caret-down

Campbell Reports Second-Quarter Results

Second-Quarter Adjusted Net Earnings per Share Increased 9 Percent to
$0.70

First-Half Adjusted Net Earnings per Share Increased 8 Percent to
$1.58

Second-Quarter Sales Increased 10 Percent to $2.333 Billion

Fiscal 2013 Guidance Confirmed

CAMDEN, N.J.–(BUSINESS WIRE)–Feb. 15, 2013–
Campbell Soup Company (NYSE:CPB) today reported its results for
the second quarter of fiscal 2013.

Second-Quarter Overview

  • Reported Sales Increased 10 Percent; Organic Sales Increased 1
    Percent
  • Adjusted Earnings Before Interest and Taxes (EBIT) Increased 5
    Percent, 1 Percent Excluding the Acquisition of Bolthouse Farms
  • U.S. Simple Meals Sales Rose 1 Percent; Earnings Increased 10
    Percent
  • Global Baking and Snacking Sales Were Up 7 Percent; Earnings
    Increased 4 Percent
  • U.S. Beverages Sales Declined 3 Percent; Earnings Increased 9
    Percent
  • Campbell Recorded Charges Related To the Announced Restructuring
    Program in Mexico

Net earnings for the quarter ended Jan. 27, 2013, were $190 million, or
$0.60 per share, compared with $205 million, or $0.64 per share, in the
prior year. The current and prior years’ reported net earnings included
charges associated with restructuring programs. Excluding restructuring
and restructuring-related charges, adjusted net earnings increased 6
percent to $220 million, compared with $207 million in the prior year’s
quarter, and adjusted net earnings per share increased 9 percent to
$0.70 compared with $0.64 in the year-ago quarter. A detailed
reconciliation of the reported financial information to the adjusted
information is included at the end of this news release.

Denise Morrison, Campbell’s President and Chief Executive Officer, said,
“We are pleased with our performance in the quarter.

“Within U.S. Simple Meals, we saw growth in U.S. Soup as consumers
responded to our efforts in brand building and innovation, both in our
core business and in new products. While we reduced overall advertising
spending, we were able to maintain competitive levels and to increase
advertising support for new innovation. Our work to improve taste
adventure and deliver more effective and efficient marketing and
promotion resulted in increased consumption in this important business.”

Morrison continued, “Our Global Baking and Snacking business has
benefitted from innovation in both core brands and new products, plus
increased distribution and merchandising. Gains in snack crackers,
cookies and fresh bakery products drove sales and earnings at Pepperidge
Farm. Arnott’s sales increased with solid performance in Australia and
Indonesia.

“Our newly acquired Bolthouse Farms business delivered solid results in
the fresh carrots, beverages and salad dressings categories, driven by
innovation and increased distribution. The Bolthouse Farms integration
is also progressing well.”

Morrison concluded, “Despite weakness in our U.S. Beverages and North
America Foodservice businesses, our first half business results were
positive. Although profits in U.S. Beverages improved, we have more work
to do to drive the top line and continue to stabilize profit in a
sluggish shelf-stable juice category. Halfway through our fiscal year,
we are making progress against our plans to return Campbell to
sustainable, profitable net sales growth.”

Campbell Confirms Fiscal 2013 Guidance

The company confirmed its previous fiscal 2013 guidance. Campbell
expects to grow sales between 10 and 12 percent, adjusted EBIT between 4
and 6 percent and adjusted EPS between 3 and 5 percent. The company
expects adjusted EPS to be between $2.51 and $2.57. This guidance
includes the estimated impact of the Bolthouse Farms business and
excludes the impact of acquisition transaction costs and restructuring
charges. In fiscal 2013, Campbell expects Bolthouse Farms to contribute
approximately $750 million to sales and add $0.05 to $0.07 to adjusted
EPS, including the impact of the suspension of Campbell’s strategic
share repurchase program.

Restructuring Program

On Feb. 14, 2013, Campbell announced that it has entered into commercial
arrangements with Grupo Jumex and Conservas La Costeña that will expand
the company’s access to manufacturing and distribution capabilities in
Mexico. These providers will produce and distribute Campbell’s
beverages, soups, broths and sauces throughout the Mexican market. As a
result of these agreements, Campbell will close its plant in Villagrán,
Mexico, and eliminate approximately 260 positions. In the second quarter
of fiscal 2013, Campbell recorded a restructuring charge of $6 million
($4 million after tax or $0.01 per share) related to this initiative.

Second-Quarter Results

For the second quarter, sales increased 10 percent to $2.333 billion.
The increase in sales for the quarter reflected the following factors:

  • The acquisition of Bolthouse Farms added 9 percent
  • Price and sales allowances added 2 percent
  • Increased promotional spending subtracted 1 percent

Second-Quarter Financial Details

  • Gross margin was 35.1 percent compared with 38.4 percent a year ago.
    Excluding restructuring-related charges, adjusted gross margin in the
    current quarter was 36.8 percent. The decline in gross margin was
    mostly attributable to the acquisition of Bolthouse Farms, which
    operates with a lower gross margin structure.
  • Marketing and selling expenses were $297 million, comparable to the
    prior year. Lower advertising and consumer promotion expenses,
    primarily in the U.S. Soup business, were offset by higher spending to
    support the company’s innovation efforts, higher selling expenses and
    the impact of the addition of Bolthouse Farms expenses.
  • Administrative expenses increased $20 million to $172 million,
    primarily due to the acquisition of Bolthouse Farms, as well as higher
    compensation and benefit costs, including pension expenses.
  • EBIT was $301 million compared with $329 million in the prior-year
    quarter. Excluding restructuring and restructuring-related charges,
    adjusted EBIT increased 5 percent to $349 million. Excluding Bolthouse
    Farms’ operating results, adjusted EBIT increased 1 percent, primarily
    driven by lower marketing expenses, partly offset by higher selling
    expenses and R&D costs.
  • Net interest expenses increased $5 million to $31 million, reflecting
    a higher debt level due to the acquisition of Bolthouse Farms,
    partially offset by lower interest rates.
  • The tax rate in the quarter was 30.7 percent compared with 33.7
    percent in the prior year. Excluding restructuring and
    restructuring-related charges, the current quarter’s adjusted tax rate
    was 31.8 percent. The decrease was primarily due to lower taxes on
    foreign earnings in the current year.
  • Adjusted net earnings for the quarter increased 6 percent to $220
    million. Adjusted net earnings per share were $0.70 in the current
    quarter compared with net earnings per share of $0.64 in the
    prior-year quarter, an increase of 9 percent. Earnings per share
    benefitted from fewer shares outstanding, reflecting the impact of the
    company’s share repurchase program in the prior year.

First-Half Results

Net earnings for the first half were $435 million, or $1.38 per share,
compared with $470 million, or $1.45 per share, in the year-ago period.
Excluding restructuring, restructuring-related charges and acquisition
transaction costs, adjusted net earnings increased 5 percent to $499
million. Reflecting the benefit of fewer shares outstanding, adjusted
net earnings per share increased 8 percent to $1.58.

For the first half of fiscal 2013, sales were $4.669 billion, an
increase of 9 percent from the year-ago period. The change in sales for
the period reflected the following factors*:

  • The acquisition of Bolthouse Farms added 9 percent
  • Price and sales allowances added 2 percent
  • Increased promotional spending subtracted 1 percent

* Does not add due to rounding

First-Half Financial Details

  • Gross margin was 36.1 percent compared with 39.0 percent a year ago.
    Excluding restructuring-related charges, adjusted gross margin in the
    first half was 37.4 percent. The decline in gross margin was primarily
    attributable to the acquisition of Bolthouse Farms.
  • Marketing and selling expenses decreased 1 percent to $551 million
    compared with $558 million in the prior year. The decline was
    primarily due to lower marketing expenses, principally reductions in
    advertising and consumer promotion expenses, partly offset by the
    impact of the addition of Bolthouse Farms expenses and higher selling
    expenses.
  • Administrative expenses increased $37 million to $334 million,
    primarily due to the acquisition of Bolthouse Farms as well as higher
    compensation and benefit costs, including pension expenses.
  • EBIT was $686 million compared with $745 million in the prior year.
    Excluding restructuring, restructuring-related charges and acquisition
    transaction costs, adjusted EBIT increased 5 percent to $787 million.
    Excluding Bolthouse Farms’ operating results, adjusted EBIT increased
    1 percent, primarily driven by lower marketing expenses, partially
    offset by higher selling and administrative expenses.
  • Adjusted net earnings for the first half increased 5 percent to $499
    million, as the impact of higher interest expenses was offset by a
    lower tax rate. Adjusted net earnings per share were $1.58 in the
    first half compared with net earnings per share of $1.46 in the prior
    year, an increase of 8 percent. Earnings per share benefitted from
    fewer shares outstanding.
  • Cash flow from operations was $499 million compared with $478 million
    in the prior year.
  • Net debt rose to $4.019 billion, an increase of $1.463 billion,
    primarily due to funding the $1.570 billion purchase of Bolthouse
    Farms.

Summary of Fiscal 2013 Second-Quarter and First-Half Results by
Segment

U.S. Simple Meals

Sales for U.S. Simple Meals were $833 million for the second quarter, an
increase of 1 percent compared with the year-ago period. A breakdown of
the change in sales follows:

  • Volume and mix subtracted 1 percent
  • Price and sales allowances added 2 percent

U.S. Soup sales increased 1 percent compared to the year-ago quarter.
Sales were negatively impacted by a decline in retailer inventory levels.

  • Sales of “Campbell’s” condensed soups increased 1 percent, driven by
    gains in eating varieties. Sales of cooking varieties were comparable
    to the year-ago quarter.
  • Sales of ready-to-serve soups increased 8 percent, primarily driven by
    double-digit volume gains in “Campbell’s Chunky” canned soups and the
    benefit of new items across the portfolio, slightly offset by declines
    in microwavable soups.
  • Broth sales decreased 12 percent, primarily due to declines in canned
    broth, reflecting earlier holiday shipments in the prior quarter.

Sales of U.S. Sauces were comparable to the prior-year quarter as lower
sales in “Prego” pasta sauce and “Chunky” chili were offset by gains in
“Swanson” canned poultry, “Campbell’s” canned pasta, “Pace” Mexican
sauce and new “Campbell’s” Skillet Sauces.

U.S. Simple Meals operating earnings increased 10 percent to $191
million, compared with $174 million in the prior-year period. Benefits
from higher selling prices, productivity improvements and lower
marketing expenses were partly offset by volume declines and cost
inflation. The increase in operating earnings was driven by earnings
gains in U.S. Soup, partly offset by a decline in U.S. Sauces.

For the first half, sales for U.S. Simple Meals increased 2 percent to
$1.729 billion, driven by higher selling prices.

U.S. Soup sales rose 2 percent primarily driven by a 6-percent increase
in ready-to-serve soups. Sales of condensed soups were comparable to the
prior year, while sales of broth decreased 1 percent.

U.S. Simple Meals operating earnings were $465 million in the first half
compared with $434 million in the year-ago period, an increase of 7
percent. Productivity savings, lower marketing expenses and higher
selling prices net of related volume impacts were partly offset by cost
inflation. The increase in operating earnings was driven by gains in
U.S. Soup, partly offset by a decline in U.S. Sauces.

Global Baking and Snacking

Sales for Global Baking and Snacking were $561 million for the second
quarter, an increase of 7 percent from a year ago. The change in sales
reflected the following factors:

  • Volume and mix added 6 percent
  • Price and sales allowances added 1 percent
  • Increased promotional spending subtracted 1 percent
  • Currency added 1 percent

Further details of sales results included the following:

  • Sales of “Pepperidge Farm” products increased, primarily driven by
    volume gains, partially offset by increased promotional spending.

    • In cookies and crackers, sales increases were driven by strong
      gains in “Goldfish” snack crackers and the national launch of
      “Jingos!” adult savory crackers, as well as improved performance
      in cookies, which benefitted from a successful holiday period.
    • Sales of fresh bakery products increased versus the prior year,
      driven by volume gains across most of the portfolio.
  • Excluding the favorable impact of currency, sales at Arnott’s
    increased, driven by growth in Australia and excellent gains in
    Indonesia. Sales growth in Australia was driven across all categories:
    savory crackers, chocolate cookies and sweet varieties.

Operating earnings for the quarter were $74 million compared with $71
million in the prior year. Volume gains and productivity improvements
were partly offset by increased promotional spending and cost inflation.
The increase in operating earnings was driven by growth in Pepperidge
Farm, partly offset by lower earnings in Arnott’s.

For the first half, sales increased 4 percent to $1.135 billion. A
breakdown of the change in sales follows:

  • Volume and mix added 4 percent
  • Price and sales allowances added 2 percent
  • Increased promotional spending subtracted 2 percent

Operating earnings in the first half were $159 million, comparable to
the prior year, reflecting growth in Pepperidge Farm offset by lower
earnings in Arnott’s.

International Simple Meals and Beverages

Sales for International Simple Meals and Beverages were $405 million for
the second quarter, an increase of 1 percent from a year ago. Organic
sales were comparable to the prior-year quarter. The change in sales
reflected the following factors:

  • Volume and mix added 1 percent
  • Price and sales allowances added 2 percent
  • Increased promotional spending subtracted 3 percent
  • Currency added 1 percent

Excluding the impact of currency, higher sales in Latin America and
Canada were offset by declines in the Asia Pacific region.

  • In Canada, sales increased primarily driven by the positive impact of
    currency.
  • In Europe, excluding the negative impact of currency, sales were
    comparable to the prior year, as sales growth in France was offset by
    lower export sales.
  • In the Asia Pacific region, sales decreased due to declines in
    Australia and Japan, partially offset by growth in Malaysia.

Operating earnings were $54 million compared with $58 million in the
year-ago period. The decrease in operating earnings was primarily due to
lower earnings in Canada.

For the first half, sales were $759 million, comparable to the prior
year. Sales were impacted by the following factors:

  • Volume and mix added 1 percent
  • Price and sales allowances added 2 percent
  • Increased promotional spending subtracted 2 percent
  • Currency subtracted 1 percent

Excluding the impact of currency, sales gains in Latin America, Canada
and the Asia Pacific region were partially offset by declines in Europe.

Operating earnings for the half were $101 million, comparable to the
prior year, reflecting earnings gains in the Asia Pacific region offset
by lower earnings in Europe.

U.S. Beverages

Sales for U.S. Beverages were $182 million for the second quarter, a
decrease of 3 percent compared to the year-ago period, due to declines
from volume and mix.

The decrease in sales was due to declines in “V8” vegetable juice and
“V8 V-Fusion” beverages. “V8 Splash” juice beverages sales increased
slightly.

Operating earnings for the quarter were $37 million compared with $34
million in the prior year. The increase in operating earnings was
primarily driven by lower advertising expenses and productivity
improvements, partially offset by volume declines and cost inflation.

For the first half, sales decreased 4 percent to $371 million. A
breakdown of the change in sales follows:

  • Volume and mix subtracted 3 percent
  • Increased promotional spending subtracted 1 percent

Sales of “V8” vegetable juice and “V8 V-Fusion” beverages declined,
while sales of “V8 Splash” juice beverages increased.

Operating earnings in the first half increased to $67 million from $64
million, primarily driven by lower advertising and consumer promotion
expenses and productivity initiatives, partly offset by volume declines
and cost inflation.

Bolthouse and Foodservice

Sales were $352 million for the second quarter, with the acquisition of
Bolthouse Farms contributing $195 million. Sales in North America
Foodservice declined 10 percent compared with a year ago. A breakdown of
the change in North America Foodservice sales follows:

  • Volume and mix subtracted 6 percent
  • Increased promotional spending subtracted 4 percent

North America Foodservice sales decreased primarily due to declines in
frozen soup sales, reflecting the loss of a major restaurant customer.

Operating earnings increased by $2 million to $30 million, driven by the
acquisition of Bolthouse Farms, which contributed $15 million, partially
offset by significantly lower earnings in North America Foodservice.

For the first half, sales were $675 million, with the acquisition of
Bolthouse Farms contributing $366 million. North America Foodservice
sales declined 8 percent to $309 million. A breakdown of the change in
North America Foodservice sales follows:

  • Volume and mix subtracted 4 percent
  • Increased promotional spending subtracted 4 percent

Operating earnings for the first half were $64 million compared with $55
million in the year-ago period. The increase in operating earnings was
primarily driven by the acquisition of Bolthouse Farms, which
contributed $29 million, offset by the lower earnings in North America
Foodservice.

Unallocated Corporate Expenses

Unallocated corporate expenses for the quarter were $77 million compared
with $33 million a year ago. The current quarter included $40 million of
restructuring-related costs. Unallocated corporate expenses for the
first half were $140 million compared with $63 million in the prior
year. The current year included $61 million of restructuring-related
costs and $10 million of transaction costs related to the Bolthouse
Farms acquisition.

Non-GAAP Financial Information

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

Conference Call

Campbell will host a conference call to discuss these results on Feb.
15, 2013, at 10:00 a.m. Eastern Standard Time. Participants may access
the call at +1 (703) 639-1157. Participants should call at least ten
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 on March 1, 2013 at +1 (703) 925-2533. The
access code is 1604056. To download the new Campbell investor relations
app, which offers access to SEC documents, news releases, audiocasts and
more, please visit the Apple App store to download on your iPhone or
iPad, or Google Play for your Android mobile device.

Reporting Segments

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

U.S. Simple Meals aggregates the U.S. Soup and U.S. Sauces
businesses. The U.S. Soup business includes the following products:
“Campbell’s” condensed and ready-to-serve soups, and “Swanson” broth and
stocks. The U.S. Sauces business includes “Prego” pasta sauce, “Pace”
Mexican sauce, “Swanson” canned poultry, “Campbell’s” canned pasta,
gravies, and beans.

Baking and Snacking aggregates the following: “Pepperidge Farm”
cookies, crackers, breads and frozen products in U.S. retail; and
“Arnott’s” biscuits in Australia and Asia Pacific.

International Simple Meals and Beverages aggregates the
following: soup, sauce and beverage products outside of the United
States, including Europe, Latin America, Asia Pacific, China and the
retail business in Canada.

U.S. Beverages represents the following products: “V8” vegetable
juices, “V8 V-Fusion” juices and juice beverages, “V8 Splash”
juice beverages, and “Campbell’s” tomato juice.

Bolthouse and Foodservice includes the Bolthouse Farms and North
America Foodservice businesses. Bolthouse Farms consists of the
following products: super-premium refrigerated beverages, refrigerated
salad dressings and carrot products, including fresh carrots, juice
concentrate and fiber. North America Foodservice represents the
distribution of products such as soup, specialty entrees, beverage
products, other prepared foods and “Pepperidge Farm” products through
various food service channels in the United States and Canada.

About Campbell Soup Company

Campbell Soup Company is a 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,” “V8” and “Bolthouse Farms.” 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 www.campbellsoupcompany.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, including the Bolthouse Farms acquisition; (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.

 
CAMPBELL SOUP COMPANY
CONSOLIDATED STATEMENTS OF EARNINGS (unaudited)
(millions, except per share amounts)
 
 
    THREE MONTHS ENDED
January 27, 2013     January 29, 2012
Net sales $ 2,333 $ 2,112
Costs and expenses
Cost of products sold 1,514 1,301
Marketing and selling expenses 297 297
Administrative expenses 172 152
Research and development expenses 34 29
Other expenses 7 1
Restructuring charges   8   3
Total costs and expenses   2,032   1,783
Earnings before interest and taxes 301 329
Interest, net   31   26
Earnings before taxes 270 303
Taxes on earnings   83   102
Net earnings 187 201
Net loss attributable to noncontrolling interests   3   4
Net earnings attributable to Campbell Soup Company $ 190 $ 205
 
Per share – basic
Net earnings attributable to Campbell Soup Company $ .61 $ .64
Dividends $ .58 $ .29
Weighted average shares outstanding – basic   314   318
 
Per share – assuming dilution
Net earnings attributable to Campbell Soup Company $ .60 $ .64
Weighted average shares outstanding – assuming dilution   316   320
 

In the second quarter of fiscal 2013, the company recorded pre-tax
restructuring charges of $2 and restructuring-related costs of $40 in
Cost of products sold associated with the initiatives announced in
September 2012 to improve its U.S. supply chain cost structure and
increase asset utilization across its U.S. thermal plant network.

In the second quarter of fiscal 2013, the company also recorded pre-tax
restructuring charges of $6 associated with commercial arrangements the
company entered into with third-party providers that will expand the
company’s access to manufacturing and distribution capabilities in
Mexico and result in the closure of its plant in Mexico.

The aggregate impact of the restructuring initiatives in the second
quarter of fiscal 2013 was pre-tax restructuring charges of $8 and
restructuring-related costs of $40 in Cost of products sold (aggregate
impact of $30 after tax or $.09 per share).

In the second quarter of fiscal 2012, the company recorded pre-tax
restructuring charges of $3 ($2 after tax or .$01 per share) associated
with the initiatives announced in June 2011 to improve supply chain
efficiency, reduce overhead costs across the organization, and exit the
Russian market.

 
CAMPBELL SOUP COMPANY
CONSOLIDATED STATEMENTS OF EARNINGS (unaudited)
(millions, except per share amounts)
 
 
    SIX MONTHS ENDED
January 27, 2013     January 29, 2012
Net sales $ 4,669 $ 4,273
Costs and expenses
Cost of products sold 2,985 2,608
Marketing and selling expenses 551 558
Administrative expenses 334 297
Research and development expenses 63 59
Other expenses 20 1
Restructuring charges   30   5
Total costs and expenses   3,983   3,528
Earnings before interest and taxes 686 745
Interest, net   64   54
Earnings before taxes 622 691
Taxes on earnings   192   227
Net earnings 430 464
Net loss attributable to noncontrolling interests   5   6
Net earnings attributable to Campbell Soup Company $ 435 $ 470
 
Per share – basic
Net earnings attributable to Campbell Soup Company $ 1.39 $ 1.46
Dividends $ .87 $ .58
Weighted average shares outstanding – basic   314   319
 
Per share – assuming dilution
Net earnings attributable to Campbell Soup Company $ 1.38 $ 1.45
Weighted average shares outstanding – assuming dilution   316   321
 

In fiscal 2013, the company recorded pre-tax transaction costs of $10
($7 after tax or $.02 per share) associated with the acquisition of
Bolthouse Farms, which closed on August 6, 2012. The costs are included
in Other expenses.

In fiscal 2013, the company recorded pre-tax restructuring charges of
$24 and restructuring-related costs of $61 in Cost of products sold
associated with the initiatives announced in September 2012 to improve
its U.S. supply chain cost structure and increase asset utilization
across its U.S. thermal plant network.

In the fiscal 2013, the company also recorded pre-tax restructuring
charges of $6 associated with commercial arrangements the company
entered into with third-party providers that will expand the company’s
access to manufacturing and distribution capabilities in Mexico and
result in the closure of its plant in Mexico.

The aggregate impact of the restructuring initiatives in fiscal 2013 was
pre-tax restructuring charges of $30 and restructuring-related costs of
$61 in Cost of products sold (aggregate impact of $57 after tax or $.18
per share).

In fiscal 2012, the company recorded pre-tax restructuring charges of $5
($3 after tax or .$01 per share) associated with the initiatives
announced in June 2011 to improve supply chain efficiency, reduce
overhead costs across the organization, and exit the Russian market.

 
CAMPBELL SOUP COMPANY
CONSOLIDATED SUPPLEMENTAL SCHEDULE OF SALES AND EARNINGS (unaudited)
(millions, except per share amounts)
 
 
    THREE MONTHS ENDED    
January 27, 2013     January 29, 2012 Percent

Change

Sales

Contributions:
U.S. Simple Meals $ 833 $ 824 1 %
Global Baking and Snacking 561 526 7 %
International Simple Meals and Beverages 405 402 1 %
U.S. Beverages 182 187 (3 )%
Bolthouse and Foodservice   352   173 103 %
Total sales $ 2,333 $ 2,112 10 %
 

Earnings

Contributions:
U.S. Simple Meals $ 191 $ 174 10 %
Global Baking and Snacking 74 71 4 %
International Simple Meals and Beverages 54 58 (7 )%
U.S. Beverages 37 34 9 %
Bolthouse and Foodservice   30   28 7 %
Total operating earnings 386 365 6 %
Unallocated corporate expenses 77 33
Restructuring charges   8   3
Earnings before interest and taxes 301 329 (9 )%
Interest, net 31 26
Taxes on earnings   83   102
Net earnings 187 201 (7 )%
Net loss attributable to noncontrolling interests   3   4
Net earnings attributable to Campbell Soup Company $ 190 $ 205 (7 )%
 
Per share – assuming dilution
Net earnings attributable to Campbell Soup Company $ .60 $ .64 (6 )%
 

In the second quarter of fiscal 2013, the company recorded pre-tax
restructuring charges of $2 and restructuring-related costs of $40 in
Unallocated corporate expenses associated with the initiatives announced
in September 2012 to improve its U.S. supply chain cost structure and
increase asset utilization across its U.S. thermal plant network.

In the second quarter of fiscal 2013, the company also recorded pre-tax
restructuring charges of $6 associated with commercial arrangements the
company entered into with third-party providers that will expand the
company’s access to manufacturing and distribution capabilities in
Mexico and result in the closure of its plant in Mexico.

The aggregate impact of the restructuring initiatives in the second
quarter of fiscal 2013 was pre-tax restructuring charges of $8 and
restructuring-related costs of $40 in Unallocated corporate expenses
(aggregate impact of $30 after tax or $.09 per share).

In the second quarter of fiscal 2012, the company recorded pre-tax
restructuring charges of $3 ($2 after tax or .$01 per share) associated
with the initiatives announced in June 2011 to improve supply chain
efficiency, reduce overhead costs across the organization, and exit the
Russian market.

 
CAMPBELL SOUP COMPANY
CONSOLIDATED SUPPLEMENTAL SCHEDULE OF SALES AND EARNINGS (unaudited)
(millions, except per share amounts)
 
 
    SIX MONTHS ENDED    
January 27, 2013     January 29, 2012 Percent

Change

Sales

Contributions:
U.S. Simple Meals $ 1,729 $ 1,698 2 %
Global Baking and Snacking 1,135 1,094 4 %
International Simple Meals and Beverages 759 761 %
U.S. Beverages 371 385 (4 )%
Bolthouse and Foodservice   675   335 101 %
Total sales $ 4,669 $ 4,273 9 %
 

Earnings

Contributions:
U.S. Simple Meals $ 465 $ 434 7 %
Global Baking and Snacking 159 159 %
International Simple Meals and Beverages 101 101 %
U.S. Beverages 67 64 5 %
Bolthouse and Foodservice   64   55 16 %
Total operating earnings 856 813 5 %
Unallocated corporate expenses 140 63
Restructuring charges   30   5
Earnings before interest and taxes 686 745 (8 )%
Interest, net 64 54
Taxes on earnings   192   227
Net earnings 430 464 (7 )%
Net loss attributable to noncontrolling interests   5   6
Net earnings attributable to Campbell Soup Company $ 435 $ 470 (7 )%
 
Per share – assuming dilution
Net earnings attributable to Campbell Soup Company $ 1.38 $ 1.45 (5 )%
 

In fiscal 2013, the company recorded pre-tax transaction costs of $10
($7 after tax or $.02 per share) associated with the acquisition of
Bolthouse Farms, which closed on August 6, 2012. The costs are included
in Unallocated corporate expenses.

In fiscal 2013, the company recorded pre-tax restructuring charges of
$24 and restructuring-related costs of $61 in Unallocated corporate
expenses associated with the initiatives announced in September 2012 to
improve its U.S. supply chain cost structure and increase asset
utilization across its U.S. thermal plant network.

In the fiscal 2013, the company also recorded pre-tax restructuring
charges of $6 associated with commercial arrangements the company
entered into with third-party providers that will expand the company’s
access to manufacturing and distribution capabilities in Mexico and
result in the closure of its plant in Mexico.

The aggregate impact of the restructuring initiatives in fiscal 2013 was
pre-tax restructuring charges of $30 and restructuring-related costs of
$61 in Unallocated corporate expenses (aggregate impact of $57 after tax
or $.18 per share).

In fiscal 2012, the company recorded pre-tax restructuring charges of $5
($3 after tax or .$01 per share) associated with the initiatives
announced in June 2011 to improve supply chain efficiency, reduce
overhead costs across the organization, and exit the Russian market.

 
CAMPBELL SOUP COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
(millions)
 
 
    January 27, 2013     January 29, 2012
Current assets $ 2,264 $ 1,918
Plant assets, net 2,361 2,047
Intangible assets, net 3,827 2,569
Other assets   141   131
Total assets $ 8,593 $ 6,665
 
 
Current liabilities $ 2,891 $ 2,152
Long-term debt 2,940 2,008
Other liabilities 1,607 1,308
Total equity   1,155   1,197
Total liabilities and equity $ 8,593 $ 6,665
 
Total debt $ 4,429 $ 2,878
 
Cash and cash equivalents $ 410 $ 322
 

Reconciliation of GAAP to Non-GAAP Financial Measures

Second Quarter Ended January 27, 2013

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.

Net Debt

The company believes that net debt is a non-GAAP measure that provides
additional meaningful comparisons between the company’s financial
position at January 27, 2013 and January 29, 2012, and also a useful
perspective on the financial condition of the business. Interest income
earned on cash and cash equivalents partially offsets interest expense
on debt. Cash and cash equivalents are available to repay outstanding
debt upon maturity.

The table below summarizes information on total debt and cash and cash
equivalents:

       
(millions) January 27, 2013 January 29, 2012
Short-term borrowings $ 1,489 $ 870
Long-term debt   2,940     2,008  
Total debt $ 4,429 2,878
Less: Cash and cash equivalents   (410 )   (322 )
Net debt $ 4,019   $ 2,556  
 

Organic Net Sales

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

 
Three Months Ended
    January 27, 2013    

January 29,

2012

    % Change
(millions)

Net Sales, as

Reported

   

Impact of

Currency

   

Impact of

Acquisition

   

Organic Net

Sales

Net Sales, as

Reported

Net Sales, as

Reported

   

Organic Net

Sales

U.S. Simple Meals $ 833     $     $     $ 833 $ 824 1 %     1 %
Global Baking and Snacking 561 (4 ) 557 526 7 % 6 %
International Simple Meals and Beverages 405 (3 ) 402 402 1 % %
U.S. Beverages 182 182 187 (3 )% (3 )%
Bolthouse and Foodservice*   352               (195 )       156   173 103 %     (10 )%
Total Net Sales* $ 2,333     $ (7 )     $ (195 )     $ 2,130 $ 2,112 10 %     1 %
*Does not add across due to rounding
 
 
 
Year-to-date
January 27, 2013

January 29,

2012

% Change
(millions)

Net Sales, as

Reported

   

Impact of

Currency

   

Impact of

Acquisition

   

Organic Net

Sales

Net Sales, as

Reported

Net Sales, as

Reported

   

Organic Net

Sales

U.S. Simple Meals $ 1,729 $ $ $ 1,729 $ 1,698 2 % 2 %
Global Baking and Snacking 1,135 (2 ) 1,133 1,094 4 % 4 %
International Simple Meals and Beverages 759 6 765 761 % 1 %
U.S. Beverages 371 371 385 (4 )% (4 )%
Bolthouse and Foodservice   675       (1 )       (366 )       308   335 101 %     (8 )%
Total Net Sales $ 4,669     $ 3       $ (366 )     $ 4,306 $ 4,273 9 %     1 %
 

Items Impacting Gross Margin and Earnings

The company believes that financial information excluding certain
transactions 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:

       
(1) In fiscal 2013, the company announced several initiatives to improve
its U.S. supply chain cost structure and increase asset utilization
across its U.S. thermal plant network. In the second quarter of
fiscal 2013, the company recorded pre-tax restructuring charges of
$2 million and restructuring-related costs of $40 million in Cost of
products sold related to the initiatives. Year-to-date, the company
recorded pre-tax restructuring charges of $24 million and
restructuring-related costs of $61 million in Cost of products sold.
 
In February 2013, the company announced that it has entered into
commercial arrangements with third-party providers that will expand
the company’s access to manufacturing and distribution capabilities
in Mexico. The third-party providers will produce and distribute the
company’s beverages, soups, broths and sauces throughout the Mexican
market. As a result of these arrangements, the company will close
its plant in Villagrán, Mexico. In the second quarter of fiscal
2013, the company recorded pre-tax restructuring charges of $6
million related to this initiative.
 
The aggregate impact of the restructuring initiatives in the second
quarter of fiscal 2013 was pre-tax restructuring charges of $8
million and restructuring-related costs of $40 million in Cost of
products sold (aggregate impact of $30 million after tax or $.09 per
share). The aggregate impact of the restructuring initiatives in the
year-to-date period of fiscal 2013 was pre-tax restructuring charges
of $30 million and restructuring-related costs of $61 million in
Cost of products sold (aggregate impact of $57 million after tax or
$.18 per share).
 
In fiscal 2011, the company announced a series of initiatives to
improve supply chain efficiency and reduce overhead costs across the
organization to help fund plans to drive the growth of the business.
The company also announced its intent to close its office in Moscow
and exit the Russian market. In the second quarter of fiscal 2012,
the company recorded pre-tax restructuring charges of $3 million ($2
million after tax or $.01 per share) related to the initiatives. The
year-to-date 2012 impact was $5 million ($3 million after tax or
$.01 per share). For the year ended July 29, 2012, the company
recorded pre-tax restructuring charges of $10 million ($6 million
after tax or $.02 per share) related to the initiatives.
 
(2) In the fourth quarter of fiscal 2012, the company announced its
intent to acquire Bolthouse Farms. In the first quarter of fiscal
2013, the company incurred transaction costs of $10 million ($7
million after tax or $.02 per share) associated with the
acquisition, which closed on August 6, 2012. In the fourth quarter
of fiscal 2012, the company incurred transaction costs of $5 million
($3 million after tax or $.01 per share) associated with the
acquisition.
 
(3) Bolthouse Farms contributed $15 million to earnings before interest
and taxes in the second quarter of fiscal 2013. Year-to-date,
Bolthouse Farms contributed $29 million to earnings before interest
and taxes.
 

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

           
Second Quarter
(millions, except per share amounts) January 27, 2013 January 29, 2012 Percent Change
Gross margin, as reported $ 819 $ 811
Add: Restructuring-related costs (1)   40      
Adjusted Gross margin $ 859   $ 811   6 %
Adjusted Gross margin percentage 36.8 % 38.4 %
 
Earnings before interest and taxes, as reported $ 301 $ 329
Add: Restructuring charges and related costs (1)   48     3  
Adjusted Earnings before interest and taxes $ 349   $ 332   5 %
Interest, net, as reported $ 31   $ 26  
Adjusted Earnings before taxes $ 318   $ 306  
 
Taxes on earnings, as reported $ 83 $ 102
Add: Tax benefit from restructuring charges and related costs (1)   18     1  
Adjusted Taxes on earnings $ 101   $ 103  
Adjusted effective income tax rate 31.8 % 33.7 %
 
Net earnings attributable to Campbell Soup Company, as reported $ 190 $ 205
Add: Net adjustment from restructuring charges and related costs (1)   30     2  
Adjusted Net earnings attributable to Campbell Soup Company $ 220   $ 207   6 %
 
Diluted net earnings per share attributable to Campbell Soup
Company, as reported
$ .60 $ .64
Add: Net adjustment from restructuring charges and related costs (1)   .09     .01  
Adjusted Diluted net earnings per share attributable to Campbell
Soup Company*
$ .70   $ .64   9 %
 
* The sum of the individual per share amounts does not add due to
rounding.
 
           
Year-to-Date
(millions, except per share amounts) January 27, 2013 January 29, 2012 Percent Change
Gross margin, as reported $ 1,684 $ 1,665
Add: Restructuring-related costs (1)   61      
Adjusted Gross margin $ 1,745   $ 1,665   5 %
Adjusted Gross margin percentage 37.4 % 39.0 %
 
Earnings before interest and taxes, as reported $ 686 $ 745
Add: Restructuring charges and related costs (1) 91 5
Add: Acquisition transaction costs (2)   10      
Adjusted Earnings before interest and taxes $ 787   $ 750   5 %
Interest, net, as reported $ 64   $ 54  
Adjusted Earnings before taxes $ 723   $ 696  
 
Taxes on earnings, as reported $ 192 $ 227
Add: Tax benefit from restructuring charges and related costs (1) 34 2
Add: Tax benefit from acquisition transaction costs (2)   3      
Adjusted Taxes on earnings $ 229   $ 229  
Adjusted effective income tax rate 31.7 % 32.9 %
 
Net earnings attributable to Campbell Soup Company, as reported $ 435 $ 470
Add: Net adjustment from restructuring charges and related costs (1) 57 3
Add: Net adjustment from acquisition transaction costs (2)   7      
Adjusted Net earnings attributable to Campbell Soup Company $ 499   $ 473   5 %
 
Diluted net earnings per share attributable to Campbell Soup
Company, as reported
$ 1.38 $ 1.45
Add: Net adjustment from restructuring charges and related costs (1) .18 .01
Add: Net adjustment from acquisition transaction costs (2)   .02      
Adjusted Diluted net earnings per share attributable to Campbell
Soup Company
$ 1.58   $ 1.46   8 %
 
 

Adjusted Earnings Before Interest and
Taxes Excluding Acquisition

Three Months Ended
(millions, except per share amounts) January 27, 2013 January 29, 2012 Percent Change
Adjusted Earnings before interest and taxes $ 349 $ 332
Deduct: Bolthouse earnings (3)   (15 )    
Adjusted Earnings before interest and taxes, less acquisition $ 334   $ 332   1 %
 
 
Year-to-Date
(millions, except per share amounts) January 27, 2013 January 29, 2012 Percent Change
Adjusted Earnings before interest and taxes $ 787 $ 750
Deduct: Bolthouse earnings (3)   (29 )    
Adjusted Earnings before interest and taxes, less acquisition $ 758   $ 750   1 %
 
         
Year Ended
(millions, except per share amounts) July 29, 2012
Earnings before interest and taxes, as reported $ 1,212
Add: Restructuring charges (1) 10
Add: Acquisition transaction costs (2)   5  
Adjusted Earnings before interest and taxes $ 1,227  
Interest, net, as reported $ 106  
Adjusted Earnings before taxes $ 1,121  
 
Taxes on earnings, as reported $ 342
Add: Tax benefit from restructuring charges (1) 4
Add: Tax benefit from acquisition transaction costs (2)   2  
Adjusted Taxes on earnings $ 348  
Adjusted effective income tax rate 31.0 %
 
Net earnings attributable to Campbell Soup Company, as reported $ 774
Add: Net adjustment from restructuring charges (1) 6
Add: Net adjustment from acquisition transaction costs (2)   3  
Adjusted Net earnings attributable to Campbell Soup Company $ 783  
 
Diluted net earnings per share attributable to Campbell Soup
Company, as reported
$ 2.41
Add: Net adjustment from restructuring charges (1) .02
Add: Net adjustment from acquisition transaction costs (2)   .01  
Adjusted Diluted net earnings per share attributable to Campbell
Soup Company
$ 2.44  
 

Source: Campbell Soup Company

Campbell Soup Company
Carla Burigatto (Media)
856-342-3737
carla_burigatto@campbellsoup.com
or
Jennifer
Driscoll (Analysts/Investors)
856-342-6081
jennifer_driscoll@campbellsoup.com