CAMPBELL'S Co 10-Q

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations OVERVIEW This Management's Discussion and Analysis of Financial Condition and Results of Operations is provided as a supplement to, and should be read in conjunction with, the Consolidated Financial Statements and the Notes to the Consolidated Financial Statements in "Part I - Item 1. Financial Statements," and our Form 10-K for the year ended August 1, 2021, including but not limited to "Part I - Item 1A. Risk Factors" and "Part II - Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations." Executive Summary Unless otherwise stated, the terms "we," "us," "our" and the "company" refer to Campbell Soup Company and its consolidated subsidiaries. We are a manufacturer and marketer of high-quality, branded food and beverage products. We operate in a highly competitive industry and experience competition in all of our categories. On May 3, 2021, we completed the sale of our Plum baby food and snacks business. The results of the business through the date of sale were reflected in continuing operations within the Meals & Beverages reportable segment. Beginning in 2022, the foodservice and Canadian business formerly in our Snacks segment is managed as part of the Meals & Beverages segment. Segment results have been adjusted retrospectively to reflect this change. Business Trends We have been actively monitoring the impact of the COVID-19 pandemic on all aspects of our business. During the second quarter of 2022, we continued to experience strong demand for our retail products, but net sales were lower than in the second quarter of 2021 due to the impact of supply constraints, primarily related to labor, which held back our ability to meet demand. We anticipate that 2022 will continue to be a dynamic macroeconomic environment and we expect elevated levels of input cost inflation to persist throughout 2022. We anticipate that these headwinds will be partially mitigated by improving labor conditions through the remainder of 2022, pricing actions in response to inflation that will be fully reflected in the third quarter, supply chain productivity improvements and cost savings initiatives. Although we expect the impacts of the COVID-19 pandemic on our business to continue to moderate in the third quarter and beyond, there still remains uncertainty around the pandemic and especially its effect on labor. The ultimate impact depends on the severity and duration of the pandemic, including the emergence and spread of COVID-19 variants and resurgences, the continued availability and effectiveness of vaccines and actions taken by government authorities and other third parties in response to the pandemic. We will continue to evaluate the extent to which the COVID-19 pandemic will impact our business, consolidated results of operations and financial condition. While we as a North American focused company have no direct exposure to Russia and Ukraine, we are monitoring any broader economic impact from the current crisis, especially on commodities. Summary of Results This Summary of Results provides significant highlights from the discussion and analysis that follows. • Net sales decreased 3% in 2022 to $2,209 million due to volume declines and the impact from the divestiture of the Plum baby food and snacks business, partially offset by favorable price and sales allowances and decreased promotional spending. Volumes declined as a result of industry-wide labor and supply challenges. On a two-year basis, net sales increased 2% in 2022 from $2,162 million in 2020, including a 1-point impact from divestitures. • Gross profit, as a percent of sales, decreased to 30.3% in 2022 from 34.4% in the prior-year quarter. The decrease was primarily due to higher cost inflation and other supply chain costs, and unfavorable volume/mix largely due to reduced operating leverage, partially offset by the benefit of pricing actions, supply chain productivity improvements, lower levels of promotional spending and cost savings initiatives. • Earnings per share from continuing operations were $.70 in 2022, compared to $.80 a year ago. The current quarter included gains of $.01 per share and the prior-year quarter included expenses of $.01 per share from items impacting comparability as discussed below. 25 Net Earnings attributable to Campbell Soup Company The following items impacted the comparability of net earnings and net earnings per share: Continuing Operations • We implemented several cost savings initiatives in recent years. In the second quarter of 2022, we recorded implementation costs and other related costs of $3 million in Administrative expenses and $2 million in Cost of products sold (aggregate impact of $4 million after tax, or $.01 per share) related to these initiatives. Year-to-date in 2022, we recorded implementation costs and other related costs of $5 million in Administrative expenses and $4 million in Cost of products sold (aggregate impact of $7 million after tax, or $.02 per share) related to these initiatives. In the second quarter of 2021, we recorded Restructuring charges of $18 million and implementation costs and other related costs of $6 million in Administrative expenses, and a reduction to Cost of products sold of $2 million (aggregate impact of $16 million after tax, or $.05 per share) related to these initiatives. Year-to-date in 2021, we recorded Restructuring charges of $19 million and implementation costs and other related costs of $10 million in Administrative expenses, and a reduction to Cost of products sold of $1 million (aggregate impact of $21 million after tax, or $.07 per share) related to these initiatives. See Note 6 to the Consolidated Financial Statements and "Restructuring Charges and Cost Savings Initiatives" for additional information; • In the second quarter of 2022, we recognized actuarial gains in Other expenses / (income) of $10 million ($8 million after tax, or $.03 per share). Year-to-date in 2022, we recognized actuarial gains in Other expenses / (income) of $4 million ($3 million after tax, or $.01 per share). In the second quarter of 2021, we recognized actuarial gains in Other expenses / (income) of $30 million ($23 million after tax, or $.08 per share). Year-to-date in 2021, we recognized actuarial gains in Other expenses / (income) of $34 million ($26 million after tax, or $.09 per share). The actuarial gains related to the remeasurements of U.S. and Canadian pension plans. These interim remeasurements were each due to lump sum distributions that exceeded or are expected to exceed service and interest costs resulting in settlement accounting for the plans; • Year-to-date in 2022, we recognized losses in Cost of products sold of $3 million ($2 million after tax, or $.01 per share) associated with unrealized mark-to-market adjustments on outstanding undesignated commodity hedges. In the second quarter of 2021, we recognized gains in Cost of products sold of $11 million ($8 million after tax, or $.03 per share) associated with unrealized mark-to-market adjustments on outstanding undesignated commodity hedges. Year-to-date in 2021, we recognized gains in Cost of products sold of $17 million ($13 million after tax, or $.04 per share) associated with unrealized mark-to-market adjustments on outstanding undesignated commodity hedges; and • In the second quarter of 2021, we recorded a $19 million ($.06 per share) deferred tax charge in connection with a legal entity reorganization as part of the continued integration of Snyder's-Lance, Inc. (Snyder's-Lance). The items impacting comparability are summarized below: Three Months Ended January 30, 2022 January 31, 2021 (Millions, except per share amounts) Earnings Impact EPS Impact Earnings Impact EPS Impact Earnings from continuing operations attributable to Campbell Soup Company $ 212 $ .70 $ 245 $ .80 Earnings (loss) from discontinued operations $ — $ — $ — $ — Net earnings attributable to Campbell Soup Company $ 212 $ .70 $ 245 $ .80 Continuing operations: Restructuring charges, implementation costs and other related costs $ (4) $ (.01) $ (16) $ (.05) Pension actuarial gains 8 .03 23 .08 Commodity mark-to-market gains — — 8 .03 Deferred tax charge — — (19) (.06) Impact of items on Earnings from continuing operations (1) $ 4 $ .01 $ (4) $ (.01) 26 Six Months Ended January 30, 2022 January 31, 2021 (Millions, except per share amounts) Earnings Impact EPS Impact Earnings Impact EPS Impact Earnings from continuing operations attributable to Campbell Soup Company $ 473 $ 1.56 $ 554 $ 1.82 Earnings (loss) from discontinued operations $ — $ — $ — $ — Net earnings attributable to Campbell Soup Company $ 473 $ 1.56 $ 554 $ 1.82 Continuing operations: Restructuring charges, implementation costs and other related costs $ (7) $ (.02) $ (21) $ (.07) Pension actuarial gains 3 .01 26 .09 Commodity mark-to-market gains (losses) (2) (.01) 13 .04 Deferred tax charge — — (19) (.06) Impact of items on Earnings from continuing operations $ (6) $ (.02) $ (1) $ — __________________________________________ (1) Sum of the individual amounts may not add due to rounding. Earnings from continuing operations were $212 million ($ .70 per share) in the current quarter, compared to $245 million ($ .80 per share) in the year-ago quarter. After adjusting for items impacting comparability, earnings from continuing operations decreased reflecting sales volume declines and a lower gross profit performance, partially offset by lower marketing and selling expenses, lower interest expense and a lower effective tax rate. Earnings per share benefited from a reduction in the weighted average diluted shares outstanding. Earnings from continuing operations were $473 million ($ 1.56 per share) in the six-month period this year, compared to $554 million ($ 1.82 per share) in the year-ago period. After adjusting for items impacting comparability, earnings from continuing operations decreased reflecting sales volume declines, a lower gross profit performance and lower other income, partially offset by lower marketing and selling expenses, lower interest expense and a lower effective tax rate. Earnings per share benefited from a reduction in the weighted average diluted shares outstanding. SECOND-QUARTER DISCUSSION AND ANALYSIS Sales An analysis of net sales by reportable segment follows: Three Months Ended (Millions) January 30, 2022 January 31, 2021 % Change Meals & Beverages $ 1,275 $ 1,318 (3) Snacks 934 961 (3) $ 2,209 $ 2,279 (3) An analysis of percent change of net sales by reportable segment follows: Meals & Beverages (2) Snacks Total Volume and mix (6)% (12)% (8)% Price and sales allowances 5 5 5 Decreased / (increased) promotional spending (1) (1) 4 1 Divestiture (2) — (1) (3)% (3)% (3)% __________________________________________ (1) Represents revenue reductions from trade promotion and consumer coupon redemption programs. (2) Sum of the individual amounts does not add due to rounding. In Meals & Beverages, sales decreased 3%. Excluding the impact from the divestiture of the Plum baby food and snacks business, sales decreased primarily due to declines across U.S. retail products, including U.S. soup and Campbell's pasta, as 27 well as in Canada, partially offset by gains in foodservice. Volume decreased primarily due to supply constraints driven by labor and materials availability. Favorable price and sales allowances were partially offset by increased promotional spending relative to moderated levels in the prior-year quarter. Sales of U.S. soup decreased 1%, cycling a 10% increase in the second quarter of the prior year, due to declines in condensed soups, partially offset by gains in ready-to-serve soups and broth. In Snacks, sales decreased 3% while sales of our power brands increased 1%. Snacks sales decreased due to declines in non-core businesses and in certain salty snacks, primarily Late July snacks, partially offset by gains in Goldfish crackers. Volume declines, driven by significant supply constraints due to labor, were partly offset by favorable price and sales allowances and decreased promotional spending. Gross Profit Gross profit, defined as Net sales less Cost of products sold, decreased by $114 million in 2022 from 2021. As a percent of sales, gross profit was 30.3% in 2022 and 34.4% in 2021. The 410 basis-point decrease in gross profit margin was due to the following factors: Margin Impact Cost inflation, supply chain costs and other factors (1) (840) Volume/mix (2) (170) Higher restructuring-related costs (20) Lower level of promotional spending 90 Productivity improvements 140 Price and sales allowances 390 (410) __________________________________________ (1) Includes an estimated positive margin impact of 30 basis points from the benefit of cost savings initiatives, which was more than offset by cost inflation and other factors, including a 50 basis-point impact from the change in unrealized mark-to-market adjustments on outstanding undesignated commodity hedges. (2) Includes the impact of operating leverage. Marketing and Selling Expenses Marketing and selling expenses as a percent of sales were 8.9% in 2022 compared to 10.2% in 2021. Marketing and selling expenses decreased 15% in 2022 from 2021. The decrease was primarily due to lower advertising and consumer promotion expense (approximately 16 points). The decrease in advertising and consumer promotion expense was due in part to supply constraints. Administrative Expenses Administrative expenses as a percent of sales were 6.7% in 2022 compared to 6.9% in 2021. Administrative expenses decreased 7% in 2022 from 2021. The decrease was primarily due to increased benefits from cost savings initiatives (approximately 4 points) and lower benefit-related costs (approximately 3 points). Other Expenses / (Income) Other income was $19 million in 2022 compared to other income of $45 million in 2021. Other income in 2022 included pension actuarial gains of $10 million. Other income in 2021 included pension actuarial gains of $30 million. Excluding these amounts, the remaining decrease in other income was primarily due to income from transition services fees in the prior year. 28 Operating Earnings Segment operating earnings decreased 17% in 2022 from 2021. An analysis of operating earnings by segment follows: Three Months Ended (Millions) January 30, 2022 January 31, 2021 % Change Meals & Beverages $ 213 $ 262 (19) Snacks 121 140 (14) 334 402 (17) Corporate income (expense) (11) 17 Restructuring charges (1) — (18) Earnings before interest and taxes $ 323 $ 401 __________________________________________ (1) See Note 6 to the Consolidated Financial Statements for additional information on restructuring charges. Operating earnings from Meals & Beverages decreased 19%. The decrease was primarily due to sales volume declines and a lower gross profit performance, partially offset by lower marketing and selling expenses. Gross profit performance was impacted by higher cost inflation and other supply chain costs, unfavorable volume/mix, which was largely due to reduced operating leverage, as well as higher levels of promotional spending, partially offset by the benefit of pricing actions and supply chain productivity improvements. Operating earnings from Snacks decreased 14%. The decrease was driven by sales volume declines and higher administrative expenses, partially offset by lower marketing and selling expenses. Increased pricing and lower promotional spending combined with the results of supply chain productivity improvements and cost savings initiatives largely offset cost inflation, higher other supply chain costs and unfavorable volume/mix, which was largely due to reduced operating leverage. Corporate expense in 2022 included pension actuarial gains of $10 million and costs of $5 million related to costs savings initiatives. Corporate income in 2021 included pension actuarial gains of $30 million, unrealized mark-to-market gains on outstanding undesignated commodity hedges of $11 million and costs of $4 million related to cost savings initiatives. Interest Expense Interest expense decreased to $46 million in 2022 from $55 million in 2021, primarily due to lower levels of debt. Taxes on Earnings The effective tax rate was 23.5% in 2022 and 29.4% in 2021. The decrease in the effective tax rate was primarily due to a $19 million deferred tax charge recognized in the second quarter of 2021 in connection with a legal entity reorganization as part of the continued integration of Snyder's-Lance. SIX-MONTH DISCUSSION AND ANALYSIS Sales An analysis of net sales by reportable segment follows: Six Months Ended (Millions) January 30, 2022 January 31, 2021 % Change Meals & Beverages $ 2,541 $ 2,681 (5) Snacks 1,904 1,938 (2) $ 4,445 $ 4,619 (4) 29 An analysis of percent change of net sales by reportable segment follows: Meals & Beverages (2) Snacks Total (2) Volume and mix (7)% (8)% (7)% Price and sales allowances 5 5 5 Decreased / (increased) promotional spending (1) (2) 1 — Divestiture (2) — (1) (5)% (2)% (4)% __________________________________________ (1) Represents revenue reductions from trade promotion and consumer coupon redemption programs. (2) Sum of the individual amounts does not add due to rounding. On a two-year basis, net sales increased 2% in 2022 from $4,345 million in 2020, including a 1-point impact from divestitures. In Meals & Beverages, sales decreased 5% from 2021. Excluding the impact from the divestiture of the Plum baby food and snacks business, sales decreased primarily due to declines across U.S. retail products, including V8 beverages, U.S. soup and Prego pasta sauces, as well as in Canada, partially offset by gains in foodservice. Volume decreased primarily due to supply constraints driven by labor and materials availability. Favorable price and sales allowances were partially offset by increased promotional spending relative to moderated levels in the prior year. Sales of U.S. soup decreased 1%, cycling a 15% increase in the prior year, due to declines in condensed soups and ready-to-serve soups, partially offset by gains in broth. In Snacks, sales decreased 2% from 2021 while sales of our power brands increased 2%. Snacks sales decreased due to declines in certain salty snacks, primarily Late July snacks and Pop Secret popcorn, and in non-core businesses, partially offset by gains in Goldfish crackers. Volume declines, driven by significant supply constraints due to labor, were partially offset by favorable price and sales allowances and decreased promotional spending. Gross Profit Gross profit, defined as Net sales less Cost of products sold, decreased by $205 million in 2022 from 2021. As a percent of sales, gross profit was 31.3% in 2022 and 34.6% in 2021. The 330 basis-point decrease in gross profit margin was due to the following factors: Margin Impact Cost inflation, supply chain costs and other factors (1) (660) Volume/mix (2) (120) Higher level of promotional spending (20) Higher restructuring-related costs (10) Productivity improvements 120 Price and sales allowances 360 (330) __________________________________________ (1) Includes an estimated positive margin impact of 30 basis points from the benefit of cost savings initiatives, which was more than offset by cost inflation and other factors, including a 50 basis-point impact from the change in unrealized mark-to-market adjustments on outstanding undesignated commodity hedges. (2) Includes the impact of operating leverage. Marketing and Selling Expenses Marketing and selling expenses as a percent of sales were 8.3% in 2022 compared to 9.5% in 2021. Marketing and selling expenses decreased 17% in 2022 from 2021. The decrease was primarily due to lower advertising and consumer promotion expense (approximately 15 points) and lower selling expenses (approximately 2 points). The decrease in advertising and consumer promotion expense was due in part to supply constraints. Administrative Expenses Administrative expenses as a percent of sales were 6.8% in 2022 compared to 6.5% in 2021. Administrative expenses increased 1% in 2022 from 2021. The increase was primarily due to expenses related to the settlement of certain legal claims (approximately 5 points), partially offset by increased benefits from cost savings initiatives (approximately 4 points). 30 Other Expenses / (Income) Other income was $20 million in 2022 compared to other income of $63 million in 2021. Other income included pension actuarial gains of $4 million in 2022 and pension actuarial gains of $34 million in 2021. Excluding these amounts, the remaining decrease in other income was primarily due to income from transition services fees in the prior year. Operating Earnings Segment operating earnings decreased 15% in 2022 from 2021. An analysis of operating earnings by segment follows: Six Months Ended (Millions) January 30, 2022 January 31, 2021 % Change Meals & Beverages $ 493 $ 599 (18) Snacks 249 275 (9) 742 874 (15) Corporate income (expense) (43) 7 Restructuring charges (1) — (19) Earnings before interest and taxes $ 699 $ 862 __________________________________________ (1) See Note 6 to the Consolidated Financial Statements for additional information on restructuring charges. Operating earnings from Meals & Beverages decreased 18%. The decrease was primarily due to sales volume declines and a lower gross profit performance, partially offset by lower marketing and selling expenses. Gross profit performance was impacted by higher cost inflation, higher levels of promotional spending, higher other supply chain costs and unfavorable volume/mix largely due to reduced operating leverage, partially offset by the benefit of pricing actions and supply chain productivity improvements. Operating earnings from Snacks decreased 9%. The decrease was primarily due to sales volume declines and higher administrative expenses due to the settlement of certain legal claims, partially offset by lower marketing and selling expenses. Corporate expense in 2022 included costs of $9 million related to costs savings initiatives, unrealized mark-to-market losses on outstanding undesignated commodity hedges of $3 million and pension actuarial gains of $4 million. Corporate income in 2021 included pension actuarial gains of $34 million, unrealized mark-to-market gains on outstanding undesignated commodity hedges of $17 million and costs of $9 million related to cost savings initiatives. Interest Expense Interest expense decreased to $93 million in 2022 from $110 million in 2021 primarily due to lower levels of debt. Taxes on Earnings The effective tax rate was 21.9% in 2022 and 26.4% in 2021. The decrease in the effective tax rate was primarily due to a $19 million deferred tax charge recognized in the second quarter of 2021 in connection with a legal entity reorganization as part of the continued integration of Snyder's-Lance and the favorable resolution of several tax matters in the first quarter of 2022. Restructuring Charges and Cost Savings Initiatives Multi-year Cost Savings Initiatives and Snyder's-Lance Cost Transformation Program and Integration Beginning in fiscal 2015, we implemented initiatives to reduce costs and to streamline our organizational structure. Over the years, we expanded these initiatives by continuing to optimize our supply chain and manufacturing networks, including closing our manufacturing facility in Toronto, Ontario, as well as our information technology infrastructure. On March 26, 2018, we completed the acquisition of Snyder's-Lance. Prior to the acquisition, Snyder's-Lance launched a cost transformation program following a comprehensive review of its operations with the goal of significantly improving its financial performance. We continued to implement this program and identified opportunities for additional cost synergies as we integrated Snyder's-Lance. 31 In 2022, we expanded these initiatives as we continue to pursue cost savings by further optimizing our supply chain and manufacturing network and through effective cost management. Cost estimates for these expanded initiatives, as well as timing for certain activities, are continuing to be developed. A summary of charges recorded in Earnings from continuing operations related to these initiatives is as follows: Three Months Ended Six Months Ended (Millions, except per share amounts) January 30, 2022 January 31, 2021 January 30, 2022 January 31, 2021 Recognized as of January 30, 2022 Restructuring charges $ — $ 18 $ — $ 19 $ 259 Administrative expenses 3 6 5 10 344 Cost of products sold 2 (2) 4 (1) 83 Marketing and selling expenses — — — — 13 Research and development expenses — — — — 4 Total pre-tax charges $ 5 $ 22 $ 9 $ 28 $ 703 Aggregate after-tax impact $ 4 $ 16 $ 7 $ 21 Per share impact $ .01 $ .05 $ .02 $ .07 A summary of the pre-tax costs in Earnings from continuing operations associated with these initiatives is as follows: (Millions) Recognized as of January 30, 2022 Severance pay and benefits $ 222 Asset impairment/accelerated depreciation 82 Implementation costs and other related costs 399 Total $ 703 The total estimated pre-tax costs for actions associated with continuing operations that have been identified are approximately $715 million to $725 million and we expect to incur the costs through 2022. These estimates will be updated as the expanded initiatives are developed. We expect the costs for actions associated with continuing operations that have been identified to date to consist of the following: approximately $225 million in severance pay and benefits; approximately $85 million in asset impairment and accelerated depreciation; and approximately $405 million to $415 million in implementation costs and other related costs. We expect these pre-tax costs to be associated with our segments as follows: Meals & Beverages - approximately 31%; Snacks - approximately 45%; and Corporate - approximately 24%. Of the aggregate $715 million to $725 million of pre-tax costs associated with continuing operations identified to date, we expect approximately $615 million to $625 million will be cash expenditures. In addition, we expect to invest approximately $445 million in capital expenditures through 2022, of which we invested $427 million as of January 30, 2022. The capital expenditures primarily relate to a U.S. warehouse optimization project, improvement of quality, safety and cost structure across the Snyder’s-Lance manufacturing network, implementation of our existing SAP enterprise-resource planning system for Snyder's-Lance, transition of production of the Toronto manufacturing facility to our U.S. thermal plants, optimization of information technology infrastructure and applications, and optimization of the Snyder’s-Lance warehouse and distribution network. We expect to fund the costs through cash flows from operations and short-term borrowings. We expect the initiatives for actions associated with continuing operations, once all phases are implemented, to generate annual ongoing savings of approximately $1,000 million by the end of 2025. As of January 30, 2022, we have generated total program-to-date pre-tax savings of $835 million. 32 Segment operating results do not include restructuring charges, implementation costs and other related costs because we evaluate segment performance excluding such charges. A summary of the pre-tax costs in Earnings from continuing operations associated with segments is as follows: January 30, 2022 (Millions) Three Months Ended Six Months Ended Costs Incurred to Date Meals & Beverages $ 1 $ 2 $ 225 Snacks 4 7 306 Corporate — — 172 Total $ 5 $ 9 $ 703 In addition, in the second quarter of 2021, we recorded a $19 million deferred tax charge in connection with a legal entity reorganization as part of the continued integration of Snyder's-Lance. LIQUIDITY AND CAPITAL RESOURCES We expect foreseeable liquidity and capital resource requirements to be met through anticipated cash flows from operations; long-term borrowings; short-term borrowings, which may include commercial paper; credit facilities; and cash and cash equivalents. We believe that our sources of financing will be adequate to meet our future requirements. We generated cash flows from operations of $766 million in 2022, compared to $611 million in 2021. The increase in 2022 was primarily due to changes in working capital, principally accounts payable and accounts receivable, partially offset by lower cash earnings. Current assets are less than current liabilities as a result of our level of current maturities of long-term debt and short-term borrowings and our focus to lower core working capital requirements. We had negative working capital of $342 million as of January 30, 2022, and $119 million as of August 1, 2021. Total debt maturing within one year was $464 million as of January 30, 2022, and $48 million as of August 1, 2021. Capital expenditures were $129 million in 2022 and $132 million in 2021. Capital expenditures are expected to total approximately $275 million in 2022. Capital expenditures in the first half of 2022 included improvement of the quality and cost structure of the Snyder's-Lance manufacturing network, the implementation of our existing SAP enterprise-resource planning system for Snyder's-Lance, and cookie and cracker capacity expansion for our Snacks business. Pepperidge Farm and Snyder’s-Lance have a direct-store-delivery distribution model that uses independent contractor distributors. In order to maintain and expand this model, we routinely purchase and sell routes. The purchase and sale proceeds of the routes are reflected in investing activities. Dividend payments were $228 million in 2022 and $215 million in 2021. The regular quarterly dividend paid on our capital stock was $.37 per share in the second quarter of 2022 and $.35 per share in the second quarter of 2021. On December 1, 2021, the Board of Directors declared a regular quarterly dividend of $.37 per share payable on January 31, 2022 to shareholders of record at the close of business on January 6, 2022. On March 2, 2022, the Board of Directors declared a regular quarterly dividend of $.37 per share payable on May 2, 2022 to shareholders of record at the close of business on April 7, 2022. In June 2021, the Board authorized an anti-dilutive share repurchase program of up to $250 million (June 2021 program) to offset the impact of dilution from shares issued under our stock compensation programs. The June 2021 program has no expiration date, but it may be suspended or discontinued at any time. Repurchases under the anti-dilutive program may be made in open-market or privately negotiated transactions. In September 2021, the Board approved a new strategic share repurchase program of up to $500 million (September 2021 program). The September 2021 program has no expiration date, but it may be suspended or discontinued at any time. Repurchases under the September 2021 program may be made in open-market or privately negotiated transactions. The September 2021 program replaced the prior $1,500 million program, which our Board approved in March 2017 and has been cancelled. We repurchased approximately 1.5 million shares at a cost of $65 million in 2022. Of this amount, $40 million was used to repurchase shares pursuant to our June 2021 program and $25 million was used to repurchase shares pursuant to our September 2021 program. As of January 30, 2022, approximately $174 million remained available under the June 2021 program and approximately $475 million remained available under the September 2021 program. See Note 12 to the Consolidated Financial Statements and “Unregistered Sales of Equity Securities and Use of Proceeds” for additional information. As of January 30, 2022, we had $464 million of short-term borrowings due within one year, none of which was comprised of commercial paper borrowings. As of January 30, 2022, we issued $32 million of standby letters of credit. On November 2, 2020, we entered into a committed revolving credit facility totaling $1,850 million scheduled to mature on November 2, 2023. On September 27, 2021, we replaced the facility with a new $1,850 million committed revolving facility that matures on September 27, 2026. The facility remained unused at January 30, 2022, except for $1 million of standby letters of credit that we 33 issued under it. The facility contains customary covenants, including a financial covenant with respect to a minimum consolidated interest coverage ratio of consolidated adjusted EBITDA to consolidated interest expense (as each is defined in the credit facility) of not less than 3.25:1.00, measured quarterly, and customary events of default for credit facilities of this type. Loans under this facility will bear interest at the rates specified in the facility, which vary based on the type of loan and certain other customary conditions. The facility supports our commercial paper program and other general corporate purposes. We expect to continue to access the commercial paper markets, bank credit lines and utilize cash flows from operations to support our short-term liquidity requirements. On February 2, 2022, we issued a notice of redemption to holders of our 2.50% Notes due August 2, 2022 (the Notes) for the redemption of all $450 million outstanding aggregate principal amount of the Notes. The redemption date for the Notes was March 4, 2022. The consideration for the redemption was $453 million, including $3 million of premium. In addition, we paid accrued and unpaid interest on the redeemed notes through the date of settlement. We used a combination of cash on hand and short-term debt to fund the redemption. We are in compliance with the covenants contained in our credit facilities and debt securities. In September 2020, we filed a registration statement with the Securities and Exchange Commission that registered an indeterminate amount of debt securities. Under the registration statement, we may issue debt securities from time to time, depending on market conditions. SIGNIFICANT ACCOUNTING ESTIMATES We prepare our consolidated financial statements in conformity with accounting principles generally accepted in the United States. The preparation of these financial statements requires the use of estimates, judgments and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the periods presented. Actual results could differ from those estimates and assumptions. Our significant accounting policies are described in Note 1 to the Consolidated Financial Statements in the Annual Report on Form 10-K for the year ended August 1, 2021 (2021 Annual Report on Form 10-K). The accounting policies we used in preparing these financial statements are substantially consistent with those we applied in our 2021 Annual Report on Form 10-K. Our significant accounting estimates are described in Management’s Discussion and Analysis included in the 2021 Annual Report on Form 10‑K. RECENT ACCOUNTING PRONOUNCEMENTS See Note 2 to the Consolidated Financial Statements for information on recent accounting pronouncements. FORWARD LOOKING STATEMENTS This Report contains "forward-looking" statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect our current expectations regarding our future results of operations, economic performance, financial condition and achievements. These forward-looking statements can be identified by words such as "anticipate," "believe," "estimate," "expect," "intend," "plan," "pursue," "strategy," "target," "will" and similar expressions. One can also identify forward-looking statements by the fact that they do not relate strictly to historical or current facts, and may reflect anticipated cost savings or implementation of our strategic plan. These statements reflect our current plans and expectations and are based on information currently available to us. They rely on several assumptions regarding future events and estimates which could be inaccurate and which are inherently subject to risks and uncertainties. We wish to caution the reader that the following important factors and those important factors described in our other Securities and Exchange Commission filings, or in our 2021 Annual Report on Form 10-K, could affect our actual results and could cause such results to vary materially from those expressed in any forward-looking statements made by, or on behalf of, us: • impacts of, and associated responses to the COVID-19 pandemic on our business, suppliers, customers, consumers and employees; • our ability to execute on and realize the expected benefits from our strategy, including growing sales in snacks and growing/maintaining our market share position in soup; • the impact of strong competitive responses to our efforts to leverage brand power with product innovation, promotional programs and new advertising; • the risks associated with trade and consumer acceptance of product improvements, shelving initiatives, new products and pricing and promotional strategies; • our ability to realize projected cost savings and benefits from cost savings initiatives and the integration of recent acquisitions; 34 • disruptions in or inefficiencies to our supply chain and/or operations including the impacts of the COVID-19 pandemic; • the risks related to the availability of, and cost inflation in, supply chain inputs, including labor, raw materials, commodities, packaging and transportation; • risks related to the effectiveness of our hedging activities and our ability to respond to volatility in commodity prices; • our ability to manage changes to our organizational structure and/or business processes, including selling, distribution, manufacturing and information management systems or processes; • changes in consumer demand for our products and favorable perception of our brands; • changing inventory management practices by certain of our key customers; • a changing customer landscape, with value and e-commerce retailers expanding their market presence, while certain of our key customers maintain significance to our business; • product quality and safety issues, including recalls and product liabilities; • the possible disruption to the independent contractor distribution models used by certain of our businesses, including as a result of litigation or regulatory actions affecting their independent contractor classification; • the uncertainties of litigation and regulatory actions against us; • the costs, disruption and diversion of management's attention associated with activist investors; • a disruption, failure or security breach of our or our vendors' information technology systems, including ransomware attacks; • impairment to goodwill or other intangible assets; • our ability to protect our intellectual property rights; • increased liabilities and costs related to our defined benefit pension plans; • our ability to attract and retain key talent; • goals and initiatives related to, and the impacts of, climate change, including from weather-related events; • negative changes and volatility in financial and credit markets, deteriorating economic conditions and other external factors, including changes in laws and regulations; and • unforeseen business disruptions or other impacts due to political instability, civil disobedience, terrorism, armed hostilities (including the recent outbreak of hostilities between Russia and Ukraine), extreme weather conditions, natural disasters, other pandemics or other calamities. This discussion of uncertainties is by no means exhaustive but is designed to highlight important factors that may impact our outlook. We disclaim any obligation or intent to update forward-looking statements made by us in order to reflect new information, events or circumstances after the date they are made. Item 3. Quantitative and Qualitative Disclosure About Market Risk For information regarding our exposure to certain market risk, see Item 7A, Quantitative and Qualitative Disclosure About Market Risk, in the 2021 Annual Report on Form 10-K. There have been no significant changes in our portfolio of financial instruments or market risk exposures from the 2021 year-end.