Campbell Soup Earnings 2019-04-28

CPB 10Q Quarterly Report

Balance Sheet	Income Statement	Cash Flow

10-Q 1 cpb-4282019x10xq.htm 10-Q Document

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
April 28, 2019				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(s)	Name of each exchange on which registered
Capital Stock, par value $.0375	CPB	New York Stock Exchange

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. þ 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). þ 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 þ	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 þ No

There were 301,149,903 shares of capital stock outstanding as of May 29, 2019.

TABLE OF CONTENTS

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
	April 28, 2019			April 29, 2018			April 28, 2019			April 29, 2018
Net sales	$	2,178		$	1,878		$	7,129		$	5,743
Costs and expenses
Cost of products sold	1,455			1,263			4,781			3,624
Marketing and selling expenses	245			220			738			645
Administrative expenses	165			153			492			444
Research and development expenses	26			25			74			79
Other expenses / (income)	20			35			13			(7		)
Restructuring charges	1			24			21			58
Total costs and expenses	1,912			1,720			6,119			4,843
Earnings before interest and taxes	266			158			1,010			900
Interest expense	92			44			279			107
Interest income	1			2			3			3
Earnings before taxes	175			116			734			796
Taxes on earnings	44			43			184			106
Earnings from continuing operations	131			73			550			690
Loss from discontinued operations	(47		)	(466		)	(331		)	(523		)
Net earnings (loss)	84			(393		)	219			167
Less: Net earnings (loss) attributable to noncontrolling interests	—			—			—			—
Net earnings (loss) attributable to Campbell Soup Company	$	84		$	(393	)	$	219		$	167
Per Share — Basic
Earnings from continuing operations attributable to Campbell Soup Company	$	.44		$	.24		$	1.83		$	2.29
Loss from discontinued operations	(.16		)	(1.55		)	(1.10		)	(1.74		)
Net earnings (loss) attributable to Campbell Soup Company	$	.28		$	(1.31	)	$	.73		$	.55
Weighted average shares outstanding — basic	301			301			301			301
Per Share — Assuming Dilution
Earnings from continuing operations attributable to Campbell Soup Company	$	.43		$	.24		$	1.82		$	2.28
Loss from discontinued operations	(.16		)	(1.55		)	(1.10		)	(1.73		)
Net earnings (loss) attributable to Campbell Soup Company ⁽¹⁾	$	.28		$	(1.31	)	$	.73		$	.55
Weighted average shares outstanding — assuming dilution	302			301			302			302


⁽¹⁾	Sum of the individual amounts may not add due to rounding.

See accompanying Notes to Consolidated Financial Statements.

CAMPBELL SOUP COMPANY

Consolidated Statements of Comprehensive Income

(unaudited)

(millions)



	Three Months Ended
	April 28, 2019								April 29, 2018
	Pre-tax amount			Tax (expense) benefit		After-tax amount			Pre-tax amount			Tax (expense) benefit			After-tax amount
Net earnings (loss)						$	84								$	(393	)
Other comprehensive income (loss):
Foreign currency translation:
Foreign currency translation adjustments	$	(26	)	$	—	(26		)	$	(59	)	$	—		(59		)
Cash-flow hedges:
Unrealized gains (losses) arising during the period	2			—		2			11			(3		)	8
Reclassification adjustment for (gains) losses included in net earnings	(1		)	—		(1		)	1			—			1
Pension and other postretirement benefits:
Prior service cost arising during the period	—			—		—			1			(1		)	—
Reclassification of prior service credit included in net earnings	(8		)	2		(6		)	(7		)	2			(5		)
Other comprehensive income (loss)	$	(33	)	$	2	(31		)	$	(53	)	$	(2	)	(55		)
Total comprehensive income (loss)						$	53								$	(448	)
Total comprehensive income (loss) attributable to noncontrolling interests						—									—
Total comprehensive income (loss) attributable to Campbell Soup Company						$	53								$	(448	)

	Nine Months Ended
	April 28, 2019								April 29, 2018
	Pre-tax amount			Tax (expense) benefit		After-tax amount			Pre-tax amount			Tax (expense) benefit			After-tax amount
Net earnings						$	219								$	167
Other comprehensive income (loss):
Foreign currency translation:
Foreign currency translation adjustments	$	(49	)	$	—	(49		)	$	(25	)	$	—		(25		)
Cash-flow hedges:
Unrealized gains (losses) arising during the period	1			—		1			22			(7		)	15
Reclassification adjustment for (gains) losses included in net earnings	—			—		—			2			—			2
Pension and other postretirement benefits:
Prior service credit arising during the period	—			—		—			(2		)	—			(2		)
Reclassification of prior service credit included in net earnings	(22		)	5		(17		)	(20		)	6			(14		)
Other comprehensive income (loss)	$	(70	)	$	5	(65		)	$	(23	)	$	(1	)	(24		)
Total comprehensive income (loss)						$	154								$	143
Total comprehensive income (loss) attributable to noncontrolling interests						—									(1		)
Total comprehensive income (loss) attributable to Campbell Soup Company						$	154								$	144

See accompanying Notes to Consolidated Financial Statements.

CAMPBELL SOUP COMPANY

Consolidated Balance Sheets

(unaudited)

(millions, except per share amounts)



	April 28, 2019			July 29, 2018
Current assets
Cash and cash equivalents	$	202		$	218
Accounts receivable, net	753			702
Inventories	884			1,037
Other current assets	102			83
Current assets of discontinued operations	220			256
Total current assets	2,161			2,296
Plant assets, net of depreciation	2,769			2,820
Goodwill	4,702			4,580
Other intangible assets, net of amortization	3,587			3,815
Other assets ($78 as of 2019 and $77 as of 2018 attributable to variable interest entity)	203			220
Noncurrent assets of discontinued operations	346			798
Total assets	$	13,768		$	14,529
Current liabilities
Short-term borrowings	$	1,773		$	1,896
Payable to suppliers and others	841			814
Accrued liabilities	672			637
Dividends payable	107			107
Accrued income taxes	18			22
Current liabilities of discontinued operations	100			118
Total current liabilities	3,511			3,594
Long-term debt	7,507			7,998
Deferred taxes	990			996
Other liabilities	519			564
Noncurrent liabilities of discontinued operations	4			4
Total liabilities	12,531			13,156
Commitments and contingencies
Campbell Soup Company shareholders' equity
Preferred stock; authorized 40 shares; none issued	—			—
Capital stock, $.0375 par value; authorized 560 shares; issued 323 shares	12			12
Additional paid-in capital	360			349
Earnings retained in the business	2,107			2,224
Capital stock in treasury, at cost	(1,077		)	(1,103		)
Accumulated other comprehensive loss	(174		)	(118		)
Total Campbell Soup Company shareholders' equity	1,228			1,364
Noncontrolling interests	9			9
Total equity	1,237			1,373
Total liabilities and equity	$	13,768		$	14,529

See accompanying Notes to Consolidated Financial Statements.

CAMPBELL SOUP COMPANY

Consolidated Statements of Cash Flows

(unaudited)

(millions)



	Nine Months Ended
	April 28, 2019			April 29, 2018
Cash flows from operating activities:
Net earnings	$	219		$	167
Adjustments to reconcile net earnings to operating cash flow
Impairment charges	360			694
Restructuring charges	22			59
Stock-based compensation	45			48
Noncurrent income taxes	—			52
Amortization of inventory fair value adjustment from acquisition	—			37
Pension and postretirement benefit income	(16		)	(48		)
Depreciation and amortization	349			266
Deferred income taxes	50			(192		)
Losses on sales of discontinued operations businesses	18			—
Other, net	21			10
Changes in working capital, net of acquisitions and divestitures
Accounts receivable	(63		)	(18		)
Inventories	156			50
Prepaid assets	(19		)	(84		)
Accounts payable and accrued liabilities	60			26
Other	(54		)	(43		)
Net cash provided by operating activities	1,148			1,024
Cash flows from investing activities:
Purchases of plant assets	(274		)	(223		)
Purchases of route businesses	(27		)	(5		)
Sales of route businesses	29			5
Businesses acquired, net of cash acquired	(18		)	(6,773		)
Sales of discontinued operations businesses, net of cash divested	54			—
Other, net	14			(12		)
Net cash used in investing activities	(222		)	(7,008		)
Cash flows from financing activities:
Short-term borrowings	4,681			7,811
Short-term repayments	(4,995		)	(7,577		)
Long-term borrowings	—			6,200
Long-term repayments	(300		)	(43		)
Dividends paid	(318		)	(321		)
Treasury stock purchases	—			(86		)
Payments related to tax withholding for stock-based compensation	(8		)	(23		)
Repurchase of noncontrolling interest	—			(47		)
Payments of debt issuance costs	(1		)	(49		)
Net cash provided by (used in) financing activities	(941		)	5,865
Effect of exchange rate changes on cash	(5		)	(1		)
Net change in cash and cash equivalents	(20		)	(120		)
Cash and cash equivalents — beginning of period	218			314
Cash and cash equivalents of discontinued operations — beginning of period	8			5
Cash and cash equivalents of discontinued operations — end of period	(4		)	(4		)
Cash and cash equivalents — end of period	$	202		$	195

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															Total Equity
Balance at January 28, 2018	323	$	12	(22	)	$	(1,104	)	$	321		$	2,734		$	(21	)	$	7		$	1,949
Noncontrolling interest acquired																		47			47
Repurchase of noncontrolling interest																		(47		)	(47		)
Net earnings (loss)												(393		)				—			(393		)
Other comprehensive income (loss)															(55		)	—			(55		)
Dividends ($.35 per share)												(105		)							(105		)
Treasury stock purchased				—		—															—
Treasury stock issued under management incentive and stock option plans				—		—			15												15
Balance at April 29, 2018	323	$	12	(22	)	$	(1,104	)	$	336		$	2,236		$	(76	)	$	7		$	1,411

Balance at July 30, 2017	323	$	12	(22	)	$	(1,066	)	$	359		$	2,385		$	(53	)	$	8		$	1,645
Noncontrolling interest acquired																		47			47
Repurchase of noncontrolling interest																		(47		)	(47		)
Net earnings (loss)												167						—			167
Other comprehensive income (loss)															(23		)	(1		)	(24		)
Dividends ($.1.05 per share)												(316		)							(316		)
Treasury stock purchased				(2	)	(86		)													(86		)
Treasury stock issued under management incentive and stock option plans				2		48			(23		)										25
Balance at April 29, 2018	323	$	12	(22	)	$	(1,104	)	$	336		$	2,236		$	(76	)	$	7		$	1,411

Balance at January 27, 2019	323	$	12	(22	)	$	(1,079	)	$	349		$	2,130		$	(143	)	$	9		$	1,278
Net earnings (loss)												84						—			84
Other comprehensive income (loss)															(31		)	—			(31		)
Dividends ($.35 per share)												(107		)							(107		)
Treasury stock purchased				—		—															—
Treasury stock issued under management incentive and stock option plans				—		2			11												13
Balance at April 28, 2019	323	$	12	(22	)	$	(1,077	)	$	360		$	2,107		$	(174	)	$	9		$	1,237

Balance at July 29, 2018	323	$	12	(22	)	$	(1,103	)	$	349		$	2,224		$	(118	)	$	9		$	1,373
Cumulative effect of changes in accounting principle:
Revenue⁽¹⁾												(8		)							(8		)
Stranded tax effects⁽¹⁾												(9		)	9						—
Net earnings (loss)												219						—			219
Other comprehensive income (loss)															(65		)	—			(65		)
Dividends ($1.05 per share)												(319		)							(319		)
Treasury stock purchased				—		—															—
Treasury stock issued under management incentive and stock option plans				—		26			11												37
Balance at April 28, 2019	323	$	12	(22	)	$	(1,077	)	$	360		$	2,107		$	(174	)	$	9		$	1,237

⁽¹⁾ See Note 2 for additional detail.

See accompanying Notes to Consolidated Financial Statements.

Notes to Consolidated Financial Statements

(unaudited)

(currency in millions, except per share amounts)


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 consolidated financial statements include our accounts and entities in which we maintain a controlling financial interest and a variable interest entity (VIE) for which we are the primary beneficiary. Intercompany transactions are eliminated in consolidation. See Note 3 for a discussion of Discontinued Operations. Certain amounts in prior-year financial statements were reclassified to conform to the current-year presentation.

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 July 29, 2018, except as described below and in Note 2.

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 28, 2019.

Revenue Recognition - Our revenues primarily consist of the sale of food and beverage products through our own sales force and/or third-party brokers and distribution partners. Revenues are recognized when our performance obligation has been satisfied and control of the product passes to our customers, which typically occurs when products are delivered or accepted by customers in accordance with terms of agreements. We make shipments promptly after acceptance of orders. Shipping and handling costs incurred to deliver the product are recorded within Cost of products sold. Amounts billed and due from our customers are classified as Accounts receivable in the Consolidated Balance Sheets and require payment on a short-term basis. Revenues are recognized net of provisions for returns, discounts and certain sales promotion expenses, such as feature price discounts, in-store display incentives, cooperative advertising programs, new product introduction fees and coupon redemption costs. These forms of variable consideration are recognized upon sale. The recognition of costs for promotion programs involves the use of judgment related to performance and redemption estimates. Estimates are made based on historical experience and other factors, including expected volume. Historically, the difference between actual experience compared to estimated redemptions and performance has not been significant to the quarterly or annual financial statements. Differences between estimates and actual costs are recognized as a change in estimate in a subsequent period. Revenues are presented on a net basis for arrangements under which suppliers perform certain additional services. See Note 7 for additional information on disaggregation of revenue. In 2019, we adopted revised guidance on the recognition of revenue from contracts with customers. See Note 2 for additional information.


2.	Recent Accounting Pronouncements

Recently Adopted

In May 2014, the Financial Accounting Standards Board (FASB) issued revised guidance on the recognition of revenue from contracts with customers. The guidance is designed to create greater comparability for financial statement users across industries and jurisdictions. The guidance also requires enhanced disclosures. The guidance was originally effective for fiscal years, and interim periods within those years, beginning after December 15, 2016. In July 2015, the FASB decided to delay the effective date of the new revenue guidance by one year to fiscal years, and interim periods within those years, beginning after December 15, 2017. Entities were permitted to adopt the new revenue standard early, but not before the original effective date. The guidance permits the use of either a full retrospective or modified retrospective transition method. We completed the review of our arrangements with customers across our businesses, including our practices of offering rebates, refunds, discounts and other price allowances, and trade and consumer promotion programs. As we evaluated our methods of estimating the amount and timing of these various forms of variable consideration, we determined we will accelerate the expense recognition of certain trade and consumer promotion programs under the new guidance. Based on our assessment, the impact is not expected to be material on an annual basis, but will impact quarterly results. We adopted the guidance in the first quarter of 2019 using the modified retrospective method and recorded a cumulative effect adjustment of $8, net of tax, to decrease the opening balance of Earnings retained in the business, an increase of $10 to Accrued liabilities, an increase of $1 to Accounts payable, a decrease of $2 to Deferred taxes and an increase of $1 to Other assets.

The impacts of the changes to our Consolidated Balance Sheet as of April 28, 2019, as a result of adoption are as follows:



	As Reported		Balances Without Adoption		Increase/(Decrease) Due to Adoption
Accounts receivable, net	$	753	$	752	$	1
Total current assets	2,161		2,160		1
Total assets	13,768		13,767		1

Payable to suppliers and others	$	841	$	840	$	1
Accrued liabilities	672		661		11
Accrued income taxes	18		21		(3		)
Total current liabilities	3,511		3,502		9
Total liabilities	12,531		12,522		9

Campbell Soup Company shareholders' equity
Earnings retained in the business	$	2,107	$	2,115	$	(8	)
Total Campbell Soup Company shareholders' equity	1,228		1,236		(8		)
Total equity	1,237		1,245		(8		)
Total liabilities and equity	13,768		13,767		1

The impacts of the changes to our Consolidated Statement of Earnings as a result of adoption are as follows:



	Three Months Ended						Nine Months Ended
	April 28, 2019						April 28, 2019
	As Reported		Balances Without Adoption		Increase/(Decrease) Due to Adoption		As Reported		Balances Without Adoption		Increase/(Decrease) Due to Adoption
Net sales	$	2,178	$	2,172	$	6	$	7,129	$	7,128	$	1

Cost of products sold	$	1,455	$	1,454	$	1	$	4,781	$	4,780	$	1
Total costs and expenses	$	1,912	$	1,911	$	1	$	6,119	$	6,118	$	1
Earnings before interest and taxes	$	266	$	261	$	5	$	1,010	$	1,010	$	—
Earnings before taxes	$	175	$	170	$	5	$	734	$	734	$	—
Taxes on earnings	44		43		1		184		184		—
Earnings from continuing operations attributable to Campbell Soup Company	$	131	$	127	$	4	$	550	$	550	$	—

Per Share — Basic
Earnings from continuing operations attributable to Campbell Soup Company⁽¹⁾	$	.44	$	.42	$	.01	$	1.83	$	1.83	$	—
Per Share — Assuming Dilution
Earnings from continuing operations attributable to Campbell Soup Company	$	.43	$	.42	$	.01	$	1.82	$	1.82	$	—

_______________________________________


⁽¹⁾	The sum of individual per share amounts may not add due to rounding.

In January 2016, the FASB issued guidance that amends the recognition and measurement of financial instruments. The changes primarily affect the accounting for equity investments, financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments. Under the new guidance, equity investments in unconsolidated entities that are not accounted for under the equity method will generally be measured at fair value through earnings. When the fair value option has been elected for financial liabilities, changes in fair value due to instrument-specific credit risk will be recognized separately in other comprehensive income. The guidance is effective for fiscal years beginning after December 15, 2017, and

interim periods within those years. In 2019, we adopted the guidance. The adoption did not have an impact on our consolidated financial statements.

In August 2016, the FASB issued guidance on the classification of certain cash receipts and payments in the statement of cash flows. The guidance is effective for fiscal years beginning after December 15, 2017, and interim periods within those years. Early adoption is permitted. The guidance must be applied retrospectively to all periods presented but may be applied prospectively if retrospective application would be impracticable. In 2019, we adopted the guidance. The adoption did not have a material impact on our consolidated financial statements.

In October 2016, the FASB issued guidance on tax accounting for intra-entity asset transfers. Under current guidance, the tax effects of intra-entity asset transfers (intercompany sales) are deferred until the transferred asset is sold to a third party or otherwise recognized. The new guidance requires companies to account for the income tax effects on intercompany transfers of assets other than inventory when the transfer occurs. The new guidance is effective for fiscal years beginning after December 15, 2017, and interim periods within those years. Early adoption is permitted in the first interim period of a fiscal year. The modified retrospective approach is required upon adoption, with a cumulative-effect adjustment recorded in retained earnings as of the beginning of the period of adoption. In 2019, we adopted the guidance. The adoption did not have an impact on our consolidated financial statements.

In January 2017, the FASB issued guidance that revises the definition of a business to assist entities with evaluating when a set of transferred assets and activities is a business. The guidance requires an entity to evaluate if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets. If this threshold is met, the set of transferred assets and activities is not a business. If it is not met, the entity then evaluates whether the set meets the requirement that a business include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create outputs. The guidance is effective for fiscal years beginning after December 15, 2017, and interim periods within those years. Early adoption is permitted. Beginning in 2019, we will prospectively apply the guidance to applicable transactions.

In May 2017, the FASB issued guidance that clarifies when changes to the terms or conditions of a share-based payment award must be accounted for as modifications. Under the new guidance, modification accounting is required only if the value, the vesting conditions, or the classification of the award (as equity or liability) changes as a result of the change in terms or conditions. The guidance is effective prospectively for fiscal years beginning after December 15, 2017. Early adoption is permitted. We will apply the guidance in evaluating future changes to terms or conditions of share-based payment awards.

In February 2018, the FASB issued guidance that provides entities an option to reclassify the stranded tax effects of the Tax Cuts and Jobs Act of 2017 on items within accumulated other comprehensive income to retained earnings. The guidance is effective for fiscal years beginning after December 15, 2018, and interim periods within those years. Entities are able to early adopt the guidance in any interim or annual period for which financial statements have not yet been issued and apply it either in the period of adoption or retrospectively to each period in which the tax effects of the Tax Cuts and Jobs Act of 2017 related to items in accumulated other comprehensive income are recognized. We adopted the guidance in the first quarter of 2019, effective on July 30, 2018, and elected not to reclassify prior periods. The adoption resulted in a cumulative effect adjustment of $9 to decrease the opening balance of Earnings retained in the business and a corresponding net decrease to the components of Accumulated other comprehensive income (loss). See Note 5 for additional information.

Accounting Pronouncements Not Yet Adopted

In February 2016, the FASB issued guidance that amends accounting for leases. Under the new guidance, a lessee will recognize assets and liabilities for most leases but will recognize expenses similar to current lease accounting. The guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018. Early adoption is permitted. In July 2018, the FASB issued an adoption approach that allows entities to apply the new guidance at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption without restating prior periods. We are currently compiling an inventory of our lease arrangements in order to determine the impact that the new guidance will have on our consolidated financial statements. We have selected a lease software solution to facilitate the adoption of the new guidance.

In August 2017, the FASB issued guidance that amends hedge accounting. Under the new guidance, more hedging strategies will be eligible for hedge accounting and the application of hedge accounting is simplified. The new guidance amends presentation and disclosure requirements, and how effectiveness is assessed. In October 2018, the FASB issued guidance which permits an entity to designate the overnight index swap rate based on the Secured Overnight Financing Rate Fed Funds as a benchmark interest rate in a hedge accounting relationship. The guidance is effective for fiscal years beginning after December 15, 2018, and interim periods within those years. Early adoption is permitted. We are currently evaluating the impact that the new guidance will have on our consolidated financial statements.

In August 2018, the FASB issued guidance that changes the disclosure requirements related to defined benefit pension and postretirement plans. The guidance is effective for fiscal years beginning after December 15, 2020. The guidance is to be applied on a retrospective basis. Early adoption is permitted. We are currently evaluating the impact that the new guidance will have on our disclosures.

In August 2018, the FASB issued guidance that eliminates, adds, and modifies certain disclosure requirements for fair value measurements. The guidance is effective for fiscal years beginning after December 15, 2019, and interim periods within those years. Early adoption is permitted. Certain disclosures in the guidance must be applied on a retrospective basis, while others must be applied on a prospective basis. We are currently evaluating the impact that the new guidance will have on our disclosures.

In August 2018, the FASB issued guidance on accounting for implementation costs incurred in a cloud computing arrangement that is a service contract. The guidance aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The guidance is effective for fiscal years beginning after December 15, 2019. Entities have the option to apply the guidance prospectively to all implementation costs incurred after the date of adoption or retrospectively. Early adoption is permitted. We are currently evaluating the impact that the new guidance will have on our consolidated financial statements.


3.	Discontinued Operations

On August 30, 2018, we announced plans to pursue the divestiture of businesses within two operating segments: our international biscuits and snacks operating segment, which includes Arnott’s, Kelsen and our operations in Indonesia, Malaysia, Hong Kong and Japan; and the Campbell Fresh operating segment, which includes Bolthouse Farms, Garden Fresh Gourmet and the U.S. refrigerated soup business.

On February 25, 2019, we sold our U.S refrigerated soup business and on April 25, 2019, we sold our Garden Fresh Gourmet business. Proceeds were approximately $55, subject to customary purchase price adjustments. On April 12, 2019, we signed a definitive agreement for the sale of Bolthouse Farms to an affiliate of Butterfly Equity for $510, subject to customary purchase price adjustments. We expect to complete the sale in the fourth quarter of 2019. Beginning in the third quarter of 2019, we have reflected the results of these businesses as discontinued operations in the Consolidated Statements of Earnings for all periods presented.

Results of discontinued operations were as follows:



	Three Months Ended						Nine Months Ended
	April 28, 2019			April 29, 2018			April 28, 2019			April 29, 2018
Net sales	$	210		$	247		$	666		$	723

Impairment charges	$	—		$	619		$	360		$	694

Earnings (loss) before taxes from operations	$	7		$	(633	)	$	(361	)	$	(720	)
Taxes on earnings from operations	7			(167		)	(82		)	(197		)
Loss on sale of businesses / costs associated with selling the businesses	(24		)	—			(31		)	—
Tax impact of loss on sale / costs associated with selling the businesses	23			—			21			—
Loss from discontinued operations	$	(47	)	$	(466	)	$	(331	)	$	(523	)

In the second quarter of 2019, we performed interim impairment assessments on the intangible and tangible assets of the businesses. We revised our future outlook for earnings and cash flows for each of these businesses as the divestiture process progressed and we received initial indications of value. Within Bolthouse Farms carrot and carrot ingredients, we recorded impairment charges of $18 on the trademark, $40 on customer relationships, $15 on technology and $104 on plant assets. Within Bolthouse Farms refrigerated beverages and salad dressings, we recorded impairment charges of $74 on the trademark, $22 on customer relationships, and $9 on plant assets. On Garden Fresh Gourmet, we recorded impairment charges of $23 on the trademark, $39 on customer relationships, and $2 on plant assets. In the first quarter of 2019, we recorded an impairment charge of $14 on the U.S refrigerated soup plant assets.

In the third quarter of 2019, we incurred pre-tax expenses of $24 associated with the sale process of the businesses in Campbell Fresh, including losses on the sale of the U.S. refrigerated soup business and Garden Fresh Gourmet of $15. Year-to-date in 2019, we incurred pre-tax expenses of $31 associated with the sale process of the businesses, including losses on the sale of the U.S. refrigerated soup business and Garden Fresh Gourmet of $18. In addition, due to the pending sale of Bolthouse Farms, we recorded tax expense of $29 in the three- and nine-month periods ended April 28, 2019, as deferred tax assets are not realizable.

The assets and liabilities of Bolthouse Farms have been reflected as assets and liabilities of discontinued operations as of April 28, 2019, and July 29, 2018. In addition, the assets and liabilities of the Garden Fresh Gourmet business and our U.S refrigerated soup business, which were sold in the current-year quarter, have been reflected as assets and liabilities of discontinued operations as of July 29, 2018.



	April 28, 2019		July 29, 2018
Cash	$	4	$	8
Accounts receivable, net	77		84
Inventories	137		161
Other current assets	2		3
Current assets	$	220	$	256

Plant assets, net of depreciation	$	199	$	413
Other intangible assets, net of amortization	143		381
Other assets	4		4
Total assets	$	566	$	1,054

Payable to suppliers and others	$	57	$	79
Accrued liabilities	43		39
Current liabilities	$	100	$	118

Deferred taxes	$	—	$	(1	)
Other liabilities	4		5
Total liabilities	$	104	$	122

The depreciation and amortization, capital expenditures, sale proceeds and significant operating noncash items of discontinued operations were as follows:



	Nine Months Ended
	April 28, 2019		April 29, 2018
Cash flows from discontinued operating activities:
Impairment charges	$	360	$	694
Depreciation and amortization	44		55
Loss on sale of businesses	18		—

Cash flows from discontinued investing activities:
Capital expenditures	$	20	$	28
Sale of businesses, net of cash divested	54		—

We will provide certain transition services to support the divested businesses.


4.	Acquisitions

On March 26, 2018, we completed the acquisition of Snyder's-Lance, Inc. (Snyder's-Lance) for $50.00 per share. Total consideration was $6,112, which included the payoff of approximately $1,100 of Snyder's-Lance indebtedness. The acquisition was financed through a single draw 3-year senior unsecured term loan facility and the issuance of senior notes. Snyder's-Lance is a snack food company that manufactures, distributes, markets and sells snack food products in North America and Europe. Its primary brands include Snyder’s of Hanover and Lance, as well as Kettle Brand, KETTLE, Cape Cod, Snack Factory Pretzel Crisps, Pop Secret, Emerald and Late July.

The excess of the purchase price over the estimated fair values of identifiable net assets was recorded as $3,006 of goodwill. The goodwill is not deductible for tax purposes. The goodwill was primarily attributable to future growth opportunities, anticipated synergies, and intangible assets that did not qualify for separate recognition. The goodwill is included in the Global Biscuits and Snacks segment.

On December 12, 2017, we completed the acquisition of Pacific Foods of Oregon, LLC (Pacific Foods). The purchase price was $688. Pacific Foods produces broth, soups, non-dairy beverages and other simple meals. The excess of the purchase price over the estimated fair values of identifiable net assets was recorded as $202 of goodwill. The goodwill is deductible for tax purposes. The goodwill was primarily attributable to future growth opportunities, anticipated synergies, and intangible assets that did not qualify for separate recognition. The goodwill is included in the Meals and Beverages segment.

The table below presents the fair value that was allocated to acquired assets and assumed liabilities of Snyder's-Lance. In the first quarter ended October 28, 2018, we made measurement period adjustments to reflect facts and circumstances in existence as of the date of acquisition. These adjustments included a $134 decrease to indefinite-lived trademarks, a $52 decrease to customer relationships, a $43 decrease to Deferred taxes and a $140 increase to Goodwill.



	Snyder's-Lance
Cash	$	21
Accounts receivable	220
Inventories	219
Other current assets	32
Plant assets	696
Goodwill	3,006
Other intangible assets	2,761
Other assets	65
Short-term debt	(1		)
Accounts payable	(124		)
Accrued liabilities	(115		)
Deferred taxes	(597		)
Other liabilities	(24		)
Noncontrolling interest	(47		)
Total assets acquired and liabilities assumed	$	6,112

The identifiable intangible assets of Snyder's-Lance consist of:



	Type	Life in Years			Value
Trademarks	Non-amortizable	Indefinite			$	1,997
Customer relationships	Amortizable	15	to	22	756
Other	Amortizable	1.5			8
Total identifiable intangible assets					$	2,761

For the three- and nine-month periods ended April 28, 2019, the acquisition of Snyder's-Lance contributed $532 and $1,615 to Net sales. The contribution to Net earnings (loss) from continuing operations were losses of $9 and $26 for the three- and nine-month periods ended April 28, 2019, including expenses associated with restructuring charges and cost savings initiatives, as well as interest expense on the debt to finance the acquisition.

We recognized transaction costs and integration costs of $64 and $88, associated with the Snyder's-Lance acquisition in the three- and nine-month periods ended April 29, 2018, respectively. Approximately $29 in the three-month period and $53 in the nine-month period represented transactions costs, including bridge financing costs and outside advisory costs, and were recorded in Other expenses / (income). Integration costs in the three- and nine-month periods included the following:


•	amortization of most of the acquisition date fair value adjustment to inventories of $37 that was recorded in Cost of products sold;


•	$10 of Restructuring charges;


•	$6 of Administrative expenses; and


•	$18 gain in Interest expense on treasury rate lock contracts used to hedge the planned financing of the acquisition.

For the three- and nine-month periods ended April 29, 2018, the contribution of the Snyder's-Lance acquisition to Net sales was $207. The contribution to Net earnings (loss) was a loss of $52 for the three-month period ended April 29, 2018, including the effect of the transaction and integration costs, and interest expense on the debt to finance the acquisition.

For the three- and nine-month periods ended April 28, 2019, the acquisition of Pacific Foods contributed $55 and $182 to Net sales. The contribution to Net earnings (loss) from continuing operations were losses of $4 and $7 for the three- and nine-month periods ended April 28, 2019, including interest expense on the debt to finance the acquisition. For the nine-month period ended April 29, 2018, the contribution of the Pacific Foods acquisition to Net sales was $83. The contribution to Net earnings was not material.

The following unaudited summary information is presented on a consolidated pro forma basis as if the Snyder's-Lance and Pacific Foods acquisitions had occurred on August 1, 2016:



	Three Months Ended		Nine Months Ended
	April 29, 2018		April 29, 2018
Net sales	$	2,201	$	7,280
Earnings from continuing operations attributable to Campbell Soup Company	$	98	$	795
Earnings from continuing operations per share attributable to Campbell Soup Company - basic	$	.33	$	2.64
Earnings from continuing operations per share attributable to Campbell Soup Company - assuming dilution	$	.33	$	2.63

The pro forma amounts include additional interest expense on the debt issued to finance the purchases, amortization and depreciation expense based on the estimated fair value and useful lives of intangible assets and plant assets, and related tax effects. The pro forma results are not necessarily indicative of the combined results had the Snyder's-Lance and Pacific Foods acquisitions been completed on August 1, 2016, nor are they indicative of future combined results. The pro forma results for the three- and nine-month periods ended April 29, 2018 do not include certain transaction costs, amortization of the acquisition date fair value adjustment to inventories, or a gain on treasury rate lock contracts, as all of these would be reflected in the nine-month period ended April 30, 2017, had the acquisitions occurred on August 1, 2016.

With the acquisition of Snyder's-Lance, we acquired an investment in Yellow Chips Holdings B.V. (Yellow Chips), and accounted for the investment under the equity method of accounting. On October 30, 2018, we purchased the remaining ownership interest in Yellow Chips, and began consolidating the business. The purchase price was $18. The pro forma results for the nine-month period ended April 28, 2019 and the three- and nine-month periods ended April 29, 2018 were not material.


5.	Accumulated Other Comprehensive Income (Loss)

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



	Foreign Currency Translation Adjustments⁽¹⁾			Gains (Losses) on Cash Flow Hedges⁽²⁾			Pension and Postretirement Benefit Plan Adjustments⁽³⁾			Total Accumulated Comprehensive Income (Loss)
Balance at July 30, 2017	$	(84	)	$	(22	)	$	53		$	(53	)
Other comprehensive income (loss) before reclassifications	(24		)	15			(2		)	(11		)
Amounts reclassified from accumulated other comprehensive income (loss)	—			2			(14		)	(12		)
Net current-period other comprehensive income (loss)	(24		)	17			(16		)	(23		)
Balance at April 29, 2018	$	(108	)	$	(5	)	$	37		$	(76	)
Balance at July 29, 2018	$	(154	)	$	(4	)	$	40		$	(118	)
Cumulative effect of a change in accounting principle⁽⁴⁾	2			(3		)	10			9
Other comprehensive income (loss) before reclassifications	(49		)	1			—			(48		)
Amounts reclassified from accumulated other comprehensive income (loss)	—			—			(17		)	(17		)
Net current-period other comprehensive income (loss)	(49		)	1			(17		)	(65		)
Balance at April 29, 2019	$	(201	)	$	(6	)	$	33		$	(174	)

_____________________________________


⁽¹⁾	Included a tax expense of $4 as of April 28, 2019, and $6 as of July 29, 2018, April 29, 2018, and July 30, 2017.


⁽²⁾	Included a tax benefit of $1 as of April 28, 2019, $4 as of July 29, 2018, $5 as of April 29, 2018, and $12 as of July 30, 2017.


⁽³⁾	Included a tax expense of $10 as of April 28, 2019, $25 as of July 29, 2018, $24 as of April 29, 2018, and $30 as of July 30, 2017.


⁽⁴⁾	Reflects the adoption of the FASB guidance on stranded tax effects. See Note 2 for additional information.

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
Details about Accumulated Other Comprehensive Income (Loss) Components	April 28, 2019			April 29, 2018			April 28, 2019			April 29, 2018			Location of (Gain) Loss Recognized in Earnings
(Gains) losses on cash flow hedges:
Foreign exchange forward contracts	$	(1	)	$	—		$	(1	)	$	—		Cost of products sold
Foreign exchange forward contracts	(1		)	—			(1		)	—			Other expenses / (income)
Forward starting interest rate swaps	1			1			2			2			Interest expense
Total before tax	(1		)	1			—			2
Tax expense (benefit)	—			—			—			—
(Gain) loss, net of tax	$	(1	)	$	1		$	—		$	2

Pension and postretirement benefit adjustments:
Prior service credit	$	(8	)	$	(7	)	$	(22	)	$	(20	)	Other expenses / (income)
Tax expense (benefit)	2			2			5			6
(Gain) loss, net of tax	$	(6	)	$	(5	)	$	(17	)	$	(14	)


6.	Goodwill and Intangible Assets

Goodwill

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



	Meals and Beverages			Global Biscuits and Snacks			Total
Net balance at July 29, 2018	$	978		$	3,602		$	4,580
Changes in preliminary purchase price allocation	—			140			140
Acquisition	—			21			21
Foreign currency translation adjustment	(3		)	(36		)	(39		)
Net balance at April 28, 2019	$	975		$	3,727		$	4,702

During the three-month period ended October 28, 2018, we made changes in the preliminary allocation of the purchase price of the Snyder's-Lance acquisition which resulted in a change in goodwill of $140 in the Global Biscuits and Snacks segment. On October 30, 2018, we acquired the remaining ownership interest in Yellow Chips and began consolidating the business, which resulted in goodwill of $21. See Note 4 for additional information.

Intangible Assets

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



				April 28, 2019							July 29, 2018
Intangible Assets	Estimated Useful Lives			Cost		Accumulated Amortization			Net		Cost		Accumulated Amortization			Net
Amortizable intangible assets
Customer relationships	10	to	22	$	890	$	(67	)	$	823	$	936	$	(34	)	$	902
Other	1.5	to	20	17		(14		)	3		17		(6		)	11
Total amortizable intangible assets

Closing Price ($)	Shares Out (MM)	Market Cap ($MM)
$38.96	301	$11,730

10-Q	2019-04-28	Quarter: 2019-04-28
10-Q	2019-01-27	Quarter: 2019-01-27
10-Q	2018-10-28	Quarter: 2018-10-28
10-K	2018-07-29	Annual: 2018-07-29
10-Q	2018-04-29	Quarter: 2018-04-29
10-Q	2018-01-28	Quarter: 2018-01-28
10-Q	2017-10-29	Quarter: 2017-10-29
10-K	2017-07-30	Annual: 2017-07-30
10-Q	2017-04-30	Quarter: 2017-04-30
10-Q	2017-01-29	Quarter: 2017-01-29
10-Q	2016-10-30	Quarter: 2016-10-30
10-K	2016-07-31	Annual: 2016-07-31
10-Q	2016-05-01	Quarter: 2016-05-01
10-Q	2016-01-31	Quarter: 2016-01-31
10-Q	2015-11-01	Quarter: 2015-11-01
10-K	2015-08-02	Annual: 2015-08-02
10-Q	2015-05-03	Quarter: 2015-05-03
10-Q	2015-02-01	Quarter: 2015-02-01
10-Q	2014-11-02	Quarter: 2014-11-02
10-K	2014-08-03	Annual: 2014-08-03
10-Q	2014-04-27	Quarter: 2014-04-27
10-Q	2014-01-26	Quarter: 2014-01-26

8-K	2019-06-16	M&A, Exhibits
8-K	2019-06-05	Earnings, Exhibits
8-K	2019-04-12	Enter Agreement, Regulation FD, Exhibits
8-K	2019-03-27	Officers, Other Events, Exhibits
8-K	2019-02-27	Earnings, Exhibits
8-K	2018-12-20	Officers, Amend Bylaw, Exhibits
8-K	2018-12-06	Regulation FD, Exhibits
8-K	2018-11-26	Enter Agreement, Officers, Other Events, Exhibits
8-K	2018-11-20	Earnings, Exhibits
8-K	2018-08-30	Earnings, Regulation FD, Exhibits
8-K	2018-05-17	Officers, Exhibits
8-K	2018-04-30	Officers
8-K	2018-04-05	Officers
8-K	2018-03-26	M&A, Off-BS Arrangement, Regulation FD, Exhibits
8-K	2018-03-19	Officers
8-K	2018-03-12	Other Events, Exhibits
8-K	2018-02-16	Earnings, Exhibits
8-K	2018-01-18	Exit Costs

OC	Owens Corning	5,450
DCP	DCP Midstream	4,390
ALX	Alexanders	1,960
UIHC	United Insurance Holdings	624
CHMA	Chiasma	197
TRVN	Trevena	143
EPIX	ESSA Pharma	17
SBOT	Stellar Biotechnologies	6
TRIS	Tri-State Generation & Transmission Association	0
PETV	Petvivo Holdings	0

EX-31.A	cpb-4282019x10xqxexb31a.htm
EX-31.B	cpb-4282019x10xqxexb31b.htm
EX-32.A	cpb-4282019x10xqxexb32a.htm
EX-32.B	cpb-4282019x10xqxexb32b.htm



PART I - FINANCIAL INFORMATION
	Item 1. Financial Statements	3
	Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	31
	Item 3. Quantitative and Qualitative Disclosure About Market Risk	47
	Item 4. Controls and Procedures	47
PART II - OTHER INFORMATION
	Item 1. Legal Proceedings	47
	Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	47
	Item 6. Exhibits	47
INDEX TO EXHIBITS		48
SIGNATURES		49