UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

___________________________________________________ 

FORM 10-Q

___________________________________________________ 

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

For the quarterly period ended: July 31, 2022

or

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

For the transition period from                      to                     

Commission file number: 1-5111

 ___________________________________________________

The J. M. Smucker Company

(Exact name of registrant as specified in its charter)

___________________________________________________ 

Ohio			34-0538550
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)
One Strawberry Lane
Orrville,	Ohio		44667-0280
(Address of principal executive offices)			(Zip code)
Registrant’s telephone number, including area code:			(330)	682-3000
N/A
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class		Trading symbol	Name of each exchange on which registered
Common shares, no par value		SJM	New York Stock Exchange

 ___________________________________________________

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes  ý    No  o

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 (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes  ý    No  o

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	ý	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

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

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

The Company had 106,557,345 common shares outstanding on August 16, 2022.

TABLE OF CONTENTS

 

		Page No.
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements
	Condensed Statements of Consolidated Income	2
	Condensed Statements of Consolidated Comprehensive Income	2
	Condensed Consolidated Balance Sheets	3
	Condensed Statements of Consolidated Cash Flows	4
	Condensed Statements of Consolidated Shareholders’ Equity	5
	Notes to Unaudited Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	28
Item 4.	Controls and Procedures	30
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	31
Item 1A.	Risk Factors	31
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	31
Item 6.	Exhibits	31
SIGNATURES		32
INDEX OF EXHIBITS		33

1

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

THE J. M. SMUCKER COMPANY

CONDENSED STATEMENTS OF CONSOLIDATED INCOME

(Unaudited)

	Three Months Ended July 31,
Dollars in millions, except per share data	2022		2021
Net sales	$	1,873.0	$	1,858.0
Cost of products sold (A)	1,320.5		1,218.6
Gross Profit	552.5		639.4
Selling, distribution, and administrative expenses	343.8		324.0
Amortization	55.6		55.4
Other special project costs (A)	1.4		1.8
Other operating expense (income) – net	(28.0)		(1.2)
Operating Income	179.7		259.4
Interest expense – net	(39.1)		(43.1)
Other income (expense) – net	0.5		(11.1)
Income Before Income Taxes	141.1		205.2
Income tax expense	31.3		51.3
Net Income	$	109.8	$	153.9
Earnings per common share:
Net Income	$	1.03	$	1.42
Net Income – Assuming Dilution	$	1.03	$	1.42

(A) Special project costs include certain divestiture, acquisition, integration, and restructuring costs, which are recognized in cost of products sold and other special project costs. For more information, see Note 3: Integration and Restructuring Costs and Note 5: Reportable Segments.

See notes to unaudited condensed consolidated financial statements.

THE J. M. SMUCKER COMPANY

CONDENSED STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME

(Unaudited)

	Three Months Ended July 31,
Dollars in millions	2022		2021
Net income	$	109.8	$	153.9
Other comprehensive income (loss):
Foreign currency translation adjustments	1.4		(4.0)
Cash flow hedging derivative activity, net of tax	2.5		2.3
Pension and other postretirement benefit plans activity, net of tax	0.4		(2.6)
Available-for-sale securities activity, net of tax	(0.3)		0.1
Total Other Comprehensive Income (Loss)	4.0		(4.2)
Comprehensive Income	$	113.8	$	149.7

See notes to unaudited condensed consolidated financial statements.

2

THE J. M. SMUCKER COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

Dollars in millions	July 31, 2022		April 30, 2022
ASSETS
Current Assets
Cash and cash equivalents	$	151.6	$	169.9
Trade receivables – net	605.0		524.7
Inventories:
Finished products	793.6		704.4
Raw materials	519.2		384.9
Total Inventory	1,312.8		1,089.3
Other current assets	218.3		226.2
Total Current Assets	2,287.7		2,010.1
Property, Plant, and Equipment
Land and land improvements	131.0		120.4
Buildings and fixtures	939.9		959.7
Machinery and equipment	2,494.6		2,503.3
Construction in progress	545.7		527.8
Gross Property, Plant, and Equipment	4,111.2		4,111.2
Accumulated depreciation	(1,972.4)		(1,979.5)
Total Property, Plant, and Equipment	2,138.8		2,131.7
Other Noncurrent Assets
Operating lease right-of-use assets	98.1		106.5
Goodwill	6,016.7		6,015.8
Other intangible assets – net	5,597.0		5,652.2
Other noncurrent assets	138.4		138.7
Total Other Noncurrent Assets	11,850.2		11,913.2
Total Assets	$	16,276.7	$	16,055.0
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Accounts payable	$	1,242.6	$	1,193.3
Accrued trade marketing and merchandising	201.2		193.8
Short-term borrowings	388.0		180.0
Current operating lease liabilities	39.2		40.1
Other current liabilities	306.2		345.6
Total Current Liabilities	2,177.2		1,952.8
Noncurrent Liabilities
Long-term debt	4,311.5		4,310.6
Deferred income taxes	1,326.9		1,325.8
Noncurrent operating lease liabilities	68.3		76.2
Other noncurrent liabilities	248.5		249.5
Total Noncurrent Liabilities	5,955.2		5,962.1
Total Liabilities	8,132.4		7,914.9
Shareholders’ Equity
Common shares	26.6		26.6
Additional capital	5,457.7		5,457.9
Retained income	2,893.4		2,893.0
Accumulated other comprehensive income (loss)	(233.4)		(237.4)
Total Shareholders’ Equity	8,144.3		8,140.1
Total Liabilities and Shareholders’ Equity	$	16,276.7	$	16,055.0

See notes to unaudited condensed consolidated financial statements.

3

THE J. M. SMUCKER COMPANY

CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS

(Unaudited)

	Three Months Ended July 31,
Dollars in millions	2022		2021
Operating Activities
Net income	$	109.8	$	153.9
Adjustments to reconcile net income to net cash provided by (used for) operations:
Depreciation	55.1		58.5
Amortization	55.6		55.4
Share-based compensation expense	7.9		5.3
Gain on divestiture	(1.6)		—
Other noncash adjustments – net	4.1		3.1
Make-whole payments included in financing activities	—		7.0
Defined benefit pension contributions	(70.7)		(0.9)
Changes in assets and liabilities:
Trade receivables	(80.2)		(32.9)
Inventories	(223.0)		(146.3)
Other current assets	(3.3)		8.0
Accounts payable	73.1		28.5
Accrued liabilities	8.9		(43.9)
Income and other taxes	25.6		47.4
Other – net	(0.3)		(5.3)
Net Cash Provided by (Used for) Operating Activities	(39.0)		137.8
Investing Activities
Additions to property, plant, and equipment	(88.3)		(68.0)
Proceeds from divestiture	1.6		—
Other – net	15.2		(12.0)
Net Cash Provided by (Used for) Investing Activities	(71.5)		(80.0)
Financing Activities
Short-term borrowings (repayments) – net	207.0		284.0
Repayments of long-term debt, including make-whole payments	—		(407.0)
Quarterly dividends paid	(105.1)		(97.2)
Purchase of treasury shares	(7.8)		(6.8)
Proceeds from stock option exercises	0.9		4.0
Other – net	(3.1)		(0.3)
Net Cash Provided by (Used for) Financing Activities	91.9		(223.3)
Effect of exchange rate changes on cash	0.3		—
Net increase (decrease) in cash and cash equivalents	(18.3)		(165.5)
Cash and cash equivalents at beginning of period	169.9		334.3
Cash and Cash Equivalents at End of Period	$	151.6	$	168.8

( ) Denotes use of cash

See notes to unaudited condensed consolidated financial statements.

4

THE J. M. SMUCKER COMPANY

CONDENSED STATEMENTS OF CONSOLIDATED SHAREHOLDERS’ EQUITY

(Unaudited)

	Three Months Ended July 31, 2022
Dollars in millions	Common Shares Outstanding	Common Shares		Additional Capital		Retained Income		Accumulated Other Comprehensive Income (Loss)		Total Shareholders’ Equity
Balance at May 1, 2022	106,458,317	$	26.6	$	5,457.9	$	2,893.0	$	(237.4)	$	8,140.1
Net income						109.8				109.8
Other comprehensive income (loss)								4.0		4.0
Comprehensive income										113.8
Purchase of treasury shares	(61,693)	—		(6.7)		(1.1)				(7.8)
Stock plans	162,735	—		6.5		—				6.5
Cash dividends declared, $1.02 per common share						(108.3)				(108.3)
Balance at July 31, 2022	106,559,359	$	26.6	$	5,457.7	$	2,893.4	$	(233.4)	$	8,144.3

	Three Months Ended July 31, 2021
Dollars in millions	Common Shares Outstanding	Common Shares		Additional Capital		Retained Income		Accumulated Other Comprehensive Income (Loss)		Total Shareholders’ Equity
Balance at May 1, 2021	108,339,057	$	27.1	$	5,527.6	$	2,847.5	$	(277.4)	$	8,124.8
Net income						153.9				153.9
Other comprehensive income (loss)								(4.2)		(4.2)
Comprehensive income										149.7
Purchase of treasury shares	(50,203)	—		(6.1)		(0.7)				(6.8)
Stock plans	71,140	—		9.5						9.5
Cash dividends declared, $0.99 per common share						(106.9)				(106.9)
Balance at July 31, 2021	108,359,994	$	27.1	$	5,531.0	$	2,893.8	$	(281.6)	$	8,170.3

See notes to unaudited condensed consolidated financial statements.

5

THE J. M. SMUCKER COMPANY

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in millions, unless otherwise noted, except per share data)

Note 1: Basis of Presentation

The unaudited interim condensed consolidated financial statements of The J. M. Smucker Company (“Company,” “we,” “us,” or “our”) have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all the information and notes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments of a normal recurring nature considered necessary for a fair presentation have been included.

Operating results for the three months ended July 31, 2022, are not necessarily indicative of the results that may be expected for the year ending April 30, 2023. For further information, reference is made to the consolidated financial statements and notes included in our Annual Report on Form 10-K for the year ended April 30, 2022.

Note 2: Recently Issued Accounting Standards

In March 2022, the U.S. Securities and Exchange Commission (the “SEC”) issued the proposed rule under SEC Release No. 33-11042, The Enhancement and Standardization of Climate-Related Disclosures for Investors, to enhance and standardize the climate-related disclosures provided by public companies. This update will require the disclosure of greenhouse gas emissions, including Scope 1 and Scope 2 emissions, which will be subject to third-party assurance, as well as climate-related targets and goals, and how the Board of Directors (the “Board”) and management oversee climate-related risks. As of July 31, 2022, these amendments were not adopted by the SEC; however, we anticipate that the adoption of these amendments will have a material impact on our financial statements and disclosures.

Note 3: Integration and Restructuring Costs

Integration and restructuring costs primarily consist of employee-related costs and other transition and termination costs related to certain divestiture, acquisition, integration, or restructuring activities. Employee-related costs include severance, retention bonuses, and relocation costs. Severance costs and retention bonuses are recognized over the estimated future service period of the impacted employees, and relocation costs are expensed as incurred. Other transition and termination costs include fixed asset-related charges, contract and lease termination costs, professional fees, and other miscellaneous expenditures associated with the integration or restructuring activities. With the exception of accelerated depreciation, these costs are expensed as incurred. These integration and restructuring costs are reported in cost of products sold and other special project costs in the Condensed Statements of Consolidated Income and are not allocated to segment profit. The obligation related to employee separation costs is included in other current liabilities in the Condensed Consolidated Balance Sheets.

Restructuring Costs: A restructuring program was approved by the Board during 2021, associated with opportunities identified to reduce our overall cost structure, optimize our organizational design, and support our portfolio reshape. This is inclusive of certain restructuring costs associated with the divestitures of the Crisco®, Natural Balance®, private label dry pet food, and natural beverage and grains businesses. For additional information, see Note 4: Divestitures.

During 2021, we substantially completed an organizational redesign related to our corporate headquarters and announced plans to close our Suffolk, Virginia, facility as a result of a new strategic partnership for the production of our liquid coffee products. During 2022, we completed the transition of production to JDE Peet’s N.V., as anticipated. Furthermore, the restructuring program was expanded during the third quarter of 2022 to include certain costs associated with the recent divestitures of the private label dry pet food and natural beverage and grains businesses, as well as the closure of our Ripon, Wisconsin, production facility by the end of calendar year 2022 to further optimize operations for our U.S. Retail Consumer Foods business. We expect to incur costs of approximately $70.0 associated with the restructuring activities planned to date. More than half of these costs are expected to be other transition and termination costs associated with our cost reduction and margin management initiatives, inclusive of accelerated depreciation, while the remainder represents employee-related costs. We anticipate the planned activities associated with this restructuring program will be completed by the end of 2023.

6

The following table summarizes our restructuring costs incurred related to the restructuring program.

	Three Months Ended July 31,				Total Costs Incurred to Date at July 31, 2022
	2022		2021
Employee-related costs	$	1.1	$	1.3	$	24.7
Other transition and termination costs	1.4		5.1		30.4
Total restructuring costs	$	2.5	$	6.4	$	55.1

The obligation related to severance costs and retention bonuses was $2.7 and $2.4 at July 31, 2022 and April 30, 2022, respectively. As of July 31, 2022, cumulative noncash charges incurred to date were $27.8, including $4.8 and $3.3 incurred during the three months ended July 31, 2022 and 2021, respectively, and primarily consisted of accelerated depreciation.

Note 4: Divestitures

On January 31, 2022, we sold the natural beverage and grains businesses to Nexus Capital Management LP (“Nexus”). The transaction included products sold under the R.W. Knudsen® and TruRoots® brands, inclusive of certain trademarks, a licensing agreement for Santa Cruz Organic® beverages, dedicated manufacturing and distribution facilities in Chico, California, and Havre de Grace, Maryland, and approximately 150 employees who supported the natural beverage and grains businesses. The transaction did not include Santa Cruz Organic nut butters, fruit spreads, syrups, or applesauce. Under our ownership, the businesses generated net sales of $106.7 in 2022, primarily included in the U.S. Retail Consumer Foods segment. Final net proceeds from the divestiture were $98.7, which were inclusive of a working capital adjustment and cash transaction costs. We recognized a pre-tax gain of $28.3 related to the natural beverage and grains businesses, including $1.6 during the three months ended July 31, 2022, within other operating expense (income) – net in the Condensed Statement of Consolidated Income, upon finalization of the working capital adjustment. The remaining pre-tax gain was recognized during the second half of 2022.

On December 1, 2021, we sold the private label dry pet food business to Diamond Pet Foods, Inc. (“Diamond Pet Foods”). The transaction included dry pet food products sold under private label brands, a dedicated manufacturing facility located in Frontenac, Kansas, and approximately 220 employees who supported the private label dry pet food business. The transaction did not include any branded products or our private label wet pet food business. Under our ownership, the business generated net sales of $62.3 in 2022, included in the U.S. Retail Pet Foods segment. Final net proceeds from the divestiture were $32.9, which were net of cash transaction costs. Upon completion of this transaction during the third quarter of 2022, we recognized a pre-tax loss of $17.1.

Note 5: Reportable Segments

We operate in one industry: the manufacturing and marketing of food and beverage products. We have three reportable segments: U.S. Retail Pet Foods, U.S. Retail Coffee, and U.S. Retail Consumer Foods. The presentation of International and Away From Home represents a combination of all other operating segments that are not individually reportable.

The U.S. Retail Pet Foods segment primarily includes the domestic sales of Rachael Ray® Nutrish®, Meow Mix®, Milk-Bone®, 9Lives®, Kibbles ’n Bits®, Pup-Peroni®, and Nature’s Recipe® branded products; the U.S. Retail Coffee segment primarily includes the domestic sales of Folgers®, Dunkin’®, and Café Bustelo® branded coffee; and the U.S. Retail Consumer Foods segment primarily includes the domestic sales of Smucker’s® and Jif® branded products. International and Away From Home includes the sale of products distributed domestically and in foreign countries through retail channels and foodservice distributors and operators (e.g., health care operators, restaurants, lodging, hospitality, offices, K-12, colleges and universities, and convenience stores).

Segment profit represents net sales, less direct and allocable operating expenses, and is consistent with the way in which we manage our segments. However, we do not represent that the segments, if operated independently, would report operating profit equal to the segment profit set forth below, as segment profit excludes certain expenses such as amortization expense and impairment charges related to intangible assets, gains and losses on divestitures, the net change in cumulative unallocated gains and losses on commodity and foreign currency exchange derivative activities (“change in net cumulative unallocated derivative gains and losses”), certain divestiture, acquisition, integration, and restructuring costs (“special project costs”), as well as corporate administrative expenses.

7

Commodity and foreign currency exchange derivative gains and losses are reported in unallocated derivative gains and losses outside of segment operating results until the related inventory is sold. At that time, we reclassify the hedge gains and losses from unallocated derivative gains and losses to segment profit, allowing our segments to realize the economic effect of the hedge without experiencing any mark-to-market volatility. We would expect that any gain or loss in the estimated fair value of the derivatives would generally be offset by a change in the estimated fair value of the underlying exposures.

The following table reconciles segment profit to income before income taxes.

	Three Months Ended July 31,
	2022		2021
Net sales:
U.S. Retail Pet Foods	$	729.0	$	648.0
U.S. Retail Coffee	597.9		543.2
U.S. Retail Consumer Foods	311.1		435.6
International and Away From Home	235.0		231.2
Total net sales	$	1,873.0	$	1,858.0
Segment profit:
U.S. Retail Pet Foods	$	120.3	$	79.9
U.S. Retail Coffee	145.9		151.3
U.S. Retail Consumer Foods	54.8		118.7
International and Away From Home	16.6		32.9
Total segment profit	$	337.6	$	382.8
Amortization	(55.6)		(55.4)
Gain on divestiture	1.6		—
Interest expense – net	(39.1)		(43.1)
Change in net cumulative unallocated derivative gains and losses	(33.8)		(2.2)
Cost of products sold – special project costs (A)	(1.1)		(4.6)
Other special project costs (A)	(1.4)		(1.8)
Corporate administrative expenses	(67.6)		(59.4)
Other income (expense) – net	0.5		(11.1)
Income before income taxes	$	141.1	$	205.2

(A)Special project costs include certain divestiture, acquisition, integration, and restructuring costs, which are recognized in cost of products sold and other special project costs in the Condensed Statements of Consolidated Income. For more information, see Note 3: Integration and Restructuring Costs.

The following table presents certain geographical information.

	Three Months Ended July 31,
	2022		2021
Net sales:
United States	$	1,759.9	$	1,733.2
International:
Canada	$	93.8	$	102.1
All other international	19.3		22.7
Total international	$	113.1	$	124.8
Total net sales	$	1,873.0	$	1,858.0

8

The following table presents product category information.

	Three Months Ended July 31,
	2022		2021		Primary Reportable Segment (A)
Coffee	$	679.9	$	613.1	U.S. Retail Coffee
Cat food	265.4		221.0		U.S. Retail Pet Foods
Pet snacks	244.2		215.8		U.S. Retail Pet Foods
Dog food	241.7		228.3		U.S. Retail Pet Foods
Frozen handheld	160.5		121.6		U.S. Retail Consumer Foods
Fruit spreads	100.1		90.8		U.S. Retail Consumer Foods
Peanut butter	60.6		211.3		U.S. Retail Consumer Foods
Portion control	27.8		34.4		Other (B)
Baking mixes and ingredients	16.3		12.4		Other (B)
Juices and beverages	0.8		33.2		Other (B) (C)
Other	75.7		76.1		Other (B)
Total net sales	$	1,873.0	$	1,858.0

(A)The primary reportable segment generally represents at least 75 percent of total net sales for each respective product category.

(B)Represents the International and Away From Home operating segments, which are combined for segment reporting purposes.

(C)During the three months ended July 31, 2021, the net sales within this category were primarily related to the divested natural beverage business included in the U.S. Retail Consumer Foods segment. For more information, see Note 4: Divestitures.

Note 6: Earnings per Share

We computed net income per common share (“basic earnings per share”) under the two-class method for the three months ended July 31, 2022 and 2021, due to certain unvested common shares that contained non-forfeitable rights to dividends (i.e., participating securities) during these periods. For the three months ended July 31, 2022, the computation of net income per common share – assuming dilution (“diluted earnings per share”) was more dilutive under the treasury stock method, as compared to the two-class method; therefore, the treasury stock method was used in accordance with FASB ASC 260, Earnings Per Share. Diluted earnings per share for the three months ended July 31, 2021 was computed under the two-class method.

The following table sets forth the computation of basic earnings per share and diluted earnings per share under the two-class method.

	Three Months Ended July 31,
	2022		2021
Net income	$	109.8	$	153.9
Less: Net income allocated to participating securities	0.2		0.5
Net income allocated to common stockholders	$	109.6	$	153.4
Weighted-average common shares outstanding	106.3		108.0
Add: Dilutive effect of stock options	0.1		0.1
Weighted-average common shares outstanding – assuming dilution	106.4		108.1
Net income per common share	$	1.03	$	1.42
Net income per common share – assuming dilution	$	1.03	$	1.42

9

The following table sets forth the computation of diluted earnings per share under the treasury stock method for the three months ended July 31, 2022.

Net income	$	109.8
Weighted-average common shares outstanding – assuming dilution:
Weighted-average common shares outstanding	106.3
Add: Dilutive effect of stock options	0.1
Add: Dilutive effect of restricted shares, restricted stock units, and performance units	0.4
Weighted-average common shares outstanding – assuming dilution	106.8
Net income per common share – assuming dilution	$	1.03

Note 7: Debt and Financing Arrangements

The following table summarizes the components of our long-term debt.

	July 31, 2022				April 30, 2022
	Principal Outstanding		Carrying Amount (A)		Principal Outstanding		Carrying Amount (A)
3.50% Senior Notes due March 15, 2025	1,000.0		997.8		1,000.0		997.6
3.38% Senior Notes due December 15, 2027	500.0		497.7		500.0		497.6
2.38% Senior Notes due March 15, 2030	500.0		496.3		500.0		496.2
2.13% Senior Notes due March 15, 2032	500.0		494.0		500.0		493.8
4.25% Senior Notes due March 15, 2035	650.0		644.8		650.0		644.7
2.75% Senior Notes due September 15, 2041	300.0		297.1		300.0		297.1
4.38% Senior Notes due March 15, 2045	600.0		587.8		600.0		587.6
3.55% Senior Notes due March 15, 2050	300.0		296.0		300.0		296.0
Total long-term debt	$	4,350.0	$	4,311.5	$	4,350.0	$	4,310.6

(A) Represents the carrying amount included in the Condensed Consolidated Balance Sheets, which includes the impact of capitalized debt issuance costs, offering discounts, and terminated interest rate contracts.

We have available a $2.0 billion unsecured revolving credit facility with a group of 11 banks that matures in August 2026. Borrowings under the revolving credit facility bear interest on the prevailing U.S. Prime Rate, London Interbank Offered Rate, Euro Interbank Offered Rate, or Canadian Dealer Offered Rate, based on our election. Interest is payable either on a quarterly basis or at the end of the borrowing term. We do not have a balance outstanding under the revolving credit facility at July 31, 2022, or April 30, 2022.

We participate in a commercial paper program under which we can issue short-term, unsecured commercial paper not to exceed $2.0 billion at any time. The commercial paper program is backed by our revolving credit facility and reduces what we can borrow under the revolving credit facility by the amount of commercial paper outstanding. Commercial paper is used as a continuing source of short-term financing for general corporate purposes. As of July 31, 2022, and April 30, 2022, we had $388.0 and $180.0 of short-term borrowings outstanding, respectively, which were issued under our commercial paper program at a weighted-average interest rate of 2.60 percent and 0.65 percent, respectively.

Interest paid totaled $9.4 and $12.8 for the three months ended July 31, 2022 and 2021, respectively. This differs from interest expense due to the timing of interest payments, capitalized interest, the effect of interest rate contracts, amortization of debt issuance costs and discounts, and the payment of other debt fees.

Our debt instruments contain certain covenant restrictions, including an interest coverage ratio. As of July 31, 2022, we are in compliance with all covenants.

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Note 8: Pensions and Other Postretirement Benefits

The components of our net periodic benefit cost for defined benefit pension and other postretirement benefit plans are shown below.

	Three Months Ended July 31,
	Defined Benefit Pension Plans				Other Postretirement Benefits
	2022		2021		2022		2021
Service cost	$	0.3	$	0.4	$	0.2	$	0.3
Interest cost	4.4		3.2		0.6		0.4
Expected return on plan assets	(4.0)		(4.1)		—		—
Amortization of net actuarial loss (gain)	1.0		1.7		(0.3)		(0.1)
Amortization of prior service cost (credit)	0.1		0.2		(0.1)		(0.2)
Settlement loss (gain)	—		3.7		—		—
Net periodic benefit cost	$	1.8	$	5.1	$	0.4	$	0.4

During the first quarter of 2023, we made contributions of $70.0 to increase funding for our U.S. qualified defined benefit pension plans and direct benefit payments of $0.7.

Note 9: Derivative Financial Instruments

We are exposed to market risks, such as changes in commodity prices, foreign currency exchange rates, and interest rates. To manage the volatility related to these exposures, we enter into various derivative transactions. We have policies in place that define acceptable instrument types we may enter into and establish controls to limit our market risk exposure.

Commodity Derivatives: We enter into commodity derivatives to manage price volatility and reduce the variability of future cash flows related to anticipated inventory purchases of key raw materials, notably green coffee, soybean meal, corn, edible oils, and wheat. We also enter into commodity derivatives to manage price risk for energy input costs, including diesel fuel and natural gas. Our derivative instruments generally have maturities of less than one year.

We do not qualify commodity derivatives for hedge accounting treatment, and as a result, the derivative gains and losses are immediately recognized in earnings. Although we do not perform the assessments required to achieve hedge accounting for derivative positions, we believe all our commodity derivatives are economic hedges of our risk exposure.

The commodities hedged have a high inverse correlation to price changes of the derivative instrument. Thus, we would expect that over time any gain or loss in the estimated fair value of the derivatives would generally be offset by an increase or decrease in the estimated fair value of the underlying exposures.

Foreign Currency Exchange Derivatives: We utilize foreign currency derivatives to manage the effect of foreign currency exchange fluctuations on future cash payments primarily related to purchases of certain raw materials and finished goods. The contracts generally have maturities of less than one year. We do not qualify instruments used to manage foreign currency exchange exposures for hedge accounting treatment.

Interest Rate Derivatives: We utilize derivative instruments to manage interest rate risk associated with anticipated debt transactions, as well as to manage changes in the fair value of our long-term debt. At the inception of an interest rate contract, the instrument is evaluated and documented for qualifying hedge accounting treatment. If the contract is designated as a cash flow hedge, the mark-to-market gains or losses on the contract are deferred and included as a component of accumulated other comprehensive income (loss) and generally reclassified to interest expense in the period during which the hedged transaction affects earnings. If the contract is designated as a fair value hedge, the contract is recognized at fair value on the balance sheet and changes in the fair value are recognized in interest expense. Generally, changes in the fair value of the contract are equal to changes in the fair value of the underlying debt and have no net impact on earnings.

The following table presents the gross notional value of outstanding derivative contracts.

	July 31, 2022		April 30, 2022
Commodity contracts	$	1,383.7	$	2,086.2
Foreign currency exchange contracts	85.5		91.3

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The following tables set forth the gross fair value amounts of derivative instruments recognized in the Condensed Consolidated Balance Sheets.

	July 31, 2022
	Other Current Assets		Other Current Liabilities		Other Noncurrent Assets		Other Noncurrent Liabilities
Derivatives not designated as hedging instruments:
Commodity contracts	$	31.1	$	27.0	$	—	$	—
Foreign currency exchange contracts	0.9		0.2		—		—
Total derivative instruments	$	32.0	$	27.2	$	—	$	—

	April 30, 2022
	Other Current Assets		Other Current Liabilities		Other Noncurrent Assets		Other Noncurrent Liabilities
Derivatives not designated as hedging instruments:
Commodity contracts	$	45.4	$	22.3	$	—	$	—
Foreign currency exchange contracts	1.7		—		—		—
Total derivative instruments	$	47.1	$	22.3	$	—	$	—

We have elected to not offset fair value amounts recognized for our exchange-traded derivative instruments and our cash margin accounts executed with the same counterparty that are generally subject to enforceable netting agreements. We are required to maintain cash margin accounts in connection with funding the settlement of our open positions. Our cash margin accounts represented collateral pledged of $42.4 and $54.6 at July 31, 2022, and April 30, 2022, respectively, and are included in other current assets in the Condensed Consolidated Balance Sheets. The change in the cash margin account balances is included in other – net, investing activities in the Condensed Statements of Consolidated Cash Flows. In the event of default and immediate net settlement of all our open positions with individual counterparties, all our derivative liabilities would be fully offset by either our derivative asset positions or margin accounts based on the net asset or liability position with our individual counterparties. Cash flows associated with the settlement of derivative instruments are classified in the same line item as the cash flows of the related hedged item, which is within operating activities in the Condensed Statements of Consolidated Cash Flows.

Economic Hedges

The following table presents the net gains and losses recognized in cost of products sold on derivatives not designated as hedging instruments.

	Three Months Ended July 31,
	2022		2021
Derivative gains (losses) on commodity contracts	$	(8.9)	$	15.8
Derivative gains (losses) on foreign currency exchange contracts	(0.2)		1.5
Total derivative gains (losses) recognized in cost of products sold	$	(9.1)	$	17.3

Commodity and foreign currency exchange derivative gains and losses are reported in unallocated derivative gains and losses outside of segment operating results until the related inventory is sold. At that time, we reclassify the hedge gains and losses from unallocated derivative gains and losses to segment profit, allowing our segments to realize the economic effect of the hedge without experiencing any mark-to-market volatility. The following table presents the net change in cumulative unallocated derivative gains and losses.

	Three Months Ended July 31,
	2022		2021
Net derivative gains (losses) recognized and classified as unallocated	$	(9.1)	$	17.3
Less: Net derivative gains (losses) reclassified to segment operating profit	24.7		19.5
Change in net cumulative unallocated derivative gains and losses	$	(33.8)	$	(2.2)

The net cumulative unallocated derivative gains were $3.5 and $37.3 at July 31, 2022, and April 30, 2022, respectively.

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Cash Flow Hedges

In 2020, we terminated all outstanding interest rate contracts concurrent with the pricing of the Senior Notes due March 15, 2030, and March 15, 2050. The contracts were designated as cash flow hedges and were used to manage our exposure to interest rate volatility associated with the anticipated debt financing. The termination resulted in a pre-tax loss of $239.8, which was deferred and included as a component of accumulated other comprehensive income (loss) and is being amortized as interest expense over the life of the debt.

The following table presents information on the pre-tax gains and losses recognized on all terminated interest rate contracts which were previously designated as cash flow hedges.

	Three Months Ended July 31,
	2022		2021
Gains (losses) recognized in other comprehensive income (loss)	$	—	$	—
Less: Gains (losses) reclassified from accumulated other comprehensive income (loss) to interest expense – net (A)	(3.3)		(3.5)
Less: Gains (losses) reclassified from accumulated other comprehensive income (loss) to other income (expense) – net (B)	—		0.6
Change in accumulated other comprehensive income (loss)	$	3.3	$	2.9

(A)Interest expense – net, as presented in the Condensed Statements of Consolidated Income was $39.1 and $43.1 for the three months ended July 31, 2022 and 2021, respectively.

(B)Other income (expense) – net, as presented in the Condensed Statements of Consolidated Income was income of $0.5 and expense of $11.1 for the three months ended July 31, 2022 and 2021, respectively. The reclassification during the first quarter of 2022 is related to the debt extinguishment of the $400.0 Senior Notes due March 15, 2022.

Included as a component of accumulated other comprehensive income (loss) at July 31, 2022, and April 30, 2022, were deferred net pre-tax losses of $210.9 and $214.2, respectively, related to the terminated interest rate contracts. The related net tax benefit recognized in accumulated other comprehensive income (loss) at July 31, 2022, and April 30, 2022, was $49.5 and $50.3, respectively. Approximately $13.5 of the net pre-tax loss will be recognized over the next 12 months related to the terminated interest rate contracts.

Fair Value Hedges

In 2015, we terminated the interest rate swap on the Senior Notes due October 15, 2021, which was designated as a fair value hedge and used to hedge against the changes in the fair value of the debt. As a result of the early termination, we received $58.1 in cash, which included $4.6 of accrued and prepaid interest. The gain on termination was recorded as an increase in the long-term debt balance and was recognized over the life of the debt as a reduction of interest expense. As of the second quarter of 2022, we had fully recognized the gain of $53.5, of which $2.1 was recognized during three months ended July 31, 2021.

Note 10: Other Financial Instruments and Fair Value Measurements

Financial instruments, other than derivatives, that potentially subject us to significant concentrations of credit risk consist principally of cash investments, short-term borrowings, and trade receivables. The carrying value of these financial instruments approximates fair value. Our remaining financial instruments, with the exception of long-term debt, are recognized at estimated fair value in the Condensed Consolidated Balance Sheets.

The following table provides information on the carrying amounts and fair values of our financial instruments.

	July 31, 2022				April 30, 2022
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Marketable securities and other investments	$	25.8	$	25.8	$	26.6	$	26.6
Derivative financial instruments – net	4.8		4.8		24.8		24.8
Total long-term debt	(4,311.5)		(3,986.3)		(4,310.6)		(3,977.7)

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Valuation techniques are based on observable and unobservable inputs.

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Observable inputs reflect readily obtainable data from independent sources, while unobservable inputs reflect our market assumptions.

The following tables summarize the fair values and the levels within the fair value hierarchy in which the fair value measurements fall for our financial instruments.

	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Fair Value at July 31, 2022
Marketable securities and other investments: (A)
Equity mutual funds	$	5.2	$	—	$	—	$	5.2
Municipal obligations	—		18.5		—		18.5
Money market funds	2.1		—		—		2.1
Derivative financial instruments: (B)
Commodity contracts – net	4.1		—		—		4.1
Foreign currency exchange contracts – net	0.2		0.5		—		0.7
Total long-term debt (C)	(3,986.3)		—		—		(3,986.3)
Total financial instruments measured at fair value	$	(3,974.7)	$	19.0	$	—	$	(3,955.7)

	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)	Fair Value at April 30, 2022
Marketable securities and other investments: (A)
Equity mutual funds	$	5.7	$	—	$