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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For The Quarterly Period EndedCommission File Number
January 28, 20241-3822
Campbell_s_Script_red_RGB.jpg

CAMPBELL SOUP COMPANY
New Jersey21-0419870
State of IncorporationI.R.S. Employer Identification No.
1 Campbell Place
Camden, New Jersey 08103-1799
Principal Executive Offices

Telephone Number: (856) 342-4800

Securities registered pursuant to Section 12(b) of the Act:
Title of Each ClassTrading SymbolName of Each Exchange on Which Registered
Capital Stock, par value $.0375CPBNew York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  ☑ Yes ☐ No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  ☑ Yes  ☐ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer
☑
Accelerated filer☐
Non-accelerated filer☐Smaller reporting company☐
Emerging growth company☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☑ No

There were 298,102,601 shares of capital stock outstanding as of February 29, 2024.





TABLE OF CONTENTS

2





PART I - FINANCIAL INFORMATION

Item 1. Financial Statements
CAMPBELL SOUP COMPANY
Consolidated Statements of Earnings
(unaudited)
(millions, except per share amounts)
 
Three Months EndedSix Months Ended
January 28, 2024January 29, 2023January 28, 2024January 29, 2023
Net sales$2,456 $2,485 $4,974 $5,060 
Costs and expenses
Cost of products sold1,680 1,726 3,410 3,467 
Marketing and selling expenses217 217 439 418 
Administrative expenses189 162 347 320 
Research and development expenses25 21 49 42 
Other expenses / (income)26 — 50 18 
Restructuring charges2 9 4 9 
Total costs and expenses2,139 2,135 4,299 4,274 
Earnings before interest and taxes317 350 675 786 
Interest expense46 45 95 92 
Interest income— — 1 1 
Earnings before taxes271 305 581 695 
Taxes on earnings68 73 144 166 
Net earnings203 232 437 529 
Less: Net earnings (loss) attributable to noncontrolling interests— — — — 
Net earnings attributable to Campbell Soup Company$203 $232 $437 $529 
Per Share — Basic
Net earnings attributable to Campbell Soup Company$.68 $.78 $1.47 $1.77 
Weighted average shares outstanding — basic298 299 298 299 
Per Share — Assuming Dilution
Net earnings attributable to Campbell Soup Company$.68 $.77 $1.46 $1.76 
Weighted average shares outstanding — assuming dilution299 301 299 301 
See accompanying Notes to Consolidated Financial Statements.
3




CAMPBELL SOUP COMPANY
Consolidated Statements of Comprehensive Income
(unaudited)
(millions)
Three Months Ended
January 28, 2024January 29, 2023
Pre-tax amountTax benefit (expense)After-tax amountPre-tax amountTax benefit (expense)After-tax amount
Net earnings (loss)$203 $232 
Other comprehensive income (loss):
Foreign currency translation:
Foreign currency translation adjustments$6 $— 6 $3 $— 3 
Cash-flow hedges:
Unrealized gains (losses) arising during the period(28)6 (22)(2)1 (1)
Reclassification adjustment for losses (gains) included in net earnings(1)— (1)(2)— (2)
Other comprehensive income (loss)$(23)$6 (17)$(1)$1 — 
Total comprehensive income (loss)$186 $232 
Total comprehensive income (loss) attributable to noncontrolling interests— — 
Total comprehensive income (loss) attributable to Campbell Soup Company$186 $232 
Six Months Ended
January 28, 2024January 29, 2023
Pre-tax amountTax benefit (expense)After-tax amountPre-tax amountTax benefit (expense)After-tax amount
Net earnings (loss)$437 $529 
Other comprehensive income (loss):
Foreign currency translation:
Foreign currency translation adjustments$(3)$— (3)$(5)$— (5)
Cash-flow hedges:
Unrealized gains (losses) arising during the period(20)4 (16)5 (1)4 
Reclassification adjustment for losses (gains) included in net earnings(1)— (1)(6)1 (5)
Other comprehensive income (loss) $(24)$4 (20)$(6)$— (6)
Total comprehensive income (loss)$417 $523 
Total comprehensive income (loss) attributable to noncontrolling interests— — 
Total comprehensive income (loss) attributable to Campbell Soup Company$417 $523 
See accompanying Notes to Consolidated Financial Statements.
4




CAMPBELL SOUP COMPANY
Consolidated Balance Sheets
(unaudited)
(millions, except per share amounts)
January 28, 2024July 30, 2023
Current assets
Cash and cash equivalents$169 $189 
Accounts receivable, net635 529 
Inventories1,188 1,291 
Other current assets78 52 
Total current assets2,070 2,061 
Plant assets, net of depreciation2,470 2,398 
Goodwill3,963 3,965 
Other intangible assets, net of amortization3,108 3,142 
Other assets495 492 
Total assets$12,106 $12,058 
Current liabilities
Short-term borrowings$14 $191 
Accounts payable1,305 1,306 
Accrued liabilities615 592 
Dividends payable113 113 
Accrued income taxes9 20 
Total current liabilities2,056 2,222 
Long-term debt4,506 4,498 
Deferred taxes1,068 1,067 
Other liabilities625 608 
Total liabilities8,255 8,395 
Commitments and contingencies
Campbell Soup Company shareholders' equity
Preferred stock; authorized 40 shares; none issued
— — 
Capital stock, $.0375 par value; authorized 560 shares; issued 323 shares
12 12 
Additional paid-in capital407 420 
Earnings retained in the business4,665 4,451 
Capital stock in treasury, at cost(1,212)(1,219)
Accumulated other comprehensive income (loss)(23)(3)
Total Campbell Soup Company shareholders' equity3,849 3,661 
Noncontrolling interests2 2 
Total equity3,851 3,663 
Total liabilities and equity$12,106 $12,058 
See accompanying Notes to Consolidated Financial Statements.

5

CAMPBELL SOUP COMPANY
Consolidated Statements of Cash Flows
(unaudited)
(millions)
Six Months Ended
 January 28, 2024January 29, 2023
Cash flows from operating activities:
Net earnings$437 $529 
Adjustments to reconcile net earnings to operating cash flow
Restructuring charges4 9 
Stock-based compensation36 31 
Pension and postretirement benefit expense3 3 
Depreciation and amortization192 176 
Deferred income taxes6 2 
Other76 51 
Changes in working capital
Accounts receivable(116)(63)
Inventories102 (6)
Other current assets(22)(12)
Accounts payable and accrued liabilities(17)38 
Other(17)(26)
Net cash provided by operating activities684 732 
Cash flows from investing activities:
Purchases of plant assets(263)(155)
Purchases of route businesses(6)(3)
Sales of route businesses13 — 
Net cash used in investing activities(256)(158)
Cash flows from financing activities:
Short-term borrowings, including commercial paper1,416 1,389 
Short-term repayments, including commercial paper(1,596)(1,626)
Dividends paid(224)(226)
Treasury stock purchases(29)(66)
Treasury stock issuances— 22 
Payments related to tax withholding for stock-based compensation(14)(18)
Other(1)— 
Net cash used in financing activities(448)(525)
Effect of exchange rate changes on cash— — 
Net change in cash and cash equivalents(20)49 
Cash and cash equivalents — beginning of period189 109 
Cash and cash equivalents — end of period$169 $158 
See accompanying Notes to Consolidated Financial Statements.
6

CAMPBELL SOUP COMPANY
Consolidated Statements of Equity
(unaudited)
(millions, except per share amounts)
 Campbell Soup Company Shareholders’ Equity  
 Capital StockAdditional Paid-in
Capital		Earnings Retained in the
Business		Accumulated Other Comprehensive
Income (Loss)		Noncontrolling
Interests		 
 IssuedIn TreasuryTotal
Equity
 SharesAmountSharesAmount
Balance at October 30, 2022
323 $12 (24)$(1,140)$375 $4,224 $(4)$2 $3,469 
Net earnings (loss)232 — 232 
Other comprehensive income (loss)— — — 
Dividends ($.37 per share)
(112)(112)
Treasury stock purchased— (25)(25)
Treasury stock issued under management incentive and stock option plans  — 21 16 — 37 
Balance at January 29, 2023
323 $12 (24)$(1,144)$391 $4,344 $(4)$2 $3,601 
Balance at July 31, 2022
323 $12 (24)$(1,138)$415 $4,040 $2 $2 $3,333 
Net earnings (loss)529 — 529 
Other comprehensive income (loss)(6)— (6)
Dividends ($.74 per share)
(225)(225)
Treasury stock purchased(1)(66)(66)
Treasury stock issued under management incentive and stock option plans  1 60 (24)—   36 
Balance at January 29, 2023323 $12 (24)$(1,144)$391 $4,344 $(4)$2 $3,601 
Balance at October 29, 2023
323 $12 (25)$(1,212)$388 $4,573 $(6)$2 $3,757 
Net earnings (loss)203 — 203 
Other comprehensive income (loss)(17)— (17)
Dividends ($.37 per share)
(111)(111)
Treasury stock purchased— (1)(1)
Treasury stock issued under management incentive and stock option plans— 1 19 — 20 
Balance at January 28, 2024
323 $12 (25)$(1,212)$407 $4,665 $(23)$2 $3,851 
Balance at July 30, 2023
323 $12 (25)$(1,219)$420 $4,451 $(3)$2 $3,663 
Net earnings (loss)437 — 437 
Other comprehensive income (loss)(20)— (20)
Dividends ($.74 per share)
(223)(223)
Treasury stock purchased(1)(29)(29)
Treasury stock issued under management incentive and stock option plans1 36 (13)— 23 
Balance at January 28, 2024
323 $12 (25)$(1,212)$407 $4,665 $(23)$2 $3,851 
See accompanying Notes to Consolidated Financial Statements.
7

Notes to Consolidated Financial Statements
(unaudited)

1. Basis of Presentation and Significant Accounting Policies
In this Form 10-Q, unless otherwise stated, the terms "we," "us," "our" and the "company" refer to Campbell Soup Company and its consolidated subsidiaries.
The financial statements reflect all adjustments which are, in our opinion, necessary for a fair statement of the results of operations, financial position and cash flows for the indicated periods. The accounting policies we used in preparing these financial statements are substantially consistent with those we applied in our Annual Report on Form 10-K for the year ended July 30, 2023.
The results for the period are not necessarily indicative of the results to be expected for other interim periods or the full year. Our fiscal year ends on the Sunday nearest July 31, which is July 28, 2024.
2. Recent Accounting Pronouncements
In September 2022, the Financial Accounting Standards Board (FASB) issued guidance that enhances the transparency of supplier finance programs by requiring disclosure of the key terms of these programs and a related rollforward of these obligations to understand the effect on working capital, liquidity and cash flows. The guidance is effective for fiscal years beginning after December 15, 2022, including interim periods in those fiscal years, except for the rollforward requirement, which is effective for fiscal years beginning after December 15, 2023. Early adoption is permitted. We adopted the guidance in the fourth quarter of 2023, with the exception of the rollforward information. The adoption did not have a material impact on our consolidated financial statements. See Note 16 for additional information.
In November 2023, the FASB issued guidance to improve reportable segment disclosures, primarily through enhanced disclosures about significant segment expenses. In addition, the guidance enhances interim disclosure requirements, clarifies circumstances in which an entity can disclose multiple segment measures of profit or loss, provides new segment disclosure requirements for entities with a single reportable segment and contains other disclosure requirements. The purpose of the guidance is to enable investors to better understand an entity’s overall performance and assess potential future cash flows. The guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. We are currently evaluating the impact that the new guidance will have on our consolidated financial statements.
In December 2023, the FASB issued guidance to improve income tax disclosures by requiring disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid. The guidance is effective for annual periods beginning after December 15, 2024. The guidance should be applied on a prospective basis with the option to apply the standard retrospectively. Early adoption is permitted. We are currently evaluating the impact that the new guidance will have on our consolidated financial statements.
8

3. Accumulated Other Comprehensive Income (Loss)
The components of Accumulated other comprehensive income (loss) consisted of the following:
(Millions)
Foreign Currency Translation Adjustments(1)
Cash-Flow Hedges(2)
Pension and Postretirement Benefit Plan Adjustments(3)
Total Accumulated Comprehensive Income (Loss)
Balance at July 31, 2022
$— $— $2 $2 
Other comprehensive income (loss) before reclassifications(5)4 — (1)
Losses (gains) reclassified from accumulated other comprehensive income (loss)— (5)— (5)
Net current-period other comprehensive income (loss)(5)(1)— (6)
Balance at January 29, 2023
$(5)$(1)$2 $(4)
Balance at July 30, 2023
$(1)$(4)$2 $(3)
Other comprehensive income (loss) before reclassifications(3)(16)— (19)
Losses (gains) reclassified from accumulated other comprehensive income (loss)
— (1)— (1)
Net current-period other comprehensive income (loss)(3)(17)— (20)
Balance at January 28, 2024
$(4)$(21)$2 $(23)
_____________________________________
(1)Included no tax as of January 28, 2024, July 30, 2023, January 29, 2023 and July 31, 2022.
(2)Included a tax benefit of $5 million as of January 28, 2024, a tax benefit of $1 million as of July 30, 2023, and no tax as of January 29, 2023 and July 31, 2022.
(3)Included tax expense of $1 million as of January 28, 2024, July 30, 2023, January 29, 2023 and July 31, 2022.
Amounts related to noncontrolling interests were not material.
The amounts reclassified from Accumulated other comprehensive income (loss) consisted of the following:
Three Months EndedSix Months Ended
(Millions)January 28, 2024January 29, 2023January 28, 2024January 29, 2023Location of Loss (Gain) Recognized in Earnings
Losses (gains) on cash-flow hedges:
Commodity contracts$— $— $— $(3)Cost of products sold
Foreign exchange forward contracts(2)(3)(2)(4)Cost of products sold
Forward starting interest rate swaps1 1 1 1 Interest expense
Total before tax(1)(2)(1)(6)
Tax expense (benefit)— — — 1 
Loss (gain), net of tax$(1)$(2)$(1)$(5)
4. Goodwill and Intangible Assets
Goodwill
The following table shows the changes in the carrying amount of goodwill:
(Millions)Meals & BeveragesSnacksTotal
Net balance at July 30, 2023
$990 $2,975 $3,965 
Foreign currency translation adjustment(2)— (2)
Net balance at January 28, 2024
$988 $2,975 $3,963 

9

Intangible Assets
The following table summarizes balance sheet information for intangible assets, excluding goodwill:
January 28, 2024July 30, 2023
(Millions)CostAccumulated AmortizationNetCostAccumulated AmortizationNet
Amortizable intangible assets
Customer relationships$830 $(263)$567 $830 $(229)$601 
Indefinite-lived trademarks
Snyder's of Hanover$620 $620 
Lance350 350 
Kettle Brand318 318 
Pace292 292 
Pacific Foods280 280 
Cape Cod187 187 
Various other Snacks(1)
494 494 
Total indefinite-lived trademarks$2,541 $2,541 
Total net intangible assets$3,108 $3,142 
____________________________________
(1)Associated with the acquisition of Snyder's-Lance, Inc. (Snyder's-Lance).
Amortization expense was $34 million for the six-month period ended January 28, 2024, and $21 million for the six-month period ended January 29, 2023. The increase in amortization expense in 2024 included $14 million of accelerated amortization expense on customer relationships, which began in the fourth quarter of 2023 due to the loss of certain contract manufacturing customers. As of January 28, 2024, amortizable intangible assets had a weighted-average remaining useful life of 14 years. Amortization expense is estimated to be approximately $68 million in 2024, $59 million in 2025 and $34 million per year for the following three years.
As of our 2023 annual impairment testing, indefinite-lived trademarks with approximately 10% or less of excess coverage of fair value over carrying value had an aggregate carrying value of $434 million and included Pacific Foods and certain other Snacks trademarks.
The estimates of future cash flows used in determining the fair value of goodwill and intangible assets involve significant management judgment and are based upon assumptions about expected future operating performance, economic conditions, market conditions and cost of capital. Inherent in estimating the future cash flows are uncertainties beyond our control, such as changes in capital markets. The actual cash flows could differ materially from management’s estimates due to changes in business conditions, operating performance and economic conditions.
5. Segment Information
Our reportable segments are as follows:
•Meals & Beverages, which consists of our soup, simple meals and beverages products in retail and foodservice in the U.S. and Canada. The segment includes the following products: Campbell’s condensed and ready-to-serve soups; Swanson broth and stocks; Pacific Foods broth, soups and non-dairy beverages; Prego pasta sauces; Pace Mexican sauces; Campbell’s gravies, pasta, beans and dinner sauces; Swanson canned poultry; V8 juices and beverages; and Campbell’s tomato juice. The segment also includes snacking products in foodservice and Canada; and
•Snacks, which consists of Pepperidge Farm cookies*, crackers, fresh bakery and frozen products, including Goldfish crackers*, Snyder’s of Hanover pretzels*, Lance sandwich crackers*, Cape Cod potato chips*, Kettle Brand potato chips*, Late July snacks*, Snack Factory pretzel crisps*, Pop Secret popcorn, and other snacking products in retail in the U.S. We refer to the * brands as our "power brands." The segment also includes the retail business in Latin America. The segment included the results of our Emerald nuts business, which was sold on May 30, 2023.
We evaluate segment performance before interest, taxes and costs associated with restructuring activities and impairment charges. Unrealized gains and losses on outstanding undesignated commodity hedging activities are excluded from segment operating earnings and are recorded in Corporate as these open positions represent hedges of future purchases. Upon closing of the contracts, the realized gain or loss is transferred to segment operating earnings, which allows the segments to reflect the economic effects of the hedge without exposure to quarterly volatility of unrealized gains and losses. Only the service cost
10

component of pension and postretirement expense is allocated to segments. All other components of expense, including interest cost, expected return on assets, amortization of prior service credits and recognized actuarial gains and losses are reflected in Corporate and not included in segment operating results. Asset information by segment is not discretely maintained for internal reporting or used in evaluating performance.
Three Months EndedSix Months Ended
(Millions)January 28, 2024January 29, 2023January 28, 2024January 29, 2023
Net sales
Meals & Beverages$1,382 $1,408 $2,786 $2,863 
Snacks1,074 1,077 2,188 2,197 
Total$2,456 $2,485 $4,974 $5,060 
Three Months EndedSix Months Ended
(Millions)January 28, 2024January 29, 2023January 28, 2024January 29, 2023
Earnings before interest and taxes
Meals & Beverages$247 $249 $534 $580 
Snacks161 150 322 303 
Corporate income (expense)(1)
(89)(40)(177)(88)
Restructuring charges(2)
(2)(9)(4)(9)
Total$317 $350 $675 $786 
_______________________________________
(1)Represents unallocated items. Costs related to the cost savings initiatives were $34 million and $45 million in the three- and six-month periods ended January 28, 2024, and $5 million and $8 million in the three- and six-month periods ended January 29, 2023, respectively. Unrealized mark-to-market adjustments on outstanding undesignated commodity hedges were gains of $7 million and losses of $8 million in the three- and six-month periods ended January 28, 2024, and losses of $4 million in the three-month period ended January 29, 2023, respectively. Accelerated amortization expense related to customer relationship intangible assets was $7 million and $14 million in the three- and six-month periods ended January 28, 2024, respectively. Costs of $10 million and $19 million associated with the pending acquisition of Sovos Brands, Inc. (Sovos Brands) were included in the three- and six-month periods ended January 28, 2024, respectively. Litigation expenses related to the Plum baby food and snacks business of $1 million and $3 million were included in the three- and six-month periods ended January 28, 2024, respectively. Costs of $3 million related to a cybersecurity incident were included in the six-month period ended January 28, 2024. There were pension actuarial gains of $6 million and losses of $9 million in the three- and six-month periods ended January 29, 2023, respectively.
(2)See Note 6 for additional information.
Our net sales based on product categories are as follows:
Three Months EndedSix Months Ended
(Millions)January 28, 2024January 29, 2023January 28, 2024January 29, 2023
Net sales
Soup$841 $852 $1,701 $1,745 
Snacks1,127 1,121 2,300 2,294 
Other simple meals317 321 619 636 
Beverages171 191 354 385 
Total$2,456 $2,485 $4,974 $5,060 
Soup includes various soup, broths and stock products. Snacks include cookies, pretzels, crackers, popcorn, potato chips, tortilla chips and other salty snacks and baked products. Other simple meals include sauces, gravies, pasta, beans and canned poultry. Beverages include V8 juices and beverages, Campbell’s tomato juice and Pacific Foods non-dairy beverages.
11

6. Restructuring Charges, Cost Savings Initiatives and Other Optimization Initiatives
Multi-year Cost Savings Initiatives and Snyder's-Lance Cost Transformation Program and Integration
Continuing Operations
Beginning in fiscal 2015, we implemented initiatives to reduce costs and to streamline our organizational structure.
Over the years, we expanded these initiatives by continuing to optimize our supply chain and manufacturing networks, as well as our information technology infrastructure.
On March 26, 2018, we completed the acquisition of Snyder's-Lance. Prior to the acquisition, Snyder's-Lance launched a cost transformation program following a comprehensive review of its operations with the goal of significantly improving its financial performance. We continued to implement this program and identified opportunities for additional cost synergies as we integrated Snyder's-Lance.
In 2022, we expanded these initiatives as we continue to pursue cost savings by further optimizing our supply chain and manufacturing network and through effective cost management. In the second quarter of 2023, we announced plans to consolidate our Snacks offices in Charlotte, North Carolina, and Norwalk, Connecticut, into our headquarters in Camden, New Jersey. Cost estimates for these expanded initiatives, as well as timing for certain activities, are continuing to be developed.
A summary of the pre-tax charges recognized in the Consolidated Statements of Earnings related to these initiatives is as follows:
Three Months EndedSix Months Ended
(Millions)January 28, 2024January 29, 2023January 28, 2024January 29, 2023
Recognized as of January 28, 2024
Restructuring charges$2 $9 $4 $9 $284 
Administrative expenses29 5 34 8 417 
Cost of products sold3 — 6 — 108 
Marketing and selling expenses1 — 3 — 22 
Research and development expenses1 — 2 — 9 
Total pre-tax charges$36 $14 $49 $17 $840 
A summary of the pre-tax costs associated with the initiatives is as follows:
(Millions)
Recognized as of January 28, 2024
Severance pay and benefits
$244 
Asset impairment/accelerated depreciation116 
Implementation costs and other related costs
480 
Total$840 
The total estimated pre-tax costs for actions that have been identified are approximately $890 million to $915 million and we expect to incur substantially all of the costs through 2025. These estimates will be updated as the expanded initiatives are developed.
We expect the costs for actions that have been identified to date to consist of the following: approximately $245 million to $255 million in severance pay and benefits; approximately $135 million in asset impairment and accelerated depreciation; and approximately $510 million to $525 million in implementation costs and other related costs. We expect these pre-tax costs to be associated with our segments as follows: Meals & Beverages - approximately 32%; Snacks - approximately 43%; and Corporate - approximately 25%.
Of the aggregate $890 million to $915 million of pre-tax costs identified to date, we expect approximately $715 million to $740 million will be cash expenditures. In addition, we expect to invest approximately $700 million in capital expenditures, of which we invested $492 million as of January 28, 2024. We expect to invest in substantially all of the capital expenditures through 2025. The capital expenditures primarily relate to optimization of production within our Meals & Beverages manufacturing network, a U.S. warehouse optimization project, improvement of quality, safety and cost structure across the Snyder’s-Lance manufacturing network, optimization of information technology infrastructure and applications, enhancements to our headquarters in Camden, New Jersey, implementation of our existing SAP enterprise-resource planning system for Snyder's-Lance, and optimization of the Snyder’s-Lance warehouse and distribution network.
12

A summary of the restructuring activity and related reserves at January 28, 2024, is as follows:
(Millions)Severance Pay and Benefits
Implementation Costs and Other Related
Costs(3)
Asset Impairment/Accelerated Depreciation
Other Non-Cash Exit Costs(4)
Total Charges
Accrued balance at July 30, 2023(1)
$13 
2024 charges
4 17 10 18 $49 
2024 cash payments
(5)
Accrued balance at January 28, 2024(2)
$12 
__________________________________ 
(1)Includes $7 million of severance pay and benefits recorded in Other liabilities in the Consolidated Balance Sheet.
(2)Includes $5 million of severance pay and benefits recorded in Other liabilities in the Consolidated Balance Sheet.
(3)Includes other costs recognized as incurred that are not reflected in the restructuring reserve in the Consolidated Balance Sheet. The costs are included in Administrative expenses, Cost of products sold, Marketing and selling expenses and Research and development expenses in the Consolidated Statements of Earnings.
(4)Includes non-cash costs that are not reflected in the restructuring reserve in the Consolidated Balance Sheet.
Segment operating results do not include restructuring charges, implementation costs and other related costs because we evaluate segment performance excluding such charges. A summary of the pre-tax costs associated with segments is as follows:
January 28, 2024
(Millions)Three Months EndedSix Months Ended
Costs Incurred to Date
Meals & Beverages$5 $9 $260 
Snacks24 30 375 
Corporate7 10 205 
Total$36 $49 $840 
Other Optimization Initiatives
In the second quarter of 2024, we began implementation of a new initiative to improve the effectiveness of our Snacks direct-store-delivery route-to-market network. Pursuant to this initiative we will purchase certain Pepperidge Farm and Snyder's-Lance routes where there are opportunities to unlock greater scale in select markets, combine them and sell the combined routes to independent contractor distributors. We expect to execute this program in a staggered rollout and to incur expenses of up to approximately $115 million through 2029.
7. Earnings per Share (EPS)
For the periods presented in the Consolidated Statements of Earnings, the calculations of basic EPS and EPS assuming dilution vary in that the weighted average shares outstanding assuming dilution include the incremental effect of stock options and other share-based payment awards, except when such effect would be antidilutive. The earnings per share calculation for the three- and six-month periods ended January 28, 2024 and January 29, 2023, excludes less than 1 million stock options that would have been antidilutive.
13

8. Pension and Postretirement Benefits
Components of net periodic benefit expense (income) were as follows:
Three Months EndedSix Months Ended
PensionPostretirementPensionPostretirement
(Millions)January 28, 2024January 29, 2023January 28, 2024January 29, 2023January 28, 2024January 29, 2023January 28, 2024January 29, 2023
Service cost$3 $3 $— $— $6 $7 $— $— 
Interest cost17 19 2 1 33 36 4 3 
Expected return on plan assets(20)(25)— — (40)(52)— — 
Actuarial losses (gains)— (6)— — — 9 — — 
Net periodic benefit expense (income)$— $(9)$2 $1 $(1)$— $4 $3 
The actuarial gains and losses for the three- and six-month periods ended January 29, 2023 resulted from the remeasurement of certain U.S. pension plans due to lump sum distributions that exceeded or were expected to exceed service and interest costs resulting in settlement accounting for these plans. The actuarial gains recognized for the three-month period ended January 29, 2023 were primarily due to increases in discount rates used to determine the benefit obligation, partially offset by losses on plan assets. The actuarial losses recognized for the six-month period ended January 29, 2023 were primarily due to losses on plan assets, partially offset by increases in discount rates used to determine the benefit obligation.
9. Leases
The components of lease costs were as follows:
Three Months EndedSix Months Ended
(Millions)January 28, 2024January 29, 2023January 28, 2024January 29, 2023
Operating lease cost(1)
$24 $20 $48 $40 
Finance lease - amortization of right-of-use (ROU) assets4 4 8 8 
Short-term lease cost16 17 35 34 
Variable lease cost49 53 102 103 
Total$93 $94 $193 $185 
__________________________________________
(1)Excludes costs associated with the cost savings initiatives described in Note 6.
The following tables summarize the lease amounts recorded in the Consolidated Balance Sheets:
Operating Leases
(Millions)Balance Sheet ClassificationJanuary 28, 2024July 30,
2023
ROU assets, netOther assets$276 $275 
Lease liabilities (current)Accrued liabilities$73 $70 
Lease liabilities (noncurrent)Other liabilities$225 $208 
Finance Leases
(Millions)Balance Sheet ClassificationJanuary 28, 2024July 30,
2023
ROU assets, netPlant assets, net of depreciation$33 $27 
Lease liabilities (current)Short-term borrowings$14 $13 
Lease liabilities (noncurrent)Long-term debt$21 $15 
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The following table summarizes cash flow and other information related to leases:
Six Months Ended
(Millions)January 28, 2024January 29, 2023
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases$46 $40 
Financing cash flows from finance leases$8 $8 
ROU assets obtained in exchange for lease obligations:
Operating leases$63 $30 
Finance leases
$15 $1 
10. Short-term Borrowings and Long-term Debt
On October 10, 2023, we entered into a delayed single draw term loan credit agreement (the 2024 DDTL Credit Agreement) totaling up to $2 billion scheduled to mature on October 8, 2024. Loans under the 2024 DDTL Credit Agreement bear interest at the rates specified in the 2024 DDTL Credit Agreement, which vary based on the type of loan and certain other conditions. The 2024 DDTL Credit Agreement contains customary representations and warranties, affirmative and negative covenants, including a financial covenant with respect to a minimum consolidated interest coverage ratio of consolidated adjusted EBITDA to consolidated interest expense (as each is defined in the 2024 DDTL Credit Agreement) of not less than 3.25:1.00, and events of default for credit facilities of this type. The proceeds of the loans under the 2024 DDTL Credit Agreement can only be used in connection with the acquisition of Sovos Brands. The 2024 DDTL Credit Agreement remained unused at January 28, 2024.
11. Financial Instruments
The principal market risks to which we are exposed are changes in foreign currency exchange rates, interest rates and commodity prices. In addition, we are exposed to price changes related to certain deferred compensation obligations. In order to manage these exposures, we follow established risk management policies and procedures, including the use of derivative contracts such as swaps, rate locks, options, forwards and commodity futures. We enter into these derivative contracts for periods consistent with the related underlying exposures, and the contracts do not constitute positions independent of those exposures. We do not enter into derivative contracts for speculative purposes and do not use leveraged instruments. Our derivative programs include instruments that qualify for hedge accounting treatment and instruments that are not designated as accounting hedges.
Concentration of Credit Risk
We are exposed to the risk that counterparties to derivative contracts will fail to meet their contractual obligations. To mitigate counterparty credit risk, we enter into contracts only with carefully selected, leading, credit-worthy financial institutions, and distribute contracts among several financial institutions to reduce the concentration of credit risk. We did not have credit risk-related contingent features in our derivative instruments as of January 28, 2024, or July 30, 2023.
We are also exposed to credit risk from our customers. During 2023, our largest customer accounted for approximately 22% of consolidated net sales. Our five largest customers accounted for approximately 47% of our consolidated net sales in 2023.
We closely monitor credit risk associated with counterparties and customers.
Foreign Currency Exchange Risk
We are exposed to foreign currency exchange risk, primarily the Canadian dollar, related to intercompany transactions and third-party transactions. We utilize foreign exchange forward purchase and sale contracts to hedge these exposures. The contracts are either designated as cash-flow hedging instruments or are undesignated. We hedge portions of our forecasted foreign currency transaction exposure with foreign exchange forward contracts for periods typically up to 18 months. The notional amount of foreign exchange forward contracts accounted for as cash-flow hedges was $75 million as of January 28, 2024, and $125 million as of July 30, 2023. Changes in the fair value on the portion of the derivative included in the assessment of hedge effectiveness of cash-flow hedges are recorded in other comprehensive income (loss), until earnings are affected by the variability of cash flows. For derivatives that are designated and qualify as hedging instruments, the initial fair value of hedge components excluded from the assessment of effectiveness is recognized in earnings under a systematic and rational method over the life of the hedging instrument and is presented in the same statement of earnings line item as the earnings effect of the hedged item. Any difference between the change in the fair value of the hedge components excluded from the assessment of effectiveness and the amounts recognized in earnings is recorded as a component of other comprehensive
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income (loss). The notional amount of foreign exchange forward contracts that are not designated as accounting hedges was $22 million as of January 28, 2024, and $15 million as of July 30, 2023.
Interest Rate Risk
We manage our exposure to changes in interest rates by optimizing the use of variable-rate and fixed-rate debt. From time to time, we may use interest rate swaps in order to maintain our variable-to-total debt ratio within targeted guidelines. We manage our exposure to interest volatility on future debt issuances by entering into forward starting interest rate swaps or treasury lock contracts to hedge the rate on the interest payments related to the anticipated debt issuance. The forward starting interest rate swaps or treasury lock contracts are either designated as cash-flow hedging instruments or are undesignated. Changes in the fair value on the portion of the derivative included in the assessment of hedge effectiveness of cash-flow hedges are recorded in other comprehensive income (loss), and reclassified into Interest expense over the life of the debt. The change in fair value on undesignated instruments is recorded in Interest expense. The notional amount of forward starting interest rate swaps accounted for as cash-flow hedges was $1 billion as of January 28, 2024. These forward starting interest rate swaps related to an anticipated debt issuance and mature in January 2025. There were no forward starting interest rate swaps or treasury lock contracts outstanding as of July 30, 2023.
Commodity Price Risk
We principally use a combination of purchase orders and various short- and long-term supply arrangements in connection with the purchase of raw materials, including certain commodities and agricultural products. We also enter into commodity futures, options and swap contracts to reduce the volatility of price fluctuations of wheat, diesel fuel, natural gas, soybean oil, aluminum, cocoa, corn, soybean meal and butter. Commodity futures, options and swap contracts are either designated as cash-flow hedging instruments or are undesignated. We hedge a portion of commodity requirements for periods typically up to 18 months. There were no commodity contracts designated as cash-flow hedges as of January 28, 2024, or July 30, 2023. The notional amount of commodity contracts not designated as accounting hedges was $161 million as of January 28, 2024, and $194 million as of July 30, 2023. The change in fair value on undesignated instruments is recorded in Cost of products sold.
We have a supply contract under which prices for certain raw materials are established based on anticipated volume requirements over a twelve-month period. Certain prices under the contract are based in part on certain component parts of the raw materials that are in excess of our needs or not required for our operations, thereby creating an embedded derivative requiring bifurcation. We net settle amounts due under the contract with our counterparty. The notional amount was $85 million as of January 28, 2024, and $47 million as of July 30, 2023. The change in fair value on the embedded derivative is recorded in Cost of products sold.
Deferred Compensation Obligation Price Risk
We enter into swap contracts which hedge a portion of exposures relating to the total return of certain deferred compensation obligations. These contracts are not designated as hedges for accounting purposes. Unrealized gains (losses) and settlements are included in Administrative expenses in the Consolidated Statements of Earnings. We enter into these contracts for periods typically not exceeding 12 months. The notional amounts of the contracts were $42 million as of January 28, 2024, and July 30, 2023.
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The following table summarizes the fair value of derivative instruments on a gross basis as recorded in the Consolidated Balance Sheets as of January 28, 2024, and July 30, 2023:
(Millions)Balance Sheet ClassificationJanuary 28, 2024July 30,
2023
Asset Derivatives
Derivatives designated as hedges:
Foreign exchange forward contractsOther current assets$1 $— 
Total derivatives designated as hedges$1 $— 
Derivatives not designated as hedges:
Commodity contractsOther current assets$12 $15 
Deferred compensation contractsOther current assets5 4 
Commodity contractsOther assets— 1 
Total derivatives not designated as hedges$17 $20 
Total asset derivatives$18 $20 
(Millions)Balance Sheet ClassificationJanuary 28, 2024July 30,
2023
Liability Derivatives
Derivatives designated as hedges:
Foreign exchange forward contractsAccrued liabilities$— $1 
Forward starting interest rate swapsAccrued liabilities23 — 
Total derivatives designated as hedges$23 $1 
Derivatives not designated as hedges:
Commodity contractsAccrued liabilities$9 $5 
Total derivatives not designated as hedges$9 $5 
Total liability derivatives$32 $