Campbell Soup Earnings 2019-01-27

CPB 10Q Quarterly Report

Balance Sheet	Income Statement	Cash Flow

10-Q 1 cpb-1272019x10xq.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
January 27, 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

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 301,118,002 shares of capital stock outstanding as of February 28, 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						Six Months Ended
	January 27, 2019			January 28, 2018			January 27, 2019		January 28, 2018
Net sales	$	2,713		$	2,180		$	5,407	$	4,341
Costs and expenses
Cost of products sold	1,999			1,414			3,869		2,792
Marketing and selling expenses	264			228			512		447
Administrative expenses	180			165			356		314
Research and development expenses	23			27			50		57
Other expenses / (income)	226			70			230		41
Restructuring charges	2			33			21		35
Total costs and expenses	2,694			1,937			5,038		3,686
Earnings before interest and taxes	19			243			369		655
Interest expense	93			32			187		63
Interest income	1			—			2		1
Earnings (loss) before taxes	(73		)	211			184		593
Taxes on earnings	(14		)	(74		)	49		33
Net earnings (loss)	(59		)	285			135		560
Less: Net earnings (loss) attributable to noncontrolling interests	—			—			—		—
Net earnings (loss) attributable to Campbell Soup Company	$	(59	)	$	285		$	135	$	560
Per Share — Basic
Net earnings (loss) attributable to Campbell Soup Company	$	(.20	)	$	.95		$	.45	$	1.86
Weighted average shares outstanding — basic	301			301			301		301
Per Share — Assuming Dilution
Net earnings attributable to Campbell Soup Company	$	(.20	)	$	.95		$	.45	$	1.85
Weighted average shares outstanding — assuming dilution	301			301			302		302

See accompanying Notes to Consolidated Financial Statements.

CAMPBELL SOUP COMPANY

Consolidated Statements of Comprehensive Income

(unaudited)

(millions)



	Three Months Ended
	January 27, 2019								January 28, 2018
	Pre-tax amount			Tax (expense) benefit		After-tax amount			Pre-tax amount			Tax (expense) benefit			After-tax amount
Net earnings (loss)						$	(59	)							$	285
Other comprehensive income (loss):
Foreign currency translation:
Foreign currency translation adjustments	$	20		$	—	20			$	66		$	—		66
Cash-flow hedges:
Unrealized gains (losses) arising during the period	(1		)	—		(1		)	2			(2		)	—
Reclassification adjustment for (gains) losses included in net earnings	—			—		—			3			—			3
Pension and other postretirement benefits:
Prior service cost arising during the period	—			—		—			(3		)	1			(2		)
Reclassification of prior service credit included in net earnings	(7		)	1		(6		)	(6		)	2			(4		)
Other comprehensive income (loss)	$	12		$	1	13			$	62		$	1		63
Total comprehensive income (loss)						$	(46	)							$	348
Total comprehensive income (loss) attributable to noncontrolling interests						—									(1		)
Total comprehensive income (loss) attributable to Campbell Soup Company						$	(46	)							$	349

	Six Months Ended
	January 27, 2019								January 28, 2018
	Pre-tax amount			Tax (expense) benefit		After-tax amount			Pre-tax amount			Tax (expense) benefit			After-tax amount
Net earnings						$	135								$	560
Other comprehensive income (loss):
Foreign currency translation:
Foreign currency translation adjustments	$	(23	)	$	—	(23		)	$	34		$	—		34
Cash-flow hedges:
Unrealized gains (losses) arising during the period	(1		)	—		(1		)	11			(4		)	7
Reclassification adjustment for (gains) losses included in net earnings	1			—		1			1			—			1
Pension and other postretirement benefits:
Prior service credit arising during the period	—			—		—			(3		)	1			(2		)
Reclassification of prior service credit included in net earnings	(14		)	3		(11		)	(13		)	4			(9		)
Other comprehensive income (loss)	$	(37	)	$	3	(34		)	$	30		$	1		31
Total comprehensive income (loss)						$	101								$	591
Total comprehensive income (loss) attributable to noncontrolling interests						—									(1		)
Total comprehensive income (loss) attributable to Campbell Soup Company						$	101								$	592

See accompanying Notes to Consolidated Financial Statements.

CAMPBELL SOUP COMPANY

Consolidated Balance Sheets

(unaudited)

(millions, except per share amounts)



	January 27, 2019			July 29, 2018
Current assets
Cash and cash equivalents	$	203		$	226
Accounts receivable, net	927			785
Inventories	1,076			1,199
Other current assets	89			86
Total current assets	2,295			2,296
Plant assets, net of depreciation	3,036			3,233
Goodwill	4,721			4,580
Other intangible assets, net of amortization	3,752			4,196
Other assets ($70 as of 2019 and $77 as of 2018 attributable to variable interest entity)	220			224
Total assets	$	14,024		$	14,529
Current liabilities
Short-term borrowings	$	1,454		$	1,896
Payable to suppliers and others	930			893
Accrued liabilities	784			676
Dividends payable	107			107
Accrued income taxes	24			22
Total current liabilities	3,299			3,594
Long-term debt	8,003			7,998
Deferred taxes	904			995
Other liabilities	540			569
Total liabilities	12,746			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	349			349
Earnings retained in the business	2,130			2,224
Capital stock in treasury, at cost	(1,079		)	(1,103		)
Accumulated other comprehensive loss	(143		)	(118		)
Total Campbell Soup Company shareholders' equity	1,269			1,364
Noncontrolling interests	9			9
Total equity	1,278			1,373
Total liabilities and equity	$	14,024		$	14,529

See accompanying Notes to Consolidated Financial Statements.

CAMPBELL SOUP COMPANY

Consolidated Statements of Cash Flows

(unaudited)

(millions)



	Six Months Ended
	January 27, 2019			January 28, 2018
Cash flows from operating activities:
Net earnings	$	135		$	560
Adjustments to reconcile net earnings to operating cash flow
Impairment charges	360			75
Restructuring charges	21			35
Stock-based compensation	31			32
Noncurrent income taxes	—			52
Pension and postretirement benefit income	(29		)	(32		)
Depreciation and amortization	241			161
Deferred income taxes	(40		)	(106		)
Other, net	18			18
Changes in working capital, net of acquisition
Accounts receivable	(150		)	(113		)
Inventories	122			84
Prepaid assets	(2		)	(25		)
Accounts payable and accrued liabilities	170			(10		)
Net payments of hedging activities	(5		)	(31		)
Other	(26		)	(40		)
Net cash provided by operating activities	846			660
Cash flows from investing activities:
Purchases of plant assets	(198		)	(132		)
Purchases of route businesses	(23		)	—
Sales of route businesses	25			—
Businesses acquired, net of cash acquired	(18		)	(682		)
Other, net	11			(11		)
Net cash used in investing activities	(203		)	(825		)
Cash flows from financing activities:
Short-term borrowings	2,831			5,052
Short-term repayments	(3,274		)	(4,673		)
Long-term repayments	—			(16		)
Dividends paid	(212		)	(216		)
Treasury stock purchases	—			(86		)
Payments related to tax withholding for stock-based compensation	(7		)	(23		)
Payments of debt issuance costs	(1		)	—
Net cash provided by (used in) financing activities	(663		)	38
Effect of exchange rate changes on cash	(3		)	4
Net change in cash and cash equivalents	(23		)	(123		)
Cash and cash equivalents — beginning of period	226			319
Cash and cash equivalents — end of period	$	203		$	196

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 October 29, 2017	323	$	12	(22	)	$	(1,106	)	$	305		$	2,555		$	(85	)	$	8		$	1,689
Net earnings (loss)												285						—			285
Other comprehensive income (loss)															64			(1		)	63
Dividends ($.35 per share)												(106		)							(106		)
Treasury stock purchased				—		—															—
Treasury stock issued under management incentive and stock option plans				—		2			16												18
Balance at January 28, 2018	323	$	12	(22	)	$	(1,104	)	$	321		$	2,734		$	(21	)	$	7		$	1,949

Balance at July 30, 2017	323	$	12	(22	)	$	(1,066	)	$	359		$	2,385		$	(53	)	$	8		$	1,645
Net earnings (loss)												560						—			560
Other comprehensive income (loss)															32			(1		)	31
Dividends ($.70 per share)												(211		)							(211		)
Treasury stock purchased				(2	)	(86		)													(86		)
Treasury stock issued under management incentive and stock option plans				2		48			(38		)										10
Balance at January 28, 2018	323	$	12	(22	)	$	(1,104	)	$	321		$	2,734		$	(21	)	$	7		$	1,949

Balance at October 28, 2018	323	$	12	(22	)	$	(1,084	)	$	339		$	2,295		$	(156	)	$	9		$	1,415
Net earnings (loss)												(59		)				—			(59		)
Other comprehensive income (loss)															13			—			13
Dividends ($.35 per share)												(106		)							(106		)
Treasury stock purchased				—		—															—
Treasury stock issued under management incentive and stock option plans				—		5			10												15
Balance at January 27, 2019	323	$	12	(22	)	$	(1,079	)	$	349		$	2,130		$	(143	)	$	9		$	1,278

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)												135						—			135
Other comprehensive income (loss)															(34		)	—			(34		)
Dividends ($.70 per share)												(212		)							(212		)
Treasury stock purchased				—		—															—
Treasury stock issued under management incentive and stock option plans				—		24			—												24
Balance at January 27, 2019	323	$	12	(22	)	$	(1,079	)	$	349		$	2,130		$	(143	)	$	9		$	1,278

⁽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. Certain amounts in prior-year financial statements were reclassified to conform to the current-year presentation. See Note 6.

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 6 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 January 27, 2019, as a result of adoption are as follows:



	As Reported		Balances Without Adoption		Increase/(Decrease) Due to Adoption
Accounts receivable, net	$	927	$	926	$	1
Total current assets	2,295		2,294		1
Total assets	14,024		14,023		1

Payable to suppliers and others	$	930	$	929	$	1
Accrued liabilities	784		768		16
Accrued income taxes	24		28		(4		)
Total current liabilities	3,299		3,286		13
Total liabilities	12,746		12,733		13

Campbell Soup Company shareholders' equity
Earnings retained in the business	$	2,130	$	2,142	$	(12	)
Total Campbell Soup Company shareholders' equity	1,269		1,281		(12		)
Total equity	1,278		1,290		(12		)
Total liabilities and equity	14,024		14,023		1

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



	Three Months Ended								Six Months Ended
	January 27, 2019								January 27, 2019
	As Reported			Balances Without Adoption			Increase/(Decrease) Due to Adoption		As Reported		Balances Without Adoption		Increase/(Decrease) Due to Adoption
Net sales	$	2,713		$	2,702		$	11	$	5,407	$	5,412	$	(5	)

Earnings before interest and taxes	$	19		$	8		$	11	$	369	$	374	$	(5	)
Earnings (loss) before taxes	$	(73	)	$	(84	)	$	11	$	184	$	189	$	(5	)
Taxes on earnings	(14		)	(17		)	3		49		50		(1		)
Net earnings (loss) attributable to Campbell Soup Company	$	(59	)	$	(67	)	$	8	$	135	$	139	$	(4	)

Per Share — Basic
Net earnings (loss) attributable to Campbell Soup Company⁽¹⁾	$	(.20	)	$	(.22	)	$	.03	$	.45	$	.46	$	(.01	)
Per Share — Assuming Dilution
Net earnings attributable to Campbell Soup Company⁽¹⁾	$	(.20	)	$	(.22	)	$	.03	$	.45	$	.46	$	(.01	)

_______________________________________


⁽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 4 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.	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 estimated fair value that was allocated to acquired assets and assumed liabilities of Snyder's-Lance. The final valuation process will be completed within the allowable measurement period. 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 six-month periods ended January 27, 2019, the acquisition of Snyder's-Lance contributed $529 and $1,083 to Net sales. The contribution to Net earnings (loss) were losses of $11 and $17 for the three- and six-month periods ended January 27, 2019, including expenses associated with restructuring charges and cost savings initiatives, as well as interest expense on the debt to finance the acquisition.

For the three- and six-month periods ended January 27, 2019, the acquisition of Pacific Foods contributed $58 and $127 to Net sales. The contribution to Net earnings (loss) were losses of $6 and $3 for the three- and six-month periods ended January 27, 2019, including interest expense on the debt to finance the acquisition. For the three-month period ended January 28, 2018, the contribution of the Pacific Foods acquisition to Net sales was $28. 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		Six Months Ended
	January 28, 2018		January 28, 2018
Net sales	$	2,747	$	5,555
Net earnings attributable to Campbell Soup Company	$	451	$	640
Net earnings per share attributable to Campbell Soup Company - basic	$	1.50	$	2.13
Net earnings per share attributable to Campbell Soup Company - assuming dilution	$	1.50	$	2.12

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 six-month periods ended January 28, 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 six-month period ended January 29, 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 three- and six-month periods ended January 27, 2019 and January 28, 2018 were not material.


4.	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	35			7			(2		)	40
Amounts reclassified from accumulated other comprehensive income (loss)	—			1			(9		)	(8		)
Net current-period other comprehensive income (loss)	35			8			(11		)	32
Balance at January 28, 2018	$	(49	)	$	(14	)	$	42		$	(21	)
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	(23		)	(1		)	—			(24		)
Amounts reclassified from accumulated other comprehensive income (loss)	—			1			(11		)	(10		)
Net current-period other comprehensive income (loss)	(23		)	—			(11		)	(34		)
Balance at January 27, 2019	$	(175	)	$	(7	)	$	39		$	(143	)

_____________________________________


⁽¹⁾	Included a tax expense of $4 as of January 27, 2019, and $6 as of July 29, 2018, January 28, 2018, and July 30, 2017.


⁽²⁾	Included a tax benefit of $1 as of January 27, 2019, $4 as of July 29, 2018, $8 as of January 28, 2018, and $12 as of July 30, 2017.


⁽³⁾	Included a tax expense of $12 as of January 27, 2019, $25 as of July 29, 2018, and January 28, 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						Six Months Ended
Details about Accumulated Other Comprehensive Income (Loss) Components	January 27, 2019			January 28, 2018			January 27, 2019			January 28, 2018			Location of (Gain) Loss Recognized in Earnings
(Gains) losses on cash flow hedges:
Foreign exchange forward contracts	$	—		$	2		$	—		$	—		Cost of products sold
Forward starting interest rate swaps	—			1			1			1			Interest expense
Total before tax	—			3			1			1
Tax expense (benefit)	—			—			—			—
(Gain) loss, net of tax	$	—		$	3		$	1		$	1

Pension and postretirement benefit adjustments:
Prior service credit	$	(7	)	$	(6	)	$	(14	)	$	(13	)	Other expenses / (income)
Tax expense (benefit)	1			2			3			4
(Gain) loss, net of tax	$	(6	)	$	(4	)	$	(11	)	$	(9	)


5.	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			Campbell Fresh⁽¹⁾		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	(1		)	(19		)	—		(20		)
Net balance at January 27, 2019	$	977		$	3,744		$	—	$	4,721

_____________________________________


⁽¹⁾	The balance of goodwill is reflected net of accumulated impairment charges of $837 as of January 27, 2019 and July 29, 2018, respectively, related to the Bolthouse Farms carrot and carrot ingredients reporting unit, the deli reporting unit, and the Bolthouse Farms refrigerated beverages and salad dressings reporting unit.

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 3 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:



Intangible Assets	January 27, 2019			July 29, 2018
Amortizable intangible assets
Customer relationships	$	917		$	1,116
Technology	10			40
Other	41			43
Total gross amortizable intangible assets	$	968		$	1,199
Accumulated amortization	(87		)	(126		)
Total net amortizable intangible assets	$	881		$	1,073
Non-amortizable intangible assets
Trademarks	2,871			3,123
Total net intangible assets	$	3,752		$	4,196

Non-amortizable intangible assets consist of trademarks, which include Snyder's of Hanover, Lance, Kettle Brand, Pace, Pacific Foods, Snack Factory, Cape Cod, Pop Secret, Kjeldsens, Plum, and Late July. Other amortizable intangible assets consist of recipes, non-compete agreements, trademarks, patents and distributor relationships.

Amortization of intangible assets was $30 and $8 for six-month periods ended January 27, 2019 and January 28, 2018, respectively. Amortization expense for the next 5 years is estimated to be $58 in 2019, $50 in 2020 and $49 in 2021 through 2023. Asset useful lives range from 2 to 22 years.

On August 30, 2018, we announced plans to pursue the divestiture of our international biscuits and snacks operating segment and the Campbell Fresh operating segment. As we continue to pursue the divestiture of these businesses, in the second quarter of 2019 we performed interim impairment assessments on the intangible assets within Campbell Fresh, which includes Bolthouse Farms carrot and carrot ingredients, Bolthouse Farms refrigerated beverages and salad dressings and Garden Fresh Gourmet. 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, which reduced the carrying value to $30; $40 on customer relationships, which reduced the carrying value to $15; and $15 on technology, which reduced the carrying value to $10. Within Bolthouse Farms refrigerated beverages and salad dressings, we recorded impairment charges of $74 on the trademark, which reduced the carrying value to $76; and $22 on customer

relationships, which reduced the carrying value to $12. On Garden Fresh Gourmet, we recorded impairment charges of $23 on the trademark and $39 on customer relationships, which eliminated the carrying value of these assets.

The impairment charges were recorded in Other expenses / (income) in the Consolidated Statements of Earnings.

The estimates of future cash flows used in determining the fair value of intangible assets involve significant management judgment and are based upon assumptions about expected future operating performance, economic conditions, market conditions, cost of capital and potential divestitures. Inherent in estimating the future cash flows are uncertainties beyond our control, such as changes in capital markets. The actual cash flows could differ materially from management’s estimates due to changes in any of the assumptions.


6.	Segment Information

Commencing in the third quarter of 2018 with the acquisition of Snyder's-Lance, we formed a new U.S. snacking unit, which combines Snyder's-Lance and Pepperidge Farm, and is an operating segment. As of the third quarter of 2018, we have four operating segments based primarily on product type, and three reportable segments. The U.S. snacking operating segment is aggregated with the international biscuits and snacks operating segment to form the Global Biscuits and Snacks reportable segment. The operating segments are aggregated based on similar economic characteristics, products, production processes, types or classes of customers, distribution methods, and regulatory environment. Our reportable segments are as follows:

•

Meals and Beverages segment includes the retail and food service businesses in the U.S., Canada and Latin America. The segment includes the following products: Campbell’s condensed and ready-to-serve soups; Swanson broth and stocks; Prego pasta sauces; Pace Mexican sauces; Campbell’s gravies, pasta, beans and dinner sauces; Swanson canned poultry; Plum food and snacks; V8 juices and beverages; Campbell’s tomato juice; and as of December 12, 2017, Pacific broth, soups, non-dairy beverages and other simple meals;

•

Global Biscuits and Snacks segment represents an aggregation of the following operating segments: U.S. snacks operating segment, which includes Pepperidge Farm cookies, crackers, bakery and frozen products in U.S. retail, and Snyder’s-Lance pretzels, sandwich crackers, potato chips, tortilla chips and other snacking products in the U.S. and Europe; and the international biscuits and snacks operating segment, which includes Arnott’s biscuits in Australia and Asia Pacific, Kelsen cookies globally, and the simple meals and shelf-stable beverages business in Australia and Asia Pacific; and


•	Campbell Fresh segment includes Bolthouse Farms fresh carrots, carrot ingredients, refrigerated beverages and refrigerated salad dressings; Garden Fresh Gourmet salsa, hummus, dips and tortilla chips; and the U.S. refrigerated soup business.

Through the fourth quarter of 2018, our simple meals and shelf-stable beverage business in Latin America was managed as part of the Global Biscuits and Snacks segment. Beginning in 2019, our business in Latin America is managed as part of the Meals and Beverages segment. Segment results have been adjusted retrospectively to reflect this change.

On August 30, 2018, we announced plans to pursue the divestiture of our international biscuits and snacks operating segment, and the Campbell Fresh segment. The international biscuits and snacks operating segment and the Campbell Fresh segment combined represent approximately $2,100 in net sales in 2018.

We evaluate segment performance before interest, taxes and costs associated with restructuring activities and impairment charges. Unrealized gains and losses on commodity hedging activities are excluded from segment operating earnings and are recorded in Corporate as these open positions represent hedges of future purchases. Upon closing of the contracts, the realized gain or loss is transferred to segment operating earnings, which allows the segments to reflect the economic effects of the hedge without exposure to quarterly volatility of unrealized gains and losses. Only the service cost component of pension and postretirement expense is allocated to segments. All other components of expense, including interest cost, expected return on assets, amortization of prior service credits and recognized actuarial gains and losses are reflected in Corporate and not included in segment operating results. Asset information by segment is not discretely maintained for internal reporting or used in evaluating performance.



	Three Months Ended				Six Months Ended
	January 27, 2019		January 28, 2018		January 27, 2019		January 28, 2018
Net sales
Meals and Beverages	$	1,230	$	1,214	$	2,474	$	2,453
Global Biscuits and Snacks	1,243		708		2,461		1,396
Campbell Fresh	239		257		471		491
Corporate	1		1		1		1
Total	$	2,713	$	2,180	$	5,407	$	4,341



	Three Months Ended						Six Months Ended
	January 27, 2019			January 28, 2018			January 27, 2019			January 28, 2018
Earnings before interest and taxes
Meals and Beverages	$	255		$	284		$	549		$	615
Global Biscuits and Snacks	185			137			339			254
Campbell Fresh	(14		)	(11		)	(17		)	(17		)
Corporate⁽¹⁾	(405		)	(134		)	(481		)	(162		)
Restructuring charges⁽²⁾	(2		)	(33		)	(21		)	(35		)
Total	$	19		$	243		$	369		$	655

_______________________________________

⁽¹⁾

Represents unallocated items. Pension and postretirement benefit mark-to-market adjustments are included in Corporate. There were gains of $14 in the six-month period ended January 28, 2018. Costs related to cost savings initiatives were $22 and $27 for the three-month periods and $49 and $44 in the six-month periods ended January 27, 2019, and January 28, 2018, respectively. Costs of $10 and $12 associated with the planned divestitures were in the three- and six-month periods ended January 27, 2019. Impairment charges of plant assets and intangible assets were $346 and $360 in the three- and- six-month periods ended January 27, 2019, respectively. Impairment charges of intangible assets were $75 in the three- and- six-month periods ended January 28, 2018. See Notes 5 and 13 for additional information. Transaction costs of $24 associated with the acquisition of Snyder's-Lance were in the three- and six-month periods ended January 28, 2018.


⁽²⁾	See Note 7 for additional information.

Our global net sales based on product categories are as follows:



	Three Months Ended				Six Months Ended
	January 27, 2019		January 28, 2018		January 27, 2019		January 28, 2018
Net sales
Soup	$	815	$	814	$	1,604	$	1,621
Snacks	1,225		690		2,434		1,367
Other simple meals	423		434		854		869
Beverages	249		241		514		483
Other	1		1		1		1
Total	$	2,713	$	2,180	$	5,407	$	4,341

Soup includes various soup, broths and stock products. Snacks include cookies, pretzels, crackers, biscuits, popcorn, nuts, potato chips, tortilla chips and other salty snacks and baked products. Other simple meals include sauces, carrot products, refrigerated salad dressings, refrigerated salsa, hummus, dips and Plum foods and snacks.


7.	Restructuring Charges and Cost Savings Initiatives

2015 Initiatives and Snyder's-Lance Cost Transformation Program and Integration

In fiscal 2015, we implemented initiatives to reduce costs and to streamline our organizational structure. As part of these initiatives, we commenced a voluntary employee separation program available to certain U.S.-based salaried employees nearing retirement who met age, length-of-service and business unit/function criteria.

In February 2017, we announced that we were expanding these initiatives by further optimizing our supply chain network, primarily in North America, continuing to evolve our operating model to drive efficiencies, and more fully integrating our recent acquisitions. In January 2018, as part of the expanded initiatives, we authorized additional pre-tax costs to improve the operational efficiency of our thermal supply chain network in North America by closing our manufacturing facility in Toronto, Ontario, and to optimize our information technology infrastructure by migrating certain applications to the latest cloud technology platform. In August 2018, we announced that we will continue to streamline our organization, expand our zero-based budgeting efforts and optimize our manufacturing network.

On March 26, 2018, we completed the acquisition of Snyder's-Lance. Prior to the acquisition, in April 2017, Snyder's-Lance launched a cost transformation program following a comprehensive review of its operations with the goal of significantly improving its financial performance. We expect to continue to implement this program and to achieve a majority of the program's targeted savings. In addition, we have identified opportunities for additional cost synergies as we integrate Snyder's-Lance.

Cost estimates, as well as timing for certain activities, are continuing to be developed.

A summary of the restructuring charges and charges recorded in Administrative expenses, Cost of products sold, Marketing and selling expenses, and Research and development expenses related to both programs is as follows:



	Three Months Ended				Six Months Ended
	January 27, 2019		January 28, 2018		January 27, 2019		January 28, 2018		Recognized as of January 27, 2019⁽¹⁾
Restructuring charges	$	2	$	33	$	21	$	35	$	238
Administrative expenses	10		26		23		38		228
Cost of products sold	9		1		21		6		70
Marketing and selling expenses	2		—		4		—		7
Research and development expenses	1		—		1		—		1
Total pre-tax charges	$	24	$	60	$	70	$	79	$	544

_______________________________________


⁽¹⁾	Includes $13 of Restructuring charges and $12 of Administrative expenses associated with the Snyder's-Lance cost transformation program and integration recognized in 2018.

A summary of the pre-tax costs associated with both programs is as follows:



	Recognized as of January 27, 2019
Severance pay and benefits⁽¹⁾	$	214
Asset impairment/accelerated depreciation	66
Implementation costs and other related costs⁽²⁾	264
Total	$	544

_______________________________________


⁽¹⁾	Includes $13 of charges associated with the Snyder's-Lance cost transformation program and integration recognized in 2018.


⁽²⁾	Includes $12 of charges associated with the Snyder's-Lance cost transformation program and integration recognized in 2018.

The total estimated pre-tax costs for actions that have been identified under both programs are approximately $620 to $665 and we expect to incur substantially all of the costs through 2020. This estimate will be updated as costs for the expanded initiatives are developed.

We expect the costs for actions that have been identified to date under both programs to consist of the following: approximately $215 to $220 in severance pay and benefits; approximately $70 in asset impairment and accelerated depreciation; and approximately $335 to $375 in implementation costs and other related costs.We expect these pre-tax costs to be associated with our segments as follows: Meals and Beverages - approximately 37%; Global Biscuits and Snacks - approximately 39%; Campbell Fresh - approximately 2%; and Corporate - approximately 22%.

Of the aggregate $620 to $665 of pre-tax costs identified to date, we expect approximately $540 to $585 will be cash expenditures. In addition, we expect to invest approximately $325 in capital expenditures through 2021, of which we invested approximately $184 as of January 27, 2019. The capital expenditures primarily related to the U.S. warehouse optimization project, improvement of quality, safety and cost structure across the Snyder’s-Lance manufacturing network, transition of production of the Toronto manufacturing facility to our U.S. thermal plants, insourcing of manufacturing for certain simple meal products, optimization of information technology infrastructure and applications, and optimization of the Snyder’s-Lance warehouse and distribution network.

A summary of the restructuring activity and related reserves associated with both programs at January 27, 2019, is as follows:



	Severance Pay and Benefits			Implementation Costs and Other Related Costs⁽³⁾	Asset Impairment/Accelerated Depreciation	Total Charges
Accrued balance at July 29, 2018⁽¹⁾	$	46
2019 charges	21			28	21	$	70
2019 cash payments	(17		)

Closing Price ($)	Shares Out (MM)	Market Cap ($MM)
$39.43	301	$11,870

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	2019-04-12	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

TCO	Taubman Centers	3,090
EHTH	Ehealth	1,480
NMFC	New Mountain Finance	1,110
AMEH	Apollo Medical	674
ENZ	Enzo Biochem	169
DCIX	Diana Containerships	30
GNUS	Genius Brands	21
APXR	Apex Resources	0
PCFG	Pacific Gold & Royalty	0
BWLA	Bowl America	0

EX-10.B	cpb-10282018x10xqxexb10b.htm
EX-31.A	cpb-1272019x10xqxexb31a.htm
EX-31.B	cpb-1272019x10xqxexb31b.htm
EX-32.A	cpb-1272019x10xqxexb32a.htm
EX-32.B	cpb-1272019x10xqxexb32b.htm



PART I - FINANCIAL INFORMATION
	Item 1. Financial Statements	3
	Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	29
	Item 3. Quantitative and Qualitative Disclosure about Market Risk	42
	Item 4. Controls and Procedures	42
PART II - OTHER INFORMATION
	Item 1. Legal Proceedings	43
	Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	43
	Item 6. Exhibits	43
INDEX TO EXHIBITS		43
SIGNATURES		44