SMITHFIELD FOODS INCSFD
SMITHFIELD FOODS INC Leases Disclosure
LEASE OBLIGATIONS, COMMITMENTS AND GUARANTEES
Lease Obligations
We lease real estate, vehicles, machinery and other equipment. Additionally, we have contracts with independent farmers to raise our hogs that include a lease component for the use of the farmers’ facilities. Our leases may include options to extend or terminate the lease, variable lease payments based on usage of the underlying assets and residual value guarantees.
The following table presents the maturities of our lease obligations as of December 28, 2025:
| Operating Leases | Total | ||||||||||||||||
| (in millions) | |||||||||||||||||
| 2026 | $ | 89 | $ | 3 | $ | 92 | |||||||||||
| 2027 | 78 | 2 | 80 | ||||||||||||||
| 2028 | 66 | 2 | 68 | ||||||||||||||
| 2029 | 40 | 2 | 41 | ||||||||||||||
| 2030 | 27 | 2 | 28 | ||||||||||||||
| After 2030 | 189 | 7 | 197 | ||||||||||||||
| Total lease payments | $ | 489 | $ | 17 | $ | 506 | |||||||||||
| Present value discount | (96) | — | (96) | ||||||||||||||
| Present value of lease obligations | $ | 393 | $ | 17 | $ | 410 | |||||||||||
The following table presents the weighted-average lease term and discount rate for our leases:
| December 28, 2025 | December 29, 2024 | ||||||||||
| Weighted-average remaining lease term (years): | |||||||||||
| Finance leases | 8.7 | 9.4 | |||||||||
| Operating leases | 9.1 | 10.8 | |||||||||
| Weighted-average discount rate: | |||||||||||
| Finance leases | 0.7 | % | 0.8 | % | |||||||
| Operating leases | 5.0 | % | 4.8 | % | |||||||
The components of total lease cost included in the consolidated statements of income are presented in the following table:
| Fiscal Year | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| (in millions) | |||||||||||||||||
| Operating lease cost | $ | 89 | $ | 83 | $ | 90 | |||||||||||
| Finance lease cost: | |||||||||||||||||
| Amortization of leased assets | 3 | 3 | 23 | ||||||||||||||
| Interest on lease obligations | — | — | 1 | ||||||||||||||
Short-term lease cost (1) | 62 | 95 | 96 | ||||||||||||||
Variable lease cost (2) | 29 | 23 | 23 | ||||||||||||||
| Total lease cost | $ | 183 | $ | 204 | $ | 234 | |||||||||||
________________
(1)Represents the expense for leases with terms of one year or less, which are not included in the lease obligation.
(2)Represents the expense associated with lease payments that vary based on usage or changes in other circumstances, which are not included in the lease obligation.
The following table presents the classification of lease payments associated with our lease obligations in the consolidated statements of cash flows, as well as new, or modifications to existing, lease obligations entered into during the periods presented:
| Fiscal Year | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| (in millions) | |||||||||||||||||
| Classification of lease payments: | |||||||||||||||||
Operating cash flows - finance leases (1) | $ | — | $ | — | $ | 1 | |||||||||||
| Operating cash flows - operating leases | 88 | 82 | 97 | ||||||||||||||
| Financing cash flows - finance leases | 3 | 3 | 4 | ||||||||||||||
| New, or modifications to existing, finance lease obligations | 1 | — | 1 | ||||||||||||||
| New, or modifications to existing, operating lease obligations | 129 | 24 | 42 | ||||||||||||||
________________
(1)Represents the interest component of our payments on finance leases.
Commitments
We have purchase commitments with certain livestock producers that obligate us to purchase all the livestock that these producers deliver. Other arrangements obligate us to purchase a fixed amount of livestock. We have purchase commitments under forward grain contracts that obligate us to purchase a fixed amount of grain. We also have contractual commitments to independent farmers who raise our hogs in exchange for a performance-based service fee payable upon delivery. We estimate the future obligations under these commitments based on the amounts that are fixed and determinable in the related contracts. There are additional variable components of these contracts not included in our estimates that are based on quantities delivered and performance. Additionally, we currently have minimum guaranteed royalty payments to license the Nathan’s Famous brand. Our estimated future obligations under these and other commitments for the next five years are as follows:
| Year | (in millions) | |||||||
| 2026 | $ | 3,447 | ||||||
| 2027 | 2,003 | |||||||
| 2028 | 1,545 | |||||||
| 2029 | 1,277 | |||||||
| 2030 | 854 | |||||||
All minimum purchase commitments under these contracts were fulfilled in each of fiscal years 2025, 2024 and 2023.
In 2019, we announced that we planned to contribute up to $250 million to Align through 2028 to fund various projects as approved by Align’s board from time to time. As of December 28, 2025, we had contributed $121 million in capital toward these planned contributions. Should the board, of which we have 50% of the voting power, choose not to approve additional projects, the remaining contributions would not be required.
We have committed to contribute up to $25 million to the TPG Rise Climate investment fund through July 2027. As of December 28, 2025, we had contributed $21 million in capital toward this commitment.
We had $88 million of committed funds related to approved capital expenditure projects as of December 28, 2025. These projects are expected to be funded with cash flows from operations and/or borrowings under credit facilities.
Guarantees
In the second quarter of 2025, Monarch refinanced its debt, repaying a debt facility of up to $61 million that Smithfield and certain other joint ventures partners in Monarch had jointly and severally guaranteed. Smithfield was released from the guaranty and no longer provides a guaranty of Monarch’s debt.Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 24, 2026 | Showing above |
| 2024 | Mar 25, 2025 | |
About Leases Disclosures
Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.
Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.