-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, AMf8lfJSWalImKfo1OjPMjuWBCWzPSJOhFFFiIeVhIGcP3Itxn5JNXzDy+sxMFMk FIZUVwkKQWeuMWXcRJuhJQ== 0000893220-99-001156.txt : 19991018 0000893220-99-001156.hdr.sgml : 19991018 ACCESSION NUMBER: 0000893220-99-001156 CONFORMED SUBMISSION TYPE: 10-K405 PUBLIC DOCUMENT COUNT: 8 CONFORMED PERIOD OF REPORT: 19990801 FILED AS OF DATE: 19991012 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CAMPBELL SOUP CO CENTRAL INDEX KEY: 0000016732 STANDARD INDUSTRIAL CLASSIFICATION: FOOD & KINDRED PRODUCTS [2000] IRS NUMBER: 210419870 STATE OF INCORPORATION: NJ FISCAL YEAR END: 0729 FILING VALUES: FORM TYPE: 10-K405 SEC ACT: SEC FILE NUMBER: 001-03822 FILM NUMBER: 99726838 BUSINESS ADDRESS: STREET 1: CAMPBELL PL CITY: CAMDEN STATE: NJ ZIP: 08103 BUSINESS PHONE: 6093424800 MAIL ADDRESS: STREET 1: CAMPBELL PL CITY: CAMDEN STATE: NJ ZIP: 08103 10-K405 1 FORM 10-K405 FISCAL YEAR ENDED AUGUST 1, 1999 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED COMMISSION FILE NUMBER AUGUST 1, 1999 1-3822 CAMPBELL SOUP COMPANY LOGO NEW JERSEY 21-0419870 STATE OF INCORPORATION I.R.S. EMPLOYER IDENTIFICATION NO. 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 NAME OF EACH EXCHANGE ON WHICH REGISTERED CAPITAL STOCK, PAR VALUE $.0375 NEW YORK STOCK EXCHANGE PHILADELPHIA STOCK EXCHANGE
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE INDICATE BY CHECK MARK WHETHER THE REGISTRANT: (1) HAS FILED ALL REPORTS REQUIRED TO BE FILED BY SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH FILING REQUIREMENTS FOR THE PAST 90 DAYS. YES x NO . INDICATE BY CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS PURSUANT TO ITEM 405 OF REGULATION S-K IS NOT CONTAINED HEREIN, AND WILL NOT BE CONTAINED, TO THE BEST OF REGISTRANT'S KNOWLEDGE, IN DEFINITIVE PROXY OR INFORMATION STATEMENTS INCORPORATED BY REFERENCE IN PART III OF THIS FORM 10-K OR ANY AMENDMENT TO THIS FORM 10-K. [ x] AS OF SEPTEMBER 20, 1999, THE AGGREGATE MARKET VALUE OF CAPITAL STOCK HELD BY NON-AFFILIATES OF THE REGISTRANT WAS $9,713,788,701. THERE WERE 427,836,506 SHARES OF CAPITAL STOCK OUTSTANDING AS OF SEPTEMBER 20, 1999. PORTIONS OF THE ANNUAL REPORT TO SHAREOWNERS FOR THE FISCAL YEAR ENDED AUGUST 1, 1999 ARE INCORPORATED BY REFERENCE INTO PARTS I AND II. PORTIONS OF THE NOTICE OF ANNUAL MEETING AND PROXY STATEMENT DATED OCTOBER 8, 1999, FOR THE ANNUAL MEETING OF SHAREOWNERS TO BE HELD ON NOVEMBER 18, 1999, ARE INCORPORATED BY REFERENCE INTO PART III. 2 PART I ITEM 1. BUSINESS THE COMPANY Campbell Soup Company ("Campbell" or the "company"), together with its consolidated subsidiaries, is a global manufacturer and marketer of high quality, branded convenience food products. Campbell was incorporated as a business corporation under the laws of New Jersey on November 23, 1922; however, through predecessor organizations, it traces its heritage in the food business back to 1869. During 1999, the company divested its Fresh Start Bakeries business. The company operates in three business segments: Soup and Sauces, Biscuits and Confectionery, and Away From Home. The Soup and Sauces segment includes the worldwide soup businesses, Prego spaghetti sauce, Franco-American pastas and gravies, Pace Mexican foods, Swanson broths, Home Pride sauces in the United Kingdom and the V8 and V8 Splash beverage business. The Biscuits and Confectionery segment includes the Pepperidge Farm, Godiva and Arnotts Limited businesses. The Away From Home segment represents products, including Campbell's soups, Pace Tabletop picante and Campbell's Specialty Kitchens entrees, which are distributed to the food service and home meal replacement markets. See also "Management's Discussion and Analysis of Results of Operations and Financial Condition" at pages 27 to 34 of the Company's 1999 Annual Report to Shareowners for the fiscal year ended August 1, 1999 ("1999 Annual Report"), which is incorporated herein by reference. Additional financial information about the company's business segments is incorporated by reference from the section of the Notes to Consolidated Financial Statements entitled "Business and Geographic Segment Information" from pages 40 and 41 of the 1999 Annual Report. INGREDIENTS The ingredients required for the manufacture of the company's food products are purchased from various suppliers. As a result of the company's portfolio reconfiguration program, the company sold or spun off certain of its ingredient and container operations and entered into various supply agreements covering those purchases. The company does not anticipate any material restrictions on availability or shortages of ingredients that would have a significant impact on the company's businesses. While all such ingredients are available from numerous independent suppliers, raw materials are subject to fluctuations in price attributable to a number of factors, including changes in crop size, cattle cycles, government-sponsored agricultural programs and weather conditions during the growing and harvesting seasons. Ingredient inventories are at a peak during the late fall and decline during the winter and spring. Since many ingredients of suitable quality are available in sufficient quantities only at certain seasons, the company makes commitments for the purchase of such ingredients during their respective seasons. CUSTOMERS In the United States, sales solicitation activities are conducted by the company's own sales force and through broker and distributor arrangements. The company's products are generally resold to consumers in retail stores, restaurants and other food service establishments. No material part of the 1 3 business is dependent upon a single customer. Shipments are made promptly by the company after receipt and acceptance of orders. TRADEMARKS AND TECHNOLOGY The company markets its food products globally under a number of significant trademarks. The company considers such trademarks, taken as a whole, to be of material importance to its business and, consequently, aggressively seeks to protect its rights in them. Although the company owns a number of valuable patents, it does not regard any segment of its business as being dependent upon any single patent or any group of related patents. COMPETITION The company experiences vigorous competition for sales of its principal products in its major markets, both within the United States and abroad, from numerous competitors of varying sizes. The principal areas of competition are quality, price, advertising, promotion and service. WORKING CAPITAL For information relating to the company's cash and other working capital items, see pages 27 through 34 of the company's 1999 Annual Report in the section entitled "Management's Discussion and Analysis of Results of Operations and Financial Condition", which are incorporated herein by reference. RESEARCH AND DEVELOPMENT During the last three fiscal years, the company's expenditures on research activities relating to new products and the improvement of existing products were approximately $66 million in 1999, $71 million in 1998 and $68 million in 1997. EMPLOYEES At August 1, 1999, there were approximately 24,500 persons employed by the company. FOREIGN OPERATIONS For information with respect to the revenue, operating profitability and identifiable assets attributable to the company's foreign operations, see pages 40 and 41 of the 1999 Annual Report in the section of the Notes to Consolidated Financial Statements entitled "Business and Geographic Segment Information", which is incorporated herein by reference. FINANCIAL INFORMATION For information with respect to revenue, operating profitability and identifiable assets attributable to the company's business segments, see pages 40 and 41 of the 1999 Annual Report in the section of the Notes to Consolidated Financial Statements entitled "Business and Geographic Segment Information", which is incorporated herein by reference. RECENT DEVELOPMENTS The information presented on page 34 of the 1999 Annual Report in the section entitled "Management's Discussion and Analysis of Results of Operations and Financial Condition" is incorporated herein by reference. 2 4 FORWARD-LOOKING STATEMENTS From time to time, the company makes oral and written statements which reflect the company's current expectations regarding future results of operations, economic performance, financial condition and achievements of the company. The company tries, wherever possible, to identify these forward looking statements by using words such as "anticipate", "believe", "estimate", "expect" and similar expressions. These statements reflect the company's current plans and expectations and are based on information currently available to it. They rely on a number of assumptions and estimates which could be inaccurate and which are subject to risks and uncertainties. Campbell wishes to caution the reader that the following important factors and those important factors described in other Securities and Exchange Commission filings of the company, or in the company's 1999 Annual Report, could affect the company's actual results and could cause such results to vary materially from those expressed in any forward-looking statements made by, or on behalf of, the company: - - the impact of strong competitive response to the company's efforts to leverage its brand power with product innovation, promotional programs and new advertising; - - the inherent risks in the marketplace associated with new product introductions, including uncertainties about trade and consumer acceptance; - - the company's ability to achieve sales and earnings forecasts, which are based on assumptions about sales volume and product mix; - - the continuation of the company's successful record of integrating acquisitions into its existing operations and the availability of new acquisition and alliance opportunities that build shareowner wealth; - - the company's ability to achieve its cost savings objectives, including the projected outcome of supply chain management programs; - - the difficulty of predicting the pattern of inventory movements by the company's trade customers; - - the impact of unforeseen economic and political changes in international markets where the company competes such as currency exchange rates, inflation rates, recession, foreign ownership restrictions and other external factors over which the company has no control; and - - the ability of the company and its key service providers, vendors, suppliers, customers and governmental entities to replace, modify or upgrade computer systems in ways that adequately address the Year 2000 issue. Specific factors that might cause actual results to vary materially from the results anticipated include the ability to identify and correct all relevant computer codes and embedded chips, unanticipated difficulties or delays in the implementation of the company's remediation plans and the ability of third parties to adequately address their own Year 2000 issues. 3 5 This discussion of uncertainties is by no means exhaustive but is designed to highlight important factors that may impact the company's outlook. ITEM 2. PROPERTIES The company's principal executive offices and main research facilities are company-owned and located in Camden, New Jersey. The following table sets forth the company's principal manufacturing facilities: PRINCIPAL MANUFACTURING FACILITIES
INSIDE THE U.S. OUTSIDE THE U.S. CALIFORNIA OHIO AUSTRALIA GERMANY - - Dixon - Napoleon - Burwood - Lubeck - - Sacramento - Wauseon - Huntingwood - Gerwisch - - Stockton - Willard - Marleston INDONESIA CONNECTICUT PENNSYLVANIA - Shepparton - Jawa Barat - - Norwalk - Denver - Virginia MALAYSIA FLORIDA - Downington BELGIUM - Selangor Darul Ehsan - - Lakeland - Reading - Brussels MEXICO ILLINOIS SOUTH CAROLINA - Puurs - Villagran - - Downers Grove - Aiken CANADA - Guasave MICHIGAN TEXAS - Listowel PAPUA NEW GUINEA - - Marshall - Paris - Toronto - Gordons NEW JERSEY UTAH UNITED KINGDOM - Malahang Lae - - South Plainfield - Richmond - King's Lynn NORTH CAROLINA WISCONSIN FRANCE - - Maxton - Milwaukee - LePontet
The company also operates retail confectionery shops in the United States, Canada, Europe and Japan; retail bakery thrift stores in the United States; a mail order facility; and other plants and facilities at various locations in the United States and abroad. Management believes that the company's manufacturing and processing plants are well maintained and are generally adequate to support the current operations of the businesses. ITEM 3. LEGAL PROCEEDINGS In management's opinion, there are no pending claims or litigation, the outcome of which would have a material effect on the consolidated results of operations, financial position or cash flows of the company. 4 6 The company has been named as a potentially responsible party in a number of proceedings brought under the Comprehensive Environmental Response, Compensation and Liability Act, commonly known as Superfund. Although the impact on these proceedings cannot be predicted at this time due to the large number of other potentially responsible parties and the speculative nature of clean-up cost estimates, the ultimate disposition is not expected to have a material effect on the consolidated results of operations, financial position, or cash flows of the company. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None. EXECUTIVE OFFICERS OF THE COMPANY The following list of executive officers as of October 1, 1999, is included as an item in Part I of this Form 10-K:
DATE FIRST NAME PRESENT TITLE AGE ELECTED OFFICER ---- ------------- --- --------------- Dale F. Morrison President and Chief Executive Officer 50 1995 - ----------------------------------------------------------------------------------------------------------------------- Basil L. Anderson Executive Vice President and Chief Financial Officer 54 1996 - ----------------------------------------------------------------------------------------------------------------------- Ellen Oran Kaden Senior Vice President - Law and 48 1998 Government Affairs - ----------------------------------------------------------------------------------------------------------------------- F. Martin Thrasher Senior Vice President 48 1992 President - North American Soup and Sauces Division - ----------------------------------------------------------------------------------------------------------------------- David L. Albright Vice President 52 1992 President - Pepperidge Farm - ----------------------------------------------------------------------------------------------------------------------- Jerry S. Buckley Vice President - Public Affairs 44 1997 - ----------------------------------------------------------------------------------------------------------------------- Timothy M. Callahan Vice President - Global Beverages and Business 39 1999 Development - ----------------------------------------------------------------------------------------------------------------------- Lawrence B. Costello Vice President - Human Resources 51 1999 - -----------------------------------------------------------------------------------------------------------------------
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Andrew K. Hughson Vice President 44 1997 President - Asia/Pacific - ----------------------------------------------------------------------------------------------------------------------- Gerald S. Lord Vice President - Controller 53 1993 - ----------------------------------------------------------------------------------------------------------------------- R. David C. Macnair Vice President - Global Research and Development 45 1998 - ----------------------------------------------------------------------------------------------------------------------- Craig W. Rydin Vice President 47 1997 President - Away From Home - -----------------------------------------------------------------------------------------------------------------------
Each of the above-named officers has been employed by the company in an executive or managerial capacity for at least five years, except Basil L. Anderson, Jerry S. Buckley, Timothy Callahan, Andrew K. Hughson, Ellen Oran Kaden, and Dale F. Morrison. Dale F. Morrison served as President, Frito Lay North (1994-1995) and Vice President Marketing and Sales, Frito Lay Central Division (1993-1994) prior to joining Campbell in 1995. Basil L. Anderson served as Chief Financial Officer (1992-1996) of Scott Paper Company prior to joining Campbell in 1996. Ellen Oran Kaden served as Executive Vice President, General Counsel and Secretary (1994-1998) and Senior Vice President, General Counsel and Secretary (1993-1994) of CBS Inc. prior to joining Campbell in 1998. Jerry S. Buckley served as Assistant Managing Editor, Gannett Company, Inc. (1994-1995) and Senior Editor/Senior Writer, U.S. News & World Report (1987-1994) prior to joining Campbell in 1995. Timothy Callahan served as Vice President and General Manager (1997-1998), Vice President - Marketing and Sales (1995-1997) and Category Director (1993-1995) of Kraft Foods - Post Cereal Division prior to joining Campbell in 1998. Andrew K. Hughson served as General Manager, Kellogg France, Belgium and the Netherlands (1994-1996) and Assistant to the Chairman, Kellogg Company, Global Marketing (1993-1994) prior to joining Campbell in 1996. There is no family relationship among any of the company's executive officers or between any such officer and any director of Campbell. Executive officers of Campbell are elected at the November 1999 meeting of the Board of Directors. PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED SHAREOWNER MATTERS Campbell's capital stock is listed and principally traded on the New York Stock Exchange. Campbell's capital stock is also listed and traded on the Philadelphia Stock Exchange, The International Stock Exchange of the United Kingdom and the Republic of Ireland Limited and the Swiss Exchange. On September 20, 1999, there were 38,722 holders of record of Campbell's capital stock. The market price and dividend information with respect to Campbell's capital stock are set forth on page 47 of the 1999 Annual Report in the section of the Notes to Consolidated Financial Statements entitled "Quarterly Data 6 8 (unaudited)" which is incorporated herein by reference. Future dividends will be dependent upon future earnings, financial requirements and other factors. ITEM 6. SELECTED FINANCIAL DATA The information called for by this Item is set forth on page 49 of the 1999 Annual Report in the section entitled "Six-Year Review Consolidated" which is incorporated herein by reference. Such information should be read in conjunction with the Consolidated Financial Statements and Notes thereto of the company included in Item 8 of this Report. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION The information presented on pages 27 through 34 of the 1999 Annual Report in the section entitled "Management's Discussion and Analysis of Results of Operations and Financial Condition" is incorporated herein by reference. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The information presented on pages 30 through 32 of the 1999 Annual Report in the section entitled "Management's Discussion and Analysis of Results of Operations and Financial Condition" is incorporated herein by reference. ITEM 8. FINANCIAL STATEMENTS The information presented on pages 35 through 48 of the 1999 Annual Report is incorporated herein by reference. With the exception of the aforementioned information and the information incorporated by reference in Items 1, 5, 6, 7, and 7A, the 1999 Annual Report is not deemed to be filed as part of this Form 10-K. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT The sections entitled "Election of Directors" and "Directors and Executive Officers Stock Ownership Reports" set forth on pages 1 through 4 and page 30 of Campbell's Notice of Annual Meeting and Proxy Statement dated October 8, 1999 (the "1999 Proxy Statement") are incorporated herein by reference. 7 9 The information required by this Item relating to the executive officers of Campbell is set forth in Part I of this Report on pages 5 and 6 under the heading "Executive Officers of the Company." ITEM 11. EXECUTIVE COMPENSATION The information set forth on pages 15 through 25 of the 1999 Proxy Statement in the section entitled "Compensation of Executive Officers" is incorporated herein by reference. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The information required by this Item is set forth at pages 5 through 7 of the 1999 Proxy Statement in the sections entitled "Security Ownership of Directors and Executive Officers" and "Security Ownership of Certain Beneficial Owners" and is incorporated herein by reference. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS None. PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K (a) The following documents are filed as part of this report: 1. FINANCIAL STATEMENTS - Consolidated Statements of Earnings for 1999, 1998 and 1997 - Consolidated Balance Sheets as of August 1, 1999 and August 2, 1998 - Consolidated Statements of Cash Flows for 1999, 1998 and 1997 - Consolidated Statements of Shareowners' Equity for 1999, 1998 and 1997 - Summary of Significant Accounting Policies - Notes to Consolidated Financial Statements - Report of Independent Accountants - The foregoing Financial Statements are incorporated into Part II, Item 8 of this Report by reference to pages 35 through 48 of the 1999 Annual Report. 8 10 2. FINANCIAL STATEMENT SCHEDULES None. 3. EXHIBITS
3(i) Campbell's Restated Certificate of Incorporation as amended through February 24, 1997, was filed with the Securities and Exchange Commission ("SEC") with Campbell's Form 10-Q for the quarterly period ended January 26, 1997, and is incorporated herein by reference. 3(ii) Campbell's By-Laws, effective as of August 1, 1999. 4 There is no instrument with respect to long-term debt of the company that involves indebtedness or securities authorized thereunder exceeding 10 percent of the total assets of the company and its subsidiaries on a consolidated basis. The company agrees to file a copy of any instrument or agreement defining the rights of holders of long-term debt of the company upon request of the SEC. 9 Major Stockholders' Voting Trust Agreement dated June 2, 1990, as amended, was filed with the SEC by the Trustees of the Major Stockholders' Voting Trust as Exhibit A to Schedule 13D dated June 5, 1990, and is incorporated herein by reference. 10(a) Campbell Soup Company 1984 Long-Term Incentive Plan, as amended on March 30, 1998, was filed with the SEC with Campbell's Form 10-K for the fiscal year ended August 2, 1998, and is incorporated herein by reference. 10(b) Campbell Soup Company 1994 Long-Term Incentive Plan as amended on March 30, 1998, was filed with the SEC with Campbell's Form 10-K for the fiscal year ended August 2, 1998, and is incorporated herein by reference. 10(c) Campbell Soup Company Management Worldwide Incentive Plan, as amended on November 17, 1994, was filed with the SEC with Campbell's 1994 Proxy Statement and is incorporated herein by reference. 10(d) Mid-Career Hire Pension Program, as amended on February 22, 1996, was filed with the SEC with Campbell's Form 10-K for the fiscal year ended July 28, 1996, and is incorporated herein by reference. 10(e) Personal Choice, A Flexible Reimbursement Program for Campbell Soup Company Executives, effective August 1, 1994, was filed with the SEC with Campbell's Form 10-K for the fiscal year ended July 30, 1995, and is incorporated herein by reference.
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10(f) Supplemental Savings Plan, as amended on May 25, 1995, was filed with the SEC with Campbell's Form 10-K for the fiscal year ended July 30, 1995, and is incorporated herein by reference. 10(g) Salary Deferral Plan, effective January 1, 1996, was filed with the SEC with Campbell's Form S-8 on February 6, 1996, and is incorporated herein by reference. 10(h) Severance Protection Agreement dated April 1, 1998, with Ellen Oran Kaden, Senior Vice President - Law and Government Affairs, was filed with the SEC with Campbell's Form 10-K for the fiscal year ended August 2, 1998, and is incorporated herein by reference. Agreements with nine (9) other executive officers are in all material respects the same as that with Ms. Kaden. 13 Pages 27 through 49 of Campbell's 1999 Annual Report to Shareowners for the fiscal year ended August 1, 1999. 21 Subsidiaries (Direct and Indirect) of the company. 23 Consent of Independent Accountants. 24(a) Power of Attorney. 24(b) Certified copy of the resolution of Campbell's Board of Directors authorizing signatures pursuant to a power of attorney. 27 Financial Data Schedule (not considered to be filed).
(b) Reports on Form 8-K There were no reports on Form 8-K filed by the Company during the fourth quarter of fiscal 1999. 10 12 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, Campbell has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Date: October 8, 1999 CAMPBELL SOUP COMPANY By:/s/ Basil L. Anderson -------------------------------- Basil L. Anderson Executive Vice President and Chief Financial Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of Campbell and in the capacity and on the date indicated. Date: October 8, 1999 /s/ Basil L. Anderson /s/ Gerald S. Lord --------------------- ------------------ Basil L. Anderson Gerald S. Lord Executive Vice President Vice President - Controller and Chief Financial Officer
Philip E. Lippincott Chairman and Director } Dale F. Morrison President, Chief Executive } Officer and Director Alva A. App Director } Edmund M. Carpenter Director } Bennett Dorrance Director } Thomas W. Field, Jr. Director } Kent B. Foster Director } Harvey Golub Director } David K. P. Li Director } By: /s/ Ellen Oran Kaden -------------------- Mary Alice Malone Director } Ellen Oran Kaden Charles H. Mott Director } Senior Vice President - Charles R. Perrin Director } Law and Government Affairs George M. Sherman Director } Donald M. Stewart Director } George Strawbridge, Jr. Director } Charlotte C. Weber Director }
11 13 INDEX OF EXHIBITS Document
3(i) Campbell's Restated Certificate of Incorporation as amended through February 24, 1997 was filed with the Securities and Exchange Commission ("SEC") with Campbell's Form 10-Q for the quarterly period ended January 26, 1997, and is incorporated herein by reference. 3(ii) Campbell's By-Laws, effective as of August 1, 1999. 4 There is no instrument with respect to long-term debt of the company that involves indebtedness or securities authorized thereunder exceeding 10 percent of the total assets of the company and its subsidiaries on a consolidated basis. The company agrees to file a copy of any instrument or agreement defining the rights of holders of long-term debt of the company upon request of the SEC. 9 Major Stockholders' Voting Trust Agreement dated June 2, 1990, as amended, was filed with the SEC by the Trustees of the Major Stockholders' Voting Trust as Exhibit A to Schedule 13D dated June 5, 1990, and is incorporated herein by reference. 10(a) Campbell Soup Company 1984 Long-Term Incentive Plan, as amended on March 30, 1998, was filed with the SEC with Campbell's Form 10-K for the fiscal year ended August 2, 1998, and is incorporated herein by reference. 10(b) Campbell Soup Company 1994 Long-Term Incentive Plan as amended on March 30, 1998, was filed with the SEC with Campbell's Form 10-K for the fiscal year ended August 2, 1998, and is incorporated herein by reference. 10(c) Campbell Soup Company Management Worldwide Incentive Plan, as amended on November 17, 1994, was filed with the SEC with Campbell's 1994 Proxy Statement, and is incorporated herein by reference. 10(d) Mid-Career Hire Pension Program, as amended on February 22, 1996, was filed with the SEC with Campbell's Form 10-K for the fiscal year ended July 28, 1996, and is incorporated herein by reference. 10(e) Personal Choice, Financial Reimbursement Program for Campbell Soup Company Executives, effective August 1, 1994, was filed with the SEC with Campbell's Form 10-K for the fiscal year ended July 30, 1995, and is incorporated herein by reference.
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10(f) Supplemental Savings Plan, as amended on May 25, 1995 was filed with the SEC with Campbell's Form 10-K for the fiscal year ended July 30, 1995 and is incorporated herein by reference. 10(g) Salary Deferral Plan, effective January 1, 1996, was filed with the SEC with Campbell's Form S-8 on February 6, 1996, and is incorporated herein by reference. 10(h) Severance Protection Agreement dated April 1, 1998, with Ellen Oran Kaden, Senior Vice President - Law and Government Affairs, was filed with the SEC with Campbell's Form 10-K for the fiscal year ended August 2, 1998, and is incorporated herein by reference. Agreements with nine (9) other executive officers are in all material respects the same as that with Ms. Kaden. 13 Pages 27 through 49 of Campbell's 1999 Annual Report to Shareowners for the fiscal year ended August 1, 1999. 21 Subsidiaries (Direct and Indirect) of Campbell. 23 Consent of Independent Accountants. 24(a) Power of Attorney. 24(b) Certified copy of the resolution of Campbell's Board of Directors authorizing signatures pursuant to a power of attorney. 27 Financial Data Schedule (not considered to be filed).
13 EX-3.(II) 2 COMPANY BY-LAWS EFFECTIVE AUGUST 1, 1999 1 EXHIBIT 3(ii) CAMPBELL SOUP COMPANY BY-LAWS EFFECTIVE AUGUST 1, 1999 2 CAMPBELL SOUP COMPANY BY-LAWS ARTICLE I. STOCKHOLDERS SECTION 1. THE ANNUAL MEETING OF THE STOCKHOLDERS OF THE CORPORATION SHALL BE HELD AT THE PRINCIPAL OFFICE OF THE CORPORATION IN NEW JERSEY, OR AT SUCH OTHER PLACE, WITHIN OR WITHOUT NEW JERSEY, AS MAY FROM TIME TO TIME BE DESIGNATED BY THE BOARD OF DIRECTORS AND STATED IN THE NOTICE OF THE MEETING, ON THE THIRD THURSDAY IN NOVEMBER IN EACH YEAR (OR IF SAID DAY BE A LEGAL HOLIDAY, THEN ON THE NEXT SUCCEEDING DAY, NOT EARLIER THAN THE FOLLOWING TUESDAY, NOT A LEGAL HOLIDAY), AT SUCH TIME AS MAY BE FIXED BY THE BOARD OF DIRECTORS, FOR THE PURPOSE OF ELECTING DIRECTORS OF THE CORPORATION, AND FOR THE TRANSACTION OF SUCH OTHER BUSINESS AS MAY PROPERLY BE BROUGHT BEFORE THE MEETING. SECTION 2. SPECIAL MEETINGS OF THE STOCKHOLDERS SHALL BE HELD AT THE PRINCIPAL OFFICE OF THE CORPORATION IN NEW JERSEY, OR AT SUCH OTHER PLACE, WITHIN OR WITHOUT NEW JERSEY, AS MAY FROM TIME TO TIME BE DESIGNATED BY THE BOARD OF DIRECTORS AND STATED IN THE NOTICE OF THE MEETING, UPON THE CALL OF THE CHAIRMAN OF THE BOARD OR OF THE PRESIDENT, OR UPON THE CALL OF A MAJORITY OF THE MEMBERS OF THE BOARD OF DIRECTORS, AND SHALL BE CALLED UPON THE WRITTEN REQUEST OF STOCKHOLDERS OF RECORD HOLDING A MAJORITY OF THE CAPITAL STOCK OF THE CORPORATION ISSUED AND OUTSTANDING AND ENTITLED TO VOTE AT SUCH MEETING. SECTION 3. NOTICE OF THE TIME AND PLACE OF EVERY MEETING OF STOCKHOLDERS SHALL BE DELIVERED PERSONALLY OR MAILED AT LEAST TEN BUT NOT MORE THAN SIXTY CALENDAR DAYS BEFORE THE MEETING TO EACH STOCKHOLDER OF RECORD ENTITLED TO VOTE AT THE MEETING. SECTION 4. THE HOLDERS OF RECORD OF A MAJORITY OF THE SHARES OF THE CAPITAL STOCK OF THE CORPORATION ISSUED AND OUTSTANDING AND ENTITLED TO VOTE, PRESENT IN PERSON OR REPRESENTED BY PROXY, SHALL CONSTITUTE A QUORUM AT ALL MEETINGS OF THE STOCKHOLDERS. IF THERE BE NO SUCH QUORUM PRESENT, THE HOLDERS OF A MAJORITY OF SUCH SHARES SO PRESENT OR REPRESENTED MAY ADJOURN THE MEETING FROM TIME TO TIME, WITHOUT NOTICE OTHER THAN ANNOUNCEMENT AT THE MEETING, UNTIL SUCH QUORUM SHALL HAVE BEEN OBTAINED, WHEN ANY BUSINESS MAY BE TRANSACTED WHICH MIGHT HAVE BEEN TRANSACTED AT THE MEETING AS FIRST CONVENED, HAD THERE BEEN A QUORUM. ONCE A QUORUM IS ESTABLISHED, THE STOCKHOLDERS PRESENT IN PERSON OR BY PROXY MAY CONTINUE TO DO BUSINESS UNTIL ADJOURNMENT, NOTWITHSTANDING THE WITHDRAWAL OF ENOUGH STOCKHOLDERS TO LEAVE LESS THAN A QUORUM. 3 SECTION 5. THE BOARD OF DIRECTORS SHALL IN ADVANCE OF EACH MEETING OF STOCKHOLDERS APPOINT ONE OR MORE INSPECTORS OF ELECTION, TO ACT UNLESS THE PERFORMANCE OF THE INSPECTOR'S FUNCTION SHALL BE UNANIMOUSLY WAIVED BY THE STOCKHOLDERS PRESENT IN PERSON OR REPRESENTED BY PROXY AT SUCH MEETING. EACH INSPECTOR, BEFORE ENTERING UPON THE DISCHARGE OF HIS DUTIES, SHALL FIRST TAKE AND SUBSCRIBE AN OATH OR AFFIRMATION TO EXECUTE THE DUTIES OF INSPECTOR AS PRESCRIBED BY LAW AT SUCH MEETING WITH STRICT IMPARTIALITY AND ACCORDING TO THE BEST OF HIS ABILITY. THE INSPECTOR OR INSPECTORS SHALL TAKE CHARGE OF THE POLLS AND SHALL MAKE A CERTIFICATE OF THE RESULTS OF THE VOTE TAKEN. NO DIRECTOR OR CANDIDATE FOR THE OFFICE OF DIRECTOR SHALL BE APPOINTED AS SUCH INSPECTOR. SECTION 6. ALL MEETINGS OF THE STOCKHOLDERS SHALL BE PRESIDED OVER BY THE CHAIRMAN OF THE BOARD, OR IF HE SHALL NOT BE PRESENT, BY THE VICE CHAIRMAN OF THE BOARD. IF NEITHER THE CHAIRMAN OF THE BOARD NOR THE VICE CHAIRMAN OF THE BOARD SHALL BE PRESENT, SUCH MEETING SHALL BE PRESIDED OVER BY THE PRESIDENT. IF NONE OF THE CHAIRMAN OF THE BOARD, THE VICE CHAIRMAN OF THE BOARD AND THE PRESIDENT SHALL BE PRESENT, SUCH MEETING SHALL BE PRESIDED OVER BY A VICE PRESIDENT, OR IF NONE SHALL BE PRESENT, THEN BY A CHAIRMAN TO BE ELECTED BY THE HOLDERS OF A MAJORITY OF THE SHARES PRESENT OR REPRESENTED AT THE MEETING. THE SECRETARY OF THE CORPORATION, OR IF HE IS NOT PRESENT, AN ASSISTANT SECRETARY OF THE CORPORATION, IF PRESENT, SHALL ACT AS SECRETARY OF THE MEETING. IF NEITHER THE SECRETARY NOR AN ASSISTANT SECRETARY IS PRESENT, THEN THE CHAIRMAN SHALL APPOINT A SECRETARY OF THE MEETING. SECTION 7. THE BOARD OF DIRECTORS SHALL FIX IN ADVANCE A DATE, NOT EXCEEDING SIXTY NOR LESS THAN TEN CALENDAR DAYS PRECEDING THE DATE OF ANY MEETING OF THE STOCKHOLDERS OR THE DATE FOR THE PAYMENT OF ANY DIVIDEND, OR THE DATE FOR THE ALLOTMENT OF RIGHTS, OR THE DATE WHEN ANY CHANGE OR CONVERSION OR EXCHANGE OF STOCK SHALL GO INTO EFFECT, AS A RECORD DATE FOR THE DETERMINATION OF THE STOCKHOLDERS ENTITLED TO NOTICE OF AND TO VOTE AT ANY SUCH MEETING, OR ENTITLED TO RECEIVE PAYMENT OF ANY SUCH DIVIDEND, OR ANY SUCH ALLOTMENT OF RIGHTS, OR TO EXERCISE THE RIGHTS IN RESPECT OF ANY SUCH CHANGE, CONVERSION OR EXCHANGE OF STOCK, AND IN SUCH CASE ONLY STOCKHOLDERS OF RECORD ON THE DATE SO FIXED SHALL BE ENTITLED TO SUCH NOTICE OF AND TO VOTE AT SUCH MEETING, OR TO RECEIVE PAYMENT OF SUCH DIVIDEND, OR ALLOTMENT OF RIGHTS, OR EXERCISE SUCH RIGHTS, AS THE CASE MAY BE, NOTWITHSTANDING ANY TRANSFER OF ANY STOCK ON THE BOOKS OF THE CORPORATION AFTER ANY SUCH RECORD DATE FIXED AS AFORESAID. 2 4 ARTICLE II. DIRECTORS SECTION 1. THE BUSINESS AND PROPERTY OF THE CORPORATION SHALL BE MANAGED AND CONTROLLED BY A BOARD OF SIXTEEN DIRECTORS. THIS NUMBER MAY BE CHANGED FROM TIME TO TIME BY AMENDMENT OF THESE BY-LAWS, BUT THE TERM OF OFFICE OF NO DIRECTOR SHALL BE SHORTENED AFTER HIS OR HER ELECTION BY REDUCTION IN THE NUMBER OF DIRECTORS. UPON ELECTION EACH DIRECTOR SHALL BE THE HOLDER OF AT LEAST TWO HUNDRED SHARES OF THE CORPORATION'S CAPITAL STOCK. WITHIN ONE YEAR OF ELECTION, EACH DIRECTOR SHALL BE THE HOLDER OF AT LEAST TWO THOUSAND SHARES OF CAPITAL STOCK AND WITHIN THREE YEARS OF ELECTION SHALL BE THE HOLDER OF AT LEAST SIX THOUSAND SHARES OF CAPITAL STOCK. IN THE EVENT THE NUMBER OF SHARES OF CAPITAL STOCK IS INCREASED AT ANY TIME AFTER JANUARY 28, 1993, BY A STOCK SPLIT, STOCK DIVIDEND, OR BY ANY OTHER EXTRAORDINARY DISTRIBUTION OF SHARES, THE ABOVE SHARE OWNERSHIP REQUIREMENTS SHALL BE PROPORTIONATELY ADJUSTED. THE DIRECTOR, UPON CEASING TO HOLD THE REQUIRED NUMBER OF SHARES, SHALL CEASE TO BE A DIRECTOR. THE DIRECTORS SHALL HOLD OFFICE UNTIL THE NEXT ANNUAL MEETING OF THE STOCKHOLDERS AND UNTIL THEIR SUCCESSORS ARE ELECTED AND SHALL HAVE QUALIFIED. SECTION 2. REGULAR MEETINGS OF THE BOARD OF DIRECTORS SHALL BE HELD AT SUCH TIMES AND AT SUCH PLACES AS MAY FROM TIME TO TIME BE FIXED BY RESOLUTION OF THE BOARD OF DIRECTORS. SPECIAL MEETINGS OF THE BOARD OF DIRECTORS MAY BE HELD AT ANY TIME UPON CALL OF THE CHAIRMAN OF THE BOARD OR OF THE VICE CHAIRMAN OF THE BOARD OR OF THE PRESIDENT OR OF THREE DIRECTORS. ORAL, TELEGRAPHIC OR WRITTEN NOTICE OF THE TIME AND PLACE OF A SPECIAL MEETING SHALL BE DULY SERVED ON, OR GIVEN OR SENT OR MAILED TO, EACH DIRECTOR NOT LESS THAN TWO CALENDAR DAYS BEFORE THE MEETING. AN ORGANIZATIONAL MEETING OF THE BOARD OF DIRECTORS SHALL BE HELD, OF WHICH NO NOTICE SHALL BE NECESSARY, AS SOON AS CONVENIENT AFTER THE ANNUAL MEETING OF THE STOCKHOLDERS. NOTICE NEED NOT BE GIVEN OF REGULAR MEETINGS OF THE BOARD OF DIRECTORS HELD AT THE TIMES FIXED BY RESOLUTION OF THE BOARD OF DIRECTORS. MEETINGS MAY BE HELD AT ANY TIME WITHOUT NOTICE IF ALL OF THE DIRECTORS ARE PRESENT OR IF THOSE NOT PRESENT WAIVE NOTICE OF THE MEETING IN WRITING. SECTION 3. SIX MEMBERS OF THE BOARD OF DIRECTORS SHALL CONSTITUTE A QUORUM FOR THE TRANSACTION OF BUSINESS. IF AT ANY MEETING OF THE BOARD OF DIRECTORS THERE SHALL BE LESS THAN A QUORUM PRESENT, A MAJORITY OF THE DIRECTORS PRESENT MAY ADJOURN THE MEETING FROM TIME TO TIME, WITHOUT NOTICE OTHER THAN ANNOUNCEMENT AT THE MEETING, UNTIL A QUORUM SHALL HAVE BEEN OBTAINED, WHEN ANY BUSINESS MAY BE TRANSACTED WHICH MIGHT HAVE BEEN TRANSACTED AT THE MEETING AS FIRST CONVENED, HAD THERE BEEN A QUORUM. 3 5 SECTION 4. ANY VACANCY OCCURRING AMONG THE DIRECTORS MAY BE FILLED BY THE AFFIRMATIVE VOTE OF A MAJORITY OF THE REMAINING MEMBERS OF THE BOARD OF DIRECTORS AT THE TIME IN OFFICE; PROVIDED THAT IN CASE OF AN INCREASE IN THE NUMBER OF DIRECTORS PURSUANT TO AN AMENDMENT TO THESE BY-LAWS MADE BY THE STOCKHOLDERS, THE STOCKHOLDERS MAY FILL THE VACANCY OR VACANCIES SO CREATED AT THE MEETING AT WHICH SUCH AMENDMENT IS EFFECTED OR MAY AUTHORIZE THE BOARD OF DIRECTORS TO FILL SUCH VACANCY OR VACANCIES. SECTION 5. THE BOARD OF DIRECTORS, BY AN AFFIRMATIVE VOTE OF A MAJORITY OF THE MEMBERS OF THE BOARD OF DIRECTORS AT THE TIME IN OFFICE, MAY APPOINT AN EXECUTIVE COMMITTEE TO CONSIST OF SUCH DIRECTORS AS THE BOARD OF DIRECTORS MAY FROM TIME TO TIME DETERMINE. THE EXECUTIVE COMMITTEE SHALL HAVE AND MAY EXERCISE, WHEN THE BOARD OF DIRECTORS IS NOT IN SESSION, ALL OF THE POWERS VESTED IN THE BOARD OF DIRECTORS, EXCEPT AS OTHERWISE PROVIDED BY LAW. THE BOARD OF DIRECTORS SHALL HAVE THE POWER AT ANY TIME TO FILL VACANCIES IN, TO CHANGE THE MEMBERSHIP OF, OR TO DISSOLVE, THE EXECUTIVE COMMITTEE. THE EXECUTIVE COMMITTEE MAY MAKE RULES FOR THE CONDUCT OF ITS BUSINESS AND MAY APPOINT SUCH COMMITTEES AND ASSISTANTS AS IT SHALL FROM TIME TO TIME DEEM NECESSARY, UNLESS THE BOARD OF DIRECTORS SHALL OTHERWISE PROVIDE. A MAJORITY OF THE MEMBERS OF THE EXECUTIVE COMMITTEE AT THE TIME IN OFFICE SHALL CONSTITUTE A QUORUM FOR THE TRANSACTION OF BUSINESS. A RECORD SHALL BE KEPT OF ALL PROCEEDINGS OF THE EXECUTIVE COMMITTEE WHICH SHALL BE SUBMITTED TO THE BOARD OF DIRECTORS AT OR BEFORE THE NEXT SUCCEEDING MEETING OF THE BOARD OF DIRECTORS. SECTION 6. THE BOARD OF DIRECTORS MAY APPOINT ONE OR MORE OTHER COMMITTEES, TO CONSIST OF SUCH NUMBER OF THE DIRECTORS AND TO HAVE SUCH POWERS AS THE BOARD OF DIRECTORS MAY FROM TIME TO TIME DETERMINE. THE BOARD OF DIRECTORS SHALL HAVE POWER AT ANY TIME TO FILL VACANCIES IN, TO CHANGE THE MEMBERSHIP OF, OR TO DISSOLVE, ANY SUCH COMMITTEE. A MAJORITY OF ANY SUCH COMMITTEE MAY DETERMINE ITS ACTION AND FIX THE TIME AND PLACE OF ITS MEETINGS, UNLESS THE BOARD OF DIRECTORS SHALL OTHERWISE PROVIDE. SECTION 7. IN ADDITION TO REIMBURSEMENT OF REASONABLE EXPENSES INCURRED IN ATTENDING MEETINGS OR OTHERWISE IN CONNECTION WITH HIS OR HER ATTENTION TO THE AFFAIRS OF THE CORPORATION, EACH DIRECTOR AS SUCH, AS CHAIRMAN OR VICE CHAIRMAN OF THE BOARD AND AS A MEMBER OF THE EXECUTIVE COMMITTEE OR OF ANY OTHER COMMITTEE OF THE BOARD OF DIRECTORS, SHALL BE ENTITLED TO RECEIVE SUCH REMUNERATION AS MAY BE FIXED FROM TIME TO TIME BY THE BOARD OF DIRECTORS, IN THE FORM EITHER OF FEES FOR ATTENDANCE AT MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES THEREOF OR ANNUAL RETAINERS, OR BOTH; BUT NO DIRECTOR WHO RECEIVES A SALARY OR OTHER REMUNERATION AS AN EMPLOYEE OF THE CORPORATION OR ANY SUBSIDIARY THEREOF SHALL RECEIVE ANY ADDITIONAL REMUNERATION AS A DIRECTOR OR MEMBER OF ANY COMMITTEE OF THE BOARD OF DIRECTORS. 4 6 ARTICLE III. OFFICERS SECTION 1. THE BOARD OF DIRECTORS, AT ITS ORGANIZATIONAL MEETING OR AS SOON AS MAY BE AFTER THE ELECTION OF DIRECTORS HELD IN EACH YEAR, SHALL ELECT ONE OF ITS NUMBER CHAIRMAN OF THE BOARD AND ONE OF ITS NUMBER PRESIDENT, AND SHALL ALSO ELECT A SECRETARY AND A TREASURER, AND FROM TIME TO TIME MAY ELECT OR APPOINT ONE OF ITS NUMBER VICE CHAIRMAN OF THE BOARD, ONE OR MORE VICE PRESIDENTS, A CONTROLLER, AND SUCH ASSISTANT SECRETARIES, ASSISTANT TREASURERS AND OTHER OFFICERS, AGENTS AND EMPLOYEES AS IT MAY DEEM PROPER. MORE THAN ONE OFFICE MAY BE HELD BY THE SAME PERSON. SECTION 2. THE TERM OF OFFICE OF ALL OFFICERS SHALL BE UNTIL THE NEXT ORGANIZATIONAL MEETING OF THE BOARD OF DIRECTORS OR UNTIL THEIR RESPECTIVE SUCCESSORS ARE ELECTED AND HAVE QUALIFIED, BUT ANY OFFICER MAY BE REMOVED FROM OFFICE AT ANY TIME BY THE AFFIRMATIVE VOTE OF A MAJORITY OF THE MEMBERS OF THE BOARD OF DIRECTORS AT THE TIME IN OFFICE. ANY OTHER EMPLOYEE OF THE CORPORATION, WHETHER APPOINTED BY THE BOARD OF DIRECTORS OR OTHERWISE, MAY BE REMOVED AT ANY TIME BY THE BOARD OF DIRECTORS OR BY ANY COMMITTEE OR OFFICER OR EMPLOYEE UPON WHOM SUCH POWER OF REMOVAL MAY BE CONFERRED BY THE BY-LAWS OR BY THE BOARD OF DIRECTORS. THE BOARD OF DIRECTORS SHALL HAVE POWER TO FILL FOR THE UNEXPIRED TERM ANY VACANCY WHICH SHALL OCCUR IN ANY OFFICE BY REASON OF DEATH, RESIGNATION, REMOVAL OR OTHERWISE. SECTION 3. THE CHAIRMAN OF THE BOARD SHALL PRESIDE AT ALL MEETINGS OF THE STOCKHOLDERS AND OF THE BOARD OF DIRECTORS AND SHALL PERFORM SUCH OTHER DUTIES AS SHALL FROM TIME TO TIME BE PRESCRIBED BY THE BOARD OF DIRECTORS. THE VICE CHAIRMAN OF THE BOARD SHALL IN THE ABSENCE OF THE CHAIRMAN OF THE BOARD PRESIDE AT ALL MEETINGS OF THE STOCKHOLDERS AND OF THE BOARD OF DIRECTORS AND SHALL PERFORM SUCH OTHER DUTIES AS SHALL FROM TIME TO TIME BE PRESCRIBED BY THE BOARD OF DIRECTORS OR THE CHAIRMAN OF THE BOARD. THE PRESIDENT SHALL BE THE CHIEF EXECUTIVE OFFICER OF THE CORPORATION AND SHALL PERFORM SUCH DUTIES AS ARE USUALLY PERFORMED BY THAT OFFICER; HE SHALL, IN THE ABSENCE OF THE CHAIRMAN AND VICE CHAIRMAN OF THE BOARD, PRESIDE AT ALL MEETINGS OF THE STOCKHOLDERS AND OF THE BOARD OF DIRECTORS; AND SHALL PERFORM SUCH OTHER DUTIES AS SHALL FROM TIME TO TIME BE PRESCRIBED BY THE BOARD OF DIRECTORS. THE OTHER OFFICERS OF THE CORPORATION SHALL HAVE SUCH POWERS AND SHALL PERFORM SUCH DUTIES AS GENERALLY PERTAIN TO THEIR OFFICES RESPECTIVELY, AS WELL AS SUCH POWERS AND DUTIES AS SHALL FROM TIME TO TIME BE CONFERRED BY THE BOARD OF DIRECTORS. 5 7 ARTICLE IV. INDEMNIFICATION OF DIRECTORS AND OTHERS SECTION 1. THE CORPORATION SHALL INDEMNIFY TO THE FULL EXTENT FROM TIME TO TIME PERMITTED BY LAW ANY PRESENT, FORMER OR FUTURE DIRECTOR, OFFICER, OR EMPLOYEE ("CORPORATE AGENT") MADE, OR THREATENED TO BE MADE, A PARTY TO, OR A WITNESS OR OTHER PARTICIPANT IN, ANY THREATENED, PENDING OR COMPLETED ACTION, SUIT OR PROCEEDING, WHETHER CIVIL, CRIMINAL, ADMINISTRATIVE, ARBITRATIVE, LEGISLATIVE, INVESTIGATIVE, OR OF ANY OTHER KIND, INCLUDING BY OR IN THE RIGHT OF THE CORPORATION ("PROCEEDING"), BY REASON OF THE FACT THAT SUCH PERSON IS OR WAS A CORPORATE AGENT OF THE CORPORATION OR ANY SUBSIDIARY OF THE CORPORATION OR, WHILE SERVING AS A CORPORATE AGENT OF THE CORPORATION OR ANY SUBSIDIARY OF THE CORPORATION, SERVES OR SERVED ANOTHER ENTERPRISE (INCLUDING, WITHOUT LIMITATION, ANY SOLE PROPRIETORSHIP, ASSOCIATION, CORPORATION, PARTNERSHIP, JOINT VENTURE OR TRUST), WHETHER OR NOT FOR PROFIT, AT THE REQUEST OF THE CORPORATION AS A DIRECTOR, OFFICER, EMPLOYEE OR AGENT THEREOF (INCLUDING SERVICE WITH RESPECT TO ANY EMPLOYEE BENEFIT PLAN OF THE CORPORATION OR ANY SUBSIDIARY OF THE CORPORATION), AGAINST EXPENSES (INCLUDING ATTORNEYS' FEES), JUDGMENTS, FINES, PENALTIES, EXCISE TAXES AND AMOUNTS PAID IN SETTLEMENT, ACTUALLY AND REASONABLY INCURRED BY SUCH PERSON IN CONNECTION WITH SUCH PROCEEDING OR ANY APPEAL THEREIN. NO INDEMNIFICATION PURSUANT TO THIS ARTICLE IV SHALL BE REQUIRED WITH RESPECT TO ANY SETTLEMENT OR OTHER NONADJUDICATED DISPOSITION OF ANY THREATENED OR PENDING PROCEEDING UNLESS THE CORPORATION HAS GIVEN ITS PRIOR CONSENT TO SUCH SETTLEMENT OR OTHER DISPOSITION. SECTION 2. EXPENSES INCURRED IN CONNECTION WITH A PROCEEDING SHALL BE PAID BY THE CORPORATION FOR ANY CORPORATE AGENT OF THE CORPORATION IN ADVANCE OF THE FINAL DISPOSITION OF SUCH PROCEEDING PROMPTLY UPON RECEIPT OF AN UNDERTAKING BY OR ON BEHALF OF SUCH PERSON TO REPAY SUCH AMOUNT UNLESS IT SHALL ULTIMATELY BE DETERMINED THAT SUCH PERSON IS ENTITLED TO BE INDEMNIFIED BY THE CORPORATION. SUCH AN UNDERTAKING SHALL NOT, HOWEVER, BE REQUIRED OF A NONPARTY WITNESS. SECTION 3. THE FOREGOING INDEMNIFICATION AND ADVANCEMENT OF EXPENSES SHALL NOT BE DEEMED EXCLUSIVE OF ANY OTHER RIGHTS TO WHICH ANY PERSON INDEMNIFIED MAY BE ENTITLED. SECTION 4. THE RIGHTS PROVIDED TO ANY PERSON BY THIS ARTICLE IV SHALL BE ENFORCEABLE AGAINST THE CORPORATION BY SUCH PERSON, WHO SHALL BE PRESUMED TO HAVE RELIED UPON IT IN SERVING OR CONTINUING TO SERVE AS A CORPORATE AGENT. NO ELIMINATION OF OR AMENDMENT TO THIS ARTICLE IV SHALL DEPRIVE ANY PERSON OF RIGHTS HEREUNDER ARISING OUT OF ALLEGED OR ACTUAL OCCURRENCES, ACTS OR FAILURES TO ACT OCCURRING PRIOR TO SUCH ELIMINATION OR AMENDMENT. THE RIGHTS PROVIDED TO ANY PERSON BY THIS ARTICLE IV SHALL INURE TO THE BENEFIT OF SUCH PERSON'S LEGAL REPRESENTATIVE AND SHALL BE APPLICABLE TO PROCEEDINGS COMMENCED OR CONTINUING AFTER THE ADOPTION OF THIS ARTICLE IV, WHETHER ARISING FROM ACTS OR OMISSIONS OCCURRING BEFORE OR AFTER SUCH ADOPTION. 6 8 SECTION 5. THE CORPORATION'S BOARD OF DIRECTORS MAY FROM TIME TO TIME DELEGATE (I) TO A COMMITTEE OF THE BOARD OF DIRECTORS OF THE CORPORATION OR TO INDEPENDENT LEGAL COUNSEL THE AUTHORITY TO DETERMINE WHETHER A DIRECTOR OR OFFICER OF THE CORPORATION, AND (II) TO ONE OR MORE OFFICERS OF THE CORPORATION THE AUTHORITY TO DETERMINE WHETHER AN EMPLOYEE OF THE CORPORATION OR ANY SUBSIDIARY, OTHER THAN A DIRECTOR OR OFFICER OF THE CORPORATION, IS ENTITLED TO INDEMNIFICATION OR ADVANCEMENT OF EXPENSES PURSUANT TO, AND IN ACCORDANCE WITH, APPLICABLE LAW AND THIS ARTICLE IV, SUBJECT TO SUCH CONDITIONS AND LIMITATIONS AS THE BOARD OF DIRECTORS MAY PRESCRIBE. ARTICLE V. FISCAL YEAR THE FISCAL YEAR SHALL BEGIN IN EACH CALENDAR YEAR ON THE MONDAY FOLLOWING THE SUNDAY WHICH IS NEAREST TO JULY 31, AND SHALL END ON THE SUNDAY WHICH IS NEAREST TO JULY 31 OF THE FOLLOWING YEAR. ARTICLE VI. CORPORATE SEAL THE BOARD OF DIRECTORS SHALL PROVIDE A SUITABLE SEAL, BEARING THE NAME OF THE CORPORATION, WHICH SEAL SHALL BE IN THE CHARGE OF THE SECRETARY; PROVIDED THAT THE USE OF A FACSIMILE OF SUCH SEAL IS HEREBY AUTHORIZED. ARTICLE VII. AMENDMENT THE BOARD OF DIRECTORS SHALL HAVE THE POWER TO MAKE, AMEND AND REPEAL THE BY-LAWS OF THE CORPORATION BY A VOTE OF A MAJORITY OF THE MEMBERS OF THE BOARD OF DIRECTORS AT THE TIME IN OFFICE AT ANY REGULAR OR SPECIAL MEETING OF THE BOARD OF DIRECTORS. THE STOCKHOLDERS, BY A MAJORITY OF THE VOTES CAST AT A MEETING OF THE STOCKHOLDERS, MAY ADOPT, ALTER, AMEND OR REPEAL THE BY-LAWS, WHETHER MADE BY THE BOARD OF DIRECTORS OR OTHERWISE. 7 EX-13 3 PAGES 27-49 OF THE COMPANY'S 1999 ANNUAL REPORT 1 MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION RESULTS OF OPERATIONS OVERVIEW The results for 1999 include a fourth quarter pre-tax restructuring charge of $36 million, net of a $5 million reversal of a prior period restructuring charge ($27 million after tax or $.06 per share). (All earnings per share amounts included in Management's Discussion and Analysis are presented on a diluted basis.) In addition, results for 1999 were impacted by fourth quarter pre-tax non-recurring costs of $22 million ($15 million after tax or $.03 per share). The non-recurring costs related to the restructuring program, unusual costs of terminated acquisition studies and expenses associated with the previously announced supply chain initiatives. Earnings from continuing operations in 1998 were impacted by a pre-tax restructuring charge of $262 million ($193 million after tax or $.42 per share) and a fourth quarter pre-tax gain of $14 million ($9 million after tax or $.02 per share) on the sale of Delacre, the company's European biscuit business. Excluding the impact of the restructuring charges, earnings from continuing operations declined 15% and earnings per share from continuing operations declined 12%. Excluding both the restructuring and non-recurring items, earnings from continuing operations declined 9% per share. The decline in earnings is primarily due to lower shipments of U.S. condensed soup as a result of the elimination of quarter-end promotions and increased marketing spending to support new business development and increased competitive activities. Net earnings in 1998 include a loss from discontinued operations ($18 million or $.04 per share), and the cumulative effect of adopting Emerging Issues Task Force consensus ruling on Issue 97-13, "Accounting for Costs Incurred in Connection with a Consulting Contract that Combines Business Process Reengineering and Information Technology Transformation" ($11 million or $.02 per share). SALES Sales in 1999 declined 4% to $6.42 billion from $6.70 billion. The decline was attributed to a 6% decrease due to divestitures, 1% due to currency, offset by a 2% increase from higher selling prices and 1% growth from acquisitions. Sales in 1998 increased 1% as follows: 4% increase from volume and new products, 2% from higher selling prices, 1% from acquisitions, offset by a 6% decline due to currency and divestitures. An analysis of net sales by segment follows:
% Change 1999/ 1998/ (millions) 1999 1998 1997 1998 1997 - -------------------------------------------------------------------------------- Soup and Sauces $ 4,423 $ 4,427 $ 4,171 -- 6 Biscuits and Confectionery 1,430 1,522 1,546 (6) (2) Away From Home 507 453 439 12 3 Other 126 343 520 (63) (34) Intersegment (62) (49) (62) -- -- - -------------------------------------------------------------------------------- $ 6,424 $ 6,696 $ 6,614 (4) 1 ================================================================================
Soup and Sauces remained flat versus 1998. Sales were impacted by a 4% decline in worldwide wet soup volume driven by an 8% decline in U.S. wet soup volume resulting from the elimination of quarter-end promotions. This decline was partially offset by strong consumer demand for ready to serve Chunky soups and Swanson broths. International soup volume increased 7%, primarily due to the fiscal 1998 acquisition of Liebig in France. Beverages, driven by V8 Splash, continued to deliver strong sales growth in 1999. U.S. sauces and prepared food sales were down versus the prior year. The Soup and Sauces sales growth in 1998 was led by worldwide wet soup volume growth of 4%, including U.S. wet soup volume growth of 1%. In the U.S., Campbell's condensed Chicken Noodle soup, ready to serve Chunky soups and Swanson broths all reported strong volume and sales gains in 1998. V8 Splash was successfully launched in the U.S. International wet soup continued to post volume gains in Canada, Germany, Australia and Japan. Liebig in France, acquired in December 1997, and Erasco also contributed to the sales growth. Biscuits and Confectionery reported a decline in sales compared to 1998 primarily due to the divestiture of Delacre in June 1998. Excluding the impact of divestitures and currency, sales increased 6% led by Godiva Chocolatier with expansion of new retail outlets in North America, Japan, and Europe. Arnotts in Australia reported sales growth due to increased sales of higher value products. Biscuits and Confectionery sales declined slightly in 1998 due to the divestiture of Delacre in June and the adverse impact of currency, particularly the weakness of the Australian dollar. Excluding the impact of the Delacre divestiture and currency, sales increased 7%. The increase was driven by Pepperidge Farm Goldfish crackers, Chocolate Chunk cookies and Swirl breads. Godiva Chocolatier 27 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION delivered double-digit sales growth and continued its expansion with new stores in North America and new distribution points in Japan. Arnotts, before the impact of currency, reported improved sales, reflecting recovering market share from 1997. Away From Home reported a 12% increase in sales in 1999 due in part to the acquisition of the Stockpot premium refrigerated soup brand in the first quarter of the year. The Away From Home sales increase in 1998 was led by Pace products, Prego entrees and V8 Splash. In addition, Away From Home successfully introduced soup merchandisers into convenience stores and college cafeterias. The decline in sales from Other was attributed to the full-year impact of the 1998 portfolio reconfiguration and the impact of the recent divestiture of Fresh Start Bakeries, Inc. In 1998, the company continued its portfolio reconfiguration and divested several non-strategic businesses, including Continental Sweets, a European confectionery and distribution business, Melbourne Mushrooms, an Australian mushroom business, and Spring Valley, an Australian beverage business. These divestitures and the impact of the 1997 divestitures led to the sales decline in Other. GROSS MARGIN Gross margin, defined as net sales less cost of products sold, decreased by $89 million in 1999 due to lower sales. As a percent of sales, gross margin was 52.5% in 1999, 51.7% in 1998, and 48.4% in 1997. The increases in gross margin percentage in 1999 and 1998 were due principally to cost savings generated from global procurement initiatives, continued productivity gains in manufacturing facilities, and the favorable impact of the portfolio reconfiguration strategy. MARKETING AND SELLING EXPENSES Marketing and selling expenses as a percent of sales were 25.4% in 1999, 22.7% in 1998, and 20.7% in 1997. The increase in 1999 was driven by consumer and trade promotion for V8 Splash, Chunky soup and Pepperidge Farm products and the growth in retail stores in the Godiva business. The increase in 1998 was primarily attributable to consumer promotion and advertising spending for U.S. wet soup, V8 beverages, Pepperidge Farm Goldfish and Milano cookies and Erasco products. GENERAL AND ADMINISTRATIVE EXPENSES Administrative expenses increased as a percent of sales to 4.7% from 4.5% in 1998. The increase was primarily due to investments in information systems, including costs associated with addressing the Year 2000 issue. In 1998, administrative expenses increased as a percent of sales to 4.5% from 4.1% in 1997 due to investments in information systems and consulting service fees. Research and development expenses as a percent of sales remain unchanged. Other expenses remained flat with 1998 as a result of higher amortization expense offset by lower incentive compensation costs and the non-recurring gain on the divestiture recorded in 1998. Other expenses declined significantly in 1998 from 1997 due to lower expenses associated with the company's long-term incentive plans and the gain on the divestiture of Delacre. OPERATING EARNINGS Segment operating earnings in 1999 increased 5% compared to 1998. Excluding the 1999 and 1998 restructuring charges of $36 million and $262 million, respectively, operating earnings decreased 10% in 1999. An analysis of operating earnings by segment follows:
% Change 1999/ 1998/ (millions) 1999(1) 1998(2) 1997(3) 1998 1997 - -------------------------------------------------------------------------------- Soup and Sauces $ 1,082 $ 1,109 $ 1,001 (2) 11 Biscuits and Confectionery 215 206 153 4 35 Away From Home 57 53 59 8 (10) Other (5) (85) (10) -- -- - -------------------------------------------------------------------------------- 1,349 1,283 1,203 5 7 - -------------------------------------------------------------------------------- Corporate (79) (35) (54) - -------------------------------------------------------------------------------- $ 1,270 $ 1,248 $ 1,149 ================================================================================
(1) Contributions to earnings by segment include the effect of a fourth quarter 1999 pre-tax restructuring charge of $36, net of a $5 reversal of a prior period restructuring charge, as follows: Soup and Sauces - $22, Biscuits and Confectionery - $1, and Other - $13. (2) Contributions to earnings by segment include the effect of a third quarter 1998 pre-tax restructuring charge of $262 as follows: Soup and Sauces - $135, Biscuits and Confectionery - $25, Away From Home - $4, and Other - $98. (3) Contributions to earnings by segment include the effect of a first quarter 1997 pre-tax restructuring charge of $204 as follows: Soup and Sauces - $134, Biscuits and Confectionery - $53, and Other - $17. Earnings from Soup and Sauces, excluding the restructuring charges, were down 11% in 1999, due to lower U.S. condensed soup shipments, increased marketing spending behind new business development, and weakness in sauces and prepared food categories. Earnings from Soup and Sauces, excluding the restructuring charges, were up 10% in 1998 due to sales growth in Campbell's condensed Chicken Noodle soup, ready to serve Chunky and Simply Home soups and Swanson broths. Our core businesses in Europe and Canada reported increased earnings. The Liebig acquisition, V8 Splash and Franco-American pastas and gravies also contributed to the earnings growth. In 1999, earnings from Biscuits and Confectionery, excluding the restructuring charges, were down 6% primarily due to increased marketing spending at Pepperidge Farm driven by the competitive environment in the cheese cracker category. 28 3 MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION In 1998, earnings from Biscuits and Confectionery increased 12% compared to fiscal 1997, excluding the restructuring charges. Excluding the impact of currency, earnings increased 18% led by Godiva, Pepperidge Farm and Arnotts. Godiva sales growth, Pepperidge Farm Swirl breads and Goldfish and Arnotts' market share recovery were the primary components of the growth. Earnings from Away From Home remained flat versus 1998, excluding the restructuring charges. The increase in sales was offset by costs associated with supply chain initiatives and the expansion of Campbell branded products beyond traditional markets. Excluding the restructuring charges, earnings from Away From Home declined slightly in 1998 due to investments in soup merchandisers and lower sales of non-soup products. Earnings from Other, excluding restructuring charges, declined 38% in 1999 due to the divestitures of several non-strategic businesses in 1998. Earnings improved in 1998, excluding the restructuring charges, primarily as a result of the decision to discontinue investment in Intelligent Quisine. The increase in corporate expenses in 1999 was primarily attributed to increases in unallocated general and administrative costs including Y2K expenses and other information system investments, and the costs of terminated acquisition studies. In 1998, corporate expenses were partially offset by a gain on divestiture. NON-OPERATING ITEMS Interest expense declined 3% in 1999 primarily due to lower interest rates. The increase in interest expense of 14% from 1997 to 1998 was primarily due to a full year of financing costs associated with the company's $2.5 billion share repurchase program that commenced in October 1996 with the "Dutch Auction" tender offer. This increase was partially offset by Vlasic Foods International Inc.'s assumption of the revolving credit facility obligation of $500 million in March 1998 in connection with the spin-off. The effective tax rate was 34% compared to 35.8% last year. Excluding the restructuring charges, the effective tax rate was 33.7% in 1999 and 34% in 1998. The 1999 rate was favorably impacted by a federal tax refund recorded during the year. In 1997, the effective tax rate was 36% as reported and 34.4% excluding the restructuring charge. DISCONTINUED OPERATIONS On March 30, 1998, the company completed the spin-off of its Specialty Foods segment to its shareowners as an independent publicly traded company (Vlasic Foods International Inc.). Accordingly, the company reported the net operating results and net assets as a discontinued operation. The 1998 loss from discontinued operations included eight months of operations, a third quarter 1998 restructuring charge of $22 million ($.05 per share) and spin-off costs of $38 million ($.08 per share). The restructuring program was designed to improve operational efficiency by closing certain U.S. and European administrative offices and production facilities. The spin-off costs primarily consisted of taxes and legal and advisory services incurred in connection with the transaction. In addition, 1997 earnings from discontinued operations included a first quarter restructuring charge of $8 million ($.01 per share). Earnings from discontinued operations, before restructuring charges and spin-off costs, were $42 million in 1998, and $86 million in 1997. Earnings in 1998 were adversely impacted by cattle supply issues in Argentina and competitive difficulties in the German specialty foods business. See Note 3 to the Consolidated Financial Statements for further discussion of discontinued operations. RESTRUCTURING CHARGES A restructuring charge included in earnings from continuing operations of $41 million ($30 million after tax or $.07 per share) was recorded in the fourth quarter 1999 to cover the costs of a restructuring and divestiture program approved in July 1999 by the company's Board of Directors. This charge relates to the streamlining of certain North American and European production and administrative facilities and the anticipated cost of a divestiture of a non-strategic business with annual sales of approximately $25 million. The restructuring charge includes approximately $20 million in cash charges primarily related to severance and employee benefit costs. The balance of the restructuring charge includes non-cash charges related to the disposition of plant assets and the divestiture. The company expects to complete the restructuring and divestiture program in 2000. The expected net cash outflows will not have a material impact on the company's liquidity. From this program, the company expects to realize annual pre-tax savings of approximately $21 million. A $5 million ($3 million after tax or $.01 per share) reversal of the 1998 restructuring charge was also recorded in the fourth quarter of 1999. The reversal reflects the net impact of changes in estimates and modifications to the original program. The initial charge for the third quarter 1998 program was $262 million ($193 million after tax or $.42 per share). This program was designed to improve operational efficiency by rationalizing certain U.S., European and Australian production and administrative facilities and divesting non-strategic businesses. Remaining spending under this program, which is primarily associated with employee benefit costs, is expected to be completed by the second quarter of 2000. 29 4 MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION In the first quarter of 1997, the company recorded a charge included in earnings from continuing operations of $204 million ($152 million after tax or $.31 per share) to cover the costs of a restructuring program. The program was designed to improve operational efficiency by closing various plants, reducing administrative and operational staff functions and divesting non-strategic businesses. See Note 6 to the Consolidated Financial Statements for further discussion of the programs. LIQUIDITY AND CAPITAL RESOURCES Strong cash flows from operations, a strong balance sheet and interest coverage demonstrate the company's continued financial strength. CASH FLOWS FROM OPERATIONS provided $932 million in 1999, compared to $902 million in 1998. Over the last three years, operating cash flows totaled approximately $3 billion. This strong cash generating capability provides the company with substantial financial flexibility in meeting operating and investing objectives and in executing the company's ongoing share repurchase program. CAPITAL EXPENDITURES were $297 million in 1999, representing an increase of $41 million over 1998. The increase was due to capital costs associated with plant reconfiguration. Capital expenditures are projected to be approximately $320 million in 2000. ACQUISITIONS of $105 million in 1999 consisted of the Stockpot premium refrigerated soup business, which is predominantly a U.S. food service business. The acquisition was funded through cash generated from operations and short-term and long-term borrowings. SALE OF BUSINESSES consisted of Fresh Start Bakeries, Inc., which was divested in May 1999. LONG-TERM BORROWINGS increased in 1999 primarily due to the issuance of $300 million 4.75% notes due October 31, 2003. This issuance was the third draw down on the company's $1 billion shelf registration. The proceeds of these notes were used primarily to repay short-term borrowings. A balance of $100 million remains available under the shelf registration. SHORT-TERM BORROWINGS increased over 1998 primarily due to funding for the company's share repurchase program. The company has financial resources available, including unconditional lines of credit totaling approximately $1.5 billion, and has ready access to financial markets around the world. The pre-tax interest coverage ratio, before the restructuring charges, was 6.9 for 1999 compared to 7.9 for 1998. DIVIDEND PAYMENTS increased $19 million or 5% to $386 million in 1999, compared to $367 million in 1998. Dividends declared in 1999 totaled $.885 per share, up from $.823 per share in 1998. The 1999 fourth quarter rate was $.225 per share. CAPITAL STOCK REPURCHASES totaled 21.8 million shares at a cost of $1.0 billion during 1999, compared to repurchases of 12.5 million shares at a cost of $669 million in 1998. The company's Board of Directors approved a new three-year $2.0 billion share repurchase program in 1998. By repurchasing shares, the company expects to utilize existing cash and debt capacity to lower its cost of capital and increase returns to shareowners. The company's long-term strategy is to repurchase approximately 2% of its outstanding shares annually. TOTAL ASSETS declined 2% to $5.5 billion primarily due to lower balances of accounts receivable and deferred tax assets in 1999. TOTAL LIABILITIES increased to $5.3 billion, versus $4.8 billion in 1998 due to higher debt levels. INFLATION Inflation during recent years has not had a significant effect on the company. The company mitigates the effects of inflation by aggressively pursuing cost productivity initiatives, including global procurement strategies, and managing capital investments in its manufacturing and administrative facilities. MARKET RISK SENSITIVITY The principal market risks to which the company is exposed are changes in interest rates and foreign currency exchange rates. In addition, the company is exposed to equity price changes related to certain employee compensation obligations. The company manages its exposure to changes in interest rates by optimizing the use of variable-rate and fixed-rate debt and by utilizing interest rate swaps in order to maintain its variable-to-total debt ratio within targeted guidelines. International operations, which account for approximately 25% of 1999 net sales, are concentrated principally in Germany, France, the United Kingdom, Canada and Australia. The company manages its foreign currency exposures by borrowing in various foreign 30 5 MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION currencies, utilizing cross-currency swaps and forward contracts and purchasing foreign currency option contracts. Swap, forward and option contracts are entered into for periods consistent with related underlying exposures and do not constitute positions independent of those exposures. The company does not enter into contracts for speculative purposes and does not use leveraged instruments. The information below summarizes the company's market risks associated with debt obligations and other significant financial instruments as of August 1, 1999. Fair values included herein have been determined based on quoted market prices. The information presented below should be read in conjunction with Notes 18 and 20 to the Consolidated Financial Statements. For debt obligations, the table below presents principal cash flows and related interest rates by fiscal year of maturity. Variable interest rates disclosed represent the weighted average rates of the portfolio at the period end. For interest rate swaps, the table presents the notional amounts and related interest rates by fiscal year of maturity. For these swaps, the variable rates presented are the average forward rates for the term of each contract. EXPECTED FISCAL YEAR OF MATURITY (US$ equivalents in millions)
There- Fair 2000 2001 2002 2003 2004 after Total Value - ------------------------------------------------------------------------------------------------------------------------ DEBT Fixed rate $ 157 $115 $12 $300 $400(1) $503 $1,487 $1,512 Weighted average interest rate 5.74% 6.98% 5.40% 6.15% 4.97% 7.68% 6.36% - ------------------------------------------------------------------------------------------------------------------------ Variable rate $1,830 $1,830 $1,830 Weighted average interest rate 5.09% 5.09% - ------------------------------------------------------------------------------------------------------------------------ INTEREST RATE SWAPS Variable to fixed $ 100(2) $ 100 $ (2) Average pay rate 8.24% 8.24% Average receive rate 5.05% 5.05% - ------------------------------------------------------------------------------------------------------------------------ Fixed to variable $ 150(3) $ 150 $ 4 Average pay rate 4.52% 4.52% Average receive rate 5.76% 5.76% - ------------------------------------------------------------------------------------------------------------------------
(1) $100 callable in 2001 (2) Hedges commercial paper borrowings (3) Hedges 5.76% notes due in 2000 As of August 2, 1998, fixed-rate debt of $1.5 billion was outstanding with an average interest rate of 6.40%, and variable-rate debt of $1.1 billion with an average interest rate of 5.51% was outstanding. The interest rate swaps described above were also outstanding at August 2, 1998. The company is exposed to foreign exchange risk as a result of transactions in currencies other than the functional currency of particular subsidiaries. The company utilizes foreign currency forward purchase and sale contracts in order to hedge these exposures. The table below summarizes the foreign currency forward contracts outstanding with the weighted average contract exchange rates as of August 1, 1999. FORWARD EXCHANGE CONTRACTS (US$ equivalents in millions)
Average Contract Contractual Amount Exchange Rate - --------------------------------------------------------------------- Receive Euro/Pay US$ $101 1.06 Receive GBP/Pay Euro $ 38 .67 Receive AUD/Pay US$ $ 9 .65 Receive US$/Pay JPY $ 9 118.08 Receive GBP/Pay US$ $ 7 1.59 - ---------------------------------------------------------------------
The company has an additional $13 million in a number of smaller contracts to purchase or sell various other currencies, principally Canadian, as of August 1, 1999. The aggregate fair value of the contracts, which is not material to any individual contract, was ($1) million as of August 1, 1999. Total forward exchange contracts outstanding as of August 2, 1998 were $287 million. 31 6 MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION The company is also exposed to foreign currency exchange risk related to subsidiary debt which is denominated in currencies other than the functional currency of those businesses. The Cross-Currency Swaps table summarizes the swaps outstanding as of August 1, 1999, which hedge these exposures. The notional amounts of each currency and the related weighted average forward interest rates are presented in the Cross-Currency Swaps table. CROSS-CURRENCY SWAPS (US$ equivalents in millions)
Interest Notional Rate Value - ------------------------------------------------------------- Pay fixed AUD 6.22% Receive fixed US$ 6.66% $ 35 - ------------------------------------------------------------- Pay fixed DM 4.09% Receive fixed US$ 6.79% $107 - ------------------------------------------------------------- Pay variable FrF 3.43% Receive variable US$ 6.07% $110 - ------------------------------------------------------------- Pay fixed GBP 6.71% Receive fixed US$ 6.79% $ 66 - -------------------------------------------------------------
The company has additional contracts with a notional value of $15 million outstanding at August 1, 1999. The aggregate fair value of the contracts was $3 million as of August 1, 1999. All contracts expire in 2000, except the variable French Franc contract which expires in 2003. The notional amount and fair value of cross-currency contracts outstanding at August 2, 1998 were $405 million and $1 million, respectively. These contracts expired in 1999, except the variable French Franc contract included in the table above. The company has swap contracts outstanding as of August 1, 1999, which hedge a portion of exposures relating to certain employee compensation liabilities linked to the total return of the Standard & Poor's 500 Index or to the total return of the company's capital stock. Under these contracts, the company pays variable interest rates and receives from the counterparty either the Standard & Poor's 500 Index total return or the total return on company capital stock. The notional value of the contract which includes the return on the Standard & Poor's 500 Index was $26 million at August 1, 1999, and $21 million at August 2, 1998. The average forward interest rate applicable to this contract, which expires in 2000, is 5.19% at August 1, 1999. The notional value of the contract which includes the total return on company capital stock was $76 million at August 1, 1999, and $122 million at August 2, 1998. The forward interest rate applicable to this contract, which expires in 2003, is 5.28% at August 1, 1999. The net cost to settle these contracts was $14 million at August 1, 1999. Gains and losses on the contracts are recognized as adjustments to the carrying value of the underlying obligations. In 1999, the company entered into a forward stock purchase contract to partially hedge the company's exposure from its stock option program. Under the contract, which matures in 2004, the company may repurchase 11 million shares at an average price of approximately $47 per share. See Note 21 to the Consolidated Financial Statements for further discussion of the contract. The company's utilization of financial instruments in managing market risk exposures described above is consistent with the prior year. Changes in the portfolio of financial instruments are a function of the results of operations and market effects and the company's acquisition and divestiture activities. YEAR 2000 Historically, certain computer programs were written using two digits rather than four to define the applicable year. Accordingly, the company's software may recognize a date using "00" as 1900 rather than the year 2000, which could result in computer systems failures or miscalculations, commonly referred to as the Year 2000 ("Y2K") issue. The Y2K issue can arise at any point in the company's supply, manufacturing, processing, distribution and financial chains. Incomplete or untimely resolution of the Y2K issue by the company, key suppliers, customers and other parties could have a material adverse effect on the company's results of operations, financial condition and cash flows. To address the Y2K issue, the company established a Worldwide Year 2000 Business Action Council, led by an Executive Steering Committee of the company's senior management, including representatives of each of the company's business segments and corporate functions, to oversee and regularly review the status of the readiness plan discussed below. In addition, the company established a Worldwide Project Office responsible for the day-to-day oversight and coordination of the Y2K remediation, replacement and testing of business systems. This project office reports to the company's Chief Information Officer. The company's plan for addressing the Y2K issue was divided into three major phases: Business Systems Inventory and Assessment, Remediation and Replacement, and Testing. BUSINESS SYSTEMS INVENTORY AND ASSESSMENT The internal inventory portion of this phase, which commenced in 1997, was designed to identify internal business systems that were susceptible to system failure or processing errors as a result of the Y2K issue. This phase is complete. 32 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Approximately 700 worldwide information technology (IT) business systems were inventoried and approximately 200 were Y2K compliant and 500 were identified as non-compliant. It was determined that approximately 400 of the non-compliant systems required remediation and the remaining 100 systems would be retired or replaced. In addition, the company has completed the inventory and assessment of its non-information technology (Non-IT) systems. The remediation and replacement of these systems, which include manufacturing production lines and equipment, elevators, heating, ventilation and air conditioning systems and water treatment systems, is included in the remediation and replacement plan discussed below. As part of this phase, significant service providers, vendors, suppliers, customers and governmental entities that are believed to be critical to business operations after January 1, 2000, were identified and steps were undertaken to ascertain their stage of Y2K readiness through questionnaires, interviews, on-site visits and other available means. REMEDIATION AND REPLACEMENT The company developed a remediation and replacement plan for all affected systems including IT and Non-IT systems. The company's plan established priorities for remediation or replacement. The business systems considered most critical to ongoing operations were given the highest priority. The company prioritized its business systems into "Mission Critical" and "All Other." "Mission Critical" systems are defined as business systems such as Business Planning and Control Process, Sales Order Billing and Warehouse Management systems that, if shut down or interrupted, could have a material adverse effect on the company's results of operations, financial condition and cash flows. "All Other" systems are defined as business systems such as Data Warehouse and Job Bidding systems that, if shut down or interrupted, may have an adverse impact on the company. Internal and external resources were used to execute the plan. Remediation and replacement of "Mission Critical" systems and "All Other" systems were substantially completed on schedule by the fourth quarter 1999. TESTING Testing was performed in conjunction with remediation and replacement. The company's efforts in this phase include testing by users and approval by appropriate local and Y2K project management that the remediated or replaced systems are Y2K compliant. The company has completed initial testing and all systems have been returned to production. Additional safeguard tests will continue through the first quarter 2000. Because the company's Y2K compliance is dependent upon key third parties also being Y2K compliant on a timely basis, there can be no guarantee that the company's efforts will prevent a material adverse impact on its results of operations, financial condition and cash flows. The possible consequences to the company or its business partners not being fully Y2K compliant include temporary plant closings, delays in the delivery of finished products, delays in the receipt of key ingredients, containers and packaging supplies, invoice and collection errors and inventory and supply obsolescence. These consequences could have a material adverse effect on the company's results of operations, financial condition and cash flows if the company is unable to conduct its business in the ordinary course as a result of the Y2K issue. The company believes that its readiness program, including the contingency plans discussed below, should significantly reduce the adverse effect any such disruptions may have. The company has developed contingency plans to mitigate the potential disruptions that may result from the Y2K issue. These plans include identifying and securing alternate suppliers of ingredients, containers, packaging materials and utilities, adjusting manufacturing facility production, shutdown and start-up schedules, stockpiling of finished product inventories and other measures considered appropriate by management. These contingency plans, and the related cost estimates, will be continually monitored and refined, as additional information becomes available. The company currently estimates that the aggregate cost of its Y2K efforts will be approximately $45 million, of which $37 million has been incurred to date. These costs, except for capital costs of approximately $3 million, are being expensed as incurred. All costs are being funded through operating cash flows. The company incurred Y2K costs of approximately $23 million in fiscal 1999 and expects to incur Y2K costs of approximately $8 million in fiscal 2000.
Estimated Current Cost Costs Costs to (millions) Estimates Incurred Complete - ---------------------------------------------------------- COMPONENTS External Consulting $27 (20) $7 Hardware/Software Upgrades 12 (11) 1 Other 6 (6) - - ---------------------------------------------------------- $45 (37) $8 ==========================================================
The company believes that such costs will not have a material impact on the company's results of operations, financial condition or cash flows. 33 8 MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION RECENT DEVELOPMENTS In June 1998, Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities," was issued and is expected to be effective for fiscal years beginning after June 15, 2000. The standard requires that all derivative instruments be recorded on the balance sheet at fair value. Changes in the fair value of derivatives are recorded in earnings or other comprehensive income, based on whether the instrument is designated as part of a hedge transaction and, if so, the type of hedge transaction. The company is currently assessing the impact of the adoption on the company's financial statements. Based on the company's current portfolio, it is not expected that adoption of this statement will have a material effect on the company's results of operations, financial condition or cash flows. FORWARD-LOOKING STATEMENTS This 1999 Annual Report contains certain statements which reflect the company's current expectations regarding future results of operations, economic performance, financial condition and achievements of the company. The company has tried, wherever possible, to identify these forward-looking statements by using words such as "anticipate," "believe," "estimate," "expect" and similar expressions. These statements reflect the company's current plans and expectations and are based on information currently available to it. They rely on a number of assumptions and estimates which could be inaccurate and which are subject to risks and uncertainties. The company wishes to caution the reader that the following important factors and those important factors described elsewhere in the commentary, or in other Securities and Exchange Commission filings of the company, could affect the company's actual results and could cause such results to vary materially from those expressed in any forward-looking statements made by, or on behalf of, the company: - - the impact of strong competitive response to the company's efforts to leverage its brand power with product innovation, promotional programs and new advertising; - - the inherent risks in the marketplace associated with new product introductions, including uncertainties about trade and consumer acceptance; - - the company's ability to achieve sales and earnings forecasts, which are based on assumptions about sales volume and product mix; - - the continuation of the company's successful record of integrating acquisitions into its existing operations and the availability of new acquisition and alliance opportunities that build shareowner wealth; - - the company's ability to achieve its cost savings objectives, including the projected outcome of supply chain management programs; - - the difficulty of predicting the pattern of inventory movements by the company's trade customers; - - the impact of unforeseen economic and political changes in international markets where the company competes such as currency exchange rates, inflation rates, recession, foreign ownership restrictions and other external factors over which the company has no control; and - - the ability of the company and its key service providers, vendors, suppliers, customers and governmental entities to replace, modify or upgrade computer systems in ways that adequately address the Y2K issue. Specific factors that might cause actual results to vary materially from the results anticipated include the ability to identify and correct all relevant computer codes and embedded chips, unanticipated difficulties or delays in the implementation of the company's remediation plans and the ability of third parties to adequately address their own Y2K issues. This discussion of uncertainties is by no means exhaustive but is designed to highlight important factors that may impact the company's outlook. 34 9 CONSOLIDATED STATEMENTS OF EARNINGS (millions, except per share amounts)
1999 1998 1997 52 WEEKS 52 weeks 53 weeks - ------------------------------------------------------------------------------------------------------------------------ NET SALES $6,424 $6,696 $6,614 - ------------------------------------------------------------------------------------------------------------------------ Costs and expenses Cost of products sold 3,050 3,233 3,412 Marketing and selling expenses 1,634 1,518 1,370 Administrative expenses 304 300 271 Research and development expenses 66 71 68 Other expenses (Note 7) 64 64 140 Restructuring charges (Note 6) 36 262 204 - ------------------------------------------------------------------------------------------------------------------------ Total costs and expenses 5,154 5,448 5,465 - ------------------------------------------------------------------------------------------------------------------------ EARNINGS BEFORE INTEREST AND TAXES 1,270 1,248 1,149 Interest expense (Note 8) 184 189 166 Interest income 11 14 8 - ------------------------------------------------------------------------------------------------------------------------ Earnings before taxes 1,097 1,073 991 Taxes on earnings (Note 11) 373 384 357 - ------------------------------------------------------------------------------------------------------------------------ EARNINGS FROM CONTINUING OPERATIONS 724 689 634 EARNINGS (LOSS) FROM DISCONTINUED OPERATIONS (NOTE 3) - (18) 79 CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE (NOTE 4) - (11) - - ------------------------------------------------------------------------------------------------------------------------ NET EARNINGS $ 724 $ 660 $ 713 ======================================================================================================================== PER SHARE - BASIC Earnings from continuing operations $ 1.64 $ 1.52 $ 1.34 Earnings (loss) from discontinued operations - (.04) .17 Cumulative effect of change in accounting principle - (.02) - - ------------------------------------------------------------------------------------------------------------------------ NET EARNINGS $ 1.64 $ 1.46 $ 1.51 ======================================================================================================================== Weighted average shares outstanding - basic 441 454 472 ======================================================================================================================== PER SHARE - ASSUMING DILUTION Earnings from continuing operations $ 1.63 $ 1.50 $ 1.33 Earnings (loss) from discontinued operations - (.04) .16 Cumulative effect of change in accounting principle - (.02) - - ------------------------------------------------------------------------------------------------------------------------ NET EARNINGS $ 1.63 $ 1.44 $ 1.49 ======================================================================================================================== Weighted average shares outstanding - assuming dilution 445 460 478 ========================================================================================================================
See accompanying Notes to Consolidated Financial Statements. 35 10 CONSOLIDATED BALANCE SHEETS (millions, except per share amounts)
August 1, 1999 August 2, 1998 CURRENT ASSETS Cash and cash equivalents $ 6 $ 16 Accounts receivable (Note 12) 541 656 Inventories (Note 13) 615 564 Other current assets (Note 14) 132 204 - ------------------------------------------------------------------------------------------------------------------------- Total current assets 1,294 1,440 - ------------------------------------------------------------------------------------------------------------------------- PLANT ASSETS, NET OF DEPRECIATION (NOTE 15) 1,726 1,723 INTANGIBLE ASSETS, NET OF AMORTIZATION (NOTE 16) 1,910 1,904 OTHER ASSETS (NOTE 17) 592 566 - ------------------------------------------------------------------------------------------------------------------------- Total assets $5,522 $5,633 ========================================================================================================================= CURRENT LIABILITIES Notes payable (Note 18) $1,987 $1,401 Payable to suppliers and others 511 506 Accrued liabilities 415 638 Dividend payable 97 95 Accrued income taxes 136 163 - ------------------------------------------------------------------------------------------------------------------------- Total current liabilities 3,146 2,803 - ------------------------------------------------------------------------------------------------------------------------- LONG-TERM DEBT (NOTE 18) 1,330 1,169 NONPENSION POSTRETIREMENT BENEFITS (NOTE 10) 394 405 OTHER LIABILITIES (NOTE 19) 417 382 - ------------------------------------------------------------------------------------------------------------------------- Total liabilities 5,287 4,759 - ------------------------------------------------------------------------------------------------------------------------- SHAREOWNERS' EQUITY (NOTE 21) Preferred stock; authorized 40 shares; none issued - - Capital stock, $.0375 par value; authorized 560 shares; issued 542 shares 20 20 Capital surplus 382 395 Earnings retained in the business 4,041 3,706 Capital stock in treasury, 113 shares in 1999 and 94 shares in 1998, at cost (4,058) (3,083) Accumulated other comprehensive income (150) (164) - ------------------------------------------------------------------------------------------------------------------------- Total shareowners' equity 235 874 - ------------------------------------------------------------------------------------------------------------------------- Total liabilities and shareowners' equity $5,522 $5,633 =========================================================================================================================
See accompanying Notes to Consolidated Financial Statements. 36 11 CONSOLIDATED STATEMENTS OF CASH FLOWS (millions)
1999 1998 1997 - -------------------------------------------------------------------------------------------------------------------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net earnings, excluding discontinued operations $ 724 $ 678 $ 634 Non-cash charges to net earnings Cumulative effect of accounting change - 11 - Restructuring charges 36 262 204 Depreciation and amortization 255 261 283 Deferred taxes 78 (21) (33) Other, net 5 53 95 Changes in working capital Accounts receivable 108 (159) (37) Inventories (58) (29) (48) Other current assets and liabilities (216) (154) (89) - -------------------------------------------------------------------------------------------------------------------------- NET CASH PROVIDED BY OPERATING ACTIVITIES 932 902 1,009 - -------------------------------------------------------------------------------------------------------------------------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of plant assets (297) (256) (252) Sales of plant assets 9 148 41 Businesses acquired (105) (478) (228) Sales of businesses 103 200 207 Other, net (32) (5) 4 - -------------------------------------------------------------------------------------------------------------------------- NET CASH USED IN INVESTING ACTIVITIES (322) (391) (228) - -------------------------------------------------------------------------------------------------------------------------- CASH FLOWS FROM FINANCING ACTIVITIES: Long-term borrowings 323 305 524 Repayments of long-term borrowings (8) (36) (21) Short-term borrowings 1,537 1,847 1,306 Repayments of short-term borrowings (1,111) (2,187) (779) Dividends paid (386) (367) (350) Treasury stock purchases (1,026) (669) (1,696) Treasury stock issuances 57 102 106 - -------------------------------------------------------------------------------------------------------------------------- NET CASH USED IN FINANCING ACTIVITIES (614) (1,005) (910) - -------------------------------------------------------------------------------------------------------------------------- NET CASH PROVIDED BY DISCONTINUED OPERATIONS - 511 105 - -------------------------------------------------------------------------------------------------------------------------- EFFECT OF EXCHANGE RATE CHANGES ON CASH (6) (18) 13 - -------------------------------------------------------------------------------------------------------------------------- NET CHANGE IN CASH AND CASH EQUIVALENTS (10) (1) (11) CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR 16 17 28 - -------------------------------------------------------------------------------------------------------------------------- CASH AND CASH EQUIVALENTS - END OF YEAR $ 6 $ 16 $ 17 ==========================================================================================================================
See accompanying Notes to Consolidated Financial Statements. 37 12 CONSOLIDATED STATEMENTS OF SHAREOWNERS' EQUITY (millions, except per share amounts)
Capital stock ----------------------------------------- Earnings Accumulated Total Issued In treasury retained other com- share- ---------------- ------------------- Capital in the prehensive owners' Shares Amount Shares Amount surplus business income equity - ------------------------------------------------------------------------------------------------------------------------------- Balance at July 28, 1996 542 $ 20 (48) $ (779) $ 228 $ 3,211 $ 62 $ 2,742 - ------------------------------------------------------------------------------------------------------------------------------- Comprehensive income Net earnings 713 713 Foreign currency translation adjustments (112) (112) Dividends ($.750 per share) (353) (353) Treasury stock purchased (40) (1,696) (1,696) Treasury stock issued under management incentive and stock option plans 4 16 110 126 - ------------------------------------------------------------------------------------------------------------------------------- Balance at August 3, 1997 542 20 (84) (2,459) 338 3,571 (50) 1,420 - ------------------------------------------------------------------------------------------------------------------------------- Comprehensive income Net earnings 660 660 Foreign currency translation adjustments (114) (114) Dividends ($.823 per share) (375) (375) Treasury stock purchased (13) (669) (669) Treasury stock issued under management incentive and stock option plans 3 45 57 102 Spin-off of Specialty Foods segment (150) (150) - ------------------------------------------------------------------------------------------------------------------------------- Balance at August 2, 1998 542 20 (94) (3,083) 395 3,706 (164) 874 - ------------------------------------------------------------------------------------------------------------------------------- COMPREHENSIVE INCOME NET EARNINGS 724 724 FOREIGN CURRENCY TRANSLATION ADJUSTMENTS 14 14 DIVIDENDS ($.885 PER SHARE) (389) (389) TREASURY STOCK PURCHASED (22) (1,026) (1,026) TREASURY STOCK ISSUED UNDER MANAGEMENT INCENTIVE AND STOCK OPTION PLANS 3 51 (13) 38 - ------------------------------------------------------------------------------------------------------------------------------- BALANCE AT AUGUST 1, 1999 542 $ 20 (113) $(4,058) $ 382 $ 4,041 $(150) $ 235 ===============================================================================================================================
See accompanying Notes to Consolidated Financial Statements. 38 13 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (dollars in millions) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONSOLIDATION The consolidated financial statements include the accounts of the company and its majority-owned subsidiaries. Significant intercompany transactions are eliminated in consolidation. Investments of 20% or more in affiliates are accounted for by the equity method. FISCAL YEAR The company's fiscal year ends on the Sunday nearest July 31. There were 52 weeks in 1999 and 1998, and 53 weeks in 1997. CASH AND CASH EQUIVALENTS All highly liquid debt instruments purchased with a maturity of three months or less are classified as cash equivalents. INVENTORIES Substantially all domestic inventories are priced at the lower of cost or market, with cost determined by the last in, first out (LIFO) method. Other inventories are priced at the lower of average cost or market. PLANT ASSETS Plant assets are stated at historical cost. Alterations and major overhauls, which extend the lives or increase the capacity of plant assets, are capitalized. The amounts for property disposals are removed from plant asset and accumulated depreciation accounts and any resultant gain or loss is included in earnings. Ordinary repairs and maintenance are charged to operating costs. DEPRECIATION Depreciation provided in Costs and expenses is calculated using the straight-line method. Buildings and machinery and equipment are depreciated over periods not exceeding 45 years and 15 years, respectively. Accelerated methods of depreciation are used for income tax purposes in certain jurisdictions. INTANGIBLE ASSETS Intangible assets consist principally of excess purchase price over net assets of businesses acquired and trademarks. Intangibles are amortized on a straight-line basis over periods not exceeding 40 years. ASSET VALUATION The company periodically reviews the recoverability of plant assets and intangibles based principally on an analysis of undiscounted cash flows. DERIVATIVE FINANCIAL INSTRUMENTS The company uses derivative financial instruments primarily for purposes of hedging exposures to fluctuations in interest rates, foreign currency exchange rates and equity-linked employee benefit obligations. The differential to be paid or received on interest rate swaps is recognized as an adjustment to interest expense. Gains and losses on hedges of existing assets or liabilities are included in the carrying amounts of those assets or liabilities and ultimately recognized in earnings. Gains and losses related to qualifying hedges of firm commitments or anticipated transactions are deferred and are recognized in earnings or as adjustments of carrying amounts when the hedged transaction occurs. USE OF ESTIMATES Generally accepted accounting principles require management to make estimates and assumptions that affect assets and liabilities, contingent assets and liabilities, and revenues and expenses. Actual results could differ from those estimates. RECLASSIFICATIONS Prior year financial statements and footnotes have been reclassified to conform to the current year presentation. 2. NEW ACCOUNTING STANDARDS In 1999, the company adopted Statement of Financial Accounting Standards ("SFAS") No. 130, "Reporting Comprehensive Income," issued in June 1997. SFAS No. 130 establishes a standard for reporting of comprehensive income, which is comprised of net income and other comprehensive income items, in the financial statements. Other comprehensive income includes items recorded in shareowners' equity that are not the result of transactions with shareowners, such as foreign currency translation adjustments. Prior year financial statements have been reclassified to conform to SFAS No. 130. 3. DISCONTINUED OPERATIONS Effective March 30, 1998, the company spun off its Specialty Foods segment to its shareowners as an independent publicly traded company. The spin-off qualified as a tax-free distribution to U.S. shareholders. Shareowners of record as of March 9, 1998 received one share of common stock of the new company, Vlasic Foods International Inc. (Vlasic), for every ten shares of Campbell Soup Company capital stock. Results of discontinued operations were as follows:
1998(1) 1997 - -------------------------------------------------------------------------------- Net sales $ 809 $1,352 ================================================================================ Earnings before taxes $ 41 $ 116 Taxes on earnings 21 37 - -------------------------------------------------------------------------------- Earnings from operations 20 79 Spin-off costs 38 -- - -------------------------------------------------------------------------------- Earnings (loss) from discontinued operations $ (18) $ 79 ================================================================================
(1) Represents the eight-month period ended March 29, 1998. 39 14 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (dollars in millions) 4. CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE In 1998, the company adopted the provisions of the Emerging Issues Task Force consensus ruling on Issue 97-13, "Accounting for Costs Incurred in Connection with a Consulting Contract that Combines Business Process Reengineering and Information Technology Transformation." The unamortized balance of previously capitalized business process reengineering costs was written off as a cumulative effect of change in accounting principle of $11 or $.02 per share, net of an income tax benefit of approximately $7. 5. BUSINESS AND GEOGRAPHIC SEGMENT INFORMATION The company operates in three business segments: Soup and Sauces, Biscuits and Confectionery and Away From Home. The segments are managed as strategic units due to their distinct manufacturing processes, marketing strategies and distribution channels. The Soup and Sauces segment includes the worldwide soup businesses, Prego spaghetti sauces, Pace Mexican sauces, Franco-American pastas and gravies, Swanson broths, and V8 beverages. The Biscuits and Confectionery segment includes the Godiva Chocolatier, Pepperidge Farm, Arnotts and Delacre businesses. The Delacre business was divested in June 1998. Away From Home represents the distribution of products, including Campbell's soups and Campbell's Specialty Kitchen entrees, to the food service and home meal replacement markets. Accounting policies for measuring segment assets and earnings before interest and taxes are substantially consistent with those described in the summary of significant accounting policies included in Note 1. The company evaluates segment performance based on earnings before interest and taxes, excluding certain non-recurring charges. Away From Home products are principally produced by the tangible assets of the company's other segments. Accordingly, plant assets have not been allocated to the Away From Home segment. Depreciation and amortization are allocated to Away From Home based on budgeted production hours. Transfers between segments are recorded at cost plus markup or at market. BUSINESS SEGMENTS
Biscuits & Away Corporate Soup & Confec- From & Elimi- 1999 Sauces tionery Home Other(1) nations(2) Total - --------------------------------------------------------------------------------------------------------- NET SALES $4,423 1,430 507 126 (62) $6,424 EARNINGS BEFORE INTEREST AND TAXES(3) $1,082 215 57 (5) (79) $1,270 DEPRECIATION AND AMORTIZATION $ 128 84 13 9 21 $ 255 CAPITAL EXPENDITURES $ 164 70 32 10 21 $ 297 SEGMENT ASSETS $2,975 1,461 349 38 699 $5,522 - ---------------------------------------------------------------------------------------------------------
(1) Represents financial information of certain prepared convenience food businesses not categorized as reportable segments. (2) Represents elimination of intersegment sales, unallocated corporate expenses and unallocated assets, including corporate offices, deferred taxes and pension accounts. (3) Contributions to earnings before interest and taxes include the effects of a fourth quarter restructuring charge of $36, net of a $5 reversal of a prior period restructuring charge, as follows: Soup and Sauces - $22, Biscuits and Confectionery - $1, and Other - $13.
Biscuits & Away Corporate Soup & Confec- From & Elimi- 1998 Sauces tionery Home Other(1) nations(2) Total - --------------------------------------------------------------------------------------------------------- Net sales $4,427 1,522 453 343 (49) $6,696 Earnings before interest and taxes(3) $1,109 206 53 (85) (35) $1,248 Depreciation and amortization $ 132 86 11 15 17 $ 261 Capital expenditures $ 135 87 -- 14 20 $ 256 Segment assets $3,105 1,402 202 208 716 $5,633 - ---------------------------------------------------------------------------------------------------------
(1) Represents financial information of certain prepared convenience food businesses not categorized as reportable segments. (2) Represents elimination of intersegment sales, unallocated corporate expenses and unallocated assets, including corporate offices, deferred taxes and pension accounts. (3) Contributions to earnings before interest and taxes by segment include the effects of a third quarter restructuring charge of $262 as follows: Soup and Sauces - $135, Biscuits and Confectionery - $25, Away From Home - $4, and Other - $98.
Biscuits & Away Corporate Soup & Confec- From & Elimi- 1997 Sauces tionery Home Other(1) nations(2) Total - --------------------------------------------------------------------------------------------------------- Net sales $4,171 1,546 439 520 (62) $6,614 Earnings before interest and taxes(3) $1,001 153 59 (10) (54) $1,149 Depreciation and amortization $ 133 102 11 18 19 $ 283 Capital expenditures $ 103 90 -- 22 37 $ 252 Segment assets(4) $2,790 1,510 230 405 629 $5,564 - ---------------------------------------------------------------------------------------------------------
(1) Represents financial information of certain prepared convenience food businesses not categorized as reportable segments. (2) Represents elimination of intersegment sales, unallocated corporate expenses and unallocated assets, including corporate offices, deferred taxes and pension accounts. (3) Contributions to earnings before interest and taxes by segment include the effects of a first quarter restructuring charge of $204 as follows: Soup and Sauces - $134, Biscuits and Confectionery - $53, and Other - $17. (4) Segment assets exclude net assets of discontinued operations of $632. 40 15 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (dollars in millions) GEOGRAPHIC AREA INFORMATION The following presents information about operations in different geographic areas:
1999 1998 1997 - -------------------------------------------------------------------------------- Net sales United States $ 4,804 $ 4,850 $ 4,623 Europe 630 859 895 Australia/Asia Pacific 616 627 613 Other countries 438 417 612 Adjustments and eliminations (64) (57) (129) - -------------------------------------------------------------------------------- Consolidated $ 6,424 $ 6,696 $ 6,614 ================================================================================
1999 1998 1997 - -------------------------------------------------------------------------------- Earnings before interest and taxes United States $ 1,196 $ 1,124 $ 1,062 Europe 32 36 39 Australia/Asia Pacific 49 50 26 Other countries 72 73 76 - -------------------------------------------------------------------------------- Segment earnings before interest and taxes 1,349 1,283 1,203 Unallocated corporate expenses (79) (35) (54) - -------------------------------------------------------------------------------- Consolidated $ 1,270 $ 1,248 $ 1,149 ================================================================================
1999 1998 1997 - -------------------------------------------------------------------------------- Identifiable assets United States $ 2,742 $ 2,820 $ 2,830 Europe 614 679 655 Australia/Asia Pacific 991 925 919 Other countries 476 493 531 Corporate 699 716 629 Net assets of discontinued operations -- -- 632 - -------------------------------------------------------------------------------- Consolidated $ 5,522 $ 5,633 $ 6,196 ================================================================================
Transfers between geographic areas are recorded at cost plus markup or at market. Identifiable assets are those assets, including goodwill, which are identified with the operations in each geographic region. The 1999 net restructuring charge of $36 is allocated to geographic regions as follows: United States -- $10, Europe -- $14, and Australia/Asia Pacific -- $12. The 1998 restructuring charge of $262 is allocated to geographic regions as follows: United States -- $200, Europe -- $36, Australia/Asia Pacific -- $21, and Other - -- $5. The 1997 restructuring charge of $204 is allocated to geographic areas as follows: United States -- $158, Europe -- $11, Australia/Asia Pacific -- $33, and Other -- $2. 6. RESTRUCTURING PROGRAM A restructuring charge included in earnings from continuing operations of $41 ($30 after tax or $.07 per share) was recorded in the fourth quarter 1999 to cover the costs of a restructuring and divestiture program approved in July 1999 by the company's Board of Directors. This charge relates to the streamlining of certain North American and European production and administrative facilities and the anticipated cost of a divestiture of a non-strategic business with annual sales of approximately $25. The restructuring charge includes approximately $20 in cash charges primarily related to severance and employee benefit costs. The balance of the restructuring charge includes non-cash charges related to the disposition of plant assets and the divestiture. The company expects to complete the restructuring and divestiture program in 2000. The expected net cash outflows will not have a material impact on the company's liquidity. A $5 ($3 after tax or $.01 per share) reversal of the 1998 restructuring charge was also recorded in the fourth quarter 1999. The reversal reflects the net impact of changes in estimates and modifications to the original program. Two manufacturing facilities scheduled for closure in 1999 were not taken out of service due to changes in business and economic conditions subsequent to the original charge, while additional asset rationalization and plant reconfiguration strategies were implemented which resulted in incremental headcount reductions. The initial charge for the third quarter 1998 program was $262 ($193 after tax or $.42 per share). This program was designed to improve operational efficiency by rationalizing certain U.S., European and Australian production and administrative facilities and divesting non-strategic businesses. Remaining spending under this program, which is primarily associated with employee benefit costs, is expected to be completed by the second quarter 2000. A summary of restructuring reserves at August 1, 1999 and related activity described above is as follows:
Modifica- Balance at tions & Balance at August 2, changes in 1999 August 1, 1998 Spending estimates Provision 1999 - ----------------------------------------------------------------------------------- Losses on asset dispositions and divestitures $ 151 (132) (21) 21 $ 19 Severance and benefits 32 (28) 16 18 38 Other exit costs 10 (9) -- 2 3 - ----------------------------------------------------------------------------------- $ 193 (169) (5) 41 $ 60 ===================================================================================
41 16 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (dollars in millions) A restructuring charge of $204 ($152 after tax or $.31 per share) was recorded in the first quarter 1997 to cover the costs of a restructuring program. This program was designed to improve operational efficiency by closing various plants, reducing administrative and operational staff functions and divesting non-strategic businesses. The restructuring charge included approximately $108 in cash charges primarily related to severance and employee benefit costs. The balance of the restructuring charge related to non-cash charges for estimated losses on the disposition of plant assets and business divestitures. This program was completed in the first quarter 1998. 7. OTHER EXPENSES
1999 1998 1997 - -------------------------------------------------------------------------------- Stock price related incentive programs $ 15 $ 27 $ 71 Amortization of intangible and other assets 58 53 51 Minority interests 1 6 7 Other, net (10) (22) 11 - -------------------------------------------------------------------------------- $ 64 $ 64 $ 140 ================================================================================
8. INTEREST EXPENSE
1999 1998 1997 - -------------------------------------------------------------------------------- Interest expense $ 190 $ 194 $ 177 Less: Interest capitalized 6 5 11 - -------------------------------------------------------------------------------- $ 184 $ 189 $ 166 ================================================================================
9. ACQUISITIONS During 1999, 1998 and 1997 the company made several acquisitions. Acquisitions were accounted for using the purchase method of accounting and accordingly, results of operations of the acquired companies are included in the consolidated financial statements from the dates the acquisitions were consummated. The allocation of the purchase price to assets acquired and liabilities assumed was based upon fair value estimates as follows:
1999 1998 1997 - -------------------------------------------------------------------------------- Working capital $ 1 $ 32 $ 4 Fixed assets 5 19 53 Intangibles 105 360 159 Other assets -- -- 19 Other liabilities (6) -- (7) Minority interests -- 67 -- - -------------------------------------------------------------------------------- $ 105 $ 478 $ 228 ================================================================================
In the first quarter of 1999, the company acquired the Stockpot premium refrigerated soup business, which is predominantly a U.S. food service business. During 1998, the company acquired the Liebig soup business in France for approximately $180. Also in 1998, Arnotts purchased the remaining outstanding ordinary shares held by its minority shareholders for an aggregate purchase price of approximately $290. Prior to the transaction, the company owned approximately 70% of Arnotts. During 1997, the company acquired the Erasco Group of companies, Germany's leading soup company. In addition, Arnotts acquired the assets of Kettle Chip Company located in Sydney, Australia. The acquisitions would not have had a material effect on net sales, net earnings or earnings per share for each of the years presented. 10. PENSION AND POSTRETIREMENT BENEFITS In 1999, the company adopted the revised disclosure provisions of Financial Accounting Standards No. 132, "Employers' Disclosures about Pensions and Other Postretirement Benefits." PENSION BENEFITS Substantially all of the company's U.S. and certain non-U.S. employees are covered by noncontributory defined benefit pension plans. In 1999, the company implemented significant amendments to certain U.S. plans. Under a new formula retirement benefits will be determined based on percentage of annual pay and age. To minimize the impact of converting to the new formula, service and earnings credit will continue to accrue for active employees participating in the plans under the formula prior to the amendments through the year 2014. Employees will receive the benefit from either the new or old formula, whichever is higher. Benefits become vested upon the completion of five years of service. Benefits are paid from funds previously provided to trustees and insurance companies or are paid directly by the company from general funds. Plan assets consist primarily of investments in equities, fixed income securities and real estate. Pension coverage for employees of certain non-U.S. subsidiaries are provided to the extent determined appropriate through their respective plans. Obligations under such plans are systematically provided for by depositing funds with trusts or under insurance contracts. The assets and obligations of these plans are not material. POSTRETIREMENT BENEFITS The company provides postretirement benefits including health care and life insurance to substantially all retired U.S. employees and their dependents. In 1999, changes were made to the postretirement benefits offered to certain U.S. employees. Participants who were not receiving postretirement benefits as of May 1, 1999 will no longer be eligible to receive such benefits in the future, but the company 42 17 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (dollars in millions) will provide access to health care coverage for non-eligible future retirees on a group basis. Costs will be paid by the participants. To preserve the economic benefits for employees close to retirement, participants who were at least age 55 and had at least 10 years of continuous service remain eligible for postretirement benefits. Components of net periodic benefit cost:
Pension ------------------------------ 1999 1998 1997 - -------------------------------------------------------------------------------- Service cost $ 29 $ 31 $ 27 Interest cost 91 94 83 Expected return on plan assets (142) (135) (110) Amortization of net transition obligation (3) (3) (1) Amortization of prior service cost 5 5 5 Recognized net actuarial (gain)/loss 5 4 7 - -------------------------------------------------------------------------------- Net periodic pension (income) expense $ (15) $ (4) $ 11 ================================================================================
Postretirement ------------------------------ 1999 1998 1997 - -------------------------------------------------------------------------------- Service cost $ 10 $ 11 $ 10 Interest cost 19 22 17 Amortization of prior service cost (6) (4) (4) Amortization of net (gain)/loss (9) (11) (10) - -------------------------------------------------------------------------------- Net periodic postretirement cost $ 14 $ 18 $ 13 ================================================================================
Change in benefit obligation:
Pension Postretirement --------------------- --------------------- 1999 1998 1999 1998 - -------------------------------------------------------------------------------- Obligation at beginning of year $ 1,332 $ 1,278 $ 313 $ 302 Service cost 29 31 10 11 Interest cost 91 94 19 22 Plan amendments 3 2 (33) -- Actuarial (gain)/loss 62 103 (38) 24 Spin-off -- (66) -- (22) Special termination benefits 6 -- -- -- Benefits paid (119) (94) (25) (24) Foreign currency adjustment 1 (16) -- -- - -------------------------------------------------------------------------------- Benefit obligation at end of year $ 1,405 $ 1,332 $ 246 $ 313 ================================================================================
Change in the fair value of pension plan assets:
1999 1998 - -------------------------------------------------------------------------------- Fair value at beginning of year $ 1,674 $ 1,675 Actual return on plan assets 177 183 Spin-off -- (79) Employer contributions 2 2 Benefits paid (115) (92) Foreign currency adjustment 2 (15) - -------------------------------------------------------------------------------- Fair value at end of year $ 1,740 $ 1,674 ================================================================================
Pension Postretirement ----------------- ----------------- 1999 1998 1999 1998 - -------------------------------------------------------------------------------- Funded status at end of year $ 335 $ 342 $(246) $(313) Unrecognized prior service cost 61 63 (43) (16) Unrecognized (gain)/loss (14) (37) (124) (95) Unrecognized net transition obligation (4) (6) -- -- - -------------------------------------------------------------------------------- Net amount recognized $ 378 $ 362 $(413) $(424) ================================================================================
The current portion of nonpension postretirement benefits included in Accrued liabilities was $19 at August 1, 1999 and August 2, 1998. Weighted average assumptions at end of year:
Pension -------------------------------- 1999 1998 1997 - -------------------------------------------------------------------------------- Discount rate for benefit obligation 7.50% 7.00% 7.70% Expected return on plan assets 10.50% 10.25% 9.70% Rate of compensation increases 4.50% 4.50% 5.00% - --------------------------------------------------------------------------------
The discount rate used to determine the accumulated postretirement benefit obligation was 7.50% in 1999 and 7.00% in 1998. The assumed health care cost trend rate used to measure the accumulated postretirement benefit obligation was 5.50%, declining to 4.50% over a period of two years and continuing at 4.50% thereafter. A one percentage point change in assumed health care costs would have the following effects on 1999 reported amounts:
% Increase % Decrease - -------------------------------------------------------------------------------- Effect on service and interest cost 4 (4) Effect on the 1999 accumulated benefit obligation 24 (26)
Obligations related to non-U.S. postretirement benefit plans are not significant since these benefits are generally provided through government-sponsored plans. SAVINGS PLAN The company sponsors employee savings plans which cover substantially all U.S. employees. After one year of continuous service, the company generally matches 50% of employee contributions up to 5% of compensation. In 1998 and 1997, the company increased its contribution to 60% because earnings goals were achieved. Amounts charged to Costs and expenses were $11 in 1999, $13 in 1998, and $14 in 1997. 43 18 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (dollars in millions) 11. TAXES ON EARNINGS The provision for income taxes on earnings from continuing operations consists of the following:
1999 1998 1997 - -------------------------------------------------------------------------------- Income taxes: Currently payable Federal $ 231 $ 311 $ 330 State 31 44 32 Non-U.S. 33 50 28 - -------------------------------------------------------------------------------- 295 405 390 - -------------------------------------------------------------------------------- Deferred Federal 64 (1) (40) State 2 (7) 2 Non-U.S. 12 (13) 5 - -------------------------------------------------------------------------------- 78 (21) (33) - -------------------------------------------------------------------------------- $ 373 $ 384 $ 357 ================================================================================ Earnings from continuing operations before income taxes: United States $ 987 $ 980 $ 882 Non-U.S. 110 93 109 - -------------------------------------------------------------------------------- $ 1,097 $ 1,073 $ 991 ================================================================================
The following is a reconciliation of effective income tax rates on continuing operations with the U.S. federal statutory income tax rate:
1999 1998 1997 - -------------------------------------------------------------------------------- Federal statutory income tax rate 35.0% 35.0% 35.0% State income taxes (net of federal tax benefit) 1.9 2.0 2.2 Nondeductible divestiture and restructuring charges .3 1.8 1.6 Non-U.S. earnings taxed at other than federal statutory rate (.6) (.4) (.7) Tax loss carryforwards (.3) (.8) (.1) Other (2.3) (1.8) (2.0) - -------------------------------------------------------------------------------- Effective income tax rate 34.0% 35.8% 36.0% ================================================================================
Deferred tax liabilities and assets are comprised of the following:
1999 1998 - -------------------------------------------------------------------------------- Depreciation $ 148 $ 142 Pensions 112 112 Other 217 185 - -------------------------------------------------------------------------------- Deferred tax liabilities 477 439 - -------------------------------------------------------------------------------- Benefits and compensation 209 209 Restructuring accruals 31 50 Tax loss carryforwards 17 15 Other 50 71 - -------------------------------------------------------------------------------- Gross deferred tax assets 307 345 Deferred tax asset valuation allowance (17) (15) - -------------------------------------------------------------------------------- Net deferred tax assets 290 330 - -------------------------------------------------------------------------------- Net deferred tax liability $ 187 $ 109 ================================================================================
For income tax purposes, subsidiaries of the company have tax loss carryforwards of approximately $55. Of these carryforwards, $27 expire through 2011 and $28 may be carried forward indefinitely. The current statutory tax rates in these countries range from 28% to 53%. Income taxes have not been accrued on undistributed earnings of non-U.S. subsidiaries of approximately $490 which are invested in operating assets and are not expected to be remitted. If remitted, tax credits are available to substantially reduce any additional taxes. 12. ACCOUNTS RECEIVABLE
1999 1998 - -------------------------------------------------------------------------------- Customers $ 507 $ 569 Allowances for cash discounts and bad debts (18) (11) - -------------------------------------------------------------------------------- 489 558 Other 52 98 - -------------------------------------------------------------------------------- $ 541 $ 656 ================================================================================
13. INVENTORIES
1999 1998 - -------------------------------------------------------------------------------- Raw materials, containers and supplies $ 207 $ 205 Finished products 408 359 - -------------------------------------------------------------------------------- $ 615 $ 564 ================================================================================
Approximately 70% of inventory in 1999 and 69% in 1998 is accounted for on the last in, first out method of determining cost. If the first in, first out inventory valuation method had been used exclusively, inventories would not differ materially from the amounts reported at August 1, 1999 and August 2, 1998. 14. OTHER CURRENT ASSETS
1999 1998 - -------------------------------------------------------------------------------- Prepaid pensions $ 18 $ 18 Deferred taxes 76 137 Other 38 49 - -------------------------------------------------------------------------------- $ 132 $ 204 ================================================================================
15. PLANT ASSETS
1999 1998 - -------------------------------------------------------------------------------- Land $ 50 $ 54 Buildings 798 816 Machinery and equipment 2,185 2,124 Projects in progress 184 166 - -------------------------------------------------------------------------------- 3,217 3,160 Accumulated depreciation (1,491) (1,437) - -------------------------------------------------------------------------------- $ 1,726 $ 1,723 ================================================================================
44 19 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (dollars in millions) Depreciation expense provided in Costs and expenses was $197 in 1999, $208 in 1998 and $232 in 1997. Approximately $90 of capital expenditures are required to complete projects in progress at August 1, 1999. 16. INTANGIBLE ASSETS
1999 1998 - ------------------------------------------------------------------------------- Purchase price in excess of net assets of businesses acquired (goodwill) $1,697 $1,655 Trademarks 429 424 Other intangibles 3 4 - ------------------------------------------------------------------------------- 2,129 2,083 Accumulated amortization (219) (179) - ------------------------------------------------------------------------------- $1,910 $1,904 ===============================================================================
17. OTHER ASSETS
1999 1998 - ------------------------------------------------------------------------------- Prepaid pensions $360 $344 Investments 211 200 Other 21 22 - ------------------------------------------------------------------------------- $592 $566 ===============================================================================
18. NOTES PAYABLE AND LONG-TERM DEBT Notes payable consists of the following:
1999 1998 - ------------------------------------------------------------------------------- Commercial paper $1,778 $ 859 Current portion of Long-term Debt: 5.40%-5.76% Notes 157 200 Variable-rate bank borrowings 52 342 - ------------------------------------------------------------------------------- $1,987 $1,401 ===============================================================================
The weighted average interest rate for commercial paper was 5.11% and 5.58% at August 1, 1999 and August 2, 1998, respectively. Long-term debt consists of the following:
Type Fiscal Year Maturity Rate 1999 1998 - ----------------------------------------------------------------------------- Notes 2000 5.76% $ - $ 150 Notes 2001 5.75%-8.58% 115 111 Notes 2002 5.40% 12 - Notes 2003 6.15% 300 300 Notes 2004(1) 4.75%-5.63% 400 100 Notes 2007 6.90% 300 300 Debentures 2021 8.88% 200 200 Notes 2001-2010 6.40% 3 8 - ----------------------------------------------------------------------------- $1,330 $ 1,169 =============================================================================
(1) $100 callable in 2001 The fair value of the company's long-term debt including the current portion of long-term debt in Notes payable was $1,512 at August 1, 1999 and $1,449 at August 2, 1998. The company had $1,500 unused lines of credit available at August 1, 1999, which are unconditional for a period of one to three years. In 1997, the company filed a shelf registration statement with the Securities and Exchange Commission for the issuance of debt securities at an aggregate initial offering price not to exceed $1,000. As of August 1, 1999, $100 remained unissued. Principal amounts of long-term debt mature as follows: 2000 - $157 (in current liabilities); 2001 - $115; 2002 - $12; 2003 - $300; 2004 - $400, and beyond - $503. 19. OTHER LIABILITIES
1999 1998 - ------------------------------------------------------------------------------- Deferred taxes $263 $246 Minority interests - 4 Deferred compensation 131 92 Postemployment benefits 11 11 Other 12 29 - ------------------------------------------------------------------------------- $417 $382 ===============================================================================
20. FINANCIAL INSTRUMENTS The company utilizes derivative financial instruments to enhance its ability to manage risk, including interest rate, foreign currency and certain equity-linked employee compensation exposures which exist as part of ongoing business operations. The company does not enter into contracts for speculative purposes, nor is it a party to any leveraged derivative instrument. The use of derivative financial instruments is monitored through regular communication with senior management and the utilization of written guidelines. The company finances a portion of its operations through debt instruments primarily consisting of commercial paper, notes, debentures and bank loans. The company utilizes interest rate swap agreements to minimize worldwide financing costs and to achieve a desired proportion of variable versus fixed-rate debt. The swaps mature in fiscal 2000. With these instruments, $100 of commercial paper borrowings is converted to fixed (8.24%) and $150 of fixed-rate debt (5.76%) is converted to variable. The amounts paid or received on hedges related to debt are recognized as an adjustment to interest expense. The notional amounts of interest rate swaps were $250 at August 1, 1999 and August 2, 1998. The swaps had a fair value of $2 at August 1, 1999. The company utilizes foreign currency exchange contracts, including swap and forward contracts, to hedge existing foreign currency exposures. Foreign exchange gains and losses on derivative financial instruments are recognized and offset foreign exchange gains and losses on the underlying exposures. 45 20 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (dollars in millions) A mix of equity, intercompany debt and local currency borrowing is used to finance foreign operations. Gains and losses, both realized and unrealized, on financial instruments that hedge the company's investments in foreign operations are recognized in Accumulated other comprehensive income in Shareowners' Equity. Swap contracts are utilized to hedge exposures relating to certain employee compensation expenses linked to the total return of the Standard & Poor's 500 Index and the total return of the company's capital stock. The company pays a variable interest rate and receives the equity returns under these instruments. The equity swap contracts have maturities in 2000 and 2003. At August 1, 1999, the notional principal amount of the contracts was $102, and the net cost to settle the contracts was $14. Gains or losses are recognized as adjustments to the carrying value of the underlying obligations. The company also has cross-currency swap agreements with financial institutions. The notional amounts of these swaps were $333 at August 1, 1999 and $405 at August 2, 1998. The swaps mature as follows: $223 in 2000, and $110 in 2003. These agreements hedge currency exposures, principally European, arising from strategies which replaced certain local currency borrowings with lower cost U.S. dollar financing. The fair value of the swaps was $3 at August 1, 1999. At August 1, 1999, the company also had contracts to purchase or sell approximately $177 in foreign currency versus $287 at August 2, 1998. The contracts are primarily for European and Australian currencies and have maturities through 2000. The fair value of the contracts was $(1) at August 1, 1999. The company is exposed to credit loss in the event of nonperformance by the counterparties in swap and forward contracts. The company minimizes its credit risk on these transactions by dealing only with leading, creditworthy financial institutions having long-term credit ratings of "A" or better and, therefore, does not anticipate non-performance. In addition, the contracts are distributed among several financial institutions, thus minimizing credit risk concentration. The carrying values of cash and cash equivalents, accounts and notes receivable, accounts payable and short-term debt approximate fair value. The fair value of long-term debt, as indicated in Note 18, and derivative financial instruments is based on quoted market prices. In June 1998, SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities," was issued and is expected to be effective for fiscal years beginning after June 15, 2000. The standard requires that all derivative instruments be recorded on the balance sheet at fair value. Changes in the fair value of derivatives are recorded in earnings or other comprehensive income, based on whether the instrument is designated as part of a hedge transaction and, if so, the type of hedge transaction. The company is currently assessing the impact of the adoption on the company's financial statements. Based on the company's current portfolio, it is not expected that adoption of this statement will have a material effect on the company's results of operations, financial condition or cash flows. 21. SHAREOWNERS' EQUITY On February 11, 1997, the company's Board of Directors authorized a two-for-one stock split effective for shareowners of record on February 24, 1997. The number of authorized shares was increased to 560 million from 280 million. All references to the number of shares reflect the stock split. Preferred stock is issuable in one or more classes, with or without par, as may be authorized by the Board of Directors. In October 1998, the company entered into a forward stock purchase contract to partially hedge the company's equity exposure from its stock option program. The contract, which matures in fiscal 2004, allows the company to repurchase approximately 11 million shares at an average price of approximately $47 per share. The company may elect to settle the contract on a net share basis in lieu of physical settlement. The contract permits early settlement and may be extended for an additional five-year term. If the forward purchase contract had been settled on a net share basis as of August 1, 1999, the company would have provided the counterparty with approximately 800,000 shares of its capital stock. The company sponsors a long-term incentive compensation plan. Under the plan, restricted stock and options may be granted to certain officers and key employees of the company. The plan provides for awards up to an aggregate of 25 million shares of capital stock. Options are granted at a price not less than the fair value of the shares on the date of grant and expire not later than ten years after the date of grant. Options vest over a three-year period. The company accounts for the stock option grants and restricted stock awards in accordance with Accounting Principles Board Opinion No. 25 and related Interpretations. Accordingly, no compensation expense has been recognized in the Statements of Earnings for the options. In 1997, the company adopted the disclosure provisions of SFAS No. 123, "Accounting for Stock-Based Compensation." Had the fair value based accounting provisions of SFAS No. 123 been adopted, the effect on earnings and earnings per share in 1999, 1998 and 1997 would not have been significant. 46 21 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (dollars in millions) As of August 1, 1999, five million shares were available for grant under the long-term incentive plan. Restricted shares granted are as follows:
(thousands of shares) 1999 1998 1997 - ------------------------------------------------------------------------------- Restricted Shares Granted 1,804 127 804 ================================================================================
Information about stock options and related activity is as follows:
Weighted Weighted Weighted Average Average Average Exercise Exercise Exercise (options in thousands) 1999 Price 1998 Price 1997 Price - ------------------------------------------------------------------------------- Beginning of year 18,366 $28.72 20,066 $26.94 22,098 $22.53 Granted 3,890 42.79 2,303 54.38 2,644 48.02 Exercised (2,122) 17.75 (3,272) 17.99 (3,428) 16.10 Terminated (254) 45.61 (2,212) 33.04 (1,248) 24.45 Spin-off related modification(1) - - 1,481 - - - - ------------------------------------------------------------------------------- End of year 19,880 $32.37 18,366 $28.72 20,066 $26.94 - ------------------------------------------------------------------------------- Exercisable at end of year 14,019 13,123 13,040 ===============================================================================
(1) When the Specialty Foods segment was spun off, the number and exercise price of options outstanding were adjusted to preserve the economic value of the options that existed prior to the spin-off.
(options in thousands) Stock Options Outstanding Exercisable Options - ------------------------------------------------------------------------------- Weighted Average Weighted Weighted Range of Remaining Average Average Exercise Contractual Exercise Exercise Prices Shares Life Price Shares Price - ------------------------------------------------------------------------------- $10.81-$22.60 5,571 2.7 $16.36 5,571 $16.36 $22.60-$31.91 6,338 6.3 $29.22 6,336 $29.22 $32.12-$44.40 5,818 9.1 $43.09 1,410 $44.13 $45.12-$56.50 2,153 8.7 $54.04 702 $54.01 - ------------------------------------------------------------------------------- 19,880 14,019 ===============================================================================
The company adopted the provisions of SFAS No. 128, "Earnings per Share," as of the second quarter 1998. SFAS No. 128 revised the standards for computation and presentation of earnings per share ("EPS"), requiring the presentation of both basic EPS and EPS assuming dilution. Basic EPS is calculated using the weighted average shares outstanding during the applicable period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. Prior periods have been restated to conform to the provisions of SFAS No. 128. For the periods presented in the Consolidated Statements of Earnings, the calculations of basic EPS and EPS assuming dilution vary in that the weighted average shares outstanding assuming dilution includes the incremental effect of stock options, except when such effect would be antidilutive. In 1999, the weighted average shares outstanding assuming dilution also includes the incremental effect of approximately 200,000 shares under the forward stock purchase contract. 22. STATEMENTS OF CASH FLOWS
1999 1998 1997 - ------------------------------------------------------------------------------- Interest paid, net of amounts capitalized $181 $187 $165 Interest received $ 11 $ 15 $ 7 Income taxes paid $300 $370 $364 - -------------------------------------------------------------------------------
23. QUARTERLY DATA (UNAUDITED)
1999 First Second Third Fourth - ------------------------------------------------------------------------------- NET SALES $1,804 $1,832 $1,492 $1,296 COST OF PRODUCTS SOLD 830 856 730 634 NET EARNINGS 264 219 162 79 PER SHARE - BASIC NET EARNINGS .59 .49 .37 .18 DIVIDENDS .210 .225 .225 .225 PER SHARE - ASSUMING DILUTION NET EARNINGS .58 .49 .37 .18 MARKET PRICE HIGH $59.94 $59.19 $46.94 $46.50 LOW $46.69 $43.38 $38.06 $39.38 - -------------------------------------------------------------------------------
1998 First Second Third Fourth - ------------------------------------------------------------------------------- Net sales $1,813 $2,012 $1,572 $1,299 Cost of products sold 893 955 775 610 Earnings (loss) from continuing operations 252 291 (36) 182 Earnings (loss) from discontinued operations 16 20 (54) - Net earnings (loss)(1) 268 300 (90) 182 Per share - basic Earnings (loss) from continuing operations .55 .64 (.08) .40 Earnings (loss) from discontinued operations .03 .04 (.12) - Net earnings (loss)(1) .58 .66 (.20) .40 Dividends .1925 .21 .21 .21 Per share - assuming dilution Earnings (loss) from continuing operations .54 .63 (.08) .40 Earnings (loss) from discontinued operations .03 .04 (.12) - Net earnings (loss)(1) .57 .65 (.20) .40 Market price(2) High $55.44 $59.44 $62.88 $57.13 Low $46.00 $51.81 $48.13 $51.50 - -------------------------------------------------------------------------------
(1) Net earnings in the second quarter 1998 include the cumulative effect of a change in accounting principle of $11 or $.02 per share (see Note 4). (2) Stock prices on or before March 30, 1998 are not adjusted to reflect the spin-off (see Note 3). 47 22 REPORT OF MANAGEMENT The accompanying financial statements have been prepared by the management of the company in conformity with generally accepted accounting principles to reflect the financial position of the company and its operating results. Financial information appearing throughout this Annual Report is consistent with that in the financial statements. Management is responsible for the information and representations in such financial statements, including the estimates and judgments required for their preparation. In order to meet its responsibility, management maintains a system of internal controls designed to assure that assets are safeguarded and that financial records properly reflect all transactions. The company also maintains a worldwide auditing function to periodically evaluate the adequacy and effectiveness of such internal controls, as well as the company's administrative procedures and reporting practices. The company believes that its long-standing emphasis on the highest standards of conduct and business ethics, set forth in extensive written policy statements, serves to reinforce its system of internal accounting controls. The report of PricewaterhouseCoopers LLP, the company's independent accountants, covering their audit of the financial statements, is included in this Annual Report. Their independent audit of the company's financial statements includes a review of the system of internal accounting controls to the extent they consider necessary to evaluate the system as required by generally accepted auditing standards. The company's internal auditors report directly to the Audit Committee of the Board of Directors, which is composed entirely of Directors who are not officers or employees of the company. The Audit Committee meets periodically with the internal auditors, other management personnel, and the independent accountants. The independent accountants and the internal auditors have had, and continue to have, direct access to the Audit Committee without the presence of other management personnel, and have been directed to discuss the results of their audit work and any matters they believe should be brought to the Committee's attention. /s/ Dale F. Morrison - ------------------------------------- Dale F. Morrison President and Chief Executive Officer /s/ Basil L. Anderson - ------------------------------------- Basil L. Anderson Executive Vice President and Chief Financial Officer /s/ Gerald S. Lord - ------------------------------------- Gerald S. Lord Vice President - Controller September 2, 1999 REPORT OF INDEPENDENT ACCOUNTANTS To the Shareowners and Directors of Campbell Soup Company In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of earnings, shareowners' equity and cash flows present fairly, in all material respects, the financial position of Campbell Soup Company and its subsidiaries at August 1, 1999 and August 2, 1998, and the results of their operations and their cash flows for each of the three years in the period ended August 1, 1999, in conformity with generally accepted accounting principles. These financial statements are the responsibility of the company's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. /s/ PricewaterhouseCoopers LLP - ------------------------------------ Thirty South Seventeenth Street Philadelphia, Pennsylvania September 2, 1999 48 23 SIX-YEAR REVIEW - CONSOLIDATED (millions, except per share amounts)
Fiscal Year 1999(1) 1998(2) 1997(3) 1996 1995 1994 - ------------------------------------------------------------------------------------------------------------------------ SUMMARY OF OPERATIONS Net sales $6,424 $6,696 $6,614 $6,324 $5,881 $5,495 Earnings before interest and taxes 1,270 1,248 1,149 1,191 1,039 947 Earnings before taxes 1,097 1,073 991 1,072 936 884 Earnings from continuing operations 724 689 634 718 627 578 Earnings (loss) from discontinued operations - (18) 79 84 71 52 Net earnings 724 660 713 802 698 630 Cash margin(4) 23.7% 22.6% 21.8% 23.5% 22.3% 21.6% FINANCIAL POSITION Net assets of discontinued operations $ - $ - $ 632 $ 659 $ 697 $ 615 Plant assets - net 1,726 1,723 2,044 2,179 2,093 1,938 Total assets 5,522 5,633 6,196 6,368 6,088 4,752 Total debt 3,317 2,570 2,657 1,606 1,719 981 Shareowners' equity 235 874 1,420 2,742 2,468 1,989 PER SHARE DATA Earnings from continuing operations - basic $ 1.64 $ 1.52 $ 1.34 $ 1.44 $ 1.26 $ 1.15 Earnings from continuing operations - assuming dilution 1.63 1.50 1.33 1.43 1.25 1.14 Net earnings - basic 1.64 1.46 1.51 1.61 1.40 1.26 Net earnings - assuming dilution 1.63 1.44 1.49 1.59 1.39 1.24 Dividends declared .885 .823 .75 .67 .61 .55 OTHER STATISTICS Capital expenditures $ 297 $ 256 $ 252 $ 357 $ 340 $ 354 Number of shareowners (in thousands) 51 51 49 43 43 43 Weighted average shares outstanding 441 454 472 498 498 501 Weighted average shares outstanding - assuming dilution 445 460 478 503 503 507 ========================================================================================================================
(1) 1999 earnings from continuing operations include a net pre-tax restructuring charge of $36; $27 after tax or $.06 per share (basic and assuming dilution). Earnings from continuing operations also include the effect of certain non-recurring costs of $22; $15 after tax or $.03 per share (basic and assuming dilution). (2) 1998 earnings from continuing operations include a pre-tax restructuring charge of $262; $193 after tax or $.42 per share (basic and assuming dilution). Earnings from continuing operations also include a gain on a divestiture of $14; $9 after tax or $.02 per share (basic and assuming dilution). Net earnings include the cumulative effect of a change in accounting for business process reengineering costs of $11 or $.02 per share (basic and assuming dilution). (3) 1997 earnings from continuing operations include a pre-tax restructuring charge of $204; $152 after tax or $.31 per share (basic and assuming dilution). (4) Cash margin equals earnings before interest and taxes plus translation, depreciation, amortization and minority interest expense divided by net sales. The company spun off its Specialty Foods segment in 1998 and accounted for it as a discontinued operation (see Note 3 to the Consolidated Financial Statements). All information has been reclassified accordingly. All share and per share data reflect a 1997 two-for-one stock split. 49 EX-21 4 SUBSIDIARIES OF THE COMPANY 1 EXHIBIT 21 SUBSIDIARIES OF CAMPBELL
NAME OF SUBSIDIARY AND NAME UNDER WHICH IT DOES BUSINESS JURISDICTION OF INCORPORATION - -------------------------------------------------------------------------------------------------------- Arnotts Limited Australia - -------------------------------------------------------------------------------------------------------- Campbell Finance Corp. Delaware - -------------------------------------------------------------------------------------------------------- Campbell Foods Belgium N.V. Belgium - -------------------------------------------------------------------------------------------------------- Campbell Foodservice Company Pennsylvania - -------------------------------------------------------------------------------------------------------- Campbell Investment Company Delaware - -------------------------------------------------------------------------------------------------------- Campbell Sales Company New Jersey - -------------------------------------------------------------------------------------------------------- Campbell Soup Company Ltd -- Les Soupes Campbell Ltee Canada - -------------------------------------------------------------------------------------------------------- Campbell Soup Supply Company L.L.C. Delaware - -------------------------------------------------------------------------------------------------------- Campbell's Australasia Pty. Limited Australia - -------------------------------------------------------------------------------------------------------- Campbell's de Mexico, S.A. de C. V. Mexico - -------------------------------------------------------------------------------------------------------- Campbell's U.K. Limited England - -------------------------------------------------------------------------------------------------------- CSC Brands LP Delaware - -------------------------------------------------------------------------------------------------------- Erasco GmbH Germany - -------------------------------------------------------------------------------------------------------- Godiva Brands, Inc. Delaware - -------------------------------------------------------------------------------------------------------- Godiva Chocolatier, Inc. New Jersey - -------------------------------------------------------------------------------------------------------- Joseph Campbell Company New Jersey - -------------------------------------------------------------------------------------------------------- Liebig S.A.S. France - -------------------------------------------------------------------------------------------------------- Pepperidge Farm, Incorporated Connecticut - -------------------------------------------------------------------------------------------------------- PF Brands, Inc. Delaware - -------------------------------------------------------------------------------------------------------- Stockpot Inc. Washington - --------------------------------------------------------------------------------------------------------
The foregoing does not constitute a complete list of all subsidiaries of the registrant. The subsidiaries which have been omitted do not, in the aggregate, (i) represent more than 10% of the assets of Campbell and its consolidated subsidiaries, (ii) contribute more than 10% of the total sales and revenues of Campbell and its consolidated subsidiaries or (iii) contribute more than 10% of the income before taxes and extraordinary items of Campbell and its consolidated subsidiaries. 14 EX-23 5 CONSENT OF PRICEWATERHOUSECOOPERS LLP 1 EXHIBIT 23 CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in the Registration Statements on Form S-3 (No. 333-11497) and Form S-8 (Nos. 333-22803, 333-00729, 33-59797, 33-56899, 33-39032 and 33-14009) of Campbell Soup Company of our report dated September 2, 1999 relating to the financial statements, which appears in the Annual Report to Shareowners, which is incorporated in this Annual Report on Form 10-K. PricewaterhouseCoopers LLP Thirty South Seventeenth Street Philadelphia, Pennsylvania October 8, 1999 15 EX-24.(A) 6 POWER OF ATTORNEY 1 EXHIBIT 24(a) POWER OF ATTORNEY FORM 10-K ANNUAL REPORT FOR FISCAL 1999 KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Ellen O. Kaden and John J. Furey, each of them, until December 31, 1999, their true and lawful attorneys-in-fact and agents, with full power of substitution and revocation, for them and in their name, place and stead, in any and all capacities, to sign Campbell Soup Company's Form 10-K Annual Report to the Securities and Exchange Commission for the fiscal year ended August 1, 1999, and any amendments thereto, and to file the same with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents may lawfully do or cause to be done by virtue hereof. CAMPBELL SOUP COMPANY
Signature Dated as of September 23, 1999 --------- ------------------------------ /s/ Alva A. App /s/Mary Alice Malone ------------------------------ ----------------------------- Alva A. App Mary Alice Malone /s/Edmund M. Carpenter /s/Dale F. Morrison ------------------------------ ----------------------------- Edmund M. Carpenter Dale F. Morrison /s/Bennett Dorrance /s/Charles H. Mott ------------------------------ ----------------------------- Bennett Dorrance Charles H. Mott /s/Thomas W. Field, Jr. /s/Charles R. Perrin ------------------------------ ----------------------------- Thomas W. Field, Jr. Charles R. Perrin /s/Kent B. Foster /s/George M. Sherman ------------------------------ ----------------------------- Kent B. Foster George M. Sherman /s/Harvey Golub /s/George Strawbridge, Jr. ------------------------------ ----------------------------- Harvey Golub George Strawbridge /s/David K. P. Li /s/Donald M. Stewart ------------------------------ ----------------------------- David K. P. Li Donald M. Stewart /s/Philip E. Lippincott /s/Charlotte C. Weber ------------------------------ ----------------------------- Philip E. Lippincott Charlotte C. Weber
16 EX-24.(B) 7 CERTIFICATION 1 EXHIBIT 24(b) CAMPBELL SOUP COMPANY CERTIFICATION I, the undersigned Assistant Corporate Secretary of Campbell Soup Company, a New Jersey corporation, certify that the attached document, entitled "FORM 10-K ANNUAL REPORT" is a true copy of a resolution adopted by the Board of Directors of Campbell Soup Company on September 23, 1999, at a meeting throughout which a quorum was present, and that the same is still in full force and effect. IN WITNESS WHEREOF, I have hereunto set my hand and affixed the seal of Campbell Soup Company this 8th day of October, 1999. [seal] /s/ Tricia L. Emmerman ---------------------- Assistant Corporate Secretary 17 2 EXHIBIT 24(b) (CONT'D) CAMPBELL SOUP COMPANY BOARD OF DIRECTORS RESOLUTION SEPTEMBER 23, 1999 * * * FORM 10-K ANNUAL REPORT RESOLVED, that the Form 10-K Annual Report for fiscal 1999 of Campbell Soup Company in the form presented to this meeting, is hereby approved. FURTHER RESOLVED, that the Senior Vice President - Law and Government Affairs, the Executive Vice President and Chief Financial Officer and the Vice President - - Controller of Campbell Soup Company are authorized to execute the Form 10-K Annual Report for fiscal 1999 approved by this resolution and to cause such Form 10-K to be filed with the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, with such modifications as may be required by the Commission or as may be desirable in the opinion of such officers. FURTHER RESOLVED, that each of the directors and the President and Chief Executive Officer of Campbell Soup Company are each hereby authorized to execute in their respective capacities, a Power of Attorney in favor of Ellen O. Kaden and John J. Furey designating each of them as the true and lawful attorneys-in-fact and agents of the signatory with full power and authority to execute and to cause to be filed with the Securities and Exchange Commission the Form 10-K Annual Report for fiscal 1999 with all exhibits and other documents in connection therewith as such attorneys-in-fact, or either one of them, may deem necessary or desirable; and to do and perform each and every act and thing necessary or desirable to be done in and about the premises as fully to all intents and purposes as such officers and directors could do themselves. 18 EX-27 8 FINANCIAL DATA SCHEDULE
5 1,000,000 12-MOS AUG-01-1999 AUG-03-1998 AUG-01-1999 6 0 559 18 615 1,294 3,217 1,491 5,522 3,146 1,330 0 0 20 215 5,522 6,424 6,424 3,050 3,050 64 0 184 1,097 373 724 0 0 0 724 $1.64 $1.63
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