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

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For The Quarterly Period EndedCommission File Number
October 31, 20211-3822
cpb-20211031_g1.jpg

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

Telephone Number: (856342-4800

Securities registered pursuant to Section 12(b) of the Act: 
Title of Each ClassTrading SymbolName of Each Exchange on Which Registered
Capital Stock, par value $.0375CPBNew York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None

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

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

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

There were 301,737,878 shares of capital stock outstanding as of December 1, 2021.
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TABLE OF CONTENTS


2






PART I - FINANCIAL INFORMATION

Item 1. Financial Statements
CAMPBELL SOUP COMPANY
Consolidated Statements of Earnings
(unaudited)
(millions, except per share amounts)
 
Three Months Ended
October 31, 2021November 1, 2020
Net sales$2,236 $2,340 
Costs and expenses
Cost of products sold1,514 1,527 
Marketing and selling expenses170 208 
Administrative expenses156 141 
Research and development expenses21 20 
Other expenses / (income)(1)(18)
Restructuring charges 1 
Total costs and expenses1,860 1,879 
Earnings before interest and taxes376 461 
Interest expense47 55 
Interest income  
Earnings before taxes329 406 
Taxes on earnings68 97 
Earnings from continuing operations261 309 
Earnings (loss) from discontinued operations  
Net earnings261 309 
Less: Net earnings (loss) attributable to noncontrolling interests  
Net earnings attributable to Campbell Soup Company$261 $309 
Per Share — Basic
Earnings from continuing operations attributable to Campbell Soup Company$.86 $1.02 
Earnings (loss) from discontinued operations  
Net earnings attributable to Campbell Soup Company$.86 $1.02 
Weighted average shares outstanding — basic302 302 
Per Share — Assuming Dilution
Earnings from continuing operations attributable to Campbell Soup Company$.86 $1.02 
Earnings (loss) from discontinued operations  
Net earnings attributable to Campbell Soup Company$.86 $1.02 
Weighted average shares outstanding — assuming dilution303 304 
See accompanying Notes to Consolidated Financial Statements.


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CAMPBELL SOUP COMPANY
Consolidated Statements of Comprehensive Income
(unaudited)
(millions)
Three Months Ended
October 31, 2021November 1, 2020
Pre-tax amountTax (expense) benefitAfter-tax amountPre-tax amountTax (expense) benefitAfter-tax amount
Net earnings (loss)$261 $309 
Other comprehensive income (loss):
Foreign currency translation:
Foreign currency translation adjustments$ $  $ $  
Cash-flow hedges:
Unrealized gains (losses) arising during the period3 (1)2 (1)1  
Reclassification adjustment for losses (gains) included in net earnings      
Pension and other postretirement benefits:
Reclassification of prior service credit included in net earnings   (1) (1)
Other comprehensive income (loss)$3 $(1)2 $(2)$1 (1)
Total comprehensive income (loss)$263 $308 
Total comprehensive income (loss) attributable to noncontrolling interests (2)
Total comprehensive income (loss) attributable to Campbell Soup Company$263 $310 
See accompanying Notes to Consolidated Financial Statements.
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CAMPBELL SOUP COMPANY
Consolidated Balance Sheets
(unaudited)
(millions, except per share amounts)
October 31, 2021August 1, 2021
Current assets
Cash and cash equivalents$69 $69 
Accounts receivable, net731 595 
Inventories974 933 
Other current assets102 98 
Total current assets1,876 1,695 
Plant assets, net of depreciation2,355 2,370 
Goodwill3,982 3,981 
Other intangible assets, net of amortization3,228 3,239 
Other assets458 449 
Total assets$11,899 $11,734 
Current liabilities
Short-term borrowings$480 $48 
Payable to suppliers and others1,151 1,070 
Accrued liabilities539 576 
Dividends payable113 115 
Accrued income taxes55 5 
Total current liabilities2,338 1,814 
Long-term debt4,567 5,010 
Deferred taxes1,073 1,051 
Other liabilities684 705 
Total liabilities8,662 8,580 
Commitments and contingencies
Campbell Soup Company shareholders' equity
Preferred stock; authorized 40 shares; none issued
  
Capital stock, $0.0375 par value; authorized 560 shares; issued 323 shares
12 12 
Additional paid-in capital372 414 
Earnings retained in the business3,882 3,742 
Capital stock in treasury, at cost(1,038)(1,021)
Accumulated other comprehensive income (loss)7 5 
Total Campbell Soup Company shareholders' equity3,235 3,152 
Noncontrolling interests2 2 
Total equity3,237 3,154 
Total liabilities and equity$11,899 $11,734 
See accompanying Notes to Consolidated Financial Statements.

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CAMPBELL SOUP COMPANY
Consolidated Statements of Cash Flows
(unaudited)
(millions)
Three Months Ended
 October 31, 2021November 1, 2020
Cash flows from operating activities:
Net earnings$261 $309 
Adjustments to reconcile net earnings to operating cash flow
Stock-based compensation14 16 
Pension and postretirement benefit income(9)(20)
Depreciation and amortization83 76 
Deferred income taxes20 25 
Other22 22 
Changes in working capital
Accounts receivable(137)(189)
Inventories(40)(38)
Prepaid assets(5)8 
Accounts payable and accrued liabilities87 (28)
Other(8)(1)
Net cash provided by operating activities288 180 
Cash flows from investing activities:
Purchases of plant assets(69)(74)
Purchases of route businesses (1)
Sales of route businesses1 3 
Net cash used in investing activities(68)(72)
Cash flows from financing activities:
Short-term borrowings, including commercial paper371  
Short-term repayments, including commercial paper(395)(123)
Dividends paid(116)(108)
Treasury stock purchases(63) 
Treasury stock issuances1  
Payments related to tax withholding for stock-based compensation(17)(13)
Other(1)(1)
Net cash used in financing activities(220)(245)
Effect of exchange rate changes on cash  
Net change in cash and cash equivalents (137)
Cash and cash equivalents — beginning of period69 859 
Cash and cash equivalents — end of period$69 $722 
See accompanying Notes to Consolidated Financial Statements.
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CAMPBELL SOUP COMPANY
Consolidated Statements of Equity
(unaudited)
(millions, except per share amounts)
 Campbell Soup Company Shareholders’ Equity  
 Capital StockAdditional Paid-in
Capital
Earnings Retained in the
Business
Accumulated Other Comprehensive
Income (Loss)
Noncontrolling
Interests
 
 IssuedIn TreasuryTotal
Equity
 SharesAmountSharesAmount
Balance at August 2, 2020323 $12 (21)$(1,023)$394 $3,190 $(10)$6 $2,569 
Net earnings (loss)309  309 
Other comprehensive income (loss)1 (2)(1)
Dividends ($.35 per share)
(107)(107)
Treasury stock purchased   
Treasury stock issued under management incentive and stock option plans  1 32 (24)(5)  3 
Balance at November 1, 2020323 $12 (20)$(991)$370 $3,387 $(9)$4 $2,773 
Balance at August 1, 2021323 $12 (21)$(1,021)$414 $3,742 $5 $2 $3,154 
Net earnings (loss)261  261 
Other comprehensive income (loss)2  2 
Dividends ($.37 per share)
(113)(113)
Treasury stock purchased(1)(63)(63)
Treasury stock issued under management incentive and stock option plans1 46 (42)(8)(4)
Balance at October 31, 2021323 $12 (21)$(1,038)$372 $3,882 $7 $2 $3,237 
See accompanying Notes to Consolidated Financial Statements.
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Notes to Consolidated Financial Statements
(unaudited)
(currency in millions, except per share amounts)
1. Basis of Presentation and Significant Accounting Policies
In this Form 10-Q, unless otherwise stated, the terms "we," "us," "our" and the "company" refer to Campbell Soup Company and its consolidated subsidiaries.
The financial statements reflect all adjustments which are, in our opinion, necessary for a fair statement of the results of operations, financial position, and cash flows for the indicated periods. The accounting policies we used in preparing these financial statements are substantially consistent with those we applied in our Annual Report on Form 10-K for the year ended August 1, 2021. Certain amounts in prior-year financial statements were reclassified to conform to the current-year presentation.
The results for the period are not necessarily indicative of the results to be expected for other interim periods or the full year. Our fiscal year ends on the Sunday nearest July 31, which is July 31, 2022.
2. Recent Accounting Pronouncements
Recently Adopted
In December 2019, the Financial Accounting Standards Board (FASB) issued guidance on simplifying the accounting for income taxes. The guidance removes certain exceptions to the general principles of accounting for income taxes and also improves consistent application of accounting by clarifying or amending existing guidance. We adopted the guidance in the first quarter of 2022. The adoption did not have an impact on our consolidated financial statements.
Accounting Pronouncements Not Yet Adopted
In March 2020, the FASB issued guidance that provides optional expedients and exceptions for a limited period of time for accounting for contracts, hedging relationships, and other transactions affected by the London Interbank Offered Rate (LIBOR) or another reference rate expected to be discontinued. Optional expedients can be applied from March 12, 2020 through December 31, 2022. We are currently evaluating the impact that the new guidance will have on our consolidated financial statements.
3. Accumulated Other Comprehensive Income (Loss)
The components of Accumulated other comprehensive income (loss) consisted of the following:
Foreign Currency Translation Adjustments(1)
Gains (Losses) on Cash-Flow Hedges(2)
Pension and Postretirement Benefit Plan Adjustments(3)
Total Accumulated Comprehensive Income (Loss)
Balance at August 2, 2020$(10)$(7)$7 $(10)
Other comprehensive income (loss) before reclassifications2   2 
Amounts reclassified from accumulated other comprehensive income (loss)  (1)(1)
Net current-period other comprehensive income (loss)2  (1)1 
Balance at November 1, 2020$(8)$(7)$6 $(9)
Balance at August 1, 2021$6 $(4)$3 $5 
Other comprehensive income (loss) before reclassifications 2  2 
Amounts reclassified from accumulated other comprehensive income (loss)
    
Net current-period other comprehensive income (loss) 2  2 
Balance at October 31, 2021$6 $(2)$3 $7 
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_____________________________________
(1)Included no tax as of October 31, 2021, August 1, 2021, November 1, 2020 and August 2, 2020.
(2)Included no tax as of October 31, 2021, a tax benefit of $1 as of August 1, 2021, $2 as of November 1, 2020, and $1 as of August 2, 2020.
(3)Included tax expense of $1 as of October 31, 2021, and as of August 1, 2021, and $2 as of November 1, 2020, and as of August 2, 2020.
Amounts related to noncontrolling interests were not material.
The amounts reclassified from Accumulated other comprehensive income (loss) consisted of the following:
Three Months Ended
Details about Accumulated Other Comprehensive Income (Loss) ComponentsOctober 31, 2021November 1, 2020Location of Loss (Gain) Recognized in Earnings
Losses (gains) on cash-flow hedges:
Commodity contracts$(1)$ Cost of products sold
Foreign exchange forward contracts1  Cost of products sold
Total before tax  
Tax expense (benefit)  
Loss (gain), net of tax$ $ 
Pension and postretirement benefit adjustments:
Prior service credit$ $(1)Other expenses / (income)
Tax expense (benefit)  
Loss (gain), net of tax$ $(1)
4. Goodwill and Intangible Assets
Goodwill
The following table shows the changes in the carrying amount of goodwill by business segment:
Meals & BeveragesSnacksTotal
Net balance at August 1, 2021$970 $3,011 $3,981 
Amounts reclassified due to segment change(1)
25 (25) 
Foreign currency translation adjustment1  1 
Net balance at October 31, 2021$996 $2,986 $3,982 
_____________________________________
(1) See Note 5 for additional information.
Intangible Assets
The following table summarizes balance sheet information for intangible assets, excluding goodwill, subject to amortization and intangible assets not subject to amortization:
October 31, 2021August 1, 2021
Intangible AssetsCostAccumulated AmortizationNetCostAccumulated AmortizationNet
Amortizable intangible assets
Customer relationships$830 $(151)$679 $830 $(140)$690 
Non-amortizable intangible assets
Trademarks2,549 2,549 
Total net intangible assets$3,228 $3,239 
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As of October 31, 2021, the carrying value of indefinite-lived trademarks is detailed below:
Various Other(1)
Snyder's of HanoverLancePacePacific Foods
Carrying value $1,007 $620 $350 $292 $280 
_____________________________________
(1) Associated with the acquisition of Snyder's-Lance, Inc. (Snyder's-Lance).
Amortization of intangible assets was $11 and $10 for the three-month periods ended October 31, 2021, and November 1, 2020, respectively. As of October 31, 2021, amortizable intangible assets had a weighted-average remaining useful life of 17 years. Amortization expense for the next 5 years is estimated to be approximately $41 per year.
5. Segment Information
Our reportable segments are as follows:
Meals & Beverages, which consists of our soup, simple meals and beverages products in retail and foodservice in the U.S. and Canada. The segment includes the following products: Campbell’s condensed and ready-to-serve soups; Swanson broth and stocks; Pacific Foods broth, soups and non-dairy beverages; Prego pasta sauces; Pace Mexican sauces; Campbell’s gravies, pasta, beans and dinner sauces; Swanson canned poultry; V8 juices and beverages; and Campbell’s tomato juice. The segment also includes snacking products in foodservice and Canada. The segment included our Plum baby food and snacks business, which was sold on May 3, 2021; and
Snacks, which consists of Pepperidge Farm cookies*, crackers, fresh bakery and frozen products, including Goldfish crackers*, Snyder’s of Hanover pretzels*, Lance sandwich crackers*, Cape Cod potato chips*, Kettle Brand potato chips*, Late July snacks*, Snack Factory pretzel crisps*, Pop Secret popcorn, Emerald nuts, and other snacking products in retail in the U.S. The segment also includes the retail business in Latin America. In 2022, we now refer to the * brands as our "power brands."
Beginning in 2022, the foodservice and Canadian business formerly in our Snacks segment is now managed as part of the Meals & Beverages segment. Segment results have been adjusted retrospectively to reflect this change.
We evaluate segment performance before interest, taxes and costs associated with restructuring activities and impairment charges. Unrealized gains and losses on outstanding undesignated commodity hedging activities are excluded from segment operating earnings and are recorded in Corporate as these open positions represent hedges of future purchases. Upon closing of the contracts, the realized gain or loss is transferred to segment operating earnings, which allows the segments to reflect the economic effects of the hedge without exposure to quarterly volatility of unrealized gains and losses. Only the service cost component of pension and postretirement expense is allocated to segments. All other components of expense, including interest cost, expected return on assets, amortization of prior service credits and recognized actuarial gains and losses are reflected in Corporate and not included in segment operating results. Asset information by segment is not discretely maintained for internal reporting or used in evaluating performance.
Three Months Ended
October 31, 2021November 1, 2020
Net sales
Meals & Beverages$1,266 $1,363 
Snacks970 977 
Total$2,236 $2,340 
Three Months Ended
October 31, 2021November 1, 2020
Earnings before interest and taxes
Meals & Beverages$280 $337 
Snacks128 135 
Corporate income (expense)(1)
(32)(10)
Restructuring charges(2)
 (1)
Total$376 $461 
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_______________________________________
(1)Represents unallocated items. In the three-month periods ended October 31, 2021, and November 1, 2020, there were pension actuarial losses of $6 and pension actuarial gains of $4, respectively. Costs related to the cost savings initiatives were $4 and $5 in the three-month periods ended October 31, 2021, and November 1, 2020, respectively. Unrealized mark-to-market adjustments on outstanding undesignated commodity hedges were losses of $3 and gains of $6 in the three-month periods ended October 31, 2021, and November 1, 2020, respectively.
(2)See Note 6 for additional information.
Our net sales based on product categories are as follows:Three Months Ended
October 31, 2021November 1, 2020
Net sales
Soup$797 $826 
Snacks1,003 1,008 
Other simple meals264 311 
Beverages172 195 
Total$2,236 $2,340 
Soup includes various soup, broth and stock products. Snacks include cookies, pretzels, crackers, popcorn, nuts, potato chips, tortilla chips and other salty snacks and baked products. Other simple meals include sauces, gravies, pasta, beans, canned poultry, and Plum products through May 3, 2021, when the business was sold. Beverages include V8 juices and beverages, Campbell’s tomato juice and Pacific Foods non-dairy beverages.
6. Restructuring Charges and Cost Savings Initiatives
Multi-year Cost Savings Initiatives and Snyder's-Lance Cost Transformation Program and Integration
Beginning in fiscal 2015, we implemented initiatives to reduce costs and to streamline our organizational structure.
Over the years, we expanded these initiatives by further optimizing our supply chain and manufacturing networks, including closing our manufacturing facility in Toronto, Ontario, as well as our information technology infrastructure.
On March 26, 2018, we completed the acquisition of Snyder's-Lance. Prior to the acquisition, Snyder's-Lance launched a cost transformation program following a comprehensive review of its operations with the goal of significantly improving its financial performance. We continued to implement this program and identified opportunities for additional cost synergies as we integrated Snyder's-Lance.
A summary of the pre-tax charges recorded in Earnings from continuing operations related to these initiatives is as follows:
Three Months Ended
 October 31, 2021November 1, 2020
Recognized as of October 31, 2021
Restructuring charges$ $1 $259 
Administrative expenses2 4 341 
Cost of products sold2 1 81 
Marketing and selling expenses  13 
Research and development expenses  4 
Total pre-tax charges$4 $6 $698 
A summary of the pre-tax costs in Earnings from continuing operations associated with the initiatives is as follows:
Recognized as of October 31, 2021
Severance pay and benefits
$222 
Asset impairment/accelerated depreciation82 
Implementation costs and other related costs
394 
Total$698 
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The total estimated pre-tax costs for actions associated with continuing operations are approximately $715 to $730. The majority of the remaining costs will be incurred in 2022.
We expect the costs for actions associated with continuing operations to consist of the following: approximately $225 in severance pay and benefits; approximately $85 in asset impairment and accelerated depreciation; and approximately $405 to $420 in implementation costs and other related costs. We expect these pre-tax costs to be associated with our segments as follows: Meals & Beverages - approximately 31%; Snacks - approximately 45%; and Corporate - approximately 24%.
Of the aggregate $715 to $730 of pre-tax costs associated with continuing operations, we expect approximately $615 to $630 will be cash expenditures. In addition, we expect to invest approximately $450 in capital expenditures through 2022, of which we invested $415 as of October 31, 2021. The capital expenditures primarily relate to improvement of quality, safety and cost structure across the Snyder’s-Lance manufacturing network, a U.S. warehouse optimization project, implementation of our existing SAP enterprise-resource planning system for Snyder's-Lance, transition of production of the Toronto manufacturing facility to our U.S. thermal plants, optimization of information technology infrastructure and applications, and optimization of the Snyder’s-Lance warehouse and distribution network.
A summary of the restructuring activity and related reserves associated with continuing operations at October 31, 2021, is as follows:
Severance Pay and Benefits
Implementation Costs and Other Related
Costs(2)
Total Charges
Accrued balance at August 1, 2021(1)
$7 
2022 charges 4 $4 
2022 cash payments(1)
Accrued balance at October 31, 2021(1)
$6 
__________________________________ 
(1)Includes $1 of severance pay and benefits recorded in Other liabilities in the Consolidated Balance Sheet.
(2)Includes other costs recognized as incurred that are not reflected in the restructuring reserve in the Consolidated Balance Sheet. The costs are included in Administrative expenses and Cost of products sold in the Consolidated Statements of Earnings.
Segment operating results do not include restructuring charges, implementation costs and other related costs because we evaluate segment performance excluding such charges. A summary of the pre-tax costs in Earnings from continuing operations associated with segments is as follows:
October 31, 2021
Three Months
Ended
Costs Incurred to Date
Meals & Beverages$1 $224 
Snacks3 302 
Corporate 172 
Total$4 $698 
Through April 28, 2019, we incurred pre-tax charges of $23 in Earnings from discontinued operations consisting of $19 of severance pay and benefits and $4 of implementation costs and other related costs. All of the costs were cash expenditures.
Expanded Initiatives in 2022
We continue to pursue cost savings initiatives by further optimizing our supply chain and manufacturing network and through effective cost management. Cost estimates will be updated as the expanded initiatives are developed.
7. Earnings per Share (EPS)
For the periods presented in the Consolidated Statements of Earnings, the calculations of basic EPS and EPS assuming dilution vary in that the weighted average shares outstanding assuming dilution include the incremental effect of stock options and other share-based payment awards, except when such effect would be antidilutive. The earnings per share calculation for the three-month periods ended October 31, 2021, and November 1, 2020, excludes approximately 1 million stock options that would have been antidilutive.
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8. Pension and Postretirement Benefits
Components of net benefit expense (income) were as follows:
Three Months Ended
PensionPostretirement
 October 31, 2021November 1, 2020October 31, 2021November 1, 2020
Service cost$4 $5 $ $ 
Interest cost10 10 1 1 
Expected return on plan assets(30)(31)  
Amortization of prior service cost   (1)
Actuarial loss (gain)6 (4)  
Net periodic benefit expense (income)$(10)$(20)$1 $ 
The actuarial loss of $6 for the three-month period ended October 31, 2021 and the actuarial gain of $4 for the three-month period ended November 1, 2020 related to the remeasurement of a U.S. and a Canadian pension plan. These remeasurements were each due to lump sum distributions that exceeded or are expected to exceed service and interest costs resulting in settlement accounting for the plans. The actuarial loss recognized for the three-month period ended October 31, 2021 was primarily due to less than anticipated investment returns on plan assets, partially offset by an increase in the discount rates. The actuarial gain recognized for the three-month period ended November 1, 2020 was primarily due to an increase in the discount rates.
9. Leases
The components of lease costs were as follows:
Three Months Ended
October 31, 2021November 1, 2020
Operating lease cost$19 $20 
Finance lease - amortization of right-of-use (ROU) assets4 1 
Short-term lease cost13 10 
Variable lease cost(1)
52 46 
Sublease income
 (1)
Total$88 $76 
__________________________________________
(1)Includes labor and other overhead in our service contracts with embedded leases.
The following tables summarize the lease amounts recorded in the Consolidated Balance Sheets:
Operating Leases
Balance Sheet ClassificationOctober 31, 2021August 1, 2021
ROU assets, netOther assets$231 $235 
Lease liabilities (current)Accrued liabilities$54 $54 
Lease liabilities (noncurrent)Other liabilities$176 $180 
Finance Leases
Balance Sheet ClassificationOctober 31, 2021August 1, 2021
ROU assets, netPlant assets, net of depreciation$38 $29 
Lease liabilities (current)Short-term borrowings$15 $11 
Lease liabilities (noncurrent)Long-term debt$24 $19 
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The following table summarizes cash flow and other information related to leases:
Three Months Ended
October 31, 2021November 1, 2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases$19 $21 
Financing cash flows from finance leases$4 $1 
ROU assets obtained in exchange for lease obligations:
Operating leases$14 $6 
Finance leases
$13 $2 
10. Financial Instruments
The principal market risks to which we are exposed are changes in foreign currency exchange rates, interest rates and commodity prices. In addition, we are exposed to equity price changes related to certain deferred compensation obligations. In order to manage these exposures, we follow established risk management policies and procedures, including the use of derivative contracts such as swaps, rate locks, options, forwards and commodity futures. We enter into these derivative contracts for periods consistent with the related underlying exposures, and the contracts do not constitute positions independent of those exposures. We do not enter into derivative contracts for speculative purposes and do not use leveraged instruments. Our derivative programs include instruments that qualify for hedge accounting treatment and instruments that are not designated as accounting hedges.
Concentration of Credit Risk
We are exposed to the risk that counterparties to derivative contracts will fail to meet their contractual obligations. To mitigate counterparty credit risk, we enter into contracts only with carefully selected, leading, credit-worthy financial institutions, and distribute contracts among several financial institutions to reduce the concentration of credit risk. We did not have credit-risk-related contingent features in our derivative instruments as of October 31, 2021, or August 1, 2021.
We are also exposed to credit risk from our customers. During 2021, our largest customer accounted for approximately 21% of consolidated net sales from continuing operations. Our five largest customers accounted for approximately 46% of our consolidated net sales from continuing operations in 2021.
We closely monitor credit risk associated with counterparties and customers.
Foreign Currency Exchange Risk
We are exposed to foreign currency exchange risk related to third-party transactions and intercompany transactions, including intercompany debt. Principal currencies hedged include the Canadian dollar. We utilize foreign exchange forward purchase and sale contracts to hedge these exposures. The contracts are either designated as cash-flow hedging instruments or are undesignated. We hedge portions of our forecasted foreign currency transaction exposure with foreign exchange forward contracts for periods typically up to 18 months. To hedge currency exposures related to intercompany debt, we enter into foreign exchange forward purchase and sale contracts for periods consistent with the underlying debt. The notional amount of foreign exchange forward contracts accounted for as cash-flow hedges was $144 as of October 31, 2021, and $134 as of August 1, 2021. Changes in the fair value on the portion of the derivative included in the assessment of hedge effectiveness of cash-flow hedges are recorded in other comprehensive income (loss), until earnings are affected by the variability of cash flows. For derivatives that are designated and qualify as hedging instruments, the initial fair value of hedge components excluded from the assessment of effectiveness is recognized in earnings under a systematic and rational method over the life of the hedging instrument and is presented in the same statement of earnings line item as the earnings effect of the hedged item. Any difference between the change in the fair value of the hedge components excluded from the assessment of effectiveness and the amounts recognized in earnings is recorded as a component of other comprehensive income (loss). The notional amount of foreign exchange forward contracts that are not designated as accounting hedges was $18 as of October 31, 2021, and $13 as of August 1, 2021.