What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-03-08 compared with 2022-12-07 · 156 added, 67 removed, 210 unchanged (52% of the section changed)

12 unchanged sentences

We will continue to take actions to mitigate a portion of this inflationary pressure, but we do not expect such benefits will fully offset the incremental costs in 2023.

While we as a North American focused company have no direct exposure to Russia and Ukraine, we have experienced shortages in materials and increased costs for transportation, energy and raw materials due in part to the negative impact of the Russia-Ukraine conflict on the global economy.

While we as a North American focused company have no direct exposure to Russia and Ukraine, we have experienced volatility in costs due, in part, to the negative impact of the Russia-Ukraine conflict on the global economy.

To date, the conflict between Russia and Ukraine has not had any material impact on our business, financial condition or results of operations.

1 unchanged sentence

The ultimate impact depends on the severity and duration of the pandemic, including the emergence and spread of new COVID-19 variants and resurgences, the continued availability and effectiveness of vaccines and actions taken by government authorities and other third parties in response to the pandemic.

We will continue to evaluate the extent to which the COVID-19 pandemic will impact our business, consolidated results of operations and financial condition.

We will continue to evaluate the extent to which the COVID-19 pandemic impacts our business, consolidated results of operations and financial condition.

Net periodic pension and postretirement benefit income excluding any actuarial losses or gains is estimated to be approximately $45 million lower in 2023, subject to the impact of interim remeasurements.

2 unchanged sentences

This Summary of Results provides significant highlights from the discussion and analysis that follows.

• Net sales increased 15% in the quarter to $2.575 billion due to inflation-driven pricing and sales allowances, partially offset by volume declines.

• Net sales increased 12% in the quarter to $2.485 billion due to favorable inflation-driven net price realization, partially offset by volume/mix declines.

• Gross profit, as a percent of sales, was 30.5% in 2023 compared to 30.3% in the prior-year quarter.

The increase was primarily due to inflation-driven pricing actions, supply chain productivity improvements, lower promotional spending and lower restructuring-related costs, partially offset by higher cost inflation and other supply chain costs as well as unfavorable volume/mix.

The increase was primarily due to favorable net price realization and supply chain productivity improvements, partially offset by higher cost inflation and other supply chain costs as well as unfavorable volume/mix.

• Earnings per share were $.77 in 2023, compared to $.70 a year ago.

The current and prior-year quarter included expenses of $.03 per share from items impacting comparability as discussed below.

The current quarter included expenses of $.03 per share and the prior-year quarter included gains of $.01 per share from items impacting comparability as discussed below.

Net Earnings attributable to Campbell Soup Company

1 unchanged sentence

• We implemented several cost savings initiatives in recent years.

In the first quarter of 2023, we recorded implementation costs and other related costs of $3 million in Administrative expenses ($.01 per share) related to these initiatives.

In the first quarter of 2022, we recorded implementation costs and other related costs of $2 million in Administrative expenses and $2 million in Cost of products sold (aggregate impact of $3 million after tax, or $.01 per share) related to these initiatives.

In the second quarter of 2023, we recorded Restructuring charges of $9 million and implementation costs and other related costs of $5 million in Administrative expenses (aggregate impact of $10 million after tax, or $.03 per share) related to these initiatives.

Year-to-date in 2023, we recorded Restructuring charges of $9 million and implementation costs and other related costs of $8 million in Administrative expenses (aggregate impact of $13 million after tax, or $.04 per share) related to these initiatives.

In the second quarter of 2022, we recorded implementation costs and other related costs of $3 million in Administrative expenses and $2 million in Cost of products sold (aggregate impact of $4 million after tax, or $.01 per share) related to these initiatives.

Year-to-date in 2022, we recorded implementation costs and other related costs of $5 million in Administrative expenses and $4 million in Cost of products sold (aggregate impact of $7 million after tax, or $.02 per share) related to these initiatives.

See Note 6 to the Consolidated Financial Statements and "Restructuring Charges and Cost Savings Initiatives" for additional information;

• In the first quarter of 2023, we recognized actuarial losses in Other expenses / (income) of $15 million ($11 million after tax, or $.04 per share).

In the first quarter of 2022, we recognized actuarial losses in Other expenses / (income) of $6 million ($5 million after tax, or $.02 per share).

The actuarial losses related to interim remeasurements of certain pension plans due to lump sum distributions that exceeded or are expected to exceed service and interest costs resulting in settlement accounting for the plans;

• In the first quarter of 2023, we recognized gains in Cost of products sold of $5 million ($4 million after tax, or $.01 per share) associated with unrealized mark-to-market adjustments on outstanding undesignated commodity hedges.

In the first quarter of 2022, we recognized losses in Cost of products sold of $3 million ($2 million after tax, or $.01 per share) associated with unrealized mark-to-market adjustments on outstanding undesignated commodity hedges.

• In the second quarter of 2023, we recognized actuarial gains in Other expenses / (income) of $6 million ($4 million after tax, or $.01 per share).

Year-to-date in 2023, we recognized actuarial losses in Other expenses / (income) of $9 million ($7 million after tax, or $.02 per share).

In the second quarter of 2022, we recognized actuarial gains in Other expenses / (income) of $10 million ($8 million after tax, or $.03 per share).

Year-to-date in 2022, we recognized actuarial gains in Other expenses / (income) of $4 million ($3 million after tax, or $.01 per share).

The actuarial gains and losses related to interim remeasurements of certain pension plans due to lump sum distributions that exceeded or are expected to exceed service and interest costs resulting in settlement accounting for the plans;

• In the second quarter of 2023, we recognized losses in Cost of products sold of $4 million ($3 million after tax, or $.01 per share) associated with unrealized mark-to-market adjustments on outstanding undesignated commodity hedges.

Year-to-date in 2022, we recognized losses in Cost of products sold of $3 million ($2 million after tax, or $.01 per share) associated with unrealized mark-to-market adjustments on outstanding undesignated commodity hedges.

The items impacting comparability are summarized below:

Three Months Ended

October 30, 2022 October 31, 2021

January 29, 2023 January 30, 2022

(Millions, except per share amounts) Earnings

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Restructuring charges, implementation costs and other related costs $ (10) $ (.03) $ (4) $ (.01)

Pension actuarial losses (11) (.04) (5) (.02)

Commodity mark-to-market gains (losses) 4 .01 (2) (.01)

Pension actuarial gains 4 .01 8 .03

Commodity mark-to-market losses (3) (.01) — —

Impact of items on Net earnings (1)

2 unchanged sentences

(1) Sum of the individual amounts may not add due to rounding.

Six Months Ended

January 29, 2023 January 30, 2022

(Millions, except per share amounts) Earnings

Net earnings attributable to Campbell Soup Company $ 529 $ 1.76 $ 473 $ 1.56

Restructuring charges, implementation costs and other related costs $ (13) $ (.04) $ (7) $ (.02)

Pension actuarial gains (losses) (7) (.02) 3 .01

Commodity mark-to-market losses — — (2) (.01)

Impact of items on Net earnings (1)

$ (20) $ (.07) $ (6) $ (.02)

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(1) Sum of the individual amounts may not add due to rounding.

Net earnings attributable to Campbell Soup Company were $232 million ($.77 per share) in the current quarter, compared to $212 million ($.70 per share) in the year-ago quarter.

After adjusting for items impacting comparability, earnings increased reflecting an improved gross profit, partially offset by higher marketing and selling expenses, a higher effective tax rate and higher other expenses.

After adjusting for items impacting comparability, earnings increased reflecting an improved gross profit, partially offset by higher marketing and selling expenses, higher other expenses, higher administrative expenses and a higher effective tax rate.

Net earnings attributable to Campbell Soup Company were $529 million ($1.76 per share) in the six-month period this year, compared to $473 million ($1.56 per share) in the year-ago period.

After adjusting for items impacting comparability, earnings increased reflecting an improved gross profit, partially offset by higher marketing and selling expenses, higher other expenses, a higher effective tax rate and higher administrative expenses.

Earnings per share benefited from a reduction in the weighted average diluted shares outstanding.

FIRST-QUARTER DISCUSSION AND ANALYSIS

SECOND-QUARTER DISCUSSION AND ANALYSIS

An analysis of net sales by reportable segment follows:

Three Months Ended

(Millions) October 30, 2022 October 31, 2021 % Change

(Millions) January 29, 2023 January 30, 2022 % Change

Meals & Beverages $ 1,408 $ 1,275 10

2 unchanged sentences

An analysis of percent change of net sales by reportable segment follows:

Meals & Beverages Snacks

Volume and mix (4)% 2% (2)%

Net price realization (1)

Currency (1) — —

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(1) Includes revenue reductions from trade promotion and consumer coupon redemption programs.

In Meals & Beverages, sales increased 10% primarily due to increases in U.S.

retail products, including U.S.

soup, Prego pasta sauces and Pace Mexican sauces, as well as gains in foodservice.

Favorable net price realization was partially offset by modest volume/mix declines.

Sales of U.S.

soup increased 7% primarily due to increases in ready-to-serve soups and condensed soups.

In Snacks, sales increased 15% driven by sales of our power brands, which increased 20%.

Sales increased due to increases in cookies and crackers, primarily Goldfish crackers and Pepperidge Farm cookies, and in salty snacks, primarily Snyder’s of Hanover pretzels, Snack Factory pretzel crisps and Kettle Brand potato chips.

Sales benefited from favorable net price realization and volume/mix increases lapping significant supply constraints in the prior year.

Gross profit, defined as Net sales less Cost of products sold, increased by $90 million in 2023 from 2022.

As a percent of sales, gross profit was 30.5% in 2023 and 30.3% in 2022.

The 20 basis-point increase in gross profit margin was due to the following factors:

Margin Impact

Net price realization 1,020

Productivity improvements 280

Cost inflation, supply chain costs and other factors (1)

Volume/mix (2)

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(1) Includes a 10 basis-point impact from the change in unrealized mark-to-market adjustments on outstanding undesignated commodity hedges.

(2) Includes the impact of operating leverage.

Marketing and Selling Expenses

Marketing and selling expenses as a percent of sales were 8.7% in 2023 compared to 8.9% in 2022.

Marketing and selling expenses increased 10% in 2023 from 2022.

The increase was primarily due to higher advertising and consumer promotion expense (approximately 8 points) and higher selling expenses (approximately 5 points), partially offset by increased benefits from cost savings initiatives (approximately 4 points).

The increase in advertising and consumer promotion expense was due in part to moderated levels in the prior year from supply constraints.

Administrative Expenses

Administrative expenses as a percent of sales were 6.5% in 2023 compared to 6.7% in 2022.

Administrative expenses increased 10% in 2023 from 2022.

The increase was primarily due to higher general administrative costs and inflation (approximately 6 points), higher benefit-related costs (approximately 3 points) and higher incentive compensation (approximately 3 points), partially offset by lower expenses related to the settlement of certain legal claims (approximately 3 points).

Other Expenses / (Income)

Other expenses / (income) were $0 million in 2023 compared to other income of $19 million in 2022.

Other expenses / (income) in 2023 included pension actuarial gains of $6 million.

Other income in 2022 included pension actuarial gains of $10 million.

Excluding these amounts, the remaining change was primarily due to lower net periodic pension and postretirement benefit income in the current year.

Operating Earnings

Segment operating earnings increased 19% in 2023 from 2022.

An analysis of operating earnings by segment follows:

Three Months Ended

(Millions) January 29, 2023 January 30, 2022 % Change

Meals & Beverages $ 249 $ 213 17

Snacks 150 121 24

Corporate income (expense) (40) (11)

Restructuring charges (1)

Earnings before interest and taxes $ 350 $ 323

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(1) See Note 6 to the Consolidated Financial Statements for additional information on restructuring charges.

Operating earnings from Meals & Beverages increased 17%.

The increase was primarily due to higher gross profit, partially offset by higher marketing and selling expenses.

Gross profit margin increased slightly due to favorable net price realization and supply chain productivity improvements, partially offset by higher cost inflation and other supply chain costs as well as unfavorable volume/mix.

Operating earnings from Snacks increased 24%.

The increase was primarily due to higher gross profit, partially offset by higher marketing and selling expenses.

Gross profit margin increased due to favorable net price realization and supply chain productivity improvements, partially offset by higher cost inflation and other supply chain costs.

Corporate expense in 2023 included costs of $5 million related to costs savings initiatives, unrealized mark-to-market losses on outstanding undesignated commodity hedges of $4 million and pension actuarial gains of $6 million.

Corporate expense in 2022 included costs of $5 million related to cost savings initiatives and pension actuarial gains of $10 million.

Excluding these amounts, the remaining increase was primarily due to lower net periodic pension and postretirement benefit income in the current year and higher administrative expenses.

Interest Expense

Interest expense of $45 million in 2023 was comparable to 2022.

Taxes on Earnings

The effective tax rate was 23.9% in 2023 and 23.5% in 2022.

The increase in the effective tax rate was primarily due to the impact of state tax law changes in 2022.

SIX-MONTH DISCUSSION AND ANALYSIS

An analysis of net sales by reportable segment follows:

Six Months Ended

(Millions) January 29, 2023 January 30, 2022 % Change

Meals & Beverages $ 2,863 $ 2,541 13

Snacks 2,197 1,904 15

$ 5,060 $ 4,445 14

An analysis of percent change of net sales by reportable segment follows:

Meals & Beverages Snacks

Volume and mix (2)% —% (1)%

Price and sales allowances 15 18 16

Decreased / (increased) promotional spending (1)

Net price realization (1)

Currency (1) — —

__________________________________________

(1) Represents revenue reductions from trade promotion and consumer coupon redemption programs.

(1) Includes revenue reductions from trade promotion and consumer coupon redemption programs.

(2) Sum of the individual amounts does not add due to rounding.

In Meals & Beverages, sales increased 15% primarily due to increases across U.S.

In Meals & Beverages, sales increased 13% primarily due to increases in U.S.

retail products, including U.S.

soup and Prego pasta sauces, as well as gains in foodservice.

Inflation-driven pricing and sales allowances and lower levels of

promotional spending were partially offset by volume declines.

Favorable net price realization was partially offset by volume/mix declines.

Sales of U.S.

soup increased 11% due to increases in ready-to-serve soups, condensed soups and broth.

soup increased 9% primarily due to increases in ready-to-serve soups and condensed soups.

In Snacks, sales increased 15% driven by sales of our power brands, which increased 21%.

Sales increased due to increases in cookies and crackers, primarily Goldfish crackers, and in salty snacks, primarily Snyder’s of Hanover pretzels and Kettle Brand and Cape Cod potato chips.

Inflation-driven pricing and sales allowances were partly offset by volume declines and increased promotional spending relative to moderated levels in the prior year.

Sales benefited from favorable net price realization.

Gross profit, defined as Net sales less Cost of products sold, increased by $202 million in 2023 from 2022.

2 unchanged sentences

Margin Impact

Price and sales allowances 1,130

Net price realization 1,090

Productivity improvements 250

Lower level of promotional spending 10

Lower restructuring-related costs 10

2 unchanged sentences

__________________________________________

(1) Includes an estimated positive margin impact of a 30 basis-point benefit from the change in unrealized mark-to-market adjustments on outstanding undesignated commodity hedge and 10 basis points from the benefit of cost savings initiatives, which were more than offset by cost inflation and other factors.

(1) Includes an estimated positive margin impact of 10 basis points from the benefit of cost savings initiatives and a 10 basis-point benefit from the change in unrealized mark-to-market adjustments on outstanding undesignated commodity hedges, which was more than offset by cost inflation and other factors.

(2) Includes the impact of operating leverage.

Marketing and Selling Expenses

Marketing and selling expenses as a percent of sales were 7.8% in 2023 compared to 7.6% in 2022.

Marketing and selling expenses as a percent of sales were 8.3% in 2023 and 2022.

Marketing and selling expenses increased 14% in 2023 from 2022.

4 unchanged sentences

Administrative expenses increased 6% in 2023 from 2022.

The increase was primarily due to higher general administrative costs and inflation (approximately 9 points), partially offset by lower expenses related to the settlement of certain legal claims (approximately 8 points).

The increase was primarily due to higher general administrative costs and inflation (approximately 8 points) and higher incentive compensation (approximately 3 points), partially offset by lower expenses related to the settlement of certain legal claims (approximately 6 points).

Other Expenses / (Income)

1 unchanged sentence

Other expenses in 2023 included pension actuarial losses of $9 million.

Other income in 2022 included pension actuarial losses of $6 million.

Other income in 2022 included pension actuarial gains of $4 million.

Excluding these amounts, the remaining change was primarily due to lower net periodic pension and postretirement benefit income in the current year.

2 unchanged sentences

An analysis of operating earnings by segment follows:

Three Months Ended

(Millions) October 30, 2022 October 31, 2021 % Change

Six Months Ended

(Millions) January 29, 2023 January 30, 2022 % Change

Meals & Beverages $ 580 $ 493 18

7 unchanged sentences

The increase was primarily due to higher gross profit, partially offset by higher marketing and selling expenses.

Gross profit margin increased due to the impact of inflation-driven pricing actions, supply chain productivity improvements and lower levels of promotional spending, partially offset by higher cost inflation and other supply chain costs as well as unfavorable volume/mix.

Gross profit margin increased due to favorable net price realization and supply chain productivity improvements, partially offset by higher cost inflation and other supply chain costs as well as unfavorable volume/mix.

Operating earnings from Snacks increased 22%.

The increase was primarily due to higher gross profit and lower administrative expenses, partially offset by higher marketing and selling expenses.

Gross profit margin declined due to higher cost inflation and other supply chain costs as well as unfavorable volume/mix and higher levels of promotional spending, partially offset by the impact of inflation-driven pricing actions and supply chain productivity improvements.

Corporate expense in 2023 included pension actuarial losses of $15 million, costs of $3 million related to costs savings initiatives and unrealized mark-to-market gains on outstanding undesignated commodity hedges of $5 million.

Corporate expense in 2022 included pension actuarial losses of $6 million, costs of $4 million related to cost savings initiatives and unrealized mark-to-market losses on outstanding undesignated commodity hedges of $3 million.

Excluding these amounts, the remaining increase was primarily due to lower net periodic pension and postretirement benefit income in the current year.

The increase was primarily due to higher gross profit, partially offset by higher marketing and selling expenses.

Gross profit margin declined due to higher cost inflation and other supply chain costs as well as unfavorable volume/mix, partially offset by favorable net price realization and supply chain productivity improvements.

Corporate expense in 2023 included pension actuarial losses of $9 million and costs of $8 million related to costs savings initiatives.

Corporate expense in 2022 included costs of $9 million related to cost savings initiatives, unrealized mark-to-market losses on outstanding undesignated commodity hedges of $3 million and pension actuarial gains of $4 million.

Excluding these amounts, the remaining increase was primarily due to lower net periodic pension and postretirement benefit income in the current year and higher administrative expenses.

Interest Expense

Interest expense of $47 million in 2023 is comparable to 2022.

Interest expense of $92 million in 2023 was comparable to 2022.

Taxes on Earnings

The effective tax rate was 23.9% in 2023 and 21.9% in 2022.

The increase in the effective tax rate was primarily due to the favorable resolution of several tax matters in 2022.

The increase in the effective tax rate was primarily due to the benefit from the favorable resolution of several tax matters and state tax law changes in 2022.

Restructuring Charges and Cost Savings Initiatives

7 unchanged sentences

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.

In the second quarter of 2023, we announced plans to consolidate our Snacks offices in Charlotte, North Carolina, and Norwalk, Connecticut, into our headquarters in Camden, New Jersey.

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 recognized in the Consolidated Statements of Earnings related to these initiatives is as follows:

Three Months Ended

Three Months Ended Six Months Ended

(Millions, except per share amounts)

October 30, 2022 October 31, 2021 Recognized as of October 30, 2022

January 29, 2023 January 30, 2022 January 29, 2023 January 30, 2022 Recognized as of January 29, 2023

Restructuring charges $ 9 $ — $ 9 $ — $ 273

7 unchanged sentences

A summary of the pre-tax costs associated with these initiatives is as follows:

(Millions) Recognized as of October 30, 2022

(Millions) Recognized as of January 29, 2023

Severance pay and benefits

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We expect the costs for actions that have been identified to date to consist of the following:

approximately $230 million in severance pay and benefits;

approximately $245 million to $250 million in severance pay and benefits;

approximately $130 million in asset impairment and accelerated depreciation;

5 unchanged sentences

Of the aggregate $860 million to $880 million of pre-tax costs identified to date, we expect approximately $690 million to $710 million will be cash expenditures.

In addition, we expect to invest approximately $450 million in capital expenditures, of which we invested $440 million as of October 30, 2022.

We expect to invest in substantially all of the capital expenditures through 2023.

The capital expenditures primarily relate to a U.S.

warehouse optimization project, improvement of quality, safety and cost structure across the Snyder’s-Lance manufacturing network, implementation of our existing SAP enterprise-resource planning system for Snyder's-Lance, transition of production within our Meals & Beverages manufacturing network, optimization of information technology infrastructure and applications and optimization of the Snyder’s-Lance warehouse and distribution network.

In addition, we expect to invest approximately $600 million in capital expenditures through 2025, of which we invested $441 million as of January 29, 2023.

The capital expenditures primarily relate to optimization of production within our Meals & Beverages manufacturing network, a U.S.

warehouse optimization project, improvement of quality, safety and cost structure across the Snyder’s-Lance manufacturing network, implementation of our existing SAP enterprise-resource planning system for Snyder's-Lance, enhancements to our headquarters in Camden, New Jersey, optimization of information technology infrastructure and applications and optimization of the Snyder’s-Lance warehouse and distribution network.

We expect to fund the costs through cash flows from operations and short-term borrowings.

We expect the initiatives, once all phases are implemented, to generate annual ongoing savings of approximately $1 billion by the end of 2025.

As of October 30, 2022, we have generated total program-to-date pre-tax savings of $860 million.

As of January 29, 2023, we have generated total program-to-date pre-tax savings of $870 million.

Segment operating results do not include restructuring charges, implementation costs and other related costs because we evaluate segment performance excluding such charges.

A summary of the pre-tax costs associated with segments is as follows:

October 30, 2022

(Millions) Three Months Ended Costs Incurred to Date

January 29, 2023

(Millions) Three Months Ended Six Months Ended Costs Incurred to Date

Meals & Beverages $ — $ — $ 225

Snacks 10 10 331

Corporate 4 7 186

10 unchanged sentences

Current assets are less than current liabilities as a result of our level of current maturities of long-term debt and short-term borrowings and our focus to lower core working capital requirements.

We had negative working capital of $729 million as of October 30, 2022, and $923 million as of July 31, 2022.

Total debt maturing within one year was $858 million as of October 30, 2022, and $814 million as of July 31, 2022.

We had negative working capital of $612 million as of January 29, 2023, and $923 million as of July 31, 2022.

Total debt maturing within one year was $578 million as of January 29, 2023, and $814 million as of July 31, 2022.

Capital expenditures were $155 million in 2023 and $129 million in 2022.

Capital expenditures are expected to total approximately $325 million in 2023.

Capital expenditures in the first three months of 2023 included chip and cracker capacity expansion for our Snacks business and a new manufacturing line for our Meals & Beverages business.

Capital expenditures in the first six months of 2023 included chip and cracker capacity expansion for our Snacks business and a new manufacturing line for our Meals & Beverages business.

In Snacks, we have a direct-store-delivery distribution model that uses independent contractor distributors.

2 unchanged sentences

Dividend payments were $226 million in 2023 and $228 million in 2022.

The regular quarterly dividend paid on our capital stock was $.37 per share in both the first quarter of 2023 and 2022.

On September 21, 2022, the Board of Directors declared a regular quarterly dividend of $.37 per share payable on October 31, 2022 to shareholders of record at the close of business on October 6, 2022.

The regular quarterly dividend paid on our capital stock was $.37 per share in both the second quarter of 2023 and 2022.

On November 30, 2022, the Board of Directors declared a regular quarterly dividend of $.37 per share payable on January 30, 2023 to shareholders of record at the close of business on January 5, 2023.

On March 1, 2023, the Board of Directors declared a regular quarterly dividend of $.37 per share payable on May 1, 2023 to shareholders of record at the close of business on April 6, 2023.

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.

4 unchanged sentences

Repurchases under the September 2021 program may be made in open-market or privately negotiated transactions.

We repurchased 859 thousand shares at a cost of $41 million in 2023 pursuant to our June 2021 program.

As of October 30, 2022, approximately $131 million remained available under the June 2021 program and approximately $375 million remained available under the September 2021 program.

We repurchased 1.298 million shares at a cost of $66 million in 2023 pursuant to our June 2021 program.

As of January 29, 2023, approximately $106 million remained available under the June 2021 program and approximately $375 million remained available under the September 2021 program.

We repurchased approximately 1.5 million shares at a cost of $65 million in 2022.

See Note 13 to the Consolidated Financial Statements and “Unregistered Sales of Equity Securities and Use of Proceeds” for additional information.

As of October 30, 2022, we had $858 million of short-term borrowings due within one year, $280 million of which was comprised of commercial paper borrowings.

As of October 30, 2022, we issued $30 million of standby letters of credit.

As of January 29, 2023, we had $578 million of short-term borrowings due within one year, none of which was comprised of commercial paper borrowings.

As of January 29, 2023, we issued $29 million of standby letters of credit.

On September 27, 2021, we entered into a committed revolving credit facility totaling $1.85 billion scheduled to mature on September 27, 2026.

The facility remained unused at October 30, 2022, except for $1 million of standby letters of credit that we issued under it.

The facility remained unused at January 29, 2023, 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.

3 unchanged sentences

On November 15, 2022, we entered into a delayed draw term loan credit agreement (the DDTL Credit Agreement) totaling up to $500 million scheduled to mature on November 15, 2025.

Loans under the DDTL Credit Agreement will bear interest at

the rates specified in the DDTL Credit Agreement, which vary based on the type of loan and certain other conditions.

Loans under the DDTL Credit Agreement will bear interest at the rates specified in the DDTL Credit Agreement, which vary based on the type of loan and certain other conditions.

The DDTL Credit Agreement contains customary representations and warranties, affirmative and negative 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 DDTL Credit Agreement) of not less than 3.25:1.00, and events of default for credit facilities of this type.

We anticipate using any of the proceeds of the loans under the DDTL Credit Agreement to refinance our existing $566 million Notes with a maturity date of March 15, 2023.

We anticipate using $500 million of the proceeds of the loans under the DDTL Credit Agreement to refinance our existing $566 million Notes with a maturity date of March 15, 2023.

We are in compliance with the covenants contained in our credit facilities and debt securities.

48 unchanged sentences

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-Q

Item 2. Management’s Discussion and Analysis