Fourth-Quarter Adjusted Net Earnings Per Share Increased 10 Percent to $0.33.Full-Year Adjusted Net Earnings Per Share Were $2.47, Up 12 Percent.Fiscal 2011 Guidance: Adjusted Net Earnings Per Share Growth of 5 to 7 Percent.
CAMDEN, N.J., Sep 03, 2010 (BUSINESS WIRE) — Campbell Soup Company (NYSE:CPB) today reported its fiscal 2010 results.
Fourth-Quarter Summary
Full-Year Summary
Net earnings for the quarter ended Aug. 1, 2010, were $113 million, or $0.33 per share, compared with $69 million, or $0.20 per share, in the prior year. Excluding items impacting comparability, all related to fiscal 2009, adjustednet earnings increased 6 percent in the quarter from an adjusted $107 million in the prior-year quarter. Adjustednet earnings per share increased 10 percent in the current quarter from $0.30 in the year-ago quarter. A detailed reconciliation of current and prior-year adjusted financial information to the reported information is included at the end of this news release.
Douglas R. Conant, Campbell’s President and CEO, said, “In a challenging year, we delivered strong earnings growth, overcoming softer-than-expected sales, particularly in our U.S. soup business. We had another year of strong cash flow performance, generating more than $1 billion in cash flow from operations.For the year, we expanded gross margins through supply chainproductivity improvements and previouslyannounced cost-savings initiatives.”
Conant continued, “By effectively managing our margins in a tough economic environment, we have set the stage for next year and positioned the company for growth through continued innovation, category leading marketing spending and competitive pricing. I am confident that we have the right strategies to drive growth across our strong portfolio of healthy beverages, baked snacks and simple meals. In healthy beverages, we will build on our track record of innovation and continue our effective marketing efforts. In baked snacks, we have a full slate of innovation across our portfolio with exciting new products for Pepperidge Farm and Arnott’s. In U.S. soup, we have significant plans to enhance our condensed soups, strengthen our competitiveness in ready-to-serve soups and introduce a new advertising campaign to support the entire U.S. portfolio of ‘Campbell’s’ soup brands and to help drive category growth.”
Fiscal 2011 Guidance
In fiscal 2011, Campbell expects sales growth of 2 to 3 percent and adjusted earnings growth before interest and taxes (EBIT) of 4 to 5 percent. These growth rates are slightly below the company’s long-term growth targets, reflecting the challenging economic and consumer conditions in the marketplace. Despite these conditions, Campbell expects fiscal 2011 EPS growth to be within its long-term target range of 5 to 7 percent from the fiscal 2010 adjusted base of $2.47.
Fourth-Quarter Results
For the fourth quarter, sales decreased 1 percent to $1.518 billion. The decrease in sales reflected the following factors:
Fourth-Quarter Financial Details
Full-Year Results
Net earnings for the fiscal year were $844 million, or $2.42 per share, compared with $736 million, or $2.05 per share, a year ago. Excluding all items impacting comparability in both periods, adjusted net earnings increased 9 percent to $862 million compared with $794 million in the prior year, and adjusted net earnings per share increased 12 percent to $2.47 in the current year compared with $2.21 in the prior year.
Sales were $7.676 billion, an increase of 1 percent. The change in sales for the yearreflected the following factors:
Full-Year Financial Details
Summary of Fiscal 2010 Fourth-Quarter and Full-Year Results by Segment
U.S. Soup, Sauces and Beverages
Sales for U.S. Soup, Sauces and Beverages were $644 million for the fourth quarter, a decrease of 1 percent compared with a year ago. The change in sales reflected the following factors:
Soup sales for the quarter decreased 5 percent, with sales of both condensed and ready-to-serve soups declining 7 percent, reflecting increased promotional spending, while broth sales increased 9 percent.
Beverage sales increased 12 percent driven by significant growth across the entire “V8” portfolio.
Sales of “Prego” pasta sauce and “Pace” Mexican sauce declined.
Operating earnings were $139 million, compared with $148 million in the prior-year period. The decrease in operating earnings was primarily due to increased promotional spending, partly offset by productivity improvements.
For the full year, U.S. Soup, Sauces and Beverages sales decreased 2 percent to $3.700 billion. A breakdown of the change in sales follows:
For the full year, U.S. Soup sales decreased 4 percent.
Beverage sales increased 4 percent driven by double-digit volume gains in the second half of the fiscal year.
“Prego” pasta sauce sales increased, reflecting the growth of “Prego” Heart Smart varieties, while sales of “Pace” Mexican sauce declined.
Operating earnings were $943 million, compared with $927 million a year ago. The increase in operating earnings was primarily due to improved gross margin performance and lower advertising, partially offset by lower sales.
Baking and Snacking
Sales for Baking and Snacking were $479 million in the fourth quarter, an increase of 3 percent from a year ago. The change in sales reflected the favorable impact of currency.
Increased sales in the Indonesia biscuits business were offset by a decline in Pepperidge Farm. In Australia, sales were comparable to the year-ago period, as higher volumes were offset by increased promotional spending.
For the quarter, operating earnings were $73 million, compared with $69 million in the prior-year period. The increase in operating earnings was due to the favorable impact of currency.
For the full year, sales increased 7 percent to $1.975 billion. A breakdown of the change in sales follows:
Further details of sales results included the following:
Operating earnings were $322 million, compared with $262 million in the prior year. The prior year included $3 million in costs related to the restructuring program. The increase in operating earnings was due to the favorable impact of currency and earnings growth in both Pepperidge Farm and Arnott’s.
International Soup, Sauces and Beverages
Sales for International Soup, Sauces and Beverages were $281 million for the fourth quarter, a decrease of 3 percent compared with a year ago. The change in sales reflected the following factors:
Sales decreased primarily due to declines in Europe and Canada, partially offset by gains in the Asia Pacific region and the favorable impact of currency.
Operating earnings were $6 million, compared with a loss of $48 million in the year-ago period. The prior-year period included an impairment charge of $67 million related to certain European trademarks. Excluding the impairment charge, operating earnings decreased primarily due to declines in Canada and Europe, partially offset by margin growth in Asia Pacific.
For the full year, sales increased 5 percent to $1.423 billion. A breakdown of the change in sales follows:
Excluding the impact of currency and divestitures, declines in Europe and Canada were partly offset by gains in the Asia Pacific region.
Operating earnings were $161 million, compared with $69 million a year ago. Excluding the prior-year impairment charge of $67 million, the increase in operating earnings was primarily driven by the favorable impact of currency and growth in Europe as well as the Asia Pacific region, partially offset by declines in Canada.
North America Foodservice
Sales were $114 million for the fourth quarter, a decrease of 7 percent compared with a year ago. A breakdown of the change in sales follows:
Operating earnings were $3 million compared with $0 in earnings in the prior-year quarter. The increase was primarily due to cost-reduction initiatives.
For the full year, sales were $578 million compared with $599 million in the prior year, a decline of 4 percent. A breakdown of the change in sales follows:
Sales declined primarily due to continued weakness in the food service sector.
Operating earnings were $43 million, compared with $34 million in the prior year. The current year included a $12 million restructuring charge, while the prior year included $19 million in restructuring-related costs. Excluding these items, operating earnings increased slightly.
Unallocated Corporate Expenses
Unallocated corporate expenses increased to $34 million in the current quarter from $24 million a year ago. The prior year included a favorable net adjustment of $14 million related to commodity hedging. Unallocated corporate expenses for the full year were $121 million versus $107 million in the prior year. The increase primarily reflected foreign currency gains recorded in the prior year and higher equity-related benefit costs in the current year.
Non-GAAP Financial Information
A reconciliation of the adjusted fiscal 2010 and 2009 financial information to the reported financial information is attached to this news release.
Conference Call
Campbell will host a conference call to discuss these results on Sept. 3, 2010, at 10:00 a.m. Eastern Daylight Time. U.S. participants may access the call at 1-866-847-7864 and non-U.S. participants at 1-703-639-1430. Participants should call at least five minutes prior to the starting time. The passcode is “Campbell Soup” and the conference leader is Jennifer Driscoll. The call will also be broadcast live over the Internet at investor.campbellsoupcompany.com and can be accessed by clicking on the “News & Events” button. A recording of the call will be available approximately two hours after it is completed through midnight Sept. 17, 2010, at 1-888-266-2081 or 1-703-925-2533. The access code is 1478732.
Reporting Segments
Campbell Soup Company earnings results are reported for the following segments:
U.S. Soup, Sauces and Beverages includes the following retail businesses: “Campbell’s” condensed and ready-to-serve soups, “Swanson” broth, stock and canned poultry businesses, “Prego” pasta sauce, “Pace” Mexican sauce, “Campbell’s” canned pasta, gravies and beans, “V8” vegetable juices, “V8 V-Fusion” juices,“V8 Splash” juice beverages, and “Campbell’s” tomato juice.
Baking and Snacking includes the following businesses: “Pepperidge Farm” cookies, crackers, breads and frozen products in U.S. retail and “Arnott’s” biscuits in Australia and Asia Pacific.
International Soup, Sauces and Beverages includes the soup, sauce and beverage businesses outside of the United States, including Europe, Mexico, Latin America, the Asia Pacific region,as well asthe emerging markets of Russia and China,and the retail business in Canada.
North America Foodservice includes the Away FromHome business in the U.S. and Canada.
About Campbell Soup Company
Campbell Soup Company is a global manufacturer and marketer of high-quality foods and simple meals, including soup and sauces, baked snacks and healthy beverages. Founded in 1869, the company has a portfolio of market-leading brands, including “Campbell’s,” “Pepperidge Farm,” “Arnott’s” and “V8.” Through its corporate social responsibility program, the company strives to make a positive impact in the workplace, in the marketplace and in the communities in which it operates. Campbell is a member of the Standard & Poor’s 500 and the Dow Jones Sustainability Indexes. For more information, visit https://www.campbellsoup.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 sales, earnings, and margins. These forward-looking statements 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 impact of strong competitive responses to the company’s efforts to leverage its brand power in the market; (2) the risks associated with trade and consumer acceptance of the company’s initiatives; (3) the company’s ability to realize projected cost savings and benefits; (4) the company’s ability to manage changes to its business processes; (5) the increased significance of certain of the company’s key trade customers; (6) the impact of fluctuations in the supply or costs of energy and raw and packaging materials; (7) the impact of portfolio changes; (8) the uncertainties of litigation; (9) the impact of changes in currency exchange rates, tax rates, interest rates, debt and equity markets, inflation rates, economic conditions and other external factors; (10) 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 (11) 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.
THREE MONTHS ENDED
In the first quarter of fiscal 2010, the company adopted and retrospectively applied new accounting guidance related to the calculation of earnings per share. There was no change to the previously reported basic or diluted net earnings per share for the fourth quarter of fiscal 2009.
In fiscal 2009, the company recognized in cost of products sold a $14 ($9 after tax or $.03 per share) favorable net adjustment on commodity hedge positions.
In fiscal 2009, as part of the company’s annual review of intangible assets, a non-cash impairment charge of $67 ($47 after tax or $.13 per share) was recorded in other expenses/(income) related to certain European trademarks, primarily in Germany and the Nordic region, used in the International Soup, Sauces and Beverages segment.
TWELVE MONTHS ENDED
In the first quarter of fiscal 2010, the company adopted and retrospectively applied new accounting guidance related to the calculation of earnings per share. The retrospective application of the provision resulted in a reduction of the previously reported basic earnings per share from continuing operations and net earnings of $.03 and of the previously reported diluted earnings per share from continuing operations and net earnings of $.01 for the year ended August 2, 2009. There was no change to the basic and diluted earnings per share from discontinued operations for the year ended August 2, 2009.
In fiscal 2010, the company recorded pre-tax restructuring charges of $12 ($8 after tax or $.02 per share) for pension benefit costs associated with the initiatives announced in April 2008 to improve operational efficiency. In fiscal 2009, the company recorded pre-tax restructuring-related costs in cost of products sold of $22 ($15 after tax or $.04 per share) related to the previously announced initiatives.
In fiscal 2010, the company recorded deferred tax expense of $10 (or $.03 per share) due to the enactment of U.S. health care legislation in March 2010.
In fiscal 2009, the company recognized a $4 (or $.01 per share) tax benefit in discontinued operations related to the sale of the Godiva Chocolatier business.
The sum of the individual per share amounts does not equal due to rounding.
Sales
Change
Earnings
In the first quarter of fiscal 2010, the company adopted and retrospectively applied new accounting guidance related to the calculation of earnings per share. There was no change to the previously reported diluted net earnings per share for the fourth quarter of fiscal 2009.
In fiscal 2009, the company recognized in cost of products sold a $14 ($9 after tax or $.03 per share) favorable net adjustment on commodity hedge positions. The favorable net adjustment is included in Unallocated corporate expenses.
In the first quarter of fiscal 2010, the company adopted and retrospectively applied new accounting guidance related to the calculation of earnings per share. The retrospective application of the provision resulted in a reduction of the previously reported diluted earnings per share from continuing operations and net earnings of $.01 for the year ended August 2, 2009. There was no change to the diluted earnings per share from discontinued operations for the year ended August 2, 2009.
In fiscal 2010, the company recorded pre-tax restructuring charges of $12 ($8 after tax or $.02 per share) for pension benefit costs associated with the initiatives announced in April 2008 to improve operational efficiency. The restructuring charges were recognized in the North America Foodservice segment. In fiscal 2009, the company recorded pre-tax restructuring-related costs in cost of products sold of $22 ($15 after tax or $.04 per share) related to the previously announced initiatives. The restructuring-related costs were recognized in the following segments: North America Foodservice – $19 and Baking and Snacking – $3.
The sum of the individual per share amount does not equal due to rounding.
Certain reclassifications were made to prior year amounts to conform with the current year presentation.
Reconciliation of GAAP and Non-GAAP Financial MeasuresFiscal Year Ended August 1, 2010
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.
Items Impacting Gross Margin and Earnings
The company believes that financial information excluding certain transactions 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 if these transactions are excluded.
The following items impacted gross margin and/or earnings:
The tables below reconcile financial information, presented in accordance with GAAP, to financial information excluding certain transactions:
Add: Non-cash impairment charge on intangible assets (4)
Add: Net non-cash impairment charge on intangible assets (4)
Add: Restructuring-related costs (1)
Add: Restructuring charges and related costs (1)
Add: Tax benefit from restructuring charges and related costs (1)
Add: Tax benefit from non-cash impairment charge on intangible assets (4)
Add: Net adjustment from restructuring charges and related costs (1)
Add: Tax expense from health care legislation (2)
Adjusted Earnings from discontinued operations
SOURCE: Campbell Soup Company
Campbell Soup CompanyAnthony Sanzio (Media)856-968-4390orJennifer Driscoll (Analysts)856-342-6081
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