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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 Commission File Number
October 29, 1995 1-3822
[CAMPBELL SOUP COMPANY LOGO]
NEW JERSEY 21-0419870
State of Incorporation I.R.S. Employer Identification No.
CAMPBELL PLACE
CAMDEN, NEW JERSEY 08103-1799
Principal Executive Offices
TELEPHONE NUMBER: (609) 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 X NO .
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THERE WERE 249,138,416 SHARES OF CAPITAL STOCK OUTSTANDING AS OF DECEMBER 1,
1995.
THIS FORM 10-Q CONSISTS OF A TOTAL OF 21 PAGES. AN INDEX TO EXHIBITS IS ON
PAGE 12.
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PART I. FINANCIAL INFORMATION
CAMPBELL SOUP COMPANY CONSOLIDATED
STATEMENTS OF EARNINGS
(unaudited)
(million dollars except per share amounts)
Three Months Ended
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OCTOBER October*
29, 1995 30, 1994
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Net sales $1,990 $1,856
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Costs and expenses
Cost of products sold 1,143 1,085
Marketing and selling expenses 358 332
Administrative expenses 83 80
Research and development expenses 20 18
Other expense 24 18
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Total costs and expenses 1,628 1,533
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Earnings before interest and taxes 362 323
Interest, net 35 25
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Earnings before taxes 327 298
Taxes on earnings 108 101
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Net earnings $ 219 $ 197
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Per share
Net earnings $.88 $.79
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Dividends $.31 $.28
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Weighted average shares outstanding 249 249
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See Notes To Financial Statements
*Reclassified to conform to this year's presentation
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CAMPBELL SOUP COMPANY CONSOLIDATED
BALANCE SHEETS
(unaudited)
(million dollars)
OCTOBER July
29, 1995 30, 1995
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Current assets
Cash and cash equivalents $ 69 $ 53
Accounts receivable 855 631
Inventories 900 755
Prepaid expenses 145 142
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Total current assets 1,969 1,581
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Plant assets, net of depreciation 2,595 2,584
Intangible assets, net of amortization 1,808 1,715
Other assets 431 435
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Total assets $6,803 $6,315
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Current liabilities
Notes payable $1,083 $ 865
Payable to suppliers and others 578 556
Accrued liabilities 590 545
Dividend payable 77 78
Accrued income taxes 186 120
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Total current liabilities 2,514 2,164
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Long-term debt 852 857
Nonpension postretirement benefits 447 434
Other liabilities, including deferred
income taxes of $241 and $235 406 392
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Total liabilities 4,219 3,847
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Shareowners' equity
Preferred stock; authorized 40 shares;
none issued - -
Capital stock, $.075 par value; authorized
280 shares; issued 271 shares 20 20
Capital surplus 171 165
Earnings retained in the business 2,897 2,755
Capital stock in treasury, at cost (581) (550)
Cumulative translation adjustments 77 78
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Total shareowners' equity 2,584 2,468
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Total liabilities and shareowners' equity $6,803 $6,315
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See Notes to Financial Statements
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CAMPBELL SOUP COMPANY CONSOLIDATED
STATEMENTS OF CASH FLOWS
(unaudited)
(million dollars)
Three Months Ended
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OCTOBER October
29, 1995 30, 1994
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Cash flows from operating activities:
Net earnings $219 $197
Non-cash charges to net earnings
Depreciation and amortization 78 63
Deferred taxes 6 -
Other, net 26 24
Changes in working capital
Accounts receivable (226) (188)
Inventories (147) (94)
Other current assets and liabilities 134 88
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Net cash provided by operating activities 90 90
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Cash flows from investing activities:
Purchases of plant assets (79) (60)
Sales of plant assets 6 3
Businesses acquired (107) (177)
Sales of businesses - 3
Net change in other assets and liabilities (6) 4
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Net cash used in investing activities (186) (227)
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Cash flows from financing activities:
Long-term borrowings - 3
Repayments of long-term borrowings (5) (4)
Short-term borrowings 322 221
Repayments of short-term borrowings (104) (17)
Dividends paid (77) (70)
Treasury stock purchased (40) -
Treasury stock issued 11 5
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Net cash provided by financing activities 107 138
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Effect of exchange rate changes on cash 5 5
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Net change in cash and cash equivalents 16 6
Cash and cash equivalents - beginning of period 53 96
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Cash and cash equivalents - end of period $ 69 $102
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See Notes to Financial Statements
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CAMPBELL SOUP COMPANY CONSOLIDATED
STATEMENTS OF CHANGES IN SHAREOWNERS' EQUITY
(unaudited)
(million dollars)
Earnings Capital
Retained Stock Cumulative Total
Preferred Capital Capital in the in Translation Shareowners'
Stock Stock Surplus Business Treasury Adjustments Equity
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Balance at July 31, 1994 $ - $20 $155 $2,359 $(559) $14 $1,989
Net earnings 197 197
Cash dividends ($.28 per share) (70) (70)
Treasury stock purchased (1) (1)
Treasury stock issued under Management
incentive and Stock option plans 4 5 9
Translation adjustments 31 31
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Balance at October 30, 1994 $ - $20 $159 $2,486 $(555) $45 $2,155
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BALANCE AT JULY 30, 1995 $ - $20 $165 $2,755 $(550) $78 $2,468
NET EARNINGS 219 219
CASH DIVIDENDS ($.31 PER SHARE) (77) (77)
TREASURY STOCK PURCHASED (38) (38)
TREASURY STOCK ISSUED UNDER MANAGEMENT
INCENTIVE AND STOCK OPTION PLANS 6 7 13
TRANSLATION ADJUSTMENTS (1) (1)
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BALANCE AT OCTOBER 29, 1995 $ - $20 $171 $2,897 $(581) $77 $2,584
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CHANGES IN NUMBER OF SHARES (UNAUDITED)
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(THOUSANDS OF SHARES)
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Issued Outstanding In Treasury
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Balance at July 31, 1994 271,245 248,319 22,926
Treasury stock purchased (12) 12
Treasury stock issued under Management incentive and Stock option plans 197 (197)
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Balance at October 30, 1994 271,245 248,504 22,741
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BALANCE AT JULY 30, 1995 271,245 249,231 22,014
TREASURY STOCK PURCHASED (833) 833
TREASURY STOCK ISSUED UNDER MANAGEMENT INCENTIVE AND STOCK OPTION PLANS 540 (540)
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BALANCE AT OCTOBER 29, 1995 271,245 248,938 22,307
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See Notes to Financial Statements
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CAMPBELL SOUP COMPANY CONSOLIDATED
NOTES TO FINANCIAL STATEMENTS
(unaudited)
(millions)
(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.
(b) Net earnings per share are based on the weighted average shares
outstanding during the applicable periods. The potential dilution
from the exercise of stock options is not material.
(c) Inventories
OCTOBER July
29, 1995 30, 1995
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Raw materials, containers and supplies $367 $317
Finished products 600 505
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967 822
Less - Adjustment of certain inventories
to LIFO basis 67 67
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$900 $755
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(d) Divestiture and Restructuring Program
On January 28, 1993, the company's Board of Directors approved a
divestiture and restructuring program which specifically identified
six manufacturing plants to be closed and fourteen businesses to be
sold. At the time of the Board's approval, charges of $353 ($300
after tax or $1.19 per share) were recorded for the estimated loss on
disposition of plant assets, cost of closing each plant and loss on
each business divestiture. During the first quarter of 1996, two
businesses were sold. A summary of the original reserve and charges
through October 29, 1995 is as follows:
Original Balance BALANCE
Reserves Charges 7/30/95 Charges 10/29/95
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Loss on disposal of assets $275 $(197) $78 $(1) $77
Severance and benefits 52 (47) 5 (2) 3
Other 26 (13) 13 - 13
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Total $353 $(257) $96 $(3) $93
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Current $153 $96 $93
Non-current 200 - -
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Total $353 $96 $93
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
CAMPBELL SOUP COMPANY
RESULTS OF OPERATIONS
OVERVIEW
Campbell achieved record sales and earnings for the first quarter ended October
29, 1995. Net sales of $1.99 billion were up 7% over the $1.86 billion for the
similar period last year. Earnings per share increased 11% to 88 cents, up
from 79 cents last year. Net earnings were $219 million, up 11% from $197
million last year. International Grocery and Bakery & Confectionery divisions
led the first quarter percentage gains. In the U.S.A. division, meal
enhancement businesses enjoyed strong growth and Pace Mexican sauces achieved
broad distribution in the Northeast.
RESULTS BY DIVISION
U.S.A. - U.S. sales for the quarter were $1.20 billion, up 6% over $1.12
billion for the comparable period last year with the Pace and Fresh Start
acquisitions driving growth. Operating earnings climbed 11% to $288 million.
Soup volume increased 2% led by the traditional "Red & White" condensed
varieties, particularly chicken noodle. Strong volume gains were also achieved
by "Franco-American" pasta with its new shapes for kids; by spaghetti sauces,
reflecting the U.S. introduction of the "Barilla" brand from Italy; and by
"Vlasic" pickles where the popularity of the "Sandwich Stackers" style remains
vibrant. Frozen foods volume declined, reflecting marketplace conditions.
New chicken pot pies for Kentucky Fried Chicken outlets and new frozen soups
helped to catapult food service business into high growth.
BAKERY & CONFECTIONERY - Bakery & Confectionery sales increased 6% to $435
million from $410 million in the first quarter of last year. Earnings
increased 15% to $53 million from $46 million last year, with Pepperidge Farm,
Delacre and Godiva all posting exceptional gains. Cost reduction programs at
Pepperidge Farm and Delacre helped expand margins.
Pepperidge Farm's new fat-free cookies and brownies, using technology derived
from the Greenfield acquisition, together with new marketing initiatives behind
"Goldfish" crackers are driving volume gains. Pepperidge Farm frozen garlic
breads continue robust growth.
The division consists of "Pepperidge Farm" in the U.S., "Arnott's" in
Australia, "Delacre" in Europe, "Godiva" worldwide and the confectionery
business in Europe.
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INTERNATIONAL GROCERY - The International Grocery Division reported
sales of $381 million, a 12% increase over last year. Two
acquisitions--Stratford-upon-Avon Foods, a leading food service supplier, and
Homepride, the number-one brand of cooking sauces--added volume as well as
operating synergies in the United Kingdom. Soup sales in Asia, Australia,
Germany and Japan all grew at double-digits, and the company's businesses in
Argentina were up sharply.
Operating earnings rose 14% to $36 million, with Argentina and Canada leading
the strong growth. Earnings in Mexico were down $4 million, reflecting the
economic difficulties there.
International Grocery consists of soup, grocery and frozen businesses in
Argentina, Asia, Australia, Canada, Europe and Mexico.
STATEMENTS OF EARNINGS
Net sales increased 7% over the prior year, driven principally by acquisitions
and a 2% increase in worldwide soup volume based on strength in U.S. condensed
soup and double-digit volume growth in Australia, Asia, Germany and Japan.
Gross margins improved 1.1 percentage points to 42.6% compared to the first
quarter of the prior year. Gross margin improvements resulted primarily from
higher selling prices and manufacturing efficiencies.
Marketing and selling expenses increased 8%, compared to the first quarter of
the prior year, reflecting the acquisition of Pace Foods which has an
aggressive advertising strategy. Overall, these expenses remained relatively
flat at 18% of sales.
Administrative expenses also remained flat as a percent of sales. The increase
in interest expense results primarily from financing costs associated with
acquisitions.
The effective tax rate was 33.0% compared to 33.9% in the first quarter of
fiscal 1995. The company expects its effective tax rate for the full fiscal
1996 year to approximate the first quarter rate due to tax planning strategies,
including utilization of tax loss carryforwards.
LIQUIDITY AND CAPITAL RESOURCES
For the second year in a row, the company generated $90 million of cash from
operations in the first quarter. Continued tight management of working capital
and increased earnings have turned the company from a traditional net user of
cash in the first quarter into a generator of cash from operating activities.
Capital expenditures were $79 million in 1996, an increase of $19 million from
the prior year, due primarily to construction of the new Huntingwood
manufacturing facility by Arnotts in Australia. Capital expenditures are
projected to be between $400 and $450 million in 1996.
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The company acquired the "Homepride" sauce business, Britain's leading cooking
sauce brand, and increased its Arnotts share ownership to 67%.
Short-term borrowings increased by $218 million in 1996 to finance acquisitions
and seasonal inventories.
The company repurchased 833,000 shares of common stock for the treasury at a
cost of $38 million, compared to minimal repurchases in 1995.
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PART II
ITEM 1. LEGAL PROCEEDINGS
In management's opinion, there are no pending claims or litigation, the outcome
of which would have a material effect on the consolidated financial position of
the company. In October 1995, the United States of America filed a complaint
against Campbell at the request of the Environmental Protection Agency in the
United States District Court for the Eastern District of California relating to
certain air emission permits at the company's Sacramento, CA facility. The suit
seeks monetary and injunctive relief for alleged violations of the Clean Air
Act claiming that the Sacramento Metropolitan Air Quality Management District,
the responsible state agency, allowed plant modifications without the
appropriate permits and pollution control equipment. Campbell is disputing
the alleged violations.
The company has also been named as a potentially responsible party in a
number of proceedings brought under the Comprehensive Environmental Response,
Compensation and Liability Act, commonly known as Superfund. The ultimate
impact of these proceedings cannot be predicted at this time due to the large
number of other potentially responsible parties, and the speculative nature of
clean-up cost estimates, but it is not expected to be material either
individually or in the aggregate.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits
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No.
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3(ii) Campbell Soup Company's By-Laws, effective September 1, 1995
4 There is no instrument with respect to long-term debt of the
company that involves indebtedness or securities authorized
thereunder exceeding 10 percent of the total assets of the
company and its subsidiaries on a consolidated basis. The
company agrees to file a copy of any instrument or agreement
defining the rights of holders of long-term debt of the
company upon request of the Securities and Exchange
Commission.
27 Financial Data Schedule
b. Reports on Form 8-K
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There were no reports on Form 8-K filed by Campbell during the
quarter for which this report is filed.
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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: December 11, 1995 By:/s/JOHN M. COLEMAN
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John M. Coleman, Senior Vice President -
Law and Public Affairs
Date: December 11, 1995 By:/s/LEO J. GREANEY
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Leo J. Greaney
Vice President - Controller
(Chief Accounting Officer)
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INDEX TO EXHIBITS
Exhibit Number Page
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3(ii) Campbell Soup Company's By-Laws, effective 13-20
September 1, 1995
27 Financial Data Schedule 21
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