- Net Sales and Organic Sales Decreased 2
Percent
- Earnings Before Interest and Taxes
(EBIT) Decreased 10 Percent; Adjusted EBIT Decreased 14
Percent
- Earnings Per Share (EPS) Decreased 3
Percent to $0.91; Adjusted EPS Decreased 8 Percent to $0.92,
reflecting the benefit of a lower adjusted tax rate
- Campbell Updates Fiscal 2018
Guidance
Campbell Soup Company (NYSE:CPB) today reported its
first-quarter results for fiscal 2018.
Three Months
Ended
($ in millions, except per share)
Oct. 29,
2017
Oct. 30,
2016
%
Change
Net Sales
As Reported (GAAP)
$2,161 $2,202 (2)% Organic (2)%
Earnings Before Interest and
Taxes
As Reported (GAAP)
$412 $457 (10)% Adjusted
$417 $486
(14)%
Diluted Earnings Per Share
As Reported (GAAP)
$0.91 $0.94 (3)% Adjusted
$0.92
$1.00 (8)% 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, “This was a difficult quarter, particularly for our
U.S. soup business. The operating environment remains volatile with
a rapidly evolving retailer landscape and competitive activity
pressuring the top line. Our bottom line performance was negatively
impacted by a lower adjusted gross margin rate due in part to cost
inflation, higher carrot costs and escalating transportation and
logistics costs following the hurricane season.
“The two percent decline in organic sales was largely due to the
performance of our Americas Simple Meals and Beverages division,
where U.S. soup sales declined by 9 percent. Consumer takeaway
decreased 2 percent in U.S. soup while significantly lower retailer
inventory accounted for the remaining decline. The sales decline
was the result of one key customer’s different promotional approach
to the soup category for fiscal 2018, as we described last quarter.
Importantly, our soup program was well received in most of our
other key customers, where consumer takeaway of our soup was up
slightly.
“In Global Biscuits and Snacks, we continued to drive momentum
with increased sales and operating earnings. Pepperidge Farm
delivered another quarter of solid performance in the snacks
business behind Goldfish crackers and a cookie portfolio
rejuvenated by the launch of the Farmhouse brand and restaging of
our American Classic Collection.
“Campbell Fresh sales were comparable to a year ago. We are
encouraged that sales of products in our CPG portfolio increased
for the second consecutive quarter behind Garden Fresh Gourmet and
Bolthouse Farms salad dressing. Our carrot sales were negatively
impacted by unfavorable weather, which led to customer allocations.
The C-Fresh team is managing this situation while maintaining its
focus on carrot quality and returning the beverage products to
growth.”
Morrison concluded, “In this challenging climate, we are focused
on sharpening our plans for the remainder of the year while
continuing to position Campbell for growth through investments to
differentiate our brands, drive innovation and accelerate our
e-commerce capabilities.”
Items Impacting Comparability
Items impacting comparability in the quarter are as follows:
- The current quarter included pre-tax
pension and postretirement mark-to-market gains of $14 million, or
$0.03 per share, as compared to pre-tax pension and postretirement
mark-to-market losses of $20 million, or $0.04 per share, in the
prior-year quarter.
- The current quarter included pre-tax
charges related to cost savings initiatives of $19 million, or
$0.04 per share, as compared to $9 million, or $0.02 per share, in
the prior-year quarter.
A detailed reconciliation of the reported (GAAP) financial
information to the adjusted information is included at the end of
this news release.
Change in Presentation of Net Periodic Pension Cost and Net
Postretirement Benefit Cost
In the first quarter of fiscal 2018, Campbell adopted new
accounting guidance that changes the presentation of net periodic
pension cost and net periodic postretirement benefit cost. Under
the new guidance, the service cost component of net periodic
benefit cost is classified in the same line item as other
compensation costs of employees. All other components of net
periodic benefit cost are classified in other expenses / (income).
Certain amounts in the prior year were reclassified to conform to
the current-year presentation. The reclassifications did not impact
EBIT.
Change in Reportable Segments
Beginning in fiscal 2018, the business in Latin America is
managed as part of the Global Biscuits and Snacks segment. Prior to
fiscal 2018, the business in Latin America was managed as part of
the Americas Simple Meals and Beverages segment. Prior-period
segment results have been adjusted retrospectively to reflect this
change.
First-Quarter Results
Sales decreased 2 percent to $2.161 billion driven by a 2
percent decline in organic sales, reflecting lower volume.
Gross margin decreased from 38.6 percent to 36.2 percent.
Excluding items impacting comparability in the current year,
adjusted gross margin decreased 2.1 percentage points to 36.5
percent. The decrease in adjusted gross margin was primarily driven
by cost inflation and higher supply chain costs, as well as
unfavorable mix, partly offset by productivity improvements and the
benefits from cost savings initiatives.
Marketing and selling expenses decreased 5 percent to $219
million primarily due to lower advertising and consumer promotion
expenses, as well as the benefits from cost savings initiatives.
Administrative expenses increased 19 percent to $149 million.
Excluding items impacting comparability, adjusted administrative
expenses increased 17 percent primarily due to an increase in
information technology costs, costs associated with the pending
acquisition of Pacific Foods of Oregon, the impact of inflation,
and investments in long-term innovation.
Other income was $29 million in the current quarter as compared
to other expenses of $11 million in the prior-year quarter.
Excluding the impact of pension and postretirement mark-to-market
adjustments, adjusted other income increased to $15 million from $9
million a year ago primarily due to higher pension and
postretirement benefit income, partly offset by losses on
investments.
EBIT decreased 10 percent to $412 million. Excluding items
impacting comparability, adjusted EBIT decreased 14 percent to $417
million, reflecting a lower adjusted gross margin, lower sales and
higher adjusted administrative expenses, partly offset by lower
marketing and selling expenses.
Net interest expense increased 7 percent to $30 million
reflecting higher average interest rates on the debt portfolio. The
tax rate was 28.0 percent as compared to 31.9 percent in the prior
year. Excluding items impacting comparability, the adjusted tax
rate decreased 3.9 percentage points to 28.2 percent driven by the
favorable settlement of certain U.S. state tax matters.
EPS decreased 3 percent to $0.91 per share. Excluding items
impacting comparability, adjusted EPS decreased 8 percent to $0.92
per share, reflecting declines in adjusted EBIT, partly offset by a
lower adjusted tax rate and the benefit of share repurchases.
Cash flow from operations decreased to $188 million from $221
million a year ago primarily due to higher payments on hedging
activities and higher working capital requirements, partly offset
by higher cash earnings.
Fiscal 2018 Guidance
For the full fiscal year, Campbell still expects the
year-over-year change in net sales to be -2 to 0 percent. Campbell
has lowered its earnings outlook and now expects adjusted EBIT to
change by -4 to -2 percent (previously -1 to 1 percent) and
adjusted EPS to change by -3 to -1 percent (previously 0 to 2
percent), or $2.95 to $3.02 per share. The change in guidance for
adjusted EBIT and adjusted EPS is due primarily to Campbell’s gross
margin performance in the first-quarter and revised outlook for the
balance of the fiscal year. This guidance assumes the impact from
currency translation will be nominal. A non-GAAP reconciliation is
not provided for 2018 guidance since certain items are not
estimable, such as pension and postretirement mark-to-market
adjustments, and these items are not considered to reflect the
company's ongoing operating results.
Segment Operating Review
An analysis of net sales and operating earnings by reportable
segment follows:
Three Months
Ended Oct. 29, 2017
($ in millions)
AmericasSimple Mealsand
Beverages
Global Biscuitsand
Snacks
CampbellFresh
Total
Net Sales, as Reported $1,218 $709 $234 $2,161
Volume and Mix (5)% 2% (1)% (2)% Promotional Spending -% -% 1% -%
Organic Net Sales (5)% 2% -% (2)% Currency -% 1% -% -% % Change vs.
Prior Year (5)% 3% -% (2)% Segment Operating Earnings $328 $120
$(6) % Change vs. Prior Year (14)% 4% 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.
Americas Simple Meals and
Beverages
Sales decreased 5 percent to $1.218 billion driven primarily by
declines in soup and V8 beverages, partly offset by gains in Prego
pasta sauces. Sales of U.S. soup decreased 9 percent driven by
declines in condensed soups, broth and ready-to-serve soups,
reflecting a 7-point decrease due to a lower seasonal inventory
build compared to a year ago. As previously announced, Campbell has
not been able to reach an agreement with a key customer on a
promotional approach for soup in fiscal 2018.
Segment operating earnings decreased 14 percent to $328 million.
The decrease was primarily driven by lower sales volume and a lower
gross margin percentage, partly offset by lower marketing and
selling expenses.
Global Biscuits and Snacks
Sales increased 3 percent to $709 million. Excluding the
favorable impact of currency translation, segment sales increased 2
percent primarily driven by gains in Pepperidge Farm snacks,
reflecting growth in Goldfish crackers and Pepperidge Farm
cookies.
Segment operating earnings increased 4 percent to $120 million.
The increase was primarily driven by higher sales volume.
Campbell Fresh
Sales in the quarter were comparable to the prior year at $234
million as sales gains in carrot ingredients, Garden Fresh Gourmet
and Bolthouse Farms salad dressings were offset by declines in
carrots. Sales of Bolthouse Farms refrigerated beverages were
comparable to the prior year.
Segment operating earnings in the quarter decreased from $1
million to a loss of $6 million, reflecting a lower gross margin
percentage driven primarily by higher carrot costs.
Corporate
Corporate in the first quarter of fiscal 2018 included pension
and postretirement mark-to-market gains of $14 million and charges
related to cost savings initiatives of $17 million. Corporate in
the first quarter of fiscal 2017 included pension and
postretirement mark-to-market losses of $20 million and charges
related to cost savings initiatives of $8 million. The remaining
increase in expenses primarily reflects losses on investments,
higher administrative expenses and losses on open commodity hedges
as compared to gains in the year-ago quarter, partly offset by
higher pension and postretirement benefit income.
Conference Call
Campbell will host a conference call to discuss these results
today at 8:30 a.m. Eastern 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 6692642. 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 Dec. 5, 2017, at +1
(404) 537-3406. The access code for the replay is 6692642.
Reportable Segments
Campbell Soup Company earnings results are reported for the
following segments:
Americas Simple Meals and Beverages
includes the retail and food service businesses in the U.S. and
Canada. The segment includes the following products: Campbell’s
condensed and ready-to-serve soups; Swanson broth and stocks; Prego
pasta sauces; Pace Mexican sauces; Campbell’s gravies, pasta, beans
and dinner sauces; Swanson canned poultry; Plum food and snacks; V8
juices and beverages; and Campbell’s tomato juice.
Global Biscuits and Snacks includes
Pepperidge Farm cookies, crackers, bakery and frozen products in
U.S. retail; Arnott’s biscuits in Australia and Asia Pacific; and
Kelsen cookies globally. The segment also includes the simple meals
and shelf-stable beverages business in Australia, Latin America and
Asia Pacific.
Campbell Fresh includes Bolthouse
Farms fresh carrots, carrot ingredients, refrigerated beverages and
refrigerated salad dressings; Garden Fresh Gourmet salsa, hummus,
dips and tortilla chips; and the U.S. refrigerated soup
business.
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) changes in consumer demand for the company’s products
and favorable perception of the company’s brands; (2) the risks
associated with trade and consumer acceptance of product
improvements, shelving initiatives, new products and pricing and
promotional strategies; (3) the impact of strong competitive
responses to the company’s efforts to leverage its brand power with
product innovation, promotional programs and new advertising; (4)
changing inventory management practices by certain of the company’s
key customers; (5) 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; (6) the company’s ability
to realize projected cost savings and benefits from its efficiency
and/or restructuring initiatives; (7) the company’s ability to
manage changes to its organizational structure and/or business
processes, including selling, distribution, manufacturing and
information management systems or processes; (8) product quality
and safety issues, including recalls and product liabilities; (9)
the ability to complete and to realize the projected benefits of
acquisitions, divestitures and other business portfolio changes;
(10) disruptions to the company’s supply chain, including
fluctuations in the supply of and inflation in energy and raw and
packaging materials cost; (11) the uncertainties of litigation and
regulatory actions against the company; (12) 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; (13) the impact of non-U.S. operations,
including trade restrictions, public corruption and compliance with
foreign laws and regulations; (14) impairment to goodwill or other
intangible assets; (15) the company’s ability to protect its
intellectual property rights; (16) increased liabilities and costs
related to the company’s defined benefit pension plans; (17) 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) changes in currency exchange rates, tax
rates, interest rates, debt and equity markets, inflation rates,
economic conditions, law, regulation and other external factors;
(20) unforeseen business disruptions in one or more of the
company’s markets due to political instability, civil disobedience,
terrorism, armed hostilities, extreme weather conditions, 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
(unaudited) (millions, except per share amounts)
Three
Months Ended October 29, 2017 October 30, 2016
Net sales
$ 2,161 $ 2,202 Costs and expenses
Cost of products sold
1,378 1,351 Marketing and selling
expenses
219 230 Administrative expenses
149 125
Research and development expenses
30 27 Other expenses /
(income)
(29 ) 11 Restructuring charges
2
1 Total costs and expenses
1,749 1,745
Earnings before interest and taxes
412 457 Interest, net
30 28 Earnings before taxes
382 429 Taxes on
earnings
107 137 Net earnings
275 292 Net loss
attributable to noncontrolling interests
— — Net
earnings attributable to Campbell Soup Company
$ 275
$ 292 Per share - basic Net earnings attributable to
Campbell Soup Company
$ .91 $ .95 Dividends
$ .35 $ .35 Weighted average shares
outstanding - basic
301 308 Per share - assuming
dilution Net earnings attributable to Campbell Soup Company
$ .91 $ .94 Weighted average shares
outstanding - assuming dilution
302 310 The
company adopted new accounting guidance on the presentation of net
periodic pension cost and net periodic postretirement benefit cost
in the first quarter of fiscal 2018. Certain amounts in the prior
year were reclassified to conform to the current-year presentation.
CAMPBELL SOUP COMPANY CONSOLIDATED SUPPLEMENTAL
SCHEDULE OF SALES AND EARNINGS (unaudited) (millions, except per
share amounts)
Three Months Ended October
29, 2017 October 30, 2016
PercentChange
Sales
Contributions: Americas Simple Meals and Beverages
$
1,218 $ 1,278 (5)% Global Biscuits and Snacks
709 690
3% Campbell Fresh
234 234 —% Total sales
$ 2,161 $ 2,202 (2)%
Earnings
Contributions: Americas Simple Meals and Beverages
$
328 $ 380 (14)% Global Biscuits and Snacks
120 115 4%
Campbell Fresh
(6 ) 1 n/m Total operating
earnings
442 496 (11)% Corporate
(28 ) (38 )
Restructuring charges
(2 ) (1 ) Earnings before
interest and taxes
412 457 (10)% Interest, net
30 28
Taxes on earnings
107 137 Net earnings
275 292 (6)% Net loss attributable to noncontrolling
interests
— — Net earnings attributable to
Campbell Soup Company
$ 275 $ 292 (6)%
Per share - assuming dilution Net earnings attributable to Campbell
Soup Company
$ .91 $ .94 (3)%
n/m - not meaningful Beginning in fiscal 2018, the business
in Latin America is managed as part of the Global Biscuits and
Snacks segment. Prior to fiscal 2018, the business in Latin America
was managed as part of the Americas Simple Meals and Beverages
segment. Segment results have been adjusted retrospectively to
reflect this change. CAMPBELL SOUP COMPANY CONDENSED
CONSOLIDATED BALANCE SHEETS (unaudited) (millions)
October 29, 2017 October 30, 2016 Current assets
$
1,996 $ 2,146 Plant assets, net
2,417 2,380
Intangible assets, net
3,198 3,404 Other assets
135
109 Total assets
$ 7,746 $ 8,039
Current liabilities
$ 2,583 $ 2,760 Long-term debt
2,269 2,298 Other liabilities
1,205 1,383 Total
equity
1,689 1,598 Total liabilities and equity
$ 7,746 $ 8,039 Total debt
$
3,461 $ 3,588 Cash and cash equivalents
$
163 $ 290 CAMPBELL SOUP COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) (millions)
Three Months Ended October 29, 2017 October
30, 2016 Cash flows from operating activities: Net earnings
$ 275 $ 292 Adjustments to reconcile net earnings to
operating cash flow Restructuring charges
2 1 Stock-based
compensation
14 14 Pension and postretirement benefit income
(16 ) (11 ) Depreciation and amortization
82
77 Deferred income taxes
41 19 Other, net
6 (2 )
Changes in working capital Accounts receivable
(167 )
(218 ) Inventories
(105 ) (27 ) Prepaid assets
16 (6 ) Accounts payable and accrued liabilities
84
96 Net payments from hedging activities
(33 ) (2 )
Other
(11 ) (12 ) Net cash provided by operating
activities
188 221 Cash flows from investing
activities: Purchases of plant assets
(58 ) (48 )
Other, net
(5 ) (4 ) Net cash used in investing
activities
(63 ) (52 ) Cash flows from financing
activities: Net short-term borrowings (repayments)
(60
) 86 Long-term repayments
— (27 ) Dividends paid
(111 ) (100 ) Treasury stock purchases
(86
) (112 ) Payments related to tax withholding for stock-based
compensation
(22 ) (20 ) Net cash used in financing
activities
(279 ) (173 ) Effect of exchange rate
changes on cash
(2 ) (2 ) Net change in cash and cash
equivalents
(156 ) (6 ) Cash and cash equivalents —
beginning of period
319 296 Cash and cash
equivalents — end of period
$ 163 $ 290
Reconciliation of GAAP to Non-GAAP
Financial Measures
First Quarter Ended October 29,
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
October 29, 2017 October 30, 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 $ 1,218
$ (6 ) $ 1,212 $
1,278 (5)% (5)%
Global Biscuits and Snacks 709
(5 ) 704 690 3% 2%
Campbell Fresh
234 — 234
234 —% —%
Total Net Sales $
2,161 $ (11 )
$ 2,150 $ 2,202 (2)% (2)%
Items Impacting
Earnings
The company believes that financial information excluding
certain items that are not considered to reflect the ongoing
operating results, 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 first quarter of fiscal 2018, the
company incurred gains of $14 million in Other expenses / (income)
($9 million after tax, or $.03 per share) associated with
mark-to-market adjustments for defined benefit pension and
postretirement plans. In the first quarter of fiscal 2017, the
company incurred losses of $20 million in Other expenses / (income)
($13 million after tax, or $.04 per share) associated with
mark-to-market adjustments for defined benefit pension and
postretirement plans. For the year ended July 30, 2017, the company
incurred gains of $178 million in Other expenses / (income) ($116
million after tax, or $.38 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 first
quarter of fiscal 2018, the company recorded Restructuring charges
of $2 million and implementation costs and other related costs of
$12 million in Administrative expenses and $5 million in Cost of
products sold (aggregate impact of $12 million after tax, or $.04
per share) related to these initiatives. In the first quarter of
fiscal 2017, the company recorded Restructuring charges of $1
million and implementation costs and other related costs of $8
million in Administrative expenses (aggregate impact of $6 million
after tax, or $.02 per share) related to these initiatives. For the
year ended July 30, 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. (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
were included in Other expenses / (income). (4) For the year
ended July 30, 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.
The following tables reconcile financial
information, presented in accordance with GAAP, to financial
information excluding certain items:
Three Months Ended October 29, 2017
October 30, 2016 (millions, except per share amounts)
As
reported Adjustments(a)
Adjusted As reported
Adjustments(a) Adjusted
AdjustedPercentChange
Gross margin
$ 783 $ 5 $
788 $ 851 $ — $ 851 (7)% Gross margin percentage
36.2
% 36.5 % 38.6 % 38.6 % Marketing and selling
expenses
219 — 219 230 — 230 Administrative
expenses
149 (12 ) 137 125 (8 ) 117
Research and development expenses
30 — 30 27 —
27 Other expenses / (income)
(29 ) 14
(15 ) 11 (20 ) (9 ) Restructuring charges
2
(2 ) — 1 (1 ) —
Earnings before interest and taxes
$ 412
$ 5 $ 417 $ 457 $
29 $ 486 (14)% Interest, net
30
— 30 28 — 28
Earnings before taxes
$ 382 $ 5
$ 387 $ 429 $ 29 $ 458
Taxes
107 2 109 137 10 147 Effective
income tax rate
28.0 % 28.2 %
31.9 % 32.1 % Net earnings attributable to Campbell Soup
Company
$ 275 $ 3
$ 278 $ 292 $ 19 $ 311
(11)% Diluted net earnings per share attributable to Campbell Soup
Company
$ .91 $ .01
$ .92 $ .94 $ .06 $ 1.00
(8)% (a)See following table for additional information.
Three Months Ended October 29, 2017 October
30, 2016 (millions, except per share amounts)
Mark-to-market
(1)
Restructuringcharges,implementationcosts
and other related costs(2)
Adjustments Mark-to-market
(1)
Restructuringcharges,implementationcosts
and otherrelated costs(2)
Adjustments Gross margin
$ — $
5 $ 5 $ — $ — $ — Marketing and selling
expenses
— — — — — — Administrative expenses
— (12 ) (12 ) — (8 ) (8 )
Research and development expenses
— — — — — —
Other expenses / (income)
14 — 14 (20 ) — (20
) Restructuring charges
— (2 )
(2 ) — (1 ) (1 ) Earnings before interest and
taxes
$ (14 ) $ 19
$ 5 $ 20 $ 9 $ 29
Interest, net
— — — —
— — Earnings before taxes
$ (14
) $ 19 $ 5 $ 20
$ 9 $ 29 Taxes
(5 ) 7
2 7 3 10 Net earnings
attributable to Campbell Soup Company
$ (9 )
$ 12 $ 3 $ 13 $ 6
$ 19 Diluted net earnings per share attributable to
Campbell Soup Company
$ (.03 ) $
.04 $ .01 $ .04 $ .02
$ .06
Year Ended (millions, except per
share amounts)
July 30, 2017 Gross margin, as recast*
$ 2,925 Add: Restructuring charges, implementation
costs and other related costs (2)
4 Adjusted Gross
margin $ 2,929 Adjusted Gross margin
percentage 37.1 % Earnings before interest and
taxes, as reported $ 1,400 Deduct: Total pension
and postretirement benefit mark-to-market adjustments (1)
(178 ) Add: Restructuring charges, implementation
costs and other related costs (2)
58 Add: Impairment charges
(3)
212 Adjusted Earnings before interest and
taxes $ 1,492 Interest, net, as
reported $ 107 Add: Sale of notes (4)
6
Adjusted Interest, net $ 113
Adjusted Earnings before taxes $ 1,379
Taxes on earnings, as reported $ 406 Deduct:
Tax expense from total pension and postretirement benefit
mark-to-market adjustments (1)
(62 ) Add: Tax benefit
from restructuring charges, implementation costs and other related
costs (2)
21 Add: Tax benefit from impairment charges (3)
32 Add: Tax benefit from sale of notes (4)
50
Adjusted Taxes on earnings $ 447
Adjusted effective income tax rate 32.4 %
Net earnings attributable to Campbell Soup Company, as
reported $ 887 Deduct: Net adjustment from total
pension and postretirement benefit mark-to-market adjustments (1)
(116 ) Add: Net adjustment from restructuring
charges, implementation costs and other related costs (2)
37
Add: Net adjustment from impairment charges (3)
180 Deduct:
Net adjustment from sale of notes (4)
(56 )
Adjusted Net earnings attributable to Campbell Soup Company
$ 932 Diluted net earnings per share
attributable to Campbell Soup Company, as reported $
2.89 Deduct: Net adjustment from total pension and
postretirement benefit mark-to-market adjustments (1)
(.38
) Add: Net adjustment from restructuring charges,
implementation costs and other related costs (2)
.12 Add:
Net adjustment from impairment charges (3)
.59 Deduct: Net
adjustment from sale of notes (4)
(.18 ) Adjusted
Diluted net earnings per share attributable to Campbell Soup
Company $ 3.04 *Reflects the impact of the
adoption of new accounting guidance on the presentation of net
periodic pension cost and net periodic postretirement benefit cost
in the first quarter of fiscal 2018.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20171121005159/en/
Campbell Soup CompanyINVESTOR
CONTACT:Ken Gosnell,
856-342-6081ken_gosnell@campbellsoup.comorMEDIA CONTACT:Thomas Hushen,
856-342-5227thomas_hushen@campbellsoup.com
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