ITEM 7. 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 financial statements and notes thereto included in Part II, Item 8 of this Annual Report on Form 10-K. 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. Refer to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2023 for additional information related to fiscal 2023.
DESCRIPTION OF THE COMPANY
We are a world-class food company and recognized leader in protein. Founded in 1935 by John W. Tyson, it has grown under four generations of family leadership. The Company is unified by this purpose: Tyson Foods. We Feed the World Like Family™ and has a broad portfolio of iconic products and brands including Tyson®, Jimmy Dean®, Hillshire Farm®, Ball Park®, Wright®, State Fair®, Aidells® and ibp®. Tyson Foods is dedicated to bringing high-quality food to every table in the world, safely, and affordably, now and for future generations.
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 China, Malaysia, Mexico, South Korea, Thailand and the Kingdom of Saudi Arabia, 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
We utilize a 52- or 53-week accounting period ending on the Saturday closest to September 30. The Company’s accounting cycle resulted in a 52-week year for fiscal 2025, 2024 and 2023.
General
Sales grew 2.1%, or $1.1 billion to $54.4 billion in fiscal 2025, largely due to higher average sales prices in our Beef, Pork and Prepared Foods segments, partially offset by $653 million of increased legal contingency accruals which reduced sales. We reported operating income of $1,098 million in fiscal 2025 as compared to an operating income of $1,409 million in fiscal 2024, as we experienced lower operating income in our Beef and Pork segments, partially offset by higher operating income in our Chicken and Prepared Foods segments and International/Other.
In fiscal 2025, our operating income was impacted by $738 million of legal contingency accruals, $343 million of goodwill and intangible impairments, $45 million of restructuring and related charges, $41 million of charges related to a product recall and $23 million related to brand and product line discontinuations. In fiscal 2024, our results were impacted by $182 million of plant closure and disposal charges, $174 million of legal contingency accruals and $31 million of restructuring and related charges.
Market Environment
According to the most recently published USDA data, domestic protein production (beef, pork, chicken and turkey) decreased slightly in fiscal 2025 compared to fiscal 2024. The Beef segment continues to experience limited supply of market-ready cattle as well as increased cattle costs. Additionally, uncertainty exists regarding the timing of the anticipated cattle herd rebuilding. The Pork segment experienced sufficient supply of market-ready hogs and increased hog costs. The Chicken segment experienced reduced feed ingredient costs, but costs began to stabilize in the back half of fiscal 2025. The Prepared Foods segment is currently experiencing increased raw material costs primarily due to higher meat costs.
We are subject to changes in import and export policies, including trade restrictions, new or increased tariffs or quotas, and customs restrictions through our international sales and operations. Our exports account for less than 10% of our business, primarily composed of chicken leg quarters and paws, boxed beef and variety meats of all proteins. As a result of the recent changes in trade policies and tariffs both domestically and internationally, we may experience some sales disruptions and other impacts associated with tariffs. There is uncertainty regarding the impact the current changes will have on the price and demand of our products in the affected countries, commodity pricing and other general economic conditions, and uncertainty in future changes that may have a material impact.
Margins
Our total operating margin was 2.0% in fiscal 2025. Operating margins by segment were as follows:
• Beef – (5.2)%
• Pork – (3.4)%
• Chicken – 8.5%
• Prepared Foods – 9.0%
Strategy
We are a world-class food company and recognized leader in protein. Our strategy is to deliver margins in the core protein business by driving efficiencies and valuing-up offerings to better serve consumers; grow branded portfolio by innovating new occasions, categories and channels; and scale in international markets by delivering profitable value-added food offerings in high growth categories.
During fiscal 2025, the Company initiated a network optimization plan to optimize our global operations and logistics network. We anticipate recognizing total pretax charges of $86 million related to actions approved through September 27, 2025, which include $99 million that have resulted or will result in cash outflows and $94 million of non-cash charges, partially offset by $107 million gain recognized from the sale of storage facilities. Additionally, we received $252 million in proceeds associated with the sale of storage facilities during fiscal 2025. We expect to incur costs related to the network optimization plan over a multi-year period and anticipate additional charges in the future as further actions are approved.
In fiscal 2025, we recognized charges of $45 million related to the network optimization plan, which included a gain of $107 million from the sale of storage facilities. The charges primarily included the closure of two facilities in the Prepared Foods segment, a non-harvesting facility closure in the Beef segment, asset write-offs in the Chicken and Prepared Foods segments and International/Other as well as severance and related costs and contract and lease termination costs. For additional description refer to Part II, Item 8, Notes to the Consolidated Financial Statements, Note 7: Restructuring and Related Charges.
SUMMARY OF RESULTS
Sales
in millions
Sales
Change in sales volume
Change in average sales price
Sales growth
• Sales Volume – Volumes were essentially flat and resulted in a decrease of $10 million as decreased sales volume in our Beef, Pork and Prepared Foods segments were offset by increased sales volume in our Chicken segment.
• Average Sales Price – Sales were positively impacted by higher average sales prices, which accounted for an increase of $1,795 million, driven by increased pricing in our Beef, Pork and Prepared Foods segments, while pricing in our Chicken segment was relatively flat.
◦ The above changes in average sales price exclude the impacts of $698 million and $45 million reductions of Sales from the recognition of legal contingency accruals in fiscal 2025 and 2024, respectively.
• Sales Volume – Volumes were essentially flat and resulted in an increase of $19 million as increased sales volume in our Beef, Pork and Prepared Foods segments were mostly offset by decreased sales volume in our Chicken segment.
• Average Sales Price – Sales were positively impacted by higher average sales prices, which accounted for an increase of $298 million, driven by increased pricing in our Beef segment.
◦ The above changes in average sales price exclude the impacts of $45 million and $156 million reductions of Sales from the recognition of legal contingency accruals in fiscal 2024 and 2023, respectively.
Cost of Sales
in millions
Cost of sales
Gross profit
Cost of sales as a percentage of sales
• Cost of sales increased $1,197 million. Lower sales volume decreased cost of sales by $10 million while higher input cost per pound increased cost of sales by $1,207 million.
• The $1,207 million impact of higher input cost per pound was impacted by:
• Increase in cattle costs of approximately $1,840 million in our Beef segment.
• Increase in raw material and other input costs of approximately $345 million in our Prepared Foods segment.
• Increase in hog costs of approximately $295 million in our Pork segment.
• Increase of $43 million related to restructuring and related charges.
• Decrease of approximately $340 million in our Chicken segment related to decreased feed ingredient costs.
• Decrease of $89 million related to lower legal contingency accruals in our Beef, Pork and Chicken segments partially offset by an increase in International/Other.
• Decrease of $165 million in plant closure and disposal charges.
• Decrease in freight and transportation costs of approximately $110 million.
• Decrease of $34 million in facility fire related costs, net of insurance proceeds, in our Chicken segment and International/Other.
• 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.
• The $10 million impact of decreased sales volume was primarily driven by decreased volumes in our Beef, Pork and Prepared Foods segments.
• Cost of sales decreased $568 million. Higher sales volume increased cost of sales by $18 million while lower input cost per pound decreased cost of sales by $586 million.
• The $586 million impact of lower input cost per pound was impacted by:
• Decrease of approximately $895 million in our Chicken segment related to decreased feed ingredient costs.
• Decrease in freight and transportation costs of approximately $310 million.
• Decrease of $140 million due to plant closure and disposal charges.
• Decrease in hog costs of approximately $135 million in our Pork segment.
• Decrease in raw material and other input costs of approximately $65 million in our Prepared Foods segment.
• Decrease due to net derivative losses of $55 million in fiscal 2024, compared to net derivative losses of $117 million in 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 $59 million in our Chicken segment from insurance proceeds, net of costs, related to a production facility fire in the fourth quarter of fiscal 2021.
• Decrease of $29 million in restructuring and related costs.
• Increase in cattle costs of approximately $1,315 million in our Beef segment.
• Increase in performance-based compensation costs of $173 million.
• Increase of $129 million related to the recognition of legal contingency accruals in our Beef, Pork and Chicken segments.
• Increase of $86 million in International/Other from costs related to a production facility fire in the Netherlands and subsequent decision to sell the facility.
• 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.
• 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.
• The $18 million impact of increased sales volume was primarily driven by increased volumes in our Beef, Pork and Prepared Foods segments.
Selling, General and Administrative
in millions
Selling, general and administrative
As a percentage of sales
• Decrease of $97 million in selling, general and administrative was primarily driven by:
• Decrease of $43 million in professional fees.
• Decrease of $35 million in marketing, advertising and promotion expenses.
• Decrease of $29 million in restructuring and related costs.
• Decrease of $25 million in team member costs.
• Increase of $30 million in technology costs.
• Decrease of $27 million in selling, general and administrative was primarily driven by:
• Decrease of $71 million in marketing, advertising and promotion expenses.
• Decrease of $64 million in restructuring and related costs.
• Decrease of $28 million in corporate facilities and assets costs.
• Decrease of $18 million in donations.
• Increase of $155 million in team member costs including $205 million in performance-based compensation partially offset by a decrease of $50 million in all other team member costs.
• Increase of $8 million in brand and product line discontinuations.
Goodwill Impairment
in millions
Goodwill Impairment
• We recorded a $343 million impairment charge in the Beef segment in fiscal 2025.
Interest (Income) Expense
in millions
Interest income
Interest expense
• The decrease in interest income for fiscal 2025 was primarily due to average lower cash and cash equivalents held.
• The decrease in interest expense for fiscal 2025 was primarily due to lower interest expense related to the repayment of the term loan due May 2026 in fiscal 2025 and the repayment of the August 2024 senior notes in fiscal 2024, partially offset by increased interest expense from the issuance of 5.40% 2029 Notes and 5.70% 2034 Notes and decreased capitalized interest expense related to lower capital expenditures.
Other (Income) Expense, net
in millions
2025 – Included $64 million of joint venture earnings and $18 million of production facilities fire insurance proceeds, partially offset by $28 million of impairments of equity investments and $3 million of foreign exchange losses.
2024 – Included $34 million of production facilities fire insurance proceeds, $15 million gain on sale of an equity method investment, $15 million of joint venture earnings and $11 million of foreign exchange gains.
Effective Tax Rate
• The increase in effective tax rate for fiscal 2025 was primarily due to a non-deductible goodwill impairment in fiscal 2025.
Net Income (Loss) Attributable to Tyson
in millions, except per share data
Net income (loss) attributable to Tyson
Net income (loss) attributable to Tyson - per diluted share
2025 – Included the following items:
• $738 million pretax, or ($1.58) per diluted share, of legal contingency accruals.
• $343 million pretax, or ($0.96) per diluted share, related to a goodwill impairment (non-tax deductible).
• $45 million pretax, or ($0.11) per diluted share, of restructuring and related charges.
• $41 million pretax, or ($0.09) per diluted share, related to a charge from a product recall.
• $28 million pretax, or ($0.08) per diluted share, related to impairment of equity investments.
• $23 million pretax, or ($0.05) per diluted share, related to brand and product line discontinuations.
• $17 million pretax, or ($0.04) per diluted share, of plant closure and disposal charges.
• $36 million pretax, or $0.12 per diluted share, of facility fire related insurance proceeds.
2024 – Included the following items:
• $182 million pretax, or ($0.41) per diluted share, of plant closure and disposal charges.
• $174 million pretax, or ($0.38) per diluted share, of legal contingency accruals.
• $18 million pretax, or ($0.02) per diluted share, of facility fire related insurance proceeds, net of costs.
• $31 million pretax, or ($0.06) per diluted share, of restructuring and related charges.
• $8 million pretax, or ($0.02) per diluted share, related to brand and product line discontinuations.
SEGMENT RESULTS
We operate in four reportable segments: Beef, Pork, Chicken, and Prepared Foods. International/Other primarily includes our foreign operations in China, Malaysia, Mexico, South Korea, Thailand and the Kingdom of Saudi Arabia, 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) for fiscal years ended 2025, 2024 and 2023, which is how we measure segment income (loss):
in millions
Sales
Operating Income (Loss)
Beef (a)
Pork (b)
Chicken (c)
Prepared Foods (d)
International/Other (e)
Intersegment Sales
Total
(a) Beef segment results for fiscal 2025 included $343 million of goodwill and intangible impairments, $318 million of legal contingency accruals and $48 million of restructuring and related charges. Beef segment results for fiscal 2024 included a $45 million legal contingency accrual and $41 million of plant closure and disposal charges. Beef segment results for fiscal 2023 included $333 million of goodwill and intangible impairments, $42 million of facility fire related insurance proceeds and $33 million of restructuring and related charges.
(b) Pork segment results for fiscal 2025 included $380 million of legal contingency accruals. Pork segment results for fiscal 2024 included $108 million of plant closure and disposal charges and $73 million of legal contingency accruals.
(c) Chicken segment results for fiscal 2025 included $23 million related to brand and product line discontinuations, $23 million of plant closure and disposal charges and $9 million of restructuring and related charges. Chicken segment results for fiscal 2024 included a $56 million legal contingency accrual, $33 million of plant closure and disposal charges and $70 million of facility fire related insurance proceeds. Chicken segment results for fiscal 2023 included $322 million of plant closure and disposal charges, $210 million of goodwill and intangible impairments, $156 million of legal contingency accruals, $16 million of restructuring and related charges and $11 million of facility fire related insurance proceeds.
(d) Prepared Foods segment results for fiscal 2025 included $41 million of charges related to a product recall and a net benefit of $26 million related to restructuring and related charges, which included a gain from the sale of storage facilities net of other plan charges. Prepared Foods segment results for fiscal 2024 included $24 million of restructuring and related charges. Prepared Foods segment results for fiscal 2023 included $49 million of restructuring and related charges and $17 million of brand and product line discontinuations.
(e) International/Other results for fiscal 2025 included a $40 million legal contingency charge related to the 2015 sale of our Mexico operation, $18 million of facility fire related insurance proceeds and $14 million of restructuring and related charges. International/Other results for fiscal 2024 included $86 million of facility fire related costs. International/Other results for fiscal 2023 included a $238 million goodwill and intangible impairments.
Beef Segment Results
in millions
Change 2025 vs. 2024
Change 2024 vs. 2023
Sales
Sales Volume Change
Average Sales Price Change
Operating Income (Loss)
Operating Margin
• Sales Volume – Sales volume decreased as lower head harvested were offset by higher average carcass weights.
• Average Sales Price – Average sales price increased due to increased input costs and strong demand. The change in average sales price for fiscal 2025 excludes a $318 million reduction of Sales from the recognition of legal contingency accruals.
• Operating Income (Loss) – Operating loss increased in fiscal 2025 due to compressed Beef margins, goodwill and intangible impairments, legal contingency accruals and increased restructuring and related charges, partially offset by improved operational execution and lapping the impacts of plant closure and disposal charges recorded in fiscal 2024.
• Sales Volume – Sales volume increased primarily due to higher average carcass weights.
• Average Sales Price – Average sales price increased due to increased input costs and increased demand.
• Operating Income (Loss) – Operating income decreased primarily due to compressed beef margins, the recognition of legal contingency accruals and plant closure and disposal charges in fiscal 2024, and recognition of facility fire related insurance proceeds in fiscal 2023 related to a fire at a production facility in 2019, partially offset by goodwill and intangible impairments recorded in fiscal 2023.
Pork Segment Results
in millions
Change 2025 vs. 2024
Change 2024 vs. 2023
Sales
Sales Volume Change
Average Sales Price Change
Operating Income (Loss)
Operating Margin
• Sales Volume – Sales volume decreased due to production decreases associated with a plant closure in 2024 which were partially offset by production increases at other facilities and higher average carcass weights.
• Average Sales Price – Average sales price increased due to increased input costs and strong demand for our pork products. The change in average sales price excludes a $380 million and $45 million reduction of Sales from the recognition of legal contingency accruals recorded in fiscal 2025 and 2024, respectively.
• Operating Income (Loss) – Operating loss increased due to compressed pork margins and the recognition of legal contingency accruals, partially offset by lower operating costs, improved results in our live hog operations and lapping the impacts of plant closure and disposal charges and restructuring and related charges recorded in fiscal 2024.
• 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 driven by lower pricing on drop credit items. The change in average sales price excludes the impact of a $45 million reduction of Sales from the recognition of legal contingency accruals in fiscal 2024.
• Operating Income (Loss) – Operating income increased primarily due to higher pork margins, improved results in our live hog operations and lapping the impacts of facility fire related costs in the third quarter of fiscal 2023, partially offset by the recognition of legal contingency accruals and plant closure and disposal costs in fiscal 2024.
Chicken Segment Results
in millions
Change 2025 vs. 2024
Change 2024 vs. 2023
Sales
Sales Volume Change
Average Sales Price Change
Operating Income (Loss)
Operating Margin
• Sales Volume – Sales volume increased primarily due to increased domestic production.
• Average Sales Price – Average sales price remained relatively flat as the impact of lower input costs was offset by strong demand.
• Operating Income (Loss) – Operating income increased primarily due to improved operational execution, improved volumes and $340 million of net decreases in feed ingredient costs which was partially offset by increased marketing, advertising and promotion expenses. Operating income was also impacted by reduced legal contingency accruals partially offset by increased costs related to brand and product line discontinuations, restructuring and related charges and lapping of facility fire related insurance proceeds recognized in fiscal 2024 associated with a production facility fire in the fourth quarter of fiscal 2021.
• Sales Volume – Sales volume decreased primarily due to reduced domestic production.
• Average Sales Price – Average sales price decreased due to the impact of lower input costs. The change in average sales price excludes the impact of a $156 million reduction of Sales from the recognition of legal contingency accruals in fiscal 2023.
• Operating Income (Loss) – Operating income increased primarily due to improved operational efficiencies, goodwill and intangible impairments recorded in fiscal 2023, lower plant closure and disposal charges, reduced legal contingency accruals, decreased freight costs and an increase in facility fire related insurance proceeds, net of costs associated with a production facility fire in the fourth quarter of fiscal 2021. Additionally, we experienced $895 million of lower feed ingredient costs in fiscal 2024 which was partially offset by associated decreases in average sales price.
Prepared Foods Segment Results
in millions
Change 2025 vs. 2024
Change 2024 vs. 2023
Sales
Sales Volume Change
Average Sales Price Change
Operating Income
Operating Margin
• Sales Volume – Sales volume decreased due to a challenging consumer environment and the impact from a product recall.
• Average Sales Price – Average sales price increased primarily due to the pass through of increased raw material costs.
• Operating Income – Operating income increased primarily due to higher average sales price, improved operational execution and lower selling, general and administrative costs, partially offset by increased raw material costs and charges related to a product recall. Additionally, fiscal 2025 benefited from net gains recognized from restructuring and related charges, which included a gain from the sale of storage facilities.
• Sales Volume – Sales volume increased primarily due to the acquisition of Williams Sausage Company in the third quarter of 2023.
• Average Sales Price – Average sales price decreased primarily due to sales mix.
• Operating Income – Operating income increased primarily due to lower raw materials costs, freight costs, marketing, advertising and promotion expenses and restructuring and related charges.
International/Other Results
in millions
Change 2025 vs. 2024
Change 2024 vs. 2023
Sales
Operating Income (Loss)
• Sales – Sales decreased due to lower average sales price.
• Operating Income (Loss) – Operating income increased primarily due to improved performance, insurance proceeds and lapping the charges related to a production facility fire in the first quarter of fiscal 2024, partially offset by the recognition of a legal accrual related to the 2015 sale of our Mexico operation.
• Sales – Sales decreased due to lower average sales price and the impact of the production facility fire in the Netherlands partially offset by increased volumes in the other regions.
• Operating Income (Loss) – Operating income increased primarily due to a goodwill impairment charge recorded in fiscal 2023, partially offset by the impacts of a production facility fire in the first quarter of fiscal 2024 and the subsequent decision to sell the facility.
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
Net income
Non-cash items in net income
Net changes in operating assets and liabilities:
(Increase) decrease in accounts receivable
(Increase) decrease in inventories
Increase (decrease) in accounts payable
Increase in income taxes payable/receivable
Net changes in other operating assets and liabilities
Net cash provided by operating activities
• Non-cash items in net income primarily included depreciation and amortization of $1,361 million and $1,400 million in fiscal 2025 and fiscal 2024, respectively, and a $343 million goodwill impairment in fiscal 2025.
• Cash provided by operating activities for fiscal 2025 was $2.2 billion, a decrease of $435 million compared to fiscal 2024, due to $105 million of lower earnings, net of non-cash items, and a $330 million decrease in cash provided by the net changes in operating assets and liabilities which was primarily impacted by:
• A decrease of $602 million due to an increase in inventory of $449 million in fiscal 2025, compared to a decrease of $153 million in fiscal 2024, primarily due to increased average cost of inventory and higher volume of livestock.
• A decrease of $180 million due to an increase in accounts receivable of $121 million in fiscal 2025, compared to a decrease of $59 million in fiscal 2024 as days sales outstanding increased more during fiscal 2025 than fiscal 2024 driven largely by increased average sales prices.
• Partially offset by:
• An increase of $389 million due to an increase in accounts payable of $184 million during fiscal 2025, compared to a decrease of $205 million in fiscal 2024, primarily due to higher input costs and increase in days payables outstanding.
• An increase of $145 million due to an increase of $273 million in the net changes in other operating assets and liabilities in fiscal 2025, compared to an increase of $128 million in fiscal 2024, primarily driven by an increase in legal accruals net of payments offset by an increase in fiscal 2024 performance-based compensation.
Cash Flows from Investing Activities
in millions
Additions to property, plant and equipment
(Purchases of)/Proceeds from marketable securities, net
Proceeds from sale of business
Proceeds from sale of storage facilities
Acquisition of equity investments
Other, net
Net cash used for investing activities
• Additions to property, plant and equipment included spending for production growth, safety, animal well-being, new equipment, infrastructure replacements and upgrades to maintain competitive standing and position us for future opportunities.
• Approximately $520 million will be necessary to complete buildings and equipment under construction at September 27, 2025.
• We expect capital expenditures between $0.7 billion and $1.0 billion for fiscal 2026. Capital expenditures include investments in profit improvement projects as well as projects for maintenance and repair.
• Proceeds from sale of business related to the sale of our Vienna, Georgia facility in fiscal 2024.
• Proceeds from sale of storage facilities related to the sale of multiple Tyson-owned and operated cold storage facilities in fiscal 2025.
• Other, net for fiscal 2025 primarily included insurance proceeds related to fires at our production facilities and proceeds from disposition of assets. Other, net for fiscal 2024 primarily included proceeds from disposition of corporate assets, proceeds on the sale of an equity method investment and insurance proceeds related to fires at our production facilities.
Cash Flows from Financing Activities
in millions
Proceeds from issuance of debt
Payments on debt
Proceeds from issuance of commercial paper
Repayments of commercial paper
Purchases of Tyson Class A common stock
Dividends
Stock options exercised
Other, net
Net cash used for financing activities
• During fiscal 2024, proceeds from issuance of debt included $750 million of proceeds from the term loan facility due May 2028, $600 million of proceeds from the 5.40% 2029 Notes, and $900 million from the 5.70% 2034 Notes.
• Payments on debt included:
• 2025 – In fiscal 2025, we fully repaid the $750 million term loan due May 2026 and $310 million of the term loan due May 2028 using cash on hand.
• 2024 – In March 2024, we issued senior unsecured notes with an aggregate principal amount of $1.5 billion. A portion of the net proceeds from the issuances were used to repay $250 million of the amount outstanding under our term loan facility due May 2026 and we used the remainder of the proceeds to retire the $1,250 million notes due August 2024.
• Purchases of Tyson Class A common stock included:
• $174 million of cash paid for shares repurchased pursuant to our share repurchase program in fiscal 2025.
• $22 million and $49 million for shares repurchased to fund certain obligations under our equity compensation plans in fiscal 2025 and 2024, respectively.
• Dividends paid during fiscal 2025 included a 2% increase to our fiscal 2024 quarterly dividend rate.
Liquidity
in millions
Commitments
Expiration Date
Facility
Amount
Outstanding Letters of Credit (no draw downs)
Amount
Borrowed
Amount Available at September 27, 2025
Cash and cash equivalents
Short-term investments
Revolving credit facility
April 2030
Commercial paper
Total liquidity
• Liquidity includes cash and cash equivalents, short-term investments and availability under our revolving credit facility, less the outstanding commercial paper balance.
• At September 27, 2025, we had current debt of $909 million, which we intend to pay 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. We had no borrowings under the revolving credit facility during fiscal 2025.
• In April 2025, we terminated our previous revolving credit facility with a maturity date of September 2026 and entered into a new $2.5 billion revolving credit facility. The new revolving credit facility will mature, and the commitments thereunder will terminate, in April 2030 with options for two one-year extensions. Under the terms of this revolving credit facility, we have the option to establish incremental commitment increases of up to an aggregate amount of $500 million if certain conditions are met. The covenants and other terms of the new facility are generally consistent with those of the terminated facility.
• We expect net interest expense will approximate $395 million for the 53 weeks of fiscal 2026.
• Our ratio of short-term assets to short-term liabilities (“current ratio”) was 1.6 to 1 and 2.0 to 1 at September 27, 2025, and September 28, 2024, respectively. The decrease in fiscal 2025 was primarily due to lower cash and cash equivalents and increased current debt.
• At September 27, 2025, $725 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 any 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 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 $2.5 billion, to provide additional liquidity for working capital needs and to backstop our commercial paper program.
At September 27, 2025, amounts available for borrowing under our revolving credit facility totaled $2.5 billion. Our revolving credit facility is funded by a syndicate of 17 banks, with commitments ranging from $50 million to $225 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 $1.75 billion, which increased in April 2025 in conjunction with the execution of the new revolving credit facility. The maturities of the notes may vary, but may not exceed 397 days from the date of issuance. As of September 27, 2025, we had no commercial paper outstanding. Our ability to access commercial paper in the future may be limited or its costs increased.
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 27, 2025, and September 28, 2024, the ratio of our net debt to EBITDA was 3.0x and 2.8x, respectively. Refer to Other Key Financial Measures below for an explanation and reconciliation to comparable Generally Accepted Accounting Principles (“GAAP”) measures. The increase in this ratio at September 27, 2025 is due to a decrease in EBITDA of $377 million partially offset by a decrease in net debt of $459 million.
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
Baa2/BBB (current level)
Baa3/BBB- or lower
Revolving Credit Facility
The below table outlines the fees paid on the unused portion of the facility (“Facility Fee Rate”) and letter of credit fees and borrowings (“Borrowing Spread”) that corresponds to the applicable ratings levels from S&P and Moody's. S&P's applicable rating is “BBB.” Moody's applicable rating is “Baa2.”
Ratings Level (Moody's/S&P)
Facility Fee Rate
Borrowing Spread
A3/A- or above
Baal/BBB+
Baa2/BBB (current level)
Baa3/BBB-
Ba1/BB+ or lower
In the event the ratings 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 September 27, 2025 and expect that we will maintain compliance.
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 $146 million at the end of fiscal 2025 as compared to an underfunded position of $158 million at the end of fiscal 2024. We contributed $14 million in fiscal 2025 and expect to contribute approximately $15 million of cash to our pension plans in fiscal 2026. 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 2026 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 27, 2025 (in millions):
Payments Due by Period
2031 and thereafter
Total
Debt principal payments (1)
Interest payments (2)
Guarantees (3)
Operating lease obligations (4)
Purchase obligations (5)
Capital expenditures (6)
Other long-term liabilities (7)
Total contractual commitments
(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 27, 2025, 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) For additional information regarding operating leases, refer to Part II, Item 8, Notes to the Consolidated Financial Statements, Note 6: Leases.
(5) Amounts include agreements with a remaining term in excess of one year 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 27, 2025. Additionally, the purchase obligations amount includes purchase commitments associated with long-term cold storage service agreements entered into as part of the sale of multiple Tyson-owned and operated storage facilities during fiscal 2025. 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 cancellable. Contracts for goods or services that contain termination clauses without penalty have also been excluded.
(6) Amounts include estimated amounts to complete buildings and equipment under construction as of September 27, 2025.
(7) Other long-term liabilities primarily consist of deferred compensation, deferred income, self-insurance and asset retirement obligations. We are unable to reliably estimate the amount and timing of the remaining payments beyond fiscal 2025; 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 $165 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 $153 million and related interest and penalties of $73 million at September 27, 2025, recorded in Other Liabilities and Other current liabilities.
Our maximum commitment associated with our cash flow assistance programs is limited to the fair value of each participating livestock supplier's net tangible assets. The potential maximum obligation as of September 27, 2025 was approximately $240 million and we did not have significant net receivables outstanding under these programs.
OTHER KEY FINANCIAL MEASURES
The following are other key financial measures used by the Company for the purposes of assessing performance and highlighting operational trends as well as our ability to generate earnings sufficient to service our debt:
in millions, except ratio data
Net income (loss)
Less: Interest income
Add: Interest expense
Add/(Less): Income tax expense (benefit)
Add: Depreciation
Add: Amortization (a)
EBITDA
Total gross debt
Less: Cash and cash equivalents
Less: Short-term investments
Total net debt
Ratio Calculations:
Gross debt/EBITDA
Net debt/EBITDA
Return on invested capital (b)
Total debt to capitalization (c)
Book value per share (d)
(a) Excludes the amortization of debt issuance and debt discount expense of $11 million, $12 million, $10 million for fiscal 2025, 2024 and 2023, respectively, as it is included in Interest expense.
(b) Return on invested capital is calculated by dividing after-tax operating income (loss), calculated by applying the Company’s effective tax rate to operating income (loss), by the average of beginning and ending total debt and shareholders’ equity less cash and cash equivalents.
(c) For the total debt to capitalization calculation, capitalization is defined as total debt plus total shareholders’ equity.
(d) Book value per share is calculated by dividing shareholders’ equity by the sum of Class A and B shares outstanding.
EBITDA is defined as net income (loss) before interest, income taxes, depreciation and amortization. Net debt to EBITDA represents the ratio of our debt, net of cash and short-term investments, to EBITDA. EBITDA and net debt to EBITDA are presented as supplemental financial measurements in the evaluation of our business. We believe the presentation of these financial measures helps investors to assess our operating performance from period to period, including our ability to generate earnings sufficient to service our debt, enhances understanding of our financial performance and highlights operational trends. These measures are widely used by investors and rating agencies in the valuation, comparison, rating and investment recommendations of companies; however, the measurements of EBITDA and net debt to EBITDA may not be comparable to those of other companies, which limits their usefulness as comparative measures. EBITDA and net debt to EBITDA are not measures required by or calculated in accordance with GAAP and should not be considered as substitutes for net income or any other measure of financial performance reported in accordance with GAAP or as a measure of operating cash flow or liquidity. EBITDA is a useful tool for assessing, but is not a reliable indicator of, our ability to generate cash to service our debt obligations because certain of the items added to net income to determine EBITDA involve outlays of cash. As a result, actual cash available to service our debt obligations will be different from EBITDA. Investors should rely primarily on our GAAP results, and use non-GAAP financial measures only supplementally, in making investment decisions.
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. These estimates require levels of subjectivity and judgment, which could result in actual results differing from our estimates.
Contingent liabilities
Description
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.
Judgments and Uncertainties
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.
Effect if Actual Results Differ From Assumptions
We have not made any material changes in the accounting methodology used to establish our contingent liabilities during the past three fiscal years. As set forth in Part II, Item 8, Notes to the Consolidated Financial Statements, Note 20: Commitments and Contingencies, we recognized $698 million and $174 million of charges in fiscal 2025 and 2024, respectively, from legal accruals related to our broiler antitrust civil litigation, broiler chicken grower litigation, pork antitrust litigation, beef antitrust litigation and wage rate litigation based on our assessment of the likelihood and amount of probable losses. 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
Description
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.
Judgments and Uncertainties
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.
Effect if Actual Results Differ From Assumptions
We do not believe there is a reasonable likelihood there will be a material change in the estimates or assumptions used to recognize revenue. As noted above, estimates are made based on historical experience and other factors. Typically, programs that are offered have a short duration, and historically, the difference between actual experience compared to estimated redemptions and performance has not been significant to the quarterly or annual financial statements. However, if the level of redemption rates or performance were to vary significantly from estimates, we may be exposed to gains or losses that could be material. We have not made any material changes in the accounting methodology used to recognize revenue during the past three fiscal years.
Accrued self-insurance
Description
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.
Judgments and Uncertainties
Our self-insurance liability contains uncertainties due to assumptions required and judgments 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.
Effect if Actual Results Differ From Assumptions
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 27, 2025, would not have a significant impact on our liability.
Income taxes
Description
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 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.
Judgments and Uncertainties
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.
Effect if Actual Results Differ From Assumptions
Due to the complexity of some of these judgments and 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. Changes in tax laws and rates could affect recorded deferred tax assets and liabilities in the future. Other than those potential impacts, we do not believe there is a reasonable likelihood there will be a material change in the tax related balances or valuation allowances.
Defined benefit pension plans
Description
We sponsor four defined benefit pension plans that provide retirement benefits to certain team members. We also participate in a multi-employer plan that provides defined benefits to certain team members covered by collective bargaining agreements. Such plans are usually administered by a board of trustees composed of the management of the participating companies and labor representatives. 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 $7 million in fiscal 2025. The projected benefit obligation was $176 million at the end of fiscal 2025. Unrecognized actuarial gain was $2 million at the end of fiscal 2025. We currently expect net periodic cost associated with our pension plans to be approximately $7 million in fiscal 2026. We expect to contribute approximately $15 million of cash to our pension plans in fiscal 2026. The exact amount of cash contributions made to pension plans in any year is dependent upon a number of factors, including minimum funding requirements.
Judgments and Uncertainties
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 team members. 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.
Effect if Actual Results Differ From Assumptions
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 27, 2025, 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 27, 2025, 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 the effect of changes in assumptions are not necessarily linear.
Impairment of goodwill and indefinite life intangible assets
Description
Goodwill and indefinite life intangible assets are evaluated for impairment annually or more frequently if events or circumstances indicate it is more likely than not that the fair value of a reporting unit or indefinite life intangible asset is less than its carrying value. 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, sustained decline in market capitalization or significant changes in macro-economic factors such as increased interest and discount rates.
We evaluate goodwill 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 more likely than not be less than its carrying value 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 value. 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.
Judgments and Uncertainties
We estimate the fair value of our reporting units considering the use of various valuation techniques, with the primary technique being an income approach (discounted cash flow method) and another technique being a market approach (guideline public company method), which use significant unobservable inputs, or Level 3 inputs, as defined by the fair value hierarchy. We include assumptions about sales growth, operating margins, discount rates and valuation multiples which consider our budgets, business plans, economic projections and marketplace data, and are believed to reflect market participant views which would exist in an exit transaction. Assumptions are also made for varying growth rates for periods beyond the long-term business plan period. Generally, we utilize operating margin assumptions based on future expectations, macro-economic trends, operating margins historically realized in the reporting units’ industries and industry marketplace valuation multiples. We consider reporting units that have 20% or less excess fair value over carrying value to have a heightened risk of impairment.
During fiscal 2023, we experienced lower than anticipated operating results and changing market fundamentals, as well as a drop in our market capitalization to below book value and an increase in long-term treasury rates which caused a net 50 basis point increase in the discount rates used in estimating the fair value of the reporting units. Based on quantitative assessments in fiscal 2023, we recognized $781 million of goodwill impairment charges including $333 million to partially impair the goodwill of the Beef reporting unit, $238 million to fully impair the goodwill of two of our International/Other reporting units and $210 million to partially impair the goodwill of a Chicken segment reporting unit.
Our fiscal 2024 goodwill impairment analysis did not result in impairment charges. Following the annual fiscal 2024 assessment, our Beef and two Chicken segment reporting units, with a total goodwill of approximately $3.3 billion in fiscal 2024, were at heightened risk of impairment.
During the third quarter of fiscal 2025, our Beef reporting unit experienced lower than anticipated supply of market-ready cattle and an increased carrying value primarily associated with higher cattle costs. Additionally, our forecasts indicated the timing of the recovery of market-ready cattle associated with the anticipated cattle herd rebuilding would be longer than previously estimated. Consequently, we determined the fair value of our Beef reporting unit was more likely than not less than the carrying amount and proceeded to perform a quantitative assessment. Based on this quantitative assessment, we determined the fair value of our Beef reporting unit had decreased to below its carrying value. Accordingly, we recognized a $343 million impairment during the third quarter of fiscal 2025 to fully impair its remaining goodwill.
We performed our annual impairment assessment as of the first day of our fourth quarter of fiscal 2025 and determined it was necessary to perform a quantitative assessment for one of our International/Other reporting units, which had goodwill of $0.2 billion at September 27, 2025, as it had lower than previously anticipated operating results. Based on this assessment, we determined that the International/Other reporting unit's estimated fair value exceeded its carrying value, and thus, did not recognize a goodwill impairment. In estimating its fair value, we generally assumed operating margins in future years would normalize over time as we believe this is consistent with market participant views in an exit transaction. The current year results are not indicative of future market participant expectations in an exit transaction primarily due to the impact of macroeconomic factors which we expect to be mostly temporary in nature. As of the date of the assessment, we estimate discount rates utilized in the discounted cash flow method would have to increase by more than approximately 125 basis points, with all other assumptions unchanged, before the carrying value of the International/Other reporting units would exceed their fair value. Following the annual fiscal 2025 assessment, this reporting unit was at heightened risk of impairment.
We performed a qualitative assessment for the remaining reporting units in our Chicken, Prepared Foods and Pork segments, which had goodwill of $9.3 billion at September 27, 2025, and determined none of them were at heightened risk of impairment following the fiscal 2025 annual assessment. As of the latest fair value assessments, we estimate discount rates utilized in the discounted cash flow method would have to increase by more than approximately 75 basis points, with all other assumptions unchanged, before the carrying value of any of the Chicken, Prepared Foods and Pork reporting units would exceed their fair value.
The fair value of our indefinite life intangible assets is calculated principally using multi-period excess earnings and relief-from-royalty 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 growth, operating margins, royalty rates and discount rates based on budgets, business plans, economic projections, anticipated future cash flows and marketplace data. We consider indefinite life intangible assets that have 20% or less excess fair value over carrying value to have a heightened risk of impairment. Our fiscal 2025, 2024 and 2023 indefinite life intangible assets impairment analyses did not result in an impairment charge.
All of our indefinite life intangible assets' estimated fair values exceeded their carrying values by more than 20% at the date of the most recent estimated fair value determination. We performed our annual impairment assessment as of the first day of our fourth quarter of fiscal 2025 and determined it was necessary to perform quantitative assessments for two of our Prepared Foods brands with carrying values of $0.5 billion and $0.3 billion at September 27, 2025. For these two brands, we estimate the discount rate would need to increase over 150 basis points as of the date of the most recent estimated fair value, with all other assumptions unchanged, to cause the carrying value to approximate its fair value. We generally assumed growth rates in future years would normalize over time as we believe this is consistent with market participant views in an exit transaction. Had we assumed future growth rates consistent with those realized in fiscal 2025, we would have failed the impairment quantitative test, which may have resulted in material impairment losses. The current year growth rate is not indicative of future market participant expectations in an exit transaction primarily due to the impacts of rapid inflationary pressures and volatile market conditions which impacts we expect to be mostly temporary in nature. We do not currently consider any of our indefinite life intangible assets, which had an aggregate value of $4.1 billion at September 27, 2025, to be at heightened risk of .
Effect if Actual Results Differ From Assumptions
We have not made material changes in the accounting methodology used to evaluate impairment of goodwill and indefinite life intangible assets during the last three years.
Our impairment analysis contains inherent estimates and assumptions, many of which are outside the control of management including interest rates, cost of capital, tax rates, market EBITDA comparables and credit ratings, which could positively or negatively impact the anticipated future economic and operating conditions. The assumptions and estimates used in determining fair value require considerable judgment and are sensitive to changes in underlying assumptions. These assumptions can change in future periods as a result of overall economic conditions, including the impacts of inflationary pressures, increased interest and discount rates, global supply chain constraints and decreased market capitalization, amongst others. As a result, there can be no assurance that estimates and assumptions made for the purpose of assessing impairments will prove to be an accurate prediction of the future. Potential circumstances that could have a negative effect on the fair value of our reporting units and indefinite life intangible assets include, but are not limited to, lower than forecasted growth rates or operating margins and changes in discount rates. A reduction in the estimated fair value of the reporting units and indefinite life intangible assets could trigger an impairment in the future. We cannot predict the occurrence of certain events or changes in circumstances that might affect the carrying value of our goodwill and indefinite life intangible assets.
We continuously evaluate the changing macro-economic conditions including inflationary pressures, rising interest rates, demand outlook and export markets, and the Company's market capitalization. Although all our reporting units and indefinite life intangible assets had more than 20% excess fair value over carrying value as of the most recent assessment, other than one reporting unit with goodwill of $0.2 billion as of September 27, 2025, they remain susceptible to impairments if any assumptions, estimates, or market factors significantly change in the future.
Impairment of long-lived assets and definite life intangibles
Description
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 group. 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 charges related to impairments, disposals and write-offs of long-lived assets of $126 million, $131 million and $101 million, in fiscal 2025, 2024 and 2023, respectively.
Judgments and Uncertainties
Our impairment analysis contains uncertainties due to judgment in assumptions, including useful lives and intended use of assets, observable market valuations, forecasted sales growth, operating margins, 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.
Effect if Actual Results Differ From Assumptions
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.
Business Combinations
Description
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.
Judgments and Uncertainties
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 growth, operating margins, attrition 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.
Effect if Actual Results Differ From Assumptions
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. For more information regarding business combinations, refer to Part II, Item 8, Notes to Consolidated Financial Statements, Note 3: Acquisitions and Dispositions.
