Campbell Soup (CPB) 10-Q 2002 Q2 Quarterly report

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended
January 27, 2002 Commission File Number
1-3822

New Jersey
State of Incorporation 21-0419870
I.R.S. Employer Identification No.

Campbell Place
Camden, New Jersey 08103-1799
Principal Executive Offices

Telephone Number: (856) 342-4800

         Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes    No

There were 409,780,587 shares of Capital Stock outstanding as of March 5, 2002.

TABLE OF CONTENTS

PART I.
	ITEM 1. FINANCIAL INFORMATION
	ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
	ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
PART II.
	ITEM 1. LEGAL PROCEEDINGS
	ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
	ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
SIGNATURES
INDEX TO EXHIBITS

Item 1.

PART I.
FINANCIAL INFORMATION
CAMPBELL SOUP COMPANY CONSOLIDATED
Statements of Earnings
(unaudited)
(millions, except per share amounts)

				Three Months Ended				Six Months Ended
				January		January		January		January
				27, 2002		28, 2001		27, 2002		28, 2001
Net sales				$	1,810	$	1,755	$	3,539	$	3,336
Costs and expenses
		Cost of products sold			1,004		918		1,975		1,774
		Marketing and selling expenses			313		245		591		478
		Administrative expenses			92		85		205		171
		Research and development expenses			17		15		35		29
		Other expenses			31		32		66		61
		Restructuring charges			1		—		1		—
			Total costs and expenses		1,458		1,295		2,873		2,513
Earnings before interest and taxes					352		460		666		823
		Interest, net			45		49		98		101
Earnings before taxes					307		411		568		722
Taxes on earnings					104		140		194		247
Net earnings				$	203	$	271	$	374	$	475
Per share — basic
	Net earnings			$	.49	$	.65	$	.91	$	1.14
	Dividends			$	.1575	$	.225	$	.315	$	.450
	Weighted average shares outstanding — basic				410		415		410		418
Per share — assuming dilution
	Net earnings			$	.49	$	.65	$	.91	$	1.12
	Weighted average shares outstanding — assuming dilution				411		419		411		425

See Notes to Financial Statements

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CAMPBELL SOUP COMPANY CONSOLIDATED
Balance Sheets
(unaudited)
(millions, except per share amounts)

			January			July
			27, 2002			29, 2001
Current assets
	Cash and cash equivalents		$	32		$	24
	Accounts receivable			642			442
	Inventories			568			597
	Other current assets			196			158
		Total current assets		1,438			1,221
Plant assets, net of depreciation				1,586			1,637
Intangible assets, net of amortization				2,408			2,451
Other assets				617			618
Total assets			$	6,049		$	5,927
Current liabilities
	Notes payable		$	1,456		$	1,806
	Payable to suppliers and others			583			582
	Accrued liabilities			545			450
	Dividend payable			65			92
	Accrued income taxes			239			190
		Total current liabilities		2,888			3,120
Long-term debt				2,354			2,243
Nonpension postretirement benefits				330			336
Other liabilities, including deferred income taxes of$301and $303				481			475
		Total liabilities		6,053			6,174
Shareowners’ equity
	Preferred stock; authorized 40 shares; none issued			—			—
	Capital stock, $.0375 par value; authorized 560 shares; issued 542 shares			20			20
	Capital surplus			324			314
	Earnings retained in the business			4,896			4,651
	Capital stock in treasury, at cost			(4,903	)		(4,908	)
	Accumulated other comprehensive loss			(341	)		(324	)
		Total shareowners’ equity		(4	)		(247	)
Total liabilities and shareowners’ equity			$	6,049		$	5,927

See Notes to Financial Statements

3

CAMPBELL SOUP COMPANY CONSOLIDATED
Statements of Cash Flows
(unaudited)
(millions)

				Six Months Ended
				January			January
				27, 2002			28, 2001
Cash flows from operating activities:
	Net earnings			$	374		$	475
	Non-cash charges to net earnings
		Depreciation and amortization			147			124
		Deferred income taxes			(2	)		(6	)
		Other, net			30			23
	Changes in working capital
		Accounts receivable			(205	)		(112	)
		Inventories			24			69
		Other current assets and liabilities			123			171
			Net cash provided by operating activities		491			744
Cash flows from investing activities:
	Purchases of plant assets				(61	)		(62	)
	Sales of plant assets				4			6
	Acquisition spending				(15	)		—
	Other, net				(3	)		(3	)
			Net cash used in investing activities		(75	)		(59	)
Cash flows from financing activities:
	Long-term borrowings				800			528
	Repayments of long-term borrowings				(400	)		—
	Short-term borrowings				554			795
	Repayments of short-term borrowings				(1,202	)		(1,223	)
	Dividends paid				(157	)		(189	)
	Treasury stock purchases				—			(589	)
	Treasury stock issuances				4			9
	Other, net				(1	)		—
			Net cash used in financing activities		(402	)		(669	)
	Effect of exchange rate changes on cash				(6	)		(5	)
	Net change in cash and cash equivalents				8			11
	Cash and cash equivalents — beginning of period				24			27
	Cash and cash equivalents — end of period			$	32		$	38

See Notes to Financial Statements

4

CAMPBELL SOUP COMPANY CONSOLIDATED
Statements of Shareowners’ Equity
(unaudited)
(millions, except per share amounts)

		Capital stock
															Earnings			Accumulated
		Issued				In treasury									retained			other			Total
												Capital			in the			comprehensive			shareowners'
		Shares		Amount		Shares			Amount			surplus			business			loss			equity
Balance at July 30, 2000			542	$	20		(121	)	$	(4,373	)	$	344		$	4,373		$	(227	)	$	137
Comprehensive income (loss)
	Net earnings															475						475
	Foreign currency translation adjustments																		(52	)		(52	)
Dividends ($.450 per share)																(187	)					(187	)
Repurchase of shares under forward stock purchase contracts							(11	)		(521	)											(521	)
Treasury stock purchased							(2	)		(68	)											(68	)
Treasury stock issued under management incentive and stock option    plans							2			59			(34	)								25
Balance at January 28, 2001			542	$	20		(132	)	$	(4,903	)	$	310		$	4,661		$	(279	)	$	(191	)
Balance at July 29, 2001			542	$	20		(133	)	$	(4,908	)	$	314		$	4,651		$	(324	)	$	(247	)
Comprehensive income (loss)
	Net earnings															374						374
	Foreign currency translation adjustments																		(11	)		(11	)
	Fair value changes in hedge derivatives																		(6	)		(6	)
Dividends ($.315 per share)																(129	)					(129	)
Treasury stock purchased							—			—												—
Treasury stock issued under management incentive and stock option    plans							—			5			10									15
Balance at January 27, 2002			542	$	20		(133	)	$	(4,903	)	$	324		$	4,896		$	(341	)		$(4	)

See Notes to Financial Statements

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CAMPBELL SOUP COMPANY CONSOLIDATED
Notes to Financial Statements
(unaudited)
(dollars in millions, except per share amounts)

(a)	The financial statements reflect all adjustments which are, in the opinion of management, necessary for a fair presentation of the results for the indicated periods. All such adjustments are of a normal recurring nature. Certain reclassifications were made to the prior year amounts to conform with current presentation.
(b)	Comprehensive Income
	Total comprehensive income is comprised of net earnings, net foreign currency translation adjustments, and net unrealized gains and losses on cash-flow hedges.
	Total comprehensive income for the three months ended January 27, 2002 and January 28, 2001 was $200 and $311, respectively. Total comprehensive income for the six months ended January 27, 2002 and January 28, 2001 was $357 and $423, respectively. Accumulated other comprehensive loss, as reflected in the Statements of Shareowners’ Equity, primarily consists of the cumulative foreign currency translation adjustment and a loss of approximately $6 related to the fair value of various cash-flow hedges. The net loss on cash-flow hedges was not material at January 28, 2001. See note (h) for a description of derivative activity.
(c)	Earnings Per Share
	For the periods presented in the Statements of Earnings, the calculations of basic EPS and EPS assuming dilution vary in that the weighted average shares outstanding assuming dilution includes the incremental effect of stock options. For the three and six months ended January 28, 2001, the weighted average shares outstanding assuming dilution also include the incremental effect of approximately three million and six million shares, respectively, under forward stock purchase contracts, which were settled on December 12, 2000.
(d)	Recently Adopted Accounting Pronouncements
	In the fourth quarter fiscal 2001, the company adopted the Emerging Issues Task Force (EITF) consensus on Issue No. 00-10 “Accounting for Shipping and Handling Fees and Costs.” In the first quarter fiscal 2002, the company adopted EITF Issue No. 00-14 “Accounting for Certain Sales Incentives” and Issue No. 00-25 “Vendor Income Statement Characterization of Consideration Paid to a Reseller of the Vendor’s Products,” as codified by Issue No. 01-9 “Accounting for Consideration Given by a Vendor to a Customer or Reseller of the Vendor’s Products.” Under these Issues, the EITF concluded that certain consumer and trade sales promotion expenses, such as coupon redemption costs, cooperative advertising programs, new product introduction fees, feature price discounts and in-store display incentives, should be classified as a reduction of sales rather than

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	as marketing expenses. The adoption of these issues resulted in the following reclassifications to the three and six month periods ended January 28, 2001: Net sales were reduced by $202 and $399, respectively; Cost of products sold was increased by $56 and $105, respectively; and Marketing and selling expenses were reduced by $258 and $504, respectively. These reclassifications had no impact on net earnings.
(e)	Segment Information
	Campbell Soup Company, together with its consolidated subsidiaries, is a global manufacturer and marketer of high quality, branded convenience food products. Through fiscal 2001, the company was organized and reported the results of operations in three business segments: Soup and Sauces, Biscuits and Confectionery, and Away From Home.
	Beginning in fiscal 2002, the company changed its organizational structure such that operations are managed and reported in four segments: North America Soup and Away From Home, North America Sauces and Beverages, Biscuits and Confectionery, and International Soup and Sauces. Comparative periods have been restated to conform to the current year presentation.
	The North America Soup and Away From Home segment comprises variousCampbell’sbrand soups, including condensed and ready-to-serve varieties,Swansonbroths, the total business in Canada and the Away From Home operations. The Away From Home operations represent the distribution of products such asCampbell’ssoups,Campbell’sspecialty entrees, beverage products and other prepared foods through various food service channels. The North America Sauces and Beverages segment includesPregopasta sauces,Pace Mexican sauces,Franco-Americancanned pastas and gravies,V8vegetable juices,V8 Splashjuice beverages,Campbell’stomato juice and the total of all businesses in Mexico and other Latin American countries. The Biscuits and Confectionery segment includesPepperidge Farmcookies, crackers, breads and frozen products in North America,Arnott’sbiscuits and crackers in Australia and Asia/Pacific andGodivachocolates worldwide. The International Soup and Sauces segment comprises operations outside of North America, includingErascosoups in Germany,Liebigsoups in France, Campbell’ssoups andHomepridesauces in the United Kingdom,Campbell’ssoups in the Asia/Pacific region, and the European dry soup and sauce businesses under theBatchelors, Oxo, Lesieur, Royco, Heisse Tasse, Blå BandandMcDonnellsbrands.
	Accounting policies for measuring segment assets and earnings before interest and taxes are substantially consistent with those described in the summary of significant accounting policies disclosed in the company’s fiscal 2001 Annual Report on Form 10-K. The company evaluates segment performance before interest and taxes, excluding certain non-recurring charges. The North America Soup and Away From Home and North America Sauces and Beverages segments operate under an integrated supply chain organization, sharing substantially all manufacturing, warehouse, distribution and sales activities. Accordingly, assets

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have been allocated between the two segments based on various measures, for example, budgeted production hours for fixed assets and depreciation.

January 27, 2002

			Earnings			Depreciation
Three Months			Before Interest			and		Capital
Ended	Net Sales		and Taxes			Amortization		Expenditures
North America Soup and Away From Home	$	812	$	216		$	16	$	9
North America Sauces and Beverages		319		65			13		5
Biscuits and Confectionery		428		76			25		18
International Soup and Sauces		251		28			13		3
Corporate and Eliminations		—		(33	)		7		2
Total	$	1,810	$	352		$	74	$	37
			Earnings			Depreciation
Six Months			Before Interest			and		Capital		Segment
Ended	Net Sales		and Taxes			Amortization		Expenditures		Assets
North America Soup and Away From Home	$	1,618	$	445		$	32	$	13	$	1,357
North America Sauces and Beverages		632		124			26		8		1,222
Biscuits and Confectionery		807		110			50		29		1,248
International Soup and Sauces		482		51			26		8		1,547
Corporate and Eliminations		—		(64	)		13		3		675
Total	$	3,539	$	666		$	147	$	61	$	6,049

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January 28, 2001

			Earnings			Depreciation
Three Months			Before Interest			and		Capital
Ended	Net Sales		and Taxes			Amortization		Expenditures
North America Soup and Away From Home	$	852	$	294		$	18	$	11
North America Sauces and Beverages		314		89			13		5
Biscuits and Confectionery		425		89			20		17
International Soup and Sauces		164		19			6		3
Corporate and Eliminations		—		(31	)		5		2
Total	$	1,755	$	460		$	62	$	38
			Earnings			Depreciation
Six Months			Before Interest			and		Capital		Segment
Ended	Net Sales		and Taxes			Amortization		Expenditures		Assets
North America Soup and Away From Home	$	1,626	$	552		$	33	$	17	$	1,347
North America Sauces and Beverages		613		161			26		9		1,213
Biscuits and Confectionery		792		134			41		27		1,287
International Soup and Sauces		305		33			12		5		610
Corporate and Eliminations		—		(57	)		12		4		637
Total	$	3,336	$	823		$	124	$	62	$	5,094

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Historical information of the reporting segments, including reclassifications as described in note (d), is as follows:

          Net Sales:

	Quarter Ended				Year to Date
	April		July		April		July		July
	29, 2001		29, 2001		29, 2001		29, 2001		30, 2000
North America Soup and Away From Home	$	512	$	394	$	2,138	$	2,532	$	2,434
North America Sauces and Beverages		278		270		891		1,161		1,156
Biscuits and Confectionery		341		313		1,133		1,446		1,391
International Soup and Sauces		140		187		445		632		622
Other		—		—		—		—		23
Total	$	1,271	$	1,164	$	4,607	$	5,771	$	5,626

          Earnings Before Interest and Taxes:

	Quarter Ended						Year to Date
	April			July			April			July			July
	29, 2001			29, 2001			29, 2001			29, 2001			30, 2000
North America Soup and Away From Home	$	132		$	90		$	684		$	774		$	768
North America Sauces and Beverages		72			62			233			295			309
Biscuits and Confectionery		43			20			177			197			206
International Soup and Sauces		14			4			47			51			64
Unallocated Corporate Expenses		(24	)		(42	)		(81	)		(123	)		(82	)
Total	$	237		$	134		$	1,060		$	1,194		$	1,265

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(f) Inventories

	January 27, 2002		July 29, 2001
Raw materials, containers and supplies	$	188	$	216
Finished products		380		381
	$	568	$	597

	Approximately 61% of inventory in fiscal 2002 and fiscal 2001 is accounted for on the last in, first out (LIFO) method of determining cost. If the first in, first out inventory valuation method had been used exclusively, inventories would not differ materially from the amounts reported at January 27, 2002 and July 29, 2001.
(g)	Notes Payable and Long-Term Debt
	In September 2001, the company issued $300 seven-year 5.875% fixed-rate notes. The proceeds were used to repay short-term borrowings.
	In October 2001, the company issued $300 two-year variable-rate notes. The proceeds were also used to repay short-term borrowings.
	On November 23, 2001, the company redeemed $100 5.625% notes due in fiscal 2003. The notes were callable at par. This redemption was financed with lower rate commercial paper.
	On December 11, 2001, the company issued an additional $200 of its existing 6.75% fixed rate notes due February 2011, originally issued in February 2001. These additional notes were priced at a premium to reflect market conditions. The proceeds were used to repay short-term borrowings.
	In January 2002, the company repaid $300 of variable-rate notes due December 2003. The notes were repaid with lower cost short-term borrowings.
(h)	Accounting for Derivative Instruments
	In fiscal 2001, the company adopted Statement of Financial Accounting Standards (SFAS) No. 133, “Accounting for Derivative Instruments and Hedging Activities”, as amended by SFAS No. 138. The standard requires that all derivative instruments be recorded on the balance sheet at fair value and establishes criteria for designation and effectiveness of the hedging relationships.
	The company utilizes certain derivative financial instruments to enhance its ability to manage risk, including interest rate, foreign currency, commodity and certain equity-linked employee compensation exposures which exist as part of ongoing business operations. Derivative instruments are entered into for periods consistent with related underlying exposures and do not constitute positions

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independent of those exposures. The company does not enter into contracts for speculative purposes, nor is it a party to any leveraged derivative instrument.

On the date the derivative contract is entered into, the company designates the derivative as (1) a hedge of the fair value of a recognized asset or liability or of an unrecognized firm commitment (fair-value hedge), (2) a hedge of a forecasted transaction or of the variability of cash flows to be received or paid related to a recognized asset or liability (cash-flow hedge), (3) a foreign-currency fair-value or cash-flow hedge (foreign-currency hedge), or (4) a hedge of a net investment in a foreign operation. Some derivatives may also be considered natural hedging instruments (changes in fair value are recognized to act as economic offsets to changes in fair value of the underlying hedged item and do not qualify for hedge accounting under SFAS No. 133).

Interest Rate Swaps

The company finances a portion of its operations through debt instruments primarily consisting of commercial paper, notes, debentures and bank loans. The company periodically utilizes interest rate swap agreements, including forward-starting swaps, to minimize worldwide financing costs and to achieve a desired proportion of variable versus fixed-rate debt.

Variable-to-fixed interest rate swaps are accounted for as cash-flow hedges. Consequently, the effective portion of unrealized gains and losses is deferred as a component of Accumulated other comprehensive income/(loss) and is recognized in earnings at the time the hedged item affects earnings. The amounts paid or received on the hedge are recognized as adjustments to interest expense.

In connection with the two-year notes issued in October 2001, the company entered into a two-year interest rate swap that converts $300 of the variable-rate debt to fixed. The fair value of this swap was not material as of January 27, 2002.

In anticipation of the $300 seven-year notes issued in September 2001, the company entered into forward-starting interest rate swap contracts with a notional value of $138. Upon issuance of the notes, the contracts were settled at a loss of approximately $4. This loss was recorded in Other comprehensive income/(loss) and is being amortized to interest expense over the life of the notes.

Fixed-to-variable interest rate swaps are accounted for as fair-value hedges. Gains and losses on these instruments are recorded in earnings as adjustments to interest expense, offsetting gains and losses on the hedged item.

In connection with the $300 seven-year notes issued in September 2001, the company entered into a seven-year interest rate swap that converts $75 of the fixed-rate debt to variable. The notional amounts of all outstanding fair-value interest rate swaps at January 27, 2002 totaled $325 with a maximum maturity date of nine years. The fair value of such instruments was a gain of $7 as of January 27, 2002.

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Foreign Currency Contracts

The company is exposed to foreign currency exchange risk as a result of transactions in currencies other than the functional currency of certain subsidiaries. The company utilizes foreign currency forward purchase and sale contracts, options and cross-currency swaps in order to manage the volatility associated with foreign currency purchases and certain intercompany transactions in the normal course of business.

Foreign currency forward contracts typically have maturities of less than one year. The maximum maturity date of any cross-currency swap contract is three years. Principal currencies include the euro, British pound, Australian dollar, Canadian dollar, Japanese yen and Swedish krona.

Qualifying forward exchange and cross-currency swap contracts are accounted for as cash-flow hedges when the hedged item is a forecasted transaction or when future cash flows related to a recognized asset or liability are expected to be received or paid. Gains and losses on these instruments are recorded in Other comprehensive income/(loss) until the underlying transaction is recorded in earnings. When the hedged item is realized, gains or losses are reclassified from Accumulated other comprehensive income/(loss) to the Statement of Earnings on the same line item as the underlying transaction. The assessment of effectiveness for contracts is based on changes in the spot rates and the change in the time value of options is reported in earnings. The fair value of these instruments was a loss of $1 at January 27, 2002.

Qualifying forward exchange contracts are accounted for as fair-value hedges when the hedged item is a recognized asset, liability or firm commitment. The fair value of such contracts was not material at January 27, 2002.

The company also enters into certain foreign currency derivative instruments that are not designated as accounting hedges. These instruments are primarily intended to reduce volatility of certain intercompany financing transactions. Gains and losses on derivatives not designated as accounting hedges are typically recorded in Other expense, as an offset to gains/losses on the underlying transaction.

Commodity Futures Contracts

The company principally uses a combination of purchase orders and various short and long-term supply arrangements in connection with the purchase of raw materials, including certain commodities and agricultural products. On occasion, the company may also enter into commodity futures contracts, as considered appropriate, to reduce the volatility of price fluctuations for commodities such as corn, soybean meal or cocoa. These instruments are designated as cash-flow hedges. The fair value of the effective portion of the contracts is recorded in Accumulated other comprehensive income/loss and reclassified into Cost of products sold in the period in which the underlying transaction is recorded in

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	earnings. Commodity hedging activity is not material to the company’s financial statements.
	Other Contracts
	The company is exposed to equity price changes related to certain employee compensation obligations. Swap contracts are utilized to hedge exposures relating to certain employee compensation obligations linked to the total return of the Standard & Poor’s 500 Index and the total return of the company’s capital stock. The company pays a variable interest rate and receives the equity returns under these instruments. The notional value of the equity swap contracts, which mature in 2002 and 2003, was $60 at January 27, 2002. These instruments are not designated as accounting hedges. Gains and losses are recorded in Other expense. The net liability recorded under these contracts at January 27, 2002 was $17.
	As of January 27, 2002, the accumulated derivative loss in Other comprehensive income/(loss) was approximately $5, principally due to the fair value of the forward-starting interest rate swap contracts which were settled in September 2001. Reclassifications from Accumulated other comprehensive income/(loss) into the Statement of Earnings during the quarter ended January 27, 2002 were not material. Reclassifications during the remainder of fiscal year 2002 are not expected to be material. There were no discontinued cash-flow hedges during the quarter.
	Other disclosures related to hedge ineffectiveness and gains/(losses) excluded from the assessment of hedge effectiveness have been omitted due to the insignificance of these amounts.
(i)	A restructuring charge of $10 ($7 after tax) was recorded in the fourth quarter fiscal 2001 for severance costs associated with the reconfiguration of the manufacturing network of Arnotts in Australia. Costs of approximately $7 ($5 after tax) were recorded in the six month period ended January 27, 2002 as Cost of products sold, representing accelerated depreciation on assets to be taken out of service. This program is expected to drive greater manufacturing efficiency and will result in the closure of the Melbourne plant. The company expects to incur additional pre-tax costs of $12 – $15 during the remainder of fiscal 2002 related to this program for accelerated depreciation, employee benefit costs and other one-time expenses. In the second quarter ended January 27, 2002, the company recorded an additional $1 restructuring charge related to planned severance actions. The expected net cash outflows related to this program will not have a material impact on the company’s liquidity. Approximately 550 jobs will be eliminated due to the plant closure.

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A summary of restructuring reserves at January 27, 2002 and related activity is as follows:

	Accrued							Accrued
	Balance at		2002					Balance at
	July 29, 2001		Charge		Spending			January 27, 2002
Severance pay and benefits	$	10		$1	$	(4	)		$7

(j)	Recently Issued Accounting Pronouncements
	In July 2001, the Financial Accounting Standards Board (FASB) issued Statement No. 141 “Business Combinations” and Statement No. 142 “Goodwill and Other Intangible Assets.” In addition to requiring that all business combinations be accounted for under the purchase method, Statement No. 141 requires intangible assets that meet certain criteria to be recognized as assets apart from goodwill. The provisions of Statement No. 142 indicate that goodwill and indefinite life intangible assets should no longer be amortized but rather be tested for impairment annually. Intangible assets with a finite life shall continue to be amortized over the estimated useful life. Statement No. 141 is effective for business combinations initiated after June 30, 2001. Statement No. 142 is effective for fiscal years beginning after December 15, 2001. The elimination of amortization is to be applied on a prospective basis and prior periods are not to be restated. However, the impact of amortization of goodwill and indefinite life intangible assets is to be disclosed for prior periods.
	The company is currently evaluating the impact of the new standards. The total after-tax amortization expense related to goodwill and other intangible assets was approximately $13 for the three month period ended January 27, 2002 and $9 for the three month period ended January 28, 2001. After-tax amortization for the six month periods then ended was $27 and $18, respectively. The company will adopt Statement No. 142 in the first quarter fiscal 2003.
	In June 2001, the FASB issued Statement No. 143 “Accounting for Asset Retirement Obligations.” This Statement addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. This Statement is effective for fiscal years beginning after June 15, 2002. The company is currently evaluating the impact of this Statement.
	In August 2001, the FASB issued Statement No. 144 “Accounting for the Impairment or Disposal of Long-Lived Assets.” This Statement addresses financial accounting and reporting for the impairment or disposal of long-lived assets. This Statement supersedes FASB Statement No. 121, “Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of",and the accounting and reporting provisions of APB Opinion No. 30, “Reporting the Results of Operations-Reporting the Effects of Disposal of a Segment of a

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	Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions",for the disposal of a segment of a business. The provisions of this Statement are effective for fiscal years beginning after December 15, 2001. The company is currently evaluating the impact of this Statement.
(k)	Litigation
	On March 30, 1998, the company effected a spinoff of several of its non-core businesses to Vlasic Foods International Inc. (“VFI”). VFI and several of its affiliates (collectively, “Vlasic”) commenced cases under Chapter 11 of the Bankruptcy Code on January 29, 2001 in the United States Bankruptcy Court for the District of Delaware. Vlasic’s Second Amended Joint Plan of Distribution under Chapter 11 (the “Plan”) was confirmed by an order of the Bankruptcy Court dated November 16, 2001, and became effective on or about November 29, 2001. The Plan provides for the assignment of various causes of action allegedly belonging to the Vlasic estates, including claims against the company allegedly arising from the spinoff, to VFB LLC, a limited liability company (“VFB”) whose membership interests are to be distributed under the Plan to Vlasic’s general unsecured creditors.
	On February 19, 2002, after the end of the current reporting period, VFB commenced a lawsuit against the company and several of its subsidiaries in the United States District Court for the District of Delaware alleging, among other things, fraudulent conveyance, illegal dividends and breaches of fiduciary duty by Vlasic directors alleged to be under the company’s control. The lawsuit seeks to hold the company liable in an amount necessary to satisfy all unpaid claims against Vlasic (which VFB estimates in the complaint to be $250), plus unspecified exemplary and punitive damages. The company believes the action is without merit and intends to defend the case vigorously.

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ITEM 2.

CAMPBELL SOUP COMPANY CONSOLIDATED
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION

Results of Operations

Overview

The company reported net earnings of $203 million for the quarter ended January 27, 2002 compared to $271 million in the comparable quarter a year ago. Diluted earnings per share declined to $.49 from $.65. Diluted earnings per share, excluding costs associated with the previously announced Australian manufacturing reconfiguration, were $.50. (All per share amounts included in Management’s Discussion and Analysis are presented on a diluted basis.) The lower earnings were a result of the following: lower U.S. wet soup shipments following strong shipment growth in the first quarter; the planned significant increase in marketing programs across the portfolio; and softness in the Godiva Chocolatier business, resulting from the events of September 11 and general weakness in the U.S. economy.

For the six months ended January 27, 2002, net earnings were $374 million compared to $475 million in the comparable period a year ago. Diluted earnings per share declined to $.91 ($.92 excluding the Australian manufacturing reconfiguration) from $1.12 in fiscal 2001. Excluding the impact of the Australian manufacturing reconfiguration, net earnings were $380 million, a decline of 20% versus the six months ended January 28, 2001. Lower earnings were primarily a result of planned increases in marketing programs across the portfolio in line with the company’s transformation plan announced in July 2001.

Certain reclassifications were made to the financial statements to comply with new accounting standards. In the fourth quarter fiscal 2001, the company adopted the Emerging Issues Task Force (EITF) consensus on Issue No. 00-10 “Accounting for Shipping and Handling Fees and Costs.” In the first quarter ended October 28, 2001, the company adopted EITF Issue No. 00-14 “Accounting for Certain Sales Incentives” and Issue No. 00-25 “Vendor Income Statement Characterization of Consideration Paid to a Reseller of the Vendor’s Products,” as codified by Issue No. 01-9 “Accounting for Consideration Given by a Vendor to a Customer or Reseller of the Vendor’s Products.” Under these Issues, the EITF concluded that certain consumer and trade sales promotion expenses, such as coupon redemption costs, cooperative advertising programs, new product introduction fees, feature price discounts and in-store display incentives, should be classified as a reduction of sales rather than as marketing expenses. The adoption of these issues resulted in the following reclassifications to the three and six month periods ended January 28, 2001: Net sales were reduced by $202 million and $399 million, respectively; Cost of products sold was increased by $56 million and $105 million, respectively; and Marketing and selling expenses were reduced by $258 million and $504 million, respectively. As reclassifications, these changes had no impact on net earnings.

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Beginning in fiscal 2002, the company changed its organizational structure such that operations are managed and reported in four segments: North America Soup and Away From Home, North America Sauces and Beverages, Biscuits and Confectionery, and International Soup and Sauces. Comparative periods have been restated to conform to the current year presentation. For a description of the segments, refer to note (e) to the Consolidated Financial Statements.

SECOND QUARTER

Sales

Sales in the quarter increased 3% to $1.81 billion from $1.76 billion last year. The net change in sales was attributed to a 5% increase from the European acquisition (which closed in the fourth quarter of fiscal 2001), a 1% increase from higher selling prices, a 2% decrease due to higher trade promotion and consumer coupon redemption expenses, and a 1% decline due to currency. Base volume and mix were flat. Wet soup shipments compared to one year ago were down 3% worldwide.

An analysis of net sales by segment follows:

(millions)	2002		2001		% Change
North America Soup and Away From Home	$	812	$	852		(5	)%
North America Sauces and Beverages		319		314		2
Biscuits and Confectionery		428		425		1
International Soup and Sauces		251		164		53
	$	1,810	$	1,755		3	%

The decrease in sales in North America Soup and Away From Home was due to shipment declines and the planned increase in trade promotion and consumer coupon redemption expenses. The decrease was primarily driven by a decline in U. S. wet soup shipments of 6% compared to one year ago. Sales volume of condensed products, including Chicken Noodle, Tomato, and Cream of Mushroom, declined 13%. Sales volume of ready-to-serve soup increased 1%. This performance reflects increased marketing programs on the ready-to-serve products, includingCampbell’s Chunky andCampbell’s Select, and flat marketing spending on the condensed business.Swansonbroth increased 3% over the prior year. Canada reported volume gains in the quarter compared to the prior year.

The 2% increase in sales in North America Sauces and Beverages was due to a 4% volume increase, offset by a 2% decrease due to increased trade promotion and consumer coupon redemption expenses.Pregopasta bake sauce,PaceMexican sauces, andV8vegetable juice contributed to the volume growth in response to advertising and broad promotion programs.Franco-Americanvolume declined as a result of competitive trade

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promotion programs.V8 Splashvolume also declined as certain items were eliminated to prepare for the upcoming beverage season.

Biscuits and Confectionery reported a 1% increase in sales due to a 2% increase in volume, a 1% increase from higher selling prices, offset by a 1% decrease due to increased trade and consumer coupon redemption expenses, and a decline of 1% due to currency, principally the Australian dollar. Volume growth in Arnotts and Pepperidge Farm was offset by lower sales of Godiva, principally in the U.S. Pepperidge Farm reported volume gains due to increased marketing efforts and product innovation in the cookie and cracker business with the introduction ofDessert Blisscookies andGoldfishsandwich crackers. Arnotts reported volume gains driven by the value-added products such asRix Rice chips,Rice Shapes, and new premiumEmporiocookies. Godiva’s sales were negatively impacted by the events of September 11 and weakness in the U. S. economy.

The significant increase in sales in International Soup and Sauces was due primarily to the European acquisition in the fourth quarter fiscal 2001, which resulted in a 56% increase. The base business declined 4%, or 3% excluding the negative impact of currency. Sales softness in the United Kingdom in soup and sauces was partially offset by growth inLiebigin France and soup and broth in Australia.

Gross Margin

Gross margin, defined as net sales less cost of products sold, decreased $31 million in the quarter as compared to last year. As a percent of sales, gross margin was 44.5% compared to 47.7% last year. The decline was due mainly to the following: increased trade promotional spending and consumer coupon redemption expenses which are classified as deductions from sales; the continuing mix shift in U. S. soup towards ready-to-serve products; the cost of quality improvements across a number of products; and costs associated with the Australian manufacturing reconfiguration.

Marketing and Selling Expenses

Marketing and selling expenses increased from $245 million in fiscal 2001 to $313 million in fiscal 2002. As a percent of sales, Marketing and selling expenses increased to 17% from 14% in the prior year. The increase is primarily due to higher advertising investments, principally in U.S. soup and North America sauces.

Administrative Expenses

Administrative expenses were relatively flat as a percent of sales compared to last year.

Operating Earnings

Segment operating earnings decreased 22% for the second quarter versus the prior year. As a percent of sales, operating earnings declined from approximately 28% in fiscal 2001

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to 21% in fiscal 2002 reflecting the decline in gross margin as a percent of sales and increased advertising costs.

An analysis of operating earnings by reportable segment follows:

(millions)		2002			2001			% Change
North America Soup and Away From Home		$	216		$	294			(27	)%
North America Sauces and Beverages			65			89			(27	)
Biscuits and Confectionery			76			89			(15	)
International Soup and Sauces			28			19			47
	Subtotal		385			491			(22	)
Corporate			(33	)		(31	)
		$	352		$	460			(23	)%

Earnings from North America Soup and Away From Home declined 27% due to planned increases in trade and consumer promotion and advertising expenses, lower shipments of soup in the U.S., and costs of quality improvements. The focus of promotion and advertising investments was on ready-to-serve products, includingCampbell’s Chunky andCampbell’s Select, and the newCampbell’sSupper Bakes.

The primary reason for the 27% decline in operating earnings in North America Sauces and Beverages was an increase in total marketing support, principally onPregopasta bake sauce,PaceandV8vegetable juices, partially offset by higher shipments of these products.

Earnings from Biscuits and Confectionery declined 15% as reported, 10% excluding costs associated with the Australian manufacturing reconfiguration, and 8% excluding the impact of currency and the reconfiguration costs. The decline was attributed to increased marketing support across all businesses and a decline in sales and earnings at Godiva, partially offset by higher volumes at Pepperidge Farm and Arnotts.

The 47% increase in earnings from International Soup and Sauces was due to the European acquisition. The European dry soup and sauce business, acquired in the fourth quarter fiscal 2001, is meeting expectations despite some initially weak marketplace performance. Excluding the impact of the acquisition and currency, operating earnings declined 31% reflecting lower sales in the United Kingdom soup and sauces business and increased marketing support.

Non-Operating Items

Net interest expense was $45 million compared to $49 million last year. Higher interest expense from higher debt levels due to the European acquisition completed in the fourth quarter fiscal 2001 was more than offset by lower short-term rates.

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The effective tax rate was 33.9% compared to 34.1% last year.

SIX MONTHS

Sales

Sales for the six months increased 6% to $3.54 billion from $3.34 billion last year. The change in net sales was attributed to a 5% increase from the European acquisition (which closed in the fourth quarter of fiscal 2001), a 3% increase from volume/mix, a 1% increase from higher selling prices, offset by a 2% decrease due to higher trade promotion and consumer coupon redemption expenses and a 1% decline due to currency. Wet soup shipments were even with the same period last year in the U.S., and up 7% in the international business, resulting in a 2% increase worldwide.

An analysis of net sales by reportable segment follows:

(millions)	2002		2001		% Change
North America Soup and Away From Home	$	1,618	$	1,626		(0	)%
North America Sauces and Beverages		632		613		3
Biscuits and Confectionery		807		792		2
International Soup and Sauces		482		305		58
	$	3,539	$	3,336		6	%

North America Soup and Away From Home reported flat sales with the prior year. Volume/mix contributed to an increase of 2%, which was totally offset by an increase in trade and consumer coupon redemption expenses. Shipments of condensed products declined 7%, while shipments of ready-to-serve products increased 9%, driven by double-digit volume gains inCampbell’s Chunky andCampbell’s Select. The ready-to-serve performance was driven by increased marketing and product improvements.Swansonbroth shipments increased 5% over the prior year. The introduction ofCampbell’sSupper Bakes in the fourth quarter of fiscal 2001 contributed to segment volume growth in the first half. Away From Home sales were approximately even with last year, while Canada reported volume gains.

North America Sauces and Beverages reported a 3% increase in sales due to a 5% increase in volume/mix offset by a 2% decrease due to increased trade and consumer coupon redemption expenses. The volume increase was driven byPrego pasta bake sauce, introduced in the fourth quarter fiscal 2001, andPace Mexican sauces.V8 Splashcontinued to show weak performance compared to last year.

Biscuits and Confectionery reported a 2% increase in sales due to a 4% increase in volume/mix, a 1% increase from higher selling prices, offset by a 1% decrease due to increased trade and consumer coupon redemption expenses and a 2% decline from

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currency. Pepperidge Farm reported sales increases across its portfolio. New product introductions such asDessert Blisscookies andGoldfishsandwich crackers contributed to the growth. Arnotts in Australia also contributed to the increase in sales. Godiva sales were negatively impacted by the events of September 11 and weakness in the U.S. economy.

The 58% increase in International Soup and Sauces sales was due primarily to the European acquisition which was completed in the fourth quarter of fiscal 2001. The base business net sales were even with year ago as sales softness in the United Kingdom in soup and sauces was partially offset by growth atLiebig in France and in soup and broth in Australia.

Gross Margin

Gross margin, defined as net sales less cost of products sold, increased $2 million year-to-date. As a percent of sales, gross margin was 44.2% compared to 46.8% last year. The decline was due mainly to the following: increased trade promotional spending and consumer coupon redemption expenses which are classified as deductions from sales; the continued mix shift in U.S. soup towards ready-to-serve products; the cost of quality improvements across a number of products; and costs associated with the Australian manufacturing reconfiguration.

Marketing and Selling Expense

Marketing and selling expenses increased from $478 million in fiscal 2001 to $591 million in fiscal 2002. The increase is due to higher advertising investments across the portfolio, particularly in U.S. soup and sauces, and the impact of the European acquisition. As a percent of sales, Marketing and selling expenses increased to approximately 17% from 14% last year.

Administrative Expenses

Administrative expenses increased by approximately 20% primarily due to costs associated with the previously announced infrastructure enhancements and the impact of the European acquisition.

Other Expenses

Other expenses increased slightly versus last year primarily due to increases in incentive compensation costs.

Operating Earnings

Segment operating earnings decreased 17% versus the prior year. As a percent of sales, operating earnings declined from approximately 26% in fiscal 2001 to 21% in fiscal 2002, reflecting the decline in gross margin as a percent of sales, increased advertising

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costs and increased administrative expenses. An analysis of operating earnings by segment follows:

(millions)		2002			2001			% Change
North America Soup and Away From Home		$	445		$	552			(19	)%
North America Sauces and Beverages			124			161			(23	)
Biscuits and Confectionery			110			134			(18	)
International Soup and Sauces			51			33			55
	Subtotal		730			880			(17	)
Corporate			(64	)		(57	)
		$	666		$	823			(19	)%

The 19% decrease in earnings from North America Soup and Away From Home was due to planned increases in trade, consumer promotion, and advertising expenses and costs of quality improvements. The focus of promotion and advertising investments was on ready-to-serve products, includingCampbell’s ChunkyandCampbell’s Select, and the newCampbell’sSupper Bakes.

The primary reason for the 23% decline in operating earnings in North America Sauces and Beverages was an increase in total marketing support, principally onPregopasta bake sauce,PaceandV8vegetable juices. These investments were partially offset by higher shipments of these products.

Earnings from Biscuits and Confectionery declined 18% as reported, 12% excluding costs associated with the Australian manufacturing reconfiguration, and 10% excluding the impact of currency and the reconfiguration costs. The decline was attributed to increased marketing support across all businesses and a decline in sales and earnings at Godiva, partially offset by higher shipments at Pepperidge Farm and Arnotts.

The 55% increase in earnings from International Soup and Sauces was due to the European acquisition. The European dry soup and sauces business, acquired in the fourth quarter fiscal 2001, is meeting expectations despite some initially weak marketplace performance. Excluding the impact of the acquisition, operating earnings declined 23%, reflecting lower sales in the United Kingdom soup and sauces business and the planned increases in marketing support.

Corporate expenses increased $7 million due principally to higher incentive compensation costs.

Non-operating Items

Net interest expense decreased to $98 million from $101 million in the prior year. Higher interest expense due to increased debt levels following the fourth quarter fiscal 2001 European acquisition was more than offset by lower short-term rates.

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The effective tax rate was 34.2% for both fiscal 2002 and 2001.

Restructuring Programs

A restructuring charge of $10 million ($7 million after tax) was recorded in the fourth quarter fiscal 2001 for severance costs associated with the reconfiguration of the manufacturing network of Arnotts in Australia. Costs of approximately $7 million ($5 million after tax) were recorded in the six months ended January 27, 2002 as Cost of products sold, representing accelerated depreciation on assets to be taken out of service. This program is designed to drive greater manufacturing efficiency and will result in the closure of the Melbourne plant. The company expects to incur additional pre-tax costs of $12 - - $15 million during the remainder of fiscal 2002 for accelerated depreciation, employee benefit costs and other one-time expenses related to this program. In the second quarter ended January 27, 2002, the company recorded an additional $1 million restructuring charge related to planned severance activities. The expected net cash outflows related to this program will not have a material impact on the company’s liquidity. As a result of this reconfiguration, the company expects annual pre-tax cost savings of approximately $10 million, beginning in fiscal 2003. Approximately 550 jobs will be eliminated due to the plant closure.

Liquidity and Capital Resources

The company generated cash from operations of $491 million compared to $744 million last year. This decrease reflects the increase in marketing programs and a recovery of working capital balances from very low levels as of July 2001.

Capital expenditures were $61 million, a decrease from $62 million last year. As previously announced, capital expenditures are expected to be approximately $300 million in fiscal 2002 due to planned process improvements, product quality enhancements and innovation.

Acquisition spending, as presented on the Statements of Cash Flows, represents a purchase price adjustment related to the May 2001 European acquisition.

The company did not purchase shares in the quarter since the strategic share repurchase plan was suspended in 2001. During the six months ended January 28, 2001, the company purchased 13.4 million shares.

In September 2001, the company issued $300 million seven-year 5.875% fixed-rate notes. The proceeds were used to repay short-term borrowings. While planning for the issuance of these notes, the company entered into interest rate swaps with a notional value of approximately $138 million that effectively fixed a portion of the interest rate on the debt prior to issuance. These contracts were settled at a loss of approximately $4 million upon issuance of the notes. This loss is being amortized over the life of the notes. In conjunction with the issuance of these notes, the company also entered into a $75 million seven-year interest rate swap that converts the fixed-rate debt to variable.

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In October 2001, the company issued $300 million two-year variable-rate notes. The proceeds were also used to repay short-term borrowings. In connection with this issuance, the company entered into a $300 million two-year interest rate swap that converts the variable-rate debt to fixed.

On November 23, 2001, the company redeemed $100 million 5.625% notes due in fiscal 2003. The notes were callable at par. This redemption was financed with lower rate commercial paper.

On December 11, 2001, the company issued an additional $200 million of its existing 6.75% fixed rate notes due February 2011, originally issued in February 2001. These additional notes were priced at a premium to reflect market conditions. The proceeds were used to repay short-term borrowings.

In January 2002, the company repaid $300 million of variable-rate notes due December 2003. The notes were repaid with lower cost short-term borrowings.

In September 2001, the company entered into $1.8 billion in committed revolving credit facilities, comprised of a $900 million 364-day revolving credit facility, which replaced an existing facility that matured in September 2001, and a $900 million 5-year revolving credit facility that replaced a facility scheduled to mature in October 2002. These agreements support the company’s commercial paper program.

The company believes that foreseeable liquidity and capital resource requirements are expected to be met through anticipated cash flows from operations, management of working capital, and borrowings supported by existing committed credit facilities, including commercial paper. The company believes that its sources of financing are adequate to meet its liquidity and capital resource requirements. The cost and terms of any future financing arrangement depend on the market conditions and the company’s financial position at that time.

The following table represents significant long-term cash obligations:
(U.S. $ equivalents in millions)

	Contractual Payments Due by Fiscal Year
					2003 -		2006 -
	Total		2002		2005		2007		Thereafter
Debt Obligations*	$	3,810	$	1,156	$	1,129	$	305	$	1,220
Purchase Commitments**		2,347		339		987		618		403
Operating Leases		255		51		106		44		54
Total Long-Term Cash Obligations	$	6,412	$	1,546	$	2,222	$	967	$	1,677

*	Includes capital lease obligations totaling $9 million
**	Represents certain long-term supply and service agreements.

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At January 27, 2002, the company had $1,456 million of notes payable due within one year and $42 million of standby letters of credit issued on behalf of the company, which are supported by $1.8 billion of committed revolving credit facilities. The company is in compliance with the covenants contained in its revolving credit facilities and debt securities.

The company enters into other commitments, such as operating lease commitments, surety bonds, and long-term purchase arrangements, in the ordinary course of business. Operating leases are primarily entered into for warehouse and office facilities, retail store space, and certain equipment. Purchase commitments relate to the procurement of ingredients, supplies, machinery and equipment and services. These commitments are not expected to have a material impact on liquidity.

The company guarantees approximately $70 million of bank loans to Pepperidge Farm independent sales distributors which are secured by their distribution routes purchased from the company.

Critical Accounting Policies/Estimates

On December 12, 2001, the Securities and Exchange Commission issued Release No. 33-8040, “Cautionary Advice Regarding Disclosure About Critical Accounting Policies.” Critical accounting policies are those that involve subjective or complex judgments, often as a result of the need to make estimates. In response to the Release, management reviewed the company’s accounting principles. The following areas all require the use of judgments and estimates: the valuation of long-lived assets, deferred income taxes, pension and postretirement benefits, marketing accruals, and inventories. Estimates in each of these areas are based on historical experience and various assumptions that the company believes are appropriate. Actual results may differ from these estimates. The company’s accounting practices are discussed in more detail in the Annual Report on Form 10-K for fiscal 2001. Additional information with respect to the valuation of long-lived assets is discussed under the New Accounting Pronouncements section.

New Accounting Pronouncements

In July 2001, the Financial Accounting Standards Board (FASB) issued Statement No. 141 “Business Combinations” and Statement No. 142 “Goodwill and Other Intangible Assets.” In addition to requiring that all business combinations be accounted for under the purchase method, Statement No. 141 requires intangible assets that meet certain criteria to be recognized as assets apart from goodwill. The provisions of Statement No. 142 indicate that goodwill and indefinite life intangible assets should no longer be amortized but rather be tested for impairment annually. Intangible assets with a finite life shall continue to be amortized over the estimated useful life. Statement No. 141 is effective for business combinations initiated after June 30, 2001. Statement No. 142 is effective for fiscal years beginning after December 15, 2001. The elimination of amortization is to be applied on a prospective basis and prior periods are not to be restated. However, the impact of amortization of goodwill and indefinite life intangible assets is to be disclosed for prior periods.

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The company is currently evaluating the impact of the new standards. The total after-tax amortization expense related to goodwill and other intangible assets was approximately $27 million for the period ended January 27, 2002 and $18 million for the period ended January 29, 2001. The company will adopt Statement No. 142 in the first quarter fiscal 2003.

In June 2001, the FASB issued Statement No. 143 “Accounting for Asset Retirement Obligations.” This Statement addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. This Statement is effective for fiscal years beginning after June 15, 2002. The company is currently evaluating the impact of this Statement.

In August 2001, the FASB issued Statement No. 144 “Accounting for the Impairment or Disposal of Long-Lived Assets.” This Statement addresses financial accounting and reporting for the impairment or disposal of long-lived assets. This Statement supersedes FASB Statement No. 121, “Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of", and the accounting and reporting provisions of APB Opinion No. 30, “Reporting the Results of Operations-Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions",for the disposal of a segment of a business. The provisions of this Statement are effective for fiscal years beginning after December 15, 2001. The company is currently evaluating the impact of this Statement.

Recent Developments

On February 13, 2002, the company issued a press release announcing results for the second quarter fiscal 2002 and commented on the outlook for earnings per share for the third quarter of fiscal 2002 and for the full year. In that release, the company maintained its previous earnings estimates of approximately $1.30 per share for fiscal 2002 (excluding the impact of the Australian reconfiguration), and announced that it expects diluted earnings of between $0.21 and $0.24 per share for the third quarter of fiscal 2002 (excluding the impact of the Australian reconfiguration).

Forward-Looking Statements

This quarterly report contains certain statements which reflect the company’s current expectations regarding future results of operations, economic performance, financial condition and achievements of the company. The company has tried, wherever possible, to identify these forward-looking statements by using words such as “anticipate,” “believe,” “estimate,” “expect” and similar expressions. These statements reflect the company’s current plans and expectations and are based on information currently available to it. They rely on a number of assumptions and estimates which could be inaccurate and which are subject to risks and uncertainties.

The company wishes to caution the reader that the following important factors, and those important factors described elsewhere in the commentary, or in other Securities and

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Exchange Commission filings of the company, could affect the company’s actual results and could cause such results to vary materially from those expressed in any forward-looking statements made by, or on behalf of, the company:

• the impact of strong competitive response to the company’s efforts to leverage its brand power with product innovation, promotional programs and new advertising;

• the inherent risks in the marketplace associated with trade and consumer acceptance of product improvements and new product introductions;

• the company’s ability to achieve sales and earnings forecasts, which are based on assumptions about sales volume and product mix;

• the company’s ability to achieve its cost savings objectives, including the projected outcome of supply chain management programs;

• the company’s ability to complete the successful post-acquisition integration of acquired businesses into existing operations;

• the difficulty of predicting the pattern of inventory movements by the company’s trade customers;

• the impact of unforeseen economic changes in currency exchange rates, interest rates, equity markets, inflation rates, recession, and other external factors over which the company has no control; and

• the impact of unforeseen business disruptions in one or more of the company’s markets due to political instability, civil disobedience, armed hostilities or other calamities.

This discussion of uncertainties is by no means exhaustive, but is designed to highlight important factors that may impact the company’s outlook.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

For information regarding the company’s exposure to certain market risks, see Item 7A, Quantitative and Qualitative Disclosures About Market Risk, in the Annual Report on Form 10-K for fiscal 2001. There have been no significant changes in the company’s portfolio of financial instruments or market risk exposures from the fiscal 2001 year-end except that the company entered into various interest rate swap instruments in connection with long-term refinancing. See note (h) of the Notes to Financial Statements and the Liquidity and Capital Resources section of Management’s Discussion and Analysis of Results of Operations for an additional discussion of these interest rate swap contracts.

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PART II.

ITEM 1. LEGAL PROCEEDINGS

As previously reported, ten purported class action lawsuits were commenced against the company and certain of its officers in the United States District Court for the District of New Jersey. The lawsuits were subsequently consolidated, and an amended consolidated complaint was filed alleging, among other things, that the company and certain of its officers misrepresented the company’s financial condition between September 8, 1997 and January 8, 1999, by failing to disclose alleged shipping and revenue recognition practices in connection with the sale of certain company products at the end of the company’s fiscal quarters in violation of Section 10 (b) and 20 (a) of the Securities Exchange Act of 1934, as amended, and Rule 10b-5 promulgated thereunder. The actions seek compensation and other damages, and costs and expenses associated with the litigation. The company believes the action is without merit and intends to defend the case vigorously.

As also previously reported, the United States Environmental Protection Agency (the “EPA”) sent the company a special notice letter dated September 28, 2000 relating to the Puente Valley Operable Unit of the San Gabriel Valley Superfund Sites, Los Angeles County, California (the “Superfund Site”) for property located at 125 N. Orange Avenue, Industry, California, advising that the EPA considers the company to be a potentially responsible party due to the alleged release or threatened release of hazardous substances, and therefore, potentially responsible for the costs incurred in connection with contamination at the Superfund Site. Although the impact of this proceeding cannot be predicted at this time due to the large number of other potentially responsible parties and the uncertainty involved in estimating the cost of clean-up, the ultimate disposition is not expected to have a material effect on the consolidated results of operations, financial position, or cash flows of the company.

On March 30, 1998, the company effected a spinoff of several of its non-core businesses to Vlasic Foods International Inc. (“VFI”). VFI and several of its affiliates (collectively, “Vlasic”) commenced cases under Chapter 11 of the Bankruptcy Code on January 29, 2001 in the United States Bankruptcy Court for the District of Delaware. Vlasic’s Second Amended Joint Plan of Distribution under Chapter 11 (the “Plan”) was confirmed by an order of the Bankruptcy Court dated November 16, 2001, and became effective on or about November 29, 2001. The Plan provides for the assignment of various causes of action allegedly belonging to the Vlasic estates, including claims against the company allegedly arising from the spinoff, to VFB LLC, a limited liability company (“VFB”) whose membership interests are to be distributed under the Plan to Vlasic’s general unsecured creditors.

On February 19, 2002, after the end of the current reporting period, VFB commenced a lawsuit against the company and several of its subsidiaries in the United States District Court for the District of Delaware alleging, among other things, fraudulent conveyance, illegal dividends and breaches of fiduciary duty by Vlasic directors alleged to be under

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the company’s control. The lawsuit seeks to hold the company liable in an amount necessary to satisfy all unpaid claims against Vlasic (which VFB estimates in the complaint to be $250,000,000), plus unspecified exemplary and punitive damages. The company believes the action is without merit and intends to defend the case vigorously.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

a.	Campbell’s Annual Meeting of Shareowners was held on November 16, 2001.
b.	The matters voted upon and the results of the vote are as follows:
Election of Directors

	Number of Shares
Name	For		Withheld
Alva A. App		354,834,066		12,729,403
Edmund M. Carpenter		365,188,097		2,375,372
Douglas R. Conant		365,179,381		2,384,088
Bennett Dorrance		363,925,881		3,637,588
Thomas W. Field, Jr.		365,155,101		2,408,368
Kent B. Foster		354,942,404		12,621,065
Harvey Golub		365,172,919		2,390,550
David K.P. Li		365,193,736		2,369,733
Philip E. Lippincott		365,020,869		2,542,600
Mary Alice D. Malone		363,827,585		3,735,884
Charles H. Mott		365,050,737		2,512,732
Charles R. Perrin		365,113,864		2,449,605
George M. Sherman		365,184,929		2,378,540
Donald M. Stewart		354,922,292		12,641,177
George Strawbridge, Jr.		363,915,474		3,647,995
Charlotte C. Weber		363,838,198		3,725,271

Ratification of Appointment of PricewaterhouseCoopers LLP as Independent Accountants
	For		Against		Abstentions		Broker Non-Votes
Ratification of Appointment of Accountants		363,828,174		2,176,160		1,559,135		0

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Shareowner Proposal Concerning Adoption of International Workers’ Rights Standards

	For		Against		Abstentions		Broker Non-Votes
Shareowner Proposal on International Workers’ Rights Standards		9,597,795		324,770,204		12,288,014		20,907,456
Shareowner Proposal Concerning a Report on Use of Genetically Engineered Foods
	For		Against		Abstentions		Broker Non-Votes
Shareowner Proposal on Genetically Engineered Foods		7,334,122		330,617,167		8,704,724		20,907,456
Shareowner Proposal Concerning the Nomination of Two Candidates for Each Open Board Position
	For		Against		Abstentions		Broker Non-Votes
Shareowner Proposal on Nomination of Board Candidates		3,269,813		340,604,360		2,781,840		20,907,456

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

a.	Exhibits
	None.
b.	Reports on Form 8-K
	There were no reports on Form 8-K filed by the company during the second quarter ended January 27, 2002.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	CAMPBELL SOUP COMPANY
Date: March 12, 2002	By:	/s/ Robert A. Schiffner
		Robert A. Schiffner
		Senior Vice President and
		Chief Financial Officer
		/s/ Ellen Oran Kaden
		Ellen Oran Kaden
		Senior Vice President –
		Law and Government Affairs

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INDEX TO EXHIBITS

Exhibit

None.

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