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

In the first quarter of fiscal 2026, the Company approved additional actions under the network optimization plan, increasing the estimated total pretax charges by $140 million. This increase reflects network changes in the Beef segment, including the closure of a harvesting facility and the transition to a single shift at another, as well as efforts to reduce support costs across all segments and corporate functions. As a result, we now expect to recognize total pretax net charges of $226 million for actions approved through December 27, 2025, which include $148 million of net charges that have resulted or will result in cash outflows and $185 million of non-cash charges, partially offset by a $107 million gain recognized from the sale of storage facilities. Additionally, we have received $294 million in proceeds associated with the sale of storage facilities to date, of which, $42 million was received in the first quarter of fiscal 2026. Through the first quarter of fiscal 2026, we have recognized $162 million of the expected total pretax charges and estimate $64 million of charges will be incurred over future periods, including $44 million during the remainder of fiscal 2026. We expect to incur costs related to the network optimization plan over a multi-year period and anticipate additional charges in the future as further actions are approved.

In the first quarter of fiscal 2026, we recognized net charges of $117 million related to the network optimization plan. The charges primarily included accelerated depreciation and asset write-offs related to the Beef segment network changes, severance and related costs and contract and lease termination costs. These charges included $57 million that have resulted or will result in cash outflows and $60 million of non-cash. In the first quarter of fiscal 2025, we recognized net charges of $73 million, which primarily included the closure of two facilities in the Prepared Foods segment, a non-harvesting facility closure in the Beef segment and asset write-offs in the Chicken and International segments. These charges included $29 million that have resulted or will result in cash outflows and $44 million of non-cash.


	Beef		Pork		Chicken		Prepared Foods		International		Corporate Expenses		Total
Cost of Sales:
Severance and related costs	$	16	$	—	$	4	$	9	$	—	$	—	$	29
Accelerated depreciation	57		—		—		—		—		—		57
Asset write-offs	12		—		—		—		—		—		12
Contract and lease terminations	—		—		3		4		—		—		7


Total Cost of Sales	$	85	$	—	$	7	$	13	$	—	$	—	$	105

Selling, General and Administrative:
Severance and related costs	1		1		2		3		—		3		10

Total Selling, General and Administrative	$	1	$	1	$	2	$	3	$	—	$	3	$	10

Non-Operating (Income)/Expense													2



Total	$	86	$	1	$	9	$	16	$	—	$	3	$	117


	Beef		Pork		Chicken		Prepared Foods		International		Corporate Expenses		Total
Cost of Sales:
Severance and related costs	$	5	$	—	$	2	$	2	$	—	$	—	$	9
Accelerated depreciation	23		—		—		—		—		—		23
Asset write-offs	3		—		7		23		5		—		38
Contract and lease terminations	1		—		—		—		—		—		1
Total Cost of Sales	$	32	$	—	$	9	$	25	$	5	$	—	$	71

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

Total Selling, General and Administrative	$	—	$	—	$	2	$	—	$	—	$	—	$	2

Total	$	32	$	—	$	11	$	25	$	5	$	—	$	73

The following table reflects our liability related to the network optimization plan as of December 27, 2025 (in millions):


	Balance at September 27, 2025		Expenses		Payments		Balance at December 27, 2025
Contract and lease terminations	$	31	$	24	$	—	$	55
Severance and related costs	3		39		(3)		39
Total	$	34	$	63	$	(3)	$	94

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