10-K – 2026-03-24 – smf-20251228.htm

Net income from continuing operations $ 998  $ 798 
Interest expense, net 41  66 
Income tax expense 283  271 
Depreciation and amortization
332  339 
EBITDA from continuing operations $ 1,654  $ 1,474 
Litigation charges 73  —  SG&A
Reduction in workforce (1)
9  —  SG&A
Reduction in workforce (1)
2  —  Cost of sales
Office closures (2)
4  —  SG&A

Hog Production Reform (3)
3  29  Cost of sales

Hog Production Reform (4)
(4) (38) Operating gains
Plant closure (5)
1  —  Cost of sales

Incremental costs from destruction of property —  4  Cost of sales

Employee retention tax credits (6)
(10) (86) Cost of sales
Employee retention tax credits (6)
—  (1) SG&A
Insurance recoveries (7)
(36) (4) Operating gains
Company-owned life insurance gain (8)
(17) —  Non-operating gains
Adjusted EBITDA from continuing operations $ 1,677  $ 1,379 

Net income margin from continuing operations 6.4  % 5.6  %
Adjusted EBITDA margin from continuing operations 10.8  % 9.7  %

________________
(1) Consists of severance costs associated with workforce reduction initiatives. Total severance costs round up to $12 million.
(2) Consists of severance costs associated with the planned closure of our satellite offices in Lisle, Illinois and Kansas City, Missouri.
(3) Consists of contract termination costs, loss on asset disposals, employee termination benefits and other exit costs associated with our Hog Production Reform initiative. Excludes accelerated depreciation charges as such amounts are included in the depreciation and amortization line in this table.
(4) Fiscal year 2025 includes a $3 million gain on the sale of certain of our hog farms in Missouri. Fiscal year 2024 includes a $32 million gain on the sale of hog farms in Utah and a $6 million gain on the sale of assets to Murphy Family Farms.
(5) Excludes accelerated depreciation charges as such amounts are included in the depreciation and amortization line in this table.
(6) Represents the recognition of employee retention tax credits received under the CARES Act.
(7) Consists of gains recognized in connection with settlements of insurance claims associated with past litigation and property damage.
(8) Consists of a gain recognized in the third quarter of 2025 for a one-time benefit on company-owned life insurance policies.
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Net Debt and Ratio of Net Debt to Adjusted EBITDA from Continuing Operations
The following table provides a reconciliation of total debt and finance lease obligations to net debt, the ratio of total debt and finance lease obligations to net income from continuing operations, and the ratio of net debt to adjusted EBITDA from continuing operations. Net debt and the ratio of net debt to adjusted EBITDA from continuing operations are non-GAAP measures. We believe net debt is a useful measure as it helps to give investors a clear understanding of our financial position. Net debt is also used to calculate certain leverage ratios. We believe the ratio of net debt to adjusted EBITDA from continuing operations is a useful measure as it monitors the sustainability of our debt levels and our ability to take on additional debt against adjusted EBITDA from continuing operations, which is used as an operating performance measure. We believe these non-GAAP measures provide a more comparable year-over-year analysis. Although net debt and the ratio of net debt to adjusted EBITDA from continuing operations are frequently used by investors and securities analysts in their evaluations of companies, these non-GAAP measures have limitations as analytical tools. As such, net debt and the ratio of net debt to adjusted EBITDA from continuing operations are not intended to be alternatives to total debt and finance lease obligations and the ratio of total debt and finance lease obligations to net income from continuing operations or any other performance measures derived in accordance with GAAP and should not be used by investors or other users of our financial statements in isolation for formulating decisions as they exclude a number of important cash and non-cash charges.

Fiscal Year Ended
December 28,
2025 December 29,
2024
(in millions, except ratios)
Current portion of long-term debt and capital lease $ 3  $ 3 
Long-term debt and finance lease obligations 2,000  1,999 
Total debt and finance lease obligations $ 2,003  $ 2,002 
Cash and cash equivalents (1,539) (943)
Net debt $ 464  $ 1,059 

Net income from continuing operations $ 998  $ 798 
Adjusted EBITDA from continuing operations $ 1,677  $ 1,379 

Ratio of total debt and finance lease obligations to net income from continuing operations 2.0x 2.5x
Ratio of net debt to adjusted EBITDA from continuing operations 0.3x 0.8x

Adjusted Operating Profit and Adjusted Operating Profit Margin
The following table provides a reconciliation of operating profit to adjusted operating profit. Adjusted operating profit and adjusted operating profit margin are non-GAAP measures. We believe these non-GAAP measures are useful to investors because they provide a better understanding of underlying operating results and trends of established, ongoing operations of our segments, excluding the impact of items that are unusual in nature, infrequent in occurrence or otherwise stem from strategic decisions to restructure our operations. These non-GAAP measures are not intended to be alternatives to operating profit, operating profit margin or any other performance measures derived in accordance with GAAP and should not be used by investors or other users of our financial statements in isolation for formulating decisions as they exclude a number of important cash and non-cash charges.

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Fiscal Year 2025 Packaged Meats Fresh Pork Hog Production Other (1)
Corporate (2)
Unallocated (3)
Consolidated
(in millions, except percentages)

Operating profit (loss) $ 1,094  $ 214  $ 176  $ 45  $ (128) $ (109) $ 1,292 
Litigation charges —  —  —  —  —  73  73 
Reduction in workforce (4)
—  —  —  —  —  12  12 
Office closures (5)
—  —  —  —  —  4  4 
Plant closure —  —  —  —  —  2  2 
Hog Production Reform —  —  —  —  —  1  1 
Employee retention tax credits (6)
(5) (5) —  —  —  —  (10)
Insurance recoveries (7)
—  —  —  —  —  (36) (36)
Adjusted operating profit (loss) $ 1,089  $ 209  $ 176  $ 45  $ (128) $ (55) $ 1,336 

Operating profit margin 12.5  % 2.6  % 5.2  % 8.6  % NM NM 8.3  %
Adjusted operating profit margin 12.4  % 2.5  % 5.2  % 8.6  % NM NM 8.6  %

Fiscal Year 2024 Packaged Meats Fresh Pork Hog Production Other (1)
Corporate (2)
Unallocated (3)
Consolidated
(in millions, except percentages)
Operating profit (loss)
$ 1,168  $ 266  $ (144) $ 35  $ (153) $ (55) $ 1,118 
Incremental costs from destruction of property —  —  —  —  —  4  4 
Insurance recoveries (7)
—  —  —  —  —  (4) (4)
Hog Production Reform (8)
—  —  —  —  —  (7) (7)
Employee retention tax credits (6)
(38) (41) (8) —  —  —  (87)
Adjusted operating profit (loss) $ 1,130  $ 225  $ (152) $ 35  $ (153) $ (61) $ 1,024 

Operating profit (loss) margin 14.0  % 3.4  % (4.8) % 7.4  % NM NM 7.9  %
Adjusted operating profit (loss) margin 13.6  % 2.9  % (5.0) % 7.4  % NM NM 7.2  %

________________
(1) Includes our Mexico and Bioscience operations.
(2) Represents general corporate expenses for management and administration of the business.
(3) We do not allocate certain items to our operating segments such as litigation charges, exit and disposal costs, insurance recoveries, gains and losses on the sale of property, plant and equipment and other assets, accelerated depreciation, and employee termination benefits, among others.
(4) Consists of severance costs associated with workforce reduction initiatives.
(5) Consists of severance costs associated with the planned closure of our satellite offices in Lisle, Illinois and Kansas City, Missouri.
(6) Represents the recognition of employee retention tax credits received under the CARES Act.
(7) Consists of gains recognized in connection with settlements of insurance claims associated with past litigation and property damage.
(8) Consists of a $32 million gain on the sale of our Utah hog farms and a $6 million gain on the sale of breeding stock to Murphy Family Farms, partially offset by contract termination costs, loss on asset disposals, employee termination benefits, accelerated depreciation charges and other exit costs associated with our Hog Production Reform initiative.
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Critical Accounting Estimates
The preparation of consolidated financial statements requires us to make estimates and assumptions. These estimates and assumptions are based on our judgment, experience and our understanding of the current facts and circumstances. Actual results could differ from those estimates. Certain of our accounting estimates are considered critical as they are both important to the representation of our financial condition and results of operations and require significant or complex judgment on the part of management. The following is a summary of certain accounting policies and estimates that we consider to be critical. Our accounting policies are more fully discussed in “Note 1: Summary of Significant Accounting Policies” to the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K.
Revenue Recognition
Our revenue (sales) is primarily derived from contracts with customers for the purchase of our products. Revenue is recognized at a point in time when our performance obligation has been satisfied and control of the promised goods is transferred to the customer, which generally occurs upon shipment or delivery to a customer based on the terms of the sale. The primary performance obligation in our contracts with customers is to provide meat products. Shipping and handling activities are considered part of the fulfillment of our promise to provide meat products and not a separate performance obligation. Shipping and handling costs are reported as a component of cost of sales.
Revenue is recorded at the amount of consideration we expect to receive in exchange for providing goods to customers. The transaction price may include estimates of variable consideration, including a variety of customer sales incentive programs, such as rebates, product returns and coupons redeemed by consumers. Our estimates of variable consideration are based on a number of factors including history with the respective customer, current performance and future projections. We sufficiently constrain estimates of variable consideration based on the likelihood and magnitude of a potential revenue reversal when the uncertainties associated with the variable consideration are subsequently resolved.
We review and update estimates of variable consideration regularly. We have not experienced any material reversals of revenue recognized in the past three fiscal years resulting from overestimation of variable consideration nor do we expect there will be a material change in our estimates of variable consideration that would result in a material reversal of revenue recognized in the consolidated statements of income. The effect of any reversal of revenue would be recognized in the period in which an adjustment to our estimate is identified.
Contingent Liabilities
We are subject to lawsuits, investigations and other claims related to the operation of our farms and facilities, labor, livestock procurement, securities, the environment, our products, taxes 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 loss. A determination of the amount of accruals and disclosures required, if any, are made after considerable analysis of each individual issue or claim.
We accrue for contingent liabilities, including future defense costs, when an assessment of the risk of loss is probable and can be reasonably estimated. We disclose contingent liabilities when the risk of loss is reasonably possible or probable.
Our contingent liabilities contain uncertainties because the eventual outcome will result from future events. Our determination of accruals requires estimates and judgments related to the possible outcomes, differing interpretations of the law, assessments of the amounts of potential damages, settlements or defense costs, and the effectiveness of strategies or other factors beyond our control.
The consolidated financial statements reflect accruals for estimated contingent losses associated with various claims. These matters will not affect our profits or losses in future periods unless our accruals prove to be insufficient or excessive. However, legal expenses incurred in our defense of legal matters and any payments made to plaintiffs through unfavorable verdicts or otherwise will negatively impact our cash flows and our liquidity position.
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If actual results are not consistent with the estimates or assumptions used to develop our accruals for contingent losses, we may be exposed to gains or losses that could have a material effect on our future results of operations and cash flows.
Impairment of Goodwill and Indefinite-Lived Intangible Assets
Goodwill and non-amortizable intangible assets are tested for impairment annually on the first day of the fourth quarter, or sooner if impairment indicators arise. In the evaluation of goodwill for impairment, we may perform a qualitative assessment to determine if it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If it is not, no further analysis is required. If it is, a quantitative goodwill impairment test is performed to measure the amount of goodwill impairment loss to be recognized for that reporting unit, if any.
To identify if an impairment exists, we compare the fair value of a reporting unit with its carrying amount, including goodwill. The fair value of a reporting unit is estimated by applying valuation multiples of earnings and/or estimating future discounted cash flows. If the fair value of a reporting unit exceeds its carrying amount, goodwill is not impaired. However, if the carrying amount of a reporting unit exceeds its fair value, an impairment loss is recognized in an amount equal to that excess.
For our other non-amortizable intangible assets, if the carrying value of the intangible asset exceeds its fair value, an impairment loss is recognized in an amount equal to that excess.
The selection of earnings multiples is dependent upon assumptions regarding future levels of operating performance as well as business trends and prospects, and industry, market and economic conditions. A discounted cash flow analysis requires us to make various judgmental assumptions about sales, operating margins, growth rates and discount rates. When estimating future discounted cash flows, we consider the assumptions that hypothetical marketplace participants would use in estimating future cash flows. In addition, where applicable, an appropriate discount rate is used, based on an industry-wide average cost of capital or location-specific economic factors. We consider all these factors to be level 3 inputs, as defined in “Note 17: Fair Value Measurements” to the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K.
The fair values of our trademarks have been estimated using a royalty rate method. Assumptions about royalty rates are based on the rates at which similar brands and trademarks are licensed in the marketplace.
Our impairment analysis contains uncertainties due to uncontrollable events that could positively or negatively impact the anticipated future economic and operating conditions.
As of December 28, 2025, we had $1,623 million of goodwill and $1,216 million of non-amortizable trademarks. Our goodwill is included in the following reporting units:
• Packaged Meats: $1,503 million
• Mexico: $79 million
• Fresh Pork: $34 million
• Hog Production: $4 million
• Bioscience: $4 million
We have not recognized an impairment of goodwill or other intangible assets in the past three fiscal years. A hypothetical 10% decrease in the estimated fair value of any of our reporting units would not result in an impairment. A hypothetical 10% decrease in the estimated fair value of our intangible assets also would not result in an impairment.
Income Taxes
We estimate total income tax expense based on statutory tax rates and tax planning opportunities available to us in various jurisdictions in which we earn income.
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Federal income taxes include an estimate for taxes on earnings of foreign subsidiaries expected to be remitted to the U.S. and be taxable, but not for earnings considered indefinitely invested in the foreign subsidiary. We account for the global intangible low-taxed income inclusion from foreign subsidiaries in the period in which it is incurred.
Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rate is recognized in earnings in the period that includes the enactment date.
We record liabilities for unrecognized tax benefits based on our analysis of whether, and the extent to which, additional taxes will be due. We record these liabilities using a two-step process in which (1) we evaluate whether we believe it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, we recognize the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the tax authority. The difference between the tax benefit claimed or expected to be claimed on a tax return and the amount recognized for financial reporting purposes is recorded as a liability.
The determination of our provision for income taxes requires significant judgment, the use of estimates, and the interpretation and application of complex tax laws. Significant judgment is required in assessing the timing and amounts of deductible and taxable items. Changes in current tax laws and rates could affect recorded tax assets and liabilities in the future. In addition, changes in projected future earnings could affect the recorded valuation allowances in the future.
Our analysis of unrecognized tax benefits requires considerable judgment about the likelihood and amount of benefit that would be sustained upon examination by tax authorities.
Due to the complexity and inherent uncertainties surrounding income tax positions, 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 liabilities have been established, or are required to pay amounts in excess of our recorded liabilities, our effective tax rate in a given financial statement period could be materially affected. An unfavorable tax settlement would require use of cash and result in an increase in our effective tax rate in the period of resolution. A favorable tax settlement would be recognized as a reduction in our effective tax rate in the period of resolution.
Over the past three fiscal years, we have recognized $66 million of income tax expense in years subsequent to the initial recognition and measurement of an unrecognized tax benefit. No payments were made to tax authorities in fiscal year 2025 upon the ultimate resolution of unrecognized tax benefits taken in prior years.
See “Note 13: Income Taxes” to the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K.
Pension Accounting
We historically provided the majority of our U.S. employees with pension benefits. In the second quarter of 2021, we amended our qualified pension plans to freeze the benefit accrual for all non-union participants as of June 30, 2021.
We recognize the funded status of our pension plans in our consolidated balance sheets and recognize, as a component of other comprehensive income (loss), the gains or losses and prior service costs or credits that arise during the period but are not recognized in net periodic benefit cost.
We use an independent third-party actuary to assist in the determination of our pension obligation and related costs. The measurement of our pension obligations and related costs is dependent on the use of assumptions and estimates. These assumptions include discount rates, expected returns on plan assets, salary growth rates and mortality rates. Changes in assumptions and future investment returns could potentially have a material impact on our expenses and related funding requirements.
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The following weighted average assumptions were used to determine our benefit obligation and net benefit cost for fiscal year 2025:
• 5.78% – Discount rate to determine net benefit cost;
• 5.69% – Discount rate to determine pension benefit obligation; and
• 7.25% – Expected return on plan assets.
If actual results are not consistent with our estimates or assumptions, we may be exposed to gains or losses that could be material. The effects of actual results differing from these assumptions are accumulated and amortized over future periods and, therefore, generally affect our recognized expense in such future periods.
A 0.50% decrease in the discount rate used to measure our projected benefit obligation would have further reduced the funded status by $100 million as of December 28, 2025, and would have resulted in an additional $3 million in net pension cost in fiscal year 2025.
A 0.50% decrease in expected return on plan assets would have resulted in an additional $8 million in net pension cost in fiscal year 2025.
In addition to higher net pension cost, a significant decrease in the funded status of our pension plans caused by either a devaluation of plan assets or a decline in the discount rate would result in higher pension funding requirements.
See “Note 14: Pension and Other Retirement Plans” to the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for further information about our accounting for pension and retirement plans.
Derivative Accounting
We are exposed to market risks primarily from changes in commodity prices. To mitigate these risks, we utilize derivative instruments to hedge our exposure to changing prices. Our objective is to reduce the volatility of earnings and cash flows associated with fluctuations in commodity prices.
We record all derivatives as either assets or liabilities at fair value on the balance sheet, with the exception of contracts that qualify for the normal purchase and normal sale scope exception, which are expected to result in physical delivery. Accounting for changes in the fair value of a derivative depends on whether it qualifies and has been designated as part of a hedging relationship. For derivatives that qualify and have been designated as hedging instruments for accounting purposes, changes in fair value have no net impact on earnings, to the extent the derivative is considered perfectly effective in achieving offsetting changes in fair value attributable to the risk being hedged, until the hedged item is recognized in earnings (commonly referred to as the “hedge accounting” method). For derivatives that do not qualify or are not designated as hedging instruments for accounting purposes, changes in fair value are recorded in current period earnings (commonly referred to as the “mark-to-market” method).
We apply hedge accounting when the change in the market value of derivative contracts has historically been, and is expected to continue to be, highly effective at offsetting changes in price movements of the hedged item. If it is determined that the derivative instruments are no longer effective at offsetting changes in the price of the hedged items, then the mark-to-market method must be applied to account for the derivative instruments prospectively, which could increase volatility in our results of operations. We recognized $8 million, $(25) million and $18 million in gains (losses) on derivatives accounted for under the mark-to-market method in fiscal years 2025, 2024, and 2023, respectively.
For additional information on derivatives, refer to “Note 1: Summary of Significant Accounting Policies” and “Note 8: Derivative Financial Instruments” to the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K, which includes detailed discussions of our accounting for and use of derivative instruments.
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Recently Issued Accounting Pronouncements
For a description of recently issued accounting pronouncements, refer to “Note 1: Summary of Significant Accounting Policies” to the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to market risks from changes in commodity prices, interest rates and foreign exchange rates, as well as risks from concentrations of credit. To mitigate these risks, we utilize derivative instruments to hedge our exposure to changing prices and rates.
When available, we use quoted market prices or rates to determine the fair value of our derivative instruments. This may include prices or rates quoted on an exchange, such as the CME, quotes obtained from brokers, or independent valuations from external sources, such as banks. In some cases where market prices are not available, we make use of observable market-based inputs to calculate fair value.
The size and mix of our derivative portfolio vary from time to time based on our analysis of current and future market conditions. The following table presents the fair values of our open derivative financial instruments in the consolidated balance sheets.

December 28, 2025 December 29, 2024
(in millions)
Livestock (1)
$ 21  $ (30)
Grains (1)
3  6 
Energy (1)
1  (5)

________________
(1) Negative amount represents net liabilities.
See “Note 8: Derivative Financial Instruments” to the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for the effects of derivative instruments on our consolidated statements of income.
Commodities Risk
Our meat processing and hog production operations use various raw materials, primarily live hogs, corn, soybean meal and wheat, which are actively traded on commodity exchanges. These commodities are subject to significant price fluctuations. We enter into hedging transactions for these commodities when we determine conditions are appropriate to mitigate the inherent price risks. While this hedging may limit our ability to participate in gains from favorable commodity fluctuations, it also reduces the risk of loss from adverse changes in raw material prices.
We attempt to closely match the hedging instrument terms with the hedged item’s terms. Gains and losses resulting from our commodity derivative contracts are recorded in cost of sales except for lean hog contracts that are designated in cash flow hedging relationships, which are recorded in sales, and are generally offset by increases and decreases in cash prices for the underlying commodity (with such increases and decreases reflected in the same income statement line items). For example, in a period of rising grain prices, gains resulting from long grain derivative positions would generally be offset by higher cash prices paid to farmers and other suppliers in spot markets. However, under the “mark-to-market” method described above, these offsetting changes do not always occur in the same period, which could result in volatility in our results of operations.

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The following table presents the sensitivity of the fair value of our open commodity derivative contracts to a hypothetical 10% change in market prices, as of December 28, 2025 and December 29, 2024.

December 28, 2025 December 29, 2024
(in millions)
Livestock $ 46  $ 64 
Grains —  11 
Energy 1  4 
Foreign Currency 3  — 

Interest Rate Risk
The following table presents the fair values and carrying values of our fixed-rate debt as of December 28, 2025 and December 29, 2024.

December 28, 2025 December 29, 2024
Fair Value Carrying Value Fair Value Carrying Value
(in millions)
Total debt $ 1,909  $ 1,986  $ 1,821  $ 1,983 

We determine the fair value of fixed-rate debt using Level 2 inputs based on quoted market prices. The carrying amount of all other debt approximates fair value as those instruments are based on variable interest rates.
Changes in interest rates impact the fair value of our fixed-rate debt. A hypothetical 10% change in interest rates would have impacted the fair value of our fixed-rate debt by $28 million and $43 million as of December 28, 2025 and December 29, 2024, respectively.
We periodically enter into interest rate swaps to hedge our exposure to changes in interest rates on certain financial instruments and to manage the overall mix of fixed rate and floating rate debt instruments. There were no interest rate swaps outstanding as of December 28, 2025 and December 29, 2024.
Foreign Currency Exchange Risk
Our revenues are primarily generated from transactions denominated in U.S. dollars. However, we also generate revenues from transactions denominated in Mexican Pesos, Japanese yen, Canadian dollars and Australian dollars, among others. We employ foreign currency exchange forward contracts to manage a portion of the exposure to foreign currency exchange risk. The fair values of foreign currency exchange forward contracts as of December 28, 2025 and December 29, 2024 were not material.
Concentration of Credit Risk
Our financial instruments are exposed to concentrations of credit risk primarily through our cash and cash equivalents, accounts receivable and derivatives. From time to time, we may have bank deposits in excess of insurance limits of the Federal Deposit Insurance Corporation. We require banks with which we make deposits to maintain minimum credits ratings. We have not experienced any losses in such accounts and believe we are not exposed to any significant credit risk related to our cash and cash equivalents.
Concentrations of credit risk with respect to accounts and notes receivable are limited due to our large number of customers. We perform periodic credit evaluations of our customers’ financial condition and generally do not require collateral. As of December 28, 2025, we had accounts and notes receivable from Murphy Family Farms and VisionAg totaling $218 million and $47 million, respectively. A portion of these balances are secured by the breeding stock and inventories owned by Murphy Family Farms and VisionAg. We have an agreement to purchase 3.2 million and 600,000 market hogs annually from Murphy Family Farms and VisionAg, respectively, which further mitigates our exposure to potential credit risk.
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Additionally, as of December 28, 2025, 11% of our accounts receivable balance was due from Walmart. No other single customer or customer group represented 10% or greater of our accounts receivable.
With regards to derivatives used to hedge commodities, foreign exchange and interest rates, we bear risk of nonperformance by counterparties. Our trading relationships are governed by international swaps and derivatives agreements and we mitigate risk by diversifying counterparties and monitoring credit ratings.
An estimate of expected credit losses is recognized as a valuation allowance and adjusted each reporting period. The estimate is based on the current expected credit loss model and is determined based on the age of receivable balances, the financial health of the customer, historical experience, current economic conditions and expectations about future performance. The valuation allowance as of December 28, 2025 and December 29, 2024 was not material.
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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of Smithfield Foods, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Smithfield Foods, Inc. and subsidiaries (the Company) as of December 28, 2025 and December 29, 2024, the related consolidated statements of income, comprehensive income , shareholders’ equity and cash flows for each of the three years in the period ended December 28, 2025, and the related notes and financial statement schedule listed in the Index at Item 15(2) (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 28, 2025 and December 29, 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 28, 2025, in conformity with U.S. generally accepted accounting principles.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
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Pension Accounting

Description of the Matter
At December 31, 2025, the Company’s defined benefit pension obligation was $1.82 billion, offset by the fair value of plan assets totaling $1.62 billion. As discussed in Notes 1 and 14 of the consolidated financial statements, the Company, with the assistance of a third-party actuary, measures the defined benefit pension obligation at December 31, or upon a remeasurement event, using actuarial assumptions including discount rates.

Auditing the defined benefit pension obligation was complex due to the significant estimation uncertainty in evaluating the discount rate used in the Company’s measurement process.

How We Addressed the Matter in Our Audit
To test the Company's accounting for the defined benefit pension obligation, we performed audit procedures that included, among others, evaluating the discount rate assumption with the assistance of our actuarial specialists. For example, we compared the discount rate used by management to historical trends, independently calculated an expected range for the discount rate based on the maturity and duration of the projected benefit payments, and compared the projected benefit payments to the historical benefits paid.

Contingent Liabilities

Description of the Matter
As described in Note 19 of the consolidated financial statements, the Company is involved in antitrust price-fixing litigation with a number of individual parties. The Company recognizes a contingent liability, including future defense costs, when an assessment of the risk of loss is probable and can be reasonably estimated. For the antitrust price-fixing litigation, where a settlement agreement has not yet been reached with the claimant, judgment is required to determine the probability and estimate of the loss.

Auditing management’s measurement of the amount of contingent liabilities for antitrust price-fixing litigation was subjective and required more complex auditor judgment. For instance, auditing management's judgments related to the outcome of litigation with claimants where the matter has not yet been tried in court or where the Company has not otherwise agreed to a settlement with claimants was more complex due to the judgment applied in evaluating the likelihood of the outcomes.

How We Addressed the Matter in Our Audit
To test the Company's accounting for ongoing antitrust price-fixing litigation, our audit procedures included, among others, reviewing the initial complaint, testing the Company's evaluation of the probability of outcome through inspection of responses to inquiry letters to both internal and external counsel, evaluating relevant events up to the audit report date, and by obtaining written representations from executives of the Company. When applicable, we also compared the Company's evaluation of these matters with its relevant history for similar legal contingencies that have been settled by obtaining and evaluating settlement agreements.

/s/ Ernst & Young LLP
We have served as the Company’s auditor since 2017.
Richmond, Virginia
March 24, 2026
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SMITHFIELD FOODS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(in millions, except for share and per share data)

Twelve Months Ended
December 28,
2025 December 29,
2024 December 31,
2023
Sales $ 15,531   $ 14,142   $ 14,640  
Cost of sales 13,442   12,244   13,751  
Gross profit 2,089   1,897   889  
Selling, general and administrative expenses 849   840   1,050  
Operating gains ( 52 ) ( 60 ) ( 105 )

Operating profit (loss) 1,292   1,118   ( 56 )
Interest expense, net 41   66   76  
Non-operating gains ( 18 ) ( 9 ) ( 3 )
Income (loss) from continuing operations before income taxes 1,270   1,061   ( 129 )
Income tax expense (benefit) 283   271   ( 41 )
(Income) loss from equity method investments ( 12 ) ( 8 ) 46  
Net income (loss) from continuing operations 998   798   ( 133 )
Net income from continuing operations attributable to noncontrolling interests 11   14   5  
Net income (loss) from continuing operations attributable to Smithfield 987   783   ( 138 )

Income from discontinued operations before income taxes —   184   185  
Income tax expense from discontinued operations —   13   30  
Net income from discontinued operations —   172   155  
Net income from discontinued operations attributable to noncontrolling interests —   2   —  
Net income from discontinued operations attributable to Smithfield —   170   155  

Net income 998   970   23  
Net income attributable to noncontrolling interests 11   17 5
Net income attributable to Smithfield $ 987   $ 953   $ 17  

Net income (loss) per common share attributable to Smithfield:
Basic:
Continuing operations $ 2.52   $ 2.06   $ ( 0.36 )
Discontinued operations —   0.45   0.41  
Total $ 2.52   $ 2.51   $ 0.05  

Diluted:
Continuing operations $ 2.51   $ 2.06   $ ( 0.36 )
Discontinued operations —   0.45   0.41  
Total $ 2.51   $ 2.51   $ 0.05  

Weighted-average shares outstanding:
Basic 392,037,699   380,069,232   380,069,232  
Diluted 392,701,169   380,069,232   380,069,232  

See Notes to Consolidated Financial Statements
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SMITHFIELD FOODS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in millions)

Twelve Months Ended
December 28,
2025 December 29,
2024 December 31,
2023
Net income $ 998   $ 970   $ 23  

Other comprehensive income (loss), net of tax
Foreign currency translation 77   ( 53 ) 219  

Pension accounting 49   ( 44 ) 16  

Hedge accounting 38   ( 33 ) ( 1 )

Total other comprehensive income (loss) 164   ( 130 ) 234  

Comprehensive income 1,162   839   256  
Comprehensive income (loss) attributable to noncontrolling interests 37   ( 19 ) 31  
Comprehensive income attributable to Smithfield $ 1,125   $ 858   $ 226  

See Notes to Consolidated Financial Statements

SMITHFIELD FOODS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in millions, except share data)
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December 28,
2025 December 29,
2024
ASSETS
Current assets:
Cash and cash equivalents $ 1,539   $ 943  
Accounts receivable, net 1,023   558  

Inventories, net 2,328   2,412  
Prepaid expenses and other current assets 276   290  
Total current assets 5,166   4,202  

Property, plant and equipment, net 3,226   3,176  
Goodwill 1,623   1,613  
Intangible assets, net 1,260   1,266  
Operating lease assets 387   335  
Equity method investments 209   202  

Other assets 306   260  
Total assets $ 12,177   $ 11,054  

LIABILITIES AND EQUITY
Current liabilities:
Accounts payable $ 856   $ 777  
Current portion of long-term debt and finance lease obligations 3   3  
Current portion of operating lease obligations 71   56  
Accrued expenses and other current liabilities 811   871  
Total current liabilities 1,741   1,706  

Long-term debt and finance lease obligations 2,000   1,999  
Long-term operating lease obligations 322   286  
Deferred income taxes, net 658   518  
Net long-term pension obligation 207   279  
Other liabilities 185   208  

Redeemable noncontrolling interests 264   225  

Commitments and contingencies (Notes 12 and 19)

Equity:
Shareholders’ equity:
Preferred stock, no par value; 100,000,000 shares authorized; no shares issued and outstanding
—   —  
Common stock, no par value; 5,000,000,000 shares authorized; 393,112,711 shares issued and outstanding as of December 28, 2025 and 380,069,232 shares issued and outstanding as of December 29, 2024 
—   —  
Additional paid-in capital 3,338   3,102  
Retained earnings 3,776   3,184  
Accumulated other comprehensive loss ( 314 ) ( 452 )
Total shareholders’ equity 6,801   5,834  

Total liabilities and equity $ 12,177   $ 11,054  

See Notes to Consolidated Financial Statements
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SMITHFIELD FOODS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
Twelve Months Ended
December 28,
2025 December 29,
2024 December 31,
2023
Cash flows from operating activities:
Net income $ 998   $ 970   $ 23  
Less: Net income from discontinued operations —   ( 172 ) ( 155 )
 Net income (loss) from continuing operations $ 998   $ 798   $ ( 133 )
Adjustments to reconcile net income (loss) from continuing operations to net cash flows from operating activities of continuing operations:
Depreciation and amortization 332   339   427  
Deferred income tax expense 94   91   ( 130 )

Stock compensation expense 9   —   —  
(Gain) loss on sale of property, plant and equipment and other assets 12   ( 21 ) ( 73 )

(Income) loss from equity method investments ( 12 ) ( 8 ) 46  
Gain on assets held in rabbi trusts ( 34 ) ( 16 ) ( 12 )
Change in accounts receivable ( 470 ) ( 6 ) 157  
Change in inventories 118   138   469  
Change in prepaid expenses and other current assets ( 6 ) ( 88 ) 57  
Change in accounts payable 65   ( 19 ) ( 215 )
Change in accrued expenses and other current liabilities ( 63 ) ( 261 ) 80  

Other 17   ( 32 ) 15  
Net cash flows from operating activities of continuing operations 1,059   916   688  

Cash flows from investing activities:
Capital expenditures ( 341 ) ( 350 ) ( 353 )
Net expenditures from breeding stock transactions ( 14 ) ( 43 ) ( 48 )
Investments in partnerships and other assets ( 12 ) ( 13 ) ( 27 )
Business dispositions —   —   13  
Proceeds from sale of property, plant and equipment and other assets 14   99   219  

Cash receipts on notes receivable 25   —   —  

Other 18   9   3  
Net cash flows used in investing activities of continuing operations ( 309 ) ( 298 ) ( 194 )

Cash flows from financing activities:    
Payment of dividends ( 396 ) ( 288 ) ( 323 )
Principal payments on long-term debt and finance lease obligations ( 3 ) ( 24 ) ( 4 )
Payment of deferred purchase consideration for acquisition ( 2 ) ( 2 ) ( 2 )
Repayments to Securitization Facility —   ( 14 ) ( 226 )
Proceeds from Securitization Facility —   14   226  
Net repayments to revolving credit facilities —   ( 8 ) ( 7 )

Purchase of redeemable noncontrolling interest —   —   ( 15 )
Net proceeds from issuance of common stock 236   —   —  
Other 1   1   ( 2 )
Net cash flows used in financing activities of continuing operations ( 164 ) ( 321 ) ( 353 )

Effect of foreign exchange rate changes on cash from continuing operations 11   ( 7 ) 3  

Cash flows from discontinued operations:
Net cash flows from operating activities of discontinued operations —   221   346  
Net cash flows used in investing activities of discontinued operations —   ( 171 ) ( 128 )
Net cash flows used in financing activities of discontinued operations —   ( 143 ) ( 180 )
Effect of foreign exchange rate changes on cash from discontinued operations —   ( 5 ) —  

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Twelve Months Ended
December 28,
2025 December 29,
2024 December 31,
2023
Net change in cash and cash equivalents of discontinued operations —   ( 98 ) 38  

Net change in cash, cash equivalents and restricted cash 597   192   181  

Cash, cash equivalents and restricted cash at beginning of period (including discontinued operations) 943   751   570  
Cash, cash equivalents and restricted cash at end of period (including discontinued operations) 1,539   943   751  
Less: Cash, cash equivalents and restricted cash attributable to discontinued operations at end of period —   —   ( 64 )
Cash, cash equivalents and restricted cash at end of period $ 1,539   $ 943   $ 687  
    
See Notes to Consolidated Financial Statements
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SMITHFIELD FOODS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(in millions)

Additional
Paid-in
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Loss
Total
Shareholders’
Equity
Balance, January 1, 2023 $ 4,188   $ 3,894   $ ( 708 ) $ 7,374  
Dividends —  ( 323 ) —  ( 323 )
Adjustment to redeemable noncontrolling interests ( 36 ) —  —  ( 36 )

Comprehensive income:
Net income —  17   —  17  
Other comprehensive income, net of tax —  —  208   208  

Balance, December 31, 2023 4,152   3,588   0 ( 500 ) 7,241  
Dividends —  ( 287 ) —  ( 287 )
Adjustment to redeemable noncontrolling interests ( 1 ) —  —  ( 1 )
European operations carve-out ( 1,125 ) ( 1,071 ) 143   ( 2,054 )
UGFH merger 77 —  —  77  
Other ( 1 ) —  —  ( 1 )
Comprehensive income:
Net income —  953   —  953  
Other comprehensive loss, net of tax —  —  ( 95 ) ( 95 )

Balance, December 29, 2024 3,102   3,184   ( 452 ) 5,834  
Dividends —  ( 395 ) —  ( 395 )
Adjustment to redeemable noncontrolling interests ( 3 ) —  —  ( 3 )
Stock compensation expense 9   —  —  9  

Net proceeds from issuance of common stock 236   —  —  236  

Other ( 6 ) —  —  ( 6 )
Comprehensive income:
Net income —  987   —  987  
Other comprehensive income, net of tax —  —  138   138  

Balance, December 28, 2025 $ 3,338   $ 3,776   0 $ ( 314 ) $ 6,801  

See Notes to Consolidated Financial Statements
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SMITHFIELD FOODS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
Smithfield Foods, Inc., together with its subsidiaries (“Smithfield,” “the Company,” “we,” “us” or “our”) produces a wide variety of fresh pork and packaged meats products primarily in the United States (“U.S.”) and markets them both domestically and internationally. We operate in a cyclical industry and our results are significantly affected by fluctuations in commodity prices for meat, livestock (primarily hogs) and grains. We are an indirect, majority-owned subsidiary of Hong Kong-based WH Group Limited (“WH Group”).
Basis of Presentation
The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the U.S. (“GAAP”), which require us to make estimates and use assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. It is possible that actual results could differ materially from those estimates. The information reflects all normal recurring adjustments which we believe are necessary to present fairly the financial position and results of operations for all periods included. Totals and percentages may be affected by rounding. Certain prior period amounts have been reclassified to conform to the current period presentation.
Our elected fiscal year is the 52-week or 53-week period which ends on the Sunday nearest to December 31. Fiscal years 2025, 2024 and 2023 each consisted of 52 weeks.
Principles of Consolidation
The consolidated financial statements include the accounts of all wholly owned subsidiaries, as well as all majority-owned subsidiaries and other entities for which we have a controlling financial interest. All intercompany transactions and accounts have been eliminated.
We evaluate contractual, equity and other variable interests in entities that may be deemed variable interest entities (“VIE”). We consolidate a VIE if we determine that we are the VIE’s primary beneficiary. A VIE’s primary beneficiary has both (1) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and (2) the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE.
The Company maintains rabbi trusts to fund nonqualified defined benefit pension plans and deferred compensation plans. The assets held in these trusts are restricted to satisfy our liabilities for these plans and are subject to the claims of our general creditors in the event of insolvency. These trusts are VIEs and are included in our consolidated financial statements. The carrying value of assets held in rabbi trusts was $ 213  million and $ 187  million as of December 28, 2025 and December 29, 2024, respectively. These assets are classified in other assets on the consolidated balance sheets except for the amount of participant distributions scheduled to occur within twelve months of the balance sheet dates, which are classified in prepaid expenses and other current assets.
The functional currency of our 66 %-owned subsidiary, Granjas Carroll de Mexico, S. de R.L. de C.V., (commonly known as “Altosano”) is the Mexican Peso. The assets and liabilities of Altosano are translated into U.S. dollars using the exchange rates in effect at the balance sheet dates. The income and cash flows of Altosano are translated into U.S. dollars using the average exchange rates over the course of the year. The net effect of translating the accounts of Altosano into U.S. dollars is included as a component of shareholders’ equity in accumulated other comprehensive loss.
Gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are recognized in earnings as incurred and included in selling, general and administrative expenses (“SG&A”) for operating transactions or non-operating gains for non-operating transactions.
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Stock-Based Compensation
In connection with our initial public offering (“IPO”) in January 2025, we adopted an incentive plan under which eligible individuals may be granted equity-based incentive awards including stock options and restricted stock units (“RSUs”), among others. We estimate the fair value of stock options on the grant date using the Black-Scholes option pricing model. RSUs are measured at fair value as if they were vested and issued on the grant date. We recognize stock-based compensation expense for stock options and RSUs granted to our employees using the straight-line method over the requisite service period. We recognize forfeitures as they occur. Stock-based compensation expense is included in SG&A in the consolidated statements of income.
Cash and Cash Equivalents 
We consider all highly liquid investments with original maturities of 90 days or less to be cash equivalents. The majority of our cash is concentrated in demand deposit accounts or money market funds. Cash and cash equivalents excludes money market funds held in rabbi trusts, which we classify as investments. The carrying value of cash and cash equivalents approximates fair value. 
We maintain a cash management structure with one of our banking institutions that incorporates a master netting arrangement. This structure utilizes concentration accounts, automated sweep mechanisms and zero‑balance disbursement accounts to fund disbursements, such as payroll and accounts payable. All accounts under this structure are netted and presented in either cash and cash equivalents or accounts payable on the consolidated balance sheet depending on whether the net balance is positive or in an overdraft position. As of December 28, 2025 and December 29, 2024, the net overdraft balances were $ 29  million and $ 53  million, respectively, which were presented in accounts payable on the consolidated balance sheets.
Accounts Receivable, Net and Revenue Recognition
Accounts receivable, net is comprised of both receivables from contracts with customers and other receivables. We monitor the credit risk associated with our accounts receivable and establish an allowance for credit losses expected to be incurred over the life of the receivable, which is recorded net of this allowance. We calculate this allowance based on our history of write-offs, future economic conditions, level of past due accounts, the financial health of our customers and historical experience. Our allowance for credit losses was not material for the periods presented.
Our revenue (sales) is primarily derived from contracts with customers for the purchase of our products. Revenue is recognized at a point in time when our performance obligation has been satisfied and control of the promised goods is transferred to the customer, which generally occurs upon shipment or delivery to a customer based on terms of the sale. The primary performance obligation in our contracts with customers is to provide meat products. Shipping and handling activities are considered part of the fulfillment of our promise to provide meat products and not a separate performance obligation. Shipping and handling costs are reported as a component of cost of sales. 
Revenue is recorded at the transaction price, which is the amount of consideration we expect to receive in exchange for providing goods to customers. The transaction price may be adjusted for estimates of known or expected variable consideration, including consumer incentives, trade promotions and other programs. Our estimates of variable consideration are based on a number of factors including history with the respective customer, current performance, and future projections. Additionally, in determining whether an estimate of variable consideration is constrained, we consider the likelihood and magnitude of a potential revenue reversal. We review and update these estimates regularly until the incentives or product returns are realized. The impact of any adjustment is recognized in the period in which the adjustment is identified. Payment terms vary per contract. However, payment is typically received within a few weeks of the invoice date.
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The balances for receivables from contracts with customers and deferred revenue are presented in the following table:

December 28,
2025 December 29,
2024 December 31,
2023
(in millions)
Receivables from contracts with customers $ 963   $ 494   $ 475  
Other receivables 60   64   102  
Total accounts receivable $ 1,023   $ 558   $ 577  

Deferred revenue $ 5   $ 7   $ 9  

Inventories, Net
Inventories, net consist of the following:

December 28,
2025 December 29,
2024
(in millions)
Fresh and packaged meats $ 1,114   $ 1,006  
Livestock 715   949  
Grains 241   208  
Manufacturing supplies 118   115  
Maintenance parts 125   115  
Other 15   19  
Inventories, net
$ 2,328   $ 2,412  

Inventories are generally valued at the lower of historical average cost or net realizable value, except for fresh pork in the U.S., which is valued based on U.S. Department of Agriculture (“USDA”) published market prices and adjusted for the cost of further processing. We primarily use batch-specific costing to record the cost of inventories sold, which approximates the first-in, first-out method. Costs for fresh and packaged meats include meat, labor, supplies and overhead. The cost of livestock includes feed, medications, contract grower fees and other production expenses. Manufacturing supplies principally consist of ingredients and packaging materials.
Derivative Financial Instruments and Hedging Activities
We record all derivatives as either assets or liabilities at fair value on the balance sheet, with the exception of contracts that qualify for the normal purchase and normal sale scope exception, which are expected to result in physical delivery. Accounting for changes in the fair value of a derivative depends on whether it qualifies and has been designated as part of a hedging relationship. For derivatives that qualify and have been designated as hedging instruments for accounting purposes, changes in fair value have no net impact on earnings, to the extent the derivative is considered perfectly effective in achieving offsetting changes in fair value attributable to the risk being hedged, until the hedged item is recognized in earnings (commonly referred to as the “hedge accounting” method). For derivatives that do not qualify or are not designated as hedging instruments for accounting purposes, changes in fair value are recorded in current period earnings (commonly referred to as the “mark-to-market” method). We may elect either method of accounting for our derivative portfolio, assuming all the necessary requirements are met. We have, in the past, availed ourselves of either acceptable method and expect to do so in the future. We believe all of our derivative instruments represent economic hedges against changes in prices and rates, regardless of their designation for accounting purposes.
When cash flow hedge accounting is applied, derivative gains or losses are recognized as a component of other comprehensive income (loss) and reclassified into earnings in the same period or periods during which the hedged transactions affect earnings. The initial fair value of hedge components excluded from the assessment of
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effectiveness is recognized in earnings on a straight-line basis over the life of the hedging instrument and is presented in the same income statement line item as the hedged item. Any difference between the change in fair value of the hedge components excluded from the assessment of effectiveness and the amounts recognized in earnings is recorded as a component of other comprehensive income (loss).
When fair value hedge accounting is applied, derivative gains and losses are recognized in earnings concurrently with the change in fair value of the hedged item attributable to the risk being hedged.
A portion of our derivatives are exchange traded futures contracts held with brokers, subject to netting arrangements that are enforceable during the ordinary course of business. Additionally, we have a portfolio of over-the-counter derivatives that are held by counterparties under netting arrangements found in typical master netting agreements. These agreements legally allow for net settlement in the event of bankruptcy. We offset the fair values of derivative assets and liabilities, along with the related cash collateral, that are executed with the same counterparty under these arrangements in the consolidated balance sheets.
The cash flows associated with derivative instruments are reported in net cash flows from operating activities in the consolidated statements of cash flows.
Property, Plant and Equipment, Net
Property, plant and equipment, net, (“PP&E”) consists of the following:

Useful Life December 28,
2025 December 29,
2024
(in Years) (in millions)
Machinery and equipment 5 - 20
$ 2,968   $ 2,823  
Buildings and improvements 15 - 40
1,627   1,549  
Land and improvements 3 +
581   573  
Computer hardware and software 3 - 15
267   264  
Breeding stock 2
150   159  
Vehicles 2 - 7
114   110  
Construction in progress 246   173  
Property, plant and equipment, gross 5,953   5,651  
Accumulated depreciation ( 2,747 ) ( 2,497 )

Finance leases 20   22  
Property, plant and equipment, net
$ 3,226   $ 3,176  

PP&E is generally stated at historical cost and depreciated on a straight-line basis over the estimated useful lives of the assets. Assets held under finance leases are classified in PP&E and depreciated over the lease term or, in the instance where title transfers to us at the end of the lease term, the estimated useful lives of the assets. The depreciation of assets held under finance leases is included in depreciation expense. Depreciation expense is included in either cost of sales or SG&A, as applicable. Accelerated depreciation of assets resulting from decisions to dispose of assets prior to the end of their previously estimated useful lives is included in cost of sales. Depreciation expense totaled $ 323 million, $ 327 million and $ 395 million in fiscal years 2025, 2024 and 2023, respectively. 
During the construction period of significant assets, the associated interest costs are capitalized. Capitalized interest was not material for any of the fiscal years presented.
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Goodwill
Goodwill represents the excess of the purchase price of a business over the fair value of identifiable net assets. The changes in goodwill allocated to each of our reportable segments for fiscal years 2025 and 2024 is presented in the following table.

Packaged Meats Fresh Pork Hog Production Other (1)
Consolidated
(in millions)
Balance, December 31, 2023 $ 1,503   $ 34   $ 4   $ 87   $ 1,627  

Foreign currency translation —   —   —   ( 14 ) ( 14 )
Balance, December 29, 2024 1,503   34   4   73   1,613  

Foreign currency translation —   —   —   9   9  
Balance, December 28, 2025 $ 1,503   $ 34   $ 4   $ 83   $ 1,623  

__________________
(1) Includes our Mexico and Bioscience operations.

Goodwill for each reporting unit is tested for impairment annually on the first day of the fourth quarter, or sooner if impairment indicators arise. Goodwill is considered to be impaired if the carrying amount of a reporting unit exceeds its fair value, in which case an impairment loss would be recognized in an amount equal to that excess. We may perform a qualitative assessment to determine if it is more likely than not that the carrying amount of a reporting unit exceeds its fair value. If it is not, no further analysis is required. If it is, a quantitative goodwill impairment test is performed to estimate the fair value of the reporting unit and measure the amount of goodwill impairment loss to be recognized, if any.
The fair value of a reporting unit is estimated by applying valuation multiples and/or estimating future discounted cash flows. The selection of multiples is dependent upon assumptions regarding future operating performance as well as business trends and prospects, and industry, market and economic conditions. When estimating future discounted cash flows, we consider the assumptions that hypothetical marketplace participants would use in estimating future cash flows. In addition, where applicable, an appropriate discount rate is used, based on an industry-wide average cost of capital or location-specific economic factors. We consider all these factors to be level 3 inputs, as defined in “Note 17: Fair Value Measurements.”
Based on the results of our annual goodwill impairment tests, as of our testing date, we have determined that no impairments existed for any of the fiscal years presented.

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Intangible Assets, Net
Intangible assets, net consists of the following:

Useful Life December 28,
2025 December 29,
2024
(in Years) (in millions)
Amortized intangible assets:
Customer relationships 14 - 20
$ 82   $ 82  
Contractual relationships 17 - 22
40   40  
Rights and customer lists 5 - 25
5   5  
Software licenses 2 - 5
2   —  
Amortized intangible assets, gross 129   127  
Accumulated amortization ( 85 ) ( 77 )
Amortized intangible assets, net 44   50  
Non-amortized intangible assets:
Trademarks Indefinite 1,216   1,216  
Intangible assets, net $ 1,260   $ 1,266  

Intangible assets with finite lives are amortized over their estimated useful lives and tested for recoverability when indicators of impairment are present using estimated future undiscounted cash flows related to those assets. The useful life of an intangible asset is the period over which the asset is expected to contribute directly or indirectly to future cash flows. Amortization expense for intangible assets was $ 8 million in each of fiscal years 2025, 2024 and 2023. The estimated amortization expense associated with our intangible assets for each of the next five years is as follows: 

Year (in millions)
2026 $ 9  
2027 7  
2028 4  
2029 4  
2030 4  

Indefinite-lived trademarks are tested for impairment annually on the first day of the fourth quarter, or sooner if impairment indicators arise. If the carrying amount of our trademarks exceed their estimated fair value, an impairment loss is recognized in an amount equal to that excess. The fair values of trademarks are calculated using a royalty rate method. Assumptions about royalty rates are based on the rates at which similar brands and trademarks are licensed in the marketplace.
We have determined that no impairments of our intangible assets existed for any of the fiscal years presented.
Investments 
We account for investments in entities that we do not control, but over which we have the ability to exercise significant influence, using the equity accounting method. These investments are recorded in equity method investments on the consolidated balance sheet. We record our share of earnings and losses from our equity method investments in (income) loss from equity method investments in the consolidated statements of income. The results of certain of our equity method investments are reported on a one-month lag, which does not materially impact our consolidated financial statements.
We account for investments in entities that we do not control and do not have the ability to exercise significant influence at fair value if fair value is readily determinable. For investments that do not have readily determinable fair
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values, we account for the investment at cost minus impairment, if any, plus or minus changes resulting from orderly transactions for the identical or a similar investment of the same issuer. These investments are recorded in other assets on the consolidated balance sheets.
We consider whether the fair value of an investment has declined below its carrying amount whenever adverse events or changes in circumstances indicate that recorded values may not be recoverable. If we consider any such decline to be other than temporary (based on various factors, including historical financial results, product development activities and the overall health of the affiliate’s industry), then a write-down of the investment would be recorded to its estimated fair value.
Leases
At inception, we determine whether a contract is or contains a lease based on whether we have the right to control the use of an identified asset for a period of time, which includes the right to (1) obtain substantially all of the economic benefits from the use of the identified asset and (2) direct the use of the identified asset. Our lease assets and obligations are initially measured at the present value of the future lease payments over the term of the lease, adjusted for any prepayments. The lease term consists of the noncancellable period of the lease, plus any period covered by an option to extend the lease that is either controlled by the lessor or is reasonably certain to be exercised by the Company. The value of the future lease payments is discounted at the interest rate implicit in our lease contracts, if readily determinable. Otherwise, we utilize the appropriate incremental borrowing rate, which is the rate incurred to borrow on a collateralized basis over a similar term and economic environment to that of the lease. Our lease assets and obligations do not contain any leases with a term of 12 months or less.
Our lease agreements contain both lease and non-lease components. We allocate the consideration in our lease agreements to each component based on the standalone values of each component. The non-lease components are excluded from the measurement of our lease assets and obligations.
Operating lease cost is recognized on a straight-line basis in earnings over the term of the lease. Finance lease cost is amortized into earnings using the effective interest method over the lease term or, in the instance where title transfers to us at the end of the lease term, the estimated useful lives of the assets. The interest component of finance lease cost is included in interest expense.
Debt Issuance Costs, Premiums and Discounts
Debt issuance costs, premiums and discounts are amortized into interest expense over the terms of the related loan agreements using the effective interest method. Debt issuance costs are generally recorded as a reduction of the associated debt instrument and classified in long-term debt and finance lease obligations in the consolidated balance sheets. Costs to enter into and/or refinance credit facilities are classified in other assets on the consolidated balance sheets and reclassified to current assets as the credit facilities approach expiration.
Income Taxes 
We estimate total income tax expense, including interest and penalties, based on statutory tax rates and tax planning opportunities available to us in various jurisdictions in which we earn income. Federal income taxes include an estimate for taxes on earnings of foreign subsidiaries expected to be remitted to the U.S. and be taxable, but not for earnings considered indefinitely invested in the foreign subsidiary.
We account for the global intangible low-taxed income inclusion from foreign subsidiaries in the period in which it is incurred.
Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rate is recognized in earnings in the period that includes the enactment date. Valuation allowances are established when necessary to reduce deferred tax assets to amounts more likely than not to be realized. 
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The determination of our provision for income taxes requires significant judgment, the use of estimates, and the interpretation and application of complex tax laws. Significant judgment is required in assessing the timing and amounts of deductible and taxable items. 
We record liabilities for unrecognized tax benefits based on our analysis of whether, and the extent to which, additional taxes will be due. We record these liabilities using a two-step process in which (1) we evaluate whether we believe it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, we recognize the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the tax authority. We recognize accrued interest and penalties related to unrecognized tax benefits in income tax expense.
Pension Accounting 
We recognize the funded status of our defined benefit pension plans in the consolidated balance sheets. We measure our pension and other postretirement benefit plan obligations and related plan assets as of December 31. The measurement of our pension obligations and related costs is dependent on the use of assumptions and estimates. These assumptions include discount rates, salary growth, mortality rates and expected returns on plan assets. Changes in assumptions and future investment returns could potentially have a material impact on our expenses and related funding requirements. 
We recognize in other comprehensive income (loss), the actuarial gains or losses and prior service costs or credits that arise during the period. These amounts are amortized over the average remaining life expectancy of the plan participants.
Self-Insurance Programs 
We are self-insured for certain levels of workers’ compensation claims, health care coverage, product recall, vehicle, property, and general liability. The cost of these self-insurance programs is accrued based upon estimated settlements for known and anticipated claims. Any resulting adjustments to previously recorded reserves are reflected in current period earnings.  
Asset Retirement Obligations
We record an asset retirement obligation (“ARO”) related to PP&E when a legal obligation is incurred and the fair value of the obligation can be estimated. AROs are initially recorded as a liability at fair value and capitalized in PP&E on the consolidated balance sheet. We estimate the fair value of AROs based on the projected discounted future cash outflows required to settle the liability. Such an estimate requires assumptions and judgments regarding the amount and timing of cash outflows required to settle the liability, which are level 3 inputs, as defined in “Note 17: Fair Value Measurements.” If the fair value of the recorded ARO changes, a revision is recorded to both the ARO and the related asset. The cost of the ARO is depreciated into earnings on a straight-line basis over the remaining useful life of the related asset. Accretion of the liability due to the passage of time is recognized as an expense in current period earnings. As of December 28, 2025 and December 29, 2024, the balance of our AROs was $ 5 million.
Contingent Liabilities
We are subject to lawsuits, investigations and other claims related to the operation of our farms and facilities, labor, livestock procurement, securities, environmental, our products, taxes 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 loss. A determination of the amount of accruals and disclosures required, if any, for these contingencies is made after considerable analysis of each individual issue.
We accrue for contingent liabilities, including future defense costs, when an assessment of the risk of loss is probable and can be reasonably estimated. We disclose contingent liabilities when the risk of material loss is at least reasonably possible. We reevaluate our accruals when facts and circumstances change, which could warrant an adjustment to the amount that is recorded.
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Our contingent liabilities contain uncertainties because the eventual outcome will result from future events. Our determination of accruals and any reasonably possible losses in excess of those accruals require estimates and judgments related to the possible outcomes, differing interpretations of the law, assessments of the amount of potential damages, settlements or defense costs, and the effectiveness of strategies or other factors beyond our control. If actual results are not consistent with our estimates or assumptions, we may be exposed to gains or losses that could have a material effect on our future results of operations and cash flows.
Redeemable Noncontrolling Interests
Certain noncontrolling interest (“NCI”) holders have the right to exercise a put option that would obligate us to redeem a portion or all of their interest. These NCIs are classified as redeemable NCIs outside of equity in our consolidated balance sheets. At the end of each period we adjust the value of redeemable NCIs, if necessary, to the redemption value (as defined in the subsidiary’s operating agreement) through additional paid-in capital. See “Note 17: Fair Value Measurements” for a discussion of the assessment of redemption value. The following table presents the changes in redeemable NCIs for our continuing operations for the periods presented:

Twelve Months Ended
December 28,
2025 December 29,
2024 December 31,
2023
(in millions)
Beginning balance $ 225   $ 246   $ 197  
Attribution of net income 11   14   5  
Attribution of other comprehensive income (loss) 26   ( 35 ) 25  
Dividends ( 1 ) ( 1 ) ( 2 )

Redemption —   —   ( 15 )
Adjustment to redemption value
3   1   36  
Ending balance $ 264   $ 225   $ 246  

Advertising and Promotional Expenses
Advertising and promotional expenses are recognized as incurred except for certain production expenses, which are expensed upon the first airing of the advertisement. Promotional sponsorship expenses are recognized as the promotional events occur. Advertising expenses totaled $ 92 million, $ 97 million and $ 123 million in fiscal years 2025, 2024 and 2023, respectively, and are included in SG&A in the consolidated statements of income.
Research and Development Expenses 
Research and development (“R&D”) expenses are recognized as incurred. R&D expenses totaled $ 214 million, $ 144 million and $ 175 million in fiscal years 2025, 2024 and 2023, respectively, and are included in cost of sales in the consolidated statements of income.
Government Assistance
We may receive government assistance (government grants) from time to time, primarily in the form of refundable tax credits. Government grants typically specify conditions that must be met in order for the grants to be earned. We record government grants when it is probable that the conditions will be met and the grant will be received. Government grants that are conditioned on the purchase, construction or acquisition of an asset are recorded as a reduction of the cost basis of the related asset, which reduces depreciation expense recognized over the useful life of the asset. All other grants are recognized in earnings when the related conditions are met.
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Recently Issued Accounting Pronouncements
New Accounting Pronouncements Recently Adopted
In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09 Income Taxes (Topic 740): Improvements to Income Tax Disclosures . The standard requires enhanced rate reconciliation disclosures, including disclosure of specific categories and additional information for reconciling items that meet a quantitative threshold. The standard also requires companies to disaggregate income taxes paid by federal, state and foreign jurisdictions. The update was adopted and applied in this Annual Report on Form 10-K on a prospective basis. The standard does not impact our financial position, results of operations or cash flows.
New Accounting Pronouncements Not Yet Adopted
In November 2024, the FASB issued ASU 2024-03 Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses . The new guidance is intended to provide investors with more disaggregated information about certain line items presented in the consolidated statement of income. The update is effective for our annual report on Form 10-K for fiscal year 2027, with early adoption permitted. The new disclosures are required to be applied prospectively with an option for retrospective application. The standard will not impact our financial position, results of operations or cash flows.
In May 2025, the FASB issued ASU 2025-03 Business Combinations (Topic 805) and Consolidation (Topic 810): Determining the Accounting Acquirer in the Acquisition of a Variable Interest Entity , which aims to improve consistency in identifying the accounting acquirer in business combinations involving VIEs. The update is effective for our annual report on Form 10-K for fiscal year 2027, with early adoption permitted. Once adopted, this update will be applied prospectively to transactions within the scope of the guidance.
In July 2025, the FASB issued ASU 2025-05 Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets , which simplifies the estimation of credit losses on current accounts receivable and contract assets arising from transactions accounted for under ASC 606. The update is effective for fiscal year 2026, including interim periods within that fiscal year, with early adoption permitted. Once adopted, this update will be applied prospectively to assets within the scope of the guidance. We do not expect the adoption of this standard to have a material impact on our financial position, results of operations or cash flows.
In September 2025, the FASB issued ASU 2025-06 Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40) , which streamlines the capitalization guidance for internal-use software and supersedes prior guidance on website development costs. The update is effective for fiscal year 2028, including interim periods within that fiscal year, with early adoption permitted. Once adopted, this update will be applied prospectively to software development projects initiated after adoption.
In September 2025, the FASB issued ASU 2025-07 Derivatives and Hedging (Topic 815) and Revenue from Contracts with Customers (Topic 606) , which clarifies the scope of derivative accounting and provides guidance on share-based noncash consideration in revenue contracts. The update is effective for fiscal year 2027, including interim periods within that fiscal year, with early adoption permitted. Once adopted, this update will be applied prospectively to contracts within the scope of the guidance. We do not expect the adoption of this standard to have a material impact on our financial position, results of operations or cash flows.
In November 2025, the FASB issued ASU 2025‑09 Hedge Accounting Improvements , which enhances guidance related to hedge accounting, including provisions for component hedging. The update is effective for fiscal year 2027, including interim periods within that fiscal year, with early adoption permitted. Upon adoption, the update will be applied prospectively to open hedging relationships and to new hedges within the scope of the guidance. We do not expect the adoption of this standard to have a material impact on our financial position, results of operations or cash flows.
In December 2025, the FASB issued ASU 2025‑10 Accounting for Government Grants , which provides authoritative guidance on the recognition, measurement, and disclosure of government grants. The update is
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effective for fiscal year 2029, including interim periods within that fiscal year, with early adoption permitted. We do not expect the adoption of this standard to have a material impact on our financial position, results of operations, or cash flows.
In December 2025, the FASB issued ASU 2025‑11 Interim Reporting (Topic 270): Narrow-Scope Improvements , which clarifies interim reporting requirements and enhances consistency in disclosures. The update is effective for fiscal year 2028, including interim periods within that fiscal year, with early adoption permitted. We do not expect the adoption of this standard to have a material impact on our financial position, results of operations, or cash flows, as the amendments primarily clarify existing guidance.
In December 2025, the FASB issued ASU 2025‑12 , Codification Improvements , which makes 33 incremental improvements to GAAP across a broad range of topics intended to address technical corrections, unintended application of the accounting standards codification, clarifications and other minor improvements. This update is effective for fiscal year 2027, including interim periods within that fiscal year, with early adoption permitted. We do not expect the adoption of this update to have a material impact on our financial position, results of operations, or cash flows.

NOTE 2: REPORTABLE SEGMENTS
Our reportable segments are determined on the basis of our organizational structure and information that is regularly reviewed by our Chief Operating Decision Maker (“CODM”) for the purpose of assessing the performance of the operating segments of our business and making operating and resource allocation decisions. Our CODM is our Chief Executive Officer. Our CODM reviews assets at a consolidated level; not by reportable segment. Therefore, we do not disclose assets by reportable segment. Additionally, while segments are managed separately, our manufacturing and warehousing activities are often integrated to optimize cost efficiencies, resulting in jointly utilized assets, including fixed assets, that are are not tracked at the segment level. Depreciation and amortization associated with these shared assets are generally allocated to reportable segments.
The measure of segment profit reviewed by our CODM is operating profit. Our CODM uses operating profit to assess segment performance, compensate employees and allocate capital, personnel and other resources to each segment.
Following the carve-out and distribution of our European operations (see “Note 3: Discontinued Operations”), we conduct our operations through three reportable segments: Packaged Meats, Fresh Pork and Hog Production.
Packaged Meats
The Packaged Meats segment consists of our U.S. operations that process fresh meat into a wide variety of packaged meats products, including bacon, sausage, hot dogs, deli and lunch meats, dry sausage products (such as pepperoni and genoa salami), ham products, ready-to-eat products and prepared foods (such as pre-cooked entrees, bacon and sausage). Approximately 80 % of the Packaged Meats segment’s raw materials are sourced from our Fresh Pork segment. We market our domestic packaged meats products under a strategic set of core brands, which include: Smithfield, Eckrich, Nathan’s Famous, Farmland, Armour, Farmer John, Kretschmar, Krakus, John Morrell, Cook’s, Gwaltney, Carando, Margherita, Curly’s and Smithfield Culinary. We also sell a sizeable portion of our packaged meats products as private label products. The majority of the Packaged Meats segment’s products are sold to retail and foodservice customers in the U.S.
Fresh Pork
The Fresh Pork segment consists of our U.S. operations that process live hogs into a wide variety of primal, sub-primal and offal products, such as bellies, butts, hams, loins, picnics and ribs. In fiscal year 2025, the Fresh Pork segment sourced approximately 40 % of its raw materials from our Hog Production segment, compared to approximately 50 % during fiscal year 2024, with the remainder fro m farmers with whom we partner across the U.S. Approximately one-third of our fresh pork products, including the majority of hams, bellies and trimmings, is transferred to our Packaged Meats segment. Externally, we sell our fresh pork products to domestic retail,
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foodservice and industrial customers, as well as to export markets, including, among others, China, Mexico, Japan, South Korea and Canada.
Hog Production
The Hog Production segment consists of our hog production operations in the U.S. , which produce and raise our hogs on numerous Company-owned farms and farms that are owned and operated by contract farmers. Nearly all of the hogs produced by this segment are processed by our Fresh Pork segment. The Hog Production segment also sells livestock feed and grains and provides transportation and other ancillary services to external customers.
The following tables provide certain financial information by reportable segment with a reconciliation to the consolidated totals.

Fiscal Year 2025
Packaged Meats Fresh Pork Hog Production Other (1)
Corporate (2)
Unallocated (3)
Intersegment Consolidated
(in millions)
Sales $ 8,757   $ 8,344   $ 3,393   $ 528   $ —   $ —   $ ( 5,492 ) $ 15,531  
Cost of sales 7,295   7,965   3,179   458   —   36   ( 5,492 ) 13,442  
Selling, general and administrative expenses 367   166   38   25   128   125   —   849  
Operating gains —   —   —   —   —   ( 52 ) —   ( 52 )
Operating profit (loss) 1,094   214   176   45   ( 128 ) ( 109 ) —   1,292  
Interest expense, net 41   41  
Non-operating gains ( 18 ) ( 18 )
Income from continuing operations before income taxes $ 1,270  
Other segment data:
Depreciation and amortization $ 133   $ 109   $ 57   $ 27   $ 1   $ 5   $ —   $ 332  
Capital expenditures 161   114   49   9   7   —   —   341  

Fiscal Year 2024
Packaged Meats Fresh Pork Hog Production Other (1)
Corporate (2)
Unallocated (3)
Intersegment Consolidated
(in millions)
Sales $ 8,319   $ 7,873   $ 3,002   $ 471   $ —   $ —   $ ( 5,524 ) $ 14,142  
Cost of sales 6,759   7,419   3,104   412   —   74   ( 5,524 ) 12,244  
Selling, general and administrative expenses 394   188   42   24   153   38   —   840  
Operating gains ( 2 ) —   —   —   —   ( 57 ) —   ( 60 )
Operating profit (loss) 1,168   266   ( 144 ) 35   ( 153 ) ( 55 ) —   1,118  
Interest expense, net 66   66  
Non-operating gains ( 9 ) ( 9 )
Income from continuing operations before income taxes $ 1,061  
Other segment data:
Depreciation and amortization $ 123   $ 113   $ 61   $ 30   $ 1   $ 10   $ —   $ 339  
Capital expenditures 144   106   33   13   54   —   —   350  

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Fiscal Year 2023
Packaged Meats Fresh Pork Hog Production Other (1)
Corporate (2)
Unallocated (3)
Intersegment Consolidated
(in millions)
Sales $ 8,280   $ 7,832   $ 3,317   $ 559   $ —   $ —   $ ( 5,348 ) $ 14,640  
Cost of sales 6,792   7,525   4,024   536   —   222   ( 5,348 ) 13,751  
Selling, general and administrative expenses 422   190   50   26   107   254   —   1,050  
Operating gains —   —   —   —   —   ( 105 ) —   ( 105 )
Operating profit (loss) 1,066   117   ( 756 ) ( 4 ) ( 107 ) ( 371 ) —   ( 56 )
Interest expense, net 76   76  
Non-operating gains ( 3 ) ( 3 )
Loss from continuing operations before income taxes $ ( 129 )
Other segment data:
Depreciation and amortization $ 120   $ 109   $ 72   $ 36   $ 1   $ 89   $ —   $ 427  
Capital expenditures 154   123   40   10   —   26   —   353  

________________
(1) Includes our Mexico and Bioscience operations. Our Mexico operations raise hogs and produce pork products that are sold primarily to customers in Mexico. Our Bioscience operations use raw materials from hogs that we harvest to manufacture heparin products, including an active pharmaceutical ingredient that mitigates the risk of blood clots.
(2) Represents general corporate expenses for management and administration of the business.
(3) We do not allocate certain items to our operating segments such as litigation charges, exit and disposal costs, insurance recoveries, gains and losses on the sale of property, plant and equipment and other assets, accelerated depreciation, and employee termination benefits, among others.

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The following tables disaggregate our sales to customers by reportable segment and by major distribution channel.

Fiscal Year 2025
Retail (1)
Foodservice (2)
Exports (3)
Industrial (4)
Other / Unallocated (5)
Total External Sales (6)
Intersegment Consolidated (7)

(in millions)
Packaged Meats $ 5,517   $ 2,684   $ 107   $ 432   $ 17   $ 8,756   $ —   $ 8,757  
Fresh Pork 2,020   273   1,647   1,071   7   5,017   3,327   8,344  
Hog Production —   —   —   —   1,229   1,229   2,164   3,393  
Other (8)
—  —  —  —  528   528   1   528  

Intersegment —  —  —  —  —  —  ( 5,492 ) ( 5,492 )
Total $ 7,537   $ 2,957   $ 1,753   $ 1,504   $ 1,780   $ 15,531   $ —  $ 15,531  

Fiscal Year 2024
Retail (1)
Foodservice (2)
Exports (3)
Industrial (4)
Other / Unallocated (5)
Total External Sales (6)
Intersegment Consolidated (7)

(in millions)
Packaged Meats $ 5,349   $ 2,447   $ 104   $ 403   $ 16   $ 8,319   $ —   $ 8,319  
Fresh Pork 1,946   232   1,666   1,035   5   4,883   2,990   7,873  
Hog Production —   —   —   —   469   469   2,533   3,002  
Other (8)
—  —  —  —  470   470   1   471  
Intersegment —  —  —  —  —  —  ( 5,524 ) ( 5,524 )
Total $ 7,295   $ 2,679   $ 1,769   $ 1,438   $ 960   $ 14,142   $ —  $ 14,142  

Fiscal Year 2023
Retail (1)
Foodservice (2)
Exports (3)
Industrial (4)
Other / Unallocated (5)
Total External Sales (6)
Intersegment Consolidated (7)

(in millions)
Packaged Meats $ 5,265   $ 2,420   $ 126   $ 449   $ 20   $ 8,280   $ —   $ 8,280  
Fresh Pork 2,007   246   1,731   1,142   12   5,138   2,694   7,832  
Hog Production —   —   —   —   671   671   2,646   3,317  
Other (8)
—  —  —  —  552   552   7   559  
Intersegment —  —  —  —  —  —  ( 5,348 ) ( 5,348 )
Total $ 7,272   $ 2,667   $ 1,857   $ 1,591   $ 1,254   $ 14,640   $ —  $ 14,640  

________________
(1) Includes national and regional retailers in the U.S. such as grocery supermarket chains, independent grocers and club stores.
(2) Includes foodservice distributors, fast food and other restaurant operators, hotel chains and other institutional customers in the U.S.
(3) Includes exports from the U.S. to international retailers and wholesale distributors primarily in North America, Asia, Latin America and other emerging markets.
(4) Includes sales to industrial customers who use our raw materials in their finished goods production, including prepared meals, pharmaceutical production and pet food.
(5) Includes sales of grain, oilseeds, feed, breeding stock and market hogs, among others, in addition to external sales from our Mexico and Bioscience operations.
(6) Includes external sales from our Mexico operations of $ 511 million, $ 431  million and $ 515 million in fiscal years 2025, 2024 and 2023, respectively. All other external sales are sourced from our U.S. operations.
(7) Our largest customer, Walmart Inc., including its subsidiary Sam’s West, Inc. (collectively “Walmart”), accounted for 15 %, 16 % and 15 % of consolidated sales in fiscal years 2025, 2024 and 2023, respectively. Sales to Walmart were included in our Packaged Meats and Fresh Pork segments. Any extended discontinuance of sales to this customer could, if not replaced, have a material impact on our results of operations.
(8) Includes our Mexico and Bioscience operations.
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NOTE 3: DISCONTINUED OPERATIONS
On August 26, 2024, we completed a carve-out and distribution of our European operations to WH Group. The European carve-out represented a strategic shift in our geographical footprint. Accordingly, where applicable, the historical results of operations, assets and liabilities, and cash flows of the European operations have been condensed into separate line items and presented in the consolidated statements of income, the consolidated balance sheets and the consolidated statements of cash flows as discontinued operations for all periods presented.
The following table presents the major components of net income from discontinued operations included in the consolidated statements of income.

Fiscal Year
2025 2024 2023
(in millions)
Sales $ —   $ 2,362   $ 3,337  
Cost of sales —   2,037   2,980  
Gross profit —   325   357  
Selling, general and administrative expenses —   151   164  
Operating gains —   ( 15 ) ( 7 )
Operating profit —   188   199  
Interest expense —   4   11  
Non-operating gains —   —   3  
Income from discontinued operations before income taxes —   184   185  
Income tax expense from discontinued operations (1)
—   13   30  
Net income from discontinued operations $ —   $ 172   $ 155  

________________
(1) Income tax expense from discontinued operations for fiscal year 2024 includes a $ 22  million income tax benefit recognized as a result of the carve-out of our European operations.
Acquisitions within our Discontinued Operations
Prior to the carve-out and distribution of our European operations, we completed the following acquisition, which is included in discontinued operations.
Goodies
On February 28, 2023, our former European operations purchased Goodies Meat Production S.R.L. (“Goodies”), a Romanian producer of private label packaged meats products, for consideration valued at € 29 million ($ 31 million). The amount paid was € 24 million ($ 26 million) including post-closing adjustments. The consideration includes contingent payments of € 5 million, payable upon the achievement of certain earnings targets over a two-year period. Goodies’ portfolio of products includes salami, ham, bacon, bologna and other meat specialties.
DeVeris
On May 31, 2023, our former European operations acquired an 80 % interest in DeVeris Polska Sp. z o.o. (“DeVeris”), a Polish processor of poultry by-products, for 48 million zł ($ 11 million). DeVeris operates a production facility in Turek, Poland. The acquisition of DeVeris expanded the vertically integrated business in Poland by enabling further processing of both pork and poultry by-products.
Argal
On March 28, 2024, our former European operations purchased a 50.1 % stake in Argal Alimentacíon, S.A. (“Argal”), a Spanish producer of packaged meats products with approximately 1,480 employees, for € 91  million ($ 98  million), subject to post-closing adjustments. The amount paid at closing was € 82  million ($ 88  million) with
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the remaining balance due upon finalization of the purchase price. In August 2024, an additional € 8  million ($ 9  million) was paid, which resulted in a final purchase price of € 90  million ($ 97  million).
Continuing Involvement
In connection with the carve-out of our European operations (currently referred to as “Morliny Foods”), we entered into a transition services agreement that governed certain services Smithfield provided to Morliny Foods for a year subsequent to the carve-out. These services included information technology support, including access and license fees, tax advisory services and financial reporting services, none of which were material to Smithfield. In addition, Smithfield continues to purchase certain products from Morliny Foods for distribution in the U.S. market. Purchases of these products from Morliny Foods totaled $ 45  million, $ 45  million, and $ 33 million in fiscal years 2025, 2024 and 2023, respectively.

NOTE 4: MERGER AND ACQUISITIONS
Merger
On December 29, 2024, United Global Foods Holdings (US), Inc. (“UGFH”), our immediate parent company at that time, merged with Smithfield, resulting in Smithfield being the surviving entity. This transaction represented a common control transfer and was applied prospectively in the Company’s financial statements. As a result of the merger, the accounts of UGFH were added to our consolidated balance sheet, which was impacted as follows:

December 29, 2024
(in millions)
Prepaid expenses and other current assets
$ 71  
Deferred income taxes, net
( 7 )
Additional paid-in capital
$ 77  

Acquisitions
Nathan’s Famous
On January 20, 2026, we entered into an agreement to acquire all of the issued and outstanding shares of Nathan’s Famous Inc. (“Nathan’s”) for $ 102.00 per share in cash. The acquisition is expected to be funded using cash on hand. Since March 2014, we have held an exclusive license to manufacture, distribute, market and sell “Nathan’s Famous” branded hot dogs, sausages, corned beef and certain other ancillary products through retail outlets in the U.S. and Canada and Sam’s Clubs in Mexico. The license is scheduled to expire in March 2032. The closing of the transaction is expected to occur in the first half of 2026, subject to satisfaction of certain conditions set forth in the merger agreement, including obtaining approval by the holders of a majority of the outstanding Nathan’s common stock, approval from the Committee on Foreign Investment in the United States, and other customary closing conditions.
Nashville, Tennessee Facility
On July 30, 2024, we acquired a dry sausage production facility located in Nashville, Tennessee from Cargill Meat Solutions Corporation for $ 38  million. The acquisition is part of our strategy to grow our value-added packaged meats business and serve the growing demand for high-quality pepperoni, deli, charcuterie and other dry sausage products. The total cost of the asset acquisition was allocated based on the relative fair value of the assets acquired. The allocated fair values of the assets acquired were as follows: equipment valued at $ 17  million, buildings valued at $ 11  million, inventory valued at $ 5  million and land valued at $ 5  million.
American Skin
On December 28, 2023, we acquired the remaining 15 % interest in American Skin Food Group, LLC for $ 15 million.
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NOTE 5: OPERATING GAINS AND NON-OPERATING GAINS
The following table provides details of operating (gains) and non-operating (gains) losses.

Fiscal Year
2025 2024 2023

Operating gains:

Insurance recoveries (1)
$ ( 37 ) $ ( 9 ) $ ( 5 )
Gain on disposal of assets (2)
( 7 ) ( 43 ) ( 88 )

Other operating gains ( 8 ) ( 8 ) ( 12 )
Operating gains $ ( 52 ) $ ( 60 ) $ ( 105 )

Non-operating gains:

Gain on assets held in rabbi trusts (3)
$ ( 34 ) $ ( 16 ) $ ( 12 )
Net pension and postretirement benefits cost (4)
17   10   10  

Other non-operating gains ( 1 ) ( 2 ) ( 1 )
Non-operating gains
$ ( 18 ) $ ( 9 ) $ ( 3 )

________________
(1) Consists of gains recognized in connection with settlements of insurance claims associated with property damage. Also includes settlements of insurance claims in the third quarter of 2025 and the third and fourth quarters of 2024 for losses incurred in connection with past litigation.
(2) Fiscal year 2025 includes a $ 3  million gain on the sale of certain of our Missouri hog farms in the fourth quarter of 2025. Fiscal year 2024 includes a $ 32 million gain on the sale of hog farms in Utah and a $ 6 million gain on the sale of assets to Murphy Family Farms (as defined and further discussed in “Note 6: Restructuring”). Fiscal year 2023 includes an $ 86 million gain on the sale of our Vernon, California plant (see “Note 6: Restructuring” for further information).
(3) Consists of assets held in rabbi trusts used to fund nonqualified defined benefit pension plans and deferred compensation plans. Fiscal year 2025 includes a $ 17  million gain recognized in the third quarter of 2025 for a one-time benefit on company-owned life insurance policies.
(4) Includes the components of net pension and postretirement benefits cost other than service cost, which is included in operating profit. These components consist of interest cost, expected return on plan assets, amortization of actuarial gains/losses and prior service costs/credits, and curtailment gains.

NOTE 6: RESTRUCTURING
West Coast Exit and Hog Production Reform
West Coast Exit
In May 2022, we announced a decision to close our Vernon, California processing facility, exit farm operations in Arizona and California and reduce our sow herd in Utah. The decision to permanently close our Vernon facility was based on increasingly difficult business conditions in California, where high taxes, high utility costs and a challenging regulatory environment negatively impact our ability to operate efficiently and profitably.
In December 2023, we made a decision to terminate a number of third-party hog grower contracts and close several company-owned nursery farms in Utah as a result of the Vernon facility closure in early fiscal year 2023.
As a result of the West Coast Exit, we recognized gains on the sale of certain properties as follows:
• In the second quarter of fiscal year 2023, we sold our Vernon, California facility for $ 205 million and recognized a gain of $ 86 million in operating gains in the consolidated statement of income.
• On December 17, 2024, we sold our hog production assets in Utah, excluding the live animals, for $ 58 million. The transaction resulted in a gain of $ 32 million, which was recognized in operating gains in the consolidated statement of income in the fourth quarter of fiscal year 2024. As part of the agreement, we
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leased back certain farm and feed properties that we continue to operate. The lease can be cancelled during each annual term and is therefore considered short term.
Hog Production Reform
Beginning in 2023, we undertook a number of actions to optimize the size of our Hog Production segment’s operations and improve its cost structure, including ceasing certain farm operations, terminating certain agreements with underperforming contract farmers and reducing the size of our hog production business (“Hog Production Reform”).
In the fourth quarter of fiscal year 2024, we became a member of a North Carolina-based company, Murphy Family Farms LLC (“Murphy Family Farms”), by contributing $ 3 million in cash in exchange for a 25 % minority interest. We additionally sold approximately 150,000 sows and related inventories located on Company-owned and contract farms in North Carolina to Murphy Family Farms. Subsequent to the end of fiscal year 2024, on December 30, 2024, we sold the commercial hog inventories associated with such sows to Murphy Family Farms. Murphy Family Farms is now a hog supplier to us and supplies approximately 3.2 million hogs annually. We supply animal feed and other supplies and provide certain support services to Murphy Family Farms.
On February 24, 2025, we became a member of a North Carolina-based company, VisionAg Hog Production, LLC (“VisionAg”), by contributing $ 450,000 in cash in exchange for a 9 % minority interest. We additionally sold approximately 28,000 sows and the associated commercial hog inventories located on certain Company-owned and contract farms in North Carolina to VisionAg. VisionAg is now a hog supplier to us and supplies approximately 600,000 hogs annually. We supply animal feed and provide certain support services to VisionAg.
The sales of breeding stock and related assets to Murphy Family Farms and VisionAg totaled $ 50  million and $ 45  million for fiscal years 2025 and 2024, respectively, which were financed through interest-bearing notes. We received payments totaling $ 21  million on these notes in fiscal year 2025.
The following table details charges we recognized in connection with the West Coast Exit and Hog Production Reform in cost of sales in the consolidated statements of income by major type of cost.

Fiscal Year Cumulative
2025 2024 2023 December 28, 2025

Accelerated depreciation (1)
$ 2   $ 3   $ 85   $ 173  
Contract termination costs —   9   42   57  
Employee termination benefits —   1   3   32  
Loss on asset disposals (2)
—   4   2   9  
Other exit costs 2   15   64   112  
Total $ 5   $ 31   $ 195   $ 382  

________________
(1) Accelerated depreciation includes $ 11 million for AROs in fiscal year 2023, which were recorded in connection with the decisions to close certain Company-owned farms in accordance with our general permit for concentrated animal feeding operations in the State of Utah.
(2) On November 26, 2024, we sold certain hog farms in Missouri for $ 32 million. The transaction resulted in a loss of $ 4 million.

In addition to the charges noted in the table above, the West Coast Exit and Hog Production Reform impacted our biogas joint ventures for which we recognized additional costs and losses as follows:
• In the fourth quarter of fiscal year 2023, we incurred $ 14 million in costs associated with biogas assets owned by our joint venture, Monarch Bio Energy, LLC (“Monarch”), in connection with the farms in
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Missouri that were closed in fiscal year 2023. These costs were recognized in (income) loss from equity method investments in the consolidated statement of income.
• Additionally, in the fourth quarter of fiscal year 2023, certain biogas assets owned by our joint venture, Align RNG, LLC (“Align”), were impaired as a result of our decision in December 2023 to terminate hog grower contracts and close farms in Utah. As a result, we recognized our share of the impairment totaling $ 35  million in (income) loss from equity method investments in the consolidated income statement.
Facility Exits
Springfield, Massachusetts Facility
On February 6, 2026, we announced our decision to exit our leased Springfield, Massachusetts dry sausage production facility by the end of August 2026 and consolidate production across our network, including at our recently acquired Nashville, Tennessee facility. The decision to close the Springfield facility is part of the Company’s ongoing efforts to optimize its manufacturing footprint and improve operational and cost efficiencies. The costs to close the facility are estimated to be approximately $ 10  million and primarily represent asset write-downs.
Elizabeth, New Jersey Facility
On June 30, 2025, we exited our leased Elizabeth, New Jersey facility, a small specialty dry sausage production facility, and consolidated production across our network. Costs associated with closing the plant primarily include equipment that we disposed of prior to the end of the asset’s useful life. The charges associated with the closing were not material.
Altoona, Iowa Facility
On August 30, 2024, we exited our leased Altoona, Iowa ham boning facility and consolidated production volume into other locations to improve manufacturing efficiencies. Charges associated with the closing were not material.
Administrative Process Optimization
In the fourth quarter of 2025, we commenced an initiative to modernize and optimize certain of our administrative and transactional processes. As part of this initiative, we will employ new and advanced technologies, including artificial intelligence and robotic process automation, that will allow us to drive significant improvements in operational efficiency and productivity. As a result of this initiative, we recognized $ 3  million in employee termination benefit costs in SG&A in the fourth quarter of fiscal year 2025 and anticipate additional one-time restructuring costs totaling approximately $ 11  million in fiscal year 2026.
Office Closures
In the second quarter of 2025, we announced a plan to close our satellite offices in Lisle, Illinois and Kansas City, Missouri and move work performed at those locations to our headquarters in Smithfield, Virginia. As a result, we estimated and accrued $ 4 million of employee termination benefit costs in SG&A in the consolidated statement of income in the second quarter of 2025 for personnel who are not expected to relocate.
Workforce Reduction
In the first quarter of 2025, we implemented a reduction in workforce initiative to streamline our operations and reduce operating expenses. We eliminated certain corporate and plant positions and recognized employee termination benefit costs totaling $ 9  million in the consolidated statement of income in the first quarter of 2025 with $ 6 million classified in SG&A and $ 2 million classified in cost of sales.
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NOTE 7: EMPLOYEE RETENTION TAX CREDITS
In 2020, the World Health Organization publicly characterized COVID-19 as a pandemic. The Company recognized a substantial amount of incremental costs during the pandemic, including costs to compensate employees who were not able to work due to facility closures, reduced work schedules or health related reasons.
The Coronavirus Aid, Relief, and Economic Security Act was signed into law in March 2020, which provided, among other things, an employee retention credit to eligible employers who paid qualified wages to employees during the pandemic. The employee retention credit represents a government grant. We recognized employee retention tax credits totaling $ 10  million and $ 87  million in the second quarters of 2025 and 2024, respectively, after concluding the recognition threshold had been met. All credits were classified in cost of sales in the consolidated statements of income with the exception of $ 1  million in the second quarter of 2024, which was classified in SG&A.

NOTE 8: DERIVATIVE FINANCIAL INSTRUMENTS 
Our pork production operations use various raw materials, primarily live hogs, corn, soybean meal and wheat, which are actively traded on commodity exchanges. We also use fuel and other energy commodities in our operations. We hedge these commodities when we determine conditions are appropriate to mitigate price risk. While this hedging may limit our ability to participate in gains from favorable commodity fluctuations, it also reduces the risk of loss from adverse changes in raw material prices. We attempt to closely match the commodity contract terms with the hedged item. We also periodically enter into interest rate swaps to hedge exposure to changes in interest rates on certain financial instruments and foreign exchange forward contracts to hedge certain exposures to fluctuating foreign currency rates.
Changes in commodity prices could have a significant impact on cash deposit requirements under our broker and counterparty agreements. Additionally, certain of our derivative contracts contain credit risk-related contingent features, which would require us to post additional cash collateral to cover net losses on open derivative instruments if our credit rating were sufficiently downgraded. As of December 28, 2025, the net liability position of our open derivative instruments subject to credit risk-related contingent features was not material.
The size and mix of our derivative portfolio vary from time to time based upon our analysis of current and future market conditions. The following table presents the fair values of our open derivative financial instruments on a gross basis.

Assets Liabilities
December 28,
2025 December 29,
2024 December 28,
2025 December 29,
2024
(in millions)
Derivatives using the “hedge accounting” method:

Commodity contracts $ 26   $ 13   $ 2   $ 37  

Derivatives using the “mark-to-market” method:

Commodity contracts 2   2   1   7  

Total fair value of derivative instruments $ 28   $ 15   $ 3   $ 44  

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The following tables reconcile the gross amounts of derivative assets and liabilities to the net amounts presented in our consolidated balance sheets and the related effects of cash collateral under netting arrangements that provide a legal right of offset of assets and liabilities.

December 28, 2025
Gross Amount of Derivative Assets/ Liabilities Netting of Derivative Assets/ Liabilities Net Derivative Assets/Liabilities Netting of Derivative and Cash Collateral Net Amount Presented in the Consolidated Balance Sheet (1)

(in millions)
Assets:
Commodity contracts $ 28   $ ( 3 ) $ 25   $ 3   $ 28  

Liabilities:
Commodity contracts $ 3   $ ( 3 ) $ —   $ —   $ —  

________________
(1) Net derivative assets are recorded in prepaid expenses and other current assets and include $ 7 million in excess collateral paid to and held by our brokers, which represents the initial margin that exceeded the related open derivative position. Net derivative liabilities are recorded in accrued expenses and other current liabilities.

December 29, 2024
Gross Amount of Derivative Assets/ Liabilities Netting of Derivative Assets/ Liabilities Net Derivative Assets/Liabilities Netting of Derivative and Cash Collateral Net Amount Presented in the Consolidated Balance Sheet (1)

(in millions)
Assets:
Commodity contracts $ 15   $ ( 13 ) $ 2   $ 37   $ 39  

Liabilities:
Commodity contracts $ 44   $ ( 13 ) $ 31   $ ( 23 ) $ 8  

________________
(1) Net derivative assets are recorded in prepaid expenses and other current assets. Net derivative liabilities are recorded in accrued expenses and other current liabilities. These balances include $ 60 million of cash collateral paid to and held by one of our brokers, $ 37 million of which represents the initial margin and exceeded the related open derivative liability position.
Hedge Accounting Method 
Cash Flow Hedges 
We enter into derivative instruments, such as futures, swaps and options contracts, to manage our exposure to the variability in expected future cash flows attributable to commodity price risk associated with the forecasted sale of fresh pork and the forecasted purchase of grains, hogs, and energy. In addition, we enter into interest rate swaps to manage our exposure to changes in interest rates associated with our variable interest rate debt and the forecasted issuance of fixed rate debt. Lastly, we enter into foreign exchange contracts to manage our exposure to the variability in expected future cash flows attributable to changes in foreign exchange rates associated with the forecasted purchase or sale of assets denominated in foreign currencies. As of December 28, 2025, substantially all of our commodity-related cash flow hedges were for transactions forecasted through June 2026.
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As of December 28, 2025, the notional volumes associated with open derivative instruments designated in cash flow hedging relationships were as follows:

Volume Metric
Lean hogs 722,560,000   Pounds
Corn 15,090,000   Bushels
Soybean meal 114,000   Tons
Natural Gas 1,200,000   Million BTU
Diesel 504,000   Gallons

The following table presents the effects on our consolidated financial statements of pre-tax gains and losses on derivative instruments designated in cash flow hedging relationships for the periods indicated:

Gains (Losses) Recognized in Other Comprehensive Income (Loss) on Derivative Gains (Losses) Reclassified from Accumulated Other Comprehensive Loss into Earnings
Fiscal Year Fiscal Year
2025 2024 2023 2025 2024 2023
(in millions)
Commodity contracts $ ( 8 ) $ ( 56 ) $ 10   $ ( 58 ) $ ( 10 ) 13  
Interest rate contracts —   —   —   ( 2 ) ( 2 ) ( 2 )
Foreign currency contracts —   1   2   —   1   1  
Total $ ( 8 ) $ ( 55 ) $ 11   $ ( 59 ) $ ( 11 ) $ 13  

As of December 28, 2025, there were deferred gains of $ 13  million, net of tax of $ 4  million, in accumulated other comprehensive loss. We expect to reclassify $ 3  million ($ 2  million net of tax) of deferred losses on closed derivative contracts into earnings within the next twelve months. We are unable to estimate the amount of deferred gains or losses related to open derivative contracts to be reclassified into earnings within the next twelve months as their values are subject to change. 
Fair Value Hedges 
We enter into derivative instruments (primarily futures contracts) that are designed to hedge changes in the fair value of firm commitments to buy grains and hogs. As of December 28, 2025, the notional volumes associated with open derivative instruments designated in fair value hedging relationships were as follows:

Volume Metric

Lean hogs 127,960,000   Pounds
Corn 2,550,000   Bushels
Soybeans 205,000   Bushels

The carrying values of hedged firm commitments designated in fair value hedge relationships as of December 28, 2025 and December 29, 2024 were immaterial. When the underlying inventories are acquired, the hedge relationship is discontinued and the fair value hedge adjustment is reclassified to inventories. The amount of fair value hedge gains remaining in inventories for which hedge accounting has been discontinued were immaterial as of December 28, 2025 and December 29, 2024.

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Mark-to-Market Method 
As of December 28, 2025, the notional volumes associated with open derivative instruments using the “mark-to-market” method were as follows:

Volume Metric
Commodity contracts:

Corn 12,710,000   Bushels
Soybean meal 124,000   Tons
Soybeans 1,825,000   Bushels

Natural gas 112,000   Million BTU

Diesel 1,008,000   Gallons

Foreign currency contracts 35,692,918   U.S. Dollars

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Derivative Impact on the Consolidated Statements of Income
The following table presents the effect of derivatives on the consolidated statements of income for the periods indicated.

Fiscal Year
2025 2024 2023
(in millions)
Sales:
Cash flow hedging — commodity contracts
$ ( 56 ) $ 18   $ 12  
Mark-to-market — commodity contracts
5   ( 16 ) 30  
Total derivative gain (loss) recognized in sales ( 51 ) 2   42  

Cost of sales:
Cash flow hedging — commodity contracts
( 2 ) ( 28 ) —  

Fair value hedging — commodity contracts:

Change in fair value of derivatives ( 2 ) 4   17  
Change in fair value of related hedged items 2   ( 5 ) ( 17 )
Gain (loss) on closed derivatives (1)
( 1 ) 10   5  

Mark-to-market — commodity contracts
3   ( 10 ) ( 14 )
Total derivative loss recognized in cost of sales —   ( 28 ) ( 9 )

Selling, general and administrative expenses:
Mark-to-market — foreign currency contracts
—   ( 2 ) —  

Interest expense:
Cash flow hedging — interest rate contracts
( 2 ) ( 2 ) ( 2 )

Discontinued operations:
Cash flow hedging - foreign exchange contracts
—   1   1  
Mark to market - foreign exchange contracts
—   3   2  
Total derivative gain recognized in discontinued operations —   4   3  

Total derivative gain (loss) $ ( 53 ) $ ( 25 ) $ 36  

________________
(1) Represents the amount of fair value hedge adjustment applied to the carrying amount of hedged assets that is recognized in cost of sales as the underlying hedged assets are relieved from inventories and charged to cost of sales.
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NOTE 9: EQUITY METHOD INVESTMENTS
Equity method investments consist of the following: 

Equity Investments % Owned December 28,
2025 December 29,
2024
(in millions)
Monarch 33   % $ 100   $ 95  
Align 50   % 91   83  
Other equity method investments Various 18   24  
Total investments $ 209   $ 202  

Monarch and Align operate renewable natural gas facilities, which refine methane gas that is captured from our Company-owned and contract grower hog farms into renewable natural gas. All significant operating decisions are made jointly between us and our investment partners, and therefore, we do not consolidate these entities.
On January 16, 2025, TPG Rise Climate (“TPG”), one of the other two equal joint venture partners in Monarch, delivered a sale notice under the joint venture agreement, which required Monarch to pursue a sale of the joint venture. A sale has not yet occurred and as a result, TPG may require that Monarch purchase TPG’s ownership interest in Monarch.

NOTE 10: ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
Accrued expenses and other current liabilities consist of the following:

December 28, 2025 December 29, 2024
(in millions)
Accrued payroll and related benefits $ 279   $ 339  
Litigation contingencies 149   141  
Accrued customer incentives and marketing 129   132  
Accrued self-insurance 67   53  
Other (1)
187   206  
Total accrued expenses and other current liabilities $ 811   $ 871  

________________
(1) Consists primarily of income taxes payable, accrued grower payments, current portion of pension and postretirement benefit obligations, accrued interest, accrued rent, accrued utilities and other accrued taxes.
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NOTE 11: DEBT
Long-term debt consists of the following:

December 28,
2025 December 29,
2024
(in millions)
4.25 % senior unsecured notes, due February 2027, net of unamortized debt issuance costs and discounts totaling $ 1 million and $ 1 million as of December 28, 2025 and December 29, 2024, respectively
$ 599   $ 599  
5.20 % senior unsecured notes, due April 2029, net of unamortized debt issuance costs and discounts totaling $ 2 million and $ 3 million as of December 28, 2025 and December 29, 2024, respectively
398   397  
3.00 % senior unsecured notes, due October 2030, net of unamortized debt issuance costs and discounts totaling $ 5 million and $ 7 million as of December 28, 2025 and December 29, 2024, respectively
495   493  
2.625 % senior unsecured notes, due September 2031, net of unamortized debt issuance costs and discounts totaling $ 6 million and $ 7 million as of December 28, 2025 and December 29, 2024, respectively
494   493  

Total long-term debt $ 1,986   $ 1,983  

Scheduled principal payments on debt for the next five years are as follows: 

Year (in millions)
2026 $ —  
2027 600  
2028 —  
2029 400  
2030 500  

Interest paid on our outstanding debts and other obligations for fiscal years 2025, 2024 and 2023 totaled $ 80 million, $ 79 million and $ 81 million, respectively.
Credit Facilities

December 28, 2025
Facility Capacity Borrowing
Base
Adjustment Outstanding
Borrowings Commercial
Paper
Borrowings Outstanding
Letters of
Credit Amount
Available
(in millions)
Senior Revolving Credit Facility $ 2,100   $ —   $ —   $ —   $ —   $ 2,100  
Securitization Facility 225   —   —   —   ( 27 ) 198  

Total credit facilities $ 2,325   $ —   $ —   $ —   $ ( 27 ) $ 2,298  

Senior Unsecured Revolving Credit Facility
In February 2025, we refinanced our $ 2,100 million senior unsecured revolving credit facility (“Senior Revolving Credit Facility”), extending the maturity date from May 21, 2027 to February 12, 2030 with the option to extend the maturity date for up to two one-year periods, subject to obtaining the lenders’ consent and satisfaction of certain other conditions. The Senior Revolving Credit Facility capacity remains at $ 2,100 million. As part of the new agreement, there are no longer any subsidiary guarantors under the Senior Revolving Credit Facility which also released the subsidiary guarantors from our Senior Unsecured Notes. The Senior Revolving Credit Facility bears interest at the Secured Overnight Financing Rate plus a margin ranging from 0.875 % to 1.50 % per annum, or, at our election, at a base rate plus a margin ranging from 0.00 % to 0.50 % per annum, in each case depending on our senior
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unsecured debt ratings. The Senior Revolving Credit Facility also contains financial maintenance covenants requiring us to maintain a maximum total consolidated leverage ratio (ratio of consolidated funded debt to consolidated capitalization, each as defined in the Senior Revolving Credit Facility) of 0.50 to 1.00 (which we may elect to increase to 0.55 to 1.00 with respect to any fiscal quarter in which a material acquisition is consummated and the immediately following three consecutive fiscal quarters, subject to certain restrictions) and a minimum interest coverage ratio (ratio of earnings before interest, taxes, depreciation and amortization (“EBITDA”) to consolidated interest expense, each as defined in the Senior Revolving Credit Facility) of 3.50 to 1.00.
Our Senior Revolving Credit Facility contains customary covenants, including, but not limited to, restrictions on our ability and that of our subsidiaries to merge and consolidate with other companies, incur indebtedness, grant liens or security interests on assets subject to their security interest, or enter into transactions with affiliates, each subject to certain exceptions as set forth therein. We are currently in compliance with the covenants under our Senior Revolving Credit Facility.
Accounts Receivable Securitization Facility
We maintain a $ 225 million accounts receivable securitization facility (“Securitization Facility”), which matures in November 2027. As part of the Securitization Facility, certain accounts receivable of our major domestic meat processing subsidiaries are sold to a wholly-owned “bankruptcy remote” special purpose vehicle (“SPV”). The SPV pledges all such accounts receivable not otherwise sold pursuant to the Monetization Facility (as defined below) as security for loans made, and letters of credit issued, by participating lenders under the Securitization Facility. The SPV is included in our consolidated financial statements and therefore the accounts receivable owned by it are included in our consolidated balance sheets. However, the accounts receivable owned by the SPV are separate and distinct from our other assets and are not available to our other creditors should we become insolvent. As of December 28, 2025, the SPV held $ 654 million of accounts receivable. We must maintain certain ratios related to the collection of our receivables as a condition of the Securitization Facility agreement. As of December 28, 2025, we had $ 27 million in letters of credit issued under the Securitization Facility. None of the letters of credit were drawn upon.
Monetization Facility
In addition to the Securitization Facility, until July 22, 2025, we maintained an uncommitted $ 250 million accounts receivable monetization facility (“Monetization Facility”). At Smithfield’s election and subject to the purchasing banks’ approval, certain accounts receivable were sold by the SPV to purchasing banks, so long as the uncollected outstanding amount of accounts receivable sold pursuant to the Monetization Facility did not exceed $ 250 million in the aggregate at any time, among other limitations. In the event of a sale, the purchasing banks assumed all credit risk related to the receivables while we maintained risk associated with customer disputes. We accounted for the sale of receivables to a purchasing bank by derecognizing the receivables from our consolidated balance sheet upon transfer of control to the purchasing bank, and recognized a discount on the sale in SG&A in the consolidated statement of income. The proceeds from the sale of receivables are included in net cash flows from operating activities in the consolidated statement of cash flows. On behalf of the purchasing banks, we serviced all receivables sold under the Monetization Facility.
In the first quarter of 2023, we sold $ 227 million of accounts receivable at a discount and received proceeds totaling $ 225 million. We reinvested $ 2,085 million, $ 4,094 million and $ 3,431  million of cash collections from customers in the revolving sale of accounts receivable to purchasing banks in fiscal years 2025, 2024 and 2023, respectively. We recognized charges totaling $ 5 million, $ 15 million and $ 12 million in fiscal years 2025, 2024 and 2023, respectively, attributable to the discount on the sale of accounts receivable in SG&A in the consolidated statements of income.
On July 22, 2025, we terminated the Monetization Facility and paid $ 232 million to participating banks to reacquire the outstanding balance of accounts receivable previously sold under the facility. The Monetization Facility was originally established to provide us with additional liquidity and working capital flexibility. In light of our liquidity position and internal capital resources as of July 22, 2025, we determined that the Monetization Facility was no
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longer cost-effective or necessary. There were no early termination penalties or other material exit costs incurred in connection with the termination of the Monetization Facility.

NOTE 12: LEASE OBLIGATIONS, COMMITMENTS AND GUARANTEES
Lease Obligations
We lease real estate, vehicles, machinery and other equipment. Additionally, we have contracts with independent farmers to raise our hogs that include a lease component for the use of the farmers’ facilities. Our leases may include options to extend or terminate the lease, variable lease payments based on usage of the underlying assets and residual value guarantees.
The following table presents the maturities of our lease obligations as of December 28, 2025:

Operating Leases Finance Leases Total
(in millions)
2026 $ 89   $ 3   $ 92  
2027 78   2   80  
2028 66   2   68  
2029 40   2   41  
2030 27   2   28  
After 2030 189   7   197  
Total lease payments $ 489   $ 17   $ 506  
Present value discount ( 96 ) —   ( 96 )
Present value of lease obligations $ 393   $ 17   $ 410  

The following table presents the weighted-average lease term and discount rate for our leases:

December 28,
2025 December 29,
2024
Weighted-average remaining lease term (years):
Finance leases 8.7 9.4
Operating leases 9.1 10.8
Weighted-average discount rate:
Finance leases 0.7   % 0.8   %
Operating leases 5.0   % 4.8   %

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The components of total lease cost included in the consolidated statements of income are presented in the following table:

Fiscal Year
2025 2024 2023
(in millions)
Operating lease cost $ 89   $ 83   $ 90  

Finance lease cost:
Amortization of leased assets 3   3   23  
Interest on lease obligations —   —   1  

Short-term lease cost (1)
62 95   96  
Variable lease cost (2)
29 23   23  
Total lease cost $ 183   $ 204   $ 234  

________________
(1) Represents the expense for leases with terms of one year or less, which are not included in the lease obligation.
(2) Represents the expense associated with lease payments that vary based on usage or changes in other circumstances, which are not included in the lease obligation.
The following table presents the classification of lease payments associated with our lease obligations in the consolidated statements of cash flows, as well as new, or modifications to existing, lease obligations entered into during the periods presented:

Fiscal Year
2025 2024 2023
(in millions)
Classification of lease payments:
Operating cash flows - finance leases (1)
$ —   $ —   $ 1  
Operating cash flows - operating leases 88   82   97  
Financing cash flows - finance leases 3   3   4  
New, or modifications to existing, finance lease obligations 1   —   1  
New, or modifications to existing, operating lease obligations 129   24   42  

________________
(1) Represents the interest component of our payments on finance leases.
Commitments
We have purchase commitments with certain livestock producers that obligate us to purchase all the livestock that these producers deliver. Other arrangements obligate us to purchase a fixed amount of livestock. We have purchase commitments under forward grain contracts that obligate us to purchase a fixed amount of grain. We also have contractual commitments to independent farmers who raise our hogs in exchange for a performance-based service fee payable upon delivery. We estimate the future obligations under these commitments based on the amounts that are fixed and determinable in the related contracts. There are additional variable components of these contracts not included in our estimates that are based on quantities delivered and performance. Additionally, we currently have minimum guaranteed royalty payments to license the Nathan’s Famous brand. Our estimated future obligations under these and other commitments for the next five years are as follows:
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Year (in millions)
2026 $ 3,447  
2027 2,003  
2028 1,545  
2029 1,277  
2030 854  

All minimum purchase commitments under these contracts were fulfilled in each of fiscal years 2025, 2024 and 2023.
In 2019, we announced that we planned to contribute up to $ 250 million to Align through 2028 to fund various projects as approved by Align’s board from time to time. As of December 28, 2025, we had contributed $ 121 million in capital toward these planned contributions. Should the board, of which we have 50 % of the voting power, choose not to approve additional projects, the remaining contributions would not be required.
We have committed to contribute up to $ 25 million to the TPG Rise Climate investment fund through July 2027. As of December 28, 2025, we had contributed $ 21 million in capital toward this commitment.
We had $ 88 million of committed funds related to approved capital expenditure projects as of December 28, 2025. These projects are expected to be funded with cash flows from operations and/or borrowings under credit facilities.
Guarantees
In the second quarter of 2025, Monarch refinanced its debt, repaying a debt facility of up to $ 61  million that Smithfield and certain other joint ventures partners in Monarch had jointly and severally guaranteed. Smithfield was released from the guaranty and no longer provides a guaranty of Monarch’s debt.

NOTE 13: INCOME TAXES
Income (loss) from continuing operations before income taxes consists of the following:

Fiscal Year
2025 2024 2023
(in millions)
U.S.
$ 1,219   $ 1,008   $ ( 134 )
Foreign 51   53   5  
Total income (loss) from continuing operations before income taxes $ 1,270   $ 1,061   $ ( 129 )

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Income Tax Expense
Income tax expense (benefit) from continuing operations consists of the following: 

Fiscal Year
2025 2024 2023
(in millions)
Current income tax expense:  
Federal $ 142   $ 161   $ 55  
State 31   19   33  
Foreign 16   —   —  
189   180   89  
Deferred income tax expense (benefit):  
Federal 93   72   ( 120 )
State —   8   ( 6 )
Foreign 1   11   ( 4 )
94   91   ( 130 )
Total income tax expense (benefit) $ 283   $ 271   $ ( 41 )

Effective Tax Rate Reconciliation
The following tables reconcile the federal statutory income tax rate to our effective tax rate:

Fiscal Year 2025
Amount Percent
(in millions)

U.S. federal statutory tax rate 267   21.0   %
State and local income taxes, net of federal income tax benefit (1)
23   1.8   %
Foreign tax effects:
      Statutory tax rate difference in Mexico 5   0.4   %
      Other 2   0.2   %

Cross-border tax laws ( 6 ) ( 0.5 ) %
Tax credits: (2)

Research and development tax credits ( 10 ) ( 0.8 ) %
Other ( 3 ) ( 0.2 ) %

Nontaxable or nondeductible items (3)
6   0.5   %
Change in unrecognized tax benefits 1   0.1   %

Other ( 1 ) ( 0.1 ) %
Effective tax rate $ 283   22.3   %

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Fiscal Year
2024 2023
Federal income taxes at statutory rate 21.0   % 21.0   %
Unrecognized tax benefits 3.5   ( 13.0 )
State income taxes, net of federal tax benefit 1.7   ( 3.5 )
Impact of foreign operations 0.5   0.1  
Equity method investments (4)
0.2   7.4  
Officers’ life insurance
( 0.1 ) 2.9  
Foreign income taxes ( 0.4 ) 4.3  
Tax credits (2)
( 1.3 ) 13.0  

Other 0.5   —  
Effective tax rate 25.5   % 32.2   %

________________
(1) State taxes in Illinois and Virginia in aggregate made up the majority (greater than 50 percent) of the tax effect in this category.
(2) We recognized federal tax credits of $ 13 million, $ 14 million and $ 17 million in fiscal years 2025, 2024 and 2023 , respectively.
(3) Consists primarily of a non-taxable gain for a one-time benefit on company-owned life insurance policies and nondeductible executive compensation.
(4) The results of our equity method investments are excluded from income (loss) from continuing operations before income taxes. However, to the extent applicable, income taxes on our equity method investments are included in income tax expense (benefit), which can have significant impact on our computed effective tax rate.

The impact of the reconciling items between the federal statutory rate and our effective tax rate were more pronounced in fiscal year 2023 largely due to the pre-tax loss of $ 129 million in fiscal year 2023 compared to pre-tax income of $ 1,270 million and $ 1,061 million in fiscal years 2025 and 2024, respectively.
Income Taxes Receivable and Payable
Income taxes receivable totaled $ 56 million and $ 99 million as of December 28, 2025 and December 29, 2024, respectively, and were included in prepaid expenses and other current assets on the consolidated balance sheets. Income taxes payable totaled $ 30 million and $ 9  million as of December 28, 2025 and December 29, 2024, respectively, and were included in accrued expenses and other current liabilities on the consolidated balance sheets.
Income Taxes Paid
We paid income taxes totaling $ 124  million, $ 130  million and $ 108  million in fiscal years 2025, 2024 and 2023, respectively. The following table provides income taxes paid (net of refunds received) by primary jurisdiction for fiscal year 2025.

(in millions)
Federal $ 103  
State (1)
19  

Foreign 3  
Total income taxes paid $ 124  

_____________
(1) In fiscal year 2025, income taxes paid (net of refunds received) in the state of California was $ 7  million, which exceeded 5 percent of total income taxes paid (net of refunds received).

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Deferred Tax Assets and Liabilities
The tax effects of temporary differences between the tax basis and book basis of our assets and liabilities are presented in the table below: 

December 28,
2025 December 29,
2024
(in millions)
Deferred tax assets:
Research and development expenses $ 30   $ 104  
Operating lease obligations 91   79  
Accrued expenses and other current liabilities 49   46  
Pension and other retirement liabilities 43   72  
Tax credits and net operating losses (1)
18   26  
Employee benefits 15   14  
Deferred payroll taxes —   3  
Other 11   28  
Total deferred tax asset before valuation allowance 256   372  
Valuation allowance (2)
( 4 ) ( 8 )
Total deferred tax asset $ 252   $ 364  

Deferred tax liabilities:
Property, plant and equipment 416   412  
Intangible assets 310   307  
Operating lease assets 89   78  
Inventory 43   38  
Investments 30   27  
Accrued expenses and other current liabilities 7   12  
Other 15   8  
Total deferred tax liability $ 910   $ 882  

Net deferred tax liability $ 658   $ 518  

________________
(1) We have $ 446 million of gross state net operating losses, $ 33 million of which have no expiration, and $ 413 million that will expire between 2026 and 2045. We have $ 2 million of state tax credits that will expire between 2026 and 2039.
(2) Valuation allowances are established if the Company’s deferred tax assets are not more likely than not to be realized. The valuation allowance primarily relates to state credits and state net operating loss carryforwards, which are expected to expire unused. The valuation allowance decreased by $ 4  million as a result of utilizing net operating losses and applying the interest expense limitation deduction.

We consider the earnings of our foreign subsidiaries to be indefinitely reinvested as we intend to use these earnings in our foreign operations. The amount of foreign subsidiary net earnings that was considered indefinitely reinvested was $ 184 million and $ 164 million as of December 28, 2025 and December 29, 2024, respectively, which is considered previously taxed income. The determination of any unrecorded deferred tax asset or liability on the remaining excess carrying amount of our investments over their respective tax bases is not practicable due to the uncertainty of how these investments would be recovered and such differences are not expected to be recognized in the foreseeable future.
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One Big Beautiful Bill
On July 4, 2025, the Tax Relief for American Families and Workers Act of 2025 (commonly known as the “One Big Beautiful Bill” or “OBBB”) was signed into law. This comprehensive legislation made several significant changes to federal tax law, including:
• Permanently reinstating 100% bonus depreciation and adding 100% bonus deprecation for real property placed in service after January 19, 2025 and used in production activity.
• Permanently reinstating the immediate expensing of R&D in the U.S, which impacted years 2022 and beyond.
• Permanently restoring the EBITDA-based limitation for interest deduction under Section 163(j) of the IRS Tax Code.
In fiscal year 2025, following the enactment of the OBBB, we reclassified approximately $ 77  million of deferred tax assets related to R&D capitalization to prepaid expenses and other current assets.
Unrecognized Tax Benefits
A reconciliation of the beginning and ending liability, excluding interest and penalties, for unrecognized tax benefits is as follows:

(in millions)

Balance, January 1, 2023 $ 28  
Additions for tax positions taken in fiscal year 2023 1  

Additions for tax positions taken for prior years 17  

Lapse of statute of limitations ( 1 )
Balance, December 31, 2023 45  
Additions for tax positions taken in fiscal year 2024 5  

Additions for tax positions taken for prior years 59  
Reductions for cash remittances for tax positions taken in prior years ( 17 )

Lapse of statute of limitations ( 5 )
Balance, December 29, 2024 87  
Additions for tax positions taken in fiscal year 2025 2  
Reductions for tax positions taken in prior years ( 9 )

Lapse of statute of limitations ( 2 )
Balance, December 28, 2025 $ 77  

During fiscal years 2025, 2024 and 2023, we recognized interest and penalties totaling $ 3 million, $ 2 million, and $ 4 million, respectively, within income tax expense (benefit). The unrecognized tax benefits, if recognized, would have favorably affected income tax expense by $ 25 million, $ 24 million and $ 25 million in fiscal years 2025, 2024 and 2023, respectively. It is not practicable at this time to estimate the amount by which the liability for unrecognized tax benefits will change in the next twelve months.
We operate in multiple taxing jurisdictions, both within the U.S. and outside of the U.S., and are subject to examination from various tax authorities. The liability for unrecognized tax benefits included $ 14 million an d $ 11 million of accrued interest as of December 28, 2025 and December 29, 2024, respectively.
We are currently being audited in several tax jurisdictions and remain subject to examination until the statute of limitations expires for the respective tax jurisdiction. Within the U.S. and Mexico, we may be subject to audit by various tax authorities, and our subsidiaries operating within each country may be subject to different statute of
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limitations expiration dates. We have concluded all U.S. federal income tax matters through the tax year ended January 1, 2017. We are currently under U.S federal examination for all subsequent tax years through December 28, 2025. We are also subject to examination from tax authorities in Mexico and certain U.S. states for the tax years ended January 3, 2021 through December 28, 2025.

NOTE 14: PENSION AND OTHER RETIREMENT PLANS
Company Sponsored Defined Benefit Pension Plans
We sponsor several qualified and non-qualified defined benefit pension plans. Benefits under the qualified plans were frozen in 2021 for all non-union participants.
The following table presents a reconciliation of the pension benefit obligation, plan assets and the funded status of our pension plans:

  December 28,
2025 December 29,
2024
  (in millions)
Change in benefit obligation:  
Benefit obligation at beginning of year $ 1,799   $ 1,829  
Service cost 12   12  
Interest cost 100   99  

Benefits paid ( 121 ) ( 116 )
Actuarial (gain) loss 26   ( 24 )

Benefit obligation at end of year 1,817   1,799  

Change in plan assets: (1)

Fair value of plan assets at beginning of year 1,498   1,551  
Actual return on plan assets 174   6  
Employer contributions 72   56  

Benefits paid ( 121 ) ( 116 )

Fair value of plan assets at end of year 1,623   1,498  
Funded status $ 194   $ 302  

Amounts recognized in the consolidated balance sheets:
Net long-term pension obligation 207   279  
Accrued expenses and other current liabilities 17   23  
Other assets 30   —  
Net amount recognized at end of year $ 194   $ 302  

________________
(1) Excludes the assets and related activity of our non-qualified defined benefit pension plans. The fair value of assets related to our non-qualified plans was $ 172 million and $ 141 million as of December 28, 2025 and December 29, 2024, respectively. These assets, which are held in a rabbi trust and remain subject to the claims of our general creditors, are recorded in prepaid expenses and other current assets, and other assets within the consolidated balance sheets.

The accumulated benefit obligation for all defined benefit pension plans was $ 1,791 million and $ 1,774 million as of December 28, 2025 and December 29, 2024, respectively. The following table provides information for the Company's defined benefit plans with an accumulated and projected benefit obligation in excess of plan assets.
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December 28,
2025 December 29,
2024
(in millions)
Aggregate accumulated benefit obligation $ 204   $ 1,774  
Aggregate projected benefit obligation 224   1,799  
Aggregate fair value of plan assets —   1,498  

The following table presents the pre-tax unrecognized items included as components of accumulated other comprehensive loss related to our defined benefit pension plans as of the dates indicated:

December 28,
2025 December 29,
2024
(in millions)
Unrecognized actuarial loss $ ( 485 ) $ ( 552 )
Unrecognized prior service cost ( 1 ) ( 2 )

The following table presents the components of the net periodic pension cost for the periods indicated.

Fiscal Year
2025 2024 2023
(in millions)
Interest cost $ 100   $ 99   $ 98  
Amortization 21   18   $ 18  
Service cost 12   12   $ 13  
Expected return on plan assets ( 105 ) ( 107 ) $ ( 107 )

Net periodic pension cost $ 28   $ 22   $ 22  

The components of net periodic pension cost other than service cost, which is included in operating profit, are included in non-operating gains in the consolidated statements of income.
The following table shows our weighted average assumptions for the periods indicated:

Fiscal Year
2025 2024 2023
Discount rate to determine net periodic pension cost 5.78   % 5.57   % 5.58   %
Discount rate to determine benefit obligation 5.69   5.78   5.57  
Expected long-term rate of return on plan assets 7.25   7.05   7.25  
Rate of compensation increase 4.00   4.00   4.00  

We use a third-party actuary to assist in the determination of assumptions used and the measurement of our pension obligation and related costs. We review and select the discount rate to be used in connection with our pension obligation annually. In determining the discount rate, a hypothetical bond portfolio is constructed based on bonds (with an AA rating or better) whose cash flows from coupons and maturities match the year-by-year projected benefit payments from defined benefit pension plans. We use the resulting yield of this portfolio to determine the discount rate applicable to our obligation. A similar methodology is used to develop the discount rate applicable to service cost.
To determine the expected long-term return on plan assets, we consider the current and anticipated asset allocations, as well as historical and estimated returns on various categories of plan assets. Long-term trends are evaluated relative to market factors such as inflation, interest rates and fiscal and monetary policies in order to assess the capital market assumptions. Actual results that differ from our assumptions are recorded in accumulated other comprehensive loss and amortized over future periods and, therefore, affect expense in future periods.
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Pension plan assets may be invested in cash and cash equivalents, equities, commingled funds, debt securities and alternative investments. Our investment policy for the pension plans is to balance risk and return through a diversified portfolio of high-quality equity and fixed income securities. Maturity for fixed income securities is managed such that sufficient liquidity exists to meet near-term benefit payment obligations. The plans retain outside investment advisors to manage plan investments within parameters established by our plan trustees. 
The following table presents the fair value of our qualified pension plan assets by major asset category. The allocation of our pension plan assets is based on the target range presented in the following table. 

Asset category: December 28,
2025 December 29,
2024 Target Range %
(in millions)  
Cash and cash equivalents, net of unsettled transactions $ 141   $ 198   0 - 15 %

Equity securities 541   511   30 - 50 %

Debt securities 659   493   30 - 50 %

Alternative assets 282   296   2 - 25 %

Total plan assets $ 1,623   $ 1,498    

See “Note 17: Fair Value Measurements” for additional information about the fair value of our pension assets.
The funding requirement for our qualified pension plans in fiscal year 2026 is expected to be $ 5 million. We also expect to contribute $ 22 million to our non-qualified pension plans to cover expected benefit payments.
Expected future benefit payments for our defined benefit pension plans are as follows: 

Fiscal Year (in millions)
2026 $ 119  
2027 122  
2028 125  
2029 126  
2030 128  
2031 - 2035 674  

Multiemployer Defined Benefit Pension Plans
In addition to our Company sponsored defined benefit pension plans, we contribute to several multiemployer defined benefit pension plans under collective bargaining agreements that cover certain of our union-represented employees. The risks of participating in such plans are different from the risks of single-employer plans, in the following respects:
• Assets contributed to a multiemployer plan by one employer may be used to provide benefits to employees of other participating employers.
• If a participating employer ceases to contribute to a multiemployer plan, the unfunded obligation of the plan may be borne by the remaining participating employers.
• If we were to withdraw from a multiemployer plan, we may be required to pay the plan an amount based on the underfunded status of the plan and on the history of our participation in the plan prior to withdrawal. This is referred to as a withdrawal liability.
Each multiemployer plan in which we participate has a certified zone status as currently defined by the Pension Protection Act of 2006. The zone status is based on information provided by each plan and is certified by the plan's actuary. The following are descriptions of the zone status types based on criteria established under the Internal Revenue Code (“IRC”):
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• “Red” Zone —Plan has been determined to be in “critical status” and is generally less than 65% funded. A rehabilitation plan, as required under the IRC, must be adopted by plans in the “red” zone. Plan participants may be responsible for the payment of surcharges, in addition to the contribution rate specified in the applicable collective bargaining agreement, for a plan in “critical status,” in accordance with the requirements of the IRC.
• “Yellow” Zone —Plan has been determined to be in “endangered status” and is generally less than 80% funded. A funding improvement plan, as required under the IRC, must be adopted.
• “Green” Zone —Plan has been determined to be neither in “critical status” nor in “endangered status,” and is generally at least 80% funded.
The IAM National Pension Fund National Pension Plan was in the “red” zone, and all other plans in which we participate were in the “green” zone for the two most recent benefit plan years that have been certified.
The following table summarizes information about the multiemployer plans in which we participate, including our contributions to the plans. Our contributions to these plans did not exceed 5% of total plan contributions for any plan year presented.

Fiscal Year
Plan EIN / PN (1)
2025 2024 2023 Expiration Dates of Collective Bargaining Agreements
(in millions)  
United Food and Commercial Workers International Union Industry Pension Fund 51-6055922 / 001 $ 1   $ 1   $ 1   Multiple (2)

Central Pension Fund of the International Union of Operating Engineers and Participating Employers 36-6052390 / 001 —   —   —   October 2028

IAM National Pension Fund National Pension Plan 51-6031295 / 002 —   —   —   February 2026

Total contributions to multiemployer plans $ 2   $ 1   $ 2    

________________
(1) Represents the Employer Identification Number and the three-digit plan number assigned to a plan by the Internal Revenue Service.
(2) We have multiple collective bargaining agreements associated with the United Food and Commercial Workers International Union Industry Pension Fund. These agreements are currently scheduled to expire between January 2026 and May 2028.
Other Post-Employment Benefit Plans
We sponsor defined contribution plans (401(k) plans) covering substantially all U.S. employees. The amount of employee contributions we match varies depending on the plan or other factors, but is based primarily on each participant’s level of contribution and cannot exceed the maximum allowable for tax purposes. Total Company contributions were $ 63 million, $ 68 million, and $ 67 million , in fiscal years 2025, 2024 and 2023, respectively.
We also provide health care and life insurance benefits for certain retired employees. These plans are unfunded and generally pay covered costs reduced by retiree premium contributions, co-payments and deductibles. We retain the right to modify or eliminate these benefits. We consider disclosures related to these plans immaterial to the consolidated financial statements.

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NOTE 15: EQUITY 
Stock Split
On January 17, 2025, the Company’s board of directors and shareholder approved a 380,069.232 -for-one stock split of its issued and outstanding shares of common stock, resulting in issued and outstanding shares of common stock of 380,069,232 , which was effected through filing of an amendment to the Company’s articles of incorporation on January 17, 2025. As part of the amendment, the number of authorized shares of common stock was revised to 5,000,000,000 , the par value of which was not adjusted, and 100,000,000 shares of preferred stock were authorized. All share and per share amounts for all periods presented in the accompanying financial statements have been adjusted retroactively to reflect this stock split.
Initial Public Offering
On January 29, 2025, we completed our IPO of 26,086,958 shares of common stock, representing 7 % of the total outstanding shares, at a price of $ 20.00 per share. We issued 13,043,479 shares of common stock bringing the total number of outstanding shares to 393,112,711 . The remaining 13,043,479 shares of common stock were sold by WH Group, through its indirect wholly owned subsidiary SFDS UK Holdings Limited (“SFDS UK”), our only shareholder at the time. WH Group granted the underwriters a 30-day option to purchase up to 3,913,042 additional shares of our common stock. On February 20, 2025, the underwriters partially exercised that option and purchased 2,506,936 additional shares of common stock from WH Group. We received net proceeds from the IPO of $ 236  million after deducting underwriting discounts, commissions and fees.
Secondary Offering
On September 8, 2025, WH Group, through its indirect wholly owned subsidiary SFDS UK, sold another 22,461,452 shares of our common stock in a secondary offering. The sale did not affect the number of shares outstanding, nor did we receive any proceeds from the sale of stock by WH Group. Following this offering, WH Group owns approximately 87 % of our outstanding common stock.
Stock-Based Compensation
In connection with the IPO, we granted to certain of our directors and employees and certain directors and employees of WH Group: (1) options to purchase  9,822,467 shares of common stock with an exercise price equal to the IPO price of $ 20.00 per share and (2) 1,527,000 RSUs. The stock options and substantially all RSUs vest over a five year period, with 20 % vesting each year. The stock options and RSUs are expected to be settled in shares of our common stock.
We recognized compensation expense totaling $ 9  million associated with these equity instruments in fiscal year 2025. The related income tax benefit was immaterial. There was no compensation expense capitalized as part of inventory or fixed assets. Unrecognized compensation expense totaled $ 37  million as of December 28, 2025, which is expected to be recognized on a straight-line basis over the remaining vesting period of 4.1 years. No compensation expense was recognized for stock options and RSUs granted to directors and employees of WH Group. Such awards are accounted for as a dividend upon issuance of the shares based on the grant-date fair value.
Stock Options
The fair value of stock options was estimated on the grant date at $ 3.05 per share using the Black-Scholes option pricing model. The stock options were valued in five separate tranches according to the expected life of each tranche. The following table summarizes the weighted average results of assumptions used in determining the fair value of the stock options.
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Expected annual volatility (1)
25.8  
%

Dividend yield
5.5  
%

Risk-free interest rate
4.4  
%

Expected term (years) (2)
5

________________
(1) The expected annual volatility was based on the historical volatility of comparable companies.
(2) The expected term of options granted represents the period of time that options are expected to be outstanding.

The following table summarizes stock option activity as of and for the fiscal year ended December 28, 2025.

Number of Stock Options
Weighted Average Exercise Price
Weighted Average Remaining Contractual Term
(in years)
Aggregate Intrinsic Value
(in millions)

Outstanding as of December 29, 2024 —   $ —  
Granted 9,822,467   $ 20.00  
Forfeited ( 460,350 ) $ 20.00  
Outstanding as of December 28, 2025 9,362,117   $ 20.00   9.1 $ 23  
Exercisable as of December 28, 2025 —   $ —  

RSUs
The following table summarizes RSU activity as of and for the fiscal year ended December 28, 2025.

Number of RSUs

Outstanding as of December 29, 2024 —  
Granted 1,527,000  
Forfeited ( 70,300 )
Outstanding as of December 28, 2025 1,456,700  

Accumulated Other Comprehensive Loss
The following tables present the beginning and ending balances of accumulated other comprehensive loss by component.

Foreign Currency Translation Pension Accounting Hedge Accounting (1)
Accumulated Other Comprehensive Loss
(in millions)
Balance, January 1, 2023 $ ( 327 ) $ ( 389 ) $ 8   $ ( 708 )
Other comprehensive income (loss), net of tax 193   16   ( 1 ) 208  
Balance, December 31, 2023 ( 134 ) ( 373 ) 8   ( 500 )
Other comprehensive loss, net of tax ( 17 ) ( 44 ) ( 33 ) ( 95 )
European operations carve-out 143   —   —   143  
Balance, December 29, 2024 ( 8 ) ( 418 ) ( 26 ) ( 452 )
Other comprehensive income, net of tax 51   49   38   138  
Balance, December 28, 2025 $ 42   $ ( 369 ) $ 13   $ ( 314 )

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________________
(1) As of December 31, 2023 accumulated other comprehensive loss included a $ 29  million gain related to option premiums, which are excluded from our assessment of hedge effectiveness. This amount represents the change in fair value of options designated in cash flow hedging relationships that was not amortized into earnings and for which the underlying transactions have not yet affected earnings. The gain or loss for all other balance sheet dates presented were not material.
Other Comprehensive Income (Loss)
The following table presents the details of other comprehensive income (loss).

Fiscal Year
2025 2024 2023
Before Tax Tax After Tax Before Tax Tax After Tax Before Tax Tax After Tax
(in millions)
Continuing operations:
Foreign currency translation:
Translation gains (losses) (1)
$ 77   0 $ —   $ 77   $ ( 130 ) $ —   $ ( 130 ) $ 75   $ —   $ 75  

Retirement benefits:
Actuarial gains (losses) 43   ( 10 ) 33   ( 79 ) 19   ( 60 ) 2   —   1  

Amortization of actuarial losses and prior service credits reclassified to non-operating gains
21   ( 5 ) 16   21   ( 5 ) 16   18   ( 4 ) 14  

Derivatives:
Gains (losses) arising during the period ( 8 ) 2   ( 6 ) ( 56 ) 14   ( 41 ) 10   ( 2 ) 7  
(Gains) losses reclassified to sales 56   ( 14 ) 42   ( 18 ) 5   ( 13 ) ( 12 ) 3   ( 9 )
Losses reclassified to cost of sales 2   —   1   28   ( 7 ) 21   —   —   —  

Losses reclassified to interest expense 2   —   1   2   —   1   2   —   1  

Total other comprehensive income (loss) from continuing operations $ 193   $ ( 28 ) $ 164   $ ( 232 ) $ 25   $ ( 207 ) $ 93   $ ( 4 ) $ 88  

Discontinued operations:
Foreign currency translation:
Translation gains (1)
—   —   —   77   —   77   144   —   144  
Retirement benefits:
Amortization of actuarial losses and prior service (credits) reclassified to non-operating gains
—   —   —   —   —   —   1   —   1  
Derivatives:
Derivative gains arising during the period —   —   —   1   —   1   2   —   2  
Derivative gains reclassified to sales —   —   —   ( 1 ) —   ( 1 ) ( 1 ) —   ( 1 )
Total other comprehensive income (loss) from discontinued operations $ —   $ —   $ —   $ 76   $ —   $ 76   $ 145   $ —   $ 145  

Total other comprehensive income (loss)
$ 193   $ ( 28 ) $ 164   $ ( 155 ) $ 25   $ ( 130 ) $ 238   $ ( 5 ) $ 234  
Other comprehensive income (loss) attributable to noncontrolling interest 26   —   26   ( 35 ) —   ( 35 ) 25   —   25  
Other comprehensive income (loss) attributable to Smithfield $ 167   $ ( 28 ) $ 138   $ ( 120 ) $ 25   $ ( 95 ) $ 213   $ ( 5 ) $ 208  

________________
(1) We consider the earnings in our non-U.S. subsidiaries to be indefinitely reinvested, and accordingly, record no deferred income taxes on such amounts. The twelve months ended December 28, 2025, December 29, 2024 and December 31, 2023 included $ 26 million of translation gains and $ 35 million of translation losses, and $ 25 million of translation gains, respectively, attributable to NCI s, which are included in redeemable NCI s on the consolidated balance sheet.
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NOTE 16: EARNINGS AND DIVIDENDS PER SHARE
The computation of basic earnings per share (“EPS”) is based on the weighted-average shares of common stock outstanding during the period. Diluted EPS adjusts basic EPS for the dilutive effect of stock options and RSUs. The incremental shares from stock options and RSUs are computed using the treasury stock method. There were no adjustments to the numerator in the computations of earnings per share for the periods presented.
The following table provides the weighted-average shares used in the denominator for those computations.

Twelve Months Ended
December 28,
2025 December 29,
2024 December 31,
2023

Basic weighted-average shares outstanding 392,037,699   380,069,232   380,069,232  
Add: Dilutive effect of stock options and RSUs 663,470   —   —  
Diluted weighted-average shares outstanding (1)
392,701,169   380,069,232   380,069,232  

__________________
(1) We excluded 6,986,437 stock options from the computation of diluted weighted-average shares outstanding for the twelve months ended December 28, 2025, because their effect would have been anti-dilutive.

In fiscal year 2025, we declared and paid dividends of $ 1.00 per share of common stock.

NOTE 17: FAIR VALUE MEASUREMENTS 
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. We are required to consider and reflect the assumptions of market participants in fair value calculations. These factors include nonperformance risk (the risk that an obligation will not be fulfilled) and credit risk, both of the reporting entity (for liabilities) and of the counterparty (for assets). 
We use, as appropriate, a market approach (generally, data from market transactions), an income approach (generally, present value techniques), and/or a cost approach (generally, replacement cost) to measure the fair value of an asset or liability. These valuation approaches incorporate inputs, such as observable, independent market data, that we believe are predicated on the assumptions market participants would use to price an asset or liability. These inputs may incorporate, as applicable, certain risks such as nonperformance risk, which includes credit risk. 
The FASB has established a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. The fair value hierarchy gives the highest priority to quoted market prices (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of inputs used to measure fair value are as follows: 
• Level 1 —Quoted prices in active markets for identical assets or liabilities accessible by the reporting entity.
• Level 2 —Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.
• Level 3 —Unobservable for an asset or liability. Unobservable inputs should only be used to the extent observable inputs are not available.
We have classified assets and liabilities measured at fair value based on the lowest level of input that is significant to the fair value measurement. For the periods presented, we had no transfers of assets or liabilities between levels within the fair value hierarchy. The timing of any such transfers would be determined at the end of each reporting period.

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Assets and Liabilities Measured at Fair Value on a Recurring Basis  
The following tables set forth, by level within the fair value hierarchy, our financial assets and liabilities, including assets held in rabbi trusts used to fund our non-qualified defined benefit pension plans and deferred compensation plans, that were measured at fair value on a recurring basis.

December 28, 2025 December 29, 2024
Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
(in millions)
Assets:

Commodity derivative contracts $ 26   $ 2   $ —   $ 28   $ 9   $ 6   $ —   $ 15  

Exchange traded funds 135   —   —   135   —   —   —   —  
Mutual funds (1)
71   —   —   78   74   —   —   84  
Insurance contracts —   —   —   —   —   104   —   104  
Total $ 232   $ 2   $ —   $ 241   $ 83   $ 110   $ —   $ 202  

Liabilities:

Commodity derivative contracts $ 3   $ —   $ —   $ 3   $ 32   $ 12   $ —   $ 44  

Total $ 3   $ 1   $ —   $ 3   $ 32   $ 12   $ —   $ 44  

__________________
(1) Institutional funds that are not publicly traded are estimated at fair value using the net asset value per share of the investment as a practical expedient and are not categorized in the fair value hierarchy. Therefore, the sum of the values categorized in the fair value hierarchy above do not agree to the total.
The following are descriptions of the valuation methodologies and key inputs used to measure financial assets and liabilities recorded at fair value on a recurring basis:
• Derivatives— Derivatives classified within Level 1 are valued using quoted market prices. In some cases where quoted market prices are not available, we value the derivatives using market-based pricing models that utilize the net present value of estimated future cash flows to calculate fair value, in which case the measurements are classified within Level 2. These valuation models make use of market-based observable inputs, including exchange traded prices and rates, yield curves, credit curves and measures of volatility. Level 3 derivatives are valued based on diesel fuel prices and use both observable and unobservable inputs. There is a lack of price transparency with respect to forward prices for diesel fuel. Such unobservable inputs are significant to the diesel fuel derivative contract valuation methodology.
• Exchange-traded funds (“ETFs”)— ETFs consist of publicly traded investment funds that are valued using quoted market prices on active exchanges and are categorized in Level 1 within the fair value hierarchy.
• Mutual funds— Mutual funds consist of publicly traded funds and other institutional funds that are not publicly traded. Publicly traded mutual funds are measured at fair value using quoted market prices and are categorized in Level 1 within the fair value hierarchy.
• Insurance contracts— Insurance contracts are valued at their cash surrender value using the daily asset unit value which is based on the quoted market price of the underlying securities and classified within Level 2.
Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis 
Certain assets and liabilities are measured at fair value on a nonrecurring basis after initial recognition; that is, the assets and liabilities are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances, for example, when there is evidence of impairment. As of December 28, 2025 and December 29, 2024, we had no significant assets or liabilities that were measured and recorded at fair value on a nonrecurring basis after initial recognition.
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Redeemable Noncontrolling Interest
The redemption value for the NCI in Altosano is fair value. We estimate the redemption value of Altosano using an income and a market approach. Under the income approach, fair value is estimated by using the projected discounted cash flows. Under the market approach, the fair value is estimated by reference to guideline companies that are reasonably comparable based on the valuation multiples of EBITDA. The significant unobservable inputs used in the estimation of the fair value have an inherent measurement uncertainty that if changed could result in higher or lower fair value measurements as of the reporting date. The following table provides the significant unobservable level 3 inputs used in the valuation.

Unobservable Inputs December 28, 2025 December 29, 2024
Weighted-average cost of capital 10   % 9   %
Growth rate 3   % 3   %
EBITDA multiple 8.75 x 10 x
Control premium 25   % 25   %

Pension Plan Assets
The following table summarizes our qualified pension plan assets measured at fair value on a recurring basis (at least annually):

December 28, 2025 December 29, 2024
  Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
  (in millions)
Cash and cash equivalents $ 100   $ —   $ —   $ 100   $ 153   $ —   $ —   $ 153  

Equity securities:
U.S. common stock:
Health care 1   —   —   1   1   —   —   1  
Financial services 3   —   —   3   2   ( 1 ) —   1  
Retail and consumer products —   —   —   —   1   —   —   1  

Information technology 1   —   —   1   1   —   —   1  
Manufacturing and industrials 1   —   —   1   1   —   —   1  

U.S. Equity Fund 1   —   —   1   1  —   —  —   —  —   —  —  
International common stock 3   —   —   3   2   —   —   2  

Commingled funds: (1)

Global equity —  —  —  530   —  —  —  504  
Corporate debt securities —  —  —  179   —  —  —  166  

Fixed income securities:
Corporate debt 262   1   —   263   248   1   —   250  
Government debt 227   ( 10 ) —   217   105   ( 27 ) —   77  

Alternative investments:
Diversified investment funds (1)
—  —  —  2   —  —  —  3  

Limited partnerships (1)
—  —  —  280   —  —  —  293  

Total fair value $ 600   $ ( 9 ) $ —   $ 1,582   $ 513   $ ( 27 ) $ —   $ 1,452  
Unsettled transactions, net 41   46  
Total plan assets $ 1,623   $ 1,498  

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(1) Assets that are measured at fair value using NAV per share as a practical expedient have not been categorized in the fair value hierarchy.
The following are descriptions of the valuation methodologies and key inputs used to measure pension plan assets recorded at fair value:
• Cash and cash equivalents— Cash equivalents include highly liquid investments with original maturities of three months or less. Due to their short-term nature, the carrying amount of these instruments approximates the estimated fair value. Actively traded money market funds are classified as Level 1 and included in cash and cash equivalents.
• Equity securities— The fair value of equity securities is based on quoted prices in active markets and classified as Level 1. Level 1 financial instruments include highly liquid instruments with quoted prices, such as equities and mutual funds traded in active markets.
• Commingled funds— The fair value of commingled funds is measured using the NAV per share practical expedient and have not been categorized in the fair value hierarchy. The NAV per share is based on the fair value of the underlying assets owned by the funds, minus its liabilities then divided by the total number of shares outstanding. Underlying assets of commingled funds primarily consist of liquid equity and fixed income securities with quoted prices in active markets.
• Fixed income— When available, the fair value of fixed income securities is based on quoted prices in active markets and classified as Level 1. Level 1 financial instruments include highly liquid instruments with quoted prices, such as equities and mutual funds traded in active markets.
If quoted prices are not available, fair values of fixed income instruments are obtained from pricing services, broker quotes or other model-based valuation techniques with observable inputs and classified as Level 2. The nature of these fixed income instruments include instruments for which quoted prices are available but traded less frequently, instruments whose fair value has been derived using a model where inputs to the model are directly observable in the market, or can be derived principally from or corroborated by observable market data and securities that are valued using other financial instruments, the parameters of which can be directly observed. Level 2 fixed income instruments include corporate debt securities.
• Alternative investments— The fair value of alternative investments is measured using the NAV per share practical expedient and have not been categorized in the fair value hierarchy. The NAV per share is based on the fair value of the underlying assets owned by the alternative investment funds, minus its liabilities then divided by the total number of shares outstanding.
• Limited partnerships— The fair value of limited partnerships is measured using the NAV practical expedient and has not been categorized in the fair value hierarchy. The NAV is based on the fair value of the underlying assets owned by the partnership, minus its liabilities then multiplied by the ownership percentage of the pension plans.
Other Financial Instruments
We determine the fair value of fixed-rate debt using Level 2 inputs based on quoted market prices. The carrying amount of all other debt approximates fair value as those instruments are based on variable interest rates. The following table presents the fair value and carrying value of total debt.

December 28, 2025 December 29, 2024
Fair Value Carrying Value Fair Value Carrying Value
(in millions)
Total debt $ 1,909   $ 1,986   $ 1,821   $ 1,983  

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