CAJIPBELL SOUP CORIPANY Consolidated Statements of Earnings (millions, except per share amounts) 2017 Net sales ............................................................... $ 7,390 Costs and expenses Cost of products sold ____________________________________________________ 4,331 Marketing and selling expenses ____________________________________________ 81';r Administrative expenses ................................................. 488 Research and development expenses ........................................ 98 Other expenses .I' (income) ________________________________________________ 238 Restructuring charges. . _ 18 Total costs and expenses .................................................. 6,490 Earnings before interest and taxes ......................................... 1,400 Interest expense ,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,, 112 Interest income __________________________________________________________ 5 Earnings before taxes _____________________________________________________ 1,293 Taxes on earnings ........................................................ 406 Net earnings ........................................................... 387 Less: Net earnings (loss) attributable to noncontrolling interests __________________ Net earnings attributable to Campbell Soup Company ________________________ S 387 Per Share Basic Net earnings attributable to Campbell Soup Company ________________________ $ 2.91 Weighted average shares outstanding basic _________________________________ 305 Per Share Assuming Dilution Net earnings attributable to Campbell Soup Company ........................ $ 2.89 Weighted average shares outstanding assuming dilution 307 See accompanying Notes to Consolidated Financial Statements. (llPBELL SOUP COR-IPANY Consolidated Balance Sheets (millions, except per share amounts) Current assets Cash and cash equivalents ...................................................... $ Accounts receivable, net _______________________________________________________ Inventories _________________________________________________________________ Other current assets . Total current assets. _ Plan! assets, net of depreciation ___________________________________________________ Goodwill ..................................................................... Other intangible assets, net of amortization __________________________________________ Other assets ($51 as of 2017 and $34 as of 2016 attributable to variable interest entity) _______ Total assets. ............................................................. 3 Current liabilities Short-term borrowings ......................................................... $ Payable to suppliers and others .................................................. Accrued liabilities ____________________________________________________________ Dividends payable ............................................................ Accrued income taxes ......................................................... Total current liabilit long-term debt ................................................................ Deferred taxes ................................................................. Other liabilities ________________________________________________________________ Total liabilities ................................................................ Commitments and contingencies Campbell Soup Company shar'elrolders' equit)r Preferred stock; authorized 40 shares; none issued ................................... Capital stock, 3.0375 par value; authorized 560 shares; issued 323 shares _________________ Additional paidin capital _______________________________________________________ Earnings retained in the business ................................................. Capital stock in treasury, at cost __________________________________________________ Accumulated other comprehensive loss ____________________________________________ Total Campbell Soup Company sharehoider's' equity ................................ Noncontrolling interests ______ _ _ Total equity __________________________________________________________________ Total liabilities and equi ................................................... $ See accompanying Notes to Consolidated Financral Statements. 2016 $ 2,961 5,181 893 64-1 124 131 31 2,001 960 115 4 84-9 286 563 $ 563 $ 1.82 309 $ 1.81 311 Jnvsm 2017 319 $ 605 902 74 1,900 2,454 2,115 1,118 139 7,726 $ 1,037 $ 666 561 111 20 2,395 2,499 490 697 6,081 12 359 2,385 (1,056) (53) 1,637 8 1,645 7,726 $ 2015 5 8,082 5,300 884 601 117 24 102 2,028 1,054 108 3 949 283 666 S 666 S 2.13 312 3 2.13 313 JnlrJl, 2015 296 626 940 46 1,908 2,407 2,263 1.152 107 7,837 1,219 610 604 100 22 2,555 2,314 396 1,039 6,304 12 354 1:92? 660 000 1,525 1,533 7,837 CAMPBELL SOUP COMPANY Consolidated Statements of Cash Flows (millions) 2017 2016 2015 Cash flows from operating activities: Net earnings . 887 S 563 566 Adjustments to reconcile net earnings to operating cash flow Impairment charges 212 141 Restructuring charges .. 18 31 102 Stock-based compensation . . 60 64 57 Pension and postretirement benefit expense (income). (258) 317 118 Depreciation and amortization . 318 308 303 Deferred income taxes . 93 (30) (49 Other, net 18 6 15 Changes in working capital, net of acquisitions Accounts receivable 28 24 12 Inventories . .. 46 59 (18) Prepaid assets . (27) 10 Accounts payable and accrued liabilities . (48) 15 30 Pension fund contributions (5) (2) (5) Net receipts from hedging activities 44 11 Other 53) 58) 52) Net cash provided by operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,291 1.491 1.206 Cash flows from investing activities: Purchases of plant assets (338) (341) (380) Sales of plant assets . 5 15 Business acquired, net of cash acquired (232) Other, net . . .. 30 18) (6) Net cash used in investing activities. . . . . . . . . . . . . . . . . . . ... . .... (368) 354) 603) Cash flows from financing activities: Net short-term borrowings (repayments) 245 (762) 100 Long-term borrowings 211 215 300 Long-term repayments. (90) Repayments of notes payable. (400) (309) Dividends paid (420) (390) (394) Treasury stock purchases . (437) (143) (244) Treasury stock issuances . 2 2 9 Contributions from noncontrolling interest . . 9 Payments related to tax withholding for stock-based compensation. (22) (21) (18) Other, net . . .. (3) Net cash used in financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. (911) 1,099 550) Effect of exchange rate changes on cash. 11 5 32) Net change in cash and cash equivalents 23 43 21 Cash and cash equivalents - beginning of period . . 296 253 232 Cash and cash equivalents - end of period - . . . . . . . . . . . . . . . . . . . .. . . $ 319 $ 296 $ 253 See accompanying Notes to Consolidated Financial Statements.CAMPBELL SOUP COMPANY Consolidated Statements of Cash Flows (millions) 2017 2016 2015 Cash flows from operating activities: Net earnings . 887 S 563 566 Adjustments to reconcile net earnings to operating cash flow Impairment charges 212 141 Restructuring charges .. 18 31 102 Stock-based compensation . . 60 64 57 Pension and postretirement benefit expense (income). (258) 317 118 Depreciation and amortization . 318 308 303 Deferred income taxes . 93 (30) (49 Other, net 18 6 15 Changes in working capital, net of acquisitions Accounts receivable 28 24 12 Inventories . .. 46 59 (18) Prepaid assets . (27) 10 Accounts payable and accrued liabilities . (48) 15 30 Pension fund contributions (5) (2) (5) Net receipts from hedging activities 44 11 Other 53) 58) 52) Net cash provided by operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,291 1.491 1.206 Cash flows from investing activities: Purchases of plant assets (338) (341) (380) Sales of plant assets . 5 15 Business acquired, net of cash acquired (232) Other, net . . .. 30 18) (6) Net cash used in investing activities. . . . . . . . . . . . . . . . . . . ... . .... (368) 354) 603) Cash flows from financing activities: Net short-term borrowings (repayments) 245 (762) 100 Long-term borrowings 211 215 300 Long-term repayments. (90) Repayments of notes payable. (400) (309) Dividends paid (420) (390) (394) Treasury stock purchases . (437) (143) (244) Treasury stock issuances . 2 2 9 Contributions from noncontrolling interest . . 9 Payments related to tax withholding for stock-based compensation. (22) (21) (18) Other, net . . .. (3) Net cash used in financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. (911) 1,099 550) Effect of exchange rate changes on cash. 11 5 32) Net change in cash and cash equivalents 23 43 21 Cash and cash equivalents - beginning of period . . 296 253 232 Cash and cash equivalents - end of period - . . . . . . . . . . . . . . . . . . . .. . . $ 319 $ 296 $ 253 See accompanying Notes to Consolidated Financial Statements.Balance Sheets 2017 2016 Accounts receivable Customer accounts receivable S 561 $ 566 Allowances . (11 12 Subtotal. 550 S $54 Other. . 55 72 505 S 26 Inventories Raw materials, containers and supplies S 377 S 391 Finished products . . . 525 549 902 $ 940 Other current assets Fair value of derivatives. S 9 S Other. . . 65 41 74 $ 46 Plant assets Land 64 S 58 Buildings 1,553 1,488 Machinery and equipment 4.231 4,042 Projects in progress 195 176 Total cost S 6,043 S 5,764 Accumulated depreciation) (3,589) (3,357) 2.454 S 2,407 Other assets Investments. . S 69 S 47 Deferred taxes 36 41 Other. 34 19 S 139 $ 107 Accrued liabilities Accrued compensation and benefits. 241 263 Fair value of derivatives . 43 16 Accrued trade and consumer promotion programs 131 130 Accrued interest 34 35 Restructuring 24 57 Other. 88 103 561 $ 504 Other liabilities Pension benefits . 261 $ 501 Deferred compensation) 96 100 Postretirement benefits. 247 285 Fair value of derivatives. 1 44 Unrecognized tax benefits 34 31 Restructuring 2 17 Other. 56 61 597 S 1,039 (1) Depreciation expense was $299 in 2017, $288 in 2016 and $286 in 2015. Buildings are depreciated over periods ranging from 7 to 45 years. Machinery and equipment are depreciated over periods generally ranging from 2 to 20 years (2) The deferred compensation obligation represents unfunded plans maintained for the purpose of providing our directors and certain of our executives the opportunity to defer a portion of their compensation. All forms of compensation contributed to the deferred compensation plans are accounted for in accordance with the underlying program. Deferrals and our contributions are credited to an investment account in the participant's name, although no funds are actually contributed to the investment account and no investments are actually purchased. Seven investment choices are available, including: (1) a book account that tracks the total return on our stock; (2) a book account that tracks the performance of the Vanguard Institutional Index; (3) a book account that tracks the performance of the Vanguard Extended Market Index; (4) a book account that tracks the performance of the Vanguard Total International Stock Index; (5) a book account that tracks the performance of the Vanguard Total Bond Market Index; (6) a book account that tracks the performance of the Vanguard Short-Term Bond Index; and (7) a book account that tracks the BlackRock Short-Term Investment Fund. Participants can reallocate investments daily and are entitled to the gains and losses on investment funds. We recognize an amount in the Consolidated Statements of Earnings for the market appreciation/depreciation of each fund.Answer the following questions: Required: a-1. Find the discussion of Property, Plant, and Equipment and depreciation methods used by Campbell's. Use data from the Campbell Soup Company annual report Straight-line method O Double declining method O Written down value method a-2. Why the particular method is used for the purpose described. O Straight-line depreciation is used for financial reporting purposes because depreciation expense will be lower than under any of the accelerated depreciation methods. O Straight-line depreciation is used for financial reporting purposes because depreciation expense will be higher than under any of the accelerated depreciation methods. a-3. What method do you think the company uses for income tax purposes? O Accelerated depreciation using the MACRS rates is probably used for tax purposes to minimize taxes payable. Straight line Method using the MACRS rates is probably used for tax purposes to minimize taxes payable O Written down value Method using the MACRS rates is probably used for tax purposes to minimize taxes payable. b. Calculate the ratio of the depreciation and amortization expense for 2017 reported in the Consolidated Statements of Cash Flows, Supplemental Financial Statement Data to the total cost (not net book value) of property, plant, and equipment reported in the schedule. (Round your percentage answer to 1 decimal place. (eg 32.6)) Ratio 1% c. Based on the ratio calculated in part b and the depreciation method being used by Campbell's, what is the average useful life being used for its depreciation calculation? (Round your answer to 1 decimal place.) Average useful life years d. Assume that the use of an accelerated depreciation method for 2017 would have resulted in 25% more depreciation and amortization than reported by Campbell's at July 30, 2017. By what percentage would this have reduced the retained earnings amount reported at July 30, 2017? (Round your percentage answer to 1 decimal place. (eg 32.6)) Reduction in retained earnings %