Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

OBJECTIVE

The following discussion provides an analysis of the Company’s financial condition, cash flows and results of operations from management’s perspective and should be read in conjunction with the consolidated condensed financial statements and notes thereto included in Part I, Item 1 of this Quarterly Report on Form 10-Q and within the Company’s Annual Report on Form 10-K filed for the fiscal year ended September 30, 2023. Our objective is to also provide discussion of events and uncertainties known to management that are reasonably likely to cause reported financial information not to be indicative of future operating results or of future financial condition and to offer information that provides understanding of our financial condition, cash flows and results of operations.

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 four 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; availability of team members to operate our production facilities; and operating efficiencies of our facilities.

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

Overview

General

Sales increased slightly in the first quarter of fiscal 2024 as increased sales in our Beef segment were partially offset by decreased sales in our Chicken segment. Operating income of $231 million for the first quarter of fiscal 2024 was down 51% as we experienced lower operating income in our Beef segment, partially offset by improved operating income in our Pork and Chicken segments. In the first quarter of fiscal 2024, our operating income was impacted by $75 million in plant closure charges, $73 million in legal contingency accruals and $30 million of restructuring and related charges. In the first quarter of fiscal 2023, our operating income was impacted by $21 million of restructuring and related charges and benefited from $35 million of insurance proceeds, net of costs incurred related to fires at our production facilities.

Market Environment

According to the United States Department of Agriculture, domestic protein production (beef, pork, chicken and turkey) increased slightly in the first quarter of fiscal 2024 as compared to the same period in fiscal 2023. The Beef segment experienced reduced supply of market-ready cattle and increased cattle costs. Additionally, uncertainty exists regarding the timing of the anticipated cattle herd rebuilding. The Pork segment experienced sufficient supply and reduced hog costs. The Chicken segment experienced reduced feed ingredient costs. The Prepared Foods segment experienced decreased raw material costs primarily due to lower meat costs. Additionally, the conflict between Ukraine and Russia has led to economic sanctions against Russia and certain regions of Ukraine and Belarus. However, the conflict is still ongoing and there are many risks and uncertainties in relation to the conflict that are outside of our control. Furthermore, the ongoing conflict in the Middle East escalated during the first quarter of fiscal 2024 creating economic and political uncertainty within the region. As of December 30, 2023, the impact of these conflicts have not had a material direct impact on our financial performance. If these conflicts escalate further, impact additional regions or countries, or additional economic sanctions are imposed, it could have a material impact on our business operations and financial performance.

The Federal Reserve has increased interest rates, and may continue to increase interest rates or maintain elevated interest rates in the near term. Our direct exposure to elevated interest rates is somewhat tempered given our strong liquidity position in addition to our current debt structure in which most of our borrowings have fixed interest rates. At December 30, 2023, we had $3.7 billion of liquidity and our current debt was $1.3 billion. Should we need to issue additional debt or borrow under our existing revolving credit facility, we may be exposed to higher interest rates than our current outstanding borrowings.

Margins

Our total operating margin was 1.7% in the first quarter of fiscal 2024. Operating margins by segment were as follows:

• Beef – (4.1)%

• Pork – 2.6%

• Chicken – 4.4%

• Prepared Foods – 9.6%

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 by delivering superior value to consumers and customers; deliver fuel for growth and returns through commercial, operational and financial excellence; and sustain our Company and our world for future generations.

In the fourth quarter of fiscal 2022, the Company approved a restructuring program, the 2022 Program, which is expected to improve business performance, increase collaboration, enhance team member agility, enable faster decision-making and reduce redundancies. We recognized $30 million and $21 million of pretax charges in the three months ended December 30, 2023 and December 31, 2022, respectively, associated with the 2022 Program consisting of severance related costs, relocation and related costs, accelerated depreciation, contract and lease termination and professional and other fees. The Company currently anticipates the 2022 Program will result in cumulative pretax charges of approximately $238 million. As the Company continues to evaluate its business strategies and long-term growth targets, additional restructuring activities may occur. The following tables set forth the pretax impact of restructuring and related charges in the Consolidated Condensed Statements of Income and the pretax impact by our reportable segments. For further description refer to Part I, Item 1, Notes to the Consolidated Condensed Financial Statements, Note 6: Restructuring and Related Charges (in millions).

			Three Months Ended
			December 30, 2023			December 31, 2022
Cost of Sales			$	3		$	8
Selling, General and Administrative			27			13
Total Restructuring and related charges, pretax			$	30		$	21

			Three Months Ended															2022 Program charges to date						Total estimated
			December 30, 2023			December 31, 2022												December 30, 2023						2022 Program charges
Beef			$	4		$	5											$	53					$	55
Pork			1			2												17						18
Chicken			4			1												26						28
Prepared Foods			21			8												106						115
International/Other			—			5												18						22
Total Restructuring and related charges, pretax			$	30		$	21											$	220					$	238

Summary of Results

Sales

in millions			Three Months Ended
			December 30, 2023						December 31, 2022
Sales			$	13,319					$	13,260
Change in sales volume			—		%
Change in average sales price			0.4		%
Sales growth			0.4		%

First quarter – Fiscal 2024 vs Fiscal 2023

• Sales Volume** – Volumes were essentially flat, accounting for a $2 million decrease in sales as increased sales volume in our Pork and Prepared Foods segments was offset by decreased sales volume in our Beef and Chicken segments.

• Average Sales Price** – Sales were positively impacted by higher average sales prices, which accounted for an increase of $61 million, driven by increased pricing in our Beef segment, partially offset by lower average sales prices in our Pork, Chicken and Prepared Foods segments.

Cost of Sales

in millions			Three Months Ended
			December 30, 2023						December 31, 2022
Cost of sales			$	12,496					$	12,292
Gross profit			823						968
Cost of sales as a percentage of sales			93.8		%				92.7		%

First quarter – Fiscal 2024 vs Fiscal 2023

• Cost of sales increased $204 million. Lower sales volume decreased cost of sales $2 million while higher input cost per pound increased cost of sales $206 million.

• The $206 million impact of higher input cost per pound was impacted by:

• Increase in cattle costs of approximately $575 million in our Beef segment.

• Increase of $75 million due to costs associated with plant closures.

• Increase of $73 million related to the recognition of legal contingency accruals in our Beef and Pork segments.

• Increase of $56 million related to inventory lower of cost or net realizable value adjustments in our Beef segment incurred in the first quarter of fiscal 2024.

• Increase of $42 million in our Beef segment from insurance proceeds received in the first quarter of fiscal 2023 related to the fire at our production facility in the fourth quarter of fiscal 2019.

• Increase of $26 million in International/Other from costs related to a production facility fire in Europe.

• Increase due to net derivative losses of $5 million in the first quarter of fiscal 2024, compared to net derivative gains of $12 million in the first quarter of fiscal 2023 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.

• Decrease of approximately $170 million in our Chicken segment related to decreased feed ingredient costs.

• Decrease in hog costs of approximately $105 million in our Pork segment.

• Decrease in freight and transportation costs of approximately $90 million.

• Decrease in raw material and other input costs of approximately $55 million in our Prepared Foods segment.

• Decrease of $31 million in our Chicken segment from insurance proceeds, net of costs, related to a production facility fire in the fourth quarter of fiscal 2021.

• Remaining decrease in costs across all of our segments primarily driven by net impacts on average cost per pound from mix changes in addition to savings from our productivity program.

Selling, General and Administrative

in millions			Three Months Ended
			December 30, 2023						December 31, 2022
Selling, general and administrative expense			$	592					$	501
As a percentage of sales			4.4		%				3.8		%

First quarter – Fiscal 2024 vs Fiscal 2023

• Increase of $91 million in selling, general and administrative was primarily driven by:

• Increase of $50 million in employee costs primarily from incentive-based compensation.

• Increase of $17 million in technology related costs.

• Increase of $17 million in professional fees.

• Increase of $14 million in restructuring and related costs.

Interest Expense

in millions			Three Months Ended
			December 30, 2023						December 31, 2022
			$	105					$	84

First quarter – Fiscal 2024 vs Fiscal 2023

• The increase in interest expense for the three months ended December 30, 2023 was primarily due to interest expense on the balance of our term loan facilities.

Other (Income) Expense, net

in millions			Three Months Ended
			December 30, 2023						December 31, 2022
Total other (income) expense, net			$	(25)					$	(42)

First quarter – Fiscal 2024

• Included $19 million of foreign exchange gains and $10 million related to an amendment of a postretirement benefit plan.

First quarter – Fiscal 2023

• Included $15 million of joint venture earnings and $25 million of foreign exchange gains.

Effective Tax Rate

			Three Months Ended
			December 30, 2023						December 31, 2022
			29.4		%				26.1		%

First quarter – Fiscal 2024 vs Fiscal 2023

• The effective tax rates for both periods were increased by state taxes and net unfavorable permanent book-to-tax differences, partially offset by various tax benefits; however, the relatively lower level of pretax income in the first quarter of fiscal 2024 resulted in a higher effective tax rate compared to the first quarter of fiscal 2023.

Net Income Attributable to Tyson

in millions, except per share data			Three Months Ended
			December 30, 2023						December 31, 2022
Net income attributable to Tyson			$	107					$	316
Net income attributable to Tyson – per diluted share			0.30						0.88

First quarter – Fiscal 2024 – Net income attributable to Tyson included the following items:

• $75 million pretax, or ($0.16) per diluted share, of charges related to plant closures.

• $73 million pretax, or ($0.16) per diluted share, related to the recognition of a legal contingency accrual.

• $30 million pretax, or ($0.06) per diluted share, of restructuring and related charges.

• $1 million pretax, or ($0.01) per diluted share, of production facilities fire insurance proceeds, net of costs incurred.

First quarter – Fiscal 2023 – Net income attributable to Tyson included the following items:

• $35 million pretax, or $0.07 per diluted share, of production facilities fire insurance proceeds, net of costs incurred.

• $21 million pretax, or ($0.04) per diluted share, of restructuring and related charges.

Segment Results

We operate in four segments: Beef, Pork, Chicken, and Prepared Foods. The following table is a summary of sales and operating income (loss), which is how we measure segment profit.

in millions			Sales
			Three Months Ended
			December 30, 2023						December 31, 2022
Beef			$	5,023					$	4,723
Pork			1,517						1,529
Chicken			4,033						4,263
Prepared Foods			2,543						2,538
International/Other			582						612
Intersegment sales			(379)						(405)
Total			$	13,319					$	13,260

in millions			Operating Income (Loss)
			Three Months Ended
			December 30, 2023						December 31, 2022
Beef			$	(206)					$	166
Pork			39						(21)
Chicken			177						69
Prepared Foods			243						258
International/Other			(22)						(5)
Total			$	231					$	467

Beef Segment Results

in millions			Three Months Ended
			December 30, 2023						December 31, 2022						Change
Sales			$	5,023					$	4,723					$	300
Sales volume change															(4.1)		%
Average sales price change															10.5		%
Operating income (loss)			$	(206)					$	166					$	(372)
Operating margin			(4.1)		%				3.5		%

First quarter – Fiscal 2024 vs Fiscal 2023

• Sales Volume** - Sales volume decreased due to lower availability of market-ready cattle.

• Average Sales Price** - Average sales price increased primarily due to increased input costs.

• Operating Income (Loss)** - Operating income decreased primarily due to compressed beef margins as well as $56 million for an inventory lower of cost or net realizable value adjustment, a $45 million legal contingency accrual and $40 million of costs related to plant closures. Operating income for the first quarter of fiscal 2023 benefited from $42 million of insurance proceeds related to a fire at a production facility in 2019.

Pork Segment Results

in millions			Three Months Ended
			December 30, 2023						December 31, 2022						Change
Sales			$	1,517					$	1,529					$	(12)
Sales volume change															7.7		%
Average sales price change															(8.5)		%
Operating income (loss)			$	39					$	(21)					$	60
Operating margin			2.6		%				(1.4)		%

First quarter – Fiscal 2024 vs Fiscal 2023

• Sales Volume** - Sales volume increased due to improved market conditions and increased domestic availability of market-ready hogs.

• Average Sales Price** - Average sales price decreased due to lower hog costs.

• Operating Income (Loss)** - Operating income increased due to improved pork margins, partially offset by a $28 million legal contingency accrual.

Chicken Segment Results

in millions			Three Months Ended
			December 30, 2023						December 31, 2022						Change
Sales			$	4,033					$	4,263					$	(230)
Sales volume change															(1.5)		%
Average sales price change															(3.9)		%
Operating income			$	177					$	69					$	108
Operating margin			4.4		%				1.6		%

First quarter – Fiscal 2024 vs Fiscal 2023

• Sales Volume** - Sales volume decreased primarily due to reduced domestic production, partially offset by the sell-through of inventory.

• Average Sales Price** - Average sales price decreased due to the impact of lower commodity protein prices.

• Operating Income** - Operating income increased due to improved operational efficiencies and a $170 million reduction in feed ingredient costs, partially offset by lower average sales price. Additionally, operating income in the first quarter of fiscal 2024 was impacted by $35 million in plant closure charges, offset by $24 million of insurance proceeds, net of costs incurred associated with a production facility fire in the fourth quarter of fiscal 2021. Operating income for the first quarter of fiscal 2023 benefited from $20 million of net derivative gains and was impacted by $7 million of costs, net of insurance proceeds, associated with a production facility fire in the fourth quarter of fiscal 2021.

Prepared Foods Segment Results

in millions			Three Months Ended
			December 30, 2023						December 31, 2022						Change
Sales			$	2,543					$	2,538					$	5
Sales volume change															2.5		%
Average sales price change															(2.3)		%
Operating income			$	243					$	258					$	(15)
Operating margin			9.6		%				10.2		%

First quarter – Fiscal 2024 vs Fiscal 2023

• Sales Volume** – Sales volume increase due to the acquisition of Williams Sausage Company in the third quarter of 2023 and increased foodservice volumes.

• Average Sales Price** – Average sales price decreased primarily due to sales mix.

• Operating Income** – Operating income decreased due to lower average sales price, increased marketing, advertising and promotion spend and $21 million of restructuring and related costs, partially offset by a $55 million reduction in raw material costs.

International/Other Results

in millions			Three Months Ended
			December 30, 2023						December 31, 2022						Change
Sales			$	582					$	612					$	(30)
Operating income (loss)			(22)						(5)						(17)

First quarter – Fiscal 2024 vs Fiscal 2023

• Sales** – Sales were negatively impacted by lower volume in Malaysia and unfavorable sales mix across the Asia-Pacific region and China due to macroeconomic headwinds, which were partially offset by volume increases in the other regions.

• Operating Income (Loss)** – Operating income decreased primarily due to a production facility fire in Europe in the first quarter of fiscal 2024.

LIQUIDITY AND CAPITAL RESOURCES

Our cash needs for working capital, capital expenditures, growth opportunities, repurchases of senior notes, repayment of maturing debt, the payment of dividends 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			Three Months Ended
			December 30, 2023						December 31, 2022
Net income			$	114					$	320
Non-cash items in net income:
Depreciation and amortization			373						303
Deferred income taxes			(14)						8
Other, net			129						68
Net changes in operating assets and liabilities			698						63
Net cash provided by operating activities			$	1,300					$	762

• The increase in net cash provided by operating activities was primarily due to decreases in annual incentive payments, inventory and accounts receivable, partially offset by lower earnings as a result of operations and a decrease in insurance proceeds received.

Cash Flows from Investing Activities

in millions			Three Months Ended
			December 30, 2023						December 31, 2022
Additions to property, plant and equipment			$	(354)					$	(589)
Proceeds from sale of (purchases of) marketable securities, net			(1)						—
Acquisition, net of cash acquired			—						(39)
Acquisition of equity investments			(26)						(36)
Other, net			3						(5)
Net cash used for investing activities			$	(378)					$	(669)

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

• We expect capital expenditures between $1 billion and $1.5 billion for fiscal 2024. Capital expenditures include investments in profit improvement projects as well as projects for maintenance and repair. This includes completion of capacity expansion projects as well as new equipment, automation technology and processes for product innovation.

• Acquisition, net of cash acquired for the three months ended December 31, 2022 included our 60% equity stake in Supreme Foods Processing Company, a producer and distributor of value-added and cooked chicken and beef products.

Cash Flows from Financing Activities

in millions			Three Months Ended
			December 30, 2023						December 31, 2022
Proceeds from issuance of debt			$	771					$	54
Payments on debt			(32)						(58)
Proceeds from issuance of commercial paper			1,649						—
Repayments of commercial paper			(2,240)						—
Purchases of Tyson Class A common stock			(13)						(313)
Dividends			(171)						(169)
Stock options exercised			7						4
Other, net			3						—
Net cash used for financing activities			$	(26)					$	(482)

• During the first three months of fiscal 2024, proceeds from issuance of debt included $750 million of proceeds from the term loan facility due May 2028.

• Purchases of Tyson Class A stock included:

• $300 million of cash paid for shares repurchased pursuant to our share repurchase program during the three months ended December 31, 2022.

• $13 million of shares repurchased to fund certain obligations under our equity compensation programs during each of the three months ended December 30, 2023 and December 31, 2022.

• Dividends paid during the three months ended December 30, 2023 reflected a 2% increase to our fiscal 2023 quarterly dividend rate.

Liquidity

in millions
			Commitments Expiration Date						Facility Amount						Outstanding Letters of Credit (no draw downs)						Amount Borrowed						Amount Available at December 30, 2023
Cash and cash equivalents																											$	1,484
Short-term investments																											15
Term loan facility			May 2026						$	1,000					$	—					$	1,000					—
Term loan facility			May 2028						750						—						750						—
Revolving credit facility			September 2026						2,250						—						—						2,250
Commercial paper																											—
Total liquidity																											$	3,749

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

• At December 30, 2023, we had current debt of $1,308 million, which we intend to pay with cash generated from our operating activities and other existing or new liquidity sources.

• In the first quarter of fiscal 2024, we borrowed the full $750 million available under the term loan facility due May 2028 to repay $592 million of outstanding commercial paper obligations and for general corporate purposes.

• The revolving credit facility supports our short-term funding needs and also serves to backstop our commercial paper program. We had no borrowings under the revolving credit facility during the three months ended December 30, 2023. Under the terms of the facility, we have the option to establish incremental commitment increases of up to $500 million if certain conditions are met.

• We expect net interest expense to approximate $400 million for fiscal 2024.

• Our current ratio was 1.5 to 1 at December 30, 2023 and 1.3 to 1 at September 30, 2023. The increase in fiscal 2024 is primarily due to increased cash and cash equivalents.

• At December 30, 2023, approximately $563 million of our cash was held in the 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 and Term Loan Facilities

Cash flows from operating activities and 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 $2.25 billion, to provide additional liquidity for working capital needs and to backstop our commercial paper program. Additionally, we have $1.75 billion in committed term loan facilities of which the full $1.75 billion was drawn upon as of December 30, 2023.

At December 30, 2023, amounts available for borrowing under our revolving credit and term loan facilities totaled $2.25 billion. Our revolving credit facility is funded by a syndicate of 20 banks, with commitments ranging from $35 million to $175 million per bank.

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 $1.5 billion. The maturities of the notes may vary, but may not exceed 397 days from the date of issuance. As of December 30, 2023, we had no commercial paper outstanding under this program. Our ability to access commercial paper in the future may be limited or its costs increased.

Credit Ratings

Term Loan Facility due May 2028

Standard & Poor’s Rating Services’, a Standard & Poor’s Financial Services LLC business (“S&P”), applicable rating is “BBB”. Moody’s Investor Service, Inc.’s (“Moody’s”) applicable rating is “Baa2”. The below table outlines the commitment fee on any unused borrowing capacity and the borrowing spread on the outstanding principal balance of our term loan facility due May 2028 that corresponds to the applicable ratings levels from S&P and Moody’s.

Ratings Level (Moody’s/S&P)			Commitment Fee			Borrowing Spread
Baal/BBB+ or above			0.100		%	1.625		%
Baa2/BBB (current level)			0.125		%	1.750		%
Baa3/BBB- or lower			0.175		%	1.875		%

Term Loan Facility due May 2026

S&P applicable rating is “BBB” and Moody’s applicable rating is “Baa2”. The below table outlines the borrowing spread on the outstanding principal balance of our term loan facility due May 2026 that corresponds to the applicable ratings levels from S&P and Moody’s.

Ratings Level (Moody’s/S&P)			Borrowing Spread
A2/A or above			0.875		%
A3/A-			1.000		%
Baal/BBB+			1.125		%
Baa2/BBB (current level)			1.250		%
Baa3/BBB- or lower			1.375		%

Revolving Credit Facility

S&P applicable rating is “BBB” and Moody’s applicable rating is “Baa2”. The below table outlines the fees paid on the unused portion of the facility (“Facility Fee Rate”) and letter of credit fees and borrowings (“All-in Borrowing Spread”) that corresponds to the applicable ratings levels from S&P and Moody’s.

Ratings Level (Moody’s/S&P)			Facility Fee Rate			All-in Borrowing Spread
A2/A or above			0.070		%	0.875		%
A3/A-			0.090		%	1.000		%
Baal/BBB+			0.100		%	1.125		%
Baa2/BBB (current level)			0.125		%	1.250		%
Baa3/BBB- or lower			0.175		%	1.375		%

In the event the rating levels fall within different levels, the applicable rate will be based upon the higher of the two Levels or, if there is more than a one-notch split between the two Levels, then the Applicable Rate will be based upon the Level that is one Level below the higher Level.

Debt Covenants

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

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 December 30, 2023, and we expect that we will maintain compliance.

RECENTLY ISSUED/ADOPTED ACCOUNTING PRONOUNCEMENTS

Refer to the discussion of recently issued/adopted accounting pronouncements under Part I, Item 1, Notes to Consolidated Condensed Financial Statements, Note 1: Accounting Policies.

CRITICAL ACCOUNTING ESTIMATES

We consider accounting policies related to: contingent liabilities; revenue recognition; accrued self-insurance; defined benefit pension plans; impairment of long-lived assets and definite life intangibles; impairment of goodwill and indefinite life intangible assets; business combinations; and income taxes to be critical accounting estimates. These policies are summarized in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the fiscal year ended September 30, 2023. Refer to Part I, Item 1, Notes to Consolidated Condensed Financial Statements, Note 1: Accounting Policies, for updates to our significant accounting policies during the three months ended December 30, 2023. These critical accounting policies require us to make estimates and assumptions that affect the amounts reported in the consolidated condensed financial statements and accompanying notes.

Our qualitative assessment for the first quarter of fiscal 2024 did not indicate that it was more likely than not the fair value of any of our reporting units or indefinite lived intangibles was less than the carrying amount, and as such, no quantitative test was deemed necessary. We consider reporting units and indefinite lived intangibles that have 20% or less excess fair value over carrying amount to have a heightened risk of impairment. The following reporting units and indefinite lived intangibles were considered at heightened risk of impairment as of the date of the most recent estimated fair value determination, which was in the fourth quarter of fiscal 2023: our Chicken segment reporting units, our Beef reporting unit and our Pork reporting unit with goodwill totaling $3.1 billion, $0.3 billion and $0.4 billion, respectively, and two Prepared Foods brands with carrying values of $0.5 billion and $0.3 billion.

We continuously evaluate the changing macroeconomic conditions including inflationary pressures, rising interest rates, demand outlook and export markets as well as the Company's market capitalization. Our reporting units with heightened risk of future impairments with $3.8 billion carrying value, as well as a brand with $0.5 billion carrying value, all had less than 10% of excess fair value above carrying value as of the date of the most recent estimated fair value determination. Consequently, their estimated fair values remain highly sensitive to future discount rate increases, changing macroeconomic conditions and achievement of projected long-term operating margins. Although our remaining reporting units and indefinite life intangible assets generally had more than 20% excess fair value over carrying amount as of the date of the most recent estimated fair value determination, they are also susceptible to impairments if any assumptions, estimates, or market factors significantly change in the future.

CAUTIONARY STATEMENTS RELEVANT TO FORWARD-LOOKING INFORMATION FOR THE PURPOSE OF “SAFE HARBOR” PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

Certain information in this report constitutes forward-looking statements. Such forward-looking statements include, but are not limited to, current views and estimates of our outlook for fiscal 2024, 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). These forward-looking statements are subject to a number of factors and uncertainties that could cause our actual results and experiences to differ materially from anticipated results and expectations expressed in such forward-looking statements. We wish to caution readers not to place undue reliance on any forward-looking statements, which speak only as of the date made. We undertake no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.

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) global pandemics have had, and may in the future have, an adverse impact on our business and operations; (ii) the effectiveness of restructuring or financial excellence programs; (iii) access to foreign markets together with foreign economic conditions, including currency fluctuations, import/export restrictions and foreign politics; (iv) cyber attacks, other cyber incidents, security breaches or other disruptions of our information technology systems; (v) risks associated with our failure to consummate favorable acquisition transactions or integrate certain acquisitions’ operations; (vi) the Tyson Limited Partnership’s ability to exercise significant control over the Company; (vii) 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; (viii) 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; (ix) outbreak of a livestock disease (such as African swine fever (ASF), 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 conduct our operations; (x) changes in consumer preference and diets and our ability to identify and react to consumer trends; (xi) effectiveness of advertising and marketing programs; (xii) significant marketing plan changes by large customers or loss of one or more large customers; (xiii) our ability to leverage brand value propositions; (xiv) changes in availability and relative costs of labor and contract farmers and our ability to maintain good relationships with team members, labor unions, contract farmers and independent producers providing us livestock, including as a result of our relocation of certain corporate team members to our world headquarters in Springdale, Arkansas; (xv) issues related to food safety, including costs resulting from product recalls, regulatory compliance and any related claims or litigation; (xvi) the effect of climate change and any legal or regulatory response thereto; (xvii) 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; (xviii) adverse results from litigation; (xix) risks associated with leverage, including cost increases due to rising interest rates or changes in debt ratings or outlook; (xx) impairment in the carrying value of our goodwill or indefinite life intangible assets; (xxi) our participation in a multiemployer pension plan; (xxii) volatility in capital markets or interest rates; (xxiii) risks associated with our commodity purchasing activities; (xxiv) the effect of, or changes in, general economic conditions; (xxv) impacts on our operations caused by factors and forces beyond our control, such as natural disasters, fire, bioterrorism, pandemics, armed conflicts or extreme weather; (xxvi) failure to maximize or assert our intellectual property rights; (xxvii) effects related to changes in tax rates, valuation of deferred tax assets and liabilities, or tax laws and their interpretation; and (xxviii) those factors discussed within Item 1, Item 1A and Item 7 of our Annual Report on Form 10-K for the year ended September 30, 2023 and our other periodic filings with the SEC.