What changed in this filing

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Item 1. Financial Statements

2024-03-06 compared with 2023-12-06 · 208 added, 138 removed, 601 unchanged (37% of the section changed)

3 unchanged sentences

(millions, except per share amounts)

Three Months Ended

October 29, 2023 October 30, 2022

Three Months Ended Six Months Ended

January 28, 2024 January 29, 2023 January 28, 2024 January 29, 2023

Net sales $ 2,456 $ 2,485 $ 4,974 $ 5,060

25 unchanged sentences

Three Months Ended

October 29, 2023 October 30, 2022

January 28, 2024 January 29, 2023

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

10 unchanged sentences

Total comprehensive income (loss) attributable to Campbell Soup Company $ 186 $ 232

Six Months Ended

January 28, 2024 January 29, 2023

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

Net earnings (loss) $ 437 $ 529

Other comprehensive income (loss):

Foreign currency translation:

Foreign currency translation adjustments $ ( 3 ) $ — ( 3 ) $ ( 5 ) $ — ( 5 )

Cash-flow hedges:

Unrealized gains (losses) arising during the period ( 20 ) 4 ( 16 ) 5 ( 1 ) 4

Reclassification adjustment for losses (gains) included in net earnings ( 1 ) — ( 1 ) ( 6 ) 1 ( 5 )

Other comprehensive income (loss) $ ( 24 ) $ 4 ( 20 ) $ ( 6 ) $ — ( 6 )

Total comprehensive income (loss) $ 417 $ 523

Total comprehensive income (loss) attributable to noncontrolling interests — —

Total comprehensive income (loss) attributable to Campbell Soup Company $ 417 $ 523

See accompanying Notes to Consolidated Financial Statements.

2 unchanged sentences

(millions, except per share amounts)

October 29, 2023 July 30, 2023

January 28, 2024 July 30, 2023

Current assets

38 unchanged sentences

Consolidated Statements of Cash Flows

Three Months Ended

October 29, 2023 October 30, 2022

Six Months Ended

January 28, 2024 January 29, 2023

Cash flows from operating activities:

1 unchanged sentence

Adjustments to reconcile net earnings to operating cash flow

Restructuring charges 4 9

Stock-based compensation 36 31

Pension and postretirement benefit expense (income) 1 11

Pension and postretirement benefit expense 3 3

Depreciation and amortization 192 176

36 unchanged sentences

Shares Amount Shares Amount

Balance at October 30, 2022

323 $ 12 ( 24 ) $ ( 1,140 ) $ 375 $ 4,224 $ ( 4 ) $ 2 $ 3,469

Net earnings (loss) 232 — 232

Other comprehensive income (loss) — — —

Dividends ($ .37 per share)

( 112 ) ( 112 )

Treasury stock purchased — ( 25 ) ( 25 )

Treasury stock issued under management incentive and stock option plans — 21 16 — 37

Balance at January 29, 2023

323 $ 12 ( 24 ) $ ( 1,144 ) $ 391 $ 4,344 $ ( 4 ) $ 2 $ 3,601

Balance at July 31, 2022

6 unchanged sentences

Treasury stock issued under management incentive and stock option plans 1 60 ( 24 ) — 36

Balance at January 29, 2023 323 $ 12 ( 24 ) $ ( 1,144 ) $ 391 $ 4,344 $ ( 4 ) $ 2 $ 3,601

Balance at October 29, 2023

323 $ 12 ( 25 ) $ ( 1,212 ) $ 388 $ 4,573 $ ( 6 ) $ 2 $ 3,757

Net earnings (loss) 203 — 203

Other comprehensive income (loss) ( 17 ) — ( 17 )

Dividends ($ .37 per share)

( 111 ) ( 111 )

Treasury stock purchased — ( 1 ) ( 1 )

Treasury stock issued under management incentive and stock option plans — 1 19 — 20

Balance at January 28, 2024

323 $ 12 ( 25 ) $ ( 1,212 ) $ 407 $ 4,665 $ ( 23 ) $ 2 $ 3,851

Balance at July 30, 2023

6 unchanged sentences

Treasury stock issued under management incentive and stock option plans 1 36 ( 13 ) — 23

Balance at October 29, 2023

Balance at January 28, 2024

323 $ 12 ( 25 ) $ ( 1,212 ) $ 407 $ 4,665 $ ( 23 ) $ 2 $ 3,851

14 unchanged sentences

See Note 16 for additional information.

In November 2023, the FASB issued guidance to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses.

In November 2023, the FASB issued guidance to improve reportable segment disclosures, primarily through enhanced disclosures about significant segment expenses.

In addition, the guidance enhances interim disclosure requirements, clarifies circumstances in which an entity can disclose multiple segment measures of profit or loss, provides new segment disclosure requirements for entities with a single reportable segment and contains other disclosure requirements.

3 unchanged sentences

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

In December 2023, the FASB issued guidance to improve income tax disclosures by requiring disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid.

The guidance is effective for annual periods beginning after December 15, 2024.

The guidance should be applied on a prospective basis with the option to apply the standard retrospectively.

Early adoption is permitted.

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

Accumulated Other Comprehensive Income (Loss)

9 unchanged sentences

Net current-period other comprehensive income (loss) ( 5 ) ( 1 ) — ( 6 )

Balance at October 30, 2022

Balance at January 29, 2023

$ ( 5 ) $ ( 1 ) $ 2 $ ( 4 )

3 unchanged sentences

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

— ( 1 ) — ( 1 )

Net current-period other comprehensive income (loss) ( 3 ) ( 17 ) — ( 20 )

Balance at October 29, 2023

Balance at January 28, 2024

$ ( 4 ) $ ( 21 ) $ 2 $ ( 23 )

_____________________________________

(1) Included no tax as of October 29, 2023, July 30, 2023, October 30, 2022 and July 31, 2022.

(2) Included tax expense of $ 1 million as of October 29, 2023, a tax benefit of $ 1 million as of July 30, 2023, tax expense of $ 1 million as of October 30, 2022 and no tax as of July 31, 2022.

(3) Included tax expense of $ 1 million as of October 29, 2023, July 30, 2023, October 30, 2022 and July 31, 2022.

(1) Included no tax as of January 28, 2024, July 30, 2023, January 29, 2023 and July 31, 2022.

(2) Included a tax benefit of $ 5 million as of January 28, 2024, a tax benefit of $ 1 million as of July 30, 2023, and no tax as of January 29, 2023 and July 31, 2022.

(3) Included tax expense of $ 1 million as of January 28, 2024, July 30, 2023, January 29, 2023 and July 31, 2022.

Amounts related to noncontrolling interests were not material.

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

Three Months Ended

(Millions) October 29, 2023 October 30, 2022 Location of Loss (Gain) Recognized in Earnings

Three Months Ended Six Months Ended

(Millions) January 28, 2024 January 29, 2023 January 28, 2024 January 29, 2023 Location of Loss (Gain) Recognized in Earnings

Losses (gains) on cash-flow hedges:

1 unchanged sentence

Foreign exchange forward contracts ( 2 ) ( 3 ) ( 2 ) ( 4 ) Cost of products sold

Forward starting interest rate swaps 1 1 1 1 Interest expense

Total before tax ( 1 ) ( 2 ) ( 1 ) ( 6 )

7 unchanged sentences

Foreign currency translation adjustment ( 2 ) — ( 2 )

Net balance at October 29, 2023

Net balance at January 28, 2024

$ 988 $ 2,975 $ 3,963

1 unchanged sentence

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

October 29, 2023 July 30, 2023

January 28, 2024 July 30, 2023

(Millions) Cost Accumulated Amortization Net Cost Accumulated Amortization Net

13 unchanged sentences

(Snyder's-Lance).

Amortization expense was $ 17 million for the three-month period ended October 29, 2023, and $ 11 million for the three-month period ended October 30, 2022.

The increase in amortization expense in 2024 includes $ 7 million of accelerated amortization expense on customer relationships beginning in the fourth quarter of 2023 due to the loss of certain contract

manufacturing customers.

As of October 29, 2023, amortizable intangible assets had a weighted-average remaining useful life of 15 years.

Amortization expense was $ 34 million for the six-month period ended January 28, 2024, and $ 21 million for the six-month period ended January 29, 2023.

The increase in amortization expense in 2024 included $ 14 million of accelerated amortization expense on customer relationships, which began in the fourth quarter of 2023 due to the loss of certain contract manufacturing customers.

As of January 28, 2024, amortizable intangible assets had a weighted-average remaining useful life of 14 years.

Amortization expense is estimated to be approximately $ 68 million in 2024, $ 59 million in 2025 and $ 34 million per year for the following three years.

23 unchanged sentences

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.

Only the service cost component of pension and postretirement expense is allocated to segments.

Only the service cost

component of pension and postretirement expense is allocated to segments.

All other components of expense, including interest cost, expected return on assets, amortization of prior service credits and recognized actuarial gains and losses are reflected in Corporate and not included in segment operating results.

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

Three Months Ended

(Millions) October 29, 2023 October 30, 2022

Three Months Ended Six Months Ended

(Millions) January 28, 2024 January 29, 2023 January 28, 2024 January 29, 2023

Meals & Beverages $ 1,382 $ 1,408 $ 2,786 $ 2,863

1 unchanged sentence

Total $ 2,456 $ 2,485 $ 4,974 $ 5,060

Three Months Ended

(Millions) October 29, 2023 October 30, 2022

Three Months Ended Six Months Ended

(Millions) January 28, 2024 January 29, 2023 January 28, 2024 January 29, 2023

Earnings before interest and taxes

4 unchanged sentences

Restructuring charges (2)

( 2 ) ( 9 ) ( 4 ) ( 9 )

Total $ 317 $ 350 $ 675 $ 786

1 unchanged sentence

(1) Represents unallocated items.

Costs related to the cost savings initiatives were $ 11 million and $ 3 million in the three-month periods ended October 29, 2023, and October 30, 2022, respectively.

Unrealized mark-to-market adjustments on outstanding undesignated commodity hedges were losses of $ 15 million and gains of $ 5 million in the three-month periods

ended October 29, 2023, and October 30, 2022, respectively.

Accelerated amortization expense related to customer relationship intangible assets was $ 7 million in the three-month period ended October 29, 2023.

Costs of $ 9 million associated with the pending acquisition of Sovos Brands, Inc.

(Sovos Brands) were included in the three-month period ended October 29, 2023.

Costs of $ 3 million related to a cybersecurity incident were included in the three-month period ended October 29, 2023.

Litigation expenses related to the Plum baby food and snacks business of $ 2 million were included in the three-month period ended October 29, 2023.

There was a pension actuarial loss of $ 15 million in the three-month period ended October 30, 2022.

Costs related to the cost savings initiatives were $ 34 million and $ 45 million in the three- and six-month periods ended January 28, 2024, and $ 5 million and $ 8 million in the three- and six-month periods ended January 29, 2023, respectively.

Unrealized mark-to-market adjustments on outstanding undesignated commodity hedges were gains of $ 7 million and losses of $ 8 million in the three- and six-month periods ended January 28, 2024, and losses of $ 4 million in the three-month period ended January 29, 2023, respectively.

Accelerated amortization expense related to customer relationship intangible assets was $ 7 million and $ 14 million in the three- and six-month periods ended January 28, 2024, respectively.

Costs of $ 10 million and $ 19 million associated with the pending acquisition of Sovos Brands, Inc.

(Sovos Brands) were included in the three- and six-month periods ended January 28, 2024, respectively.

Litigation expenses related to the Plum baby food and snacks business of $ 1 million and $ 3 million were included in the three- and six-month periods ended January 28, 2024, respectively.

Costs of $ 3 million related to a cybersecurity incident were included in the six-month period ended January 28, 2024.

There were pension actuarial gains of $ 6 million and losses of $ 9 million in the three- and six-month periods ended January 29, 2023, respectively.

(2) See Note 6 for additional information.

Our net sales based on product categories are as follows:

Three Months Ended

(Millions) October 29, 2023 October 30, 2022

Three Months Ended Six Months Ended

(Millions) January 28, 2024 January 29, 2023 January 28, 2024 January 29, 2023

Soup $ 841 $ 852 $ 1,701 $ 1,745

7 unchanged sentences

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

Restructuring Charges and Cost Savings Initiatives

Restructuring Charges, Cost Savings Initiatives and Other Optimization Initiatives

Multi-year Cost Savings Initiatives and Snyder's-Lance Cost Transformation Program and Integration

9 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

(Millions) October 29, 2023 October 30, 2022 Recognized as of October 29, 2023

Three Months Ended Six Months Ended

(Millions) January 28, 2024 January 29, 2023 January 28, 2024 January 29, 2023 Recognized as of January 28, 2024

Restructuring charges $ 2 $ 9 $ 4 $ 9 $ 284

5 unchanged sentences

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

(Millions) Recognized as of October 29, 2023

(Millions) Recognized as of January 28, 2024

Severance pay and benefits

12 unchanged sentences

Of the aggregate $ 890 million to $ 915 million of pre-tax costs identified to date, we expect approximately $ 715 million to $ 740 million will be cash expenditures.

In addition, we expect to invest approximately $ 620 million in capital expenditures, of which we invested $ 482 million as of October 29, 2023.

In addition, we expect to invest approximately $ 700 million in capital expenditures, of which we invested $ 492 million as of January 28, 2024.

We expect to invest in substantially all of the capital expenditures through 2025.

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, 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.

A summary of the restructuring activity and related reserves at October 29, 2023, is as follows:

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

A summary of the restructuring activity and related reserves at January 28, 2024, is as follows:

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

Asset Impairment/Accelerated Depreciation Total Charges

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

Total Charges

Accrued balance at July 30, 2023 (1)

4 17 10 18 $ 49

2024 cash payments

Accrued balance at October 29, 2023 (2)

Accrued balance at January 28, 2024 (2)

__________________________________

3 unchanged sentences

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.

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

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 29, 2023

(Millions) Three Months Ended Costs Incurred to Date

January 28, 2024

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

Meals & Beverages $ 5 $ 9 $ 260

Snacks 24 30 375

Corporate 7 10 205

Total $ 36 $ 49 $ 840

Other Optimization Initiatives

In the second quarter of 2024, we began implementation of a new initiative to improve the effectiveness of our Snacks direct-store-delivery route-to-market network.

Pursuant to this initiative we will purchase certain Pepperidge Farm and Snyder's-Lance routes where there are opportunities to unlock greater scale in select markets, combine them and sell the combined routes to independent contractor distributors.

We expect to execute this program in a staggered rollout and to incur expenses of up to approximately $ 115 million through 2029.

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 the three-month period ended October 29, 2023, excludes less than 1 million stock options that would have been antidilutive.

The earnings per share calculation for the three-month period ended October 30, 2022, excludes approximately 1 million stock options that would have been antidilutive.

The earnings per share calculation for the three- and six-month periods ended January 28, 2024 and January 29, 2023, excludes less than 1 million stock options that would have been antidilutive.

Pension and Postretirement Benefits

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

Three Months Ended

Pension Postretirement

(Millions) October 29, 2023 October 30, 2022 October 29, 2023 October 30, 2022

Three Months Ended Six Months Ended

Pension Postretirement Pension Postretirement

(Millions) January 28, 2024 January 29, 2023 January 28, 2024 January 29, 2023 January 28, 2024 January 29, 2023 January 28, 2024 January 29, 2023

Service cost $ 3 $ 3 $ — $ — $ 6 $ 7 $ — $ —

3 unchanged sentences

Net periodic benefit expense (income) $ — $ ( 9 ) $ 2 $ 1 $ ( 1 ) $ — $ 4 $ 3

The actuarial loss for the three-month period ended October 30, 2022 resulted from the remeasurement of a U.S.

pension plan due to lump sum distributions that were expected to exceed service and interest costs resulting in settlement accounting for this plan.

The actuarial loss recognized for the three-month period ended October 30, 2022 was primarily due to losses on plan assets, partially offset by increases in discount rates used to determine the benefit obligation.

The actuarial gains and losses for the three- and six-month periods ended January 29, 2023 resulted from the remeasurement of certain U.S.

pension plans due to lump sum distributions that exceeded or were expected to exceed service and interest costs resulting in settlement accounting for these plans.

The actuarial gains recognized for the three-month period ended January 29, 2023 were primarily due to increases in discount rates used to determine the benefit obligation, partially offset by losses on plan assets.

The actuarial losses recognized for the six-month period ended January 29, 2023 were primarily due to losses on plan assets, partially offset by increases in discount rates used to determine the benefit obligation.

The components of lease costs were as follows:

Three Months Ended

(Millions) October 29, 2023 October 30, 2022

Three Months Ended Six Months Ended

(Millions) January 28, 2024 January 29, 2023 January 28, 2024 January 29, 2023

Operating lease cost (1)

$ 24 $ 20 $ 48 $ 40

Finance lease - amortization of right-of-use (ROU) assets 4 4 8 8

3 unchanged sentences

__________________________________________

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

(1) Excludes costs associated with the cost savings initiatives described in Note 6.

The following tables summarize the lease amounts recorded in the Consolidated Balance Sheets:

Operating Leases

(Millions) Balance Sheet Classification October 29, 2023 July 30,

(Millions) Balance Sheet Classification January 28, 2024 July 30,

ROU assets, net Other assets $ 276 $ 275

2 unchanged sentences

Finance Leases

(Millions) Balance Sheet Classification October 29, 2023 July 30,

(Millions) Balance Sheet Classification January 28, 2024 July 30,

ROU assets, net Plant assets, net of depreciation $ 33 $ 27

2 unchanged sentences

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

Three Months Ended

(Millions) October 29, 2023 October 30, 2022

Six Months Ended

(Millions) January 28, 2024 January 29, 2023

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

9 unchanged sentences

The proceeds of the loans under the 2024 DDTL Credit Agreement can only be used in connection with the acquisition of Sovos Brands.

The 2024 DDTL Credit Agreement remained unused at October 29, 2023.

The 2024 DDTL Credit Agreement remained unused at January 28, 2024.

Financial Instruments

8 unchanged sentences

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 October 29, 2023, or July 30, 2023.

We did not have credit risk-related contingent features in our derivative instruments as of January 28, 2024, or July 30, 2023.

We are also exposed to credit risk from our customers.

7 unchanged sentences

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

The notional amount of foreign exchange forward contracts accounted for as cash-flow hedges was $ 83 million as of October 29, 2023, and $ 125 million as of July 30, 2023.

The notional amount of foreign exchange forward contracts accounted for as cash-flow hedges was $ 75 million as of January 28, 2024, and $ 125 million as of July 30, 2023.

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.

2 unchanged sentences

income (loss).

The notional amount of foreign exchange forward contracts that are not designated as accounting hedges was $ 17 million as of October 29, 2023, and $ 15 million as of July 30, 2023.

The notional amount of foreign exchange forward contracts that are not designated as accounting hedges was $ 22 million as of January 28, 2024, and $ 15 million as of July 30, 2023.

Interest Rate Risk

5 unchanged sentences

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

The notional amount of forward starting interest rate swaps accounted for as cash-flow hedges was $ 525 million as of October 29, 2023.

The notional amount of forward starting interest rate swaps accounted for as cash-flow hedges was $ 1 billion as of January 28, 2024.

These forward starting interest rate swaps related to an anticipated debt issuance and mature in January 2025.

There were no forward starting interest rate swaps or treasury lock contracts outstanding as of July 30, 2023.

Since October 29, 2023, we have entered into additional forward starting interest rate swaps accounted for as cash-flow hedges with a notional value of $ 450 million.

Commodity Price Risk

3 unchanged sentences

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

There were no commodity contracts designated as cash-flow hedges as of October 29, 2023, or July 30, 2023.

The notional amount of commodity contracts not designated as accounting hedges was $ 197 million as of October 29, 2023, and $ 194 million as of July 30, 2023.

There were no commodity contracts designated as cash-flow hedges as of January 28, 2024, or July 30, 2023.

The notional amount of commodity contracts not designated as accounting hedges was $ 161 million as of January 28, 2024, and $ 194 million as of July 30, 2023.

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

2 unchanged sentences

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

The notional amount was $ 18 million as of October 29, 2023, and $ 47 million as of July 30, 2023.

The notional amount was $ 85 million as of January 28, 2024, and $ 47 million as of July 30, 2023.

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

4 unchanged sentences

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

The notional amounts of the contracts were $ 42 million as of October 29, 2023, and July 30, 2023.

The following table summarizes the fair value of derivative instruments on a gross basis as recorded in the Consolidated Balance Sheets as of October 29, 2023, and July 30, 2023:

(Millions) Balance Sheet Classification October 29, 2023 July 30,

The notional amounts of the contracts were $ 42 million as of January 28, 2024, and July 30, 2023.

The following table summarizes the fair value of derivative instruments on a gross basis as recorded in the Consolidated Balance Sheets as of January 28, 2024, and July 30, 2023:

(Millions) Balance Sheet Classification January 28, 2024 July 30,

Asset Derivatives

1 unchanged sentence

Foreign exchange forward contracts Other current assets $ 1 $ —

Forward starting interest rate swaps Other assets 3 —

Total derivatives designated as hedges $ 1 $ —

5 unchanged sentences

Total asset derivatives $ 18 $ 20

(Millions) Balance Sheet Classification October 29, 2023 July 30,

(Millions) Balance Sheet Classification January 28, 2024 July 30,

Liability Derivatives

1 unchanged sentence

Foreign exchange forward contracts Accrued liabilities $ — $ 1

Forward starting interest rate swaps Accrued liabilities 23 —

Total derivatives designated as hedges $ 23 $ 1

1 unchanged sentence

Commodity contracts Accrued liabilities $ 9 $ 5

Deferred compensation contracts Accrued liabilities 1 —

Total derivatives not designated as hedges $ 9 $ 5

1 unchanged sentence

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 October 29, 2023, and July 30, 2023, would be adjusted as detailed in the following table:

October 29, 2023 July 30, 2023

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 January 28, 2024, and July 30, 2023, would be adjusted as detailed in the following table:

January 28, 2024 July 30, 2023

(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

2 unchanged sentences

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

Cash margin asset balances of $ 18 million at October 29, 2023, and $ 2 million at July 30, 2023, were included in Other current assets in the Consolidated Balance Sheets.

The following table shows the effect of our derivative instruments designated as cash-flow hedges for the three-month periods ended October 29, 2023, and October 30, 2022, in other comprehensive income (loss) (OCI) and the Consolidated Statements of Earnings:

Cash margin asset balances of $ 9 million at January 28, 2024, and $ 2 million at July 30, 2023, were included in Other current assets in the Consolidated Balance Sheets.

The following tables show the effect of our derivative instruments designated as cash-flow hedges for the three- and six-month periods ended January 28, 2024, and January 29, 2023, in other comprehensive income (loss) (OCI) and the Consolidated Statements of Earnings:

Total Cash-Flow Hedge

(Millions) October 29, 2023 October 30, 2022

(Millions) January 28, 2024 January 29, 2023

Three Months Ended

5 unchanged sentences

Location in Earnings

Foreign exchange forward contracts Cost of products sold ( 2 ) ( 3 )

Forward starting interest rate swaps Interest expense 1 1

OCI derivative gain (loss) at end of quarter $ ( 26 ) $ ( 1 )

Six Months Ended

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

Effective portion of changes in fair value recognized in OCI:

Foreign exchange forward contracts 3 5

Forward starting interest rate swaps ( 23 ) —

Amount of loss (gain) reclassified from OCI to earnings:

Location in Earnings

Commodity contracts Cost of products sold — ( 3 )

Foreign exchange forward contracts Cost of products sold ( 2 ) ( 4 )

Forward starting interest rate swaps Interest expense 1 1

OCI derivative gain (loss) at end of quarter $ ( 26 ) $ ( 1 )

Based on current valuations, the amount expected to be reclassified from OCI into earnings within the next 12 months is a gain of $ 3 million.

The following table shows the total amounts of line items presented in the Consolidated Statements of Earnings for the three-month periods ended October 29, 2023, and October 30, 2022, 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:

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

The following tables show the total amounts of line items presented in the Consolidated Statements of Earnings for the three- and six-month periods ended January 28, 2024, and January 29, 2023, 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:

Three Months Ended

October 29, 2023 October 30, 2022

(Millions) Cost of products sold Cost of products sold

January 28, 2024 January 29, 2023

(Millions) Cost of products sold Interest

expense Cost of products sold Interest

Consolidated Statements of Earnings:

2 unchanged sentences

Amount of loss (gain) reclassified from OCI to earnings $ ( 2 ) $ 1 $ ( 3 ) $ 1

Six Months Ended

January 28, 2024 January 29, 2023

(Millions) Cost of products sold Interest

expense Cost of products sold Interest

Consolidated Statements of Earnings:

$ 3,410 $ 95 $ 3,467 $ 92

Loss (gain) on cash-flow hedges:

Amount of loss (gain) reclassified from OCI to earnings $ ( 2 ) $ 1 $ ( 7 ) $ 1

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:

Location of Loss (Gain) Recognized in Earnings Three Months Ended

(Millions) October 29, 2023 October 30, 2022

Location of Loss (Gain) Recognized in Earnings Three Months Ended Six Months Ended

(Millions) January 28, 2024 January 29, 2023 January 28, 2024 January 29, 2023

Foreign exchange forward contracts Cost of products sold $ 1 $ — $ — $ ( 1 )

12 unchanged sentences

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following tables present our financial assets and liabilities that are measured at fair value on a recurring basis as of October 29, 2023, and July 30, 2023, consistent with the fair value hierarchy:

October 29, 2023

The following tables present our financial assets and liabilities that are measured at fair value on a recurring basis as of January 28, 2024, and July 30, 2023, consistent with the fair value hierarchy:

January 28, 2024

Fair Value Measurements at

October 29, 2023 Using

January 28, 2024 Using

Fair Value Hierarchy

12 unchanged sentences

1 1 — — 1 1 — —

Forward starting interest rate swaps (5)

3 — 3 — — — — —

Total assets at fair value $ 19 $ 3 $ 7 $ 9 $ 21 $ 12 $ 7 $ 2

October 29, 2023

January 28, 2024

Fair Value Measurements at

October 29, 2023 Using

January 28, 2024 Using

Fair Value Hierarchy

8 unchanged sentences

9 6 3 — 5 3 2 —

Deferred compensation derivative contracts (3)

1 — 1 — — — — —

Deferred compensation obligation (4)

104 104 — — 91 91 — —

Forward starting interest rate swaps (5)

23 — 23 — — — — —

Total liabilities at fair value $ 136 $ 110 $ 26 $ — $ 97 $ 94 $ 3 $ —

6 unchanged sentences

(5) Based on SOFR swap rates.

The following table summarizes the changes in fair value of Level 3 assets and liabilities for the three-month periods ended October 29, 2023, and October 30, 2022:

Three Months Ended

(Millions) October 29, 2023 October 30, 2022

The following table summarizes the changes in fair value of Level 3 assets and liabilities for the six-month periods ended January 28, 2024, and January 29, 2023:

Six Months Ended

(Millions) January 28, 2024 January 29, 2023

Fair value at beginning of year $ 2 $ 4

4 unchanged sentences

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

There were no cash equivalents at October 29, 2023 or July 30, 2023.

The fair value of short- and long-term debt was $ 4.108 billion at October 29, 2023, and $ 4.293 billion at July 30, 2023.

The carrying value was $ 4.706 billion at October 29, 2023, and $ 4.689 billion at July 30, 2023.

There were no cash equivalents at January 28, 2024 or July 30, 2023.

The fair value of short- and long-term debt was $ 4.143 billion at January 28, 2024, and $ 4.293 billion at July 30, 2023.

The carrying value was $ 4.52 billion at January 28, 2024, and $ 4.689 billion at July 30, 2023.

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.

6 unchanged sentences

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

During the three-month period ended October 29, 2023, we repurchased 679 thousand shares at a cost of $ 28 million pursuant to our June 2021 program.

As of October 29, 2023, approximately $ 76 million remained available under the June 2021 program and approximately $ 301 million remained available under the September 2021 program.

During the three-month period ended October 30, 2022, we repurchased 859 thousand shares at a cost of $ 41 million.

During the six-month period ended January 28, 2024, we repurchased 707 thousand shares at a cost of $ 29 million pursuant to our June 2021 program.

As of January 28, 2024, approximately $ 75 million remained available under the June 2021 program and approximately $ 301 million remained available under the September 2021 program.

During the six-month period ended January 29, 2023, we repurchased 1.298 million shares at a cost of $ 66 million.

Stock-based Compensation

4 unchanged sentences

Total pre-tax stock-based compensation expense and tax-related benefits recognized in the Consolidated Statements of Earnings were as follows:

Three Months Ended

(Millions) October 29, 2023 October 30, 2022

Three Months Ended Six Months Ended

(Millions) January 28, 2024 January 29, 2023 January 28, 2024 January 29, 2023

Total pre-tax stock-based compensation expense $ 19 $ 16 $ 36 $ 31

Tax-related benefits $ 4 $ 3 $ 6 $ 6

The following table summarizes stock option activity as of October 29, 2023:

The following table summarizes stock option activity as of January 28, 2024:

Options Weighted-

6 unchanged sentences

Terminated — $ —

Outstanding at October 29, 2023

Outstanding at January 28, 2024

833 $ 44.77 3.7 $ 4

Exercisable at October 29, 2023

Exercisable at January 28, 2024

833 $ 44.77 3.7 $ 4

The total intrinsic value of options exercised during the three-month period ended October 30, 2022 was not material.

The total intrinsic value of options exercised during the six-month period ended January 29, 2023 was $ 3 million.

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

1 unchanged sentence

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

The following table summarizes time-lapse restricted stock units and EPS performance restricted stock units as of October 29, 2023:

The following table summarizes time-lapse restricted stock units and EPS performance restricted stock units as of January 28, 2024:

Units Weighted-Average Grant-Date Fair Value

5 unchanged sentences

Forfeited ( 147 ) $ 43.47

Nonvested at October 29, 2023

Nonvested at January 28, 2024

2,902 $ 43.24

6 unchanged sentences

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

There were 936 thousand EPS performance target grants outstanding at October 29, 2023, with a weighted-average grant-date fair value of $ 42.99 .

As of October 29, 2023, total remaining unearned compensation related to nonvested time-lapse restricted stock units and EPS performance restricted stock units was $ 83 million, which will be amortized over the weighted-average remaining service period of 1.9 years.

The fair value of restricted stock units vested during the three-month periods ended October 29, 2023, and October 30, 2022, was $ 30 million and $ 34 million, respectively.

The weighted-average grant-date fair value of the restricted stock units granted during the three-month period ended October 30, 2022 was $ 47.12 .

The following table summarizes TSR performance restricted stock units as of October 29, 2023:

There were 898 thousand EPS performance target grants outstanding at January 28, 2024, with a weighted-average grant-date fair value of $ 42.98 .

As of January 28, 2024, total remaining unearned compensation related to nonvested time-lapse restricted stock units and EPS performance restricted stock units was $ 65 million, which will be amortized over the weighted-average remaining service period of 1.9 years.

The fair value of restricted stock units vested during the six-month periods ended January 28, 2024, and January 29, 2023, was $ 31 million and $ 35 million, respectively.

The weighted-average grant-date fair value of the restricted stock units granted during the six-month period ended January 29, 2023 was $ 47.36 .

The following table summarizes TSR performance restricted stock units as of January 28, 2024:

Units Weighted-Average Grant-Date Fair Value

4 unchanged sentences

Forfeited ( 148 ) $ 52.57

Nonvested at October 29, 2023

Nonvested at January 28, 2024

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

5 unchanged sentences

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 October 29, 2023, total remaining unearned compensation related to TSR performance restricted stock units was $ 24 million, which will be amortized over the weighted-average remaining service period of 2.0 years.

As of January 28, 2024, total remaining unearned compensation related to TSR performance restricted stock units was $ 19 million, which will be amortized over the weighted-average remaining service period of 1.9 years.

In the first quarter of 2024, 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 28, 2023.

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

The fair value of TSR performance restricted stock units vested during the three-month periods ended October 29, 2023, and October 30, 2022, was $ 12 million and $ 21 million, respectively.

The weighted-average grant-date fair value of the TSR performance restricted stock units granted during the three-month period ended October 30, 2022, was $ 53.74 .

The tax benefits on the exercise of stock options in the three-month period ended October 30, 2022 were not material.

Cash received from the exercise of stock options was $ 2 million for the three-month period ended October 30, 2022, and is reflected in cash flows from financing activities in the Consolidated Statements of Cash Flows.

The fair value of TSR performance restricted stock units vested during the six-month periods ended January 28, 2024, and January 29, 2023, was $ 12 million and $ 21 million, respectively.

The grant-date fair value of the TSR performance restricted stock units granted during the six-month period ended January 29, 2023, was $ 53.74 .

The tax benefits on the exercise of stock options in the six-month period ended January 29, 2023 were not material.

Cash received from the exercise of stock options was $ 22 million for the six-month period ended January 29, 2023, and is reflected in cash flows from financing activities in the Consolidated Statements of Cash Flows.

Commitments and Contingencies

10 unchanged sentences

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 October 29, 2023.

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 January 28, 2024.

While the potential future charges could be material in a particular quarter or

3 unchanged sentences

Certain indemnifications have finite expiration dates.

Liabilities recognized based on known exposures related to such matters were not material at October 29, 2023.

Liabilities recognized based on known exposures related to such matters were not material at January 28, 2024.

Supplier Finance Program Obligations

7 unchanged sentences

The payment of these obligations is included in cash provided by operating activities in the Consolidated Statements of Cash Flows.

Amounts outstanding under these programs, which are included in Accounts payable on the Consolidated Balance Sheets, were $ 277 million at October 29, 2023, and $ 258 million at July 30, 2023.

Amounts outstanding under these programs, which are included in Accounts payable on the Consolidated Balance Sheets, were $ 252 million at January 28, 2024, and $ 258 million at July 30, 2023.

Supplemental Financial Statement Data

(Millions) October 29, 2023 July 30,

(Millions) January 28, 2024 July 30,

Balance Sheets

2 unchanged sentences

$ 1,188 $ 1,291

Three Months Ended

(Millions) October 29, 2023 October 30, 2022

Three Months Ended Six Months Ended

(Millions) January 28, 2024 January 29, 2023 January 28, 2024 January 29, 2023

Statements of Earnings

1 unchanged sentence

Amortization of intangible assets (1)

Net periodic benefit expense (income) other than the service cost ( 2 ) 7

$ 17 $ 10 $ 34 $ 21

Net periodic benefit income other than the service cost ( 1 ) ( 11 ) ( 3 ) ( 4 )

Costs associated with pending acquisition (2)

Transition services fees

Other — 1 2 1

$ 26 $ — $ 50 $ 18

(1) Includes accelerated amortization expense of $ 7 million related to customer relationship intangible assets in the three-month period ended October 29, 2023.

_______________________________________

(1) Includes accelerated amortization expense related to customer relationship intangible assets of $ 7 million and $ 14 million in the three- and six-month periods ended January 28, 2024, respectively.

(2) Related to the pending acquisition of Sovos Brands.

3 unchanged sentences

The closing of the Sovos Brands acquisition is subject to certain customary mutual conditions, including among other things the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the HSR Act).

If any condition to the acquisition is not satisfied or waived, the completion of the acquisition could be significantly delayed or not occur at all.

On October 23, 2023, we and Sovos Brands each received a request for additional information (the Second Request) from the U.S.

Federal Trade Commission (the FTC) in connection with the FTC’s review of the transaction contemplated by the merger agreement.

Issuance of the Second Request extends the waiting period under the HSR Act until 30 days after both we and Sovos Brands substantially comply with the Second Request, unless the waiting period is extended voluntarily by the parties or terminated earlier by the FTC.

We now expect that the merger will close in calendar 2024, and we will continue to engage with the FTC on its review with the objective of closing the transaction in mid-calendar 2024.

Issuance of the Second Request extended the waiting period under the HSR Act until 30 days after both we and Sovos Brands substantially complied with the Second Request, unless the waiting period was extended voluntarily by the parties or terminated earlier by the FTC.

On February 13, 2024, we and Sovos Brands announced that both companies have certified substantial compliance with the Second Request.

The certification of substantial compliance triggered the start of a 30-day waiting period which is expected to expire on March 11, 2024, after which the acquisition can be consummated.

Subject to the satisfaction or waiver of customary closing conditions set forth in the merger agreement, we expect to complete the transaction the week of March 11, 2024.

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 1. Financial Statements