What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2022-09-22 compared with 2021-09-23 · 409 added, 494 removed, 1131 unchanged (44% of the section changed)

2 unchanged sentences

Consolidated Statements of Earnings

C onsolidated Stat ements of Comprehensive Income

Consolidated Statements of Comprehensive Income

Consolidated Balance Sheets

6 unchanged sentences

Goodwill and Intangible Assets

Business and Geographic Segment Information

Segment Information

Restructuring Charges and Cost Savings Initiatives

6 unchanged sentences

Fair Value Measurements

Shareholder s ' Equity

Shareholders' Equity

Stock-based Compensation

1 unchanged sentence

Supplemental Financial Statement Data

Management’s Report on Internal Control Over Financial Reporting

Report of Independent Registered Public Accounting Firm

CAMPBELL SOUP COMPANY

39 unchanged sentences

52 weeks 52 weeks 53 weeks

Pre-tax amount Tax (expense) benefit After-tax amount Pre-tax amount Tax (expense) benefit After-tax amount Pre-tax amount Tax (expense) benefit After-tax amount

Pre-tax amount Tax benefit (expense) After-tax amount Pre-tax amount Tax benefit (expense) After-tax amount Pre-tax amount Tax benefit (expense) After-tax amount

Net earnings $ 757 $ 1,002 $ 1,628

5 unchanged sentences

Unrealized gains (losses) arising during period 17 ( 3 ) 14 ( 5 ) 1 ( 4 ) 3 ( 1 ) 2

Reclassification adjustment for (gains) losses included in net earnings 8 ( 1 ) 7 — — — — — —

Reclassification adjustment for losses (gains) included in net earnings ( 12 ) 2 ( 10 ) 8 ( 1 ) 7 — — —

Pension and other postretirement benefits:

Prior service credit arising during the period — — — — — — — — —

Reclassification of prior service credit included in net earnings ( 1 ) — ( 1 ) ( 5 ) 1 ( 4 ) ( 28 ) 6 ( 22 )

53 unchanged sentences

Adjustments to reconcile net earnings to operating cash flow

Impairment charges — — 393

Restructuring charges 5 21 9

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Other 88 86 101

Changes in working capital, net of acquisitions and divestitures

Changes in working capital, net of divestitures

Accounts receivable 48 ( 20 ) ( 30 )

Inventories ( 314 ) ( 77 ) ( 20 )

Prepaid assets ( 28 ) ( 3 ) ( 1 )

Other current assets 25 ( 28 ) ( 3 )

Accounts payable and accrued liabilities 200 ( 164 ) 145

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Sales of route businesses 2 10 11

Business acquired, net of cash acquired — — ( 18 )

Sales of businesses, net of cash divested — 101 2,537

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Balance at July 28, 2019

Cumulative effect of changes in accounting principle:

Stranded tax effects (1)

323 $ 12 ( 22 ) $ ( 1,076 ) $ 372 $ 1,993 $ ( 198 ) $ 9 $ 1,112

Net earnings (loss) 1,628 — 1,628

Divestiture ( 4 ) ( 4 )

Other comprehensive income (loss) 188 1 189

3 unchanged sentences

Treasury stock issued under management incentive and stock option plans 1 53 22 ( 3 ) 72

Balance at July 28, 2019 323 12 ( 22 ) ( 1,076 ) 372 1,993 ( 198 ) 9 1,112

Balance at August 2, 2020

323 12 ( 21 ) ( 1,023 ) 394 3,190 ( 10 ) 6 2,569

Net earnings (loss) 1,002 — 1,002

Divestiture ( 4 ) ( 4 )

Other comprehensive income (loss) 15 ( 4 ) 11

4 unchanged sentences

Balance at August 1, 2021

323 12 ( 21 ) ( 1,021 ) 414 3,742 5 2 3,154

Net earnings (loss) 757 — 757

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Treasury stock issued under management incentive and stock option plans 1 50 1 ( 8 ) 43

Balance at August 1, 2021 323 $ 12 ( 21 ) $ ( 1,021 ) $ 414 $ 3,742 $ 5 $ 2 $ 3,154

(1) See Note 2 for additional detail.

Balance at July 31, 2022

323 $ 12 ( 24 ) $ ( 1,138 ) $ 415 $ 4,040 $ 2 $ 2 $ 3,333

See accompanying Notes to Consolidated Financial Statements.

Notes to Consolidated Financial Statements

(currency in millions, except per share amounts)

Summary of Significant Accounting Policies

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There were 52 weeks in 2022 and 2021, and 53 weeks in 2020.

Discontinued Operations — We present discontinued operations when there is a disposal of a component group or a group of components that in our judgment represents a strategic shift that will have a major effect on our operations and financial results.

Discontinued Operations — We present discontinued operations when there is a disposal of a component or a group of components that in our judgment represents a strategic shift that will have a major effect on our operations and financial results.

We aggregate the results of operations for discontinued operations into a single line item in the Consolidated Statements of Earnings for all periods presented.

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Revenues are recognized when our performance obligation has been satisfied and control of the product passes to our customers, which typically occurs when products are delivered or accepted by customers in accordance with terms of agreements.

We make shipments promptly after acceptance of orders.

Shipping and handling costs incurred to deliver the product are recorded within Cost of products sold.

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See Note 6 for additional information on disaggregation of revenue.

In 2019, we adopted revised guidance on the recognition of revenue from contracts with customers.

See Note 2 for additional information.

Cash and Cash Equivalents — All highly liquid debt instruments purchased with a maturity of three months or less are classified as cash equivalents.

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Repairs and maintenance are charged to expense as incurred.

Goodwill and Intangible Assets — Goodwill and intangible assets deemed to have indefinite lives are not amortized but rather are tested at least annually for impairment, or when circumstances indicate that the carrying amount of the asset may not be recoverable.

Goodwill and Intangible Assets — Goodwill and intangible assets deemed to have indefinite lives are not amortized but rather are tested at least annually in the fourth quarter for impairment, or more often if events or changes in circumstances indicate that more likely than not the carrying amount of the asset may not be recoverable.

Goodwill is tested for impairment at the reporting unit level.

A reporting unit is an operating segment or a component of an operating segment.

A reporting unit represents an operating segment or a component of an operating segment.

Goodwill is tested for impairment by either performing a qualitative evaluation or a quantitative test.

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The discounted estimates of future cash flows include significant management assumptions such as revenue growth rates, operating margins, weighted average costs of capital and future economic and market conditions.

If the carrying value of the reporting unit exceeds fair value, goodwill is considered impaired and an impairment charge will be recorded to reduce the reporting unit to fair value.

If the carrying value of the reporting unit exceeds fair value, goodwill is considered impaired.

An impairment charge is recognized for the amount by which the carrying value of the reporting unit exceeds fair value, limited to the amount of goodwill in the reporting unit.

Indefinite-lived intangible assets are tested for impairment by comparing the fair value of the asset to the carrying value.

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If the carrying value exceeds fair value, an impairment charge will be recorded to reduce the asset to fair value.

See Notes 3 and 5 for information on intangible assets and impairment charges.

Leases — At the beginning of the first quarter of 2020, we adopted new guidance on accounting for leases.

We determine if an agreement is or contains a lease at inception by evaluating if an identified asset exists that we control for a period of time.

See Note 5 for more information.

Leases — We determine if an agreement is or contains a lease at inception by evaluating if an identified asset exists that we control for a period of time.

When a lease exists, we record a right-of-use (ROU) asset and a corresponding lease liability on our Consolidated Balance Sheet.

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For finance leases, the amortization of ROU lease assets is recognized on a straight-line basis over the shorter of the estimated useful life of the underlying asset or the lease term in Cost of products sold, Marketing and selling expenses, or Administrative expenses depending on the nature of the leased item.

Interest expense on finance lease obligations is recorded over the lease term and is recorded in Interest expense (based on a front-loaded interest expense pattern).

Interest expense on finance lease obligations is recorded using the effective interest method over the lease term and is recorded in Interest expense.

All operating lease cash payments and interest on finance leases are recorded within Net cash provided by operating activities and all finance lease principal payments are recorded within Net cash used in financing activities in our Consolidated Statements of Cash Flows.

See Notes 2 and 10 for more information.

See Note 10 for more information.

Derivative Financial Instruments — We use derivative financial instruments primarily for purposes of hedging exposures to fluctuations in foreign currency exchange rates, interest rates, commodities and equity-linked employee benefit obligations.

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Recently Adopted

In May 2014, the Financial Accounting Standards Board (FASB) issued revised guidance on the recognition of revenue from contracts with customers.

We adopted the guidance in the first quarter of 2019, effective on July 30, 2018, using the modified retrospective method and recorded a cumulative effect adjustment of $ 8 , net of tax, to decrease the opening balance of Earnings retained in the business, an increase of $ 10 to Accrued liabilities, an increase of $ 1 to Accounts payable, a decrease of $ 2 to Deferred taxes and an increase of $ 1 to Other assets.

In February 2016, the FASB issued guidance that amends accounting for leases.

Under the new guidance, a lessee will recognize most leases on the balance sheet but will recognize expenses similar to current lease accounting.

The guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018.

In July 2018, the FASB issued an adoption approach that allows entities to apply the new guidance and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption without restating prior periods.

We adopted the new guidance in the first quarter of 2020 using this transition method.

We elected to apply a package of practical expedients, which allowed us to not reassess prior conclusions related to contracts containing leases, lease classification, and initial direct costs.

Adoption of the new guidance resulted in the recognition of operating lease ROU assets of $ 259 and operating lease liabilities of $ 254 , with the difference between the assets and liabilities primarily due to below market assets, deferred rent and prepaid rent.

In addition, we derecognized $ 20 of an asset and liability associated with a build-to-suit lease arrangement.

The adoption did not have a material impact on consolidated net earnings or cash flows.

See Note 10 for additional information.

In August 2017, the FASB issued guidance that amends hedge accounting.

Under the new guidance, more hedging strategies will be eligible for hedge accounting and the application of hedge accounting is simplified.

The new guidance amends presentation and disclosure requirements, and how effectiveness is assessed.

In October 2018, the FASB issued guidance which permits an entity to designate the overnight index swap rate based on the Secured Overnight Financing Rate Fed Funds as a benchmark interest rate in a hedge accounting relationship.

The guidance is effective for fiscal years beginning after December 15, 2018, and interim periods within those years.

We adopted the guidance in the first quarter of 2020.

The adoption did not have a material impact on our consolidated financial statements.

In February 2018, the FASB issued guidance that provides entities an option to reclassify the stranded tax effects of the Tax Cuts and Jobs Act of 2017 on items within accumulated other comprehensive income to retained earnings.

The guidance is effective for fiscal years beginning after December 15, 2018, and interim periods within those years.

We adopted the guidance in the first quarter of 2019, effective on July 30, 2018, and elected not to reclassify prior periods.

The adoption resulted in a cumulative effect adjustment of $ 9 to decrease the opening balance of Earnings retained in the business and a corresponding net decrease to the components of Accumulated other comprehensive income (loss).

See Note 4 for additional information.

In August 2018, the FASB issued guidance that eliminates, adds, and modifies certain disclosure requirements for fair value measurements.

In August 2018, the Financial Accounting Standards Board (FASB) issued guidance that eliminates, adds and modifies certain disclosure requirements for fair value measurements.

The guidance is effective for fiscal years beginning after December 15, 2019, and interim periods within those years.

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The adoption did not have a material impact on our consolidated financial statements.

Accounting Pronouncements Not Yet Adopted

In December 2019, the FASB issued guidance on simplifying the accounting for income taxes.

The guidance removes certain exceptions to the general principles of accounting for income taxes and also improves consistent application of accounting by clarifying or amending existing guidance.

The guidance is effective for fiscal years beginning after December 15, 2020, and interim periods within those years.

Early adoption is permitted.

The adoption is not expected to have a material impact on our consolidated financial statements.

We adopted the guidance in the first quarter of 2022.

The adoption did not have an impact on our consolidated financial statements.

Accounting Pronouncements Not Yet Adopted

In March 2020, the FASB issued guidance that provides optional expedients and exceptions for a limited period of time for accounting for contracts, hedging relationships and other transactions affected by the London Interbank Offered Rate (LIBOR) or another reference rate expected to be discontinued.

Optional expedients can be applied from March 12, 2020, through December 31, 2022.

We are currently evaluating the impact that the new guidance will have on our consolidated financial statements.

The adoption is not expected to have a material impact on our consolidated financial statements .

Discontinued Operations

On February 25, 2019, we sold our U.S.

refrigerated soup business, and on April 25, 2019, we sold our Garden Fresh Gourmet business.

Proceeds were $ 55 .

On June 16, 2019, we sold our Bolthouse Farms business.

Proceeds were $ 500 .

Beginning in the third quarter of 2019, we have reflected the results of these businesses as discontinued operations in the Consolidated Statements of Earnings for all periods presented.

These businesses were historically included in the Campbell Fresh reportable segment.

We completed the sale of our Kelsen business on September 23, 2019, for $ 322 .

We also completed the sale of our Arnott’s business and certain other international operations, including the simple meals and shelf-stable beverages businesses in Australia and Asia Pacific (the Arnott's and other international operations), on December 23, 2019, for $ 2,286 .

The purchase price was subject to certain post-closing adjustments, which resulted in $ 4 of additional proceeds in the third quarter of 2020.

We completed the sale of our Kelsen business on September 23, 2019, for $ 322 million.

The purchase price was subject to certain post-closing adjustments, which resulted in $ 4 million of additional proceeds in the third quarter of 2020.

Beginning in the fourth quarter of 2019, we have reflected the results of operations of the Kelsen business and the Arnott’s and other international operations (collectively referred to as Campbell International) as discontinued operations in the Consolidated Statements of Earnings for all periods presented.

1 unchanged sentence

Results of discontinued operations were as follows:

Campbell International Campbell Fresh

2020 2019 2019

(Millions) 2020

Net sales $ 359

Impairment charges $ — $ 17 $ 360

Earnings (loss) before taxes from operations $ 53 $ 120 $ ( 359 )

Taxes on earnings (loss) from operations 17 41 ( 78 )

Gain (loss) on sales of businesses / costs associated with selling the businesses 1,039 ( 12 ) ( 32 )

Tax expense (benefit) on sales / costs associated with selling the businesses 39 ( 2 ) 19

Earnings (loss) from discontinued operations $ 1,036 $ 69 $ ( 332 )

In the third quarter of 2021, we recognized a $ 6 Loss from discontinued operations due to tax expense from return-to-provision adjustments related to the sale of Campbell International.

Earnings before taxes from operations $ 53

Taxes on earnings from operations 17

Gain on sales of businesses / costs associated with selling the businesses 1,039

Tax expense on sales / costs associated with selling the businesses 39

Earnings from discontinued operations $ 1,036

In addition, in the third quarter of 2021, we recognized a $ 6 million loss due to tax expense from return-to-provision adjustments related to the sale of Campbell International.

The sale of the Arnott's and other international operations resulted in a substantial capital gain for tax purposes.

We were able to utilize capital losses in 2020, which were offset with valuation allowances as of July 28, 2019, to offset the capital gain.

In the fourth quarter of 2019, as part of our annual review of intangible assets, we recognized an impairment charge of $ 7 on a trademark and $ 10 on goodwill in Kelsen due to a lower long-term outlook for sales and the pending sale of the business.

In the second quarter of 2019, we performed interim impairment assessments on the intangible and tangible assets of the Campbell Fresh businesses.

We revised our future outlook for earnings and cash flows for each of these businesses as the

divestiture process progressed and we received initial indications of value.

In Bolthouse Farms carrot and carrot ingredients, we recorded impairment charges of $ 18 on the trademark, $ 40 on customer relationships, $ 15 on technology and $ 104 on plant assets.

In Bolthouse Farms refrigerated beverages and salad dressings, we recorded impairment charges of $ 74 on the trademark, $ 22 on customer relationships, and $ 9 on plant assets.

In Garden Fresh Gourmet, we recorded impairment charges of $ 23 on the trademark, $ 39 on customer relationships, and $ 2 on plant assets.

In the first quarter of 2019, we recorded an impairment charge of $ 14 on the U.S refrigerated soup plant assets in Campbell Fresh.

In addition, we recorded tax expense of $ 29 in 2019 as deferred tax assets were not realizable.

Under the terms of the sale of the Arnott's and other international operations, we entered into a long-term licensing arrangement for the exclusive rights to certain Campbell brands in certain non-U.S.

We provided certain transition services to support the divested businesses.

The depreciation and amortization, capital expenditures, sale proceeds and significant operating non-cash items of discontinued operations were as follows:

The significant operating non-cash items, capital expenditures and sale proceeds of discontinued operations were as follows:

(Millions) 2020

Cash flows from discontinued operating activities:

Impairment charges $ — $ 377

Depreciation and amortization (1)

Net (gain) loss on sales of discontinued operations businesses ( 1,039 ) 32

Net gain on sales of discontinued operations businesses $ ( 1,039 )

Cash flows from discontinued investing activities:

1 unchanged sentence

Sales of discontinued operations businesses, net of cash divested 2,466

_____________________________________

(1) Depreciation and amortization are no longer recognized once businesses are classified as held for sale/discontinued operations.

Other Divestitures

On October 11, 2019, we completed the sale of our European chips business for £ 63 , or $ 77 .

The pre-tax loss recognized in the first quarter of 2020 on the sale was $ 64 , which included the impact of allocated goodwill and foreign currency translation adjustments.

On October 11, 2019, we completed the sale of our European chips business for £ 63 million, or $ 77 million.

The pre-tax loss recognized in the first quarter of 2020 on the sale was $ 64 million, which included the impact of allocated goodwill and foreign currency translation adjustments.

For tax purposes, we were able to use the capital loss on this sale to offset a portion of the capital gain from the sale of the Arnott's and other international operations.

The after-tax loss was $ 37 .

The European chips business had net sales of $ 25 in 2020 and $ 129 in 2019.

Earnings from the business, which included a pre-tax impairment charge on intangible assets of $ 16 recognized in the fourth quarter of 2019, were not material.

The after-tax loss was $ 37 million .

The European chips business had net sales of $ 25 million in 2020.

Earnings from the business were not material.

The results of the European chips business through the date of sale were reflected in continuing operations within the Snacks reportable segment.

On May 3, 2021, we completed the sale of our Plum baby food and snacks business for $ 101 , subject to certain post-closing adjustments.

On May 3, 2021, we completed the sale of our Plum baby food and snacks business for $ 101 million.

The purchase agreement contained customary representations, warranties, indemnifications and other obligations between us and the buyer.

In addition, we have agreed to indemnify the buyer for certain claims against the Plum baby food and snacks business alleging the presence of heavy metals in the products manufactured or sold on or prior to May 2, 2021, that were pending at the time of closing of the transaction or are asserted within two years thereafter.

We recognized a pre-tax loss of $ 11 and an after-tax gain on the sale of $ 3 .

The business had net sales of $ 68 in 2021, $ 104 in 2020, and $ 110 in 2019.

We recognized a pre-tax loss of $ 11 million and an after-tax gain on the sale of $ 3 million.

The business had net sales of $ 68 million in 2021 and $ 104 million in 2020.

Earnings were not material in the periods.

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The components of Accumulated other comprehensive income (loss) consisted of the following:

Foreign Currency Translation Adjustments (1)

Gains (Losses) on Cash-Flow Hedges (2)

(Millions) Foreign Currency Translation Adjustments (1)

Cash-Flow Hedges (2)

Pension and Postretirement Benefit Plan Adjustments (3)

1 unchanged sentence

Balance at July 28, 2019

Cumulative effect of a change in accounting principle (4)

Other comprehensive income (loss) before reclassifications ( 68 ) ( 2 ) — ( 70 )

Amounts reclassified from accumulated other comprehensive income (loss) 2 — ( 21 ) ( 19 )

Net current-period other comprehensive income (loss) ( 66 ) ( 2 ) ( 21 ) ( 89 )

Balance at July 28, 2019 $ ( 218 ) $ ( 9 ) $ 29 $ ( 198 )

$ ( 218 ) $ ( 9 ) $ 29 $ ( 198 )

Other comprehensive income (loss) before reclassifications ( 2 ) 2 — —

Amounts reclassified from accumulated other comprehensive income (loss) (5)

Losses (gains) reclassified from accumulated other comprehensive income (loss) (4)

210 — ( 22 ) 188

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Balance at August 2, 2020

$ ( 10 ) $ ( 7 ) $ 7 $ ( 10 )

Other comprehensive income (loss) before reclassifications 16 ( 4 ) — 12

Amounts reclassified from accumulated other comprehensive income (loss)

Losses (gains) reclassified from accumulated other comprehensive income (loss) — 7 ( 4 ) 3

Net current-period other comprehensive income (loss) 16 3 ( 4 ) 15

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$ 6 $ ( 4 ) $ 3 $ 5

(1) Included no tax as of August 1, 2021, and August 2, 2020, and tax expense of $ 4 as of July 28, 2019, and $ 6 as of July 29, 2018.

(2) Included a tax benefit of $ 1 as of August 1, 2021, and as of August 2, 2020, $ 2 as of July 28, 2019, and $ 4 as of July 29, 2018.

(3) Included a tax expense of $ 1 as of August 1, 2021, $ 2 as of August 2, 2020, $ 8 as of July 28, 2019, and $ 25 as of July 29, 2018.

(4) Reflects the adoption of the FASB guidance on stranded tax effects.

See Note 2 for additional information.

Other comprehensive income (loss) before reclassifications ( 6 ) 14 — 8

Losses (gains) reclassified from accumulated other comprehensive income (loss)

— ( 10 ) ( 1 ) ( 11 )

Net current-period other comprehensive income (loss) ( 6 ) 4 ( 1 ) ( 3 )

Balance at July 31, 2022

$ — $ — $ 2 $ 2

_____________________________________

(1) Included no tax as of July 31, 2022, August 1, 2021, and August 2, 2020, and a tax expense of $ 4 million as of July 28, 2019.

(2) Included no tax as of July 31, 2022, and a tax benefit of $ 1 million as of August 1, 2021 and August 2, 2020, and $ 2 million as of July 28, 2019.

(3) Included a tax expense of $ 1 million as of July 31, 2022 and August 1, 2021, $ 2 million as of August 2, 2020, and $ 8 million as of July 28, 2019.

(4) Reflects the reclassification from sale of businesses.

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The amounts reclassified from Accumulated other comprehensive income (loss) consisted of the following:

Details about Accumulated Other Comprehensive Income (Loss) Components 2021 2020 2019 Location of Loss (Gain) Recognized in Earnings

(Millions) 2022 2021 2020 Location of Loss (Gain) Recognized in Earnings

Foreign currency translation adjustments:

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Losses (gains) on cash-flow hedges:

Commodity contracts $ ( 14 ) $ — $ — Cost of products sold

Foreign exchange forward contracts 1 6 ( 2 ) Cost of products sold

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Goodwill and Intangible Assets

The following table shows the changes in the carrying amount of goodwill by business segment:

Meals & Beverages

Net balance at July 28, 2019 $ 977 $ 3,040 $ 4,017

The following table shows the changes in the carrying amount of goodwill:

(Millions) Meals & Beverages

Net balance at August 2, 2020

$ 975 $ 3,011 $ 3,986

Divestiture (1)

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Net balance at August 1, 2021

Divestiture (1)

$ 970 $ 3,011 $ 3,981

Amounts reclassified due to segment change (2)

Foreign currency translation adjustment ( 2 ) — ( 2 )

Net balance at August 1, 2021 $ 970 $ 3,011 $ 3,981

Net balance at July 31, 2022

$ 993 $ 2,986 $ 3,979

_____________________________________

(1) See Note 3 for additional information on the sale of the Plum baby and snack foods business .

(2) See Note 6 for additional information.

Intangible Assets

The following table sets forth balance sheet information for intangible assets, excluding goodwill, subject to amortization and intangible assets not subject to amortization:

Intangible Assets Cost Accumulated Amortization Net Cost Accumulated Amortization Net

The following table summarizes balance sheet information for intangible assets, excluding goodwill:

(Millions) Cost Accumulated Amortization Net Cost Accumulated Amortization Net

Amortizable intangible assets

Customer relationships $ 830 $ ( 181 ) $ 649 $ 830 $ ( 140 ) $ 690

$ 830 $ ( 140 ) $ 690 $ 851 $ ( 112 ) $ 739

Non-amortizable intangible assets

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Total net intangible assets $ 3,198 $ 3,239

_____________________________________

(1) Net Customer relationships of $ 8 and Trademarks of $ 62 were divested with the sale of the Plum baby and snack foods business.

See Note 3 for additional information.

As of August 1, 2021, the carrying value of indefinite-lived trademarks is detailed below:

Various Other (1)

Snyder's of Hanover Lance Pace Pacific Foods

Carrying value $ 1,007 $ 620 $ 350 $ 292 $ 280

Amortization of intangible assets in Earnings from continuing operations was $ 41 million for 2022, $ 42 million for 2021 and $ 43 million for 2020.

As of July 31, 2022, amortizable intangible assets had a weighted-average remaining useful life of 16 years.

Amortization expense for the next five years is estimated to be approximately $ 41 million per year.

The carrying values of indefinite-lived trademarks as of July 31, 2022 and August 1, 2021, are detailed below:

Snyder's of Hanover $ 620

Kettle Brand 318

Pacific Foods 280

Various other Snacks (1)

Total $ 2,549

_____________________________________

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(Snyder's-Lance) .

Amortization of intangible assets in Earnings from continuing operations was $ 42 for 2021, $ 43 for 2020 and $ 48 for 2019.

As of August 1, 2021, amortizable intangible assets had a weighted-average remaining useful life of 17 years.

Amortization expense for the next 5 years is estimated to be approximately $ 41 per year.

Amortization of intangible assets in discontinued operations was $ 9 for 2019.

As of the 2022 impairment testing, indefinite-lived trademarks with 10% or less of excess coverage of fair value over carrying value had an aggregate carrying value of $ 434 million and included Pacific Foods and certain other Snacks trademarks.

The estimates of future cash flows used in determining the fair value of goodwill and intangible assets involve significant management judgment and are based upon assumptions about expected future operating performance, economic conditions, market conditions and cost of capital.

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The actual cash flows could differ materially from management’s estimates due to changes in business conditions, operating performance and economic conditions.

Business and Geographic Segment Information

Segment Information

Our reportable segments are as follows:

• Meals & Beverages, which includes the retail and foodservice businesses in the U.S.

• Meals & Beverages, which consists of our soup, simple meals and beverages products in retail and foodservice in the U.S.

The segment includes the following products:

8 unchanged sentences

and Campbell’s tomato juice.

The segment also included the results of our Plum baby food and snacks business, which was sold on May 3, 2021;

• Snacks, which consists of Pepperidge Farm cookies, crackers, fresh bakery and frozen products in U.S.

retail, including Pepperidge Farm Farmhouse* cookies and bakery products, Milano * cookies and Goldfish * crackers;

and Snyder’s of Hanover * pretzels, Lance * sandwich crackers, Cape Cod * and Kettle Brand * potato chips, Late July * snacks, Snack Factory pretzel crisps,* Pop Secret popcorn, Emerald nuts, and other snacking products in retail and foodservice in the U.S.

The segment includes the retail business in Latin America.

The segment also includes snacking products in foodservice and Canada.

The segment included the results of our Plum baby food and snacks business, which was sold on May 3, 2021;

• Snacks, which consists of Pepperidge Farm cookies*, crackers, fresh bakery and frozen products, including Goldfish crackers*, Snyder’s of Hanover pretzels*, Lance sandwich crackers*, Cape Cod potato chips *, Kettle Brand potato chips * , Late July snacks * , Snack Factory pretzel crisps *, Pop Secret popcorn, Emerald nuts, and other snacking products in retail in the U.S.

Beginning in 2022, we refer to the * brands as our "power brands." The segment includes the retail business in Latin America.

The segment also included the results of our European chips business, which was sold on October 11, 2019.

We refer to the * trademarks as our "power brands."

Beginning in 2022, the foodservice and Canadian portion of Snacks will be managed as part of Meals & Beverages .

Beginning in 2022, the foodservice and Canadian business formerly included in our Snacks segment is now managed as part of the Meals & Beverages segment .

Segment results have been adjusted retrospectively to reflect this change.

We evaluate segment performance before interest, taxes and costs associated with restructuring activities and impairment charges.

Unrealized gains and losses on commodity hedging activities are excluded from segment operating earnings and are recorded in Corporate as these open positions represent hedges of future purchases.

Unrealized gains and losses on outstanding undesignated commodity hedging activities are excluded from segment operating earnings and are recorded in Corporate as these open positions represent hedges of future purchases.

Upon closing of the contracts, the realized gain or loss is transferred to segment operating earnings, which allows the segments to reflect the economic effects of the hedge without exposure to quarterly volatility of unrealized gains and losses.

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Asset information by segment is not discretely maintained for internal reporting or used in evaluating performance.

Therefore, only geographic segment asset information is provided.

Our largest customer, Wal-Mart Stores, Inc.

and its affiliates, accounted for approximately 21 % of consolidated net sales from continuing operations in 2021 and 2020, and 20 % in 2019.

and its affiliates, accounted for approximately 22 % of consolidated net sales from continuing operations in 2022, and 21 % in 2021 and 2020.

Both of our reportable segments sold products to Wal-Mart Stores, Inc.

or its affiliates.

2021 2020 2019

(Millions) 2022 2021 2020

Meals & Beverages $ 4,607 $ 4,621 $ 4,747

Snacks 3,955 3,855 3,944

Corporate — — 1

Total $ 8,562 $ 8,476 $ 8,691

2021 2020 2019

(Millions) 2022 2021 2020

Earnings before interest and taxes

6 unchanged sentences

Total $ 1,163 $ 1,545 $ 1,107

2021 2020 2019

(Millions) 2022 2021 2020

Depreciation and amortization

2 unchanged sentences

Corporate (3)

Discontinued operations (4)

Total $ 337 $ 317 $ 328

2021 2020 2019

(Millions) 2022 2021 2020

Capital expenditures

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(1) Represents unallocated items.

Pension and postretirement benefit settlement and mark-to-market adjustments are included in Corporate.

There were settlement gains of $ 38 and gains of $ 165 in 2021, settlement charges of $ 43 and losses of $ 121 in 2020, and losses of $ 122 in 2019, respectively.

A loss of $ 11 on the sale of the Plum baby food and snacks business was included in 2021.

A loss of $ 45 on Acre Venture Partners, L.P.

Pension and postretirement actuarial gains and losses are included in Corporate.

There were actuarial losses of $ 44 million in 2022, gains of $ 203 million in 2021, and losses of $ 164 million in 2020, respectively.

Costs related to the cost savings initiatives were $ 26 million, $ 32 million and $ 60 million in 2022, 2021 and 2020, respectively.

Unrealized mark-to-market adjustments on outstanding undesignated commodity hedges were losses of $ 59 million in 2022, gains of $ 50 million in 2021, and gains of $ 2 million in 2020, respectively.

A loss of $ 11 million on the sale of the Plum baby food and snacks business was included in 2021.

A loss of $ 64 million on the sale of our European chips business was included in 2020.

A loss of $ 45 million on Acre Venture Partners, L.P.

(Acre) was included in 2020.

See Note 14 for additional information on Acre.

A loss of $ 64 on the sale of our European chips business was included in 2020.

Costs related to the cost savings initiatives were $ 32 , $ 60 and $ 90 in 2021, 2020 and 2019, respectively.

Intangible asset impairment charges were $ 16 in 2019.

A mark-to-market gain on outstanding commodity hedges of $ 50 was included in 2021.

(2) See Note 7 for additional information.

(3) Represents primarily corporate offices and enterprise-wide information technology systems.

(4) Depreciation and amortization are no longer recognized once businesses are classified as held for sale/discontinued operations .

Our global net sales based on product categories are as follows:

2021 2020 2019

Our net sales based on product categories are as follows:

(Millions) 2022 2021 2020

Soup $ 2,615 $ 2,568 $ 2,653

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Snacks include cookies, pretzels, crackers, popcorn, nuts, potato chips, tortilla chips and other salty snacks and baked products.

Other simple meals include sauces and Plum products.

Other simple meals include sauces, gravies, pasta, beans, canned poultry and Plum products through May 3, 2021, when the business was sold.

Beverages include V8 juices and beverages, Campbell's tomato juice and Pacific Foods non-dairy beverages.

Geographic Area Information

Information about continuing operations in different geographic areas is as follows:

2021 2020 2019

United States $ 7,951 $ 8,165 $ 7,492

Other countries 525 526 615

Total $ 8,476 $ 8,691 $ 8,107

2021 2020 2019

Long-lived assets

United States $ 2,363 $ 2,361 $ 2,400

Other countries 7 7 55

Total $ 2,370 $ 2,368 $ 2,455

We are a North American focused company with over 90 % of our net sales and long-lived assets related to our U.S.

Restructuring Charges and Cost Savings Initiatives

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Beginning in fiscal 2015, we implemented initiatives to reduce costs and to streamline our organizational structure.

In recent years, we expanded these initiatives by further optimizing our supply chain and manufacturing networks, including closing our manufacturing facility in Toronto, Ontario, as well as our information technology infrastructure.

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 continue to implement this program.

In addition, we have identified opportunities for additional cost synergies as we integrate Snyder's-Lance.

We continued to implement this program and identified opportunities for additional cost synergies as we integrated Snyder's-Lance.

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 the pre-tax charges recorded in Earnings from continuing operations related to these initiatives is as follows:

2021 2020 2019 Recognized as of August 1, 2021

(Millions) 2022 2021 2020 Recognized as of July 31, 2022

Restructuring charges $ 5 $ 21 $ 9 $ 264

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A summary of the pre-tax costs in Earnings from continuing operations associated with the initiatives is as follows:

Recognized as of

August 1, 2021

(Millions) Recognized as of

July 31, 2022

Severance pay and benefits

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Implementation costs and other related costs

A summary of the pre-tax costs in Earnings (loss) from discontinued operations associated with these initiatives is as follows:

Recognized as of August 1, 2021

Severance pay and benefits

Implementation costs and other related costs

As of April 28, 2019, we incurred substantially all of the costs for actions associated with discontinued operations.

All of the costs were cash expenditures.

The total estimated pre-tax costs for actions associated with continuing operations are approximately $ 710 to $ 730 .

This estimate will be updated as costs continue to be developed.

The majority of the remaining costs will be incurred in 2022.

We expect the costs for actions associated with continuing operations to consist of the following:

approximately $ 220 to $ 225 in severance pay and benefits;

approximately $ 85 in asset impairment and accelerated depreciation;

and approximately $ 405 to $ 420 in implementation costs and other related costs.

The total estimated pre-tax costs for actions associated with continuing operations that have been identified are approximately $ 735 million to $ 740 million and we expect to incur the costs through 2023.

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 $ 230 million in severance pay and benefits;

approximately $ 85 million in asset impairment and accelerated depreciation;

and approximately $ 420 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:

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and Corporate - approximately 25 %.

Of the aggregate $ 710 to $ 730 of pre-tax costs associated with continuing operations, we expect approximately $ 610 to $ 630 will be cash expenditures.

In addition, we expect to invest approximately $ 435 in capital expenditures through 2022, of which we invested $ 401 as of August 1, 2021.

Of the aggregate $ 735 million to $ 740 million of pre-tax costs associated with continuing operations identified to date, we expect approximately $ 635 million to $ 640 million will be cash expenditures.

In addition, we expect to invest approximately $ 445 million in capital expenditures through 2023, of which we invested $ 440 million as of July 31, 2022.

The capital expenditures primarily relate to a U.S.

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thermal plants, optimization of information technology infrastructure and applications and optimization of the Snyder’s-Lance warehouse and distribution network.

A summary of the restructuring activity and related reserves associated with continuing operations at August 1, 2021, is as follows:

Severance Pay and Benefits Implementation Costs and Other Related Costs (4)

A summary of the restructuring activity and related reserves associated with continuing operations at July 31, 2022, is as follows:

(Millions) Severance Pay and Benefits Implementation Costs and Other Related Costs (3)

Asset Impairment/Accelerated Depreciation Other Non-Cash Exit Costs (4)

Total Charges

Accrued balance at July 28, 2019 (1)

2020 charges 9 56 4 — $ 69

2020 cash payments ( 31 )

Accrued balance at August 2, 2020 (1)

2021 charges 6 27 15 5 $ 53

6 27 15 5 $ 53

2021 cash payments

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5 26 — — $ 31

(1) Includes $ 8 of severance pay and benefits recorded in Other liabilities in the Consolidated Balance Sheet.

(2) Includes $ 3 of severance pay and benefits recorded in Other liabilities in the Consolidated Balance Sheet.

(3) Includes $ 1 of severance pay and benefits recorded in Other liabilities in the Consolidated Balance Sheet.

2022 cash payments

Accrued balance at July 31, 2022

_______________________________________

(1) Includes $ 3 million of severance pay and benefits recorded in Other liabilities in the Consolidated Balance Sheet.

(2) Includes $ 1 million of severance pay and benefits recorded in Other liabilities in the Consolidated Balance Sheet.

(3) Includes other costs recognized as incurred that are not reflected in the restructuring reserve in the Consolidated Balance Sheet.

The costs are included in Administrative expenses, Cost of products sold, Marketing and selling expenses, and Research and development expenses in the Consolidated Statements of Earnings.

The costs are included in Administrative expenses, Cost of products sold and Marketing and selling expenses in the Consolidated Statements of Earnings.

(4) Includes non-cash costs that are not reflected in the restructuring reserve in the Consolidated Balance Sheet.

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A summary of the pre-tax costs in Earnings from continuing operations associated with segments is as follows:

2021 Costs Incurred to Date

(Millions) 2022 Costs Incurred to Date

Meals & Beverages $ 2 $ 225

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Total $ 31 $ 725

In addition, in the second quarter of 2021, we recorded a $ 19 deferred tax charge in connection with a legal entity reorganization as part of the continued integration of Snyder's-Lance.

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.

Earnings per Share (EPS)

For the periods presented in the Consolidated Statements of Earnings, the calculations of basic EPS and EPS assuming dilution vary in that the weighted average shares outstanding assuming dilution include the incremental effect of stock options and other share-based payment awards, except when such effect would be antidilutive.

The earnings per share calculation for 2021 and 2020 excludes approximately 1 million stock options and for 2019 excludes approximately 2 million stock options that would have been antidilutive.

The earnings per share calculation for 2022, 2021 and 2020 excludes approximately 1 million stock options that would have been antidilutive.

Pension and Postretirement Benefits

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Accordingly, we sponsor a retiree medical program for eligible retired U.S.

employees and fund applicable retiree medical accounts intended to provide reimbursement for eligible health care

expenses on a tax-favored basis for retirees who satisfy certain eligibility requirements.

employees and fund applicable retiree medical accounts intended to provide reimbursement for eligible health care expenses on a tax-favored basis for retirees who satisfy certain eligibility requirements.

Effective as of January 1, 2019, we no longer sponsor our own retiree medical coverage for substantially all retired U.S.

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employees who retired prior to January 1, 2018, as well as certain eligible retired employees covered by one of our collective bargaining agreements.

We use the fiscal year end as the measurement date for the benefit plans.

Components of net benefit expense (income) were as follows:

2021 2020 2019

Determining net periodic benefit expense (income) is dependent on various actuarial assumptions, including discount rates, expected return on plan assets, compensation increases, turnover rates and health care trend rates.

Actuarial gains and losses are recognized immediately in Other expenses / (income) in the Consolidated Statements of Earnings as of the measurement date, which is our fiscal year end, or more frequently if an interim remeasurement is required.

We use the fair value of plan assets to calculate the expected return on plan assets.

Components of net periodic benefit expense (income) were as follows:

(Millions) 2022 2021 2020

Service cost $ 16 $ 18 $ 19

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Amortization of prior service cost — — —

Recognized net actuarial loss (gain) ( 159 ) 98 120

Settlement charges (gains) ( 38 ) 43 28

Actuarial losses (gains) 80 ( 197 ) 141

Net periodic benefit expense (income) $ 27 $ ( 260 ) $ 91

The components of net periodic benefit expense (income) other than the service cost component associated with continuing operations are included in Other expenses / (income) in the Consolidated Statements of Earnings.

The settlement gains in 2021 and charges in 2020 resulted from the level of lump sum distributions associated with U.S.

and Canadian pension plans.

The settlement charges in 2019 resulted from the level of lump sum distributions associated with a U.S.

pension plan.

Net periodic benefit expense (income) associated with discontinued operations was not material in 2020 and $ 13 in 2019.

The actuarial losses recognized in 2022 were primarily due to losses on plan assets, partially offset by increases in discount rates used to determine the benefit obligation.

The actuarial gains recognized in 2021 were primarily due to higher than anticipated investment gains on plan assets and increases in discount rates used to determine the benefit obligation.

The actuarial losses recognized in 2020 were primarily due to decreases in discount rates used to determine the benefit obligation, partially offset by higher than anticipated investment gains on plan assets.

Net periodic benefit expense (income) associated with discontinued operations was not material in 2020.

Postretirement

2021 2020 2019

(Millions) 2022 2021 2020

Service cost $ — $ — $ 1

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Amortization of prior service credit ( 1 ) ( 5 ) ( 28 )

Recognized net actuarial loss (gain) ( 6 ) 23 14

Actuarial losses (gains) ( 36 ) ( 6 ) 23

Net periodic benefit expense (income) $ ( 34 ) $ ( 7 ) $ 2

The actuarial gains recognized in 2022 and 2021 were primarily due to increases in discount rates used to determine the benefit obligation.

The actuarial losses recognized in 2020 were primarily due to decreases in discount rates used to determine the benefit obligation.

Change in benefit obligation:

Pension Postretirement

2021 2020 2021 2020

(Millions) 2022 2021 2022 2021

Obligation at beginning of year $ 2,186 $ 2,366 $ 222 $ 244

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Other ( 6 ) ( 2 ) — —

Divestitures — ( 105 ) — —

Foreign currency adjustment ( 3 ) 11 — —

Benefit obligation at end of year $ 1,737 $ 2,186 $ 172 $ 222

The actuarial losses (gains) in our pension and postretirement benefit obligations were primarily due to changes in the discount rates used to determine the benefit obligation.

Change in the fair value of pension plan assets:

(Millions) 2022 2021

Fair value at beginning of year $ 2,220 $ 2,120

3 unchanged sentences

Settlements ( 89 ) ( 53 )

Divestitures — ( 86 )

Foreign currency adjustment ( 4 ) 13

2 unchanged sentences

Pension Postretirement

2021 2020 2021 2020

(Millions) 2022 2021 2022 2021

Other assets $ 146 $ 190 $ — $ —

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Amounts recognized in accumulated other comprehensive income (loss) consist of:

Pension Postretirement

(Millions) Pension Postretirement

2022 2021 2022 2021

2 unchanged sentences

The following table provides information for pension plans with projected benefit obligations in excess of plan assets and accumulated benefit obligations in excess of plan assets:

(Millions) 2022 2021

Projected benefit obligation $ 120 $ 156

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Fair value of plan assets $ — $ —

The accumulated benefit obligation for all pension plans was $ 2,159 at August 1, 2021, and $ 2,338 at August 2, 2020.

The accumulated benefit obligation for all pension plans was $ 1.716 billion at July 31, 2022, and $ 2.159 billion at August 1, 2021.

Weighted-average assumptions used to determine benefit obligations at the end of the year:

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Interest crediting rate 4.00 % 4.00 % 4.00 %

The discount rate is established as of our fiscal year-end measurement date.

The discount rate is established as of the measurement date.

In establishing the discount rate, we review published market indices of high-quality debt securities, adjusted as appropriate for duration.

In addition, independent actuaries apply high-quality bond yield curves to the expected benefit payments of the plans.

The expected return on plan assets is a long-term assumption based upon historical experience and expected future performance, considering our current and projected

investment mix.

The expected return on plan assets is a long-term assumption based upon historical experience and expected future performance, considering our current and projected investment mix.

This estimate is based on an estimate of future inflation, long-term projected real returns for each asset class and a premium for active management.

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Unobservable inputs, which are valued based on our estimates of assumptions that market participants would use in pricing the asset or liability.

The following table presents our pension plan assets by asset category at August 1, 2021, and August 2, 2020:

August 1, 2021 Fair Value Measurements at

August 1, 2021 Using

Fair Value Hierarchy Fair Value

August 2, 2020 Fair Value Measurements at

The following table presents our pension plan assets by asset category at July 31, 2022, and August 1, 2021:

July 31, 2022

Fair Value Measurements at

July 31, 2022 Using

Fair Value Hierarchy

August 1, 2021

Fair Value Measurements at

August 1, 2021 Using

Fair Value Hierarchy

Level 1 Level 2 Level 3 Level 1 Level 2 Level 3

(Millions) Level 1 Level 2 Level 3 Level 1 Level 2 Level 3

Short-term investments

19 unchanged sentences

Short-term investments

Commingled funds:

Equities 438 262

Fixed income 117 139

Commingled equity funds 307 438

Commingled fixed income funds 87 117

Real estate 99 87

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Total investments measured at net asset value:

Other items to reconcile to fair value of plan assets

Other items to reconcile to fair value

( 32 ) ( 34 )

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Commingled funds — Investments in commingled funds are not traded in active markets.

Blended commingled funds are invested in both equities and fixed income securities.

Commingled funds are valued based on the net asset values of such funds and are included as a reconciling item to the fair value table.

Other items to reconcile to fair value of plan assets included amounts due for securities sold, amounts payable for securities purchased and other payables.

The following table summarizes the changes in fair value of Level 3 investments for the years ended August 1, 2021, and August 2, 2020:

Real Estate Hedge Funds Total

The following table summarizes the changes in fair value of Level 3 investments for the years ended July 31, 2022, and August 1, 2021:

(Millions) Real Estate Hedge Funds Total

Fair value at August 1, 2021

$ 3 $ 30 $ 33

Actual return on plan assets — 1 1

1 unchanged sentence

Transfers out of Level 3 — — —

Fair value at August 1, 2021 $ 3 $ 30 $ 33

Real Estate Hedge Funds Total

Fair value at July 31, 2022

$ 2 $ 11 $ 13

(Millions) Real Estate Hedge Funds Total

Fair value at August 2, 2020

$ 3 $ 31 $ 34

Actual return on plan assets — 2 2

2 unchanged sentences

Fair value at August 1, 2021

$ 3 $ 30 $ 33

Estimated future benefit payments are as follows:

Pension Postretirement

(Millions) Pension Postretirement

2023 $ 168 $ 20

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employees and provide a matching contribution of 100 % of employee contributions up to 4 % of eligible compensation.

In addition, for employees not eligible to participate in defined benefit plans that we sponsor, we provide a contribution equal to 3 % of eligible compensation regardless of their participation in the 401(k) Retirement Plan.

In addition, for

employees not eligible to participate in defined benefit plans that we sponsor, we provide a contribution equal to 3 % of eligible compensation regardless of their participation in the 401(k) Retirement Plan.

Through December 31, 2019, all Snyder's-Lance U.S.

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As of January 1, 2020, Snyder's-Lance employees were transitioned to the 401(k) Retirement Plan and receive the same contributions under the 401(k) Retirement Plan noted above.

Amounts charged to Costs and expenses of continuing operations were $ 64 in 2021, $ 62 in 2020 and $ 52 in 2019.

Amounts charged to discontinued operations were $ 4 in 2019.

Amounts charged to Costs and expenses of continuing operations were $ 69 million in 2022, $ 64 million in 2021 and $ 62 million in 2020.

We lease warehouse and distribution facilities, office space, manufacturing facilities, equipment and vehicles, primarily through operating leases.

3 unchanged sentences

The components of lease costs were as follows:

(Millions) 2022 2021 2020

Operating lease cost $ 79 $ 80 $ 81

4 unchanged sentences

— ( 2 ) ( 3 )

$ 354 $ 333 $ 291

__________________________________________

(1) Includes labor and other overhead included in our service contracts with embedded leases.

(2) Total lease cost in 2020 included $ 4 related to discontinued operations .

(2) Total lease cost in 2020 included $ 4 million related to discontinued operations .

The following table summarizes the lease amounts recorded in the Consolidated Balance Sheets:

Operating Leases

Balance sheet classification 2021 2020

(Millions) Balance Sheet Classification 2022 2021

ROU assets, net Other assets $ 239 $ 235

2 unchanged sentences

Financing Leases

Balance sheet classification 2021 2020

(Millions) Balance Sheet Classification 2022 2021

ROU assets, net Plant assets, net of depreciation $ 28 $ 29

2 unchanged sentences

Weighted-average lease terms and discount rates were as follows:

August 1, 2021 August 2, 2020

July 31, 2022 August 1, 2021

Operating Finance Operating Finance

2 unchanged sentences

Future minimum lease payments are as follows:

August 1, 2021

Operating Finance

July 31, 2022

(Millions) Operating Finance

2023 $ 66 $ 14

4 unchanged sentences

The following table summarizes cash flow and other information related to leases:

(Millions) 2022 2021

Cash paid for amounts included in the measurement of lease liabilities:

4 unchanged sentences

Finance leases

ROU assets divested with businesses sold:

Operating leases $ — $ 18

Finance leases $ — $ 5

Lease liabilities derecognized upon adoption:

Build-to-suit lease commitment $ — $ 20

Taxes on Earnings

The provision for income taxes on earnings from continuing operations consists of the following:

2021 2020 2019

(Millions) 2022 2021 2020

Income taxes:

3 unchanged sentences

Federal 29 102 ( 12 )

$ 328 $ 174 $ 151

State ( 6 ) 33 4

$ 218 $ 328 $ 174

(Millions) 2022 2021 2020

Earnings from continuing operations before income taxes:

7 unchanged sentences

Tax effect of international items 0.7 0.2 ( 0.3 )

Tax Cuts and Jobs Act - transition tax

State income tax law changes

( 1.0 ) 0.3 0.1

Divestiture impact on deferred taxes — ( 0.9 ) —

5 unchanged sentences

Effective income tax rate 22.4 % 24.6 % 22.7 %

In 2021, we recorded a $ 19 deferred tax charge in connection with a legal entity reorganization as part of the continued integration of Snyder's-Lance.

Deferred tax liabilities and assets of continuing operations and discontinued operations are comprised of the following:

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.

Deferred tax liabilities and assets are comprised of the following:

(Millions) 2022 2021

Depreciation $ 354 $ 352

1 unchanged sentence

Operating lease ROU assets 54 53

Pension 35 45

Deferred tax liabilities 1,322 1,328

8 unchanged sentences

Net deferred tax liability $ 1,072 $ 1,050

At August 1, 2021, our U.S.

subsidiaries had tax loss carryforwards of approximately $ 294 .

Of these carryforwards, $ 27 may be carried forward indefinitely, and $ 267 expire between 2022 and 2038, with the majority expiring after 2028.

At August 1, 2021, deferred tax asset valuation allowances have been established to offset $ 113 of these tax loss carryforwards.

Additionally, as of August 1, 2021, our U.S.

subsidiaries had capital loss carryforwards of approximately $ 477 , all of which were offset by valuation allowances.

The increase in the total capital loss carryforwards in 2021 was primarily due to the sale of the Plum baby food and snacks business.

The net change in the deferred tax asset valuation allowance in 2021 was an increase of $ 20 .

The increase was primarily due to the sale of the Plum baby food and snacks business.

The net change in the deferred tax asset valuation allowance in 2020 was a decrease of $ 305 .

At July 31, 2022, our U.S.

subsidiaries had tax loss carryforwards of approximately $ 259 million.

Of these carryforwards, $ 4 million may be carried forward indefinitely, and $ 255 million expire between 2023 and 2037, with the majority expiring after 2028.

At July 31, 2022, deferred tax asset valuation allowances have been established to offset $ 78 million of these tax loss carryforwards.

Additionally, as of July 31, 2022, our U.S.

subsidiaries had capital loss carryforwards of approximately $ 477 million, all of which were offset by valuation allowances.

The net change in the deferred tax asset valuation allowance in 2022 was a decrease of $ 11 million.

The decrease was primarily due to liquidation of an inactive subsidiary.

The net change in the deferred tax asset valuation allowance in 2021 was an increase of $ 20 million.

The increase was primarily due to the sale of the the Plum baby food and snacks business.

The net change in the deferred tax asset valuation allowance in 2020 was a decrease of $ 305 million.

The decrease was primarily due to the sale of the Arnott's and other international operations.

The net change in the deferred tax asset valuation allowance in 2019 was an increase of $ 294 .

The increase was primarily due to the sale of Bolthouse Farms and the pending sale of the Arnott's and other international operations.

As of August 1, 2021, and August 2, 2020, other deferred tax assets included $ 13 of state tax credit carryforwards related to various states that expire between 2022 and 2031.

As of August 1, 2021, and August 2, 2020, deferred tax asset valuation allowances have been established to offset the $ 13 of state credit carryforwards.

As of August 1, 2021, we had approximately $ 11 of undistributed earnings of foreign subsidiaries which are deemed to be permanently reinvested and for which we have not recognized a deferred tax liability.

As of July 31, 2022, and August 1, 2021, other deferred tax assets included $ 13 million of state tax credit carryforwards related to various states that expire between 2023 and 2025.

As of July 31, 2022, and August 1, 2021, deferred tax asset valuation allowances have been established to offset the $ 13 million of state credit carryforwards.

As of July 31, 2022, we had approximately $ 11 million of undistributed earnings of foreign subsidiaries which are deemed to be permanently reinvested and for which we have not recognized a deferred tax liability.

We estimate that the tax liability that might be incurred if permanently reinvested earnings were remitted to the U.S.

would not be material.

Foreign subsidiary earnings in 2021 are not considered permanently reinvested and we have therefore recognized a deferred tax liability and expense.

Foreign subsidiary earnings in 2021 and thereafter are not considered permanently reinvested and we have therefore recognized a deferred tax liability and expense.

A reconciliation of the activity related to unrecognized tax benefits follows:

2021 2020 2019

(Millions) 2022 2021 2020

Balance at beginning of year $ 22 $ 23 $ 24

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Balance at end of year $ 14 $ 22 $ 23

The amount of unrecognized tax benefits that, if recognized, would impact the annual effective tax rate was $ 18 as of August 1, 2021, and as of August 2, 2020, and $ 17 as of July 28, 2019.

The decrease of unrecognized tax benefits was primarily due to audit settlements.

The amount of unrecognized tax benefits that, if recognized, would impact the annual effective tax rate was $ 12 million as of July 31, 2022, and $ 18 million as of August 1, 2021 and August 2, 2020.

The total amount of unrecognized tax benefits can change due to audit settlements, tax examination activities, statute expirations and the recognition and measurement criteria under accounting for uncertainty in income taxes.

Our accounting policy for interest and penalties attributable to income taxes is to reflect any expense or benefit as a component of our income tax provision.

The total amount of interest and penalties recognized in the Consolidated Statements of Earnings were not material in 2021, 2020, and 2019.

The total amount of interest and penalties recognized in the Consolidated Balance Sheets in Other liabilities was $ 4 as of August 1, 2021, and as of August 2, 2020.

The total amount of interest and penalties recognized in the Consolidated Statements of Earnings was not material in 2022, 2021, and 2020.

The total amount of interest and penalties recognized in the Consolidated Balance Sheets in Other liabilities was $ 4 million as of July 31, 2022, and as of August 1, 2021.

We file income tax returns in the U.S.

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Short-term borrowings consist of the following:

(Millions) 2022 2021

Commercial paper $ 235 $ 37

Debentures — 200

Finance leases 14 11

3 unchanged sentences

The weighted-average interest rate of commercial paper, which consisted of U.S.

borrowings, was 0.22 % as of August 1, 2021, and 2.10 % as of August 2, 2020.

As of August 1, 2021, we issued $ 36 of standby letters of credit.

On November 2, 2020, we entered into a committed revolving credit facility totaling $ 1,850 that matures on November 2, 2023 .

This facility remained unused at August 1, 2021, except for $ 1 of standby letters of credit that we issued under it.

borrowings, was 2.63 % as of July 31, 2022, and 0.22 % as of August 1, 2021.

As of July 31, 2022, we issued $ 32 million of standby letters of credit.

On November 2, 2020, we entered into a committed revolving credit facility totaling $ 1.85 billion scheduled to mature on November 2, 2023 .

On September 27, 2021, we replaced the facility with a new $ 1.85 billion committed revolving facility that matures on September 27, 2026 .

This facility remained unused at July 31, 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 .

1 unchanged sentence

The facility supports our commercial paper program and other general corporate purposes.

In March 2020, we borrowed $ 300 under our previous revolving credit facility and on May 1, 2020, we repaid the borrowings.

In March 2020, we borrowed $ 300 million under our previous revolving credit facility and on May 1, 2020, we repaid the borrowings.

Long-term debt consists of the following:

Type Fiscal Year of Maturity Rate 2021 2020

Notes 2021 Variable $ — $ 400

Notes 2021 3.30 % — 321

Debentures 2021 8.875 % — 200

Notes 2023 2.50 % 450 450

Notes 2023 3.65 % 566 566

Notes 2025 3.95 % 850 850

Notes 2025 3.30 % 300 300

Notes 2028 4.15 % 1,000 1,000

Notes 2030 2.375 % 500 500

Notes 2043 3.80 % 163 163

Notes 2048 4.80 % 700 700

Notes 2050 3.125 % 500 500

(Millions) 2022 2021

2.50 % Notes due August 2, 2022

3.65 % Notes due March 15, 2023

3.95 % Notes due March 15, 2025

3.30 % Notes due March 19, 2025

4.15 % Notes due March 15, 2028

2.375 % Notes due April 24, 2030

3.80 % Notes due August 2, 2042

4.80 % Notes due March 15, 2048

3.125 % Notes due April 24, 2050

Finance leases 16 19

6 unchanged sentences

Principal amounts of long-term debt mature as follows:

$ 1,025 in 2023;

$ 1,152 in 2025;

and a total of $ 2,863 in periods thereafter.

Debt Extinguishment

On January 22, 2020, we completed the redemption of all $ 500 outstanding aggregate principal amount of our 4.25 % Senior Notes due 2021.

On January 24, 2020, we settled tender offers to purchase $ 1,200 in aggregate principal amount of certain senior unsecured debt, comprising $ 329 of 3.30 % Senior Notes due 2021, $ 634 of 3.65 % Senior Notes due 2023, and $ 237 of 3.80 % Senior Notes due 2043.

The consideration for the redemption and the tender offers was $ 1,765 , including $ 65 of premium.

We recognized a loss of $ 75 (including $ 65 of premium, fees and other costs paid with the tender offers and unamortized debt issuance costs), which was recorded in Interest expense in the Consolidated Statement of Earnings.

Thereafter $ 2,863

Debt Extinguishments

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.

On January 22, 2020, we completed the redemption of all $ 500 million outstanding aggregate principal amount of our 4.25 % Senior Notes due 2021.

On January 24, 2020, we settled tender offers to purchase $ 1.2 billion in aggregate principal amount of certain senior unsecured debt, comprising $ 329 million of 3.30 % Senior Notes due 2021, $ 634 million of 3.65 % Senior Notes due 2023, and $ 237 million of 3.80 % Senior Notes due 2043.

The consideration for the redemption and the tender offers was $ 1.765 billion, including $ 65 million of premium.

We recognized a loss of $ 75 million (including $ 65 million of premium, fees and other costs paid with the tender offers and unamortized debt issuance costs), which was recorded in Interest expense in the Consolidated Statement of Earnings.

In addition, we paid accrued and unpaid interest on the purchased notes through the dates of settlement.

Debt Repayments

In March 2021, we repaid our 3.30 % $ 321 notes and floating rate $ 400 notes, and in May 2021, we repaid our 8.875 % $ 200 notes.

In 2020, we also repaid our $ 499 Senior Term Loan due 2021.

In March 2021, we repaid our 3.30 % $ 321 million notes and floating rate $ 400 million notes, and in May 2021, we repaid our 8.875 % $ 200 million notes.

In 2020, we also repaid our $ 499 million Senior Term Loan due 2021.

Debt Issuances

On April 24, 2020, we issued senior notes in an aggregate principal amount of $ 1,000 , consisting of $ 500 aggregate principal amount of notes bearing interest at a fixed rate of 2.375 % per annum, due April 24, 2030, and $ 500 aggregate principal amount of notes bearing interest at a fixed rate of 3.125 % per annum, due April 24, 2050.

On May 1, 2020, we used $ 300 of the net proceeds to repay $ 300 of borrowings outstanding under a revolving credit facility.

The 2.375 % Senior Notes due 2030 and the 3.125 % Senior Notes due 2050 may each be redeemed at the applicable redemption price, in whole or in part, at our option at any time and from time to time prior to January 24, 2030, and October 24, 2049, respectively.

On April 24, 2020, we issued senior notes in an aggregate principal amount of $ 1 billion, consisting of $ 500 million aggregate principal amount of notes bearing interest at a fixed rate of 2.375 % per annum, due April 24, 2030, and $ 500 million aggregate principal amount of notes bearing interest at a fixed rate of 3.125 % per annum, due April 24, 2050.

On May 1, 2020, we used $ 300 million of the net proceeds to repay $ 300 million of borrowings outstanding under a revolving credit facility.

2.375 % Senior Notes due 2030 and the 3.125 % Senior Notes due 2050 may each be redeemed at the applicable redemption price, in whole or in part, at our option at any time and from time to time prior to January 24, 2030, and October 24, 2049, respectively.

Interest on each of the notes is due semi-annually on April 24 and October 24, commencing on October 24, 2020.

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In addition, we are exposed to equity price changes related to certain deferred compensation obligations.

In order to manage these exposures, we follow established risk management policies and procedures, including the use of

derivative contracts such as swaps, rate locks, options, forwards and commodity futures.

In order to manage these exposures, we follow established risk management policies and procedures, including the use of derivative contracts such as swaps, rate locks, options, forwards and commodity futures.

We enter into these derivative contracts for periods consistent with the related underlying exposures, and the contracts do not constitute positions independent of those exposures.

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To mitigate counterparty credit risk, we enter into contracts only with carefully selected, leading, credit-worthy financial institutions, and distribute contracts among several financial institutions to reduce the concentration of credit risk.

We did not have credit-risk-related contingent features in our derivative instruments as of August 1, 2021, or August 2, 2020.

We did not have credit risk-related contingent features in our derivative instruments as of July 31, 2022, or August 1, 2021.

We are also exposed to credit risk from our customers.

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Foreign Currency Exchange Risk

We are exposed to foreign currency exchange risk related to third-party transactions and intercompany transactions, including intercompany debt.

Principal currencies hedged include the Canadian dollar and, prior to the sale of Arnott's and other international operations, the Australian dollar.

We are exposed to foreign currency exchange risk, primarily the Canadian dollar, related to third-party transactions and intercompany transactions.

We utilize foreign exchange forward purchase and sale contracts to hedge these exposures.

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We hedge portions of our forecasted foreign currency transaction exposure with foreign exchange forward contracts for periods typically up to 18 months.

To hedge currency exposures related to intercompany debt, we enter into foreign exchange forward purchase and sale contracts for periods consistent with the underlying debt.

The notional amount of foreign exchange forward contracts accounted for as cash-flow hedges was $ 134 at August 1, 2021, and $ 164 at August 2, 2020.

The notional amount of foreign exchange forward contracts accounted for as cash-flow hedges was $ 140 million as of July 31, 2022, and $ 134 million as of August 1, 2021.

Changes in the fair value on the portion of the derivative included in the assessment of hedge effectiveness of cash-flow hedges are recorded in other comprehensive income (loss), until earnings are affected by the variability of cash flows.

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Any difference between the change in the fair value of the hedge components excluded from the assessment of effectiveness and the amounts recognized in earnings is recorded as a component of other comprehensive income (loss).

The notional amount of foreign exchange forward contracts that are not designated as accounting hedges was $ 13 at August 1, 2021, and $ 19 at August 2, 2020.

The notional amount of foreign exchange forward contracts that are not designated as accounting hedges was $ 13 million as of July 31, 2022, and as of August 1, 2021.

Interest Rate Risk

We manage our exposure to changes in interest rates by optimizing the use of variable-rate and fixed-rate debt and by utilizing interest rate swaps in order to maintain our variable-to-total debt ratio within targeted guidelines.

We manage our exposure to changes in interest rates by optimizing the use of variable-rate and fixed-rate debt and we may utilize interest rate swaps in order to maintain our variable-to-total debt ratio within targeted guidelines.

Receive fixed rate/pay variable rate interest rate swaps are accounted for as fair-value hedges.

Changes in the fair value on the portion of the derivative included in the assessment of hedge effectiveness of a fair-value hedge, along with the gain or loss on the underlying hedged asset or liability, are recorded in current-period earnings.

We manage our exposure to interest rate volatility on future debt issuances by entering into forward starting interest rate swaps or treasury rate lock contracts to lock in the rate on the interest payments related to the anticipated debt issuances.

The contracts are either designated as cash-flow hedging instruments or are undesignated.

Changes in the fair value on the portion of the derivative included in the assessment of hedge effectiveness of cash-flow hedges are recorded in other comprehensive income (loss), and reclassified into Interest expense over the life of the debt.

Changes in the fair value on the portion of the derivative included in the assessment of hedge effectiveness of cash-flow hedges are recorded in Accumulated other comprehensive income (loss), and reclassified into Interest expense over the life of the debt.

The change in fair value on undesignated instruments is recorded in Interest expense.

There were no interest rate swaps or treasury rate lock contracts outstanding as of August 1, 2021, or August 2, 2020.

There were no interest rate swaps outstanding as of July 31, 2022, or August 1, 2021.

Commodity Price Risk

We principally use a combination of purchase orders and various short- and long-term supply arrangements in connection with the purchase of raw materials, including certain commodities and agricultural products.

We also enter into commodity futures, options and swap contracts to reduce the volatility of price fluctuations of wheat, soybean oil, diesel fuel, natural gas, aluminum, cocoa, soybean meal, corn and butter.

We also enter into commodity futures, options and swap contracts to reduce the volatility of price fluctuations of wheat, diesel fuel, natural gas, soybean oil, aluminum, cocoa, corn, soybean meal and butter.

Commodity futures, options and swap contracts are either designated as cash-flow hedging instruments or are undesignated.

We hedge a portion of commodity requirements for periods typically up to 18 months.

The notional amount of commodity contracts designated as cash flow hedges was $ 18 as of August 1, 2021.

There were no commodity contracts designated as cash flow hedges as of August 2, 2020.

The notional amount of commodity contracts designated as cash flow hedges was $ 3 million as of July 31, 2022, and $ 18 million as of August 1, 2021.

The notional amount of commodity contracts not designated as accounting hedges was $ 190 at August 1, 2021, and $ 137 at August 2, 2020.

The notional amount of commodity contracts not designated as accounting hedges was $ 254 million as of July 31, 2022, and $ 190 million as of August 1, 2021.

The change in fair value on undesignated instruments is recorded in Cost of products sold.

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We net settle amounts due under the contract with our counterparty.

The notional amount was approximately $ 38 as of August 1, 2021, and $ 34 as of August 2, 2020.

The notional amount was approximately $ 39 million as of July 31, 2022, and $ 38 million as of August 1, 2021.

The change in fair value on the embedded derivative is recorded in Cost of products sold.

Equity Price Risk

We enter into swap contracts which hedge a portion of exposures relating to certain deferred compensation obligations linked to the total return of our capital stock, the total return of the Vanguard Institutional Index Institutional Plus Shares, and the total return of the Vanguard Total International Stock Index.

Under these contracts, we pay variable interest rates and receive from the counterparty either:

the total return on our capital stock;

the total return of the Standard & Poor's 500 Index, which is expected to approximate the total return of the Vanguard Institutional Index Institutional Plus Shares;

or the total return of the iShares MSCI EAFE Index, which is expected to approximate the total return of the Vanguard Total International Stock Index.

As of June 2021, we no longer hedge our exposure linked to the total return of our capital stock.

These contracts were not designated as hedges for accounting purposes.

We enter into swap contracts which hedge a portion of exposures relating to certain deferred compensation obligations linked to the total return of the Vanguard Extended Market Index Plus Fund, the Vanguard Institutional Index Institutional Plus Fund, the Vanguard Short-Term Bond Index Fund and the Vanguard Total International Stock Index Fund.

Prior to 2022, we had entered into swap contracts which hedged a portion of exposures linked to the total return of our capital stock.

As of July 31, 2022, and August 1, 2021, we no longer hedge our exposure linked to the total return of our capital stock.

These contracts are not designated as hedges for accounting purposes.

Unrealized gains (losses) and settlements are included in Administrative expenses in the Consolidated Statements of Earnings.

We enter into these contracts for periods typically not exceeding 12 months.

The notional amounts of the contracts as of August 1, 2021, and August 2, 2020, were $ 29 and $ 22 , respectively.

The following table summarizes the fair value of derivative instruments on a gross basis as recorded in the Consolidated Balance Sheets as of August 1, 2021, and August 2, 2020:

Balance Sheet Classification 2021 2020

The notional amounts of the contracts as of July 31, 2022, and August 1, 2021, were $ 50 million and $ 29 million, respectively.

The following tables summarize the fair value of derivative instruments on a gross basis as recorded in the Consolidated Balance Sheets as of July 31, 2022, and August 1, 2021:

(Millions) Balance Sheet Classification 2022 2021

Asset Derivatives

Derivatives designated as hedges:

Commodity derivative contracts Other current assets $ 4 $ —

Commodity contracts Other current assets $ 3 $ 4

Foreign exchange forward contracts Other current assets 2 1

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Derivatives not designated as hedges:

Commodity derivative contracts Other current assets $ 49 $ 7

Deferred compensation derivative contracts Other current assets 3 4

Commodity contracts Other current assets $ 20 $ 49

Deferred compensation contracts Other current assets — 3

Total derivatives not designated as hedges $ 20 $ 52

Total asset derivatives $ 25 $ 57

Balance Sheet Classification 2021 2020

(Millions) Balance Sheet Classification 2022 2021

Liability Derivatives

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Derivatives not designated as hedges:

Commodity derivative contracts Accrued liabilities $ — $ 9

Commodity contracts Accrued liabilities $ 30 $ —

Deferred compensation contracts Accrued liabilities 4 —

Total derivatives not designated as hedges $ 34 $ —

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We do not offset the fair values of derivative assets and liabilities executed with the same counterparty that are generally subject to enforceable netting agreements.

However, if we were to offset and record the asset and liability balances of derivatives on a net basis, the amounts presented in the Consolidated Balance Sheets as of August 1, 2021, and August 2, 2020, would be adjusted as detailed in the following table:

Derivative Instrument Gross Amounts Presented in the Consolidated Balance Sheet Gross Amounts Not Offset in the Consolidated Balance Sheet Subject to Netting Agreements Net Amount Gross Amounts Presented in the Consolidated Balance Sheet Gross Amounts Not Offset in the Consolidated Balance Sheet Subject to Netting Agreements Net Amount

However, if we were to offset and record the asset and liability balances of derivatives on a net basis, the amounts presented in the Consolidated Balance Sheets as of July 31, 2022, and August 1, 2021, would be adjusted as detailed in the following table:

(Millions) Gross Amounts Presented in the Consolidated Balance Sheet Gross Amounts Not Offset in the Consolidated Balance Sheet Subject to Netting Agreements Net Amount Gross Amounts Presented in the Consolidated Balance Sheet Gross Amounts Not Offset in the Consolidated Balance Sheet Subject to Netting Agreements Net Amount

Total asset derivatives $ 25 $ ( 17 ) $ 8 $ 57 $ ( 1 ) $ 56

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We are required to maintain cash margin accounts in connection with funding the settlement of open positions for exchange-traded commodity derivative instruments.

A cash margin liability balance of $ 14 at August 1, 2021, and an asset balance of $ 8 at August 2, 2020, were included in Accrued liabilities and Other current assets, respectively, in the Consolidated Balance Sheets.

The following tables show the effect of our derivative instruments designated as cash-flow hedges for the years ended August 1, 2021, August 2, 2020, and July 28, 2019 in other comprehensive income (loss) (OCI) and the Consolidated Statements of Earnings:

A cash margin asset balance of $ 8 million at July 31, 2022, and a liability balance of $ 14 million at August 1, 2021, were included in Other current assets and Accrued liabilities, respectively, in the Consolidated Balance Sheets.

The following tables show the effect of our derivative instruments designated as cash-flow hedges for the years ended July 31, 2022, August 1, 2021, and August 2, 2020 in other comprehensive income (loss) (OCI) and the Consolidated Statements of Earnings:

Total Cash-Flow Hedge

Derivatives Designated as Cash-Flow Hedges 2021 2020 2019

(Millions) 2022 2021 2020

OCI derivative gain (loss) at beginning of year $ ( 5 ) $ ( 8 ) $ ( 11 )

Effective portion of changes in fair value recognized in OCI:

Commodity derivative contracts 4 — —

Commodity contracts 13 4 —

Foreign exchange forward contracts 4 ( 9 ) 3

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Location in Earnings

Commodity contracts Cost of products sold ( 14 ) — —

Foreign exchange forward contracts Cost of products sold 1 6 ( 2 )

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OCI derivative gain (loss) at end of year $ — $ ( 5 ) $ ( 8 )

Based on current valuations, the amount expected to be reclassified from OCI into earnings within the next 12 months is a gain of $ 1 .

Based on current valuations, the amount expected to be reclassified from OCI into earnings within the next 12 months is a gain of $ 4 million.

The following table shows the total amounts of line items presented in the Consolidated Statements of Earnings for the years ended 2022, 2021, and 2020 in which the effects of derivative instruments designated as cash-flow hedges are recorded and the total effect of hedge activity on these line items are as follows:

2022 2021 2020

Cost of products sold Other expenses / (income) Interest expense Earnings (loss) from discontinued operations Cost of products sold Interest expense Earnings (loss) from discontinued operations Cost of products sold Interest expense Earnings (loss) from discontinued operations

(Millions) Cost of products sold Interest expense Cost of products sold Other expenses / (income) Interest expense Cost of products sold Interest expense Earnings (loss) from discontinued operations

Consolidated Statements of Earnings:

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Amount of loss (gain) reclassified from OCI to earnings $ ( 13 ) $ 1 $ 6 $ 1 $ 1 $ ( 2 ) $ 1 $ 1

Amount excluded from effectiveness testing recognized in earnings using an amortization approach $ — $ — $ — $ — $ — $ — $ — $ — $ — $ —

The amount excluded from effectiveness testing recognized in each line item of earnings using an amortization approach was not material in all periods presented.

The following table shows the effects of our derivative instruments not designated as hedges in the Consolidated Statements of Earnings:

Amount of Loss (Gain) Recognized in Earnings on Derivatives

Derivatives Not Designated as Hedges Location of Loss (Gain)

(Millions) Location of Loss (Gain)

Recognized in Earnings 2022 2021 2020

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Foreign exchange forward contracts Other expenses / (income) — — 2

Commodity derivative contracts Cost of products sold ( 55 ) 12 6

Commodity derivative contracts Earnings (loss) from discontinued operations — — ( 1 )

Deferred compensation derivative contracts Administrative expenses ( 8 ) ( 2 ) ( 2 )

Commodity contracts Cost of products sold 8 ( 55 ) 12

Deferred compensation contracts Administrative expenses 3 ( 8 ) ( 2 )

Treasury rate lock contracts Interest expense — — ( 3 )

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Variable Interest Entity

In February 2016, we agreed to make a capital commitment subject to certain qualifications of up to $ 125 to Acre, a limited partnership formed to make venture capital investments in innovative new companies in food and food-related industries.

In February 2016, we agreed to make a capital commitment subject to certain qualifications of up to $ 125 million to Acre, a limited partnership formed to make venture capital investments in innovative new companies in food and food-related industries.

Acre was managed by its general partner, Acre Ventures GP, LLC, which was independent of us.

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Acre was a VIE.

We entered into an agreement to sell our interest in Acre on April 26, 2020, and completed the sale on May 8, 2020, for $ 30 resulting in a loss of $ 45 recognized in the third quarter of 2020 as a result of the pending sale.

We entered into an agreement to sell our interest in Acre on April 26, 2020, and completed the sale on May 8, 2020, for $ 30 million resulting in a loss of $ 45 million recognized in the third quarter of 2020 as a result of the pending sale.

We consolidated Acre and accounted for the third party ownership as a noncontrolling interest.

Through the date of the sale, we funded $ 86 of the capital commitment.

Through the date of the sale, we funded $ 86 million of the capital commitment.

Acre elected the fair value option to account for qualifying investments to more appropriately reflect the value of the investments in the financial statements.

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Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following table presents our financial assets and liabilities that are measured at fair value on a recurring basis as of August 1, 2021, and August 2, 2020, consistent with the fair value hierarchy:

2021 Fair Value Measurements at

August 1, 2021 Using

The following tables present our financial assets and liabilities that are measured at fair value on a recurring basis as of July 31, 2022, and August 1, 2021, consistent with the fair value hierarchy:

July 31, 2022 Fair Value Measurements at

July 31, 2022 Using

Fair Value Hierarchy Fair Value

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Fair Value Hierarchy

Level 1 Level 2 Level 3 Level 1 Level 2 Level 3

(Millions) Level 1 Level 2 Level 3 Level 1 Level 2 Level 3

Foreign exchange forward contracts (1)

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Total assets at fair value $ 27 $ 2 $ 21 $ 4 $ 60 $ 24 $ 35 $ 1

2021 Fair Value Measurements at

August 1, 2021 Using

July 31, 2022 Fair Value Measurements at

July 31, 2022 Using

Fair Value Hierarchy Fair Value

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Fair Value Hierarchy

Level 1 Level 2 Level 3 Level 1 Level 2 Level 3

(Millions) Level 1 Level 2 Level 3 Level 1 Level 2 Level 3

Foreign exchange forward contracts (1)

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30 6 24 — — — — —

Deferred compensation derivative contracts (3)

4 — 4 — — — — —

Deferred compensation obligation (4)

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Level 3 is based on unobservable inputs in which there is little or no market data, which requires management’s own assumptions within an internally developed model.

(3) Based on LIBOR and equity index swap rates.

(3) Based on equity index swap rates.

(4) Based on the fair value of the participants’ investments.

The following table summarizes the changes in fair value of Level 3 investments for the years ended August 1, 2021, and August 2, 2020:

2021 2020 (1)

The following table summarizes the changes in fair value of Level 3 assets for the years ended July 31, 2022, and August 1, 2021:

(Millions) 2022 2021

Fair value at beginning of year $ 1 $ 2

Gains (losses) recognized in earnings 6 ( 45 )

Purchases — 1

Sales — ( 29 )

Gains (losses) 18 6

Settlements ( 15 ) ( 7 )

Fair value at end of year $ 4 $ 1

__________________________________

(1) Primarily represented investments in equity securities that were not readily marketable and were accounted for under the fair value option.

The investments were funded by Acre, a limited partnership in which we were the sole limited partner.

Fair value was based on analyzing recent transactions and transactions of comparable companies, and the discounted cash flow method.

In addition, allocation methods, including the option pricing method, were used in distributing fair value among various equity holders according to rights and preferences.

We entered into an agreement to sell our interest in Acre on April 26, 2020, and completed the sale on May 8, 2020.

See Note 14 for additional information.

Fair Value of Financial Instruments

The carrying values of cash and cash equivalents, accounts receivable and accounts payable approximate fair value.

There were no cash equivalents at August 1, 2021, and $ 157 at August 2, 2020.

There were cash equivalents of $ 27 million at July 31, 2022, and none at August 1, 2021.

Cash equivalents represent fair value as these highly liquid investments have an original maturity of three months or less.

Fair value of cash equivalents is based on Level 2 inputs.

The fair value of short- and long-term debt was $ 5,613 at August 1, 2021, and $ 6,995 at August 2, 2020.

The carrying value was $ 5,058 at August 1, 2021, and $ 6,196 at August 2, 2020.

The fair value of short- and long-term debt was $ 4.637 billion at July 31, 2022, and $ 5.613 billion at August 1, 2021.

The carrying value was $ 4.81 billion at July 31, 2022, and $ 5.058 billion at August 1, 2021.

The fair value of long-term debt is principally estimated using Level 2 inputs based on quoted market prices or pricing models using current market rates.

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Share Repurchase Programs

In March 2017, the Board authorized a strategic share repurchase program to purchase up to $ 1,500 (March 2017 program).

The March 2017 program had no expiration date, but could be suspended or discontinued at any time.

In addition to the March 2017 program, we had a separate Board authorization to purchase shares to offset the impact of dilution from shares issued under our stock compensation programs (anti-dilutive program).

We suspended all of our share repurchases, including our anti-dilutive program, as of the second quarter of 2018.

Approximately $ 1,296 remained available under the March 2017 program as of August 1, 2021.

In June 2021, the Board authorized a new anti-dilutive share repurchase program of up to $ 250 (June 2021 program) to offset the impact of dilution from shares issued under our stock compensation programs.

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 June 2021 program may be made in open-market or privately negotiated transactions.

In 2021, we repurchased 1 million shares at a cost of $ 36 .

Approximately $ 214 remained available under the June 2021 program as of August 1, 2021.

In September 2021, the Board approved a new strategic share repurchase program of up to $ 500 (September 2021 program).

The September 2021 program has no expiration date, but may be suspended or discontinued at any time.

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.

The September 2021 program replaces the suspended March 2017 program, which has been cancelled.

In 2022, we repurchased 3.8 million shares at a cost of $ 167 million.

Of this amount, $ 42 million was used to repurchase shares pursuant to our June 2021 program and $ 125 million was used to repurchase share pursuant to our September 2021 program.

As of July 31, 2022, approximately $ 172 million remained available under the June 2021 program and approximately $ 375 million remained under the September 2021 program.

In 2021, we repurchased approximately 1 million shares at a cost of $ 36 million.

Stock-based Compensation

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In 2015, shareholders approved the 2015 Long-Term Incentive Plan, which authorized the issuance of 13 million shares.

Approximately 6 million of these shares were

shares that were currently available under the 2005 plan and were incorporated into the 2015 Plan upon approval by shareholders.

Approximately 6 million of these shares were shares that were currently available under the 2005 plan and were incorporated into the 2015 Plan upon approval by shareholders.

Awards under Long-Term Incentive Plans may be granted to employees and directors.

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Based upon our ranking in the performance peer group after the relevant three-year performance period, a recipient of TSR performance restricted stock/units may earn a total award ranging from 0 % to 200 % of the initial grant.

Awards of EPS performance restricted stock/units were earned based upon our achievement of annual earnings per share goals and vested over the relevant three-year period.

Awards of EPS performance restricted stock/units granted in 2022 will be earned upon the achievement of our adjusted EPS compound annual growth rate goal (EPS CAGR performance restricted stock/units), measured over a three-year period.

A recipient of EPS CAGR performance restricted stock/units may earn a total award ranging from 0 % to 200 % of the initial grant.

Awards of EPS

performance restricted stock/units granted prior to 2022 were earned based upon our achievement of annual earnings per share goals and vested over the relevant three-year period.

During the three-year vesting period, a recipient of EPS performance restricted stock/units earned a total award of either 0 % or 100 % of the initial grant.

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A recipient of strategic performance restricted stock units earned a total award ranging from 0 % to 200 % of the initial grant.

Awards of FCF performance restricted stock units will be earned based upon the achievement of free cash flow (defined as Net cash provided by operating activities less capital expenditures and certain investing and financing activities) compared to annual operating plan objectives over a three-year period.

Awards of FCF performance restricted stock units were earned based upon the achievement of free cash flow (defined as Net cash provided by operating activities less capital expenditures and certain investing and financing activities) compared to annual operating plan objectives over a three-year period.

An annual objective was established each fiscal year for three consecutive years.

Performance against these objectives is averaged at the end of the three-year period to determine the number of underlying units that will vest at the end of the three years.

A recipient of FCF performance restricted stock units may earn a total award ranging from 0 % to 200 % of the initial grant.

Performance against these objectives was averaged at the end of the three-year period to determine the number of underlying units that vested at the end of the three years.

A recipient of FCF performance restricted stock units earned a total award ranging from 0 % to 200 % of the initial grant.

Awards of time-lapse restricted stock/units will vest ratably over the three-year period.

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In 2019, we also granted certain options that vest at the end of a three-year period.

We have not issued any stock options in 2021 or 2020.

In 2021, we issued time-lapse restricted stock units, unrestricted stock and TSR performance restricted stock units.

We last issued stock options in 2019.

In 2022, we issued time-lapse restricted stock units, unrestricted stock, TSR performance restricted stock units and EPS CAGR performance restricted stock units.

We last issued FCF performance restricted stock units in 2019, EPS performance restricted stock units in 2018, strategic performance restricted stock units in 2014 and special performance restricted units in 2015.

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Total pre-tax stock-based compensation expense and tax-related benefits recognized in Earnings from continuing operations were as follows:

2021 2020 2019

Total pre-tax stock-based compensation expense $ 64 $ 59 $ 50

Tax-related benefits $ 12 $ 11 $ 8

Total pre-tax stock-based compensation expense and tax-related benefits recognized in Earnings (loss) from discontinued operations were as follows:

(Millions) 2022 2021 2020

Total pre-tax stock-based compensation expense $ 59 $ 64 $ 59

Tax-related benefits $ 10 $ 12 $ 11

The following table summarizes stock option activity as of August 1, 2021:

In 2020, total pre-tax stock-based compensation expense recognized in Earnings (loss) from discontinued operations was $ 2 million.

The tax-related benefits were not material.

The following table summarizes stock option activity as of July 31, 2022:

Options Weighted-

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Outstanding at August 1, 2021

1,372 $ 45.61

Granted — $ —

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Terminated — $ —

Outstanding at August 1, 2021 1,372 $ 45.61 5.9 $ 4

Exercisable at August 1, 2021 1,079 $ 48.36 5.5 $ 2

Outstanding at July 31, 2022

1,297 $ 46.04 4.8 $ 6

Exercisable at July 31, 2022

1,297 $ 46.04 4.8 $ 6

The total intrinsic value of options exercised during 2022 and 2020 was $ 1 million and $ 2 million, respectively.

The total intrinsic value of options exercised during 2021 was not material.

The total intrinsic value of options exercised during 2020 was $ 2 .

No options were exercised during 2019.

We measure the fair value of stock options using the Black-Scholes option pricing model.

The expected term of options granted was based on the weighted average time of vesting and the end of the contractual term.

We utilized this simplified method as we do not have sufficient historical exercise data to provide a reasonable basis upon which to estimate the expected term.

The weighted-average assumptions and grant-date fair values for grants in 2019 were as follows:

Risk-free interest rate 2.79 %

Expected dividend yield 3.84 %

Expected volatility 25.28 %

Expected term 6.1 years

Grant-date fair value $ 6.27

We expense stock options on a straight-line basis over the vesting period, except for awards issued to retirement eligible participants, which we expense on an accelerated basis.

As of August 1, 2021, total remaining unearned compensation related to nonvested stock options was less than $ 1 , which will be amortized over the weighted-average remaining service period of less than 1 year.

The following table summarizes time-lapse restricted stock units, EPS performance restricted stock units and FCF performance restricted stock units as of August 1, 2021:

We measured the fair value of stock options using the Black-Scholes option pricing model.

We expensed stock options on a straight-line basis over the vesting period, except for awards issued to retirement eligible participants, which we expensed on an accelerated basis.

As of January 2022, compensation related to stock options was fully expensed.

The following table summarizes time-lapse restricted stock units, EPS CAGR performance restricted stock units and FCF performance restricted stock units as of July 31, 2022:

Units Weighted-

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Nonvested at August 1, 2021

1,814 $ 45.63

Granted 1,543 $ 41.96

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Forfeited ( 236 ) $ 44.38

Nonvested at August 1, 2021 1,814 $ 45.63

We determine the fair value of time-lapse restricted stock units, EPS performance restricted stock units and FCF performance restricted stock units based on the quoted price of our stock at the date of grant.

We expense time-lapse restricted stock units on a straight-line basis over the vesting period, except for awards issued to retirement-eligible participants, which we expense on an accelerated basis.

We expensed EPS performance restricted stock units on a graded-vesting basis, except for awards issued to retirement-eligible participants, which we expensed on an accelerated basis.

Nonvested at July 31, 2022

1,946 $ 43.88

We determine the fair value of time-lapse restricted stock units, EPS CAGR performance restricted stock units, FCF performance restricted stock units and EPS performance restricted stock units based on the quoted price of our stock at the date of grant.

We expense time-lapse restricted stock units and EPS CAGR performance restricted stock units on a straight-line basis over the vesting period, except for awards issued to retirement-eligible participants, which we expense on an accelerated basis.

There were 297 thousand EPS CAGR performance target grants outstanding at July 31, 2022 with a weighted-average grant-date fair value of $ 41.50 .

We expensed FCF performance restricted stock units over the requisite service period of each objective.

As of October 31, 2021, there were no FCF performance target grants outstanding.

We expensed EPS performance restricted stock units on a graded vesting basis, expect for awards issued to retirement-eligible participants, which we expensed on an accelerated basis.

As of November 1, 2020, there were no EPS performance target grants outstanding.

We expense FCF performance restricted stock units over the requisite service period of each objective.

In 2019, we issued approximately 388 thousand FCF performance restricted stock units.

As of November 1, 2020, we have granted all of the issued FCF performance restricted stock units, which are included in the table above.

There were 239 thousand FCF performance target grants outstanding at August 1, 2021, with a weighted-average grant date fair value of $ 44.10 .

The actual number of EPS performance restricted stock units and FCF performance restricted stock units that vest will depend on actual performance achieved.

The actual number of EPS CAGR performance restricted stock units, FCF performance restricted stock units and EPS performance restricted stock units, that vest will depend on actual performance achieved.

We estimate expense based on the number of awards expected to vest.

As of August 1, 2021, total remaining unearned compensation related to nonvested time-lapse restricted stock units and FCF performance restricted units was $ 30 , which will be amortized over the weighted-average remaining service period of 1.6 years.

The fair value of restricted stock units vested during 2021, 2020 and 2019 was $ 38 , $ 41 and $ 26 , respectively.

As of July 31, 2022, total remaining unearned compensation related to nonvested time-lapse restricted stock units and EPS CAGR performance restricted units was $ 37 million, which will be amortized over the weighted-average remaining service period of 1.7 years.

In the first quarter of 2022, recipients of FCF performance restricted stock units earned 167 % of the initial grants based upon the average of actual performance achieved during a three-year period ended August 1, 2021.

As a result, approximately 158 thousand additional shares were awarded.

The fair value of restricted stock units vested during 2022, 2021 and 2020 was $ 50 million, $ 38 million and $ 41 million, respectively.

The weighted-average grant-date fair value of the restricted stock units granted during 2021 and 2020 was $ 48.37 and $ 46.82 , respectively.

In the first quarter of 2022, recipients of FCF performance restricted stock units will receive a 167 % payout based upon the average of actual performance achieved during a three-year period ended August 1, 2021.

The following table summarizes TSR performance restricted stock units as of August 1, 2021:

The following table summarizes TSR performance restricted stock units as of July 31, 2022:

Units Weighted-

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Nonvested at August 1, 2021

1,222 $ 53.60

Granted 331 $ 45.54

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Forfeited ( 222 ) $ 48.85

Nonvested at August 1, 2021 1,222 $ 53.60

Nonvested at July 31, 2022

1,153 $ 55.63

We estimated the fair value of TSR performance restricted stock units at the grant date using a Monte Carlo simulation.

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We recognize compensation expense on a straight-line basis over the service period, except for awards issued to retirement eligible participants, which we expense on an accelerated basis.

As of August 1, 2021, total remaining unearned compensation related to TSR performance restricted stock units was $ 25 , which will be amortized over the weighted-average remaining service period of 1.6 years.

As of July 31, 2022, total remaining unearned compensation

related to TSR performance restricted stock units was $ 15 million, which will be amortized over the weighted-average remaining service period of 1.5 years.

In the first quarter of 2022, recipients of TSR performance restricted stock units earned 75 % of the initial grants based upon our TSR ranking in a performance peer group during a three-year period ended July 30, 2021.

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In the first quarter of 2020, recipients of TSR performance restricted stock units earned 0 % of the initial grants based upon our TSR ranking in a performance peer group during a three-year period ended July 26, 2019.

The fair value of TSR performance restricted stock units vested during 2021 was $ 11 .

The weighted-average grant-date fair value of the TSR performance restricted stock units granted during 2020 and 2019 was $ 63.06 and $ 31.29 , respectively.

The fair value of TSR performance restricted stock units vested during 2022 and 2021 was $ 8 million and $ 11 million, respectively.

The grant-date fair value of the TSR performance restricted stock units granted during 2021 and 2020 was $ 54.93 and $ 63.06 , respectively.

In the first quarter of 2023, recipients of TSR performance restricted stock units will receive a 100 % payout based upon our TSR ranking in a performance peer group during a three-year period ended July 29, 2022.

The excess tax benefits of $ 1 in 2021 and 2020 and the excess tax deficiencies of $ 6 in 2019, on the exercise of stock options and vested restricted stock were presented as cash flows from operating activities.

Cash received from the exercise of stock options was $ 2 and $ 23 for 2021 and 2020, respectively, and is reflected in cash flows from financing activities in the Consolidated Statements of Cash Flows.

The tax benefits on the exercise of stock options in 2022, 2021, and 2020 were not material.

Cash received from the exercise of stock options was $ 3 million, $ 2 million and $ 23 million for 2022, 2021, and 2020, respectively, and is reflected in cash flows from financing activities in the Consolidated Statements of Cash Flows.

Commitments and Contingencies

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We establish liabilities for litigation and regulatory loss contingencies when information related to the loss contingencies shows both that it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated.

It is possible that some matters could require us to pay damages or make other expenditures or establish accruals in amounts that could not be reasonably estimated as of August 1, 2021.

It is possible that some matters could require us to pay damages or make other expenditures or establish accruals in amounts that could not be reasonably estimated as of July 31, 2022.

While the potential future charges could be material in a particular quarter or annual period, based on information currently known by us, we do not believe any such charges are likely to have a material adverse effect on our consolidated results of operations or financial condition.

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We guarantee approximately 4,800 bank loans made to independent contractor distributors by third-party financial institutions for the purchase of distribution routes.

The maximum potential amount of the future payments under existing guarantees we could be required to make is $ 488 as of August 1, 2021.

The maximum potential amount of the future payments under existing guarantees we could be required to make is $ 500 million as of July 31, 2022.

Our guarantees are indirectly secured by the distribution routes.

We do not expect that we will be required to make material guarantee payments as a result of defaults on the bank loans guaranteed.

The amounts recognized as of August 1, 2021, and August 2, 2020, were not material.

The amounts recognized as of July 31, 2022, and August 1, 2021, were not material.

We have provided certain standard indemnifications in connection with divestitures, contracts and other transactions.

Certain indemnifications have finite expiration dates.

Liabilities recognized based on known exposures related to such matters were not material at August 1, 2021, and August 2, 2020.

Liabilities recognized based on known exposures related to such matters were not material at July 31, 2022, and August 1, 2021.

Supplemental Financial Statement Data

Balance Sheets

(Millions) 2022 2021

Accounts receivable

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Subtotal $ 490 $ 544

(Millions) 2022 2021

Raw materials, containers and supplies $ 390 $ 321

Finished products 856 612

$ 1,246 $ 933

(Millions) 2022 2021

Land $ 74 $ 75

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$ 2,343 $ 2,370

____________________________________

(1) Depreciation expense was $ 296 million in 2022, $ 275 million in 2021 and $ 285 million in 2020.

Buildings are depreciated over periods ranging from 7 to 45 years.

Machinery and equipment are depreciated over periods generally ranging from 2 to 20 years.

(Millions) 2022 2021

Operating lease ROU assets, net of amortization $ 239 $ 235

Pension 146 190

(Millions) 2022 2021

Accrued liabilities

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Operating lease liabilities 62 54

Other 119 116

(Millions) 2022 2021

Other liabilities

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Unrecognized tax benefits 15 20

____________________________________

(1) Depreciation expense was $ 275 in 2021, $ 285 in 2020 and $ 389 in 2019.

Depreciation expense associated with discontinued operations was $ 74 in 2019.

Buildings are depreciated over periods ranging from 7 to 45 years.

Machinery and equipment are depreciated over periods generally ranging from 2 to 20 years.

Statements of Earnings

2021 2020 2019

(Millions) 2022 2021 2020

Other expenses / (income)

Amortization of intangible assets $ 41 $ 42 $ 43

Impairment of intangible assets (1)

Net periodic benefit expense (income) other than the service cost ( 23 ) ( 285 ) 73

Pension settlement charges (gains) ( 38 ) 43 28

Investment losses (1)

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____________________________________

(1) See Note 3 for additional information.

(2) 2020 includes a loss of $ 45 related to Acre.

(1) 2020 includes a loss of $ 45 million related to Acre.

See Note 14 for additional information.

(3) In 2021, we recognized a loss of $ 11 on the sale of the Plum baby food and snacks business.

In 2020, we recognized a loss of $ 64 on the sale of the European chips business.

(2) In 2021, we recognized a loss of $ 11 million on the sale of the Plum baby food and snacks business.

In 2020, we recognized a loss of $ 64 million on the sale of the European chips business.

See Note 3 for additional information.

(3) Included in Marketing and selling expenses.

(5) In 2020, we recognized a loss of $ 75 (including $ 65 of premium, fees and other costs paid with the tender offers and unamortized debt issuance costs).

(4) In 2022, we recognized a loss of $ 4 million (including $ 3 million of premium and other costs) on the extinguishment of debt.

In 2020, we recognized a loss of $ 75 million (including $ 65 million of premium, fees and other costs paid with the tender offers and unamortized debt issuance costs).

See Note 12 for additional information.

Statements of Cash Flows

2021 2020 2019

(Millions) 2022 2021 2020

Cash Flows from Operating Activities

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Income taxes paid $ 196 $ 212 $ 222

Non-cash Activity

Build-to-suit lease commitment $ — $ — $ 20

Management’s Report on Internal Control Over Financial Reporting

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Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

The Company’s management assessed the effectiveness of the Company’s internal control over financial reporting as of August 1, 2021.

The Company’s management assessed the effectiveness of the Company’s internal control over financial reporting as of July 31, 2022.

In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control — Integrated Framework (2013) .

Based on this assessment using those criteria, management concluded that the Company’s internal control over financial reporting was effective as of August 1, 2021.

The effectiveness of the Company’s internal control over financial reporting as of August 1, 2021 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report, which appears on the next page.

Based on this assessment using those criteria, management concluded that the Company’s internal control over financial reporting was effective as of July 31, 2022.

The effectiveness of the Company’s internal control over financial reporting as of July 31, 2022 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report, which appears on the next page.

President and Chief Executive Officer

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Stanley Polomski

Vice President and Controller

Senior Vice President and Controller

(Principal Accounting Officer)

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Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of Campbell Soup Company and its subsidiaries (the "Company") as of August 1, 2021 and August 2, 2020, and the related consolidated statements of earnings, comprehensive income, equity, and cash flows for each of the three years in the period ended August 1, 2021, including the related notes and schedule of valuation and qualifying accounts for each of the three years in the period ended August 1, 2021 appearing on page 89 (collectively referred to as the "consolidated financial statements").

We also have audited the Company's internal control over financial reporting as of August 1, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of August 1, 2021 and August 2, 2020, and the results of its operations and its cash flows for each of the three years in the period ended August 1, 2021 in conformity with accounting principles generally accepted in the United States of America.

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of August 1, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Change in Accounting Principle

As discussed in Note 2 to the consolidated financial statements, the Company changed the manner in which it accounts for leases in 2020.

We have audited the accompanying consolidated balance sheets of Campbell Soup Company and its subsidiaries (the "Company") as of July 31, 2022 and August 1, 2021, and the related consolidated statements of earnings, of comprehensive income, of equity, and of cash flows for each of the three years in the period ended July 31, 2022, including the related notes and schedule of valuation and qualifying accounts for each of the three years in the period ended July 31, 2022 appearing on page 84 (collectively referred to as the "consolidated financial statements").

We also have audited the Company's internal control over financial reporting as of July 31, 2022, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of July 31, 2022 and August 1, 2021, and the results of its operations and its cash flows for each of the three years in the period ended July 31, 2022 in conformity with accounting principles generally accepted in the United States of America.

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of July 31, 2022, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Basis for Opinions

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Indefinite-lived Intangible Assets Impairment Test for Certain Trademarks

As described in Notes 1 and 5 to the consolidated financial statements, the Company’s indefinite-lived intangible assets (trademarks) were $2,549 million as of August 1, 2021.

Of the carrying value of all indefinite-lived trademarks, $620 million related to the Snyder's of Hanover trademark, $350 million related to the Lance trademark, $292 million related to the Pace trademark, and $280 million related to the Pacific Foods trademark.

As described in Notes 1 and 5 to the consolidated financial statements, the Company’s indefinite-lived intangible assets (trademarks) were $2.549 billion as of July 31, 2022.

Of the carrying value of all indefinite-lived trademarks, $350 million related to the Lance trademark, $318 million related to the Kettle Brand trademark, $292 million related to the Pace trademark, and $280 million related to the Pacific Foods trademark.

Management conducts a test at least annually for impairment, or when circumstances indicate that the carrying amount of the asset may not be recoverable.

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Management determines fair value based on discounted cash flow analyses that include significant management assumptions such as revenue growth rates, weighted average costs of capital, and assumed royalty rates.

The principal considerations for our determination that performing procedures relating to the indefinite-lived intangible assets impairment test for certain trademarks is a critical audit matter are the significant amount of judgment by management when developing the estimates related to the Snyder's of Hanover , Lance , Pace, and Pacific Foods trademarks, which in turn led to a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating management's significant assumptions related to (i) revenue growth rates, weighted average costs of capital, and assumed royalty rates for the Snyder's of Hanover , Pace, and Pacific Foods trademarks and (ii) weighted average cost of capital and assumed royalty rate for the Lance trademark.

In addition, the audit effort involved the use of professionals with specialized skill and knowledge.

The principal considerations for our determination that performing procedures relating to the indefinite-lived intangible assets impairment test for certain trademarks is a critical audit matter are (i) the high degree of auditor judgment and subjectivity involved in applying procedures relating to the fair value estimates of certain trademarks due to the significant judgment by management when developing these estimates, (ii) the significant audit effort in performing procedures and evaluating management’s significant assumptions related to revenue growth rates, weighted average costs of capital, and assumed royalty rates for the Pace and Pacific Foods trademarks and the weighted average costs of capital and assumed royalty rates for the Kettle Brand and Lance trademarks, and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls relating to management’s trademark impairment tests.

These procedures also included, among others, (i) testing management’s process for developing the fair value estimates;

(ii) evaluating the appropriateness of the discounted cash flow analyses;

(iii) testing the completeness, accuracy, and relevance of underlying data used in the analyses;

and (iv) evaluating the significant assumptions used by management related to revenue growth rates, weighted average costs of capital, and assumed royalty rates for the Snyder’s of Hanover , Pace, and Pacific Foods trademarks and weighted average cost of capital and assumed royalty rate for the Lance trademark .

Evaluating management’s assumptions related to revenue growth rates, weighted average costs of capital and assumed royalty rates involved evaluating whether the assumptions used by management were reasonable considering (i) the current and past performance associated with the trademarks, (ii) the consistency with external market and industry data, and (iii) whether these assumptions were consistent with evidence obtained in other areas of the audit.

Professionals with specialized skill and knowledge were used to assist in the evaluation of the Company’s discounted cash flow model and evaluating the reasonableness of the weighted average costs of capital and royalty rates assumptions.

These procedures included testing the effectiveness of controls relating to management’s trademark impairment test.

These procedures also included, among others (i) testing management’s process for developing the fair value estimates, (ii) evaluating the appropriateness of the discounted cash flow analyses, (iii) testing the completeness and accuracy of underlying data used in the discounted cash flow analyses, and (iv) evaluating the reasonableness of the significant assumptions used by management related to revenue growth rates, weighted average costs of capital, and assumed royalty rates for the Pace and Pacific Foods trademarks and the weighted average costs of capital and assumed royalty rates for the Kettle Brand and Lance trademarks.

Evaluating management’s assumptions related to revenue growth rates involved evaluating whether the assumptions used by management were reasonable considering (i) the current and past performance associated with the trademarks, (ii) the consistency with external market and industry data, and (iii) whether these assumptions were consistent with evidence obtained in other areas of the audit.

Professionals with specialized skill and knowledge were used to assist in the evaluation of the appropriateness of the Company’s discounted cash flow analyses and evaluating the reasonableness of the weighted average costs of capital and royalty rates significant assumptions.

/s/ PricewaterhouseCoopers LLP

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data