Company
2 0 23 A N NU A L RE P OR T
1 Campbell Place, Camden, NJ 08103-1799 • investor.campbellsoupcompany.com
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Campbells_Cover.indd 1
Campbells_Cover.indd 1
10/9/23 6:51 AM
10/9/23 6:51 AM
Shareholder information
Headquarters
1 Campbell Place, Camden, NJ 08103-1799
(856) 342-4800 • (856) 342-3878 (Fax)
Stock exchange listing
New York Stock Exchange Ticker Symbol: CPB
Transfer agent and registrar
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P.O. Box 43006
Providence, RI 02940-3006
1-800-780-3203
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Suite 1700
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Philadelphia, PA 19103-7042
Shareholder information service
For the latest quarterly business results or other information requests
such as dividend dates, shareholder programs or product news, visit
investor.campbellsoupcompany.com.
Campbell’s brands
Product trademarks owned or licensed by Campbell Soup Company
and/or its subsidiaries appearing in the narrative text of this report
are italicized.
The papers utilized in the production of this Annual Report are all certified for Forest
Stewardship Council (FSC®) standards, which promote environmentally appropriate,
socially beneficial and economically viable management of the world’s forests. This
Annual Report was printed at a Landfill-free, Sustainable Green Printing partnership
(SGP)-certified facility.
Chair's message
Dividends
We have paid dividends since the company became public in 1954.
Dividends are normally paid quarterly, near the end of January, April,
July and October.
Throughout fiscal 2023, we made significant progress
in achieving our strategic goals and continuing the track
A dividend reinvestment plan is available to shareholders. For
record of growth and stability that we have built over
information about dividends or the dividend reinvestment plan, write
the last five years. Our financial performance reflects our
to Dividend Reinvestment Plan Agent, Campbell Soup Company, P.O.
ability to deliver even through a dynamic environment,
Box 43006, Providence, RI 02940-3006.
marked by generational levels of inflation. We remain
Or call: (781) 575-2723 or 1-800-780-3203
committed to balancing growth and profitability while
investing in sustaining brand momentum and fueling long-
Publications
term performance.
For copies of the Annual Report or the SEC Form 10-K or other
financial information, visit investor.campbellsoupcompany.com.
With the remarkable transformation our company has
undertaken since fiscal 2019, including navigating the
For copies of Campbell’s Corporate Responsibility Report, write to
pandemic, our business stands in a position of strength. We
Stewart Lindsay, Vice President Corporate Responsibility and
have driven renewed relevance of our Meals & Beverages
Sustainability at csr_feedback@campbells.com.
brands, a remarkable upswing in Snacks profitability fueled
by double digit in-market dollar consumption growth1 in
our power brands and transformed our supply chain to
serve our customers with best-in-class service levels.
Information sources
Inquiries regarding our products may be addressed to Campbell’s
Consumer Response Center at the Headquarters address or call
1-800-257-8443.
Our investment in our people and culture to further
enhance our capabilities in sales and marketing, coupled
Investors and financial analysts may contact Rebecca Gardy, Senior
with the strongest innovation pipelines in both divisions
Vice President, Chief Investor Relations Officer, at the Headquarters
I’ve seen in many years, will further propel our momentum.
address, via email at ir@campbells.com or call (856) 342-6081.
Moving forward, our pending acquisition of Sovos Brands,
Inc. (Sovos Brands) will add another growth platform for
the company while strengthening Meals & Beverages and
enabling the division to be a stable contributor to both
top-line growth and profitability.
Media and public relations inquiries should be directed to James
Regan, Director of External Communications, at the Headquarters
address, via email at media@campbells.com or call (856) 219-6409.
Impact. To read our Corporate Responsibility Report and learn more
about our Environmental, Social and Governance strategy, go to
campbellsoupcompany.com/our-impact.
As we look toward our next chapter, we remain committed
to continuing to deliver consistent and dependable results
that create shareholder value. On behalf of Campbell’s
Board of Directors, I would like to recognize the dedication
and hard work demonstrated by all Campbell’s employees,
especially our frontline teams that make the food people
love. I would like to express my appreciation to Mark
Clouse, Campbell’s President and Chief Executive Officer,
for his leadership, along with the Campbell's Operating
Committee for their contributions to our business. I
also want to thank my fellow board members for their
partnership and recognize John P. (JP) Bilbrey, who is
retiring from the Board of Directors later this year. Lastly,
On the web. Visit us at: campbellsoupcompany.com
I would like to extend our gratitude to our shareholders,
for company news and information.
suppliers, customers and all our stakeholders for their
continued confidence and support.
Campbell’s road ahead holds immense promise, building
Careers. To explore career opportunities, visit us at:
on our rich history. I am excited about the momentum our
careers.campbellsoupcompany.com.
business has already built and am confident the company
is well-positioned to continue to advance in the new
fiscal year. While we have come a long way over the last
five years, we are not satisfied and will continue to be
Instagram. Follow us: @CampbellSoupCo for stories
relentless in creating value for our shareholders.
about our people, company and brands.
Sincerely,
Campbells_Cover.indd 2
Campbells_Cover.indd 2
Communications concerning share transfer, lost certificates, dividends
and change of address, should be directed to Computershare Trust
Company, N.A., 1-800-780-3203.
LinkedIn. For stories about our people, company and brands, follow
us at: Linkedin.com/company/campbell-soup-company.
1: Total Circana US MULO $ Consumption latest 52 weeks ending 7/30/2023
Keith R. McLoughlin
Chair of the Board
1
10/9/23 6:51 AM
10/9/23 6:51 AM
Fiscal 2023 results
Our business performed well across our key metrics
in fiscal 2023, with results well ahead of our initial
expectations. We delivered organic net sales growth
of 10%2 and a 5% increase in adjusted earnings
before interest and taxes (EBIT)2. Full-year adjusted
earnings per share (EPS) increased 5% versus prior
year to $3.002. In addition, we delivered strong in-
market performance with dollar consumption up 8%
versus prior year and up 23% versus four years ago3.
These results reflect the effective execution and the
hard work of our entire team, fueled by sustained
consumer demand for our brands. We further
enhanced the tremendous equity of our brands,
invested in additional capacity for future growth and
strengthened our capabilities.
$9.4 Billion
Net
sales
+10% Organic net sales growth2,4
consumption3,4
+8% Dollar
$1.1B
$3.00 Adjusted
EPS2
Cash flow from
operations
+5%2, 4
Snacks
Fiscal 2023 was another fantastic year for our Snacks
division. Our strategic focus on highly differentiated
and relevant brands
leading to sustainable,
profitable growth.
is
Our power brands continued to perform well with
16% dollar consumption growth versus the prior year1 .
On a four-year basis, dollar consumption was up 38%1 ,
with all eight power brands growing double digits1
and seven power brands holding volume share5. This
underscores the strength of our portfolio and reflects
the continuation of heightened consumer demand for
snacking.
A clear example is Goldfish, an iconic snack that
is quickly approaching a billion dollars in annual
net sales, driven by our product and packaging
innovations and engaging marketing. Building on this
model, we are now driving increased innovation on
in our Snacks portfolio. Another
other brands
satisfying,
Lance. This
has
standout
convenient snack delivered share growth across
dollars, volume and units versus a year ago6.
been
Importantly, in fiscal 2023, we drove a step change
in Snacks operating margins, growing from 13.1% in
fiscal 2022 to 14.4%. This is consistent with our margin
roadmap and gives us increased confidence that we’ll
show steady improvement in fiscal 2024, when we expect
to be north of 15% and remain on the path to deliver our
long-term goals.
With best-in-class service levels, strong contributions
from innovation, effective marketing efforts that continue
to win with consumers and capital investments to meet
consumer demand, I’m confident that Snacks will continue
to deliver accelerated growth in fiscal 2024.
Meals & Beverages
Our Meals & Beverages division is home to leading brands
that offer consumers many delicious choices at a great value.
In soup, our strategic focus on Campbell’s condensed icons
and condensed cooking soups, Chunky and Pacific led to
strong performance, with all up 0.4 share points versus
the prior year7 and up 1.3 points versus four years ago7. Our
marketing and innovation efforts on these brands have
been very effective and compelling for consumers, even
among younger households. Our soup portfolio continues
to demonstrate long-term growth potential.
8
In sauces, Prego remained the share leader for over
four years and continues to resonate with consumers
seeking in-home meals the entire family loves. Pace also
performed well with share gains of 0.4 points versus the
prior year7, as the popularity of Mexican meals prepared at
home continues.
The pending acquisition of Sovos Brands will further
strengthen and diversify the division with high-growth,
premium brands. It further builds my confidence in Meals
& Beverages as a steady contributor to Campbell’s
growth and earnings.
Continued momentum
I’ve never been more confident in our strategy and
ability to grow in the next chapter of our history. Our
progress has set the stage for continued momentum in
fiscal 2024, with sustained growth and execution of our
strategic plan.
Snacks will continue to deliver accelerated growth
while expanding margins, and Meals & Beverages will be
further strengthened and diversified with the pending
acquisition of Sovos Brands, which will provide
significant growth opportunities. I am confident that this
combination, along with the consistent execution of our
proven strategy, will make our company one of the most
dependable, growth-oriented names in food.
Mark Clouse
President and Chief Executive Officer
Adding the most compelling
growth story in food
We are adding what I believe is the most compelling
growth story in food with the addition of Sovos
Brands—a stand-out business with a volume-led,
high-growth portfolio that meets several of the most
relevant consumer trends.
t
The acquisition aligns with and accelerates
Campbell’s focused strategic roadmap and has the
potential o fuel earnings growth. It gives us fast-
growing, premium brands that provide a significant
runway for growth and expansion into near-in adjacent
categories. In particular, the Rao’s™ brand has
tremendous growth opportunities across ultra-
distinctive Italian sauce and other categories making
the near- and long-term potential of this business
very
Paired with Campbell’s already
growing sauce brands, strong core soup portfolio
and premium Pacific Foods brand, upon closing, this
combination will give our Meals & Beverages division
one of the most compelling center-store grocery
portfolios in the industry.
.
attractive.
We’ve spent the last five years building one of the
in the
most consistently performing companies
industry. We have transformed our organization and
have been disciplined in getting our house in order
before taking on more acquisitions. I am confident
that we are fully ready to integrate this business and
add the fantastic next chapter of growth to Campbell’s
154-year history.
2.
These amounts are adjusted for certain items not considered to be part of the ongoing businesses.
For a reconciliation of non-GAAP financial measures, see page 12 and 13
3. Total Circana US MULO $ Consumption latest 52 weeks ending 7/30/2023. Total Company
4. Versus Fiscal Year 2022
5. Total Circana US MULO Volume Share latest 52 weeks ending 7/30/2023
6.
7.
8.
Total Circana US MULO $ Share, Volume Share, Unit Share latest 52 weeks ending 7/30/2023
Total Circana US MULO $ Share latest 52 weeks ending 7/30/2023
Total Circana US MULO $ Share latest 4 weeks ending 7/30/2023
3
Dear shareholders,
For over 150 years, we have made food that consumers love.
Our history has been built by the hard work of dedicated teams
—past and present—and our commitment to our people, our
culture, our brands and the communities we serve.
Fiscal 2023 was another strong year for our company, even with
the food industry facing significant inflationary challenges, the
lingering effects of the global pandemic and shifts in consumer
behavior. Campbell’s results demonstrate that the execution of
our strategic plan and dedication to the promise of our purpose
can culminate in consistent, dependable results even during
economic uncertainty.
We enter fiscal 2024 with another year of measurable progress
behind us and excitement about the future and the power of
our advantaged portfolio, our best-in-class supply chain and our
enhanced capabilities in marketing and innovation. We remain
focused on setting a higher standard for our performance and
continuing to create sustained value for our shareholders and
other stakeholders.
Strategic pillars
Build a
winning team
and culture
Accelerate
profitable
growth
Fuel investments
and margins with
expanded savings
and efficiency
Deliver on the
promise of our
purpose
2
Build a winning team and culture
Our strategy starts with people and building a winning team and culture. We foster a culture
of belonging where employees are empowered and enabled to reach their full potential. This
year, we advanced key initiatives on leadership, well-being and inclusion and diversity. We
also launched our new employee value proposition—Make history with Campbell’s.
We celebrated the opening of our new
Snacks neighborhood in early September
Making great
workplaces even better
In January, we announced plans to invest $50 million in our Camden HQ, our home
for more than 150 years, and bring our Snacks team together under one roof. With
one headquarters, we’re accelerating our plan to build a winning team and culture
by investing in our campus and our people. We are also making investments to
upgrade and modernize workspaces across our manufacturing network, including
updated break rooms, locker rooms and cafés.
Developing the next generation
of industry leaders
Strong leadership is a difference maker not only for
business results but for every employee’s personal and
professional well-being. This year, we advanced our
goal of becoming a destination for developing the next
generation of leaders through a new initiative called
the Campbell’s Way of Leadership. This new program
will develop our people and give them the skills to
become principled
leaders to drive the growth of
our business.
4
Connecting people
through food
they love
Remarkable
people
ideas
innovations
People
first
Set the standard
for performance
Our values
care
character
collaboration
competitiveness
creativity
S T E W A R D S O F A M A Z I N G B R A N D S
Empowered to
reach your full
potential
Build a
rewarding
career
Passionate in
our pursuit to win
M A K E A N I M P A C T E V E R Y D AY
Care for our
communities
Inclusive leaders
who drive results
Grow
innovate
inspire
Dynamic
teams
Recognized
& rewarded
Accelerate profitable growth
Meals &
Beverages
Our Meals & Beverages division consists of iconic soups, sauces and plant-based beverage brands that people have loved for
generations. Consumers turn to our products for delicious food that provides value and convenience. New, younger consumers
continue to discover our brands thanks to the renewed relevance of our categories and the continued growth of cooking at
home. The pending acquisition of Sovos Brands will further diversify Meals & Beverages with high-growth, premium brands
and should solidify the division as a steady contributor to our growth.
Results
4
+7%
Net
sales
+2% Operating
earnings
Innovation driving
incremental sales
The MVP
We have transformed Chunky from the ground up.
Improved quality
Strong innovation
Engaging marketing
Great value
The brand has performed extremely well especially with
younger consumers, driven by innovations like our Spicy
line. Strong marketing and our partnership with the NFL
have also fueled growth with the brand gaining dollar share
in seven out of the last eight quarters.11
Saucy innovation
The Italian sauce category continues to benefit from
consumers seeking value and meals that can easily be
prepared at home. Families love Prego’s delicious taste
and famously thick sauce, including new elevated flavor
varieties such as Spicy Marinara and Creamy Tomato
Basil. In fiscal 2023, Prego innovation contributed the
greatest incrementality to net sales in the last five years.
The growth engine
Pacific Foods has proven to be a fantastic acquisition by driving incremental consumers
to our portfolio. In fact, the brand grew more dollar share in fiscal 2023 than any other
year since the fiscal 2018 acquisition7. Fueled by the launch of new ready-to-serve cans,
the brand also delivered the largest share growth of key organic/premium competitors
12 Pacific Foods is well-positioned, especially with millennial households,
in fiscal 2023 .
with offerings in broth, ready-to-serve soups and beverages.
• Launched ready-to-serve cans
• Gained more dollar share in
fiscal 2023 than the last three
fiscal years combined
13
15%consumption growth1,4
The icons
Generations of consumers love Campbell’s icons—Tomato, Chicken Noodle, Cream of Mushroom and
Cream of Chicken. Many continue to discover the power of cooking with condensed soup, with cooking
varieties growing both dollar and volume share in fiscal 20239. With consumers preparing about 80% of
meals from home , our condensed soup continues to be well-positioned for sustained growth, delivering
the quality, value and convenience they seek.
10
6
9: Total Circana US MULO $ Share and Volume Share latest 52 weeks ending 7/30/2023
10: Circana / National Eating Trends latest 52 weeks ending 7/30/2023
11: Total Circana US MULO $ Share quarter ending 10/31/2021, 1/30/2022, 5/1/2022, 7/31/2022,
10/30/2022, 1/29/2023, 4/30/2023, 7/30/2023
12: Total Circana US MULO $ Share FY23 latest 52 weeks ending 7/30/2023. Key competition includes General Mills™, Amy’s™, Kettle & Fire™ and Private Label.
13: Total Circana US MULO $ Share latest 52 weeks ending 8/2/2020, 8/1/2021, 7/31/2022, 7/30/2023
7
Accelerate profitable growth
Snacks
Our Snacks division is home to highly differentiated brands of cookies, crackers and salty snacks. The division
continues to grow at an accelerated pace, led by our eight power brands and supported by consumers' resilient
snacking behavior. Our brands offer an elevated snacking experience within mainstream categories. In fiscal
2023, we continued to drive sales growth, advanced our margin roadmap and had strong execution across our
supply chain. We'll continue to accelerate Snacks growth through innovation, marketing activation and execution
in fiscal 2024.
Results
4
+1 3%
Net
sales
+24% Operating
earnings
+3 points dollar share4,7
to
Damn fine cookies!
Our cookies offer something distinct, crafted
with discerning taste that is consistently
superior
the competition. Nothing
embodies distinction quite like Pepperidge
Farm cookies. From elegant classics like
Milano to deliciously decadent new favorites
like Charleston Birthday Cake, Pepperidge
Farm delivers the cookies consumers crave.
Supported by fresh innovation and clever
and captivating marketing such as the “Have
a Little Taste” campaign, we are reminding
consumers of the elevated experiences our
snacks deliver.
The perfect balance of
crisp cookies and rich,
luxurious chocolate for
a truly indulgent treat.
On pace to be a
$1 billion brand
Goldfish is the star of our Snacks division. As one of the company's primary growth engines,
the brand continues to perform extremely well with dollar consumption up 18%1 and dollar
share gains of 0.7 points7 versus the prior year. Our strategy to expand our consumer base
is delivering, with double-digit sales and buy rate growth versus the prior year across
generational groups and in households with and without children14.
14. Circana OmniConsumer Scan Panel (CSIA) – Total US All Outlet latest 52 weeks ending 7/30/2023; NBD Adjusted
8
Bold flavors, bold innovation!
Leaning into the popularity of air fryers, we developed and launched
the first kettle-cooked, air-finished chip. Delivering a light and crispy
crunch with our signature bold flavor, the new Kettle Brand Air Fried
chips have 30% less fat than the original version. This new platform is a
great example of our innovation capabilities and our ability to create new
growth opportunities within traditional categories.
The sandwich cracker king
For over 100 years, Lance sandwich crackers
have been fueling families with a snack that
helps keep you going. The brand continues
to step up to the plate as the official snack
of the Little League® World Series and
sponsor of the fourth annual Little League®
Coach of the Year award. In fiscal 2023,
the brand grew share in dollars, volume
and units versus a year ago6 driven by
consumers’ continued desire for satisfying,
convenient snacking options.
9
Fuel investments and margins
with expanded savings and efficiency
With a solid balance sheet, rigorous financial strategy and strong cash flow generation, we
are well-positioned to invest in the business and improve our operations to drive growth
and expand margins. We are focused on revenue management, transforming our supply
chain into a competitive advantage and finding innovative ways to enhance our products
and processes to unlock cost efficiencies and savings across the enterprise.
Deliver on the promise
of our purpose
Our final strategic pillar includes our commitment to corporate responsibility and
sustainability. For generations, we have earned trust by acting with character, integrity and
transparency in everything we do. We were proud to be named one of the World’s Most
Trustworthy Companies by Newsweek and remain focused on improving our communities
and the environment.
Delivering
Snacks margins
13.1%
FY22
14.4%
FY23
17%
GOAL
FY24
Our momentum within Snacks has continued, with strong
top-line growth and a step change in operating margins—
growing from 13.1% in fiscal 2022 to 14.4% in fiscal 2023.
For fiscal 2024, we anticipate operating margins to be
north of 15% and to show steady improvement on our path
to reach our goal of approximately 17%.
Investing in growth
We are investing in capacity to support our growth,
including bakery expansions to help meet increased
consumer demand. Our $160 million investment in
our Richmond, Utah bakery will increase its output of
Goldfish by 50%.
Since 1953, The Campbell’s Foundation has supported communities through direct grants, employee
matching gifts and partnerships with nonprofits. We have three focus areas: increasing food access,
encouraging healthy living and nurturing neighborhoods in communities where our employees live
and work. Fiscal 2023 foundation giving was $2.4 million, including $1.6 million in direct grantmaking
and nearly $775,000 in matching gifts to nonprofits. Employees logged over 15,000 volunteer hours,
and participation in our annual employee giving campaign raised over $1.3 million for over 1,400
non-profit organizations through employee contributions and foundation matches.
+25%
YoY increase in
participation during
employee giving
campaign
$1 Billion
$1 Billion
cost savings by the end of fiscal 2025
in cost savings by the end of fiscal 2025
Ensuring full futures
Full Futures was launched in our hometown of Camden,
N.J., in fiscal 2022 in recognition of the vital role schools
play in providing daily nutrition to children. Working with a
cross-sector group of partners, we are focused on advancing
the school nutrition environment including infrastructure,
nutrition education and expanding school meal programs to
ensure students are well nourished. This year, we extended
the program to Charlotte, N.C. In fiscal 2024, we will bring
the program to a third Campbell’s community. Ultimately,
our goal is to create a roadmap that could be used in
communities across the country.
Talking tomatoes & sustainability
To advance our sustainable agriculture goals, we
hosted a tomato summit with farmers who grow over
70% of our tomatoes. Many of our tomato farmers are
multi-generational families who have been growing
for us for decades. At the summit, we announced new
initiatives to spur the adoption of new regenerative
agriculture principles and sustainability practices,
including a grant program to help offset the costs of
trialing new practices.
11
Campbell’s supply chain is
a competitive advantage
Operational Excellence
is our supply chain program
and organizational structure that drives ownership,
standardization of processes and the sharing of best
practices across our manufacturing sites. It empowers our
teams to deliver world-class performance by building skills
and improving our ways of working. This year we rolled out
the Operational Excellence Playbook to half of our sites,
and it has already enabled us to reach best-in-class service
levels in the industry.
Driving savings to fuel growth
In fiscal 2023, we added another $40 million in
savings from our multi-year cost savings initiatives
and remain on track to deliver $1 billion of savings by
the end of fiscal 2025.
10
Financial highlights
(dollars in millions, except per share amounts)
Results of Operations
Net sales
Gross profit
Percent of net sales
Earnings before interest and taxes
Net earnings attributable to Campbell Soup Company
Per share — diluted
Other Information
Net cash provided by operating activities
Capital expenditures
Dividends per share
2023
$ 9,357
$ 2,917
31.2%
1,312
858
2.85
$
$
$
$
$
$
1,143
370
1.48
2022
$ 8,562
$ 2,627
30.7%
1,163
757
2.51
$
$
$
$
$
$
1,181
242
1.48
(dollars in millions)
Net earnings attributable to
Campbell Soup Company
Add: Net earnings (loss) attributable
to noncontrolling interests
Add: Taxes on earnings
Add: Interest, net
2023
Restructuring
Charges,
Implementation
Costs and Other
Related Costs
As
Reported
Pension and
Postretirement
Actuarial Gains
Commodity
Mark-to-Market
Gains
Accelerated
Amortization
Charges
Associated with
Divestiture
Transaction
Costs
Adjusted
$ 858
$
50
$
(11)
$
(16)
$
-
270
184
-
16
-
-
(4)
-
-
(5)
-
5
-
2
-
7
$
13
$
4
$ 903
-
-
-
$
13
$
-
1
-
5
-
280
184
$ 1,367
Earnings before interest and taxes (EBIT)
$ 1,312
$ 66
$
(15)
$
(21)
$
In 2023, Net earnings attributable to Campbell Soup Company were impacted by the following: a restructuring charge and costs of $66 million
($50 million after tax, or $.17 per share) associated with restructuring and cost savings initiatives; actuarial gains on pension and postretirement plans of $15
million ($11 million after tax, or $.04 per share); gains of $21 million ($16 million after tax, or $.05 per share) associated with unrealized mark-to-market adjustments
on outstanding undesignated commodity hedges; accelerated amortization expense of $7 million ($5 million after tax, or $.02 per share) related to customer
relationship intangible assets due to the loss of certain contract manufacturing customers; a pre- and after-tax loss of $13 million ($.04 per share) on the sale of
the Emerald nuts business; and transaction costs of $5 million ($4 million after tax, or $.01 per share) associated with the pending acquisition of Sovos Brands, Inc.
In 2022, Net earnings attributable to Campbell Soup Company were impacted by the following: a restructuring charge and costs of $31 million
($24 million after tax, or $.08 per share) associated with restructuring and cost savings initiatives; actuarial losses on pension and postretirement plans of
$44 million ($33 million after tax, or $.11 per share); losses of $59 million ($44 million after tax, or $.15 per share) associated with unrealized mark-to-market
adjustments on outstanding undesignated commodity hedges; and a loss of $4 million ($3 million after tax, or $.01 per share) on the extinguishment of debt.
(dollars in millions)
Net earnings attributable to
Campbell Soup Company
Add: Net earnings (loss) attributable
to noncontrolling interests
Add: Taxes on earnings
Add: Interest, net
As
Reported
$
757
-
218
188
2022
Restructuring
Charges,
Implementation
Costs and Other
Related Costs
Pension and
Postretirement
Actuarial Losses
Commodity
Mark-to-Market
Losses
Loss on Debt
Extinguishment
Adjusted
$
24
$
33
$
44
$
3
$
861
-
7
-
-
11
-
-
15
-
-
1
(4)
-
-
252
184
$
1,297
5%
Reconciliation of GAAP and Non-GAAP financial measures
Earnings before interest and taxes
$ 1,163
$
31
$
44
$
59
$
The following information is provided to reconcile certain non-GAAP financial measures disclosed in the preceding pages to reported sales and earnings
results. These non-GAAP financial measures are measures of performance not defined by accounting principles generally accepted in the United States and
should be considered in addition to, not in lieu of, GAAP reported measures. We believe that presenting certain non-GAAP financial measures facilitates
comparison of our historical operating results and trends in our underlying operating results, and provides transparency on how we evaluate our business. For
instance, we believe that organic net sales, which exclude the impact of currency, acquisitions and divestitures, are a better indicator of our ongoing business
performance. We also believe that financial information excluding certain transactions not considered to reflect the ongoing operating results improves
the comparability of year-to-year earnings results. Consequently, we believe that investors may be able to better understand our earnings results if these
transactions are excluded from the results.
2023
2022
% Change
(dollars in millions)
Net sales
As
Reported
Impact of
Currency
Organic
Net Sales
$ 9,357
$
25
$ 9,382
As
Reported
$ 8,562
Impact of
Divestiture
Organic
Net Sales
Net Sales,
As Reported
Organic
Net Sales
$
(13)
$ 8,549
9%
10%
Adjusted EBIT percent change 2023/2022
Net earnings attributable to
Campbell Soup Company, as reported
Restructuring charges, implementation
costs and other related costs
Pension and postretirement actuarial losses (gains)
Commodity mark-to-market losses (gains)
Accelerated amortization
Charges associated with divestiture
Transaction costs
Loss on debt extinguishment
2023
Diluted EPS
Impact
$
2.85
.17
(.04)
(.05)
.02
.04
.01
-
(reconciliations continued on opposite page)
*The sum of per share amounts may not add due to rounding.
Adjusted Net earnings attributable to Campbell Soup Company*
$
3.00
$
12
2022
EPS % Change
Diluted EPS
Impact
$
2.51
2023/2022
.08
.11
.15
-
-
-
.01
2.85
5%
13
Board of Directors
(as of October 2023)
Campbell's Operating Committee
(as of October 2023)
Keith R. McLoughlin
Chair of the Board of Campbell Soup Company
Former Chief Executive Officer of AB Electrolux
Mark A. Clouse
President and Chief Executive Officer
Mark A. Clouse
President and Chief Executive Officer
of Campbell Soup Company
Fabiola R. Arredondo
Managing Partner of Siempre Holdings
Howard M. Averill
Former Executive Vice President and
Chief Financial Officer of Time Warner Inc.
John P. (JP) Bilbrey
Retired Chairman and Chief Executive Officer
of The Hershey Company
Carrie L. Anderson
Executive Vice President and Chief Financial Officer
Mick J. Beekhuizen
Executive Vice President and President, Meals & Beverages
Adam G. Ciongoli
Executive Vice President, General Counsel and
Chief Sustainability, Corporate Responsibility and Governance Officer
Christopher D. Foley
Executive Vice President and President, Snacks
Diane Johnson May
Executive Vice President and Chief Human Resources Officer
Bennett Dorrance, Jr.
Managing Director for the DFE Trust Company
Daniel L. Poland
Executive Vice President and Chief Supply Chain Officer
Anthony J. Sanzio
Executive Vice President and Chief Communications Officer
Craig S. Slavtcheff
Executive Vice President, Chief R&D and Innovation Officer
Maria Teresa (Tessa) Hilado
Former Executive Vice President and
Chief Financial Officer of Allergan plc
Grant H. Hill
Co-owner and Vice Chairman
of the Atlanta Hawks
Sarah Hofstetter
President, Profitero, Ltd.
Marc B. Lautenbach
Former
of Pitney Bowes Inc.
President and Chief Executive Officer
Mary Alice D. Malone
President of Iron Spring Farm, Inc.
Kurt T. Schmidt
Former President and Chief Executive Officer
of Cronos Group Inc.
Archbold D. van Beuren
Retired Senior Vice President
of Campbell Soup Company
14
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
_________________________________________________________________________________
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended
July 30, 2023
Commission File Number
1-3822
CAMPBELL SOUP COMPANY
New Jersey
State of Incorporation
21-0419870
I.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 Class
Capital Stock, par value $.0375
Trading Symbol
CPB
Name of Each Exchange on Which Registered
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. þ Yes ☐ No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. ☐ Yes þ No
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. þ 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). þ
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
Non-accelerated filer
Emerging growth company
☑
☐
☐
Accelerated filer
Smaller reporting 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 has filed a report on and attestation to its management’s assessment of the effectiveness of its
internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting
firm that prepared or issued its audit report. ☑
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant
included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based
compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes þ No
Based on the closing price on the New York Stock Exchange on January 27, 2023 (the last business day of the registrant’s most recently
completed second fiscal quarter), the aggregate market value of capital stock held by non-affiliates of the registrant was approximately
$9,841,692,399. There were 297,945,220 shares of capital stock outstanding as of September 13, 2023.
Portions of the Registrant’s Proxy Statement for the 2023 Annual Meeting of Shareholders are incorporated by reference into Part III.
TABLE OF CONTENTS
PART I
PART I
Item 1. Business
Item 1A. Risk Factors
Item 1B. Unresolved Staff Comments
Item 2. Properties
Item 3. Legal Proceedings
Item 4. Mine Safety Disclosures
Information about our Executive Officers
PART II
Item 5. Market for Registrant’s Capital Stock, Related Shareholder Matters and Issuer Purchases of
Equity Securities
Item 6. Reserved
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 7A. Quantitative and Qualitative Disclosure about Market Risk
Item 8. Financial Statements and Supplementary Data
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Item 9A. Controls and Procedures
Item 9B. Other Information
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
PART III
Item 10. Directors, Executive Officers and Corporate Governance
Item 11. Executive Compensation
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Shareholder
Matters
Item 13. Certain Relationships and Related Transactions, and Director Independence
Item 14. Principal Accounting Fees and Services
PART IV
Item 15. Exhibits and Financial Statement Schedules
Item 16. Form 10-K Summary
Index to Exhibits
Signatures
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6
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14
15
15
16
17
17
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33
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73
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73
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This Report contains "forward-looking" statements within the meaning of the Private Securities Litigation Reform Act of 1995.
These forward-looking statements reflect our current expectations regarding our future results of operations, economic
performance, financial condition and achievements. These forward-looking statements can be identified by words such as
"anticipate," "believe," "estimate," "expect," "intend," "plan," "pursue," "strategy," "target," "will" and similar expressions. One
can also identify forward-looking statements by the fact that they do not relate strictly to historical or current facts, and may
reflect anticipated cost savings or implementation of our strategic plan. These statements reflect our current plans and
expectations and are based on information currently available to us. They rely on several assumptions regarding future events
and estimates which could be inaccurate and which are inherently subject to risks and uncertainties. Risks and uncertainties
include, but are not limited to, those discussed in "Risk Factors" and in the "Cautionary Factors That May Affect Future
Results" in "Management’s Discussion and Analysis of Financial Condition and Results of Operations" in this Report. Our
consolidated financial statements and the accompanying notes to the consolidated financial statements are presented in
"Financial Statements and Supplementary Data" in this Report.
Item 1. Business
The Company
Unless otherwise stated, the terms "we," "us," "our" and the "company" refer to Campbell Soup Company and its
consolidated subsidiaries.
We are a manufacturer and marketer of high-quality, branded food and beverage products. We organized as a business
corporation under the laws of New Jersey on November 23, 1922; however, through predecessor organizations, we trace our
heritage in the food business back to 1869. Our principal executive offices are in Camden, New Jersey 08103-1799.
Our operations, including reportable segments are described below. Our locations, including manufacturing facilities,
within each reporting segment are described in Item 2. Properties.
On August 7, 2023, we entered into an agreement to acquire Sovos Brands, Inc. (Sovos Brands) for $23.00 per share in
cash, representing a total enterprise value of approximately $2.7 billion. The closing of the transaction is subject to customary
closing conditions and termination rights, including the approval of Sovos Brands’ shareholders and regulatory approvals. We
plan to finance the acquisition through the issuance of new debt. For additional information on this pending acquisition, see our
Form 8-K filed with the U.S. Securities and Exchange Commission on August 7, 2023, and Note 19 to the Consolidated
Financial Statements.
Reportable Segments
Our reportable segments are:
• 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. The segment
included the results of our Plum baby food and snacks business, which was sold on May 3, 2021; 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 includes the retail business in Latin America.
The segment included the results of our Emerald nuts business, which was sold on May 30, 2023.
See Note 6 to the Consolidated Financial Statements and "Management's Discussion and Analysis of Financial Condition
and Results of Operations" for additional information regarding our reportable segments.
Ingredients and Packaging
The ingredients and packaging materials required for the manufacture of our food and beverage products are purchased
from various suppliers, substantially all of which are located in North America. During 2023, we continued to experience
significantly elevated commodity and supply chain costs including the costs of labor, raw materials, energy, fuel, packaging
materials and other inputs necessary for the production and distribution of our products. In addition, many of these items are
subject to price fluctuations from a number of factors, including but not limited to climate change, changes in crop size, cattle
cycles, herd and flock disease, crop disease, crop pests, product scarcity, demand for raw materials, commodity market
speculation, energy costs, currency fluctuations, supplier capacities, government-sponsored agricultural programs and other
government policy, import and export requirements (including tariffs), drought and excessive rain, temperature extremes and
other adverse weather events, water scarcity, scarcity of suitable agricultural land, scarcity of organic ingredients, pandemic
2
3
illness (such as the COVID-19 pandemic), geopolitical conflicts (including the ongoing conflict between Russia and Ukraine),
environmental and other sustainability regulations and other factors that may be beyond our control. To help reduce some of
this price volatility, we use a combination of purchase orders, short- and long-term contracts, inventory management practices
and various commodity risk management tools for most of our ingredients and packaging. Ingredient inventories are generally
at a peak during the late fall and decline during the winter and spring. Since many ingredients of suitable quality are available in
sufficient quantities only during certain seasons, we make commitments for the purchase of such ingredients in their respective
seasons. Although we are unable to predict the impact of our ability to source these ingredients and packaging materials in the
future, we expect these supply pressures to continue throughout 2024. As 2023 progressed, we experienced some moderation in
input cost inflation, and we expect modestly elevated levels of inflation to continue into 2024.
Customers
In most of our markets, sales and merchandising activities are conducted through our own sales force and/or third-party
brokers and distribution partners. Our products are generally resold to consumers through retail food chains, mass discounters,
mass merchandisers, club stores, convenience stores, drug stores, dollar stores, e-commerce and other retail, commercial and
non-commercial establishments. Our Snacks segment has a direct-store-delivery distribution model that uses independent
contractor distributors.
Our five largest customers accounted for approximately 47% of our consolidated net sales in 2023 and 2022 and 46% in
2021. Our largest customer, Wal-Mart Stores, Inc. and its affiliates, accounted for approximately 22% of our consolidated net
sales in 2023 and 2022 and 21% in 2021. Both of our reportable segments sold products to Wal-Mart Stores, Inc. or its
affiliates. No other customer accounted for 10% or more of our consolidated net sales.
Trademarks and Technology
As of September 13, 2023, we owned over 2,600 trademark registrations and applications in over 150 countries. We
believe our trademarks are of material importance to our business. Although the laws vary by jurisdiction, trademarks generally
are valid as long as they are in use and/or their registrations are properly maintained and have not been found to have become
generic. Trademark registrations generally can be renewed indefinitely as long as the trademarks are in use. We believe that our
principal brands, including Campbell's, Cape Cod, Chunky, Goldfish, Kettle Brand, Lance, Late July, Milano, Pace, Pacific
Foods, Pepperidge Farm, Pop Secret, Prego, Snack Factory, Snyder's of Hanover, Spaghettios, Swanson, and V8, are protected
by trademark law in the major markets where they are used.
Although we own a number of valuable patents, we do not regard any segment of our business as being dependent upon
any single patent or group of related patents. In addition, we own copyrights, both registered and unregistered, proprietary trade
secrets, technology, know-how, processes and other intellectual property rights that are not registered.
Competition
We operate in a highly competitive industry and experience competition in all of our categories. This competition arises
from numerous competitors of varying sizes across multiple food and beverage categories, and includes producers of private
label products, as well as other branded food and beverage manufacturers. Private label products are generally sold at lower
prices than branded products. Competitors market and sell their products through traditional retailers and e-commerce. All of
these competitors vie for trade merchandising support and consumer dollars. The number of competitors cannot be reliably
estimated. Our principal areas of competition are brand recognition, taste, nutritional value, price, promotion, innovation, shelf
space and customer service.
Capital Expenditures
During 2023, our aggregate capital expenditures were $370 million. We expect to spend approximately $440 million for
capital projects in 2024. Major capital projects based on planned spend in 2024 include capacity expansions and a new
production line for our Snacks business, network optimization for our Meals & Beverages business, upgrades of assets across
both segments of the business, and enhancements to our headquarters in Camden, New Jersey relating to our Snacks office
consolidation.
Government Regulation
The manufacture and sale of consumer food products is highly regulated. In the U.S., our activities are subject to regulation
by various federal government agencies, including the Food and Drug Administration, the Department of Agriculture, the
Federal Trade Commission, the Department of Labor, the Department of Commerce, the Occupational Safety and Health
Administration and the Environmental Protection Agency, as well as various state and local agencies. Our business is also
regulated by similar agencies outside of the U.S. Additionally, we are subject to data privacy and security regulations, tax and
securities regulations, accounting and reporting standards, and other financial laws and regulations. We believe that we are in
compliance with current laws and regulations in all material respects and do not expect that continued compliance with such
laws and regulations will have a material effect on capital expenditures, earnings or our competitive position.
Environmental Matters
We have requirements for the operation and design of our facilities that meet or exceed applicable environmental rules and
regulations. Of our $370 million in capital expenditures made during 2023, approximately $18 million were for compliance
with environmental laws and regulations in the U.S. We further estimate that approximately $20 million of the capital
expenditures anticipated during 2024 will be for compliance with U.S. environmental laws and regulations. We believe that the
continued compliance with existing environmental laws and regulations (both within the U.S. and elsewhere) will not have a
material effect on capital expenditures, earnings or our competitive position. In addition, we continue to monitor existing and
pending environmental laws and regulations within the U.S. and elsewhere relating to climate change and greenhouse gas
emissions. While the impact of these laws and regulations cannot be predicted with certainty, we do not believe that compliance
with these laws and regulations will have a material effect on capital expenditures, earnings or our competitive position.
Seasonality
Demand for soup products is seasonal, with the fall and winter months usually accounting for the highest sales volume.
Demand for our other products is generally evenly distributed throughout the year.
Human Capital Management
One of the core pillars of our strategic plan is to build a winning team and culture. To do this, we are committed to building
a company where everyone can be real, and feel safe, valued and supported to do their best work. We believe that our
employees are the driving force behind our success and prioritize attracting, developing and retaining diverse, world-class talent
and creating an inclusive culture that embodies our purpose: Connecting people through food they love. In 2023, we approved a
plan to bring together all of our corporate team members from our Snacks offices in Charlotte, North Carolina and Norwalk,
Connecticut to our headquarters in Camden, New Jersey. This move is intended to foster closer collaboration and enhance
decision-making, thereby improving our ability to execute our business strategy. We have also recently introduced a new
Employee Value Proposition, Make history with Campbell’s, to enhance our focus on building a winning team and culture. On
July 30, 2023, we had approximately 14,500 employees.
Training, Development and Engagement
We invest in our employees through training and development programs. We have partnered with leading online content
experts and have recently increased internal learning development to expand our catalog of courses and support our culture of
continuous learning. A suite of training and education programs are available to employees ranging from role-specific training
to education on soft skills to assist them with enhancing their careers through continuous learning. Through objective-setting,
individual development plans, learning opportunities, feedback and coaching, employees are encouraged to continue their
professional growth. Our education programs allow employees to focus on timely and topical development areas including
leadership, management excellence, functional capabilities and inclusion and diversity. We communicate frequently and
transparently with our employees through regular company-wide and business unit check-ins, and we conduct employee
engagement surveys that provide our employees with an opportunity to share anonymous feedback with management in a
variety of areas including confidence in leadership, growth and career opportunities, available resources and overall
engagement. These surveys allow our leaders to develop action plans for their business units as well as the broader
organization.
Our Campbell Employee Experience enhances the foundational moments that are key to an employee's career at our
company - from the candidate experience and onboarding through career advancement - to help our employees thrive at work,
with the goal of building an inclusive, engaging and high-performing culture.
Inclusion and Diversity
We believe that having an inclusive and diverse culture strengthens our ability to recruit and develop talent and allows all
employees to thrive and succeed. Diversity of input and perspectives is an essential part of our strategic plan to build a winning
team and culture, and we believe one key to success is attracting and retaining a diverse workforce that reflects our consumers
of today and tomorrow. Our commitment to inclusion and diversity (I&D) is based on three guiding pillars:
•
•
•
Capabilities - providing resources and tools to employees to build capabilities to build a winning team and culture and
to drive systemic change;
Advocacy - strengthening ally networks by supporting our employees, our partners and the communities where we live
and work; and
Accountability - having individual, management and organizational accountability and transparency about our progress
on building an inclusive and diverse culture.
We also continue to provide I&D learning experiences and foster employee resource groups to highlight issues that impact
underrepresented communities. Throughout 2023 the board of directors received regular updates from management on our
inclusion and diversity efforts.
4
5
Wellness and Safety
Our employees' health, safety and well-being are our top priorities. We promote a strong culture of safety and prioritize
keeping all our employees, contractors and visitors safe. To accomplish this, we employ comprehensive health, safety and
environment management policies and standards throughout the organization. In addition, we strive to continuously improve
our work processes, tools and metrics to reduce workplace injuries and enhance safety.
We provide a workplace that develops, supports and motivates our people. Our Resources for Living program provides
information, education tools and resources to help support our employees' physical, financial, social and emotional well-being.
As part of this focus on well-being, we emphasize the need for our employees to embrace healthy lifestyles and we offer a
variety of wellness education opportunities for our employees. We continue to modernize our workspaces and have established
a hybrid work policy to allow office-based employees to work remotely several days per week.
Total Rewards
We provide market-based competitive compensation through our salary, annual incentive and long-term incentive
programs, and a robust benefits package that promotes the overall well-being of our employees. We provide a variety of
resources and services to help our employees plan for retirement and provide a 401(k) plan with immediate vesting. We
benchmark and establish compensation structures based on competitive market data. Individual pay is based on various factors
such as an employee's role, experience, job location and contributions. Performance discussions for salaried employees are
conducted throughout the year to assess contributions and inform individual development plans.
Websites
Our primary corporate website can be found at www.campbellsoupcompany.com. We make available free of charge at the
Investor portion of this website (under the "About Us—Investors—Financials—SEC Filings" caption) all of our reports
(including amendments) filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as
amended, including our annual reports on Form 10-K, our quarterly reports on Form 10-Q and our current reports on Form 8-K.
These reports are made available on the website as soon as reasonably practicable after their filing with, or furnishing to, the
Securities and Exchange Commission.
All websites appearing in this Annual Report on Form 10-K are inactive textual references only, and the information in, or
accessible through, such websites is not incorporated into this Annual Report on Form 10-K, or into any of our other filings
with the Securities and Exchange Commission.
Item 1A. Risk Factors
In addition to the factors discussed elsewhere in this Report, the following risks and uncertainties could materially
adversely affect our business, financial condition and results of operations. Although the risks are organized and described
separately, many of the risks are interrelated. Additional risks and uncertainties not presently known to us or that we currently
deem immaterial also may impair our business operations and financial condition.
Business and Operational Risks
We may not be able to increase prices to fully offset inflationary pressures on costs, such as raw and packaging
materials, labor and distribution costs.
As a manufacturer of food and beverage products, we rely on plant labor, distribution resources and raw and packaging
materials including tomato paste, grains, beef, poultry, dairy, vegetable oil, wheat, potatoes and other vegetables, steel,
aluminum, glass, paper and resin. During 2023, we continued to experience significantly elevated commodity and supply chain
costs including the costs of labor, raw materials, energy, fuel, packaging materials and other inputs necessary for the production
and distribution of our products. As 2023 progressed, we experienced some moderation in input cost inflation, and we expect
modestly elevated levels of inflation to continue into 2024. In addition, many of these items are subject to price fluctuations
from a number of factors, including but not limited to changes in crop size, cattle cycles, herd and flock disease, crop disease,
crop pests, product scarcity, demand for raw materials, commodity market speculation, energy costs, currency fluctuations,
supplier capacities, government-sponsored agricultural programs and other government policy, import and export requirements
(including tariffs), drought and excessive rain, temperature extremes and other adverse weather events, water scarcity, scarcity
of suitable agricultural land, scarcity of organic ingredients, pandemic illness (such as the COVID-19 pandemic), geopolitical
conflicts (including the ongoing conflict between Russia and Ukraine), environmental and other sustainability regulations and
other factors that may be beyond our control.
We try to mitigate some or all cost increases through increases in the selling prices of, or decreases in the packaging sizes
of, some of our products. Higher product prices or smaller packaging sizes may result in reductions in sales volume. Consumers
may be less willing to pay a price differential for our branded products and may increasingly purchase lower-priced offerings,
or may forego some purchases altogether, during an economic downturn or times of increased inflationary pressure. To the
extent that price increases or packaging size decreases are not sufficient to offset these increased costs adequately or in a timely
manner, and/or if they result in significant decreases in sales volume or a shift in sales mix to lower-margin offerings, our
business results and financial condition may be adversely affected. Furthermore, we may not be able to fully offset any cost
increases through productivity initiatives or through our commodity hedging activity.
Disruption to our supply chain could adversely affect our business.
Our ability to manufacture and/or sell our products may be impaired by damage or disruption to our manufacturing,
warehousing or distribution capabilities, or to the capabilities of our suppliers, contract manufacturers, logistics service
providers or independent distributors. This damage or disruption could result from execution issues, as well as factors that are
hard to predict or beyond our control such as increased temperatures due to climate change, water stress, extreme weather
events, natural disasters, product or raw material scarcity, fire, terrorism, pandemics (such as the COVID-19 pandemic),
geopolitical conflicts (including the ongoing conflict between Russia and Ukraine), strikes, labor shortages, cybersecurity
breaches, government shutdowns, disruptions in logistics, supplier capacity constraints or other events. Commodity prices
continue to be volatile and have generally increased. Production of the agricultural commodities used in our business may also
be adversely affected by drought and excessive rain, temperature extremes and other adverse weather events, water scarcity,
scarcity of suitable agricultural land, scarcity of organic ingredients, crop size, cattle cycles, herd and flock disease, crop disease
and crop pests. Failure to take adequate steps to mitigate the likelihood or potential impact of such events, or to effectively
manage such events if they occur, may adversely affect our business or financial results, particularly in circumstances when a
product is sourced from a single supplier or location. Disputes with significant suppliers, contract manufacturers, logistics
service providers or independent distributors, including disputes regarding pricing or performance, may also adversely affect
our ability to manufacture and/or sell our products, as well as our business or financial results.
Deterioration of global macroeconomic conditions, including economic recession or periods of higher inflation in key
markets may adversely affect consumer spending and demand for our products.
Global macroeconomic conditions can be uncertain and volatile. We have in the past been, and may continue to be,
adversely affected by changes in global macroeconomic conditions, including inflation, rising interest rates, consumer spending
rates, energy availability and costs, global supply chain challenges, labor shortages, geopolitical conflicts (including the
ongoing conflict between Russia and Ukraine), pandemics (such as the COVID-19 pandemic) and growing recession risk.
Volatility in financial markets and deterioration of global macroeconomic conditions could impact our business and results of
operations in a number of ways, including but not limited to, the following:
•
•
•
•
•
•
higher commodity prices and other increased input costs could continue due to supply chain shortages or supply chain
disruptions, which may not be sufficiently mitigated by our current commodity contracts;
the failure of third parties on which we rely, including but not limited to, those that supply our packaging, ingredients,
equipment and other necessary operating materials, co-manufacturers and independent contractors, to meet their
obligations to us, or significant disruptions in their ability to do so;
a shift in consumer spending during periods of economic uncertainty or inflation that could result in consumers
moving to private label or lower price products;
a change in demand for or availability of our products, as a result of retailers, distributors, or carriers modifying their
inventory, fulfillment or shipping practices;
a disruption to our distribution capabilities or our distribution channels, including those of our suppliers, contract
manufacturers, logistics service providers or independent distributors; and
future volatility or disruption in the capital and credit markets could negatively impact our liquidity or increase costs of
borrowing;
These and other impacts of global macroeconomic conditions could also heighten many of the other risk factors discussed in
this Item 1A. Our sensitivity to global macroeconomic conditions could materially impact our business, results of operations,
financial condition, and liquidity.
Our intellectual property rights are valuable, and any inability to protect them could reduce the value of our products
and brands.
We consider our intellectual property rights, particularly our trademarks, to be a significant and valuable aspect of our
business. We protect our intellectual property rights through a combination of trademark, patent, copyright and trade secret
protection, contractual agreements and policing of third-party misuses of our intellectual property in traditional retail and digital
environments. Our failure to obtain or adequately protect our intellectual property or any change in law that lessens or removes
the current legal protections of our intellectual property may diminish our competitiveness and adversely affect our business
and financial results.
Competing intellectual property claims that impact our brands or products may arise unexpectedly. Any litigation or
disputes regarding intellectual property may be costly and time-consuming and may divert the attention of our management and
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key personnel from our business operations. We also may be subject to significant damages or injunctions against development,
launch and sale of certain products. Any of these occurrences may harm our business and financial results.
Our results may be adversely impacted if consumers do not maintain their favorable perception of our brands.
We have a number of iconic brands with significant value. Maintaining and continually enhancing the value of these brands
is critical to the success of our business. Brand value is primarily based on consumer perceptions. Success in promoting and
enhancing brand value depends in large part on our ability to provide high-quality products. Brand value could diminish
significantly due to a number of factors, including consumer perception that we have acted in an irresponsible manner, adverse
publicity about our products, packaging, ingredients, or our environmental, social, human capital or governance practices, our
failure to maintain the quality of our products, the failure of our products to deliver consistently positive consumer experiences,
or the products becoming unavailable to consumers. The growing use of social and digital media by consumers increases the
speed and extent that information and opinions can be shared. Negative posts or comments about us, our brands, products or
packaging on social or digital media could seriously damage our brands and reputation. In addition, we might fail to
appropriately target our marketing efforts, anticipate consumer preferences, or invest sufficiently in maintaining our brand
image. If we do not maintain the favorable perception of our brands, our results could be adversely impacted.
We may be adversely impacted by a disruption, failure or security breach of our information technology systems.
Our information technology systems are critically important to our operations. We rely on our information technology
systems (some of which are outsourced to third parties) to manage our data, communications and business processes, including
our marketing, sales, manufacturing, procurement, supply chain, customer service, accounting and administrative functions and
the importance of such networks and systems has increased due to an increase in our employees working remotely. If we do not
obtain and effectively manage the resources and materials necessary to build, sustain and protect appropriate information
technology systems, our business or financial results could be adversely impacted. Furthermore, our information technology
systems are subject to attack or other security breaches (including the access to or acquisition of customer, consumer, employee
or other confidential information), service disruptions or other system failures. If we are unable to prevent or adequately
respond to and resolve these breaches, disruptions or failures, our operations may be impacted, and we may suffer other adverse
consequences such as reputational damage, litigation, remediation costs, ransomware payments and/or penalties under various
data protection laws and regulations.
To address the risks to our information technology systems and the associated costs, we maintain an information security
program that includes updating technology and security policies, cyber insurance, employee awareness training, and monitoring
and routine testing of our information technology systems. We believe that these preventative actions provide adequate
measures of protection against security breaches and generally reduce our cybersecurity risks, however, cyber threats are
constantly evolving, are becoming more frequent and more sophisticated and are being made by groups of individuals with a
wide range of expertise and motives, which increases the difficulty of detecting and successfully defending against them.
Additionally, continued geopolitical turmoil, including the ongoing conflict between Russia and Ukraine, has heightened the
risk of cyberattacks. We have experienced threats and breaches to our data and systems and although we have not experienced a
breach that had a material impact on our operations or business, there can be no assurance that these measures will prevent or
limit the impact of a future incident. For example, at the end of the fourth quarter of 2023, we identified unauthorized activity
on some of our information technology systems. Upon detecting the attack, we took immediate action to investigate, contain
and remediate the threat, retaining the services of leading third-party cybersecurity experts and contacting federal law
enforcement. The incident had a limited impact on our business operations and was not material to the company's results of
operations or financial condition. In addition, the rapid evolution and increased adoption of artificial intelligence technologies
may intensify our cybersecurity risks. We may incur significant costs in protecting against or remediating cyberattacks or other
cyber incidents. As cyberattacks increase in frequency and magnitude around the world, we may be unable to obtain cyber
insurance in the amounts and on the terms we view as appropriate and favorable for our operations.
In addition, in the event our suppliers or customers experience a breach or system failure, their businesses could be
disrupted or otherwise negatively affected, which may result in a disruption in our supply chain or reduced customer orders,
which would adversely affect our business and financial results. We have also outsourced several information technology
support services and administrative functions to third-party service providers, and may outsource other functions in the future to
achieve cost savings and efficiencies. Our information security program includes capabilities designed to evaluate and mitigate
cyber risks arising from third-party service providers. We believe that these capabilities provide insights and visibility to the
security posture of our third-party service providers, however, cyber threats to those organizations are beyond our control. If
these service providers do not perform effectively due to breach or system failure, we may not be able to achieve the expected
benefits and our business may be disrupted.
We may not be able to attract and retain the highly skilled people we need to support our business.
We depend on the skills and continued service of key personnel, including our experienced management team. In addition,
our ability to achieve our strategic and operating goals depends on our ability to identify, hire, train and retain qualified
individuals, including all levels of skilled labor in our manufacturing facilities. We also compete with other companies both
within and outside of our industry for talented personnel, and we may lose key personnel or fail to attract, train and retain other
talented personnel. Any such loss or failure may adversely affect our business or financial results. In addition, activities related
to identifying, recruiting, hiring and integrating qualified individuals may require significant time and expense. We may not be
able to locate suitable replacements for any key employees who leave, or offer employment to potential replacements on
reasonable terms, each of which may adversely affect our business and financial results.
Over the past few years, we have experienced an increasingly competitive labor market. A sustained labor shortage or
increased turnover rates within our employee base, as a result of general macroeconomic factors, could lead to increased costs,
such as increased overtime to meet demand and increased wage rates to attract and retain employees, and could negatively
affect our ability to efficiently operate our manufacturing and distribution facilities and overall business. If we are unable to hire
and retain employees capable of performing at a high-level, or if mitigation measures we may take to respond to a decrease in
labor availability, such as overtime and third-party outsourcing, have unintended negative effects, our business could be
adversely affected.
If we do not fully realize the expected cost savings and/or operating efficiencies associated with our strategic initiatives,
our profitability could suffer.
Our future success and earnings growth depend in part on our ability to achieve the appropriate cost structure and operate
efficiently in the highly competitive food industry, particularly in an environment of volatile cost inputs. We continuously
pursue initiatives to reduce costs and increase effectiveness. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations - Restructuring Charges and Cost Savings Initiatives" for additional information on these
initiatives. We also regularly pursue cost productivity initiatives in procurement, manufacturing and logistics. Any failure or
delay in implementing our initiatives in accordance with our plans could adversely affect our ability to meet our long-term
growth and profitability expectations and could adversely affect our business. If we do not continue to effectively manage costs
and achieve additional efficiencies, our competitiveness and our profitability could decrease.
Our results may be adversely affected by our inability to complete or realize the projected benefits of acquisitions,
divestitures and other strategic transactions.
We have historically made strategic acquisitions of brands and businesses and we may undertake additional acquisitions or
other strategic transactions in the future. Our ability to meet our objectives with respect to acquisitions and other strategic
transactions may depend in part on our ability to identify suitable counterparties, negotiate favorable financial and other
contractual terms, obtain all necessary regulatory approvals on the terms expected and complete those transactions. Potential
risks also include:
•
•
•
•
•
•
•
•
the inability to integrate acquired businesses into our existing operations in a timely and cost-efficient manner,
including implementation of enterprise-resource planning systems;
diversion of management's attention from other business concerns;
potential loss of key employees, co-manufacturers, suppliers and/or customers of acquired businesses;
assumption of unknown risks and liabilities;
the inability to achieve anticipated benefits, including revenues or other operating results;
operating costs of acquired businesses may be greater than expected;
the inability to promptly implement an effective control environment; and
the risks inherent in entering markets or lines of business with which we have limited or no prior experience.
In addition, we have previously made strategic divestitures and may do so in the future. Any businesses we decide to divest
in the future may depend in part on our ability to identify suitable buyers, negotiate favorable financial and other contractual
terms and obtain all necessary regulatory approvals on the terms expected. Potential risks of divestitures may also include:
•
•
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•
diversion of management's attention from other business concerns;
loss of key suppliers and/or customers of divested businesses;
the inability to separate divested businesses or business units effectively and efficiently from our existing business
operations; and
the inability to reduce or eliminate associated overhead costs.
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If we are unable to complete or realize the projected benefits of future acquisitions, divestitures or other strategic
transactions, our business or financial results may be adversely impacted.
change, we may be required in the future to record impairment of the carrying value of goodwill or other indefinite-lived
intangible assets, which could adversely affect our financial results and net worth.
Competitive and Industry Risks
We face significant competition in all our product categories, which may result in lower sales and margins.
We operate in the highly competitive food and beverage industry mainly in the North American market and experience
competition in all of our categories. The principal areas of competition are brand recognition, taste, nutritional value, price,
promotion, innovation, shelf space and customer service. A number of our primary competitors are larger than us and have
substantial financial, marketing and other resources, and some of our competitors may spend more aggressively on advertising
and promotional activities than we do. In addition, reduced barriers to entry and easier access to funding are creating new
competition. A strong competitive response from one or more of these competitors to our marketplace efforts, or a continued
shift towards private label offerings, particularly during periods of economic uncertainty or significant inflation, could result in
us reducing prices and/or increasing promotions, increasing marketing or other expenditures, and/or losing market share, each
of which may result in lower sales and margins.
Our ability to compete also depends upon our ability to predict, identify, and interpret the tastes and dietary habits of
consumers and to offer products that appeal to those preferences. There are inherent marketplace risks associated with new
product or packaging introductions, including uncertainties about trade and consumer acceptance. If we do not succeed in
offering products that consumers want to buy, our sales and market share will decrease, resulting in reduced profitability. If we
are unable to accurately predict which shifts in consumer preferences will be long-lasting, or are unable to introduce new and
improved products to satisfy those preferences, our sales will decline. Weak economic conditions, recessions, significant
inflation and other factors, such as pandemics, could effect consumer preferences and demand. In addition, given the variety of
backgrounds and identities of consumers in our consumer base, we must offer a sufficient array of products to satisfy the broad
spectrum of consumer preferences. As such, we must be successful in developing innovative products across a multitude of
product categories. Finally, if we fail to rapidly develop products in faster-growing and more profitable categories, we could
experience reduced demand for our products, or fail to expand margins.
We may be adversely impacted by a changing customer landscape and the increased significance of some of our
customers.
Our businesses are largely concentrated in the traditional retail grocery trade, which has experienced slower growth than
other retail channels, such as dollar stores, drug stores, club stores and e-commerce retailers. We expect this trend away from
traditional retail grocery to alternate channels to continue in the future. These alternative retail channels may also create
consumer price deflation, affecting our retail customer relationships and presenting additional challenges to increasing prices in
response to commodity or other cost increases. In addition, retailers with increased buying power and negotiating strength are
seeking more favorable terms, including increased promotional programs and customized products funded by their suppliers.
These customers may also use more of their shelf space for their private label products, which are generally sold at lower prices
than branded products. If we are unable to use our scale, marketing, product innovation and category leadership positions to
respond to these customer dynamics, our business or financial results could be adversely impacted.
In 2023, our five largest customers accounted for approximately 47% of our consolidated net sales, with the largest
customer, Wal-Mart Stores, Inc. and its affiliates, accounting for approximately 22% of our consolidated net sales. There can be
no assurance that our largest customers will continue to purchase our products in the same mix or quantities, or on the same
terms as in the past. Disruption of sales to any of these customers, or to any of our other large customers, for an extended period
of time could adversely affect our business or financial results.
Financial and Economic Risks
An impairment of the carrying value of goodwill or other indefinite-lived intangible assets could adversely affect our
financial results and net worth.
As of July 30, 2023, we had goodwill of $3.965 billion and other indefinite-lived intangible assets of $2.541 billion.
Goodwill and indefinite-lived intangible assets are initially recorded at fair value and not amortized, but are tested for
impairment at least annually in the fourth quarter or more frequently if impairment indicators arise. We test goodwill at the
reporting unit level by comparing the carrying value of the net assets of the reporting unit, including goodwill, to the unit's fair
value. Similarly, we test indefinite-lived intangible assets by comparing the fair value of the assets to their carrying values. Fair
value for both goodwill and other indefinite-lived intangible assets is determined based on discounted cash flow analyses. If the
carrying values of the reporting unit or indefinite-lived intangible assets exceed their fair value, the goodwill or indefinite-lived
intangible assets are considered impaired. Factors that could result in an impairment include a change in revenue growth rates,
operating margins, weighted average cost of capital, future economic and market conditions or assumed royalty rates. If current
expectations for growth rates for sales and profits are not met, or other market factors and macroeconomic conditions were to
We may be adversely impacted by increased liabilities and costs related to our defined benefit pension plans.
We sponsor a number of defined benefit pension plans for certain employees in the U.S. and certain non-U.S. locations.
The major defined benefit pension plans are funded with trust assets invested in a globally diversified portfolio of securities and
other investments. Changes in regulatory requirements or the market value of plan assets, investment returns, interest rates and
mortality rates may affect the funded status of our defined benefit pension plans and cause volatility in the net periodic benefit
cost, future funding requirements of the plans and the funded status as recorded on the balance sheet. A significant increase in
our obligations, future funding requirements, or net periodic benefit costs could have a material adverse effect on our financial
results.
We face risks related to heightened inflation, recession, financial and credit market disruptions and other economic
conditions.
Customer and consumer demand for our products may be impacted by weak economic conditions, recession, equity market
volatility or other negative economic factors in the U.S. or other nations. For instance in 2023, the U.S. experienced
significantly heightened inflationary pressures which we expect to continue into 2024. We may not be able to fully mitigate the
impact of inflation through continued price increases, productivity initiatives and cost savings, which could have a material
adverse effect on our financial results. We implemented a series of price increases in the last year in response to inflationary
pressures, and although price elasticities have remained below historical levels this may not continue and result in lower sales in
2024. In addition, if the U.S. economy enters a recession in 2024, we may experience sales declines and may have to decrease
prices, all of which could have a material adverse impact on our financial results.
Similarly, disruptions in financial and/or credit markets may impact our ability to manage normal commercial relationships
with our customers, suppliers and creditors and might cause us to not be able to continue to have access to preferred sources of
liquidity when needed or on terms we find acceptable, and our borrowing costs could increase. An economic or credit crisis
could occur and impair credit availability and our ability to raise capital when needed. A disruption in the financial markets may
have a negative effect on our derivative counterparties and could impair our banking or other business partners, on whom we
rely for access to capital and as counterparties to our derivative contracts. In addition, changes in tax or interest rates in the U.S.
or other nations, whether due to recession, economic disruptions or other reasons, may adversely impact us.
Legal and Regulatory Risks
We may be adversely impacted by legal and regulatory proceedings or claims.
We are a party to a variety of legal and regulatory proceedings and claims arising out of the normal course of business. See
Note 17 to the Consolidated Financial Statements for information regarding reportable legal proceedings. Since these actions
are inherently uncertain, there is no guarantee that we will be successful in defending ourselves against such proceedings or
claims, or that our assessment of the materiality or immateriality of these matters, including any reserves taken in connection
with such matters, will be consistent with the ultimate outcome of such proceedings or claims. In particular, the marketing of
food products has come under increased scrutiny in recent years, and the food industry has been subject to an increasing
number of proceedings and claims relating to alleged false or deceptive marketing under federal, state and foreign laws or
regulations, including claims relating to the presence of heavy metals in food products. Additionally, the independent contractor
distribution model, which is used in our Snacks segment, has also come under increased regulatory scrutiny. Our independent
contractor distribution model has also been the subject of various class and individual lawsuits in recent years. In the event we
are unable to successfully defend ourselves against these proceedings or claims, or if our assessment of the materiality of these
proceedings or claims proves inaccurate, our business or financial results may be adversely affected. In addition, our reputation
could be damaged by allegations made in proceedings or claims (even if untrue).
Increased regulation or changes in law could adversely affect our business or financial results.
The manufacture and marketing of food products is extensively regulated. Various laws and regulations govern the
processing, packaging, storage, distribution, marketing, advertising, labeling, quality and safety of our food products, as well as
the health and safety of our employees and the protection of the environment. In the U.S., we are subject to regulation by
various federal government agencies, including but not limited to the Food and Drug Administration, the Department of
Agriculture, the Federal Trade Commission, the Department of Labor, the Department of Commerce, the Occupational Safety
and Health Administration and the Environmental Protection Agency, as well as various state and local agencies. We are also
regulated by similar agencies outside the U.S.
Governmental and administrative bodies within the U.S. are considering a variety of tax, trade and other regulatory
reforms. Trade reforms include tariffs on certain materials used in the manufacture of our products and tariffs on certain
finished products. We regularly move data across national and state borders to conduct our operations and, consequently, are
subject to a variety of laws and regulations in the U.S. and other jurisdictions regarding privacy, data protection, and data
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security, including those related to the collection, storage, handling, use, disclosure, transfer, and security of personal data.
There is significant uncertainty with respect to compliance with such privacy and data protection laws and regulations because
they are continuously evolving and developing and may be interpreted and applied differently from country to country and state
to state and may create inconsistent or conflicting requirements.
Changes in legal or regulatory requirements (such as new food safety requirements and revised regulatory requirements for
the labeling of nutrition facts, serving sizes and genetically modified ingredients), or evolving interpretations of existing legal or
regulatory requirements, or an increased focus regarding environmental policies relating to climate change, regulating
greenhouse gas emissions, energy policies and sustainability, may result in increased compliance cost, capital expenditures and
other financial obligations that could adversely affect our business and financial results.
We may suffer losses if changes to regulations require us to change the ingredients we use or how we process, package,
transport, store, distribute, advertise, or label our products. Moreover, depending on the implementation of such regulatory
changes, we could have increased risk for a product recall or have existing inventory become unsellable, which could materially
and adversely impact our product sales, financial condition and operating results.
If our food products become adulterated or are mislabeled, we might need to recall those items, and we may experience
product liability claims and damage to our reputation.
We have in the past and we may, in the future, need to recall some of our products if they become adulterated or if they are
mislabeled, and we may also be liable if the consumption of any of our products causes sickness or injury to consumers. A
widespread product recall could result in significant losses due to the costs of a recall, the destruction of product inventory, and
lost sales due to the unavailability of product for a period of time. We could also suffer losses from a significant adverse
product liability judgment. A significant product recall or product liability claim could also result in adverse publicity, damage
to our reputation, and a loss of consumer confidence in the safety and/or quality of our products, ingredients or packaging. In
addition, if another company recalls or experiences negative publicity related to a product in a category in which we compete,
consumers might reduce their overall consumption of products in that category.
Climate change, or legal, regulatory or market measures to address climate change, may negatively affect our business
and operations.
There is growing concern that carbon dioxide and other greenhouse gases in the atmosphere may have an adverse impact
on global temperatures, weather patterns, and the frequency and severity of extreme weather and natural disasters. In the event
that such climate change has a negative effect on agricultural productivity, we may be subject to decreased availability or less
favorable pricing for certain commodities that are necessary for our products, such as wheat, tomatoes and potatoes. Adverse
weather conditions and natural disasters can reduce crop size and crop quality, which in turn could reduce our supplies of raw
materials, lower recoveries of usable raw materials, increase the prices of our raw materials, increase our cost of storing and
transporting our raw materials, or disrupt production schedules. We may also be subjected to decreased availability or less
favorable pricing for water as a result of such change, which could impact our manufacturing and distribution operations. In
addition, natural disasters and extreme weather conditions may disrupt the productivity of our facilities or the operation of our
supply chain. The physical effects and transitional costs of climate change and the legal, regulatory or market initiatives to
address climate change could have a negative impact on our business, financial condition, and results of operations.
There is an increased focus by foreign, federal, state and local regulatory and legislative bodies regarding environmental
policies relating to climate change, regulating greenhouse gas emissions (including carbon pricing, cap and trade systems or a
carbon tax), energy policies, and sustainability. Increased compliance costs and expenses due to the impacts of climate change
and additional legal or regulatory requirements regarding climate change that are designed to reduce or mitigate the effects of
carbon dioxide and other greenhouse gas emissions on the environment may cause disruptions in, or an increase in the costs
associated with, the running of our manufacturing facilities and our business, as well as increase distribution and supply chain
costs. Moreover, compliance with any such legal or regulatory requirements may require us to make significant changes in our
business operations and strategy, which will likely require us to devote substantial time and attention to these matters and cause
us to incur additional costs. Even if we make changes to align ourselves with such legal or regulatory requirements, we may
still be subject to significant penalties or potential litigation if such laws and regulations are interpreted and applied in a manner
inconsistent with our practices. The effects of climate change and legal or regulatory initiatives to address climate change could
have a long-term adverse impact on our business and results of operations.
Our business is subject to an increasing focus on sustainability matters.
From time to time we establish and publicly announce goals and commitments, including reducing our impact on the
environment and relating to animal welfare. For example, in 2022, we established science-based targets for Scope 1, 2 and 3
greenhouse gas emissions. Our ability to achieve any stated goal, target or objective is subject to numerous factors and
conditions, many of which are outside of our control. Examples of such factors include evolving regulatory requirements
affecting sustainability standards or disclosures or imposing different requirements, the pace of changes in technology, the
availability of requisite financing, the availability of suppliers and products that can meet our sustainability and other standards,
and changing business dynamics including acquisitions. Furthermore, standards for tracking and reporting such matters
continue to evolve. Our selection of voluntary disclosure frameworks and standards, and the interpretation or application of
those frameworks and standards, may change from time to time or differ from those of others. Methodologies for reporting
these data may be updated and previously reported data may be adjusted to reflect improvement in availability and quality of
third-party data, changing assumptions, changes in the nature and scope of our operations (including from acquisitions and
divestitures), and other changes in circumstances, which could result in significant revisions to our current goals, reported
progress in achieving such goals, or ability to achieve such goals in the future. If we fail to achieve, or are perceived to have
failed or been delayed in achieving, or improperly report our progress toward achieving these goals and commitments, it could
negatively affect consumer or customer preference for our products or investor confidence in our stock, as well as expose us to
enforcement actions and litigation.
Additionally, we might fail to effectively address increased attention from the media, stockholders, activists and other
stakeholders on climate change and related environmental sustainability matters or animal welfare goals. Such failure, or the
perception that we have failed to act responsibly regarding climate change or animal welfare, whether or not valid, could result
in adverse publicity and negatively affect our business and reputation.
Our business, financial condition and results of operations could be adversely affected by disruptions in the global
economy caused by the ongoing conflict between Russia and Ukraine.
The global economy has been negatively impacted by the military conflict between Russia and Ukraine. Furthermore,
governments in the U.S., United Kingdom, and European Union have each imposed export controls on certain products and
financial and economic sanctions on certain industry sectors and parties in Russia. Although we have no operations in Russia or
Ukraine, we have experienced shortages in materials and increased costs for transportation, energy, and raw material due in part
to the negative impact of the Russia-Ukraine military conflict on the global economy. The scope and duration of the military
conflict in Ukraine is uncertain, rapidly changing and hard to predict. Further escalation of geopolitical tensions related to the
military conflict, including increased trade barriers or restrictions on global trade, could result in, among other things,
cyberattacks, supply disruptions, lower consumer demand, and changes to foreign exchange rates and financial markets, any of
which may adversely affect our business and supply chain. In addition, the effects of the ongoing conflict could also heighten
many of the other risk factors discussed in this Item 1A.
Risk Factors Related to the Pending Sovos Brands Acquisition
The Sovos Brands acquisition is subject to certain closing conditions that, if not satisfied or waived, could delay closing
or prevent it from occurring at all.
The closing of the Sovos Brands acquisition is subject to certain customary mutual conditions, including (i) the absence of
any injunction or other order issued by a court of competent jurisdiction in the United States or applicable law or legal
prohibition in the United States that prohibits or makes illegal the consummation of the merger, (ii) the approval of Sovos
Brands’ shareholders holding at least a majority of the outstanding shares of Sovos Brands common stock entitled to vote on the
adoption of the merger agreement and (iii) the expiration or termination of any waiting period (and any extension thereof)
applicable to the consummation of the merger under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. If
the closing of the acquisition is not effective by May 7, 2024, we could be required to pay an additional $0.00182 per share per
day beginning May 8, 2024 until the merger becomes effective. We and Sovos Brands may also terminate the merger
agreement under certain circumstances, and we may be required, in certain circumstances, to pay a termination fee of $145
million. For additional information on the merger agreement, see our Form 8-K filed with the U.S. Securities and Exchange
Commission on August 7, 2023. There are also several pending lawsuits filed by purported shareholders of Sovos Brands
seeking, among other things, to enjoin the acquisition. If we do not complete the acquisition, or if the closing is significantly
delayed, our business or financial results may be adversely affected.
Our obligation to complete the pending acquisition of Sovos Brands is not subject to a financing condition, and
financing for the Sovos Brands acquisition may not be obtained on favorable terms, or at all.
Our obligation to complete the pending acquisition of Sovos Brands is not subject to a financing condition. We intend to
finance the acquisition of Sovos Brands with the issuance of new debt. There can be no assurance that we will obtain financing
on terms we find acceptable and we may be required to finance a portion of the purchase price of the pending acquisition at
interest rates higher than currently expected. Limitations on our ability to obtain financing, a reduction in our liquidity or an
increase in our borrowing costs may adversely affect our business or financial results.
The anticipated benefits of the Sovos Brands acquisition may not be fully realized.
We expect that the acquisition of Sovos Brands will result in various benefits including, among other things, cost savings,
cost synergies and revenue opportunities. Achieving these anticipated benefits is subject to uncertainties, including whether we
integrate in an efficient and effective manner, and general competitive factors in the marketplace. Integrating Sovos Brands will
be a complex, time-consuming and expensive process. We may experience unanticipated difficulties or expenses related to the
integration, including:
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• diversion of management's attention from ongoing business concerns;
• managing a larger combined business;
Item 4. Mine Safety Disclosures
Not applicable.
• perceived adverse changes in product offerings to consumers, whether or not these changes actually occur;
Information about our Executive Officers
The section below provides information regarding our executive officers as of September 13, 2023:
Name, Present Title & Business Experience
Carrie L. Anderson, Executive Vice President and Chief Financial Officer. Executive Vice President and
Chief Financial Officer, Integra LifeSciences Holdings Corporation (2019-2023). Vice President and
Controller, Dover Corporation (2017-2019).
Year First
Appointed
Executive
Officer
Age
54
2023
Mick J. Beekhuizen, Executive Vice President and President, Meals & Beverages. Executive Vice
President and Chief Financial Officer (2020-2023). Executive Vice President and Chief Financial Officer,
Chobani LLC (2016-2019).
47
2020
Adam G. Ciongoli, Executive Vice President, General Counsel and Chief Sustainability, Corporate
Responsibility and Governance Officer. We have employed Mr. Ciongoli in an executive or managerial
capacity for at least five years.
Mark A. Clouse, President and Chief Executive Officer. Chief Executive Officer, Pinnacle Foods, Inc.
(2016-2018). Chief Commercial Officer (2016) and Executive Vice President and Chief Growth Officer
(2014-2016), Mondelez International, Inc.
55
2015
55
2019
Christopher D. Foley, Executive Vice President and President, Snacks. We have employed Mr. Foley in
an executive or managerial capacity for at least five years.
51
2019
Diane Johnson May, Executive Vice President and Chief Human Resources Officer. Senior Vice
President, People and Culture, Manpower Group (2020-2021). Executive Vice President, Chief Human
Resources Officer, Brookdale Senior Living (2019-2020). Managing Vice President, The Deli Source, Inc.
(2017-2019).
Daniel L. Poland, Executive Vice President and Chief Supply Chain Officer. Chief Operating Officer,
KIND Snacks (2019-2021). Executive Vice President and Chief Supply Chain Officer, Pinnacle Foods,
Inc. (2018-2019). Chief Supply Chain Officer - North American Operations, Danone (2016-2017).
65
2022
60
2022
Anthony J. Sanzio, Executive Vice President and Chief Communications Officer. We have employed Mr.
Sanzio in an executive or managerial capacity for at least five years.
56
2022
Craig S. Slavtcheff, Executive Vice President, Chief R&D and Innovation Officer. We have employed
Mr. Slavtcheff in an executive or managerial capacity for at least five years.
56
2019
• assumption of unknown risks and liabilities;
• the retention of key suppliers and customers of Sovos Brands;
• attracting new business and operational relationships;
• retaining and integrating key employees and maintaining employee morale; and
• unforeseen expenses or delays.
After the acquisition, we may seek to combine certain operations, functions, systems and processes, which we may be
unsuccessful or delayed in implementing. While we have assumed that a certain level of expenses would be incurred in
connection with the Sovos Brands acquisition, transaction costs, acquisition-related costs, costs for synergies and integration
costs may be more than anticipated. In addition, there are many factors beyond our control and the control of Sovos Brands that
could affect the total amount or the timing of these expenses. Although we expect that the elimination of duplicative costs and
realization of other efficiencies related to the integration of the businesses will offset incremental costs over time, any net
benefit may not be achieved in the near term or at all. The failure to effectively address any of these risks, or any other risks
related to the integration of the Sovos Brands acquisition, may adversely affect our business or financial results.
Item 1B. Unresolved Staff Comments
None.
Item 2. Properties
Our principal executive offices are company-owned and located in Camden, New Jersey. The following table sets forth our
principal manufacturing facilities and the reportable segment that primarily uses each of the facilities:
Inside the U.S.
Arizona
Goodyear (S)
California
Dixon (MB)
Stockton (MB)
Connecticut
Bloomfield (S)
Florida
Lakeland (S)
Illinois
Downers Grove (S)
Indiana
Jeffersonville (S)
______________________________
MB - Meals & Beverages
S - Snacks
Massachusetts
Hyannis (S)
North Carolina
Charlotte (S)
Maxton (MB)
Ohio
Ashland (S)
Napoleon (MB)
Willard (S)
Oregon
Salem (S)
Tualatin (MB)
Pennsylvania
Denver (S)
Downingtown (S)
Hanover (S)
Texas
Paris (MB)
Utah
Richmond (S)
Wisconsin
Beloit (S)
Franklin (S)
Milwaukee (MB)
Each of the foregoing manufacturing facilities is company-owned, except the Tualatin, Oregon facility, which is leased. We
also maintain principal business unit offices in Charlotte, North Carolina; Doral, Florida; Hanover, Pennsylvania; Norwalk,
Connecticut; Tualatin, Oregon; and Mississauga, Canada. 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.
We also own and lease distribution centers across the U.S. We believe that our manufacturing and processing plants and
distribution centers are well maintained and, together with facilities operated by our contract manufacturers, are generally
adequate to support the current operations of the businesses.
Item 3. Legal Proceedings
Information regarding reportable legal proceedings is contained in Note 17 to the Consolidated Financial Statements and
incorporated herein by reference.
14
15
PART II
Issuer Purchases of Equity Securities
Item 5. Market for Registrant’s Capital Stock, Related Shareholder Matters and Issuer Purchases of Equity Securities
Market for Registrant’s Capital Stock
Our capital stock is traded on the New York Stock Exchange under the symbol "CPB." On September 13, 2023, there were
297,945,220 holders of record of our capital stock.
Return to Shareholders* Performance Graph
The information contained in this Return to Shareholders Performance Graph section shall not be deemed to be "soliciting
material" or "filed" or incorporated by reference in future filings with the Securities and Exchange Commission, or subject to
the liabilities of Section 18 of the Securities Exchange Act of 1934, as amended (the Exchange Act), except to the extent we
specifically incorporate it by reference into a document filed under the Securities Exchange Act of 1933, as amended (the
Securities Act), or the Exchange Act.
The following graph compares the cumulative total shareholder return (TSR) on our stock with the cumulative total return
of the Standard & Poor’s 500 Stock Index (the S&P 500) and the Standard & Poor’s Packaged Foods Index (the S&P Packaged
Foods Group). The graph assumes that $100 was invested on July 27, 2018, in each of our stock, the S&P 500 and the S&P
Packaged Foods Group, and that all dividends were reinvested. The total cumulative dollar returns shown on the graph
represent the value that such investments would have had on July 30, 2023.
S
R
A
L
L
O
D
250
225
200
175
150
125
100
75
50
25
0
2018
2019
2020
2021
2022
2023
Campbell
S&P 500
S&P Packaged Foods Group
Period
5/1/23 - 5/31/23
6/1/23 - 6/30/23
7/3/23 - 7/28/23
Total
Total Number
of Shares
Purchased (1)
Average
Price Paid
Per Share (2)
—
5,657
—
5,657
$
$
$
$
—
46.37
—
46.37
Total Number of
Shares Purchased
as Part of Publicly
Announced Plans or
Programs (3)
Approximate
Dollar Value of
Shares that may yet
be Purchased
Under the Plans or
Programs
($ in Millions) (3)
—
5,657
—
5,657
$
$
$
$
405
405
405
405
____________________________________
(1) Shares purchased are as of the trade date.
(2) Average price paid per share is calculated on a settlement basis and excludes commission and excise tax. As of January 1,
2023, our share repurchases in excess of issuances are subject to a 1% excise tax enacted by the Inflation Reduction Act.
Any excise tax incurred is recognized as part of the cost basis of the shares acquired in the Consolidated Statements of
Equity.
(3)
In June 2021, our Board of Directors authorized an anti-dilutive share repurchase program of up to $250 million (June
2021 program) to offset the impact of dilution from shares issued under our stock compensation programs. The June 2021
program has no expiration date, but it may be suspended or discontinued at any time. Repurchases under the June 2021
program may be made in open-market or privately negotiated transactions. In September 2021, the Board approved a
strategic share repurchase program of up to $500 million (September 2021 program). The September 2021 program has no
expiration date, but it may be suspended or discontinued at any time. Repurchases under the September 2021 program may
be made in open-market or privately negotiated transactions.
Item 6. Reserved
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
OVERVIEW
This Management’s Discussion and Analysis of Financial Condition and Results of Operations is provided as a supplement
to, and should be read in conjunction with, our consolidated financial statements and the accompanying notes to the
consolidated financial statements presented in "Financial Statements and Supplementary Data," as well as the information
contained in "Risk Factors."
Unless otherwise stated, the terms "we," "us," "our" and the "company" refer to Campbell Soup Company and its
consolidated subsidiaries.
Executive Summary
We are a manufacturer and marketer of high-quality, branded food and beverage products. We operate in a highly
competitive industry and experience competition in all of our categories.
In 2023 we delivered strong growth against all of our key financial metrics, exceeding our initial expectations and
advancing many of our key strategic initiatives. During 2023, we navigated through a challenging environment marked by
continued supply chain pressures, particularly around high input cost inflation. Our improved supply chain execution combined
with inflation-driven pricing, continued supply chain productivity improvements and cost savings initiatives partially mitigated
ongoing inflationary pressures experienced in 2023.
* Stock appreciation plus dividend reinvestment.
Strategy
Campbell
S&P 500
S&P Packaged Foods Group
2018
100
100
100
2019
104
110
110
2020
129
121
119
2021
118
165
128
2022
137
157
144
2023
132
177
151
Our strategy is to unlock our full growth potential by focusing on our core brands in two divisions within North America
while delivering on the promise of our purpose - Connecting people through food they love. Our strategic plan is based on four
pillars: build a winning team and culture; accelerate profitable growth; fuel investments and margins with targeted cost savings;
and deliver on the promise of our purpose all as further discussed below.
We plan to continue our focus on building a winning team and culture by driving organizational engagement, belonging
and effectiveness through our new employee value proposition: Make history with Campbell’s, and modernizing our facilities.
In 2023, we announced the consolidation of our Snacks offices in Charlotte, North Carolina and Norwalk, Connecticut into
Camden, New Jersey and a $50 million investment in the Camden campus. We expect a single headquarters will accelerate our
plan to build a winning team and culture by investing in our campus and our people. In addition, we plan to continue to deliver
on the promise of our purpose with continued progress on our sustainability goals and strengthening our connection to the
communities in which we operate.
16
17
We believe that we can accelerate our profitable growth model by growing market share and driving integrated business
planning programming throughout the company. We expect to expand into new market segments through retail execution,
marketing and innovation. In addition, we expect to continue to focus on accelerating the growth of our Snacks brands while
also sustaining the growth in U.S. soup and our other core brands.
We also expect to fuel investments and margins by continuing to focus on effective revenue management, transforming our
supply chain into a competitive advantage, and finding innovative ways to enhance our products and processes to unlock cost
efficiencies and savings across the enterprise. We continue to pursue our multi-year cost savings initiatives with targeted
annualized cost savings of $1 billion for continuing operations by the end of 2025, with $890 million in cost savings achieved
through 2023. See "Restructuring Charges and Cost Savings Initiatives" for additional information on these initiatives.
Business Trends
Our businesses are being influenced by a variety of trends that we anticipate will continue in the future, including: cost
inflation; changing consumer preferences; and a competitive and dynamic retail environment.
Our strategy is designed, in part, to capture growing consumer preferences for snacking and convenience. For example, we
believe that consumers are changing their eating habits by increasing the type and frequency of snacks they consume and are
continuing in-home eating behaviors that were driven by the COVID-19 pandemic.
Retailers continue to use their buying power and negotiating strength to seek increased promotional programs funded by
their suppliers and more favorable terms, including supplier-funded customized products. Any consolidations among retailers
would continue to create large and sophisticated customers that may further this trend. Retailers also continue to grow and
promote store brands that compete with branded products, especially on price.
Throughout 2022 and continuing into 2023, our industry has been impacted by supply chain disruptions, commodity cost
volatility, labor market issues, input cost inflation, and other global macroeconomic challenges. Throughout 2023, we have
experienced some moderation in input cost inflation, and we expect modest pressures of input cost inflation to continue into
2024. We anticipate continued supply chain productivity and previously implemented pricing actions to mitigate some of the
inflationary pressures, and expect such benefits to largely offset the incremental costs in 2024. We will continue to evaluate the
evolving macroeconomic environment to take action to mitigate the impact on our business, consolidated results of operations
and financial condition. We will also be lapping 2023 price increases, and anticipate that favorable net price realization will
represent a reduced contribution to sales in 2024.
Recent Developments
On August 7, 2023, we entered into an agreement to acquire Sovos Brands, Inc. (Sovos Brands) for $23.00 per share in
cash, representing a total enterprise value of approximately $2.7 billion. The closing of the transaction is subject to customary
closing conditions and termination rights, including the approval of Sovos Brands’ shareholders and regulatory approvals. We
plan to finance the acquisition through the issuance of new debt. For additional information on this pending acquisition, see our
Form 8-K filed with the U.S. Securities and Exchange Commission on August 7, 2023, and Note 19 to the Consolidated
Financial Statements.
Summary of Results
This Summary of Results provides significant highlights from the discussion and analysis that follows.
There were 52 weeks in 2023, 2022 and 2021.
•
•
•
Net sales increased 9% in 2023 to $9.357 billion with the benefit of favorable inflation-driven net price realization
more than offsetting unfavorable volume/mix.
Gross profit, as a percent of sales, increased to 31.2% in 2023 from 30.7% a year ago. The increase was primarily due
to favorable net price realization, supply chain productivity improvements and mark-to-market adjustments on
outstanding undesignated commodity hedges, partially offset by higher cost inflation and other supply chain costs as
well as unfavorable volume/mix.
Earnings per share were $2.85 in 2023, compared to $2.51 a year ago. The current year included expenses of $.15 per
share and the prior year included expenses of $.34 per share from items impacting comparability as discussed below.
Net Earnings attributable to Campbell Soup Company - 2023 Compared with 2022
The following items impacted the comparability of net earnings and net earnings per share:
•
In 2023, we recognized actuarial gains on our pension and postretirement plans in Other expenses / (income) of $15
million ($11 million after tax, or $.04 per share). In 2022, we recognized actuarial losses in Other expenses / (income)
of $44 million ($33 million after tax, or $.11 per share);
•
In 2023, we recognized gains in Cost of products sold of $21 million ($16 million after tax, or $.05 per share)
associated with unrealized mark-to-market adjustments on outstanding undesignated commodity hedges. In 2022, we
recognized losses in Cost of products sold of $59 million ($44 million after tax, or $.15 per share) associated with
unrealized mark-to-market adjustments on outstanding undesignated commodity hedges;
• We implemented several cost savings initiatives in recent years. In 2023, we recorded Restructuring charges of $16
million and implementation costs and other related costs of $24 million in Administrative expenses, $18 million in
Cost of products sold, $5 million in Marketing and selling expenses and $3 million in Research and development
expenses (aggregate impact of $50 million after tax, or $.17 per share) related to these initiatives. In 2022, we recorded
Restructuring charges of $5 million and implementation costs and other related costs of $20 million in Administrative
expenses, $5 million in Cost of products sold and $1 million in Marketing and selling expenses (aggregate impact of
$24 million after tax, or $.08 per share) related to these initiatives. See Note 7 to the Consolidated Financial
Statements and "Restructuring Charges and Cost Savings Initiatives" for additional information;
•
•
•
•
In 2023, we recorded a pre- and after-tax loss in Other expenses / (income) of $13 million ($.04 per share) on the sale
of our Emerald nuts business, which was sold on May 30, 2023;
In 2023, we recorded accelerated amortization expense in Other expenses / (income) of $7 million ($5 million after
tax, or $.02 per share) related to customer relationship intangible assets due to the loss of certain contract
manufacturing customers;
In the first quarter of 2024, we announced our intent to acquire Sovos Brands. In 2023, we incurred transaction costs in
Other expenses / (income) of $5 million ($4 million after tax, or $.01 per share) associated with the pending
acquisition, which we expect to close by the end of December 2023; and
In 2022, we recorded a loss in Interest expense of $4 million ($3 million after tax, or $.01 per share) on the
extinguishment of debt.
The items impacting comparability are summarized below:
(Millions, except per share amounts)
Net earnings attributable to Campbell Soup Company
Pension and postretirement actuarial gains (losses)
Commodity mark-to-market gains (losses)
Restructuring charges, implementation costs and other related costs
Charges associated with divestiture
Accelerated amortization
Transaction costs
Loss on debt extinguishment
Impact of items on Net earnings(1)
__________________________________________
(1) Sum of the individual amounts may not add due to rounding.
$
$
2023
2022
Earnings
Impact
EPS
Impact
Earnings
Impact
EPS
Impact
858 $
2.85 $
757 $
2.51
11 $
.04 $
(33) $
16
(50)
(13)
(5)
(4)
—
.05
(.17)
(.04)
(.02)
(.01)
—
(44)
(24)
—
—
—
(3)
$
(45) $
(.15) $
(104) $
(.11)
(.15)
(.08)
—
—
—
(.01)
(.34)
Net earnings attributable to Campbell Soup Company were $858 million ($2.85 per share) in 2023, compared to $757
million ($2.51 per share) in 2022. After adjusting for items impacting comparability, earnings increased reflecting an improved
gross profit, partially offset by higher marketing and selling expenses, higher other expenses, higher administrative expenses
and a higher effective tax rate. Earnings per share benefited from a reduction in the weighted average diluted shares
outstanding. Net periodic pension and postretirement benefit income excluding any actuarial gains or losses was $44 million
($33 million after tax, or $.11 per share) lower in 2023.
Net Earnings attributable to Campbell Soup Company - 2022 Compared with 2021
In addition to the 2022 items that impacted comparability of Net earnings discussed above, the following items impacted
the comparability of net earnings and net earnings per share:
Continuing Operations
•
In 2021, we recognized actuarial gains on our pension and postretirement plans in Other expenses / (income) of $203
million ($155 million after tax, or $.51 per share);
18
19
•
•
•
•
In 2021, we recognized gains in Cost of products sold of $50 million ($38 million after tax, or $.12 per share)
associated with unrealized mark-to-market adjustments on outstanding undesignated commodity hedges;
In 2021, we recorded Restructuring charges of $21 million and implementation costs and other related costs of $28
million in Administrative expenses, $3 million in Cost of products sold and $1 million in Marketing and selling
expenses (aggregate impact of $40 million after tax, or $.13 per share) related to the cost savings initiatives discussed
above. See Note 7 to the Consolidated Financial Statements and "Restructuring Charges and Cost Savings Initiatives"
for additional information;
In 2021, we recorded a loss in Other expenses / (income) of $11 million (and a gain of $3 million after tax, or $.01 per
share) on the sale of our Plum baby food and snacks business; and
In 2021, we recorded a $19 million ($.06 per share) deferred tax charge in connection with a legal entity reorganization
as part of the continued integration of Snyder's-Lance, Inc. (Snyder's-Lance).
The items impacting comparability are summarized below:
(Millions, except per share amounts)
2022
2021
Earnings
Impact
EPS
Impact
Earnings
Impact
EPS
Impact
Earnings from continuing operations attributable to Campbell Soup Company $
757 $
2.51 $ 1,008 $
3.30
Continuing operations:
Pension and postretirement actuarial gains (losses)
$
(33) $
(.11) $
155 $
Commodity mark-to-market gains (losses)
Restructuring charges, implementation costs and other related costs
Loss on debt extinguishment
Gain associated with divestiture
Deferred tax charge
Impact of items on Earnings from continuing operations(1)
__________________________________________
(1) Sum of the individual amounts may not add due to rounding.
(44)
(24)
(3)
—
—
(.15)
(.08)
(.01)
—
—
38
—
3
(19)
(40)
(.13)
.51
.12
—
.01
(.06)
.45
$
(104) $
(.34) $
137 $
Earnings from continuing operations were $757 million ($2.51 per share) in 2022, compared to $1.008 billion ($3.30 per
share) in 2021. After adjusting for items impacting comparability, earnings from continuing operations decreased reflecting
lower gross profit, lower other income and higher administrative expenses, mostly offset by lower marketing and selling
expenses, lower interest expense and a lower effective tax rate. Earnings per share benefited from a reduction in the weighted
average diluted shares outstanding.
See "Discontinued Operations" for additional information.
DISCUSSION AND ANALYSIS
Sales
An analysis of net sales by reportable segment follows:
(Millions)
Meals & Beverages
Snacks
2023
2022
2021
2023/2022
2022/2021
$
$
4,907 $
4,607 $
4,450
3,955
9,357 $
8,562 $
4,621
3,855
8,476
7
13
9
—
3
1
% Change
An analysis of percent change of net sales by reportable segment follows:
2023 versus 2022
Volume/mix
Net price realization(1)
Currency
Divestiture
2022 versus 2021
Volume/mix
Net price realization(1)
Divestiture
Meals &
Beverages(1)
(5)%
12
(1)
—
7%
Meals &
Beverages
(6)%
7
(1)
—%
Snacks
(2)%
15
—
—
13%
Snacks(2)
(6)%
8
—
3%
Total
(4)%
13
—
—
9%
Total(2)
(6)%
7
(1)
1%
__________________________________________
(1)
(2) Sum of the individual amounts does not add due to rounding.
Includes revenue reductions from trade promotion and consumer coupon redemption programs.
In 2023, Meals & Beverages sales increased 7% primarily due to increases in U.S. retail products, including U.S. soup and
Prego pasta sauces, as well as gains in foodservice. Favorable net price realization was partially offset by lower volume/mix.
Sales of U.S. soup increased 3% primarily due to increases in ready-to-serve soups and broth.
In 2022, Meals & Beverages sales were comparable with prior year. Excluding the impact from the divestiture of the Plum
baby food and snacks business, sales increased primarily due to increases in U.S. soup and foodservice, partially offset by
declines in V8 beverages. Favorable inflation-driven net price realization was partially offset by lower volume/mix, which
decreased primarily due to supply constraints driven by labor and materials availability and price elasticities. Sales of U.S. soup
increased 3% due to increases in ready-to-serve soups, condensed soups and broth.
In 2023, Snacks sales increased 13% driven by sales of our power brands which increased 17%. Sales increased due to
increases in cookies and crackers, primarily Goldfish crackers and Lance sandwich crackers, and in salty snacks, primarily
Snyder’s of Hanover pretzels and Kettle Brand and Cape Cod potato chips. Sales benefited from favorable net price realization.
In 2022, Snacks sales increased 3% driven by sales of our power brands which increased 7%. Sales increased due to
increases in cookies and crackers, primarily Goldfish crackers, and in salty snacks, primarily Snyder’s of Hanover pretzels and
Kettle Brand potato chips which more than offset declines in Late July snacks, partially offset by declines in non-core
businesses. Favorable inflation-driven net price realization was partly offset by a decline in volume/mix. Volume/mix declined
driven by supply constraints due to labor and materials availability and price elasticities.
Gross Profit
Gross profit, defined as Net sales less Cost of products sold, increased by $290 million in 2023 from 2022 and decreased
by $184 million in 2022 from 2021. As a percent of sales, gross profit was 31.2% in 2023, 30.7% in 2022 and 33.2% in 2021.
The 50 basis-point increase and the 250 basis-point decrease in gross profit margin in 2023 and 2022, respectively, were
due to the following factors:
Net price realization
Productivity improvements
Cost inflation, supply chain costs and other factors(1)
Volume/mix(2)
Higher restructuring-related costs
Margin Impact
2023
950
300
(1,040)
(150)
(10)
50
2022
540
130
(810)
(110)
—
(250)
__________________________________________
(1)
2023 includes an estimated positive margin impact of a 90 basis-point benefit from the change in unrealized mark-to-
market adjustments on outstanding undesignated commodity hedges and 10 basis points from the benefit of cost savings
initiatives, which were more than offset by cost inflation and other factors. 2022 includes an estimated positive margin
20
21
impact of 30 basis points from the benefit of cost savings initiatives, which was more than offset by cost inflation and other
factors, including a 130 basis-point negative impact from the change in unrealized mark-to-market adjustments on
outstanding undesignated commodity hedges.
(2)
Includes the impact of operating leverage.
Marketing and Selling Expenses
Marketing and selling expenses as a percent of sales were 8.7% in 2023, 8.6% in 2022 and 9.6% in 2021. Marketing and
selling expenses increased 10% in 2023 from 2022. The increase was primarily due to higher advertising and consumer
promotion expense (approximately 7 points) and higher selling expenses (approximately 6 points), partially offset by increased
benefits from cost savings initiatives (approximately 3 points). The increase in advertising and consumer promotion expense
was due in part to moderated levels in the prior year from supply constraints.
Marketing and selling expenses decreased 10% in 2022 from 2021. The decrease was primarily due to lower advertising
and consumer promotion expense (approximately 10 points). The reduction in advertising and consumer promotion expense
was primarily due to supply constraints.
Administrative Expenses
Administrative expenses as a percent of sales were 7.0% in 2023, 7.2% in 2022 and 7.1% in 2021. Administrative expenses
increased 6% in 2023 from 2022. The increase was primarily due to higher general administrative costs and inflation
(approximately 8 points) and higher incentive compensation (approximately 2 points), partially offset by lower expenses related
to the settlement of certain legal claims (approximately 4 points). Administrative expenses in 2023 included $14 million of
litigation expenses related to the Plum baby food and snacks business, which we divested in May 2021.
Administrative expenses increased 3% in 2022 from 2021. The increase was primarily due to expenses related to the
settlement of certain legal claims (approximately 3 points) and higher general administrative costs (approximately 3 points),
partially offset by increased benefits from cost savings initiatives (approximately 3 points).
Other Expenses / (Income)
Other expenses in 2023 included the following:
• $48 million of amortization of intangible assets, including accelerated amortization of $7 million;
• a loss of $13 million on the sale of the Emerald nuts business;
• $5 million of transaction costs associated with the pending acquisition of Sovos Brands; and
• $35 million of net periodic benefit income, including pension and postretirement actuarial gains of $15 million.
Other expenses in 2022 included the following:
• $41 million of amortization of intangible assets; and
• $23 million of net periodic benefit income, including pension and postretirement actuarial losses of $44 million.
Other income in 2021 included the following:
Operating Earnings
Segment operating earnings increased 10% in 2023 from 2022 and decreased 3% in 2022 from 2021.
An analysis of operating earnings by segment follows:
(Millions)
Meals & Beverages
Snacks
Corporate income (expense)
Restructuring charges(1)
Earnings before interest and taxes
2023
2022
2021
2023/2022
2022/2021
% Change
$
894 $
874 $
640
517
922
514
1,534
(206)
(16)
1,391
(223)
1,436
130
(5)
(21)
$ 1,312 $
1,163 $ 1,545
2
24
10
(5)
1
(3)
__________________________________________
(1) See Note 7 to the Consolidated Financial Statements for additional information on restructuring charges.
Operating earnings from Meals & Beverages increased 2% in 2023 versus 2022. The increase was primarily due to higher
gross profit, partially offset by higher marketing and selling expenses. Gross profit margin decreased due to unfavorable
volume/mix, with favorable net price realization and supply chain productivity improvements more than offsetting higher cost
inflation and other supply chain costs.
Operating earnings from Meals & Beverages decreased 5% in 2022 versus 2021. The decrease was primarily due to lower
gross profit and higher administrative expenses, partially offset by lower marketing and selling expenses. Gross profit margin
declined driven by higher cost inflation and other supply chain costs as well as unfavorable volume/mix, partially offset by
favorable net price realization and supply chain productivity improvements.
Operating earnings from Snacks increased 24% in 2023 versus 2022. The increase was primarily due to higher gross profit,
partially offset by higher marketing and selling expenses. Gross profit margin increased due to favorable net price realization
and supply chain productivity improvements, partially offset by higher cost inflation and other supply chain costs as well as
unfavorable volume/mix.
Operating earnings from Snacks increased 1% in 2022 versus 2021. The increase primarily due to lower marketing and
selling expenses and slightly higher gross profit, partially offset by higher administrative expenses due to the settlement of
certain legal claims.
Corporate expense in 2023 included the following:
• costs of $50 million related to cost savings initiatives;
• a loss of $13 million from the sale of the Emerald nuts business;
• $7 million of accelerated amortization expense;
• $285 million of net periodic benefit income, including pension and postretirement actuarial gains of $203 million;
• $5 million of transaction costs associated with the pending acquisition of Sovos Brands;
• $27 million of income from transition services fees;
• $42 million of amortization of intangible assets; and
• a loss of $11 million on the sale of the Plum baby food and snacks business.
• $21 million of unrealized mark-to-market gains on outstanding undesignated commodity hedges; and
• $15 million of pension and postretirement actuarial gains.
Corporate expense in 2022 included the following:
• $59 million of unrealized mark-to-market losses on outstanding undesignated commodity hedges;
• $44 million of pension and postretirement actuarial losses; and
• costs of $26 million related to cost savings initiatives.
Corporate income in 2021 included the following:
• $203 million of pension and postretirement actuarial gains;
• $50 million of unrealized mark-to-market gains on outstanding undesignated commodity hedges;
• costs of $32 million related to the cost savings initiatives; and
• a loss of $11 million from the sale of the Plum baby food and snacks business.
22
23
Excluding these amounts, the remaining change in 2023 from 2022 was primarily due to lower net periodic pension and
postretirement benefit income in the current year and higher administrative expenses, including litigation expenses related to the
Plum baby food and snacks business.
Interest Expense
Interest expense decreased to $188 million in 2023 from $189 million in 2022. The decrease in interest expense was
primarily due to a loss on extinguishment of debt of $4 million in 2022, partially offset by higher average interest rates on the
debt portfolio.
Interest expense decreased to $189 million in 2022 from $210 million in 2021. The decrease in interest expense was
primarily due to lower levels of debt, partially offset by a loss on extinguishment of debt of $4 million in 2022.
Taxes on Earnings
The effective tax rate was 23.9% in 2023, 22.4% in 2022 and 24.6% in 2021.
The increase in the effective tax rate in 2023 from 2022 was primarily due to the favorable impact of state income tax law
changes in 2022.
The decrease in the effective rate in 2022 from 2021 was primarily due to a $19 million deferred tax charge recognized in
the second quarter of 2021 in connection with a legal entity reorganization as part of the continued integration of Snyder's-
Lance and state income tax law changes.
Restructuring Charges and Cost Savings 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 charges recorded in the Consolidated Statements of Earnings related to these initiatives is as follows:
(Millions, except per share amounts)
Restructuring charges
Administrative expenses
Cost of products sold
Marketing and selling expenses
Research and development expenses
Total pre-tax charges
Aggregate after-tax impact
Per share impact
2023
2022
2021
Recognized as of
July 30, 2023
280
383
102
19
7
791
$
16 $
5 $
21 $
24
18
5
3
20
5
1
—
28
3
1
—
66 $
31 $
53 $
50 $
.17 $
24 $
.08 $
40
.13
$
$
$
24
A summary of the pre-tax costs associated with these initiatives is as follows:
(Millions)
Severance pay and benefits
Asset impairment/accelerated depreciation
Implementation costs and other related costs
Total
Recognized as of
July 30, 2023
$
$
240
106
445
791
The total estimated pre-tax costs for actions that have been identified are approximately $885 million to $905 million and
we expect to incur 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
$250 million in severance pay and benefits; approximately $140 million in asset impairment and accelerated depreciation; and
approximately $500 million to $515 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 $885 million to $905 million of pre-tax costs identified to date, we expect approximately $705 million to
$725 million will be cash expenditures. In addition, we expect to invest approximately $620 million in capital expenditures
through 2025, of which we invested $467 million as of July 30, 2023. 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, implementation of our existing SAP enterprise-resource planning system for Snyder's-Lance,
enhancements to our headquarters in Camden, New Jersey, and optimization of the Snyder’s-Lance warehouse and distribution
network.
We expect to fund the costs through cash flows from operations and short-term borrowings.
We expect the initiatives, once all phases are implemented, to generate annual ongoing savings of approximately $1 billion
by the end of 2025. As of July 30, 2023, we have generated total program-to-date pre-tax savings of $890 million.
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:
(Millions)
Meals & Beverages
Snacks
Corporate
Total
2023
Costs Incurred to
Date
26 $
24
16
66 $
251
345
195
791
$
$
See Note 7 to the Consolidated Financial Statements for additional information.
Discontinued Operations
We completed the sale of our Kelsen business on September 23, 2019, and the sale of the Arnott’s and certain other
international operations on December 23, 2019. In the third quarter of 2021, we recognized a $6 million loss due to tax expense
from return-to-provision adjustments related to the sale of these businesses.
LIQUIDITY AND CAPITAL RESOURCES
We expect foreseeable liquidity and capital resource requirements to be met through anticipated cash flows from
operations; long-term borrowings; short-term borrowings, which may include commercial paper; credit facilities; and cash and
cash equivalents. We believe that our sources of financing will be adequate to meet our future requirements.
We generated cash flows from operations of $1.143 billion in 2023, compared to $1.181 billion in 2022. The decline in
2023 was primarily due to changes in working capital, partially offset by higher cash earnings.
We generated cash flows from operations of $1.181 billion in 2022, compared to $1.035 billion in 2021. The increase in
2022 was primarily due changes in working capital, partially offset by lower cash earnings.
Current assets are less than current liabilities, which include debt maturing in one year, as we focus on lowering core
working capital requirements. We had negative working capital of $161 million as of July 30, 2023, and $923 million as of
July 31, 2022. Total debt maturing within one year was $191 million as of July 30, 2023, and $814 million as of July 31, 2022.
25
As part of our focus to lower core working capital requirements, we have worked with our suppliers to optimize our terms
and conditions, including the extension of payment terms. Our current payment terms with our suppliers, which we deem to be
commercially reasonable, generally range from 0 to 120 days. We also maintain agreements with third-party administrators that
allow participating suppliers to track payment obligations from us, and, at the sole discretion of the supplier, sell those payment
obligations to participating financial institutions. Our obligations to our suppliers, including amounts due and scheduled
payment terms, are not impacted. Supplier participation in these agreements is voluntary. We have no economic interest in a
supplier’s decision to enter into these agreements and no direct financial relationship with the financial institutions. We have
not pledged assets as security or provided any guarantees in connection with these arrangements. The payment of these
obligations is included in cash provided by operating activities in the Consolidated Statements of Cash Flows. Amounts
outstanding under these programs, which are included in Accounts payable on the Consolidated Balance Sheets, were
$258 million at July 30, 2023, and $262 million at July 31, 2022.
Capital expenditures were $370 million in 2023, $242 million in 2022 and $275 million in 2021. Capital expenditures are
expected to total approximately $440 million in 2024. Capital expenditures in 2023 included chip and cracker capacity
expansion for our Snacks business and a new manufacturing line for our Meals & Beverages business. Capital expenditures in
2022 included improvement of the quality and cost structure of the Snyder's-Lance manufacturing network, the continued
implementation of our existing SAP enterprise-resource planning system for Snyder's-Lance and cookie and cracker capacity
expansion for our Snacks business. Capital expenditures in 2021 included the continued implementation of our existing SAP
enterprise-resource planning system for Snyder's-Lance, chip capacity expansion projects, a Milano cookie capacity expansion
project and a Goldfish cracker capacity expansion project.
In Snacks, we have a direct-store-delivery distribution model that uses independent contractor distributors. In order to
maintain and expand this model, we routinely purchase and sell routes. The purchase and sale proceeds of the routes are
reflected in investing activities.
On May 3, 2021, we completed the sale of our Plum baby food and snacks business for $101 million.
On May 30, 2023, we completed the sale of our Emerald nuts business for $41 million.
Dividend payments were $447 million in 2023, $451 million in 2022 and $439 million in 2021. Annual dividends declared
were $1.48 per share in both 2023 and 2022 and $1.46 per share in 2021. The 2023 fourth quarter dividend was $.37 per share.
The declaration of dividends is subject to the discretion of our Board and depends on various factors, including our net
earnings, financial condition, cash requirements, future prospects and other factors that our Board deems relevant to its analysis
and decision making.
In June 2021, the Board authorized an anti-dilutive share repurchase program of up to $250 million (June 2021 program) to
offset the impact of dilution from shares issued under our stock compensation programs. The June 2021 program has no
expiration date, but it may be suspended or discontinued at any time. Repurchases under the anti-dilutive program may be made
in open-market or privately negotiated transactions. In September 2021, the Board approved a strategic share repurchase
program of up to $500 million (September 2021 program). The September 2021 program has no expiration date, but it may be
suspended or discontinued at any time. Repurchases under the September 2021 program may be made in open-market or
privately negotiated transactions. In 2023, we repurchased 2.7 million shares at a cost of $142 million. Of this amount, $68
million was used to repurchase shares pursuant to our June 2021 program and $74 million was used to repurchase share
pursuant to our September 2021 program. As of July 30, 2023, approximately $104 million remained available under the June
2021 program and approximately $301 million remained under the September 2021 program. In 2022, we repurchased 3.8
million shares at a cost of $167 million. In 2021, we repurchased approximately 1 million shares at a cost of $36 million. See
Note 15 to the Consolidated Financial Statements and "Market for Registrant's Capital Stock, Related Shareholder Matters and
Issuer Purchases of Equity Securities" for additional information.
On November 15, 2022, we entered into a delayed draw term loan credit agreement (the DDTL Credit Agreement) totaling
up to $500 million scheduled to mature on November 15, 2025. Loans under the DDTL Credit Agreement bear interest at the
rates specified in the DDTL Credit Agreement, which vary based on the type of loan and certain other conditions. The 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 DDTL Credit Agreement) of not less than 3.25:1.00, and events of default for credit
facilities of this type. We borrowed $500 million under the DDTL Credit Agreement on March 13, 2023, and used the proceeds
and cash on hand to repay the 3.65% $566 million Notes that matured on March 15, 2023.
On March 4, 2022, we completed the redemption of all $450 million outstanding aggregate principal amount of our 2.50%
Senior Notes due August 2, 2022. The consideration for the redemption was $453 million, including $3 million of premium.
We recognized a loss of $4 million (including the $3 million of premium and other costs), which was recorded in Interest
expense in the Consolidated Statement of Earnings. In addition, we paid accrued and unpaid interest on the redeemed notes
through the date of settlement. We used a combination of cash on hand and short-term debt to fund the redemption.
In March 2021, we repaid our 3.30% $321 million Notes and floating rate $400 million Notes, and in May 2021, we repaid
our 8.875% $200 million Notes. The repayments were funded with available cash and commercial paper issuances.
As of July 30, 2023, we had $191 million of short-term borrowings due within one year, of which $178 million was
comprised of commercial paper borrowings. As of July 30, 2023, we issued $29 million of standby letters of credit. On
September 27, 2021, we entered into a committed revolving credit facility totaling $1.85 billion scheduled to mature on
September 27, 2026. This facility remained unused at July 30, 2023, except for $1 million of standby letters of credit that we
issued under it. The facility contains customary 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
credit facility) of not less than 3.25:1.00, measured quarterly, and customary events of default for credit facilities of this type.
Loans under this facility will bear interest at the rates specified in the facility, which vary based on the type of loan and certain
other customary conditions. The facility supports our commercial paper program and other general corporate purposes. We
expect to continue to access the commercial paper markets, bank credit lines and utilize cash flows from operations to support
our short-term liquidity requirements.
On April 4, 2023, we entered into an amendment to our existing revolving credit facility to replace remaining LIBOR-
based benchmark rates applicable to borrowings under the revolving credit facility with SOFR-based benchmark rates, in
advance of the cessation of LIBOR occurring on June 30, 2023.
We are in compliance with the covenants contained in our credit facilities and debt securities.
In August 2023, we filed a registration statement with the Securities and Exchange Commission that registered an
indeterminate amount of debt securities. Under the registration statement we may issue debt securities from time to time,
depending on market conditions.
We intend to finance the pending Sovos Brands acquisition with the issuance of new debt.
CONTRACTUAL OBLIGATIONS AND OTHER COMMITMENTS
Contractual Obligations
We have short- and long-term material cash requirements related to our contractual obligations that arise in the normal
course of business. In addition to principal and interest payments on our outstanding debt obligations, our contractual
obligations primarily consist of purchase commitments, lease payments and pension and postretirement benefits.
See Note 12 to the Consolidated Financial Statements for a summary of our principal payments for short-term borrowings
and long-term debt obligations as of July 30, 2023. Interest payments primarily for short-term borrowings and long-term debt as
of July 30, 2023 are approximately as follows: $188 million in 2024; $305 million in 2025 through 2026; $218 million in 2027
through 2028; and $1.129 billion from 2029 through maturity. Interest payments are based on principal amounts and coupons or
contractual rates at fiscal year end.
Purchase commitments represent purchase orders and long-term purchase arrangements related to the procurement of
ingredients, supplies, machinery, equipment and services. As of July 30, 2023, purchase commitments totaled approximately
$1.762 billion. Approximately $1.31 billion of these purchase commitments will be settled in the ordinary course of business in
the next 12 months and the balance of $452 million from 2025 through 2031.
See Note 10 to the Consolidated Financial Statements for a summary of our lease obligations as of July 30, 2023.
As of July 30, 2023, we have a pension liability of $105 million and a postretirement benefit obligation of $153 million. As
of July 30, 2023, we also have a pension asset of $164 million based on the funded status of certain plans. See Note 9 to the
Consolidated Financial Statements and "Critical Accounting Estimates" for further discussion of our pension and postretirement
benefit obligations.
Off-Balance Sheet Arrangements and Other Commitments
We guarantee approximately 4,700 bank loans made to independent contractor distributors by third-party financial
institutions for the purchase of distribution routes. The maximum potential amount of the future payments under existing
guarantees we could be required to make is $496 million as of July 30, 2023. Our guarantees are indirectly secured by the
distribution routes. We do not expect that we will be required to make material guarantee payments as a result of defaults on the
bank loans guaranteed.
These obligations and commitments impact our liquidity and capital resource needs. We expect foreseeable liquidity and
capital resource requirements to be met through anticipated cash flows from operations; long-term borrowings; short-term
borrowings, which may include commercial paper; credit facilities; and cash and cash equivalents. We believe that our sources
of financing will be adequate to meet our future requirements.
26
27
MARKET RISK SENSITIVITY
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 equity price changes related to certain deferred compensation obligations. We
manage our foreign currency exposures by utilizing foreign exchange forward contracts. We enter into foreign exchange
forward contracts for periods consistent with related underlying exposures, and the contracts do not constitute positions
independent of those exposures. We manage our exposure to changes in interest rates by optimizing the use of variable-rate and
fixed-rate debt and we may utilize interest rate swaps in order to maintain our variable-to-total debt ratio within targeted
guidelines. 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. We do not enter into derivative contracts for speculative purposes
and do not use leveraged instruments.
The information below summarizes our market risks associated with significant financial instruments as of July 30, 2023.
Fair values included herein have been determined based on quoted market prices or pricing models using current market rates.
The information presented below should be read in conjunction with Notes 12, 13 and 14 to the Consolidated Financial
Statements.
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
notional amounts of the contracts as of July 30, 2023, and July 31, 2022, were $140 million and $153 million, respectively. The
aggregate fair value of all contracts was a loss of $1 million as of July 30, 2023, and a gain of $2 million as of July 31, 2022. A
hypothetical 10% fluctuation in exchange rates would impact the fair value of our outstanding foreign exchange contracts by
approximately $17 million as of July 30, 2023, and July 31, 2022, which would generally be offset by inverse changes on the
underlying hedged items.
As of July 30, 2023, we had outstanding variable-rate debt of $678 million with an average interest rate of 6.18%. As of
July 31, 2022, we had outstanding variable-rate debt of $235 million with an average interest rate of 2.63%. A hypothetical
100-basis-point increase in average interest rates applied to our variable-rate debt balances throughout 2023 and 2022 would
have increased annual interest expense in those years by approximately $4 million and $1 million, respectively.
As of July 30, 2023, we had outstanding fixed-rate debt of $4.041 billion with a weighted average interest rate of 3.79%.
As of July 31, 2022, we had outstanding fixed-rate debt of $4.609 billion with a weighted average interest rate of 3.76%. The
fair value of fixed-rate debt was $3.615 billion as of July 30, 2023 and $4.402 billion as of July 31, 2022. As of July 30, 2023,
and July 31, 2022, a hypothetical 100-basis-point increase in interest rates would decrease the fair value of our fixed-rate debt
by approximately $221 million and $274 million, respectively, while a hypothetical 100-basis-point decrease in interest rates
would increase the fair value of our fixed-rate debt by approximately $256 million and $318 million, respectively. The impact
of market interest rate fluctuations on our long-term debt does not affect our results of operations or financial position.
We enter into commodity futures, options and swap contracts, and a supply contract under which prices for certain raw
materials are established based on anticipated volume requirements to reduce the volatility of price fluctuations for
commodities. As of July 30, 2023, the total notional amount of the contracts was $241 million, and the aggregate fair value of
these contracts was a gain of $11 million. As of July 31, 2022, the total notional amount of these contracts was $296 million,
and the aggregate fair value of these contracts was a loss of $7 million. A hypothetical 10% fluctuation in commodity prices
would impact the fair value of our outstanding commodity contracts by approximately $25 million as of July 30, 2023, and $30
million as of July 31, 2022, which would generally be offset by inverse changes on the underlying hedged items.
We enter into swap contracts which hedge a portion of exposures relating to the total return of certain deferred
compensation obligations. The notional amount of the contracts was $42 million as of July 30, 2023, and $50 million as of
July 31, 2022. The fair value of these contracts was a gain of $4 million as of July 30, 2023, and a loss of $4 million as of
July 31, 2022. A hypothetical 10% fluctuation in equity price changes would impact the fair value of our outstanding swap
contracts by $5 million as of July 30, 2023, and July 31, 2022, which would generally be offset by inverse changes on the
underlying hedged items.
CRITICAL ACCOUNTING ESTIMATES
We prepare our consolidated financial statements in conformity with accounting principles generally accepted in the United
States. The preparation of these financial statements requires the use of estimates, judgments and assumptions that affect the
reported amounts of assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses
during the periods presented. Actual results could differ from those estimates and assumptions. See Note 1 to the Consolidated
Financial Statements for a discussion of significant accounting policies. The following areas all require the use of subjective or
complex judgments, estimates and assumptions:
Trade and consumer promotion programs — We offer various sales incentive programs to customers and consumers, such
as feature price discounts, in-store display incentives, cooperative advertising programs, new product introduction fees and
coupons. The mix between these forms of variable consideration, which are classified as reductions in revenue and recognized
upon sale, and advertising or other marketing activities, which are classified as marketing and selling expenses, fluctuates
between periods based on our overall marketing plans. The measurement and recognition of the costs for trade and consumer
promotion programs involves the use of judgment related to performance and redemption estimates. Estimates are made based
on historical experience and other factors, including expected volume. Typically, programs that are offered have a very short
duration. Historically, the difference between actual experience compared to estimated redemptions and performance has not
been significant to the quarterly or annual financial statements. Differences between estimates and actual costs are recognized
as a change in estimate in a subsequent period. However, actual expenses may differ if the level of redemption rates and
performance were to vary from estimates. Accrued trade and consumer promotion liabilities as of July 30, 2023 and July 31,
2022 were $156 million and $141 million, respectively.
Valuation of long-lived assets — Fixed assets and amortizable intangible assets are reviewed for impairment as events or
changes in circumstances occur indicating that the carrying value of the asset may not be recoverable. Undiscounted cash flow
analyses are used to determine if the carrying amount of the asset is recoverable. If impairment is determined to exist, the loss is
calculated based on estimated fair value.
Goodwill and intangible assets deemed to have indefinite lives are not amortized but rather are tested at least annually in
the fourth quarter for impairment, or more often if events or changes in circumstances indicate that the carrying amount of the
asset may be impaired.
Goodwill is tested for impairment at the reporting unit level. A reporting unit represents an operating segment or a
component of an operating segment. Goodwill is tested for impairment by either performing a qualitative evaluation or a
quantitative test. The qualitative evaluation is an assessment of factors to determine whether it is more likely than not that the
fair value of a reporting unit is less than its carrying amount, including goodwill. We may elect not to perform the qualitative
assessment for some or all reporting units and perform a quantitative impairment test. Fair value is determined based on
discounted cash flow analyses. The discounted estimates of future cash flows include significant management assumptions such
as revenue growth rates, operating margins, weighted average costs of capital and future economic and market conditions. If the
carrying value of the reporting unit exceeds fair value, goodwill is considered impaired. An impairment charge is recognized for
the amount by which the carrying value of the reporting unit exceeds fair value, limited to the amount of goodwill in the
reporting unit.
Indefinite-lived intangible assets are tested for impairment by comparing the fair value of the asset to the carrying value.
Fair value is determined using a relief from royalty valuation method based on discounted cash flow analyses that include
significant management assumptions such as revenue growth rates, weighted average costs of capital and assumed royalty rates.
If the carrying value exceeds fair value, an impairment charge will be recorded to reduce the asset to fair value.
As of July 30, 2023, the carrying value of goodwill was $3.965 billion. Based on our assessments, all of our reporting units
had fair values that significantly exceeded carrying values.
As of July 30, 2023, the carrying value of indefinite-lived trademarks was $2.541 billion as detailed below:
(Millions)
Snyder's of Hanover
Lance
Kettle Brand
Pace
Pacific Foods
Cape Cod
Various other Snacks(1)
Total
$
620
350
318
292
280
187
494
$
2,541
_____________________________________
(1) Associated with the acquisition of Snyder's-Lance.
As of the 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 the Pacific Foods and certain
other Snacks trademarks. Although assumptions are generally interdependent and do not change in isolation, sensitivities to
changes are provided below. Holding all other assumptions in our 2023 impairment testing constant, changes in the
assumptions below would reduce fair value of trademarks and result in impairment charges of approximately:
28
29
(Millions)
1% increase in the weighted-average cost of capital
1% reduction in revenue growth
1% decrease in royalty rate
Pacific
Foods
Various
other
Snacks
$
$
$
20 $
— $
20 $
25
10
50
While the 1% changes in assumptions would not result in impairment charges on our other trademarks, some changes
would reduce the excess coverage of fair value over carrying value to less than 10% for the Snyder's of Hanover, Kettle Brand,
Cape Cod and Pace trademarks.
The estimates of future cash flows used in impairment testing are made at a point in time, involve considerable
management judgment, and are based upon assumptions about expected future operating performance, assumed royalty rates,
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. If our assumptions change or
market conditions decline, potential impairment charges could result.
See also Note 5 to the Consolidated Financial Statements for additional information on goodwill and intangible assets.
Pension and postretirement benefits — We provide certain pension and postretirement benefits to employees and retirees.
Determining the cost associated with such benefits is dependent on various actuarial assumptions, including discount rates,
expected return on plan assets, compensation increases, turnover rates and health care trend rates. Independent actuaries, in
accordance with accounting principles generally accepted in the United States, perform the required calculations to determine
expense. Actuarial gains and losses are recognized immediately in Other expenses / (income) in the Consolidated Statements of
Earnings as of the measurement date, which is our fiscal year end, or more frequently if an interim remeasurement is required.
We use the fair value of plan assets to calculate the expected return on plan assets.
In establishing the discount rate, we review published market indices of high-quality debt securities, adjusted as appropriate
for duration. In addition, independent actuaries apply high-quality bond yield curves to the expected benefit payments of the
plans. We use a full yield curve approach to estimate service cost and interest cost by applying the specific spot rates along the
yield curve used to determine the benefit obligation of the relevant projected cash flows.
The expected return on plan assets is a long-term assumption based upon historical experience and expected future
performance, considering our current and projected investment mix. This estimate is based on an estimate of future inflation,
long-term projected real returns for each asset class and a premium for active management. Within any given fiscal period,
significant differences may arise between the actual return and the expected return on plan assets. Gains and losses resulting
from differences between actual experience and the assumptions are determined at each measurement date.
As of July 30, 2023, we have a pension liability of $105 million and a postretirement benefit obligation of $153 million. As
of July 30, 2023, we also have a pension asset of $164 million based on the funded status of certain plans.
Net periodic pension and postretirement benefit expense (income) and actuarial losses (gains) included within net periodic
pension and benefit expense (income) were as follows:
(Millions)
Total net periodic pension and postretirement benefit expense (income)
Actuarial losses (gains)
2023
2022
2021
$
$
(22) $
(15) $
(7) $ (267)
44 $ (203)
The pension actuarial gains recognized in 2023 were primarily due to increases in discount rates used to determine the
benefit obligation, partially offset by losses on plan assets and plan experience. The pension actuarial losses recognized in 2022
were primarily due to to losses on plan assets, partially offset by increases in discount rates used to determine the benefit
obligation. The pension actuarial gains recognized in 2021 were primarily due to higher than anticipated investment gains on
plan assets and increases in discount rates used to determine the benefit obligation.
Excluding actuarial gains and losses, net periodic pension and postretirement benefit income was $44 million lower in
2023 compared to 2022. Based on benefit obligations and plan assets as of July 30, 2023, net periodic pension and
postretirement benefit income excluding any actuarial losses or gains is estimated to be approximately $13 million lower in
2024, subject to the impact of interim remeasurements. The decrease in 2024 is primarily due to a lower market value of plan
assets.
Significant weighted-average assumptions as of the end of the year were as follows:
Pension
Discount rate for benefit obligations
Expected return on plan assets
Postretirement
Discount rate for obligations
2023
2022
2021
5.46% 4.58% 2.69%
6.38% 6.40% 5.82%
5.47% 4.48% 2.37%
Based on benefit obligations and plan assets as of July 30, 2023, estimated sensitivities to 2024 annual net periodic pension
and postretirement cost are as follows:
• a 50-basis-point increase in the discount rate would result in expense of approximately $5 million and would result in
an immediate actuarial gain recognition of approximately $43 million;
• a 50-basis-point decline in the discount rate would result in income of approximately $5 million and would result in an
immediate actuarial loss recognition of approximately $53 million; and
• a 50-basis-point reduction in the estimated return on assets assumption would result in expense of approximately $5
million.
Contributions to pension plans were not material in 2023, 2022 and 2021 and are not expected to be material in 2024.
See also Note 9 to the Consolidated Financial Statements for additional information on pension and postretirement benefits.
Income taxes — The effective tax rate reflects statutory tax rates, tax planning opportunities available in the various
jurisdictions in which we operate and management’s estimate of the ultimate outcome of various tax audits and issues.
Significant judgment is required in determining the effective tax rate and in evaluating tax positions. Income taxes are recorded
based on amounts refundable or payable in the current year and include the effect of deferred taxes. Deferred tax assets and
liabilities are recognized for the future impact of differences between the financial statement carrying amounts of assets and
liabilities and their respective tax bases, as well as for operating loss and tax credit carryforwards. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those differences are
expected to be recovered or settled. Valuation allowances are established for deferred tax assets when it is more likely than not
that a tax benefit will not be realized.
See also Notes 1 and 11 to the Consolidated Financial Statements for further discussion on income taxes.
RECENT ACCOUNTING PRONOUNCEMENTS
See Note 2 to the Consolidated Financial Statements for information on recent accounting pronouncements.
CAUTIONARY FACTORS THAT MAY AFFECT FUTURE RESULTS
This Report contains "forward-looking" statements within the meaning of the Private Securities Litigation Reform Act of
1995. These forward-looking statements reflect our current expectations regarding our future results of operations, economic
performance, financial condition and achievements. These forward-looking statements can be identified by words such as
"anticipate," "believe," "estimate," "expect," "intend," "plan," "pursue," "strategy," "target," "will" and similar expressions. One
can also identify forward-looking statements by the fact that they do not relate strictly to historical or current facts, and may
reflect anticipated cost savings or implementation of our strategic plan. These statements reflect our current plans and
expectations and are based on information currently available to us. They rely on several assumptions regarding future events
and estimates which could be inaccurate and which are inherently subject to risks and uncertainties.
We wish to caution the reader that the following important factors and those important factors described in Part 1, Item 1A
and elsewhere in this Report, or in our other Securities and Exchange Commission filings, could affect our actual results and
could cause such results to vary materially from those expressed in any forward-looking statements made by, or on behalf of,
us:
•
•
•
the conditions to the completion of the Sovos Brands transaction, including obtaining Sovos Brands' shareholder
approval, may not be satisfied, or the regulatory approvals required for the transaction may not be obtained on the
terms expected, on the anticipated schedule, or at all;
financing for the Sovos Brands transaction may not be obtained on favorable terms, or at all;
closing of the Sovos Brands transaction may not occur or be delayed, either as a result of litigation related to the
transaction or otherwise or result in significant costs of defense, indemnification and liability;
30
31
Item 8. Financial Statements and Supplementary Data
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Statements of Earnings
Consolidated Statements of Comprehensive Income
Consolidated Balance Sheets
Consolidated Statements of Cash Flows
Consolidated Statements of Equity
Notes to Consolidated Financial Statements
Note 1. Summary of Significant Accounting Policies
Note 2. Recent Accounting Pronouncements
Note 3. Divestitures
Note 4. Accumulated Other Comprehensive Income (Loss)
Note 5. Goodwill and Intangible Assets
Note 6. Segment Information
Note 7. Restructuring Charges and Cost Savings Initiatives
Note 8. Earnings per Share
Note 9. Pension and Postretirement Benefits
Note 10. Leases
Note 11. Taxes on Earnings
Note 12. Short-term Borrowings and Long-term Debt
Note 13. Financial Instruments
Note 14. Fair Value Measurements
Note 15. Shareholders' Equity
Note 16. Stock-based Compensation
Note 17. Commitments and Contingencies
Note 18. Supplemental Financial Statement Data
Note 19. Subsequent Event
Management’s Report on Internal Control Over Financial Reporting
Report of Independent Registered Public Accounting Firm
34
35
36
37
38
39
41
41
42
43
44
46
47
48
53
54
57
58
61
63
63
66
67
69
70
71
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
the risk that the cost savings and any other synergies from the Sovos Brands transaction may not be fully realized or
may take longer or cost more to be realized than expected, including that the Sovos Brands transaction may not be
accretive within the expected timeframe or the extent anticipated;
completing the Sovos Brands transaction may distract our management from other important matters;
the risks related to the availability of, and cost inflation in, supply chain inputs, including labor, raw materials,
commodities, packaging and transportation;
our ability to execute on and realize the expected benefits from our strategy, including growing sales in snacks and
growing/maintaining our market share position in soup;
the impact of strong competitive responses to our efforts to leverage brand power with product innovation,
promotional programs and new advertising;
the risks associated with trade and consumer acceptance of product improvements, shelving initiatives, new products
and pricing and promotional strategies;
our ability to realize projected cost savings and benefits from cost savings initiatives and the integration of recent
acquisitions;
disruptions in or inefficiencies to our supply chain and/or operations, including reliance on key supplier relationships;
risks related to the effectiveness of our hedging activities and our ability to respond to volatility in commodity prices;
the impacts of, and associated responses to, the COVID-19 pandemic on our business, suppliers, customers, consumers
and employees;
our ability to manage changes to our organizational structure and/or business processes, including selling, distribution,
manufacturing and information management systems or processes;
changes in consumer demand for our products and favorable perception of our brands;
changing inventory management practices by certain of our key customers;
a changing customer landscape, with value and e-commerce retailers expanding their market presence, while certain of
our key customers maintain significance to our business;
product quality and safety issues, including recalls and product liabilities;
the possible disruption to the independent contractor distribution models used by certain of our businesses, including
as a result of litigation or regulatory actions affecting their independent contractor classification;
the uncertainties of litigation and regulatory actions against us;
the costs, disruption and diversion of management's attention associated with activist investors;
a disruption, failure or security breach of our or our vendors' information technology systems, including ransomware
attacks;
impairment to goodwill or other intangible assets;
our ability to protect our intellectual property rights;
increased liabilities and costs related to our defined benefit pension plans;
our ability to attract and retain key talent;
goals and initiatives related to, and the impacts of, climate change, including from weather-related events;
negative changes and volatility in financial and credit markets, deteriorating economic conditions and other external
factors, including changes in laws and regulations; and
unforeseen business disruptions or other impacts due to political instability, civil disobedience, terrorism, geopolitical
conflicts (including the ongoing conflict between Russia and Ukraine), extreme weather conditions, natural disasters,
other pandemics or other calamities.
This discussion of uncertainties is by no means exhaustive but is designed to highlight important factors that may impact
our outlook. We disclaim any obligation or intent to update forward-looking statements made by us in order to reflect new
information, events or circumstances after the date they are made.
Item 7A. Quantitative and Qualitative Disclosure About Market Risk
The information presented in the section entitled "Management’s Discussion and Analysis of Financial Condition and
Results of Operations — Market Risk Sensitivity" is incorporated herein by reference.
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33
CAMPBELL SOUP COMPANY
Consolidated Statements of Earnings
(millions, except per share amounts)
Net sales
Costs and expenses
Cost of products sold
Marketing and selling expenses
Administrative expenses
Research and development expenses
Other expenses / (income)
Restructuring charges
Total costs and expenses
Earnings before interest and taxes
Interest expense
Interest income
Earnings before taxes
Taxes on earnings
Earnings from continuing operations
Loss from discontinued operations
Net earnings
Less: Net earnings (loss) attributable to noncontrolling interests
Net earnings attributable to Campbell Soup Company
Per Share — Basic
Earnings from continuing operations attributable to Campbell Soup Company
Loss from discontinued operations
Net earnings attributable to Campbell Soup Company
Weighted average shares outstanding — basic
Per Share — Assuming Dilution
Earnings from continuing operations attributable to Campbell Soup Company
Loss from discontinued operations
Net earnings attributable to Campbell Soup Company(1)
Weighted average shares outstanding — assuming dilution
(1) Sum of the individual amounts may not add due to rounding.
See accompanying Notes to Consolidated Financial Statements.
2023
2022
2021
$
9,357 $
8,562 $
8,476
6,440
5,935
5,665
811
654
92
32
16
8,045
1,312
188
4
1,128
270
858
—
858
—
734
617
87
21
5
7,399
1,163
189
1
975
218
757
—
757
—
817
598
84
(254)
21
6,931
1,545
210
1
1,336
328
1,008
(6)
1,002
—
$
$
$
$
$
858 $
757 $
1,002
2.87 $
2.51 $
—
—
2.87 $
2.51 $
299
301
2.85 $
2.51 $
—
2.85 $
—
2.51 $
301
302
3.33
(.02)
3.31
303
3.30
(.02)
3.29
305
CAMPBELL SOUP COMPANY
Consolidated Statements of Comprehensive Income
(millions)
2023
Tax
benefit
(expense)
Pre-tax
amount
After-tax
amount
Pre-tax
amount
$
858
2022
Tax
benefit
(expense)
After-tax
amount
Pre-tax
amount
$
757
2021
Tax
benefit
(expense)
After-tax
amount
$ 1,002
$
(1) $ —
(1) $
(6) $ —
(6) $
12 $ —
12
5
(1)
4
17
(3)
14
(5)
1
(4)
(10)
2
(8)
(12)
2
(10)
8
(1)
7
Net earnings
Other comprehensive income (loss):
Foreign currency translation:
Foreign currency translation
adjustments
Cash-flow hedges:
Unrealized gains (losses) arising
during the period
Reclassification adjustment for
losses (gains) included in net
earnings
Pension and other postretirement
benefits:
Reclassification of prior service
credit included in net earnings
—
Other comprehensive income (loss) $
(6) $
Total comprehensive income (loss)
Total comprehensive income (loss)
attributable to noncontrolling interests
Total comprehensive income (loss)
attributable to Campbell Soup
Company
—
1
—
(1)
(5) $
(2) $
—
(1)
(1)
(5)
(3) $
10 $
1
1
(4)
11
$
853
—
$
754
—
$ 1,013
(4)
$
853
$
754
$ 1,017
See accompanying Notes to Consolidated Financial Statements.
34
35
CAMPBELL SOUP COMPANY
Consolidated Balance Sheets
(millions, except per share amounts)
CAMPBELL SOUP COMPANY
Consolidated Statements of Cash Flows
(millions)
Current assets
Cash and cash equivalents
Accounts receivable, net
Inventories
Other current assets
Total current assets
Plant assets, net of depreciation
Goodwill
Other intangible assets, net of amortization
Other assets
Total assets
Current liabilities
Short-term borrowings
Accounts payable
Accrued liabilities
Dividends payable
Accrued income taxes
Total current liabilities
Long-term debt
Deferred taxes
Other liabilities
Total liabilities
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
Additional paid-in capital
Earnings retained in the business
Capital stock in treasury, at cost
Accumulated other comprehensive income (loss)
Total Campbell Soup Company shareholders' equity
Noncontrolling interests
Total equity
Total liabilities and equity
See accompanying Notes to Consolidated Financial Statements.
July 30,
2023
July 31,
2022
$
$
$
$
189 $
529
1,291
52
2,061
2,398
3,965
3,142
492
12,058 $
191 $
1,306
592
113
20
2,222
4,498
1,067
608
8,395
—
12
420
4,451
(1,219)
(3)
3,661
2
3,663
12,058 $
109
541
1,246
67
1,963
2,343
3,979
3,198
409
11,892
814
1,334
621
114
3
2,886
3,996
1,074
603
8,559
—
12
415
4,040
(1,138)
2
3,331
2
3,333
11,892
Cash flows from operating activities:
Net earnings
Adjustments to reconcile net earnings to operating cash flow
Restructuring charges
Stock-based compensation
Pension and postretirement benefit expense (income)
Depreciation and amortization
Deferred income taxes
Net loss on sales of businesses
Loss on extinguishment of debt
Other
Changes in working capital, net of divestitures
Accounts receivable
Inventories
Other current assets
Accounts payable and accrued liabilities
Other
Net cash provided by operating activities
Cash flows from investing activities:
Purchases of plant assets
Purchases of route businesses
Sales of route businesses
Sales of businesses
Other
Net cash used in investing activities
Cash flows from financing activities:
Short-term borrowings, including commercial paper
Short-term repayments, including commercial paper
Long-term borrowings
Long-term repayments
Dividends paid
Treasury stock purchases
Treasury stock issuances
Payments related to tax withholding for stock-based compensation
Payments related to extinguishment of debt
Other
Net cash used in financing activities
Effect of exchange rate changes on cash
Net change in cash and cash equivalents
Cash and cash equivalents — beginning of period (including discontinued operations)
Less cash and cash equivalents discontinued operations - end of period
Cash and cash equivalents — end of period
See accompanying Notes to Consolidated Financial Statements.
2023
2022
2021
$
858 $
757 $
1,002
16
63
(22)
387
(5)
13
—
100
(1)
(64)
13
(164)
(51)
1,143
(370)
(13)
1
41
1
5
59
(7)
337
21
—
4
88
48
(314)
25
200
(42)
1,181
(242)
(1)
2
—
11
(340)
(230)
3,677
(3,749)
1,173
(997)
500
(566)
(447)
(142)
22
(19)
—
1
(723)
—
80
109
—
—
—
(451)
(167)
3
(18)
(453)
—
(910)
(1)
40
69
—
$
189 $
109 $
21
64
(267)
317
137
11
—
86
(20)
(77)
(28)
(164)
(47)
1,035
(275)
(2)
10
101
8
(158)
320
(580)
—
(921)
(439)
(36)
2
(15)
—
—
(1,669)
2
(790)
859
—
69
36
37
CAMPBELL SOUP COMPANY
Consolidated Statements of Equity
(millions, except per share amounts)
Campbell Soup Company Shareholders’ Equity
Capital Stock
Issued
In Treasury
Shares
Amount
Shares
Amount
Additional
Paid-in
Capital
Earnings
Retained in
the
Business
Accumulated
Other
Comprehensive
Income (Loss)
Noncontrolling
Interests
Total
Equity
Balance at August 2, 2020
323 $
12
(21) $ (1,023) $
394 $
3,190 $
(10) $
6 $
2,569
Net earnings (loss)
Other comprehensive income
(loss)
Dividends ($1.46 per share)
Treasury stock purchased
Treasury stock issued under
management incentive and stock
option plans
(1)
(36)
1
38
Balance at August 1, 2021
323
12
(21)
(1,021)
Net earnings (loss)
Other comprehensive income
(loss)
Dividends ($1.48 per share)
Treasury stock purchased
Treasury stock issued under
management incentive and stock
option plans
(4)
(167)
1
50
Balance at July 31, 2022
323
12
(24)
(1,138)
Net earnings (loss)
Other comprehensive income
(loss)
Dividends ($1.48 per share)
Treasury stock purchased
Treasury stock issued under
management incentive and
stock option plans
1,002
(444)
(6)
3,742
757
(451)
(8)
4,040
858
(447)
20
414
1
415
15
5
(3)
2
(5)
(3)
(142)
2
61
5
—
—
(4)
2
—
—
2
—
—
1,002
11
(444)
(36)
52
3,154
757
(3)
(451)
(167)
43
3,333
858
(5)
(447)
(142)
66
Balance at July 30, 2023
323 $
12
(25) $ (1,219) $
420 $
4,451 $
(3) $
2 $
3,663
See accompanying Notes to Consolidated Financial Statements.
1. Summary of Significant Accounting Policies
Notes to Consolidated Financial Statements
In this Report, unless otherwise stated, the terms "we," "us," "our" and the "company" refer to Campbell Soup Company
and its consolidated subsidiaries.
We are a manufacturer and marketer of high-quality, branded food and beverage products.
Basis of Presentation — The consolidated financial statements include our accounts and entities in which we maintain a
controlling financial interest. Intercompany transactions are eliminated in consolidation. Our fiscal year ends on the Sunday
nearest July 31. There were 52 weeks in 2023, 2022, and 2021.
Discontinued Operations — We present discontinued operations when there is a disposal of a component or a group of
components that in our judgment represents a strategic shift that will have a major effect on our operations and financial results.
We aggregate the results of operations for discontinued operations into a single line item in the Consolidated Statements of
Earnings for all periods presented. General corporate overhead is not allocated to discontinued operations. See Note 3 for
additional information.
Use of Estimates — Generally accepted accounting principles require management to make estimates and assumptions that
affect assets, liabilities, revenues and expenses. Actual results could differ from those estimates.
Revenue Recognition — Our revenues primarily consist of the sale of food and beverage products through our own sales
force and/or third-party brokers and distribution partners. Revenues are recognized when our performance obligation has been
satisfied and control of the product passes to our customers, which typically occurs when products are delivered or accepted by
customers in accordance with terms of agreements. Shipping and handling costs incurred to deliver the product are recorded
within Cost of products sold. Amounts billed and due from our customers are classified as Accounts receivable in the
Consolidated Balance Sheets and require payment on a short-term basis. Revenues are recognized net of provisions for returns,
discounts and certain sales promotion expenses, such as feature price discounts, in-store display incentives, cooperative
advertising programs, new product introduction fees and coupon redemption costs. These forms of variable consideration are
recognized upon sale. The recognition of costs for promotion programs involves the use of judgment related to performance and
redemption estimates. Estimates are made based on historical experience and other factors, including expected volume.
Historically, the difference between actual experience compared to estimated redemptions and performance has not been
significant to the quarterly or annual financial statements. Differences between estimates and actual costs are recognized as a
change in estimate in a subsequent period. Revenues are presented on a net basis for arrangements under which suppliers
perform certain additional services. See Note 6 for additional information on disaggregation of revenue.
Cash and Cash Equivalents — All highly liquid debt instruments purchased with a maturity of three months or less are
classified as cash equivalents.
Inventories — All inventories are valued at the lower of average cost or net realizable value.
Property, Plant and Equipment — Property, plant and equipment are recorded at historical cost and are depreciated over
estimated useful lives using the straight-line method. Buildings and machinery and equipment are depreciated over periods not
exceeding 45 years and 20 years, respectively. Assets are evaluated for impairment when conditions indicate that the carrying
value may not be recoverable. Such conditions include significant adverse changes in business climate or a plan of disposal.
Repairs and maintenance are charged to expense as incurred.
Goodwill and Intangible Assets — Goodwill and intangible assets deemed to have indefinite lives are not amortized but
rather are tested at least annually in the fourth quarter for impairment, or more often if events or changes in circumstances
indicate that the carrying amount of the asset may be impaired.
Goodwill is tested for impairment at the reporting unit level. A reporting unit represents an operating segment or a
component of an operating segment. Goodwill is tested for impairment by either performing a qualitative evaluation or a
quantitative test. The qualitative evaluation is an assessment of factors to determine whether it is more likely than not that the
fair value of a reporting unit is less than its carrying amount, including goodwill. We may elect not to perform the qualitative
assessment for some or all reporting units and perform a quantitative impairment test. Fair value is determined based on
discounted cash flow analyses. The discounted estimates of future cash flows include significant management assumptions such
as revenue growth rates, operating margins, weighted average costs of capital and future economic and market conditions. If the
carrying value of the reporting unit exceeds fair value, goodwill is considered impaired. An impairment charge is recognized for
the amount by which the carrying value of the reporting unit exceeds fair value, limited to the amount of goodwill in the
reporting unit.
Indefinite-lived intangible assets are tested for impairment by comparing the fair value of the asset to the carrying value.
Fair value is determined using a relief from royalty valuation method based on discounted cash flow analyses that include
38
39
significant management assumptions such as revenue growth rates, weighted average costs of capital and assumed royalty rates.
If the carrying value exceeds fair value, an impairment charge will be recorded to reduce the asset to fair value.
See Note 5 for more information.
Leases — We determine if an agreement is or contains a lease at inception by evaluating if an identified asset exists that we
control for a period of time. When a lease exists, we record a right-of-use (ROU) asset and a corresponding lease liability on
our Consolidated Balance Sheets. ROU assets represent our right to use an underlying asset for the lease term and the
corresponding liabilities represent an obligation to make lease payments during the term. We have elected not to record leases
with a term of 12 months or less on our Consolidated Balance Sheets.
ROU assets are recorded on our Consolidated Balance Sheets at lease commencement based on the present value of the
corresponding liabilities and are adjusted for any prepayments, lease incentives received, or initial direct costs incurred. To
calculate the present value of our lease liabilities, we use a country-specific collateralized incremental borrowing rate based on
the lease term at commencement. The measurement of our ROU assets and liabilities includes all fixed payments and any
variable payments based on an index or rate.
Our leases generally include options to extend or terminate use of the underlying assets. These options are included in the
lease term used to determine ROU assets and corresponding liabilities when we are reasonably certain we will exercise.
Our lease arrangements typically include non-lease components, such as common area maintenance and labor. We account
for each lease and any non-lease components associated with that lease as a single lease component for all underlying asset
classes with the exception of certain production assets. Accordingly, all costs associated with a lease contract are disclosed as
lease costs. This includes any variable payments that are not dependent on an index or a rate and which are expensed as
incurred.
Operating leases expense is recognized on a straight-line basis over the lease term with the expense recorded in Cost of
products sold, Marketing and selling expenses, or Administrative expenses depending on the nature of the leased item.
For finance leases, the amortization of ROU lease assets is recognized on a straight-line basis over the shorter of the
estimated useful life of the underlying asset or the lease term in Cost of products sold, Marketing and selling expenses, or
Administrative expenses depending on the nature of the leased item. Interest expense on finance lease obligations is recorded
using the effective interest method over the lease term and is recorded in Interest expense.
All operating lease cash payments and interest on finance leases are recorded within Net cash provided by operating
activities and all finance lease principal payments are recorded within Net cash used in financing activities in our Consolidated
Statements of Cash Flows.
See Note 10 for more information.
Derivative Financial Instruments — We use derivative financial instruments primarily for purposes of hedging exposures
to fluctuations in foreign currency exchange rates, interest rates, commodities and equity-linked employee benefit obligations.
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 strategies that qualify and strategies that do not qualify for
hedge accounting treatment. To qualify for hedge accounting, the hedging relationship, both at inception of the hedge and on an
ongoing basis, is expected to be highly effective in achieving offsetting changes in the fair value of the hedged risk during the
period that the hedge is designated.
All derivatives are recognized on the balance sheet at fair value. For derivatives that qualify for hedge accounting, we
designate the derivative as a hedge of the fair value of a recognized asset or liability or a firm commitment (fair-value hedge) or
a hedge of a forecasted transaction or of the variability of cash flows to be received or paid related to a recognized asset or
liability (cash-flow hedge). Some derivatives may also be considered natural hedging instruments (changes in fair value act as
economic offsets to changes in fair value of the underlying hedged item) and are not designated for hedge accounting.
Changes in the fair value on the portion of the derivative included in the assessment of hedge effectiveness of a fair-value
hedge, along with the gain or loss on the underlying hedged asset or liability (including losses or gains on firm commitments),
are recorded in current-period earnings. 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 income (loss).
Changes in the fair value of derivatives that are not designated for hedge accounting are recognized in current-period earnings.
Cash flows from derivative contracts are included in Net cash provided by operating activities.
Supplier Finance Program Obligations — To manage our cash flow and related liquidity, we work with our suppliers to
optimize our terms and conditions, including the extension of payment terms. Our current payment terms with our suppliers,
which we deem to be commercially reasonable, generally range from 0 to 120 days. We also maintain agreements with third-
party administrators that allow participating suppliers to track payment obligations from us, and, at the sole discretion of the
supplier, sell those payment obligations to participating financial institutions. Our obligations to our suppliers, including
amounts due and scheduled payment terms, are not impacted. Supplier participation in these agreements is voluntary. We have
no economic interest in a supplier’s decision to enter into these agreements and no direct financial relationship with the
financial institutions. We have not pledged assets as security or provided any guarantees in connection with these arrangements.
The payment of these obligations is included in cash provided by operating activities in the Consolidated Statements of Cash
Flows. Amounts outstanding under these programs, which are included in Accounts payable on the Consolidated Balance
Sheets, were $258 million at July 30, 2023, and $262 million at July 31, 2022.
Advertising Production Costs — Advertising production costs are expensed in the period that the advertisement first takes
place or when a decision is made not to use an advertisement.
Research and Development Costs — The costs of research and development are expensed as incurred. Costs include
expenditures for new product and manufacturing process innovation, and improvements to existing products and processes.
Costs primarily consist of salaries, wages, consulting, and depreciation and maintenance of research facilities and equipment.
Income Taxes — Deferred tax assets and liabilities are recognized for the future impact of differences between the financial
statement carrying amounts of assets and liabilities and their respective tax bases, as well as for operating loss and tax credit
carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in
the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances
are recorded to reduce deferred tax assets when it is more likely than not that a tax benefit will not be realized.
2. Recent Accounting Pronouncements
Recently Adopted
In August 2018, the Financial Accounting Standards Board (FASB) issued guidance on accounting for implementation
costs incurred in a cloud computing arrangement that is a service contract. The guidance aligns the requirements for capitalizing
implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing
implementation costs incurred to develop or obtain internal-use software. The guidance is effective for fiscal years beginning
after December 15, 2019. Entities have the option to apply the guidance prospectively to all implementation costs incurred after
the date of adoption or retrospectively. Early adoption is permitted. We adopted the guidance on a prospective basis in the first
quarter of 2021. The adoption did not have a material impact on our consolidated financial statements.
In August 2018, the FASB issued guidance that changes the disclosure requirements related to defined benefit pension and
postretirement plans. The guidance is effective for fiscal years ending after December 15, 2020. The guidance is to be applied
on a retrospective basis. We adopted the guidance in 2021. The adoption did not have a material impact on our consolidated
financial statements.
In December 2019, the FASB issued guidance on simplifying the accounting for income taxes. The guidance removes
certain exceptions to the general principles of accounting for income taxes and also improves consistent application of
accounting by clarifying or amending existing guidance. We adopted the guidance in the first quarter of 2022. The adoption did
not have an impact on our consolidated financial statements.
In September 2022, the 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.
3. Divestitures
Discontinued Operations
We completed the sale of our Kelsen business on September 23, 2019, and the sale of our Arnott’s business and certain
other international operations on December 23, 2019. In the third quarter of 2021, we recognized a $6 million loss due to tax
expense from return-to-provision adjustments related to the sale of these businesses.
40
41
Under the terms of the sale of the Arnott's and certain other international operations, we entered into a long-term licensing
arrangement for the exclusive rights to certain Campbell brands in certain non-U.S. markets. We provided certain transition
services to support the divested businesses.
Other Divestitures
On May 30, 2023, we completed the sale of our Emerald nuts business for $41 million. We recognized a pre- and after-tax
loss on the sale of $13 million. In connection with the sale, we provided certain transition services to support the business. The
business had net sales of $51 million in 2023, $66 million in 2022, and $75 million in 2021. Earnings were not material in the
periods. The results of the business through the date of sale were reflected within the Snacks reportable segment.
On May 3, 2021, we completed the sale of our Plum baby food and snacks business for $101 million. The purchase
agreement contained customary representations, warranties, indemnifications and other obligations between us and the buyer. In
addition, we agreed to indemnify the buyer for certain claims against the Plum baby food and snacks business alleging the
presence of heavy metals in the products manufactured or sold on or prior to May 2, 2021, that were pending at the time of
closing of the transaction or were asserted within two years thereafter. We recognized a pre-tax loss of $11 million and an after-
tax gain on the sale of $3 million. The business had net sales of $68 million in 2021. Earnings were not material. The results of
the business through the date of sale were reflected within the Meals & Beverages reportable segment.
4. Accumulated Other Comprehensive Income (Loss)
The components of Accumulated other comprehensive income (loss) consisted of the following:
The amounts reclassified from Accumulated other comprehensive income (loss) consisted of the following:
(Millions)
Losses (gains) on cash-flow hedges:
Commodity contracts
Foreign exchange forward contracts
Foreign exchange forward contracts
Forward starting interest rate swaps
2023
2022
2021
Location of Loss (Gain)
Recognized in Earnings
(14) $
— Cost of products sold
$
(3) $
(8)
—
1
1
—
1
6 Cost of products sold
1 Other expenses / (income)
Interest expense
1
8
(1)
7
Total before tax
(10)
(12)
Tax expense (benefit)
2
2
Loss (gain), net of tax $
(8) $
(10) $
Pension and postretirement benefit adjustments:
Prior service credit
$
— $
(1) $
(5) Other expenses / (income)
Tax expense (benefit)
Loss (gain), net of tax $
—
—
— $
(1) $
1
(4)
(Millions)
Balance at August 2, 2020
Other comprehensive income (loss) before
reclassifications
Losses (gains) reclassified from accumulated other
comprehensive income (loss)
Net current-period other comprehensive income (loss)
Balance at August 1, 2021
Other comprehensive income (loss) before
reclassifications
Losses (gains) reclassified from accumulated other
comprehensive income (loss)
Net current-period other comprehensive income (loss)
Balance at July 31, 2022
Other comprehensive income (loss) before
reclassifications
Losses (gains) reclassified from accumulated other
comprehensive income (loss)
Net current-period other comprehensive income
(loss)
Balance at July 30, 2023
Foreign
Currency
Translation
Adjustments(1)
Cash-Flow
Hedges(2)
Pension and
Postretirement
Benefit Plan
Adjustments(3)
Total
Accumulated
Comprehensive
Income (Loss)
$
(10) $
(7) $
7 $
(10)
5. Goodwill and Intangible Assets
Goodwill
The following table shows the changes in the carrying amount of goodwill:
16
—
16
(4)
—
7
3
(4)
(4)
3 $
$
6 $
(4) $
(6)
—
(6)
— $
(1)
—
(1)
(1) $
14
—
(10)
4
— $
4
(8)
(4)
(4) $
(1)
(1)
2 $
—
—
—
2 $
$
$
(Millions)
Net balance at August 1, 2021
Amounts reclassified due to segment change(1)
Foreign currency translation adjustment
Net balance at July 31, 2022
Divestiture(2)
Foreign currency translation adjustment
Net balance at July 30, 2023
Meals &
Beverages
Snacks
Total
970 $
3,011 $
3,981
25
(2)
993 $
—
(3)
990 $
(25)
—
2,986 $
(11)
—
2,975 $
—
(2)
3,979
(11)
(3)
3,965
$
$
$
_____________________________________
(1) See Note 6 for additional information.
(2) See Note 3 for additional information on the sale of the Emerald nuts business.
12
3
15
5
8
(11)
(3)
2
3
(8)
(5)
(3)
_____________________________________
(1)
(2)
(3)
Included no tax as of July 30, 2023, July 31, 2022, August 1, 2021, and August 2, 2020.
Included a tax benefit of $1 million as of July 30, 2023, no tax as of July 31, 2022, and a tax benefit of $1 million as of
August 1, 2021 and August 2, 2020.
Included tax expense of $1 million as of as of July 30, 2023, July 31, 2022 and August 1, 2021, and $2 million as of
August 2, 2020.
Amounts related to noncontrolling interests were not material.
42
43
Intangible Assets
The following table summarizes balance sheet information for intangible assets, excluding goodwill:
(Millions)
Amortizable intangible assets
Customer relationships
Indefinite-lived trademarks
Snyder's of Hanover
Lance
Kettle Brand
Pace
Pacific Foods
Cape Cod
Various other Snacks(1),(2)
Total indefinite-lived trademarks
Total net intangible assets
2023
Accumulated
Amortization
Cost
Net
Cost
Accumulated
Amortization
Net
2022
$
830 $
(229) $
601 $
830 $
(181) $
649
$
620
350
318
292
280
187
494
$
$
2,541
3,142
$
620
350
318
292
280
187
502
$
$
2,549
3,198
_____________________________________
(1) Associated with the acquisition of Snyder's-Lance, Inc. (Snyder's-Lance).
(2) An $8 million trademark was divested with the sale of the Emerald nuts business in 2023. See Note 3 for additional
information.
Amortization expense was $48 million for 2023, $41 million for 2022 and $42 million for 2021. The increase in
amortization expense in 2023 was a result of $7 million of accelerated amortization expense on customer relationships in the
fourth quarter due to the loss of certain contract manufacturing customers. As of July 30, 2023, amortizable intangible assets
had a weighted-average remaining useful life of 15 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 the 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 the 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.
6. 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. The segment
included the results of our Plum baby food and snacks business, which was sold on May 3, 2021; 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.
Beginning in 2022, the foodservice and Canadian business formerly included in our Snacks segment is now managed as
part of the Meals & Beverages segment. Segment results have been adjusted retrospectively to reflect this change.
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
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.
Our largest customer, Wal-Mart Stores, Inc. and its affiliates, accounted for approximately 22% of consolidated net sales in
2023 and 2022 and 21% in 2021. Both of our reportable segments sold products to Wal-Mart Stores, Inc. or its affiliates.
(Millions)
Net sales
Meals & Beverages
Snacks
Total
(Millions)
Earnings before interest and taxes
Meals & Beverages
Snacks
Corporate income (expense)(1)
Restructuring charges(2)
Total
(Millions)
Depreciation and amortization
Meals & Beverages
Snacks
Corporate(3)
Total
(Millions)
Capital expenditures
Meals & Beverages
Snacks
Corporate(3)
Total
2023
2022
2021
$
$
4,907 $
4,607 $
4,450
3,955
9,357 $
8,562 $
4,621
3,855
8,476
2023
2022
2021
$
894 $
874 $
640
(206)
(16)
517
(223)
(5)
922
514
130
(21)
$
1,312 $
1,163 $
1,545
2023
2022
2021
$
$
$
$
151 $
131 $
211
25
185
21
387 $
337 $
2023
2022
2021
129 $
76 $
199
42
120
46
370 $
242 $
128
169
20
317
61
153
61
275
_______________________________________
(1) Represents unallocated items. Pension and postretirement actuarial gains and losses are included in Corporate. There were
actuarial gains of $15 million in 2023, losses of $44 million in 2022, and gains of $203 million in 2021. Costs related to the
cost savings initiatives were $50 million, $26 million and $32 million in 2023, 2022 and 2021, respectively. Unrealized
mark-to-market adjustments on outstanding undesignated commodity hedges were gains of $21 million in 2023, losses of
$59 million in 2022, and gains of $50 million in 2021. Accelerated amortization expense related to customer relationship
intangible assets was $7 million in 2023. A loss of $13 million on the sale of our Emerald nuts business was included in
2023. Transaction costs of $5 million associated with the pending acquisition of Sovos Brands, Inc. (Sovos Brands) was
included in 2023. A loss of $11 million on the sale of our Plum baby food and snacks business was included in 2021.
(2) See Note 7 for additional information.
(3) Represents primarily corporate offices and enterprise-wide information technology systems.
44
45
Our net sales based on product categories are as follows:
(Millions)
Net sales
Soup
Snacks
Other simple meals
Beverages
Total
2023
2022
2021
$
2,740 $
2,615 $
4,643
1,205
4,103
1,091
769
9,357 $
753
8,562 $
$
2,568
3,989
1,134
785
8,476
Soup includes various soup, broths and stock products. Snacks include cookies, pretzels, crackers, popcorn, nuts, potato
chips, tortilla chips and other salty snacks and baked products. Other simple meals include sauces, gravies, pasta, beans, canned
poultry and Plum products through May 3, 2021, when the business was sold. Beverages include V8 juices and beverages,
Campbell's tomato juice and Pacific Foods non-dairy beverages.
We are a North American focused company with over 90% of our net sales and long-lived assets related to our U.S.
operations.
7. Restructuring Charges and Cost Savings 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 recorded in the Consolidated Statements of Earnings related to these initiatives is as
follows:
(Millions)
Restructuring charges
Administrative expenses
Cost of products sold
Marketing and selling expenses
Research and development expenses
Total pre-tax charges
2023
2022
2021
Recognized as of
July 30, 2023
$
16 $
5 $
21 $
24
18
5
3
20
5
1
—
28
3
1
—
$
66 $
31 $
53 $
280
383
102
19
7
791
We expect the costs for actions that have been identified to date to consist of the following: approximately $245 million to
$250 million in severance pay and benefits; approximately $140 million in asset impairment and accelerated depreciation; and
approximately $500 million to $515 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 $885 million to $905 million of pre-tax costs identified to date, we expect approximately $705 million to
$725 million will be cash expenditures. In addition, we expect to invest approximately $620 million in capital expenditures
through 2025, of which we invested $467 million as of July 30, 2023. 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, implementation of our existing SAP enterprise-resource planning system for Snyder's-Lance,
enhancements to our headquarters in Camden, New Jersey, and optimization of the Snyder’s-Lance warehouse and distribution
network.
A summary of the restructuring activity and related reserves at July 30, 2023, is as follows:
(Millions)
Accrued balance at August 1, 2021(1)
2022 charges
2022 cash payments
Accrued balance at July 31, 2022
2023 charges
2023 cash payments
Accrued balance at July 30, 2023(2)
_______________________________________
(1)
Severance
Pay and
Benefits
Implementation
Costs and
Other Related
Costs(3)
Asset
Impairment/
Accelerated
Depreciation
Other
Non-Cash
Exit
Costs(4)
Total
Charges
$
$
$
7
5
(5)
7
13
(7)
13
26
—
— $
31
26
24
3 $
66
Includes $1 million of severance pay and benefits recorded in Other liabilities in the Consolidated Balance Sheet.
(2)
(3)
(4)
Includes $7 million of severance pay and benefits recorded in Other liabilities in the Consolidated Balance Sheet.
Includes other costs recognized as incurred that are not reflected in the restructuring reserves in the Consolidated Balance
Sheets. 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.
Includes non-cash costs that are not reflected in the restructuring reserves in the Consolidated Balance Sheets.
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:
(Millions)
Meals & Beverages
Snacks
Corporate
Total
2023
Costs Incurred to
Date
26 $
24
16
66 $
251
345
195
791
$
$
A summary of the pre-tax costs associated with these initiatives is as follows:
(Millions)
Severance pay and benefits
Asset impairment/accelerated depreciation
Implementation costs and other related costs
Total
Recognized as of
July 30, 2023
$
$
240
106
445
791
In addition, in the second quarter of 2021, we recorded a $19 million deferred tax charge in connection with a legal entity
reorganization as part of the continued integration of Snyder's-Lance.
8. 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
2023 excludes less than 1 million stock options that would have been antidilutive. The earnings per share calculation for 2022
and 2021 excludes approximately 1 million stock options that would have been antidilutive.
The total estimated pre-tax costs for actions that have been identified are approximately $885 million to $905 million and
we expect to incur the costs through 2025. These estimates will be updated as the expanded initiatives are developed.
46
47
9. Pension and Postretirement Benefits
Pension Benefits — We sponsor a number of noncontributory defined benefit pension plans to provide retirement benefits
to eligible U.S. and non-U.S. employees. The benefits provided under these plans are based primarily on years of service and
compensation levels. Benefits are paid from funds previously provided to trustees or are paid directly by us from general funds.
In 1999, we implemented significant amendments to certain U.S. pension plans. Under a new formula, retirement benefits are
determined based on percentages of annual pay and age. To minimize the impact of converting to the new formula, service and
earnings credit continued to accrue for fifteen years for certain active employees participating in the plans under the old formula
prior to the amendments. Employees will receive the benefit from either the new or old formula, whichever is higher. Effective
as of January 1, 2011, our U.S. pension plans were amended so that employees hired or rehired on or after that date and who are
not covered by collective bargaining agreements will not be eligible to participate in the plans. All collective bargaining units
adopted this amendment by December 31, 2011.
In June 2023, we settled $245 million of our pension benefit obligations associated with approximately 6,000 retired
participants currently receiving benefits within our U.S. defined benefit pension plans. A group annuity contract was purchased
on behalf of these participants with a third-party insurance provider and funded directly by $241 million from the assets of our
pension plans, resulting in an actuarial gain of $4 million.
Postretirement Benefits — We provide postretirement benefits, including health care and life insurance to eligible retired
U.S. employees, and where applicable, their dependents. Accordingly, we sponsor a retiree medical program for eligible retired
U.S. employees and fund applicable retiree medical accounts intended to provide reimbursement for eligible health care
expenses on a tax-favored basis for retirees who satisfy certain eligibility requirements. Effective as of January 1, 2019, we no
longer sponsor our own retiree medical coverage for substantially all retired U.S. employees that are Medicare eligible. Instead,
we offer these Medicare-eligible retirees access to health care coverage through a private exchange and offer a health
reimbursement account to subsidize benefits for a select group of such retirees. We also provide postretirement life insurance to
all eligible U.S. employees who retired prior to January 1, 2018, as well as certain eligible retired employees covered by one of
our collective bargaining agreements who retired prior to January 1, 2023.
Determining net periodic benefit expense (income) is dependent on various actuarial assumptions, including discount rates,
expected return on plan assets, compensation increases, turnover rates and health care trend rates. Actuarial gains and losses are
recognized immediately in Other expenses / (income) in the Consolidated Statements of Earnings as of the measurement date,
which is our fiscal year end, or more frequently if an interim remeasurement is required. We use the fair value of plan assets to
calculate the expected return on plan assets.
Components of net periodic benefit expense (income) were as follows:
(Millions)
Service cost
Interest cost
Expected return on plan assets
Amortization of prior service credit
Actuarial losses (gains)
2023
$
Pension
2022
13 $
73
16 $
49
(100)
(118)
1
(6)
—
80
Net periodic benefit expense (income)
$
(19) $
27 $
(260) $
Postretirement
2021
2023
2022
2021
18 $
— $
— $
41
(122)
—
(197)
7
—
(1)
(9)
(3) $
3
—
(1)
(36)
(34) $
—
4
—
(5)
(6)
(7)
Change in benefit obligation:
(Millions)
Obligation at beginning of year
Service cost
Interest cost
Actuarial losses (gains)
Benefits paid
Settlements
Other
Foreign currency adjustment
Benefit obligation at end of year
Change in the fair value of pension plan assets:
(Millions)
Fair value at beginning of year
Actual return on plan assets
Employer contributions
Benefits paid
Settlements
Foreign currency adjustment
Fair value at end of year
Pension
Postretirement
2023
2022
2023
2022
$
1,737 $
2,186 $
172 $
13
73
(108)
(104)
(352)
—
(2)
16
49
(310)
(106)
(89)
(6)
(3)
—
7
(9)
(17)
—
—
—
222
—
3
(36)
(17)
—
—
—
$
1,257 $
1,737 $
153 $
172
2023
2022
$
1,763 $
(1)
2,220
(272)
1
(91)
(352)
(4)
—
(92)
(89)
(4)
$
1,316 $
1,763
Net amounts recognized in the Consolidated Balance Sheets:
(Millions)
Other assets
Accrued liabilities
Other liabilities
Net amounts recognized asset / (liability)
Pension
Postretirement
2023
2022
2023
2022
$
$
164 $
146 $
— $
10
95
13
107
18
135
59 $
26 $
(153) $
—
19
153
(172)
Amounts recognized in Accumulated other comprehensive income (loss) consist of:
(Millions)
Prior service credit (cost)
Pension
Postretirement
2023
2022
2023
2022
$
— $
(1) $
3 $
4
The components of net periodic benefit expense (income) other than the service cost component are included in Other
The change in amounts recognized in Accumulated other comprehensive income (loss) associated with postretirement
expenses / (income) in the Consolidated Statements of Earnings.
benefits was due to amortization in 2023 and 2022.
The pension actuarial gains recognized in 2023 were primarily due to increases in discount rates used to determine the
benefit obligation and the gain from the annuity settlement, partially offset by losses on plan assets and plan experience. The
pension actuarial losses recognized in 2022 were primarily due to losses on plan assets, partially offset by increases in discount
rates used to determine the benefit obligation. The pension actuarial gains recognized in 2021 were primarily due to higher than
anticipated investment gains on plan assets and increases in discount rates used to determine the benefit obligation.
The postretirement actuarial gains recognized in 2023, 2022 and 2021 were primarily due to increases in discount rates
used to determine the benefit obligation.
The following table provides information for pension plans with projected benefit obligations in excess of plan assets and
accumulated benefit obligations in excess of plan assets:
(Millions)
Projected benefit obligation
Accumulated benefit obligation
Fair value of plan assets
2023
2022
$
$
$
105 $
104 $
— $
120
118
—
The accumulated benefit obligation for all pension plans was $1.24 billion at July 30, 2023, and $1.716 billion at July 31,
2022.
48
49
Weighted-average assumptions used to determine benefit obligations at the end of the year:
Our year-end pension plan weighted-average asset allocations by category were:
Discount rate
Rate of compensation increase
Interest crediting rate
Pension
Postretirement
2023
5.46%
3.23%
4.00%
2022
4.58%
3.23%
4.00%
2023
5.47%
3.25%
2022
4.48%
3.25%
Not applicable
Equity securities
Debt securities
Real estate and other
Total
Strategic
Target
26%
68%
6%
100%
2023
27%
66%
7%
100%
2022
34%
59%
7%
100%
Weighted-average assumptions used to determine net periodic benefit cost for the years ended:
Discount rate
Expected return on plan assets
Rate of compensation increase
Interest crediting rate
2023
5.03%
6.40%
3.23%
4.00%
Pension
2022
3.13%
5.82%
3.23%
4.00%
2021
2.47%
6.01%
3.23%
4.00%
The discount rate is established as of the measurement date. In establishing the discount rate, we review published market
indices of high-quality debt securities, adjusted as appropriate for duration. In addition, independent actuaries apply high-
quality bond yield curves to the expected benefit payments of the plans. The expected return on plan assets is a long-term
assumption based upon historical experience and expected future performance, considering our current and projected
investment mix. This estimate is based on an estimate of future inflation, long-term projected real returns for each asset class
and a premium for active management.
The discount rate used to determine net periodic postretirement expense was 4.48% in 2023, 2.37% in 2022, and 2.15% in
2021.
Assumed health care cost trend rates at the end of the year:
Health care cost trend rate assumed for next year
Rate to which the cost trend rate is assumed to decline (ultimate trend rate)
Year that the rate reaches the ultimate trend rate
Pension Plan Assets
2023
6.50%
5.00%
2030
2022
6.50%
5.00%
2027
The fundamental goal underlying the investment policy is to ensure that the assets of the plans are invested in a prudent
manner to meet the obligations of the plans as these obligations come due. The primary investment objectives include providing
a total return which will promote the goal of benefit security by attaining an appropriate ratio of plan assets to plan obligations,
to provide for real asset growth while also tracking plan obligations, to diversify investments across and within asset classes, to
reduce the impact of losses in single investments, and to follow investment practices that comply with applicable laws and
regulations.
The primary policy objectives will be met by investing assets to achieve a reasonable tradeoff between return and risk
relative to plan obligations. This includes investing a portion of the assets in funds selected in part to hedge the interest rate
sensitivity to plan obligations.
The portfolio includes investments in the following asset classes: fixed income, equity, real estate and alternatives. Fixed
income will provide a moderate expected return and partially hedge the exposure to interest rate risk of the plans’ obligations.
Equities are used for their high expected return. Additional asset classes are used to provide diversification.
Asset allocation is monitored on an ongoing basis relative to the established asset class targets. The interaction between
plan assets and benefit obligations is periodically studied to assist in the establishment of strategic asset allocation targets. The
investment policy permits variances from the targets within certain parameters. Asset rebalancing occurs when the underlying
asset class allocations move outside these parameters, at which time the asset allocation is rebalanced back to the policy target
weight.
Pension plan assets are categorized based on the following fair value hierarchy:
•
•
•
Level 1: Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.
Level 2: Inputs other than quoted prices included in Level 1 that are observable for the asset or liability through
corroboration with observable market data.
Level 3: Unobservable inputs, which are valued based on our estimates of assumptions that market participants would
use in pricing the asset or liability.
The following table presents our pension plan assets by asset category at July 30, 2023, and July 31, 2022:
(Millions)
Fair
Value
as of
July 30,
2023
Fair Value Measurements at
July 30, 2023 Using
Fair Value Hierarchy
Level 1
Level 2
Level 3
Fair
Value
as of
July 31,
2022
Fair Value Measurements at
July 31, 2022 Using
Fair Value Hierarchy
Level 1
Level 2
Level 3
Short-term investments
$
7 $
3 $
4 $ — $
33 $
27 $
6 $ —
Equities:
U.S.
Non-U.S.
Corporate bonds:
U.S.
Non-U.S.
Government and agency bonds:
U.S.
Non-U.S.
Municipal bonds
Mortgage and asset backed securities
Real estate
Hedge funds
Derivative assets
Derivative liabilities
Total assets at fair value
53
116
448
87
183
14
15
19
2
8
4
(3)
51
115
—
—
—
—
—
—
1
—
—
—
2
1
448
87
183
14
15
19
—
—
4
(3)
—
—
—
—
—
—
—
—
1
8
—
—
78
162
571
119
224
20
19
15
4
11
10
(5)
75
162
—
—
—
—
—
—
2
—
—
—
3
—
571
119
224
20
19
15
—
—
10
(5)
$
953 $
170 $
774 $
9 $ 1,261 $
266 $
982 $
—
—
—
—
—
—
—
—
2
11
—
—
13
Investments measured at net asset
value:
Short-term investments
Commingled equity funds
Commingled fixed income funds
Real estate
Hedge funds
$
69
158
79
73
2
Total investments measured at net
asset value:
Other items to reconcile to fair value
$
381
(18)
Total pension plan assets at fair value
$ 1,316
$
27
307
87
99
14
$
534
(32)
$ 1,763
Short-term investments — Investments include cash and cash equivalents, and various short-term debt instruments and
short-term investment funds. Institutional short-term investment vehicles valued daily are classified as Level 1 at cost which
50
51
approximates market value. Short-term debt instruments are classified at Level 2 and are valued based on bid quotations and
recent trade data for identical or similar obligations. Other investments valued based upon net asset value are included as a
reconciling item to the fair value table.
Equities — Generally common stocks and preferred stocks are classified as Level 1 and are valued using quoted market
prices in active markets.
Corporate bonds — These investments are valued based on quoted market prices, yield curves and pricing models using
current market rates.
Government and agency bonds — These investments are generally valued based on bid quotations and recent trade data for
identical or similar obligations.
Municipal bonds — These investments are valued based on quoted market prices, yield curves and pricing models using
current market rates.
Mortgage and asset backed securities — These investments are valued based on prices obtained from third party pricing
sources. The prices from third party pricing sources may be based on bid quotes from dealers and recent trade data. Mortgage
backed securities are traded in the over-the-counter market.
Real estate — Real estate investments consist of real estate investment trusts, property funds and limited partnerships. Real
estate investment trusts are classified as Level 1 and are valued based on quoted market prices. Property funds are classified as
either Level 2 or Level 3 depending upon whether liquidity is limited or there are few observable market participant
transactions. Property funds are valued based on third party appraisals. Limited partnerships are valued based upon valuations
provided by the general partners of the funds. The values of limited partnerships are based upon an assessment of each
underlying investment, incorporating valuations that consider the evaluation of financing and sales transactions with third
parties, expected cash flows and market-based information, including comparable transactions and performance multiples
among other factors. The investments are classified as Level 3 since the valuation is determined using unobservable inputs.
Real estate investments valued at net asset value are included as a reconciling item to the fair value table.
Hedge funds — Hedge fund investments include hedge funds valued based upon a net asset value derived from the fair
value of underlying securities. Hedge fund investments that are subject to liquidity restrictions or that are based on
unobservable inputs are classified as Level 3. Hedge fund investments may include long and short positions in equity and fixed
income securities, derivative instruments such as futures and options, commodities and other types of securities. Hedge fund
investments valued at net asset value are included as a reconciling item to the fair value table.
Derivatives — Derivative financial instruments include forward currency contracts, futures contracts, options contracts,
interest rate swaps and credit default swaps. Derivative financial instruments are classified as Level 2 and are valued based on
observable market transactions or prices.
Commingled funds — Investments in commingled funds are not traded in active markets. Commingled funds are valued
based on the net asset values of such funds and are included as a reconciling item to the fair value table.
Other items to reconcile to fair value of plan assets included amounts due for securities sold, amounts payable for securities
purchased and other payables.
The following table summarizes the changes in fair value of Level 3 investments for the years ended July 30, 2023, and
Estimated future benefit payments are as follows:
(Millions)
2024
2025
2026
2027
2028
2029-2033
Pension
Postretirement
$
$
$
$
$
$
127 $
118 $
115 $
110 $
107 $
486 $
19
17
16
15
14
60
The estimated future benefit payments include payments from funded and unfunded plans.
We do not expect contributions to pension plans to be material in 2024.
Defined Contribution Plans — We sponsor a 401(k) Retirement Plan that covers substantially all U.S. employees and
provide a matching contribution of 100% of employee contributions up to 4% of eligible compensation. In addition, for
employees not eligible to participate in defined benefit plans that we sponsor, we provide a contribution equal to 3% of eligible
compensation regardless of their participation in the 401(k) Retirement Plan. Amounts charged to Costs and expenses were $73
million in 2023, $69 million in 2022 and $64 million in 2021.
10. Leases
We lease warehouse and distribution facilities, office space, manufacturing facilities, equipment and vehicles, primarily
through operating leases.
Leases recorded on our Consolidated Balance Sheet have remaining terms primarily from 1 to 12 years.
Our fleet leases generally include residual value guarantees that are assessed at lease inception in determining ROU assets
and corresponding liabilities. No other significant restrictions or covenants are included in our leases.
The components of lease costs were as follows:
(Millions)
Operating lease cost
Finance lease - amortization of ROU assets
Short-term lease cost
Variable lease cost(1)
Sublease income
Total
2023
2022
2021
$
86 $
79 $
16
64
207
—
17
56
202
—
$
373 $
354 $
__________________________________________
Includes labor and other overhead included in our service contracts with embedded leases.
(1)
The following table summarizes the lease amounts recorded in the Consolidated Balance Sheets:
July 31, 2022:
(Millions)
Fair value at July 31, 2022
Actual return on plan assets
Purchases, sales and settlements, net
Transfers out of Level 3
Fair value at July 30, 2023
(Millions)
Fair value at August 1, 2021
Actual return on plan assets
Purchases, sales and settlements, net
Transfers out of Level 3
Fair value at July 31, 2022
Real Estate
Hedge Funds
Total
2 $
—
(1)
—
1 $
11 $
(1)
(2)
—
8 $
Real Estate
Hedge Funds
Total
3 $
—
(1)
—
2 $
30 $
1
(20)
—
11 $
$
$
$
$
13
(1)
(3)
—
9
33
1
(21)
—
13
(Millions)
ROU assets, net
Lease liabilities (current)
Lease liabilities (noncurrent)
(Millions)
ROU assets, net
Lease liabilities (current)
Lease liabilities (noncurrent)
Operating Leases
Balance Sheet Classification
2023
2022
Other assets
Accrued liabilities
Other liabilities
$
$
$
275 $
70 $
208 $
Financing Leases
Balance Sheet Classification
2023
2022
Plant assets, net of depreciation
Short-term borrowings
Long-term debt
$
$
$
27 $
13 $
15 $
52
53
80
6
48
201
(2)
333
239
62
177
28
14
16
Weighted-average lease terms and discount rates were as follows:
Weighted-average remaining term in years
Weighted-average discount rate
Future minimum lease payments are as follows:
(Millions)
2024
2025
2026
2027
2028
Thereafter
Total future undiscounted lease payments
Less imputed interest
Total reported lease liability
July 30, 2023
July 31, 2022
Operating
Finance
Operating
Finance
5.1
2.6
5.7
2.4
3.2 %
2.8 %
2.2 %
0.8 %
(Millions)
2023
2022
2021
Earnings from continuing operations before income taxes:
United States
Non-U.S.
$
$
1,105 $
948 $
1,308
23
27
28
1,128 $
975 $
1,336
July 30, 2023
Operating
Finance
The following is a reconciliation of the effective income tax rate on continuing operations to the U.S. federal statutory
income tax rate:
$
77 $
71
48
37
24
46
303
25
$
278 $
13
8
7
1
—
—
29
1
28
78
17
79
16
Federal statutory income tax rate
State income taxes (net of federal tax benefit)
Tax effect of international items
State income tax law changes
Divestiture impact on deferred taxes
Legal entity reorganization
Capital loss on the sale of the Plum baby food and snacks business
Capital loss valuation allowance on the sale of the Plum baby food and snacks business
Other
Effective income tax rate
2023
2022
2021
21.0 %
21.0 %
21.0 %
2.9
—
0.1
—
—
—
—
2.2
0.7
(1.0)
—
—
—
—
(0.1)
23.9 %
(0.5)
22.4 %
2.8
0.2
0.3
(0.9)
1.4
(1.3)
1.3
(0.2)
24.6 %
In the second quarter of 2021, we recorded a $19 million deferred tax charge in connection with a legal entity
reorganization as part of the continued integration of Snyder's-Lance.
On August 16, 2022, the Inflation Reduction Act (IRA) was signed into law. The IRA introduces a corporate alternative
minimum tax beginning in 2024, a 1% excise tax on share repurchases in excess of issuances after January 1, 2023, and several
tax incentives to promote clean energy. Any excise tax incurred is recognized as part of the cost basis of the shares acquired in
the Consolidated Statements of Equity. We do not expect the provisions of the IRA to have a material impact on our
consolidated financial statements.
Deferred tax liabilities and assets are comprised of the following:
(Millions)
Depreciation
Amortization
The following table summarizes cash flow and other information related to leases:
(Millions)
2023
2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases
Financing cash flows from finance leases
ROU assets obtained in exchange for lease obligations:
Operating leases
Finance leases
11. Taxes on Earnings
$
$
$
$
84 $
17 $
117 $
17 $
The provision for income taxes on earnings from continuing operations consists of the following:
(Millions)
Income taxes:
Currently payable:
Federal
State
Non-U.S.
Deferred:
Federal
State
Non-U.S.
2023
2022
2021
Operating lease ROU assets
$
229 $
160 $
39
7
275
(8)
2
1
(5)
270 $
22
15
197
29
(6)
(2)
21
218 $
$
151
34
6
191
102
33
2
137
328
Pension
Other
Deferred tax liabilities
Benefits and compensation
Pension benefits
Tax loss carryforwards
Capital loss carryforwards
Operating lease liabilities
Capitalized research and development
Other
Gross deferred tax assets
Deferred tax asset valuation allowance
Deferred tax assets, net of valuation allowance
Net deferred tax liability
54
55
2023
2022
$
340 $
881
69
39
8
1,337
112
25
10
114
69
15
56
401
(129)
272
354
870
54
35
9
1,322
119
28
13
115
54
—
52
381
(131)
250
$
1,065 $
1,072
At July 30, 2023, our U.S. and non-U.S. subsidiaries had tax loss carryforwards of approximately $192 million. Of these
carryforwards, $4 million may be carried forward indefinitely, and $188 million expire between 2024 and 2037, with the
majority expiring after 2028. At July 30, 2023, deferred tax asset valuation allowances have been established to offset $40
million of these tax loss carryforwards. Additionally, as of July 30, 2023, our U.S. and non-U.S. subsidiaries had capital loss
carryforwards of approximately $474 million, all of which were offset by valuation allowances. Of these capital loss
carryforwards, $349 million expire in 2024, $77 million expire in 2026, and $48 million may be carried forward indefinitely.
The net change in the deferred tax asset valuation allowance in 2023 was a decrease of $2 million. The decrease was
primarily due to state tax loss carryforwards. The net change in the deferred tax asset valuation allowance in 2022 was a
decrease of $11 million. The decrease was primarily due to the liquidation of an inactive subsidiary. The net change in the
deferred tax asset valuation allowance in 2021 was an increase of $20 million. The increase was primarily due to the sale of the
Plum baby food and snacks business.
As of July 30, 2023, other deferred tax assets included $12 million of state tax credit carryforwards related to various states
that expire in 2025. As of July 31, 2022, other deferred tax assets included $13 million of state tax credit carryforwards. As of
July 30, 2023, and July 31, 2022, deferred tax asset valuation allowances have been established to offset the state tax credit
carryforwards.
As of July 30, 2023, we had approximately $11 million of undistributed earnings of foreign subsidiaries which are deemed
to be permanently reinvested and for which we have not recognized a deferred tax liability. We estimate that the tax liability
that might be incurred if permanently reinvested earnings were remitted to the U.S. would not be material. Foreign subsidiary
earnings in 2021 and thereafter are not considered permanently reinvested and we have therefore recognized a deferred tax
liability and expense.
A reconciliation of the activity related to unrecognized tax benefits follows:
(Millions)
Balance at beginning of year
Increases related to prior-year tax positions
Decreases related to prior-year tax positions
Increases related to current-year tax positions
Settlements
Lapse of statute
Balance at end of year
2023
2022
2021
$
14 $
—
—
2
—
(1)
15 $
$
22 $
4
(10)
1
(2)
(1)
14 $
23
—
(1)
3
—
(3)
22
The increase of unrecognized tax benefits was primarily due current-year tax positions. The amount of unrecognized tax
benefits that, if recognized, would impact the annual effective tax rate was $12 million as of July 30, 2023, and July 31, 2022,
and $18 million as of August 1, 2021. The total amount of unrecognized tax benefits can change due to audit settlements, tax
examination activities, statute expirations and the recognition and measurement criteria under accounting for uncertainty in
income taxes.
Our accounting policy for interest and penalties attributable to income taxes is to reflect any expense or benefit as a
component of our income tax provision. The total amount of interest and penalties recognized in the Consolidated Statements of
Earnings was not material in 2023, 2022, and 2021. The total amount of interest and penalties recognized in the Consolidated
Balance Sheets in Other liabilities was $5 million as of July 30, 2023, and $4 million as of July 31, 2022.
We file income tax returns in the U.S. federal jurisdiction and various state and non-U.S. jurisdictions. In the normal course
of business, we are subject to examination by taxing authorities, including the U.S. and Canada. With limited exceptions, we
have been audited for income tax purposes in the U.S. through 2021 and in Canada through 2016. In addition, several state
income tax examinations are in progress for the years 2017 to 2021.
12. Short-term Borrowings and Long-term Debt
Short-term borrowings consist of the following:
(Millions)
Commercial paper
Notes
Finance leases
Other(1)
Total short-term borrowings
2023
2022
$
$
178 $
—
13
—
191 $
235
566
14
(1)
814
_______________________________________
(1)
Includes unamortized net discount/premium on debt issuances and debt issuance costs.
The weighted-average interest rate of commercial paper, which consisted of U.S. borrowings, was 5.43% as of
July 30, 2023, and 2.63% as of July 31, 2022.
As of July 30, 2023, we issued $29 million of standby letters of credit. On September 27, 2021, we entered into a
committed revolving credit facility totaling $1.85 billion scheduled to mature on September 27, 2026. This facility remained
unused at July 30, 2023, except for $1 million of standby letters of credit that we issued under it. The facility contains
customary 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 credit facility) of not less than
3.25:1.00, measured quarterly, and customary events of default for credit facilities of this type. Loans under this facility will
bear interest at the rates specified in the facility, which vary based on the type of loan and certain other customary conditions.
The facility supports our commercial paper program and other general corporate purposes.
On April 4, 2023, we entered into an amendment to our existing revolving credit facility to replace remaining LIBOR-
based benchmark rates applicable to borrowings under the revolving credit facility with SOFR-based benchmark rates, in
advance of the cessation of LIBOR occurring on June 30, 2023.
Long-term debt consists of the following:
(Millions)
3.65% Notes due March 15, 2023
3.95% Notes due March 15, 2025
3.30% Notes due March 19, 2025
Variable-rate term loan due November 15, 2025
4.15% Notes due March 15, 2028
2.375% Notes due April 24, 2030
3.80% Notes due August 2, 2042
4.80% Notes due March 15, 2048
3.125% Notes due April 24, 2050
Finance leases
Other(1)
Total
Less current portion
Total long-term debt
_______________________________________
(1)
Includes unamortized net discount/premium on debt issuances and debt issuance costs.
2023
2022
$
— $
850
300
500
1,000
500
163
700
500
15
(30)
4,498 $
—
4,498 $
$
$
566
850
300
—
1,000
500
163
700
500
16
(34)
4,561
565
3,996
56
57
Principal amounts of long-term debt mature as follows:
(Millions)
2025
2026
2027
2028
Thereafter
Debt Extinguishments
$
$
$
$
$
1,158
507
—
1,000
1,863
On March 4, 2022, we completed the redemption of all $450 million outstanding aggregate principal amount of our 2.50%
Senior Notes due August 2, 2022. The consideration for the redemption was $453 million, including $3 million of premium.
We recognized a loss of $4 million (including the $3 million of premium and other costs), which was recorded in Interest
expense in the Consolidated Statement of Earnings. In addition, we paid accrued and unpaid interest on the redeemed notes
through the date of settlement. We used a combination of cash on hand and short-term debt to fund the redemption.
Debt Repayments
In March 2023, we repaid our 3.65% $566 million Notes.
In March 2021, we repaid our 3.30% $321 million Notes and floating rate $400 million Notes, and in May 2021, we repaid
our 8.875% $200 million Notes.
Debt Issuances
On November 15, 2022, we entered into a delayed draw term loan credit agreement (the DDTL Credit Agreement) totaling
up to $500 million scheduled to mature on November 15, 2025. Loans under the DDTL Credit Agreement bear interest at the
rates specified in the DDTL Credit Agreement, which vary based on the type of loan and certain other conditions. The 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 DDTL Credit Agreement) of not less than 3.25:1.00, and events of default for credit
facilities of this type. We borrowed $500 million under the DDTL Credit Agreement on March 13, 2023, and used the proceeds
and cash on hand to repay the 3.65% $566 million Notes that matured on March 15, 2023.
13. 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 equity 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 July 30, 2023, or July 31, 2022.
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 $125 million as of
July 30, 2023, and $140 million as of July 31, 2022. 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
income (loss). The notional amount of foreign exchange forward contracts that are not designated as accounting hedges was
$15 million as of July 30, 2023, and $13 million as of July 31, 2022.
Interest Rate Risk
We manage our exposure to changes in interest rates by optimizing the use of variable-rate and fixed-rate debt and by
utilizing interest rate swaps in order to maintain our variable-to-total debt ratio within targeted guidelines. There were no
interest rate swaps outstanding as of July 30, 2023, or July 31, 2022.
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 July 30, 2023. The notional amount of
commodity contracts designated as cash-flow hedges was $3 million as of July 31, 2022. 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. The notional amount of commodity
contracts not designated as accounting hedges was $194 million as of July 30, 2023, and $254 million as of July 31, 2022. 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
approximately $47 million as of July 30, 2023, and $39 million as of July 31, 2022. 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 as of July 30, 2023, and July 31, 2022,
were $42 million and $50 million, respectively.
The following tables summarize the fair value of derivative instruments on a gross basis as recorded in the Consolidated
Balance Sheets as of July 30, 2023, and July 31, 2022:
(Millions)
Asset Derivatives
Derivatives designated as hedges:
Commodity contracts
Foreign exchange forward contracts
Total derivatives designated as hedges
Derivatives not designated as hedges:
Commodity contracts
Deferred compensation contracts
Commodity contracts
Total derivatives not designated as hedges
Total asset derivatives
Balance Sheet Classification
2023
2022
Other current assets
Other current assets
Other current assets
Other current assets
Other assets
$
$
$
$
$
— $
—
— $
15 $
4
1
20 $
20 $
3
2
5
20
—
—
20
25
58
59
(Millions)
Liability Derivatives
Derivatives designated as hedges:
Balance Sheet Classification
2023
2022
Foreign exchange forward contracts
Accrued liabilities
Total derivatives designated as hedges
Derivatives not designated as hedges:
Commodity contracts
Deferred compensation contracts
Total derivatives not designated as hedges
Total liability derivatives
Accrued liabilities
Accrued liabilities
$
$
$
$
$
1 $
1 $
5 $
—
5 $
6 $
—
—
30
4
34
34
We do not offset the fair values of derivative assets and liabilities executed with the same counterparty that are generally
subject to enforceable netting agreements. However, if we were to offset and record the asset and liability balances of
derivatives on a net basis, the amounts presented in the Consolidated Balance Sheets as of July 30, 2023, and July 31, 2022,
would be adjusted as detailed in the following table:
2023
Gross Amounts
Not Offset in
the
Consolidated
Balance Sheet
Subject to
Netting
Agreements
Gross Amounts
Presented in
the
Consolidated
Balance Sheet
Gross Amounts
Presented in
the
Consolidated
Balance Sheet
Net Amount
2022
Gross Amounts
Not Offset in
the
Consolidated
Balance Sheet
Subject to
Netting
Agreements
Net Amount
(Millions)
Total asset derivatives
Total liability derivatives
$
$
20 $
6 $
(5) $
(5) $
15 $
1 $
25 $
34 $
(17) $
(17) $
8
17
We are required to maintain cash margin accounts in connection with funding the settlement of open positions for
exchange-traded commodity derivative instruments. A cash margin asset balance of $2 million at July 30, 2023, and $8 million
at July 31, 2022, were included in Other current assets in the Consolidated Balance Sheets.
The following tables show the effect of our derivative instruments designated as cash-flow hedges for the years ended
July 30, 2023, July 31, 2022, and August 1, 2021 in other comprehensive income (loss) (OCI) and the Consolidated Statements
of Earnings:
(Millions)
OCI derivative gain (loss) at beginning of year
Effective portion of changes in fair value recognized in OCI:
Commodity contracts
Foreign exchange forward contracts
Amount of loss (gain) reclassified from OCI to earnings:
Location in Earnings
Commodity contracts
Foreign exchange forward contracts
Foreign exchange forward contracts
Forward starting interest rate swaps
OCI derivative gain (loss) at end of year
Cost of products sold
Cost of products sold
Other expenses / (income)
Interest expense
Total Cash-Flow Hedge
OCI Activity
2023
2022
2021
$
— $
(5) $
(8)
—
5
(3)
(8)
—
1
13
4
4
(9)
(14)
—
1
—
1
6
1
1
$
(5) $
— $
(5)
Based on current valuations, the amount expected to be reclassified from OCI into earnings within the next 12 months is a
loss of $2 million.
The following table shows the total amounts of line items presented in the Consolidated Statements of Earnings for the
years ended 2023, 2022, and 2021 in which the effects of derivative instruments designated as cash-flow hedges are recorded
and the total effect of hedge activity on these line items are as follows:
2023
2022
2021
(Millions)
Consolidated Statements of Earnings:
Cost of
products
sold
Interest
expense
Cost of
products
sold
Interest
expense
Cost of
products
sold
Other
expenses /
(income)
Interest
expense
$ 6,440 $
188 $ 5,935 $
189 $ 5,665 $
(254) $
210
Loss (gain) on cash-flow hedges:
Amount of loss (gain) reclassified from OCI
to earnings
$
(11) $
1 $
(13) $
1 $
6 $
1 $
1
The amount excluded from effectiveness testing recognized in each line item of earnings using an amortization approach
was not material in all periods presented.
The following table shows the effects of our derivative instruments not designated as hedges in the Consolidated
Statements of Earnings:
(Millions)
Foreign exchange forward contracts
Commodity contracts
Deferred compensation contracts
Total
14. Fair Value Measurements
Location of Loss (Gain)
Recognized in Earnings
Cost of products sold
Cost of products sold
Administrative expenses
2023
2022
2021
$
— $
— $
(27)
(4)
8
3
$
(31) $
11 $
2
(55)
(8)
(61)
We categorize financial assets and liabilities based on the following fair value hierarchy:
•
•
•
Level 1: Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.
Level 2: Inputs other than quoted prices included in Level 1 that are observable for the asset or liability through
corroboration with observable market data.
Level 3: Unobservable inputs, which are valued based on our estimates of assumptions that market participants would
use in pricing the asset or liability.
Fair value is defined as the exit price, or the amount that would be received to sell an asset or paid to transfer a liability in
an orderly transaction between market participants as of the measurement date. When available, we use unadjusted quoted
market prices to measure the fair value and classify such items as Level 1. If quoted market prices are not available, we base
fair value upon internally developed models that use current market-based or independently sourced market parameters such as
interest rates and currency rates. Included in the fair value of derivative instruments is an adjustment for credit and
nonperformance risk.
60
61
Assets and Liabilities Measured at Fair Value on a Recurring Basis
The following table summarizes the changes in fair value of Level 3 assets for the years ended July 30, 2023, and July 31,
$
— $
— $
— $
— $
2 $
— $
2 $
—
The carrying values of cash and cash equivalents, accounts receivable and accounts payable approximate fair value.
The following tables present our financial assets and liabilities that are measured at fair value on a recurring basis as of
July 30, 2023, and July 31, 2022, consistent with the fair value hierarchy:
Fair Value
as of
July 30, 2023
Fair Value Measurements at
July 30, 2023 Using
Fair Value Hierarchy
Level 1
Level 2
Level 3
Fair Value
as of
July 31, 2022
Fair Value Measurements at
July 31, 2022 Using
Fair Value Hierarchy
Level 1
Level 2
Level 3
(Millions)
Assets
Foreign exchange
forward
contracts(1)
Commodity
derivative
contracts(2)
Deferred
compensation
derivative
contracts(3)
Deferred
compensation
investments(4)
Total assets at fair
value
(Millions)
Liabilities
Foreign exchange
forward
contracts(1)
Commodity
derivative
contracts(2)
Deferred
compensation
derivative
contracts(3)
Deferred
compensation
obligation(4)
Total liabilities at
fair value
16
11
4
1
—
1
3
4
—
2
23
—
19
4
—
—
—
2
—
2
—
—
—
—
4
$
21 $
12 $
7 $
2 $
27 $
2 $
21 $
Fair Value
as of
July 30, 2023
Fair Value Measurements at
July 30, 2023 Using
Fair Value Hierarchy
Level 1
Level 2
Level 3
Fair Value
as of
July 31, 2022
Fair Value Measurements at
July 31, 2022 Using
Fair Value Hierarchy
Level 1
Level 2
Level 3
$
1 $
— $
1 $
— $
— $
— $
— $
—
5
3
2
—
30
6
24
—
—
91
—
91
—
—
—
—
4
96
—
96
4
—
$
97 $
94 $
3 $
— $
130 $
102 $
28 $
—
—
—
___________________________________
(1) Based on observable market transactions of spot currency rates and forward rates.
(2) Level 1 and 2 are based on quoted futures exchanges and on observable prices of futures and options transactions in the
marketplace. Level 3 is based on unobservable inputs in which there is little or no market data, which requires
management’s own assumptions within an internally developed model.
(3) Based on equity index swap rates.
(4) Based on the fair value of the participants’ investments.
2022:
(Millions)
Fair value at beginning of year
Gains (losses)
Settlements
Fair value at end of year
Fair Value of Financial Instruments
2023
2022
$
$
4 $
3
(5)
2 $
1
18
(15)
4
There were no cash equivalents at July 30, 2023, and $27 million at July 31, 2022. Cash equivalents represent fair value as
these highly liquid investments have an original maturity of three months or less. Fair value of cash equivalents is based on
Level 2 inputs.
The fair value of short- and long-term debt was $4.293 billion at July 30, 2023, and $4.637 billion at July 31, 2022. The
carrying value was $4.689 billion at July 30, 2023, and $4.81 billion at July 31, 2022. The fair value of long-term debt is
principally estimated using Level 2 inputs based on quoted market prices or pricing models using current market rates.
15. Shareholders' Equity
We have authorized 560 million shares of Capital stock with $.0375 par value and 40 million shares of Preferred stock,
issuable in one or more classes, with or without par as may be authorized by the Board of Directors. No Preferred stock has
been issued.
Share Repurchase Programs
In June 2021, the Board authorized an anti-dilutive share repurchase program of up to $250 million (June 2021 program) to
offset the impact of dilution from shares issued under our stock compensation programs. The June 2021 program has no
expiration date, but it may be suspended or discontinued at any time. Repurchases under the June 2021 program may be made
in open-market or privately negotiated transactions.
In September 2021, the Board approved a strategic share repurchase program of up to $500 million (September 2021
program). The September 2021 program has no expiration date, but it may be suspended or discontinued at any time.
Repurchases under the September 2021 program may be made in open-market or privately negotiated transactions.
In 2023, we repurchased 2.698 million shares at a cost of $142 million. Of this amount, $68 million was used to
repurchase shares pursuant to our June 2021 program and $74 million was used to repurchase share pursuant to our September
2021 program. As of July 30, 2023, approximately $104 million remained available under the June 2021 program and
approximately $301 million remained under the September 2021 program. In 2022, we repurchased 3.8 million shares at a cost
of $167 million. In 2021, we repurchased approximately 1 million shares at a cost of $36 million.
16. Stock-based Compensation
In 2005, shareholders approved the 2005 Long-Term Incentive Plan, which authorized the issuance of 6 million shares to
satisfy awards of stock options, stock appreciation rights, unrestricted stock, restricted stock/units (including performance
restricted stock) and performance units. In 2008, shareholders approved an amendment to the 2005 Long-Term Incentive Plan
to increase the number of authorized shares to 10.5 million and in 2010, shareholders approved another amendment to the 2005
Long-Term Incentive Plan to increase the number of authorized shares to 17.5 million. In 2015, shareholders approved the 2015
Long-Term Incentive Plan, which authorized the issuance of 13 million shares. Approximately 6 million of these shares were
shares that were currently available under the 2005 plan and were incorporated into the 2015 Plan upon approval by
shareholders. In 2022, shareholders approved the 2022 Long-Term Incentive Plan, which authorized the issuance of 12 million
shares to satisfy awards of stock options, stock appreciation rights, unrestricted stock, restricted stock/units (including
performance restricted stock) and performance units. The 2022 Long-Term Incentive Plan replaced the 2015 Long-Term
Incentive Plan and no new awards can be granted under the 2015 Long-Term Incentive Plan and none of the shares that remain
available under the 2015 Long-Term Incentive Plan are available for issuance under the 2022 Long-Term Incentive Plan.
Awards under Long-Term Incentive Plans may be granted to employees and directors. Pursuant to the Long-Term
Incentive Plan, we adopted a long-term incentive compensation program which provides for grants of total shareholder return
(TSR) performance restricted stock/units, EPS performance restricted stock/units, strategic performance restricted stock/units,
time-lapse restricted stock/units, special performance restricted stock/units, free cash flow (FCF) performance restricted stock/
units and unrestricted stock. Under the program, awards of TSR performance restricted stock/units will be earned by comparing
our total shareholder return during a three-year period to the respective total shareholder returns of companies in a performance
peer group. Based upon our ranking in the performance peer group after the relevant three-year performance period, a recipient
62
63
of TSR performance restricted stock/units may earn a total award ranging from 0% to 200% of the initial grant. Awards of EPS
performance restricted stock/units granted beginning in 2022 will be earned upon the achievement of our adjusted EPS
compound annual growth rate goal (EPS CAGR performance restricted stock/units), measured over a three-year period. A
recipient of EPS CAGR performance restricted stock/units may earn a total award ranging from 0% to 200% of the initial grant.
Awards of EPS performance restricted stock/units granted prior to 2022 were earned based upon our achievement of annual
earnings per share goals and vested over the relevant three-year period. During the three-year vesting period, a recipient of EPS
performance restricted stock/units earned a total award of either 0% or 100% of the initial grant. Awards of the strategic
performance restricted stock units were earned based upon the achievement of two key metrics, net sales and EPS growth,
compared to strategic plan objectives during a three-year period. A recipient of strategic performance restricted stock units
earned a total award ranging from 0% to 200% of the initial grant. Awards of FCF performance restricted stock units were
earned based upon the achievement of free cash flow (defined as Net cash provided by operating activities less capital
expenditures and certain investing and financing activities) compared to annual operating plan objectives over a three-year
period. An annual objective was established each fiscal year for three consecutive years. Performance against these objectives
was averaged at the end of the three-year period to determine the number of underlying units that vested at the end of the three
years. A recipient of FCF performance restricted stock units earned a total award ranging from 0% to 200% of the initial grant.
Awards of time-lapse restricted stock/units will vest ratably over the three-year period. In addition, we may issue special grants
of restricted stock/units to attract and retain executives which vest over various periods. Awards are generally granted annually
in October.
Stock options are granted on a selective basis under the Long-Term Incentive Plans. The term of a stock option granted
under these plans may not exceed ten years from the date of grant. The option price may not be less than the fair market value
of a share of common stock on the date of the grant. Options granted under these plans generally vest ratably over a three-year
period. In 2019, we also granted certain options that vest at the end of a three-year period. We last issued stock options in 2019.
In 2023, we issued time-lapse restricted stock units, unrestricted stock, TSR performance restricted stock units and EPS
CAGR performance restricted stock units. We last issued FCF performance restricted stock units in 2019, EPS performance
restricted stock units in 2018, strategic performance restricted stock units in 2014 and special performance restricted units in
2015.
In determining stock-based compensation expense, we estimate forfeitures expected to occur. Total pre-tax stock-based
compensation expense and tax-related benefits recognized in the Consolidated Statements of Earnings were as follows:
(Millions)
Total pre-tax stock-based compensation expense
Tax-related benefits
2023
2022
2021
$
$
63 $
12 $
59 $
10 $
64
12
The following table summarizes stock option activity as of July 30, 2023:
Weighted-
Average
Exercise
Price
Weighted-
Average
Remaining
Contractual
Life
(In years)
Aggregate
Intrinsic
Value
(Millions)
Options
(In thousands)
Outstanding at July 31, 2022
Granted
Exercised
Terminated
Outstanding at July 30, 2023
Exercisable at July 30, 2023
1,297 $
— $
(464) $
— $
833 $
833 $
46.04
—
48.33
—
44.77
44.77
The following table summarizes time-lapse restricted stock units and EPS CAGR performance restricted stock units as of
July 30, 2023:
Nonvested at July 31, 2022
Granted
Vested
Forfeited
Nonvested at July 30, 2023
Weighted-
Average
Grant-Date
Fair Value
Units
(In thousands)
1,946 $
1,227 $
(770) $
(129) $
2,274 $
43.88
47.65
45.25
44.94
45.39
We determine the fair value of time-lapse restricted stock units, EPS CAGR performance restricted stock units, FCF
performance restricted stock units and EPS performance restricted stock units based on the quoted price of our stock at the date
of grant. We expense time-lapse restricted stock units and EPS CAGR performance restricted stock units on a straight-line basis
over the vesting period, except for awards issued to retirement-eligible participants, which we expense on an accelerated basis.
There were 560 thousand EPS CAGR performance target grants outstanding at July 30, 2023, with a weighted-average grant-
date fair value of $44.33. We expensed FCF performance restricted stock units over the requisite service period of each
objective. As of October 31, 2021, there were no FCF performance target grants outstanding. We expensed EPS performance
restricted stock units on a graded vesting basis, expect for awards issued to retirement-eligible participants, which we expensed
on an accelerated basis. As of November 1, 2020, there were no EPS performance target grants outstanding. The actual number
of EPS CAGR performance restricted stock units, FCF performance restricted stock units and EPS performance restricted stock
units, that vest will depend on actual performance achieved. We estimate expense based on the number of awards expected to
vest.
As of July 30, 2023, total remaining unearned compensation related to nonvested time-lapse restricted stock units and EPS
CAGR performance restricted units was $43 million, which will be amortized over the weighted-average remaining service
period of 1.6 years. In the first quarter of 2022, recipients of FCF performance restricted stock units earned 167% of the initial
grants based upon the average of actual performance achieved during a three-year period ended August 1, 2021. As a result,
approximately 158 thousand additional shares were awarded. The fair value of restricted stock units vested during 2023, 2022
and 2021 was $37 million, $50 million and $38 million, respectively. The weighted-average grant-date fair value of the
restricted stock units granted during 2022 and 2021 was $41.96 and $48.37, respectively.
The following table summarizes TSR performance restricted stock units as of July 30, 2023:
Nonvested at July 31, 2022
Granted
Vested
Forfeited
Nonvested at July 30, 2023
Weighted-
Average
Grant-Date
Fair Value
Units
(In thousands)
1,153 $
296 $
(443) $
(58) $
948 $
55.63
53.74
63.06
51.70
51.81
4.2 $
4.2 $
4
4
We estimated the fair value of TSR performance restricted stock units at the grant date using a Monte Carlo simulation.
Weighted-average assumptions used in the Monte Carlo simulation were as follows:
The total intrinsic value of options exercised during 2023 and 2022 was $3 million and $1 million, respectively. The total
intrinsic value of options exercised during 2021 was not material. We measured the fair value of stock options using the Black-
Scholes option pricing model.
We expensed stock options on a straight-line basis over the vesting period, except for awards issued to retirement eligible
participants, which we expensed on an accelerated basis. As of January 2022, compensation related to stock options was fully
expensed.
Risk-free interest rate
Expected dividend yield
Expected volatility
Expected term
2023
2022
4.29% 0.46%
3.09% 3.50%
2021
0.15%
2.85%
26.40% 27.42% 29.99%
3 years
3 years
3 years
64
65
We recognize compensation expense on a straight-line basis over the service period, except for awards issued to retirement
eligible participants, which we expense on an accelerated basis. As of July 30, 2023, total remaining unearned compensation
related to TSR performance restricted stock units was $13 million, which will be amortized over the weighted-average
remaining service period of 1.6 years. In the first quarter of 2023, recipients of TSR performance restricted stock units earned
100% of the initial grants based upon our TSR ranking in a performance peer group during a three-year period ended
July 29, 2022. In the first quarter of 2022, recipients of TSR performance restricted stock units earned 75% of the initial grants
based upon our TSR ranking in a performance peer group during a three-year period ended July 30, 2021. In the first quarter of
2021, recipients of TSR performance restricted stock units earned 50% of the initial grants based upon our TSR ranking in a
performance peer group during a three-year period ended July 31, 2020. The fair value of TSR performance restricted stock
units vested during 2023, 2022, and 2021 was $21 million, $8 million and $11 million, respectively. The weighted-average
grant-date fair value of the TSR performance restricted stock units granted during 2022 and 2021 was $45.54 and $54.93,
respectively. In the first quarter of 2024, recipients of TSR performance restricted stock units will receive a 75% payout based
upon our TSR ranking in a performance peer group during a three-year period ended July 28, 2023.
The tax benefits on the exercise of stock options in 2023, 2022 and 2021 were not material. Cash received from the
exercise of stock options was $22 million, $3 million and $2 million for 2023, 2022, and 2021, respectively, and is reflected in
cash flows from financing activities in the Consolidated Statements of Cash Flows.
17. Commitments and Contingencies
Regulatory and Litigation Matters
We are involved in various pending or threatened legal or regulatory proceedings, including purported class actions, arising
from the conduct of business both in the ordinary course and otherwise. Modern pleading practice in the U.S. permits
considerable variation in the assertion of monetary damages or other relief. Jurisdictions may permit claimants not to specify
the monetary damages sought or may permit claimants to state only that the amount sought is sufficient to invoke the
jurisdiction of the trial court. In addition, jurisdictions may permit plaintiffs to allege monetary damages in amounts well
exceeding reasonably possible verdicts in the jurisdiction for similar matters. This variability in pleadings, together with our
actual experiences in litigating or resolving through settlement numerous claims over an extended period of time, demonstrates
to us that the monetary relief which may be specified in a lawsuit or claim bears little relevance to its merits or disposition
value.
Due to the unpredictable nature of litigation, the outcome of a litigation matter and the amount or range of potential loss at
particular points in time is normally difficult to ascertain. Uncertainties can include how fact finders will evaluate documentary
evidence and the credibility and effectiveness of witness testimony, and how trial and appellate courts will apply the law in the
context of the pleadings or evidence presented, whether by motion practice, or at trial or on appeal. Disposition valuations are
also subject to the uncertainty of how opposing parties and their counsel will themselves view the relevant evidence and
applicable law.
We establish liabilities for litigation and regulatory loss contingencies when information related to the loss contingencies
shows both that it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated. It is possible
that some matters could require us to pay damages or make other expenditures or establish accruals in amounts that could not
be reasonably estimated as of July 30, 2023. While the potential future charges could be material in a particular quarter or
annual period, based on information currently known by us, we do not believe any such charges are likely to have a material
adverse effect on our consolidated results of operations or financial condition.
Other Contingencies
We guarantee approximately 4,700 bank loans made to independent contractor distributors by third-party financial
institutions for the purchase of distribution routes. The maximum potential amount of the future payments under existing
guarantees we could be required to make is $496 million as of July 30, 2023. Our guarantees are indirectly secured by the
distribution routes. We do not expect that we will be required to make material guarantee payments as a result of defaults on the
bank loans guaranteed. The amounts recognized as of July 30, 2023, and July 31, 2022, were not material.
We have provided certain indemnifications in connection with divestitures, contracts and other transactions. Certain
indemnifications have finite expiration dates. Liabilities recognized based on known exposures related to such matters were not
material at July 30, 2023, and July 31, 2022.
18. Supplemental Financial Statement Data
Balance Sheets
(Millions)
Accounts receivable
Customer accounts receivable
Allowances
Subtotal
Other
(Millions)
Inventories
Raw materials, containers and supplies
Finished products
(Millions)
Plant assets
Land
Buildings
Machinery and equipment
Projects in progress
Total cost
Accumulated depreciation(1)
2023
2022
513 $
(19)
494 $
35
529 $
502
(12)
490
51
541
2023
2022
372 $
919
1,291 $
390
856
1,246
2023
2022
74 $
1,547
4,004
291
5,916 $
(3,518)
2,398 $
74
1,531
3,932
141
5,678
(3,335)
2,343
$
$
$
$
$
$
$
$
____________________________________
(1) Depreciation expense was $339 million in 2023, $296 million in 2022 and $275 million in 2021. Buildings are depreciated
over periods ranging from 7 to 45 years. Machinery and equipment are depreciated over periods generally ranging from 2
to 20 years.
(Millions)
Other assets
Operating lease ROU assets, net of amortization
Pension
Other
(Millions)
Accrued liabilities
Accrued compensation and benefits
Fair value of derivatives
Accrued trade and consumer promotion programs
Accrued interest
Restructuring
Operating lease liabilities
Other
$
$
$
2023
2022
275 $
164
53
492 $
2023
2022
222 $
6
156
57
6
70
75
$
592 $
239
146
24
409
216
34
141
64
7
62
97
621
66
67
(Millions)
Other liabilities
Pension benefits
Postretirement benefits
Operating lease liabilities
Deferred compensation
Unrecognized tax benefits
Restructuring
Other
Statements of Earnings
(Millions)
Other expenses / (income)
Amortization of intangible assets(1)
Net periodic benefit income other than the service cost
Loss on sales of businesses(2)
Transaction costs(3)
Transition services fees
Other
Advertising and consumer promotion expense(4)
Interest expense(5)
Interest expense
Less: Interest capitalized
2023
2022
$
95 $
135
208
80
11
7
72
$
608 $
107
153
177
81
15
—
70
603
2023
2022
2021
$
$
$
$
$
48 $
(35)
13
5
(1)
2
41 $
(23)
—
—
—
3
42
(285)
11
—
(27)
5
32 $
21 $
(254)
365 $
314 $
399
192 $
191 $
4
2
188 $
189 $
214
4
210
____________________________________
(1)
In 2023, we recognized accelerated amortization expense of $7 million related to customer relationship intangible assets.
(2)
(3)
(4)
(5)
In 2023, we recognized a loss of $13 million on the sale of our Emerald nuts business. In 2021, we recognized a loss of $11
million on the sale of our Plum baby food and snacks business. See Note 3 for additional information.
In 2023, we recognized transaction costs of $5 million related to the pending acquisition of Sovos Brands.
Included in Marketing and selling expenses.
In 2022, we recognized a loss of $4 million (including $3 million of premium and other costs) on the extinguishment of
debt. See Note 12 for additional information.
Statements of Cash Flows
(Millions)
Cash Flows from Operating Activities
Other non-cash charges to net earnings
Operating lease ROU asset expense
Amortization of debt issuance costs/debt discount
Benefit related expense
Other
Other
Benefit related payments
Other
Other Cash Flow Information
Interest paid
Interest received
Income taxes paid
19. Subsequent Event
2023
2022
2021
$
80 $
74 $
4
4
12
5
3
6
$
100 $
88 $
$
$
$
$
$
(47) $
(45) $
(4)
3
(51) $
(42) $
193 $
188 $
4 $
1 $
268 $
196 $
75
6
12
(7)
86
(49)
2
(47)
214
1
212
On August 7, 2023, we entered into a merger agreement to acquire Sovos Brands for $23.00 per share in cash, representing
a total enterprise value of approximately $2.7 billion. The closing of the Sovos Brands acquisition is subject to certain
customary mutual conditions, including (i) the absence of any injunction or other order issued by a court of competent
jurisdiction in the United States or applicable law or legal prohibition in the United States that prohibits or makes illegal the
consummation of the merger, (ii) the approval of Sovos Brands' shareholders holding at least a majority of the outstanding
shares of Sovos Brands common stock entitled to vote on the adoption of the merger agreement and (iii) the expiration or
termination of any waiting period (and any extension thereof) applicable to the consummation of the merger under the Hart-
Scott-Rodino Antitrust Improvements Act of 1976, as amended. There are also several pending lawsuits filed by purported
shareholders of Sovos Brands seeking, among other things, to enjoin the acquisition. If any condition to the acquisition is not
satisfied or waived, the completion of the acquisition could be significantly delayed or not occur at all.
68
69
Management’s Report on Internal Control Over Financial Reporting
Report of Independent Registered Public Accounting Firm
The management of Campbell Soup Company (the Company) is responsible for establishing and maintaining adequate
internal control over financial reporting (as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934,
as amended). Internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles in the United States of America.
The Company's internal control over financial reporting includes those policies and procedures that:
•
•
•
pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the Company;
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements
in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are
being made only in accordance with authorizations of management and Directors of the Company; and
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition
of the Company's assets that could have a material effect on the financial statements.
Because of its inherent limitations, any system of internal control over financial reporting, no matter how well defined, may
not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk
that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or
procedures may deteriorate.
The Company’s management assessed the effectiveness of the Company’s internal control over financial reporting as of
July 30, 2023. In making this assessment, management used the criteria set forth by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO) in Internal Control — Integrated Framework (2013). Based on this
assessment using those criteria, management concluded that the Company’s internal control over financial reporting was
effective as of July 30, 2023.
The effectiveness of the Company’s internal control over financial reporting as of July 30, 2023 has been audited by
PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report, which appears on the
next page.
/s/ Mark A. Clouse
Mark A. Clouse
President and Chief Executive Officer
/s/ Carrie L. Anderson
Carrie L. Anderson
Executive Vice President and Chief Financial Officer
/s/ Stanley Polomski
Stanley Polomski
Senior Vice President and Controller
(Principal Accounting Officer)
September 21, 2023
To the Board of Directors and Shareholders of Campbell Soup Company
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets of Campbell Soup Company and its subsidiaries (the
"Company") as of July 30, 2023 and July 31, 2022, and the related consolidated statements of earnings, of comprehensive
income, of equity and of cash flows for each of the three years in the period ended July 30, 2023, including the related notes
and schedule of valuation and qualifying accounts for each of the three years in the period ended July 30, 2023 appearing on
page 80 (collectively referred to as the "consolidated financial statements"). We also have audited the Company's internal
control over financial reporting as of July 30, 2023, based on criteria established in Internal Control - Integrated Framework
(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial
position of the Company as of July 30, 2023 and July 31, 2022, and the results of its operations and its cash flows for each of
the three years in the period ended July 30, 2023 in conformity with accounting principles generally accepted in the United
States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over
financial reporting as of July 30, 2023, based on criteria established in Internal Control - Integrated Framework (2013) issued
by the COSO.
Basis for Opinions
The Company's management is responsible for these consolidated financial statements, for maintaining effective internal
control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included
in the accompanying Management's Report on Internal Control Over Financial Reporting. Our responsibility is to express
opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting
based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United
States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities
laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement,
whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material
respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement
of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.
Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated
financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by
management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal
control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the
risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based
on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the
circumstances. We believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures
that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the
company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
70
71
Critical Audit Matters
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial
statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or
disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or
complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated
financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate
opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Indefinite-Lived Intangible Assets Impairment Test for Certain Trademarks
As described in Notes 1 and 5 to the consolidated financial statements, the Company’s indefinite-lived intangible assets
(trademarks) were $2.541 billion as of July 30, 2023. Of the carrying value of all indefinite-lived trademarks, $620 million
related to the Snyder's of Hanover trademark, $350 million related to the Lance trademark, $318 million related to the Kettle
Brand trademark, $280 million related to the Pacific Foods trademark, and $187 million related to the Cape Cod trademark.
Management conducts a test at least annually in the fourth quarter for impairment, or more often if events or changes in
circumstances indicate that the carrying amount of the asset may be impaired. Indefinite-lived intangible assets are tested for
impairment by comparing the fair value of the asset to the carrying value. Fair value is determined using a relief from royalty
valuation method based on discounted cash flow analyses that include significant management assumptions such as revenue
growth rates, weighted average costs of capital and assumed royalty rates. If the carrying value exceeds fair value, an
impairment charge will be recorded to reduce the asset to fair value.
The principal considerations for our determination that performing procedures relating to the indefinite-lived intangible assets
impairment test for certain trademarks is a critical audit matter are (i) the significant judgment by management when
developing the fair value estimate of certain trademarks, (ii) a high degree of auditor judgment, subjectivity, and effort in
performing procedures and evaluating management’s significant assumptions related to the weighted average costs of capital
and assumed royalty rates for the Snyder's of Hanover, Lance, Kettle Brand, Pacific Foods, and Cape Cod trademarks, and (iii)
the audit effort involved the use of professionals with specialized skill and knowledge.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall
opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to
management’s indefinite-lived intangible assets impairment test for trademarks. These procedures also included, among others
(i) testing management’s process for developing the fair value estimate of certain trademarks, (ii) evaluating the appropriateness
of the relief from royalty valuation method, (iii) testing the completeness and accuracy of underlying data used in the relief
from royalty valuation method, and (iv) evaluating the reasonableness of the significant assumptions used by management
related to the weighted average costs of capital and assumed royalty rates for the Snyder's of Hanover, Lance, Kettle Brand,
Pacific Foods, and Cape Cod trademarks. Evaluating management’s assumption related to the assumed royalty rates involved
evaluating whether the assumption used by management was reasonable considering (i) the current and past profitability of
certain trademarks, (ii) the consistency with external market and industry data, and (iii) whether the assumption was consistent
with evidence obtained in other areas of the audit. Professionals with specialized skill and knowledge were used to assist in the
evaluation of the appropriateness of the relief from royalty valuation method and the reasonableness of the weighted average
cost of capital and assumed royalty rate assumptions.
/s/ PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania
September 21, 2023
We have served as the Company’s auditor since 1954.
None.
Item 9A. Controls and Procedures
We, under the supervision and with the participation of our management, including the President and Chief Executive
Officer and the Executive Vice President and Chief Financial Officer, have evaluated the effectiveness of our disclosure
controls and procedures (as such term is defined in Rule 13a-15(e) under the Exchange Act) as of July 30, 2023 (the Evaluation
Date). Based on such evaluation, the President and Chief Executive Officer and the Executive Vice President and Chief
Financial Officer have concluded that, as of the Evaluation Date, our disclosure controls and procedures are effective.
The annual report of management on our internal control over financial reporting is provided under "Financial Statements
and Supplementary Data" on page 70. The attestation report of PricewaterhouseCoopers LLP, our independent registered public
accounting firm, regarding our internal control over financial reporting is provided under "Financial Statements and
Supplementary Data" on pages 71-72.
There were no changes in our internal control over financial reporting that materially affected, or were likely to materially
affect, such internal control over financial reporting during the quarter ended July 30, 2023.
Item 9B. Other Information
During the quarter ended July 30, 2023, none of our directors or officers (as defined in Rule 16a-1(f) under the Exchange
Act) adopted or terminated any contract, instruction or written plan for the purchase or sale of our securities that was intended
to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any "non-Rule 10b5-1 trading arrangement" in accordance
with Item 408 of Regulation S-K of the Securities Act.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
Item 10. Directors, Executive Officers and Corporate Governance
PART III
The sections entitled "Item 1 — Election of Directors" and "Voting Securities and Principal Shareholders — Ownership of
Directors and Executive Officers" in our Proxy Statement for the 2023 Annual Meeting of Shareholders (the 2023 Proxy) are
incorporated herein by reference. The information presented in the section entitled "Corporate Governance Policies and
Practices — Board Meetings and Committees — Board Committee Structure" in the 2023 Proxy relating to the members of our
Audit Committee and the Audit Committee’s financial experts is incorporated herein by reference.
Certain of the information required by this Item relating to our executive officers is set forth under the heading
"Information about our Executive Officers" in this Report.
We have adopted a Code of Ethics for the Chief Executive Officer and Senior Financial Officers that applies to our Chief
Executive Officer, Chief Financial Officer, Controller and members of the Chief Financial Officer’s financial leadership team.
The Code of Ethics for the Chief Executive Officer and Senior Financial Officers is posted on the Investor portion of our
website, www.campbellsoupcompany.com (under the "About Us—Investors—Governance—Governance Documents" caption).
We intend to satisfy the disclosure requirement regarding any amendment to, or a waiver of, a provision of the Code of Ethics
for the Chief Executive Officer and Senior Financial Officers by posting such information on our website.
We have also adopted a separate Code of Business Conduct and Ethics applicable to the Board of Directors, our officers
and all of our employees. The Code of Business Conduct and Ethics is posted on the Investor portion of our website,
www.campbellsoupcompany.com (under the "About Us—Investors—Governance—Governance Documents" caption). Our
Corporate Governance Standards and the charters of our four standing committees of the Board of Directors can also be found
at this website. Printed copies of the foregoing are available to any shareholder requesting a copy by:
•
•
•
writing to Investor Relations, Campbell Soup Company, 1 Campbell Place, Camden, NJ 08103-1799;
calling 856-342-6081; or
e-mailing our Investor Relations Department at IR@campbells.com.
Item 11. Executive Compensation
The information presented in the sections entitled "Compensation Discussion and Analysis," "Executive Compensation
Tables," "Corporate Governance Policies and Practices — Compensation of Directors," "Corporate Governance Policies and
Practices — Board Meetings and Committees — Board Committee Structure — Compensation and Organization Committee
Interlocks and Insider Participation" and "Compensation Discussion and Analysis — Compensation and Organization
Committee Report" in the 2023 Proxy is incorporated herein by reference.
72
73
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters
2. Financial Statement Schedule
The information presented in the sections entitled "Voting Securities and Principal Shareholders — Ownership of Directors
and Executive Officers" and "Voting Securities and Principal Shareholders — Principal Shareholders" in the 2023 Proxy is
incorporated herein by reference.
Securities Authorized for Issuance Under Equity Compensation Plans
The following table provides information about the stock that could have been issued under our equity compensation plans
as of July 30, 2023:
II - Valuation and Qualifying Accounts for 2023, 2022 and 2021
3. Exhibits
Reference is made to Item 15(b) below.
(b) Exhibits. The Exhibit Index, which immediately precedes the signature page, is incorporated by reference into this Report.
(c) Financial Statement Schedules. Reference is made to Item 15(a)(2) above.
Item 16. Form 10-K Summary
None.
Plan Category
Equity Compensation Plans Approved by Security Holders (1)
Equity Compensation Plans Not Approved by Security Holders
Total
Number of
Securities to be
Issued Upon
Exercise of
Outstanding
Options, Warrants
and Rights (a)
Weighted-
Average
Exercise Price of
Outstanding
Options,
Warrants and
Rights (b)
Number of Securities
Remaining Available
For
Future Issuance Under
Equity Compensation
Plans
(Excluding Securities
Reflected in the First
Column) (c)
5,561,603 $
N/A
5,561,603 $
44.77
N/A
44.77
11,889,375
N/A
11,889,375
___________________________________
(1) Column (a) represents stock options and restricted stock units outstanding under the 2022 Long-Term Incentive Plan, the
2015 Long-Term Incentive Plan and the 2005 Long-Term Incentive Plan. Column (a) includes 3,015,598 TSR performance
restricted stock units and EPS performance restricted stock units based on the maximum number of shares potentially
issuable under the awards, and the number of shares, if any, to be issued pursuant to such awards will be determined based
upon performance during the applicable three-year performance period. No additional awards can be made under either of
the 2005 Long-Term Incentive Plan or 2015 Long-Term Incentive Plan. Future equity awards under the 2022 Long-Term
Incentive Plan may take the form of incentive stock options, nonqualified stock options, stock appreciation rights (SARs),
restricted stock, restricted performance stock, unrestricted Campbell stock, restricted stock units and performance units.
Column (b) represents the weighted-average exercise price of the outstanding stock options only; the outstanding restricted
stock units are not included in this calculation. Column (c) represents the maximum number of future equity awards that
can be made under the 2022 Long-Term Incentive Plan as of July 30, 2023.
Item 13. Certain Relationships and Related Transactions, and Director Independence
The information presented in the sections entitled "Corporate Governance Policies and Practices — Transactions with
Related Persons," "Item 1 — Election of Directors," "Corporate Governance Policies and Practices — Director Independence"
and "Corporate Governance Policies and Practices — Board Meetings and Committees — Board Committee Structure" in the
2023 Proxy is incorporated herein by reference.
Item 14. Principal Accounting Fees and Services
The information presented in the sections entitled "Item 2 — Ratification of Appointment of Independent Registered Public
Accounting Firm — Audit Firm Fees and Services" and "Item 2 — Ratification of Appointment of Independent Registered
Public Accounting Firm — Audit Committee Pre-Approval Policy" in the 2023 Proxy is incorporated herein by reference.
Item 15. Exhibits and Financial Statement Schedules
(a) The following documents are filed as part of this Report:
1. Financial Statements
PART IV
Consolidated Statements of Earnings for 2023, 2022 and 2021
Consolidated Statements of Comprehensive Income for 2023, 2022 and 2021
Consolidated Balance Sheets as of July 30, 2023 and July 31, 2022
Consolidated Statements of Cash Flows for 2023, 2022 and 2021
Consolidated Statements of Equity for 2023, 2022 and 2021
Notes to Consolidated Financial Statements
Management's Report on Internal Control Over Financial Reporting
Report of Independent Registered Public Accounting Firm (PCAOB ID 238)
74
75
2
3(a)
3(b)
4(a)
4(b)
4(c)
4(d)
4(e)
4(f)
4(g)
4(h)
4(i)
4(j)
4(k)
4(l)
4(m)
4(n)
10(a)+
10(b)+
10(c)+
INDEX TO EXHIBITS
Agreement and Plan of Merger, dated August 7, 2023, by and among Sovos Brands, Inc., Campbell Soup
Company and Premium Products Merger Sub, Inc., is incorporated by reference to Exhibit 2.1 to Campbell’s
Form 8-K (SEC file number 1-3822) filed with the SEC on August 7, 2023
Campbell’s Restated Certificate of Incorporation, as amended through February 24, 1997, is incorporated by
reference to Exhibit 3(i) to Campbell’s Form 10-K (SEC file number 1-3822) for the fiscal year ended July 28,
2002.
By-Laws of Campbell Soup Company, amended and restated effective May 23, 2023, are incorporated by
reference to Exhibit 3.1 to Campbell’s Form 8-K (SEC file number 1-3822) filed with the SEC on May 24, 2023.
Indenture, dated November 24, 2008, between Campbell and The Bank of New York Mellon, as Trustee, is
incorporated by reference to Exhibit 4(a) to Campbell’s Registration Statement on Form S-3 (SEC file
number 333-155626) filed with the SEC on November 24, 2008.
Form of First Supplemental Indenture, dated August 2, 2012, among Campbell, The Bank of New York Mellon
and Wells Fargo Bank, National Association, as Series Trustee, to Indenture dated November 24, 2008, is
incorporated by reference to Exhibit 4.1 to Campbell's Form 8-K (SEC file number 1-3822) filed with the SEC on
August 2, 2012.
Form of Subordinated Indenture between Campbell and Wells Fargo Bank, National Association, as Trustee, is
incorporated by reference to Exhibit 4.2 to Campbell's Registration Statement on Form S-3 (SEC file number
333-249174) filed with the SEC on September 30, 2020.
Indenture dated as of March 19, 2015, between Campbell and Wells Fargo Bank, National Association, as trustee,
is incorporated by reference to Exhibit 4.1 to Campbell's Form 8-K (SEC file number 1-3822) filed with the SEC
on March 19, 2015.
Form of Subordinated Indenture between the Campbell Soup Company and U.S. Bank, National Association, as
trustee, is incorporated by reference to Exhibit 4.2 to Campbell’s Registration Statement on Form S-3 (SEC file
number 333-274048) filed with the SEC on August 17, 2023.
First Supplemental Indenture, dated as of August 17, 2023, between Campbell Soup Company, Computershare
Trust Company, N.A. (as successor in interest to Wells Fargo Bank, National Association), as retiring trustee, and
U.S. Bank, National Association, as successor trustee, is incorporated by reference to Exhibit 4.3 to Campbell’s
Registration Statement on Form S-3 (SEC file number 333-274048) filed with the SEC on August 17, 2023.
Form of 3.800% Notes due 2042 is incorporated by reference to Exhibit 4.1 to Campbell's Form 8-K (SEC file
number 1-3822) filed with the SEC on August 2, 2012.
Form of 3.300% Note due 2025 is incorporated by referenced to Exhibit 4.2 to Campbell's Form 8-K (SEC file
number 1-3822) filed with the SEC on March 19, 2015.
Form of 3.950% Note due 2025 is incorporated by reference to Exhibit 4.2.5 to Campbell's Form 8-K (SEC file
number 1-3822) filed with the SEC on March 16, 2018.
Form of 4.150% Note due 2028 is incorporated by reference to Exhibit 4.2.6 to Campbell's Form 8-K (SEC file
number 1-3822) filed with the SEC on March 16, 2018.
Form of 4.800% Note due 2048 is incorporated by reference to Exhibit 4.2.7 to Campbell's Form 8-K (SEC file
number 1-3822) filed with the SEC on March 16, 2018.
Form of 2.375% Note due 2030 incorporated by reference to Exhibit 4.2.1 to Campbell's Form 8-K (SEC file
number 1-3822) filed with the SEC on April 24, 2020.
Form of 3.125% Note due 2050 incorporated by reference to Exhibit 4.2.2 to Campbell's Form 8-K (SEC file
number 1-3822) filed with the SEC on April 24, 2020.
Description of securities incorporated by reference to Exhibit 4(p) to Campbell's Form 10-K (SEC file number
1-3822) filed with the SEC on September 26, 2019.
Campbell Soup Company 2005 Long-Term Incentive Plan, as amended and restated on November 18, 2010, is
incorporated by reference to Campbell’s 2010 Proxy Statement (SEC file number 1-3822) filed with the SEC on
October 7, 2010.
Campbell Soup Company 2015 Long-Term Incentive Plan is incorporated by reference to Campbell’s 2015 Proxy
Statement (SEC file number 1-3822) filed with the SEC on October 9, 2015.
Campbell Soup Company 2022 Long-Term Incentive Plan, is incorporated by reference to Appendix B to
Campbell’s 2022 Proxy Statement (SEC file number 1-3822) filed with the SEC on October 18, 2022.
10(d)+
10(e)+
10(f)+
10(g)+
10(h)+
10(i)+
10(j)+
10(k)+
10(l)+
10(m)+
10(n)+
10(o)+
10(p)+
10(q)+
10(r)+
10(s)+
10(t)+
10(u)+
10(v)+
Campbell Soup Company Annual Incentive Plan, as amended on November 19, 2014, is incorporated by
reference to Campbell’s 2014 Proxy Statement (SEC file number 1-3822) filed with the SEC on October 1, 2014.
Campbell Soup Company Mid-Career Hire Pension Plan, as amended and restated effective as of January 1,
2009, is incorporated by reference to Exhibit 10(a) to Campbell’s Form 10-Q (SEC file number 1-3822) for the
fiscal quarter ended February 1, 2009.
First Amendment to the Campbell Soup Company Mid-Career Hire Pension Plan, effective as of December 31,
2010, is incorporated by reference to Exhibit 10(a) to Campbell’s Form 10-Q (SEC file number 1-3822) for the
fiscal quarter ended January 30, 2011.
Deferred Compensation Plan, effective November 18, 1999, is incorporated herein by reference to Exhibit 10(e)
to Campbell’s Form 10-K (SEC file number 1-3822) for the fiscal year ended July 30, 2000.
First Amendment to Campbell Soup Company Deferred Compensation Plan, as amended and restated effective as
of September 1, 2023.
Campbell Soup Company Supplemental Retirement Plan (formerly known as Deferred Compensation Plan II), as
amended and restated effective as of August 1, 2015, is incorporated herein by reference to Exhibit 4(c) to
Campbell’s Form S-8 (SEC file number 333-216582) filed with the SEC on March 9, 2017.
Form of Severance Protection Agreement is incorporated by reference to Exhibit 10(i) to Campbell's Form 10-K
(SEC file number 1-3822) for the fiscal year ended July 30, 2017.
Form of Amendment to the Severance Protection Agreement is incorporated by reference to Exhibit 10(j) to
Campbell's Form 10-K (SEC file number) for the fiscal year ended July 30, 2017.
Form of U.S. Severance Protection Agreement is incorporated by reference to Exhibit 10(m) to Campbell’s
Form 10-K (SEC file number 1-3822) for the fiscal year ended July 31, 2011.
Form of Amendment to U.S. Severance Protection Agreement is incorporated by reference to Exhibit 10(o) to
Campbell's Form 10-K (SEC file number 1-3822) for the fiscal year ended July 31, 2016.
Campbell Soup Company Supplemental Employees’ Retirement Plan, as amended and restated effective January
1, 2009, is incorporated by reference to Exhibit 10(c) to Campbell’s Form 10-Q (SEC file number 1-3822) for the
fiscal quarter ended February 1, 2009.
First Amendment to the Campbell Soup Company Supplemental Employees’ Retirement Plan, effective as of
December 31, 2010, is incorporated by reference to Exhibit 10(c) to Campbell’s Form 10-Q (SEC file number
1-3822) for the fiscal quarter ended January 30, 2011.
Form of 2005 Long-Term Incentive Plan Nonqualified Stock Option Agreement is incorporated by reference to
Exhibit 10 to Campbell's Form 10-Q (SEC file number 1-3822) for the fiscal quarter ended November 1, 2015.
Form of 2015 Long-Term Incentive Plan Nonqualified Stock Option Agreement is incorporated by reference to
Exhibit 10(dd) to Campbell's Form 10-K (SEC file number 1-3822) for the fiscal year ended July 31, 2016.
Form of 2015 Long-Term Incentive Plan Performance Stock Unit Agreement (Earnings Per Share) is
incorporated by reference to Exhibit 10(b) to Campbell's Form 10-Q (SEC file number 1-3822) for the fiscal
quarter ended October 30, 2016.
Form of 2015 Long-Term Incentive Plan Performance Stock Unit Agreement (Total Shareholder Return) is
incorporated by reference to Exhibit 10(ff) to Campbell’s Form 10-K (SEC file number 1-3822) for the fiscal year
ended July 31, 2016.
Form of 2015 Long-Term Incentive Plan Time-Lapse Restricted Stock Unit Agreement is incorporated by
reference to Exhibit 10(c) to Campbell's Form 10-Q (SEC file number 1-3822) for the fiscal quarter ended
October 30, 2016.
Form of 2015 Long-Term Incentive Plan Time-Lapse Restricted Stock Unit Agreement incorporated by reference
to Exhibit 10(s) to Campbell's Form 10-K(SEC file number 1-3822) for the fiscal year ended August 1, 2021.
Form of 2015 Long-Term Incentive Performance Restricted Stock Unit Agreement is incorporated by reference to
Exhibit 10(t) to Campbell's Form 10-K (SEC file number 1-3822) for the fiscal year ended August 1, 2021.
10(w)+
Form of 2022 Long-Term Incentive Plan Time-Lapse Restricted Stock Unit Agreement.
10(x)+
10(y)+
Form of 2022 Long-Term Incentive Plan Performance Restricted Stock Unit Agreement (Earnings Per Share).
Form of 2022 Long-Term Incentive Plan Performance Restricted Stock Unit Agreement (Total Shareholder
Return).
76
77
10(z)
10(aa)
10(bb)
10(cc)+
10(dd)+
10(ee)+
Five-Year Credit Agreement, dated September 27, 2021, by and among Campbell Soup Company, the Eligible
Subsidiaries party thereto from time to time, JPMorgan Chase Bank, N.A., as administrative agent, and the other
lenders named therein, incorporated by reference to Campbell's Form 10-Q (SEC file number 1-3822) for the
fiscal quarter ended October 31, 2021.
Amendment No. 1 to Five-Year Credit Agreement by and among Campbell Soup Company, the Eligible
Subsidiaries party thereto from time to time, JPMorgan Chase Bank, N.A., as administrative agent, and the other
lenders named therein, dated as of April 4, 2023 is incorporated by reference to Exhibit 10.1 to Campbell's Form
10-Q (SEC file number 1-3822) for the fiscal quarter ended April 30, 2023.
2023 Non-Employee Director Fees are incorporated by reference to Exhibit 10.1 to Campbell’s Form 10-Q (SEC
file number 1-3822) for the fiscal quarter ended October 30, 2022.
First Amendment to the Campbell Soup Company Supplemental Retirement Plan effective November 30, 2018 is
incorporated by reference to Exhibit 10(b) to Campbell's Form 10-Q (SEC file number 1-3822) for the fiscal
quarter ended January 27, 2019.
Second Amendment to the Campbell Soup Company Supplemental Retirement Plan effective September 16, 2020
is incorporated by reference to Exhibit 10(bb) to Campbell's Form 10-K (SEC file number 1-3822) for the fiscal
year ended August 2, 2020.
Third Amendment to the Campbell Soup Company Supplemental Retirement Plan effective December 31, 2020
is incorporated by reference to Exhibit 10.1 to Campbell's Form 10-Q (SEC file number 1-3822) for the fiscal
quarter ended January 31, 2021.
10(ff)+
Fourth Amendment to the Campbell Soup Company Supplemental Retirement Plan, effective September 1, 2023.
10(gg)+
10(hh)+
Campbell Soup Company Executive Severance Pay Plan is incorporated by reference to Exhibit 10 to Campbell's
Form 8-K (SEC file number 1-3822) filed with the SEC on April 2, 2019.
First Amendment to the Campbell Soup Company Executive Severance Pay Plan, effective September 1, 2023.
10(ii)
21
23
24
31(a)
31(b)
32(a)
32(b)
Voting Agreement, dated August 7, 2023, by and among certain funds associated with Advent International
Corporation and Campbell Soup Company, is incorporated by reference to Exhibit 10.1 to Campbell’s Form 8-K
(SEC file number 1-3822) filed with the SEC on August 7, 2023.
Subsidiary List.
Consent of Independent Registered Public Accounting Firm.
Powers of Attorney.
Certification of Mark A. Clouse pursuant to Rule 13a-14(a).
Certification of Carrie L. Anderson pursuant to Rule 13a-14(a).
Certification of Mark A. Clouse pursuant to 18 U.S.C. Section 1350.
Certification of Carrie L. Anderson pursuant to 18 U.S.C. Section 1350.
101.INS
XBRL Instance Document
101.SCH XBRL Schema Document
101.CAL XBRL Calculation Linkbase Document
101.DEF XBRL Definition Linkbase Document
101.LAB XBRL Label Linkbase Document
101.PRE XBRL Presentation Linkbase Document
104
The cover page from this Annual Report on Form 10-K, formulated in Inline XBRL (see exhibit 101)
+This exhibit is a management contract or compensatory plan or arrangement.
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, Campbell has
duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.
September 21, 2023
SIGNATURES
CAMPBELL SOUP COMPANY
By:
/s/ Carrie L. Anderson
Carrie L. Anderson
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this Report has been signed below by
the following persons on behalf of Campbell and in the capacities indicated on September 21, 2023.
Signatures
/s/ Mark A. Clouse
Mark A. Clouse
President and Chief Executive Officer and Director
(Principal Executive Officer)
/s/ Carrie L. Anderson
Carrie L. Anderson
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
/s/ Stanley Polomski
Stanley Polomski
Senior Vice President and Controller
(Principal Accounting Officer)
*
Keith R. McLoughlin
Chair and Director
*
Fabiola R. Arredondo
Director
*
Howard M. Averill
Director
*
John P. Bilbrey
Director
*
Bennett Dorrance, Jr.
Director
*
Maria Teresa Hilado
Director
*
Grant H. Hill
Director
*
Sarah Hofstetter
Director
*
Marc B. Lautenbach
Director
*
Mary Alice D. Malone
Director
*
Kurt T. Schmidt
Director
*
Archbold D. van Beuren
Director
* By: /s/ Charles A. Brawley, III
Name: Charles A. Brawley, III
Title: Senior Vice President, Deputy General
Counsel and Corporate Secretary,
as Attorney-in-fact
(pursuant to powers of attorney)
78
79
CAMPBELL SOUP COMPANY
Valuation and Qualifying Accounts
CERTIFICATION PURSUANT
TO RULE 13a-14(a)
For the Fiscal Years ended July 30, 2023, July 31, 2022, and August 1, 2021
I, Mark A. Clouse, certify that:
Schedule II
EXHIBIT 31(a)
(Millions)
Fiscal year ended July 30, 2023
Cash discount
Bad debt reserve
Returns reserve(1)
Total Accounts receivable allowances
Fiscal year ended July 31, 2022
Cash discount
Bad debt reserve
Returns reserve(1)
Total Accounts receivable allowances
Fiscal year ended August 1, 2021
Cash discount
Bad debt reserve
Returns reserve(1)
Total Accounts receivable allowances
Balance at
Beginning of
Period
Charged to/
(Reduction in)
Costs
and
Expenses
Deductions
Balance at
End of
Period
$
$
$
$
$
$
5 $
4
3
12 $
6 $
2
4
12 $
6 $
4
4
14 $
117 $
7
—
124 $
136 $
2
(1)
137 $
137 $
—
—
137 $
(116) $
(1)
—
(117) $
(137) $
—
—
(137) $
(137) $
(2)
—
(139) $
6
10
3
19
5
4
3
12
6
2
4
12
_______________________________________
(1) The returns reserve is evaluated quarterly and adjusted accordingly. During each period, returns are charged to Net sales in
the Consolidated Statements of Earnings as incurred. Actual returns were approximately $105 million in 2023, $110
million in 2022, and $100 million in 2021, or less than 2% of Net sales.
1. I have reviewed this Annual Report on Form 10-K of Campbell Soup Company;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading
with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in
all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods
presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined
in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed
under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is
made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be
designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report
based on such evaluation; and
d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the
registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control
over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons
performing the equivalent functions):
a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report
financial information; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the
registrant’s internal control over financial reporting.
Date: September 21, 2023
By:
/s/ Mark A. Clouse
Name: Mark A. Clouse
Title:
President and Chief Executive Officer
80
EXHIBIT 31(b)
EXHIBIT 32(a)
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
In connection with the Annual Report of Campbell Soup Company (the “Company”) on Form 10-K for the fiscal year ended
July 30, 2023 (the “Report”), I, Mark A. Clouse, President and Chief Executive Officer of the Company, hereby certify,
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my
knowledge:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of
1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of
operations of the Company.
Date: September 21, 2023
By:
/s/ Mark A. Clouse
Name: Mark A. Clouse
Title:
President and Chief Executive Officer
The foregoing certification is being furnished solely pursuant to 18 U.S.C. Section 1350 and is not being filed as part of the
Report or as a separate disclosure document.
A signed original of this written statement required under Section 906 has been provided to the Company and will be retained
by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
CERTIFICATION PURSUANT
TO RULE 13a-14(a)
I, Carrie L. Anderson, certify that:
1. I have reviewed this Annual Report on Form 10-K of Campbell Soup Company;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading
with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in
all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods
presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined
in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed
under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is
made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be
designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report
based on such evaluation; and
d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the
registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control
over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons
performing the equivalent functions):
a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report
financial information; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the
registrant’s internal control over financial reporting.
Date: September 21, 2023
By:
/s/ Carrie L. Anderson
Name: Carrie L. Anderson
Title:
Executive Vice President and Chief Financial
Officer
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
EXHIBIT 32(b)
In connection with the Annual Report of Campbell Soup Company (the “Company”) on Form 10-K for the fiscal year ended
July 30, 2023 (the “Report”), I, Carrie L. Anderson, Executive Vice President and Chief Financial Officer of the Company,
hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that,
to my knowledge:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of
1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of
operations of the Company.
Date: September 21, 2023
By:
/s/ Carrie L. Anderson
Name: Carrie L. Anderson
Title:
Executive Vice President and Chief Financial
Officer
The foregoing certification is being furnished solely pursuant to 18 U.S.C. Section 1350 and is not being filed as part of the
Report or as a separate disclosure document.
A signed original of this written statement required under Section 906 has been provided to the Company and will be retained
by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
Shareholder information
Headquarters
1 Campbell Place, Camden, NJ 08103-1799
(856) 342-4800 • (856) 342-3878 (Fax)
Stock exchange listing
New York Stock Exchange Ticker Symbol: CPB
Transfer agent and registrar
Computershare Trust Company, N.A.
P.O. Box 43006
Providence, RI 02940-3006
1-800-780-3203
Independent accountants
PricewaterhouseCoopers LLP
Two Commerce Square
Suite 1700
2001 Market Street
Philadelphia, PA 19103-7042
Dividends
We have paid dividends since the company became public in 1954.
Dividends are normally paid quarterly, near the end of January, April,
July and October.
A dividend reinvestment plan is available to shareholders. For
information about dividends or the dividend reinvestment plan, write
to Dividend Reinvestment Plan Agent, Campbell Soup Company, P.O.
Box 43006, Providence, RI 02940-3006.
Or call: (781) 575-2723 or 1-800-780-3203
Publications
For copies of the Annual Report or the SEC Form 10-K or other
financial information, visit investor.campbellsoupcompany.com.
Shareholder information service
For the latest quarterly business results or other information requests
such as dividend dates, shareholder programs or product news, visit
investor.campbellsoupcompany.com.
Campbell’s brands
Product trademarks owned or licensed by Campbell Soup Company
and/or its subsidiaries appearing in the narrative text of this report
are italicized.
The papers utilized in the production of this Annual Report are all certified for Forest
Stewardship Council (FSC®) standards, which promote environmentally appropriate,
socially beneficial and economically viable management of the world’s forests. This
Annual Report was printed at a Landfill-free, Sustainable Green Printing partnership
(SGP)-certified facility.
Impact. To read our Corporate Responsibility Report and learn more
about our Environmental, Social and Governance strategy, go to
campbellsoupcompany.com/our-impact.
For copies of Campbell’s Corporate Responsibility Report, write to
Stewart Lindsay, Vice President Corporate Responsibility and
Sustainability at csr_feedback@campbells.com.
On the web. Visit us at: campbellsoupcompany.com
for company news and information.
Information sources
Inquiries regarding our products may be addressed to Campbell’s
Consumer Response Center at the Headquarters address or call
1-800-257-8443.
Investors and financial analysts may contact Rebecca Gardy, Senior
Vice President, Chief Investor Relations Officer, at the Headquarters
address, via email at ir@campbells.com or call (856) 342-6081.
Media and public relations inquiries should be directed to James
Regan, Director of External Communications, at the Headquarters
address, via email at media@campbells.com or call (856) 219-6409.
Careers. To explore career opportunities, visit us at:
careers.campbellsoupcompany.com.
Instagram. Follow us: @CampbellSoupCo for stories
about our people, company and brands.
Communications concerning share transfer, lost certificates, dividends
and change of address, should be directed to Computershare Trust
Company, N.A., 1-800-780-3203.
LinkedIn. For stories about our people, company and brands, follow
us at: Linkedin.com/company/campbell-soup-company.
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1 Campbell Place, Camden, NJ 08103-1799 • investor.campbellsoupcompany.com
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