Discontinued Operations

12 Months Ended

Dec. 29, 2024

Discontinued Operations and Disposal Groups [Abstract]

DISCONTINUED OPERATIONS

On August 26, 2024, we completed a carve-out and distribution of our European operations to WH Group. The European carve-out represents a strategic shift in our geographical footprint. Accordingly, the results of operations, assets and liabilities, and cash flows of the European operations have been condensed into separate line items and presented in the consolidated statements of income, the consolidated balance sheets and the consolidated statements of cash flows as discontinued operations and this treatment has been applied retrospectively to all periods presented.

The following table presents the major components of net income from discontinued operations included in the consolidated statements of income.


	Fiscal Year
	2024		2023		2022
	(in millions)
Sales	$	2,362	$	3,337	$	2,872
Cost of sales	2,037		2,980		2,623
Gross profit	325		357		250
Selling, general and administrative expenses	151		164		144
Operating gains	(15)		(7)		(2)
Operating profit	188		199		108
Interest expense	4		11		9
Non-operating losses	—		3		2
Income from discontinued operations before income taxes	184		185		97
Income tax on discontinued operations (1)	13		30		27
Net income from discontinued operations	$	172	$	155	$	70

________________

(1)Income tax on discontinued operations for 2024 includes a $22 million income tax benefit recognized as a result of the carve-out of our European operations.

The following tables present the carrying amounts of the major classes of assets and liabilities of the discontinued operations included in the consolidated balance sheets.

Assets


	December 29, 2024		December 31, 2023

Current assets:
Cash and cash equivalents	$	—	$	61
Accounts receivable, net	—		412
Inventories, net	—		460
Prepaid expenses and other current assets	—		25
Total current assets	—		958

Property, plant and equipment, net	—		911
Goodwill	—		253
Intangible assets, net	—		114
Other assets	—		69
Total long-term assets	$	—	$	1,347

Liabilities


	December 29, 2024		December 31, 2023

Current liabilities:
Accounts payable	$	—	$	182
Current portion of long-term debt and finance lease obligations	—		68
Accrued expenses and other current liabilities	—		156
Total current liabilities	—		406

Deferred income taxes, net	—		30
Long-term debt and finance lease obligations	—		8
Other liabilities	—		48
Total long-term liabilities	$	—	$	86

Acquisitions within our Discontinued Operations

Prior to the carve-out and distribution of our European operations, we completed several acquisitions, which are included in discontinued operations.

Goodies

On February 28, 2023, our former European operations purchased Goodies Meat Production S.R.L. (“Goodies”), a Romanian producer of private label packaged meats products, for consideration valued at €29 million ($31 million). The amount paid was €24 million ($26 million) including post-closing adjustments. The consideration includes contingent payments of €5 million, payable upon the achievement of certain earnings targets over a two-year period. Goodies operates a production facility in Ceptura de Jos, Romania and employs 320 people. Their portfolio of products includes salami, ham, bacon, bologna and other meat specialties.

DeVeris

On May 31, 2023, our former European operations acquired an 80% interest in DeVeris Polska Sp. z o.o. (“DeVeris”), a Polish processor of poultry by-products, for 48 million zł ($11 million). DeVeris operates a production facility in Turek, Poland. The acquisition of DeVeris expanded the vertically integrated business in Poland by enabling further processing of both pork and poultry by-products.

Argal

On March 28, 2024, our former European operations purchased a 50.1% stake in Argal Alimentacíon, S.A. (“Argal”), a Spanish producer of packaged meats products with approximately 1,480 employees, for €91 million ($98 million), subject to post-closing adjustments. The amount paid at closing was €82 million ($88 million) with the remaining balance due upon finalization of the purchase price. In August 2024, an additional €8 million ($9 million) was paid, which resulted in a final purchase price of €90 million ($97 million).

Continuing Involvement

In connection with the carve-out of our European operations (“Morliny Foods”), we entered into a transition services agreement that governs certain services Smithfield will provide to Morliny Foods for up to a year subsequent to the carve-out. These services include information technology support, including access and license fees, tax advisory services and financial reporting services, none of which are material to Smithfield. In addition, Smithfield will continue to purchase certain products from Morliny Foods for distribution in the U.S. market. Purchases of these products from Morliny Foods were $45 million, $33 million and $62 million in fiscal years 2024, 2023 and 2022, respectively.