FinanceLooker

Excrept from filing document 2025-08-03

Based on the closing price on January 24 2025 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 7 566 297 331 There were 297 992 525 shares of capital stock outstanding as of September 10 2025
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
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
On March 12 2024 we completed the acquisition of Sovos Brands Inc Sovos Brands for total purchase consideration of 2 899 billion For additional information on this acquisition see Note 3 to the Consolidated Financial Statements
On May 30 2023 we completed the sale of our Emerald nuts business On August 26 2024 we completed the sale of our Pop Secret popcorn business On February 24 2025 we completed the sale of our noosa yoghurt business For additional information on the divestitures see Note 4 to the Consolidated Financial Statements
pretzel crisps and other snacking products in retail in the U S The segment also includes the snacking and meals and beverages retail business in Latin America The segment also included the results of our Pop Secret popcorn business which was sold on August 26 2024 and our Emerald nuts business which was sold on May 30 2023
See Note 7 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
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 We also purchase finished products from domestic and international suppliers Many of these items are subject to price fluctuations from a number of factors including but not limited to geopolitical conflicts shifting global trade policies including tariffs and retaliatory measures import and export requirements product scarcity demand for raw materials commodity market speculation energy costs currency fluctuations supplier capacities government sponsored agricultural programs and other government policy climate change changes in crop size cattle cycles herd and flock disease crop disease crop pests drought and excessive rain temperature extremes and other adverse weather events water scarcity scarcity of suitable agricultural land scarcity of organic ingredients pandemics or other local or global health issues 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 alternative sourcing opportunities supplier collaboration various commodity risk management tools for most of our ingredients and packaging and other cost mitigation efforts as applicable 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
During 2025 we experienced some volatility in commodity and supply chain costs including the costs of labor raw materials energy fuel packaging materials and finished products with a moderate impact from tariffs in the fourth quarter We are unable to predict the extent to which tariffs may impact our ability to source ingredients packaging materials and finished products in the future and certain supply pressures may continue throughout 2026 In 2026 we expect more significant cost pressures primarily driven by tariff impacts We plan to reduce some of these costs and impacts over time through cost savings initiatives inventory management practices supplier collaboration alternative sourcing opportunities continued supply chain productivity initiatives surgical pricing actions where necessary and other mitigation efforts
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 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 2025 2024 and 2023 Our largest customer Wal Mart Stores Inc and its affiliates accounted for approximately 21 of our consolidated net sales in 2025 and 22 in 2024 and 2023 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
As of September 10 2025 we owned over 3 000 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 remain valid and can be renewed indefinitely as long as they are in use and or their registrations are properly maintained and they have not become generic We believe that our principal brands including
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
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
During 2025 our aggregate capital expenditures were 426 million We expect to spend approximately 420 million for capital projects in 2026 Major capital projects based on planned spend in 2026 include network optimization for both our Meals Beverages and Snacks businesses information technology projects and wastewater initiatives We estimate that approximately 35 million of the capital expenditures anticipated during 2026 will be for upgrades to our Napoleon Ohio wastewater treatment facility with another approximately 20 million for other network wastewater initiatives
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 FDA 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 food ingredients regulations including but not limited to Food Drug and Cosmetic Act FD C colors labeling and packaging regulations including but not limited to extended producer responsibility EPR regulations data privacy and security regulations tax and securities regulations import 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
Of our 426 million in capital expenditures made during 2025 approximately 26 million were for compliance with environmental laws and regulations in the U S We further estimate that approximately 35 million of the capital expenditures anticipated during 2026 will be for upgrades to our Napoleon Ohio wastewater treatment facility with another approximately 20 million for other network wastewater initiatives Additionally we anticipate spending approximately 6 million for compliance with U S environmental laws and regulations during 2026 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 greenhouse gas emissions energy and sustainability including EPR laws and regulations 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 See Note 18 to the Consolidated Financial Statements for additional information regarding certain environmental matters
One of the four pillars of our strategic framework is to build a Top Team To do this we are committed to building a company where everyone is valued and supported to do their best work We believe that our employees are the driving force behind our success Prioritizing attracting developing and retaining world class talent and cultivating a culture of belonging embodies our purpose
to enhance our focus on building a winning team and culture In accordance with our purpose and Employee Value Proposition we have brought 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 has helped to foster closer collaboration and enhance decision making thereby enabling us to execute our business strategy We have also invested in other work experiences and wellness areas in our field locations On August 3 2025 we had approximately 13 700 full time and part time employees
We invest in our employees through training and development programs to support our culture of continuous learning Our developmental programs allow employees to focus on timely and topical development areas including leadership excellence change management and functional capabilities 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 alignment of work and overall engagement
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
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 Ways to Well being Strategy provides information education tools and resources to drive engagement and to help support our employees physical financial professional 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 a hybrid work policy to allow office based employees to work remotely several days per week
We make available free of charge at the Investors portion of this website under the 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 SEC
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 SEC
In addition to the factors discussed elsewhere in this Report the following risks and uncertainties could have a material adverse affect on 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
Deterioration of global macroeconomic conditions including economic recession or slow growth 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 geopolitical conflicts global supply chain challenges including imposed and threatened tariffs by the U S and reciprocal tariffs by its trading partners inflation consumer spending patterns recession rising interest rates energy availability and costs labor shortages pandemics or other local or global health issues 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
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 contract manufacturers and independent contractors to meet their obligations to us or significant disruptions in their ability to do so
These and other impacts of global macroeconomic conditions could also heighten many of the other risk factors discussed in this Item 1A or in other reports we periodically file with the SEC Our sensitivity to global macroeconomic conditions could materially impact our business results of operations financial condition and liquidity
Changes in global trade policies including imposed and threatened tariffs by the U S and reciprocal tariffs by its trading partners remain uncertain and could impact our financial condition or results of operations
The current U S presidential administration has announced a wide range of tariffs on certain ingredients inputs and imports from many countries including Canada Mexico members of the European Union and the United Kingdom The imposition of such tariffs have resulted in increased costs including on ingredients packaging such as tinplate steel used to make cans and other materials used to produce and distribute our products and on finished products that we import We are continuing to monitor the rapidly evolving tariff and global trade policies and are working with our suppliers to mitigate potential impacts on our business The extent and duration of the tariffs and the resulting impact on general economic conditions and on our business are uncertain and depend on various factors such as recent legal challenges to the U S s imposition of tariffs negotiations between the U S and affected countries the responses of other countries or regions relief that may be granted availability and cost of alternative sources of supply and demand for our products in affected markets The uncertainty of the tariffs including a potential increase in input costs and decrease in demand for our products could heighten the other risks factors and uncertainties discussed in this Item 1A or in other reports we periodically file with the SEC and impact our financial condition or results of operations Furthermore our competitors may be less exposed to tariff impacts or in a better position to mitigate the increased costs of tariffs
As a manufacturer of food and beverage products we rely on plant labor distribution resources and raw and packaging materials including tomatoes tomato paste grains beef poultry dairy olive oil vegetable oil wheat potatoes and other vegetables steel aluminum glass paper and resin We also purchase finished products from domestic and international suppliers Many of these items are subject to price fluctuations from a number of factors including but not limited to geopolitical conflicts shifting global trade policies including tariffs and retaliatory measures import and export requirements product scarcity demand for raw materials commodity market speculation energy costs currency fluctuations supplier capacities government sponsored agricultural programs and other government policy climate change changes in crop size cattle cycles herd and flock disease crop disease crop pests drought and excessive rain temperature extremes and other adverse weather events water scarcity scarcity of suitable agricultural land scarcity of organic ingredients pandemics or other local or global health issues 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 private label or other 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 private label or other lower margin offerings our business results and financial condition may be adversely affected Furthermore we may not be able to fully offset cost increases through productivity initiatives or through our commodity hedging activity
During 2025 we experienced some volatility in commodity and supply chain costs including the costs of labor raw materials energy fuel packaging materials and finished products with a moderate impact from tariffs in the fourth quarter In 2026 we expect more significant cost pressures primarily driven by tariff impacts We plan to reduce some of these costs and impacts over time through cost savings initiatives inventory management practices supplier collaboration alternative sourcing opportunities continued supply chain productivity initiatives surgical pricing actions where necessary and other mitigation efforts If we cannot effectively mitigate these costs our results could be adversely impacted
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 changing trade policies geopolitical conflicts product or raw material scarcity disruptions in logistics supplier capacity constraints increased temperatures due to climate change water stress extreme weather events natural disasters fire terrorism pandemics or other local or global health issues strikes labor shortages cybersecurity breaches government shutdowns or other events Commodity prices continue to be volatile 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 or produced at a single location For example the substantial majority of our
tomato based sauce products are produced at a single facility in the U S If a dispute arises with such contract manufacturer or if the contract manufacturer experiences financial operational or other issues we may be required to make alternative arrangements to produce
tomato based sauce products such as assuming manufacturing operations on our own or finding one or more alternative contract manufacturing arrangements which could be costly or time consuming In addition disputes with significant suppliers contract manufacturers logistics service providers or independent distributors including disputes regarding pricing performance or production may also adversely affect our ability to manufacture and or sell our products as well as our business or financial results
We have historically made strategic acquisitions and divestitures of brands and businesses and we may undertake additional acquisitions divestitures or other strategic transactions in the future Our ability to meet our objectives with respect to acquisitions divestitures and other strategic transactions may depend as applicable on our ability to identify suitable acquisition targets buyers or counterparties negotiate favorable financial and other contractual terms obtain all necessary regulatory approvals on the terms expected and complete those transactions
If we are unable to complete acquisitions divestitures or other strategic transactions or successfully integrate and develop acquired businesses or divest existing businesses including as applicable the effective management of such activities we could fail to achieve the anticipated synergies cost savings or increases in revenues and
results Additional risks include the diversion of management attention from our existing business or other business concerns potential loss of key employees suppliers or customers from the acquired or divested businesses assumption of unknown risks and liabilities greater than anticipated operating costs of the acquired business the inability to promptly implement an effective control environment risks inherent in entering markets or lines of business with which we have limited or no prior experience
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 including in response to developing artificial intelligence technologies 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 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
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 waste management 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 consumer trends emphasizing health and wellness 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
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 disruptions failures or breaches 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
Cyber threats are constantly evolving are becoming more frequent and more sophisticated and are being made by groups of individuals and state actors with a wide range of expertise and motives Additionally continued geopolitical turmoil has heightened the risk of cyberattacks We have previously 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 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
New and emerging technologies including artificial intelligence that could result in greater operational efficiency may further expose our computer systems to the risk of cyberattacks Our initiatives to continue to modernize our operations increase data digitalization and improve our production facilities may increase potential exposure to cybersecurity risks and increase the complexity of our cybersecurity program In addition the rapid evolution and increased adoption of artificial intelligence technologies may intensify our cybersecurity risks We may incur increased 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 cybersecurity insurance in the amounts and on the terms we view as appropriate and favorable for our operations
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 cybersecurity insurance employee awareness training and monitoring and routine testing of our information technology systems We believe that these preventative and detective actions provide adequate measures of protection against security breaches generally reduce our cybersecurity risks and enhance our ability to prevent detect and respond to disruptive events 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 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 particularly related to certain segments of manufacturing 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 have unintended negative effects our business could be adversely affected
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 Cost Savings Initiatives and Other Optimization 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
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 may be less exposed to tariff impacts 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 Attractive pricing product placement and visibility securing new retailers and maintaining or increasing shelf space for our products may also affect our ability to remain competitive Even if we obtain our desired product visibility and shelf space we may not achieve retailers sales expectations which could cause these retailers to reduce shelf space for our products 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 each of which may result in lower sales and or 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 government regulation including in the health and wellness space and other factors such as pandemics could affect 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 We must also be able to respond successfully to technological advances including artificial intelligence and machine learning which may become critical in interpreting consumer preferences in the future and intellectual property rights of our competitors and failure to do so could compromise our competitive position and negatively impact our product sales 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
Our businesses are largely concentrated in the traditional retail grocery trade which has experienced slower growth than other retail channels such as dollar 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 2025 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 21 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
As of August 3 2025 we had goodwill of 4 991 billion and other indefinite lived intangible assets of 3 678 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 the impact of tariffs and a change in revenue growth rates operating margins weighted average cost of capital future economic and market conditions or assumed royalty rates See Critical Accounting Estimates and Note 6 to the Consolidated Financial Statements for information on impairment charges recognized in 2024 and 2025 If current expectations for growth rates for sales and profits are not met or other market factors and macroeconomic conditions were to 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
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
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 2025 the U S experienced elevated inflationary pressures In 2026 we may continue to experience elevated inflationary pressures and 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 In addition if the U S economy enters a recession in 2026 we may experience sales declines and may have to decrease prices all of which could have a material adverse impact on our financial results
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
In addition we regularly access the commercial paper markets for working capital needs and other general corporate purposes If our credit ratings are downgraded we may have difficulty issuing additional debt securities or borrowing money in the amounts and on the terms that might be available if our credit ratings were maintained See Management s Discussion and Analysis of Financial Condition and Results of Operations Liquidity and Capital Resources for additional information regarding our indebtedness
Disruptions in the commercial paper market or other effects of volatile economic conditions on the financial markets may also reduce the amount of commercial paper that we can issue and raise our borrowing costs for both short and long term debt offerings There can be no assurance that we will have access to the financial markets on terms we find acceptable Limitations on our ability to access the financial markets a reduction in our liquidity or an increase in our borrowing costs may adversely affect our business and financial results
We are a party to a variety of legal and regulatory proceedings and claims arising out of the normal course of business See Note 18 to the Consolidated Financial Statements for information regarding certain 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 The manufacture and marketing of food products has come under increased scrutiny in recent years and the food industry has been subject to changes in laws and regulations at the state and federal levels and an increasing number of proceedings and claims relating to alleged false or deceptive marketing under federal state and foreign laws or regulations In light of recent actions by the United States Department of Health and Human Services FDA and states we anticipate continued legislative and regulatory developments with respect to food ingredients labeling and packaging at the state and federal levels along with related changes in consumer expectations and behavior In April 2025 the FDA called on industry to phase out all petroleum based synthetic dyes from the nation s food supply and in May 2025 the Make America Healthy Again MAHA Commission published an assessment report discussing factors contributing to chronic childhood disease including diet environmental exposure lack of physical activity and healthcare The MAHA Commission transmitted its strategy report setting forth certain recommendations for addressing chronic childhood disease to the President in August 2025 and publicly released it in September 2025 While the effects of all of these proposals remain uncertain at this time we are continuing to monitor changes to laws and regulations that affect the food industry and evaluate their impact on our business financial condition and results of operations
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
If we fail to comply with the many laws applicable to our business we may face lawsuits or incur significant fines and penalties In addition changes in such laws regulations or other policies may lead to increased costs
The manufacture and marketing of food products is extensively regulated Various laws and regulations govern the processing ingredients including but not limited to FD C colors packaging including but not limited to potential impacts of EPR regulations and laws waste management storage distribution marketing advertising labeling import export requirements 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 FDA 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 See Note 18 to the Consolidated Financial Statements for additional information regarding regulatory matters
Governmental and administrative bodies within the U S have made 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 For a discussion of certain risks and uncertainties of tariff impacts on our financial condition or results of operations see Item 1A Business and Operational Risks Changes in global trade policies including imposed and threatened tariffs by the U S and reciprocal tariffs by its trading partners remain uncertain and could impact our financial condition or results of operations
We also 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 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 but not limited to new food safety requirements and revised regulatory requirements for the labeling of nutrition facts serving sizes and genetically modified ingredients or new EPR regulations and laws evolving interpretations of existing legal or regulatory requirements or an increased focus regarding environmental policies relating to climate change climate reporting 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 res
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
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 potatoes cocoa and olive oil 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
There is an increased focus by regulatory and legislative bodies regarding environmental policies relating to climate change climate reporting regulating greenhouse gas emissions including carbon pricing regulations 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 physical effects and transitional costs of climate change and legal regulatory or market initiatives to address climate change could have a long term adverse impact on our business financial condition and results of operations
From time to time we establish and publicly announce sustainability goals and commitments including reducing our impact on the environment and relating to animal welfare For example 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 and its market availability 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 to achieve or have 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 other environmental sustainability matters or animal welfare goals including attention from stakeholders with opposing views on such matters 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
The global economy has been negatively impacted by ongoing geopolitical conflicts including the military conflicts between Russia and Ukraine the conflicts in the Middle East as well as tensions between China and Taiwan For instance 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 Ukraine the Middle East China or Taiwan we have experienced shortages in materials and increased costs for transportation energy and raw material due in part to the negative impact of these ongoing geopolitical conflicts on the global economy The scope and duration of such conflicts are uncertain rapidly changing and hard to predict Further escalation of these geopolitical conflicts 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 conflicts could also heighten many of the other risk factors discussed in this Item 1A or in other reports we periodically file with the SEC
Enterprise risk management ERM is an integral part of our business processes and our ERM framework considers cybersecurity risk alongside other company risks as part of our overall risk assessment process We follow an industry leading
National Institute of Standards and Technology cybersecurity framework NIST CSF and have developed a comprehensive information security program for assessing identifying and managing cybersecurity risks that is designed to protect our systems and data from unauthorized access use or other security impact
As part of our information security program we continuously monitor and update our information technology networks and infrastructure We have dedicated internal legal compliance and information security teams and leverage consultants and third party service providers to inform our understanding of the threat landscape and to identify prevent detect address and mitigate risks associated with unauthorized access misuse computer viruses and other events that could have a security impact Our information security strategy focuses on complying with applicable data privacy and protection laws maintaining the availability of our manufacturing operations protecting data detecting and responding to threats building resiliency and providing a secure foundation for growth and innovation We invest in industry standard security technology to protect the company s data and business processes against risk of cybersecurity incidents Our data security management program includes identity trust vulnerability and threat management business processes as well as adoption of standard data protection policies
We measure our data security effectiveness by benchmarking against industry accepted methods presenting the results to our Board and Audit Committee for evaluation and making improvements based on such evaluation We maintain and routinely test backup systems and disaster recovery and also have processes in place to prevent disruptions resulting from our implementation of new software and systems We maintain a third party cyber risk management process to review and monitor critical suppliers regularly for cybersecurity risk and prescribe remediation activities when necessary
We train our employees through annual security training phishing simulations and regular communications about timely security topics to enhance their understanding of cybersecurity threats and their ability to identify and escalate potential cybersecurity events We have a cross functional crisis management team comprised of business unit and functional leaders and a crisis management plan that includes procedures for identifying containing and responding to cybersecurity incidents We engage third party cybersecurity experts to conduct tabletop exercises with our executive leadership to enhance incident response preparedness
Our cybersecurity risk management strategy includes the use of cybersecurity insurance that provides protection against certain potential losses arising from certain cybersecurity incidents however such insurance may not insure us against all claims related to security breaches cyberattacks and other related breaches The company has previously experienced threats and breaches to its data and systems but has not experienced a breach that had a material impact on its operations or business and has not incurred any material breach related expenses for the last three years that are reasonably likely to materially affect the company or its business strategy results of operations or financial condition However as discussed in Item 1A Risk Factors specifically the risks under the heading We may be adversely impacted by a disruption failure or security breach of our information technology systems cyber threats are constantly evolving and becoming more frequent and sophisticated Accordingly no matter how well designed or implemented the company s information security policies and procedures are there can be no assurance that these policies and procedures will prevent or limit the impact of a cybersecurity incident
We have established oversight mechanisms intended to provide effective cybersecurity governance risk management and timely incident response Our Board in coordination with the Audit Committee oversees the company s ERM process including the management of risks arising from cybersecurity threats
Our Board annually reviews assessments of our information security program under the NIST CSF It receives benchmarking results of our data security effectiveness and reports from our Chief Digital Technology Officer CDTO and Chief Information Security Officer CISO on our information security program and recent developments Our Board has delegated the primary responsibility to oversee cybersecurity matters to the Audit Committee To fulfill its oversight responsibilities the Audit Committee reviews the measures implemented by the company to identify and mitigate cybersecurity risks and receives quarterly updates from our CDTO and CISO on the information security program including the status of significant cybersecurity incidences the emerging threat landscape and the status of projects to strengthen the company s information security posture The Audit Committee regularly reports to the Board on cybersecurity matters In addition we have a crisis management plan and protocols by which certain cybersecurity incidents that meet established reporting thresholds are escalated within the company and where appropriate reported promptly to the Audit Committee or Board with ongoing updates regarding any such incident until it has been addressed Our risk oversight processes and disclosure controls and procedures are designed to escalate key risks for the Board to analyze for disclosure purposes
Our CDTO a member of our corporate leadership team oversees the team responsible for leading the enterprise wide information technology strategy policy standards architecture and processes Our CISO who reports to the CDTO oversees the dedicated information security team which works in partnership with the company s ERM team and corporate audit department as well as consultants as part of an overall internal controls process to monitor cybersecurity threats and prevent detect mitigate and remediate cybersecurity incidents The CDTO has over 30 years of information technology experience including serving in strategic planning oversight and global operation of information systems and technology functions for
companies in the consumer packaged goods industry The CISO has over 25 years of information technology experience including strategy execution and operations of enterprise wide security programs including cybersecurity programs and global information technology infrastructure programs
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
Each of the foregoing manufacturing facilities is company owned except the Tualatin Oregon and Austin Texas facilities which are leased We also maintain principal business unit offices in Doral Florida Hanover Pennsylvania and Mississauga Canada
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
Diane Johnson May Executive Vice President and Chief People and Culture Officer Senior Vice President People and Culture Manpower Group 2020 2021 Executive Vice President Chief Human Resources Officer Brookdale Senior Living 2019 2020
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 SEC 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 31 2020 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 August 3 2025
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
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 September 2024 the Board authorized an anti dilutive share repurchase program of up to 250 million September 2024 program to offset the impact of dilution from shares issued under our stock compensation programs The September 2024 program has no expiration date but it may be suspended or discontinued at any time Repurchases under the September 2024 program may be made in open market or privately negotiated transactions
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
In 2025 we continued to advance our key strategic initiatives in a dynamic operating environment marked by shifting global trade policies increased regulatory activity consumer behavior shifts commodity cost fluctuations and other global macroeconomic challenges During 2025 we experienced elevated cost inflation and other supply chain costs which were mostly offset by improvements in our supply chain productivity and benefits from our cost savings initiatives In 2026 we expect more significant cost pressures primarily driven by tariff impacts We plan to reduce some of these costs and impacts over time through cost savings initiatives inventory management practices supplier collaboration alternative sourcing opportunities continued supply chain productivity initiatives surgical pricing actions where necessary and other mitigation efforts We will continue to evaluate the dynamic macroeconomic environment to take action to mitigate the impact on our business financial condition and results of operations
We plan to deliver for our people by continuing to cultivate a highly engaged culture to attract grow and retain top talent This includes investing in leadership and development programs and elevating commercial capabilities that will help us grow We are driving organizational engagement belonging and effectiveness through our
and modernizing our facilities We have completed the consolidation of our Snacks offices into Camden New Jersey Our single headquarters has helped to foster closer collaboration and enhance decision making thereby improving our ability to execute on our business strategy
We believe in delivering for our consumers through consumer focused marketing efforts and increased leadership brand support We have created a Growth Office to support our two divisions and to expand our consumer led innovations We believe that we are well positioned as a transformative category leader with an advantaged portfolio of brands across our Meals Beverages and Snacks segments We will support our Best Portfolio priority and accelerate our profitable growth model by growing market share and driving integrated business planning programming throughout the company
We will focus on delivering for our customers by advancing strategic retailer relationships and continuing to optimize our manufacturing and distribution network with a focus on digitization logistics and distribution expertise In September 2024 we announced plans to implement new cost savings initiatives with targeted annual savings of approximately 250 million by the end of 2028 On September 3 2025 we increased the estimate of annual ongoing savings once all phases are implemented to approximately 375 million by the end of 2028 See Restructuring Charges Cost Savings Initiatives and Other Optimization Initiatives for additional information on these initiatives
Our industry continues to navigate a dynamic operating and regulatory environment driven by commodity cost volatility supply chain pressures tariffs and shifting global trade policies and other economic uncertainties as well as evolving consumer purchasing and spending patterns
Our strategy is designed in part to capture growing consumer preferences for value and convenience We expect consumers to continue to seek at home cooking solutions and stretchable meals We also believe that consumers are making more intentional decisions in snacking in terms of health and wellness and seeking indulgences
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 private label brands that compete with branded products especially on price
Tariffs on certain ingredients inputs and imports from many countries including Canada Mexico members of the European Union and the United Kingdom have resulted in increased costs including on ingredients packaging such as tinplate steel used to make cans and other materials used to produce and distribute our products and on finished products that we import We are continuing to monitor the rapidly evolving tariff and global trade policies and are working with our suppliers to mitigate potential impacts on our business The extent and duration of the tariffs and the resulting impact on general economic conditions and on our business are uncertain and depend on various factors such as recent legal challenges to the U S s imposition of tariffs negotiations between the U S and affected countries the responses of other countries or regions relief that may be granted availability and cost of alternative sources of supply and demand for our products in affected markets
In addition in light of recent actions by the United States Department of Health and Human Services Food and Drug Administration FDA and states we anticipate continued legislative and regulatory developments with respect to food ingredients labeling and packaging at the state and federal levels along with related changes in consumer expectations and behavior In April 2025 the FDA called on industry to phase out all petroleum based synthetic dyes from the nation s food supply and in May 2025 the MAHA Commission published an assessment report discussing factors contributing to chronic childhood disease including diet environmental exposure lack of physical activity and healthcare The MAHA Commission transmitted its strategy report setting forth certain recommendations for addressing chronic childhood disease to the President in August 2025 and publicly released it in September 2025 While the effects of all of these proposals remain uncertain at this time we are continuing to monitor changes to laws and regulations that affect the food industry and evaluate their impact on our business financial condition and results of operations
In 2026 we expect significant cost pressures primarily driven by tariff impacts that could negatively impact our business financial condition and results of operations We will continue to evaluate the dynamic macroeconomic environment to take action to mitigate such impacts
On March 12 2024 we completed the acquisition of Sovos Brands Inc Sovos Brands for total purchase consideration of 2 899 billion For additional information on the Sovos Brands acquisition see Note 3 to the Consolidated Financial Statements All references to the acquisition below refer to the Sovos Brands acquisition
On May 30 2023 we completed the sale of our Emerald nuts business On August 26 2024 we completed the sale of our Pop Secret popcorn business On February 24 2025 we completed the sale of our noosa yoghurt business For additional information on the divestitures see Note 4 to the Consolidated Financial Statements
Gross profit as a percent of sales decreased to 30 4 in 2025 from 30 8 a year ago The decrease was primarily due to higher cost inflation and other supply chain costs and unfavorable net price realization partially offset by the benefits from supply chain productivity improvements
Earnings per share were 2 01 in 2025 compared to 1 89 a year ago The current year included expenses of 97 per share and the prior year included expenses of 1 19 per share from items impacting comparability as discussed below
We implemented several cost savings initiatives in recent years In 2025 we recorded Restructuring charges of 24 million and implementation costs and other related costs of 41 million in Administrative expenses 32 million in Cost of products sold 4 million in Marketing and selling expenses and 3 million in Research and development expenses related to these initiatives In 2024 we recorded Restructuring charges of 17 million and implementation costs and other related costs of 54 million in Administrative expenses 26 million in Cost of products sold 4 million in Marketing and selling expenses and 3 million in Research and development expenses related to these initiatives
In the second quarter of 2024 we began implementation of an optimization initiative to improve the effectiveness of our Snacks direct store delivery route to market network In 2025 we recognized 20 million in Marketing and selling expenses and 1 million in Administrative expenses related to this initiative In 2024 we recognized 5 million in Marketing and selling expenses related to this initiative
In 2025 the total aggregate impact related to the cost savings and optimization initiatives was 125 million 96 million after tax or 32 per share In 2024 the total aggregate impact related to the cost savings and optimization initiatives was 109 million 83 million after tax or 28 per share See Note 8 to the Consolidated Financial Statements and Restructuring Charges Cost Savings Initiatives and Other Optimization Initiatives for additional information
In 2025 we recognized actuarial losses on our pension and postretirement plans in Other expenses income of 24 million 18 million after tax or 06 per share In 2024 we recognized actuarial losses in Other expenses income of 33 million 25 million after tax or 08 per share
In 2025 we recognized gains in Cost of products sold of 11 million 8 million after tax or 03 per share associated with unrealized mark to market adjustments on outstanding undesignated commodity hedges In 2024 we recognized losses in Cost of products sold of 22 million 16 million after tax or 05 per share associated with unrealized mark to market adjustments on outstanding undesignated commodity hedges
In 2025 we recorded accelerated amortization expense in Other expenses income of 20 million 15 million after tax or 05 per share related to customer relationship intangible assets due to the loss of certain contract manufacturing customers which began in the fourth quarter of 2023 In 2024 we recorded accelerated amortization expense in Other expenses income of 27 million 20 million after tax or 07 per share
In the fourth quarter of 2024 we performed an impairment assessment on the assets in our Pop Secret popcorn business within our Snacks segment as sales and operating performance were below expectations due in part to competitive pressure and reduced margins and as we pursued divesting the business As a result of these factors in the fourth quarter of 2024 we lowered our long term outlook for the business and recognized an impairment charge of 76 million on the trademark The sale of the business was completed on August 26 2024
In 2025 and 2024 we recorded litigation expenses in Administrative expenses of 5 million 5 million after tax or 02 per share related to the Plum baby food and snacks business Plum which was divested on May 3 2021 and certain other litigation matters
In 2025 we recorded insurance recoveries in Administrative expenses of 1 million 1 million after tax related to a cybersecurity incident that was identified in the fourth quarter of 2023 In 2024 we recorded costs of 2 million in Cost of products sold and 1 million in Administrative expenses aggregate impact of 2 million after tax or 01 per share related to the cybersecurity incident
In the third quarter of 2025 we completed the sale of our noosa yoghurt business In the second quarter of 2025 we recorded 15 million 05 per share of tax expense related to the sale In 2025 we recorded an after tax loss of 15 million 05 per share on the sale of the business In the first quarter of 2025 we recorded a loss in Other expenses income of 25 million 19 million after tax or 06 per share on the sale of our Pop Secret popcorn business In 2025 the total aggregate impact of charges associated with divestitures was 25 million 34 million after tax or 11 per share and
In the first quarter of 2024 we announced our intent to acquire Sovos Brands and on March 12 2024 the acquisition closed In 2024 we incurred 126 million of costs associated with the acquisition of which 21 million was recorded in Restructuring charges 47 million in Administrative expenses 35 million in Other expenses income 3 million in Marketing and selling expenses 2 million in Research and development expenses and 18 million in Cost of products sold of which 17 million was associated with the acquisition date fair value adjustment for inventory We also recorded costs of 2 million in Interest expense related to costs associated with the Delayed Draw Term Loan Credit Agreement the 2024 DDTL Credit Agreement used to fund the acquisition The aggregate impact was 128 million 109 million after tax or 36 per share
Net earnings attributable to The Campbell s Company were 602 million 2 01 per share in 2025 compared to 567 million 1 89 per share in 2024 After adjusting for items impacting comparability earnings decreased primarily due to higher interest expense and higher marketing and selling expenses partially offset by an increase in gross profit and a lower effective tax rate The additional week contributed approximately 06 per share to earnings in 2025 The estimated impact of tariffs was approximately 02 per share in 2025
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 the cost savings initiatives discussed above See Note 8 to the Consolidated Financial Statements and Restructuring Charges Cost Savings Initiatives and Other Optimization Initiatives for additional information
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 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 contracting manufacturing customers which began in the fourth quarter of 2023 and
Net earnings attributable to The Campbell s Company were 567 million 1 89 per share in 2024 compared to 858 million 2 85 per share in 2023 After adjusting for items impacting comparability earnings increased reflecting improved gross profit partially offset by higher interest expense higher marketing and selling expenses higher other expenses and higher research and development expenses Earnings per share benefited from a reduction in the weighted average diluted shares outstanding
In 2025 Meals Beverages sales increased 15 primarily due to a 15 point benefit from the acquisition of Sovos Brands Excluding the benefit from the Sovos Brands acquisition the benefit of the additional week and the impact from the divestiture of the noosa yoghurt business sales were comparable primarily due to gains in foodservice Canada and
Favorable volume mix was offset by unfavorable net price realization Including a 1 point benefit from the additional week sales of U S soup were comparable with prior year as increases in broth and condensed soups were offset by decreases in ready to serve soups
In 2024 Meals Beverages sales increased 7 reflecting a 9 point benefit from the acquisition of Sovos Brands Sales were impacted by unfavorable volume mix with neutral net price realization Excluding the benefit from the acquisition sales decreased primarily due to declines in U S retail products including beverages and U S soup partially offset by gains in foodservice and Canada Sales of U S soup decreased 2 primarily due to decreases in ready to serve soups and condensed soups partially offset by an increase in broth
In 2025 Snacks sales decreased 4 Excluding the impact from the divestiture of the Pop Secret popcorn business and the benefit of the additional week sales decreased due to declines in third party partner brands and contract manufacturing
In 2024 Snacks sales decreased 2 Excluding the impact from the divestiture of the Emerald nuts business sales decreased as declines in third party partner brands and contract manufacturing fresh bakery and
Gross profit defined as Net sales less Cost of products sold increased by 148 million in 2025 from 2024 and increased by 54 million in 2024 from 2023 As a percent of sales gross profit was 30 4 in 2025 30 8 in 2024 and 31 2 in 2023
2025 includes an estimated positive margin impact of 50 basis points from the benefit of cost savings initiatives and a 30 basis point positive impact from the change in unrealized mark to market adjustments on outstanding undesignated commodity hedges which were more than offset by cost inflation and other factors 2024 includes an estimated positive margin impact of 20 basis points from the benefit of cost savings initiatives which was more than offset by cost inflation and other factors including a 40 basis point negative impact from the change in unrealized mark to market adjustments on outstanding undesignated commodity hedges and a 10 basis point negative impact from a cybersecurity incident
Marketing and selling expenses as a percent of sales were 9 0 in 2025 8 6 in 2024 and 8 7 in 2023 Marketing and selling expenses increased 11 in 2025 from 2024 The increase was primarily due to the impact of the acquisition approximately 7 points higher advertising and consumer promotion expense approximately 2 points and higher costs related to cost savings and optimization initiatives approximately 2 points The increase in advertising and consumer promotion expense was driven by Meals Beverages and Snacks
Marketing and selling expenses increased 3 in 2024 from 2023 The increase was primarily due to the impact of the acquisition approximately 4 points higher selling expenses approximately 1 point and higher other marketing expenses approximately 1 point partially offset by lower advertising and consumer promotion expense approximately 3 points primarily in Meals Beverages
Administrative expenses as a percent of sales were 6 6 in 2025 7 6 in 2024 and 7 0 in 2023 Administrative expenses decreased 9 in 2025 from 2024 The decrease was primarily due to increased benefits from cost savings initiatives approximately 8 points costs associated with the acquisition in the prior year approximately 6 points lower incentive compensation approximately 2 points lower costs related to cost savings initiatives approximately 2 points and lower benefit related costs approximately 1 point partially offset by higher general administrative costs and inflation approximately 7 points and the impact of the acquisition approximately 3 points
Administrative expenses increased 13 in 2024 from 2023 The increase was primarily due to costs associated with the acquisition approximately 7 points higher costs related to cost savings initiatives approximately 5 points higher general administrative costs and inflation approximately 3 points the impact of the acquisition approximately 2 points and higher benefit related costs approximately 2 points partially offset by increased benefits from cost savings initiatives approximately 5 points and lower incentive compensation approximately 2 points
Operating earnings from Meals Beverages increased 10 in 2025 versus 2024 The increase was primarily due to the benefit of the acquisition of Sovos Brands and the benefit of the additional week partially offset by lower gross profit Gross profit margin decreased due to higher cost inflation and other supply chain costs unfavorable net price realization and the dilutive impact of the acquisition partially offset by supply chain productivity improvements benefits from cost savings initiatives and favorable volume mix
Operating earnings from Meals Beverages increased 9 in 2024 versus 2023 The increase was primarily due to the benefit of the acquisition of Sovos Brands and lower marketing and selling expenses partially offset by lower gross profit Gross profit margin decreased due to higher cost inflation and other supply chain costs and the dilutive impact of the acquisition partially offset by supply chain productivity improvements favorable net price realization and favorable volume mix
Operating earnings from Snacks decreased 14 in 2025 versus 2024 The decrease was primarily due to lower gross profit and higher marketing and selling expenses partially offset by lower administrative expenses Gross profit decreased primarily due to the impact of cost inflation and other supply chain costs and unfavorable volume mix partially offset by supply chain productivity improvements the benefit of the additional week and benefits from cost savings initiatives
Operating earnings from Snacks increased 1 in 2024 versus 2023 The increase was primarily due to higher gross profit partially offset by higher marketing and selling expenses Gross profit margin increased due to supply chain productivity improvements
Interest expense was 345 million in 2025 249 million in 2024 and 188 million in 2023 The increases in 2025 and 2024 were primarily due to higher levels of debt to fund the acquisition in 2024 and higher average interest rates on the debt portfolio each year
nondeductible costs associated with the acquisition of Sovos Brands in the prior year excess tax benefits associated with the vesting of stock based compensation awards in the current year and state tax law changes partially offset by 15 million of tax expense related to the sale of the noosa yoghurt business
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 continued 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
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
As of July 28 2024 we substantially completed the multi year cost savings initiatives and Snyder s Lance cost transformation program and integration and we generated total pre tax savings of approximately 950 million Certain phases that had not been fully implemented were incorporated into the 2025 cost savings initiatives described below
On March 12 2024 we completed the acquisition of Sovos Brands See Note 3 to the Consolidated Financial Statements for additional information We identified opportunities for cost synergies as we integrate Sovos Brands
In 2024 we recorded Restructuring charges of 21 million for severance pay and benefits related to initiatives to achieve the synergies and generated pre tax savings of 10 million The charges incurred in 2024 were associated with the Meals Beverages segment
On September 10 2024 we announced plans to implement cost savings initiatives beginning in 2025 including initiatives to further optimize our supply chain and manufacturing network optimization of our information technology infrastructure and targeted cost management We also identified additional opportunities for cost synergies as we integrate Sovos Brands As mentioned above we substantially completed our previous multi year cost savings initiatives and Snyder s Lance cost transformation program and integration Certain initiatives from that program have been incorporated into our 2025 cost savings initiatives Cost estimates for the 2025 initiatives as well as timing for certain activities are continuing to be developed
The total estimated pre tax costs for actions that have been identified to date are approximately 215 million and we expect to incur substantially all of the costs through 2028 These estimates will be updated as the detailed plans are developed
We expect the costs for the actions that have been identified to date to consist of the following approximately 30 million in severance pay and benefits approximately 55 million in asset impairment and accelerated depreciation and approximately 130 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 71 Snacks approximately 11 and Corporate approximately 18
Of the aggregate 215 million of pre tax costs identified to date we expect approximately 155 million will be cash expenditures In addition we expect to invest approximately 205 million in capital expenditures of which we invested 147 million as of August 3 2025 The capital expenditures primarily relate to optimization of production within our manufacturing network optimization of information technology infrastructure and applications and implementation of our existing SAP enterprise resource planning system for Sovos Brands
On September 10 2024 we announced that we expect these initiatives once all phases are implemented to generate annual ongoing savings of approximately 250 million by the end of 2028 On September 3 2025 we increased the estimate of annual ongoing savings once all phases are implemented to approximately 375 million by the end of 2028 As of August 3 2025 we have generated total program to date pre tax savings of 145 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
In the second quarter of 2024 we began implementation of an initiative to improve the effectiveness of our Snacks direct store delivery route to market network Pursuant to this initiative we will purchase certain Pepperidge Farm and Snyder s Lance routes where there are opportunities to unlock greater scale in select markets combine them and sell the combined routes to independent contractor distributors We expect to execute this program in a staggered rollout and to incur expenses of up to approximately 115 million through 2029 In 2025 we incurred 20 million in Marketing and selling expenses and 1 million in Administrative expenses related to this initiative In 2024 we incurred 5 million in Marketing and selling expenses related to this initiative As of August 3 2025 we have incurred 25 million in Marketing and selling expenses and 1 million in Administrative expenses related to this initiative
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 had negative working capital of 674 million as of August 3 2025 and 1 386 billion as of July 28 2024 Current assets were less than current liabilities which included debt maturing in one year due to a focus on lowering core working capital requirements Total debt maturing within one year was 762 million as of August 3 2025 and 1 423 billion as of July 28 2024 We have 400 million aggregate principal amount of senior notes maturing in March 2026 that we expect to repay and or refinance using available resources which may include cash on hand accessing the capital markets commercial paper and or revolving credit facility
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 240 million at August 3 2025 and 243 million at July 28 2024
Capital expenditures were 426 million in 2025 517 million in 2024 and 370 million in 2023 Capital expenditures are expected to total approximately 420 million in 2026 Capital expenditures in 2025 included network optimization for our Meals Beverages business chip and cracker capacity expansion for our Snacks business and enhancements to our headquarters in Camden New Jersey Capital expenditures in 2024 included chip and cracker capacity expansion for our Snacks business upgrades of assets across both segments of the business enhancements to our headquarters in Camden New Jersey and network optimization for our Meals Beverages business Capital expenditures in 2023 included chip and cracker capacity expansion for our Snacks business and a new manufacturing line for our Meals Beverages business
In Snacks we have a direct store delivery distribution model that uses independent contractor distributors From time to time we purchase and sell routes including certain routes under our optimization initiatives The purchase and sale proceeds of the routes are reflected in investing activities
On February 24 2025 we sold the noosa yoghurt business for 188 million subject to certain customary purchase price adjustments On August 26 2024 we sold our Pop Secret popcorn business for 70 million On May 30 2023 we completed the sale of our Emerald nuts business for 41 million
Dividend payments were 459 million in 2025 445 million in 2024 and 447 million in 2023 Annual dividends declared were 1 54 per share in 2025 and 1 48 per share in 2024 and 2023 The 2025 fourth quarter dividend was 39 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 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 September 2024 the Board authorized a new anti dilutive share repurchase program of up to 250 million September 2024 program to offset the impact of dilution from shares issued under our stock compensation programs The September 2024 program has no expiration date but it may be discontinued at any time Repurchases under the September 2024 program may be made in open market or privately negotiated transactions The September 2024 program replaced an anti dilutive share repurchase program of up to 250 million that was approved by the Board in June 2021 and has been terminated In 2025 we repurchased 1 303 million shares at a cost of 62 million pursuant to our anti dilutive share repurchase program In 2024 and 2023 we repurchased 1 56 million shares at a cost of 67 million and 2 698 million shares at a cost of 142 million respectively As of August 3 2025 approximately 198 million remained available under the September 2024 program and approximately 301 million remained under the September 2021 program See Note 16 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 2022 DDTL Credit Agreement totaling up to 500 million scheduled to mature on November 15 2025 Loans under the 2022 DDTL Credit Agreement bear interest at the rates specified in the 2022 DDTL Credit Agreement which vary based on the type of loan and certain other conditions The 2022 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 2022 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 2022 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 April 5 2024 we repaid 100 million of the 500 million outstanding under the 2022 DDTL Credit Agreement The remaining 400 million was repaid in October 2024 and November 2024 as described below
On October 10 2023 we entered into the 2024 DDTL Credit Agreement totaling up to 2 billion scheduled to mature on October 8 2024 Loans under the 2024 DDTL Credit Agreement bear interest at the rates specified in the 2024 DDTL Credit Agreement which vary based on the type of loan and certain other conditions The 2024 DDTL Credit Agreement contains customary representations and warranties affirmative and negative covenants including a financial covenant with respect to a minimum consolidated interest coverage ratio of consolidated adjusted EBITDA to consolidated interest expense as each is defined in the 2024 DDTL Credit Agreement of not less than 3 25 1 00 and events of default for credit facilities of this type The proceeds of the loans under the 2024 DDTL Credit Agreement could only be used in connection with the acquisition of Sovos Brands and the payment of fees and expenses incurred in connection therewith On March 12 2024 we borrowed 2 billion under the 2024 DDTL Credit Agreement and used the proceeds in order to fund the acquisition of Sovos Brands along with the fees and expenses incurred in connection therewith
In August 2023 we filed a registration statement with the SEC 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
400 million aggregate principal amount of notes bearing interest at a fixed rate of 5 30 per annum due March 20 2026 with interest payable semi annually on each of March 20 and September 20 commencing September 20 2024
500 million aggregate principal amount of notes bearing interest at a fixed rate of 5 20 per annum due March 19 2027 with interest payable semi annually on each of March 19 and September 19 commencing September 19 2024
600 million aggregate principal amount of notes bearing interest at a fixed rate of 5 20 per annum due March 21 2029 with interest payable semi annually on each of March 21 and September 21 commencing September 21 2024 and
1 billion aggregate principal amount of notes bearing interest at a fixed rate of 5 40 per annum due March 21 2034 with interest payable semi annually on each of March 21 and September 21 commencing September 21 2024
The notes contain customary covenants and events of default If a change of control triggering event occurs we will be required to offer to purchase the notes at a purchase price equal to 101 of the principal amount plus accrued and unpaid interest if any to the purchase date
borrowings under the 2024 DDTL Credit Agreement used to fund the Sovos Brands acquisition including fees and expenses in connection therewith and the remainder of the net proceeds to repay commercial paper
800 million aggregate principal amount of notes bearing interest at a fixed rate of 4 75 per annum due March 23 2035 with interest payable semi annually on each of March 23 and September 23 commencing March 23 2025 and
350 million aggregate principal amount of notes bearing interest at a fixed rate of 5 25 per annum due October 13 2054 with interest payable semi annually on each of April 13 and October 13 commencing April 13 2025
The notes contain customary covenants and events of default If a change of control triggering event occurs we will be required to offer to purchase the notes at a purchase price equal to 101 of the principal amount plus accrued and unpaid interest if any to the purchase date In October 2024 we used a portion of the net proceeds from the issuance of the notes to repay 200 million of the 400 million outstanding under the 2022 DDTL Credit Agreement due November 15 2025 and a portion of our outstanding commercial paper In November 2024 we repaid the remaining 200 million outstanding under the 2022 DDTL Credit Agreement In March 2025 we used a portion of the net proceeds from the issuance of the notes along with cash on hand and the issuance of commercial paper to repay a 1 15 billion aggregate principal amount of senior notes that matured in March 2025
On April 16 2024 we terminated our existing revolving credit facility dated September 27 2021 as amended on April 4 2023 On April 16 2024 we entered into a Five Year Credit Agreement for an unsecured senior revolving credit facility the 2024 Revolving Credit Facility Agreement in an aggregate principal amount equal to 1 85 billion with a maturity date of April 16 2029 or such later date as extended pursuant to the terms set forth in the 2024 Revolving Credit Facility Agreement On August 5 2025 we entered into an Extension Agreement to extend the maturity date of the 2024 Revolving Credit Facility Agreement by one year from April 16 2029 to April 16 2030 The 2024 Revolving Credit Facility Agreement remained unused at August 3 2025 except for 1 million of standby letters of credit that we issued under it We may increase the 2024 Revolving Credit Facility Agreement commitments up to an additional 500 million subject to the satisfaction of certain conditions Loans under the 2024 Revolving Credit Facility Agreement will bear interest at the rates specified in the 2024 Revolving Credit Facility Agreement which vary based on the type of loan and certain other conditions The 2024
Revolving Credit Facility Agreement 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 of not less than 3 25 1 00 and customary events of default for credit facilities of this type 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
As of August 3 2025 we had 762 million of short term borrowings due within one year of which 332 million was comprised of commercial paper borrowings As of August 3 2025 we issued 27 million of standby letters of credit
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 13 to the Consolidated Financial Statements for a summary of our principal payments for short term borrowings and long term debt obligations as of August 3 2025 Interest payments primarily for short term borrowings and long term debt as of August 3 2025 are approximately as follows 304 million in 2026 529 million in 2027 through 2028 388 million in 2029 through 2030 and 1 846 billion from 2031 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 contract manufacturing and services As of August 3 2025 purchase commitments totaled approximately 1 966 billion Approximately 1 403 billion of these purchase commitments will be settled in the ordinary course of business in the next 12 months and the balance of 563 million from 2027 through 2031
As of August 3 2025 we have a pension liability of 98 million and a postretirement benefit obligation of 127 million As of August 3 2025 we also have a pension asset of 128 million based on the funded status of certain plans See Note 10 to the Consolidated Financial Statements and Critical Accounting Estimates
We guarantee approximately 4 500 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 570 million as of August 3 2025 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
The principal market risks to which we are exposed are changes in foreign currency exchange rates interest rates and commodity prices In addition we are exposed to price changes related to certain deferred compensation obligations We manage our foreign currency exposures by utilizing foreign exchange forward and option contracts We enter into foreign exchange forward and option 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 cocoa aluminum soybean meal and corn 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 August 3 2025 Fair values included herein have been determined based on quoted market prices or pricing models using current market rates
We are exposed to foreign currency exchange risk primarily the Canadian dollar and Euro related to intercompany transactions and third party transactions We utilize foreign exchange forward and option contracts to hedge these exposures The notional amounts of the contracts as of August 3 2025 and July 28 2024 were 596 million and 297 million respectively The aggregate fair value of all contracts was a loss of 1 million as of August 3 2025 and a gain of 2 million as of July 28 2024 A hypothetical 10 fluctuation in exchange rates would impact the fair value of our outstanding foreign exchange contracts by approximately 32 million as of August 3 2025 and 16 million as of July 28 2024 which would generally be offset by inverse changes on the underlying hedged items
As of August 3 2025 we had outstanding variable rate debt of 332 million with an average interest rate of 4 69 As of July 28 2024 we had outstanding variable rate debt of 650 million with an average interest rate of 6 20 A hypothetical 100 basis point increase in average interest rates applied to our variable rate debt balances throughout 2025 and 2024 would have increased annual interest expense in those years by approximately 3 million and 7 million respectively
As of August 3 2025 we had outstanding fixed rate debt of 6 583 billion with a weighted average interest rate of 4 57 As of July 28 2024 we had outstanding fixed rate debt of 6 584 billion with a weighted average interest rate of 4 38 The fair value of fixed rate debt was 6 213 billion as of August 3 2025 and 6 216 billion as of July 28 2024 As of August 3 2025 and July 28 2024 a hypothetical 100 basis point increase in interest rates would decrease the fair value of our fixed rate debt by approximately 367 million and 312 million respectively while a hypothetical 100 basis point decrease in interest rates would increase the fair value of our fixed rate debt by approximately 417 million and 348 million respectively The impact of market interest rate fluctuations on our long term debt does not affect our results of operations or financial position
g the use of variable rate and fixed rate debt From time to time we may use interest rate swaps in order to maintain our variable to total debt ratio within targeted guidelines We manage our exposure to interest volatility on future debt issuances by entering into forward starting interest rate swaps or treasury lock contracts to hedge the rate on the interest payments related to the anticipated debt issuance There were no forward starting interest rate swaps or treasury lock contracts outstanding as of August 3 2025 and July 28 2024 In conjunction with the issuance of senior unsecured notes on October 2 2024 due on March 23 2035 we settled forward starting interest rate swaps with a notional value of 700 million at a gain of less than 1 million We settled forward starting interest rate swaps with a notional value of 1 1 billion in March 2024 at a loss of 11 million The gains and losses on these instruments were recorded in other comprehensive income loss and will be recognized in Interest expense over the respective lives of the debt
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 August 3 2025 the total notional amount of the contracts was 233 million and the aggregate fair value of the contracts was a gain of 1 million As of July 28 2024 the total notional amount of the contracts was 248 million and the aggregate fair value of the contracts was a loss of 10 million A hypothetical 10 fluctuation in commodity prices would impact the fair value of our outstanding commodity contracts by approximately 23 million as of August 3 2025 and 24 million as of July 28 2024 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 76 million as of August 3 2025 and 71 million as of July 28 2024 The fair value of the contracts was a gain of 1 million as of August 3 2025 and a gain of 3 million as of July 28 2024 A hypothetical 10 fluctuation in equity price changes would impact the fair value of our outstanding swap contracts by 8 million as of August 3 2025 and 7 million as of July 28 2024 which would generally be offset by inverse changes on the underlying hedged items
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
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 August 3 2025 and July 28 2024 were 159 million and 186 million respectively
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 charge 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
collectively referred to as our Allied brands In 2024 sales and operating performance were below expectations due in part to competitive pressure and reduced margins In the fourth quarter of 2024 based on recent performance and the reevaluation of the position of the Allied brands within our portfolio we lowered our near term and long term outlook for future sales and operating performance reducing the carrying value of the trademarks to 43 million
In the fourth quarter of 2024 we performed an impairment assessment on the assets in our Pop Secret popcorn business within our Snacks segment as sales and operating performance were below expectations due in part to competitive pressure and reduced margins and as we pursued divesting the business As a result of these factors in the fourth quarter of 2024 we lowered our long term outlook for the business and recognized an impairment charge of 76 million on the trademark reducing the carrying value of the trademark to 28 million The sale of the business was completed on August 26 2024
During the second quarter of 2025 we performed an interim impairment assessment on our Allied brands trademarks as our sales performance was below expectations In the second quarter of 2025 based on recent performance we lowered our long term outlook and recognized an impairment charge of 15 million on the trademarks reducing the carrying value to 28 million
trademark within our Snacks segment as our sales performance was below expectations In the second quarter of 2025 based on recent performance we lowered our long term outlook and recognized an impairment charge of 11 million on the trademark reducing the carrying value to 47 million
trademark within our Snacks segment as our sales and operating performance were below expectations In the third quarter of 2025 based on recent performance we lowered our long term outlook and recognized an impairment charge of 150 million on the
As of the 2025 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 2 587 billion and included
and Allied brands trademarks Although assumptions are generally interdependent and do not change in isolation sensitivities to changes are provided below Holding all other assumptions in our 2025 impairment testing constant changes in the assumptions below would reduce fair value of trademarks and result in impairment charges of approximately
The estimates of future cash flows used in impairment testing involve significant 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 including the potential impact of tariffs If our assumptions change or market conditions decline potential impairment charges could result
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 August 3 2025 we have a pension liability of 98 million and a postretirement benefit obligation of 127 million As of August 3 2025 we also have a pension asset of 128 million based on the funded status of certain plans
The actuarial losses recognized in 2025 were primarily due to gains on plan assets that were less than the expected return partially offset by increases in the discount rates used to determine the benefit obligation and plan experience The actuarial losses recognized in 2024 were primarily due to decreases in discount rates used to determine the benefit obligation and plan experience partially offset by gains on plan assets The 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 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
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 SEC 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
declines or volatility in financial markets deteriorating economic conditions and other external factors including the impact and application of new or changes to existing governmental laws regulations and policies
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 to the extent anticipated
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
unforeseen business disruptions or other impacts due to political instability civil disobedience terrorism geopolitical conflicts extreme weather conditions natural disasters pandemics or other outbreaks of disease 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
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 53 weeks in 2025 and 52 weeks in 2024 and 2023 There will be 52 weeks in 2026
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 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 7 for additional information on disaggregation of revenue
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 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
Intangible assets with definite lives are amortized over their estimated useful lives and 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 charge is calculated based on estimated fair value
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
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
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
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
In September 2022 the Financial Accounting Standards Board FASB issued guidance that enhances the transparency of supplier finance programs by requiring disclosure of the key terms of these programs and a related rollforward of these obligations to understand the effect on working capital liquidity and cash flows The guidance is effective for fiscal years beginning after December 15 2022 including interim periods in those fiscal years except for the rollforward requirement which is effective for fiscal years beginning after December 15 2023 We adopted the guidance in the fourth quarter of 2023 with the exception of the rollforward information which was adopted in the fourth quarter of 2025 The adoption did not have a material impact on our consolidated financial statements See Note 19 for additional information
In November 2023 the FASB issued guidance to improve reportable segment disclosures primarily through enhanced disclosures about significant segment expenses In addition the guidance enhances interim disclosure requirements clarifies circumstances in which an entity can disclose multiple segment measures of profit or loss provides new segment disclosure requirements for entities with a single reportable segment and contains other disclosure requirements The purpose of the guidance is to enable investors to better understand an entity s overall performance and assess potential future cash flows The guidance is effective for fiscal years beginning after December 15 2023 and interim periods within fiscal years beginning after December 15 2024 We adopted the guidance in the fourth quarter of 2025 The adoption did not have an impact on our consolidated financial statements See Note 7 for additional information
In December 2023 the FASB issued guidance to improve income tax disclosures by requiring disaggregated information about a reporting entity s effective tax rate reconciliation as well as information on income taxes paid The guidance is effective for annual periods beginning after December 15 2024 The guidance should be applied on a prospective basis with the option to apply the standard retrospectively Early adoption is permitted We are currently evaluating the impact that the new guidance will have on our consolidated financial statements
In November 2024 the FASB issued guidance to improve disclosures by requiring additional details about specific types of expenses purchases of inventory employee compensation depreciation and intangible asset amortization included in certain expense captions The guidance requires disclosure of the total amount of selling expenses and on an annual basis disclosure of the definition of selling expenses The guidance is effective for fiscal years beginning after December 15 2026 and interim periods within fiscal years beginning after December 15 2027 Early adoption is permitted The guidance should be applied on a prospective basis with the option to apply the standard retrospectively We are currently evaluating the impact that the new guidance will have on our consolidated financial statements
On August 7 2023 we entered into a merger agreement to acquire Sovos Brands Inc Sovos Brands for 23 00 per share On March 12 2024 we completed the acquisition Sovos Brands portfolio included a variety of pasta sauces dry pasta soups frozen entrées frozen pizza and yogurts sold in North America under the brand names
Represents cash paid to equity award holders of Sovos Brands restricted stock and restricted stock unit awards attributable to pre combination service This excludes 3 million of cash paid that was recognized as expense
We issued replacement equity awards in settlement of certain Sovos Brands equity awards that did not become vested in connection with the acquisition The portion of fair value of the replacement awards attributable to pre combination service was 42 million and is included in the purchase consideration We recognized 26 million of expense related to accelerated vesting of certain replacement awards
The excess of the purchase price over the estimated fair values of identifiable net assets was recorded as 1 116 billion of goodwill The goodwill is not deductible for tax purposes The goodwill was primarily attributable to future growth
We incurred transaction costs and integration costs including costs to achieve synergies of 128 million associated with the Sovos Brands acquisition in 2024 Approximately 35 million represented transaction costs including outside advisory costs recorded in Other expenses income In addition we recognized 2 million in Interest expense related to financing fees associated with the 2024 DDTL Credit Agreement Integration costs included expenses associated with accelerated vesting of replacement awards severance and retention bonuses amortization of the acquisition date fair value adjustment to inventories and other costs Integration costs recognized in 2024 included the following
For the period March 12 2024 through July 28 2024 the Sovos Brands acquisition contributed 423 million to Net sales and a loss of 84 million to Net earnings including the effect of transaction and integration costs and interest expense on the debt to finance the acquisition
The pro forma results are not necessarily indicative of the combined results had the Sovos Brands acquisition been completed on August 1 2022 nor are they indicative of future combined results The pro forma amounts include adjustments to interest expense for financing the acquisition to amortization and depreciation expense based on the estimated fair value and useful lives of intangible assets and plant assets and related tax effects The pro forma results include adjustments to reflect amortization of the acquisition date fair value adjustment to inventories expenses related to accelerated vesting of replacement awards and severance and retention bonuses as of August 1 2022
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 Earnings were not material in the period The results of the business were reflected within the Snacks reportable segment
On August 26 2024 we completed the sale our Pop Secret popcorn business for 70 million We recognized a pre tax loss on the sale of 25 million or 19 million after tax In connection with the sale we provided certain transition services to support the business The business had net sales of 9 million in 2025 119 million in 2024 and 133 million in 2023 Earnings were not material in the periods The results of the business were reflected within the Snacks reportable segment
We entered into an agreement to sell our noosa yoghurt business in November 2024 The noosa yoghurt business was purchased as part of the Sovos Brands acquisition In the second quarter of 2025 we recorded 15 million of tax expense
related to the sale of the business We completed the sale on February 24 2025 for 188 million subject to certain customary purchase price adjustments The after tax loss recorded on the sale was 15 million In connection with the sale we provided certain transition services to support the business The business had net sales of 99 million in 2025 and 68 million in 2024 after it was purchased as part of the Sovos Brands acquisition on March 12 2024 Earnings were not material in the periods The results of the business were reflected within the Meals Beverages segment
Amortization expense was 68 million for 2025 73 million for 2024 and 48 million for 2023 Amortization expense in 2025 2024 and 2023 included accelerated amortization expense of 20 million 27 million and 7 million respectively on customer relationships which began in the fourth quarter of 2023 due to the loss of certain contract manufacturing customers As of August 3 2025 amortizable intangible assets had a weighted average remaining useful life of 18 years Amortization expense is estimated to be approximately 40 million per year for the following five years
pressure and reduced margins In the fourth quarter of 2024 based on recent performance and the reevaluation of the position of the Allied brands within our portfolio we lowered our near term and long term outlook for future sales and operating performance reducing the carrying value of the trademarks to 43 million
In the fourth quarter of 2024 we performed an impairment assessment on the assets in our Pop Secret popcorn business within our Snacks segment as sales and operating performance were below expectations due in part to competitive pressure and reduced margins and as we pursued divesting the business As a result of these factors in the fourth quarter of 2024 we lowered our long term outlook for the business and recognized an impairment charge of 76 million on the trademark reducing the carrying value of the trademark to 28 million The sale of the business was completed on August 26 2024
During the second quarter of 2025 we performed an interim impairment assessment on our Allied brands trademarks as our sales performance was below expectations In the second quarter of 2025 based on recent performance we lowered our long term outlook and recognized an impairment charge of 15 million on the trademarks reducing the carrying value to 28 million
trademark within our Snacks segment as our sales performance was below expectations In the second quarter of 2025 based on recent performance we lowered our long term outlook and recognized an impairment charge of 11 million on the trademark reducing the carrying value to 47 million
trademark within our Snacks segment as our sales and operating performance were below expectations In the third quarter of 2025 based on recent performance we lowered our long term outlook and recognized an impairment charge of 150 million on the trademark reducing the carrying value to 470 million
As of the 2025 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 2 587 billion and included
The estimates of future cash flows used in impairment testing involve significant 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 including the potential impact of tariffs
pretzel crisps and other snacking products in retail in the U S The segment also includes the snacking and meals and beverages retail business in Latin America The segment also included the results of our Pop Secret popcorn business which was sold on August 26 2024 and our Emerald nuts business which was sold on May 30 2023
Our chief operating decision maker CODM is our President and Chief Executive Officer Our CODM uses segment operating earnings as the profit measure in evaluating segment performance during the annual plan and forecasting process and
in monitoring actual performance versus plan Segment operating earnings are comprised of earnings before interest taxes and costs associated with restructuring activities cost savings and optimization initiatives impairment charges accelerated amortization and corporate expenses 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 by the CODM
Our largest customer Wal Mart Stores Inc and its affiliates accounted for approximately 21 of consolidated net sales in 2025 and 22 in 2024 and 2023 Both of our reportable segments sold products to Wal Mart Stores Inc or its affiliates
Other segment items for each of the reportable segments includes marketing and selling expenses administrative expenses research and development expenses and expense for amortization of intangible assets
Represents unallocated items Pension and postretirement actuarial gains and losses are included in Corporate There were actuarial losses of 24 million in 2025 losses of 33 million in 2024 and gains of 15 million in 2023 Costs related to the cost savings and optimization initiatives were 101 million 92 million and 50 million in 2025 2024 and 2023 respectively Unrealized mark to market adjustments on outstanding undesignated commodity hedges were gains of 11 million in 2025 losses of 22 million in 2024 and gains of 21 million in 2023 Accelerated amortization expense related to customer relationship intangible assets was 20 million 27 million and 7 million in 2025 2024 and 2023
respectively Intangible asset impairment charges were 176 million and 129 million in 2025 and 2024 respectively Insurance recoveries of 1 million and costs of 3 million related to a cybersecurity incident were included in 2025 and 2024 respectively Litigation expenses related to the Plum baby food and snacks business which was divested on May 3 2021 and certain other litigation matters were 5 million in 2025 and 2024 A loss on the sale of our Pop Secret popcorn business of 25 million was included in 2025 and a loss on the sale of our Emerald nuts business of 13 million was included in 2023 Costs associated with the acquisition of Sovos Brands were 105 million and 5 million in 2024 and 2023 respectively
Soup includes various soup broths and stock products Snacks include cookies pretzels crackers popcorn potato chips tortilla chips and other salty snacks and baked products Other simple meals include sauces yogurts pasta frozen entrées canned poultry frozen pizza gravies and beans Beverages include
We are a North American focused company with 95 of our net sales related to our U S operations in 2025 2024 and 2023 Primarily all of our long lived assets relate to our U S operations with less than 1 related to non U S operations in 2025 and 2024
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 continued 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
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
As of July 28 2024 we substantially completed the multi year cost savings initiatives and Snyder s Lance cost transformation program and integration Certain phases that had not been fully implemented were incorporated into the 2025 cost savings initiatives described below
In 2024 we recorded Restructuring charges of 21 million for severance pay and benefits related to initiatives to achieve the synergies The charges incurred in 2024 were associated with the Meals Beverages segment
On September 10 2024 we announced plans to implement cost savings initiatives beginning in 2025 including initiatives to further optimize our supply chain and manufacturing network optimization of our information technology infrastructure and targeted cost management We also identified additional opportunities for cost synergies as we integrate Sovos Brands As mentioned above we substantially completed our previous multi year cost savings initiatives and Snyder s Lance cost transformation program and integration Certain initiatives from that program have been incorporated into our 2025 cost savings initiatives Cost estimates for the 2025 initiatives as well as timing for certain activities are continuing to be developed
The total estimated pre tax costs for actions that have been identified to date are approximately 215 million and we expect to incur substantially all of the costs through 2028 These estimates will be updated as the detailed plans are developed
We expect the costs for the actions that have been identified to date to consist of the following approximately 30 million in severance pay and benefits approximately 55 million in asset impairment and accelerated depreciation and approximately 130 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 71 Snacks approximately 11 and Corporate approximately 18
Of the aggregate 215 million of pre tax costs identified to date we expect approximately 155 million will be cash expenditures In addition we expect to invest approximately 205 million in capital expenditures of which we invested 147 million as of August 3 2025 The capital expenditures primarily relate to optimization of production within our manufacturing network optimization of information technology infrastructure and applications and implementation of our existing SAP enterprise resource planning system for Sovos Brands
Associated with the multi year cost savings initiatives and Snyder s Lance cost transformation program and integration and the Sovos Brands integration initiatives described above Includes 12 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 reserve in the Consolidated Balance Sheet The costs are included in Administrative expenses Cost of products sold Marketing and selling expenses and Research and development expenses in the Consolidated Statements of Earnings
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
In the second quarter of 2024 we began implementation of an initiative to improve the effectiveness of our Snacks direct store delivery route to market network Pursuant to this initiative we will purchase certain Pepperidge Farm and Snyder s Lance routes where there are opportunities to unlock greater scale in select markets combine them and sell the combined routes to independent contractor distributors We expect to execute this program in a staggered rollout and to incur expenses of up to approximately 115 million through 2029 In 2025 we incurred 20 million in Marketing and selling expenses and 1 million in Administrative expenses related to this initiative In 2024 we incurred 5 million in Marketing and selling expenses related
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 2025 excludes approximately 1 million stock options that would have been antidilutive The earnings per share calculation for 2024 and 2023 excludes less than 1 million stock options that would have been antidilutive
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 that were 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
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
The pension actuarial losses recognized in 2025 were primarily due to gains on plan assets that were less than the expected return partially offset by increases in the discount rates used to determine the benefit obligation The pension actuarial losses recognized in 2024 were primarily due to decreases in discount rates used to determine the benefit obligation and plan
experience partially offset by gains on plan assets 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 postretirement actuarial gains recognized in 2025 were primarily due to plan experience The postretirement actuarial gains recognized in 2023 were primarily due to increases in discount rates used to determine the benefit obligation
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 fundamental goal underlying the investment policy is to ensure that the assets of the plans are invested in a prudent manner to earn a rate of return over time 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 volatility of pension assets relative to pension liabilities 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 including 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 investments provide a moderate expected return and 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 A key element of our investment strategy is to reduce our funded status risk in part through appropriate asset allocation within our plan assets 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
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 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
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 investments consist of property funds and commingled funds primarily invested in publicly listed infrastructure securities and publicly traded real estate securities Real estate investments are valued based on the net asset values of such funds and included as a reconciling item to the fair value table
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
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
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 77 million in 2025 and 73 million in 2024 and 2023
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
On July 4 2025 the One Big Beautiful Bill Act OBBBA was signed into law The OBBBA makes certain provisions of the Tax Cuts and Jobs Act of 2017 permanent and makes changes to some U S corporate tax provisions many of which have different effective dates The provisions of the OBBBA did not have a material impact on our consolidated financial statements in 2025 We do not expect the OBBBA to have a material impact on our effective tax rate However we do anticipate future cash tax benefits due to changes in the tax laws for depreciation and research and development expenses
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 The provisions of the IRA did not have a material impact on our consolidated financial statements
As of August 3 2025 our U S and non U S subsidiaries had tax loss carryforwards of approximately 114 million Of these carryforwards 10 million may be carried forward indefinitely and 104 million expire between 2026 and 2044 with the majority expiring after 2028 As of August 3 2025 our net deferred liability included 5 million of tax effected loss carryforwards of which 3 million was offset by a deferred tax asset valuation allowance Additionally as of August 3 2025 our U S and non U S subsidiaries had capital loss carryforwards of approximately 98 million Of these capital loss carryforwards 52 million expire in 2026 and 46 million may be carried forward indefinitely As of August 3 2025 our net deferred liability included 18 million of tax effected capital loss carryforwards all of which was offset by a deferred tax asset valuation allowance
The net change in the deferred tax asset valuation allowance in 2025 was a decrease of 6 million The decrease was primarily due to the sale of our Pop Secret popcorn business The net change in the deferred tax asset valuation allowance in 2024 was a decrease of 100 million The decrease was primarily due to the expiration of capital loss carryforwards in 2024 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
As of August 3 2025 other deferred tax assets included 3 million of state tax credit carryforwards with the majority expiring between 2029 and 2039 As of August 3 2025 deferred tax asset valuation allowances had been established to offset 2 million of the tax credit carryforwards
As of August 3 2025 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
The amount of unrecognized tax benefits that if recognized would impact the annual effective tax rate was 15 million as of August 3 2025 14 million as of July 28 2024 and 12 million as of July 30 2023 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 We reasonably expect reductions in the liability for unrecognized tax benefits of approximately 4 million within the next 12 months due to settlement of tax examinations
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 2025 2024 and 2023 The total amount of interest and penalties recognized in the Consolidated Balance Sheets in Other liabilities was 7 million as of August 3 2025 and 6 million as of July 28 2024
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 2023 and in Canada through 2017 In addition several state income tax examinations are in progress for the years 2017 to 2023
On April 16 2024 we terminated our existing revolving credit facility dated September 27 2021 as amended on April 4 2023 On April 16 2024 we entered into a Five Year Credit Agreement for an unsecured senior revolving credit facility the 2024 Revolving Credit Facility Agreement in an aggregate principal amount equal to 1 85 billion with a maturity date of April 16 2029 or such later date as extended pursuant to the terms set forth in the 2024 Revolving Credit Facility Agreement On August 5 2025 we entered into an Extension Agreement to extend the maturity date of the 2024 Revolving Credit Facility Agreement by one year from April 16 2029 to April 16 2030 The 2024 Revolving Credit Facility Agreement remained unused at August 3 2025 except for 1 million of standby letters of credit that we issued under it We may increase the 2024 Revolving Credit Facility Agreement commitments up to an additional 500 million subject to the satisfaction of certain conditions Loans under the 2024 Revolving Credit Facility Agreement will bear interest at the rates specified in the 2024 Revolving Credit Facility Agreement which vary based on the type of loan and certain other conditions The 2024 Revolving Credit Facility Agreement 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 of not less than 3 25 1 00 and customary events of default for credit facilities of this type 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
We have 400 million aggregate principal amount of senior notes maturing in March 2026 that we expect to repay and or refinance using available sources which may include cash on hand accessing the capital markets commercial paper and or revolving credit facility
On November 15 2022 we entered into a delayed draw term loan credit agreement the 2022 DDTL Credit Agreement totaling up to 500 million scheduled to mature on November 15 2025 Loans under the 2022 DDTL Credit Agreement bear interest at the rates specified in the 2022 DDTL Credit Agreement which vary based on the type of loan and certain other conditions The 2022 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 2022 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 2022 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 April 5 2024 we repaid 100 million of the 500 million outstanding under the 2022 DDTL Credit Agreement The remaining 400 million was repaid in October 2024 and November 2024 as described below
On October 10 2023 we entered into the 2024 DDTL Credit Agreement totaling up to 2 billion scheduled to mature on October 8 2024 Loans under the 2024 DDTL Credit Agreement bear interest at the rates specified in the 2024 DDTL Credit Agreement which vary based on the type of loan and certain other conditions The 2024 DDTL Credit Agreement contains customary representations and warranties affirmative and negative covenants including a financial covenant with respect to a minimum consolidated interest coverage ratio of consolidated adjusted EBITDA to consolidated interest expense as each is defined in the 2024 DDTL Credit Agreement of not less than 3 25 1 00 and events of default for credit facilities of this type The proceeds of the loans under the 2024 DDTL Credit Agreement could only be used in connection with the acquisition of Sovos Brands and the payment of fees and expenses incurred in connection therewith On March 12 2024 we borrowed
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
400 million aggregate principal amount of notes bearing interest at a fixed rate of 5 30 per annum due March 20 2026 with interest payable semi annually on each of March 20 and September 20 commencing September 20 2024
500 million aggregate principal amount of notes bearing interest at a fixed rate of 5 20 per annum due March 19 2027 with interest payable semi annually on each of March 19 and September 19 commencing September 19 2024
600 million aggregate principal amount of notes bearing interest at a fixed rate of 5 20 per annum due March 21 2029 with interest payable semi annually on each of March 21 and September 21 commencing September 21 2024 and
1 billion aggregate principal amount of notes bearing interest at a fixed rate of 5 40 per annum due March 21 2034 with interest payable semi annually on each of March 21 and September 21 commencing September 21 2024
The notes contain customary covenants and events of default If a change of control triggering event occurs we will be required to offer to purchase the notes at a purchase price equal to 101 of the principal amount plus accrued and unpaid interest if any to the purchase date
borrowings under the 2024 DDTL Credit Agreement used to fund the Sovos Brands acquisition including fees and expenses in connection therewith and the remainder of the net proceeds to repay commercial paper
800 million aggregate principal amount of notes bearing interest at a fixed rate of 4 75 per annum due March 23 2035 with interest payable semi annually on each of March 23 and September 23 commencing March 23 2025 and
350 million aggregate principal amount of notes bearing interest at a fixed rate of 5 25 per annum due October 13 2054 with interest payable semi annually on each of April 13 and October 13 commencing April 13 2025
The notes contain customary covenants and events of default If a change of control triggering event occurs we will be required to offer to purchase the notes at a purchase price equal to 101 of the principal amount plus accrued and unpaid interest if any to the purchase date In October 2024 we used a portion of the net proceeds from the issuance of the notes to repay 200 million of the 400 million outstanding under the 2022 DDTL Credit Agreement due November 15 2025 and a portion of our outstanding commercial paper In November 2024 we repaid the remaining 200 million outstanding under the 2022 DDTL Credit Agreement In March 2025 we used a portion of the net proceeds from the issuance of the notes along with cash on hand and the issuance of commercial paper to repay a 1 15 billion aggregate principal amount of senior notes that matured in March 2025
The principal market risks to which we are exposed are changes in foreign currency exchange rates interest rates and commodity prices In addition we are exposed to price changes related to certain deferred compensation obligations In order to manage these exposures we follow established risk management policies and procedures including the use of derivative contracts such as swaps rate locks options forwards and commodity futures We enter into these derivative contracts for periods consistent with the related underlying exposures and the contracts do not constitute positions independent of those exposures We do not enter into derivative contracts for speculative purposes and do not use leveraged instruments Our derivative programs include instruments that qualify for hedge accounting treatment and instruments that are not designated as accounting hedges
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 August 3 2025 or July 28 2024
We are also exposed to credit risk from our customers During 2025 our largest customer accounted for approximately 21 of consolidated net sales Our five largest customers accounted for approximately 47 of our consolidated net sales in 2025
We are exposed to foreign currency exchange risk primarily the Canadian dollar and Euro related to intercompany transactions and third party transactions We utilize foreign exchange forward and option 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 183 million as of August 3 2025 and 108 million as of July 28 2024 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 and option contracts that are not designated as accounting hedges was 413 million as of August 3 2025 and 189 million as of July 28 2024
We manage our exposure to changes in interest rates by optimizing the use of variable rate and fixed rate debt From time to time we may use interest rate swaps in order to maintain our variable to total debt ratio within targeted guidelines We manage our exposure to interest volatility on future debt issuances by entering into forward starting interest rate swaps or treasury lock contracts to hedge the rate on the interest payments related to the anticipated debt issuance The forward starting interest rate swaps or treasury lock contracts are either designated as cash flow hedging instruments or are undesignated Changes in the fair value on the portion of the derivative included in the assessment of hedge effectiveness of cash flow hedges are recorded in other comprehensive income loss and reclassified into Interest expense over the life of the debt issued The change in fair value on undesignated instruments is recorded in Interest expense In conjunction with the issuance of senior unsecured notes on October 2 2024 due on March 23 2035 we settled forward starting interest rate swaps with a notional value of 700 million at a gain of less than 1 million We settled forward starting interest rate swaps with a notional value of 1 1 billion in March 2024 at a loss of 11 million The gains and losses on these instruments were recorded in other comprehensive income loss and will be recognized in Interest expense over the respective lives of the debt There were no forward starting interest rate swaps or treasury lock contracts outstanding as of August 3 2025 and July 28 2024
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 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 There were no commodity contracts designated as cash flow hedges as of August 3 2025 or July 28 2024 The notional amount of commodity contracts not designated as accounting hedges was 184 million as of August 3 2025 and 200 million as of July 28 2024 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 49 million as of August 3 2025 and 48 million as of July 28 2024 The change in fair value on the embedded derivative is recorded in Cost of products sold
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 August 3 2025 and July 28 2024 were 76 million and 71 million respectively
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 August 3 2025 and July 28 2024 would be adjusted as detailed in the following table
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 less than 1 million at August 3 2025 and an asset balance of 2 million at July 28 2024 were included in Accrued liabilities and Other current assets respectively in the Consolidated Balance Sheets
The following table shows the total amounts of line items presented in the Consolidated Statements of Earnings 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
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
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
In the fourth quarter of 2024 we recognized impairment charges on certain trademarks in our Snacks segment In the second and third quarters of 2025 we performed interim impairment assessments on certain trademarks in our Snacks segment See also Note 6 for additional information on the impairment charges
Fair value was determined based on unobservable Level 3 inputs The fair value of trademarks was determined based on discounted cash flow analysis that involves significant management assumptions such as expected revenue growth rates assumed royalty rates and weighted average costs of capital
The carrying values of cash and cash equivalents accounts receivable and accounts payable approximate fair value Cash equivalents represent fair value as these highly liquid investments have an original maturity of three months or less There were no cash equivalents with fair value based on Level 2 inputs at August 3 2025 There were 25 million of cash equivalents with fair value based on Level 2 inputs at July 28 2024
The fair value of short and long term debt was 6 545 billion at August 3 2025 and 6 866 billion at July 28 2024 The carrying value was 6 857 billion at August 3 2025 and 7 184 billion at July 28 2024 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
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
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 September 2024 the Board authorized a new anti dilutive share repurchase program of up to 250 million September 2024 program to offset the impact of dilution from shares issued under our stock compensation programs The September 2024 program has no expiration date but it may be discontinued at any time Repurchases under the September 2024 program may be made in open market or privately negotiated transactions The September 2024 program replaced an anti dilutive share repurchase program of up to 250 million that was approved by the Board in June 2021 and has been terminated
In 2025 we repurchased 1 303 million shares at a cost of 62 million pursuant to our anti dilutive share repurchase program In 2024 and 2023 we repurchased 1 56 million shares at a cost of 67 million and 2 698 million shares at a cost of 142 million respectively As of August 3 2025 approximately 198 million remained available under the September 2024 program and approximately 301 million remained under the September 2021 program
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 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 2025 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 connection with the Sovos Brands acquisition in the third quarter of 2024 we issued 1 721 million time lapse restricted stock units Replacement units in exchange for certain Sovos Brands restricted stock units and performance restricted stock units The Replacement units are subject to the same terms and conditions of the original Sovos Brands restricted stock units and performance restricted stock units Certain Replacement units were subject to accelerated vesting The Replacement units have a total fair value of 74 million based on the quoted price of our stock on the acquisition date The portion of Replacement units attributed to pre combination service was 42 million which was accounted for as part of consideration transferred and was recorded in Additional Paid in Capital in our Consolidated Statements of Equity in the third quarter of 2024 See Note 3 for additional information The portion of the Replacement units attributable to post combination service will be recognized as stock based compensation expense over the remaining vesting period
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
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
We determine the fair value of time lapse restricted stock units and EPS CAGR 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 and certain Replacement units which we expense on an accelerated basis There were 809 thousand EPS CAGR performance target grants outstanding at August 3 2025 with a weighted average grant date fair value of 45 19 The actual number of EPS CAGR performance restricted stock units that vest will depend on actual performance achieved We estimate expense based on the number of awards expected to vest In connection with the Sovos Brands acquisition in 2024 our adjusted EPS compound annual growth rate goals for the EPS CAGR performance restricted stock units granted in 2024 2023 and 2022 were revised to equitably adjust for the impact of completed acquisitions and divestitures that were not contemplated at the time of approval of the original targets In connection with the divestiture of our Pop Secret popcorn business in the first quarter of 2025 our adjusted EPS compound annual growth rate goals for the EPS performance restricted stock units granted in 2024 and 2023 were similarly revised In connection with the divestiture of our noosa yoghurt business in the third quarter of 2025 our adjusted EPS compound annual growth rate goals for the EPS performance restricted stock units granted in 2025 2024 and 2023 were again similarly revised
As of August 3 2025 total remaining unearned compensation related to nonvested time lapse restricted stock units and EPS CAGR performance restricted units was 40 million which will be amortized over the weighted average remaining service period of 1 7 years In the first quarter of 2025 recipients of EPS CAGR performance restricted stock units earned 100 of the initial grants based upon performance achieved during a three year period ended July 28 2024 The fair value of restricted stock units vested during 2025 2024 and 2023 was 69 million 97 million and 37 million respectively The weighted average grant date fair value of the restricted stock units granted during 2024 and 2023 was 41 57 and 47 65 respectively In the first quarter of 2026 recipients of EPS CAGR performance restricted stock units will receive a 48 payout based upon performance achieved during a three year period ended August 3 2025
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 August 3 2025 total remaining unearned compensation related to TSR performance restricted stock units was 10 million which will be amortized over the weighted average remaining service period of 1 7 years In the first quarter of 2025 recipients of TSR performance restricted stock units earned 175 of the initial grants based upon our TSR ranking in a performance peer group during a three year period ended July 26 2024 As a result approximately 199 thousand additional shares were awarded In the first quarter of 2024 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 28 2023 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 The fair value of TSR performance restricted stock units vested during 2025 2024 and 2023 was 23 million 12 million and 21 million respectively The weighted average grant date fair value of the TSR performance restricted stock units granted during 2024 and 2023 was 44 18 and 53 74 respectively In the first quarter of 2026 recipients of TSR performance restricted stock units will receive a 50 payout based upon our TSR ranking in a performance peer group during a three year period ended August 1 2025
The tax benefits on the exercise of stock options in 2024 and 2023 were not material Cash received from the exercise of stock options was 2 million and 22 million for 2024 and 2023 respectively and is reflected in cash flows from financing activities in the Consolidated Statements of Cash Flows
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
On March 20 2024 the United States Department of Justice DOJ on behalf of the U S Environmental Protection Agency and National Education Law Center on behalf of Environment America and Lake Erie Waterkeeper filed lawsuits in the United States District Court for the Northern District of Ohio Western Division concerning alleged violations of the Clean Water Act relating to alleged contaminant discharges from our Napoleon Ohio wastewater treatment facility in excess of the facility s Clean Water Act permit limits We have and are continuing to take actions to remediate the exceedances and are in settlement discussions with the DOJ and the private environmental groups while litigation proceedings are ongoing While we cannot predict with certainty the amount of any civil penalty or the timing of the resolution of this matter we do not expect that the ultimate costs to resolve this matter will have a material adverse effect on our financial condition results of operations or cash flows
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 August 3 2025 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
We guarantee approximately 4 500 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 570 million as of August 3 2025 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 August 3 2025 and July 28 2024 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 August 3 2025 and July 28 2024
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 The rollforward of our outstanding obligations confirmed as valid under our supplier finance program which are included in Accounts payable on the Consolidated Balance Sheets for the year ended August 3 2025 is as follows
Depreciation expense was 366 million in 2025 338 million in 2024 and 339 million in 2023 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
The management of The Campbell s 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
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 August 3 2025 In making this assessment management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission COSO in
The effectiveness of the Company s internal control over financial reporting as of August 3 2025 has been audited by PricewaterhouseCoopers LLP an independent registered public accounting firm as stated in their report which appears on the next page
We have audited the accompanying consolidated balance sheets of The Campbell s Company and its subsidiaries the Company as of August 3 2025 and July 28 2024 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 August 3 2025 including the related notes and schedule of valuation and qualifying accounts for each of the three years in the period ended August 3 2025 appearing on page 92 collectively referred to as the consolidated financial statements We also have audited the Company s internal control over financial reporting as of August 3 2025 based on criteria established in
In our opinion the consolidated financial statements referred to above present fairly in all material respects the financial position of the Company as of August 3 2025 and July 28 2024 and the results of its operations and its cash flows for each of the three years in the period ended August 3 2025 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 August 3 2025 based on criteria established in
nternal 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
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
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
As described in Notes 1 and 6 to the consolidated financial statements the Company s indefinite lived trademarks were 3 678 billion as of August 3 2025 Of the carrying value of all indefinite lived trademarks 1 470 billion related to the
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 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 In the third quarter of 2025 based on recent performance of the
he principal considerations for our determination that performing procedures relating to the indefinite lived intangible assets impairment tests 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 revenue growth rates and weighted average costs of capital for the
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 tests for certain 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 revenue growth rates and weighted average costs of capital for the
trademarks Evaluating management s assumptions related to the revenue growth rates and the assumed royalty rates involved evaluating whether the assumptions used by management were reasonable considering i the current and past performance of the certain trademarks ii the consistency with external market and industry data and iii whether the assumptions were 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 costs of capital and assumed royalty rate assumptions
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 August 3 2025 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 82 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 83 84
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 August 3 2025
During the quarter ended August 3 2025 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
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 2025 Annual Meeting of Shareholders the 2025 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 2025 Proxy relating to the members of our Audit Committee and the Audit Committee s financial experts is incorporated herein by reference The information presented in the section entitled Compensation Discussion and Analysis How Do We Manage Risks Related to Our Compensation Program Trading Campbell s Securities in the 2025 Proxy relating to the company s Insider Trading Policy is incorporated herein by reference
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
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
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
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
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 2025 Proxy is incorporated herein by reference
Column a represents stock options and restricted stock units outstanding under the 2022 Long Term Incentive Plan the 2015 Long Term Incentive Plan the 2005 Long Term Incentive Plan and replacement equity awards in settlement of certain Sovos Brands equity awards previously issued pursuant to the Sovos Brands Inc 2021 Equity Incentive Plan which the company assumed in connection with the acquisition of Sovos Brands on March 12 2024 Column a includes 3 236 544 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 August 3 2025
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 2025 Proxy is incorporated herein by reference
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 2025 Proxy is incorporated herein by reference
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
Restated Certificate of Incorporation as amended through November 19 2024 is incorporated by reference to Exhibit 3 1 to Campbell s Form 10 Q SEC file number 1 3822 for the fiscal quarter ended October 27 2024
By Laws of The Campbell s Company amended and restated effective November 19 2024 are incorporated by reference to Exhibit 3 2 to Campbell s Form 8 K SEC file number 1 3822 filed with the SEC on November 20 2024
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 Trust Company 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 Trust Company 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
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 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
Form of 2022 Long Term Incentive Plan Time Lapse Restricted Stock Unit Agreement is incorporated by reference to Exhibit 10 w to Campbell s Form 10 K SEC file number 1 3822 for the fiscal year ended July 30 2023
Form of 2022 Long Term Incentive Plan Performance Restricted Stock Unit Agreement Earnings Per Share is incorporated by reference to Exhibit 10 x to Campbell s Form 10 K SEC file number 1 3822 for the fiscal year ended July 30 2023
Form of 2022 Long Term Incentive Plan Performance Restricted Stock Unit Agreement Total Shareholder Return is incorporated by reference to Exhibit 10 y to Campbell s Form 10 K SEC file number 1 3822 for the fiscal year ended July 30 2023
First Amendment to the Campbell Soup Company Executive Severance Pay Plan effective September 1 2023 is incorporated by reference to Exhibit 10 hh to Campbell s Form 10 K SEC file number 1 3822 for the fiscal year ended July 30 2023
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
Five Year Credit Agreement dated April 16 2024 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 is incorporated by reference to Exhibit 10 to Campbell s Current Report on Form 8 K SEC file number 1 3822 filed with the SEC on April 16 2024
Form of Amended and Restated Change in Control Severance Protection Agreement is incorporated by reference to Exhibit 10 ee to Campbell s Annual Report on Form 10 K SEC file number 1 3822 for the fiscal year ended July 28 2024
Form of 2022 Long Term Incentive Plan Performance Restricted Stock Unit Agreement Earnings Per Share is incorporated by reference to Exhibit 10 1 to Campbell s Form 10 Q SEC file number 1 3822 for the fiscal quarter ended October 27 2024
Form of 2022 Long Term Incentive Plan Performance Restricted Stock Unit Agreement Total Shareholder Return is incorporated by reference to Exhibit 10 2 to Campbell s Form 10 Q SEC file number 1 3822 for the fiscal quarter ended October 27 2024
Campbell Soup Company Supplemental Retirement Plan as amended and restated effective October 1 2024 is incorporated by reference to Exhibit 10 3 to Campbell s Form 10 Q SEC file number 1 3822 for the fiscal quarter ended October 27 2024
Extension Agreement dated as of August 5 2025 by and among The Campbell s Company the Eligible Subsidiaries party thereto from time to time JPMorgan Chase Bank N A as administrative agent and the other lenders named therein is incorporated by reference to Exhibit 10 1 to Campbell s Current Report on Form 8 K SEC file number 1 3822 filed with the SEC on August 5 2025
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
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 18 2025
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 109 million in 2025 and 2024 and 105 million in 2023 or less than 2 of Net sales

Company Name	CAMPBELL'S Co Vist SEC web-site
Category	FOOD & KINDRED PRODUCTS
Trading Symbol	CPB