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EX-32.(B) - EX-32.(B) - CAMPBELL SOUP CO | w77628exv32wxby.htm |
EX-32.(A) - EX-32.(A) - CAMPBELL SOUP CO | w77628exv32wxay.htm |
EX-31.(A) - EX-31.(A) - CAMPBELL SOUP CO | w77628exv31wxay.htm |
EXCEL - IDEA: XBRL DOCUMENT - CAMPBELL SOUP CO | Financial_Report.xls |
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended
January 31, 2010
January 31, 2010
Commission File Number
1-3822
1-3822
CAMPBELL SOUP COMPANY
New Jersey | 21-0419870 | |
State of Incorporation | I.R.S. Employer Identification No. |
1 Campbell Place
Camden, New Jersey 08103-1799
Principal Executive Offices
Camden, New Jersey 08103-1799
Principal Executive Offices
Telephone Number: (856) 342-4800
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. þ Yes
o No
Indicate by check mark whether the registrant has submitted electronically and posted on its
corporate web site, if any, every Interactive Date File required to be submitted and posted
pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period
that that the registrant was required to submit and post such files). þ Yes
o No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated
filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large
accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the
Exchange Act.
Large accelerated filer þ | Accelerated filer o | Non-accelerated filer o (Do not check if a smaller reporting company) |
Smaller reporting company o |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of
the Exchange Act). o Yes þ No
There were 340,266,799 shares of capital stock outstanding as of March 4, 2010.
TABLE OF CONTENTS
Table of Contents
Part I
Item 1. FINANCIAL INFORMATION
CAMPBELL SOUP COMPANY CONSOLIDATED
Item 1. FINANCIAL INFORMATION
CAMPBELL SOUP COMPANY CONSOLIDATED
Statements of Earnings
(unaudited)
(millions, except per share amounts)
(unaudited)
(millions, except per share amounts)
Three Months Ended | Six Months Ended | |||||||||||||||
January 31, | February 1, | January 31, | February 1, | |||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Net Sales |
$ | 2,153 | $ | 2,122 | $ | 4,356 | $ | 4,372 | ||||||||
Costs and expenses |
||||||||||||||||
Cost of products sold |
1,282 | 1,285 | 2,562 | 2,664 | ||||||||||||
Marketing and selling expenses |
301 | 315 | 585 | 622 | ||||||||||||
Administrative expenses |
149 | 138 | 282 | 278 | ||||||||||||
Research and development expenses |
28 | 27 | 57 | 56 | ||||||||||||
Other expenses / (income) |
2 | 2 | 1 | (2 | ) | |||||||||||
Total costs and expenses |
1,762 | 1,767 | 3,487 | 3,618 | ||||||||||||
Earnings before interest and taxes |
391 | 355 | 869 | 754 | ||||||||||||
Interest expense |
27 | 26 | 55 | 59 | ||||||||||||
Interest income |
1 | 1 | 2 | 2 | ||||||||||||
Earnings before taxes |
365 | 330 | 816 | 697 | ||||||||||||
Taxes on earnings |
106 | 101 | 253 | 208 | ||||||||||||
Earnings from continuing operations |
259 | 229 | 563 | 489 | ||||||||||||
Earnings from discontinued operations |
| 4 | | 4 | ||||||||||||
Net earnings |
$ | 259 | $ | 233 | $ | 563 | $ | 493 | ||||||||
Per Share basic |
||||||||||||||||
Earnings from continuing operations |
$ | .74 | $ | .63 | $ | 1.62 | $ | 1.35 | ||||||||
Earnings from discontinued operations |
| .01 | | .01 | ||||||||||||
Net earnings |
$ | .74 | $ | .65 | $ | 1.62 | $ | 1.36 | ||||||||
Dividends |
$ | .275 | $ | .25 | $ | .525 | $ | .50 | ||||||||
Weighted average shares outstanding basic |
341 | 355 | 342 | 356 | ||||||||||||
Per share assuming dilution |
||||||||||||||||
Earnings from continuing operations |
$ | .74 | $ | .63 | $ | 1.61 | $ | 1.33 | ||||||||
Earnings from discontinued operations |
| .01 | | .01 | ||||||||||||
Net Earnings |
$ | .74 | $ | .64 | $ | 1.61 | $ | 1.34 | ||||||||
Weighted average shares outstanding assuming dilution |
344 | 358 | 345 | 360 | ||||||||||||
See Notes to Consolidated Financial Statements.
The sum of the individual per share amounts does not equal net earnings per share due to rounding.
2
Table of Contents
CAMPBELL SOUP COMPANY CONSOLIDATED
Balance Sheets
(unaudited)
(millions, except per share amounts)
(unaudited)
(millions, except per share amounts)
January 31, | August 2, | |||||||
2010 | 2009 | |||||||
Current assets |
||||||||
Cash and cash equivalents |
$ | 113 | $ | 51 | ||||
Accounts receivable |
679 | 528 | ||||||
Inventories |
700 | 824 | ||||||
Other current assets |
140 | 148 | ||||||
Total current assets |
1,632 | 1,551 | ||||||
Plant assets, net of depreciation |
1,969 | 1,977 | ||||||
Goodwill |
1,926 | 1,901 | ||||||
Other intangible assets, net of amortization |
516 | 522 | ||||||
Other assets |
109 | 105 | ||||||
Total assets |
$ | 6,152 | $ | 6,056 | ||||
Current liabilities |
||||||||
Short-term borrowings |
$ | 400 | $ | 378 | ||||
Payable to suppliers and others |
512 | 569 | ||||||
Accrued liabilities |
576 | 579 | ||||||
Dividend payable |
96 | 88 | ||||||
Accrued income taxes |
49 | 14 | ||||||
Total current liabilities |
1,633 | 1,628 | ||||||
Long-term debt |
2,250 | 2,246 | ||||||
Deferred taxes |
289 | 237 | ||||||
Other liabilities |
954 | 1,214 | ||||||
Total liabilities |
5,126 | 5,325 | ||||||
Campbell Soup Company shareowners equity |
||||||||
Preferred stock; authorized 40 shares; none issued |
| | ||||||
Capital stock, $.0375 par value; authorized 560 shares;
issued 542 shares |
20 | 20 | ||||||
Additional paid-in capital |
311 | 332 | ||||||
Earnings retained in the business |
8,668 | 8,288 | ||||||
Capital stock in treasury, at cost |
(7,321 | ) | (7,194 | ) | ||||
Accumulated other comprehensive loss |
(655 | ) | (718 | ) | ||||
Total Campbell Soup Company shareowners equity |
1,023 | 728 | ||||||
Noncontrolling interest |
3 | 3 | ||||||
Total equity |
1,026 | 731 | ||||||
Total liabilities and equity |
$ | 6,152 | $ | 6,056 | ||||
See accompanying Notes to Consolidated Financial Statements.
3
Table of Contents
CAMPBELL SOUP COMPANY CONSOLIDATED
Statements of Cash Flows
(unaudited)
(millions)
Statements of Cash Flows
(unaudited)
(millions)
Six Months Ended | ||||||||
January 31, | February 1, | |||||||
2010 | 2009 | |||||||
Cash flows from operating activities: |
||||||||
Net earnings |
$ | 563 | $ | 493 | ||||
Adjustments to reconcile net earnings to operating cash flow |
||||||||
Stock-based compensation |
45 | 44 | ||||||
Depreciation and amortization |
122 | 133 | ||||||
Deferred income taxes |
58 | 53 | ||||||
Other, net |
46 | 24 | ||||||
Changes in working capital |
||||||||
Accounts receivable |
(147 | ) | (144 | ) | ||||
Inventories |
126 | 23 | ||||||
Prepaid assets |
| 22 | ||||||
Accounts payable and accrued liabilities |
(31 | ) | (169 | ) | ||||
Pension fund contributions |
(272 | ) | (4 | ) | ||||
Receipts from (payments of) hedging activities |
7 | (47 | ) | |||||
Other |
(21 | ) | (10 | ) | ||||
Net cash provided by operating activities |
496 | 418 | ||||||
Cash flows from investing activities: |
||||||||
Purchases of plant assets |
(103 | ) | (98 | ) | ||||
Sales of plant assets |
5 | | ||||||
Sale of business, net of cash divested |
| 38 | ||||||
Other, net |
2 | (2 | ) | |||||
Net cash used in investing activities |
(96 | ) | (62 | ) | ||||
Cash flows from financing activities: |
||||||||
Net short-term borrowings |
8 | 47 | ||||||
Long-term borrowings |
| 300 | ||||||
Repayments of notes payable |
| (300 | ) | |||||
Dividends paid |
(175 | ) | (171 | ) | ||||
Treasury stock purchases |
(213 | ) | (295 | ) | ||||
Treasury stock issuances |
36 | 69 | ||||||
Excess tax benefits on stock-based compensation |
4 | 17 | ||||||
Other, net |
| (4 | ) | |||||
Net cash used in financing activities |
(340 | ) | (337 | ) | ||||
Effect of exchange rate changes on cash |
2 | (20 | ) | |||||
Net change in cash and cash equivalents |
62 | (1 | ) | |||||
Cash and cash equivalents beginning of period |
51 | 81 | ||||||
Cash and cash equivalents end of period |
$ | 113 | $ | 80 | ||||
See accompanying Notes to Consolidated Financial Statements.
4
Table of Contents
CAMPBELL SOUP COMPANY CONSOLIDATED
Statements of Equity
(unaudited)
(millions, except per share amounts)
(unaudited)
(millions, except per share amounts)
Campbell Soup Company Shareowners Equity | ||||||||||||||||||||||||||||||||||||
Capital Stock | Earnings | Accumulated | ||||||||||||||||||||||||||||||||||
Issued | In Treasury | Additional | Retained | Other | ||||||||||||||||||||||||||||||||
Paid-in | in the | Comprehensive | Noncontrolling | Total | ||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Capital | Business | Income (Loss) | Interest | Equity | ||||||||||||||||||||||||||||
Balance at August 3, 2008 |
542 | $ | 20 | (186 | ) | $ | (6,812 | ) | $ | 337 | $ | 7,909 | $ | (136 | ) | $ | 3 | $ | 1,321 | |||||||||||||||||
Comprehensive income (loss) |
||||||||||||||||||||||||||||||||||||
Net earnings |
493 | | 493 | |||||||||||||||||||||||||||||||||
Foreign currency
translation adjustments, net of tax |
(409 | ) | | (409 | ) | |||||||||||||||||||||||||||||||
Cash-flow hedges, net of tax |
(13 | ) | (13 | ) | ||||||||||||||||||||||||||||||||
Pension and postretirement benefits,
net of tax |
23 | 23 | ||||||||||||||||||||||||||||||||||
Other comprehensive income (loss) |
(399 | ) | | (399 | ) | |||||||||||||||||||||||||||||||
Total comprehensive income (loss) |
94 | |||||||||||||||||||||||||||||||||||
Dividends ($.50 per share) |
(181 | ) | (181 | ) | ||||||||||||||||||||||||||||||||
Treasury stock purchased |
(9 | ) | (295 | ) | (295 | ) | ||||||||||||||||||||||||||||||
Treasury stock issued under
management incentive and
stock option plans |
4 | 135 | (34 | ) | 101 | |||||||||||||||||||||||||||||||
Balance at February 1, 2009 |
542 | $ | 20 | (191 | ) | $ | (6,972 | ) | $ | 303 | $ | 8,221 | $ | (535 | ) | $ | 3 | $ | 1,040 | |||||||||||||||||
Balance at August 2, 2009 |
542 | $ | 20 | (199 | ) | $ | (7,194 | ) | $ | 332 | $ | 8,288 | $ | (718 | ) | $ | 3 | $ | 731 | |||||||||||||||||
Comprehensive income (loss) |
||||||||||||||||||||||||||||||||||||
Net earnings |
563 | | 563 | |||||||||||||||||||||||||||||||||
Foreign currency
translation adjustments, net of tax |
35 | | 35 | |||||||||||||||||||||||||||||||||
Cash-flow hedges, net of tax |
6 | 6 | ||||||||||||||||||||||||||||||||||
Pension and postretirement benefits,
net of tax |
22 | 22 | ||||||||||||||||||||||||||||||||||
Other comprehensive income (loss) |
63 | | 63 | |||||||||||||||||||||||||||||||||
Total comprehensive income (loss) |
626 | |||||||||||||||||||||||||||||||||||
Dividends ($.525 per share) |
(183 | ) | (183 | ) | ||||||||||||||||||||||||||||||||
Treasury stock purchased |
(7 | ) | (213 | ) | (213 | ) | ||||||||||||||||||||||||||||||
Treasury stock issued under
management incentive and
stock option plans |
3 | 86 | (21 | ) | 65 | |||||||||||||||||||||||||||||||
Balance at January 31, 2010 |
542 | $ | 20 | (203 | ) | $ | (7,321 | ) | $ | 311 | $ | 8,668 | $ | (655 | ) | $ | 3 | $ | 1,026 | |||||||||||||||||
See accompanying Notes to Consolidated Financial Statements.
5
Table of Contents
Notes to Consolidated Financial Statements
(unaudited)
(currency in millions, except per share amounts)
(unaudited)
(currency in millions, except per share amounts)
1. Basis of Presentation and Significant Accounting Policies
The financial statements reflect all adjustments which are, in the opinion of management,
necessary for a fair presentation of the results of operations, financial position, and cash flows
for the indicated periods. All such adjustments are of a normal recurring nature. The accounting
policies used in preparing these financial statements are consistent with those applied in the
Annual Report on Form 10-K for the year ended August 2, 2009, except for the adoption of new
financial accounting standards, as discussed in Note 2. Certain amounts in prior-year financial
statements were reclassified to conform to the current-year presentation. The results for the
period are not necessarily indicative of the results to be expected for other interim periods or
the full year.
2. Recent Accounting Pronouncements
Recently Adopted Accounting Pronouncements
In December 2007, the Financial Accounting Standards Board (FASB) issued authoritative
guidance which establishes accounting and reporting standards for the noncontrolling interest in a
subsidiary and for the deconsolidation of a subsidiary. It requires a noncontrolling interest in a
subsidiary, which was formerly known as minority interest, to be classified as a separate component
of total equity in the consolidated financial statements. The company retrospectively adopted the
new noncontrolling interest guidance in the first quarter of fiscal 2010. The adoption did not have
a material impact on the financial statements. See Note 9 for additional information.
In December 2007, the FASB issued authoritative guidance for business combinations, which
establishes the principles and requirements for how an acquirer recognizes the assets acquired, the
liabilities assumed, and any noncontrolling interest in the acquiree at the acquisition date,
measured at their fair values as of that date with limited exceptions. The guidance requires
acquisition-related transaction costs to be expensed as incurred rather than capitalized as a
component of the business combination. The provisions as revised were effective as of the first
quarter of fiscal 2010 and will be applied to any business combinations entered into in fiscal 2010
and thereafter.
In September 2006, the FASB issued authoritative guidance for fair value measurements, which
establishes a definition of fair value, provides a framework for measuring fair value and expands
the disclosure requirements about fair value measurements. This guidance does not require any new
fair value measurements but rather applies to all other accounting pronouncements that require or
permit fair value measurements. In February 2008, the FASB issued authoritative guidance which
delayed by a year the effective date for certain nonfinancial assets and liabilities. The company
adopted the provisions of the guidance for financial assets and liabilities in the first quarter of
fiscal 2009. The adoption did not have a material impact on the consolidated financial statements.
The company adopted the remaining provisions in the first quarter of fiscal 2010 for nonfinancial
assets and liabilities, including goodwill and intangible assets. The adoption did not have a
material impact on the consolidated financial statements. See Note 12 for additional information.
In June 2008, the FASB issued authoritative guidance related to the calculation of earnings
per share. The guidance provides that unvested share-based payment awards that contain
non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are
participating securities and shall be included in the computation of earnings per share pursuant to
the two-class method. Upon adoption, a company is required to retrospectively adjust its earnings
per share data (including any amounts related to interim periods, summaries of earnings and
selected financial data) to conform with the new provisions. The company adopted the new guidance
in the first quarter of fiscal 2010. Prior periods have been restated. See Note 8 for additional
information.
In April 2009, the FASB issued authoritative guidance related to interim disclosures about
fair value of financial instruments. The company prospectively adopted the interim fair value
disclosure guidance in the first quarter of fiscal 2010. The adoption did not have a material
impact on the consolidated financial statements. The additional disclosures are included in Note
11.
6
Table of Contents
Notes to Consolidated Financial Statements (Continued)
In June 2009, the FASB Accounting Standards Codification (Codification) was issued to become
the source of authoritative U.S. generally accepted accounting principles (GAAP) to be applied by
nongovernmental entities and supersede all then-existing non-SEC accounting and reporting
standards. Rules and interpretive releases of the Securities and Exchange Commission (SEC) under
authority of federal securities laws are also sources of authoritative GAAP for SEC registrants.
All other nongrandfathered non-SEC accounting literature not included in the Codification will
become nonauthoritative. The Codification was effective for financial statements issued for
interim and annual periods ending after September 15, 2009. The company adopted the provisions in
the first quarter of 2010. The adoption did not impact the companys consolidated financial
statements.
Recently Issued Accounting Pronouncements
In December 2008, the FASB issued additional authoritative guidance related to employers
disclosures about the plan assets of defined benefit pension or other postretirement plans. The
additional required disclosures include a description of how investment allocation decisions are
made, major categories of plan assets, valuation techniques used to measure the fair value of plan
assets, the impact of measurements using significant unobservable inputs and concentrations of risk
within plan assets. The disclosures about plan assets required by this additional guidance must be
provided for fiscal years ending after December 15, 2009 and will be effective for the company for
fiscal year-end 2010.
3. Discontinued Operations
On March 18, 2008, the company completed the sale of its Godiva Chocolatier business for $850.
The purchase price was subject to certain post-closing adjustments, which resulted in an
additional $20 of proceeds. The company reflected the results of this business as discontinued
operations in the consolidated statements of earnings. The company used approximately $600 of the
net proceeds to purchase company stock. The company recognized a $4 benefit in Earnings from
discontinued operations during the three-month period ended February 1, 2009 as a result of an
adjustment to the tax liability associated with the sale.
4. Comprehensive Income (Loss)
Total comprehensive income (loss) is comprised of net earnings, net foreign currency
translation adjustments, net unamortized pension and postretirement benefits adjustments and net
unrealized gains and losses on cash-flow hedges. Total comprehensive income for the three-month
periods ended January 31, 2010 and February 1, 2009, was $236 and $206, respectively. Total
comprehensive income for the six-month periods ended January 31, 2010 and February 1, 2009, was
$626 and $94, respectively.
The components of Accumulated other comprehensive income (loss) consisted of the following:
January 31, | August 2, | |||||||
2010 | 2009 | |||||||
Foreign currency translation adjustments, net of tax (1) |
$ | 128 | $ | 93 | ||||
Cash-flow hedges, net of tax (2) |
(14 | ) | (20 | ) | ||||
Unamortized pension and postretirement benefits, net of tax (3): |
||||||||
Net actuarial loss |
(766 | ) | (787 | ) | ||||
Prior service cost |
(3 | ) | (4 | ) | ||||
Total Accumulated other comprehensive income (loss) |
$ | (655 | ) | $ | (718 | ) | ||
(1) | Includes a tax expense of $6 as of January 31, 2010 and $7 as of August 2, 2009. | |
(2) | Includes a tax benefit of $8 as of January 31, 2010 and $11 as of August 2, 2009. | |
(3) | Includes a tax benefit of $441 as of January 31, 2010 and $442 as of August 2, 2009. |
7
Table of Contents
Notes to Consolidated Financial Statements (Continued)
5. Goodwill and Intangible Assets
The following table shows the changes in the carrying amount of goodwill by business segment:
International | ||||||||||||||||||||
U.S. Soup, | Baking | Soup, Sauces | North | |||||||||||||||||
Sauces and | and | and | America | |||||||||||||||||
Beverages | Snacking | Beverages | Foodservice | Total | ||||||||||||||||
Balance at August 2, 2009 |
$ | 434 | $ | 700 | $ | 621 | $ | 146 | $ | 1,901 | ||||||||||
Foreign currency translation adjustment |
| 38 | (13 | ) | | 25 | ||||||||||||||
Balance at January 31, 2010 |
$ | 434 | $ | 738 | $ | 608 | $ | 146 | $ | 1,926 | ||||||||||
The following table sets forth balance sheet information for intangible assets, excluding
goodwill, subject to amortization and intangible assets not subject to amortization:
January 31, | August 2, | |||||||
2010 | 2009 | |||||||
Intangible Assets: |
||||||||
Non-amortizable intangible assets |
$ | 503 | $ | 508 | ||||
Amortizable intangible assets |
21 | 21 | ||||||
524 | 529 | |||||||
Accumulated amortization |
(8 | ) | (7 | ) | ||||
Total net intangible assets |
$ | 516 | $ | 522 | ||||
Non-amortizable intangible assets consist of trademarks. Amortizable intangible assets
consist substantially of process technology and customer intangibles.
Amortization related to these assets was less than $1 for the six-month periods ended January
31, 2010 and February 1, 2009. The estimated aggregated amortization expense for each of the five
succeeding fiscal years is less than $1 per year. Asset useful lives range from ten to twenty
years.
6. Business and Geographic Segment Information
Campbell Soup Company, together with its consolidated subsidiaries, is a global manufacturer
and marketer of high-quality, branded convenience food products. The company manages and reports
the results of operations in the following segments: U.S. Soup, Sauces and Beverages; Baking and
Snacking; International Soup, Sauces and Beverages; and North America Foodservice.
The U.S. Soup, Sauces and Beverages segment includes the following retail businesses:
Campbells condensed and ready-to-serve soups; Swanson broth, stocks and canned poultry; Prego
pasta sauce; Pace Mexican sauce; Campbells canned pasta, gravies, and beans; V8 juice and juice
drinks; and Campbells tomato juice.
The Baking and Snacking segment includes the following businesses: Pepperidge Farm cookies,
crackers, bakery and frozen products in U.S. retail; and Arnotts biscuits in Australia and Asia
Pacific.
The International Soup, Sauces and Beverages segment includes the soup, sauce and beverage
businesses outside of the United States, including Europe, Latin America, the Asia Pacific region,
as well as the emerging markets of Russia and China and the retail business in Canada.
The North America Foodservice segment 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.
Accounting policies for measuring segment assets and earnings before interest and taxes are
substantially consistent with those described in the companys 2009 Annual Report on Form 10-K.
The company evaluates segment performance before interest and taxes. North America Foodservice
products are principally produced by the tangible assets of the companys other segments, except
for refrigerated soups, which are produced in a separate facility, and certain other products,
which are produced under contract manufacturing agreements. Tangible assets of the companys other
segments are not allocated to the North America Foodservice operations. Depreciation, however, is
allocated to North America Foodservice based on production hours.
8
Table of Contents
Notes to Consolidated Financial Statements (Continued)
Three Months Ended | Six Months Ended | |||||||||||||||
January 31, | February 1, | January 31, | February 1, | |||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Net sales |
||||||||||||||||
U.S. Soup, Sauces and Beverages |
$ | 1,068 | $ | 1,128 | $ | 2,208 | $ | 2,326 | ||||||||
Baking and Snacking |
489 | 440 | 1,019 | 949 | ||||||||||||
International Soup, Sauces and Beverages |
437 | 391 | 811 | 771 | ||||||||||||
North America Foodservice |
159 | 163 | 318 | 326 | ||||||||||||
Total |
$ | 2,153 | $ | 2,122 | $ | 4,356 | $ | 4,372 | ||||||||
Three Months Ended | Six Months Ended | |||||||||||||||
January 31, | February 1, | January 31, | February 1, | |||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Earnings before interest and taxes |
||||||||||||||||
U.S. Soup, Sauces and Beverages |
$ | 259 | $ | 270 | $ | 590 | $ | 584 | ||||||||
Baking and Snacking(1) |
73 | 53 | 173 | 136 | ||||||||||||
International Soup, Sauces and Beverages |
74 | 50 | 118 | 88 | ||||||||||||
North America Foodservice(1) |
17 | 10 | 43 | 21 | ||||||||||||
Corporate(2) |
(32 | ) | (28 | ) | (55 | ) | (75 | ) | ||||||||
Total |
$ | 391 | $ | 355 | $ | 869 | $ | 754 | ||||||||
(1) | Earnings before interest and taxes of the Baking and Snacking and North America Foodservice segments included the effect of restructuring-related costs of $2 and $6, respectively, in the three-month period ended February 1, 2009. Earnings before interest and taxes of the Baking and Snacking and North America Foodservice segments included the effect of restructuring-related costs of $2 and $13, respectively, in the six-month period ended February 1, 2009. See Note 7 for additional information on restructuring charges. | |
(2) | Represents unallocated corporate expenses. The six-month period ended February 1, 2009 included unrealized losses on commodity hedges of $26. |
7. Restructuring Charges
On April 28, 2008, the company announced a series of initiatives to improve operational
efficiency and long-term profitability, including selling certain salty snack food brands and
assets in Australia, closing certain production facilities in Australia and Canada, and
streamlining the companys management structure. As a result of these initiatives, in 2008, the
company recorded a restructuring charge of $175 ($102 after tax or $.27 per share). The charge
consisted of a net loss of $120 ($64 after tax) on the sale of certain Australian salty snack food
brands and assets; $45 ($31 after tax) of employee severance and benefit costs, including the
estimated impact of curtailment and other pension charges; and $10 ($7 after tax) of property,
plant and equipment impairment charges. In addition, approximately $7 ($5 after tax or $.01 per
share) of costs related to these initiatives were recorded in Cost of products sold, primarily
representing accelerated depreciation on property, plant and equipment. The aggregate after-tax
impact of restructuring charges and related costs in 2008 was $107, or $.28 per share. In 2009,
the company recorded approximately $22 ($15 after tax or $.04 per share) of costs related to these
initiatives in Cost of products sold. Approximately $17 ($12 after tax) of the costs represented
accelerated depreciation on property, plant and equipment; approximately $4 ($2 after tax) related
to other exit costs; and approximately $1 related to employee severance and benefit costs,
including other pension charges. Of the amount recorded in 2009, costs of approximately $15 ($10
after tax or $.03 per share) were recorded through the end of the second quarter. Approximately
$13 ($9 after tax) of the costs represented accelerated depreciation on property, plant and
equipment and approximately $2 ($1 after tax) related to other exit costs. The company expects to
incur additional pre-tax costs of approximately $12 in benefit costs related to pension charges in
2010.
A summary of restructuring activity and related reserves at January 31, 2010 is as follows:
Accrued | Accrued | |||||||||||
Balance at | Balance at | |||||||||||
August 2, | Cash | January 31, | ||||||||||
2009 | Payments | 2010 | ||||||||||
Severance pay and benefits |
$ | 4 | (3 | ) | $ | 1 | ||||||
9
Table of Contents
Notes to Consolidated Financial Statements (Continued)
A summary of restructuring charges incurred in 2008 and 2009 by reportable segment is as
follows:
International | ||||||||||||||||||||
U.S. Soup, | Baking | Soup, Sauces | North | |||||||||||||||||
Sauces and | and | and | America | |||||||||||||||||
Beverages | Snacking | Beverages | Foodservice | Total | ||||||||||||||||
Severance pay and benefits |
$ | | $ | 14 | $ | 9 | $ | 23 | $ | 46 | ||||||||||
Asset impairment/accelerated depreciation |
| 131 | | 23 | 154 | |||||||||||||||
Other exit costs |
| 2 | | 2 | 4 | |||||||||||||||
$ | | $ | 147 | $ | 9 | $ | 48 | $ | 204 | |||||||||||
The company expects to incur the additional pre-tax costs of approximately $12 in the North
America Foodservice segment for benefit costs related to pension charges. The total pre-tax costs
of $216 expected to be incurred by segment is as follows: Baking and Snacking $147,
International Soup, Sauces and Beverages $9 and North America Foodservice $60.
8. Earnings per Share
In June 2008, the FASB issued accounting guidance related to the calculation of earnings per
share. The guidance provides that unvested share-based payment awards that contain non-forfeitable
rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities
and shall be included in the computation of earnings per share pursuant to the two-class method.
The two-class method is an earnings allocation formula that determines earnings per share for each
class of common stock and participating security according to dividends declared and participation
rights in undistributed earnings. The company adopted and retrospectively applied the new guidance
in the first quarter of fiscal 2010. The retrospective application of the provisions resulted in a
reduction of previously reported basic earnings per share from continuing operations and net
earnings of $.02 and $.01, respectively, for the three-month period ended February 1, 2009. There
was no change to the previously reported diluted earnings per share from continuing operations, net
earnings, or the previously reported basic and diluted earnings per share from discontinued
operations for the three-month period ended February 1, 2009. For the six-month period ended
February 1, 2009, the retrospective application resulted in a reduction of the previously reported
basic earnings per share from continuing operations and net earnings of $.02 and of the previously
reported diluted earnings per share from continuing operations and net earnings of $.01. There was
no change to the previously reported basic and diluted earnings per share from discontinued
operations.
The computation of basic and diluted earnings per share attributable to common shareowners is
as follows:
Three Months Ended | Six Months Ended | |||||||||||||||
January 31, | February 1, | January 31, | February 1, | |||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Earnings from continuing operations |
$ | 259 | $ | 229 | $ | 563 | $ | 489 | ||||||||
Less: Allocation to participating securities |
(5 | ) | (4 | ) | (8 | ) | (9 | ) | ||||||||
Available to common shareowners |
$ | 254 | $ | 225 | $ | 555 | $ | 480 | ||||||||
Earnings from discontinued operations |
$ | | $ | 4 | $ | | $ | 4 | ||||||||
Less: Allocation to participating securities |
| | | | ||||||||||||
Available to common shareowners |
$ | | $ | 4 | $ | | $ | 4 | ||||||||
Net earnings |
$ | 259 | $ | 233 | $ | 563 | $ | 493 | ||||||||
Less: Allocation to participating securities |
(5 | ) | (4 | ) | (8 | ) | (9 | ) | ||||||||
Available to common shareowners |
$ | 254 | $ | 229 | $ | 555 | $ | 484 | ||||||||
Weighted average shares outstanding basic |
341 | 355 | 342 | 356 | ||||||||||||
Effect of dilutive securities: stock options |
3 | 3 | 3 | 4 | ||||||||||||
Weighted average shares outstanding diluted |
344 | 358 | 345 | 360 | ||||||||||||
Earnings from continuing operations per common share: |
||||||||||||||||
Basic |
$ | .74 | $ | .63 | $ | 1.62 | $ | 1.35 | ||||||||
Diluted |
$ | .74 | $ | .63 | $ | 1.61 | $ | 1.33 | ||||||||
Earnings from discontinued operations per common share: |
||||||||||||||||
Basic |
$ | | $ | .01 | $ | | $ | .01 | ||||||||
Diluted |
$ | | $ | .01 | $ | | $ | .01 | ||||||||
10
Table of Contents
Notes to Consolidated Financial Statements (Continued)
Three Months Ended | Six Months Ended | |||||||||||||||
January 31, | February 1, | January 31, | February 1, | |||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Net earnings per common share (1): |
||||||||||||||||
Basic |
$ | .74 | $ | .65 | $ | 1.62 | $ | 1.36 | ||||||||
Diluted |
$ | .74 | $ | .64 | $ | 1.61 | $ | 1.34 | ||||||||
(1) | The sum of the individual per share amounts does not equal due to rounding. |
Stock options to purchase approximately 1 million shares of capital stock for the six-month
period ended January 31, 2010 and stock options to purchase approximately 1.6 million and 1 million
shares of capital stock for the three-month and six-month periods ended February 1, 2009,
respectively, were not included in the calculation of diluted earnings per share because the
exercise price of the stock options exceeded the average market price of the capital stock and,
therefore, would be antidilutive.
Additional historical information is as follows:
Quarter Ended | Year-to-Date | |||||||||||||||
May 3, | August 2, | May 3, | August 2, | |||||||||||||
2009 | 2009 | 2009 | 2009 | |||||||||||||
Earnings from continuing operations |
$ | 174 | $ | 69 | $ | 663 | $ | 732 | ||||||||
Less: Allocation to participating securities |
(3 | ) | (1 | ) | (12 | ) | (12 | ) | ||||||||
Available to common shareowners |
$ | 171 | $ | 68 | $ | 651 | $ | 720 | ||||||||
Earnings from discontinued operations |
$ | | $ | | $ | 4 | $ | 4 | ||||||||
Less: Allocation to participating securities |
| | | | ||||||||||||
Available to common shareowners |
$ | | $ | | $ | 4 | $ | 4 | ||||||||
Net Earnings |
$ | 174 | $ | 69 | $ | 667 | $ | 736 | ||||||||
Less: Allocation to participating securities |
(3 | ) | (1 | ) | (12 | ) | (12 | ) | ||||||||
Available to common shareowners |
$ | 171 | $ | 68 | $ | 655 | $ | 724 | ||||||||
Weighted average shares outstanding basic |
350 | 346 | 354 | 352 | ||||||||||||
Effect of dilutive securities: stock options |
1 | 2 | 3 | 2 | ||||||||||||
Weighted average shares outstanding diluted |
351 | 348 | 357 | 354 | ||||||||||||
Earnings from continuing operations per common share: |
||||||||||||||||
Basic |
$ | .49 | $ | .20 | $ | 1.84 | $ | 2.05 | ||||||||
Diluted |
$ | .49 | $ | .20 | $ | 1.82 | $ | 2.03 | ||||||||
Earnings from discontinued operations per common share: |
||||||||||||||||
Basic |
$ | | $ | | $ | .01 | $ | .01 | ||||||||
Diluted |
$ | | $ | | $ | .01 | $ | .01 | ||||||||
Net earnings per common share (1): |
||||||||||||||||
Basic |
$ | .49 | $ | .20 | $ | 1.85 | $ | 2.06 | ||||||||
Diluted |
$ | .49 | $ | .20 | $ | 1.83 | $ | 2.05 | ||||||||
(1) | The sum of the individual per share amounts does not equal due to rounding. |
11
Table of Contents
Notes to Consolidated Financial Statements (Continued)
Year-to-Date | ||||||||
August 3, | July 29, | |||||||
2008 | 2007 | |||||||
Earnings from continuing operations |
$ | 671 | $ | 792 | ||||
Less: Allocation to participating securities |
(12 | ) | (13 | ) | ||||
Available to common shareowners basic |
$ | 659 | $ | 779 | ||||
Earnings from discontinued operations |
$ | 494 | $ | 62 | ||||
Less: Allocation to participating securities |
(10 | ) | (1 | ) | ||||
Available to common shareowners basic |
$ | 484 | $ | 61 | ||||
Net Earnings |
$ | 1,165 | $ | 854 | ||||
Less: Allocation to participating securities |
(22 | ) | (14 | ) | ||||
Available to common shareowners basic |
$ | 1,143 | $ | 840 | ||||
Earnings from continuing operations |
$ | 671 | $ | 792 | ||||
Less: Allocation to participating securities |
(12 | ) | (12 | ) | ||||
Available to common shareowners diluted |
$ | 659 | $ | 780 | ||||
Earnings from discontinued operations |
$ | 494 | $ | 62 | ||||
Less: Allocation to participating securities |
(10 | ) | (2 | ) | ||||
Available to common shareowners diluted |
$ | 484 | $ | 60 | ||||
Net Earnings |
$ | 1,165 | $ | 854 | ||||
Less: Allocation to participating securities |
(22 | ) | (14 | ) | ||||
Available to common shareowners diluted |
$ | 1,143 | $ | 840 | ||||
Weighted average shares outstanding basic |
373 | 386 | ||||||
Effect of dilutive securities: stock options |
4 | 6 | ||||||
Weighted average shares outstanding diluted |
377 | 392 | ||||||
Earnings from continuing operations per common share: |
||||||||
Basic |
$ | 1.77 | $ | 2.02 | ||||
Diluted |
$ | 1.75 | $ | 1.99 | ||||
Earnings from discontinued operations per common share: |
||||||||
Basic |
$ | 1.30 | $ | .16 | ||||
Diluted |
$ | 1.28 | $ | .15 | ||||
Net earnings per common share (1): |
||||||||
Basic |
$ | 3.06 | $ | 2.18 | ||||
Diluted |
$ | 3.03 | $ | 2.14 | ||||
(1) | The sum of the individual per share amounts does not equal due to rounding. |
9. Noncontrolling Interest
The company owns a 70% controlling interest in a Malaysian manufacturing company. The
noncontrolling interest in this entity is included in Total equity in the Consolidated Balance
Sheets. The earnings attributable to the noncontrolling interest were less than $1 for the three-
and six-month periods ended January 31, 2010 and February 1, 2009, and were included in Other
expenses/(income) in the Consolidated Statements of Earnings.
12
Table of Contents
Notes to Consolidated Financial Statements (Continued)
10. Pension and Postretirement Benefits
The company sponsors certain defined benefit plans and postretirement medical benefit plans
for employees. Components of benefit expense were as follows:
Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||||||
Pension | Postretirement | Pension | Postretirement | |||||||||||||||||||||||||||||
Jan. 31, | Feb. 1, | Jan. 31, | Feb. 1, | Jan. 31, | Feb. 1, | Jan. 31, | Feb. 1, | |||||||||||||||||||||||||
2010 | 2009 | 2010 | 2009 | 2010 | 2009 | 2010 | 2009 | |||||||||||||||||||||||||
Service cost |
$ | 13 | $ | 12 | $ | 1 | $ | 1 | $ | 27 | $ | 23 | $ | 2 | $ | 2 | ||||||||||||||||
Interest cost |
31 | 30 | 5 | 6 | 61 | 61 | 10 | 11 | ||||||||||||||||||||||||
Expected return on plan assets |
(42 | ) | (41 | ) | | | (85 | ) | (82 | ) | | | ||||||||||||||||||||
Amortization of prior service cost |
| | | | 1 | 1 | | | ||||||||||||||||||||||||
Recognized net actuarial loss |
12 | 5 | | | 24 | 9 | | | ||||||||||||||||||||||||
Net periodic benefit expense |
$ | 14 | $ | 6 | $ | 6 | $ | 7 | $ | 28 | $ | 12 | $ | 12 | $ | 13 | ||||||||||||||||
As of January 31, 2010, a contribution of $260 was made to a U.S. pension plan and
contributions of $12 were made to non-U.S. pension plans. No additional U.S. pension plan
contributions are expected this fiscal year. Contributions to non-U.S. pension plans are expected
to be approximately $14 during the remainder of the fiscal year.
11. Financial Instruments
The carrying value of cash and cash equivalents, accounts receivable, accounts payable and
short-term borrowings approximate fair value. The fair value of long-term debt as of January 31,
2010 was $2,387 and was based on quoted market prices or pricing models using current market rates.
The principal market risks to which the company is exposed are changes in foreign currency
exchange rates, interest rates, and commodity prices. In addition, the company is exposed to
equity price changes related to certain deferred compensation obligations. In order to manage
these exposures, the company follows established risk management policies and procedures, including
the use of derivative contracts such as swaps, forwards, commodity futures and option contracts.
These derivative contracts are entered into for periods consistent with the related underlying
exposures and do not constitute positions independent of those exposures. The company does not
enter into derivative contracts for speculative purposes and does not use leveraged instruments.
The companys derivative programs include strategies that both qualify and do not qualify for hedge
accounting treatment.
The company is exposed to the risk that counterparties to derivative contracts will fail to
meet their contractual obligations. The company minimizes the counterparty credit risk on these
transactions by dealing only with leading, credit-worthy financial institutions having long-term
credit ratings of A or better and, therefore, does not anticipate nonperformance. In addition,
the contracts are distributed among several financial institutions, thus minimizing credit-risk
concentration. The company does not have credit-risk-related contingent features in its derivative
instruments as of January 31, 2010.
Foreign Currency Exchange Risk
The company is exposed to foreign currency exchange risk related to its international
operations, including non-functional currency, intercompany debt and net investments in
subsidiaries. The company is also exposed to foreign exchange risk as a result of transactions in
currencies other than the functional currency of certain subsidiaries. The company utilizes
foreign exchange forward purchase and sale contracts as well as cross-currency swaps to hedge these
exposures. The contracts are designated as cash-flow hedging instruments or are undesignated. The
company typically hedges portions of its forecasted foreign currency transaction exposure with
foreign exchange forward contracts for up to 18 months. To hedge currency exposures related to
intercompany debt, cross-currency swap contracts are entered into for periods consistent with the
underlying debt. As of January 31, 2010, cross-currency swap contracts mature in 2010 through
2014. Principal currencies hedged include the Australian dollar, euro, Canadian dollar, Swedish
krona, New Zealand dollar, British pound and Japanese yen. The notional amount of foreign exchange
forward and cross-currency swap contracts accounted for as cash-flow hedges was $344 and $314 at
January 31, 2010 and February 1, 2009, respectively. The effective portion of the changes in fair
value on these instruments is recorded in other comprehensive income (loss) and is reclassified
into the Statements of Earnings on the same line item and same period in which the underlying hedge
transaction
13
Table of Contents
Notes to Consolidated Financial Statements (Continued)
affects earnings. The notional amount of foreign exchange forward and cross-currency
swap contracts that are not designated as accounting hedges was $753 and $627 at January 31, 2010
and February 1, 2009, respectively.
Interest Rate Risk
The company manages its exposure to changes in interest rates by optimizing the use of
variable-rate and fixed-rate debt and by utilizing interest rate swaps in order to maintain its
variable-to-total debt ratio within targeted guidelines. Receive fixed rate/pay variable rate
interest rate swaps are accounted for as fair-value hedges. The notional amount of outstanding
fair-value interest rate swaps totaled $500 at January 31, 2010 and February 1, 2009.
During fiscal 2010, the company entered into forward starting interest rate swap contracts
accounted for as cash-flow hedges with a combined notional value of $200 to hedge an anticipated
debt offering.
In June 2008, the company entered into two forward starting interest rate swap contracts
accounted for as cash-flow hedges with a combined notional value of $200 to hedge an anticipated
debt offering in fiscal 2009. These swaps were settled as of November 2, 2008, at a loss of $13,
which was recorded in other comprehensive income (loss). In January 2009, the company issued $300
ten-year 4.50% notes. The loss on the swap contracts is being amortized over the life of the debt
as additional interest expense.
Commodity Price Risk
The company principally uses a combination of purchase orders and various short- and long-term
supply arrangements in connection with the purchase of raw materials, including certain commodities
and agricultural products. The company also enters into commodity futures and options contracts to
reduce the volatility of price fluctuations of natural gas, diesel fuel, wheat, soybean oil, cocoa,
aluminum and corn, which impact the cost of raw materials. Commodity futures and option contracts
are typically accounted for as cash-flow hedges or are not designated as accounting hedges.
Commodity futures and option contracts are typically entered into to hedge a portion of commodity
requirements for periods up to 18 months. The notional amount of commodity contracts accounted for
as cash-flow hedges was $16 and $28 at January 31, 2010 and February 1, 2009, respectively. The
notional amount of commodity contracts that are not designated as accounting hedges was $74 and $77
at January 31, 2010 and February 1, 2009, respectively. As of January 31, 2010, commodity
contracts primarily mature within 12 months.
Equity Price Risk
The company hedges a portion of exposures relating to certain deferred compensation
obligations linked to the total return of the Standard & Poors 500 Index, the total return of the
companys capital stock and the total return of the Puritan Fund. Under these contracts, the
company pays variable interest rates and receives from the counterparty either the total return of
the Standard & Poors 500 Index, the total return on company capital stock, or the total return of
the Puritan Fund. These instruments are not designated as hedges for accounting purposes. The
contracts are typically entered into for periods not exceeding 12 months. The notional amount of
the companys deferred compensation hedges as of January 31, 2010 and February 1, 2009 were $56 and
$44, respectively.
14
Table of Contents
Notes to Consolidated Financial Statements (Continued)
The following table summarizes the fair value of derivative instruments recorded in the
Consolidated Balance Sheets as of January 31, 2010 and August 2, 2009:
January 31, | August 2, | |||||||||
Balance Sheet Classification | 2010 | 2009 | ||||||||
Asset Derivatives |
||||||||||
Derivatives designated as hedges: |
||||||||||
Foreign exchange forward contracts |
Other current assets | $ | 3 | $ | 1 | |||||
Cross-currency swap contracts |
Other current assets | 2 | 3 | |||||||
Interest rate swaps |
Other assets | 43 | 38 | |||||||
Total derivatives designated as hedges |
$ | 48 | $ | 42 | ||||||
Derivatives not designated as hedges: |
||||||||||
Foreign exchange forward contracts |
Other current assets | $ | 1 | $ | 3 | |||||
Commodity contracts |
Other current assets | 1 | 6 | |||||||
Cross-currency swap contracts |
Other assets | 8 | 7 | |||||||
Deferred compensation contracts |
Other current assets | | 4 | |||||||
Total derivatives not designated as hedges |
$ | 10 | $ | 20 | ||||||
Total asset derivatives |
$ | 58 | $ | 62 | ||||||
January 31, | August 2, | |||||||||
Balance Sheet Classification | 2010 | 2009 | ||||||||
Liability Derivatives |
||||||||||
Derivatives designated as hedges: |
||||||||||
Foreign exchange forward contracts |
Accrued liabilities | $ | 3 | $ | 3 | |||||
Commodity contracts |
Accrued liabilities | 1 | | |||||||
Cross-currency swap contracts |
Accrued liabilities | | 1 | |||||||
Interest rate swaps |
Accrued liabilities | 2 | | |||||||
Cross-currency swap contracts |
Other liabilities | 25 | 31 | |||||||
Total derivatives designated as hedges |
$ | 31 | $ | 35 | ||||||
Derivatives not designated as hedges: |
||||||||||
Foreign exchange forward contracts |
Accrued liabilities | $ | 6 | $ | 11 | |||||
Commodity contracts |
Accrued liabilities | 3 | 6 | |||||||
Cross-currency swap contracts |
Accrued liabilities | 18 | 5 | |||||||
Cross-currency swap contracts |
Other liabilities | 7 | 8 | |||||||
Deferred compensation contracts |
Other liabilities | | | |||||||
Total derivatives not designated as hedges |
$ | 34 | $ | 30 | ||||||
Total liability derivatives |
$ | 65 | $ | 65 | ||||||
The derivative assets and liabilities are presented on a gross basis in the table. Certain
derivative asset and liability balances, including cash collateral, are offset in the balance sheet
when a legally enforceable right of offset exists.
The following tables show the effect of the companys derivative instruments designated as
cash-flow hedges for the three- and six-month periods ended January 31, 2010 and February 1, 2009
on other comprehensive income (loss) (OCI) and the Consolidated Statements of Earnings:
15
Table of Contents
Notes to Consolidated Financial Statements (Continued)
Derivatives Designated as Cash-Flow Hedges
Total | ||||||||||
Cash-Flow | ||||||||||
Hedge | ||||||||||
OCI Activity | ||||||||||
Three Months Ended January 31, 2010 and February 1, 2009 | 2010 | 2009 | ||||||||
OCI derivative gain/(loss) at beginning of quarter |
$ | (30 | ) | $ | (23 | ) | ||||
Effective portion of changes in fair value recognized in OCI: |
||||||||||
Foreign exchange forward contracts |
1 | 4 | ||||||||
Cross-currency swap contracts |
| 1 | ||||||||
Forward starting interest rate swaps |
(1 | ) | | |||||||
Commodity contracts |
| 7 | ||||||||
Amount of (gain) or loss reclassified from OCI to earnings: |
Location in Earnings | |||||||||
Foreign exchange forward contracts |
Other expenses/income | (1 | ) | (1 | ) | |||||
Foreign exchange forward contracts |
Cost of products sold | 8 | (2 | ) | ||||||
Forward starting interest rate swaps |
Interest expense | 1 | | |||||||
OCI derivative gain/(loss) at end of quarter |
$ | (22 | ) | $ | (14 | ) | ||||
Total | ||||||||||
Cash-Flow | ||||||||||
Hedge | ||||||||||
OCI Activity | ||||||||||
Six Months Ended January 31, 2010 and February 1, 2009 | 2010 | 2009 | ||||||||
OCI derivative gain/(loss) at beginning of year |
$ | (31 | ) | $ | 8 | |||||
Effective portion of changes in fair value recognized in OCI: |
||||||||||
Foreign exchange forward contracts |
(1 | ) | 11 | |||||||
Cross-currency swap contracts |
2 | (3 | ) | |||||||
Forward starting interest rate swaps |
(2 | ) | (15 | ) | ||||||
Commodity contracts |
(1 | ) | (13 | ) | ||||||
Amount of (gain) or loss reclassified from OCI to earnings: |
Location in Earnings | |||||||||
Foreign exchange forward contracts |
Other expenses/income | (1 | ) | (1 | ) | |||||
Foreign exchange forward contracts |
Cost of products sold | 10 | (1 | ) | ||||||
Forward starting interest rate swaps |
Interest expense | 1 | | |||||||
Commodity contracts |
Cost of products sold | 1 | | |||||||
OCI derivative gain/(loss) at end of quarter |
$ | (22 | ) | $ | (14 | ) | ||||
The amount expected to be reclassified from other comprehensive income into earnings within
the next 12 months is a loss of $9. The ineffective portion and amount excluded from effectiveness
testing were not material.
The following tables show the effect of the companys derivative instruments designated as
fair-value hedges on the Consolidated Statements of Earnings:
Amount of | Amount of | |||||||||||||||||
Gain or (Loss) | Gain or (Loss) | |||||||||||||||||
Recognized in Earnings | Recognized in Earnings | |||||||||||||||||
on Derivatives | on Hedged Item | |||||||||||||||||
Derivatives Designated | Location of Gain or (Loss) | January 31, | February 1, | January 31, | February 1, | |||||||||||||
as Fair-Value Hedges | Recognized in Earnings | 2010 | 2009 | 2010 | 2009 | |||||||||||||
Three Months Ended |
||||||||||||||||||
Interest rate swaps |
Interest expense | $ | 1 | $ | 26 | $ | (1 | ) | $ | (26 | ) | |||||||
Six Months Ended |
||||||||||||||||||
Interest rate swaps |
Interest expense | $ | 5 | $ | 30 | $ | (5 | ) | $ | (30 | ) | |||||||
16
Table of Contents
Notes to Consolidated Financial Statements (Continued)
The following table shows the effects of the companys derivative instruments not designated
as hedges in the Consolidated Statements of Earnings:
Amount of Gain or (Loss) | ||||||||||||||||||
Recognized in Earnings | ||||||||||||||||||
On Derivatives | ||||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||||
Location of Gain or (Loss) | January 31, | February 1, | January 31, | February 1, | ||||||||||||||
Derivatives not Designated as Hedges | Recognized in Earnings | 2010 | 2009 | 2010 | 2009 | |||||||||||||
Foreign exchange forward contracts |
Other expenses/income | $ | (1 | ) | $ | (5 | ) | $ | (4 | ) | $ | 3 | ||||||
Foreign exchange forward contracts |
Cost of products sold | | | | 1 | |||||||||||||
Cross-currency swap contracts |
Other expenses/income | 14 | 8 | (10 | ) | 125 | ||||||||||||
Commodity contracts |
Cost of products sold | (2 | ) | (6 | ) | (3 | ) | (29 | ) | |||||||||
Deferred compensation contracts |
Administrative expenses | 2 | (10 | ) | 4 | (13 | ) | |||||||||||
Total |
$ | 13 | $ | (13 | ) | $ | (13 | ) | $ | 87 | ||||||||
12. Fair Value Measurements
The company is required to categorize financial assets and liabilities based on the following
fair value hierarchy:
| Level 1: Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. | ||
| Level 2: Inputs other than quoted prices included in Level 1 that are observable for the asset or liability through corroboration with observable market data. | ||
| Level 3: Unobservable inputs that reflect the reporting entitys own assumptions. |
Fair value is defined as the exit price, or the amount that would be received to sell an asset
or paid to transfer a liability in an orderly transaction between market participants as of the
measurement date. When available, the company uses unadjusted quoted market prices to measure the
fair value and classifies such items as Level 1. If quoted market prices are not available, the
company bases fair value upon internally developed models that use current market-based or
independently sourced market parameters such as interest rates and currency rates. Items valued
using internally generated models are classified according to the lowest level input or value
driver that is significant to the calculation.
The following table presents the companys financial assets and liabilities that are measured
at fair value on a recurring basis at January 31, 2010 consistent with the fair value hierarchy:
Fair Value | Fair Value Measurements at | |||||||||||||||
as of | January 31, 2010 Using | |||||||||||||||
January 31, | Fair Value Hierarchy | |||||||||||||||
2010 | Level 1 | Level 2 | Level 3 | |||||||||||||
Assets |
||||||||||||||||
Interest rate swaps (1) |
$ | 43 | $ | | $ | 43 | $ | | ||||||||
Foreign exchange forward contracts (2) |
4 | | 4 | | ||||||||||||
Cross-currency swap contracts (3) |
10 | | 10 | | ||||||||||||
Commodity derivatives (4) |
1 | 1 | | | ||||||||||||
Total assets at fair value |
$ | 58 | $ | 1 | $ | 57 | $ | | ||||||||
Fair Value | Fair Value Measurements at | |||||||||||||||
as of | January 31, 2010 Using | |||||||||||||||
January 31, | Fair Value Hierarchy | |||||||||||||||
2010 | Level 1 | Level 2 | Level 3 | |||||||||||||
Liabilities |
||||||||||||||||
Interest rate swaps (1) |
$ | 2 | $ | | $ | 2 | $ | | ||||||||
Foreign exchange forward contracts (2) |
9 | | 9 | | ||||||||||||
Cross-currency swap contracts (3) |
50 | | 50 | | ||||||||||||
Commodity derivatives (4) |
4 | 4 | | | ||||||||||||
Deferred compensation obligation (5) |
159 | 112 | 47 | | ||||||||||||
Total liabilities at fair value |
$ | 224 | $ | 116 | $ | 108 | $ | | ||||||||
17
Table of Contents
Notes to Consolidated Financial Statements (Continued)
(1) | Based on LIBOR swap rates. | |
(2) | Based on observable market transactions of spot currency rates and forward rates. | |
(3) | Based on observable local benchmarks for currency and interest rates. | |
(4) | Based on quoted futures exchanges. | |
(5) | Based on the fair value of the participants investments. |
13. Share Repurchase Programs
In June 2008, the companys Board of Directors authorized the purchase of up to $1,200 of
company stock through fiscal 2011. This program began in fiscal 2009. In addition to this
publicly announced program, the company repurchases shares to offset the impact of dilution from
shares issued under the companys stock compensation plans.
During the six-month period ended January 31, 2010, the company repurchased 7 million shares
at a cost of $213. Of this amount, $118 were repurchased pursuant to the companys June 2008
publicly announced share repurchase program. Approximately $682 remains available under this
program as of January 31, 2010.
During the six-month period ended February 1, 2009, the company repurchased 9 million shares
at a cost of $295. Of this amount, $197 were repurchased pursuant to the companys June 2008
publicly announced share repurchase program.
14. Stock-based Compensation
The company provides compensation benefits by issuing unrestricted stock, restricted stock and
restricted stock units (including EPS performance restricted stock/units and total shareowner
return (TSR) performance restricted stock/units). In previous fiscal years, the company also
issued stock options and stock appreciation rights to provide compensation benefits.
Total pre-tax stock-based compensation recognized in Earnings from continuing operations was
$25 and $19 for the three-month periods ended January 31, 2010 and February 1, 2009, respectively.
Tax-related benefits of $10 and $7 were also recognized for the three-month periods ended January
31, 2010 and February 1, 2009, respectively. Total pre-tax stock-based compensation recognized in
Earnings from continuing operations was $45 and $44 for the six-month periods ended January 31,
2010 and February 1, 2009, respectively. Tax-related benefits of $17 and $16 were also recognized
for the six-month periods ended January 31, 2010 and February 1, 2009, respectively. Cash received
from the exercise of stock options was $36 and $69 for the six-month periods ended January 31, 2010
and February 1, 2009, respectively, and is reflected in cash flows from financing activities in the
Consolidated Statements of Cash Flows.
The following table summarizes stock option activity as of January 31, 2010:
Weighted- | ||||||||||||||||
Weighted- | Average | |||||||||||||||
Average | Remaining | Aggregate | ||||||||||||||
Exercise | Contractual | Intrinsic | ||||||||||||||
Options | Price | Life | Value | |||||||||||||
(Options in thousands) | ||||||||||||||||
Outstanding at August 2, 2009 |
17,552 | $ | 27.08 | |||||||||||||
Granted |
| $ | | |||||||||||||
Exercised |
(1,384 | ) | $ | 27.13 | ||||||||||||
Terminated |
(81 | ) | $ | 35.20 | ||||||||||||
Outstanding at January 31, 2010 |
16,087 | $ | 27.00 | 2.9 | $ | 98 | ||||||||||
Exercisable at January 31, 2010 |
16,087 | $ | 27.00 | 2.9 | $ | 98 | ||||||||||
The total intrinsic value of options exercised during the six-month periods ended January 31,
2010 and February 1, 2009 was $9 and $30, respectively. As of January 2009, compensation
related to stock options was fully expensed. The company measured the fair value of stock options
using the Black-Scholes option pricing model.
18
Table of Contents
Notes to Consolidated Financial Statements (Continued)
The following table summarizes time-lapse restricted stock/units and EPS performance
restricted stock/units as of January 31, 2010:
Weighted- | ||||||||
Average | ||||||||
Grant-Date | ||||||||
Shares/Units | Fair Value | |||||||
(Restricted stock/units in thousands) | ||||||||
Nonvested at August 2, 2009 |
2,073 | $ | 38.17 | |||||
Granted |
1,384 | $ | 32.19 | |||||
Vested |
(924 | ) | $ | 37.79 | ||||
Forfeited |
(62 | ) | $ | 35.88 | ||||
Nonvested at January 31, 2010 |
2,471 | $ | 35.02 | |||||
The fair value of time-lapse restricted stock/units and EPS performance restricted stock/units
is determined based on the number of shares granted and the quoted price of the companys stock at
the date of grant. Time-lapse restricted stock/units granted in fiscal 2006 and forward are
expensed on a straight-line basis over the vesting period, except for awards issued to
retirement-eligible participants, which are expensed on an accelerated basis. EPS restricted
stock/units are expensed on a graded-vesting basis, except for awards issued to retirement-eligible
participants, which are expensed on an accelerated basis.
As of January 31, 2010, total remaining unearned compensation related to nonvested time-lapse
restricted stock/units and EPS performance restricted stock/units was $55, which will be amortized
over the weighted-average remaining service period of 1.8 years. The fair value of restricted
stock/units vested during the six-month periods ended January 31, 2010 and February 1, 2009 was $30
and $39, respectively. The weighted-average grant-date fair value of the restricted stock/units
granted during the six-month period ended February 1, 2009 was $39.79.
The following table summarizes TSR performance restricted stock/units as of January 31, 2010:
Weighted- | ||||||||
Average | ||||||||
Grant-Date | ||||||||
Shares/Units | Fair Value | |||||||
(Restricted stock/units in thousands) | ||||||||
Nonvested at August 2, 2009 |
3,349 | $ | 36.08 | |||||
Granted |
1,518 | $ | 33.84 | |||||
Vested |
(944 | ) | $ | 26.38 | ||||
Forfeited |
(262 | ) | $ | 31.05 | ||||
Nonvested at January 31, 2010 |
3,661 | $ | 38.01 | |||||
The fair value of TSR performance restricted stock/units is estimated at the grant date using
a Monte Carlo simulation. Expense is recognized on a straight-line basis over the service period.
As of January 31, 2010, total remaining unearned compensation related to TSR performance restricted
stock/units was $76, which will be amortized over the weighted-average remaining service period of
2.1 years. During the six-month period ended January 31, 2010, recipients of TSR performance
restricted stock/units earned 85% of their initial grants based upon the companys total shareowner
return ranking in a performance peer group during a three-year period ended July 31, 2009. As a
result, approximately 165,000 shares were forfeited. The total fair value of TSR performance
restricted stock/units vested during the six-month periods ended January 31, 2010 and February 1,
2009 was $31 and $57, respectively. The grant-date fair value of TSR performance restricted
stock/units granted during the six-month period ended February 1, 2009 was $47.20.
Prior to fiscal 2009, employees could elect to defer all types of restricted stock awards.
These awards are classified as liabilities because of the possibility that they may be settled in
cash. The fair value is adjusted quarterly. Total cash paid to settle the liabilities during the
six-month periods ended January 31, 2010 and February 1, 2009 was not material.
The excess tax benefits on the exercise of stock options and vested restricted stock presented
as cash flows from financing activities for the six-month periods ended January 31, 2010 and
February 1, 2009 were $4 and $17, respectively.
19
Table of Contents
Notes to Consolidated Financial Statements (Continued)
15. Inventories
January 31, | August 2, | |||||||
2010 | 2009 | |||||||
Inventories |
||||||||
Raw materials, containers and supplies |
$ | 250 | $ | 324 | ||||
Finished products |
450 | 500 | ||||||
$ | 700 | $ | 824 | |||||
16. Supplemental Cash Flow Information
Other cash used in operating activities for the six-month periods is comprised of the
following:
January 31, | February 1, | |||||||
2010 | 2009 | |||||||
Benefit related payments |
$ | (17 | ) | $ | (19 | ) | ||
Other |
(4 | ) | 9 | |||||
$ | (21 | ) | $ | (10 | ) | |||
20
Table of Contents
Item 2.
CAMPBELL SOUP COMPANY CONSOLIDATED
MANAGEMENTS DISCUSSION AND ANALYSES OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
MANAGEMENTS DISCUSSION AND ANALYSES OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
OVERVIEW
Description of the Company
Campbell Soup Company is a global manufacturer and marketer of high-quality, branded
convenience food products. The company is organized and reports in the following segments: U.S.
Soup, Sauces and Beverages; Baking and Snacking; International Soup, Sauces and Beverages; and
North America Foodservice. The companys well-known brands are sold in approximately 120 countries.
Its principal geographies are the United States, Canada, Australia, France, Germany and Belgium.
Executive Summary
This Executive Summary provides significant highlights from the discussion and analysis that
follows.
| Net sales increased 1% in the quarter to $2.153 billion. |
| Currency translation contributed 4 points of sales growth. | ||
| U.S. Soup sales declined 8%. |
| Gross profit, as a percent of sales, increased to 40.5% in the quarter, reflecting cost savings from productivity initiatives. | ||
| Net earnings per share for the quarter increased 16% to $.74. | ||
| For the first half of 2010, cash from operations increased to $496 million, more than offsetting a $260 million U.S. pension contribution. |
Items Impacting Comparability
The following items impacted the comparability of net earnings and net earnings per share:
Continuing Operations
| In the second quarter of 2009, the company recorded pre-tax restructuring-related costs of $8 million ($5 million after tax or $.01 per share) in Cost of products sold associated with the previously announced initiatives to improve operational efficiency and long-term profitability. In the six months ended February 1, 2009, the company recorded pre-tax restructuring-related costs of $15 million ($10 million after tax or $.03 per share) in Cost of products sold. See Note 7 to the Consolidated Financial Statements for additional information. | ||
| In the six months ended February 1, 2009, the company recorded $26 million ($16 million after tax or $.04 per share) in Cost of products sold related to unrealized losses on the fair value of open commodity contracts. |
Discontinued Operations
| In the second quarter of 2009, the company recorded a $4 million tax benefit ($.01 per share) related to the sale of the Godiva Chocolatier business. |
21
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The items impacting comparability are summarized below:
Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||||||
January 31, | February 1, | January 31, | February 1, | |||||||||||||||||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||||||||||||||||||
Earnings | EPS | Earnings | EPS | Earnings | EPS | Earnings | EPS | |||||||||||||||||||||||||
(Millions, except per share amounts) | Impact | Impact | Impact | Impact | Impact | Impact | Impact | Impact | ||||||||||||||||||||||||
Earnings from continuing operations |
$ | 259 | $ | .74 | $ | 229 | $ | .63 | $ | 563 | $ | 1.61 | $ | 489 | $ | 1.33 | ||||||||||||||||
Earnings from discontinued operations |
$ | | $ | | $ | 4 | $ | .01 | $ | | $ | | $ | 4 | $ | .01 | ||||||||||||||||
Net earnings |
$ | 259 | $ | .74 | $ | 233 | $ | .64 | $ | 563 | $ | 1.61 | $ | 493 | $ | 1.34 | ||||||||||||||||
Continuing operations: |
||||||||||||||||||||||||||||||||
Restructuring-related costs |
$ | | $ | | $ | (5 | ) | $ | (.01 | ) | $ | | $ | | $ | (10 | ) | $ | (.03 | ) | ||||||||||||
Unrealized losses on commodity hedges |
| | | | | | (16 | ) | (.04 | ) | ||||||||||||||||||||||
Discontinued
operations: |
||||||||||||||||||||||||||||||||
Tax benefit from sale of Godiva Chocolatier business |
| | 4 | .01 | | | 4 | .01 | ||||||||||||||||||||||||
Impact of significant items on net earnings (1) |
$ | | $ | | $ | (1 | ) | $ | | $ | | $ | | $ | (22 | ) | $ | (.07 | ) | |||||||||||||
(1) | The sum of the individual per share amounts does not equal due to rounding. |
Earnings from Continuing and Discontinued Operations
The company reported earnings from continuing operations of $259 million for the quarter ended
January 31, 2010, versus $229 million in the comparable quarter a year ago. Earnings per share
from continuing operations were $.74 compared to $.63 a year ago. After adjusting for the items
impacting comparability, earnings from continuing operations for the quarter increased primarily
due to lower marketing and selling expenses, the impact of currency, an improved gross margin
percentage, and a lower effective tax rate, partially offset by lower sales volume. Earnings per
share from continuing operations in the current quarter benefited from a reduction in the weighted
average diluted shares outstanding, which was primarily due to share repurchases under the
companys strategic share repurchase program. Earnings per share from continuing operations were
positively impacted by $.04 from currency translation.
Earnings from discontinued operations of $4 million, or $.01 per share, for the quarter ended
February 1, 2009 represented an adjustment to the tax liability associated with the sale of the
Godiva Chocolatier business.
For the six months ended January 31, 2010, earnings from continuing operations were $563
million compared to $489 million a year ago. Earnings per share from continuing operations were
$1.61 compared to $1.33 a year ago. After adjusting for the items impacting comparability,
earnings from continuing operations in the current period increased primarily due to an improved
gross margin percentage, lower marketing and selling expenses and the impact of currency, partially
offset by lower sales volume. Earnings per share from continuing operations in the current period
benefited from a reduction in the weighted average diluted shares outstanding, which was primarily
due to share repurchases under the companys strategic share repurchase program. Earnings per
share from continuing operations were positively impacted by $.06 from currency translation.
22
Table of Contents
Basis of Presentation
All earnings per share amounts included in Managements Discussion and Analysis are presented
on a diluted basis.
In June 2008, the Financial Accounting Standards Board (FASB) issued accounting guidance
related to the calculation of earnings per share. The guidance provides that unvested share-based
payment awards that contain non-forfeitable rights to dividends or dividend equivalents (whether
paid or unpaid) are participating securities and shall be included in the computation of earnings
per share pursuant to the two-class method. The two-class method is an earnings allocation formula
that determines earnings per share for each class of common stock and participating security
according to dividends declared and participation rights in undistributed earnings. The company
adopted and retrospectively applied the new guidance in the first quarter of 2010. The
retrospective application of the provisions resulted in a reduction of previously reported basic
earnings per share from continuing operations and net earnings of $.02 and $.01, respectively, for
the three-month period ended February 1, 2009. There was no change to the previously reported
diluted earnings per share from continuing operations, net earnings, or the previously reported
basic and diluted earnings per share from discontinued operations for the three-month period ended
February 1, 2009. The retrospective application of the provisions resulted in a reduction of
previously reported basic earnings per share from continuing operations and net earnings of $.02
and of the previously reported diluted earnings per share from continuing operations and net
earnings of $.01, for the six-month period ended February 1, 2009. There was no change to the
previously reported basic and diluted earnings per share from discontinued operations for the
six-month period ended February 1, 2009. See Note 8 to the Consolidated Financial Statements for
additional information.
SECOND-QUARTER DISCUSSION AND ANALYSIS
Sales
An analysis of net sales by reportable segment follows:
2010 | 2009 | % Change | ||||||||||
(Millions) | ||||||||||||
U.S. Soup, Sauces and Beverages |
$ | 1,068 | $ | 1,128 | (5 | )% | ||||||
Baking and Snacking |
489 | 440 | 11 | |||||||||
International Soup, Sauces and Beverages |
437 | 391 | 12 | |||||||||
North America Foodservice |
159 | 163 | (2 | ) | ||||||||
$ | 2,153 | $ | 2,122 | 1 | % | |||||||
An analysis of percent change of net sales by reportable segment follows:
International | ||||||||||||||||||||
U.S. Soup, | Baking | Soup, Sauces | North | |||||||||||||||||
Sauces and | and | and | America | |||||||||||||||||
Beverages | Snacking | Beverages | Foodservice | Total | ||||||||||||||||
Volume and Mix |
(4 | )% | 3 | % | (2 | )% | (3 | )% | (2 | )% | ||||||||||
Price and Sales Allowances |
1 | | 4 | | 1 | |||||||||||||||
Increased Promotional Spending (1) |
(2 | ) | (3 | ) | (2 | ) | (1 | ) | (2 | ) | ||||||||||
Currency |
| 10 | 12 | 2 | 4 | |||||||||||||||
Acquisitions/(Divestitures) |
| 1 | | | | |||||||||||||||
(5 | )% | 11 | % | 12 | % | (2 | )% | 1 | % | |||||||||||
(1) | Represents revenue reductions from trade promotion and consumer coupon redemption programs. |
In U.S. Soup, Sauces, and Beverages, U.S. soup sales decreased 8% due to the following:
| Sales of Campbells condensed soups were flat, as gains in cooking varieties, which benefited from consumers using Campbells condensed cooking soups to prepare more meals at home, were offset by declines in eating varieties. | ||
| Sales of ready-to-serve soups decreased 18%. Sales of both canned and microwavable soups declined due to lower promotional spending and intense competitive pressure in the broader simple meals category. | ||
| Broth sales increased 1%. |
23
Table of Contents
Beverage sales decreased slightly, primarily due to lower sales of V8 vegetable juice, mostly
offset by growth in V8 V-Fusion juice and V8 Splash juice drinks. Prego pasta sauce sales
increased strongly. Pace Mexican sauce sales declined due to increased competitive activity.
In Baking and Snacking, sales increased primarily due to the impact of currency and the
acquisition of Ecce Panis, Inc. in May 2009. Sales of Pepperidge Farm increased due to higher
volumes and the acquisition, partially offset by increased promotional spending. In the Pepperidge
Farm bakery business, sales increased due to the acquisition. In the Pepperidge Farm cookies and
crackers business, sales increased reflecting the continued solid growth of Goldfish snack
crackers, partly offset by a decline in cookies. In Australia, sales increased due to currency and
continued growth in Arnotts, led by higher sales of both savory and sweet biscuit products.
In International Soup, Sauces, and Beverages, sales increased primarily due to currency. In
Europe, sales increased due to the impact of currency, and higher sales in Belgium and France,
partly offset by lower sales in Germany. In Asia Pacific, sales increased primarily due to
currency and gains in Japan, partly offset by lower sales in the Australian soup business. In
Canada, sales increased due to currency partially offset by lower soup sales.
In North America Foodservice, sales declined primarily due to continued weakness in the food
service sector.
Gross Profit
Gross profit, defined as Net sales less Cost of products sold, increased by $34 million in
2010. As a percent of sales, gross profit increased from 39.4% in 2009 to 40.5% in 2010. The
percentage point increase was due to productivity improvements (approximately 2.0 percentage
points), higher selling prices (approximately 0.7 percentage point), costs in the prior year
related to the initiatives to improve operational efficiency and long-term profitability
(approximately 0.4 percentage point), and favorable mix (approximately 0.4 percentage point),
partially offset by increased promotional spending (approximately 1.3 percentage points), and the
impact of cost inflation and other factors (approximately 1.1 percentage points).
Marketing and Selling Expenses
Marketing and selling expenses as a percent of sales were 14.0% in 2010 and 14.8% in 2009.
Marketing and selling expenses decreased 4% in 2010 from 2009. The decrease was primarily due to
lower advertising expenses (approximately 4 percentage points), and lower other marketing expenses
(approximately 3 percentage points), partially offset by the impact of currency (approximately 3
percentage points). The lower advertising expenses were due in part to a reduction in media rates
and a shift to trade promotion in many businesses.
Administrative Expenses
Administrative expenses as a percent of sales were 6.9% in 2010 and 6.5% in 2009.
Administrative expenses increased by 8% in 2010 from 2009, primarily due to an increase in pension
expense and other benefit costs (approximately 6 percentage points), the impact of currency
(approximately 4 percentage points), and higher incentive compensation costs (approximately 2
percentage points), partially offset by cost reduction efforts and other factors (approximately 4
percentage points).
Operating Earnings
Segment operating earnings increased 10% in 2010 from 2009.
An analysis of operating earnings by segment follows:
2010 | 2009(1) | % Change | ||||||||||
(Millions) | ||||||||||||
U.S. Soup, Sauces and Beverages |
$ | 259 | $ | 270 | (4 | )% | ||||||
Baking and Snacking |
73 | 53 | 38 | |||||||||
International Soup, Sauces and Beverages |
74 | 50 | 48 | |||||||||
North America Foodservice |
17 | 10 | 70 | |||||||||
423 | 383 | 10 | % | |||||||||
Corporate |
(32 | ) | (28 | ) | ||||||||
$ | 391 | $ | 355 | |||||||||
24
Table of Contents
(1) | Operating earnings by segment included the effect of restructuring-related costs of $2 million in Baking and Snacking and $6 million in North America Foodservice. See Note 7 to the Consolidated Financial Statements for additional information on restructuring charges. |
Earnings from U.S. Soup, Sauces and Beverages decreased 4% in 2010 versus 2009 primarily due
to lower sales, partly offset by lower marketing expenses.
Earnings
from Baking and Snacking increased 38% in 2010 versus 2009 primarily
due to the impact
of currency and margin growth in Arnotts and Pepperidge Farm. The prior year included $2 million
in costs related to the initiatives to improve operational efficiency and long-term profitability.
Earnings from International Soup, Sauces and Beverages increased 48% in 2010 versus 2009. The
increase in operating earnings was due to growth in the businesses in Europe and the impact of
currency.
Earnings from North America Foodservice in 2010 increased to $17 million from $10 million in
2009. The prior year included $6 million in costs related to the initiatives to improve
operational efficiency and long-term profitability.
Corporate expenses increased from $28 million in 2009 to $32 million in 2010. The increase
was due primarily to higher benefit costs.
Interest Expense/Income
Interest expense increased to $27 million from $26 million in the prior year, primarily due to
an increase in fixed-rate debt slightly offset by lower average short-term rates.
Taxes on Earnings
The effective tax rate for the current quarter was 29.0%. The effective rate for the year-ago
quarter was 30.6%. The decrease in the effective rate was primarily due to lower taxes on foreign
earnings.
SIX-MONTH DISCUSSION AND ANALYSIS
Sales
An analysis of net sales by reportable segment follows:
2010 | 2009 | % Change | ||||||||||
(Millions) | ||||||||||||
U.S. Soup, Sauces and Beverages |
$ | 2,208 | $ | 2,326 | (5 | )% | ||||||
Baking and Snacking |
1,019 | 949 | 7 | |||||||||
International Soup, Sauces and Beverages |
811 | 771 | 5 | |||||||||
North America Foodservice |
318 | 326 | (2 | ) | ||||||||
$ | 4,356 | $ | 4,372 | | % | |||||||
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Table of Contents
An analysis of percent change of net sales by reportable segment follows:
International | ||||||||||||||||||||
U.S. Soup, | Baking | Soup, Sauces | North | |||||||||||||||||
Sauces and | and | and | America | |||||||||||||||||
Beverages | Snacking | Beverages | Foodservice | Total | ||||||||||||||||
Volume and Mix |
(5 | )% | 2 | % | (2 | )% | (4 | )% | (3 | )% | ||||||||||
Price and Sales Allowances |
1 | 1 | 4 | 1 | 2 | |||||||||||||||
Increased Promotional Spending (1) |
(1 | ) | (3 | ) | (2 | ) | | (2 | ) | |||||||||||
Currency |
| 6 | 7 | 1 | 3 | |||||||||||||||
Acquisitions/(Divestitures) |
| 1 | (2 | ) | | | ||||||||||||||
(5 | )% | 7 | % | 5 | % | (2 | )% | | % | |||||||||||
(1) | Represents revenue reductions from trade promotion and consumer coupon redemption programs. |
In U.S. Soup, Sauces, and Beverages, U.S. soup sales decreased 5%, due to the following:
| Sales of Campbells condensed soups were unchanged, as gains in cooking varieties were offset by declines in eating varieties. | ||
| Sales of ready-to-serve soups decreased 13%. | ||
| Broth sales were comparable to a year ago. |
Beverage sales decreased primarily due to lower sales of V8 vegetable juice. Prego pasta
sauce sales were up slightly, while Pace Mexican sauce sales decreased.
In Baking and Snacking, sales increased primarily due to the impact of currency and the
acquisition of Ecce Panis, Inc. Sales of Pepperidge Farm were unchanged as the benefits of the
acquisition and higher sales volumes were offset by increased promotional spending. In the
Pepperidge Farm bakery business, sales increased due to the acquisition, partially offset by a
decline in the base business as higher promotional spending was partly offset by increased volumes.
In the Pepperidge Farm cookies and crackers business, sales were unchanged, reflecting growth in
Goldfish snack crackers offset by declines in cookies. In Australia, sales increased due to the
impact of currency and growth in Arnotts products.
In International Soup, Sauces and Beverages, sales increased primarily due to currency, partly
offset by the divestiture of the companys French sauce and mayonnaise business in September 2008.
In Europe, sales increased due to currency, partly offset by the divestiture, and lower sales in
Germany. In Asia Pacific, sales increased primarily due to currency and gains in Japan. In
Canada, sales increased due to currency.
In North America Foodservice, sales declined primarily due to continued weakness in the food
service sector.
Gross Profit
Gross profit, defined as Net sales less Cost of products sold, increased by $86 million in
2010. As a percent of sales, gross profit increased from 39.1% in 2009 to 41.2% in 2010. The
percentage point increase was due to productivity improvements (approximately 2.0 percentage
points), higher selling prices (approximately 1.1 percentage points), unrealized losses on
commodity hedges in the prior year (approximately 0.6 percentage point), costs in the prior year
related to the initiatives to improve operational efficiency and long-term profitability
(approximately 0.3 percentage point), and favorable mix (approximately 0.1 percentage point),
partially offset by increased promotional spending (approximately 1.0 percentage point), and the
impact of cost inflation and other factors (approximately 1.0 percentage point).
26
Table of Contents
Marketing and Selling Expenses
Marketing and selling expenses as a percent of sales were 13.4% in 2010 and 14.2% in 2009.
Marketing and selling expenses decreased 6% in 2010 from 2009. The decrease was primarily due to
lower advertising expenses (approximately 5 percentage points), and lower other marketing expenses
(approximately 3 percentage points), partially offset by the impact of currency (approximately 2
percentage points). The lower advertising expenses in the current year reflected a reduction in
media rates and a shift to trade promotion in many of the businesses.
Administrative Expenses
Administrative expenses as a percent of sales were 6.5% in 2010 and 6.4% in 2009.
Administrative expenses increased by 1% in 2010 from 2009, primarily due to an increase in benefit
costs, including pension expense (approximately 4 percentage points) and the impact of currency
(approximately 2 percentage points), offset by cost reduction efforts and lower incentive
compensation costs (approximately 4 percentage points).
Operating Earnings
Segment operating earnings increased 11% in 2010 from 2009.
An analysis of operating earnings by segment follows:
2010 | 2009(1) | % Change | ||||||||||
(Millions) | ||||||||||||
U.S. Soup, Sauces and Beverages |
$ | 590 | $ | 584 | 1 | % | ||||||
Baking and Snacking |
173 | 136 | 27 | |||||||||
International Soup, Sauces and Beverages |
118 | 88 | 34 | |||||||||
North America Foodservice |
43 | 21 | 105 | |||||||||
924 | 829 | 11 | % | |||||||||
Corporate |
(55 | ) | (75 | ) | ||||||||
$ | 869 | $ | 754 | |||||||||
(1) | Operating earnings by segment included the effect of restructuring-related costs of $2 million in Baking and Snacking and $13 million in North America Foodservice, and unrealized losses on commodity hedges of $26 million in Corporate. See Note 7 to the Consolidated Financial Statements for additional information on restructuring charges. |
Earnings from U.S. Soup, Sauces and Beverages increased 1% in 2010 versus 2009 due to lower
marketing expenses and an improvement in gross margin percentage, partially offset by lower sales.
Earnings from Baking and Snacking increased 27% in 2010 versus 2009. The prior year included
$2 million in costs related to the initiatives to improve operational efficiency and long-term
profitability. The increase in operating earnings was due to the impact of currency and margin
growth in Arnotts and Pepperidge Farm.
Earnings from International Soup, Sauces and Beverages increased 34% in 2010 versus 2009. The
increase in operating earnings was primarily due to the impact of currency and growth in the
businesses in Europe.
Earnings from North America Foodservice increased to $43 million in 2010 from $21 million in
2009. The prior year included $13 million in costs related to the initiatives to improve
operational efficiency and long-term profitability. The remaining increase in operating earnings
was primarily due to an improved gross margin percentage, reflecting productivity improvements,
including the benefits from closing the facility in Canada, and lower administrative costs.
Corporate expenses decreased from $75 million in 2009 to $55 million in 2010. The decrease
was primarily due to $26 million of unrealized losses on commodity hedges included in the prior
year, partially offset by higher employee benefit costs.
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Interest Expense/Income
Interest expense decreased to $55 million from $59 million in the prior year, primarily due to
lower average interest rates, partially offset by higher average debt levels.
Taxes on Earnings
The effective tax rate for the current period was 31.0%. The effective rate for the year-ago
period was 29.8%. The increase in the effective rate was primarily due to higher state taxes in
the U.S.
Restructuring Charges
On April 28, 2008, the company announced a series of initiatives to improve operational
efficiency and long-term profitability, including selling certain salty snack food brands and
assets in Australia, closing certain production facilities in Australia and Canada, and
streamlining the companys management structure. As a result of these initiatives, in 2008, the
company recorded a restructuring charge of $175 million ($102 million after tax or $.27 per share).
The charge consisted of a net loss of $120 million ($64 million after tax) on the sale of certain
Australian salty snack food brands and assets; $45 million ($31 million after tax) of employee
severance and benefit costs, including the estimated impact of curtailment and other pension
charges; and $10 million ($7 million after tax) of property, plant and equipment impairment
charges. In addition, approximately $7 million ($5 million after tax or $.01 per share) of costs
related to these initiatives were recorded in Cost of products sold, primarily representing
accelerated depreciation on property, plant and equipment. The aggregate after-tax impact of
restructuring charges and related costs in 2008 was $107 million, or $.28 per share. In 2009, the
company recorded approximately $22 million ($15 million after tax or $.04 per share) of costs
related to these initiatives in Cost of products sold. Approximately $17 million ($12 million
after tax) of the costs represented accelerated depreciation on property, plant and equipment;
approximately $4 million ($2 million after tax) related to other exit costs; and approximately $1
million related to employee severance and benefit costs, including other pension charges. Of the
amount recorded in 2009, costs of approximately $15 million ($10 million after tax or $.03 per
share) were recorded through the end of the second quarter. Approximately $13 million ($9 million
after tax) of the costs represented accelerated depreciation on property, plant and equipment and
approximately $2 million ($1 million after tax) related to other exit costs. The company expects
to incur additional pre-tax costs of approximately $12 million in benefit costs related to pension
charges in 2010.
In aggregate, the company incurred pre-tax costs of approximately $204 million in 2008 and in
2009 by segment as follows: Baking and Snacking $147 million, International Soup, Sauces and
Beverages $9 million and North America Foodservice $48 million. The additional pre-tax costs
of $12 million are expected to be incurred in the North America Foodservice segment for benefit
costs related to pension charges.
See Note 7 to the Consolidated Financial Statements for additional information.
LIQUIDITY AND CAPITAL RESOURCES
The company expects that foreseeable liquidity and capital resource requirements, including
cash outflows to repurchase shares, pay dividends and fund pension plan contributions, will be met
through anticipated cash flows from operations; long-term borrowings under its shelf registration
statement; short-term borrowings, including commercial paper; and cash and cash equivalents. The
company expects that its sources of financing are adequate to meet its future liquidity and capital
resource requirements. The cost and terms of any future financing arrangements may be negatively
impacted by capital and credit market disruptions and will depend on the market conditions and the
companys financial position at the time.
The company generated cash from operations of $496 million in 2010, compared to $418 million
last year. The increase was due to lower working capital requirements and higher earnings,
partially offset by a $260 million contribution to a U.S. pension plan.
Capital expenditures were $103 million in 2010 compared to $98 million a year ago. Capital
expenditures in 2010 included expansion and enhancements of the companys corporate headquarters
(approximately $11 million), expansion of Arnotts production capacity (approximately $10 million),
the ongoing implementation of SAP in Asia Pacific (approximately $8 million) and expansion of the
U.S. beverage production capacity (approximately $4 million). Capital expenditures are expected to
total approximately $350 million in 2010.
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Net cash provided by investing activities in 2009 included the proceeds from the sale of the
sauce and mayonnaise business in France, net of cash divested.
Excluding shares owned and tendered by employees to satisfy tax withholding requirements on
the vesting of restricted shares and for stock option exercises, the company repurchased 7 million
shares at a cost of $213 million during the six-month period in 2010 and 9 million shares at a cost
of $295 million during the six-month period in 2009. Approximately 3.6 million of the shares
repurchased in the current year and 6 million of the shares repurchased in the prior-year period
were repurchased pursuant to the companys June 2008 publicly announced share repurchase program.
Approximately $682 million remains available under the June 2008 repurchase program as of January
31, 2010. In addition to the June 2008 publicly announced share repurchase program, the company
also purchased shares to offset the impact of dilution from shares issued under the companys stock
compensation plans. The company expects to continue this practice in the future. See
Unregistered Sales of Equity Securities and Use of Proceeds for more information.
At January 31, 2010, the company had $400 million of short-term borrowings due within one year
and $27 million of standby letters of credit issued on behalf of the company. The company has a
$1.5 billion committed revolving credit facility maturing in 2011, which remained unused at January
31, 2010, except for $27 million of standby letters of credit issued on behalf of the company.
This agreement supports the companys commercial paper programs.
In November 2008, the company filed a registration statement with the Securities and Exchange
Commission that registered an indeterminate amount of debt securities. Under the registration
statement, the company may issue debt securities, depending on market conditions. During fiscal
2010, the company entered into forward starting interest rate swap contracts with a combined
notional value of $200 million to hedge an anticipated debt offering.
The company is in compliance with the covenants contained in its revolving credit facilities
and debt securities.
SIGNIFICANT ACCOUNTING ESTIMATES
The consolidated financial statements of the company are prepared in conformity with
accounting principles generally accepted in the United States. The preparation of these financial
statements requires the use of estimates, judgments and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial statements and reported amounts of
revenues and expenses during the periods presented. Actual results could differ from those
estimates and assumptions. The significant accounting policies of the company are described in Note
1 to the Consolidated Financial Statements. The significant accounting estimates are described in
Managements Discussion and Analysis included in the 2009 Annual Report on Form 10-K. The impact of
new accounting standards is discussed in the following section. There have been no other changes in
the companys accounting policies in the current period that had a material impact on the companys
consolidated financial condition or results of operation.
RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS
In addition to the guidance related to the calculation of earnings per share described in
Basis of Presentation and in Note 8 to the Consolidated Financial Statements, the following
accounting pronouncements were recently adopted:
In December 2007, the FASB issued authoritative guidance which establishes accounting and
reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of
a subsidiary. It requires a noncontrolling interest in a subsidiary, which was formerly known as
minority interest, to be classified as a separate component of total equity in the consolidated
financial statements. The company retrospectively adopted the new noncontrolling interest guidance
in the first quarter of fiscal 2010. The adoption did not have a material impact on the financial
statements. See Note 9 for additional information.
In December 2007, the FASB issued authoritative guidance for business combinations, which
establishes the principles and requirements for how an acquirer recognizes the assets acquired, the
liabilities assumed, and any noncontrolling interest in the acquiree at the acquisition date,
measured at their fair values as of that date with limited exceptions. The guidance requires
acquisition-related transaction costs to be expensed as incurred rather than capitalized as a
component of the business combination. The provisions as revised were effective as of the first
quarter of fiscal 2010 and will be applied to any business combinations entered into in fiscal 2010
and thereafter.
In September 2006, the FASB issued authoritative guidance for fair value measurements, which
establishes a definition of fair value, provides a framework for measuring fair value and expands
the disclosure requirements about fair value measurements. This
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guidance does not require any new fair value measurements but rather applies to all other
accounting pronouncements that require or permit fair value measurements. In February 2008, the
FASB issued authoritative guidance which delayed by a year the effective date for certain
nonfinancial assets and liabilities. The company adopted the provisions of the guidance for
financial assets and liabilities in the first quarter of fiscal 2009. The adoption did not have a
material impact on the consolidated financial statements. The company adopted the remaining
provisions in the first quarter of fiscal 2010 for nonfinancial assets and liabilities, including
goodwill and intangible assets. The adoption did not have a material impact on the consolidated
financial statements. See Note 12 for additional information.
In April 2009, the FASB issued authoritative guidance related to interim disclosures about
fair value of financial instruments. The company prospectively adopted the interim fair value
disclosure guidance in the first quarter of fiscal 2010. The adoption did not have a material
impact on the consolidated financial statements. The additional disclosures are included in Note
11.
In June 2009, the FASB Accounting Standards Codification (Codification) was issued to become
the source of authoritative U.S. generally accepted accounting principles (GAAP) to be applied by
nongovernmental entities and supersede all then-existing non-SEC accounting and reporting
standards. Rules and interpretive releases of the Securities and Exchange Commission (SEC) under
authority of federal securities laws are also sources of authoritative GAAP for SEC registrants.
All other nongrandfathered non-SEC accounting literature not included in the Codification will
become nonauthoritative. The Codification was effective for financial statements issued for
interim and annual periods ending after September 15, 2009. The company adopted the provisions in
the first quarter of 2010. The adoption did not impact the companys consolidated financial
statements.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In December 2008, the FASB issued additional authoritative guidance related to employers
disclosures about the plan assets of defined benefit pension or other postretirement plans. The
additional required disclosures include a description of how investment allocation decisions are
made, major categories of plan assets, valuation techniques used to measure the fair value of plan
assets, the impact of measurements using significant unobservable inputs and concentrations of risk
within plan assets. The disclosures about plan assets required by this additional guidance must be
provided for fiscal years ending after December 15, 2009 and will be effective for the company for
fiscal year-end 2010.
FORWARD-LOOKING STATEMENTS
This quarterly report contains certain statements that reflect the companys current
expectations regarding future results of operations, economic performance, financial condition and
achievements of the company. The company tries, wherever possible, to identify these
forward-looking statements by using words such as anticipate, believe, estimate, expect,
will and similar expressions. One can also identify them by the fact that they do not relate
strictly to historical or current facts. These statements reflect the companys current plans and
expectations and are based on information currently available to it. They rely on a number of
assumptions regarding future events and estimates which could be inaccurate and which are
inherently subject to risks and uncertainties.
The company wishes to caution the reader that the following important factors and those
important factors described in other Securities and Exchange Commission filings of the company, or
in the companys 2009 Annual Report on Form 10-K, could affect the companys actual results and
could cause such results to vary materially from those expressed in any forward-looking statements
made by, or on behalf of, the company:
| the impact of strong competitive response to the companys efforts to leverage its brand power with product innovation, promotional programs and new advertising, and of changes in consumer demand for the companys products; | ||
| the risks in the marketplace associated with trade and consumer acceptance of product improvements, shelving initiatives, new product introductions, and pricing and promotional strategies; | ||
| the companys ability to achieve sales and earnings guidance, which are based on assumptions about sales volume, product mix, the development and success of new products, the impact of marketing and pricing actions, product costs and currency; | ||
| the companys ability to realize projected cost savings and benefits, including those contemplated by restructuring programs and other cost-savings initiatives; |
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| the companys ability to manage changes to its business processes, including selling, distribution, product capacity, information management systems and the integration of acquisitions; | ||
| the increased significance of certain of the companys key trade customers; | ||
| the impact of inventory management practices by the companys trade customers; | ||
| the impact of fluctuations in the supply and inflation in energy, raw and packaging materials cost; | ||
| the risks associated with portfolio changes and completion of acquisitions and divestitures; | ||
| the uncertainties of litigation described from time to time in the companys Securities and Exchange Commission filings; | ||
| the impact of changes in currency exchange rates, tax rates, interest rates, debt and equity markets, inflation rates, economic conditions and other external factors; and | ||
| the impact of unforeseen business disruptions in one or more of the companys markets due to political instability, civil disobedience, armed hostilities, natural disasters or other calamities. |
This discussion of uncertainties is by no means exhaustive but is designed to highlight
important factors that may impact the companys outlook. The company disclaims any obligation or
intent to update forward-looking statements made by the company in order to reflect new
information, events or circumstances after the date they are made.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
For information regarding the companys exposure to certain market risk, see Item 7A,
Quantitative and Qualitative Disclosures About Market Risk, in the 2009 Annual Report on Form 10-K.
There have been no significant changes in the companys portfolio of financial instruments or
market risk exposures from the fiscal 2009 year-end, except that during fiscal 2010, the company
entered into four forward starting interest rate swap contracts accounted for as cash-flow hedges
to hedge interest-rate uncertainty related to an anticipated debt offering. The notional amount of
these swaps at January 31, 2010 was $200 million and the fair value was a net loss of $2 million.
Item 4. CONTROLS AND PROCEDURES
a. Evaluation of Disclosure Controls and Procedures
The company, under the supervision and with the participation of its management, including the
President and Chief Executive Officer and the Senior Vice President Chief Financial Officer and
Chief Administrative Officer, has evaluated the effectiveness of the companys disclosure controls
and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities
Exchange Act of 1934, as amended (the Exchange Act)) as of January 31, 2010 (the Evaluation
Date). Based on such evaluation, the President and Chief Executive Officer and the Senior Vice
President Chief Financial Officer and Chief Administrative Officer have concluded that, as of
the Evaluation Date, the companys disclosure controls and procedures are effective.
b. Changes in Internal Controls
During the quarter ended January 31, 2010, there were no changes in the companys internal
control over financial reporting that materially affected, or were reasonably likely to materially
affect, such internal control over financial reporting.
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Table of Contents
PART II
Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Issuer Purchases of Equity Securities
Approximate | ||||||||||||||||
Dollar Value of | ||||||||||||||||
Total Number of | Shares that may yet | |||||||||||||||
Shares Purchased | be Purchased | |||||||||||||||
Total Number | Average | as Part of Publicly | Under the Plans or | |||||||||||||
of Shares | Price Paid | Announced Plans or | Programs | |||||||||||||
Period | Purchased(1) | Per Share(2) | Programs(3) | ($ in Millions)(3) | ||||||||||||
11/2/09 11/30/09 |
1,063,735 | (4) | $ | 32.67 | (4) | 585,810 | $ | 732 | ||||||||
12/1/09 12/31/09 |
1,325,707 | (5) | $ | 34.64 | (5) | 767,920 | $ | 705 | ||||||||
1/1/10 1/31/10 |
1,179,264 | (6) | $ | 33.32 | (6) | 683,240 | $ | 682 | ||||||||
Total |
3,568,706 | $ | 33.62 | 2,036,970 | $ | 682 |
(1) | Includes (i) 1,527,030 shares repurchased in open-market transactions to offset the dilutive impact to existing shareowners of issuances under the companys stock compensation plans, and (ii) 4,706 shares owned and tendered by employees to satisfy tax withholding obligations on the vesting of restricted shares. Unless otherwise indicated, shares owned and tendered by employees to satisfy tax withholding obligations were purchased at the closing price of the companys shares on the date of vesting. | |
(2) | Average price paid per share is calculated on a settlement basis and excludes commission. | |
(3) | During the second quarter of fiscal 2010, the company had one publicly announced share repurchase program. Under this program, which was announced on June 30, 2008, the companys Board of Directors authorized the purchase of up to $1.2 billion of company stock through the end of fiscal 2011. In addition to the publicly announced share repurchase program, the company will continue to purchase shares, under separate authorization, as part of its practice of buying back shares sufficient to offset shares issued under incentive compensation plans. | |
(4) | Includes (i) 476,190 shares repurchased in open-market transactions at an average price of $32.66 to offset the dilutive impact to existing shareowners of issuances under the companys stock compensation plans, and (ii) 1,735 shares owned and tendered by employees at an average price per share of $34.56 to satisfy tax withholding requirements on the vesting of restricted shares. | |
(5) | Includes (i) 556,080 shares repurchased in open-market transactions at an average price of $34.64 to offset the dilutive impact to existing shareowners of issuances under the companys stock compensation plans, and (ii) 1,707 shares owned and tendered by employees at an average price per share of $35.06 to satisfy tax withholding requirements on the vesting of restricted shares. | |
(6) | Includes (i) 494,760 shares repurchased in open-market transactions at an average price of $33.32 to offset the dilutive impact to existing shareowners of issuances under the companys stock compensation plans, and (ii) 1,264 shares owned and tendered by employees at an average price per share of $33.65 to satisfy tax withholding requirements on the vesting of restricted shares. |
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Table of Contents
Item 5. OTHER INFORMATION
a. | The companys Annual Meeting of Shareowners was held on November 19, 2009. | ||
b. | The matters voted upon and the results of the vote are as follows: |
Election of Directors
Number of Shares | ||||||||
Name | For | Withheld | ||||||
Edmund M. Carpenter |
301,832,020 | 7,571,418 | ||||||
Paul R. Charron |
307,540,397 | 1,863,041 | ||||||
Douglas R. Conant |
307,201,942 | 2,201,496 | ||||||
Bennett Dorrance |
305,158,012 | 4,245,426 | ||||||
Harvey Golub |
305,724,891 | 3,678,547 | ||||||
Lawrence C. Karlson |
307,658,835 | 1,744,603 | ||||||
Randall W. Larrimore |
303,024,311 | 6,379,127 | ||||||
Mary Alice D. Malone |
305,345,713 | 4,057,725 | ||||||
Sara Mathew |
306,681,590 | 2,721,848 | ||||||
William D. Perez |
307,821,519 | 1,581,919 | ||||||
Charles R. Perrin |
306,655,113 | 2,748,325 | ||||||
A. Barry Rand |
306,605,947 | 2,797,491 | ||||||
Nick Shreiber |
307,802,830 | 1,600,608 | ||||||
Archbold D. van Beuren |
308,101,548 | 1,301,890 | ||||||
Les C. Vinney |
302,416,904 | 6,986,534 | ||||||
Charlotte C. Weber |
305,153,081 | 4,250,357 |
Ratification of Appointment of PricewaterhouseCoopers LLP as Independent Registered Public
Accounting Firm
Broker Non- | ||||||||||||||||
For | Against | Abstentions | Votes | |||||||||||||
Ratification of
PricewaterhouseCoopers
LLP |
306,783,888 | 2,265,467 | 354,083 | N/A |
Re-Approval of the Campbell Soup Company Annual Incentive Plan
Broker Non- | ||||||||||||||||
For | Against | Abstentions | Votes | |||||||||||||
Re-Approval of
Campbell Soup
Company Annual
Incentive Plan |
276,678,393 | 8,268,078 | 592,006 | 23,864,961 |
33
Table of Contents
Item 6. EXHIBITS
31(a)
|
Certification of Douglas R. Conant pursuant to Rule 13a-14(a). | |
31(b)
|
Certification of B. Craig Owens pursuant to Rule 13a-14(a). | |
32(a)
|
Certification of Douglas R. Conant pursuant to 18 U.S.C. Section 1350. | |
32(b)
|
Certification of B. Craig Owens pursuant to 18 U.S.C. Section 1350. | |
101.INS
|
XBRL Instance Document* | |
101.SCH
|
XBRL Schema Document* | |
101.CAL
|
XBRL Calculation Linkbase Document* | |
101.DEF
|
XBRL Definition Linkbase Document* | |
101.LAB
|
XBRL Label Linkbase Document* | |
101.PRE
|
XBRL Presentation Linkbase Document* |
* | In accordance with Regulation S-T, the XBRL-related information in Exhibit 101 to the Quarterly Report on Form 10-Q shall be deemed furnished and not filed. |
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Table of Contents
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Date: March 10, 2010
CAMPBELL SOUP COMPANY |
||||
By: | /s/ B. Craig Owens | |||
B. Craig Owens | ||||
Senior Vice President Chief Financial Officer and Chief Administrative Officer |
||||
By: | /s/ Ellen Oran Kaden | |||
Ellen Oran Kaden | ||||
Senior Vice President Law and Government Affairs |
35
Table of Contents
INDEX TO EXHIBITS
31(a)
|
Certification of Douglas R. Conant pursuant to Rule 13a-14(a). | |
31(b)
|
Certification of B. Craig Owens pursuant to Rule 13a-14(a). | |
32(a)
|
Certification of Douglas R. Conant pursuant to 18 U.S.C. Section 1350. | |
32(b)
|
Certification of B. Craig Owens pursuant to 18 U.S.C. Section 1350. | |
101.INS
|
XBRL Instance Document* | |
101.SCH
|
XBRL Schema Document* | |
101.CAL
|
XBRL Calculation Linkbase Document* | |
101.DEF
|
XBRL Definition Linkbase Document* | |
101.LAB
|
XBRL Label Linkbase Document* | |
101.PRE
|
XBRL Presentation Linkbase Document* |
* | In accordance with Regulation S-T, the XBRL-related information in Exhibit 101 to the Quarterly Report on Form 10-Q shall be deemed furnished and not filed. |
36