- Fourth-Quarter Net Sales and Organic
Sales Decreased 1 Percent
- Fourth-Quarter Earnings Per Share (EPS)
of $1.04; Adjusted EPS Increased 13 Percent to $0.52
- Full-Year Net Sales and Organic Sales
Decreased 1 Percent
- Full-Year EPS of $2.89; Adjusted EPS
Increased 3 Percent to $3.04
- Campbell Provides Fiscal 2018
Guidance
Campbell Soup Company (NYSE:CPB) today reported its
fourth-quarter and full-year results for fiscal 2017.
Three Months
Ended
Twelve Months
Ended
($ in millions, except per share)
July
30,2017
July
31,2016
%
Change
July
30,2017
July
31,2016
%
Change
Net Sales As Reported (GAAP)
$1,664 $1,687 (1)%
$7,890 $7,961 (1)% Organic (1)% (1)%
Earnings (Loss)
Before Interest and Taxes As Reported (GAAP)
$440 $(37)
n/m
$1,400 $960 46% Adjusted
$282 $253 11%
$1,492 $1,467 2%
Diluted Earnings (Loss) Per Share As
Reported (GAAP)
$1.04 $(0.26) n/m
$2.89 $1.81 60%
Adjusted
$0.52 $0.46 13%
$3.04 $2.94 3%
n/m – not meaningful
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, “The operating environment for the packaged foods
industry remains challenging due to shifting demographics, changing
consumer preferences for food, the adoption of new shopping
behaviors and the dynamic retailer landscape. In these times, sales
growth remains a challenge. Despite multiple headwinds, we finished
the year within our guidance and delivered another year of growth
in adjusted EBIT and adjusted EPS.
“In the fourth quarter, Global Biscuits and Snacks was soft on
the top line but generated a solid double-digit earnings increase
versus the year-ago quarter. Americas Simple Meals and Beverages
continued to deliver against its portfolio role, with sales
performance in line with the categories in which we compete and
margin expansion. While Campbell Fresh sales increased slightly and
the bottom line was disappointing, we expect to return to
profitable growth going forward.
“In fiscal 2017, we have made progress in several key areas,
including increasing our successful multi-year cost savings
initiative to $450 million by the end of fiscal 2020. The pending
acquisition of Pacific Foods will add a purpose-driven, real food
brand with a solid track record of growth to our portfolio.
Additionally, our new Campbell Fresh leadership team has taken
steps to enhance our quality processes and address capacity
constraints toward our objective of returning the division to
growth.”
Morrison concluded, “Looking ahead to fiscal 2018, we expect the
operating environment to remain difficult. We will continue to
position Campbell for long-term growth by managing costs
aggressively and re-investing a portion of those savings back in
the business with a focus on our strategic imperatives of real
food, digital and e-commerce, health and well-being, and
snacking.”
Fiscal 2018 Guidance
Campbell expects sales to change by -2 to 0 percent, adjusted
earnings before interest and taxes (EBIT) to change by -1 to 1
percent, and adjusted EPS to change by 0 to 2 percent, or $3.04 to
$3.11 per share. This guidance assumes the impact from currency
translation will be nominal. A non-GAAP reconciliation is not
provided for 2018 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.
Items Impacting Comparability in the Quarter
Items impacting comparability in the quarter are as follows:
- The current quarter included pre-tax
pension and postretirement mark-to-market gains of $198 million, or
$0.42 per share, as compared to pre-tax pension and postretirement
mark-to-market losses of $138 million, or $0.29 per share, in the
prior-year quarter.
- The current quarter included pre-tax
charges related to cost savings initiatives of $40 million, or
$0.09 per share, as compared to $11 million, or $0.02 per share, in
the prior-year quarter.
- The current-quarter earnings included a
tax benefit of $52 million primarily related to the sale of
intercompany notes receivable to a financial institution, which
resulted in the recognition of foreign exchange losses on the notes
for tax purposes. In addition, the company recorded a $6 million
reduction to interest expense ($4 million after tax) related to
premiums and fees received on the sale of the notes. The aggregate
impact was an after-tax gain of $56 million, or $0.18 per
share.
- The prior-year quarter included a
pre-tax non-cash impairment charge of $141 million, or $0.41 per
share, to reduce the carrying value of the intangible assets of the
Bolthouse Farms carrot and carrot ingredients reporting unit.
A detailed reconciliation of the reported (GAAP) financial
information to the adjusted information is included at the end of
this news release.
Fourth-Quarter Results
Sales decreased 1 percent to $1.664 billion driven by a 1
percent decline in organic sales, reflecting lower volume.
Gross margin increased from 32.4 percent to 43.0 percent.
Excluding items impacting comparability, adjusted gross margin
increased 0.8 percentage points from 36.1 percent to 36.9 percent.
The increase in adjusted gross margin was primarily driven by
productivity improvements and the benefits from cost savings
initiatives, partly offset by cost inflation and higher supply
chain costs.
Marketing and selling expenses decreased 34 percent to $143
million. Excluding items impacting comparability, adjusted
marketing and selling expenses decreased 12 percent primarily due
to lower advertising and consumer promotion expenses lapping
marketing levels above historical levels in the prior-year quarter
and the benefits from cost savings initiatives. Administrative
expenses decreased 54 percent to $86 million. Excluding items
impacting comparability, adjusted administrative expenses decreased
5 percent primarily due to the benefits from cost savings
initiatives.
The company reported EBIT of $440 million as compared to a loss
of $37 million in the prior-year quarter. Excluding items impacting
comparability, adjusted EBIT increased 11 percent to $282 million,
reflecting lower adjusted marketing and selling expenses, as well
as a higher adjusted gross margin percentage, partly offset by
lower sales.
Net interest expense decreased 18 percent to $23 million.
Excluding items impacting comparability in the current year,
adjusted net interest expense increased $1 million to $29 million,
reflecting higher average interest rates on the debt portfolio,
partly offset by lower average levels of debt. The tax rate was
23.7 percent as compared to 24.6 percent in the prior year.
Excluding items impacting comparability, the adjusted tax rate
increased 0.8 percentage points to 37.2 percent.
The company reported EPS of $1.04 in the quarter. Excluding
items impacting comparability in both periods, adjusted EPS
increased 13 percent to $0.52 per share, compared with $0.46 per
share in the year-ago quarter.
Full-Year Results
Sales decreased 1 percent to $7.890 billion driven by a 1
percent decline in organic sales, reflecting lower volume and
higher promotional spending.
EBIT increased from $960 million to $1.400 billion. Excluding
items impacting comparability, adjusted EBIT increased 2 percent to
$1.492 billion, reflecting a higher adjusted gross margin
percentage and lower adjusted administrative expenses, due in part
to lower incentive compensation costs, partly offset by lower sales
volume.
Net interest expense decreased 4 percent to $107 million.
Excluding items impacting comparability in the current year,
adjusted net interest expense increased $2 million to $113 million,
reflecting higher average interest rates on the debt portfolio,
partly offset by lower average levels of debt. The tax rate
decreased 2.3 percentage points to 31.4 percent. Excluding items
impacting comparability, the adjusted tax rate decreased 0.2
percentage points to 32.4 percent.
The company reported EPS of $2.89. Excluding items impacting
comparability in both years, adjusted EPS increased 3 percent to
$3.04 per share, compared with $2.94 per share a year ago.
Cash flow from operations was $1.291 billion as compared to
$1.491 billion a year ago. The year-over-year decline was primarily
due to lapping significant working capital reductions in the prior
year, as well as lower cash earnings and lower receipts from
hedging activities in the current year.
Segment Operating Review
An analysis of net sales and operating earnings by reportable
segment follows:
Three Months
Ended July 30, 2017
($ in millions)
AmericasSimple Mealsand
Beverages
Global Biscuitsand
Snacks
Campbell
Fresh
Total Net Sales, as Reported $815 $624 $225 $1,664
Volume and Mix (2)% (2)% (1)% (2)% Promotional Spending (1)% 1% 2%
-% Organic Net Sales (3)%
-%*
1%
(1)%*
Currency -% -% -% -% % Change vs. Prior Year (3)% -% 1% (1)%
Segment Operating Earnings $198 $109 $(8) % Change vs. Prior Year
4% 35% n/m
n/m – not meaningful
* Numbers do not add due to rounding.
Note: A detailed reconciliation of the reported (GAAP) net sales
to organic net sales is included at the end of this news
release.
Twelve Months
Ended July 30, 2017
($ in millions)
AmericasSimple Mealsand
Beverages
Global Biscuitsand
Snacks
Campbell Fresh
Total Net Sales, as Reported $4,325 $2,598 $967 $7,890
Volume and Mix (1)% 1% (5)% (1)% Promotional Spending (1)% -% 1%
(1)% Organic Net Sales
(1)%*
-%*
(5)%*
(1)%*
Currency -% 1% -% -% % Change vs. Prior Year (1)% 1% (5)% (1)%
Segment Operating Earnings $1,120 $454 $(9) % Change vs. Prior Year
5% 8% 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 3 percent to $815 million driven
primarily by declines in soup and V8 beverages. Sales of U.S. soup
decreased 4 percent driven by declines in condensed soups, broth
and ready-to-serve soups, reflecting a reduction in retailer
inventory levels while consumer takeaway in measured channels was
comparable to the prior-year quarter. For the fiscal year, sales of
U.S. soup decreased 1 percent.
Segment operating earnings in the quarter increased 4 percent to
$198 million. The increase was primarily driven by lower
advertising and consumer promotion expenses and lower
administrative expenses, partly offset by lower sales volume and a
lower gross margin percentage.
Global Biscuits and Snacks
Sales in the quarter were comparable to the prior year at $624
million, as gains in Pepperidge Farm snacks, reflecting continued
growth in Goldfish crackers, as well as gains in Arnott’s biscuits
in Australia, were offset by declines in Indonesia.
Segment operating earnings increased 35 percent to $109 million.
The increase was primarily driven by a higher gross margin
percentage, lower advertising and consumer promotion expenses and
lower administrative expenses.
Campbell Fresh
Sales in the quarter increased 1 percent to $225 million driven
primarily by higher sales of Garden Fresh Gourmet, carrots and
carrot ingredients. Sales of Bolthouse Farms refrigerated beverages
declined slightly, reflecting supply constraints.
Segment operating earnings in the quarter decreased from $8
million to a loss of $8 million, reflecting higher administrative
expenses, higher carrot costs and the continued cost impact of
enhanced quality processes and related beverage capacity
constraints.
Segment operating earnings for the year decreased from $60
million to a loss of $9 million, reflecting lower sales volume and
unfavorable mix, higher carrot costs, and the full year cost impact
of enhanced quality processes and related beverage capacity
constraints, as well as higher administrative expenses.
Corporate
Corporate in the fourth quarter of fiscal 2017 included pension
and postretirement mark-to-market gains of $198 million and charges
related to cost savings initiatives of $22 million. Corporate in
the fourth quarter of fiscal 2016 included a non-cash impairment
charge of $141 million, pension and postretirement mark-to-market
losses of $138 million and charges related to cost savings
initiatives of $12 million. The remaining decrease in expenses
primarily reflects gains on open commodity hedges.
Conference Call
Campbell will host a conference call to discuss these results
today at 8:30 a.m. Eastern Daylight Time. To join in the U.S., dial
(833) 659-8619. To join outside of the U.S., dial +1 (703)
639-1316. The access code is 6692641. 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 Sept. 14,
2017, at +1 (404) 537-3406. The access code for the replay is
6692641.
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 2018, 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 impact of a
changing customer landscape, with value and e-commerce retailers
expanding their market presence, while certain of the company’s key
customers continue to increase their significance to the company’s
business; (8) the impact of changing inventory management practices
by certain of the company’s key customers; (9) the impact of
disruptions to the company’s supply chain, including fluctuations
in the supply of and inflation in energy and raw and packaging
materials cost; (10) the impact of non-U.S. operations, including
trade restrictions, public corruption and compliance with foreign
laws and regulations; (11) the ability to complete and to realize
the projected benefits of acquisitions, divestitures and other
business portfolio changes; (12) the uncertainties of litigation
and regulatory actions against the company; (13) the possible
disruption to the independent contractor distribution models used
by certain of the company’s businesses, including as a result of
litigation or regulatory actions affecting their independent
contractor classification; (14) the company’s ability to protect
its intellectual property rights; (15) the impact of an impairment
to goodwill or other intangible assets; (16) the impact of
increased liabilities and costs related to the company’s defined
benefit pension plans; (17) the impact of a material failure in or
breach of the company’s information technology systems; (18) the
company’s ability to attract and retain key talent; (19) 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; (20) 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 (21) 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
(millions, except per share amounts)
Three Months
Ended July 30, 2017 July 31, 2016 Net sales
$ 1,664 $ 1,687 Costs and expenses Cost
of products sold
949 1,141 Marketing and selling expenses
143 216 Administrative expenses
86 185 Research and
development expenses
20 38 Other expenses / (income)
8 145 Restructuring charges
18 (1 ) Total
costs and expenses
1,224 1,724 Earnings (loss)
before interest and taxes
440 (37 ) Interest, net
23
28 Earnings (loss) before taxes
417 (65 )
Taxes on earnings
99 16 Net earnings (loss)
318 (81 ) Net loss attributable to noncontrolling interests
— — Net earnings (loss) attributable to
Campbell Soup Company
$ 318 $ (81 ) Per share
- basic Net earnings (loss) attributable to Campbell Soup Company
$ 1.05 $ (.26 ) Dividends
$ .35
$ .312 Weighted average shares outstanding - basic
303 308 Per share - assuming dilution Net
earnings (loss) attributable to Campbell Soup Company
$
1.04 $ (.26 ) Weighted average shares outstanding -
assuming dilution
305 310 CAMPBELL SOUP
COMPANY CONSOLIDATED STATEMENTS OF EARNINGS (millions, except per
share amounts)
Twelve Months Ended July 30,
2017 July 31, 2016 Net sales
$ 7,890
$ 7,961 Costs and expenses Cost of products sold
4,831 5,181 Marketing and selling expenses
817 893
Administrative expenses
488 641 Research and development
expenses
98 124 Other expenses / (income)
238 131
Restructuring charges
18 31 Total costs and
expenses
6,490 7,001 Earnings before interest
and taxes
1,400 960 Interest, net
107 111
Earnings before taxes
1,293 849 Taxes on earnings
406 286 Net earnings
887 563 Net loss
attributable to noncontrolling interests
— —
Net earnings attributable to Campbell Soup Company
$
887 $ 563 Per share - basic Net earnings
attributable to Campbell Soup Company
$ 2.91 $
1.82 Dividends
$ 1.40 $ 1.248
Weighted average shares outstanding - basic
305 309
Per share - assuming dilution Net earnings attributable to
Campbell Soup Company
$ 2.89 $ 1.81
Weighted average shares outstanding - assuming dilution
307
311 CAMPBELL SOUP COMPANY CONSOLIDATED
SUPPLEMENTAL SCHEDULE OF SALES AND EARNINGS (millions, except per
share amounts)
Three Months Ended July 30,
2017 July 31, 2016 Percent
Change
Sales
Contributions: Americas Simple Meals and Beverages
$
815 $ 842 (3)% Global Biscuits and Snacks
624 622 —%
Campbell Fresh
225 223 1% Total sales
$
1,664 $ 1,687 (1)%
Earnings
Contributions: Americas Simple Meals and Beverages
$
198 $ 191 4% Global Biscuits and Snacks
109 81 35%
Campbell Fresh
(8 ) 8 n/m Total operating
earnings
299 280 7% Corporate
159 (318 )
Restructuring charges
(18 ) 1 Earnings (loss)
before interest and taxes
440 (37 ) n/m Interest, net
23 28 Taxes on earnings
99 16 Net
earnings (loss)
318 (81 ) n/m Net loss attributable to
noncontrolling interests
— — Net earnings
(loss) attributable to Campbell Soup Company
$ 318
$ (81 ) n/m Per share - assuming dilution Net earnings
(loss) attributable to Campbell Soup Company
$ 1.04
$ (.26 ) n/m CAMPBELL SOUP COMPANY
CONSOLIDATED SUPPLEMENTAL SCHEDULE OF SALES AND EARNINGS (millions,
except per share amounts)
Twelve Months Ended July
30, 2017 July 31, 2016 Percent
Change
Sales
Contributions: Americas Simple Meals and Beverages
$
4,325 $ 4,380 (1)% Global Biscuits and Snacks
2,598
2,564 1% Campbell Fresh
967 1,017 (5)% Total
sales
$ 7,890 $ 7,961 (1)%
Earnings
Contributions: Americas Simple Meals and Beverages
$
1,120 $ 1,069 5% Global Biscuits and Snacks
454 422
8% Campbell Fresh
(9 ) 60 n/m Total operating
earnings
1,565 1,551 1% Corporate
(147 ) (560
) Restructuring charges
(18 ) (31 ) Earnings before
interest and taxes
1,400 960 46% Interest, net
107
111 Taxes on earnings
406 286 Net earnings
887 563 58% Net loss attributable to noncontrolling
interests
— — Net earnings attributable to
Campbell Soup Company
$ 887 $ 563 58%
Per share - assuming dilution Net earnings attributable to Campbell
Soup Company
$ 2.89 $ 1.81 60%
CAMPBELL SOUP COMPANY CONDENSED CONSOLIDATED BALANCE SHEETS
(millions)
July 30, 2017 July 31, 2016 Current assets
$ 1,900 $ 1,908 Plant assets, net
2,454 2,407
Intangible assets, net
3,233 3,415 Other assets
139
107 Total assets
$ 7,726 $ 7,837
Current liabilities
$ 2,395 $ 2,555 Long-term
debt
2,499 2,314 Other liabilities
1,187 1,435 Total
equity
1,645 1,533 Total liabilities and
equity
$ 7,726 $ 7,837 Total debt
$ 3,536 $ 3,533 Cash and cash
equivalents
$ 319 $ 296 CAMPBELL
SOUP COMPANY CONSOLIDATED STATEMENTS OF CASH FLOWS (millions)
Twelve Months Ended July 30, 2017 July
31, 2016 Cash flows from operating activities: Net earnings
$ 887 $ 563 Adjustments to reconcile net earnings to
operating cash flow Impairment charges
212 141 Restructuring
charges
18 31 Stock-based compensation
60 64 Pension
and postretirement benefit expense (income)
(258 )
317 Depreciation and amortization
318 308 Deferred income
taxes
93 (30 ) Other, net
18 6 Changes in working
capital Accounts receivable
28 24 Inventories
46 59
Prepaid assets
(27 ) 9 Accounts payable and accrued
liabilities
(48 ) 15 Pension fund contributions
(5 ) (2 ) Net receipts from hedging activities
2 44 Other
(53 ) (58 ) Net cash provided by
operating activities
1,291 1,491 Cash flows
from investing activities: Purchases of plant assets
(338
) (341 ) Sales of plant assets
— 5 Other, net
(30 ) (18 ) Net cash used in investing activities
(368 ) (354 ) Cash flows from financing activities:
Net short-term borrowings (repayments)
245 (762 ) Long-term
borrowings
211 215 Long-term repayments
(90 )
— Repayments of notes payable
(400 ) — Dividends paid
(420 ) (390 ) Treasury stock purchases
(437
) (143 ) Treasury stock issuances
2 2
Payments related to tax withholding for
stock-based compensation
(22 ) (21 ) Net cash used in financing activities
(911 ) (1,099 ) Effect of exchange rate changes on
cash
11 5 Net change in cash and cash
equivalents
23 43 Cash and cash equivalents — beginning of
period
296 253 Cash and cash equivalents — end
of period
$ 319 $ 296
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
MeasuresFiscal Year Ended July 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 July 30, 2017
July 31, 2016 % Change (millions)
Net Sales, as Reported
Impact ofCurrency
OrganicNet Sales
Net Sales,as Reported
Net Sales,as Reported
OrganicNet Sales
Americas Simple Meals and Beverages $ 815
$ 1 $ 816 $ 842 (3 )%
(3 )%
Global Biscuits and Snacks 624 (3
) 621 622 — % — %
Campbell Fresh 225
— 225 223 1
% 1 %
Total Net Sales $ 1,664
$ (2 ) $ 1,662
$ 1,687 (1 )% (1 )%
Year Ended
July 30, 2017 July 31, 2016 %
Change (millions)
Net Sales,as Reported
Impact ofCurrency
OrganicNet Sales
Net Sales,as Reported
Net Sales,as Reported
OrganicNet Sales
Americas Simple Meals and Beverages $ 4,325
$ (1 ) $ 4,324 $ 4,380 (1 )% (1
)%
Global Biscuits and Snacks 2,598 (26
) 2,572 2,564 1 % — %
Campbell Fresh
967 — 967
1,017 (5 )% (5 )%
Total Net Sales $
7,890 $ (27 )
$ 7,863 $ 7,961 (1 )% (1 )%
Items Impacting 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 earnings:
(1) In the fourth quarter of fiscal 2017, the company
incurred gains of $198 million in Costs and expenses ($129 million
after tax, or $.42 per share) associated with mark-to-market
adjustments for defined benefit pension and postretirement plans.
In fiscal 2017, the company incurred gains of $178 million in Costs
and expenses ($116 million after tax, or $.38 per share) associated
with mark-to-market adjustments for defined benefit pension and
postretirement plans. In the fourth quarter of fiscal 2016, the
company incurred losses of $138 million in Costs and expenses ($90
million after tax, or $.29 per share) associated with
mark-to-market adjustments for defined benefit pension and
postretirement plans. In fiscal 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 fiscal 2017, the company expanded these cost savings
initiatives by further optimizing its supply chain network,
primarily in North America, continuing to evolve its operating
model to drive efficiencies, and more fully integrating its recent
acquisitions. In the fourth quarter of fiscal 2017, the company
recorded Restructuring charges of $18 million and implementation
costs and other related costs of $18 million in Administrative
expenses and $4 million in Cost of products sold (aggregate impact
of $26 million after tax, or $.09 per share) related to these
initiatives. In fiscal 2017, the company recorded Restructuring
charges of $18 million and implementation costs and other related
costs of $36 million in Administrative expenses and $4 million in
Cost of products sold (aggregate impact of $37 million after tax,
or $.12 per share) related to these initiatives. In the
fourth quarter of fiscal 2016, the company recorded implementation
costs and other related costs of $12 million in Administrative
expenses related to the fiscal 2015 initiatives. In the fourth
quarter of fiscal 2016, the company also recorded a reduction to
Restructuring charges of $1 million related to the fiscal 2014
initiatives. The aggregate after-tax impact of Restructuring
charges, implementation costs and other related costs was $7
million, or $.02 per share. In fiscal 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 $.59 per share). The charges are included in Other expenses /
(income). In the fourth quarter of fiscal 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 fourth quarter of
fiscal 2017, the company recorded a tax benefit of $52 million in
Taxes on earnings primarily related to the sale of intercompany
notes receivable to a financial institution, which resulted in the
recognition of foreign exchange losses on the notes for tax
purposes. In addition, the company recorded a $6 million reduction
to interest expense ($4 million after tax) related to premiums and
fees received on the sale of the notes. The aggregate impact was
$56 million after tax, or $.18 per share. (5) In 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 July 30, 2017
July 31, 2016 (millions, except per share amounts)
Asreported
Adjustments(a)
Adjusted
Asreported
Adjustments(a) Adjusted
AdjustedPercentChange
Gross margin
$ 715 $ (101 )
$ 614 $ 546 $ 63 $ 609 1 % Gross margin percentage
43.0 % 36.9 % 32.4 % 36.1 % Marketing
and selling expenses
143 29 172 216 (20 ) 196
Administrative expenses
86 35 121 185 (57 )
128 Research and development expenses
20 11 31
38 (10 ) 28 Other expenses / (income)
8 — 8
145 (141 ) 4 Restructuring charges
18 (18
) — (1 ) 1 — Earnings (loss)
before interest and taxes
$ 440 $
(158 ) $ 282 $ (37 ) $ 290
$ 253 11 % Interest, net
23 6
29 28 — 28 Earnings
(loss) before taxes
$ 417 $ (164
) $ 253 $ (65 ) $ 290 $ 225
Taxes
99 (5 ) 94 16 66 82
Effective income tax rate
23.7 % 37.2
% 24.6 % 36.4 % Net earnings (loss) attributable to
Campbell Soup Company
$ 318 $
(159 ) $ 159 $ (81 ) $ 224
$ 143 11 % Diluted net earnings (loss) per share
attributable to Campbell Soup Company
$ 1.04
$ (.52 ) $ .52 $ (.26 ) $
.72 $ .46 13 % (a)See following table for additional
information.
Three Months Ended July 30, 2017
July 31, 2016 (millions, except per share amounts)
Mark-to-market
(1)
Restructuringcharges,implementationcosts
and otherrelated costs(2)
Saleof notes(4)
Adjustments
Mark-to-market
(1)
Restructuringcharges,implementationcosts
and otherrelated costs(2)
Impairmentcharges(3)
Adjustments Gross margin
$ (105
) $ 4 $ — $ (101
) $ 63 $ — $ — $ 63 Marketing and selling expenses
29
— — 29 (20 ) — — (20 ) Administrative expenses
53 (18 ) — 35 (45 ) (12 ) — (57
) Research and development expenses
11 — —
11 (10 ) — — (10 ) Other expenses / (income)
—
— — — — — (141 ) (141 ) Restructuring charges
— (18 ) — (18
) — 1 — 1 Earnings before
interest and taxes
$ (198 ) $ 40
$ — $ (158 ) $ 138
$ 11 $ 141 $ 290 Interest, net
—
— 6 6 — —
— — Earnings before taxes
$ (198
) $ 40 $ (6 )
$ (164 ) $ 138 $ 11 $ 141
$ 290 Taxes
(69 ) 14 50
(5 ) 48 4 14 66
Net earnings attributable to Campbell Soup Company
$
(129 ) $ 26 $ (56
) $ (159 ) $ 90 $ 7 $ 127
$ 224 Diluted net earnings per share attributable to
Campbell Soup Company*
$ (.42 ) $
.09 $ (.18 ) $
(.52 ) $ .29 $ .02 $ .41 $ .72
*The sum of the individual per share amounts may not add due
to rounding.
Year Ended July 30, 2017
July 31, 2016 (millions, except per share amounts)
Asreported
Adjustments(a) Adjusted
Asreported
Adjustments(a) Adjusted
AdjustedPercentChange
Gross margin
$ 3,059 $ (81 )
$ 2,978 $ 2,780 $ 176 $ 2,956 1 % Gross margin
percentage
38.8 % 37.7 % 34.9 % 37.1 %
Marketing and selling expenses
817 29 846 893
(46 ) 847 Administrative expenses
488 17 505
641 (118 ) 523 Research and development expenses
98
11 109 124 (20 ) 104 Other expenses / (income)
238 (212 ) 26 131 (116 ) 15
Restructuring charges
18 (18 ) —
31 (31 ) — Earnings before interest and taxes
$ 1,400 $ 92 $
1,492 $ 960 $ 507 $ 1,467 2 %
Interest, net
107 6 113
111 — 111 Earnings before taxes
$
1,293 $ 86 $ 1,379
$ 849 $ 507 $ 1,356 Taxes
406
41 447 286 156 442 Effective income tax rate
31.4 % 32.4 % 33.7 % 32.6
% Net earnings attributable to Campbell Soup Company
$
887 $ 45 $ 932
$ 563 $ 351 $ 914 2 % Diluted net
earnings per share attributable to Campbell Soup Company
$
2.89 $ .15 $ 3.04
$ 1.81 $ 1.13 $ 2.94 3 % (a)See
following tables for additional information.
Year
Ended July 30, 2017 (millions, except per share amounts)
Mark-to-market(1)
Restructuringcharges,implementationcosts
and otherrelated costs
(2)
Impairmentcharges(3)
Sale ofnotes(4)
Adjustments Gross margin
$ (85 )
$ 4 $ — $ — $
(81 ) Marketing and selling expenses
29
— — — 29 Administrative expenses
53 (36 ) — — 17 Research
and development expenses
11 — — —
11 Other expenses / (income)
— — (212
) — (212 ) Restructuring charges
— (18 ) — —
(18 ) Earnings before interest and taxes
$
(178 ) $ 58 $ 212
$ — $ 92 Interest,
net
— — — 6
6 Earnings before taxes
$ (178 )
$ 58 $ 212 $
(6 ) $ 86 Taxes
(62
) 21 32 50
41 Net earnings attributable to Campbell Soup Company
$ (116 ) $ 37 $
180 $ (56 ) $ 45
Diluted net earnings per share attributable to Campbell Soup
Company
$ (.38 ) $ .12
$ .59 $ (.18 ) $
.15 Year Ended July 31, 2016
(millions, except per share amounts)
Mark-to-market
(1)
Restructuringcharges,implementationcosts
and otherrelated costs
(2)
Impairmentcharges(3)
Claimsettlement(5)
Adjustments Gross margin $ 176 $ — $ — $ — $ 176
Marketing and selling expenses (46 ) — — — (46 ) Administrative
expenses (71 ) (47 ) — — (118 ) Research and development expenses
(20 ) — — — (20 ) Other expenses / (income) — — (141 ) 25 (116 )
Restructuring charges — (31 ) — — (31 )
Earnings before interest and taxes $ 313 $ 78 $ 141
$ (25 ) $ 507 Interest, net — — —
— — Earnings before taxes $ 313 $ 78
$ 141 $ (25 ) $ 507 Taxes 113 29
14 — 156 Net earnings attributable to Campbell
Soup Company $ 200 $ 49 $ 127 $ (25 ) $ 351
Diluted net earnings per share attributable to Campbell Soup
Company $ .64 $ .16 $ .41 $ (.08 ) $ 1.13
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170831005297/en/
Campbell Soup CompanyINVESTOR
CONTACT:Ken Gosnell,
856-342-6081ken_gosnell@campbellsoup.comorMEDIA CONTACT:Carla Burigatto,
856-342-3737carla_burigatto@campbellsoup.com
Campbell Soup (NYSE:CPB)
Historical Stock Chart
From Mar 2024 to Apr 2024
Campbell Soup (NYSE:CPB)
Historical Stock Chart
From Apr 2023 to Apr 2024