Skip to content
||
Newsroom

Campbell Reports Fourth-Quarter and Full-Year Results and Increases Quarterly Dividend

News

CAMDEN, N.J.–(BUSINESS WIRE)–Sep. 1, 2016–
Campbell Soup Company (NYSE:CPB) today reported its
fourth-quarter and full-year results for fiscal 2016 and announced a 12
percent increase in its quarterly dividend.

Three Months Ended

Twelve Months Ended

($ in millions, except per share)

July 31,
2016

Aug. 2,
2015

%
Change

July 31,
2016

Aug. 2,
2015

%
Change

Net Sales
As Reported (GAAP) $1,687 $1,693 -% $7,961 $8,082 (1)%
Organic (1) % (1)%
Earnings (Loss) Before Interest and Taxes
As Reported (GAAP) $(37) $43 n/m $960 $1,054 (9)%
Adjusted $253 $259 (2)% $1,467 $1,316 11%
Diluted Earnings (Loss) Per Share
As Reported (GAAP) $(0.26) $0.05 n/m $1.81 $2.13 (15)%
Adjusted $0.46 $0.49 (6)% $2.94 $2.65 11%

n/m – not meaningful

Note: A detailed reconciliation of the reported financial information to
the adjusted financial information is included at the end of this news
release.

CEO Comments

Denise Morrison, Campbell’s President and Chief Executive Officer, said,
“We finished the year in line with our guidance, including strong profit
performance. However, I am not pleased with the results of our fourth
quarter. The performance of our Campbell Fresh business, driven
predominantly by execution issues, is disappointing. We have taken and
are taking steps designed to ensure the business performs to its
potential. We remain confident in our Campbell Fresh strategy and its
ability to deliver long-term growth consistent with its portfolio role,
as the business remains well-positioned to capitalize on the health and
well-being consumer trend. For the year, Americas Simple Meals and
Beverages and Global Biscuits and Snacks delivered significant margin
expansion, driving double-digit profit growth. Despite the difficult
quarter, we delivered adjusted EPS growth of 11 percent for the year.”

Morrison concluded, “While we have made progress, we recognize we need
to deliver sales growth – and it remains a top priority. Reflecting its
confidence in our long-term growth prospects and strong profit
performance this year, the Board declared a 12 percent increase in our
quarterly dividend today.”

Items Impacting Comparability

The Company reported a loss of $0.26 per share in the fourth quarter.
The current quarter results reflect a pre-tax non-cash impairment charge
of $141 million, or $0.41 per share, to reduce the carrying value of the
intangible assets of the Bolthouse Farms carrot and carrot ingredients
reporting unit. The current quarter also included pre-tax pension and
postretirement mark-to-market losses of $138 million, or $0.29 per
share, and pre-tax charges related to cost savings initiatives of $11
million, or $0.02 per share. The prior-year quarter included pre-tax
pension and postretirement mark-to-market losses of $110 million, or
$0.22 per share, and pre-tax charges related to the implementation of
the new organizational structure and cost savings initiatives of $106
million, or $0.21 per share. Excluding items impacting comparability in
both periods, adjusted EPS decreased 6 percent to $0.46 per share,
compared with $0.49 per share in the year-ago quarter. A detailed
reconciliation of the reported financial information to the adjusted
information is included at the end of this news release.

Fourth-Quarter Results

Sales of $1.687 billion were comparable to prior year as the benefit
from the acquisition of Garden Fresh Gourmet was offset by the decline
in organic sales and the adverse impact of currency translation. Organic
sales decreased 1 percent primarily driven by Campbell Fresh, reflecting
declines in carrots and carrot ingredients, as well as the impact from
the voluntary recall announced on June 22 of Bolthouse Farms Protein
PLUS
drinks. The estimated negative impact on net sales in the
fourth quarter related to the recall and related production outages was
approximately one percentage point.

Gross margin decreased from 33.2 percent to 32.4 percent. Excluding
items impacting comparability, adjusted gross margin decreased 0.9
points. The decrease in adjusted gross margin was primarily driven by
increased promotional spending, inflation, the impact of the Bolthouse
Farms recall and related production outages, as well as higher carrot
costs, partly offset by productivity improvements.

Marketing and selling expenses increased 14 percent to $216 million.
Excluding items impacting comparability, adjusted marketing and selling
expenses increased 14 percent to $196 million primarily due to higher
advertising and consumer promotion expenses. Administrative expenses
decreased 4 percent to $185 million. Excluding items impacting
comparability, adjusted administrative expenses decreased 19 percent to
$128 million primarily due to lower incentive compensation costs and the
benefits from cost savings initiatives.

As reported EBIT was a loss of $37 million, reflecting the non-cash
impairment charge, pension and postretirement mark-to-market losses and
charges associated with cost savings initiatives as previously
mentioned. Excluding items impacting comparability, adjusted EBIT
decreased 2 percent to $253 million reflecting higher advertising and
consumer promotion expenses and a lower adjusted gross margin
percentage, partly offset by lower administrative expenses.

Net interest expense increased $1 million to $28 million reflecting
higher average interest rates on the debt portfolio, partly offset by
lower levels of debt. The tax rate increased to 24.6 percent as compared
with a tax rate of 6.3 percent in the prior year. Excluding items
impacting comparability, the adjusted tax rate increased 2.3 percentage
points to 36.4 percent. The increase in the adjusted tax rate reflects a
$13 million correction for deferred taxes, most of which related to the
third quarter of fiscal 2016. This was partly offset by the geographic
mix of earnings.

Full-Year Results

Sales decreased 1 percent to $7.961 billion driven by the adverse impact
of currency translation and a decline in organic sales, partly offset by
the benefit from the acquisition of Garden Fresh Gourmet. Organic sales
decreased 1 percent driven by lower volume, partly offset by higher
selling prices.

EBIT decreased 9 percent to $960 million. Excluding items impacting
comparability, adjusted EBIT increased 11 percent to $1.467 billion
reflecting a higher adjusted gross margin percentage and the benefits
from cost savings initiatives, partly offset by the adverse impact of
currency translation, higher incentive compensation costs, and volume
declines.

Net interest expense increased $6 million to $111 million reflecting
higher average interest rates on the debt portfolio, partly offset by
lower levels of debt. The tax rate increased 3.9 percentage points to
33.7 percent. Excluding items impacting comparability, the adjusted tax
rate increased 1.2 percentage points to 32.6 percent. This increase was
primarily due to lapping the favorable resolution of an intercompany
pricing agreement between the U.S. and Canada in the prior year.

Cash flow from operations increased to $1.463 billion from $1.182
billion a year ago primarily due to higher cash earnings and lower
working capital requirements.

Company Announces Quarterly Dividend Increase

Campbell announced that the company’s Board of Directors has approved an
increase in its quarterly dividend from $0.312 per share to $0.35 per
share, an increase of 12 percent. The quarterly dividend is payable Oct.
31, 2016, to shareholders of record at the close of business Oct. 12,
2016.

Fiscal 2017 Guidance

Campbell expects sales to increase by 0 to 1 percent, adjusted EBIT to
increase by 1 to 4 percent, and adjusted EPS to increase by 2 to 5
percent, or $3.00 to $3.09 per share. This guidance assumes the impact
from currency translation will be nominal. A non-GAAP reconciliation is
not provided for 2017 guidance since certain items are not estimable,
such as pension and postretirement mark-to-market adjustments, and these
items are not considered to be part of the company’s ongoing business
results.

Segment Operating Review

An analysis of net sales and operating earnings by reportable segment
follows:

Three Months Ended July 31, 2016

($ in millions)

Americas
Simple Meals
and Beverages

Global Biscuits
and Snacks

Campbell
Fresh

Total
Net Sales, as Reported $842 $622 $223 $1,687
Volume and Mix 2% 3% (10)% 1%
Price and Sales Allowances -% 1% -% -%
Promotional Spending (1)% (2)% (2)% (2)%
Organic Net Sales -%* 2% (12)% (1)%
Currency -% (1)% -% (1)%
Acquisitions -% -% 7% 1%
% Change vs. Prior Year -% 1% (5)% -%*
Segment Operating Earnings $191 $81 $8
% Change vs. Prior Year 4% 5% (62)%

* Numbers do not add due to rounding.

Note: A detailed reconciliation of the reported net sales to organic net
sales is included at the end of this news release.

Twelve Months Ended July 31, 2016

($ in millions)

Americas
Simple Meals
and Beverages

Global Biscuits
and Snacks

Campbell
Fresh

Total
Net Sales, as Reported $4,380 $2,564 $1,017 $7,961
Volume and Mix (2)% 1% (3)% (1)%
Price and Sales Allowances 1% 1% -% 1%
Promotional Spending -% -% (1)% -%
Organic Net Sales (1)% 1%* (4)% (1)%*
Currency (1)% (4)% -% (2)%
Acquisitions -% -% 10% 1%
% Change vs. Prior Year (2)% (3)% 5%* (1)%*
Segment Operating Earnings $1,069 $422 $60
% Change vs. Prior Year 13% 10% (2)%

* Numbers do not add due to rounding.

Note: A detailed reconciliation of the reported net sales to organic net
sales is included at the end of this news release.

Americas Simple Meals and Beverages

Sales in the quarter were comparable to the prior year at $842 million
driven by gains in Prego pasta sauces and Plum products,
partly offset by declines in V8 beverages and soup. U.S. soup
sales decreased 2 percent driven by declines in ready-to-serve soups,
partly offset by increases in broth.

Segment operating earnings increased 4 percent to $191 million. The
increase was primarily driven by a higher gross margin percentage,
partly offset by increased marketing and selling expenses.

Global Biscuits and Snacks

Sales increased 1 percent in the quarter to $622 million. Excluding the
negative impact of currency translation, segment sales increased 2
percent primarily driven by gains in Pepperidge Farm Goldfish
crackers and Arnott’s biscuits.

Segment operating earnings increased 5 percent to $81 million as the
benefit from lower administrative expenses was partly offset by a lower
gross margin percentage.

Campbell Fresh

Sales decreased 5 percent in the quarter to $223 million. Excluding the
impact from the acquisition of Garden Fresh Gourmet, segment sales
declined 12 percent reflecting lower sales in carrots and carrot
ingredients, as well as in Bolthouse Farms premium refrigerated
beverages, partly offset by gains in fresh soup and Bolthouse Farms
salad dressings.

Segment operating earnings decreased 62 percent to $8 million. The
decrease in operating earnings was primarily driven by the adverse
impact of the voluntary recall on Bolthouse Farms Protein PLUS
drinks and related production outages, as well as higher carrot costs
and lower sales in carrots and carrot ingredients. The decrease was
partly offset by lower administrative expenses.

Unallocated Corporate Expenses

Unallocated corporate expenses for the quarter were $318 million
compared to $145 million in the prior year. The increase in expenses
reflects the impact of the non-cash impairment charge, pension and
postretirement mark-to-market losses and charges related to cost savings
initiatives as previously mentioned. The remaining increase in expenses
was primarily due to losses on open commodity hedges.

Conference Call

Campbell will host a conference call to discuss these results today at
8:30 a.m. Eastern Daylight Time. To join, dial +1 (703) 639-1316. The
conference ID is 1673833. Access to a live webcast of the call with
accompanying slides, as well as a replay of the call, will be available
at investor.campbellsoupcompany.com.
A recording of the call will also be available until midnight on Sept.
15, 2016, at +1 (703) 925-2533. The access code for the replay is
1673833.

About Campbell Soup Company

Campbell (NYSE:CPB) is driven and inspired by our Purpose, “Real food
that matters for life’s moments.” We make a range of high-quality soups
and simple meals, beverages, snacks and packaged fresh foods. For
generations, people have trusted Campbell to provide authentic,
flavorful and readily available foods and beverages that connect them to
each other, to warm memories and to what’s important today. Led by our
iconic Campbell’s brand, our portfolio includes Pepperidge
Farm, Bolthouse Farms, Arnott’s, V8, Swanson, Pace, Prego, Plum, Royal
Dansk, Kjeldsens
and Garden Fresh Gourmet. Founded in 1869,
Campbell has a heritage of giving back and acting as a good steward of
the planet’s natural resources. The company is a member of the Standard
& Poor’s 500 and the Dow Jones Sustainability Indexes. For more
information, visit www.campbellsoupcompany.com
or follow company news on Twitter via @CampbellSoupCo.
To learn more about how we make our food and the choices behind the
ingredients we use, visit www.whatsinmyfood.com.

Forward-Looking Statements

This release contains “forward-looking statements” that reflect the
company’s current expectations about the impact of its future plans and
performance on the company’s business or financial results. These
forward-looking statements, including the statements made regarding
sales, EBIT and EPS guidance for fiscal 2017, rely on a number of
assumptions and estimates that could be inaccurate and which are subject
to risks and uncertainties. The factors that could cause the company’s
actual results to vary materially from those anticipated or expressed in
any forward-looking statement include (1) the company’s ability to
manage changes to its organizational structure and/or business
processes; (2) the company’s ability to realize projected cost savings
and benefits from its efficiency programs; (3) the impact of strong
competitive responses to the company’s efforts to leverage its brand
power in the market; (4) the impact of changes in consumer demand for
the company’s products; (5) the impact of product quality and safety
issues, including recalls and product liabilities; (6) the risks
associated with trade and consumer acceptance of the company’s
initiatives, including its trade and promotional programs; (7) the
practices, including changes to inventory practices, and increased
significance of certain of the company’s key trade customers; (8) the
impact of fluctuations in the supply or costs of energy and raw and
packaging materials; (9) the impact of business portfolio changes; (10)
the uncertainties of litigation and regulatory actions against the
company; (11) disruption to the independent contractor distribution
models used by certain of our businesses, including the results of
litigation or regulatory actions that could affect their independent
contractor classification; (12) the company’s ability to protect its
intellectual property rights; (13) the impact of an impairment to
goodwill or other intangible assets; (14) the impact of a material
failure in or breach of the company’s information technology systems;
(15) the impact of changes in currency exchange rates, tax rates,
interest rates, debt and equity markets, inflation rates, economic
conditions, law, regulation and other external factors; (16) the impact
of unforeseen business disruptions in one or more of the company’s
markets due to political instability, civil disobedience, terrorism,
armed hostilities, natural disasters or other calamities; and (17) other
factors described in the company’s most recent Form 10-K and subsequent
Securities and Exchange Commission filings. The company disclaims any
obligation or intent to update the forward-looking statements in order
to reflect events or circumstances after the date of this release.

CAMPBELL SOUP COMPANY
CONSOLIDATED STATEMENTS OF EARNINGS
(millions, except per share amounts)
Three Months Ended
July 31, 2016 August 2, 2015
Net sales $ 1,687 $ 1,693
Costs and expenses
Cost of products sold 1,141 1,131
Marketing and selling expenses 216 189
Administrative expenses 185 193
Research and development expenses 38 34
Other expenses / (income) 145 10
Restructuring charges (1 ) 93
Total costs and expenses 1,724 1,650
Earnings (loss) before interest and taxes (37 ) 43
Interest, net 28 27
Earnings (loss) before taxes (65 ) 16
Taxes on earnings 16 (1 )
Net earnings (loss) (81 ) 17
Net loss attributable to noncontrolling interests
Net earnings (loss) attributable to Campbell Soup Company $ (81 ) $ 17
Per share – basic
Net earnings (loss) attributable to Campbell Soup Company $ (.26 ) $ .05
Dividends $ .312 $ .312
Weighted average shares outstanding – basic 308 310
Per share – assuming dilution
Net earnings (loss) attributable to Campbell Soup Company $ (.26 ) $ .05
Weighted average shares outstanding – assuming dilution 310 312

In fiscal 2016, the company changed the method of accounting for the
recognition of actuarial gains and losses for defined benefit pension
and postretirement plans and the calculation of expected return on
pension plan assets. These changes in accounting policy have been
retrospectively applied to all periods presented. The company excludes
the impact of the mark-to-market adjustments resulting from these
accounting changes in evaluating performance. In the fourth quarter of
fiscal 2016, the company incurred losses of $138 in Costs and expenses
($90 after tax, or $.29 per share) due to mark-to-market adjustments. In
the fourth quarter of fiscal 2015, the company incurred losses of $110
in Costs and expenses ($69 after tax, or $.22 per share) due to
mark-to-market adjustments.

CAMPBELL SOUP COMPANY
CONSOLIDATED STATEMENTS OF EARNINGS
(millions, except per share amounts)
Twelve Months Ended
July 31, 2016 August 2, 2015
Net sales $ 7,961 $ 8,082
Costs and expenses
Cost of products sold 5,181 5,300
Marketing and selling expenses 893 884
Administrative expenses 641 601
Research and development expenses 124 117
Other expenses / (income) 131 24
Restructuring charges 31 102
Total costs and expenses 7,001 7,028
Earnings before interest and taxes 960 1,054
Interest, net 111 105
Earnings before taxes 849 949
Taxes on earnings 286 283
Net earnings 563 666
Net loss attributable to noncontrolling interests
Net earnings attributable to Campbell Soup Company $ 563 $ 666
Per share – basic
Net earnings attributable to Campbell Soup Company $ 1.82 $ 2.13
Dividends $ 1.248 $ 1.248
Weighted average shares outstanding – basic 309 312
Per share – assuming dilution
Net earnings attributable to Campbell Soup Company $ 1.81 $ 2.13
Weighted average shares outstanding – assuming dilution 311 313

In fiscal 2016, the company changed the method of accounting for the
recognition of actuarial gains and losses for defined benefit pension
and postretirement plans and the calculation of expected return on
pension plan assets. These changes in accounting policy have been
retrospectively applied to all periods presented. The company excludes
the impact of the mark-to-market adjustments resulting from these
accounting changes in evaluating performance. In fiscal 2016, the
company incurred losses of $313 in Costs and expenses ($200 after tax,
or $.64 per share) due to mark-to-market adjustments. In fiscal 2015,
the company incurred losses of $138 in Costs and expenses ($87 after
tax, or $.28 per share) due to mark-to-market adjustments.

CAMPBELL SOUP COMPANY
CONSOLIDATED SUPPLEMENTAL SCHEDULE OF SALES AND EARNINGS
(millions, except per share amounts)
Three Months Ended
July 31, 2016 August 2, 2015 Percent

Change

Sales

Contributions:
Americas Simple Meals and Beverages $ 842 $ 842 —%
Global Biscuits and Snacks 622 617 1%
Campbell Fresh 223 234 (5)%
Total sales $ 1,687 $ 1,693 —%

Earnings

Contributions:
Americas Simple Meals and Beverages $ 191 $ 183 4%
Global Biscuits and Snacks 81 77 5%
Campbell Fresh 8 21 (62)%
Total operating earnings 280 281 —%
Unallocated corporate expenses 318 145
Restructuring charges (1 ) 93
Earnings (loss) before interest and taxes (37 ) 43 (186)%
Interest, net 28 27
Taxes on earnings 16 (1 )
Net earnings (loss) (81 ) 17 (576)%
Net loss attributable to noncontrolling interests
Net earnings (loss) attributable to Campbell Soup Company $ (81 ) $ 17 (576)%
Per share – assuming dilution
Net earnings (loss) attributable to Campbell Soup Company $ (.26 ) $ .05 (620)%

In fiscal 2016, the company modified its segment reporting as a result
of changes in the management of the business. In addition, the company
changed the method of accounting for the recognition of actuarial gains
and losses for defined benefit pension and postretirement plans and the
calculation of expected return on pension plan assets. In fiscal 2016,
the company also modified its method of allocating pension and
postretirement benefit costs to reportable segments. Through fiscal
2015, the company included all components of benefit expense in
measuring segment performance. In fiscal 2016, service cost is allocated
to segments. All other components of expense, including interest cost,
expected return on assets, and recognized actuarial gains and losses,
are reflected in Unallocated corporate expenses and not included in
segment operating results. The changes in segment reporting and
accounting policies have been retrospectively applied to all periods
presented.

CAMPBELL SOUP COMPANY
CONSOLIDATED SUPPLEMENTAL SCHEDULE OF SALES AND EARNINGS
(millions, except per share amounts)
Twelve Months Ended
July 31, 2016 August 2, 2015 Percent

Change

Sales

Contributions:
Americas Simple Meals and Beverages $ 4,380 $ 4,483 (2)%
Global Biscuits and Snacks 2,564 2,631 (3)%
Campbell Fresh 1,017 968 5%
Total sales $ 7,961 $ 8,082 (1)%

Earnings

Contributions:
Americas Simple Meals and Beverages $ 1,069 $ 948 13%
Global Biscuits and Snacks 422 383 10%
Campbell Fresh 60 61 (2)%
Total operating earnings 1,551 1,392 11%
Unallocated corporate expenses 560 236
Restructuring charges 31 102
Earnings before interest and taxes 960 1,054 (9)%
Interest, net 111 105
Taxes on earnings 286 283
Net earnings 563 666 (15)%
Net loss attributable to noncontrolling interests
Net earnings attributable to Campbell Soup Company $ 563 $ 666 (15)%
Per share – assuming dilution
Net earnings attributable to Campbell Soup Company $ 1.81 $ 2.13 (15)%

In fiscal 2016, the company modified its segment reporting as a result
of changes in the management of the business. In addition, the company
changed the method of accounting for the recognition of actuarial gains
and losses for defined benefit pension and postretirement plans and the
calculation of expected return on pension plan assets. In fiscal 2016,
the company also modified its method of allocating pension and
postretirement benefit costs to reportable segments. Through fiscal
2015, the company included all components of benefit expense in
measuring segment performance. In fiscal 2016, service cost is allocated
to segments. All other components of expense, including interest cost,
expected return on assets, and recognized actuarial gains and losses,
are reflected in Unallocated corporate expenses and not included in
segment operating results. The changes in segment reporting and
accounting policies have been retrospectively applied to all periods
presented.

CAMPBELL SOUP COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(millions)
July 31, 2016 August 2, 2015
Current assets $ 1,908 $ 2,093
Plant assets, net 2,407 2,347
Intangible assets, net 3,415 3,549
Other assets 107 88
Total assets $ 7,837 $ 8,077
Current liabilities $ 2,728 $ 2,806
Long-term debt 2,141 2,539
Other liabilities 1,435 1,355
Total equity 1,533 1,377
Total liabilities and equity $ 7,837 $ 8,077
Total debt $ 3,533 $ 4,082
Cash and cash equivalents $ 296 $ 253

In fiscal 2016, the company changed the method of accounting for the
recognition of actuarial gains and losses for defined benefit pension
and postretirement plans and the calculation of expected return on
pension plan assets. These changes in accounting policy have been
retrospectively applied to all periods presented.

CAMPBELL SOUP COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(millions)
Twelve Months Ended
July 31, 2016 August 2, 2015
Cash flows from operating activities:
Net earnings $ 563 $ 666
Adjustments to reconcile net earnings to operating cash flow
Impairment charges 141 6
Restructuring charges 31 102
Stock-based compensation 64 57
Pension and postretirement benefit expense 317 118
Depreciation and amortization 308 303
Deferred income taxes (30 ) (49 )
Other, net 6 15
Changes in working capital, net of acquisition
Accounts receivable 24 12
Inventories 59 (18 )
Prepaid assets 9 10
Accounts payable and accrued liabilities (13 ) 6
Pension fund contributions (2 ) (5 )
Receipts from hedging activities 44 11
Other (58 ) (52 )
Net cash provided by operating activities 1,463 1,182
Cash flows from investing activities:
Purchases of plant assets (341 ) (380 )
Sales of plant assets 5 15
Business acquired, net of cash acquired (232 )
Other, net (18 ) (6 )
Net cash used in investing activities (354 ) (603 )
Cash flows from financing activities:
Net short-term borrowings (repayments) (547 ) 100
Long-term borrowings 300
Repayments of notes payable (309 )
Dividends paid (390 ) (394 )
Treasury stock purchases (143 ) (244 )
Treasury stock issuances 2 9
Excess tax benefits on stock-based compensation 7 6
Contributions from noncontrolling interest 9
Other, net (3 )
Net cash used in financing activities (1,071 ) (526 )
Effect of exchange rate changes on cash 5 (32 )
Net change in cash and cash equivalents 43 21
Cash and cash equivalents — beginning of period 253 232
Cash and cash equivalents — end of period $ 296 $ 253

In fiscal 2016, the company changed the method of accounting for the
recognition of actuarial gains and losses for defined benefit pension
and postretirement plans and the calculation of expected return on
pension plan assets. These changes in accounting policy have been
retrospectively applied to all periods presented.

Reconciliation of GAAP to Non-GAAP Financial Measures
Fiscal
Year Ended July 31, 2016

Campbell Soup Company uses certain non-GAAP financial measures as
defined by the Securities and Exchange Commission in certain
communications. These non-GAAP financial measures are measures of
performance not defined by accounting principles generally accepted in
the United States and should be considered in addition to, not in lieu
of, GAAP reported measures. Management believes that also presenting
certain non-GAAP financial measures provides additional information to
facilitate comparison of the company’s historical operating results and
trends in its underlying operating results, and provides transparency on
how the company evaluates its business. Management uses these non-GAAP
financial measures in making financial, operating and planning decisions
and in evaluating the company’s performance.

Organic Net Sales

Organic net sales are net sales excluding the impact of currency and
acquisitions. Management believes that excluding these items, which are
not part of the ongoing business, improves the comparability of
year-to-year results. A reconciliation of net sales as reported to
organic net sales follows.

Three Months Ended
July 31, 2016

August 2,
2015

% Change
(millions)

Net Sales,
as
Reported

Impact of
Currency

Impact of
Acquisitions

Organic
Net Sales

Net Sales,
as
Reported

Net Sales,
as
Reported

Organic
Net Sales

Americas Simple Meals and Beverages $ 842 $ 4 $ $ 846 $ 842 % %
Global Biscuits and Snacks 622 6 628 617 1 % 2 %
Campbell Fresh 223 (16 ) 207 234 (5 )% (12 )%
Total Net Sales $ 1,687 $ 10 $ (16 ) $ 1,681 $ 1,693 % (1 )%
Year Ended
July 31, 2016

August 2,
2015

% Change
(millions)

Net Sales,
as
Reported

Impact of
Currency

Impact of
Acquisitions

Organic
Net Sales

Net Sales,
as
Reported

Net Sales,
as
Reported

Organic
Net Sales

Americas Simple Meals and Beverages $ 4,380 $ 55 $ $ 4,435 $ 4,483 (2 )% (1 )%
Global Biscuits and Snacks 2,564 103 2,667 2,631 (3 )% 1 %
Campbell Fresh 1,017 (92 ) 925 968 5 % (4 )%
Total Net Sales $ 7,961 $ 158 $ (92 ) $ 8,027 $ 8,082 (1 )% (1 )%

Items Impacting Gross Margin, Costs and
Expenses, and Earnings

The company believes that financial information excluding certain items
that are not considered to be part of the ongoing business, such as
those listed below, improves the comparability of year-to-year results.
Consequently, the company believes that investors may be able to better
understand its results excluding these items.

The following items impacted gross margin, costs and expenses, and
earnings:

(1) In fiscal 2016, the company changed the method of accounting for the
recognition of actuarial gains and losses for defined benefit
pension and postretirement plans and the calculation of expected
return on pension plan assets. Historically, actuarial gains and
losses associated with benefit obligations were recognized in
Accumulated other comprehensive loss in the Consolidated Balance
Sheets and were amortized into earnings over the remaining service
life of participants to the extent that the amounts were in excess
of a corridor. Under the new policy, actuarial gains and losses will
be recognized immediately in the Consolidated Statements of Earnings
as of the measurement date, which is typically the end of the fiscal
year, or more frequently if an interim remeasurement is required. In
addition, the company will no longer use a market-related value of
plan assets, which is an average value, to determine the expected
return on assets but rather will use the fair value of plan assets.
The company excludes the impact of the mark-to-market adjustments
resulting from these accounting changes in evaluating performance.
These changes in accounting policy have been retrospectively applied
to all periods presented. In the fourth quarter of fiscal 2016, the
company incurred losses of $138 million in Costs and expenses ($90
million after tax, or $.29 per share) due to mark-to-market
adjustments. In fiscal 2016, the company incurred losses of $313
million in Costs and expenses ($200 million after tax, or $.64 per
share) due to mark-to-market adjustments. In the fourth quarter of
fiscal 2015, the company incurred losses of $110 million in Costs
and expenses ($69 million after tax, or $.22 per share). In fiscal
2015, the company incurred losses of $138 million in Costs and
expenses ($87 million after tax, or $.28 per share) due to
mark-to-market adjustments.
(2) In fiscal 2015, the company implemented a new enterprise design and
initiatives to reduce costs and to streamline its organizational
structure. In the fourth quarter of fiscal 2016, the company
recorded implementation costs and other related costs of $12 million
in Administrative expenses related to these initiatives. In the
fourth quarter of fiscal 2016, the company also recorded a reduction
to Restructuring charges of $1 million related to the fiscal 2014
initiatives. The aggregate after-tax impact of Restructuring
charges, implementation costs and other related costs was $7
million, or $.02 per share. In fiscal 2016, the company recorded
Restructuring charges of $35 million and implementation costs and
other related costs of $47 million in Administrative expenses
related to the fiscal 2015 initiatives. The company also recorded a
reduction to Restructuring charges of $4 million related to the
fiscal 2014 initiatives. The aggregate after-tax impact of
Restructuring charges, implementation costs and other related costs
was $49 million, or $.16 per share. In the fourth quarter of fiscal
2015, the company recorded Restructuring charges of $93 million and
implementation costs of $13 million in Administrative expenses
related to the fiscal 2015 initiatives (aggregate impact of $67
million after tax, or $.21 per share). In fiscal 2015, the company
recorded Restructuring charges of $102 million and implementation
costs of $22 million in Administrative expenses related to the
fiscal 2015 initiatives (aggregate impact of $78 million after tax,
or $.25 per share).
(3) In fiscal 2016, the company recorded a gain of $25 million in Other
expenses / (income) ($.08 per share) from a settlement of a claim
related to the Kelsen acquisition.
(4) In the fourth quarter of fiscal 2016, as part of the annual review
of intangible assets, the company recorded a non-cash impairment
charge of $141 million in Other expenses / (income) ($127 million
after tax, or $.41 per share) related to the intangible assets of
the Bolthouse Farms carrot and carrot ingredients reporting unit.

The following tables reconcile financial information, presented in
accordance with GAAP, to financial information excluding certain items:

Three Months Ended
July 31, 2016 August 2, 2015
(millions, except per share amounts)

As
reported

Adjustments(a) Adjusted

As
reported

Adjustments(a) Adjusted

Adjusted
Percent
Change

Gross margin $ 546 $ 63 $ 609 $ 562 $ 64 $ 626 (3 )%
Gross margin percentage 32.4 % 36.1 % 33.2 % 37.0 %
Marketing and selling expenses 216 (20 ) 196 189 (17 ) 172
Administrative expenses 185 (57 ) 128 193 (34 ) 159
Research and development expenses 38 (10 ) 28 34 (8 ) 26
Other expenses / (income) 145 (141 ) 4 10 10
Restructuring charges (1 ) 1 93 (93 )
Earnings (loss) before interest and taxes $ (37 ) $ 290 $ 253 $ 43 $ 216 $ 259 (2 )%
Interest, net 28 28 27 27
Earnings (loss) before taxes $ (65 ) $ 290 $ 225 $ 16 $ 216 $ 232
Taxes 16 66 82 (1 ) 80 79
Effective income tax rate (24.6 )% 36.4 % (6.3 )% 34.1 %
Net earnings (loss) attributable to Campbell Soup Company $ (81 ) $ 224 $ 143 $ 17 $ 136 $ 153 (7 )%
Diluted net earnings (loss) per share attributable to Campbell Soup
Company
$ (.26 ) $ .72 $ .46 $ .05 $ .44 $ .49 (6 )%
(a)See following table for additional information.
Three Months Ended
July 31, 2016 August 2, 2015
(millions, except per share amounts)

Mark-to-
market (1)

Restructuring
charges,
implementation
costs
and other

related costs (2)

Impairment
charges (4)

Adjustments

Mark-to-
market (1)

Restructuring
charges and
implementation
costs
(2)

Adjustments
Gross margin $ 63 $ $ $ 63 $ 64 $ $ 64
Marketing and selling expenses (20 ) (20 ) (17 ) (17 )
Administrative expenses (45 ) (12 ) (57 ) (21 ) (13 ) (34 )
Research and development expenses (10 ) (10 ) (8 ) (8 )
Other expenses / (income) (141 ) (141 )
Restructuring charges 1 1 (93 ) (93 )
Earnings before interest and taxes $ 138 $ 11 $ 141 $ 290 $ 110 $ 106 $ 216
Interest, net $
Earnings before taxes $ 138 $ 11 $ 141 $ 290 $ 110 $ 106 $ 216
Taxes 48 4 14 66 41 39 80
Net earnings attributable to Campbell Soup Company $ 90 $ 7 $ 127 $ 224 $ 69 $ 67 $ 136
Diluted net earnings per share attributable to Campbell Soup Company* $ .29 $ .02 $ .41 $ .72 $ .22 $ .21 $ .44
*The sum of the individual per share amounts may not add due to
rounding.
Year Ended
July 31, 2016 August 2, 2015
(millions, except per share amounts)

As
reported

Adjustments(a) Adjusted

As
reported

Adjustments(a) Adjusted

Adjusted
Percent
Change

Gross margin $ 2,780 $ 176 $ 2,956 $ 2,782 $ 80 $ 2,862 3 %
Gross margin percentage 34.9 % 37.1 % 34.4 % 35.4 %
Marketing and selling expenses 893 (46 ) 847 884 (21 ) 863
Administrative expenses 641 (118 ) 523 601 (49 ) 552
Research and development expenses 124 (20 ) 104 117 (10 ) 107
Other expenses / (income) 131 (116 ) 15 24 24
Restructuring charges 31 (31 ) 102 (102 )
Earnings before interest and taxes $ 960 $ 507 $ 1,467 $ 1,054 $ 262 $ 1,316 11 %
Interest, net 111 111 105 105
Earnings before taxes $ 849 $ 507 $ 1,356 $ 949 $ 262 $ 1,211
Taxes 286 156 442 283 97 380
Effective income tax rate 33.7 % 32.6 % 29.8 % 31.4 %
Net earnings attributable to Campbell Soup Company $ 563 $ 351 $ 914 $ 666 $ 165 $ 831 10 %
Diluted net earnings per share attributable to Campbell Soup Company* $ 1.81 $ 1.13 $ 2.94 $ 2.13 $ .53 $ 2.65 11 %
(a)See following table for additional information.
*The sum of the individual per share amounts may not add due to
rounding.
Year Ended
July 31, 2016 August 2, 2015
(millions, except per share amounts)

Mark-to-
market
(1)

Restructuring
charges,
implementation
costs
and other

related costs (2)

Claim
settlement (3)

Impairment
charges (4)

Adjustments

Mark-to-
market
(1)

Restructuring
charges and
implementation
costs
(2)

Adjustments
Gross margin $ 176 $ $ $ $ 176 $ 80 $ $ 80
Marketing and selling expenses (46 ) (46 ) (21 ) (21 )
Administrative expenses (71 ) (47 ) (118 ) (27 ) (22 ) (49 )
Research and development expenses (20 ) (20 ) (10 ) (10 )
Other expenses / (income) 25 (141 ) (116 )
Restructuring charges (31 ) (31 ) (102 ) (102 )
Earnings before interest and taxes $ 313 $ 78 $ (25 ) $ 141 $ 507 $ 138 $ 124 $ 262
Interest, net
Earnings before taxes $ 313 $ 78 $ (25 ) $ 141 $ 507 $ 138 $ 124 $ 262
Taxes 113 29 14 156 51 46 97
Net earnings attributable to Campbell Soup Company $ 200 $ 49 $ (25 ) $ 127 $ 351 $ 87 $ 78 $ 165
Diluted net earnings per share attributable to Campbell Soup Company $ .64 $ .16 $ (.08 ) $ .41 $ 1.13 $ .28 $ .25 $ .53

Source: Campbell Soup Company

Campbell Soup Company
INVESTOR CONTACT:
Ken
Gosnell, 856-342-6081
[email protected]
or
MEDIA
CONTACT:
Carla Burigatto, 856-342-3737
[email protected]

Share
FacebookTwitterLinkedInShare
News Press Releases

Join our mailing list

Sign up to get the latest company news. Delivered from our family to yours.