Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

DESCRIPTION OF THE COMPANY

We are one of the world's largest food companies with leading brands such as Tyson®, Jimmy Dean®, Hillshire Farm®, Sara Lee®, Ball Park®, Wright®, Aidells® and State Fair®. We are a recognized market leader in chicken, beef and pork as well as prepared foods, including bacon, breakfast sausage, turkey, lunchmeat, hot dogs, pizza crusts and toppings, tortillas and desserts. Some of the key factors influencing our business are customer demand for our products; the ability to maintain and grow relationships with customers and introduce new and innovative products to the marketplace; accessibility of international markets; market prices for our products; the cost and availability of live cattle and hogs, raw materials, and feed ingredients; and operating efficiencies of our facilities.

We operate in four reportable segments: Chicken, Beef, Pork and Prepared Foods. Other primarily includes our foreign chicken production operations in China and India and third-party merger and integration costs.

On August 28, 2014, we acquired and consolidated The Hillshire Brands Company ("Hillshire Brands"), a manufacturer and marketer of branded, convenient foods. Hillshire Brands results from operations subsequent to the acquisition closing are included in the Prepared Foods segment.

OVERVIEW

•	Fiscal year – Our accounting cycle resulted in a 52-week year for both fiscal 2016 and 2014 and a 53-week year for fiscal 2015.

•

General – Our operating income grew 31% in fiscal 2016 over fiscal 2015, which was led by the Beef segment's $413 million improvement in operating income and record earnings in our Prepared Foods segment, as well as continued strong performance in the Chicken and Pork segments. Sales decreased 11% in fiscal 2016 over fiscal 2015, primarily due to declining beef prices, the impact of an additional week in fiscal 2015 and the sale of our Brazil and Mexico chicken production operations. We continued to execute our strategy of accelerating growth in domestic value-added chicken sales, prepared food sales, innovating products, services and customer insights and cultivating our talent development to support Tyson's growth for the future.

•

Integration – We continue to maintain focus on the integration of Hillshire Brands and synergy capture. We expect to realize synergies of around $675 million in fiscal 2017 from the acquisition as well as our profit improvement plan for our legacy Prepared Foods business. The amount expected to be realized in fiscal 2017 is reduced from our previous estimate of $700 million as some of the incremental synergies are now expected to be realized in fiscal 2018. The majority of these benefits are expected to be realized in the Prepared Foods segment. We will continue to invest a portion of the synergies in innovation, new product launches and support the growth of our brands. In fiscal 2016, we captured $258 million of incremental synergies above the $322 million captured in fiscal 2015, for a total of $580 million of synergies realized in fiscal 2016.

•

Market Environment – Domestic protein production (chicken, beef, pork and turkey according to the USDA) increased approximately 3% in fiscal 2016 over fiscal 2015 and export market conditions experienced some improvement over fiscal 2015. Our Chicken segment delivered strong results in fiscal 2016 driven by favorable demand for our products and lower feed costs. The Beef segment earnings improved over fiscal 2015 due to more favorable market conditions associated with an increase in cattle supply which resulted in lower fed cattle costs. The Pork segment's operating margin was above its normalized range as domestic market conditions were favorable with lower livestock cost and increased demand for our pork products. Our Prepared Foods segment delivered record operating income as we continued to realize synergies and lower input costs, partially offset with higher marketing, advertising, and promotion spend.

•	Margins – Our total operating margin was 7.7% in fiscal 2016. Operating margins by segment were as follows:

•	Chicken – 11.9%

•	Beef – 2.4%

•	Pork – 10.8%

•	Prepared Foods – 10.0%

•	Liquidity – During fiscal 2016, we generated $2.7 billion of operating cash flows. We repurchased 30.8 million shares of our Class A common stock for $1,868 million under our share repurchase program in fiscal 2016. At October 1, 2016, we had $1.3 billion of liquidity, which included the availability under our revolving credit facility and $349 million of cash and cash equivalents.

	in millions, except per share data
	2016				2015				2014
Net income attributable to Tyson	$	1,768			$	1,220			$	864
Net income attributable to Tyson - per diluted share	4.53				2.95				2.37

2016 – Included the following items:

•	$53 million, or $0.14 per diluted share, related to recognition of previously unrecognized tax benefits and audit settlements.

2015 – Included the following items:

•	$169 million, or ($0.41) per diluted share, related to an impairment charge in China.

•	$59 million, or ($0.09) per diluted share, related to Prepared Foods network optimization impairment charges.

•	$57 million, or ($0.09) per diluted share, related to merger and integration costs.

•	$12 million, or ($0.02) per diluted share, related to closure and impairment charges related to the ceasing of beef operations at our Denison facility.

•	$161 million, or $0.24 per diluted share, related to a gain on sale of the Mexico operation.

•	$39 million, or $0.06 per diluted share, related to the additional week in fiscal 2015.

•	$26 million, or $0.06 per diluted share, related to recognition of previously unrecognized tax benefits.

•	$21 million, or $0.03 per diluted share, related to a gain on sale of equity securities.

•	$8 million, or $0.02 per diluted share, of insurance proceeds (net of costs) related to a legacy Hillshire Brands plant fire.

2014 – Included the following items (fiscal 2014 per diluted share adjustments utilized a weighted average shares outstanding amount of 356 million):

•	$197 million, or ($0.37) per diluted share, related to the Hillshire Brands acquisition, integration and costs associated with our Prepared Foods improvement plan.

•	$42 million, or ($0.16) per diluted share, related to an impairment in our Brazil operation and Mexico undistributed earnings tax.

•	$40 million, or ($0.07) per diluted share, related to the Hillshire Brands post-closing results, purchase price accounting adjustments and costs related to a legacy Hillshire Brands plant fire.

•	$27 million, or ($0.12) per diluted share, related to the Hillshire Brands acquisition financing incremental interest costs and share dilution.

•	$52 million, or $0.15 per diluted share, related to a gain from previously unrecognized tax benefits.

SUMMARY OF RESULTS

Sales	in millions
	2016				2015				2014
Sales	$	36,881			$	41,373			$	37,580
Change in sales volume	(4.6		)%		5.0		%
Change in average sales price	(6.5		)%		4.8		%
Sales growth	(10.9		)%		10.1		%

2016 vs. 2015 –

•

Sales Volume – Sales were negatively impacted by lower sales volume, which accounted for a decrease of $1.9 billion. Each segment had a decline in sales volume primarily attributed to the additional week in fiscal 2015. The decrease in sales volume was also attributable to the divestitures of the Mexico and Brazil chicken production operations in fiscal 2015. When excluding these impacts along with the divestiture of our Heinold Hog Markets business in the first quarter of fiscal 2015, total company sales volume increased 0.1%.

•	Average Sales Price – Sales were negatively impacted by lower average sales prices, which accounted for a decrease of $2.6 billion. Each segment had a decrease in average sales prices largely due to decreased pricing associated with lower beef, pork, and chicken prices, with the largest decrease in the Beef segment.

2015 vs. 2014 –

•

Sales Volume – Sales were positively impacted by higher sales volume, which accounted for an increase of $2.4 billion. The Chicken segment had an increase in sales volume primarily due to an extra week in fiscal 2015, and the Prepared Foods segment had an increase in sales volume primarily due to the acquisition and consolidation of Hillshire Brands in our final month of fiscal 2014 in addition to an extra week in fiscal 2015. The increase in sales volume was partially offset by a decrease in the Beef and Pork segments along with the divestitures of the Mexico and Brazil chicken operations in fiscal 2015.

•

Average Sales Price – Sales were positively impacted by higher average sales prices, which accounted for an increase of $1.4 billion. The Beef and Prepared Foods segments each had an increase in average sales prices, partially offset by a decrease in average sales prices in the Chicken and Pork segments. The increase in average sales price was largely due to continued tight domestic availability of beef products along with the change in mix in the Prepared Foods segment as a result of the acquisition and consolidation of Hillshire Brands in our final month of fiscal 2014.

Cost of Sales	in millions
	2016				2015				2014
Cost of sales	$	32,184			$	37,456			$	34,895
Gross profit	4,697				3,917				2,685
Cost of sales as a percentage of sales	87.3		%		90.5		%		92.9		%

2016 vs. 2015 –

•	Cost of sales decreased by approximately $5.3 billion. Lower input costs per pound decreased cost of sales approximately $3.6 billion and lower sales volume decreased cost of sales approximately $1.7 billion.

•	The approximate $3.6 billion impact of lower input costs was primarily driven by:

•	Decrease in live cattle cost of approximately $2.6 billion in our Beef segment.

•	Decrease in live hog costs of approximately $360 million in our Pork segment.

•	Decrease in raw material and other input costs of approximately $300 million in our Prepared Foods segment.

•	Decreases in feed costs of approximately $170 million in our Chicken segment.

•

Decrease due to net realized derivative gains of $96 million in fiscal 2016, compared to net realized derivative losses of $102 million in fiscal 2015 due to our risk management activities. These amounts exclude offsetting impacts from related physical purchase transactions, which are included in the change in live cattle and hog costs and raw material and feed costs described above. Additionally, cost of sales increased due to net unrealized gains of $11 million in fiscal 2016, compared to net unrealized gains of $80 million in fiscal 2015, primarily due to our Chicken, Beef and Pork segment commodity risk management activities.

•	The $1.7 billion impact of lower sales volume was primarily due to the sale of our Mexico chicken production operation in fiscal 2015 along with the additional week in fiscal 2015.

2015 vs. 2014 –

•	Cost of sales increased by approximately $2.6 billion. Higher input costs per pound increased cost of sales approximately $330 million and higher sales volume increased cost of sales approximately $2.3 billion.

•	The approximate $330 million impact of higher input costs was primarily driven by:

•	Increase in live cattle cost of approximately $1.1 billion and operating costs of approximately $90 million in our Beef segment.

•	Increase in input cost per pound related to the acquisition of Hillshire Brands on August 28, 2014.

•	Increase of $49 million and $12 million related to Prepared Foods network optimization impairment charges and Denison plant impairment and closure costs, respectively.

•	Decrease in live hog costs of approximately $500 million in our Pork segment.

•	Decrease in raw material and other input costs of approximately $290 million in our Prepared Foods segment.

•	Decreases in feed costs of approximately $450 million in our Chicken segment.

•	Decrease due to net unrealized gains of $55 million in fiscal 2015, compared to net unrealized losses of $39 million in fiscal 2014, from our Beef and Pork segment commodity risk management activities.

•	The $2.3 billion impact of higher sales volume was driven by an increase in sales volume in our Chicken and Prepared Foods segments, partially offset by decreases in sales volume in our Beef and Pork segments. Prepared Foods contributed a majority of the increase due to the acquisition of Hillshire Brands on August 28, 2014, in addition to the extra week in fiscal 2015.

Selling, General and Administrative	in millions
	2016				2015				2014
Selling, general and administrative	$	1,864			$	1,748			$	1,255
As a percentage of sales	5.1		%		4.2		%		3.3		%

2016 vs. 2015 –

•	Increase of $116 million in selling, general and administrative was primarily driven by:

•	Increase of $88 million related to marketing, advertising and promotion expense to drive sales growth.

•	Increase of $71 million of employee costs including payroll and stock-based and incentive-based compensation.

•	Increase of $11 million related to bad debt expense.

•	Increase of $17 million in all other primarily related to professional fees, information technology costs and rent.

•	Decrease of $26 million due to a reduction in amortization and other expense related to our intangible assets.

•	Decrease of $25 million related to fiscal 2015 sale of our chicken production operations in Brazil and Mexico.

•	Decrease of $20 million of merger and integration costs.

2015 vs. 2014 –

•	Increase of $493 million in selling, general and administrative was primarily driven by:

•	Increase of $487 million related to the inclusion of Hillshire Brands in fiscal 2015 results with only one month in fiscal 2014 results.

•	Increase of $69 million related to incremental amortization associated with the acquired Hillshire Brands' intangibles.

•	Increase of $27 million related to employee costs including payroll and stock-based compensation.

•	Decrease of $59 million related to advertising and sales promotions in the legacy Tyson business primarily attributable to discontinuing certain programs that were present in fiscal 2014.

•	Decrease of $14 million related to merger and integration costs and employee severance and retention costs associated with the Hillshire Brands acquisition and implementation of our Prepared Foods strategy.

•	Decrease of $17 million in all other primarily related to professional fees.

Interest Income	in millions
	2016				2015				2014
	$	(6	)		$	(9	)		$	(7	)

2016/2015/2014 – Interest income remained relatively flat due to continued low interest rates.

Interest Expense	in millions
	2016				2015				2014
Cash interest expense	$	248			$	293			$	132
Non-cash interest expense	1				—				—
Total Interest Expense	$	249			$	293			$	132

2016/2015/2014 –

•

Cash interest expense primarily included interest expense related to the coupon rates for senior notes and term loans and commitment/letter of credit fees incurred on our revolving credit facilities. The decrease in cash interest expense in fiscal 2016 was primarily due to a reduction of our debt. The increase in cash interest expense in fiscal 2015 was primarily due to senior notes and term loans issued and debt assumed in connection with our completed acquisition of Hillshire Brands on August 28, 2014.

•	Non-cash interest expense primarily included amounts related to the amortization of debt issuance costs and discounts/premiums on note issuances, offset by interest capitalized.

Other (Income) Expense, net	in millions
	2016				2015				2014
	$	(8	)		$	(36	)		$	53

2016 – Included $12 million of equity earnings in joint ventures and $4 million in net foreign currency exchange losses.

2015 – Included $12 million of equity earnings in joint ventures and $21 million of gains on the sale of equity securities.

2014 – Included $60 million of costs associated with bridge financing facilities for the Hillshire Brands acquisition and $6 million of other than temporary impairment related to an available-for-sale security, partially offset with $14 million of equity earnings in joint ventures and net foreign currency exchange gains.

Effective Tax Rate
	2016			2015			2014
	31.8	%		36.3	%		31.6	%

The effective tax rate on continuing operations was impacted by a number of items which result in a difference between our effective tax rate and the United States statutory rate of 35%. The table below reflects significant items impacting the rate as indicated.

2016 –

•	Domestic production activity deduction reduced the rate 2.6%.

•	Unrecognized tax benefits activity, mostly related to expiration of statutes of limitations and settlements with taxing authorities, reduced the rate 1.7%.

•	State income taxes increased the rate 2.7%.

2015 –

•	Domestic production activity deduction reduced the rate 3.7%.

•	Unrecognized tax benefits activity, mostly related to expiration of statutes of limitations, reduced the rate 1.8%.

•	State income taxes increased the rate 3.1%.

•	Foreign rate differences and valuation allowances increased the rate 3.8%.

2014 –

•	Domestic production activity deduction reduced the rate 4.0%.

•	Net decrease in unrecognized tax benefits, mostly related to expiration of statutes of limitations and settlements with taxing authorities, reduced the rate 4.7%.

•	State income taxes increased the rate 2.8%.

•	Foreign rate differences and valuation allowances increased the rate 2.8%.

SEGMENT RESULTS

We operate in four reportable segments: Chicken, Beef, Pork and Prepared Foods. Other primarily includes our foreign chicken production operations in China and India and third-party merger and integration costs. Additionally, the results from Dynamic Fuels, which was sold in fiscal 2014, are also included in Other fiscal 2014 results until the closing date of such sale. The following table is a summary of segment sales and operating income (loss), which is how we measure segment income (loss).

																					in millions
	Sales												Operating Income (Loss)
	2016				2015				2014				2016				2015				2014
Chicken	$	10,927			$	11,390			$	11,116			$	1,305			$	1,366			$	883
Beef	14,513				17,236				16,177				347				(66		)		347
Pork	4,909				5,262				6,304				528				380				455
Prepared Foods	7,346				7,822				3,927				734				588				(60		)
Other	380				879				1,381				(81		)		(99		)		(195		)
Intersegment Sales	(1,194		)		(1,216		)		(1,325		)		—				—				—
Total	$	36,881			$	41,373			$	37,580			$	2,833			$	2,169			$	1,430

Chicken Segment Results																	in millions
	2016				2015				Change 2016 vs. 2015				2014				Change 2015 vs. 2014
Sales	$	10,927			$	11,390			$	(463	)		$	11,116			$	274
Sales Volume Change									(2.6		)%						4.2		%
Average Sales Price Change									(1.5		)%						(1.6		)%
Operating Income	$	1,305			$	1,366			$	(61	)		$	883			$	483
Operating Margin	11.9		%		12.0		%						7.9		%

2016 vs. 2015 –

•	Sales Volume – Sales volume decreased primarily due to the additional week in fiscal 2015, in addition to a planned temporary decrease in production in the fourth quarter of fiscal 2016 while we transitioned our mix to sell more value-added and less commodity products along with optimizing our mix and our buy versus grow strategy.

•	Average Sales Price – Average sales price decreased as feed costs declined, partially offset by mix changes.

•	Operating Income – Operating income was negatively impacted by the additional week in fiscal 2015 along with increases in operating costs and marketing, advertising and promotion expenses, partially offset by lower feed costs of $170 million.

2015 vs. 2014 –

•	Sales Volume – Sales volume grew as a result of the additional week in fiscal 2015 as well as stronger demand for chicken products and mix of rendered product sales.

•	Average Sales Price – Average sales price decreased as feed ingredient costs declined, partially offset by mix changes.

•	Operating Income – Operating income increased due to higher sales volume and lower feed ingredient costs of $450 million, partially offset by disruptions caused by export bans.

Beef Segment Results																	in millions
	2016				2015				Change 2016 vs. 2015				2014				Change 2015 vs. 2014
Sales	$	14,513			$	17,236			$	(2,723	)		$	16,177			$	1,059
Sales Volume Change									(1.1		)%						(0.3		)%
Average Sales Price Change									(14.9		)%						6.9		%
Operating Income (Loss)	$	347			$	(66	)		$	413			$	347			$	(413	)
Operating Margin	2.4		%		(0.4		)%						2.1		%

2016 vs. 2015 –

•	Sales Volume – Sales volume decreased due to the additional week in fiscal 2015. When excluding the additional week in fiscal 2015, sales volume increased 0.8% due to increased availability of cattle supply and better demand for our beef products despite a reduction in live cattle processing capacity due to the closure of our Denison, Iowa, facility in the fourth quarter of fiscal 2015.

•	Average Sales Price – Average sales price decreased due to higher domestic availability of beef supplies and lower livestock cost.

•	Operating Income – Operating income increased due to more favorable market conditions as we maximized our revenues relative to the decline in live fed cattle cost, in addition to reduced losses from mark-to-market open derivative positions and lower-of-cost-or market inventory adjustments that were incurred in the fourth quarter of fiscal 2015, partially offset by higher operating costs.

2015 vs. 2014 –

•	Sales Volume – Sales volume decreased due to reduced live cattle supplies available to process, partially offset by an additional week in fiscal 2015.

•	Average Sales Price – Average sales price increased due to lower domestic availability of beef products.

•

Operating Income – Operating income decreased due to unfavorable market conditions associated with a decrease in supply which drove up fed cattle costs, export market disruptions, the relative value of competing proteins and increased operating costs. Additionally, in fiscal 2015, we incurred $12 million in Denison plant impairment and closure costs and $81 million of losses from mark-to-market open derivative positions and lower-of-cost-or-market inventory adjustments, which was mostly the result of a large and rapid decline in live cattle futures in September of fiscal 2015.

Pork Segment Results																	in millions
	2016				2015				Change 2016 vs. 2015				2014				Change 2015 vs. 2014
Sales	$	4,909			$	5,262			$	(353	)		$	6,304			$	(1,042	)
Sales Volume Change									(2.5		)%						(0.8		)%
Average Sales Price Change									(4.4		)%						(15.8		)%
Operating Income	$	528			$	380			$	148			$	455			$	(75	)
Operating Margin	10.8		%		7.2		%						7.2		%

2016 vs. 2015 –

•	Sales Volume – Sales volume decreased due to the divestiture of our Heinold Hog Markets business in the first quarter of fiscal 2015 and the additional week in fiscal 2015. Excluding these impacts, sales volume grew 1.2%, driven by better demand for our pork products.

•	Average Sales Price – Average sale price decreased due to increased live hog supplies and lower livestock cost.

•	Operating Income – Operating income increased as we maximized our revenues relative to the decline in live hog markets and due to better plant utilization associated with increased volume processed, which were partially offset by higher operating costs, losses incurred in our live hog operation and the additional week in fiscal 2015.

2015 vs. 2014 –

•	Sales Volume – Sales volume decreased due to the divestiture of our Heinold Hog Markets business in the first quarter of fiscal 2015. Excluding the impact of the divestiture, we had a 5.4% increase in sales volume as a result of the additional week in fiscal 2015 as well as better demand for our pork products.

•	Average Sales Price – Average sales price decreased due to an increase in live hog supplies, which drove down livestock cost and average sales price.

•	Operating Income – While reduced compared to prior year, operating income remained strong as we maximized our revenues relative to live hog markets, partially attributable to operational and mix performance.

Prepared Foods Segment Results													in millions
	2016				2015				Change 2016 vs. 2015				2014				Change 2015 vs. 2014
Sales	$	7,346			$	7,822			$	(476	)		$	3,927			$	3,895
Sales Volume Change									(2.8		)%						70.7		%
Average Sales Price Change									(3.4		)%						16.7		%
Operating Income (Loss)	$	734			$	588			$	146			$	(60	)		$	648
Operating Margin	10.0		%		7.5		%						(1.5		)%

2016 vs. 2015 –

•	Sales Volume – Sales volume decreased due to the additional week in fiscal 2015 and lower sales volume in the first six months of fiscal 2016 due to changes in sales mix and the carryover effect of the 2015 turkey avian influenza occurrence into the first half of fiscal 2016.

•	Average Sales Price – Average sales price decreased primarily due to a decline in input costs, partially offset by a change in product mix.

•

Operating Income – Operating income increased due to mix changes as well as lower input costs of approximately $300 million, partially offset with higher marketing, advertising, and promotion spend along with the additional week in fiscal 2015. Additionally, Prepared Foods operating income was positively impacted by $441 million in synergies, of which $156 million was incremental synergies in fiscal 2016 above the $285 million of synergies realized in fiscal 2015. The positive impact of these synergies to operating income was partially offset with heavy investments in innovation, new product launches and supporting the growth of our brands.

2015 vs. 2014 –

•	Sales Volume – Sales volume increased due to incremental volumes from the acquisition of Hillshire Brands and an additional week in fiscal 2015.

•	Average Sales Price – Average sales price increased primarily due to better product mix which was positively impacted by the acquisition of Hillshire Brands.

•

Operating Income – Operating income improved due to an increase in sales volume and average sales price mainly attributed to Hillshire Brands, as well as lower raw material costs of approximately $290 million for fiscal 2015 related to our legacy Prepared Foods business. Profit improvement initiatives and Hillshire Brands synergies positively impacted Prepared Foods operating income by $285 million for fiscal 2015. Additionally, in the fourth quarter of fiscal 2015, we incurred $59 million in impairment charges associated with optimizing our Prepared Foods network.

Other Results													in millions
	2016				2015				Change 2016 vs. 2015				2014				Change 2015 vs. 2014
Sales	$	380			$	879			$	(499	)		$	1,381			$	(502	)
Operating Loss	(81		)		(99		)		18				(195		)		96

2016 vs. 2015 –

•	Sales – Sales decreased due to the sale of the Mexico and Brazil chicken production operations in fiscal 2015.

•	Operating loss – Operating loss improved due to better performance at our China operation and reduced third-party merger and integration costs partially offset by the results of the Mexico chicken production operation sold in fiscal 2015.

2015 vs. 2014 –

•	Sales – Sales decreased due to the sale of the Mexico and Brazil chicken production operations in fiscal 2015.

•

Operating loss – Operating loss improved $69 million from our international operations due to the sale of our Brazil operation and better market conditions in Mexico (prior to its sale in the fourth quarter of fiscal 2015), partially offset by challenging market conditions in China. Additionally, third-party merger and integration costs decreased by $12 million and losses associated with Dynamic Fuels, which was sold in fiscal 2014, decreased $15 million.

LIQUIDITY AND CAPITAL RESOURCES

Our cash needs for working capital, capital expenditures, growth opportunities, the repurchases of senior notes, repayment of term loans and share repurchases are expected to be met with current cash on hand, cash flows provided by operating activities, or short-term borrowings. Based on our current expectations, we believe our liquidity and capital resources will be sufficient to operate our business. However, we may take advantage of opportunities to generate additional liquidity or refinance existing debt through capital market transactions. The amount, nature and timing of any capital market transactions will depend on our operating performance and other circumstances; our then-current commitments and obligations; the amount, nature and timing of our capital requirements; any limitations imposed by our current credit arrangements; and overall market conditions.

Cash Flows from Operating Activities					in millions
	2016				2015				2014
Net income	$	1,772			$	1,224			$	856
Non-cash items in net income:
Depreciation and amortization	705				711				530
Deferred income taxes	84				38				(105		)
Convertible debt discount	—				—				(92		)
Gain on dispositions of businesses	—				(177		)		—
Impairment of assets	45				285				107
Stock-based compensation expense	81				69				51
Other, net	(34		)		71				(20		)
Net changes in operating assets and liabilities	63				349				(149		)
Net cash provided by operating activities	$	2,716			$	2,570			$	1,178

•	Operating cash outflow associated with the convertible debt discount related to the initial debt discount of $92 million on our 3.25% convertible notes issued in 2008, which matured on October 15, 2013, and were retired in fiscal 2014.

•

Gain on dispositions of businesses in fiscal 2015 primarily relates to the sale of the Mexico chicken production operation. Impairment of assets in fiscal 2015 included $59 million of impairment charges related to our Prepared Foods network optimization and $169 million of impairments related to our China operation. For further description regarding these charges refer to Part II, Item 8, Notes to Consolidated Financial Statements, Note 3: Acquisitions and Dispositions and Note 9: Other Income and Charges.

•	Other, net increase in fiscal 2015 is primarily driven by non-cash pension expense.

•	Cash flows associated with changes in operating assets and liabilities:

•

2016 – Increased primarily due to decreased inventory and accounts receivable balances and increased accrual for incentive compensation, which were partially offset by decreased accounts payable, increased tax receivable and contributions to pension plans. The decreased inventory, accounts receivable and accounts payable balances were largely due to decreased raw material costs and timing of sales and payments.

•	2015 – Increased primarily due to the decrease in inventory and accounts receivable balances and an increase in taxes payable, partially offset by the decrease in accounts payable. The decreased inventory, accounts receivable and accounts payable balances were largely due to decreased raw material costs and timing of sales and payments.

•	2014 – Decreased primarily due to the increase in inventory and accounts receivable balances and decrease in income taxes payable, partially offset by the increase in accounts payable. The higher inventory, accounts receivable and accounts payable balances are primarily attributable to significant increases in input costs and price increases associated with the increased input costs.

Cash Flows from Investing Activities									in millions
	2016				2015				2014
Additions to property, plant and equipment	$	(695	)		$	(854	)		$	(632	)
(Purchases of)/Proceeds from marketable securities, net	(9		)		14				15
Acquisitions, net of cash acquired	—				—				(8,193		)
Proceeds from sale of businesses	—				539				—
Other, net	20				31				10
Net cash used for investing activities	$	(684	)		$	(270	)		$	(8,800	)

•	Additions to property, plant and equipment included acquiring new equipment and upgrading our facilities to maintain competitive standing and position us for future opportunities.

•	Capital spending for fiscal 2017 is expected to approximate $1.0 billion and will include spending for production growth, safety, animal well-being, infrastructure replacements and upgrades, and operational improvements that will result in production and labor efficiencies, yield improvements and sales channel flexibility.

•	Purchases of marketable securities included funding for our deferred compensation plans.

•	Proceeds from sale of businesses primarily included proceeds, net of cash transferred, from the sale of the Mexico and Brazil operations.

•

Acquisitions in fiscal 2014 related to acquiring Hillshire Brands and an additional value-added food business as part of our strategy to accelerate growth in our prepared foods sales. Both of these acquisitions are included in the Prepared Foods segment. For further description regarding these transactions refer to Part II, Item 8, Notes to Consolidated Financial Statements, Note 3: Acquisitions and Dispositions.

Cash Flows from Financing Activities									in millions
	2016				2015				2014
Payments on debt	$	(714	)		$	(1,995	)		$	(639	)
Proceeds from issuance of long-term debt	1				501				5,576
Borrowings on revolving credit facility	1,065				1,345				—
Payments on revolving credit facility	(765		)		(1,345		)		—
Proceeds from issuance of debt component of tangible equity units	—				—				205
Proceeds from issuance of common stock, net of issuance costs	—				—				873
Net proceeds from issuance of equity component of tangible equity units	—				—				1,255
Purchases of Tyson Class A common stock	(1,944		)		(495		)		(295		)
Dividends	(216		)		(147		)		(104		)
Stock options exercised	128				84				67
Other, net	68				17				(23		)
Net cash provided by (used for) financing activities	$	(2,377	)		$	(2,035	)		$	6,915

•	Payments on debt included –

•	2016 – We fully retired the $638 million outstanding balance of our 6.60% senior notes due April 2016.

•	2015 – We fully retired the $401 million outstanding balance of the 2.75% senior notes due September 2015 and paid $353 million related to the 5-year tranche A term loan facility and $1,172 million related to the 3-year tranche A term loan facility.

•

2014 – Our 3.25% convertible notes issued in 2008 matured on October 15, 2013, at which time we paid the $458 million principal value with cash on hand and settled the conversion premium by issuing 11.7 million shares of our Class A stock from available treasury shares. These notes were initially recorded at a $92 million discount, which equaled the fair value of an equity conversion premium instrument. The portion of the payment of these notes related to the initial $92 million discount was recorded in cash flows from operating activities. Simultaneous to the settlement of the conversion premium, we received 11.7 million shares of our Class A stock from the call options purchased at the time of issuance of the notes.

•	2014 – $194 million related to the 5-year tranche A term loan facility and $30 million related to the 3-year tranche A term loan facility.

•	Proceeds from issuance of long-term debt and borrowings/payments on revolving credit facility –

•

2016 – We had borrowings of $1,065 million and payments of $765 million on our revolving credit facility for fiscal 2016. We utilized our revolving credit facility to balance our cash position with the retirement of the 2016 Notes and changes in working capital. Additionally, total debt of our foreign subsidiaries was $7 million at October 1, 2016, $6 million of which is classified as long-term in our Consolidated Balance Sheets.

•

2015 – $500 million from term loans, the full balance of which was used to prepay outstanding borrowings under the 3-year tranche A term loan facility. In addition, we had borrowings and payments on our revolver of $1,345 million for fiscal 2015. We utilized our revolving credit facility to balance our cash position with term loan deleveraging and changes in working capital. Additionally, total debt of our foreign subsidiaries was $10 million at October 3, 2015, all of which is classified as long-term in our Consolidated Balance Sheets.

•	2014 – $2,300 million from term loans and $3,243 million from senior unsecured notes after original issue discounts of $7 million. Additionally, total debt related to our foreign subsidiaries was $8 million at September 27, 2014, all of which is classified as long-term in our Consolidated Balance Sheets.

•	Proceeds from issuance of debt and equity components of tangible equity units –

•

2014 – We issued 30 million, 4.75% tangible equity units (TEUs). Total proceeds, net of underwriting discounts and other expenses, were $1,454 million. Each TEU is comprised of a prepaid stock purchase contract and a senior amortizing note due July 15, 2017. We allocated the proceeds from the issuance of the TEUs to equity and debt based on the relative fair values of the respective components of each TEU. The fair value of the prepaid stock purchase contracts, which was $1,295 million, is recorded in Capital in Excess of Par Value, net of $40 million issuance costs. The fair value of the senior amortizing notes was $205 million which was recorded in debt.

•	Proceeds from issuance of common stock, net of issuance costs –

•	2014 – We issued 23.8 million shares of our Class A common stock, for total proceeds, net of underwriting discounts and other offering related fees and expenses, of $873 million.

•	Purchases of Tyson Class A common stock include –

•	$1,868 million, $455 million and $250 million for shares repurchased pursuant to our share repurchase program in fiscal 2016, 2015 and 2014, respectively.

•	$76 million, $40 million and $45 million for shares repurchased to fund certain obligations under our equity compensation plans in fiscal 2016, 2015 and 2014, respectively.

•	We expect to continue repurchasing shares under our share repurchase program. As of October 1, 2016, 40.3 million shares remain authorized for repurchases. 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.

•	Subsequent to October 1, 2016, through November 18, 2016, we repurchased $255 million, or approximately 3.6 million shares, of our common stock under our share repurchase program.

•	Dividends paid during fiscal 2016 included a 50% increase to our fiscal 2015 quarterly dividend rate.

•	Other, net increase in fiscal 2016 is primarily driven by tax benefits associated with stock option exercises.

Liquidity																in millions
		Commitments Expiration Date		Facility Amount				Outstanding Letters of Credit under Revolving Credit Facility (no draw downs)				Outstanding Amount Borrowed				Amount Available
Cash and cash equivalents																$	349
Short-term investments																4
Revolving credit facility		September 2019		$	1,250			$	7			$	300			943
Total liquidity																$	1,296

•	The revolving credit facility supports our short-term funding needs and letters of credit. The letters of credit issued under this facility are primarily in support of leasing obligations and workers’ compensation insurance programs. Our maximum borrowing under the revolving credit facility during fiscal 2016 was $335 million.

•	We expect net interest expense will approximate $225 million for fiscal 2017.

•

At October 1, 2016, approximately $286 million of our cash was held in the international accounts of our foreign subsidiaries. Generally, we do not rely on the foreign cash as a source of funds to support our ongoing domestic liquidity needs. Rather, we manage our worldwide cash requirements by reviewing available funds among our foreign subsidiaries and the cost effectiveness with which those funds can be accessed. The repatriation of cash balances from certain of our foreign subsidiaries could have adverse tax consequences or be subject to regulatory capital requirements; however, those balances are generally available without legal restrictions to fund ordinary business operations. United States income taxes, net of applicable foreign tax credits, have not been provided on undistributed earnings of foreign subsidiaries. Our intention is to reinvest the cash held by foreign subsidiaries permanently or to repatriate the cash only when it is tax efficient to do so.

•	Our current ratio was 1.77 to 1 and 1.52 to 1 at October 1, 2016, and October 3, 2015, respectively.

Capital Resources

Credit Facility

Cash flows from operating activities and current cash on hand are our primary sources of liquidity for funding debt service, capital expenditures, dividends and share repurchases. We also have a revolving credit facility, with a committed capacity of $1.25 billion, to provide additional liquidity for working capital needs, letters of credit and a source of financing for growth opportunities. As of October 1, 2016, we had $300 million borrowed and $7 million of outstanding letters of credit issued under this facility, none of which were drawn upon, which left $943 million available for borrowing. Our revolving credit facility is funded by a syndicate of 42 banks, with commitments ranging from $0.3 million to $85 million per bank. The syndicate includes bank holding companies that are required to be adequately capitalized under federal bank regulatory agency requirements.

Capitalization

To monitor our credit ratings and our capacity for long-term financing, we consider various qualitative and quantitative factors. We monitor the ratio of our net debt to EBITDA as support for our long-term financing decisions. At October 1, 2016, and October 3, 2015, the ratio of our net debt to EBITDA was 1.7x and 2.1x, respectively. Refer to Part II, Item 6, Selected Financial Data, for an explanation and reconciliation to comparable GAAP measures. The decrease in this ratio for fiscal 2016 is primarily due to increased EBITDA of $632 million.

Credit Ratings

Term Loans: Tranche B due April 2019 and Tranche B due August 2019

S&P’s credit rating for both term loans is "BBB." Moody’s Investor Service, Inc. (Moody's) credit rating for both term loans is "Baa2." Fitch Ratings, a wholly owned subsidiary of Fimlac, S.A. (Fitch) credit rating for both term loans is "BBB." The below table outlines the borrowing spread on the outstanding principal balance depending on the rating levels of both term loans from S&P, Moody's and Fitch.

Ratings Level (S&P/Moody's/Fitch)	Tranche B due April 2019 Borrowing Spread		Tranche B due August 2019 Borrowing Spread
BBB+/Baa1/BBB+	1.000	%	1.250	%
BBB/Baa2/BBB (current level)	1.125	%	1.500	%
BBB-/Baa3/BBB-	1.375	%	1.750	%
BB+/Ba1/BB+	1.625	%	2.000	%
BB/Ba2/BB or lower	1.875	%	2.500	%

Revolving Credit Facility

S&P’s corporate credit rating for Tyson Foods, Inc. is "BBB." Moody’s, senior unsecured, long-term debt rating for Tyson Foods, Inc. is "Baa2." Fitch's issuer default rating for Tyson Foods, Inc. is "BBB." The below table outlines the fees paid on the unused portion of the facility (Facility Fee Rate) and letter of credit fees (Undrawn Letter of Credit Fee and Borrowing Spread) depending on the rating levels of Tyson Foods, Inc. from S&P, Moody's and Fitch.

Ratings Level (S&P/Moody's/Fitch)	Facility Fee Rate		Undrawn Letter of Credit Fee and Borrowing Spread
A-/A3/A- or above	0.100	%	1.000	%
BBB+/Baa1/BBB+	0.125	%	1.125	%
BBB/Baa2/BBB (current level)	0.150	%	1.250	%
BBB-/Baa3/BBB-	0.200	%	1.500	%
BB+/Ba1/BB+ or lower	0.250	%	1.750	%

In the event the rating levels are split, the applicable fees and spread will be based upon the rating level in effect for two of the rating agencies, or, if all three rating agencies have different rating levels, the applicable fees and spread will be based upon the rating level that is between the rating levels of the other two rating agencies.

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 1, 2016.

Pension Plans

As further described in Part II, Item 8, Notes to Consolidated Financial Statements, Note 14: Pensions and Other Postretirement Benefits, the funded status of our defined benefit pension plans is defined as the amount the projected benefit obligation exceeds the plan assets. The funded status of the plans is an underfunded position of $336 million at the end of fiscal 2016 as compared to an underfunded position of $410 million at the end of fiscal 2015.

We expect to contribute approximately $40 million of cash to our pension plans in fiscal 2017 as compared to approximately $64 million in fiscal 2016 and $14 million in fiscal 2015. The exact amount of cash contributions made to pension plans in any year is dependent upon a number of factors, including minimum funding requirements. As a result, the actual funding in fiscal 2017 may be different from the estimate.

OFF-BALANCE SHEET ARRANGEMENTS

We do not have any off-balance sheet arrangements material to our financial position or results of operations. The off-balance sheet arrangements we have are guarantees of debt of outside third parties, including leases and grower loans, and residual value guarantees covering certain operating leases for various types of equipment. See Part II, Item 8, Notes to Consolidated Financial Statements, Note 19: Commitments and Contingencies for further discussion.

CONTRACTUAL OBLIGATIONS

The following table summarizes our contractual obligations as of October 1, 2016:

																	in millions
	Payments Due by Period
	2017				2018-2019				2020-2021				2022 and thereafter				Total
Debt and capital lease obligations:
Principal payments (1)	$	79			$	2,487			$	295			$	3,439			$	6,300
Interest payments (2)	226				428				351				1,218				2,223
Guarantees (3)	20				37				40				30				127
Operating lease obligations (4)	118				158				73				78				427
Purchase obligations (5)	1,817				539				207				106				2,669
Capital expenditures (6)	720				151				—				—				871
Other long-term liabilities (7)	—				—				—				—				548
Total contractual commitments	$	2,980			$	3,800			$	966			$	4,871			$	13,165

(1)	In the event of a default on payment, acceleration of the principal payments could occur.

(2)	Interest payments include interest on all outstanding debt. Payments are estimated for variable rate and variable term debt based on effective interest rates at October 1, 2016, and expected payment dates.

(3)	Amounts include guarantees of debt of outside third parties, which consist of leases and grower loans, all of which are substantially collateralized by the underlying assets, as well as residual value guarantees covering certain operating leases for various types of equipment. The amounts included are the maximum potential amount of future payments.

(4)	Amounts include minimum lease payments under lease agreements.

(5)

Amounts include agreements to purchase goods or services that are enforceable and legally binding and specify all significant terms, including: fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of the transaction. The purchase obligations amount included items, such as future purchase commitments for grains, livestock contracts and fixed grower fees, that provide terms that meet the above criteria. For certain grain purchase commitments with a fixed quantity provision, we have assumed the future obligations under the commitment based on available commodity futures prices as published in observable active markets as of October 1, 2016. We have excluded future purchase commitments for contracts that do not meet these criteria. Purchase orders are not included in the table, as a purchase order is an authorization to purchase and is cancelable. Contracts for goods or services that contain termination clauses without penalty have also been excluded.

(6)	Amounts include estimated amounts to complete buildings and equipment under construction as of October 1, 2016.

(7)

Other long-term liabilities primarily consist of deferred compensation, deferred income, self-insurance, and asset retirement obligations. We are unable to reliably estimate the amount of these payments beyond fiscal 2017; therefore, we have only included the total liability in the table above. We also have employee benefit obligations consisting of pensions and other postretirement benefits of $359 million that are excluded from the table above. A discussion of the Company's pension and postretirement plans, including funding matters, is included in Part II, Item 8, Notes to Consolidated Financial Statements, Note 14: Pensions and Other Postretirement Benefits.

In addition to the amounts shown above in the table, we have unrecognized tax benefits of $283 million and related interest and penalties of $52 million at October 1, 2016, recorded as liabilities.

The maximum contractual obligation associated with our cash flow assistance programs at October 1, 2016, based on the estimated fair values of the livestock supplier’s net tangible assets on that date, aggregated to approximately $380 million, or approximately $378 million remaining maximum commitment after netting the cash flow assistance related receivables.

RECENTLY ISSUED/ADOPTED ACCOUNTING PRONOUNCEMENTS

Refer to the discussion under Part II, Item 8, Notes to Consolidated Financial Statements, Note 1: Business and Summary of Significant Accounting Policies and Note 2: Changes in Accounting Principles.

CRITICAL ACCOUNTING ESTIMATES

The preparation of consolidated financial statements requires us to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The following is a summary of certain accounting estimates we consider critical.

Description		Judgments and Uncertainties		Effect if Actual Results Differ From Assumptions
Contingent liabilities
We are subject to lawsuits, investigations and other claims related to wage and hour/labor, environmental, product, taxing authorities and other matters, and are required to assess the likelihood of any adverse judgments or outcomes to these matters, as well as potential ranges of probable losses. A determination of the amount of reserves and disclosures required, if any, for these contingencies is made after considerable analysis of each individual issue. We accrue for contingent liabilities when an assessment of the risk of loss is probable and can be reasonably estimated. We disclose contingent liabilities when the risk of loss is reasonably possible or probable.		Our contingent liabilities contain uncertainties because the eventual outcome will result from future events, and determination of current reserves requires estimates and judgments related to future changes in facts and circumstances, differing interpretations of the law and assessments of the amount of damages, and the effectiveness of strategies or other factors beyond our control.		We have not made any material changes in the accounting methodology used to establish our contingent liabilities during the past three fiscal years. We do not believe there is a reasonable likelihood there will be a material change in the estimates or assumptions used to calculate our contingent liabilities. However, if actual results are not consistent with our estimates or assumptions, we may be exposed to gains or losses that could be material.
Marketing, advertising and promotion costs
We promote our products with marketing, advertising, trade promotions, and consumer incentives. These programs include, but are not limited to, coupons, discounts, rebates, volume-based incentives, cooperative advertising, and other programs. Marketing, advertising, and promotion costs are charged to operations in the period incurred. We accrue costs based on the estimated performance, historical utilization and redemption rates of each program. Cash consideration given to customers is considered a reduction in the price of our products, thus recorded as a reduction to sales. The remainder of marketing, advertising and promotion costs is recorded as a selling, general and administrative expense.		Recognition of the costs related to these programs contains uncertainties due to judgment required in estimating the potential performance, utilization and redemption rates of each program. These estimates are based on many factors, including experience of similar promotional programs.		We have not made any material changes in the accounting methodology used to establish our marketing, advertising, and promotion accruals during the past three fiscal years. We do not believe there is a reasonable likelihood there will be a material change in the estimates or assumptions used to calculate our marketing, advertising, and promotion accruals. However, if actual results are not consistent with our estimates or assumptions, we may be exposed to gains or losses that could be material. A 10% change in our marketing, advertising, and promotion accruals at October 1, 2016, would impact pretax earnings by approximately $21 million.

Description		Judgments and Uncertainties		Effect if Actual Results Differ From Assumptions
Accrued self-insurance
We are self-insured for certain losses related to health and welfare, workers’ compensation, auto liability and general liability claims. We use an independent third-party actuary to assist in determining our self-insurance liability. We and the actuary consider a number of factors when estimating our self-insurance liability, including claims experience, demographic factors, severity factors and other actuarial assumptions. We periodically review our estimates and assumptions with our third-party actuary to assist us in determining the adequacy of our self-insurance liability. Our policy is to maintain an accrual within the central to high point of the actuarial range.		Our self-insurance liability contains uncertainties due to assumptions required and judgment used. Costs to settle our obligations, including legal and healthcare costs, could increase or decrease causing estimates of our self-insurance liability to change. Incident rates, including frequency and severity, could increase or decrease causing estimates in our self-insurance liability to change.		We have not made any material changes in the accounting methodology used to establish our self-insurance liability during the past three fiscal years. We do not believe there is a reasonable likelihood there will be a material change in the estimates or assumptions used to calculate our self-insurance liability. However, if actual results are not consistent with our estimates or assumptions, we may be exposed to gains or losses that could be material. A 10% increase in the actuarial estimate at October 1, 2016, would result in an increase in the amount we recorded for our self-insurance liability of approximately $23 million. A 10% decrease in the actuarial estimate at October 1, 2016, would result in a decrease in the amount we recorded for our self-insurance liability of approximately $8 million.

Description		Judgments and Uncertainties		Effect if Actual Results Differ From Assumptions
Defined benefit pension plans
We sponsor nine defined benefit pension plans that provide retirement benefits to certain employees. We also participate in a multi-employer plan that provides defined benefits to certain employees 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. We use independent third-party actuaries to assist us in determining our pension obligations and net periodic benefit cost. We and the actuaries review assumptions that include estimates of the present value of the projected future pension payment to all plan participants, taking into consideration the likelihood of potential future events such as salary increases and demographic experience. We accumulate and amortize the effect of actuarial gains and losses over future periods. Net periodic benefit cost for the defined benefit pension plans was $18 million in fiscal 2016. The projected benefit obligation was $1,776 million at the end of fiscal 2016. Unrecognized actuarial loss was $72 million at the end of fiscal 2016. We currently expect net periodic benefit cost for fiscal 2017 to be approximately $26 million. Plan assets are currently comprised of approximately 85% fixed income securities and 10% equity securities. Fixed income securities can include, but are not limited to, direct bond investments and pooled or indirect bond investments. Other investments may include, but are not limited to, international and domestic equities, real estate, commodities and private equity. We expect to contribute approximately $40 million of cash to our pension plans in fiscal 2017. The exact amount of cash contributions made to pension plans in any year is dependent upon a number of factors, including minimum funding requirements.		Our defined benefit pension plans contain uncertainties due to assumptions required and judgments used. The key assumptions used in developing the required estimates include such factors as discount rates, expected returns on plan assets, retirement rates, and mortality. These assumptions can have a material impact upon the funded status and the net periodic benefit cost. The discount rates 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. In determining the long-term rate of return on plan assets, 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. Investment, management and other fees paid out of plan assets are factored into the determination of asset return assumptions. Retirement rates are based primarily on actual plan experience, while standard actuarial tables are used to estimate mortality. It is reasonably likely that changes in external factors will result in changes to the assumptions used to measure pension obligations and net periodic benefit cost in future periods. The risks of participating in multiemployer plans are different from single-employer plans. The net pension cost of the multiemployer plans is equal to the annual contribution determined in accordance with the provisions of negotiated labor contracts. Assets contributed to such plans are not segregated or otherwise restricted to provide benefits only to our employees. The future cost of these 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.		We have not made any material changes in the accounting methodology used to establish our pension obligations and net periodic benefit cost during the past three fiscal years. We do not believe there is a reasonable likelihood there will be a material change in the estimates or assumptions used to calculate our pension obligations and net periodic benefit cost. However, if actual results are not consistent with our estimates or assumptions, they are accumulated and amortized over future periods and, therefore generally affect the net periodic benefit cost in future periods. A 1% increase in the discount rate at October 1, 2016, would result in a decrease in the projected benefit obligation and net periodic benefit cost of approximately $203 million and $5 million, respectively. A 1% decrease in the discount rate at October 1, 2016, would result in an increase in the projected benefit obligation and net periodic benefit cost of approximately $250 million and $12 million, respectively. A 1% change in the return on plan assets at October 1, 2016, would impact the net periodic benefit cost by approximately $14 million. The sensitivities reflect the impact of changing one assumption at a time with the remaining assumptions held constant. Economic factors and conditions often affect multiple assumptions simultaneously and that the effect of changes in assumptions are not necessarily linear.

Description		Judgments and Uncertainties		Effect if Actual Results Differ From Assumptions
Income taxes
We estimate total income tax expense based on statutory tax rates and tax planning opportunities available to us in various jurisdictions in which we earn income. Federal income tax includes an estimate for taxes on earnings of foreign subsidiaries expected to be taxable upon remittance to the United States, except for earnings considered to be indefinitely invested in the foreign subsidiary. Deferred income taxes are recognized for the future tax effects of temporary differences between financial and income tax reporting using tax rates in effect for the years in which the differences are expected to reverse. Valuation allowances are recorded when it is likely a tax benefit will not be realized for a deferred tax asset. We record unrecognized tax benefit liabilities for known or anticipated tax issues based on our analysis of whether, and the extent to which, additional taxes will be due.		Changes in tax laws and rates could affect recorded deferred tax assets and liabilities in the future. Changes in projected future earnings could affect the recorded valuation allowances in the future. Our calculations related to income taxes contain uncertainties due to judgment used to calculate tax liabilities in the application of complex tax regulations across the tax jurisdictions where we operate. Our analysis of unrecognized tax benefits contains uncertainties based on judgment used to apply the more likely than not recognition and measurement thresholds.		We do not believe there is a reasonable likelihood there will be a material change in the tax related balances or valuation allowances. However, due to the complexity of some of these uncertainties, the ultimate resolution may result in a payment that is materially different from the current estimate of the tax liabilities. To the extent we prevail in matters for which unrecognized tax benefit liabilities have been established, or are required to pay amounts in excess of our recorded unrecognized tax benefit liabilities, our effective tax rate in a given financial statement period could be materially affected. An unfavorable tax settlement would require use of our cash and generally result in an increase in our effective tax rate in the period of resolution. A favorable tax settlement would generally be recognized as a reduction in our effective tax rate in the period of resolution.
Impairment of long-lived assets and definite life intangibles
Long-lived assets and definite life intangibles are evaluated for impairment whenever events or changes in circumstances indicate the carrying value may not be recoverable. Examples include a significant adverse change in the extent or manner in which we use the asset, a change in its physical condition, or an unexpected change in financial performance. When evaluating long-lived assets and definite life intangibles for impairment, we compare the carrying value of the asset to the asset’s estimated undiscounted future cash flows. An impairment is indicated if the estimated future cash flows are less than the carrying value of the asset. For assets held for sale, we compare the carrying value of the disposal group to fair value. The impairment is the excess of the carrying value over the fair value of the asset. We recorded impairment charges related to long-lived assets and definite life intangibles of $45 million, $262 million and $107 million, in fiscal 2016, 2015 and 2014, respectively.		Our impairment analysis contains uncertainties due to judgment in assumptions, including useful lives of assets, forecasted sales, operating margins, growth rates, royalty rates and discount rates based on budgets, business plans, economic projections, anticipated future cash flows and marketplace data that reflects the risk inherent in future cash flows to determine fair value.		We have not made any material changes in the accounting methodology used to evaluate the impairment of long-lived assets or definite life intangibles during the last three fiscal years. We do not believe there is a reasonable likelihood there will be a material change in the estimates or assumptions used to calculate impairments of long-lived assets or definite life intangibles. However, if actual results are not consistent with our estimates and assumptions used to calculate estimated future cash flows, we may be exposed to impairment losses that could be material. We periodically conduct projects to strategically evaluate optimization of such items as network capacity and manufacturing efficiencies. Additionally, we continue to evaluate our international operations and strategies. If we have a significant change in strategies, outlook, or a manner in which we plan to use these assets, we may be exposed to future impairments.

Impairment of goodwill and indefinite life intangible assets

Description: Goodwill 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. We can elect to forgo the qualitative assessment and perform the quantitative test.

The quantitative goodwill impairment test is performed using a two-step process. The first step 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 fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is not considered to have a potential impairment and the second step of the quantitative impairment test is not necessary. However, if the carrying amount of a reporting unit exceeds its fair value, the second step is performed to determine if goodwill is impaired and to measure the amount of impairment loss to recognize, if any.

The second step compares the implied fair value of goodwill with the carrying amount of goodwill. If the implied fair value of goodwill exceeds the carrying amount, then goodwill is not considered impaired. However, if the carrying amount of goodwill exceeds the implied fair value, an impairment loss is recognized in an amount equal to that excess.

The implied fair value of goodwill is determined in the same manner as the amount of goodwill recognized in a business combination (i.e., the fair value of the reporting unit is allocated to all the assets and liabilities, including any unrecognized intangible assets, as if the reporting unit had been acquired in a business combination and the fair value of the reporting unit was determined as the exit price a market participant would pay for the same business).

For 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. We elected to forgo the qualitative assessments on our indefinite life intangible assets for the fiscal 2016 impairment test.

We have elected to make the first day of the fourth quarter the annual impairment assessment date for goodwill and indefinite life intangible assets. However, we could be required to evaluate the recoverability of goodwill and indefinite life intangible assets prior to the required annual assessment if, among other things, we experience disruptions to the business, unexpected significant declines in operating results, divestiture of a significant component of the business or a sustained decline in market capitalization.

Judgments and Uncertainties: We estimate the fair value of our reporting units, using various valuation techniques, with the primary technique being a discounted cash flow analysis, which uses significant unobservable inputs, or Level 3 inputs, as defined by the fair value hierarchy. A discounted cash flow analysis requires us to make various judgmental assumptions about sales, operating margins, growth rates and discount rates.

We include assumptions about sales, operating margins and growth rates which consider our budgets, business plans and economic projections, 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 normalized operating margin assumptions based on future expectations and operating margins historically realized in the reporting units' industries.

The fair value of our indefinite life intangible assets is calculated principally using relief-from-royalty and multi-period excess earnings valuation approaches, which uses 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.

Our impairment analysis contains uncertainties due to uncontrollable events that could positively or negatively impact the anticipated future economic and operating conditions.

Effect if Actual Results Differ From Assumptions: We have not made any material changes in the accounting methodology used to evaluate impairment of goodwill and intangible assets during the last three years.

During fiscal 2016, 2015 and 2014, all of our material reporting units that underwent a quantitative test passed the first step of the goodwill impairment analysis and therefore, the second step was not necessary. In fiscal 2015, we recorded a $23 million full impairment of an immaterial reporting unit’s goodwill.

Some of the inherent estimates and assumptions used in determining fair value of the reporting units and indefinite life intangible assets are outside the control of management, including interest rates, cost of capital, tax rates and credit ratings. While we believe we have made reasonable estimates and assumptions to calculate the fair value of the reporting units and indefinite life intangibles, 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, we may be required to perform the second step, which could result in additional material impairments of our goodwill.

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. Consequently, we do not currently consider any of our material reporting units at significant risk of failing the first step of the annual goodwill impairment test.

The discount rate used in our annual goodwill impairment test decreased to 6.2% in fiscal 2016 from 6.8% in fiscal 2015. Discount rates continue to be low compared to historical levels. A 38% increase in the discount rate would have caused our Prepared Foods reporting unit, with $4,005 million of goodwill at October 1, 2016, to fail the first step of the goodwill impairment step and may have resulted in a material impairment upon completion of the second step.

We did not have material indefinite life intangible assets prior to the acquisition of Hillshire Brands in August 2014. Our fiscal 2016 and 2015 indefinite life intangible assets impairment analyses did not result in an impairment charge. All 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. Consequently, we do not currently consider any of our material indefinite life intangible assets at significant risk of impairment.

The discount rate used in our annual indefinite life intangible assets impairment test was 7.9% in fiscal 2016 and 8.0% in fiscal 2015. A 20% increase in the discount rate would have caused the carrying value of two intangible assets, which have a combined carrying value of $2,476 million, to exceed fair value.