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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
May 1, 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 .
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There were 250,099,906 shares of Capital Stock outstanding as of June 1, 1994.
This Form 10-Q consists of a total of 11 pages.
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<TABLE>
<CAPTION>
PART 1. FINANCIAL INFORMATION
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CAMPBELL SOUP COMPANY CONSOLIDATED
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Statements of Earnings
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(unaudited)
(million dollars except per share amounts)
Three Months Ended Nine Months Ended
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May 1, 1994 May 2, 1993 May 1, 1994 May 2, 1993
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net sales $1,568 $1,632 $5,225 $5,116
- - - -----------------------------------------------------------------------------------------------------------------------
Costs and expenses
Cost of products sold 946 1,018 3,108 3,154
Marketing and selling expenses 321 318 991 919
Administrative expenses 74 83 226 226
Research and development expenses 20 17 56 50
Other expense 9 12 36 20
Divestiture and restructuring charges - - - 353
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Total costs and expenses 1,370 1,448 4,417 4,722
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Earnings before interest and taxes 198 184 808 394
Interest, net 15 18 48 58
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Earnings before taxes 183 166 760 336
Taxes on earnings 64 61 272 200
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Earnings before cumulative effect of
accounting changes 119 105 488 136
Cumulative effect of accounting changes - - - (249)
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Net earnings $ 119 $ 105 $ 488 $ (113)
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Per share
Earnings before cumulative effect of
accounting changes $.47 $.42 $1.94 $.54
Cumulative effect of accounting changes - - - (.99)
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Net earnings $.47 $.42 $1.94 $(.45)
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Dividends $.28 $.25 $.81 $.665
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Weighted average shares outstanding 251 252 251 252
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</TABLE>
See Notes To Financial Statements
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<TABLE>
<CAPTION>
CAMPBELL SOUP COMPANY CONSOLIDATED
Balance Sheets
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(unaudited)
(million dollars)
May 1, 1994 August 1, 1993
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<S> <C> <C>
Current assets
Cash and cash equivalents $ 86 $ 63
Other temporary investments, at cost
which approximates market - 7
Accounts receivable 615 646
Inventories 750 804
Prepaid expenses 149 166
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Total current assets 1,600 1,686
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Plant assets, net of depreciation 2,326 2,264
Intangible assets, net of amortization 599 596
Other assets 413 352
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Total assets $4,938 $4,898
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Current liabilities
Notes payable $ 474 $ 669
Payable to suppliers and others 361 510
Accrued liabilities 515 499
Dividend payable - 64
Accrued income taxes 115 109
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Total current liabilities 1,465 1,851
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Long-term debt 564 462
Nonpension postretirement benefits 392 370
Other liabilities, including deferred
income taxes of $196 and $186 535 511
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Total liabilities 2,956 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 157 149
Earnings retained in the business 2,288 2,002
Capital stock in treasury, at cost (462) (428)
Cumulative translation adjustments (21) (39)
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Total shareowners' equity 1,982 1,704
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Total liabilities and shareowners' equity $4,938 $4,898
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</TABLE>
See Notes to Financial Statements
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<TABLE>
<CAPTION>
CAMPBELL SOUP COMPANY CONSOLIDATED
Statements of Cash Flows
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(unaudited)
(million dollars)
Nine Months Ended
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May 1, 1994 May 2, 1993
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<S> <C> <C>
Cash flows from operating activities:
Net earnings $488 $(113)
Non-cash charges:
Cumulative effect of accounting changes - 249
Divestiture and restructuring charges - 353
Depreciation and amortization 193 174
Deferred taxes 8 (56)
Other 41 29
Net change in accounts receivable 35 (105)
Net change in inventories 55 9
Net change in other current assets and liabilities (125) (101)
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Net cash provided by operating activities 695 439
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Cash flows from investing activities:
Purchases of plant assets (278) (180)
Sales of plant assets 33 19
Businesses acquired (8) (255)
Sales of businesses 23 10
Net change in other assets (57) (42)
Net change in other temporary investments 7 (2)
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Net cash used in investing activities (280) (450)
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Cash flows from financing activities:
Issuance of long-term debt 111 -
Reductions in long-term debt (109) (226)
Net change in borrowings with less than three-month
maturities (37) 420
Other short-term borrowings (57) (16)
Dividends paid (265) (217)
Treasury stock purchased (46) (25)
Treasury stock issued 13 37
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Net cash used in financing activities (390) (27)
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Effect of exchange rate changes on cash (2) (4)
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Net change in cash and cash equivalents 23 (42)
Cash and cash equivalents - beginning of period 63 112
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Cash and cash equivalents - end of period $ 86 $ 70
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</TABLE>
See Notes to Financial Statements
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<TABLE>
<CAPTION>
CAMPBELL SOUP COMPANY CONSOLIDATED
Statements of Changes in Shareowners' Equity
(unaudited)
(million dollars)
Capital
Earnings Retained Stock Cumulative Total
Preferred Capital Capital in the in Translation Shareowners'
Stock Stock Surplus Business Treasury Adjustments Equity
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<S> <C> <C> <C> <C> <C> <C> <C>
Balance at August 2, 1992 $ - $20 $116 $2,225 $(402) $69 $2,028
Net earnings 149 149
Cash dividends
($.665 per share) (168) (168)
Treasury stock purchased (26) (26)
Treasury stock issued under
Management incentive and
Stock option plans 29 16 45
Translation adjustments (67) (67)
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Balance at May 2, 1993 $ - $20 $145 $2,206 $(412) $ 2 $1,961
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Balance at August 1, 1993 $ - $20 $149 $2,002 $(428) $(39) $1,704
Net earnings 488 488
Cash dividends
($.81 per share) (202) (202)
Treasury stock purchased (46) (46)
Treasury stock issued under
Management incentive and
Stock option plans 8 12 20
Translation adjustments 18 18
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Balance at May 1, 1994 $ - $20 $157 $2,288 $(462) $(21) $1,982
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</TABLE>
<TABLE>
<CAPTION>
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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<S> <C> <C> <C>
Balance at August 2, 1992 271,245 251,168 20,077
Treasury stock purchased (646) 646
Treasury stock issued under Management
incentive and Stock option plans 1,450 (1,450)
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Balance at May 2, 1993 271,245 251,972 19,273
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Balance at August 1, 1993 271,245 251,706 19,539
Treasury stock purchased (1,268) 1,268
Treasury stock issued under Management
incentive and Stock option plans 514 (514)
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Balance at May 1, 1994 271,245 250,952 20,293
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</TABLE>
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
May August
1, 1994 1, 1993
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Raw materials, containers and supplies $358 $342
Finished products 471 538
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829 880
Less - Adjustment of certain inventories
to LIFO basis 79 76
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$750 $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 earnings for its third quarter and first nine months
ended May 1, 1994.
Earnings per share increased 12% to a quarterly record of 47 cents, up
from 42 cents last year. Net earnings rose 13% to $119 million, from $105
million a year ago. Net sales for the quarter were $1.57 billion, down 4%
from the comparable period last year.
Record earnings reflect Campbell's better-balanced worldwide business
portfolio. Both Biscuit and Bakery and International delivered strong
earnings gains. International soup volume alone was up an impressive 11%.
Soft U.S. results reflect calculated decisions designed to gain operating
and market efficiencies by leveling production and shipping to consumer
demand.
Earnings for the nine months were $488 million or $1.94 per share,
compared to a loss of 45 cents per share last year, which included
restructuring and one-time charges for accounting changes. Net earnings
increased 12% before these special charges. Sales for the nine months
increased 2% to $5.23 billion, versus $5.12 billion for the comparable
period last year.
Results by Division
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THIRD QUARTER
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U.S.A. - U.S. third quarter sales of $913 million were down 8%, and
operating earnings of $150 million were 2% lower than last year's $154
million. Soup shipments to the trade declined 15% from last year's third
quarter because of reduced promotional activity.
Marketing spending has been refocused on the retail consumer this year.
This is expected to eliminate undesirable peaks in the business cycle and
lower costs throughout the distribution chain.
"Swanson" traditional frozen dinners, pies and breakfasts and "Prego"
spaghetti sauces achieved solid volume growth. Food service products
continued rapid sales growth led by frozen entrees and custom packed
products for quick-service restaurants.
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Biscuit and Bakery - Biscuit and Bakery third quarter sales rose 11% to
$289 million, primarily due to the 1993 acquisition of majority ownership
in Arnotts Limited. Pepperidge Farm's biscuit and frozen businesses also
had substantial sales growth with frozen pastry and garlic bread posting
very strong gains. Operating earnings rose 23% to $28 million from $23
million last year, driven by strong performances from Arnotts and
Pepperidge Farm's biscuit business.
International - International businesses consisting of soups, grocery,
frozen, worldwide confectionery and specialty foods in Canada, Mexico,
Argentina, Europe and Asia, reported a sales decrease of 2%, to $381
million from $390 million last year, but a 1% increase before currency
fluctuations.
International operating earnings rose 40% to $31 million from $22 million
for the comparable period last year. Campbell's United Kingdom led this
strong earnings growth with gains in soup and frozen products and the
"Fray Bentos" canned meat business which was acquired in April 1993.
Mexico, Argentina and Campbell's confectionery businesses also posted
solid earnings gains.
NINE MONTHS
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U.S.A. - U.S. sales for the nine months declined 3% to $3.14 billion.
Operating earnings were $621 million, a 2% decline excluding the effect of
1993 restructuring charges.
Soup shipments to the trade were down 7.5% for the period, compared to the
prior year. Sales of "Swanson" traditional frozen dinners, pies and
breakfasts and food service products increased during the period.
Biscuit and Bakery - Biscuit and Bakery sales for the nine months grew to
$937 million, an increase of 34%, primarily due to the acquisition of
Arnotts. Operating earnings increased to $109 million from $60 million,
a 67% increase excluding 1993 restructuring charges. Although volume was
down, Delacre showed strong earnings improvement during the period.
International - International sales for the nine months declined 2% to
$1.19 billion, but increased 4% before currency fluctuations. Strong
sales growth occurred in the United Kingdom, Mexico and in the "Godiva"
business. Soup volume increased 9%.
Operating earnings increased to $109 million, a 28% increase excluding
1993 restructuring charges. Most businesses experienced earnings growth,
led by Canada, the United Kingdom and the confectionery businesses.
Statements of Earnings
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Net sales increased 2% for the nine months but declined 4% in the third
quarter versus the same periods in the prior year. Excluding the effects
of acquisitions, sales decreased for the nine months, reflecting the
decline in U.S. soup shipments.
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Gross margins improved 2.1 percentage points in the third quarter and for
the nine months to 39.7% and 40.5%, respectively. These improvements
resulted from continued stability in commodity prices, higher selling
prices and manufacturing efficiencies.
Marketing and selling expenses for the third quarter were flat compared to
the prior year, but increased 8% in the nine months versus last year.
Major marketing activities were initiated early in the year, including the
new advertising campaign, "Never Underestimate the Power of Soup."
The increase in Other expense for the nine months results principally from
minority interest associated with Arnotts. The favorability in Interest
expense results from retirement of higher rate long-term debt and the low
short term interest rate environment.
The effective tax rates for the third quarter and nine months were 35.0%
and 35.8%, respectively as the Company continues to benefit from tax
planning strategies.
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 attention on working capital,
the Company provided cash of $695 million from operations in the first
nine months of 1994, up $256 million from $439 million in the same period
in 1993. A decrease in accounts receivable provided $35 million in 1994,
compared to use of $105 million in 1993, primarily as a result of the
timing of sales promotions. Inventory reductions provided $55 million of
cash in 1994, an improvement of $46 million over the same period in 1993.
Capital expenditures were $278 million in 1994, up $98 million over the
prior year due to a high level of cost savings projects. Capital
expenditures are projected to reach $430 million for fiscal 1994.
During the first nine months of 1994, the Company acquired the Australian
mushroom business, Dandy Mushrooms, for $8 million. In the same period for
1993, the Company purchased, at a cost of $227 million, 25% of the outstand-
ing shares of the Australian biscuit company, Arnotts Limited, increasing
the Company's ownership position from 33% to 58%.
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 $94 million in 1994 and
increased $404 million in 1993.
As a result of increases in the dividend rate, year-to-date dividend
payments increased $48 million to $265 million in 1994, from $217 million
for the first nine months of 1993.
The Company repurchased 1.3 million shares of common stock for the
treasury at a cost of $46 million through three quarters in 1994, compared
to repurchases of approximately 646,000 shares for $26 million in the same
period in 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 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.
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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: June 13, 1994 By:/s/John M. Coleman
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John M. Coleman, Senior Vice President -
Law and Public Affairs
Date: June 13, 1994 By:/s/Frank E. Weise, III
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Frank E. Weise, III
Senior Vice President - Finance
and Chief Financial Officer
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