CAMDEN, N.J., Nov. 14 /PRNewswire/ — Campbell Soup Company (NYSE: CPB) today reported diluted earnings per share for the first quarter ended October 28, 2001, of $.42, down 11 percent or $.05 from the same period last year. This result is consistent with the company’s October 30, 2001, announcement that it expected diluted earnings per share for the first quarter to be between $.40-$.42.
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Net sales in the quarter increased 9 percent to $1.7 billion. The following factors drove the increase:
The base business grew 5 percent.
The European dry soup and sauces acquisition completed in fiscal year 2001 added 5 percentage points.
Currency exchange rates negatively impacted results by 1 percentage point.
For the quarter, shipments of U.S. soup increased 6 percent compared to a year ago, which drove a worldwide wet soup shipment increase of 7 percent.
Net earnings were $171 million, down 16 percent versus a year earlier. Excluding the impact of the previously announced reconfiguration of manufacturing operations in Australia, net earnings for the quarter were $174 million, down 15 percent compared to $204 million a year earlier. The lower earnings are a result of the company’s strategic transformation plan announced in July, which included a significant increase in marketing investment across the portfolio. Total marketing investment for the quarter was up 20 percent before the impact of currency and the European acquisition.
As announced on October 30, the company’s sales performance is principally the result of stronger than expected shipments of U.S. soup and sauce products resulting from positive consumer trends. In early September, as planned, the company began a major increase in marketing programs that continued throughout the quarter. During the period immediately following September 11, the company experienced a significant acceleration in shipments of U.S. soup and sauces. In October, shipments continued to be higher than a year ago.
For the full fiscal year, the company is maintaining its previous earnings estimate of approximately $1.30 per share, excluding the impact of the Australian reconfiguration. For the 2002 second quarter, the company expects diluted earnings per share to be between $.48-$.52, excluding the impact of the Australian reconfiguration.
Douglas R. Conant, President and Chief Executive Officer, said, “We are pleased with the impact our increased marketing investments and innovation are beginning to have on our marketplace performance. For example, North America Soup, North America Sauces, Pepperidge Farm and our businesses in Europe and Australia had strong sales driven by increased advertising and new products. However, it is important to note that the tragic events of September 11 created unusual circumstances in the U.S. for part of the first quarter. While the year has started strong and we are well positioned moving into the heart of the U.S. soup season, it is difficult to determine how shipments will trend going forward. We will continue implementing our investment and innovation plans to put Campbell back on a sustainable growth track.”
In addition, for the quarter the company reported:
Free cash flow was $122 million versus $235 million a year ago. This reflects increased marketing investment and recovery of working capital levels from historical lows as of July 29, 2001. Quarter-end operating working capital was $21 million lower than a year ago.
Quarter-end debt of $4.1 billion increased from $3 billion a year ago, principally as a result of the European acquisition that closed in May 2001.
$600 million in commercial paper was refinanced with long-term debt.
Interest expense was essentially unchanged from a year ago due to favorable interest rates.
In connection with its previously announced strategic transformation plan, the company is changing its reporting segments to reflect the new organization of its businesses. The new segments are:
North America Soup and Away From Home: U.S. soup, total business in Canada and Away From Home
North America Sauces and Beverages: “Prego” Italian sauces, “Pace” Mexican sauces, “Franco-American” canned pastas and gravies, “Swanson” broths, “Campbell’s” pork and beans, “V8” vegetable juices, “V8 Splash” juice beverages, “Campbell’s” tomato juice and total businesses in Mexico and Latin America
Biscuits and Confectionery: “Pepperidge Farm” cookies, crackers, breads and frozen products, “Arnotts” biscuits and crackers and “Godiva” chocolates
International Soup and Sauces: All soup and sauces outside North America
A summary of fiscal 2002 first quarter results by the new segments follows:
North America Soup and Away From Home
Sales for the quarter increased 4 percent or $32 million to $806 million driven by the 6 percent increase in U.S. soup shipments. Operating earnings were $229 million, down 11 percent. As expected, this decline resulted from the company’s previously announced plans to significantly increase marketing investments.
Shipments of condensed soup increased 1 percent led by “Campbell’s” Red & White Chicken Noodle, Cream of Mushroom and Tomato icons. Shipments of ready-to-serve soup increased 17 percent behind excellent performances of “Chunky” and “Select.” Ready-to-serve “Swanson” broth shipments increased 7 percent.
Shipments of eating soups increased 7 percent driven by “Chunky” and “Select.” Cooking soups increased 4 percent due to growth in “Swanson” broth and “Campbell’s” Red & White condensed Cream of Mushroom.
“Campbell’s Supper Bakes” meal kit was launched nationally and achieved targeted distribution.
North America Sauces and Beverages
Sales for the quarter increased 5 percent or $14 million to $313 million. Operating earnings decreased by 18 percent to $59 million. The anticipated earnings decline was driven by a significant increase in marketing.
Shipments of “Prego” Italian sauces increased significantly, driven primarily by the new “Prego” Pasta Bake sauce, a convenient product that does not require pasta to be pre-cooked. It was launched in the fourth quarter and continues to meet sales targets.
“Pace” Mexican sauces also had strong shipment growth as a result of advertising in its core market and increased promotional investments.
Shipments of “Franco-American” canned pastas increased while shipments of “SpaghettiOs” pasta, the brand’s largest individual business, were up strongly as a result of increased investments.
Total beverage shipments increased 1 percent as a result of modest growth of “V8” vegetable juice and “Campbell’s” tomato juice. “V8 Splash” juice beverage shipments declined.
Biscuits and Confectionery
Biscuits and Confectionery sales for the quarter increased 3 percent to $379 million. Excluding the impact of currency, sales grew 6 percent driven by increased marketing investments and new product innovations. Operating earnings were down 16 percent, 13 percent before currency, to $38 million, excluding the impact of the Australian manufacturing reconfiguration. This decline resulted from increased marketing support for all businesses and flat sales for Godiva.
Pepperidge Farm delivered strong sales performance across its portfolio with increased shipments of cookies, crackers, breads and frozen products. Several new products, including “Giant Goldfish” sandwich crackers, “Dessert Bliss” cookies and new varieties of “Farmhouse” bread and rolls and “Texas Toast” bread, contributed to this growth. “Milano” cookies also performed well.
Godiva Chocolatier’s sales and earnings were negatively impacted by the events of September 11. New York City stores located at the World Trade Center and World Financial Center were previously two of its largest volume locations. Worldwide sales were up slightly as new retail outlets continued to open around the world.
Before the impact of currency, Arnotts in Australia reported strong sales driven by new products, including “Emporio” biscuits and “Rix Rice Chips.”
International Soup and Sauces
International Soup and Sauces sales for the quarter increased 64 percent to $231 million. Excluding the impact of the European acquisition and currency, sales grew 3 percent.
Operating earnings were up 64 percent to $23 million. Excluding the impact of the European acquisition and currency, earnings were down 14 percent. This earnings decline resulted from a planned significant increase in marketing investments.
In Europe, base sales were up slightly versus a year earlier. The newly acquired European dry soup and sauces business met pre-acquisition projections. In the United Kingdom, “Homepride’s” Sizzlin’ cooking sauces performed well. In addition, Liebig’s new “Delisoup” in France had a solid start.
In Asia/Pacific, consumer purchases of “Campbell’s” soups in Australia increased 4 percent.
Reporting Changes
U.S. consumer purchase data as reported by A.C. Nielsen and Information Resources, Inc. do not contain complete sales from food, drug and mass merchandise outlets. Several large retailers, now including Wal-Mart, choose not to report sales to these information services. This makes the data from these services less reliable as an indicator of true consumer activity. As a result, Campbell will no longer provide consumer purchases for all U.S. consumer products. Instead, the company will report this information using shipment data.
The company adopted the Emerging Issues Task Force (EITF) consensus on Issue No. 00-10 “Accounting for Shipping and Handling Fees and Costs” in the fourth quarter fiscal 2001. In the first quarter of fiscal 2002, the company adopted EITF Issues No. 00-14 and 00-25, which address the measurement and income statement classification of certain consumer and trade sales promotion expenses such as coupon redemption costs, cooperative advertising programs and store display incentives.
Conference Call
The company will host a conference call to discuss these results on November 14, 2001 at 10:00 a.m. Eastern Standard Time. U.S. participants may access the call at 1-877-601-3547 and non-U.S. participants at 312-470-7280. Participants should call at least five minutes prior to the starting time. The passcode is Campbell Soup. The conference leader is Len Griehs. The call will also be broadcast live over the Internet at https://www.campbellsoup.com and can be accessed by clicking on the Webcast banner. A recording of the call will be available approximately two hours after it is completed through midnight November 19, 2001 at 1-800-839-5570 or 1-402-998-0911.
Forward-Looking Statements
This release contains “forward-looking statements” which reflect the company’s current expectations about its future performance. These forward-looking statements rely on a number of assumptions and estimates which could be inaccurate and which are subject to risks and uncertainties. Actual results could vary materially from those anticipated or expressed in any forward-looking statement made by the company. Please refer to the company’s most recent Form 10-K and subsequent filings for a further discussion of these risks and uncertainties. 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.
About Campbell Soup Company
Campbell Soup Company is a global manufacturer and marketer of high quality soup, sauces, beverage, biscuits, confectionery and prepared food products. The company owns a portfolio of more than 20 market-leading businesses each with more than $100 million in sales. They include “Campbell’s” soups worldwide, “Erasco” soups in Germany and “Liebig” soups in France, “Pepperidge Farm” cookies and crackers, “V8” vegetable juices, “V8 Splash” juice beverages, “Pace” Mexican sauces, “Prego” Italian sauces, “Franco-American” canned pastas and gravies, “Swanson” broths, “Homepride” sauces in the United Kingdom, “Arnott’s” biscuits in Australia and “Godiva” chocolates around the world. The company also owns dry soup and sauce businesses in Europe under the “Batchelors,” “Oxo,” “Lesieur,” “Royco,” “Liebig,” “Heisse Tasse,” “Bla Band” and “McDonnells” brands. The company is ably supported by approximately 24,000 employees worldwide. For more information on the company, visit Campbell’s website on the Internet at www.campbellsoup.com .
CAMPBELL SOUP COMPANY CONSOLIDATED STATEMENTS OF EARNINGS (unaudited) (millions, except per share amounts)
THREE MONTHS ENDED October October 28, 2001 29, 2000 Net sales $1,729 $1,581 Costs and expenses Cost of products sold 971 856 Selling, general and administrative expenses 444 362 Total costs and expenses 1,415 1,218 Earnings before interest and taxes 314 363 Interest, net 53 52 Earnings before taxes 261 311 Taxes on earnings 90 107 Net earnings $ 171 $ 204 Per share - basic Net earnings $ .42 $ .48 Dividends $.1575 $ .225 Weighted average shares outstanding - basic 410 421 Per share - assuming dilution Net earnings $ .42 $ .47
Weighted average shares outstanding
– assuming dilution 411 431 In the first quarter fiscal 2002 ended October 28, 2001, the company adopted new accounting standards related to the recognition, measurement and income statement classification of certain consumer and trade promotional expenses, such as coupon redemption costs, cooperative advertising programs and in-store display incentives. In the fourth quarter of last year, the company adopted new guidance on the classification of shipping and handling costs. As a result, the following reclassifications were made to the first quarter fiscal 2001 ended October 29, 2000, statement of earnings: Net sales were reduced by $197; Cost of products sold was increased by $49; and Selling, general and administrative expenses were reduced by $246.
CAMPBELL SOUP COMPANY CONSOLIDATED SUPPLEMENTAL SCHEDULE OF SALES AND EARNINGS (unaudited) (millions, except per share amounts)
THREE MONTHS ENDED October October Percent Sales 28, 2001 29, 2000 Change Contributions: North America Soup and Away From Home $ 806 $ 774 4% North America Sauces and Beverages 313 299 5% Biscuits and Confectionery 379 367 3% International Soup and Sauces 231 141 64% Total sales $1,729 $1,581 9% Percent Change Excluding Special Earnings Charges(1) Contributions: North America Soup and Away From Home $ 229 $ 258 -11% -11% North America Sauces and Beverages 59 72 -18% -18% Biscuits and Confectionery 34 45 -24% -16% International Soup and Sauces 23 14 64% 64% Total operating earnings 345 389 -11% -10% Unallocated corporate expenses (31) (26) Earnings before interest and taxes 314 363 -13% -12% Interest, net (53) (52) Taxes on earnings (90) (107) Net earnings $ 171 $ 204 -16% -15% Net earnings per share - assuming dilution $ .42 $ .47 -11% -11%
In the first quarter fiscal 2002 ended October 28, 2001, the company adopted
new accounting standards related to the recognition, measurement and income
statement classification of certain consumer and trade promotional expenses,
such as coupon redemption costs, cooperative advertising programs and in-store
display incentives. In the fourth quarter of last year, the company adopted
new guidance on the classification of shipping and handling costs. As a
result, the following reclassifications were made to the first quarter fiscal
2001 ended October 29, 2000, statement of earnings: Net sales were reduced by
$197; Cost of products sold was increased by $49; and Selling, general and
administrative expenses were reduced by $246.
(1) Percent change is calculated excluding the effects of the Australian
manufacturing reconfiguration plan announced in fiscal 2001. CAMPBELL SOUP COMPANY CONSOLIDATED BALANCE SHEETS (unaudited) (millions)
October October 28, 2001 29, 2000 Current assets $1,576 $1,386 Plant assets, net 1,603 1,574 Intangible assets, net 2,440 1,678 Other assets 625 596 Total assets $6,244 $5,234 Current liabilities $2,820 $3,083 Long-term debt 2,757 1,216 Nonpension postretirement benefits 333 355 Other liabilities 482 452 Shareowners' equity (148) 128 Total liabilities and shareowners' equity $6,244 $5,234 Total debt $4,052 $2,957 Net debt $4,017 $2,932
SOURCE Campbell Soup Company
CONTACT: Media – Elizabeth Bingham Douglass, +1-856-342-3813; or Analysts – Leonard F. Griehs, +1-856-342-6428, both of Campbell Soup Company/
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