Building
momentum
Campbell Soup Company 2003 Annual Report
Financial Highlights
(millions of dollars, except per share amounts)
Net sales
Gross margin
Percent of sales
Earnings before interest and taxes 1, 2
Percent of sales
Net cash provided by operating activities
Capital expenditures
Earnings before cumulative effect
of accounting change 1,2
Per share 1,2
Basic 1,2
Diluted 1,2
Dividends
Per share
2003
53 Weeks
$ 6,678
$ 2,873
43.0%
$ 1,105
16.5%
$ 873
$ 283
2002
52 Weeks
$ 6,133
$ 2,690
43.9%
$ 984
16.0%
$ 1,017
$ 269
$ 626
$ 525
$ 1.52
$ 1.52
$ 259
$ 0.63
$ 1.28
$ 1.28
$ 258
$ 0.63
1 In 2003, the company adopted Statement of Financial Accounting Standards (SFAS) No. 142 “Goodwill and Other
Intangible Assets” and discontinued the amortization of goodwill and indefinite-lived intangible assets. Results for 2002
include $70 ($54 after tax or $.13 per share) of amortization. See also Note 3 to the Consolidated Financial Statements.
2 2003 and 2002 results include pre-tax costs of $1 and $20 ($14 after tax or $.03 per share), respectively, related to an
Australian manufacturing reconfiguration. Of these amounts, pre-tax costs of approximately $1 and $19 were recorded
in 2003 and 2002, respectively, in Cost of products sold.
Campbell Soup Company Annual Report 2003
do not use
Dear Shareowner,
Dear Shareowner,
Two years ago we began to implement a three-
Two years ago we began to implement a three-
year, five-point plan designed to renew Campbell
year, five-point plan designed to renew Campbell
Soup Company. In fiscal 2003, we began building
Soup Company. In fiscal 2003, we began building
momentum with innovative products, revitalized core
momentum with innovative products, revitalized core
brands and reenergized employees.
brands and reenergized employees.
Net sales in fiscal 2003 increased 9 percent (currency and acquisitions accounted for 5 percent of the increase) to $6.7 billion,
Net sales in fiscal 2003 increased 9 percent (currency and acquisitions accounted for 5 percent of the increase) to $6.7 billion,
and earnings before the cumulative effect of accounting change grew 8 percent (excluding amortization from fiscal 2002
and earnings before the cumulative effect of accounting change grew 8 percent (excluding amortization from fiscal 2002
results) to $626 million, or $1.52 per share. These gains were achieved through strong volume growth in the second half
results) to $626 million, or $1.52 per share. These gains were achieved through strong volume growth in the second half
of the fiscal year as we passed the midway point of our Transformation Plan. All of our major reporting segments showed
of the fiscal year as we passed the midway point of our Transformation Plan. All of our major reporting segments showed
top-line growth. Our decision to invest more heavily in our brands through both marketing and product innovation is
top-line growth. Our decision to invest more heavily in our brands through both marketing and product innovation is
beginning to yield better results.
beginning to yield better results.
I believe that Campbell Soup Company now has in place the four elements necessary for any consumer products company
I believe that Campbell Soup Company now has in place the four elements necessary for any consumer products company
to be successful for the long term: (1) We have strong brands that are leaders in their categories; (2) we compete within
to be successful for the long term: (1) We have strong brands that are leaders in their categories; (2) we compete within
large, appealing categories with above-average growth; (3) we possess a financial structure that generates the cash flow
large, appealing categories with above-average growth; (3) we possess a financial structure that generates the cash flow
required to sustain solid growth; and (4) we have an organization that is capable of creating and executing our increasingly
required to sustain solid growth; and (4) we have an organization that is capable of creating and executing our increasingly
competitive plans.
competitive plans.
With these elements for success in place, we have broadened our strategic framework to realize the full potential of our
With these elements for success in place, we have broadened our strategic framework to realize the full potential of our
portfolio and our people. We believe that these five strategies, which have been modified during the past two years, will
portfolio and our people. We believe that these five strategies, which have been modified during the past two years, will
drive Campbell Soup Company to its next level of performance:
drive Campbell Soup Company to its next level of performance:
1 Revitalize core North America thermal businesses
1 Revitalize core North America thermal businesses
– U.S. Soup
– U.S. Soup
– Beverages, Sauces and Simple Meals
– Beverages, Sauces and Simple Meals
2 Strengthen the broader portfolio for consistent sales
2 Strengthen the broader portfolio for consistent sales
and earnings growth
and earnings growth
3 Continually improve product and package quality
3 Continually improve product and package quality
4 Drive total system productivity
4 Drive total system productivity
5 Build organization excellence and vitality
5 Build organization excellence and vitality
1. Revitalize core North America thermal businesses
1. Revitalize core North America thermal businesses
Seventy percent of our operating earnings are derived from soup, beverages and sauces, and we are committed to
Seventy percent of our operating earnings are derived from our hot-filled, shelf stable businesses — soup, beverages,
sauces — and we are committed to developing competitive advantage in taste, nutrition and packaging in these businesses.
developing significant competitive advantages in taste, nutrition and packaging in these important businesses.
Soup > Campbell’s soups outsell the leading branded competition in the U.S. by a margin of 7 to 1. At the heart of our
Soup > Campbell’s soups outsell the leading branded competition in the U.S. by a margin of 7 to 1. At the heart of our
program is a commitment to make soups more appealing to consumers by continually improving quality, making pack-
program is a commitment to make soups more appealing to consumers by continually improving quality, making pack-
aging more convenient and making shopping easier. This past year we brought this objective to life on all three fronts.
aging more convenient and making shopping easier. This past year we brought this objective to life on all three fronts.
First, our reformulated “cold blend” condensed vegetable soups entered the marketplace with improved quality of
First, our reformulated “cold blend” condensed vegetable soups entered the marketplace with improved quality of
those 10 varieties. Second, we delivered Campbell’s Soup at Hand sippable soups, the first truly portable soup product.
those 10 varieties. Second, we delivered Campbell’s Soup at Hand sippable soups, the first truly portable soup product.
1
Third, we developed iQ Shelf Maximizer, a breakthrough shelving system
that groups soups in a highly visible and efficient way that makes it much
easier for consumers to find their favorite varieties. In fiscal 2004, we are
building on these initiatives. We have improved 14 more condensed soup
varieties using cold blend processing. We have launched an entirely new
platform for portability — Campbell’s M’m! M’m! Good! To Go — incorporating
Campbell’s Soup at Hand, Campbell’s Chunky and Campbell’s Select brand
soups, all in microwavable containers. And we are rolling out iQ Shelf
Maximizer to more high-volume retail outlets.
“We are
creating a
strong,
focused
company.”
Beverages, Sauces and Simple Meals > In our North America Sauces and
Beverages businesses, we’re making considerable progress thanks to our
investments in marketing and new product development. In addition, the
investments in thermal technology and manufacturing that we have made in our soup business are being leveraged in
these businesses as well. In fiscal 2003, our V8, Pace and Prego brands responded to marketing initiatives and delivered both
top-line and bottom-line growth. The introduction of V8 Splash Smoothies helped restore growth to the beverage business.
We intend to take advantage of the fact that two thirds of today’s meals are still eaten at home. Simple meals made from
Campbell’s soups and sauces will be a theme of our 2004 marketing campaigns.
2. Strengthen the broader portfolio for consistent sales and earnings growth
Most of the brands in our broader portfolio are first or second in their categories, but there is still plenty of room for market
expansion. We have accelerated innovation and intensified consumer support to grow sales volume and, where appropriate,
market share.
Snacking and baking businesses account for more than 20 percent of our sales. Our three core brands — Pepperidge
Farm, Arnott’s, Godiva — have a solid position and opportunities for top-line growth.
In fiscal 2003, Pepperidge Farm had strong growth in all three of its core businesses — biscuits, bakery and frozen —
while Arnott’s delivered increased sales and earnings and achieved the #2 salty snack position in Australia through our
acquisition of Snack Foods Ltd. Godiva continues to be one of the most recognized luxury brands in the world today.
However, its growth continued to be affected by softness in consumer spending for luxury goods.
In International Soup and Sauces, we also delivered growth. In Europe, we have successfully integrated our dry soup
businesses purchased more than two years ago and those businesses grew. We experienced weakness in our base
businesses in the United Kingdom, France and Germany, but we have plans in place to address those issues. In Asia
Pacific, our soup business in Australia continued to deliver good growth.
3. Continually improve product and package quality
Two years ago we set superiority standards for our top-selling 120 products around the world. Since then, we have tripled
the number of these products that are rated superior to competition and we have laid the groundwork for even greater
progress in the years ahead. We are also aggressively upgrading our packaging capabilities across our portfolio. Our work
in soup is illustrative of this effort.
In fiscal 2003, Campbell’s Soup at Hand sippable soups introduced new easy-open, microwavable packaging that proved
to be a big success and created an opportunity to establish a whole new platform for soup growth. For fiscal 2004, we
have introduced more Campbell’s Soup at Hand varieties and new microwavable packaging for both Campbell’s Chunky
and Campbell’s Select brands in a new section within the soup aisle under the umbrella brand M’m! M’m! Good! To Go.
At the same time, new easy-open lids on condensed soup are providing many opportunities for consumers to try
Campbell’s soup instead of other food choices. Our vegetable soups in aseptic packaging have had good success both
in Canada, with Campbell’s Gardennay, and in Australia, with Campbell’s Velish. We are also making significant gains in
customizing our products for our customers through innovative packaging.
4. Drive total system productivity
In fiscal 2003, we delivered cost savings in excess of $130 million. This is an important element of our efforts to generate
increased funding for our brands. Across our entire supply chain, we are generating significant savings through upgrading
systems and increasing the efficiency of our spending. Our new Pepperidge Farm bakery in Bloomfield, Connecticut, and
the upgrade of Arnott’s bakery in Marleston, Australia, will give us a better cost profile in our core bakery business.
2
Campbell Soup Company Annual Report 2003
5. Build organization excellence and vitality
Through both internal advancements and external hires, we have created a workforce that I believe is second to none in
the industry. We have added leadership in critical areas and enhanced our talent at all levels. Additionally, we have made
notable progress improving employee satisfaction and morale through multiple workplace initiatives.
Outlook
Our outlook is bright. In U.S. Soup, we are starting to gain traction through better marketing and innovative new products,
as well as improved product quality and packaging. Our broader portfolio is also starting to gain momentum, and we are
getting better top-line results. We are increasing the contributions from new products, and improving quality and productivity.
We expect to further improve momentum in fiscal 2004 through top-line growth across several of our businesses, especially
in soup, as innovation and more efficient and effective marketing continue. We also expect to maintain our current level of
capital investment to support innovation, ensure capacity to support our growth and generate more productivity.
The plan we initiated two years ago is helping us renew our winning ways. We are creating a strong, focused company that
can consistently deliver a total shareowner return that is among the best in the consumer food industry.
Douglas R. Conant
President and Chief Executive Officer
Chairman’s message
In fiscal 2003, we saw momentum building behind our Transformation Plan. Our investments for quality
improvements, and innovation with the new microwavable convenience platform, have generated
consumer and customer excitement about Campbell’s soups.
Last spring, the Board completed a comprehensive analysis of the Company’s strategic plan in which we developed a broader
strategic view encompassing Campbell’s entire thermal processing capabilities. We have identified opportunities to grow and
leverage our leading brands in soup, sauces and beverages utilizing proprietary manufacturing processes and technology.
The Compensation and Organization Committee approved a new executive compensation program that provides more
stock-based incentives. We believe this new program better reflects the current market environment while continuing to
align the interests of management with those of shareholders.
Campbell has long been recognized for its leadership in corporate governance. This year, new governance standards
proposed by the New York Stock Exchange provided an opportunity to reevaluate our governance practices. As explained
in the 2003 proxy statement, we have broadened our governance principles and adopted new charters for each of our
committees. We believe these actions will continue Campbell’s leadership in this important area.
In November 2003, Tom Field and David Li will retire from the Board. They will be missed. Tom was elected in 1987,
and his expertise in food retailing brought a valuable perspective to the Board. David was elected in 1995, and brought a
rich background in finance and international business. The nominees to succeed them are Paul Charron, Chairman and
CEO of Liz Claiborne, and Les Vinney, President and CEO of Steris Corporation. Paul brings a strong consumer products
background, including tenures at both General Foods and Procter & Gamble. Les has a solid financial background, as well
as a career in diversified businesses. I am confident that both Paul and Les will make valuable contributions to the Board.
George M. Sherman
Chairman of the Board
3
Strategy 1 2 3 4 5
1
REVITALIZE CORE NORTH
AMERICA THERMAL BUSINESSES
U.S. Soup
The soup for
right now
Consumers have relied on the Campbell’s brand
for more than a century to provide superior simple
meals and snacks. Today, we are bringing even
more convenient soup choices to satisfy busy,
on-the-go lifestyles. With new portable packaging,
improved ready-to-serve varieties, added value
and, as always, superior taste, Campbell’s soups
can now be enjoyed anytime, anywhere.
convenient
Capitalizing on the success of Campbell’s
Soup at Hand single-serve soups, we
have added seven new sippable varieties
to enjoy on-the-go, including Chicken with
Mini Noodles and Mexican-Style Fiesta
for teens and “tweens.”
4
relevant
Tampa Bay Buccaneer John Lynch joins Campbell’s
long-running “Mama’s Boys” campaign for Campbell’s
Chunky soup. To score extra points with hearty eaters,
we have introduced Chunky Grilled Chicken and
Sausage Gumbo, and added 33 percent more chicken
to Chunky Chicken Corn Chowder.
M’m! M’m! Good! To Go > According to National Eating Trends research, 34 percent of lunches are eaten “on the run.” To answer consumers’
needs for portability, we’re bringing greater convenience to our most popular ready-to-serve Campbell’s Chunky and Campbell’s Select soups,
with new microwavable packaging. Now a warm, wholesome bowl of soup can be ready in just minutes!
valued
To provide a broader set of choices in the
ready-to-serve soup section, we introduced
Campbell’s Kitchen Classics soups, high-
quality soups aimed at the value-conscious
consumer. These 10 soups include varieties
like Chicken Noodle and Tomato.
creative
More and more consumers continue to enjoy our great-tasting soups
when dining away from home. Last year, sales of Campbell’s frozen
and refrigerated restaurant-quality soups had double-digit growth.
To better serve the needs of our food service customers, we offer
Stockpot Custom Creations, a fl exible program whereby our chefs
develop customized soups for restaurant menus.
5
Strategy 1 2 3 4 5
1
REVITALIZE CORE
NORTH AMERICA
THERMAL BUSINESSES
U.S. Soup
Make it
Campbell’s
instead
We’re creating new reasons to enjoy
Campbell’s soups every day, with
better-tasting soups and quick and easy
recipes. With our new advertising —
Make It Campbell’s Instead — we’re
reminding consumers to choose
Campbell’s soup instead of hot dogs,
instead of macaroni and cheese,
instead of pizza. At the same time,
we’re enhancing our Campbell’s Fun
Favorites soups and working with
celebrities like actress Mandy Moore
and hip-hop artist Bow Wow, to appeal to
today’s contemporary Campbell Kids.
fun
tasty
In 2003, Campbell’s Fun Favorites soups for kids enjoyed
steady growth with the introduction of soups with Goldfi sh
brand pasta. This year, we have enhanced our kids’ soups with
more pasta, more fl avorful broth and more exciting packaging.
Our goal is to make Campbell’s soups the #1 choice for simple
meals and snacks that kids love eating — and moms love serving.
Dinner (and Tuesday) will never be the same now that
Campbell has introduced its Tasty Tuesday Tip of the Week™
meal solution program. Celebrity spokesperson Gordon Elliott
will star in radio and TV advertising to share weekly recipes
and meal-planning tips made with Campbell products to
help solve mom’s daily dinner dilemmas.
6
Kid-Appealing Soups > More than 72 million children
under age 18 live in the U.S. These younger soup-lovers
are an important — and admittedly fun — group of
Campbell consumers.
powerful
Last year, we introduced our iQ Shelf system, designed
to help customers fi nd their favorite condensed soups
faster. Now, the soup aisle is even friendlier with iQ Shelf
Maximizer, a new system whereby our cans are gravity-fed
from large, clearly marked shelf holders. In 2004, we plan
to roll this system out to thousands of stores.
essential
Flavor’s In. Water’s Out. Promoting Swanson broth
as the essential stock to keep in the pantry has been
successful during the holiday season as well as year-
round, helping to boost shipments double digits in
2003. Aseptic packaging adds to the convenience
of this popular recipe ingredient.
7
Southwestern Appeal > The Pace Trailgating Tour combines the authenticity of cowboy-style chuckwagon cooking and the time-honored
tradition of tailgate barbecuing. We plan to visit more than 30 events this year as title sponsor of the Pace Picante Rodeo Championships
and expect to continue to build on the brand’s Southwestern heritage — delivering another year of strong growth.
authentic
Your favorite Mexican restaurant is as close as
your kitchen now that the Pace brand has served up
Mexican Creations cooking sauces. These fl avorful
sauces include Classic Taco, Sweet Roasted Onion
& Garlic, Roasted Ranchero, Verde with Tomatillos
& Jalapeños and Cilantro & Lime.
8
hearty
Nearly half of consumers add meat to pasta sauce.
Now, they can add Prego Hearty Meat sauces
to their shopping list. These sauces are superior
to the leading competitor and are available in
Authentic Italian Sausage, Meatball Parmesan
and Classic Meat with Fresh Mushrooms.
Strategy 1 2 3 4 5
REVITALIZE CORE NORTH
AMERICA THERMAL BUSINESSES
Beverages, Sauces and Simple Meals
1
Bringing
new zest
to life
Campbell’s sauce brands — Pace Mexican
sauces, Prego pasta sauces and Franco-American
gravies — provide consumers with the opportunity
to create a range of flavorful and simple meals
and snacks. Campbell’s beverage brands give
consumers “better for you” beverage choices with
V8 Vegetable juice and the refreshing taste of
V8 Splash juice beverages.
refreshing
V8 Splash Smoothies, a shelf-stable beverage with
essential nutrients and a “splash” of soy protein, is off
to a fast start this year. Currently available in Peach
Mango, Strawberry Banana and Citrus Blend, this
product line will add three new fl avors in 2004 —
Tropical Colada, Orange Creme and Wild Berry Creme.
nutritious
The V8 brand is juiced up about its third consecutive year
of sales growth, up more than 6 percent in 2003, after the
introduction of Lemon Twist V8 juice and the continued success
of its “Drink Smarter” advertising campaign. Another key
beverage initiative is this year’s introduction of the fi rst organic
product in Campbell history — Campbell’s Organic Tomato Juice.
9
Strategy 1 2 3 4 5
2 STRENGTHEN THE BROADER
PORTFOLIO FOR CONSISTENT SALES
AND EARNINGS GROWTH
More fun,
more flavors,
more choice
for all
Campbell markets many powerful brands around
the world to satisfy consumer needs in snacking and
baking, premium chocolate, dry soups and sauces
and aseptic soups. This provides the platform to
leverage scale in many ways. For example, we are
beginning to see greater synergies in aseptic soup
between North America and Europe, and in snacking
and baking between Pepperidge Farm and Arnott’s.
colorful
premier
Pepperidge Farm Goldfi sh crackers swim in more than
half of all U.S. households with children under 12. And
their pond became a whirlpool of activity this year with
new Goldfi sh Colors, one of the most successful launches
in the brand’s 40-year history. Coming soon, four extreme
varieties of Flavor Blasted Goldfi sh crackers.
Consumers around the world
love Godiva chocolates. We are
building on this strong equity to reach
consumers in powerful luxury markets like Singapore,
Hong Kong and Japan, and adding new chocolates such
as the Godiva Caramel Nouveau Collection.
10
Bite-sized Treats > Pepperidge Farm is the proud new parent of Mini Cookies — bite-sized replicas of such
classics as Milano and Chocolate Chunk cookies. Five varieties offer consumers a convenient way to satisfy
their cravings for some of America’s favorite premium cookies anytime, anywhere.
snacking
fruitful
With the completion of the Snack Foods Ltd. acquisition,
Arnott’s adds to its line of Rix and Kettle Chips savory snacks with
more Australian favorites including Cheezels, Planters, Thins, CCs
and French Fries. And for the pint-sized crowd, now Tiny Teddy
Dippers come with delicious new fl avors — thick chocolate
hazelnut, strawberry crème and milky white chocolate.
Made from real fruit, Arnott’s SnackRight biscuits
meet growing consumer demand for great-tasting, lower-
fat snacks. Increased marketing has nearly doubled
household penetration from 6 to 10 percent while
driving category growth, and the biscuits remain #1
in the “Better For You” segment of their market.
11
Making It Easier > Today’s busy consumers want their meals easy to prepare and easy to eat. That’s why
we continue to invest in convenience. All of our soups, from our icon condensed brands to ready-to-serve
Campbell’s Chunky and Campbell’s Select, now feature easy-open lids.
improved
Using innovative cold blend technology,
we’ve upgraded 30 percent of our
condensed soups. In 2004, we’ll also
add more rice to Campbell’s Chicken with
Rice soup and more pasta to Campbell’s
Fun Favorites soups.
12
innovative
Consumers in western Canada savor Campbell’s
Gardennay restaurant-quality, ready-to-serve vegetable
soups in aseptic packaging. These soups leverage
Campbell’s expertise with this innovative technology to
produce Swanson broths in the U.S., Liebig soups in
France and Campbell’s Velish soups in Australia.
Strategy 1 2 3 4 5
CONTINUALLY
IMPROVE PRODUCT AND
PACKAGE QUALITY
3
Raising
the
bar
Across our portfolio, we’re improving the quality
of our products and packaging to make our
soups, sauces, beverages and snacks more
convenient and more consumer-friendly. From
easy-open lids and easy-grip jars to more pasta
in our soups and more meat in our sauces,
we’re raising quality standards to make our
brands the preferred choice.
competitive
customized
A major program to improve our European soups, sauces
and stocks is delivering strong results in the marketplace.
In consumer testing, more than 50 percent of our products
are now preferred over the competition. In addition, Germany’s
Heisse Tasse line has launched Swing low-fat soups and
Extra pasta soups.
One of Campbell’s most important initiatives is tailoring
assortments of products to suit the needs of our varied
customers. From specially-sized juice packs
to large bundles of soup, we are continuously
helping our customers differentiate themselves
in the marketplace.
13
Strategy 1 2 3 4 5
4 DRIVE TOTAL
SYSTEM
PRODUCTIVITY
Working better,
working
smarter
Our teams are working hard to bring best-in-class
processes and technologies to all areas of the
company. We aim to drive the most efficient and
effective business systems in the U.S. and then
share our knowledge across the globe.
collaboration
Campbell earned the #8 spot in Cannondale Associates’
PoweRanking™ survey, where retailers and manufac-
turers rate each other in areas such as strategy, service
and profi tability. Campbell’s reemergence in the top 10
follows an investment in building customer relationships
and helping customers to grow.
possibilities
In 2003, we launched a new initiative with our sales
and marketing teams to drive more profi table business
growth with our retail customers. It’s called the Customer
Investment Program and it utilizes state-of-the-art
analytical tools, along with joint business planning,
to grow our mutual businesses.
14
On the Rise > We are modernizing our bakery operations to further improve our baked goods and reduce overall costs. In the U.S.,
a new energy-effi cient, state-of-the-art Pepperidge Farm bakery in Bloomfi eld, Connecticut, became fully operational this year.
focus
productivity
Campbell’s innovative use of Internet
technology is placing us at the forefront of
the global movement toward electronic data-sharing. Campbell was one
of the fi rst manufacturers to send and receive data with Wal-Mart stores
through the UCCnet Global Data Registry, speeding delivery time and
ensuring more accurate invoicing.
The forecast is bright with Campbell’s new Sales and
Operations Planning process. This program aligns functional
areas, from marketing and sales to manufacturing and
distribution, allowing us to better share information across
these areas. We are optimistic that this process will help us
improve our planning accuracy and inventory management.
15
Hitting the Bull’s-eye > The new Dr. John T. Dorrance Culinary & Learning Center in our World Headquarters represents a signifi cant
investment in our workplace. Pictured here is our sales team for Target stores, the second-largest general merchandiser in the U.S.
Their teamwork exemplifi es the winning spirit within our organization, earning Campbell the “2002 Target Vendor Award of Excellence.”
engaging
developing
We are living our pledge to our employees —
“Campbell Valuing People and People Valuing
Campbell” — and measuring our results through
a yearly employee survey. We are also embracing a new
Leadership Model to build an environment of trust across
the organization.
Campbell’s mission to establish world-class research and development
facilities and culinary capabilities reached another milestone with
the opening of a new R&D Center in the United Kingdom. This modern
facility, with development and demonstration kitchens, pilot plant
and consumer test center, provides Campbell U.K. with greater
resources to drive product and packaging innovation.
16
Strategy 1 2 3 4 5
ORGANIZATION EXCELLENCE
& VITALITY
5BUILD
Winning
in the
workplace
To win in the marketplace we must win in
the workplace. We want to demonstrate an
extraordinary commitment to our people so that
they will deliver an extraordinary commitment
to the success of our company. This promise also
flows out to our neighbors in the communities
where we live.
inspiring
creating
This year, the Campbell Soup Foundation
celebrates 50 years of making a difference
in the U.S. To commemorate this anniversary,
the Foundation announced the “50 Hours for 50 Years” Volunteer
Campaign. As part of this program, Campbell teams will volunteer
50 hours in communities where they work and live.
Our Stockpot Inc. Culinary Campus in Woodinville, Washington,
provides an entrepreneurial and creative environment where
Stockpot chefs collaborate with some of the nation’s leading
restaurant chains to create signature soups and menu items.
Our customer teams have a passion for food and a mindset
of continuous innovation.
17
Financial Review
Management’s Discussion and
Analysis of Results of Operations
and Financial Condition
Consolidated Statements of Earnings
Consolidated Balance Sheets
Consolidated Statements of Cash Flows
Consolidated Statements of
Shareowners’ Equity (Defi cit)
Notes to Consolidated
Financial Statements
Report of Management
Report of Independent Auditors
Five-Year Review – Consolidated
19
30
31
32
33
34
48
49
50
Campbell Soup Company Annual Report 2003
Campbell Soup Company Annual Report 2003
Management’s Discussion and Analysis of
Results of Operations and Financial Condition
Results of Operations
Overview Earnings before the cumulative effect of accounting
change were $626 million ($1.52 per share) in 2003 compared
to $525 million ($1.28 per share) in 2002. (All earnings per
share amounts included in Management’s Discussion and
Analysis are presented on a diluted basis.) Comparisons to
the prior year are impacted by the adoption of Statement of
Financial Accounting Standards (SFAS) No. 142 “Goodwill
and Other Intangible Assets” as of the beginning of 2003. In
accordance with the provisions of this standard, the company
discontinued amortization of goodwill and indefinite-lived
intangible assets on a prospective basis from the date of
adoption. Had such amortization been eliminated as of the
beginning of the prior year, net earnings for 2002 would
have been $579 million, or $1.41 per share. The 2002
results included a restructuring charge and related costs of
approximately $20 million pre-tax ($.03 per share) associated
with the Australian manufacturing reconfiguration. Pre-tax
charges of $19 million were classified as Cost of products sold
and $1 million were classified as a Restructuring charge. The
2003 results included costs of $1 million associated with the
Australian manufacturing reconfiguration which commenced
in 2001. The increase in earnings before the cumulative
effect of accounting change in 2003 was due to higher sales
during the year, lower interest expense, and a lower effective
tax rate compared to the prior year, partially offset by higher
administrative expenses and higher pension expense. In
addition, there were 53 weeks in 2003 and 52 weeks in 2002.
The additional week contributed approximately $.02 per share
to earnings in 2003.
In connection with the adoption of SFAS No. 142, the company
also recognized a one-time non-cash charge of $31 million
(net of a $17 million tax benefit) in the first quarter of 2003,
or $.08 per share, as a cumulative effect of accounting change.
This charge related to impaired goodwill associated with the
Stockpot business, a food service business acquired in August
1998. See also Note 3 to the Consolidated Financial Statements.
Although SFAS No. 142 precludes restatement of prior period
results, prior period segment operating earnings have been
adjusted to reflect the pro forma impact of amortization
eliminated under the standard.
During the first quarter ended October 27, 2002, the
company acquired two businesses for cash consideration
of approximately $170 million and assumed debt of
approximately $20 million. The company acquired Snack
Foods Limited, a leader in the Australian salty snack category,
and Erin Foods, the number two dry soup manufacturer in
Ireland. Snack Foods Limited is included in the Biscuits
and Confectionery segment. Erin Foods is included in the
International Soup and Sauces segment. The businesses have
annual sales of approximately $160 million.
In 2002, net earnings declined 19% and earnings per share
declined 17% compared to 2001. The 2001 results included
a restructuring charge and related costs of approximately
$15 million pre-tax ($.03 per share) associated with the
Australian manufacturing reconfiguration. Pre-tax charges
of $10 million were classified as a Restructuring charge
and $5 million were classified as Cost of products sold.
Net earnings in 2001 also included an approximate $.03 per
share dilutive impact from the European dry soup and sauce
brands acquisition. The earnings decline in 2002 was primarily
related to planned increases in marketing and infrastructure
investments across major businesses, partially offset by lower
interest expense.
In 2003, certain stock-based incentive compensation costs
and deferred compensation expenses were reclassified from
Other expenses to reflect the costs by function on various
lines of the Statements of Earnings. Prior periods have been
reclassified to conform to the current presentation.
Beginning in 2002, the company adopted the consensus
reached by the Financial Accounting Standards Board’s
(FASB’s) Emerging Issues Task Force (EITF) on Issue No. 01-9
“Accounting for Consideration Given by a Vendor to a Customer
or Reseller of the Vendor’s Products.” Under this consensus,
the EITF concluded that certain consumer and trade promotion
expenses, such as coupon redemption costs, cooperative
advertising programs, new product introduction allowances,
feature price discounts and in-store display incentives, should
be classified as a reduction of sales rather than as marketing
expenses. The adoption of this consensus in 2002 resulted in
the following reclassifications to the annual results for 2001:
Net sales were reduced by $893 million; Cost of products
sold was reduced by $14 million; and Marketing and selling
expenses were reduced by $879 million. These reclassifications
had no impact on net earnings.
Sales Sales increased 9% in 2003 to $6.7 billion from
$6.1 billion. The increase in sales was due to a 3% increase
in volume and mix, a 1% increase due to higher selling prices,
a 3% increase from currency, and a 2% increase from the
acquisitions of Erin Foods and Snack Foods Limited. The
additional week in 2003 accounted for approximately 1 to 2
percentage points of the increase. Worldwide wet soup volume
increased 2%.
Sales increased 6% in 2002 to $6.1 billion from $5.8 billion.
The increase in sales was due to a 4% increase from the
European acquisition which was completed in May 2001, a
2% increase due to volume and mix, a 1% increase due to
higher selling prices, offset by a 1% decline due to increased
revenue reductions from trade promotion and consumer
19
19
Management’s Discussion and Analysis of
Results of Operations and Financial Condition
coupon redemption programs. Worldwide wet soup volume
increased 1% from 2001.
An analysis of net sales by segment follows:
(millions)
2003
2002
2001
% Change
2003/
2002
2002/
2001
North America Soup
and Away From Home
$ 2,606
$ 2,524
$ 2,532
3 —
North America Sauces
and Beverages
Biscuits and
Confectionery
International Soup
and Sauces
1,246
1,182
1,161
5
1,774
1,507
1,446
18
1,052
920
632
$ 6,678
$ 6,133
$ 5,771
14
9
2
4
46
6
The 3% increase in sales from North America Soup and Away
From Home in 2003 versus 2002 was due to a 1% increase
in volume and mix, a 1% increase due to lower revenue
reductions from trade promotion and consumer coupon
redemption programs, and a combined 1% increase from
higher price realization and currency. U.S. wet soup volume
increased 2% over the prior year. Ready-to-serve volume
increased 8% behind volume gains in Campbell’s Chunky
and Campbell’s Select soups, and the launch of Soup at
Hand sippable soups in convenient portable microwaveable
packaging. Swanson broth reported a volume increase of 13%
due to successful promotional campaigns for cooking with
broth. Condensed soup volume declined 6%. Canada reported
growth in soup volume, due in part to the regional introduction
of the new Campbell’s Gardennay soup in aseptic packages.
Away From Home experienced increased soup volume, offset
by declines in lower margin businesses.
Sales in 2002 from North America Soup and Away From Home
were flat with 2001. Volume and mix increased 1% from the
prior year, offset by an increase in revenue reductions from
trade promotion and consumer coupon redemption programs.
U.S. wet soup volume increased 1%. Ready-to-serve volume
increased 9% behind the double-digit volume gains in
Campbell’s Chunky and Campbell’s Select soups. This volume
growth was driven by new varieties, quality improvements,
and increased advertising. Swanson broth volume increased
4%. Condensed soup volume declined 5%. Canada reported
sales growth in all businesses, particularly soup, in response to
increased marketing. Away From Home sales slightly increased
over the prior year led by solid soup sales performance, which
offset a decline in lower margin bakery and frozen entrée sales.
The 5% increase in sales from North America Sauces and
Beverages in 2003 versus 2002 was due to a 4% increase in
volume and mix, a 1% increase from higher price realization,
a 1% increase due to lower revenue reductions from trade
promotion and consumer coupon redemption programs, offset
by a 1% decline due to currency. The sales increase was
driven by strong gains in Pace Mexican sauces, Prego brand
products, V8 vegetable juices, Campbell’s tomato juice, Latin
America, and the introduction of V8 Splash Smoothies. The
introduction of Prego Hearty Meat sauces and Pace Mexican
Creations sauces contributed to the sales growth. These gains
were partially offset by declines in Franco-American canned
pasta and gravies.
The 2% increase in sales from North America Sauces and
Beverages in 2002 versus 2001 was due to a 3% increase
in volume and mix, offset by a 1% reduction due to higher
revenue reductions from trade promotion and consumer
coupon redemption programs. The volume growth resulted
from the performance of Prego pasta bake sauces, which
were introduced in the fourth quarter of 2001, Pace Mexican
sauces, V8 vegetable juices and the Mexican business. These
volume gains were partially offset by continued declines in
Franco-American canned pasta and V8 Splash beverages.
Sales from Biscuits and Confectionery increased 18% in 2003
due to a 3% increase in volume and mix, a 4% increase from
higher price realization, an 8% increase from the acquisition
of Snack Foods Limited in Australia, a 4% increase from
currency, offset by a 1% increase in revenue reductions from
trade promotion and consumer coupon redemption programs.
The favorable currency impact principally reflected the
strengthening of the Australian dollar. Pepperidge Farm reported
sales increases in cookies, crackers, and fresh bread. Arnott’s
contributed to the sales increase with growth in the chocolate
segment and new products introduced in the year, particularly
Snackright fruit-based low fat biscuits. Godiva Chocolatier’s
worldwide sales increased due to growth in Asia, partially offset
by continued weakness in same store sales in North America.
Sales from Biscuits and Confectionery increased 4% in 2002
due to a 4% increase in volume and mix, a 1% increase from
higher price realization, offset by a 1% decline from currency,
primarily the Australian dollar. Pepperidge Farm contributed to
the sales growth with new products, including the introduction
of Dessert Bliss cookies and Goldfish Sandwich crackers, and
increased distribution. Arnott’s in Australia reported volume
gains due to increases in value-added products in the snack
foods category, such as Rix Rice chips and Kettle chips.
Tim Tam biscuit sales also increased significantly. Godiva
sales rose slightly, as new store openings worldwide offset
lower same store sales in North America in the aftermath of
September 11th.
International Soup and Sauces reported a 14% increase
in sales due to a 12% increase from currency and a 2%
increase from the acquisition of Erin Foods in Ireland. Strong
performance of dry soups in Europe was offset by weakness in
the wet soup and sauces businesses in the United Kingdom,
2020
Campbell Soup Company Annual Report 2003
Campbell Soup Company Annual Report 2003
France and Germany. The United Kingdom performance
reflected declines in Homepride sauces and Campbell’s
soups. Sales in France declined due primarily to aggressive
competitive activity. In Germany, a significant portion of the
private-label soup business is being discontinued. The Asia
Pacific region reported sales growth.
International Soup and Sauces reported a 46% increase in sales
in 2002 due primarily to a 44% increase from the European dry
soup and sauce acquisition, which was completed in the fourth
quarter of 2001, and a 2% increase from currency. The base
business in Europe declined slightly as weakness in United
Kingdom soup and sauces was partially offset by gains in soup
sales in Belgium and France. Asia Pacific sales increased due
to growth in Australian soup, broth and beverages.
Gross Margin Gross margin, defined as Net sales less Cost
of products sold, increased by $183 million in 2003 due to
the increase in sales. As a percent of sales, gross margin was
43.0% in 2003, 43.9% in 2002, and 45.7% in 2001. The
percentage decrease in 2003 was due to the lower margin
structure of acquisitions (approximately 0.5 percentage
points), costs associated with transition and startup of the new
Pepperidge Farm bakery and with the discontinuance of certain
co-packing contracts (approximately 0.3 percentage points),
and the net adverse impact of pricing, productivity gains,
mix and quality improvements (approximately 0.4 percentage
points), offset by the benefits of lower costs related to the
Australian manufacturing reconfiguration (approximately
0.3 percentage points). The percentage decline in 2002 from
2001 was due mainly to the continuing mix shift in U.S. soup
towards ready-to-serve products (approximately 0.4 percentage
points), the cost of quality improvements across a number of
products (approximately 0.7 percentage points), and costs
associated with the Australian manufacturing reconfiguration
(approximately 0.3 percentage points).
Marketing and Selling Expenses Marketing and selling
expenses as a percent of sales were 17.1% in 2003, 17.5%
in 2002, and 15.4% in 2001. Marketing and selling expenses
increased approximately 7% in 2003. The increase was
driven by currency and acquisitions (3 percentage points),
increased advertising, primarily for V8 Splash Smoothies,
V8 juices and Pace Mexican sauces (3 percentage points),
and incremental selling expense due to shelving initiatives
and systems upgrades. In 2002, Marketing and selling
expenses increased approximately 21% from 2001. The
European dry soup and sauce acquisition accounted for 5%
of the increase. The remaining increase in 2002 was due
primarily to the planned increases in advertising investments
across the portfolio (approximately 8 percentage points),
particularly in U.S. soup and sauces, and selling infrastructure
investments (approximately 5 percentage points) to improve
execution capability.
Administrative Expenses Administrative expenses as a
percent of sales increased to 7.6% in 2003 from 7.4% in
2002. Administrative expenses increased by approximately
12% in 2003 from 2002. Currency and acquisitions accounted
for approximately 5 percentage points of the increase. The
remaining increase was driven by a number of items, including
costs associated with litigation, investments in information
technology, and an increase in bad debt expense. In 2002,
Administrative expenses increased to 7.4% of Net sales
from 7.0% in 2001 due to higher compensation costs and
costs associated with investments in people and information
technology to improve execution capabilities.
Research and Development Expenses Research and
development expenses increased $9 million or 11% in 2003
from 2002 due to costs associated with quality improvement
initiatives and new product development costs (approximately
8 percentage points), and the impact of currency and
acquisitions (approximately 3 percentage points). Research
and development costs increased $15 million or 23% in 2002
from 2001 due to costs associated with quality improvement
initiatives (approximately $10 million) and new product
development (approximately $5 million).
Other Expenses Other expenses decreased to $28 million
in 2003 compared to $99 million in 2002 due primarily to
the elimination of $70 million of amortization of goodwill
and indefinite-lived intangible assets upon adoption of SFAS
No. 142 as of the beginning of 2003. In 2003, Other expenses
were impacted by an increase in non-cash adjustments to the
carrying value of long-term investments in affordable housing
partnerships ($36 million), partially offset by gains on sales
of land and buildings ($16 million) and a one-time payment
for the transfer of the Godiva Chocolatier ice cream license
($5 million). Other expenses increased in 2002 as compared
to 2001 primarily due to increased amortization expense
associated with the European acquisition.
In 2003, costs related to stock-based incentive compensation
and deferred compensation were reclassified from Other
expenses to reflect the costs by function. The prior periods
were adjusted to conform to the current presentation.
Operating Earnings As previously noted, operating segment
results for 2002 and 2001 have been restated to reflect the
pro forma impact of SFAS No. 142. Amortization expense of
$70 million was eliminated from 2002 operating earnings.
Amortization expense of $54 million was eliminated from
2001 operating earnings. Segment operating earnings, on
a comparable basis, increased 5% from 2002. Segment
operating earnings declined 13% in 2002 from 2001.
21
21
Management’s Discussion and Analysis of
Results of Operations and Financial Condition
An analysis of operating earnings by segment follows:
(millions)
2003
2002
2001
% Change
2003/
2002
2002/
2001
North America Soup
and Away From Home
$ 632 $ 634 $ 784
—
(19)
North America Sauces
and Beverages
Biscuits and
Confectionery
International Soup
and Sauces
289
257
316
12
(19)
212
186
208
14
(11)
128
120
63
$ 1,261
$ 1,197
$ 1,371
7
5
90
(13)
Corporate
(156)
(143)
(123)
$ 1,105
$ 1,054
$ 1,248
Earnings from North America Soup and Away From Home
in 2003 were even with 2002 earnings. The increase in
sales was offset by a decline in gross margin due to quality
improvements, packaging improvements and product mix.
In addition, costs increased due to shelving initiatives and
system upgrades.
Earnings from North America Soup and Away From Home
decreased 19% in 2002 from 2001 due to planned increases
in trade and consumer promotion costs, advertising expenses,
infrastructure investments and costs of quality improvements.
The promotion and advertising investments were focused on
ready-to-serve products, including Campbell’s Chunky and
Campbell’s Select, and the new Campbell’s Supper Bakes
meal kits.
Earnings from North America Sauces and Beverages increased
12% in 2003 from 2002 primarily due to the increase in
sales of Pace, V8 Splash and Prego brand products, and an
improvement in gross margin.
Earnings from North America Sauces and Beverages declined
19% in 2002 from 2001 primarily due to a significant increase
in marketing investments, principally on Prego, Pace Mexican
sauces and V8 vegetable juices.
Earnings from Biscuits and Confectionery increased 14%
in 2003 compared to 2002. Favorable currency translation
accounted for approximately 4 percentage points of the
increase. Operating earnings in 2003 were impacted by
approximately $10 million of transitional expenses related
to the closure of the Pepperidge Farm bakery in Norwalk,
Connecticut and startup of the new bakery in Bloomfield,
Connecticut. Earnings in 2003 benefited from a $5 million
payment to Godiva for the transfer of an ice cream license.
Operating earnings in 2002 included $20 million of costs
associated with the Australian manufacturing reconfiguration
compared to $1 million in 2003.
In 2002, earnings from Biscuits and Confectionery decreased
11%. Earnings included the effect of costs associated with
the Australian manufacturing reconfiguration of $20 million
in 2002 and $15 million in 2001. The remaining decline was
due primarily to increased marketing investments across the
portfolio and a decline in earnings from Godiva, partially offset
by increased sales in Pepperidge Farm and Arnott’s.
The 7% increase in 2003 earnings from International
Soup and Sauces was primarily due to favorable currency
translation, partially offset by $8 million of costs associated
with the discontinuance in 2004 of certain co-packing
contracts in Europe.
The 90% increase in 2002 earnings from International Soup
and Sauces was due to the European acquisition. Base
earnings declined significantly due to lower sales in the United
Kingdom soup and sauces business and planned increases in
marketing across the portfolio.
Corporate expenses increased in 2003 primarily due to adjust-
ments recorded to the carrying value of long-term investments
in affordable housing partnerships and legal expenses related
to ongoing litigation, partially offset by lower stock-related
compensation costs.
Corporate expenses increased in 2002 due principally to planned
infrastructure investments and higher compensation costs.
Nonoperating Items Interest expense declined 2% in 2003
from 2002 due to lower levels of debt and lower interest rates.
Interest expense decreased 13% in 2002 from 2001. Higher
interest expense due to increased average debt levels following
the fourth quarter 2001 European acquisition was more than
offset by a steep decline in short-term rates.
The effective tax rate was 32.2% in 2003 and 34.2% in both
2002 and 2001, as reported. The comparable tax rate for
2002 and 2001 would be 33.3% and 33.8%, respectively,
based on a pro forma adjustment for the adoption of SFAS
No. 142. The reduction in the rate from 2002 to 2003 reflects
a number of factors which favorably impact foreign and
U.S. taxes.
Restructuring Program A restructuring charge of $10 million
($7 million after tax) was recorded in the fourth quarter 2001
for severance costs associated with the reconfiguration of
the manufacturing network of Arnott’s in Australia. In the
second quarter of 2002, the company recorded an additional
$1 million restructuring charge related to planned severance
actions. Related costs of approximately $1 million, $19 million
($13 million after tax) and $5 million ($4 million after tax) were
recorded in 2003, 2002 and 2001, respectively, as Cost of
products sold, primarily representing accelerated depreciation
on assets to be taken out of service. This program was
2222
Campbell Soup Company Annual Report 2003
Campbell Soup Company Annual Report 2003
designed to drive greater manufacturing efficiency resulting
from the closure of the Melbourne plant. Approximately 550
jobs were eliminated due to the plant closure. As a result of
this reconfiguration, the company expects annual pre-tax cost
savings of approximately $10 million, most of which will be
realized in 2004. In 2003, the company incurred startup costs
associated with the transition of production. These costs were
substantially offset by a gain on the sale of the facility. See
Note 5 to the Consolidated Financial Statements for further
discussion of this program.
Liquidity and Capital Resources
Net cash flows from operating activities provided $873
million in 2003, compared to $1.0 billion in 2002. The 2002
cash flow benefited from a significant reduction in working
capital to a low level, which was maintained in 2003. Net
cash flows from operations in 2002 decreased to $1.0 billion
from $1.1 billion in 2001. This decrease was primarily due
to lower net earnings resulting from planned increases in
marketing and infrastructure investments. Over the last three
years, operating cash flows totaled approximately $3 billion.
This cash generating capability provides the company with
substantial financial flexibility in meeting its operating and
investing needs.
Capital expenditures were $283 million in 2003, $269 million
in 2002 and $200 million in 2001. Capital expenditures are
projected to be approximately $285 million in 2004. The
increase in 2003 was driven by the Pepperidge Farm bakery
and soup quality projects, partially offset by reduced spending
in Australia on the manufacturing reconfiguration, which
was substantially completed in 2002. The increase in 2002
was due to planned process improvements, product quality
enhancements, the Australian plant reconfiguration, and the
construction of the new Pepperidge Farm bakery.
Businesses acquired, as presented in the Statements of Cash
Flows, primarily represents the acquisitions of Snack Foods
Limited and Erin Foods in the first quarter of 2003. The
purchase price adjustment in 2002 related to the European
dry soup and sauces acquisition, completed in 2001.
In November 2002, the company issued $400 million of
ten-year 5% fixed-rate notes due December 2012. The
proceeds were used to retire $300 million 6.15% notes and
to repay commercial paper borrowings. In connection with
this issuance, the company entered into ten-year interest
rate swaps that converted $300 million of the fixed-rate debt
to variable.
In November 2002, the company terminated interest rate swap
contracts with a notional value of $250 million that converted
fixed-rate debt (6.75% notes due 2011) to variable and
received $37 million. Of this amount, $3 million represented
accrued interest earned on the swap prior to the termination
date. The remainder will be amortized over the remaining life
of the notes as a reduction to interest expense.
Long-term borrowings in 2002 were the result of a series
of debt issuances throughout the year. In September 2001,
the company issued $300 million seven-year 5.875% fixed-
rate notes. The proceeds were used to repay short-term
borrowings. While planning for the issuance of these notes,
the company entered into interest rate swaps with a notional
value of approximately $138 million that effectively fixed a
portion of the interest rate on the debt prior to issuance. These
contracts were settled at a loss of approximately $4 million
upon issuance of the notes. This loss is being amortized over
the life of the notes. In conjunction with the issuance of these
notes, the company also entered into a $75 million seven-year
interest rate swap that converts fixed-rate debt to variable.
In October 2001, the company issued $300 million two-year
variable-rate notes. The proceeds were also used to repay
short-term borrowings. In connection with this issuance, the
company entered into a $300 million two-year interest rate
swap that converts the variable-rate debt to fixed.
In November 2001, the company redeemed $100 million
5.625% fixed-rate notes due in September 2003. The notes
were callable at par. This redemption was financed with lower
rate commercial paper.
In December 2001, the company issued an additional
$200 million of its existing 6.75% fixed-rate notes due February
2011, originally issued in February 2001. These additional
notes were priced at a premium to reflect market conditions.
The proceeds were used to repay short-term borrowings.
In January 2002, the company repaid $300 million of variable-
rate notes due December 2003. The notes were repaid with
lower cost short-term borrowings.
In March 2002, the company issued $300 million five-year
5.50% fixed-rate notes. The proceeds were used to repay
$228 million variable-rate notes due in December 2003 and
short-term borrowings. In connection with this issuance,
the company entered into a five-year interest rate swap that
converts $100 million of the fixed-rate debt to variable.
In June 2002, the company filed a $1 billion shelf registration
statement with the Securities and Exchange Commission
to use for future offerings of debt securities. Under the
registration statement, the company may issue debt securities
from time to time, depending on market conditions. The
company intends to use the proceeds to repay short-term
debt, to reduce or retire other indebtedness or for other
general corporate purposes. As of August 3, 2003, the
company had $600 million available for issuance under this
registration statement. See also Recent Developments.
23
23
Management’s Discussion and Analysis of
Results of Operations and Financial Condition
Long-term borrowings completed in 2001 included both a
three-year floating rate loan, which funded the purchase of
11 million shares under forward stock purchase contracts
for approximately $521 million in December 2000, and the
issuance of $500 million 6.75% fixed-rate notes due February
2011. The proceeds of the 6.75% notes were used primarily
to repay short-term borrowings. The company also entered
into ten-year interest rate swap contracts with a notional value
of $250 million in connection with the issuance of the 6.75%
fixed-rate notes. The company terminated these swaps in
November 2002.
Dividend payments decreased to $259 million in 2003,
compared to $286 million in 2002. Dividends declared in
2003 and 2002 totaled $0.63 per share and in 2001 totaled
$0.90 per share. The 2003 fourth quarter rate was $0.1575
per share.
Capital stock repurchases totaled 1 million shares at a cost of
$24 million during 2003, compared to 200,000 shares at a
cost of $5 million during 2002 and repurchases of 14.3 million
shares at a cost of $618 million in 2001. In 2001, the strategic
share repurchase plan was suspended. The company expects
to continue to repurchase shares to offset the impact of dilution
from shares issued under incentive stock compensation plans.
At August 3, 2003, the company had $1.279 billion of notes
payable due within one year and $31 million of standby letters
of credit issued on behalf of the company. The company
maintains $1.8 billion of committed revolving credit facilities,
which remain unused at August 3, 2003, except for $31 million
of standby letters of credit. In September 2003, the company
entered into a $900 million committed 364-day revolving credit
facility, which replaced an existing $900 million 364-day facility
that matured in September 2003. The company also has a
$900 million revolving credit facility that matures in September
2006. These agreements support the company’s commercial
paper program.
The company is in compliance with the covenants contained
in its revolving credit facilities and debt securities.
The company believes that foreseeable liquidity, including
the resolution of the contingencies described in Note 20 to
the Consolidated Financial Statements, and capital resource
requirements are expected to be met through anticipated
cash flows from operations, management of working capital,
long-term borrowings under its shelf registration, and short-
term borrowings, including commercial paper. The company
believes that its sources of financing are adequate to meet its
liquidity and capital resource requirements. The cost and terms
of any future financing arrangements depend on the market
conditions and the company’s financial position at that time.
Contractual Obligations and Other Commitments
Contractual Obligations The following table summarizes
the company’s obligations and commitments to make future
payments under certain contractual obligations. For additional
information on debt, see Note 16 to the Consolidated Financial
Statements. Operating leases are primarily entered into for
warehouse and office facilities, retail store space, and certain
equipment. Purchase commitments represent purchase
orders and long-term purchase arrangements related to the
procurement of ingredients, supplies, machinery, equipment
and services. These commitments are not expected to have
a material impact on liquidity. Other long-term liabilities
primarily represent payments related to deferred compensation
obligations and postemployment benefits. For additional
information on other long-term liabilities, see Note 17 to the
Consolidated Financial Statements.
(US$ equivalents in millions)
Debt Obligations1
Contractual Payments Due by Fiscal Year
Total
2004
2005-
2006
2007-
2008
Thereafter
$ 3,528 $ 1,279 $
2 $ 606 $ 1,641
Purchase Commitments
3,662
1,418
1,171
940
Operating Leases
294
67
100
Other Long-term
Liabilities2
Total Long-term
233
16
43
68
79
133
59
95
Cash Obligations
$ 7,717 $ 2,780 $ 1,316 $ 1,693 $ 1,928
1 Includes capital lease obligations totaling $8 million, unamortized net premium on debt
issuances, unamortized gain on an interest rate swap and a gain on fair-value interest
rate swaps.
2 Represents other long-term liabilities, excluding deferred taxes and minority interest.
Off-Balance Sheet Arrangements and Other Commitments
The company guarantees approximately 1,200 bank loans
to Pepperidge Farm independent sales distributors used to
purchase distribution routes. The maximum potential amount
of the future payments the company could be required to
make under the guarantees is approximately $85 million.
The company’s guarantees are secured by the distribution
routes. The company does not believe that it is probable that
it will be required to make guarantee payments as a result of
defaults on the bank loans guaranteed. See also Note 20 to
the Consolidated Financial Statements for information on off-
balance sheet arrangements.
Infl ation
Inflation during recent years has not had a significant effect on
the company. The company mitigates the effects of inflation
by aggressively pursuing cost productivity initiatives, including
global procurement strategies, and making capital investments
that improve the efficiency of operations.
2424
Campbell Soup Company Annual Report 2003
Campbell Soup Company Annual Report 2003
Market Risk Sensitivity
The principal market risks to which the company is exposed
are changes in commodity prices, interest rates and foreign
currency exchange rates. In addition, the company is
exposed to equity price changes related to certain employee
compensation obligations. The company manages its exposure
to changes in interest rates by optimizing the use of variable-
rate and fixed-rate debt and by utilizing interest rate swaps
in order to maintain its variable-to-total debt ratio within
targeted guidelines. International operations, which accounted
for approximately 32% of 2003 net sales, are concentrated
principally in Australia, Canada, France, Germany and the
United Kingdom. The company manages its foreign currency
exposures by borrowing in various foreign currencies and
utilizing cross-currency swaps, forward contracts and
options. Swaps and forward contracts are entered into for
periods consistent with related underlying exposures and
do not constitute positions independent of those exposures.
The company does not enter into contracts for speculative
purposes and does not use leveraged instruments.
The company principally uses a combination of purchase
orders and various short- and long-term supply arrangements
Expected Fiscal Year of Maturity
in connection with the purchase of raw materials, including
certain commodities and agricultural products. The company
may also enter into commodity futures contracts, as considered
appropriate, to reduce the volatility of price fluctuations for
commodities such as corn, cocoa, soybean meal, soybean oil
and wheat. At August 3, 2003 and July 28, 2002, the notional
values and unrealized gains or losses on commodity futures
contracts held by the company were not material.
The information below summarizes the company’s market risks
associated with debt obligations and other significant financial
instruments as of August 3, 2003. Fair values included herein
have been determined based on quoted market prices. The
information presented below should be read in conjunction
with Notes 16 and 18 to the Consolidated Financial Statements.
The table below presents principal cash flows and related
interest rates by fiscal year of maturity for debt obligations.
Variable interest rates disclosed represent the weighted-average
rates of the portfolio at the period end. Notional amounts and
related interest rates of interest rate swaps are presented by
fiscal year of maturity. For the swaps, variable rates are the
average forward rates for the term of each contract.
(US$ equivalents in millions)
2004
2005
2006
2007
2008
Thereafter
Total
Fair Value
Debt
Fixed rate
Weighted-average
interest rate
Variable rate
Weighted-average
interest rate
Interest Rate Swaps
Fixed to variable
Average pay rate1
Average receive rate
Variable to fixed
Average pay rate
Average receive rate
$ 301
$ 1
$ 1
$ 605
$ 1
$ 1,641
$ 2,550
$ 2,780
4.76%
6.42%
6.60%
6.20%
6.60%
6.42%
6.17%
$ 978
2.07%
$ 300)4
3.74%
1.54%
$ 978
$ 978
2.07%
$ 100)2
3.28%
5.50%
$ 375)3
$ 475
$
2
5.32%
5.18%
4.89%
5.24%
$ 300
$
(1)
3.74%
1.54%
1 Average pay rates estimated over life of swap by using US$ forward LIBOR interest rates plus applicable spread.
2 Hedges 5.50% notes due in 2007.
3 Hedges $75 million of 5.875% notes and $300 million of 5.00% notes, respectively, due in 2009 and 2013.
4 Hedges variable-rate notes due in 2004.
As of July 28, 2002, fixed-rate debt of approximately $2.5 billion with an average interest rate of 6.37% and variable-rate debt of approximately $1.2 billion with an average interest rate of 2.46%
were outstanding. As of July 28, 2002, the company had also swapped $425 million of fixed-rate debt to variable. The average rate received on these swaps was 6.30% and the average rate paid
was estimated to be 5.09% over the remaining life of the swaps. Additionally, the company had swapped $300 million of floating-rate debt to fixed. The average rate received on this swap was
estimated to be 2.63% and the average rate paid was 3.74% over the remaining life of the swap.
The company is exposed to foreign exchange risk related to its international operations, including non-functional currency
intercompany debt and net investments in subsidiaries.
25
25
Management’s Discussion and Analysis of
Results of Operations and Financial Condition
The table below summarizes the cross-currency swaps
outstanding as of August 3, 2003, which hedge such expo-
sures. The notional amount of each currency and the related
weighted-average forward interest rate are presented in the
Cross-Currency Swaps table.
Cross-Currency Swaps
(US$ equivalents in millions)
Expiration
Pay fixed SEK
Receive fixed USD
Pay fixed SEK
Receive fixed USD
Pay fixed EUR
Receive fixed USD
Pay fixed GBP
Receive fixed USD
2004
2005
2007
2011
Interest
Rate
4.83%
2.10%
5.78%
5.25%
5.46%
5.75%
5.97%
6.08%
Notional
Value
$ 31
Fair
Value
$ (4)
$ 47
$ (11)
$ 200
$ (56)
$ 200
$ (26)
The cross-currency swap contracts outstanding at July 28, 2002 represented two pay fixed
SEK/receive fixed USD swaps with notional values of $29 million and $47 million, a pay fixed
EUR/receive fixed USD swap with a notional value of $200 million, and a pay fixed GBP/
receive fixed USD swap with a notional value of $200 million. The aggregate fair value of these
swap contracts was $(37) million as of July 28, 2002.
Effective August 5, 2003, the company entered into a pay
floating CAD/receive floating USD swap with a notional value
of $53 million. The company also entered into two pay
fixed CAD/receive fixed USD swaps with notional values of
$61 million each.
The company is also exposed to foreign exchange risk as a
result of transactions in currencies other than the functional
currency of certain subsidiaries, including subsidiary debt.
The company utilizes foreign currency forward purchase
and sale contracts to hedge these exposures. The table
below summarizes the foreign currency forward contracts
outstanding and the related weighted-average contract
exchange rates as of August 3, 2003.
Forward Exchange Contracts
(US$ equivalents in millions)
Receive USD / Pay GBP
Receive USD / Pay EUR
Receive USD / Pay AUD
Receive USD / Pay CAD
Receive EUR / Pay GBP
Receive GBP / Pay USD
Receive JPY / Pay USD
Receive AUD / Pay NZD
Receive EUR / Pay SEK
Receive USD / Pay JPY
Receive EUR / Pay JPY
Receive GBP / Pay AUD
Receive SEK / Pay USD
Contract
Amount
Average Contractual
Exchange Rate
$ 203
$ 197
$ 172
$ 44
$ 33
$ 21
$ 20
$ 18
$ 8
$ 6
$ 6
$ 5
$ 5
0.63
0.88
1.56
1.41
0.71
1.61
0.01
1.10
9.25
118.26
135.69
2.53
0.12
The company had an additional $12 million in a number of smaller contracts to purchase
or sell various other currencies, such as the Australian dollar, British pound, Canadian
dollar, euro, New Zealand dollar and Swiss franc, as of August 3, 2003. The aggregate fair
value of all contracts was $ 4 million as of August 3, 2003. Total forward exchange contracts
outstanding as of July 28, 2002 were $637 million with a fair value of $(7) million.
2626
The company had swap contracts outstanding as of August 3,
2003, which hedge a portion of exposures relating to certain
employee compensation liabilities linked to the total return
of the Standard & Poor’s 500 Index or to the total return
of the company’s capital stock. Under these contracts, the
company pays variable interest rates and receives from the
counterparty either the Standard & Poor’s 500 Index total
return or the total return on company capital stock. The
notional value of the contracts that are linked to the return on
the Standard & Poor’s 500 Index was $10 million at August 3,
2003 and $21 million at July 28, 2002. The average forward
interest rate applicable to the contract, which expires in 2004,
was 1.40% at August 3, 2003. The notional value of the
contract that is linked to the total return on company capital
stock was $11 million at August 3, 2003 and $32 million at
July 28, 2002. The average forward interest rate applicable to
this contract, which expires in 2004, was 1.65% at August 3,
2003. The fair value of these contracts was a $1 million
gain at August 3, 2003 and a net loss of $22 million at
July 28, 2002.
The company’s utilization of financial instruments in managing
market risk exposures described above is consistent with the
prior year. Changes in the portfolio of financial instruments are
a function of the results of operations, debt repayment and
debt issuances, market effects on debt and foreign currency,
and the company’s acquisition and divestiture activities.
Signifi cant Accounting Estimates
The consolidated financial statements of the company are
prepared in conformity with accounting principles generally
accepted in the United States. The preparation of these
financial statements requires the use of estimates, judgments
and assumptions that affect the reported amounts of assets
and liabilities at the date of the financial statements and
reported amounts of revenues and expenses during the periods
presented. Actual results could differ from those estimates
and assumptions. See Note 1 to the Consolidated Financial
Statements for a discussion of significant accounting policies.
The following areas all require the use of subjective or complex
judgments, estimates and assumptions:
Trade and consumer promotion programs The company
offers various sales incentive programs to customers and
consumers, such as cooperative advertising programs, feature
price discounts, in-store display incentives and coupons.
The recognition of the costs for these programs, which are
classified as a reduction of revenue, involves use of judgment
related to performance and redemption estimates. Estimates
are made based on historical experience and other factors.
Actual expenses may differ if the level of redemption rates
and performance vary from estimates.
Campbell Soup Company Annual Report 2003
Campbell Soup Company Annual Report 2003
Valuation of long-lived assets Long-lived assets, including fixed
assets and intangibles, are reviewed for impairment as events
or changes in circumstances occur indicating that the carrying
amount of the asset may not be recoverable. Discounted cash
flow analyses are used to assess nonamortizable intangible
asset impairment, while undiscounted cash flow analyses are
used to assess other long-lived asset impairment. The esti-
mates of future cash flows involve considerable management
judgment and are based upon assumptions about expected
future operating performance. Assumptions used in these
forecasts are consistent with internal planning. The actual
cash flows could differ from management’s estimates due to
changes in business conditions, operating performance and
economic conditions.
Pension and postretirement medical benefits The company
provides certain pension and postretirement benefits to
employees and retirees. Determining the cost associated with
such benefits is dependent on various actuarial assumptions,
including discount rates, expected return on plan assets,
compensation increases, turnover rates and health care trend
rates. Independent actuaries, in accordance with accounting
principles generally accepted in the United States, perform
the required calculations to determine expense. Actual results
that differ from the actuarial assumptions are generally
accumulated and amortized over future periods.
The discount rate is established as of the company’s fiscal
year-end measurement date based on high-quality, long-term
debt securities. The estimated return on plan assets is a
long-term assumption based upon historical experience and
expected future performance, considering the company’s
current and projected investment mix. Within any given
fiscal period, significant differences may arise between the
actual return and the estimated long-term return on plan
assets. The value of plan assets, used in the calculation of
pension expense, is determined on a calculated method that
recognizes 20% of the difference between the actual fair value
of assets and the expected calculated method. Gains and
losses resulting from differences between actual experience
and the assumptions are determined at each measurement
date. If the net gain or loss exceeds 10% of the greater of plan
assets or liabilities, a portion is amortized into earnings in the
following year.
Shareowners’ equity (deficit) includes a minimum liability,
net of tax, of $210 million in 2003 and $208 million in 2002,
principally related to a U.S. pension plan. Following stock
market declines in July 2002, the fair value of assets included
in certain pension funds fell below the accumulated benefit
obligation. As required under accounting principles generally
accepted in the United States, the company recognized
the additional minimum liability and reclassified an existing
pension asset to equity. This non-cash adjustment did not
impact 2002 operating results. However, the lower fair value of
pension assets and a reduction in the estimated return on plan
assets resulted in an increase in net periodic pension cost
in 2003.
Net periodic pension and postretirement medical expense
was $43 million in 2003 compared to $8 million in 2002.
The net periodic pension and postretirement medical expense
is expected to be approximately $60 million in 2004. The
increase in 2004 is primarily due to a lower discount rate, a
reduction in the expected return on assets, and an increase
in the health care trend rate, partially offset by a $50 million
contribution to a U.S. plan subsequent to August 3, 2003.
Significant weighted-average assumptions as of the end of the
year are as follows:
Discount rate for benefit obligations
Expected return on plan assets
Initial health care trend rate
Ultimate health care trend rate
2003
6.39%
8.80%
9.00%
4.50%
2002
6.90%
9.30%
8.00%
4.50%
Estimated sensitivities to the net periodic pension cost are as
follows: a 50 basis point reduction in the discount rate would
increase expense by approximately $9 million; a 50 basis
point reduction in the estimated return on assets assumption
would increase expense by approximately $8 million. A one
percentage point change in assumed health care costs would
increase expense by approximately $3 million.
Contributions to the U.S. plans were not required in 2003.
Contributions to international plans were $19 million in 2003.
Although there were no mandatory funding requirements to
the U.S. plans in 2004, the company made a $50 million
contribution to a U.S. plan subsequent to August 3, 2003
based on expected future funding requirements.
See also Note 9 to the Consolidated Financial Statements for
additional information on pension and postretirement medical
expenses.
Income taxes The effective tax rate and the tax bases of
assets and liabilities reflect management’s estimate of the
ultimate outcome of various tax audits and issues. In addition,
valuation allowances are established for deferred tax assets
where the amount of expected future taxable income from
operations does not support the realization of the asset.
Recently Issued Accounting Pronouncements
The company adopted SFAS No. 144 “Accounting for the
Impairment or Disposal of Long-Lived Assets” on July 29,
2002. This standard is generally effective for the company
on a prospective basis. This standard addresses financial
accounting and reporting for the impairment or disposal of
long-lived assets. This standard supersedes SFAS No. 121
27
27
Management’s Discussion and Analysis of
Results of Operations and Financial Condition
“Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of” and the accounting
and reporting provisions of Accounting Principles Board
(APB) Opinion No. 30 “Reporting the Results of Operations –
Reporting the Effects of Disposal of a Segment of a Business,
and Extraordinary, Unusual and Infrequently Occurring Events
and Transactions” for the disposal of a segment of a business.
Long-lived assets are tested for impairment if certain triggers
occur. The adoption of this standard did not have a material
impact on the financial statements.
In July 2002, the FASB issued SFAS No. 146 “Accounting for
Exit or Disposal Activities.” The provisions of this standard
were effective for disposal activities initiated after December
31, 2002, with early application encouraged. The adoption
of this standard did not have a material impact on the
financial statements.
In December 2002, the FASB issued SFAS No. 148
“Accounting for Stock-Based Compensation – Transition
and Disclosure.” This standard amends the transition and
disclosure requirements of SFAS No. 123 “Accounting for
Stock-Based Compensation.” The increased disclosure
requirements are applicable to the company’s interim and
annual financial statements beginning in the third quarter of
the current fiscal year. The required disclosures are included
in Note 1 to the Consolidated Financial Statements. The
company currently does not intend to transition to the use of
a fair value method for accounting for stock-based compensa-
tion. As permitted by SFAS No. 148, the company accounts for
stock option grants and restricted stock awards in accordance
with APB Opinion No. 25 “Accounting for Stock Issued to
Employees” and related Interpretations. Accordingly, no
compensation expense has 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.
In November 2002, FASB Interpretation No. 45 (FIN 45)
“Guarantor’s Accounting and Disclosure Requirements for
Guarantees, Including Indirect Guarantees of Indebtedness
of Others” was issued. FIN 45 clarifies the requirements
relating to a guarantor’s accounting for, and disclosure of, the
issuance of certain types of guarantees. FIN 45 requires that
upon issuance of a guarantee, the guarantor must recognize
a liability for the fair value of the obligation it assumes under
that guarantee. The initial recognition and measurement
provisions are applicable on a prospective basis to guarantees
issued or modified after December 31, 2002. The disclosure
provisions are included in Note 20 to the Consolidated
Financial Statements.
In January 2003, the FASB issued FIN 46 “Consolidation of
Variable Interest Entities, an Interpretation of ARB 51.” This
Interpretation addressed consolidation by business enterprises
of certain variable interest entities (VIEs). The Interpretation is
effective immediately for all enterprises with variable interests
in VIEs created after January 31, 2003. For variable interests
in VIEs created before February 1, 2003, the provisions of this
Interpretation will be applicable no later than the beginning
of the first interim or annual period beginning after June 15,
2003. Further, the disclosure requirements of the Interpretation
are applicable for all financial statements initially issued after
January 31, 2003, regardless of the date on which the VIE was
created. The adoption of this standard is not expected to have
a material impact on the financial statements.
The EITF reached a consensus on Issue No. 02-17 “Recognition
of Customer Relationship Intangible Assets Acquired in a
Business Combination,” which clarifies certain recognition
requirements in SFAS No. 141 “Business Combinations.” The
guidance in this Issue is to be applied to business combinations
consummated and goodwill impairments tests performed after
October 25, 2002. The company does not expect its application
to have a material impact on the financial statements.
In April 2003, the FASB issued SFAS No. 149 “Amendment
of Statement 133 on Derivative Instruments and Hedging
Activities.” This standard amends and clarifies financial
accounting and reporting for derivative instruments and
hedging activities, primarily as a result of decisions made
by the FASB Derivatives Implementation Group subsequent
to the original issuance of SFAS No. 133 and in connection
with other FASB projects. This standard is generally effective
prospectively for contracts and hedging relationships entered
into or modified after June 30, 2003. The company does
not expect its application to have a material impact on the
financial statements.
In May 2003, the FASB issued SFAS No. 150 “Accounting
for Certain Financial Instruments with Characteristics of both
Liabilities and Equity.” SFAS No. 150 changes the accounting
for certain financial instruments that, under previous
guidance, could be classified as equity or “mezzanine” equity,
by now requiring those instruments to be classified as liabili-
ties (or assets in some circumstances) in the statement of
financial position. Further, SFAS No. 150 requires disclosure
regarding the terms of those instruments and settlement alter-
natives. The guidance in SFAS No. 150 is generally effec tive
for all financial instruments entered into or modified after
May 31, 2003, and is otherwise effective at the beginning of
the first interim period beginning after June 15, 2003. The
company is in the process of evaluating this standard, but
does not expect the adoption to have a material impact on the
financial statements.
2828
Recent Developments
In September 2003, the company issued $300 million ten-year
4.875% fixed-rate notes. The proceeds were used to repay
commercial paper borrowings and for other general corporate
purposes. While planning for the issuance of these notes, the
company entered into treasury lock agreements with a notional
value of $100 million that effectively fixed a portion of the
interest rate on the debt prior to issuance. These agreements
were settled at a minimal gain upon issuance of the notes,
which will be amortized over the life of the notes. In connec-
tion with this issuance, the company entered into ten-year
interest rate swaps that convert $200 million of the fixed-rate
debt to variable.
In September 2003, the company also entered into $100 million
five-year interest rate swaps that convert a portion of the
5.875% fixed-rate notes due October 2008 to variable.
Earnings Outlook
On September 11, 2003, the company issued a press release
announcing results for 2003 and commented on the outlook for
earnings per share for the first quarter and full year for 2004.
Cautionary Factors That May Affect Future Results
This 2003 Annual Report contains “forward-looking” statements
that reflect the company’s current expectations regarding future
results of operations, economic performance, financial condi-
tion and achievements of the company. The company tries,
wherever possible, to identify these forward-looking statements
by using words such as “anticipate,” “believe,” “estimate,”
“expect,” “will” and similar expressions. One can also identify
them by the fact that they do not relate strictly to historical or
current facts. 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 regarding
future events and estimates which could be inaccurate and
which are inherently subject to risks and uncertainties.
The company wishes to caution the reader that the following
important factors and those important factors described else-
where in the commentary, or in the 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:
(cid:127) the company’s ability to achieve the goals of its
“transformation plan”;
(cid:127) the impact of strong competitive response to the company’s
efforts to leverage its brand power with product innovation,
promotional programs and new advertising, and of changes
in consumer demand for the company’s products;
Campbell Soup Company Annual Report 2003
Campbell Soup Company Annual Report 2003
(cid:127) the risks in the marketplace associated with trade and
consumer acceptance of product improvements, shelving
initiatives and new product introductions;
(cid:127) the company’s ability to achieve sales and earnings
forecasts, which are based on assumptions about sales
volume and product mix and the impact of increased
marketing investments;
(cid:127) the company’s ability to realize forecasted cost savings;
(cid:127) the company’s ability to successfully manage changes to its
business processes, including selling, distribution and the
integration of acquisitions;
(cid:127) the increased significance of certain of the company’s key
trade customers;
(cid:127) the difficulty of predicting the pattern of inventory movements
by the company’s trade customers and of predicting changes
in the policies of its customers, such as changes in customer
inventory levels and access to shelf space;
(cid:127) the impact of fluctuations in the supply and cost of raw
materials;
(cid:127) the impact of unforeseen economic changes in currency
exchange rates, tax rates, interest rates, equity markets,
inflation rates, recession and other external factors over
which the company has no control, including the possibility
of increased pension expense and contributions resulting
from lower interest rates and declines in stock market
returns; and
(cid:127) the impact of unforeseen business disruptions in one or
more of the company’s markets due to political instability,
civil disobedience, armed hostilities or other calamities.
This discussion of uncertainties is by no means exhaustive
but is designed to highlight important factors that may impact
the company’s outlook. The company disclaims any obligation
or intent to update forward-looking statements made by
the company in order to reflect new information, events or
circumstances after the date they are made.
29
29
Consolidated Statements of Earnings
(millions, except per share amounts)
Net Sales
Costs and expenses
Cost of products sold
Marketing and selling expenses
Administrative expenses
Research and development expenses
Other expenses (Note 6)
Restructuring charges (Note 5)
Total costs and expenses
Earnings Before Interest and Taxes
Interest expense (Note 7)
Interest income
Earnings before taxes
Taxes on earnings (Note 10)
Earnings before cumulative effect of accounting change
Cumulative effect of change in accounting principle
Net Earnings
Per Share – Basic
Earnings before cumulative effect of accounting change
Cumulative effect of change in accounting principle
Net Earnings
Weighted average shares outstanding – basic
Per Share – Assuming Dilution
Earnings before cumulative effect of accounting change
Cumulative effect of change in accounting principle
Net Earnings
Weighted average shares outstanding – assuming dilution
See accompanying Notes to Consolidated Financial Statements.
The sum of the individual per share amounts does not equal net earnings per share due to rounding.
2003
53 weeks
$ 6,678
2002
52 weeks
$ 6,133
2001
52 weeks
$ 5,771
3,805
1,145
507
88
28
—
5,573
1,105
186
5
924
298
626
(31)
3,443
1,073
454
79
99
1
5,149
984
190
4
798
273
525
—
3,132
890
403
64
78
10
4,577
1,194
219
12
987
338
649
—
$ 595
$ 525
$ 649
$ 1.52
(.08)
$ 1.45
411
$ 1.52
(.08)
$ 1.45
411
$ 1.28
—
$ 1.28
410
$ 1.28
—
$ 1.28
411
$ 1.57
—
$ 1.57
414
$ 1.55
—
$ 1.55
418
30
Consolidated Balance Sheets
(millions, except per share amounts)
Campbell Soup Company Annual Report 2003
August 3, 2003 July 28, 2002
Current Assets
Cash and cash equivalents
Accounts receivable (Note 11)
Inventories (Note 12)
Other current assets (Note 13)
Total current assets
Plant Assets, Net of Depreciation (Note 14)
Goodwill (Note 3)
Other Intangible Assets, Net of Amortization (Note 3)
Other Assets (Note 15)
Total assets
Current Liabilities
Notes payable (Note 16)
Payable to suppliers and others
Accrued liabilities
Dividend payable
Accrued income taxes
Total current liabilities
Long-term Debt (Note 16)
Nonpension Postretirement Benefits (Note 9)
Other Liabilities (Note 17)
Total liabilities
Shareowners’ Equity (Deficit) (Note 19)
Preferred stock; authorized 40 shares; none issued
Capital stock, $.0375 par value; authorized 560 shares; issued 542 shares
Additional paid-in capital
Earnings retained in the business
Capital stock in treasury, 132 shares in 2003 and 2002, at cost
Accumulated other comprehensive loss
Total shareowners’ equity (deficit)
Total liabilities and shareowners’ equity (deficit)
See accompanying Notes to Consolidated Financial Statements.
$ 32
$ 21
413
709
136
1,290
1,843
1,803
1,018
251
417
638
123
1,199
1,684
1,581
953
304
$ 6,205
$ 5,721
$ 1,279
$ 1,196
620
602
65
217
2,783
2,249
304
482
5,818
—
20
298
5,254
(4,869)
(316)
387
612
572
65
233
2,678
2,449
319
389
5,835
—
20
320
4,918
(4,891)
(481)
(114)
$ 6,205
$ 5,721
31
2003
2002
2001
$ 595
$ 525
$ 649
31
—
243
72
93
46
(33)
1
(38)
(137)
873
(283)
22
(177)
10
(4)
(432)
400
—
(566)
(259)
(24)
17
—
(432)
2
11
21
—
—
319
5
53
40
(30)
9
195
(99)
—
10
266
4
38
(11)
(1)
3
137
11
1,017
1,106
(269)
5
(15)
3
(12)
(288)
1,100
(628)
(915)
(286)
(5)
14
(6)
(726)
(6)
(3)
24
(200)
8
(911)
—
(19)
(1,122)
1,028
—
(45)
(374)
(618)
24
—
15
(2)
(3)
27
$ 32
$ 21
$ 24
Consolidated Statements of Cash Flows
(millions)
Cash Flows from Operating Activities:
Net earnings
Non-cash charges to net earnings
Cumulative effect of accounting change
Restructuring charges
Depreciation and amortization
Deferred taxes
Other, net
Changes in working capital
Accounts receivable
Inventories
Prepaid assets
Accounts payable and accrued liabilities
Other
Net Cash Provided by Operating Activities
Cash Flows from Investing Activities:
Purchases of plant assets
Sales of plant assets
Businesses acquired
Sales of businesses
Long-term investments
Net Cash Used in Investing Activities
Cash Flows from Financing Activities:
Long-term borrowings
Repayments of long-term borrowings
Net repayments of short-term borrowings
Dividends paid
Treasury stock purchases
Treasury stock issuances
Other, net
Net Cash Provided by (Used in) Financing Activities
Effect of Exchange Rate Changes on Cash
Net Change in Cash and Cash Equivalents
Cash and Cash Equivalents – Beginning of Year
Cash and Cash Equivalents – End of Year
See accompanying Notes to Consolidated Financial Statements.
32
Consolidated Statements of Shareowners’ Equity (Deficit)
(millions, except per share amounts)
Campbell Soup Company Annual Report 2003
Capital Stock
Issued
In Treasury
Shares
Amount
Shares
Amount
Additional
Paid-in
Capital
Earnings
Retained
Accumulated
Other
in the Comprehensive
Total
Shareowners’
Income (Loss) Equity (Deficit)
Business
Balance at July 30, 2000
542
$ 20
(121)
$ (4,373)
$ 344
$ 4,373
$ (227)
$ 137
Comprehensive income (loss)
Net earnings
Foreign currency
translation adjustments
Other comprehensive loss
Total Comprehensive income
Dividends ($.90 per share)
Repurchase of shares
under forward stock
purchase contracts
Treasury stock purchased
Treasury stock issued under
management incentive and
stock option plans
(11)
(3)
(521)
(97)
2
83
Balance at July 29, 2001
542
20
(133)
(4,908)
Comprehensive income (loss)
Net earnings
Foreign currency
translation adjustments
Cash-flow hedges, net of tax
Minimum pension liability,
net of tax
Other comprehensive loss
Total Comprehensive income
Dividends ($.63 per share)
Treasury stock purchased
Treasury stock issued under
management incentive and
stock option plans
649
(371)
(97)
(97)
(30)
314
4,651
(324)
525
(258)
49
2
(208)
(157)
—
(5)
1
22
6
Balance at July 28, 2002
542
20
(132)
(4,891)
320
4,918
(481)
Comprehensive income (loss)
Net earnings
Foreign currency
translation adjustments
Cash-flow hedges, net of tax
Minimum pension liability,
net of tax
Other comprehensive income
Total Comprehensive income
Dividends ($.63 per share)
Treasury stock purchased
Treasury stock issued under
management incentive and
stock option plans
595
(259)
174
(7)
(2)
165
(1)
(24)
1
46
(22)
Balance at August 3, 2003
542
$ 20
(132)
$ (4,869)
$ 298
$ 5,254
$ (316)
$ 387
See accompanying Notes to Consolidated Financial Statements.
33
649
(97)
(97)
552
(371)
(521)
(97)
53
(247)
525
49
2
(208)
(157)
368
(258)
(5)
28
(114)
595
174
(7)
(2)
165
760
(259)
(24)
24
Notes to Consolidated Financial Statements
(dollars in millions, except per share amounts)
1 Summary of Signifi cant Accounting Policies
Consolidation The consolidated financial statements include
the accounts of the company and its majority-owned subsid-
iaries. Significant intercompany transactions are eliminated
in consolidation. Investments of 20% or more in affiliates are
accounted for by the equity method.
Fiscal Year The company’s fiscal year ends on the Sunday
nearest July 31. There were 53 weeks in 2003 and 52 weeks
in 2002 and 2001. There will be 52 weeks in fiscal 2004.
Revenue Recognition Revenues are recognized when the
earnings process is complete. This occurs when products are
shipped in accordance with terms of agreements, title and risk
of loss transfer to customers, collection is probable and pricing
is fixed or determinable.
Beginning in 2002, the company adopted the consensus
reached by the Financial Accounting Standards Board’s
(FASB’s) Emerging Issues Task Force (EITF) on Issue No. 01-09
“Accounting for Consideration Given by a Vendor to a Customer
or Reseller of the Vendor’s Products.” Under this consensus,
the EITF concluded that certain consumer and trade sales
promotion expenses, such as coupon redemption costs, cooper-
ative advertising programs, new product introduction fees,
feature price discounts and in-store display incentives, should
be classified as a reduction of sales rather than as marketing
expenses. The adoption of this consensus in 2002 resulted in
the following reclassifications to the annual results for 2001: Net
sales were reduced by $893; Cost of products sold was reduced
by $14; and Marketing and selling expenses were reduced by
$879. These reclassifications had no impact on net earnings.
Cash and Cash Equivalents All highly liquid debt instruments
purchased with a maturity of three months or less are
classified as cash equivalents.
Inventories Substantially all U.S. inventories are priced at the
lower of cost or market, with cost determined by the last in,
first out (LIFO) method. Other inventories are priced at the
lower of average cost or market.
Plant Assets and Other Long-Lived Assets Plant assets are
stated at historical cost. Alterations and major overhauls,
which extend the lives or increase the capacity of plant
assets, are capitalized. The amounts for property disposals
are removed from plant asset and accumulated depreciation
accounts and any resultant gain or loss is included in
earnings. Ordinary repairs and maintenance are charged
to operating costs. Depreciation provided in Costs and
expenses is calculated using the straight-line method over the
estimated useful lives of the assets. Buildings and machinery
and equipment are depreciated over periods not exceeding
45 years and 15 years, respectively.
The company adopted Statement of Financial Accounting
Standards (SFAS) No. 144 “Accounting for the Impairment
or Disposal of Long-Lived Assets” on July 29, 2002. This
standard is generally effective for the company on a prospec-
tive basis. This standard addresses financial accounting and
reporting for the impairment or disposal of long-lived assets
such as property, plants, equipment and amortized intangibles.
This standard supersedes SFAS No. 121 “Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets
to Be Disposed Of” and the accounting and reporting provi-
sions of Accounting Principles Board (APB) Opinion No. 30
“Reporting the Results of Operations – Reporting the Effects
of Disposal of a Segment of a Business, and Extraordinary,
Unusual and Infrequently Occurring Events and Transactions”
for the disposal of a segment of a business. Long-lived assets
are tested for impairment if certain triggers occur. The adoption
of this standard did not have a material impact on the finan-
cial statements.
Derivative Financial Instruments The company uses deriva-
tive financial instruments primarily for purposes of hedging
exposures to fluctuations in interest rates, foreign currency
exchange rates, commodities and equity-linked employee
benefit obligations. Beginning in 2001, all derivatives are
accounted for in accordance with SFAS No. 133 “Accounting
for Derivatives and Hedging Activities,” as amended by
SFAS No. 137 and No. 138. All derivatives are recognized on
the balance sheet at fair value. Changes in the fair value of
derivatives are recorded in earnings or other comprehensive
income, based on whether the instrument is designated as
part of a hedge transaction and, if so, the type of hedge trans-
action. Gains or losses on derivative instruments reported in
other comprehensive income are reclassified to earnings in
the period in which earnings are affected by the underlying
hedged item. The ineffective portion of all hedges is recog-
nized in earnings in the current period. The cumulative effect
of adopting SFAS No. 133 was not material to the company’s
consolidated financial statements.
Stock-Based Compensation In December 2002, the
FASB issued SFAS No. 148 “Accounting for Stock-Based
Compensation – Transition and Disclosure.” This standard
amends the transition and disclosure requirements of
SFAS No. 123 “Accounting for Stock-Based Compensation.”
As permitted by SFAS No. 148, the company accounts for
stock option grants and restricted stock awards in accordance
with APB Opinion No. 25 “Accounting for Stock Issued to
Employees” and related Interpretations. Accordingly, no
compensation expense has 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.
Restricted stock awards are expensed. See also Note 19 of
the Notes to Consolidated Financial Statements. The company
3434
Campbell Soup Company Annual Report 2003
Campbell Soup Company Annual Report 2003
currently does not intend to transition to the use of a fair
value method for accounting for stock-based compensation.
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. 123 to stock-based
employee compensation.
Net Earnings, as reported
$ 595
$ 525
$ 649
2003
2002
2001
Add: Stock-based employee compensation
expense included in reported net earnings,
net of related tax effects1
Deduct: Total stock-based employee
compensation expense determined under
fair value based method for all awards,
net of related tax effects
13
19
15
(37)
(34)
(29)
Pro forma net earnings
$ 571
$ 510
$ 635
Earnings per share:
Basic – as reported
Basic – pro forma
Diluted – as reported
Diluted – pro forma
1 Represents restricted stock expense.
$ 1.45
$ 1.28
$ 1.57
$ 1.39
$ 1.24
$ 1.53
$ 1.45
$ 1.28
$ 1.55
$ 1.39
$ 1.24
$ 1.52
The weighted average fair value of options granted in 2003,
2002 and 2001 was estimated as $5.91, $8.09 and $7.96,
respectively. The fair value of each option grant at grant date
is estimated using the Black-Scholes option pricing model.
The following weighted average assumptions were used for
grants in 2003, 2002 and 2001:
Risk-free interest rate
Expected life (in years)
Expected volatility
Expected dividend yield
2003
2002
2001
4.0%
5.0%
5.1%
6
6
26%
31%
2.8%
2.2%
6
30%
3.1%
Use of Estimates Generally accepted accounting principles
require management to make estimates and assumptions that
affect assets and liabilities, contingent assets and liabilities,
and revenues and expenses. Actual results could differ from
those estimates.
Income Taxes Income taxes are accounted for under the
asset and liability method. Deferred tax assets and liabilities
are recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts
of assets and liabilities and their respective tax bases and
operating loss and tax credit carryforwards. Deferred tax assets
and liabilities are measured using enacted tax rates expected
to apply to taxable income in the years in which those tempo-
rary differences are expected to be recovered or settled. The
effect on deferred tax assets and liabilities of a change in tax
rates is recognized in income in the period that includes the
enactment date. Valuation allowances are recorded to reduce
deferred tax assets when it is more likely than not that a tax
benefit will not be realized.
Reclassifications Prior year financial statements and footnotes
have been reclassified to conform to the current year
presentation.
Recently Issued Accounting Pronouncements In July 2002,
the FASB issued SFAS No. 146 “Accounting for Exit or Disposal
Activities.” The provisions of this standard are effective for
disposal activities initiated after December 31, 2002, with early
application encouraged. The adoption of this standard did not
have a material impact on the financial statements.
In January 2003, the FASB issued Interpretation No. 46
“Consolidation of Variable Interest Entities, an Interpretation
of ARB 51.” This Interpretation addressed consolidation by
business enterprises of certain variable interest entities (VIEs).
The Interpretation is effective immediately for all enterprises
with variable interests in VIEs created after January 31, 2003.
For variable interests in VIEs created before February 1,
2003, the provisions of this Interpretation will be applicable
no later than the beginning of the first interim or annual
period beginning after June 15, 2003. Further, the disclosure
requirements of the Interpretation are applicable for all
financial statements initially issued after January 31, 2003,
regardless of the date on which the VIE was created. The
adoption of this standard is not expected to have a material
impact on the financial statements.
The EITF reached a consensus on Issue No. 02-17
“Recognition of Customer Relationship Intangible Assets
Acquired in a Business Combination,” which clarifies
certain recognition requirements in SFAS No. 141 “Business
Combinations.” The guidance in this Issue is to be applied to
business combinations consummated and goodwill impairment
tests performed after October 25, 2002. The company does
not expect its application to have a material impact on the
financial statements.
In April 2003, the FASB issued SFAS No. 149 “Amendment
of Statement 133 on Derivative Instruments and Hedging
Activities.” This standard amends and clarifies financial
accounting and reporting for derivative instruments and
hedging activities, primarily as a result of decisions made
by the FASB Derivatives Implementation Group subsequent
to the original issuance of SFAS No. 133 and in connection
with other FASB projects. This standard is generally effective
prospectively for contracts and hedging relationships entered
into or modified after June 30, 2003. The company does
not expect its application to have a material impact on the
financial statements.
In May 2003, the FASB issued SFAS No. 150 “Accounting
for Certain Financial Instruments with Characteristics of both
35
35
Notes to Consolidated Financial Statements
(dollars in millions, except per share amounts)
Liabilities and Equity.” SFAS No. 150 changes the accounting
for certain financial instruments that, under previous guidance,
could be classified as equity or “mezzanine” equity, by now
requiring those instruments to be classified as liabilities (or
assets in some circumstances) in the statement of financial
position. Further, SFAS No. 150 requires disclosure regarding
the terms of those instruments and settlement alternatives.
The guidance in SFAS No. 150 is generally effective for all
financial instruments entered into or modified after May 31,
2003, and is otherwise effective at the beginning of the first
interim period beginning after June 15, 2003. The company
is in the process of evaluating this standard, but does
not expect the adoption to have a material impact on the
financial statements.
2 Comprehensive Income
Total comprehensive income is comprised of net earnings, net
foreign currency translation adjustments, minimum pension
liability adjustments (see Note 9), and net unrealized gains
and losses on cash-flow hedges. Total comprehensive income
for the twelve months ended August 3, 2003, July 28, 2002
and July 29, 2001 was $760, $368, and $552, respectively.
The components of Accumulated other comprehensive loss,
as reflected in the Statements of Shareowners’ Equity (Deficit),
consisted of the following:
Foreign currency translation adjustments
Cash-flow hedges, net of tax
Minimum pension liability, net of tax1
Total Accumulated other
comprehensive loss
1 Includes a tax benefit of $120 in 2003 and $119 in 2002.
2003
2002
$ (101)
$ (275)
(5)
2
fair value, an impairment loss is recognized. The assessment
of goodwill is a two-step process in which the first step identi-
fies impairment by requiring a comparison of the fair value of
each reporting unit to the carrying value, including goodwill
allocated to the unit. If the carrying value exceeds the fair value,
goodwill is considered to be impaired. The amount of impair-
ment is measured in a second step as the difference between
the carrying value of goodwill and the “implied” fair value of
goodwill, which is determined by calculating goodwill as if the
reporting unit had just been acquired and accounted for as
a business combination. Fair values were determined using
discounted cash flow analyses. As a result of this evaluation,
the company recorded a non-cash after-tax charge of $31 (net
of a $17 tax benefit), or $.08 per share, for impaired goodwill
associated with the Stockpot business, a food service business
acquired in August 1998. Stockpot is a reporting unit in the
North America Soup and Away From Home segment. This non-
cash charge was recorded as a cumulative effect of a change
in accounting principle. The impairment of Stockpot goodwill is
the result of a reduction in actual sales attained and forecasted
future sales growth relative to projections made at the time of
the acquisition.
The provisions of SFAS No. 142 are to be applied on a
prospective basis and prior year results are not to be restated.
The following tables present a reconciliation of earnings before
cumulative effect of accounting change, adjusted to exclude
amortization of goodwill and indefinite-lived intangible assets:
1
2003.
2002
2001
Earnings before cumulative effect
of accounting change, as reported
$ 626
$ 525
$ 649
(210)
(208)
Add back: Goodwill Amortization
Trademark Amortization
—
—
36
18
29
11
$ (316)
$ (481)
Adjusted earnings before cumulative
effect of accounting change
$ 626
$ 579
$ 689
3 Goodwill and Intangible Assets
On July 29, 2002 the company adopted SFAS No. 142
“Goodwill and Other Intangible Assets.” Under this standard,
goodwill and intangible assets with indefinite useful lives are no
longer amortized, but rather are to be tested at least annually for
impairment. Intangible assets with finite lives should continue
to be amortized over the estimated useful life and reviewed for
impairment in accordance with SFAS No. 144 “Accounting for
the Impairment or Disposal of Long-lived Assets.” In connec-
tion with the adoption of SFAS No. 142, the company was
required to perform an impairment assessment on all goodwill
and indefinite-lived intangible assets as of July 29, 2002. The
assessment of the indefinite-lived intangible assets requires a
comparison between the fair value and carrying value of the
intangible asset. To the extent the carrying value exceeds the
Basic earnings per share before cumulative
effect of accounting change, as reported
Add back: Goodwill Amortization
Trademark Amortization
Adjusted basic earnings per share before
cumulative effect of accounting change
1
2003.
2002
2001
$ 1.52
$ 1.28
$ 1.57
—
—
0.09
0.04
0.07
0.03
$ 1.52
$ 1.41
$ 1.66
1
2003.
2002
2001
Diluted earnings per share before cumulative
effect of accounting change, as reported
Add back: Goodwill Amortization
Trademark Amortization
$ 1.52
$ 1.28
$ 1.55
—
—
0.09
0.04
0.07
0.03
Adjusted diluted earnings per share before
cumulative effect of accounting change
$ 1.52
$ 1.41
$ 1.65
1 In the first quarter of 2003, the company recognized a $31 (net of a $17 tax benefit), or $.08
per share, cumulative effect of accounting change related to the adoption of SFAS No. 142.
3636
The following table sets forth balance sheet information for
intangible assets, excluding goodwill, subject to amortization
and intangible assets not subject to amortization:
Intangible assets subject to
amortization:1
Trademarks
Other
Total
Intangible assets not subject to
amortization:2
Trademarks
Pension
Other
Total
August 3, 2003
July 28, 2002
Carrying Accumulated
Amount Amortization
Carrying Accumulated
Amount Amortization
$ 6
16
$ 22
$ (2)
(7)
$ (9)
$ 5
15
$ 20
$ (1)
(5)
$ (6)
$ 975
28
2
$ 1,005
$ 908
31
—
$ 939
1 Amortization related to these assets was approximately $2 for 2003. 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.
2 Total carrying amount is net of accumulated amortization through July 28, 2002.
Changes in the carrying amount for goodwill for the period
ended August 3, 2003 are as follows:
Balance at
July 28, 2002
Goodwill acquired
Impairment losses
Foreign currency
North America North America
Soup and
Away From Home
Sauces and Biscuits and
Beverages Confectionery
International
Soup and
Sauces
Total
$ 336
$ 365
$ 339
$ 541 $ 1,581
—
(48)
—
—
—
92
—
93
11
—
103
(48)
64
167
translation adjustment
10
Balance at
August 3, 2003
$ 298
$ 365
$ 524
$ 616 $ 1,803
4 Business and Geographic Segment Information
Campbell Soup Company, together with its consolidated
subsidiaries, is a global manufacturer and marketer of high
quality, branded convenience food products. Through 2001,
the company was organized and reported the results of
operations in three business segments: Soup and Sauces,
Biscuits and Confectionery, and Away From Home.
Beginning in 2002, the company changed its organizational
structure such that operations are managed and reported
in four segments: North America Soup and Away From
Home, North America Sauces and Beverages, Biscuits and
Confectionery, and International Soup and Sauces. Segment
financial information has been modified for all periods in
order to conform to the new structure. In addition, Net sales
reflect the reclassifications related to the adoption of the new
accounting standard as discussed in Note 1.
Campbell Soup Company Annual Report 2003
Campbell Soup Company Annual Report 2003
The North America Soup and Away From Home segment
comprises the retail soup and Away From Home business
in the U.S. and Canada. The U.S. retail business includes
the Campbell’s brand condensed and ready-to-serve soups
and Swanson broths. The segment includes the company’s
total business in Canada, which comprises the Habitant
and Campbell’s soups, Prego pasta sauce and V8 juices.
The Away From Home operations represent the distribu-
tion of products such as Campbell’s soups, Campbell’s
specialty entrees, beverage products, other prepared foods
and Pepperidge Farm products through various food service
channels in North America. The North America Sauces
and Beverages segment includes Prego pasta sauces, Pace
Mexican sauces, Franco-American canned pastas and gravies,
V8 vegetable juices, V8 Splash juice beverages, Campbell’s
tomato juice, as well as the total of all businesses in Mexico
and other Latin American and Caribbean countries. The
Biscuits and Confectionery segment includes all retail sales
of Pepperidge Farm cookies, crackers, breads and frozen
products in North America, Arnott’s biscuits and crackers in
Australia and Asia Pacific, Arnott’s Snackfoods salty snacks in
Australia, and Godiva chocolates worldwide. The International
Soup and Sauces segment comprises operations outside of
North America, including Erasco and Heisse Tasse soups
in Germany, Liebig and Royco soups and Lesieur sauces
in France, Campbell’s and Batchelors soups, Oxo stock
cubes and Homepride sauces in the United Kingdom, Devos
Lemmens mayonnaise and cold sauces and Campbell’s and
Royco soups in Belgium, Blå Band soups in Sweden, and
McDonnells and Erin soups in Ireland. In Asia Pacific, opera-
tions include Campbell’s soups and stock and Swanson broths
across the region.
Accounting policies for measuring segment assets and
earnings before interest and taxes are substantially consis-
tent with those described in Note 1. The company evaluates
segment performance before interest and taxes, excluding
certain non-recurring charges. The North America Soup and
Away From Home and North America Sauces and Beverages
segments operate under an integrated supply chain organi-
zation, sharing substantially all manufacturing, warehouse,
distribution and sales activities. Accordingly, assets have
been allocated between the two segments based on various
measures, for example, budgeted production hours for fixed
assets and depreciation.
The company’s largest customer, Wal-Mart Stores, Inc. and its
affiliates, accounted for approximately 12% of consolidated net
sales during 2003 and 2002. All of the company’s segments
sold products to Wal-Mart Stores, Inc. or its affiliates.
Segment financial information for 2003 reflects the adoption
of SFAS No. 142 as discussed in Note 3. Operating Segment
results for 2002 and 2001 have been adjusted to reflect the
37
37
Notes to Consolidated Financial Statements
(dollars in millions, except per share amounts)
pro forma impact of amortization eliminated under the standard.
Amortization expense of $70 and $54 for 2002 and 2001,
respectively, has been eliminated from the prior period results.
new accounting standards related to the income statement classification of certain consumer
and trade sales promotion expenses, such as coupon redemption costs, cooperative
advertising programs and in-store display incentives. As a result, the reclassifications,
recorded in 2002, reduced Net sales by $893 for 2001. See Note 1 for further discussion.
Information about operations by business segment, reflecting
the reclassifications described in Note 1, is as follows:
3 Contributions to earnings before interest and taxes by the Biscuits and Confectionery
segment include the effect of costs of $1 in 2003, $20 in 2002, and $15 in 2001 associated
with the Australian manufacturing reconfiguration.
Business Segments
2003
Net Sales)
North America Soup
Earnings
Before Depreciation
and
Interest
and Taxes)3 Amortization
Capital
Expen-
ditures
Segment
Assets
Information about operations in different geographic areas is
as follows:
Geographic Area Information
and Away From Home $ 2,606 $ 632
$ 62
$ 71 $ 1,237
North America Sauces
and Beverages
1,246
289
34
42
1,213
Net sales1
United States
Europe
Australia/Asia Pacific
Other countries
2003
2002
2001
$ 4,549
$ 4,339
$ 4,313
969
779
492
843
554
502
558
517
455
1,774
212
85
115
1,680
1,052
128
30
34
1,775
Consolidated
$ 6,678
$ 6,133
$ 5,771
Adjustments and eliminations
(111)
(105)
(72)
Earnings before interest and taxes
2003
2002
2001
—
(156)
32
21
300
$ 6,678 $ 1,105
$ 243
$ 283 $ 6,205
Earnings
Before Depreciation
and
Interest
and Taxes)3 Amortization
Capital
Expen-
ditures
Segment
Assets
Net Sales
United States
Europe
Australia/Asia Pacific
Other countries
$ 965 $ 913
$ 1,137
126
93
77
92
41
81
53
46
81
Segment earnings before interest and taxes
1,261
1,127
1,317
and Away From Home
$ 2,524 $ 634
$ 58
$ 75 $ 1,263
Unallocated corporate expenses
(156)
(143)
(123)
North America Sauces
and Beverages
1,182
257
32
47
1,228
1,507
186
90
100
1,276
920
120
27
28
1,632
—
(143)
42
19
322
$ 6,133 $ 1,054
$ 249
$ 269 $ 5,721
Before Depreciation
and
Interest
and Taxes)3 Amortization
Capital
Expen-
ditures
Segment
Assets
Net Sales)2
North America Soup
and Away From Home
$ 2,532 $ 784
$ 57
$ 59 $ 1,248
North America Sauces
and Beverages
1,161
316
Consolidated
Identifiable assets
United States
Europe
Australia/Asia Pacific
Other countries
Corporate
Consolidated
$ 1,105 $ 984
$ 1,194
2003
2002
2001
$ 2,774
$ 2,797
$ 2,737
1,718
1,586
1,472
1,100
313
300
725
288
325
717
293
708
$ 6,205
$ 5,721
$ 5,927
shipping and handling costs. Shipping and handling costs of $207 for 2001 were reclassified
from Net sales to Cost of products sold. In the first quarter of 2002, the company adopted
new accounting standards related to the income statement classification of certain consumer
and trade sales promotion expenses, such as coupon redemption costs, cooperative
advertising programs and in-store display incentives. As a result, the reclassifications,
recorded in 2002, reduced Net sales $893 for 2001. See Note 1 for further discussion.
Earnings
1 In the fourth quarter of 2001, the company adopted new guidance on the classification of
1,446
208
632
63
32
76
20
33
1,243
77
1,249
21
1,519
Transfers between geographic areas are recorded at cost plus
markup or at market. Identifiable assets are those assets,
including goodwill, which are identified with the operations in
each geographic region. The restructuring charges in 2002
and 2001 were allocated to Australia/Asia Pacific.
—
(123)
27
10
668
Total
$ 5,771 $ 1,248
$ 212
$ 200 $ 5,927
5 Restructuring Program
1 Represents unallocated corporate expenses and unallocated assets, including corporate
offices, deferred income taxes and prepaid pension assets.
2 In the fourth quarter of 2001, the company adopted new guidance on the classification of
shipping and handling costs. Shipping and handling costs of $207 for 2001 were reclassified
from Net sales to Cost of products sold. In the first quarter of 2002, the company adopted
A restructuring charge of $10 ($7 after tax) was recorded in
the fourth quarter 2001 for severance costs associated with
the reconfiguration of the manufacturing network of Arnott’s in
Australia. In the second quarter 2002, the company recorded
3838
Biscuits and
Confectionery
International Soup
and Sauces
Corporate and
Eliminations1
Total
2002
North America Soup
Biscuits and
Confectionery
International Soup
and Sauces
Corporate and
Eliminations1
Total
2001
Biscuits and
Confectionery
International Soup
and Sauces
Corporate and
Eliminations1
Campbell Soup Company Annual Report 2003
Campbell Soup Company Annual Report 2003
an additional $1 restructuring charge related to planned
severance actions. Related costs of approximately $1 in 2003,
$19 ($13 after tax) in 2002, and $5 ($4 after tax) in 2001
were recorded as Cost of products sold, primarily representing
accelerated depreciation on assets to be taken out of service.
This program was designed to drive greater manufacturing
efficiency resulting from the closure of the Melbourne
plant. Approximately 550 jobs were eliminated due to the
plant closure.
A summary of restructuring reserves at August 3, 2003 and
related activity is as follows:
Accrued
Balance at
July 28,
2002
Accrued
Balance at
August 3,
2003
Spending
Severance pay and benefits
$ 4
(4)
$ —
6 Other Expenses
Foreign exchange losses
Amortization of intangible and other assets
Gain on asset sales
Adjustments to long-term investments
Other
2003
$ 15
2
(16)
36
(9)
2002
$ 9
78
(6)
16
2
2001
$ 2
57
—
10
9
$ 28
$ 99
$ 78
Adjustments to long-term investments represent a non-cash
write-down to estimated fair market value of investments in
affordable housing partnerships.
In 2003, certain stock-based incentive compensation costs
and deferred compensation expenses were reclassified from
Other expenses to reflect the costs by function on various
lines of the Statements of Earnings. Prior periods have been
reclassified to conform to the current presentation.
7 Interest Expense
Interest expense
Less: Interest capitalized
8 Acquisitions
2003
2002
2001
$ 188
$ 191
$ 222
2
1
3
$ 186
$ 190
$ 219
In the first quarter 2003, the company acquired two businesses
for cash consideration of approximately $170 and assumed
debt of approximately $20. The company acquired Snack
Foods Limited, a leader in the Australian salty snack category,
and Erin Foods, the number two dry soup manufacturer in
Ireland. Snack Foods Limited is included in the Biscuits
and Confectionery segment. Erin Foods is included in the
International Soup and Sauces segment. The businesses have
annual sales of approximately $160. The pro forma impact on
net earnings or earnings per share for the prior periods would
not have been material.
In May 2001, the company acquired the assets of the
European culinary brands business, comprised of several
soup and sauce businesses, from Unilever, PLC/Unilever
N.V. for approximately $920. The acquisition was financed
with available cash and commercial paper borrowings. This
acquisition was accounted for as a purchase transaction,
and operations of the acquired business are included in
the financial statements from May 4, 2001, the date the
acquisition was consummated. The purchase price was
allocated as follows: approximately $100 to fixed assets
and inventory; approximately $490 to trademarks and other
identifiable intangible assets; and approximately $330 to
the excess of the purchase price over net assets acquired
(goodwill). Goodwill and trademarks were being amortized on
a straight-line basis over 40 years. An additional purchase
price adjustment of $15 was paid in 2002 related to inventory.
Had the acquisition occurred at the beginning of 2001, based
on unaudited data, net sales for 2001 would have increased
approximately $300, and net earnings would have decreased
$2 in 2001. Basic and diluted earnings per share would
have decreased $.01. These pro forma estimates factor in
certain adjustments, including amortization of goodwill which
has since been eliminated under SFAS No. 142, additional
depreciation expense, increased interest expense on debt
related to the acquisition, and related income tax effects. The
pro forma results do not include any synergies expected to
result from the acquisition.
9 Pension and Postretirement Benefi ts
Pension Benefits Substantially all of the company’s U.S. and
certain non-U.S. employees are covered by noncontributory
defined benefit pension plans. In 1999, the company
implemented significant amendments to certain U.S. plans.
Under a new formula, retirement benefits are determined
based on percentages of annual pay and age. To minimize
the impact of converting to the new formula, service and
earnings credit will continue to accrue for active employees
participating in the plans under the formula prior to the
amendments through the year 2014. Employees will receive
the benefit from either the new or old formula, whichever
is higher. Benefits become vested upon the completion of
five years of service. Benefits are paid from funds previously
provided to trustees and insurance companies or are paid
39
39
Notes to Consolidated Financial Statements
(dollars in millions, except per share amounts)
directly by the company from general funds. Plan assets
consist primarily of investments in equities, fixed income
securities, and real estate.
Postretirement Benefits The company provides postretirement
benefits including health care and life insurance to substan-
tially all retired U.S. employees and their dependents. In 1999,
changes were made to the postretirement benefits offered to
certain U.S. employees. Participants who were not receiving
postretirement benefits as of May 1, 1999 will no longer be
eligible to receive such benefits in the future, but the company
will provide access to health care coverage for non-eligible
future retirees on a group basis. Costs will be paid by the
participants. To preserve the economic benefits for employees
near retirement, participants who were at least age 55 and had
at least 10 years of continuous service remain eligible for post-
retirement benefits.
Components of net periodic benefit cost:
Change in the fair value of pension plan assets:
Fair value at beginning of year
Acquisition adjustment
Actual return on plan assets
Employer contributions
Participants contributions
Benefits paid
Foreign currency adjustment
Fair value at end of year
2003
2002
$ 1,377
$ 1,644
12
172
19
2
—
(159)
8
—
(127)
(118)
17
2
$ 1,472
$ 1,377
Funded status as recognized in the Consolidated Balance
Sheets:
Pension
Postretirement
2003
2002
2003
2002
Funded status at end of year
$ (326)
$ (292) $ (373)
$ (340)
Unrecognized prior service cost
Unrecognized loss
51
682
57
644
(22)
72
(33)
36
Pension
Service cost
Interest cost
2003
2002
2001
Net amount recognized
$ 407
$ 409
$ (323)
$ (337)
$ 46
$ 36
$ 35
112
109
106
Amounts recognized in the Consolidated Balance Sheets:
Expected return on plan assets
(153)
(159)
(158)
Pension
Amortization of net transition obligation
Amortization of prior service cost
Recognized net actuarial loss
Curtailment/special termination benefits
—
6
14
4
—
6
4
—
(1)
5
1
—
Net periodic pension (income) expense
$ 29
$
(4)
$ (12)
Postretirement
Service cost
Interest cost
Amortization of prior service cost
Amortization of net gain
2003
2002
2001
$
4
$
5
$
21
(11)
—
21
(14)
—
3
20
(12)
(7)
Net periodic postretirement expense
$ 14
$ 12
$
4
Change in benefit obligation:
Pension
Postretirement
2003
2002
2003
2002
Obligation at beginning of year
$ 1,669
$ 1,522
$ 340
$ 338
Acquisition adjustment
Service cost
Interest cost
Plan amendments
Actuarial loss
Participant contributions
Curtailment/
13
46
112
—
62
2
—
36
109
6
117
—
special termination benefits
4
—
—
4
21
—
37
—
—
Benefits paid
(132)
(123)
(29)
Foreign currency adjustment
22
2
—
—
5
21
(16)
21
—
—
(29)
—
Benefit obligation at end of year $ 1,798
$ 1,669
$ 373
$ 340
4040
Prepaid benefit cost
Intangible asset
Accumulated other comprehensive loss
Net amount recognized
2003
2002
$ 49
$ 51
28
330
31
327
$ 407
$ 409
The projected benefit obligation, accumulated benefit obligation,
and fair value of plan assets for the pension plans with accumu-
lated benefit obligations in excess of plan assets were $1,256,
$1,131 and $929, respectively, as of August 3, 2003 and
$1,144, $1,048 and $864, respectively, as of July 28, 2002.
The current portion of nonpension postretirement benefits
included in Accrued liabilities was $19 at August 3, 2003 and
July 28, 2002.
Pension
Weighted-average assumptions of the company’s global plans
at end of year:
Discount rate for benefit obligation
6.39%
6.90%
7.25%
Expected return on plan assets
8.80%
9.30% 10.00%
Rate of compensation increases
4.43%
4.50%
4.50%
2003
2002
2001
Postretirement
The discount rate used to determine the accumulated post-
retirement benefit obligation was 6.50% in 2003 and 7.00%
in 2002. The assumed health care cost trend rate used to
measure the accumulated postretirement benefit obligation
was 9%, declining to 4.50% in 2008 and continuing at 4.50%
thereafter.
A one percentage point change in assumed health care costs
would have the following effects on 2003 reported amounts:
Effect on service and interest cost
Effect on the 2003 accumulated benefit obligation
Increase
Decrease
$ 3
$ 32
$ (2)
$ (28)
Obligations related to non-U.S. postretirement benefit plans
are not significant since these benefits are generally provided
through government-sponsored plans.
Savings Plan The company sponsors employee savings plans
which cover substantially all U.S. employees. After one year of
continuous service, the company generally matches 50% of
employee contributions up to 5% of compensation. Amounts
charged to Costs and expenses were $11 in 2003, $13 in
2002, and $11 in 2001.
10 Taxes on Earnings
Income taxes:
Currently payable
Federal
State
Non-U.S.
Deferred
Federal
State
Non-U.S.
Earnings before income taxes:
United States
Non-U.S.
$ 178
$ 201
$ 254
13
35
19
48
29
51
226
268
334
62
1
9
72
7
—
(2)
5
13
(1)
(8)
4
$ 298
$ 273
$ 338
$ 752
$ 685
$ 835
172
113
152
$ 924
$ 798
$ 987
The provision for income taxes on earnings consists of the
following:
Deferred tax liabilities
Benefits and compensation
2003
2002
2001
Tax loss carryforwards
Campbell Soup Company Annual Report 2003
Campbell Soup Company Annual Report 2003
The following is a reconciliation of the effective income tax
rate on continuing operations with the U.S. federal statutory
income tax rate:
Federal statutory income tax rate
35.0%
35.0%
35.0%
State income taxes (net of federal tax benefit)
1.0
1.6
1.5
2003
2002
2001
Non-U.S. earnings taxed at other
than federal statutory rate
Tax loss carryforwards
Other
(1.9)
(0.1)
(1.8)
(0.1)
(0.4)
(1.9)
(0.9)
(0.3)
(1.1)
Effective income tax rate
32.2%
34.2%
34.2%
Deferred tax liabilities and assets are comprised of the
following:
Depreciation
Pensions
Amortization
Other
Other
Gross deferred tax assets
Deferred tax asset valuation allowance
Net deferred tax assets
Net deferred tax liability
2003
2002
$ 170
$ 154
24
138
109
441
186
20
100
306
(20)
286
10
125
113
402
195
12
103
310
(10)
300
$ 155
$ 102
At August 3, 2003, non-U.S. subsidiaries of the company
have tax loss carryforwards of approximately $56. Of these
carryforwards, $8 expire through 2008 and $48 may be
carried forward indefinitely. The current statutory tax rates
in these countries range from 28% to 46%.
U.S. income taxes have not been provided on undistributed
earnings of non-U.S. subsidiaries of approximately $530,
which are deemed to be permanently invested. If remitted,
tax credits or planning strategies should substantially offset
any resulting tax liability.
11 Accounts Receivable
Customers
Allowances
Other
2003
2002
$ 425
$ 431
(40)
(36)
385
28
395
22
$ 413
$ 417
41
41
Notes to Consolidated Financial Statements
(dollars in millions, except per share amounts)
12 Inventories
Raw materials, containers and supplies
Finished products
The decrease in the carrying value of these investments
represents a write-down to estimated fair market value.
2003
2002
$ 264
$ 231
445
407
$ 709
$ 638
16 Notes Payable and Long-term Debt
Notes payable consists of the following:
Approximately 57% of inventory in 2003 and 60% in 2002 is
accounted for on the last in, first out method of determining
cost. If the first in, first out inventory valuation method had been
used exclusively, inventories would not differ materially from the
amounts reported at August 3, 2003 and July 28, 2002.
Commercial paper
Current portion of Long-term Debt
Variable-rate bank borrowings
2003
2002
$ 668
$ 886
600
11
301
9
$ 1,279
$ 1,196
2003
2002
$ 90
$ 86
46
37
$ 136
$ 123
Commercial paper had a weighted average interest rate of
2.33% and 2.54% at August 3, 2003 and July 28, 2002,
respectively.
The current portion of Long-term Debt had a weighted average
interest rate of 3.15% and 6.16% at August 3, 2003 and
July 28, 2002, respectively.
The company has two committed lines of credit totaling
$1,800 that support commercial paper borrowings and remain
unused at August 3, 2003, except for $31 of standby letters of
credit issued on behalf of the company.
2003
2002
Long-term Debt consists of the following:
$
66
$
53
Type
Fiscal Year of Maturity
Rate
2003
2002
974
868
2,827
2,482
145
230
4,012
3,633
(2,169)
(1,949)
$ 1,843
$ 1,684
Notes
Notes
Notes
Notes
Notes
Notes
Notes
Debentures
Other
2004
2004)1
2007
2007
2009
2011
2013
2021
4.75% $ —
$ 300
1.54%
6.90%
5.50%
5.88%
6.75%
5.00%
8.88%
—
300
300
300
700
400
200
49
300
300
300
300
700
—
200
49
$ 2,249
$ 2,449
1 $300 notional value swapped to fixed rate debt at 3.86%.
The fair value of the company’s long-term debt including the
current portion of long-term debt in Notes payable was $3,080
at August 3, 2003, and $2,952 at July 28, 2002.
The company has $600 of long-term debt available to issue
as of August 3, 2003 under a shelf registration statement filed
with the Securities and Exchange Commission.
Principal amounts of long-term debt mature as follows: 2004-
$601 (in current liabilities); 2005-$1; 2006-$1; 2007-$605;
2008-$1 and beyond-$1,641.
13 Other Current Assets
Deferred taxes
Other
14 Plant Assets
Land
Buildings
Machinery and equipment
Projects in progress
Accumulated depreciation
Depreciation expense provided in Costs and expenses was
$241 in 2003 and in 2002, and $209 in 2001. Approximately
$105 of capital expenditures are required to complete projects
in progress at August 3, 2003.
15 Other Assets
Prepaid pension benefit cost
Investments
Other
2003
2002
$ 49
$ 51
162
40
198
55
$ 251
$ 304
Investments consist primarily of several limited partnership
interests in affordable housing partnership funds. These
investments generate significant tax credits. The company’s
ownership primarily ranges from approximately 12% to 19%.
4242
Campbell Soup Company Annual Report 2003
Campbell Soup Company Annual Report 2003
17 Other Liabilities
Deferred taxes
Deferred compensation
Postemployment benefits
Other
2003
2002
$ 245
$ 188
102
19
116
121
15
65
$ 482
$ 389
The deferred compensation plan is an unfunded plan main-
tained for the purpose of providing the company’s directors
and certain of its executives the opportunity to defer a portion
of their compensation. All forms of compensation contrib-
uted to the deferred compensation plan are accounted for in
accordance with the underlying program. Contributions are
credited to an investment account in the participant’s name,
although no funds are actually contributed to the investment
account and no investment choices are actually purchased.
Four investment choices are available, including: (1) a book
account which tracks the total return on company stock;
(2) a book account that tracks performance of Fidelity’s
Spartan U.S. Equity Index Fund; (3) a book account which
tracks the performance of Fidelity’s Puritan Fund and; (4) a
book account that credits interest based on the Wall Street
Journal indexed prime rate. Participants can reallocate
investments daily and are entitled to the gains and losses
on investment funds. The company recognizes an amount
in the Statements of Earnings for the market appreciation/
depreciation of each fund, as appropriate.
18 Financial Instruments
The carrying values of cash and cash equivalents, accounts
and notes receivable, accounts payable and short-term debt
approximate fair value. The fair value of long-term debt, as
indicated in Note 16, and derivative financial instruments is
based on quoted market prices.
In 2001, the company adopted SFAS No. 133, “Accounting for
Derivative Instruments and Hedging Activities,” as amended
by SFAS No. 138 and SFAS No. 149. 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 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 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 is exposed to credit loss in the event of nonper-
formance by the counterparties on derivative contracts. The
company minimizes its credit risk on these transactions by
dealing only with leading, credit-worthy financial institutions
having long-term credit ratings of “A” or better and, therefore,
does not anticipate nonperformance. In addition, the contracts
are distributed among several financial institutions, thus mini-
mizing credit risk concentration.
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).
Changes in the fair value of a fair-value hedge, along with
the loss or gain on the hedged asset or liability that is
attributable to the hedged risk (including losses or gains on
firm commitments), are recorded in current period earnings.
Changes in the fair value of a cash-flow hedge are recorded
in other comprehensive income, until earnings are affected
by the variability of cash flows. Changes in the fair value
of a foreign-currency hedge are recorded in either current-
period earnings or other comprehensive income, depending
on whether the hedge transaction is a fair-value hedge (e.g.,
a hedge of a firm commitment that is to be settled in foreign
currency) or a cash-flow hedge (e.g., a hedge of a foreign-
currency-denominated forecasted transaction). If, however, a
derivative is used as a hedge of a net investment in a foreign
operation, its changes in fair value, to the extent effective as a
hedge, are recorded in the cumulative translation adjustments
account within Shareowners’ equity (deficit).
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 versus fixed-rate debt.
In November 2002, the company terminated interest rate swap
contracts with a notional value of $250 that converted fixed-
rate debt (6.75% notes due 2011) to variable and received
43
43
Notes to Consolidated Financial Statements
(dollars in millions, except per share amounts)
$37. Of this amount, $3 represented accrued interest earned
on the swap prior to the termination date. The remainder of
$34 is being amortized over the remaining life of the notes as
a reduction to interest expense. The company also entered
into ten-year interest rate swaps that converted $300 of ten-
year 5% fixed-rate notes issued in November 2002 to variable.
In 2002, the company entered into interest rate swaps that
convert fixed-rate debt (5.50% notes due in 2007 and 5.875%
notes due in 2009) to variable. These swaps mature in 2007
and 2009, respectively, and are accounted for as fair-value
hedges. The amounts paid or received on these hedges and
adjustments to fair value are recognized as adjustments to
interest expense. In 2001, the company entered into interest
rate swaps that convert fixed-rate debt (6.75% notes due in
2011) to variable. These fair-value swaps were terminated in
November 2002. The notional amount of fair-value interest
rate swaps was $475 and $425 at August 3, 2003 and July
28, 2002, respectively. The swaps had a fair value of $2 and
$31 at August 3, 2003 and July 28, 2002, respectively.
In 2002, the company entered into interest rate swaps with a
notional value of $300 that convert variable-rate debt to fixed.
The swaps mature in 2004 and are accounted for as cash-
flow hedges. Consequently, the effective portion of unrealized
gains/(losses) is deferred as a component of Accumulated
other comprehensive income/(loss) and is recognized in
earnings at the time the hedged item affects earnings. The
amounts paid or received on the hedge are recognized as
adjustments to interest expense. The fair value of the swaps
was $(1) as of August 3, 2003.
In anticipation of the $300 seven-year notes issued in
September 2001, the company entered into forward-starting
interest rate swap contracts with a notional value of $138.
Upon issuance of the notes, the contracts were settled at
a loss of approximately $4. This loss was recorded in other
comprehensive income/(loss) and is being amortized to
interest expense over the life of the notes.
The company is exposed to foreign currency exchange risk
as a result of transactions in currencies other than the func-
tional currency of certain subsidiaries. The company utilizes
foreign currency forward purchase and sale contracts, options
and cross-currency swaps in order to manage the volatility
associated with foreign currency purchases and certain inter-
company transactions in the normal course of business.
Qualifying forward exchange contracts 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 fair value of these
instruments was $(97) at August 3, 2003.
Qualifying forward exchange contracts are accounted for as
fair-value hedges when the hedged item is a recognized asset,
liability or firm commitment. The fair-value of such contracts
was not material at August 3, 2003.
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 expenses, as an offset to gains/
(losses) on the underlying transaction. The fair value of these
instruments was $3 at August 3, 2003.
Foreign currency forward contracts typically have maturities of
less than one year. Principal currencies include the Australian
dollar, British pound, Canadian dollar, euro, Japanese yen and
Swedish krona.
As of August 3, 2003, the accumulated derivative net loss in
other comprehensive income for cash-flow hedges, including
the cross-currency swaps, variable to fixed interest rate
swaps and forward starting swap contracts was $5, net of
tax. As of July 28, 2002, the accumulated derivative net
gain in other comprehensive income for cash-flow hedges,
including the cross-currency swaps, variable to fixed interest
rate swaps and forward starting swap contracts was $2, net
of tax. Reclassifications from Accumulated other compre-
hensive income/(loss) into the Statements of Earnings during
the period ended August 3, 2003 were not material. There
were no discontinued cash-flow hedges during the year. At
August 3, 2003, the maximum maturity date of any cash-flow
hedge was approximately eight years.
Other disclosures related to hedge ineffectiveness, gains/
(losses) excluded from the assessment of hedge effectiveness,
gains/(losses) arising from effective hedges of net investments,
gains/(losses) resulting from the discontinuance of hedge
accounting and reclassifications from other comprehensive
income to earnings have been omitted due to the insignifi-
cance of these amounts.
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. The company
may also enter into commodity futures contracts, as consid-
ered appropriate, to reduce the volatility of price fluctuations
for commodities such as corn, cocoa, soybean meal, soybean
oil, and wheat. These instruments are designated as cash-flow
4444
Campbell Soup Company Annual Report 2003
Campbell Soup Company Annual Report 2003
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.
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 notional value of the equity swap contracts, which mature
in 2004, was $21 at August 3, 2003. These instruments are
not designated as accounting hedges. Gains and losses are
recorded in the Statements of Earnings. The net asset recorded
under these contracts at August 3, 2003 was approximately $1.
Restricted shares granted are as follows:
(shares in thousands)
Restricted Shares
Granted
2003
2002
2001
900
94
184
Information about stock options and related activity is as
follows:
(options in thousands)
Weighted
Average
Exercise
Price
2003
Weighted
Average
Exercise
Price
2002
Weighted
Average
Exercise
Price
2001
Beginning of year 30,006 $ 28.21 17,370 $ 30.30 24,024 $ 32.16
Granted
Exercised
577 22.89 15,176
25.53
1,361
31.95
(847) 19.66
(827) 17.52
(2,434) 16.82
Terminated
(874) 28.67
(1,713) 31.16
(929) 40.36
Converted to
restricted stock
—
—
—
—
(4,652) 46.13
End of year
28,862 $ 28.29 30,006 $ 28.21 17,370 $ 30.30
Exercisable at
end of year
17,665
12,595
12,160
19 Shareowners’ Equity (Defi cit)
(options in thousands) Stock Options Outstanding Exercisable Options
Weighted
The company has authorized 560 million shares of Capital
stock with $.0375 par value and 40 million shares of Preferred
stock, issuable in one or more classes, with or without par as
may be authorized by the Board of Directors. No Preferred
stock has been issued.
The company sponsors a long-term incentive compensation
plan. Under the plan, restricted stock and options may be
granted to certain officers and key employees of the company.
The plan provides for awards up to an aggregate of 50 million
shares of Capital stock. Options are granted at a price not
less than the fair value of the shares on the date of grant
and expire not later than ten years after the date of grant.
Options vest over a three-year period. See also Note 1 to the
Consolidated Financial Statements for additional information
on accounting for stock-based compensation, including
the pro forma impact if the company applied the fair value
recognition provisions of SFAS No. 123.
In 2001, the Board of Directors authorized the conversion
of certain stock options to shares of restricted stock based
on specified conversion ratios. The exchange, which was
voluntary, replaced approximately 4.7 million options with
approximately one million restricted shares. Depending on the
original grant date of the options, the restricted shares vest in
2002, 2003 or 2004. The company recognizes compensation
expense throughout the vesting period of the restricted stock.
Compensation expense related to this award was $6 in 2003,
$11 in 2002, and $8 in 2001.
Range of
Exercise
Prices
Average Weighted
Average
Exercise
Price
Remaining
Contractual
Life
Shares
Weighted
Average
Exercise
Price
Shares
$16.81–$22.60
2,278
2.2 $ 20.47
2,075 $ 20.33
$22.61–$31.91
23,336
7.2 $ 27.26 12,781 $ 28.80
$31.92–$44.41
$44.42–$56.50
2,715
5.4 $ 38.70
2,276 $ 39.88
533
3.1 $ 53.97
533 $ 53.99
28,862
17,665
In 1999, the company entered into forward stock purchase
contracts to partially hedge the company’s equity exposure
from its stock option program. On December 12, 2000, the
company purchased 11 million shares of common stock under
the existing forward contracts for approximately $521.
For the periods presented in the Consolidated Statements of
Earnings, the calculations of basic earnings per share and
earnings per share assuming dilution vary in that the weighted
average shares outstanding assuming dilution includes the
incremental effect of stock options, except when such effect
would be antidilutive. In 2001, the weighted average shares
outstanding assuming dilution also includes the incremental
effect of approximately three million shares under forward
stock purchase contracts.
20 Commitments and 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)
45
45
Notes to Consolidated Financial Statements
(dollars in millions, except per share amounts)
commenced cases under Chapter 11 of the Bankruptcy Code
on January 29, 2001 in the United States Bankruptcy Court for
the District of Delaware. Vlasic’s 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 Vlasic’s 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 alleging, among other
things, fraudulent conveyance, illegal dividends and breaches
of fiduciary duty by Vlasic directors alleged to be under the
company’s 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 com-
plaint to be $200), plus unspecified exemplary and punitive
damages. While this case is still in its early stages and the
ultimate disposition of complex litigation is inherently difficult
to assess, the company believes the action is without merit
and is defending the case vigorously.
The company received an Examination Report from the Internal
Revenue Service on December 23, 2002, which included a
challenge to the treatment of gains and interest deductions
claimed in the company’s fiscal 1995 federal income tax
return, relating to transactions involving government securities.
If the proposed adjustment were upheld, it would require
the company to pay a net amount of approximately $100 in
taxes, accumulated interest to date, and penalties. Interest will
continue to accrue until the matter is resolved. The company
believes these transactions were properly reported on its
federal income tax return in accordance with applicable tax
laws and regulations in effect during the period involved and is
challenging these adjustments vigorously. While the outcome
of proceedings of this type cannot be predicted with certainty,
the company believes that the ultimate outcome of this matter
will not have a material impact on the consolidated financial
condition or results of operation.
Early in 2000, ten purported class action lawsuits were com-
menced against the company and two of its former executives
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 the company and the former executives 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. On February 6, 2003, the company
announced it had reached an agreement in principle to settle
this case. The district court’s order approving the settlement
was issued on May 22, 2003 and became effective June 23,
2003. Pursuant to the court’s order, all claims have been dis-
missed and the litigation has been terminated in exchange for
a payment of $35, which was made in June 2003. The full
amount of the payment was covered by insurance. The settle-
ment does not constitute an admission of fault or liability by the
company or any other defendant.
The company is a party to other legal proceedings and claims,
environmental matters and tax issues arising out of the normal
course of business. Although the results of the pending
claims and litigation cannot be predicted with certainty, in
management’s opinion, the final outcome of these other legal
proceedings and claims, environmental matters and tax issues
will not have a material effect on the consolidated results of
operations, financial position or cash flows of the company.
The company has certain operating lease commitments,
primarily related to warehouse and office facilities, retail store
space, and certain equipment. Future minimum annual rental
payments under these operating leases are as follows:
2004
$ 67
2005
$ 58
2006
$ 42
2007
$ 36
2008
Thereafter
$ 32
$ 59
In November 2002, FASB Interpretation No. 45 (FIN 45)
“Guarantor’s Accounting and Disclosure Requirements for
Guarantees, Including Indirect Guarantees of Indebtedness
of Others” was issued. FIN 45 clarifies the requirements
relating to a guarantor’s accounting for, and disclosure of, the
issuance of certain types of guarantees. FIN 45 requires that
upon issuance of a guarantee, the guarantor must recognize
a liability for the fair value of the obligation it assumes under
that guarantee. The initial recognition and measurement
provisions are applicable on a prospective basis to guarantees
issued or modified after December 31, 2002.
The company guarantees almost 1,200 bank loans made
to Pepperidge Farm independent sales distributors for the
purchase of distribution routes. The maximum potential
amount of future payments the company could be required
to make under the guarantees is approximately $85. The
company’s guarantees are secured by the distribution routes.
The company does not believe it is probable that it will be
required to make guarantee payments as a result of defaults
on the bank loans guaranteed. Prior to the adoption of FIN 45,
no amounts were recognized on the Consolidated Balance
Sheets related to these guarantees. The amount recognized as
of August 3, 2003 is not material.
4646
Campbell Soup Company Annual Report 2003
Campbell Soup Company Annual Report 2003
23 Quarterly Data (unaudited)
2003
Net sales
Cost of products sold
Net earnings1
Per share – basic
Net earnings1
Dividends
First
Second
Third
Fourth
$ 1,705 $ 1,918 $ 1,600 $ 1,455
971
161
1,056
231
920
129
858
74
0.39
0.56
0.31
0.18
0.1575 0.1575 0.1575 0.1575
Per share – assuming dilution
Net earnings1
0.39
0.56
0.31
0.18
The company has provided certain standard indemnifications
in connection with divestitures and other transactions. Certain
indemnifications have finite expiration dates. Liabilities recog-
nized based on known exposures related to such matters are
not material at August 3, 2003.
21 Statements of Cash Flows
2003
2002
2001
Cash Flows from Operating Activities:
Other non-cash charges to net earnings:
Non-cash compensation/benefit
related expense
Net loss on fixed assets, long-term
investments, minority interest
Other
Total
Other:
Benefit related payments and
pension contributions
Payments for hedging activities
Other
Total
$ 60
$ 41
$ 25
Market price
33
—
16
(4)
12
1
$ 93
$ 53
$ 38
High
Low
2002
Net sales
Cost of products sold
$ (63)
$ (54)
$ (44)
Net earnings
(67)
(7)
(48)
3
22
33
Per share – basic
Net earnings
$ (137)
$ (99)
$ 11
Dividends
Interest paid, net of amounts capitalized
Interest received
Income taxes paid
2003
2002
2001
$ 173
$
5
$ 225
$ 173
$ 4
$ 222
$ 208
$ 12
$ 310
Per share – assuming dilution
Net earnings
Market price
High
Low
$ 23.90 $ 24.99 $ 24.30 $ 26.43
$ 21.00 $ 19.65 $ 19.95 $ 21.35
First
Second
Third
Fourth
$ 1,729
$ 1,810
$ 1,371
$ 1,223
971
171
1,004
203
782
96
686
55
0.42
0.49
0.23
0.13
0.1575
0.1575
0.1575
0.1575
0.42
0.49
0.23
0.13
$ 29.27
$ 31.44
$ 28.85
$ 28.40
$ 25.52
$ 27.81
$ 25.59
$ 21.00
1 Net earnings in the first quarter include the cumulative effect of a change in accounting
principle of $31 or $.08 per share (see Note 3 to the Consolidated Financial Statements).
In 2003, the company adopted SFAS No. 142 “Goodwill and Other Intangible Assets” and
discontinued the amortization of goodwill and indefinite-lived intangible assets. Results for
2002 include $70 ($54 after-tax or $.13 per share) of amortization. See also Note 3 to the
Consolidated Financial Statements.
22 Subsequent Event
In September 2003, the company issued $300 ten-year
4.875% fixed-rate notes. While planning for the issuance of
these notes, the company entered into treasury lock agree-
ments with a notional value of $100 that effectively fixed a
portion of the interest rate on the debt prior to issuance. These
agreements were settled at a minimal gain upon issuance
of the notes. In connection with this issuance, the company
entered into ten-year interest rate swaps that convert $200 of
the fixed-rate debt to variable.
In September 2003, the company also entered into $100 five-
year interest rate swaps that convert a portion of the 5.875%
fixed-rate notes due October 2008 to variable.
47
47
Report of Management
The accompanying financial statements have been prepared by the management of the company in conformity with generally
accepted accounting principles to reflect the financial position of the company and its operating results. Financial information
appearing throughout this Annual Report is consistent with that in the financial statements. Management is responsible for the
information and representations in such financial statements, including the estimates and judgments required for their preparation.
In order to meet its responsibility, management maintains a system of internal controls designed to assure that assets are safe-
guarded and that financial records properly reflect all transactions. The company also maintains a worldwide auditing function to
periodically evaluate the adequacy and effectiveness of such internal controls, as well as the company’s administrative procedures
and reporting practices. The company believes that its long-standing emphasis on the highest standards of conduct and business
ethics, set forth in extensive written policy statements, serves to reinforce its system of internal accounting controls.
The report of PricewaterhouseCoopers LLP, the company’s independent auditors, covering their audit of the financial statements,
is included in this Annual Report. Their independent audit of the company’s financial statements includes a review of the system
of internal accounting controls to the extent they consider necessary to evaluate the system as required by generally accepted
auditing standards.
The company’s internal auditors report directly to the Audit Committee of the Board of Directors, which is composed entirely
of Directors who are not officers or employees of the company. The Audit Committee meets regularly with the internal auditors,
other management personnel, and the independent auditors. The independent auditors and the internal auditors have had, and
continue to have, direct access to the Audit Committee without the presence of other management personnel, and have been
directed to discuss the results of their audit work and any matters they believe should be brought to the Committee’s attention.
Douglas R. Conant
President and Chief Executive Officer
Robert A. Schiffner
Senior Vice President and Chief Financial Officer
Gerald S. Lord
Vice President – Controller
September 11, 2003
48
Report of Independent Auditors
Campbell Soup Company Annual Report 2003
To the Shareowners and Directors of Campbell Soup Company
In our opinion, the accompanying consolidated balance sheets and the related consolidated statement of earnings, shareowners’
equity (deficit) and cash flows present fairly, in all material respects, the financial position of Campbell Soup Company and its
subsidiaries at August 3, 2003 and July 28, 2002, and the results of their operations and their cash flows for each of the three
years in the period ended August 3, 2003 in conformity with accounting principles generally accepted in the United States of
America. These financial statements are the responsibility of the Company’s management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with
auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
As discussed in Note 3 to the consolidated financial statements, effective July 29, 2002, the Company adopted Statement of
Financial Accounting Standard No. 142, “Goodwill and Other Intangible Assets.”
Philadelphia, Pennsylvania
September 18, 2003
49
Five-Year Review – Consolidated
(millions, except per share amounts)
Fiscal Year
Summary of Operations
Net sales
Earnings before interest and taxes
Earnings before taxes
Earnings before cumulative effect
of accounting change
Cumulative effect of accounting change
Net earnings
Financial Position
Plant assets – net
Total assets
Total debt
Shareowners’ equity (deficit)
Per Share Data
Earnings before cumulative effect
of accounting change – basic
Earnings before cumulative effect
1
2003)
2002)
2
3
2001)
2000
4
1999)
$ 6,678
$ 6,133
$ 5,771
$ 5,626
$ 5,803
1,105
924
626
(31)
595
984
798
525
—
525
1,194
987
1,265
1,077
649
—
649
714
—
714
1,270
1,097
724
—
724
$ 1,843
$ 1,684
$ 1,637
$ 1,644
$ 1,726
6,205
3,528
387
5,721
3,645
(114)
5,927
4,049
(247)
5,196
3,091
137
5,522
3,317
235
$ 1.52
$ 1.28
$ 1.57
$ 1.68
$ 1.64
of accounting change – assuming dilution
Net earnings – basic
Net earnings – assuming dilution
Dividends declared
1.52
1.45
1.45
0.63
1.28
1.28
1.28
0.63
1.55
1.57
1.55
0.90
1.65
1.68
1.65
0.90
1.63
1.64
1.63
0.885
Other Statistics
Capital expenditures
Number of shareowners (in thousands)
Weighted average shares outstanding
Weighted average shares outstanding –
assuming dilution
$ 283
$ 269
$ 200
$ 200
$ 297
46
411
411
47
410
411
48
414
418
51
425
432
51
441
445
In 2003, the company adopted SFAS No. 142 resulting in the elimination of amortization of goodwill and other indefi nite-lived intangible assets. Prior periods
have not been restated. See Note 3 to the Consolidated Financial Statements for additional information.
The 2003 fi scal year consisted of fi fty-three weeks compared to fi fty-two weeks in the prior periods. The additional week contributed 1 to 2 percentage points of
the sales increase compared to 2002, and approximately $.02 per share.
In 2002, fi nancial results were restated to conform to the requirements of new accounting standards. Certain consumer and trade promotional expenses have
been reclassifi ed from Marketing and selling expenses and Cost of products sold to Net sales for years 1999 to 2001.
1 2003 results include pre-tax costs of $1 ($1 after tax) related to an Australian manufacturing reconfi guration. These costs were recorded in Cost of products sold.
2 2002 results include pre-tax costs of $20 ($14 after tax or $.03 per share basic and assuming dilution) related to an Australian manufacturing reconfi guration.
Of this amount, pre-tax costs of approximately $19 were recorded in Cost of products sold.
3 2001 results include pre-tax costs of $15 ($11 after tax or $.03 per share basic and assuming dilution) related to an Australian manufacturing reconfi guration.
Of this amount, pre-tax costs of approximately $5 were recorded in Cost of products sold.
4 1999 earnings from continuing operations include a net pre-tax restructuring charge of $36 ($27 after tax or $.06 per share basic and assuming dilution).
Earnings from continuing operations also include the effect of certain non-recurring costs of $22 ($15 after tax or $.03 per share basic and assuming dilution).
50
Information Sources
Inquiries regarding our products
may be addressed to Campbell’s
Consumer Response and
Information Center at the World
Headquarters address, or call
1-800-257-8443.
Media and public relations
inquiries should be directed
to John Faulkner, Director –
Corporate Communications at
the World Headquarters address,
or call (856) 342-3738.
Investors and financial analysts
may contact Leonard F. Griehs,
Vice President – Investor Relations,
at the World Headquarters address,
or call (856) 342-6428.
Communications concerning share
transfer, lost certificates, dividends
and change of address, should be
directed to EquiServe Trust
Company, 1-800-446-2617.
Shareowner Information Service
For the latest quarterly business
results, or other information
requests such as dividend dates,
shareowner programs or product
news, call 1-888-SIP-SOUP
(1-888-747-7687). Shareowner
information is also available on
the worldwide website at:
www.campbellsoup.com.
Campbell Brands
Product trademarks of Campbell
Soup Company and/or its subsidiaries
appearing in the narrative text of
this report are italicized.
Thanks to all the Campbell
employees pictured in this year’s
annual report.
Board of
Directors
Officers
(as of October 2003)
Shareowner
Information
George M. Sherman
Chairman of Campbell Soup
Company and Retired President
and Chief Executive Officer
of Danaher Corp. 2
Douglas R. Conant
President and Chief Executive
Officer of Campbell Soup Company3
Edmund M. Carpenter
President and Chief Executive
Officer of Barnes Group Inc.1, 3
Bennett Dorrance
Private Investor and Chairman
and Managing Director
of DMB Associates 2, 3
Kent B. Foster
Chairman and Chief Executive
Officer of Ingram Micro, Inc.1, 4
Harvey Golub
Retired Chairman and Chief
Executive Officer of American
Express Company 2, 3
Randall Larrimore
Chairman of Olin Corporation
and Retired President and Chief
Executive Officer of United
Stationers Inc.1, 2
David K. P. Li
Chairman and Chief Executive of
The Bank of East Asia, Limited 3
Philip E. Lippincott
Former Chairman of Campbell
Soup Company and Retired
Chairman and Chief Executive
Officer of Scott Paper Company 2, 3
Mary Alice D. Malone
Private Investor and President
of Iron Spring Farm, Inc.3, 4
David C. Patterson
Founder and Chairman
Brandywine Trust Company 3, 4
Charles R. Perrin
Retired Chairman and Chief
Executive Officer of Avon
Products, Inc.1, 2
Donald M. Stewart
President and Chief Executive
Officer of the Chicago
Community Trust 2, 4
George Strawbridge, Jr.
Private Investor and President
of Augustin Corporation 1, 4
Charlotte C. Weber
Private Investor and President
and Chief Executive Officer
of Live Oak Properties 2, 4
Douglas R. Conant
President and Chief
Executive Officer
Jerry S. Buckley
Senior Vice President –
Public Affairs
Terry K. Danahy
Senior Vice President –
Human Resources
M. Carl Johnson, III
Senior Vice President –
Chief Strategy Officer
Ellen Oran Kaden
Senior Vice President –
Law and Government Affairs
R. David C. Macnair
Senior Vice President –
Global Research and
Development
Larry S. McWilliams
Senior Vice President
and President –
North America Soup
Denise M. Morrison
Senior Vice President and
President – Global Sales
and Chief Customer Officer
Robert A. Schiffner
Senior Vice President
and Chief Financial Officer
Doreen A. Wright
Senior Vice President
and Chief Information Officer
Anthony P. DiSilvestro
Vice President and Managing
Director – Campbell International
John Doumani
Vice President and President –
Campbell International
John J. Furey
Vice President and
Corporate Secretary
James A. Goldman
Vice President and President –
North America Sauces and Beverages
Richard J. Landers
Vice President – Taxes
Gerald S. Lord
Vice President – Controller
William J. O’Shea
Vice President – Treasurer
Mark A. Sarvary
Vice President and President –
Pepperidge Farm
World Headquarters
Campbell Soup Company
Campbell Place
Camden, NJ 08103
(856) 342-4800
(856) 342-3878 (Fax)
Stock Exchange Listings
New York, Philadelphia,
London, Swiss
Ticker Symbol: CPB
Newspaper Listing: CamSp
Transfer Agent and Registrar
EquiServe Trust Company
P.O. Box 43069
Providence, RI 02940-3069
1-800-446-2617
Independent Auditors
PricewaterhouseCoopers LLP
Two Commerce Square
Suite 1700
2001 Market Street
Philadelphia, PA 19103-7042
Dividends
Campbell has paid dividends since
the company became public in
1954. Dividends are normally paid
quarterly, at the end of January,
April, July and October.
A dividend reinvestment plan
is available to shareowners.
For information about dividends
or the dividend investment plan,
write: Dividend Reinvestment Plan
Agent, Campbell Soup Company,
P.O. Box 43081, Providence, RI
02940-3081, or call: (781) 575-2723
or 1-800-446-2617.
Annual Meeting
The Annual Meeting of Shareowners
will be held on November 21, 2003
at 11 a.m., Eastern Standard Time,
at the Sheraton Hotel at Bradley
International Airport, Windsor Locks,
CT 06096.
Publications
For copies of the Annual Report
or the SEC Form 10-K (filed
annually in October) or other
financial information, write:
Investor Relations at the World
Headquarters address, or call
1-888-SIP-SOUP (1-888-747-7687)
or visit our worldwide website at
www.campbellsoup.com.
For copies of Campbell Soup
Company’s Equal Opportunity
Report or the Annual Report of
the Campbell Soup Foundation,
write to: Public Affairs at the World
Headquarters address.
Committees 1 Audit 2 Compensation & Organization 3 Finance & Corporate Development 4 Governance
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Campbell Place, Camden, NJ 08103 -1799 www.campbellsoup.com