What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-06-07 compared with 2023-03-08 · 119 added, 98 removed, 268 unchanged (45% of the section changed)

8 unchanged sentences

We operate in a highly competitive industry and experience competition in all of our categories.

On May 30, 2023, we sold our Emerald nuts business for $40 million, subject to certain post-closing adjustments.

The results of the business through the date of sale are reflected within the Snacks reportable segment.

See Note 17 to the Consolidated Financial Statements for additional information.

Business Trends

7 unchanged sentences

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.

Net periodic pension and postretirement benefit income excluding any actuarial losses or gains is estimated to be approximately $45 million lower in 2023.

The decrease in 2023 is due to increases in discount rates used to determine the benefit obligations and a decline in the market value of plan assets.

1 unchanged sentence

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

• 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.

• Net sales increased 5% in the quarter to $2.229 billion.

Favorable inflation-driven net price realization was partially offset by expected volume/mix declines, which were driven by lapping prior year retailer inventory rebuild as well as lower volume consumption due to elasticities.

• Gross profit, as a percent of sales, was 30.0% in 2023 compared to 31.2% in the prior-year quarter.

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.

The decrease was primarily due to unfavorable volume/mix, with favorable net price realization and supply chain productivity improvements more than offsetting higher cost inflation and other supply chain costs.

• Earnings per share were $.53 in 2023, compared to $.62 a year ago.

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.

The current quarter included expenses of $.15 per share and the prior-year quarter included expenses of $.08 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 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.

In the third quarter of 2023, we recorded Restructuring charges of $6 million and implementation costs and other related costs of $13 million in Administrative expenses, $12 million in Cost of products sold and $2 million in Research and development expenses (aggregate impact of $24 million after tax, or $.08 per share) related to these initiatives.

Year-to-date in 2023, we recorded Restructuring charges of $15 million and implementation costs and other related costs of $21 million in Administrative expenses, $12 million in Cost of products sold and $2 million in Research and development expenses (aggregate impact of $37 million after tax, or $.12 per share) related to these initiatives.

In the third quarter of 2022, we recorded implementation costs and other related costs of $5 million in Administrative expenses and $1 million in Cost of products sold (aggregate impact of $5 million after tax, or $.02 per share) related to these initiatives.

Year-to-date in 2022, we recorded implementation costs and other related costs of $10 million in Administrative expenses and $5 million in Cost of products sold (aggregate impact of $12 million after tax, or $.04 per share) related to these initiatives.

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

• 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).

• In the third quarter of 2023, we recognized actuarial losses in Other expenses / (income) of $17 million ($13 million after tax, or $.04 per share).

Year-to-date in 2023, we recognized actuarial losses in Other expenses / (income) of $26 million ($20 million after tax, or $.07 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.

In the third quarter of 2022, we recognized actuarial losses in Other expenses / (income) of $16 million ($12 million after tax, or $.04 per share).

Year-to-date in 2022, we recognized actuarial losses in Other expenses / (income) of $12 million ($9 million after tax, or $.03 per share).

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 third quarter of 2023, we recognized losses in Cost of products sold of $9 million ($7 million after tax, or $.02 per share) associated with unrealized mark-to-market adjustments on outstanding undesignated commodity hedges.

Year-to-date in 2023, we recognized losses in Cost of products sold of $9 million ($7 million after tax, or $.02 per share) associated with unrealized mark-to-market adjustments on outstanding undesignated commodity hedges.

In the third quarter of 2022, we recognized losses in Cost of products sold of $5 million ($4 million after tax, or $.01 per share) associated with unrealized mark-to-market adjustments on outstanding undesignated commodity hedges.

Year-to-date in 2022, we recognized losses in Cost of products sold of $8 million ($6 million after tax, or $.02 per share) associated with unrealized mark-to-market adjustments on outstanding undesignated commodity hedges;

• In the third quarter of 2022, we recorded a loss in Interest expense of $4 million ($3 million after tax, or $.01 per share) on the extinguishment of debt.

The items impacting comparability are summarized below:

Three Months Ended

January 29, 2023 January 30, 2022

April 30, 2023 May 1, 2022

(Millions, except per share amounts) Earnings

1 unchanged sentence

Restructuring charges, implementation costs and other related costs $ (24) $ (.08) $ (5) $ (.02)

Pension actuarial gains 4 .01 8 .03

Pension actuarial losses (13) (.04) (12) (.04)

Commodity mark-to-market losses (7) (.02) (4) (.01)

Loss on debt extinguishment — — (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

Nine Months Ended

April 30, 2023 May 1, 2022

(Millions, except per share amounts) Earnings

1 unchanged sentence

Restructuring charges, implementation costs and other related costs $ (37) $ (.12) $ (12) $ (.04)

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

Pension actuarial losses (20) (.07) (9) (.03)

Commodity mark-to-market losses (7) (.02) (6) (.02)

Loss on debt extinguishment — — (3) (.01)

Impact of items on Net earnings $ (64) $ (.21) $ (30) $ (.10)

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

__________________________________________

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

Net earnings attributable to Campbell Soup Company were $160 million ($.53 per share) in the current quarter, compared to $188 million ($.62 per share) in the year-ago quarter.

After adjusting for items impacting comparability, earnings decreased reflecting higher other expenses and a higher effective tax rate as higher gross profit more than offset higher administrative expenses and higher marketing and selling expenses.

Other expenses increased as net periodic pension and postretirement benefit income excluding any actuarial losses was $12 million ($9 million after tax, or $.03 per share) lower in 2023.

Net earnings attributable to Campbell Soup Company were $689 million ($2.29 per share) in the nine-month period this year, compared to $661 million ($2.18 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, 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.

SECOND-QUARTER DISCUSSION AND ANALYSIS

Net periodic pension and postretirement benefit income excluding any actuarial losses was $37 million ($28 million after tax, or $.09 per share) lower in 2023.

THIRD-QUARTER DISCUSSION AND ANALYSIS

An analysis of net sales by reportable segment follows:

Three Months Ended

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

(Millions) April 30, 2023 May 1, 2022 % Change

Meals & Beverages $ 1,108 $ 1,131 (2)

2 unchanged sentences

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

Meals & Beverages Snacks

Meals & Beverages (2)

Volume and mix (11)% (3)% (7)%

3 unchanged sentences

(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.

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

In Meals & Beverages, sales decreased 2% primarily due to declines in U.S.

soup and the impact of currency, partially offset by gains in foodservice.

The price driven in-market growth was more than offset by an expected decline in volume/mix driven by lapping prior year retailer inventory rebuild as well as lower volume consumption due to elasticities and increased competitive pressure.

The retailer inventory impact was most pronounced in U.S.

soup, which had a sales decline of 11% in comparison to relatively flat in-market performance.

In Snacks, sales increased 12% driven by sales of our power brands, which increased 16%.

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.

Sales increased due to increases in cookies and crackers, primarily Goldfish crackers and Lance sandwich crackers, and in salty snacks, primarily Kettle Brand

potato chips, Snack Factory pretzel crisps, Cape Cod potato chips and Snyder’s of Hanover pretzels.

Sales benefited from favorable net price realization, partially offset by modest volume/mix declines.

Gross profit, defined as Net sales less Cost of products sold, increased by $3 million in 2023 from 2022.

As a percent of sales, gross profit was 30.0% in 2023 and 31.2% in 2022.

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

The 120 basis-point decrease 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)

Higher restructuring-related costs (50)

Net price realization 880

Productivity improvements 320

__________________________________________

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

Includes the impact of a 50 basis-point benefit in 2022 from the settlement of an insurance claim.

(2) Includes the impact of operating leverage.

2 unchanged sentences

Marketing and selling expenses increased 3% 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.

The increase was primarily due to higher selling expenses (approximately 5 points), partially offset by increased benefits from cost savings initiatives (approximately 3 points).

Advertising and consumer promotion expense declined slightly.

Administrative Expenses

1 unchanged sentence

Administrative expenses increased 11% 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).

The increase was primarily due to higher costs associated with cost savings initiatives (approximately 5 points), higher general administrative costs and inflation (approximately 5 points), higher incentive compensation (approximately 2 points) and higher benefit-related costs (approximately 2 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.

Other expenses were $23 million in 2023 compared to other expenses of $10 million in 2022.

Other expenses / (income) in 2023 included pension actuarial losses of $17 million.

Other expenses in 2022 included pension actuarial losses of $16 million.

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

3 unchanged sentences

Three Months Ended

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

(Millions) April 30, 2023 May 1, 2022 % Change

Meals & Beverages $ 182 $ 220 (17)

5 unchanged sentences

(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 Meals & Beverages decreased 17%.

The decrease was primarily due to lower gross profit with part of the decline due to lapping an insurance settlement in the prior year.

Gross profit margin decreased due to unfavorable

volume/mix, with favorable net price realization and supply chain productivity improvements largely offsetting higher cost inflation and other supply chain costs.

Operating earnings from Snacks increased 41%.

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.

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

Gross profit margin increased due to favorable net price realization and supply chain productivity improvements more than offsetting higher cost inflation and other supply chain costs as well as unfavorable volume/mix.

Corporate expense in 2023 included costs of $27 million related to costs savings initiatives, pension actuarial losses of $17 million and unrealized mark-to-market losses on outstanding undesignated commodity hedges of $9 million.

Corporate expense in 2022 included pension actuarial losses of $16 million, costs of $6 million related to cost savings initiatives and unrealized mark-to-market losses on outstanding undesignated commodity hedges of $5 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.

Interest expense of $47 million in 2023 decreased from $51 million in 2022.

The decline was primarily due to a loss on extinguishment of debt of $4 million in the prior-year quarter.

Taxes on Earnings

The effective tax rate was 23.1% in 2023 and 23.0% 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

NINE-MONTH DISCUSSION AND ANALYSIS

An analysis of net sales by reportable segment follows:

Six Months Ended

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

Nine Months Ended

(Millions) April 30, 2023 May 1, 2022 % Change

Meals & Beverages $ 3,971 $ 3,672 8

8 unchanged sentences

(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 8% primarily due to increases in U.S.

3 unchanged sentences

Sales of U.S.

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

soup increased 4% primarily due to increases in ready-to-serve soups and broth.

In Snacks, sales increased 14% driven by sales of our power brands, which increased 19%.

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

Sales benefited from favorable net price realization.

1 unchanged sentence

As a percent of sales, gross profit was 31.0% in 2023 and 31.3% in 2022.

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

The 30 basis-point decrease in gross profit margin was due to the following factors:

Margin Impact

Net price realization 1,090

Productivity improvements 250

Lower restructuring-related costs 10

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

Volume/mix (2)

Higher restructuring-related costs (10)

Net price realization 1,020

Productivity improvements 270

__________________________________________

(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.

(1) Includes an estimated positive margin impact of 10 basis points from the benefit of cost savings initiatives, which was more than offset by cost inflation and other factors.

(2) Includes the impact of operating leverage.

7 unchanged sentences

Administrative expenses increased 7% in 2023 from 2022.

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).

The increase was primarily due to higher general administrative costs and inflation (approximately 7 points), higher costs associated with cost savings initiatives (approximately 2 points) and higher incentive compensation (approximately 2 points), partially offset by lower expenses related to the settlement of certain legal claims (approximately 5 points).

Other Expenses / (Income)

1 unchanged sentence

Other expenses in 2023 included pension actuarial losses of $26 million.

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

Other income in 2022 included pension actuarial losses of $12 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:

Six Months Ended

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

Nine Months Ended

(Millions) April 30, 2023 May 1, 2022 % Change

Meals & Beverages $ 762 $ 713 7

Snacks 482 376 28

1,244 1,089 14

Corporate income (expense) (189) (96)

5 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 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.

Gross profit margin decreased due to unfavorable volume/mix, with favorable net price realization and supply chain productivity improvements more than offsetting higher cost inflation and other supply chain costs.

Operating earnings from Snacks increased 28%.

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.

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.

Corporate expense in 2023 included costs of $35 million related to costs savings initiatives, pension actuarial losses of $26 million and unrealized mark-to-market losses on outstanding undesignated commodity hedges of $9 million.

Corporate expense in 2022 included costs of $15 million related to cost savings initiatives, pension actuarial losses of $12 million and unrealized mark-to-market losses on outstanding undesignated commodity hedges of $8 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 $92 million in 2023 was comparable to 2022.

Interest expense of $139 million in 2023 decreased from $144 million in 2022 primarily due to a loss on extinguishment of debt of $4 million in the prior year.

Taxes on Earnings

13 unchanged sentences

A summary of the pre-tax charges recognized in the Consolidated Statements of Earnings related to these initiatives is as follows:

Three Months Ended Six Months Ended

Three Months Ended Nine Months Ended

(Millions, except per share amounts)

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

April 30, 2023 May 1, 2022 April 30, 2023 May 1, 2022 Recognized as of April 30, 2023

Restructuring charges $ 6 $ — $ 15 $ — $ 279

7 unchanged sentences

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

(Millions) Recognized as of January 29, 2023

(Millions) Recognized as of April 30, 2023

Severance pay and benefits

12 unchanged sentences

Of the aggregate $880 million to $900 million of pre-tax costs identified to date, we expect approximately $700 million to $720 million will be cash expenditures.

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.

In addition, we expect to invest approximately $620 million in capital expenditures through 2025, of which we invested $455 million as of April 30, 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.

warehouse optimization project, improvement of quality, safety and cost structure across the Snyder’s-Lance manufacturing network, optimization of information technology infrastructure and applications, implementation of our existing SAP enterprise-resource planning system for Snyder's-Lance, enhancements to our headquarters in Camden, New Jersey, 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 January 29, 2023, we have generated total program-to-date pre-tax savings of $870 million.

As of April 30, 2023, we have generated total program-to-date pre-tax savings of $880 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:

January 29, 2023

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

April 30, 2023

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

Meals & Beverages $ 19 $ 19 $ 244

9 unchanged sentences

We believe that our sources of financing will be adequate to meet our future requirements.

We generated cash flows from operations of $732 million in 2023, compared to $766 million in 2022.

We generated cash flows from operations of $918 million in 2023, compared to $1.101 billion in 2022.

The decline in 2023 was primarily due to changes in working capital, partially offset by higher cash earnings.

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

We had negative working capital of $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.

Current assets are less than current liabilities as a result of our level of debt maturing within one year and our focus to lower core working capital requirements.

We had negative working capital of $184 million as of April 30, 2023, and $923 million as of July 31, 2022.

Total debt maturing within one year was $263 million as of April 30, 2023, and $814 million as of July 31, 2022.

Capital expenditures were $257 million in 2023 and $179 million in 2022.

Capital expenditures are expected to total approximately $360 million in 2023.

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.

Capital expenditures in the first nine 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 $336 million in 2023 and $340 million in 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.

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

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.

On May 23, 2023, the Board of Directors declared a regular quarterly dividend of $.37 per share payable on July 31, 2023 to shareholders of record at the close of business on July 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 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 2.692 million shares at a cost of $141 million in 2023.

Of this amount, $67 million was used to repurchase shares pursuant to our June 2021 program and $74 million was used to repurchase shares pursuant to our September 2021 program.

As of April 30, 2023, approximately $104 million remained available under the June 2021 program and approximately $301 million remained available under the September 2021 program.

We repurchased approximately 2.7 million shares at a cost of $116 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 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 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 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 borrowed $500 million under the DDTL Credit Agreement on March 13, 2023, and used the proceeds and cash on hand to repay the 3.65% $566 million Notes that matured on March 15, 2023.

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.

As of April 30, 2023, we had $263 million of short-term borrowings due within one year, $249 million of which was comprised of commercial paper borrowings.

As of April 30, 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 January 29, 2023, except for $1 million of standby letters of credit that we issued under it.

The facility remained unused at April 30, 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.

Loans under this facility will bear interest at the rates specified in the facility, which vary based on the type of loan and certain other customary conditions.

Loans under this facility bear interest at the rates specified in the facility, which vary based on the type of loan and certain other customary conditions.

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

We expect to continue to access the commercial paper markets, bank credit lines and utilize cash flows from operations to support our short-term liquidity requirements.

On 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.

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.

On April 4, 2023, we entered into an amendment to our existing revolving credit facility to replace remaining LIBOR-based benchmark rates applicable to borrowings under the revolving credit facility with SOFR-based benchmark rates, in advance of the cessation of LIBOR occurring on June 30, 2023.

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

6 unchanged sentences

Our significant accounting policies are described in Note 1 to the Consolidated Financial Statements in the Annual Report on Form 10-K for the year ended July 31, 2022 (2022 Annual Report on Form 10-K).

The accounting policies we used in preparing these financial statements are substantially consistent with those we applied in our 2022 Annual Report on Form 10-K.

The accounting policies we used in preparing these financial

statements are substantially consistent with those we applied in our 2022 Annual Report on Form 10-K.

Our significant accounting estimates are described in Management’s Discussion and Analysis included in the 2022 Annual Report on Form 10‑K.

39 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