XNYS:CPB Campbell Soup Co Annual Report 10-K Filing - 7/29/2012

Effective Date 7/29/2012

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UNITED STATES 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
July 29, 2012
Commission File Number
1-3822
CAMPBELL SOUP COMPANY 
New Jersey
21-0419870
State of Incorporation
I.R.S. Employer Identification No.
1 Campbell Place
Camden, New Jersey 08103-1799
Principal Executive Offices
Telephone Number: (856) 342-4800
Securities registered pursuant to Section 12(b) of the Act: 
Title of Each Class
 
Name of Each Exchange on Which Registered
 
 
 
Capital Stock, par value $.0375
 
New York Stock Exchange
 Securities registered pursuant to Section 12(g) of the Act: None   
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. R Yes o No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. o Yes R No
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. R Yes o No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Date File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). R Yes o 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. o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer þ
Accelerated filer o
Non-accelerated filer o
(Do not check if a smaller  reporting company)
Smaller reporting company o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). o Yes R No
As of January 29, 2012 (the last business day of the registrant’s most recently completed second fiscal quarter), the aggregate market value of capital stock held by non-affiliates of the registrant was approximately $5,793,740,752. There were 313,547,620 shares of capital stock outstanding as of September 14, 2012.
Portions of the Registrant’s Proxy Statement for the Annual Meeting of Shareowners to be held on November 14, 2012, are incorporated by reference into Part III.





TABLE OF CONTENTS

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 





PART I

Item 1. Business
The Company
Campbell Soup Company, together with its consolidated subsidiaries (Campbell or the company), is a manufacturer and marketer of high-quality, branded convenience food products. Campbell was organized 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. The company’s principal executive offices are in Camden, New Jersey 08103-1799.
Recent Developments
On August 6, 2012, the company completed the acquisition of BF Bolthouse Holdco LLC (Bolthouse Farms) from a fund managed by Madison Dearborn Partners, LLC, a private equity firm, for $1.55 billion in cash, subject to customary purchase price adjustments related to the amount of Bolthouse Farm’s cash, debt, working capital, transaction expenses and taxes. Bolthouse Farms is a vertically integrated food and beverage company focused on developing, manufacturing and marketing fresh carrots and proprietary, high value-added natural, healthy products. Bolthouse Farms has leading market positions in retail fresh carrots and super-premium beverages in the U.S. and Canada. Bolthouse Farms employs approximately 2,100 persons, and its two primary manufacturing facilities are company-owned and located in Bakersfield, California, and Prosser, Washington. Bolthouse Farms also leases agricultural property, which is primarily located in California. For additional information relating to the strategic rationale for the Bolthouse Farms acquisition, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Overview.” The company funded the acquisition through a combination of short- and long-term borrowings. For additional information relating to the funding of the Bolthouse Farms acquisition, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources.” Since the Bolthouse Farms acquisition occurred subsequent to 2012, the results of Bolthouse Farms' operations are not included in this 2012 Annual Report on Form 10-K (the Report), and the discussion of the company's business and operations in this Report does not incorporate Bolthouse Farms' business and operations unless specifically stated otherwise.
On September 27, 2012, the company announced several initiatives to improve its U.S. supply chain cost structure and increase asset utilization across its U.S. thermal plant network. The initiatives include closing the company's Sacramento, California, thermal plant, which produces soups, sauces and beverages, and the company's South Plainfield, New Jersey, spice plant, which supplies ingredients to the company's U.S. thermal plants. As a result of the initiatives, the company expects to incur pre-tax costs of approximately $115 million, most of which will be incurred in 2013. The company also expects to invest approximately $27 million in capital expenditures, primarily to relocate and refurbish a beverage filling and packaging line. For additional information relating to the initiatives, see Note 19 to the Consolidated Financial Statements.
Reportable Segments
The company reports the results of operations in the following reportable segments: U.S. Simple Meals; Global Baking and Snacking; International Simple Meals and Beverages; U.S. Beverages; and North America Foodservice. The company has 11 operating segments based on product type and geographic location and has aggregated the operating segments into the appropriate reportable segment based on similar economic characteristics; products; production processes; types or classes of customers; distribution methods; and regulatory environment. See also Note 5 to the Consolidated Financial Statements. The segments are discussed in greater detail below.
U.S. Simple Meals
The U.S. Simple Meals segment aggregates the following operating segments: U.S. Soup and U.S. Sauces. The U.S. Soup retail business includes the following products: Campbell’s condensed and ready-to-serve soups; and Swanson broth and stocks. The U.S. Sauces retail business includes the following products: Prego pasta sauces; Pace Mexican sauces; Campbell’s canned gravies, pasta, and beans; and Swanson canned poultry.
Global Baking and Snacking
The Global Baking and Snacking segment aggregates the following operating segments: Pepperidge Farm cookies, crackers, bakery and frozen products in U.S. retail; and Arnott’s biscuits in Australia and Asia Pacific.
International Simple Meals and Beverages
The International Simple Meals and Beverages segment aggregates the simple meals and beverages operating segments outside of the U.S., including Europe, the retail business in Canada, and the businesses in Asia Pacific, Latin America and China. The segment’s operations include Erasco and Heisse Tasse soups in Germany, Liebig and Royco soups in France, Devos Lemmens mayonnaise and cold sauces and Campbell’s and Royco soups in Belgium, and Blå Band soups and sauces in Sweden. In Canada, operations include Habitant and Campbell’s soups, Prego pasta sauces, Pace Mexican sauces, V8 juices and beverages and certain Pepperidge Farm products. In Asia Pacific, operations include Campbell’s soup and stock, Kimball sauces, V8 juices and beverages,

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Prego pasta sauce and Swanson broths.
U.S. Beverages
The U.S. Beverages segment represents the U.S. retail beverages business, including the following products: V8 juices and beverages and Campbell’s tomato juice.
North America Foodservice
The North America Foodservice segment represents the distribution of products such as soup, specialty entrees, beverage products, other prepared foods and Pepperidge Farm products through various food service channels in the U.S. and Canada.
Ingredients and Packaging
The ingredient and packaging materials required for the manufacture of the company’s food products are purchased from various suppliers. These items are subject to fluctuations in price attributable to a number of factors, including changes in crop size, cattle cycles, product scarcity, demand for raw materials, energy costs, government-sponsored agricultural programs, import and export requirements and regional drought and other weather conditions (including the potential effects of climate change) during the growing and harvesting seasons. To help reduce some of this price volatility, the company uses a combination of purchase orders, short- and long-term contracts and various commodity risk management tools for most of its ingredients and packaging. 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. At this time, the company does not anticipate any material restrictions on availability or shortages of ingredients or packaging that would have a significant impact on the company’s businesses. For information on the impact of inflation on the company, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
Customers
In most of the company’s markets, sales and merchandising activities are conducted through the company’s own sales force and its third-party broker and distributor partners. In the U.S., Canada and Latin America, the company’s products are generally resold to consumers in retail food chains, mass discounters, mass merchandisers, club stores, convenience stores, drug stores, dollar stores and other retail, commercial and non-commercial establishments. In Europe, the company’s products are generally resold to consumers in retail food chains, mass discounters, mass merchandisers, club stores, convenience stores and other retail, commercial and non-commercial establishments. In the Asia Pacific region, the company’s products are generally resold to consumers through retail food chains, convenience stores and other retail, commercial and non-commercial establishments. The company makes shipments promptly after receipt and acceptance of orders.
The company's five largest customers accounted for approximately 34% of the company's consolidated net sales in 2012, 2011, and 2010. The company’s largest customer, Wal-Mart Stores, Inc. and its affiliates, accounted for approximately 17% of the company’s consolidated net sales in 2012 and 2011, and 18% in 2010. All of the company’s segments sold products to Wal-Mart Stores, Inc. or its affiliates. No other customer accounted for 10% or more of the company’s consolidated net sales.
Trademarks and Technology
As of September 14, 2012, the company owned over 4,200 trademark registrations and applications in over 165 countries, including the registrations acquired in the Bolthouse Farms acquisition. The company believes that its trademarks are of material importance to its business. Although the laws vary by jurisdiction, trademarks generally are valid as long as they are in use and/or their registrations are properly maintained and have not been found to have become generic. Trademark registrations generally can be renewed indefinitely as long as the trademarks are in use. The company believes that its principal brands, including Campbell’s, Erasco, Liebig, Pepperidge Farm, Goldfish, V8, Pace, Prego, Swanson, Royco and Arnott’s, as well as the Bolthouse Farms brand acquired in the Bolthouse Farms acquisition, are protected by trademark law in the major markets where they are used. In addition, some of the company’s products are sold under brands that have been licensed from third parties.
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 group of related patents. In addition, the company owns copyrights, both registered and unregistered, and proprietary trade secrets, technology, know-how processes, and other intellectual property rights that are not registered.
Competition
The company experiences worldwide competition in all of its principal products. This competition arises from numerous competitors of varying sizes across multiple food and beverage categories, and includes producers of generic and private label products, as well as other branded food and beverage manufacturers. All of these competitors vie for trade merchandising support and consumer dollars. The number of competitors cannot be reliably estimated. The principal areas of competition are brand recognition, taste, quality, price, advertising, promotion, convenience and service.

4



Working Capital
For information relating to the company’s cash and working capital items, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
Capital Expenditures
During 2012, the company’s aggregate capital expenditures were $323 million. The company expects to spend approximately $330 million for capital projects in fiscal 2013, including Bolthouse Farms projects. Major 2013 capital projects include a soup capacity expansion project for the North America Foodservice business, a cracker expansion project for Pepperidge Farm, the ongoing implementation of a series of related initiatives to simplify the soup-making process in North America (also known as the soup common platform initiative), the relocation and refurbishment of a U.S. beverage filling and packaging line, a packing automation project at one of the company’s Australian biscuit plants, and the continued implementation of an advanced planning system in North America.
Research and Development
During the last three fiscal years, the company’s expenditures on research and development activities relating to new products and the improvement and maintenance of existing products were $125 million in 2012, $129 million in 2011, and $123 million in 2010. The decrease from 2011 to 2012 was primarily due to cost savings initiatives and other factors, partially offset by higher costs associated with product innovation in North America and the Asia Pacific region and inflation. The increase from 2010 to 2011 was primarily due to costs associated with an ongoing initiative to simplify the soup-making process in North America, costs associated with product innovation in North America, costs associated with a global baked snacks initiative, and the impact of currency, partially offset by cost savings initiatives. In fiscal 2013, the company expects to conduct much of its baking and snacking portfolio-related research and development at its new Pepperidge Farm innovation center, as well as its existing Arnott's innovation center.
Environmental Matters
The company has requirements for the operation and design of its facilities that meet or exceed applicable environmental rules and regulations. Of the company’s $323 million in capital expenditures made during 2012, approximately $8 million was for compliance with environmental laws and regulations in the U.S. The company further estimates that approximately $18 million of the capital expenditures anticipated during 2013 will be for compliance with U.S. environmental laws and regulations. The company believes that continued compliance with existing environmental laws and regulations (both within the U.S. and elsewhere) will not have a material effect on capital expenditures, earnings or the competitive position of the company. In addition, the company continues to monitor pending environmental laws and regulations within the U.S. and elsewhere, including laws and regulations relating to climate change and greenhouse gas emissions. While the impact of these pending laws and regulations cannot be predicted with certainty, the company does not believe that compliance with these pending laws and regulations will have a material effect on capital expenditures, earnings or the competitive position of the company.
Seasonality
Demand for the company’s products is somewhat seasonal, with the fall and winter months usually accounting for the highest sales volume due primarily to demand for the company’s soup products. Demand for the company’s sauce, beverage, baking and snacking products, however, is generally evenly distributed throughout the year.
Employees
On July 29, 2012, there were approximately 17,700 employees of the company. In addition, as of July 29, 2012, Campbell Swire, the company's joint venture in China, employed approximately 170 persons.
Financial Information
Financial information for the company’s reportable segments and geographic areas is found in Note 5 to the Consolidated Financial Statements. For risks attendant to the company’s foreign operations, see “Risk Factors.”
Company Website
The company’s primary corporate website can be found at www.campbellsoupcompany.com. The company makes available free of charge at this website (under the “Investor Center — Financial Information — SEC Filings” caption) all of its reports (including amendments) filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, including its annual report on Form 10-K, its quarterly reports on Form 10-Q and its current reports on Form 8-K. These reports are made available on the website as soon as reasonably practicable after their filing with, or furnishing to, the Securities and Exchange Commission.

5




Item 1A. Risk Factors
In addition to the factors discussed elsewhere in this Report, the following risks and uncertainties could materially adversely affect the company’s business, financial condition and results of operations. Additional risks and uncertainties not presently known to the company or that the company currently deems immaterial also may impair the company’s business operations and financial condition.
The company operates in a highly competitive industry
The company operates in the highly competitive food industry and experiences international competition in all of its principal products. The principal areas of competition are brand recognition, taste, quality, price, advertising, promotion, convenience and service. A number of the company's primary competitors have substantial financial, marketing and other resources. A strong competitive response from one or more of these competitors to the company's marketplace efforts, or a consumer shift towards private label offerings, could result in the company reducing pricing, increasing marketing or other expenditures, and/or losing market share.
The company's results are dependent on successful marketplace initiatives and acceptance by consumers of the company's products, including new or improved product and packaging introductions
The company's results are dependent on successful marketplace initiatives and acceptance by consumers of the company's products. The company's new or improved product and packaging introductions, along with its other marketplace initiatives, are designed to capitalize on customer or consumer trends. In order to remain successful, the company must anticipate and react to these trends and develop new or improved products or packaging to address them. While the company devotes significant resources to meeting this goal, the company may not be successful in developing new or improved products or packaging, or its new or improved products or packaging may not be accepted by customers or consumers.
Disruption to the company's supply chain could adversely affect its business
Damage or disruption to the company's manufacturing or distribution capabilities, or to the capabilities of the company's suppliers or contract manufacturers, whether as a result of adverse weather conditions (such as drought, temperature extremes or floods), natural disaster, fire, terrorism, pandemic, strikes, or other events, could impair the company's ability to manufacture and/or sell its products. In addition, as part of the Bolthouse Farms acquisition, the company acquired a significant U.S. producer of fresh carrots. The production of carrots may be adversely impacted by the events listed above, as well as by water scarcity, crop disease and crop pests. Failure to take adequate steps to mitigate the likelihood or potential impact of such events, or to effectively manage such events if they occur, particularly when a product is sourced from a single location, could adversely affect the company's business or financial results.
The company faces risks related to recession, financial and credit market disruptions and other economic conditions
Customer and consumer demand for the company's products may be impacted by weak economic conditions, recession, equity market volatility or other negative economic factors in the U.S. or other nations. Similarly, disruptions in financial and/or credit markets may impact the company's ability to manage normal commercial relationships with its customers, suppliers and creditors. In addition, changes in tax or interest rates in the U.S. or other nations, whether due to recession, financial and credit market disruptions or other reasons, could impact the company.
The company may be adversely impacted by the failure to execute acquisitions and divestitures successfully
From time to time, the company undertakes acquisitions, such as the Bolthouse Farms acquisition, or divestitures. The success of any such acquisition or divestiture depends, in part, upon the company's ability to identify suitable buyers or sellers, negotiate favorable contractual terms and, in many cases, obtain governmental approval. For acquisitions, success is also dependent upon efficiently integrating the acquired business into the company's existing operations, successfully managing new risks associated with the acquired business and achieving expected returns and other benefits. Acquisitions outside the U.S. may present unique challenges or increase the company's exposure to risks associated with foreign operations, including foreign currency risks and risks associated with local regulatory regimes. For divestitures, success is also dependent on effectively and efficiently separating the divested unit or business from the company and reducing or eliminating associated overhead costs. In cases where acquisitions or divestitures are not successfully implemented or completed, the company's business or financial results could be negatively impacted.
Increased regulation could adversely affect the company's business or financial results
The manufacture and marketing of food products is extensively regulated. The primary areas of regulation include the processing, packaging, storage, distribution, advertising, labeling, quality and safety of the company's food products, as well as the health and safety of the company's employees and the protection of the environment. In the U.S., the company is subject to regulation by various government agencies, including the Food and Drug Administration, the U.S. Department of Agriculture, the Federal Trade Commission, the Occupational Safety and Health Administration and the Environmental Protection Agency, as well

6



as various state and local agencies. The company is also regulated by similar agencies outside the U.S. and by voluntary organizations, such as the National Advertising Division and the Children's Food and Beverage Advertising Initiative of the Council of Better Business Bureaus. Changes in regulatory requirements (such as proposed requirements designed to restrict food marketing), or evolving interpretations of existing regulatory requirements, may result in increased compliance cost, capital expenditures and other financial obligations that could adversely affect the company's business or financial results.
Fluctuations in foreign currency exchange rates could adversely affect the company's results
The company holds assets and incurs liabilities, generates revenue, and pays expenses in a variety of currencies other than the U.S. dollar, primarily the Australian dollar, Canadian dollar, and the euro. The company's consolidated financial statements are presented in U.S. dollars, and therefore the company must translate its assets, liabilities, sales and expenses into U.S. dollars for external reporting purposes. As a result, changes in the value of the U.S. dollar may materially and negatively affect the value of these items in the company's consolidated financial statements, even if their value has not changed in their original currency.
The company's results may be adversely impacted by increases in the price of raw and packaging materials
The raw and packaging materials used in the company's business include tomato paste, grains, beef, poultry, vegetables, steel, glass, paper and resin. Many of these materials are subject to price fluctuations from a number of factors, including product scarcity, demand for raw materials, commodity market speculation, energy costs, currency fluctuations, weather conditions (including the potential effects of climate change), import and export requirements and changes in government-sponsored agricultural programs. To the extent any of these factors result in an increase in raw and packaging material prices, the company may not be able to offset such increases through productivity or price increases or through its commodity hedging activity.
Price increases may not be sufficient to cover increased costs, or may result in declines in sales volume due to pricing elasticity in the marketplace
The company intends to pass along to customers some or all cost increases in raw and packaging materials and other inputs through increases in the selling prices of some of its products. Higher product prices may result in reductions in sales volume. To the extent the price increases are not sufficient to offset increased raw and packaging materials and other input costs, and/or if they result in significant decreases in sales volume, the company's business results and financial condition may be adversely affected.
The company may be adversely impacted by a changing customer landscape and the increased significance of some of its customers
In recent years, alternative retail grocery channels, such as dollar stores, drug stores and club stores, have increased their market share. This trend towards alternative channels is expected to continue in the future. In addition, consolidations in the traditional retail grocery trade have produced large, sophisticated customers with increased buying power and negotiating strength who may seek lower prices or increased promotional programs funded by their suppliers. These customers may use more of their shelf space for their private label products. If the company is unable to use its scale, marketing expertise, product innovation and category leadership positions to respond to these customer dynamics, the company's business or financial results could be negatively impacted. Also, during 2012, the company's five largest customers accounted for approximately 34% of the company's consolidated net sales, with the largest customer, Wal-Mart Stores, Inc. and its affiliates, accounting for approximately 17% of the company's consolidated net sales. The disruption of sales to any of these customers, or to any of the company's other large customers, for an extended period of time could adversely affect the company's business or financial results.
The company may be adversely impacted by increased liabilities and costs related to its defined benefit pension plans
The company sponsors a number of defined benefit pension plans for employees in the U.S. and various non-U.S. locations. The major defined benefit pension plans are funded with trust assets invested in a globally diversified portfolio of securities and other investments. Changes in regulatory requirements or the market value of plan assets, investment returns, interest rates and mortality rates may affect the funded status of the company's defined benefit pension plans and cause volatility in the net periodic benefit cost, future funding requirements of the plans and the funded status as recorded on the balance sheet. A significant increase in the company's obligations or future funding requirements could have a material adverse effect on the financial results of the company.
The company may be adversely impacted by inadequacies in, or security breaches of, its information technology systems
Each year the company engages in several billion dollars of transactions with its customers and vendors. Because the amount of dollars involved is so significant, the company's information technology resources (some of which are managed by third parties) must provide connections among its marketing, sales, manufacturing, logistics, customer service, and accounting functions. If the company does not allocate and effectively manage the resources necessary to build and sustain an appropriate technology infrastructure and to maintain the related computerized and manual control processes, the company's business or financial results could be negatively impacted. Furthermore, the company's information technology systems may be vulnerable to security breaches (including the theft of customer, consumer or other confidential data), cyber-based attacks or other system failures. If the company is unable to prevent such failures, the company's business or financial results could be negatively impacted.

7



The company may not properly execute, or realize anticipated cost savings or benefits from, its ongoing supply chain, information technology or other initiatives
The company's success is partly dependent upon properly executing, and realizing cost savings or other benefits from, its ongoing supply chain, information technology and other initiatives. These initiatives are primarily designed to make the company more efficient in the manufacture and distribution of its products, which is necessary in the company's highly competitive industry. These initiatives are often complex, and a failure to implement them properly may, in addition to not meeting projected cost savings or benefits, result in an interruption to the company's sales, manufacturing, logistics, customer service or accounting functions.
The company's results may be impacted negatively by political conditions in the countries where the company does business
The company has operations or does business in multiple countries. Because of its international reach, the company's performance may be impacted negatively by politically motivated factors, such as unfavorable changes in tariffs or export and import restrictions, in these countries. The company may also be impacted by political instability, civil disobedience, armed hostilities and terrorist acts in these countries.
If the company's food products become adulterated or are mislabeled, the company might need to recall those items, and may experience product liability claims if consumers are injured
The company may need to recall some of its products if they become adulterated or if they are mislabeled. The company may also be liable if the consumption of any of its products causes injury. A widespread product recall could result in significant losses due to the costs of a recall, the destruction of product inventory and lost sales due to the unavailability of product for a period of time. The company could also suffer losses from a significant product liability judgment against it. A significant product recall or product liability case could also result in adverse publicity, damage to the company's reputation and a loss of consumer confidence in the company's products. In addition, the company's results could be adversely affected if consumers lose confidence in the safety and quality of the company's products, ingredients or packaging, even in the absence of a recall or a product liability case.
The company's results may be negatively impacted if consumers do not maintain their favorable perception of its brands
The company has a number of iconic brands with significant value. Maintaining and continually enhancing the value of these brands is critical to the success of the company's business. Brand value is based in large part on consumer perceptions. Success in promoting and enhancing brand value depends in large part on the company's ability to provide high-quality products. Brand value could diminish significantly due to a number of factors, including consumer perception that the company has acted in an irresponsible manner, adverse publicity about the company's products (whether or not valid), the company's failure to maintain the quality of its products, the failure of the company's products to deliver consistently positive consumer experiences, or the products becoming unavailable to consumers. The growing use of social and digital media by consumers increases the speed and extent that information and opinions can be shared. Negative posts or comments about the company, its brands or products on social or digital media could seriously damage the company's brands and reputation. If the company does not maintain the favorable perception of its brands, the company's results could be negatively impacted.
Item 1B. Unresolved Staff Comments
None.

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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 and the business segment that primarily uses each of the facilities:
Principal Manufacturing Facilities
Inside the U.S.
 
 
 
 
California
 
New Jersey
 
South Carolina
Dixon (USSM/USB)
 
South Plainfield (USSM/USB)
 
Aiken (GBS)
Sacramento (USSM/USB/ ISMB)
 
East Brunswick (GBS)
 
Texas
Stockton (USSM/USB)
 
North Carolina
 
Paris (USSM/USB/ISMB)
Connecticut
 
Maxton (USSM/ISMB)
 
Utah
Bloomfield (GBS)
 
Ohio
 
Richmond (GBS)
Florida
 
Napoleon (USSM/USB/NAFS/ISMB)
 
Washington
Lakeland (GBS)
 
 
Everett (NAFS)
Illinois
 
Willard (GBS)
 
Wisconsin
Downers Grove (GBS)
 
Pennsylvania
 
Milwaukee (USSM)
 
 
Denver (GBS)
 
 
 
 
Downingtown (GBS/NAFS)
 
 
Outside the U.S.
 
 
 
 
Australia
 
China
 
    Indonesia
Huntingwood (GBS)
 
Xiamen (ISMB)
 
Jawa Barat (GBS)
Marleston (GBS)
 
Canada
 
Malaysia
Shepparton (ISMB)
 
Toronto (USSM/ ISMB/NAFS)
 
Selangor Darul Ehsan (ISMB)
Virginia (GBS)
 
France
 
Mexico
Belgium
 
LePontet (ISMB)
 
Villagran (ISMB)
Puurs (ISMB)
 
Germany
 
Sweden
 
 
Luebeck (ISMB)
 
Kristianstadt (ISMB)
____________________________________ 
USSM - U.S. Simple Meals
GBS - Global Baking and Snacking
ISMB - International Simple Meals and Beverages
USB - U.S. Beverages
NAFS - North America Foodservice
Each of the foregoing manufacturing facilities is company-owned, except the (i) Selangor Darul Ehsan, Malaysia, and the East Brunswick, New Jersey, facilities are leased, and (ii) Xiamen, China, facility is owned by Swire Pacific Limited, the company's joint venture partner in China. The company also operates retail bakery thrift stores in the U.S. and other plants, facilities and offices at various locations in the U.S. and abroad, including additional executive offices in Norwalk, Connecticut; Puurs, Belgium; and North Strathfield, Australia.
The company expects to close the Sacramento, California, and the South Plainfield, New Jersey, facilities in 2013. For information relating to the properties acquired in the Bolthouse Farms acquisition, see “Business - Recent Developments.”
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
None.
Item 4. Mine Safety Disclosures
Not applicable.

9



Executive Officers of the Company
The following list of executive officers as of September 14, 2012, is included as an item in Part III of this Form 10-K:
Name
Present Title
Age
Year First
Appointed
Executive
Officer
Mark R. Alexander
Senior Vice President
48
2009
Irene Chang Britt
Senior Vice President
49
2010
Anthony P. DiSilvestro
Senior Vice President - Finance
53
2004
Ellen Oran Kaden
Senior Vice President - Chief Legal and Public Affairs Officer
60
1998
Denise M. Morrison
President and Chief Executive Officer
58
2003
Robert W. Morrissey
Senior Vice President and Chief Human Resources Officer
54
2012
B. Craig Owens
Senior Vice President - Chief Financial Officer and Chief Administrative Officer
58
2008
David R. White
Senior Vice President
57
2004
B. Craig Owens served as Executive Vice President and Chief Financial Officer of the Delhaize Group prior to joining the company in 2008. The company has employed Mark R. Alexander, Irene Chang Britt, Anthony P. DiSilvestro, Ellen Oran Kaden, Denise M. Morrison, Robert W. Morrissey, and David R. White in an executive or managerial capacity for at least five years.
There is no family relationship among any of the company’s executive officers or between any such officer and any director that is first cousin or closer. All of the executive officers were elected at the November 2011 meeting of the Board of Directors, except Robert W. Morrissey was elected at the January 2012 meeting with an effective appointment date of April 1, 2012.

10




PART II

Item 5.
Market for Registrant’s Capital Stock, Related Shareowner Matters and Issuer Purchases of Equity Securities
Market for Registrant’s Capital Stock
The company’s capital stock is listed and principally traded on the New York Stock Exchange. On September 14, 2012, there were 24,079 holders of record of the company’s capital stock. Market price and dividend information with respect to the company’s capital stock are set forth in Note 18 to the Consolidated Financial Statements. Future dividends will be dependent upon future earnings, financial requirements and other factors.
Return to Shareowners* Performance Graph
The following graph compares the cumulative total shareowner return (TSR) on the company’s stock with the cumulative total return of the Standard & Poor’s 500 Stock Index (the S&P 500) and the Standard & Poor’s Packaged Foods Index (the S&P Packaged Foods Group). The graph assumes that $100 was invested on July 27, 2007, in each of company stock, the S&P 500 and the S&P Packaged Foods Group, and that all dividends were reinvested. The total cumulative dollar returns shown on the graph represent the value that such investments would have had on July 27, 2012.
*
Stock appreciation plus dividend reinvestment.
 
 
2007
 
2008
 
2009
 
2010
 
2011
 
2012
Campbell
 
100
 
98
 
88
 
105
 
100
 
103
S&P 500
 
100
 
88
 
71
 
81
 
97
 
106
S&P Packaged Foods Group
 
100
 
103
 
95
 
111
 
133
 
144

11



Issuer Purchases of Equity Securities
Period
Total Number
of Shares
Purchased (1)
 
 
 
Average
Price Paid
Per Share (2)
 
 
 
Total Number of
Shares Purchased
as Part of Publicly
Announced Plans or
Programs (3)
 
Approximate
Dollar Value  of
Shares that may yet
be Purchased
Under the Plans or
Programs
($ in Millions) (3)
4/30/2012 - 5/31/2012
863,780

 
(4)
 
$33.27
 
(4)
 
416,643

 
$806
6/1/2012 - 6/30/2012
1,874,518

 
(5)
 
$31.86
 
(5)
 
1,139,028

 
$769
7/1/2012 - 7/29/2012
1,568,048

 
(6)
 
$33.02
 
(6)
 
582,355

 
$750
Total
4,306,346

 
  
 
$32.57
 
  
 
2,138,026

 
$750
____________________________________ 
(1)
Includes (i) 2,166,195 shares repurchased in open-market transactions to offset the dilutive impact to existing shareowners of issuances under the company's stock compensation plans, and (ii) 2,125 shares owned and tendered by employees to satisfy tax withholding obligations on the vesting of restricted shares. Unless otherwise indicated, shares owned and tendered by employees to satisfy tax withholding obligations were purchased at the closing price of the company's shares on the date of vesting.
(2)
Average price paid per share is calculated on a settlement basis and excludes commission.
(3)
During the fourth quarter of 2012, the company had a publicly announced share repurchase program. Under this program, which was announced on June 23, 2011, the company's Board of Directors authorized the purchase of up to $1 billion of company stock. The program has no expiration date, although the company suspended purchases under the program in July 2012. The company expects to continue its longstanding practice, under separate authorization, of purchasing shares sufficient to offset shares issued under incentive compensation plans.
(4)
Includes (i) 445,771 shares repurchased in open-market transactions at an average price of $33.28 to offset the dilutive impact to existing shareowners of issuances under the company's stock compensation plans, and (ii) 1,366 shares owned and tendered by employees at an average price per share of $33.62 to satisfy tax withholding requirements on the vesting of restricted shares.
(5)
Includes 735,490 shares repurchased in open-market transactions at an average price of $31.77 to offset the dilutive impact to existing shareowners of issuances under the company's stock compensation plans.
(6)
Includes (i) 984,934 shares repurchased in open-market transactions at an average price of $33.04 to offset the dilutive impact to existing shareowners of issuances under the company's stock compensation plans, and (ii) 759 shares owned and tendered by employees at an average price per share of $33.38 to satisfy tax withholding requirements on the vesting of restricted shares.

12




Item 6.
Selected Financial Data
FIVE-YEAR REVIEW — CONSOLIDATED
Fiscal Year
2012(1)
2011(2)
2010(3)
2009(4)
2008(5)
 
 
(Millions, except per share amounts)
Summary of Operations
 
 
 
 
 
Net sales
$
7,707

$
7,719

$
7,676

$
7,586

$
7,998

Earnings before interest and taxes
1,212

1,279

1,348

1,185

1,098

Earnings before taxes
1,106

1,168

1,242

1,079

939

Earnings from continuing operations
764

802

844

732

671

Earnings from discontinued operations



4

494

Net earnings
764

802

844

736

1,165

Net earnings attributable to Campbell Soup Company
774

805

844

736

1,165

Financial Position
 
 
 
 
 
Plant assets - net
$
2,127

$
2,103

$
2,051

$
1,977

$
1,939

Total assets
6,530

6,862

6,276

6,056

6,474

Total debt
2,790

3,084

2,780

2,624

2,615

Total equity
898

1,096

929

731

1,321

Per Share Data
 
 
 
 
 
Earnings from continuing operations attributable to Campbell Soup Company - basic
$
2.43

$
2.44

$
2.44

$
2.05

$
1.77

Earnings from continuing operations attributable to Campbell Soup Company - assuming dilution
2.41

2.42

2.42

2.03

1.75

Net earnings attributable to Campbell Soup Company - basic
2.43

2.44

2.44

2.06

3.06

Net earnings attributable to Campbell Soup Company - assuming dilution
2.41

2.42

2.42

2.05

3.03

Dividends declared
1.16

1.145

1.075

1.00

0.88

Other Statistics
 
 
 
 
 
Capital expenditures
$
323

$
272

$
315

$
345

$
298

Weighted average shares outstanding - basic
317

326

340

352

373

Weighted average shares outstanding - assuming dilution
319

329

343

354

377

____________________________________ 
In the first quarter of fiscal 2010, the company adopted and retrospectively applied new accounting guidance related to a noncontrolling interest in a subsidiary. The guidance requires a noncontrolling interest in a subsidiary to be classified as a separate component of total equity.
In the first quarter of fiscal 2010, the company adopted and retrospectively applied new accounting guidance related to the calculation of earnings per share. The retrospective application of the provision resulted in the following reductions to basic and diluted earnings per share:
 
 
2009
 
2008
 
 
Basic
 
Diluted
 
Basic
 
Diluted
Earnings from continuing operations attributable to Campbell Soup Company
 
$
(.03
)
 
$
(.01
)
 
$
(.03
)
 
$
(.01
)
Net earnings attributable to Campbell Soup Company
 
$
(.03
)
 
$
(.01
)
 
$
(.06
)
 
$
(.03
)
(All per share amounts below are on a diluted basis)
The 2008 fiscal year consisted of fifty-three weeks. All other periods had fifty-two weeks.
(1)
The 2012 earnings from continuing operations were impacted by a restructuring charge of $6 million ($.02 per share) associated with the 2011 initiatives to improve supply chain efficiency, reduce overhead costs across the organization and exit the Russian market. Earnings from continuing operations were also impacted by Bolthouse Farms acquisition-related

13



costs of $3 million ($.01 per share).
(2)
The 2011 earnings from continuing operations were impacted by a restructuring charge of $41 million ($.12 per share) associated with initiatives announced in June 2011 to improve supply chain efficiency, reduce overhead costs across the organization and exit the Russian market.
(3)
The 2010 earnings from continuing operations were impacted by the following: a restructuring charge of $8 million ($.02 per share) for pension benefit costs associated with the 2008 initiatives to improve operational efficiency and long-term profitability and $10 million ($.03 per share) to reduce deferred tax assets as a result of the U.S. health care legislation enacted in March 2010.
(4)
The 2009 earnings from continuing operations were impacted by the following: an impairment charge of $47 million ($.13 per share) related to certain European trademarks and $15 million ($.04 per share) of restructuring-related costs associated with the 2008 initiatives to improve operational efficiency and long-term profitability. The 2009 results of discontinued operations represented a $4 million ($.01 per share) tax benefit related to the sale of the Godiva Chocolatier business.
(5)
The 2008 earnings from continuing operations were impacted by the following: a $107 million ($.28 per share) restructuring charge and related costs associated with initiatives to improve operational efficiency and long-term profitability and a $13 million ($.03 per share) benefit from the favorable resolution of a tax contingency. The 2008 results of discontinued operations included a $462 million ($1.20 per share) gain from the sale of the Godiva Chocolatier business.
Five-Year Review should be read in conjunction with the Notes to Consolidated Financial Statements.
Item 7.
Management's Discussion and Analysis of Financial Condition and Results of Operations

OVERVIEW
Description of the Company
Campbell Soup Company is a manufacturer and marketer of high-quality, branded convenience food products. The company reports the results of operations in the following reportable segments: U.S. Simple Meals; Global Baking and Snacking; International Simple Meals and Beverages; U.S. Beverages; and North America Foodservice.
Key Strategies
Campbell's long-term goal is to drive profitable net sales growth as a means to deliver attractive, sustainable total shareowner returns. To grow net sales, the company is focused on expanding its brand and product platforms in three core categories -- simple meals, healthy beverages and baked snacks. Its plans are designed to tap into segments and adjacencies with high-growth profiles and strong prospects for growth within these categories. Three strategies guide this effort:
Stabilize and then profitably grow the company's North America soup and simple meals business.
Expand the company's international presence.
Continue to drive growth in the company's healthy beverages and baked snacks businesses.
By reducing less profitable promotional support and increasing consumer brand building in 2012, Campbell took steps towards stabilizing the profitability of its soup and simple meals business in North America. In 2013, the company is increasing its pipeline of consumer-driven innovation by expanding its product platforms and packaging formats to reach new consumers and new usage occasions. To this end, the company will introduce more than 50 new products in 2013 -- ranging from new varieties of Chunky ready-to-eat soups and Campbell's condensed soups to new products under the Campbell's Go platform and new sauces under the Campbell's Skillet Sauces brand. In addition to its innovation offerings, the company plans to increase its focus on other important growth drivers, such as product positioning, taste, availability, merchandising and price, to strengthen and grow its core soup and simple meals business portfolio in North America.
Campbell plans to expand its presence in international markets by extending product platforms in its current businesses, pursuing growth opportunities in faster-growing emerging markets, and expanding its export businesses in both existing and new geographies. The company's strategy for emerging market growth is likely to be centered on external development, ranging from acquisitions to strategic alliances such as joint ventures and other strategic partnerships. Investments in its business in the People's Republic of China, where the company has a majority stake in a joint venture with Swire Pacific Limited, are expected to continue in 2013.
In Campbell's healthy beverages business, the company will continue the U.S. expansion of its V8 V-Fusion beverages into faster growing segments and channels, such as sparkling and energy beverages, teas and juice boxes. It will invest to revitalize the V8 100% vegetable juice franchise in the U.S. by reengaging both current and lapsed users with a new advertising campaign and new varieties. In the international beverage business, the company expects to attract new users in its Asia Pacific business through product improvements, such as the conversion from glass to PET packaging, and to further accelerate beverage growth in its Latin American business.

14



In Campbell's baked snacks portfolio, the company is increasing its focus on innovation while further enhancing collaboration between its Pepperidge Farm and Arnott's divisions to leverage new product ideas between these powerful brands. Pepperidge Farm will continue to drive growth in its very successful Goldfish brand, along with its savory cracker, cookie and bakery products. At Arnott's in Australia, the focus remains on innovation in sweet and savory biscuits, along with further development of products designed to address the “light lunch” eating occasion.
The Bolthouse Farms acquisition provides the company with a new growth platform within its portfolio. As previously discussed, Bolthouse Farms is a vertically integrated food and beverage company focused on developing, manufacturing and marketing fresh carrots and proprietary, high value-added natural, healthy products. Bolthouse Farms' U.S. and Canadian market-leading super-premium refrigerated beverages complement the company's successful V8 beverage business, and Bolthouse Farms' leading U.S. and Canadian market position in fresh carrots anchors its business and provides significant cash flow. In addition, Bolthouse Farms' prominent position in the high-growth packaged fresh category augments the company's existing chilled soup business in North America, and offers opportunities for expansion into adjacent packaged fresh segments that respond directly to significant consumer trends.
Executive Summary
This Executive Summary provides significant highlights from the discussion and analysis that follows.
Net sales were $7.707 billion in 2012, comparable to a year ago.
Gross profit, as a percent of sales, decreased to 38.8% from 40.2% a year ago.
Net earnings per share were $2.41 in 2012, compared to $2.42 in 2011. The current year included $.03 per share of expense from items that impacted comparability. The prior year included $.12 per share of expense from items that impacted comparability, as discussed below.
Net earnings attributable to Campbell Soup Company - 2012 Compared with 2011
The following items impacted the comparability of net earnings and earnings per share:
In 2011, the company announced a series of initiatives to improve supply chain efficiency and reduce overhead costs across the organization to help fund plans to drive the growth of the business. The company also announced its intent to exit the Russian market. In 2012, the company recorded pre-tax restructuring charges of $10 million ($6 million after tax or $.02 per share) related to the initiatives. In the fourth quarter of 2011, the company recorded a restructuring charge of $63 million ($41 million after tax or $.12 per share) related to the initiatives. See Note 6 to the Consolidated Financial Statements and "Restructuring Charges" for additional information; and
In 2012, the company recorded pre-tax transaction costs of $5 million ($3 million after tax or $.01 per share) related to the acquisition of Bolthouse Farms.
The items impacting comparability are summarized below:
 
2012
 
2011
 
Earnings
Impact
 
EPS
Impact
 
Earnings
Impact
 
EPS
Impact
 
(Millions, except per share amounts)
Net earnings
$
774

 
$
2.41

 
$
805

 
$
2.42

 
 
 
 
 
 
 
 
Restructuring charges
$
(6
)
 
$
(.02
)
 
$
(41
)
 
$
(.12
)
Acquisition transaction costs
(3
)
 
(.01
)
 

 

Impact of items on net earnings
$
(9
)
 
$
(.03
)
 
$
(41
)
 
$
(.12
)
Net earnings were $774 million ($2.41 per share) in 2012, compared to $805 million ($2.42 per share) in 2011. After adjusting for items impacting comparability, net earnings decreased primarily due to a decline in gross margin percentage partially offset by a lower effective tax rate. Earnings per share benefited from a reduction in the weighted average diluted shares outstanding, which was primarily due to share repurchases under the company’s strategic share repurchase programs.
Net earnings (loss) attributable to noncontrolling interests
The company owns a 60% controlling interest in a joint venture formed with Swire Pacific Limited to support the development of the company’s business in China. The joint venture began operations on January 31, 2011, the beginning of the third quarter of 2011. The noncontrolling interest’s share in the net loss was included in Net earnings (loss) attributable to noncontrolling interests in the Consolidated Statements of Earnings.
The company also owns a 70% controlling interest in a Malaysian food products manufacturing company. Historically, the earnings attributable to the noncontrolling interest were less than $1 million annually and, prior to the third quarter of 2011, were

15



included in Other expenses/(income) in the Consolidated Statements of Earnings. Beginning in the third quarter of 2011, the earnings attributable to the noncontrolling interest were included in Net earnings (loss) attributable to noncontrolling interests in the Consolidated Statements of Earnings. The earnings were not material in 2012 and in 2011.
Net earnings attributable to Campbell Soup Company - 2011 Compared with 2010
In addition to the 2011 item that impacted comparability of net earnings and net earnings per share previously disclosed, the following items also impacted comparability:
In the third quarter of 2010, the company recorded a restructuring charge of $12 million ($8 million after tax or $.02 per share) for pension benefit costs related to the 2008 initiatives to improve operational efficiency and long-term profitability. See Note 6 to the Consolidated Financial Statements and “Restructuring Charges” for additional information; and
In the third quarter of 2010, the company recorded deferred tax expense of $10 million, or $.03 per share, to reduce deferred tax assets as a result of the U.S. health care legislation enacted in March 2010. The law changed the tax treatment of subsidies to companies that provide prescription drug benefits to retirees.
The items impacting comparability are summarized below:
 
2011
 
2010
 
Earnings
Impact
 
EPS
Impact
 
Earnings
Impact
 
EPS
Impact
 
(Millions, except per share amounts)
Net earnings
$
805

 
$
2.42

 
$
844

 
$
2.42

 
 
 
 
 
 
 
 
Restructuring charges
$
(41
)
 
$
(.12
)
 
$
(8
)
 
$
(.02
)
Deferred tax expense from U.S. health care legislation

 

 
(10
)
 
(.03
)
Impact of items on net earnings
$
(41
)
 
$
(.12
)
 
$
(18
)
 
$
(.05
)
Net earnings were $805 million ($2.42 per share) in 2011 and $844 million ($2.42 per share) in 2010. After adjusting for the items impacting comparability, net earnings decreased in 2011 primarily due to a decline in gross margin percentage and lower sales volume, partly offset by lower marketing expenses and the impact of currency. After adjusting for items impacting comparability, earnings per share increased in 2011 due to a reduction in the weighted average diluted shares outstanding, primarily due to share repurchases under the company's strategic share repurchase program.
DISCUSSION AND ANALYSIS
Sales
An analysis of net sales by reportable segment follows:
 
 
 
 
 
 
 
% Change
 
2012
 
2011
 
2010
 
2012/2011
 
2011/2010
 
(Millions)
 
 
 
 
U.S. Simple Meals
$
2,726

 
$
2,751

 
$
2,938

 
(1)
 
(6)
Global Baking and Snacking
2,193

 
2,156

 
1,975

 
2
 
9
International Simple Meals and Beverages
1,404

 
1,463

 
1,423

 
(4)
 
3
U.S. Beverages
774

 
759

 
762

 
2
 
North America Foodservice
610

 
590

 
578

 
3
 
2
 
$
7,707

 
$
7,719

 
$
7,676

 
 
1

16



An analysis of percent change of net sales by reportable segment follows:
 
2012 versus 2011
U.S.
Simple
Meals
 
Global
Baking
and
Snacking
 
International
Simple Meals
and
Beverages
 
U.S.
Beverages
 
North
America
Foodservice
 
Total
Volume and Mix
(4)%
 
(1)%
 
(3)%
 
3%
 
2%
 
(2)%
Price and Sales Allowances
3
 
5
 
2
 
 
2
 
3
Increased Promotional Spending (1)
 
(3)
 
(1)
 
(1)
 
(1)
 
(1)
Currency
 
1
 
(2)
 
 
 
 
(1)%
 
2%
 
(4)%
 
2%
 
3%
 
—%

2011 versus 2010
U.S.
Simple
Meals
 
Global
Baking
and
Snacking
 
International
Simple Meals
and
Beverages
 
U.S.
Beverages
 
North
America
Foodservice
 
Total
Volume and Mix
(5)%
 
3%
 
—%
 
2%
 
(1)%
 
(1)%
Price and Sales Allowances
 
2
 
 
 
 
1
(Increased)/Decreased Promotional Spending (1)
(1)
 
(1)
 
(1)
 
(2)
 
2
 
(1)
Currency
 
5
 
4
 
 
1
 
2
 
(6)%
 
9%
 
3%
 
—%
 
2%
 
1%
__________________________________________
(1)
Represents revenue reductions from trade promotion and consumer coupon redemption programs.
In 2012, U.S. Simple Meals sales decreased 1%. U.S. Soup declined 2% as lower volumes were partially offset by higher selling prices, reflecting a continued cautious consumer environment. Further details of U.S. Soup include:
Sales of Campbell’s condensed soups increased 1% due to gains in eating varieties as cooking varieties were comparable to a year ago.
Sales of ready-to-serve soups decreased 7%. Ready-to-serve soup volumes were impacted by the company's shift to improve price realization through higher selling prices and reduced promotional spending. The introduction of Campbell’s Slow Kettle soups in July 2011 positively impacted sales performance.
Broth sales increased 3% primarily due to volume gains and the introduction of Swanson Flavor Boost concentrated broth, which launched in July 2011.
U.S. Sauces sales increased slightly as gains in Prego pasta sauces were mostly offset by declines in sales of Pace Mexican sauces and other simple meal products. Sales of Pace Mexican sauces were negatively impacted by increased private label competitive activity. In U.S. Sauces, promotional spending was increased to improve marketplace performance.
In 2011, U.S. Simple Meals sales decreased 6%. U.S. soup sales decreased 6% reflecting an overall weak economy; a challenging competitive environment in the U.S. food industry; changes in buying patterns among U.S. shoppers, particularly in “stock up” purchase behavior; and lower levels of product innovation. In this retail environment, the company’s high levels of promotional support during the first half of the year did not deliver anticipated volume gains.
Sales of Campbell’s condensed soups declined 4% primarily due to declines in eating varieties. Sales of eating varieties were negatively impacted by promotional discounting in ready-to-serve soups.
Sales of ready-to-serve soups decreased 9% with declines in both canned and microwavable varieties.
Broth sales decreased 1%.
In 2011, sales of Prego pasta sauces and Pace Mexican sauces declined due to increased competitive activities.
In 2012, Global Baking and Snacking sales increased 2% as sales growth in Pepperidge Farm was partially offset by a decline in Arnott's. Sales at Pepperidge Farm reflected higher selling prices across the product portfolio, partly offset by increased promotional spending. Sales increased at double-digit rates in Goldfish snack crackers, and declined in cookies and frozen products. Sales at Arnott's declined reflecting an increase in promotional spending as the business was impacted by a difficult customer and consumer environment.
In 2011, Global Baking and Snacking sales increased 9% as both Pepperidge Farm and Arnott’s achieved volume gains and also benefited from higher selling prices. Pepperidge Farm sales increased primarily due to growth in Goldfish snack crackers and

17



bakery products, including whole-grain bread. In Arnott’s, sales increased primarily due to currency, as well as gains in Shapes, Cruskits, and Vita-Weat savory crackers, and chocolate biscuits.
In 2012, International Simple Meals and Beverages sales decreased 4%. In Europe, sales declined primarily due to currency and declines in Germany. In Canada, sales declined primarily due to lower soup sales and the impact of currency. Promotional spending was increased within the segment to improve marketplace performance.
In 2011, International Simple Meals and Beverages sales increased 3%, primarily due to currency. In Europe, sales declined due to currency. In Asia Pacific, sales increased primarily due to currency and volume-driven gains in Australia. In Canada, sales increased due to currency and volume gains, partially offset by increased promotional spending on soup products to be more competitive with other simple meal products. Sales in Latin America declined.
In 2012, U.S. Beverages sales increased 2%. Sales of V8 Splash beverages and V8 V-Fusion beverages increased, while sales of V8 vegetable juice declined. Sales of V8 V-Fusion beverages benefited from a range of new products, including V8 V-Fusion Smoothies, Energy, Sparkling and juice boxes, as well as increased promotional support.
In 2011, U.S. Beverages sales were comparable to 2010 as increased volume was offset by higher promotional spending. Promotional spending was increased to be more competitive with other beverages. Sales of V8 Splash beverages and V8 V-Fusion beverages increased, while sales of V8 vegetable juice declined.
In 2012, North America Foodservice sales increased 3% primarily due to gains in refrigerated soup.
In 2011, North America Foodservice sales increased 2% primarily due to gains in refrigerated soup.
Gross Profit
Gross profit, defined as Net sales less Cost of products sold, decreased by $111 million in 2012 from 2011 and decreased by $47 million in 2011 from 2010. As a percent of sales, gross profit was 38.8% in 2012, 40.2% in 2011, and 41.0% in 2010.
The 1.4-percentage-point decrease in gross margin percentage in 2012 was due to the following factors:
 
 
 
Margin
Impact
Cost inflation and other factors
(3.7)
Higher level of promotional spending
(0.8)
Mix
(0.7)
Higher selling prices
2.0
Productivity improvements
1.8
 
(1.4)
The 0.8-percentage-point decrease in gross margin percentage in 2011 was due to the following factors:
 
 
 
Margin
Impact
Cost inflation and other factors, including higher plant costs
(2.2)
Higher level of promotional spending
(0.7)
Mix
(0.2)
Productivity improvements
1.9
Higher selling prices
0.4
 
(0.8)
Marketing and Selling Expenses
Marketing and selling expenses as a percent of sales were 13.2% in 2012, 13.0% in 2011, and 13.8% in 2010. Marketing and selling expenses increased 1% in 2012 from 2011. The increase was primarily due to higher advertising and consumer promotion expenses (approximately 1 percentage point) and higher other marketing expenses (approximately 1 percentage point), partly offset by lower selling expenses (approximately 1 percentage point). Advertising and consumer promotion expenses increased 3% in 2012 from 2011, reflecting brand-building investments across many key brands. Marketing and selling expenses decreased 5% in 2011 from 2010. The decrease was primarily due to lower advertising expenses (approximately 3 percentage points); lower selling expenses (approximately 2 percentage points); and lower other marketing expenses (approximately 2 percentage points), partly offset by the impact of currency (approximately 2 percentage points).

18



Administrative Expenses
Administrative expenses as a percent of sales were 7.9% in 2012, 2011, and 2010. Administrative expenses were comparable in 2012 and 2011, as cost savings from restructuring initiatives and other factors (approximately 5 percentage points) were offset by higher compensation and benefit costs (approximately 2 percentage points) and higher general administrative costs and inflation (approximately 3 percentage points). Administrative expenses increased by 1% in 2011 from 2010 primarily due to an increase in pension and health care benefit costs (approximately 2 percentage points); the impact of currency (approximately 2 percentage points); and costs associated with the corporate headquarters facility (approximately 1 percentage point), partially offset by lower compensation costs (approximately 2 percentage points) and cost management efforts and other factors (approximately 2 percentage points).
Research and Development Expenses
Research and development expenses decreased $4 million or 3% in 2012 from 2011. The decrease was primarily due to cost savings initiatives and other factors (approximately 6 percentage points), partially offset by higher costs associated with product innovation in North America and the Asia Pacific region (approximately 2 percentage points), and inflation (approximately 1 percentage point). Research and development expenses increased $6 million or 5% in 2011 from 2010. The increase was primarily due to costs associated with an ongoing initiative to simplify the soup-making process and product innovation in North America (approximately 2 percentage points); costs associated with a global baked snacks initiative (approximately 2 percentage points), and the impact of currency (approximately 2 percentage points), partly offset by cost savings initiatives (approximately 1 percentage point).
Other Expenses/(Income)
Other expense in 2012 included a $3 million impairment charge associated with the Blå Band trademark used in the International Simple Meals and Beverages segment. The charge was recorded as a result of the company's annual review of intangible assets. See Note 4 to the Consolidated Financial Statements. Other expense in 2012 also included $5 million of transaction costs associated with the acquisition of Bolthouse Farms. See Note 19 to the Consolidated Financial Statements.
Other expense in 2011 included a $3 million impairment charge associated with the Heisse Tasse trademark used in the International Simple Meals and Beverages segment. The charge was recorded as a result of the company's annual review of intangible assets. See Note 4 to the Consolidated Financial Statements.
Operating Earnings
Segment operating earnings decreased 8% in 2012 from 2011 and decreased 1% in 2011 from 2010.
An analysis of operating earnings by segment follows:
 
 
 
 
 
 
 
% Change
 
2012
 
2011
 
2010
 
2012/2011
 
2011/2010
 
(Millions)
 
 
 
 
U.S. Simple Meals
$
658

 
$
657

 
$
737

 
 
(11)
Global Baking and Snacking
315

 
355

 
322

 
(11)
 
10
International Simple Meals and Beverages
153

 
185

 
161

 
(17)
 
15
U.S. Beverages
134

 
182

 
206

 
(26)
 
(12)
North America Foodservice
85

 
82

 
55

 
4
 
49
 
1,345

 
1,461

 
1,481

 
(8)
 
(1)
Unallocated corporate expenses
(123
)
 
(119
)
 
(121
)
 
 
 
 
Restructuring charges(1)
(10
)
 
(63
)
 
(12
)
 
 
 
 
Earnings before interest and taxes
$
1,212

 
$
1,279

 
$
1,348

 
 
 
 
__________________________________________
(1)
See Note 6 to the Consolidated Financial Statements for additional information on restructuring charges.
Earnings from U.S. Simple Meals in 2012 and 2011 were comparable, as earnings gains in U.S. Soup were mostly offset by declines in U.S. Sauces. For the segment, higher selling prices, productivity improvements and lower promotional spending were mostly offset by lower volumes and cost inflation.
Earnings from U.S. Simple Meals decreased 11% in 2011 versus 2010. The decline was primarily due to lower sales and a reduced gross margin percentage, partially offset by lower marketing and selling expenses. In the first half of 2011, in response to the overall competitive environment, the company maintained higher levels of promotional support, which did not deliver anticipated volume gains.

19



Earnings from Global Baking and Snacking decreased 11% in 2012 versus 2011 primarily due to cost inflation, increased promotional spending and higher advertising expense, partly offset by higher selling prices and productivity improvements. Promotional spending was increased to support the businesses.
Earnings from Global Baking and Snacking increased 10% in 2011 versus 2010. The increase was primarily due to the impact of currency and volume-driven growth in both Pepperidge Farm and Arnott’s.
Earnings from International Simple Meals and Beverages decreased 17% in 2012 versus 2011. The decrease in operating earnings was primarily due to lower earnings in the Asia Pacific region and Canada, and increased costs associated with the company's market expansion in China.
Earnings from International Simple Meals and Beverages increased 15% in 2011 versus 2010. The increase was primarily due to growth in the Asia Pacific region, the impact of currency and reduced investment in Russia.
Earnings from U.S. Beverages decreased 26% primarily due to cost inflation, increased promotional spending and advertising expense, partly offset by productivity improvements.
Earnings from U.S. Beverages decreased 12% in 2011 versus 2010 primarily due to increased promotional spending.
Earnings from North America Foodservice increased 4% due to higher selling prices and productivity improvements, partially offset by cost inflation.
Earnings from North America Foodservice increased to $82 million in 2011 from $55 million in 2010 primarily due to reduced promotional spending, productivity improvements in excess of inflation, and lower administrative expense.
Interest Expense/Income
Interest expense decreased to $114 million in 2012 from $122 million in 2011, primarily due to lower interest rates on fixed-rate debt. Interest income decreased to $8 million in 2012 from $11 million in 2011 primarily due to lower levels of cash and cash equivalents.
Interest expense increased to $122 million in 2011 from $112 million in 2010 primarily due to an increase in fixed-rate debt and higher debt levels. Interest income increased to $11 million in 2011 from $6 million in 2010 primarily due to higher levels of cash and cash equivalents.
Taxes on Earnings
The effective tax rate was 30.9% in 2012, 31.3% in 2011, and 32.0% in 2010. The reduction in the effective tax rate in 2012 from 2011 was primarily due to lower tax expense associated with the repatriation of foreign earnings in 2012.
The reduction in the effective tax rate in 2011 from 2010 was primarily due to $10 million of deferred tax expense recognized in 2010 as a result of the enactment of U.S. health care legislation. The law changed the tax treatment of subsidies to companies that provide prescription drug benefits to retirees. The company recorded the adjustment to reduce the value of the deferred tax asset associated with the subsidy.
Restructuring Charges
2011 Initiatives
On June 28, 2011, the company announced a series of initiatives to improve supply chain efficiency and reduce overhead costs across the organization to help fund plans to drive the growth of the business. The company also announced its intent to exit the Russian market. Details of the initiatives include:
In Australia, the company will invest in a new system to automate packing operations at its biscuit plant in Virginia. This investment will occur through the second quarter of 2013 and will result in the elimination of approximately 190 positions. Further, the company improved asset utilization in the U.S. by shifting production of ready-to-serve soups from Paris, Texas, to other facilities in 2012. In addition, the manufacturing facility in Marshall, Michigan, was closed in 2011, and manufacturing of Campbell’s Soup at Hand microwavable products was consolidated at the Maxton, North Carolina, plant in 2012.
The company streamlined its salaried workforce by approximately 510 positions around the world, including approximately 130 positions at its world headquarters in Camden, New Jersey. These actions were substantially completed in 2011. As part of this initiative, the company outsourced a larger portion of its U.S. retail merchandising activities to its current retail sales agent, Acosta Sales and Marketing, and eliminated approximately 190 positions.
In connection with exiting the Russian market, the company has eliminated approximately 50 positions. The exit process commenced in 2011 and was substantially completed in 2012.
In 2012, the company recorded a restructuring charge of $10 million ($6 million after tax or $.02 per share) related to these initiatives. In 2011, the company recorded a restructuring charge of $63 million ($41 million after tax or $.12 per share). A summary

20



of the pre-tax charges and remaining costs associated with the initiatives is as follows:
 
(Millions)
Total
Program
 
Recognized
as of
July 29, 2012
 
Remaining
Costs to be
Recognized
Severance pay and benefits
$
43

 
$
(41
)
 
$
2

Asset impairment/accelerated depreciation
23

 
(23
)
 

Other exit costs
9

 
(9
)
 

Total
$
75

 
$
(73
)
 
$
2


Of the aggregate $75 million of pre-tax costs, the company expects approximately $50 million will be cash expenditures, the majority of which was spent in 2012. In addition, the company expects to invest approximately $40 million in capital expenditures in connection with the actions, of which approximately $18 million has been invested as of July 29, 2012. The remaining cash outflows related to these programs are not expected to have a material adverse impact on the company’s liquidity. The initiatives are expected to be completed by the end of 2013.
The initiatives included in this program are expected to generate annual pre-tax cash savings of approximately $60 million beginning in 2012 and increasing to approximately $70 million in 2014.
The total pre-tax costs of $75 million associated with each segment are expected to be as follows: U.S. Simple Meals $32 million; Global Baking and Snacking $15 million; International Simple Meals and Beverages $18 million; U.S. Beverages $3 million; North America Foodservice $1 million; and Corporate $6 million. Segment operating results do not include restructuring charges as segment performance is evaluated excluding such charges.
2008 Initiatives
On April 28, 2008, the company announced a series of initiatives to improve operational efficiency and long-term profitability, including selling certain salty snack food brands and assets in Australia, closing certain production facilities in Australia and Canada, and streamlining the company's management structure.
As a result of these initiatives, in 2010, the company recorded a restructuring charge of $12 million ($8 million after tax or $.02 per share) for pension benefit costs, which represented the final costs associated with the 2008 initiatives. These costs related to the International Simple Meals and Beverages segment.
See Note 6 to the Consolidated Financial Statements for additional information.
Recent Development - 2013 Initiatives
On September 27, 2012, the company announced several initiatives to improve its U.S. supply chain cost structure and increase asset utilization across its U.S. thermal plant network. The initiatives include closing the company's Sacramento, California, thermal plant, which produces soups, sauces and beverages, and the company's South Plainfield, New Jersey, spice plant, which supplies ingredients to the company's U.S. thermal plants. As a result of the initiatives, the company expects to incur pre-tax costs of approximately $115 million, most of which will be incurred in 2013. The company also expects to invest approximately $27 million in capital expenditures, primarily to relocate and refurbish a beverage filling and packaging line. For additional information relating to the initiatives, see Note 19 to the Consolidated Financial Statements.
LIQUIDITY AND CAPITAL RESOURCES
The company expects that foreseeable liquidity and capital resource requirements, including cash outflows to repay debt, pay dividends and fund pension plan contributions, will be met through anticipated cash flows from operations; long-term borrowings under its shelf registration statement; short-term borrowings, including commercial paper; and cash and cash equivalents. Over the last three years, operating cash flows totaled approximately $3.3 billion. This cash-generating capability provides the company with substantial financial flexibility in meeting its operating and investing needs. The company believes that its sources of financing will be adequate to meet its future liquidity and capital resource requirements.
The company generated cash from operations of $1.120 billion in 2012, compared to $1.142 billion in 2011. The decline was primarily due to lower cash earnings, partially offset by lower pension contributions in 2012.
The company generated cash from operations of $1.142 billion in 2011, compared to $1.057 billion in 2010. The increase was primarily due to lower pension contributions and higher cash earnings, partially offset by higher working capital requirements.
Capital expenditures were $323 million in 2012, $272 million in 2011 and $315 million in 2010. Capital expenditures are expected to total approximately $330 million in 2013, including Bolthouse Farms projects. Capital expenditures in 2012 included the packing automation and capacity expansion projects at one of the company’s Australian biscuit plants (approximately $32

21



million), an advanced planning system in North America (approximately $14 million), capacity expansion at Pepperidge Farm (approximately $18 million), the ongoing initiative to simplify the soup-making process in North America (also known as the soup common platform initiative) (approximately $17 million), continued enhancement of the company’s corporate headquarters (approximately $11 million), and Pepperidge Farm's 34,000-square-foot innovation center (approximately $20 million). Capital expenditures in 2011 included the expansion of beverage capacity (approximately $6 million); the ongoing implementation of SAP (approximately $13 million); expenditures at the company’s corporate headquarters (approximately $6 million); Pepperidge Farm’s new 34,000-square-foot innovation center (approximately $5 million); expansion of Pepperidge Farm’s production capacity (approximately $5 million) and a number of infrastructure projects in the U.S. supply chain (approximately $31 million). Capital expenditures in 2010 included expansion and enhancements of the company’s corporate headquarters (approximately $36 million); expansion of Arnott’s production capacity (approximately $21 million); the ongoing implementation of SAP in Australia and New Zealand (approximately $15 million) and expansion of Pepperidge Farm’s production capacity (approximately $14 million).
Long-term borrowings in 2011 included the issuance in April of $500 million of 4.25% notes that mature in April 2021. Long-term borrowings in 2010 included the issuance in July of $400 million of 3.05% notes that mature in July 2017. The net proceeds from these issuances were used for the repayment of commercial paper borrowings and for other general corporate purposes.
Dividend payments were $373 million in 2012, $378 million in 2011, and $365 million in 2010. Annual dividends declared in 2012 were $1.16 per share, $1.145 per share in 2011 and $1.075 per share in 2010. The 2012 fourth quarter rate was $0.29 per share.
Excluding shares owned and tendered by employees to satisfy tax withholding requirements on the vesting of restricted shares and for stock option exercises, the company repurchased approximately 13 million shares at a cost of $412 million during 2012. Approximately $250 million was used to repurchase shares pursuant to the company’s June 2011 publicly announced share repurchase program. Approximately $750 million remained available under the June 2011 repurchase program as of July 29, 2012. This program has no expiration date, although the company suspended purchases under this program in July 2012. In addition to the June 2011 publicly announced share repurchase program, the company also purchased shares to offset the impact of dilution from shares issued under the company’s stock compensation plans. The company expects to continue this practice in the future. See “Market for Registrant’s Capital Stock, Related Shareowner Matters and Issuer Purchases of Equity Securities” for more information.
Excluding shares owned and tendered by employees to satisfy tax withholding requirements on the vesting of restricted shares and for stock option exercises, the company repurchased 21 million shares at a cost of $728 million during 2011. Approximately $550 million was used to repurchase shares pursuant to the company’s June 2008 publicly announced share repurchase program. Under this program, the company’s Board of Directors authorized the purchase of up to $1.2 billion of company stock through the end of 2011. This program was completed in 2011. In addition to the June 2008 publicly announced share repurchase program, the company also purchased shares to offset the impact of dilution from shares issued under the company’s stock compensation plans.
Excluding shares owned and tendered by employees to satisfy tax withholding requirements on the vesting of restricted shares and for stock option exercises, the company repurchased 14 million shares at a cost of $472 million during 2010. Approximately $250 million was used to repurchase shares pursuant to the company’s June 2008 publicly announced share repurchase program. In addition to the June 2008 publicly announced share repurchase program, the company also purchased shares to offset the impact of dilution from shares issued under the company’s stock compensation plans.
At July 29, 2012, the company had $786 million of short-term borrowings due within one year and $47 million of standby letters of credit issued on behalf of the company. At that date, the company had a $500 million credit facility that matured in September 2012, and a $1.5 billion facility that matures in September 2016. These facilities remained unused at July 29, 2012, except for $3 million of standby letters of credit issued on behalf of the company. In September 2012, the company entered into a $500 million committed revolving credit facility that matures in September 2016, replacing the $500 million credit facility that matured in September 2012. These revolving credit agreements support the company’s commercial paper programs and other general corporate purposes.
As previously disclosed, on August 6, 2012, the company completed the acquisition of Bolthouse Farms for $1.55 billion in cash, subject to customary purchase price adjustments. The acquisition was funded through a combination of short- and long-term borrowings. Approximately $300 million was funded through the issuance of commercial paper. The terms of long-term borrowings, which were issued on August 2, 2012 to fund the transaction, were as follows:
$400 million floating rate notes that mature on August 1, 2014. Interest on the notes is based on 3-month U.S. dollar LIBOR plus 0.30%. Interest is payable quarterly beginning November 1, 2012;
$450 million of 2.50% notes that mature on August 2, 2022. Interest is payable semi-annually beginning February 2, 2013. The company may redeem the notes in whole or in part at any time at a redemption price of 100% of the principal amount plus accrued interest or an amount designed to ensure that the note holders are not penalized by the early redemption; and

22



$400 million of 3.80% notes that mature on August 2, 2042. Interest is payable semi-annually beginning February 2, 2013. The company may redeem the notes in whole or in part at any time at a redemption price of 100% of the principal amount plus accrued interest or an amount designed to ensure that the note holders are not penalized by the early redemption.
In November 2011, the company filed a registration statement with the Securities and Exchange Commission that registered an indeterminate amount of debt securities. This registration statement replaced the 2008 registration statement, which expired in November 2011. Under the registration statement, the company may issue debt securities, depending on market conditions.
The company is in compliance with the covenants contained in its revolving credit facilities and debt securities.
CONTRACTUAL OBLIGATIONS AND OTHER COMMITMENTS
Contractual Obligations
The following table summarizes the company’s obligations and commitments to make future payments under certain contractual obligations as of July 29, 2012. For additional information on debt, see Note 11 to the Consolidated Financial Statements. Operating leases are primarily entered into for warehouse and office facilities and certain equipment. Purchase commitments represent purchase orders and long-term purchase arrangements related to the procurement of ingredients, supplies, machinery, equipment and services. These commitments are not expected to have a material impact on liquidity. Other long-term liabilities primarily represent payments related to deferred compensation obligations. For additional information on other long-term liabilities, see Note 17 to the Consolidated Financial Statements.
 
Contractual Payments Due by Fiscal Year
 
Total
 
2013
 
2014 - 2015
 
2016 - 2017
 
Thereafter
 
(Millions)
Debt obligations(1)
$
2,782

 
$
782

 
$
600

 
$
400

 
$
1,000

Interest payments(2)
535

 
97

 
143

 
129

 
166

Purchase commitments
915

 
612

 
128

 
79

 
96

Operating leases
199

 
42

 
55

 
42

 
60

Derivative payments(3)
83

 
37

 
46

 

 

Other long-term liabilities(4)
145

 

 
38

 
31

 
76

Total long-term cash obligations
$
4,659

 
$
1,570

 
$
1,010

 
$
681

 
$
1,398

_______________________________________
(1)
Excludes unamortized net discount/premium on debt issuances and amounts related to interest rate swaps designated as fair-value hedges. For additional information on debt obligations, see Note 11 to the Consolidated Financial Statements.
(2)
Interest payments for short-term borrowings are calculated based on par values and rates of contractually obligated issuances at fiscal year end. Interest payments on long-term debt are based on principal amounts and fixed coupon rates at fiscal year end.
(3)
Represents payments of cross-currency swaps, forward exchange contracts, commodity contracts, and deferred compensation hedges. Contractual payments for cross-currency swaps represent future undiscounted cash payments based on forward interest and foreign exchange rates.
(4)
Represents other long-term liabilities, excluding unrecognized tax benefits, postretirement benefits and payments related to pension plans. For additional information on pension and postretirement benefits, see Note 9 to the Consolidated Financial Statements.
Off-Balance Sheet Arrangements and Other Commitments
The company guarantees approximately 2,000 bank loans to Pepperidge Farm independent sales distributors by third-party financial institutions used to purchase distribution routes. The maximum potential amount of the future payments the company could be required to make under the guarantees is $164 million. The company’s guarantees are indirectly secured by the distribution routes. The company does not believe that it is probable that it will be required to make guarantee payments as a result of defaults on the bank loans guaranteed. See also Note 16 to the Consolidated Financial Statements for information on off-balance sheet arrangements.
INFLATION
Since 2010, the company has experienced inflationary increases primarily in commodity costs. The company continues to use a number of strategies to mitigate the effects of cost inflation including increasing prices, commodity hedging and pursuing cost productivity initiatives such as global procurement strategies and capital investments that improve the efficiency of operations.

23



MARKET RISK SENSITIVITY
The principal market risks to which the company is exposed are changes in foreign currency exchange rates, interest rates and commodity prices. In addition, the company is exposed to equity price changes related to certain deferred 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 accounted for approximately 30% of 2012 net sales, are concentrated principally in Australia, Canada, France, Germany and Belgium. The company manages its foreign currency exposures by borrowing in various foreign currencies and utilizing cross-currency swaps and forward contracts. Cross-currency swaps and forward 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 company principally uses a combination of purchase orders and various short- and long-term supply arrangements in connection with the purchase of raw materials, including certain commodities and agricultural products. The company also enters into commodity futures, options and swap contracts to reduce the volatility of price fluctuations of diesel fuel, soybean oil, aluminum, wheat, natural gas and cocoa, which impact the cost of raw materials.
The information below summarizes the company’s market risks associated with debt obligations and other significant financial instruments as of July 29, 2012. Fair values included herein have been determined based on quoted market prices or pricing models using current market rates. The information presented below should be read in conjunction with Notes 11 through 13 to the Consolidated Financial Statements.
The table below presents principal cash flows and related interest rates by fiscal year of maturity for debt obligations. Interest rates disclosed on variable-rate debt maturing in 2012 represent the weighted-average rates at the period end. Notional amounts and related interest rates of interest rate swaps are presented by fiscal year of maturity. For the swaps, variable rates are the weighted-average forward rates for the term of each contract.
 
Expected Fiscal Year of Maturity
 
 
 
 
 
2013
 
2014
 
2015
 
2016
 
2017
 
Thereafter
 
Total
 
Fair Value
 
(Millions)
Debt(1)
 
 
 
 
 
 

 
 
 
 
 


 
 
Fixed rate
$
400

 
$
300

 
$
300

 
$

 
$
400

 
$
1,000

 
$
2,400

 
$
2,663

Weighted-average interest rate
5.00
%
 
4.88
%
 
3.38
%
 
%
 
3.05
%
 
5.25
%
 
4.56
%
 
 
Variable rate(2)
$
382

 
 
 
 
 


 
 
 
 
 
$
382

 
$
382

Weighted-average interest rate
0.72
%
 
 
 
 
 


 
 
 
 
 
0.72
%
 
 
Interest Rate Swaps
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fair-value swaps
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed to variable
$
300

 
$
200

 
 
 
 
 
 
 
 
 
$
500

 
$
13

Average pay rate
1.16
%
 
0.89
%
 
 
 


 
 
 
 
 
1.05
%
 
 
Average receive rate
5.00
%
 
4.88
%
 
 
 


 


 


 
4.95
%
 


Cash-flow swaps
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Variable to fixed
$
400

 
 
 
$
200

 
 
 
 
 
 
 
$
600

 
$
2

Average pay rate
1.71
%
 
 
 
2.16
%
 
 
 
 
 
 
 
1.86
%
 
 
Average receive rate
1.74
%
 
 
 
2.23
%
 
 
 
 
 
 
 
1.91
%
 
 
_______________________________________
(1)
Excludes unamortized net premium/discount on debt issuances and amounts related to interest rate swaps designated as fair-value hedges.
(2)
Represents $352 million of USD borrowings and $30 million equivalent of borrowings in other currencies.
As of July 31, 2011, fixed-rate debt of approximately $2.4 billion with an average interest rate of 4.56% and variable-rate debt of approximately $655 million with an average interest rate of 1.19% were outstanding. As of July 31, 2011, the company had swapped $500 million of fixed-rate debt to variable. The average rate to be received on these swaps was 4.95%, and the average rate paid was estimated to be 0.97% over the remaining life of the swaps.
The company is exposed to foreign exchange risk related to its international operations, including non-functional currency intercompany debt and net investments in subsidiaries. The following table summarizes the cross-currency swaps outstanding as of July 29, 2012, which hedge such exposures. The notional amount of each currency and the related weighted-average forward interest rate are presented in the Cross-Currency Swaps table.

24



Cross-Currency Swaps
 
 
Fiscal Year of Expiration
 
Interest Rate
 
Notional Value
 
Fair Value
 
 
 
 
 
 
(Millions)
Pay variable AUD
 
2013
 
3.51%
 
$
7

 
$

Receive variable USD
 
 
 
0.44%
 
 
 
 
Pay variable AUD
 
2013
 
3.58%
 
$
52

 
$

Receive variable USD
 
 
 
0.53%
 
 
 
 
Pay variable AUD
 
2013
 
4.08%
 
$
133

 
$
(25
)
Receive variable USD
 
 
 
1.08%
 
 
 
 
Pay variable CAD
 
2013
 
1.41%
 
$
45

 
$
1

Receive variable USD
 
 
 
0.41%
 
 
 
 
Pay variable CAD
 
2013
 
1.16%
 
$
40

 
$
2

Receive variable USD
 
 
 
0.47%
 
 
 
 
Pay variable EUR
 
2013
 
1.28%
 
$
21

 
$
2

Receive variable USD
 
 
 
1.34%
 
 
 
 
Pay variable EUR
 
2013
 
(0.01)%
 
$
90

 
$
5

Receive variable USD
 
 
 
0.42%
 
 
 
 
Pay variable EUR
 
2013
 
0.17%
 
$
61

 
$
4

Receive variable USD
 
 
 
0.48%
 
 
 
 
Pay variable EUR
 
2013
 
0.18%
 
$
69

 
$
5

Receive variable USD
 
 
 
0.48%
 
 
 
 
Pay fixed CAD
 
2014
 
6.24%
 
$
60

 
$
(25
)
Receive fixed USD
 
 
 
5.66%
 
 
 
 
Pay variable CAD
 
2014
 
1.59%
 
$
83

 
$
(2
)
Receive variable USD
 
 
 
0.59%
 
 
 
 
Pay variable AUD
 
2015
 
4.54%
 
$
133

 
$
(26
)
Receive variable USD
 
 
 
1.24%
 
 
 
 
Pay variable CAD
 
2015
 
1.79%
 
$
42

 
$
(1
)
Receive variable USD
 
 
 
0.74%
 
 
 
 
Total
 
 
 
 
 
$
836

 
$
(60
)
The cross-currency swap contracts outstanding at July 31, 2011, represented four pay variable EUR/receive variable USD swaps with notional values totaling $192 million, one pay fixed EUR/receive fixed USD swap with a notional value of $102 million, two pay variable CAD/receive variable USD swaps with notional values totaling $119 million, two pay variable AUD/receive variable USD swaps with notional values totaling $266 million, and two pay fixed CAD/receive fixed USD swaps with notional values totaling $218 million. The aggregate notional value of these swap contracts was $897 million as of July 31, 2011, and the aggregate fair value of these swap contracts was a loss of $128 million as of July 31, 2011.
The company is also exposed to foreign exchange risk as a result of transactions in currencies other than the functional currency of certain subsidiaries, including subsidiary debt. The company utilizes foreign exchange forward purchase and sale contracts to hedge these exposures. The following table summarizes the foreign exchange forward contracts outstanding and the related weighted-average contract exchange rates as of July 29, 2012.

25



Forward Exchange Contracts
 
Contract Amount
 
Average Contractual Exchange Rate (currency paid/ currency received)
Receive USD/Pay CAD
$
139

 
1.01
Receive USD/Pay AUD
$
30

 
0.98
Receive AUD/Pay NZD
$
25

 
1.26
Receive AUD/Pay USD
$
13

 
0.99
Receive EUR/Pay SEK
$
10

 
8.39
The company had an additional $11 million in a number of smaller contracts to purchase or sell various other currencies, such as the Australian dollar, British Pound, and euro, as of July 29, 2012. The aggregate fair value of all contracts was a gain of $2 million as of July 29, 2012. The total forward exchange contracts outstanding were $251 million, and the aggregate fair value was a loss of $9 million as of July 31, 2011.
The company enters into commodity futures and options contracts to reduce the volatility of price fluctuations for commodities. The notional value of these contracts was $95 million and the aggregate fair value of these contracts was a gain of $4 million as of July 29, 2012. The notional value of these contracts was $87 million, and the aggregate fair value of these contracts was a gain of $1 million as of July 31, 2011.
The company enters into swap contracts which hedge a portion of exposures relating to certain deferred compensation obligations linked to the total return of the company’s capital stock, the total return of the Vanguard Institutional Index, the total return of the Vanguard Total International Stock Index and, beginning in April 2012, the total return of the Vanguard Short-Term Bond Index. Under these contracts, the company pays variable interest rates and receives from the counterparty either the total return on company capital stock; the total return of the Standard & Poor's 500 Index, which is expected to approximate the total return of the Vanguard Institutional Index; the total return of the iShares MSCI EAFE Index, which is expected to approximate the total return of the Vanguard Total International Stock Index; or the total return of the Vanguard Short-Term Bond Index. The notional value of the contract that is linked to the total return on company capital stock was $26 million at July 29, 2012 and $51 million at July 31, 2011. The average forward interest rate applicable to this contract, which expires in 2013, was 0.76% at July 29, 2012. The notional value of the contract that is linked to the return on the Standard & Poor's 500 Index was $15 million at July 29, 2012 and $16 million at July 31, 2011. The average forward interest rate applicable to this contract, which expires in 2013, was 0.64% at July 29, 2012. The notional value of the contract that is linked to the total return of the iShares MSCI EAFE Index was $4 million at July 29, 2012 and July 31, 2011. The average forward interest rate applicable to this contract, which expires in 2013, was 0.71% at July 29, 2012. The notional value of the contract that was linked to the return on the Vanguard Short-Term Bond Index was $30 million at July 29, 2012. The average forward interest rate applicable to this contract, which expires in 2013, was 0.71% at July 29, 2012. The fair value of these contracts was a $1 million gain at July 29, 2012 and a $3 million loss at July 31, 2011.
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, debt repayment and debt issuances, market effects on debt and foreign currency, and the company’s acquisition and divestiture activities.
SIGNIFICANT ACCOUNTING ESTIMATES
The consolidated financial statements of the company are prepared in conformity with accounting principles generally accepted in the United States. The preparation of these financial statements requires the use of estimates, judgments and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the periods presented. Actual results could differ from those estimates and assumptions. See Note 1 to the Consolidated Financial Statements for a discussion of significant accounting policies. The following areas all require the use of subjective or complex judgments, estimates and assumptions:
Trade and consumer promotion programs — The company offers various sales incentive programs to customers and consumers, such as feature price discounts, in-store display incentives, cooperative advertising programs, new product introduction fees, and coupons. The mix between promotion programs, which are classified as reductions in revenue, and advertising or other marketing activities, which are classified as marketing and selling expenses, fluctuates between periods based on the company’s overall marketing plans, and such fluctuations have an impact on revenues. The measurement and recognition of the costs for trade and consumer promotion programs involves the use of judgment related to performance and redemption estimates. Estimates are made based on historical experience and other factors. Typically, programs that are offered have a very short duration. Historically, the difference between actual experience compared to estimated redemptions and performance has not been significant to the quarterly

26



or annual financial statements. However, actual expenses may differ if the level of redemption rates and performance were to vary from estimates.
Valuation of long-lived assets — Fixed assets and amortizable intangible assets are reviewed for impairment as events or changes in circumstances occur indicating that the carrying value of the asset may not be recoverable. Undiscounted cash flow analyses are used to determine if an impairment exists. If an impairment is determined to exist, the loss is calculated based on estimated fair value.
Goodwill and intangible assets deemed to have indefinite lives are not amortized but rather are tested at least annually for impairment, or more often if events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. Goodwill is tested for impairment at the reporting unit level. A reporting unit represents an operating segment or a component of an operating segment. Goodwill is tested for impairment by either performing a qualitative evaluation or a two-step quantitative test. The qualitative evaluation is an assessment of factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount, including goodwill. The company may elect not to perform the qualitative assessment for some or all reporting units and perform a two-step quantitative impairment test. Fair value is determined based on discounted cash flow analyses. The discounted estimates of future cash flows include significant management assumptions such as revenue growth rates, operating margins, weighted average cost of capital, and future economic and market conditions. If the carrying value of the reporting unit exceeds fair value, goodwill is considered impaired. The amount of the impairment is the difference between the carrying value of the goodwill and the “implied” fair value, which is calculated as if the reporting unit had just been acquired and accounted for as a business combination. As of July 29, 2012, the carrying value of goodwill was $2.013 billion. The company has not recognized any impairment of goodwill as a result of annual testing, which began in 2003. As of the 2012 measurement, the fair value of each reporting unit exceeded the carrying value by at least 45%. Holding all other assumptions used in the 2012 measurement constant, a 100-basis-point increase in the weighted average cost of capital would not result in the carrying value of any reporting unit to be in excess of the fair value.
Indefinite-lived intangible assets are tested for impairment by comparing the fair value of the asset to the carrying value. Fair value is determined based on discounted cash flow analyses that include significant management assumptions such as revenue growth rates, weighted average cost of capital, and assumed royalty rates. If the fair value is less than the carrying value, the asset is reduced to fair value. As of July 29, 2012, the carrying value of trademarks was $485 million. In 2012, as part of the company’s annual review of intangible assets, an impairment charge of $3 million was recognized related to the Blå Band trademark used in the International Simple Meals and Beverages segment. The trademark was determined to be impaired as a result of a decrease in the fair value of the brand, resulting from reduced expectations for future sales and discounted cash flows in comparison to the prior year. As of July 29, 2012, certain European trademarks have a carrying value of approximately $40 million, which approximates fair value. Holding all other assumptions used in the 2012 measurement constant, a 100-basis-point increase in the weighted average cost of capital would reduce the fair value of all trademarks and result in an impairment charge of approximately $6 million. In 2011, as part of the company’s annual review of intangible assets, an impairment charge of $3 million was recognized related to the Heisse Tasse trademark used in the International Simple Meals and Beverages segment. The trademark was determined to be impaired as a result of a decrease in the fair value of the brand, resulting from reduced expectations for future sales and discounted cash flows in comparison to the prior year.
The estimates of future cash flows involve considerable management judgment and are based upon assumptions about expected future operating performance, economic conditions, market conditions, and cost of capital. Inherent in estimating the future cash flows are uncertainties beyond the company’s control, such as capital markets. The actual cash flows could differ from management’s estimates due to changes in business conditions, operating performance, and economic conditions.
See also Note 4 to the Consolidated Financial Statements for additional information on goodwill and intangible assets.
Pension and postretirement benefits — The company provides certain pension and postretirement benefits to employees and retirees. Determining the cost associated with such benefits is dependent on various actuarial assumptions, including discount rates, expected return on plan assets, compensation increases, turnover rates and health care trend rates. Independent actuaries, in accordance with accounting principles generally accepted in the United States, perform the required calculations to determine expense. Actual results that differ from the actuarial assumptions are generally accumulated and amortized over future periods.
The discount rate is established as of the company’s fiscal year-end measurement date. In establishing the discount rate, the company reviews published market indices of high-quality debt securities, adjusted as appropriate for duration. In addition, independent actuaries apply high-quality bond yield curves to the expected benefit payments of the plans. The expected return on plan assets is a long-term assumption based upon historical experience and expected future performance, considering the company’s current and projected investment mix. This estimate is based on an estimate of future inflation, long-term projected real returns for each asset class, and a premium for active management. Within any given fiscal period, significant differences may arise between the actual return and the expected return on plan assets. The value of plan assets, used in the calculation of pension expense, is determined on a calculated method that recognizes 20% of the difference between the actual fair value of assets and the expected calculated method. Gains and losses resulting from differences between actual experience and the assumptions are determined at each measurement date. If the net gain or loss exceeds 10% of the greater of plan assets or liabilities, a portion is

27



amortized into earnings in the following year.
Net periodic pension and postretirement expense was $102 million in 2012, $98 million in 2011, and $92 million in 2010. The 2010 expense included $12 million of pension settlement costs related to the closure of a plant in Canada. Significant weighted-average assumptions as of the end of the year were as follows:
 
2012
2011
2010
Pension
 
 
 
Discount rate for benefit obligations
4.05%
5.41%
5.46%
Expected return on plan assets
7.65%
7.90%
8.15%
Postretirement
 
 
 
Discount rate for obligations
3.75%
5.00%
5.25%
Initial health care trend rate
8.25%
8.25%
8.25%
Ultimate health care trend rate
4.50%
4.50%
4.50%
Estimated sensitivities to annual net periodic pension cost are as follows: a 50-basis-point reduction in the discount rate would increase expense by approximately $18 million; a 50-basis-point reduction in the estimated return on assets assumption would increase expense by approximately $12 million. A one-percentage-point increase in assumed health care costs would increase postretirement service and interest cost by approximately $1 million.
Net periodic pension and postretirement expense is expected to increase to approximately $128 million in 2013 primarily due to increased amortization of unrecognized losses.
The company contributed $55 million and $100 million, respectively, to U.S. pension plans in 2012 and 2011. Given the adverse impact of declining financial markets on the funding levels of the plans, the company contributed $260 million to a U.S. plan in 2010. Contributions to non-U.S. plans were $16 million in 2012, $44 million in 2011, and $24 million in 2010. The company contributed $75 million to U.S. plans in the first quarter of 2013. Additional contributions to U.S. plans are not expected in 2013. Contributions to non-U.S. plans are expected to be approximately $13 million in 2013.
See also Note 9 to the Consolidated Financial Statements for additional information on pension and postretirement expenses.
Income taxes — The effective tax rate reflects statutory tax rates, tax planning opportunities available in the various jurisdictions in which the company operates and management’s estimate of the ultimate outcome of various tax audits and issues. Significant judgment is required in determining the effective tax rate and in evaluating tax positions. Income taxes are recorded based on amounts refundable or payable in the current year and include the effect of deferred taxes. Deferred tax assets and liabilities are recognized for the future impact of differences between the financial statement carrying amounts of assets and liabilities and their respective tax bases, as well as for operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those differences are expected to be recovered or settled. Valuation allowances are established for deferred tax assets when it is more likely than not that a tax benefit will not be realized.
See also Notes 1 and 10 to the Consolidated Financial Statements for further discussion on income taxes.
RECENT ACCOUNTING PRONOUNCEMENTS
See Note 2 to the Consolidated Financial Statements for information on recent accounting pronouncements.
CAUTIONARY FACTORS THAT MAY AFFECT FUTURE RESULTS
This Report contains contains “forward-looking” statements that 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,” “will” and similar expressions. One can also identify them by the fact that they do not relate strictly to historical or current facts. 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 regarding future events and estimates which could be inaccurate and which are inherently subject to risks and uncertainties.
The company wishes to caution the reader that the following important factors and those important factors described in Part 1, Item 1A and elsewhere in this Report, 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, and of changes in consumer demand for the company’s products;

28



the risks in the marketplace associated with trade and consumer acceptance of product improvements, shelving initiatives, new product introductions, and pricing and promotional strategies;
the company’s ability to achieve sales and earnings guidance, which is based on assumptions about sales volume, product mix, the development and success of new products, the impact of marketing, promotional and pricing actions, product costs and currency;
the company’s ability to realize projected cost savings and benefits;
the company’s ability to successfully manage changes to its business processes, including selling, distribution, manufacturing and information management systems;
the practices and increased significance of certain of the company’s key trade customers;
the impact of inventory management practices by the company’s trade customers;
the impact of fluctuations in the supply of and inflation in energy, raw and packaging materials cost;
the impact associated with completing and integrating acquisitions, divestitures and other portfolio changes, including the Bolthouse Farms acquisition;
the uncertainties of litigation described from time to time in the company’s Securities and Exchange Commission filings;
the impact of changes in currency exchange rates, tax rates, interest rates, debt and equity markets, inflation rates, economic conditions and other external factors; and
the impact of unforeseen business disruptions in one or more of the company’s markets due to political instability, civil disobedience, armed hostilities, natural disasters or other calamities.
This discussion of uncertainties is by no means exhaustive but is designed to highlight important factors that may impact the company’s outlook. The company disclaims any obligation or intent to update forward-looking statements made by the company in order to reflect new information, events or circumstances after the date they are made.
Item 7A. Quantitative and Qualitative Disclosure About Market Risk
The information presented in the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Market Risk Sensitivity” is incorporated herein by reference.

29



Item 8.
Financial Statements and Supplementary Data

CAMPBELL SOUP COMPANY
Consolidated Statements of Earnings
(millions, except per share amounts)
 
 
2012
 
2011
 
2010
Net sales
$
7,707

 
$
7,719

 
$
7,676

Costs and expenses
 
 
 
 

Cost of products sold
4,715

 
4,616

 
4,526

Marketing and selling expenses
1,020

 
1,007

 
1,058

Administrative expenses
611

 
612

 
605

Research and development expenses
125

 
129

 
123

Other expenses / (income)
14

 
13

 
4

Restructuring charges
10

 
63

 
12

Total costs and expenses
6,495

 
6,440

 
6,328

Earnings before interest and taxes
1,212

 
1,279

 
1,348

Interest expense
114

 
122

 
112

Interest income
8

 
11

 
6

Earnings before taxes
1,106

 
1,168

 
1,242

Taxes on earnings
342

 
366

 
398

Net earnings
764

 
802

 
844

Less: Net earnings (loss) attributable to noncontrolling interests
(10
)
 
(3
)
 

Net earnings attributable to Campbell Soup Company
$
774

 
$
805

 
$
844

Per Share — Basic
 
 
 
 

Net earnings attributable to Campbell Soup Company
$
2.43

 
$
2.44

 
$
2.44

Weighted average shares outstanding — basic
317

 
326

 
340

Per Share — Assuming Dilution
 
 
 
 

Net earnings attributable to Campbell Soup Company
$
2.41

 
$
2.42

 
$
2.42

Weighted average shares outstanding — assuming dilution
319

 
329

 
343

See accompanying Notes to Consolidated Financial Statements.


30


CAMPBELL SOUP COMPANY
Consolidated Balance Sheets
(millions, except per share amounts)
 
 
July 29,
2012
 
July 31,
2011
Current assets
 
 
 
Cash and cash equivalents
$
335

 
$
484

Accounts receivable, net
553

 
560

Inventories
714

 
767

Other current assets
169

 
152

Total current assets
1,771

 
1,963

Plant assets, net of depreciation
2,127

 
2,103

Goodwill
2,013

 
2,133

Other intangible assets, net of amortization
496

 
527

Other assets
123

 
136

Total assets
$
6,530

 
$
6,862

Current liabilities
 
 
 
Short-term borrowings
$
786

 
$
657

Payable to suppliers and others
571

 
585

Accrued liabilities
598

 
619

Dividend payable
93

 
95

Accrued income taxes
22

 
33

Total current liabilities
2,070

 
1,989

Long-term debt
2,004

 
2,427

Deferred taxes
298

 
367

Other liabilities
1,260

 
983

Total liabilities
5,632

 
5,766

Commitments and contingencies

 

Campbell Soup Company shareowners’ equity
 
 
 
Preferred stock; authorized 40 shares; none issued

 

Capital stock, $.0375 par value; authorized 560 shares; issued 542 shares
20

 
20

Additional paid-in capital
329

 
331

Earnings retained in the business
9,584

 
9,185

Capital stock in treasury, at cost
(8,259
)
 
(8,021
)
Accumulated other comprehensive loss
(776
)
 
(427
)
Total Campbell Soup Company shareowners’ equity
898

 
1,088

Noncontrolling interests

 
8

Total equity
898

 
1,096

Total liabilities and equity
$
6,530

 
$
6,862

See accompanying Notes to Consolidated Financial Statements.


31



CAMPBELL SOUP COMPANY
Consolidated Statements of Cash Flows
(millions)
 
2012
 
2011
 
2010
Cash flows from operating activities:
 
 
 
 
 
Net earnings
$
764

 
$
802

 
$
844

Adjustments to reconcile net earnings to operating cash flow
 
 
 
 

Restructuring charges
10

 
63

 
12

Stock-based compensation
79

 
87

 
88

Depreciation and amortization
262

 
268

 
251

Deferred income taxes
45

 
46

 
54

Other, net
118

 
108

 
99

Changes in working capital
 
 
 
 

Accounts receivable
(18
)
 
(15
)
 
21

Inventories
32

 
(14
)
 
105

Prepaid assets
(3
)
 
19

 
(9
)
Accounts payable and accrued liabilities
(19
)
 
(26
)
 
(34
)
Pension fund contributions
(71
)
 
(144
)
 
(284
)
Receipts from (payments of) hedging activities
7

 
3

 
(20
)
Other
(86
)
 
(55
)
 
(70
)
Net cash provided by operating activities
1,120

 
1,142

 
1,057

Cash flows from investing activities:
 
 
 
 

Purchases of plant assets
(323
)
 
(272
)
 
(315
)
Sales of plant assets
1

 
9

 
13

Other, net
(1
)
 
2

 
2

Net cash used in investing activities
(323
)
 
(261
)
 
(300
)
Cash flows from financing activities:
 
 
 
 

Net short-term borrowings (repayments)
(257
)
 
495

 
(265
)
Long-term borrowings

 
500

 
400

Repayment of notes payable

 
(700
)
 

Dividends paid
(373
)
 
(378
)
 
(365
)
Treasury stock purchases
(412
)
 
(728
)
 
(472
)
Treasury stock issuances
112

 
96

 
139

Excess tax benefits on stock-based compensation
8

 
11

 
11

Contribution from noncontrolling interest
2

 
10

 

Other, net

 
(6
)
 
(4
)
Net cash used in financing activities
(920
)
 
(700
)
 
(556
)
Effect of exchange rate changes on cash
(26
)
 
49

 
2

Net change in cash and cash equivalents
(149
)
 
230

 
203

Cash and cash equivalents — beginning of period
484

 
254

 
51

Cash and cash equivalents — end of period
$
335

 
$
484

 
$
254

See accompanying Notes to Consolidated Financial Statements.



32



CAMPBELL SOUP COMPANY
Consolidated Statements of Equity
(millions, except per share amounts)
 
Campbell Soup Company Shareowners’ Equity
 
 
 
 
 
Capital Stock
 
Additional Paid-in
Capital
 
Earnings Retained in the
Business
 
Accumulated Other Comprehensive
Income (Loss)
 
Noncontrolling
Interests
 
 
 
Issued
 
In Treasury
 
 
 
 
 
Total
Equity
  
Shares
 
Amount
 
Shares
 
Amount
 
 
 
 
 
Balance at August 2, 2009
542