What changed in this filing

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Item 1. Financial Statements

2024-06-05 compared with 2024-03-06 · 316 added, 175 removed, 634 unchanged (44% of the section changed)

3 unchanged sentences

(millions, except per share amounts)

Three Months Ended Six Months Ended

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

Three Months Ended Nine Months Ended

April 28, 2024 April 30, 2023 April 28, 2024 April 30, 2023

Net sales $ 2,369 $ 2,229 $ 7,343 $ 7,289

25 unchanged sentences

Three Months Ended

January 28, 2024 January 29, 2023

April 28, 2024 April 30, 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 $ 141 $ 158

Six Months Ended

January 28, 2024 January 29, 2023

Nine Months Ended

April 28, 2024 April 30, 2023

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

14 unchanged sentences

(millions, except per share amounts)

January 28, 2024 July 30, 2023

April 28, 2024 July 30, 2023

Current assets

38 unchanged sentences

Consolidated Statements of Cash Flows

Six Months Ended

January 28, 2024 January 29, 2023

Nine Months Ended

April 28, 2024 April 30, 2023

Cash flows from operating activities:

3 unchanged sentences

Stock-based compensation 80 48

Amortization of inventory fair value adjustment from acquisition 17 —

Pension and postretirement benefit expense 5 20

1 unchanged sentence

Deferred income taxes 13 ( 2 )

Changes in working capital

Changes in working capital, net of acquisition

Accounts receivable ( 33 ) 1

8 unchanged sentences

Sales of route businesses 33 —

Business acquired, net of cash acquired ( 2,617 ) —

Net cash used in investing activities ( 2,987 ) ( 269 )

Cash flows from financing activities:

Short-term borrowings, including commercial paper 1,416 1,389

Short-term repayments, including commercial paper ( 1,596 ) ( 1,626 )

Short-term borrowings, including commercial paper and delayed draw term loan 4,616 2,479

Short-term repayments, including commercial paper and delayed draw term loan ( 4,556 ) ( 2,473 )

Long-term borrowings 2,496 500

Long-term repayments ( 100 ) ( 566 )

Dividends paid ( 334 ) ( 336 )

2 unchanged sentences

Payments related to tax withholding for stock-based compensation ( 46 ) ( 19 )

Payments of debt issuance costs ( 22 ) —

Other — ( 1 )

Net cash used in financing activities ( 448 ) ( 525 )

Net cash provided by (used in) financing activities 2,008 ( 535 )

Effect of exchange rate changes on cash — —

13 unchanged sentences

Shares Amount Shares Amount

Balance at October 30, 2022

Balance at January 29, 2023

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

4 unchanged sentences

Treasury stock purchased ( 2 ) ( 75 ) ( 75 )

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

Balance at January 29, 2023

Treasury stock issued under stock-based compensation plans 1 — 16 — 16

Balance at April 30, 2023

323 $ 12 ( 25 ) $ ( 1,219 ) $ 407 $ 4,392 $ ( 6 ) $ 2 $ 3,588

6 unchanged sentences

Treasury stock purchased ( 3 ) ( 141 ) ( 141 )

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

Treasury stock issued under stock-based compensation plans 2 60 ( 8 ) — 52

Balance at April 30, 2023 323 $ 12 ( 25 ) $ ( 1,219 ) $ 407 $ 4,392 $ ( 6 ) $ 2 $ 3,588

Balance at January 28, 2024

Balance at October 29, 2023

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

3 unchanged sentences

( 113 ) ( 113 )

Replacement share-based awards issued in connection with Sovos Brands, Inc.

acquisition (1)

Treasury stock purchased — ( 17 ) ( 17 )

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

Balance at January 28, 2024

Treasury stock issued under stock-based compensation plans — 39 ( 28 ) — 11

Balance at April 28, 2024

323 $ 12 ( 25 ) $ ( 1,190 ) $ 421 $ 4,685 $ ( 15 ) $ 2 $ 3,915

5 unchanged sentences

( 336 ) ( 336 )

Replacement share-based awards issued in connection with Sovos Brands, Inc.

acquisition (1)

Treasury stock purchased ( 1 ) ( 46 ) ( 46 )

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

Balance at January 28, 2024

Treasury stock issued under stock-based compensation plans 1 75 ( 41 ) — 34

Balance at April 28, 2024

323 $ 12 ( 25 ) $ ( 1,190 ) $ 421 $ 4,685 $ ( 15 ) $ 2 $ 3,915

(1) See Note 3 for additional information.

See accompanying Notes to Consolidated Financial Statements.

24 unchanged sentences

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

On August 7, 2023 , we entered into a merger agreement to acquire Sovos Brands, Inc.

(Sovos Brands) for $ 23.00 per share.

On March 12, 2024 , we completed the acquisition.

Sovos Brands' portfolio includes a variety of pasta sauces, dry pasta, soups, frozen entrées, frozen pizza and yogurts, all of which are sold in North America under the brand names Rao’s, Michael Angelo’s and noosa .

Total purchase consideration was $ 2.899 billion, which was determined as follows:

Cash consideration paid to Sovos Brands shareholders (1)

Cash paid for share-based awards (2)

Cash consideration paid directly to shareholders $ 2,339

Cash paid for transaction costs of Sovos Brands 32

Repayment of Sovos Brands existing indebtedness and accrued interest 486

Total cash consideration $ 2,857

Fair value of replacement share-based awards (3)

Total consideration $ 2,899

___________________________________________

(1) Consideration paid to Sovos Brands shareholders which reflects $ 23.00 per share.

(2) Represents cash paid to equity award holders of Sovos Brands restricted stock and restricted stock unit awards attributable to pre-combination service.

This excludes $3 million of cash paid that was recognized as expense.

(3) We issued replacement equity awards in settlement of certain Sovos Brands equity awards that did not become vested in connection with the acquisition.

The portion of fair value of the replacement awards attributable to pre-combination service was $ 42 million and is included in the purchase consideration.

We recognized $ 26 million of expense related to accelerated vesting of certain replacement awards.

The cash portion of the acquisition was funded through a Delayed Draw Term Loan Credit Agreement (the 2024 DDTL Credit Agreement) of $ 2 billion and cash on hand.

See Note 11 for additional information.

The table below presents the fair value that was allocated to acquired assets and assumed liabilities:

(Millions) Estimated Fair Value

Accounts receivable 96

Inventories 130

Other current assets 5

Plant assets 102

Other intangible assets 1,785

Other assets 16

Total assets acquired $ 2,374

Accounts payable $ 96

Accrued liabilities 56

Accrued income taxes 1

Long-term debt 9

Deferred taxes 412

Other liabilities 11

Total liabilities assumed $ 585

Net assets acquired $ 1,789

Goodwill 1,110

Total consideration $ 2,899

The excess of the purchase price over the estimated fair values of identifiable net assets was recorded as $ 1.11 billion of goodwill.

The goodwill is not deductible for tax purposes.

The goodwill was primarily attributable to future growth opportunities, anticipated synergies, and intangible assets that did not qualify for separate recognition.

The goodwill is included in the Meals & Beverages segment.

The purchase price allocation of Sovos Brands is preliminary and is subject to the finalization of certain items, including valuations and tax balances, which will be completed within the allowable measurement period.

The identifiable intangible assets of Sovos Brands consist of:

(Millions) Type Life in Years Value

Trademarks Non-amortizable Indefinite $ 1,470

Trademarks Amortizable 20 83

Customer relationships Amortizable 20 to 30 232

Total identifiable intangible assets $ 1,785

As of April 28, 2024, Sovos Brands amortizable intangible assets had a weighted-average remaining useful life of 27 years.

We incurred transaction costs and integration costs, including costs to achieve synergies, of $ 95 million and $ 114 million associated with the Sovos Brands acquisition in the three- and nine-month periods ended April 28, 2024, respectively.

Approximately $ 16 million in the three-month period and $ 35 million in the nine-month period represented transaction costs, including outside advisory costs, recorded in Other expenses / (income).

In the three-month period ended April 28, 2024, we recognized $ 2 million in Interest expense related to financing fees associated with the 2024 DDTL Credit Agreement.

Integration costs included expenses associated with accelerated vesting of replacement awards, severance and retention bonuses, amortization of the acquisition date fair value adjustment to inventories and other costs.

Integration costs recognized in the three-month period ended April 28, 2024 included the following:

• $ 18 million in Costs of products sold, $ 17 million of which related to the amortization of the acquisition date fair value adjustment to inventories;

• $ 2 million of Marketing and selling expenses;

• $ 39 million of Administrative expenses;

• $ 2 million of Research and development expenses;

• $ 16 million of Restructuring charges to achieve synergies.

See Note 7 for additional information.

For the period March 12, 2024 through April 28, 2024, the Sovos Brands acquisition contributed $ 166 million to Net sales and a loss of $ 75 million to Net earnings, including the effect of transaction and integration costs and interest expense on the debt to finance the acquisition.

The following unaudited summary information is presented on a consolidated pro forma basis as if the Sovos Brands acquisition had occurred on August 1, 2022:

Three Months Ended Nine Months Ended

(Millions) April 28, 2024 April 30, 2023 April 28, 2024 April 30, 2023

Net sales $ 2,510 $ 2,472 $ 8,061 $ 8,023

Net earnings attributable to Campbell Soup Company $ 184 $ 141 $ 595 $ 532

The pro forma results are not necessarily indicative of the combined results had the Sovos Brands acquisition been completed on August 1, 2022, nor are they indicative of future combined results.

The pro forma amounts include adjustments to interest expense for financing the acquisition, to amortization and depreciation expense based on the estimated fair value and useful lives of intangible assets and plant assets, and related tax effects.

The pro forma results include adjustments to reflect amortization of the acquisition date fair value adjustment to inventories, expenses related to accelerated vesting of replacement awards and severance and retention bonuses as of August 1, 2022.

Accumulated Other Comprehensive Income (Loss)

9 unchanged sentences

Net current-period other comprehensive income (loss) ( 7 ) ( 1 ) — ( 8 )

Balance at January 29, 2023

Balance at April 30, 2023

$ ( 7 ) $ ( 1 ) $ 2 $ ( 6 )

5 unchanged sentences

Net current-period other comprehensive income (loss) ( 6 ) ( 6 ) — ( 12 )

Balance at January 28, 2024

Balance at April 28, 2024

$ ( 7 ) $ ( 10 ) $ 2 $ ( 15 )

_____________________________________

(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.

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

(2) Included a tax benefit of $ 3 million as of April 28, 2024 and $ 1 million as of July 30, 2023, and no tax as of April 30, 2023 and July 31, 2022.

(3) Included tax expense of $ 1 million as of April 28, 2024, July 30, 2023, April 30, 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 Six Months Ended

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

Three Months Ended Nine Months Ended

(Millions) April 28, 2024 April 30, 2023 April 28, 2024 April 30, 2023 Location of Loss (Gain) Recognized in Earnings

Losses (gains) on cash-flow hedges:

Commodity contracts $ — $ — $ — $ ( 3 ) Cost of products sold

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

Foreign exchange contracts — ( 2 ) ( 2 ) ( 6 ) Cost of products sold

Forward starting interest rate swaps — — 1 1 Interest expense

7 unchanged sentences

$ 990 $ 2,975 $ 3,965

Acquisition (1)

1,110 — 1,110

Foreign currency translation adjustment ( 3 ) — ( 3 )

Net balance at January 28, 2024

Net balance at April 28, 2024

$ 2,097 $ 2,975 $ 5,072

____________________________________

(1) On March 12, 2024, we acquired Sovos Brands.

See Note 3 for additional information.

Intangible Assets

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

January 28, 2024 July 30, 2023

April 28, 2024 July 30, 2023

(Millions) Cost Accumulated Amortization Net Cost Accumulated Amortization Net

1 unchanged sentence

Customer relationships $ 1,062 $ ( 281 ) $ 781 $ 830 $ ( 229 ) $ 601

Definite-lived trademarks 83 — 83 — — —

Total amortizable intangible assets $ 1,145 $ ( 281 ) $ 864 $ 830 $ ( 229 ) $ 601

Indefinite-lived trademarks

Rao's $ 1,470 $ —

Snyder's of Hanover 620 620

9 unchanged sentences

(Snyder's-Lance).

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.

As part of the Sovos Brands acquisition, we acquired the Rao's indefinite-lived trademark of $ 1.47 billion, customer relationship intangible assets of $ 232 million and definite-lived trademarks of $ 83 million.

See Note 3 for additional information.

Amortization expense was $ 52 million for the nine-month period ended April 28, 2024, and $ 31 million for the nine-month period ended April 30, 2023.

Amortization expense in 2024 included $ 20 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 April 28, 2024, amortizable intangible assets had a weighted-average remaining useful life of 19 years.

Amortization expense is estimated to be approximately $ 73 million in 2024, $ 72 million in 2025 and $ 46 million per year for the following three years.

As of our 2023 annual impairment testing, indefinite-lived trademarks with approximately 10% or less of excess coverage of fair value over carrying value had an aggregate carrying value of $ 434 million and included Pacific Foods and certain other Snacks trademarks.

The indefinite-lived trademark related to the Sovos Brands acquisition has been recorded at fair value.

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

13 unchanged sentences

V8 juices and beverages;

and Campbell’s tomato juice.

Campbell’s tomato juice;

and as of March 12, 2024, Rao's pasta sauces, dry pasta, frozen entrées, frozen pizza and soups;

Michael Angelo's frozen entrées and pasta sauces;

and noosa yogurts.

The segment also includes snacking products in foodservice and Canada;

2 unchanged sentences

The segment included the results of our Emerald nuts business, which was sold on May 30, 2023.

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

We evaluate segment performance before interest, taxes and costs associated with restructuring activities, cost savings and optimization initiatives, impairment charges and corporate expenses.

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

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

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 Six Months Ended

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

Three Months Ended Nine Months Ended

(Millions) April 28, 2024 April 30, 2023 April 28, 2024 April 30, 2023

Meals & Beverages $ 1,272 $ 1,108 $ 4,058 $ 3,971

1 unchanged sentence

Total $ 2,369 $ 2,229 $ 7,343 $ 7,289

Three Months Ended Six Months Ended

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

Three Months Ended Nine Months Ended

(Millions) April 28, 2024 April 30, 2023 April 28, 2024 April 30, 2023

Earnings before interest and taxes

8 unchanged sentences

(1) Represents unallocated items.

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.

Costs related to cost savings and optimization initiatives were $ 23 million and $ 68 million in the three- and nine-month periods ended April 28, 2024, and $ 27 million and $ 35 million in the three- and nine-month periods ended April 30, 2023, respectively.

Unrealized mark-to-market adjustments on outstanding undesignated commodity hedges were gains of $ 13 million and $ 5 million in the three- and nine-month periods ended April 28, 2024, and losses of $ 9 million in the three- and nine-month periods ended April 30, 2023, respectively.

Accelerated amortization expense related to customer relationship intangible assets was $ 6 million and $ 20 million in the three- and nine-month periods ended April 28, 2024, respectively.

Costs of $ 77 million and $ 96 million associated with the acquisition of Sovos Brands were included in the three- and nine-month periods ended April 28, 2024, respectively.

Litigation expenses related to the Plum baby food and snacks business, which was divested on May 3, 2021, were $ 3 million and were included in the nine-month period ended April 28, 2024.

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

There were pension actuarial losses of $ 17 million and $ 26 million in the three- and nine-month periods ended April 30, 2023, respectively.

(2) See Note 7 for additional information.

Our net sales based on product categories are as follows:

Three Months Ended Six Months Ended

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

Three Months Ended Nine Months Ended

(Millions) April 28, 2024 April 30, 2023 April 28, 2024 April 30, 2023

Soup $ 577 $ 571 $ 2,278 $ 2,316

5 unchanged sentences

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

Other simple meals include sauces, gravies, pasta, beans and canned poultry.

Other simple meals include sauces, yogurts, pasta, frozen entrées, canned poultry, frozen pizza, gravies and beans.

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

11 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

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

Three Months Ended Nine Months Ended

(Millions) April 28, 2024 April 30, 2023 April 28, 2024 April 30, 2023 Recognized as of April 28, 2024

Restructuring charges $ ( 3 ) $ 6 $ 1 $ 15 $ 281

5 unchanged sentences

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

(Millions) Recognized as of January 28, 2024

(Millions) Recognized as of April 28, 2024

Severance pay and benefits

12 unchanged sentences

Of the aggregate $ 905 million to $ 930 million of pre-tax costs identified to date, we expect approximately $ 725 million to $ 750 million will be cash expenditures.

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

In addition, we expect to invest approximately $ 705 million in capital expenditures, of which we invested $ 508 million as of April 28, 2024.

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

1 unchanged sentence

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:

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

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

4 unchanged sentences

2024 cash payments

Accrued balance at January 28, 2024 (2)

Accrued balance at April 28, 2024 (2)

__________________________________

6 unchanged sentences

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

January 28, 2024

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

April 28, 2024

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

Meals & Beverages $ 7 $ 16 $ 267

6 unchanged sentences

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

In the three-month period ended April 28, 2024, we incurred $ 5 million in Marketing and selling expenses related to this initiative.

Sovos Brands Integration Initiatives

On March 12, 2024, we completed the acquisition of Sovos Brands.

See Note 3 for additional information.

We have identified opportunities for cost synergies as we integrate Sovos Brands.

Cost estimates to achieve the synergies are continuing to be developed.

The total expected pre-tax costs and timing of when we expect to incur those costs, as well as the expected future cash expenditures, will be updated as detailed plans are developed.

We expect the pre-tax costs to be associated primarily with the Meals & Beverages segment.

In the three-month period ended April 28, 2024, we recorded Restructuring charges of $ 16 million related to initiatives to achieve the synergies.

A summary of the restructuring activity and related reserves associated with the Sovos Brands integration at April 28, 2024, is as follows:

(Millions) Severance Pay and Benefits

2024 charges $ 16

2024 cash payments —

Accrued balance at April 28, 2024 (1)

__________________________________

(1) Includes $ 5 million of severance pay and benefits recorded in Other liabilities in the Consolidated Balance Sheet.

Segment operating results do not include restructuring charges, nor implementation and integration costs, because we evaluate segment performance excluding such charges.

The costs incurred in the three-month period ended April 28, 2024 were associated with the Meals & Beverages segment.

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- and six-month periods ended January 28, 2024 and January 29, 2023, excludes less than 1 million stock options that would have been antidilutive.

The earnings per share calculation for the three- and nine-month periods ended April 28, 2024 and April 30, 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 Six Months Ended

Three Months Ended Nine 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

(Millions) April 28, 2024 April 30, 2023 April 28, 2024 April 30, 2023 April 28, 2024 April 30, 2023 April 28, 2024 April 30, 2023

Service cost $ 4 $ 3 $ — $ — $ 10 $ 10 $ — $ —

3 unchanged sentences

Net periodic benefit expense (income) $ — $ 15 $ 2 $ 2 $ ( 1 ) $ 15 $ 6 $ 5

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

The actuarial losses for the three- and nine-month periods ended April 30, 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 actuarial losses recognized for the three-month period ended April 30, 2023 were primarily due to decreases in discount rates used to determine the benefit obligation and plan experience, partially offset by gains on plan assets.

The actuarial losses recognized for the nine-month period ended April 30, 2023 were primarily due to losses on plan assets and plan experience, partially offset by increases in discount rates used to determine the benefit obligation.

The components of lease costs were as follows:

Three Months Ended Six Months Ended

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

Three Months Ended Nine Months Ended

(Millions) April 28, 2024 April 30, 2023 April 28, 2024 April 30, 2023

Operating lease cost (1)

1 unchanged sentence

Finance lease - amortization of right-of-use (ROU) assets 6 4 14 12

Finance lease - interest on lease liabilities 1 — 1 —

Short-term lease cost 15 14 50 48

5 unchanged sentences

Operating Leases

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

(Millions) Balance Sheet Classification April 28, 2024 July 30, 2023

ROU assets, net Other assets $ 283 $ 275

2 unchanged sentences

Finance Leases

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

(Millions) Balance Sheet Classification April 28, 2024 July 30, 2023

ROU assets, net Plant assets, net of depreciation $ 61 $ 27

2 unchanged sentences

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

Six Months Ended

(Millions) January 28, 2024 January 29, 2023

Nine Months Ended

(Millions) April 28, 2024 April 30, 2023

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

Operating cash flows from operating leases $ 70 $ 62

Operating cash flows from finance leases $ 1 $ —

Financing cash flows from finance leases $ 15 $ 12

2 unchanged sentences

Finance leases

ROU assets obtained with business acquired:

Operating leases $ 15 $ —

Finance leases

Short-term Borrowings and Long-term Debt

On October 10, 2023 , we entered into a delayed single draw term loan credit agreement (the 2024 DDTL Credit Agreement) totaling up to $ 2 billion scheduled to mature on October 8, 2024 .

On October 10, 2023 , we entered into the 2024 DDTL Credit Agreement totaling up to $ 2 billion scheduled to mature on October 8, 2024 .

Loans under the 2024 DDTL Credit Agreement bear interest at the rates specified in the 2024 DDTL Credit Agreement, which vary based on the type of loan and certain other conditions.

The 2024 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 2024 DDTL Credit Agreement) of not less than 3.25:1.00 , and events of default for credit facilities of this type.

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 January 28, 2024.

The proceeds of the loans under the 2024 DDTL Credit Agreement could only be used in connection with the acquisition of Sovos Brands and the payment of fees and expenses incurred in connection therewith.

On March 12, 2024, we borrowed $ 2 billion under the 2024 DDTL Credit Agreement and used the proceeds in order to fund the acquisition of Sovos Brands, along with the fees and expenses incurred in connection therewith.

In August 2023, we filed a registration statement with the Securities and Exchange Commission that registered an indeterminate amount of debt securities.

Under the registration statement we may issue debt securities from time to time, depending on market conditions.

On March 19, 2024, pursuant to the registration statement, we issued senior unsecured notes of $ 2.5 billion, consisting of:

• $ 400 million aggregate principal amount of notes bearing interest at a fixed rate of 5.30 % per annum, due March 20, 2026 , with interest payable semi-annually on each of March 20 and September 20 commencing September 20, 2024;

• $ 500 million aggregate principal amount of notes bearing interest at a fixed rate of 5.20 % per annum, due March 19, 2027 , with interest payable semi-annually on each of March 19 and September 19 commencing September 19, 2024;

• $ 600 million aggregate principal amount of notes bearing interest at a fixed rate of 5.20 % per annum, due March 21, 2029 , with interest payable semi-annually on each of March 21 and September 21 commencing September 21, 2024;

• $ 1 billion aggregate principal amount of notes bearing interest at a fixed rate of 5.40 % per annum, due March 21, 2034 , with interest payable semi-annually on each of March 21 and September 21 commencing September 21, 2024.

The notes contain customary covenants and events of default.

If a change of control triggering event occurs, we will be required to offer to purchase the notes at a purchase price equal to 101 % of the principal amount plus accrued and unpaid interest, if any, to the purchase date.

We used the net proceeds from the sale of the notes to repay the $ 2 billion of outstanding borrowings under the 2024 DDTL Credit Agreement used to fund the Sovos Brands acquisition, including fees and expenses in connection therewith, and the remainder of the net proceeds to repay commercial paper.

On April 5, 2024, we repaid $ 100 million of the $ 500 million outstanding under our Delayed Draw Term Loan Credit Agreement (the 2022 DDTL Credit Agreement) due November 15, 2025.

On April 16, 2024, we terminated our existing revolving credit facility dated September 27, 2021 (as amended on April 4, 2023).

On April 16, 2024, we entered into a Five-Year Credit Agreement for an unsecured, senior revolving credit facility (the 2024 Revolving Credit Facility Agreement) in an aggregate principal amount equal to $ 1.85 billion with a maturity date of April 16, 2029 or such later date as extended pursuant to the terms set forth in the 2024 Revolving Credit Facility Agreement.

The 2024 Revolving Credit Facility Agreement remained unused at April 28, 2024, except for $ 1 million of standby letters of credit that we issued under it.

We may increase the 2024 Revolving Credit Facility Agreement commitments up to an additional $ 500 million, subject to the satisfaction of certain conditions.

Loans under the 2024 Revolving Credit Facility Agreement will bear interest at the rates specified in the 2024 Revolving Credit Facility Agreement, which vary based on the type of loan and certain other conditions.

The 2024 Revolving Credit Facility Agreement contains customary covenants, including a financial covenant with respect to a minimum consolidated interest coverage ratio of consolidated adjusted EBITDA to consolidated interest expense of not less than 3.25:1.00 , and customary events of default for credit facilities of this type.

We have $ 1.15 billion aggregate principal amount of senior notes maturing in March 2025 that we expect to repay and/or refinance using available sources, which may include cash on hand, accessing the capital markets, commercial paper and/or revolving credit facility.

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 January 28, 2024, or July 30, 2023.

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

We are also exposed to credit risk from our customers.

3 unchanged sentences

Foreign Currency Exchange Risk

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

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

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

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

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

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 $ 75 million as of January 28, 2024, 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 April 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.

For derivatives that are designated and qualify as hedging instruments, the initial fair value of hedge components excluded from the assessment of effectiveness is recognized in earnings under a systematic and rational method over the life of the hedging instrument and is presented in the same statement of earnings line item as the earnings effect of the hedged item.

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

income (loss).

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

The notional amount of foreign exchange forward and option contracts that are not designated as accounting hedges was $ 279 million as of April 28, 2024, and $ 15 million as of July 30, 2023.

Interest Rate Risk

3 unchanged sentences

The forward starting interest rate swaps or treasury lock contracts are either designated as cash-flow hedging instruments or are undesignated.

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

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

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 $ 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.

We settled forward starting interest rate swaps with a notional value of $ 1.1 billion in March 2024 at a loss of $ 11 million.

The $ 11 million loss on these instruments was recorded in other comprehensive income (loss) and will be recognized as additional interest expense over the 10-year, 5-year, and 3-year lives of the debt issued in March 2024.

There were no forward starting interest rate swaps or treasury lock contracts outstanding as of April 28, 2024 and July 30, 2023.

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 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.

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

The notional amount of commodity contracts not designated as accounting hedges was $ 211 million as of April 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 $ 85 million as of January 28, 2024, and $ 47 million as of July 30, 2023.

The notional amount was $ 66 million as of April 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 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,

The notional amounts of the contracts were $ 71 million as of April 28, 2024, and $ 42 million 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 April 28, 2024, and July 30, 2023:

(Millions) Balance Sheet Classification April 28, 2024 July 30, 2023

Asset Derivatives

Derivatives designated as hedges:

Foreign exchange forward contracts Other current assets $ 1 $ —

Foreign exchange contracts Other current assets $ 1 $ —

Total derivatives designated as hedges $ 1 $ —

5 unchanged sentences

Total asset derivatives $ 21 $ 20

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

(Millions) Balance Sheet Classification April 28, 2024 July 30, 2023

Liability Derivatives

Derivatives designated as hedges:

Foreign exchange forward contracts Accrued liabilities $ — $ 1

Forward starting interest rate swaps Accrued liabilities 23 —

Foreign exchange contracts Accrued liabilities $ — $ 1

Total derivatives designated as hedges $ — $ 1

1 unchanged sentence

Commodity contracts Accrued liabilities $ 4 $ 5

Deferred compensation contracts Accrued liabilities 1 —

Total derivatives not designated as hedges $ 5 $ 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 January 28, 2024, and July 30, 2023, would be adjusted as detailed in the following table:

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

April 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 $ 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:

A cash margin liability balance of $ 2 million at April 28, 2024, and an asset balance of $ 2 million at July 30, 2023, were included in Accrued liabilities and Other current assets, respectively, in the Consolidated Balance Sheets.

The following tables show the effect of our derivative instruments designated as cash-flow hedges for the three- and nine-month periods ended April 28, 2024, and April 30, 2023, in other comprehensive income (loss) (OCI) and the Consolidated Statements of Earnings:

Total Cash-Flow Hedge

(Millions) January 28, 2024 January 29, 2023

(Millions) April 28, 2024 April 30, 2023

Three Months Ended

1 unchanged sentence

Effective portion of changes in fair value recognized in OCI:

Foreign exchange forward contracts ( 2 ) ( 2 )

Foreign exchange contracts 1 2

Forward starting interest rate swaps 12 —

1 unchanged sentence

Location in Earnings

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

Foreign exchange contracts Cost of products sold — ( 2 )

Forward starting interest rate swaps Interest expense — —

OCI derivative gain (loss) at end of quarter $ ( 13 ) $ ( 1 )

Six Months Ended

Nine 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

Foreign exchange contracts 4 7

Forward starting interest rate swaps ( 11 ) —

2 unchanged sentences

Commodity contracts Cost of products sold — ( 3 )

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

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

Forward starting interest rate swaps Interest expense 1 1

OCI derivative gain (loss) at end of quarter $ ( 13 ) $ ( 1 )

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:

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

The following tables show the total amounts of line items presented in the Consolidated Statements of Earnings for the three- and nine-month periods ended April 28, 2024, and April 30, 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

January 28, 2024 January 29, 2023

April 28, 2024 April 30, 2023

(Millions) Cost of products sold Interest

4 unchanged sentences

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

Six Months Ended

January 28, 2024 January 29, 2023

Nine Months Ended

April 28, 2024 April 30, 2023

(Millions) Cost of products sold Interest

6 unchanged sentences

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 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 )

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

(Millions) April 28, 2024 April 30, 2023 April 28, 2024 April 30, 2023

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

Commodity contracts Cost of products sold ( 13 ) 18 ( 9 ) 7

11 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 January 28, 2024, and July 30, 2023, consistent with the fair value hierarchy:

January 28, 2024

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

April 28, 2024

Fair Value Measurements at

January 28, 2024 Using

April 28, 2024 Using

Fair Value Hierarchy

4 unchanged sentences

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

Foreign exchange forward contracts (1)

Foreign exchange contracts (1)

$ 1 $ — $ 1 $ — $ — $ — $ — $ —

6 unchanged sentences

Total assets at fair value $ 22 $ 6 $ 8 $ 8 $ 21 $ 12 $ 7 $ 2

January 28, 2024

April 28, 2024

Fair Value Measurements at

January 28, 2024 Using

April 28, 2024 Using

Fair Value Hierarchy

4 unchanged sentences

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

Foreign exchange forward contracts (1)

Foreign exchange contracts (1)

$ — $ — $ — $ — $ 1 $ — $ 1 $ —

1 unchanged sentence

4 1 3 — 5 3 2 —

Deferred compensation obligation (4)

Deferred compensation derivative contracts (3)

1 — 1 — — — — —

Forward starting interest rate swaps (5)

Deferred compensation obligation (4)

94 94 — — 91 91 — —

6 unchanged sentences

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

(5) Based on SOFR swap rates.

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

The following table summarizes the changes in fair value of Level 3 assets and liabilities for the nine-month periods ended April 28, 2024, and April 30, 2023:

Nine Months Ended

(Millions) April 28, 2024 April 30, 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 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.

There were cash equivalents of $ 26 million at April 28, 2024 and none at July 30, 2023.

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

The fair value of short- and long-term debt was $ 6.714 billion at April 28, 2024, and $ 4.293 billion at July 30, 2023.

The carrying value was $ 7.179 billion at April 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 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.

During the nine-month period ended April 28, 2024, we repurchased 1.08 million shares at a cost of $ 46 million pursuant to our June 2021 program.

As of April 28, 2024, approximately $ 58 million remained available under the June 2021 program and approximately $ 301 million remained available under the September 2021 program.

During the nine-month period ended April 30, 2023, we repurchased 2.692 million shares at a cost of $ 141 million.

Stock-based Compensation

2 unchanged sentences

We last issued stock options and FCF performance restricted stock units in 2019.

In connection with the Sovos Brands acquisition, we issued 1.721 million time-lapse restricted stock units (Replacement units) in exchange for certain Sovos Brands restricted stock units and performance restricted stock units.

The Replacement units are subject to the same terms and conditions of the original Sovos Brands restricted stock units and performance restricted stock units.

Certain Replacement units were subject to accelerated vesting.

The Replacement units have a total fair value of $ 74 million based on the quoted price of our stock on the acquisition date.

The portion of Replacement units attributed to pre-combination service was $ 42 million, which was accounted for as part of consideration transferred and was recorded in Additional Paid-in Capital in our Consolidated Statements of Equity.

See Note 3 for additional information.

The portion of the Replacement units attributable to post-combination service will be recognized as stock-based compensation expense over the remaining vesting period.

In determining stock-based compensation expense, we estimate forfeitures expected to occur.

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

Three Months Ended Six Months Ended

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

Three Months Ended Nine Months Ended

(Millions) April 28, 2024 April 30, 2023 April 28, 2024 April 30, 2023

Total pre-tax stock-based compensation expense (1)

$ 44 $ 17 $ 80 $ 48

Tax-related benefits $ 3 $ 3 $ 9 $ 9

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

_______________________________________

(1) Includes $ 26 million of expense related to accelerated vesting of certain Replacement units in the three- and nine-month periods ended April 28, 2024.

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

Options Weighted-

6 unchanged sentences

Terminated — $ —

Outstanding at January 28, 2024

Outstanding at April 28, 2024

833 $ 44.77 3.5 $ 4

Exercisable at January 28, 2024

Exercisable at April 28, 2024

833 $ 44.77 3.5 $ 4

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

The total intrinsic value of options exercised during the nine-month period ended April 30, 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 January 28, 2024:

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

Units Weighted-Average Grant-Date Fair Value

3 unchanged sentences

Granted 1,744 $ 41.46

Replacement units granted in connection with Sovos Brands acquisition 1,721 $ 43.01

Vested ( 2,233 ) $ 43.86

Forfeited ( 184 ) $ 43.27

Nonvested at January 28, 2024

Nonvested at April 28, 2024

3,322 $ 43.23

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

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

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

Since 2022, we have granted EPS performance restricted stock units that will be earned upon the achievement of our adjusted EPS compound annual growth rate goal, measured over a three-year period.

3 unchanged sentences

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

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:

There were 887 thousand EPS performance target grants outstanding at April 28, 2024, with a weighted-average grant-date fair value of $ 42.98 .

As of April 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 1.8 years.

The fair value of restricted stock units vested during the nine-month periods ended April 28, 2024, and April 30, 2023, was $ 95 million and $ 36 million, respectively.

The weighted-average grant-date fair value of the restricted stock units granted during the nine-month period ended April 30, 2023 was $ 47.55 .

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

Units Weighted-Average Grant-Date Fair Value

4 unchanged sentences

Forfeited ( 159 ) $ 52.20

Nonvested at January 28, 2024

Nonvested at April 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 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.

As of April 28, 2024, total remaining unearned compensation related to TSR performance restricted stock units was $ 16 million, which will be amortized over the weighted-average remaining service period of 1.8 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 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.

The fair value of TSR performance restricted stock units vested during the nine-month periods ended April 28, 2024, and April 30, 2023, was $ 12 million and $ 21 million, respectively.

The grant-date fair value of the TSR performance restricted stock units granted during the nine-month period ended April 30, 2023, was $ 53.74 .

The tax benefits on the exercise of stock options in the nine-month period ended April 30, 2023 were not material.

Cash received from the exercise of stock options was $ 22 million for the nine-month period ended April 30, 2023, and is reflected in cash flows from financing activities in the Consolidated Statements of Cash Flows.

Commitments and Contingencies

9 unchanged sentences

Disposition valuations are also subject to the uncertainty of how opposing parties and their counsel will themselves view the relevant evidence and applicable law.

On March 20, 2024, the United States Department of Justice (DOJ), on behalf of the U.S.

Environmental Protection Agency, and National Education Law Center, on behalf of Environment America and Lake Erie Waterkeeper, filed lawsuits in the United States District Court for the Northern District of Ohio – Western Division concerning alleged violations of the Clean Water Act relating to alleged contaminant discharges from the company’s Napoleon, Ohio wastewater treatment facility in excess of the facility’s Clean Water Act permit limits.

We have and are continuing to take actions to remediate the exceedances

and are in settlement discussions with the DOJ and the private environmental groups.

While we cannot predict with certainty the amount of any civil penalty or the timing of the resolution of this matter, we do not expect that the ultimate costs to resolve this matter will have a material adverse effect on our financial condition, results of operations, or cash flows.

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 January 28, 2024.

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

annual period, based on information currently known by us, we do not believe any such charges are likely to have a material adverse effect on our consolidated results of operations or financial condition.

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 April 28, 2024.

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

Other Contingencies

1 unchanged sentence

Certain indemnifications have finite expiration dates.

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

Liabilities recognized based on known exposures related to such matters were not material at April 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 $ 252 million at January 28, 2024, and $ 258 million at July 30, 2023.

Amounts outstanding under these programs, which are included in Accounts payable on the Consolidated Balance Sheets, were approximately $ 260 million at April 28, 2024 and July 30, 2023.

Supplemental Financial Statement Data

(Millions) January 28, 2024 July 30,

(Millions) April 28, 2024 July 30, 2023

Balance Sheets

2 unchanged sentences

$ 1,300 $ 1,291

Three Months Ended Six Months Ended

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

Three Months Ended Nine Months Ended

(Millions) April 28, 2024 April 30, 2023 April 28, 2024 April 30, 2023

Statements of Earnings

2 unchanged sentences

$ 18 $ 10 $ 52 $ 31

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

Costs associated with pending acquisition (2)

Net periodic benefit expense (income) other than the service cost ( 2 ) 14 ( 5 ) 10

Costs associated with acquisition (2)

Transition services fees

2 unchanged sentences

_______________________________________

(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.

(1) Includes accelerated amortization expense related to customer relationship intangible assets of $ 6 million and $ 20 million in the three- and nine-month periods ended April 28, 2024, respectively.

(2) Related to the acquisition of Sovos Brands.

See Note 3 for additional information.

Pending Acquisition

On August 7, 2023 , we entered into a merger agreement to acquire Sovos Brands for $ 23.00 per share in cash, representing a total enterprise value of approximately $ 2.7 billion.

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).

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 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