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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
January 30, 1994 1-3822
Campbell Soup Company
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 .
--- ---
There were 250,864,926 shares of Capital Stock outstanding as
of March 1, 1994.
This Form 10-Q consists of a total of 12 pages.
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PART I. FINANCIAL INFORMATION
CAMPBELL SOUP COMPANY CONSOLIDATED
Statements Of Earnings
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(unaudited)
(million dollars except per share amounts)
Three Months Ended Six Months Ended
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January January January January
30, 1994 31, 1993 30, 1994 31, 1993
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Net sales $1,894 $1,789 $3,657 $3,484
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Costs and expenses
Cost of products sold 1,104 1,082 2,162 2,136
Marketing and selling
expenses 350 315 670 601
Administrative expenses 79 74 152 143
Research and development
expenses 18 17 36 33
Other expense 13 (2) 27 8
Divestiture and
restructuring charges - 353 - 353
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Total costs and expenses 1,564 1,839 3,047 3,274
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Earnings before interest and
taxes 330 (50) 610 210
Interest, net 14 20 32 40
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Earnings before taxes 316 (70) 578 170
Taxes on earnings 113 51 209 139
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Earnings before cumulative
effect of accounting changes 203 (121) 369 31
Cumulative effect of
accounting changes - - - (249)
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Net earnings $ 203 $ (121) $ 369 $ (218)
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Per share
Earnings before cumulative
effect of accounting changes $.81 $(.48) $1.47 $.12
Cumulative effect of
accounting changes - - - (.99)
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Net earnings $.81 $(.48) $1.47 $(.87)
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Dividends $.28 $.22 $.53 $.415
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Weighted average shares
outstanding 251 252 251 252
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See Notes To Financial Statements
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CAMPBELL SOUP COMPANY CONSOLIDATED
Balance Sheets
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(unaudited)
(million dollars)
January August
30, 1994 1, 1993
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Current assets
Cash and cash equivalents $ 61 $ 63
Other temporary investments, at cost
which approximates market 14 7
Accounts receivable 759 646
Inventories 788 804
Prepaid expenses 151 166
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Total current assets 1,773 1,686
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Plant assets, net of depreciation 2,305 2,264
Intangible assets, net of amortization 605 596
Other assets 342 352
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Total assets $5,025 $4,898
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Current liabilities
Notes payable $ 540 $ 669
Payable to suppliers and others 399 510
Accrued liabilities 500 499
Dividend payable 71 64
Accrued income taxes 117 109
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Total current liabilities 1,627 1,851
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Long-term debt 562 462
Nonpension postretirement benefits 386 370
Other liabilities, including deferred
income taxes of $175 and $169 524 511
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Total liabilities 3,099 3,194
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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 155 149
Earnings retained in the business 2,238 2,002
Capital stock in treasury, at cost (463) (428)
Cumulative translation adjustments (24) (39)
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Total shareowners' equity 1,926 1,704
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Total liabilities and shareowners' equity $5,025 $4,898
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See Notes to Financial Statements
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CAMPBELL SOUP COMPANY CONSOLIDATED
Statements of Cash Flows
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(unaudited)
(million dollars)
Six Months Ended
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January January
30, 1994 31, 1993
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Cash flows from operating activities:
Net earnings $369 $(218)
Non-cash charges:
Cumulative effect of accounting changes - 249
Divestiture and restructuring charges - 353
Depreciation and amortization 125 113
Deferred taxes 4 (54)
Other 29 11
Net change in accounts receivable (114) (242)
Net change in inventories 15 (70)
Net change in other current assets and liabilities (93) (6)
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Net cash provided by operating activities 335 136
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Cash flows from investing activities:
Purchases of plant assets (176) (113)
Sales of plant assets 15 10
Businesses acquired (8) (137)
Sales of businesses 15 -
Net change in other assets 14 28
Net change in other temporary investments (8) (1)
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Net cash used in investing activities (148) (213)
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Cash flows from financing activities:
Issuance of long-term debt 100 1
Reductions in long-term debt (101) (118)
Net change in borrowings with less than
three-month maturities (4) 232
Other short-term borrowings (25) (15)
Dividends paid (126) (98)
Treasury stock purchased (41) -
Treasury stock issued 8 29
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Net cash provided by (used in) financing activities (189) 31
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Effect of exchange rate changes on cash - -
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Net change in cash and cash equivalents (2) (46)
Cash and cash equivalents - beginning of period 63 112
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Cash and cash equivalents - end of period $ 61 $ 66
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See Notes to Financial Statements
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CAMPBELL SOUP COMPANY CONSOLIDATED
Statements of Changes in Shareowners' Equity
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(unaudited)
(million dollars)
Earnings Capital
Retained Stock Cumulative Total
Preferred Capital Capital in the in Translation Shareowners'
Stock Stock Surplus Business Treasury Adjustments Equity
--------- ------- ------- -------- -------- ----------- ------------
Balance at August 2, 1992 $ - $20 $116 $2,224 $(402) $69 $2,027
Net earnings 41 41
Cash dividends ($.415
per share) (104) (104)
Treasury stock purchased -
Treasury stock issued
under Management
incentive and Stock
option plans 20 15 35
Translation adjustments (92) (92)
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Balance at January 31, 1993 $ - $20 $136 $2,161 $(387) $(23) $1,907
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Balance at August 1, 1993 $ - $20 $149 $2,002 $(428) $(39) $1,704
Net earnings 369 369
Cash dividends ($.53 per
share) (133) (133)
Treasury stock purchased (41) (41)
Treasury stock issued
under Management
incentive and Stock
option plans 6 6 12
Translation adjustments 15 15
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Balance at January 30, 1994 $ - $20 $155 $2,238 $(463) $(24) $1,926
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Changes in Number of Shares (unaudited)
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(thousands of shares)
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In
Issued Outstanding Treasury
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Balance at August 2, 1992 271,245 251,168 20,077
Treasury stock purchased
Treasury stock issued under Management incentive and Stock option
plans 1,154 (1,154)
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Balance at January 31, 1993 271,245 252,322 18,923
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Balance at August 1, 1993 271,245 251,706 19,539
Treasury stock purchased (1,139) 1,139
Treasury stock issued under Management incentive and Stock option
plans 284 (284)
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Balance at January 30, 1994 271,245 250,851 20,394
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See Notes to Financial Statements
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CAMPBELL SOUP COMPANY CONSOLIDATED
Notes to Financial Statements
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(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
January August
30, 1994 1, 1993
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Raw materials, containers and
supplies $ 377 $342
Finished products 490 538
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867 880
Less - Adjustment of certain
inventories to LIFO basis 79 76
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$ 788 $804
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(d) In February 1993, Campbell increased its ownership in Arnotts
Limited from a minority interest to 58%. Beginning in the
third quarter of fiscal 1993, Arnotts' results have been
consolidated. Prior to this time, Campbell's investment in
Arnotts was accounted for by the equity method. Minority
interest is classified as Other Expense in the Statement of
Earnings.
(e) Certain reclassifications of prior years' data have been made
to improve comparability.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
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AND FINANCIAL CONDITION
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CAMPBELL SOUP COMPANY
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Results of Operations
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Overview
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Campbell had record sales and earnings for its second quarter and
first six months ended January 30, 1994.
Earnings per share increased to a quarterly record of 81 cents,
compared to a loss of 48 cents in the second quarter last year,
which included restructuring charges of $1.19. Net earnings rose
to $203 million from a loss of $121 million a year ago. Net sales
for the quarter were $1.89 billion, up 6% from the comparable
period last year.
In the second quarter, the worldwide Biscuit and Bakery business
continued to make excellent progress and International recorded
strong earnings improvement with soup volume outside the U.S. up
4%. U.S. businesses posted slight earnings gains, recovering from
a difficult first quarter.
Net earnings for the six months were $369 million, or $1.47 per
share, compared to a loss of 87 cents per share last year, which
included restructuring and one-time charges for accounting changes
totaling $2.18 per share. Net earnings increased 12% before these
special charges. Sales for the six months increased 5% to $3.66
billion, versus $3.48 billion for the comparable period last year.
Results by Division
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SECOND QUARTER
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U.S.A. - U.S. sales for the second quarter of $1.16 billion were up
slightly and operating earnings increased to $249 million from $72
million last year. Operating earnings increased 1% before 1993
restructuring charges. Soup shipments to the trade declined 3%
from last year's second quarter because of heavy promotional
activity last year. Consumer purchases of Campbell's soups rose
2%, supported by the new advertising campaign, "Never Underestimate
the Power of Soup."
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Major sales gains were achieved by "Swanson" traditional frozen
dinners, "Great Starts" breakfasts, and ready-to-serve soups. Food
service sales continued to grow at a rapid pace highlighted by the
introduction of new products for quick-service restaurants.
Biscuit and Bakery - Biscuit and Bakery second quarter sales rose
48% to $318 million, primarily due to Campbell's 1993 acquisition
of majority ownership in Arnotts Limited. Operating earnings
increased to $43 million from $18 million last year. Before 1993
restructuring charges, operating earnings increased 84% with
Arnotts the major contributor to the improvement.
"Pepperidge Farm" sales rose slightly from last year's comparable
period. Sales of new frozen garlic breads contributed strongly to
sales and earnings.
"Delacre" sales were down slightly, reflecting the lingering
effects of recession in Europe. Earnings improved substantially
due to restructuring of the business.
International - International businesses consisting of soups,
grocery, frozen, confectionery and specialty foods in Canada,
Mexico, Argentina, Europe and Asia, reported a sales decrease of
3%, but an increase of 1% before currency fluctuations.
International operating earnings rose to $49 million from a loss of
$130 million for the comparable period last year. 1993 results
included restructuring charges of $173 million. Excluding
restructuring charges and currency fluctuations, operating earnings
rose 20%. Campbell's United Kingdom businesses turned in another
record earnings performance, due to volume growth in the soup and
grocery businesses, continued margin improvement in frozen foods,
and the acquisition last April of the "Fray Bentos" meat product
business.
Solid earnings gains also came from Canada, Australia and
Campbell's confectionery businesses. "Godiva" chocolates had a
very successful holiday season.
SIX MONTHS
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U.S.A. - U.S. sales for the six months of $2.23 billion decreased
1%. Operating earnings were $471 million, a 2% decline excluding
the effects of 1993 restructuring charges.
Soup shipments to the trade declined 5% versus a very strong prior
year. Sales of "Swanson" traditional frozen dinners and food
service products were particularly strong during the period.
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Biscuit and Bakery - Biscuit and Bakery sales for the six months
rose to $647 million, a 48% increase, largely due to the
acquisition of Arnotts. Operating earnings increased to $81
million from $38 million. Excluding 1993 restructuring charges,
operating earnings increased 90%, primarily as a result of the
acquisition of Arnotts. Delacre delivered solid sales gains and
substantial improvements in earnings.
International - International sales for the six months declined 2%
to $813 million, but increased 5% before currency fluctuations.
Solid gains were contributed by Mexico, "Godiva," and the grocery
business in the United Kingdom.
Operating earnings increased to $78 million, a 24% increase
excluding 1993 restructuring charges. Earnings improvements
occurred throughout most businesses but were particularly strong in
the United Kingdom, Canada, Argentina and the confectionery
businesses.
Statements of Earnings
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Net sales increased 6% for the second quarter and 5% for the six
months versus the same periods in the prior year. Acquisitions
accounted for all of this increase as sales of other businesses
were even with last year. Strong sales gains in frozen,
confectionery and U.K. businesses were offset by a slight decline
in domestic soup sales to the trade.
Gross margins improved 2.1 percentage points to 41.7% in the second
quarter, and 2.2 percentage points to 40.9% for the six-month
period. These increases resulted from continued stability in
commodity costs, higher selling prices and manufacturing
improvements.
Marketing and selling expenses were up 11.1% and 11.5% for the
second quarter and the six months, respectively, compared to the
prior year. During the six-month period, major marketing
activities were initiated including the new soup advertising
campaign, "Never Underestimate the Power of Soup," which is
designed to increase per capita consumption.
The increase in Other expense results principally from minority
interest associated with Arnotts. Interest expense continues to be
favorable to the prior year due to the retirement of higher rate
long-term debt as well as the low interest rate environment.
In the second quarter of 1993, divestiture and restructuring
charges were recorded to cover the costs of plant consolidations,
including the closing of frozen food plants in Salisbury, Md. and
Philadelphia, Pa. and the sale of non-strategic businesses.
The effective tax rates for the second quarter and the six months
were 35.9% and 36.1%, respectively. The Company continues to
benefit from tax planning strategies.
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Liquidity and Capital Resources
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Campbell's cash flows from operating activities are highly
seasonal. As a result of earnings improvements and focused control
of working capital, the Company generated cash of
$335 million from operations in 1994, up $199 million from 1993.
The seasonal increase in accounts receivable was $114 million in
1994, compared to an increase of $242 million in 1993, primarily as
a result of the timing of sales promotions and currency
fluctuations. Tighter inventory control provided $15 million of
cash in 1994 in contrast to a $70 million use of cash in 1993.
Capital expenditures were $176 million in 1994, up $63 million over
the prior year, due to a high level of previously approved cost
savings projects including restructuring programs announced in the
second quarter of 1993. Capital expenditures are projected to
reach $420 million in 1994. The Company acquired the Australian mushroom
business, "Dandy Mushrooms," for $8 million during the first six
months of 1994. In the same period for 1993, the Company made a
tender offer for the outstanding shares of Arnotts Limited; by the
close of business for the second quarter, shares totaling $127
million had been acquired. Additional shares of Arnotts Limited
totaling $100 million were acquired in the third quarter of 1993,
bringing the total cost of shares of Arnotts Limited acquired in
fiscal 1993 to $227 million, representing a 58% ownership position.
During the first quarter, the Company retired $100 million of
9.125% notes and issued $100 million of notes bearing an interest
rate of 5.625% with a maturity in 2003. Short-term debt decreased
by $29 million in 1994 and increased $217 million in 1993.
As a result of increases in the dividend rate, year-to-date
dividend payments increased $28 million to $126 million in 1994,
compared to $98 million for the first six months of 1993.
The Company repurchased 1.1 million shares of common stock for the
treasury at a cost of $41 million in the first quarter of 1994, whereas there
were no repurchases in the same period for 1993.
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PART II
ITEM 1. LEGAL PROCEEDINGS
As previously reported, 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. The Company has 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 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
a. Campbell's Annual Meeting of Shareowners was held on November
18, 1993.
c. The matters voted upon and the results of the vote are as
follows:
Election of Directors
Number of Shares
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Name For Withheld
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Alva A. App 231,198,139 297,306
Robert A. Beck 231,189,090 306,355
Edmund M. Carpenter 231,191,073 304,372
Bennett Dorrance 231,211,286 284,159
John T. Dorrance, III 231,209,264 286,181
Thomas W. Field, Jr. 231,217,802 277,643
David W. Johnson 231,200,082 295,363
Philip E. Lippincott 231,184,137 311,308
Mary Alice Malone 231,205,592 289,853
Charles H. Mott 231,212,550 282,895
Ralph A. Pfeiffer, Jr. 231,133,062 362,383
Donald M. Stewart 230,888,383 607,062
George Strawbridge, Jr. 231,203,221 292,224
Robert J. Vlasic 224,653,482 6,841,963
Charlotte C. Weber 231,207,707 287,738
Broker
For Against Abstentions Non-Votes
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Ratification of Independent
Accountants 230,674,622 365,816 455,007 N/A
Shareowner Proposal
Concerning Former
Government Employees 4,082,156 216,484,807 1,815,550 9,112,932
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits
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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.
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.
SIGNATURES
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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 10, 1994 By: /s/ John M. Coleman
--------------------------------
John M. Coleman,
Senior Vice President -
Law and Public Affairs
Date: March 10, 1994 By: /s/ Frank E. Weise, III
--------------------------------
Frank E. Weise, III
Senior Vice President -
Finance and Chief Financial Officer
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