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

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For The Quarterly Period Ended Commission File Number
January 31, 2021 1-3822
CPB-20210131_G1.JPG

CAMPBELL SOUP COMPANY 
New Jersey 21-0419870
State of Incorporation 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 Trading Symbol Name of Each Exchange on Which Registered
Capital Stock, par value $.0375 CPB New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None

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

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

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

There were 303,009,350 shares of capital stock outstanding as of March 3, 2021.
1





TABLE OF CONTENTS



2






PART I - FINANCIAL INFORMATION

Item 1. Financial Statements
CAMPBELL SOUP COMPANY
Consolidated Statements of Earnings
(unaudited)
(millions, except per share amounts)
 
Three Months Ended Six Months Ended
January 31,
2021
January 26,
2020
January 31, 2021 January 26, 2020
Net sales $ 2,279  $ 2,162  $ 4,619  $ 4,345 
Costs and expenses
Cost of products sold 1,496  1,420  3,023  2,865 
Marketing and selling expenses 232  237  440  443 
Administrative expenses 158  148  299  282 
Research and development expenses 19  22  39  44 
Other expenses / (income) (45) (22) (63) 34 
Restructuring charges 18  19  10 
Total costs and expenses 1,878  1,812  3,757  3,678 
Earnings before interest and taxes 401  350  862  667 
Interest expense 55  149  110  229 
Interest income 1  1 
Earnings before taxes 347  204  753  441 
Taxes on earnings 102  33  199  101 
Earnings from continuing operations 245  171  554  340 
Earnings from discontinued operations   1,037    1,034 
Net earnings 245  1,208  554  1,374 
Less: Net earnings (loss) attributable to noncontrolling interests   —    — 
Net earnings attributable to Campbell Soup Company $ 245  $ 1,208  $ 554  $ 1,374 
Per Share — Basic
Earnings from continuing operations attributable to Campbell Soup Company $ .81  $ .57  $ 1.83  $ 1.13 
Earnings from discontinued operations   3.43    3.44 
Net earnings attributable to Campbell Soup Company(1)
$ .81  $ 4.00  $ 1.83  $ 4.56 
Weighted average shares outstanding — basic 303  302  303  301 
Per Share — Assuming Dilution
Earnings from continuing operations attributable to Campbell Soup Company $ .80  $ .56  $ 1.82  $ 1.12 
Earnings from discontinued operations   3.41    3.41 
Net earnings attributable to Campbell Soup Company $ .80  $ 3.97  $ 1.82  $ 4.53 
Weighted average shares outstanding — assuming dilution 305  304  305  303 
(1) Sum of the individual amounts may not add due to rounding.
See accompanying Notes to Consolidated Financial Statements.


3





CAMPBELL SOUP COMPANY
Consolidated Statements of Comprehensive Income
(unaudited)
(millions)
Three Months Ended
January 31, 2021 January 26, 2020
Pre-tax amount Tax (expense) benefit After-tax amount Pre-tax amount Tax (expense) benefit After-tax amount
Net earnings (loss) $ 245  $ 1,208 
Other comprehensive income (loss):
Foreign currency translation:
Foreign currency translation adjustments $ 7  $   7  $ $ — 
Reclassification of currency translation adjustments realized upon disposal of businesses       124  128 
Cash-flow hedges:
Unrealized gains (losses) arising during the period (6)   (6) — 
Reclassification adjustment for (gains) losses included in net earnings 3    3  (1) —  (1)
Pension and other postretirement benefits:
Reclassification of prior service credit included in net earnings (1)   (1) (7) (5)
Other comprehensive income (loss) $ 3  $   3  $ 124  $ 130 
Total comprehensive income (loss) $ 248  $ 1,338 
Total comprehensive income (loss) attributable to noncontrolling interests (1) (1)
Total comprehensive income (loss) attributable to Campbell Soup Company $ 249  $ 1,339 
Six Months Ended
January 31, 2021 January 26, 2020
Pre-tax amount Tax (expense) benefit After-tax amount Pre-tax amount Tax (expense) benefit After-tax amount
Net earnings (loss) $ 554  $ 1,374 
Other comprehensive income (loss):
Foreign currency translation:
Foreign currency translation adjustments $ 7  $   7  $ $ — 
Reclassification of currency translation adjustments realized upon disposal of businesses       206  210 
Cash-flow hedges:
Unrealized gains (losses) arising during period (7) 1  (6) — 
Reclassification adjustment for (gains) losses included in net earnings 3    3  (1) — 
Pension and other postretirement benefits:
Reclassification of prior service credit included in net earnings (2)   (2) (14) (11)
Other comprehensive income (loss) $ 1  $ 1  2  $ 197  $ 203 
Total comprehensive income (loss) $ 556  $ 1,577 
Total comprehensive income (loss) attributable to noncontrolling interests (3) — 
Total comprehensive income (loss) attributable to Campbell Soup Company $ 559  $ 1,577 
See accompanying Notes to Consolidated Financial Statements.
4





CAMPBELL SOUP COMPANY
Consolidated Balance Sheets
(unaudited)
(millions, except per share amounts)
January 31,
2021
August 2,
2020
Current assets
Cash and cash equivalents $ 946  $ 859 
Accounts receivable, net 702  575 
Inventories 815  871 
Other current assets 72  80 
Total current assets 2,535  2,385 
Plant assets, net of depreciation 2,329  2,368 
Goodwill 3,991  3,986 
Other intangible assets, net of amortization 3,329  3,350 
Other assets 314  283 
Total assets $ 12,498  $ 12,372 
Current liabilities
Short-term borrowings $ 1,025  $ 1,202 
Payable to suppliers and others 1,026  1,049 
Accrued liabilities 618  693 
Dividends payable 115  107 
Accrued income taxes 17  24 
Total current liabilities 2,801  3,075 
Long-term debt 4,996  4,994 
Deferred taxes 982  914 
Other liabilities 794  820 
Total liabilities 9,573  9,803 
Commitments and contingencies
Campbell Soup Company shareholders' equity
Preferred stock; authorized 40 shares; none issued
  — 
Capital stock, $0.0375 par value; authorized 560 shares; issued 323 shares
12  12 
Additional paid-in capital 388  394 
Earnings retained in the business 3,517  3,190 
Capital stock in treasury, at cost (990) (1,023)
Accumulated other comprehensive income (loss) (5) (10)
Total Campbell Soup Company shareholders' equity 2,922  2,563 
Noncontrolling interests 3 
Total equity 2,925  2,569 
Total liabilities and equity $ 12,498  $ 12,372 
See accompanying Notes to Consolidated Financial Statements.

5


CAMPBELL SOUP COMPANY
Consolidated Statements of Cash Flows
(unaudited)
(millions)

Six Months Ended
  January 31, 2021 January 26, 2020
Cash flows from operating activities:
Net earnings $ 554  $ 1,374 
Adjustments to reconcile net earnings to operating cash flow
Restructuring charges 19  10 
Stock-based compensation 34  33 
Pension and postretirement benefit income (66) (47)
Depreciation and amortization 154  162 
Deferred income taxes 69  32 
Net gain on sales of businesses   (972)
Loss on extinguishment of debt   75 
Other 47  53 
Changes in working capital, net of divestitures
Accounts receivable (124) (112)
Inventories 57  73 
Prepaid assets (3) 11 
Accounts payable and accrued liabilities (108) (9)
Other (22) (20)
Net cash provided by operating activities 611  663 
Cash flows from investing activities:
Purchases of plant assets (132) (167)
Purchases of route businesses (1) (6)
Sales of route businesses 6 
Sales of businesses, net of cash divested   2,533 
Other 7 
Net cash provided by (used in) investing activities (120) 2,368 
Cash flows from financing activities:
Short-term borrowings, including commercial paper   3,680 
Short-term repayments, including commercial paper (176) (4,350)
Long-term repayments   (499)
Dividends paid (215) (213)
Treasury stock issuances  
Payments related to tax withholding for stock-based compensation (14) (9)
Payments related to extinguishment of debt   (1,765)
Net cash used in financing activities (405) (3,152)
Effect of exchange rate changes on cash 1  — 
Net change in cash and cash equivalents 87  (121)
Cash and cash equivalents — beginning of period 859  31 
Cash and cash equivalents discontinued operations — beginning of period   148 
Cash and cash equivalents discontinued operations — end of period   — 
Cash and cash equivalents — end of period $ 946  $ 58 
See accompanying Notes to Consolidated Financial Statements.
6


CAMPBELL SOUP COMPANY
Consolidated Statements of Equity
(unaudited)
(millions, except per share amounts)
  Campbell Soup Company Shareholders’ Equity    
  Capital Stock Additional Paid-in
Capital
Earnings Retained in the
Business
Accumulated Other Comprehensive
Income (Loss)
Noncontrolling
Interests
 
  Issued In Treasury Total
Equity
  Shares Amount Shares Amount
Balance at October 27, 2019 323  $ 12  (21) $ (1,053) $ 356  $ 2,050  $ (126) $ 10  $ 1,249 
Net earnings (loss) 1,208  —  1,208 
Divestiture (4) (4)
Other comprehensive income (loss) 131  (1) 130 
Dividends ($.35 per share)
(106) (106)
Treasury stock issued under management incentive and stock option plans     —  18  (1) 22 
Balance at January 26, 2020 323  $ 12  (21) $ (1,048) $ 374  $ 3,151  $ $ $ 2,499 
Balance at July 28, 2019 323  $ 12  (22) $ (1,076) $ 372  $ 1,993  $ (198) $ $ 1,112 
Net earnings (loss) 1,374  —  1,374 
Divestiture (4) (4)
Other comprehensive income (loss) 203  —  203 
Dividends ($.70 per share)
(214) (214)
Treasury stock issued under management incentive and stock option plans     28  (2)     28 
Balance at January 26, 2020 323  $ 12  (21) $ (1,048) $ 374  $ 3,151  $ $ $ 2,499 
Balance at November 1, 2020 323  $ 12  (20) $ (991) $ 370  $ 3,387  $ (9) $ $ 2,773 
Net earnings (loss) 245    245 
Other comprehensive income (loss) 4  (1) 3 
Dividends ($.37 per share)
(114) (114)
Treasury stock issued under management incentive and stock option plans   1  18  (1) 18 
Balance at January 31, 2021 323  $ 12  (20) $ (990) $ 388  $ 3,517  $ (5) $ 3  $ 2,925 
Balance at August 2, 2020 323  $ 12  (21) $ (1,023) $ 394  $ 3,190  $ (10) $ $ 2,569 
Net earnings (loss) 554    554 
Other comprehensive income (loss) 5  (3) 2 
Dividends ($.72 per share)
(221) (221)
Treasury stock issued under management incentive and stock option plans 1  33  (6) (6) 21 
Balance at January 31, 2021 323  $ 12  (20) $ (990) $ 388  $ 3,517  $ (5) $ 3  $ 2,925 
See accompanying Notes to Consolidated Financial Statements.
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Notes to Consolidated Financial Statements
(unaudited)
(currency in millions, except per share amounts)
1. Basis of Presentation and Significant Accounting Policies
In this Form 10-Q, unless otherwise stated, the terms "we," "us," "our" and the "company" refer to Campbell Soup Company and its consolidated subsidiaries.
The consolidated financial statements include our accounts and entities in which we maintain a controlling financial interest and a variable interest entity (VIE) for which we were the primary beneficiary. Intercompany transactions are eliminated in consolidation. See Note 3 for a discussion of Discontinued Operations.
The financial statements reflect all adjustments which are, in our opinion, necessary for a fair statement of the results of operations, financial position, and cash flows for the indicated periods. The accounting policies we used in preparing these financial statements are substantially consistent with those we applied in our Annual Report on Form 10-K for the year ended August 2, 2020.
The results for the period are not necessarily indicative of the results to be expected for other interim periods or the full year. Our fiscal year ends on the Sunday nearest July 31, which is August 1, 2021. There are 52 weeks in 2021. There were 53 weeks in 2020.
2. Recent Accounting Pronouncements
Recently Adopted
In August 2018, the Financial Accounting Standards Board (FASB) issued guidance that eliminates, adds, and modifies certain disclosure requirements for fair value measurements. The guidance is effective for fiscal years beginning after December 15, 2019, and interim periods within those years. We adopted the new guidance at the beginning of 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 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 new guidance on a prospective basis at the beginning of the first quarter of 2021. The adoption did not have a material impact on our consolidated financial statements.
Accounting Pronouncements Not Yet Adopted
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. Early adoption is permitted. We are currently evaluating the impact that the new guidance will have on our disclosures.
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. The guidance is effective for fiscal years beginning after December 15, 2020, and interim periods within those years. Early adoption is permitted. We are currently evaluating the impact that the new guidance will have on our consolidated financial statements.
In March 2020, the FASB issued guidance that provides optional expedients and exceptions for a limited period of time for accounting for contracts, hedging relationships, and other transactions affected by the London Interbank Offered Rate (LIBOR) or another reference rate expected to be discontinued. Optional expedients can be applied from March 12, 2020 through December 31, 2022. We are currently evaluating the impact that the new guidance will have on our consolidated financial statements.
3. Divestitures
Discontinued Operations
We completed the sale of our Kelsen business on September 23, 2019, for $322. We also completed the sale of our Arnott’s business and certain other international operations, including the simple meals and shelf-stable beverages businesses in Australia and Asia Pacific (the Arnott's and other international operations), on December 23, 2019, for $2,286. The purchase price was subject to certain post-closing adjustments, which resulted in $4 of additional proceeds in the third quarter of 2020. Beginning in the fourth quarter of 2019, we have reflected the results of operations of the Kelsen business and the Arnott’s and
8


other international operations (collectively referred to as Campbell International) as discontinued operations in the Consolidated Statements of Earnings for all periods presented. These businesses were historically included in the Snacks reportable segment.
Results of Campbell International were as follows:
Three Months Ended Six Months Ended
January 26, 2020
Net sales $ 136  $ 359 
Earnings before taxes from operations $ 16  $ 53 
Taxes on earnings from operations 17 
Gain on sales of businesses / costs associated with selling the businesses 1,087  1,036 
Tax expense on sales of businesses / costs associated with selling the businesses 62  38 
Earnings from discontinued operations $ 1,037  $ 1,034 
Under the terms of the sale of the Arnott's and 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 provide certain transition services to support the divested business.
Cash flow activity of Campbell International included the following:
Six Months Ended
January 26, 2020
Cash flows from discontinued operating activities:
Net gain on sales of discontinued operations businesses $ 1,036 
Cash flows from discontinued investing activities:
Capital expenditures $ 30 
Sales of discontinued operations businesses, net of cash divested 2,462 
Other Divestitures
On October 11, 2019, we completed the sale of our European chips business for £63, or $77. The pre-tax loss recognized in the first quarter of 2020 on the sale was $64, which included the impact of allocated goodwill and foreign currency translation adjustments. For tax purposes, in the first quarter of 2020, the capital loss on the sale was offset by a valuation allowance. In the second quarter of 2020, we recognized a $19 tax benefit in continuing operations as we were able to use the capital loss on this sale to offset a portion of the capital gain from the sale of the Arnott's and other international operations. The European chips business had net sales of $25 for the six-month period ended January 26, 2020. Earnings were not material in the period. The results of the European chips business through the date of sale were reflected in continuing operations within the Snacks reportable segment.
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4. Accumulated Other Comprehensive Income (Loss)
The components of Accumulated other comprehensive income (loss) consisted of the following:
Foreign Currency Translation Adjustments(1)
Gains (Losses) on Cash Flow Hedges(2)
Pension and Postretirement Benefit Plan Adjustments(3)
Total Accumulated Comprehensive Income (Loss)
Balance at July 28, 2019 $ (218) $ (9) $ 29  $ (198)
Other comprehensive income (loss) before reclassifications — 
Amounts reclassified from accumulated other comprehensive income (loss)(4)
210  —  (11) 199 
Net current-period other comprehensive income (loss) 213  (11) 203 
Balance at January 26, 2020 $ (5) $ (8) $ 18  $
Balance at August 2, 2020 $ (10) $ (7) $ $ (10)
Other comprehensive income (loss) before reclassifications 10  (6)   4 
Amounts reclassified from accumulated other comprehensive income (loss)
  3  (2) 1 
Net current-period other comprehensive income (loss) 10  (3) (2) 5 
Balance at January 31, 2021 $   $ (10) $ 5  $ (5)
_____________________________________
(1)Included no tax as of January 31, 2021, August 2, 2020, and January 26, 2020 and tax expense of $4 as of July 28, 2019.
(2)Included a tax benefit of $2 as of January 31, 2021, $1 as of August 2, 2020, and January 26, 2020, and $2 as of July 28, 2019.
(3)Included tax expense of $2 as of January 31, 2021, and as of August 2, 2020, $5 as of January 26, 2020, and $8 as of July 28, 2019.
(4)Reflects amounts reclassified from sale of businesses. See Note 3 for additional information.
Amounts related to noncontrolling interests were not material.
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The amounts reclassified from Accumulated other comprehensive income (loss) consisted of the following:
Three Months Ended Six Months Ended
Details about Accumulated Other Comprehensive Income (Loss) Components January 31, 2021 January 26, 2020 January 31, 2021 January 26, 2020 Location of (Gain) Loss Recognized in Earnings
Foreign currency translation adjustments:
Currency translation (gains) losses realized upon disposal of businesses $   $ —  $   $ 23  Other expenses / (income)
Currency translation (gains) losses realized upon disposal of businesses   124    183  Earnings (loss) from discontinued operations
Total before tax   124    206 
Tax expense (benefit)    
(Gain) loss, net of tax $   $ 128  $   $ 210 
(Gains) losses on cash flow hedges:
Foreign exchange forward contracts $ 2  $ (1) $ 2  $ (1) Cost of products sold
Foreign exchange forward contracts   —    Earnings (loss) from discontinued operations
Forward starting interest rate swaps 1  —  1  Interest expense
Total before tax 3  (1) 3 
Tax expense (benefit)   —    (1)
(Gain) loss, net of tax $ 3  $ (1) $ 3  $ — 
Pension and postretirement benefit adjustments:
Prior service credit $ (1) $ (7) $ (2) $ (14) Other expenses / (income)
Tax expense (benefit)    
(Gain) loss, net of tax $ (1) $ (5) $ (2) $ (11)

5. Goodwill and Intangible Assets
Goodwill
The following table shows the changes in the carrying amount of goodwill by business segment:
Meals & Beverages Snacks Total
Net balance at August 2, 2020 $ 975  $ 3,011  $ 3,986 
Foreign currency translation adjustment 5    5 
Net balance at January 31, 2021 $ 980  $ 3,011  $ 3,991 

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Intangible Assets
The following table summarizes balance sheet information for intangible assets, excluding goodwill, subject to amortization and intangible assets not subject to amortization:
January 31, 2021 August 2, 2020
Intangible Assets Cost Accumulated Amortization Net Cost Accumulated Amortization Net
Amortizable intangible assets
Customer relationships $ 851  $ (133) $ 718  $ 851  $ (112) $ 739 
Non-amortizable intangible assets
Trademarks 2,611  2,611 
Total net intangible assets $ 3,329  $ 3,350 
Non-amortizable intangible assets consist of trademarks. As of January 31, 2021, trademarks primarily included $1,978 associated with Snyder's-Lance. Of the carrying values of all indefinite-lived trademarks, $620 related to the Snyder's of Hanover trademark, $292 related to the Pace trademark, and $280 related to the Pacific Foods trademark.
Amortization of intangible assets in Earnings from continuing operations was $21 and $22 for the six-month periods ended January 31, 2021, and January 26, 2020, respectively. As of January 31, 2021, amortizable intangible assets had a weighted-average remaining useful life of 18 years. Amortization expense for the next 5 years is estimated to be approximately $42 per year.
6. Segment Information
Our reportable segments are as follows:
Meals & Beverages, which includes the retail and foodservice businesses 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; Plum baby food and snacks; V8 juices and beverages; and Campbell’s tomato juice; and
Snacks, which consists of Pepperidge Farm cookies, crackers, fresh bakery and frozen products in U.S. retail, including Pepperidge Farm Farmhouse* cookies and bakery products, Milano* cookies and Goldfish* crackers; and Snyder’s of Hanover* pretzels, Lance* sandwich crackers, Cape Cod* and Kettle Brand* potato chips, Late July* snacks, Snack Factory Pretzel Crisps,* Pop Secret popcorn, Emerald nuts, and other snacking products in the U.S. and Canada. The segment includes the retail business in Latin America. The segment also included the results of our European chips business, which was sold on October 11, 2019. We refer to the * trademarks as our "power brands."
We evaluate segment performance before interest, taxes and costs associated with restructuring activities and impairment charges. Unrealized gains and losses on 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.
Three Months Ended Six Months Ended
January 31,
2021
January 26,
2020
January 31,
2021
January 26,
2020
Net sales
Meals & Beverages $ 1,300  $ 1,224  $ 2,642  $ 2,418 
Snacks 979  938  1,977  1,927 
Total $ 2,279  $ 2,162  $ 4,619  $ 4,345 

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Three Months Ended Six Months Ended
January 31,
2021
January 26,
2020
January 31,
2021
January 26,
2020
Earnings before interest and taxes
Meals & Beverages $ 258  $ 242  $ 591  $ 524 
Snacks 144  136  283  261 
Corporate(1)
17  (21) 7  (108)
Restructuring charges(2)
(18) (7) (19) (10)
Total $ 401  $ 350  $ 862  $ 667 
_______________________________________
(1)Represents unallocated items. Pension benefit settlement adjustments are included in Corporate. There were settlement gains of $30 and $34 in the three- and six-month periods ended January 31, 2021, and $11 in the three- and six-month periods ended January 26, 2020. A loss of $64 on the sale of our European chips business was included in the six-month period ended January 26, 2020. Costs related to the cost savings initiatives were $4 and $18 in the three-month periods and $9 and $26 in the six-month periods ended January 31, 2021, and January 26, 2020, respectively.
(2)See Note 7 for additional information.
Our net sales based on product categories are as follows:
Three Months Ended Six Months Ended
January 31,
2021
January 26,
2020
January 31,
2021
January 26,
2020
Net sales
Soup $ 794  $ 755  $ 1,620  $ 1,463 
Snacks 989  955  1,997  1,965 
Other simple meals 307  279  618  562 
Beverages 189  173  384  355 
Total $ 2,279  $ 2,162  $ 4,619  $ 4,345 
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 and Plum products. Beverages include V8 juices and beverages, Campbell’s tomato juice and Pacific Foods non-dairy beverages.
7. Restructuring Charges and Cost Savings Initiatives
Multi-year Cost Savings Initiatives and Snyder's-Lance Cost Transformation Program and Integration
Beginning in fiscal 2015, we implemented initiatives to reduce costs and to streamline our organizational structure.
In recent years, we expanded these initiatives by further optimizing our supply chain and manufacturing networks, including closing our manufacturing facility in Toronto, Ontario, as well as our information technology infrastructure.
On March 26, 2018, we completed the acquisition of Snyder's-Lance, Inc. (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 continue to implement this program. In addition, we have identified opportunities for additional cost synergies as we integrate Snyder's-Lance.
Cost estimates, as well as timing for certain activities, are continuing to be developed.
A summary of the pre-tax charges (gains) recorded in Earnings from continuing operations related to these initiatives is as follows:
Three Months Ended Six Months Ended
  January 31, 2021 January 26,
2020
January 31, 2021 January 26,
2020
Recognized as of January 31, 2021
Restructuring charges $ 18  $ $ 19  $ 10  $ 257 
Administrative expenses 6  13  10  21  321 
Cost of products sold (2) (1) 75 
Marketing and selling expenses     12 
Research and development expenses    
Total pre-tax charges $ 22  $ 25  $ 28  $ 36  $ 669 
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A summary of the pre-tax costs in Earnings from discontinued operations associated with these initiatives is as follows:
Recognized as of January 31, 2021
Severance pay and benefits
$ 19 
Implementation costs and other related costs
Total $ 23 
As of April 28, 2019, we incurred substantially all of the costs for actions associated with discontinued operations. All of the costs were cash expenditures.
A summary of the pre-tax costs in Earnings from continuing operations associated with the initiatives is as follows:
Recognized as of January 31, 2021
Severance pay and benefits
$ 219 
Asset impairment/accelerated depreciation 80 
Implementation costs and other related costs
370 
Total $ 669 
The total estimated pre-tax costs for actions associated with continuing operations that have been identified are approximately $695 to $725 and we expect to incur the costs through 2022. This estimate will be updated as costs for the expanded initiatives are developed.
We expect the costs for actions associated with continuing operations that have been identified to date to consist of the following: approximately $220 to $225 in severance pay and benefits; approximately $85 in asset impairment and accelerated depreciation; and approximately $390 to $415 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 44%; and Corporate - approximately 24%.
Of the aggregate $695 to $725 of pre-tax costs associated with continuing operations identified to date, we expect approximately $595 to $625 will be cash expenditures. In addition, we expect to invest approximately $455 in capital expenditures through 2022, of which we invested $367 as of January 31, 2021. The capital expenditures primarily relate to a U.S. warehouse optimization project, improvement of quality, safety and cost structure across the Snyder’s-Lance manufacturing network, implementation of an SAP enterprise-resource planning system for Snyder's-Lance, transition of production of the Toronto manufacturing facility to our U.S. thermal plants, optimization of information technology infrastructure and applications, insourcing of manufacturing for certain simple meal products, and optimization of the Snyder’s-Lance warehouse and distribution network.
A summary of the restructuring activity and related reserves associated with continuing operations at January 31, 2021, is as follows:
Severance Pay and Benefits
Implementation Costs and Other Related
Costs(3)
Asset Impairment/Accelerated Depreciation
Other Non-Cash Exit Costs(4)
Total Charges
Accrued balance at August 2, 2020(1)
$ 15 
2021 charges 4  8  13  3  $ 28 
2021 cash payments (9)
Accrued balance at January 31, 2021(2)
$ 10 
__________________________________ 
(1)Includes $3 of severance pay and benefits recorded in Other liabilities in the Consolidated Balance Sheet.
(2)Includes $4 of severance pay and benefits recorded in Other liabilities in the Consolidated Balance Sheet.
(3)Includes other costs recognized as incurred that are not reflected in the restructuring reserve in the Consolidated Balance Sheet. The costs are included in Administrative expenses and Cost of products sold in the Consolidated Statements of Earnings.
(4)Includes non-cash costs that are not reflected in the restructuring reserve in the Consolidated Balance Sheet.

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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 in Earnings from continuing operations associated with segments is as follows:
January 31, 2021
Three Months Ended Six Months
Ended
Costs Incurred to Date
Meals & Beverages $ $ $ 221 
Snacks 21  26  277 
Corporate —  171 
Total $ 22  $ 28  $ 669 
In addition, in the second quarter of 2021, we recorded a $19 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 the three- and six-month periods ended January 31, 2021, and January 26, 2020, excludes approximately 1 million stock options that would have been antidilutive.
9. Pension and Postretirement Benefits
Components of net benefit expense (income) were as follows:
Three Months Ended Six Months Ended
Pension Postretirement Pension Postretirement
  January 31,
2021
January 26,
2020
January 31,
2021
January 26,
2020
January 31,
2021
January 26,
2020
January 31,
2021
January 26,
2020
Service cost $ 4  $ $   $ —  $ 9  $ 10  $   $ — 
Interest cost 10  17  1  20  34  2 
Expected return on plan assets (30) (34)   —  (61) (69)   — 
Amortization of prior service cost   —  (1) (7)   —  (2) (14)
Settlement gains (30) (11)   —  (34) (11)   — 
Net periodic benefit expense (income) $ (46) $ (23) $   $ (6) $ (66) $ (36) $   $ (11)
The components of net periodic benefit expense (income) other than the service cost component associated with continuing operations are included in Other expenses / (income) in the Consolidated Statements of Earnings.
The settlement gains resulted from the level of lump sum distributions associated with U.S. and Canadian pension plans.
Net periodic pension benefit expense (income) associated with discontinued operations was not material for the six-month period ended January 26, 2020.
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10. Leases
The components of lease costs were as follows:
Three Months Ended Six Months Ended
January 31,
2021
January 26,
2020
January 31,
2021
January 26,
2020
Operating lease cost $ 20  $ 21  $ 40  $ 40 
Finance lease - amortization of right-of-use (ROU) assets 1  2 
Short-term lease cost 11  10  21  20 
Variable lease cost(1)
46  43  92  86 
Sublease income
  (2) (1) (2)
Total(2)
$ 78  $ 73  $ 154  $ 145 
__________________________________________
(1)Includes labor and other overhead in our service contracts with embedded leases.
(2)Total lease cost of $2 and $4 for the three- and six-month periods ended January 26, 2020, respectively, related to discontinued operations.
The following tables summarize the lease amounts recorded in the Consolidated Balance Sheets:
Operating Leases
Balance Sheet Location January 31,
2021
August 2,
2020
ROU assets, net Other assets $ 239  $ 254 
Lease liabilities (current) Accrued liabilities $ 54  $ 67 
Lease liabilities (noncurrent) Other liabilities $ 183  $ 184 

Finance Leases
Balance Sheet Location January 31,
2021
August 2,
2020
ROU assets, net Plant assets, net of depreciation $ 10  $ 10 
Lease liabilities (current) Short-term borrowings $ 4  $
Lease liabilities (noncurrent) Long-term debt $ 7  $
The following table summarizes cash flow and other information related to leases:
Six Months Ended
January 31,
2021
January 26,
2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases $ 40  $ 38 
Financing cash flows from finance leases $ 2  $ — 
ROU assets obtained in exchange for lease obligations:
Operating leases $ 27  $ 63 
Finance leases
$ 3  $
ROU assets divested with businesses sold:
Operating leases $   $ 18 
Finance leases
$   $

11. Financial Instruments
The principal market risks to which we are exposed are changes in foreign currency exchange rates, interest rates and commodity prices. In addition, we are exposed to 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
16


derivative contracts such as swaps, rate locks, options, forwards and commodity futures. We enter into these derivative contracts for periods consistent with the related underlying exposures, and the contracts do not constitute positions independent of those exposures. We do not enter into derivative contracts for speculative purposes and do not use leveraged instruments. Our derivative programs include instruments that qualify for hedge accounting treatment and instruments that are not designated as accounting hedges.
Concentration of Credit Risk
We are exposed to the risk that counterparties to derivative contracts will fail to meet their contractual obligations. To mitigate counterparty credit risk, we enter into contracts only with carefully selected, leading, credit-worthy financial institutions, and distribute contracts among several financial institutions to reduce the concentration of credit risk. We did not have credit-risk-related contingent features in our derivative instruments as of January 31, 2021, or August 2, 2020.
We are also exposed to credit risk from our customers. During 2020, our largest customer accounted for approximately 21% of consolidated net sales from continuing operations. Our five largest customers accounted for approximately 44% of our consolidated net sales from continuing operations in 2020.
We closely monitor credit risk associated with counterparties and customers.
Foreign Currency Exchange Risk
We are exposed to foreign currency exchange risk related to third-party transactions and intercompany transactions, including intercompany debt. Principal currencies hedged include the Canadian dollar and, prior to the sale of Arnott's and other international operations, the Australian dollar. 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. To hedge currency exposures related to intercompany debt, we enter into foreign exchange forward purchase and sale contracts for periods consistent with the underlying debt. The notional amount of foreign exchange forward contracts accounted for as cash-flow hedges was $98 as of January 31, 2021, and $164 as of August 2, 2020. The effective portion of the changes in fair value on these instruments is recorded in other comprehensive income (loss) and is reclassified into the Consolidated Statements of Earnings on the same line item and the same period in which the underlying hedged transaction affects earnings. The notional amount of foreign exchange forward contracts that are not designated as accounting hedges was $20 as of January 31, 2021, and $19 as of August 2, 2020.
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. Receive fixed rate/pay variable rate interest rate swaps are accounted for as fair-value hedges. We manage our exposure to interest rate volatility on future debt issuances by entering into forward starting interest rate swaps or treasury rate lock contracts to lock in the rate on the interest payments related to the anticipated debt issuances. The contracts are either designated as cash-flow hedging instruments or are undesignated. The effective portion of the changes in fair value on designated instruments is recorded in other comprehensive income (loss) and reclassified into interest expense over the life of the debt. The change in fair value on undesignated instruments is recorded in interest expense. There were no forward starting interest rate swaps or treasury rate lock contracts outstanding as of January 31, 2021, or August 2, 2020.
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, soybean oil, diesel fuel, natural gas, cocoa, aluminum, soybean meal and corn. 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. The notional amount of commodity contracts designated as cash flow hedges was $5 as of January 31, 2021. There were no commodity contracts designated as cash flow hedges as of August 2, 2020. The notional amount of commodity contracts not designated as accounting hedges was $121 as of January 31, 2021, and $137 as of August 2, 2020.
In 2017, we entered into 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 value was approximately $84 as of January 31, 2021, and $34 as of August 2, 2020.
Unrealized gains (losses) and settlements are included in Cost of products sold in our Consolidated Statements of Earnings.
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Equity Price Risk
We enter into swap contracts which hedge a portion of exposures relating to certain deferred compensation obligations linked to the total return of our capital stock, the total return of the Vanguard Institutional Index Institutional Plus Shares, and the total return of the Vanguard Total International Stock Index. Under these contracts, we pay variable interest rates and receive from the counterparty either: the total return on our capital stock; the total return of the Standard & Poor's 500 Index, which is expected to approximate the total return of the Vanguard Institutional Index Institutional Plus Shares; or the total return of the iShares MSCI EAFE Index, which is expected to approximate the total return of the Vanguard Total International Stock Index. These contracts were not designated as hedges for accounting purposes. Unrealized gains (losses) and settlements are included in Administrative expenses in the Consolidated Statements of Earnings. We enter into these contracts for periods typically not exceeding 12 months. The notional amounts of the contracts were $22 as of January 31, 2021, and August 2, 2020.
The following table summarizes the fair value of derivative instruments on a gross basis as recorded in the Consolidated Balance Sheets as of January 31, 2021, and August 2, 2020:
Balance Sheet Classification January 31,
2021
August 2,
2020
Asset Derivatives
Derivatives designated as hedges:
Foreign exchange forward contracts Other current assets $   $
Total derivatives designated as hedges $   $
Derivatives not designated as hedges:
Commodity derivative contracts Other current assets $ 16  $
Deferred compensation derivative contracts Other current assets 3 
Commodity derivative contracts Other assets 1  — 
Total derivatives not designated as hedges $ 20  $ 11 
Total asset derivatives $ 20  $ 12 

  Balance Sheet Classification January 31,
2021
August 2,
2020
Liability Derivatives
Derivatives designated as hedges:
Foreign exchange forward contracts Accrued liabilities $ 4  $
Total derivatives designated as hedges $ 4  $
Derivatives not designated as hedges:
Commodity derivative contracts Accrued liabilities $ 2  $
Total derivatives not designated as hedges $ 2  $
Total liability derivatives $ 6  $ 11 
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 January 31, 2021, and August 2, 2020, would be adjusted as detailed in the following table:
January 31, 2021 August 2, 2020
Derivative Instrument Gross Amounts Presented in the Consolidated Balance Sheet Gross Amounts Not Offset in the Consolidated Balance Sheet Subject to Netting Agreements Net Amount Gross Amounts Presented in the Consolidated Balance Sheet Gross Amounts Not Offset in the Consolidated Balance Sheet Subject to Netting Agreements Net Amount
Total asset derivatives $ 20  $   $ 20  $ 12  $ (4) $
Total liability derivatives $ 6  $   $ 6  $ 11  $ (4) $
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 liability balance of $5 at January 31, 2021, and an asset
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balance of $8 at August 2, 2020, were included in Accrued liabilities and Other current assets, respectively, in the Consolidated Balance Sheets.
The following tables show the effect of our derivative instruments designated as cash-flow hedges for the three- and six-month periods ended January 31, 2021, and January 26, 2020, in other comprehensive income (loss) (OCI) and the Consolidated Statements of Earnings:
  Total Cash-Flow Hedge
OCI Activity
Derivatives Designated as Cash-Flow Hedges   January 31,
2021
January 26,
2020
Three Months Ended
OCI derivative gain (loss) at beginning of quarter $ (9) $ (9)
Effective portion of changes in fair value recognized in OCI:
Foreign exchange forward contracts (6)
Amount of (gain) loss reclassified from OCI to earnings: Location in Earnings
Foreign exchange forward contracts Cost of products sold 2  (1)
Forward starting interest rate swaps Interest expense 1  — 
OCI derivative gain (loss) at end of quarter $ (12) $ (9)
Six Months Ended
OCI derivative gain (loss) at beginning of year $ (8) $ (11)
Effective portion of changes in fair value recognized in OCI:
Foreign exchange forward contracts (7)
Amount of (gain) loss reclassified from OCI to earnings: Location in Earnings
Foreign exchange forward contracts Cost of products sold 2  (1)
Foreign exchange forward contracts Earnings (loss) from discontinued operations  
Forward starting interest rate swaps Interest expense 1 
OCI derivative gain (loss) at end of quarter $ (12) $ (9)
Based on current valuations, the amount expected to be reclassified from OCI into earnings within the next 12 months is a loss of $6.
The following tables show the effect of our derivative instruments designated as cash-flow hedges for the three- and six-month periods ended January 31, 2021, and January 26, 2020, in the Consolidated Statements of Earnings:
Three Months Ended
January 31, 2021 January 26, 2020
Cost of products sold Interest expense Cost of products sold Earnings from discontinued operations Interest expense
Consolidated Statements of Earnings: $ 1,496  $ 55  $ 1,420  $ 1,037  $ 149 
(Gain) loss on Cash Flow Hedges:
Amount of (gain) loss reclassified from OCI to earnings $ 2  $ 1  $ (1) $ —  $ — 
Amount excluded from effectiveness testing recognized in earnings using an amortization approach $   $   $ —  $ —  $ — 

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Six Months Ended
January 31, 2021 January 26, 2020
Cost of products sold Interest
expense
Cost of product sold Earnings from discontinued operations Interest
expense
Consolidated Statements of Earnings: $ 3,023  $ 110  $ 2,865  $ 1,034  $ 229 
(Gain) loss on Cash Flow Hedges:
Amount of (gain) loss reclassified from OCI to earnings $ 2  $ 1  $ (1) $ $
Amount excluded from effectiveness testing recognized in earnings using an amortization approach $   $   $ —  $ —  $ — 
The following table shows the effects of our derivative instruments not designated as hedges for the three- and six-month periods ended January 31, 2021, and January 26, 2020, in the Consolidated Statements of Earnings:
Amount of (Gain) Loss Recognized in Earnings on Derivatives
Derivatives not Designated as Hedges Location of (Gain) Loss
Recognized in Earnings
Three Months Ended Six Months Ended
January 31,
2021
January 26,
2020
January 31, 2021 January 26, 2020
Foreign exchange forward contracts Cost of products sold $   $ —  $ 1  $ — 
Foreign exchange forward contracts Other expenses / (income)   —   
Commodity derivative contracts Cost of products sold (13) —  (15) (4)
Deferred compensation derivative contracts Administrative expenses (3) (3) (3) (4)
Treasury rate lock contracts Interest expense   (3)   (3)
Total (gain) loss at end of quarter $ (16) $ (6) $ (17) $ (9)

12. Fair Value Measurements
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.
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Assets and Liabilities Measured at Fair Value on a Recurring Basis
The following table presents our financial assets and liabilities that are measured at fair value on a recurring basis as of January 31, 2021, and August 2, 2020, consistent with the fair value hierarchy:
  Fair Value
as of
January 31,
2021
Fair Value Measurements at
January 31, 2021 Using
Fair Value Hierarchy
Fair Value
as of
August 2,
2020
Fair Value Measurements at
August 2, 2020 Using
Fair Value Hierarchy
  Level 1 Level 2 Level 3 Level 1 Level 2 Level 3
Assets
Foreign exchange forward contracts(1)
$   $   $   $   $ $ —  $ $ — 
Commodity derivative contracts(2)
17  9  8   
Deferred compensation derivative contracts(3)
3    3    —  — 
Deferred compensation investments(4)
3  3      —  — 
Total assets at fair value $ 23  $ 12  $ 11  $   $ 15  $ $ $

  Fair Value
as of
January 31,
2021
Fair Value Measurements at
January 31, 2021 Using
Fair Value Hierarchy
Fair Value
as of
August 2,
2020
Fair Value Measurements at
August 2, 2020 Using
Fair Value Hierarchy
  Level 1 Level 2 Level 3 Level 1 Level 2 Level 3
Liabilities
Foreign exchange forward contracts(1)
$ 4  $   $ 4  $   $ $ —  $ $ — 
Commodity derivative contracts(2)
2    1