<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED COMMISSION FILE NUMBER
AUGUST 1, 1999 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: (856) 342-4800
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
<TABLE>
<CAPTION>
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
<S> <C>
CAPITAL STOCK, PAR VALUE $.0375 NEW YORK STOCK EXCHANGE
PHILADELPHIA STOCK EXCHANGE
</TABLE>
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE
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 .
INDICATE BY CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS PURSUANT
TO ITEM 405 OF REGULATION S-K IS NOT CONTAINED HEREIN, AND WILL NOT BE
CONTAINED, TO THE BEST OF REGISTRANT'S KNOWLEDGE, IN DEFINITIVE PROXY OR
INFORMATION STATEMENTS INCORPORATED BY REFERENCE IN PART III OF THIS FORM 10-K
OR ANY AMENDMENT TO THIS FORM 10-K. [ x]
AS OF SEPTEMBER 20, 1999, THE AGGREGATE MARKET VALUE OF CAPITAL
STOCK HELD BY NON-AFFILIATES OF THE REGISTRANT WAS $9,713,788,701. THERE WERE
427,836,506 SHARES OF CAPITAL STOCK OUTSTANDING AS OF SEPTEMBER 20, 1999.
PORTIONS OF THE ANNUAL REPORT TO SHAREOWNERS FOR THE FISCAL YEAR
ENDED AUGUST 1, 1999 ARE INCORPORATED BY REFERENCE INTO PARTS I AND II. PORTIONS
OF THE NOTICE OF ANNUAL MEETING AND PROXY STATEMENT DATED OCTOBER 8, 1999, FOR
THE ANNUAL MEETING OF SHAREOWNERS TO BE HELD ON NOVEMBER 18, 1999, ARE
INCORPORATED BY REFERENCE INTO PART III.
<PAGE> 2
PART I
ITEM 1. BUSINESS
THE COMPANY
Campbell Soup Company ("Campbell" or the "company"), together with its
consolidated subsidiaries, is a global manufacturer and marketer of high
quality, branded convenience food products. Campbell was incorporated as a
business corporation under the laws of New Jersey on November 23, 1922; however,
through predecessor organizations, it traces its heritage in the food business
back to 1869.
During 1999, the company divested its Fresh Start Bakeries business.
The company operates in three business segments: Soup and Sauces, Biscuits and
Confectionery, and Away From Home. The Soup and Sauces segment includes the
worldwide soup businesses, Prego spaghetti sauce, Franco-American pastas and
gravies, Pace Mexican foods, Swanson broths, Home Pride sauces in the United
Kingdom and the V8 and V8 Splash beverage business. The Biscuits and
Confectionery segment includes the Pepperidge Farm, Godiva and Arnotts Limited
businesses. The Away From Home segment represents products, including Campbell's
soups, Pace Tabletop picante and Campbell's Specialty Kitchens entrees, which
are distributed to the food service and home meal replacement markets. See also
"Management's Discussion and Analysis of Results of Operations and Financial
Condition" at pages 27 to 34 of the Company's 1999 Annual Report to Shareowners
for the fiscal year ended August 1, 1999 ("1999 Annual Report"), which is
incorporated herein by reference. Additional financial information about the
company's business segments is incorporated by reference from the section of the
Notes to Consolidated Financial Statements entitled "Business and Geographic
Segment Information" from pages 40 and 41 of the 1999 Annual Report.
INGREDIENTS
The ingredients required for the manufacture of the company's food products are
purchased from various suppliers. As a result of the company's portfolio
reconfiguration program, the company sold or spun off certain of its ingredient
and container operations and entered into various supply agreements covering
those purchases. The company does not anticipate any material restrictions on
availability or shortages of ingredients that would have a significant impact on
the company's businesses.
While all such ingredients are available from numerous independent suppliers,
raw materials are subject to fluctuations in price attributable to a number of
factors, including changes in crop size, cattle cycles, government-sponsored
agricultural programs and weather conditions during the growing and harvesting
seasons. Ingredient inventories are at a peak during the late fall and decline
during the winter and spring. Since many ingredients of suitable quality are
available in sufficient quantities only at certain seasons, the company makes
commitments for the purchase of such ingredients during their respective
seasons.
CUSTOMERS
In the United States, sales solicitation activities are conducted by the
company's own sales force and through broker and distributor arrangements. The
company's products are generally resold to consumers in retail stores,
restaurants and other food service establishments. No material part of the
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business is dependent upon a single customer. Shipments are made promptly by the
company after receipt and acceptance of orders.
TRADEMARKS AND TECHNOLOGY
The company markets its food products globally under a number of significant
trademarks. The company considers such trademarks, taken as a whole, to be of
material importance to its business and, consequently, aggressively seeks to
protect its rights in them.
Although the company owns a number of valuable patents, it does not regard any
segment of its business as being dependent upon any single patent or any group
of related patents.
COMPETITION
The company experiences vigorous competition for sales of its principal products
in its major markets, both within the United States and abroad, from numerous
competitors of varying sizes. The principal areas of competition are quality,
price, advertising, promotion and service.
WORKING CAPITAL
For information relating to the company's cash and other working capital items,
see pages 27 through 34 of the company's 1999 Annual Report in the section
entitled "Management's Discussion and Analysis of Results of Operations and
Financial Condition", which are incorporated herein by reference.
RESEARCH AND DEVELOPMENT
During the last three fiscal years, the company's expenditures on research
activities relating to new products and the improvement of existing products
were approximately $66 million in 1999, $71 million in 1998 and $68 million in
1997.
EMPLOYEES
At August 1, 1999, there were approximately 24,500 persons employed by the
company.
FOREIGN OPERATIONS
For information with respect to the revenue, operating profitability and
identifiable assets attributable to the company's foreign operations, see pages
40 and 41 of the 1999 Annual Report in the section of the Notes to Consolidated
Financial Statements entitled "Business and Geographic Segment Information",
which is incorporated herein by reference.
FINANCIAL INFORMATION
For information with respect to revenue, operating profitability and
identifiable assets attributable to the company's business segments, see pages
40 and 41 of the 1999 Annual Report in the section of the Notes to Consolidated
Financial Statements entitled "Business and Geographic Segment Information",
which is incorporated herein by reference.
RECENT DEVELOPMENTS
The information presented on page 34 of the 1999 Annual Report in the section
entitled "Management's Discussion and Analysis of Results of Operations and
Financial Condition" is incorporated herein by reference.
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FORWARD-LOOKING STATEMENTS
From time to time, the company makes oral and written statements which reflect
the company's current expectations regarding future results of operations,
economic performance, financial condition and achievements of the company. The
company tries, 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.
Campbell wishes to caution the reader that the following important factors and
those important factors described in other Securities and Exchange Commission
filings of the company, or in the company's 1999 Annual Report, 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 new product
introductions, including uncertainties about trade and consumer
acceptance;
- - the company's ability to achieve sales and earnings forecasts,
which are based on assumptions about sales volume and product mix;
- - the continuation of the company's successful record of integrating
acquisitions into its existing operations and the availability of
new acquisition and alliance opportunities that build shareowner
wealth;
- - the company's ability to achieve its cost savings objectives,
including the projected outcome of supply chain management
programs;
- - the difficulty of predicting the pattern of inventory movements by
the company's trade customers;
- - the impact of unforeseen economic and political changes in
international markets where the company competes such as currency
exchange rates, inflation rates, recession, foreign ownership
restrictions and other external factors over which the company has
no control; and
- - the ability of the company and its key service providers, vendors,
suppliers, customers and governmental entities to replace, modify
or upgrade computer systems in ways that adequately address the
Year 2000 issue. Specific factors that might cause actual results
to vary materially from the results anticipated include the ability
to identify and correct all relevant computer codes and embedded
chips, unanticipated difficulties or delays in the implementation
of the company's remediation plans and the ability of third parties
to adequately address their own Year 2000 issues.
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This discussion of uncertainties is by no means exhaustive but is designed to
highlight important factors that may impact the company's outlook.
ITEM 2. PROPERTIES
The company's principal executive offices and main research facilities are
company-owned and located in Camden, New Jersey. The following table sets forth
the company's principal manufacturing facilities:
PRINCIPAL MANUFACTURING FACILITIES
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<CAPTION>
INSIDE THE U.S. OUTSIDE THE U.S.
<S> <C> <C> <C>
CALIFORNIA OHIO AUSTRALIA GERMANY
- - Dixon - Napoleon - Burwood - Lubeck
- - Sacramento - Wauseon - Huntingwood - Gerwisch
- - Stockton - Willard - Marleston INDONESIA
CONNECTICUT PENNSYLVANIA - Shepparton - Jawa Barat
- - Norwalk - Denver - Virginia MALAYSIA
FLORIDA - Downington BELGIUM - Selangor Darul Ehsan
- - Lakeland - Reading - Brussels MEXICO
ILLINOIS SOUTH CAROLINA - Puurs - Villagran
- - Downers Grove - Aiken CANADA - Guasave
MICHIGAN TEXAS - Listowel PAPUA NEW GUINEA
- - Marshall - Paris - Toronto - Gordons
NEW JERSEY UTAH UNITED KINGDOM - Malahang Lae
- - South Plainfield - Richmond - King's Lynn
NORTH CAROLINA WISCONSIN FRANCE
- - Maxton - Milwaukee - LePontet
</TABLE>
The company also operates retail confectionery shops in the United States,
Canada, Europe and Japan; retail bakery thrift stores in the United States; a
mail order facility; and other plants and facilities at various locations in the
United States and abroad.
Management believes that the company's manufacturing and processing plants are
well maintained and are generally adequate to support the current operations of
the businesses.
ITEM 3. 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 results of operations,
financial position or cash flows of the company.
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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. Although the impact on 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, 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.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
EXECUTIVE OFFICERS OF THE COMPANY
The following list of executive officers as of October 1, 1999, is included as
an item in Part I of this Form 10-K:
<TABLE>
<CAPTION>
DATE FIRST
NAME PRESENT TITLE AGE ELECTED OFFICER
---- ------------- --- ---------------
<S> <C> <C> <C>
Dale F. Morrison President and Chief Executive Officer 50 1995
- -----------------------------------------------------------------------------------------------------------------------
Basil L. Anderson Executive Vice President and Chief Financial Officer 54 1996
- -----------------------------------------------------------------------------------------------------------------------
Ellen Oran Kaden Senior Vice President - Law and 48 1998
Government Affairs
- -----------------------------------------------------------------------------------------------------------------------
F. Martin Thrasher Senior Vice President 48 1992
President - North American Soup and Sauces Division
- -----------------------------------------------------------------------------------------------------------------------
David L. Albright Vice President 52 1992
President - Pepperidge Farm
- -----------------------------------------------------------------------------------------------------------------------
Jerry S. Buckley Vice President - Public Affairs 44 1997
- -----------------------------------------------------------------------------------------------------------------------
Timothy M. Callahan Vice President - Global Beverages and Business 39 1999
Development
- -----------------------------------------------------------------------------------------------------------------------
Lawrence B. Costello Vice President - Human Resources 51 1999
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
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<TABLE>
<CAPTION>
<S> <C> <C> <C>
Andrew K. Hughson Vice President 44 1997
President - Asia/Pacific
- -----------------------------------------------------------------------------------------------------------------------
Gerald S. Lord Vice President - Controller 53 1993
- -----------------------------------------------------------------------------------------------------------------------
R. David C. Macnair Vice President - Global Research and Development 45 1998
- -----------------------------------------------------------------------------------------------------------------------
Craig W. Rydin Vice President 47 1997
President - Away From Home
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
Each of the above-named officers has been employed by the company in an
executive or managerial capacity for at least five years, except Basil L.
Anderson, Jerry S. Buckley, Timothy Callahan, Andrew K. Hughson, Ellen Oran
Kaden, and Dale F. Morrison. Dale F. Morrison served as President, Frito Lay
North (1994-1995) and Vice President Marketing and Sales, Frito Lay Central
Division (1993-1994) prior to joining Campbell in 1995. Basil L. Anderson served
as Chief Financial Officer (1992-1996) of Scott Paper Company prior to joining
Campbell in 1996. Ellen Oran Kaden served as Executive Vice President, General
Counsel and Secretary (1994-1998) and Senior Vice President, General Counsel and
Secretary (1993-1994) of CBS Inc. prior to joining Campbell in 1998. Jerry S.
Buckley served as Assistant Managing Editor, Gannett Company, Inc. (1994-1995)
and Senior Editor/Senior Writer, U.S. News & World Report (1987-1994) prior to
joining Campbell in 1995. Timothy Callahan served as Vice President and General
Manager (1997-1998), Vice President - Marketing and Sales (1995-1997) and
Category Director (1993-1995) of Kraft Foods - Post Cereal Division prior to
joining Campbell in 1998. Andrew K. Hughson served as General Manager, Kellogg
France, Belgium and the Netherlands (1994-1996) and Assistant to the Chairman,
Kellogg Company, Global Marketing (1993-1994) prior to joining Campbell in 1996.
There is no family relationship among any of the company's executive officers or
between any such officer and any director of Campbell. Executive officers of
Campbell are elected at the November 1999 meeting of the Board of Directors.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED SHAREOWNER MATTERS
Campbell's capital stock is listed and principally traded on the New York Stock
Exchange. Campbell's capital stock is also listed and traded on the Philadelphia
Stock Exchange, The International Stock Exchange of the United Kingdom and the
Republic of Ireland Limited and the Swiss Exchange. On September 20, 1999, there
were 38,722 holders of record of Campbell's capital stock. The market price and
dividend information with respect to Campbell's capital stock are set forth on
page 47 of the 1999 Annual Report in the section of the Notes to Consolidated
Financial Statements entitled "Quarterly Data
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(unaudited)" which is incorporated herein by reference. Future dividends will be
dependent upon future earnings, financial requirements and other factors.
ITEM 6. SELECTED FINANCIAL DATA
The information called for by this Item is set forth on page 49 of the 1999
Annual Report in the section entitled "Six-Year Review Consolidated" which is
incorporated herein by reference. Such information should be read in conjunction
with the Consolidated Financial Statements and Notes thereto of the company
included in Item 8 of this Report.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
The information presented on pages 27 through 34 of the 1999 Annual Report in
the section entitled "Management's Discussion and Analysis of Results of
Operations and Financial Condition" is incorporated herein by reference.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information presented on pages 30 through 32 of the 1999 Annual Report in
the section entitled "Management's Discussion and Analysis of Results of
Operations and Financial Condition" is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS
The information presented on pages 35 through 48 of the 1999 Annual Report is
incorporated herein by reference. With the exception of the aforementioned
information and the information incorporated by reference in Items 1, 5, 6, 7,
and 7A, the 1999 Annual Report is not deemed to be filed as part of this Form
10-K.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The sections entitled "Election of Directors" and "Directors and Executive
Officers Stock Ownership Reports" set forth on pages 1 through 4 and page 30 of
Campbell's Notice of Annual Meeting and Proxy Statement dated October 8, 1999
(the "1999 Proxy Statement") are incorporated herein by reference.
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The information required by this Item relating to the executive officers of
Campbell is set forth in Part I of this Report on pages 5 and 6 under the
heading "Executive Officers of the Company."
ITEM 11. EXECUTIVE COMPENSATION
The information set forth on pages 15 through 25 of the 1999 Proxy Statement in
the section entitled "Compensation of Executive Officers" is incorporated herein
by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this Item is set forth at pages 5 through 7 of the
1999 Proxy Statement in the sections entitled "Security Ownership of Directors
and Executive Officers" and "Security Ownership of Certain Beneficial Owners"
and is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) The following documents are filed as part of this report:
1. FINANCIAL STATEMENTS
- Consolidated Statements of Earnings for 1999, 1998 and 1997
- Consolidated Balance Sheets as of August 1, 1999 and August 2,
1998
- Consolidated Statements of Cash Flows for 1999, 1998 and 1997
- Consolidated Statements of Shareowners' Equity for 1999, 1998
and 1997
- Summary of Significant Accounting Policies
- Notes to Consolidated Financial Statements
- Report of Independent Accountants
- The foregoing Financial Statements are incorporated into Part
II, Item 8 of this Report by reference to pages 35 through 48
of the 1999 Annual Report.
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2. FINANCIAL STATEMENT SCHEDULES
None.
3. EXHIBITS
<TABLE>
<CAPTION>
<S> <C>
3(i) Campbell's Restated Certificate of Incorporation
as amended through February 24, 1997, was filed with
the Securities and Exchange Commission ("SEC") with
Campbell's Form 10-Q for the quarterly period ended
January 26, 1997, and is incorporated herein by
reference.
3(ii) Campbell's By-Laws, effective as of August 1, 1999.
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 SEC.
9 Major Stockholders' Voting Trust Agreement dated June
2, 1990, as amended, was filed with the SEC by the
Trustees of the Major Stockholders' Voting Trust as
Exhibit A to Schedule 13D dated June 5, 1990, and is
incorporated herein by reference.
10(a) Campbell Soup Company 1984 Long-Term Incentive Plan,
as amended on March 30, 1998, was filed with the SEC
with Campbell's Form 10-K for the fiscal year ended
August 2, 1998, and is incorporated herein by
reference.
10(b) Campbell Soup Company 1994 Long-Term Incentive Plan
as amended on March 30, 1998, was filed with the SEC
with Campbell's Form 10-K for the fiscal year ended
August 2, 1998, and is incorporated herein by
reference.
10(c) Campbell Soup Company Management Worldwide Incentive
Plan, as amended on November 17, 1994, was filed with
the SEC with Campbell's 1994 Proxy Statement and is
incorporated herein by reference.
10(d) Mid-Career Hire Pension Program, as amended on
February 22, 1996, was filed with the SEC with
Campbell's Form 10-K for the fiscal year ended July
28, 1996, and is incorporated herein by reference.
10(e) Personal Choice, A Flexible Reimbursement Program for
Campbell Soup Company Executives, effective August 1,
1994, was filed with the SEC with Campbell's Form
10-K for the fiscal year ended July 30, 1995, and is
incorporated herein by reference.
</TABLE>
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<TABLE>
<CAPTION>
<S> <C>
10(f) Supplemental Savings Plan, as amended on May 25,
1995, was filed with the SEC with Campbell's Form
10-K for the fiscal year ended July 30, 1995, and is
incorporated herein by reference.
10(g) Salary Deferral Plan, effective January 1, 1996, was
filed with the SEC with Campbell's Form S-8 on
February 6, 1996, and is incorporated herein by
reference.
10(h) Severance Protection Agreement dated April 1, 1998,
with Ellen Oran Kaden, Senior Vice President - Law
and Government Affairs, was filed with the SEC with
Campbell's Form 10-K for the fiscal year ended August
2, 1998, and is incorporated herein by reference.
Agreements with nine (9) other executive officers are
in all material respects the same as that with Ms.
Kaden.
13 Pages 27 through 49 of Campbell's 1999 Annual Report
to Shareowners for the fiscal year ended August 1,
1999.
21 Subsidiaries (Direct and Indirect) of the company.
23 Consent of Independent Accountants.
24(a) Power of Attorney.
24(b) Certified copy of the resolution of Campbell's Board
of Directors authorizing signatures pursuant to a
power of attorney.
27 Financial Data Schedule (not considered to be filed).
</TABLE>
(b) Reports on Form 8-K
There were no reports on Form 8-K filed by the Company during the
fourth quarter of fiscal 1999.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, Campbell has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
Date: October 8, 1999
CAMPBELL SOUP COMPANY
By:/s/ Basil L. Anderson
--------------------------------
Basil L. Anderson
Executive Vice President
and Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of Campbell and in the
capacity and on the date indicated.
Date: October 8, 1999
/s/ Basil L. Anderson /s/ Gerald S. Lord
--------------------- ------------------
Basil L. Anderson Gerald S. Lord
Executive Vice President Vice President - Controller
and Chief Financial Officer
<TABLE>
<CAPTION>
<S> <C> <C>
Philip E. Lippincott Chairman and Director }
Dale F. Morrison President, Chief Executive }
Officer and Director
Alva A. App Director }
Edmund M. Carpenter Director }
Bennett Dorrance Director }
Thomas W. Field, Jr. Director }
Kent B. Foster Director }
Harvey Golub Director }
David K. P. Li Director } By: /s/ Ellen Oran Kaden
--------------------
Mary Alice Malone Director } Ellen Oran Kaden
Charles H. Mott Director } Senior Vice President -
Charles R. Perrin Director } Law and Government Affairs
George M. Sherman Director }
Donald M. Stewart Director }
George Strawbridge, Jr. Director }
Charlotte C. Weber Director }
</TABLE>
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INDEX OF EXHIBITS
Document
<TABLE>
<CAPTION>
<S> <C>
3(i) Campbell's Restated Certificate of Incorporation as amended
through February 24, 1997 was filed with the Securities and
Exchange Commission ("SEC") with Campbell's Form 10-Q for the
quarterly period ended January 26, 1997, and is incorporated
herein by reference.
3(ii) Campbell's By-Laws, effective as of August 1, 1999.
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
SEC.
9 Major Stockholders' Voting Trust Agreement dated June 2, 1990, as
amended, was filed with the SEC by the Trustees of the Major
Stockholders' Voting Trust as Exhibit A to Schedule 13D dated June
5, 1990, and is incorporated herein by reference.
10(a) Campbell Soup Company 1984 Long-Term Incentive Plan, as amended on
March 30, 1998, was filed with the SEC with Campbell's Form 10-K
for the fiscal year ended August 2, 1998, and is incorporated
herein by reference.
10(b) Campbell Soup Company 1994 Long-Term Incentive Plan as amended on
March 30, 1998, was filed with the SEC with Campbell's Form 10-K
for the fiscal year ended August 2, 1998, and is incorporated
herein by reference.
10(c) Campbell Soup Company Management Worldwide Incentive Plan, as
amended on November 17, 1994, was filed with the SEC with
Campbell's 1994 Proxy Statement, and is incorporated herein by
reference.
10(d) Mid-Career Hire Pension Program, as amended on February 22, 1996,
was filed with the SEC with Campbell's Form 10-K for the fiscal
year ended July 28, 1996, and is incorporated herein by reference.
10(e) Personal Choice, Financial Reimbursement Program for Campbell Soup
Company Executives, effective August 1, 1994, was filed with the
SEC with Campbell's Form 10-K for the fiscal year ended July 30,
1995, and is incorporated herein by reference.
</TABLE>
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<TABLE>
<CAPTION>
<S> <C>
10(f) Supplemental Savings Plan, as amended on May 25, 1995 was filed
with the SEC with Campbell's Form 10-K for the fiscal year ended
July 30, 1995 and is incorporated herein by reference.
10(g) Salary Deferral Plan, effective January 1, 1996, was filed with
the SEC with Campbell's Form S-8 on February 6, 1996, and is
incorporated herein by reference.
10(h) Severance Protection Agreement dated April 1, 1998, with Ellen
Oran Kaden, Senior Vice President - Law and Government Affairs,
was filed with the SEC with Campbell's Form 10-K for the fiscal
year ended August 2, 1998, and is incorporated herein by
reference. Agreements with nine (9) other executive officers are
in all material respects the same as that with Ms. Kaden.
13 Pages 27 through 49 of Campbell's 1999 Annual Report to
Shareowners for the fiscal year ended August 1, 1999.
21 Subsidiaries (Direct and Indirect) of Campbell.
23 Consent of Independent Accountants.
24(a) Power of Attorney.
24(b) Certified copy of the resolution of Campbell's Board of Directors
authorizing signatures pursuant to a power of attorney.
27 Financial Data Schedule (not considered to be filed).
</TABLE>
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EXHIBIT 3(ii)
CAMPBELL SOUP COMPANY
BY-LAWS
EFFECTIVE AUGUST 1, 1999
<PAGE> 2
CAMPBELL SOUP COMPANY
BY-LAWS
ARTICLE I.
STOCKHOLDERS
SECTION 1. THE ANNUAL MEETING OF THE STOCKHOLDERS OF THE CORPORATION
SHALL BE HELD AT THE PRINCIPAL OFFICE OF THE CORPORATION IN NEW JERSEY, OR AT
SUCH OTHER PLACE, WITHIN OR WITHOUT NEW JERSEY, AS MAY FROM TIME TO TIME BE
DESIGNATED BY THE BOARD OF DIRECTORS AND STATED IN THE NOTICE OF THE MEETING, ON
THE THIRD THURSDAY IN NOVEMBER IN EACH YEAR (OR IF SAID DAY BE A LEGAL HOLIDAY,
THEN ON THE NEXT SUCCEEDING DAY, NOT EARLIER THAN THE FOLLOWING TUESDAY, NOT A
LEGAL HOLIDAY), AT SUCH TIME AS MAY BE FIXED BY THE BOARD OF DIRECTORS, FOR THE
PURPOSE OF ELECTING DIRECTORS OF THE CORPORATION, AND FOR THE TRANSACTION OF
SUCH OTHER BUSINESS AS MAY PROPERLY BE BROUGHT BEFORE THE MEETING.
SECTION 2. SPECIAL MEETINGS OF THE STOCKHOLDERS SHALL BE HELD AT THE
PRINCIPAL OFFICE OF THE CORPORATION IN NEW JERSEY, OR AT SUCH OTHER PLACE,
WITHIN OR WITHOUT NEW JERSEY, AS MAY FROM TIME TO TIME BE DESIGNATED BY THE
BOARD OF DIRECTORS AND STATED IN THE NOTICE OF THE MEETING, UPON THE CALL OF THE
CHAIRMAN OF THE BOARD OR OF THE PRESIDENT, OR UPON THE CALL OF A MAJORITY OF THE
MEMBERS OF THE BOARD OF DIRECTORS, AND SHALL BE CALLED UPON THE WRITTEN REQUEST
OF STOCKHOLDERS OF RECORD HOLDING A MAJORITY OF THE CAPITAL STOCK OF THE
CORPORATION ISSUED AND OUTSTANDING AND ENTITLED TO VOTE AT SUCH MEETING.
SECTION 3. NOTICE OF THE TIME AND PLACE OF EVERY MEETING OF
STOCKHOLDERS SHALL BE DELIVERED PERSONALLY OR MAILED AT LEAST TEN BUT NOT MORE
THAN SIXTY CALENDAR DAYS BEFORE THE MEETING TO EACH STOCKHOLDER OF RECORD
ENTITLED TO VOTE AT THE MEETING.
SECTION 4. THE HOLDERS OF RECORD OF A MAJORITY OF THE SHARES OF THE
CAPITAL STOCK OF THE CORPORATION ISSUED AND OUTSTANDING AND ENTITLED TO VOTE,
PRESENT IN PERSON OR REPRESENTED BY PROXY, SHALL CONSTITUTE A QUORUM AT ALL
MEETINGS OF THE STOCKHOLDERS. IF THERE BE NO SUCH QUORUM PRESENT, THE HOLDERS OF
A MAJORITY OF SUCH SHARES SO PRESENT OR REPRESENTED MAY ADJOURN THE MEETING FROM
TIME TO TIME, WITHOUT NOTICE OTHER THAN ANNOUNCEMENT AT THE MEETING, UNTIL SUCH
QUORUM SHALL HAVE BEEN OBTAINED, WHEN ANY BUSINESS MAY BE TRANSACTED WHICH MIGHT
HAVE BEEN TRANSACTED AT THE MEETING AS FIRST CONVENED, HAD THERE BEEN A QUORUM.
ONCE A QUORUM IS ESTABLISHED, THE STOCKHOLDERS PRESENT IN PERSON OR BY PROXY MAY
CONTINUE TO DO BUSINESS UNTIL ADJOURNMENT, NOTWITHSTANDING THE WITHDRAWAL OF
ENOUGH STOCKHOLDERS TO LEAVE LESS THAN A QUORUM.
<PAGE> 3
SECTION 5. THE BOARD OF DIRECTORS SHALL IN ADVANCE OF EACH MEETING OF
STOCKHOLDERS APPOINT ONE OR MORE INSPECTORS OF ELECTION, TO ACT UNLESS THE
PERFORMANCE OF THE INSPECTOR'S FUNCTION SHALL BE UNANIMOUSLY WAIVED BY THE
STOCKHOLDERS PRESENT IN PERSON OR REPRESENTED BY PROXY AT SUCH MEETING. EACH
INSPECTOR, BEFORE ENTERING UPON THE DISCHARGE OF HIS DUTIES, SHALL FIRST TAKE
AND SUBSCRIBE AN OATH OR AFFIRMATION TO EXECUTE THE DUTIES OF INSPECTOR AS
PRESCRIBED BY LAW AT SUCH MEETING WITH STRICT IMPARTIALITY AND ACCORDING TO THE
BEST OF HIS ABILITY. THE INSPECTOR OR INSPECTORS SHALL TAKE CHARGE OF THE POLLS
AND SHALL MAKE A CERTIFICATE OF THE RESULTS OF THE VOTE TAKEN. NO DIRECTOR OR
CANDIDATE FOR THE OFFICE OF DIRECTOR SHALL BE APPOINTED AS SUCH INSPECTOR.
SECTION 6. ALL MEETINGS OF THE STOCKHOLDERS SHALL BE PRESIDED OVER BY
THE CHAIRMAN OF THE BOARD, OR IF HE SHALL NOT BE PRESENT, BY THE VICE CHAIRMAN
OF THE BOARD. IF NEITHER THE CHAIRMAN OF THE BOARD NOR THE VICE CHAIRMAN OF THE
BOARD SHALL BE PRESENT, SUCH MEETING SHALL BE PRESIDED OVER BY THE PRESIDENT. IF
NONE OF THE CHAIRMAN OF THE BOARD, THE VICE CHAIRMAN OF THE BOARD AND THE
PRESIDENT SHALL BE PRESENT, SUCH MEETING SHALL BE PRESIDED OVER BY A VICE
PRESIDENT, OR IF NONE SHALL BE PRESENT, THEN BY A CHAIRMAN TO BE ELECTED BY THE
HOLDERS OF A MAJORITY OF THE SHARES PRESENT OR REPRESENTED AT THE MEETING.
THE SECRETARY OF THE CORPORATION, OR IF HE IS NOT PRESENT, AN ASSISTANT
SECRETARY OF THE CORPORATION, IF PRESENT, SHALL ACT AS SECRETARY OF THE MEETING.
IF NEITHER THE SECRETARY NOR AN ASSISTANT SECRETARY IS PRESENT, THEN THE
CHAIRMAN SHALL APPOINT A SECRETARY OF THE MEETING.
SECTION 7. THE BOARD OF DIRECTORS SHALL FIX IN ADVANCE A DATE, NOT
EXCEEDING SIXTY NOR LESS THAN TEN CALENDAR DAYS PRECEDING THE DATE OF ANY
MEETING OF THE STOCKHOLDERS OR THE DATE FOR THE PAYMENT OF ANY DIVIDEND, OR THE
DATE FOR THE ALLOTMENT OF RIGHTS, OR THE DATE WHEN ANY CHANGE OR CONVERSION OR
EXCHANGE OF STOCK SHALL GO INTO EFFECT, AS A RECORD DATE FOR THE DETERMINATION
OF THE STOCKHOLDERS ENTITLED TO NOTICE OF AND TO VOTE AT ANY SUCH MEETING, OR
ENTITLED TO RECEIVE PAYMENT OF ANY SUCH DIVIDEND, OR ANY SUCH ALLOTMENT OF
RIGHTS, OR TO EXERCISE THE RIGHTS IN RESPECT OF ANY SUCH CHANGE, CONVERSION OR
EXCHANGE OF STOCK, AND IN SUCH CASE ONLY STOCKHOLDERS OF RECORD ON THE DATE SO
FIXED SHALL BE ENTITLED TO SUCH NOTICE OF AND TO VOTE AT SUCH MEETING, OR TO
RECEIVE PAYMENT OF SUCH DIVIDEND, OR ALLOTMENT OF RIGHTS, OR EXERCISE SUCH
RIGHTS, AS THE CASE MAY BE, NOTWITHSTANDING ANY TRANSFER OF ANY STOCK ON THE
BOOKS OF THE CORPORATION AFTER ANY SUCH RECORD DATE FIXED AS AFORESAID.
2
<PAGE> 4
ARTICLE II.
DIRECTORS
SECTION 1. THE BUSINESS AND PROPERTY OF THE CORPORATION SHALL BE
MANAGED AND CONTROLLED BY A BOARD OF SIXTEEN DIRECTORS. THIS NUMBER MAY BE
CHANGED FROM TIME TO TIME BY AMENDMENT OF THESE BY-LAWS, BUT THE TERM OF OFFICE
OF NO DIRECTOR SHALL BE SHORTENED AFTER HIS OR HER ELECTION BY REDUCTION IN THE
NUMBER OF DIRECTORS.
UPON ELECTION EACH DIRECTOR SHALL BE THE HOLDER OF AT LEAST TWO HUNDRED
SHARES OF THE CORPORATION'S CAPITAL STOCK. WITHIN ONE YEAR OF ELECTION, EACH
DIRECTOR SHALL BE THE HOLDER OF AT LEAST TWO THOUSAND SHARES OF CAPITAL STOCK
AND WITHIN THREE YEARS OF ELECTION SHALL BE THE HOLDER OF AT LEAST SIX THOUSAND
SHARES OF CAPITAL STOCK. IN THE EVENT THE NUMBER OF SHARES OF CAPITAL STOCK IS
INCREASED AT ANY TIME AFTER JANUARY 28, 1993, BY A STOCK SPLIT, STOCK DIVIDEND,
OR BY ANY OTHER EXTRAORDINARY DISTRIBUTION OF SHARES, THE ABOVE SHARE OWNERSHIP
REQUIREMENTS SHALL BE PROPORTIONATELY ADJUSTED. THE DIRECTOR, UPON CEASING TO
HOLD THE REQUIRED NUMBER OF SHARES, SHALL CEASE TO BE A DIRECTOR.
THE DIRECTORS SHALL HOLD OFFICE UNTIL THE NEXT ANNUAL MEETING OF THE
STOCKHOLDERS AND UNTIL THEIR SUCCESSORS ARE ELECTED AND SHALL HAVE QUALIFIED.
SECTION 2. REGULAR MEETINGS OF THE BOARD OF DIRECTORS SHALL BE HELD AT
SUCH TIMES AND AT SUCH PLACES AS MAY FROM TIME TO TIME BE FIXED BY RESOLUTION OF
THE BOARD OF DIRECTORS. SPECIAL MEETINGS OF THE BOARD OF DIRECTORS MAY BE HELD
AT ANY TIME UPON CALL OF THE CHAIRMAN OF THE BOARD OR OF THE VICE CHAIRMAN OF
THE BOARD OR OF THE PRESIDENT OR OF THREE DIRECTORS. ORAL, TELEGRAPHIC OR
WRITTEN NOTICE OF THE TIME AND PLACE OF A SPECIAL MEETING SHALL BE DULY SERVED
ON, OR GIVEN OR SENT OR MAILED TO, EACH DIRECTOR NOT LESS THAN TWO CALENDAR DAYS
BEFORE THE MEETING. AN ORGANIZATIONAL MEETING OF THE BOARD OF DIRECTORS SHALL BE
HELD, OF WHICH NO NOTICE SHALL BE NECESSARY, AS SOON AS CONVENIENT AFTER THE
ANNUAL MEETING OF THE STOCKHOLDERS. NOTICE NEED NOT BE GIVEN OF REGULAR MEETINGS
OF THE BOARD OF DIRECTORS HELD AT THE TIMES FIXED BY RESOLUTION OF THE BOARD OF
DIRECTORS. MEETINGS MAY BE HELD AT ANY TIME WITHOUT NOTICE IF ALL OF THE
DIRECTORS ARE PRESENT OR IF THOSE NOT PRESENT WAIVE NOTICE OF THE MEETING IN
WRITING.
SECTION 3. SIX MEMBERS OF THE BOARD OF DIRECTORS SHALL CONSTITUTE A
QUORUM FOR THE TRANSACTION OF BUSINESS. IF AT ANY MEETING OF THE BOARD OF
DIRECTORS THERE SHALL BE LESS THAN A QUORUM PRESENT, A MAJORITY OF THE DIRECTORS
PRESENT MAY ADJOURN THE MEETING FROM TIME TO TIME, WITHOUT NOTICE OTHER THAN
ANNOUNCEMENT AT THE MEETING, UNTIL A QUORUM SHALL HAVE BEEN OBTAINED, WHEN ANY
BUSINESS MAY BE TRANSACTED WHICH MIGHT HAVE BEEN TRANSACTED AT THE MEETING AS
FIRST CONVENED, HAD THERE BEEN A QUORUM.
3
<PAGE> 5
SECTION 4. ANY VACANCY OCCURRING AMONG THE DIRECTORS MAY BE FILLED BY
THE AFFIRMATIVE VOTE OF A MAJORITY OF THE REMAINING MEMBERS OF THE BOARD OF
DIRECTORS AT THE TIME IN OFFICE; PROVIDED THAT IN CASE OF AN INCREASE IN THE
NUMBER OF DIRECTORS PURSUANT TO AN AMENDMENT TO THESE BY-LAWS MADE BY THE
STOCKHOLDERS, THE STOCKHOLDERS MAY FILL THE VACANCY OR VACANCIES SO CREATED AT
THE MEETING AT WHICH SUCH AMENDMENT IS EFFECTED OR MAY AUTHORIZE THE BOARD OF
DIRECTORS TO FILL SUCH VACANCY OR VACANCIES.
SECTION 5. THE BOARD OF DIRECTORS, BY AN AFFIRMATIVE VOTE OF A MAJORITY
OF THE MEMBERS OF THE BOARD OF DIRECTORS AT THE TIME IN OFFICE, MAY APPOINT AN
EXECUTIVE COMMITTEE TO CONSIST OF SUCH DIRECTORS AS THE BOARD OF DIRECTORS MAY
FROM TIME TO TIME DETERMINE. THE EXECUTIVE COMMITTEE SHALL HAVE AND MAY
EXERCISE, WHEN THE BOARD OF DIRECTORS IS NOT IN SESSION, ALL OF THE POWERS
VESTED IN THE BOARD OF DIRECTORS, EXCEPT AS OTHERWISE PROVIDED BY LAW. THE BOARD
OF DIRECTORS SHALL HAVE THE POWER AT ANY TIME TO FILL VACANCIES IN, TO CHANGE
THE MEMBERSHIP OF, OR TO DISSOLVE, THE EXECUTIVE COMMITTEE. THE EXECUTIVE
COMMITTEE MAY MAKE RULES FOR THE CONDUCT OF ITS BUSINESS AND MAY APPOINT SUCH
COMMITTEES AND ASSISTANTS AS IT SHALL FROM TIME TO TIME DEEM NECESSARY, UNLESS
THE BOARD OF DIRECTORS SHALL OTHERWISE PROVIDE. A MAJORITY OF THE MEMBERS OF THE
EXECUTIVE COMMITTEE AT THE TIME IN OFFICE SHALL CONSTITUTE A QUORUM FOR THE
TRANSACTION OF BUSINESS. A RECORD SHALL BE KEPT OF ALL PROCEEDINGS OF THE
EXECUTIVE COMMITTEE WHICH SHALL BE SUBMITTED TO THE BOARD OF DIRECTORS AT OR
BEFORE THE NEXT SUCCEEDING MEETING OF THE BOARD OF DIRECTORS.
SECTION 6. THE BOARD OF DIRECTORS MAY APPOINT ONE OR MORE OTHER
COMMITTEES, TO CONSIST OF SUCH NUMBER OF THE DIRECTORS AND TO HAVE SUCH POWERS
AS THE BOARD OF DIRECTORS MAY FROM TIME TO TIME DETERMINE. THE BOARD OF
DIRECTORS SHALL HAVE POWER AT ANY TIME TO FILL VACANCIES IN, TO CHANGE THE
MEMBERSHIP OF, OR TO DISSOLVE, ANY SUCH COMMITTEE. A MAJORITY OF ANY SUCH
COMMITTEE MAY DETERMINE ITS ACTION AND FIX THE TIME AND PLACE OF ITS MEETINGS,
UNLESS THE BOARD OF DIRECTORS SHALL OTHERWISE PROVIDE.
SECTION 7. IN ADDITION TO REIMBURSEMENT OF REASONABLE EXPENSES INCURRED
IN ATTENDING MEETINGS OR OTHERWISE IN CONNECTION WITH HIS OR HER ATTENTION TO
THE AFFAIRS OF THE CORPORATION, EACH DIRECTOR AS SUCH, AS CHAIRMAN OR VICE
CHAIRMAN OF THE BOARD AND AS A MEMBER OF THE EXECUTIVE COMMITTEE OR OF ANY OTHER
COMMITTEE OF THE BOARD OF DIRECTORS, SHALL BE ENTITLED TO RECEIVE SUCH
REMUNERATION AS MAY BE FIXED FROM TIME TO TIME BY THE BOARD OF DIRECTORS, IN THE
FORM EITHER OF FEES FOR ATTENDANCE AT MEETINGS OF THE BOARD OF DIRECTORS AND
COMMITTEES THEREOF OR ANNUAL RETAINERS, OR BOTH; BUT NO DIRECTOR WHO RECEIVES A
SALARY OR OTHER REMUNERATION AS AN EMPLOYEE OF THE CORPORATION OR ANY SUBSIDIARY
THEREOF SHALL RECEIVE ANY ADDITIONAL REMUNERATION AS A DIRECTOR OR MEMBER OF ANY
COMMITTEE OF THE BOARD OF DIRECTORS.
4
<PAGE> 6
ARTICLE III.
OFFICERS
SECTION 1. THE BOARD OF DIRECTORS, AT ITS ORGANIZATIONAL MEETING OR AS
SOON AS MAY BE AFTER THE ELECTION OF DIRECTORS HELD IN EACH YEAR, SHALL ELECT
ONE OF ITS NUMBER CHAIRMAN OF THE BOARD AND ONE OF ITS NUMBER PRESIDENT, AND
SHALL ALSO ELECT A SECRETARY AND A TREASURER, AND FROM TIME TO TIME MAY ELECT OR
APPOINT ONE OF ITS NUMBER VICE CHAIRMAN OF THE BOARD, ONE OR MORE VICE
PRESIDENTS, A CONTROLLER, AND SUCH ASSISTANT SECRETARIES, ASSISTANT TREASURERS
AND OTHER OFFICERS, AGENTS AND EMPLOYEES AS IT MAY DEEM PROPER. MORE THAN ONE
OFFICE MAY BE HELD BY THE SAME PERSON.
SECTION 2. THE TERM OF OFFICE OF ALL OFFICERS SHALL BE UNTIL THE NEXT
ORGANIZATIONAL MEETING OF THE BOARD OF DIRECTORS OR UNTIL THEIR RESPECTIVE
SUCCESSORS ARE ELECTED AND HAVE QUALIFIED, BUT ANY OFFICER MAY BE REMOVED FROM
OFFICE AT ANY TIME BY THE AFFIRMATIVE VOTE OF A MAJORITY OF THE MEMBERS OF THE
BOARD OF DIRECTORS AT THE TIME IN OFFICE.
ANY OTHER EMPLOYEE OF THE CORPORATION, WHETHER APPOINTED BY THE BOARD
OF DIRECTORS OR OTHERWISE, MAY BE REMOVED AT ANY TIME BY THE BOARD OF DIRECTORS
OR BY ANY COMMITTEE OR OFFICER OR EMPLOYEE UPON WHOM SUCH POWER OF REMOVAL MAY
BE CONFERRED BY THE BY-LAWS OR BY THE BOARD OF DIRECTORS.
THE BOARD OF DIRECTORS SHALL HAVE POWER TO FILL FOR THE UNEXPIRED TERM
ANY VACANCY WHICH SHALL OCCUR IN ANY OFFICE BY REASON OF DEATH, RESIGNATION,
REMOVAL OR OTHERWISE.
SECTION 3. THE CHAIRMAN OF THE BOARD SHALL PRESIDE AT ALL MEETINGS OF
THE STOCKHOLDERS AND OF THE BOARD OF DIRECTORS AND SHALL PERFORM SUCH OTHER
DUTIES AS SHALL FROM TIME TO TIME BE PRESCRIBED BY THE BOARD OF DIRECTORS.
THE VICE CHAIRMAN OF THE BOARD SHALL IN THE ABSENCE OF THE CHAIRMAN OF
THE BOARD PRESIDE AT ALL MEETINGS OF THE STOCKHOLDERS AND OF THE BOARD OF
DIRECTORS AND SHALL PERFORM SUCH OTHER DUTIES AS SHALL FROM TIME TO TIME BE
PRESCRIBED BY THE BOARD OF DIRECTORS OR THE CHAIRMAN OF THE BOARD.
THE PRESIDENT SHALL BE THE CHIEF EXECUTIVE OFFICER OF THE CORPORATION
AND SHALL PERFORM SUCH DUTIES AS ARE USUALLY PERFORMED BY THAT OFFICER; HE
SHALL, IN THE ABSENCE OF THE CHAIRMAN AND VICE CHAIRMAN OF THE BOARD, PRESIDE AT
ALL MEETINGS OF THE STOCKHOLDERS AND OF THE BOARD OF DIRECTORS; AND SHALL
PERFORM SUCH OTHER DUTIES AS SHALL FROM TIME TO TIME BE PRESCRIBED BY THE BOARD
OF DIRECTORS.
THE OTHER OFFICERS OF THE CORPORATION SHALL HAVE SUCH POWERS AND SHALL
PERFORM SUCH DUTIES AS GENERALLY PERTAIN TO THEIR OFFICES RESPECTIVELY, AS WELL
AS SUCH POWERS AND DUTIES AS SHALL FROM TIME TO TIME BE CONFERRED BY THE BOARD
OF DIRECTORS.
5
<PAGE> 7
ARTICLE IV.
INDEMNIFICATION OF DIRECTORS AND OTHERS
SECTION 1. THE CORPORATION SHALL INDEMNIFY TO THE FULL EXTENT FROM TIME
TO TIME PERMITTED BY LAW ANY PRESENT, FORMER OR FUTURE DIRECTOR, OFFICER, OR
EMPLOYEE ("CORPORATE AGENT") MADE, OR THREATENED TO BE MADE, A PARTY TO, OR A
WITNESS OR OTHER PARTICIPANT IN, ANY THREATENED, PENDING OR COMPLETED ACTION,
SUIT OR PROCEEDING, WHETHER CIVIL, CRIMINAL, ADMINISTRATIVE, ARBITRATIVE,
LEGISLATIVE, INVESTIGATIVE, OR OF ANY OTHER KIND, INCLUDING BY OR IN THE RIGHT
OF THE CORPORATION ("PROCEEDING"), BY REASON OF THE FACT THAT SUCH PERSON IS OR
WAS A CORPORATE AGENT OF THE CORPORATION OR ANY SUBSIDIARY OF THE CORPORATION
OR, WHILE SERVING AS A CORPORATE AGENT OF THE CORPORATION OR ANY SUBSIDIARY OF
THE CORPORATION, SERVES OR SERVED ANOTHER ENTERPRISE (INCLUDING, WITHOUT
LIMITATION, ANY SOLE PROPRIETORSHIP, ASSOCIATION, CORPORATION, PARTNERSHIP,
JOINT VENTURE OR TRUST), WHETHER OR NOT FOR PROFIT, AT THE REQUEST OF THE
CORPORATION AS A DIRECTOR, OFFICER, EMPLOYEE OR AGENT THEREOF (INCLUDING SERVICE
WITH RESPECT TO ANY EMPLOYEE BENEFIT PLAN OF THE CORPORATION OR ANY SUBSIDIARY
OF THE CORPORATION), AGAINST EXPENSES (INCLUDING ATTORNEYS' FEES), JUDGMENTS,
FINES, PENALTIES, EXCISE TAXES AND AMOUNTS PAID IN SETTLEMENT, ACTUALLY AND
REASONABLY INCURRED BY SUCH PERSON IN CONNECTION WITH SUCH PROCEEDING OR ANY
APPEAL THEREIN. NO INDEMNIFICATION PURSUANT TO THIS ARTICLE IV SHALL BE REQUIRED
WITH RESPECT TO ANY SETTLEMENT OR OTHER NONADJUDICATED DISPOSITION OF ANY
THREATENED OR PENDING PROCEEDING UNLESS THE CORPORATION HAS GIVEN ITS PRIOR
CONSENT TO SUCH SETTLEMENT OR OTHER DISPOSITION.
SECTION 2. EXPENSES INCURRED IN CONNECTION WITH A PROCEEDING SHALL BE
PAID BY THE CORPORATION FOR ANY CORPORATE AGENT OF THE CORPORATION IN ADVANCE OF
THE FINAL DISPOSITION OF SUCH PROCEEDING PROMPTLY UPON RECEIPT OF AN UNDERTAKING
BY OR ON BEHALF OF SUCH PERSON TO REPAY SUCH AMOUNT UNLESS IT SHALL ULTIMATELY
BE DETERMINED THAT SUCH PERSON IS ENTITLED TO BE INDEMNIFIED BY THE CORPORATION.
SUCH AN UNDERTAKING SHALL NOT, HOWEVER, BE REQUIRED OF A NONPARTY WITNESS.
SECTION 3. THE FOREGOING INDEMNIFICATION AND ADVANCEMENT OF EXPENSES
SHALL NOT BE DEEMED EXCLUSIVE OF ANY OTHER RIGHTS TO WHICH ANY PERSON
INDEMNIFIED MAY BE ENTITLED.
SECTION 4. THE RIGHTS PROVIDED TO ANY PERSON BY THIS ARTICLE IV SHALL
BE ENFORCEABLE AGAINST THE CORPORATION BY SUCH PERSON, WHO SHALL BE PRESUMED TO
HAVE RELIED UPON IT IN SERVING OR CONTINUING TO SERVE AS A CORPORATE AGENT. NO
ELIMINATION OF OR AMENDMENT TO THIS ARTICLE IV SHALL DEPRIVE ANY PERSON OF
RIGHTS HEREUNDER ARISING OUT OF ALLEGED OR ACTUAL OCCURRENCES, ACTS OR FAILURES
TO ACT OCCURRING PRIOR TO SUCH ELIMINATION OR AMENDMENT. THE RIGHTS PROVIDED TO
ANY PERSON BY THIS ARTICLE IV SHALL INURE TO THE BENEFIT OF SUCH PERSON'S LEGAL
REPRESENTATIVE AND SHALL BE APPLICABLE TO PROCEEDINGS COMMENCED OR CONTINUING
AFTER THE ADOPTION OF THIS ARTICLE IV, WHETHER ARISING FROM ACTS OR OMISSIONS
OCCURRING BEFORE OR AFTER SUCH ADOPTION.
6
<PAGE> 8
SECTION 5. THE CORPORATION'S BOARD OF DIRECTORS MAY FROM TIME TO TIME
DELEGATE
(I) TO A COMMITTEE OF THE BOARD OF DIRECTORS OF THE CORPORATION OR TO
INDEPENDENT LEGAL COUNSEL THE AUTHORITY TO DETERMINE WHETHER A DIRECTOR
OR OFFICER OF THE CORPORATION, AND
(II) TO ONE OR MORE OFFICERS OF THE CORPORATION THE AUTHORITY TO
DETERMINE WHETHER AN EMPLOYEE OF THE CORPORATION OR ANY SUBSIDIARY,
OTHER THAN A DIRECTOR OR OFFICER OF THE CORPORATION,
IS ENTITLED TO INDEMNIFICATION OR ADVANCEMENT OF EXPENSES PURSUANT TO, AND IN
ACCORDANCE WITH, APPLICABLE LAW AND THIS ARTICLE IV, SUBJECT TO SUCH CONDITIONS
AND LIMITATIONS AS THE BOARD OF DIRECTORS MAY PRESCRIBE.
ARTICLE V.
FISCAL YEAR
THE FISCAL YEAR SHALL BEGIN IN EACH CALENDAR YEAR ON THE MONDAY FOLLOWING THE
SUNDAY WHICH IS NEAREST TO JULY 31, AND SHALL END ON THE SUNDAY WHICH IS NEAREST
TO JULY 31 OF THE FOLLOWING YEAR.
ARTICLE VI.
CORPORATE SEAL
THE BOARD OF DIRECTORS SHALL PROVIDE A SUITABLE SEAL, BEARING THE NAME OF THE
CORPORATION, WHICH SEAL SHALL BE IN THE CHARGE OF THE SECRETARY; PROVIDED THAT
THE USE OF A FACSIMILE OF SUCH SEAL IS HEREBY AUTHORIZED.
ARTICLE VII.
AMENDMENT
THE BOARD OF DIRECTORS SHALL HAVE THE POWER TO MAKE, AMEND AND REPEAL THE
BY-LAWS OF THE CORPORATION BY A VOTE OF A MAJORITY OF THE MEMBERS OF THE BOARD
OF DIRECTORS AT THE TIME IN OFFICE AT ANY REGULAR OR SPECIAL MEETING OF THE
BOARD OF DIRECTORS. THE STOCKHOLDERS, BY A MAJORITY OF THE VOTES CAST AT A
MEETING OF THE STOCKHOLDERS, MAY ADOPT, ALTER, AMEND OR REPEAL THE BY-LAWS,
WHETHER MADE BY THE BOARD OF DIRECTORS OR OTHERWISE.
7
<PAGE> 1
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
RESULTS OF OPERATIONS
OVERVIEW
The results for 1999 include a fourth quarter pre-tax restructuring charge of
$36 million, net of a $5 million reversal of a prior period restructuring charge
($27 million after tax or $.06 per share). (All earnings per share amounts
included in Management's Discussion and Analysis are presented on a diluted
basis.) In addition, results for 1999 were impacted by fourth quarter pre-tax
non-recurring costs of $22 million ($15 million after tax or $.03 per share).
The non-recurring costs related to the restructuring program, unusual costs of
terminated acquisition studies and expenses associated with the previously
announced supply chain initiatives.
Earnings from continuing operations in 1998 were impacted by a pre-tax
restructuring charge of $262 million ($193 million after tax or $.42 per share)
and a fourth quarter pre-tax gain of $14 million ($9 million after tax or $.02
per share) on the sale of Delacre, the company's European biscuit business.
Excluding the impact of the restructuring charges, earnings from continuing
operations declined 15% and earnings per share from continuing operations
declined 12%. Excluding both the restructuring and non-recurring items, earnings
from continuing operations declined 9% per share. The decline in earnings is
primarily due to lower shipments of U.S. condensed soup as a result of the
elimination of quarter-end promotions and increased marketing spending to
support new business development and increased competitive activities.
Net earnings in 1998 include a loss from discontinued operations ($18 million
or $.04 per share), and the cumulative effect of adopting Emerging Issues Task
Force consensus ruling on Issue 97-13, "Accounting for Costs Incurred in
Connection with a Consulting Contract that Combines Business Process
Reengineering and Information Technology Transformation" ($11 million or $.02
per share).
SALES
Sales in 1999 declined 4% to $6.42 billion from $6.70 billion. The decline was
attributed to a 6% decrease due to divestitures, 1% due to currency, offset by a
2% increase from higher selling prices and 1% growth from acquisitions. Sales in
1998 increased 1% as follows: 4% increase from volume and new products, 2% from
higher selling prices, 1% from acquisitions, offset by a 6% decline due to
currency and divestitures.
An analysis of net sales by segment follows:
<TABLE>
<CAPTION>
% Change
1999/ 1998/
(millions) 1999 1998 1997 1998 1997
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Soup and Sauces $ 4,423 $ 4,427 $ 4,171 -- 6
Biscuits and
Confectionery 1,430 1,522 1,546 (6) (2)
Away From Home 507 453 439 12 3
Other 126 343 520 (63) (34)
Intersegment (62) (49) (62) -- --
- --------------------------------------------------------------------------------
$ 6,424 $ 6,696 $ 6,614 (4) 1
================================================================================
</TABLE>
Soup and Sauces remained flat versus 1998. Sales were impacted by a 4% decline
in worldwide wet soup volume driven by an 8% decline in U.S. wet soup volume
resulting from the elimination of quarter-end promotions. This decline was
partially offset by strong consumer demand for ready to serve Chunky soups and
Swanson broths. International soup volume increased 7%, primarily due to the
fiscal 1998 acquisition of Liebig in France. Beverages, driven by V8 Splash,
continued to deliver strong sales growth in 1999. U.S. sauces and prepared food
sales were down versus the prior year.
The Soup and Sauces sales growth in 1998 was led by worldwide wet soup volume
growth of 4%, including U.S. wet soup volume growth of 1%. In the U.S.,
Campbell's condensed Chicken Noodle soup, ready to serve Chunky soups and
Swanson broths all reported strong volume and sales gains in 1998. V8 Splash was
successfully launched in the U.S. International wet soup continued to post
volume gains in Canada, Germany, Australia and Japan. Liebig in France, acquired
in December 1997, and Erasco also contributed to the sales growth.
Biscuits and Confectionery reported a decline in sales compared to 1998
primarily due to the divestiture of Delacre in June 1998. Excluding the impact
of divestitures and currency, sales increased 6% led by Godiva Chocolatier with
expansion of new retail outlets in North America, Japan, and Europe. Arnotts in
Australia reported sales growth due to increased sales of higher value products.
Biscuits and Confectionery sales declined slightly in 1998 due to the
divestiture of Delacre in June and the adverse impact of currency, particularly
the weakness of the Australian dollar. Excluding the impact of the Delacre
divestiture and currency, sales increased 7%. The increase was driven by
Pepperidge Farm Goldfish crackers, Chocolate Chunk cookies and Swirl breads.
Godiva Chocolatier
27
<PAGE> 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL
CONDITION
delivered double-digit sales growth and continued its expansion with new stores
in North America and new distribution points in Japan. Arnotts, before the
impact of currency, reported improved sales, reflecting recovering market share
from 1997.
Away From Home reported a 12% increase in sales in 1999 due in part to the
acquisition of the Stockpot premium refrigerated soup brand in the first quarter
of the year.
The Away From Home sales increase in 1998 was led by Pace products, Prego
entrees and V8 Splash. In addition, Away From Home successfully introduced soup
merchandisers into convenience stores and college cafeterias.
The decline in sales from Other was attributed to the full-year impact of the
1998 portfolio reconfiguration and the impact of the recent divestiture of Fresh
Start Bakeries, Inc.
In 1998, the company continued its portfolio reconfiguration and divested
several non-strategic businesses, including Continental Sweets, a European
confectionery and distribution business, Melbourne Mushrooms, an Australian
mushroom business, and Spring Valley, an Australian beverage business. These
divestitures and the impact of the 1997 divestitures led to the sales decline in
Other.
GROSS MARGIN
Gross margin, defined as net sales less cost of products sold, decreased by $89
million in 1999 due to lower sales. As a percent of sales, gross margin was
52.5% in 1999, 51.7% in 1998, and 48.4% in 1997. The increases in gross margin
percentage in 1999 and 1998 were due principally to cost savings generated from
global procurement initiatives, continued productivity gains in manufacturing
facilities, and the favorable impact of the portfolio reconfiguration strategy.
MARKETING AND SELLING EXPENSES
Marketing and selling expenses as a percent of sales were 25.4% in 1999, 22.7%
in 1998, and 20.7% in 1997. The increase in 1999 was driven by consumer and
trade promotion for V8 Splash, Chunky soup and Pepperidge Farm products and the
growth in retail stores in the Godiva business. The increase in 1998 was
primarily attributable to consumer promotion and advertising spending for U.S.
wet soup, V8 beverages, Pepperidge Farm Goldfish and Milano cookies and Erasco
products.
GENERAL AND ADMINISTRATIVE EXPENSES
Administrative expenses increased as a percent of sales to 4.7% from 4.5% in
1998. The increase was primarily due to investments in information systems,
including costs associated with addressing the Year 2000 issue. In 1998,
administrative expenses increased as a percent of sales to 4.5% from 4.1% in
1997 due to investments in information systems and consulting service fees.
Research and development expenses as a percent of sales remain unchanged.
Other expenses remained flat with 1998 as a result of higher amortization
expense offset by lower incentive compensation costs and the non-recurring gain
on the divestiture recorded in 1998. Other expenses declined significantly in
1998 from 1997 due to lower expenses associated with the company's long-term
incentive plans and the gain on the divestiture of Delacre.
OPERATING EARNINGS
Segment operating earnings in 1999 increased 5% compared to 1998. Excluding the
1999 and 1998 restructuring charges of $36 million and $262 million,
respectively, operating earnings decreased 10% in 1999.
An analysis of operating earnings by segment follows:
<TABLE>
<CAPTION>
% Change
1999/ 1998/
(millions) 1999(1) 1998(2) 1997(3) 1998 1997
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Soup and Sauces $ 1,082 $ 1,109 $ 1,001 (2) 11
Biscuits and
Confectionery 215 206 153 4 35
Away From Home 57 53 59 8 (10)
Other (5) (85) (10) -- --
- --------------------------------------------------------------------------------
1,349 1,283 1,203 5 7
- --------------------------------------------------------------------------------
Corporate (79) (35) (54)
- --------------------------------------------------------------------------------
$ 1,270 $ 1,248 $ 1,149
================================================================================
</TABLE>
(1) Contributions to earnings by segment include the effect of a fourth quarter
1999 pre-tax restructuring charge of $36, net of a $5 reversal of a prior
period restructuring charge, as follows: Soup and Sauces - $22, Biscuits and
Confectionery - $1, and Other - $13.
(2) Contributions to earnings by segment include the effect of a third quarter
1998 pre-tax restructuring charge of $262 as follows: Soup and Sauces -
$135, Biscuits and Confectionery - $25, Away From Home - $4, and Other -
$98.
(3) Contributions to earnings by segment include the effect of a first quarter
1997 pre-tax restructuring charge of $204 as follows: Soup and Sauces -
$134, Biscuits and Confectionery - $53, and Other - $17.
Earnings from Soup and Sauces, excluding the restructuring charges, were down
11% in 1999, due to lower U.S. condensed soup shipments, increased marketing
spending behind new business development, and weakness in sauces and prepared
food categories.
Earnings from Soup and Sauces, excluding the restructuring charges, were up
10% in 1998 due to sales growth in Campbell's condensed Chicken Noodle soup,
ready to serve Chunky and Simply Home soups and Swanson broths. Our core
businesses in Europe and Canada reported increased earnings. The Liebig
acquisition, V8 Splash and Franco-American pastas and gravies also contributed
to the earnings growth.
In 1999, earnings from Biscuits and Confectionery, excluding the
restructuring charges, were down 6% primarily due to increased marketing
spending at Pepperidge Farm driven by the competitive environment in the
cheese cracker category.
28
<PAGE> 3
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL
CONDITION
In 1998, earnings from Biscuits and Confectionery increased 12% compared to
fiscal 1997, excluding the restructuring charges. Excluding the impact of
currency, earnings increased 18% led by Godiva, Pepperidge Farm and Arnotts.
Godiva sales growth, Pepperidge Farm Swirl breads and Goldfish and Arnotts'
market share recovery were the primary components of the growth.
Earnings from Away From Home remained flat versus 1998, excluding the
restructuring charges. The increase in sales was offset by costs associated with
supply chain initiatives and the expansion of Campbell branded products beyond
traditional markets.
Excluding the restructuring charges, earnings from Away From Home declined
slightly in 1998 due to investments in soup merchandisers and lower sales of
non-soup products.
Earnings from Other, excluding restructuring charges, declined 38% in 1999
due to the divestitures of several non-strategic businesses in 1998. Earnings
improved in 1998, excluding the restructuring charges, primarily as a result of
the decision to discontinue investment in Intelligent Quisine.
The increase in corporate expenses in 1999 was primarily attributed to
increases in unallocated general and administrative costs including Y2K expenses
and other information system investments, and the costs of terminated
acquisition studies. In 1998, corporate expenses were partially offset by a gain
on divestiture.
NON-OPERATING ITEMS
Interest expense declined 3% in 1999 primarily due to lower interest rates. The
increase in interest expense of 14% from 1997 to 1998 was primarily due to a
full year of financing costs associated with the company's $2.5 billion share
repurchase program that commenced in October 1996 with the "Dutch Auction"
tender offer. This increase was partially offset by Vlasic Foods International
Inc.'s assumption of the revolving credit facility obligation of $500 million in
March 1998 in connection with the spin-off.
The effective tax rate was 34% compared to 35.8% last year. Excluding the
restructuring charges, the effective tax rate was 33.7% in 1999 and 34% in 1998.
The 1999 rate was favorably impacted by a federal tax refund recorded during the
year. In 1997, the effective tax rate was 36% as reported and 34.4% excluding
the restructuring charge.
DISCONTINUED OPERATIONS
On March 30, 1998, the company completed the spin-off of its Specialty Foods
segment to its shareowners as an independent publicly traded company (Vlasic
Foods International Inc.). Accordingly, the company reported the net operating
results and net assets as a discontinued operation. The 1998 loss from
discontinued operations included eight months of operations, a third quarter
1998 restructuring charge of $22 million ($.05 per share) and spin-off costs of
$38 million ($.08 per share). The restructuring program was designed to improve
operational efficiency by closing certain U.S. and European administrative
offices and production facilities. The spin-off costs primarily consisted of
taxes and legal and advisory services incurred in connection with the
transaction. In addition, 1997 earnings from discontinued operations included a
first quarter restructuring charge of $8 million ($.01 per share). Earnings from
discontinued operations, before restructuring charges and spin-off costs, were
$42 million in 1998, and $86 million in 1997. Earnings in 1998 were adversely
impacted by cattle supply issues in Argentina and competitive difficulties in
the German specialty foods business. See Note 3 to the Consolidated Financial
Statements for further discussion of discontinued operations.
RESTRUCTURING CHARGES
A restructuring charge included in earnings from continuing operations of $41
million ($30 million after tax or $.07 per share) was recorded in the fourth
quarter 1999 to cover the costs of a restructuring and divestiture program
approved in July 1999 by the company's Board of Directors. This charge relates
to the streamlining of certain North American and European production and
administrative facilities and the anticipated cost of a divestiture of a
non-strategic business with annual sales of approximately $25 million.
The restructuring charge includes approximately $20 million in cash charges
primarily related to severance and employee benefit costs. The balance of the
restructuring charge includes non-cash charges related to the disposition of
plant assets and the divestiture. The company expects to complete the
restructuring and divestiture program in 2000. The expected net cash outflows
will not have a material impact on the company's liquidity. From this program,
the company expects to realize annual pre-tax savings of approximately $21
million.
A $5 million ($3 million after tax or $.01 per share) reversal of the 1998
restructuring charge was also recorded in the fourth quarter of 1999. The
reversal reflects the net impact of changes in estimates and modifications to
the original program. The initial charge for the third quarter 1998 program was
$262 million ($193 million after tax or $.42 per share). This program was
designed to improve operational efficiency by rationalizing certain U.S.,
European and Australian production and administrative facilities and divesting
non-strategic businesses. Remaining spending under this program, which is
primarily associated with employee benefit costs, is expected to be completed by
the second quarter of 2000.
29
<PAGE> 4
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL
CONDITION
In the first quarter of 1997, the company recorded a charge included in
earnings from continuing operations of $204 million ($152 million after tax or
$.31 per share) to cover the costs of a restructuring program. The program was
designed to improve operational efficiency by closing various plants, reducing
administrative and operational staff functions and divesting non-strategic
businesses.
See Note 6 to the Consolidated Financial Statements for further discussion of
the programs.
LIQUIDITY AND CAPITAL RESOURCES
Strong cash flows from operations, a strong balance sheet and interest coverage
demonstrate the company's continued financial strength.
CASH FLOWS FROM OPERATIONS provided $932 million in 1999, compared to $902
million in 1998. Over the last three years, operating cash flows totaled
approximately $3 billion. This strong cash generating capability provides the
company with substantial financial flexibility in meeting operating and
investing objectives and in executing the company's ongoing share repurchase
program.
CAPITAL EXPENDITURES were $297 million in 1999, representing an increase of $41
million over 1998. The increase was due to capital costs associated with plant
reconfiguration. Capital expenditures are projected to be approximately $320
million in 2000.
ACQUISITIONS of $105 million in 1999 consisted of the Stockpot premium
refrigerated soup business, which is predominantly a U.S. food service business.
The acquisition was funded through cash generated from operations and short-term
and long-term borrowings.
SALE OF BUSINESSES consisted of Fresh Start Bakeries, Inc., which was divested
in May 1999.
LONG-TERM BORROWINGS increased in 1999 primarily due to the issuance of $300
million 4.75% notes due October 31, 2003. This issuance was the third draw down
on the company's $1 billion shelf registration. The proceeds of these notes were
used primarily to repay short-term borrowings. A balance of $100 million remains
available under the shelf registration.
SHORT-TERM BORROWINGS increased over 1998 primarily due to funding for the
company's share repurchase program. The company has financial resources
available, including unconditional lines of credit totaling approximately $1.5
billion, and has ready access to financial markets around the world. The pre-tax
interest coverage ratio, before the restructuring charges, was 6.9 for 1999
compared to 7.9 for 1998.
DIVIDEND PAYMENTS increased $19 million or 5% to $386 million in 1999, compared
to $367 million in 1998. Dividends declared in 1999 totaled $.885 per share, up
from $.823 per share in 1998. The 1999 fourth quarter rate was $.225 per share.
CAPITAL STOCK REPURCHASES totaled 21.8 million shares at a cost of $1.0 billion
during 1999, compared to repurchases of 12.5 million shares at a cost of $669
million in 1998. The company's Board of Directors approved a new three-year $2.0
billion share repurchase program in 1998. By repurchasing shares, the company
expects to utilize existing cash and debt capacity to lower its cost of capital
and increase returns to shareowners. The company's long-term strategy is to
repurchase approximately 2% of its outstanding shares annually.
TOTAL ASSETS declined 2% to $5.5 billion primarily due to lower balances of
accounts receivable and deferred tax assets in 1999.
TOTAL LIABILITIES increased to $5.3 billion, versus $4.8 billion in 1998 due to
higher debt levels.
INFLATION
Inflation during recent years has not had a significant effect on the company.
The company mitigates the effects of inflation by aggressively pursuing cost
productivity initiatives, including global procurement strategies, and managing
capital investments in its manufacturing and administrative facilities.
MARKET RISK SENSITIVITY
The principal market risks to which the company is exposed are changes in
interest rates and foreign currency exchange rates. In addition, the company is
exposed to equity price changes related to certain employee compensation
obligations. The company manages its exposure to changes in interest rates by
optimizing the use of variable-rate and fixed-rate debt and by utilizing
interest rate swaps in order to maintain its variable-to-total debt ratio within
targeted guidelines. International operations, which account for approximately
25% of 1999 net sales, are concentrated principally in Germany, France, the
United Kingdom, Canada and Australia. The company manages its foreign currency
exposures by borrowing in various foreign
30
<PAGE> 5
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL
CONDITION
currencies, utilizing cross-currency swaps and forward contracts and purchasing
foreign currency option contracts. Swap, forward and option contracts are
entered into for periods consistent with related underlying exposures and do not
constitute positions independent of those exposures. The company does not enter
into contracts for speculative purposes and does not use leveraged instruments.
The information below summarizes the company's market risks associated with
debt obligations and other significant financial instruments as of August 1,
1999. Fair values included herein have been determined based on quoted market
prices. The information presented below should be read in conjunction with Notes
18 and 20 to the Consolidated Financial Statements.
For debt obligations, the table below presents principal cash flows and
related interest rates by fiscal year of maturity. Variable interest rates
disclosed represent the weighted average rates of the portfolio at the period
end. For interest rate swaps, the table presents the notional amounts and
related interest rates by fiscal year of maturity. For these swaps, the variable
rates presented are the average forward rates for the term of each contract.
EXPECTED FISCAL YEAR OF MATURITY
(US$ equivalents in millions)
<TABLE>
<CAPTION>
There- Fair
2000 2001 2002 2003 2004 after Total Value
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
DEBT
Fixed rate $ 157 $115 $12 $300 $400(1) $503 $1,487 $1,512
Weighted average interest rate 5.74% 6.98% 5.40% 6.15% 4.97% 7.68% 6.36%
- ------------------------------------------------------------------------------------------------------------------------
Variable rate $1,830 $1,830 $1,830
Weighted average interest rate 5.09% 5.09%
- ------------------------------------------------------------------------------------------------------------------------
INTEREST RATE SWAPS
Variable to fixed $ 100(2) $ 100 $ (2)
Average pay rate 8.24% 8.24%
Average receive rate 5.05% 5.05%
- ------------------------------------------------------------------------------------------------------------------------
Fixed to variable $ 150(3) $ 150 $ 4
Average pay rate 4.52% 4.52%
Average receive rate 5.76% 5.76%
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) $100 callable in 2001
(2) Hedges commercial paper borrowings
(3) Hedges 5.76% notes due in 2000
As of August 2, 1998, fixed-rate debt of $1.5 billion was outstanding with an
average interest rate of 6.40%, and variable-rate debt of $1.1 billion with an
average interest rate of 5.51% was outstanding. The interest rate swaps
described above were also outstanding at August 2, 1998.
The company is exposed to foreign exchange risk as a result of transactions
in currencies other than the functional currency of particular subsidiaries.
The company utilizes foreign currency forward purchase and sale contracts in
order to hedge these exposures. The table below summarizes the foreign currency
forward contracts outstanding with the weighted average contract exchange rates
as of August 1, 1999.
FORWARD EXCHANGE CONTRACTS
(US$ equivalents in millions)
<TABLE>
<CAPTION>
Average
Contract Contractual
Amount Exchange Rate
- ---------------------------------------------------------------------
<S> <C> <C>
Receive Euro/Pay US$ $101 1.06
Receive GBP/Pay Euro $ 38 .67
Receive AUD/Pay US$ $ 9 .65
Receive US$/Pay JPY $ 9 118.08
Receive GBP/Pay US$ $ 7 1.59
- ---------------------------------------------------------------------
</TABLE>
The company has an additional $13 million in a number of smaller contracts to
purchase or sell various other currencies, principally Canadian, as of August 1,
1999. The aggregate fair value of the contracts, which is not material to any
individual contract, was ($1) million as of August 1, 1999.
Total forward exchange contracts outstanding as of August 2, 1998 were $287
million.
31
<PAGE> 6
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL
CONDITION
The company is also exposed to foreign currency exchange risk related to
subsidiary debt which is denominated in currencies other than the functional
currency of those businesses. The Cross-Currency Swaps table summarizes the
swaps outstanding as of August 1, 1999, which hedge these exposures. The
notional amounts of each currency and the related weighted average forward
interest rates are presented in the Cross-Currency Swaps table.
CROSS-CURRENCY SWAPS
(US$ equivalents in millions)
<TABLE>
<CAPTION>
Interest Notional
Rate Value
- -------------------------------------------------------------
<S> <C> <C>
Pay fixed AUD 6.22%
Receive fixed US$ 6.66% $ 35
- -------------------------------------------------------------
Pay fixed DM 4.09%
Receive fixed US$ 6.79% $107
- -------------------------------------------------------------
Pay variable FrF 3.43%
Receive variable US$ 6.07% $110
- -------------------------------------------------------------
Pay fixed GBP 6.71%
Receive fixed US$ 6.79% $ 66
- -------------------------------------------------------------
</TABLE>
The company has additional contracts with a notional value of $15 million
outstanding at August 1, 1999. The aggregate fair value of the contracts was $3
million as of August 1, 1999. All contracts expire in 2000, except the variable
French Franc contract which expires in 2003.
The notional amount and fair value of cross-currency contracts outstanding at
August 2, 1998 were $405 million and $1 million, respectively. These contracts
expired in 1999, except the variable French Franc contract included in the table
above.
The company has swap contracts outstanding as of August 1, 1999, which hedge
a portion of exposures relating to certain employee compensation liabilities
linked to the total return of the Standard & Poor's 500 Index or to the total
return of the company's capital stock. Under these contracts, the company pays
variable interest rates and receives from the counterparty either the Standard &
Poor's 500 Index total return or the total return on company capital stock. The
notional value of the contract which includes the return on the Standard &
Poor's 500 Index was $26 million at August 1, 1999, and $21 million at August 2,
1998. The average forward interest rate applicable to this contract, which
expires in 2000, is 5.19% at August 1, 1999. The notional value of the contract
which includes the total return on company capital stock was $76 million at
August 1, 1999, and $122 million at August 2, 1998. The forward interest rate
applicable to this contract, which expires in 2003, is 5.28% at August 1, 1999.
The net cost to settle these contracts was $14 million at August 1, 1999. Gains
and losses on the contracts are recognized as adjustments to the carrying value
of the underlying obligations.
In 1999, the company entered into a forward stock purchase contract to
partially hedge the company's exposure from its stock option program. Under the
contract, which matures in 2004, the company may repurchase 11 million shares at
an average price of approximately $47 per share. See Note 21 to the Consolidated
Financial Statements for further discussion of the contract.
The company's utilization of financial instruments in managing market risk
exposures described above is consistent with the prior year. Changes in the
portfolio of financial instruments are a function of the results of operations
and market effects and the company's acquisition and divestiture activities.
YEAR 2000
Historically, certain computer programs were written using two digits rather
than four to define the applicable year. Accordingly, the company's software may
recognize a date using "00" as 1900 rather than the year 2000, which could
result in computer systems failures or miscalculations, commonly referred to as
the Year 2000 ("Y2K") issue. The Y2K issue can arise at any point in the
company's supply, manufacturing, processing, distribution and financial chains.
Incomplete or untimely resolution of the Y2K issue by the company, key
suppliers, customers and other parties could have a material adverse effect on
the company's results of operations, financial condition and cash flows.
To address the Y2K issue, the company established a Worldwide Year 2000
Business Action Council, led by an Executive Steering Committee of the company's
senior management, including representatives of each of the company's business
segments and corporate functions, to oversee and regularly review the status of
the readiness plan discussed below. In addition, the company established a
Worldwide Project Office responsible for the day-to-day oversight and
coordination of the Y2K remediation, replacement and testing of business
systems. This project office reports to the company's Chief Information Officer.
The company's plan for addressing the Y2K issue was divided into three major
phases: Business Systems Inventory and Assessment, Remediation and Replacement,
and Testing.
BUSINESS SYSTEMS INVENTORY AND ASSESSMENT
The internal inventory portion of this phase, which commenced in 1997, was
designed to identify internal business systems that were susceptible to system
failure or processing errors as a result of the Y2K issue. This phase is
complete.
32
<PAGE> 7
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL
CONDITION
Approximately 700 worldwide information technology (IT) business systems were
inventoried and approximately 200 were Y2K compliant and 500 were identified as
non-compliant. It was determined that approximately 400 of the non-compliant
systems required remediation and the remaining 100 systems would be retired or
replaced. In addition, the company has completed the inventory and assessment of
its non-information technology (Non-IT) systems. The remediation and replacement
of these systems, which include manufacturing production lines and equipment,
elevators, heating, ventilation and air conditioning systems and water treatment
systems, is included in the remediation and replacement plan discussed below. As
part of this phase, significant service providers, vendors, suppliers, customers
and governmental entities that are believed to be critical to business
operations after January 1, 2000, were identified and steps were undertaken to
ascertain their stage of Y2K readiness through questionnaires, interviews,
on-site visits and other available means.
REMEDIATION AND REPLACEMENT
The company developed a remediation and replacement plan for all affected
systems including IT and Non-IT systems. The company's plan established
priorities for remediation or replacement. The business systems considered most
critical to ongoing operations were given the highest priority. The company
prioritized its business systems into "Mission Critical" and "All Other."
"Mission Critical" systems are defined as business systems such as Business
Planning and Control Process, Sales Order Billing and Warehouse Management
systems that, if shut down or interrupted, could have a material adverse effect
on the company's results of operations, financial condition and cash flows. "All
Other" systems are defined as business systems such as Data Warehouse and Job
Bidding systems that, if shut down or interrupted, may have an adverse impact on
the company. Internal and external resources were used to execute the plan.
Remediation and replacement of "Mission Critical" systems and "All Other"
systems were substantially completed on schedule by the fourth quarter 1999.
TESTING
Testing was performed in conjunction with remediation and replacement. The
company's efforts in this phase include testing by users and approval by
appropriate local and Y2K project management that the remediated or replaced
systems are Y2K compliant. The company has completed initial testing and all
systems have been returned to production. Additional safeguard tests will
continue through the first quarter 2000.
Because the company's Y2K compliance is dependent upon key third parties also
being Y2K compliant on a timely basis, there can be no guarantee that the
company's efforts will prevent a material adverse impact on its results of
operations, financial condition and cash flows. The possible consequences to the
company or its business partners not being fully Y2K compliant include temporary
plant closings, delays in the delivery of finished products, delays in the
receipt of key ingredients, containers and packaging supplies, invoice and
collection errors and inventory and supply obsolescence. These consequences
could have a material adverse effect on the company's results of operations,
financial condition and cash flows if the company is unable to conduct its
business in the ordinary course as a result of the Y2K issue. The company
believes that its readiness program, including the contingency plans discussed
below, should significantly reduce the adverse effect any such disruptions may
have.
The company has developed contingency plans to mitigate the potential
disruptions that may result from the Y2K issue. These plans include identifying
and securing alternate suppliers of ingredients, containers, packaging materials
and utilities, adjusting manufacturing facility production, shutdown and
start-up schedules, stockpiling of finished product inventories and other
measures considered appropriate by management. These contingency plans, and the
related cost estimates, will be continually monitored and refined, as additional
information becomes available.
The company currently estimates that the aggregate cost of its Y2K efforts
will be approximately $45 million, of which $37 million has been incurred to
date. These costs, except for capital costs of approximately $3 million, are
being expensed as incurred. All costs are being funded through operating cash
flows. The company incurred Y2K costs of approximately $23 million in fiscal
1999 and expects to incur Y2K costs of approximately $8 million in fiscal 2000.
<TABLE>
<CAPTION>
Estimated
Current Cost Costs Costs to
(millions) Estimates Incurred Complete
- ----------------------------------------------------------
<S> <C> <C> <C>
COMPONENTS
External Consulting $27 (20) $7
Hardware/Software Upgrades 12 (11) 1
Other 6 (6) -
- ----------------------------------------------------------
$45 (37) $8
==========================================================
</TABLE>
The company believes that such costs will not have a material impact on the
company's results of operations, financial condition or cash flows.
33
<PAGE> 8
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL
CONDITION
RECENT DEVELOPMENTS
In June 1998, Statement of Financial Accounting Standards No. 133, "Accounting
for Derivative Instruments and Hedging Activities," was issued and is expected
to be effective for fiscal years beginning after June 15, 2000. The standard
requires that all derivative instruments be recorded on the balance sheet at
fair value. Changes in the fair value of derivatives are recorded in earnings or
other comprehensive income, based on whether the instrument is designated as
part of a hedge transaction and, if so, the type of hedge transaction. The
company is currently assessing the impact of the adoption on the company's
financial statements. Based on the company's current portfolio, it is not
expected that adoption of this statement will have a material effect on the
company's results of operations, financial condition or cash flows.
FORWARD-LOOKING STATEMENTS
This 1999 Annual 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 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 new product
introductions, including uncertainties about trade and consumer acceptance;
- - the company's ability to achieve sales and earnings forecasts, which are based
on assumptions about sales volume and product mix;
- - the continuation of the company's successful record of integrating
acquisitions into its existing operations and the availability of new
acquisition and alliance opportunities that build shareowner wealth;
- - the company's ability to achieve its cost savings objectives, including the
projected outcome of supply chain management programs;
- - the difficulty of predicting the pattern of inventory movements by the
company's trade customers;
- - the impact of unforeseen economic and political changes in international
markets where the company competes such as currency exchange rates, inflation
rates, recession, foreign ownership restrictions and other external factors over
which the company has no control; and
- - the ability of the company and its key service providers, vendors, suppliers,
customers and governmental entities to replace, modify or upgrade computer
systems in ways that adequately address the Y2K issue. Specific factors that
might cause actual results to vary materially from the results anticipated
include the ability to identify and correct all relevant computer codes and
embedded chips, unanticipated difficulties or delays in the implementation of
the company's remediation plans and the ability of third parties to adequately
address their own Y2K issues.
This discussion of uncertainties is by no means exhaustive but is designed to
highlight important factors that may impact the company's outlook.
34
<PAGE> 9
CONSOLIDATED STATEMENTS OF EARNINGS
(millions, except per share amounts)
<TABLE>
<CAPTION>
1999 1998 1997
52 WEEKS 52 weeks 53 weeks
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NET SALES $6,424 $6,696 $6,614
- ------------------------------------------------------------------------------------------------------------------------
Costs and expenses
Cost of products sold 3,050 3,233 3,412
Marketing and selling expenses 1,634 1,518 1,370
Administrative expenses 304 300 271
Research and development expenses 66 71 68
Other expenses (Note 7) 64 64 140
Restructuring charges (Note 6) 36 262 204
- ------------------------------------------------------------------------------------------------------------------------
Total costs and expenses 5,154 5,448 5,465
- ------------------------------------------------------------------------------------------------------------------------
EARNINGS BEFORE INTEREST AND TAXES 1,270 1,248 1,149
Interest expense (Note 8) 184 189 166
Interest income 11 14 8
- ------------------------------------------------------------------------------------------------------------------------
Earnings before taxes 1,097 1,073 991
Taxes on earnings (Note 11) 373 384 357
- ------------------------------------------------------------------------------------------------------------------------
EARNINGS FROM CONTINUING OPERATIONS 724 689 634
EARNINGS (LOSS) FROM DISCONTINUED OPERATIONS (NOTE 3) - (18) 79
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE (NOTE 4) - (11) -
- ------------------------------------------------------------------------------------------------------------------------
NET EARNINGS $ 724 $ 660 $ 713
========================================================================================================================
PER SHARE - BASIC
Earnings from continuing operations $ 1.64 $ 1.52 $ 1.34
Earnings (loss) from discontinued operations - (.04) .17
Cumulative effect of change in accounting principle - (.02) -
- ------------------------------------------------------------------------------------------------------------------------
NET EARNINGS $ 1.64 $ 1.46 $ 1.51
========================================================================================================================
Weighted average shares outstanding - basic 441 454 472
========================================================================================================================
PER SHARE - ASSUMING DILUTION
Earnings from continuing operations $ 1.63 $ 1.50 $ 1.33
Earnings (loss) from discontinued operations - (.04) .16
Cumulative effect of change in accounting principle - (.02) -
- ------------------------------------------------------------------------------------------------------------------------
NET EARNINGS $ 1.63 $ 1.44 $ 1.49
========================================================================================================================
Weighted average shares outstanding - assuming dilution 445 460 478
========================================================================================================================
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
35
<PAGE> 10
CONSOLIDATED BALANCE SHEETS
(millions, except per share amounts)
<TABLE>
<CAPTION>
August 1, 1999 August 2, 1998
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 6 $ 16
Accounts receivable (Note 12) 541 656
Inventories (Note 13) 615 564
Other current assets (Note 14) 132 204
- -------------------------------------------------------------------------------------------------------------------------
Total current assets 1,294 1,440
- -------------------------------------------------------------------------------------------------------------------------
PLANT ASSETS, NET OF DEPRECIATION (NOTE 15) 1,726 1,723
INTANGIBLE ASSETS, NET OF AMORTIZATION (NOTE 16) 1,910 1,904
OTHER ASSETS (NOTE 17) 592 566
- -------------------------------------------------------------------------------------------------------------------------
Total assets $5,522 $5,633
=========================================================================================================================
CURRENT LIABILITIES
Notes payable (Note 18) $1,987 $1,401
Payable to suppliers and others 511 506
Accrued liabilities 415 638
Dividend payable 97 95
Accrued income taxes 136 163
- -------------------------------------------------------------------------------------------------------------------------
Total current liabilities 3,146 2,803
- -------------------------------------------------------------------------------------------------------------------------
LONG-TERM DEBT (NOTE 18) 1,330 1,169
NONPENSION POSTRETIREMENT BENEFITS (NOTE 10) 394 405
OTHER LIABILITIES (NOTE 19) 417 382
- -------------------------------------------------------------------------------------------------------------------------
Total liabilities 5,287 4,759
- -------------------------------------------------------------------------------------------------------------------------
SHAREOWNERS' EQUITY (NOTE 21)
Preferred stock; authorized 40 shares; none issued - -
Capital stock, $.0375 par value; authorized 560 shares; issued 542 shares 20 20
Capital surplus 382 395
Earnings retained in the business 4,041 3,706
Capital stock in treasury, 113 shares in 1999 and 94 shares in 1998, at cost (4,058) (3,083)
Accumulated other comprehensive income (150) (164)
- -------------------------------------------------------------------------------------------------------------------------
Total shareowners' equity 235 874
- -------------------------------------------------------------------------------------------------------------------------
Total liabilities and shareowners' equity $5,522 $5,633
=========================================================================================================================
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
36
<PAGE> 11
CONSOLIDATED STATEMENTS OF CASH FLOWS
(millions)
<TABLE>
<CAPTION>
1999 1998 1997
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings, excluding discontinued operations $ 724 $ 678 $ 634
Non-cash charges to net earnings
Cumulative effect of accounting change - 11 -
Restructuring charges 36 262 204
Depreciation and amortization 255 261 283
Deferred taxes 78 (21) (33)
Other, net 5 53 95
Changes in working capital
Accounts receivable 108 (159) (37)
Inventories (58) (29) (48)
Other current assets and liabilities (216) (154) (89)
- --------------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 932 902 1,009
- --------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of plant assets (297) (256) (252)
Sales of plant assets 9 148 41
Businesses acquired (105) (478) (228)
Sales of businesses 103 200 207
Other, net (32) (5) 4
- --------------------------------------------------------------------------------------------------------------------------
NET CASH USED IN INVESTING ACTIVITIES (322) (391) (228)
- --------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Long-term borrowings 323 305 524
Repayments of long-term borrowings (8) (36) (21)
Short-term borrowings 1,537 1,847 1,306
Repayments of short-term borrowings (1,111) (2,187) (779)
Dividends paid (386) (367) (350)
Treasury stock purchases (1,026) (669) (1,696)
Treasury stock issuances 57 102 106
- --------------------------------------------------------------------------------------------------------------------------
NET CASH USED IN FINANCING ACTIVITIES (614) (1,005) (910)
- --------------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY DISCONTINUED OPERATIONS - 511 105
- --------------------------------------------------------------------------------------------------------------------------
EFFECT OF EXCHANGE RATE CHANGES ON CASH (6) (18) 13
- --------------------------------------------------------------------------------------------------------------------------
NET CHANGE IN CASH AND CASH EQUIVALENTS (10) (1) (11)
CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR 16 17 28
- --------------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS - END OF YEAR $ 6 $ 16 $ 17
==========================================================================================================================
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
37
<PAGE> 12
CONSOLIDATED STATEMENTS OF SHAREOWNERS' EQUITY
(millions, except per share amounts)
<TABLE>
<CAPTION>
Capital stock
----------------------------------------- Earnings Accumulated Total
Issued In treasury retained other com- share-
---------------- ------------------- Capital in the prehensive owners'
Shares Amount Shares Amount surplus business income equity
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at July 28, 1996 542 $ 20 (48) $ (779) $ 228 $ 3,211 $ 62 $ 2,742
- -------------------------------------------------------------------------------------------------------------------------------
Comprehensive income
Net earnings 713 713
Foreign currency
translation adjustments (112) (112)
Dividends ($.750 per share) (353) (353)
Treasury stock purchased (40) (1,696) (1,696)
Treasury stock issued under
management incentive and
stock option plans 4 16 110 126
- -------------------------------------------------------------------------------------------------------------------------------
Balance at August 3, 1997 542 20 (84) (2,459) 338 3,571 (50) 1,420
- -------------------------------------------------------------------------------------------------------------------------------
Comprehensive income
Net earnings 660 660
Foreign currency
translation adjustments (114) (114)
Dividends ($.823 per share) (375) (375)
Treasury stock purchased (13) (669) (669)
Treasury stock issued under
management incentive and
stock option plans 3 45 57 102
Spin-off of Specialty Foods
segment (150) (150)
- -------------------------------------------------------------------------------------------------------------------------------
Balance at August 2, 1998 542 20 (94) (3,083) 395 3,706 (164) 874
- -------------------------------------------------------------------------------------------------------------------------------
COMPREHENSIVE INCOME
NET EARNINGS 724 724
FOREIGN CURRENCY
TRANSLATION ADJUSTMENTS 14 14
DIVIDENDS ($.885 PER SHARE) (389) (389)
TREASURY STOCK PURCHASED (22) (1,026) (1,026)
TREASURY STOCK ISSUED UNDER
MANAGEMENT INCENTIVE AND
STOCK OPTION PLANS 3 51 (13) 38
- -------------------------------------------------------------------------------------------------------------------------------
BALANCE AT AUGUST 1, 1999 542 $ 20 (113) $(4,058) $ 382 $ 4,041 $(150) $ 235
===============================================================================================================================
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
38
<PAGE> 13
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CONSOLIDATION
The consolidated financial statements include the accounts of the company and
its majority-owned subsidiaries. Significant intercompany transactions are
eliminated in consolidation. Investments of 20% or more in affiliates are
accounted for by the equity method.
FISCAL YEAR
The company's fiscal year ends on the Sunday nearest July 31. There were 52
weeks in 1999 and 1998, and 53 weeks in 1997.
CASH AND CASH EQUIVALENTS
All highly liquid debt instruments purchased with a maturity of three months or
less are classified as cash equivalents.
INVENTORIES
Substantially all domestic inventories are priced at the lower of cost or
market, with cost determined by the last in, first out (LIFO) method. Other
inventories are priced at the lower of average cost or market.
PLANT ASSETS
Plant assets are stated at historical cost. Alterations and major overhauls,
which extend the lives or increase the capacity of plant assets, are
capitalized. The amounts for property disposals are removed from plant asset and
accumulated depreciation accounts and any resultant gain or loss is included in
earnings. Ordinary repairs and maintenance are charged to operating costs.
DEPRECIATION
Depreciation provided in Costs and expenses is calculated using the
straight-line method. Buildings and machinery and equipment are depreciated over
periods not exceeding 45 years and 15 years, respectively. Accelerated methods
of depreciation are used for income tax purposes in certain jurisdictions.
INTANGIBLE ASSETS
Intangible assets consist principally of excess purchase price over net assets
of businesses acquired and trademarks. Intangibles are amortized on a
straight-line basis over periods not exceeding 40 years.
ASSET VALUATION
The company periodically reviews the recoverability of plant assets and
intangibles based principally on an analysis of undiscounted cash flows.
DERIVATIVE FINANCIAL INSTRUMENTS
The company uses derivative financial instruments primarily for purposes of
hedging exposures to fluctuations in interest rates, foreign currency exchange
rates and equity-linked employee benefit obligations. The differential to be
paid or received on interest rate swaps is recognized as an adjustment to
interest expense. Gains and losses on hedges of existing assets or liabilities
are included in the carrying amounts of those assets or liabilities and
ultimately recognized in earnings. Gains and losses related to qualifying hedges
of firm commitments or anticipated transactions are deferred and are recognized
in earnings or as adjustments of carrying amounts when the hedged transaction
occurs.
USE OF ESTIMATES
Generally accepted accounting principles require management to make estimates
and assumptions that affect assets and liabilities, contingent assets and
liabilities, and revenues and expenses. Actual results could differ from those
estimates.
RECLASSIFICATIONS
Prior year financial statements and footnotes have been reclassified to conform
to the current year presentation.
2. NEW ACCOUNTING STANDARDS
In 1999, the company adopted Statement of Financial Accounting Standards
("SFAS") No. 130, "Reporting Comprehensive Income," issued in June 1997. SFAS
No. 130 establishes a standard for reporting of comprehensive income, which is
comprised of net income and other comprehensive income items, in the financial
statements. Other comprehensive income includes items recorded in shareowners'
equity that are not the result of transactions with shareowners, such as foreign
currency translation adjustments. Prior year financial statements have been
reclassified to conform to SFAS No. 130.
3. DISCONTINUED OPERATIONS
Effective March 30, 1998, the company spun off its Specialty Foods segment to
its shareowners as an independent publicly traded company. The spin-off
qualified as a tax-free distribution to U.S. shareholders. Shareowners of record
as of March 9, 1998 received one share of common stock of the new company,
Vlasic Foods International Inc. (Vlasic), for every ten shares of Campbell Soup
Company capital stock.
Results of discontinued operations were as follows:
<TABLE>
<CAPTION>
1998(1) 1997
- --------------------------------------------------------------------------------
<S> <C> <C>
Net sales $ 809 $1,352
================================================================================
Earnings before taxes $ 41 $ 116
Taxes on earnings 21 37
- --------------------------------------------------------------------------------
Earnings from operations 20 79
Spin-off costs 38 --
- --------------------------------------------------------------------------------
Earnings (loss) from
discontinued operations $ (18) $ 79
================================================================================
</TABLE>
(1) Represents the eight-month period ended March 29, 1998.
39
<PAGE> 14
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions)
4. CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE
In 1998, the company adopted the provisions of the Emerging Issues Task Force
consensus ruling on Issue 97-13, "Accounting for Costs Incurred in Connection
with a Consulting Contract that Combines Business Process Reengineering and
Information Technology Transformation." The unamortized balance of previously
capitalized business process reengineering costs was written off as a cumulative
effect of change in accounting principle of $11 or $.02 per share, net of an
income tax benefit of approximately $7.
5. BUSINESS AND GEOGRAPHIC SEGMENT INFORMATION
The company operates in three business segments: Soup and Sauces, Biscuits and
Confectionery and Away From Home. The segments are managed as strategic units
due to their distinct manufacturing processes, marketing strategies and
distribution channels.
The Soup and Sauces segment includes the worldwide soup businesses, Prego
spaghetti sauces, Pace Mexican sauces, Franco-American pastas and gravies,
Swanson broths, and V8 beverages. The Biscuits and Confectionery segment
includes the Godiva Chocolatier, Pepperidge Farm, Arnotts and Delacre
businesses. The Delacre business was divested in June 1998. Away From Home
represents the distribution of products, including Campbell's soups and
Campbell's Specialty Kitchen entrees, to the food service and home meal
replacement markets.
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 included in Note 1. The company evaluates
segment performance based on earnings before interest and taxes, excluding
certain non-recurring charges. Away From Home products are principally produced
by the tangible assets of the company's other segments. Accordingly, plant
assets have not been allocated to the Away From Home segment. Depreciation and
amortization are allocated to Away From Home based on budgeted production hours.
Transfers between segments are recorded at cost plus markup or at market.
BUSINESS SEGMENTS
<TABLE>
<CAPTION>
Biscuits & Away Corporate
Soup & Confec- From & Elimi-
1999 Sauces tionery Home Other(1) nations(2) Total
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET SALES $4,423 1,430 507 126 (62) $6,424
EARNINGS BEFORE
INTEREST AND TAXES(3) $1,082 215 57 (5) (79) $1,270
DEPRECIATION AND
AMORTIZATION $ 128 84 13 9 21 $ 255
CAPITAL
EXPENDITURES $ 164 70 32 10 21 $ 297
SEGMENT ASSETS $2,975 1,461 349 38 699 $5,522
- ---------------------------------------------------------------------------------------------------------
</TABLE>
(1) Represents financial information of certain prepared convenience food
businesses not categorized as reportable segments.
(2) Represents elimination of intersegment sales, unallocated corporate
expenses and unallocated assets, including corporate offices, deferred
taxes and pension accounts.
(3) Contributions to earnings before interest and taxes include the effects of
a fourth quarter restructuring charge of $36, net of a $5 reversal of a
prior period restructuring charge, as follows: Soup and Sauces - $22,
Biscuits and Confectionery - $1, and Other - $13.
<TABLE>
<CAPTION>
Biscuits & Away Corporate
Soup & Confec- From & Elimi-
1998 Sauces tionery Home Other(1) nations(2) Total
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net sales $4,427 1,522 453 343 (49) $6,696
Earnings before
interest and taxes(3) $1,109 206 53 (85) (35) $1,248
Depreciation and
amortization $ 132 86 11 15 17 $ 261
Capital
expenditures $ 135 87 -- 14 20 $ 256
Segment assets $3,105 1,402 202 208 716 $5,633
- ---------------------------------------------------------------------------------------------------------
</TABLE>
(1) Represents financial information of certain prepared convenience food
businesses not categorized as reportable segments.
(2) Represents elimination of intersegment sales, unallocated corporate
expenses and unallocated assets, including corporate offices, deferred
taxes and pension accounts.
(3) Contributions to earnings before interest and taxes by segment include the
effects of a third quarter restructuring charge of $262 as follows: Soup
and Sauces - $135, Biscuits and Confectionery - $25, Away From Home - $4,
and Other - $98.
<TABLE>
<CAPTION>
Biscuits & Away Corporate
Soup & Confec- From & Elimi-
1997 Sauces tionery Home Other(1) nations(2) Total
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net sales $4,171 1,546 439 520 (62) $6,614
Earnings before
interest and taxes(3) $1,001 153 59 (10) (54) $1,149
Depreciation and
amortization $ 133 102 11 18 19 $ 283
Capital
expenditures $ 103 90 -- 22 37 $ 252
Segment assets(4) $2,790 1,510 230 405 629 $5,564
- ---------------------------------------------------------------------------------------------------------
</TABLE>
(1) Represents financial information of certain prepared convenience food
businesses not categorized as reportable segments.
(2) Represents elimination of intersegment sales, unallocated corporate
expenses and unallocated assets, including corporate offices, deferred
taxes and pension accounts.
(3) Contributions to earnings before interest and taxes by segment include the
effects of a first quarter restructuring charge of $204 as follows: Soup
and Sauces - $134, Biscuits and Confectionery - $53, and Other - $17.
(4) Segment assets exclude net assets of discontinued operations of $632.
40
<PAGE> 15
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions)
GEOGRAPHIC AREA INFORMATION
The following presents information about operations in different geographic
areas:
<TABLE>
<CAPTION>
1999 1998 1997
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales
United States $ 4,804 $ 4,850 $ 4,623
Europe 630 859 895
Australia/Asia Pacific 616 627 613
Other countries 438 417 612
Adjustments and eliminations (64) (57) (129)
- --------------------------------------------------------------------------------
Consolidated $ 6,424 $ 6,696 $ 6,614
================================================================================
</TABLE>
<TABLE>
<CAPTION>
1999 1998 1997
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Earnings before interest
and taxes
United States $ 1,196 $ 1,124 $ 1,062
Europe 32 36 39
Australia/Asia Pacific 49 50 26
Other countries 72 73 76
- --------------------------------------------------------------------------------
Segment earnings before
interest and taxes 1,349 1,283 1,203
Unallocated corporate
expenses (79) (35) (54)
- --------------------------------------------------------------------------------
Consolidated $ 1,270 $ 1,248 $ 1,149
================================================================================
</TABLE>
<TABLE>
<CAPTION>
1999 1998 1997
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Identifiable assets
United States $ 2,742 $ 2,820 $ 2,830
Europe 614 679 655
Australia/Asia Pacific 991 925 919
Other countries 476 493 531
Corporate 699 716 629
Net assets of discontinued
operations -- -- 632
- --------------------------------------------------------------------------------
Consolidated $ 5,522 $ 5,633 $ 6,196
================================================================================
</TABLE>
Transfers between geographic areas are recorded at cost plus markup or at
market. Identifiable assets are those assets, including goodwill, which are
identified with the operations in each geographic region. The 1999 net
restructuring charge of $36 is allocated to geographic regions as follows:
United States -- $10, Europe -- $14, and Australia/Asia Pacific -- $12. The 1998
restructuring charge of $262 is allocated to geographic regions as follows:
United States -- $200, Europe -- $36, Australia/Asia Pacific -- $21, and Other
- -- $5. The 1997 restructuring charge of $204 is allocated to geographic areas as
follows: United States -- $158, Europe -- $11, Australia/Asia Pacific -- $33,
and Other -- $2.
6. RESTRUCTURING PROGRAM
A restructuring charge included in earnings from continuing operations of $41
($30 after tax or $.07 per share) was recorded in the fourth quarter 1999 to
cover the costs of a restructuring and divestiture program approved in July 1999
by the company's Board of Directors. This charge relates to the streamlining of
certain North American and European production and administrative facilities and
the anticipated cost of a divestiture of a non-strategic business with annual
sales of approximately $25.
The restructuring charge includes approximately $20 in cash charges primarily
related to severance and employee benefit costs. The balance of the
restructuring charge includes non-cash charges related to the disposition of
plant assets and the divestiture. The company expects to complete the
restructuring and divestiture program in 2000. The expected net cash outflows
will not have a material impact on the company's liquidity.
A $5 ($3 after tax or $.01 per share) reversal of the 1998 restructuring
charge was also recorded in the fourth quarter 1999. The reversal reflects the
net impact of changes in estimates and modifications to the original program.
Two manufacturing facilities scheduled for closure in 1999 were not taken out of
service due to changes in business and economic conditions subsequent to the
original charge, while additional asset rationalization and plant
reconfiguration strategies were implemented which resulted in incremental
headcount reductions. The initial charge for the third quarter 1998 program was
$262 ($193 after tax or $.42 per share). This program was designed to improve
operational efficiency by rationalizing certain U.S., European and Australian
production and administrative facilities and divesting non-strategic businesses.
Remaining spending under this program, which is primarily associated with
employee benefit costs, is expected to be completed by the second quarter 2000.
A summary of restructuring reserves at August 1, 1999 and related activity
described above is as follows:
<TABLE>
<CAPTION>
Modifica-
Balance at tions & Balance at
August 2, changes in 1999 August 1,
1998 Spending estimates Provision 1999
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Losses on asset
dispositions and
divestitures $ 151 (132) (21) 21 $ 19
Severance and
benefits 32 (28) 16 18 38
Other exit costs 10 (9) -- 2 3
- -----------------------------------------------------------------------------------
$ 193 (169) (5) 41 $ 60
===================================================================================
</TABLE>
41
<PAGE> 16
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions)
A restructuring charge of $204 ($152 after tax or $.31 per share) was recorded
in the first quarter 1997 to cover the costs of a restructuring program. This
program was designed to improve operational efficiency by closing various
plants, reducing administrative and operational staff functions and divesting
non-strategic businesses. The restructuring charge included approximately $108
in cash charges primarily related to severance and employee benefit costs. The
balance of the restructuring charge related to non-cash charges for estimated
losses on the disposition of plant assets and business divestitures. This
program was completed in the first quarter 1998.
7. OTHER EXPENSES
<TABLE>
<CAPTION>
1999 1998 1997
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Stock price related
incentive programs $ 15 $ 27 $ 71
Amortization of intangible
and other assets 58 53 51
Minority interests 1 6 7
Other, net (10) (22) 11
- --------------------------------------------------------------------------------
$ 64 $ 64 $ 140
================================================================================
</TABLE>
8. INTEREST EXPENSE
<TABLE>
<CAPTION>
1999 1998 1997
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Interest expense $ 190 $ 194 $ 177
Less: Interest capitalized 6 5 11
- --------------------------------------------------------------------------------
$ 184 $ 189 $ 166
================================================================================
</TABLE>
9. ACQUISITIONS
During 1999, 1998 and 1997 the company made several acquisitions. Acquisitions
were accounted for using the purchase method of accounting and accordingly,
results of operations of the acquired companies are included in the consolidated
financial statements from the dates the acquisitions were consummated. The
allocation of the purchase price to assets acquired and liabilities assumed was
based upon fair value estimates as follows:
<TABLE>
<CAPTION>
1999 1998 1997
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Working capital $ 1 $ 32 $ 4
Fixed assets 5 19 53
Intangibles 105 360 159
Other assets -- -- 19
Other liabilities (6) -- (7)
Minority interests -- 67 --
- --------------------------------------------------------------------------------
$ 105 $ 478 $ 228
================================================================================
</TABLE>
In the first quarter of 1999, the company acquired the Stockpot premium
refrigerated soup business, which is predominantly a U.S. food service business.
During 1998, the company acquired the Liebig soup business in France for
approximately $180. Also in 1998, Arnotts purchased the remaining outstanding
ordinary shares held by its minority shareholders for an aggregate purchase
price of approximately $290. Prior to the transaction, the company owned
approximately 70% of Arnotts.
During 1997, the company acquired the Erasco Group of companies, Germany's
leading soup company. In addition, Arnotts acquired the assets of Kettle Chip
Company located in Sydney, Australia.
The acquisitions would not have had a material effect on net sales, net
earnings or earnings per share for each of the years presented.
10. PENSION AND POSTRETIREMENT BENEFITS
In 1999, the company adopted the revised disclosure provisions of Financial
Accounting Standards No. 132, "Employers' Disclosures about Pensions and Other
Postretirement Benefits."
PENSION BENEFITS
Substantially all of the company's U.S. and certain non-U.S. employees are
covered by noncontributory defined benefit pension plans. In 1999, the company
implemented significant amendments to certain U.S. plans. Under a new formula
retirement benefits will be determined based on percentage of annual pay and
age. To minimize the impact of converting to the new formula, service and
earnings credit will continue to accrue for active employees participating in
the plans under the formula prior to the amendments through the year 2014.
Employees will receive the benefit from either the new or old formula, whichever
is higher. Benefits become vested upon the completion of five years of service.
Benefits are paid from funds previously provided to trustees and insurance
companies or are paid directly by the company from general funds. Plan assets
consist primarily of investments in equities, fixed income securities and real
estate.
Pension coverage for employees of certain non-U.S. subsidiaries are provided
to the extent determined appropriate through their respective plans. Obligations
under such plans are systematically provided for by depositing funds with trusts
or under insurance contracts. The assets and obligations of these plans are not
material.
POSTRETIREMENT BENEFITS
The company provides postretirement benefits including health care and life
insurance to substantially all retired U.S. employees and their dependents. In
1999, changes were made to the postretirement benefits offered to certain U.S.
employees. Participants who were not receiving postretirement benefits as of May
1, 1999 will no longer be eligible to receive such benefits in the future, but
the company
42
<PAGE> 17
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions)
will provide access to health care coverage for non-eligible future retirees on
a group basis. Costs will be paid by the participants. To preserve the economic
benefits for employees close to retirement, participants who were at least age
55 and had at least 10 years of continuous service remain eligible for
postretirement benefits.
Components of net periodic benefit cost:
<TABLE>
<CAPTION>
Pension
------------------------------
1999 1998 1997
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost $ 29 $ 31 $ 27
Interest cost 91 94 83
Expected return on plan assets (142) (135) (110)
Amortization of net
transition obligation (3) (3) (1)
Amortization of prior service cost 5 5 5
Recognized net actuarial (gain)/loss 5 4 7
- --------------------------------------------------------------------------------
Net periodic pension
(income) expense $ (15) $ (4) $ 11
================================================================================
</TABLE>
<TABLE>
<CAPTION>
Postretirement
------------------------------
1999 1998 1997
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost $ 10 $ 11 $ 10
Interest cost 19 22 17
Amortization of prior service cost (6) (4) (4)
Amortization of net (gain)/loss (9) (11) (10)
- --------------------------------------------------------------------------------
Net periodic postretirement cost $ 14 $ 18 $ 13
================================================================================
</TABLE>
Change in benefit obligation:
<TABLE>
<CAPTION>
Pension Postretirement
--------------------- ---------------------
1999 1998 1999 1998
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Obligation at beginning
of year $ 1,332 $ 1,278 $ 313 $ 302
Service cost 29 31 10 11
Interest cost 91 94 19 22
Plan amendments 3 2 (33) --
Actuarial (gain)/loss 62 103 (38) 24
Spin-off -- (66) -- (22)
Special termination benefits 6 -- -- --
Benefits paid (119) (94) (25) (24)
Foreign currency adjustment 1 (16) -- --
- --------------------------------------------------------------------------------
Benefit obligation at
end of year $ 1,405 $ 1,332 $ 246 $ 313
================================================================================
</TABLE>
Change in the fair value of pension plan assets:
<TABLE>
<CAPTION>
1999 1998
- --------------------------------------------------------------------------------
<S> <C> <C>
Fair value at beginning of year $ 1,674 $ 1,675
Actual return on plan assets 177 183
Spin-off -- (79)
Employer contributions 2 2
Benefits paid (115) (92)
Foreign currency adjustment 2 (15)
- --------------------------------------------------------------------------------
Fair value at end of year $ 1,740 $ 1,674
================================================================================
</TABLE>
<TABLE>
<CAPTION>
Pension Postretirement
----------------- -----------------
1999 1998 1999 1998
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Funded status at end of year $ 335 $ 342 $(246) $(313)
Unrecognized prior
service cost 61 63 (43) (16)
Unrecognized (gain)/loss (14) (37) (124) (95)
Unrecognized net
transition obligation (4) (6) -- --
- --------------------------------------------------------------------------------
Net amount recognized $ 378 $ 362 $(413) $(424)
================================================================================
</TABLE>
The current portion of nonpension postretirement benefits included in Accrued
liabilities was $19 at August 1, 1999 and August 2, 1998.
Weighted average assumptions at end of year:
<TABLE>
<CAPTION>
Pension
--------------------------------
1999 1998 1997
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Discount rate for benefit obligation 7.50% 7.00% 7.70%
Expected return on plan assets 10.50% 10.25% 9.70%
Rate of compensation increases 4.50% 4.50% 5.00%
- --------------------------------------------------------------------------------
</TABLE>
The discount rate used to determine the accumulated postretirement benefit
obligation was 7.50% in 1999 and 7.00% in 1998. The assumed health care cost
trend rate used to measure the accumulated postretirement benefit obligation was
5.50%, declining to 4.50% over a period of two years and continuing at 4.50%
thereafter.
A one percentage point change in assumed health care costs would have the
following effects on 1999 reported amounts:
<TABLE>
<CAPTION>
% Increase % Decrease
- --------------------------------------------------------------------------------
<S> <C> <C>
Effect on service and interest cost 4 (4)
Effect on the 1999 accumulated
benefit obligation 24 (26)
</TABLE>
Obligations related to non-U.S. postretirement benefit plans are not significant
since these benefits are generally provided through government-sponsored plans.
SAVINGS PLAN
The company sponsors employee savings plans which cover substantially all U.S.
employees. After one year of continuous service, the company generally matches
50% of employee contributions up to 5% of compensation. In 1998 and 1997, the
company increased its contribution to 60% because earnings goals were achieved.
Amounts charged to Costs and expenses were $11 in 1999, $13 in 1998, and $14 in
1997.
43
<PAGE> 18
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions)
11. TAXES ON EARNINGS
The provision for income taxes on earnings from continuing operations consists
of the following:
<TABLE>
<CAPTION>
1999 1998 1997
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Income taxes:
Currently payable
Federal $ 231 $ 311 $ 330
State 31 44 32
Non-U.S. 33 50 28
- --------------------------------------------------------------------------------
295 405 390
- --------------------------------------------------------------------------------
Deferred
Federal 64 (1) (40)
State 2 (7) 2
Non-U.S. 12 (13) 5
- --------------------------------------------------------------------------------
78 (21) (33)
- --------------------------------------------------------------------------------
$ 373 $ 384 $ 357
================================================================================
Earnings from continuing
operations before income taxes:
United States $ 987 $ 980 $ 882
Non-U.S. 110 93 109
- --------------------------------------------------------------------------------
$ 1,097 $ 1,073 $ 991
================================================================================
</TABLE>
The following is a reconciliation of effective income tax rates on continuing
operations with the U.S. federal statutory income tax rate:
<TABLE>
<CAPTION>
1999 1998 1997
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Federal statutory income
tax rate 35.0% 35.0% 35.0%
State income taxes (net of
federal tax benefit) 1.9 2.0 2.2
Nondeductible divestiture
and restructuring charges .3 1.8 1.6
Non-U.S. earnings taxed at other
than federal statutory rate (.6) (.4) (.7)
Tax loss carryforwards (.3) (.8) (.1)
Other (2.3) (1.8) (2.0)
- --------------------------------------------------------------------------------
Effective income tax rate 34.0% 35.8% 36.0%
================================================================================
</TABLE>
Deferred tax liabilities and assets are comprised of the following:
<TABLE>
<CAPTION>
1999 1998
- --------------------------------------------------------------------------------
<S> <C> <C>
Depreciation $ 148 $ 142
Pensions 112 112
Other 217 185
- --------------------------------------------------------------------------------
Deferred tax liabilities 477 439
- --------------------------------------------------------------------------------
Benefits and compensation 209 209
Restructuring accruals 31 50
Tax loss carryforwards 17 15
Other 50 71
- --------------------------------------------------------------------------------
Gross deferred tax assets 307 345
Deferred tax asset valuation allowance (17) (15)
- --------------------------------------------------------------------------------
Net deferred tax assets 290 330
- --------------------------------------------------------------------------------
Net deferred tax liability $ 187 $ 109
================================================================================
</TABLE>
For income tax purposes, subsidiaries of the company have tax loss carryforwards
of approximately $55. Of these carryforwards, $27 expire through 2011 and $28
may be carried forward indefinitely. The current statutory tax rates in these
countries range from 28% to 53%.
Income taxes have not been accrued on undistributed earnings of non-U.S.
subsidiaries of approximately $490 which are invested in operating assets and
are not expected to be remitted. If remitted, tax credits are available to
substantially reduce any additional taxes.
12. ACCOUNTS RECEIVABLE
<TABLE>
<CAPTION>
1999 1998
- --------------------------------------------------------------------------------
<S> <C> <C>
Customers $ 507 $ 569
Allowances for cash discounts
and bad debts (18) (11)
- --------------------------------------------------------------------------------
489 558
Other 52 98
- --------------------------------------------------------------------------------
$ 541 $ 656
================================================================================
</TABLE>
13. INVENTORIES
<TABLE>
<CAPTION>
1999 1998
- --------------------------------------------------------------------------------
<S> <C> <C>
Raw materials, containers and supplies $ 207 $ 205
Finished products 408 359
- --------------------------------------------------------------------------------
$ 615 $ 564
================================================================================
</TABLE>
Approximately 70% of inventory in 1999 and 69% in 1998 is accounted for on the
last in, first out 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 August 1, 1999 and August 2,
1998.
14. OTHER CURRENT ASSETS
<TABLE>
<CAPTION>
1999 1998
- --------------------------------------------------------------------------------
<S> <C> <C>
Prepaid pensions $ 18 $ 18
Deferred taxes 76 137
Other 38 49
- --------------------------------------------------------------------------------
$ 132 $ 204
================================================================================
</TABLE>
15. PLANT ASSETS
<TABLE>
<CAPTION>
1999 1998
- --------------------------------------------------------------------------------
<S> <C> <C>
Land $ 50 $ 54
Buildings 798 816
Machinery and equipment 2,185 2,124
Projects in progress 184 166
- --------------------------------------------------------------------------------
3,217 3,160
Accumulated depreciation (1,491) (1,437)
- --------------------------------------------------------------------------------
$ 1,726 $ 1,723
================================================================================
</TABLE>
44
<PAGE> 19
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions)
Depreciation expense provided in Costs and expenses was $197 in 1999, $208
in 1998 and $232 in 1997. Approximately $90 of capital expenditures are required
to complete projects in progress at August 1, 1999.
16. INTANGIBLE ASSETS
<TABLE>
<CAPTION>
1999 1998
- -------------------------------------------------------------------------------
<S> <C> <C>
Purchase price in excess of net assets
of businesses acquired (goodwill) $1,697 $1,655
Trademarks 429 424
Other intangibles 3 4
- -------------------------------------------------------------------------------
2,129 2,083
Accumulated amortization (219) (179)
- -------------------------------------------------------------------------------
$1,910 $1,904
===============================================================================
</TABLE>
17. OTHER ASSETS
<TABLE>
<CAPTION>
1999 1998
- -------------------------------------------------------------------------------
<S> <C> <C>
Prepaid pensions $360 $344
Investments 211 200
Other 21 22
- -------------------------------------------------------------------------------
$592 $566
===============================================================================
</TABLE>
18. NOTES PAYABLE AND LONG-TERM DEBT
Notes payable consists of the following:
<TABLE>
<CAPTION>
1999 1998
- -------------------------------------------------------------------------------
<S> <C> <C>
Commercial paper $1,778 $ 859
Current portion of Long-term Debt:
5.40%-5.76% Notes 157 200
Variable-rate bank borrowings 52 342
- -------------------------------------------------------------------------------
$1,987 $1,401
===============================================================================
</TABLE>
The weighted average interest rate for commercial paper was 5.11% and 5.58% at
August 1, 1999 and August 2, 1998, respectively.
Long-term debt consists of the following:
<TABLE>
<CAPTION>
Type Fiscal Year Maturity Rate 1999 1998
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Notes 2000 5.76% $ - $ 150
Notes 2001 5.75%-8.58% 115 111
Notes 2002 5.40% 12 -
Notes 2003 6.15% 300 300
Notes 2004(1) 4.75%-5.63% 400 100
Notes 2007 6.90% 300 300
Debentures 2021 8.88% 200 200
Notes 2001-2010 6.40% 3 8
- -----------------------------------------------------------------------------
$1,330 $ 1,169
=============================================================================
</TABLE>
(1) $100 callable in 2001
The fair value of the company's long-term debt including the current
portion of long-term debt in Notes payable was $1,512 at August 1, 1999 and
$1,449 at August 2, 1998.
The company had $1,500 unused lines of credit available at August 1, 1999,
which are unconditional for a period of one to three years.
In 1997, the company filed a shelf registration statement with the
Securities and Exchange Commission for the issuance of debt securities at an
aggregate initial offering price not to exceed $1,000. As of August 1, 1999,
$100 remained unissued.
Principal amounts of long-term debt mature as follows: 2000 - $157 (in
current liabilities); 2001 - $115; 2002 - $12; 2003 - $300; 2004 - $400, and
beyond - $503.
19. OTHER LIABILITIES
<TABLE>
<CAPTION>
1999 1998
- -------------------------------------------------------------------------------
<S> <C> <C>
Deferred taxes $263 $246
Minority interests - 4
Deferred compensation 131 92
Postemployment benefits 11 11
Other 12 29
- -------------------------------------------------------------------------------
$417 $382
===============================================================================
</TABLE>
20. FINANCIAL INSTRUMENTS
The company utilizes derivative financial instruments to enhance its ability to
manage risk, including interest rate, foreign currency and certain equity-linked
employee compensation exposures which exist as part of ongoing business
operations. The company does not enter into contracts for speculative purposes,
nor is it a party to any leveraged derivative instrument. The use of derivative
financial instruments is monitored through regular communication with senior
management and the utilization of written guidelines.
The company finances a portion of its operations through debt instruments
primarily consisting of commercial paper, notes, debentures and bank loans. The
company utilizes interest rate swap agreements to minimize worldwide financing
costs and to achieve a desired proportion of variable versus fixed-rate debt.
The swaps mature in fiscal 2000. With these instruments, $100 of commercial
paper borrowings is converted to fixed (8.24%) and $150 of fixed-rate debt
(5.76%) is converted to variable. The amounts paid or received on hedges related
to debt are recognized as an adjustment to interest expense. The notional
amounts of interest rate swaps were $250 at August 1, 1999 and August 2, 1998.
The swaps had a fair value of $2 at August 1, 1999.
The company utilizes foreign currency exchange contracts, including swap
and forward contracts, to hedge existing foreign currency exposures. Foreign
exchange gains and losses on derivative financial instruments are recognized and
offset foreign exchange gains and losses on the underlying exposures.
45
<PAGE> 20
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions)
A mix of equity, intercompany debt and local currency borrowing is used to
finance foreign operations. Gains and losses, both realized and unrealized, on
financial instruments that hedge the company's investments in foreign operations
are recognized in Accumulated other comprehensive income in Shareowners' Equity.
Swap contracts are utilized to hedge exposures relating to certain employee
compensation expenses 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 equity swap contracts have maturities in 2000 and 2003. At August 1, 1999,
the notional principal amount of the contracts was $102, and the net cost to
settle the contracts was $14. Gains or losses are recognized as adjustments to
the carrying value of the underlying obligations.
The company also has cross-currency swap agreements with financial
institutions. The notional amounts of these swaps were $333 at August 1, 1999
and $405 at August 2, 1998. The swaps mature as follows: $223 in 2000, and $110
in 2003. These agreements hedge currency exposures, principally European,
arising from strategies which replaced certain local currency borrowings with
lower cost U.S. dollar financing. The fair value of the swaps was $3 at August
1, 1999.
At August 1, 1999, the company also had contracts to purchase or sell
approximately $177 in foreign currency versus $287 at August 2, 1998. The
contracts are primarily for European and Australian currencies and have
maturities through 2000. The fair value of the contracts was $(1) at August 1,
1999.
The company is exposed to credit loss in the event of nonperformance by the
counterparties in swap and forward contracts. The company minimizes its credit
risk on these transactions by dealing only with leading, creditworthy financial
institutions having long-term credit ratings of "A" or better and, therefore,
does not anticipate non-performance. In addition, the contracts are distributed
among several financial institutions, thus minimizing credit risk concentration.
The carrying values of cash and cash equivalents, accounts and notes
receivable, accounts payable and short-term debt approximate fair value. The
fair value of long-term debt, as indicated in Note 18, and derivative financial
instruments is based on quoted market prices.
In June 1998, SFAS No. 133, "Accounting for Derivative Instruments and
Hedging Activities," was issued and is expected to be effective for fiscal years
beginning after June 15, 2000. The standard requires that all derivative
instruments be recorded on the balance sheet at fair value. Changes in the fair
value of derivatives are recorded in earnings or other comprehensive income,
based on whether the instrument is designated as part of a hedge transaction
and, if so, the type of hedge transaction. The company is currently assessing
the impact of the adoption on the company's financial statements. Based on the
company's current portfolio, it is not expected that adoption of this statement
will have a material effect on the company's results of operations, financial
condition or cash flows.
21. SHAREOWNERS' EQUITY
On February 11, 1997, the company's Board of Directors authorized a two-for-one
stock split effective for shareowners of record on February 24, 1997. The number
of authorized shares was increased to 560 million from 280 million. All
references to the number of shares reflect the stock split. Preferred stock is
issuable in one or more classes, with or without par, as may be authorized by
the Board of Directors.
In October 1998, the company entered into a forward stock purchase contract
to partially hedge the company's equity exposure from its stock option program.
The contract, which matures in fiscal 2004, allows the company to repurchase
approximately 11 million shares at an average price of approximately $47 per
share. The company may elect to settle the contract on a net share basis in lieu
of physical settlement. The contract permits early settlement and may be
extended for an additional five-year term. If the forward purchase contract had
been settled on a net share basis as of August 1, 1999, the company would have
provided the counterparty with approximately 800,000 shares of its capital
stock.
The company sponsors a long-term incentive compensation plan. Under the
plan, restricted stock and options may be granted to certain officers and key
employees of the company. The plan provides for awards up to an aggregate of 25
million shares of capital stock. Options are granted at a price not less than
the fair value of the shares on the date of grant and expire not later than ten
years after the date of grant. Options vest over a three-year period.
The company accounts for the stock option grants and restricted stock
awards in accordance with Accounting Principles Board Opinion No. 25 and related
Interpretations. Accordingly, no compensation expense has been recognized in the
Statements of Earnings for the options. In 1997, the company adopted the
disclosure provisions of SFAS No. 123, "Accounting for Stock-Based
Compensation." Had the fair value based accounting provisions of SFAS No. 123
been adopted, the effect on earnings and earnings per share in 1999, 1998 and
1997 would not have been significant.
46
<PAGE> 21
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions)
As of August 1, 1999, five million shares were available for grant under
the long-term incentive plan. Restricted shares granted are as follows:
<TABLE>
<CAPTION>
(thousands of shares) 1999 1998 1997
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Restricted Shares
Granted 1,804 127 804
================================================================================
</TABLE>
Information about stock options and related activity is as follows:
<TABLE>
<CAPTION>
Weighted Weighted Weighted
Average Average Average
Exercise Exercise Exercise
(options in thousands) 1999 Price 1998 Price 1997 Price
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Beginning of year 18,366 $28.72 20,066 $26.94 22,098 $22.53
Granted 3,890 42.79 2,303 54.38 2,644 48.02
Exercised (2,122) 17.75 (3,272) 17.99 (3,428) 16.10
Terminated (254) 45.61 (2,212) 33.04 (1,248) 24.45
Spin-off related
modification(1) - - 1,481 - - -
- -------------------------------------------------------------------------------
End of year 19,880 $32.37 18,366 $28.72 20,066 $26.94
- -------------------------------------------------------------------------------
Exercisable at
end of year 14,019 13,123 13,040
===============================================================================
</TABLE>
(1) When the Specialty Foods segment was spun off, the number and exercise
price of options outstanding were adjusted to preserve the economic value
of the options that existed prior to the spin-off.
<TABLE>
<CAPTION>
(options in thousands) Stock Options Outstanding Exercisable Options
- -------------------------------------------------------------------------------
Weighted
Average Weighted Weighted
Range of Remaining Average Average
Exercise Contractual Exercise Exercise
Prices Shares Life Price Shares Price
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$10.81-$22.60 5,571 2.7 $16.36 5,571 $16.36
$22.60-$31.91 6,338 6.3 $29.22 6,336 $29.22
$32.12-$44.40 5,818 9.1 $43.09 1,410 $44.13
$45.12-$56.50 2,153 8.7 $54.04 702 $54.01
- -------------------------------------------------------------------------------
19,880 14,019
===============================================================================
</TABLE>
The company adopted the provisions of SFAS No. 128, "Earnings per Share," as of
the second quarter 1998. SFAS No. 128 revised the standards for computation and
presentation of earnings per share ("EPS"), requiring the presentation of both
basic EPS and EPS assuming dilution. Basic EPS is calculated using the weighted
average shares outstanding during the applicable period. Diluted EPS reflects
the potential dilution that could occur if securities or other contracts to
issue common stock were exercised or converted into common stock. Prior periods
have been restated to conform to the provisions of SFAS No. 128. For the periods
presented in the Consolidated 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,
except when such effect would be antidilutive. In 1999, the weighted average
shares outstanding assuming dilution also includes the incremental effect of
approximately 200,000 shares under the forward stock purchase contract.
22. STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
1999 1998 1997
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Interest paid, net of
amounts capitalized $181 $187 $165
Interest received $ 11 $ 15 $ 7
Income taxes paid $300 $370 $364
- -------------------------------------------------------------------------------
</TABLE>
23. QUARTERLY DATA (UNAUDITED)
<TABLE>
<CAPTION>
1999 First Second Third Fourth
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NET SALES $1,804 $1,832 $1,492 $1,296
COST OF PRODUCTS SOLD 830 856 730 634
NET EARNINGS 264 219 162 79
PER SHARE - BASIC
NET EARNINGS .59 .49 .37 .18
DIVIDENDS .210 .225 .225 .225
PER SHARE - ASSUMING DILUTION
NET EARNINGS .58 .49 .37 .18
MARKET PRICE
HIGH $59.94 $59.19 $46.94 $46.50
LOW $46.69 $43.38 $38.06 $39.38
- -------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
1998 First Second Third Fourth
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales $1,813 $2,012 $1,572 $1,299
Cost of products sold 893 955 775 610
Earnings (loss) from
continuing operations 252 291 (36) 182
Earnings (loss) from
discontinued operations 16 20 (54) -
Net earnings (loss)(1) 268 300 (90) 182
Per share - basic
Earnings (loss) from
continuing operations .55 .64 (.08) .40
Earnings (loss) from
discontinued operations .03 .04 (.12) -
Net earnings (loss)(1) .58 .66 (.20) .40
Dividends .1925 .21 .21 .21
Per share - assuming dilution
Earnings (loss) from
continuing operations .54 .63 (.08) .40
Earnings (loss) from
discontinued operations .03 .04 (.12) -
Net earnings (loss)(1) .57 .65 (.20) .40
Market price(2)
High $55.44 $59.44 $62.88 $57.13
Low $46.00 $51.81 $48.13 $51.50
- -------------------------------------------------------------------------------
</TABLE>
(1) Net earnings in the second quarter 1998 include the cumulative effect of a
change in accounting principle of $11 or $.02 per share (see Note 4).
(2) Stock prices on or before March 30, 1998 are not adjusted to reflect the
spin-off (see Note 3).
47
<PAGE> 22
REPORT OF MANAGEMENT
The accompanying financial statements have been prepared by the management of
the company in conformity with generally accepted accounting principles to
reflect the financial position of the company and its operating results.
Financial information appearing throughout this Annual Report is consistent with
that in the financial statements. Management is responsible for the information
and representations in such financial statements, including the estimates and
judgments required for their preparation.
In order to meet its responsibility, management maintains a system of
internal controls designed to assure that assets are safeguarded and that
financial records properly reflect all transactions. The company also maintains
a worldwide auditing function to periodically evaluate the adequacy and
effectiveness of such internal controls, as well as the company's administrative
procedures and reporting practices. The company believes that its long-standing
emphasis on the highest standards of conduct and business ethics, set forth in
extensive written policy statements, serves to reinforce its system of internal
accounting controls.
The report of PricewaterhouseCoopers LLP, the company's independent
accountants, covering their audit of the financial statements, is included in
this Annual Report. Their independent audit of the company's financial
statements includes a review of the system of internal accounting controls to
the extent they consider necessary to evaluate the system as required by
generally accepted auditing standards.
The company's internal auditors report directly to the Audit Committee of
the Board of Directors, which is composed entirely of Directors who are not
officers or employees of the company. The Audit Committee meets periodically
with the internal auditors, other management personnel, and the independent
accountants. The independent accountants and the internal auditors have had, and
continue to have, direct access to the Audit Committee without the presence of
other management personnel, and have been directed to discuss the results of
their audit work and any matters they believe should be brought to the
Committee's attention.
/s/ Dale F. Morrison
- -------------------------------------
Dale F. Morrison
President and Chief Executive Officer
/s/ Basil L. Anderson
- -------------------------------------
Basil L. Anderson
Executive Vice President and Chief Financial Officer
/s/ Gerald S. Lord
- -------------------------------------
Gerald S. Lord
Vice President - Controller
September 2, 1999
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareowners and Directors
of Campbell Soup Company
In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of earnings, shareowners' equity and cash flows present
fairly, in all material respects, the financial position of Campbell Soup
Company and its subsidiaries at August 1, 1999 and August 2, 1998, and the
results of their operations and their cash flows for each of the three years in
the period ended August 1, 1999, in conformity with generally accepted
accounting principles. These financial statements are the responsibility of the
company's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
statements in accordance with generally accepted auditing standards, which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
/s/ PricewaterhouseCoopers LLP
- ------------------------------------
Thirty South Seventeenth Street
Philadelphia, Pennsylvania
September 2, 1999
48
<PAGE> 23
SIX-YEAR REVIEW - CONSOLIDATED
(millions, except per share amounts)
<TABLE>
<CAPTION>
Fiscal Year 1999(1) 1998(2) 1997(3) 1996 1995 1994
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS
Net sales $6,424 $6,696 $6,614 $6,324 $5,881 $5,495
Earnings before interest and taxes 1,270 1,248 1,149 1,191 1,039 947
Earnings before taxes 1,097 1,073 991 1,072 936 884
Earnings from continuing operations 724 689 634 718 627 578
Earnings (loss) from discontinued operations - (18) 79 84 71 52
Net earnings 724 660 713 802 698 630
Cash margin(4) 23.7% 22.6% 21.8% 23.5% 22.3% 21.6%
FINANCIAL POSITION
Net assets of discontinued operations $ - $ - $ 632 $ 659 $ 697 $ 615
Plant assets - net 1,726 1,723 2,044 2,179 2,093 1,938
Total assets 5,522 5,633 6,196 6,368 6,088 4,752
Total debt 3,317 2,570 2,657 1,606 1,719 981
Shareowners' equity 235 874 1,420 2,742 2,468 1,989
PER SHARE DATA
Earnings from continuing operations - basic $ 1.64 $ 1.52 $ 1.34 $ 1.44 $ 1.26 $ 1.15
Earnings from continuing operations -
assuming dilution 1.63 1.50 1.33 1.43 1.25 1.14
Net earnings - basic 1.64 1.46 1.51 1.61 1.40 1.26
Net earnings - assuming dilution 1.63 1.44 1.49 1.59 1.39 1.24
Dividends declared .885 .823 .75 .67 .61 .55
OTHER STATISTICS
Capital expenditures $ 297 $ 256 $ 252 $ 357 $ 340 $ 354
Number of shareowners (in thousands) 51 51 49 43 43 43
Weighted average shares outstanding 441 454 472 498 498 501
Weighted average shares outstanding -
assuming dilution 445 460 478 503 503 507
========================================================================================================================
</TABLE>
(1) 1999 earnings from continuing operations include a net pre-tax
restructuring charge of $36; $27 after tax or $.06 per share (basic and
assuming dilution). Earnings from continuing operations also include the
effect of certain non-recurring costs of $22; $15 after tax or $.03 per
share (basic and assuming dilution).
(2) 1998 earnings from continuing operations include a pre-tax restructuring
charge of $262; $193 after tax or $.42 per share (basic and assuming
dilution). Earnings from continuing operations also include a gain on a
divestiture of $14; $9 after tax or $.02 per share (basic and assuming
dilution). Net earnings include the cumulative effect of a change in
accounting for business process reengineering costs of $11 or $.02 per
share (basic and assuming dilution).
(3) 1997 earnings from continuing operations include a pre-tax restructuring
charge of $204; $152 after tax or $.31 per share (basic and assuming
dilution).
(4) Cash margin equals earnings before interest and taxes plus translation,
depreciation, amortization and minority interest expense divided by net
sales.
The company spun off its Specialty Foods segment in 1998 and accounted for it as
a discontinued operation (see Note 3 to the Consolidated Financial Statements).
All information has been reclassified accordingly.
All share and per share data reflect a 1997 two-for-one stock split.
49
<PAGE> 1
EXHIBIT 21
SUBSIDIARIES OF CAMPBELL
<TABLE>
<CAPTION>
NAME OF SUBSIDIARY AND NAME
UNDER WHICH IT DOES BUSINESS JURISDICTION OF INCORPORATION
- --------------------------------------------------------------------------------------------------------
<S> <C>
Arnotts Limited Australia
- --------------------------------------------------------------------------------------------------------
Campbell Finance Corp. Delaware
- --------------------------------------------------------------------------------------------------------
Campbell Foods Belgium N.V. Belgium
- --------------------------------------------------------------------------------------------------------
Campbell Foodservice Company Pennsylvania
- --------------------------------------------------------------------------------------------------------
Campbell Investment Company Delaware
- --------------------------------------------------------------------------------------------------------
Campbell Sales Company New Jersey
- --------------------------------------------------------------------------------------------------------
Campbell Soup Company Ltd -- Les Soupes Campbell Ltee Canada
- --------------------------------------------------------------------------------------------------------
Campbell Soup Supply Company L.L.C. Delaware
- --------------------------------------------------------------------------------------------------------
Campbell's Australasia Pty. Limited Australia
- --------------------------------------------------------------------------------------------------------
Campbell's de Mexico, S.A. de C. V. Mexico
- --------------------------------------------------------------------------------------------------------
Campbell's U.K. Limited England
- --------------------------------------------------------------------------------------------------------
CSC Brands LP Delaware
- --------------------------------------------------------------------------------------------------------
Erasco GmbH Germany
- --------------------------------------------------------------------------------------------------------
Godiva Brands, Inc. Delaware
- --------------------------------------------------------------------------------------------------------
Godiva Chocolatier, Inc. New Jersey
- --------------------------------------------------------------------------------------------------------
Joseph Campbell Company New Jersey
- --------------------------------------------------------------------------------------------------------
Liebig S.A.S. France
- --------------------------------------------------------------------------------------------------------
Pepperidge Farm, Incorporated Connecticut
- --------------------------------------------------------------------------------------------------------
PF Brands, Inc. Delaware
- --------------------------------------------------------------------------------------------------------
Stockpot Inc. Washington
- --------------------------------------------------------------------------------------------------------
</TABLE>
The foregoing does not constitute a complete list of all subsidiaries of the
registrant. The subsidiaries which have been omitted do not, in the aggregate,
(i) represent more than 10% of the assets of Campbell and its consolidated
subsidiaries, (ii) contribute more than 10% of the total sales and revenues of
Campbell and its consolidated subsidiaries or (iii) contribute more than 10% of
the income before taxes and extraordinary items of Campbell and its consolidated
subsidiaries.
14
<PAGE> 1
EXHIBIT 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statements on Form S-3 (No. 333-11497) and Form S-8 (Nos. 333-22803,
333-00729, 33-59797, 33-56899, 33-39032 and 33-14009) of Campbell Soup
Company of our report dated September 2, 1999 relating to the financial
statements, which appears in the Annual Report to Shareowners, which is
incorporated in this Annual Report on Form 10-K.
PricewaterhouseCoopers LLP
Thirty South Seventeenth Street
Philadelphia, Pennsylvania
October 8, 1999
15
<PAGE> 1
EXHIBIT 24(a)
POWER OF ATTORNEY
FORM 10-K ANNUAL REPORT FOR FISCAL 1999
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints Ellen O. Kaden and John J. Furey, each of them, until
December 31, 1999, their true and lawful attorneys-in-fact and agents, with full
power of substitution and revocation, for them and in their name, place and
stead, in any and all capacities, to sign Campbell Soup Company's Form 10-K
Annual Report to the Securities and Exchange Commission for the fiscal year
ended August 1, 1999, and any amendments thereto, and to file the same with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as he
or she might or could do in person, hereby ratifying and confirming all that
said attorneys-in-fact and agents may lawfully do or cause to be done by virtue
hereof.
CAMPBELL SOUP COMPANY
<TABLE>
<CAPTION>
Signature Dated as of September 23, 1999
--------- ------------------------------
<S> <C>
/s/ Alva A. App /s/Mary Alice Malone
------------------------------ -----------------------------
Alva A. App Mary Alice Malone
/s/Edmund M. Carpenter /s/Dale F. Morrison
------------------------------ -----------------------------
Edmund M. Carpenter Dale F. Morrison
/s/Bennett Dorrance /s/Charles H. Mott
------------------------------ -----------------------------
Bennett Dorrance Charles H. Mott
/s/Thomas W. Field, Jr. /s/Charles R. Perrin
------------------------------ -----------------------------
Thomas W. Field, Jr. Charles R. Perrin
/s/Kent B. Foster /s/George M. Sherman
------------------------------ -----------------------------
Kent B. Foster George M. Sherman
/s/Harvey Golub /s/George Strawbridge, Jr.
------------------------------ -----------------------------
Harvey Golub George Strawbridge
/s/David K. P. Li /s/Donald M. Stewart
------------------------------ -----------------------------
David K. P. Li Donald M. Stewart
/s/Philip E. Lippincott /s/Charlotte C. Weber
------------------------------ -----------------------------
Philip E. Lippincott Charlotte C. Weber
</TABLE>
16
<PAGE> 1
EXHIBIT 24(b)
CAMPBELL SOUP COMPANY
CERTIFICATION
I, the undersigned Assistant Corporate Secretary of Campbell Soup
Company, a New Jersey corporation, certify that the attached document,
entitled
"FORM 10-K ANNUAL REPORT"
is a true copy of a resolution adopted by the Board of Directors of Campbell
Soup Company on September 23, 1999, at a meeting throughout which a quorum was
present, and that the same is still in full force and effect.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the seal
of Campbell Soup Company this 8th day of October, 1999.
[seal] /s/ Tricia L. Emmerman
----------------------
Assistant Corporate Secretary
17
<PAGE> 2
EXHIBIT 24(b) (CONT'D)
CAMPBELL SOUP COMPANY
BOARD OF DIRECTORS RESOLUTION
SEPTEMBER 23, 1999
* * *
FORM 10-K ANNUAL REPORT
RESOLVED, that the Form 10-K Annual Report for fiscal 1999 of Campbell Soup
Company in the form presented to this meeting, is hereby approved.
FURTHER RESOLVED, that the Senior Vice President - Law and Government Affairs,
the Executive Vice President and Chief Financial Officer and the Vice President
- - Controller of Campbell Soup Company are authorized to execute the Form 10-K
Annual Report for fiscal 1999 approved by this resolution and to cause such Form
10-K to be filed with the Securities and Exchange Commission pursuant to the
Securities Exchange Act of 1934, with such modifications as may be required by
the Commission or as may be desirable in the opinion of such officers.
FURTHER RESOLVED, that each of the directors and the President and Chief
Executive Officer of Campbell Soup Company are each hereby authorized to execute
in their respective capacities, a Power of Attorney in favor of Ellen O. Kaden
and John J. Furey designating each of them as the true and lawful
attorneys-in-fact and agents of the signatory with full power and authority to
execute and to cause to be filed with the Securities and Exchange Commission the
Form 10-K Annual Report for fiscal 1999 with all exhibits and other documents in
connection therewith as such attorneys-in-fact, or either one of them, may deem
necessary or desirable; and to do and perform each and every act and thing
necessary or desirable to be done in and about the premises as fully to all
intents and purposes as such officers and directors could do themselves.
18
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<FISCAL-YEAR-END> AUG-01-1999
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0
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