CAMPBELL SOUP CO [CPB] Filings

10-Q 1 cpb-20211031.htm 10-Q cpb-20211031

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For The Quarterly Period Ended

Commission File Number

October 31, 2021

1-3822

CAMPBELL SOUP COMPANY


New Jersey			21-0419870
State of Incorporation			I.R.S. Employer Identification No.

1 Campbell Place

Camden, New Jersey 08103-1799

Principal Executive Offices

Telephone Number: (856) 342-4800

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

Trading Symbol

Name of Each Exchange on Which Registered

Capital Stock, par value $.0375

CPB

New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

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

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☑ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☑

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

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

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

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

TABLE OF CONTENTS


PART I - FINANCIAL INFORMATION		3
	Item 1. Financial Statements	3
	Consolidated Statements of Earnings	3
	Consolidated Statements of Comprehensive Income	4
	Consolidated Balance Sheets	5
	Consolidated Statements of Cash Flows	6
	Consolidated Statements of Equity	7
	Notes to Consolidated Financial Statements	8
















	Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	23
	Item 3. Quantitative and Qualitative Disclosure About Market Risk	30
	Item 4. Controls and Procedures	30
PART II - OTHER INFORMATION		31
	Item 1. Legal Proceedings	31
	Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	31
	Item 6. Exhibits	31
INDEX TO EXHIBITS		32
SIGNATURES		33

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, 2021		November 1, 2020
Net sales	$	2,236	$	2,340
Costs and expenses
Cost of products sold	1,514		1,527
Marketing and selling expenses	170		208
Administrative expenses	156		141
Research and development expenses	21		20
Other expenses / (income)	(1)		(18)
Restructuring charges	—		1
Total costs and expenses	1,860		1,879
Earnings before interest and taxes	376		461
Interest expense	47		55
Interest income	—		—
Earnings before taxes	329		406
Taxes on earnings	68		97
Earnings from continuing operations	261		309
Earnings (loss) from discontinued operations	—		—
Net earnings	261		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 — basic	302		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 dilution	303		304

See accompanying Notes to Consolidated Financial Statements.

CAMPBELL SOUP COMPANY

Consolidated Statements of Comprehensive Income

(unaudited)

(millions)


	Three Months Ended
	October 31, 2021						November 1, 2020
	Pre-tax amount		Tax (expense) benefit		After-tax amount		Pre-tax amount		Tax (expense) benefit		After-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 period	3		(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.

CAMPBELL SOUP COMPANY

Consolidated Balance Sheets

(unaudited)

(millions, except per share amounts)


	October 31, 2021		August 1, 2021
Current assets
Cash and cash equivalents	$	69	$	69
Accounts receivable, net	731		595
Inventories	974		933
Other current assets	102		98

Total current assets	1,876		1,695
Plant assets, net of depreciation	2,355		2,370
Goodwill	3,982		3,981
Other intangible assets, net of amortization	3,228		3,239
Other assets	458		449

Total assets	$	11,899	$	11,734
Current liabilities
Short-term borrowings	$	480	$	48
Payable to suppliers and others	1,151		1,070
Accrued liabilities	539		576
Dividends payable	113		115
Accrued income taxes	55		5

Total current liabilities	2,338		1,814
Long-term debt	4,567		5,010
Deferred taxes	1,073		1,051
Other liabilities	684		705

Total liabilities	8,662		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 capital	372		414
Earnings retained in the business	3,882		3,742
Capital stock in treasury, at cost	(1,038)		(1,021)
Accumulated other comprehensive income (loss)	7		5
Total Campbell Soup Company shareholders' equity	3,235		3,152
Noncontrolling interests	2		2
Total equity	3,237		3,154
Total liabilities and equity	$	11,899	$	11,734

See accompanying Notes to Consolidated Financial Statements.

CAMPBELL SOUP COMPANY

Consolidated Statements of Cash Flows

(unaudited)

(millions)


	Three Months Ended
	October 31, 2021		November 1, 2020
Cash flows from operating activities:
Net earnings	$	261	$	309
Adjustments to reconcile net earnings to operating cash flow


Stock-based compensation	14		16


Pension and postretirement benefit income	(9)		(20)
Depreciation and amortization	83		76
Deferred income taxes	20		25



Other	22		22
Changes in working capital
Accounts receivable	(137)		(189)
Inventories	(40)		(38)
Prepaid assets	(5)		8
Accounts payable and accrued liabilities	87		(28)


Other	(8)		(1)
Net cash provided by operating activities	288		180
Cash flows from investing activities:
Purchases of plant assets	(69)		(74)

Purchases of route businesses	—		(1)
Sales of route businesses	1		3



Net cash used in investing activities	(68)		(72)
Cash flows from financing activities:
Short-term borrowings, including commercial paper	371		—
Short-term repayments, including commercial paper	(395)		(123)



Dividends paid	(116)		(108)
Treasury stock purchases	(63)		—
Treasury stock issuances	1		—


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 period	69		859

Cash and cash equivalents — end of period	$	69	$	722

See accompanying Notes to Consolidated Financial Statements.

CAMPBELL SOUP COMPANY

Consolidated Statements of Equity

(unaudited)

(millions, except per share amounts)


	Campbell Soup Company Shareholders’ Equity
	Capital Stock						Additional Paid-in Capital		Earnings Retained in the Business		Accumulated Other Comprehensive Income (Loss)		Noncontrolling Interests
	Issued			In Treasury											Total Equity
	Shares	Amount		Shares	Amount









Balance at August 2, 2020	323	$	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, 2020	323	$	12	(20)	$	(991)	$	370	$	3,387	$	(9)	$	4	$	2,773









Balance at August 1, 2021	323	$	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 plans				1	46		(42)		(8)						(4)
Balance at October 31, 2021	323	$	12	(21)	$	(1,038)	$	372	$	3,882	$	7	$	2	$	3,237

See accompanying Notes to Consolidated Financial Statements.

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 reclassifications	2		—		—		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

_____________________________________

(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) Components	October 31, 2021		November 1, 2020		Location of Loss (Gain) Recognized in Earnings







Losses (gains) on cash-flow hedges:
Commodity contracts	$	(1)	$	—	Cost of products sold
Foreign exchange forward contracts	1		—		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 & Beverages		Snacks		Total




Net balance at August 1, 2021	$	970	$	3,011	$	3,981


Amounts reclassified due to segment change(1)	25		(25)		—

Foreign currency translation adjustment	1		—		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, 2021						August 1, 2021
Intangible Assets	Cost		Accumulated Amortization		Net		Cost		Accumulated Amortization		Net
Amortizable intangible assets
Customer relationships	$	830	$	(151)	$	679	$	830	$	(140)	$	690
Non-amortizable intangible assets
Trademarks					2,549						2,549
Total net intangible assets					$	3,228					$	3,239

As of October 31, 2021, the carrying value of indefinite-lived trademarks is detailed below:


	Various Other(1)		Snyder's of Hanover		Lance		Pace		Pacific 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, 2021		November 1, 2020
Net sales
Meals & Beverages	$	1,266	$	1,363
Snacks	970		977
Total	$	2,236	$	2,340


	Three Months Ended
	October 31, 2021		November 1, 2020
Earnings before interest and taxes
Meals & Beverages	$	280	$	337
Snacks	128		135
Corporate income (expense)(1)	(32)		(10)
Restructuring charges(2)	—		(1)
Total	$	376	$	461

_______________________________________

(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, 2021		November 1, 2020
Net sales
Soup	$	797	$	826
Snacks	1,003		1,008
Other simple meals	264		311
Beverages	172		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, 2021		November 1, 2020		Recognized as of October 31, 2021
Restructuring charges		$	—	$	1	$	259
Administrative expenses		2		4		341
Cost of products sold		2		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 depreciation	82
Implementation costs and other related costs	394
Total	$	698

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
Snacks	3		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.

8. Pension and Postretirement Benefits

Components of net benefit expense (income) were as follows:


	Three Months Ended
	Pension				Postretirement
	October 31, 2021		November 1, 2020		October 31, 2021		November 1, 2020
Service cost	$	4	$	5	$	—	$	—
Interest cost	10		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, 2021		November 1, 2020
Operating lease cost	$	19	$	20
Finance lease - amortization of right-of-use (ROU) assets	4		1

Short-term lease cost	13		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 Classification	October 31, 2021		August 1, 2021
ROU assets, net	Other assets	$	231	$	235
Lease liabilities (current)	Accrued liabilities	$	54	$	54
Lease liabilities (noncurrent)	Other liabilities	$	176	$	180

	Finance Leases
	Balance Sheet Classification	October 31, 2021		August 1, 2021
ROU assets, net	Plant assets, net of depreciation	$	38	$	29
Lease liabilities (current)	Short-term borrowings	$	15	$	11
Lease liabilities (noncurrent)	Long-term debt	$	24	$	19

The following table summarizes cash flow and other information related to leases:

Three Months Ended

October 31, 2021

November 1, 2020

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash flows from operating leases