• Sales Decreased 2 Percent, Organic Sales Comparable to the Prior Year
• Adjusted EPS of $0.95 Increased 22 Percent
• Campbell Raises Outlook for Adjusted EBIT and EPS; Sales Guidance
  Lowered to Reflect Impact from Currency Translation

CAMDEN, N.J.–(BUSINESS WIRE)–Nov. 24, 2015–
Campbell Soup Company (NYSE:CPB) today reported its first-quarter
results for fiscal 2016.

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

Change in Method of Accounting for Pension and Postretirement Benefits

In fiscal 2016, Campbell elected to change its method of accounting for
its defined benefit pension and postretirement plans in order to provide
greater transparency into financial results. This change has no impact
on cash flow. Under the new method, actuarial gains and losses will be
recognized immediately in the Consolidated Statements of Earnings
following a measurement date rather than amortized over several years.

The change in accounting method has been retrospectively applied to
prior periods. The periodic mark-to-market adjustment will be reflected
as an item impacting comparability and excluded from adjusted results.

Items Impacting Comparability

At the end of the news release is a detailed reconciliation of the
reported financial information to the adjusted information including the
impact on earnings from the mark-to-market pension losses and cost
savings initiatives described below.

In fiscal 2016, the company incurred mark-to-market losses associated
with the interim remeasurement of certain U.S. pension plans. The
remeasurement was required due to a high level of lump sum payments to
certain vested plan participants arising primarily out of a limited-time
offer to accept a single lump sum in lieu of future annuity payments.
The impact on EPS was $0.26 per share. There was no impact on the
company’s cash flow.

In fiscal 2016, the company incurred restructuring charges,
implementation costs and other related costs associated with the new
organizational structure and cost savings initiatives. The impact on EPS
was $0.07 per share.

CEO Comments

Denise Morrison, Campbell’s President and Chief Executive Officer, said,
“We’re encouraged by our first-quarter performance. While organic sales
for the quarter were comparable to a solid prior year, we recognize that
we have more work ahead to improve our growth trajectory. I am
particularly pleased that we delivered a third consecutive quarter of
adjusted gross margin expansion with improved execution in our supply
chain. We drove strong adjusted EBIT and EPS performance across the
company. Given an improved margin outlook for the year, we raised
guidance for adjusted EBIT and EPS, while we lowered sales guidance to
reflect increased currency headwinds.

“We began fiscal 2016 after successfully implementing a number of
changes to align our enterprise structure with our strategy. Most
significant among those changes were the formation of three new
divisions with clear portfolio roles and the roll-out of a major cost
savings initiative that included streamlining our organization, the
launch of an Integrated Global Services organization and initiating
zero-based budgeting. In addition, we have revised our reporting
segments to reflect our new structure. We have made clear and meaningful
progress and commence the new fiscal year better positioned to execute
against our strategic imperatives.”

First-Quarter Results

Sales decreased 2 percent to $2.203 billion primarily due to the adverse
impact of currency translation. Organic sales were comparable to the
prior year as higher selling prices and a reduction in promotional
spending were offset by volume declines.

Gross margin decreased from 35.3 percent to 34.3 percent. Excluding
items impacting comparability in the current year, adjusted gross margin
improved 2.6 percentage points. The increase in adjusted gross margin
was driven by productivity improvements, higher selling prices, improved
supply chain performance and lower promotional spending, partly offset
by cost inflation.

Marketing and selling expenses decreased 7 percent to $226 million.
Excluding items impacting comparability in the current year, adjusted
marketing and selling expenses decreased 15 percent to $206 million
primarily due to lower advertising, reflecting a shift in spending to
later in the fiscal year, as well as benefits from cost savings
initiatives and the impact of currency translation. Administrative
expenses increased 19 percent to $156 million. Excluding items impacting
comparability in the current year, adjusted administrative expenses
decreased 8 percent to $120 million primarily due to benefits from cost
savings initiatives and the impact of currency translation.

EBIT decreased 19 percent to $315 million. The first-quarter results
were negatively impacted by the mark-to-market losses and charges
incurred related to cost savings initiatives. Excluding items impacting
comparability in the current year, adjusted EBIT increased 23 percent to
$479 million reflecting a higher adjusted gross margin percentage, lower
adjusted marketing and selling expenses and lower adjusted
administrative expenses, partly offset by the adverse impact of currency
translation.

Net interest expense increased $3 million to $28 million reflecting
higher average interest rates on the debt portfolio. The tax rate
increased 0.5 percentage points to 32.4 percent. Excluding items
impacting comparability in the current year, the adjusted tax rate
increased 2.2 percentage points to 34.1 percent primarily due to the
geographic mix of earnings and higher U.S. state taxes in 2016.

Cash flow from operations was $218 million compared to $188 million a
year ago, primarily due to higher cash earnings, partially offset by
higher working capital requirements.

Revised Fiscal 2016 Guidance

Reflecting an improved outlook for margin performance and the increased
negative impact of currency translation, Campbell has revised its fiscal
2016 guidance. This revised guidance is now based off recasted 2015
results for adjusted EBIT and adjusted EPS due to the previously
discussed change in accounting for pension and postretirement benefits.

Sales are now expected to change by -1 to 0 percent (previously 0 to +1
percent), adjusted EBIT to grow by 4 to 7 percent (previously 3 to 5
percent) and adjusted EPS to grow by 4 to 7 percent (previously 3 to 5
percent), or $2.75 to $2.83 per share.

This guidance includes the impact of currency translation, which is now
estimated to have a 3 percentage point negative
impact (previously negative 2 percentage points), as well as the impact
of the Garden Fresh Gourmet acquisition.

*Adjusted – see non-GAAP reconciliation.

** 2015 Results for Adjusted EBIT and Adjusted EPS reflect impact of
recently adopted changes in accounting for pension and postretirement
benefits.

New Reportable Segments

Beginning in fiscal 2016, Campbell is reporting operating results in the
following segments: Americas Simple Meals and Beverages, Global Biscuits
and Snacks and Campbell Fresh. A detailed description of the segments is
included at the end of the news release.

In fiscal 2016, Campbell also modified its method of allocating pension
and postretirement benefit costs to its reportable segments. Through
fiscal 2015, the company included all components of benefit expense in
measuring segment performance. In fiscal 2016, only the service cost
associated with the plans 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.

Prior period segment results have been adjusted retrospectively to
reflect these revisions. Following the filing of its first quarter Form
10-Q, Campbell intends to provide recasted historical financial
information reflecting the new reportable segments and the previously
discussed changes in accounting for pension and postretirement benefits.

Segment Operating Review

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

* 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 decreased 2 percent to $1.302 billion. Excluding the negative
impact of currency translation, segment sales decreased 1 percent. U.S.
soup sales decreased 3 percent driven by declines in ready-to-serve
soups and broth, partly offset by gains in condensed soup. Sales of U.S.
beverages decreased primarily due to declines in V8 V-Fusion
beverages, partly offset by gains in V8 Splash beverages. Sales
of other U.S. simple meals increased driven by gains in Prego
pasta sauces, Campbell’s dinner sauces and the new Prego
and Pace ready meals. Excluding the negative impact of currency
translation, sales in Canada increased driven by gains in soup.

Segment operating earnings increased 19 percent to $363 million. The
increase was primarily driven by a higher gross margin percentage,
benefiting from increased price realization and improved supply chain
performance compared to the prior-year quarter, as well as lower
marketing and selling expenses.

Global Biscuits and Snacks

Sales decreased 6 percent to $652 million. Excluding the negative impact
of currency translation, segment sales increased 2 percent. Sales of
Pepperidge Farm products increased as gains in Goldfish crackers,
fresh bakery and frozen products were partly offset by declines in
cookies. In Asia Pacific, excluding the negative impact of currency
translation, Arnott’s sales gains in Australia from savory and sweet
varieties were offset by declines in Indonesia.

Segment operating earnings increased 16 percent to $114 million. The
increase was primarily driven by a higher gross margin percentage,
volume gains and lower selling expenses, partly offset by the negative
impact of currency translation.

Campbell Fresh

Sales increased 8 percent to $249 million. Excluding the impact from the
acquisition of Garden Fresh Gourmet, segment sales decreased 3 percent
reflecting declines in carrot ingredients, fresh carrots and
refrigerated soup, partly offset by gains in Bolthouse Farms
premium refrigerated beverages and salad dressings.

Segment operating earnings increased from $9 million to $18 million
reflecting a higher gross margin percentage and the impact of the
acquisition.

Cost Savings Initiatives

In the first quarter, the company incurred charges associated with its
initiatives to implement a new enterprise design that better aligns with
its strategy, to reduce costs and to streamline its organizational
structure. The company recorded pre-tax restructuring charges of $21
million related to these initiatives. The company also incurred pre-tax
charges of $15 million recorded in Administrative expenses related to
the implementation of the new organizational structure and cost savings
initiatives. The aggregate after-tax impact of the restructuring
charges, implementation costs and other related costs was $23 million,
or $0.07 per share.

Unallocated Corporate Expenses

Unallocated corporate expenses for the quarter were $159 million
compared to $23 million in the prior year. The current quarter included
$128 million of pre-tax charges related to the pension and
postretirement benefit mark-to-market adjustment. The current quarter
also included $15 million of pre-tax charges related to the
implementation of the new organizational structure and cost savings
initiatives. The remaining change was primarily due to lower losses on
open commodity hedges in the current year.

Conference Call

Campbell will host a conference call to discuss these results today at
8:30 a.m. Eastern Standard Time. To join, dial +1 (703) 639-1316. The
conference ID is 1665411. Access to a live webcast of the call with
accompanying slides, as well as a replay of the call, is available at investor.campbellsoupcompany.com.
A recording of the call will also be available until midnight on Dec. 8,
2015, at +1 (703) 925-2533. The access code for the replay is 1665411.

Reportable Segments

Campbell Soup Company earnings results are reported for the following
segments:

Americas Simple Meals and Beverages includes the retail and food
service channel businesses in the U.S., Canada and Latin America. The
segment includes the following products: Campbell’s condensed and
ready-to-serve soups; Swanson broth and stocks; Prego
pasta sauces; Pace Mexican sauces; Campbell’s gravies,
pasta, beans and dinner sauces; Swanson canned poultry; Plum
food and snacks; V8 juices and beverages; and Campbell’s
tomato juice.

Global Biscuits and Snacks includes Pepperidge Farm cookies,
crackers, bakery and frozen products in U.S. retail; Arnott’s biscuits
in Australia and Asia Pacific; and Kelsen cookies globally. The segment
also includes the simple meals and shelf-stable beverages business in
Australia and Asia Pacific.

Campbell Fresh includes Bolthouse Farms fresh carrots, carrot
ingredients, refrigerated beverages and refrigerated salad dressings;
Garden Fresh Gourmet salsa, hummus, dips and tortilla chips; and the
U.S. refrigerated soup business.

About Campbell Soup Company

Campbell (NYSE:CPB) is driven and inspired by our Purpose, “Real food
that matters for life’s moments.” The company makes 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 its iconic Campbell’s brand, the company’s
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.

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 2016, 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 organizational change effectively; (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
risks associated with trade and consumer acceptance of the company’s
initiatives, including its trade and promotional programs; (6) the
practices, including changes to inventory practices, and increased
significance of certain of the company’s key trade customers; (7) the
impact of fluctuations in the supply or costs of energy and raw and
packaging materials; (8) the impact of portfolio changes; (9) the
uncertainties of litigation; (10) the impact of changes in currency
exchange rates, tax rates, interest rates, debt and equity markets,
inflation rates, economic conditions and other external factors; (11)
the impact of unforeseen business disruptions in one or more of the
company’s markets due to political instability, civil disobedience,
armed hostilities, natural disasters or other calamities; and (12) 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.

In 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 first quarter of
2016, the company incurred non-cash pre-tax charges of $128 in Costs and
expenses ($80 after tax, or $.26 per share) due to mark-to-market
adjustments.

In fiscal 2015, the company implemented a new enterprise design and
initiatives to reduce costs and to streamline its organizational
structure. In the first quarter of fiscal 2016, the company recorded
pre-tax restructuring charges of $21 related to these initiatives. The
company also incurred pre-tax charges of $15 recorded in Administrative
expenses related to these initiatives. The aggregate after-tax impact of
restructuring charges, implementation costs and other related costs was
$23, or $.07 per share.

In 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 2016, the
company also modified its method of allocating pension and
postretirement benefit costs to reportable segments. Through 2015, the
company included all components of benefit expense in measuring segment
performance. In 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.

In the first quarter of 2016, the company incurred non-cash pre-tax
charges of $128 in Unallocated corporate expenses ($80 after tax, or
$.26 per share) due to mark-to-market adjustments.

In fiscal 2015, the company implemented a new enterprise design and
initiatives to reduce costs and to streamline its organizational
structure. In the first quarter of fiscal 2016, the company recorded
pre-tax restructuring charges of $21 related to these initiatives. The
company also incurred pre-tax charges of $15 recorded in Unallocated
corporate expenses related to these initiatives. The aggregate after-tax
impact of restructuring charges, implementation costs and other related
costs was $23, or $.07 per share.

In 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.

In 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
First
Quarter Ended November 1, 2015

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.

Organic Net Sales

The company believes that organic net sales, which exclude the impact of
currency and acquisitions, improves the comparability of year-to-year
results. A reconciliation of net sales as reported to organic net sales
follows.

Items Impacting Gross Margin and Earnings

The company believes that financial information excluding certain items
that are not considered to be part of the ongoing business improves the
comparability of year-to-year results. Consequently, the company
believes that investors may be able to better understand its gross
margin and earnings results excluding these transactions.

The following items impacted gross margin and/or earnings:

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

View source version on businesswire.com: https://www.businesswire.com/news/home/20151124005355/en/

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]

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