What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-06-18 compared with 2023-06-20 · 496 added, 344 removed, 1201 unchanged (41% of the section changed)

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Statements of Consolidated Shareholders’ Equity 55

Notes to Consolidated Financial Statements 53

Notes to the Consolidated Financial Statements 56

REPORT OF MANAGEMENT ON INTERNAL CONTROL

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In making this assessment, we used the criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 Framework) (the “COSO criteria”).

On November 7, 2023, we completed the acquisition of Hostess Brands.

As permitted by the SEC, we excluded Hostess Brands operations from our assessment of internal control over financial reporting as of April 30, 2024.

Hostess Brands operations constituted 31 percent of total assets (including goodwill and other intangible assets of $5.4 billion) as of April 30, 2024, and 8 percent of net sales and 6 percent of operating income for the year then ended.

Hostess Brands operations will be included in our assessment as of April 30, 2025.

Based on our assessment of internal control over financial reporting under the COSO criteria, we concluded the internal control over financial reporting was effective as of April 30, 2024.

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Smucker Company (the “Company”) maintained, in all material respects, effective internal control over financial reporting as of April 30, 2024, based on the COSO criteria.

As indicated in the accompanying Report of Management on Internal Control Over Financial Reporting, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of Hostess Brands, Inc., which is included in the 2024 consolidated financial statements of the Company and constituted 31 percent of total assets (including goodwill and other intangible assets of $5.4 billion) as of April 30, 2024, and 8 percent of net sales and 6 percent of operating income for the year then ended.

Our audit of internal control over financial reporting of the Company also did not include an evaluation of the internal control over financial reporting of Hostess Brands, Inc.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the 2024 consolidated financial statements of the Company and our report dated June 18, 2024 expressed an unqualified opinion thereon.

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We have audited the accompanying consolidated balance sheets of The J.

Smucker Company (the “Company”) as of April 30, 2023 and 2022, the related statements of consolidated income, comprehensive income, shareholders’ equity, and cash flows for each of the three years in the period ended April 30, 2023, and the related notes (collectively referred to as the “consolidated financial statements”).

Smucker Company (the “Company”) as of April 30, 2024 and 2023, the related consolidated statements of income, comprehensive income, shareholders’ equity, and cash flows for each of the three years in the period ended April 30, 2024, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at April 30, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended April 30, 2024, in conformity with U.S.

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Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Retail Pet Foods Goodwill Impairment Evaluation

Description of the Matter At April 30, 2023, the Company’s total goodwill was $5.2 billion, of that, $1.6 billion relates to the U.S.

Retail Pet Foods segment.

Goodwill is assigned to the Company’s reporting units as of the acquisition date.

As discussed in Note 1 and Note 6 of the consolidated financial statements, goodwill is quantitatively tested at the reporting unit level for impairment at least annually on February 1, or when events or circumstances occur that would more likely than not reduce the fair value of a reporting unit below its carrying amount.

The Company uses an income and market approach in its quantitative impairment tests.

Retail Pet Foods goodwill is susceptible to impairment due to the narrow difference between fair value and carrying value.

Auditing the Company’s annual U.S.

Retail Pet Foods goodwill impairment evaluation was complex and highly judgmental due to the significant estimation required in determining the fair value of the reporting unit.

In particular, the fair value estimate using the income approach was sensitive to significant assumptions such as the weighted average cost of capital, discrete revenue growth rates, terminal period revenue growth rate, and profitability assumptions.

Elements of these significant assumptions are forward-looking and could be affected by future economic conditions and/or changes in consumer preferences.

How We Addressed the Matter in Our Audit

We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s U.S.

Retail Pet Foods goodwill impairment review process, including controls over the significant assumptions mentioned above.

To test the estimated fair value used in the Company’s U.S.

Retail Pet Foods impairment analysis, we performed audit procedures that included, among others, assessing fair value methodologies and testing the significant assumptions discussed above and the underlying data used by the Company in its analysis.

As it pertains to revenue growth rates and profitability assumptions, we compared the significant assumptions used by management to current industry and economic trends, changes to the Company’s business model, customer base or product mix, as applicable.

We assessed the historical accuracy of management’s estimates.

In addition, we involved our valuation specialists to assist with our evaluation of the methodology used by the Company and significant assumptions, including, the weighted average cost of capital.

Specifically, we evaluated the components of the weighted average cost of capital assumptions used by the Company by performing an independent corroborative calculation with the involvement of our valuation specialists.

Allocation of Goodwill Related to the Divestiture of Certain Pet Food Brands

Description of the Matter As discussed in Note 3 and Note 6 to the consolidated financial statements, on April 28, 2023, the Company divested certain pet food brands.

In conjunction with the divestiture, management allocated goodwill previously included primarily in the U.S.

Retail Pet Foods segment to the pet food brands disposal group using a relative fair value approach.

Goodwill of $790.3 million was allocated to the pet food brands disposal group as part of the divestiture.

Auditing the Company’s allocation of goodwill to the pet food brands disposal group was complex due to the significant estimation required to determine the relative fair values of the U.S.

Retail Pet Foods segment and the pet food brands disposal group referred to above.

These fair value estimates were sensitive to significant assumptions such as the weighted-average cost of capital, discrete revenue growth rates, terminal period revenue growth rate, and profitability assumptions.

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Purchase price allocation related to the acquisition of Hostess Brands

Description of the Matter As discussed in Note 2 to the consolidated financial statements, on November 7, 2023, the Company completed the acquisition of Hostess Brands.

The total purchase consideration in connection with the acquisition was $5.4 billion, of which $1.8 billion was allocated to indefinite-lived intangible assets and $1.2 billion was allocated to customer and contractual relationships.

The Company accounted for this acquisition as a business combination.

Auditing the Company’s purchase price allocation was complex due to the significant estimation required to determine the fair value of one indefinite-lived intangible asset and the customer relationship asset.

These fair value estimates were sensitive to certain significant assumptions.

As it pertains to the indefinite-lived intangible asset, these significant assumptions include the revenue attributable to the asset, discrete revenue growth rates, royalty rate, and discount rate.

Related to the customer relationship asset, these significant assumptions include the revenue growth rates, EBITDA margin and discount rate.

Elements of these significant assumptions are forward-looking and could be affected by future economic conditions and/or changes in consumer preferences.

How We Addressed the Matter in Our Audit

We obtained an understanding, evaluated the design and tested the operating effectiveness of management’s controls over the goodwill allocation process.

We obtained an understanding, evaluated the design, and tested the operating effectiveness of management’s controls over the purchase price allocation process.

For example, we tested controls over management’s review of the significant assumptions described above along with the completeness and accuracy of the data used in these fair value estimates.

To test the estimated fair value of the goodwill allocated to the divested pet food brands, we performed audit procedures that included, among others, assessing fair value methodologies and testing the significant assumptions discussed above and the underlying data used by the Company in its analysis.

As it pertains to revenue growth rates and profitability assumptions, we compared the significant assumptions used by management to current industry and economic trends.

We assessed the historical accuracy of management’s estimates and performed sensitivity analyses of significant assumptions to evaluate any hypothetical change in the fair value of the U.S.

Retail Pet Foods segment and pet food brands disposal group that would result from changes in significant assumptions.

In addition, we involved our valuation specialists to assist with our evaluation of the methodology used by the Company and significant assumptions, including, the weighted average cost of capital.

We also tested the allocation of goodwill by recalculating the amounts based on the estimated fair values of the U.S.

Retail Pet Foods segment and the pet food brands disposal group.

Furthermore, we have evaluated the Company’s disclosures in relation to the allocation of goodwill.

To test the estimated fair value of the indefinite-lived intangible asset and the customer relationship asset, we performed audit procedures that included, among others, assessing fair value methodologies and testing the significant assumptions described above and the underlying data used by the Company in its analysis.

As it pertains to revenue attributable to the asset and discrete revenue growth rates used to value the indefinite-lived intangible asset and revenue growth rates and EBITDA margin used to value the customer relationship, we compared the significant assumptions used by management to current industry and economic trends.

We assessed the historical results of the acquired business and performed sensitivity analyses of significant assumptions to evaluate any hypothetical change in the fair value of the indefinite-lived intangible asset and the customer relationship asset that would result from changes in significant assumptions.

In addition, we involved our valuation specialists to assist with our evaluation of the methodology used by the Company and significant assumptions, including the royalty rate and discount rate used to value the indefinite-lived intangible asset and discount rate used to value to the customer relationship asset.

Furthermore, we have evaluated the Company’s disclosure of the purchase price allocation.

/s/ Ernst & Young LLP

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Other special project costs (A)

130.2 4.7 8.0

Loss (gain) on divestitures – net 12.9 1,018.5 ( 9.6 )

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Interest expense – net ( 264.3 ) ( 152.0 ) ( 160.9 )

Other debt costs (A)

Other income (expense) – net ( 25.6 ) ( 14.7 ) ( 19.1 )

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Net Income (Loss) – Assuming Dilution $ 7.13 $ ( 0.86 ) $ 5.83

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

(A) Includes special project costs related to certain divestiture, acquisition, integration, and restructuring activities.

For more information, see Note 4:

Special Project Costs and Note 4:

Reportable Segments.

Special Project Costs, Note 5:

Reportable Segments, and Note 8:

Debt and Financing Arrangements.

See notes to consolidated financial statements.

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Dividends payable 112.8 106.3

Current portion of long-term debt 999.3 —

Short-term borrowings 591.0 —

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Noncurrent Liabilities

Long-term debt 4,314.2 4,310.6

Long-term debt, less current portion 6,773.7 4,314.2

Defined benefit pensions 54.1 62.1

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Amortization 191.1 206.9 223.6

Realized loss on investment in equity securities – net 21.5 — —

Other intangible assets impairment charges — — 150.4

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Deferred income tax expense (benefit) ( 40.5 ) ( 190.8 ) ( 38.1 )

Loss on disposal of assets – net 5.1 4.7 7.1

Loss (gain) on disposal of assets – net 7.8 5.1 4.7

Other noncash adjustments – net 31.9 23.9 14.9

Settlement of interest rate contracts 42.5 — —

Make-whole payments included in financing activities — — 7.0

Defined benefit pension contributions ( 4.1 ) ( 74.1 ) ( 5.3 )

Changes in assets and liabilities, net of effect from divestitures:

Changes in assets and liabilities, net of effect from acquisition and divestitures:

Trade receivables 41.5 ( 74.8 ) 7.5

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Investing Activities

Business acquired, net of cash acquired ( 3,920.6 ) — —

Proceeds from sale of equity securities 466.3 — —

Proceeds from divestitures – net 56.3 686.3 130.0

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Proceeds from stock option exercises 3.2 21.6 16.3

Payment of assumed tax receivable agreement obligation ( 86.4 ) — —

Other – net ( 5.0 ) ( 2.6 ) ( 0.1 )

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( 425.9 ) ( 425.9 )

Other ( 0.5 ) 0.5 — —

Balance at April 30, 2022 106,458,317 26.6 5,457.9 2,893.0 ( 237.4 ) 8,140.1

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Purchase of treasury shares ( 2,416,945 ) ( 0.7 ) ( 132.8 ) ( 242.9 ) ( 376.4 )

Issuance of shares for acquisition 3,989,915 1.0 449.2 450.2

Stock plans 222,693 0.1 25.7 ( 1.1 ) 24.7

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GAAP requires that we make certain estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes.

Estimates in these consolidated financial statements include, among others, estimates of future cash flows associated with assets, potential asset impairments, allocated goodwill disposed of as part of the sale of certain pet food brands, useful lives and residual values of long-lived assets used in determining depreciation and amortization, net realizable value of inventories, accruals for trade marketing and merchandising programs, income taxes, and discount rates and other assumptions used in determining defined benefit pension and other postretirement benefit expenses.

Estimates in these consolidated financial statements include, among others, estimates of future cash flows associated with assets, potential asset impairments, purchase price allocation, goodwill related to acquisitions and divestitures, useful lives and residual values of long-lived assets used in determining depreciation and amortization, net realizable value of inventories, accruals for trade marketing and merchandising programs, income taxes, and discount rates and other assumptions used in determining defined benefit pension and other postretirement benefit expenses.

Actual results could differ from these estimates.

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Based on the short-term nature of these assets, carrying value approximates fair value.

Cash equivalents within cash and cash equivalents in the Consolidated Balance Sheets were $ 614.0 and $ 116.3 at April 30, 2023 and 2022, respectively.

There were no cash equivalents within cash and cash equivalents at April 30, 2024, and $ 614.0 at April 30, 2023, in the Consolidated Balance Sheets.

Revenue Recognition:

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Distribution costs are included in SD&A expenses and primarily relate to the warehousing costs incurred to store our products.

Total distribution costs recorded within SD&A were $ 304.5 , $ 294.1 , and $ 281.8 in 2023, 2022, and 2021, respectively.

Total costs recorded within SD&A were $ 267.7 , $ 304.5 , and $ 294.1 in 2024, 2023, and 2022, respectively.

Advertising Expense:

Advertising costs are expensed as incurred.

Advertising costs are expensed as incurred and are included in SD&A in the Statements of Consolidated Income.

Advertising expense was $ 182.5 , $ 160.3 , and $ 176.5 in 2024, 2023, and 2022, respectively.

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Realized excess tax benefits and tax deficiencies are presented in the Statements of Consolidated Cash Flows as an operating activity and are recognized within income taxes in the Statements of Consolidated Income.

In 2023 and 2022, the excess tax benefits realized upon exercise or vesting of share-based compensation were $ 1.4 and $ 1.1 , respectively, and in 2021, there were tax deficiencies realized of $ 0.1 .

In 2024, 2023 and 2022, the excess tax benefits realized upon exercise or vesting of share-based compensation awards were $ 2.9 , $ 1.4 , and $ 1.1 , respectively.

For additional discussion on share-based compensation expense, see Note 13:

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Further, we compute net income (loss) per common share – assuming dilution (“diluted earnings per share”) under either the two-class method or the treasury method, dependent on which is more dilutive.

In 2023, we recognized a net loss, and as a result, excluded the anti-dilutive effect of stock-based awards from the computation of net income (loss) per common share – assuming dilution.

In 2024 and 2022, the computation of diluted earnings per share was more dilutive under the treasury stock method.

In 2023, we recognized a net loss, and as a result, excluded the anti-dilutive effect of stock-based awards from the computation of diluted earnings per share.

Therefore, in 2023, diluted earnings per share was computed under the two-class method.

In 2022, the computation of diluted earnings per share was more dilutive under the treasury stock method, while in 2021, diluted earnings per share was more dilutive under the two-class method.

Basic earnings per share is calculated by dividing net income (loss) available to common shareholders by the weighted-average number of common shares outstanding during the period.

Under the two-class method, net income (loss) available to common and participating common shareholders is reduced by the net income (loss) allocated to participating securities, which is equal to the amount of dividends declared in the current period and by the contractual amount of dividends that must be paid for the current period related to participating securities.

Under the two-class method, net income (loss) available to common and participating common shareholders is reduced by the net income (loss) allocated to participating securities, which is equal to the amount of dividends declared in the current period, and the contractual amount of dividends that must be paid for the current period related to participating securities.

Under the treasury stock method, the diluted earnings per share calculation includes potential common shares assumed to be issued, which reflects the potential dilution that would occur if any outstanding options or warrants were exercised or restricted stock becomes vested, and includes the “if converted” method for participating securities if the effect is dilutive.

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We account for the financial statement recognition and measurement criteria of a tax position taken or expected to be taken in a tax return under FASB ASC 740, Income Taxes .

ASC 740 also provides guidance on derecognition, classification, interest

and penalties, accounting in interim periods, and disclosure.

In accordance with the requirements of ASC 740, uncertain tax positions have been classified in the Consolidated Balance Sheets as noncurrent, except to the extent payment is expected within one year.

ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, and disclosure.

In accordance with the requirements of ASC 740, uncertain tax positions have been classified in the Consolidated Balance Sheets as noncurrent, except to the extent payment is expected

within one year.

We recognize net interest and penalties related to unrecognized tax benefits in income tax expense.

For additional information, refer to Note 14:

Income Taxes.

Trade Receivables:

In the normal course of business, we extend credit to customers.

Trade receivables, less credit losses, reflects the net realizable value of receivables and approximates fair value.

We account for trade receivables, less credit losses, under Accounting Standards Update (“ASU”) 2016-13, Financial Instruments – Credit Losses .

Trade receivables, less credit losses, reflect the net realizable value of receivables and approximates fair value.

We account for trade receivables, less credit losses, in accordance with FASB ASC 326, Financial Instruments – Credit Losses .

We evaluate our trade receivables and establish a reserve for credit loss based on a combination of factors.

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Trade receivables are charged off against the reserve for credit losses after we determine that the potential for recovery is remote.

At April 30, 2023 and 2022, the reserve for credit loss was $ 2.3 .

At April 30, 2024 and 2023, the reserve for credit loss was $ 8.7 and $ 2.3 , respectively.

We believe there is no concentration of risk with any single customer whose failure or nonperformance would materially affect results other than as discussed in Note 5:

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Thus, we would expect that over time any gain or loss in the estimated fair value of the derivatives would generally be offset by an increase or decrease in the estimated fair value of the underlying exposures.

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.

From time to time, 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.

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We lease certain land, buildings, and equipment for varying periods of time, with renewal options.

Lease expense in 2023, 2022, and 2021 totaled $ 113.3 , $ 111.0 , and $ 108.7 , respectively.

Lease expense in 2024, 2023, and 2022 was $ 121.7 , $ 113.3 , and $ 111.0 , respectively.

In accordance with FASB ASC 360, Property, Plant, and Equipment , long-lived assets, other than goodwill and other indefinite-lived intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable.

Recoverability of assets to be held and used is measured by a comparison of the carrying amount of the assets to future net undiscounted cash flows estimated to be generated by such assets.

If such assets are considered to be impaired, the impairment to be recognized is the amount by which the carrying amount exceeds

the estimated fair value of the assets.

Assets to be disposed of by sale are recognized as held for sale at the lower of carrying value or fair value less costs to sell.

If such assets are considered to be impaired, the impairment to be recognized is the amount by which the carrying amount exceeds the estimated fair value of the assets.

Assets to be disposed of by sale are recognized as held for sale at the lower of carrying

value or fair value less costs to sell.

Furthermore, determining fair value is subject to estimates of both cash flows and discount rates, and different estimates could yield different results.

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As required by ASC 321, the ownership interest in the entity is recognized at fair value based on fixed or determinable prices within current assets in the Consolidated Balance Sheets, and any change in fair value is included in other income (expense) – net in the Statements of Consolidated Income.

The net proceeds received from the divestiture of certain pet food brands included approximately 5.4 million shares of Post common stock, which represents approximately an 8 percent equity interest in Post.

At April 30, 2023, the fair value of the investment in Post common stock was $ 487.8 , which included an unrealized pre-tax loss of $ 3.8 .

In connection with the divestiture of certain pet food brands and the acquisition of Post common stock, we entered into a registration rights agreement with Post (the “Registration Rights Agreement”) on April 28, 2023.

Under the Registration Rights Agreement, Post must use reasonable best efforts to keep its existing registration statement on Form S-3, or any applicable subsequent shelf registration statement, continuously effective and usable for the resale of the Post common stock that we received in the divestiture, and upon receipt of a request or notice from us, Post must, subject to the terms and conditions of the Registration Rights Agreement, register the sale of the Post common stock under the Securities Act of 1933, as amended.

In May 2023, we entered into an agreement with an unrelated third party giving us the ability to enter into forward derivative transactions to provide flexibility with respect to the potential sale of Post common stock during the first two quarters of 2024.

Subsequent to April 30, 2023, we have not entered into any forward derivative transactions.

The net proceeds received from the divestiture of certain pet food brands included approximately 5.4 million shares of Post common stock, which represented approximately an 8 percent equity interest in Post as of April 30, 2023.

The fair value of the investment in Post common stock was $ 487.8 at April 30, 2023.

Upon selling the Post common stock on November 15, 2023, the investment in equity securities was valued at $ 460.9 .

We recognized a realized pre-tax loss of $ 30.7 on the investment, with $ 26.9 and $ 3.8 of the loss recognized during the years ended April 30, 2024 and 2023, respectively, which were included in other income (expense) – net in the Statements of Consolidated Income.

For additional information, see Note 10:

Derivative Financial Instruments and Note 11:

Other Financial Instruments and Fair Value Measurements.

Equity Method Investments:

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We have no economic interest in a supplier’s decision to enter into these agreements.

Our obligations to our suppliers, including amounts due and scheduled payment terms, are not impacted by our suppliers’ decisions to sell amounts under these arrangements.

Our rights and obligations to our suppliers, including amounts due and scheduled payment terms, are not impacted by our suppliers’ decisions to sell

amounts under these arrangements.

However, our right to offset balances due from suppliers against our payment obligations is restricted by the agreement for those payment obligations that have been sold by our suppliers.

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Recently Issued Accounting Standards:

In March 2022, the SEC issued the proposed rule under SEC Release No.

33-11042, The Enhancement and Standardization of Climate-Related Disclosures for Investors, to enhance and standardize the climate-related disclosures provided by public companies.

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

As of April 30, 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.

In March 2024, the SEC adopted the climate-related final rule SEC Release Nos.

33-11275 and 34-99678, The Enhancement and Standardization of Climate-Related Disclosures for Investors , which will require registrants to provide certain climate-related information in their registration statements and annual reports.

The rules will require the disclosure of significant effects of severe weather events and other natural conditions, as well as amounts related to carbon offsets and renewable energy credits or certificates, in the audited financial statements in certain circumstances.

Disclosure of the actual and potential material impacts of any identified climate-related risks on the registrant’s strategy, business model, and outlook will also be required, along with the process used to identify, assess, and manage these risks.

In addition, the rules require disclosure of material climate-related targets or goals, material Scope 1 and Scope 2 greenhouse gas emissions, and the methodology used to calculate those emissions.

In April 2024, the SEC stayed implementation of the final rule pending the outcome of a judicial review;

however, we do not anticipate any impact to our financial statements upon adoption and continue to evaluate the impacts on our disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740) Improvements to Income Tax Disclosures .

ASU 2023-09 will improve the transparency and decision usefulness of income tax disclosures to better assess how operations and related tax risks affect tax rates and future cash flows on an interim and annual basis.

It will be effective for us on May 1, 2025, and can be adopted either on a prospective or retrospective basis.

We are currently evaluating the impacts of the standard on our financial statements and disclosures.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280) Improvements to Reportable Segment Disclosures .

ASU 2023-07 will improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses on an interim and annual basis.

It will be effective for our annual period beginning May 1, 2024, and interim periods beginning May 1, 2025, with the option to early adopt at any time prior to the effective dates and will require adoption on a retrospective basis.

We are currently evaluating the impacts of the standard on our financial statements and disclosures.

In July 2023, the SEC adopted the final rule under SEC Release No.

33-11216, Cybersecurity Risk Management, Strategy, Governance, and Incident Disclosure , requiring current reporting about material cybersecurity incidents and annual disclosures on management’s processes for assessing, identifying, and managing material cybersecurity risks, the material impacts of cybersecurity threats and previous cybersecurity incidents, the Board oversight of cybersecurity risks, and management’s role and expertise in assessing and managing material cybersecurity risks.

SEC Release No.

33-11216 was effective for us on November 1, 2023, and did not have a material impact on our financial statements and disclosures.

The additional disclosures required are presented in Part I, Item 1C in this Annual Report on Form 10-K.

In December 2022, the SEC adopted the final rule under SEC Release No.

33-11138, Insider Trading Arrangements and Related Disclosures , which requires new disclosures regarding insider trading policies and procedures, the use of Rule 10b5-1 plans by directors and officers, and stock option grants issued in close proximity to the release of material nonpublic information.

SEC Release No.

33-11138 was effective for us on May 1, 2023, and did not have a material impact on our financial statements and disclosures.

The additional disclosures required are presented in Part III, Item 10 in this Annual Report on form 10-K.

Risks and Uncertainties:

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The principal packaging materials we use are plastic, glass, metal cans, caps, carton board, and corrugate.

Green coffee, protein meals, peanuts, grains, oils and fats, fruit, and other ingredients are obtained from various suppliers.

Green coffee, peanuts, oils and fats, flour, sugar, fruit, and other ingredients are obtained from various suppliers.

The availability, quality, and costs of many of these commodities have fluctuated, and may continue to fluctuate over time, partially driven by the elevated commodity and supply chain costs we experienced in 2024.

We actively monitor changes in commodity and supply chain costs, and to mitigate the rising costs, we may be required to implement material price increases across our business.

Green coffee, along with certain other raw materials, is sourced solely from foreign countries, and its supply and price is subject to high volatility due to factors such as weather, global supply and demand, product scarcity, plant disease, investor speculation, armed hostilities (including the ongoing conflict between Russia and Ukraine), changes in governmental agricultural and energy policies and regulation, and political and economic conditions in the source countries.

Raw materials are generally available from numerous sources, although we have elected to source certain plastic packaging materials for our Folgers coffee products, as well as our Jif peanut butter, and certain finished goods, such as K-Cup ® pods, our Pup-Peroni dog snacks, and liquid coffee, from single sources of supply pursuant to long-term contracts.

While availability may vary from year-to-year, we believe that we will continue to obtain adequate supplies and that alternatives to single-sourced materials are available.

We actively monitor changes in commodity and supply chain costs, and to mitigate the rising costs, we may be required to implement material

price increases across our business.

Green coffee, along with certain other raw materials, is sourced solely from foreign countries, and its supply and price is subject to high volatility due to factors such as weather, global supply and demand, product scarcity, plant disease, investor speculation, geopolitical conflicts (including the ongoing conflicts between Russia and Ukraine and Israel and Hamas), changes in governmental agricultural and energy policies and regulation, and political and economic conditions in the source countries.

Raw materials are generally available from numerous sources, although we have elected to source certain plastic packaging materials for our Folgers coffee products, as well as our Jif peanut butter, and certain finished goods, such as K-Cup ® pods, our Pup-Peroni dog snacks, and liquid coffee, from primary or single sources of supply pursuant to long-term contracts.

While availability may vary from year-to-year, we believe that we will continue to obtain adequate supplies and that alternatives to primary or single-sourced materials are available.

We have not historically encountered significant shortages of key raw materials.

We consider our relationships with key raw material suppliers to be in good standing.

We have consolidated production capacity at a single manufacturing site for certain products, including substantially all of our coffee, Milk-Bone dog snacks, and fruit spreads.

We have consolidated production capacity at a single manufacturing site for certain products, including substantially all of our coffee, Milk-Bone dog snacks, Voortman cookies, and fruit spreads.

Although steps are taken at all of our manufacturing sites to reduce the likelihood of a production disruption, an interruption at a single manufacturing site would result in a reduction or elimination of the availability of some of our products for a period of time.

Of our full-time employees, 22 percent are covered by union contracts at seven manufacturing locations.

The contracts vary in term depending on location, with one contract expiring in 2024, representing approximately one percent of our total employees.

Of our full-time employees, 27 percent are covered by union contracts at eleven manufacturing locations, inclusive of Hostess Brands employees.

The contracts vary in term depending on location, with six contracts expiring in 2025, representing approximately 10 percent of our total employees.

We insure our business and assets in each country against insurable risks, to the extent that we deem appropriate, based upon an analysis of the relative risks and costs.

Special Project Costs

Special project 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 restructuring activities.

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

These restructuring costs are reported in cost of products sold and other special project costs in the 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 Consolidated Balance Sheets.

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.

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 related to the divestitures, see Note 3:

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, and expanded the restructuring program 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 completed the closure of the Ripon facility during 2023, as planned, and the remaining restructuring activities were completed as of April 30, 2023.

The costs incurred associated with these restructuring activities include other transition and termination costs associated with our cost reduction and margin management initiatives, inclusive of accelerated depreciation, as well as employee-related costs.

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

2023 2022 2021 Total Costs

Incurred to Date

at April 30, 2023

Employee-related costs $ 3.5 $ 6.3 $ 17.3 $ 27.1

Other transition and termination costs 7.6 22.2 6.8 36.6

Total restructuring costs $ 11.1 $ 28.5 $ 24.1 $ 63.7

The obligation related to severance costs and retention bonuses was $ 1.6 and $ 2.4 at April 30, 2023 and 2022, respectively, and is expected to be settled in the first quarter of 2024.

As of April 30, 2023, cumulative noncash charges incurred to date were $ 33.2 , including $ 10.2 , $ 18.6 , and $ 4.4 incurred during 2023, 2022, and 2021, respectively, and primarily consisted of accelerated depreciation.

On April 28, 2023, we sold certain pet food brands to Post.

The transaction included 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 supported these pet food brands.

Under our ownership, these brands generated net sales of $ 1.5 billion in 2023, and $ 1.4 billion in both 2022 and 2021, primarily included in the U.S.

Retail Pet Foods segment.

Net proceeds from the divestiture were $ 1.2 billion, consisting of $ 684.7 in cash, net of a preliminary working capital adjustment and cash transaction costs, and approximately 5.4 million shares of Post common stock, valued at $ 491.6 at the close of the transaction.

Upon close of the transaction, we recognized a pre-tax loss of $ 1.0 billion.

The net proceeds and pre-tax loss will be finalized during the first quarter of 2024, upon finalization of the working capital adjustment and cash transaction costs.

The following table summarizes the net assets and liabilities included in the disposal group associated with the divestiture of certain pet food brands.

On November 7, 2023, we completed a cash and stock transaction to acquire Hostess Brands.

The total purchase consideration in connection with the acquisition was $ 5.4 billion, which reflects an exchange offer of all outstanding shares of Hostess Brands common stock at a price of $ 34.25 per share, consisting of $ 30.00 in cash and 0.03002 shares of our common shares, based on the closing stock price on September 8, 2023, that were exchanged for each share of Hostess Brands common stock as of the transaction date.

The purchase price included the issuance of approximately 4.0 million of our common shares to Hostess Brands’ shareholders, valued at $ 450.2 , as discussed in Note 17:

Common Shares.

In addition, we paid $ 3.9 billion in cash, net of cash acquired, and assumed $ 991.0 of debt from Hostess Brands and $ 67.8 of an other debt-like item, reflecting consideration transferred for the cash payment of Hostess Brands’ employee equity awards.

New debt of $ 5.0 billion was borrowed, consisting of $ 3.5 billion in Senior Notes, an $ 800.0 Term Loan, and $ 700.0 of short-term borrowings under our commercial paper program to partially fund the transaction and pay off the debt assumed as part of the acquisition.

For additional information on the financing associated with this transaction, refer to Note 8:

Debt and Financing Arrangements.

Hostess Brands is a manufacturer and marketer of sweet baked goods brands including Hostess Donettes , Twinkies , CupCakes , DingDongs , Zingers , CoffeeCakes , HoHos , Mini Muffins , and Fruit Pies , and the Voortman cookie brand.

In addition to its headquarters in Lenexa, Kansas, the transaction included six manufacturing facilities located in Emporia, Kansas;

Burlington, Ontario;

Chicago, Illinois;

Columbus, Georgia;

Indianapolis, Indiana;

and Arkadelphia, Arkansas, a distribution facility in Edgerton, Kansas, and a commercial center of excellence in Chicago, Illinois.

Approximately 3,000 employees transitioned with the business at the close of the transaction.

The transaction was accounted for under the acquisition method of accounting, and accordingly, the results of Hostess Brands operations, including $ 637.3 in net sales and $ 73.4 in operating income, are included within the Sweet Baked Snacks segment for 2024.

The operating income for the year ended April 30, 2024, includes the recognition of an unfavorable fair value purchase accounting adjustment of $ 8.3 , attributable to the acquired inventory, and excludes special project costs recognized within the segment.

The purchase price was preliminarily allocated to the underlying assets acquired and liabilities assumed based upon their estimated fair values at the date of acquisition on a provisional basis.

We determined the estimated fair values based on independent appraisals, discounted cash flow analyses, quoted market prices, and estimates made by management.

purchase price exceeded the estimated fair value of the net identifiable tangible and intangible assets acquired and, as such, the excess was allocated to goodwill.

The following table summarizes the preliminary fair values of the assets acquired and liabilities assumed at the acquisition date.

Assets acquired:

Cash and cash equivalents $ 135.0

Trade receivables – net 181.1

Inventories 66.0

Other current assets 5.9

Property, plant, and equipment – net 534.5

Operating lease right-of-use assets 17.2

Goodwill 2,447.2

Other intangible assets – net 3,038.6

Other noncurrent assets 43.2

Total assets acquired $ 6,468.7

Liabilities assumed:

Accounts payable $ 67.3

Current operating lease liabilities 4.7

Other current liabilities 244.4

Deferred income taxes 639.6

Noncurrent operating lease liabilities 14.5

Other noncurrent liabilities 1.4

Total liabilities assumed 971.9

Net assets acquired $ 5,496.8

Certain estimated fair values for the acquisition, including goodwill, intangible assets, property, plant, and equipment, and income taxes, are not yet finalized.

The purchase price was preliminarily allocated based on information available at the acquisition date and is subject to change as we complete our analysis of the fair values at the date of the acquisition during the measurement period not to exceed one year, as permitted under FASB ASC 805, Business Combinations.

As a result of the acquisition, we recognized a total of $ 2.4 billion of goodwill within the Sweet Baked Snacks segment.

Of the total goodwill, $ 196.6 was deductible for tax purposes at the acquisition date, of which $ 186.9 remains deductible as of April 30, 2024.

Goodwill represents the value we expect to achieve through the implementation of operational synergies and growth opportunities as we integrate Hostess Brands into our Company.

We are evaluating the impact of these anticipated operational synergies and growth opportunities across our reporting units and, as a result, have not allocated goodwill to our other reporting units as of April 30, 2024;

however, we will complete our evaluation and allocate goodwill, as appropriate, by the end of the measurement period.

The goodwill and indefinite-lived trademarks resulting from the acquisition are susceptible to future impairment charges.

Any significant change in our near or long-term projections or macroeconomic conditions may result in future impairment charges as the carrying values of goodwill and indefinite-lived trademarks approximate estimated fair values.

The following table summarizes the preliminary purchase price allocated to the identifiable intangible assets acquired.

Intangible assets with finite lives:

Customer and contractual relationships ( 25 -year useful life)

Non-competition agreements (varying useful lives) 38.0

Trademarks ( 5 -year useful life)

Intangible assets with indefinite lives:

Trademarks $ 1,752.2

Total intangible assets $ 3,038.6

The estimated annual amortization expense for the finite-lived intangible assets based on the preliminary purchase price allocation is $ 71.6 .

Hostess Brands’ results of operations are included in our consolidated financial statements from the date of the transaction within our Sweet Baked Snacks segment.

If the transaction had occurred on May 1, 2022, unaudited pro forma consolidated results for 2024 and 2023, would have been as follows:

Year Ended April 30,

Net sales $ 8,912.8 $ 9,897.2

Net income (loss) 761.9 ( 55.2 )

Net income (loss) per common share – assuming dilution $ 7.15 $ ( 0.50 )

The unaudited pro forma consolidated results are based on our historical financial statements and those of Hostess Brands and do not necessarily indicate the results of operations that would have resulted had the acquisition been completed at the beginning of the applicable period presented.

The most significant pro forma adjustments relate to the elimination of interest expense associated with acquisition-related financing, nonrecurring acquisition-related costs incurred prior to the close of the transaction, amortization of acquired intangible assets, and depreciation of acquired property, plant, and equipment.

The unaudited pro forma consolidated results do not give effect to the synergies of the acquisition and are not indicative of the results of operations in future periods .

On January 2, 2024, we sold the Canada condiment business to TreeHouse Foods.

The transaction included Bick’s pickles, Habitant pickled beets, Woodman’s horseradish, and McLarens pickled onions brands, inclusive of certain trademarks.

Under our ownership, these brands generated net sales of $ 43.8 , $ 61.6 , and $ 62.7 in 2024, 2023, and 2022, respectively, which were included in the International operating segment.

Final net proceeds from the divestiture were $ 25.3 , inclusive of a working capital adjustment and cash transaction costs.

We recognized a pre-tax loss of $ 5.7 during 2024, within other operating expense (income) – net in the Statement of Consolidated Income.

On November 1, 2023, we sold the Sahale Snacks business to Second Nature.

The transaction included products sold under the Sahale Snacks brand, inclusive of certain trademarks and licensing agreements, a leased manufacturing facility in Seattle, Washington, and approximately 100 employees who supported the brand.

Under our ownership, the Sahale Snacks brand generated net sales of $ 24.1 , $ 48.4 , and $ 47.4 in 2024, 2023, and 2022, respectively, primarily included in the U.S.

Retail Frozen Handheld and Spreads segment.

Final net proceeds from the divestiture were $ 31.6 , inclusive of a working capital adjustment and cash transaction costs.

We recognized a pre-tax loss of $ 6.7 during 2024, within other operating expense (income) – net in the Statement of Consolidated Income.

The following table summarizes the net assets and liabilities disposed, which were measured at the lower of carrying amount or fair value less costs to sell.

April 30, 2024

Condiment Sahale Snacks

Assets disposed:

Inventories $ 23.9 $ 9.9

Other current assets 0.5

Property, plant, and equipment – net — 6.0

Operating lease right-of-use assets — 1.8

Goodwill — 11.5

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Other current liabilities $ — $ 0.8

Deferred income taxes — 4.1

Other noncurrent liabilities — 1.0

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Net assets disposed $ 31.0 $ 38.3

On April 28, 2023, we sold certain pet food brands to Post.

The transaction included the Rachael Ray Nutrish , 9Lives , Kibbles ’n Bits , Nature’s Recipe , and Gravy Train brands, as well as the 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 supported these pet food brands.

Under our ownership, these brands generated net sales of $ 1.5 billion and $ 1.4 billion in 2023 and 2022, respectively, primarily included in the U.S.

Retail Pet Foods segment.

Final net proceeds from the divestiture were $ 1.2 billion, consisting of $ 683.9 in cash, net of a working capital adjustment and cash transaction costs, and approximately 5.4 million shares of Post common stock, valued at $ 491.6 at the close of the transaction.

We recognized a pre-tax loss of $ 1.0 billion upon completion of this transaction during 2023, within other operating expense (income) – net in the Statement of Consolidated Income.

During 2024, we finalized the working capital adjustment and transaction costs, which resulted in an immaterial adjustment to the pre-tax loss.

Furthermore, during 2024, we entered into equity forward derivative transactions under an agreement with an unrelated third-party to facilitate the forward sale of the Post common stock.

All 5.4 million shares of Post common stock were settled for $ 466.3 under the equity forward contract on November 15, 2023.

For additional information, see Note 10:

Derivative Financial Instruments.

On January 31, 2022, we sold the natural beverage and grains businesses to Nexus.

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The transaction did not include Santa Cruz Organic nut butters, fruit spreads, syrups, or applesauce.

Under our ownership, the businesses generated net sales of $ 106.7 and $ 143.4 , in 2022 and 2021, respectively, primarily included in the U.S.

Retail Consumer Foods segment.

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

Under our ownership, the businesses generated net sales of $ 106.7 in 2022, primarily included in the U.S.

Retail Frozen Handheld and Spreads segment.

Final net proceeds from the divestiture were $ 98.7 , 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, of which $ 26.7 was recognized during 2022, and the remaining $ 1.6 was recognized upon finalization of the working capital adjustment in 2023, and is included within other operating expense (income) – net in the Statements of Consolidated Income.

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

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The transaction did not include any branded products or our private label wet pet food business.

Under our ownership, the business generated net sales of $ 62.3 and $ 94.0 in 2022 and 2021, respectively, included in the U.S.

Retail Pet Foods segment.

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

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

On January 29, 2021, we sold the Natural Balance premium pet food business to Nexus.

The transaction included pet food products sold under the Natural Balance brand, certain trademarks and licensing agreements, and select employees who supported the Natural Balance business.

Under our ownership, the business generated net sales of $ 62.3 in 2022, included in the U.S.

Retail Pet Foods segment.

Final net proceeds from the divestiture were $ 33.8 , net of a working capital adjustment and cash transaction costs.

Upon completion of this transaction, we recognized a pre-tax loss of $ 89.5 .

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

The transaction included oils and shortening products sold under the Crisco brand, primarily in the U.S.

and Canada, certain trademarks and licensing agreements, dedicated manufacturing and warehouse facilities located in Cincinnati, Ohio, and approximately 160 employees who supported the Crisco business.

Under our ownership, the business generated net sales of $ 198.9 in 2021, primarily included in the U.S.

Retail Consumer Foods segment.

Final net proceeds from the divestiture were $ 530.2 , net of a working capital adjustment and cash transaction costs.

Upon completion of this transaction, we recognized a pre-tax gain of $ 114.8 .

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

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

Special Project Costs

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

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

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

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

These special project costs are reported in cost of products sold, other special project costs, other debt costs, and other income (expense) - net in the 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 Consolidated Balance Sheets.

Divestiture Costs:

Total divestiture costs related to the divested Sahale Snacks and Canada condiment businesses are anticipated to be approximately $ 6.0 , consisting primarily of employee-related and lease termination costs, all of which are expected to be cash charges with the majority recognized in 2024 and the remainder to be recognized during the first half of 2025.

We incurred $ 3.9 of employee-related costs and $ 1.6 of other transition and termination costs related to lease termination costs during 2024.

The obligation related to severance and retention bonuses was $ 2.5 at April 30, 2024, and is expected to be settled during the first half of 2025.

Furthermore, we identified opportunities to address certain distribution inefficiencies, as a result of the divestiture of certain pet food brands.

We anticipate incurring approximately $ 11.0 of costs related to these efforts, consisting primarily of other transition and termination charges.

The majority of these costs are expected to be cash charges and incurred by the end of 2026, with over half of the costs expected to be recognized in 2025.

For additional information, see Note 3:

Divestitures.

Integration Costs :

Total integration costs related to the acquisition of Hostess Brands are anticipated to be approximately $ 210.0 and include transaction costs, employee-related costs, and other transition and termination charges.

The majority of the integration costs are expected to be cash charges with most recognized during 2024.

The remainder are expected to be incurred by the end of 2026 and are expected to be split between employee-related costs and other transition and termination costs.

The following table summarizes our integration costs incurred related to the acquisition of Hostess Brands.

Transaction costs $ 99.0

Employee-related costs 33.4

Other transition and termination costs 15.0

Total integration costs $ 147.4

Noncash charges of $ 3.2 were incurred through April 30, 2024, which primarily consisted of accelerated depreciation.

Transaction costs primarily reflect equity compensation pay-outs, legal fees, and fees related to the Bridge Loan that provided committed financing for the acquisition of Hostess Brands.

Other transition and termination costs primarily consisted of contract termination charges, accelerated depreciation, and consulting fees.

The obligation related to severance and retention bonuses was $ 28.0 at April 30, 2024.

For additional information, see Note 2:

Restructuring Costs:

The program was further expanded in 2022 to include the costs associated with the divestitures of the private label dry pet food and natural beverage and grains businesses, as well as closure of certain production facilities.

The restructuring activities were considered complete as of April 30, 2023.

The costs incurred associated with these restructuring activities included other transition and termination costs related to our cost reduction and margin management initiatives, inclusive of accelerated depreciation, as well as employee-related costs.

For additional information related to the divestiture s, see Note 3:

Divestitures.

During 2022, we completed the transition of liquid coffee production to JDE Peet’s, and expanded the restructuring program 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 Frozen Handheld and Spreads business.

We completed the closure of the Ripon facility during 2023.

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

2023 2022 Total Costs

Incurred to Date

at April 30, 2023

Employee-related costs $ 3.5 $ 6.3 $ 27.1

Other transition and termination costs 7.6 22.2 36.6

Total restructuring costs $ 11.1 $ 28.5 $ 63.7

The obligation related to severance costs and retention bonuses was $ 1.6 at April 30, 2023, and was fully satisfied during the first quarter of 2024.

Cumulative noncash charges incurred through April 30, 2023, to date were $ 33.2 , and included $ 10.2 and $ 18.6 incurred during 2023 and 2022 respectively, which primarily consisted of accelerated depreciation.

Reportable Segments

1 unchanged sentence

the manufacturing and marketing of food and beverage products.

We have three reportable segments:

Retail Pet Foods, U.S.

Retail Coffee, and U.S.

Retail Consumer Foods.

We have four reportable segments:

Retail Coffee, U.S.

Retail Frozen Handheld and Spreads, U.S.

Retail Pet Foods, and Sweet Baked Snacks.

The presentation of International and Away From Home represents a combination of all other operating segments that are not individually reportable.

Retail Pet Foods segment primarily includes the domestic sales of Meow Mix , Milk-Bone , Pup-Peroni, and Canine Carry Outs branded products;

As disclosed in Note 2:

Acquisition, we acquired Hostess Brands in a cash and stock transaction on November 7, 2023, resulting in the new Sweet Baked Snacks reportable segment for 2024.

Further, the historical U.S.

Retail Consumer Foods reportable segment has been renamed to U.S.

Retail Frozen Handheld and Spreads;

however, there is no change to the manner in which the segment was previously presented.

We do not anticipate any impact to our other historical reportable segments, as we do not anticipate any changes to the internal manner in which we will manage and report these reportable segments.

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.

International and Away From Home includes the sale of products distributed domestically and in foreign countries through retail channels and foodservice distributors and operators (e.g., health care operators, restaurants, lodging, hospitality, offices, K-12, colleges and universities, and convenience stores).

Under our ownership, the divested Rachael Ray Nutrish, 9Lives, Kibbles ’n Bits, Nature’s Recipe , and Gravy Train brands generated net sales of $ 1.5 billion in 2023, and $ 1.4 billion in both 2022 and 2021, primarily included in the U.S.

Retail Pet Foods segment.

Retail Frozen Handheld and Spreads segment primarily includes the domestic sales of Smucker’s and Jif branded products;

Retail Pet Foods segment primarily includes the domestic sales of Meow Mix , Milk-Bone , Pup-Peroni , and Canine Carry Outs branded products;

and the Sweet Baked Snacks segment primarily includes all domestic and foreign sales of Hostess and Voortman branded products in all channels.

With the exception of Sweet Baked Snacks products, International and Away From Home includes the sale of all products that are distributed in foreign countries through retail channels, as well as domestically and in foreign countries through foodservice distributors and operators (e.g., healthcare operators, restaurants, educational institutions, offices, lodging and gaming establishments, and convenience stores).

Segment profit represents net sales, less direct and allocable operating expenses, and is consistent with the way in which we manage our segments.

8 unchanged sentences

2024 2023 2022

Retail Coffee $ 2,704.4 $ 2,735.3 $ 2,497.3

Retail Frozen Handheld and Spreads 1,815.6 1,630.9 1,707.2

Retail Pet Foods (A)

1,822.8 3,038.1 2,764.3

Retail Coffee 2,735.3 2,497.3 2,374.6

Retail Consumer Foods 1,630.9 1,707.2 1,835.7

Sweet Baked Snacks 637.3 — —

International and Away From Home 1,198.6 1,124.9 1,030.1

1 unchanged sentence

Segment profit:

Retail Coffee $ 759.2 $ 737.7 $ 736.7

Retail Frozen Handheld and Spreads 434.1 352.6 424.2

Retail Pet Foods (A)

402.1 494.9 395.9

Retail Coffee 737.7 736.7 769.1

Retail Consumer Foods 352.6 424.2 472.5

Sweet Baked Snacks 138.2 — —

International and Away From Home 208.1 143.3 142.0

9 unchanged sentences

( 130.2 ) ( 4.7 ) ( 8.0 )

Other debt costs (B)

Corporate administrative expenses ( 305.5 ) ( 313.1 ) ( 258.7 )

Other income (expense) – net ( 14.7 ) ( 19.1 ) ( 37.8 )

Other income (expense) – net (B)

( 25.6 ) ( 14.7 ) ( 19.1 )

Income (loss) before income taxes $ 996.4 $ ( 9.2 ) $ 843.8

Retail Coffee $ 4,826.3 $ 4,808.9 $ 4,891.8

Retail Frozen Handheld and Spreads 3,257.1 2,972.7 2,692.1

Retail Pet Foods (A)

4,784.1 4,994.3 7,167.4

Retail Coffee 4,808.9 4,891.8 4,793.9

Retail Consumer Foods 2,972.7 2,692.1 2,553.4

Sweet Baked Snacks 6,267.1 — —

International and Away From Home 989.6 978.3 973.9

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Depreciation, amortization, and impairment charges:

Retail Coffee $ 101.1 $ 101.6 $ 100.2

Retail Frozen Handheld and Spreads 81.6 76.3 64.6

Retail Pet Foods (A)

118.1 178.7 342.8

Retail Coffee 101.6 100.2 96.7

Retail Consumer Foods 76.3 64.6 75.4

Sweet Baked Snacks 59.6 — —

International and Away From Home 32.4 31.7 46.2

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Additions to property, plant, and equipment:

Retail Coffee $ 79.7 $ 49.0 $ 49.8

Retail Frozen Handheld and Spreads 334.5 341.6 274.8

Retail Pet Foods (A)

83.4 64.3 74.0

Retail Coffee 49.0 49.8 42.5

Retail Consumer Foods 341.6 274.8 167.4

Sweet Baked Snacks 41.2 — —

International and Away From Home 47.7 22.5 18.9

2 unchanged sentences

Retail Pet Foods segment.

In addition, the net assets disposed of during 2023 were primarily included in the U.S.

Retail Pet Foods segment.

For more information, see Note 3:

Divestitures.

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

(B) Includes special project costs related to certain divestiture, acquisition, integration, and restructuring activities.

For more information, see Note 4:

Special Project Costs.

Special Project Costs and Note 8:

Debt and Financing Arrangements.

27 unchanged sentences

Retail Coffee

Cat food 1,101.1 969.9 918.4 U.S.

Retail Pet Foods

Pet snacks 1,024.8 1,052.4 944.9 U.S.

Retail Pet Foods

Dog food 980.0 926.5 1,090.8 U.S.

Peanut butter 814.1 635.6 801.1 U.S.

Retail Frozen Handheld and Spreads

Cat food 792.4 1,101.1 969.9 U.S.

Retail Pet Foods

Frozen handheld 791.1 686.4 510.7 U.S.

Retail Consumer Foods

Peanut butter 635.6 801.1 796.1 U.S.

Retail Consumer Foods

Retail Frozen Handheld and Spreads

Sweet baked goods 572.5 — — Sweet Baked Snacks

Fruit spreads 427.2 426.2 386.5 U.S.

Retail Consumer Foods

Retail Frozen Handheld and Spreads

Portion control 207.9 163.7 158.2 Other (B)

Baking mixes and ingredients 90.3 94.3 85.5 Other (B)

Juices and beverages 3.2 106.3 139.0 Other (B)(C)

Shortening and oils — — 193.9 U.S.

Retail Consumer Foods (D)

Toppings and syrups 88.4 88.9 82.5 U.S.

Retail Frozen Handheld and Spreads

Dog food 76.4 980.0 926.5 U.S.

Retail Pet Foods

Cookies 64.8 — — Sweet Baked Snacks

Other 165.8 211.8 328.4 Other (B)

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

(C) During 2022 and 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.

For more information, see Note 3:

Divestitures.

(D) During 2021, the net sales within this category were related to the divested Crisco business.

For more information, see Note 3:

Divestitures.

Sales to Walmart Inc.

and subsidiaries amounted to 34 percent of net sales in both 2023 and 2022 and 32 percent of net sales in 2021.

and subsidiaries amounted to 33 percent of net sales in 2024 and 34 percent of net sales in both 2023 and 2022.

These sales are primarily included in our U.S.

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Further, we computed diluted earnings per share under the two-class method and treasury stock method to determine the method that was most dilutive, in accordance with FASB ASC 260, Earnings Per Share .

In 2023, we recognized a net loss, and as a result, excluded the anti-dilutive effect of stock-based awards from the computation of net income (loss) per common share – assuming dilution.

In 2024 and 2022, the computation of 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 2023, we recognized a net loss, and as a result, excluded the anti-dilutive effect of stock-based awards from the computation of diluted earnings per share.

Therefore, in 2023, diluted earnings per share was computed under the two-class method.

In 2022, the computation of diluted earnings per share was more dilutive under the treasury stock method, while in 2021, diluted earnings per share was more dilutive under the two-class method.

Goodwill and Other Intangible Assets

The following table summarizes the changes in our goodwill.

Pet Foods U.S.

Consumer Foods International

Frozen Handheld and Spreads U.S.

Pet Foods Sweet Baked Snacks International

From Home Total

Balance at May 1, 2022 $ 2,090.9 $ 1,147.5 $ 2,368.2 $ — $ 409.2 $ 6,015.8

Divestiture — — ( 788.0 ) — ( 2.3 ) ( 790.3 )

— — — — ( 8.6 ) ( 8.6 )

Balance at April 30, 2023 $ 2,090.9 $ 1,147.5 $ 1,580.2 $ — $ 398.3 $ 5,216.9

Acquisition — — — 2,447.2 — 2,447.2

Divestiture — ( 7.6 ) — — ( 3.9 ) ( 11.5 )

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Total other intangible assets $ 9,645.5 $ 2,390.1 $ 7,255.4 $ 6,648.7 $ 2,219.4 $ 4,429.3

The decrease in finite-lived intangible assets from April 30, 2022, includes the disposal of the Rachael Ray Nutrish, 9Lives, Kibbles 'n Bits, Nature's Recipe, and Gravy Train trademarks, as well as select customer and contractual relationships and licensing agreements during the fourth quarter of 2023.

For additional information, see Note 3:

Divestitures.

Amortization expense for finite-lived intangible assets was $ 190.1 , $ 205.9 , and $ 222.5 in 2024, 2023, and 2022, respectively.

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As of February 1, 2024, we completed the annual impairment review, in which goodwill impairment was tested at the reporting unit level for all of our reporting units with goodwill.

As part of our annual evaluation, we did not recognize any impairment charges related to each of our reporting units and indefinite-lived intangible assets.

The estimated fair value exceeded the carrying value by greater than 10 percent for all our reporting units and indefinite-lived intangible assets, with the exception of the Pet Foods reporting unit, for which its fair value exceeded its carrying value by approximately 7 percent.

Subsequent to the annual impairment review, on April 28, 2023, we divested certain pet food brands, and as a result, we disposed $ 790.3 of goodwill, primarily within the Pet Foods reporting unit.

The amount of goodwill allocated to the disposal group was determined based on a relative fair value analysis.

In addition, the impacted reporting units were re-assessed for impairment as of April 30, 2023, and we concluded there were no indicators of impairment, as the estimated fair values were in excess of the carrying values for all reporting units.

Further, the estimated fair value exceeded the carrying value of the Pet Foods reporting unit by greater than 10 percent as of April 30, 2023.

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

As part of our annual evaluation, we did not recognize any impairment charges related to our reporting units or indefinite-lived intangible assets.

The estimated fair value exceeded the carrying value by greater than 10 percent for all our reporting units and indefinite-lived intangible assets, with the exception of the Sweet Baked Snacks reporting unit, for which its fair value exceeded its carrying value by approximately 3 percent, as the carrying value approximates estimated fair value due to the recent acquisition of Hostess Brands.

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

Sweet Baked Snacks segment.

For additional information, see Goodwill and Other Intangible Assets in Note 1:

Accounting Policies and Note 3:

Accounting Policies, Note 2:

Acquisition, and Note 3:

Divestitures.

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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.

During 2021, we recognized an impairment charge of $ 3.8 related to an immaterial trademark within the U.S.

Retail Consumer Foods segment.

These charges were included as noncash charges in our Statements of Consolidated Income.

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

Debt and Financing Arrangements

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500.0 498.4 500.0 498.0

5.90 % Senior Notes due November 15, 2028

750.0 744.5 — —

2.38 % Senior Notes due March 15, 2030

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500.0 495.2 500.0 494.4

6.20 % Senior Notes due November 15, 2033

1,000.0 991.5 — —

4.25 % Senior Notes due March 15, 2035

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300.0 297.4 300.0 297.3

6.50 % Senior Notes due November 15, 2043

750.0 736.5 — —

4.38 % Senior Notes due March 15, 2045

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300.0 296.2 300.0 296.1

6.50 % Senior Notes due November 15, 2053

1,000.0 982.6 — —

Total long-term debt $ 7,850.0 $ 7,773.0 $ 4,350.0 $ 4,314.2

Current portion of long-term debt 1,000.0 999.3 — —

Total long-term debt, less current portion $ 6,850.0 $ 6,773.7 $ 4,350.0 $ 4,314.2

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

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

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 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 Statement of Consolidated Income.

In 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, and terminated the previous $ 1.8 billion revolving credit facility.

The 2022 revolving credit facility included $ 4.3 of capitalized debt issuance costs, and is amortized to interest expense over the time for which the revolving credit facility is effective.

In September 2023, we entered into a Term Loan with a group of banks for an unsecured $ 800.0 term facility.

Borrowings under the Term Loan bear interest on the prevailing SOFR.

In November 2023, the full amount was drawn on the Term Loan to partially finance the acquisition of Hostess Brands and pay off the debt assumed as part of the acquisition, as discussed in Note 2:

As of April 30, 2024, the $ 800.0 Term Loan was prepaid in full.

In September 2023, we entered into a commitment letter for a $ 5.2 billion Bridge Loan that provided committed financing for the acquisition of Hostess Brands, as discussed in Note 2:

No balances were drawn against this facility, as the commitment letter was terminated after completion of the Senior Notes offering and drawing on the Term Loan.

Included in other debt costs in the Statement of Consolidated Income during the year ended April 30, 2024, was $ 19.5 related to financing fees associated with the Bridge Loan.

In October 2023, we completed an offering of $ 3.5 billion in Senior Notes due November 15, 2028, November 15, 2033, November 15, 2043, and November 15, 2053.

The Senior Notes included $ 31.8 of capitalized debt issuance costs and $ 15.0 of offering discounts to be amortized to interest expense – net in the Statements of Consolidated Income over the time period for which the debt is outstanding.

The net proceeds from the offering were used to partially finance the acquisition of Hostess Brands and pay off the debt assumed as part of the acquisition.

In 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 Statement of Consolidated Income.

In 2020, we completed an offering of $ 800.0 in Senior Notes due March 15, 2030, and March 15, 2050.

Concurrent with the pricing of these Senior Notes, we terminated interest rate contracts that were designated as cash flow hedges and were used to manage our exposure to interest rate volatility associated with the anticipated debt financing.

The termination resulted in a pre-tax loss of $ 239.8 , which was deferred and included as a component of accumulated other comprehensive income (loss) and is amortized as interest expense over the life of the debt.

For additional information, see Note 10:

Derivative Financial Instruments.

All of our Senior Notes outstanding at April 30, 2024, are unsecured, and interest is paid semiannually, with no required scheduled principal payments until maturity.

We may prepay all or part of the Senior Notes at 100 percent of the principal amount thereof, together with the accrued and unpaid interest, and any applicable make-whole amount.

We have available a $ 2.0 billion unsecured revolving credit facility with a group of 11 banks that matures in August 2026.

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

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As of April 30, 2023, we did not have a balance outstanding under the commercial paper program.

In 2020, we completed an offering of $ 800.0 in Senior Notes due March 15, 2030, and March 15, 2050.

For additional information, see Note 9:

Derivative Financial Instruments.

All of our Senior Notes outstanding at April 30, 2023, are unsecured, and interest is paid semiannually, with no required scheduled principal payments until maturity.

We may prepay all or part of the Senior Notes at 100 percent of the principal amount thereof, together with the accrued and unpaid interest, and any applicable make-whole amount.

Interest paid totaled $ 170.7 , $ 153.1 , and $ 155.2 in 2024, 2023, and 2022, respectively.

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

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 payment of other debt fees.

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

Our financial covenant restrictions were amended to remove the leverage ratio in 2022, in conjunction with entering into the $2.0 billion unsecured revolving credit facility.

We are in compliance with all covenants.

As of April 30, 2024, w e are in compliance with all covenants.

Pensions and Other Postretirement Benefits

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Covered employees generally are eligible for these benefits when they reach age 55 and have attained 10 years of credited service .

To determine the ultimate obligation under our defined benefit pension and other postretirement benefit plans, we must estimate the future cost of benefits and attribute that cost to the time period during which each covered employee works.

Various actuarial assumptions must be made in order to predict and measure costs and obligations many years prior to the settlement date, the most significant being the interest rates used to discount the obligations of the plans, the long-term rates of return on the plans’ assets, and mortality assumptions.

We, along with third-party actuaries and investment managers, review all of these assumptions on an ongoing basis to ensure that the most reasonable information available is being considered.

The following table summarizes the components of net periodic benefit cost and the change in accumulated other comprehensive income (loss) related to the defined benefit pension and other postretirement plans.

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Amortization of net actuarial loss (gain) 3.5 4.0 6.9 ( 1.5 ) ( 1.2 ) ( 0.4 )

Curtailment loss (gain) ( 1.2 ) — — — — —

Settlement loss (gain) 3.2 7.4 10.8 — — —

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Amortization of net actuarial loss (gain) 3.5 4.0 6.9 ( 1.5 ) ( 1.2 ) ( 0.4 )

Curtailment loss (gain) ( 1.2 ) — — — — —

Settlement loss (gain) — 7.4 10.8 — — —

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Expected return on plan assets 3.30 1.60 1.70 — — —

Rate of compensation increase — — 3.00 — — —

We amortize gains and losses for our postretirement plans over the average expected future period of vested service.

For plans that consist of less than 5 percent of participants that are active, average life expectancy is used instead of the average expected future service period.

We utilize a spot rate methodology for the estimation of service and interest cost for our plans by applying specific spot rates along the yield curve to the relevant projected cash flows to provide a better estimate of service and interest costs.

For 2025 expense recognition, we will use weighted-average discount rates for the U.S.

defined benefit pension plans of 5.43 percent to determine benefit obligation, 6.06 percent to determine service cost, and 5.38 percent to determine interest cost.

As of April 30, 2024, a 50 basis-point decrease in the discount rate assumption would increase the 2025 net periodic benefit cost by approximately $ 0.1 , and the benefit obligation would increase by approximately $ 14.1 .

In addition, we anticipate using an expected rate of return on plan assets of 4.70 percent for the U.S.

defined benefit pension plans.

A 50 basis-point decrease in the expected rate of return on plan assets assumption would increase the 2025 net periodic benefit cost by approximately $ 1.3 .

We use a measurement date of April 30 to determine defined benefit pension and other postretirement benefit plans’ assets and benefit obligations.

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Interest cost 18.5 17.8 2.6 2.3

Amendments — 0.4 — —

Actuarial loss (gain) (A)

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Benefits paid ( 34.5 ) ( 17.7 ) ( 3.8 ) ( 4.3 )

Curtailment ( 3.4 ) — — —

Settlement 3.1 ( 36.1 ) — —

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(A) The actuarial losses and gains for our defined benefit pension plans and other postretirement benefits were primarily due to changes in the discount rates used in determining the plan obligations.

In 2021, we transferred obligations related to our Canadian defined benefit pension plan to an insurance company through the purchase of an irrevocable group annuity contract (the “Canadian Buy-Out Contract”).

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

During 2024, we received corporate approval to proceed with distribution of the surplus that remains within the Canadian defined benefit pension plan.

As a result, we recognized a noncash pre-tax settlement charge of $ 3.2 related to the acceleration of prior service cost for the portion of the plan surplus to be allocated to plan members, which is subject to regulatory approval before a payout can be made.

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

We did not recognize any charges related to the Canadian Buy-Out Contract during 2023 and 2022.

In October 2023, we approved an amendment to terminate one of our U.S.

qualified defined benefit plans, effective as of December 31, 2023.

We provided notice to participants of the intent to terminate the plan and applied for a determination letter from the IRS.

Pension obligations will be distributed through a combination of lump sum payments to eligible plan participants and through the purchase of a group annuity contract.

During the plan year ended December 31, 2023, the asset allocation for the plan’s assets was adjusted in anticipation of the plan termination.

Upon settlement of the pension obligations, we will reclassify unrecognized actuarial gains or losses, currently recorded in accumulated other comprehensive income (loss), to the Consolidated Statement of Income as a settlement gain or charge.

As of April 30, 2024, we had unrecognized losses related to the plan of $ 45.6 .

We anticipate the termination process will be substantially complete by the end of 2025.

The following table summarizes amounts recognized in accumulated other comprehensive income (loss) in the Consolidated Balance Sheets, before income taxes.

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The health care cost trend rate assumption impacts the amount of the other postretirement benefits obligation and periodic other postretirement benefits cost reported.

The following table sets forth selective information pertaining to our Canadian pension and other postretirement benefit plans, which is included in the consolidated information presented on pages 68 and 69.

Defined Benefit Pension Plans Other Postretirement Benefits

Year Ended April 30, Year Ended April 30,

2023 2022 2023 2022

Benefit obligation at end of year $ 0.4 $ 2.0 $ 3.9 $ 4.9

Fair value of plan assets at end of year 6.5 8.1 — —

Funded status of the plans $ 6.1 $ 6.1 $ ( 3.9 ) $ ( 4.9 )

Components of net periodic benefit cost:

Interest cost $ 0.1 $ 0.1 $ 0.2 $ 0.1

Expected return on plan assets ( 0.1 ) 0.1 — —

Amortization of net actuarial loss (gain) — — ( 0.2 ) ( 0.1 )

Settlement loss (gain) 0.7 — — —

Net periodic benefit cost (credit) $ 0.7 $ 0.2 $ — $ —

Changes in plan assets:

Actual return on plan assets $ 0.1 $ 0.3 $ — $ —

Company contributions 0.1 ( 0.4 ) 0.3 0.4

Benefits paid 7.1 ( 0.3 ) ( 0.3 ) ( 0.4 )

Settlement ( 8.4 ) — — —

Foreign currency translation ( 0.4 ) ( 0.4 ) — —

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

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

As a result of this transaction, during 2021, we recognized a noncash pre-tax settlement charge of $ 29.6 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 Statement of Consolidated Income.

We did not recognize any additional charges related to the Canadian buy-out contract during 2023 and 2022.

We expect to finalize the wind-up of the Canadian pension plan impacted by the buy-out in 2024, upon Board approval for payout of the surplus.

The following table sets forth additional information related to our defined benefit pension plans.

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Plans with an accumulated benefit obligation in excess of plan assets:

Accumulated benefit obligation (A)

$ 194.6 $ 422.4

Accumulated benefit obligation $ 276.7 $ 194.6

Fair value of plan assets 205.3 133.1

Plans with a projected benefit obligation in excess of plan assets:

Projected benefit obligation (A)

$ 198.9 $ 427.8

Projected benefit obligation $ 276.7 $ 198.9

Fair value of plan assets 205.3 133.1

(A) The decrease in our defined benefit pension plan obligations for plans in excess of plan assets, as compared to 2022, is primarily driven by the fact that we made contributions during 2023, which significantly improved the funded status of the majority of our defined benefit pension plans.

We employ a total return on investment approach for the defined benefit pension plans’ assets.

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In determining the expected long-term rate of return on the defined benefit pension plans’ assets, we consider the historical rates of return, the nature of investments, the asset allocation, and expectations of future investment strategies.

Based on our improved funded status, our current investment policy includes a mix of investments that consist of approximately 80 percent fixed-income securities and 20 percent equity securities.

The actual rate of return was a loss of 2.90 percent and 2.30 percent for the years ended April 30, 2024 and 2023, respectively, which excludes administrative and investment expenses.

Based on our improved funded status and the anticipated termination of one of our U.S.

qualified defined benefit pension plans, our current investment policy includes a mix of investments that consist of approximately 80 percent fixed-income securities, 10 percent equity securities, and 10 percent cash and cash equivalents.

The following tables summarize the major asset classes for the U.S.

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International (C)

15.7 — — 15.7

Fixed-income securities:

220.1 — — 220.1

Other types of investments (F)

Other types of investments (E)

— 13.3 — 13.3

Total financial assets measured at fair value $ 269.7 $ 13.3 $ — $ 283.0

Total financial assets measured at net asset value (G)

Total financial assets measured at net asset value (F)

Total plan assets $ 283.0

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Equity securities:

29.8 — — 29.8

International (C)

33.3 — — 33.3

Fixed-income securities:

259.6 — — 259.6

Fixed income (E)

Other types of investments (F)

Other types of investments (E)

— 26.9 — 26.9

Total financial assets measured at fair value $ 299.0 $ 26.9 $ — $ 325.9

Total financial assets measured at net asset value (G)

Total financial assets measured at net asset value (F)

Total plan assets $ 325.9

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These assets are valued using quoted market prices for identical securities in active markets and are classified as Level 1 assets.

(E) This category was composed of fixed-income funds that were invested primarily in government-related bonds of non-U.S.

issuers and included investments in the Canadian, as well as emerging markets.

These assets were valued using quoted market prices for identical securities in active markets and were classified as Level 1 assets.

(F) This category is composed of a real estate fund whereby the underlying investments are contained in the Canadian market and a common collective trust fund investing in direct commercial property funds.

(E) This category is composed of a real estate fund whereby the underlying investments are contained in the Canadian market and a common collective trust fund investing in direct commercial property funds.

The real estate fund and the collective trust fund investing in direct commercial property are classified as Level 2 assets, whereby the underlying securities are valued utilizing quoted market prices for identical securities in active markets and based on the quoted market prices of the underlying investments in the common collective trust, respectively.

(G) This category was composed of a private equity fund that consisted primarily of limited partnership interests in corporate finance and venture capital funds, as well as a private limited investment partnership.

(F) This category was composed of a private equity fund that consisted primarily of limited partnership interests in corporate finance and venture capital funds, as well as a private limited investment partnership.

The fair value estimates of the private equity fund and private limited investment partnership were based on the underlying funds’ net asset values.

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In 2025, we do not expect to make any contributions to our U.S.

qualified defined benefit pension plans;

however, we do expect to make direct benefit payments of approximately $ 9.8 in 2024.

Further, we expect the following payments to be made from the defined benefit pension and other postretirement benefit plans:

qualified defined benefit pension plans, except as required to fund the U.S.

defined benefit plan we plan to terminate, which will be equal to the shortfall following the payment of lump sums and purchase of a group annuity contract.

The amount of the contribution necessary will be dependent on several factors including asset performance, economic environment, lump sum election percentage, and insurance premium pricing, among others.

In addition, the timing of the annuity purchase will be dependent on the timing of the regulatory reviews by the IRS, as well as other plan termination activities.

During 2025, we also expect to make direct benefit payments of approximately $ 8.8 .

Furthermore, we expect the following payments to be made from the defined benefit pension and other postretirement benefit plans:

$ 162.1 in 2025, $ 23.2 in 2026, $ 22.6 in 2027, $ 22.3 in 2028, $ 21.9 in 2029, and $ 112.0 in 2030 through 2034.

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The risks of participating in multi-employer pension plans are different from the risks of participating in single-employer pension plans.

For instance, the assets contributed to the multi-employer plan by one employer may be used to provide

benefits to employees of other participating employers, and if a participating employer stops contributing to the plan, the unfunded obligations of the plan allocable to the withdrawing employer may be the responsibility of the remaining participating employers.

For instance, the assets contributed to the multi-employer plan by one employer may be used to provide benefits to employees of other participating employers, and if a participating employer stops contributing to the plan, the unfunded obligations of the plan allocable to the withdrawing employer may be the responsibility of the remaining participating employers.

Additionally, if we stop participating in the multi-employer pension plan, we may be required to pay the plan an amount based on our allocable share of the underfunded status of the plan, referred to as a withdrawal liability.

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The American Rescue Plan Act (the “ARPA”), signed into law on March 11, 2021, established a special financial assistance program for financially troubled multi-employer pension plans.

Under the ARPA, eligible multi-employer plans can apply to receive a cash payment in an amount projected by the Pension Benefit Guaranty Corporation to pay pension benefits through the plan year ending 2051.

Under the ARPA, eligible multi-employer plans can apply to receive a cash payment in an amount projected by the Pension Benefit Guaranty Corporation (“PBGC”) to pay pension benefits through the plan year ending 2051.

On March 1, 2023, the Bakery and Confectionery Union Fund applied for assistance under the ARPA program.

After working directly with the PBGC to review and revise assumptions, the Bakery and Confectionary Union Fund submitted a revised application for assistance on February 21, 2024.

Derivative Financial Instruments

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We have policies in place that define acceptable instrument types we may enter into and establish controls to limit our market risk exposure.

By policy, we do not enter into derivative transactions for speculative purposes.

Commodity Derivatives:

We enter into commodity derivatives to manage the 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, edible oils, and wheat.

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

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Interest Rate Derivatives:

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.

From time to time, 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.

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Generally, changes in the fair value of the contract are equal to changes in the fair value of the underlying debt and have no net impact on earnings.

Equity Forward Derivative:

During the first quarter of 2024, we began entering into equity forward derivative transactions under an agreement with an unrelated third-party to facilitate the forward sale of the Post common stock.

We did not qualify the forward sale derivative contract for hedge accounting treatment, and as a result, derivative gains and losses associated with the economic hedge were immediately recognized in earnings within other income (expense) – net in the Statement of Consolidated Income, netting with the change in fair value of the underlying shares.

All 5.4 million shares of Post common stock were hedged and later settled on November 15, 2023, for $ 466.3 , resulting in a pre-tax gain of $ 5.4 during the year ended April 30, 2024.

For additional information, see Note 3:

Divestitures.

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

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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 $ 17.0 and $ 54.6 at April 30, 2023 and 2022, respectively, and are included in other current assets in the Consolidated Balance Sheets.

Our cash margin accounts represented collateral received of $ 1.9 and collateral pledged of $ 17.0 at April 30, 2024 and 2023, respectively, and are included in other current assets in the Consolidated Balance Sheets.

The change in the cash margin accounts is included in other – net, investing activities in the 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.

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 Statements of Consolidated Cash Flows.

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Cash Flow Hedges

In November 2023, we terminated interest rate contracts for $ 42.5 concurrent with the payment of the debt assumed with the acquisition of Hostess Brands.

The interest rate contracts were designated as cash flow hedges and were used to manage exposure to changes in cash flows associated with variable rate debt.

In 2020, we terminated all outstanding interest rate contracts concurrent with the pricing of the Senior Notes due March 15, 2030, and March 15, 2050.

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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 April 30, 2022, we had fully recognized the gain of $ 53.5 , of which $ 4.0 and $ 8.4 were recognized in 2022 and 2021, respectively.

As of April 30, 2022, we had fully recognized the gain of $ 53.5 , of which $ 4.0 was recognized in 2022.

Other Financial Instruments and Fair Value Measurements

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Foreign currency exchange contracts – net 0.5 1.3 — 1.8

Investment in equity securities (C)

487.8 — — 487.8

Total long-term debt (D)

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Foreign currency exchange contracts – net 0.2 1.1 — 1.3

Investment in equity securities (C)

487.8 — — 487.8

Total long-term debt (D)

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The investment in equity securities represents our equity interest in Post of approximately 8 percent as of April 30, 2023, which is valued using the trading value of Post common stock.

In 2023, we recognized an unrealized pre-tax loss of $ 3.8 on the investment, which was included in other income (expense) – net in the Statement of Consolidated Income.

The investment in equity securities represented our equity interest in Post of approximately 8 percent as of April 30, 2023, which was valued using the trading value of Post common stock.

The investment in equity securities was valued at $ 460.9 on the settlement date.

As a result, we recognized a realized pre-tax loss of $ 30.7 on the investment, of which $ 26.9 and $ 3.8 was recognized during 2024 and 2023, respectively, and was included in other income (expense) – net in the Statements of Consolidated Income.

For additional information, see Investment in Equity Securities in Note 1:

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Debt and Financing Arrangements.

During 2024, we recognized a loss on divestiture in our Statement of Consolidated Income related to the divestiture of Sahale Snacks .

The pre-tax loss for the divested Sahale Snacks business included the impact of an allocation of $ 11.5 of goodwill, primarily in the U.S.

Retail Frozen Handheld and Spreads segment, which was determined based on a relative fair value analysis.

The impact of the goodwill disposed was included in the noncash pre-tax loss on the divestiture in our Statement of Consolidated Income.

Furthermore, we acquired Hostess Brands on November 7, 2023, and as a result, the underlying assets acquired and liabilities assumed were adjusted to their estimated fair values at the date of acquisition, which was determined based on independent appraisals, discounted cash flow analyses, quoted market prices, and estimates made by management.

During 2023, we recognized a loss on divestiture in our Statement of Consolidated Income related to the divestiture of certain pet food brands.

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Retail Pet Foods segment.

During 2021, we recognized an impairment charge of $ 3.8 related to an immaterial trademark within the U.S.

Retail Consumer Foods segment.

These charges were included as noncash charges in our Statements of Consolidated Income.

We utilized Level 3 inputs based on management’s best estimates and assumptions to estimate the fair value of the indefinite-lived trademarks.

For additional information, see Goodwill and Other Intangible Assets in Note 1:

Accounting Policies and Note 6:

For additional information, see Note 2:

Acquisition, Note 3:

Divestitures, and Note 7:

Goodwill and Other Intangible Assets.

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

As of April 30, 2023, we have entered into a lease commitment related to a distribution center for which the lease has not yet commenced as of that date.

The lease will begin during the first quarter of 2024, and upon commencement, we expect to recognize a right-of-use asset and lease liability of approximately $ 75.8 in the Condensed Consolidated Balance Sheet.

As of April 30, 2024, we have entered into a lease commitment related to a Canadian corporate office for which the lease has not yet commenced as of that date.

The lease will begin during the third quarter of 2025, and upon commencement, we expect to recognize a right-of-use asset and lease liability of approximately $ 1.9 in the Condensed Consolidated Balance Sheet.

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

43 unchanged sentences

2027 25.6 2.5

2028 17.6 2.3

2029 16.4 0.9

2030 and beyond 60.5 0.5

21 unchanged sentences

Stock Options:

Under the 2020 Plan, we granted 113,970 and 152,971 stock options during 2023 and 2022, respectively, and under the 2010 Plan, we granted 296,619 stock options during 2021.

Under the 2020 Plan, we granted 84,568 , 113,970 , and 152,971 stock options during 2024, 2023, and 2022, respectively.

Stock options granted in 2024, 2023, and 2022 vest ratably over a period of three years .

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The intrinsic value of a stock option is the amount by which the market value of the underlying stock exceeds the exercise price of the stock option.

The total intrinsic value for stock options outstanding and exercisable was $ 20.1 and $ 12.2 at

April 30, 2023, respectively, with an average remaining contractual term of 7.2 years and 6.5 years, respectively.

The total intrinsic value for both stock options outstanding and exercisable was $ 1.2 at April 30, 2024, with an average remaining contractual term of 5.7 years and 5.8 years, respectively.

The total intrinsic value of stock options exercised during 2024, 2023, and 2022 was $ 0.1 , $ 8.6 , and $ 3.6 , respectively.

3 unchanged sentences

During 2024, 2023, and 2022, we recognized compensation cost of $ 2.8 , $ 3.1 , and $ 3.0 , respectively.

The tax benefit related to the stock option expense was $ 0.7 , $ 0.7 , and $ 0.5 for 2023, 2022, and 2021, respectively.

The annual tax benefit related to the stock option expense was $ 0.7 for 2024, 2023, and 2022.

As of April 30, 2024, we had unrecognized compensation cost of $ 2.9 related to the stock options that were granted in 2024, 2023, and 2022.

2 unchanged sentences

The following table is a summary of our restricted shares, deferred stock units, and performance units.

Stock Units Weighted-

Per Share Performance

Units Weighted-

Restricted Shares

Stock Units Weighted-Average

Grant Date Fair Value Per Share Performance

Units Weighted-Average

Grant Date Fair Value Per Share

Outstanding at May 1, 2023

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The weighted-average grant date fair value of equity awards other than stock options that vested in 2024, 2023, and 2022 was $ 36.5 , $ 30.6 , and $ 21.7 , respectively.

The weighted-average grant date fair value of restricted shares, deferred stock units,

and performance units is the average of the high and the low share price on the date of grant.

The weighted-average grant date fair value of restricted shares, deferred stock units, and performance units is the average of the high and the low share price on the date of grant.

The vesting date fair value of equity awards other than stock options that vested in 2024, 2023, and 2022 was $ 46.9 , $ 36.2 , and $ 24.0 , respectively.

The following table summarizes the weighted-average fair values of the equity awards granted.

Year Ended April 30, Restricted

Stock Units Weighted-

Per Share Performance

Units Weighted-

Year Ended April 30, Restricted Shares

Stock Units Weighted-Average

Grant Date Fair Value Per Share Performance

Units Weighted-Average

Grant Date Fair Value Per Share

2024 155,354 $ 143.60 117,312 $ 153.20

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The restricted shares and deferred stock units granted in 2024, 2023, and 2022 under our new long-term incentive compensation program vest ratably over three years from the date of grant.

The remaining restricted shares and deferred stock units generally vest over four years from the date of grant or upon the attainment of a defined age and years of service, subject to certain retention requirements.

The performance units granted in 2024, 2023, and 2022 vest three years from the date of grant and are converted to common shares upon vesting based on the performance achieved during the service period.

21 unchanged sentences

Statutory federal income tax rate 21.0 % 21.0 % 21.0 %

Acquisition of Hostess Brands 1.3 — —

Sale of certain pet food brands — ( 776.4 ) —

Sale of the Crisco business

Sale of the Natural Balance business

State and local income taxes 2.9 ( 157.7 ) 2.6

3 unchanged sentences

Income taxes paid $ 316.5 $ 254.8 $ 233.0

The income tax expense of $ 82.1 for 2023 includes a permanent tax impact associated with the sale of certain pet food brands.

The income tax expense of $ 212.1 for 2022 includes an unfavorable deferred tax impact, primarily related to an internal legal entity simplification to support multiple work locations for office-based employees and our continued strategic activities.

The income tax expense of $ 295.6 for 2021 includes the permanent tax impacts associated with the sales of the Crisco and Natural Balance businesses.

We are a voluntary participant in the Compliance Assurance Process (“CAP”) program offered by the IRS and are currently under a CAP examination for the tax years ended April 30, 2023 and April 30, 2024.

For the 2019 through 2022 tax years, the CAP examination is substantially complete and awaiting final closing documentation.

The income tax expense of $ 252.4 for 2024 includes unfavorable permanent and deferred tax impacts associated with the acquisition of Hostess Brands.

The income tax expense of $ 82.1 for 2023 includes unfavorable permanent tax impacts associated with the sale of certain pet food brands.

The income tax expense of $ 212.1 for 2022 includes unfavorable deferred tax impacts of an internal legal entity simplification.

During 2024, the IRS concluded the CAP examinations for the 2019 through 2022 tax years.

The tax years prior to 2020 are no longer subject to U.S.

1 unchanged sentence

With limited exceptions, we are no longer subject to examination for state, local, and foreign jurisdictions for the tax years prior to 2020.

As part of the acquisition of Hostess Brands, we assumed a tax receivable agreement payable to C.

Dean Metropoulos and entities under his control.

Subsequent to the acquisition, we terminated all future payments under the tax receivable agreement in exchange for a cash payment of $ 86.4 , which was included within financing activities in the Statement of Consolidated Cash Flows for the year ended April 30, 2024.

Deferred income taxes reflect the tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax reporting.

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We evaluate the realizability of deferred tax assets for each of the jurisdictions in which we operate.

The total valuation allowance decreased by an immaterial amount during the year.

We did not repatriate foreign cash to the U.S.

during both 2023 and 2022.

We returned $ 100.0 of foreign cash to the U.S.

from Canada during 2021, net of $ 5.0 of foreign withholding taxes and insignificant U.S.

federal and state income taxes.

Consistent with the prior year, as of April 30, 2023, we have determined that a portion of our undistributed earnings, in Canada, is not permanently reinvested, resulting in the recognition of an immaterial deferred tax liability.

Deferred income taxes have not been provided on approximately $ 30.0 of the remaining temporary differences of our foreign subsidiaries, primarily Canada, that are determined to be permanently reinvested, the tax effects of which are immaterial.

The total valuation allowance increased by an immaterial amount during the year.

As of April 30, 2024, we have determined that a portion of our undistributed earnings, in Canada, is not permanently reinvested, resulting in the recognition of an immaterial deferred tax liability.

Deferred income taxes have not been provided on approximately $ 31.9 of the unremitted earnings of our foreign subsidiaries, primarily Canada, that are determined to be permanently reinvested, the tax effects of which are immaterial.

Our unrecognized tax benefits were $ 4.6 , $ 5.3 , and $ 6.5 , of which $ 3.7 , $ 4.2 , and $ 5.1 would affect the effective income tax rate, if recognized, as of April 30, 2024, 2023, and 2022, respectively.

5 unchanged sentences

Prior year tax positions — — 0.2

Acquired business 1.3 — —

Expiration of statute of limitations periods 2.0 1.2 4.0

24 unchanged sentences

$ ( 39.2 ) $ ( 143.1 ) $ ( 53.4 ) $ 1.1 $ ( 234.6 )

(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 10:

Derivative Financial Instruments.

(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 charges related to the Canadian buy-out contract.

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

For additional information, see Note 9:

2 unchanged sentences

We, like other food manufacturers, are from time to time subject to various administrative, regulatory, and other legal proceedings arising in the ordinary course of business.

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, 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 April 30, 2023.

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 defendants in a series of putative class action lawsuits that were transferred to the United States District Court for the Western District of Missouri for coordinated pre-trial proceedings.

We are currently a defendant in a variety of such legal proceedings, and 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 April 30, 2024.

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 will have a material adverse effect on our financial position, results of operations, or cash flows.

Class Action Lawsuits:

We are defendants in a series of putative class action lawsuits that were 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.

1 unchanged sentence

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 April 30, 2023, and the likelihood of loss is not considered probable or estimable.

Accordingly, no loss contingency has been recorded for these matters as of April 30, 2024, and the likelihood of loss is not considered probable or reasonably 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.

1 unchanged sentence

In May 2022, we initiated a voluntary recall of select Jif peanut butter products produced at our Lexington, Kentucky facility and sold primarily in the U.S., due to potential salmonella contamination.

At that time, we also suspended the manufacturing of Jif peanut butter products at the Lexington facility and temporarily paused shipments from our Memphis, Tennessee facility to eliminate confusion while customers cleared their shelves of potentially impacted products manufactured at the Lexington facility.

No other products produced at our other facilities were affected by the recall.

In June 2022, we resumed manufacturing Jif peanut butter products at our Lexington facility, as well as shipping from our Memphis facility.

We partnered with retailers to restock Jif peanut butter products during the first quarter of 2023, and as of April 30, 2023, we have returned to normal levels.

To date, we have recognized total direct costs associated with the recall of approximately $ 120.0 , 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.

We expect costs associated with the recall to be minimal in 2024.

At that time, we also suspended the manufacturing of Jif peanut butter products at the Lexington facility.

We partnered with retailers to restock Jif peanut butter products and returned to normal levels by the end of 2023.

During 2023 and 2022, we recognized total direct costs associated with the recall of approximately $ 120.0 , net of insurance recoveries, related to customer returns, fees, unsaleable inventory, and other product recall-related costs, primarily within our U.S.

Retail Frozen Handheld and Spreads segment.

There were no significant direct costs recognized during 2024.

Further, the FDA issued a Warning Letter on January 24, 2023, following an inspection of our Lexington facility completed in June 2022 in connection with the Jif voluntary recall, 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.

In addition, we have worked diligently to further strengthen our already stringent quality processes, including doubling our finished product testing and tripling our environmental testing to verify the efficacy of our actions.

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.

We 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.

In addition, we strengthened our already stringent quality processes.

The FDA delivered its Establishment Inspection Report concluding the June 2022 inspection in March 2024.

Although the FDA has concluded its inspection, other agencies may nonetheless conclude that certain practices or controls were not in compliance with the FDCA or other laws.

Any potential regulatory action based on such an agency conclusion 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 ongoing consumer litigation associated with the voluntary recall of Jif peanut butter products.

The outcome and financial impact of the ongoing consumer litigation or any 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 April 30, 2023, and the likelihood of loss is not considered probable or estimable.

Accordingly, no loss contingency has been recorded for these matters as of April 30, 2024, and the likelihood of loss is not considered probable or reasonably estimable.

Voortman Contingency:

In December 2020, Hostess Brands asserted claims for indemnification against the Sellers under the terms of the Purchase Agreement pursuant to which Hostess Brands acquired Voortman.

The claims were for damages arising out of alleged breaches by the Sellers of certain representations, warranties, and covenants contained in the Purchase Agreement relating to periods prior to the closing of the acquisition.

Hostess Brands also submitted claims relating to these alleged breaches under the RWI that was purchased in connection with the acquisition.

In the third quarter of calendar 2022, the RWI insurers paid Hostess Brands $ 42.5 CAD (the RWI coverage limit) related to these breaches.

Per agreement with the RWI insurers, we will not be required to return the Proceeds under any circumstances.

On November 3, 2022, pursuant to the agreement with the RWI insurers, Voortman brought the Claim, related to the breaches against certain of the Sellers.

The Claim alleges the seller defendants made certain non-disclosures and misrepresentations to induce Hostess Brands to overpay for Voortman.

We are seeking damages of $ 109.0 CAD representing the amount of the aggregate liability of the Sellers for indemnification under the Purchase Agreement, $ 5.0 CAD in punitive

or aggravated damages, interest, proceedings fees, and any other relief the presiding court deems appropriate.

A portion of any recovery will be shared with the RWI insurers.

Although we believe that the Claim is meritorious, no assurance can be given as to whether we will recover all, or any part, of the amounts being pursued.

Common Shares

The Amended Articles of Incorporation provide that each holder of a common share outstanding is entitled to one vote on each matter submitted to a vote of the shareholders.

Repurchase Programs:

During the fourth quarter of 2023, we repurchased approximately 2.4 million common shares for $ 358.0 pursuant to the authorizations of the Board.

Under the repurchase plan, a total of approximately 3.5 million common shares remain available for repurchase as of April 30, 2023.

Repurchase Program:

On March 2, 2023, we entered into the 10b5-1 Plan established in accordance with Rule 10b5-1 of the Exchange Act in connection with the remaining common shares authorized for repurchase by the Board, which was approximately 3.5 million common shares as of April 30, 2023.

In accordance with the 10b5-1 Plan, our designated broker had the authority to repurchase approximately 2.4 million common shares, which commenced upon the sale of certain pet food brands on April 28, 2023, and expired 45 calendar days after the closure of the transaction.

In 2024, we repurchased approximately 2.4 million common shares for $ 362.8 under the 10b5-1 Plan, and approximately 1.1 million common shares remain available for repurchase as of April 30, 2024.

In accordance with the Inflation Reduction Act, a one percent excise tax was applied to share repurchases after December 31, 2022.

As a result, an excise tax of $ 3.6 was accrued on the repurchased shares during 2023, and included within additional capital in our Consolidated Balance Sheet.

A total of 2.0 million common shares were repurchased for $ 262.5 during 2022 under authorizations by the Board, and no excise tax was accrued on the repurchased shares.

As a result, an excise tax of $ 3.6 was accrued on the repurchased shares during the first quarter of 2024, and included within additional capital in our Consolidated Balance Sheet.

In 2023, we repurchased approximately 2.4 million common shares for $ 358.0 pursuant to the authorizations of the Board and an excise tax of $ 3.6 was accrued on the repurchased shares.

All other share repurchases during 2024 and 2023 consisted of shares repurchased from stock plan recipients in lieu of cash payments.

On March 2, 2023, we also entered into the 10b5-1 Plan that was established in accordance with Rule 10b5-1 of the Exchange Act in connection with the remaining common shares authorized for repurchase by the Board.

In accordance with the 10b5-1 Plan, our designated broker has the authority to repurchase approximately 2.4 million commons shares, which commenced on the consummation of the sale of certain pet food brands on April 28, 2023, and will expire 45 calendar days after the closure of the transaction, which is in the first quarter of 2024, unless terminated earlier in accordance with the terms of the 10b5-1 Plan.

Subsequent to April 30, 2023, we repurchased approximately 2.4 million common shares for $ 362.8 under this 10b5-1 Plan, and approximately 1.1 million common shares remain available for repurchase.

An excise tax of $ 3.6 was also accrued on the repurchased shares during the first quarter of 2024.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

Shares Issued:

On November 7, 2023, we acquired Hostess Brands, and as a result, we issued approximately 4.0 million common shares valued at $ 450.2 in exchange for the outstanding shares of Hostess Brands common stock to partially fund the acquisition of Hostess Brands.

The shares issued were based on each outstanding share of Hostess Brands common stock receiving $ 30.00 per share in cash and 0.03002 shares of our common shares, which represented a value of $ 4.25 based on the closing stock price of our common shares on September 8, 2023, the last trading day preceding September 11, 2023, the date on which the execution of the Hostess Brands merger agreement was publicly announced.

For additional information on the acquisition of Hostess Brands, see Note 2:

Changes in and Disagreements with Accountants on Accounting and Financial Disclosures.

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

What changed 10-K

Item 8. Financial Statements and Supplementary Data