Campbell Reports First Quarter Results: Earnings Per Share of $.73 Includes $.14 Gain from Tax Settlement; Adjusted Earnings Per Share Increase 7 Percent; Company Announces $600 Million Share Repurchase Plan.CAMDEN Camden, borough, Greater London, England Camden, inner borough (1991 pop. 170,500) of Greater London, SE England. Within the borough, residential Hampstead is popular with writers and artists. , N.J. -- Campbell Soup Company Campbell Soup Company (NYSE: CPB) (also known as Campbell's) is a well-known American producer of canned soups and related products. Campbell's products are sold in 120 countries around the world. It is headquartered in Camden, New Jersey. (NYSE NYSE See: New York Stock Exchange :CPB CPB see cardiopulmonary bypass. CPB Cardiopulmonary bypass. See Port-Access cardiopulmonary bypass. ) today reported net earnings increased to $302 million in the first quarter ended October October: see month. 30, 2005 versus $230 million in the prior year. Diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of for the quarter were $.73, compared with $.56 in the year-ago period. These results included several items that impact the comparability of results this quarter with a year ago. The company also announced that its Board of Directors has authorized au·thor·ize tr.v. au·thor·ized, au·thor·iz·ing, au·thor·iz·es 1. To grant authority or power to. 2. To give permission for; sanction: the purchase of up to $600 million of company stock on the open market or through privately negotiated transactions through the end of fiscal 2008. In addition, the company will continue to purchase shares, under separate authorization The right or permission to use a system resource; the process of granting access. See access control. , as part of its practice of buying back shares sufficient to offset shares issued under incentive compensation plans. Beginning in fiscal 2006, the company adopted a new accounting standard (SFAS SFAS Statement of Financial Accounting Standards SFAS Special Forces Assessment and Selection SFAS Student Financial Aid Services SFAS Sport Fishing Association of Singapore SFAS Safety Features Actuation System SFAS Statewide Fixed Assets System 123R) that requires all stock-based compensation to be expensed. Had all stock-based compensation been expensed in the year-ago quarter, net earnings would have been $224 million and diluted earnings per share would have been $.54. For the full fiscal year 2005, diluted earnings per share would have been $1.64. Net earnings and earnings per share in the first quarter of fiscal 2006 were impacted by the following items: --The company recorded a non-cash tax benefit of $47 million resulting from the favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. resolution of a U.S. tax contingency contingency n. an event that might not occur. related to transactions involving government securities in a prior period. In addition, the company reduced interest expense and accrued interest Accrued Interest The interest that has accumulated on a bond since the last interest payment up to but not including the settlement date. There are two methods for calculating accrued interest: 1) 360-day year method, used for corporate and municipal bonds. payable by $21 million and adjusted deferred tax expense by $8 million ($13 million after tax). The aggregate non-cash impact of the settlement on net earnings was $60 million, or $.14 per share. --The company finalized See finalization. its plan to repatriate repatriate To bring home assets that are currently held in a foreign country. Domestic corporations are frequently taxed on the profits that they repatriate, a factor inducing the firms to leave overseas the profits earned there. earnings from non-U non-U adj. Chiefly British Not characteristic of the upper class, especially in language usage. [non- + U2. .S. subsidiaries under the provisions of the American American, river, 30 mi (48 km) long, rising in N central Calif. in the Sierra Nevada and flowing SW into the Sacramento River at Sacramento. The discovery of gold at Sutter's Mill (see Sutter, John Augustus) along the river in 1848 led to the California gold rush of Jobs Creation Act, and as a result, recorded incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. tax expense of $8 million, or $.02 per share, associated with one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. incremental dividends of $225 million. This incremental dividend is in addition to $200 million that was provided for in fiscal year 2005, raising the total dividends to be repatriated under the American Jobs Creation Act to $425 million. --The company changed the method of accounting for certain U.S. inventories from the LIFO (Last In-First Out) A queueing method in which the next item to be retrieved is the item most recently placed in the queue. Contrast with FIFO. LIFO - stack method to the average cost method. The impact of the change to this preferable method of accounting resulted in a $13 million pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta gain. The impact on net earnings was $8 million, or $.02 per share. Prior periods were not restated since the impact of the change on previously issued financial statements was not considered material. After adjusting for these items, net earnings would have been $242 million in the first quarter of fiscal 2006 and $224 million in the year-ago period, an increase of 8 percent. Earnings per share would have been $.58 in the first quarter of fiscal 2006 and $.54 in the year-ago period, an increase of 7 percent. For the first quarter, sales rose 1 percent to $2,110 million, following a strong year-ago quarter when sales increased 10 percent. Sales for the quarter reflect the following factors: --Volume and mix subtracted 3 percent --Price and sales allowances added 4 percent --Increased promotional spending subtracted 1 percent --Currency added 1 percent Douglas Douglas, city, Isle of Man Douglas, city (1991 pop. 19,950), capital of the Isle of Man, Great Britain. It is a popular resort, connected by rail to Ramsey and Port Erin, on the Irish Sea. Tourism is the chief industry. R. Conant Co·nant , James Bryant 1893-1978. American educator who was president of Harvard University (1933-1953) and served as ambassador to West Germany (1955-1957). , Campbell's President and Chief Executive Officer, said, "Our plan to drive quality growth is on track. This quarter, although our ready-to-serve soup sales were significantly weaker due to a change in our pricing and promotional activity from a year ago, we continued to improve our profit margin while laying the foundation for driving top-line growth for the balance of the year, consistent with our goal. I am confident in the plans we have in place to drive growth across our portfolio, including U.S. Soup. The $600 million share repurchase Share Repurchase A program by which a company buys back its own shares from the marketplace, reducing the number of outstanding shares. This is usually an indication that the company's management thinks the shares are undervalued. program we announced today leverages our strong cash flow generation and reflects the confidence we have in our long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. growth prospects." Excluding the gain of $.14 related to the favorable tax settlement, and other items affecting comparability, the company confirmed its fiscal 2006 guidance for earnings per share to increase between 5 and 7 percent from the adjusted fiscal year 2005 base of $1.64. Summary of Fiscal 2006 First Quarter Results by Segment U.S. Soup, Sauces and Beverages Sales for U.S. Soup, Sauces and Beverages were $970 million, a 2 percent decrease compared with a year ago. The change in sales reflects the following factors: --Volume and mix subtracted 7 percent --Price and sales allowances added 5 percent Operating earnings Operating Earnings Profits after subtracting expenses such as marketing, cost of goods sold, administration and general operating costs from revenue. Notes: Tax and interest expenses are not subtracted - operating earnings are synonymous with EBIT (earnings before were $288 million compared with $275 million in the prior-year period. Earnings for the first quarter of this year included an $8 million benefit from the change in the method of accounting for inventory. Prior-year earnings would have been $1 million lower had all stock-based compensation been expensed. Operating earnings were driven by higher selling prices and productivity gains, which more than offset the impact of lower sales and cost inflation. Soup sales for the quarter declined 6 percent, driven by the following: --Sales of "Campbell's" condensed con·dense v. con·densed, con·dens·ing, con·dens·es v.tr. 1. To reduce the volume or compass of. 2. To make more concise; abridge or shorten. 3. Physics a. soups increased 1 percent following a strong year-ago quarter that delivered 10 percent growth. Both eating and cooking varieties delivered gains in this year's quarter. The condensed soup segment continues to benefit from the gravity-feed shelving shelv·ing n. 1. Shelves considered as a group. 2. Material for shelves. 3. An incline; a slope. shelving Noun 1. material for shelves 2. systems which are now installed in more than 14,000 grocery stores and the continuation of more effective advertising. --Sales of ready-to-serve soups declined 17 percent for the quarter versus year ago when sales were up 18 percent. "Campbell's Chunky chunk·y adj. chunk·i·er, chunk·i·est 1. Short and thick; stocky. 2. Containing small thick pieces: chunky peanut butter; chunky soup. " soups in cans were a primary driver of the decline as the business was adversely affected by a change in promotional activity in comparison to the year-ago period in which aggressive discounting drove significantly higher volume. In addition, the discontinuance Cessation; ending; giving up. The discontinuance of a lawsuit, also known as a dismissal or a non-suit, is the voluntary or involuntary termination of an action. DISCONTINUANCE, pleading. A chasm or interruption in the pleading. 2. of "Campbell's Kitchen Classics" soups contributed to the declines in ready-to-serve soups. "Campbell's Select" soup sales increased in the quarter driven by the introduction of "Campbell's Select Gold Label" soups, which use aseptic aseptic /asep·tic/ (-tik) free from infection or septic material. a·sep·tic adj. Of, relating to, or characterized by asepsis. technology. --Sales of microwaveable soups increased in the quarter driven by the introduction of "Campbell's" Red and White ready-to-serve Chicken Noodle, Tomato, and Vegetable soups in bowls. --Sales of "Swanson" broth broth liquid media for culturing microorganisms. cooked meat broth a medium useful for culturing anaerobic bacteria. enrichment broth one modified to permit growth by selected bacteria. increased 9 percent for the quarter. Volume gains were achieved behind the continued growth in cooking usage and consumers' growing preference for aseptically-packaged broth. Highlights of this segment's other businesses include: --"V8" vegetable juice Vegetable juice is a popular drink all over the world. Vegetable juice is an alternative to fruit juice. Most commercial brands do however contain a large amount of sodium. If making vegetable juice at home, a juicer that can process vegetables will be needed. recorded a double-digit dou·ble-dig·it adj. Being between 10 and 99 percent: double-digit inflation. sales increase as the business benefited from new and more effective advertising. "Campbell's" tomato juice sales also increased, while sales of "V8 Splash" juice beverages declined. --"Campbell's Chunky" chili (language) CHILI - D.L. Abt. A language for systems programming, based on ALGOL 60 with extensions for structures and type declarations. ["CHILI, An Algorithmic Language for Systems Programming", CHI-1014, Chi Corp, Sep 1975] canned sales declined in comparison to a year ago when the product line was introduced. This was partially offset by sales from the launch of new microwaveable bowls. --"Campbell's SpaghettiOs SpaghettiOs are a brand of canned spaghetti that consist of small, circular pasta, suspended in cheese and tomato sauce. Besides the "plain" (pasta and sauce only) version, other varieties of SpaghettiOs include miniature meatballs or "franks" (processed meat that resemble slices " pasta While the only basic difference between these names is the shape of the pasta, each pasta is typically matched with a particular sauce based on cooking time, consistency, ability to hold sauce, ease of eating, etc. sales increased as consumers continue to respond positively to the transition from the "Franco-American Fran·co-A·mer·i·can n. An American of French or French-Canadian descent. adj. 1. Of or relating to the Franco-Americans. 2. " brand to the "Campbell's" brand supported by new advertising. --"Prego Prego® is a trade mark brand name pasta sauce of Campbell Soup Company. It was introduced in 1981 internationally and is based on a family recipe of one of the chefs. Eventually they became the number one selling dry grocery product of the decade. " pasta sauce sales declined for the quarter due to high levels of competitive activity in the category. --Sales of "Pace" Mexican Mexican named after or originating in Mexico. Mexican axolotl see ambystomamexicanum. Mexican beaded lizard (Heloderma horridum sauces increased for the quarter driven by a new and more effective advertising campaign. Baking baking: see cooking. baking Process of cooking by dry heat, especially in an oven. Baked products include bread, cookies, pies, and pastries. and Snacking Sales for Baking and Snacking were $458 million, a 2 percent increase compared with a year ago. A breakdown of the change in sales follows: --Volume and mix subtracted 2 percent --Price and sales allowances added 3 percent --Increased promotional spending subtracted 1 percent --Currency added 2 percent Operating earnings were $50 million compared with $46 million in the prior-year period. Earnings for the first quarter of this year included a $5 million benefit from the change in the method of accounting for inventory. Prior-year earnings would have been $2 million lower had all stock-based compensation been expensed. Operating earnings for the quarter were also driven by higher earnings at Arnott's and favorable currency, which were partially offset by declines at Pepperidge Farm Pepperidge Farm was founded in 1937 by Margaret Rudkin, who named the brand for a property her family owned in Connecticut (which itself was named for the pepperidge tree, Nyssa sylvatica). In 1961, the company was purchased by Campbell's. due to a higher level of marketing expenses in support of the launch of the new "Pepperidge Farm Whims" poppable snacks. Further details of sales results include the following: --Pepperidge Farm sales grew as fresh bakery and cookies and cracker (1) A person who breaks into a computer system without authorization, whose purpose is to do damage (destroy files, steal credit card numbers, plant viruses, etc.). Because a cracker uses low-level hacker skills to do cracking, the terms "cracker" and "hacker" have become sales increased, more than offsetting declines in its frozen business. --Sales growth of "Pepperidge Farm" fresh bread and bakery products was driven by breakfast and sandwich items, highlighted by the continued success of English 1. English - (Obsolete) The source code for a program, which may be in any language, as opposed to the linkable or executable binary produced from it by a compiler. The idea behind the term is that to a real hacker, a program written in his favourite programming language is muffins, whole grain and "Farmhouse" breads, and sandwich rolls. --"Pepperidge Farm" cookies and cracker sales increased, primarily due to solid performance of "Pepperidge Farm" Chocolate Chunk cookies, as well as gains in distinctive crackers. Sales of "Pepperidge Farm Goldfish" snack crackers were up slightly in the quarter. --Arnott's sales increased versus a year ago due to favorable currency and gains on Arnott's two biggest icon brands, "Shapes" and "Tim Tams Tim Tams are a chocolate biscuit made by Arnott's Biscuits, Australia. A Tim Tam is composed of two layers of chocolate malted biscuit, separated by a light chocolate cream filling, and coated in a thin layer of textured chocolate. ," which was aided by the strong performance of new "Tim Tam" Balls. International Soup and Sauces Sales for International Soup and Sauces were $420 million, a 1 percent increase compared with the year-ago period, due to currency. Operating earnings were flat at $55 million. Prior year earnings would have been $1 million lower had all stock-based compensation been expensed. Operating earnings growth in Canada Canada (kăn`ədə), independent nation (2001 pop. 30,007,094), 3,851,787 sq mi (9,976,128 sq km), N North America. Canada occupies all of North America N of the United States (and E of Alaska) except for Greenland and the French islands of and currency gains were offset by declines in Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). and Latin America Latin America, the Spanish-speaking, Portuguese-speaking, and French-speaking countries (except Canada) of North America, South America, Central America, and the West Indies. .Further details of sales results include the following: --Sales in Europe declined during the first quarter due to weakness in the U.K. business and the unfavorable impact of currency. --In Asia Pacific, sales increased significantly driven by continued growth in soup and beverages in Australia Australia (ôstrāl`yə), smallest continent, between the Indian and Pacific oceans. With the island state of Tasmania to the south, the continent makes up the Commonwealth of Australia, a federal parliamentary state (2005 est. pop. . Highlights for the quarter include the launch of "V8 Plus" beverages and expanded distribution of microwaveable soups. --The Canadian business Canadian Business is the longest-publishing business magazine in Canada. It was founded in 1928 as The Commerce of the Nation, the organ of the Canadian Chamber of Commerce. The magazine was renamed Canadian Business in 1933. delivered strong sales results driven by gains across condensed and ready-to-serve soups and broth. "Campbell's Soup at Hand" was successfully introduced in the quarter. Favorable currency also contributed to sales gains. Other The balance of the portfolio includes the Godiva Chocolatier choc·o·la·tier n. 1. One who makes or sells chocolate. 2. A place where chocolate is made or sold. [French, from chocolat, chocolate, from Spanish chocolate business worldwide and the Away From Home business in the U.S. and Canada. Sales grew 13 percent to $262 million compared with the same period a year ago. A breakdown of the change in sales follows: --Volume and mix added 10 percent --Price and sales allowances added 3 percent Operating earnings were $26 million compared with $22 million in the prior-year period. Prior year earnings would have been $1 million lower had all stock-based compensation been expensed. Operating earnings growth was also driven by strong sales growth and margin improvements in the Away From Home business. Further details include the following: --Godiva Chocolatier sales grew at a double-digit rate, driven by solid performance in both the U.S. and international markets. North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. same-store retail sales increased 10 percent in the quarter. In the U.S., new "Chocolixir" beverages and "Godiva Platinum," a new chocolate collection, delivered strong results. In Japan, the introduction of "Godiva Platinum" and refurbished boutique Boutique A small investment firm specializing in offering specific, but limited services to a select number of individuals. Notes: These investment firms are the alternatives to large financial supermarkets. They provide a highly personalized environment for investing. stores contributed to sales gains. --Away From Home sales continued to grow, driven by double-digit growth in refrigerated re·frig·er·ate tr.v. re·frig·er·at·ed, re·frig·er·at·ing, re·frig·er·ates 1. To cool or chill (a substance). 2. To preserve (food) by chilling. soups marketed through retail deli programs. Solid gains in both frozen and canned soups Canned soup is soup that comes packaged in a can. It can be condensed, in which case it is prepared by adding water (or sometimes milk), or it can be ready-to-eat, meaning that it only needs to be warmed. Canned soup can be prepared by heating in a pan or in the microwave. and bakery products sold through the Away From Home channels also contributed to growth. Non-GAAP Financial Information A reconciliation of the adjusted fiscal 2006 and 2005 financial information to the reported financial information is attached to this release and can also be found on the company's website at www.campbellsoupcompany.com in the "Investor Center" section. Conference Call The company will host a conference call to discuss these results on November 21 at 10:00 a.m. Eastern Standard Time. U.S. participants may access the call at 1-888-791-1856 and non-U.S. participants at 1-773-756-4600. Participants should call at least five minutes prior to the starting time Noun 1. starting time - the time at which something is supposed to begin; "they got an early start"; "she knew from the get-go that he was the man for her" commencement, get-go, offset, outset, showtime, start, kickoff, beginning, first . The passcode is "Campbell Soup" and the conference leader is Len Griehs. The call will also be broadcast live over the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the at www.campbellsoupcompany.com and can be accessed by clicking on the "Webcast" banner. A recording of the call will be available approximately two hours after it is completed through midnight November 25, 2005 at 1-866-428-3803 or 1-203-369-0904. Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. This release contains "forward-looking statements" which reflect the company's current expectations about its future plans and performance, including statements concerning the impact of marketing investments and strategies, pricing, new product introductions and innovation, cost-saving initiatives and quality improvement on sales, earnings and margins. These forward-looking statements rely on a number of assumptions and estimates which could be inaccurate and which are subject to risks and uncertainties. Actual results could vary materially from those anticipated or expressed in any forward-looking statement made by the company. Please refer to the company's most recent Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. and subsequent filings for a further discussion of these risks and uncertainties. The company disclaims any obligation or intent to update the forward-looking statements in order to reflect events or circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or after the date of this release. Reporting Segments Beginning in fiscal year 2005, Campbell Soup Company earnings results are reported for the following segments: U.S. Soup, Sauces and Beverages includes the following retail businesses: "Campbell's" brand condensed and ready-to-serve soups, "Swanson" broth and canned poultry poultry, domesticated fowl kept primarily for meat and eggs; including birds of the order Galliformes, e.g., the chicken, turkey, guinea fowl, pheasant, quail, and peacock; and natatorial (swimming) birds, e.g., the duck and goose. businesses, "Prego" pasta sauce, "Pace" Mexican sauce, "Campbell's Chunky" chili, "Campbell's" canned pasta, gravies and beans See JavaBeans. , "Campbell's Supper Supper is the name for the evening meal in some dialects of English - ordinarily the last meal of the day, usually the meal that comes after dinner. The term is derived from the French souper Bakes" meal kits, "V8" vegetable juices, "V8 Splash" juice beverages, and "Campbell's" tomato juice. Baking and Snacking includes the following businesses: "Pepperidge Farm" cookies, crackers, breads and frozen products in U.S. retail, "Arnott's" biscuits in Australia and Asia Pacific, and "Arnott's" salty salt·y adj. salt·i·er, salt·i·est 1. Of, containing, or seasoned with salt. 2. Suggestive of the sea or sailing life. 3. Witty; pungent; earthy: salty humor. snacks in Australia. International Soup and Sauces includes the soup, sauce and beverage businesses outside of the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. , including Canada, Europe, Mexico, Latin America, and the Asia Pacific region. Other includes the Godiva Chocolatier business worldwide and the Away From Home business in the U.S. and Canada. About Campbell Soup Company Campbell Soup Company is a global manufacturer and marketer of high quality simple meals, including soup, baked snacks, vegetable-based beverages, and premium chocolate products. Founded in 1869, the company has a portfolio of more than 20 market-leading brands, including "Campbell's," "Pepperidge Farm," "Arnott's," "V8," and "Godiva." For more information on the company, visit Campbell's website at www.campbellsoupcompany.com.
CAMPBELL SOUP COMPANY CONSOLIDATED
STATEMENTS OF EARNINGS (unaudited)
(millions, except per share amounts)
THREE MONTHS ENDED
------------------
October October
30, 2005 31, 2004
------------ ------------
Net sales $ 2,110 $ 2,091
------------ ------------
Costs and expenses
Cost of products sold 1,228 1,245
Marketing and selling expenses 320 314
Administrative expenses 138 129
Research and development expenses 24 20
Other expenses / (income) (1) 2
------------ ------------
Total costs and expenses 1,709 1,710
------------ ------------
Earnings before interest and taxes 401 381
Interest, net 26 44
------------ ------------
Earnings before taxes 375 337
Taxes on earnings 73 107
------------ ------------
Net earnings $ 302 $ 230
============ ============
Per share - basic
Net earnings $ .74 $ .56
============ ============
Dividends $ .18 $ .17
============ ============
Weighted average shares outstanding - basic 409 409
============ ============
Per share - assuming dilution
Net earnings $ .73 $ .56
============ ============
Weighted average shares outstanding
- assuming dilution 414 412
============ ============
The company adopted SFAS 123R in fiscal 2006 which requires that
all stock-based awards be expensed. Had compensation expense been
recognized in fiscal 2005 for all stock-based awards, an additional
pre-tax expense of $10 would have been recognized. Net earnings would
have been $224 and diluted earnings per share would have been $.54.
The 2005 pre-tax incremental compensation expense would have been
recognized as follows on the Consolidated Statements of Earnings: Cost
of products sold - $1; Marketing and selling - $3; Administrative -
$5; and Research and development - $1.
In fiscal 2006, the company changed the method of accounting for
certain U.S. inventories from the LIFO method to the average cost
method. The impact of the change was reflected as a one-time non-cash
pre-tax benefit of $13 ($8 after tax or $.02 per share).
In fiscal 2006, the company recorded a non-cash tax benefit of $47
resulting from the favorable resolution of a U.S. tax contingency
related to a prior period. In addition, the company reduced interest
expense and accrued interest payable by $21 and adjusted deferred tax
expense by $8 ($13 after tax). The aggregate non-cash impact of the
settlement on net earnings was $60, or $.14 per share.
During the quarter, an incremental tax expense of $8 (or $.02 per
share) was recorded related to repatriated earnings from non-U.S.
subsidiaries under the provision of the American Jobs Creation Act.
CAMPBELL SOUP COMPANY CONSOLIDATED
SUPPLEMENTAL SCHEDULE OF SALES AND EARNINGS (unaudited)
(millions, except per share amounts)
THREE MONTHS ENDED
------------------
October October Percent
Sales 30, 2005 31, 2004 Change
----- -------- -------- -------
Contributions:
U.S. Soup, Sauces and
Beverages $ 970 $ 994 -2%
Baking and Snacking 458 449 2%
International Soup and
Sauces 420 416 1%
Other 262 232 13%
-------- --------
Total sales $ 2,110 $ 2,091 1%
======== ========
Earnings
--------
Contributions:
U.S. Soup, Sauces and
Beverages $ 288 $ 275 5%
Baking and Snacking 50 46 9%
International Soup and
Sauces 55 55 0%
Other 26 22 18%
-------- --------
Total operating earnings 419 398 5%
Unallocated corporate expenses (18) (17)
-------- --------
Earnings before interest and
taxes 401 381 5%
Interest, net (26) (44)
Taxes on earnings (73) (107)
-------- --------
Net earnings $ 302 $ 230 31%
======== ========
Net earnings per share -
assuming dilution $ .73 $ .56 30%
======== ========
The company adopted SFAS 123R in fiscal 2006 which requires that
all stock-based awards be expensed. Had compensation expense been
recognized in fiscal 2005 for all stock-based awards, an additional
pre-tax expense of $10 would have been recognized. Net earnings would
have been $224 and diluted earnings per share would have been $.54.
The 2005 pre-tax incremental compensation expense would have been
recognized as follows: U.S. Soup, Sauces and Beverages - $1; Baking
and Snacking - $2; International Soup and Sauces - $1; Other - $1; and
Unallocated Corporate - $5.
In fiscal 2006, the company changed the method of accounting for
certain U.S. inventories from the LIFO method to the average cost
method. The impact of the change was reflected as a one-time non-cash
pre-tax benefit of $13 ($8 after tax or $.02 per share). The pre-tax
benefit is reflected as follows: U.S. Soup, Sauces and Beverages - $8
and Baking and Snacking - $5.
In fiscal 2006, the company recorded a non-cash tax benefit of $47
resulting from the favorable resolution of a U.S. tax contingency
related to a prior period. In addition, the company reduced interest
expense and accrued interest payable by $21 and adjusted deferred tax
expense by $8 ($13 after tax). The aggregate non-cash impact of the
settlement on net earnings was $60, or $.14 per share.
During the quarter, an incremental tax expense of $8 (or $.02 per
share) was recorded related to repatriated earnings from non-U.S.
subsidiaries under the provision of the American Jobs Creation Act.
CAMPBELL SOUP COMPANY CONSOLIDATED
BALANCE SHEETS (unaudited)
(millions)
October October
30, 2005 31, 2004
---------- ----------
Current assets $ 1,910 $ 1,857
Plant assets, net 1,957 1,916
Intangible assets, net 3,006 3,103
Other assets 291 340
---------- ----------
Total assets $ 7,164 $ 7,216
========== ==========
Current liabilities $ 2,438 $ 2,590
Long-term debt 2,225 2,565
Nonpension postretirement benefits 278 295
Other liabilities 710 649
Shareowners' equity 1,513 1,117
---------- ----------
Total liabilities and shareowners' equity $ 7,164 $ 7,216
========== ==========
Total debt $ 2,976 $ 3,457
========== ==========
Cash and cash equivalents $ 45 $ 44
========== ==========
Reconciliation of GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). and Non-GAAP Financial Measures 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 Instead of; in place of; in substitution of. It does not mean in addition to. , GAAP reported measures. The impact of changes in accounting methods and certain tax matters on financial information are as follows:
(1) In fiscal 2006, the company changed the method of determining
the cost of certain U.S. inventories from the LIFO method to
the average cost method. As a result, the company recorded a
$13 million pre-tax, $8 million after tax, benefit from the
change in accounting method. Prior periods were not restated
since the impact on previously issued financial statements was
not considered material.
(2) In fiscal 2006, the company adopted SFAS 123R which requires
that all stock-based compensation be expensed based on the
fair value of the awards. In fiscal 2005, the company did not
recognize compensation expense for stock options under
previous accounting guidelines. This adjustment reflects the
pro forma impact had all stock-based awards been expensed.
(3) In fiscal 2006, the company recorded a non-cash tax benefit of
$47 million resulting from the favorable resolution of a U.S.
tax contingency related to a prior period. In addition, the
company reduced interest expense and accrued interest payable
by $21 million and adjusted deferred tax expense by $8 million
($13 million after tax). The aggregate non-cash impact of the
settlement on net earnings was $60 million, or $.14 per share.
(4) In fiscal 2006, the company recorded incremental tax expense
of $8 million associated with the repatriation of earnings
under the American Jobs Creation Act.
The table below reconciles financial information, presented in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with GAAP, to financial information excluding the impact of changes in accounting methods and certain tax matters:
First Quarter
-----------------
Oct. 30, Oct. 31, %
2005 2004 Change
-------- -------- ------
Earnings before interest and taxes, as
reported $ 401 $ 381
Deduct: Impact of change in inventory
accounting method (1) (13) -
Deduct: Impact had all stock-based awards
been expensed under SFAS 123R (2) - (10)
--------- --------
Adjusted Earnings before interest and taxes $ 388 $ 371
--------- --------
Interest, net, as reported $ 26 $ 44
Add: Reduction in interest expense related
to the favorable resolution of tax
contingency (3) 21 -
--------- --------
Adjusted Interest, net $ 47 $ 44
--------- --------
Adjusted Earnings before taxes $ 341 $ 327 4%
--------- --------
Taxes on earnings, as reported $ 73 $ 107
Deduct: Tax impact of change in inventory
accounting method (1) (5) -
Deduct: Tax impact had all stock-based
awards been expensed under SFAS 123R (2) - (4)
Add: Adjustment to tax expense related to
the favorable resolution of tax
contingency (3) 39 -
Deduct: Incremental tax recorded for
earnings to be repatriated under the
American Jobs Creation Act (4) (8) -
--------- --------
Adjusted Taxes on earnings $ 99 $ 103
--------- --------
Adjusted effective income tax rate 29.0% 31.5%
Net earnings, as reported $ 302 $ 230
Deduct: Impact of change in inventory
accounting method (1) (8) -
Deduct: Impact had all stock-based awards
been expensed under SFAS 123R (2) - (6)
Deduct: Net adjustment to taxes and
interest expense related to the favorable
resolution of tax contingency (3) (60) -
Add: Incremental tax recorded for earnings
to be repatriated under the American Jobs
Creation Act (4) 8 -
--------- --------
Adjusted Net earnings $ 242 $ 224 8%
========= ========
Earnings per share, as reported $ 0.73 $ 0.56
Deduct: Impact of change in inventory
accounting method (1) (0.02) -
Deduct: Impact had all stock-based awards
been expensed under SFAS 123R (2) - (0.02)
Deduct: Net adjustment to taxes and
interest expense related to the favorable
resolution of tax contingency (3) (0.14) -
Add: Incremental tax recorded for
earnings to be repatriated under the
American Jobs Creation Act (4) 0.02 -
--------- --------
Adjusted Earnings per share* $ 0.58 $ 0.54 7%
========= ========
* The sum of the individual per share amounts does not equal net
earnings per share due to rounding.
The company believes that financial information excluding certain
changes in accounting methods and certain other transactions not
considered to be part of the ongoing business improves the
comparability of year-to-year results. Consequently, the company
believes that investors may be able to better understand its earnings
results if these transactions are excluded from the results.
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