In May 2022, we announced a decision to close our Vernon, California processing facility, exit farm operations in Arizona and California and reduce our sow herd in Utah. The decision to permanently close our Vernon facility was based on increasingly difficult business conditions in California, where high taxes, high utility costs and a challenging regulatory environment negatively impact our ability to operate efficiently and profitably.

In December 2023, we made a decision to terminate a number of third-party hog grower contracts and close several company-owned nursery farms in Utah as a result of the Vernon facility closure in early fiscal year 2023.

•In May 2023, we made a decision to cease operations on a number of sow farms in Missouri. The decision was driven by persistent livestock disease issues, underperforming operations and shifting industry supply and demand dynamics.

•In fiscal years 2023 and 2024, we terminated certain agreements with underperforming contract farmers and closed certain farms in the eastern U.S.

•On December 27, 2024, we became a member of a North Carolina-based company, Murphy Family Farms, by contributing $3 million in cash in exchange for a 25% minority interest. We additionally sold approximately 150,000 sows and related inventories located on company-owned and contract farms in North Carolina to Murphy Family Farms and recorded a gain of $6 million on the sale. Subsequent to the end of our fiscal year 2024, on December 30, 2024, we sold the commercial hog inventories associated with such sows to Murphy Family Farms. Murphy Family Farms is now a hog supplier to us and will supply approximately 3.2 million hogs annually. We will supply animal feed and other supplies and provide certain support services to Murphy Family Farms.

•On February 24, 2025, we became a member of a North Carolina-based company, VisionAg Hog Production, LLC (“VisionAg”), by contributing $450,000 in cash in exchange for a 9% minority interest. We additionally sold approximately 28,000 sows and the associated commercial hog inventories located on certain company-owned and contract farms in North Carolina to VisionAg. VisionAg is now a hog supplier to us and will supply approximately 600,000 hogs annually. In addition, we will supply animal feed and provide certain support services to VisionAg.

As a result of these decisions, we incurred various exit costs and disposal charges, which have been recorded in cost of sales in our consolidated statements of income. The following table details the charges by major type of cost.


	Fiscal Year						Cumulative
	2024		2023		2022
	(in millions)
Accelerated depreciation (1)	$	3	$	85	$	83	$	171
Contract termination costs	9		42		6		57
Employee termination benefits	1		3		28		32
Loss on asset disposals (2)	4		2		3		9
Other exit costs	15		64		31		110
Total	$	31	$	195	$	151	$	377

(1)Accelerated depreciation includes $11 million and $20 million for AROs in fiscal years 2023 and 2022, respectively, which were recorded in connection with the decisions to close certain Company-owned farms in accordance with our general permit for concentrated animal feeding operations in the State of Utah.


	Balance, January 1, 2023		Additions		Payments		Balance, December 31, 2023		Additions		Payments		Balance, December 29, 2024
	(in millions)
Contract termination costs	$	5	$	42	$	(5)	$	42	$	13	$	(54)	$	—
Employee termination benefits	27		3		(28)		2		2		(4)		—
Other exit costs	—		64		(56)		8		5		(12)		—
Total	$	33	$	108	$	(89)	$	52	$	19	$	(70)	$	1

•In the fourth quarter of fiscal year 2023, we incurred $14 million in costs associated with biogas assets owned by our joint venture, Monarch, in connection with the farms in Missouri that were closed in fiscal year 2023. These costs were recognized in (income) loss from equity method investments in the consolidated statement of income.

•Additionally, in the fourth quarter of fiscal year 2023, certain biogas assets owned by our joint venture, Align RNG, LLC (“Align”), were impaired as a result of our decision in December 2023 to terminate hog grower contracts and close farms in Utah. As a result, we recognized our share of the impairment totaling $35 million in (income) loss from equity method investments in the consolidated income statement.

Also, following the restructuring activities outlined above, we sold certain properties and recognized gains, which were not included in the table above:

•In the second quarter of fiscal year 2023, we sold our Vernon, California facility for $205 million and recognized a gain of $86 million in operating gains in the consolidated statement of income.