Tyson Foods (TSN) 10-K risk factor changes: FY2017 vs FY2016

The integration of [removed: The Hillshire Brands Company] [added: AdvancePierre] may be more difficult, costly or time consuming than expected, and the acquisition may not result in any or all of the anticipated benefits, including cost synergies.

The success of the acquisition of [removed: Hillshire Brands,] [added: AdvancePierre,] including the realization of the anticipated benefits, will depend in part on our ability to successfully integrate [removed: Hillshire Brands’] [added: AdvancePierre’s] businesses in an efficient and effective manner.

Failure to effectively integrate the businesses could adversely impact the expected benefits of the acquisition, including cost synergies [removed: stemming] [added: arising] from supply chain efficiencies, merchandising activities and overlapping general and administrative functions.

The integration of two large companies is complex, and we will be required to devote significant management attention and incur substantial costs to integrate [removed: Hillshire Brands’] [added: AdvancePierre's] and Tyson’s business practices, policies, cultures and operations.

Furthermore, during the integration planning process, we may encounter additional challenges and difficulties, including those related to, without limitation, managing a larger combined company; streamlining supply chains, consolidating corporate and administrative infrastructures and eliminating overlapping operations; retaining our existing vendors and customers; unanticipated issues in integrating information technology, communications and other systems; and unforeseen and unexpected liabilities related to the acquisition of [removed: Hillshire Brands’ business.][added: AdvancePierre.]

We continue to evaluate our estimates of synergies to be realized from the [removed: Hillshire Brands] [added: AdvancePierre] acquisition and refine them.

Finally, we may not be able to achieve the targeted operating or long-term strategic benefits of the [removed: Hillshire Brands] [added: AdvancePierre] acquisition [added: in a timely manner] or [added: at all or] could incur higher transition [removed: costs.][added: costs than anticipated.]

An inability to realize the full extent of, or any of, the anticipated benefits of the [removed: Hillshire Brands] [added: AdvancePierre] acquisition, as well as any delays encountered in the integration process, could have an adverse effect on our business, results of operations and financial condition.

Our results of operations and financial condition, as well as the selling prices for our products, are dependent upon the cost and supply of commodities and raw materials such as [removed: pork,] beef, [added: pork,] poultry, corn, soybean, packaging materials and energy and, to a lesser extent, cheese, fruit, seasoning blends, flour, corn syrup, corn oils, butter and sugar.

Corn, soybean meal and other feed ingredients, for instance, represented roughly [removed: 57%] [added: 55%] of our cost of growing a live chicken in fiscal [removed: 2016.][added: 2017.]

Some of the factors on which we compete include: pricing, product safety and quality, brand identification, innovation, breadth and depth of product offerings, availability of our products [added: (including distribution channels used, such as e-commerce)] and competing products, customer service, and credit terms.

Alternatively, if we do not reduce our prices and our competitors seek advantage through pricing or promotional changes, our revenues and market share [removed: would] [added: could] be adversely affected.

Outbreaks of livestock diseases can adversely impact our ability to conduct our operations and [added: the supply and] demand for our products.

[removed: Demand] [added: Supply of and demand] for our products can be adversely impacted by outbreaks of livestock diseases, which can have a significant impact on our financial results.

In fiscal [removed: 2016,] [added: 2017,] we sold products to approximately [removed: 115] [added: 117] countries.

Our sales to customers in foreign countries for fiscal [removed: 2016] [added: 2017] totaled [removed: $4.1] [added: $4.5] billion, of which [removed: $3.5] [added: $3.9] billion related to export sales from the United States.

In addition, we had approximately [removed: $204] [added: $217] million of long-lived assets located in foreign countries, primarily Brazil, China, [added: European Union] and India, at the end of fiscal [removed: 2016.][added: 2017.]

| • | imposition of tariffs, quotas, trade barriers and other trade protection measures imposed by foreign countries regarding the importation of [removed: poultry,] beef, [removed: pork] [added: pork, poultry,] and prepared foods products, in addition to import or export licensing requirements imposed by various foreign countries; |

| • | closing of borders by foreign countries to the import of [removed: poultry, beef] [added: beef, pork,] and [removed: pork] [added: poultry] products due to animal disease or other perceived health or safety issues; |

We have approximately [removed: 114,000] [added: 122,000] employees, approximately [removed: 33,000] [added: 35,000] of whom are covered by collective bargaining agreements or are members of labor unions.

If our products become contaminated, we may be subject to product liability claims and product [removed: recalls.][added: recalls, which could adversely affect our financial results and damage our reputation.]

Our financial success is dependent on anticipating changes in consumer [removed: preferences] [added: preferences, purchasing behaviors] and dietary habits and successfully developing and launching new products and product extensions that consumers [removed: want.][added: want in the channels where they shop.]

To the extent we are not able to effectively gauge the direction of our key markets and successfully identify, develop, manufacture and market new or improved products in these changing markets, [added: such as adapting to emerging e-commerce channels,] our financial results and our competitive position will suffer.

Our indebtedness, including borrowings under our revolving credit [removed: facility,] [added: facility and commercial paper program,] may increase from time to time for various reasons, including fluctuations in operating results, working capital needs, capital expenditures and possible acquisitions, joint ventures or other significant initiatives.

In assessing the carrying value of goodwill and indefinite life intangible assets, we make estimates and assumptions about sales, operating margins, growth rates, royalty [removed: rates] [added: rates, EBITDA multiples,] and discount rates based on budgets, business plans, economic projections, anticipated future cash flows and marketplace data.

[removed: Goodwill valuations have been calculated principally using an] [added: The] income approach [added: is] based on the present value of future cash flows of each reporting unit and are believed to reflect market participant views which would exist in an exit transaction.

As of [removed: October 1, 2016,] [added: September 30, 2017,] we had [removed: $10.7] [added: $13.4] billion of goodwill and indefinite life intangible assets, which represented approximately 48% of total assets.

We operate in a [removed: highly regulated] [added: highly-regulated] environment with constantly evolving legal and regulatory frameworks.

Legal claims or regulatory enforcement actions arising out of our failure or alleged failure to comply with applicable laws and regulations, including those contained in Item 3, Legal Proceedings and Part II, Item 8, [removed: and] Notes to Consolidated Financial Statements, Note [removed: 19:] [added: 20:] Commitments and Contingencies in this Annual Report on Form 10-K, could subject us to civil and criminal penalties, including debarment from governmental contracts that could materially and adversely affect our product sales, reputation, financial condition and results of operations.

Our business could suffer significant setbacks in sales and operating income if our customers’ plans and/or markets change significantly or if we lost one or more of our largest customers, including, for example, Wal-Mart Stores, Inc., which accounted for [removed: 17.5%] [added: 17.3%] of our sales in fiscal [removed: 2016.][added: 2017.]

Natural disasters, fire, bioterrorism, pandemic or extreme weather, including droughts, floods, excessive cold or heat, hurricanes or other storms, could impair the health or growth of livestock or interfere with our operations due to power outages, fuel shortages, decrease in availability of water, damage to our production and processing facilities or disruption of transportation [removed: channels,] [added: channels or unfavorably impact the demand for, or our consumers’ ability to purchase our products,] among other things.

As of [removed: October 1, 2016,] [added: September 30, 2017,] Tyson Limited Partnership (the [removed: TLP)] [added: "TLP")] owns 99.985% of the outstanding shares of the Company's Class B Common Stock, $0.10 par value (Class B stock) and the TLP and members of the Tyson family own, in the aggregate, [removed: 2.06%] [added: 2.07%] of the outstanding shares of the Company's Class A Common Stock, $0.10 par value (Class A stock), giving them, collectively, control of approximately [removed: 71.18%] [added: 70.78%] of the total voting power of the Company's outstanding voting stock.

As of [removed: October 1, 2016,] [added: September 30, 2017,] Mr. John Tyson, Chairman of the Board of Directors, has 33.33% of the general partner percentage interests, and Ms. Barbara Tyson, a director of the Company, has 11.115% general partner percentage interests (the remaining general partnership interests are held by the [removed: Tyson Partnership Interest Trust (44.44%) and Harry C.][added: Donald J.]

As of [removed: October 1, 2016,] [added: September 30, 2017,] the funded status of our defined benefit pension plans was an underfunded position of [removed: $336] [added: $195] million, as compared to an underfunded position of [removed: $410] [added: $336] million at the end of fiscal [removed: 2015.][added: 2016.]

We may not realize any or all of the anticipated benefits of our financial fitness program, which may prove to be more difficult, costly, or time consuming than expected.

In the fourth quarter of fiscal 2017, our Board of Directors approved a multi-year restructuring program (the “Financial Fitness Program”), which is expected to contribute to the Company’s overall strategy of financial fitness through increased operational effectiveness and overhead reduction.

For more information regarding this program, refer to the heading “Overview” set forth in Part II, “Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this report.

The success of the Financial Fitness Program, including the realization of the anticipated benefits, will depend in part on our ability to successfully implement the program in an efficient and effective manner.

The implementation of the Financial Fitness Program may be more difficult, costly, or time consuming than expected, and the Financial Fitness Program may not result in any or all of the anticipated benefits.

If we are unable to implement the Financial Fitness Program smoothly or successfully, or we otherwise do not capture the anticipated savings, our business, results of operations and financial condition for future periods could be negatively impacted.

In addition, we may incur higher costs associated with reductions in overhead than anticipated, and the reduction in overhead could result in performance shortfalls.

The Financial Fitness Program may become a distraction for our organization and may disrupt our ongoing business operations; cause deterioration in employee morale; disrupt or weaken the internal control structures of the affected business operations; and result in negative publicity which could affect our corporate reputation.

If we are unable to successfully manage the negative consequences of the Financial Fitness Program, our business, results of operations and financial condition for future periods could be adversely affected.

We may experience difficulties in implementing an enterprise resource planning system over the next few years.

We are engaged in a multi-year implementation of an enterprise resource planning (“ERP”) system.

Such an implementation is a major undertaking from a financial, management, and personnel perspective.

The implementation of the ERP system may prove to be more difficult, costly, or time consuming than expected, and there can be no assurance that this system will continue to be beneficial to the extent anticipated.

Any disruptions, delays or deficiencies in the design and implementation of our new ERP system could adversely affect our ability to process orders, ship products, send invoices and track payments, fulfill contractual obligations, produce financial reports, or otherwise operate our business.

As we implement our new ERP system, our exposure to system attacks may be elevated because we will be running old and new processes in parallel and must simultaneously protect both the new system and legacy systems.

If we are unable to implement the ERP system smoothly or successfully, or we otherwise do not capture anticipated benefits, our business, results of operations and financial condition for future periods could be negatively impacted.

Additionally, our implementation of the ERP system may involve greater utilization of third-party “cloud” computing services in connection with our business operations.

Problems faced by us or our third-party “cloud” computing providers, including technological or business-related disruptions, as well as cybersecurity threats, could adversely impact our business, results of operations and financial condition for future periods.

Goodwill valuations have been calculated principally using an income approach.

Additionally, from time to time, we may divest businesses that do not meet our strategic objectives or do not meet our growth or profitability targets.

We may not be able to complete desired or proposed divestitures on terms favorable to us.

Gains or losses on the sales of, or lost operating income from, those businesses may affect our profitability and margins.

Moreover, we may incur asset impairment charges related to divestitures that reduce our profitability.

Our divestiture activities may present financial, managerial and operational risks.

Those risks include diversion of management attention from existing businesses, difficulties separating personnel and financial and other systems, possible need for providing transition services to buyers, adverse effects on existing business relationships with suppliers and customers and indemnities and potential disputes with the buyers.

Any of these factors could adversely affect our product sales, financial condition and results of operations.

On April 24, 2017, we announced our intent to sell three non-protein businesses, Sara Lee® Frozen Bakery, Kettle and Van’s®, which are all a part of our Prepared Foods segment, as part of our strategic focus on protein-packed brands.

We anticipate we will close the transactions by the end of calendar 2017.

Alternative retail channels, such as convenience stores, dollar stores, drug stores, club stores and Internet-based retailers have increased their market share.

This trend towards alternative channels is expected to continue in the future.

If we are not successful in expanding sales in alternative retail channels, our business or financial results may be adversely impacted.

Tyson Revocable Trust (44.44%) and Harry C.

We could incur substantial tax liabilities as a result of the DEMB Master Blenders 1753 N.V (“DEMB”) Spin-Off.

On June 28, 2012, Hillshire Brands divested its international coffee and tea business segment through the spin-off of DEMB (the “Spin-Off”).

Hillshire Brands intended for the Spin-Off and certain related transactions to qualify as tax-free under Sections 355, 368(a)(1)(D), and 361 and related provisions of the United States Internal Revenue Code, which we refer to as the Code, and Hillshire Brands received a private letter ruling from the IRS substantially to the effect that the Spin-Off and certain related transactions, including a debt exchange, will qualify as tax-free to Hillshire Brands and its stockholders for United States federal income tax purposes.

Although a private letter ruling generally is binding on the IRS, if the factual representations or assumptions made in the private letter ruling request are untrue or incomplete in any material respect, or any material forward-looking covenants or undertakings are not complied with, then Hillshire Brands would not be able to rely on the ruling.

In addition, the ruling is based on current law, and cannot be relied upon if the applicable law changes with retroactive effect.

As a matter of practice the IRS does not rule on every requirement for a tax-free spin-off or tax-free debt-for-debt exchange, and the parties relied solely on the opinion of counsel for comfort that such additional requirements should be satisfied.

The opinion of counsel relies on, among other things, the continuing validity of the ruling and various assumptions and representations as to factual matters made by Hillshire Brands and DEMB which, if inaccurate or incomplete in any material respect, would jeopardize the conclusions reached by counsel in its opinion.

The opinion is not binding on the IRS or the courts, and there can be no assurance that the IRS or the courts will not challenge the conclusions stated in the opinion or that any such challenge would not prevail.

Accordingly, even though Hillshire Brands obtained a ruling and a “should” opinion of counsel, the IRS could assert that Hillshire Brands has not satisfied the requirements for tax-free treatment and such assertion, if successful, could result in significant United States federal income tax liabilities for us.

Events subsequent to the Spin-Off could cause the Spin-Off to become taxable.

Under the terms of the tax sharing agreement Hillshire Brands entered into with DEMB in connection with the Spin-Off, DEMB will generally be required to indemnify Hillshire Brands for 100% of any taxes imposed on DEMB and its subsidiaries or Hillshire Brands and its subsidiaries in the event that the Spin-Off and certain related transactions were to fail to qualify for tax-free treatment as a result of an acquisition of DEMB (including the acquisition of DEMB by J.A. Benckiser), or actions or omissions (including breaches of certain representations and warranties made in the tax sharing agreement) by DEMB or any of its affiliates.

However, if the Spin-Off or certain related transactions were to fail to qualify for tax-free treatment because of actions or omissions by Hillshire Brands or any of its affiliates, Hillshire Brands would be responsible for all such taxes.

In addition, Hillshire Brands would be responsible for 50% of any taxes resulting from the failure of the Spin-Off and certain related transactions to qualify as tax-free, which failure is not due to actions or omissions (including breaches of certain representations and warranties made in the tax sharing agreement) by Hillshire Brands, DEMB or any of Hillshire Brands’ or DEMB's respective subsidiaries.

There can be no assurance that the tax sharing agreement will be sufficient to protect Hillshire Brands against any tax liabilities that may arise, or that DEMB will be able to fully satisfy its indemnification obligations.

Hillshire Brands’ inability to enforce the indemnification provisions of the tax sharing agreement or obtain indemnification payments in a timely manner could adversely affect our results of operations, cash flows and financial condition.

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 [removed: materials,] [added: materials] and feed ingredients; and operating efficiencies of our facilities.

We operate in four reportable segments: [removed: Chicken,] Beef, [removed: Pork] [added: Pork, Chicken,] and Prepared Foods.

Other primarily includes our foreign chicken production operations in China and [removed: India and] [added: India,] third-party merger and integration [removed: costs.][added: costs and corporate overhead related to Tyson New]

[removed: Hillshire Brands] [added: AdvancePierre's] results from operations subsequent to the acquisition closing are included in the Prepared Foods [removed: segment.][added: and Chicken segments.]

| • | Fiscal year – Our accounting cycle resulted in a 52-week year for both fiscal [removed: 2016] [added: 2017] and [removed: 2014] [added: 2016] and a 53-week year for fiscal 2015. |

| • | [added: Hillshire] Integration – [removed: We continue to maintain focus on the integration] [added: The impact] of [added: the The] Hillshire Brands [removed: and synergy capture. We expect to realize synergies of around $675 million in fiscal 2017 from] [added: Company ("Hillshire Brands") synergies, along with] the [removed: acquisition as well as our] profit improvement plan [removed: for] [added: related to] our legacy Prepared Foods [removed: business. The amount expected to be realized] [added: business, had a positive incremental impact of approximately $90 million] in fiscal 2017 [removed: is reduced from our previous estimate] [added: above the $258 million captured in fiscal 2016 and $322 million captured in fiscal 2015, for a total] of [removed: $700] [added: $670] million [removed: as some] of [removed: the incremental] synergies [removed: are now expected to be realized in fiscal 2018.] [added: realized.] The majority of these benefits [removed: are expected to be] [added: were] realized in the Prepared Foods [removed: segment. We will continue] [added: segment and were partially used] to invest [removed: a portion of the synergies] in innovation, new product launches and [removed: support] [added: supporting] the growth of our brands. [removed: 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.] |

| • | Margins – Our total operating margin was 7.7% in fiscal [removed: 2016.] [added: 2017.] Operating margins by segment were as follows: |

| [removed: • |] Chicken [removed: – 11.9%] | [added: 56 | | | 32 | | | 88 | | |]

| [removed: • |] Beef [removed: – 2.4%] | [added: $ | 8 | | $ | 6 | | $ | 14 | |]

| [removed: • |] Pork [removed: – 10.8%] | [added: 3 | | | 2 | | | 5 | | |]

| [removed: • |] Prepared Foods [removed: – 10.0%] | [added: 82 | | | 25 | | | 107 | | |]

| | [removed: 2016] [added: 2017] | | | | [removed: 2015] [added: 2016] | | | | [removed: 2014] [added: 2015] | | |

| Net income attributable to Tyson | $ | [removed: 1,768] [added: 1,774] | | | $ | [removed: 1,220] [added: 1,768] | | | $ | [removed: 864] [added: 1,220] | |

| Net income attributable to Tyson - per diluted share | [removed: 4.53] [added: 4.79] | | | | [removed: 2.95] [added: 4.53] | | | | [removed: 2.37] [added: 2.95] | | |

| • | $53 [removed: million,] [added: million post tax,] or $0.14 per diluted share, related to recognition of previously unrecognized tax benefits and audit settlements. |

| • | $169 [removed: million,] [added: million pretax,] or ($0.41) per diluted share, related to an impairment charge in China. |

| • | $59 [removed: million,] [added: million pretax,] or ($0.09) per diluted share, related to Prepared Foods network optimization impairment charges. |

| • | $57 [removed: million,] [added: million pretax,] or ($0.09) per diluted share, related to merger and integration costs. |

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

| • | $161 [removed: million,] [added: million pretax,] or $0.24 per diluted share, related to a gain on sale of the Mexico operation. |

| • | $39 [removed: million,] [added: million pretax,] or $0.06 per diluted share, related to the additional week in fiscal 2015. |

| • | $26 [removed: million,] [added: million post tax,] or $0.06 per diluted share, related to recognition of previously unrecognized tax benefits. |

| • | $21 [removed: million,] [added: million pretax,] or $0.03 per diluted share, related to a gain on sale of equity securities. |

| • | $8 [removed: million,] [added: million pretax,] or $0.02 per diluted share, of insurance proceeds (net of costs) related to a legacy Hillshire Brands plant fire. |

| Sales | $ | [removed: 36,881] [added: 38,260] | | | $ | [removed: 41,373] [added: 36,881] | | | $ | [removed: 37,580] [added: 41,373] | |

| Change in sales volume | [removed: (4.6] [added: 1.0] | | [removed: )%] [added: %] | | [removed: 5.0] [added: (4.6] | | [removed: %] [added: )%] | | | | |

| Change in average sales price | [removed: (6.5] [added: 2.7] | | [removed: )%] [added: %] | | [removed: 4.8] [added: (6.5] | | [removed: %] [added: )%] | | | | |

| Sales growth | [removed: (10.9] [added: 3.7] | | [removed: )%] [added: %] | | [removed: 10.1] [added: (10.9] | | [removed: %] [added: )%] | | | | |

| • | Average Sales Price – Sales were positively impacted by higher average sales prices, which accounted for an increase of [removed: $1.4 billion. The Beef and Prepared Foods segments each] [added: $902 million. Each segment] had an increase in average sales [removed: prices, partially offset by a decrease in average sales prices in] [added: price with] the [added: Pork,] Chicken and [removed: Pork segments. The increase in average sales price was largely due] [added: Prepared Foods segments contributing] to [removed: continued tight domestic availability] [added: the majority] of [removed: beef products along with] the [removed: change] [added: increase due to strong demand for our pork products, improved mix and higher chicken pricing] in [added: our Chicken segment and better product] mix in [removed: the] [added: our] Prepared Foods segment [removed: as a result of] [added: which was positively impacted by] the acquisition [removed: and consolidation] of [removed: Hillshire Brands in our final month of fiscal 2014.] [added: AdvancePierre.] |

| Cost of sales | $ | [removed: 32,184] [added: 33,177] | | | $ | [removed: 37,456] [added: 32,184] | | | $ | [removed: 34,895] [added: 37,456] | |

| Gross profit | [removed: 4,697] [added: 5,083] | | | | [removed: 3,917] [added: 4,697] | | | | [removed: 2,685] [added: 3,917] | | |

| Cost of sales as a percentage of sales | [removed: 87.3] [added: 86.7] | | % | | [removed: 90.5] [added: 87.3] | | % | | [removed: 92.9] [added: 90.5] | | % |

| • | 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 [removed: Chicken, Beef] [added: Beef, Pork,] and [removed: Pork] [added: Chicken] segment commodity risk management activities. |

| • | The [removed: approximate $330] [added: $588] million impact of higher input [removed: costs] [added: cost per pound] was primarily driven by: |

| • | [removed: Increase] [added: Decrease] in live cattle [removed: cost of approximately $1.1 billion and operating] costs of approximately [removed: $90] [added: $600] million in our Beef segment. |

| • | Increase in input cost per pound related to the acquisition of [removed: Hillshire Brands] [added: AdvancePierre] on [removed: August 28, 2014.] [added: June 7, 2017.] |

| • | [removed: Decrease] [added: Increase] in live hog costs of approximately [removed: $500] [added: $40] million in our Pork segment. |

| • | [removed: Decrease] [added: Increase] in raw material and other input costs of approximately [removed: $290] [added: $50] million in our Prepared Foods segment. |

[removed: | • | Decrease] [added: Additionally, cost of sales increased] due to net unrealized [removed: gains] [added: losses] of [removed: $55] [added: $40] million [removed: in] [added: for] fiscal [removed: 2015,] [added: 2017,] compared to net unrealized [removed: losses] [added: gains] of [removed: $39] [added: $11] million [removed: in] [added: for] fiscal [removed: 2014, from] [added: 2016, primarily due to] our Beef [removed: and Pork] segment commodity risk management activities. [removed: |]

| Selling, general and administrative | $ | [removed: 1,864] [added: 2,152] | | | $ | [removed: 1,748] [added: 1,864] | | | $ | [removed: 1,255] [added: 1,748] | |

We are one of the world’s largest food companies and a recognized leader in protein.

Founded in 1935 by John W.

Tyson and grown under three generations of family leadership, the Company has a broad portfolio of products and brands like Tyson®, Jimmy Dean®, Hillshire Farm®, Ball Park®, Wright®, Aidells®, ibp® and State Fair®.

Ventures, LLC.

On June 7, 2017, we acquired and consolidated AdvancePierre Foods Holdings, Inc. ("AdvancePierre"), a producer and distributor of value-added, convenient, ready-to-eat sandwiches, sandwich components and other entrées and snacks.

| • | General – Our fiscal 2017 operating income grew 3% compared to fiscal 2016 to a record $2,931 million, which was led by record earnings in our Beef and Pork segments. The Beef segment's operating income improved $530 million and the Pork segment improved $117 million in fiscal 2017 due to favorable market conditions and strong operational execution. Our Chicken segment's lower operating income was impacted by increased operating costs and $56 million of restructuring and related charges. Our Prepared Foods segment's lower operating income was impacted by increased operating costs, impairments of $52 million related to our San Diego Prepared Foods operation and $45 million related to the expected sale of a non-protein business and $82 million of restructuring and related charges. In addition, we incurred an incremental $95 million of compensation and benefit integration expense in fiscal 2017, as we continued to integrate and make investments in our talent, and incurred $85 million of AdvancePierre purchase accounting and acquisition related operating costs. Sales increased 4% in fiscal 2017 over fiscal 2016, primarily due to increased sales volumes and increased beef, pork and chicken prices, as well as the net incremental impact of AdvancePierre's sales of $508 million. |

| • | Market Environment – According to the United States Department of Agriculture (USDA), domestic protein production (beef, pork, chicken and turkey) increased approximately 3% in fiscal 2017 compared to fiscal 2016. The Beef segment experienced strong export demand and more favorable domestic market conditions associated with an increase in cattle supply. The Pork segment had favorable market conditions associated with strong demand for our pork products and improved export markets. There was stronger demand for our chicken products and reduced feed ingredient costs of $80 million, which benefited the Chicken segment. Our Prepared Foods segment had improved demand for our retail products but experienced a decline in foodservice and higher input costs of $50 million. |

| • | Beef – 5.9% |

| • | Pork – 12.3% |

| • | Chicken –9.2% (included $56 million of restructuring and related charges) |

| • | Prepared Foods – 5.9% (included $52 million impairment related to our San Diego Prepared Foods operation, $45 million impairment related to the expected sale of a non-protein business, $82 million of restructuring and related charges and $34 million of purchase accounting and acquisition related costs from the acquisition of AdvancePierre.) |

| • | Liquidity – During fiscal 2017, we generated $2.6 billion of operating cash flows. At September 30, 2017, we had $1.0 billion of liquidity, which included $318 million of cash and cash equivalents and the availability under our revolving credit facility after deducting amounts outstanding under our commercial paper program. |

| • | Strategy - In fiscal 2017, we announced our strategy to sustainably feed the world with the fastest growing portfolio of protein-packed brands. We intend to accomplish this by growing our portfolio of protein-packed brands and delivering food at scale, which will be enabled by driving profitable growth with and for our customers through differentiated capabilities and creating fuel for reinvestment through a disciplined financial fitness model. |

| • | On June 7, 2017, we acquired all of the outstanding stock of AdvancePierre as part of our overall strategy. The purchase price was equal to $40.25 per share in cash for AdvancePierre's outstanding common stock, or approximately $3.2 billion. We funded the acquisition with existing cash on hand, net proceeds from the issuance of new senior notes, as well as borrowings under our commercial paper program and new term loan facility. AdvancePierre’s results from operations subsequent to the acquisition closing are included in the Prepared Foods and Chicken segments. For further description refer to Part II, Item 8, Notes to the Consolidated Financial Statements, Note 3: Acquisition and Dispositions. |

| • | On April 24, 2017, we announced our intent to sell three non-protein businesses, Sara Lee® Frozen Bakery, Kettle and Van’s®, which are all included in our Prepared Foods segment, as part of our strategic focus on protein-packed brands. We have reclassified the assets and liabilities related to these businesses to assets and liabilities held for sale in our Consolidated Balance Sheet as of September 30, 2017. In the fourth quarter of 2017, we recorded an impairment charge totaling $45 million related to one of these businesses due to a revised 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 2017, and consisted of goodwill and intangible assets previously classified within assets held for sale. We anticipate we will close the transactions by the end of calendar 2017, or early calendar 2018, and expect to record a net pretax gain as a result of the sale of these businesses. For further description refer to Part II, Item 8, Notes to the Consolidated Financial Statements, Note 3: Acquisition and Dispositions. |

| • | In the fourth quarter of fiscal 2017, our Board of Directors approved a multi-year restructuring program (the “Financial Fitness Program”), which is expected to contribute to the Company’s overall strategy of financial fitness through increased operational effectiveness and overhead reduction. Through a combination of synergies from the integration of AdvancePierre and additional elimination of non-valued added costs, the Financial Fitness Program is estimated to result in cumulative net savings of $200 million in fiscal 2018, $400 million in fiscal 2019 including new savings of $200 million, and $600 million in fiscal 2020 including additional savings of $200 million. Approximately 50-60% of these net savings, which are focused on supply chain, procurement, and overhead improvements, are expected to be realized in the Prepared Foods segment with the majority of the remaining net savings impacting the Chicken segment. Additionally, we estimate that approximately 75% of the net savings will be reflected in Cost of Sales in our Consolidated Statement of Income, with the remaining in Selling, General and Administrative. |

As part of the Financial Fitness Program, we anticipate eliminating approximately 500 positions across several areas and job levels with most of the eliminated positions originating from the corporate offices in Springdale, Arkansas; Chicago, Illinois; and Cincinnati, Ohio.

As a result, in the fourth quarter of fiscal 2017, the Company recognized restructuring and related charges of $150 million that consisted of $53 million severance and employee related costs, $72 million technology impairment and related costs, and $25 million for contract termination costs.

The Company currently anticipates the Financial Fitness Program will result in cumulative pretax charges, once implemented, of approximately $215 million which consist primarily of severance and employee related costs, asset impairments, accelerated depreciation, incremental costs to implement new technology, and contract termination costs.

The following tables set forth the pretax impact of restructuring and related charges incurred in fiscal 2017 in the Consolidated Statements of Income and the pretax impact by our reportable segments.

For further description refer to Part II, Item 8, Notes to the Consolidated Financial Statements, Note 6: Restructuring and Related Charges.

| in millions | | | | |

| | | 2017 | | |

| Cost of Sales | | $ | 35 | |

| Selling, general and administrative expenses | | 115 | | |

| Total restructuring and related charges, pretax | | $ | 150 | |

| | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | |

| | | | | | | | in millions | | |

| | 2017 charges | | | Estimated 2018 charges | | | Total estimated Financial Fitness Program charges | | |

| Other | 1 | | | — | | | 1 | | |

| Total restructuring and related charges, pretax | $ | 150 | | $ | 65 | | $ | 215 | |

2017 – Included the following items:

| • | $103 million pretax, or ($0.18) per diluted share, of AdvancePierre purchase accounting and acquisition related costs, which included a $36 million purchase accounting adjustment for the amortization of the fair value step-up of inventory, $49 million of acquisition related costs and $18 million of acquisition bridge financing fees. |

| • | $150 million pretax, or ($0.15) per diluted share, of restructuring and related charges. |

| • | $52 million pretax, or ($0.09) per diluted share, impairment charge related to our San Diego Prepared Foods operation. |

| • | $45 million pretax, or $0.01 per diluted share, impairment net of tax benefit related to the expected sale of a non-protein business. |

2017 vs. 2016 –

| • | Sales Volume – Sales were positively impacted by an increase in sales volume, which accounted for an increase of $477 |

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.

On August 28, 2014, we acquired and consolidated The Hillshire Brands Company ("Hillshire Brands"), a manufacturer and marketer of branded, convenient foods.

| • | 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. |

| • | 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. |

| • | 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. |

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. |

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. |

| • | 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. |

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

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

| • | 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. |

| • | 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. |

| | $ | (6 | ) | | $ | (9 | ) | | $ | (7 | ) |

| | $ | (8 | ) | | $ | (36 | ) | | $ | 53 | |

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.

2014 –

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

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

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.

| • | 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. |

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

| • | 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. |

| • | 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. |

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

| • | 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. |

The following table presents a sensitivity analysis resulting from a hypothetical change of 10% in market prices as of [added: September 30, 2017, and] October 1, 2016, [removed: and October 3, 2015,] on the fair value of open positions.

| Live Cattle | $ | [removed: 5] [added: 23] | | | $ | [removed: 13] [added: 5] | |

| Lean Hogs | [removed: 7] [added: 16] | | | | [removed: 12] [added: 7] | | |

| Corn | [removed: 26] [added: 17] | | | | [removed: 3] [added: 26] | | |

| Soy Meal | [removed: 8] [added: 13] | | | | [removed: —] [added: 8] | | |

Interest Rate Risk: At [removed: October 1, 2016,] [added: September 30, 2017,] we had variable rate debt of [removed: $1,357] [added: $2,756] million with a weighted average interest rate of [removed: 1.8%.][added: 1.9%.]

A hypothetical 10% increase in interest rates effective at [added: September 30, 2017, and] October 1, 2016, [removed: and October 3, 2015,] would have a minimal effect on interest expense.

At [removed: October 1, 2016,] [added: September 30, 2017,] we had fixed-rate debt of [removed: $4,922] [added: $7,447] million with a weighted average interest rate of [removed: 4.3%.][added: 4.1%.]

A hypothetical 10% decrease in interest rates would have increased the fair value of our fixed-rate debt by approximately [removed: $71] [added: $150] million at [removed: October 1, 2016,] [added: September 30, 2017,] and [removed: $87] [added: $71] million at October [removed: 3, 2015.][added: 1, 2016.]

See Part II, Item 8, Notes to Consolidated Financial Statements, Note [removed: 14:] [added: 15:] Pensions and Other Postretirement Benefits for additional information.

A hypothetical 10% change in foreign exchange rates effective at [added: September 30, 2017, and] October 1, 2016, [removed: and October 3, 2015,] related to the foreign exchange forward and option contracts would have a [added: $7 million and] $3 million [removed: impact] [added: impact, respectively,] on pretax income.

At [added: September 30, 2017, and] October 1, 2016, [removed: and October 3, 2015, 18.9%] [added: 18.6%] and [removed: 20.0%,] [added: 18.9%,] respectively, of our net accounts receivable balance was due from Wal-Mart Stores, Inc. No other single customer or customer group represented greater than 10% of net accounts receivable.

| | 2017 | | | | 2016 | | |

| | 2016 | | | | 2015 | | |

[removed: Our operations are conducted] [added: We operate] in four reportable segments: [removed: Chicken,] Beef, [removed: Pork] [added: Pork, Chicken] and Prepared Foods.

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 [removed: materials, grain] [added: materials] and feed ingredients; and operating efficiencies of our facilities.

We operate a fully [removed: vertically integrated] [added: vertically-integrated] chicken production process.

[removed: Hillshire Brands'] [added: AdvancePierre's] results of operations are included in the Prepared Foods [removed: segment.][added: and Chicken segments.]

Other primarily includes our foreign chicken production operations in China and [removed: India and] [added: India,] third-party merger and integration [removed: costs.][added: costs and corporate overhead related to Tyson New Ventures, LLC.]

The contribution of each segment to net sales and operating income (loss), and the identifiable assets attributable to each segment, are set forth in Part II, Item 8, Notes to Consolidated Financial Statements, Note [removed: 16:] [added: 17:] Segment Reporting.

Products primarily include [added: ready-to-eat sandwiches, sandwich components such as flame-grilled hamburgers and Philly steaks,] pepperoni, bacon, breakfast sausage, turkey, lunchmeat, hot dogs, pizza crusts and toppings, flour and corn tortilla products, desserts, appetizers, snacks, prepared meals, ethnic foods, soups, sauces, side dishes, meat dishes, breadsticks and processed meats.

Adult chickens are transported to processing plants where they are [removed: slaughtered] [added: harvested] and converted into finished products, which are then sent to distribution centers and delivered to customers.

In fiscal [removed: 2016,] [added: 2017,] corn, soybean meal and other feed ingredients were major production costs, representing roughly [removed: 57%] [added: 55%] of our cost of growing a live chicken domestically.

While we produce nearly all our inventory of breeder chickens and live broilers, we also purchase ice-packed or deboned [removed: chicken] [added: chicken, including no antibiotics ever (sometimes referred] to [added: as "NAE") certified chicken, to] meet production and sales requirements.

Prepared Foods: The primary raw materials used in our prepared foods operations are commodity based raw materials, including [removed: chicken,] beef, pork, [added: chicken,] turkey, corn, flour, [removed: vegetables] [added: vegetables, bread, breading, cheese, eggs, seasonings,] and other cooking ingredients.

Demand for [removed: chicken,] beef, [added: chicken] and certain prepared foods products, such as hot dogs and smoked sausage, generally increases during the spring and summer months and generally decreases during the winter months.

Wal-Mart Stores, Inc. accounted for [removed: 17.5%] [added: 17.3%] of our fiscal [removed: 2016] [added: 2017] consolidated sales.

No other single customer or customer group represented more than 10% of fiscal [removed: 2016] [added: 2017] consolidated sales.

We sold products in approximately [removed: 115] [added: 117] countries in fiscal [removed: 2016.][added: 2017.]

| • | Cobb-Vantress, a chicken breeding stock subsidiary, has business interests in Argentina, Brazil, China, the Dominican Republic, India, Japan, the Netherlands, New Zealand, the Philippines, [removed: Russia,] Spain, Turkey, the United Kingdom and Venezuela. |

Additional information regarding export sales and long-lived assets located in foreign countries is set forth in Part II, Item 8, Notes to Consolidated Financial Statements, Note [removed: 16:] [added: 17:] Segment Reporting.

The centers include [removed: over] [added: more than] 80,000 square feet of United States Department of Agriculture [removed: (USDA)] [added: ("USDA")] pilot plant space, two consumer sensory and focus group areas, a packaging lab and 25 research kitchens.

Research and development costs totaled [removed: $96] [added: $113] million, [removed: $75] [added: $96] million, and [removed: $52] [added: $75] million in fiscal [removed: 2016, 2015] [added: 2017, 2016] and [removed: 2014,] [added: 2015,] respectively.

Our facilities for processing [removed: chicken,] beef, pork, [added: chicken,] turkey and prepared foods, milling feed and housing live chickens and swine are subject to a variety of international, federal, state and local environmental laws and regulations, which include provisions relating to the discharge of materials into the environment and generally provide for protection of the environment.

In addition to our own internal Food Safety and Quality Assurance oversight and review, our [removed: chicken,] beef, [removed: pork] [added: pork, chicken,] and prepared foods products are subject to inspection prior to distribution, primarily by the USDA and the United States Food and Drug Administration.

As of [removed: October 1, 2016,] [added: September 30, 2017,] we employed approximately [removed: 114,000] [added: 122,000] employees.

Approximately [removed: 108,000] [added: 117,000] employees were employed in the United [removed: States] [added: States,] and [removed: 6,000] [added: 5,000] employees were employed in foreign countries, primarily in China.

Approximately [removed: 29,000] [added: 31,000] employees in the United States were subject to collective bargaining agreements with various labor unions, with approximately [removed: 43%] [added: 10%] of those employees at locations either under negotiation for contract renewal or included under agreements expiring in fiscal [removed: 2017.][added: 2018.]

Our principal marketing objective is to be the preferred provider of [removed: chicken,] beef, [removed: pork] [added: pork, chicken,] and prepared foods products for our customers and consumers.

We build the Tyson®, Jimmy Dean®, Hillshire Farm®, [removed: Sara Lee®,] Ball Park®, Wright®, [removed: Aidells®] [added: Aidells®, ibp®] and State Fair® brands while supporting strong regional and emerging brands primarily through well-defined, product-specific advertising, marketing, and public relations efforts focused toward key consumer targets with specific needs.

On this website, we make available, free of charge, annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, XBRL (eXtensible Business Reporting Language) reports, and all amendments to any of those reports, as soon as reasonably practicable after we electronically file such reports with, or furnish [added: such reports] to, the Securities and Exchange Commission.

Such forward-looking statements include, but are not limited to, current views and estimates of our outlook for fiscal [removed: 2017,] [added: 2018,] other future economic circumstances, industry conditions in domestic and international markets, our performance and financial results (e.g., debt levels, return on invested capital, value-added product growth, capital expenditures, tax rates, access to foreign markets and dividend policy).

Among the factors that may cause actual results and experiences to differ from anticipated results and expectations expressed in such forward-looking statements are the following: (i) [removed: the effect of, or changes in, general economic conditions; (ii)] fluctuations in the cost and availability of inputs and raw materials, such as live cattle, live swine, feed grains (including corn and soybean meal) and energy; [removed: (iii)] [added: (ii)] market conditions for finished products, including competition from other global and domestic food processors, supply and pricing of competing products and alternative proteins and demand for alternative proteins; [removed: (iv) successful rationalization of existing facilities and operating efficiencies of the facilities; (v) risks associated with our commodity purchasing activities; (vi) access to foreign markets together with foreign economic conditions, including currency fluctuations, import/export restrictions and foreign politics; (vii)] [added: (iii)] outbreak of a livestock disease (such as avian influenza (AI) or bovine spongiform encephalopathy (BSE)), which could have an adverse effect on livestock we own, the availability of livestock we purchase, consumer perception of certain protein products or our ability to access certain domestic and foreign markets; [added: (iv) the integration of AdvancePierre Foods Holdings, Inc.; (v) the effectiveness of our financial fitness program; (vi) the implementation of an enterprise resource planning system; (vii) access to foreign markets together with foreign economic conditions, including currency fluctuations, import/export restrictions and foreign politics;] (viii) changes in availability and relative costs of labor and contract growers and our ability to maintain good relationships with employees, labor unions, contract growers and independent producers providing us livestock; (ix) issues related to food safety, including costs resulting from product recalls, regulatory compliance and any related claims or litigation; (x) changes in consumer preference and diets and our ability to identify and react to consumer trends; (xi) [removed: significant marketing plan changes by large customers or loss] [added: effectiveness] of [removed: one or more large customers; (xii) adverse results from litigation; (xiii) impacts on our operations caused by factors] [added: advertising] and [removed: forces beyond] [added: marketing programs; (xii)] our [removed: control, such as natural disasters, fire, bioterrorism, pandemics or extreme weather; (xiv)] [added: ability to leverage brand value propositions; (xiii)] risks associated with leverage, including cost increases due to rising interest rates or changes in debt ratings or outlook; [added: (xiv) impairment in the carrying value of our goodwill or indefinite life intangible assets;] (xv) compliance with and changes to regulations and laws (both domestic and foreign), including changes in accounting standards, tax laws, environmental laws, agricultural laws and occupational, health and safety laws; (xvi) [added: adverse results from litigation; (xvii) cyber incidents, security breaches or other disruptions of] our [added: information technology systems; (xviii) our] ability to make effective acquisitions or joint ventures and successfully integrate newly acquired businesses into existing operations; [removed: (xvii) cyber incidents, security breaches] [added: (xix) risks associated with our commodity purchasing activities; (xx) the effect of,] or [removed: other disruptions] [added: changes in, general economic conditions; (xxi) significant marketing plan changes by large customers or loss] of [added: one or more large customers; (xxii) impacts on] our [removed: information technology systems; (xviii) effectiveness] [added: operations caused by factors and forces beyond our control, such as natural disasters, fire, bioterrorism, pandemics or extreme weather; (xxiii) failure to maximize or assert our intellectual property rights; (xxiv) our participation in a multiemployer pension plan; (xxv) the Tyson Limited Partnership’s ability to exercise significant control over the Company; (xxvi) effects related to changes in tax rates, valuation] of [removed: advertising] [added: deferred tax assets] and [removed: marketing programs;] [added: liabilities, or tax laws] and [removed: (xix)] [added: their interpretation; (xxvii) volatility in capital markets or interest rates; and (xxviii)] those factors listed under Item 1A.

Tyson Foods, Inc. and its subsidiaries (collectively, the “Company,” “we,” “us,” “our,” “Tyson Foods” or “Tyson”) (NYSE: TSN) 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 like Tyson®, Jimmy Dean®, Hillshire Farm®, Ball Park®, Wright®, Aidells®, ibp® and State Fair®.

Tyson Foods innovates 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.

Headquartered in Springdale, Arkansas, the company had approximately 122,000 team members on September 30, 2017.

Through its Core Values, Tyson Foods strives to operate with integrity, create value for its shareholders, customers, communities and team members and serve as a steward of the animals, land and environment entrusted to it.

On June 7, 2017, we acquired and consolidated AdvancePierre Foods Holdings, Inc. ("AdvancePierre"), a producer and distributor of value-added, convenient, ready-to-eat sandwiches, sandwich components and other entrées and snacks.

As part of our commitment to innovation and growth, in fiscal 2017 we launched a venture capital fund focused on investing in companies developing breakthrough technologies, business models and products to sustainably feed a growing world population.

The Tyson New Ventures LLC, fund is used to broaden our exposure to innovative, new forms of protein and ways of sustainably producing food to complement the Company's continuing investments in innovation in our core Beef, Pork, Chicken and Prepared Foods businesses.

Our value-added chicken products primarily include breaded chicken strips, nuggets, patties and other ready-to-fix or fully cooked chicken parts.

Founded in 1935, Tyson Foods, Inc. and its subsidiaries (collectively, “Company,” “we,” “us” or “our”) is 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.

On August 28, 2014, we acquired and consolidated The Hillshire Brands Company ("Hillshire Brands"), a manufacturer and marketer of branded, convenient foods.

We operate in four reportable segments: Chicken, Beef, Pork and Prepared Foods.

Refer to the description of certain legal proceedings pending against us under Part II, Item 8, Notes to Consolidated Financial Statements, Note [removed: 19:] [added: 20:] Commitments and Contingencies, which discussion is incorporated herein by reference.

On April 23, 2015, the [removed: EPA] [added: United States Environmental Protection Agency (EPA)] issued a Finding and Notice of Violation [removed: (the “NOV”)] [added: (NOV)] to Tyson Foods, Inc. and our subsidiary, Southwest Products, LLC, alleging violations of the California Truck and Bus Regulation.

The NOV [removed: alleges] [added: alleged] that certain diesel-powered trucks operated by us in California did not comply with California’s emission requirements for in-use trucks and that we did not verify the compliance status of independent carriers hired to carry products in California.

The judgment required payment of $540,000, which [removed: includes] [added: included] amounts for penalties, cost recovery and supplemental environmental projects.

Other Matters: As of [removed: October 1, 2016,] [added: September 30, 2017,] we had approximately [removed: 114,000] [added: 122,000] employees and, at any time, have various employment practices matters outstanding.

On January 27, 2017, Haff Poultry, Inc., Craig Watts, Johnny Upchurch, Jonathan Walters and Brad Carr, acting on behalf of themselves and a putative class of broiler chicken farmers, filed a class action complaint against us and certain of our poultry subsidiaries, as well as several other vertically-integrated poultry processing companies, in the United States District Court for the Eastern District of Oklahoma.

On March 28, 2017, a second class action complaint making similar claims on behalf of a similarly defined putative class was filed in the United States District Court for the Eastern District of Oklahoma.

Plaintiffs in the two cases sought to have the matters consolidated, and, on July 10, 2017, filed a consolidated amended complaint styled In re Broiler Chicken Grower Litigation.

The plaintiffs allege, among other things, that the defendants colluded not to compete for broiler raising services “with the purpose and effect of fixing, maintaining, and/or stabilizing grower compensation below competitive levels.” The plaintiffs also allege that the defendants “agreed to share detailed data on \[g\]rower compensation with one another, with the purpose and effect of artificially depressing \[g\]rower compensation below competitive levels.” The plaintiffs contend these alleged acts constitute violations of the Sherman Antitrust Act and Section 202 of the Grain Inspection, Packers and Stockyards Act of 1921.

The plaintiffs are seeking treble damages, pre- and post-judgment interest, costs, and attorneys’ fees on behalf of the putative class.

We and the other defendants filed a motion to dismiss on September 8, 2017.

That motion is pending.

In June 2017, the EPA withdrew this proposal and referred the matter to the California Air Resources Board (CARB).

We are cooperating with the CARB and, in July 2017, we signed a tolling agreement with the CARB.

The CARB has not yet made a demand in the matter.

We subsequently satisfied all these requirements, and the consent judgment was terminated in January 2017.

Following a criminal investigation by the EPA into the incident, one of the Company’s subsidiaries, Tyson Poultry, Inc., pled guilty to two misdemeanor violations of the federal Clean Water Act pursuant to a plea agreement conditionally approved on September 27, 2017 by the United States District Court for the Western District of Missouri.

Under the terms of the plea agreement, Tyson Poultry, Inc. has agreed to pay a $2 million fine, to make a $500,000 community service payment and to fund third-party environmental audits of numerous feed mills and wastewater treatment plants.

The court will determine whether to grant final approval of the terms of the plea agreement at a future sentencing hearing to be scheduled following the completion of a pre-sentencing report.

Our subsidiary, Tyson Poultry, Inc., has been in negotiations with Region 6 of the Unites States Environmental Protection Agency (the “EPA”) to resolve concerns about an accident at the Hope, Arkansas processing plant which occurred on April 23, 2016.

The EPA alleged violation of the Clean Air Act Risk Management Plan requirements related to our anhydrous ammonia refrigeration system and the accident.

Pursuant to an administrative settlement with the EPA, we will pay a penalty of $106,894, perform independent, third-party audits at 20 facilities in Arkansas, Oklahoma and Texas over the next 3 years, and construct a closed vent refrigeration system at a facility in Region 6 within the next 2 years.

We are cooperating with the EPA and believe that we have defenses to the allegations of the NOV.

That lawsuit alleges six violations stemming from the incident and seeks penalties against us, compensation for damage to the stream, and reimbursement for the State of Missouri’s costs in investigating the matter.

The EPA has also indicated to us that it has begun a criminal investigation into the incident.

If we become subject to criminal charges, we may be subject to a fine and other relief, as well as government contract suspension and debarment.

We are cooperating with the EPA but cannot predict the outcome of its investigation at this time.

It is also possible that other regulatory agencies may commence investigations and allege additional violations.

| | For the fiscal year ended | [removed: October 1, 2016] [added: September 30, 2017] |

[removed: ][added: ]

Yes [added: \[X\] No] \[ \] [removed: No \[X\]]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, [removed: or a] smaller reporting [added: company or an emerging growth] company.

See definitions of “large accelerated filer,” “accelerated [removed: filer” and] [added: filer,”] “smaller reporting [removed: company”] [added: company,” and "emerging growth company"] in Rule 12b-2 of the Exchange Act.

| Large accelerated filer [removed: \[X\]] | | [added: x | |] Accelerated filer [removed: \[ \]] | [added: | o |]

| Non-accelerated filer [removed: \[ \]] [added: | | o] (Do not check if a smaller reporting company) | | Smaller reporting company [removed: \[ \]] | [added: | o |]

On April [removed: 2, 2016,] [added: 1, 2017,] the aggregate market value of the registrant’s Class A Common Stock, $0.10 par value (Class A stock), and Class B Common Stock, $0.10 par value (Class B stock), held by non-affiliates of the registrant was [removed: $20,012,635,241] [added: $17,568,317,217] and [removed: $732,308,] [added: $663,691,] respectively.

On October [removed: 29, 2016,] [added: 28, 2017,] there were [removed: 290,558,412] [added: 297,708,610] shares of Class A stock and [removed: 70,010,755] [added: 70,010,355] shares of Class B stock outstanding.

Portions of the registrant’s definitive Proxy Statement for the registrant’s Annual Meeting of Shareholders to be held February [removed: 9, 2017,] [added: 8, 2018,] are incorporated by reference into Part III of this Annual Report on Form 10-K.

| Item 1. | [removed: [Business](#s616302C2761A50BDB2A44CC407EFCAD1)] [added: [Business](#sC1A6C8DBB9855900BE17B874AF24D602)] | [removed: [2](#s616302C2761A50BDB2A44CC407EFCAD1)] [added: [2](#sC1A6C8DBB9855900BE17B874AF24D602)] |

| Item 1A. | [Risk [removed: Factors](#s2430E48F753A5DFA858761D90796039A)] [added: Factors](#s7557E2C2FEB556F3835C57B9967D35F9)] | [removed: [6](#s2430E48F753A5DFA858761D90796039A)] [added: [6](#s7557E2C2FEB556F3835C57B9967D35F9)] |

| Item 1B. | [Unresolved Staff [removed: Comments](#sA8C95B027F06513BA64B8CF3102A5267)] [added: Comments](#s18EB5B21185B5004887337E4874DC67D)] | [removed: [14](#sA8C95B027F06513BA64B8CF3102A5267)] [added: [15](#s18EB5B21185B5004887337E4874DC67D)] |

| Item 2. | [removed: [Properties](#s69630D0B3FBC56B383A1FDD003F71A7D)] [added: [Properties](#s13D7BD0324AD506BA5540E532DA8BAFC)] | [removed: [15](#s69630D0B3FBC56B383A1FDD003F71A7D)] [added: [15](#s13D7BD0324AD506BA5540E532DA8BAFC)] |

| Item 3. | [Legal [removed: Proceedings](#s4B91CD2FC0995A7DB3F37ABDDE2BC585)] [added: Proceedings](#s5A64873B23505242AED2C760E4EBAAF7)] | [removed: [16](#s4B91CD2FC0995A7DB3F37ABDDE2BC585)] [added: [16](#s5A64873B23505242AED2C760E4EBAAF7)] |

| Item 4. | [Mine Safety [removed: Disclosures](#s3E2FD190E7D15CDB8765C3837ED0376E)] [added: Disclosures](#s532A48ADAF755D99A6D418D4D246B72C)] | [removed: [16](#s3E2FD190E7D15CDB8765C3837ED0376E)] [added: [17](#s532A48ADAF755D99A6D418D4D246B72C)] |

| Item 5. | [Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities](#s2B00B2341C8D5AD2A08BE76080E09766)] [added: Securities](#s4988004AD0845CD2860E94DFA51645A3)] | [removed: [19](#s2B00B2341C8D5AD2A08BE76080E09766)] [added: [19](#s4988004AD0845CD2860E94DFA51645A3)] |

| Item 6. | [Selected Financial [removed: Data](#s18A91AE6E847504B86B7D9D24F368D79)] [added: Data](#s779117B534B15D1AA0F18CC1E09D4004)] | [removed: [21](#s18A91AE6E847504B86B7D9D24F368D79)] [added: [21](#s779117B534B15D1AA0F18CC1E09D4004)] |

| Item 7. | [Management’s Discussion and Analysis of Financial Condition and Results of [removed: Operations](#s906428747EC653A7B4A6010DB1C8ECD6)] [added: Operations](#sEDA30967F6875E9382E0651A7D6B56A0)] | [removed: [23](#s906428747EC653A7B4A6010DB1C8ECD6)] [added: [23](#sEDA30967F6875E9382E0651A7D6B56A0)] |

| Item 7A. | [Quantitative and Qualitative Disclosures About Market [removed: Risk](#s11BF3CDC3F705F28B7707C263DC54EE0)] [added: Risk](#s41BFCEA3933E5DEEB96A349985C8730F)] | [removed: [42](#s11BF3CDC3F705F28B7707C263DC54EE0)] [added: [43](#s41BFCEA3933E5DEEB96A349985C8730F)] |

| Item 8. | [Financial Statements and Supplementary [removed: Data](#sD61CA297295D5A699298E2259618BCA1)] [added: Data](#sEC9850BFD6A9575AA3FA2F1A0C2C3972)] | [removed: [44](#sD61CA297295D5A699298E2259618BCA1)] [added: [45](#sEC9850BFD6A9575AA3FA2F1A0C2C3972)] |

| Item 9. | [Changes in and Disagreements With Accountants on Accounting and Financial [removed: Disclosure](#sBEAFE7DFF7225DB8B69086D670FFBF9F)] [added: Disclosure](#sAD0B5B55D5AC50179D787C93700F0324)] | [removed: [86](#sBEAFE7DFF7225DB8B69086D670FFBF9F)] [added: [90](#sAD0B5B55D5AC50179D787C93700F0324)] |

| Item 9A. | [Controls and [removed: Procedures](#s11AB09B3C43E56E59677DBFC3BEFB3F3)] [added: Procedures](#sD68A106CAFF15D318B1D7D15A963C578)] | [removed: [86](#s11AB09B3C43E56E59677DBFC3BEFB3F3)] [added: [90](#sD68A106CAFF15D318B1D7D15A963C578)] |

| Item 9B. | [Other [removed: Information](#sB29E7F538B4A52B289397C4CFC3A0C2E)] [added: Information](#s833E0336A1BC5704A700F43B63B648DF)] | [removed: [86](#sB29E7F538B4A52B289397C4CFC3A0C2E)] [added: [90](#s833E0336A1BC5704A700F43B63B648DF)] |

| [PART [removed: III](#s001CB444291E527C93508F2F71F1D240)] [added: III](#s2C8102E2C9C05B95A61B499C3CD3CE56)] | | |

| Item 10. | [Directors, Executive Officers and Corporate [removed: Governance](#s592AFD6A4A0355F4964AC29752A364C1)] [added: Governance](#s22215655237D5C3482215AE10126CB9D)] | [removed: [87](#s592AFD6A4A0355F4964AC29752A364C1)] [added: [91](#s22215655237D5C3482215AE10126CB9D)] |

| Item 11. | [Executive [removed: Compensation](#s4D576F9AC44F5338830DDD6F54ED2FA2)] [added: Compensation](#sA3F8E189B73D55DAA7DD9AF8A992729C)] | [removed: [87](#s4D576F9AC44F5338830DDD6F54ED2FA2)] [added: [91](#sA3F8E189B73D55DAA7DD9AF8A992729C)] |

| Item 12. | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder [removed: Matters](#s4EB1B6E14C175CEA812D10FD236C6755)] [added: Matters](#s179CAC5195DC521D8B1062666BEAAA03)] | [removed: [87](#s4EB1B6E14C175CEA812D10FD236C6755)] [added: [92](#s179CAC5195DC521D8B1062666BEAAA03)] |

| Item 13. | [Certain Relationships and Related Transactions, and Director [removed: Independence](#s83FF7D26D0745E469AC66B26E72F5F22)] [added: Independence](#sD60F42B433185C5CB2B103C57113C2E2)] | [removed: [87](#s83FF7D26D0745E469AC66B26E72F5F22)] [added: [92](#sD60F42B433185C5CB2B103C57113C2E2)] |

| Item 14. | [Principal Accounting Fees and [removed: Services](#s19AE39B156165DDCB011BDAC899F3294)] [added: Services](#sC7D1CFA79B025A3C8BF63355B7892E9C)] | [removed: [87](#s19AE39B156165DDCB011BDAC899F3294)] [added: [92](#sC7D1CFA79B025A3C8BF63355B7892E9C)] |

| Item 15. | [Exhibits, Financial Statement [removed: Schedules](#sFB51D4FBBB395505AB06AB6E737AFD7C)] [added: Schedules](#sC44DE62CDFD7576DBC43349C19529D3B)] | [removed: [88](#sFB51D4FBBB395505AB06AB6E737AFD7C)] [added: [93](#sC44DE62CDFD7576DBC43349C19529D3B)] |

10-K 1 tsn201710kq4.htm 10-K

| | | | | | | |

| --- | --- | --- | --- | --- | --- | --- |

| | | | | | | |

| | | | | Emerging growth company | | o |

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

Yes ¨ No x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of September 30, 2017.

| | | | |

| --- | --- | --- | --- |

| | | | |

| Class | | Outstanding Shares | |

| Class A Common Stock, $0.10 Par Value (Class A stock) | | 297,596,071 | |

| Class B Common Stock, $0.10 Par Value (Class B stock) | | 70,010,755 | |

| [PART I](#sB9179D91CF6B51F6892AD32328B2FAC2) | | |

| [PART II](#sDC1BA37C5EB05EF098230CD729D160CA) | | |

| [PART IV](#s5F612D5016C053FEA680F1D47FDCC276) | | |

| Item 16. | [Form 10-K Summary](#sdd3440ff4d6e44f082bdf5efc50ee797) | [103](#sdd3440ff4d6e44f082bdf5efc50ee797) |

10-K 1 tsn201610kq4.htm FORM 10-K

| | | |

| --- | --- | --- |

| [PART I](#s9334049B37FA5EF490B58C168B8F0C54) | | |

| [PART II](#s12F1B3F9EC405443964307638AC0A43F) | | |

| [PART IV](#s76A9CFD6DA185768BBF7A6C1D1A9B458) | | |

We have production and distribution operations in the following states: Alabama, Arizona, Arkansas, California, Delaware, Florida, Georgia, Illinois, Indiana, Iowa, Kansas, Kentucky, [added: Maine,] Maryland, Michigan, Mississippi, Missouri, Nebraska, [added: New Jersey,] North Carolina, Oklahoma, [added: Ohio,] Pennsylvania, South Carolina, Tennessee, Texas, Virginia, Washington and Wisconsin.

Additionally, we have sales offices, facilities or participate in joint venture operations in Argentina, Brazil, Canada, China, the Dominican Republic, Hong Kong, India, Japan, Mexico, the Netherlands, New Zealand, the Philippines, [removed: Russia,] South Korea, Spain, Taiwan, Turkey, the United Arab Emirates, the United Kingdom and Venezuela.

| Processing [removed: plants] [added: plants(1)] | [removed: 44] [added: 47] | | | 1 | | | [removed: 45] [added: 48] | |

| Feed mills | [removed: 32] [added: 33] | | | — | | | [removed: 32] [added: 33] | |

| Broiler hatcheries | [removed: 60] [added: 59] | | | 3 | | | [removed: 63] [added: 62] | |

| Broiler farm houses | [removed: 48] [added: 50] | | | — | | | [removed: 48] [added: 50] | |

| Processing [removed: plants] [added: plants(1)] | [removed: 30] [added: 38] | | | 4 | | | [removed: 34] [added: 42] | |

| Distribution [removed: Centers] [added: Centers(2)] | 12 | | | [removed: 1] [added: 2] | | | [removed: 13] [added: 14] | |

| Cold Storage [removed: Facilities] [added: Facilities(2)] | [removed: 50] [added: 51] | | | [removed: —] [added: 1] | | | [removed: 50] [added: 52] | |

| | | | | [removed: Capacity(1)] [added: Capacity(3)] per week at [removed: October 1, 2016] [added: September 30, 2017] | | | Fiscal [removed: 2016] [added: 2017] Average Capacity Utilization | |

| Beef Production Facilities | | | | [removed: 165,000] [added: 162,000] head | | | [removed: 76] [added: 80] | % |

| Pork Production Facilities | | | | 456,000 head | | | [removed: 91] [added: 93] | % |

| Prepared Foods Processing [removed: Facilities(2)] [added: Facilities] | | | | [removed: 78] [added: 88] million pounds | | | [removed: 84] [added: 85] | % |

[removed: | (1) |] [added: (3)] Capacity per week based on the following: [removed: Chicken] [added: Beef] and [removed: Prepared Foods (five] [added: Pork (six] day week) and [removed: Beef] [added: Chicken] and [removed: Pork (six] [added: Prepared Foods (five] day week). [removed: |]

Chicken: Chicken processing plants include various phases of [removed: slaughtering,] [added: harvesting,] dressing, cutting, packaging, deboning and further-processing.

Beef: Beef plants include various phases of [removed: slaughtering] [added: harvesting] live cattle and fabricating beef products.

Pork: Pork plants include various phases of [removed: slaughtering] [added: harvesting] live hogs and fabricating pork products and allied products.

Prepared Foods: Prepared Foods plants process fresh and frozen chicken, turkey, beef, pork and other raw materials into [added: ready-to-eat sandwiches, sandwich components such as flame-grilled hamburgers and Philly steaks,] pizza toppings, branded and processed meats, desserts, appetizers, prepared meals, ethnic foods, soups, sauces, side dishes, pizza crusts, flour and corn tortilla products and meat dishes.

The processing plants include various phases of [removed: slaughtering,] [added: harvesting,] dressing, cutting, packaging, deboning and further-processing chicken.

| Breeder houses | 457 | | | 44 | | | 501 | |

| (1) | Certain facilities acquired in the AdvancePierre acquisition produce products that are reported in both the Chicken and Prepared Foods segments. For presentation purposes, the acquired facilities are reflected in the segment that had the majority of the facility’s production. As a result, two facilities were added to the Chicken segment and eight facilities were added to the Prepared Foods segment. |

| (2) | Includes a leased Distribution Center and a leased Cold Storage Facility acquired in the AdvancePierre acquisition. |

| Breeder houses | 430 | | | 44 | | | 474 | |

| (2) | In fiscal 2016, we changed the method of calculating capacity for our Prepared Foods processing plants. If we would have used the fiscal 2015 method, fiscal 2016 capacity would have been 74 million pounds with an 89% average capacity utilization. |

[removed: Our] [added: Each of our] executive officers serve one-year terms from the date of their election, or until their successors are appointed and qualified.

The name, title, age (as of [removed: October 1, 2016)] [added: September 30, 2017)] and calendar year of initial election to executive office of our executive officers are listed below:

| John Tyson | | Chairman of the Board of Directors | | [removed: 63] [added: 64] | | 2011 |

| Curt T. Calaway | | Senior Vice President, Controller and Chief Accounting Officer | | [removed: 43] [added: 44] | | 2012 |

| Thomas P. Hayes | | President [added: and Chief Executive Officer] | | [removed: 51] [added: 52] | | 2014 |

| Dennis Leatherby | | Executive Vice President and Chief Financial Officer | | [removed: 56] [added: 57] | | 1994 |

| Mary Oleksiuk | | Executive Vice President and Chief Human Resources Officer | | [removed: 54] [added: 55] | | 2014 |

| Stephen Stouffer | | [removed: President,] [added: President] Fresh Meats | | [removed: 56] [added: 57] | | 2013 |

| David L. Van Bebber | | Executive Vice President and General Counsel | | [removed: 60] [added: 61] | | 2008 |

| Noel White | | [removed: President, Poultry] [added: Group President Fresh Meats & International] | | [removed: 58] [added: 59] | | 2009 |

Calaway was appointed Senior Vice President, Controller and Chief Accounting Officer in 2012, after serving as Vice President, Audit and Compliance since [removed: 2008, prior to which he served as the Company's Senior Director of Financial Reporting.][added: 2008.]

Hillshire Brands was acquired by the Company in [removed: August] 2014.

Sally Grimes was appointed [added: Group] President, [added: Prepared Foods in August 2017, after serving as President, North American Retail since February 2017, Chief Global Growth Officer and President] International [added: since October 2016, President, International] and Chief Global Growth Officer [removed: in] [added: since August 2016, and Chief Global Growth Officer since] June 2015 following her appointment as President and Global Growth Officer in 2014.

Hayes was appointed [added: Chief Executive Officer in December 2016 following his appointment as] President in June 2016.

[removed: Mr. Hayes previously] [added: Prior to that, he] served as [added: the] Chief Commercial Officer since June 2015 after being appointed President, Foodservice in 2014.

Mr. Hayes previously served as Executive Vice President and Chief Supply Chain Officer of Hillshire Brands since [removed: 2012, prior to which he served as Senior Vice President and Chief Supply Chain Officer for Sara Lee’s North American Retail and Foodservice businesses from 2009 to] 2012.

Mr. Hayes was initially employed by [added: the] Sara Lee [added: Corporation, the predecessor to Hillshire Brands,] in 2006.

Dennis Leatherby was appointed Executive Vice President and Chief Financial Officer in [removed: 2008 after serving as Senior Vice President, Finance and Treasurer since 1998.][added: 2008.]

Mr. [removed: Smith] [added: Ramsey] was initially employed by the Company in [removed: 1980.][added: 1992.]

Stouffer was appointed President, Fresh Meats in 2013, after serving as Senior Vice President, Beef Margin Management since [removed: 2012, prior to which he served as Vice President, Ground Beef, Trim and Variety Meats Sales since 2009, and Director, Ground Beef, Trim and Carcass Sales since 2006.][added: 2012.]

Van Bebber was appointed Executive Vice President and General Counsel in [removed: 2008, after serving as Senior Vice President and Deputy General Counsel since 2004.][added: 2008.]

Noel White was appointed [added: Group] President, [removed: Poultry] [added: Fresh Meats/International] in [removed: 2013,] [added: August 2017,] after serving as [removed: Senior Group Vice] President, [removed: Fresh Meats] [added: Poultry] since [removed: 2009,] [added: 2013,] after serving as Senior [removed: Vice President, Pork Margin Management since 2007 and] Group Vice President, Fresh Meats [removed: Operations/Commodity Sales] since [removed: 2005.][added: 2009.]

| Sally Grimes | | Group President Prepared Foods | | 46 | | 2014 |

| Doug Ramsey | | Group President Poultry | | 48 | | 2017 |

| Scott Rouse | | Chief Customer Officer | | 54 | | 2017 |

Doug Ramsey was appointed Group President, Poultry in August 2017, after serving as President Poultry since March 2017.

Mr. Ramsey previously served as Senior Vice President Big Bird/Fowl since 2014, and Senior Vice President and GM Value since 2011.

Scott Rouse was appointed Chief Customer Officer in September 2014, after serving as Senior Vice President Customer Development since 2006.

Mr. Rouse was initially employed by the Company in 2004.

| Andrew P. Callahan | | President, Retail Packaged Brands | | 50 | | 2014 |

| Howell P. Carper | | Executive Vice President, Operations Services | | 62 | | 2013 |

| Sally Grimes | | President, International and Chief Global Growth Officer | | 45 | | 2014 |

| Donnie King | | President, North American Operations | | 54 | | 2009 |

| Monica McGurk | | Executive Vice President, Strategy and New Ventures and President, Foodservice | | 46 | | 2016 |

| Donnie Smith | | Chief Executive Officer | | 56 | | 2008 |

Andrew P.

Callahan was appointed President, Retail Packaged Brands in September 2014.

Mr. Callahan previously served as Executive Vice President and President, Retail of The Hillshire Brands Company (“Hillshire Brands”) since 2012, prior to which he served as Senior Vice President, Chief Customer Officer for Sara Lee Corporation's (“Sara Lee”) North American operations from 2011 to 2012, after serving as President of Sara Lee's North American Foodservice segment from 2009 to 2011.

Howell P.

(“Hal”) Carper was appointed Executive Vice President, Operations Services in April 2016, after serving as Executive Vice President, Strategy and New Ventures since 2013.

He previously served as Group Vice President, Research and Development, Logistics, and Technical Services since 2008, prior to which he served as Senior Vice President, Corporate Research and Development since 2003, and Senior Vice President and General Manager, Foodbrands Foodservice since 2001.

Mr. Carper was appointed by IBP, inc. as Senior Vice President, Sales and Marketing in 1999.

Prior to employment with IBP, inc., he served as Senior Vice President, Sales and Marketing with Foodbrands, Inc., which was acquired by IBP, inc. in 1997.

Prior to joining Hillshire Brands, Ms. Grimes served as Global Vice President, Marketing for the writing and creative expression business unit at Newell Rubbermaid, Inc. from 2007 to 2012.

Donnie King was appointed President North American Operations in June 2015 following his appointment as President of North American Operations and Food Service in 2014.

He previously served as President of Prepared Foods, Customer and Consumer Solutions since 2013, Senior Group Vice President, Poultry and Prepared Foods since 2009, Group Vice President, Refrigerated and Deli since 2008, Group Vice President, Operations since 2007, Senior Vice President, Consumer Products Operations since 2006 and Senior Vice President, Poultry Operations since 2003.

Mr. King was initially employed by Valmac Industries, Inc. in 1982.

Valmac Industries, Inc. was acquired by the Company in 1984.

He also served as Interim Chief Financial Officer from 2004 to 2006.

Monica McGurk was appointed Executive Vice President, Strategy and New Ventures and President, Foodservice in August 2016 after serving as Senior Vice President, Strategy and New Ventures since April 2016.

Prior to joining the Company, Ms. McGurk served as Senior Vice President of Strategy, Decision Support and eCommerce for the North American Group of the Coca-Cola Company from 2014 to 2016, prior to which she served as Vice President, Strategy & eCommerce since late 2012.

Prior to joining the Coca-Cola Company, she was the Chief Executive Officer and Executive Editor of The Alumni Factor from May through November 2012.

Prior to this position, she was a partner with McKinsey & Company, a global management consulting firm with which she served in various roles for 19 years.

Prior to joining Hillshire Brands, Ms. Oleksiuk served as Chief Human Resources Officer and Senior Vice President for Discover Financial Services from 2011 to 2012.

From 2010 to 2011, she served as Senior Vice President, Global Human Resources with Alberto Culver Company and as Vice President, Global Human Resources with Alberto Culver Company from 2007 to 2010.

Donnie Smith was appointed President and Chief Executive Officer in November 2009 and continues to serve as Chief Executive Officer following Mr. Hayes’ appointment as President in June 2016.

Mr. Smith served as Senior Group Vice President, Poultry and Prepared Foods since January 2009, prior to which he served as Group Vice President of Consumer Products since 2008, Group Vice President of Logistics and Operations Services since 2007, Group Vice President Information Systems, Purchasing and Distribution since 2006 and Senior Vice President and Chief Information Officer since 2005.

As of October [removed: 29, 2016,] [added: 28, 2017,] there were approximately [removed: 23,000] [added: 20,000] holders of record of our Class A stock and six holders of record of our Class B stock.

In fiscal [removed: 2015,] [added: 2017,] the annual dividend rate for Class A stock was [removed: $0.40] [added: $0.90] per share and the annual dividend rate for Class B stock was [removed: $0.36] [added: $0.81] per share.

On November [removed: 17, 2016,] [added: 10, 2017,] the Board of Directors increased the [added: quarterly] dividend previously declared on August [removed: 4, 2016,] [added: 10, 2017,] to [removed: $0.225] [added: $0.30] per share on our Class A stock and [removed: $0.2025] [added: $0.27] per share on our Class B stock.

The increased quarterly dividend is payable on December 15, [removed: 2016,] [added: 2017,] to shareholders of record at the close of business on December 1, [removed: 2016.][added: 2017.]

Also on November [removed: 17, 2016,] [added: 10, 2017,] the Board of Directors declared a quarterly dividend of [removed: $0.225] [added: $0.30] per share on our Class A stock and [removed: $0.2025] [added: $0.27] per share on our Class B stock, payable on March 15, [removed: 2017,] [added: 2018,] to shareholders of record at the close of business on March 1, [removed: 2017.][added: 2018.]

We anticipate the remaining quarterly dividends in fiscal [removed: 2017] [added: 2018] will be [removed: $0.225] [added: $0.30] and [removed: $0.2025] [added: $0.27] per share of our Class A and Class B stock, respectively.

We also continue to anticipate our annual dividends to increase approximately $0.10 per [added: share per] year.

The high and low sales prices of our Class A stock for each quarter of fiscal [removed: 2016] [added: 2017] and [removed: 2015] [added: 2016] are represented in the table below.

| | High | | | | Low | | | [removed: |] High | | | | Low | | |

| First Quarter | $ | [removed: 54.42 |] [added: 75.33] | | [removed: $] | [removed: 42.89] [added: 55.72] | | | $ | [removed: 43.37] [added: 54.42] | | | $ | [removed: 37.02] [added: 42.89] | |

| Second Quarter | [removed: 68.17 |] [added: 67.14] | | | [removed: 48.52] | [added: 61.00] | | | [removed: 42.41] [added: 68.17] | | | | [removed: 37.10] [added: 48.52] | | |

| Third Quarter | [removed: 70.44 |] [added: 66.87] | | | [removed: 59.45] | [added: 57.20] | | | [removed: 45.10] [added: 70.44] | | | | [removed: 37.24] [added: 59.45] | | |

| Fourth Quarter | [removed: 77.05 |] [added: 70.80] | | | [removed: 65.83] | [added: 58.36] | | | [removed: 44.78] [added: 77.05] | | | | [removed: 39.05] [added: 65.83] | | |

| (2) | We purchased [removed: 254,857] [added: 194,741] shares during the period that were not made pursuant to our previously announced stock repurchase program, but were purchased to fund certain Company obligations under our equity compensation plans. These transactions included [removed: 244,498] [added: 178,162] shares purchased in open market transactions and [removed: 10,359] [added: 16,579] shares withheld to cover required tax withholdings on the vesting of restricted stock. |

The following graph shows a five-year comparison of cumulative total returns for our Class A stock, the Standard & Poor’s (S&P) 500 Index [added: our previous peer group] and [removed: a] [added: our current peer] group of [removed: peer] companies described below.

[removed: ][added: ]

The total cumulative return on investment (change in the year-end stock price plus reinvested dividends), which is based on the stock price or composite index at the end of fiscal [removed: 2011,] [added: 2012,] is presented for each of the periods for the Company, the S&P 500 Index, [added: the previous peer group] and our [added: current] peer group.

The [added: complete list of our current] peer group includes: Archer-Daniels-Midland Company, Bunge Limited, Campbell Soup Company, ConAgra Foods, Inc., Dean Foods Company, General Mills, Inc., Hormel Foods Corp., Kellogg Co., [added: Kraft Heinz Company,] McCormick & Co., Mondelez International Inc., PepsiCo, Inc., Pilgrim's Pride Corporation, [removed: Sanderson Farms, Inc.,] The [removed: Hershey] [added: Coca-Cola] Company, [added: The Hershey Company] and The J.M. Smucker Company.

The graph compares the performance of the Company's Class A common stock with that of the S&P 500 Index and [added: both] peer [removed: group,] [added: groups,] with the return of each company in the peer [removed: group] [added: groups] weighted on market capitalization.

This results in an annual dividend rate in fiscal 2018 of $1.20 for Class A shares and $1.08 for Class B shares, or a 33% increase compared to the fiscal 2017 annual dividend rate.

| | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | | |

| | 2017 | | | | | | | 2016 | | | | | | |

| Jul. 2, 2017 to Jul. 29, 2017 | 69,962 | | | $ | 61.36 | | — | | | 27,821,995 | |

| Jul. 30, 2017 to Sept. 2, 2017 | 82,328 | | | 64.40 | | | — | | | 27,821,995 | |

| Sept. 3, 2017 to Sept. 30, 2017 | 42,451 | | | 65.57 | | | — | | | 27,821,995 | |

| Total | 194,741 | | (2) | $ | 63.56 | | — | | (3) | 27,821,995 | |

| | 9/29/12 | | | | 9/28/13 | | | | 9/27/14 | | | | 10/3/15 | | | | 10/1/16 | | | | 9/30/17 | | |

| Tyson Foods, Inc. | $ | 100.00 | | | $ | 181.00 | | | $ | 240.79 | | | $ | 285.92 | | | $ | 485.58 | | | $ | 465.00 | |

| S&P 500 Index | 100.00 | | | | 119.34 | | | | 142.89 | | | | 154.00 | | | | 160.94 | | | | 194.44 | | |

| Previous Peer Group | 100.00 | | | | 121.82 | | | | 140.64 | | | | 154.48 | | | | 174.37 | | | | 171.50 | | |

| Current Peer Group | 100.00 | | | | 115.59 | | | | 132.52 | | | | 140.88 | | | | 160.33 | | | | 159.82 | | |

The changes from our previous peer group to our current peer group was that our previous group included Sanderson Farms and our current peer group includes the addition of the Kraft Heinz Company and The Coca-Cola Company.

| | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | 2016 | | | | | | | | 2015 | | | | | | |

| Jul. 3, 2016 to Jul. 30, 2016 | 4,706,269 | | | $ | 70.20 | | 4,598,556 | | | 44,488,878 | |

| Jul. 31, 2016 to Sept. 3, 2016 | 2,643,859 | | | 74.69 | | | 2,543,335 | | | 41,945,543 | |

| Sept. 4, 2016 to Oct. 1, 2016 | 1,652,309 | | | 74.61 | | | 1,605,689 | | | 40,339,854 | |

| Total | 9,002,437 | | (2) | $ | 72.33 | | 8,747,580 | | (3) | 40,339,854 | |

| | Base Period 10/1/11 | | | | 9/29/12 | | | | 9/28/13 | | | | 9/27/14 | | | | 10/3/15 | | | | 10/1/16 | | |

| Tyson Foods, Inc. | $ | 100.00 | | | $ | 93.09 | | | $ | 168.50 | | | $ | 224.16 | | | $ | 266.17 | | | $ | 452.03 | |

| S&P 500 Index | 100.00 | | | | 130.20 | | | | 155.39 | | | | 186.05 | | | | 184.91 | | | | 213.44 | | |

| Peer Group | 100.00 | | | | 117.85 | | | | 143.56 | | | | 165.74 | | | | 182.04 | | | | 205.49 | | |

| | [removed: 2016] [added: 2017] | | | | [removed: 2015] [added: 2016] | | | | [removed: 2014] [added: 2015] | | | | [removed: 2013] [added: 2014] | | | | [removed: 2012] [added: 2013] | | |

| Sales | $ | [removed: 36,881] [added: 38,260] | | | $ | [removed: 41,373] [added: 36,881] | | | $ | [removed: 37,580] [added: 41,373] | | | $ | [removed: 34,374] [added: 37,580] | | | $ | [removed: 33,055] [added: 34,374] | |

| Operating income | [removed: 2,833] [added: 2,931] | | | | [removed: 2,169] [added: 2,833] | | | | [removed: 1,430] [added: 2,169] | | | | [removed: 1,375] [added: 1,430] | | | | [removed: 1,286] [added: 1,375] | | |

| Net interest expense | [removed: 243] [added: 272] | | | | [removed: 284] [added: 243] | | | | [removed: 125] [added: 284] | | | | [removed: 138] [added: 125] | | | | [removed: 344] [added: 138] | | |

| Income from continuing operations | [removed: 1,772] [added: 1,778] | | | | [removed: 1,224] [added: 1,772] | | | | [removed: 856] [added: 1,224] | | | | [removed: 848] [added: 856] | | | | [removed: 614] [added: 848] | | |

| Loss from discontinued operation, net of tax | — | | | | — | | | | — | | | | [removed: (70] [added: —] | | [removed: )] | | [removed: (38] [added: (70] | | ) |

| Net income | [removed: 1,772] [added: 1,778] | | | | [removed: 1,224] [added: 1,772] | | | | [removed: 856] [added: 1,224] | | | | [removed: 778] [added: 856] | | | | [removed: 576] [added: 778] | | |

| Net income attributable to Tyson | [removed: 1,768] [added: 1,774] | | | | [removed: 1,220] [added: 1,768] | | | | [removed: 864] [added: 1,220] | | | | [removed: 778] [added: 864] | | | | [removed: 583] [added: 778] | | |

| Income from continuing operations | [removed: 4.53] [added: 4.79] | | | | [removed: 2.95] [added: 4.53] | | | | [removed: 2.37] [added: 2.95] | | | | [removed: 2.31] [added: 2.37] | | | | [removed: 1.68] [added: 2.31] | | |

| Loss from discontinued operation | — | | | | — | | | | — | | | | [removed: (0.19] [added: —] | | [removed: )] | | [removed: (0.10] [added: (0.19] | | ) |

| Net income | [removed: 4.53] [added: 4.79] | | | | [removed: 2.95] [added: 4.53] | | | | [removed: 2.37] [added: 2.95] | | | | [removed: 2.12] [added: 2.37] | | | | [removed: 1.58] [added: 2.12] | | |

| Class A | [removed: 0.650] [added: 0.975] | | | | [removed: 0.425] [added: 0.650] | | | | [removed: 0.325] [added: 0.425] | | | | [removed: 0.310] [added: 0.325] | | | | [removed: 0.160] [added: 0.310] | | |

| Class B | [removed: 0.585] [added: 0.878] | | | | [removed: 0.383] [added: 0.585] | | | | [removed: 0.294] [added: 0.383] | | | | [removed: 0.279] [added: 0.294] | | | | [removed: 0.144] [added: 0.279] | | |

| Cash and cash equivalents | $ | [removed: 349] [added: 318] | | | $ | [removed: 688] [added: 349] | | | $ | [removed: 438] [added: 688] | | | $ | [removed: 1,145] [added: 438] | | | $ | [removed: 1,071] [added: 1,145] | |

| Total assets | [removed: 22,373] [added: 28,066] | | | | [removed: 22,969] [added: 22,373] | | | | [removed: 23,906] [added: 22,969] | | | | [removed: 12,167] [added: 23,906] | | | | [removed: 11,882] [added: 12,167] | | |

| Total debt | [removed: 6,279] [added: 10,203] | | | | [removed: 6,690] [added: 6,279] | | | | [removed: 8,128] [added: 6,690] | | | | [removed: 2,398] [added: 8,128] | | | | [removed: 2,418] [added: 2,398] | | |

| Shareholders’ equity | [removed: 9,624] [added: 10,559] | | | | [removed: 9,706] [added: 9,624] | | | | [removed: 8,904] [added: 9,706] | | | | [removed: 6,233] [added: 8,904] | | | | [removed: 6,042] [added: 6,233] | | |

| Depreciation and amortization | $ | [removed: 705] [added: 761] | | | $ | [removed: 711] [added: 705] | | | $ | [removed: 530] [added: 711] | | | $ | [removed: 519] [added: 530] | | | $ | [removed: 499] [added: 519] | |

| Capital expenditures | [removed: 695] [added: 1,069] | | | | [removed: 854] [added: 695] | | | | [removed: 632] [added: 854] | | | | [removed: 558] [added: 632] | | | | [removed: 690] [added: 558] | | |

| EBITDA | [removed: 3,538] [added: 3,648] | | | | [removed: 2,906] [added: 3,538] | | | | [removed: 1,897] [added: 2,906] | | | | [removed: 1,818] [added: 1,897] | | | | [removed: 1,731] [added: 1,818] | | |

| Return on invested capital | [removed: 18.1] [added: 16.3] | | % | | [removed: 13.4] [added: 18.1] | | % | | [removed: 11.9] [added: 13.4] | | % | | [removed: 18.5] [added: 11.9] | | % | | [removed: 17.7] [added: 18.5] | | % |

| Effective tax rate for continuing operations | [removed: 31.8] [added: 32.3] | | % | | [removed: 36.3] [added: 31.8] | | % | | [removed: 31.6] [added: 36.3] | | % | | [removed: 32.6] [added: 31.6] | | % | | [removed: 36.4] [added: 32.6] | | % |

| Total debt to capitalization | [removed: 39.5] [added: 49.1] | | % | | [removed: 40.8] [added: 39.5] | | % | | [removed: 47.7] [added: 40.8] | | % | | [removed: 27.8] [added: 47.7] | | % | | [removed: 28.6] [added: 27.8] | | % |

| Book value per share | $ | [removed: 25.67] [added: 28.72] | | | $ | [removed: 24.25] [added: 25.67] | | | $ | [removed: 21.86] [added: 24.25] | | | $ | [removed: 18.13] [added: 21.86] | | | $ | [removed: 16.84] [added: 18.13] | |

| Stock price high | [removed: 77.05] [added: 75.33] | | | | [removed: 45.10] [added: 77.05] | | | | [removed: 44.24] [added: 45.10] | | | | [removed: 32.40] [added: 44.24] | | | | [removed: 21.06] [added: 32.40] | | |

| Stock price low | [removed: 42.89] [added: 55.72] | | | | [removed: 37.02] [added: 42.89] | | | | [removed: 27.33] [added: 37.02] | | | | [removed: 15.93] [added: 27.33] | | | | [removed: 14.07] [added: 15.93] | | |

| [removed: a.] [added: b.] | Fiscal 2016 net income included $53 million related to the recognition of previously unrecognized tax benefits and audit settlements. In fiscal 2016, we adopted new accounting guidance, retrospectively, requiring classification of debt issuance costs as a reduction of the carrying value of the debt. In doing so, $29 million, $35 million, $50 [removed: million, $10] million and [removed: $14] [added: $10] million of deferred issuance costs have been reclassified from Other Assets to Long-Term Debt in our Consolidated Balance Sheets for fiscal 2016, 2015, [removed: 2014, 2013] [added: 2014] and [removed: 2012] [added: 2013] respectively. This change is reflected above in total assets, total debt, total debt to capitalization and return on invested capital ratios. |

| [removed: b.] [added: c.] | Fiscal 2015 was a 53-week year, while the other years presented were 52-week years. Fiscal 2015 included a $169 million pretax impairment charge related to our China operation, $57 million pretax expense related to merger and integration costs, $59 million pretax impairment charges related to our Prepared Foods network optimization, $12 million pretax charges related to Denison impairment and plant closure costs, $8 million pretax gain related to net insurance proceeds (net of costs) related to a legacy Hillshire Brands plant fire, $21 million pretax gain on the sale of equity securities, $161 million pretax gain on the sale of the Mexico operation, $39 million pretax gain related to the impact of the additional week in fiscal 2015 and $26 million unrecognized tax benefit gain. |

| [removed: c.] [added: d.] | Fiscal 2014 included a $42 million pretax impairment charge and other costs related to the sale of our Brazil operation and Mexico's undistributed earnings tax, $197 million pretax expense related to the Hillshire Brands acquisition, integration and costs associated with our Prepared Foods improvement plan, $40 million pretax expense related to the Hillshire Brands post-closing results, purchase price accounting, and costs related to a legacy Hillshire Brands plant fire, $27 million pretax expense related to the Hillshire Brands acquisition financing incremental interest cost and $52 million unrecognized tax benefit gain. |

| [removed: d.] [added: e.] | Fiscal 2013 included a $19 million currency translation adjustment gain recognized in conjunction with the receipt of proceeds constituting the final resolution of our investment in Canada. [removed: Additionally] [added: Additionally,] in fiscal [removed: 2013,] [added: 2013] we determined our Weifang operation (Weifang) was no longer core to the execution of our strategy in China. In July 2013, we completed the sale of Weifang. Non-cash charges related to the impairment of assets in Weifang amounted to $56 million [removed: and $15 million] in fiscal [removed: 2013 and 2012, respectively.] [added: 2013.] |

| h. | [removed: In fiscal 2016, we changed our methodology of calculating the book] [added: Book] value per share [removed: to include] [added: is calculated by dividing shareholders’ equity by] the [added: sum of Class A and B shares outstanding and the] remaining minimum shares that [removed: will] [added: were to] be issued from our tangible equity units for each [removed: period presented above.] [added: period.] |

| Net income | $ | [removed: 1,772] [added: 1,778] | | | $ | [removed: 1,224] [added: 1,772] | | | [removed: $] [added: 1,224] | [removed: 856] | | | $ | [removed: 778] [added: 856] | | | $ | [removed: 576] [added: 778] | |

| Less: Interest income | [removed: (6] [added: (7] | | ) | | [removed: (9] [added: (6] | | ) | | [removed: (7] [added: (9] | | ) | | (7 | | ) | | [removed: (12] [added: (7] | | ) |

| Add: Interest expense | [removed: 249] [added: 279] | | | | [removed: 293] [added: 249] | | | | [removed: 132] [added: 293] | | | | [removed: 145] [added: 132] | | | | [removed: 356] [added: 145] | | |

| Add: Income tax expense (a) | [removed: 826] [added: 850] | | | | [removed: 697] [added: 826] | | | | [removed: 396] [added: 697] | | | | [removed: 411] [added: 396] | | | | [removed: 351] [added: 411] | | |

| Add: Depreciation | [removed: 617] [added: 642] | | | | [removed: 609] [added: 617] | | | | [removed: 494] [added: 609] | | | | [removed: 474] [added: 494] | | | | [removed: 443] [added: 474] | | |

| Add: Amortization (b) | [removed: 80] [added: 106] | | | | [removed: 92] [added: 80] | | | | [removed: 26] [added: 92] | | | | [removed: 17] [added: 26] | | | | 17 | | |

| EBITDA | $ | [removed: 3,538] [added: 3,648] | | | $ | [removed: 2,906] [added: 3,538] | | | $ | [removed: 1,897] [added: 2,906] | | | $ | [removed: 1,818] [added: 1,897] | | | $ | [removed: 1,731] [added: 1,818] | |

| Total gross debt [removed: (c)] | $ | [removed: 6,279] [added: 10,203] | | | $ | [removed: 6,690] [added: 6,279] | | | $ | [removed: 8,128] [added: 6,690] | | | $ | [removed: 2,398] [added: 8,128] | | | $ | [removed: 2,418] [added: 2,398] | |

| Less: Cash and cash equivalents | [removed: (349] [added: (318] | | ) | | [removed: (688] [added: (349] | | ) | | [removed: (438] [added: (688] | | ) | | [removed: (1,145] [added: (438] | | ) | | [removed: (1,071] [added: (1,145] | | ) |

| a. | Fiscal 2017 net income included $103 million pretax expense of AdvancePierre purchase accounting and acquisition related costs, pretax impairment charges of $52 million related to our San Diego Prepared Foods operation and $45 million related to the expected sale of a non-protein business and pretax restructuring and related charges of $150 million. |

| | 2017 | | | | 2016 | | | | 2015 | | | | 2014 | | | | 2013 | | |

| | |

| --- | --- |

| e. | Fiscal 2012 included a pretax charge of $167 million related to the early extinguishment of debt. |

| (c) | In fiscal 2016, we adopted new accounting guidance, retrospectively, requiring classification of debt issuance costs as a reduction of the carrying value of the debt. In doing so, $29 million, $35 million, $50 million, $10 million and $14 million of deferred issuance costs have been reclassified from Other Assets to Long-Term Debt in our Consolidated Balance Sheets for fiscal 2016, 2015, 2014, 2013 and 2012, respectively. |

| | Three years ended [removed: October 1, 2016] [added: September 30, 2017] | | | | | | | | | | |

| | [removed: 2016] [added: 2017] | | | | [removed: 2015] [added: 2016] | | | | [removed: 2014] [added: 2015] | | |

| Sales | $ | [removed: 36,881] [added: 38,260] | | | $ | [removed: 41,373] [added: 36,881] | | | $ | [removed: 37,580] [added: 41,373] | |

| Cost of Sales | [removed: 32,184] [added: 33,177] | | | | [removed: 37,456] [added: 32,184] | | | | [removed: 34,895] [added: 37,456] | | |

| Gross Profit | [removed: 4,697] [added: 5,083] | | | | [removed: 3,917] [added: 4,697] | | | | [removed: 2,685] [added: 3,917] | | |

| Selling, General and Administrative | [removed: 1,864] [added: 2,152] | | | | [removed: 1,748] [added: 1,864] | | | | [removed: 1,255] [added: 1,748] | | |

| Operating Income | [removed: 2,833] [added: 2,931] | | | | [removed: 2,169] [added: 2,833] | | | | [removed: 1,430] [added: 2,169] | | |

| Interest income | [removed: (6] [added: (7] | | ) | | [removed: (9] [added: (6] | | ) | | [removed: (7] [added: (9] | | ) |

| Interest expense | [removed: 249] [added: 279] | | | | [removed: 293] [added: 249] | | | | [removed: 132] [added: 293] | | |

| Other, net | [removed: (8] [added: 31] | | [removed: )] | | [removed: (36] [added: (8] | | ) | | [removed: 53] [added: (36] | | [added: )] |

| Total Other (Income) Expense | [removed: 235] [added: 303] | | | | [removed: 248] [added: 235] | | | | [removed: 178] [added: 248] | | |