What changed in this filing

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Item 7. Management’s Discussion and Analysis

2024-09-19 compared with 2023-09-21 · 290 added, 210 removed, 375 unchanged (57% of the section changed)

5 unchanged sentences

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

In 2023 we delivered strong growth against all of our key financial metrics, exceeding our initial expectations and advancing many of our key strategic initiatives.

During 2023, we navigated through a challenging environment marked by continued supply chain pressures, particularly around high input cost inflation.

Our improved supply chain execution combined with inflation-driven pricing, continued supply chain productivity improvements and cost savings initiatives partially mitigated ongoing inflationary pressures experienced in 2023.

Our strategy is to unlock our full growth potential by focusing on our core brands in two divisions within North America while delivering on the promise of our purpose - Connecting people through food they love .

Our strategic plan is based on four pillars:

build a winning team and culture;

accelerate profitable growth;

fuel investments and margins with targeted cost savings;

and deliver on the promise of our purpose all as further discussed below.

We plan to continue our focus on building a winning team and culture by driving organizational engagement, belonging and effectiveness through our new employee value proposition:

In 2024, we continued to advance our key strategic initiatives in a challenging environment.

We completed the acquisition of Sovos Brands, Inc.

(Sovos Brands) which has brought incremental growth to our Meals & Beverages segment and supports the continued transformation of our advantaged portfolio.

During 2024, we continued to navigate through a landscape marked by consumer behavior shifts, commodity cost fluctuations and other global macroeconomic challenges.

During 2024, we experienced a moderate amount of input cost inflation and increased supply chain stability, which we expect to continue through 2025.

Our strategy is to Set the Standard for performance in the food industry by driving accelerated growth in our two divisions within North America while delivering on the promise of our purpose - Connecting people through food they lov e.

Our strategic framework is based on five areas that position us to achieve best in class performance:

Best Portfolio;

Top-Tier Performance;

Winning Execution;

and Lasting Impact, as further discussed below.

We plan to continue our focus on creating a Top Team by fostering an engaged and inclusive culture, while building capabilities and developing leaders at all levels of the organization.

We are driving organizational engagement, belonging and effectiveness through our employee value proposition:

Make history with Campbell’s , and modernizing our facilities.

In 2023, we announced the consolidation of our Snacks offices in Charlotte, North Carolina and Norwalk, Connecticut into Camden, New Jersey and a $50 million investment in the Camden campus.

We expect a single headquarters will accelerate our plan to build a winning team and culture by investing in our campus and our people.

In addition, we plan to continue to deliver on the promise of our purpose with continued progress on our sustainability goals and strengthening our connection to the communities in which we operate.

We believe that we can accelerate our profitable growth model by growing market share and driving integrated business planning programming throughout the company.

We expect to expand into new market segments through retail execution, marketing and innovation.

In addition, we expect to continue to focus on accelerating the growth of our Snacks brands while also sustaining the growth in U.S.

soup and our other core brands.

We also expect to fuel investments and margins by continuing to focus on effective revenue management, transforming our supply chain into a competitive advantage, and finding innovative ways to enhance our products and processes to unlock cost efficiencies and savings across the enterprise.

We continue to pursue our multi-year cost savings initiatives with targeted annualized cost savings of $1 billion for continuing operations by the end of 2025, with $890 million in cost savings achieved through 2023.

See "Restructuring Charges and Cost Savings Initiatives" for additional information on these initiatives.

We have completed the consolidation of our Snacks offices into Camden, New Jersey.

Our single headquarters has helped to foster closer collaboration and enhance decision-making, thereby improving our ability to execute on our business strategy.

• Best Portfolio :

We believe that we are well-positioned as a transformative category leader with an advantaged portfolio of brands across our Meals & Beverages and Snacks segments.

We will support our Best Portfolio priority and accelerate our profitable growth model by growing market share and driving integrated business planning programming throughout the company.

• Top-Tier Performance :

We also believe that we have the resources and capabilities to deliver predictable and consistent growth resulting in Top-Tier Performance through continued focus on effective revenue management, and finding innovative ways to enhance our products and processes to unlock cost efficiencies and savings across the enterprise.

• Winning Execution :

We will focus on Winning Execution by delivering an advantaged supply chain by continuing to modernize our manufacturing and distribution network, with a focus on logistics and distribution expertise.

We continued to pursue our multi-year cost savings initiatives with $950 million in cost savings achieved through 2024.

On September 10, 2024, we announced plans to implement new cost savings initiatives beginning in 2025 with targeted annual savings of approximately $250 million by the end of 2028.

See "Restructuring Charges, Cost Savings Initiatives and Other Optimization Initiatives" for additional information on these initiatives.

• Lasting Impact :

Finally, we plan to continue to deliver on the promise of our purpose through a focus on Lasting Impact with continued progress on our sustainability and community goals and strengthening our connection to the communities in which we operate.

Business Trends

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cost inflation;

changing consumer preferences;

an evolving consumer landscape;

and a competitive and dynamic retail environment.

Our strategy is designed, in part, to capture growing consumer preferences for snacking and convenience.

For example, we believe that consumers are changing their eating habits by increasing the type and frequency of snacks they consume and are continuing in-home eating behaviors that were driven by the COVID-19 pandemic.

For example, we believe that consumers are changing their eating habits by increasing the type and frequency of snacks they consume while also making more intentional decisions on value in snacking.

We also expect consumers to continue in-home eating behaviors.

Retailers continue to use their buying power and negotiating strength to seek increased promotional programs funded by their suppliers and more favorable terms, including supplier-funded customized products.

Any consolidations among retailers would continue to create large and sophisticated customers that may further this trend.

Retailers also continue to grow and promote store brands that compete with branded products, especially on price.

Throughout 2022 and continuing into 2023, our industry has been impacted by supply chain disruptions, commodity cost volatility, labor market issues, input cost inflation, and other global macroeconomic challenges.

Throughout 2023, we have experienced some moderation in input cost inflation, and we expect modest pressures of input cost inflation to continue into 2024.

We anticipate continued supply chain productivity and previously implemented pricing actions to mitigate some of the inflationary pressures, and expect such benefits to largely offset the incremental costs in 2024.

Retailers also continue to grow and promote private label brands that compete with branded products, especially on price.

Our industry continues to navigate a steady and ongoing recovery in light of supply chain disruptions, commodity cost volatility, labor market issues, economic uncertainties regarding the 2024 presidential election, impacts of a potential change in administration and other global macroeconomic challenges.

Throughout 2024, we have experienced some moderation in input cost inflation, and we expect input cost inflation in 2025 to remain at similar levels as 2024 , as we continue to see improvement across certain ingredients and packaging materials.

We anticipate continued supply chain productivity and previously implemented pricing actions to mitigate some of the inflationary pressures, and expect such benefits to offset incremental costs in 2025.

We will continue to evaluate the evolving macroeconomic environment to take action to mitigate the impact on our business, consolidated results of operations and financial condition.

We will also be lapping 2023 price increases, and anticipate that favorable net price realization will represent a reduced contribution to sales in 2024.

Recent Developments

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

(Sovos Brands) for $23.00 per share in cash, representing a total enterprise value of approximately $2.7 billion.

The closing of the transaction is subject to customary closing conditions and termination rights, including the approval of Sovos Brands’ shareholders and regulatory approvals.

We plan to finance the acquisition through the issuance of new debt.

For additional information on this pending acquisition, see our Form 8-K filed with the U.S.

Securities and Exchange Commission on August 7, 2023, and Note 19 to the Consolidated Financial Statements.

Business Acquisition & Divestiture

On March 12, 2024, we completed the acquisition of Sovos Brands for total purchase consideration of $2.899 billion.

For additional information on the Sovos Brands acquisition, see Note 3 to the Consolidated Financial Statements.

All references to the acquisition below refer to the Sovos Brands acquisition.

On August 26, 2024, we completed the sale of our Pop Secret popcorn business.

For additional information on the divestiture, see Note 21 to the Consolidated Financial Statements.

Stock Exchange Listing

On August 19, 2024, our capital stock, par value $0.0375 per share (the Capital Stock), began trading on The Nasdaq Stock Market LLC following our voluntarily withdrawal from listing on the New York Stock Exchange after market close on August 16, 2024.

Our Capital Stock continues to trade under the stock symbol “CPB.”

Summary of Results

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There were 52 weeks in 2024, 2023 and 2022.

• Net sales increased 9% in 2023 to $9.357 billion with the benefit of favorable inflation-driven net price realization more than offsetting unfavorable volume/mix.

• Gross profit, as a percent of sales, increased to 31.2% in 2023 from 30.7% a year ago.

The increase was primarily due to favorable net price realization, supply chain productivity improvements and mark-to-market adjustments on outstanding undesignated commodity hedges, partially offset by higher cost inflation and other supply chain costs as well as unfavorable volume/mix.

There will be 53 weeks in 2025.

• Net sales increased 3% in 2024 to $9.636 billion primarily due to a 5-point benefit from the acquisition of Sovos Brands and favorable net price realization, partially offset by unfavorable volume/mix.

• Gross profit, as a percent of sales, decreased to 30.8% in 2024 from 31.2% a year ago.

The decrease was primarily due to higher cost inflation and other supply chain costs, the impact of the acquisition and mark-to-market adjustments on outstanding undesignated commodity hedges, partially offset by the benefits from supply chain productivity improvements and favorable net price realization.

• Earnings per share were $1.89 in 2024, compared to $2.85 a year ago.

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The following items impacted the comparability of net earnings and net earnings per share:

• In 2023, we recognized actuarial gains on our pension and postretirement plans in Other expenses / (income) of $15 million ($11 million after tax, or $.04 per share).

In 2022, we recognized actuarial losses in Other expenses / (income) of $44 million ($33 million after tax, or $.11 per share);

• In 2023, we recognized gains in Cost of products sold of $21 million ($16 million after tax, or $.05 per share) associated with unrealized mark-to-market adjustments on outstanding undesignated commodity hedges.

In 2022, we recognized losses in Cost of products sold of $59 million ($44 million after tax, or $.15 per share) associated with unrealized mark-to-market adjustments on outstanding undesignated commodity hedges;

• We implemented several cost savings initiatives in recent years.

In 2024, we recorded Restructuring charges of $17 million and implementation costs and other related costs of $54 million in Administrative expenses, $26 million in Cost of products sold, $4 million in Marketing and selling expenses and $3 million in Research and development expenses related to these initiatives.

In 2023, we recorded Restructuring charges of $16 million and implementation costs and other related costs of $24 million in Administrative expenses, $18 million in Cost of products sold, $5 million in Marketing and selling expenses and $3 million in Research and development expenses (aggregate impact of $50 million after tax, or $.17 per share) related to these initiatives.

In 2022, we recorded Restructuring charges of $5 million and implementation costs and other related costs of $20 million in Administrative expenses, $5 million in Cost of products sold and $1 million in Marketing and selling expenses (aggregate impact of $24 million after tax, or $.08 per share) related to these initiatives.

See Note 7 to the Consolidated Financial Statements and "Restructuring Charges and Cost Savings Initiatives" for additional information;

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

In 2024, we recognized $5 million in Marketing and selling expenses related to this initiative.

In 2024, the total aggregate impact related to the cost savings and optimization initiatives was $109 million ($83 million after tax, or $.28 per share).

See Note 8 to the Consolidated Financial Statements and "Restructuring Charges, Cost Savings Initiatives and Other Optimization Initiatives" for additional information;

• In 2024, we recognized actuarial losses on our pension and postretirement plans in Other expenses / (income) of $33 million ($25 million after tax, or $.08 per share).

In 2023, we recognized actuarial gains in Other expenses / (income) of $15 million ($11 million after tax, or $.04 per share);

• In 2024, we recognized losses in Cost of products sold of $22 million ($16 million after tax, or $.05 per share) associated with unrealized mark-to-market adjustments on outstanding undesignated commodity hedges.

In 2023, we recognized gains in Cost of products sold of $21 million ($16 million after tax, or $.05 per share) associated with unrealized mark-to-market adjustments on outstanding undesignated commodity hedges;

• In the first quarter of 2024, we announced our intent to acquire Sovos Brands and on March 12, 2024 the acquisition closed.

In 2024, we incurred $126 million of costs associated with the acquisition, of which $21 million was recorded in Restructuring charges, $47 million in Administrative expenses, $35 million in Other expenses / (income), $3 million in Marketing and selling expenses, $2 million in Research and development expenses and $18 million in Cost of products sold, of which $17 million was associated with the acquisition date fair value adjustment for inventory.

We also recorded costs of $2 million in Interest expense related to costs associated with the Delayed Draw Term Loan Credit Agreement (the 2024 DDTL Credit Agreement) used to fund the acquisition.

The aggregate impact was $128 million, $109 million after tax, or $.36 per share.

In 2023, we incurred costs associated with the acquisition in Other expense / (income) of $5 million ($4 million after tax, or $.01 per share);

• In 2024, we recorded accelerated amortization expense in Other expenses / (income) of $27 million ($20 million after tax, or $.07 per share) related to customer relationship intangible assets due to the loss of certain contract manufacturing customers, which began in the fourth quarter of 2023.

In 2023, we recorded accelerated amortization expense in Other expenses / (income) of $7 million ($5 million after tax, or $.02);

• In the fourth quarter of 2024, we recognized an impairment charge of $53 million in Other expenses / (income) on certain salty snacks and cookie trademarks within our Snacks segment, including Tom's , Jays , Kruncher's , O-Ke-Doke , Stella D'oro and Archway , collectively referred to as our "Allied brands." In 2024, sales and operating performance were below expectations due in part to competitive pressure and reduced margins.

In the fourth quarter of 2024, based on recent performance and reevaluation of the position of the Allied brands within our portfolio, we lowered our near-term and long-term outlook for future sales and operating performance.

In the fourth quarter of 2024, we performed an impairment assessment on the assets in our Pop Secret popcorn business within our Snacks segment as sales and operating performance were below expectations due in part to competitive pressure and reduced margins, and as we pursued divesting the business.

As a result of these factors, in the fourth quarter of 2024, we lowered our long-term outlook for the business and recognized an impairment charge of $76 million in Other expenses / (income) on the trademark.

The sale of the business was completed on August 26, 2024.

The total aggregate impact of the impairment charges was $129 million ($98 million after tax, or $.33 per share).

See "Critical Accounting Estimates" for additional information;

• In 2024, we recorded pre- and after-tax litigation expenses in Administrative expenses of $5 million ($.02 per share) related to the Plum baby food and snacks business (Plum), which was divested on May 3, 2021, and certain other litigation matters;

• In 2024, we recorded costs of $2 million in Cost of products sold and $1 million in Administrative expenses (aggregate impact of $2 million after tax, or $.01 per share) related to a cybersecurity incident that was identified in the fourth quarter of 2023;

• In 2023, we recorded a pre- and after-tax loss in Other expenses / (income) of $13 million ($.04 per share) on the sale of our Emerald nuts business, which was sold on May 30, 2023.

• In 2023, we recorded accelerated amortization expense in Other expenses / (income) of $7 million ($5 million after tax, or $.02 per share) related to customer relationship intangible assets due to the loss of certain contract manufacturing customers;

• In the first quarter of 2024, we announced our intent to acquire Sovos Brands.

In 2023, we incurred transaction costs in Other expenses / (income) of $5 million ($4 million after tax, or $.01 per share) associated with the pending acquisition, which we expect to close by the end of December 2023;

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

The items impacting comparability are summarized below:

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Net earnings attributable to Campbell Soup Company $ 567 $ 1.89 $ 858 $ 2.85

Costs associated with cost savings and optimization initiatives $ (83) $ (.28) $ (50) $ (.17)

Pension and postretirement actuarial gains (losses) (25) (.08) 11 .04

Commodity mark-to-market gains (losses) (16) (.05) 16 .05

Restructuring charges, implementation costs and other related costs (50) (.17) (24) (.08)

Charges associated with divestiture (13) (.04) — —

Costs associated with acquisition (109) (.36) (4) (.01)

Accelerated amortization (20) (.07) (5) (.02)

Transaction costs (4) (.01) — —

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

Impairment charges (98) (.33) — —

Certain litigation expenses (5) (.02) — —

Cybersecurity incident costs (2) (.01) — —

Charges associated with divestiture — — (13) (.04)

Impact of items on Net earnings (1)

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Net earnings attributable to Campbell Soup Company were $567 million ($1.89 per share) in 2024, compared to $858 million ($2.85 per share) in 2023.

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

After adjusting for items impacting comparability, earnings increased reflecting improved gross profit, partially offset by higher interest expense, higher marketing and selling expenses, higher other expenses and higher research and development expenses.

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

Net periodic pension and postretirement benefit income excluding any actuarial gains or losses was $44 million ($33 million after tax, or $.11 per share) lower in 2023.

Net Earnings attributable to Campbell Soup Company - 2023 Compared with 2022

In addition to the 2023 items that impacted comparability of Net earnings discussed above, the following items impacted the comparability of net earnings and net earnings per share:

Continuing Operations

• In 2021, we recognized actuarial gains on our pension and postretirement plans in Other expenses / (income) of $203 million ($155 million after tax, or $.51 per share);

• In 2021, we recognized gains in Cost of products sold of $50 million ($38 million after tax, or $.12 per share) associated with unrealized mark-to-market adjustments on outstanding undesignated commodity hedges;

• In 2021, we recorded Restructuring charges of $21 million and implementation costs and other related costs of $28 million in Administrative expenses, $3 million in Cost of products sold and $1 million in Marketing and selling expenses (aggregate impact of $40 million after tax, or $.13 per share) related to the cost savings initiatives discussed above.

See Note 7 to the Consolidated Financial Statements and "Restructuring Charges and Cost Savings Initiatives" for additional information;

• In 2021, we recorded a loss in Other expenses / (income) of $11 million (and a gain of $3 million after tax, or $.01 per share) on the sale of our Plum baby food and snacks business;

• In 2021, we recorded a $19 million ($.06 per share) deferred tax charge in connection with a legal entity reorganization as part of the continued integration of Snyder's-Lance, Inc.

(Snyder's-Lance).

• In 2022, we recorded Restructuring charges of $5 million and implementation and other related costs of $20 million in Administrative expenses, $5 million in Cost of products sold and $1 million in Marketing and selling expenses (aggregate impact of $24 million after tax, or $.08 per share) related to the cost savings initiatives discussed above.

See Note 8 to the Consolidated Financial Statements and "Restructuring Charges, Cost Savings Initiatives and Other Optimization Initiatives" for additional information;

• In 2022, we recognized actuarial losses on our pension and postretirement plans in Other expenses / (income) of $44 million ($33 million after tax, or $.11 per share);

• In 2022, we recognized losses in Cost of products sold of $59 million ($44 million after tax, or $.15 per share) associated with unrealized mark-to-market adjustments on outstanding undesignated commodity hedges;

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

The items impacting comparability are summarized below:

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Impact Earnings

Earnings from continuing operations attributable to Campbell Soup Company $ 757 $ 2.51 $ 1,008 $ 3.30

Continuing operations:

Net earnings attributable to Campbell Soup Company $ 858 $ 2.85 $ 757 $ 2.51

Costs associated with cost savings and optimization initiatives $ (50) $ (.17) $ (24) $ (.08)

Pension and postretirement actuarial gains (losses) 11 .04 (33) (.11)

Commodity mark-to-market gains (losses) 16 .05 (44) (.15)

Restructuring charges, implementation costs and other related costs (24) (.08) (40) (.13)

Costs associated with acquisition (4) (.01) — —

Accelerated amortization (5) (.02) — —

Charges associated with divestiture (13) (.04) — —

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

Gain associated with divestiture — — 3 .01

Deferred tax charge — — (19) (.06)

Impact of items on Earnings from continuing operations (1)

Impact of items on Net earnings (1)

$ (45) $ (.15) $ (104) $ (.34)

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

Earnings from continuing operations were $757 million ($2.51 per share) in 2022, compared to $1.008 billion ($3.30 per share) in 2021.

After adjusting for items impacting comparability, earnings from continuing operations decreased reflecting lower gross profit, lower other income and higher administrative expenses, mostly offset by lower marketing and selling expenses, lower interest expense and a lower effective tax rate.

Net earnings attributable to Campbell Soup Company were $858 million ($2.85 per share) in 2023, compared to $757 million ($2.51 per share) in 2022.

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

See "Discontinued Operations" for additional information.

Net periodic pension and postretirement benefit income excluding any actuarial gains or losses was $44 million ($33 million after tax, or $.11 per share) lower in 2023.

DISCUSSION AND ANALYSIS

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2024 versus 2023

Meals & Beverages (1)

Meals & Beverages Snacks

Volume/mix (2)% (2)% (2)%

Net price realization (1)

Currency (1) — —

Acquisition 9 — 5

2023 versus 2022

Meals & Beverages Snacks (2)

Meals & Beverages (2)

Volume/mix (5)% (2)% (4)%

Net price realization (1)

Currency (1) — —

__________________________________________

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

In 2024, Meals & Beverages sales increased 7% reflecting a 9-point benefit from the acquisition of Sovos Brands.

Sales were impacted by unfavorable volume/mix with neutral net price realization.

Excluding the benefit from the acquisition, sales decreased primarily due to declines in U.S.

retail products, including beverages and U.S.

soup, partially offset by gains in foodservice and Canada.

Sales of U.S.

soup decreased 2% primarily due to decreases in ready-to-serve soups and condensed soups, partially offset by an increase in broth.

On a two-year CAGR basis, sales increased 7%, including the impact of the acquisition.

In 2023, Meals & Beverages sales increased 7% primarily due to increases in U.S.

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soup increased 3% primarily due to increases in ready-to-serve soups and broth.

In 2022, Meals & Beverages sales were comparable with prior year.

Excluding the impact from the divestiture of the Plum baby food and snacks business, sales increased primarily due to increases in U.S.

soup and foodservice, partially offset by declines in V8 beverages.

Favorable inflation-driven net price realization was partially offset by lower volume/mix, which decreased primarily due to supply constraints driven by labor and materials availability and price elasticities.

Sales of U.S.

soup increased 3% due to increases in ready-to-serve soups, condensed soups and broth.

In 2024, Snacks sales decreased 2%.

Excluding the impact from the divestiture of the Emerald nuts business, sales decreased as declines in third-party partner brands and contract manufacturing, fresh bakery and Pop Secret popcorn were partially offset by sales of our power brands, which increased 2%.

Sales of power brands were driven by increases in Goldfish crackers and Lance sandwich crackers.

Volume/mix declines were partially offset by favorable net price realization.

On a two-year CAGR basis, sales increased 5%.

In 2023, Snacks sales increased 13% driven by sales of our power brands which increased 17%.

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Sales benefited from favorable net price realization.

In 2022, Snacks sales increased 3% driven by sales of our power brands which increased 7%.

Sales increased due to increases in cookies and crackers, primarily Goldfish crackers, and in salty snacks, primarily Snyder’s of Hanover pretzels and Kettle Brand potato chips which more than offset declines in Late July snacks, partially offset by declines in non-core businesses.

Favorable inflation-driven net price realization was partly offset by a decline in volume/mix.

Volume/mix declined driven by supply constraints due to labor and materials availability and price elasticities .

Gross profit, defined as Net sales less Cost of products sold, increased by $290 million in 2023 from 2022 and decreased by $184 million in 2022 from 2021.

Gross profit, defined as Net sales less Cost of products sold, increased by $54 million in 2024 from 2023 and increased by $290 million in 2023 from 2022.

As a percent of sales, gross profit was 30.8% in 2024, 31.2% in 2023 and 30.7% in 2022.

The 50 basis-point increase and the 250 basis-point decrease in gross profit margin in 2023 and 2022, respectively, were due to the following factors:

The 40 basis-point decrease and the 50 basis-point increase in gross profit margin in 2024 and 2023, respectively, were due to the following factors:

Margin Impact

Net price realization 950 540

Productivity improvements 300 130

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

(310) (1,040)

Impact of acquisition (2)

Higher costs associated with cost savings initiatives (10) (10)

Productivity improvements 240 300

Net price realization 60 950

Volume/mix (3)

Higher restructuring-related costs (10) —

__________________________________________

(1) 2023 includes an estimated positive margin impact of a 90 basis-point benefit from the change in unrealized mark-to-market adjustments on outstanding undesignated commodity hedges and 10 basis points from the benefit of cost savings initiatives, which were more than offset by cost inflation and other factors.

2022 includes an estimated positive margin

impact of 30 basis points from the benefit of cost savings initiatives, which was more than offset by cost inflation and other factors, including a 130 basis-point negative impact from the change in unrealized mark-to-market adjustments on outstanding undesignated commodity hedges.

(1) 2024 includes an estimated positive margin impact of 20 basis points from the benefit of cost savings initiatives, which was more than offset by cost inflation and other factors, including a 40 basis-point negative impact from the change in unrealized mark-to-market adjustments on outstanding undesignated commodity hedges and a 10 basis-point negative impact from a cybersecurity incident.

2023 includes a 90 basis-point positive impact from the change in unrealized mark-to-market adjustments on outstanding undesignated commodity hedges and an estimated positive margin impact of 10 basis points from the benefit of cost savings initiatives, which were more than offset by cost inflation and other factors.

(2) Includes a negative margin impact of 20 basis points from a Sovos Brands acquisition date fair value adjustment for inventory.

(3) Includes the impact of operating leverage.

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Marketing and selling expenses increased 3% in 2024 from 2023.

The increase was primarily due to the impact of the acquisition (approximately 4 points), higher selling expenses (approximately 1 point) and higher other marketing expenses (approximately 1 point), partially offset by lower advertising and consumer promotion expense (approximately 3 points), primarily in Meals & Beverages.

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

The increase was primarily due to higher advertising and consumer promotion expense (approximately 7 points) and higher selling expenses (approximately 6 points), partially offset by increased benefits from cost savings initiatives (approximately 3 points).

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

Marketing and selling expenses decreased 10% in 2022 from 2021.

The decrease was primarily due to lower advertising and consumer promotion expense (approximately 10 points).

The reduction in advertising and consumer promotion expense was primarily due to supply constraints.

Administrative Expenses

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Administrative expenses increased 13% in 2024 from 2023.

The increase was primarily due to costs associated with the acquisition (approximately 7 points), higher costs related to cost savings initiatives (approximately 5 points), higher general administrative costs and inflation (approximately 3 points), the impact of the acquisition (approximately 2 points) and higher benefit-related costs (approximately 2 points), partially offset by increased benefits from cost savings initiatives (approximately 5 points) and lower incentive compensation (approximately 2 points).

Administrative expenses increased 6% in 2023 from 2022.

The increase was primarily due to higher general administrative costs and inflation (approximately 8 points) and higher incentive compensation (approximately 2 points), partially offset by lower expenses related to the settlement of certain legal claims (approximately 4 points).

Administrative expenses in 2023 included $14 million of litigation expenses related to the Plum baby food and snacks business, which we divested in May 2021.

Administrative expenses increased 3% in 2022 from 2021.

The increase was primarily due to expenses related to the settlement of certain legal claims (approximately 3 points) and higher general administrative costs (approximately 3 points), partially offset by increased benefits from cost savings initiatives (approximately 3 points).

Other Expenses / (Income)

Other expenses in 2024 included the following:

• $129 million of impairment charges related to the Pop Secret and Allied brands trademarks;

• $73 million of amortization of intangible assets, including accelerated amortization of $27 million;

• a loss of $13 million on the sale of the Emerald nuts business;

• $5 million of transaction costs associated with the pending acquisition of Sovos Brands;

• $35 million of net periodic benefit income, including pension and postretirement actuarial gains of $15 million.

• $35 million of costs associated with the acquisition of Sovos Brands;

• $26 million of net periodic benefit expense, including pension and postretirement actuarial losses of $33 million.

Other expenses in 2023 included the following:

• $41 million of amortization of intangible assets;

• $23 million of net periodic benefit income, including pension and postretirement actuarial losses of $44 million.

Other income in 2021 included the following:

• $48 million of amortization of intangible assets, including accelerated amortization of $7 million;

• $13 million loss on the sale of the Emerald nuts business;

• $5 million of costs associated with the acquisition of Sovos Brands;

• $35 million of net periodic benefit income, including pension and postretirement actuarial gains of $15 million.

• $27 million of income from transition services fees;

Other income in 2022 included the following:

• $41 million of amortization of intangible assets;

• a loss of $11 million on the sale of the Plum baby food and snacks business.

• $23 million of net periodic benefit income, including pension and postretirement actuarial losses of $44 million.

Operating Earnings

Segment operating earnings increased 10% in 2023 from 2022 and decreased 3% in 2022 from 2021.

Segment operating earnings increased 6% in 2024 from 2023 and increased 10% in 2023 from 2022.

An analysis of operating earnings by segment follows:

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Operating earnings from Meals & Beverages increased 9% in 2024 versus 2023.

The increase was primarily due the benefit of the acquisition of Sovos Brands and lower marketing and selling expenses, partially offset by lower gross profit.

Gross profit margin decreased due to higher cost inflation and other supply chain costs and the dilutive impact of the acquisition, partially offset by supply chain productivity improvements, favorable net price realization and favorable volume/mix.

Operating earnings from Meals & Beverages increased 2% in 2023 versus 2022.

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

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

Operating earnings from Meals & Beverages decreased 5% in 2022 versus 2021.

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

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

Operating earnings from Snacks increased 1% in 2024 versus 2023.

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

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

Gross profit margin increased due to supply chain productivity improvements, favorable net price realization and benefits from cost savings initiatives more than offsetting higher cost inflation and other supply chain costs.

Operating earnings from Snacks increased 24% in 2023 versus 2022.

The increase primarily due to lower marketing and selling expenses and slightly higher gross profit, partially offset by higher administrative expenses due to the settlement of certain legal claims.

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

Corporate expense in 2024 included the following:

• $129 million of impairment charges related to the Pop Secret and Allied brands trademarks;

• $105 million of costs associated with the acquisition of Sovos Brands;

• costs of $92 million related to cost savings and optimization initiatives;

• $33 million of pension and postretirement actuarial losses;

• $27 million of accelerated amortization expense;

• $22 million of unrealized mark-to-market losses on outstanding undesignated commodity hedges;

• $5 million of certain litigation expenses, including expenses related to the Plum baby food and snacks business;

• $3 million of costs associated with a cybersecurity incident.

Corporate expense in 2023 included the following:

• costs of $50 million related to cost savings initiatives;

• a loss of $13 million from the sale of the Emerald nuts business;

• $13 million loss from the sale of the Emerald nuts business;

• $7 million of accelerated amortization expense;

• $5 million of transaction costs associated with the pending acquisition of Sovos Brands;

• $5 million of costs associated with the acquisition of Sovos Brands;

• $21 million of unrealized mark-to-market gains on outstanding undesignated commodity hedges;

• $15 million of pension and postretirement actuarial gains.

Corporate expense in 2022 included the following:

Corporate income in 2022 included the following:

• $59 million of unrealized mark-to-market losses on outstanding undesignated commodity hedges;

• $44 million of pension and postretirement actuarial losses;

• costs of $26 million related to cost savings initiatives.

Corporate income in 2021 included the following:

• $203 million of pension and postretirement actuarial gains;

• $50 million of unrealized mark-to-market gains on outstanding undesignated commodity hedges;

• costs of $26 million related to the cost savings initiatives.

• a loss of $11 million from the sale of the Plum baby food and snacks business.

Excluding these amounts, the remaining change in 2023 from 2022 was primarily due to lower net periodic pension and postretirement benefit income in the current year and higher administrative expenses, including litigation expenses related to the Plum baby food and snacks business.

Excluding these amounts, the slight increase in 2024 from 2023 was primarily due to higher net periodic pension and postretirement benefit income in the prior year, mostly offset by lower general and administrative expenses.

Excluding these amounts, the remaining change in 2023 from 2022 was primarily due to net periodic pension and postretirement benefit income in 2023 and higher administrative expenses, including litigation expenses related to the Plum baby food and snacks business.

Interest Expense

Interest expense increased to $249 million in 2024 from $188 million in 2023.

The increase in interest expense was primarily due to higher levels of debt to fund the acquisition and higher average interest rates on the debt portfolio.

Interest expense decreased to $188 million in 2023 from $189 million in 2022.

The decrease in interest expense was primarily due to a loss on extinguishment of debt of $4 million in 2022, partially offset by higher average interest rates on the debt portfolio.

Interest expense decreased to $189 million in 2022 from $210 million in 2021.

The decrease in interest expense was primarily due to lower levels of debt, partially offset by a loss on extinguishment of debt of $4 million in 2022.

Taxes on Earnings

The effective tax rate was 25.1% in 2024, 23.9% in 2023 and 22.4% in 2022.

The increase in the effective tax rate in 2023 from 2022 was primarily due to the favorable impact of state income tax law changes in 2022.

The decrease in the effective rate in 2022 from 2021 was primarily due to a $19 million deferred tax charge recognized in the second quarter of 2021 in connection with a legal entity reorganization as part of the continued integration of Snyder's-Lance and state income tax law changes.

Restructuring Charges and Cost Savings Initiatives

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

The increase in the effective tax rate in 2024 from 2023 was primarily due to nondeductible costs associated with the acquisition.

The increase in the effective rate in 2023 from 2022 was primarily due to the favorable impact of state income tax law changes in 2022.

Restructuring Charges, Cost Savings Initiatives and Other Optimization Initiatives

Multi-year Cost Savings Initiatives and Snyder's-Lance, Inc.

(Snyder's-Lance) Cost Transformation Program and Integration

Continuing Operations

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

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

Over the years, we expanded these initiatives by continuing to optimize our supply chain and manufacturing networks, as well as our information technology infrastructure.

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

In 2022, we expanded these initiatives as we continue to pursue cost savings by further optimizing our supply chain and manufacturing network and through effective cost management.

In 2022, we expanded these initiatives as we continued to pursue cost savings by further optimizing our supply chain and manufacturing network and through effective cost management.

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

Cost estimates for these expanded initiatives, as well as timing for certain activities, are continuing to be developed.

A summary of charges recorded in the Consolidated Statements of Earnings related to these initiatives is as follows:

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Implementation costs and other related costs

The total estimated pre-tax costs for actions that have been identified are approximately $885 million to $905 million and we expect to incur the costs through 2025.

These estimates will be updated as the expanded initiatives are developed.

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

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

approximately $140 million in asset impairment and accelerated depreciation;

and approximately $500 million to $515 million in implementation costs and other related costs.

We expect these pre-tax costs to be associated with our segments as follows:

Meals & Beverages - approximately 32%;

Snacks - approximately 43%;

and Corporate - approximately 25%.

Of the aggregate $885 million to $905 million of pre-tax costs identified to date, we expect approximately $705 million to $725 million will be cash expenditures.

In addition, we expect to invest approximately $620 million in capital expenditures through 2025, of which we invested $467 million as of July 30, 2023.

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

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

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

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

As of July 30, 2023, we have generated total program-to-date pre-tax savings of $890 million.

Of the aggregate $895 million pre-tax costs incurred to date, approximately $720 million were cash expenditures.

In addition, we invested $543 million in capital expenditures as of July 28, 2024.

The capital expenditures primarily related to a U.S.

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

We funded the costs through cash flows from operations and short-term borrowings.

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

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Total $ 104 $ 895

See Note 7 to the Consolidated Financial Statements for additional information.

Discontinued Operations

We completed the sale of our Kelsen business on September 23, 2019, and the sale of the Arnott’s and certain other international operations on December 23, 2019.

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

As of July 28, 2024, we have substantially completed the multi-year cost savings initiatives and Snyder's-Lance cost transformation program and integration, and we have generated total program-to-date pre-tax savings of approximately $950 million.

Certain phases that have not been fully implemented will be incorporated into the new cost savings initiatives described below.

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.

In 2024, we recorded Restructuring charges of $21 million of severance pay and benefits related to initiatives to achieve the synergies and generated pre-tax savings of $10 million.

The charges incurred in 2024 were associated with the Meals & Beverages segment.

Beginning in 2025, the initiatives to achieve the synergies will be incorporated into the new cost savings initiatives described below.

2025 Cost Savings Initiatives

On September 10, 2024, we announced plans to implement new cost savings initiatives beginning in 2025, including initiatives to further optimize our supply chain and manufacturing network, optimization of our information technology infrastructure and targeted cost management.

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

As mentioned above, we substantially completed our existing multi-year cost savings initiatives and Snyder's-Lance cost transformation program and integration.

Certain initiatives from that program have been incorporated into our new cost savings initiatives.

Cost estimates for these new initiatives, as well as timing for certain activities, are continuing to be developed.

The total estimated pre-tax costs for actions that have been identified to date are approximately $180 million and we expect to incur substantially all of the costs through 2028.

These estimates will be updated as the detailed plans are developed.

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

approximately $25 million in severance pay and benefits;

approximately $45 million in asset impairment and accelerated depreciation;

and $110 million in implementation costs and other related costs.

We expect these pre-tax costs to be associated with our segments as follows:

Meals & Beverages - approximately 80%;

Snacks - approximately 5% and Corporate - approximately 15%.

Of the aggregate $180 million of pre-tax costs identified to date, we expect $135 million will be cash expenditures.

In addition, we expect to invest approximately $235 million in capital expenditures.

We expect these initiatives, once all phases are implemented, to generate annual ongoing savings of approximately $250 million by the end of 2028.

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.

In 2024, we incurred $5 million in Marketing and selling expenses related to this initiative.

LIQUIDITY AND CAPITAL RESOURCES

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We generated cash flows from operations of $1.185 billion in 2024, compared to $1.143 billion in 2023.

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

The increase in 2024 was primarily due to changes in working capital.

We generated cash flows from operations of $1.143 billion in 2023, compared to $1.181 billion in 2022.

The increase in 2022 was primarily due changes in working capital, partially offset by lower cash earnings.

Current assets are less than current liabilities, which include debt maturing in one year, as we focus on lowering core working capital requirements.

We had negative working capital of $161 million as of July 30, 2023, and $923 million as of July 31, 2022.

Total debt maturing within one year was $191 million as of July 30, 2023, and $814 million as of July 31, 2022.

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

We had negative working capital of $1.386 billion as of July 28, 2024, and $161 million as of July 30, 2023.

Current assets were less than current liabilities, which included debt maturing in one year, due to a focus on lowering core working capital requirements.

Total debt maturing within one year was $1.423 billion as of July 28, 2024, and $191 million as of July 30, 2023.

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.

As part of our focus to lower core working capital requirements, we have worked with our suppliers to optimize our terms and conditions, including the extension of payment terms.

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Capital expenditures are expected to total approximately $530 million in 2025.

Capital expenditures in 2024 included chip and cracker capacity expansion for our Snacks business, upgrades of assets across both segments of the business, enhancements to our headquarters in Camden, New Jersey and network optimization for our Meals & Beverages business.

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

Capital expenditures in 2022 included improvement of the quality and cost structure of the Snyder's-Lance manufacturing network, the continued implementation of our existing SAP enterprise-resource planning system for Snyder's-Lance and cookie and cracker capacity expansion for our Snacks business.

Capital expenditures in 2021 included the continued implementation of our existing SAP enterprise-resource planning system for Snyder's-Lance, chip capacity expansion projects, a Milano cookie capacity expansion project and a Goldfish cracker capacity expansion project.

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

In order to maintain and expand this model, we routinely purchase and sell routes.

From time to time, we purchase and sell routes, including certain routes under our optimization initiatives.

The purchase and sale proceeds of the routes are reflected in investing activities.

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

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

Cash consideration was $2.857 billion.

The acquisition was funded through the 2024 DDTL Credit Agreement of $2 billion and cash on hand.

On May 30, 2023, we completed the sale of our Emerald nuts business for $41 million.

Dividend payments were $445 million in 2024, $447 million in 2023 and $451 million in 2022.

Annual dividends declared were $1.48 per share in both 2023 and 2022 and $1.46 per share in 2021.

Annual dividends declared were $1.48 per share in 2024, 2023 and 2022.

The 2024 fourth quarter dividend was $.37 per share.

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

In 2023, we repurchased 2.7 million shares at a cost of $142 million.

Of this amount, $68 million was used to repurchase shares pursuant to our June 2021 program and $74 million was used to repurchase share pursuant to our September 2021 program.

In 2024, we repurchased 1.6 million shares at a cost of $67 million pursuant to our June 2021 program.

As of July 28, 2024, approximately $37 million remained available under the June 2021 program and approximately $301 million remained under the September 2021 program.

In 2023, we repurchased 2.7 million shares at a cost of $142 million.

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

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

In September 2024, the Board authorized a new anti-dilutive share repurchase program of up to $250 million (September 2024 program) to offset the impact of dilution from shares issued under our stock compensation programs.

The September 2024 program has no expiration date, but it may be discontinued at any time.

Repurchases under the September 2024 program may be made in open-market or privately negotiated transactions.

See Note 16 to the Consolidated Financial Statements and "Market for Registrant's Capital Stock, Related Shareholder Matters and Issuer Purchases of Equity Securities" for additional information.

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

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We borrowed $500 million under the 2022 DDTL Credit Agreement on March 13, 2023, and used the proceeds and cash on hand to repay the 3.65% $566 million Notes that matured on March 15, 2023.

On March 4, 2022, we completed the redemption of all $450 million outstanding aggregate principal amount of our 2.50% Senior Notes due August 2, 2022.

The consideration for the redemption was $453 million, including $3 million of premium.

We recognized a loss of $4 million (including the $3 million of premium and other costs), which was recorded in Interest expense in the Consolidated Statement of Earnings.

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

We used a combination of cash on hand and short-term debt to fund the redemption.

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

The repayments were funded with available cash and commercial paper issuances.

As of July 30, 2023, we had $191 million of short-term borrowings due within one year, of which $178 million was comprised of commercial paper borrowings.

As of July 30, 2023, we issued $29 million of standby letters of credit.

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

This facility remained unused at July 30, 2023, except for $1 million of standby letters of credit that we issued under it.

The facility contains customary covenants, including a financial covenant with respect to a minimum consolidated interest coverage ratio of consolidated adjusted EBITDA to consolidated interest expense (as each is defined in the credit facility) of not less than 3.25:1.00, measured quarterly, and customary events of default for credit facilities of this type.

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

On April 5, 2024, we repaid $100 million of the $500 million outstanding under the 2022 DDTL Credit Agreement.

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

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

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

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

As of July 28, 2024, we had $1.423 billion of short-term borrowings due within one year, of which $250 million was comprised of commercial paper borrowings.

As of July 28, 2024, we issued $28 million of standby letters of credit.

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

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.

We intend to finance the pending Sovos Brands acquisition with the issuance of new debt.

CONTRACTUAL OBLIGATIONS AND OTHER COMMITMENTS

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Interest payments are based on principal amounts and coupons or contractual rates at fiscal year end.

Purchase commitments represent purchase orders and long-term purchase arrangements related to the procurement of ingredients, supplies, machinery, equipment and services.

Purchase commitments represent purchase orders and long-term purchase arrangements related to the procurement of ingredients, supplies, machinery, equipment, contract manufacturing and services.

As of July 28, 2024, purchase commitments totaled approximately $1.879 billion.

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

We manage our foreign currency exposures by utilizing foreign exchange forward contracts.

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

We manage our foreign currency exposures by utilizing foreign exchange forward and option contracts.

We enter into foreign exchange forward and option contracts for periods consistent with related underlying exposures, and the contracts do not constitute positions independent of those exposures.

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

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

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

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

We do not enter into derivative contracts for speculative purposes and do not use leveraged instruments.

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The information presented below should be read in conjunction with Notes 13, 14 and 15 to the Consolidated Financial Statements.

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 notional amounts of the contracts as of July 28, 2024, and July 30, 2023, were $297 million and $140 million, respectively.

The aggregate fair value of all contracts was a loss of $1 million as of July 30, 2023, and a gain of $2 million as of July 31, 2022.

A hypothetical 10% fluctuation in exchange rates would impact the fair value of our outstanding foreign exchange contracts by approximately $17 million as of July 30, 2023, and July 31, 2022, which would generally be offset by inverse changes on the underlying hedged items.

The aggregate fair value of all contracts was a gain of $2 million as of July 28, 2024, and a loss of

$1 million as of July 30, 2023.

A hypothetical 10% fluctuation in exchange rates would impact the fair value of our outstanding foreign exchange contracts by approximately $16 million as of July 28, 2024, and $17 million as of July 30, 2023, which would generally be offset by inverse changes on the underlying hedged items.

As of July 28, 2024, we had outstanding variable-rate debt of $650 million with an average interest rate of 6.20%.

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The impact of market interest rate fluctuations on our long-term debt does not affect our results of operations or financial position.

We manage our exposure to changes in interest rates by optimizin g the use of variable-rate and fixed-rate debt.

From time to time, we may use interest rate swaps in order to maintain our variable-to-total debt ratio within targeted guidelines.

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

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

Subsequent to July 28, 2024, we entered into forward starting interest rate swaps accounted for as cash-flow hedges with a notional value of $ 450 million related to an anticipated debt issuance.

The forward starting interest rate swaps mature in January 2025.

We enter into commodity futures, options and swap contracts, and a supply contract under which prices for certain raw materials are established based on anticipated volume requirements to reduce the volatility of price fluctuations for commodities.

As of July 30, 2023, the total notional amount of the contracts was $241 million, and the aggregate fair value of these contracts was a gain of $11 million.

As of July 31, 2022, the total notional amount of these contracts was $296 million, and the aggregate fair value of these contracts was a loss of $7 million.

As of July 28, 2024, the total notional amount of the contracts was $248 million, and the aggregate fair value of these contracts was a loss of $10 million.

As of July 30, 2023, the total notional amount of these contracts was $241 million, and the aggregate fair value of these contracts was a gain of $11 million.

A hypothetical 10% fluctuation in commodity prices would impact the fair value of our outstanding commodity contracts by approximately $24 million as of July 28, 2024, and $25 million as of July 30, 2023, which would generally be offset by inverse changes on the underlying hedged items.

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The notional amount of the contracts was $ 71 million as of July 28, 2024, and $ 42 million as of July 30, 2023.

The fair value of these contracts was a gain of $4 million as of July 30, 2023, and a loss of $4 million as of July 31, 2022.

A hypothetical 10% fluctuation in equity price changes would impact the fair value of our outstanding swap contracts by $5 million as of July 30, 2023, and July 31, 2022, which would generally be offset by inverse changes on the underlying hedged items.

The fair value of these contracts was a gain of $3 million as of July 28, 2024, and a gain of $4 million as of July 30, 2023.

A hypothetical 10% fluctuation in equity price changes would impact the fair value of our outstanding swap contracts by $7 million as of July 28, 2024, and $5 million as of July 30, 2023, which would generally be offset by inverse changes on the underlying hedged items.

CRITICAL ACCOUNTING ESTIMATES

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Differences between estimates and actual costs are recognized as a change in estimate in a subsequent period.

However, actual expenses may differ if the level of redemption rates and performance were to vary from estimates.

However, actual expenses may differ if the level of redemption rates and

performance were to vary from estimates.

Accrued trade and consumer promotion liabilities as of July 28, 2024 and July 30, 2023 were $186 million and $156 million, respectively.

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Undiscounted cash flow analyses are used to determine if the carrying amount of the asset is recoverable.

If impairment is determined to exist, the loss is calculated based on estimated fair value.

If impairment is determined to exist, the charge is calculated based on estimated fair value.

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

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As of July 28, 2024, the carrying value of goodwill was $5.077 billion.

Based on our assessments, all of our reporting units had fair values that significantly exceeded carrying values.

which included $ 1.116 billion from the acquisition of Sovos Brands.

The carrying values of the reporting units associated with the Sovos Brands acquisition approximate fair value.

Based on our assessments, all of our reporting units excluding the reporting units associated with the Sovos Brands acquisition had fair values that significantly exceeded carrying values.

In the fourth quarter of 2024, we recognized an impairment charge of $ 53 million on certain salty snacks and cookie trademarks within our Snacks segment, including Tom’s, Jays, Kruncher’s, O-Ke-Doke, Stella D’oro and Archway, collectively referred to as our "Allied brands." In 2024, sales and operating performance were below expectations due in part to competitive pressure and reduced margins.

In the fourth quarter of 2024, based on recent performance and the reevaluation of the position of the Allied brands within our portfolio, we lowered our near-term and long-term outlook for future sales and operating performance.

As of July 28, 2024, the carrying value of the Allied brands trademark was $ 43 million.

As a result of these factors, in the fourth quarter of 2024, we lowered our long-term outlook for the business and recognized an impairment charge of $ 76 million on the trademark.

As of July 28, 2024, the carrying value of the trademark was $ 28 million.

The sale of the business was completed on August 26, 2024.

As of July 28, 2024, the carrying value of indefinite-lived trademarks was $3.882 billion as detailed below:

Rao's $ 1,470

Snyder's of Hanover 620

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_____________________________________

(1) Associated with the acquisition of Snyder's-Lance.

As of the 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 the Pacific Foods and certain other Snacks trademarks.

(1) Associated with the acquisition of Snyder's-Lance and includes the Pop Secret and Allied brands trademarks.

The $ 1.47 billion carrying value of the Rao's trademark associated with the Sovos Brands acquisition approximates fair value.

Holding all other assumptions used in the acquisition valuation measurement constant, changes in the assumptions below would reduce the fair value of this trademark and result in impairment charges of approximately:

(Millions) Rao's

1% increase in the weighted-average cost of capital $ 215

1% reduction in revenue growth $ 95

1% decrease in royalty rate $ 155

Excluding the Rao's trademark and the Pop Secret trademark, which was sold on August 26, 2024, as of the 2024 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 $ 1.293 billion and included the Snyder's of Hanover, Pace, Pacific Foods and certain other Snacks trademarks.

Although assumptions are generally interdependent and do not change in isolation, sensitivities to changes are provided below.

Holding all other assumptions in our 2024 impairment testing constant, changes in the assumptions below would reduce fair value of trademarks and result in impairment charges of approximately:

(Millions) Pacific Foods Various other Snacks

(Millions) Snyder's of Hanover Pace Pacific Foods Various other Snacks

1% increase in the weighted-average cost of capital $ 45 $ 10 $ 40 $ 15

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1% decrease in royalty rate $ 5 $ 5 $ 45 $ 45

While the 1% changes in assumptions would not result in impairment charges on our other trademarks, some changes would reduce the excess coverage of fair value over carrying value to less than 10% for the Snyder's of Hanover , Kettle Brand , Cape Cod and Pace trademarks.

The estimates of future cash flows used in impairment testing are made at a point in time, involve considerable management judgment, and are based upon assumptions about expected future operating performance, assumed royalty rates, economic conditions, market conditions and cost of capital.

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$ 33 $ (15) $ 44

The pension actuarial gains recognized in 2023 were primarily due to increases in discount rates used to determine the benefit obligation, partially offset by losses on plan assets and plan experience.

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

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

Excluding actuarial gains and losses, net periodic pension and postretirement benefit income was $44 million lower in 2023 compared to 2022.

Based on benefit obligations and plan assets as of July 30, 2023, net periodic pension and postretirement benefit income excluding any actuarial losses or gains is estimated to be approximately $13 million lower in 2024, subject to the impact of interim remeasurements.

The decrease in 2024 is primarily due to a lower market value of plan assets.

The actuarial losses recognized in 2024 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 gains recognized in 2023 were primarily due to increases in discount rates used to determine the benefit obligation, partially offset by losses on plan assets and plan experience.

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

Significant weighted-average assumptions as of the end of the year were as follows:

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We wish to caution the reader that the following important factors and those important factors described in Part 1, Item 1A and elsewhere in this Report, or in our other Securities and Exchange Commission filings, could affect our actual results and could cause such results to vary materially from those expressed in any forward-looking statements made by, or on behalf of, us:

• the conditions to the completion of the Sovos Brands transaction, including obtaining Sovos Brands' shareholder approval, may not be satisfied, or the regulatory approvals required for the transaction may not be obtained on the terms expected, on the anticipated schedule, or at all;

• financing for the Sovos Brands transaction may not be obtained on favorable terms, or at all;

• closing of the Sovos Brands transaction may not occur or be delayed, either as a result of litigation related to the transaction or otherwise or result in significant costs of defense, indemnification and liability;

• the risk that the cost savings and any other synergies from the Sovos Brands transaction may not be fully realized or may take longer or cost more to be realized than expected, including that the Sovos Brands transaction may not be accretive within the expected timeframe or the extent anticipated;

• completing the Sovos Brands transaction may distract our management from other important matters;

• the risks related to the availability of, and cost inflation in, supply chain inputs, including labor, raw materials, commodities, packaging and transportation;

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• our ability to realize projected cost savings and benefits from cost savings initiatives and the integration of recent acquisitions;

• disruptions in or inefficiencies to our supply chain and/or operations, including reliance on key supplier relationships;

• disruptions in or inefficiencies to our supply chain and/or operations, including reliance on key contract manufacturer and supplier relationships;

• risks related to the effectiveness of our hedging activities and our ability to respond to volatility in commodity prices;

• the impacts of, and associated responses to, the COVID-19 pandemic on our business, suppliers, customers, consumers and employees;

• our ability to manage changes to our organizational structure and/or business processes, including selling, distribution, manufacturing and information management systems or processes;

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• negative changes and volatility in financial and credit markets, deteriorating economic conditions and other external factors, including changes in laws and regulations;

• unforeseen business disruptions or other impacts due to political instability, civil disobedience, terrorism, geopolitical conflicts (including the ongoing conflict between Russia and Ukraine), extreme weather conditions, natural disasters, other pandemics or other calamities.

• our indebtedness and ability to pay such indebtedness;

• unforeseen business disruptions or other impacts due to political instability, civil disobedience, geopolitical conflicts, extreme weather conditions, natural disasters, pandemics or other outbreaks of disease or other calamities.

This discussion of uncertainties is by no means exhaustive but is designed to highlight important factors that may impact our outlook.

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

What changed 10-K

Item 7. Management’s Discussion and Analysis