CAMPBELL SOUP CO [CPB] Filings

10-Q 1 cpb-20220501.htm 10-Q cpb-20220501

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For The Quarterly Period Ended

Commission File Number

May 1, 2022

1-3822

CAMPBELL SOUP COMPANY


New Jersey			21-0419870
State of Incorporation			I.R.S. Employer Identification No.

1 Campbell Place

Camden, New Jersey 08103-1799

Principal Executive Offices

Telephone Number: (856) 342-4800

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

Trading Symbol

Name of Each Exchange on Which Registered

Capital Stock, par value $.0375

CPB

New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☑ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☑ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☑

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☑ No

There were 300,575,616 shares of capital stock outstanding as of June 1, 2022.

TABLE OF CONTENTS


PART I - FINANCIAL INFORMATION		3
	Item 1. Financial Statements	3
	Consolidated Statements of Earnings	3
	Consolidated Statements of Comprehensive Income	4
	Consolidated Balance Sheets	5
	Consolidated Statements of Cash Flows	6
	Consolidated Statements of Equity	7
	Notes to Consolidated Financial Statements	8
















	Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	24
	Item 3. Quantitative and Qualitative Disclosure About Market Risk	34
	Item 4. Controls and Procedures	34
PART II - OTHER INFORMATION		35
	Item 1. Legal Proceedings	35
	Item 1 A . Risk Factor s	35
	Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	35
	Item 6. Exhibits	35
INDEX TO EXHIBITS		36
SIGNATURES		37

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

CAMPBELL SOUP COMPANY

Consolidated Statements of Earnings

(unaudited)

(millions, except per share amounts)


	Three Months Ended				Nine Months Ended
	May 1, 2022		May 2, 2021		May 1, 2022		May 2, 2021
Net sales	$	2,130	$	1,984	$	6,575	$	6,603
Costs and expenses
Cost of products sold	1,465		1,356		4,519		4,379
Marketing and selling expenses	188		202		555		642
Administrative expenses	151		153		454		452
Research and development expenses	22		22		64		61
Other expenses / (income)	10		(23)		(10)		(86)
Restructuring charges	—		2		—		21
Total costs and expenses	1,836		1,712		5,582		5,469
Earnings before interest and taxes	294		272		993		1,134
Interest expense	51		53		144		163
Interest income	1		—		1		1
Earnings before taxes	244		219		850		972
Taxes on earnings	56		53		189		252
Earnings from continuing operations	188		166		661		720
Loss from discontinued operations	—		(6)		—		(6)
Net earnings	188		160		661		714
Less: Net earnings (loss) attributable to noncontrolling interests	—		—		—		—
Net earnings attributable to Campbell Soup Company	$	188	$	160	$	661	$	714
Per Share — Basic
Earnings from continuing operations attributable to Campbell Soup Company	$	.62	$	.55	$	2.19	$	2.38
Loss from discontinued operations	—		(.02)		—		(.02)
Net earnings attributable to Campbell Soup Company	$	.62	$	.53	$	2.19	$	2.36
Weighted average shares outstanding — basic	301		303		302		303
Per Share — Assuming Dilution
Earnings from continuing operations attributable to Campbell Soup Company	$	.62	$	.54	$	2.18	$	2.36
Loss from discontinued operations	—		(.02)		—		(.02)
Net earnings attributable to Campbell Soup Company	$	.62	$	.52	$	2.18	$	2.34
Weighted average shares outstanding — assuming dilution	302		305		303		305

See accompanying Notes to Consolidated Financial Statements.

CAMPBELL SOUP COMPANY

Consolidated Statements of Comprehensive Income

(unaudited)

(millions)


	Three Months Ended
	May 1, 2022						May 2, 2021
	Pre-tax amount		Tax benefit (expense)		After-tax amount		Pre-tax amount		Tax benefit (expense)		After-tax amount
Net earnings (loss)					$	188					$	160
Other comprehensive income (loss):
Foreign currency translation:
Foreign currency translation adjustments	$	(2)	$	—	(2)		$	7	$	—	7

Cash-flow hedges:
Unrealized gains (losses) arising during the period	9		(2)		7		(2)		—		(2)
Reclassification adjustment for losses (gains) included in net earnings	(4)		1		(3)		2		—		2
Pension and other postretirement benefits:

Reclassification of prior service credit included in net earnings	—		—		—		(2)		1		(1)

Other comprehensive income (loss)	$	3	$	(1)	2		$	5	$	1	6
Total comprehensive income (loss)					$	190					$	166
Total comprehensive income (loss) attributable to noncontrolling interests					—						(1)
Total comprehensive income (loss) attributable to Campbell Soup Company					$	190					$	167

	Nine Months Ended
	May 1, 2022						May 2, 2021
	Pre-tax amount		Tax benefit (expense)		After-tax amount		Pre-tax amount		Tax benefit (expense)		After-tax amount
Net earnings (loss)					$	661					$	714
Other comprehensive income (loss):
Foreign currency translation:
Foreign currency translation adjustments	$	(6)	$	—	(6)		$	14	$	—	14
Cash-flow hedges:
Unrealized gains (losses) arising during period	17		(4)		13		(9)		1		(8)
Reclassification adjustment for losses (gains) included in net earnings	(4)		1		(3)		5		—		5
Pension and other postretirement benefits:

Reclassification of prior service credit included in net earnings	(1)		—		(1)		(4)		1		(3)
Other comprehensive income (loss)	$	6	$	(3)	3		$	6	$	2	8
Total comprehensive income (loss)					$	664					$	722
Total comprehensive income (loss) attributable to noncontrolling interests					—						(4)
Total comprehensive income (loss) attributable to Campbell Soup Company					$	664					$	726

See accompanying Notes to Consolidated Financial Statements.

CAMPBELL SOUP COMPANY

Consolidated Balance Sheets

(unaudited)

(millions, except per share amounts)


	May 1, 2022		August 1, 2021
Current assets
Cash and cash equivalents	$	196	$	69
Accounts receivable, net	511		595
Inventories	1,044		933
Other current assets	101		98

Total current assets	1,852		1,695
Plant assets, net of depreciation	2,313		2,370
Goodwill	3,978		3,981
Other intangible assets, net of amortization	3,208		3,239
Other assets	496		449

Total assets	$	11,847	$	11,734
Current liabilities
Short-term borrowings	$	750	$	48
Payable to suppliers and others	1,286		1,070
Accrued liabilities	542		576
Dividends payable	112		115
Accrued income taxes	9		5

Total current liabilities	2,699		1,814
Long-term debt	3,998		5,010
Deferred taxes	1,094		1,051
Other liabilities	661		705

Total liabilities	8,452		8,580
Commitments and contingencies
Campbell Soup Company shareholders' equity
Preferred stock; authorized 40 shares; none issued	—		—
Capital stock, $0.0375 par value; authorized 560 shares; issued 323 shares	12		12
Additional paid-in capital	402		414
Earnings retained in the business	4,059		3,742
Capital stock in treasury, at cost	(1,088)		(1,021)
Accumulated other comprehensive income (loss)	8		5
Total Campbell Soup Company shareholders' equity	3,393		3,152
Noncontrolling interests	2		2
Total equity	3,395		3,154
Total liabilities and equity	$	11,847	$	11,734

See accompanying Notes to Consolidated Financial Statements.

CAMPBELL SOUP COMPANY

Consolidated Statements of Cash Flows

(unaudited)

(millions)


	Nine Months Ended
	May 1, 2022		May 2, 2021
Cash flows from operating activities:
Net earnings	$	661	$	714
Adjustments to reconcile net earnings to operating cash flow

Restructuring charges	—		21
Stock-based compensation	46		51


Pension and postretirement benefit income	(31)		(87)
Depreciation and amortization	251		233
Deferred income taxes	39		99



Other	66		66
Changes in working capital
Accounts receivable	81		(4)
Inventories	(111)		(2)
Prepaid assets	(1)		(23)
Accounts payable and accrued liabilities	140		(149)


Other	(40)		(38)
Net cash provided by operating activities	1,101		881
Cash flows from investing activities:
Purchases of plant assets	(179)		(190)

Purchases of route businesses	(1)		(1)
Sales of route businesses	2		7


Other	10		7
Net cash used in investing activities	(168)		(177)
Cash flows from financing activities:
Short-term borrowings, including commercial paper	821		—
Short-term repayments, including commercial paper	(700)		(295)

Long-term repayments	—		(721)

Dividends paid	(340)		(327)
Treasury stock purchases	(116)		—
Treasury stock issuances	1		2


Payments related to tax withholding for stock-based compensation	(18)		(15)

Payments related to extinguishment of debt	(453)		—


Net cash used in financing activities	(805)		(1,356)
Effect of exchange rate changes on cash	(1)		2
Net change in cash and cash equivalents	127		(650)
Cash and cash equivalents — beginning of period	69		859

Cash and cash equivalents — end of period	$	196	$	209

See accompanying Notes to Consolidated Financial Statements.

CAMPBELL SOUP COMPANY

Consolidated Statements of Equity

(unaudited)

(millions, except per share amounts)


	Campbell Soup Company Shareholders’ Equity
	Capital Stock						Additional Paid-in Capital		Earnings Retained in the Business		Accumulated Other Comprehensive Income (Loss)		Noncontrolling Interests
	Issued			In Treasury											Total Equity
	Shares	Amount		Shares	Amount
Balance at January 31, 2021	323	$	12	(20)	$	(990)	$	388	$	3,517	$	(5)	$	3	$	2,925
Net earnings (loss)									160				—		160

Other comprehensive income (loss)											7		(1)		6
Dividends ($.37 per share)									(113)						(113)
Treasury stock purchased				—	—										—
Treasury stock issued under management incentive and stock option plans				—	4		13		—						17
Balance at May 2, 2021	323	$	12	(20)	$	(986)	$	401	$	3,564	$	2	$	2	$	2,995

Balance at August 2, 2020	323	$	12	(21)	$	(1,023)	$	394	$	3,190	$	(10)	$	6	$	2,569
Net earnings (loss)									714				—		714

Other comprehensive income (loss)											12		(4)		8
Dividends ($1.09 per share)									(334)						(334)
Treasury stock purchased				—	—										—
Treasury stock issued under management incentive and stock option plans				1	37		7		(6)						38
Balance at May 2, 2021	323	$	12	(20)	$	(986)	$	401	$	3,564	$	2	$	2	$	2,995

Balance at January 30, 2022	323	$	12	(21)	$	(1,039)	$	388	$	3,983	$	6	$	2	$	3,352
Net earnings (loss)									188				—		188
Other comprehensive income (loss)											2		—		2
Dividends ($.37 per share)									(112)						(112)
Treasury stock purchased				(2)	(51)										(51)
Treasury stock issued under management incentive and stock option plans				—	2		14		—						16
Balance at May 1, 2022	323	$	12	(23)	$	(1,088)	$	402	$	4,059	$	8	$	2	$	3,395

Balance at August 1, 2021	323	$	12	(21)	$	(1,021)	$	414	$	3,742	$	5	$	2	$	3,154
Net earnings (loss)									661				—		661
Other comprehensive income (loss)											3		—		3
Dividends ($1.11 per share)									(336)						(336)
Treasury stock purchased				(3)	(116)										(116)
Treasury stock issued under management incentive and stock option plans				1	49		(12)		(8)						29
Balance at May 1, 2022	323	$	12	(23)	$	(1,088)	$	402	$	4,059	$	8	$	2	$	3,395

See accompanying Notes to Consolidated Financial Statements.

Notes to Consolidated Financial Statements

(unaudited)

1. Basis of Presentation and Significant Accounting Policies

In this Form 10-Q, unless otherwise stated, the terms "we," "us," "our" and the "company" refer to Campbell Soup Company and its consolidated subsidiaries.

The financial statements reflect all adjustments which are, in our opinion, necessary for a fair statement of the results of operations, financial position, and cash flows for the indicated periods. The accounting policies we used in preparing these financial statements are substantially consistent with those we applied in our Annual Report on Form 10-K for the year ended August 1, 2021. Certain amounts in prior-year financial statements were reclassified to conform to the current-year presentation.

The results for the period are not necessarily indicative of the results to be expected for other interim periods or the full year. Our fiscal year ends on the Sunday nearest July 31, which is July 31, 2022.

2. Recent Accounting Pronouncements

Recently Adopted

In December 2019, the Financial Accounting Standards Board (FASB) issued guidance on simplifying the accounting for income taxes. The guidance removes certain exceptions to the general principles of accounting for income taxes and also improves consistent application of accounting by clarifying or amending existing guidance. We adopted the guidance in the first quarter of 2022. The adoption did not have an impact on our consolidated financial statements.

Accounting Pronouncements Not Yet Adopted

In March 2020, the FASB issued guidance that provides optional expedients and exceptions for a limited period of time for accounting for contracts, hedging relationships, and other transactions affected by the London Interbank Offered Rate (LIBOR) or another reference rate expected to be discontinued. Optional expedients can be applied from March 12, 2020 through December 31, 2022. We are currently evaluating the impact that the new guidance will have on our consolidated financial statements.

3. Accumulated Other Comprehensive Income (Loss)

The components of Accumulated other comprehensive income (loss) consisted of the following:


(Millions)	Foreign Currency Translation Adjustments(1)		Cash-Flow Hedges(2)		Pension and Postretirement Benefit Plan Adjustments(3)		Total Accumulated Comprehensive Income (Loss)
Balance at August 2, 2020	$	(10)	$	(7)	$	7	$	(10)
Other comprehensive income (loss) before reclassifications	18		(8)		—		10
Losses (gains) reclassified from accumulated other comprehensive income (loss)	—		5		(3)		2
Net current-period other comprehensive income (loss)	18		(3)		(3)		12
Balance at May 2, 2021	$	8	$	(10)	$	4	$	2

Balance at August 1, 2021	$	6	$	(4)	$	3	$	5
Other comprehensive income (loss) before reclassifications	(6)		13		—		7
Losses (gains) reclassified from accumulated other comprehensive income (loss)	—		(3)		(1)		(4)
Net current-period other comprehensive income (loss)	(6)		10		(1)		3
Balance at May 1, 2022	$	—	$	6	$	2	$	8

_____________________________________

(1)Included no tax as of May 1, 2022, August 1, 2021, May 2, 2021 and August 2, 2020.

(2)Included tax expense of $2 million as of May 1, 2022, a tax benefit of $1 million as of August 1, 2021, $2 million as of May 2, 2021, and $1 million as of August 2, 2020.

(3)Included tax expense of $1 million as of May 1, 2022, August 1, 2021 and May 2, 2021, and $2 million as of August 2, 2020.

Amounts related to noncontrolling interests were not material.

The amounts reclassified from Accumulated other comprehensive income (loss) consisted of the following:


	Three Months Ended				Nine Months Ended
(Millions)	May 1, 2022		May 2, 2021		May 1, 2022		May 2, 2021		Location of Loss (Gain) Recognized in Earnings







Losses (gains) on cash-flow hedges:
Commodity contracts	$	(3)	$	—	$	(6)	$	—	Cost of products sold
Foreign exchange forward contracts	(1)		2		1		4		Cost of products sold


Forward starting interest rate swaps	—		—		1		1		Interest expense
Total before tax	(4)		2		(4)		5
Tax expense (benefit)	1		—		1		—
Loss (gain), net of tax	$	(3)	$	2	$	(3)	$	5

Pension and postretirement benefit adjustments:
Prior service credit	$	—	$	(2)	$	(1)	$	(4)	Other expenses / (income)
Tax expense (benefit)	—		1		—		1
Loss (gain), net of tax	$	—	$	(1)	$	(1)	$	(3)

4. Goodwill and Intangible Assets

Goodwill

The following table shows the changes in the carrying amount of goodwill by business segment:


(Millions)	Meals & Beverages		Snacks		Total




Net balance at August 1, 2021	$	970	$	3,011	$	3,981


Amounts reclassified due to segment change(1)	25		(25)		—

Foreign currency translation adjustment	(3)		—		(3)
Net balance at May 1, 2022	$	992	$	2,986	$	3,978

_____________________________________

(1)See Note 5 for additional information.

Intangible Assets

The following table summarizes balance sheet information for intangible assets, excluding goodwill, subject to amortization and intangible assets not subject to amortization:

May 1, 2022

August 1, 2021

(Mil