CAMDEN, N.J.–(BUSINESS WIRE)–Nov. 13, 2002–Campbell Soup Company (NYSE:CPB) today reported diluted earnings per share for the first quarter ended October 27, 2002 of $.47 before the impact of a one-time accounting charge, compared to $.42 a year ago. Earnings per share for the first quarter of fiscal 2003 include the impact of the adoption of SFAS No. 142, “Goodwill and Other Intangible Assets.” Earnings per share for the year-ago quarter were $.46 when adjusted for SFAS No. 142 and for charges related to the Australian manufacturing reconfiguration.
As a result of adopting SFAS No. 142 at the start of fiscal year 2003, the company eliminated most of its amortization of intangibles on a prospective basis. In addition, the company recorded a one-time, non-cash, goodwill impairment charge of $31 million, after tax, related to Stockpot, which was acquired in fiscal 1999.
For the first quarter, net sales declined 1 percent to $1.7 billion, driven by the following:
Base volume and mix were down 3 percent;
Price added 1 percent;
Promotions subtracted 1 percent;
Acquisitions added 1 percent; and
Currency added 1 percent.
In the comparable quarter last year, sales increased 9 percent, driven by a 6 percent increase in volume and mix as Campbell experienced very strong shipments of U.S. soup and sauce products following the events of September 11, 2001.
For the first quarter of 2003, wet soup shipments declined 8 percent in the U.S., compared to the strong year-ago quarter in which shipments rose 6 percent. Outside of the U.S., wet soup shipments declined 1 percent, resulting in a 6 percent decline worldwide, compared to a 7 percent increase a year ago.
As reported net earnings, before the cumulative effect of the accounting change, were $192 million versus $171 million a year earlier. On a comparable basis, earnings for the quarter were $193 million versus $187 million a year ago, after adjusting the prior year for amortization eliminated under SFAS No. 142, and both years for the impact of the Australian reconfiguration.
Douglas R. Conant, Campbell’s President and Chief Executive Officer, said, “We are making substantial progress in building the foundation to deliver the long-term results consistent with our Transformation Plan. For the quarter, we are pleased that we have exceeded our earnings per share target. As expected, we faced difficult top line comparisons with the year-ago quarter. Nonetheless, we are not satisfied with this top line performance, particularly in U.S. condensed soup. We continue to be encouraged by the performance of our ready-to-serve soups, including the newly introduced Campbell’s `Soup at Hand.’ We fully expect our U.S. soup performance to improve for the remainder of fiscal 2003 as we begin to realize substantially more of the impact of our marketing and product quality investments across our soup product lines, particularly condensed soup.”
Conant added, “We are also pleased with the momentum that we are building in parts of our broader portfolio. Our ongoing investments in Pepperidge Farm, Arnott’s and V8 have resulted in higher sales in these businesses during the quarter. As we execute our plans for fiscal 2003, we remain focused on delivering consumer-driven new products and packaging innovation for fiscal 2004 and beyond.”
Consistent with earlier guidance, the company continues to expect earnings per share, before the one-time goodwill impairment charge, of approximately $1.47 for fiscal 2003, reflecting the adoption of SFAS No. 142 and the recent acquisitions of Snack Foods Limited in Australia and Erin Foods in Ireland. This compares to $1.44 per share in fiscal 2002, which has been restated for SFAS No. 142 and excludes the costs of the Australian reconfiguration. For the second quarter of 2003, the company expects earnings per share to be in the range of $.53 to $.55.
A summary of first quarter segment results follows. For comparative purposes, prior year business results have been adjusted to reflect the pro forma impact of amortization eliminated under SFAS No. 142.
North America Soup and Away From Home
Sales of $746 million were down 7 percent, reflecting the 8 percent decline in U.S. soup shipments, which followed 6 percent growth in the year-ago period. Operating earnings of $205 million were down 12 percent due to the overall decline in sales and a less favorable product mix.
Further details include the following:
Results were affected by increased aggressive competitive activity and lower retailer inventory builds.
Condensed soups declined 14 percent.
Ready-to-serve soup shipments decreased 1 percent. Campbell’s “Soup at Hand,” the new convenient sipping soup designed for out-of-home consumption, is generating strong interest in the marketplace.
“Swanson” broth shipments were down 6 percent primarily due to the later timing of the Thanksgiving holiday in the U.S.
North America Sauces and Beverages
Sales were down 2 percent to $307 million and operating earnings increased 20 percent to $77 million. The year-ago period included introductory product shipments and the related spending behind “Prego” pasta bake sauces.
During the quarter, “Pace” Mexican sauces and “V8” vegetable juices delivered strong performances in the marketplace. “V8 Splash” juice drinks and “Franco-American” canned pasta and gravies showed continued weakness. “Prego” pasta sauce declined compared to the stronger year-ago quarter when “Prego” pasta bake sauces were introduced.
Biscuits and Confectionery
Sales increased 8 percent to $410 million. Excluding the impact of currency and the acquisition of Snack Foods Limited, sales grew 2 percent. Operating earnings rose 5 percent to $43 million, excluding the impact of the Australian manufacturing reconfiguration.
All three businesses – Pepperidge Farm, Arnott’s and Godiva Chocolatier – reported growth. Further details include the following:
Pepperidge Farm delivered strong performances in cookies, crackers and bread. The primary drivers of growth were “Goldfish” crackers, as well as strong sales of the core cookie line, including “Milano” and “Chocolate Chunk” cookies. Fresh bakery sales increased, driven by improved distribution and strong consumer demand. Pepperidge Farm “Texas Toast” frozen bread continued to deliver strong sales results.
At Arnott’s, sales were up on the strength of “Kettle” chips, “Tim Tam” biscuits and a strong performance in Indonesia.
Godiva Chocolatier’s worldwide sales increased, helped by new store openings in North America and Japan and a stronger performance in Europe. Same store sales in North America continued to be weak.
International Soup and Sauces
International Soup and Sauces sales grew 5 percent to $242 million and operating earnings were down 10 percent to $26 million, compared to the year-ago quarter. Excluding the impact of currency and the acquisition of Erin Foods in Ireland, sales declined 3 percent and operating earnings decreased 18 percent. The earnings decline is primarily due to severance costs related to the closure of a dry soup facility in Ireland and one-time costs related to a strategic procurement initiative in Europe.
Sales declined in Europe, reflecting decreased sales of condensed soup and “Homepride” sauces in the United Kingdom and wet soup in Germany, partially offset by sales increases in Belgium and “Liebig” soups in France.
Soup shipments in the Asia Pacific region declined, reflecting a warm winter in Australia and increased competitive activity. Additionally, the closure of the U.S. West Coast ports negatively impacted soup shipments to Asia.
Conference Call
The company will host a conference call to discuss these results on November 13, 2002 at 10:00 a.m. Eastern Standard Time. U.S. participants may access the call at 1-888-282-8354 and non-U.S. participants at 1-630-395-0045. 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 18, 2002 at 1-800-839-9325 or 1-402-998-0850.
Forward-Looking Statements
This release contains “forward-looking statements” which reflect the company’s current expectations about its future plans and performance, including statements concerning the impact of marketing investments and quality improvements on volume and earnings. 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” pasta 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 25,000 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 27, 2002 28, 2001 -------- -------- Net sales $ 1,705 $ 1,729 -------- -------- Costs and expenses Cost of products sold 971 971 Selling, general and administrative expenses 404 444 -------- -------- Total costs and expenses 1,375 1,415 -------- -------- Earnings before interest and taxes 330 314 Interest, net 45 53 -------- -------- Earnings before taxes 285 261 Taxes on earnings 93 90 -------- -------- Earnings before cumulative effect of accounting change 192 171 Cumulative effect of accounting change (31) - -------- -------- Net earnings $ 161 $ 171 ======== ======== Per share - basic Earnings before cumulative effect of accounting change $ .47 $ .42 Cumulative effect of accounting change (.08) - -------- -------- Net earnings $ .39 $ .42 ======== ======== Dividends $ .1575 $ .1575 ======== ======== Weighted average shares outstanding - basic 410 410 ======== ======== Per share - assuming dilution Earnings before cumulative effect of accounting change $ .47 $ .42 Cumulative effect of accounting change (.08) - -------- -------- Net earnings $ .39 $ .42 ======== ======== Weighted average shares outstanding - assuming dilution 411 411 ======== ======== At the beginning of fiscal 2003, the company adopted Statement of Financial Accounting Standards No. 142 "Goodwill and Other Intangible Assets." In accordance with the standard, the company discontinued the amortization of goodwill and indefinite-lived intangible assets. Net earnings for the quarter ended October 28, 2001 would have been $184 or $.45 per diluted share had the provisions of the standard been adopted at the beginning of the prior year. In connection with the adoption of this new standard, the company also recognized a non-cash charge of $31 (net of a $17 tax benefit) as a cumulative effect of accounting change for the write-down of goodwill of one business unit. CAMPBELL SOUP COMPANY CONSOLIDATED SUPPLEMENTAL SCHEDULE OF SALES AND EARNINGS (unaudited) (millions, except per share amounts) THREE MONTHS ENDED ------------------ October October Percent Sales 27, 2002 28, 2001 Change ----- -------- -------- ------- Contributions: North America Soup and Away From Home $ 746 $ 806 -7% North America Sauces and Beverages 307 313 -2% Biscuits and Confectionery 410 379 8% International Soup and Sauces 242 231 5% -------- -------- Total sales $ 1,705 $ 1,729 -1% ======== ======== Percent Change Excluding Restructuring Related Earnings Costs (1) -------- ------------- Contributions: North America Soup and Away From Home $ 205 $ 232 -12% -12% North America Sauces and Beverages 77 64 20% 20% Biscuits and Confectionery 42 37 14% 5% International Soup and Sauces 26 29 -10% -10% -------- -------- Total operating earnings 350 362 -3% -4% Unallocated corporate expenses (20) (31) -------- -------- Earnings before interest and taxes 330 331 0% -1% Interest, net (45) (53) Taxes on earnings (93) (94) -------- -------- Earnings before cumulative effect of accounting change 192 184 4% 3% Cumulative effect of accounting change (31) - -------- -------- Net earnings $ 161 $ 184 -13% -13% ======== ======== Net earnings per share before cumulative effect of accounting change - assuming dilution $ .47 $ .45 4% 2% ======== ======== Results for the period ended October 28, 2001 have been restated to reflect the pro forma impact of SFAS No. 142. Amortization expense of $17 ($13 after tax or $.03 per share) has been eliminated from the prior period results. Earnings contributions from Biscuits and Confectionery include the effect of costs associated with the Australian manufacturing reconfiguration plan. In the first quarter of fiscal 2003, costs were both $1 pre- and after tax. In the first quarter of fiscal 2002, costs were $4 pre-tax ($3 after tax). (1) Percent change is calculated excluding the effects of the Australian manufacturing reconfiguration plan. CAMPBELL SOUP COMPANY CONSOLIDATED BALANCE SHEETS (unaudited) (millions) October October 27, 2002 28, 2001 -------- -------- Current assets $ 1,577 $ 1,558 Plant assets, net 1,736 1,603 Intangible assets, net 2,622 2,440 Other assets 315 643 -------- -------- Total assets $ 6,250 $ 6,244 ======== ======== Current liabilities $ 3,702 $ 2,820 Long-term debt 1,860 2,757 Nonpension postretirement benefits 317 333 Other liabilities 368 482 Shareowners' equity 3 (148) -------- -------- Total liabilities and shareowners' equity $ 6,250 $ 6,244 ======== ======== Total debt $ 3,907 $ 4,052 ======== ======== Net debt $ 3,866 $ 4,017 ======== ======== Certain reclassifications were made to prior year financial statements.
–30–CRB/ph* NR/ph
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