. Fourth-Quarter Adjusted Net Earnings Per Share Increased 10 Percent to $0.33.
. Full-Year Adjusted Net Earnings Per Share Were $2.47, Up 12 Percent.
. Fiscal 2011 Guidance: Adjusted Net Earnings Per Share Growth of 5 to 7 Percent.
CAMDEN, N.J., Sep 03, 2010 (BUSINESS WIRE) -- Campbell Soup Company (NYSE:CPB) today reported its fiscal 2010 results.
Fourth-Quarter Summary
. Sales Decreased 1 Percent to $1.518 Billion
. U.S. Beverage Sales Increased 12 Percent
. U.S. Soup Sales Decreased 5 Percent

Full-Year Summary


Sales Increased 1 Percent to $7.676 Billion
Significant Improvement in Gross Margin Percentage Driven by Increased Productivity
Adjusted Earnings Before Interest and Taxes Increased 7 Percent
Generated More Than $1 Billion in Cash Flow from Operations

Net earnings for the quarter ended Aug. 1, 2010, were $113 million, or $0.33 per share, compared with $69 million, or $0.20 per share, in the prior year. Excluding items impacting comparability, all related to fiscal 2009, adjustednet earnings increased 6 percent in the quarter from an adjusted $107 million in the prior-year quarter. Adjustednet earnings per share increased 10 percent in the current quarter from $0.30 in the year-ago quarter. A detailed reconciliation of current and prior-year adjusted financial information to the reported information is included at the end of this news release.

Douglas R. Conant, Campbell's President and CEO, said, "In a challenging year, we delivered strong earnings growth, overcoming softer-than-expected sales, particularly in our U.S. soup business. We had another year of strong cash flow performance, generating more than $1 billion in cash flow from operations.For the year, we expanded gross margins through supply chainproductivity improvements and previouslyannounced cost-savings initiatives."

Conant continued, "By effectively managing our margins in a tough economic environment, we have set the stage for next year and positioned the company for growth through continued innovation, category leading marketing spending and competitive pricing. I am confident that we have the right strategies to drive growth across our strong portfolio of healthy beverages, baked snacks and simple meals. In healthy beverages, we will build on our track record of innovation and continue our effective marketing efforts. In baked snacks, we have a full slate of innovation across our portfolio with exciting new products for Pepperidge Farm and Arnott's. In U.S. soup, we have significant plans to enhance our condensed soups, strengthen our competitiveness in ready-to-serve soups and introduce a new advertising campaign to support the entire U.S. portfolio of 'Campbell's' soup brands and to help drive category growth."

Fiscal 2011 Guidance

In fiscal 2011, Campbell expects sales growth of 2 to 3 percent and adjusted earnings growth before interest and taxes (EBIT) of 4 to 5 percent. These growth rates are slightly below the company's long-term growth targets, reflecting the challenging economic and consumer conditions in the marketplace. Despite these conditions, Campbell expects fiscal 2011 EPS growth to be within its long-term target range of 5 to 7 percent from the fiscal 2010 adjusted base of $2.47.

Fourth-Quarter Results

For the fourth quarter, sales decreased 1 percent to $1.518 billion. The decrease in sales reflected the following factors:


Increased promotional spending subtracted 2 percent
Currency added 1 percent

Fourth-Quarter Financial Details


Gross margin was 40.4 percent, compared with 41.6 percent a year ago. The prior year included a favorable net adjustment of $14 million related to commodity hedging. After adjusting for this item, the gross margin percentage for the prior-year quarter was 40.6 percent. The decrease in gross margin percentage was primarily due to increased promotional spending and cost inflation, partially offset by productivity improvements.
Marketing and selling expenses increased 6 percent to $221 million, primarily due to increased advertising expense.
Administrative expenses decreased $17 million to $167 million, primarily due to lower incentive compensation costs.
EBIT was $187 million compared with $145 million in the prior-year quarter. Excluding items impacting comparability, adjusted EBIT in the prior-year quarter was $198 million. Adjusted EBIT decreased 6 percent primarily due to increased promotional spending and cost inflation, partially offset by productivity improvements and lower administrative expense.
The effective tax rate was 29.8 percent compared with 43.4 percent in the prior-year quarter. Excluding items impacting comparability, the prior-year effective tax rate was 38.9 percent. The decrease in the tax rate was primarily due to additional tax expense in the prior year associated with the repatriation of foreign earnings.
Net earnings per share were $0.33 in the current quarter compared with adjusted net earnings per share of $0.30 in the prior-year quarter, an increase of 10 percent. The increase was primarily due to a lower effective tax rate in the current year and the benefit from a reduction in weighted average diluted shares outstanding.

Full-Year Results

Net earnings for the fiscal year were $844 million, or $2.42 per share, compared with $736 million, or $2.05 per share, a year ago. Excluding all items impacting comparability in both periods, adjusted net earnings increased 9 percent to $862 million compared with $794 million in the prior year, and adjusted net earnings per share increased 12 percent to $2.47 in the current year compared with $2.21 in the prior year.

Sales were $7.676 billion, an increase of 1 percent. The change in sales for the yearreflected the following factors:


Volume and mix subtracted 1 percent
Price and sales allowances added 1 percent
Increased promotional spending subtracted 2 percent
Currency added 3 percent

Full-Year Financial Details


Gross margin was 41.0 percent, compared with 39.9 percent a year ago. The prior year included $22 million of costs related to initiatives to improve operational efficiency and long-term profitability. After adjusting for this item, the gross margin percentage for the prior year was 40.2 percent. The increase in gross margin percentage was primarilydue to productivity improvements, partially offset by cost inflation.
Marketing and selling expenses decreased $19 million to $1.058 billion, primarily due to lower advertising and consumer promotion costs, partially offset by the impact of currency.
Administrative expenses increased to $605 million from $591 million a year ago, primarily due to the impact of currency; higher compensation and benefit costs, including pension expense; and inflation, partially offset by expense-management efforts.
EBIT was $1.348 billion compared with $1.185 billion in the prior year. Excluding items impacting comparability in both years, adjusted EBIT was $1.360 billion in the current year versus $1.274 billion a year ago. Adjusted EBIT increased 7 percent primarily due to improved gross margin performance and the impact of currency, partially offset by lower sales volume.
Cash flow from operations was $1.057 billion compared with $1.166 billion in the year-ago period. The current-year cash flow reflected a $260 million contribution to a Campbell U.S. pension plan, mostly offset by improvements in working capital and higher earnings.
In fiscal 2010, Campbell repurchased 14 million shares for $472 million under its strategic share repurchase program announced in June 2008 and the company's ongoing practice of buying back shares sufficient to offset those issued under incentive compensation plans.

Summary of Fiscal 2010 Fourth-Quarter and Full-Year Results by Segment

U.S. Soup, Sauces and Beverages

Sales for U.S. Soup, Sauces and Beverages were $644 million for the fourth quarter, a decrease of 1 percent compared with a year ago. The change in sales reflected the following factors:


Volume and mix added 1 percent
Price and sales allowances added 1 percent
Increasedpromotional spending subtracted 3 percent

Soup sales for the quarter decreased 5 percent, with sales of both condensed and ready-to-serve soups declining 7 percent, reflecting increased promotional spending, while broth sales increased 9 percent.

Beverage sales increased 12 percent driven by significant growth across the entire "V8" portfolio.

Sales of "Prego" pasta sauce and "Pace" Mexican sauce declined.

Operating earnings were $139 million, compared with $148 million in the prior-year period. The decrease in operating earnings was primarily due to increased promotional spending, partly offset by productivity improvements.

For the full year, U.S. Soup, Sauces and Beverages sales decreased 2 percent to $3.700 billion. A breakdown of the change in sales follows:


Volume and mix subtracted 1 percent
Price and sales allowances added 1 percent
Increased promotional spending subtracted 2 percent

For the full year, U.S. Soup sales decreased 4 percent.


Sales of "Campbell's" condensed soups decreased 2 percent. Sales of condensed cooking varieties increased, benefiting from growth ofin-home eating occasions. Sales of eating varieties declined.
Sales of ready-to-serve soups declined 9 percent. Reflecting weak category trends, sales of both canned and microwavable varieties declined.
Broth sales increased 3 percent, also benefiting from the growth of in-home eating occasions and from consumer demand for 100% natural product offerings.

Beverage sales increased 4 percent driven by double-digit volume gains in the second half of the fiscal year.


"V8 V-Fusion" juice sales increased double digits due to increased advertising and successful new item launches, including Cranberry-Blackberry and Acai Mixed Berry Light varieties, as well as new 8-ounce slim can packaging.
Sales of "V8 Splash" juice drinks increased, while sales of "V8" vegetable juice declined.

"Prego" pasta sauce sales increased, reflecting the growth of "Prego" Heart Smart varieties, while sales of "Pace" Mexican sauce declined.

Operating earnings were $943 million, compared with $927 million a year ago. The increase in operating earnings was primarily due to improved gross margin performance and lower advertising, partially offset by lower sales.

Baking and Snacking

Sales for Baking and Snacking were $479 million in the fourth quarter, an increase of 3 percent from a year ago. The change in sales reflected the favorable impact of currency.

Increased sales in the Indonesia biscuits business were offset by a decline in Pepperidge Farm. In Australia, sales were comparable to the year-ago period, as higher volumes were offset by increased promotional spending.

For the quarter, operating earnings were $73 million, compared with $69 million in the prior-year period. The increase in operating earnings was due to the favorable impact of currency.

For the full year, sales increased 7 percent to $1.975 billion. A breakdown of the change in sales follows:


Volume and mix added 2 percent
Price and sales allowances added 1 percent
Increased promotional spending subtracted 3 percent
Currency added 6 percent
Acquisitions added 1 percent

Further details of sales results included the following:


Sales of Pepperidge Farm were comparable to a year ago, as the acquisition of Ecce Panis, Inc. and volume gains were offset by increased promotional spending.


Excluding the acquisition, sales from the bakery business declined, reflecting increased promotional spending partly offset by volume gains.
In the cookies and crackers business, sales were comparable to a year ago, as solid gains in "Goldfish" snack crackers were offset by a decline in cookies.
In Australia, sales increased due to currency and growth in Arnott's, driven by gains in "Tim Tam" chocolate biscuits and "Shapes" savory crackers.

Operating earnings were $322 million, compared with $262 million in the prior year. The prior year included $3 million in costs related to the restructuring program. The increase in operating earnings was due to the favorable impact of currency and earnings growth in both Pepperidge Farm and Arnott's.

International Soup, Sauces and Beverages

Sales for International Soup, Sauces and Beverages were $281 million for the fourth quarter, a decrease of 3 percent compared with a year ago. The change in sales reflected the following factors:


Volume and mix subtracted 1 percent
Increased promotional spending subtracted 3 percent
Currency added 1 percent

Sales decreased primarily due to declines in Europe and Canada, partially offset by gains in the Asia Pacific region and the favorable impact of currency.

Operating earnings were $6 million, compared with a loss of $48 million in the year-ago period. The prior-year period included an impairment charge of $67 million related to certain European trademarks. Excluding the impairment charge, operating earnings decreased primarily due to declines in Canada and Europe, partially offset by margin growth in Asia Pacific.

For the full year, sales increased 5 percent to $1.423 billion. A breakdown of the change in sales follows:


Volume and mix subtracted 1 percent
Price and sales allowances added 2 percent
Increased promotional spending subtracted 2 percent
Currency added 7 percent
Divestitures subtracted 1 percent

Excluding the impact of currency and divestitures, declines in Europe and Canada were partly offset by gains in the Asia Pacific region.


In Europe, sales declined, reflecting lower sales in Germany and the impact of divestitures, partly offset by the favorable impact of currency.
In Asia Pacific, sales increased due to currency and volume-driven gains in Japan, Australia and Malaysia.
In Canada, sales increased due to the impact of currency, partially offset by lower sales volume of ready-to-serve soups.

Operating earnings were $161 million, compared with $69 million a year ago. Excluding the prior-year impairment charge of $67 million, the increase in operating earnings was primarily driven by the favorable impact of currency and growth in Europe as well as the Asia Pacific region, partially offset by declines in Canada.

North America Foodservice

Sales were $114 million for the fourth quarter, a decrease of 7 percent compared with a year ago. A breakdown of the change in sales follows:

Volume and mix subtracted 6 percent
Increased promotional spending subtracted 3 percent
Currency added 2 percent

Operating earnings were $3 million compared with $0 in earnings in the prior-year quarter. The increase was primarily due to cost-reduction initiatives.

For the full year, sales were $578 million compared with $599 million in the prior year, a decline of 4 percent. A breakdown of the change in sales follows:

Volume and mix subtracted 5 percent
Price and sales allowances added 1 percent
Increased promotional spending subtracted 1 percent
Currency added 1 percent

Sales declined primarily due to continued weakness in the food service sector.

Operating earnings were $43 million, compared with $34 million in the prior year. The current year included a $12 million restructuring charge, while the prior year included $19 million in restructuring-related costs. Excluding these items, operating earnings increased slightly.

Unallocated Corporate Expenses

Unallocated corporate expenses increased to $34 million in the current quarter from $24 million a year ago. The prior year included a favorable net adjustment of $14 million related to commodity hedging. Unallocated corporate expenses for the full year were $121 million versus $107 million in the prior year. The increase primarily reflected foreign currency gains recorded in the prior year and higher equity-related benefit costs in the current year.

Non-GAAP Financial Information

A reconciliation of the adjusted fiscal 2010 and 2009 financial information to the reported financial information is attached to this news release.