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Item 1. Financial Statements

2022-11-21 compared with 2022-08-23 · 127 added, 92 removed, 579 unchanged (27% 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 2022 2021 2022 2021

6 unchanged sentences

Other special project costs (A)

0.7 1.3 2.1 3.1

Other operating expense (income) – net ( 2.9 ) ( 4.7 ) ( 30.9 ) ( 5.9 )

8 unchanged sentences

Net Income – Assuming Dilution $ 1.79 $ 1.90 $ 2.82 $ 3.32

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

(A) Special project costs include certain restructuring costs, which are recognized in cost of products sold and other special project costs.

For more information, see Note 3:

Integration and Restructuring Costs and Note 5:

Restructuring Costs and Note 5:

Reportable Segments.

2 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 2022 2021 2022 2021

10 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

Dollars in millions July 31, 2022 April 30, 2022

Dollars in millions October 31, 2022 April 30, 2022

Current Assets

46 unchanged sentences

CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS

Three Months Ended July 31,

Six Months Ended October 31,

Dollars in millions 2022 2021

25 unchanged sentences

Short-term borrowings (repayments) – net 118.2 237.8

Proceeds from long-term debt — 797.6

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

Capitalized debt issuance costs — ( 10.2 )

Quarterly dividends paid ( 213.5 ) ( 204.1 )

11 unchanged sentences

CONDENSED STATEMENTS OF CONSOLIDATED SHAREHOLDERS’ EQUITY

Three Months Ended July 31, 2022

Six Months Ended October 31, 2022

Dollars in millions Common

9 unchanged sentences

Balance at July 31, 2022 106,559,359 $ 26.6 $ 5,457.7 $ 2,893.4 $ ( 233.4 ) $ 8,144.3

Three Months Ended July 31, 2021

Net income 191.1 191.1

Other comprehensive income (loss) ( 13.9 ) ( 13.9 )

Comprehensive income 177.2

Purchase of treasury shares ( 580 ) — ( 0.1 ) — ( 0.1 )

Stock plans 67,757 — 4.4 — 4.4

Cash dividends declared, $ 1.02 per common share

( 108.5 ) ( 108.5 )

Balance at October 31, 2022 106,626,536 $ 26.6 $ 5,462.0 $ 2,976.0 $ ( 247.3 ) $ 8,217.3

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

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

See notes to unaudited condensed consolidated financial statements.

9 unchanged sentences

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, 2022, are not necessarily indicative of the results that may be expected for the year ending April 30, 2023.

Operating results for the six months ended October 31, 2022, are not necessarily indicative of the results that may be expected for the year ending April 30, 2023.

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, 2022.

4 unchanged sentences

This update will require the disclosure of greenhouse gas emissions, including Scope 1 and Scope 2 emissions, which will be subject to third-party assurance, as well as climate-related targets and goals, and how the Board of Directors (the “Board”) and management oversee climate-related risks.

As of July 31, 2022, these amendments were not adopted by the SEC;

As of October 31, 2022, these amendments were not adopted by the SEC;

however, we anticipate that the adoption of these amendments will have a material impact on our financial statements and disclosures.

Integration and Restructuring Costs

Integration and restructuring costs primarily consist of employee-related costs and other transition and termination costs related to certain divestiture, acquisition, integration, or restructuring activities.

Restructuring Costs

Restructuring costs primarily consist of employee-related costs and other transition and termination costs related to approved restructuring activities.

Employee-related costs include severance, retention bonuses, and relocation costs.

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.

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

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

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

The obligation related to employee separation costs is included in other current liabilities in the Condensed Consolidated Balance Sheets.

Restructuring Costs:

A restructuring program was approved by the Board during 2021, associated with opportunities identified to reduce our overall cost structure, optimize our organizational design, and support our portfolio reshape.

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

Three Months Ended July 31, Total Costs Incurred to Date at July 31, 2022

Three Months Ended October 31, Six Months Ended October 31, Total Costs Incurred to Date at October 31, 2022

2022 2021 2022 2021

Employee-related costs $ 0.7 $ 1.1 $ 1.8 $ 2.4 $ 25.4

1 unchanged sentence

Total restructuring costs $ 3.5 $ 7.4 $ 6.0 $ 13.8 $ 58.6

The obligation related to severance costs and retention bonuses was $ 2.7 and $ 2.4 at July 31, 2022 and April 30, 2022, respectively.

As of July 31, 2022, cumulative noncash charges incurred to date were $ 27.8 , including $ 4.8 and $ 3.3 incurred during the three months ended July 31, 2022 and 2021, respectively, and primarily consisted of accelerated depreciation.

The obligation related to severance costs and retention bonuses was $ 2.7 and $ 2.4 at October 31, 2022, and April 30, 2022, respectively.

Noncash charges of $ 2.2 and $ 5.9 were included in the restructuring costs during the three months ended October 31, 2022 and 2021, respectively, and $ 7.0 and $ 9.2 during the six months ended October 31, 2022 and 2021, respectively.

As of October 31, 2022, cumulative noncash charges incurred to date were $ 30.0 and primarily consisted of accelerated depreciation.

On January 31, 2022, we sold the natural beverage and grains businesses to Nexus Capital Management LP (“Nexus”).

4 unchanged sentences

Retail Consumer Foods segment.

Final net proceeds from the divestiture were $ 98.7 , which were inclusive of a working capital adjustment and cash transaction costs.

We recognized a pre-tax gain of $ 28.3 related to the natural beverage and grains businesses, including $ 1.6 during the three months ended July 31, 2022, within other operating expense (income) – net in the Condensed Statement of Consolidated Income, upon finalization of the working capital adjustment.

Final net proceeds from the divestiture were $ 98.7 , which were inclusive of a working capital adjustment and net of cash transaction costs.

We recognized a pre-tax gain of $ 28.3 related to the natural beverage and grains businesses, including $ 1.6 during the first quarter of 2023, within other operating expense (income) – net in the Condensed Statement of Consolidated Income, upon finalization of the working capital adjustment.

The remaining pre-tax gain was recognized during the second half of 2022.

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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,

2022 2021 2022 2021

Retail Pet Foods $ 765.2 $ 701.6 $ 1,494.2 $ 1,349.6

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Income before income taxes $ 252.9 $ 268.8 $ 394.0 $ 474.0

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

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

For more information, see Note 3:

Integration and Restructuring Costs.

Restructuring Costs.

The following table presents certain geographical information.

Three Months Ended July 31,

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

2022 2021 2022 2021

United States $ 2,062.1 $ 1,919.2 $ 3,822.0 $ 3,652.4

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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,

2022 2021 2022 2021 Primary Reportable Segment (A)

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Retail Consumer Foods

Fruit spreads 100.1 90.8 U.S.

Retail Consumer Foods

Peanut butter 192.9 200.8 253.5 412.1 U.S.

Retail Consumer Foods

Fruit spreads 103.7 89.9 203.8 180.7 U.S.

Retail Consumer Foods

Portion control 43.5 40.8 71.3 75.2 Other (B)

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

(C) During the three months ended July 31, 2021, the net sales within this category were primarily related to the divested natural beverage business included in the U.S.

(C) During the three and six months ended October 31, 2021, the net sales within this category were primarily related to the divested natural beverage business included in the U.S.

Retail Consumer Foods segment.

2 unchanged sentences

Earnings per Share

We computed net income per common share (“basic earnings per share”) under the two-class method for the three months ended July 31, 2022 and 2021, due to certain unvested common shares that contained non-forfeitable rights to dividends (i.e., participating securities) during these periods.

For the three months ended July 31, 2022, the computation of net income per common share – assuming dilution (“diluted earnings per share”) was more dilutive under the treasury stock method, as compared to the two-class method;

We computed net income per common share (“basic earnings per share”) under the two-class method for the three and six months ended October 31, 2022 and 2021, due to certain unvested common shares that contained non-forfeitable rights to dividends (i.e., participating securities) during these periods.

For the three and six months ended October 31, 2022, the computation of net income per common share – assuming dilution (“diluted earnings per share”) was more dilutive under the treasury stock method, as compared to the two-class method;

therefore, the treasury stock method was used in accordance with FASB ASC 260, Earnings Per Share .

Diluted earnings per share for the three months ended July 31, 2021 was computed under the two-class method.

Diluted earnings per share for the three and six months ended October 31, 2021, was computed under the two-class method.

The following table sets forth the computation of basic earnings per share and diluted earnings per share under the two-class method.

Three Months Ended July 31,

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

2022 2021 2022 2021

Net income $ 191.1 $ 206.0 $ 300.9 $ 359.9

6 unchanged sentences

Net income per common share – assuming dilution $ 1.79 $ 1.90 $ 2.82 $ 3.32

The following table sets forth the computation of diluted earnings per share under the treasury stock method for the three months ended July 31, 2022.

The following table sets forth the computation of diluted earnings per share under the treasury stock method.

Three Months Ended October 31, 2022 Six Months Ended October 31, 2022

Net income $ 191.1 $ 300.9

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

July 31, 2022 April 30, 2022

October 31, 2022 April 30, 2022

Outstanding Carrying

22 unchanged sentences

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

We do no t have a balance outstanding under the revolving credit facility at July 31, 2022, or April 30, 2022.

We do no t have a balance outstanding under the revolving credit facility at October 31, 2022, or April 30, 2022.

We participate in a commercial paper program under which we can issue short-term, unsecured commercial paper not to exceed $ 2.0 billion at any time.

1 unchanged sentence

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

As of July 31, 2022, and April 30, 2022, we had $ 388.0 and $ 180.0 of short-term borrowings outstanding, respectively, which we re issued under our commercial paper program at a weighted-average interest rate of 2.60 percent and 0.65 percent, respectively .

Interest paid totaled $ 9.4 and $ 12.8 for the three months ended July 31, 2022 and 2021, respectively .

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

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

As of July 31, 2022, we are in compliance with all covenants.

As of October 31, 2022, and April 30, 2022, we had $ 302.0 and $ 180.0 of short-term borrowings outstanding, respectively, which we re issued under our commercial paper program at weighted-average interest rates of 3.40 and 0.65 percent, respectively .

Interest paid totaled $ 67.9 and $ 69.0 for the three months ended October 31, 2022 and 2021, respectively, and $ 77.3 and $ 81.8 for the six months ended October 31, 2022 and 2021, respectively .

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

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

As of October 31, 2022, 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

7 unchanged sentences

Net periodic benefit cost $ 3.6 $ 3.9 $ 0.3 $ 0.4

During the first quarter of 2023, we made contributions of $ 70.0 to increase funding for our U.S.

Six Months Ended October 31,

Defined Benefit Pension Plans Other Postretirement Benefits

2022 2021 2022 2021

Service cost $ 0.6 $ 0.9 $ 0.5 $ 0.6

Interest cost 8.8 6.2 1.2 0.7

Expected return on plan assets ( 8.1 ) ( 8.2 ) — —

Amortization of net actuarial loss (gain) 2.0 3.5 ( 0.6 ) ( 0.2 )

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

Settlement loss (gain) 1.7 6.2 — —

Net periodic benefit cost $ 5.4 $ 9.0 $ 0.7 $ 0.8

During the first six months of 2023, we made contributions of $ 70.0 to increase funding for our U.S.

qualified defined benefit pension plans and direct benefit payments of $ 1.8 .

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We utilize derivative instruments to manage interest rate risk associated with anticipated debt transactions, as well as to manage changes in the fair value of our long-term debt.

At the inception of an interest rate contract, the instrument is evaluated and documented for qualifying hedge accounting treatment.

At the inception of an interest rate contract,

the instrument is evaluated and documented for qualifying hedge accounting treatment.

If the contract is designated as a cash flow hedge, the mark-to-market gains or losses on the contract are deferred and included as a component of accumulated other comprehensive income (loss) and generally reclassified to interest expense in the period during which the hedged transaction affects earnings.

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

July 31, 2022 April 30, 2022

October 31, 2022 April 30, 2022

Commodity contracts $ 1,236.6 $ 2,086.2

1 unchanged sentence

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

July 31, 2022

October 31, 2022

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 $ 42.4 and $ 54.6 at July 31, 2022, and April 30, 2022, respectively, and are included in other current assets in the Condensed Consolidated Balance Sheets.

Our cash margin accounts represente d collateral pledged of $ 77.9 and $ 54.6 at October 31, 2022, and April 30, 2022, respectively, 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.

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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,

2022 2021 2022 2021

Derivative gains (losses) on commodity contracts $ ( 19.3 ) $ 10.9 $ ( 28.2 ) $ 26.7

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Commodity and foreign currency exchange derivative gains and losses are reported in unallocated derivative gains and losses outside of segment operating results until the related inventory is sold.

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.

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 net change in cumulative unallocated derivative gains and losses.

Three Months Ended July 31,

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

2022 2021 2022 2021

Net derivative gains (losses) recognized and classified as unallocated $ ( 14.5 ) $ 10.7 $ ( 23.6 ) $ 28.0

2 unchanged sentences

Change in net cumulative unallocated derivative gains and losses $ ( 27.1 ) $ ( 13.3 ) $ ( 60.9 ) $ ( 15.5 )

The net cumulative unallocated derivative gains were $ 3.5 and $ 37.3 at July 31, 2022, and April 30, 2022, respectively.

The net cumulative unallocated derivative losses were $ 23.6 at October 31, 2022, and net cumulative unallocated derivative gains were $ 37.3 at April 30, 2022.

Cash Flow Hedges

3 unchanged sentences

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

Three Months Ended July 31,

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

2022 2021 2022 2021

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

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

to interest expense – net (A)

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

( 3.5 ) ( 3.5 ) ( 6.8 ) ( 7.0 )

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

to other income (expense) – net (B)

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 $ 6.8 $ 6.4

(A) Interest expense – net, as presented in the Condensed Statements of Consolidated Income was $ 39.1 and $ 43.1 for the three months ended July 31, 2022 and 2021, respectively.

(B) Other income (expense) – net, as presented in the Condensed Statements of Consolidated Income was income of $ 0.5 and expense of $ 11.1 for the three months ended July 31, 2022 and 2021, respectively.

(A) Interest expense – net, as presented in the Condensed Statements of Consolidated Income was $ 39.7 and $ 40.3 for the three months ended October 31, 2022 and 2021, respectively, and $ 78.8 and $ 83.4 for the six months ended October 31, 2022 and 2021, respectively.

(B) Other income (expense) – net, as presented in the Condensed Statements of Consolidated Income was expense of $ 0.8 and $ 2.7 for the three months ended October 31, 2022 and 2021, respectively, and expense of $ 0.3 and $ 13.8 for the six months ended October 31, 2022 and 2021, respectively.

The reclassification during the first quarter of 2022 is related to the debt extinguishment of the $400.0 Senior Notes due March 15, 2022.

Included as a component of accumulated other comprehensive income (loss) at July 31, 2022, and April 30, 2022, were deferred net pre-tax losses of $ 210.9 and $ 214.2 , respectively, related to the terminated interest rate contracts.

The related net tax benefit recognized in accumulated other comprehensive income (loss) at July 31, 2022, and April 30, 2022, was $ 49.5 and $ 50.3 , respectively.

Approximately $ 13.5 of the net pre-tax loss will be recognized over the next 12 months related to the terminated interest rate contracts.

Included as a component of accumulated other comprehensive income (loss) at October 31, 2022, and April 30, 2022, were deferred net pre-tax losses of $ 207.4 and $ 214.2 , respectively, related to the terminated interest rate contracts.

The related net tax benefit recognized in accumulated other comprehensive income (loss) at October 31, 2022, and April 30, 2022, was $ 48.6 and $ 50.3 , respectively.

Approximately $ 13.5 o f the net pre-tax loss will be recognized over the next 12 months related to the terminated interest rate contracts.

Fair Value Hedges

2 unchanged sentences

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

As of the second quarter of 2022, we had fully recognized the gain of $ 53.5 , of which $ 2.1 was recognized during three months ended July 31, 2021.

As of the second quarter of 2022, we had fully recognized the gain of $ 53.5 , of which $ 1.9 and $ 4.0 was recognized during three and six months ended October 31, 2021, respectively.

Other Financial Instruments and Fair Value Measurements

3 unchanged sentences

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

July 31, 2022 April 30, 2022

October 31, 2022 April 30, 2022

Amount Fair Value Carrying

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(Level 2) Significant

(Level 3) Fair Value at July 31, 2022

(Level 3) Fair Value at October 31, 2022

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, 2022, our municipal obligations are scheduled to mature as follows:

As of October 31, 2022, our municipal obligations are scheduled to mature as follows:

$ 0.3 in 2023, $ 1.7 in 2024, $ 1.8 in 2025, $ 0.8 in 2026, $ 4.9 in 2027, and the remaining $ 9.4 in 2028 and beyond.

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

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

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

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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, 2022 April 30, 2022

October 31, 2022 April 30, 2022

Operating lease right-of-use assets $ 86.7 $ 106.5

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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,

2022 2021 2022 2021

Operating lease cost $ 10.3 $ 10.6 $ 20.8 $ 21.4

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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:

7 unchanged sentences

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

July 31, 2022

October 31, 2022

Operating Leases Finance Leases

8 unchanged sentences

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

July 31, 2022 April 30, 2022

October 31, 2022 April 30, 2022

Weighted average remaining lease term (in years):

4 unchanged sentences

Finance leases

The effective income tax rates for the three months ended July 31, 2022 and 2021, were 22.2 and 25.0 percent, respectively.

During the three months ended July 31, 2022 and 2021, the effective income tax rates varied from the U.S.

The effective income tax rates for the three months ended October 31, 2022 and 2021, were 24.4 and 23.4 percent, respectively, and for the six months ended October 31, 2022 and 2021, were 23.6 and 24.1 percent, respectively.

During the three and six months ended October 31, 2022 and 2021, 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.

The effective income tax rate for the three months ended July 31, 2022, reflects the favorable deferred tax benefit of a state income tax rate reduction enacted during the quarter.

Within the next 12 months, it is reasonably possible that we could decrease our unrecognized tax benefits by an estimated $ 1.2 , primarily as a result of the expiration of statute of limitation periods.

On August 16, 2022, President Biden signed into law The Inflation Reduction Act of 2022, H.R.

5376 (the “Act”).

Under the Act, share repurchases after December 31, 2022, will be subject to a 1% excise tax, which would not be material.

Further, the remaining corporate tax changes included in the Act are not expected to have a material impact on our financial statements.

Accumulated Other Comprehensive Income (Loss)

12 unchanged sentences

Income tax benefit (expense) — ( 1.7 ) ( 0.4 ) 0.4 ( 1.7 )

Balance at July 31, 2022 $ ( 19.7 ) $ ( 161.4 ) $ ( 53.8 ) $ 1.5 $ ( 233.4 )

Balance at October 31, 2022 $ ( 36.1 ) $ ( 158.8 ) $ ( 53.3 ) $ 0.9 $ ( 247.3 )

Adjustment Net Gains (Losses)

10 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 )

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

During both 2023 and 2022, the reclassification was primarily from accumulated other comprehensive income (loss) to interest expense.

In addition, during the first quarter of 2022, a portion of the reclassification was to other income (expense) – net, which was driven by the prepayment of the Senior Notes due March 15, 2022.

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

(A) The reclassification from accumulated other comprehensive income (loss) is primarily composed of deferred gains (losses) related to terminated interest rate contracts which were reclassified to interest expense.

For additional information, see Note 9:

6 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, 2022.

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.

In addition to the legal proceedings discussed above, we are currently a defendant in Council for Education and Research on Toxics (“CERT”) v.

Brad Barry LLC, et al., which alleges that we, in addition to nearly eighty other defendants (collectively the “Defendants”) who manufacture, package, distribute, or sell packaged coffee, failed to provide warnings for our coffee products of exposure to the chemical acrylamide as required under California Health and Safety Code Section 25249.5, the California Safe Drinking Water and Toxic Enforcement Act of 1986 (better known as “Proposition 65”).

products of exposure to the chemical acrylamide as required under California Health and Safety Code Section 25249.5, the California Safe Drinking Water and Toxic Enforcement Act of 1986 (better known as “Proposition 65”).

CERT sought equitable relief, including warnings to consumers, as well as civil penalties in the amount of the statutory maximum of $2,500 per day per violation of Proposition 65.

1 unchanged sentence

In June 2019, the state agency responsible for administering the Proposition 65 program, the California Office of Environmental Health Hazard Assessment (“OEHHA”), approved a regulation clarifying that cancer warnings are not required for coffee under Proposition 65, and in August 2020, the trial court granted the Defendants’ motion for summary judgment based on the regulation.

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 a series of putative class action lawsuits that were originally filed in federal courts in California, Florida, Illinois, Missouri, New York, 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.

CERT appealed the ruling in November 2020 to the California Court of Appeals for the Second Appellate District.

The Court issued its order on October 26, 2022, affirming the lower court’s decision.

CERT may petition the California Supreme Court for further appeal by December 5, 2022.

We are also defendants in a series of putative class action lawsuits that were originally filed in federal courts in California, Florida, Illinois, Missouri, New York, Texas, 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.

3 unchanged sentences

Their claims are premised on allegations that we engaged in business practices designed to mislead the public regarding the safety of Jif peanut butter for human consumption due to the alleged presence of salmonella.

The cases are pending and consolidated in the United States District Court for the Northern District of Ohio.

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, 2022, 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, 2022, 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.

7 unchanged sentences

Retail Consumer Foods segment.

Approximately $ 65.0 of direct costs were recognized, net of the remaining anticipated insurance recoveries, during the three months ended July 31, 2022.

Approximately $ 25.0 and $ 90.0 of direct costs were recognized, net of the remaining anticipated insurance recoveries, during the three and six months ended October 31, 2022, respectively.

We expect the majority of the remaining costs will be incurred through the third quarter of 2023.

1 unchanged sentence

The following table sets forth common share information.

July 31, 2022 April 30, 2022

October 31, 2022 April 30, 2022

Common shares authorized 300.0 300.0

2 unchanged sentences

Repurchase Program:

During the three months ended July 31, 2022 and 2021, 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, 2022 and 2021, consisted of shares repurchased from stock plan recipients in lieu of cash payments.

At July 31, 2022, approximately 5.8 million common shares remain available for repurchase pursuant to the Board’s authorizations.

During the six months ended October 31, 2022 and 2021, 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, 2022 and 2021, consisted of shares repurchased from stock plan recipients in lieu of cash payments.

At October 31, 2022, approximately 5.8 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