Campbell Sales Up 13% in Q4

Fourth Quarter Adjusted Net Earnings Per Share Were $0.26, full Year Adjusted Net Earnings Per Share Were $2.09, Up 7 Percent. Sales Increased 8 Percent for the Year.

12/09/08 Campbell Soup Company has reported net earnings for the quarter ended August 3, 2008 of $89 million, or $0.24 per share, compared to $61 million, or $0.16 per share, in the year-ago period. The current quarter's reported net earnings included charges associated with previously announced restructuring initiatives. Excluding all items impacting comparability in both periods, adjusted net earnings were $96 million compared to $53 million in the prior year's quarter and adjusted net earnings per share were $0.26 in the current quarter compared to $0.14 in the year-ago quarter, an increase of 86 percent.

In March 2008, Campbell completed the sale of the Godiva business, the results of which are reported as discontinued operations for all periods. Additionally, in the third and fourth quarters, Campbell recorded restructuring charges and costs related to previously announced initiatives to improve operational efficiency and enhance long-term profitability, including the sale of certain salty snack foods brands and assets in Australia, the closure of production facilities in Australia and Canada, and the streamlining of its management structure.

In the fourth quarter, earnings from continuing operations were $89 million compared to $58 million in the prior year. Earnings per share from continuing operations for the current quarter were $0.24 compared to $0.15 in the year-ago period. Excluding items impacting comparability, adjusted earnings from continuing operations in the fourth quarter were $96 million compared to $58 million in the year-ago period. Adjusted earnings per share from continuing operations were $0.26 compared to $0.15 in the prior-year period, an increase of 73 percent.

In the prior period, earnings from discontinued operations were $3 million, or $0.01 per share. Excluding items impacting comparability, the adjusted loss from discontinued operations was $5 million, or $0.01 per share, reflecting the seasonality of the Godiva business.

For the fourth quarter, sales increased 13 percent to $1.715 billion. Sales growth for the quarter reflects the following factors:

* Volume and mix subtracted 1 percent
* Price and sales allowances added 5 percent
* Increased promotional spending subtracted 1 percent
* Currency added 4 percent
* Divestitures subtracted 2 percent
* The 53rd week added 8 percent

Douglas R. Conant, Campbell's President and Chief Executive Officer, said, "We delivered a very strong quarter, including in our U.S. soup business, to complete a challenging year in which we faced unprecedented cost inflation. For the sixth consecutive year, we met or exceeded our financial guidance. Our more focused portfolio strategy is paying off, as we grew sales and earnings for the year in each of our three core categories-simple meals, baked snacks and healthy beverages.

"In U.S. soup, our focus on wellness is working. Our lower sodium soup portfolio continued its strong performance, and we are well positioned to build on this success in fiscal year 2009, especially with the launch of 'Campbell's Select Harvest' ready-to-serve soups. In addition, our soup businesses in Canada and Australia posted good results for the year."

Conant continued, "Looking at the rest of our portfolio, Pepperidge Farm once again delivered outstanding performance, and Arnott's also had a strong year in its core biscuit business. In healthy beverages, our 'V8' brand, led by 'V8 V-Fusion,' reported double-digit sales growth for the year. In the emerging markets of Russia and China, we are encouraged by our progress in our first year in the marketplace, and we are optimistic about our expansion plans in both geographies.

"Looking ahead to fiscal 2009, we have strong plans in place across our portfolio to win with consumers in our core categories."

Conant concluded, "In fiscal 2009, we expect our continuing operations, excluding the negative impact of one less week in the fiscal year and recent divestitures, to deliver sales growth in excess of our long-term target range of between 3 and 4 percent. We expect to deliver EBIT growth, excluding items impacting comparability, slightly below our long-term target growth rate of between 5 and 6 percent, reflecting the impact of one less week in the fiscal year, higher marketing spending behind increased innovation in the U.S. and increased investment spending in Russia and China. Consistent with our long-term target growth rate, we expect to deliver adjusted net earnings per share growth between 5 and 7 percent from the fiscal 2008 adjusted base of $2.09."

Net earnings for fiscal 2008 were $1.165 billion, or $3.06 per share, compared to $854 million, or $2.16 per share, in the year-ago period.

Excluding items impacting comparability, adjusted net earnings were $797 million compared to $771 million in the year-ago period. Adjusted net earnings per share were $2.09 in the current period compared to $1.95 in the prior period, an increase of 7 percent.

For fiscal 2008, earnings from continuing operations were $671 million versus $792 million a year earlier. Earnings per share from continuing operations were $1.76 compared to $2.00 a year ago.

Excluding the above-referenced items in both years, adjusted earnings from continuing operations for fiscal 2008 were $765 million compared to $740 million a year ago and adjusted earnings per share from continuing operations were $2.01 compared to $1.87 a year ago, an increase of 7 percent.

Earnings from discontinued operations for the year were $494 million, or $1.30 per share, versus $62 million, or $0.16 per share, a year ago. Excluding items impacting comparability in both years, adjusted earnings from discontinued operations for the year were $32 million, or $0.08 per share, compared to $31 million, or $0.08 per share, a year ago.

For fiscal 2008, net sales were $7.998 billion, an increase of 8 percent. Sales growth for the year reflects the following factors:

* Volume and mix added 2 percent
* Price and sales allowances added 2 percent
* Increased promotional spending subtracted 1 percent
* Currency added 4 percent
* Divestitures subtracted 1 percent
* The 53rd week added 2 percent

Full Year Financial Details from Continuing Operations

* Gross margin decreased to 39.6 percent from 40.6 percent. The decline was primarily due to escalating cost inflation, partially offset by higher selling prices and productivity gains.
* Restructuring charges of $175 million included $120 million related to the loss on the sale of certain Australian salty snack foods brands and assets, $38 million for plant closures and $17 million related to streamlining the company's management structure. An additional $7 million of accelerated depreciation was recorded in cost of products sold. Total costs to date in fiscal 2008 related to the company's initiatives designed to improve operational efficiency and long-term profitability were $182 million.
* Cash flow from operations for fiscal 2008 was $766 million compared to $674 million in the prior period.
* During the fiscal year, Campbell repurchased 26 million shares for $903 million. The company completed its three-year $600 million share repurchase program and the program using approximately $600 million of the net proceeds from the sale of Godiva to repurchase shares. Campbell also repurchased shares under its practice to offset shares issued under incentive compensation plans. In June 2008, Campbell announced that its Board of Directors authorized a new three-year program to purchase up to $1.2 billion of its outstanding shares in open market and privately negotiated transactions.