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 dynamic macroeconomic environment, including the COVID-19 pandemic, the conflict between Russia and Ukraine and inflation, on all aspects of our business. We anticipate that 2022 will continue to be a dynamic macroeconomic environment and we expect significantly elevated levels of input cost inflation to persist throughout the remainder of 2022. We anticipate that these headwinds will be partially mitigated by inflation-driven pricing actions, supply chain productivity improvements and cost savings initiatives. There still remains uncertainty around the COVID-19 pandemic. The ultimate impact depends on the severity and duration of the pandemic, including the emergence and spread of new 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 have experienced shortages in materials and increased costs for transportation, energy and raw materials due in part to the negative impact of the Russia-Ukraine conflict on the global economy. To date, the conflict between Russia and Ukraine has not had any material impact on our business, financial condition or results of operations. Summary of Results This Summary of Results provides significant highlights from the discussion and analysis that follows. • Net sales increased 7% in the quarter to $2,130 million due to inflation-driven pricing and sales allowances, partially offset by volume declines and the impact from the divestiture of the Plum baby food and snacks business. Volumes declined driven by select supply constraints and price elasticities, partially offset by retailer inventory rebuild. • Gross profit, as a percent of sales, decreased to 31.2% in 2022 from 31.7% in the prior-year quarter. The decrease was primarily due to higher cost inflation and other supply chain costs as well as unfavorable volume/mix largely due to reduced operating leverage, partially offset by inflation-driven pricing actions, supply chain productivity improvements and cost savings initiatives. • Earnings per share from continuing operations were $.62 in 2022, compared to $.54 a year ago. The current quarter included expenses of $.08 per share and the prior-year quarter included gains of $.03 per share from items impacting comparability as discussed below. 24 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 third quarter of 2022, we recorded implementation costs and other related costs of $5 million in Administrative expenses and $1 million in Cost of products sold (aggregate impact of $5 million after tax, or $.02 per share) related to these initiatives. Year-to-date in 2022, we recorded implementation costs and other related costs of $10 million in Administrative expenses and $5 million in Cost of products sold (aggregate impact of $12 million after tax, or $.04 per share) related to these initiatives. In the third quarter of 2021, we recorded Restructuring charges of $2 million and implementation costs and other related costs of $11 million in Administrative expenses and $2 million in Cost of products sold (aggregate impact of $11 million after tax, or $.04 per share) related to these initiatives. Year-to-date in 2021, we recorded Restructuring charges of $21 million and implementation costs and other related costs of $21 million in Administrative expenses and $1 million in Cost of products sold (aggregate impact of $32 million after tax, or $.10 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 third quarter of 2022, we recognized actuarial losses in Other expenses / (income) of $16 million ($12 million after tax, or $.04 per share). Year-to-date in 2022, we recognized actuarial losses in Other expenses / (income) of $12 million ($9 million after tax, or $.03 per share). In the third quarter of 2021, we recognized actuarial gains in Other expenses / (income) of $4 million ($3 million after tax, or $.01 per share). Year-to-date in 2021, we recognized actuarial gains in Other expenses / (income) of $38 million ($29 million after tax, or $.10 per share). The actuarial gains and losses 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; • In the third quarter of 2022, we recorded a loss in Interest expense of $4 million ($3 million after tax, or $.01 per share) on the extinguishment of debt; • In the third quarter of 2022, we recognized losses in Cost of products sold of $5 million ($4 million after tax, or $.01 per share) associated with unrealized mark-to-market adjustments on outstanding undesignated commodity hedges. Year-to-date in 2022, we recognized losses in Cost of products sold of $8 million ($6 million after tax, or $.02 per share) associated with unrealized mark-to-market adjustments on outstanding undesignated commodity hedges. In the third quarter of 2021, we recognized gains in Cost of products sold of $22 million ($17 million after tax, or $.06 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 $39 million ($30 million after tax, or $.10 per share) associated with unrealized mark-to-market adjustments on outstanding undesignated commodity hedges; and • Year-to-date in 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 May 1, 2022 May 2, 2021 (Millions, except per share amounts) Earnings Impact EPS Impact Earnings Impact EPS Impact Earnings from continuing operations attributable to Campbell Soup Company $ 188 $ .62 $ 166 $ .54 Loss from discontinued operations $ — $ — $ ( 6 ) $ ( .02 ) Net earnings attributable to Campbell Soup Company $ 188 $ .62 $ 160 $ .52 Continuing operations: Restructuring charges, implementation costs and other related costs $ (5) $ (.02) $ (11) $ (.04) Pension actuarial gains (losses) (12) (.04) 3 .01 Loss on debt extinguishment (3) (.01) — — Commodity mark-to-market gains (losses) (4) (.01) 17 .06 Impact of items on Earnings from continuing operations $ (24) $ (.08) $ 9 $ .03 25 Nine Months Ended May 1, 2022 May 2, 2021 (Millions, except per share amounts) Earnings Impact EPS Impact Earnings Impact EPS Impact Earnings from continuing operations attributable to Campbell Soup Company $ 661 $ 2.18 $ 720 $ 2.36 Loss from discontinued operations $ — $ — $ (6) $ (.02) Net earnings attributable to Campbell Soup Company $ 661 $ 2.18 $ 714 $ 2.34 Continuing operations: Restructuring charges, implementation costs and other related costs $ (12) $ (.04) $ (32) $ (.10) Pension actuarial gains (losses) (9) (.03) 29 .10 Loss on debt extinguishment (3) (.01) — — Commodity mark-to-market gains (losses) (6) (.02) 30 .10 Deferred tax charge — — (19) (.06) Impact of items on Earnings from continuing operations (1) $ (30) $ (.10) $ 8 $ .03 __________________________________________ (1) Sum of the individual amounts may not add due to rounding. Earnings from continuing operations were $188 million ($ .62 per share) in the current quarter, compared to $166 million ($ .54 per share) in the year-ago quarter. After adjusting for items impacting comparability, earnings from continuing operations increased reflecting an improved gross profit performance, lower marketing and selling expenses and lower interest expense, partially offset by sales volume declines and lower other income. Earnings per share benefited from a reduction in the weighted average diluted shares outstanding. Earnings from continuing operations were $661 million ($ 2.18 per share) in the nine-month period this year, compared to $720 million ($ 2.36 per share) in the year-ago period. After adjusting for items impacting comparability, earnings from continuing operations decreased reflecting sales volume declines, lower other income and higher administrative expenses, partially offset by lower marketing and selling expenses, an improved gross profit performance, lower interest expense and a lower effective tax rate. Earnings per share benefited from a reduction in the weighted average diluted shares outstanding. THIRD-QUARTER DISCUSSION AND ANALYSIS Sales An analysis of net sales by reportable segment follows: Three Months Ended (Millions) May 1, 2022 May 2, 2021 % Change Meals & Beverages $ 1,131 $ 1,062 6 Snacks 999 922 8 $ 2,130 $ 1,984 7 An analysis of percent change of net sales by reportable segment follows: Meals & Beverages Snacks (2) Total Volume and mix (3)% (3)% (3)% Price and sales allowances 12 10 11 Decreased / (increased) promotional spending (1) (1) 2 — Divestiture (2) — (1) 6% 8% 7% __________________________________________ (1) Represents revenue reductions from trade promotion and consumer coupon redemption programs. (2) Sum of the individual amounts does not add due to rounding. 26 In Meals & Beverages, sales increased 6%. Excluding the impact from the divestiture of the Plum baby food and snacks business, sales increased primarily due to increases in U.S. soup, foodservice and Prego pasta sauces, partially offset by declines in Canada. Inflation-driven pricing and sales allowances were partially offset by increased promotional spending. Volume decreased primarily due to supply constraints driven by labor and materials availability and price elasticities, partially offset by retailer inventory rebuild. Sales of U.S. soup increased 15% due to increases in condensed soups and ready-to-serve soups, while broth was comparable to prior year. In Snacks, sales increased 8% while sales of our power brands increased 13%. Snacks sales increased due to increases in salty snacks, primarily Snyder’s of Hanover pretzels and Kettle Brand potato chips, as well as in cookies and crackers, primarily Goldfish crackers. Inflation-driven pricing and sales allowances and decreased promotional spending were partly offset by volume declines. Volumes declined driven by supply constraints based on materials availability and price elasticities, partially offset by retailer inventory rebuild. Gross Profit Gross profit, defined as Net sales less Cost of products sold, increased by $37 million in 2022 from 2021. As a percent of sales, gross profit was 31.2% in 2022 and 31.7% in 2021. The 50 basis-point decrease in gross profit margin was due to the following factors: Margin Impact Cost inflation, supply chain costs and other factors (1) (910) Volume/mix (2) (50) Lower level of promotional spending 10 Productivity improvements 110 Price and sales allowances 790 (50) __________________________________________ (1) Includes an estimated positive margin impact of 100 basis points related to the weather event in the prior year and 20 basis points from the benefit of cost savings initiatives, which were more than offset by cost inflation and other factors, including a 140 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 8.8% in 2022 compared to 10.2% in 2021. Marketing and selling expenses decreased 7% in 2022 from 2021. The decrease was primarily due to lower advertising and consumer promotion expense (approximately 8 points). The reduction in advertising and consumer promotion expense was due in part to the pacing of supply recovery in the current quarter and some on-going materials availability issues. Administrative Expenses Administrative expenses as a percent of sales were 7.1% in 2022 compared to 7.7% in 2021. Administrative expenses decreased 1% in 2022 from 2021. The decrease was primarily due to lower costs associated with cost savings initiatives (approximately 4 points), partially offset by expenses related to the settlement of certain legal claims (approximately 3 points). Other Expenses / (Income) Other expenses was $10 million in 2022 compared to other income of $23 million in 2021. Other expenses in 2022 included pension actuarial losses of $16 million. Other income in 2021 included pension actuarial gains of $4 million. Excluding these amounts, the remaining decrease in other income was primarily due to income from transition services fees in the prior year. 27 Operating Earnings Segment operating earnings increased 20% in 2022 from 2021. An analysis of operating earnings by segment follows: Three Months Ended (Millions) May 1, 2022 May 2, 2021 % Change Meals & Beverages $ 220 $ 186 18 Snacks 127 102 25 347 288 20 Corporate income (expense) (53) (14) Restructuring charges (1) — (2) Earnings before interest and taxes $ 294 $ 272 __________________________________________ (1) See Note 6 to the Consolidated Financial Statements for additional information on restructuring charges. Operating earnings from Meals & Beverages increased 18%. The increase was primarily due to improved gross profit performance, partially offset by sales volume declines. Gross profit performance reflected mitigation of on-going inflation with pricing actions, lower other supply chain costs and supply chain productivity improvements, partially offset by unfavorable volume/mix, which was largely due to reduced operating leverage, as well as higher levels of promotional spending. These results also reflect lower base operating earnings in the prior-year third quarter. Operating earnings from Snacks increased 25%. The increase was primarily due to improved gross profit performance and lower marketing and selling expenses, partially offset by higher administrative expenses. Gross profit performance reflected mitigation of on-going inflation with pricing actions combined with the results of supply chain productivity improvements, execution improvements and cost savings initiatives, partially offset by some remaining elevated supply chain costs. These results also reflect lower base operating earnings in the prior-year third quarter. Corporate expense in 2022 included pension actuarial losses of $16 million, costs of $6 million related to costs savings initiatives, and unrealized mark-to-market losses on outstanding undesignated commodity hedges of $5 million. Corporate expense in 2021 included costs of $13 million related to cost savings initiatives, pension actuarial gains of $4 million and unrealized mark-to-market gains on outstanding undesignated commodity hedges of $22 million. Interest Expense Interest expense decreased to $51 million in 2022 from $53 million in 2021, primarily due to lower levels of debt, partially offset by a loss on extinguishment of debt of $4 million in the current quarter. Taxes on Earnings The effective tax rate was 23.0% in 2022 and 24.2% in 2021. The decrease in the effective tax rate was primarily due to state tax law changes in the prior year. NINE-MONTH DISCUSSION AND ANALYSIS Sales An analysis of net sales by reportable segment follows: Nine Months Ended (Millions) May 1, 2022 May 2, 2021 % Change Meals & Beverages $ 3,672 $ 3,743 (2) Snacks 2,903 2,860 2 $ 6,575 $ 6,603 — 28 An analysis of percent change of net sales by reportable segment follows: Meals & Beverages (2) Snacks Total Volume and mix (6)% (6)% (6)% Price and sales allowances 7 6 7 Decreased / (increased) promotional spending (1) (2) 2 — Divestiture (2) — (1) (2)% 2% —% __________________________________________ (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 2%. Excluding the impact from the divestiture of the Plum baby food and snacks business, sales were comparable to the prior year as increases in U.S. soup were offset by declines in Canada. Inflation-driven pricing and sales allowances were partially offset by increased promotional spending relative to moderated levels in the prior year. Volume decreased primarily due to supply constraints driven by labor and materials availability. Sales of U.S. soup increased 2%, due to increases in ready-to-serve soups, broth and condensed soups. In Snacks, sales increased 2% while sales of our power brands increased 6%. Snacks sales increased due to increases in cookies and crackers, primarily Goldfish crackers, partially offset by declines in non-core businesses. Sales of salty snacks increased slightly with increases in Snyder’s of Hanover pretzels mostly offset by declines in Late July snacks. Inflation-driven pricing and sales allowances and decreased promotional spending were partly offset by volume declines. Volumes declined driven by supply constraints due to labor and materials availability and price elasticities, partially offset by retailer inventory rebuild . Gross Profit Gross profit, defined as Net sales less Cost of products sold, decreased by $168 million in 2022 from 2021. As a percent of sales, gross profit was 31.3% in 2022 and 33.7% in 2021. The 240 basis-point decrease in gross profit margin was due to the following factors: Margin Impact Cost inflation, supply chain costs and other factors (1) (730) Volume/mix (2) (100) Higher level of promotional spending (10) Higher restructuring-related costs (10) Productivity improvements 120 Price and sales allowances 490 (240) __________________________________________ (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 70 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 8.4% in 2022 compared to 9.7% in 2021. Marketing and selling expenses decreased 14% in 2022 from 2021. The decrease was primarily due to lower advertising and consumer promotion expense (approximately 13 points). The reduction in advertising and consumer promotion expense was due in part to the pacing of supply recovery in the current year and some on-going materials availability issues. Administrative Expenses Administrative expenses as a percent of sales were 6.9% in 2022 compared to 6.8% in 2021. Administrative expenses were comparable in 2022 with 2021. The change was primarily due to expenses related to the settlement of certain legal claims (approximately 4 points), partially offset by increased benefits from cost savings initiatives (approximately 3 points). 29 Other Expenses / (Income) Other income was $10 million in 2022 compared to other income of $86 million in 2021. Other income included pension actuarial losses of $12 million in 2022 and pension actuarial gains of $38 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 6% in 2022 from 2021. An analysis of operating earnings by segment follows: Nine Months Ended (Millions) May 1, 2022 May 2, 2021 % Change Meals & Beverages $ 713 $ 785 (9) Snacks 376 377 — 1,089 1,162 (6) Corporate income (expense) (96) (7) Restructuring charges (1) — (21) Earnings before interest and taxes $ 993 $ 1,134 __________________________________________ (1) See Note 6 to the Consolidated Financial Statements for additional information on restructuring charges. Operating earnings from Meals & Beverages decreased 9%. The decrease was primarily due to sales volume declines, partially offset by lower marketing and selling expenses. Operating earnings from Snacks were comparable to the prior year. Lower marketing and selling expenses and improved profit performance were offset by sales volume declines and higher administrative expenses due to the settlement of certain legal claims. Gross profit performance was impacted by higher cost inflation and other supply chain costs and unfavorable volume/mix, which was largely due to reduced operating leverage, partially offset by the impact of pricing actions and lower promotional spending combined with the results of supply chain productivity improvements and cost savings initiatives. Corporate expense in 2022 included costs of $15 million related to costs savings initiatives, pension actuarial losses of $12 million and unrealized mark-to-market losses on outstanding undesignated commodity hedges of $8 million. Corporate expense in 2021 included costs of $22 million related to cost savings initiatives, pension actuarial gains of $38 million and unrealized mark-to-market gains on outstanding undesignated commodity hedges of $39 million. Interest Expense Interest expense decreased to $144 million in 2022 from $163 million in 2021 primarily due to lower levels of debt, partially offset by a loss on extinguishment of debt of $4 million in the third quarter of 2022. Taxes on Earnings The effective tax rate was 22.2% in 2022 and 25.9% 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. 30 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 Nine Months Ended (Millions, except per share amounts) May 1, 2022 May 2, 2021 May 1, 2022 May 2, 2021 Recognized as of May 1, 2022 Restructuring charges $ — $ 2 $ — $ 21 $ 259 Administrative expenses 5 11 10 21 349 Cost of products sold 1 2 5 1 84 Marketing and selling expenses — — — — 13 Research and development expenses — — — — 4 Total pre-tax charges $ 6 $ 15 $ 15 $ 43 $ 709 Aggregate after-tax impact $ 5 $ 11 $ 12 $ 32 Per share impact $ .02 $ .04 $ .04 $ .10 A summary of the pre-tax costs in Earnings from continuing operations associated with these initiatives is as follows: (Millions) Recognized as of May 1, 2022 Severance pay and benefits $ 222 Asset impairment/accelerated depreciation 82 Implementation costs and other related costs 405 Total $ 709 The total estimated pre-tax costs for actions associated with continuing operations that have been identified are approximately $725 million to $735 million and we expect to incur substantially all of 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 $415 million to $425 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 43%; and Corporate - approximately 26%. Of the aggregate $725 million to $735 million of pre-tax costs associated with continuing operations identified to date, we expect approximately $625 million to $635 million will be cash expenditures. In addition, we expect to invest approximately $440 million in capital expenditures, of which we invested $433 million as of May 1, 2022. We expect to invest in substantially all of the capital expenditures through 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 May 1, 2022, we have generated total program-to-date pre-tax savings of $840 million. 31 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: May 1, 2022 (Millions) Three Months Ended Nine Months Ended Costs Incurred to Date Meals & Beverages $ — $ 2 $ 225 Snacks 4 11 310 Corporate 2 2 174 Total $ 6 $ 15 $ 709 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 $1,101 million in 2022, compared to $881 million in 2021. The increase in 2022 was primarily due to changes in working capital, 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 $847 million as of May 1, 2022, and $119 million as of August 1, 2021. Total debt maturing within one year was $750 million as of May 1, 2022, and $48 million as of August 1, 2021. Capital expenditures were $179 million in 2022 and $190 million in 2021. Capital expenditures are expected to total approximately $275 million in 2022. Capital expenditures in the first nine months 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. On March 4, 2022, we completed the redemption of all $450 million outstanding aggregate principal amount of our 2.50% Senior Notes due August 2, 2022. The consideration for the redemption was $453 million, including $3 million of premium. We recognized a loss of $4 million (including the $3 million of premium and other costs), which was recorded in Interest expense in the Consolidated Statement of Earnings. 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. Dividend payments were $340 million in 2022 and $327 million in 2021. The regular quarterly dividend paid on our capital stock was $.37 per share in both the third quarter of 2022 and 2021. 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. On May 24, 2022, the Board of Directors declared a regular quarterly dividend of $.37 per share payable on August 1, 2022 to shareholders of record at the close of business on July 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 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. We repurchased approximately 2.7 million shares at a cost of $116 million in 2022. Of this amount, $41 million was used to repurchase shares pursuant to our June 2021 program and $75 million was used to repurchase shares pursuant to our September 2021 program. As of May 1, 2022, approximately $173 million remained available under the June 2021 program and approximately $425 million remained available under the September 2021 program. See Note 13 to the Consolidated Financial Statements and “Unregistered Sales of Equity Securities and Use of Proceeds” for additional information. As of May 1, 2022, we had $750 million of short-term borrowings due within one year, $170 million of which was comprised of commercial paper borrowings. As of May 1, 2022, we issued $32 million of standby letters of credit. On 32 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 May 1, 2022, except for $1 million of standby letters of credit that we 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. 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; • disruptions in or inefficiencies to our supply chain and/or operations including the impacts of the COVID-19 pandemic; 33 • 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 ongoing conflict 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.