Maximum Length of Contract Maturity

  
  
Commodity Price RiskWe principally use a combination of purchase orders and various short- and long-term supply arrangements in connection with the purchase of raw materials, including certain commodities and agricultural products. We also enter into commodity futures, options and swap contracts to reduce the volatility of price fluctuations of wheat, diesel fuel, natural gas, soybean oil, aluminum, cocoa, corn, soybean meal and butter. Commodity futures, options and swap contracts are either designated as cash-flow hedging instruments or are undesignated. We hedge a portion of commodity requirements for periods typically up to 18 months. The notional amount of commodity contracts designated as cash flow hedges was $3 million as of July 31, 2022, and $18 million 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. The notional amount of commodity contracts not designated as accounting hedges was $254 million as of July 31, 2022, and $190 million as of August 1, 2021. The change in fair value on undesignated instruments is recorded in Cost of products sold.We have a supply contract under which prices for certain raw materials are established based on anticipated volume requirements over a twelve-month period. Certain prices under the contract are based in part on certain component parts of the raw materials that are in excess of our needs or not required for our operations, thereby creating an embedded derivative requiring bifurcation. We net settle amounts due under the contract with our counterparty. The notional amount was approximately $39 million as of July 31, 2022, and $38 million as of August 1, 2021. The change in fair value on the embedded derivative is recorded in Cost of products sold.Equity Price RiskWe enter into swap contracts which hedge a portion of exposures relating to certain deferred compensation obligations linked to the total return of the Vanguard Extended Market Index Plus Fund, the Vanguard Institutional Index Institutional Plus Fund, the Vanguard Short-Term Bond Index Fund and the Vanguard Total International Stock Index Fund. Prior to 2022, we had entered into swap contracts which hedged a portion of exposures linked to the total return of our capital stock. As of July 31, 2022, and August 1, 2021, we no longer hedge our exposure linked to the total return of our capital stock. These contracts are not designated as hedges for accounting purposes. Unrealized gains (losses) and settlements are included in Administrative expenses in the Consolidated Statements of Earnings. We enter into these contracts for periods typically not exceeding 12 months. The notional amounts of the contracts as of July 31, 2022, and August 1, 2021, were $50 million and $29 million, respectively.The following tables summarize the fair value of derivative instruments on a gross basis as recorded in the Consolidated Balance Sheets as of July 31, 2022, and August 1, 2021:

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| (Millions) | Balance Sheet Classification |  | 2022 |  | 2021 |
| Asset Derivatives |  |  |  |  |  |
| Derivatives designated as hedges: |  |  |  |  |  |
| Commodity contracts | Other current assets |  | $ | 3  |  |  | $ | 4  |  |
| Foreign exchange forward contracts | Other current assets |  | 2  |  |  | 1  |  |
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| Total derivatives designated as hedges |  |  | $ | 5  |  |  | $ | 5  |  |
| Derivatives not designated as hedges: |  |  |  |  |  |
| Commodity contracts | Other current assets |  | $ | 20  |  |  | $ | 49  |  |
|  |  |  |  |  |  |
| Deferred compensation contracts | Other current assets |  | —  |  |  | 3  |  |
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| Total derivatives not designated as hedges |  |  | $ | 20  |  |  | $ | 52  |  |
| Total asset derivatives |  |  | $ | 25  |  |  | $ | 57  |  |



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| (Millions) | Balance Sheet Classification |  | 2022 |  | 2021 |
| Liability Derivatives |  |  |  |  |  |
| Derivatives designated as hedges: |  |  |  |  |  |
|  |  |  |  |  |  |
| Foreign exchange forward contracts | Accrued liabilities |  | $ | —  |  |  | $ | 3  |  |
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| Total derivatives designated as hedges |  |  | $ | —  |  |  | $ | 3  |  |
| Derivatives not designated as hedges: |  |  |  |  |  |
| Commodity contracts | Accrued liabilities |  | $ | 30  |  |  | $ | —  |  |
|  |  |  |  |  |  |
| Deferred compensation contracts | Accrued liabilities |  | 4  |  |  | —  |  |
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| Total derivatives not designated as hedges |  |  | $ | 34  |  |  | $ | —  |  |
| Total liability derivatives |  |  | $ | 34  |  |  | $ | 3  |  |

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