What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-02-28 compared with 2022-11-21 · 147 added, 101 removed, 605 unchanged (29% of the section changed)

2 unchanged sentences

CONDENSED STATEMENTS OF CONSOLIDATED INCOME

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

Three Months Ended January 31, Nine Months Ended January 31,

Dollars in millions, except per share data 2023 2022 2023 2022

5 unchanged sentences

Amortization 55.6 55.3 166.8 166.1

Other intangible assets impairment charge — 150.4 — 150.4

Other special project costs (A)

17 unchanged sentences

CONDENSED STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME

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

Three Months Ended January 31, Nine Months Ended January 31,

Dollars in millions 2023 2022 2023 2022

10 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

Dollars in millions October 31, 2022 April 30, 2022

Dollars in millions January 31, 2023 April 30, 2022

Current Assets

46 unchanged sentences

CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS

Six Months Ended October 31,

Nine Months Ended January 31,

Dollars in millions 2023 2022

4 unchanged sentences

Amortization 166.8 166.1

Other intangible assets impairment charge — 150.4

Share-based compensation expense 11.3 15.2

Gain on divestiture ( 1.6 ) —

Gain on divestitures – net ( 1.6 ) ( 9.6 )

Other noncash adjustments – net 26.2 12.3

12 unchanged sentences

Additions to property, plant, and equipment ( 332.3 ) ( 244.5 )

Proceeds from divestiture 1.6 —

Proceeds from divestitures – net 1.6 130.2

Other – net 23.9 ( 17.6 )

18 unchanged sentences

CONDENSED STATEMENTS OF CONSOLIDATED SHAREHOLDERS’ EQUITY

Six Months Ended October 31, 2022

Nine Months Ended January 31, 2023

Dollars in millions Common

17 unchanged sentences

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

Net income 208.5 208.5

Other comprehensive income (loss) 10.1 10.1

Comprehensive income 218.6

Purchase of treasury shares ( 746 ) — ( 0.1 ) — ( 0.1 )

Stock plans 8,499 — 7.5 7.5

Cash dividends declared, $ 1.02 per common share

( 108.3 ) ( 108.3 )

Balance at January 31, 2023 106,634,289 $ 26.6 $ 5,469.4 $ 3,076.2 $ ( 237.2 ) $ 8,335.0

Nine Months Ended January 31, 2022

Dollars in millions Common

17 unchanged sentences

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

Net income 69.7 69.7

Other comprehensive income (loss) 1.2 1.2

Comprehensive income 70.9

Purchase of treasury shares ( 1,505 ) — ( 0.2 ) — ( 0.2 )

Stock plans 100,996 — 16.8 16.8

Cash dividends declared, $ 0.99 per common share

( 107.0 ) ( 107.0 )

Balance at January 31, 2022 108,462,330 $ 27.1 $ 5,553.6 $ 2,955.5 $ ( 269.3 ) $ 8,266.9

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

Operating results for the nine months ended January 31, 2023, 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 October 31, 2022, these amendments were not adopted by the SEC;

As of January 31, 2023, 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.

9 unchanged sentences

This is inclusive of certain restructuring costs associated with the divestitures of the Crisco ® , Natural Balance ® , private label dry pet food, and natural beverage and grains businesses.

For additional information, see Note 4:

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

Divestitures.

During 2021, we substantially completed an organizational redesign related to our corporate headquarters and announced plans to close our Suffolk, Virginia, facility as a result of a new strategic partnership for the production of our liquid coffee products.

During 2022, we completed the transition of production to JDE Peet’s N.V., as anticipated.

Furthermore, the restructuring program was expanded during the third quarter of 2022 to include certain costs associated with the recent divestitures of the private label dry pet food and natural beverage and grains businesses, as well as the closure of our Ripon, Wisconsin, production facility by the end of calendar year 2022 to further optimize operations for our U.S.

During 2022, we completed the transition of production to JDE Peet’s N.V.

Furthermore, the restructuring program was expanded during the third quarter of 2022 to include certain costs associated with the divestitures of the private label dry pet food and natural beverage and grains businesses, as well as the closure of our Ripon, Wisconsin, production facility to further optimize operations for our U.S.

Retail Consumer Foods business.

We expect to incur costs of approximately $ 70.0 associated with the restructuring activities planned to date.

More than 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 planned activities associated with this restructuring program will be completed by the end of 2023.

We completed the closure of the Ripon facility during the third quarter of 2023, as planned, and anticipate the remaining restructuring activities will be completed by the end of 2023.

We expect to incur total costs of approximately $ 65.0 associated with the restructuring activities, of which more than 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.

The remaining costs represent employee-related costs.

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

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

Three Months Ended January 31, Nine Months Ended January 31, Total Costs Incurred to Date at January 31, 2023

2023 2022 2023 2022

2 unchanged sentences

Total restructuring costs $ 1.6 $ 8.8 $ 7.6 $ 22.6 $ 60.2

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.

The obligation related to severance costs and retention bonuses was $ 0.5 and $ 2.4 at January 31, 2023, and April 30, 2022, respectively.

Noncash charges of $ 3.2 and $ 6.7 were included in the restructuring costs during the three months ended January 31, 2023 and 2022, respectively, and $ 10.2 and $ 15.9 during the nine months ended January 31, 2023 and 2022, respectively.

As of January 31, 2023, cumulative noncash charges incurred to date were $ 33.2 and primarily consisted of accelerated depreciation.

Subsequent to January 31, 2023, we entered into a definitive agreement to sell several of our pet food brands to Post Holdings, Inc.

We expect the transaction to close during the fourth quarter of 2023, subject to closing conditions, including the receipt of required regulatory approvals.

The transaction includes the Rachael Ray ® Nutrish ® , 9Lives ® , Kibbles ’n Bits ® , Nature’s Recipe ® , and Gravy Train ® brands, as well as our private label pet food business, inclusive of certain trademarks and licensing agreements, manufacturing and distribution facilities in Bloomsburg, Pennsylvania, manufacturing facilities in Meadville, Pennsylvania, and Lawrence, Kansas, and approximately 1,100 employees who support these pet food brands.

Under our ownership, these brands are expected to generate net sales of approximately $ 1.5 billion in 2023, primarily included in the U.S.

Retail Pet Foods segment.

The transaction is valued at approximately $ 1.2 billion, consisting of $ 700.0 in cash, subject to a working capital adjustment, and approximately 5.39 million shares of Post common stock.

Based on the expected proceeds, less estimated costs to sell, we anticipate recognizing a pre-tax loss of approximately $ 815.0 in the fourth quarter of 2023, inclusive of the estimated carrying value of the net assets to be disposed, primarily consisting of goodwill and other intangible assets.

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

5 unchanged sentences

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.

We recognized a pre-tax gain of $ 28.3 related to the natural beverage and grains businesses within other operating expense (income) – net in the Condensed Statements of Consolidated Income, of which $ 26.7 was recognized during the second half of 2022, and the remaining $ 1.6 was recognized upon finalization of the working capital adjustment during the first quarter of 2023.

On December 1, 2021, we sold the private label dry pet food business to Diamond Pet Foods, Inc.

5 unchanged sentences

Final net proceeds from the divestiture were $ 32.9 , which were net of cash transaction costs.

Upon completion of this transaction during the third quarter of 2022, we recognized a pre-tax loss of $ 17.1 .

Upon completion of this transaction during the third quarter of 2022, we recognized a pre-tax loss of $ 17.1 , within other operating expense (income) – net in the Condensed Statement of Consolidated Income.

Reportable Segments

7 unchanged sentences

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’ ® , 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.

6 unchanged sentences

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

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

Three Months Ended January 31, Nine Months Ended January 31,

2023 2022 2023 2022

11 unchanged sentences

Amortization ( 55.6 ) ( 55.3 ) ( 166.8 ) ( 166.1 )

Gain on divestiture — — 1.6 —

Other intangible assets impairment charge — ( 150.4 ) — ( 150.4 )

Gain on divestitures – net — 9.6 1.6 9.6

Interest expense – net ( 37.9 ) ( 39.5 ) ( 116.7 ) ( 122.9 )

11 unchanged sentences

The following table presents certain geographical information.

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

Three Months Ended January 31, Nine Months Ended January 31,

2023 2022 2023 2022

6 unchanged sentences

The following table presents product category information.

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

Three Months Ended January 31, Nine Months Ended January 31,

2023 2022 2023 2022 Primary Reportable Segment (A)

20 unchanged sentences

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

(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.

(C) During the three and nine months ended January 31, 2022, 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 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 and six months ended October 31, 2021, was computed under the two-class method.

We computed net income per common share (“basic earnings per share”) under the two-class method for the three and nine months ended January 31, 2023 and 2022, due to certain unvested common shares that contained non-forfeitable rights to dividends (i.e., participating securities) during these periods.

For the three and nine months ended January 31, 2023, 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 Financial Accounting Standards Board Accounting Standards Codification 260, Earnings Per Share .

Diluted earnings per share for the three and nine months ended January 31, 2022, 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 October 31, Six Months Ended October 31,

Three Months Ended January 31, Nine Months Ended January 31,

2023 2022 2023 2022

8 unchanged sentences

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

Three Months Ended January 31, 2023 Nine Months Ended January 31, 2023

Net income $ 208.5 $ 509.4

5 unchanged sentences

Net income per common share – assuming dilution $ 1.95 $ 4.77

Goodwill and Other Intangible Assets

We review goodwill and other indefinite-lived intangible assets for impairment at least annually on February 1, and more often if indicators of impairment exist.

As of January 31, 2023, there were no indicators of impairment, and as a result, we do not believe that any of our reporting units or material indefinite-lived intangible assets are more likely than not impaired.

The goodwill within the U.S.

Retail Pet Foods segment remains susceptible to future impairment charges due to narrow differences between fair value and carrying value.

Any significant adverse change in our near or long-term projections or macroeconomic conditions could result in future impairment charges.

The carrying value of the goodwill within the U.S.

Retail Pet Foods segment was $ 2.4 billion as of January 31, 2023.

During the third quarter of 2022, we recognized an impairment charge of $ 150.4 related to the Rachael Ray Nutrish brand within the U.S.

Retail Pet Foods segment, primarily driven by the re-positioning of this brand within the Pet Foods brand portfolio, which led to a decline in the current and long-term net sales expectations and the royalty rate used in the valuation analysis.

This charge was included as a noncash charge in our Condensed Statement of Consolidated Income.

Additionally, we reassessed the long-term strategic expectations for the Rachael Ray Nutrish brand and reclassified this brand as a finite-lived intangible asset as of January 31, 2022.

Debt and Financing Arrangements

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

October 31, 2022 April 30, 2022

January 31, 2023 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 October 31, 2022, or April 30, 2022.

We did no t have a balance outstanding under the revolving credit facility at January 31, 2023, 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 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.

At April 30, 2022, we had $ 180.0 of short-term borrowings outstanding, which we re issued under our commercial paper program at a weighted-average interest rate of 0.65 percent .

As of January 31, 2023, we did not have a balance outstanding under the commercial paper program.

Interest paid totaled $ 9.9 and $ 8.6 for the three months ended January 31, 2023 and 2022, respectively, and $ 87.2 and $ 90.4 for the nine months ended January 31, 2023 and 2022, 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 covenant restrictions, including an interest coverage ratio.

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

As of January 31, 2023, 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 October 31,

Three Months Ended January 31,

Defined Benefit Pension Plans Other Postretirement Benefits

7 unchanged sentences

Net periodic benefit cost $ 3.8 $ 2.9 $ 0.4 $ 0.3

Six Months Ended October 31,

Nine Months Ended January 31,

Defined Benefit Pension Plans Other Postretirement Benefits

7 unchanged sentences

Net periodic benefit cost $ 9.2 $ 11.9 $ 1.1 $ 1.1

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

During the first nine 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 $ 2.8 .

17 unchanged sentences

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.

2 unchanged sentences

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

October 31, 2022 April 30, 2022

January 31, 2023 April 30, 2022

Commodity contracts $ 876.6 $ 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.

October 31, 2022

January 31, 2023

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 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.

Our cash margin accounts represented collateral pledged of $ 33.4 and $ 54.6 at January 31, 2023, and April 30, 2022, respectively, and are included in other current assets in the Condensed Consolidated Balance Sheets.

The change in the cash margin accounts are 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 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.

2 unchanged sentences

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 October 31, Six Months Ended October 31,

Three Months Ended January 31, Nine Months Ended January 31,

2023 2022 2023 2022

3 unchanged sentences

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 October 31, Six Months Ended October 31,

Three Months Ended January 31, Nine Months Ended January 31,

2023 2022 2023 2022

3 unchanged sentences

Change in net cumulative unallocated derivative gains and losses $ 17.5 $ ( 22.4 ) $ ( 43.4 ) $ ( 37.9 )

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.

The net cumulative unallocated derivative losses were $ 6.1 at January 31, 2023, 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 October 31, Six Months Ended October 31,

Three Months Ended January 31, Nine Months Ended January 31,

2023 2022 2023 2022

4 unchanged sentences

Change in accumulated other comprehensive income (loss) $ 3.4 $ 3.4 $ 10.2 $ 9.8

(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 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.

(A) Interest expense – net, as presented in the Condensed Statements of Consolidated Income was $ 37.9 and $ 39.5 for the three months ended January 31, 2023 and 2022, respectively, and $ 116.7 and $ 122.9 for the nine months ended January 31, 2023 and 2022, respectively.

(B) Other income (expense) – net, as presented in the Condensed Statements of Consolidated Income was expense of $ 4.6 and $ 1.5 for the three months ended January 31, 2023 and 2022, respectively, and expense of $ 4.9 and $ 15.3 for the nine months ended January 31, 2023 and 2022, respectively.

The reclassification during the nine months ended January 31, 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 January 31, 2023, and April 30, 2022, were deferred net pre-tax losses of $ 204.0 and $ 214.2 , respectively, related to the terminated interest rate contracts.

The related net tax benefit recognized in accumulated other comprehensive income (loss) at January 31, 2023, and April 30, 2022, was $ 47.9 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.

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 $ 1.9 and $ 4.0 was recognized during three and six months ended October 31, 2021, respectively.

As of the second quarter of 2022, we had fully recognized the gain of $ 53.5 , of which $ 4.0 was recognized during the nine months ended January 31, 2022.

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.

October 31, 2022 April 30, 2022

January 31, 2023 April 30, 2022

Amount Fair Value Carrying

12 unchanged sentences

(Level 2) Significant

(Level 3) Fair Value at October 31, 2022

(Level 3) Fair Value at January 31, 2023

Marketable securities and other investments:

28 unchanged sentences

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

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

As of January 31, 2023, our municipal obligations are scheduled to mature as follows:

$ 0.2 in 2023, $ 1.5 in 2024, $ 1.3 in 2025, $ 0.8 in 2026, $ 5.0 in 2027, and the remaining $ 9.7 in 2028 and beyond.

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

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

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

9 unchanged sentences

Certain leases also include termination provisions or options to purchase the leased property.

Since we are not reasonably certain to exercise these types of options, minimum lease payments do not include any amounts related to these termination or purchase options.

Since we are not reasonably certain to exercise these types of

options, minimum lease payments do not include any amounts related to these termination or purchase options.

Our lease agreements generally do not contain residual value guarantees or restrictive covenants that are material.

5 unchanged sentences

We consider our credit rating and the current economic environment in determining this collateralized rate.

As of January 31, 2023, we have entered into lease commitments related to two distribution centers for which the leases have not yet commenced as of that date.

The leases will begin during the fourth quarter of 2023 and the first quarter of 2024, and upon commencement, we expect to recognize a right-of-use asset and lease liability of approximately $ 28.8 and $ 72.8 , respectively, in the Condensed Consolidated Balance Sheets.

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

October 31, 2022 April 30, 2022

January 31, 2023 April 30, 2022

Operating lease right-of-use assets $ 82.9 $ 106.5

13 unchanged sentences

The following table summarizes the components of lease expense.

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

Three Months Ended January 31, Nine Months Ended January 31,

2023 2022 2023 2022

3 unchanged sentences

Interest on lease liabilities

0.1 — 0.1 0.1

Variable lease cost 7.2 5.9 18.9 16.9

3 unchanged sentences

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

Six Months Ended October 31,

Nine Months Ended January 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.

October 31, 2022

January 31, 2023

Operating Leases Finance Leases

8 unchanged sentences

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

October 31, 2022 April 30, 2022

January 31, 2023 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 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.

The effective income tax rates for the three months ended January 31, 2023 and 2022, were 24.3 and 36.4 percent, respectively, and for the nine months ended January 31, 2023 and 2022, were 23.9 and 26.4 percent, respectively.

During the three and nine months ended January 31, 2023, 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 rates for the three and nine months ended January 31, 2022, varied from the U.S.

statutory income tax rate due to the impact of state income taxes, including an unfavorable one-time deferred tax impact of an internal legal entity simplification.

Within the next 12 months, it is reasonably possible that we could decrease our unrecognized tax benefits by an estimated $ 1.1 , primarily as a result of the expiration of statute of limitation periods.

13 unchanged sentences

Income tax benefit (expense) — ( 2.4 ) ( 0.6 ) 0.2 ( 2.8 )

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

Balance at January 31, 2023 $ ( 29.6 ) $ ( 156.1 ) $ ( 52.7 ) $ 1.2 $ ( 237.2 )

Adjustment Net Gains (Losses)

10 unchanged sentences

Income tax benefit (expense) — ( 1.4 ) ( 2.0 ) ( 0.1 ) ( 3.5 )

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

Balance at January 31, 2022 $ ( 18.0 ) $ ( 166.4 ) $ ( 88.7 ) $ 3.8 $ ( 269.3 )

(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.

7 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 October 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”).

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.

In addition, CERT asserted that every consumed cup of coffee, absent a compliant warning, was equivalent to a violation under Proposition 65.

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.

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.

In addition to the legal proceedings discussed above, in May 2011, we were named a defendant in Council for Education and Research on Toxics (“CERT”) v.

Brad Barry LLC, et al., which alleged 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”).

In August 2020, the trial court granted the Defendants’ motion for summary judgment based on a 2019 regulation clarifying that cancer warnings are not required for coffee under Proposition 65.

CERT appealed the ruling in November 2020 to the California Court of Appeals for the Second Appellate District, which affirmed the trial court's decision.

CERT then petitioned for further appeal to the California Supreme Court, which was denied on February 15, 2023.

The California Supreme Court will send the case back to the trial court to affirm judgement in favor of the Defendants thereby effectively concluding this litigation.

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.

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.

We are a defendant in five putative class action lawsuits as a result of our voluntary recall of select Jif peanut butter products.

The plaintiffs assert causes of action for negligence, breach of warranties, fraudulent concealment, unjust enrichment, and, in some of the lawsuits, violations of state consumer protection and deceptive trade practices laws.

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 October 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 January 31, 2023, 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.

4 unchanged sentences

In June 2022, we resumed manufacturing and shipping at our Lexington facility, as well as shipping from our Memphis facility.

We continue to partner with retailers to restock Jif peanut butter products as quickly as possible and anticipate a return to normal levels by the end of 2023.

In addition to the impact of manufacturing downtime, we expect to incur total direct costs of approximately $ 100.0 by the end of 2023, net of the remaining anticipated insurance recoveries, related to customer returns, fees, unsaleable inventory, and other product recall-related costs, primarily within our U.S.

We partnered with retailers to restock Jif peanut butter products during the first quarter of 2023 and anticipate a return to normal levels by the end of 2023.

During the three and nine months ended January 31, 2023, approximately $ 20.0 and $ 110.0 of direct costs were recognized, respectively, net of insurance recoveries, related to customer returns, fees, unsaleable inventory, and other product recall-related costs, primarily within our U.S.

Retail Consumer Foods segment.

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.

The majority of the direct costs were incurred through the third quarter of 2023, and additional direct costs are expected to be minimal during the remainder of 2023.

Further, we are a defendant in five putative class action lawsuits as a result of our voluntary recall of select Jif peanut butter products.

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

Additionally, the U.S.

Food and Drug Administration (the “FDA”) issued a warning letter on January 24, 2023, following an inspection of our Lexington facility completed in June 2022, identifying concerns regarding certain practices and controls at the facility.

We have responded to the warning letter with a detailed explanation of our food safety plan and extensive verification activities to prevent contamination in Jif peanut butter products but the FDA or other agencies may nonetheless conclude that certain practices or controls were not in compliance with the Federal Food, Drug, and Cosmetic Act or other laws.

Any potential regulatory action could result in the imposition of injunctive terms and monetary payments that could have a material adverse effect on our business, reputation, brand, results of operations, and financial performance, as well as affect pending consumer litigation associated with the voluntary recall of Jif peanut butter products.

The outcome and financial impact, if any, of the ongoing consumer litigation or potential regulatory action associated with the Jif voluntary recall cannot be predicted at this time.

Accordingly, no loss contingency has been recorded for these matters as of January 31, 2023, and the likelihood of loss is not considered probable or estimable.

Common Shares

The following table sets forth common share information.

October 31, 2022 April 30, 2022

January 31, 2023 April 30, 2022

Common shares authorized 300.0 300.0

2 unchanged sentences

Repurchase Program:

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.

During the nine months ended January 31, 2023 and 2022, we did no t repurchase any common shares under a repurchase plan authorized by the Board.

The shares repurchased during the nine months ended January 31, 2023 and 2022, consisted of shares repurchased from stock plan recipients in lieu of cash payments.

At January 31, 2023, 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