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

DESCRIPTION OF THE COMPANY

We are one of the world’s largest food companies and a recognized leader in protein. Founded in 1935 by John W. Tyson and grown under three generations of family leadership, the Company has a broad portfolio of products and brands including Tyson®, Jimmy Dean®, Hillshire Farm®, Ball Park®, Wright®, Aidells®, ibp® and State Fair®. Some of the key factors influencing our business are customer demand for our products; the ability to maintain and grow relationships with customers and introduce new and innovative products to the marketplace; accessibility of international markets; market prices for our products; the cost and availability of live cattle and hogs, raw materials and feed ingredients; and operating efficiencies of our facilities.

We operate in four reportable segments: Beef, Pork, Chicken and Prepared Foods. International/Other primarily includes our foreign operations in Australia, China, South Korea, Malaysia, Mexico, the Netherlands, Thailand and the United Kingdom, third-party merger and integration costs and corporate overhead related to Tyson New Ventures, LLC. For further description of the business, refer to Part I, Item 1, Business.

OVERVIEW

•	Fiscal year – Our accounting cycle resulted in a 52-week year for fiscal 2019, 2018 and 2017.

•

General – Sales grew 6% in fiscal 2019 over fiscal 2018, primarily due to acquisitions and increased average sales prices in the Beef and Prepared Foods segments. Fiscal 2019 operating income decreased compared to fiscal 2018, as record Beef segment results were offset by a decline in operating income in the Chicken and Pork segments. In fiscal 2019, our results were impacted by a $41 million impairment associated with the planned divestiture of a business, $41 million of restructuring and related charges, $37 million related to Keystone Foods purchase accounting and acquisition related costs and $31 million of costs associated with a fire at one of our beef production facilities. In fiscal 2018, our results were impacted by $109 million of one-time cash bonus to frontline employees, as we continued to make investments in our talent, $68 million impairment, net of realized gains, associated with the divestitures of non-protein businesses, and $59 million of restructuring and related charges.

•

Market Environment – According to the United States Department of Agriculture ("USDA"), domestic protein production (beef, pork, chicken and turkey) increased approximately 2% in fiscal 2019 compared to fiscal 2018. Currently, we are experiencing impacts to domestic and export prices across all of our segments resulting from uncertainty in trade policies and increased tariffs. Additionally, all segments experienced increased operating and labor costs in fiscal 2019. We will pursue recovery of these increased costs through pricing. The Beef segment experienced strong demand offset by increased costs associated with a fire at one of our beef production facilities. The Pork segment experienced increased livestock costs during a time of excess domestic availability of pork products due to export constraints, which made market conditions challenging. Our Chicken segment also faced challenging pricing conditions associated with increased domestic availability of supply. Our Prepared Foods segment continued its strong performance due to demand despite increased raw material costs and reduced volumes from the divestiture of certain non-protein businesses in fiscal 2018.

•	Margins – Our total operating margin was 6.7% in fiscal 2019. Operating margins by segment were as follows:

•	Beef – 7.0%

•	Pork – 5.3%

•	Chicken – 4.7%

•	Prepared Foods – 10.0%

•	Liquidity – We generated approximately $2.5 billion of operating cash flows during fiscal 2019. At September 28, 2019, we had $1.2 billion of liquidity, which included $484 million of cash and cash equivalents and the availability under our revolving credit facility after deducting amounts outstanding under our commercial paper program.

•	Strategy – Our strategy is to sustainably feed the world with the fastest growing protein brands. We intend to achieve our strategy as we: grow our business through differentiated capabilities; deliver ongoing financial fitness through continuous improvement; and sustain our company and our world for future generations.

•

During fiscal 2019, we acquired two businesses for a total of approximately $2.5 billion, net of cash acquired. These businesses included the Thai and European operations, which consist of vertically integrated chicken and further-processing operations, and Keystone Foods, a major supplier to the growing global foodservice industry. They were acquired in furtherance of our growth strategy and expansion of our value-added protein capabilities in domestic and global markets. For further description refer to Part II, Item 8, Notes to the Consolidated Financial Statements, Note 3: Acquisitions and Dispositions.

•

During fiscal 2018, we acquired three operations for a total of approximately $1.5 billion, net of cash acquired. These operations, which consisted of American Proteins Inc., a poultry rendering and blending operation, Tecumseh Poultry, LLC, a vertically integrated valued-added business, and Original Philly Holdings, Inc., a value-added protein business, were acquired as part of our growth and sustainability initiatives and our acquisition strategy of new brands, new capabilities, scale and synergy, and new geographies and markets. For further description refer to Part II, Item 8, Notes to the Consolidated Financial Statements, Note 3: Acquisitions and Dispositions.

•

During fiscal 2018, we sold four non-protein operations for net proceeds of $805 million, as part of our strategic focus on protein brands. These operations, which were all part of our Prepared Foods segment, included Sara Lee® Frozen Bakery, Van’s®, Kettle and TNT Crust. For further description refer to Part II, Item 8, Notes to the Consolidated Financial Statements, Note 3: Acquisitions 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 business acquisitions and additional elimination of non-valued added costs, the program is focused on supply chain, procurement and overhead improvements, and net savings are expected to be realized in the Prepared Foods and Chicken segments. No liability exists under this program at September 28, 2019. For further description refer to Part II, Item 8, Notes to the Consolidated Financial Statements, Note 6: Restructuring and Related Charges.

in millions, except per share data
	2019				2018
Net income attributable to Tyson	$	2,022			$	3,024
Net income attributable to Tyson - per diluted share	5.52				8.19

2019 – Included the following items:

•	$37 million pretax, or ($0.08) per diluted share, of Keystone Foods purchase accounting and acquisition related costs, which included an $11 million purchase accounting adjustment for the amortization of the fair value step-up of inventory and $26 million of acquisition related costs.

•	$41 million pretax, or ($0.08) per diluted share, of restructuring and related charges.

•	$55 million pretax, or $0.11 per diluted share, from gain on sale of an investment.

•	$105 million post tax, or $0.29 per diluted share, from recognition of previously unrecognized tax benefit.

•	$31 million pretax, or ($0.06) per diluted share, of Beef production facility fire costs.

•	$41 million pretax, or ($0.09) per diluted share, from an impairment associated with the planned divestiture of a business.

•	$15 million pretax, or ($0.03) per diluted share, due to a pension plan termination charge.

2018 – Included the following items:

•	$1,003 million post tax, or $2.71 per diluted share, tax benefit from remeasurement of net deferred tax liabilities at lower enacted tax rates.

•	$109 million pretax, or ($0.22) per diluted share, related to one-time cash bonus to frontline employees.

•	$68 million pretax, or ($0.34) per diluted share, impairments net of realized gains associated with the divestitures of non-protein businesses.

•	$59 million pretax, or ($0.12) per diluted share, of restructuring and related charges.

SUMMARY OF RESULTS

Sales	in millions
	2019				2018				2017
Sales	$	42,405			$	40,052			$	38,260
Change in sales volume	8.8		%		2.5		%
Change in average sales price	(3.0		)%		2.1		%
Sales growth	5.9		%		4.7		%

2019 vs. 2018 –

•	Sales Volume – Sales were positively impacted by an increase in sales volume, which accounted for an increase of $3,539 million primarily driven by incremental volumes from business acquisitions which impacted the Chicken segment and International/Other, partially offset by business divestitures in fiscal 2018 in our Prepared Foods segment.

•

Average Sales Price – Sales were negatively impacted by lower average sales prices, which accounted for a decrease of $1,186 million. The Chicken segment had a decrease in average sales price as a result of decreased pricing associated with product mix changes from fiscal 2018 acquisitions, partially offset by an increase in average sales price in the Beef and Prepared Foods segments attributable to strong demand and sales in the Beef segment and a more favorable product mix and higher raw material costs in our Prepared Foods segment.

•	The above amounts include a net increase of $2,209 million related to the impact of results from acquisitions and divestitures.

2018 vs. 2017 –

•

Sales Volume – Sales were positively impacted by an increase in sales volume, which accounted for an increase of $1,041 million. The Beef, Chicken and Prepared Foods segments had an increase in sales volume driven by strong demand for our beef products and incremental volumes from business acquisitions in the Chicken and Prepared Foods segments net of business divestitures in the Prepared Foods segment.

•

Average Sales Price – Sales were positively impacted by higher average sales prices, which accounted for an increase of $751 million. All segments had an increase in average sales price, other than the Pork segment. The Beef segment experienced strong demand, while the Chicken and Prepared Foods segments were positively impacted by improved mix and business acquisitions net of business divestitures in the Prepared Foods segment.

•	The above amounts included an incremental impact of $1,060 million in fiscal 2018 related to the inclusion of the AdvancePierre results post acquisition through the first anniversary of the acquisition on June 7, 2018.

Cost of Sales	in millions
	2019				2018			2017
Cost of sales	$	37,383			$	34,956		$	33,198
Gross profit	5,022				5,096
Cost of sales as a percentage of sales	88.2		%		87.3		%

2019 vs. 2018 –

•	Cost of sales increased $2,427 million. This included a net increase of $2,120 million primarily related to the impact of results from acquisitions and divestitures.

•	For the remaining $307 million increase, higher input cost per pound increased cost of sales $445 million, offset by lower sales volume, which decreased cost of sales $138 million.

•	The $445 million impact of higher input cost per pound was impacted by:

•	Increase in live cattle costs of approximately $110 million in our Beef segment.

•	Increase in live hog costs of approximately $100 million in our Pork segment.

•	Increase in raw material and other input costs of approximately $60 million in our Prepared Foods segment.

•	Increase in freight costs of approximately $20 million.

•	Increase due to $31 million of incremental costs associated with a fire at one of our Beef production facilities.

•	Decrease due to one-time cash bonus to front line employees of $108 million in fiscal 2018.

•	Decrease due to impairment charges of $101 million associated with the divestiture of a non-protein business in fiscal 2018, partially offset by a $41 million impairment related to the planned divestiture of a business in fiscal 2019 and a $33 million gain related to a sale of a non-protein business in fiscal 2018.

•	Decrease due to net derivative gains of $26 million for fiscal 2019, compared to net derivative losses of $33 million for fiscal 2018 due to our risk management activities. These amounts exclude offsetting impacts from related physical purchase transactions, which are included in the change in live cattle and hog costs and raw material and feed ingredient costs described herein.

•	Remaining net change across all of our segments was primarily driven by increased operating costs and impacts on average input cost per pound from mix changes.

•	The $138 million impact of lower sales volume, excluding the impact of acquisitions and divestitures, was driven by a decrease in sales volume in our Chicken segment.

2018 vs. 2017 –

•	Cost of sales increased $1,758 million. This included a net increase of $813 million primarily related to the impact of results from acquisitions and divestitures.

•	For the remaining $945 million increase, higher input cost per pound increased cost of sales $948 million while lower sales volume decreased cost of sales $3 million.

•	The $948 million impact of higher input cost per pound was primarily driven by:

•	Increase in freight of approximately $270 million incurred across all our segments.

•	Increase from one-time cash bonus to frontline employees of $108 million.

•	Increase due to impairment charges of $101 million associated with the divestiture of a non-protein business in fiscal 2018, partially offset by $33 million of realized gains related to the sale of non-protein businesses in fiscal 2018 and impairment charges of $44 million related to our San Diego Prepared Foods operation in fiscal 2017.

•	Increase of approximately $52 million in our Chicken segment related to net increases in feed ingredient costs, growout expenses and outside meat purchases.

•	Decrease in live cattle costs of approximately $25 million in our Beef segment.

•	Decrease in live hog costs of approximately $90 million in our Pork segment.

•

Decrease due to net realized derivative losses of $30 million for fiscal 2018, compared to net realized derivative loss of $79 million for fiscal 2017 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 decreased due to net unrealized losses of $3 million for fiscal 2018, compared to net unrealized losses of $40 million for fiscal 2017, primarily due to our Beef segment commodity risk management activities.

•	Remaining net change across all of our segments was primarily driven by increased operating costs and impacts on average input cost per pound from mix changes.

Selling, General and Administrative	in millions
	2019				2018				2017
Selling, general and administrative	$	2,195			$	2,064			$	2,141
As a percentage of sales	5.2		%		5.2		%

2019 vs. 2018 –

•	Increase of $131 million in selling, general and administrative was primarily driven by:

•	Increase of $87 million related to the Keystone Foods acquisition.

•	Increase of $26 million in employee costs primarily from incentive-based compensation.

•	Increase of $18 million from technology related costs.

•	Increase of $16 million in marketing, advertising, and promotion expenses.

•	Decrease of $18 million from restructuring and related charges.

2018 vs. 2017 –

•	Decrease of $77 million in selling, general and administrative was primarily driven by:

•	Decrease of $92 million in employee costs primarily from stock-based and incentive-based compensation, which also included a reduction of $24 million compensation and benefit integration expense incurred in fiscal 2017 that did not recur in fiscal 2018.

•	Decrease of $56 million from restructuring and related charges.

•	Decrease of $49 million in AdvancePierre acquisition related fees incurred as part of the acquisition in fiscal 2017 that did not recur in fiscal 2018.

•	Decrease of $18 million in commission and brokerage fees.

•	Decrease of $14 million in non-restructuring severance related expenses.

•	Decrease of $10 million in marketing, advertising, and promotion expense.

•	Increase of $153 million related to the AdvancePierre acquisition through the first anniversary of the acquisition on June 7, 2018, which included $91 million in incremental amortization and $62 million from the inclusion of AdvancePierre results post-acquisition.

•	Increase of $15 million from technology related costs.

•	Remainder of net change was primarily related to reduction in professional fees.

Interest Income	in millions
	2019				2018
	$	(11	)		$	(7	)

2019 / 2018 – Interest income increased slightly primarily due to higher interest rates.

Interest Expense	in millions
	2019				2018
Cash interest expense	$	476			$	357
Non-cash interest (expense) income	(14		)		(7		)
Total Interest Expense	$	462			$	350

2019 / 2018 –

•	Cash interest expense primarily included interest expense related to our senior notes, term loans and commercial paper, in addition to commitment/letter of credit fees incurred on our revolving credit facility. The increase in cash interest expense in fiscal 2019 was primarily due to debt issued in connection with business acquisitions and higher interest rates.

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

Other (Income) Expense, net	in millions
	2019				2018
	$	(55	)		$	(56	)

2019 – Included $55 million of pretax gain on the sale of an investment, $23 million of insurance proceeds and other income and $20 million of equity earnings in joint ventures, partially offset by $48 million of net periodic pension and postretirement benefit costs and pension plan settlements.

2018 – Included $21 million of equity earnings in joint ventures and $11 million in insurance proceeds. Also includes $23 million of net periodic pension and postretirement benefit credit, excluding the service cost component, retrospectively recognized in accordance with recently adopted accounting guidance.

Effective Tax Rate
	2019			2018
	16.3	%		(10.3	)%

Our effective income tax rate was 16.3% for fiscal 2019 compared to (10.3)% for fiscal 2018. The effective tax rates reflect impacts of the Tax Cuts and Jobs Act (the "Tax Act") signed into law on December 22, 2017. These impacts include a statutory federal tax rate of 21% for fiscal 2019 and 24.5% for fiscal 2018. These impacts also include a 37.9% benefit in fiscal 2018 related to the remeasurement of deferred taxes existing at the date of enactment and favorable timing differences deductible in fiscal 2018 at the 24.5% blended tax rate, but reversing in future years at 21%. The effective tax rate for fiscal 2019 includes a 6.6% benefit due to changes in tax reserves, primarily expirations of federal, state and foreign statutes of limitations. The non-deductible impairment and sale of certain assets in our non-protein businesses increased the fiscal 2018 rate 3.1%. The fiscal 2018 effective tax rate also includes a 1.7% benefit related to domestic production activity deduction which was repealed with the Tax Act beginning with our fiscal 2019.

SEGMENT RESULTS

We operate in four reportable segments: Beef, Pork, Chicken, and Prepared Foods. International/Other primarily includes our foreign operations in Australia, China, South Korea, Malaysia, Mexico, the Netherlands, Thailand and the United Kingdom, third-party merger and integration costs and corporate overhead related to Tyson New Ventures, LLC. Additional information regarding the geographic areas of our foreign operations is set forth in Part II, Item 8, Notes to Consolidated Financial Statements, Note 17: Segment Reporting.

The following table is a summary of segment sales and operating income (loss), which is how we measure segment income (loss).

																					in millions
	Sales												Operating Income (Loss)
	2019				2018				2017				2019				2018				2017
Beef	$	15,828			$	15,473			$	14,823			$	1,107			$	1,013			$	877
Pork	4,932				4,879				5,238				263				361				645
Chicken	13,300				12,044				11,409				621				866				1,053
Prepared Foods	8,418				8,668				7,853				843				845				452
International/Other	1,289				305				349				(7		)		(53		)		(106		)
Intersegment Sales	(1,362		)		(1,317		)		(1,412		)		—				—				—
Total	$	42,405			$	40,052			$	38,260			$	2,827			$	3,032			$	2,921

Beef Segment Results																	in millions
	2019				2018				Change 2019 vs. 2018				2017				Change 2018 vs. 2017
Sales	$	15,828			$	15,473			$	355			$	14,823			$	650
Sales Volume Change									(0.1		)%						3.1		%
Average Sales Price Change									2.4		%						1.2		%
Operating Income	$	1,107			$	1,013			$	94			$	877			$	136
Operating Margin	7.0		%		6.5		%						5.9		%

2019 vs. 2018 –

•	Sales Volume – Sales volume decreased due to a reduction in live cattle processing capacity from the temporary closure of a production facility as a result of a fire.

•	Average Sales Price – Average sales price increased as demand for our beef products remained strong.

•	Operating Income – Operating income increased as we continued to maximize our revenues relative to live fed cattle costs, partially offset by increased operating costs and $31 million of net incremental costs from the production facility fire.

2018 vs. 2017 –

•	Sales Volume – Sales volume increased due to improved availability of cattle supply, stronger demand for our beef products and increased exports.

•	Average Sales Price – Average sales price increased as demand for our beef products and strong exports outpaced the increase in live cattle supplies.

•	Operating Income – Operating income increased as we continued to maximize our revenues relative to live fed cattle costs, partially offset by increased labor and freight costs and one-time cash bonus to frontline employees of $27 million.

Pork Segment Results																	in millions
	2019				2018				Change 2019 vs. 2018				2017				Change 2018 vs. 2017
Sales	$	4,932			$	4,879			$	53			$	5,238			$	(359	)
Sales Volume Change									0.8		%						(2.1		)%
Average Sales Price Change									0.3		%						(4.8		)%
Operating Income	$	263			$	361			$	(98	)		$	645			$	(284	)
Operating Margin	5.3		%		7.4		%						12.3		%

2019 vs. 2018 –

•	Sales Volume – Sales volume increased due to increased domestic availability of live hogs and strong demand for our pork products.

•	Average Sales Price – Average sales price increased associated with higher livestock costs.

•	Operating Income – Operating income decreased due to periods of compressed pork margins caused primarily by the combination of increased livestock supplies, excess domestic availability of pork and export constraints, which drove livestock costs up faster than sales prices.

2018 vs. 2017 –

•	Sales Volume – Sales volume decreased as a result of balancing our supply with customer demand during a period of margin compression.

•	Average Sales Price – The average sales price decrease was associated with lower livestock costs.

•	Operating Income – Operating income decreased from prior year record results due to periods of compressed pork margins caused by excess domestic availability of pork, higher labor and freight costs, and one-time cash bonus to frontline employees of $12 million.

Chicken Segment Results																	in millions
	2019				2018				Change 2019 vs. 2018				2017				Change 2018 vs. 2017
Sales	$	13,300			$	12,044			$	1,256			$	11,409			$	635
Sales Volume Change									19.7		%						4.9		%
Average Sales Price Change									(9.3		)%						0.7		%
Operating Income	$	621			$	866			$	(245	)		$	1,053			$	(187	)
Operating Margin	4.7		%		7.2		%						9.2		%

2019 vs. 2018 –

•	Sales Volume – Sales volume increased primarily due to incremental volume from business acquisitions.

•	Average Sales Price – Average sales price decreased due to market conditions and sales mix primarily associated with the acquisition of a poultry rendering and blending business in the fourth quarter of fiscal 2018.

•	Operating Income – Operating income decreased due to increased operating costs and challenging pricing conditions. Additionally, operating income was impacted in fiscal 2019 by approximately $40 million of net feed ingredient costs and realized and mark-to-market derivative losses.

2018 vs. 2017 –

•	Sales Volume – Sales volume increased primarily due to incremental volume from business acquisitions.

•	Average Sales Price – Average sales price increased due to sales mix changes and price increases associated with cost inflation.

•	Operating Income – Operating income decreased due to increased labor, freight and growout expenses, in addition to $103 million of higher feed ingredient costs and net realized and mark-to-market derivative losses, and one-time cash bonus to frontline employees of $51 million.

Prepared Foods Segment Results													in millions
	2019				2018				Change 2019 vs. 2018				2017				Change 2018 vs. 2017
Sales	$	8,418			$	8,668			$	(250	)		$	7,853			$	815
Sales Volume Change									(8.3		)%						4.1		%
Average Sales Price Change									5.4		%						6.1		%
Operating Income	$	843			$	845			$	(2	)		$	452			$	393
Operating Margin	10.0		%		9.7		%						5.8		%

2019 vs. 2018 –

•	Sales Volume – Sales volume decreased primarily from business divestitures.

•	Average Sales Price – Average sales price increased due to product mix, which was positively impacted by business divestitures, as well as pricing increases in our ongoing business from the pass through of raw material costs.

•

Operating Income – Operating income was relatively flat in fiscal 2019 compared to fiscal 2018 as strong demand for our products and improved product mix was offset by increased raw material and operating costs. Additionally, operating income in fiscal 2019 was impacted by a $41 million impairment from a planned divestiture of a business. Operating income in fiscal 2018 was impacted by a $68 million impairment, net of realized gains, associated with the divestiture of non-protein businesses.

2018 vs. 2017 –

•	Sales Volume – Sales volume increased primarily due to incremental volume from business acquisitions net of business divestitures. Excluding the impact of the business divestitures, sales volumes in fiscal 2018 increased by 9.8%.

•	Average Sales Price – Average sales price increased due to product mix which was positively impacted by business acquisitions and divestitures.

•

Operating Income – Operating income increased due to improved mix and net incremental results from business acquisitions, net of divestitures, partially offset by higher input and freight costs and one-time cash bonus to frontline employees of $19 million. Additionally, operating income was impacted in fiscal 2018 by $68 million of impairments, net of realized gains, related to the divestitures of non-protein businesses. For fiscal 2017, operating income was impacted from $34 million of AdvancePierre purchase accounting and acquisition related costs, $97 million of impairments related to our San Diego Prepared Foods operation and the expected sale of a non-protein business, $30 million of compensation and benefits integration expense and $82 million of restructuring and related charges.

International/Other Results													in millions
	2019				2018				Change 2019 vs. 2018				2017				Change 2018 vs. 2017
Sales	$	1,289			$	305			$	984			$	349			$	(44	)
Operating Loss	(7		)		(53		)		46				(106		)		53

2019 vs. 2018 –

•	Sales – Sales increased primarily from the incremental sales from the acquisitions of Keystone Foods and the Thai and European operations.

•	Operating loss – Operating loss decreased primarily from better performance in our China operations and inclusion of results of the Keystone Foods acquisition, partially offset by increased third-party merger and integration costs associated with the Keystone Foods acquisition.

2018 vs. 2017 –

•	Sales – Sales decreased due to a decline in sales volume in our foreign chicken production operations.

•	Operating loss – Operating loss improved primarily from lower third-party merger and integration costs.

LIQUIDITY AND CAPITAL RESOURCES

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

Cash Flows from Operating Activities					in millions
	2019				2018
Net income	$	2,035			$	3,027
Non-cash items in net income:
Depreciation and amortization	1,098				943
Deferred income taxes	92				(865		)
Gain on dispositions of businesses	(17		)		(42		)
Impairment of assets	94				175
Stock-based compensation expense	77				69
Other, net	(20		)		(58		)
Net changes in operating assets and liabilities	(846		)		(286		)
Net cash provided by operating activities	$	2,513			$	2,963

•	Deferred income taxes for fiscal 2018 included a $1,004 million benefit related to remeasurement of net deferred income tax liabilities at newly enacted tax rates.

•	Gain on dispositions of businesses in fiscal 2018 primarily related to the sale of the Sara Lee® Frozen Bakery, Kettle, Van’s® and TNT Crust businesses.

•	Impairment of assets included the following:

•	2019 – Included a $41 million impairment related to the planned sale of a business. For further description regarding this charge refer to Part II, Item 8, Notes to Consolidated Financial Statements, Note 3: Acquisitions and Dispositions.

•	2018 – Included a $101 million impairment related to the expected sale of a non-protein business. For further description regarding this charge refer to Part II, Item 8, Notes to Consolidated Financial Statements, Note 3: Acquisitions and Dispositions.

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

•

2019 – Decreased primarily due to increased accounts receivable and inventory and decreased income taxes payable. The increase in accounts receivable is primarily due to the timing of sales and payments. The increase in inventory is primarily due to increased volumes and costs in the Prepared Foods segment. Decreased income taxes payable is primarily due to reduced taxable income, change in federal tax rate and timing of payments related to the sale of non-protein businesses in fiscal 2018.

•

2018 – Decreased primarily due to increased inventory and decreased accrued employee costs, partially offset by increased income taxes payable. The increase in inventory is primarily due to livestock inventories. The decrease in accrued salaries and wages is primarily due to reduced restructuring and incentive-based compensation accruals. Increased taxes payable is due to timing of payments related to the sale of non-protein businesses in the fourth quarter.

Cash Flows from Investing Activities					in millions
	2019				2018
Additions to property, plant and equipment	$	(1,259	)		$	(1,200	)
(Purchases of)/Proceeds from marketable securities, net	(1		)		(5		)
Acquisitions, net of cash acquired	(2,462		)		(1,474		)
Proceeds from sale of businesses	170				797
Other, net	88				(24		)
Net cash used for investing activities	$	(3,464	)		$	(1,906	)

•	Additions to property, plant and equipment included spending for production growth, safety and animal well-being, in addition to acquiring new equipment, infrastructure replacements and upgrades to maintain competitive standing and position us for future opportunities.

•	Capital spending for fiscal 2020 is expected to approximate $1.3 billion and will include spending for production growth, safety, animal well-being, infrastructure replacements and upgrades, and operational improvements that are expected to result in production and labor efficiencies, yield improvements and sales channel flexibility.

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

•	Acquisitions, net of cash acquired, included:

•	2019 – We acquired two valued-added protein businesses in fiscal 2019. For further description regarding these acquisitions refer to Part II, Item 8, Notes to the Consolidated Financial Statements, Note 3: Acquisitions and Dispositions.

•	2018 – We acquired three valued-added protein businesses in fiscal 2018. For further description regarding these acquisitions refer to Part II, Item 8, Notes to the Consolidated Financial Statements, Note 3: Acquisitions and Dispositions.

•	Proceeds from sale of businesses related to the proceeds received from sale of a chicken further processing facility in fiscal 2019 and the proceeds received from sale of non-protein businesses during fiscal 2018. For further description refer to Part II, Item 8, Notes to the Consolidated Financial Statements, Note 3: Acquisitions and Dispositions.

•	Other, net for fiscal 2019 primarily related to the net proceeds from the sale of an investment.

Cash Flows from Financing Activities					in millions
	2019				2018
Proceeds from issuance of debt	$	4,634			$	1,148
Payments on debt	(3,208		)		(1,307		)
Borrowings on revolving credit facility	1,135				1,755
Payments on revolving credit facility	(1,065		)		(1,755		)
Proceeds from issuance of commercial paper	17,722				21,024
Repayments of commercial paper	(17,327		)		(21,197		)
Purchases of Tyson Class A common stock	(252		)		(427		)
Dividends	(537		)		(431		)
Stock options exercised	99				102
Other, net	(30		)		(14		)
Net cash provided by (used for) financing activities	$	1,171			$	(1,102	)

•	Proceeds from issuance of debt and borrowings/payments on revolving credit facility:

•

2019 – Proceeds from issuance of debt included $1,800 million proceeds from the issuance of a 364-day term loan for the initial financing of the Keystone Foods acquisition and subsequent issuance of $2,800 million senior unsecured notes which were primarily used to extinguish our 364-day term loan and to repay commercial paper obligations used to fund the Keystone Foods acquisition as well as to fund all or a portion of the purchase price for the acquisition of the Thai and European operations.

•

2018 – Proceeds from issuance of long-term debt included a $250 million increase in our Term Loan Tranche B due August 2020, primarily to fund an acquisition. Subsequently, proceeds from issuance of long-term debt included $400 million Senior Notes due 2023 and $500 million Senior Notes due 2048, which were primarily used to extinguish our Term Loan Tranche B due August 2020 and to repay commercial paper obligations.

•	Payments on debt included:

•	2019 – We extinguished the $1,800 million outstanding balance of our 364-day term loan, the $300 million outstanding balance of our May 2019 Notes and the $1,000 million outstanding balance of our August 2019 Notes using proceeds received from the issuance of debt, cash on hand and other liquidity sources.

•

2018 – We extinguished the $750 million outstanding balance of the Term Loan Tranche B due August 2020, which was increased during fiscal 2018 by $250 million, using cash on hand and proceeds from the issuance of Senior Notes due 2023 and 2048. We extinguished the $427 million outstanding balance of the Term Loan Tranche B due August 2019 using cash on hand and proceeds received from the sale of our Kettle business. We extinguished the $120 million outstanding balance of the Senior Notes due May 2018 using cash on hand.

•	Proceeds from issuance and repayment of short-term debt in the form of commercial paper:

•	2019 – We had net issuances of $395 million to our unsecured short-term promissory notes ("commercial paper") pursuant to our commercial paper program.

•	2018 – We had net repayments of $173 million to our unsecured short-term promissory notes pursuant to our commercial paper program.

•	Purchases of Tyson Class A common stock included:

•	$150 million and $350 million for shares repurchased pursuant to our share repurchase program in fiscal 2019 and 2018, respectively.

•	$102 million and $77 million for shares repurchased to fund certain obligations under our equity compensation plans in fiscal 2019 and 2018, respectively.

•	Dividends paid during fiscal 2019 included a 25% increase to our fiscal 2018 quarterly dividend rate.

Liquidity																in millions
		Commitments Expiration Date		Facility Amount				Outstanding Letters of Credit (no draw downs)				Outstanding Amount Borrowed				Amount Available at September 28, 2019
Cash and cash equivalents																$	484
Short-term investments																1
Revolving credit facility		March 2023		$	1,750			$	—			$	70			1,680
Commercial Paper																(1,000		)
Total liquidity																$	1,165

•	Liquidity includes cash and cash equivalents, short-term investments, and availability under our revolving credit facility, less outstanding commercial paper balance.

•	At September 28, 2019, we had current debt of $2,102 million, which we intend to repay with cash generated from our operating activities and other existing or new liquidity sources.

•	The revolving credit facility supports our short-term funding needs and also serves to backstop our commercial paper program. Our maximum borrowing under the revolving credit facility during fiscal 2019 was $330 million.

•	We expect net interest expense will approximate $460 million for fiscal 2020.

•	Our ratio of short-term assets to short-term liabilities ("current ratio") was 1.30 to 1 and 1.13 to 1 at September 28, 2019, and September 29, 2018, respectively. The increase in fiscal 2019 was primarily due to increased inventory and accounts receivable balances.

•

At September 28, 2019, $467 million of our cash was held in the international accounts of our foreign subsidiaries. Generally, we do not rely on the foreign cash as a source of funds to support our ongoing domestic liquidity needs. We manage our worldwide cash requirements by reviewing available funds among our foreign subsidiaries and the cost effectiveness with which those funds can be accessed. We intend to repatriate excess cash (net of applicable withholding taxes) not subject to regulatory requirements and to indefinitely reinvest outside of the United States the remainder of cash held by foreign subsidiaries. We do not expect the regulatory restrictions or taxes on repatriation to have a material effect on our overall liquidity, financial condition or the results of operations for the foreseeable future.

Capital Resources

Credit Facility

Cash flows from operating activities and current cash on hand are our primary sources of liquidity for funding debt service, capital expenditures, dividends and share repurchases. We also have a revolving credit facility, with a committed capacity of $1.75 billion, to provide additional liquidity for working capital needs and to backstop our commercial paper program. As of September 28, 2019, we had $70 million in borrowings and no outstanding letters of credit issued under this facility, which left $1.68 billion available for borrowing, before deducting amounts to backstop our commercial paper program. Our revolving credit facility is funded by a syndicate of 39 banks, with commitments ranging from $0.3 million to $123 million per bank. The syndicate includes bank holding companies that are required to be adequately capitalized under federal bank regulatory agency requirements.

Commercial Paper Program

Our commercial paper program provides a low-cost source of borrowing to fund general corporate purposes including working capital requirements. The maximum borrowing capacity under the commercial paper program is $1 billion. The maturities of the notes may vary, but may not exceed 397 days from the date of issuance. As of September 28, 2019, $1 billion was outstanding under this program with maturities less than 25 days.

Capitalization

To monitor our credit ratings and our capacity for long-term financing, we consider various qualitative and quantitative factors. We monitor the ratio of our net debt to EBITDA as support for our long-term financing decisions. At September 28, 2019, and September 29, 2018, the ratio of our net debt to EBITDA was 2.9x and 2.4x, respectively. Refer to Part II, Item 6, Selected Financial Data, for an explanation and reconciliation to comparable GAAP measures. The increase in this ratio for fiscal 2019 is due to an increase in net debt of $1,845 million.

Credit Ratings

Revolving Credit Facility

Standard & Poor's Rating Services', a Standard & Poor's Financial Services LLC business ("S&P"), corporate credit rating is "BBB." Moody’s Investor Service, Inc.'s ("Moody's") applicable rating is "Baa2." Fitch Ratings', a wholly owned subsidiary of Fimlac, S.A. ("Fitch"), applicable rating is "BBB." The below table outlines the fees paid on the unused portion of the facility ("Facility Fee Rate") and letter of credit fees and borrowings ("Undrawn Letter of Credit Fee and Borrowing Spread") that corresponds to the applicable ratings levels from S&P, Moody's and Fitch.

Ratings Level (S&P/Moody's/Fitch)	Facility Fee Rate		All-in Borrowing Spread
A-/A3/A- or above	0.090	%	1.000	%
BBB+/Baa1/BBB+	0.100	%	1.125	%
BBB/Baa2/BBB (current level)	0.125	%	1.250	%
BBB-/Baa3/BBB-	0.175	%	1.375	%
BB+/Ba1/BB+ or lower	0.225	%	1.625	%

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

Debt Covenants

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

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

We were in compliance with all debt covenants at September 28, 2019.

Pension Plans

As further described in Part II, Item 8, Notes to Consolidated Financial Statements, Note 15: Pensions and Other Postretirement Benefits, the funded status of our defined benefit pension plans is defined as the amount the projected benefit obligation exceeds the plan assets. The funded status of the plans is an underfunded position of $240 million at the end of fiscal 2019 as compared to an underfunded position of $162 million at the end of fiscal 2018. We expect to contribute approximately $33 million of cash to our pension plans in fiscal 2020 as compared to approximately $13 million in fiscal 2019. The exact amount of cash contributions made to pension plans in any year is dependent upon a number of factors, including minimum funding requirements. As a result, the actual funding in fiscal 2020 may be different from the estimate.

OFF-BALANCE SHEET ARRANGEMENTS

We do not have any off-balance sheet arrangements material to our financial position or results of operations. The off-balance sheet arrangements we have are guarantees of obligations related to certain outside third parties, including leases, debt and livestock grower loans, and residual value guarantees covering certain operating leases for various types of equipment. See Part II, Item 8, Notes to Consolidated Financial Statements, Note 20: Commitments and Contingencies for further discussion.

CONTRACTUAL OBLIGATIONS

The following table summarizes our contractual obligations as of September 28, 2019:

																	in millions
	Payments Due by Period
	2020				2021-2022				2023-2024				2025 and thereafter				Total
Debt principal payments (1)	$	2,104			$	1,568			$	1,759			$	6,604			$	12,035
Interest payments (2)	451				829				707				3,851				5,838
Guarantees (3)	33				43				14				17				107
Operating lease obligations (4)	159				187				89				54				489
Livestock grower obligations (5)	253				217				107				122				699
Purchase obligations (6)	2,466				509				62				23				3,060
Capital expenditures (7)	1,048				724				—				—				1,772
Other long-term liabilities (8)	—				—				—				—				645
Total contractual commitments	$	6,514			$	4,077			$	2,738			$	10,671			$	24,645

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

(2)	Interest payments include interest on all outstanding debt. Payments are estimated for variable rate and variable term debt based on effective interest rates at September 28, 2019, and expected payment dates.

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

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

(5)	We have agreements with livestock growers that can have fixed and variable payment structures, but are generally cancelable and based on flocks placed with the livestock growers. Amounts include fixed or estimable non-cancelable commitments related to these agreements.

(6)

Amounts include agreements to purchase goods or services that are enforceable and legally binding and specify all significant terms, including: fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of the transaction. The purchase obligations amount included items, such as future purchase commitments for grains and livestock purchase contracts, that provide terms that meet the above criteria. For certain grain purchase commitments with a fixed quantity provision, we have assumed the future obligations under the commitment based on available commodity futures prices as published in observable active markets as of September 28, 2019. We have excluded future purchase commitments for contracts that do not meet these criteria. Purchase orders are not included in the table, as a purchase order is an authorization to purchase and is cancelable. Contracts for goods or services that contain termination clauses without penalty have also been excluded.

(7)	Amounts include estimated amounts to complete buildings and equipment under construction as of September 28, 2019.

(8)

Other long-term liabilities primarily consist of deferred compensation, deferred income, self-insurance, and asset retirement obligations. We are unable to reliably estimate the amount of these payments beyond fiscal 2019; therefore, we have only included the total liability in the table above. We also have employee benefit obligations consisting of pensions and other postretirement benefits of $332 million that are excluded from the table above. A discussion of the Company's pension and postretirement plans, including funding matters, is included in Part II, Item 8, Notes to Consolidated Financial Statements, Note 15: Pensions and Other Postretirement Benefits.

In addition to the amounts shown above in the table, we have unrecognized tax benefits of $149 million and related interest and penalties of $46 million at September 28, 2019, recorded as liabilities.

The potential maximum contractual obligation associated with our cash flow assistance programs at September 28, 2019, based on the estimated fair values of the livestock supplier’s net tangible assets on that date, aggregated to approximately $300 million. After analyzing residual credit risks and general market conditions, we had no allowance for these programs' estimated uncollectible receivables at September 28, 2019.

RECENTLY ISSUED/ADOPTED ACCOUNTING PRONOUNCEMENTS

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

CRITICAL ACCOUNTING ESTIMATES

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

Description		Judgments and Uncertainties		Effect if Actual Results Differ From Assumptions
Contingent liabilities
We are subject to lawsuits, investigations and other claims related to wage and hour/labor, antitrust, environmental, product, taxing authorities and other matters, and are required to assess the likelihood of any adverse judgments or outcomes to these matters, as well as potential ranges of probable losses. A determination of the amount of reserves and disclosures required, if any, for these contingencies is made after considerable analysis of each individual issue. We accrue for contingent liabilities when an assessment of the risk of loss is probable and can be reasonably estimated. We disclose contingent liabilities when the risk of loss is reasonably possible or probable.		Our contingent liabilities contain uncertainties because the eventual outcome will result from future events, and determination of current reserves requires estimates and judgments related to future changes in facts and circumstances, differing interpretations of the law and assessments of the amount of damages, and the effectiveness of strategies or other factors beyond our control.		We have not made any material changes in the accounting methodology used to establish our contingent liabilities during the past three fiscal years. We do not believe there is a reasonable likelihood there will be a material change in the estimates or assumptions used to calculate our contingent liabilities. However, if actual results are not consistent with our estimates or assumptions, we may be exposed to gains or losses that could be material.

Revenue Recognition
We recognize revenue for the sale of our product at the point in time when our performance obligation has been satisfied and control of the product has transferred to our customer, which generally occurs upon shipment or delivery to a customer based on terms of the sale. Revenue is measured by the transaction price, which is defined as the amount of consideration we expect to receive in exchange for providing goods to customers. The transaction price is adjusted for estimates of known or expected variable consideration, which includes consumer incentives, trade promotions, and allowances, such as coupons, discounts, rebates, volume-based incentives, cooperative advertising, and other programs. Variable consideration related to these programs is recorded as a reduction to revenue based on amounts we expect to pay.		The transaction price contains estimates of known or expected variable consideration. We base these estimates on current performance, historical utilization, and projected redemption rates of each program. We review and update these estimates regularly until the incentives or product returns are realized and the impact of any adjustments are recognized in the period the adjustments are identified.		We do not believe there is a reasonable likelihood there will be a material change in the estimates or assumptions used to recognize revenue. However, if actual results are not consistent with our estimates or assumptions, we may be exposed to gains or losses that could be material. We adopted the FASB’s new guidance on revenue recognition in fiscal 2019. The adoption of this standard did not have a material impact on our consolidated financial statements. We have not made any material changes in the accounting methodology used to recognize revenue during the past three fiscal years.

Accrued self-insurance
We are self-insured for certain losses related to health and welfare, workers’ compensation, auto liability and general liability claims. We use an independent third-party actuary to assist in determining our self-insurance liability. We and the actuary consider a number of factors when estimating our self-insurance liability, including claims experience, demographic factors, severity factors and other actuarial assumptions. We periodically review our estimates and assumptions with our third-party actuary to assist us in determining the adequacy of our self-insurance liability. Our policy is to maintain an accrual at the actuarial estimated median.		Our self-insurance liability contains uncertainties due to assumptions required and judgment used. Costs to settle our obligations, including legal and healthcare costs, could increase or decrease causing estimates of our self-insurance liability to change. Incident rates, including frequency and severity, could increase or decrease causing estimates in our self-insurance liability to change.		We have not made any material changes in the accounting methodology used to establish our self-insurance liability during the past three fiscal years. We do not believe there is a reasonable likelihood there will be a material change in the estimates or assumptions used to calculate our self-insurance liability. However, if actual results are not consistent with our estimates or assumptions, we may be exposed to gains or losses that could be material. A 10% change in the actuarial estimate at September 28, 2019, would not have a significant impact on our liability.

Description		Judgments and Uncertainties		Effect if Actual Results Differ From Assumptions
Defined benefit pension plans
We sponsor nine defined benefit pension plans that provide retirement benefits to certain employees. Currently we are in the process of liquidating three of our nine defined benefit pension plans. We also participate in multi-employer plans that provide defined benefits to certain employees covered by collective bargaining agreements. Such plans are usually administered by a board of trustees composed of the management of the participating companies and labor representatives. We use independent third-party actuaries to assist us in determining our pension obligations and net periodic benefit cost. We and the actuaries review assumptions that include estimates of the present value of the projected future pension payment to all plan participants, taking into consideration the likelihood of potential future events such as salary increases and demographic experience. We accumulate and amortize the effect of actuarial gains and losses over future periods. Net periodic benefit cost for the defined benefit pension plans was $30 million in fiscal 2019. The projected benefit obligation was $1,717 million at the end of fiscal 2019. Unrecognized actuarial gain was $7 million at the end of fiscal 2019. We currently expect net periodic benefit cost for fiscal 2020 to be approximately $10 million, excluding the pending settlement as described in Note 15: Pension and Other Postretirement Benefits. Plan assets are currently comprised of approximately 73% fixed income securities. Fixed income securities can include, but are not limited to, direct bond investments and pooled or indirect bond investments. We expect to contribute approximately $33 million of cash to our pension plans in fiscal 2020. The exact amount of cash contributions made to pension plans in any year is dependent upon a number of factors, including minimum funding requirements.		Our defined benefit pension plans contain uncertainties due to assumptions required and judgments used. The key assumptions used in developing the required estimates include such factors as discount rates, expected returns on plan assets, retirement rates, and mortality. These assumptions can have a material impact upon the funded status and the net periodic benefit cost. The expected liquidation of certain plans has been considered along with these assumptions. The discount rates were determined using a cash flow matching technique whereby the rates of a yield curve, developed from high-quality debt securities, were applied to the benefit obligations to determine the appropriate discount rate. In determining the long-term rate of return on plan assets, we first examined historical rates of return for the various asset classes within the plans. We then determined a long-term projected rate-of-return based on expected returns. Investment, management and other fees paid out of plan assets are factored into the determination of asset return assumptions. Retirement rates are based primarily on actual plan experience, while standard actuarial tables are used to estimate mortality. It is reasonably likely that changes in external factors will result in changes to the assumptions used to measure pension obligations and net periodic benefit cost in future periods. The risks of participating in multi-employer plans are different from single-employer plans. The net pension cost of the multi-employer plans is equal to the annual contribution determined in accordance with the provisions of negotiated labor contracts. Assets contributed to such plans are not segregated or otherwise restricted to provide benefits only to our employees. The future cost of these plans is dependent on a number of factors including the funded status of the plans and the ability of the other participating companies to meet ongoing funding obligations.		We have not made any material changes in the accounting methodology used to establish our pension obligations and net periodic benefit cost during the past three fiscal years. We do not believe there is a reasonable likelihood there will be a material change in the estimates or assumptions used to calculate our pension obligations and net periodic benefit cost. However, if actual results are not consistent with our estimates or assumptions, they are accumulated and amortized over future periods and, therefore generally affect the net periodic benefit cost in future periods. A 1% change in the discount rate at September 28, 2019, would not have a significant impact on the projected benefit obligation or net periodic benefit cost. A 1% change in the return on plan assets at September 28, 2019, would not have a significant impact on net periodic benefit cost. The sensitivities reflect the impact of changing one assumption at a time with the remaining assumptions held constant. Economic factors and conditions often affect multiple assumptions simultaneously and that the effect of changes in assumptions are not necessarily linear.

Description		Judgments and Uncertainties		Effect if Actual Results Differ From Assumptions
Income taxes
We estimate total income tax expense based on statutory tax rates and tax planning opportunities available to us in various jurisdictions in which we earn income. Income tax includes an estimate for withholding taxes on earnings of foreign subsidiaries expected to be remitted to the United States but does not include an estimate for taxes on earnings considered to be indefinitely invested in the foreign subsidiary. Deferred income taxes are recognized for the future tax effects of temporary differences between financial and income tax reporting using tax rates in effect for the years in which the differences are expected to reverse. Valuation allowances are recorded when it is likely a tax benefit will not be realized for a deferred tax asset. We record unrecognized tax benefit liabilities for known or anticipated tax issues based on our analysis of whether, and the extent to which, additional taxes will be due.		Changes in tax laws and rates could affect recorded deferred tax assets and liabilities in the future. Changes in projected future earnings could affect the recorded valuation allowances in the future. Our calculations related to income taxes contain uncertainties due to judgment used to calculate tax liabilities in the application of complex tax regulations across the tax jurisdictions where we operate. Our analysis of unrecognized tax benefits contains uncertainties based on judgment used to apply the more likely than not recognition and measurement thresholds.		We do not believe there is a reasonable likelihood there will be a material change in the tax related balances or valuation allowances. However, due to the complexity of some of these uncertainties, the ultimate resolution may result in a payment that is materially different from the current estimate of the tax liabilities. To the extent we prevail in matters for which unrecognized tax benefit liabilities have been established, or are required to pay amounts in excess of our recorded unrecognized tax benefit liabilities, our effective tax rate in a given financial statement period could be materially affected. An unfavorable tax settlement would require use of our cash and generally result in an increase in our effective tax rate in the period of resolution. A favorable tax settlement would generally be recognized as a reduction in our effective tax rate in the period of resolution.

Business Combinations
We account for acquired businesses using the acquisition method of accounting, which requires that once control of a business is obtained, 100% of the assets acquired and liabilities assumed, including amounts attributed to noncontrolling interests, be recorded at the date of acquisition at their respective fair values. Any excess of the purchase price over the estimated fair values of the net assets acquired is recorded as goodwill. We use various models to determine the value of assets acquired and liabilities assumed such as net realizable value to value inventory, cost method and market approach to value property, relief-from-royalty and multi-period excess earnings to value intangibles and discounted cash flow to value goodwill. For significant acquisitions we may use independent third-party valuation specialists to assist us in determining the fair value of assets acquired and liabilities assumed.		Significant judgment is often required in estimating the fair value of assets acquired and liabilities assumed, particularly intangible assets. We make estimates and assumptions about projected future cash flows including sales, operating margins, attrition rates, growth rates, and discount rates based on historical results, business plans, expected synergies, perceived risk and marketplace data considering the perspective of marketplace participants. Determining the useful life of an intangible asset also requires judgment as different types of intangible assets will have different useful lives and certain assets may be considered to have indefinite useful lives.		While management believes those expectations and assumptions are reasonable, they are inherently uncertain. Unanticipated market or macroeconomic events and circumstances may occur, which could affect the accuracy or validity of the estimates and assumptions, which could result in subsequent impairments.

Description		Judgments and Uncertainties		Effect if Actual Results Differ From Assumptions
Impairment of goodwill and indefinite life intangible assets
Goodwill is evaluated for impairment by first performing a qualitative assessment to determine whether a quantitative goodwill test is necessary. If it is determined, based on qualitative factors, the fair value of the reporting unit may be more likely than not less than its carrying amount or if significant changes to macro-economic factors related to the reporting unit have occurred that could materially impact fair value, a quantitative goodwill impairment test would be required. The quantitative test compares the fair value of a reporting unit with its carrying amount. Additionally, we can elect to forgo the qualitative assessment and perform the quantitative test. Upon performing the quantitative test, if the carrying value of the reporting unit exceeds its fair value, an impairment loss is recognized in an amount equal to that excess, not to exceed the carrying amount of goodwill. For indefinite life intangible assets, a qualitative assessment can also be performed to determine whether the existence of events and circumstances indicates it is more likely than not an intangible asset is impaired. Similar to goodwill, we can also elect to forgo the qualitative test for indefinite life intangible assets and perform the quantitative test. Upon performing the quantitative test, if the carrying value of the intangible asset exceeds its fair value, an impairment loss is recognized in an amount equal to that excess. We have elected to make the first day of the fourth quarter the annual impairment assessment date for goodwill and indefinite life intangible assets. However, we could be required to evaluate the recoverability of goodwill and indefinite life intangible assets outside of the required annual assessment if, among other things, we experience disruptions to the business, unexpected significant declines in operating results, divestiture of a significant component of the business or a sustained decline in market capitalization.		We estimate the fair value of our reporting units considering the use of various valuation techniques, with the primary technique being an income approach (discounted cash flow analysis), which uses significant unobservable inputs, or Level 3 inputs, as defined by the fair value hierarchy and requires us to make various judgmental assumptions about sales, operating margins, growth rates and discount rates. We include assumptions about sales, operating margins and growth rates which consider our budgets, business plans and economic projections, and are believed to reflect market participant views which would exist in an exit transaction. Assumptions are also made for varying perpetual growth rates for periods beyond the long-term business plan period. Generally, we utilize operating margin assumptions based on future expectations and operating margins historically realized in the reporting units' industries. The fair value of our indefinite life intangible assets is calculated principally using relief-from-royalty and multi-period excess earnings valuation approaches, which uses significant unobservable inputs, or Level 3 inputs, as defined by the fair value hierarchy, and is believed to reflect market participant views which would exist in an exit transaction. Under these valuation approaches, we are required to make estimates and assumptions about sales, operating margins, growth rates, royalty rates and discount rates based on budgets, business plans, economic projections, anticipated future cash flows and marketplace data. Our impairment analysis contains uncertainties due to uncontrollable events that could positively or negatively impact the anticipated future economic and operating conditions.		We have not made any material changes in the accounting methodology used to evaluate impairment of goodwill and intangible assets during the last three years. During fiscal 2019, 2018 and 2017, all of our material reporting units passed the goodwill impairment analysis. Some of the inherent estimates and assumptions used in determining fair value of the reporting units and indefinite life intangible assets are outside the control of management, including interest rates, cost of capital, tax rates, market EBITDA comparables and credit ratings. While we believe we have made reasonable estimates and assumptions to calculate the fair value of the reporting units and indefinite life intangibles, it is possible a material change could occur. If our actual results are not consistent with our estimates and assumptions used to calculate fair value, it could result in material impairments of our goodwill. All of our material reporting units' estimated fair value exceeded their carrying value by more than 20% at the date of their most recent estimated fair value determination. Consequently, we do not currently consider any of our material reporting units at significant risk of impairment. Our fiscal 2019, 2018, and 2017 indefinite life intangible assets impairment analyses did not result in an impairment charge. All indefinite life intangible assets’ estimated fair value exceeded their carrying value by more than 20% at the date of their most recent estimated fair value determination. Consequently, we do not currently consider any of our material indefinite life intangible assets at significant risk of impairment. The discount rate used in our annual indefinite life intangible assets impairment test was 7.5% in fiscal 2019. A 20% increase in the discount rate would not have caused the carrying value of any of our intangible assets to exceed fair value.

Description		Judgments and Uncertainties		Effect if Actual Results Differ From Assumptions
Impairment of long-lived assets and definite life intangibles
Long-lived assets and definite life intangibles are evaluated for impairment whenever events or changes in circumstances indicate the carrying value may not be recoverable. Examples include a significant adverse change in the extent or manner in which we use the asset, a change in its physical condition, or an unexpected change in financial performance. When evaluating long-lived assets and definite life intangibles for impairment, we compare the carrying value of the asset to the asset’s estimated undiscounted future cash flows. An impairment is indicated if the estimated future cash flows are less than the carrying value of the asset. For assets held for sale, we compare the carrying value of the disposal group to fair value. The impairment is the excess of the carrying value over the fair value of the asset. We recorded impairment charges related to long-lived assets and definite life intangibles of $94 million, $175 million and $214 million, in fiscal 2019, 2018 and 2017, respectively.		Our impairment analysis contains uncertainties due to judgment in assumptions, including useful lives and intended use of assets, observable market valuations, forecasted sales, operating margins, growth rates, royalty rates and discount rates based on budgets, business plans, economic projections, anticipated future cash flows and marketplace data that reflects the risk inherent in future cash flows to determine fair value.		We have not made any material changes in the accounting methodology used to evaluate the impairment of long-lived assets or definite life intangibles during the last three fiscal years. We do not believe there is a reasonable likelihood there will be a material change in the estimates or assumptions used to calculate impairments or useful lives of long-lived assets or definite life intangibles. However, if actual results are not consistent with our estimates and assumptions used to calculate estimated future cash flows, we may be exposed to impairment losses that could be material. We periodically conduct projects to strategically evaluate optimization of such items as network capacity, manufacturing efficiencies and business technology. If we have a significant change in strategies, outlook, or a manner in which we plan to use these assets, we may be exposed to future impairments.