CAMPBELL SOUP COMPANY Consolidated Statements of Earnings (millions, except per share amounts) 2017 2016 2015 Net sales... Costs and expenses S 7,890 $ 7,961 $ 8,082 Cost of products sold 4,831 5,181 5,300 Marketing and selling expenses. 817 893 884 Administrative expenses 488 641 601 Research and development expenses. 98 124 117 Other expenses/ (income). 238 131 24 Restructuring charges.. 18 31 102 Total costs and expenses.. 6,490 7,001 7,028 Earnings before interest and taxes 1,400 960 1,054 Interest expense 112 115 108 Interest income. 5 4 3 Earnings before taxes. 1,293 849 949 Taxes on earnings.. 406 286 283 887 563 666 Net earnings Less: Net eamings (loss) attributable to noncontrolling interests Net earnings attributable to Campbell Soup Company Per Share Basic Net earnings attributable to Campbell Soup Company. Weighted average shares outstanding-basic Per Share Assuming Dilution Net earnings attributable to Campbell Soup Company Weighted average shares outstanding-assuming dilution. See accompanying Notes to Consolidated Financial Statements. - - $ 887 $ 563 $ 666 $ 2.91 $ 1.82 $ 2.13 305 309 312 $ 2.89 $ 1.81 $ 2.13 307 311 313 Current assets Cash and cash equivalents. Accounts receivable, net Inventories Other current assets Total current assets. Plant assets, net of depreciation CAMPBELL SOUP COMPANY Consolidated Balance Sheets (millions, except per share amounts) 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. Current liabilities Short-term borrowings.. Payable to suppliers and others Accrued liabilities Dividends payable. Accrued income taxes Total current liabilities. Long-term debt. Deferred taxes. Other liabilities. Total liabilities. Commitments and contingencies Campbell Soup Company shareholders' equity Preferred stock; authorized 40 shares, none issued Capital stock, $.0375 par value; authorized 560 shares; issued 323 shares. Additional paid-in capital... Earnings retained in the business. Capital stock in treasury, at cost. Accumulated other comprehensive loss. Total Campbell Soup Company shareholders' equity. Noncontrolling interests. Total equity Total liabilities and equity July 30, 2017 July 31, 2016 S 319 $ 296 605 626 902 940 74 46 1,900 1,908 2,454 2,407 2,115 2,263 1,118 1,152 139 107 7,726 $ 7,837 S 1,037 $ 1,219 666 610 561 604 111 100 20 22 2,395 2,555 2,499 2,314 490 396 697 1,039 6,081 6,304 12 12 12 359 354 2,385 1,927 (1,066) (664) (53) (104) 1,637 1,525 8 8 1,645 1,533 7,726 S 7,837 Cash flows from operating activities: Consolidated Statements of Cash Flows (millions) 2017 2016 2015 Net earnings Adjustments to reconcile net eamings to operating cash flow Impairment charges Restructuring charges. Stock-based compensation. Pension and postretirement benefit expense (income) Depreciation and amortization. Deferred income taxes. Other, net Changes in working capital, net of acquisitions Accounts receivable Inventories Prepaid assets Accounts payable and accrued liabilities. Pension fund contributions S 887 S 28 46 (27) (48) (5) Net receipts from hedging activities 2 Other (53) Net cash provided by operating activities. 1,291 1,491 Cash flows from investing activities: Purchases of plant assets. (338) (341) Sales of plant assets. Business acquired, net of cash acquired Other, net. (30) (18) Net cash used in investing activities. (368) (354) Cash flows from financing activities: Net short-term borrowings (repayments). 245 (762) Long-term borrowings. 211 215 Long-term repayments. (90) Dividends paid.. Repayments of notes payable. Treasury stock purchases. Treasury stock issuances (400) (420) (390) (437) 2 (143) 9 Contributions from noncontrolling interest. Payments related to tax withholding for stock-based compensation. Other, net. Net cash used in financing activities 9 (22) (21) (18) (3) (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 $ 253 563 $ 141 212 6 18 31 102 60 (258) 64 57 317 118 318 308 303 93 (30) (49) 18. 6 15 R |2g, 8 666 24 12 59 (18) 9 10 15 30 (2) (5) 44 11 (58) (52) 1,206 (380) 5 15 (232) (6) (603) 100 300 (309) (394) (244) 2 Case 6-34 (Static) Financial statement effects of depreciation methods LO 3 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 Double declining method Written down value method a-2. Why the particular method is used for the purpose described. Straight-line depreciation is used for financial reporting purposes because depreciation expense will be lower than under any of the accelerated depreciation methods. 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? 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. 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 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 Check my work 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 namings %