In the first quarter of fiscal 2025, the Company initiated a network optimization plan to optimize our global operations and logistics network. We are reporting on actions approved through the end of the second quarter of fiscal 2026 as we are currently unable to make an estimate of the cost of the entire network optimization plan.

In the second quarter and first half of fiscal 2026, the Company increased the estimated pretax charges by $38 million and $178 million, respectively, for additional actions approved to date under the network optimization plan. In the first quarter of fiscal 2026, the increase in estimated total pretax charges reflects network changes in the Beef segment, including the closure of a harvesting facility and the transition of another to a single shift, as well as efforts to reduce support costs across all segments and corporate functions. The increase in the second quarter primarily reflects the closure of a production facility in the Prepared Foods segment.

As a result, we now expect to recognize total pretax net charges of $264 million for actions approved through March 28, 2026, which include $179 million of net charges that have resulted or will result in cash outflows and $192 million of non-cash charges, partially offset by a $107 million gain recognized from the sale of storage facilities. Additionally, we have received $296 million in proceeds associated with the sale of storage facilities to date. Through the second quarter of fiscal 2026, we have recognized $208 million of the expected total pretax charges and estimate $56 million of charges will be incurred over future periods, including $35 million during the remainder of fiscal 2026. We expect to incur costs related to the network optimization plan over a multi-year period and anticipate additional charges in the future as further actions are approved.

We recognized net charges of $46 million and $163 million related to the network optimization plan in the second quarter and first six months of fiscal 2026, respectively. The charges primarily included accelerated depreciation and asset write-offs related to the Beef segment network changes approved in the first quarter of fiscal 2026, severance and related costs and contract and lease termination costs. These charges included $77 million that have resulted or will result in cash outflows and $86 million of non-cash. In the second quarter and first six months of fiscal 2025, we recognized net charges of $43 million and $116 million, respectively, which primarily included the closure of two facilities in the Prepared Foods segment, a non-harvesting facility closure in the Beef segment and asset write-offs in the Chicken and International segments. These charges included $47 million that have resulted or will result in cash outflows and $69 million of non-cash.


	Beef		Pork		Chicken		Prepared Foods		International		Corporate Expenses		Total
Cost of Sales:
Severance and related costs	$	18	$	—	$	5	$	10	$	—	$	—	$	33
Accelerated depreciation	90		—		—		—		—		—		90
Asset write-offs (gain on sale)	13		—		—		(1)		(1)		—		11
Contract and lease terminations	2		—		4		7		—		—		13


Total Cost of Sales	$	123	$	—	$	9	$	16	$	(1)	$	—	$	147

Selling, General and Administrative:
Severance and related costs	1		1		2		4		—		6		14

Total Selling, General and Administrative	$	1	$	1	$	2	$	4	$	—	$	6	$	14

Non-Operating (Income)/Expense													2


Total	$	124	$	1	$	11	$	20	$	(1)	$	6	$	163


	Beef		Pork		Chicken		Prepared Foods		International		Corporate Expenses		Total
Cost of Sales:
Severance and related costs	$	6	$	—	$	7	$	2	$	2	$	—	$	17
Accelerated depreciation	38		—		1		—		—		—		39
Asset write-offs (gain on sale)	3		—		22		23		9		—		57
Contract and lease terminations	1		—		—		—		—		—		1
Total Cost of Sales	$	48	$	—	$	30	$	25	$	11	$	—	$	114

Selling, General and Administrative:
Severance and related costs	—		—		2		—		—		—		2

Total Selling, General and Administrative	$	—	$	—	$	2	$	—	$	—	$	—	$	2
Total	$	48	$	—	$	32	$	25	$	11	$	—	$	116

The following table reflects our liability related to the network optimization plan as of March 28, 2026 (in millions):


	Balance at September 27, 2025		Expenses		Payments		Balance at March 28, 2026
Contract and lease terminations	$	31	$	33	$	—	$	64
Severance and related costs	3		47		(23)		27
Total	$	34	$	80	$	(23)	$	91

We continue to strategically evaluate optimization of such items as network capacity, manufacturing efficiencies and business technology. If we have a significant change in strategies, outlook, or manner in which we plan to use these assets, we may experience future charges.


	Balance at September 27, 2025		Plant Closure Charges		Payments		Balance at March 28, 2026
Contract termination	$	72	$	—	$	(8)	$	64
Severance and retention	—		—		—		—
Total	$	72	$	—	$	(8)	$	64