- Net Sales and Organic Sales Decreased 1
Percent
- Earnings Before Interest and Taxes
(EBIT) Increased 11 Percent, Adjusted EBIT Decreased 2 Percent
- Earnings Per Share (EPS) Decreased 2
Percent to $0.58, Adjusted EPS Decreased 9 Percent to $0.59
Reflecting Higher Adjusted Tax Rate
- Campbell Revises Fiscal 2017
Guidance
Campbell Soup Company (NYSE:CPB) today reported its
third-quarter results for fiscal 2017.
Three Months
Ended
Nine Months
Ended
($ in millions, except per share)
Apr.
30,2017
May
1,2016
%Change
Apr.
30,2017
May
1,2016
%Change
Net Sales
As Reported (GAAP)
$1,853 $1,870 (1)%
$6,226 $6,274
(1)% Organic (1)% (1)%
Earnings Before Interest and
Taxes
As Reported (GAAP)
$298 $268 11%
$960 $997 (4)%
Adjusted
$305 $312 (2)%
$1,210 $1,214 - %
Diluted Earnings Per Share
As Reported (GAAP)
$0.58 $0.59 (2)%
$1.85 $2.07 (11)%
Adjusted
$0.59 $0.65 (9)%
$2.51 $2.48 1%
Note: A detailed reconciliation of the reported (GAAP) financial
information to the adjusted financial information is included at
the end of this news release.
CEO Comments
Denise Morrison, Campbell’s President and Chief Executive
Officer, said, “While organic sales declined 1 percent in the
quarter, the team performed well in a difficult environment,
gaining market share in many of our categories and continuing to
execute our cost savings program.
“This was a challenging quarter across the food industry as
top-line growth remained scarce, especially in center store
categories. The industry, including Campbell, experienced
significant consumption declines early in the calendar year. These
industry trends coincided with weak consumer spending, which was at
its lowest growth rate since 2009. While we rebounded with sales
growth in March and April, we were unable to offset the earlier
declines.
“In this context, Campbell delivered competitive performance. A
bright spot in the quarter was our Global Biscuits and Snacks
division, which delivered top-line and double-digit bottom-line
growth. Looking ahead as we finish the fiscal year, we expect
Global Biscuits and Snacks to maintain its positive momentum, and
we will also be cycling the C-Fresh protein drink recall from last
year.
“We are adjusting our fiscal 2017 guidance, reflecting our
performance in the quarter, the difficult operating environment and
our outlook for the remainder of the year. We lowered our sales
outlook by one percentage point to a range of -1 to 0 percent. We
raised our expectations for adjusted EBIT and adjusted EPS,
increasing the low end of both ranges to 2 to 4 percent and 3 to 5
percent, respectively. Despite the challenges on the top line, we
expect that we will be able to offset the impact of lower sales
with our ongoing cost-savings efforts, which are ahead of our
expectations for the fiscal year.”
Items Impacting Comparability
The company reported earnings of $0.58 per share in the quarter.
The current-quarter results reflect pre-tax charges related to cost
savings initiatives of $7 million, or $0.01 per share. The
prior-year quarter included a pre-tax charge related to a pension
benefit mark-to-market adjustment of $54 million, or $0.11 per
share, and pre-tax charges related to cost savings initiatives of
$15 million, or $0.03 per share. The prior-year quarter also
included a gain from the settlement of a claim related to the
Kelsen acquisition of $25 million, or $0.08 per share. Excluding
items impacting comparability in both periods, adjusted EPS
decreased 9 percent to $0.59 per share, compared with $0.65 per
share in the year-ago quarter. A detailed reconciliation of the
reported (GAAP) financial information to the adjusted information
is included at the end of this news release.
Third-Quarter Results
Sales decreased 1 percent to $1.853 billion driven by a 1
percent decline in organic sales, reflecting higher promotional
spending, while volumes were comparable to the prior year. Organic
sales declines in Americas Simple Meals and Beverages and Campbell
Fresh were partly offset by gains in Global Biscuits and
Snacks.
Gross margin increased from 35.3 percent to 36.6 percent.
Excluding items impacting comparability in the prior year, adjusted
gross margin decreased 0.4 percentage points from 37.0 percent to
36.6 percent. The decrease in adjusted gross margin was primarily
driven by higher supply chain costs and inflation, including the
unfavorable impact of lapping gains on open commodity contracts in
the prior-year quarter, as well as higher promotional spending,
partly offset by productivity improvements and the benefits from
cost savings initiatives.
Marketing and selling expenses decreased 8 percent to $209
million. Excluding items impacting comparability in the prior year,
adjusted marketing and selling expenses decreased 5 percent
primarily due to lower advertising and consumer promotion expenses
and the benefits from cost savings initiatives. Administrative
expenses decreased 9 percent to $140 million. Excluding items
impacting comparability, adjusted administrative expenses increased
1 percent.
EBIT increased 11 percent to $298 million. Excluding items
impacting comparability, adjusted EBIT decreased 2 percent to $305
million reflecting a lower adjusted gross margin percentage and
lower sales, partly offset by lower marketing and selling
expenses.
Net interest expense was comparable to prior year at $28 million
reflecting lower levels of debt offset by higher average interest
rates on the debt portfolio. The tax rate increased to 34.8 percent
as compared with a tax rate of 22.9 percent in the prior year.
Excluding items impacting comparability, the adjusted tax rate
increased 6.5 percentage points to 35.0 percent driven by lower
taxes on foreign earnings in the prior year. In the fourth quarter
of fiscal 2016, a $13 million correction on deferred tax expense
was recognized, most of which related to the third quarter of
fiscal 2016.
Nine-Month Results
Sales decreased 1 percent to $6.226 billion driven by a 1
percent decline in organic sales, reflecting higher promotional
spending and lower volume.
EBIT decreased 4 percent to $960 million. Excluding items
impacting comparability, adjusted EBIT was comparable to the prior
year at $1.210 billion reflecting a higher adjusted gross margin
percentage offset by lower sales volume and higher marketing and
selling expenses.
Net interest expense increased 1 percent to $84 million
reflecting higher average interest rates on the debt portfolio,
partly offset by lower levels of debt. The tax rate increased 5.5
percentage points to 35.0 percent. Excluding items impacting
comparability, the adjusted tax rate decreased 0.5 percentage
points to 31.3 percent.
Cash flow from operations was $1.011 billion compared to $1.211
billion in the prior year, which benefited from significant
reductions in working capital.
Fiscal 2017 Guidance
Campbell has revised its fiscal 2017 guidance. Campbell now
expects sales to change by -1 to 0 percent (previously 0 to 1
percent); adjusted EBIT to increase by 2 to 4 percent (previously 1
to 4 percent), and adjusted EPS to increase by 3 to 5 percent
(previously 2 to 5 percent), or $3.04 to $3.09 per share. This
guidance assumes the impact from currency translation will be
nominal. A non-GAAP reconciliation is not provided for 2017
guidance since certain items are not estimable, such as pension and
postretirement mark-to-market adjustments, and these items are not
considered to be part of the company's ongoing business
results.
Segment Operating Review
An analysis of net sales and operating earnings by reportable
segment follows:
Three Months
Ended Apr. 30, 2017
($ in millions)
AmericasSimple Mealsand
Beverages
Global Biscuitsand
Snacks
Campbell
Fresh
Total Net Sales, as Reported $982 $623 $248 $1,853
Volume and Mix -% 3% (6)% -% Promotional Spending (2)% (1)% -% (1)%
Organic Net Sales (2)% 2% (6)% (1)% Currency -% -% -% -% % Change
vs. Prior Year (2)% 2% (6)% (1)% Segment Operating Earnings $226
$98 $1 % Change vs. Prior Year -% 14% n/m n/m – not
meaningful Note: A detailed reconciliation of the reported (GAAP)
net sales to organic net sales is included at the end of this news
release.
Nine Months Ended
Apr. 30, 2017
($ in millions)
AmericasSimple Mealsand
Beverages
Global Biscuitsand
Snacks
CampbellFresh
Total Net Sales, as Reported $3,510 $1,974 $742
$6,226
Volume and Mix -% 1% (7)% (1)% Promotional Spending (1)% (1)% -%
(1)% Organic Net Sales (1)% -% (7)% (1)%* Currency -% 1% -% -% %
Change vs. Prior Year (1)% 2%* (7)% (1)% Segment Operating Earnings
$922 $345 $(1) % Change vs. Prior Year 5% 1% n/m n/m – not
meaningful * Numbers do not add due to rounding. Note: A detailed
reconciliation of the reported (GAAP) net sales to organic net
sales is included at the end of this news release.
Americas Simple Meals and
Beverages
Sales in the quarter decreased 2 percent to $982 million driven
by declines in soup and V8 beverages, partly offset by gains in
Prego pasta sauces. Sales of U.S. soup decreased 4 percent driven
by declines in condensed soups and broth, partly offset by gains in
ready-to-serve soups. For the first nine months of fiscal 2017,
sales of U.S. soup decreased 1 percent.
Segment operating earnings for the quarter were comparable to
prior year at $226 million, as a higher gross margin percentage was
offset by lower sales volume.
Global Biscuits and Snacks
Sales in the quarter increased 2 percent to $623 million driven
by gains in Pepperidge Farm, as well as gains in Arnott’s biscuits
in both Australia and Indonesia. Pepperidge Farm sales increased
due to gains in Goldfish crackers and Pepperidge Farm cookies,
partly offset by declines in fresh bakery and frozen products.
Segment operating earnings increased 14 percent to $98 million.
The increase was primarily driven by higher sales volume and lower
advertising and consumer promotion expenses.
Campbell Fresh
Sales in the quarter decreased 6 percent to $248 million driven
by lower sales of Bolthouse Farms refrigerated beverages.
Segment operating earnings decreased from $13 million to $1
million driven by unfavorable sales volume and mix, as well as the
cost impact of both reduced beverage capacity and enhanced quality
processes.
Unallocated Corporate Expenses
Unallocated corporate expenses for the quarter were $27 million
compared to $54 million in the prior year. The current quarter
included $7 million of charges associated with cost savings
initiatives. The prior-year quarter included $54 million of charges
related to a pension benefit mark-to-market adjustment and $13
million of charges associated with cost savings initiatives. The
prior-year quarter also included a $25 million gain from the
settlement of a claim related to the Kelsen acquisition. The
remaining increase in expenses reflects the unfavorable impact of
lapping gains on open commodity contracts in the prior-year
quarter, partly offset by lower postretirement benefit costs.
Conference Call
Campbell will host a conference call to discuss these results
today at 8:30 a.m. Eastern Daylight Time. To join, dial +1 (703)
639-1316. The conference ID is 6692640. Access to a live webcast of
the call with accompanying slides, as well as a replay of the call,
will be available at investor.campbellsoupcompany.com. A recording
of the call will also be available until midnight on June 2, 2017,
at +1 (404) 537-3406. The access code for the replay is
6692640.
About Campbell Soup Company
Campbell (NYSE:CPB) is driven and inspired by our Purpose, “Real
food that matters for life’s moments.” We make a range of
high-quality soups and simple meals, beverages, snacks and packaged
fresh foods. For generations, people have trusted Campbell to
provide authentic, flavorful and readily available foods and
beverages that connect them to each other, to warm memories and to
what’s important today. Led by our iconic Campbell’s brand, our
portfolio includes Pepperidge Farm, Bolthouse Farms, Arnott’s, V8,
Swanson, Pace, Prego, Plum, Royal Dansk, Kjeldsens and Garden Fresh
Gourmet. Founded in 1869, Campbell has a heritage of giving back
and acting as a good steward of the planet’s natural resources. The
company is a member of the Standard & Poor’s 500 and the Dow
Jones Sustainability Indexes. For more information, visit
www.campbellsoupcompany.com or follow company news on Twitter via
@CampbellSoupCo. To learn more about how we make our food and the
choices behind the ingredients we use, visit
www.whatsinmyfood.com.
Forward-Looking Statements
This release contains “forward-looking statements” that reflect
the company’s current expectations about the impact of its future
plans and performance on the company’s business or financial
results. These forward-looking statements, including the statements
made regarding sales, EBIT and EPS guidance for fiscal 2017, rely
on a number of assumptions and estimates that could be inaccurate
and which are subject to risks and uncertainties. The factors that
could cause the company’s actual results to vary materially from
those anticipated or expressed in any forward-looking statement
include (1) the company’s ability to manage changes to its
organizational structure and/or business processes; (2) the
company’s ability to realize projected cost savings and benefits
from its efficiency programs; (3) the impact of strong competitive
responses to the company’s efforts to leverage its brand power in
the market; (4) the impact of changes in consumer demand for the
company’s products and favorable perception of the company’s
brands; (5) the impact of product quality and safety issues,
including recalls and product liabilities; (6) the risks associated
with trade and consumer acceptance of the company’s initiatives,
including its trade and promotional programs; (7) the practices,
including changes to inventory practices, and increased
significance of certain of the company’s key trade customers; (8)
the impact of disruptions to the company’s supply chain, including
fluctuations in the supply or costs of energy and raw and packaging
materials; (9) the impact of non-U.S. operations, including trade
restrictions, public corruption and compliance with foreign laws
and regulations; (10) the impact of business portfolio changes;
(11) the uncertainties of litigation and regulatory actions against
the company; (12) disruption to the independent contractor
distribution models used by certain of the company’s businesses,
including the results of litigation or regulatory actions that
could affect their independent contractor classification; (13) the
company’s ability to protect its intellectual property rights; (14)
the impact of an impairment to goodwill or other intangible assets;
(15) the impact of increased liabilities and costs related to the
company’s defined benefit pension plans; (16) the impact of a
material failure in or breach of the company’s information
technology systems; (17) the company’s ability to attract and
retain key talent; (18) the impact of changes in currency exchange
rates, tax rates, interest rates, debt and equity markets,
inflation rates, economic conditions, law, regulation and other
external factors; (19) the impact of unforeseen business
disruptions in one or more of the company’s markets due to
political instability, civil disobedience, terrorism, armed
hostilities, natural disasters or other calamities; and (20) other
factors described in the company’s most recent Form 10-K and
subsequent Securities and Exchange Commission filings. The company
disclaims any obligation or intent to update the forward-looking
statements in order to reflect events or circumstances after the
date of this release.
CAMPBELL SOUP COMPANY CONSOLIDATED STATEMENTS OF EARNINGS
(unaudited) (millions, except per share amounts)
Three
Months Ended April 30, 2017 May 1, 2016 Net sales
$ 1,853 $ 1,870 Costs and expenses Cost
of products sold
1,175 1,210 Marketing and selling expenses
209 228 Administrative expenses
140 154 Research and
development expenses
27 31 Other expenses / (income)
4 (23 ) Restructuring charges
— 2 Total
costs and expenses
1,555 1,602 Earnings before
interest and taxes
298 268 Interest, net
28 28
Earnings before taxes
270 240 Taxes on earnings
94 55 Net earnings
176 185 Net loss
attributable to noncontrolling interests
— —
Net earnings attributable to Campbell Soup Company
$
176 $ 185 Per share - basic Net earnings
attributable to Campbell Soup Company
$ .58 $
.60 Dividends
$ .35 $ .312
Weighted average shares outstanding - basic
304 309
Per share - assuming dilution Net earnings attributable to
Campbell Soup Company
$ .58 $ .59
Weighted average shares outstanding - assuming dilution
306
311 CAMPBELL SOUP COMPANY CONSOLIDATED
STATEMENTS OF EARNINGS (unaudited) (millions, except per share
amounts)
Nine Months Ended April 30, 2017
May 1, 2016 Net sales
$ 6,226 $ 6,274
Costs and expenses Cost of products sold
3,882 4,040
Marketing and selling expenses
674 677 Administrative
expenses
402 456 Research and development expenses
78
86 Other expenses / (income)
230 (14 ) Restructuring charges
— 32 Total costs and expenses
5,266
5,277 Earnings before interest and taxes
960
997 Interest, net
84 83 Earnings before taxes
876 914 Taxes on earnings
307 270 Net
earnings
569 644 Net loss attributable to noncontrolling
interests
— — Net earnings attributable to
Campbell Soup Company
$ 569 $ 644 Per
share - basic Net earnings attributable to Campbell Soup Company
$ 1.86 $ 2.08 Dividends
$
1.05 $ .936 Weighted average shares
outstanding - basic
306 309 Per share -
assuming dilution Net earnings attributable to Campbell Soup
Company
$ 1.85 $ 2.07 Weighted average
shares outstanding - assuming dilution
308 311
CAMPBELL SOUP COMPANY CONSOLIDATED SUPPLEMENTAL
SCHEDULE OF SALES AND EARNINGS (unaudited) (millions, except per
share amounts)
Three Months Ended April 30,
2017 May 1, 2016
PercentChange
Sales
Contributions: Americas Simple Meals and Beverages
$
982 $ 999 (2)% Global Biscuits and Snacks
623 608 2%
Campbell Fresh
248 263 (6)% Total sales
$ 1,853 $ 1,870 (1)%
Earnings
Contributions: Americas Simple Meals and Beverages
$
226 $ 225 —% Global Biscuits and Snacks
98 86 14%
Campbell Fresh
1 13 NM Total operating
earnings
325 324 —% Unallocated corporate expenses
27
54 Restructuring charges
— 2 Earnings before
interest and taxes
298 268 11% Interest, net
28 28
Taxes on earnings
94 55 Net earnings
176 185 (5)% Net loss attributable to noncontrolling
interests
— — Net earnings attributable to
Campbell Soup Company
$ 176 $ 185 (5)%
Per share - assuming dilution Net earnings attributable to Campbell
Soup Company
$ .58 $ .59 (2)%
CAMPBELL SOUP COMPANY CONSOLIDATED SUPPLEMENTAL SCHEDULE OF
SALES AND EARNINGS (unaudited) (millions, except per share amounts)
Nine Months Ended April 30, 2017
May 1, 2016
PercentChange
Sales
Contributions: Americas Simple Meals and Beverages
$
3,510 $ 3,538 (1)% Global Biscuits and Snacks
1,974
1,942 2% Campbell Fresh
742 794 (7)% Total
sales
$ 6,226 $ 6,274 (1)%
Earnings
Contributions: Americas Simple Meals and Beverages
$
922 $ 878 5% Global Biscuits and Snacks
345 341 1%
Campbell Fresh
(1 ) 52 NM Total operating
earnings
1,266 1,271 —% Unallocated corporate expenses
306 242 Restructuring charges
— 32
Earnings before interest and taxes
960 997 (4)% Interest,
net
84 83 Taxes on earnings
307 270 Net
earnings
569 644 (12)% Net loss attributable to
noncontrolling interests
— — Net earnings
attributable to Campbell Soup Company
$ 569 $
644 (12)% Per share - assuming dilution Net earnings
attributable to Campbell Soup Company
$ 1.85 $
2.07 (11)% CAMPBELL SOUP
COMPANY CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
(millions)
April 30, 2017 May 1, 2016 Current assets
$ 1,790 $ 2,042 Plant assets, net
2,372 2,371
Intangible assets, net
3,170 3,574 Other assets
119
82 Total assets
$ 7,451 $ 8,069 Current
liabilities
$ 2,352 $ 2,377 Long-term debt
2,270 2,540 Other liabilities
1,339 1,478 Total
equity
1,490 1,674 Total liabilities and equity
$ 7,451 $ 8,069 Total debt
$
3,392 $ 3,674 Cash and cash equivalents
$
313 $ 383 Certain amounts in the prior year
were reclassified to conform to the current-year presentation.
CAMPBELL SOUP COMPANY CONSOLIDATED STATEMENTS
OF CASH FLOWS (unaudited) (millions)
Nine Months
Ended April 30, 2017 May 1, 2016 Cash
flows from operating activities: Net earnings
$ 569 $
644 Adjustments to reconcile net earnings to operating cash flow
Impairment charges
212 — Restructuring charges
— 32
Stock-based compensation
48 50 Pension and postretirement
benefit expense (income)
(35 ) 167 Depreciation and
amortization
234 228 Deferred income taxes
11 4
Other, net
15 2 Changes in working capital Accounts
receivable
1 5 Inventories
144 172 Prepaid assets
(20 ) 7 Accounts payable and accrued liabilities
(116 ) (59 ) Receipts from hedging activities
1 5 Other
(53 ) (46 ) Net cash
provided by operating activities
1,011
1,211 Cash flows from investing activities: Purchases of
plant assets
(195 ) (225 ) Sales of plant assets
— 5 Other, net
(14 ) (14 ) Net
cash used in investing activities
(209 )
(234 ) Cash flows from financing activities: Net short-term
repayments
(66 ) (425 ) Long-term repayments
(76 ) — Dividends paid
(314 ) (294 )
Treasury stock purchases
(305 ) (118 ) Treasury stock
issuances
2 2 Payments related to tax withholding for
stock-based compensation
(21 ) (21 )
Net cash used in financing activities
(780 )
(856 ) Effect of exchange rate changes on cash
(5 ) 9 Net change in cash and cash
equivalents
17 130 Cash and cash equivalents — beginning of
period
296 253 Cash and cash
equivalents — end of period
$ 313 $ 383
The company adopted new accounting guidance for stock-based
compensation in the first quarter of 2017. Certain amounts in the
prior year were reclassified to conform to the current-year
presentation.
Reconciliation of GAAP to Non-GAAP
Financial Measures
Third Quarter Ended April 30,
2017
Campbell Soup Company uses certain non-GAAP financial
measures as defined by the Securities and Exchange Commission in
certain communications. These non-GAAP financial measures are
measures of performance not defined by accounting principles
generally accepted in the United States and should be considered in
addition to, not in lieu of, GAAP reported measures. Management
believes that also presenting certain non-GAAP financial measures
provides additional information to facilitate comparison of the
company's historical operating results and trends in its underlying
operating results, and provides transparency on how the company
evaluates its business. Management uses these non-GAAP financial
measures in making financial, operating and planning decisions and
in evaluating the company's performance.
Organic Net
Sales
Organic net sales are net sales excluding the impact of
currency. Management believes that excluding this item, which is
not part of the ongoing business, improves the comparability of
year-to-year results. A reconciliation of net sales as reported to
organic net sales follows.
Three Months Ended
April 30, 2017 May 1, 2016
% Change (millions)
Net
Sales,asReported
Impact ofCurrency
OrganicNet Sales
Net
Sales,asReported
Net
Sales,asReported
OrganicNet Sales
Americas Simple Meals and Beverages $ 982
$ 1 $ 983 $ 999 (2 )%
(2 )%
Global Biscuits and Snacks 623 (2
) 621 608 2 % 2 %
Campbell Fresh
248 — 248
263 (6 )% (6 )%
Total Net Sales $
1,853 $ (1 ) $
1,852 $ 1,870 (1 )% (1 )%
Nine
Months Ended April 30, 2017 May 1, 2016 %
Change (millions)
Net
Sales,asReported
Impact ofCurrency
OrganicNet Sales
Net
Sales,asReported
Net
Sales,asReported
OrganicNet Sales
Americas Simple Meals and Beverages $ 3,510
$ (2 ) $ 3,508 $ 3,538 (1 )% (1
)%
Global Biscuits and Snacks 1,974 (23
) 1,951 1,942 2 % — %
Campbell Fresh
742 — 742
794 (7 )% (7 )%
Total Net Sales $
6,226 $ (25 ) $
6,201 $ 6,274 (1 )% (1 )%
Items Impacting
Gross Margin, Costs and Expenses, and Earnings
The company believes that financial information excluding
certain items that are not considered to be part of the ongoing
business, such as those listed below, improves the comparability of
year-to-year results. Consequently, the company believes that
investors may be able to better understand its results excluding
these items. The following items impacted gross margin,
costs and expenses, and earnings: (1) In the
first quarter of fiscal 2017, the company incurred losses of $20
million in Costs and expenses ($13 million after tax, or $.04 per
share) associated with mark-to-market adjustments for defined
benefit pension and postretirement plans. In the third quarter of
fiscal 2016, the company incurred losses of $54 million in Costs
and expenses ($34 million after tax, or $.11 per share) associated
with mark-to-market adjustments for defined benefit pension and
postretirement plans. In the nine-month period of fiscal 2016, the
company incurred losses of $175 million in Costs and expenses ($110
million after tax, or $.35 per share) associated with
mark-to-market adjustments for defined benefit pension and
postretirement plans. For the year ended July 31, 2016, the company
incurred losses of $313 million in Costs and expenses ($200 million
after tax, or $.64 per share) associated with mark-to-market
adjustments for defined benefit pension and postretirement plans.
(2) In fiscal 2015, the company implemented a new enterprise
design and initiatives to reduce costs and to streamline its
organizational structure. In the third quarter of fiscal 2017, the
company recorded implementation costs and other related costs of $7
million in Administrative expenses ($4 million after tax, or $.01
per share) related to these initiatives. In the nine-month period
of fiscal 2017, the company recorded implementation costs and other
related costs of $18 million in Administrative expenses ($11
million after tax, or $.04 per share) related to these initiatives.
In the third quarter of fiscal 2016, the company recorded
Restructuring charges of $2 million and implementation costs and
other related costs of $13 million in Administrative expenses
related to the fiscal 2015 initiatives (aggregate impact of $9
million after tax, or $.03 per share). In the nine-month period of
fiscal 2016, the company recorded Restructuring charges of $35
million and implementation costs and other related costs of $35
million recorded in Administrative expenses related to the fiscal
2015 initiatives. The company also recorded a reduction to
Restructuring charges of $3 million related to the fiscal 2014
initiative to improve supply chain efficiency in Australia. The
aggregate after-tax impact of Restructuring charges, implementation
costs and other related costs was $42 million, or $.14 per share.
For the year ended July 31, 2016, the company recorded
Restructuring charges of $35 million and implementation costs and
other related costs of $47 million in Administrative expenses
related to the fiscal 2015 initiatives. The company also recorded a
reduction to Restructuring charges of $4 million related to the
fiscal 2014 initiatives. The aggregate after-tax impact of
Restructuring charges, implementation costs and other related costs
was $49 million, or $.16 per share. (3) In the second
quarter of fiscal 2017, the company performed an interim impairment
assessment on the intangible assets of the Bolthouse Farms carrot
and carrot ingredients reporting unit and the Garden Fresh Gourmet
reporting unit as operating performance was well below expectations
and a new leadership team of the Campbell Fresh division initiated
a strategic review which led to a revised outlook for future sales,
earnings, and cash flow. The company recorded a non-cash impairment
charge of $147 million ($139 million after tax, or $.45 per share)
related to intangible assets of the Bolthouse Farms carrot and
carrot ingredients reporting unit and a non-cash impairment charge
of $65 million ($41 million after tax, or $.13 per share) related
to the intangible assets of the Garden Fresh Gourmet reporting unit
(aggregate pre-tax impact of $212 million, $180 million after tax,
or $.58 per share). The charges are included in Other expenses /
(income). For the year ended July 31, 2016, as part of the
annual review of intangible assets, the company recorded a non-cash
impairment charge of $141 million in Other expenses / (income)
($127 million after tax, or $.41 per share) related to the
intangible assets of the Bolthouse Farms carrot and carrot
ingredients reporting unit. (4) In the third quarter of
fiscal 2016, the company recorded a gain of $25 million in Other
expenses / (income) ($.08 per share) from a settlement of a claim
related to the Kelsen acquisition. The following tables
reconcile financial information, presented in accordance with GAAP,
to financial information excluding certain items:
Three Months Ended April 30, 2017 May 1,
2016 (millions, except per share amounts)
Asreported
Adjustments(a) Adjusted
Asreported
Adjustments(a) Adjusted
AdjustedPercentChange
Gross margin
$ 678 $ — $
678 $ 660 $ 32 $ 692 (2 )% Gross margin percentage
36.6 % 36.6 % 35.3 % 37.0 % Marketing
and selling expenses
209 — 209 228 (9 ) 219
Administrative expenses
140 (7 ) 133
154 (22 ) 132 Research and development expenses
27 —
27 31 (4 ) 27 Other expenses / (income)
4 —
4 (23 ) 25 2 Restructuring charges
— —
— 2 (2 ) — Earnings before
interest and taxes
$ 298 $ 7
$ 305 $ 268 $ 44 $ 312
(2 )% Interest, net
28 —
28 28 — 28 Earnings before taxes
$ 270 $ 7 $
277 $ 240 $ 44 $ 284 Taxes
94 3 97 55 26 81 Effective income tax rate
34.8 % 35.0 % 22.9 % 28.5
% Net earnings attributable to Campbell Soup Company
$
176 $ 4 $ 180
$ 185 $ 18 $ 203 (11 )% Diluted net
earnings per share attributable to Campbell Soup Company
$
.58 $ .01 $ .59
$ .59 $ .06 $ .65 (9 )% (a)See
following table for additional information.
Three Months
Ended April 30, 2017 May 1, 2016
(millions, except per share amounts)
Restructuring
charges,implementation costsand other related
costs(2)
Mark-to-market
(1)
Restructuring
charges,implementation costsand other related
costs
(2)
ClaimSettlement (4)
Adjustments Gross margin
$ — $ 32 $ — $
— $ 32 Marketing and selling expenses
— (9 ) — — (9 )
Administrative expenses
(7 ) (9 ) (13 ) — (22 )
Research and development expenses
— (4 ) — — (4 ) Other
expenses / (income)
— — — 25 25 Restructuring charges
— — (2 ) — (2 ) Earnings before
interest and taxes
$ 7 $ 54 $ 15
$ (25 ) $ 44 Interest, net
— — —
— — Earnings before taxes
$ 7 $
54 $ 15 $ (25 ) $ 44 Taxes
3 20
6 — 26 Net earnings attributable to
Campbell Soup Company
$ 4 $ 34 $ 9
$ (25 ) $ 18 Diluted net earnings per share
attributable to Campbell Soup Company
$ .01 $
.11 $ .03 $ (.08 ) $ .06
Nine
Months Ended April 30, 2017 May 1, 2016
(millions, except per share amounts)
Asreported
Adjustments(a) Adjusted
Asreported
Adjustments(a) Adjusted
AdjustedPercentChange
Gross margin
$ 2,344 $ 20 $
2,364 $ 2,234 $ 113 $ 2,347 1 % Gross margin percentage
37.6 % 38.0 % 35.6 % 37.4 % Marketing
and selling expenses
674 — 674 677 (26 ) 651
Administrative expenses
402 (18 ) 384
456 (61 ) 395 Research and development expenses
78 —
78 86 (10 ) 76 Other expenses / (income)
230
(212 ) 18 (14 ) 25 11 Restructuring charges
— — — 32 (32 ) —
Earnings before interest and taxes
$ 960
$ 250 $ 1,210 $
997 $ 217 $ 1,214 — % Interest, net
84
— 84 83 — 83
Earnings before taxes
$ 876 $
250 $ 1,126 $ 914 $ 217
$ 1,131 Taxes
307 46 353 270 90
360 Effective income tax rate
35.0 %
31.3 % 29.5 % 31.8 % Net earnings attributable
to Campbell Soup Company
$ 569 $
204 $ 773 $ 644 $ 127
$ 771 — % Diluted net earnings per share attributable
to Campbell Soup Company
$ 1.85 $
.66 $ 2.51 $ 2.07 $ .41
$ 2.48 1 % (a)See following table for additional
information.
Nine Months Ended April 30, 2017
May 1, 2016 (millions, except per share amounts)
Mark-to-market
(1)
Restructuringcharges,implementationcosts
and otherrelated costs
(2)
Impairmentcharges
(3)
Adjustments
Mark-to-market
(1)
Restructuringcharges,implementationcosts
and otherrelated costs
(2)
ClaimSettlement (4)
Adjustments Gross margin
$ 20 $
— $ — $ 20 $ 113 $ — $ — $ 113
Marketing and selling expenses
— — — —
(26 ) — — (26 ) Administrative expenses
— (18
) — (18 ) (26 ) (35 ) — (61 ) Research
and development expenses
— — — — (10 )
— — (10 ) Other expenses / (income)
— — (212
) (212 ) — — 25 25 Restructuring charges
— — — — —
(32 ) — (32 ) Earnings before interest and taxes
$ 20 $ 18 $
212 $ 250 $ 175 $ 67
$ (25 ) $ 217 Interest, net
— —
$ — — — — —
— Earnings before taxes
$ 20
$ 18 $ 212 $
250 $ 175 $ 67 $ (25 ) $ 217
Taxes
7 7 32 46
65 25 — 90 Net earnings
attributable to Campbell Soup Company
$ 13
$ 11 $ 180 $
204 $ 110 $ 42 $ (25 ) $ 127
Diluted net earnings per share attributable to Campbell Soup
Company
$ .04 $ .04
$ .58 $ .66 $ .35
$ .14 $ (.08 ) $ .41
Year Ended
(millions, except per share amounts)
July 31, 2016 Gross
margin, as reported $ 2,780 Add: Pension and
postretirement benefit mark-to-market adjustments (1)
176
Adjusted Gross margin $ 2,956
Adjusted Gross margin percentage 37.1 %
Earnings before interest and taxes, as reported $
960 Add: Total pension and postretirement benefit
mark-to-market adjustments (1)
313 Add: Restructuring
charges, implementation costs and other related costs (2)
78
Add: Impairment charges (3)
141 Deduct: Claim settlement (4)
(25 ) Adjusted Earnings before interest and
taxes $ 1,467 Interest, net, as
reported $ 111 Adjusted Earnings before
taxes $ 1,356 Taxes on earnings, as
reported $ 286 Add: Tax benefit from total
pension and postretirement benefit mark-to-market adjustments (1)
113 Add: Tax benefit from restructuring charges,
implementation costs and other related costs (2)
29 Add: Tax
benefit from impairment charges (3)
14 Adjusted
Taxes on earnings $ 442 Adjusted
effective income tax rate 32.6 % Net earnings
attributable to Campbell Soup Company, as reported $
563 Add: Net adjustment from total pension and
postretirement benefit mark-to-market adjustments (1)
200
Add: Net adjustment from restructuring charges, implementation
costs and other related costs (2)
49 Add: Net adjustment
from impairment charges (3)
127 Deduct: Claim settlement (4)
(25 ) Adjusted Net earnings attributable to
Campbell Soup Company $ 914 Diluted net
earnings per share attributable to Campbell Soup Company, as
reported $ 1.81 Add: Net adjustment from total
pension and postretirement benefit mark-to-market adjustments (1)
.64 Add: Net adjustment from restructuring charges,
implementation costs and other related costs (2)
.16 Add:
Net adjustment from impairment charges (3)
.41 Deduct: Claim
Settlement (4)
(.08 ) Adjusted Diluted net
earnings per share attributable to Campbell Soup Company
$ 2.94
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170519005247/en/
Campbell Soup CompanyINVESTOR
CONTACT:Ken Gosnell,
856-342-6081ken_gosnell@campbellsoup.comorMEDIA CONTACT:Carla Burigatto,
856-342-3737carla_burigatto@campbellsoup.com
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