Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

TYSON FOODS, INC.

CONSOLIDATED STATEMENTS OF INCOME

			Three years ended October 3, 2020
			in millions, except per share data
			2020						2019						2018
Sales			$	43,185					$	42,405					$	40,052
Cost of Sales			37,801						37,383						34,956
Gross Profit			5,384						5,022						5,096
Selling, General and Administrative			2,376						2,252						2,127
Operating Income			3,008						2,770						2,969
Other (Income) Expense:
Interest income			(10)						(11)						(7)
Interest expense			485						462						350
Other, net			(131)						(55)						(56)
Total Other (Income) Expense			344						396						287
Income before Income Taxes			2,664						2,374						2,682
Income Tax Expense (Benefit)			593						381						(291)
Net Income			2,071						1,993						2,973
Less: Net Income Attributable to Noncontrolling Interests			10						13						3
Net Income Attributable to Tyson			$	2,061					$	1,980					$	2,970
Weighted Average Shares Outstanding:
Class A Basic			293						293						295
Class B Basic			70						70						70
Diluted			365						366						369
Net Income Per Share Attributable to Tyson:
Class A Basic			$	5.79					$	5.56					$	8.29
Class B Basic			$	5.21					$	4.99					$	7.46
Diluted			$	5.64					$	5.40					$	8.04

See accompanying notes.

TYSON FOODS, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

			Three years ended October 3, 2020
			in millions
			2020						2019						2018
Net Income			$	2,071					$	1,993					$	2,973
Other Comprehensive Income (Loss), Net of Taxes:
Derivatives accounted for as cash flow hedges			9						(15)						(7)
Investments			1						2						(1)
Currency translation			(29)						(23)						(29)
Postretirement benefits			(43)						(66)						(7)
Total Other Comprehensive Income (Loss), Net of Taxes			(62)						(102)						(44)
Comprehensive Income			2,009						1,891						2,929
Less: Comprehensive Income Attributable to Noncontrolling Interests			10						13						3
Comprehensive Income Attributable to Tyson			$	1,999					$	1,878					$	2,926

See accompanying notes.

TYSON FOODS, INC.

CONSOLIDATED BALANCE SHEETS

October 3, 2020, and September 28, 2019
in millions, except share and per share data
			2020						2019
Assets
Current Assets:
Cash and cash equivalents			$	1,420					$	484
Accounts receivable, net			1,952						2,173
Inventories			3,859						3,929
Other current assets			367						404
Total Current Assets			7,598						6,990
Net Property, Plant and Equipment			7,596						7,282
Goodwill			10,899						10,844
Intangible Assets, net			6,774						7,037
Other Assets			1,589						765
Total Assets			$	34,456					$	32,918
Liabilities and Shareholders’ Equity
Current Liabilities:
Current debt			$	548					$	2,102
Accounts payable			1,876						1,926
Other current liabilities			1,810						1,485
Total Current Liabilities			4,234						5,513
Long-Term Debt			10,791						9,830
Deferred Income Taxes			2,317						2,309
Other Liabilities			1,728						1,172
Commitments and Contingencies (Note 21)
Shareholders’ Equity:
Common stock ($0.10 par value):
Class A-authorized 900 million shares, issued 378 million shares			38						38
Convertible Class B-authorized 900 million shares, issued 70 million shares			7						7
Capital in excess of par value			4,433						4,378
Retained earnings			15,100						13,655
Accumulated other comprehensive gain (loss)			(179)						(117)
Treasury stock, at cost – 83 million shares at October 3, 2020 and 82 million shares at September 28, 2019			(4,145)						(4,011)
Total Tyson Shareholders’ Equity			15,254						13,950
Noncontrolling Interests			132						144
Total Shareholders’ Equity			15,386						14,094
Total Liabilities and Shareholders’ Equity			$	34,456					$	32,918

See accompanying notes.

TYSON FOODS, INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

			Three years ended October 3, 2020
																					in millions
			2020												2019												2018
			Shares						Amount						Shares						Amount						Shares						Amount
Class A Common Stock:
Balance at beginning of year			378						$	38					378						$	38					378						$	38
Issuance of Class A common stock			—						—						—						—						—						—
Balance at end of year			378						38						378						38						378						38
Class B Common Stock:
Balance at beginning and end of year			70						7						70						7						70						7
Capital in Excess of Par Value:
Balance at beginning of year									4,378												4,387												4,378
Stock-based compensation and other									55												(9)												9
Balance at end of year									4,433												4,378												4,387
Retained Earnings:
Balance at beginning of year									13,655												12,239												9,740
Net income attributable to Tyson									2,061												1,980												2,970
Dividends									(616)												(564)												(458)
Reclass from Accumulated Other Comprehensive Income (Loss), Net of Tax (1)									—												—												(13)
Balance at end of year									15,100												13,655												12,239
Accumulated Other Comprehensive Income (Loss), Net of Tax:
Balance at beginning of year									(117)												(15)												16
Other Comprehensive Income (Loss)									(62)												(102)												(44)
Reclass to Retained Earnings (1)									—												—												13
Balance at end of year									(179)												(117)												(15)
Treasury Stock:
Balance at beginning of year			82						(4,011)						82						(3,943)						80						(3,674)
Purchase of Class A common stock			2						(207)						4						(252)						6						(427)
Stock-based compensation			(1)						73						(4)						184						(4)						158
Balance at end of year			83						(4,145)						82						(4,011)						82						(3,943)
Total Shareholders’ Equity Attributable to Tyson									$	15,254											$	13,950											$	12,713
Equity Attributable to Noncontrolling Interests:
Balance at beginning of year									$	144											$	8											$	18
Net income attributable to noncontrolling interests									10												13												3
Distributions to noncontrolling interest									(13)												(3)												(3)
Business combination and other									(9)												126												(10)
Total Equity Attributable to Noncontrolling Interests									$	132											$	144											$	8
Total Shareholders’ Equity									$	15,386											$	14,094											$	12,721

(1) Reclass from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act ("Tax Act"), following adoption of the applicable new accounting standard for the fiscal year ended September 29, 2018.

See accompanying notes.

TYSON FOODS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

			Three years ended October 3, 2020
			in millions
			2020						2019						2018
Cash Flows From Operating Activities:
Net income			$	2,071					$	1,993					$	2,973
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation			900						819						723
Amortization			292						279						220
Deferred income taxes			18						77						(874)
Gain on dispositions of businesses			—						(17)						(42)
Impairment of assets			48						94						175
Stock-based compensation expense			89						77						69
Other, net			(124)						(20)						(58)
(Increase) decrease in accounts receivable			191						(226)						(2)
(Increase) decrease in inventories			86						(157)						(144)
Increase (decrease) in accounts payable			(64)						(55)						(44)
Increase (decrease) in income taxes payable/receivable			62						(254)						111
Increase (decrease) in interest payable			(41)						47						(3)
Net changes in other operating assets and liabilities			346						(144)						(141)
Cash Provided by Operating Activities			3,874						2,513						2,963
Cash Flows From Investing Activities:
Additions to property, plant and equipment			(1,199)						(1,259)						(1,200)
Purchases of marketable securities			(105)						(64)						(42)
Proceeds from sale of marketable securities			87						63						37
Acquisitions, net of cash acquired			—						(2,462)						(1,474)
Proceeds from sale of businesses			29						170						797
Acquisition of equity investments			(183)						—						—
Other, net			(52)						88						(24)
Cash Used for Investing Activities			(1,423)						(3,464)						(1,906)
Cash Flows From Financing Activities:
Proceeds from issuance of debt			1,609						4,634						1,148
Payments on debt			(1,212)						(3,208)						(1,307)
Borrowings on revolving credit facility			1,210						1,135						1,755
Payments on revolving credit facility			(1,280)						(1,065)						(1,755)
Proceeds from issuance of commercial paper			14,272						17,722						21,024
Repayments of commercial paper			(15,271)						(17,327)						(21,197)
Purchases of Tyson Class A common stock			(207)						(252)						(427)
Dividends			(601)						(537)						(431)
Stock options exercised			30						99						102
Other, net			(18)						(30)						(14)
Cash Provided by (Used for) Financing Activities			(1,468)						1,171						(1,102)
Effect of Exchange Rate Change on Cash			(1)						(6)						(3)
Increase (decrease) in Cash and Cash Equivalents and Restricted Cash			982						214						(48)
Cash and Cash Equivalents and Restricted Cash at Beginning of Year			484						270						318
Cash and Cash Equivalents and Restricted Cash at End of Year			1,466						484						270
Less: Restricted Cash at End of Year			46						—						—
Cash and Cash Equivalents at End of Year			$	1,420					$	484					$	270

See accompanying notes.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

TYSON FOODS, INC.

NOTE 1: BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Description of Business: Tyson Foods, Inc. (collectively, “Company,” “we,” “us” or “our”), is one of the world's largest food companies and a recognized leader in protein. Founded in 1935 by John W. Tyson and grown under three generations of family leadership, the Company has a broad portfolio of products and brands including Tyson®, Jimmy Dean®, Hillshire Farm®, Ball Park®, Wright®, Aidells®, ibp® and State Fair®. We innovate continually to make protein more sustainable, tailor food for everywhere it’s available and raise the world’s expectations for how much good food can do.

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

Fiscal Year: We utilize a 52- or 53-week accounting period ending on the Saturday closest to September 30. The Company’s accounting cycle resulted in a 53-week year for fiscal 2020 and a 52-week year for fiscal 2019 and fiscal 2018.

Cash and Cash Equivalents: Cash equivalents consist of investments in short-term, highly liquid securities having original maturities of three months or less, which are made as part of our cash management activity. The carrying values of these assets approximate their fair values. We primarily utilize a cash management system with a series of separate accounts consisting of lockbox accounts for receiving cash, concentration accounts where funds are moved to, and several zero-balance disbursement accounts for funding payroll, accounts payable, livestock procurement, livestock grower payments, etc. As a result of our cash management system, checks issued, but not presented to the banks for payment, may result in negative book cash balances. These negative book cash balances are included in accounts payable and other current liabilities. At October 3, 2020, and September 28, 2019, checks outstanding in excess of related book cash balances totaled approximately $200 million.

Accounts Receivable: We record accounts receivable at net realizable value. This value includes an appropriate allowance for estimated uncollectible accounts to reflect any loss anticipated on the accounts receivable balances and charged to the provision for doubtful accounts. We calculate this allowance based on our history of write-offs, level of past due accounts and relationships with and economic status of our customers. At October 3, 2020, and September 28, 2019, our allowance for uncollectible accounts was $26 million and $21 million, respectively. We generally do not have collateral for our receivables, but we do periodically evaluate the credit worthiness of our customers.

Inventories: Processed products, livestock and supplies and other are valued at the lower of cost or net realizable value. Cost includes purchased raw materials, live purchase costs, livestock growout costs (primarily feed, livestock grower pay and catch and haul costs), labor and manufacturing and production overhead, which are related to the purchase and production of inventories. In fiscal 2020 and fiscal 2019, the cost of inventories was determined by either the first-in, first-out (“FIFO”) method or the weighted-average method. The following table reflects the major components of inventory at October 3, 2020, and September 28, 2019 (in millions):

			2020						2019
Processed products			$	2,223					$	2,362
Livestock(1)			977						971
Supplies and other			659						596
Total inventory			$	3,859					$	3,929

(1) As of October 3, 2020 the Livestock amounts have changed from $1,262 million as originally reported to $977 million as revised and as of September 28, 2019 have changed from $1,150 million as originally reported to $971 million as revised as further discussed below in the section “Revision.”

Property, Plant and Equipment: Property, plant and equipment are stated at cost and generally depreciated on a straight-line method over the estimated lives for buildings and leasehold improvements of 10 to 33 years, machinery and equipment of 3 to 12 years and land improvements and other of 3 to 20 years. Major repairs and maintenance costs that significantly extend the useful life of the related assets are capitalized. Normal repairs and maintenance costs are charged to operations.

We review the carrying value of long-lived assets at each balance sheet date if indication of impairment exists. Recoverability is assessed using undiscounted cash flows based on historical results and current projections of earnings before interest, taxes, depreciation and amortization. We measure impairment as the excess of carrying value over the fair value of an asset group. The fair value of an asset group is generally measured using discounted cash flows including market participant assumptions of future operating results and discount rates.

Goodwill and Intangible Assets: Definite life intangibles are initially recorded at fair value and amortized over the estimated period of benefit. Brands and trademarks are generally amortized using the straight-line method over 20 years or less. Customer relationships and supply arrangements are generally amortized over 7 to 30 years based on the pattern of revenue expected to be generated from the use of the asset. The gross cost and accumulated amortization of intangible assets are removed when the recorded amounts are fully amortized and the asset is no longer in use or the contract has expired. Amortization expense is generally recognized in selling, general, and administrative expense. We review the carrying value of definite life intangibles at each balance sheet date if indication of impairment exists. Recoverability is assessed using undiscounted cash flows based on historical results and current projections of earnings before interest, taxes, depreciation and amortization. We measure impairment as the excess of carrying value over the fair value of the definite life intangible asset. We use various valuation techniques to estimate fair value, with the primary techniques being discounted cash flows, relief-from-royalty and multi-period excess earnings valuation approaches, which use significant unobservable inputs, or Level 3 inputs, as defined by the fair value hierarchy. Under these valuation approaches, we are required to make estimates and assumptions about sales, operating margins, growth rates, royalty rates and discount rates based on budgets, business plans, economic projections, anticipated future cash flows and marketplace data.

Goodwill and indefinite life intangible assets are initially recorded at fair value and not amortized, but are reviewed for impairment at least annually or more frequently if impairment indicators arise. Our goodwill is allocated by reporting unit and is evaluated for impairment by first performing a qualitative assessment to determine whether a quantitative goodwill test is necessary. If it is determined, based on qualitative factors, the fair value of the reporting unit may be more likely than not less than carrying amount, or if significant changes to macro-economic factors related to the reporting unit have occurred that could materially impact fair value, a quantitative goodwill impairment test would be required. Additionally, we can elect to forgo the qualitative assessment and perform the quantitative test. The quantitative test is to identify if a potential impairment exists by comparing the fair value of a reporting unit with its carrying amount, including goodwill. If the carrying amount of the reporting unit exceeds the fair value, an impairment loss is recognized in an amount equal to that excess, not to exceed the carrying amount of goodwill.

We estimate the fair value of our reporting units considering the use of various valuation techniques, with the primary technique being an income approach (discounted cash flow method), with another technique being a market approach (guideline public company method), which use significant unobservable inputs, or Level 3 inputs, as defined by the fair value hierarchy. We include assumptions about sales, operating margins, growth rates, discount rates and valuations multiples which consider our budgets, business plans, economic projections and marketplace data, and are believed to reflect market participant views which would exist in an exit transaction. Assumptions are also made for varying perpetual growth rates for periods beyond the long-term business plan period. Generally, we utilize operating margin assumptions based on future expectations, operating margins historically realized in the reporting units' industries and industry marketplace valuation multiples.

Some of the inherent estimates and assumptions used in determining fair value of the reporting units are outside the control of management, including interest rates, cost of capital, tax rates, market EBITDA comparables and credit ratings. While we believe we have made reasonable estimates and assumptions to calculate the fair value of the reporting units, it is possible a material change could occur. If our actual results are not consistent with our estimates and assumptions used to calculate fair value, it could result in additional material impairments of our goodwill.

During fiscal 2020, 2019 and 2018, we determined none of our material reporting units' fair values were below its carrying value. All of our material reporting units’ estimated fair value exceeded their carrying value by more than 20% at the date of their most recent estimated fair value determination, other than the Domestic Chicken reporting unit, which had $3,266 million of goodwill at October 3, 2020.

For our indefinite life intangible assets, a qualitative assessment can also be performed to determine whether the existence of events and circumstances indicates it is more likely than not an intangible asset is impaired. Similar to goodwill, we can also elect to forgo the qualitative test for indefinite life intangible assets and perform the quantitative test. Upon performing the quantitative test, if the carrying value of the intangible asset exceeds its fair value, an impairment loss is recognized in an amount equal to that excess.

The fair value of our indefinite life intangible assets is calculated principally using multi-period excess earnings and relief-from-royalty valuation approaches, which use significant unobservable inputs, or Level 3 inputs, as defined by the fair value hierarchy, and is believed to reflect market participant views which would exist in an exit transaction. Under these valuation approaches, we are required to make estimates and assumptions about sales, operating margins, growth rates, royalty rates and discount rates based on budgets, business plans, economic projections, anticipated future cash flows and marketplace data. During fiscal 2020, 2019 and 2018, we determined the fair value of each of our indefinite life intangible assets exceeded its carrying value. All of our indefinite life intangible assets’ estimated fair value exceeded their carrying value by more than 20% at the date of their most recent estimated fair value determination.

Leases: We determine if an agreement is or contains a lease at its inception by evaluating if an identified asset exists that we control for a period of time. When a lease exists, we classify it as a finance or operating lease and record a right-of-use (“ROU”) asset and a corresponding lease liability at lease commencement. We have elected to not record leases with a term of 12 months or less in our Consolidated Balance Sheets, and accordingly, lease expense for these short-term leases is recognized on a straight-line basis over the lease term. Finance lease assets are presented within Net Property, Plant and Equipment and finance lease liabilities are presented within Current and Long-Term Debt in our Consolidated Balance Sheets. Finance lease disclosures are omitted as they are deemed immaterial. Operating ROU assets are presented within Other Assets, and operating lease liabilities are recorded within Other current liabilities and Other Liabilities in our Consolidated Balance Sheets. Lease assets are subject to review for impairment within the related long-lived asset group.

ROU assets are presented in our Consolidated Balance Sheets based on the present value of the corresponding liabilities and are adjusted for any prepayments, lease incentives received or initial direct costs incurred. The measurement of our ROU assets and liabilities includes all fixed payments and any variable payments based on an index or rate. Variable lease payments which do not depend on an index, or where rates are unknown, are excluded from lease payments in the measurement of the ROU asset and lease liability, and accordingly, are recognized as lease expense in the period the obligation for those payments is incurred. The present value of lease payments is based on our incremental borrowing rate according to the lease term and information available at the lease commencement date, as our lease arrangements generally do not provide an implicit interest rate. The incremental borrowing rate is derived using a hypothetically-collateralized borrowing cost, based on our revolving credit facility, plus a country risk factor, where applicable. We consider our credit rating and the current economic environment in determining the collateralized rate.

Our lease arrangements can include fixed or variable non-lease components, such as common area maintenance, taxes and labor. We account for each lease and any non-lease components associated with that lease as a single lease component for all asset classes, except production and livestock grower asset classes embedded in service and supply agreements, and other asset classes that include significant maintenance or service components. We account for lease and non-lease components of an agreement separately based on relative stand-alone prices either observable or estimated if observable prices are not readily available. For asset classes where an election was made not to separate lease and non-lease components, all costs associated with a lease contract are disclosed as lease costs. The accounting for some of the Company's leases may require significant judgment when determining whether a contract is or contains a lease, the lease term, and the likelihood of exercising renewal or termination options. Our leases can include options to extend or terminate use of the underlying assets. These options are included in the lease term used to determine ROU assets and corresponding liabilities when we are reasonably certain we will exercise the option. Additionally, certain leases can have residual value guarantees, which are included within our operating lease liabilities when considered probable. Our lease agreements do not include significant restrictions or covenants.

Recognition, measurement and presentation of expenses and cash flows arising from a lease will depend on classification as a finance or operating lease. Operating lease expense is recognized on a straight-line basis over the lease term, whereas the amortization of finance lease assets is recognized on a straight-line basis over the shorter of the estimated useful life of the underlying asset or the lease term. Operating lease expense and finance lease amortization are presented in Cost of Sales or Selling, General and Administrative in our Consolidated Statements of Income depending on the nature of the leased item. Interest expense on finance lease obligations is recorded over the lease term and is presented in Interest expense, based on the effective interest method. All operating lease cash payments and interest on finance leases are presented within Net cash provided by operating activities and all finance lease principal payments are presented within Net cash used in financing activities in our Consolidated Statements of Cash Flows.

Investments: We have investments in joint ventures and other entities. The equity method of accounting is used for entities in which we exercise significant influence but do not have a controlling interest or a variable interest in which we are the primary beneficiary. Investments not accounted for using the equity method do not have readily determinable fair values and do not qualify for the practical expedient to measure the investment using a net asset value per share. These investments are recorded using the measurement alternative in which our equity interests are recorded at cost, less impairments, adjusted for observable price changes in orderly transactions for an identical or similar investment of the same issuer. At each reporting period, we assess if these investments continue to qualify for this measurement alternative. An impairment is recorded when there is evidence that the expected fair value of the investment has declined to below the recorded cost. Adjustments to the carrying value are recorded in Other, net in the Consolidated Statements of Income. Investments in joint ventures and other entities are reported in the Consolidated Balance Sheets in Other Assets.

We also have investments in marketable debt securities. We have determined all of our marketable debt securities are available-for-sale investments. These investments are reported at fair value based on quoted market prices as of the balance sheet date, with unrealized gains and losses, net of tax, recorded in other comprehensive income.

The amortized cost of debt securities is adjusted for amortization of premiums and accretion of discounts to maturity. Such amortization is recorded in interest income. The cost of securities sold is based on the specific identification method. Realized gains and losses on the sale of debt securities and declines in value judged to be other than temporary are recorded on a net basis in other income. Interest and dividends on securities classified as available-for-sale are recorded in interest income.

Accrued Self-Insurance: We use a combination of insurance and self-insurance mechanisms in an effort to mitigate the potential liabilities for health and welfare, workers’ compensation, auto liability and general liability risks. Liabilities associated with our risks retained are estimated, in part, by considering claims experience, demographic factors, severity factors and other actuarial assumptions.

Other Current Liabilities: Other current liabilities at October 3, 2020, and September 28, 2019, include (in millions):

			2020						2019
Accrued salaries, wages and benefits			$	823					$	620
Other			987						865
Total other current liabilities			$	1,810					$	1,485

Defined Benefit Plans: We recognize the funded status of defined pension and postretirement plans in the Consolidated Balance Sheets. The funded status is measured as the difference between the fair value of the plan assets and the benefit obligation. We measure our plan assets and liabilities at the end of our fiscal year. For a defined benefit pension plan, the benefit obligation is the projected benefit obligation; for any other defined benefit postretirement plan, such as a retiree health care plan, the benefit obligation is the accumulated postretirement benefit obligation. Any overfunded status is recognized as an asset and any underfunded status is recognized as a liability. Any transitional asset/liability, prior service cost or actuarial gain/loss that has not yet been recognized as a component of net periodic cost is recognized in accumulated other comprehensive income. Accumulated other comprehensive income will be adjusted as these amounts are subsequently recognized as a component of net periodic benefit costs in future periods.

Derivative Financial Instruments: We purchase certain commodities, such as grains and livestock in the course of normal operations. As part of our commodity risk management activities, we use derivative financial instruments, primarily futures and options, to reduce our exposure to various market risks related to these purchases, as well as to changes in foreign currency exchange and interest rates. Contract terms of a financial instrument qualifying as a hedge instrument closely mirror those of the hedged item, providing a high degree of risk reduction and correlation. Contracts designated and highly effective at meeting risk reduction and correlation criteria are recorded using hedge accounting. If a derivative instrument is accounted for as a hedge, depending on the nature of the hedge, changes in the fair value of the instrument either will be offset against the change in fair value of the hedged assets, liabilities or firm commitments through earnings, or be recognized in other comprehensive income (loss) until the hedged item is recognized in earnings. The ineffective portion of an instrument’s change in fair value is recognized immediately. Instruments we hold as part of our risk management activities that do not meet the criteria for hedge accounting are marked to fair value with unrealized gains or losses reported currently in earnings. Changes in market value of derivatives used in our risk management activities relating to inputs of forward sales contracts are recorded in cost of sales. Changes in market value of derivatives used in our risk management activities surrounding inventories on hand or anticipated purchases of inventories are recorded in cost of sales. Changes in market value of derivatives used in our risk management activities related to interest rates are recorded in interest expense. Changes in the market value of derivatives used in our risk management activities related to foreign exchange contracts are recorded in other, net. We generally do not hedge anticipated transactions beyond 18 months.

Litigation Reserves: There are a variety of legal proceedings pending or threatened against us. Accruals are recorded when it is probable a liability has been incurred and the amount of the liability can be reasonably estimated based on current law, progress of each case, opinions and views of legal counsel and other advisers, our experience in similar matters and intended response to the litigation. These amounts, which are not discounted and are exclusive of claims against third parties, are adjusted periodically as assessment efforts progress or additional information becomes available. We expense amounts for administering or litigating claims as incurred. Accruals for legal proceedings are included in Other current liabilities in the Consolidated Balance Sheets.

Revenue Recognition: We recognize revenue mainly through retail, foodservice, international, industrial and other distribution channels. Our revenues primarily result from contracts with customers and are generally short term in nature with the delivery of product as the single performance obligation. We recognize revenue for the sale of the product at the point in time when our performance obligation has been satisfied and control of the product has transferred to our customer, which generally occurs upon shipment or delivery to a customer based on terms of the sale. We elected to account for shipping and handling activities that occur after the customer has obtained control of the product as a fulfillment cost rather than an additional promised service. Our contracts are generally less than one year, and therefore we recognize costs paid to third party brokers to obtain contracts as expenses. Additionally, items that are not material in the context of the contract are recognized as expense. Any taxes collected on behalf of government authorities are excluded from net revenues.

Revenue is measured by the transaction price, which is defined as the amount of consideration we expect to receive in exchange for providing goods to customers. The transaction price is adjusted for estimates of known or expected variable consideration, which includes consumer incentives, trade promotions, and allowances, such as coupons, discounts, rebates, volume-based incentives, cooperative advertising, and other programs. Variable consideration related to these programs is recorded as a reduction to revenue based on amounts we expect to pay. We base these estimates on current performance, historical utilization, and projected redemption rates of each program. We review and update these estimates regularly until the incentives or product returns are realized and the impact of any adjustments are recognized in the period the adjustments are identified. In many cases, key sales terms such as pricing and quantities ordered are established on a regular basis such that most customer arrangements and related incentives have a duration of less than one year. Amounts billed and due from customers are short term in nature and are classified as receivables since payments are unconditional and only the passage of time is required before payments are due. Additionally, we do not grant payment financing terms greater than one year. Freight expense associated with products shipped to customers is recognized in cost of sales.

Advertising Expenses: Advertising expense is charged to operations in the period incurred and is recorded as selling, general and administrative expense. Advertising expense totaled $283 million, $276 million and $243 million in fiscal 2020, 2019 and 2018, respectively.

Research and Development: Research and development costs are expensed as incurred. Research and development costs totaled $98 million, $97 million and $114 million in fiscal 2020, 2019 and 2018, respectively.

Business Combinations: We account for acquired businesses using the acquisition method of accounting, which requires that once control of a business is obtained, 100% of the assets acquired and liabilities assumed, including amounts attributable to noncontrolling interests, be recorded at the date of acquisition at their respective fair values. Any excess of the purchase price over the estimated fair values of the net assets acquired is recorded as goodwill. Acquisition-related expenses including transaction and integration costs are expensed as incurred.

We use various models to determine the value of assets acquired such as net realizable value to value inventory, cost method and market approach to value property, relief-from-royalty and multi-period excess earnings to value intangibles, and discounted cash flow to value goodwill. We make estimates and assumptions about projected future cash flows including sales, operating margins, attrition rates, growth rates, and discount rates based on historical results, business plans, expected synergies, perceived risk, and market place data considering the perspective of marketplace participants. Determining the useful life of an intangible asset also requires judgment as different types of intangible assets will have different useful lives and certain assets may be considered to have indefinite useful lives.

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

Risks and Uncertainties: We have considered the impact of the global novel coronavirus pandemic (“COVID-19” or “pandemic”) on our consolidated financial statements. In addition to the COVID-19 impacts already experienced, there likely will be future impacts, the extent of which is uncertain and largely subject to whether the severity worsens or duration lengthens. These impacts could include but may not be limited to risks and uncertainty related to worker availability, our ability to operate production facilities, demand-driven production facility idling, shifts in demand between sales channels and market volatility in our supply chain. Consequently, this may subject us to future risk of material goodwill, intangible and long-lived asset impairments, increased reserves for uncollectible accounts, and adjustments for inventory and market volatility for items subject to fair value measurements such as derivatives and investments.

Revision: Subsequent to the filing of the Original Form 10-K on November 16, 2020, the Company discovered information that led to an internal investigation relating to one of its cattle suppliers and determined that this supplier made misrepresentations regarding the number of cattle the supplier purchased on behalf of the Company’s Beef segment. Based upon the recently completed investigation, the Company determined that the misappropriation of Company funds by the supplier caused the Company to overstate live cattle inventory for fiscal years and interim periods from 2017 through 2020. The resulting loss to the Company and related inventory misstatement is isolated to the Beef segment and is attributable solely to this cattle supplier. The Company concluded that the misrepresentations regarding live cattle inventory did not have a material impact on the Company’s previously issued annual and interim period consolidated financial statements. However, the Company determined it necessary to revise the accompanying consolidated annual financial statements to correct the misstatement in the periods impacted. The applicable notes to the accompanying financial statements have also been revised to correct for these misstatements. Refer to Note 22: Quarterly Financial Data (Unaudited) for the impact of the misstatements and resulting revision on our unaudited interim quarterly financial information.

The following tables reflect the impact of this revision on our consolidated financial statements as of and for the fiscal years indicated:

Consolidated Balance Sheets																																																			in millions
																					As of October 3, 2020												As of September 28, 2019
																																							As originally reported			Adjustments			As revised						As originally reported			Adjustments			As revised
Inventories																																							$	4,144		$	(285)		$	3,859					$	4,108		$	(179)		$	3,929
Total Current Assets																																							7,883			(285)			7,598						7,169			(179)			6,990
Total Assets																																							34,741			(285)			34,456						33,097			(179)			32,918
Deferred Income Taxes																																							2,391			(74)			2,317						2,356			(47)			2,309
Retained Earnings (a)																																							15,311			(211)			15,100						13,787			(132)			13,655
Total Tyson Shareholders' Equity																																							15,465			(211)			15,254						14,082			(132)			13,950
Total Shareholders' Equity																																							15,597			(211)			15,386						14,226			(132)			14,094
Total Liabilities and Shareholders' Equity																																							34,741			(285)			34,456						33,097			(179)			32,918
Consolidated Statements of Income																																	in millions
																																							Year ended October 3, 2020												Year ended September 28, 2019												Year ended September 29, 2018
																																							As originally reported			Adjustments			As revised						As originally reported			Adjustments			As revised						As originally reported			Adjustments			As revised
Selling, General and Administrative																																							$	2,270		$	106		$	2,376					$	2,195		$	57		$	2,252					$	2,064		$	63		$	2,127
Operating Income																																							3,114			(106)			3,008						2,827			(57)			2,770						3,032			(63)			2,969
Income before Income Taxes																																							2,770			(106)			2,664						2,431			(57)			2,374						2,745			(63)			2,682
Income Tax Expense (Benefit)																																							620			(27)			593						396			(15)			381						(282)			(9)			(291)
Net Income																																							2,150			(79)			2,071						2,035			(42)			1,993						3,027			(54)			2,973
Net Income Attributable to Tyson																																							2,140			(79)			2,061						2,022			(42)			1,980						3,024			(54)			2,970
Net Income Per Share Attributable to Tyson:
Class A																																							$	6.02		$	(0.23)		$	5.79					$	5.67		$	(0.11)		$	5.56					$	8.44		$	(0.15)		$	8.29
Class B																																							$	5.41		$	(0.20)		$	5.21					$	5.10		$	(0.11)		$	4.99					$	7.59		$	(0.13)		$	7.46
Diluted																																							$	5.86		$	(0.22)		$	5.64					$	5.52		$	(0.12)		$	5.40					$	8.19		$	(0.15)		$	8.04
Consolidated Statements of Comprehensive Income																																	in millions
																																							Year ended October 3, 2020												Year ended September 28, 2019												Year ended September 29, 2018
																																							As originally reported			Adjustments			As revised						As originally reported			Adjustments			As revised						As originally reported			Adjustments			As revised
Net Income																																							$	2,150		$	(79)		$	2,071					$	2,035		$	(42)		$	1,993					$	3,027		$	(54)		$	2,973
Comprehensive Income																																							2,088			(79)			2,009						1,933			(42)			1,891						2,983			(54)			2,929
Comprehensive Income Attributable to Tyson																																							2,078			(79)			1,999						1,920			(42)			1,878						2,980			(54)			2,926
Consolidated Statements of Cash Flows																																	in millions
																																							Year ended October 3, 2020												Year ended September 28, 2019												Year ended September 29, 2018
																																							As originally reported			Adjustments			As revised						As originally reported			Adjustments			As revised						As originally reported			Adjustments			As revised
Net Income																																							$	2,150		$	(79)		$	2,071					$	2,035		$	(42)		$	1,993					$	3,027		$	(54)		$	2,973
Deferred Income Taxes																																							45			(27)			18						92			(15)			77						(865)			(9)			(874)
(Increase) decrease in inventories																																							(20)			106			86						(214)			57			(157)						(207)			63			(144)

(a) Beginning Retained Earnings for the fiscal year ended September 28, 2019 was revised from $12,329 million to $12,239 million to reflect the $90 million misappropriation and resulting overstatement of live cattle inventory that originated prior to fiscal 2019, including $36 million which originated prior to fiscal 2018.

Recently Issued Accounting Pronouncements:

In August 2020, the Financial Accounting Standards Board (“FASB”) issued guidance that simplifies the accounting for debt with conversion options, revises the criteria for applying the derivative scope exception for contracts in an entity’s own equity, and improves the consistency for the calculation of earnings per share. The guidance is effective for annual reporting periods and interim periods within those annual reporting periods beginning after December 15, 2021, our fiscal 2023. Early adoption is permitted for annual periods and interim periods within those annual periods beginning after December 15, 2020, our fiscal 2022. We are currently evaluating the impact this guidance will have on our consolidated financial statements.

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

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

In June 2016, the FASB issued guidance that provides more decision-useful information about the expected credit losses on financial instruments and changes the loss impairment methodology. The guidance is effective for annual reporting periods and interim periods within those annual reporting periods beginning after December 15, 2019, our fiscal 2021. We will adopt this guidance using the modified retrospective and prospective transition methods beginning in the first quarter of fiscal 2021. We do not expect the adoption of this guidance will have a material impact on our consolidated financial statements.

NOTE 2: CHANGES IN ACCOUNTING PRINCIPLES

In August 2017, the FASB issued guidance that eases certain documentation and assessment requirements of hedge effectiveness and modifies the accounting for components excluded from the assessment. Some of the modifications included the ineffectiveness of derivative gain/loss in highly effective cash flow hedges to be recorded in Other Comprehensive Income, alignment of the recognition and presentation of the effects related to the hedging instrument and hedged item in the financial statements, and additional disclosures required on the cumulative basis adjustment in fair value hedges and the effect of hedging on financial statement lines for components excluded from the assessment. The amendment also simplified the application of hedge accounting in certain situations to permit new hedging strategies to be eligible for hedge accounting. The guidance is effective for annual reporting periods and interim periods within those annual reporting periods beginning after December 15, 2018, our fiscal 2020. We adopted this guidance in the first quarter of fiscal 2020 using the modified retrospective transition approach, and it did not have a material impact on our consolidated financial statements.

In February 2016, the FASB issued guidance that created new accounting and reporting guidelines for leasing arrangements. The guidance requires lessees to recognize a right-of-use asset and lease liability for all leases with terms of more than 12 months. Recognition, measurement and presentation of expenses and cash flows arising from a lease will depend on classification as a finance or operating lease. The guidance also requires qualitative and quantitative disclosures regarding the amount, timing, and uncertainty of cash flows arising from leases. The guidance is effective for annual reporting periods and interim periods within those annual reporting periods beginning after December 15, 2018, our fiscal 2020. We adopted this guidance in the first quarter of fiscal 2020 using the optional transition method that allows for a cumulative-effect adjustment in the period of adoption with no restatement of prior periods. We have elected the package of practical expedients available under the transition guidance which allows us to not reassess prior conclusions related to lease classifications, existing contracts containing leases, and initial direct costs, as well as the practical expedient that allows the continued historical treatment of land easements. We did not elect the practical expedient for the use of hindsight in evaluating the expected lease term of existing leases. The adoption resulted in the recording of operating lease assets and operating lease liabilities of $549 million and $546 million, respectively, as of September 29, 2019, with no changes to our finance leases. The difference between the additional lease assets and lease liabilities, represents existing deferred rent and prepaid lease balances that were reclassified on the balance sheet. The adoption did not have a material impact on our Consolidated Statements of Income or our Consolidated Statements of Cash Flows. For further description of our lease policy refer to Note 1: Business and Summary of Significant Accounting Policies, and for quantitative lease information refer to Note 6: Leases.

NOTE 3: ACQUISITIONS AND DISPOSITIONS

Acquisitions

On June 3, 2019, we acquired the Thai and European operations of BRF S.A. (“Thai and European operations”) for $326 million, net of cash acquired, subject to certain adjustments, as a part of our growth strategy to expand offerings of value-added protein in global markets. Its results, subsequent to the acquisition closing, are included in International/Other for segment presentation. The purchase price allocation included $262 million of net working capital, including $56 million of cash acquired, $89 million of Property, Plant and Equipment, $47 million of Goodwill, $23 million of Intangible Assets, $24 million of Other Liabilities, $8 million of Deferred Income Taxes and $7 million of Noncontrolling Interest. Intangible Assets included customer relationships which will be amortized over a life of 7 years. We do not expect the goodwill to be deductible for income tax purposes. During fiscal 2020, we recorded measurement period adjustments, which increased Goodwill by $46 million, including a reduction to net working capital of $45 million, a reduction to Property, Plant and Equipment of $4 million, and a decrease in Deferred Income Taxes of $3 million.

On November 30, 2018, we acquired all of the outstanding common stock of MFG (USA) Holdings, Inc. and McKey Luxembourg Holdings S.à.r.l. (“Keystone Foods”) from Marfrig Global Foods (“Marfrig”) for $2.3 billion in cash, subject to certain adjustments. The acquisition was accounted for using the acquisition method of accounting and the results of Keystone Foods' domestic and international results, subsequent to the acquisition closing, are included in our Chicken segment and International/Other, respectively.

The following table summarizes the purchase price allocation for Keystone Foods and fair values of the assets acquired and liabilities assumed at the acquisition date (in millions):

Cash and cash equivalents						$	186
Accounts receivable						106
Inventories						257
Other current assets						34
Property, Plant and Equipment						676
Goodwill						1,120
Intangible Assets						659
Other Assets						28
Current debt						(73)
Accounts payable						(208)
Other current liabilities						(99)
Long-Term Debt						(113)
Deferred Income Taxes						(177)
Other Liabilities						(8)
Noncontrolling Interests						(122)
Net assets acquired						$	2,266

The fair value of identifiable intangible assets primarily consisted of customer relationships with a weighted average life of 25 years. As a result of the acquisition, we recognized a total of $1,120 million of goodwill. The purchase price was assigned to assets acquired and liabilities assumed based on their estimated fair values as of the date of acquisition, and any excess was allocated to goodwill, as shown in the table above. Goodwill represents the value we expect to achieve through the implementation of operational synergies and growth opportunities. We allocated goodwill to our segments using the acquisition method approach. This resulted in $779 million and $341 million of goodwill allocated to our Chicken segment and International/Other, respectively. We do not expect the goodwill to be deductible for income tax purposes.

We used various valuation techniques to determine fair value, with the primary techniques being discounted cash flow, relief-from-royalty, market pricing multiple and multi-period excess earnings valuation approaches, which use significant unobservable inputs, or Level 3 inputs, as defined by the fair value hierarchy. Under these valuation approaches, we are required to make estimates and assumptions about sales, operating margins, growth rates, attrition rates, royalty rates, EBITDA multiples, and discount rates based on budgets, business plans, economic projections, anticipated future cash flows and marketplace data.

On August 20, 2018, we acquired the assets of American Proteins, Inc. and AMPRO Products, Inc. (“American Proteins”), a poultry rendering and blending operation for $864 million, as part of our strategic expansion and sustainability initiatives. Its results, subsequent to the acquisition closing, are included in our Chicken segment. The purchase price allocation included $56 million of net working capital, $152 million of Property, Plant and Equipment, $361 million of Intangible Assets, $308 million of Goodwill, and $13 million of Other liabilities. Intangible Assets primarily included $310 million assigned to supply network which will be amortized over 14 years and $51 million assigned to customer relationships which will be amortized over a weighted average of 12 years. All of the goodwill acquired is amortizable for tax purposes. During fiscal 2019, we settled the net-working capital purchase price adjustment reducing the purchase price by $2 million and recorded measurement period adjustments which increased goodwill by $66 million, including a reduction to net working capital of $15 million, a reduction to Property, Plant and Equipment of $3 million, and a reduction to intangible assets of $50 million.

On June 4, 2018, we acquired Tecumseh Poultry, LLC (“Tecumseh”), a vertically integrated value-added protein business for $382 million, net of cash acquired, as part of our strategy to grow in the high quality, branded poultry market. Its results, subsequent to the acquisition closing, are included in our Chicken segment. The purchase price allocation included $13 million of net working capital, including $1 million of cash acquired, $49 million of Property, Plant and Equipment, $227 million of Intangible Assets and $94 million of Goodwill. Intangible Assets included $193 million assigned to brands and trademarks which will be amortized over 20 years. All of the goodwill acquired is amortizable for tax purposes.

On November 10, 2017, we acquired Original Philly Holdings, Inc. (“Original Philly”), a value-added protein business, for $226 million, net of cash acquired, as part of our strategic expansion initiative. Its results, subsequent to the acquisition closing, are included in our Prepared Foods and Chicken segments. The purchase price allocation included $21 million of net working capital, including $10 million of cash acquired, $13 million of Property, Plant and Equipment, $90 million of Intangible Assets and $111 million of Goodwill. We allocated $82 million and $29 million of goodwill to our Prepared Foods and Chicken segments, respectively, using the acquisition method approach. All of the goodwill acquired is amortizable for tax purposes.

On January 15, 2020, we acquired a 40% minority interest in a vertically-integrated Brazilian poultry producer for $122 million. On February 7, 2020, we acquired a 50% interest in a joint venture serving the worldwide fats and oils market for $61 million. We are accounting for both of these investments under the equity method.

Dispositions

On April 24, 2017, we announced our intent to sell three non-protein businesses as part of our strategic focus on protein brands. These businesses, which were all part of our Prepared Foods segment, included Sara Lee® Frozen Bakery, Kettle and Van’s® and produce items such as frozen desserts, waffles, snack bars, and soups, sauces and sides. The sale also included the Chef Pierre®, Bistro Collection®, Kettle Collection™, and Van’s® brands, a license to use the Sara Lee® brand in various channels, as well as our Tarboro, North Carolina, Fort Worth, Texas, and Traverse City, Michigan, prepared foods facilities.

We completed the sale of our Kettle business on December 30, 2017, and received net proceeds of $125 million including a working capital adjustment. As a result of the sale, we recorded a pretax gain of $22 million, which is reflected in Cost of Sales in our Consolidated Statement of Income for our fiscal 2018. We utilized the net proceeds to pay down term loan debt.

We completed the sale of our Sara Lee® Frozen Bakery and Van’s® businesses on July 30, 2018 for $623 million including a working capital adjustment. As a result of the sale, we recorded a pretax gain of $11 million, which is reflected in Cost of Sales in our Consolidated Statement of Income for our fiscal 2018. We utilized the net proceeds to repay commercial paper.

Previously in fiscal 2018, we recorded a pretax impairment charge for these businesses of $101 million due to revised estimates of the businesses' fair value based on expected net sales proceeds at the time of the impairment. This charge was recorded in Cost of Sales in our Consolidated Statement of Income, and primarily consisted of goodwill previously classified within assets held for sale.

In the first quarter of fiscal 2018, we made the decision to sell TNT Crust, our pizza crust business, which was also included in our Prepared Foods segment, as part of our strategic focus on protein brands. We completed the sale of this business on September 2, 2018, for $57 million net of adjustments. As a result of the sale, we recorded a pretax gain of $9 million, which is reflected in Cost of Sales in our Consolidated Statement of Income for our fiscal 2018. We utilized the net proceeds to repay commercial paper.

We completed the sale of a chicken further processing facility acquired during the Keystone Foods acquisition on August 31, 2019 for $170 million net proceeds, which did not result in a significant gain or loss.

NOTE 4: PROPERTY, PLANT AND EQUIPMENT

The following table reflects major categories of property, plant and equipment and accumulated depreciation at October 3, 2020, and September 28, 2019 (in millions):

			2020						2019
Land			$	196					$	198
Building and leasehold improvements			4,961						4,747
Machinery and equipment			9,013						8,607
Land improvements and other			420						385
Buildings and equipment under construction			991						713
			15,581						14,650
Less accumulated depreciation			7,985						7,368
Net property, plant and equipment			$	7,596					$	7,282

Approximately $1,102 million will be necessary to complete buildings and equipment under construction at October 3, 2020.

NOTE 5: GOODWILL AND INTANGIBLE ASSETS

The following table reflects goodwill activity for fiscal 2020 and 2019 (in millions):

			Beef						Pork						Chicken						Prepared Foods						International/Other						Unallocated						Consolidated
Balance at September 29, 2018
Goodwill			$	1,236					$	423					$	2,498					$	6,142					$	57					$	—					$	10,356
Accumulated impairment losses			(560)						—						—						—						(57)						—						(617)
			$	676					$	423					$	2,498					$	6,142					$	—					$	—					$	9,739
Fiscal 2019 Activity:
Acquisition			$	—					$	—					$	779					$	—					$	342					$	—					$	1,121
Measurement period adjustments			—						—						66						—						—						—						66
Reclass to assets held for sale			—						—						(70)						(7)						—						—						(77)
Currency translation and other			—						—						1						(1)						(5)						—						(5)
Balance at September 28, 2019
Goodwill			1,236						423						3,274						6,134						394						—						11,461
Accumulated impairment losses			(560)						—						—						—						(57)						—						(617)
			$	676					$	423					$	3,274					$	6,134					$	337					$	—					$	10,844
Fiscal 2020 Activity:
Measurement period adjustments			$	—					$	—					$	—					$	—					$	46					$	—					$	46
Currency translation and other			—						—						—						—						9						—						9
Balance at October 03, 2020
Goodwill			1,236						423						3,274						6,134						449						—						11,516
Accumulated impairment losses			(560)						—						—						—						(57)						—						(617)
			$	676					$	423					$	3,274					$	6,134					$	392					$	—					$	10,899

The following table reflects intangible assets by type at October 3, 2020, and September 28, 2019 (in millions):

			2020						2019
Amortizable intangible assets:
Brands and trademarks			$	951					$	945
Customer relationships			2,388						2,389
Supply Arrangements			310						310
Patents, intellectual property and other			44						34
Land use rights			8						8
Total gross amortizable intangible assets			$	3,701					$	3,686
Less accumulated amortization			1,005						727
Total net amortizable intangible assets			$	2,696					$	2,959
Brands and trademarks not subject to amortization			4,078						4,078
Total intangible assets			$	6,774					$	7,037

Amortization expense of $278 million, $267 million and $210 million was recognized during fiscal 2020, 2019 and 2018, respectively. We estimate amortization expense on intangible assets for the next five fiscal years subsequent to October 3, 2020, will be: 2021 - $261 million; 2022 - $247 million; 2023 - $228 million; 2024 - $223 million; 2025 - $214 million.

NOTE 6: LEASES

We lease certain equipment, buildings and land related to transportation, distribution, storage, production, livestock grower assets and office activities. These lease arrangements can be structured as a standard lease agreement or embedded in a service or supply agreement and are primarily classified as operating leases. For further description of our lease accounting policy, refer to Note 1: Business and Summary of Significant Accounting Policies. Operating lease ROU assets and liabilities presented in our Consolidated Balance Sheets were as follows (in millions):

			October 3, 2020
Other Assets			$	532
Other current liabilities			161
Other Liabilities			368

The components of lease costs were as follows (in millions):

									Twelve Months Ended
									October 3, 2020
Operating lease cost (a)									$	199
Variable lease cost (b)									451
Short-term lease cost									38
Total									$	688

(a) Sublease income is immaterial and not deducted from operating lease cost.

(b) Variable lease costs are determined based on volume of output received, flocks placed or other performance metrics.

Other operating lease information includes the following:

Twelve months ended October 3, 2020
Operating cash outflows from operating leases (in millions)			$	211
ROU assets obtained in exchange for new operating lease liabilities (in millions)			$	167
Weighted-average remaining lease term			5 years
Weighted-average discount rate			3		%

At October 3, 2020, future maturities of operating leases were as follows (in millions):

Operating Lease Commitments
2021			$	173
2022			129
2023			88
2024			64
2025			45
2026 and beyond			63
Total undiscounted operating lease payments			$	562
Less: Imputed interest			33
Present value of total operating lease liabilities			$	529

At October 3, 2020, our leases that had not yet commenced were not significant.

Prior Year Lease Disclosures

The following pertains to previously disclosed information set forth in the Company's 2019 Form 10-K, Part II, Item 8, Notes to the Consolidated Financial Statements, Note 20: Commitments and Contingencies.

We lease equipment, properties and certain farms for which total rentals approximated $220 million and $200 million, in fiscal 2019 and 2018, respectively. Most leases have initial terms of up to seven years, some with varying renewal periods. Minimum lease commitments under non-cancelable leases at September 28, 2019 were (in millions):

Operating Lease Commitments
2020			$	159
2021			113
2022			74
2023			49
2024			40
2025 and beyond			54
Total			$	489

We enter into agreements with livestock growers that can have fixed and variable payment structures, but are generally cancelable and based on flocks placed with growers. Livestock grower fixed or estimable non-cancelable commitments at September 28, 2019 were (in millions):

Livestock Grower Commitments
2020			$	253
2021			131
2022			86
2023			58
2024			49
2025 and beyond			122
Total			$	699

NOTE 7: RESTRUCTURING AND RELATED CHARGES

In the first quarter of fiscal 2020, the Company approved a restructuring program (the “2020 Program”), which is expected to contribute to the Company’s overall strategy of financial fitness through the elimination of overhead and consolidation of certain enterprise functions. In the fourth quarter of fiscal 2020, the Company extended the 2020 Program as it identified additional opportunities to eliminate overhead by optimizing organizational structures and other activities. We have recognized $60 million of cumulative pretax charges in fiscal 2020 associated with the 2020 Program consisting of severance and employee related costs. As part of the 2020 Program, we are eliminating positions across several areas and job levels, with eliminated positions originating from the corporate offices in Springdale, Arkansas and Chicago, Illinois, as well as certain production facility and supply chain administrative positions. The majority of the positions have already been or are expected to be eliminated by the end of fiscal 2021.

In the fourth quarter of fiscal 2017, our Board of Directors approved a multi-year restructuring program (the “2017 Program”), which contributed to the Company’s overall strategy of financial fitness through increased operational effectiveness and overhead reduction. The 2017 Program resulted in cumulative pretax charges of $267 million which consisted of $117 million incremental costs to implement new technology and accelerated depreciation of technology assets, $53 million severance and employee related costs, $72 million technology impairment, and $25 million for contract termination costs. The 2017 Program concluded in fiscal 2020.

We recognized restructuring and related charges of $77 million during fiscal 2020, consisting of $60 million of severance and team member related costs from the 2020 Program and $17 million of incremental costs to implement new technology from the 2017 Program. For fiscal 2020, we recorded $17 million in Cost of Sales from the 2020 Program, and we recorded $60 million in Selling, General and Administrative in our Consolidated Statements of Income, of which $43 million is related to the 2020 Program and $17 million is related to the 2017 Program.

For fiscal 2019 and 2018 the restructuring and related charges related to the 2017 Program consisted of $41 million and $59 million, respectively, of incremental costs to implement new technology and accelerated depreciation of technology assets. These costs were recorded in Selling, General and Administrative in our Consolidated Statements of Income.

The following table reflects the pretax impact of restructuring and related charges during fiscal 2020, 2019 and 2018 and the charges to date, by reportable segment (in millions):

			2018			2019			2020			Total charges to date
Beef			$	4		$	1		$	9		$	22
Pork			1			1			3			8
Chicken			30			21			34			141
Prepared Foods			24			18			28			152
International/Other			—			—			3			4
Total restructuring and related charges, pretax			$	59		$	41		$	77		$	327

We do not anticipate future costs of the 2020 Program to be significant, however, as the Company continues to evaluate its business strategies and long-term growth targets, additional restructuring activities may occur.

Our restructuring liability was $37 million at October 3, 2020 and we had no restructuring liability at September 28, 2019. The change in the restructuring liability was due to additional charges of $77 million, net of $40 million primarily consisting of payments, during fiscal 2020.

NOTE 8: DEBT

The following table reflects major components of debt as of October 3, 2020, and September 28, 2019 (in millions):

			2020						2019
Revolving credit facility			$	—					$	70
Commercial Paper			—						1,000
Senior notes:
Notes due June 2020 ("2020 Notes")			—						350
Notes due August 2020 ("2020 Notes")			—						400
4.10% Notes due September 2020 ("2020 Notes")			—						280
2.25% Notes due August 2021			500						500
4.50% Senior notes due June 2022			1,000						1,000
3.90% Notes due September 2023			400						400
3.95% Notes due August 2024			1,250						1,250
4.00% Notes due March 2026 ("2026 Notes")			800						800
3.55% Notes due June 2027			1,350						1,350
7.00% Notes due January 2028			18						18
4.35% Notes due March 2029 ("2029 Notes")			1,000						1,000
6.13% Notes due November 2032			160						161
4.88% Notes due August 2034			500						500
5.15% Notes due August 2044			500						500
4.55% Notes due June 2047			750						750
5.10% Notes due September 2048 ("2048 Notes")			1,500						1,500
Discount on senior notes			(45)						(48)
Term loan:
Term loan facility due March 2022 (1.69% at October 3, 2020)			1,500						—
Other			216						216
Unamortized debt issuance costs			(60)						(65)
Total debt			11,339						11,932
Less current debt			548						2,102
Total long-term debt			$	10,791					$	9,830

Annual maturities of debt for the five fiscal years subsequent to October 3, 2020 are: 2021 - $550 million; 2022 - $2,543 million; 2023 - $431 million; 2024 - $1,269 million; 2025 - $12 million.

Revolving Credit Facility and Letters of Credit

We have a $1.75 billion revolving credit facility that supports short-term funding needs and serves as a backstop to our commercial paper program. The facility will mature and the commitments thereunder will terminate in March 2023. Amounts available for borrowing under this facility totaled $1.75 billion at October 3, 2020. At October 3, 2020, we had no borrowings and no outstanding letters of credit issued under this facility. At October 3, 2020 we had $101 million of bilateral letters of credit issued separately from the revolving credit facility, none of which were drawn upon. Our letters of credit are issued primarily in support of workers’ compensation insurance programs and other legal obligations. In the future, if any of our subsidiaries shall guarantee any of our material indebtedness, such subsidiary shall be required to guarantee the indebtedness, obligations and liabilities under this facility.

Commercial Paper Program

We have a commercial paper program under which we may issue unsecured short-term promissory notes (“commercial paper”) up to an aggregate maximum principal amount of $1 billion. As of October 3, 2020, we had no commercial paper outstanding. On April 1, 2020, we repaid the outstanding balance of the commercial paper using proceeds from the Term Loan Facility due March 2022. Our ability to access commercial paper in the future may be limited or its costs increased, due to market conditions which have been impacted in part by COVID-19.

2020 Notes

During fiscal 2020, we extinguished the $350 million outstanding balance of the senior notes due June 2020, the $400 million outstanding balance of the senior notes due August 2020 and the $278 million outstanding balance of the senior notes due September 2020 using cash on hand and other liquidity sources.

Term Loan Facility due March 2022

On March 27, 2020, we executed a new $1.5 billion term loan facility to refinance our commercial paper program, repay outstanding balances under our revolving credit facility and for general liquidity purposes. The term loan facility expires on March 27, 2022 and is subject to prepayment under certain conditions. Additionally, the term loan facility contains covenants that are similar to those contained in the revolving credit facility.

Debt Covenants

Our revolving credit and term loan facilities contain affirmative and negative covenants that, among other things, may limit or restrict our ability to: create liens and encumbrances; incur debt; merge, dissolve, liquidate or consolidate; make acquisitions and investments; dispose of or transfer assets; change the nature of our business; engage in certain transactions with affiliates; and enter into hedging transactions, in each case, subject to certain qualifications and exceptions. In addition, we are required to maintain minimum interest expense coverage and maximum debt-to-capitalization ratios.

Our senior notes also contain affirmative and negative covenants that, among other things, may limit or restrict our ability to: create liens; engage in certain sale/leaseback transactions; and engage in certain consolidations, mergers and sales of assets.

We were in compliance with all debt covenants at October 3, 2020.

NOTE 9: EQUITY

Capital Stock

We have two classes of capital stock, Class A Common stock, $0.10 par value (“Class A stock”) and Class B Common Stock, $0.10 par value (“Class B stock”). Holders of Class B stock may convert such stock into Class A stock on a share-for-share basis. Holders of Class B stock are entitled to 10 votes per share, while holders of Class A stock are entitled to one vote per share on matters submitted to shareholders for approval. As of October 3, 2020, Tyson Limited Partnership (the “TLP”) owned 99.985% of the outstanding shares of Class B stock and the TLP and members of the Tyson family owned, in the aggregate, 2.23% of the outstanding shares of Class A stock, giving them, collectively, control of approximately 71.06% of the total voting power of the outstanding voting stock.

The Class B stock is considered a participating security requiring the use of the two-class method for the computation of basic earnings per share. The two-class computation method for each period reflects the cash dividends paid for each class of stock, plus the amount of allocated undistributed earnings (losses) computed using the participation percentage, which reflects the dividend rights of each class of stock. Basic earnings per share were computed using the two-class method for all periods presented. The shares of Class B stock are considered to be participating convertible securities since the shares of Class B stock are convertible on a share-for-share basis into shares of Class A stock. Diluted earnings per share were computed assuming the conversion of the Class B shares into Class A shares as of the beginning of each period.

Dividends

Cash dividends cannot be paid to holders of Class B stock unless they are simultaneously paid to holders of Class A stock. The per share amount of the cash dividend paid to holders of Class B stock cannot exceed 90% of the cash dividend simultaneously paid to holders of Class A stock. We pay quarterly cash dividends to Class A and Class B shareholders. We paid Class A dividends per share of $1.68, $1.50, and $1.20 in fiscal 2020, 2019, and 2018, respectively. We paid Class B dividends per share of $1.51, $1.35, and $1.08 in fiscal 2020, 2019, and 2018, respectively. Effective November 13, 2020, the Board of Directors increased the quarterly dividend previously declared on August 6, 2020, to $0.445 per share on our Class A stock and $0.4005 per share on our Class B stock. The increased quarterly dividend is payable on December 15, 2020, to shareholders of record at the close of business on December 1, 2020.

Share Repurchases

As of October 3, 2020, 18.9 million shares remained available for repurchase under the Company's share repurchase program. The program has no fixed or scheduled termination date and the timing and extent to which we repurchase shares will depend upon, among other things, our working capital needs, markets, industry conditions, liquidity targets, limitations under our debt obligations and regulatory requirements. In addition to the share repurchase program, we purchase shares on the open market to fund certain obligations under our equity compensation plans.

A summary of cumulative share repurchases of our Class A stock for fiscal 2020, 2019 and 2018 is as follows (in millions):

						October 3, 2020												September 28, 2019												September 29, 2018
						Shares						Dollars						Shares						Dollars						Shares						Dollars
Shares repurchased:
Under share repurchase program						1.8						$	150					2.3						$	150					4.9						$	350
To fund certain obligations under equity compensation plans						0.7						57						1.4						102						1.0						77
Total share repurchases						2.5						$	207					3.7						$	252					5.9						$	427

NOTE 10: INCOME TAXES

Detail of the provision (benefit) for income taxes from continuing operations consists of the following (in millions):

			2020						2019						2018
Federal			$	477					$	314					$	(431)
State			98						38						114
Foreign			18						29						26
			$	593					$	381					$	(291)
Current			$	575					$	304					$	583
Deferred			18						77						(874)
			$	593					$	381					$	(291)

The reasons for the difference between the statutory federal income tax rate and our effective income tax rate from continuing operations are as follows:

			2020						2019						2018
Federal income tax rate			21.0		%				21.0		%				24.5		%
State income taxes			2.9						2.8						3.2
Unrecognized tax benefits, net			(0.1)						(6.7)						(0.1)
Impact of the Tax Act			—						—						(38.4)
Domestic production deduction			—						—						(1.7)
Impairment and sale of non-protein businesses			—						—						3.2
Other			(1.5)						(1.0)						(1.5)
			22.3		%				16.1		%				(10.8)		%

During fiscal 2020, state tax expense, net of federal benefit, was $78 million.

During fiscal 2019, changes in unrecognized tax benefits decreased tax expense by $160 million, and state tax expense, excluding changes in unrecognized tax benefits and net of federal tax benefit, was $66 million.

During fiscal 2018, the domestic production deduction decreased tax expense by $46 million, and state tax expense, net of federal tax benefit, was $86 million. The change in federal tax rate from the Tax Act resulted in a tax benefit of $996 million related to deferred tax remeasurement. Additionally, favorable timing differences deductible in fiscal 2018 at the 24.5% blended tax rate but reversing in future years at 21% resulted in a $33 million tax benefit. The impacts of the non-deductible impairment and sale of certain assets in our non-protein businesses increased the effective tax rate by 3.2%.

Approximately $2,605 million, $2,275 million and $2,637 million of income from continuing operations before income taxes for fiscal 2020, 2019 and 2018, respectively, were from our operations based in the United States.

On December 22, 2017, President Trump signed into law the Tax Act. The Tax Act made significant changes to the U.S. tax code including, but not limited to, (1) reducing the corporate federal income tax rate from 35% to 21% effective January 1, 2018, (2) a general elimination of U.S. federal income taxes on dividends from foreign subsidiaries, (3) the repeal of the domestic production activity deduction beginning with our fiscal 2019, and (4) new provisions designed to tax global intangible low-taxed income and to allow a deduction for foreign-derived intangible income beginning with our fiscal 2019.

Under generally accepted accounting principles (“U.S. GAAP”), specifically ASC Topic 740, Income Taxes, the tax effects of changes in tax laws must be recognized in the period in which the law is enacted, or December 22, 2017, for the Tax Act. ASC 740 also requires deferred tax assets and liabilities to be measured at the enacted tax rate expected to apply when temporary differences are to be realized or settled. Thus, at the date of enactment, the Company’s deferred taxes were remeasured based upon the new tax rates. The change in deferred taxes was recorded as an adjustment to our fiscal 2018 deferred tax provision.

We recognize deferred income taxes for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

The tax effects of major items recorded as deferred tax assets and liabilities as of October 3, 2020, and September 28, 2019, are as follows (in millions):

			2020												2019
			Assets						Liabilities						Assets						Liabilities
Property, plant and equipment			$	—					$	923					$	—					$	891
Intangible assets			—						1,591						—						1,624
ROU assets			—						154						—						—
Accrued expenses			341						—						297						—
Lease liabilities			129						—						—						—
Net operating loss and other carryforwards			137						—						99						—
Other			149						265						131						231
			$	756					$	2,933					$	527					$	2,746
Valuation allowance			$	(127)											$	(86)
Net deferred tax liability									$	2,304											$	2,305

At October 3, 2020, our gross state tax net operating loss carryforwards approximated $799 million, of which $747 million expire in fiscal years 2021 through 2039, and the remainder has no expiration. Gross foreign net operating loss carryforwards approximated $238 million, of which $104 million expire in fiscal years 2021 through 2032, and the remainder has no expiration. We also have tax credit carryforwards of approximately $48 million, of which $46 million expire in fiscal years 2021 through 2034, and the remainder has no expiration.

We have accumulated undistributed earnings of foreign subsidiaries aggregating approximately $318 million and $252 million at October 3, 2020, and September 28, 2019, respectively. The Tax Act generally eliminates U.S. federal income taxes on dividends from foreign subsidiaries after December 31, 2017. As a result, our intention is that excess cash held by our foreign subsidiaries that is not subject to regulatory restrictions will be repatriated net of applicable withholding taxes which are expected to be immaterial. The remainder of accumulated undistributed earnings are expected to be indefinitely reinvested outside of the United States. If these earnings were distributed in the form of dividends or otherwise, we could be subject to state income taxes and withholding taxes payable to various foreign countries. Due to the uncertainty of the manner in which the undistributed earnings would be brought back to the United States and the tax laws in effect at that time, it is not currently practicable to estimate the tax liability that might be payable on the repatriation of these foreign earnings; however, we do not expect any tax due to be material.

The following table summarizes the activity related to our gross unrecognized tax benefits at October 3, 2020, September 28, 2019, and September 29, 2018 (in millions):

			2020						2019						2018
Balance as of the beginning of the year			$	169					$	308					$	316
Increases related to current year tax positions			21						20						19
Increases related to prior year tax positions			5						21						8
Reductions related to prior year tax positions			(9)						(17)						(18)
Reductions related to settlements			(3)						(9)						(8)
Reductions related to expirations of statutes of limitations			(18)						(154)						(9)
Balance as of the end of the year			$	165					$	169					$	308

The amount of unrecognized tax benefits, if recognized, that would impact our effective tax rate was $118 million at October 3, 2020 and $116 million at September 28, 2019. We classify interest and penalties on unrecognized tax benefits as income tax expense. At October 3, 2020, and September 28, 2019, before tax benefits, we had $51 million and $46 million, respectively, of accrued interest and penalties on unrecognized tax benefits.

As of October 3, 2020, certain United States federal income tax returns are subject to examination for fiscal years 2013 through 2019. We are also subject to income tax examinations by major state and foreign jurisdictions for fiscal years 2015 through 2019. We do not expect material changes to our unrecognized tax benefits during the next twelve months.

NOTE 11: OTHER INCOME AND CHARGES

During fiscal 2019, we recognized $48 million of net periodic pension and postretirement benefit cost, excluding the service cost component, and pension plan settlements which were recorded in the Consolidated Statements of Income in Other, net. We recognized $20 million of equity earnings in joint ventures which was also recorded in the Consolidated Statements of Income in Other, net. Additionally, we sold an investment for $79 million in net proceeds resulting in a pretax gain of $55 million, which was recorded in the Consolidated Statements of Income in Other, net.

During fiscal 2018, we recognized a one-time cash bonus to our hourly frontline team members of $109 million using incremental cash savings from the Tax Act, which was predominantly recorded in the Consolidated Statements of Income in Cost of Sales. Additionally, we recorded $11 million of insurance proceeds, $21 million of equity earnings in joint ventures and $1 million in net foreign currency exchange gains, which were recognized in the Consolidated Statements of Income in Other, net.

Additionally, in accordance with recently adopted accounting guidance, we have retrospectively recognized $23 million of net periodic pension and postretirement benefit credit, excluding the service cost component for fiscal 2018, and recorded the amount in the Consolidated Statements of Income in Other, net.

NOTE 12: EARNINGS PER SHARE

The earnings and weighted average common shares used in the computation of basic and diluted earnings per share are as follows:

			in millions, except per share data
			2020						2019						2018
Numerator:
Net income			$	2,071					$	1,993					$	2,973
Less: Net income attributable to noncontrolling interests			10						13						3
Net income attributable to Tyson			2,061						1,980						2,970
Less dividends declared:
Class A			508						465						378
Class B			108						99						80
Undistributed earnings			$	1,445					$	1,416					$	2,512
Class A undistributed earnings			$	1,189					$	1,166					$	2,070
Class B undistributed earnings			256						250						442
Total undistributed earnings			$	1,445					$	1,416					$	2,512
Denominator:
Denominator for basic earnings per share:
Class A weighted average shares			293						293						295
Class B weighted average shares, and shares under if-converted method for diluted earnings per share			70						70						70
Effect of dilutive securities:
Stock options and restricted stock			2						3						4
Denominator for diluted earnings per share – adjusted weighted average shares and assumed conversions			365						366						369
Net Income Per Share Attributable to Tyson:
Class A Basic			$	5.79					$	5.56					$	8.29
Class B Basic			$	5.21					$	4.99					$	7.46
Diluted			$	5.64					$	5.40					$	8.04
Dividends Declared Per Share:
Class A			$	1.725					$	1.575					$	1.275
Class B			$	1.553					$	1.418					$	1.148

Approximately 2 million of our stock-based compensation shares were antidilutive for fiscal 2020 and approximately 1 million for fiscal 2019 and 2018. These shares were not included in the dilutive earnings per share calculation.

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

We allocate undistributed earnings based upon a 1 to 0.9 ratio per share to Class A stock and Class B stock, respectively. We allocate undistributed earnings based on this ratio due to historical dividend patterns, voting control of Class B shareholders and contractual limitations of dividends to Class B stock.

NOTE 13: DERIVATIVE FINANCIAL INSTRUMENTS

Our business operations give rise to certain market risk exposures mostly due to changes in commodity prices, foreign currency exchange rates and interest rates. We manage a portion of these risks through the use of derivative financial instruments to reduce our exposure to commodity price risk, foreign currency risk and interest rate risk. Our risk management programs are periodically reviewed by our Board of Directors' Audit Committee. These programs and risks are monitored by senior management and may be revised as market conditions dictate. Our current risk management programs utilize various industry-standard models that take into account the implicit cost of hedging. Credit risks associated with our derivative contracts are not significant as we minimize counterparty exposure by dealing with credit-worthy counterparties and utilizing exchange traded instruments, margin accounts or letters of credit. Additionally, our derivative contracts are mostly short-term in duration and we generally do not make use of credit-risk-related contingent features. No significant concentrations of credit risk existed at October 3, 2020.

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

												in millions, except soybean meal tons
						Metric						October 3, 2020						September 28, 2019
Commodity:
Corn						Bushels						43						111
Soybean Meal						Tons						428,300						1,078,800
Live Cattle						Pounds						234						14
Lean Hogs						Pounds						283						309
Foreign Currency						United States dollar						$	536					$	148
Interest Rate Swaps						Average monthly debt						$	—					$	400

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

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

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

Cash flow hedges

Derivative instruments are designated as hedges against changes in the amount of future cash flows related to procurement of certain commodities utilized in our production processes as well as interest rates to our variable rate debt. For the derivative instruments we designate and qualify as a cash flow hedge, the effective portion of the gain or loss on the derivative is reported as a component of other comprehensive income (“OCI”) and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. Gains and losses representing hedge ineffectiveness are recognized in earnings in the current period. Ineffectiveness related to our cash flow hedges was not significant during fiscal 2020, 2019 and 2018. As of October 3, 2020, we have net pretax losses of $1 million for our commodity contracts, which are expected to be reclassified into earnings within the next 12 months. Additionally, we have $16 million of realized losses related to treasury rate locks in connection with the issuance of the 2026, 2029 and 2048 Notes, which will be reclassified to earnings over the lives of these notes. During fiscal 2020, 2019 and 2018, we did not reclassify significant pretax gains or losses into earnings as a result of the discontinuance of cash flow hedges. The following table sets forth the pretax impact of cash flow hedge derivative instruments in Other Comprehensive Income (in millions):

Gain (Loss) Recognized in OCI on Derivatives			2020						2019						2018
Cash Flow Hedge – Derivatives designated as hedging instruments:
Commodity contracts			$	(17)					$	(15)					$	(21)
Interest rate hedges			—						(24)						1
Total			$	(17)					$	(39)					$	(20)

Fair value hedges

We designate certain derivative contracts as fair value hedges of firm commitments to purchase livestock for harvest. Our objective of these hedges is to minimize the risk of changes in fair value created by fluctuations in commodity prices associated with fixed price livestock firm commitments. For these derivative instruments we designate and qualify as a fair value hedge, the gain or loss on the derivative, as well as the offsetting gain or loss on the hedged item attributable to the hedged risk, are recognized in earnings in the same period. We include the gain or loss on the hedged items (i.e., livestock purchase firm commitments) in the same line item, Cost of Sales, as the offsetting gain or loss on the related livestock forward position. Ineffectiveness related to our fair value hedges was not significant during fiscal 2020, 2019 and 2018. The carrying amount of fair value hedge (assets) liabilities as of fiscal 2020, 2019 and 2018 were as follows (in millions):

Consolidated Balance Sheets Classification			2020						2019						2018
Inventory			6						(19)						4

Undesignated positions

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

Reclassification to Earnings

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

Consolidated Statements of Income Classification			2020						2019						2018
Cost of Sales			$	37,801					$	37,383					$	34,956
Interest Expense			485						462						350
Other, net			(131)						(55)						(56)

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

Consolidated Statements of Income Classification						2020						2019						2018
Sales			Gain (Loss) on derivatives not designated as hedging instruments:
			Commodity contracts			$	—					$	(23)					$	18
Cost of Sales			Gain (Loss) on cash flow hedges reclassified from OCI to Earnings:
			Commodity contracts			$	(24)					$	(18)					$	(12)
			Gain (Loss) on fair value hedges:
			Commodity contracts (a)			135						42						12
			Gain (Loss) on derivatives not designated as hedging instruments:
			Commodity contracts			(103)						2						(33)
Total						$	8					$	26					$	(33)
Interest Expense			Gain (Loss) on cash flow hedges reclassified from OCI to Earnings:
			Interest rate contracts			$	(6)					$	(1)					$	—
Other, net			Gain (Loss) on derivatives not designated as hedging instruments:
			Foreign exchange contracts			$	(5)					$	8					$	(3)

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

The fair value of all outstanding derivative instruments in the Consolidated Balance Sheets are included in Note 14: Fair Value Measurements.

NOTE 14: FAIR VALUE MEASUREMENTS

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

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

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

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

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

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

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

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

Assets and Liabilities Measured at Fair Value on a Recurring Basis

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

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

October 3, 2020			Level 1						Level 2						Level 3						Netting (a)						Total
Other Current Assets:
Derivative financial instruments:
Designated as hedges			$	—					$	4					$	—					$	(2)					$	2
Undesignated			—						96						—						(51)						45
Available for sale securities:
Current			—						—						—						—						—
Other assets:
Available for sale securities:
Non-current			—						55						53						—						108
Deferred compensation assets			19						336						—						—						355
Total assets			$	19					$	491					$	53					$	(53)					$	510
Other Current Liabilities:
Derivative financial instruments:
Designated as hedges			$	—					$	10					$	—					$	(10)					$	—
Undesignated			—						74						—						(59)						15
Total liabilities			$	—					$	84					$	—					$	(69)					$	15

September 28, 2019			Level 1						Level 2						Level 3						Netting (a)						Total
Other Current Assets:
Derivative financial instruments:
Designated as hedges			$	—					$	26					$	—					$	(3)					$	23
Undesignated			—						58						—						(5)						53
Available for sale securities:
Current			—						—						1						—						1
Other Assets:
Available for sale securities:
Non-current			—						51						51						—						102
Deferred Compensation assets			7						311						—						—						318
Total assets			$	7					$	446					$	52					$	(8)					$	497
Other Current Liabilities:
Derivative financial instruments:
Designated as hedges			$	—					$	17					$	—					$	(13)					$	4
Undesignated			—						93						—						(90)						3
Total liabilities			$	—					$	110					$	—					$	(103)					$	7

(a) Our derivative assets and liabilities are presented in our Consolidated Balance Sheets on a net basis when a legally enforceable master netting arrangement exists between the counterparty to a derivative contract and us. Additionally, at October 3, 2020, and September 28, 2019, we had $16 million and $95 million, respectively, of net cash collateral posted with various counterparties where master netting arrangements exist and held no cash collateral.

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

			October 3, 2020						September 28, 2019
Balance at beginning of year			$	52					$	51
Total realized and unrealized gains (losses):
Included in earnings			—						—
Included in other comprehensive income (loss)			1						1
Purchases			17						20
Issuances			—						—
Settlements			(17)						(20)
Balance at end of year			$	53					$	52

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

Derivative Assets and Liabilities: Our derivative financial instruments primarily include exchange-traded and over-the-counter contracts which are further described in Note 13: Derivative Financial Instruments. We record our derivative financial instruments at fair value using quoted market prices, adjusted where necessary for credit and non-performance risk and internal models that use readily observable market inputs as their basis, including current and forward market prices and rates. We classify these instruments in Level 2 when quoted market prices can be corroborated utilizing observable current and forward commodity market prices on active exchanges or observable market transactions.

Available for Sale Securities: Our investments in marketable debt securities are classified as available-for-sale and are reported at fair value based on pricing models and quoted market prices adjusted for credit and non-performance risk. Short-term investments with maturities of less than 12 months are included in Other current assets in the Consolidated Balance Sheets and primarily include certificates of deposit and commercial paper. All other marketable debt securities are included in Other Assets in the Consolidated Balance Sheets and have maturities ranging up to 40 years. We classify our investments in U.S. government, U.S. agency, certificates of deposit and commercial paper debt securities as Level 2 as fair value is generally estimated using discounted cash flow models that are primarily industry-standard models that consider various assumptions, including time value and yield curve as well as other readily available relevant economic measures. We classify certain corporate, asset-backed and other debt securities as Level 3 as there is limited activity or less observable inputs into valuation models, including current interest rates and estimated prepayment, default and recovery rates on the underlying portfolio or structured investment vehicle. Significant changes to assumptions or unobservable inputs in the valuation of our Level 3 instruments would not have a significant impact to our consolidated financial statements.

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

			October 3, 2020																		September 28, 2019
			Amortized Cost Basis						Fair Value						Unrealized Gain/(Loss)						Amortized Cost Basis						Fair Value						Unrealized Gain/(Loss)
Available for Sale Securities:
Debt Securities:
United States Treasury and Agency			$	55					$	55					$	—					$	51					$	51					$	—
Corporate and Asset-Backed			51						53						2						51						52						1

Unrealized holding gains (losses), net of tax, are excluded from earnings and reported in OCI until the security is settled or sold. On a quarterly basis, we evaluate whether losses related to our available-for-sale securities are temporary in nature. Losses on equity securities are recognized in earnings if the decline in value is judged to be other than temporary. If losses related to our debt securities are determined to be other than temporary, the loss would be recognized in earnings if we intend, or more likely than not will be required, to sell the security prior to recovery.

For debt securities in which we have the intent and ability to hold until maturity, losses determined to be other than temporary would remain in OCI, other than expected credit losses which are recognized in earnings. We consider many factors in determining whether a loss is temporary, including the length of time and extent to which the fair value has been below cost, the financial condition and near-term prospects of the issuer and our ability and intent to hold the investment for a period of time sufficient to allow for any anticipated recovery. We recognized no other than temporary impairment in earnings for fiscal 2020 and fiscal 2019. No other than temporary losses were deferred in OCI as of October 3, 2020, and September 28, 2019.

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

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

In addition to assets and liabilities that are recorded at fair value on a recurring basis, we record assets and liabilities at fair value on a nonrecurring basis. Generally, assets are recorded at fair value on a nonrecurring basis as a result of impairment charges.

In fiscal 2019, we recorded a $41 million impairment charge related to a Prepared Foods business held for sale, due to our estimate of the business' fair value based on current expected net sales proceeds. The impairment charge was recorded in Cost of Sales in our Consolidated Statement of Income for fiscal 2019. Our valuation included unobservable Level 3 inputs and was based on expected sales proceeds from a competitive bidding process and ongoing discussions with potential buyers.

In fiscal 2018, we recorded $101 million of impairment charges related to the expected sale of non-protein businesses held for sale, due to revised estimates of the businesses' fair value based on current expected net sales proceeds at the time of the impairment. These charges were recorded in Cost of Sales in our Consolidated Statement of Income, and primarily consisted of Goodwill previously classified within Assets held for sale. Our valuation included unobservable Level 3 inputs and was based on expected sales proceeds from a competitive bidding process and ongoing discussions with potential buyers.

Other Financial Instruments

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

			October 3, 2020												September 28, 2019
			Fair Value						Carrying Value						Fair Value						Carrying Value
Total Debt			$	12,982					$	11,339					$	12,978					$	11,932

Concentrations of Credit Risk

Our financial instruments exposed to concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable. Our cash equivalents are in high quality securities placed with major banks and financial institutions. Concentrations of credit risk with respect to receivables are limited due to the large number of customers and their dispersion across geographic areas. We perform periodic credit evaluations of our customers’ financial condition and generally do not require collateral. At October 3, 2020, and September 28, 2019, 16.5% and 16.2%, respectively, of our net accounts receivable balance was due from Walmart Inc. No other single customer or customer group represented greater than 10% of net accounts receivable.

NOTE 15: STOCK-BASED COMPENSATION

We issue shares under our stock-based compensation plans by issuing Class A stock from treasury. The total number of shares available for future grant under the Tyson Foods, Inc. 2000 Stock Incentive Plan (“Incentive Plan”) was 9,979,081 at October 3, 2020.

Stock Options

Shareholders approved the Incentive Plan in January 2001. The Incentive Plan is administered by the Compensation and Leadership Development Committee of the Board of Directors (“Compensation Committee”). The Incentive Plan includes provisions for granting incentive stock options for shares of Class A stock at a price not less than the fair value at the date of grant. Nonqualified stock options may be granted at a price equal to or more than the fair value of Class A stock on the date the option is granted. Stock options under the Incentive Plan generally become exercisable ratably over three years from the date of grant and must be exercised within 10 years from the date of grant. Our policy is to recognize compensation expense on a straight-line basis over the requisite service period for the entire award. Forfeitures are recognized as they occur.

			Shares Under Option						Weighted Average Exercise Price Per Share						Weighted Average Remaining Contractual Life (in Years)						Aggregate Intrinsic Value (in millions)
Outstanding, September 28, 2019			5,362,672						$	54.03
Exercised			(661,549)						48.21
Forfeited or expired			(265,237)						76.06
Granted			1,515,587						90.04
Outstanding, October 3, 2020			5,951,473						$	62.86					6.8						$	37
Exercisable, October 3, 2020			3,231,765						$	50.96					5.4						$	37

The weighted average grant-date fair value of options granted in fiscal 2020, 2019 and 2018 was $16.77, $11.35 and $18.31, respectively. The fair value of each option grant is established on the date of grant using a binomial lattice method. We use historical volatility for a period of time comparable to the expected life of the option to determine volatility assumptions. Expected life is calculated based on the contractual term of each grant and takes into account the historical exercise and termination behavior of participants. Risk-free interest rates are based on the five-year Treasury bond rate. Assumptions used in the fair value calculation are as of the grant dates and are outlined in the following table.

			2020						2019						2018
Expected life (in years)			4.3						4.3						5.9
Risk-free interest rate			1.6		%				2.8		%				2.1		%
Expected volatility			25.7		%				25.4		%				23.5		%
Expected dividend yield			2.0		%				2.5		%				1.5		%

We recognized stock-based compensation expense related to stock options, net of income taxes, of $16 million, $16 million and $13 million for fiscal 2020, 2019 and 2018, respectively. The related tax benefit for fiscal 2020, 2019 and 2018 was $4 million, $3 million and $6 million, respectively. We had 1.3 million, 1.2 million and 2.2 million options vest in fiscal 2020, 2019 and 2018, respectively, with a grant date fair value of $17 million, $18 million and $27 million, respectively.

In fiscal 2020, 2019 and 2018, we received cash of $30 million, $99 million and $102 million, respectively, for the exercise of stock options. Shares are issued from treasury for stock option exercises. The related tax benefit realized from stock options exercised during fiscal 2020, 2019 and 2018, was $6 million, $21 million and $30 million, respectively. The total intrinsic value of options exercised in fiscal 2020, 2019 and 2018, was $21 million, $79 million and $103 million, respectively. Cash flows resulting from tax deductions in excess of the compensation cost of those options (excess tax deductions) are classified as financing cash flows. We realized $4 million, $14 million and $20 million related to excess tax deductions during fiscal 2020, 2019 and 2018, respectively.

As of October 3, 2020, we had $21 million of total unrecognized compensation cost related to stock option plans that will be recognized over a weighted average period of 1.3 years.

Restricted Stock

We issue restricted stock at the market value as of the date of grant, with restrictions expiring over periods through fiscal 2023. Unearned compensation is recognized over the vesting period for the particular grant using a straight-line method.

			Number of Shares						Weighted Average Grant- Date Fair Value Per Share						Weighted Average Remaining Contractual Life (in Years)						Aggregate Intrinsic Value (in millions)
Nonvested, September 28, 2019			1,662,078						$	64.55
Granted			628,844						88.96
Dividends			44,704						74.51
Vested			(556,632)						60.30
Forfeited			(116,585)						74.18
Nonvested, October 3, 2020			1,662,409						$	74.79					1.3						$	99

As of October 3, 2020, we had $49 million of total unrecognized compensation cost related to restricted stock awards that will be recognized over a weighted average period of 1.8 years.

We recognized stock-based compensation expense related to restricted stock, net of income taxes, of $36 million, $26 million and $22 million for fiscal 2020, 2019 and 2018, respectively. The related tax benefit for fiscal 2020, 2019 and 2018 was $9 million, $8 million and $9 million, respectively. We had 0.6 million, 0.5 million and 0.6 million restricted stock awards vest in fiscal 2020, 2019 and 2018, respectively, with a grant date fair value of $34 million, $29 million and $27 million, respectively.

Performance-Based Shares

We award performance-based shares of our Class A stock to certain team members. These awards are typically granted once a year. Performance-based shares vest based upon the passage of time and the achievement of performance or market performance criteria, ranging from 0% to 200%, as determined by the Compensation Committee prior to the date of the award. Vesting periods for these awards are three years. We review progress toward the attainment of the performance criteria each quarter during the vesting period. When it is probable the minimum performance criteria for an award will be achieved, we begin recognizing the expense equal to the proportionate share of the total fair value of the Class A stock price on the grant date. The total expense recognized over the duration of performance awards will equal the Class A stock price on the date of grant multiplied by the number of shares ultimately awarded based on the level of attainment of the performance criteria. For grants with market performance criteria, the fair value is determined on the grant date and is calculated using the same inputs for expected volatility, expected dividend yield, and risk-free rate as stock options, noted above, with a duration of three years. The total expense recognized over the duration of the award will equal the fair value, regardless if the market performance criteria is met.

The following table summarizes the performance-based shares at the maximum award amounts based upon the respective performance share agreements. Actual shares that will vest depend on the level of attainment of the performance-based criteria.

			Number of Shares						Weighted Average Grant- Date Fair Value Per Share						Weighted Average Remaining Contractual Life (in Years)						Aggregate Intrinsic Value (in millions)
Nonvested, September 28, 2019			2,027,059						$	51.03
Granted			726,388						67.55
Vested			(344,870)						46.29
Forfeited			(445,440)						52.59
Nonvested, October 3, 2020			1,963,137						$	57.62					1.2						$	116

We recognized stock-based compensation expense related to performance shares, net of income taxes, of $18 million, $16 million and $12 million for fiscal 2020, 2019 and 2018, respectively. The related tax benefit for fiscal 2020, 2019 and 2018 was $4 million, $4 million and $5 million, respectively. As of October 3, 2020, we had $33 million of total unrecognized compensation based upon our progress toward the attainment of criteria related to performance-based share awards that will be recognized over a weighted average period of 1.9 years.

NOTE 16: PENSIONS AND OTHER POSTRETIREMENT BENEFITS

At October 3, 2020, we had six defined benefit pension plans consisting of two frozen and noncontributory funded qualified plans and four unfunded non-qualified plans. Additionally, we have two plans that were terminated during fiscal 2020, which have residual plan assets of $27 million and no benefit obligations as of October 3, 2020. The benefits provided under these plans are based on a formula using years of service and either a specified benefit rate or compensation level. The non-qualified defined benefit plans are for certain contracted officers and use a formula based on years of service and final average salary. We also have other postretirement benefit plans for which substantially all of our team members may receive benefits if they satisfy applicable eligibility criteria. The postretirement healthcare plans are contributory with participants’ contributions adjusted when deemed necessary.

We have defined contribution retirement programs for various groups of team members. We recognized expenses of $103 million, $97 million and $84 million in fiscal 2020, 2019 and 2018, respectively.

We use a fiscal year end measurement date for our defined benefit plans and other postretirement plans. We recognize the effect of actuarial gains and losses into earnings immediately for other postretirement plans rather than amortizing the effect over future periods. Other postretirement benefits include postretirement medical costs and life insurance.

During fiscal 2017, we issued a notice of intent to terminate two of our qualified pension plans with a termination date of April 30, 2017. The settlements of the terminated plans occurred during fiscal 2019, through purchased annuities, and we incurred a $19 million settlement charge at final liquidation.

During fiscal 2019, we issued a notice of intent to terminate three other qualified pension plans. The settlements of the terminated plans occurred during fiscal 2020, through purchased annuities, and we incurred settlement gains of approximately $112 million related to the plan terminations. No significant contributions to purchase annuities at the time of settlement were necessary. Due to favorable annuity pricing at the time of settlement, approximately $52 million in residual plan assets remained in the plan following the annuity purchase. A portion of these funds have been transferred to a qualified replacement plan during fiscal 2020, with the remaining funds to be transferred in fiscal 2021.

Benefit Obligations and Funded Status

The following table provides a reconciliation of the changes in the plans’ benefit obligations, assets and funded status at October 3, 2020, and September 28, 2019 (in millions):

			Pension Benefits																								Other Postretirement
			Qualified												Non-Qualified												Benefits
			2020						2019						2020						2019						2020						2019
Change in benefit obligation
Benefit obligation at beginning of year			$	1,478					$	1,392					$	239					$	220					$	77					$	28
Service cost			—						—						—						1						2						2
Interest cost			14						56						8						9						1						1
Plan amendments			—						—						—						—						(6)						4
Actuarial (gain)/loss			—						154						5						17						4						6
Benefits paid			(38)						(77)						(14)						(12)						(4)						(4)
Business Acquisition			—						2						—						4						—						13
Plan Terminations			(1,423)						(49)						—						—						—						—
Other			—						—						—						—						—						27
Benefit obligation at end of year			31						1,478						238						239						74						77
Change in plan assets
Fair value of plan assets at beginning of year			1,477						1,450						—						—						—						—
Actual return on plan assets			(14)						146						—						—						—						—
Employer contributions			7						1						12						12						4						4
Benefits paid			(38)						(77)						(12)						(12)						(4)						(4)
Business Acquisition			—						2						—						—						—						—
Plan Terminations			(1,397)						(45)						—						—						—						—
Fair value of plan assets at end of year			35						1,477						—						—						—						—
Funded status			$	4					$	(1)					$	(238)					$	(239)					$	(74)					$	(77)

Amounts recognized in the Consolidated Balance Sheets consist of (in millions):

			Pension Benefits																								Other Postretirement
			Qualified												Non-Qualified												Benefits
			2020						2019						2020						2019						2020						2019
Other assets			$	4					$	16					$	—					$	—					$	—					$	—
Other current liabilities			—						—						(12)						(12)						(3)						(3)
Other liabilities			—						(17)						(226)						(227)						(71)						(74)
Total assets (liabilities)			$	4					$	(1)					$	(238)					$	(239)					$	(74)					$	(77)

Amounts recognized in Accumulated Other Comprehensive Income consist of (in millions):

			Pension Benefits																								Other Postretirement
			Qualified												Non-Qualified												Benefits
			2020						2019						2020						2019						2020						2019
Accumulated other comprehensive (income)/loss:
Actuarial (gain) loss			$	4					$	(53)					$	45					$	46					$	24					$	27
Prior service (credit) cost			—						—						3						4						(37)						(42)
Total accumulated other comprehensive (income)/loss:			$	4					$	(53)					$	48					$	50					$	(13)					$	(15)

We had four pension plans at October 3, 2020 and five pension plans at September 28, 2019, that had an accumulated benefit obligation in excess of plan assets. Plans with accumulated benefit obligations in excess of plan assets are as follows (in millions):

			Pension Benefits
			Qualified												Non-Qualified
			2020						2019						2020						2019
Projected benefit obligation			$	—					$	381					$	238					$	239
Accumulated benefit obligation			—						381						238						239
Fair value of plan assets			—						364						—						—

The accumulated benefit obligation for all qualified pension plans was $31 million and $1,478 million at October 3, 2020, and September 28, 2019, respectively.

Net Periodic Benefit Cost (Credit)

Components of net periodic benefit cost (credit) for pension and postretirement benefit plans recognized in the Consolidated Statements of Income are as follows (in millions):

			Pension Benefits																																				Other Postretirement
			Qualified																		Non-Qualified																		Benefits
			2020						2019						2018						2020						2019						2018						2020						2019						2018
Service cost			$	—					$	—					$	—					$	—					$	1					$	7					$	2					$	2					$	1
Interest cost			14						56						55						8						9						8						1						1						1
Expected return on plan assets			(17)						(57)						(62)						—						—						—						—						—						—
Amortization of prior service cost			—						—						1						1						1						1						(6)						(2)						(25)
Recognized actuarial loss (gain), net			—						(1)						—						3						2						3						4						5						(5)
Recognized settlement loss (gain)			(112)						19						—						—						—						—						—						—						—
Net periodic benefit cost (credit)			$	(115)					$	17					$	(6)					$	12					$	13					$	19					$	1					$	6					$	(28)

Each of the components other than the service cost component were recorded in the Consolidated Statements of Income in Other, net. As of October 3, 2020, we expect no amounts to be reclassified into earnings within the next 12 months related to net periodic benefit cost (credit) for the qualified pension plans, excluding pending settlements. As of October 3, 2020, the amounts expected to be reclassified into earnings within the next 12 months related to net periodic benefit cost (credit) for the non-qualified pension plans and the other postretirement benefit plans are not significant.

Assumptions

Weighted average assumptions are as follows:

			Pension Benefits																																				Other Postretirement
			Qualified																		Non-Qualified																		Benefits
			2020						2019						2018						2020						2019						2018						2020						2019						2018
Discount rate to determine net periodic benefit cost			3.23		%				4.26		%				3.85		%				3.19		%				4.31		%				3.88		%				2.68		%				3.99		%				3.39		%
Discount rate to determine benefit obligations			1.70		%				3.23		%				4.26		%				2.63		%				3.16		%				4.31		%				1.95		%				2.68		%				4.11		%
Rate of compensation increase			n/a						n/a						n/a						n/a						n/a						2.53		%				n/a						n/a						n/a
Expected return on plan assets			3.50		%				3.50		%				4.20		%				n/a						n/a						n/a						n/a						n/a						n/a

To determine the expected return on plan assets assumption, we first examined historical rates of return for the various asset classes within the plans. We then determined a long-term projected rate-of-return based on expected returns. Our discount rate assumptions used to account for pension and other postretirement benefit plans reflect the rates at which the benefit obligations could be effectively settled. The discount rates for two of our plans that were settled in fiscal 2020 were determined using a composite rate comprised of an annuity purchase rate and a lump sum conversion discount rate based on the portions of the populations that were purchased under the annuity contract with the insurance company versus those who elected lump sums, respectively. The discount rates for our other plans were determined using a cash flow matching technique whereby the rates of a yield curve, developed from high-quality debt securities, were applied to the benefit obligations to determine the appropriate discount rate. For all periods presented, all pension and other postretirement benefit plans used the RP-2014 mortality tables.

We have eight other postretirement benefit plans, of which five are healthcare and life insurance related. Two of these plans, with benefit obligations totaling $16 million at October 3, 2020, were not impacted by healthcare cost trend rates as one consists of fixed annual payments and one is life insurance related. One of the healthcare plans, with benefit obligations less than $1 million at October 3, 2020, was not impacted by healthcare cost trend rates due to previous plan amendments. The remaining two plans, with benefit obligations totaling $8 million and $3 million, at October 3, 2020, utilized assumed healthcare cost trend rates of 7.0% and 6.8%, respectively. The healthcare cost trend rates will be grading down to an ultimate rate of 4.5% and 5.0%, respectively in 2027. A one-percentage-point change in assumed health-care cost trend rates would not have a significant effect on the postretirement benefit obligation.

Plan Assets

The asset allocation for domestic pension plan assets at October 3, 2020 was 100% cash due to the intent to terminate the remaining domestic qualified pension plan in the next year. Additionally, one of our foreign subsidiary pension plans had $32 million in plan assets held in an insurance trust at October 3, 2020.

At October 3, 2020, 7% of plan assets were held in cash and cash equivalents (Level 1) and 93% were held in an insurance trust (Level 3). At September 28, 2019, 36% of plan assets were held in cash and cash equivalents (Level 1), 61% in corporate and municipal bonds (Level 2) and 3% were held in an insurance trust (Level 3).

Contributions

Our policy is to fund at least the minimum contribution required to meet applicable federal employee benefit and local tax laws. In our sole discretion, we may from time to time fund additional amounts. Expected contributions to pension plans for fiscal 2021 are approximately $13 million. For fiscal 2020, 2019 and 2018, we funded $19 million, $13 million and $29 million, respectively, to pension plans.

Estimated Future Benefit Payments

The following benefit payments are expected to be paid (in millions):

			Pension Benefits												Other Postretirement
			Qualified						Non-Qualified						Benefits
2021			$	—					$	12					$	4
2022			—						12						3
2023			—						13						3
2024			2						13						3
2025			1						13						3
2026-2030			3						63						10

The above benefit payments for other postretirement benefit plans are not expected to be offset by Medicare Part D subsidies in fiscal 2021.

Multi-Employer Plans

Additionally, we participate in three multi-employer plans that provide defined benefits to certain team members covered by collective bargaining agreements. Such plans are usually administered by a board of trustees composed of the management of the participating companies and labor representatives.

The risks of participating in multi-employer plans are different from single-employer plans. Assets contributed to the multi-employer plan by one employer may be used to provide benefits to team members of other participating employers. If a participating employer stops contributing to the plan, the unfunded obligation of the plan may be borne by the remaining participating employers. If we stop participating in a plan, we may be required to pay that plan an amount based on the underfunded status of the plan, referred to as a withdrawal liability.

The net pension cost of the plans is equal to the annual contributions determined in accordance with the provisions of negotiated labor contracts. Contributions to the plans were $1 million in fiscal 2020 and $2 million in fiscal 2019. Assets contributed to such plans are not segregated or otherwise restricted to provide benefits only to our team members. The future cost of the plans is dependent on a number of factors including the funded status of the plans and the ability of the other participating companies to meet ongoing funding obligations.

Our participation in these multi-employer plans for fiscal 2020 is outlined below. The EIN/Pension Plan Number column provides the Employer Identification Number (“EI”) and the three-digit plan number. Unless otherwise noted, the most recent Pension Protection Act (“PPA”) zone status available in fiscal 2020 and fiscal 2019 is for the plan's year beginning January 1, 2020, and 2019, respectively. The zone status is based on information that we have received from the plan and is certified by the plan's actuaries. Among other factors, plans in the red zone are generally less than 65 percent funded. Plans that are critical and declining status are projected to have an accumulated funding deficiency. The FIP/RP Status column indicates plans for which a financial improvement plan (“FIP”) or rehabilitation plan (“RP”) is either pending or has been implemented. The last column lists the expiration date of the collective-bargaining agreements to which the plan is subject. During fiscal 2019, as part of our acquisition of Keystone Foods, we acquired an interest in four multi-employer plans. Our interest in two of these plans was subsequently disposed of in conjunction with the divestiture of a chicken further processing facility acquired during the Keystone Foods acquisition. See Note 3: Acquisitions and Divestitures for additional information on these transactions. Additionally, during fiscal 2019, we initiated our withdrawal from the Retail, Wholesale and Department Store International Union and Industry Pension Fund (“RWDSU Fund”). As a result of our withdrawal from the RWDSU Fund, we recorded a $15 million termination liability. We received the withdrawal letter from the RWDSU fund during fiscal 2020 and reduced the termination liability accordingly to $10 million. Subsequently during fiscal 2020, we initiated our withdrawal from the Pension Fund of Local 227. As a result of our withdrawal from the Pension Fund of Local 227, we recorded a $1 million termination liability.

In addition to regular contributions, we could be obligated to pay additional contributions (known as complete or partial withdrawal liabilities) if it has unfunded vested benefits.

									PPA Zone Status												FIP/RP Status						Contributions (in millions)												Surcharge Imposed
Pension Fund Plan Name			EIN/Pension Plan Number						2020						2019						Implemented						2020			2019			2018						2020						Expiration Date of Collective Bargaining Agreement(a)
Bakery and Confectionery Union and Industry International Pension Fund			52-6118572/001						Red						Red						Nov 2012						$1			$1			$2						10%						2015-10-10
Pension Fund of Local 227			61-6054018/001						Green						Green						n/a						$—			$0.2			n/a						None						2023-11-08
Retail, Wholesale and Department Store International Union and Industry Pension Fund			63-0708442/001						Red						Red						Nov 2015						$—			$0.5			n/a						9%						2021-11-07

(a) Renewal negotiations for the Bakery and Confectionery Union and Industry International Pension Fund are in progress.

NOTE 17: COMPREHENSIVE INCOME (LOSS)

The components of accumulated other comprehensive loss are as follows (in millions):

			2020						2019
Accumulated other comprehensive income (loss), net of taxes:
Unrealized net hedging loss			$	(15)					$	(24)
Unrealized net gain (loss) on investments			2						1
Currency translation adjustment			(136)						(107)
Postretirement benefits reserve adjustments			(30)						13
Total accumulated other comprehensive income (loss)			$	(179)					$	(117)

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

						2020												2019												2018
						Before Tax			Tax			After Tax						Before Tax			Tax			After Tax						Before Tax			Tax			After Tax
Derivatives accounted for as cash flow hedges:
(Gain) loss reclassified to interest expense						$	6		$	(2)		$	4					$	1		$	—		$	1					$	—		$	—		$	—
(Gain) loss reclassified to cost of sales						24			(7)			17						18			(5)			13						12			(4)			8
Unrealized gain (loss)						(17)			5			(12)						(39)			10			(29)						(20)			5			(15)
Investments:
Unrealized gain (loss)						1			—			1						3			(1)			2						(2)			1			(1)
Currency translation:
Translation adjustment						(29)			—			(29)						(23)			—			(23)						(38)			2			(36)
Translation loss reclassified to cost of sales						—			—			—						—			—			—						7			—			7
Postretirement benefits:
Unrealized gain (loss)						1			—			1						(114)			31			(83)						(8)			1			(7)
Pension settlement reclassified to other (income) expense						(58)			14			(44)						23			(6)			17						—			—			—
Total other comprehensive income (loss)						$	(72)		$	10		$	(62)					$	(131)		$	29		$	(102)					$	(49)		$	5		$	(44)

NOTE 18: SEGMENT REPORTING

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

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

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

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

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

We allocate expenses related to corporate activities to the segments, except for third-party merger and integration costs of $5 million, $36 million, and $26 million in fiscal 2020, 2019 and 2018, respectively, which are included in International/Other. Assets and additions to property, plant and equipment relating to corporate activities remain in International/Other. Additionally, as of September 28, 2019, we allocated approximately $342 million of goodwill to International/Other as a result of our Keystone Foods and Thai and European operations acquisitions. Refer to Note 5: Goodwill and Intangible Assets for further description.

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

			Beef						Pork						Chicken						Prepared Foods												International/Other						Intersegment Sales						Consolidated
Fiscal 2020
Sales			$	15,742					$	5,128					$	13,234					$	8,532											$	1,856					$	(1,307)					$	43,185
Operating Income (Loss)			1,580						565						122						743												(2)												3,008
Total Other (Income) Expense																																													344
Income before Income Taxes																																													2,664
Depreciation and amortization			106						56						553						398												65												1,178
Total Assets			3,223						1,516						11,028						14,883												3,806												34,456
Additions to property, plant and equipment			219						117						577						211												75												1,199
Fiscal 2019
Sales			$	15,828					$	4,932					$	13,300					$	8,418											$	1,289					$	(1,362)					$	42,405
Operating Income (Loss)			1,050						263						621						843												(7)												2,770
Total Other (Income) Expense																																													396
Income before Income Taxes																																													2,374
Depreciation and amortization			97						47						513						397												32												1,086
Total Assets			2,958						1,372						10,807						15,138												2,643												32,918
Additions to property, plant and equipment			133						128						637						246												115												1,259
Fiscal 2018
Sales			$	15,473					$	4,879					$	12,044					$	8,668											$	305					$	(1,317)					$	40,052
Operating Income (Loss)			950						361						866						845												(53)												2,969
Total Other (Income) Expense																																													287
Income before Income Taxes																																													2,682
Depreciation and amortization			103						42						368						410												10												933
Total Assets			2,939						1,265						8,794						15,063												926												28,987
Additions to property, plant and equipment			107						150						570						228												145												1,200

The Beef segment had sales of $390 million, $411 million and $420 million for fiscal 2020, 2019 and 2018, respectively, from transactions with other operating segments. The Pork segment had sales of $865 million, $893 million and $817 million for fiscal 2020, 2019 and 2018, respectively, from transactions with other operating segments. The Chicken segment had sales of $52 million, $58 million and $80 million for fiscal 2020, 2019 and 2018, respectively, from transactions with other operating segments. The aforementioned sales from intersegment transactions, which were at market prices, were included in the segment sales in the above table.

Our largest customer, Walmart Inc., accounted for 18.7%, 16.9% and 17.3% of consolidated sales in fiscal 2020, 2019 and 2018, respectively. Sales to Walmart Inc. were included in all the segments. Any extended discontinuance of sales to this customer could, if not replaced, have a material impact on our operations.

The majority of our operations are domiciled in the United States. Approximately 95%, 96% and 99% of sales to external customers for fiscal 2020, 2019 and 2018, respectively, were sourced from the United States. Approximately $25.6 billion and $24.8 billion of long-lived assets were located in the United States at October 3, 2020, and September 28, 2019, respectively. Excluding goodwill and intangible assets, long-lived assets located in the United States totaled approximately $8.5 billion and $7.5 billion at October 3, 2020, and September 28, 2019, respectively. Approximately $1,287 million and $1,107 million of long-lived assets were located in foreign locations, primarily Brazil, China, the European Union, New Zealand and Thailand at October 3, 2020, and September 28, 2019, respectively. Excluding goodwill and intangible assets, long-lived assets in foreign countries totaled approximately $648 million and $506 million at October 3, 2020, and September 28, 2019, respectively.

We sell certain products in foreign markets, primarily Australia, Canada, Central America, Chile, China, the European Union, the United Kingdom, Japan, Mexico, Malaysia, the Middle East, South Korea, Taiwan and Thailand. Our export sales from the United States totaled $4.0 billion, $4.1 billion and $4.2 billion for fiscal 2020, 2019 and 2018, respectively. Substantially all of our export sales are facilitated through unaffiliated brokers, marketing associations and foreign sales staffs. Sales of products produced in a country other than the United States were less than 10% of consolidated sales for each of fiscal 2020, 2019 and 2018.

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

			Twelve months ended October 3, 2020
			Retail(a)						Foodservice(b)						International(c)						Industrial and Other(d)						Intersegment						Total
Beef			$	8,155					$	3,669					$	2,183					$	1,345					$	390					$	15,742
Pork			1,590						403						1,026						1,244						865						5,128
Chicken			5,935						4,892						642						1,713						52						13,234
Prepared Foods			5,137						3,090						126						179						—						8,532
International/Other			—						—						1,856						—						—						1,856
Intersegment			—						—						—						—						(1,307)						(1,307)
Total			$	20,817					$	12,054					$	5,833					$	4,481					$	—					$	43,185

			Twelve months ended September 28, 2019
			Retail(a)						Foodservice(b)						International(c)						Industrial and Other(d)						Intersegment						Total
Beef			$	7,420					$	4,151					$	2,426					$	1,420					$	411					$	15,828
Pork			1,415						400						890						1,334						893						4,932
Chicken			5,637						5,138						690						1,777						58						13,300
Prepared Foods			4,793						3,270						104						251						—						8,418
International/Other			—						—						1,289						—						—						1,289
Intersegment			—						—						—						—						(1,362)						(1,362)
Total			$	19,265					$	12,959					$	5,399					$	4,782					$	—					$	42,405

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

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

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

(d) Includes sales to industrial food processing companies that further process our product to sell to end consumers and any remaining sales not included in the Retail, Foodservice or International categories.

NOTE 19: SUPPLEMENTAL CASH FLOWS INFORMATION

The following table summarizes cash payments for interest and income taxes (in millions):

			2020						2019						2018
Interest, net of amounts capitalized			$	536					$	419					$	368
Income taxes, net of refunds			511						557						470

NOTE 20: TRANSACTIONS WITH RELATED PARTIES

We have related party leases for two wastewater facilities with an entity owned by the Donald J. Tyson Revocable Trust (for which Mr. John Tyson, Chairman of the Company, is a trustee), Berry Street Waste Water Treatment Plant, LP (90% of which is owned by the Tyson Limited Partnership), and the sisters of Mr. Tyson. Prior to the third quarter of fiscal 2020, these leases were both classified as short-term operating leases. Based on the assessment of the renewal of these leases, as of October 3, 2020, one lease was classified as a finance lease with a debt balance of $7 million which is primarily recognized as Long-term debt in our Consolidated Balance Sheet. Total payments of approximately $1 million in each of fiscal 2020, 2019 and 2018 were paid to lease the facilities.

As of October 3, 2020, the TLP, of which John Tyson and director Barbara Tyson are general partners, owned 70 million shares, or 99.985% of our outstanding Class B stock and, along with the members of the Tyson family, owned 6.6 million shares of Class A stock, giving it control of approximately 71.06% of the total voting power of our outstanding voting stock.

In August 2017, the Company committed to invest $5 million for a 17.5% equity interest in Buchan Ltd., a Mauritian private holding company of poultry operations in sub-Saharan Africa. Acacia Foods, B.V. is committed to invest $9 million in Buchan Ltd. Donnie Smith, who during the first quarter of fiscal year 2017 was Chief Executive Officer of the Company, serves as the Chairman of Acacia Foods, B.V. and as a director of Buchan Ltd. John Randal Tyson (son of John Tyson and Chief Sustainability Officer) serves as a director of Buchan Ltd. for the Company. We completed our funding commitment in fiscal 2018.

In fiscal 2020, 2019 and 2018, the Company provided administrative services to the Tyson Limited Partnership, the beneficial owner of 70 million shares of Class B stock, and the Tyson Limited Partnership, through TLP Investment, L.P., reimbursed the Company $0.2 million in fiscal 2020 and $0.3 million in both fiscal 2019 and fiscal 2018.

NOTE 21: COMMITMENTS AND CONTINGENCIES

Commitments

We guarantee obligations of certain outside third parties, consisting primarily of grower loans, which are substantially collateralized by the underlying assets. The remaining terms of the underlying obligations cover periods up to 10 years, and the maximum potential amount of future payments as of October 3, 2020, was $13 million. The likelihood of material payments under these guarantees is not considered probable. At October 3, 2020, and September 28, 2019, no significant liabilities for guarantees were recorded.

We have cash flow assistance programs in which certain livestock suppliers participate. Under these programs, we pay an amount for livestock equivalent to a standard cost to grow such livestock during periods of low market sales prices. The amounts of such payments that are in excess of the market sales price are recorded as receivables and accrue interest. Participating suppliers are obligated to repay these receivables balances when market sales prices exceed this standard cost, or upon termination of the agreement. Our potential maximum obligation associated with these programs is limited to the fair value of each participating livestock supplier’s net tangible assets. The potential maximum obligation as of October 3, 2020, was approximately $320 million. The total receivables under these programs were $29 million and $5 million at October 3, 2020 and September 28, 2019, respectively. These receivables are included, net of allowance for uncollectible amounts, in Accounts Receivable in our Consolidated Balance Sheets. Even though these programs are limited to the net tangible assets of the participating livestock suppliers, we also manage a portion of our credit risk associated with these programs by obtaining security interests in livestock suppliers’ assets. After analyzing residual credit risks and general market conditions, we had no allowance for these programs' estimated uncollectible receivables at October 3, 2020, and September 28, 2019.

When constructing new facilities or making major enhancements to existing facilities, we will occasionally enter into incentive agreements with local government agencies in order to reduce certain state and local tax expenditures. These funds are generally considered restricted cash, which is reported in the Consolidated Balance Sheets in Other Assets, and totaled $46 million and $0 at October 3, 2020 and September 28, 2019, respectively. Additionally, under certain agreements, we transfer the related assets to various local government entities and receive Industrial Revenue Bonds. We immediately lease the facilities from the local government entities and have an option to re-purchase the facilities for a nominal amount upon tendering the Industrial Revenue Bonds to the local government entities at various predetermined dates. The Industrial Revenue Bonds and the associated obligations for the leases of the facilities offset, and the underlying assets remain in property, plant and equipment. At October 3, 2020, total amounts under these types of arrangements totaled $573 million.

Additionally, we enter into other purchase commitments for various items such as grains, livestock contracts and variable livestock grower commitments that are estimable, which at October 3, 2020 were (in millions):

			Purchase Obligations
2021			$	2,371
2022			414
2023			253
2024			111
2025			79
2026 and beyond			152
Total			$	3,380

Contingencies

We are involved in various claims and legal proceedings. We routinely assess the likelihood of adverse judgments or outcomes to those matters, as well as ranges of probable losses, to the extent losses are reasonably estimable. We record accruals in the Company's Consolidated Financial Statements for matters to the extent that we conclude a loss is probable and the financial impact, should an adverse outcome occur, is reasonably estimable. Additionally, for matters in which losses are reasonably possible, no reasonable estimate of the possible loss or range of loss in excess of amounts accrued, if any, can be made because, among other reasons: (i) the proceedings are in preliminary stages; (ii) specific damages have not been sought; (iii) damage claims are unsupported and/or unreasonable; (iv) there is uncertainty as to the outcome of pending appeals or motions; (v) there are significant factual issues to be resolved; or (vi) novel legal issues or unsettled legal theories are being asserted. In our opinion, we have made appropriate and adequate accruals for these matters. While these accruals reflect the Company’s best estimate of the probable loss for those matters as of the dates of those accruals, the recorded amounts may differ materially from the actual amount of the losses for those matters. Listed below are certain claims made against the Company and/or our subsidiaries for which the potential exposure is considered material to the Company’s Consolidated Financial Statements. We believe we have substantial defenses to the claims made and intend to vigorously defend these matters.

On September 2, 2016, Maplevale Farms, Inc., acting on its own behalf and on behalf of a putative class of direct purchasers of poultry products, filed a class action complaint against us and certain of our poultry subsidiaries, as well as several other poultry processing companies, in the Northern District of Illinois. Subsequent to the filing of this initial complaint, additional lawsuits making similar claims on behalf of putative classes of direct and indirect purchasers were filed in the United States District Court for the Northern District of Illinois. The court consolidated the complaints, for pre-trial purposes, into actions on behalf of three different putative classes: direct purchasers, indirect purchasers/consumers and commercial/institutional indirect purchasers. The consolidated actions are styled In re Broiler Chicken Antitrust Litigation. Since the original filing, certain putative class members have opted out of the matter and are proceeding with individual direct actions making similar claims, and others may do so in the future. All opt out complaints have been filed in, or transferred to, the Northern District of Illinois and are proceeding on a coordinated pre-trial basis with the consolidated actions. The operative complaints, which have been amended throughout the litigation, allege, among other things, that beginning in January 2008 the defendants conspired and combined to fix, raise, maintain, and stabilize the price of broiler chickens in violation of United States antitrust laws. The complaints on behalf of the putative classes of indirect purchasers also include causes of action under various state unfair competition laws, consumer protection laws, and unjust enrichment common laws. The plaintiffs also allege that defendants “manipulated and artificially inflated a widely used Broiler price index, the Georgia Dock.” The plaintiffs further allege that the defendants concealed this conduct from the plaintiffs and the members of the putative classes. The plaintiffs seek treble damages, injunctive relief, pre- and post-judgment interest, costs, and attorneys’ fees on behalf of the putative classes. Decisions on class certification and summary judgment motions likely to be filed by defendants are currently expected in late calendar year 2020 and 2021. If necessary, trial will occur after rulings on class certification and any summary judgment motions in calendar year 2022. On April 26, 2019, the plaintiffs notified us that the U.S. Department of Justice ("DOJ") Antitrust Division issued a grand jury subpoena to them requesting discovery produced by all parties in the civil case. On June 21, 2019, the DOJ filed a motion to intervene and sought a limited stay of discovery in the civil action, which the court granted in part. Subsequently, we received a grand jury subpoena from the DOJ seeking additional documents and information related to the chicken industry. On June 2, 2020 a grand jury for the District of Colorado returned an indictment against four individual executives employed by two other poultry processing companies charging a conspiracy to engage in bid-rigging in violation of federal antitrust laws. On June 10, 2020, we announced that we uncovered information in connection with the grand jury subpoena that we had previously self-reported to the DOJ and have been fully cooperating with the DOJ as part of our application for leniency under the DOJ's Corporate Leniency Program. On October 7, 2020, the DOJ announced a superseding indictment adding charges against six more individuals to charge a total of 10 executives and employees at poultry processing companies for a conspiracy to fix prices and rig bids for broiler chicken products from at least 2012 until at least early 2019. The partial stay previously granted by the court in the civil action was lifted and discovery is continuing. Plaintiffs in the civil action filed complaints expressly referencing the conduct in the DOJ’s indictments or motions arguing that bid-rigging conduct was encompassed by prior complaints. On September 22, 2020, the court ruled that bid-rigging claims will be consolidated into the existing action but bifurcated from the original supply reduction and Georgia Dock claims. The original claims will proceed on their current schedule and the bid-rigging claims, including any related discovery, are stayed until the supply reduction and Georgia Dock claims are resolved.

The Commonwealth of Puerto Rico, on behalf of its citizens, has also initiated a civil lawsuit against us, certain of our subsidiaries, and several other poultry processing companies alleging activities in violation of the Puerto Rican antitrust laws. This lawsuit has been transferred to the Northern District of Illinois for coordinated pre-trial proceedings. On July 15, 2020, the court ruled that Puerto Rico could pursue claims based on direct purchases from defendants, but dismissed all claims based on indirect purchases or Puerto Rico’s parens patriae status. On August 26, 2020, Puerto Rico filed a notice of voluntary dismissal without prejudice and withdrew all claims against defendants. On September 1, 2020, the Office of the Attorney General of the State of New Mexico filed a complaint against us and certain of our poultry subsidiaries, as well as several other poultry processing companies and Agri Stats, Inc., in Santa Fe County, New Mexico. The complaint alleges violations of New Mexico’s antitrust, unfair trade practice, and unjust enrichment laws based on allegations of conspiracies to manipulate the Georgia Dock, exchange information and reduce the supply of broiler chickens.

On March 1, 2017, we received a civil investigative demand (“CID”) from the Office of the Attorney General, Department of Legal Affairs, of the State of Florida. The Florida CID requests information primarily related to possible anticompetitive conduct in connection with the Georgia Dock, a chicken products pricing index formerly published by the Georgia Department of Agriculture. We have been cooperating with the Florida Attorney General’s office. In July 2019, the Attorney General issued a subpoena to the In re Broiler Chicken Antitrust Litigation plaintiffs requesting all information provided to the DOJ.

On August 18, 2019, we were advised that the In re Broiler Chicken Antitrust Litigation plaintiffs had received a CID from the Louisiana Department of Justice Office of the Attorney General Public Protection Division. The Louisiana CID requests all deposition transcripts related to the In re Broiler Chicken Antitrust Litigation.

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

On June 18, 2018, a group of plaintiffs acting on their own behalf and on behalf of a putative class of all persons and entities who indirectly purchased pork, filed a class action complaint against us and certain of our pork subsidiaries, as well as several other pork processing companies, in the United States District Court for the District of Minnesota. Subsequent to the filing of the initial complaint, additional lawsuits making similar claims on behalf of putative classes of direct and indirect purchasers were also filed in the same court. The court consolidated the complaints, for pre-trial purposes, into actions on behalf of three different putative classes: direct purchasers, indirect purchasers/consumers and commercial/institutional indirect purchasers. The consolidated actions are styled In re Pork Antitrust Litigation. Since the original filing, a putative class member is proceeding with an individual direct action making similar claims, and others may do so in the future. The individual complaint has been filed in the District of Minnesota and is proceeding on a coordinated pre-trial basis with the consolidated actions. The complaints allege, among other things, that beginning in January 2009 the defendants conspired and combined to fix, raise, maintain, and stabilize the price of pork and pork products in violation of United States antitrust laws. The complaints on behalf of the putative classes of indirect purchasers also include causes of action under various state unfair competition laws, consumer protection laws, and unjust enrichment common laws. The plaintiffs seek treble damages, injunctive relief, pre- and post-judgment interest, costs, and attorneys’ fees on behalf of the putative classes. On August 8, 2019, this matter was dismissed without prejudice. The plaintiffs filed amended complaints on November 6, 2019, in which the plaintiffs again have alleged that the defendants conspired and combined to fix, raise, maintain, and stabilize the price of pork and pork products in violation of state and federal antitrust, consumer protection, and unjust enrichment common laws, and the plaintiffs again are seeking treble damages, injunctive relief, pre- and post-judgment interest, costs, and attorneys’ fees on behalf of the putative classes. The Commonwealth of Puerto Rico, on behalf of its citizens, has also initiated a civil lawsuit against us, certain of our subsidiaries, and several other pork processing companies alleging activities in violation of the Puerto Rican antitrust laws. This lawsuit was transferred to the District of Minnesota and an amended complaint was filed on December 6, 2019. We moved to dismiss the amended complaints, and on October 16, 2020, the court granted the motion with respect to certain state law claims but denied the motion with respect to the plaintiffs’ federal antitrust claims.

On April 23, 2019, a group of plaintiffs, acting on behalf of themselves and on behalf of a putative class of all persons and entities who directly sold to the named defendants any fed cattle for slaughter and all persons who transacted in live cattle futures and/or options traded on the Chicago Mercantile Exchange or another U.S. exchange, filed a class action complaint against us and our beef and pork subsidiary, Tyson Fresh Meats, Inc., as well as other beef packer defendants, in the United States District Court for the Northern District of Illinois. The plaintiffs allege that the defendants engaged in a conspiracy from January 2015 to the present to reduce fed cattle prices in violation of federal antitrust laws, the Grain Inspection, Packers and Stockyards Act of 1921, and the Commodities Exchange Act by periodically reducing their slaughter volumes so as to reduce demand for fed cattle, curtailing their purchases and slaughters of cash-purchased cattle during those same periods, coordinating their procurement practices for fed cattle settled on a cash basis, importing foreign cattle at a loss so as to reduce domestic demand, and closing and idling plants. In addition, the plaintiffs also allege the defendants colluded to manipulate live cattle futures and options traded on the Chicago Mercantile Exchange. The plaintiffs seek, among other things, treble monetary damages, punitive damages, restitution, and pre- and post-judgment interest, as well as declaratory and injunctive relief. This complaint was subsequently voluntarily dismissed and re-filed in the United States District Court for the District of Minnesota. Other similar lawsuits were filed by ranchers in other district courts. All actions seeking relief by ranchers and futures traders have now been transferred to the United States District Court for the District of Minnesota action and are consolidated for pre-trial proceedings as In Re Cattle Antitrust Litigation. Following the filing of defendants’ motion to dismiss this matter, the plaintiffs filed a second amended complaint on October 4, 2019. We moved to dismiss the second amended complaint, which the court granted on September 28, 2020. The dismissal is without prejudice, and the plaintiffs are permitted to amend their complaint by December 28, 2020.

On April 26, 2019, a group of plaintiffs, acting on behalf of themselves and on behalf of a putative class of indirect purchasers of beef for personal use filed a class action complaint against us, other beef packers, and Agri Stats, Inc., an information services provider, in the United States District Court for the District of Minnesota. The plaintiffs allege that the packer defendants conspired to reduce slaughter capacity by closing or idling plants, limiting their purchases of cash cattle, coordinating their procurement of cash cattle, and reducing their slaughter numbers so as to reduce beef output, all in order to artificially raise prices of beef. The plaintiffs seek, among other things, damages under state antitrust and consumer protection statutes and the common law of approximately 30 states, as well as injunctive relief. The plaintiffs filed a first amended complaint in which the claims against Agri Stats were dismissed and subsequently filed a second amended complaint on November 22, 2019. We moved to dismiss the second amended complaint. The indirect consumer purchaser litigation is styled as Peterson v. JBS USA Food Company Holdings, et al. Additional complaints have been filed on behalf of a putative class of direct purchasers of beef alleging violations of Section 1 of the Sherman Act based on an alleged conspiracy to artificially fix, raise, and stabilize the wholesale price for beef, as well as on behalf of a putative class of commercial and institutional indirect purchasers of beef alleging violations of Section 1 of the Sherman Act, various state antitrust laws and unjust enrichment based on an alleged conspiracy to artificially inflate the price for beef. On September 28, 2020, the court granted our motion to dismiss the second amended complaint. The dismissal is without prejudice, and the plaintiffs are permitted to amend their complaint by December 28, 2020.

On May 22, 2020, we received a CID from DOJ's Antitrust Division. The CID requests information related to the fed cattle and beef packing markets. We have been cooperating with the DOJ's Antitrust Division with respect to the CID.

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

Our subsidiary, The Hillshire Brands Company (formerly named Sara Lee Corporation), is a party to a consolidation of cases filed by individual complainants with the Republic of the Philippines, Department of Labor and Employment and the National Labor Relations Commission ("NLRC") from 1998 through July 1999. The complaint was filed against Aris Philippines, Inc., Sara Lee Corporation, Sara Lee Philippines, Inc., Fashion Accessories Philippines, Inc., and Attorney Cesar C. Cruz (collectively, the “respondents”). The complaint alleges, among other things, that the respondents engaged in unfair labor practices in connection with the termination of manufacturing operations in the Philippines in 1995 by Aris Philippines, Inc., a former subsidiary of The Hillshire Brands Company. In late 2004, a labor arbiter ruled against the respondents and awarded the complainants PHP3,453,664,710 (approximately U.S. $71 million) in damages and fees. The respondents appealed the labor arbiter's ruling, and it was subsequently set aside by the NLRC in December 2006. Subsequent to the NLRC’s decision, the parties filed numerous appeals, motions for reconsideration and petitions for review, certain of which remained outstanding for several years. While various of those appeals, motions and/or petitions were pending, The Hillshire Brands Company, on June 23, 2014, without admitting liability, filed a settlement motion requesting that the Supreme Court of the Philippines order dismissal with prejudice of all claims against it and certain other respondents in exchange for payments allocated by the court among the complainants in an amount not to exceed PHP342,287,800 (approximately U.S. $7 million). Based in part on its finding that the consideration to be paid to the complainants as part of such settlement was insufficient, the Supreme Court of the Philippines denied the respondents’ settlement motion and all motions for reconsideration thereof. The Supreme Court of the Philippines also set aside as premature the NLRC’s December 2006 ruling. As a result, the cases were remanded back before the NLRC to rule on the merits of the case. On December 15, 2016, we learned that the NLRC rendered its decision on November 29, 2016, regarding the respondents’ appeals regarding the labor arbiter’s 2004 ruling in favor of the complainants. The NLRC increased the award for 4,922 of the total 5,984 complainants to PHP14,858,495,937 (approximately U.S. $306 million). However, the NLRC approved a prior settlement reached with the group comprising approximately 18% of the class of 5,984 complainants, pursuant to which The Hillshire Brands Company agreed to pay each settling complainant PHP68,000 (approximately U.S. $1,400). The settlement payment was made on December 21, 2016, to the NLRC, which is responsible for distributing the funds to each settling complainant. On December 27, 2016, the respondents filed motions for reconsideration with the NLRC asking that the award be set aside. The NLRC denied respondents' motions for reconsideration in a resolution received on May 5, 2017 and entered a judgment on the award on July 24, 2017. Each of Aris Philippines, Inc., Sara Lee Corporation and Sara Lee Philippines, Inc. appealed this award and sought an injunction to preclude enforcement of the award to the Philippines Court of Appeals. On November 23, 2017, the Court of Appeals granted a writ of preliminary injunction that precluded execution of the NLRC award during the pendency of the appeal. The Court of Appeals subsequently vacated the NLRC’s award on April 12, 2018. Complainants have filed motions for reconsideration with the Court of Appeals. On November 14, 2018, the Court of Appeals denied claimants’ motions for reconsideration and granted defendants’ motion to release and discharge the preliminary injunction bond. Claimants have since filed petitions for writ of certiorari with the Supreme Court of the Philippines. The Supreme Court has accepted the case for review. We continue to maintain an accrual for this matter.

Various claims have been asserted against the Company, its subsidiaries, and its officers and agents by, and on behalf of, team members who claim to have contracted COVID-19 in our facilities.

NOTE 22: QUARTERLY FINANCIAL DATA (UNAUDITED)

Revision of Previously Issued Unaudited Consolidated Condensed Financial Statements

As described in Note 1: Business and Summary of Significant Accounting Policies, the Company determined it necessary to revise the accompanying consolidated annual and interim quarterly financial information to correct the misstatement in the periods impacted.

The following tables represent revisions to our unaudited consolidated condensed financial information for quarter-to-date interim periods in fiscal 2020 and 2019:

First Quarter			in millions, except per share data
			Quarter ended December 28, 2019												Quarter ended December 29, 2018
			As originally reported			Adjustments			As revised						As originally reported			Adjustments			As revised
Consolidated Statements of Income:
Sales			$	10,815		$	—		$	10,815					$	10,193		$	—		$	10,193
Gross profit			1,440			—			1,440						1,355			—			1,355
Selling, General and Administrative			614			68			682						548			28			576
Operating income			826			(68)			758						807			(28)			779
Income before Income Taxes			725			(68)			657						713			(28)			685
Income Tax Expense (Benefit)			164			(16)			148						161			(7)			154
Net income			561			(52)			509						552			(21)			531
Net income attributable to Tyson			557			(52)			505						551			(21)			530
Net income per share attributable to Tyson:
Class A Basic			$	1.56		$	(0.14)		$	1.42					$	1.54		$	(0.05)		$	1.49
Class B Basic			$	1.40		$	(0.13)		$	1.27					$	1.39		$	(0.05)		$	1.34
Diluted			$	1.52		$	(0.14)		$	1.38					$	1.50		$	(0.06)		$	1.44
Consolidated Statements of Comprehensive Income:
Net income			$	561		$	(52)		$	509					$	552		$	(21)		$	531
Comprehensive Income			599			(52)			547						549			(21)			528
Comprehensive Income Attributable to Tyson			595			(52)			543						548			(21)			527
			As of December 28, 2019												As of December 29, 2018
			As originally reported			Adjustments			As revised						As originally reported			Adjustments			As revised
Consolidated Balance Sheets:
Inventories			$	4,304		$	(247)		$	4,057					$	3,777		$	(150)		$	3,627
Total Current Assets			7,193			(247)			6,946						6,301			(150)			6,151
Total Assets			33,811			(247)			33,564						32,335			(150)			32,185
Deferred Income Taxes			2,369			(63)			2,306						2,330			(39)			2,291
Retained Earnings			14,178			(184)			13,994						12,719			(111)			12,608
Total Tyson Shareholders' Equity			14,419			(184)			14,235						13,127			(111)			13,016
Total Shareholders' Equity			14,566			(184)			14,382						13,259			(111)			13,148
Total Liabilities and Shareholders' Equity			33,811			(247)			33,564						32,335			(150)			32,185

First quarter fiscal 2020 net income also included $52 million pretax restructuring and related charges and $16 million pretax Beef production facility fire costs, net of insurance proceeds.

First quarter fiscal 2019 net income included $26 million pretax Keystone Foods purchase accounting and acquisition related costs, which included an $11 million purchase accounting adjustment for the amortization of the fair value step-up of inventory and $15 million of acquisition related costs, and $8 million pretax restructuring and related charges.

Second Quarter			in millions, except per share data
			Quarter ended March 28, 2020												Quarter ended March 30, 2019
			As originally reported			Adjustments			As revised						As originally reported			Adjustments			As revised
Consolidated Statements of Income:
Sales			$	10,888		$	—		$	10,888					$	10,443		$	—		$	10,443
Gross profit			1,021			—			1,021						1,192			—			1,192
Selling, General and Administrative			520			(14)			506						557			43			600
Operating income			501			14			515						635			(43)			592
Income before Income Taxes			491			14			505						528			(43)			485
Income Tax Expense (Benefit)			124			2			126						98			(11)			87
Net income			367			12			379						430			(32)			398
Net income attributable to Tyson			364			12			376						426			(32)			394
Net income per share attributable to Tyson:
Class A Basic			$	1.03		$	0.03		$	1.06					$	1.20		$	(0.09)		$	1.11
Class B Basic			$	0.92		$	0.03		$	0.95					$	1.07		$	(0.08)		$	0.99
Diluted			$	1.00		$	0.03		$	1.03					$	1.17		$	(0.09)		$	1.08
Consolidated Statements of Comprehensive Income:
Net income			$	367		$	12		$	379					$	430		$	(32)		$	398
Comprehensive Income			216			12			228						452			(32)			420
Comprehensive Income Attributable to Tyson			213			12			225						448			(32)			416
			As of March 28, 2020												As of March 30, 2019
			As originally reported			Adjustments			As revised						As originally reported			Adjustments			As revised
Consolidated Balance Sheets:
Inventories			$	4,025		$	(233)		$	3,792					$	3,899		$	(193)		$	3,706
Total Current Assets			7,099			(233)			6,866						6,376			(193)			6,183
Total Assets			33,890			(233)			33,657						32,498			(193)			32,305
Deferred Income Taxes			2,384			(61)			2,323						2,278			(50)			2,228
Retained Earnings			14,392			(172)			14,220						13,012			(143)			12,869
Total Tyson Shareholders' Equity			14,449			(172)			14,277						13,423			(143)			13,280
Total Shareholders' Equity			14,594			(172)			14,422						13,558			(143)			13,415
Total Liabilities and Shareholders' Equity			33,890			(233)			33,657						32,498			(193)			32,305

Second quarter fiscal 2020 net income included $110 million pretax gain from pension plan terminations.

Second quarter fiscal 2019 net income included $11 million pretax Keystone Foods acquisition related costs and $8 million pretax restructuring and related charges.

Third Quarter			in millions, except per share data
			Quarter ended June 27, 2020												Quarter Ended June 29, 2019
			As originally reported			Adjustments			As revised						As originally reported			Adjustments			As revised
Consolidated Statements of Income:
Sales			$	10,022		$	—		$	10,022					$	10,885		$	—		$	10,885
Gross profit			1,313			—			1,313						1,336			—			1,336
Selling, General and Administrative			538			2			540						555			(10)			545
Operating income			775			(2)			773						781			10			791
Income before Income Taxes			667			(2)			665						724			10			734
Income Tax Expense (Benefit)			140			(1)			139						43			2			45
Net income			527			(1)			526						681			8			689
Net income attributable to Tyson			527			(1)			526						676			8			684
Net income per share attributable to Tyson:
Class A Basic			$	1.48		$	—		$	1.48					$	1.90		$	0.02		$	1.92
Class B Basic			$	1.33		$	—		$	1.33					$	1.71		$	0.02		$	1.73
Diluted			$	1.44		$	—		$	1.44					$	1.84		$	0.03		$	1.87
Consolidated Statements of Comprehensive Income:
Net income			$	527		$	(1)		$	526					$	681		$	8		$	689
Comprehensive Income			540			(1)			539						671			8			679
Comprehensive Income Attributable to Tyson			540			(1)			539						666			8			674
			As of June 27, 2020												As of June 29, 2019
			As originally reported			Adjustments			As revised						As originally reported			Adjustments			As revised
Consolidated Balance Sheets:
Inventories			$	3,915		$	(235)		$	3,680					$	4,149		$	(183)		$	3,966
Total Current Assets			7,699			(235)			7,464						7,433			(183)			7,250
Total Assets			34,558			(235)			34,323						33,665			(183)			33,482
Deferred Income Taxes			2,370			(62)			2,308						2,338			(48)			2,290
Retained Earnings			14,769			(173)			14,596						13,553			(135)			13,418
Total Tyson Shareholders' Equity			14,858			(173)			14,685						13,928			(135)			13,793
Total Shareholders' Equity			15,004			(173)			14,831						14,141			(135)			14,006
Total Liabilities and Shareholders' Equity			34,558			(235)			34,323						33,665			(183)			33,482

Third quarter fiscal 2020 net income included $15 million pretax Beef production facility fire insurance proceeds, net of costs and $6 million pretax gain from pension plan terminations.

Third quarter fiscal 2019 net income included $105 million post tax recognition of previously unrecognized tax benefit, $55 million pretax gain on sale of an investment and $15 million pretax restructuring and related charges.

Fourth Quarter			in millions, except per share data
			Quarter ended October 3, 2020												Quarter ended September 29, 2019
			As originally reported			Adjustments			As revised						As originally reported			Adjustments			As revised
Consolidated Statements of Income:
Sales			$	11,460		$	—		$	11,460					$	10,884		$	—		$	10,884
Gross profit			1,610			—			1,610						1,139			—			1,139
Selling, General and Administrative			598			50			648						535			(4)			531
Operating income			1,012			(50)			962						604			4			608
Income before Income Taxes			887			(50)			837						466			4			470
Income Tax Expense (Benefit)			192			(12)			180						94			1			95
Net income			695			(38)			657						372			3			375
Net income attributable to Tyson			692			(38)			654						369			3			372
Net income per share attributable to Tyson:
Class A Basic			$	1.95		$	(0.12)		$	1.83					$	1.03		$	0.01		$	1.04
Class B Basic			$	1.76		$	(0.10)		$	1.66					$	0.93		$	—		$	0.93
Diluted			$	1.90		$	(0.11)		$	1.79					$	1.01		$	—		$	1.01
Consolidated Statements of Comprehensive Income:
Net income			$	695		$	(38)		$	657					$	372		$	3		$	375
Comprehensive Income			733			(38)			695						261			3			264
Comprehensive Income Attributable to Tyson			730			(38)			692						258			3			261
			As of October 3, 2020												As of September 29, 2019
			As originally reported			Adjustments			As revised						As originally reported			Adjustments			As revised
Consolidated Balance Sheets:
Inventories			$	4,144		$	(285)		$	3,859					$	4,108		$	(179)		$	3,929
Total Current Assets			7,883			(285)			7,598						7,169			(179)			6,990
Total Assets			34,741			(285)			34,456						33,097			(179)			32,918
Deferred Income Taxes			2,391			(74)			2,317						2,356			(47)			2,309
Retained Earnings			15,311			(211)			15,100						13,787			(132)			13,655
Total Tyson Shareholders' Equity			15,465			(211)			15,254						14,082			(132)			13,950
Total Shareholders' Equity			15,597			(211)			15,386						14,226			(132)			14,094
Total Liabilities and Shareholders' Equity			34,741			(285)			34,456						33,097			(179)			32,918

Fourth quarter fiscal 2020 net income included $23 million pretax restructuring and related charges and $65 million pretax income related to our accounting cycle resulting in a 53-week year in fiscal 2020.

Fourth quarter fiscal 2019 net income included $31 million pretax Beef production facility fire costs, a $41 million pretax impairment charge related to the divestiture of a business, $15 million pretax pension plan termination charge and $10 million pretax restructuring and related charges.

The revisions set forth above did not impact total cash flows provided by operating activities and for each period presented above, the impacts of the misstatements on individual line items within cash flows provided by operating activities were not material, including net income, change in inventories for the impact of the misstatement, and deferred income taxes for the tax impact of the misstatement.

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of Tyson Foods, Inc.

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of Tyson Foods, Inc. and its subsidiaries (the “Company”) as of October 3, 2020 and September 28, 2019, and the related consolidated statements of income, of comprehensive income, of shareholders' equity and of cash flows for each of the three years in the period ended October 3, 2020, including the related notes and schedule of valuation and qualifying accounts for each of the three years in the period ended October 3, 2020 appearing under Item 15 (collectively referred to as the “consolidated financial statements”). We also have audited the Company's internal control over financial reporting as of October 3, 2020, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of October 3, 2020 and September 28, 2019, and the results of its operations and its cash flows for each of the three years in the period ended October 3, 2020 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company did not maintain, in all material respects, effective internal control over financial reporting as of October 3, 2020, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO because a material weakness in internal control over financial reporting existed as of that date related to the Company not designing and maintaining effective controls over the existence of live cattle inventory.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis. The material weakness referred to above is described in Management’s Annual Report on Internal Control Over Financial Reporting appearing under Item 9A. We considered this material weakness in determining the nature, timing, and extent of audit tests applied in our audit of the fiscal 2020 consolidated financial statements, and our opinion regarding the effectiveness of the Company’s internal control over financial reporting does not affect our opinion on those consolidated financial statements.

Restatement of Management’s Conclusion Regarding Internal Control over Financial Reporting

Management and we previously concluded that the Company maintained effective internal control over financial reporting as of October 3, 2020. However, management has subsequently determined that a material weakness in internal control over financial reporting related to its management failing to design and maintain effective controls over the existence of live cattle inventory as of that date. Accordingly, management’s report has been restated and our present opinion on internal control over financial reporting, as presented herein, is different from that expressed in our previous report.

Change in Accounting Principle

As discussed in Note 2 to the consolidated financial statements, the Company changed the manner in which it accounts for leases as of September 29, 2019.

Basis for Opinions

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in management's report referred to above. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matters

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Goodwill Impairment Assessments – Domestic Chicken and International Reporting Units

As described in Notes 1 and 5 to the consolidated financial statements, the Company’s consolidated goodwill balance was $10,899 million as of October 3, 2020, which included $3,266 million and $392 million for the Domestic Chicken and International reporting units, respectively. As disclosed by management, a goodwill impairment test is conducted as of the first day of the fourth quarter each year, or more frequently if impairment indicators arise. Management estimates the fair value of reporting units considering the use of various valuation techniques, with the primary technique being an income approach (discounted cash flow method) and another technique being a market approach (guideline public company method). The determination of fair value using these techniques includes assumptions about sales, operating margins, growth rates, discount rates and valuation multiples based on budgets, business plans, economic projections and marketplace data.

The principal considerations for our determination that performing procedures relating to the goodwill impairment assessment of the Domestic Chicken and International reporting units is a critical audit matter are (i) the significant judgment by management when developing the fair value measurements of the reporting units, (ii) the high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating audit evidence related to management’s anticipated future cash flows and significant assumptions related to sales, operating margins, growth rates, discount rates and valuation multiples, and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to management’s goodwill impairment assessment, including controls over the valuation of the Company’s Domestic Chicken and International reporting units. These procedures also included, among others, testing management’s process for developing the fair value estimates of the Domestic Chicken and International reporting units; evaluating the appropriateness of the income and market valuation approaches; testing the completeness and accuracy of underlying data used in the fair value estimates; and evaluating management’s cash flow projections and significant assumptions related to sales, operating margins, growth rates, discount rates and valuation multiples. Evaluating management’s assumptions related to sales, operating margins, growth rates, discount rates and valuation multiples involved evaluating whether the assumptions used were reasonable considering (i) the current and past performance associated with the related reporting units, (ii) the consistency with external market and industry data, and (iii) whether these assumptions were consistent with evidence obtained in other areas of the audit. Professionals with specialized skill and knowledge were used to assist in the evaluation of the Company’s valuation methods and the sales, operating margins, growth rates, discount rates and valuation multiples significant assumptions.

/s/ PricewaterhouseCoopers LLP

Fayetteville, Arkansas

November 16, 2020, except for the effects of the revision discussed in Note 1 to the consolidated financial statements and the matter discussed in the penultimate paragraph of Management’s Annual Report on Internal Control Over Financial Reporting, as to which the date is February 11, 2021.

We have served as the Company’s auditor since 2009.