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Item 1. Financial Statements

2024-08-28 compared with 2024-02-27 · 178 added, 392 removed, 611 unchanged (48% of the section changed)

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CONDENSED STATEMENTS OF CONSOLIDATED INCOME

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

Three Months Ended July 31,

Dollars in millions, except per share data 2024 2023

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Other special project costs (A)

98.9 0.6 105.7 2.7

Other operating expense (income) – net ( 5.5 ) ( 2.1 )

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Interest expense – net ( 100.4 ) ( 32.1 )

Other debt costs (A)

— — ( 19.5 ) —

Other income (expense) – net (A)

( 2.1 ) ( 4.6 ) ( 30.0 ) ( 4.9 )

Other income (expense) – net ( 3.1 ) ( 33.0 )

Income Before Income Taxes 246.0 238.4

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For more information, see Note 5:

Special Project Costs, Note 6:

Reportable Segments, and Note 9:

Debt and Financing Arrangements.

Special Project Costs and Note 6:

Reportable Segments.

See notes to unaudited condensed consolidated financial statements.

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CONDENSED STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME

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

Three Months Ended July 31,

Dollars in millions 2024 2023

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Available-for-sale securities activity, net of tax — ( 0.2 )

Total Other Comprehensive Income (Loss) 13.1 10.1 11.8 0.2

Total Other Comprehensive Income 2.4 10.2

Comprehensive Income $ 187.4 $ 193.8

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CONDENSED CONSOLIDATED BALANCE SHEETS

Dollars in millions January 31, 2024 April 30, 2023

Dollars in millions July 31, 2024 April 30, 2024

Current Assets

4 unchanged sentences

Total Inventory 1,137.8 1,038.9

Investment in equity securities — 487.8

Other current assets 168.9 129.5

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Accrued trade marketing and merchandising 202.0 214.3

Current portion of long-term debt 999.5 999.3

Short-term borrowings 697.0 591.0

Current operating lease liabilities 40.6 33.2

Other current liabilities 621.4 620.3

1 unchanged sentence

Noncurrent Liabilities

Long-term debt 8,121.1 4,314.2

Long-term debt, less current portion 6,775.3 6,773.7

Deferred income taxes 1,740.8 1,737.4

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CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS

Nine Months Ended January 31,

Three Months Ended July 31,

Dollars in millions 2024 2023

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Amortization 56.0 39.8

Realized loss on investment in equity securities – net 21.5 —

Pension settlement loss (gain) — 3.2

Unrealized loss on investment in equity securities – net — 27.4

Share-based compensation expense 8.9 5.1

Loss (gain) on divestitures – net 12.9 ( 1.6 )

Deferred income tax expense (benefit) 2.6 ( 8.9 )

Other noncash adjustments – net 15.1 4.8

Settlement of interest rate contracts 42.5 —

Defined benefit pension contributions ( 2.8 ) ( 72.8 )

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

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Investing Activities

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

Proceeds from sale of equity securities 466.3 —

Additions to property, plant, and equipment ( 123.7 ) ( 150.3 )

Proceeds from divestitures – net 50.5 1.6

Other – net ( 48.7 ) ( 1.6 )

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Short-term borrowings (repayments) – net 96.2 —

Proceeds from long-term debt 4,285.0 —

Repayments of long-term debt ( 1,441.0 ) —

Capitalized debt issuance costs ( 32.1 ) —

Quarterly dividends paid ( 112.1 ) ( 105.2 )

Purchase of treasury shares ( 2.6 ) ( 372.0 )

Payment of assumed tax receivable agreement obligation ( 86.4 ) —

Other – net ( 4.5 ) ( 4.1 )

8 unchanged sentences

CONDENSED STATEMENTS OF CONSOLIDATED SHAREHOLDERS’ EQUITY

Nine Months Ended January 31, 2024

Three Months Ended July 31, 2024

Dollars in millions Common

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Balance at July 31, 2024 106,408,530 $ 26.6 $ 5,715.2 $ 2,259.9 $ ( 232.2 ) $ 7,769.5

Net income 194.9 194.9

Other comprehensive income (loss) ( 11.5 ) ( 11.5 )

Comprehensive income 183.4

Purchase of treasury shares ( 3,139 ) — ( 0.4 ) — ( 0.4 )

Stock plans 25,067 — 11.1 11.1

Cash dividends declared, $ 1.06 per common share

( 108.6 ) ( 108.6 )

Balance at October 31, 2023 102,154,601 $ 25.5 $ 5,252.8 $ 2,051.1 $ ( 240.5 ) $ 7,088.9

Net income 120.4 120.4

Other comprehensive income (loss) 13.1 13.1

Comprehensive income 133.5

Purchase of treasury shares ( 1,101 ) — ( 0.1 ) — ( 0.1 )

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

Stock plans 33,904 — 4.1 4.1

Cash dividends declared, $ 1.06 per common share

( 116.5 ) ( 116.5 )

Balance at January 31, 2024 106,177,319 $ 26.5 $ 5,706.0 $ 2,055.0 $ ( 227.4 ) $ 7,560.1

Nine Months Ended January 31, 2023

Three Months Ended July 31, 2023

Dollars in millions Common

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Balance at July 31, 2023 102,132,673 $ 25.5 $ 5,242.1 $ 1,964.8 $ ( 229.0 ) $ 7,003.4

Net income 191.1 191.1

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

Comprehensive income 177.2

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

Stock plans 67,757 — 4.4 4.4

Cash dividends declared, $ 1.02 per common share

( 108.5 ) ( 108.5 )

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

Net income 208.5 208.5

Other comprehensive income (loss) 10.1 10.1

Comprehensive income 218.6

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

Stock plans 8,499 — 7.5 7.5

Cash dividends declared, $ 1.02 per common share

( 108.3 ) ( 108.3 )

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

See notes to unaudited condensed consolidated financial statements.

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

Operating results for the nine months ended January 31, 2024, are not necessarily indicative of the results that may be expected for the year ending April 30, 2024.

Operating results for the three months ended July 31, 2024, are not necessarily indicative of the results that may be expected for the year ending April 30, 2025.

For further information, reference is made to the consolidated financial statements and notes included in our Annual Report on Form 10-K for the year ended April 30, 2024.

Recently Issued Accounting Standards

In March 2024, the U.S.

Securities and Exchange Commission (the “SEC”) adopted the final rule under 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 Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“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, with the option to early adopt at any time prior to the effective date and will require adoption on a retrospective basis.

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

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

We do not anticipate any impact to our financial statements upon adoption and are currently evaluating the impacts of the standard on our 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 date 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 U.S.

Securities and Exchange Commission (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 of Directors’ (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.

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.

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.

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

As of January 31, 2024, these amendments were not adopted by the SEC;

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

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 do not anticipate any impact to our financial statements upon adoption and are currently evaluating the impacts of the standard on our disclosures.

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

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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, a $ 800.0 senior unsecured delayed-draw Term Loan Credit Agreement (“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.

New debt of $ 5.0 billion was borrowed, consisting of $ 3.5 billion in Senior Notes, an $ 800.0 senior unsecured delayed-draw Term Loan Credit Agreement (“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

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

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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 $ 300.3 in net sales and $ 34.7 in operating income, are included within the Sweet Baked Snacks segment for the three months ended January 31, 2024.

The operating income for the three months ended January 31, 2024, includes the recognition of an unfavorable fair value purchase accounting adjustment of $ 8.1 , attributable to the acquired inventory, and excludes special project costs recognized within the segment.

The transaction was accounted for under the acquisition method of accounting, and accordingly, the results of Hostess Brands operations, including $ 333.7 in net sales and $ 50.8 in operating income, are included within the Sweet Baked Snacks segment for the three months ended July 31, 2024.

The operating income for the three months ended July 31, 2024, excludes special project costs related to transaction and integration 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.

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Goodwill 2,447.1

Other intangible assets 3,036.8

Other intangible assets – net 3,038.6

Other noncurrent assets 43.2

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Accounts payable $ 67.3

Current operating lease liabilities 4.7

Current liabilities 250.2

Other current liabilities 249.3

Deferred income taxes 639.4

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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 $ 2.5 billion of goodwill within the Sweet Baked Snacks segment, of which $ 196.6 is expected to be deductible for tax purposes, which will be refined during the measurement period.

Certain estimated fair values for the acquisition, including goodwill 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 one-year measurement period, as permitted under FASB Accounting Standards Codification (“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 $ 181.3 remains deductible as of July 31, 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 January 31, 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 preliminary purchase price was allocated to the identifiable intangible assets acquired as follows:

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

Intangible assets with finite lives:

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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 the three and nine months ended January 31, 2024 and 2023, would have been as follows:

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

2024 2023 2024 2023

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

Hostess Brands’ results of operations are included in our condensed 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 the three months ended July 31, 2023, would have been as follows:

Three Months Ended July 31, 2023

Net sales $ 2,159.8

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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 nonrecurring acquisition-related costs incurred prior to the close of the transaction, amortization of acquired intangible assets, depreciation of acquired property, plant, and equipment, and interest expense associated with acquisition-related financing.

The most significant pro forma adjustments relate to interest expense associated with acquisition-related financing, the elimination of 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, 202 4, we sold our Canada condiment business to TreeHouse Food s, Inc.

On January 2, 202 4, we sold the Canada condiment business to TreeHouse Food s, Inc.

(“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 approximately $ 60.0 in 2023, which were included in the International operating segment.

Net proceeds from the divestiture were $ 25.3 , n et of cash transaction costs and includes a receivable related to a preliminary working capital adjustment.

During the second quarter of 2024, the disposal group was classified as held for sale, and as a result, an estimated pre-tax loss of $ 5.2 was recognized with in other operating expense (income) – net in the Condensed Statement of Consolidated Income.

Upon close of the transaction during the third quarter of 2024, the pre-tax loss was adjusted to $ 5.7 , reflecting the fair value of the disposal group as of the transaction date.

On November 1, 2023, we sold our Sahale Snacks ® business to Second Nature Brands (“Second Nature”).

The transaction included products sold under our 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 approximately $ 48.0 in 2023, primarily included in the U.S.

Under our ownership, these brands generated net sales of $ 43.8 in 2024, 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 the third quarter of 2024.

On November 1, 2023, we sold the Sahale Snacks ® business to Second Nature Brands (“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 in 2024, primarily included in the U.S.

Retail Frozen Handheld and Spreads segment.

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

During the second quarter of 2024, the disposal group was classified as held for sale, and as a result, an estimated pre-tax loss of $ 6.8 was recognized within other operating expense (income) – n et in the Condensed Statement of Consolidated Income.

Upon close of the transaction during the third quarter of 2024, the pre-tax loss was adjusted to $ 6.7 , reflecting the fair value of the disposal group as of the transaction date.

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.

January 31, 2024

Condiment Sahale Snacks

Assets disposed:

Inventories $ 23.9 $ 9.9

Property, plant, and equipment – net — 6.0

Operating lease right-of-use assets — 1.8

Goodwill — 11.5

Other intangible assets – net 7.1 14.7

Other noncurrent assets — 0.3

Total assets disposed $ 31.0 $ 44.2

Liabilities disposed:

Other current liabilities $ — $ 0.8

Deferred income taxes — 4.1

Other noncurrent liabilities — 1.0

Total liabilities disposed — 5.9

Net assets disposed $ 31.0 $ 38.3

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 the third quarter of 2024.

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

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, primarily included in the U.S.

Retail Pet Foods segment.

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.

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 the fourth quarter of 2023, within other operating expense (income) – net in the Statement of Consolidated Income, net of a working capital adjustment and transaction costs.

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

Furthermore, 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.

All 5.4 million shares of Post common stock were settled for $ 466.3 on November 15, 2023.

We recognized a pre-tax loss of $ 1.0 billion upon completion of this transaction during 2023.

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

Furthermore, during the first quarter of 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 Capital Management LP (“Nexus”).

The transaction included products sold under the R.W.

Knudsen ® and TruRoots ® brands, inclusive of certain trademarks, a licensing agreement for Santa Cruz Organic ® beverages, dedicated manufacturing and distribution facilities in Chico, California and Havre de Grace, Maryland, and approximately 150 employees who supported the natural beverage and grains businesses.

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

Final net proceeds from the divestiture were $ 98.7 , net 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 $ 1.6 was recognized during the first quarter of 2023, within other operating expense (income) – net in the Condensed Statement of Consolidated Income, upon finalization of the working capital adjustment.

Special Project Costs

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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.

Severance costs are generally recognized when deemed probable and reasonably estimable, 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 divestiture, acquisition, integration, and restructuring activities.

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 Condensed

Statements of Consolidated Income and are not allocated to segment profit.

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

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

Divestiture Costs:

Total divestiture costs related to the divested Sahale Snacks and Canada condiment businesses are anticipated to be approximately $ 6.0 and consist primarily of employee-related costs and lease termination costs, all of which are expected to be cash charges and recognized in 2024.

We incurred $ 2.3 and $ 2.8 of employee-related costs during the three and nine months ended January 31, 2024, respectively, related to these divestitures.

We also incurred $ 1.6 of other transition and termination costs during the third quarter of 2024, primarily related to lease termination costs.

The obligation related to severance and retention bonuses was $ 1.5 at January 31, 2024.

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.

The majority of these costs were recognized in 2024, and the remainder are expected to be recognized during the first half of 2025.

We incurred divestiture costs of $ 0.3 during the three months ended July 31, 2024, primarily consisting of employee-related costs.

Total divestiture costs incurred to date were $ 5.8 , which included $ 4.2 and $ 1.6 of employee-related and other transition and termination costs, respectively.

The obligation related to severance and retention bonuses was $ 0.8 and $ 2.5 at July 31, 2024 and April 30, 2024, respectively.

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

We anticipate incurring approximately $ 12.0 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 approximately half of the costs expected to be recognized in 2025.

We incurred $ 0.1 of other transition and termination costs during the three months ended July 31, 2024.

For additional information, see Note 4:

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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.

Of the total anticipated integration costs, approximately half reflect transaction costs, with the remainder split between employee-related costs and other transition and termination charges.

The majority of the integration costs are expected to be cash charges incurred by the end of 2026, with over half of the costs expected to be recognized in 2024.

We anticipate the remaining integration costs will be incurred by the end of 2026 and are expected to be split between employee-related and other transition and termination costs.

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

Three Months Ended January 31, 2024 Nine Months Ended January 31, 2024

Three Months Ended

July 31, 2024 Total Costs Incurred to Date

at July 31, 2024

Transaction costs $ — $ 99.0

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Total integration costs $ 12.0 $ 159.4

Noncash charges of $ 0.1 were included in employee-related costs incurred during both the three and nine months ended January 31, 2024.

Transaction costs primarily reflect equity compensation pay-outs, legal fees, and a 364-day senior unsecured Bridge Term Loan Credit Facility (“Bridge Loan”) that provided committed financing for the acquisition of Hostess Brands.

Other transition and termination costs primarily consist of consulting fees.

The obligation related to severance and retention bonuses was $ 14.8 at January 31, 2024.

Cumulative noncash charges incurred through July 31, 2024, were $ 8.8 and included $ 5.6 incurred during the three months ended July 31, 2024, which primarily consisted of accelerated depreciation.

Transaction costs primarily reflected equity compensation payouts, 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 $ 23.4 and $ 28.0 at July 31, 2024 and April 30, 2024, respectively.

For additional information, see Note 3:

Restructuring Costs:

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

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

Three Months Ended January 31, 2023 Nine Months Ended January 31, 2023 Total Costs Incurred to Date at April 30, 2023

Employee-related costs $ 0.3 $ 2.1 $ 27.1

Other transition and termination costs 1.3 5.5 36.6

Total restructuring costs $ 1.6 $ 7.6 $ 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, were $ 33.2 , and included $ 3.2 and $ 10.2 incurred during the three and nine months ended January 31, 2023, respectively, which primarily consisted of accelerated depreciation.

Reportable Segments

6 unchanged sentences

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

As disclosed in Note 3:

Acquisition, we acquired Hostess Brands in a cash and stock transaction on November 7, 2023.

The transaction resulted in a new reportable segment for 2024, Sweet Baked Snacks.

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

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

Retail Frozen Handheld and Spreads segment primarily includes the domestic sales of Uncrustables ® , 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., health care operators, restaurants, lodging, hospitality, offices, K-12, colleges and universities, and convenience stores).

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.

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

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

2024 2023 2024 2023

Three Months Ended July 31,

Retail Coffee $ 623.4 $ 625.1

Retail Frozen Handheld and Spreads 496.8 464.0

Retail Pet Foods (A)

465.2 758.6 1,370.2 2,252.8

Retail Pet Foods 399.7 441.0

Sweet Baked Snacks 333.7 —

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Retail Frozen Handheld and Spreads 119.0 105.7

Retail Pet Foods (A)

109.5 109.0 288.0 349.4

Retail Pet Foods 115.3 81.3

Sweet Baked Snacks 74.4 —

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Change in net cumulative unallocated derivative gains and losses ( 30.0 ) 10.4

Cost of products sold – special project costs (B)

— ( 1.0 ) — ( 4.9 )

Other special project costs (B)

( 98.9 ) ( 0.6 ) ( 105.7 ) ( 2.7 )

Other debt costs (B)

— — ( 19.5 ) —

Cost of products sold – special project costs (A)

Other special project costs (A)

Corporate administrative expenses ( 82.0 ) ( 61.8 )

Other income (expense) – net (B)

( 2.1 ) ( 4.6 ) ( 30.0 ) ( 4.9 )

Other income (expense) – net ( 3.1 ) ( 33.0 )

Income before income taxes $ 246.0 $ 238.4

(A) On April 28, 2023, we sold certain pet food brands to Post, and the divested net sales were primarily included in the U.S.

Retail Pet Foods segment.

For more information, see Note 4:

Divestitures.

(B) Includes certain divestiture, acquisition, integration, and restructuring costs.

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

For more information, see Note 5:

Special Project Costs and Note 9:

Debt and Financing Arrangements.

Special Project Costs.

The following table presents certain geographical information.

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

2024 2023 2024 2023

Three Months Ended July 31,

United States $ 2,015.4 $ 1,676.4

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The following table presents product category information.

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

Three Months Ended July 31,

2024 2023 Primary Reportable Segment (A)

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Retail Coffee

Sweet baked goods 296.6 — Sweet Baked Snacks

Pet snacks 226.8 243.4 U.S.

Retail Pet Foods (B)

Retail Pet Foods

Frozen handheld 222.6 179.4 U.S.

Retail Frozen Handheld and Spreads

Peanut butter 218.6 212.0 U.S.

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Cat food 183.1 191.1 U.S.

Retail Pet Foods (B)

Frozen handheld 182.6 172.6 573.8 501.4 U.S.

Retail Frozen Handheld and Spreads

Retail Pet Foods

Fruit spreads 106.5 106.6 U.S.

Retail Frozen Handheld and Spreads

Sweet baked goods 270.2 — 270.2 — Sweet Baked Snacks

Portion control 51.5 42.9 153.1 114.2 Other (D)

Baking mixes and ingredients 23.1 25.7 68.0 70.8 Other (D)

Portion control 54.1 48.6 Other (B)

Cookies 37.1 — Sweet Baked Snacks

Toppings and syrups 28.3 24.8 U.S.

Retail Frozen Handheld and Spreads

Baking mixes and ingredients 14.2 14.8 Other (B)

Dog food 6.2 26.8 U.S.

Retail Pet Foods (B) (C)

Cookies 30.1 — 30.1 — Sweet Baked Snacks

Other 38.6 49.4 142.3 156.9 Other (D)

Retail Pet Foods

Other 19.1 48.6 Other (B)

Total net sales $ 2,125.1 $ 1,805.2

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

(B) During the three and nine months ended January 31, 2024, a portion of the net sales within this product category relates to sales associated with a contract manufacturing agreement resulting from the divestiture of certain pet food brands, primarily included in the U.S.

Retail Pet Foods segment.

This agreement will continue through the remainder of 2024 and into 2025.

(C) During the three and nine months ended January 31, 2023, the net sales within this product category were primarily related to the divested pet food brands, primarily included in the U.S.

Retail Pet Foods segment.

For more information, see Note 4:

Divestitures.

(D) Primarily represents the International and Away From Home operating segments, which are combined for segment reporting purposes.

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

Earnings per Share

We computed net income per common share (“basic earnings per share”) under the two-class method for the three and nine months ended January 31, 2024 and 2023, due to certain unvested common shares that contained non-forfeitable rights to dividends (i.e., participating securities) during these periods.

For the three and nine months ended January 31, 2024 and 2023, the computation of net income per common share – assuming dilution (“diluted earnings per share”) was more dilutive under the treasury stock method, as compared to the two-class method.

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

We computed net income per common share (“basic earnings per share”) under the two-class method for the three months ended July 31, 2024 and 2023, due to certain unvested common shares that contained non-forfeitable rights to dividends (i.e., participating securities) during these periods.

Further, we computed net income per common share – assuming dilution (“diluted earnings per share”) under the two-class and treasury stock methods to determine the method that was most dilutive, in accordance with FASB ASC 260, Earnings Per Share .

For the three months ended July 31, 2024 and 2023, 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.

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

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

2024 2023 2024 2023

Three Months Ended July 31,

Net income $ 185.0 $ 183.6

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

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

2024 2023 2024 2023

Three Months Ended July 31,

Net income $ 185.0 $ 183.6

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Net income per common share – assuming dilution $ 1.74 $ 1.79

Goodwill and Other Intangible Assets

The following table summarizes the changes in our goodwill.

Retail Coffee U.S.

Retail Frozen Handheld and Spreads U.S.

Retail Pet Foods Sweet Baked Snacks International and Away From Home Total

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

Acquisition — — — 2,461.1 — 2,461.1

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

— — — — 1.3 1.3

Balance at January 31, 2024 (B)

$ 2,090.9 $ 1,139.9 $ 1,580.2 $ 2,461.1 $ 395.7 $ 7,667.8

(A) The amounts classified as other represent foreign currency translation adjustments.

(B) Included in goodwill as of April 30, 2023, are accumulated goodwill impairment charges of $ 242.9 .

The following table summarizes our other intangible assets and related accumulated amortization and impairment charges including foreign currency exchange adjustments.

January 31, 2024 April 30, 2023

Acquisition Cost Accumulated Amortization/Impairment Charges/Foreign Currency Exchange Net Acquisition Cost Accumulated Amortization/Impairment Charges/Foreign Currency Exchange Net

Finite-lived intangible assets subject to

amortization:

Customer and contractual relationships $ 4,764.9 $ 1,840.4 $ 2,924.5 $ 3,499.0 $ 1,719.8 $ 1,779.2

Patents and technology 163.0 160.7 2.3 167.6 161.6 6.0

Trademarks 143.1 109.1 34.0 151.4 111.6 39.8

Total intangible assets subject to amortization $ 5,071.0 $ 2,110.2 $ 2,960.8 $ 3,818.0 $ 1,993.0 $ 1,825.0

Indefinite-lived intangible assets not subject to

amortization:

Trademarks $ 4,572.7 $ 223.2 $ 4,349.5 $ 2,830.7 $ 226.4 $ 2,604.3

Total other intangible assets $ 9,643.7 $ 2,333.4 $ 7,310.3 $ 6,648.7 $ 2,219.4 $ 4,429.3

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

As of January 31, 2024, there were no indicators of impairment, and as a result, we do not believe that any of our reporting units or material indefinite-lived intangible assets are more likely than not impaired.

The goodwill within the U.S.

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

In addition, t he goodwill and indefinite-lived trademarks within the Sweet Baked Snacks segment remain susceptible to future impairment charges, as the carrying values approximate estimated fair values 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 these segments.

Debt and Financing Arrangements

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

January 31, 2024 April 30, 2023

July 31, 2024 April 30, 2024

Outstanding Carrying

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1,000.0 982.8 1,000.0 982.6

Term Loan Credit Agreement due November 7, 2026 350.0 349.9 — —

Total long-term debt $ 7,850.0 $ 7,774.8 $ 7,850.0 $ 7,773.0

Current portion of long-term debt 1,000.0 999.5 1,000.0 999.3

Total long-term debt, less current portion $ 6,850.0 $ 6,775.3 $ 6,850.0 $ 6,773.7

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

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 Secured Overnight Financing Rate (“SOFR”) and are payable at the end of the borrowing term.

The Term Loan matures on November 7, 2026, and does not require scheduled amortization payments.

Voluntary prepayments are permitted without premium or penalty.

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 3:

Capitalized debt issuance costs associated with the Term Loan will be amortized to interest expense – net in the Condensed Statements of Consolidated Income over the time period for which the debt is outstanding.

As of January 31, 2024, we prepaid $ 450.0 on the Term Loan.

The interest rate on the Term Loan at January 31, 2024, was 6.69 percent.

Subsequent to January 31, 2024, we prepaid an additional $ 100.0 on the Term Loan.

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 disclosed in Note 3:

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 Condensed Statement of Consolidated Income during the nine months ended January 31, 2024, was $ 19.5 related to financing fees associated with the Bridge Loan.

In November 2023, the full amount was drawn on the Term Loan to partially finance the acquisition of Hostess Brands and to pay off the debt assumed as part of the acquisition, as discussed in Note 3:

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

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.

1 unchanged sentence

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.

All of our Senior Notes outstanding at January 31, 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.

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

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

borrowing term.

We did no t have a balance outstanding under the revolving credit facility at January 31, 2024, or April 30, 2023.

Prime Rate, Secured Overnight Financing Rate (“SOFR”), Euro Interbank Offered Rate, or Canadian Overnight Repo Rate Average, based on our election.

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

We did no t have a balance outstanding under the revolving credit facility at July 31, 2024, or April 30, 2024.

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

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

As of January 31, 2024, we had $ 418.0 of short-term borrowings outstanding, which were issued under our commercial paper program at weighted-average interest rate of 5.45 percent.

As of April 30, 2023, we did not have a balance outstanding.

Interest paid totaled $ 20.6 and $ 9.9 for the three months ended January 31, 2024 and 2023, respectively, and $ 94.2 and $ 87.2 for the nine months ended January 31, 2024 and 2023, respectively.

As of July 31, 2024 and April 30, 2024, we had $ 697.0 and $ 591.0 of short-term borrowings outstanding, respectively, which were both issued under our commercial paper program at a weighted-average interest rate of 5.48 percent.

Interest paid totaled $ 140.9 and $ 8.4 for the three months ended July 31, 2024 and 2023, respectively.

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

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

As of January 31, 2024, we are in compliance with all covenants.

As of July 31, 2024, we are in compliance with all covenants.

Pensions and Other Postretirement Benefits

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

Three Months Ended January 31,

Defined Benefit Pension Plans Other Postretirement Benefits

2024 2023 2024 2023

Service cost $ 0.2 $ 0.3 $ 0.2 $ 0.2

Interest cost 4.5 4.6 0.7 0.6

Expected return on plan assets ( 4.0 ) ( 3.6 ) — —

Amortization of net actuarial loss (gain) 1.0 1.0 ( 0.4 ) ( 0.3 )

Amortization of prior service cost (credit) — 0.1 ( 0.1 ) ( 0.1 )

Settlement loss (gain) — 1.4 — —

Net periodic benefit cost $ 1.7 $ 3.8 $ 0.4 $ 0.4

Nine Months Ended January 31,

The following table summarizes our net periodic benefit cost for defined benefit pension and other postretirement benefit plans.

Three Months Ended July 31,

Defined Benefit Pension Plans Other Postretirement Benefits

12 unchanged sentences

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

We did not recognize any charges related to the Canadian Buy-Out Contract during the nine months ended January 31, 2023.

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

qualified defined benefit pension plans.

Additionally, we made direct benefit payments of $ 2.8 in both the nine months ended January 31, 2024 and 2023.

We did not recognize any charges related to the Canadian Buy-Out Contract during the three months ended July 31, 2024.

We made direct benefit payments of $ 0.7 for both the three months ended July 31, 2024 and 2023.

Derivative Financial Instruments

2 unchanged sentences

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, soybean meal, corn, wheat, and edible oils.

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

17 unchanged sentences

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 Condensed 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 as of October 31, 2023.

On November 15, 2023, we settled the equity forward contract for $ 466.3 and recognized a realized pre-tax loss of $ 28.2 and gain of $ 5.4 during the three and nine months ended January 31, 2024, respectively.

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, inclusive of an unrealized gain of $ 0.6 recognized during the three months ended July 31, 2023.

For additional information, see Note 4:

1 unchanged sentence

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

January 31, 2024 April 30, 2023

July 31, 2024 April 30, 2024

Commodity contracts $ 1,664.1 $ 787.7

1 unchanged sentence

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

January 31, 2024

July 31, 2024

Liabilities Other

11 unchanged sentences

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

Our cash margin accounts represented collateral pledged of $ 19.1 and $ 17.0 at January 31, 2024, and April 30, 2023, respectively, and are included in other current assets in the Condensed Consolidated Balance Sheets.

Our cash margin accounts represented collateral pledged of $ 46.7 and collateral received of $ 1.9 at July 31, 2024 and April 30, 2024, respectively, and are included in other current assets in the Condensed Consolidated Balance Sheets.

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

3 unchanged sentences

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

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

2024 2023 2024 2023

Three Months Ended July 31,

Derivative gains (losses) on commodity contracts $ ( 30.0 ) $ 7.8

4 unchanged sentences

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

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

2024 2023 2024 2023

Three Months Ended July 31,

Net derivative gains (losses) recognized and classified as unallocated $ ( 29.8 ) $ 5.6

1 unchanged sentence

Change in net cumulative unallocated derivative gains and losses $ ( 30.0 ) $ 10.4

Net cumulative unallocated derivative losses were $ 5.2 at January 31, 2024, and net cumulative unallocated derivative gains were $ 15.9 at April 30, 2023.

As of July 31, 2024, the net cumulative unallocated derivative losses were $ 7.4 , and at April 30, 2024, the net cumulative unallocated derivative gains were $ 22.6 .

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.

2 unchanged sentences

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

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

2024 2023 2024 2023

Three Months Ended July 31,

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

2 unchanged sentences

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

(A) Interest expense – net, as presented in the Condensed Statements of Consolidated Income was $ 99.8 and $ 37.9 for the three months ended January 31, 2024 and 2023, respectively, and $ 167.0 and $ 116.7 for the nine months ended January 31, 2024 and 2023, respectively.

(A) Interest expense – net, as presented in the Condensed Statements of Consolidated Income was $ 100.4 and $ 32.1 for the three months ended July 31, 2024 and 2023, respectively.

The reclassification includes terminated contracts which were designated as cash flow hedges.

Included as a component of accumulated other comprehensive income (loss) at January 31, 2024, and April 30, 2023, were deferred net pre-tax losses of $ 190.6 and $ 200.7 , respectively, related to the terminated interest rate contracts.

The related net tax benefit recognized in accumulated other comprehensive income (loss) at January 31, 2024, and April 30, 2023, was $ 45.2 and $ 47.1 , respectively.

Included as a component of accumulated other comprehensive income (loss) at July 31, 2024, and April 30, 2024, were deferred net pre-tax losses of $ 183.7 and $ 187.1 , respectively, related to the terminated interest rate contracts.

The related net tax benefit recognized in accumulated other comprehensive income (loss) at July 31, 2024, and April 30, 2024, was $ 43.2 and $ 44.0 , respectively.

Approximately $ 13.7 of the net pre-tax loss will be recognized over the next 12 months related to the terminated interest rate contracts.

4 unchanged sentences

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

January 31, 2024 April 30, 2023

July 31, 2024 April 30, 2024

Amount Fair Value Carrying

2 unchanged sentences

Derivative financial instruments – net ( 17.0 ) ( 17.0 ) 28.2 28.2

Investment in equity securities — — 487.8 487.8

Total long-term debt ( 7,774.8 ) ( 7,620.6 ) ( 7,773.0 ) ( 7,652.9 )

8 unchanged sentences

(Level 2) Significant

(Level 3) Fair Value at January 31, 2024

(Level 3) Fair Value at July 31, 2024

Marketable securities and other investments:

5 unchanged sentences

Foreign currency exchange contracts – net 0.3 1.2 — 1.5

Total long-term debt (D)

Total long-term debt (C)

( 7,620.6 ) — — ( 7,620.6 )

14 unchanged sentences

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)

Total long-term debt (C)

( 7,652.9 ) — — ( 7,652.9 )

Total financial instruments measured at fair value $ ( 7,620.8 ) $ 18.2 $ — $ ( 7,602.6 )

(A) Marketable securities and other investments consists of funds maintained for the payment of benefits associated with nonqualified retirement plans.

(A) Marketable securities and other investments consist of funds maintained for the payment of benefits associated with nonqualified retirement plans.

The funds include equity securities listed in active markets, municipal obligations valued by a third-party using valuation techniques that utilize inputs that are derived principally from or corroborated by observable market data, and money market funds with maturities of three months or less.

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

As of January 31, 2024, our municipal obligations are scheduled to mature as follows:

As of July 31, 2024, our municipal obligations are scheduled to mature as follows:

$ 1.5 in 2025, $ 0.8 in 2026, $ 3.9 in 2027, $ 0.4 in 2028, $ 3.4 in 2029, and the remaining $ 7.2 in 2030 and beyond.

1 unchanged sentence

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

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.

On November 15, 2023, we settled the equity forward contract that hedged all 5.4 million shares of Post common stock for $ 466.3 .

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 a gain of $ 28.2 and loss of $ 26.9 was recognized during the three and nine months ended January 31, 2024, respectively, which was included in other income (expense) – net in the Condensed Statement of Consolidated Income.

For additional information, see Note 10:

Divestitures.

(D) Long-term debt is composed of public Senior Notes classified as Level 1 and the Term Loan classified as Level 2.

The public Senior Notes are traded in an active secondary market and valued using quoted prices.

The fair value of the Term Loan is based on the net present value of each interest and principle payment calculated utilizing an interest rate derived from an estimated yield curve obtained from independent pricing sources for similar types of term loan borrowing arrangements.

Derivative Financial Instruments.

(C) Long-term debt is composed of public Senior Notes, which are traded in an active secondary market and valued using quoted prices.

For additional information, see Note 8:

Debt and Financing Arrangements.

During the second quarter of 2024, the disposal groups for the Sahale Snacks and Canada condiment businesses were classified as held for sale, and as a result, an estimated pre-tax loss of $ 6.8 and $ 5.2 were recognized within other expense (income) – net in the Condensed Statement of Consolidated Income, respectively.

Upon close of the transactions during the third quarter of 2024, the pre-tax losses were adjusted to $ 6.7 and $ 5.7 , respectively, reflecting the fair values of the disposal groups as of the transaction dates.

We utilized Level 3 inputs based on management’s best estimates and assumptions to estimate the fair value of the disposal groups.

Furthermore, t he 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.

For additional information, see Note 4:

Divestitures and Note 8:

Goodwill and Other Intangible Assets.

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.

For additional information, see Note 3:

We lease certain warehouses, manufacturing facilities, office space, equipment, and vehicles, primarily through operating lease agreements.

12 unchanged sentences

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

January 31, 2024 April 30, 2023

July 31, 2024 April 30, 2024

Operating lease right-of-use assets $ 164.5 $ 174.6

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Machinery and equipment

$ 23.6 $ 18.7

Accumulated depreciation

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The following table summarizes the components of lease expense.

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

2024 2023 2024 2023

Three Months Ended July 31,

Operating lease cost $ 12.5 $ 12.7

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Interest on lease liabilities

0.1 0.1 0.4 0.1

Variable lease cost 6.5 6.1

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

Nine Months Ended January 31,

Three Months Ended July 31,

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

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

January 31, 2024

July 31, 2024

Operating Leases Finance Leases

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

January 31, 2024 April 30, 2023

July 31, 2024 April 30, 2024

Weighted average remaining lease term (in years):

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Finance leases

The effective income tax rates for the three months ended January 31, 2024 and 2023, were 38.4 and 24.3 percent, respectively, and for the nine months ended January 31, 2024 and 2023, were 27.0 and 23.9 percent, respectively.

During the three and nine months ended January 31, 2024, the effective income tax rates varied from the U.S.

statutory income tax rate of 21.0 percent primarily due to state income taxes and unfavorable tax impacts associated with the acquisition of Hostess Brands.

The effective income tax rate for the nine months ended January 31, 2024, also included a favorable tax impact of the divested Sahale Snacks business.

During the three and nine months ended January 31, 2023, the effective income tax rate varied from the U.S.

The effective income tax rates for the three months ended July 31, 2024 and 2023, were 24.8 and 23.0 percent, respectively.

The increase in the effective income tax rate was primarily due to a discrete unfavorable impact of share-based compensation, as compared to the prior year.

During the three months ended July 31, 2024 and 2023, the effective income tax rates varied from the U.S.

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

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

During the three months ended January 31, 2024, the IRS concluded the CAP examinations for the 2019 through 2022 tax years.

Within the next 12 months, it is reasonably possible that we could decrease our unrecognized tax benefits by an estimated $ 1.6 , primarily as a result of the expiration of statute of limitation periods.

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 recognized as a financing outflow in the Condensed Statement of Consolidated Cash Flows for the nine months ended January 31, 2024.

Accumulated Other Comprehensive Income (Loss)

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Income tax benefit (expense) — ( 0.8 ) ( 0.1 ) — ( 0.9 )

Balance at January 31, 2024 $ ( 31.9 ) $ ( 145.4 ) $ ( 51.7 ) $ 1.6 $ ( 227.4 )

Balance at July 31, 2024 $ ( 39.8 ) $ ( 140.5 ) $ ( 53.0 ) $ 1.1 $ ( 232.2 )

Adjustment Net Gains (Losses)

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Income tax benefit (expense) — ( 0.8 ) ( 0.1 ) 0.1 ( 0.8 )

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

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

Balance at July 31, 2023 $ ( 26.9 ) $ ( 151.0 ) $ ( 52.3 ) $ 1.2 $ ( 229.0 )

(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 – net.

For additional information, see Note 10:

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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, 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 January 31, 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 U.S.

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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 January 31, 2024, and the likelihood of loss is not considered probable or reasonably estimable.

Accordingly, no loss contingency has been recorded for these matters as of July 31, 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.

Product Recall:

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.

We partnered with retailers to restock Jif peanut butter products during the first quarter of 2023 and returned to normal levels at the end of 2023.

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.

Approximately $ 20.0 and $ 110.0 of direct costs were recognized during the three and nine months ended January 31, 2023, respectively, and no significant direct costs were recognized during 2024.

Further, the U.S.

Food and Drug Administration (the “FDA”) issued a Warning Letter on January 24, 2023, following an inspection of our Lexington facility completed in June 2022 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.

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 January 31, 2024, and the likelihood of loss is not considered probable or reasonably estimable.

We are defendants in ongoing consumer litigation associated with a voluntary recall of select Jif peanut butter products initiated in May 2022.

The outcome and financial impact of this litigation cannot be predicted at this time.

Accordingly, no loss contingency has been recorded for these matters as of July 31, 2024, and the likelihood of loss is not considered probable or reasonably estimable.

Voortman Contingency:

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

Per agreement with the RWI insurers, under no circumstances would we be required to return the Proceeds.

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 claims in the Ontario (Canada) Superior Court of Justice (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.

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The following table sets forth common share information.

January 31, 2024 April 30, 2023

July 31, 2024 April 30, 2024

Common shares authorized 300.0 300.0

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Repurchase Program:

During the three months ended July 31, 2024, we did not repurchase any common shares under a repurchase plan authorized by the Board of Directors (the “Board”).

As of July 31, 2024, approximately 1.1 million common shares remain available for repurchase pursuant to the Board’s authorizations.

On March 2, 2023, we entered into a share repurchase plan (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.

During the nine months ended January 31, 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.

During the three months ended July 31, 2023, we repurchased approximately 2.4 million common shares for $ 362.8 under the 10b5-1 Plan.

In accordance with The Inflation Reduction Act of 2022, H.R.

1 unchanged sentence

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 Condensed Consolidated Balance Sheet.

During the nine months ended January 31, 2023, we did not repurchase any common shares under a repurchase plan authorized by the Board.

All other share repurchases during the nine months ended January 31, 2024 and 2023, consisted of shares repurchased from stock plan recipients in lieu of cash payments.

All other share repurchases during the three months ended July 31, 2024 and 2023, consisted of shares repurchased from stock plan recipients in lieu of cash payments.

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 3:

Supplier Financing Program

As part of ongoing efforts to maximize working capital, we work with our suppliers to optimize our terms and conditions, which includes the extension of payment terms.

Payment terms with our suppliers, which we deem to be commercially reasonable, range from 0 to 180 days.

We have an agreement with a third-party administrator to provide an accounts payable tracking system and facilitate a supplier financing program which allows participating suppliers the ability to monitor and voluntarily elect to sell our payment obligations to a designated third-party financial institution.

Participating suppliers can sell one or more of our payment obligations at their sole discretion, and our rights and obligations to our suppliers are not impacted.

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

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.

The payment of these obligations is included in cash provided by operating activities in the Condensed Statements of Consolidated Cash Flows.

Included in accounts payable in the Condensed Consolidated Balance Sheets as of July 31, 2024, and April 30, 2024, $ 366.8 and $ 384.9 of our outstanding payment obligations, respectively, that were elected and sold to a financial institution by participating suppliers.

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

What changed 10-Q

Item 1. Financial Statements