In the first quarter of fiscal 2025, the Company initiated a network optimization plan to optimize its global operations and logistics network. We are reporting on actions approved through the third quarter of fiscal 2026. The Company continues to strategically evaluate its operations and network and may approve additional actions. If the Company makes significant changes to its strategies, outlook or manner in which it plans to use these assets, it may incur additional charges in future periods.

During the first nine months of fiscal 2026, the Company increased the estimated pretax charges by $155 million for additional actions approved to date under the network optimization plan. This increase reflects network changes in the Beef segment, including the closure of a harvesting facility and the transition of another facility to a single shift, the closure of a production facility in the Prepared Foods segment and efforts to reduce support costs across all segments and corporate functions. The estimated pretax charges decreased $23 million in the third quarter of fiscal 2026, due to an estimated gain on the sale of assets expected to close in the fourth quarter related to network changes in the Beef segment approved in the first quarter of fiscal 2026.

As a result, we now expect to recognize total pretax net charges of $241 million for actions approved through June 27, 2026. These charges include $181 million of net charges that have resulted or will result in cash outflows and $190 million of non-cash charges, partially offset by a $107 million gain recognized from the sale of storage facilities and a $23 million estimated gain on the expected sale of assets in the Beef segment. Additionally, we have received $296 million of proceeds from the sale of storage facilities to date. Through the third quarter of fiscal 2026, we have recognized $240 million of the expected total pretax charges and estimate that the remaining $1 million of net charges will be incurred over future periods, including income of $20 million during the remainder of fiscal 2026, consisting of a $23 million estimated gain on the expected sale of assets in the Beef segment, partially offset by $3 million of charges. 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 $32 million and $195 million related to the network optimization plan in the third quarter and first nine months of fiscal 2026, respectively. These charges primarily consisted of accelerated depreciation and asset write-offs related to the Beef and Prepared Foods segment network changes, severance and related costs and contract and lease termination costs. The first nine month charges included $99 million that have resulted or will result in cash outflows and $96 million of non-cash charges.

In the third quarter of fiscal 2025, we recognized income of $83 million related to the network optimization plan, consisting of a gain of $107 million from the sale of storage facilities, partially offset by $24 million of charges. For the first nine months of fiscal 2025, we recognized net charges of $33 million. These charges primarily related to the closure of two facilities in the Prepared Foods segment, the closure of a non-harvesting facility in the Beef segment and asset write-offs in the Chicken, Prepared Foods and International segments. The charges included $51 million that have resulted or will result in cash outflows and $89 million of non-cash charges.


	Beef		Pork		Chicken		Prepared Foods		International		Corporate Expenses		Total
Cost of Sales:
Severance and related costs	$	19	$	—	$	5	$	11	$	—	$	—	$	35
Accelerated depreciation	93		—		—		7		—		—		100
Asset write-offs (gain on sale)	13		—		—		(3)		(1)		—		9
Contract and lease terminations	2		—		5		10		—		—		17


Total Cost of Sales	$	127	$	—	$	10	$	25	$	(1)	$	—	$	161

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													20


Total	$	128	$	1	$	12	$	29	$	(1)	$	6	$	195


	Beef		Pork		Chicken		Prepared Foods		International		Corporate Expenses		Total
Cost of Sales:
Severance and related costs	$	6	$	—	$	8	$	2	$	2	$	—	$	18
Accelerated depreciation	38		—		1		—		—		—		39
Asset write-offs (gain on sale)	3		—		31		34		9		—		77
Contract and lease terminations	1		—		1		2		—		—		4
Gain on sale of storage facilities	—		—		(38)		(69)		—		—		(107)
Total Cost of Sales	$	48	$	—	$	3	$	(31)	$	11	$	—	$	31
Selling, General and Administrative:
Severance and related costs	—		—		2		—		—		—		2

Total Selling, General and Administrative	$	—	$	—	$	2	$	—	$	—	$	—	$	2
Total	$	48	$	—	$	5	$	(31)	$	11	$	—	$	33

The following table reflects our liability related to the network optimization plan as of June 27, 2026 (in millions):


	Balance at September 27, 2025		Expenses		Payments		Balance at June 27, 2026
Contract, lease and pension terminations	$	31	$	55	$	(3)	$	83
Severance and related costs	3		49		(35)		17
Total	$	34	$	104	$	(38)	$	100

In July 2026, we completed the sale of our 40% minority interest in a vertically-integrated Brazilian poultry producer, which was accounted for under the equity method, for $120 million including $84 million received at closing and $36 million to be paid in July 2027. As a result of the sale, we do not expect to recognize a significant gain or loss in our fiscal year 2026 Consolidated Statement of Income.

During the third quarter of fiscal 2026, we announced certain executive leadership changes, including the transition of our Chief Executive Officer and Chief Operating Officer from their respective roles, the appointment of their successors and the execution of a new employment agreement with the Chairman of our Board of Directors. In connection with these transitions, we recognized charges of $73 million during the three and nine months ended June 27, 2026, consisting of $41 million of one-time cash payments and $32 million of severance and related charges. These charges were recognized as corporate expenses within Selling, General and Administrative in our Consolidated Condensed Statements of Income. Additionally, we expect to recognize charges of $29 million associated with these transitions in the fourth quarter of fiscal 2026.