UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q



x	Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended ~~June 28,~~December 27, 2014



¨	Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from to

001-14704

(Commission File Number)

TYSON FOODS, INC.

(Exact name of registrant as specified in its charter)



Delaware		71-0225165
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

2200 Don Tyson Parkway, Springdale, Arkansas		72762-6999
(Address of principal executive offices)		(Zip Code)

(479) 290-4000

(Registrant’s telephone number, including area code)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨

No x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of ~~June 28,~~December 27, 2014.



Class		Outstanding Shares
Class A Common Stock, $0.10 Par Value (Class A stock)		~~281,687,503~~304,572,910
Class B Common Stock, $0.10 Par Value (Class B stock)		70,010,805

TYSON FOODS, INC.

INDEX

PART I. FINANCIAL INFORMATION



		PAGE
Item 1.	Financial Statements

	Consolidated Condensed Statements of Income for the Three ~~and Nine~~ Months Ended ~~June 28,~~December 27, 2014, and ~~June 29,~~December 28, 2013	2

	Consolidated Condensed Statements of Comprehensive Income for the Three ~~and Nine~~ Months Ended ~~June 28,~~December 27, 2014, and ~~June 29,~~December 28, 2013	3

	Consolidated Condensed Balance Sheets as of ~~June 28,~~December 27, 2014, and September ~~28, 2013~~27, 2014	4

	Consolidated Condensed Statements of Cash Flows for the ~~Nine~~Three Months Ended ~~June 28,~~December 27, 2014, and ~~June 29,~~December 28, 2013	5

	Notes to Consolidated Condensed Financial Statements	6

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3130

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4340

Item 4.	Controls and Procedures	4442

PART II. OTHER INFORMATION



Item 1.	Legal Proceedings	4442

Item 1A.	Risk Factors	4543

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4643

Item 3.	Defaults Upon Senior Securities	4643

Item 4.	Mine Safety Disclosures	4643

Item 5.	Other Information	4643

Item 6.	Exhibits	4744

SIGNATURES		4845

Table of Contents

PART I. FINANCIAL INFORMATION


Item 1.	Financial Statements

TYSON FOODS, INC.

CONSOLIDATED CONDENSED STATEMENTS OF INCOME

(In millions, except per share data)

(Unaudited)


	Three Months Ended						Nine Months Ended						Three Months Ended
	June 28, 2014			June 29, 2013			June 28, 2014			June 29, 2013			December 27, 2014			December 28, 2013
Sales	$	9,682		$	8,731		$	27,475		$	25,480		$	10,817		$	8,761
Cost of Sales	9,045			8,049			25,502			23,791			9,861			8,076
Gross Profit	637			682			1,973			1,689			956			685
Selling, General and Administrative	286			263			849			730			447			273
Operating Income	351			419			1,124			959			509			412
Other (Income) Expense:
Interest income	(1		)	(2		)	(6		)	(5		)	(2		)	(2		)
Interest expense	25			36			78			109			77			28
Other, net	17			—			18			(19		)	(1		)	3
Total Other (Income) Expense	41			34			90			85			74			29
Income from Continuing Operations before Income Taxes	310			385			1,034			874
Income before Income Taxes													435			383
Income Tax Expense	52			136			314			285			125			131
Income from Continuing Operations	258			249			720			589
Loss from Discontinued Operation, Net of Tax	—			(4		)	—			(70		)
Net Income	258			245			720			519			310			252
Less: Net Income (Loss) Attributable to Noncontrolling Interests	(2		)	(4		)	(7		)	2			1			(2		)
Net Income Attributable to Tyson	$	260		$	249		$	727		$	517		$	309		$	254
Amounts Attributable to Tyson:
Net Income from Continuing Operations	260			253			727			587
Net Loss from Discontinued Operation	—			(4		)	—			(70		)
Net Income Attributable to Tyson	$	260		$	249		$	727		$	517
Weighted Average Shares Outstanding:
Class A Basic	280			283			275			284
Class B Basic	70			70			70			70
Diluted	356			369			355			366
Net Income Per Share from Continuing Operations Attributable to Tyson:
Class A Basic	$	0.75		$	0.73		$	2.15		$	1.69
Class B Basic	$	0.68		$	0.66		$	1.94		$	1.52
Diluted	$	0.73		$	0.69		$	2.05		$	1.61
Net Loss Per Share from Discontinued Operation Attributable to Tyson:
Class A Basic	$	—		$	(0.01	)	$	—		$	(0.20	)	336			271
Class B Basic	$	—		$	(0.02	)	$	—		$	(0.18	)	70			70
Diluted	$	—		$	(0.01	)	$	—		$	(0.19	)	416			354
Net Income Per Share Attributable to Tyson:
Class A Basic	$	0.75		$	0.72		$	2.15		$	1.49		$	0.77		$	0.76
Class B Basic	$	0.68		$	0.64		$	1.94		$	1.34		$	0.71		$	0.68
Diluted	$	0.73		$	0.68		$	2.05		$	1.42		$	0.74		$	0.72
Dividends Declared Per Share:
Class A	$	0.075		$	0.050		$	0.250		$	0.260		$	0.125		$	0.100
Class B	$	0.068		$	0.045		$	0.226		$	0.234		$	0.113		$	0.090

See accompanying Notes to Consolidated Condensed Financial Statements.

Table of Contents

TYSON FOODS, INC.

CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME

(In millions)

(Unaudited)


	Three Months Ended						Nine Months Ended						Three Months Ended
	June 28, 2014			June 29, 2013			June 28, 2014			June 29, 2013			December 27, 2014		December 28, 2013
Net Income	$	258		$	245		$	720		$	519		$	310	$	252
Other Comprehensive Income (Loss), Net of Taxes:
Derivatives accounted for as cash flow hedges	(5		)	2			—			(12		)	1		(2		)
Investments	—			1			3			(2		)	9		3
Currency translation	12			(33		)	7			(49		)	6		(11		)
Postretirement benefits	—			1			2			4			7		2
Total Other Comprehensive Income (Loss), Net of Taxes	7			(29		)	12			(59		)	23		(8		)
Comprehensive Income	265			216			732			460			333		244
Less: Comprehensive Income (Loss) Attributable to Noncontrolling Interests	(2		)	(4		)	(7		)	2			1		(2		)
Comprehensive Income Attributable to Tyson	$	267		$	220		$	739		$	458		$	332	$	246

See accompanying Notes to Consolidated Condensed Financial Statements.

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TYSON FOODS, INC.

CONSOLIDATED CONDENSED BALANCE SHEETS

(In millions, except share and per share data)

(Unaudited)


	June 28, 2014			September 28, 2013			December 27, 2014			September 27, 2014
Assets
Current Assets:
Cash and cash equivalents	$	587		$	1,145		$	381		$	438
Accounts receivable, net	1,624			1,497			1,777			1,684
Inventories	3,061			2,817			3,192			3,274
Other current assets	241			145			375			379
Assets held for sale							213			446
Total Current Assets	5,513			5,604			5,938			6,221
Net Property, Plant and Equipment	3,941			4,053			5,211			5,130
Goodwill	1,925			1,902			6,700			6,706
Intangible Assets	151			138
Intangible Assets, net							5,246			5,276
Other Assets	525			480			663			623
Total Assets	$	12,055		$	12,177		$	23,758		$	23,956

Liabilities and Shareholders’ Equity
Current Liabilities:
Current debt	$	41		$	513		$	596		$	643
Accounts payable	1,496			1,359			2,147			1,806
Other current liabilities	1,075			1,138			1,157			1,207
Liabilities held for sale							54			141
Total Current Liabilities	2,612			3,010			3,954			3,797
Long-Term Debt	1,784			1,895			6,931			7,535
Deferred Income Taxes	404			479			2,473			2,450
Other Liabilities	545			560			1,263			1,270
Commitments and Contingencies (Note 15)
Commitments and Contingencies (Note 16)
Shareholders’ Equity:
Common stock ($0.10 par value):
Class A-authorized 900 million shares, issued 322 million shares	32			32
Class A-authorized 900 million shares, issued 346 million shares							35			35
Convertible Class B-authorized 900 million shares, issued 70 million shares	7			7			7			7
Capital in excess of par value	2,122			2,292			4,265			4,257
Retained earnings	5,640			4,999			6,011			5,748
Accumulated other comprehensive loss	(96		)	(108		)	(124		)	(147		)
Treasury stock, at cost – 40 million shares at June 28, 2014, and 48 million shares at September 28, 2013	(1,011		)	(1,021		)
Treasury stock, at cost – 41 million shares at December 27, 2014 and 40 million shares at September 27, 2014							(1,071		)	(1,010		)
Total Tyson Shareholders’ Equity	6,694			6,201			9,123			8,890
Noncontrolling Interests	16			32			14			14
Total Shareholders’ Equity	6,710			6,233			9,137			8,904
Total Liabilities and Shareholders’ Equity	$	12,055		$	12,177		$	23,758		$	23,956

See accompanying Notes to Consolidated Condensed Financial Statements.

Table of Contents

TYSON FOODS, INC.

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)


	Nine Months Ended						Three Months Ended
	June 28, 2014			June 29, 2013			December 27, 2014			December 28, 2013
Cash Flows From Operating Activities:
Net income	$	720		$	519		$	310		$	252
Depreciation and amortization	382			387			175			127
Deferred income taxes	(64		)	(21		)	11			(15		)
Convertible debt discount	(92		)	—			—			(92		)
Other, net	76			80			6			22
Net changes in working capital	(479		)	(193		)	310			67
Cash Provided by Operating Activities	543			772			812			361
Cash Flows From Investing Activities:
Additions to property, plant and equipment	(437		)	(425		)	(231		)	(140		)
Purchases of marketable securities	(25		)	(123		)	(10		)	(10		)
Proceeds from sale of marketable securities	24			22			7			9
Acquisitions, net of cash acquired	(56		)	(106		)
Proceeds from sale of businesses							142			—
Other, net	44			36			3			(3		)
Cash Used for Investing Activities	(450		)	(596		)	(89		)	(144		)
Cash Flows From Financing Activities:
Payments on debt	(407		)	(69		)	(668		)	(379		)
Net proceeds from borrowings	28			48
Proceeds from issuance of long-term debt							—			6
Purchases of Tyson Class A common stock	(286		)	(298		)	(91		)	(159		)
Dividends	(76		)	(87		)	(37		)	(25		)
Stock options exercised	61			93			16			12
Other, net	26			13			5			5
Cash Used for Financing Activities	(654		)	(300		)	(775		)	(540		)
Effect of Exchange Rate Changes on Cash	3			(4		)	(5		)	3
Decrease in Cash and Cash Equivalents	(558		)	(128		)	(57		)	(320		)
Cash and Cash Equivalents at Beginning of Year	1,145			1,071			438			1,145
Cash and Cash Equivalents at End of Period	$	587		$	943		$	381		$	825

See accompanying Notes to Consolidated Condensed Financial Statements.

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TYSON FOODS, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1: ACCOUNTING POLICIES

~~BASIS OF PRESENTATION~~Basis of Presentation

The consolidated condensed financial statements are unaudited and have been prepared by Tyson Foods, Inc. (“Tyson,” “the Company,” “we,” “us” or “our”). Certain information and accounting policies and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to such rules and regulations of the United States Securities and Exchange Commission. Although we believe the disclosures contained herein are adequate to make the information presented not misleading, these consolidated condensed financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our annual report on Form 10-K for the fiscal year ended September ~~28, 2013~~27, 2014. Preparation of consolidated condensed financial statements requires us to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated condensed financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

We believe the accompanying consolidated condensed financial statements contain all adjustments, which are of a normal recurring nature, necessary to state fairly our financial position as of ~~June 28,~~December 27, 2014, and the results of operations for the three ~~and nine~~ months ended ~~June 28,~~December 27, 2014, and ~~June 29,~~December 28, 2013. Results of operations and cash flows for the periods presented are not necessarily indicative of results to be expected for the full year.

~~CONSOLIDATION~~Consolidation

The consolidated condensed financial statements include the accounts of all wholly-owned subsidiaries, as well as majority-owned subsidiaries over which we exercise control and, when applicable, entities for which we have a controlling financial interest or variable interest entities for which we are the primary beneficiary. All significant intercompany accounts and transactions have been eliminated in consolidation.

~~SHARE REPURCHASES~~

~~A summary of cumulative share repurchases of our Class A stock is as follows (in millions):~~

Three Months Ended Nine Months Ended
June 28, 2014 June 29, 2013 June 28, 2014 June 29, 2013
Shares Dollars Shares Dollars Shares Dollars Shares Dollars
Shares repurchased:
Under share repurchase program —
$ —
4.0
$ 100
7.1
$ 250
11.2
$ 250
To fund certain obligations under equity compensation plans 0.3
11
0.4
10
1.0
36
2.3
48
Total share repurchases 0.3
$ 11
4.4
$ 110
8.1
$ 286
13.5
$ 298

~~On January 30, 2014, our Board of Directors approved an increase of 25 million shares authorized for repurchase under our share repurchase program. As of~~ ~~June 28, 2014~~, ~~32.1 million~~ shares remained available for repurchases under this program. The share repurchase program has no fixed or scheduled termination date and the timing and extent to which we repurchase shares will depend upon, among other things, our working capital needs, markets, industry conditions, liquidity targets, limitations under our debt obligations and regulatory requirements. In addition to the share repurchase program, we purchase shares on the open market to fund certain obligations under our equity compensation plans.

~~RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS~~

~~In December 2011 and February 2013, the Financial~~Recently Issued Accounting Standards Board (FASB) issued guidance enhancing disclosures related to offsetting of certain assets and liabilities. This guidance is effective for annual reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods. We adopted this guidance in the first quarter of fiscal 2014. The adoption did not have a significant impact on our consolidated condensed financial statements.

In April 2014, the FASB issued guidance changing the criteria for reporting discontinued operations. The guidance also modifies the related disclosure requirements. The guidance is effective on a prospective basis for annual reporting periods beginning after December 15, 2014, and interim periods within annual periods beginning on or after December 15, 2015. Early adoption is permitted and we adopted in the third quarter of fiscal 2014. The adoption did not have a significant impact on our consolidated condensed financial statements.

~~Table of Contents~~

~~RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS~~Pronouncements

In May 2014, the FASB issued guidance changing the criteria for recognizing revenue. The guidance also modifies the related disclosure requirements, clarifies guidance for multiple-element arrangements and provides guidance for transactions that were not addressed fully in previous guidance. The guidance is effective for annual reporting periods and interim periods within those annual reporting periods beginning after December 15, 2016, our fiscal 2018. Early adoption is not permitted. The Company is currently evaluating the impact this guidance will have on our consolidated condensed financial statements.

NOTE 2: ACQUISITIONS AND DISPOSITIONS

Acquisitions

On ~~July 1,~~August 28, 2014, ~~Tyson and HMB Holdings, Inc. (“Merger Sub”), a wholly-owned subsidiary~~we acquired all of ~~Tyson, entered into an agreement and plan~~the outstanding stock of ~~merger with~~ The Hillshire Brands Company ~~(“Hillshire”~~("Hillshire Brands") as part of our strategic expansion initiative. The purchase price was equal to $63.00 per share for Hillshire Brands' outstanding common stock, or $8,081 million. In addition, we paid $163 million in cash for breakage costs incurred by Hillshire Brands related to a previously announced acquisition. We funded the acquisition with existing cash on hand, net proceeds from the issuance of new senior notes, Class A common stock (Class A stock), and tangible equity units as well as borrowings under a new term loan facility (refer to Note 6: Debt and Note 7: Equity). Hillshire Brands' results from operations subsequent to the acquisition closing are included in the Prepared Foods segment.

Table of Contents

The following table summarizes the preliminary fair values of the assets acquired and liabilities assumed at the acquisition date. Certain estimated values for the acquisition, including goodwill, intangible assets, plant property and equipment, and deferred taxes, are not yet finalized and the preliminary purchase price allocations are subject to change as we complete our analysis of the fair value at the date of acquisition. The purchase price was allocated based on information available at acquisition date. During the quarter ended December 27, 2014, we recorded measurement period adjustments, which reduced goodwill by $5 million, after obtaining additional information regarding, among other things, asset valuations and liabilities assumed. The amount was not considered material and therefore prior periods have not been revised.



	in millions
Cash and cash equivalents		$	72
Accounts receivable		236
Inventories		418
Other current assets		343
Property, Plant and Equipment		1,303
Goodwill		4,799
Intangible Assets		5,141
Other Assets		66
Accounts payable		(347		)
Other current liabilities		(328		)
Long-Term Debt		(869		)
Deferred Income Taxes		(2,072		)
Other Liabilities		(518		)
Net assets acquired		$	8,244

The fair value of identifiable intangible assets is as follows (in millions):



Intangible Asset Category	Type	Life in Years	Fair Value
Brands & trademarks	Non-amortizable	Indefinite	$	4,062
Brands & trademarks	Amortizable	20 years	532
Customer relationships	Amortizable	Weighted average life of 16 years	541
Non-compete agreements	Amortizable	1 year	6
Total identifiable intangible assets			$	5,141

As a result of the acquisition, we recognized a total of $4,799 million of goodwill. The purchase price was assigned to assets acquired and liabilities assumed based on their estimated fair values as of the date of acquisition, and any excess was allocated to goodwill, as shown in the table above. Goodwill represents the value we expect to achieve through the implementation of operational synergies and growth opportunities primarily in our Prepared Foods segment. The allocation of goodwill to our reporting units is pending finalization of the expected synergies and the impact of the synergies to our reporting units. We do not expect the final fair value of goodwill to be deductible for U.S. income tax purposes.

We used various valuation techniques to determine fair value, with the primary techniques being discounted cash flow analysis, relief-from-royalty and excess earnings valuation approaches, each of which use significant unobservable inputs, or Level 3 inputs, as defined by the fair value hierarchy. Under these valuation approaches, we are required to make estimates and assumptions about sales, operating margins, growth rates, royalty rates and discount rates based on budgets, business plans, economic projections, anticipated future cash flows and marketplace data.

The acquisition of Hillshire Brands was accounted for using the acquisition method of accounting, and consequently, the results of operations for Hillshire Brands are reported in our consolidated condensed financial statements from the date of acquisition.

The following pro forma information presents the combined results of operations as if the acquisition of Hillshire Brands had occurred at the beginning of fiscal 2013. Hillshire Brands' pre-acquisition results have been added to our historical results. The pro forma results contained in the following table include adjustments for amortization of acquired intangibles, depreciation expense, interest expense related to the financing and related income taxes. Any potential cost savings or other operational efficiencies that could result from the acquisition are not included in these pro forma results.

Table of Contents

The pro forma results have been prepared for comparative purposes only and are not necessarily indicative of the results of operations as they would have been had the acquisition occurred on the assumed date, nor is it necessarily an indication of future operating results. The pro forma results for the three months ended December 28, 2013 include a nonrecurring tax benefit of $46 million recognized by Hillshire Brands primarily related to the release of valuation allowances on state deferred tax assets.



in millions
	December 28, 2013
Pro forma sales	$	9,817
Pro forma net income from continuing operations attributable to Tyson	$	338
Pro forma net income per diluted share from continuing operations attributable to Tyson	$	0.81

Additionally, ~~on July 28,~~during the second quarter of fiscal 2014 we acquired a value-added food business as part of our strategic expansion initiative, which is included in our Prepared Foods segment. The aggregate purchase price of the acquisition was $56 million, which included $12 million for Property, Plant and Equipment, $27 million allocated to Intangible Assets and $18 million allocated to Goodwill.

Dispositions

In fiscal 2014, we announced our plan to sell our ~~Tyson de~~Brazil and Mexico operations, which are included in our International segment, to JBS SA ("JBS") for a combined $575 million in cash, subject to certain adjustments. As a result, we conducted an impairment test and ~~Tyson do~~recorded a $39 million impairment charge in the fourth quarter of fiscal 2014 related to our Brazil ~~operations,~~operation. We completed the sale of the Brazil operation in the first quarter of fiscal 2015 for ~~$575 million. For further description~~proceeds of ~~these transactions, refer~~$130 million with additional proceeds expected in the second quarter of fiscal 2015 related to ~~Note 16: Subsequent Events.~~the working capital and net debt adjustments. The sale did not result in a significant gain or loss as the carrying value of the Brazil operation approximated the sales proceeds at the time of sale. The assets and liabilities associated with Brazil were classified as held for sale on the balance sheet at September 27, 2014. We expect to realize a gain on the sale of our Mexico operation, which is pending the necessary government approvals, and expect it to close in the second quarter of fiscal 2015. The assets and liabilities related to Mexico are classified as held for sale on the balance sheet at December 27, 2014 and September 27, 2014.

The following table summarizes the net assets and liabilities held for sale (in millions):



	December 27, 2014		September 27, 2014
Assets held for sale:
Accounts receivable, net	$	23	$	74
Inventories	77		141
Other current assets	17		72
Net property, plant and equipment	76		132
Goodwill	14		16
Other assets	6		11
Total assets held for sale	$	213	$	446
Liabilities held for sale:
Current debt	$	—	$	32
Accounts payable	33		61
Other current liabilities	12		27
Long-term debt	—		9
Deferred income taxes	8		12
Other Liabilities	1		—
Total liabilities held for sale	$	54	$	141

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In ~~June~~fiscal 2014, we sold our 50 percent ownership interest of Dynamic Fuels LLC (Dynamic Fuels) for ~~$30~~$30 million cash consideration at closing and up to ~~$35~~$35 million in future cash payments contingent on Dynamic Fuels' production volumes over a period of up to 11.5 years. Additionally as part of the terms of the sale, we were released from our guarantee of the ~~$100~~$100 million Gulf Opportunity Zone tax-exempt bonds, which were issued in October 2008 to fund a portion of the plant construction costs. Our obligations pursuant to the guarantee were not released until July 2014; however, as of June 28, 2014, the purchaser had placed in escrow the full value of our guarantee as collateral while it secured a suitable replacement to our guarantee, which was obtained on July 8, 2014. Dynamic Fuels previously qualified as a variable interest entity which we consolidated, as we were the primary beneficiary. As a result of the sale, we deconsolidated Dynamic Fuels and recorded a gain of approximately $3$3 million~~, which is reflected~~ in ~~Cost~~the third quarter of ~~Sales in our Consolidated Condensed Statements of Income.~~fiscal 2014. We will recognize the future contingent payments in income as the required volumes are produced. At ~~September 28, 2013, Dynamic Fuels had~~ ~~$166 million~~ ~~of total assets, of which~~ ~~$142 million~~ ~~was net property, plant and equipment, and~~ ~~$113 million~~ ~~of total liabilities, of which~~ ~~$100 million~~ ~~was long-term debt. The plant has been idled since October 2012.~~

In ~~June~~fiscal 2014, we recorded an impairment ~~charge~~charges of ~~$49~~$52 million related to the planned closure of three Prepared Foods plants. The Company’s Cherokee, Iowa plant ~~is expected to close~~closed in September ~~while~~2014, the ~~Company’s plants in~~ Buffalo, New York plant closed in January 2015, and the Santa Teresa, New Mexico ~~are~~plant is expected to ~~cease operations~~close during the first half of calendar 2015. Additionally, in April 2014, Hillshire Brands announced that it would discontinue all production at its Florence, Alabama plant. The ~~impairment charges are reflected~~plant closed in December 2014 and the ~~Consolidated Condensed Statements of Income in Cost of Sales.~~

~~During~~closure costs did not have a significant impact on the second quarter of fiscal 2014 we acquired one value-added food business as part of our strategic expansion initiative, which is included in our Prepared Foods segment. The aggregate purchase price of the acquisition was $56 million, which included $12 million for property, plant and equipment, $27 million allocated to Intangible Assets and $18 million allocated to Goodwill.

~~During fiscal 2013, we acquired~~ ~~two~~ ~~value-added food businesses as part of our strategic expansion initiative, which are included in our Prepared Foods segment. The aggregate purchase price of the acquisitions were~~ ~~$106 million, which included~~ ~~$50 million~~ ~~for property, plant and equipment,~~ ~~$41 million~~ ~~allocated to Intangible Assets and~~ ~~$12 million~~ ~~allocated to Goodwill.~~Company's financial results.

NOTE 3: ~~DISCONTINUED OPERATION~~

After conducting an assessment during fiscal 2013 of our long-term business strategy in China, we determined our Weifang operation (Weifang), which was previously part of our Chicken segment, was no longer core to the execution of our strategy given the capital investment it required to execute our future business plan. Consequently, we conducted an impairment test and recorded a ~~$56 million~~ impairment charge in the second quarter of fiscal 2013. We subsequently sold Weifang which resulted in reporting it as a discontinued operation. The sale was completed in July 2013 and did not result in a significant gain or loss as its carrying value approximated the sales proceeds at the time of sale. Weifang's prior periods results, including the impairment charge, have been reclassified and presented as a discontinued operation in our Consolidated Condensed Statements of Income. The following is a summary of the discontinued operation's results (in millions):

Three Months Ended Nine Months Ended
June 28, 2014 June 29, 2013 June 28, 2014 June 29, 2013
Sales $ —
$ 36
$ —
$ 108

Pretax loss —
(2 ) —
(68 )
Income tax expense —
2
—
2
Loss from discontinued operation, net of tax $ —
$ (4 ) $ —
$ (70 )

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~~NOTE 4:~~ INVENTORIES

Processed products, livestock and supplies and other are valued at the lower of cost or market. Cost includes purchased raw materials, live purchase costs, growout costs (primarily feed, ~~contract~~ grower pay and catch and haul costs), labor and manufacturing and production overhead, which are related to the purchase and production of inventories. ~~Total inventory consists~~

At December 27, 2014, 67% of the cost of inventories was determined by the first-in, first-out ("FIFO") method as compared to 66% at September 27, 2014. The remaining cost of inventories for both years is determined by the weighted-average method.

The following table reflects the major components of inventory (in millions):

June 28, 2014 September 28, 2013
Processed products:
Weighted-average method – chicken, prepared foods and international $ 837
$ 799
First-in, first-out method – beef and pork 721
624
Livestock – first-in, first-out method 1,120
1,002
Supplies and other – weighted-average method 383
392
Total inventory $ 3,061
$ 2,817



	December 27, 2014		September 27, 2014
Processed products	$	1,703	$	1,794
Livestock	1,073		1,066
Supplies and other	416		414
Total inventory	$	3,192	$	3,274

NOTE 5:4: PROPERTY, PLANT AND EQUIPMENT

The major categories of property, plant and equipment and accumulated depreciation are as follows (in millions):


	June 28, 2014		September 28, 2013		December 27, 2014		September 27, 2014
Land	$	104	$	100	$	126	$	126
Buildings and leasehold improvements	3,014		2,945		3,558		3,501
Machinery and equipment	5,680		5,504		6,204		6,144
Land improvements and other	274		417		278		276
Buildings and equipment under construction	245		236		409		334
	9,317		9,202		10,575		10,381
Less accumulated depreciation	5,376		5,149		5,364		5,251
Net property, plant and equipment	$	3,941	$	4,053	$	5,211	$	5,130

NOTE 6:5: OTHER CURRENT LIABILITIES

Other current liabilities are as follows (in millions):


	June 28, 2014		September 28, 2013		December 27, 2014		September 27, 2014
Accrued salaries, wages and benefits	$	392	$	419	$	349	$	490
Self-insurance reserves	255		267
Other	428		452		808		717
Total other current liabilities	$	1,075	$	1,138	$	1,157	$	1,207

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NOTE 7:6: DEBT

The major components of debt are as follows (in millions):


	June 28, 2014			September 28, 2013			December 27, 2014			September 27, 2014
Revolving credit facility	$	—		$	—		$	—		$	—
Senior notes:
3.25% Convertible senior notes due October 2013 (2013 Notes)	—			458
2.75% Senior notes due September 2015 (2015 Notes)							405			407
6.60% Senior notes due April 2016 (2016 Notes)	638			638			638			638
7.00% Notes due May 2018	120			120			120			120
2.65% Notes due August 2019 (2019 Notes)							1,000			1,000
4.10% Notes due September 2020 (2020 Notes)							286			287
4.50% Senior notes due June 2022 (2022 Notes)	1,000			1,000			1,000			1,000
3.95% Notes due August 2024 (2024 Notes)							1,250			1,250
7.00% Notes due January 2028	18			18			18			18
6.13% Notes due November 2032 (2032 Notes)							164			164
4.88% Notes due August 2034 (2034 Notes)							500			500
5.15% Notes due August 2044 (2044 Notes)							500			500
Discount on senior notes	(5		)	(6		)	(11		)	(12		)
GO Zone tax-exempt bonds due October 2033	—			100
Term loan facility:
3-year tranche (1.56% at 12/27/2014)							872			1,172
5-year tranche A							—			353
5-year tranche B (1.69% at 12/27/2014)							552			552
Amortizing Notes - Tangible Equity Units (see Note 7: Equity)							192			205
Other	54			80			41			24
Total debt	1,825			2,408			7,527			8,178
Less current debt	41			513			596			643
Total long-term debt	$	1,784		$	1,895		$	6,931		$	7,535

Revolving Credit Facility

We have a ~~$1.0~~$1.25 billion revolving credit facility that supports short-term funding needs and letters of credit. The facility will mature and the commitments thereunder will terminate in ~~August 2017~~.September 2019. After reducing the amount available by outstanding letters of credit issued under this facility, the amount available for borrowing at ~~June 28,~~December 27, 2014, was $~~959~~1,245 million. At ~~June 28,~~December 27, 2014, we had outstanding letters of credit issued under this facility totaling $415 million, none of which were drawn upon. We had an additional $~~145~~102 million of bilateral letters of credit issued separately from the revolving credit facility, none of which were drawn upon. Our letters of credit are issued primarily in support of workers’ compensation insurance programs and derivative ~~activities and Dynamic Fuels’ Gulf Opportunity Zone tax-exempt bonds.~~activities.

The revolving credit facility is unsecured and is fully guaranteed by Tyson Fresh Meats, Inc. (TFM Parent), our wholly owned subsidiary, until such date TFM Parent is released from all of its guarantees of other material indebtedness. If in the future any of our other subsidiaries shall guarantee any of our material indebtedness, such subsidiary shall also be required to guarantee the indebtedness, obligations and liabilities under this facility.

2019 / 2024 / 2034 / 2044 Notes

In ~~June~~August 2014, we ~~amended this facility to, among other things, permit~~issued senior unsecured notes with an aggregate principal amount of $3,250 million, consisting of $1,000 million due August 2019, $1,250 million due August 2024, $500 million due August 2034, and $500 million due August 2044. The 2019 Notes, 2024 Notes, 2034 Notes, and 2044 Notes carry interest rates of 2.65%, 3.95%, 4.88% and 5.15%, respectively, with interest payments due semi-annually on August 15 and February 15. After the ~~consummation~~original issue discounts of ~~certain debt financings related to our tender offer to acquire all~~$7 million, we received net proceeds of ~~the issued and outstanding shares~~$3,243 million. In addition, we incurred offering expenses of ~~common stock of Hillshire.~~$27 million.

~~Bridge~~Term Loan Facility

In ~~the third quarter of fiscal~~August 2014, we ~~entered into a fully committed 364-day~~borrowed under an unsecured ~~bridge~~term loan facility, which provided for total term loans in an aggregate principal amount of ~~$8.2 billion to be available to fund the Hillshire acquisition.~~$2,300 million, consisting of a $1,202 million 3-year tranche facility, a $546 million 5-year tranche A facility, and a $552 million 5-year tranche B facility. The bridge facility commitment was modified in July 2014, which is further described in Note 16: Subsequent Events. As of June 28, 2014, we paid $42 million of costs associated with the bridge facility. These costs were capitalized and we expense them over the facility’s estimated life, which is generally through the date permanent financing is expected and the bridge facility is reduced or eliminated. Accordingly, we recorded $22 million of expense in the third quarter of fiscal 2014, which is reflected in Other, net in the Consolidated Condensed Statements of Income.

~~2013 Notes~~

~~In September 2008, we issued~~ ~~$458 million~~principal ~~amount~~ ~~3.25%~~ ~~convertible senior unsecured notes which were due~~ ~~October 15, 2013. In connection with the issuance~~ of the ~~2013 Notes,~~3-year tranche facility amortizes at 2.5% per quarter. Interest is reset based on the selected LIBOR interest period plus 1.375% for the 3-year tranche facility and 1.50% for the 5-year tranche B facility. In addition, we ~~entered into separate call option and warrant transactions with respect to our Class A stock to minimize the potential economic dilution upon conversion~~incurred term loan issuance costs of ~~the 2013 Notes. The call options contractually expired upon the maturity of the 2013 Notes. The 2013 Notes matured on October 15, 2013 at which time we paid the~~ ~~$458 million~~ ~~principal value with cash on hand and settled the conversion premium by issuing~~ ~~11.7 million~~ ~~shares of our Class A stock from available treasury shares. Simultaneously with the settlement of the conversion premium, we received~~ ~~11.7 million~~ ~~shares of our Class A stock from the call options.~~

~~The warrants were settled on various dates from~~ ~~January 2014~~ ~~through~~ ~~April 2014, resulting in the issuance of 8.9 million shares of Class A stock through March 2014 and 2.8 million shares of Class A stock in April 2014.~~approximately $11 million.

910

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~~2016~~2015 / 2020 / 2032 Notes

~~The 2016 Notes carry~~In August 2014 and in connection with our acquisition of Hillshire Brands, we assumed $840 million of Hillshire Brands' debt, which had an ~~interest rate at issuance~~estimated fair value of ~~6.60%, with an interest step up feature dependent on their credit rating. On June 7, 2012, Moody's upgraded the credit rating~~approximately $868 million as of the ~~2016 Notes from "Ba1" to "Baa3." This upgrade decreased~~acquisition date. We recorded the assumed debt at fair value. The fair value adjustment is being amortized and recorded as a reduction of interest ~~rate on the 2016 Notes from~~ ~~6.85%~~ to ~~6.60%, effective beginning with the six-month interest payment due October 1, 2012.~~

~~On February 11, 2013, S&P upgraded the credit rating of the 2016 Notes from "BBB-" to "BBB." This upgrade did not impact the interest rate on the 2016 Notes.~~

~~2022 Notes~~

~~In June 2012, we issued~~ ~~$1.0 billion~~expense. The debt assumed is mainly comprised of senior unsecured notes which ~~will mature in June 2022.~~consist of $400 million due September 2015, $278 million due September 2020, and $152 million due November 2032. The ~~2022~~2015 Notes, 2020 Notes, and the 2032 Notes carry ~~a 4.50%~~ interest ~~rate, with interest payments due semi-annually on June 15~~rates of 2.75%, 4.10%, and ~~December 15. After the original issue discount of $5 million, based on an issue price of 99.458%~~6.13%, ~~we received net proceeds of $995 million. In addition, we incurred offering expenses of $9 million.~~

~~GO Zone Tax-Exempt Bonds~~

~~In October 2008, Dynamic Fuels received~~ ~~$100 million~~ in proceeds from the sale of Gulf Opportunity Zone tax-exempt bonds made available by the federal government to the regions affected by Hurricanes Katrina and Rita in 2005. As further described in Note 2: Acquisitions and Dispositions, in the third quarter of fiscal 2014, we sold our interest in Dynamic Fuels, which resulted in the deconsolidation of its assets and liabilities including these bonds.respectively.

Debt Covenants

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

Our ~~2022 Notes~~senior notes also contain affirmative and negative covenants that, among other things, may limit or restrict our ability to: create liens; engage in certain sale/leaseback transactions; and engage in certain consolidations, mergers and sales of assets.

We were in compliance with all debt covenants at ~~June 28,~~December 27, 2014.

NOTE 7: EQUITY

Share Repurchases

In fiscal 2014, our Board of Directors approved an increase of 25 million shares authorized for repurchase under our share repurchase program. As of December 27, 2014, 30.1 million shares remained available for repurchases under this program. The share repurchase program has no fixed or scheduled termination date and the timing and extent to which we repurchase shares will depend upon, among other things, our working capital needs, markets, industry conditions, liquidity targets, limitations under our debt obligations and regulatory requirements. In addition to the share repurchase program, we purchase shares on the open market to fund certain obligations under our equity compensation plans.

A summary of cumulative share repurchases of our Class A stock is as follows (in millions):



	Three Months Ended
	December 27, 2014			December 28, 2013
	Shares	Dollars		Shares	Dollars
Shares repurchased:
Under share repurchase program	2.0	$	81	4.6	$	150
To fund certain obligations under equity compensation plans	0.2	10		0.3	9
Total share repurchases	2.2	$	91	4.9	$	159

Share Issuance

In fiscal 2014, we issued 23.8 million shares of our Class A stock to provide funding for the Hillshire Brands acquisition. Total proceeds, net of underwriting discounts and other offering related fees and expenses were $873 million.

Tangible Equity Units

In fiscal 2014, we completed the public issuance of 30 million 4.75% tangible equity units (TEUs). Total proceeds, net of underwriting discounts and other expenses, were $1,454 million. Each TEU, which has a stated amount of $50, is comprised of a prepaid stock purchase contract and a senior amortizing note due July 15, 2017. We allocated the proceeds from the issuance of the TEUs to equity and debt based on the relative fair values of the respective components of each TEU. The fair value of the prepaid stock purchase contracts, which was $1,295 million, is recorded in Capital in Excess of Par Value, net of issuance costs. The fair value of the senior amortizing notes, which was $205 million, was recorded in debt, of which $65 million was current. Issuance costs associated with the TEU debt were recorded as deferred financing costs in the Consolidated Condensed Balance Sheets in Other Assets and are amortized over the term of the instrument to July 15, 2017.

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The aggregate values assigned upon issuance of each component of the TEU's, based on the relative fair value of the respective components of each TEU, were as follows (in millions, except price per TEU):



	Equity Component			Debt Component			Total
Price per TEU	$	43.17		$	6.83		$	50.00
Gross Proceeds	1,295			205			1,500
Issuance cost	(40		)	(6		)	(46		)
Net proceeds	$	1,255		$	199		$	1,454

Each senior amortizing note has an initial principal amount of $6.83 and bears interest at 1.5% per annum. On each January 15, April 15, July 15 and October 15, commencing on October 15, 2014, we will pay equal quarterly cash installments of $0.59 per amortizing note (except for the October 15, 2014 installment payment, which was $0.46 per amortizing note), which cash payment in the aggregate (principal and interest) is equivalent to 4.75% per year with respect to the $50 stated amount per TEU. Each installment will constitute a payment of interest and partial repayment of principal. Unless settled earlier at the holder's or the Company's option, each purchase contract will automatically settle on July 15, 2017, subject to postponement in certain limited circumstances. We will deliver between a minimum of 31.8 million shares and a maximum of 39.7 million shares of our Class A stock, subject to adjustment, based upon the Applicable Market Value (as defined below) of our Class A stock as described below:

If the Applicable Market Value is equal to or greater than the conversion price of $47.22 per share, we will deliver 1.0588 shares of Class A stock per purchase contract, or a minimum of 31.8 million Class A shares.

If the Applicable Market Value is greater than the reference price of $37.78 but less than the conversion price of $47.22 per share, we will deliver a number of shares per purchase contract equal to $50, divided by the Applicable Market Value.

If the Applicable Market Value is less than or equal to the reference price of $37.78 per share, we will deliver 1.3236 shares of Class A stock per purchase contract, or a maximum of 39.7 million Class A shares.

The "Applicable Market Value" means the average of the closing prices of our Class A stock on each of the 20 consecutive trading days beginning on, and including, the 23rd scheduled trading day immediately preceding July 15, 2017.

On December 15, 2014, we paid our quarterly dividend to shareholders of record at December 1, 2014 equal to $0.10 per share on our Class A common stock. The amount of the distribution exceeded the dividend threshold amount; which is $0.075 per share. Consequently, the settlements rates, reference price and conversion price were adjusted to reflect this change.

The TEUs have a dilutive effect on our earnings per share. The 31.8 million minimum shares to be issued are included in the calculation of Class A Basic weighted average shares. The 7.9 million share difference between the minimum shares and the 39.7 million maximum shares are potentially dilutive securities, and accordingly, are included in our diluted earnings per share on a pro rata basis to the extent the Applicable Market Value is higher than the reference price but is less than the conversion price at period end.

NOTE 8: INCOME TAXES

The effective tax rate ~~for continuing operations~~ was ~~16.8%~~28.8% and ~~35.4%~~34.3% for the ~~third~~first quarter of fiscal ~~2014~~2015 and ~~2013~~2014, ~~respectively, and~~ ~~30.4%~~ ~~and~~ ~~32.6%~~ ~~for the nine months of fiscal 2014 and 2013,~~ respectively. The effective tax rates for the ~~third~~first quarter ~~and nine months~~ of fiscal ~~2014~~2015 and fiscal ~~2013~~2014 were impacted by such items as the domestic production deduction, state income taxes and losses in foreign jurisdictions for which no benefit is recognized. In addition, ~~a benefit~~changes in tax reserves resulting from the expiration of statutes of limitations reduced the effective tax rate for the ~~third~~first quarter ~~and nine months~~ of fiscal ~~2014~~2015 by ~~12.8%~~6.5% ~~and~~ ~~3.8%, respectively.~~.

Unrecognized tax benefits were $~~137~~239 million and $~~175~~272 million at ~~June 28,~~December 27, 2014, and September ~~28, 2013~~27, 2014, respectively. The amount of unrecognized tax benefits, if recognized, that would impact our effective tax rate was $~~111~~209 million and $~~149~~241 million at ~~June 28,~~December 27, 2014, and September ~~28, 2013~~27, 2014, respectively.

We classify interest and penalties on unrecognized tax benefits as income tax expense. At ~~June 28,~~December 27, 2014, and September ~~28, 2013~~27, 2014, before tax benefits, we had $6152 million and $6354 million, respectively, of accrued interest and penalties on unrecognized tax benefits.

We are subject to income tax assessments for U.S. federal income taxes for fiscal years 2011 through 2013. We are also subject to income tax assessments by major state and foreign jurisdictions for fiscal years ~~2003~~2005 through 2013 and 2002 through 2013, respectively. We estimate that during the next twelve months it is reasonably possible that unrecognized tax benefits could decrease ~~by as much as~~up to $305 million primarily due to expiration of statutes of limitations in various jurisdictions.

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NOTE 9: OTHER INCOME AND CHARGES

During the ~~nine months~~first quarter of fiscal ~~2014,~~2015, we recorded $7$1 million of equity earnings in joint ventures, $4 million in net foreign currency exchange gains, $6 million of other than temporary impairment related to an available-for-sale security and $22 million of costs associated with bridge financing facilities for the Hillshire acquisition, which were recorded in the Consolidated Condensed Statements of Income in Other, net.

During the ~~nine months~~first quarter of fiscal ~~2013,~~2014, we recorded a ~~$19~~$2 million of equity earnings in joint ventures, $1 million in net foreign currency ~~translation adjustment gain recognized in conjunction with the receipt~~exchange gains and $6 million of ~~proceeds constituting the final resolution of our investment in Canada,~~other than temporary impairment related to an available-for-sale security, which ~~was~~were recorded in the Consolidated Condensed Statements of Income in Other, net.

~~Table of Contents~~

NOTE 10: EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted earnings per share (in millions, except per share data):


	Three Months Ended						Nine Months Ended					Three Months Ended
	June 28, 2014			June 29, 2013			June 28, 2014			June 29, 2013		December 27, 2014		December 28, 2013
Numerator:
Income from continuing operations	$	258		$	249		$	720		$	589
Net Income												$	310	$	252
Less: Net income (loss) attributable to noncontrolling interests	(2		)	(4		)	(7		)	2		1		(2		)
Net income from continuing operations attributable to Tyson	260			253			727			587
Net income attributable to Tyson												309		254
Less dividends declared:
Class A	21			14			69			74		38		28
Class B	5			3			16			16		8		6
Undistributed earnings	$	234		$	236		$	642		$	497	$	263	$	220

Class A undistributed earnings	$	190		$	193		$	522		$	406	$	221	$	179
Class B undistributed earnings	44			43			120			91		42		41
Total undistributed earnings	$	234		$	236		$	642		$	497	$	263	$	220
Denominator:
Denominator for basic earnings per share:
Class A weighted average shares	280			283			275			284		336		271
Class B weighted average shares, and shares under the if-converted method for diluted earnings per share	70			70			70			70		70		70
Effect of dilutive securities:
Stock options and restricted stock	6			5			5			5		5		5
Convertible 2013 Notes	—			11			—			7
Tangible Equity Units												5		—
Warrants	—			—			5			—		—		8
Denominator for diluted earnings per share – adjusted weighted average shares and assumed conversions	356			369			355			366		416		354

Net Income Per Share from Continuing Operations Attributable to Tyson:
Class A Basic	$	0.75		$	0.73		$	2.15		$	1.69
Class B Basic	$	0.68		$	0.66		$	1.94		$	1.52
Diluted	$	0.73		$	0.69		$	2.05		$	1.61
Net Income Per Share Attributable to Tyson:
Class A Basic	$	0.75		$	0.72		$	2.15		$	1.49	$	0.77	$	0.76
Class B Basic	$	0.68		$	0.64		$	1.94		$	1.34	$	0.71	$	0.68
Diluted	$	0.73		$	0.68		$	2.05		$	1.42	$	0.74	$	0.72

~~We had no stock-based compensation shares that were antidilutive for both the three months ended June 28, 2014~~Approximately 6 million and ~~June 29, 2013. Approximately~~ 45 million of our stock-based compensation shares were antidilutive for ~~both~~ the ~~nine~~three months ended ~~June 28,~~December 27, 2014 and ~~June 29, 2013.~~December 28, 2013, respectively. These shares were not included in the ~~dilutive~~diluted earnings per share calculation.

We have two classes of capital stock, Class A stock and Class B stock. Cash dividends cannot be paid to holders of Class B stock unless they are simultaneously paid to holders of Class A stock. The per share amount of cash dividends paid to holders of Class B stock cannot exceed 90% of the cash dividends paid to holders of Class A stock.

We allocate undistributed earnings based upon a 1 to 0.9 ratio per share to Class A stock and Class B stock, respectively. We allocate undistributed earnings based on this ratio due to historical dividend patterns, voting control of Class B shareholders and contractual limitations of dividends to Class B stock.

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NOTE 11: DERIVATIVE FINANCIAL INSTRUMENTS

Our business operations give rise to certain market risk exposures mostly due to changes in commodity prices, foreign currency exchange rates and interest rates. We manage a portion of these risks through the use of derivative financial instruments, primarily futures and options, to reduce our exposure to commodity price risk, foreign currency risk and interest rate risk. Forward contracts on various commodities, including grains, livestock and energy, are primarily entered into to manage the price risk associated with forecasted purchases of these inputs used in our production processes. Foreign exchange forward contracts are entered into to manage the fluctuations in foreign currency exchange rates, primarily as a result of certain receivable and payable balances. We also periodically utilize interest rate swaps to manage interest rate risk associated with our variable-rate borrowings.

Our risk management programs are periodically reviewed by our Board of Directors’ Audit Committee. These programs are monitored by senior management and may be revised as market conditions dictate. Our current risk management programs utilize industry-standard models that take into account the implicit cost of hedging. Risks associated with our market risks and those created by derivative instruments and the fair values are strictly monitored, using Value-at-Risk and stress tests. Credit risks associated with our derivative contracts are not significant as we minimize counterparty concentrations, utilize margin accounts or letters of credit, and deal with credit-worthy counterparties. Additionally, our derivative contracts are mostly short-term in duration and we generally do not make use of credit-risk-related contingent features. No significant concentrations of credit risk existed at ~~June 28,~~December 27, 2014.

We recognize all derivative instruments as either assets or liabilities at fair value in the Consolidated Condensed Balance Sheets, with the exception of normal purchases and normal sales expected to result in physical delivery. The accounting for changes in the fair value (i.e., gains or losses) of a derivative instrument depends on whether it has been designated and qualifies as part of a hedging relationship and the type of hedging relationship. For those derivative instruments that are designated and qualify as hedging instruments, we designate the hedging instrument based upon the exposure being hedged (i.e., cash flow hedge or fair value hedge). We qualify, or designate, a derivative financial instrument as a hedge when contract terms closely mirror those of the hedged item, providing a high degree of risk reduction and correlation. If a derivative instrument is accounted for as a hedge, depending on the nature of the hedge, changes in the fair value of the instrument either will be offset against the change in fair value of the hedged assets, liabilities or firm commitments through earnings, or be recognized in other comprehensive income (loss) (OCI) until the hedged item is recognized in earnings. The ineffective portion of an instrument’s change in fair value is recognized in earnings immediately. We designate certain forward contracts as follows:

Cash Flow Hedges - include certain commodity forward and option contracts of forecasted purchases (i.e., grains) and certain foreign exchange forward contracts.

Fair Value Hedges - include certain commodity forward contracts of firm commitments (i.e., livestock).

Cash ~~flow hedges~~Flow Hedges

Derivative instruments, such as futures and options, are designated as hedges against changes in the amount of future cash flows related to procurement of certain commodities utilized in our production processes. We do not purchase forward and option commodity contracts in excess of our physical consumption requirements and generally do not hedge forecasted transactions beyond 18 months. The objective of these hedges is to reduce the variability of cash flows associated with the forecasted purchase of those commodities. For the derivative instruments we designate and qualify as a cash flow hedge, the effective portion of the gain or loss on the derivative is reported as a component of Other Comprehensive Income (OCI) and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. Gains and losses representing hedge ineffectiveness are recognized in earnings in the current period. Ineffectiveness related to our cash flow hedges was not significant for the three ~~and nine~~ months ended ~~June 28,~~December 27, 2014, and ~~June 29,~~December 28, 2013.

We had the following aggregated notional values of outstanding forward and option contracts accounted for as cash flow hedges (in millions, except soy meal tons):


	Metric	June 28, 2014		September 28, 2013		Metric	December 27, 2014		September 27, 2014
Commodity:
Corn	Bushels	—		5		Bushels	—		—
Soy meal	Tons	151,200		96,800		Tons	800		2,300
Foreign Currency	United States dollar	$	1	$	60	United States dollar	$	—	$	1

~~Table of Contents~~

As of ~~June 28,~~December 27, 2014, the net amounts expected to be reclassified into earnings within the next 12 months are pretax losses of $61 million related to grains. During the three ~~and nine~~ months ended ~~June 28,~~December 27, 2014, and ~~June 29,~~December 28, 2013, we did not reclassify significant pretax gains/losses into earnings as a result of the discontinuance of cash flow hedges due to the probability the original forecasted transaction would not occur by the end of the originally specified time period or within the additional period of time allowed by generally accepted accounting principles.

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The following table sets forth the pretax impact of cash flow hedge derivative instruments on the Consolidated Condensed Statements of Income (in millions):


	Gain/(Loss) Recognized in OCI On Derivatives						Consolidated Condensed Statements of Income Classification	Gain/(Loss) Reclassified from OCI to Earnings						Gain/(Loss) Recognized in OCI On Derivatives					Consolidated Condensed Statements of Income Classification	Gain/(Loss) Reclassified from OCI to Earnings
	Three Months Ended							Three Months Ended						Three Months Ended						Three Months Ended
	June 28, 2014			June 29, 2013				June 28, 2014			June 29, 2013			December 27, 2014		December 28, 2013				December 27, 2014			December 28, 2013
Cash Flow Hedge – Derivatives designated as hedging instruments:
Commodity contracts	$	(7	)	$	(5	)	Cost of Sales	$	1		$	(2	)	$	—	$	(2	)	Cost of Sales	$	(3	)	$	—
Foreign exchange contracts	—			3			Other Income/Expense	—			(2		)	—		(1		)	Other Income/Expense	—			—
Total	$	(7	)	$	(2	)		$	1		$	(4	)	$	—	$	(3	)		$	(3	)	$	—

	Gain/(Loss) Recognized in OCI On Derivatives						Consolidated Condensed Statements of Income Classification	Gain/(Loss) Reclassified from OCI to Earnings
	Nine Months Ended							Nine Months Ended
	June 28, 2014			June 29, 2013				June 28, 2014			June 29, 2013
Cash Flow Hedge – Derivatives designated as hedging instruments:
Commodity contracts	$	(1	)	$	(28	)	Cost of Sales	$	(2	)	$	(5	)
Foreign exchange contracts	(1		)	(2		)	Other Income/Expense	—			(4		)
Total	$	(2	)	$	(30	)		$	(2	)	$	(9	)

Fair ~~value hedges~~Value Hedges

We designate certain futures contracts as fair value hedges of firm commitments to purchase livestock for slaughter. Our objective of these hedges is to minimize the risk of changes in fair value created by fluctuations in commodity prices associated with fixed price livestock firm commitments. We had the following aggregated notional values of outstanding forward contracts entered into to hedge firm commitments which are accounted for as a fair value hedge (in millions):

Metric

June 28, 2014

September 28, 2013

Metric

December 27, 2014

September 27, 2014

Commodity:

Live Cattle

Pounds

434

209

Pounds

442

427

Lean Hogs

Pounds

348

384

Pounds

224

329

For these derivative instruments we designate and qualify as a fair value hedge, the gain or loss on the derivative, as well as the offsetting gain or loss on the hedged item attributable to the hedged risk, are recognized in earnings in the same period. We include the gain or loss on the hedged items (i.e., livestock purchase firm commitments) in the same line item, Cost of Sales, as the offsetting gain or loss on the related livestock forward position.


											in millions				in millions
	Consolidated Condensed Statements of Income Classification	Three Months Ended						Nine Months Ended						Consolidated Condensed Statements of Income Classification	Three Months Ended
		June 28, 2014			June 29, 2013			June 28, 2014			June 29, 2013				December 27, 2014			December 28, 2013
Gain/(Loss) on forwards	Cost of Sales	$	(56	)	$	11		$	(96	)	$	26		Cost of Sales	$	(40	)	$	(6	)
Gain/(Loss) on purchase contract	Cost of Sales	56			(11		)	96			(26		)	Cost of Sales	40			6

Ineffectiveness related to our fair value hedges was not significant for the three ~~and nine~~ months ended ~~June 28,~~December 27, 2014, and ~~June 29,~~December 28, 2013.

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Undesignated ~~positions~~Positions

In addition to our designated positions, we also hold forward and option contracts for which we do not apply hedge accounting. These include certain derivative instruments related to commodities price risk, including grains, livestock, energy and foreign currency risk. We mark these positions to fair value through earnings at each reporting date. We generally do not enter into undesignated positions beyond 18 months.

The objective of our undesignated grains, livestock and energy commodity positions is to reduce the variability of cash flows associated with the forecasted purchase of certain grains, energy and livestock inputs to our production processes. We also enter into certain forward sales of boxed beef and boxed pork and forward purchases of cattle and hogs at fixed prices. The fixed price sales contracts lock in the proceeds from a future sale and the fixed cattle and hog purchases lock in the cost. However, the cost of the livestock and the related boxed beef and boxed pork market prices at the time of the sale or purchase could vary from this fixed price. As we enter into fixed forward sales of boxed beef and boxed pork and forward purchases of cattle and hogs, we also enter into the appropriate number of livestock options and futures positions to mitigate a portion of this risk. Changes in market value of the open livestock options and futures positions are marked to market and reported in earnings at each reporting date, even though the economic impact of our fixed prices being above or below the market price is only realized at the time of sale or purchase. These positions generally do not qualify for hedge treatment due to location basis differences between the commodity exchanges and the actual locations when we purchase the commodities.

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We have a foreign currency cash flow hedging program to hedge portions of forecasted transactions denominated in foreign currencies, primarily with forward and option contracts, to protect against the reduction in value of forecasted foreign currency cash flows. Our undesignated foreign currency positions generally would qualify for cash flow hedge accounting. However, to reduce earnings volatility, we normally will not elect hedge accounting treatment when the position provides an offset to the underlying related transaction that impacts current earnings.

We had the following aggregate outstanding notional values related to our undesignated positions (in millions, except soy meal tons):


	Metric	June 28, 2014		September 28, 2013		Metric	December 27, 2014		September 27, 2014
Commodity:
Corn	Bushels	3		69		Bushels	16		—
Soy Meal	Tons	82,800		204,600		Tons	281,300		195,800
Soy Oil	Pounds	27		11		Pounds	21		3
Live Cattle	Pounds	109		60		Pounds	14		22
Lean Hogs	Pounds	74		159		Pounds	1		22
Foreign Currency	United States dollars	$	92	$	95	United States dollars	$	29	$	108

The following table sets forth the pretax impact of the undesignated derivative instruments on the Consolidated Condensed Statements of Income (in millions):


	Consolidated Condensed Statements of Income Classification	Gain/(Loss) Recognized in Earnings						Gain/(Loss) Recognized in Earnings						Consolidated Condensed Statements of Income Classification	Gain/(Loss) Recognized in Earnings
		Three Months Ended						Nine Months Ended							Three Months Ended
		June 28, 2014			June 29, 2013			June 28, 2014			June 29, 2013				December 27, 2014			December 28, 2013
Derivatives not designated as hedging instruments:
Commodity contracts	Sales	$	25		$	(7	)	$	57		$	(19	)	Sales	$	(1	)	$	2
Commodity contracts	Cost of Sales	(47		)	(8		)	(89		)	(15		)	Cost of Sales	(26		)	(2		)
Foreign exchange contracts	Other Income/Expense	3			(2		)	4			—			Other Income/Expense	(2		)	(1		)
Total		$	(19	)	$	(17	)	$	(28	)	$	(34	)		$	(29	)	$	(1	)

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The following table sets forth the fair value of all derivative instruments outstanding in the Consolidated Condensed Balance Sheets (in millions):


	Fair Value				Fair Value
	June 28, 2014		September 28, 2013		December 27, 2014		September 27, 2014
Derivative Assets:
Derivatives designated as hedging instruments:
Commodity contracts	$	5	$	4	$	31	$	17
Foreign exchange contracts	—		1		—		—
Total derivative assets – designated	5		5		31		17

Derivatives not designated as hedging instruments:
Commodity contracts	38		25		31		42
Foreign exchange contracts	3		2		—		—
Total derivative assets – not designated	41		27		31		42

Total derivative assets	$	46	$	32	$	62	$	59
Derivative Liabilities:
Derivatives designated as hedging instruments:
Commodity contracts	$	121	$	29	$	31	$	78
Foreign exchange contracts	—		—		—		—
Total derivative liabilities – designated	121		29		31		78
Derivatives not designated as hedging instruments:
Commodity contracts	68		72		37		80
Foreign exchange contracts	—		1		—		2
Total derivative liabilities – not designated	68		73		37		82

Total derivative liabilities	$	189	$	102	$	68	$	160

Our derivative assets and liabilities are presented in our Consolidated Condensed Balance Sheets on a net basis. We net derivative assets and liabilities, including cash collateral when a legally enforceable master netting arrangement exists between the counterparty to a derivative contract and us. See Note 12: Fair Value Measurements for a reconciliation to amounts reported in the Consolidated Condensed Balance Sheets in Other current assets and Other current liabilities.

NOTE 12: FAIR VALUE MEASUREMENTS

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The fair value hierarchy contains three levels as follows:

Level 1 — Unadjusted quoted prices available in active markets for the identical assets or liabilities at the measurement date.

Level 2 — Other observable inputs available at the measurement date, other than quoted prices included in Level 1, either directly or indirectly, including:

Quoted prices for similar assets or liabilities in active markets;

Quoted prices for identical or similar assets in non-active markets;

Inputs other than quoted prices that are observable for the asset or liability; and

Inputs derived principally from or corroborated by other observable market data.

Level 3 — Unobservable inputs that cannot be corroborated by observable market data and reflect the use of significant management judgment. These values are generally determined using pricing models for which the assumptions utilize management’s estimates of market participant assumptions.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The fair value hierarchy requires the use of observable market data when available. In instances where the inputs used to measure fair value fall into different levels of the fair value hierarchy, the fair value measurement has been determined based on the lowest level input significant to the fair value measurement in its entirety. Our assessment of the significance of a particular item to the fair value measurement in its entirety requires judgment, including the consideration of inputs specific to the asset or liability.

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The following tables set forth by level within the fair value hierarchy our financial assets and liabilities accounted for at fair value on a recurring basis according to the valuation techniques we used to determine their fair values (in millions):


June 28, 2014	Level 1		Level 2		Level 3		Netting (a)			Total
December 27, 2014												Level 1		Level 2		Level 3		Netting (a)			Total
Assets:
Commodity Derivatives	$	—	$	43	$	—	$	(11	)	$	32	$	—	$	62	$	—	$	(34	)	$	28
Foreign Exchange Forward Contracts	—		3		—		—			3		—		—		—		—			—
Available-for-Sale Securities:
Current	—		2		—		—			2		—		2		—		—			2
Non-current	—		28		65		—			93		17		28		65		—			110
Deferred Compensation Assets	15		220		—		—			235		5		230		—		—			235
Total Assets	$	15	$	296	$	65	$	(11	)	$	365	$	22	$	322	$	65	$	(34	)	$	375
Liabilities:
Commodity Derivatives	$	—	$	189	$	—	$	(183	)	$	6	$	—	$	68	$	—	$	(68	)	$	—
Foreign Exchange Forward Contracts	—		—		—		—			—		—		—		—		—			—
Total Liabilities	$	—	$	189	$	—	$	(183	)	$	6	$	—	$	68	$	—	$	(68	)	$	—


September 28, 2013	Level 1		Level 2		Level 3		Netting (a)			Total
September 27, 2014												Level 1		Level 2		Level 3		Netting (a)			Total
Assets:
Commodity Derivatives	$	—	$	29	$	—	$	(21	)	$	8	$	—	$	59	$	—	$	(50	)	$	9
Foreign Exchange Forward Contracts	—		3		—		(1		)	2		—		—		—		—			—
Available-for-Sale Securities:
Current	—		1		—		—			1		—		1		—		—			1
Non-current	4		24		65		—			93		1		24		67		—			92
Deferred Compensation Assets	23		191		—		—			214		15		218		—		—			233
Total Assets	$	27	$	248	$	65	$	(22	)	$	318	$	16	$	302	$	67	$	(50	)	$	335
Liabilities:
Commodity Derivatives	$	—	$	101	$	—	$	(101	)	$	—	$	—	$	158	$	—	$	(148	)	$	10
Foreign Exchange Forward Contracts	—		1		—		—			1		—		2		—		—			2
Total Liabilities	$	—	$	102	$	—	$	(101	)	$	1	$	—	$	160	$	—	$	(148	)	$	12

(a)

Our derivative assets and liabilities are presented in our Consolidated Condensed Balance Sheets on a net basis. We net derivative assets and liabilities, including cash collateral, when a legally enforceable master netting arrangement exists between the counterparty to a derivative contract and us. At ~~June 28,~~December 27, 2014, and September ~~28, 2013~~27, 2014, we had posted with various counterparties $~~172~~34 million and $7998 million, respectively, of cash collateral related to our commodity derivatives and held no cash collateral.

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The following table provides a reconciliation between the beginning and ending balance of debt securities measured at fair value on a recurring basis in the table above that used significant unobservable inputs (Level 3) (in millions):


	Nine Months Ended						Three Months Ended
	June 28, 2014			June 29, 2013			December 27, 2014			December 28, 2013
Balance at beginning of year	$	65		$	86		$	67		$	65
Total realized and unrealized gains (losses):
Included in earnings	—			1			—			—
Included in other comprehensive income (loss)	—			(1		)	—			—
Purchases	18			14			4			7
Issuances	—			—			—			—
Settlements	(18		)	(35		)	(6		)	(8		)
Balance at end of period	$	65		$	65		$	65		$	64
Total gains (losses) for the nine-month period included in earnings attributable to the change in unrealized gains (losses) relating to assets and liabilities still held at end of period	$	—		$	—
Total gains (losses) for the three-month period included in earnings attributable to the change in unrealized gains (losses) relating to assets and liabilities still held at end of period							$	—		$	—

The following methods and assumptions were used to estimate the fair value of each class of financial instrument:

Derivative Assets and Liabilities: Our commodities and foreign exchange forward contracts primarily include exchange-traded and over-the-counter contracts which are further described in Note 11: Derivative Financial Instruments. We record our commodity derivatives at fair value using quoted market prices adjusted for credit and non-performance risk and internal models that use as their basis readily observable market inputs including current and forward commodity market prices. Our foreign exchange forward contracts are recorded at fair value based on quoted prices and spot and forward currency prices adjusted for credit and non-performance risk. We classify these instruments in Level 2 when quoted market prices can be corroborated utilizing observable current and forward commodity market prices on active exchanges or observable market transactions of spot currency rates and forward currency prices.

Available-for-Sale Securities: Our investments in marketable debt securities are classified as available-for-sale and are reported at fair value based on pricing models and quoted market prices adjusted for credit and non-performance risk. Short-term investments with maturities of less than 12 months are included in Other current assets in the Consolidated Condensed Balance Sheets and primarily include certificates of deposit and commercial paper. All other marketable debt securities are included in Other Assets in the Consolidated Condensed Balance Sheets and have maturities ranging up to 35 years. We classify our investments in U.S. government, U.S. agency, certificates of deposit and commercial paper debt securities as Level 2 as fair value is generally estimated using discounted cash flow models that are primarily industry-standard models that consider various assumptions, including time value and yield curve as well as other readily available relevant economic measures. We classify certain corporate, asset-backed and other debt securities as Level 3 as there is limited activity or less observable inputs into valuation models, including current interest rates and estimated prepayment, default and recovery rates on the underlying portfolio or structured investment vehicle. Significant changes to assumptions or unobservable inputs in the valuation of our Level 3 instruments would not have a significant impact to our consolidated condensed financial statements.

~~We have~~ ~~0.8 million~~ shares of Syntroleum Corporation common stock. At June 28, 2014, we classified the shares as Level 2 as the fair value could be corroborated based on observable market data. At September 28, 2013, we classified the shares as Level 1 as the fair value was based on unadjusted quoted prices available in active markets. We record the shares in Other Assets in the Consolidated Condensed Balance Sheet. Additionally, at September 28, 2013, we had ~~0.4 million~~ of Syntroleum Corporation warrants. We classified the warrants as Level 2 as the fair value could be corroborated based on observable market data and was recorded in Other Assets in the Consolidated Condensed Balance Sheet.

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The following table sets forth our available-for-sale securities' amortized cost basis, fair value and unrealized gain (loss) by significant investment category (in millions):


	June 28, 2014						September 28, 2013							December 27, 2014						September 27, 2014
	Amortized Cost Basis		Fair Value		Unrealized Gain/(Loss)		Amortized Cost Basis		Fair Value		Unrealized Gain/(Loss)			Amortized Cost Basis		Fair Value		Unrealized Gain/(Loss)		Amortized Cost Basis		Fair Value		Unrealized Gain/(Loss)
Available-for-Sale Securities:
Debt Securities:
U.S. Treasury and Agency	$	26	$	27	$	1	$	25	$	25	$	—		$	29	$	30	$	1	$	25	$	25	$	—
Corporate and Asset-Backed	65		65		—		64		65		1			65		65		—		65		67		2
Equity Securities:
Common Stock and Warrants (a)	3		3		—		9		4		(5		)
Common Stock (a)														1		17		16		1		1		—


(a)	At ~~June 28,~~December 27, 2014, and September 27, 2014, the amortized cost basis for Equity Securities had been reduced by accumulated other than temporary impairment of approximately ~~$6 million~~. $2 million.

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Unrealized holding gains (losses), net of tax, are excluded from earnings and reported in OCI until the security is settled or sold. On a quarterly basis, we evaluate whether losses related to our available-for-sale securities are temporary in nature. Losses on equity securities are recognized in earnings if the decline in value is judged to be other than temporary. If losses related to our debt securities are determined to be other than temporary, the loss would be recognized in earnings if we intend, or more likely than not will be required, to sell the security prior to recovery. For debt securities in which we have the intent and ability to hold until maturity, losses determined to be other than temporary would remain in OCI, other than expected credit losses which are recognized in earnings. We consider many factors in determining whether a loss is temporary, including the length of time and extent to which the fair value has been below cost, the financial condition and near-term prospects of the issuer and our ability and intent to hold the investment for a period of time sufficient to allow for any anticipated recovery. We recognized ~~$6 million of~~no other than temporary impairment in earnings for the ~~nine~~three months ended ~~June~~December 27, 2014 and $6 million for the three months ended December 28, ~~2014~~,2013, which iswas recorded in the Consolidated Condensed Statements of Income in Other, net. No other than temporary losses were deferred in OCI as of ~~June 28,~~December 27, 2014, and September ~~28, 2013~~27, 2014.

Deferred Compensation Assets: We maintain non-qualified deferred compensation plans for certain executives and other highly compensated employees. Investments are maintained within a trust and include money market funds, mutual funds and life insurance policies. The cash surrender value of the life insurance policies is invested primarily in mutual funds. The investments are recorded at fair value based on quoted market prices and are included in Other Assets in the Consolidated Condensed Balance Sheets. We classify the investments which have observable market prices in active markets in Level 1 as these are generally publicly-traded mutual funds. The remaining deferred compensation assets are classified in Level 2, as fair value can be corroborated based on observable market data. Realized and unrealized gains (losses) on deferred compensation are included in earnings.

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

In addition to assets and liabilities that are recorded at fair value on a recurring basis, we record assets and liabilities at fair value on a nonrecurring basis. Generally, assets are recorded at fair value on a nonrecurring basis as a result of impairment charges. ~~During~~We did not have any significant measurements of assets or liabilities at fair value on a nonrecurring basis subsequent to their initial recognition during the ~~third quarter of fiscal~~three months ended December 27, 2014 ~~we recorded a $49 million impairment charge related to the planned closure of three Prepared Foods plants. Our valuation of these assets incorporated unobservable Level 3 inputs.~~and December 28, 2013.

Other Financial Instruments

Fair value of our debt is principally estimated using Level 2 inputs based on quoted prices for those or similar instruments. Fair value and carrying value for our debt are as follows (in millions):

June 28, 2014 September 28, 2013
Fair Value Carrying Value Fair Value Carrying Value
Total Debt $ 1,963
$ 1,825
$ 2,541
$ 2,408



	December 27, 2014				September 27, 2014
	Fair Value		Carrying Value		Fair Value		Carrying Value
Total Debt	$	7,815	$	7,527	$	8,347	$	8,178

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NOTE 13: PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS

The components of the net periodic cost for the pension and postretirement benefit plans for the three months ended December 27, 2014 and December 28, 2013 are as follows (in millions):



	Pension Plans
	Three Months Ended
	December 27, 2014			December 28, 2013

Service cost	$	4		$	2
Interest cost	21			2
Expected return on plan assets	(25		)	(1		)
Amortization of:
Net actuarial loss	1			1
Settlement loss	8			—
Net periodic cost	$	9		$	4



	Postretirement Benefit Plans
	Three Months Ended
	December 27, 2014		December 28, 2013

Service cost	$	1	$	—
Interest cost	2		1
Net periodic cost	$	3	$	1

We contributed $3 million and $2 million to our pension plans for the three months ended December 27, 2014 and December 28, 2013, respectively. We expect to contribute an additional $11 million during the remainder of fiscal 2015. The amount of contributions made to pension plans in any year is dependent upon a number of factors including minimum funding requirements in the jurisdictions in which we operate. As a result, the actual funding in fiscal 2015 may differ from the current estimate.

NOTE 14: OTHER COMPREHENSIVE INCOME (LOSS)

The before and after tax changes in the components of other comprehensive income (loss) are as follows (in millions):


	Three Months Ended																		Nine Months Ended																		Three Months Ended
	June 28, 2014									June 29, 2013									June 28, 2014									June 29, 2013									December 27, 2014									December 28, 2013
	Before Tax			Tax			After Tax			Before Tax			Tax			After Tax			Before Tax			Tax			After Tax			Before Tax			Tax			After Tax			Before Tax			Tax			After Tax			Before Tax			Tax			After Tax

Derivatives accounted for as cash flow hedges:
(Gain) loss reclassified to Cost of Sales	$	(1	)	$	—		$	(1	)	$	2		$	(1	)	$	1		$	2		$	(1	)	$	1		$	5		$	(2	)	$	3		$	3		$	(2	)	$	1		$	—		$	—		$	—
(Gain) loss reclassified to Other Income/Expense	—			—			—			2			—			2			—			—			—			4			(1		)	3
Unrealized gain (loss)	(7		)	3			(4		)	(2		)	1			(1		)	(2		)	1			(1		)	(30		)	12			(18		)	—			—			—			(3		)	1			(2		)

Investments:
(Gain) loss reclassified to Other Income/Expense	—			—			—			—			—			—			6			(2		)	4			(1		)	—			(1		)	—			—			—			6			(2		)	4
Unrealized gain (loss)	—			—			—			1			—			1			(1		)	—			(1		)	(2		)	1			(1		)	15			(6		)	9			(1		)	—			(1		)

Currency translation:
Translation gain reclassified to Other Income/Expense	—			—			—			—			—			—			—			—			—			(19		)	(1		)	(20		)
Translation loss reclassified to Cost of Sales (a)																																					37			(1		)	36			—			—			—
Translation adjustment	10			2			12			(33		)	—			(33		)	5			2			7			(29		)	—			(29		)	(37		)	7			(30		)	(11		)	—			(11		)

Postretirement benefits	1			(1		)	—			1			—			1			3			(1		)	2			4			—			4			9			(2		)	7			1			1			2
Total Other Comprehensive Income (Loss)	$	3		$	4		$	7		$	(29	)	$	—		$	(29	)	$	13		$	(1	)	$	12		$	(68	)	$	9		$	(59	)	$	27		$	(4	)	$	23		$	(8	)	$	—		$	(8	)

(a) Translation loss reclassified to Cost of Sales related to disposition of a foreign operation, which is further described in Note 2: Acquisitions and Dispositions.

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NOTE ~~14:~~15: SEGMENT REPORTING

We operate in five segments: Chicken, Beef, Pork, Prepared Foods and International. We measure segment profit as operating income (loss).

During the second quarter of fiscal 2014, we began reporting our International operation as a separate segment, which was previously included in our Chicken segment. Our International segment became a separate reportable segment as a result of changes to our internal financial reporting to align with previously announced executive leadership changes. All periods presented have been reclassified to reflect this change. Beef, Pork, Prepared Foods and Other results were not impacted by this change.

Chicken: Chicken includes our domestic operations related to raising and processing live chickens into fresh, frozen and value-added chicken products, as well as sales from allied products. Products are marketed domestically to food retailers, foodservice distributors, restaurant operators, hotel chains and noncommercial foodservice establishments such as schools, healthcare facilities, the military and other food processors, as well as to international export markets. This segment also includes logistics operations to move products through our domestic supply chain and the global operations of our chicken breeding stock subsidiary.

Beef: Beef includes our operations related to processing live fed cattle and fabricating dressed beef carcasses into primal and sub-primal meat cuts and case-ready products. Products are marketed domestically to food retailers, foodservice distributors, restaurant operators, hotel chains and noncommercial foodservice establishments such as schools, healthcare facilities, the military and other food processors, as well as to international export markets. This segment also includes sales from allied products such as hides and variety meats, as well as logistics operations to move products through the supply chain.

Pork: Pork includes our operations related to processing live market hogs and fabricating pork carcasses into primal and sub-primal cuts and case-ready products. Products are marketed domestically to food retailers, foodservice distributors, restaurant operators, hotel chains and noncommercial foodservice establishments such as schools, healthcare facilities, the military and other food processors, as well as to international export markets. This segment also includes our live swine group, related allied product processing activities and logistics operations to move products through the supply chain.

Prepared Foods: Prepared Foods includes our operations related to manufacturing and marketing frozen and refrigerated food products and logistics operations to move products through the supply chain. Products primarily include pepperoni, bacon, sausage, beef and pork pizza toppings, pizza crusts, flour and corn tortilla products, appetizers, prepared meals, ethnic foods, soups, sauces, side dishes, meat dishes, breadsticks and processed meats. Products are marketed domestically to food retailers, foodservice distributors, restaurant operators, hotel chains and noncommercial foodservice establishments such as schools, healthcare facilities, the military and other food processors, as well as to international export markets.

~~Table~~In fiscal 2014, we acquired Hillshire Brands, a manufacturer and marketer of ~~Contents~~branded, convenient foods which includes brands such as Jimmy Dean®, Ball Park®, Hillshire Farm®, State Fair®, Van's®, Sara Lee® frozen bakery and Chef Pierre® pies as well as artisanal brands Aidells®, Gallo Salame®, and Golden Island® premium jerky. Hillshire Brands' results from operations for the first quarter of fiscal 2015 are included in the Prepared Foods segment.

International: International includes our foreign operations primarily related to raising and processing live chickens into fresh, frozen and value-added chicken products in Brazil, China, India and Mexico. Products are marketed in each respective country to food retailers, foodservice distributors, restaurant operators, hotel chains, noncommercial foodservice establishments and live markets, as well as to other international export markets.

In fiscal 2014, we announced our plan to sell our Brazil and Mexico operations, part of our International segment, to JBS for $575 million in cash, subject to certain adjustments. As further described in Note 2: Acquisitions and Dispositions, we sold our Brazil operations in the first quarter of fiscal 2015. The sale of our Mexico operation is pending the necessary government approvals and is expected to close in the second quarter of fiscal 2015.

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The results from Dynamic Fuels are included in ~~Other.~~Other in fiscal 2014. We allocate expenses related to corporate activities to the segments, except for ~~third party~~third-party acquisition ~~related transaction fees~~and integration costs which are included in ~~Other.~~Other of $15 million.

Information on segments and a reconciliation to income ~~from continuing operations~~ before income taxes are as follows (in millions):


	Three Months Ended							Nine Months Ended								Three Months Ended
	June 28, 2014				June 29, 2013			June 28, 2014				June 29, 2013				December 27, 2014			December 28, 2013
Sales:
Chicken	$	2,829			$	2,820		$	8,327			$	8,148			$	2,780		$	2,656
Beef	4,189				3,723			11,748				10,655				4,391			3,734
Pork	1,766				1,332			4,677				4,006				1,540			1,424
Prepared Foods	901				797			2,669				2,441				2,133			907
International	365				343			1,020				1,001				305			327
Other	—				—			—				47				—			—
Intersegment Sales	(368		)		(284		)	(966		)		(818		)		(332		)	(287		)
Total Sales	$	9,682			$	8,731		$	27,475			$	25,480			$	10,817		$	8,761

Operating Income (Loss):
Chicken	$	195			$	215		$	682			$	471			$	351		$	253
Beef	101				114			194				134				(6		)	58
Pork	128				67			356				264				122			121
Prepared Foods	(50		)	(a)	24			(13		)	(a)	85				71			16
International	(15		)		5			(73		)		—				(14		)	(28		)
Other	(8		)	(b)	(6		)	(22		)	(b)	5				(15		)	(8		)
Total Operating Income	351				419			1,124				959				509			412

Total Other (Income) Expense	41			(b)	34			90			(b)	85			(c)	74			29

Income from Continuing Operations before Income Taxes	$	310			$	385		$	1,034			$	874
Income before Income Taxes																$	435		$	383


~~(a)~~	~~Includes $49 million impairment charge related to the planned closure of three Prepared Foods plants.~~


~~(b)~~	Operating income in Other includes $7 million related to third party transaction fees and Other (Income) Expense includes $22 million related to costs associated with bridge financing facilities, both incurred as part of the Hillshire acquisition.


~~(c)~~	~~Includes $19 million related to the recognized currency translation adjustment gain.~~

The Chicken segment had sales of $2$1 million and $5$2 million in the ~~third~~first quarter of fiscal ~~2014~~2015 and ~~2013~~2014, ~~respectively, and sales of~~ ~~$6 million~~ ~~and~~ ~~$13 million~~ ~~in the nine months of fiscal 2014 and 2013,~~ respectively, from transactions with other operating segments of the Company. The Beef segment had sales of $8378 million and $5963 million in the ~~third~~first quarter of fiscal ~~2014~~2015 and ~~2013~~2014, ~~respectively, and sales of~~ ~~$213 million~~ ~~and~~ ~~$156 million~~ ~~in the nine months of fiscal 2014 and 2013,~~ respectively, from transactions with other operating segments of the Company. The Pork segment had sales of $~~283~~253 million and $~~220~~222 million in the ~~third~~first quarter of fiscal ~~2014~~2015 and ~~2013~~2014, ~~respectively, and sales of~~ ~~$747 million~~ ~~and~~ ~~$649 million~~ ~~in the nine months of fiscal 2014 and 2013,~~ respectively, from transactions with other operating segments of the Company. The aforementioned sales from intersegment transactions, which were at market prices, were included in the segment sales in the above table.

2023

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NOTE ~~15:~~16: COMMITMENTS AND CONTINGENCIES

Commitments

We guarantee obligations of certain outside third parties, consisting primarily of leases and grower loans, which are substantially collateralized by the underlying assets. Terms of the underlying debt cover periods up to ~~ten~~10 years, and the maximum potential amount of future payments as of ~~June 28,~~December 27, 2014, was $5562 million. We also maintain operating leases for various types of equipment, some of which contain residual value guarantees for the market value of the underlying leased assets at the end of the term of the lease. The remaining terms of the lease maturities cover periods over the next 13 years. The maximum potential amount of the residual value guarantees is $5253 million, of which $4647 million could be recoverable through various recourse provisions and an additional undeterminable recoverable amount based on the fair value of the underlying leased assets. The likelihood of material payments under these guarantees is not considered probable. At ~~June 28,~~December 27, 2014, and September ~~28, 2013~~27, 2014, no material liabilities for guarantees were recorded.

We have cash flow assistance programs in which certain livestock suppliers participate. Under these programs, we pay an amount for livestock equivalent to a standard cost to grow such livestock during periods of low market sales prices. The amounts of such payments that are in excess of the market sales price are recorded as receivables and accrue interest. Participating suppliers are obligated to repay these receivables balances when market sales prices exceed this standard cost, or upon termination of the agreement. Our maximum obligation associated with these programs is limited to the fair value of each participating livestock supplier’s net tangible assets. The potential maximum obligation as of ~~June 28,~~December 27, 2014, was approximately $~~310~~330 million. ~~The total~~We had no receivables under these programs ~~were~~at ~~$19 million~~December 27, 2014 and $444 million at ~~June 28,~~September 27, 2014~~, and~~ ~~September 28, 2013, respectively, and~~. These receivables are included, net of allowance for uncollectible amounts, in Accounts Receivable in our Consolidated Condensed Balance Sheets. Even though these programs are limited to the net tangible assets of the participating livestock suppliers, we also manage a portion of our credit risk associated with these programs by obtaining security interests in livestock suppliers’ assets. After analyzing residual credit risks and general market conditions, we have ~~recorded an~~no allowance for these programs’ estimated uncollectible receivables of ~~$9 million~~ ~~and~~ ~~$15 million~~at ~~June 28,~~December 27, 2014, and September ~~28, 2013~~27, 2014~~, respectively.~~.

Contingencies

We are involved in various claims and legal proceedings. We routinely assess the likelihood of adverse judgments or outcomes to those matters, as well as ranges of probable losses, to the extent losses are reasonably estimable. We record accruals for such matters to the extent that we conclude a loss is probable and the financial impact, should an adverse outcome occur, is reasonably estimable. Such accruals are reflected in the Company’s consolidated condensed financial statements. In our opinion, we have made appropriate and adequate accruals for these matters and believe the probability of a material loss beyond the amounts accrued to be remote; however, the ultimate liability for these matters is uncertain, and if accruals are not adequate, an adverse outcome could have a material effect on the consolidated financial condition or results of operations. Listed below are certain claims made against the Company and/or our subsidiaries for which the potential exposure is considered material to the Company’s consolidated condensed financial statements. We believe we have substantial defenses to the claims made and intend to vigorously defend these matters.

~~Table of Contents~~

There are ~~eleven~~seven pending lawsuits ~~against~~involving our beef, pork and ~~pork subsidiary, Tyson Fresh Meats Inc.,~~prepared foods plants, in which certain present and past employees allege that we failed to compensate them for the time it takes to engage in pre- and post-shift activities, such as changing into and out of protective and sanitary clothing and walking to and from the changing area, work areas and break areas in violation of the Fair Labor Standards Act ~~(FLSA)~~ and various state laws. These lawsuits involve employees from our plants in Garden City, Kansas (Garcia, et al. v. Tyson Foods, Inc., Tyson Fresh Meats, Inc., D. Kansas, May 15, 2006); Storm Lake, Iowa (Bouaphakeo (f/k/a Sharp), et al. v. Tyson Foods, Inc., N.D. Iowa, February 6, 2007); Columbus Junction, Iowa (Guyton (f/k/a Robinson), et al. v. Tyson Foods, Inc., d.b.a Tyson Fresh Meats, Inc., S.D. Iowa, September 12, 2007); Madison, Nebraska (Acosta, et al. v Tyson Foods, Inc. d.b.a Tyson Fresh Meats, Inc., D. Nebraska, February 29, 2008); Dakota City, Nebraska (Gomez, et al. v. Tyson Foods, Inc., D. Nebraska, January 16, 2008); Perry and Waterloo, Iowa (Edwards, et al. v. Tyson Foods, Inc. d.b.a Tyson Fresh Meats, Inc., S.D. Iowa, March 20, 2008); Logansport, Indiana (Carter, et al. v. Tyson Foods, Inc. and Tyson Fresh Meats, Inc., N.D. Indiana, April 29, 2008); Goodlettsville, Tennessee (Abadeer v. Tyson Foods, Inc., and Tyson Fresh Meats, Inc., M.D. Tennessee, February 6, 2009); Emporia, Kansas (Abdiaziz, et al. v. Tyson Foods, Inc., Tyson Fresh Meats, Inc., D. Kansas, September 30, 2011); and Joslin, Illinois (Murray, et al. v. Tyson Foods, Inc., C.D. Illinois, January 2, 2008; and DeVoss v. Tyson Foods, Inc. d.b.a. Tyson Fresh Meats, C.D. Illinois, March 2, 2011). The actions allege we failed to pay employees for all hours worked, including overtime compensation for the time it takes to change into protective work uniforms, safety equipment and other sanitary and protective clothing worn by employees, and for walking to and from the changing area, work areas and break areas in violation of the FLSA and analogous state laws. The plaintiffs seek back wages, liquidated damages, pre- and post-judgment interest, attorneys’ fees and costs. Each case is proceeding in its jurisdiction.

Garcia, et al. v. Tyson Foods, Inc., Tyson Fresh Meats, Inc., D. Kansas, May 15, 2006 - After a trial ~~in the Garcia case, which involves~~involving our Garden City, Kansas beef plant, a jury verdict in favor of the plaintiffs was entered on March 17, 2011. Exclusive of pre- and post-judgment interest, attorneys’ fees and costs, the jury found violations of federal and state laws for pre- and post-shift work activities and awarded damages in the amount of ~~$503,011~~.$503,011. Plaintiffs’ counsel filed an application for attorneys’ fees and expenses which we contested. On December 7, 2012, the court granted plaintiffs' counsel's application and awarded a total of ~~$3,609,723~~.$3,609,723. We appealed the jury’s verdict and trial court’s award to the Tenth Circuit Court of ~~Appeals Oral arguments were held on November 18, 2013.~~Appeals. The appellate court affirmed the jury verdict and judgment and subsequently denied our petition for rehearing. We subsequently paid the judgment.

Bouaphakeo (f/k/a Sharp), et al. v. Tyson Foods, Inc., N.D. Iowa, February 6, 2007 - A jury trial was held ~~in the Bouaphakeo case, which involves~~involving our Storm Lake, Iowa pork plant which resulted in a jury verdict in favor of the plaintiffs for violations of federal and state laws for pre- and post-shift work activities. The trial court also awarded the plaintiffs liquidated damages, resulting in total damages awarded in the amount of ~~$5,784,758~~.$5,784,758. The plaintiffs' counsel has also filed an application for attorneys' fees and expenses in the amount of ~~$2,692,145~~.$2,692,145. We ~~have~~ appealed the jury's verdict and trial court's award to the Eighth Circuit Court of Appeals. ~~Oral arguments were held on February 11, 2014.~~

~~A jury trial was held in~~The appellate court affirmed the ~~Guyton case, which involves our Columbus Junction, Iowa pork plant, which resulted in a~~ jury verdict ~~in favor~~and judgment on August 25, 2014, and we filed a petition for rehearing on September 22, 2014, which was denied.

Table of ~~Tyson on April 25, 2012. The plaintiffs have appealed to the Eighth Circuit Court of Appeals. Oral arguments were held on February 11, 2014.~~Contents

Acosta, et al. v Tyson Foods, Inc. dba Tyson Fresh Meats, Inc., D. Nebraska, February 29, 2008 - A bench trial was held ~~in the Acosta case, which involves~~involving our Madison, Nebraska pork plant, in January 2013. In May 2013 the trial court awarded the plaintiffs ~~$5,733,943~~$5,733,943 for unpaid overtime wages. Subsequently, the court ordered the class of plaintiffs expanded, and the plaintiffs submitted an updated calculation of ~~$6,258,330~~$6,258,330 for unpaid overtime wages as reflected by payroll data through May 2013. On January 30, 2014, the trial court entered judgment in favor of the plaintiffs in the amount of ~~$18,774,989.~~$18,774,989, which represents a tripling of the plaintiffs’ alleged damages. The court denied our post-trial motions, and we appealed to the Eighth Circuit Court of Appeals. Oral argument was held before the appellate court on January 15, 2015.

Gomez, et al. v. Tyson Foods, Inc., D. Nebraska, January 16, 2008 - A jury trial ~~in the Gomez case, which involves~~involving our Dakota City, Nebraska beef plant, was held, and the jury found in favor of the plaintiffs on April 3, 2013. On October 2, 2013, the trial court denied the parties’ post-trial motions and entered judgment awarding unpaid overtime wages, liquidated damages, and penalties totaling ~~$4,960,787~~.$4,960,787. We appealed the jury’s verdict and trial court’s award to the Eighth Circuit Court of Appeals. Oral argument was held before the appellate court on January 15, 2015.

Edwards, et al. v. Tyson Foods, Inc. dba Tyson Fresh Meats, Inc., S.D. Iowa, March 20, 2008 - The trial court in ~~the Edwards~~this case, which involves our Perry and Waterloo, Iowa pork plants, decertified the state law class and granted other pre-trial motions that resulted in judgment in our favor with respect to the plaintiffs’ claims. The plaintiffs have filed a motion to modify this judgment.

Abdiaziz, et al. v. Tyson Foods, Inc., Tyson Fresh Meats, Inc., D. Kansas, September 30, 2011 - This case involves our Emporia, Kansas beef plant, and was bifurcated from the case involving our Garden City, Kansas beef plant. It is presently stayed.

Murray, et al. v. Tyson Foods, Inc., C.D. Illinois, January 2, 2008; and DeVoss v. Tyson Foods, Inc. d.b.a. Tyson Fresh Meats, C.D. Illinois, March 2, 2011 - These cases involve our Joslin, Illinois beef plant and are in their preliminary stages.

Dozier, Southerland, et al. v. Hillshire Brands, Co., Inc. E.D. North Carolina, September 2, 2014 - This case involves our Tarboro, N.C. prepared foods plant and is in its preliminary stages.

Our subsidiary, The Hillshire Brands Company (formerly named Sara Lee Corporation), is a party to a consolidation of cases filed by individual complainants with the Republic of the Philippines, Department of Labor and Employment and the National Labor Relations Commission (NLRC) from 1998 through July 1999. The complaint is filed against Aris Philippines, Inc., Sara Lee Corporation, Sara Lee Philippines, Inc., Fashion Accessories Philippines, Inc., and Attorney Cesar C. Cruz (collectively, the “respondents”). The complaint primarily alleges unfair labor practices due to the termination of manufacturing operations in the Philippines by Aris Philippines, Inc., a former subsidiary of The Hillshire Brands Company. In 2006, the arbitrator ruled against the respondents and awarded the complainants PHP3,453,664,710 (approximately US$76 million) in damages and fees. The respondents appealed this ruling and it was subsequently set aside by the NLRC in December 2006. However, in a decision dated June 4, 2014, the Supreme Court of the Philippines set aside the NLRC’s December 2006 ruling as premature. The parties have filed numerous appeals, motions for reconsideration and petitions for review in these cases as to the ~~Carter case, which involves our Logansport, Indiana pork plant, agreed~~merits of complainants’ claims and the appropriate amount of an appeal bond to ~~settle all claims for~~ ~~$950,000. The parties’ joint motion for approval~~be posted by the respondents. Certain of these appeals and motions remain pending before the NLRC and Supreme Court of the ~~settlement was granted on May 9, 2014.~~

The trial court in the Abadeer case, which involves our Goodlettsville, Tennessee case-ready beef and pork plant, granted the plaintiffs’ motion for summary judgment in part, finding that certain pre- and post-shift activities were compensable and our non-payment for those activities was willful and not in good faith. The parties subsequently agreed to settle all claims for $7,750,000. The parties' joint motion for approval of settlement was granted.

~~Table of Contents~~

Philippines. On June ~~19, 2005, the Attorney General and the Secretary of the Environment of the State of Oklahoma filed a complaint in the U.S. District Court for the Northern District of Oklahoma against us,~~ ~~three~~ ~~of our subsidiaries and~~ ~~six~~ ~~other poultry integrators.~~23, 2014, without admitting liability, The complaint, which was subsequently amended, asserts a number of state and federal causes of action including, but not limited to, counts under Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), Resource Conservation and Recovery Act (RCRA), and state-law public nuisance theories. The amended complaint asserts that defendants and certain contract growers who are not named in the amended complaint polluted the surface waters, groundwater and associated drinking water supplies of the Illinois River Watershed (IRW) through the land application of poultry litter. Oklahoma asserts that this alleged pollution has also caused extensive injury to the environment (including soils and sediments) of the IRW and that the defendants have been unjustly enriched. Oklahoma’s claims cover the entire IRW, which encompasses more than ~~one million~~ ~~acres of land and the natural resources (including lakes and waterways) contained therein. Oklahoma seeks wide-ranging relief, including injunctive relief, compensatory damages in excess of~~ ~~$800 million~~, an unspecified amount in punitive damages and attorneys’ fees. We and the other defendants have denied liability, asserted various defenses, and filed a third-party complaint that asserts claims against other persons and entities whose activities may have contributed to the pollution alleged in the amended complaint. The district court has stayed proceedings on the third party complaint pending resolution of Oklahoma’s claims against the defendants. On October 31, 2008, the defendantsHillshire Brands Company filed a motion ~~to dismiss for failure to join~~requesting that the Cherokee Nation as a required party or, in the alternative, for judgment as a matter of law based on the plaintiffs’ lack of standing. This motion was granted in part and denied in part on July 22, 2009. In its ruling, the district court dismissed Oklahoma’s claims for cost recovery and for natural resources damages under CERCLA and for unjust enrichment under Oklahoma common law. This ruling also narrowed the scope of Oklahoma’s remaining claims by dismissing all damage claims under its causes of action for Oklahoma common law nuisance, federal common law nuisance, and Oklahoma common law trespass, leaving only its claims for injunctive relief for trial. On August 18, 2009, theSupreme Court ~~granted partial summary judgment in favor~~ of the ~~defendants on Oklahoma’s~~Philippines order dismissal with prejudice of all claims against it and its predecessors-in-interest in exchange for ~~violations of~~payments allocated by the ~~Oklahoma Registered Poultry Feeding Operations Act. Oklahoma later voluntarily dismissed~~court among the remainder of this claim. On September 2, 2009, the Cherokee Nation filed a motion to intervene in the lawsuit. Its motion to intervene was denied on September 15, 2009, and the Cherokee Nation filed a notice of appeal of that ruling in the Tenth Circuit Court of Appeals on September 17, 2009. A non-jury trial of the case began on September 24, 2009. At the close of Oklahoma’s case-in-chief, the Court granted the defendants’ motions to dismiss claims based on RCRA, nuisance per se, and health risks related to bacteria. The defense rested its case on January 13, 2010, and closing arguments were held on February 11, 2010. On September 21, 2010, the Court of Appeals affirmed the district court’s denial of the Cherokee Nation’s motion to intervene. On October 6, 2010, the Cherokee Nation and the State of Oklahoma filed a petition for rehearing or en banc review seeking reconsideration of this ruling. The Court of Appeals denied this petition. The district court has not yet rendered its decision from the trial, which ended in February 2010.

~~NOTE 16: SUBSEQUENT EVENTS~~

~~Hillshire Brands Acquisition~~

On June 8, 2014, we submitted to Hillshire a unilaterally binding offer to acquire its outstanding stock for $63.00 per share in cash. The offer was accompanied by a definitive agreement and plan of merger (the “Merger Agreement”) among Tyson, Merger Sub and Hillshire, which was executed by Tyson and Merger Sub. The offer was contingent upon the termination of the merger agreement between Hillshire and Pinnacle Foods, Inc. (“Pinnacle”), which occurred on July 1, 2014, at which time Hillshire accepted the offer and executed the Merger Agreement. The Merger Agreement required that we pay to or on behalf of Hillshire the termination fee of $163 million due to Pinnacle upon termination of the merger agreement between Hillshire and Pinnacle, which we subsequently paid on July 2, 2014. T~~he transaction is valued at an estimated $8.9 billion, including the assumption of Hillshire’s net debt and $163 million termination fee.~~

On July 16, 2014, pursuant to the Merger Agreement, we commenced a tender offer to purchase all of the issued and outstanding shares of Hillshire common stock at a purchase price of $63.00 per share in cash, without interest. The tender offer is scheduled to expire on August 12, 2014 and is subject to the condition that two-thirds of the outstanding shares of Hillshire common stock shall have been validly tendered prior to the expiration of the tender offer and not withdrawn. The Merger Agreement also contains other customary conditions, including the expiration of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. Subject to certain conditions and limitations, Hillshire granted Tyson an option to purchase from Hillshire after the successful completion of the tender offer enough additional Hillshire shares so that Tyson will own more than 90% of the outstanding shares of Hillshire common stock, in order to facilitate the completion of the merger through the “short-form” procedures available under Maryland law. Following the consummation of the tender offer, and subject to the satisfaction or waiver of certain conditions set forth in the Merger Agreement, the Merger Agreement provides that Merger Sub will merge with and into Hillshire, with Hillshire surviving the merger as our wholly-owned subsidiary. At and following consummation of the merger, any remaining outstanding shares of Hillshire common stock not owned, directly or indirectly, by us, Merger Sub or Hillshire will be converted into the right to receive $63.00 per share in cash, without interest.

~~We expect to close the acquisition upon the completion of the tender offer, however, there can be no assurance that the acquisition will close at such time.~~

~~Table of Contents~~

~~Acquisition Financing~~

In the third quarter of fiscal 2014, we entered into a fully committed 364-day, $8.2 billion unsecured bridge facility. In July 2014, we decreased the bridge facility to $5.7 billion and added a $2.5 billion senior unsecured term loan facility. The committed facilities, together with cash on hand, will be available to fund the Hillshire acquisition, including the payment of related fees and expenses. The lenders are obligated to fund the facilities, subject to customary closing conditions. The bridge facility provides that the commitments will be automatically reduced on a dollar-for-dollar basis by, among other things, the net cash proceeds of certain offerings of debt, equity or equity-linked securities; the committed principal amount of certain term loan facilities; and the net cash proceeds of certain asset sales and will mature on the date that is 364-days after the date on which lenders are obligated to make initial loans under the bridge facility.

~~Permanent funding for the Hillshire acquisition includes a mix of Class A common stock, tangible equity units, term loans, senior notes, and cash on hand.~~

~~Class A Common Stock: On August 5, 2014, we completed the issuance of 23.8 million shares of our Class A common stock for total proceeds, net of underwriting discounts and other estimated expenses, of $873 million. The amount of shares of Class A common stock sold may increase up to 3.6 million shares if the underwriters exercise their over-allotment option, which expires on August 29, 2014.~~

~~Tangible Equity Units:~~ On August 5, 2014, we completed the issuance of 30 million, 4.75% tangible equity units. Total proceeds, net of underwriting discounts and other estimated expenses, was $1,454 million. Each tangible equity unit, which has a stated amount of $50, is comprised of a prepaid stock purchase contract and a senior amortizing note due July 15, 2017. The senior amortizing note is payable quarterly and has a stated interest rate of 1.5%. Unless earlier redeemed or settled, each purchase contract will automatically settle on July 15, 2017, and the Company will deliver between a minimum of 31.7 million and a maximum of 39.7 million of the shares, subject to adjustment, based upon the applicable market value of the Class A common stock. Prior to any adjustments, we will deliver the minimum amount of shares upon conversion if our share price is equal to or greater than the conversion price of $47.25 and will deliver the maximum shares upon conversion if our share price is equal to or less than the reference price of $37.80. If our share price upon conversion is between the reference and conversion prices, we will deliver a variable amount of shares between the minimum and maximum amounts. The fair value of the prepaid stock purchase contracts, which is estimated at $1,295 million, will be recorded in Capital in Excess of Par Value, net of its offering expenses. The fair value of the senior amortizing notes, which is estimated at $205 million, will be recorded in debt, of which $65 million is current.

~~Term Loan Facility:~~ ~~The committed unsecured term loan facility provides for total term loan commitments~~complainants in an ~~aggregate principal~~ amount of $2,500 million, consisting of a $1,306 million 3-year tranche facility, a $594 million 5-year tranche A facility, and a $600 million 5-year tranche B facility. The principal of the 3-year tranche facility and the 5-year tranche A facility each amortize at 2.5% per quarter. The lenders are obligatednot to ~~fund the loans upon consummation of the tender offer, subject to customary closing conditions. In addition, we estimate the term loan issuance costs will total approximately $13 million.~~exceed PHP342,287,800 (approximately US$7 million).

~~Senior Notes Offering:~~ On August 5, 2014, we launched and priced a public offering of senior unsecured notes with an aggregate principal amount of $3,250 million, consisting of $1,000 million due August 2019 (“2019 Notes”), $1,250 million due August 2024 (“2024 Notes”), $500 million due August 2034 (“2034 Notes”), and $500 million due August 2044 ("2044 Notes"). The 2019 Notes, 2024 Notes, 2034 Notes, and 2044 Notes carry interest rates of 2.65%, 3.95%, 4.88% and 5.15%, respectively, with interest payments due semi-annually on August 15 and February 15. After the original issue discounts of $7 million, we expect to receive net proceeds of $3,243 million. In addition, we estimate that the total senior notes offering costs will total approximately $29 million. We expect to close on the senior notes offering on August 8, 2014.

~~Covenants and Guarantees:~~ The senior notes, term loan facility and bridge facility contain certain covenants which are consistent with our existing covenants that are described in Note 7: Debt. The senior notes, term loan facility and bridge facility are fully guaranteed by TFM Parent, until such date as TFM Parent is released from all of its guarantees of other indebtedness of the Company.

~~Sale of Brazil and Mexico Chicken Operations~~

On July 28, 2014, we announced we reached a definitive agreement to sell our chicken production operations in Brazil and Mexico to JBS SA (“JBS”) for $575 million. The all-cash transaction is subject to customary closing conditions and requires necessary government approvals in Brazil and Mexico. We expect to close the sale by the end of calendar 2014. The combined operations of Brazil and Mexico, which are part of our International segment, had annual sales of approximately $1 billion and we expect to realize a net gain upon completion of the transaction. We intend to use the cash receipts to pay down debt.

~~Table of Contents~~

NOTE 17: CONDENSED CONSOLIDATING FINANCIAL STATEMENTS

TFM Parent, our wholly-owned subsidiary, has fully and unconditionally guaranteed the 2016 Notes. Additionally, TFM Parent has fully and unconditionally guaranteed the 2022 Notes until such date TFM Parent has been released of its guarantee of both (i) Tyson's $~~1.0~~1.25 billion revolving credit facility and (ii) the 2016 Notes, at which time TFM Parent's guarantee of the 2019, 2022, 2024, 2034 and 2044 Notes is permanently released. The following financial information presents condensed consolidating financial statements, which include Tyson Foods, Inc. (TFI Parent); TFM Parent; the Non-Guarantors Subsidiaries (Non-Guarantors) on a combined basis; the elimination entries necessary to consolidate TFI Parent, TFM Parent and the Non-Guarantors; and Tyson Foods, Inc. on a consolidated basis, and is provided as an alternative to providing separate financial statements for the guarantor.

Condensed Consolidating Statement of Income and Comprehensive Income for the three months ended June 28, 2014 in millions
TFI
Parent TFM
Parent Non-
Guarantors Eliminations Total
Sales $ 114
$ 5,807
$ 4,234
$ (473 ) $ 9,682
Cost of Sales 14
5,559
3,945
(473 ) 9,045
Gross Profit 100
248
289
—
637
Selling, General and Administrative 16
55
215
—
286
Operating Income 84
193
74
—
351
Other (Income) Expense:
Interest expense, net 23
—
1
—
24
Other, net 22
1
(6 ) —
17
Equity in net earnings of subsidiaries (229 ) (18 ) —
247
—
Total Other (Income) Expense (184 ) (17 ) (5 ) 247
41
Income from Continuing Operations before Income Taxes 268
210
79
(247 ) 310
Income Tax Expense 8
62
(18 ) —
52
Income from Continuing Operations 260
148
97
(247 ) 258
Loss from Discontinued Operation, Net of Tax —
—
—
—
—
Net Income 260
148
97
(247 ) 258
Less: Net Income (Loss) Attributable to Noncontrolling Interest —
—
(2 ) —
(2 )
Net Income Attributable to Tyson $ 260
$ 148
$ 99
$ (247 ) $ 260

Comprehensive Income (Loss) 265
156
106
(262 ) 265
Less: Comprehensive Income (Loss) Attributable to Noncontrolling Interest —
—
(2 ) —
(2 )
Comprehensive Income (Loss) Attributable to Tyson $ 265
$ 156
$ 108
$ (262 ) $ 267

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Condensed Consolidating Statement of Income and Comprehensive Income for the three months ended June 29, 2013													in millions
Condensed Consolidating Statement of Income and Comprehensive Income for the three months ended December 27, 2014																Condensed Consolidating Statement of Income and Comprehensive Income for the three months ended December 27, 2014											in millions
	TFI Parent			TFM Parent			Non- Guarantors			Eliminations			Total			TFI Parent			TFM Parent			Non- Guarantors		Eliminations			Total
Sales	$	142		$	4,908		$	4,081		$	(400	)	$	8,731		$	228		$	5,809		$	5,325	$	(545	)	$	10,817
Cost of Sales	8			4,679			3,762			(400		)	8,049			19			5,662			4,722		(542		)	9,861
Gross Profit	134			229			319			—			682			209			147			603		(3		)	956
Selling, General and Administrative	19			54			190			—			263			34			61			355		(3		)	447
Operating Income	115			175			129			—			419			175			86			248		—			509
Other (Income) Expense:
Interest expense, net	9			15			10			—			34			69			—			6		—			75
Other, net	—			(1		)	1			—			—			(1		)	—			—		—			(1		)
Equity in net earnings of subsidiaries	(181		)	(15		)	—			196			—			(237		)	(38		)	—		275			—
Total Other (Income) Expense	(172		)	(1		)	11			196			34			(169		)	(38		)	6		275			74
Income from Continuing Operations before Income Taxes	287			176			118			(196		)	385
Income Tax Expense	38			56			42			—			136
Income from Continuing Operations	249			120			76			(196		)	249
Loss from Discontinued Operation, Net of Tax	—			—			(4		)	—			(4		)
Income (Loss) before Income Taxes																344			124			242		(275		)	435
Income Tax (Benefit) Expense																35			30			60		—			125
Net Income	249			120			72			(196		)	245			309			94			182		(275		)	310
Less: Net Income (Loss) Attributable to Noncontrolling Interest	—			—			(4		)	—			(4		)	—			—			1		—			1
Net Income Attributable to Tyson	$	249		$	120		$	76		$	(196	)	$	249		$	309		$	94		$	181	$	(275	)	$	309

Comprehensive Income (Loss)	216			103			49			(152		)	216			332			104			186		(289		)	333
Less: Comprehensive Income (Loss) Attributable to Noncontrolling Interest	—			—			(4		)	—			(4		)	—			—			1		—			1
Comprehensive Income (Loss) Attributable to Tyson	$	216		$	103		$	53		$	(152	)	$	220		$	332		$	104		$	185	$	(289	)	$	332



Condensed Consolidating Statement of Income and Comprehensive Income for the nine months ended June 28, 2014													in millions
Condensed Consolidating Statement of Income and Comprehensive Income for the three months ended December 28, 2013																Condensed Consolidating Statement of Income and Comprehensive Income for the three months ended December 28, 2013												in millions
	TFI Parent			TFM Parent			Non- Guarantors			Eliminations			Total			TFI Parent			TFM Parent			Non- Guarantors			Eliminations			Total
Sales	$	429		$	16,023		$	12,380		$	(1,357	)	$	27,475		$	167		$	5,048		$	3,987		$	(441	)	$	8,761
Cost of Sales	35			15,338			11,486			(1,357		)	25,502			17			4,826			3,674			(441		)	8,076
Gross Profit	394			685			894			—			1,973			150			222			313			—			685
Selling, General and Administrative	67			167			615			—			849			23			55			195			—			273
Operating Income	327			518			279			—			1,124			127			167			118			—			412
Other (Income) Expense:
Interest expense, net	13			49			10			—			72			5			15			6			—			26
Other, net	29			—			(11		)	—			18			6			(1		)	(2		)	—			3
Equity in net earnings of subsidiaries	(532		)	(30		)	—			562			—			(175		)	(6		)	—			181			—
Total Other (Income) Expense	(490		)	19			(1		)	562			90			(164		)	8			4			181			29
Income from Continuing Operations before Income Taxes	817			499			280			(562		)	1,034
Income Tax Expense	90			158			66			—			314
Income from Continuing Operations	727			341			214			(562		)	720
Loss from Discontinued Operation, Net of Tax	—			—			—			—			—
Income (Loss) before Income Taxes																291			159			114			(181		)	383
Income Tax (Benefit) Expense																37			52			42			—			131
Net Income	727			341			214			(562		)	720			254			107			72			(181		)	252
Less: Net Income (Loss) Attributable to Noncontrolling Interest	—			—			(7		)	—			(7		)	—			—			(2		)	—			(2		)
Net Income Attributable to Tyson	$	727		$	341		$	221		$	(562	)	$	727		$	254		$	107		$	74		$	(181	)	$	254

Comprehensive Income (Loss)	732			348			220			(568		)	732			244			102			63			(165		)	244
Less: Comprehensive Income (Loss) Attributable to Noncontrolling Interest	—			—			(7		)	—			(7		)	—			—			(2		)	—			(2		)
Comprehensive Income (Loss) Attributable to Tyson	$	732		$	348		$	227		$	(568	)	$	739		$	244		$	102		$	65		$	(165	)	$	246

Table of Contents

Condensed Consolidating Statement of Income and Comprehensive Income for the nine months ended June 29, 2013 in millions
TFI
Parent TFM
Parent Non-
Guarantors Eliminations Total
Sales $ 318
$ 14,210
$ 11,957
$ (1,005 ) $ 25,480
Cost of Sales 35
13,696
11,065
(1,005 ) 23,791
Gross Profit 283
514
892
—
1,689
Selling, General and Administrative 51
151
528
—
730
Operating Income 232
363
364
—
959
Other (Income) Expense:

Interest expense, net 26
46
32
—
104
Other, net 4
(1 ) (22 ) —
(19 )
Equity in net earnings of subsidiaries (381 ) (29 ) —
410
—
Total Other (Income) Expense (351 ) 16
10
410
85
Income from Continuing Operations before Income Taxes 583
347
354
(410 ) 874
Income Tax Expense 66
109
110
—
285
Income from Continuing Operations 517
238
244
(410 ) 589
Loss from Discontinued Operation, Net of Tax —
—
(70 ) —
(70 )
Net Income 517
238
174
(410 ) 519
Less: Net Income (Loss) Attributable to Noncontrolling Interest —
—
2
—
2
Net Income Attributable to Tyson $ 517
$ 238
$ 172
$ (410 ) $ 517

Comprehensive Income (Loss) 460
202
80
(282 ) 460
Less: Comprehensive Income (Loss) Attributable to Noncontrolling Interest —
—
2
—
2
Comprehensive Income (Loss) Attributable to Tyson $ 460
$ 202
$ 78
$ (282 ) $ 458



Condensed Consolidating Balance Sheet as of December 27, 2014										in millions
	TFI Parent		TFM Parent		Non- Guarantors		Eliminations			Total
Assets
Current Assets:
Cash and cash equivalents	$	—	$	12	$	369	$	—		$	381
Accounts receivable, net	1		724		1,052		—			1,777
Inventories	—		1,312		1,880		—			3,192
Other current assets	43		67		301		(36		)	375
Assets held for sale	3		—		210		—			213
Total Current Assets	47		2,115		3,812		(36		)	5,938
Net Property, Plant and Equipment	28		948		4,235		—			5,211
Goodwill	—		881		5,819		—			6,700
Intangible Assets, net	—		14		5,232		—			5,246
Other Assets	160		149		354		—			663
Investment in Subsidiaries	21,153		2,092		—		(23,245		)	—
Total Assets	$	21,388	$	6,199	$	19,452	$	(23,281	)	$	23,758

Liabilities and Shareholders’ Equity
Current Liabilities:
Current debt	$	189	$	—	$	407	$	—		$	596
Accounts payable	28		1,148		971		—			2,147
Other current liabilities	5,414		163		859		(5,279		)	1,157
Liabilities held for sale	—		—		54		—			54
Total Current Liabilities	5,631		1,311		2,291		(5,279		)	3,954
Long-Term Debt	6,441		2		488		—			6,931
Deferred Income Taxes	17		101		2,355		—			2,473
Other Liabilities	176		127		960		—			1,263

Total Tyson Shareholders’ Equity	9,123		4,658		13,344		(18,002		)	9,123
Noncontrolling Interest	—		—		14		—			14
Total Shareholders’ Equity	9,123		4,658		13,358		(18,002		)	9,137
Total Liabilities and Shareholders’ Equity	$	21,388	$	6,199	$	19,452	$	(23,281	)	$	23,758

Table of Contents


Condensed Consolidating Balance Sheet as of June 28, 2014										in millions
Condensed Consolidating Balance Sheet as of September 27, 2014												Condensed Consolidating Balance Sheet as of September 27, 2014									in millions
	TFI Parent		TFM Parent		Non- Guarantors		Eliminations			Total		TFI Parent		TFM Parent		Non- Guarantors		Eliminations			Total
Assets
Current Assets:
Cash and cash equivalents	$	—	$	15	$	572	$	—		$	587	$	—	$	41	$	397	$	—		$	438
Accounts receivable, net	1		713		910		—			1,624		3		665		1,016		—			1,684
Inventories	1		1,270		1,790		—			3,061		—		1,272		2,002		—			3,274
Other current assets	123		49		245		(176		)	241		42		78		379		(120		)	379
Assets held for sale												3		—		443		—			446
Total Current Assets	125		2,047		3,517		(176		)	5,513		48		2,056		4,237		(120		)	6,221
Net Property, Plant and Equipment	30		922		2,989		—			3,941		30		932		4,168		—			5,130
Goodwill	—		881		1,044		—			1,925		—		881		5,825		—			6,706
Intangible Assets	—		17		134		—			151
Intangible Assets, net												—		15		5,261		—			5,276
Other Assets	168		149		269		(61		)	525		204		148		326		(55		)	623
Investment in Subsidiaries	12,456		2,070		—		(14,526		)	—		20,845		2,049		—		(22,894		)	—
Total Assets	$	12,779	$	6,086	$	7,953	$	(14,763	)	$	12,055	$	21,127	$	6,081	$	19,817	$	(23,069	)	$	23,956

Liabilities and Shareholders’ Equity
Current Liabilities:
Current debt	$	—	$	—	$	41	$	—		$	41	$	240	$	—	$	403	$	—		$	643
Accounts payable	38		699		759		—			1,496		35		755		1,016		—			1,806
Other current liabilities	4,127		308		866		(4,226		)	1,075		4,718		235		921		(4,667		)	1,207
Liabilities held for sale												—		—		141		—			141
Total Current Liabilities	4,165		1,007		1,666		(4,226		)	2,612		4,993		990		2,481		(4,667		)	3,797
Long-Term Debt	1,771		1		73		(61		)	1,784		7,056		2		532		(55		)	7,535
Deferred Income Taxes	6		76		322		—			404		21		96		2,333		—			2,450
Other Liabilities	143		156		246		—			545		167		125		978		—			1,270

Total Tyson Shareholders’ Equity	6,694		4,846		5,630		(10,476		)	6,694		8,890		4,868		13,479		(18,347		)	8,890
Noncontrolling Interest	—		—		16		—			16		—		—		14		—			14
Total Shareholders’ Equity	6,694		4,846		5,646		(10,476		)	6,710		8,890		4,868		13,493		(18,347		)	8,904
Total Liabilities and Shareholders’ Equity	$	12,779	$	6,086	$	7,953	$	(14,763	)	$	12,055	$	21,127	$	6,081	$	19,817	$	(23,069	)	$	23,956

Table of Contents

Condensed Consolidating Balance Sheet as of September 28, 2013 in millions
TFI
Parent TFM
Parent Non-
Guarantors Eliminations Total
Assets
Current Assets:
Cash and cash equivalents $ —
$ 21
$ 1,124
$ —
$ 1,145
Accounts receivable, net —
571
926
—
1,497
Inventories —
1,039
1,778
—
2,817
Other current assets 351
88
117
(411 ) 145
Total Current Assets 351
1,719
3,945
(411 ) 5,604
Net Property, Plant and Equipment 32
891
3,130
—
4,053
Goodwill —
881
1,021
—
1,902
Intangible Assets —
21
117
—
138
Other Assets 895
162
244
(821 ) 480
Investment in Subsidiaries 11,975
2,035
—
(14,010 ) —
Total Assets $ 13,253
$ 5,709
$ 8,457
$ (15,242 ) $ 12,177

Liabilities and Shareholders’ Equity
Current Liabilities:
Current debt $ 457
$ 132
$ 251
$ (327 ) $ 513
Accounts payable 27
575
757
—
1,359
Other current liabilities 4,625
200
901
(4,588 ) 1,138
Total Current Liabilities 5,109
907
1,909
(4,915 ) 3,010
Long-Term Debt 1,770
679
241
(795 ) 1,895
Deferred Income Taxes 24
93
362
—
479
Other Liabilities 149
155
282
(26 ) 560

Total Tyson Shareholders’ Equity 6,201
3,875
5,631
(9,506 ) 6,201
Noncontrolling Interest —
—
32
—
32
Total Shareholders’ Equity 6,201
3,875
5,663
(9,506 ) 6,233
Total Liabilities and Shareholders’ Equity $ 13,253
$ 5,709
$ 8,457
$ (15,242 ) $ 12,177



Condensed Consolidating Statement of Cash Flows for the three months ended December 27, 2014												in millions
	TFI Parent			TFM Parent			Non- Guarantors			Eliminations		Total
Cash Provided by (Used for) Operating Activities	$	55		$	325		$	432		$	—	$	812
Cash Flows from Investing Activities:
Additions to property, plant and equipment	—			(40		)	(191		)	—		(231		)
(Purchases of)/Proceeds from marketable securities, net	—			—			(3		)	—		(3		)
Proceeds from sale of businesses	—			—			142			—		142
Other, net	—			—			3			—		3
Cash Provided by (Used for) Investing Activities	—			(40		)	(49		)	—		(89		)
Cash Flows from Financing Activities:
Net change in debt	(667		)	—			(1		)	—		(668		)
Purchases of Tyson Class A common stock	(91		)	—			—			—		(91		)
Dividends	(37		)	—			—			—		(37		)
Stock options exercised	16			—			—			—		16
Other, net	5			—			—			—		5
Net change in intercompany balances	719			(314		)	(405		)	—		—
Cash Provided by (Used for) Financing Activities	(55		)	(314		)	(406		)	—		(775		)
Effect of Exchange Rate Change on Cash	—			—			(5		)	—		(5		)
Increase (Decrease) in Cash and Cash Equivalents	—			(29		)	(28		)	—		(57		)
Cash and Cash Equivalents at Beginning of Year	—			41			397			—		438
Cash and Cash Equivalents at End of Period	$	—		$	12		$	369		$	—	$	381



Condensed Consolidating Statement of Cash Flows for the three months ended December 28, 2013												in millions
	TFI Parent			TFM Parent			Non- Guarantors			Eliminations		Total
Cash Provided by (Used for) Operating Activities	$	(4	)	$	284		$	81		$	—	$	361
Cash Flows from Investing Activities:
Additions to property, plant and equipment	(1		)	(35		)	(104		)	—		(140		)
(Purchases of)/Proceeds from marketable securities, net	—			—			(1		)	—		(1		)
Other, net	—			1			(4		)	—		(3		)
Cash Provided by (Used for) Investing Activities	(1		)	(34		)	(109		)	—		(144		)
Cash Flows from Financing Activities:
Net change in debt	(367		)	—			(6		)	—		(373		)
Purchases of Tyson Class A common stock	(159		)	—			—			—		(159		)
Dividends	(25		)	—			—			—		(25		)
Stock options exercised	12			—			—			—		12
Other, net	5			—			—			—		5
Net change in intercompany balances	539			(261		)	(278		)	—		—
Cash Provided by (Used for) Financing Activities	5			(261		)	(284		)	—		(540		)
Effect of Exchange Rate Change on Cash	—			—			3			—		3
Increase (Decrease) in Cash and Cash Equivalents	—			(11		)	(309		)	—		(320		)
Cash and Cash Equivalents at Beginning of Year	—			21			1,124			—		1,145
Cash and Cash Equivalents at End of Period	$	—		$	10		$	815		$	—	$	825

Table of Contents

Condensed Consolidating Statement of Cash Flows for the nine months ended June 28, 2014 in millions
TFI
Parent TFM
Parent Non-
Guarantors Eliminations Total
Cash Provided by (Used for) Operating Activities $ 12
$ 264
$ 312
$ (45 ) $ 543
Cash Flows from Investing Activities:
Additions to property, plant and equipment (1 ) (109 ) (327 ) —
(437 )
(Purchases of)/Proceeds from marketable securities, net —
—
(1 ) —
(1 )
Acquisitions, net of cash acquired —
—
(56 ) —
(56 )
Other, net 30
1
13
—
44
Cash Provided by (Used for) Investing Activities 29
(108 ) (371 ) —
(450 )
Cash Flows from Financing Activities:
Net change in debt (370 ) —
(9 ) —
(379 )
Purchases of Tyson Class A common stock (286 ) —
—
—
(286 )
Dividends (76 ) —
(45 ) 45
(76 )
Stock options exercised 61
—
—
—
61
Other, net 26
—
—
—
26
Net change in intercompany balances 604
(162 ) (442 ) —
—
Cash Provided by (Used for) Financing Activities (41 ) (162 ) (496 ) 45
(654 )
Effect of Exchange Rate Change on Cash —
—
3
—
3
Increase (Decrease) in Cash and Cash Equivalents —
(6 ) (552 ) —
(558 )
Cash and Cash Equivalents at Beginning of Year —
21
1,124
—
1,145
Cash and Cash Equivalents at End of Period $ —
$ 15
$ 572
$ —
$ 587

Condensed Consolidating Statement of Cash Flows for the nine months ended June 29, 2013 in millions
TFI
Parent TFM
Parent Non-
Guarantors Eliminations Total
Cash Provided by (Used for) Operating Activities $ 185
$ 196
$ 404
$ (13 ) $ 772
Cash Flows from Investing Activities:
Additions to property, plant and equipment (3 ) (82 ) (340 ) —
(425 )
(Purchases of)/Proceeds from marketable securities, net —
(14 ) (87 ) —
(101 )
Acquisitions, net of cash acquired —
—
(106 ) —
(106 )
Other, net (3 ) 9
30
—
36
Cash Provided by (Used for) Investing Activities (6 ) (87 ) (503 )

(596 )
Cash Flows from Financing Activities:
Net change in debt —
—
(21 ) —
(21 )
Purchases of Tyson Class A common stock (298 ) —
—
—
(298 )
Dividends (87 ) —
(13 ) 13
(87 )
Stock options exercised 93
—
—
—
93
Other, net 13
—
—
—
13
Net change in intercompany balances 99
(105 ) 6
—
—
Cash Provided by (Used for) Financing Activities (180 ) (105 ) (28 ) 13
(300 )
Effect of Exchange Rate Change on Cash —
—
(4 ) —
(4 )
Increase (Decrease) in Cash and Cash Equivalents (1 ) 4
(131 ) —
(128 )
Cash and Cash Equivalents at Beginning of Year 1
9
1,061
—
1,071
Cash and Cash Equivalents at End of Period $ —
$ 13
$ 930
$ —
$ 943

~~Table of Contents~~


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

RESULTS OF OPERATIONS

Description of the Company

We are one of the ~~world’s~~world's largest ~~meat protein companies and the second-largest food production company in the~~ ~~Fortune~~ ~~500 with one~~producers of ~~the most recognized brand names in the food industry. We produce, distribute and market~~ chicken, beef, pork and prepared foods that include leading brands such as Tyson®, Jimmy Dean®, Hillshire Farm®, Sara Lee® frozen bakery, Ball Park®, Wright®, Aidells® and ~~related allied products.~~State Fair®. Some of the key factors influencing our business are customer demand for our products; the ability to maintain and grow relationships with customers and introduce new and innovative products to the marketplace; accessibility of international markets; market prices for our products; the cost and availability of live cattle and hogs, raw materials, and feed ingredients; and operating efficiencies of our facilities.

Our operations are conducted in five segments: Chicken, Beef, Pork, Prepared Foods and International. ~~During~~On August 28, 2014, we acquired and consolidated The Hillshire Brands Company ("Hillshire Brands"), a manufacturer and marketer of branded, convenient foods. Hillshire Brands' results from operations for the ~~second~~first quarter of fiscal ~~2014, we began reporting our International operation as a separate segment, which was previously~~2015 are included in our Chicken segment. Our International segment became a separate reportable segment as a result of changes to our internal financial reporting to align with previously announced executive leadership changes. The International segment includes our foreign operations primarily related to raising and processing live chickens into fresh, frozen and value-added chicken products in Brazil, China, India and Mexico. All periods presented have been reclassified to reflect this change. Beef, Pork,the Prepared Foods ~~and Other results were not impacted by this change.~~segment.

Overview

General – Our operating ~~results remained strong~~income grew 24% in the ~~third~~first quarter of fiscal ~~2014~~2015, which was led by ~~solid~~record earnings in our Chicken segment and strong earnings in our Pork ~~segment~~ and ~~continued strength in our Chicken and Beef segments, partially offset with negative returns in our~~ Prepared Foods segments. Sales grew to a record $10.8 billion in the first quarter of fiscal 2015 and ~~International segments.~~

we were able to reduce total debt by approximately $650 million driven by record operating cash flows of $812 million. We continued to execute our strategy of accelerating growth in domestic value-added chicken sales, ~~and~~ prepared food sales, innovating products, services and customer insights and cultivating our talent development to support Tyson's growth for the future.

Hillshire Integration – We ~~also maintained~~continue to maintain focus on ~~maximizing~~the integration of Hillshire Brands and synergy capture. As we execute our ~~margins through margin management~~Prepared Foods strategy, we estimate the impact of the Hillshire Brands synergies, along with the profit improvement plan related to our legacy Prepared Foods business, will have a positive impact of more than $225 million in fiscal 2015, and ~~operational efficiency improvements. Margin management improvements occurred~~more than $500 million by fiscal 2017. The majority of these benefits will be realized in the ~~areas~~Prepared Foods segment. In the first quarter of ~~mix, export sales, price optimization~~fiscal 2015, we captured $60 million of synergies and ~~value-added product initiatives. The operational efficiencies occurred in areas~~profit improvement initiatives of ~~yields, cost reduction and labor management.~~which $55 million impacted the Prepared Foods segment.

Market environment – Our Chicken segment delivered ~~solid~~record results in the ~~third~~first quarter of fiscal ~~2014~~2015 driven by strong demand and favorable domestic market conditions. The Pork segment’s operating margins were within its normalized range due to favorable market conditions associated with strong demand for our ~~chicken~~pork products. Our Prepared Foods segment results improved despite increased raw material prices as we continued to execute our profit improvement plan and integrate Hillshire Brands. The Beef segment experienced a loss driven by higher fed cattle costs, ~~and reduced~~lower availability of fed cattle supplies, but delivered strong results by maximizing our revenues relative to the rising live cattle markets. Our Pork segment results remained strong in the third quarter of fiscal 2014 due to favorable market conditions associated with lower total pork supplies. Our Prepared Foods segment was challenged by rapidly increasing raw material prices in addition to costs incurred as we continue to invest in our growth platforms.and reduced demand for premium beef products. Our International segment experienced losses due to challenging market conditions in ~~China and Brazil.~~China.

Margins – Our total operating margin was ~~3.6%~~4.7% in the ~~third~~first quarter of fiscal ~~2014~~2015. Operating margins by segment were as ~~follows (Prepared Food segment recorded a $49 million impairment due to the planned closure of three facilities):~~follows:

Chicken – ~~6.9%~~12.6%

Beef – ~~2.4%~~(0.1)%

Pork – ~~7.2%~~7.9%

Prepared Foods – ~~(5.5)%~~3.3%

International – ~~(4.1)~~(4.6)%

~~Debt and~~ Liquidity – During the ~~third~~first quarter of fiscal ~~2014~~2015 we generated $~~278~~812 million of operating cash flows. At ~~June 28,~~December 27, 2014, we had approximately $~~1.5~~1.6 billion of liquidity, which includes availability under our credit facility and $~~587~~381 million of cash and cash equivalents.

~~Table of Contents~~

in millions, except per share data Three Months Ended Nine Months Ended
June 28, 2014 June 29, 2013 June 28, 2014 June 29, 2013
Net income from continuing operations attributable to Tyson $ 260
$ 253
$ 727
$ 587
Net income from continuing operations attributable to Tyson – per diluted share 0.73
0.69
2.05
1.61

Net loss from discontinued operation attributable to Tyson —
(4 ) —
(70 )
Net loss from discontinued operation attributable to Tyson – per diluted share —
(0.01 ) —
(0.19 )

Net income attributable to Tyson 260
249
727
517
Net income attributable to Tyson – per diluted share 0.73
0.68
2.05
1.42



in millions, except per share data	Three Months Ended
	December 27, 2014		December 28, 2013
Net income attributable to Tyson	$	309	$	254
Net income attributable to Tyson – per diluted share	$	0.74	$	0.72

~~Third~~First quarter ~~and nine months~~ - Fiscal ~~2014~~2015 - Net income attributable to Tyson included the following items:

$4036 million, or ~~$0.11~~$0.06 per diluted share, of ongoing costs related to a legacy Hillshire Brands plant fire.

$19 million, or $0.03 per diluted share, related to ~~a gain on an unrecognized tax benefit;~~the Hillshire Brands merger and integration costs.

$4926 million, or ~~$0.08 per diluted share, impairment related to the planned closure of three Prepared Foods plants; and~~

~~$29 million, or $0.05~~$0.06 per diluted share, related to ~~Hillshire Brands ("Hillshire") acquisition fees paid to third parties.~~recognition of previously unrecognized tax benefits.

~~Nine months - Fiscal~~ ~~2013~~ - ~~Net income attributable to Tyson included the following item:~~

~~$19 million, or $0.05 per diluted share, related to a recognized currency translation adjustment.~~

Table of Contents

Summary of Results

Sales


in millions	Three Months Ended					Nine Months Ended					Three Months Ended
	June 28, 2014			June 29, 2013		June 28, 2014			June 29, 2013		December 27, 2014			December 28, 2013
Sales	$	9,682		$	8,731	$	27,475		$	25,480	$	10,817		$	8,761
Change in sales volume	2.2		%			2.5		%			7.7		%
Change in average sales price	8.5		%			5.4		%			14.7		%
Sales growth	10.9		%			7.8		%			23.5		%

~~Third~~First quarter – Fiscal ~~2014~~2015 vs Fiscal ~~2013~~2014

Sales Volume – Sales were positively impacted by higher sales volume, which accounted for an increase of ~~$141~~$756 million. ~~All~~The Chicken, Pork and Prepared Foods segments ~~with the exception of the Beef segment,~~each had an increase in sales ~~volume.~~volume offset by a decrease in sales volume in each of the Beef and International segments. Prepared Foods contributed the majority of the increase due to the acquisition of Hillshire Brands on August 28, 2014.

Average Sales Price – Sales were positively impacted by higher average sales prices, which accounted for an increase of ~~$810 million. The Beef, Pork and Prepared Foods~~

$1.3 billion. All segments, with the exception of the International segment, had an increase in average sales price largely due to improved mix and increased pricing associated with rising raw material, cattle and hog costs. These increases were partially offset by a decrease in average sales price in the Chicken and International segments which was driven by lower domestic feed ingredient costs and volatile markets in our International segment.

~~Nine months – Fiscal~~ ~~2014~~ ~~vs Fiscal~~ ~~2013~~

~~Sales Volume~~ ~~– Sales were positively impacted by higher sales volume, which accounted for an increase of $503 million. All segments had an increase in sales volume.~~

~~Average Sales Price~~ – Sales were positively impacted by higher average sales prices, which accounted for an increase of approximately $1.5 billion. The Beef, Pork and Prepared Foods segments had an increase in average sales price largely due to continued tight domestic availability of protein, increased pricing associated with rising live and raw material costs, and improved mix. These increases were partially offset by a decrease in average sales price in the Chicken and International segments driven by lower domestic feed ingredient costs and volatile markets in our International segment.

~~Table of Contents~~

Cost of Sales


in millions	Three Months Ended						Nine Months Ended						Three Months Ended
	June 28, 2014			June 29, 2013			June 28, 2014			June 29, 2013			December 27, 2014			December 28, 2013
Cost of sales	$	9,045		$	8,049		$	25,502		$	23,791		$	9,861		$	8,076
Gross profit	$	637		$	682		$	1,973		$	1,689		$	956		$	685
Cost of sales as a percentage of sales	93.4		%	92.2		%	92.8		%	93.4		%	91.2		%	92.2		%

~~Third~~First quarter – Fiscal ~~2014~~2015 vs Fiscal ~~2013~~2014

Cost of sales increased ~~$996 million. Higher input cost per pound increased cost of sales $876 million and higher sales volume increased cost of sales $120 million.~~

~~The $876 million impact of higher input cost per pound was primarily driven by:~~

~~Increases in live cattle and live hog costs of approximately $490 million and $265 million, respectively.~~

~~Increase in raw material and other input costs in our Prepared Foods segment of approximately $95 million.~~

~~Increase of $49 million from an impairment related to the planned closure of three Prepared Foods plants.~~

~~Decreases in feed costs of approximately $120 million in our Chicken segment and $14 million in our International segment.~~

~~The $120 million impact of higher sales volume was driven by increases in sales volume in all of our segments other than our Beef segment.~~

~~Nine months – Fiscal~~ ~~2014~~ ~~vs Fiscal~~ ~~2013~~

~~Cost of sales increased $1.7~~$1.8 billion. Higher input cost per pound increased cost of sales ~~approximately $1.2~~$1.1 billion and higher sales volume increased cost of sales ~~$478~~$676 million.

The ~~$1.2~~$1.1 billion impact of higher input cost per pound was primarily driven by:

Increases in live cattle and live hog costs of approximately ~~$940~~$780 million and ~~$405~~$110 million, respectively.

~~Increase~~Increases in raw material and other input costs of approximately $10 million in our legacy Prepared Foods ~~segment of approximately $160 million.~~business.

Increase of ~~$49~~$36 million related to ongoing costs related to a legacy Hillshire Brands plant fire.

Increase due to net losses of $70 million in the first quarter of fiscal 2015, compared to net losses of $10 million in the first quarter of fiscal 2014, primarily from ~~an impairment~~our Chicken and Beef segments commodity risk management activities. These amounts exclude the impact from related physical purchase transaction, which mostly offset the losses.

Increase in input cost per pound related to the ~~planned closure~~acquisition of ~~three Prepared Foods plants.~~Hillshire Brands on August 28, 2014.

Decreases in feed costs of approximately ~~$460~~$110 million in our Chicken segment and ~~$32~~$10 million in our International segment.

The ~~$478~~$676 million impact of higher sales volume was driven by increases in sales volume in ~~all~~each of our segments other than our Beef and International segments. Prepared Foods contributed to the majority of the increase due to the acquisition of Hillshire Brands on August 28, 2014.

Table of Contents

Selling, General and Administrative


in millions	Three Months Ended						Nine Months Ended						Three Months Ended
	June 28, 2014			June 29, 2013			June 28, 2014			June 29, 2013			December 27, 2014			December 28, 2013
Selling, general and administrative expense	$	286		$	263		$	849		$	730		$	447		$	273
As a percentage of sales	3.0		%	3.0		%	3.1		%	2.9		%	4.1		%	3.1		%

~~Third~~First quarter – Fiscal ~~2014~~2015 vs Fiscal ~~2013~~2014

Increase of $8$134 million related to ~~advertising, sales promotions and commissions.~~the inclusion of Hillshire Brands in the first quarter of fiscal 2015 results with no corresponding amounts in the first quarter of fiscal 2014.

Increase of $9$19 million related to ~~professional fees~~merger and ~~charitable contributions~~integration costs.

Increase of ~~$7 million from Hillshire acquisition fees paid to third parties.~~

~~Nine months – Fiscal~~ ~~2014~~ ~~vs Fiscal~~ ~~2013~~

~~Increase of $31~~$18 million related to ~~employee costs including payroll and stock-based and incentive-based compensation.~~

~~Increase of $43 million related to advertising, sales promotions and commissions.~~

~~Increase of $29 million related to professional fees and charitable contributions~~

~~Increase of $7 million from~~amortization associated with acquired Hillshire ~~acquisition fees paid to third parties.~~Brands’ intangibles.

~~Table of Contents~~

Interest Expense


in millions	Three Months Ended				Nine Months Ended				Three Months Ended
	June 28, 2014		June 29, 2013		June 28, 2014		June 29, 2013		December 27, 2014		December 28, 2013
Cash interest expense	$	24	$	29	$	73	$	88	$	75	$	28
Non-cash interest expense	1		7		5		21		2		—
Total Interest Expense	$	25	$	36	$	78	$	109	$	77	$	28

~~Third~~First quarter ~~and nine months~~ – Fiscal ~~2014~~2015 vs Fiscal ~~2013~~2014

Cash interest expense ~~includes~~primarily included interest expense related to the coupon rates for senior notes and term loans and

commitment/letter of credit fees incurred on our revolving credit facilities. The ~~decrease is~~increase in cash interest expense in the first quarter of fiscal 2015 was primarily due to ~~a lower average~~senior notes and term loans issued and debt ~~balance compared to the same period~~assumed in ~~fiscal 2013 as~~connection with our ~~2013 Notes were paid off and retired~~acquisition of Hillshire Brands on ~~October 15, 2013.~~August 28, 2014.

•Non-cash interest expense primarily ~~includes interest~~included amounts related to the amortization of debt issuance costs and discounts/

premiums on note ~~issuances.~~issuances, partially offset by interest capitalized. The ~~decrease~~increase in non-cash interest expense is due to ~~lower~~increased amortization of debt issuance costs ~~and discounts compared to the same period in fiscal 2013 as~~incurred with our ~~2013 Notes were paid off and retired on October 15, 2013.~~acquisition of Hillshire Brands.

Other (Income) Expense, net

in millions Three Months Ended Nine Months Ended
June 28, 2014 June 29, 2013 June 28, 2014 June 29, 2013
$ 17
$ —
$ 18
$ (19 )



in millions	Three Months Ended
	December 27, 2014			December 28, 2013
	$	(1	)	$	3

~~Nine months~~First quarter – Fiscal 2015

Included $1 million of income from equity earnings in joint ventures.

First quarter - Fiscal 2014

~~Includes~~Included an expense of $6 million related to the impairment of an equity security investment, ~~and $22 million of costs associated with bridge financing facilities for the Hillshire acquisition,~~ which ~~were~~was partially offset by income of ~~$11~~$3 million of equity earnings in joint ventures and foreign currency exchange gains.

~~Nine months - Fiscal~~ ~~2013~~

~~Included $19 million related to a currency translation adjustment gain recognized in conjunction with the receipt~~

Table of ~~proceeds constituting the final resolution of our investment in Canada.~~Contents

Effective Tax Rate

Three Months Ended Nine Months Ended
June 28, 2014 June 29, 2013 June 28, 2014 June 29, 2013
16.8 % 35.4 % 30.4 % 32.6 %



Three Months Ended
December 27, 2014		December 28, 2013
28.8	%	34.3	%

~~Third~~First quarter ~~and nine months~~ - Fiscal ~~2014~~2015 – The effective tax rate ~~for continuing operations~~ was impacted by:

state income taxes;

the domestic production deduction;

losses in foreign jurisdictions for which no benefit is recognized; and

decrease in tax reserves due to the expiration of ~~federal and state~~ statutes of limitations and settlements with taxing authorities.

~~Third~~First quarter ~~and nine months~~ - Fiscal ~~2013~~2014 – The effective tax rate ~~for continuing operations~~ was impacted by:

state income taxes;

the domestic production deduction; and

losses in foreign jurisdictions for which no benefit is recognized.

~~Table of Contents~~

Segment Results

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


in millions	Sales												Sales
	Three Months Ended						Nine Months Ended						Three Months Ended
	June 28, 2014			June 29, 2013			June 28, 2014			June 29, 2013			December 27, 2014			December 28, 2013
Chicken	$	2,829		$	2,820		$	8,327		$	8,148		$	2,780		$	2,656
Beef	4,189			3,723			11,748			10,655			4,391			3,734
Pork	1,766			1,332			4,677			4,006			1,540			1,424
Prepared Foods	901			797			2,669			2,441			2,133			907
International	365			343			1,020			1,001			305			327
Other	—			—			—			47			—			—
Intersegment Sales	(368		)	(284		)	(966		)	(818		)	(332		)	(287		)
Total	$	9,682		$	8,731		$	27,475		$	25,480		$	10,817		$	8,761


in millions	Operating Income (Loss)											Operating Income (Loss)
	Three Months Ended						Nine Months Ended					Three Months Ended
	June 28, 2014			June 29, 2013			June 28, 2014			June 29, 2013		December 27, 2014			December 28, 2013
Chicken	$	195		$	215		$	682		$	471	$	351		$	253
Beef	101			114			194			134		(6		)	58
Pork	128			67			356			264		122			121
Prepared Foods	(50		)	24			(13		)	85		71			16
International	(15		)	5			(73		)	—		(14		)	(28		)
Other	(8		)	(6		)	(22		)	5		(15		)	(8		)
Total	$	351		$	419		$	1,124		$	959	$	509		$	412

~~Third~~Note: During the second quarter ~~and nine months~~of fiscal 2014, we began reporting our International operation as a separate segment, which was previously included in our Chicken segment. All periods presented have been reclassified to reflect this change.

First quarter – Fiscal ~~2014~~2015

Operating income was reduced by ~~$49~~$40 million in the Prepared Foods segment ~~for impairments~~due to $36 million of ongoing costs related to ~~the closure~~a legacy Hillshire Brands plant fire and $4 million of ~~three plants.~~merger and acquisition costs.

Operating income was reduced by $7$15 million in Other for ~~third party transaction fees incurred as part~~third-party merger and integration costs.

Table of ~~the Hillshire~~Contents

~~acquisition.~~

Chicken Segment Results


in millions	Three Months Ended									Nine Months Ended									Three Months Ended
	June 28, 2014			June 29, 2013			Change			June 28, 2014			June 29, 2013			Change			December 27, 2014			December 28, 2013			Change
Sales	$	2,829		$	2,820		$	9		$	8,327		$	8,148		$	179		$	2,780		$	2,656		$	124
Sales Volume Change							1.3		%							2.7		%							3.1		%
Average Sales Price Change							(1.0		)%							(0.5		)%							1.5		%
Operating Income	$	195		$	215		$	(20	)	$	682		$	471		$	211		$	351		$	253		$	98
Operating Margin	6.9		%	7.6		%				8.2		%	5.8		%				12.6		%	9.5		%

~~Third~~First quarter ~~and nine months~~ – Fiscal ~~2014~~2015 vs Fiscal ~~2013~~2014

Sales Volume – Sales volume grew as a result of stronger demand for chicken ~~products and mix of rendered product sales.~~products.

Average Sales Price – Average sales price ~~decreased~~increased as ~~feed ingredient costs declined, partially offset by~~a result of market conditions and sales mix changes.

Operating Income – Operating income for the third quarter of fiscal 2014 was negatively impacted by rapidly rising costs of outside meat purchases as well as operational disruptions at two of our facilities. For the nine months of fiscal 2014, operating income increased due to higher average sales ~~volume~~price and volumes in addition to lower feed ingredient costs ~~partially offset by~~which decreased ~~average sales price. Feed costs decreased $120~~$110 million ~~and $460 million for~~during the ~~third~~first quarter ~~and nine months~~ of fiscal ~~2014, respectively.~~2015.

~~Table of Contents~~

Beef Segment Results


in millions	Three Months Ended									Nine Months Ended									Three Months Ended
	June 28, 2014			June 29, 2013			Change			June 28, 2014			June 29, 2013			Change			December 27, 2014			December 28, 2013			Change
Sales	$	4,189		$	3,723		$	466		$	11,748		$	10,655		$	1,093		$	4,391		$	3,734		$	657
Sales Volume Change							(0.9		)%							0.4		%							(2.7		)%
Average Sales Price Change							13.5		%							9.8		%							20.9		%
Operating Income	$	101		$	114		$	(13	)	$	194		$	134		$	60		$	(6	)	$	58		$	(64	)
Operating Margin	2.4		%	3.1		%				1.7		%	1.3		%				(0.1		)%	1.6		%

~~Third~~First quarter ~~and nine months~~ – Fiscal ~~2014~~2015 vs Fiscal ~~2013~~2014

Sales Volume – Sales volume decreased ~~for the third quarter of fiscal 2014~~ due to a reduction in live cattle processed. ~~However, sales volumes were up for the nine months of fiscal 2014 due to better domestic demand for our beef products, partially offset by reduced exports.~~

Average Sales Price – Average sales price increased due to lower domestic availability of ~~fed cattle supplies, which additionally drove up livestock costs.~~beef products.

Operating Income – Operating income decreased ~~for the third quarter of fiscal 2014~~ due to higher fed cattle costs and periods of reduced ~~demand for~~consumption of beef products, which made it difficult to pass along increased input costs, as well as lower sales volumes and increased operating costs. For the nine months of fiscal 2014, operating income increased due to improved operational execution and maximizing our revenues relative to the rising live cattle markets, partially offset by increased operating costs.

Pork Segment Results


in millions	Three Months Ended									Nine Months Ended									Three Months Ended
	June 28, 2014			June 29, 2013			Change			June 28, 2014			June 29, 2013			Change			December 27, 2014			December 28, 2013			Change
Sales	$	1,766		$	1,332		$	434		$	4,677		$	4,006		$	671		$	1,540		$	1,424		$	116
Sales Volume Change							5.0		%							1.1		%							1.1		%
Average Sales Price Change							26.3		%							15.4		%							7.0		%
Operating Income	$	128		$	67		$	61		$	356		$	264		$	92		$	122		$	121		$	1
Operating Margin	7.2		%	5.0		%				7.6		%	6.6		%				7.9		%	8.5		%

~~Third~~First quarter ~~and nine months~~ – Fiscal ~~2014~~2015 vs Fiscal ~~2013~~2014

Sales Volume – Sales volume increased ~~as a result of~~due to better domestic demand for our pork products.

Average Sales Price – Average sales price increased due to better demand for our pork products. Additionally our average sales price increased due to lower total hog supplies, which ~~additionally~~ resulted in higher input costs.

Operating Income – Operating income ~~increased~~remained strong as we maximized our revenues relative to live hog markets, partially attributable to operational and mix performance.

3634

Table of Contents

Prepared Foods Segment Results


in millions	Three Months Ended									Nine Months Ended									Three Months Ended
	June 28, 2014			June 29, 2013			Change			June 28, 2014			June 29, 2013			Change			December 27, 2014			December 28, 2013			Change
Sales	$	901		$	797		$	104		$	2,669		$	2,441		$	228		$	2,133		$	907		$	1,226
Sales Volume Change							4.0		%							5.2		%							89.5		%
Average Sales Price Change							8.7		%							4.0		%							24.1		%
Operating Income	$	(50	)	$	24		$	(74	)	$	(13	)	$	85		$	(98	)	$	71		$	16		$	55
Operating Margin	(5.5		)%	3.0		%				(0.5		)%	3.5		%				3.3		%	1.8		%

~~Third~~First quarter ~~and nine months~~ – Fiscal ~~2014~~2015 vs Fiscal ~~2013~~2014

Sales Volume – Sales volume increased primarily due to incremental volumes from the acquisition of Hillshire Brands as ~~a result of~~well as improved demand for our prepared foods ~~products and incremental volumes from the purchase of three businesses.~~products.

Average Sales Price – Average sales price increased due to price increases associated with better product mix ~~and price increases~~which was positively impacted by the acquisition of Hillshire Brands, as well as increased prices associated with higher input costs.

Operating Income – ~~Operating income decreased as a result~~Despite incurring $10 million of higher raw material costs and ~~other input~~$40 million of ongoing costs of approximately $95 million and $160 million for the third quarter and nine months of fiscal 2014, respectively, and additional costs incurred as we invested in our growth platforms. Because many of our sales contracts are formula based or shorter-term in nature, we are typically able to offset rising input costs through pricing. However, there is a lag time for price increases to take effect. Additionally, in the third quarter of fiscal 2014, we incurred a $49 million impairment charge related to ~~the planned closure of three plants, which are expected~~a legacy Hillshire Brands plant fire and merger and acquisition costs, operating income improved due to ~~cease operation~~an increase in sales volume and average sales price mainly attributed to Hillshire Brands. Additionally, Prepared Foods operating income was positively impacted by ~~mid-fiscal 2015.~~$55 million related to profit improvement initiatives and Hillshire Brands synergies.

International Segment Results


in millions	Three Months Ended									Nine Months Ended									Three Months Ended
	June 28, 2014			June 29, 2013			Change			June 28, 2014			June 29, 2013			Change			December 27, 2014			December 28, 2013			Change
Sales	$	365		$	343		$	22		$	1,020		$	1,001		$	19		$	305		$	327		$	(22	)
Sales Volume Change							17.2		%							14.0		%							(3.8		)%
Average Sales Price Change							(9.2		)%							(10.6		)%							(2.9		)%
Operating Income	$	(15	)	$	5		$	(20	)	$	(73	)	$	—		$	(73	)	$	(14	)	$	(28	)	$	14
Operating Margin	(4.1		)%	1.5		%				(7.2		)%	—		%				(4.6		)%	(8.6		)%

~~Third~~First quarter ~~and nine months~~ – Fiscal ~~2014~~2015 vs Fiscal ~~2013~~2014

Sales Volume – Sales volume ~~increased as we grew our businesses in~~decreased due to the sale of the Brazil ~~and China.~~operation during the first quarter of fiscal 2015.

Average Sales Price – Average sales price decreased due to ~~poor export market conditions in Brazil,~~ supply imbalances associated with weak demand in ~~China and a less favorable pricing environment in Mexico.~~China.

Operating Income – Operating ~~income decreased~~loss improved due to ~~poor operational execution in~~the sale of the Brazil ~~challenging~~operation and better market conditions in ~~Brazil and China and additional costs incurred as we grew our International operation.~~Mexico.

3735

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LIQUIDITY AND CAPITAL RESOURCES

Our cash needs for working capital, capital expenditures, growth opportunities, the repurchases of senior notes, repayment of term loans and share repurchases are expected to be met with current cash on hand, cash flows provided by operating activities, or short-term borrowings. Based on our current expectations, we believe our liquidity and capital resources will be sufficient to operate our business. However, we may take advantage of opportunities to generate additional liquidity or refinance existing debt through capital market transactions. The amount, nature and timing of any capital market transactions will depend on our operating performance and other circumstances; our then-current commitments and obligations; the amount, nature and timing of our capital requirements; any limitations imposed by our current credit arrangements; and overall market conditions.

As described below, we have entered into a definitive merger agreement to acquire Hillshire. Subsequent to our third quarter of fiscal 2014, we raised substantial capital in order to finance the acquisition. The impacts of the acquisition and related financing may affect our future liquidity and capital resources.

Cash Flows from Operating Activities


in millions	Nine Months Ended						Three Months Ended
	June 28, 2014			June 29, 2013			December 27, 2014		December 28, 2013
Net income	$	720		$	519		$	310	$	252
Non-cash items in net income:
Depreciation and amortization	382			387			175		127
Deferred income taxes	(64		)	(21		)	11		(15		)
Other, net	76			80			6		22
Convertible debt discount	(92		)	—			—		(92		)
Net, changes in working capital	(479		)	(193		)	310		67
Net cash provided by operating activities	$	543		$	772		$	812	$	361

Operating cash outflow associated with the Convertible debt discount ~~relates~~related to the initial debt discount of $92 million on our ~~2013 Notes,~~3.25% convertible notes issued in 2008, which matured on October 15, 2013 and were retired in the first quarter of fiscal 2014.

Cash flows associated with changes in working capital for the ~~nine~~three months ended:

~~June 28,~~December 27, 2014 – ~~Decreased~~Increased primarily due to higher ~~inventory and~~ accounts ~~receivable balances and decreases in taxes~~ payable and ~~accrued salaries, wages and benefits balances,~~taxes payable, partially offset by an increase in accounts ~~payable.~~receivable. The ~~increased inventory~~increases in accounts payable and accounts receivable ~~balances~~ are largely due to ~~increased raw material costs.~~increases in input costs and price increases associated with the higher input costs as well as due to the timing of payments and sales.

~~June 29,~~December 28, 2013 – ~~Decreased~~Increased primarily due to higher ~~inventory and~~ accounts ~~receivable balances~~payable and lower ~~accounts payable.~~inventory balances, partially offset by decreases in accrued interest payable and accrued salaries, wages and benefit balances. The ~~increased~~decrease in inventory ~~and accounts receivable balances are~~balance was largely due to ~~increased raw material costs and timing of sales.~~a decline in overall feed ingredient costs.

We expect 2014 sales to approximate $38 billion as we continue to execute our strategy of accelerating growth in domestic value-added chicken sales, prepared food sales, and international chicken production, as well as price increases associated with rising cattle and hog costs and raw materials in Prepared Foods.

Cash Flows from Investing Activities


in millions	Nine Months Ended						Three Months Ended
	June 28, 2014			June 29, 2013			December 27, 2014			December 28, 2013
Additions to property, plant and equipment	$	(437	)	$	(425	)	$	(231	)	$	(140	)
(Purchases of)/Proceeds from marketable securities, net	(1		)	(101		)	(3		)	(1		)
Acquisitions, net of cash acquired	(56		)	(106		)
Proceeds from sale of businesses							142			—
Other, net	44			36			3			(3		)
Net cash used for investing activities	$	(450	)	$	(596	)	$	(89	)	$	(144	)

Additions to property, plant and equipment include acquiring new equipment and upgrading our facilities to maintain competitive standing and position us for future opportunities.

Capital spending for fiscal ~~2014~~2015 is expected to be approximately ~~$600 to $650~~$900 million, and will include spending on our operations for production and labor efficiencies, yield improvements and sales channel flexibility.

~~Acquisitions - During the nine months~~Proceeds from sale of ~~fiscal 2014, we acquired a value-added food business as part~~businesses primarily include proceeds, net of our strategic expansion initiative. The purchase price of the acquisition was $56 million, which included $12 million for property, plant and equipment, $27 million allocated to Intangible Assets and $18 million allocated to Goodwill.

~~Other, net includes $30 million received~~cash transferred, from the sale of our ~~50 percent ownership interest in our Dynamic Fuels LLC (Dynamic Fuels) joint venture.~~Brazil operation.

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On July 1, 2014, we executed a definitive merger agreement with Hillshire to acquire all of its outstanding stock for $63.00 per share in cash. The transaction is valued at an estimated $8.9 billion, including the assumption of Hillshire’s net debt and $163 million termination fee. Refer to further description regarding this transaction under Part 1, Item 1, Notes to the Consolidated Condensed Financial Statements, Note 16: Subsequent Events.

Cash Flows from Financing Activities


in millions	Nine Months Ended						Three Months Ended
	June 28, 2014			June 29, 2013			December 27, 2014			December 28, 2013
Payments on debt	$	(407	)	$	(69	)	$	(668	)	$	(379	)
Net proceeds from borrowings	28			48			—			6
Purchases of Tyson Class A common stock	(286		)	(298		)	(91		)	(159		)
Dividends	(76		)	(87		)	(37		)	(25		)
Stock options exercised	61			93			16			12
Other, net	26			13			5			5
Net cash used for financing activities	$	(654	)	$	(300	)	$	(775	)	$	(540	)

During the first quarter of fiscal 2015, we retired the 5-year tranche A term loan facility for $353 million and paid down the 3-year tranche term loan facility by $300 million.

Our ~~2013 Notes~~3.25% convertible notes issued in 2008 matured on October 15, 2013 at which time we paid the ~~$458~~$458 million principal value with cash on hand, and settled the conversion premium by issuing 11.7 million shares of our Class A stock from available treasury shares. ~~The 2013 Notes~~These notes were initially recorded at a $92 million discount, which equaled the fair value of an equity conversion premium instrument. The portion of the payment of the ~~Notes~~notes related to the initial $92 million discount was recorded in cash flows from operating activities. Simultaneous to the settlement of the conversion premium, we received 11.7 million shares of our Class A stock from call options purchased at the ~~call options.~~

~~During~~time of issuance of the nine months of fiscal 2014, we received proceeds of $26 million and paid $37 million related to borrowings at our foreign subsidiaries. Total debt related to our foreign subsidiaries was $49 million at ~~June 28, 2014~~ ~~($39 million current, $10 million long-term).~~

notes.

Purchases of Tyson Class A stock included:

$~~250~~81 million and $150 million of shares repurchased pursuant to our share repurchase program during the ~~nine months ended June 28,~~first quarter of fiscal 2015 and 2014, ~~and June 29, 2013,~~ respectively.

$3610 million and $489 million ~~for~~of shares repurchased to fund certain obligations under our equity compensation programs during the ~~nine months ended June 28,~~first quarter of fiscal 2015 and 2014, ~~and June 29, 2013,~~ respectively.

We currently ~~do not~~ plan to repurchase a number of shares ~~other than~~equivalent to ~~fund obligations~~the dilution expected to be realized from the current fiscal year grant under ~~equity~~our stock-based compensation programs.

Dividends during the ~~nine months~~first quarter of fiscal ~~2014~~2015 included a ~~50%~~33% increase to our quarterly dividend rate. ~~Dividends during the nine months of fiscal 2013 include a special dividend of $0.10 and $0.09 to holders of our Class A stock and Class B stock, respectively.~~

~~Acquisition Financing~~– In the third quarter of fiscal 2014, we entered into a fully committed 364-day, $8.2 billion unsecured bridge facility. In July 2014, we decreased the bridge facility to $5.7 billion and added a $2.5 billion senior unsecured term loan facility. The committed facilities, together with cash on hand, will be available to fund the Hillshire acquisition, including the payment of related fees and expenses. The lenders are obligated to fund the facilities, subject to customary closing conditions. The bridge facility provides that the commitments will be automatically reduced on a dollar-for-dollar basis by, among other things, the net cash proceeds of certain offerings of debt, equity or equity-linked securities; the committed principal amount of certain term loan facilities; and the net cash proceeds of certain asset sales and will mature on the date that is 364-days after the date on which lenders are obligated to make initial loans under the bridge facility. Permanent funding for the Hillshire acquisition includes a mix of Class A common stock, tangible equity units, term loans, senior notes, and cash on hand. Additional details of the permanent funding include:

Class A Common Stock: On August 5, 2014, we completed the issuance of 23.8 million shares of our Class A common stock for total proceeds, net of underwriting discounts and other estimated expenses, of $873 million. The amount of shares of Class A common stock sold may increase up to 3.6 million shares if the underwriters exercise their over-allotment option, which expires on August 29, 2014.

~~Table of Contents~~

Tangible Equity Units: On August 5, 2014, we completed the issuance of 30 million, 4.75% tangible equity units. Total proceeds, net of underwriting discounts and other estimated expenses, was $1,454 million. Each tangible equity unit, which has a stated amount of $50, is comprised of a prepaid stock purchase contract and a senior amortizing note due July 15, 2017. The senior amortizing note is payable quarterly and has a stated interest rate of 1.5%. Unless earlier redeemed or settled, each purchase contract will automatically settle on July 15, 2017, and the Company will deliver between a minimum of 31.7 million and a maximum of 39.7 million of the shares, subject to adjustment, based upon the applicable market value of the Class A common stock. Prior to any adjustments, we will deliver the minimum amount of shares upon conversion if our share price is equal to or greater than the conversion price of $47.25 and will deliver the maximum shares upon conversion if our share price is equal to or less than the reference price of $37.80. If our share price upon conversion is between the reference and conversion prices, we will deliver a variable amount of shares between the minimum and maximum amounts. The fair value of the prepaid stock purchase contracts, which is estimated at $1,295 million, will be recorded in Capital in Excess of Par Value, net of its offering expenses. The fair value of the senior amortizing notes, which is estimated at $205 million, will be recorded in debt, of which $65 million is current.

Term Loan Facility: The committed unsecured term loan facility provides for total term loan commitments in an aggregate principal amount of $2,500 million, consisting of a $1,306 million 3-year tranche facility, a $594 million 5-year tranche A facility, and a $600 million 5-year tranche B facility. The principal of the 3-year tranche facility and the 5-year tranche A facility each amortize at 2.5% per quarter. The lenders are obligated to fund the loans upon consummation of the tender offer, subject to customary closing conditions. In addition, we estimate the term loan issuance costs will total approximately $13 million.

Senior Notes: On August 5, 2014, we launched and priced a public offering of senior unsecured notes with an aggregate principal amount of $3,250 million, consisting of $1,000 million due August 2019 (“2019 Notes”), $1,250 million due August 2024 (“2024 Notes”), $500 million due August 2034 ("2034 Notes"), and $500 million due August 2044 (“2044 Notes”). The 2019 Notes, 2024 Notes, 2034 Notes, and 2044 Notes carry interest rates of 2.65%, 3.95%, 4.88% and 5.15%, respectively, with interest payments due semi-annually on August 15 and February 15. After the original issue discounts of $7 million, we expect to receive net proceeds of $3,243 million. In addition, we estimate that the total senior notes offering costs will total approximately $29 million. We expect to close on the senior notes offering on August 8, 2014.

Revolving Credit Facility: On June 27, 2014, we amended our existing revolving credit facility to, among other things, permit the consummation of certain debt financings related to our tender offer to acquire all of the issued and outstanding shares of common stock of Hillshire.

Liquidity


in millions
	Commitments Expiration Date	Facility Amount		Outstanding Letters of Credit (no draw downs)		Amount Borrowed		Amount Available		Commitments Expiration Date	Facility Amount		Outstanding Letters of Credit (no draw downs)		Amount Borrowed		Amount Available
Cash and cash equivalents								$	587								$	381
Short-term investments								$	2								2
Revolving credit facility	August 2017	$	1,000	$	41	$	—	$	959	September 2019	$	1,250	$	5	$	—	1,245
Total liquidity								$	1,548								$	1,628

The revolving credit facility supports our short-term funding needs and letters of credit. The letters of credit issued under this facility are primarily in support of workers’ compensation insurance programs and derivative activities.

~~In October 2013 our 2013 Notes matured at which time we paid the~~ ~~$458 million~~ ~~principal value with cash on hand.~~

We expect net interest expense will approximate ~~$130~~$285 million for fiscal ~~2014, which includes estimates regarding the timing and composition of debt financing and closing of the Hillshire acquisition.~~2015 (53-weeks).

At ~~June 28,~~December 27, 2014, approximately ~~47%~~$326 million of our cash was held in the international accounts of our foreign subsidiaries. Generally, we do not rely on the foreign cash as a source of funds to support our ongoing domestic liquidity needs. Rather, we manage our worldwide cash requirements by reviewing available funds among our foreign subsidiaries and the cost effectiveness with which those funds can be accessed. The repatriation of cash balances from certain of our subsidiaries could have adverse tax consequences or be subject to regulatory capital requirements; however, those balances are generally available without legal restrictions to fund ordinary business operations. U.S. income taxes, net of applicable foreign tax credits, have not been provided on undistributed earnings of foreign ~~subsidiaries. Our~~subsidiaries with the exception of the undistributed earnings of our Mexican subsidiaries due to the pending sale. Except for cash generated from the sale of our Mexico operation, our intention is to reinvest the cash held by foreign subsidiaries permanently or to repatriate the cash only when it is tax ~~efficient~~effective to do so.

Our current ratio was ~~2.11~~1.50 to 1 and ~~1.86~~1.64 to 1 at ~~June 28,~~December 27, 2014, and September ~~28, 2013~~27, 2014, respectively.

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Capital Resources

As described above, subsequent to our third quarter of fiscal 2014, we raised substantial capital in order to finance our pending acquisition of Hillshire. The impacts of these capital resources may affect future periods' debt-to-total capitalization ratios and credit ratings.

Credit Facility

Cash flows from operating activities and current cash on hand are our primary sources of liquidity for funding debt service, capital expenditures, dividends and share repurchases. We also have a revolving credit facility, with a committed maximum capacity of ~~$1.0~~$1.25 billion, to provide additional liquidity for working capital needs, letters of credit and a source of financing for growth opportunities. As of ~~June 28,~~December 27, 2014, we had outstanding letters of credit totaling $415 million issued under this facility, none of which were drawn upon, which left ~~$959~~$1,245 million available for borrowing. Our revolving credit facility is funded by a syndicate of 4442 banks, with commitments ranging from $0.3 million to ~~$90~~$85 million per bank. The syndicate includes bank holding companies that are required to be adequately capitalized under federal bank regulatory agency requirements.

Capitalization

To monitor our credit ratings and our capacity for long-term financing, we consider various qualitative and quantitative factors. We monitor the ratio of our net debt to ~~our total capitalization~~EBITDA as support for our long-term financing decisions. At ~~June 28,~~December 27, 2014,, and September ~~28, 2013~~,27, 2014, the ratio of our ~~debt-to-total capitalization~~net debt to EBITDA was ~~21.4%~~3.5x and ~~27.9%~~,4.1x, respectively. Refer to Part I, Item 3, EBITDA Reconciliations, for an explanation and reconciliation to comparable GAAP measures. The ~~reduction~~decrease in this ratio at ~~June 28,~~December 27, 2014 was due to increased EBITDA and the ~~retirement~~reduction of ~~our 2013 Notes, which totaled $458 million, upon their maturity in our~~debt during the first quarter of fiscal ~~2014. Additionally, in the third quarter~~2015 of fiscal 2014, we settled the $100 million Dynamic Fuels’ Gulf Opportunity Zone tax-exempt bonds associated with the deconsolidation of our Dynamic Fuels subsidiary due to the sale of our 50 percent ownership interest. For the purpose of this calculation, debt is defined as the sum of current and long-term debt. Total capitalization is defined as debt plus Total Shareholders’ Equity.approximately $650 million.

Credit Ratings

2016 Notes

On February 11, 2013, Standard & Poor's Ratings Services, a Standard & Poor's Financial Services LLC business (S&P), upgraded the credit rating of the 2016 Notes from "BBB-" to "BBB." This upgrade did not impact the interest rate on the 2016 Notes.

On June 7, 2012, Moody's Investors Service, Inc. (Moody's) upgraded the credit rating of the 2016 Notes from "Ba1" to "Baa3." This upgrade decreased the interest rate on the 2016 Notes from 6.85% to 6.60%, effective beginning with the six-month interest payment due October 1, 2012.

A one-notch downgrade by Moody's would increase the interest rates on the 2016 Notes by 0.25%. A two-notch downgrade from S&P would increase the interest rates on the 2016 Notes by 0.25%.

Revolving Credit Facility

S&P's corporate credit rating for Tyson Foods, Inc. is "BBB." Moody’s senior, unsecured, subsidiary guaranteed long-term debt rating for Tyson Foods, Inc. is "Baa3." Fitch ~~Ratings',~~Ratings, a wholly owned subsidiary of Fimalac, S.A. (Fitch), issuer default rating for Tyson Foods, Inc. is "BBB." The below table outlines the fees paid on the unused portion of the facility (Facility Fee Rate) and letter of credit fees (Undrawn Letter of Credit Fee and Borrowing Spread) depending on the rating levels of Tyson Foods, Inc. from S&P, Moody's and Fitch.


Ratings Level (S&P/Moody's/Fitch)	Facility Fee Rate		Undrawn Letter of Credit Fee and Borrowing Spread		Facility Fee Rate		Undrawn Letter of Credit Fee and Borrowing Spread
BBB+/Baa1/BBB+ or above	0.150	%	1.125	%
A-/A3/A- or above					0.100	%	1.000	%
BBB+/Baa1/BBB+					0.125	%	1.125	%
BBB/Baa2/BBB (current level)	0.175	%	1.375	%	0.150	%	1.250	%
BBB-/Baa3/BBB-	0.225	%	1.625	%	0.200	%	1.500	%
BB+/Ba1/BB+	0.275	%	1.875	%
BB/Ba2/BB or lower or unrated	0.325	%	2.125	%
BB+/Ba1/BB+ or lower					0.250	%	1.750	%

In the event the rating levels are split, the applicable fees and spread will be based upon the rating level in effect for two of the rating agencies, or, if all three rating agencies have different rating levels, the applicable fees and spread will be based upon the rating level that is between the rating levels of the other two rating agencies.

~~Table of Contents~~

Debt Covenants

~~As described above, subsequent to our third quarter of fiscal 2014, we raised substantial capital in order to finance our pending acquisition of Hillshire. The~~Our senior notes ~~term loan facility and bridge facility contain certain covenants which are consistent with our existing covenants.~~

~~Our 2022 Notes~~ also contain affirmative and negative covenants that, among other things, may limit or restrict our ability to: create liens; engage in certain sale/leaseback transactions; and engage in certain consolidations, mergers and sales of assets.

We were in compliance with all debt covenants at ~~June 28,~~December 27, 2014.

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RECENTLY ADOPTED/ISSUED ACCOUNTING PRONOUNCEMENTS

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

CRITICAL ACCOUNTING ESTIMATES

We consider accounting policies related to: contingent liabilities; marketing and advertising costs; accrued ~~self insurance;~~self-insurance; defined benefit pension plans; impairment of long-lived assets; impairment of goodwill and other intangible assets; and income taxes to be critical accounting estimates. These policies are summarized in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended September ~~28, 2013~~27, 2014.

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

Certain information in this report constitutes forward-looking statements. Such forward-looking statements include, but are not limited to, current views and estimates of our outlook for fiscal ~~2014~~2015, other future economic circumstances, industry conditions in domestic and international markets, our performance and financial results (e.g., debt levels, return on invested capital, value-added product growth, capital expenditures, tax rates, access to foreign markets and dividend policy). These forward-looking statements are subject to a number of factors and uncertainties that could cause our actual results and experiences to differ materially from anticipated results and expectations expressed in such forward-looking statements. We wish to caution readers not to place undue reliance on any forward-looking statements, which speak only as of the date made. We undertake no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.

Among the factors that may cause actual results and experiences to differ from anticipated results and expectations expressed in such forward-looking statements are the following: (i) the effect of, or changes in, general economic conditions; (ii) fluctuations in the cost and availability of inputs and raw materials, such as live cattle, live swine, feed grains (including corn and soybean meal) and energy; (iii) market conditions for finished products, including competition from other global and domestic food processors, supply and pricing of competing products and alternative proteins and demand for alternative proteins; (iv) successful rationalization of existing facilities and operating efficiencies of the facilities; (v) risks associated with our commodity purchasing activities; (vi) access to foreign markets together with foreign economic conditions, including currency fluctuations, import/export restrictions and foreign politics; (vii) outbreak of a livestock disease (such as avian influenza (AI) or bovine spongiform encephalopathy (BSE)), which could have an adverse effect on livestock we own, the availability of livestock we purchase, consumer perception of certain protein products or our ability to access certain domestic and foreign markets; (viii) changes in availability and relative costs of labor and contract growers and our ability to maintain good relationships with employees, labor unions, contract growers and independent producers providing us livestock; (ix) issues related to food safety, including costs resulting from product recalls, regulatory compliance and any related claims or litigation; (x) changes in consumer preference and diets and our ability to identify and react to consumer trends; (xi) significant marketing plan changes by large customers or loss of one or more large customers; (xii) adverse results from litigation; (xiii) impacts on our operations caused by factors and forces beyond our control, such as natural disasters, fire, bioterrorism, pandemic or extreme weather; (xiv) risks associated with leverage, including cost increases due to rising interest rates or changes in debt ratings or outlook; ~~(xiv)~~(xv) compliance with and changes to regulations and laws (both domestic and foreign), including changes in accounting standards, tax laws, environmental laws, agricultural laws and occupational, health and safety laws; ~~(xv)~~(xvi) our ability to make effective acquisitions or joint ventures and successfully integrate newly acquired businesses into existing operations; ~~(xvi)~~(xvii) failures or security breaches of our information technology systems; (xviii) effectiveness of advertising and marketing programs; and ~~(xvii)~~(xix) those factors listed under Item 1A. “Risk Factors” included in our Annual Report filed on Form 10-K for the year ended September ~~28, 2013~~.27, 2014.

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Item 3.	Quantitative and Qualitative Disclosures About Market Risk

Market risk relating to our operations results primarily from changes in commodity prices, interest rates and foreign exchange rates, as well as credit risk concentrations. To address certain of these risks, we enter into various derivative transactions as described below. If a derivative instrument is accounted for as a hedge, depending on the nature of the hedge, changes in the fair value of the instrument either will be offset against the change in fair value of the hedged assets, liabilities or firm commitments through earnings, or be recognized in other comprehensive income (loss) until the hedged item is recognized in earnings. The ineffective portion of an instrument’s change in fair value is recognized immediately. Additionally, we hold certain positions, primarily in grain and livestock futures that either do not meet the criteria for hedge accounting or are not designated as hedges. With the exception of normal purchases and normal sales that are expected to result in physical delivery, we record these positions at fair value, and the unrealized gains and losses are reported in earnings at each reporting date. Changes in market value of derivatives used in our risk management activities relating to forward sales contracts are recorded in sales. Changes in market value of derivatives used in our risk management activities surrounding inventories on hand or anticipated purchases of inventories are recorded in cost of sales.

The sensitivity analyses presented below are the measures of potential losses of fair value resulting from hypothetical changes in market prices related to commodities. Sensitivity analyses do not consider the actions we may take to mitigate our exposure to changes, nor do they consider the effects such hypothetical adverse changes may have on overall economic activity. Actual changes in market prices may differ from hypothetical changes.

Commodities Risk: We purchase certain commodities, such as grains and livestock in the course of normal operations. As part of our commodity risk management activities, we use derivative financial instruments, primarily futures and options, to reduce the effect of changing prices and as a mechanism to procure the underlying commodity. However, as the commodities underlying our derivative financial instruments can experience significant price fluctuations, any requirement to mark-to-market the positions that have not been designated or do not qualify as hedges could result in volatility in our results of operations. Contract terms of a hedge instrument closely mirror those of the hedged item providing a high degree of risk reduction and correlation. Contracts designated and highly effective at meeting this risk reduction and correlation criteria are recorded using hedge accounting. The following table presents a sensitivity analysis resulting from a hypothetical change of 10% in market prices as of ~~June 28,~~December 27, 2014, and September ~~28, 2013~~27, 2014, on the fair value of open positions. The fair value of such positions is a summation of the fair values calculated for each commodity by valuing each net position at quoted futures prices. The market risk exposure analysis includes hedge and non-hedge derivative financial instruments.


Effect of 10% change in fair value			in millions				in millions
	June 28, 2014		September 28, 2013		December 27, 2014		September 27, 2014
Livestock:
Cattle	$	73	$	13	$	50	$	42
Hogs	47		35		18		32
Grain	8		23		11		10

Interest Rate Risk: At ~~June 28,~~December 27, 2014, we had variable rate debt of ~~$49 million~~$1.4 billion with a weighted average interest rate of ~~6.7%~~1.6%. A hypothetical 10% increase in interest rates effective at ~~June 28,~~December 27, 2014, and September ~~28, 2013~~27, 2014, would have a minimal effect on interest expense.

Additionally, changes in interest rates impact the fair value of our fixed-rate debt. At ~~June 28,~~December 27, 2014, we had fixed-rate debt of ~~$1.8~~$6.1 billion with a weighted average interest rate of ~~5.5%~~4.2%. Market risk for fixed-rate debt is estimated as the potential increase in fair value, resulting from a hypothetical 10% decrease in interest rates. A hypothetical 10% decrease in interest rates would have increased the fair value of our fixed-rate debt by approximately ~~$20~~$113 million at ~~June 28,~~December 27, 2014 and ~~$22~~$109 million at September ~~28, 2013~~27, 2014. The fair values of our debt were estimated based on quoted market prices and/or published interest rates.

We have interest rate risk associated with our pension and post-retirement benefit obligations. Changes in interest rates impact the liabilities associated with these benefit plans as well as the amount of income or expense recognized for these plans. Declines in the value of the plan assets could diminish the funded status of the pension plans and potentially increase the requirements to make cash contributions to these plans. See Part II, Item 8, Notes to Consolidated Financial Statements, Note 15: Pensions and Other Postretirement Benefits in the Annual Report on Form 10-K for the year ended September 27, 2014 for additional information.

Foreign Currency Risk: We have foreign exchange exposure from fluctuations in foreign currency exchange rates primarily as a result of certain receivable and payable balances. The primary currencies we have exposure to are the Brazilian real, the British pound sterling, the Canadian dollar, the Chinese renminbi, the European euro, the Indian rupee and the Mexican peso. We periodically enter into foreign exchange forward and option contracts to hedge some portion of our foreign currency exposure. A hypothetical 10% change in foreign exchange rates effective at ~~June 28,~~December 27, 2014, and September ~~28, 2013~~27, 2014, related to the foreign exchange forward and option contracts would have a $4$3 million and ~~$11~~$9 million impact, respectively, on pretax income. ~~In the future, we may enter into more foreign exchange forward and option contracts as a result~~

Table of ~~our international growth strategy.~~Contents

Concentration of Credit Risk: Refer to our market risk disclosures set forth in the ~~2013~~2014 Annual Report filed on Form 10-K for a detailed discussion of quantitative and qualitative disclosures about concentration of credit risks, as these risk disclosures have not changed significantly from the ~~2013~~2014 Annual Report.

EBITDA Reconciliations

A reconciliation of net income to EBITDA is as follows (in millions, except ratio data):



	Three Months Ended						Fiscal Year Ended			Twelve Months Ended
	December 27, 2014			December 28, 2013			September 27, 2014			December 27, 2014

Net income	$	310		$	252		$	856		$	914
Less: Interest income	(2		)	(2		)	(7		)	(7		)
Add: Interest expense	77			28			132			181
Add: Income tax expense	125			131			396			390
Add: Depreciation	148			120			494			522
Add: Amortization (a)	23			4			26			45
EBITDA	$	681		$	533		$	1,897		$	2,045


Total gross debt							$	8,178		$	7,527
Less: Cash and cash equivalents							(438		)	(381		)
Less: Short-term investments							(1		)	(2		)
Total net debt							$	7,739		$	7,144

Ratio Calculations:
Gross debt/EBITDA							4.3x			3.7x
Net debt/EBITDA							4.1x			3.5x


(a)	Excludes the amortization of debt discount expense of $4 million and $3 million for the three months ended December 27, 2014, and December 28, 2013, respectively, $10 million for the fiscal year ended September 27, 2014, and $11 million for the twelve months ended December 27, 2014, as it is included in Interest expense.

EBITDA represents net income, net of interest, income tax and depreciation and amortization. Net debt to EBITDA represents the ratio of our debt, net of cash and short-term investments, to EBITDA. EBITDA and net debt to EBITDA are presented as supplemental financial measurements in the evaluation of our business. We believe the presentation of these financial measures helps investors to assess our operating performance from period to period, including our ability to generate earnings sufficient to service our debt, and enhances understanding of our financial performance and highlights operational trends. These measures are widely used by investors and rating agencies in the valuation, comparison, rating and investment recommendations of companies; however, the measurements of EBITDA and net debt to EBITDA may not be comparable to those of other companies, which limits their usefulness as comparative measures. EBITDA and net debt to EBITDA are not measures required by or calculated in accordance with generally accepted accounting principles (GAAP) and should not be considered as substitutes for net income or any other measure of financial performance reported in accordance with GAAP or as a measure of operating cash flow or liquidity. EBITDA is a useful tool for assessing, but is not a reliable indicator of, our ability to generate cash to service our debt obligations because certain of the items added to net income to determine EBITDA involve outlays of cash. As a result, actual cash available to service our debt obligations will be different from EBITDA. Investors should rely primarily on our GAAP results, and use non-GAAP financial measures only supplementally, in making investment decisions.

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Item 4.	Controls and Procedures

An evaluation was performed, under the supervision and with the participation of management, including the Chief Executive Officer (CEO) and the Chief Financial Officer (CFO), of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended). Based on that evaluation, management, including the CEO and CFO, has concluded that, as of ~~June 28,~~December 27, 2014, our disclosure controls and procedures were effective.

In the ~~third~~first quarter ended ~~June 28,~~December 27, 2014, there were no changes in the Company’s internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II. OTHER INFORMATION


Item 1.	Legal Proceedings

Refer to the description of certain legal proceedings pending against us under Part I, Item 1, Notes to Consolidated Condensed Financial Statements, Note ~~15:~~16: Commitments and Contingencies, which discussion is incorporated herein by reference. Listed below are certain additional legal proceedings involving the Company and/or its subsidiaries.

On May 8, 2008, a lawsuit was filed against the Company and two of our employees in the District Court of McCurtain County, Oklahoma styled Armstrong, et al. v. Tyson Foods, Inc., et al. (the Armstrong Case). The lawsuit was brought by a group of 52 poultry growers who allege that certain of our live production practices in Oklahoma constitute fraudulent inducement, fraud, unjust enrichment, negligence, gross negligence, unconscionability, violations of the Oklahoma Business Sales Act, Deceptive Trade Practice violations, violations of the Consumer Protection Act, and conversion, as well as other theories of recovery. The plaintiffs sought damages in an unspecified amount. On October 30, 2009, 20 additional growers represented by the same attorney filed a lawsuit against us in the same court asserting the same or similar claims, which is styled Clardy, et al. v. Tyson Foods, Inc., et al. (the Clardy Case). In both of these cases we have denied all allegations of wrongdoing. In June 2009, the plaintiffs in the Armstrong case requested an expedited trial date for a smaller group of plaintiffs they claimed were facing imminent financial peril. The Court ultimately severed a group of 10 plaintiffs from the Armstrong Case, and a trial began on March 15, 2010. On April 1, 2010, the jury returned a verdict against us and one of our employees, and on April 2, 2010, the Court entered a judgment in the amount of $8,655,735, which included punitive damages. Subsequent to the trial, the presiding judge disqualified from the cases and the Oklahoma Supreme Court appointed a new judge to the cases. Following this appointment, the trial court granted our motions for change of venue and to stay all future trials of plaintiffs in the Armstrong Case and the Clardy Case pending the outcome of our appeal of the initial Armstrong Case verdict. The trial court took under advisement the sizes of groupings of plaintiffs in future trials in response to our motion to sever the plaintiffs' claims into individual cases. We appealed the initial Armstrong Case verdict to the Oklahoma Supreme Court based on numerous irregularities and rulings during the trial, and the Oklahoma Supreme Court reversed the verdict and remanded the case back to the trial court. At this time, the district court has not set trial dates for the Armstrong Case or the Clardy Case.

In September 2013, the United States Department of Justice (DOJ) alleged that one of our subsidiaries did not comply with the Clean Water Act with respect to a spill that occurred in North Carolina in January 2010. Following discussions with the DOJ, we agreed to settle the allegations and underlying claims for $305,000.

On June 17, 2014, the Missouri attorney general filed a civil lawsuit against us in the circuit court of Barry County, Missouri, concerning an incident that occurred in May 2014 in which some feed supplement was discharged from our plant in Monett, Missouri, to the City of Monett’s wastewater treatment plant allegedly leading to a fish kill in a local stream and odor issues around the plant. That lawsuit alleges six violations stemming from the incident and seeks penalties against us, compensation for damage to the stream, and reimbursement for the State of Missouri’s costs in investigating the matter. In January 2015 a consent judgment was entered that resolved the lawsuit. The judgment requires payment of $540,000, which includes amounts for penalties, cost recovery and supplemental environmental projects. The U.S. Environmental Protection Agency has also indicated to us that it has begun a criminal investigation into the incident. If we become subject to criminal charges, we may be subject to a fine and other relief, as well as government contract suspension and debarment. We are cooperating with the Environmental Protection Agency but cannot predict the outcome of its investigation at this time. It is also possible that other regulatory agencies may commence investigations and allege additional violations. ~~Finally, we may be subject~~

On June 19, 2005, the Attorney General and the Secretary of the Environment of the State of Oklahoma filed a complaint in the U.S. District Court for the Northern District of Oklahoma against Tyson Foods, Inc., three subsidiaries and six other poultry integrators. The complaint, which was subsequently amended, asserts a number of state and federal causes of action including, but not limited to, counts under Comprehensive Environmental Response, Compensation, and Liability Act, Resource Conservation and Recovery Act, and state-law public nuisance theories. Oklahoma alleges that the defendants and certain contract growers who were not joined in the lawsuit polluted the surface waters, groundwater and associated drinking water supplies of the Illinois River Watershed through the land application of poultry litter. Oklahoma’s claims were narrowed through various rulings issued before and during trial and its claims for natural resource damages were dismissed by the district court in a ruling issued on July 22, 2009 which was subsequently affirmed on appeal by the Tenth Circuit Court of Appeals. A non-jury trial of the remaining claims including Oklahoma’s request for injunctive relief began on September 24, 2009. Closing arguments were held on February 11, 2010. The district court has not yet rendered its decision from the ~~City of Monett for causing it to violate various municipal regulations and for damages to the City’s treatment system.~~trial.

Other Matters: ~~We currently have~~At September 27, 2014, we had approximately ~~115,000~~124,000 employees and, at any time, we have various employment practices matters outstanding. In the aggregate, these matters are significant to the Company, and we devote significant resources to managing employment issues. Additionally, we are subject to other lawsuits, investigations and claims (some of which involve substantial amounts) arising out of the conduct of our business. While the ultimate results of these matters cannot be determined, they are not expected to have a material adverse effect on our consolidated results of operations or financial position.

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Item 1A.	Risk Factors

~~In addition~~There have been no material changes to ~~the information set forth below and elsewhere in this Form 10-Q and~~ the risk factors listed in Part I, “Item 1A. Risk Factors” in the Annual Report on Form 10-K for the year ended September ~~28, 2013, you should carefully consider the~~27, 2014. These risk factors ~~set forth below. These risks~~should be considered carefully with the information provided elsewhere in this report, which could materially adversely affect our business, financial condition or results of operations.

~~Risks Related to the Proposed Hillshire Brands Acquisition~~

If the Hillshire Brands Acquisition is consummated, we may be unable to successfully integrate Hillshire Brands’ operations or to realize targeted cost savings, revenues and other benefits of the Hillshire Brands Acquisition.

We entered into the merger agreement for the Hillshire Brands acquisition because we believe that the Hillshire Brands acquisition will be beneficial to us and our stockholders. Achieving the targeted benefits of the Hillshire Brands acquisition will depend in part upon whether we can integrate Hillshire Brands’ businesses in an efficient and effective manner. We may not be able to accomplish this integration process smoothly or successfully. The necessity of coordinating geographically separated organizations, systems and facilities and addressing possible differences in business backgrounds, corporate cultures and management philosophies may increase the difficulties of integration. We and Hillshire Brands operate numerous systems, including those involving management information, purchasing, accounting and finance, sales, billing, employee benefits, payroll and regulatory compliance. Moreover, the integration of our respective operations will require the dedication of significant management resources, which is likely to distract management’s attention from day-to-day operations. Employee uncertainty and lack of focus during the integration process may also disrupt our business and result in undesired employee attrition. An inability of management to successfully integrate the operations of the two companies could have a material adverse effect on the business, results of operations and financial condition of the combined businesses.

In addition, we continue to evaluate our estimates of synergies to be realized from the Hillshire Brands acquisition and refine them, so that our actual cost-savings could differ materially from our current estimates. Actual cost-savings, the costs required to realize the cost-savings and the source of the cost-savings could differ materially from our estimates, and we cannot assure you that we will achieve the full amount of cost-savings on the schedule anticipated or at all or that these cost-savings programs will not have other adverse effects on our business. In light of these uncertainties, you should not place undue reliance on our estimated cost-savings.

Finally, we may not be able to achieve the targeted operating or long-term strategic benefits of the Hillshire Brands acquisition or could incur higher transition costs. An inability to realize the full extent of, or any of, the anticipated benefits of the Hillshire Brands acquisition, as well as any delays encountered in the integration process, could have an adverse effect on our business, results of operations and financial condition.

~~We will incur significant transaction and acquisition-related costs in connection with the Hillshire Brands Acquisition.~~

We expect to incur significant costs associated with the Hillshire Brands acquisition and combining the operations of the two companies, including costs to achieve targeted cost-savings. The substantial majority of the expenses resulting from the Hillshire Brands acquisition will be composed of transaction costs related to the Hillshire Brands acquisition, systems consolidation costs, and business integration and employment-related costs, including costs for severance, retention and other restructuring. We may also incur transaction fees and costs related to formulating integration plans. Additional unanticipated costs may be incurred in the integration of the two companies’ businesses. Although we expect that the elimination of duplicative costs, as well as the realization of other efficiencies related to the integration of the businesses, should allow us to offset incremental transaction and acquisition-related costs over time, this net benefit may not be achieved in the near term, or at all.

~~The announcement and pendency of the Hillshire Brands Acquisition could impact or cause disruptions in our and Hillshire Brands’ businesses.~~

~~Specifically:~~

our and Hillshire Brands’ current and prospective customers and suppliers may experience uncertainty associated with the Hillshire Brands Acquisition, including with respect to current or future business relationships with us, Hillshire Brands or the combined business and may attempt to negotiate changes in existing business;

~~our and Hillshire Brands’ employees may experience uncertainty about their future roles with us, which may adversely affect our and Hillshire Brands’ ability to retain and hire key employees;~~

~~the Hillshire Brands Acquisition may give rise to potential liabilities, including as a result of pending and future Hillshire Brands shareholder lawsuits relating to the Hillshire Brands Acquisition;~~

if the Hillshire Brands Acquisition is completed, the accelerated vesting of equity-based awards and payment of “change in control” benefits to some members of Hillshire Brands’ management on completion of the Hillshire Brands Acquisition could result in increased difficulty or cost in retaining Hillshire Brands’ officers and employees; and

the attention of our management and that of Hillshire Brands may be directed toward the completion and implementation of the Hillshire Brands Acquisition and transaction-related considerations and may be diverted from the day-to-day business operations of the respective companies.

In connection with the Hillshire Brands Acquisition, we could also encounter additional transaction and integration-related costs or other factors such as the failure to realize all of the benefits anticipated in the Hillshire Brands Acquisition, as described in more detail above.

~~Table of Contents~~

~~The Hillshire Brands Acquisition may not be successful.~~

We recently announced our entry into the merger agreement to acquire Hillshire Brands. Risks associated with the Hillshire Brands acquisition include the risk that the transaction may not be consummated, the risk that regulatory approval that may be required for the transaction is not obtained or is obtained subject to certain conditions that are not anticipated, litigation risk associated with claims or potential claims brought by shareholders of Hillshire Brands to enjoin the transaction or seek monetary damages, and risks associated with our ability to issue debt to fund a portion of the purchase price. In addition, if the Hillshire Brands acquisition does not close, we will have significant discretion to allocate the proceeds from the above-described concurrent offerings of Class A common stock and tangible equity units offering to other uses. We have no assurances that we will have opportunities to allocate the proceeds from those offerings for other productive uses or that other uses of the proceeds from those offerings will result in a favorable return to investors.


Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds

The table below provides information regarding our purchases of Class A stock during the periods indicated.

Period
Total
Number of
Shares
Purchased

Average
Price Paid
per Share

Total Number of Shares
Purchased as Part of
Publicly Announced
Plans or Programs

Maximum Number of
Shares that May Yet Be
Purchased Under the Plans
or Programs ⁽¹⁾

Mar. 30, 2014 to Apr. 26, 2014 85,229
$ 42.37
—
32,054,771
Apr. 27, 2014 to May 31, 2014 143,444
41.14
—
32,054,771
Jun. 01, 2014 to Jun. 28, 2014 44,929
39.29
—
32,054,771
Total 273,602
⁽²⁾
$ 41.22
—
32,054,771



Period	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs ⁽¹⁾
Sept. 28, 2014 to Oct. 25, 2014	128,702		$	40.02	—		32,054,771
Oct. 26, 2014 to Nov. 29, 2014	1,276,535		40.74		1,200,000		30,854,771
Nov. 30, 2014 to Dec. 27, 2014	838,622		39.81		800,000		30,054,771
Total	2,243,859	⁽²⁾	$	40.35	2,000,000	⁽³⁾	30,054,771

(1)

On February 7, 2003, we announced our Board of Directors approved a program to repurchase up to 25 million shares of Class A common stock from time to time in open market or privately negotiated transactions. On May 3, 2012, our Board of Directors approved an increase of 35 million shares authorized for repurchase under this program. On January 30, 2014, our Board of Directors approved an increase of 25 million shares authorized for repurchase under this program. The program has no fixed or scheduled termination date.

(2)

We purchased ~~273,602~~243,859 shares during the period that were not made pursuant to our previously announced stock repurchase program, but were purchased to fund certain Company obligations under our equity compensation plans. These transactions included ~~241,609~~158,360 shares purchased in open market transactions and ~~31,993~~85,499 shares withheld to cover required tax withholdings on the vesting of restricted stock.


(3)	These shares were purchased during the period pursuant to our previously announced stock repurchase program.


Item 3.	Defaults Upon Senior Securities

None


Item 4.	Mine Safety Disclosures

Not Applicable


Item 5.	Other Information

None

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Item 6.	Exhibits

The following exhibits are filed with this report.



Exhibit No.		Exhibit Description

12.1		Ratio of Earnings to Fixed Charges

31.1		Certification of Chief Executive Officer pursuant to SEC Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of Chief Financial Officer pursuant to SEC Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101		The following financial information from our Quarterly Report on Form 10-Q for the quarter ended ~~June, 28,~~December, 27, 2014, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Condensed Statements of Income, (ii) Consolidated Condensed Statements of Comprehensive Income, (iii) Consolidated Condensed Balance Sheets, (iv) Consolidated Condensed Statements of Cash Flows, and (v) the Notes to Consolidated Condensed Financial Statements.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



	TYSON FOODS, INC.

Date: ~~August 7, 2014~~January 30, 2015		/s/ Dennis Leatherby
		Dennis Leatherby
		Executive Vice President and Chief Financial Officer

Date: ~~August 7, 2014~~January 30, 2015		/s/ Curt T. Calaway
		Curt T. Calaway
		Senior Vice President, Controller and Chief Accounting Officer

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	June 28, 2014		September 28, 2013
Processed products:
Weighted-average method – chicken, prepared foods and international	$	837	$	799
First-in, first-out method – beef and pork	721		624
Livestock – first-in, first-out method	1,120		1,002
Supplies and other – weighted-average method	383		392
Total inventory	$	3,061	$	2,817

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