CAMDEN, N.J.–(BUSINESS WIRE)–May 15, 2002–Campbell Soup Company (NYSE:CPB) today reported diluted earnings per share for the third quarter ended April 28, 2002, of $.23. Excluding the costs of the previously announced Australian manufacturing reconfiguration, diluted earnings per share were $.24, down 20 percent or $.06 from the comparable period last year. This is consistent with the company’s February 13, 2002 announcement that it expected diluted earnings per share for the third quarter to be between $.21-$.24, excluding the impact of the Australian reconfiguration.
Net sales in the quarter increased 8 percent to $1,371 million. The following factors impacted sales growth: base volume and mix were flat, price added 1 percentage point and the European dry soup and sauces acquisition, completed in the fourth quarter of fiscal year 2001, added 7 percentage points.
For the quarter, wet soup shipments compared to one year ago were up 2 percent in the U.S. and down 3 percent in international, resulting in flat worldwide shipments. Net earnings for the quarter were $96 million. Excluding the impact of the Australian reconfiguration, net earnings for the quarter were $100 million, down 19 percent versus a year earlier as a result of planned increases in infrastructure and marketing investments across major businesses. The lower earnings were partially offset by favorable short-term interest rates that drove lower interest expense despite higher debt levels resulting from the European acquisition. Total marketing investment for the quarter was up 5 percent before the impact of currency and the European acquisition, and up 12 percent including the European acquisition.
For the first nine months of fiscal year 2002, net sales increased 7 percent to $4,910 million. The following factors drove the increase:
Base volume and mix increased 2 percent.
Price added 1 percentage point.
Promotions subtracted 1 percentage point.
Currency exchange rates negatively impacted sales by 1 percentage point.
The European acquisition added 6 percentage points.
For the first nine months, wet soup shipments compared to one year ago were flat for the U.S. and up 2 percent in international, resulting in a 1 percent worldwide increase. Net earnings for the first nine months were $470 million. Excluding the impact of the Australian reconfiguration, net earnings for the first nine months were $480 million, down 20 percent versus a year earlier.
For the current fiscal year, the company is maintaining its previous earnings estimate of approximately $1.30 per share, excluding the impact of the Australian reconfiguration.
Douglas R. Conant, President and Chief Executive Officer, said, “Our multi-year plan to put Campbell back on a sustainable growth track is gaining traction as we continue to refine and focus our consumer marketing, product quality and innovation strategies. We are also continuing the required investments in infrastructure and people that are essential to the success of our transformation plan.
“In U.S. soup, our highest strategic priority business, ready-to-serve brands such as `Campbell’s Chunky’ and `Campbell’s Select’ again delivered strong performances in the quarter. Although the rate of decline in `Campbell’s’ condensed soups moderated, we still have much more to accomplish with this business. As planned, quality improvements across the entire condensed line will continue during the next three soup seasons. The first phase of these improvements is being accelerated so that enhanced condensed vegetable varieties will be available during the upcoming soup season.”
Conant continued, “Beyond U.S. soup, the investments we have made in key businesses such as Pepperidge Farm in the U.S. and Arnotts in Australia are reflected in their strong results this quarter. In addition, we continue to generate strong cash flow, which has helped accelerate the reduction in debt resulting from the European acquisition.”
The company reported:
Free cash flow for the first nine months was $717 million versus $831 million a year ago reflecting increased marketing and infrastructure investments, which were offset by continued solid improvements in working capital.
Debt of $3,594 million increased from $3,131 million a year ago, but was down from $4,049 million at the end of fiscal year 2001. The higher debt level compared to a year ago is a result of the European acquisition that closed in the fourth quarter of fiscal year 2001.
A summary of fiscal year 2002 third quarter results by segment follows:
North America Soup and Away From Home
Sales for the quarter increased 1 percent to $516 million due to a 2 percent increase in U.S. soup shipments. Operating earnings were $108 million, down 18 percent, resulting from the planned increases in marketing and infrastructure investments.
For the quarter, shipments of condensed soup and “Swanson” broth both decreased 3 percent, while shipments of ready-to-serve soup increased 9 percent.
For the first nine months, shipments of condensed soup decreased 6 percent, shipments of ready-to-serve soup increased 9 percent and shipments of “Swanson” broth increased 3 percent. Quality improvements and new varieties in “Campbell’s Chunky” and “Campbell’s Select” soups led the ready-to-serve increases.
For the quarter, shipments of eating soups increased 3 percent and shipments of cooking soups decreased 3 percent.
For the first nine months, shipments of eating soups were flat and shipments of cooking soups decreased 1 percent.
North America Sauces and Beverages
Sales for the quarter decreased 1 percent to $276 million. Operating earnings decreased 22 percent to $56 million. The earnings decline was primarily driven by lower volumes and infrastructure investments.
Shipments of “Prego” Italian sauces were up slightly, due to the new “Prego” pasta bake sauce, a convenient product that does not require pasta to be pre-cooked. Performance of base “Prego” sauces was soft in a competitive market.
Shipments of “Pace” Mexican sauces continued to increase in response to advertising and consumer promotion.
Shipments of “Franco-American” canned pastas decreased significantly as a result of continued heavy competitive trade promotion programs.
Shipments of “V8” vegetable juice increased strongly, reflecting positive consumer response to continued television and print advertising. Shipments of “V8 Splash” juice beverages declined.
Biscuits and Confectionery
Biscuits and Confectionery sales for the quarter increased 5 percent to $357 million. Sales were up in all three businesses – Pepperidge Farm, Godiva and Arnotts. Operating earnings increased 5 percent to $46 million, excluding the impact of the Australian manufacturing reconfiguration.
Pepperidge Farm delivered solid sales performance across its portfolio with increased shipments and share growth in cookies, crackers and fresh and frozen breads. New products, including “Dessert Bliss” cookies and “Goldfish” sandwich crackers, performed well, as did “Milano” cookies. New varieties of “Farmhouse” breads and rolls and new “Pepperidge Farm” bagels also delivered solid performance. Total sales of “Goldfish” crackers were up. In addition, “Goldfish” became the best-selling brand of cheese cracker for the first time at retail in the most recent 12-week period.
Godiva Chocolatier’s sales increased slightly, driven by continued global new store openings. Godiva’s same store sales and earnings continued to be negatively impacted by the events of September 11, which reduced sales at retail outlets such as airport duty-free stores and resort-destination stores.
Arnotts in Australia reported increased sales driven by the new premium “Emporio” biscuits and new rice-based snack products.
International Soup and Sauces
International Soup and Sauces sales for the quarter increased 59 percent to $222 million compared to $140 million a year ago. Operating earnings increased 36 percent to $19 million compared to $14 million a year ago. These results were driven by the European acquisition. Excluding the impact of the European acquisition and currency, sales decreased 3 percent and operating earnings declined significantly. These results were driven by increases in marketing and infrastructure investments to support long-term growth and by sales softness in the United Kingdom business. The newly acquired European dry soup and sauces business continues to meet earnings expectations.
Reporting Changes
The company adopted the Emerging Issues Task Force (EITF) consensus on Issue No. 00-10 “Accounting for Shipping and Handling Fees and Costs” in the fourth quarter of fiscal year 2001. In the first quarter of fiscal year 2002, the company adopted EITF Issues No. 00-14 and 00-25, which address the measurement and income statement classification of certain consumer and trade sales promotion expenses such as coupon redemption costs, cooperative advertising programs and in-store display incentives. As a result, the following reclassifications were made to the third quarter and first nine months fiscal year 2001 financial statements:
Net sales were reduced by $168 million and $567 million respectively.
Cost of products sold increased by $45 million and $150 million respectively.
Selling, general and administrative expenses were reduced by $213 million and $717 million respectively.
Conference Call
The company will host a conference call to discuss these results on May 15, 2002 at 10:00 a.m. Eastern Standard Time. U.S. participants may access the call at 1-800-988-9454 and non-U.S. participants at 1-712-257-2276. Participants should call at least five minutes prior to the starting time. The passcode is Campbell Soup Company. The conference leader is Len Griehs. The call will also be broadcast live over the Internet at https://www.campbellsoup.com and can be accessed by clicking on the Webcast banner. A recording of the call will be available approximately two hours after it is completed through midnight May 20, 2002 at 1-800-873-5254 for U.S. callers or 1-402-220-4776 for non-U.S. participants.
Forward-Looking Statements
This release contains “forward-looking statements” which reflect the company’s current expectations about its future performance. These forward-looking statements rely on a number of assumptions and estimates which could be inaccurate and which are subject to risks and uncertainties. Actual results could vary materially from those anticipated or expressed in any forward-looking statement made by the company. Please refer to the company’s most recent Form 10-K and subsequent filings for a further discussion of these risks and uncertainties. The company disclaims any obligation or intent to update the forward-looking statements in order to reflect events or circumstances after the date of this release.
About Campbell Soup Company
Campbell Soup Company is a global manufacturer and marketer of high quality soup, sauces, beverages, biscuits, confectionery and prepared food products. The company owns a portfolio of more than 20 market-leading businesses each with more than $100 million in sales. They include “Campbell’s” soups worldwide, “Erasco” soups in Germany and “Liebig” soups in France, “Pepperidge Farm” cookies and crackers, “V8” vegetable juices, “V8 Splash” juice beverages, “Pace” Mexican sauces, “Prego” Italian sauces, “Franco-American” canned pastas and gravies, “Swanson” broths, “Homepride” sauces in the United Kingdom, “Arnott’s” biscuits in Australia and “Godiva” chocolates around the world. The company also owns dry soup and sauce businesses in Europe under the “Batchelors,” “Oxo,” “Lesieur,” “Royco,” “Liebig,” “Heisse Tasse,” “Bla Band” and “McDonnells” brands. The company is ably supported by approximately 24,000 employees worldwide. For more information on the company, visit Campbell’s website on the Internet at www.campbellsoup.com.
CAMPBELL SOUP COMPANY CONSOLIDATED STATEMENTS OF EARNINGS (unaudited) (millions, except per share amounts) THREE MONTHS ENDED -------------------- April April 28, 2002 29, 2001 --------- -------- Net sales $1,371 $1,271 --------- -------- Costs and expenses Cost of products sold 782 712 Selling, general and administrative expenses 399 322 --------- -------- Total costs and expenses 1,181 1,034 --------- -------- Earnings before interest and taxes 190 237 Interest, net 44 52 --------- -------- Earnings before taxes 146 185 Taxes on earnings 50 63 --------- -------- Net earnings $ 96 $ 122 ========= ======== Per share - basic Net earnings $ .23 $ .30 ========= ======== Dividends $.1575 $ .225 ========= ======== Weighted average shares outstanding - basic 410 410 ========= ======== Per share - assuming dilution Net earnings $ .23 $ .30 ========= ======== Weighted average shares outstanding - assuming dilution 411 411 ========= ======== In the first quarter fiscal 2002 ended October 28, 2001, the company adopted new accounting standards related to the recognition, measurement and income statement classification of certain consumer and trade promotional expenses, such as coupon redemption costs, cooperative advertising programs and in-store display incentives. In the fourth quarter of last year, the company adopted new guidance on the classification of shipping and handling costs. As a result, the following reclassifications were made to the three month period ended April 29, 2001 statement of earnings: Net sales were reduced by $168; Cost of products sold was increased by $45; and Selling, general and administrative expenses were reduced by $213. CAMPBELL SOUP COMPANY CONSOLIDATED STATEMENTS OF EARNINGS (unaudited) (millions, except per share amounts) NINE MONTHS ENDED ----------------- April April 28, 2002 29, 2001 -------- -------- Net sales $4,910 $4,607 -------- -------- Costs and expenses Cost of products sold 2,757 2,486 Selling, general and administrative expenses 1,296 1,061 Restructuring charge 1 - -------- -------- Total costs and expenses 4,054 3,547 -------- -------- Earnings before interest and taxes 856 1,060 Interest, net 142 153 -------- -------- Earnings before taxes 714 907 Taxes on earnings 244 310 -------- -------- Net earnings $ 470 $ 597 ======== ======== Per share - basic Net earnings $ 1.14 $ 1.44 ======== ======== Dividends $.4725 $ .675 ======== ======== Weighted average shares outstanding - basic 410 415 ======== ======== Per share - assuming dilution Net earnings $ 1.14 $ 1.42 ======== ======== Weighted average shares outstanding - assuming dilution 411 420 ======== ======== In the first quarter fiscal 2002 ended October 28, 2001, the company adopted new accounting standards related to the recognition, measurement and income statement classification of certain consumer and trade promotional expenses, such as coupon redemption costs, cooperative advertising programs and in-store display incentives. In the fourth quarter of last year, the company adopted new guidance on the classification of shipping and handling costs. As a result, the following reclassifications were made to the nine month period ended April 29, 2001 statement of earnings: Net sales were reduced by $567; Cost of products sold was increased by $150; and Selling, general and administrative expenses were reduced by $717. CAMPBELL SOUP COMPANY CONSOLIDATED SUPPLEMENTAL SCHEDULE OF SALES AND EARNINGS (unaudited) (millions, except per share amounts) THREE MONTHS ENDED ------------------ April April Percent Sales 28, 2002 29, 2001 Change ----- -------- -------- ------- Contributions: North America Soup and Away From Home $ 516 $ 512 1% North America Sauces and Beverages 276 278 -1% Biscuits and Confectionery 357 341 5% International Soup and Sauces 222 140 59% -------- -------- Total sales $1,371 $1,271 8% ======== ======== Percent Change Excluding Special Earnings Charges (1) -------- ----------- Contributions: North America Soup and Away From Home $ 108 $ 132 -18% -18% North America Sauces and Beverages 56 72 -22% -22% Biscuits and Confectionery 40 43 -7% 5% International Soup and Sauces 19 14 36% 36% -------- -------- Total operating earnings 223 261 -15% -13% Unallocated corporate expenses (33) (24) -------- -------- Earnings before interest and taxes 190 237 -20% -18% Interest, net (44) (52) Taxes on earnings (50) (63) -------- -------- Net earnings $ 96 $ 122 -21% -19% ======== ======== Net earnings per share - assuming dilution $ .23 $ .30 -23% -20% ======== ======== In the first quarter fiscal 2002 ended October 28, 2001, the company adopted new accounting standards related to the recognition, measurement and income statement classification of certain consumer and trade promotional expenses, such as coupon redemption costs, cooperative advertising programs and in-store display incentives. In the fourth quarter of last year, the company adopted new guidance on the classification of shipping and handling costs. As a result, the following reclassifications were made to the three month period ended April 29, 2001 statement of earnings: Net sales were reduced by $168; Cost of products sold was increased by $45; and Selling, general and administrative expenses were reduced by $213. (1) Percent change is calculated excluding the effects of the Australian manufacturing reconfiguration plan announced in fiscal 2001. CAMPBELL SOUP COMPANY CONSOLIDATED SUPPLEMENTAL SCHEDULE OF SALES AND EARNINGS (unaudited) (millions, except per share amounts) NINE MONTHS ENDED ----------------- April April Percent Sales 28, 2002 29, 2001 Change ----- -------- -------- ------ Contributions: North America Soup and Away From Home $ 2,134 $ 2,138 0% North America Sauces and Beverages 908 891 2% Biscuits and Confectionery 1,164 1,133 3% International Soup and Sauces 704 445 58% ------- ------- Total sales $ 4,910 $ 4,607 7% ======= ======= Percent Change Excluding Special Earnings Charges (1) -------- --------- Contributions: North America Soup and Away From Home $ 553 $ 684 -19% -19% North America Sauces and Beverages 180 233 -23% -23% Biscuits and Confectionery 150 177 -15% -8% International Soup and Sauces 70 47 49% 49% ------- ------- Total operating earnings 953 1,141 -16% -15% Unallocated corporate expenses (97) (81) ------- ------- Earnings before interest and taxes 856 1,060 -19% -18% Interest, net (142) (153) Taxes on earnings (244) (310) ------- ------- Net earnings $ 470 $ 597 -21% -20% ======= ======= Net earnings per share - assuming dilution $ 1.14 $ 1.42 -20% -18% ======= ======= In the first quarter fiscal 2002 ended October 28, 2001, the company adopted new accounting standards related to the recognition, measurement and income statement classification of certain consumer and trade promotional expenses, such as coupon redemption costs, cooperative advertising programs and in-store display incentives. In the fourth quarter of last year, the company adopted new guidance on the classification of shipping and handling costs. As a result, the following reclassifications were made to the nine month period ended April 29, 2001 statement of earnings: Net sales were reduced by $567; Cost of products sold was increased by $150; and Selling, general and administrative expenses were reduced by $717. (1) Percent change is calculated excluding the effects of the Australian manufacturing reconfiguration plan announced in fiscal 2001. CAMPBELL SOUP COMPANY CONSOLIDATED BALANCE SHEETS (unaudited) (millions) April April 28, 2002 29, 2001 -------- -------- Current assets $ 1,133 $ 1,030 Plant assets, net 1,595 1,542 Intangible assets, net 2,440 1,660 Other assets 621 600 -------- -------- Total assets $ 5,789 $ 4,832 ======== ======== Current liabilities $ 2,490 $ 2,026 Long-term debt 2,430 2,239 Nonpension postretirement benefits 326 342 Other liabilities 463 444 Shareowners' equity 80 (219) -------- -------- Total liabilities and shareowners' equity $ 5,789 $ 4,832 ======== ======== Total debt $ 3,594 $ 3,131 ======== ======== Net debt $ 3,567 $ 3,110 ======== ========
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