Campbell Reports First Quarter Results.Strong U.S. Soup Performance Drives 8 Percent Sales Increase; Earnings Per Share from Continuing Operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the of $.66 Compared to $.69 in the Prior Period on an as Reported Basis; EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. From Continuing Operations of $.66 Increased 16 Percent Over Prior Year Adjusted Pro Forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma Base 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 an 8 percent sales increase to $2,153 million in the quarter ended October 29, 2006, and earnings from continuing operations of $269 million, compared to $286 million in the prior year. Earnings per share from continuing operations for the current quarter were $.66, compared to $.69 as reported in the year-ago period. Both earnings and earnings per share in the year-ago period included several items that impact the comparability of results from continuing operations. After factoring in the items that impact comparability into the fiscal 2006 reported results, earnings from continuing operations would have been $226 million in the prior-year period compared to $269 million in the current quarter. Adjusted pro forma earnings pro forma earnings Income not necessarily calculated in accordance with generally accepted accounting principles. For example, a company might report pro forma earnings that exclude depreciation expense and nonrecurring expenses such as restructuring costs. per share would have been $.57 in the prior-year period compared to $.66 in the current quarter, an increase of 16 percent. The items recorded in the first quarter of fiscal 2006 that impact the comparability of earnings from continuing operations are:
-- The company recorded a non-cash tax benefit of $47 million
resulting from the favorable resolution of a U.S. tax
contingency related to transactions in government securities in
a prior period. In addition, Campbell 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 earnings was $60
million, or $.14 per share.
-- The company recorded an incremental tax expense of $8 million,
or $.02 per share, associated with the repatriation of non-U.S.
earnings under the American Jobs Creation Act.
-- 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 resulted in a $13 million pre-tax
gain, $8 million after tax, or $.02 per share.
One additional adjustment to earnings per share from continuing operations is required for comparability. In August 2006, upon completing the sale of its U.K. and Ireland businesses for approximately $870 million, Campbell announced a special 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 for $620 million of the proceeds. To provide comparability of results, the company's adjusted 2006 results reflect the pro forma impact of utilizing $620 million of the proceeds from the sale to repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. 17 million shares, an 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. impact of $.02 per share. This results in a 2006 adjusted pro forma base of $.57 compared to $.66 for the first quarter of fiscal 2007. A detailed reconciliation of the adjusted fiscal 2007 and 2006 financial information to the reported financial information is attached to this release. Earnings from discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. in the quarter were $22 million compared to $16 million in the prior year. Earnings for the current year's first quarter reflected a $36 million gain, $22 million after tax, or $.05 per share, from the sale of the U.K. and Ireland businesses, while the prior year's earnings of $.04 per share represented operating performance. For the first quarter, sales were $2,153 million, an increase of 8 percent. Sales for the quarter reflect the following factors:
-- Volume and mix added 4 percent
-- Price and sales allowances added 2 percent
-- Decreased promotional spending added 1 percent
-- Currency added 1 percent
Douglas R. Conant, Campbell's President and Chief Executive Officer, said, "We achieved strong first quarter results across our key strategic growth platforms This article or section needs sources or references that appear in reliable, third-party publications. Alone, primary sources and sources affiliated with the subject of this article are not sufficient for an accurate encyclopedia article. of simple meals and baked snacks. "Within simple meals, our U.S. soup business delivered strong growth across all formatsacondensed, ready-to-serve, and 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. . Given our strategic emphasis on wellness, we are encouraged by the introduction of our new lower sodium soups, featuring natural sea salt. Although this initiative is in its early stages, consumer trial has been solid and initial shipments have exceeded our expectations. We will have a better sense of the incremental impact of this effort as the year progresses. "Within baked snacks, we achieved strong growth in our 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. bakery and cookies and crackers businesses, as well as solid gains in Arnott's biscuit biscuit, n the firing bakes, or stages (referred to as low, medium, and high), during the fusing of dental porcelain preceding the final, or glaze, bake. biscuit in dogs, a grayish-yellow coat color. business in Australia. Additionally, our beverage business continued its strong growth trend, driven by the innovative aV8 V-Fusion' juice beverages and aV8' vegetable juices 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. . "Overall, we are pleased with this very good start to the year." The company confirmed its fiscal 2007 guidance for earnings per share from continuing operations to increase between 5 and 7 percent from the adjusted pro forma fiscal year 2006 base of $1.73. At the end of the quarter, total debt was $2,863 million compared to $2,976 million a year ago. Net debt, or total debt minus cash and cash equivalents, was $2,633 million compared to $2,931 million a year ago, a reduction of $298 million. During the first quarter, Campbell completed its previously announced program to utilize $620 million of the proceeds from the sale of its U.K. and Ireland businesses to repurchase shares. This was accomplished through two accelerated share repurchase transactions for $600 million and $20 million of open market transactions. This is in addition to the three-year $600 million share repurchase plan share repurchase plan A corporation's plan for buying back a predetermined number of its own shares in the open market. Institution of a share repurchase plan derives from management's view that the company has limited outside investment opportunities and announced in November 2005 and Campbell's ongoing practice of buying back shares sufficient to offset shares issued under incentive compensation plans. In total, the company purchased 19.9 million shares for $751 million during the first quarter. Summary of Fiscal 2007 First Quarter Results by Segment U.S. Soup, Sauces and Beverages Sales for U.S. Soup, Sauces and Beverages were $1,052 million, up 8 percent from $970 million a year ago. The change in sales reflects the following factors:
-- Volume and mix added 4 percent
-- Price and sales allowances added 3 percent
-- Decreased promotional spending added 1 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 $322 million compared with $288 million in the prior-year period. Earnings in the prior-year period included an $8 million gain from a change in the method of accounting for inventory. Operating earnings were driven by higher selling prices, increased volume, and productivity gains, partially offset by cost inflation. Total soup sales for the quarter increased 10 percent, driven by the following:
-- Sales of "Campbell's" condensed soups increased 7 percent with
gains in both eating and cooking soups. Condensed eating soups
delivered double-digit growth due to increased advertising and
effective back-to-school merchandising. Solid consumer trial of
new lower sodium soups also had a positive impact on sales.
Sales increases in condensed cooking soups were driven by new
casserole focused advertising. Sales of condensed soups
continued to benefit from the gravity-feed shelving systems,
now installed in more than 16,000 grocery stores.
-- Sales of ready-to-serve soups increased 15 percent for the
quarter driven by significant volume increases. Highlights
for ready-to-serve soup sales performance are as follows:
-- "Campbell's Select" and "Campbell's Chunky" soups had
strong sales growth in both cans and microwavable bowls
driven by increased advertising and promotions.
-- Ready-to-serve soups also benefited from continued strong
demand for "Campbell's" classic soup varieties in
microwavable bowls. New varieties of vegetable beef and
creamy tomato were added in the quarter.
-- Overall, the company's convenience line of soups in
microwavable bowls and cups achieved very strong
double-digit sales growth.
-- Both "Campbell's Select" and "Campbell's Chunky" soups
sales benefited from strong consumer trial of seven new
"Campbell's Healthy Request" lower sodium varieties.
-- As expected, sales of "Campbell's Select Gold Label" soups
declined versus the year-ago period, which benefited from
higher levels of shipments during its introduction.
However, customer and consumer response continued to be
favorable.
-- Sales of "Swanson" broth increased 8 percent for the quarter
due to continued growth in aseptically-packaged broth.
Highlights of this segment's other businesses include:
-- Beverage sales grew at a double-digit rate, driven by the
introduction of "V8 V-Fusion," a 100% juice beverage that
provides a full serving of vegetables and fruit, as well as the
strong performance of "V8" vegetable juices. Launched in the
second quarter of fiscal 2006, "V8 V-Fusion" continues to be
favorably received by the trade and consumers.
-- "Prego" pasta sauce sales declined for the quarter, due to the
timing of promotional activity, while sales of "Pace" Mexican
sauces posted solid gains.
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 $484 million, up 6 percent from $458 million a year ago. A breakdown of the change in sales follows:
-- Volume and mix added 4 percent
-- Price and sales allowances added 2 percent
Operating earnings were $68 million compared with $50 million in the prior-year period. Earnings in the prior-year period included a $5 million gain from a change in the method of accounting for inventory. Operating earnings were driven by significant gains at Pepperidge Farm, primarily due to higher volumes and lower marketing costs compared to the prior year's quarter which included marketing expenses related to the launch of "Whims" poppable cookie cookie File or part of a file put on a Web user's hard disk by a Web site. Cookies are used to store registration data, to make it possible to customize information for visitors to a Web site, to target Web advertising, and to keep track of the products a user wishes to snacks. "Whims" was subsequently discontinued dis·con·tin·ue v. dis·con·tin·ued, dis·con·tin·u·ing, dis·con·tin·ues v.tr. 1. To stop doing or providing (something); end or abandon: . Arnott's also delivered significant earnings growth from favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. product mix, higher selling prices, and productivity improvements. Further details of sales results include the following:
-- Pepperidge Farm achieved double-digit sales growth with gains
in each of its businesses--bakery, cookies and crackers, and
frozen.
-- In the cookies and crackers business, double-digit sales
gains were driven by significant growth of "Goldfish"
crackers, due to effective promotional activity and new
100-calorie packs. Expanded distribution of single-serve
products in convenience and drug store channels, along with
gains in "Milano" cookies, also contributed to growth.
-- Pepperidge Farm's bakery business also delivered strong
sales gains behind continued growth of fresh breads, driven
by the continued popularity of whole grain varieties.
-- At Arnott's, sales decreased slightly as solid gains in the
biscuit business were offset by declines in the snack foods
business and the unfavorable impact of currency.
International Soup and Sauces Sales for International Soup and Sauces were $346 million, up 11 percent from $312 million a year ago. The change in sales reflects the following factors:
-- Volume and mix added 6 percent
-- Price and sales allowances added 1 percent
-- Currency added 4 percent
Operating earnings were $48 million compared to $35 million in the year-ago period. Operating earnings were driven by double-digit increases in the Canadian Canadian (kənā`dēən), river, 906 mi (1,458 km) long, rising in NE New Mexico. and flowing E across N Texas and central Oklahoma into the Arkansas River in E Oklahoma. and European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. businesses and by the favorable impact of currency. Further details of sales results include the following:
-- The Canadian business delivered strong sales results driven by
currency and solid performance of its soup business.
-- The company's European business is focused in four geographies:
France, Germany, Belgium, and the Nordic region. Sales in
Europe increased during the first quarter across all markets
due to the favorable impact of currency and volume gains in
each of these businesses.
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. Segment sales were $271 million, up 3 percent from $262 million a year ago. A breakdown of the change in sales follows:
-- Price and sales allowances added 4 percent
-- Increased promotional spending subtracted 1 percent
Operating earnings were $26 million, flat with the prior-year period. Further details include the following:
-- Godiva Chocolatier sales increased in North America and
international markets. Godiva is currently relaunching its Gold
Ballotin assortment with new contemporary packaging, new
chocolates, and reformulated classic varieties.
-- Away From Home sales increased slightly, due to gains in frozen
soup.
Non-GAAP Financial Information A reconciliation of the adjusted fiscal 2007 and 2006 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 20, 2006 at 10:00 a.m. Eastern Standard Time. U.S. participants may access the call at 1-866-802-4323 and non-U.S. participants at 1-703-639-1320. 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 at www.campbellsoupcompany.com and can be accessed by clicking on the "Shareholder Event / Webcast" banner. A recording of the call will be available approximately two hours after it is completed through midnight November 24, 2006 at 1-888-266-2081 or 1-703-925-2533. The access code is 993507. 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, share repurchase, new product introductions and innovation, cost-saving initiatives, quality improvements, and portfolio strategies, including divestitures, 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 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 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. 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 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. sauce, "Pace" Mexican sauce, "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. " 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] , "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 Latin America, the Spanish-speaking, Portuguese-speaking, and French-speaking countries (except Canada) of North America, South America, Central America, and the West Indies. , 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 soups, baked snacks, vegetable-based beverages, and premium chocolate products. Founded in 1869, the company has a portfolio of 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. [TABLE OMITTED] In fiscal 2006, 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 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 contingency n. an event that might not occur. related to 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 and adjusted deferred tax expense by $8 ($13 after tax). The aggregate non-cash impact of the settlement on earnings from continuing operations was $60, or $.14 per share. In fiscal 2006, incremental tax expense of $8 (or $.02 per share) was recorded related to earnings repatriated from non-U.S. subsidiaries under the provision of the American Jobs Creation Act. The sum of the individual per share amounts does not equal net earnings due to rounding. [TABLE OMITTED] 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 earnings from continuing operations was $60, or $.14 per share. In fiscal 2006, incremental tax expense of $8 (or $.02 per share) was recorded related to earnings repatriated from non-U.S. subsidiaries under the provision of the American Jobs Creation Act. The sum of the individual per share amounts does not equal net earnings due to rounding. [TABLE OMITTED] Certain reclassifications were made to prior year financial statements.
Reconciliation of GAAP and Non-GAAP Financial Measures
First Quarter Ended October 29, 2006
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 GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). reported measures. The company believes that net debt is a non-GAAP measure that provides additional meaningful comparisons between current results and prior period results and a useful perspective on the financial condition of the business. Interest income earned on cash and cash equivalents partially offsets interest expense on debt. Cash and cash equivalents are available to repay outstanding debt upon maturity. The table below summarizes information on total debt and cash and cash equivalents: [TABLE OMITTED] The company believes that financial information excluding certain changes in accounting methods and 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. In fiscal 2006, the following changes in accounting methods and tax matters impacted earnings from continuing operations: [TABLE OMITTED] 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: [TABLE OMITTED] Pro Forma Impact of Use of Proceeds from Sale of Businesses In August 2006, the company completed the sale of its businesses in the United Kingdom and Ireland for [pounds sterling]460 million or approximately $870 million and announced that approximately $620 million of the net proceeds Net Proceeds The amount received after all costs are deducted from the sale of a piece of property or security. Notes: In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). would be used to repurchase shares. To improve the comparability of results, the following table illustrates the pro forma impact had 17 million shares been repurchased and eliminated from shares outstanding in the prior year: [TABLE OMITTED] |
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