<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED COMMISSION FILE NUMBER
OCTOBER 29, 2000 1-3822
CAMPBELL SOUP COMPANY
NEW JERSEY 21-0419870
STATE OF INCORPORATION I.R.S. EMPLOYER IDENTIFICATION NO.
CAMPBELL PLACE
CAMDEN, NEW JERSEY 08103-1799
PRINCIPAL EXECUTIVE OFFICES
TELEPHONE NUMBER: (856) 342-4800
INDICATE BY CHECK MARK WHETHER THE REGISTRANT: (1) HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE
REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH
FILING REQUIREMENTS FOR THE PAST 90 DAYS.
YES [X] NO [ ].
THERE WERE 420,250,814 SHARES OF CAPITAL STOCK OUTSTANDING AS OF
DECEMBER 7, 2000.
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<PAGE> 2
PART I. FINANCIAL INFORMATION
CAMPBELL SOUP COMPANY CONSOLIDATED
STATEMENTS OF EARNINGS
(unaudited)
(millions, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended
---------------------
OCTOBER October
29, 2000 31, 1999
-------- --------
<S> <C> <C>
Net sales $1,778 $1,768
--------------------------------------------------------------------------------
Costs and expenses
Cost of products sold 807 809
Marketing and selling expenses 479 428
Administrative expenses 86 83
Research and development expenses 14 16
Other expenses 29 21
--------------------------------------------------------------------------------
Total costs and expenses 1,415 1,357
--------------------------------------------------------------------------------
Earnings before interest and taxes 363 411
Interest, net 52 46
--------------------------------------------------------------------------------
Earnings before taxes 311 365
Taxes on earnings 107 130
--------------------------------------------------------------------------------
Net earnings $ 204 $ 235
================================================================================
Per share - basic
Net earnings $ .48 $ .55
================================================================================
Dividends $ .225 $ .225
================================================================================
Weighted average shares outstanding - basic 421 429
================================================================================
Per share - assuming dilution
Net earnings $ .47 $ .54
================================================================================
Weighted average shares outstanding - basic 431 433
================================================================================
See Notes to Financial Statements
</TABLE>
2
<PAGE> 3
CAMPBELL SOUP COMPANY CONSOLIDATED
BALANCE SHEETS
(unaudited)
(millions, except per share amounts)
<TABLE>
<CAPTION>
OCTOBER July
29, 2000 30, 2000
---------- ----------
<S> <C> <C>
Current assets
Cash and cash equivalents $ 25 $ 27
Accounts receivable 609 443
Inventories 595 571
Other current assets 157 127
----------------------------------------------------------------------------------
Total current assets 1,386 1,168
----------------------------------------------------------------------------------
Plant assets, net of depreciation 1,574 1,644
Intangible assets, net of amortization 1,678 1,767
Other assets 596 617
----------------------------------------------------------------------------------
Total assets $ 5,234 $ 5,196
==================================================================================
Current liabilities
Notes payable $ 1,741 $ 1,873
Payable to suppliers and others 482 509
Accrued liabilities 486 360
Dividend payable 95 95
Accrued income taxes 279 195
----------------------------------------------------------------------------------
Total current liabilities 3,083 3,032
----------------------------------------------------------------------------------
Long-term debt 1,216 1,218
Nonpension postretirement benefits 355 364
Other liabilities, including deferred
income taxes of $277 and $284 452 445
----------------------------------------------------------------------------------
Total liabilities 5,106 5,059
----------------------------------------------------------------------------------
Shareowners' equity
Preferred stock; authorized 40 shares;
none issued - -
Capital stock, $.0375 par value; authorized
560 shares; issued 542 shares 20 20
Capital surplus 365 344
Earnings retained in the business 4,482 4,373
Capital stock in treasury, at cost (4,420) (4,373)
Accumulated other comprehensive loss (319) (227)
----------------------------------------------------------------------------------
Total shareowners' equity 128 137
----------------------------------------------------------------------------------
Total liabilities and shareowners' equity $ 5,234 $ 5,196
==================================================================================
See Notes to Financial Statements
</TABLE>
3
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CAMPBELL SOUP COMPANY CONSOLIDATED
STATEMENTS OF CASH FLOWS
(unaudited)
(millions)
<TABLE>
<CAPTION>
Three Months Ended
------------------
OCTOBER October
29, 2000 31, 1999
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 204 $ 235
Non-cash charges to net earnings
Depreciation and amortization 62 62
Deferred income taxes (6) (1)
Other, net 11 1
Changes in working capital
Accounts receivable (180) (142)
Inventories (34) (73)
Other current assets and liabilities 202 185
---------------------------------------------------------------------------------
Net cash provided by operating activities 259 267
---------------------------------------------------------------------------------
Cash flows from investing activities:
Purchases of plant assets (24) (36)
Sales of plant assets 1 1
Other, net (2) (1)
---------------------------------------------------------------------------------
Net cash used in investing activities (25) (36)
---------------------------------------------------------------------------------
Cash flows from financing activities:
Repayments of long-term borrowings - (3)
Short-term borrowings 520 282
Repayments of short-term borrowings (628) (239)
Dividends paid (95) (97)
Treasury stock purchases (29) (155)
Treasury stock issuances 1 6
---------------------------------------------------------------------------------
Net cash used in financing activities (231) (206)
---------------------------------------------------------------------------------
Effect of exchange rate changes on cash (5) 3
---------------------------------------------------------------------------------
Net change in cash and cash equivalents (2) 28
Cash and cash equivalents - beginning of period 27 6
---------------------------------------------------------------------------------
Cash and cash equivalents - end of period $ 25 $ 34
=================================================================================
See Notes to Financial Statements
</TABLE>
4
<PAGE> 5
CAMPBELL SOUP COMPANY CONSOLIDATED
STATEMENTS OF SHAREOWNERS' EQUITY
(unaudited)
(millions, except per share amounts)
<TABLE>
<CAPTION>
Capital stock
------------------------------------------
Issued In treasury Earnings Accumulated
----------------- ---------------------- retained other Total
Capital in the comprehensive shareowners'
Shares Amount Shares Amount surplus business income equity
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at August 1, 1999 542 $ 20 (113) $ (4,058) $ 382 $ 4,041 $ (150) $ 235
Comprehensive income
Net earnings 235 235
Foreign currency translation
adjustments (5) (5)
Dividends ($.225 per share) (96) (96)
Treasury stock purchased (3) (155) (155)
Treasury stock issued under
management incentive and
stock option plans 1 57 (43) 14
------------------------------------------------------------------------------------------------------------------------------------
Balance at October 31, 1999 542 $ 20 (115) $ (4,156) $ 339 $ 4,180 $ (155) $ 228
====================================================================================================================================
BALANCE AT JULY 30, 2000 542 $ 20 (121) $ (4,373) $ 344 $ 4,373 $ (227) $ 137
COMPREHENSIVE INCOME
NET EARNINGS 204 204
FOREIGN CURRENCY TRANSLATION
ADJUSTMENTS (92) (92)
DIVIDENDS ($.225 PER SHARE) (95) (95)
TREASURY STOCK PURCHASED (2) (29) (29)
TREASURY STOCK ISSUED UNDER
MANAGEMENT INCENTIVE AND
STOCK OPTION PLANS - (18) 21 3
------------------------------------------------------------------------------------------------------------------------------------
BALANCE AT OCTOBER 29, 2000 542 $ 20 (123) $ (4,420) $ 365 $ 4,482 $ (319) $ 128
====================================================================================================================================
See Notes to Financial Statements
</TABLE>
5
<PAGE> 6
CAMPBELL SOUP COMPANY CONSOLIDATED
NOTES TO FINANCIAL STATEMENTS
(unaudited)
(dollars in millions, except per share amounts)
(a) The financial statements reflect all adjustments which are, in the opinion
of management, necessary for a fair presentation of the results for the
indicated periods. All such adjustments are of a normal recurring nature.
Certain reclassifications were made to the prior year amounts to conform
with current presentation.
(b) Comprehensive Income
Total comprehensive income is comprised of net earnings, net foreign
currency translation adjustments, and net unrealized gains and losses on
cash flow hedges.
Total comprehensive income for the three months ended October 29, 2000 and
October 31, 1999, was $112 and $230, respectively. Accumulated other
comprehensive income, as reflected in the Statements of Shareowner's
Equity, primarily consists of the cumulative foreign currency translation
adjustment. The net loss on cash flow hedges was not material at October
29, 2000.
(c) Earnings Per Share
For the periods presented in the Statements of Earnings, the calculations
of basic EPS and EPS assuming dilution vary in that the weighted average
shares outstanding assuming dilution includes the incremental effect of
stock options. For the three months ended October 29, 2000, the weighted
average shares outstanding assuming dilution also includes the incremental
effect of approximately nine million shares under forward stock purchase
contracts. See note (f) for a description of the contracts. For the three
month period ended October 31, 1999, the weighted average shares
outstanding assuming dilution also includes the incremental effect of
approximately one million shares under the contracts.
(d) 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, Homepride sauces, Franco-American pastas and gravies, Swanson
broths, and V8 and V8 Splash beverages. The Biscuits and Confectionery
segment includes the Godiva Chocolatier, Pepperidge Farm, and Arnotts
Limited businesses. Away From Home represents products, including
Campbell's soups and Campbell's Specialty Kitchen entrees, which are
distributed to the food service and home meal replacement markets.
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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 the company's
fiscal 2000 Annual Report on Form 10-K. 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, except for Stockpot
premium refrigerated soups, which are produced in a separate facility, and
for certain frozen products which are produced under contract
manufacturing agreements. Accordingly, with the exception of the
designated Stockpot facility, tangible assets have not been allocated to
the Away From Home segment. For products produced by the assets of other
segments, depreciation and amortization are allocated to Away From Home
based on budgeted production hours. Transfers between segments are
recorded at cost plus mark-up or at market.
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
AWAY CORPORATE
THREE MONTHS ENDED SOUP AND BISCUITS AND FROM AND
OCTOBER 29, 2000 SAUCES CONFECTIONERY HOME OTHER(1) ELIMINATIONS(2) TOTAL
------------------ ------ -------------- ---- -------- --------------- -----
<S> <C> <C> <C> <C> <C> <C>
NET SALES $1,270 390 135 1 (18) $1,778
EARNINGS BEFORE
INTEREST AND TAXES $ 326 48 16 - (27) $ 363
DEPRECIATION AND
AMORTIZATION $ 31 20 4 - 7 $ 62
CAPITAL EXPENDITURES $ 12 10 1 - 1 $ 24
SEGMENT ASSETS $2,847 1,317 362 7 701 $5,234
----------------------------------------------------------------------------------------------------------------------
</TABLE>
7
<PAGE> 8
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------
Away Corporate
Three Months Ended Soup and Biscuits and From and
October 31, 1999 Sauces Confectionery Home Other(1) Eliminations(2) Total
------------------ ------- ------------- ---- -------- --------------- -----
<S> <C> <C> <C> <C> <C> <C>
Net sales $1,263 374 135 13 (17) $1,768
Earnings before
interest and taxes $ 358 58 14 1 (20) $ 411
Depreciation and
amortization $ 32 20 4 - 6 $ 62
Capital expenditures $ 21 11 1 - 3 $ 36
Segment assets $3,137 1,491 378 42 694 $5,742
-----------------------------------------------------------------------------------------------------------------------
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 income taxes
and prepaid pension assets.
</TABLE>
(e) Inventories
<TABLE>
<CAPTION>
OCTOBER 29, 2000 July 30, 2000
---------------- -------------
<S> <C> <C>
Raw materials, containers and supplies $209 $213
Finished products 386 358
--------------------------------
$595 $571
================================
</TABLE>
Approximately 62% of inventory in both fiscal 2001 and fiscal 2000 is
accounted for on the last in, first out (LIFO) method of determining cost.
If the first in, first out inventory valuation method had been used
exclusively, inventories would not differ materially from the amounts
reported at October 29, 2000 and July 30, 2000.
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<PAGE> 9
(f) Forward Stock Purchase Program
In October 1998, the company entered into forward stock purchase contracts
to partially hedge the company's equity exposure from its stock option
program. The contracts, which mature in fiscal 2004, provide for the
company to repurchase approximately 11 million shares at an average price
of approximately $47 per share. The company could elect to settle the
contracts on a net share basis in lieu of physical settlement. The
contracts permit early settlement and may be extended for an additional
five-year term.
If the forward purchase contracts had been settled on a net share basis as
of October 29, 2000, the company would have provided the counterparty with
approximately seven million shares of its capital stock.
On December 12, 2000, the company purchased the 11 million shares of
common stock under the existing forward contracts for approximately $521.
(g) Accounting for Derivative Instruments
Effective July 31, 2000, the company adopted Statement of Financial
Accounting Standards (SFAS) No. 133, "Accounting for Derivative
Instruments and Hedging Activities", as amended by SFAS No. 138. The
standard requires that all derivative instruments be recorded on the
balance sheet at fair value and establishes criteria for designation and
effectiveness of the hedging relationships. The cumulative effect of
adopting SFAS No. 133 was not material to the company's consolidated
financial statements as of July 31, 2000.
The company utilizes certain 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. Derivative instruments 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, nor is it a party to any
leveraged derivative instrument. The company designates derivatives as
either fair value hedges, cash flow hedges, hedges of net investment, or
as a natural hedging instrument (changes in fair value are recognized to
act as an economic offset to changes in fair value of the underlying
hedged item).
Interest Rate Swaps
The company finances a portion of its operations through debt instruments
primarily consisting of commercial paper, notes, debentures and bank
loans. The company periodically utilizes interest rate swap agreements to
minimize worldwide financing costs and to achieve a desired proportion of
variable versus fixed-rate debt. There were no interest rate swaps
outstanding as of October 29, 2000 or July 31, 2000.
9
<PAGE> 10
Foreign Currency Forward Contracts
The company is exposed to foreign currency exchange risk as a result of
transactions in currencies other than the functional currency of certain
subsidiaries. The company utilizes foreign currency forward purchase and
sale contracts in order to manage the volatility associated with foreign
currency purchases and certain intercompany transactions in the normal
course of business. Contracts typically have maturities of less than one
year. Principal currencies include the euro, British pound, Australian
dollar, Canadian dollar, and Japanese yen.
Qualifying forward exchange contracts are accounted for as cash flow
hedges when the hedged item is a forecasted transaction. The fair value of
these instruments was not material at October 29, 2000. Gains and losses
on these instruments are recorded in Other comprehensive income/loss until
the underlying transaction is recorded in earnings. When the hedged item
is realized, gains or losses are reclassified from Accumulated other
comprehensive income/loss to the Statement of Earnings on the same line
item as the underlying transaction. The assessment of effectiveness for
contracts is based on changes in the spot rates and the change in the time
value of options is reported in earnings.
Qualifying forward exchange contracts are accounted for as fair value
hedges when the hedged item is a recognized asset, liability or firm
commitment. The net loss on such contracts was not material at October 29,
2000.
The company also enters into certain foreign currency derivative
instruments that are not designated as accounting hedges. These
instruments are primarily intended to reduce volatility of certain
intercompany financing transactions. Gains and losses on derivatives not
designated as accounting hedges are typically recorded in Other expense,
as an offset to gains/losses on the underlying transaction.
Commodity Future Contracts
The company principally uses a combination of purchase orders and various
short and long-term supply arrangements in connection with the purchase of
raw materials, including certain commodities and agricultural products. On
occasion, the company may also enter into commodity future contracts, as
considered appropriate, to reduce the volatility of price fluctuations for
commodities such as corn, soybean meal and cocoa. These instruments are
designated as cash flow hedges. The fair value of the effective portion of
the contracts is recorded in Accumulated other comprehensive income/loss
and reclassified into Cost of products sold in the period in which the
underlying transaction is recorded in earnings. Commodity hedging activity
is not material to the company's financial statements.
10
<PAGE> 11
All amounts in Other comprehensive income/loss for cash flow hedges are
expected to be reclassified into earnings in the fiscal year. The amount
of discontinued cash flow hedges during the quarter was not material.
Other Contracts
The company is exposed to equity price changes related to certain employee
compensation obligations. Swap contracts are utilized to hedge exposures
relating to certain employee compensation obligations linked to the total
return of the Standard & Poor's 500 Index and the total return of the
company's capital stock. The company pays a variable interest rate and
receives the equity returns under these instruments. The equity swap
contracts have maturities in 2001 and 2003. These instruments are not
designated as accounting hedges. Gains and losses are recorded in Other
expense. The net liability recorded under these contracts at October 29,
2000 was $24.
11
<PAGE> 12
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
CAMPBELL SOUP COMPANY CONSOLIDATED
RESULTS OF CONTINUING OPERATIONS
OVERVIEW
The company reported net earnings of $204 million for the first quarter ended
October 29, 2000 versus $235 million in the comparable quarter a year ago. The
earnings performance was driven by increased marketing spending. Diluted
earnings per share decreased 13% to $.47 per share from $.54. Net sales
increased 1% as compared to last year primarily due to an increase in global
soup volume.
SALES
Net sales increased 1% to $1.78 billion from $1.77 billion last year. The
increase was attributed to a 3% increase in volume and mix, a 1% increase from
higher selling prices, offset by a 2% decrease due to currency and a 1% decrease
due to divestitures.
An analysis of net sales by segment follows:
<TABLE>
<CAPTION>
(MILLIONS) 2001 2000 % CHANGE
---------- ---- ---- --------
<S> <C> <C> <C>
Soup and Sauces $ 1,270 $ 1,263 1%
Biscuits and Confectionery 390 374 4
Away From Home 135 135 -
-----------------------------------------------------------------------------------
Subtotal 1,795 1,772 1
Other 1 13
Intersegment (18) (17)
-----------------------------------------------------------------------------------
$ 1,778 $ 1,768 1%
===================================================================================
</TABLE>
The increase in Soup and Sauces was due to a 4% increase in worldwide wet soup
volume, driven by a 4% increase in the U.S. wet soup volume reflecting a 3%
increase in U.S. consumption. Currency depreciation, primarily the euro,
Australian dollar, and British pound, negatively impacted sales growth. Before
currency, sales increased 2%. The U.S. soup gains were led by Chunky, Swanson
broths, and the new Campbell's Ready to Serve soups with easy-open lids. In
addition, Campbell's condensed Chicken Noodle and Tomato soups contributed to
the sales growth.
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<PAGE> 13
International wet soup volume increased 4% over the prior year. Erasco in
Germany contributed to the sales growth through the introduction of a new line
of soups in pouches and Liebig in France reported increased sales in
bottled soup. The Australian business also contributed to the sales growth.
Beyond soup, Prego pasta sauces reported volume gains in a highly competitive
category. Total beverage sales, primarily V8 Splash, declined versus the prior
year as a result of intense competitive activity in the juice drink category.
Biscuits and Confectionery reported a 4% increase in sales, 9% before the impact
of currency, driven by volume gains across the portfolio. The adverse currency
impact principally reflects the weakening of the Australian dollar.
Increased new product innovation and marketing investments helped increase sales
of Pepperidge Farm cookies, crackers, and frozen products. Godiva Chocolatier
continued to report double-digit sales growth. Arnotts also reported volume
growth, although results were negatively impacted by currency.
Sales were flat in Away From Home. Increases in frozen soup and Stockpot
products were offset by the performance of frozen entrees and the planned
strategy to discontinue certain products.
GROSS MARGIN
Gross margin, defined as net sales less cost of products sold, increased $12
million in the quarter. As a percent of sales, gross margin improved slightly to
54.6% from 54.2%.
MARKETING AND SELLING EXPENSES
Marketing and selling expenses as a percent of sales increased to 27% from 24%
last year. The increase is principally due to higher marketing investments in
U.S. soup and Pepperidge Farm and increased selling expenses due to new store
openings by Godiva Chocolatier.
ADMINISTRATIVE EXPENSES
Administrative expenses were relatively flat as a percent of sales compared to
last year.
OPERATING EARNINGS
Segment operating earnings declined 9% for the first quarter versus the prior
year primarily due to increased marketing investments in U.S. soup and
Pepperidge Farm.
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<PAGE> 14
An analysis of operating earnings by segment follows:
<TABLE>
<CAPTION>
(MILLIONS) 2001 2000 % CHANGE
---------- ---- ---- --------
<S> <C> <C> <C>
Soup and Sauces $ 326 $ 358 (9)%
Biscuits and Confectionery 48 58 (17)
Away From Home 16 14 14
---------------------------------------------------------------------------------
Subtotal 390 430 (9)
Other - 1
---------------------------------------------------------------------------------
390 431 (10)
Corporate (27) (20)
---------------------------------------------------------------------------------
$ 363 $ 411 (12)%
=================================================================================
</TABLE>
Earnings from Soup and Sauces declined 9%, 8% before currency, due to increased
marketing investments in U.S. soup and declines in the beverage business.
Earnings from Biscuits and Confectionery declined 17%, 13% before currency, due
primarily to increased marketing investments in Pepperidge Farm, Arnotts and
Godiva Chocolatier.
Away From Home reported an earnings increase of $2 million to $16 million.
Earnings were negatively impacted in the prior year by the start-up of a new
Stockpot facility.
NON-OPERATING ITEMS
Interest expense increased slightly to $52 million from $46 million in the prior
year due to higher interest rates.
The effective tax rate decreased to 34.5% compared to 35.6% last year, resulting
from a lower effective rate on foreign earnings.
LIQUIDITY AND CAPITAL RESOURCES
The company generated cash from operations of $259 million compared to $267
million last year. This decrease is principally due to lower net earnings,
offset by improvements in working capital.
Capital expenditures were $24 million, a decrease from $36 million last year.
The company continues to manage capital outlays and expects total expenditures
to be approximately $225 million in fiscal 2001.
The company repurchased 1.1 million shares in the quarter versus 3.6 million
last year. On November 15, 2000, the company announced that it would suspend the
strategic share repurchase program and purchase 11 million shares under existing
forward stock
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<PAGE> 15
purchase contracts. On December 12, 2000, the company purchased the 11 million
shares under the contracts for approximately $521 million. The purchase was
funded with a three-year floating-rate loan. See also note (f) of the Notes to
Financial Statements.
RECENT DEVELOPMENTS
In May 2000, the EITF issued a consensus on Issue No. 00-14 "Accounting for
Certain Sales Incentives", which addresses the recognition, measurement and
income statement classification of various sales incentives. The EITF concluded
that certain consumer and trade sales promotion expenses should be classified as
a reduction of sales rather than as marketing expenses.
The EITF is addressing several related topics that also impact the
classification and recognition of certain promotion expenses including:
- Issue No. 00-21 "Accounting for Revenue Arrangements with Multiple
Deliverables";
- Issue No. 00-22 "Accounting for 'Points' and Certain Other Time-Based or
Volume-Based Sales Incentives Offers, and Offers for Free Products or
Services to Be Delivered in the Future"; and
- Issue No. 00-25 "Vendor Income Statement Characterization of Consideration
from a Vender to a Retailer."
Final consensus has not yet been reached on Issues No. 00-21, 00-22, and 00-25
although further discussion is planned. The company offers sales incentives to
its customers and consumers in the ordinary course of business that are covered
by the emerging Issues. Promotional sales incentives include cooperative
advertising programs, certain new product introduction fees, display aisle
incentives, volume rebates and various other trade and consumer programs. Such
costs are currently classified as either a reduction of sales or included within
Marketing and selling expenses. The company is continuing to evaluate the impact
of these Issues. Based on the company's review to date, current interpretations,
and consensus guidelines, upon adoption of Issue No. 00-14 in the fourth quarter
fiscal 2001 the redemption costs of coupons, which are currently classified in
Marketing and selling expense, will be reclassified as a reduction of sales.
Based on the company's continuing review and ultimate resolution of these
Issues, certain other costs historically recorded in Marketing and selling
expense, which may be material, may also be reclassified as a reduction of
sales. As reclassifications, these changes will not affect the company's
financial position or earnings. Prior period amounts will be restated to conform
to the new requirements.
In September 2000, the EITF reached a final consensus in Issue No. 00-10 on
"Accounting for Shipping and Handling Costs" that such costs cannot be reported
as a reduction of revenue. The company currently classifies certain shipping and
handling costs as a reduction of sales. Upon adoption of Issue No. 00-10,
shipping and handling costs will be reclassified to Cost of products sold,
resulting in an increase in sales. The company is currently evaluating the
impact of this Issue, which is required to be adopted
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<PAGE> 16
in the fourth quarter fiscal 2001. Upon adoption, prior period amounts will be
restated to conform to the new requirements. As a reclassification, this change
will not affect the company's financial position or earnings.
On November 15, 2000, the company issued a press release announcing results for
the first quarter fiscal 2001 and commented on the outlook for earnings per
share for the second quarter and the full year.
FORWARD-LOOKING STATEMENTS
This quarterly report contains certain statements which reflect the company's
current expectations regarding future results of operations, economic
performance, financial condition and achievements of the company. The company
has tried, wherever possible, to identify these forward-looking statements by
using words such as "anticipate," "believe," "estimate," "expect" and similar
expressions. These statements reflect the company's current plans and
expectations and are based on information currently available to it. They rely
on a number of assumptions and estimates which could be inaccurate and which are
subject to risks and uncertainties.
The company wishes to caution the reader that the following important factors,
and those important factors described elsewhere in the commentary, or in other
Securities and 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 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; and
- 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.
This discussion of uncertainties is by no means exhaustive, but is designed to
highlight important factors that may impact the company's outlook.
16
<PAGE> 17
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
For information regarding the company's exposure to certain market risks, see
Item 7A, Quantitative and Qualitative Disclosures About Market Risk, in the
Annual Report on Form 10-K for fiscal 2000. There have been no significant
changes in the company's portfolio of financial instruments or market risk
exposures which have occurred since year-end. See also note (f) of the Notes to
Financial Statements for a discussion of forward stock purchase contracts.
17
<PAGE> 18
PART II
ITEM 1. LEGAL PROCEEDINGS
In management's opinion, there are no pending claims or litigation, the outcome
of which would have a material effect on the consolidated results of operations,
financial position or cash flows of the company.
As previously reported, ten purported class action lawsuits were commenced
against the company and certain of its officers in the United States District
Court for the District of New Jersey. The lawsuits were subsequently
consolidated, and an amended consolidated complaint was filed alleging, among
other things, that Campbell and certain of its officers misrepresented the
company's financial condition between September 8, 1997 and January 8, 1999, by
failing to disclose alleged shipping and revenue recognition practices in
connection with the sale of certain company products at the end of the company's
fiscal quarters in violation of Section 10 (b) and 20 (a) of the Securities
Exchange Act of 1934, as amended, and Rule 10b-5 promulgated thereunder. The
actions seek compensation and other damages, and costs and expenses associated
with the litigation. Campbell believes the action is without merit.
The United States Environmental Protection Agency (the "EPA") sent Campbell Soup
Company a special notice letter dated September 28, 2000 relating to the Puente
Valley Operable Unit of the San Gabriel Valley Superfund Sites, Los Angeles
County, California (the "Superfund Site") for property located at 125 N. Orange
Avenue, Industry California, advising that the EPA considers Campbell to be a
potentially responsible party due to the alleged release or threatened release
of hazardous substances, and therefore, potentially responsible for the costs
incurred in connection with contamination at the Superfund Site. Although the
impact of this proceeding cannot be predicted at this time due to the large
number of other potentially responsible parties and the uncertainty involved in
estimating the cost of clean-up, the ultimate disposition is not expected to
have a material effect on the consolidated results of operations, financial
position, or cash flows of the company.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits
Exhibit 4 There is no instrument with respect to long-term debt of the
company that involves indebtedness or securities authorized
thereunder exceeding 10 percent of the total assets of the
company and its subsidiaries on a consolidated basis. The
company agrees to file a copy of any instrument or agreement
defining the rights of holders of long-term debt of the
company upon request of the Securities and Exchange
Commission.
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<PAGE> 19
Exhibit 10 (j) Addendum dated October 9, 2000 to the agreement dated May 23,
2000 between the company and David W. Johnson.
Exhibit 27 Financial Data Schedule
b. Reports on Form 8-K
The company filed a report on Form 8-K on September 13, 2000 with
information pursuant to Item 5 (Other Events) pertaining to analysts'
expectations for the first quarter of fiscal 2001 and the outlook for
earnings per share for the full year. The report also indicated under
Item 7 that a copy of the press release was attached as an exhibit to
the report.
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<PAGE> 20
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CAMPBELL SOUP COMPANY
Date: December 13, 2000 By: /s/ Basil L. Anderson
----------------------
Basil L. Anderson
Executive Vice President and
Chief Financial Officer
By: /s/ Ellen Oran Kaden
----------------------
Ellen Oran Kaden
Senior Vice President -
Law and Government Affairs
20
<PAGE> 21
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit Number
--------------
<S> <C>
10 (j) Addendum dated October 9, 2000 to the agreement dated May 23,
2000 between the company and David W. Johnson.
27 Financial Data Schedule.
</TABLE>
21
