For the Quarterly Period Ended | Commission File Number | |
April 30, 2006 | 1-3822 |
New Jersey | 21-0419870 | |
State of Incorporation | I.R.S. Employer Identification No. |
Large accelerated filer þ | Accelerated filer o | Non-accelerated filer o |
Three Months Ended | Nine Months Ended | |||||||||||||||
April 30, | May 1, | April 30, | May 1, | |||||||||||||
2006 | 2005 | 2006 | 2005 | |||||||||||||
Net sales |
$ | 1,836 | $ | 1,736 | $ | 6,227 | $ | 6,050 | ||||||||
Costs and expenses |
||||||||||||||||
Cost of products sold |
1,089 | 1,035 | 3,651 | 3,601 | ||||||||||||
Marketing and selling
expenses |
285 | 275 | 969 | 951 | ||||||||||||
Administrative expenses |
160 | 145 | 454 | 403 | ||||||||||||
Research and development
expenses |
25 | 24 | 73 | 68 | ||||||||||||
Other expenses / (income) |
2 | (2 | ) | 1 | (2 | ) | ||||||||||
Total costs and expenses |
1,561 | 1,477 | 5,148 | 5,021 | ||||||||||||
Earnings before interest and taxes |
275 | 259 | 1,079 | 1,029 | ||||||||||||
Interest, net |
41 | 45 | 110 | 134 | ||||||||||||
Earnings before taxes |
234 | 214 | 969 | 895 | ||||||||||||
Taxes on earnings |
68 | 68 | 247 | 284 | ||||||||||||
Net earnings |
$ | 166 | $ | 146 | $ | 722 | $ | 611 | ||||||||
Per share basic |
||||||||||||||||
Net earnings |
$ | .41 | $ | .36 | $ | 1.77 | $ | 1.49 | ||||||||
Dividends |
$ | .18 | $ | .17 | $ | .54 | $ | .51 | ||||||||
Weighted average shares
outstanding basic |
406 | 409 | 408 | 409 | ||||||||||||
Per share assuming dilution |
||||||||||||||||
Net earnings |
$ | .40 | $ | .35 | $ | 1.74 | $ | 1.48 | ||||||||
Weighted average shares
outstanding assuming dilution |
413 | 414 | 414 | 414 | ||||||||||||
2
April 30, | July 31, | |||||||
2006 | 2005 | |||||||
Current assets |
||||||||
Cash and cash equivalents |
$ | 530 | $ | 40 | ||||
Accounts receivable |
579 | 509 | ||||||
Inventories |
650 | 753 | ||||||
Other current assets |
163 | 181 | ||||||
Total current assets |
1,922 | 1,483 | ||||||
Plant assets, net of depreciation |
1,944 | 1,987 | ||||||
Goodwill |
1,997 | 1,950 | ||||||
Other intangible assets, net of amortization |
1,088 | 1,059 | ||||||
Other assets |
301 | 297 | ||||||
Total assets |
$ | 7,252 | $ | 6,776 | ||||
Current liabilities |
||||||||
Notes payable |
$ | 1,043 | $ | 451 | ||||
Payable to suppliers and others |
546 | 624 | ||||||
Accrued liabilities |
713 | 606 | ||||||
Dividend payable |
74 | 70 | ||||||
Accrued income taxes |
250 | 251 | ||||||
Total current liabilities |
2,626 | 2,002 | ||||||
Long-term debt |
1,904 | 2,542 | ||||||
Nonpension postretirement benefits |
276 | 278 | ||||||
Other liabilities, including deferred
income taxes of $360 and $342 |
666 | 684 | ||||||
Total liabilities |
5,472 | 5,506 | ||||||
Shareowners equity |
||||||||
Preferred stock; authorized 40 shares;
none issued |
| | ||||||
Capital stock, $.0375 par value; authorized
560 shares; issued 542 shares |
20 | 20 | ||||||
Additional paid-in capital |
344 | 236 | ||||||
Earnings retained in the business |
6,569 | 6,069 | ||||||
Capital stock in treasury, at cost |
(4,973 | ) | (4,832 | ) | ||||
Accumulated other comprehensive loss |
(180 | ) | (223 | ) | ||||
Total shareowners equity |
1,780 | 1,270 | ||||||
Total liabilities and shareowners equity |
$ | 7,252 | $ | 6,776 | ||||
3
Nine Months Ended | ||||||||
April 30, | May 1, | |||||||
2006 | 2005 | |||||||
Cash flows from operating activities: |
||||||||
Net earnings |
$ | 722 | $ | 611 | ||||
Non-cash charges to net earnings |
||||||||
Change in accounting method (Note g) |
(8 | ) | | |||||
Stock-based compensation |
65 | 18 | ||||||
Resolution of tax contingency (Note k) |
(60 | ) | | |||||
Depreciation and amortization |
212 | 207 | ||||||
Deferred income taxes |
5 | 23 | ||||||
Other, net |
60 | 50 | ||||||
Changes in working capital |
||||||||
Accounts receivable |
(62 | ) | (28 | ) | ||||
Inventories |
127 | 119 | ||||||
Prepaid assets |
6 | (1 | ) | |||||
Accounts payable and accrued liabilities |
(10 | ) | (117 | ) | ||||
Pension fund contributions |
(47 | ) | (53 | ) | ||||
Other |
(33 | ) | (57 | ) | ||||
Net cash provided by operating activities |
977 | 772 | ||||||
Cash flows from investing activities: |
||||||||
Purchases of plant assets |
(146 | ) | (166 | ) | ||||
Sales of plant assets |
1 | 8 | ||||||
Other, net |
7 | 7 | ||||||
Net cash used in investing activities |
(138 | ) | (151 | ) | ||||
Cash flows from financing activities: |
||||||||
Net short-term repayments |
(55 | ) | (393 | ) | ||||
Dividends paid |
(218 | ) | (205 | ) | ||||
Treasury stock purchases |
(183 | ) | (66 | ) | ||||
Treasury stock issuances |
100 | 41 | ||||||
Other |
5 | | ||||||
Net cash used in financing activities |
(351 | ) | (623 | ) | ||||
Effect of exchange rate changes on cash |
2 | 2 | ||||||
Net change in cash and cash equivalents |
490 | | ||||||
Cash and cash equivalents beginning of period |
40 | 32 | ||||||
Cash and cash equivalents end of period |
$ | 530 | $ | 32 | ||||
4
Capital Stock | Earnings | Accumulated | ||||||||||||||||||||||||||||||
Issued | In Treasury | Additional | Retained | Other | Total | |||||||||||||||||||||||||||
Paid-in | in the | Comprehensive | Shareowners | |||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Capital | Business | Income (Loss) | Equity | |||||||||||||||||||||||||
Balance at August 1, 2004 |
542 | $ | 20 | (134 | ) | $ | (4,848 | ) | $ | 264 | $ | 5,642 | $ | (204 | ) | $ | 874 | |||||||||||||||
Comprehensive income (loss) |
||||||||||||||||||||||||||||||||
Net earnings |
611 | 611 | ||||||||||||||||||||||||||||||
Foreign currency
translation adjustments |
114 | 114 | ||||||||||||||||||||||||||||||
Cash-flow hedges,
net of tax |
(15 | ) | (15 | ) | ||||||||||||||||||||||||||||
Minimum pension liability,
net of tax |
(1 | ) | (1 | ) | ||||||||||||||||||||||||||||
Other comprehensive income |
98 | 98 | ||||||||||||||||||||||||||||||
Total comprehensive income |
709 | |||||||||||||||||||||||||||||||
Dividends ($.51 per share) |
(210 | ) | (210 | ) | ||||||||||||||||||||||||||||
Treasury stock purchased |
(2 | ) | (66 | ) | (66 | ) | ||||||||||||||||||||||||||
Treasury stock issued under
management incentive and
stock option plans |
2 | 91 | (30 | ) | 61 | |||||||||||||||||||||||||||
Balance at May 1, 2005 |
542 | $ | 20 | (134 | ) | $ | (4,823 | ) | $ | 234 | $ | 6,043 | $ | (106 | ) | $ | 1,368 | |||||||||||||||
Balance at July 31, 2005 |
542 | $ | 20 | (134 | ) | $ | (4,832 | ) | $ | 236 | $ | 6,069 | $ | (223 | ) | $ | 1,270 | |||||||||||||||
Comprehensive income (loss) |
||||||||||||||||||||||||||||||||
Net earnings |
722 | 722 | ||||||||||||||||||||||||||||||
Foreign currency
translation adjustments |
44 | 44 | ||||||||||||||||||||||||||||||
Cash-flow hedges,
net of tax |
2 | 2 | ||||||||||||||||||||||||||||||
Minimum pension liability,
net of tax |
(3 | ) | (3 | ) | ||||||||||||||||||||||||||||
Other comprehensive income |
43 | 43 | ||||||||||||||||||||||||||||||
Total comprehensive income |
765 | |||||||||||||||||||||||||||||||
Dividends ($.54 per share) |
(222 | ) | (222 | ) | ||||||||||||||||||||||||||||
Treasury stock purchased |
(6 | ) | (183 | ) | (183 | ) | ||||||||||||||||||||||||||
Treasury stock issued under
management incentive and
stock option plans |
4 | 42 | 108 | 150 | ||||||||||||||||||||||||||||
Balance at April 30, 2006 |
542 | $ | 20 | (136 | ) | $ | (4,973 | ) | $ | 344 | $ | 6,569 | $ | (180 | ) | $ | 1,780 | |||||||||||||||
5
(a) | Basis of Presentation / Accounting Policies | |
The financial statements reflect all adjustments which are, in the opinion of management, necessary for a fair presentation of the results of operations, financial position, and cash flows for the indicated periods. All such adjustments are of a normal recurring nature. The accounting policies used in preparing these financial statements are consistent with those applied in the Annual Report on Form 10-K for the year ended July 31, 2005, except for the adoption of Statement of Financial Accounting Standards No. 123 (revised 2004) Share-Based Payment (SFAS No. 123R) and a change in the method of accounting for certain U.S. inventories. See Note (b) for additional information on SFAS No. 123R and Note (g) for additional information on the change in method of accounting for inventory. Certain reclassifications were made to the prior year amounts to conform with the current presentation. The results for the period are not necessarily indicative of the results to be expected for other interim periods or the full year. | ||
(b) | Stock-based Compensation | |
In December 2004, the Financial Accounting Standards Board (FASB) issued SFAS No. 123R, which requires stock-based compensation to be measured based on the grant-date fair value of the awards and the cost to be recognized over the period during which an employee is required to provide service in exchange for the award. The company adopted the provisions of SFAS No. 123R as of August 1, 2005. The company issues restricted stock, stock options, and beginning in fiscal 2006, performance restricted stock. | ||
Prior to August 1, 2005, the company accounted for stock-based compensation in accordance with Accounting Principles Board Opinion No. 25 Accounting for Stock Issued to Employees and related Interpretations. Accordingly, no compensation expense had been recognized for stock options since all options granted had an exercise price equal to the market value of the underlying stock on the grant date. SFAS No. 123R was adopted using the modified prospective transition method. Under this method, the provisions of SFAS No. 123R apply to all awards granted or modified after the date of adoption. In addition, compensation expense must be recognized for any unvested stock option awards outstanding as of the date of adoption. Prior periods have not been restated. Total pre-tax stock-based compensation recognized in the Statements of Earnings was $24 and $6 for the third quarter ended April 30, 2006 and May 1, 2005, respectively. Tax related benefits of $9 and $2 were also recognized for the third quarter of 2006 and 2005, respectively. Total pre-tax stock-based compensation recognized in the Statements of Earnings was $65 and $18 for the nine months ended April 30, 2006 and May 1, 2005, respectively. Tax related benefits of $24 and $7 were also recognized for the nine months of 2006 and 2005, respectively. Amounts recorded in fiscal 2005 primarily represent expenses related to restricted stock awards since no expense was recognized for stock options. Cash received from the exercise of stock options was |
6
$100 and $41 for the nine months ended April 30, 2006 and May 1, 2005, respectively, and is reflected in cash flows from financing activities in the Consolidated Statements of Cash Flows. | ||
Stock Plans | ||
In 2003, shareowners approved the 2003 Long-Term Incentive Plan, which authorized the issuance of 28 million shares to satisfy awards of stock options, stock appreciation rights, unrestricted stock, restricted stock (including performance restricted stock) and performance units. Approximately 3.2 million shares available under a previous long-term plan were rolled into the 2003 Long-Term Incentive Plan, making the total number of available shares approximately 31.2 million. In November 2005, shareowners approved the 2005 Long-Term Incentive Plan, which authorized the issuance of an additional 6 million shares to satisfy the same types of awards. | ||
Awards under the 2003 and 2005 Long-Term Incentive Plans may be granted to employees and directors. The term of a stock option granted under these plans may not exceed ten years from the date of grant. Options granted under these plans vest cumulatively over a three-year period at a rate of 30%, 60% and 100%, respectively. The option price may not be less than the fair market value of a share of common stock on the date of the grant. Restricted stock granted in fiscal 2004 and 2005 vests in three annual installments of 1/3 each, beginning 21/2 years from the date of grant. | ||
Pursuant to the 2003 Long-Term Incentive Plan, in July 2005 the company adopted a long-term incentive compensation program for fiscal 2006 which provides for grants of total shareowner return (TSR) performance restricted stock, EPS performance restricted stock, and time-lapse restricted stock. Initial grants made in accordance with this program were approved in September 2005. Under the program, awards of TSR performance restricted stock will be earned by comparing the companys total shareowner return during the period 2006 to 2008 to the respective total shareowner returns of companies in a performance peer group. Based upon the companys ranking in the performance peer group, a recipient of TSR performance restricted stock may earn a total award ranging from 0% to 200% of the initial grant. Awards of EPS performance restricted stock will be earned based upon the companys achievement of annual earnings per share goals. During the period 2006 to 2008, a recipient of EPS performance restricted stock may earn a total award ranging from 0% to 100% of the initial grant. Awards of time-lapse restricted stock will vest ratably over the three-year period. Annual stock option grants are not part of the long-term incentive compensation program for 2006. However, stock options may still be granted on a selective basis under the 2003 and 2005 Long-Term Incentive Plans. |
7
SFAS No. 123R requires disclosure of pro forma information for periods prior to the
adoption. The pro forma disclosures are based on the fair value of awards at the grant
date, amortized to expense over the service period. The following table illustrates the
effect on net earnings and earnings per share if the company had applied the fair value
recognition provisions of SFAS No. 123R to stock-based employee compensation. |
Three Months Ended | Nine Months Ended | |||||||
May 1, 2005 | May 1, 2005 | |||||||
Net earnings, as reported |
$ | 146 | $ | 611 | ||||
Add: Stock-based employee
compensation expense included
in reported net earnings, net of
related tax effects 1 |
4 | 11 | ||||||
Deduct: Total stock-based employee
compensation expense determined
under fair value based method for
all awards, net of related tax effects |
(12 | ) | (33 | ) | ||||
Pro forma net earnings |
$ | 138 | $ | 589 | ||||
Earnings per share: |
||||||||
Basic-as reported |
$ | .36 | $ | 1.49 | ||||
Basic-pro forma |
$ | .34 | $ | 1.44 | ||||
Diluted-as reported |
$ | .35 | $ | 1.48 | ||||
Diluted-pro forma |
$ | .33 | $ | 1.42 | ||||
1 | Represents restricted stock expense. | |
The following table summarizes stock option activity as of April 30, 2006: |
Weighted-Average | Aggregate | |||||||||||||||
Weighted-Average | Remaining | Intrinsic | ||||||||||||||
(options in thousands) | Options | Exercise Price | Contractual Life | Value | ||||||||||||
Outstanding at July 31, 2005 |
39,548 | $ | 27.85 | |||||||||||||
Granted |
212 | $ | 29.82 | |||||||||||||
Exercised |
(3,705 | ) | $ | 26.93 | ||||||||||||
Terminated |
(685 | ) | $ | 28.03 | ||||||||||||
Outstanding at April 30, 2006 |
35,370 | $ | 28.03 | 5.8 | $ | 145 | ||||||||||
Exercisable at April 30, 2006 |
26,603 | $ | 28.48 | 5.1 | $ | 97 | ||||||||||
8
Weighted-Average | ||||||||
Grant-Date | ||||||||
(restricted stock in thousands) | Shares | Fair Value | ||||||
Nonvested at July 31, 2005 |
2,447 | $ | 26.51 | |||||
Granted |
1,707 | $ | 29.38 | |||||
Vested |
(383 | ) | $ | 26.54 | ||||
Forfeited |
(261 | ) | $ | 27.40 | ||||
Nonvested at April 30, 2006 |
3,510 | $ | 27.84 | |||||
The fair value of time-lapse restricted stock and EPS performance restricted stock is determined based on the number of shares granted and the quoted price of the companys stock at the date of grant. Time-lapse restricted stock granted in fiscal 2004 and 2005 is expensed on a graded-vesting basis. Time-lapse restricted stock granted in fiscal 2006 is expensed on a straight-line basis over the vesting period, except for awards issued to retirement-eligible participants, which are expensed on an accelerated basis. EPS performance restricted stock is expensed on a graded-vesting basis, except for awards issued to retirement-eligible participants, which are expensed on an accelerated basis. | ||
As of April 30, 2006, total remaining unearned compensation related to nonvested time-lapse restricted stock and EPS performance restricted stock was $54, which will be amortized over the weighted-average remaining service period of 2.1 years. The fair value of restricted stock vested during the nine months ended April 30, 2006 was $12. | ||
In 2006, the company granted approximately 1.7 million shares of TSR performance restricted stock with a grant-date fair value of $28.73. Approximately 1.6 million shares were outstanding at April 30, 2006. The fair value of TSR performance restricted stock is estimated at the grant date using a Monte Carlo simulation. Expense is recognized on a straight-line basis over the service period. As of April 30, 2006, total remaining unearned compensation related to TSR performance restricted stock was $36, which will be amortized over the weighted-average remaining service period of 2.4 years. |
9
Employees can elect to defer all types of restricted stock awards. These awards are classified as liabilities because of the possibility that they may be settled in cash. The fair value is adjusted quarterly. | ||
Prior to the adoption of SFAS No. 123R, the company presented the tax benefits of deductions resulting from the exercise of stock options as cash flows from operating activities in the Consolidated Statements of Cash Flows. SFAS No. 123R requires the cash flows from the excess tax benefits the company realizes on the exercise of stock options to be presented as cash flows from financing activities. The excess tax benefits on the exercise of stock options presented as cash flows from financing activities in the nine-month period ended April 30, 2006 were $5 and as cash flows from operating activities in the nine-month period ended May 1, 2005 were $3. | ||
(c) | Goodwill and Intangible Assets | |
The following table sets forth balance sheet information for intangible assets, excluding goodwill, subject to amortization and intangible assets not subject to amortization: |
April 30, 2006 | July 31, 2005 | |||||||||||||||
Carrying | Accumulated | Carrying | Accumulated | |||||||||||||
Amount | Amortization | Amount | Amortization | |||||||||||||
Intangible assets subject to amortization1: |
||||||||||||||||
Trademarks |
$ | 6 | $ | (5 | ) | $ | 6 | $ | (4 | ) | ||||||
Other |
17 | (8 | ) | 17 | (7 | ) | ||||||||||
Total |
$ | 23 | $ | (13 | ) | $ | 23 | $ | (11 | ) | ||||||
Intangible assets not subject to amortization: |
||||||||||||||||
Trademarks |
$ | 1,071 | $ | 1,042 | ||||||||||||
Pension |
4 | 3 | ||||||||||||||
Other |
3 | 2 | ||||||||||||||
Total |
$ | 1,078 | $ | 1,047 | ||||||||||||
1 | Amortization related to these assets was approximately $1 for the nine-month periods ended April 30, 2006 and May 1, 2005. The estimated aggregated amortization expense for each of the five succeeding fiscal years is less than $2 per year. Asset useful lives range from five to thirty-four years. |
10
U.S. Soup, | ||||||||||||||||||||
Sauces and | Baking and | International | ||||||||||||||||||
Beverages | Snacking | Soup and Sauces | Other | Total | ||||||||||||||||
Balance at July 31, 2005 |
$ | 428 | $ | 602 | $ | 769 | $ | 151 | $ | 1,950 | ||||||||||
Foreign currency
translation adjustment |
| 3 | 37 | | 40 | |||||||||||||||
Other |
| 7 | | | 7 | |||||||||||||||
Balance at April 30, 2006 |
$ | 428 | $ | 612 | $ | 806 | $ | 151 | $ | 1,997 | ||||||||||
(d) | Comprehensive Income | |
Total comprehensive income comprises net earnings, net foreign currency translation adjustments, minimum pension liability adjustments, and net unrealized gains (losses) on cash-flow hedges. | ||
Total comprehensive income for the three months ended April 30, 2006 and May 1, 2005, was $207 and $138, respectively. Total comprehensive income for the nine months ended April 30, 2006 and May 1, 2005, was $765 and $709, respectively. | ||
The balance of Accumulated other comprehensive loss as of April 30, 2006 and May 1, 2005 consisted of the following components: |
April 30, | May 1, | |||||||
2006 | 2005 | |||||||
Foreign currency translation adjustments |
$ | 79 | $ | 107 | ||||
Cash-flow hedges, net of tax |
(18 | ) | (16 | ) | ||||
Minimum pension liability, net of tax1 |
(241 | ) | (197 | ) | ||||
Total Accumulated other comprehensive loss |
$ | (180 | ) | $ | (106 | ) | ||
1 | Includes a tax benefit of $142 as of April 30, 2006 and $112 as of May 1, 2005. |
(e) | 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 include the incremental effect of stock options and restricted stock programs, except when such effect would be antidilutive. Stock options to purchase 5 million and 11 million shares of capital stock for the three-month periods ended April 30, 2006 and May 1, 2005, respectively, and 5 million and 17 million shares of capital stock for the nine-month periods ended April 30, 2006 and May 1, 2005, respectively, were not included in the calculation of diluted |
11
earnings per share because the exercise price of the stock options exceeded the average market price of the capital stock and therefore, the effect would be antidilutive. | ||
(f) | Segment Information | |
Campbell Soup Company, together with its consolidated subsidiaries, is a global manufacturer and marketer of high quality, branded convenience food products. The company is organized and reports the results of operations in the following segments: U.S. Soup, Sauces and Beverages, Baking and Snacking, International Soup and Sauces, and Other. | ||
The U.S. Soup, Sauces and Beverages segment includes the following retail businesses: Campbells condensed and ready-to-serve soups; Swanson broth and canned poultry; Prego pasta sauce; Pace Mexican sauce; Campbells Chunky chili; Campbells canned pasta, gravies, and beans; Campbells Supper Bakes meal kits; V8 juice and juice drinks; and Campbells tomato juice. | ||
The Baking and Snacking segment includes the following businesses: Pepperidge Farm cookies, crackers, bakery and frozen products in U.S. retail; Arnotts biscuits in Australia and Asia Pacific; and Arnotts salty snacks in Australia. | ||
The International Soup and Sauces segment includes the soup, sauce and beverage businesses outside of the United States, including Europe, Mexico, Latin America, the Asia Pacific region and the retail business in Canada. | ||
The balance of the portfolio reported in Other includes Godiva Chocolatier worldwide and the companys Away From Home operations, which represent the distribution of products such as soup, specialty entrees, beverage products, other prepared foods and Pepperidge Farm products through various food service channels in the United States and Canada. | ||
Accounting policies for measuring segment assets and earnings before interest and taxes are substantially consistent with those described in the companys 2005 Annual Report on Form 10-K, except for the adoption of SFAS No. 123R described in Note (b) and the change in method of accounting for certain inventories described in Note (g). The company evaluates segment performance before interest and taxes. Away From Home products are principally produced by the tangible assets of the companys other segments, except for Stockpot soups, which are produced in a separate facility, and certain other products, which are produced under contract manufacturing agreements. Accordingly, with the exception of the designated Stockpot facility, plant assets are not allocated to the Away From Home operations. Depreciation, however, is allocated to Away From Home based on production hours. |
12
Earnings | Depreciation | |||||||||||||||
Before Interest | and | Capital | ||||||||||||||
Three Months Ended | Net Sales | and Taxes | Amortization | Expenditures | ||||||||||||
U.S. Soup, Sauces and
Beverages |
$ | 713 | $ | 171 | $ | 23 | $ | 14 | ||||||||
Baking and Snacking |
422 | 35 | 25 | 14 | ||||||||||||
International Soup and
Sauces |
430 | 70 | 13 | 6 | ||||||||||||
Other |
271 | 27 | 7 | 17 | ||||||||||||
Corporate 1 |
| (28 | ) | 7 | 10 | |||||||||||
Total |
$ | 1,836 | $ | 275 | $ | 75 | $ | 61 |
Earnings | Depreciation | |||||||||||||||
Before Interest | and | Capital | ||||||||||||||
Nine Months Ended | Net Sales | and Taxes2 | Amortization | Expenditures | ||||||||||||
U.S. Soup, Sauces and
Beverages |
$ | 2,701 | $ | 701 | $ | 66 | $ | 33 | ||||||||
Baking and Snacking |
1,309 | 125 | 67 | 30 | ||||||||||||
International Soup and
Sauces |
1,333 | 206 | 38 | 19 | ||||||||||||
Other |
884 | 122 | 21 | 39 | ||||||||||||
Corporate 1 |
| (75 | ) | 20 | 25 | |||||||||||
Total |
$ | 6,227 | $ | 1,079 | $ | 212 | $ | 146 |
13
Earnings | Depreciation | |||||||||||||||
Before Interest | and | Capital | ||||||||||||||
Three Months Ended | Net Sales | and Taxes | Amortization | Expenditures | ||||||||||||
U.S. Soup, Sauces and
Beverages |
$ | 627 | $ | 152 | $ | 22 | $ | 20 | ||||||||
Baking and Snacking |
421 | 36 | 23 | 22 | ||||||||||||
International Soup and
Sauces |
435 | 59 | 13 | 11 | ||||||||||||
Other |
253 | 27 | 6 | 4 | ||||||||||||
Corporate 1 |
| (15 | ) | 7 | 5 | |||||||||||
Total |
$ | 1,736 | $ | 259 | $ | 71 | $ | 62 |
Earnings | Depreciation | |||||||||||||||
Before Interest | and | Capital | ||||||||||||||
Nine Months Ended | Net Sales | and Taxes | Amortization | Expenditures | ||||||||||||
U.S. Soup, Sauces and
Beverages |
$ | 2,577 | $ | 643 | $ | 64 | $ | 58 | ||||||||
Baking and Snacking |
1,303 | 129 | 65 | 47 | ||||||||||||
International Soup and
Sauces |
1,353 | 184 | 38 | 29 | ||||||||||||
Other |
817 | 121 | 20 | 11 | ||||||||||||
Corporate 1 |
| (48 | ) | 20 | 21 | |||||||||||
Total |
$ | 6,050 | $ | 1,029 | $ | 207 | $ | 166 |
1 | Represents unallocated corporate expenses. | |
2 | Contributions to earnings before interest and taxes by segment include the effect of a $13 benefit due to a change in the method of accounting for certain U.S. inventories from the LIFO method to the average cost method as follows: U.S. Soup, Sauces and Beverages $8 and Baking and Snacking $5. |
14
(g) | Inventories |
April 30, 2006 | July 31, 2005 | |||||||
Raw materials, containers and supplies |
$ | 218 | $ | 278 | ||||
Finished products |
432 | 488 | ||||||
Less: Adjustment to LIFO valuation
method |
| (13 | ) | |||||
$ | 650 | $ | 753 | |||||
As of August 1, 2005, the company changed the method of accounting for certain U.S. inventories from the last in, first out (LIFO) method to the average cost method. Approximately 55% of inventory in 2005 was accounted for on the LIFO method of determining cost. | ||
The company believes that the average cost method of accounting for U.S. inventories is preferable and will improve financial reporting by better matching revenues and expenses as average cost reflects the physical flow of inventory and current cost. In addition, the change from LIFO to average cost will enhance the comparability of the companys financial statements with peer companies since the average cost method is consistent with methods used in the industry. The company does not use the LIFO valuation method for tax purposes. The impact of the change was a pre-tax $13 benefit ($8 after tax or $.02 per share) recorded in the first quarter. Prior periods were not restated since the impact of the change on previously issued financial statements was not considered material. | ||
(h) | Accounting for Derivative Instruments | |
The company utilizes certain derivative financial instruments to enhance its ability to manage risk including interest rate, foreign currency, commodity and certain equity-linked employee compensation exposures that 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. | ||
All derivatives are recognized on the balance sheet at fair value. On the date the derivative contract is entered into, the company designates the derivative as (1) a hedge of the fair value of a recognized asset or liability or of an unrecognized firm commitment (fair-value hedge), (2) a hedge of a forecasted transaction or of the variability of cash flows to be received or paid related to a recognized asset or liability (cash-flow hedge), (3) a foreign-currency fair-value or cash-flow hedge (foreign-currency hedge), or (4) a hedge of a net investment in a foreign operation. Some derivatives may also be considered natural hedging instruments (changes in fair value are recognized to act as economic offsets to changes in fair value of the underlying hedged item and do not qualify for hedge accounting under SFAS No. 133). |
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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 utilizes interest rate swap agreements to minimize worldwide financing costs and to achieve a targeted ratio of variable-rate versus fixed-rate debt. | ||
Fixed-to-variable interest rate swaps are accounted for as fair-value hedges. Gains and losses on these instruments are recorded in earnings as adjustments to interest expense, offsetting gains and losses on the hedged item. The notional amounts of all outstanding fair-value interest rate swaps at April 30, 2006 totaled $875 with a maximum maturity date of October 2013. The fair value of such instruments was a loss of $29 as of April 30, 2006. | ||
Foreign Currency 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, including subsidiary financing transactions. The company utilizes foreign currency forward purchase and sale contracts, and cross-currency swaps in order to manage the volatility associated with foreign currency purchases and sales and certain intercompany transactions in the normal course of business. | ||
Qualifying foreign exchange forward and cross-currency swap contracts are accounted for as cash-flow hedges when the hedged item is a forecasted transaction, or when future cash flows related to a recognized asset or liability are expected to be received or paid. The effective portion of the changes in fair value on these instruments is recorded in Accumulated other comprehensive income (loss) and is reclassified into the Statements of Earnings on the same line item and in the same period or periods in which the hedged transaction affects earnings. The assessment of effectiveness for contracts is based on changes in the spot rates. The fair value of these instruments was a loss of $197 at April 30, 2006. | ||
Qualifying foreign exchange forward contracts are accounted for as fair-value hedges when the hedged item is a recognized asset, liability or firm commitment. There were no such fair-value contracts at April 30, 2006. | ||
The company also enters into certain foreign exchange forward and variable-to-variable cross-currency swap contracts 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 expenses/(income), as an offset to gains (losses) on the underlying transactions. The fair value of these instruments was a loss of $25 at April 30, 2006. | ||
Foreign exchange forward contracts typically have maturities of less than eighteen months. Cross-currency swap contracts mature in 2006 through 2014. Principal currencies include the Australian dollar, British pound, Canadian dollar, euro, Japanese yen, Mexican peso and Swedish krona. |
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As of April 30, 2006, the accumulated derivative net loss in other comprehensive income for cash-flow hedges, including the foreign exchange forward and cross-currency contracts, forward starting swap contracts, and treasury lock agreements was $18, net of tax. As of May 1, 2005, the accumulated derivative net loss in other comprehensive income was $16, net of tax. Reclassifications from Accumulated other comprehensive income (loss) into the Statements of Earnings during the quarter ended April 30, 2006 were not material. Reclassifications during the remainder of fiscal year 2006 are not expected to be material. At April 30, 2006, the longest maturity date of any cash-flow hedge was August 2013. |
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 & Poors 500 Index, the total return of the companys capital stock and the total return of the Puritan Fund. The company pays a variable interest rate and receives the equity returns under these instruments. The notional value of the equity swap contracts, which mature in 2007, was $54 at April 30, 2006. These instruments are not designated as accounting hedges. Gains and losses are recorded in the Statements of Earnings. The fair value of these contracts at April 30, 2006 was not material. | ||
(i) | Restructuring | |
A restructuring charge of $32 ($22 after tax) was recorded in the fourth quarter 2004 for severance and employee benefit costs associated with a worldwide reduction in workforce and with the implementation of a sales and logistics realignment in Australia. These programs are part of cost savings initiatives designed to improve the companys operating margins and asset utilization. Approximately 400 positions were eliminated under the reduction in workforce program, resulting in a restructuring charge of $23. The reductions represented the elimination of layers of management, elimination of redundant positions due to the realignment of operations in North America, and reorganization of the U.S. sales force. The majority of the terminations occurred in the fourth quarter 2004. | ||
The sales and logistics realignment in Australia involves the conversion of a direct store delivery system to a central warehouse system, outsourcing of warehouse operations, and the consolidation of the field sales organization. As a result of this program, over 200 positions will be eliminated. A restructuring charge of $9 was recorded for this program. | ||
The majority of the terminations occurred in 2005. A summary of restructuring reserves at April 30, 2006 and related activity is as follows: |
Accrued | Accrued | |||||||||||
Balance at | Cash | Balance at | ||||||||||
July 31, 2005 | Payments | April 30, 2006 | ||||||||||
Severance pay and benefits |
$ | 4 | (2 | ) | $ | 2 |
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(j) | Pension and Postretirement Medical Benefits | |
The company sponsors certain defined benefit plans and postretirement medical benefit plans for employees. Components of benefit expense were as follows: |
Three Months Ended | Pension | Postretirement | ||||||||||||||
April 30, 2006 | May 1, 2005 | April 30, 2006 | May 1, 2005 | |||||||||||||
Service cost |
$ | 15 | $ | 13 | $ | 1 | $ | | ||||||||
Interest cost |
28 | 28 | 5 | 5 | ||||||||||||
Expected return on plan
assets |
(41 | ) | (39 | ) | | | ||||||||||
Amortization of prior service
cost |
| 2 | (1 | ) | (2 | ) | ||||||||||
Recognized net actuarial loss |
11 | 7 | 1 | 1 | ||||||||||||
Net periodic benefit expense |
$ | 13 | $ | 11 | $ | 6 | $ | 4 | ||||||||
Nine Months Ended | Pension | Postretirement | ||||||||||||||
April 30, 2006 | May 1, 2005 | April 30, 2006 | May 1, 2005 | |||||||||||||
Service cost |
$ | 43 | $ | 41 | $ | 3 | $ | 1 | ||||||||
Interest cost |
84 | 85 | 15 | 15 | ||||||||||||
Expected return on plan
assets |
(122 | ) | (117 | ) | | | ||||||||||
Amortization of prior service
cost |
1 | 6 | (2 | ) | (5 | ) | ||||||||||
Recognized net actuarial loss |
32 | 19 | 3 | 1 | ||||||||||||
Net periodic benefit expense |
$ | 38 | $ | 34 | $ | 19 | $ | 12 | ||||||||
In the first quarter 2006, the company made a $35 voluntary contribution to a U.S. pension plan. Additional contributions to the U.S. pension plans are not expected this fiscal year. Contributions of $12 were made to the non-U.S. plans as of April 30, 2006. | ||
(k) | Contingencies | |
On March 30, 1998, the company effected a spinoff of several of its non-core businesses to Vlasic Foods International Inc. (VFI). VFI and several of its affiliates (collectively, Vlasic) commenced cases under Chapter 11 of the Bankruptcy Code on January 29, 2001 in the United States Bankruptcy Court for the District of Delaware. Vlasics Second Amended Joint Plan of Distribution under Chapter 11 (the Plan) was confirmed by an order of the Bankruptcy Court dated November 16, 2001, and became effective on or about November 29, 2001. The Plan provides for the assignment of various causes of action allegedly belonging to the Vlasic estates, including claims against the company allegedly arising from the spinoff, to VFB L.L.C., a limited liability company (VFB) whose membership interests are to be distributed under the Plan to Vlasics general unsecured creditors. | ||
On February 19, 2002, VFB commenced a lawsuit against the company and several of its subsidiaries in the United States District Court for the District of Delaware |
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alleging, among other things, fraudulent conveyance, illegal dividends and breaches of fiduciary duty by Vlasic directors alleged to be under the companys control. The lawsuit seeks to hold the company liable in an amount necessary to satisfy all unpaid claims against Vlasic (which VFB estimates in the amended complaint to be $200), plus unspecified exemplary and punitive damages. | ||
Following a trial on the merits, on September 13, 2005, the District Court issued Post-Trial Findings of Fact and Conclusions of Law, ruling in favor of the company and against VFB on all claims. The Court ruled that VFB failed to prove that the spinoff was a constructive or actual fraudulent transfer. The Court also rejected VFBs claim of breach of fiduciary duty, VFBs claim that VFI was an alter ego of the company, and VFBs claim that the spinoff should be deemed an illegal dividend. On November 1, 2005, VFB appealed the decision to the United States Court of Appeals for the Third Circuit. While the ultimate disposition of complex litigation is inherently difficult to access, the company continues to believe this action is without merit and is defending the case vigorously. | ||
The company received an Examination Report from the Internal Revenue Service (IRS) on December 23, 2002, which included a challenge to the treatment of gains and interest deductions claimed in the companys fiscal 1995 federal income tax return, relating to transactions involving government securities. If the proposed adjustment had been upheld, it would have required the company to pay a net amount of over $100 in taxes, accumulated interest and penalties. The company had maintained a reserve for a portion of this contingency. In November 2005, the company negotiated a settlement of this matter with the IRS. As a result of the settlement in the first quarter, the company adjusted tax reserves and recorded a $47 tax benefit. In addition, the company reduced interest expense and accrued interest payable by $21 and adjusted deferred tax expense by $8 ($13 after tax). The aggregate non-cash impact of the settlement on net earnings was $60, or $.14 per share. The settlement will not have a material impact on the companys consolidated cash flow. | ||
The company is a party to other legal proceedings and claims, tax issues and environmental matters arising out of the normal course of business. | ||
Management assesses the probability of loss for all legal proceedings and claims, tax issues and environmental matters and has recognized liabilities for such contingencies, as appropriate. Although the results of these matters cannot be predicted with certainty, in managements opinion, the final outcome of legal proceedings and claims, tax issues and environmental matters will not have a material adverse effect on the consolidated results of operations or financial condition of the company. |
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(l) | Supplemental Cash Flow Information | |
Other cash used in operating activities for the nine-month periods is comprised of the following: |
April 30, 2006 | May 1, 2005 | |||||||
Receipts /(Payments) for hedging activities |
$ | 7 | $ | (22 | ) | |||
Benefit related payments |
(39 | ) | (38 | ) | ||||
Other |
(1 | ) | 3 | |||||
$ | (33 | ) | $ | (57 | ) | |||
(m) | Recently Issued Accounting Pronouncements | |
In November 2004, SFAS No. 151 Inventory Costs an amendment of ARB No. 43, Chapter 4 was issued. SFAS No. 151 is the result of efforts to converge U.S. accounting standards for inventories with International Accounting Standards. SFAS No. 151 requires abnormal amounts of idle facility expense, freight, handling costs and spoilage to be recognized as current-period charges. It also requires that allocation of fixed production overheads to the costs of conversion be based on the normal capacity of the production facilities. SFAS No. 151 was effective for inventory costs incurred during fiscal years beginning after June 15, 2005. The adoption of SFAS No. 151 did not have a material impact on the financial statements. | ||
In October 2004, the American Jobs Creation Act (the AJCA) was signed into law. The AJCA provides for a deduction of 85% of certain non-U.S. earnings that are repatriated, as defined by the AJCA, and a phased-in tax deduction related to profits from domestic manufacturing activities. In December 2004, the FASB issued FASB Staff Position FAS 109-1 and 109-2 to address the accounting and disclosure requirements related to the AJCA. In 2006, the company finalized its plan to repatriate earnings from non-U.S. subsidiaries and as a result recorded incremental tax expense of $10 associated with $235 in dividends. The total amount expected to be repatriated under the AJCA is $435 and the related tax cost is $17. In 2005, the company recorded $7 in tax expense for $200 of the earnings to be repatriated. | ||
In March 2005, the FASB issued FASB Interpretation No. 47 (FIN 47) Accounting for Conditional Asset Retirement Obligations, an Interpretation of FASB Statement No. 143. This Interpretation clarifies that a conditional retirement obligation refers to a legal obligation to perform an asset retirement activity in which the timing and (or) method of settlement are conditional on a future event that may or may not be within the control of the entity. The obligation to perform the asset retirement activity is unconditional even though uncertainty exists about the timing and (or) method of settlement. Accordingly, an entity is required to recognize a liability for the fair value of a conditional asset retirement obligation if the fair value of the liability can be reasonably estimated. The liability should be recognized when incurred, generally upon acquisition, construction or development of the asset. FIN |
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47 is effective no later than the end of the fiscal years ending after December 15, 2005. The company is in the process of evaluating the impact of FIN 47 but does not expect the adoption to have a material impact on the financial statements. | ||
(n) | Share Repurchase Plan | |
In November 2005, the company announced that the Board of Directors authorized the purchase of up to $600 of company stock through fiscal 2008. The company purchased 3.1 million shares at a cost of $95 under this program during the nine-month period ended April 30, 2006. In addition, the company announced that it will continue to purchase shares, under separate authorization, to offset the impact of dilution from shares issued under incentive compensation plans. |
21
| As noted above, the company adopted SFAS No. 123R in 2006. Had all stock-based compensation been expensed in the year-ago period, net earnings would have been $589 million and earnings per share would have been $1.42 (See Note (b) to the Consolidated Financial Statements); | ||
| In the first quarter of 2006, the company recorded a non-cash tax benefit of $47 million resulting from the favorable resolution of a U.S. tax contingency related to transactions in government securities in a prior period. In addition, the company reduced interest expense and accrued interest payable by $21 million and adjusted deferred tax expense by $8 million ($13 million after tax). The aggregate non-cash impact of the settlement on net earnings was $60 million, or $.14 per share. (See Note (k) to the Consolidated Financial Statements); | ||
| In the first quarter of 2006, a $13 million pre-tax gain was recognized due to a change in the method of accounting for certain U.S. inventories from the LIFO method to the average cost method. The impact on net earnings was $8 million, or $.02 per share. |
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Prior periods were not restated since the impact of the change on previously issued financial statements was not considered material. (See Note (g) to the Consolidated Financial Statements); and | |||
| In the first quarter of 2006, incremental tax expense of $8 million, or $.02 per share, was recognized associated with one-time incremental dividends of $225 million as the company finalized its plan in the first quarter to repatriate earnings from non-U.S. subsidiaries under the provisions of the American Jobs Creation Act (the AJCA). |
(millions) | ||||||||||||
2006 | 2005 | % Change | ||||||||||
U.S. Soup, Sauces and
Beverages |
$ | 713 | $ | 627 | 14 | % | ||||||
Baking and Snacking |
422 | 421 | | |||||||||
International Soup and Sauces |
430 | 435 | (1 | ) | ||||||||
Other |
271 | 253 | 7 | |||||||||
$ | 1,836 | $ | 1,736 | 6 | % | |||||||
U.S. Soup, | Baking | International | ||||||||||||||||||
Sauces and | and | Soup and | ||||||||||||||||||
Beverages | Snacking | Sauces | Other | Total | ||||||||||||||||
Volume and Mix |
8 | % | | % | 1 | % | 7 | % | 4 | % | ||||||||||
Price and Sales Allowances |
6 | 3 | | 2 | 3 | |||||||||||||||
Decreased / (Increased)
Promotional Spending 1 |
| | 2 | (1 | ) | 1 | ||||||||||||||
Currency |
| (3 | ) | (4 | ) | (1 | ) | (2 | ) | |||||||||||
14 | % | | % | (1 | )% | 7 | % | 6 | % | |||||||||||
1 | Represents revenue reductions from trade promotion and consumer coupon redemption programs. |
23
24
(millions) | ||||||||||||
2006 | 2005 | % Change | ||||||||||
U.S. Soup, Sauces and
Beverages |
$ | 171 | $ | 152 | 13 | % | ||||||
Baking and Snacking |
35 | 36 | (3 | ) | ||||||||
International Soup and Sauces |
70 | 59 | 19 | |||||||||
Other |
27 | 27 | | |||||||||
Subtotal |
303 | 274 | 11 | |||||||||
Corporate |
(28 | ) | (15 | ) | ||||||||
$ | 275 | $ | 259 | 6 | % | |||||||
25
(millions) | ||||||||||||
2006 | 2005 | % Change | ||||||||||
U.S. Soup, Sauces and
Beverages |
$ | 2,701 | $ | 2,577 | 5 | % | ||||||
Baking and Snacking |
1,309 | 1,303 | | |||||||||
International Soup and Sauces |
1,333 | 1,353 | (1 | ) | ||||||||
Other |
884 | 817 | 8 | |||||||||
$ | 6,227 | $ | 6,050 | 3 | % | |||||||
26
U.S. Soup, | Baking | International | ||||||||||||||||||
Sauces and | and | Soup and | ||||||||||||||||||
Beverages | Snacking | Sauces | Other | Total | ||||||||||||||||
Volume and Mix |
(1 | )% | (1 | )% | | % | 7 | % | | % | ||||||||||
Price and Sales Allowances |
6 | 3 | | 2 | 4 | |||||||||||||||
Decreased/(Increased)
Promotional Spending1 |
| (1 | ) | 1 | | | ||||||||||||||
Currency |
| (1 | ) | (2 | ) | (1 | ) | (1 | ) | |||||||||||
5 | % | | % | (1 | )% | 8 | % | 3 | % | |||||||||||
1 | Represents revenue reductions from trade promotion and consumer coupon redemption programs. |
27
28
(millions) | ||||||||||||
2006 | 2005 | % Change | ||||||||||
U.S. Soup, Sauces and
Beverages |
$ | 701 | $ | 643 | 9 | % | ||||||
Baking and Snacking |
125 | 129 | (3 | ) | ||||||||
International Soup and
Sauces |
206 | 184 | 12 | |||||||||
Other |
122 | 121 | 1 | |||||||||
Subtotal |
1,154 | 1,077 | 7 | |||||||||
Corporate |
(75 | ) | (48 | ) | ||||||||
$ | 1,079 | $ | 1,029 | 5 | % | |||||||
29
30
31
32
| the impact of strong competitive response to the companys efforts to leverage its brand power with product innovation, promotional programs and new advertising, and of changes in consumer demand for the companys products; | ||
| the risks in the marketplace associated with trade and consumer acceptance of product improvements, shelving initiatives and new product introductions; | ||
| the companys ability to achieve sales and earnings forecasts, which are based on assumptions about sales volume and product mix, and the impact of marketing and pricing actions; | ||
| the companys ability to realize projected cost savings and benefits, including those contemplated by restructuring programs and other cost-savings initiatives; | ||
| the companys ability to successfully manage changes to its business processes, including selling, distribution, production capacity, information management systems and the integration of acquisitions; | ||
| the increased significance of certain of the companys key trade customers; | ||
| the difficulty of predicting changes in customer inventory levels and access to shelf space; | ||
| the impact of fluctuations in the supply and cost of energy and raw materials; | ||
| the risks associated with portfolio changes and completion of acquisitions and divestitures; | ||
| the uncertainties of litigation described from time to time in the companys Securities and Exchange Commission filings; | ||
| the impact of changes in currency exchange rates, tax rates, interest rates, equity markets, inflation rates, recession and other external factors; and |
33
| the impact of unforeseen business disruptions in one or more of the companys markets due to political instability, civil disobedience, armed hostilities, natural disasters or other calamities. |
34
35
a. | Evaluation of Disclosure Controls and Procedures | ||
The company, under the supervision and with the participation of its management, including the President and Chief Executive Officer and the Senior Vice President and Chief Financial Officer, has evaluated the effectiveness of the companys disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act)) as of April 30, 2006 (the Evaluation Date). Based on such evaluation, the President and Chief Executive Officer and the Senior Vice President and Chief Financial Officer have concluded that, as of the Evaluation Date, the companys disclosure controls and procedures are effective, and are reasonably designed to ensure that all material information relating to the company (including its consolidated subsidiaries) required to be included in the companys reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission. | |||
b. | Changes in Internal Controls | ||
During the quarter ended April 30, 2006, there were no changes in the companys internal control over financial reporting that materially affected, or are reasonably likely to materially affect, such internal control over financial reporting. |
36
37
Approximate | ||||||||||||||||
Dollar Value of | ||||||||||||||||
Total Number of | Shares that May | |||||||||||||||
Total | Shares Purchased | Yet Be Purchased | ||||||||||||||
Number | Average | as Part of Publicly | Under the Plans | |||||||||||||
of Shares | Price Paid | Announced Plans | or Programs | |||||||||||||
Period | Purchased(1) | Per Share(2) | or Programs(3) | ($ in millions)(3) | ||||||||||||
1/30/06 - 2/28/06 |
960,692 | (4) | $ | 29.94 | (4) | 800,000 | $ | 526 | ||||||||
3/1/06 - 3/31/06 |
866,576 | (5) | $ | 31.59 | (5) | 650,000 | $ | 505 | ||||||||
4/1/06 - 4/30/06 |
82,815 | (6) | $ | 32.40 | (6) | 0 | $ | 505 | ||||||||
Total |
1,910,083 | $ | 30.79 | 1,450,000 |
(1) | Includes (i) 370,000 shares repurchased in open-market transactions to offset the dilutive impact to existing shareowners of issuances under the companys stock compensation plans, and (ii) 90,083 shares owned and tendered by employees to satisfy tax withholding obligations on the vesting of restricted shares. Unless otherwise indicated, shares owned and tendered by employees to satisfy tax withholding obligations were purchased at the closing price of the companys shares on the date of vesting. | |
(2) | Average price paid per share is calculated on a settlement basis and excludes commission. | |
(3) | On November 21, 2005, the company announced that its Board of Directors authorized the purchase of up to $600 million of company capital stock on the open market or through privately negotiated transactions through the end of fiscal 2008. | |
(4) | Includes (i) 160,000 shares repurchased in open-market transactions at an average price of $29.94 to offset the dilutive impact to existing shareowners of issuances under the companys stock compensation plans, and (ii) 692 shares owned and tendered by employees at an average price per share of $30.37 to satisfy tax withholding requirements on the vesting of restricted shares. | |
(5) | Includes (i) 210,000 shares repurchased in open-market transactions at an average price of $31.77 to offset the dilutive impact to existing shareowners of issuances under the companys stock compensation plans, and (ii) 6,576 shares owned and tendered by employees at an average price per share of $29.97 to satisfy tax withholding requirements on the vesting of restricted shares. | |
(6) | Represents shares owned and tendered by employees to satisfy tax withholding requirements on the vesting of restricted shares. |
38
3(i)
|
Campbells By-Laws, as amended through May 25, 2006, were filed with a Form 8-K on May 26, 2006, and are incorporated herein by reference. | |
31(i)
|
Certification of Douglas R. Conant pursuant to Rule 13a-14(a). | |
31(ii)
|
Certification of Robert A. Schiffner pursuant to Rule 13a-14(a). | |
32(i)
|
Certification of Douglas R. Conant pursuant to 18 U.S.C. Section 1350. | |
32(ii)
|
Certification of Robert A. Schiffner pursuant to 18 U.S.C. Section 1350. |
39
CAMPBELL SOUP COMPANY | ||||||
Date: June 7, 2006
|
By: | /s/ Robert A. Schiffner | ||||
Robert A. Schiffner | ||||||
Senior Vice President and | ||||||
Chief Financial Officer | ||||||
By: | /s/ Ellen Oran Kaden | |||||
Ellen Oran Kaden | ||||||
Senior Vice President | ||||||
Law and Government Affairs |
3(i)
|
Campbells By-Laws, as amended through May 25, 2006, were filed with a Form 8-K on May 26, 2006, and are incorporated herein by reference. | |
31(i)
|
Certification of Douglas R. Conant pursuant to Rule 13a-14(a). | |
31(ii)
|
Certification of Robert A. Schiffner pursuant to Rule 13a-14(a). | |
32(i)
|
Certification of Douglas R. Conant pursuant to 18 U.S.C. Section 1350. | |
32(ii)
|
Certification of Robert A. Schiffner pursuant to 18 U.S.C. Section 1350. |
41