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Item 1. Financial Statements

2021-11-23 compared with 2021-08-26 · 134 added, 91 removed, 559 unchanged (29% of the section changed)

2 unchanged sentences

CONDENSED STATEMENTS OF CONSOLIDATED INCOME

Three Months Ended July 31,

Three Months Ended October 31, Six Months Ended October 31,

Dollars in millions, except per share data 2021 2020 2021 2020

23 unchanged sentences

CONDENSED STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME

Three Months Ended July 31,

Three Months Ended October 31, Six Months Ended October 31,

Dollars in millions 2021 2020 2021 2020

10 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

Dollars in millions July 31, 2021 April 30, 2021

Dollars in millions October 31, 2021 April 30, 2021

Current Assets

47 unchanged sentences

CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS

Three Months Ended July 31,

Six Months Ended October 31,

Dollars in millions 2021 2020

23 unchanged sentences

Short-term borrowings (repayments) – net 237.8 31.7

Repayments of long-term debt ( 407.0 ) ( 300.0 )

Proceeds from long-term debt 797.6 —

Repayments of long-term debt, including make-whole payments ( 1,157.0 ) ( 500.0 )

Capitalized debt issuance costs ( 10.2 ) —

Quarterly dividends paid ( 204.1 ) ( 202.4 )

11 unchanged sentences

CONDENSED STATEMENTS OF CONSOLIDATED SHAREHOLDERS’ EQUITY

Three Months Ended July 31, 2021

Six Months Ended October 31, 2021

Dollars in millions Common

9 unchanged sentences

Balance at July 31, 2021 108,359,994 $ 27.1 $ 5,531.0 $ 2,893.8 $ ( 281.6 ) $ 8,170.3

Three Months Ended July 31, 2020

Net income 206.0 206.0

Other comprehensive income (loss) 11.1 11.1

Comprehensive income 217.1

Purchase of treasury shares ( 5,676 ) — ( 0.6 ) ( 0.1 ) ( 0.7 )

Stock plans 8,521 — 6.6 6.6

Cash dividends declared, $ 0.99 per common share

( 106.9 ) ( 106.9 )

Balance at October 31, 2021 108,362,839 $ 27.1 $ 5,537.0 $ 2,992.8 $ ( 270.5 ) $ 8,286.4

Six Months Ended October 31, 2020

Dollars in millions Common

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Balance at July 31, 2020 114,087,442 $ 28.5 $ 5,795.3 $ 2,882.3 $ ( 360.9 ) $ 8,345.2

Net income 230.8 230.8

Other comprehensive income (loss) 33.4 33.4

Comprehensive income 264.2

Purchase of treasury shares ( 14,769 ) — ( 1.7 ) 0.1 ( 1.6 )

Stock plans 24,588 — 9.5 9.5

Cash dividends declared, $ 0.90 per common share

( 102.3 ) ( 102.3 )

Balance at October 31, 2020 114,097,261 $ 28.5 $ 5,803.1 $ 3,010.9 $ ( 327.5 ) $ 8,515.0

See notes to unaudited condensed consolidated financial statements.

6 unchanged sentences

generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X.

Accordingly, they do not include all of the information and notes required by U.S.

Accordingly, they do not include all the information and notes required by U.S.

GAAP for complete financial statements.

In the opinion of management, all adjustments of a normal recurring nature considered necessary for a fair presentation have been included.

Operating results for the three months ended July 31, 2021, are not necessarily indicative of the results that may be expected for the year ending April 30, 2022.

Operating results for the six months ended October 31, 2021, are not necessarily indicative of the results that may be expected for the year ending April 30, 2022.

For further information, reference is made to the consolidated financial statements and notes included in our Annual Report on Form 10-K for the year ended April 30, 2021.

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ASU 2019-12 was effective for us on May 1, 2021.

The accounting guidance for franchise taxes and foreign investments was adopted on a modified retrospective basis through a cumulative-effect adjustment to retained earnings as of the beginning of 2022.

All other applicable provisions were adopted on a prospective basis, as required by ASU 2019-12.

The accounting guidance for franchise taxes and foreign investments was adopted on a modified retrospective basis and all other applicable provisions were adopted on a prospective basis, as required by ASU 2019-12.

The adoption of this ASU did not have a material impact on our financial statements and disclosures.

3 unchanged sentences

Severance costs and retention bonuses are recognized over the estimated future service period of the impacted employees, and relocation costs are expensed as incurred.

Other transition and termination costs include fixed asset-related charges, contract and lease termination costs, professional fees, and other miscellaneous expenditures associated with the integration or restructuring activities, which are expensed as incurred.

With the exception of accelerated depreciation, these costs are expensed as incurred.

These integration and restructuring costs are reported in costs of products sold and other special project costs in the Condensed Statements of Consolidated Income and are not allocated to segment profit.

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Restructuring Costs:

A restructuring program was approved by the Board of Directors (the “Board”) during 2021, associated with opportunities identified to reduce our overall cost structure and optimize our organizational design, inclusive of stranded overhead associated with recent divestitures of the Crisco ® and Natural Balance ® businesses.

A restructuring program was approved by the Board of Directors (the “Board”) during 2021, associated with opportunities identified to reduce our overall cost structure and optimize our organizational design, inclusive of stranded overhead associated with the divestitures of the Crisco ® and Natural Balance ® businesses.

For additional information related to these divestitures, see Note 4:

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Approximately half of these costs are expected to be other transition and termination costs associated with our cost reduction and margin management initiatives, inclusive of accelerated depreciation, while the remainder represents employee-related costs.

We anticipate the activities

associated with this restructuring program will be completed by the end of 2023, with the majority of the costs expected to be incurred by the end of 2022.

We anticipate the activities associated with this restructuring program will be completed by the end of 2023, with the majority of the costs expected to be incurred by the end of 2022.

The following table summarizes our restructuring costs incurred related to the restructuring program.

Three Months Ended July 31, 2021 Total Costs Incurred to Date at July 31, 2021

Three Months Ended October 31, 2021 Six Months Ended October 31, 2021 Total Costs Incurred to Date at October 31, 2021

Employee-related costs $ 1.1 $ 2.4 $ 19.7

1 unchanged sentence

Total restructuring costs $ 7.4 $ 13.8 $ 37.9

The obligation related to severance costs and retention bonuses was $ 3.8 and $ 14.6 at July 31, 2021 and April 30, 2021, respectively.

As of July 31, 2021, cumulative noncash charges incurred to date were $ 7.7 , including $ 3.3 incurred during the first quarter of 2022, and primarily consisted of accelerated depreciation.

We did no t incur any costs related to restructuring during the three months ended July 31, 2020.

The obligation related to severance costs and retention bonuses was $ 3.0 and $ 14.6 at October 31, 2021 and April 30, 2021, respectively.

As of October 31, 2021, cumulative noncash charges incurred to date were $ 13.6 , including $ 5.9 and $ 9.2 incurred during the three and six months ended October 31, 2021, respectively, and primarily consisted of accelerated depreciation.

We did no t incur any costs related to restructuring during the three and six months ended October 31, 2020.

On December 1, 2020, we sold the Crisco oils and shortening business to B&G Foods, Inc.

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Retail Pet Foods segment primarily includes the domestic sales of Rachael Ray ® Nutrish ® , Meow Mix ® , Milk-Bone ® , 9Lives ® , Kibbles ’n Bits ® , Pup-Peroni ® , and Nature’s Recipe ® branded products;

Retail Coffee segment primarily includes the domestic sales of Folgers ® , Dunkin’ TM , and Café Bustelo ® branded coffee;

Retail Coffee segment primarily includes the domestic sales of Folgers ® , Dunkin’ ® , and Café Bustelo ® branded coffee;

Retail Consumer Foods segment primarily includes the domestic sales of Smucker’s ® and Jif ® branded products.

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The following table reconciles segment profit to income before income taxes.

Three Months Ended July 31,

Three Months Ended October 31, Six Months Ended October 31,

2021 2020 2021 2020

Retail Pet Foods $ 701.6 $ 708.7 $ 1,349.6 $ 1,401.3

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Cost of products sold – special project costs (A)

( 6.1 ) — ( 10.7 ) —

Other special project costs (A)

( 1.3 ) — ( 3.1 ) —

Corporate administrative expenses ( 70.9 ) ( 93.0 ) ( 130.3 ) ( 158.8 )

1 unchanged sentence

Income before income taxes $ 268.8 $ 303.5 $ 474.0 $ 617.1

(A) Special project costs include divestiture, acquisition, integration, and restructuring costs, which are recognized in cost of products sold and other special project costs in the Condensed Statement of Consolidated Income.

For more information, see Note 3:

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The following table presents certain geographical information.

Three Months Ended July 31,

Three Months Ended October 31, Six Months Ended October 31,

2021 2020 2021 2020

United States $ 1,919.2 $ 1,882.2 $ 3,652.4 $ 3,711.9

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The following table presents product category information.

Three Months Ended July 31,

Three Months Ended October 31, Six Months Ended October 31,

2021 2020 2021 2020 Primary Reportable Segment (A)

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(A) The primary reportable segment generally represents at least 75 percent of total net sales for each respective product category.

(B) Represents the combined International and Away From Home operating segments.

(B) Represents the International and Away From Home operating segments, which are combined for segment reporting purposes.

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The following table sets forth the computation of net income per common share and net income per common share – assuming dilution under the two-class method.

Three Months Ended July 31,

Three Months Ended October 31, Six Months Ended October 31,

2021 2020 2021 2020

Net income $ 206.0 $ 230.8 $ 359.9 $ 467.8

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The following table summarizes the components of our long-term debt.

July 31, 2021 April 30, 2021

October 31, 2021 April 30, 2021

Outstanding Carrying

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650.0 644.5 650.0 644.3

2.75 % Senior Notes due September 15, 2041

300.0 297.0 — —

4.38 % Senior Notes due March 15, 2045

600.0 587.3 600.0 587.1

3.55 % Senior Notes due March 15, 2050

300.0 296.0 300.0 295.8

Total long-term debt $ 4,350.0 $ 4,308.8 $ 4,700.0 $ 4,669.7

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(A) Represents the carrying amount included in the Condensed Consolidated Balance Sheets, which includes the impact of capitalized debt issuance costs, offering discounts, and terminated interest rate contracts.

During the first quarter of 2022, we prepaid $ 400.0 in principal of the Senior Notes due March 15, 2022, and as a result, we recognized a net loss on extinguishment of $ 6.9 , which primarily consisted of a make-whole payment and was included in other income (expense) – net in the Condensed Statement of Consolidated Income.

As of July 31, 2021, we had available a $ 1.8 billion unsecured revolving credit facility with a group of 11 banks that was scheduled to mature in September 2022.

During the second quarter of 2022, we completed an offering of $ 800.0 in Senior Notes due March 15, 2032, and September 15, 2041.

The Senior Notes include $ 7.2 of capitalized debt issuance costs and $ 2.4 of offering discounts to be amortized to interest expense over the time for which the debt is outstanding.

The net proceeds from the offering were primarily used to repay $ 750.0 in principal of the Senior Notes due October 15, 2021.

Furthermore, during the first quarter of 2022, we prepaid $ 400.0 in principal of the Senior Notes due March 15, 2022, and as a result, we recognized a net loss on extinguishment of $ 6.9 , which primarily consisted of a make-whole payment and was included in other income (expense) – net in the Condensed Statement of Consolidated Income.

In August 2021, we entered into an unsecured revolving credit facility with a group of 11 banks, which provides for a revolving credit line of $ 2.0 billion and matures in August 2026, and terminated the previous $ 1.8 billion revolving credit facility.

The new revolving credit facility includes $ 4.3 of capitalized debt issuance costs, which will be amortized to interest expense over the time for which the revolving credit facility is effective.

Borrowings under the revolving credit facility bear interest on the prevailing U.S.

Prime Rate, London Interbank Offered Rate (“LIBOR”), or Canadian Dealer Offered Rate, based on our election.

Interest is payable either on a quarterly basis or at the end of the borrowing term.

We did no t have a balance outstanding under the revolving credit facility at July 31, 2021, or April 30, 2021.

Subsequent to the first quarter of 2022, we entered into an unsecured revolving credit facility with a group of 11 banks, which provides for a revolving credit line of $ 2.0 billion and matures in August 2026.

As a result of entering into the new facility in August 2021, we terminated the $1.8 billion revolving credit facility.

The new revolving credit facility includes approximately $ 4.0 of capitalized debt issuance costs, which will be amortized to interest expense over the time for which the revolving credit facility is effective.

Borrowings under the new revolving credit facility bear interest on the prevailing U.S.

Prime Rate, LIBOR, Euro Interbank Offered Rate, or Canadian Dealer Offered Rate, based on our election.

Prime Rate, London Interbank Offered Rate, Euro Interbank Offered Rate, or Canadian Dealer Offered Rate, based on our election.

Interest is payable either on a quarterly basis or at the end of the borrowing term.

We have no t drawn upon the $2.0 billion revolving credit facility.

We participate in a commercial paper program under which we can issue short-term, unsecured commercial paper not to exceed $ 1.8 billion as of July 31, 2021.

We have no t drawn upon the new revolving credit facility as of October 31, 2021, and did not have a balance outstanding under the previous revolving credit facility as of April 30, 2021.

We participate in a commercial paper program under which we can issue short-term, unsecured commercial paper not to exceed $ 2.0 billion, which was increased from $ 1.8 billion in August 2021, in conjunction with entering into the $2.0 billion unsecured revolving credit facility.

The commercial paper program is backed by our revolving credit facility and reduces what we can borrow under the revolving credit facility by the amount of commercial paper outstanding.

Commercial paper is used as a continuing source of short-term financing for general corporate purposes.

As of July 31, 2021, and April 30, 2021, we had $ 366.0 and $ 82.0 of short-term borrowings outstanding, respectively, which were both issued under our commercial paper program at a weighted-average interest rate of 0.17 percent.

In conjunction with entering into the $2.0 billion unsecured revolving credit facility in August 2021, we also increased the commercial paper limit from $1.8 billion to $ 2.0 billion.

Interest paid totaled $ 12.8 and $ 10.2 for the three months ended July 31, 2021 and 2020, respectively.

This differs from interest expense due to the timing of interest payments, capitalized interest, effect of interest rate contracts, amortization of debt issuance costs and discounts, and the payment of other debt fees.

Our debt instruments contain certain financial covenant restrictions, including a leverage ratio and an interest coverage ratio.

As of July 31, 2021, we are in compliance with all covenants.

Furthermore, in conjunction with entering into the $2.0 billion unsecured revolving credit facility in August 2021, we amended the financial covenant restrictions to remove the leverage ratio.

As of October 31, 2021, and April 30, 2021, we had $ 320.0 and $ 82.0 of short-term borrowings outstanding, respectively, which were both issued under our commercial paper program at a weighted-average interest rate of 0.17 percent.

Interest paid totaled $ 69.0 and $ 76.2 for the three months ended October 31, 2021 and 2020, respectively, and $ 81.8 and $ 86.4 for the six months ended October 31, 2021 and 2020, respectively.

This differs from interest expense due to capitalized interest, the effect of interest rate contracts, amortization of debt issuance costs and discounts, payment of other debt fees, and the timing of interest payments.

Our debt instruments contain certain covenant restrictions, including an interest coverage ratio.

Our financial covenant restrictions were amended to remove the leverage ratio in August 2021, in conjunction with entering into the $2.0 billion unsecured revolving credit facility.

As of October 31, 2021, we are in compliance with all covenants.

Pensions and Other Postretirement Benefits

The components of our net periodic benefit cost for defined benefit pension and other postretirement benefit plans are shown below.

Three Months Ended July 31,

Three Months Ended October 31,

Defined Benefit Pension Plans Other Postretirement Benefits

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Net periodic benefit cost $ 3.9 $ 32.9 $ 0.4 $ 0.7

Six Months Ended October 31,

Defined Benefit Pension Plans Other Postretirement Benefits

2021 2020 2021 2020

Service cost $ 0.9 $ 0.9 $ 0.6 $ 0.9

Interest cost 6.2 7.8 0.7 0.9

Expected return on plan assets ( 8.2 ) ( 10.1 ) — —

Amortization of net actuarial loss (gain) 3.5 5.8 ( 0.2 ) —

Amortization of prior service cost (credit) 0.4 0.4 ( 0.3 ) ( 0.5 )

Settlement loss (gain) 6.2 30.6 — —

Net periodic benefit cost $ 9.0 $ 35.4 $ 0.8 $ 1.3

During the second quarter of 2021, we transferred $ 82.6 in obligations of our Canadian defined benefit pension plan to an insurance company through the purchase of an irrevocable group annuity contract (referred to as a buy-out contract).

The group annuity contract was purchased using assets from the pension trust.

As a result of this transaction, during the second quarter of 2021, we recognized a noncash pre-tax settlement charge of $ 27.9 to accelerate the unrecognized losses within accumulated other comprehensive income (loss) that would have otherwise been recognized in subsequent periods.

This settlement charge was included within other income (expense) – net in the Condensed Statement of Consolidated Income.

Derivative Financial Instruments

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Commodity Derivatives:

We enter into commodity derivatives to manage price volatility and reduce the variability of future cash flows related to anticipated inventory purchases of key raw materials, notably green coffee, corn, soybean meal, wheat, and edible oils.

We also enter into commodity derivatives to manage price risk for energy input costs, including diesel fuel and natural gas.

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We do not qualify commodity derivatives for hedge accounting treatment, and as a result, the derivative gains and losses are immediately recognized in earnings.

Although we do not perform the assessments required to achieve hedge accounting for derivative positions, we believe all of our commodity derivatives are economic hedges of our risk exposure.

Although we do not perform the assessments required to achieve hedge accounting for derivative positions, we believe all our commodity derivatives are economic hedges of our risk exposure.

The commodities hedged have a high inverse correlation to price changes of the derivative instrument.

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The following table presents the gross notional value of outstanding derivative contracts.

July 31, 2021 April 30, 2021

October 31, 2021 April 30, 2021

Commodity contracts $ 626.2 $ 861.0

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The following tables set forth the gross fair value amounts of derivative instruments recognized in the Condensed Consolidated Balance Sheets.

July 31, 2021

October 31, 2021

Liabilities Other

11 unchanged sentences

We are required to maintain cash margin accounts in connection with funding the settlement of our open positions.

Our cash margin accounts represented collateral pledged of $ 0.6 at July 31, 2021 and collateral received of $ 10.8 at April 30, 2021, and are included in other current assets in the Condensed Consolidated Balance Sheets.

Our cash margin accounts represented collateral pledged of $ 3.2 at October 31, 2021, and collateral received of $ 10.8 at April 30, 2021, and are included in other current assets in the Condensed Consolidated Balance Sheets.

The change in the cash margin account balances is included in other – net, investing activities in the Condensed Statements of Consolidated Cash Flows.

In the event of default and immediate net settlement of all of our open positions with individual counterparties, all of our derivative liabilities would be fully offset by either our derivative asset positions or margin accounts based on the net asset or liability position with our individual counterparties.

In the event of default and immediate net settlement of all our open positions with individual counterparties, all our derivative liabilities would be fully offset by either our derivative asset positions or margin accounts based on the net asset or liability position with our individual counterparties.

Cash flows associated with the settlement of derivative instruments are classified in the same line item as the cash flows of the related hedged item, which is within operating activities in the Condensed Statements of Consolidated Cash Flows.

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The following table presents the net gains and losses recognized in cost of products sold on derivatives not designated as hedging instruments.

Three Months Ended July 31,

Three Months Ended October 31, Six Months Ended October 31,

2021 2020 2021 2020

Derivative gains (losses) on commodity contracts $ 10.9 $ 13.4 $ 26.7 $ 24.8

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At that time, we reclassify the hedge gains and losses from unallocated derivative gains and losses to segment profit, allowing our segments to realize the economic effect of the hedge without experiencing any mark-to-market volatility.

The following table presents the activity in unallocated derivative gains and losses.

Three Months Ended July 31,

The following table presents the net change in cumulative unallocated derivative gains and losses.

Three Months Ended October 31, Six Months Ended October 31,

2021 2020 2021 2020

Net derivative gains (losses) recognized and classified as unallocated $ 10.7 $ 13.0 $ 28.0 $ 22.1

Net derivative gains (losses) reclassified to segment operating profit 19.5 ( 7.1 )

Net derivative gains (losses) reclassified to segment

operating profit 24.0 ( 18.5 ) 43.5 ( 25.6 )

Change in net cumulative unallocated derivative gains and losses $ ( 13.3 ) $ 31.5 $ ( 15.5 ) $ 47.7

The net cumulative unallocated derivative gains were $ 58.5 and $ 60.7 at July 31, 2021, and April 30, 2021, respectively.

The net cumulative unallocated derivative gains were $ 45.2 and $ 60.7 at October 31, 2021, and April 30, 2021, respectively.

Cash Flow Hedges

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The following table presents information on the pre-tax gains and losses recognized on all contracts previously designated as cash flow hedges.

Three Months Ended July 31,

Three Months Ended October 31, Six Months Ended October 31,

2021 2020 2021 2020

Gains (losses) recognized in other comprehensive income (loss) $ — $ — $ — $ —

Gains (losses) reclassified from accumulated other comprehensive income (loss) to income (A)

Gains (losses) reclassified from accumulated other comprehensive income (loss) to interest expense – net (A)

( 3.5 ) ( 3.5 ) ( 7.0 ) ( 6.9 )

Gains (losses) reclassified from accumulated other

comprehensive income (loss) to other income (expense) – net (B)

Change in accumulated other comprehensive income (loss) $ 3.5 $ 3.5 $ 6.4 $ 6.9

(A) Interest expense – net, as presented in the Condensed Statements of Consolidated Income was $ 43.1 and $ 46.1 for the three months ended July 31, 2021 and 2020, respectively, which included the reclassification of losses of $ 3.5 and $ 3.4 , respectively.

Other income (expense) – net, as presented in the Condensed Statement of Consolidated Income was expense of $ 11.1 for the three months ended July 31, 2021, which included the reclassification of a gain of $ 0.6 related to the debt extinguishment, as discussed in Note 7:

(A) Interest expense – net, as presented in the Condensed Statements of Consolidated Income was $ 40.3 and $ 45.1 for the three months ended October 31, 2021 and 2020, respectively, and was $ 83.4 and $ 91.2 for the six months ended October 31, 2021 and 2020, respectively.

(B) Other income (expense) – net, as presented in the Condensed Statements of Consolidated Income was $ 2.7 and $ 32.2 for the three months ended October 31, 2021 and 2020, respectively, and was $ 13.8 and $ 33.6 for the six months ended October 31, 2021 and 2020, respectively.

The reclassification is related to the debt extinguishment during the first quarter of 2022, as discussed in Note 7:

Debt and Financing Arrangements.

Included as a component of accumulated other comprehensive income (loss) at July 31, 2021, and April 30, 2021, were deferred net pre-tax losses of $ 224.4 and $ 227.3 , respectively, related to the terminated interest rate contracts.

The related net tax benefit recognized in accumulated other comprehensive income (loss) at July 31, 2021, and April 30, 2021, was $ 51.9 and $ 52.5 , respectively.

Included as a component of accumulated other comprehensive income (loss) at October 31, 2021, and April 30, 2021, were deferred net pre-tax losses of $ 220.9 and $ 227.3 , respectively, related to the terminated interest rate contracts.

The related net tax benefit recognized in accumulated other comprehensive income (loss) at October 31, 2021, and April 30, 2021, was $ 51.1 and $ 52.5 , respectively.

Approximately $ 13.4 of the net pre-tax loss will be recognized over the next 12 months related to the terminated interest rate contracts.

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The gain on termination was recorded as an increase in the long-term debt balance and is being recognized over the life of the debt as a reduction of interest expense.

To date, we have recognized $ 51.6 of the gain, of which $ 2.1 and $ 2.2 was recognized during the three months ended July 31, 2021 and 2020, respectively.

The remaining gain of $ 1.9 will be recognized during the second quarter of 2022.

As of October 31, 2021, we have fully recognized the gain of $ 53.5 , of which $ 1.9 and $ 4.0 was recognized during the three and six months ended October 31, 2021, respectively, and $ 2.0 and $ 4.2 was recognized during the three and six months ended October 31, 2020, respectively.

Other Financial Instruments and Fair Value Measurements

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The following table provides information on the carrying amounts and fair values of our financial instruments.

July 31, 2021 April 30, 2021

October 31, 2021 April 30, 2021

Amount Fair Value Carrying

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(Level 2) Significant

(Level 3) Fair Value at July 30, 2021

(Level 3) Fair Value at October 31, 2021

Marketable securities and other investments:

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Based on the short-term nature of these money market funds, carrying value approximates fair value.

As of July 31, 2021, our municipal obligations are scheduled to mature as follows:

As of October 31, 2021, our municipal obligations are scheduled to mature as follows:

$ 1.8 in 2022, $ 2.2 in 2024, $ 3.0 in 2025, $ 1.6 in 2026, and the remaining $ 15.1 in 2027 and beyond.

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(B) Level 1 commodity and foreign currency exchange derivatives are valued using quoted market prices for identical instruments in active markets.

Level 2 foreign currency exchange derivatives are valued using quoted prices for similar assets or liabilities in active markets.

Level 2 commodity and foreign currency exchange derivatives are valued using quoted prices for similar assets or liabilities in active markets.

For additional information, see Note 9:

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A lease commences when the lessor makes the identified asset available for our use.

generally account for lease and non-lease components as a single lease component.

We generally account for lease and non-lease components as a single lease component.

Minimum lease payments do not include variable lease payments other than those that depend on an index or rate.

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The following table sets forth the right-of-use assets and lease liabilities recognized in the Condensed Consolidated Balance Sheets.

July 31, 2021 April 30, 2021

October 31, 2021 April 30, 2021

Operating lease right-of-use assets $ 123.8 $ 142.0

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The following table summarizes the components of lease expense.

Three Months Ended July 31,

Three Months Ended October 31, Six Months Ended October 31,

2021 2020 2021 2020

Operating lease cost $ 10.6 $ 11.1 $ 21.4 $ 22.4

2 unchanged sentences

Interest on lease liabilities

0.1 — 0.1 0.1

Variable lease cost 5.7 5.5 11.0 11.1

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The following table sets forth cash flow and noncash information related to leases.

Three Months Ended July 31,

Six Months Ended October 31,

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

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The following table summarizes the maturity of our lease liabilities by fiscal year.

July 31, 2021

October 31, 2021

Operating Leases Finance Leases

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The following table sets forth the weighted average remaining lease term and discount rate.

July 31, 2021 April 30, 2021

October 31, 2021 April 30, 2021

Weighted average remaining lease term (in years):

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Finance leases

The effective income tax rates for the three months ended July 31, 2021 and 2020, were 25.0 and 24.4 percent, respectively.

During the three months ended July 31, 2021 and 2020, the effective income tax rates varied from the U.S.

The effective income tax rates for the three months ended October 31, 2021 and 2020, were 23.4 and 24.0 percent, respectively, and for the six months ended October 31, 2021 and 2020, were 24.1 and 24.2 percent, respectively.

During the three and six months ended October 31, 2021 and 2020, the effective income tax rates varied from the U.S.

statutory income tax rate of 21.0 percent primarily due to the impact of state income taxes.

14 unchanged sentences

Income tax benefit (expense) — ( 1.4 ) ( 1.0 ) — ( 2.4 )

Balance at July 31, 2021 $ ( 13.0 ) $ ( 172.5 ) $ ( 99.9 ) $ 3.8 $ ( 281.6 )

Balance at October 31, 2021 $ ( 11.0 ) $ ( 169.8 ) $ ( 93.4 ) $ 3.7 $ ( 270.5 )

Adjustment Net Gains (Losses)

10 unchanged sentences

Income tax benefit (expense) — ( 1.6 ) ( 10.1 ) ( 0.2 ) ( 11.9 )

Balance at July 31, 2020 $ ( 37.6 ) $ ( 183.0 ) $ ( 145.0 ) $ 4.7 $ ( 360.9 )

Balance at October 31, 2020 $ ( 35.3 ) $ ( 180.3 ) $ ( 116.3 ) $ 4.4 $ ( 327.5 )

(A) The reclassification is composed of deferred gains (losses) related to terminated interest rate contracts.

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(B) The reclassification from accumulated other comprehensive income (loss) to other income (expense) – net is composed of settlement charges and amortization of net losses and prior service costs.

The reclassification in 2021 primarily includes the impact of the nonrecurring settlement charge related to the purchase of a group annuity contract to transfer the obligation of our Canadian defined benefit pension plan to an insurance company.

For additional information, see Note 8:

3 unchanged sentences

We are currently a defendant in a variety of such legal proceedings, including certain lawsuits related to the alleged price-fixing of shelf stable tuna products prior to 2011 by a business previously owned by, but divested prior to our acquisition of, Big Heart Pet Brands, the significant majority of which were settled and paid during 2019 and 2020.

While we cannot predict with certainty the ultimate results of these proceedings or potential settlements associated with these or other matters, we have accrued losses for certain contingent liabilities that we have determined are probable and reasonably estimable at July 31, 2021.

Based on the information known to date, with the exception of the matters discussed below, we do not believe the final outcome of these proceedings would have a material adverse effect on our financial position, results of operations, or cash flows.

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CERT appealed the ruling in November 2020 to the California Court of Appeals for the Second Appellate District, which is currently pending.

We are also defendants in nine pending putative class action lawsuits filed in federal courts in California, Florida, Illinois, Missouri, Texas, Washington, and Washington D.C.

The plaintiffs in those actions assert claims arising under various state laws for false advertising, consumer protection, deceptive and unfair trade practices, and similar statutes.

We are also defendants in a series of putative class action lawsuits that were originally filed in federal courts in California, Florida, Illinois, Missouri, Texas, Washington, and Washington D.C., but have been transferred to the United States District Court for the Western District of Missouri for coordinated pre-trial proceedings.

The plaintiffs assert claims arising under various state laws for false advertising, consumer protection, deceptive and unfair trade practices, and similar statutes.

Their claims are premised on allegations that we have misrepresented the number of servings that can be made from various canisters of Folgers coffee on the packaging for those products.

Five of the lawsuits have been transferred to the United States District Court for the Western District of Missouri for coordinated pre-trial proceedings.

Similar claims have been asserted against certain retailers of our Folgers coffee products, and indemnity claims have been asserted by such retailers against us.

Various other potential plaintiffs have threatened to assert similar claims against us.

The outcome and the financial impact of these cases, if any, cannot be predicted at this time.

Accordingly, no loss contingency has been recorded for these matters as of July 31, 2021, and the likelihood of loss is not considered probable or estimable.

Accordingly, no loss contingency has been recorded for these matters as of October 31, 2021, and the likelihood of loss is not considered probable or estimable.

However, if we are required to pay significant damages, our business and financial results could be adversely impacted, and sales of those products could suffer not only in these locations but elsewhere.

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The following table sets forth common share information.

July 31, 2021 April 30, 2021

October 31, 2021 April 30, 2021

Common shares authorized 300.0 300.0

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Repurchase Program:

At July 31, 2021, approximately 2.8 million common shares remain available for repurchase pursuant to the Board’s authorizations.

During the three months ended July 31, 2021 and 2020, we did no t repurchase any common shares under a repurchase plan authorized by the Board.

The shares repurchased during the three months ended July 31, 2021 and 2020, consisted of shares repurchased from stock plan recipients in lieu of cash payments.

During the six months ended October 31, 2021 and 2020, we did no t repurchase any common shares under a repurchase plan authorized by the Board.

The shares repurchased during the six months ended October 31, 2021 and 2020, consisted of shares repurchased from stock plan recipients in lieu of cash payments.

On October 22, 2021, the Board authorized the repurchase of up to 5.0 million common shares, in addition to the 2.8 million common shares that remained available for repurchase pursuant to prior authorizations of the Board.

Therefore, at October 31, 2021, approximately 7.8 million common shares remain available for repurchase pursuant to the Board’s authorizations.

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