caret-down

Campbell Reports Fourth-Quarter and Full-Year Results

  • Fourth-Quarter Net Sales and Organic Sales Decreased 1 Percent
  • Fourth-Quarter Earnings Per Share (EPS) of $1.04; Adjusted EPS
    Increased 13 Percent to $0.52
  • Full-Year Net Sales and Organic Sales Decreased 1 Percent
  • Full-Year EPS of $2.89; Adjusted EPS Increased 3 Percent to $3.04
  • Campbell Provides Fiscal 2018 Guidance

CAMDEN, N.J.–(BUSINESS WIRE)–Aug. 31, 2017–
Campbell Soup Company (NYSE:CPB) today reported its
fourth-quarter and full-year results for fiscal 2017.

     

Three Months Ended

Twelve Months Ended

($ in millions, except per share)

July 30,
2017

 

July 31,
2016

 

% Change

July 30,
2017

 

July 31,
2016

 

% Change

Net Sales
As Reported (GAAP) $1,664 $1,687 (1)% $7,890 $7,961 (1)%
Organic (1)% (1)%
Earnings (Loss) Before Interest and Taxes
As Reported (GAAP) $440 $(37) n/m $1,400 $960 46%
Adjusted $282 $253 11% $1,492 $1,467 2%
Diluted Earnings (Loss) Per Share
As Reported (GAAP) $1.04 $(0.26) n/m $2.89 $1.81 60%
Adjusted $0.52 $0.46 13% $3.04 $2.94 3%
 

n/m – not meaningful

Note: A detailed reconciliation of the reported (GAAP) 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,
“The operating environment for the packaged foods industry remains
challenging due to shifting demographics, changing consumer preferences
for food, the adoption of new shopping behaviors and the dynamic
retailer landscape. In these times, sales growth remains a challenge.
Despite multiple headwinds, we finished the year within our guidance and
delivered another year of growth in adjusted EBIT and adjusted EPS.

“In the fourth quarter, Global Biscuits and Snacks was soft on the top
line but generated a solid double-digit earnings increase versus the
year-ago quarter. Americas Simple Meals and Beverages continued to
deliver against its portfolio role, with sales performance in line with
the categories in which we compete and margin expansion. While Campbell
Fresh sales increased slightly and the bottom line was disappointing, we
expect to return to profitable growth going forward.

“In fiscal 2017, we have made progress in several key areas, including
increasing our successful multi-year cost savings initiative to $450
million by the end of fiscal 2020. The pending acquisition of Pacific
Foods will add a purpose-driven, real food brand with a solid track
record of growth to our portfolio. Additionally, our new Campbell Fresh
leadership team has taken steps to enhance our quality processes and
address capacity constraints toward our objective of returning the
division to growth.”

Morrison concluded, “Looking ahead to fiscal 2018, we expect the
operating environment to remain difficult. We will continue to position
Campbell for long-term growth by managing costs aggressively and
re-investing a portion of those savings back in the business with a
focus on our strategic imperatives of real food, digital and e-commerce,
health and well-being, and snacking.”

Fiscal 2018 Guidance

Campbell expects sales to change by -2 to 0 percent, adjusted earnings
before interest and taxes (EBIT) to change by -1 to 1 percent, and
adjusted EPS to change by 0 to 2 percent, or $3.04 to $3.11 per share.
This guidance assumes the impact from currency translation will be
nominal. A non-GAAP reconciliation is not provided for 2018 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.

Items Impacting Comparability in the Quarter

Items impacting comparability in the quarter are as follows:

  • The current quarter included pre-tax pension and postretirement
    mark-to-market gains of $198 million, or $0.42 per share, as compared
    to pre-tax pension and postretirement mark-to-market losses of $138
    million, or $0.29 per share, in the prior-year quarter.
  • The current quarter included pre-tax charges related to cost savings
    initiatives of $40 million, or $0.09 per share, as compared to $11
    million, or $0.02 per share, in the prior-year quarter.
  • The current-quarter earnings included a tax benefit of $52 million
    primarily related to the sale of intercompany notes receivable to a
    financial institution, which resulted in the recognition of foreign
    exchange losses on the notes for tax purposes. In addition, the
    company recorded a $6 million reduction to interest expense ($4
    million after tax) related to premiums and fees received on the sale
    of the notes. The aggregate impact was an after-tax gain of $56
    million, or $0.18 per share.
  • The prior-year quarter included 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.

A detailed reconciliation of the reported (GAAP) financial information
to the adjusted information is included at the end of this news release.

Fourth-Quarter Results

Sales decreased 1 percent to $1.664 billion driven by a 1 percent
decline in organic sales, reflecting lower volume.

Gross margin increased from 32.4 percent to 43.0 percent. Excluding
items impacting comparability, adjusted gross margin increased 0.8
percentage points from 36.1 percent to 36.9 percent. The increase in
adjusted gross margin was primarily driven by productivity improvements
and the benefits from cost savings initiatives, partly offset by cost
inflation and higher supply chain costs.

Marketing and selling expenses decreased 34 percent to $143 million.
Excluding items impacting comparability, adjusted marketing and selling
expenses decreased 12 percent primarily due to lower advertising and
consumer promotion expenses lapping marketing levels above historical
levels in the prior-year quarter and the benefits from cost savings
initiatives. Administrative expenses decreased 54 percent to $86
million. Excluding items impacting comparability, adjusted
administrative expenses decreased 5 percent primarily due to the
benefits from cost savings initiatives.

The company reported EBIT of $440 million as compared to a loss of $37
million in the prior-year quarter. Excluding items impacting
comparability, adjusted EBIT increased 11 percent to $282 million,
reflecting lower adjusted marketing and selling expenses, as well as a
higher adjusted gross margin percentage, partly offset by lower sales.

Net interest expense decreased 18 percent to $23 million. Excluding
items impacting comparability in the current year, adjusted net interest
expense increased $1 million to $29 million, reflecting higher average
interest rates on the debt portfolio, partly offset by lower average
levels of debt. The tax rate was 23.7 percent as compared to 24.6
percent in the prior year. Excluding items impacting comparability, the
adjusted tax rate increased 0.8 percentage points to 37.2 percent.

The company reported EPS of $1.04 in the quarter. Excluding items
impacting comparability in both periods, adjusted EPS increased 13
percent to $0.52 per share, compared with $0.46 per share in the
year-ago quarter.

Full-Year Results

Sales decreased 1 percent to $7.890 billion driven by a 1 percent
decline in organic sales, reflecting lower volume and higher promotional
spending.

EBIT increased from $960 million to $1.400 billion. Excluding items
impacting comparability, adjusted EBIT increased 2 percent to $1.492
billion, reflecting a higher adjusted gross margin percentage and lower
adjusted administrative expenses, due in part to lower incentive
compensation costs, partly offset by lower sales volume.

Net interest expense decreased 4 percent to $107 million. Excluding
items impacting comparability in the current year, adjusted net interest
expense increased $2 million to $113 million, reflecting higher average
interest rates on the debt portfolio, partly offset by lower average
levels of debt. The tax rate decreased 2.3 percentage points to 31.4
percent. Excluding items impacting comparability, the adjusted tax rate
decreased 0.2 percentage points to 32.4 percent.

The company reported EPS of $2.89. Excluding items impacting
comparability in both years, adjusted EPS increased 3 percent to $3.04
per share, compared with $2.94 per share a year ago.

Cash flow from operations was $1.291 billion as compared to $1.491
billion a year ago. The year-over-year decline was primarily due to
lapping significant working capital reductions in the prior year, as
well as lower cash earnings and lower receipts from hedging activities
in the current year.

Segment Operating Review

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

 

Three Months Ended July 30, 2017

($ in millions)
       

Americas
Simple Meals
and Beverages

Global Biscuits
and Snacks

Campbell

Fresh

Total
Net Sales, as Reported $815 $624 $225 $1,664

 

 

 

 

Volume and Mix (2)% (2)% (1)% (2)%
Promotional Spending (1)% 1% 2% -%
Organic Net Sales (3)%

-%*

1%

(1)%*

Currency -% -% -% -%
% Change vs. Prior Year (3)% -% 1% (1)%
Segment Operating Earnings $198 $109 $(8)
% Change vs. Prior Year 4% 35% n/m
 

n/m – not meaningful

* Numbers do not add due to rounding.

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

 

Twelve Months Ended July 30, 2017

($ in millions)
       

Americas
Simple Meals
and Beverages

Global Biscuits
and Snacks

Campbell
Fresh

Total
Net Sales, as Reported $4,325 $2,598 $967 $7,890

 

 

 

 

Volume and Mix (1)% 1% (5)% (1)%
Promotional Spending (1)% -% 1% (1)%
Organic Net Sales

(1)%*

-%*

(5)%*

(1)%*

Currency -% 1% -% -%
% Change vs. Prior Year (1)% 1% (5)% (1)%
Segment Operating Earnings $1,120 $454 $(9)
% Change vs. Prior Year 5% 8% n/m
 

n/m – not meaningful

* Numbers do not add due to rounding.

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

Americas Simple Meals and Beverages

Sales in the quarter decreased 3 percent to $815 million driven
primarily by declines in soup and V8 beverages. Sales of U.S.
soup decreased 4 percent driven by declines in condensed soups, broth
and ready-to-serve soups, reflecting a reduction in retailer inventory
levels while consumer takeaway in measured channels was comparable to
the prior-year quarter. For the fiscal year, sales of U.S. soup
decreased 1 percent.

Segment operating earnings in the quarter increased 4 percent to $198
million. The increase was primarily driven by lower advertising and
consumer promotion expenses and lower administrative expenses, partly
offset by lower sales volume and a lower gross margin percentage.

Global Biscuits and Snacks

Sales in the quarter were comparable to the prior year at $624 million,
as gains in Pepperidge Farm snacks, reflecting continued growth in Goldfish
crackers, as well as gains in Arnott’s biscuits in Australia,
were offset by declines in Indonesia.

Segment operating earnings increased 35 percent to $109 million. The
increase was primarily driven by a higher gross margin percentage, lower
advertising and consumer promotion expenses and lower administrative
expenses.

Campbell Fresh

Sales in the quarter increased 1 percent to $225 million driven
primarily by higher sales of Garden Fresh Gourmet, carrots and carrot
ingredients. Sales of Bolthouse Farms refrigerated beverages
declined slightly, reflecting supply constraints.

Segment operating earnings in the quarter decreased from $8 million to a
loss of $8 million, reflecting higher administrative expenses, higher
carrot costs and the continued cost impact of enhanced quality processes
and related beverage capacity constraints.

Segment operating earnings for the year decreased from $60 million to a
loss of $9 million, reflecting lower sales volume and unfavorable mix,
higher carrot costs, and the full year cost impact of enhanced quality
processes and related beverage capacity constraints, as well as higher
administrative expenses.

Corporate

Corporate in the fourth quarter of fiscal 2017 included pension and
postretirement mark-to-market gains of $198 million and charges related
to cost savings initiatives of $22 million. Corporate in the fourth
quarter of fiscal 2016 included a non-cash impairment charge of $141
million, pension and postretirement mark-to-market losses of $138
million and charges related to cost savings initiatives of $12 million.
The remaining decrease in expenses primarily reflects gains 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 in the U.S., dial (833)
659-8619. To join outside of the U.S., dial +1 (703) 639-1316. The
access code is 6692641. 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.
14, 2017, at +1 (404) 537-3406. The access code for the replay is
6692641.

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 2018, 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 and favorable perception of the company’s brands;
(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 impact of a changing customer
landscape, with value and e-commerce retailers expanding their market
presence, while certain of the company’s key customers continue to
increase their significance to the company’s business; (8) the impact of
changing inventory management practices by certain of the company’s key
customers; (9) the impact of disruptions to the company’s supply chain,
including fluctuations in the supply of and inflation in energy and raw
and packaging materials cost; (10) the impact of non-U.S. operations,
including trade restrictions, public corruption and compliance with
foreign laws and regulations; (11) the ability to complete and to
realize the projected benefits of acquisitions, divestitures and other
business portfolio changes; (12) the uncertainties of litigation and
regulatory actions against the company; (13) the possible disruption to
the independent contractor distribution models used by certain of the
company’s businesses, including as a result of litigation or regulatory
actions affecting their independent contractor classification; (14) the
company’s ability to protect its intellectual property rights; (15) the
impact of an impairment to goodwill or other intangible assets; (16) the
impact of increased liabilities and costs related to the company’s
defined benefit pension plans; (17) the impact of a material failure in
or breach of the company’s information technology systems; (18) the
company’s ability to attract and retain key talent; (19) 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; (20) 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 (21) 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 30, 2017   July 31, 2016
Net sales $ 1,664   $ 1,687  
Costs and expenses
Cost of products sold 949 1,141
Marketing and selling expenses 143 216
Administrative expenses 86 185
Research and development expenses 20 38
Other expenses / (income) 8 145
Restructuring charges 18   (1 )
Total costs and expenses 1,224   1,724  
Earnings (loss) before interest and taxes 440 (37 )
Interest, net 23   28  
Earnings (loss) before taxes 417 (65 )
Taxes on earnings 99   16  
Net earnings (loss) 318 (81 )
Net loss attributable to noncontrolling interests    
Net earnings (loss) attributable to Campbell Soup Company $ 318   $ (81 )
Per share – basic
Net earnings (loss) attributable to Campbell Soup Company $ 1.05   $ (.26 )
Dividends $ .35   $ .312  
Weighted average shares outstanding – basic 303   308  
Per share – assuming dilution
Net earnings (loss) attributable to Campbell Soup Company $ 1.04   $ (.26 )
Weighted average shares outstanding – assuming dilution 305   310  
 
CAMPBELL SOUP COMPANY
CONSOLIDATED STATEMENTS OF EARNINGS
(millions, except per share amounts)
 
Twelve Months Ended
July 30, 2017   July 31, 2016
Net sales $ 7,890   $ 7,961  
Costs and expenses
Cost of products sold 4,831 5,181
Marketing and selling expenses 817 893
Administrative expenses 488 641
Research and development expenses 98 124
Other expenses / (income) 238 131
Restructuring charges 18   31  
Total costs and expenses 6,490   7,001  
Earnings before interest and taxes 1,400 960
Interest, net 107   111  
Earnings before taxes 1,293 849
Taxes on earnings 406   286  
Net earnings 887 563
Net loss attributable to noncontrolling interests    
Net earnings attributable to Campbell Soup Company $ 887   $ 563  
Per share – basic
Net earnings attributable to Campbell Soup Company $ 2.91   $ 1.82  
Dividends $ 1.40   $ 1.248  
Weighted average shares outstanding – basic 305   309  
Per share – assuming dilution
Net earnings attributable to Campbell Soup Company $ 2.89   $ 1.81  
Weighted average shares outstanding – assuming dilution 307   311  
   
CAMPBELL SOUP COMPANY
CONSOLIDATED SUPPLEMENTAL SCHEDULE OF SALES AND EARNINGS
(millions, except per share amounts)
 
Three Months Ended
July 30, 2017   July 31, 2016 Percent

Change

Sales

Contributions:
Americas Simple Meals and Beverages $ 815 $ 842 (3)%
Global Biscuits and Snacks 624 622 —%
Campbell Fresh 225   223   1%
Total sales $ 1,664   $ 1,687   (1)%

Earnings

Contributions:
Americas Simple Meals and Beverages $ 198 $ 191 4%
Global Biscuits and Snacks 109 81 35%
Campbell Fresh (8 ) 8   n/m
Total operating earnings 299 280 7%
Corporate 159 (318 )
Restructuring charges (18 ) 1  
Earnings (loss) before interest and taxes 440 (37 ) n/m
Interest, net 23 28
Taxes on earnings 99   16  
Net earnings (loss) 318 (81 ) n/m
Net loss attributable to noncontrolling interests    
Net earnings (loss) attributable to Campbell Soup Company $ 318   $ (81 ) n/m
Per share – assuming dilution
Net earnings (loss) attributable to Campbell Soup Company $ 1.04   $ (.26 ) n/m
   
CAMPBELL SOUP COMPANY
CONSOLIDATED SUPPLEMENTAL SCHEDULE OF SALES AND EARNINGS
(millions, except per share amounts)
 
Twelve Months Ended
July 30, 2017   July 31, 2016 Percent

Change

Sales

Contributions:
Americas Simple Meals and Beverages $ 4,325 $ 4,380 (1)%
Global Biscuits and Snacks 2,598 2,564 1%
Campbell Fresh 967   1,017   (5)%
Total sales $ 7,890   $ 7,961   (1)%

Earnings

Contributions:
Americas Simple Meals and Beverages $ 1,120 $ 1,069 5%
Global Biscuits and Snacks 454 422 8%
Campbell Fresh (9 ) 60   n/m
Total operating earnings 1,565 1,551 1%
Corporate (147 ) (560 )
Restructuring charges (18 ) (31 )
Earnings before interest and taxes 1,400 960 46%
Interest, net 107 111
Taxes on earnings 406   286  
Net earnings 887 563 58%
Net loss attributable to noncontrolling interests    
Net earnings attributable to Campbell Soup Company $ 887   $ 563   58%
Per share – assuming dilution
Net earnings attributable to Campbell Soup Company $ 2.89   $ 1.81   60%
   
CAMPBELL SOUP COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(millions)
 
July 30, 2017 July 31, 2016
Current assets $ 1,900 $ 1,908
Plant assets, net 2,454 2,407
Intangible assets, net 3,233 3,415
Other assets 139   107  
Total assets $ 7,726   $ 7,837  
Current liabilities $ 2,395 $ 2,555
Long-term debt 2,499 2,314
Other liabilities 1,187 1,435
Total equity 1,645   1,533  
Total liabilities and equity $ 7,726   $ 7,837  
Total debt $ 3,536   $ 3,533  
Cash and cash equivalents $ 319   $ 296  
 
CAMPBELL SOUP COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(millions)
 
Twelve Months Ended
July 30, 2017   July 31, 2016
Cash flows from operating activities:
Net earnings $ 887 $ 563
Adjustments to reconcile net earnings to operating cash flow
Impairment charges 212 141
Restructuring charges 18 31
Stock-based compensation 60 64
Pension and postretirement benefit expense (income) (258 ) 317
Depreciation and amortization 318 308
Deferred income taxes 93 (30 )
Other, net 18 6
Changes in working capital
Accounts receivable 28 24
Inventories 46 59
Prepaid assets (27 ) 9
Accounts payable and accrued liabilities (48 ) 15
Pension fund contributions (5 ) (2 )
Net receipts from hedging activities 2 44
Other (53 ) (58 )
Net cash provided by operating activities 1,291   1,491  
Cash flows from investing activities:
Purchases of plant assets (338 ) (341 )
Sales of plant assets 5
Other, net (30 ) (18 )
Net cash used in investing activities (368 ) (354 )
Cash flows from financing activities:
Net short-term borrowings (repayments) 245 (762 )
Long-term borrowings 211 215
Long-term repayments (90 )
Repayments of notes payable (400 )
Dividends paid (420 ) (390 )
Treasury stock purchases (437 ) (143 )
Treasury stock issuances 2 2

Payments related to tax withholding for stock-based compensation

(22 ) (21 )
Net cash used in financing activities (911 ) (1,099 )
Effect of exchange rate changes on cash 11   5  
Net change in cash and cash equivalents 23 43
Cash and cash equivalents — beginning of period 296   253  
Cash and cash equivalents — end of period $ 319   $ 296  
 

The company adopted new accounting guidance for stock-based compensation
in the first quarter of 2017. Certain amounts in the prior year were
reclassified to conform to the current-year presentation.

Reconciliation of GAAP to Non-GAAP Financial Measures
Fiscal
Year Ended July 30, 2017

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.
Management believes that excluding this item, which is 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 30, 2017   July 31, 2016   % Change
(millions)

Net Sales,
as Reported

 

Impact of
Currency

 

Organic
Net Sales

Net Sales,
as Reported

Net Sales,
as Reported

 

Organic
Net Sales

Americas Simple Meals and Beverages $ 815   $ 1   $ 816 $ 842 (3 )%   (3 )%
Global Biscuits and Snacks 624 (3 ) 621 622 % %
Campbell Fresh 225         225   223   1 %   1 %
Total Net Sales $ 1,664     $ (2 )   $ 1,662   $ 1,687   (1 )%   (1 )%
 
Year Ended
  July 30, 2017   July 31, 2016   % Change
(millions)

Net Sales,
as Reported

 

Impact of
Currency

 

Organic
Net Sales

Net Sales,
as Reported

Net Sales,
as Reported

 

Organic
Net Sales

Americas Simple Meals and Beverages $ 4,325 $ (1 ) $ 4,324 $ 4,380 (1 )% (1 )%
Global Biscuits and Snacks 2,598 (26 ) 2,572 2,564 1 % %
Campbell Fresh 967         967   1,017   (5 )%   (5 )%
Total Net Sales $ 7,890     $ (27 )   $ 7,863   $ 7,961   (1 )%   (1 )%
 

Items Impacting 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 earnings:

 
(1) In the fourth quarter of fiscal 2017, the company incurred gains of
$198 million in Costs and expenses ($129 million after tax, or $.42
per share) associated with mark-to-market adjustments for defined
benefit pension and postretirement plans. In fiscal 2017, the
company incurred gains of $178 million in Costs and expenses ($116
million after tax, or $.38 per share) associated with mark-to-market
adjustments for defined benefit pension and postretirement plans. 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) associated with mark-to-market adjustments for defined
benefit pension and postretirement plans. In fiscal 2016, the
company incurred losses of $313 million in Costs and expenses ($200
million after tax, or $.64 per share) associated with mark-to-market
adjustments for defined benefit pension and postretirement plans.
 
(2) In fiscal 2015, the company implemented a new enterprise design and
initiatives to reduce costs and to streamline its organizational
structure. In fiscal 2017, the company expanded these cost savings
initiatives by further optimizing its supply chain network,
primarily in North America, continuing to evolve its operating model
to drive efficiencies, and more fully integrating its recent
acquisitions. In the fourth quarter of fiscal 2017, the company
recorded Restructuring charges of $18 million and implementation
costs and other related costs of $18 million in Administrative
expenses and $4 million in Cost of products sold (aggregate impact
of $26 million after tax, or $.09 per share) related to these
initiatives. In fiscal 2017, the company recorded Restructuring
charges of $18 million and implementation costs and other related
costs of $36 million in Administrative expenses and $4 million in
Cost of products sold (aggregate impact of $37 million after tax, or
$.12 per share) related to these initiatives.
 
In the fourth quarter of fiscal 2016, the company recorded
implementation costs and other related costs of $12 million in
Administrative expenses related to the fiscal 2015 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.
 
(3) In the second quarter of fiscal 2017, the company performed an
interim impairment assessment on the intangible assets of the
Bolthouse Farms carrot and carrot ingredients reporting unit and the
Garden Fresh Gourmet reporting unit as operating performance was
well below expectations and a new leadership team of the Campbell
Fresh division initiated a strategic review which led to a revised
outlook for future sales, earnings, and cash flow. The company
recorded a non-cash impairment charge of $147 million ($139 million
after tax, or $.45 per share) related to intangible assets of the
Bolthouse Farms carrot and carrot ingredients reporting unit and a
non-cash impairment charge of $65 million ($41 million after tax, or
$.13 per share) related to the intangible assets of the Garden Fresh
Gourmet reporting unit (aggregate pre-tax impact of $212 million,
$180 million after tax, or $.59 per share). The charges are included
in Other expenses / (income).
 
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.
 
(4) In the fourth quarter of fiscal 2017, the company recorded a tax
benefit of $52 million in Taxes on earnings primarily related to the
sale of intercompany notes receivable to a financial institution,
which resulted in the recognition of foreign exchange losses on the
notes for tax purposes. In addition, the company recorded a $6
million reduction to interest expense ($4 million after tax) related
to premiums and fees received on the sale of the notes. The
aggregate impact was $56 million after tax, or $.18 per share.
 
(5) 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.
 

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

   
Three Months Ended
July 30, 2017   July 31, 2016
(millions, except per share amounts)

As
reported

 

Adjustments(a)

  Adjusted

As
reported

  Adjustments(a)   Adjusted

Adjusted
Percent
Change

Gross margin $ 715 $ (101 ) $ 614 $ 546 $ 63 $ 609 1 %
Gross margin percentage 43.0 % 36.9 % 32.4 % 36.1 %
Marketing and selling expenses 143 29 172 216 (20 ) 196
Administrative expenses 86 35 121 185 (57 ) 128
Research and development expenses 20 11 31 38 (10 ) 28
Other expenses / (income) 8 8 145 (141 ) 4
Restructuring charges 18   (18 )   (1 ) 1    
Earnings (loss) before interest and taxes $ 440   $ (158 ) $ 282   $ (37 ) $ 290   $ 253   11 %
Interest, net 23   6   29   28     28  
Earnings (loss) before taxes $ 417   $ (164 ) $ 253   $ (65 ) $ 290   $ 225  
Taxes 99 (5 ) 94 16 66 82
Effective income tax rate 23.7 %   37.2 % 24.6 %   36.4 %
Net earnings (loss) attributable to Campbell Soup Company $ 318   $ (159 ) $ 159   $ (81 ) $ 224   $ 143   11 %
Diluted net earnings (loss) per share attributable to Campbell Soup
Company
$ 1.04   $ (.52 ) $ .52   $ (.26 ) $ .72   $ .46   13 %
(a)See following table for additional information.
 
Three Months Ended
July 30, 2017   July 31, 2016
(millions, except per share amounts)

Mark-
to-
market

(1)

 

Restructuring
charges,
implementation
costs
and other

related costs
(2)

 

Sale
of notes
(4)

  Adjustments

Mark-
to-
market

(1)

 

Restructuring
charges,
implementation
costs
and other

related costs
(2)

 

Impairment
charges
(3)

  Adjustments
Gross margin $ (105 ) $ 4 $ $ (101 ) $ 63 $ $ $ 63
Marketing and selling expenses 29 29 (20 ) (20 )
Administrative expenses 53 (18 ) 35 (45 ) (12 ) (57 )
Research and development expenses 11 11 (10 ) (10 )
Other expenses / (income) (141 ) (141 )
Restructuring charges   (18 )   (18 )   1     1  
Earnings before interest and taxes $ (198 ) $ 40   $   $ (158 ) $ 138   $ 11   $ 141   $ 290  
Interest, net     6   6          
Earnings before taxes $ (198 ) $ 40   $ (6 ) $ (164 ) $ 138   $ 11   $ 141   $ 290  
Taxes (69 ) 14   50   (5 ) 48   4   14   66  
Net earnings attributable to Campbell Soup Company $ (129 ) $ 26   $ (56 ) $ (159 ) $ 90   $ 7   $ 127   $ 224  
Diluted net earnings per share attributable to Campbell Soup Company* $ (.42 ) $ .09   $ (.18 ) $ (.52 ) $ .29   $ .02   $ .41   $ .72  
*The sum of the individual per share amounts may not add due to
rounding.
   
Year Ended
July 30, 2017   July 31, 2016
(millions, except per share amounts)

As
reported

  Adjustments(a)   Adjusted

As
reported

  Adjustments(a)   Adjusted

Adjusted
Percent
Change

Gross margin $ 3,059 $ (81 ) $ 2,978 $ 2,780 $ 176 $ 2,956 1 %
Gross margin percentage 38.8 % 37.7 % 34.9 % 37.1 %
Marketing and selling expenses 817 29 846 893 (46 ) 847
Administrative expenses 488 17 505 641 (118 ) 523
Research and development expenses 98 11 109 124 (20 ) 104
Other expenses / (income) 238 (212 ) 26 131 (116 ) 15
Restructuring charges 18   (18 )   31   (31 )  
Earnings before interest and taxes $ 1,400   $ 92   $ 1,492   $ 960   $ 507   $ 1,467   2 %
Interest, net 107   6   113   111     111  
Earnings before taxes $ 1,293   $ 86   $ 1,379   $ 849   $ 507   $ 1,356  
Taxes 406 41 447 286 156 442
Effective income tax rate 31.4 %   32.4 % 33.7 %   32.6 %
Net earnings attributable to Campbell Soup Company $ 887   $ 45   $ 932   $ 563   $ 351   $ 914   2 %
Diluted net earnings per share attributable to Campbell Soup Company $ 2.89   $ .15   $ 3.04   $ 1.81   $ 1.13   $ 2.94   3 %
(a)See following tables for additional information.
 
Year Ended
July 30, 2017
(millions, except per share amounts)

Mark-
to-
market
(1)

 

Restructuring
charges,
implementation
costs
and other

related costs

(2)

 

Impairment
charges
(3)

 

Sale of
notes
(4)

  Adjustments
Gross margin $ (85 ) $ 4 $ $ $ (81 )
Marketing and selling expenses 29 29
Administrative expenses 53 (36 ) 17
Research and development expenses 11 11
Other expenses / (income) (212 ) (212 )
Restructuring charges   (18 )     (18 )
Earnings before interest and taxes $ (178 ) $ 58   $ 212   $   $ 92  
Interest, net       6   6  
Earnings before taxes $ (178 ) $ 58   $ 212   $ (6 ) $ 86  
Taxes (62 ) 21   32   50   41  
Net earnings attributable to Campbell Soup Company $ (116 ) $ 37   $ 180   $ (56 ) $ 45  
Diluted net earnings per share attributable to Campbell Soup Company $ (.38 ) $ .12   $ .59   $ (.18 ) $ .15  
 
Year Ended
July 31, 2016
(millions, except per share amounts)

Mark-
to-
market

(1)

 

Restructuring
charges,
implementation
costs
and other

related costs

(2)

 

Impairment
charges
(3)

 

Claim
settlement
(5)

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

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]