Look at the notes to the Campbell Soup financials in your text or in the module in Canvas. What do the notes say about the inventory cost flow assumptions used? Why do you think this is important information to users of financial statements?

APPENDIX Campbell Soup Company 2014 Annual Report The Campbell Soup 2014 Annual Report. Copyright 2014 by the Campbell Soup Company. Used with permission. CAMPBELL SOUP COMPANY 2014 ANNUAL REPORT mar35312_app_640-705.indd 640 10/28/15 8:30 PM Appendix\t641 Denise M. Morrison President\tand Chief\tExecutive\tOfficer FELLOW SHAREHOLDERS, A\tyear\tago,\tI\ttold\tyou\tthat\tI\twas\toptimistic\tabout\tCampbell's\tfuture.\tToday,\tI\tremain\tconfident\tthat\tour\tstrategy to\treshape\tCampbell\tby\tstrengthening\tour\tcore\tbusiness\tand\texpanding\tinto\tfaster-growing\tspaces\tis\tthe\tright course\tfor\tour\tcompany.\tBut\tI\talso\tknow\tthat\tit\twill\ttake\tmore\ttime\tthan\twe\toriginally\tanticipated\tto\tachieve\tour long-term\tgrowth\ttargets.\tOur\tindustry\tis\tnow\tin\ta\tperiod\tof\tprofound\tchange\tand\tchallenge,\tand\tthere\thas\tbeen\ta meaningful\tslowdown\tin\tthe\tperformance\tof\tthe\tpackaged\tfood\tsector.\tIncluding\tthe\tbenefits\tof\trecent\tacquisitions and\ta\t53rd\tweek\tin\tthe\tfiscal\tyear,\tCampbell\tdelivered\tgrowth\tin\tboth\tsales\tand\tadjusted\tearnings\tin\tfiscal\t2014, but\tour\tresults\tfor\tthe\tyear\tshowed\tthe\timpact\tof\tthe\tforces\tthat\tare\ttransforming\tthe\tfood\tbusiness.\tToday,\twe\tare engaging\twith\tthose\tforces\thead-on.\tI\tbelieve\twe\tare\tmaking\tsmart\tdecisions\tto\tbuild\ta\tbright\tfuture\tfor\tCampbell and\tdeliver\tprofitable\tgrowth\tfor\tour\tshareholders. Seismic Shifts It\tis\timportant\tfor\tour\tshareholders\tto\tbe\taware\tof\tthe\tseismic\tshifts\tthat\tare\tdriving\tpowerful\tchanges\tin\tconsumer behavior\twith\trespect\tto\tfood.\tFirst\tand\tforemost\tis\tthe\timpact\tof\ta\tpersistently\tchallenging\teconomic\tenvironment. In\tthe\tUnited\tStates\tand\tother\tdeveloped\tmarkets,\tlower-\tand\tmiddle-class\tconsumers\tcontinue\tto\tstruggle. The\tlong-awaited\trebound\tfrom\tthe\tGreat\tRecession\thas\tnot\tbrought\tthem\tmeaningful\trelief,\tand\ttheir\tpurchasing behavior\treflects\ttheir\tcaution\tabout\tthe\tfuture.\tThese\tconsumers\tcontinue\tto\tdemonstrate\ta\tpronounced\tfocus on\tvalue,\tand\tit\tappears\tthat\tfocus\tis\there\tto\tstay.\tAt\tthe\tsame\ttime,\tfrom\ta\tglobal\tstandpoint,\twe\tare\twitnessing a\tdramatic\teconomic\trealignment\t\ta\tshrinking\tmiddle\tclass\tin\tthe\tU.S.\tand\tother\tdeveloped\teconomies,\tand\ta burgeoning\tmiddle\tclass\tin\tdeveloping\tmarkets.\tAccording\tto\tsome\tprojections,\ttwo-thirds\tof\tthe\tglobal\tmiddle class\twill\tlive\tin\tAsia\tby\tthe\tyear\t2030. We\tare\talso\tseeing\ta\tstunning\ttransformation\tin\tconsumers'\tfood\tpreferences\tand\tin\ttheir\texpectations\tof\tfood manufacturers\tand\tretailers.\tConsumers\tare\tdemanding\tgreater\ttransparency.\tThey\twant\tto\tknow\twhere\tand\thow their\tfood\tis\tgrown\tand\tproduced,\tand\twhere\tfood\tcompanies\tstand\ton\tissues\tthat\tare\timportant\tto\tthem.\tAcross generations\tand\tcultures,\theightened\tconcern\tabout\tthe\timpact\tof\tdiet\ton\thealth\tand\twell-being\tis\tfueling\tthe growth\tof\tfresh,\tpackaged\tfresh\tand\torganic\tfoods\t\ttrends\tthat\tare\tdriving\tthe\texpansion\tof\tthe\tperimeters\tof retail\tstores\tand\tadversely\taffecting\tcenter-store\tcategories. Powerful\tsocial\tand\tdemographic\tchanges\tare\talso\tpresenting\tnew\tchallenges\tfor\tfood\tcompanies.\tIn\taddition to\tthe\tmuch-discussed\timpact\tof\tthe\t80\tmillion\tmembers\tof\tthe\tMillennial\tgeneration\tand\tnow\tmore\tthan\t50\tmillion Latinos\tin\tthe\tU.S.,\tour\tindustry\tmust\trespond\teffectively\tto\tthe\tneeds\tof\tthe\tnew\tAmerican\tfamily\t\ta\tunit\tthat today\tincludes\tgrowing\tnumbers\tof\tadults-only\thouseholds,\tsingle-person\thouseholds,\tsingle-parent\thouseholds, multi-cultural\thouseholds,\tsame-sex\thouseholds\tand\tfamilies\twith\tseveral\tgenerations\tunder\ta\tsingle\troof.\tEvery one\tof\tthese\tfamilies\tis\timportant,\tand\tall\tof\tthem\teat\tand\tshop\tdifferently\tthan\tthe\ttraditional\tfamilies\ton\twhich our\tindustry\thas\tfocused\tfor\tso\tlong. Finally,\tafter\ta\tdecade\tof\ttransformational\timpact\ton\tother\tsectors\tof\tthe\teconomy,\te-commerce\tis\tcoming\tto\tfood. Online\tgrocers\tare\tchanging\tthe\tgame,\tand\ttraditional\tretailers\tare\tentering\tthe\te-commerce\tfray.\tReady\tor\tnot, our\tindustry\tmust\tdo\ta\tmuch\tbetter\tjob\tof\tleveraging\tthis\texpanding\tchannel. 2 Campbell\tSoup\tCompany mar35312_app_640-705.indd 641 10/18/15 11:52 AM 642\t\u0003 Appendix THE FOOD INDUSTRY HAS ARRIVED AT A \"NEW NORMAL.\" I\tbelieve\tthat,\tin\tcombination,\tthese\tforces\tof\tchange\thave\tdriven\tour\tindustry\tto\ta\ttipping\tpoint.\tIn\tthe\tpast year,\twe\thave\tseen\tslower\tgrowth\tacross\tthe\tpackaged\tfood\tsector.\tWe\thave\talso\tseen\tintensified\tcompetition, widespread\tcost-cutting\tand\tcontinued\tconsolidation,\tas\tcompetitors\tseek\tsynergies\tand\tthe\tadvantages\tof\tscale. Whether\tthese\ttrends\twill\tproduce\ttheir\tintended\tbenefits\tremains\tto\tbe\tseen,\tbut\toverall,\tthere\tcan\tbe\tlittle\tdoubt that\tthe\tfood\tindustry\thas\tarrived\tat\ta\t\"new\tnormal.\"\tAt\tCampbell,\twe\tbelieve\tthat\tthe\twinners\twill\tbe\tcompanies that\tadapt\tsuccessfully\tto\tthe\tchanges\tin\tour\tuniverse;\tprovide\tproducts\tthat\trespond\tto\tconsumers'\tevolving needs\tand\tvalues;\tand\toperate\twith\ta\tclear\tand\tauthentic\tsense\tof\tpurpose.\tAnd\tI\tam\tconfident\tthat\tCampbell will\tbe\tone\tof\tthose\tcompanies. Embracing Change When\tI\tbecame\tCEO\tin\t2011,\tCampbell\twas\tstruggling\tto\tadapt\tto\ta\tchanging\tworld.\tToday,\twe're\tembracing change\tas\twe\tcontinue\tto\tdiversify\tour\t$8+\tbillion\tportfolio\tbeyond\tour\tcenter-store\tproduct\tlines\tin\ttraditional mass\tand\tgrocery\tchannels.\tA\tstep\tat\ta\ttime,\twe\tare\tbuilding\tour\tpresence\tin\tpackaged\tfresh\tand\tother\tfastergrowing\tspaces;\tin\tstrategically\timportant\tgeographies\toutside\tof\tour\tdeveloped\tmarkets;\tand\tin\tchannels\tthat will\tmake\tour\tproducts\tavailable\teverywhere\tconsumers\tshop. WE BELIEVE THAT THE WINNERS WILL BE COMPANIES THAT ADAPT SUCCESSFULLY TO THE CHANGES IN OUR UNIVERSE ... AND I AM CONFIDENT THAT CAMPBELL WILL BE ONE OF THOSE COMPANIES. In\tfiscal\t2014,\twe\tachieved\tkey\tmilestones\tin\tour\texecution\tof\tthese\tstrategies.\tWe\tcompleted\tour\tacquisition\tof Kelsen\tGroup,\twhich\thas\tgiven\tus\ta\tvaluable\tgrowth\tplatform\tfor\tbaked\tsnacks\tin\tChina\tand\tHong\tKong.\tPlum became\tthe\tleading\tbrand\tof\torganic\tbaby\tfood\tin\tthe\tU.S.\tin\tthe\tfourth\tquarter.\tWe\tinvested\tin\tour\tfirst\tmarketing programs\tto\tbuild\tthe\tBolthouse Farms\tbrand\tand\texpanded\tthe\tdistribution\tof\tBolthouse\tproducts,\tdriving\tstrong sales\tgrowth.\tWe\tdivested\tour\tslow-growing\tEuropean\tsimple\tmeals\tbusiness\tto\tfocus\ton\tgrowth\topportunities in\tAsia\tand\tLatin\tAmerica,\tand\texpanded\tour\tsweet\tbiscuit\tbusiness\tin\tIndonesia,\ta\tkey\tdeveloping\tmarket. We\ttransitioned\tto\ta\tnew\tU.S.\tnetwork\tof\tdistributors\tto\tdrive\tthe\tavailability\tof\tour\tsingle-serve\tbeverages\tfor immediate\tconsumption,\tand\tincreased\te-commerce\tprograms\tin\tkey\tonline\tchannels.\tAnd\twe\tcontinued\tto\tdrive consumer-focused\tinnovation,\tlaunching\tmore\tthan\t200\tnew\tproducts. Affirming Our Purpose We\talso\tmade\tan\timportant\teffort\tin\tfiscal\t2014\tto\treflect\ton\tour\tcompany's\tpurpose,\twhich\twe've\texpressed in\tseven\twords\t\tReal food that matters for life's moments.\tThis\tpurpose\twill\tbe\tthe\tcompass\tthat\tguides our\tdecisions\tas\twe\tseek\tto\tbecome\ta\t$10\tbillion\tcompany\twithin\tthe\tnext\tfive\tyears.\tIt\taffirms\tour\tconnection to\tthe\tcore\tvalues\tthat\thave\tinspired\ttrust\tin\tCampbell\tfor\t145\tyears,\tand\tit\tbridges\tus\tto\tthe\tpriorities\tof new\tgenerations. Our\tpurpose\tis\tbased\ton\ta\tset\tof\tunwavering\tbeliefs\t\tthat\tfood\tshould\tbe\tdelicious,\taccessible,\tand\taffordable; that\tit\thas\tprofound\tpower\tto\tconnect\tpeople\tto\teach\tother;\tand\tthat\twhat\twe\tdo\tevery\tday\tmatters\t...\tfor\tthe families\tthat\tdepend\ton\tour\tproducts,\tfor\tour\temployees,\tcustomers,\tand\tcommunities,\tand\tfor\tour\tshareholders, who\texpect\tsolid,\tsustainable\treturns.\tThese\tbeliefs\thave\thelped\tCampbell's\tbrands\tearn\ta\tspecial\tplace\tin\tpeople's lives.\tAs\twe\treshape\tour\tcompany,\tthey\twill\tconnect\tus\tto\tour\tpast\twhile\tilluminating\tthe\tpath\tto\tour\tfuture. mar35312_app_640-705.indd 642 Campbell\tSoup\tCompany 3 10/18/15 11:52 AM Appendix\t643 Fiscal 2014 Results In\tfiscal\t2014,\twe\twere\tencouraged\tby\tthe\tperformance\tof\tthe\tbusinesses\twe\tacquired\tin\tthe\tlast\ttwo\tfiscal\tyears as\tpart\tof\tour\tstrategy\tto\treshape\tCampbell's\tgrowth\ttrajectory.\tBut\twe\twere\tnot\tsatisfied\twith\tthe\tperformance of\tour\tcore\tbusiness.\tSales\tfrom\tcontinuing\toperations\tincreased\t3\tpercent\tto\t$8.268\tbillion,\tbenefiting\tfrom acquisitions\tand\tan\tadditional\tweek\tin\tthe\tfiscal\tyear.\tOrganic\tsales\tdeclined\t1\tpercent.*\tAdjusted\tearnings\tper share\tfrom\tcontinuing\toperations\tincreased\t2\tpercent\tto\t$2.53.* In\tU.S.\tSimple\tMeals,\twe\tdelivered\tgrowth\tin\tsauces,\twith\thigher\tsales\tof\tPrego\tpasta\tsauces\tand\tCampbell's\tdinner sauces.\tBut\tafter\tgrowing\t5\tpercent\tin\tfiscal\t2013,\tsales\tdeclined\tin\tU.S.\tSoup,\tas\tgrowth\tin\tSwanson\tbroth\twas more\tthan\toffset\tby\tdeclines\tin\tready-to-serve\tand\tcondensed\tsoups\tamid\tsofter\tconsumption.\tIn\tGlobal\tBaking and\tSnacking,\twe\tsaw\tmodest\tgrowth\tat\tPepperidge\tFarm,\tincluding\tcontinued\tgains\tin\tour\tGoldfish\tfranchise\tand fresh\tbakery,\tand\tsolid\tgrowth\tin\tIndonesia.\tAs\twe\texpected,\tsales\tdeclined\tin\tour\tbusiness\tin\tAustralia\tand\tin\tour U.S.\tBeverages\tbusiness,\tand\twe\thave\tinitiated\tturnaround\tplans\tto\treinvigorate\tboth\tof\tthose\tbusinesses. Looking Ahead In\tfiscal\t2015,\twe\twill\ttake\tfurther\taction\tto\tdrive\tgrowth\tin\tour\timportant\tU.S.\tSoup\tportfolio\tand\timprove category\tperformance.\tTo\tdo\tthis,\twe\twill\tcontinue\tto\televate\tquality,\tincrease\tbrand-building\tand\tdrive\tmore innovation,\tincluding\tour\tfirst\tCampbell's\torganic\tsoups.\tWe\tintend\tto\texpand\tin\tthe\tpremium\tsoup\tsegment, strengthen\tready-to-serve\tsoups,\tand\tgrow\tour\tnumber-one\tpositions\tin\tcondensed\tsoups\tand\tbroth.\tWe\twill\talso drive\tgrowth\tin\tPepperidge\tFarm\tby\texecuting\tagainst\tall\tthe\tdrivers\tof\tdemand,\tincluding\tincreased\tinnovation, particularly\tin\tthe\tback\thalf\tof\tthe\tyear.\tWe\twill\trevitalize\tour\tshelf-stable\tU.S.\tBeverages\tbusiness\tby\tleveraging innovation\tand\tthe\tpowerful\tequities\tof\tthe\tV8\tbrand\tin\tvegetable\tnutrition\tto\tcapitalize\ton\tthe\tjuicing\ttrend\twith \"affordable\tjuicing.\"\tWe\twill\talso\tcontinue\tto\tstabilize\tour\tAustralian\tbusiness\tand\trejuvenate\tsales\tof\tArnott's biscuits\tin\tthat\tkey\tmarket.\tIn\tfaster-growing\tspaces,\twe\texpect\tsales\tto\tgrow\tin\tour\tBolthouse\tFarms,\tPlum and\tKelsen\tbusinesses\tas\twe\texpand\tdistribution. Consistent\twith\tour\tlong-term\tstrategy,\twe\twill\tfocus\ton\tfour\tkey\tplatforms\tto\tcontinue\tto\tdrive\tour\texpansion into\tfaster-growing\tspaces:\taccelerated\tbreakthrough\tinnovation,\tincluding\tcontinued\texpansion\tin\tdinner\tsauces and\tplans\tto\textend\tthe\tV8\tbrand\tinto\tprotein\tshakes\tand\tbars;\tthe\tpursuit\tof\tbranded\tleadership\tin\tpackaged fresh\tfoods,\ta\tgrowing\t$18.6\tbillion\tcategory\tin\twhich\tBolthouse\tFarms\thas\tgiven\tus\ta\tsolid\tfoundation\tand\tis now\texpanding\twith\tthe\tlaunch\tof\tBolthouse Farms Kids,\tan\tinnovative\tportfolio\tof\thealthy\tsnacks\tfor\tchildren; expansion\tin\tdeveloping\tmarkets\tin\tAsia\tand\tLatin\tAmerica,\tbuilding\ton\tour\tfootholds\tin\tChina,\tIndonesia,\tMalaysia and\tMexico;\tand\tincreased\tavailability\tof\tour\tproducts\tin\tall\tchannels,\tincluding\timmediate\tconsumption\tand e-commerce.\tWe\twill\tfund\tour\tgrowth\tby\taggressively\tmanaging\tour\tcosts\tand\tmargins.\tWe\twill\talso\tcontinue\tto drive\tagile\tdecision-making,\town\tour\tresults\tand\tattract\tand\tretain\tworld-class\ttalent\tto\tfurther\tdiversify\tour\tteam. Fiscal 2015 Guidance In\tfiscal\t2015,\twe\texpect\tto\tdeliver\tmodest\tgrowth\tin\tsales\tand\tadjusted\tearnings\tfrom\tcontinuing\toperations on\ta\t52-week\tbasis,\tdespite\ta\tconsumer\tenvironment\tthat\tis\tlikely\tto\tremain\tchallenging.\tHowever,\twe\texpect\tfiscal 2015\tgrowth\tto\tbe\tbelow\tour\tlong-term\ttargets\tfor\tannual\tgrowth\tin\tsales\tand\tearnings.\tWe\tcontinue\tto\tbelieve that\tour\tlong-term\ttargets\tof\t3\tto\t4\tpercent\tin\torganic\tsales,\t4\tto\t6\tpercent\tin\tadjusted\tEBIT\tand\t5\tto\t7\tpercent in\tadjusted\tEPS\tare\tachievable,\tbut\twe\trecognize\tthat\tfurther\tportfolio\treconfiguration,\tincluding\tsmart\texternal development,\tmay\tbe\trequired\tto\tdeliver\tand\tsustain\tgrowth\tat\tthis\tlevel. * These\tamounts\tare\tadjusted\tfor\tcertain\titems\tnot\tconsidered\tto\tbe\tpart\tof\tthe\tongoing\tbusiness. For\ta\treconciliation\tof\tnon-GAAP\tfinancial\tmeasures,\tsee\tpage\t15. 4 Campbell\tSoup\tCompany mar35312_app_640-705.indd 643 10/18/15 11:52 AM 644\t\u0003 Appendix Living the \"New Normal\" As\tI\tenter\tmy\tfourth\tyear\tas\tCEO,\tour\tindustry\tis\tfacing\tpotent\tchallenges,\tand\tI\tbelieve\tit\tis\tessential\tto\tbalance optimism\twith\trealism.\tConsumers\tare\tchanging\tin\tprofound\tways.\tAt\tCampbell,\twe\tare\tputting\tthe\tconsumer\tfirst and\tadapting\tquickly\tto\tthe\t\"new\tnormal\"\tof\tour\tworld.\tWhile\tremaining\ttrue\tto\tour\tcore\tbeliefs,\twe\thave\topened our\tminds\tto\tnew\tways\tof\tthinking\tabout\tour\tbusiness.\tWe\thave\tmeaningfully\tchanged\tthe\tcomposition\tof\tour portfolio\tand\tare\tfollowing\tthrough\ton\tour\tcommitment\tto\tdiversify\tour\tbusiness\tinto\tfaster-growing\tspaces.\tBut we\tknow\tthat\tit\twill\ttake\tsome\ttime\tto\trealize\tthe\tfull\tpromise\tof\tour\tnew\tplatforms;\tthat\twe\tclearly\thave\tmore\tto do;\tand\tthat\twe\tstand\tat\ta\tcritical\tjuncture.\tTo\twin\tin\tthe\tlong\tterm,\tfood\tcompanies\twill\thave\tto\tembrace\tchange, and\tlead\tchange.\tWe\tare\tdoing\tthis\tat\tCampbell. In\tclosing,\tI\twant\tto\tthank\tour\tBoard\tof\tDirectors,\tthe\tCampbell\tleadership\tteam,\tour\temployees\tand\tour shareholders.\tWith\tyour\tsupport,\tI\tfully\texpect\tthat\tCampbell\twill\tbe\tone\tof\tthe\twinners\tin\tour\tindustry\tas\twe change\tour\tcompany's\tgrowth\ttrajectory\tover\ttime\tand\thelp\tdefine\tthe\tfuture\tof\treal\tfood. Best, DENISE M. MORRISON President\tand\tChief\tExecutive\tOfficer CHAIRMAN'S MESSAGE Fiscal\t2014\twas\ta\tchallenging\tyear\tfor\tCampbell,\tas\tmacroeconomic\tfactors\tand changing\tconsumer\tbehaviors\tnegatively\timpacted\tthe\tcompany's\tperformance. As\tDenise\tdescribes\tin\ther\tmessage,\tCampbell\tcontinued\tto\ttake\tsteps\tto\treshape its\tportfolio\tand\tlay\tthe\tfoundation\tfor\tan\teven\tmore\tsuccessful\tfuture.\tWe\tknow there\tis\tmore\tto\tbe\tdone,\tand\tremain\tdedicated\tto\tdelivering\tsustainable,\tprofitable long-term\tgrowth\tfor\tour\tshareholders. In\tNovember,\ttwo\tlong-standing\tdirectors\twill\tbe\tretiring.\tEdmund\tM.\tCarpenter and\tCharlotte\tColket\tWeber\thave\teach\tserved\ton\tthe\tBoard\tsince\t1990.\tTheir\tfellow directors,\tour\tmanagement\tand\tshareholders\thave\tbenefited\tin\tso\tmany\tways\tfrom their\twise\tperspective\tand\tspecial\tinsights\tacross\ta\tvery\tbroad\tfront.\tBoth\twill\tbe\tmissed.\tAll\tother\tincumbent directors\tare\tstanding\tfor\treelection\tat\tthe\tNovember\tAnnual\tMeeting,\tincluding\tthe\tnewest\tmember\tof\tthe Board,\tMarc\tB.\tLautenbach,\tPresident\tand\tChief\tExecutive\tOfficer\tof\tPitney\tBowes\tInc.\tMarc\tjoined\tthe\tBoard in\tJune\t2014\tand\tbrings\ta\tfresh\tand\trelevant\tperspective\tas\twe\tcontinue\tto\treshape\tCampbell\tfor\tthe\tfuture. On\tbehalf\tof\tthe\tentire\tBoard\tand\tthe\tmanagement\tteam,\tI\twould\tlike\tto\tthank\tour\tshareholders\tfor\ttheir continued\tsupport. PAUL R. CHARRON Chairman\tof\tthe\tBoard mar35312_app_640-705.indd 644 Campbell\tSoup\tCompany 5 10/18/15 11:52 AM Appendix\t645 FINANCIAL HIGHLIGHTS (dollars\tin\tmillions,\texcept\tper\tshare\tamounts) Results of Operations Net\tSales Gross\tProfit Percent\tof\tSales Earnings\tbefore\tinterest\tand\ttaxes Earnings\tfrom\tcontinuing\toperations\tattributable\tto\tCampbell\tSoup\tCompany Per\tshare\t\tdiluted Earnings\t(loss)\tfrom\tdiscontinued\toperations Per\tshare\t\tdiluted Net\tearnings\tattributable\tto\tCampbell\tSoup\tCompany Per\tshare\t\tdiluted Other Information Net\tcash\tprovided\tby\toperating\tactivities Capital\texpenditures Dividends\tper\tshare 2014 53 weeks 2013 52\tweeks $ 8,268 $ 2,898 35.1% $ 1,192 $ 8,052 $ 2,912 36.2% $ 1,080 $ 689 $ 2.17 $ (231) $ $ $ $ 737 2.33 81 0.26 $ $ 818 2.59 $ (0.73) $ 458 $ 1.44 $ 899 $ 347 $ 1.248 $ 1,019 $ 336 $ 1.16 In\t2014,\tEarnings\tfrom\tcontinuing\toperations\tattributable\tto\tCampbell\tSoup\tCompany\twere\timpacted\tby\tthe\tfollowing:\ta\trestructuring\tcharge\tand\trelated\tcosts of\t$36\t($.11\tper\tshare)\tassociated\twith\trestructuring\tinitiatives\tin\t2014\tand\t2013;\tpension\tsettlement\tcharges\tof\t$14\t($.04\tper\tshare)\tassociated\twith\ta\tU.S.\tpension plan; a loss of $6 ($.02 per share) on foreign exchange forward contracts used to hedge the proceeds from the sale of the European simple meals business; and\t$7\t($.02\tper\tshare)\ttax\texpense\tassociated\twith\tthe\tsale\tof\tthe\tEuropean\tsimple\tmeals\tbusiness.\tEarnings\tfrom\tdiscontinued\toperations\tincluded\ta\tgain\tof\t$72 ($.23\tper\tshare)\ton\tthe\tsale\tof\tthe\tEuropean\tsimple\tmeals\tbusiness. In\t2013,\tEarnings\tfrom\tcontinuing\toperations\tattributable\tto\tCampbell\tSoup\tCompany\twere\timpacted\tby\tthe\tfollowing:\ta\trestructuring\tcharge\tand\trelated\tcosts\tof $90 ($.28 per share) associated with restructuring initiatives in 2013 and $7 ($.02 per share) of transaction costs related to the acquisition of Bolthouse Farms. Earnings\tfrom\tdiscontinued\toperations\twere\timpacted\tby\tan\timpairment\tcharge\ton\tthe\tintangible\tassets\tof\tthe\tEuropean\tsimple\tmeals\tbusiness\tof\t$263\t($.83\tper share)\tand\ttax\texpense\tof\t$18\t($.06\tper\tshare)\trepresenting\ttaxes\ton\tthe\tdifference\tbetween\tthe\tbook\tvalue\tand\ttax\tbasis\tof\tthe\tbusiness. See\tbelow\tfor\ta\treconciliation\tof\tthe\timpact\tof\tthese\titems\ton\treported\tresults. RECONCILIATION OF GAAP AND NON-GAAP FINANCIAL MEASURES The\tfollowing\tinformation\tis\tprovided\tto\treconcile\tcertain\tnon-GAAP\tfinancial\tmeasures\tdisclosed\tin\tthe\tLetter\tto\tShareholders\tto\treported\tsales\tand\tearnings\tresults. The\tcompany\tbelieves\tthat\torganic\tnet\tsales,\twhich\texclude\tthe\timpact\tof\tcurrency,\tacquisitions,\tand\tan\tadditional\tweek\tin\tfiscal\t2014,\tare\ta\tbetter\tindicator\tof\tthe company's ongoing business performance. The company also believes that the financial information excluding certain transactions not considered to be part of the ongoing business improves the comparability of year-to-year earnings results. Consequently, the company believes that investors may be able to better understand\tits\tearnings\tresults\tif\tthese\ttransactions\tare\texcluded\tfrom\tthe\tresults.\tThese\tnon-GAAP\tfinancial\tmeasures\tare\tmeasures\tof\tperformance\tnot\tdefined\tby accounting\tprinciples\tgenerally\taccepted\tin\tthe\tUnited\tStates\tand\tshould\tbe\tconsidered\tin\taddition\tto,\tnot\tin\tlieu\tof,\tGAAP\treported\tmeasures. 2014 (dollars\tin\tmillions) Net Sales $ 8,268 2013 %\tChange $ 8,052 3% Volume\tand\tMix Price\tand\tSales\tAllowances Increased\tPromotional\tSpending 0% 1% -2% Organic\tGrowth -1% Currency Acquisitions Impact\tof\tadditional\tweek -1% 3% 2% Total 3% Earnings\t%\tChange EPS\t%\tChange 2014/2013 2014/2013 2% 2% 2014 (dollars\tin\tmillions,\texcept\tper\tshare\tamounts) Earnings\tfrom\tcontinuing\toperations\tattributable to\tCampbell\tSoup\tCompany,\tas\treported Restructuring\tcharges\tand\trelated\tcosts Pension\tsettlement\tcharges Loss\ton\tforeign\texchange\tforward\tcontracts Tax\texpense\tassociated\twith\tsale\tof\tEuropean\tbusiness Acquisition\ttransaction\tcosts Adjusted\tEarnings\tfrom\tcontinuing\toperations attributable\tto\tCampbell\tSoup\tCompany 2013 Diluted EPS Impact Earnings Impact $ 737 36 14 $ 6 7 $ 800 2.33 0.11 0.04 0.02 0.02 $ 2.53 Earnings Impact $\t689 90 7 $\t786 Diluted EPS Impact $ 2.17 0.28 0.02 $ 2.48 The\tsum\tof\tthe\tindividual\tper\tshare\tamounts\tdoes\tnot\tadd\tdue\tto\trounding. mar35312_app_640-705.indd 645 Campbell\tSoup\tCompany 15 10/18/15 11:52 AM 646\t\u0003 Appendix 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 August 3, 2014 Commission File Number 1-3822 CAMPBELL SOUP COMPANY New Jersey State of Incorporation 21-0419870 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. Yes No Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes 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. Yes No Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data 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). Yes 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. 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 Accelerated filer Non-accelerated filer (Do not check if a smaller reporting company) Smaller reporting company Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No As of January 24, 2014 (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 $7,711,154,033. There were 314,220,361 shares of capital stock outstanding as of September 15, 2014. Portions of the Registrant's Proxy Statement for the Annual Meeting of Shareholders to be held on November 19, 2014, are incorporated by reference into Part III. mar35312_app_640-705.indd 646 10/18/15 11:52 AM Appendix\t647 TABLE OF CONTENTS PART I Item 1. Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 1A. Risk Factors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 1B. Unresolved Staff Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 2. Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 3. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 4. Mine Safety Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Executive Officers of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . PART II Item 5. Market for Registrant's Capital Stock, Related Shareholder Matters and Issuer Purchases of Equity Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 6. Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations. . . . Item 7A. Quantitative and Qualitative Disclosure about Market Risk . . . . . . . . . . . . . . . . . . . . . . . . . . Item 8. Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure . . . Item 9A. Controls and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 9B. Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . PART III Item 10. Directors, Executive Officers and Corporate Governance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 11. Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Item 13. Certain Relationships and Related Transactions, and Director Independence . . . . . . . . . . . . . Item 14. Principal Accounting Fees and Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . PART IV Item 15. Exhibits and Financial Statement Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . mar35312_app_640-705.indd 647 3 5 9 10 10 10 11 11 13 14 32 33 79 79 79 79 79 80 80 80 80 83 10/18/15 11:52 AM 648\t\u0003 Appendix Item 6. Selected Financial Data FIVE-YEAR REVIEW CONSOLIDATED 2014(1) 2011(4) 2010(5) $8,052 $ 7,175 1,080 1,155 955 1,049 680 724 (231) 40 449 764 458 774 $ 7,143 1,212 1,100 749 53 802 805 $ 7,085 1,272 1,166 791 53 844 844 $2,260 8,323 4,453 $ 2,127 6,530 2,790 $ 2,103 6,862 3,084 $ 2,051 6,276 2,780 1,210 898 1,096 929 $ 2.19 $ 2.30 $ 2.28 $ 2.29 2.17 2.29 2.26 2.27 1.46 2.43 2.44 2.44 2.59 1.248 1.44 2.41 2.42 2.42 1.16 1.16 1.145 1.075 Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 347 314 Weighted average shares outstanding - basic . . . . . . . . . . . . . . . . . . . . . . 316 Weighted average shares outstanding - assuming dilution. . . . . . . . . . . . $ 336 314 317 $ 323 317 319 $ 272 326 329 $ 315 340 343 Fiscal Year (Millions, except per share amounts) Summary of Operations Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $8,268 Earnings before interest and taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,192 Earnings before taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,073 726 Earnings from continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81 Earnings (loss) from discontinued operations . . . . . . . . . . . . . . . . . . . . . 807 Net earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 818 Net earnings attributable to Campbell Soup Company . . . . . . . . . . . . . . Financial Position Plant assets - net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,318 Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,113 Total debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,015 Total equity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,603 Per Share Data Earnings from continuing operations attributable to Campbell Soup Company - basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2.35 Earnings from continuing operations attributable to Campbell Soup 2.33 Company - assuming dilution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.61 Net earnings attributable to Campbell Soup Company - basic. . . . . . . . . Net earnings attributable to Campbell Soup Company - assuming dilution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Dividends declared . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other Statistics 2013(2) 2012(3) ____________________________________ (All per share amounts below are on a diluted basis) The 2014 fiscal year consisted of 53 weeks. All other periods had 52 weeks. (1) (2) (3) The 2014 earnings from continuing operations attributable to Campbell Soup Company were impacted by the following: a restructuring charge and related costs of $36 million ($.11 per share) associated with restructuring initiatives in 2014 and 2013; pension settlement charges of $14 million ($.04 per share) associated with a U.S. pension plan; a loss of $6 million ($.02 per share) on foreign exchange forward contracts used to hedge the proceeds from the sale of the European simple meals business; and $7 million ($.02 per share) tax expense associated with the sale of the European simple meals business. Earnings from discontinued operations included a gain of $72 million ($.23 per share) on the sale of the European simple meals business. The 2013 earnings from continuing operations attributable to Campbell Soup Company were impacted by the following: a restructuring charge and related costs of $90 million ($.28 per share) associated with restructuring initiatives in 2013 and $7 million ($.02 per share) of transaction costs related to the acquisition of Bolthouse Farms. Earnings from discontinued operations were impacted by an impairment charge on the intangible assets of the simple meals business in Europe of $263 million ($.83 per share) and tax expense of $18 million ($.06 per share) representing taxes on the difference between the book value and tax basis of the business. The 2012 earnings from continuing operations attributable to Campbell Soup Company were impacted by the following: a restructuring charge of $4 million ($.01 per share) associated with the 2011 initiatives and $3 million ($.01 per share) of transaction costs related to the acquisition of Bolthouse Farms. Earnings from discontinued operations included a restructuring charge of $2 million ($.01 per share) associated with the 2011 initiatives. 13 mar35312_app_640-705.indd 648 10/18/15 11:52 AM (4) (5) Appendix\t649 The 2011 earnings from continuing operations attributable to Campbell Soup Company were impacted by a restructuring charge of $39 million ($.12 per share) associated with initiatives announced in June 2011. Earnings from discontinued operations included a restructuring charge of $2 million associated with the initiatives. The 2010 earnings from continuing operations attributable to Campbell Soup Company were impacted by the following: a restructuring charge of $8 million ($.02 per share) for pension benefit costs associated with the 2008 initiatives 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. 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 Bolthouse and Foodservice. On August 6, 2012, the company completed the acquisition of Bolthouse Farms from a fund managed by Madison Dearborn Partners, LLC, a private equity firm. After taking into account customary purchase price adjustments, the final all-cash purchase price was $1.561 billion. See Note 3 to the Consolidated Financial Statements for more information on the acquisition. On June 13, 2013, the company completed the acquisition of Plum. The final all-cash purchase price was $249 million. See Note 3 to the Consolidated Financial Statements for more information on the acquisition. On August 8, 2013, the company completed the acquisition of Kelsen. The final all-cash purchase price was $331 million. See Note 3 to the Consolidated Financial Statements for more information on the acquisition. On October 28, 2013, the company completed the sale of its European simple meals business to Soppa Investments S. r.l., an affiliate of CVC Capital Partners. The all-cash preliminary sale price was 400 million, or $548 million, and was subject to certain post-closing adjustments, which resulted in a $14 million reduction of proceeds. The company has reflected the results of the European simple meals business as discontinued operations in the Consolidated Statements of Earnings for all years presented. See Note 4 to the Consolidated Financial Statements for additional information. Key Strategies Campbell's long-term goal is to build shareholder value by driving sustainable, profitable net sales growth. In its efforts to achieve this goal, the company is guided by its purpose - "Real Food That Matters For Life's Moments" - which it articulated in 2014 as an expression of its core beliefs and the foundation of its historic connection with consumers. With this purpose as its compass, the company is pursuing a strategy that is focused on strengthening its established simple meals, snacks and healthy beverages businesses while diversifying its portfolio into higher-growth spaces. Campbell plans to take a number of steps in 2015 to strengthen its established businesses. In its North American soup and simple meals business, the company expects to improve performance by enhancing product quality and elevating its marketing and brand-building efforts. The company will also introduce new soup and simple meal products responsive to consumers' desire for indulgent or premium foods; their increasing appetite for ethnic and regional cuisines; and their growing interest in quick and easy home-cooking solutions. For its shelf-stable beverage business, the company will target health-conscious adults with its V8 branded beverages and households with children with its V8 Splash branded beverages. Pepperidge Farm will remain focused on building the Goldfish cracker brand, maintaining the momentum of its fresh bakery portfolio, and revitalizing its adult savory crackers business. The company will also continue its efforts to reinvigorate its businesses in Australia, focusing on Arnott's biscuits. Since 2013, Campbell has acquired three businesses - Bolthouse Farms, Plum and Kelsen - and divested its European simple meals business as part of its effort to diversify its portfolio into higher-growth spaces. This effort will continue in 2015, with a focus on four key growth platforms: Accelerating breakthrough innovation, including through continued expansion of the company's dinner sauces platform and the introduction of V8 Protein shakes and bars. Becoming a branded leader in packaged fresh foods. For example, in 2015 Bolthouse Farms will introduce its first kidfocused line of refrigerated snacks and beverages, building on its existing businesses in fresh carrots, super-premium beverages and salad dressings. Expanding in developing markets in Asia and Latin America, where the company already has footholds in China, Indonesia, Malaysia and Mexico. 14 mar35312_app_640-705.indd 649 10/18/15 11:52 AM 650\t\u0003 Appendix Item 8. Financial Statements and Supplementary Data CAMPBELL SOUP COMPANY Consolidated Statements of Earnings (millions, except per share amounts) Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ Costs and expenses Cost of products sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Marketing and selling expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Research and development expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other expenses / (income) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Restructuring charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total costs and expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Earnings before interest and taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Earnings before taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Taxes on earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Earnings from continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Earnings (loss) from discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net earnings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Less: Net earnings (loss) attributable to noncontrolling interests . . . . . . . . . . . . . Net earnings attributable to Campbell Soup Company . . . . . . . . . . . . . . . . . . . $ 2014 2013 2012 53 weeks 52 weeks 52 weeks 8,268 $ 5,370 935 573 8,052 $ 5,140 947 677 128 29 51 6,972 1,080 135 10 955 121 22 55 7,076 1,192 122 3 1,073 347 726 81 807 (11) 7,175 4,365 941 580 116 11 7 6,020 1,155 114 8 1,049 275 680 (231) 325 724 40 764 (10) 449 (9) 818 $ 458 $ 774 Earnings from continuing operations attributable to Campbell Soup Company . . . $ Earnings (loss) from discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net earnings attributable to Campbell Soup Company . . . . . . . . . . . . . . . . . . . $ 2.35 .26 2.61 $ 2.19 $ (.74) $ 1.46 2.30 .12 2.43 Weighted average shares outstanding basic. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 314 Per Share Basic $ 314 317 $ 2.17 $ (.73) $ 1.44 2.29 .12 2.41 Per Share Assuming Dilution Earnings from continuing operations attributable to Campbell Soup Company . . . $ Earnings (loss) from discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net earnings attributable to Campbell Soup Company . . . . . . . . . . . . . . . . . . . $ 2.33 .26 2.59 Weighted average shares outstanding assuming dilution . . . . . . . . . . . . . . . . . . 316 317 $ 319 The sum of the individual per share amounts may not add due to rounding. See accompanying Notes to Consolidated Financial Statements. 33 mar35312_app_640-705.indd 650 10/18/15 11:52 AM Appendix\t651 CAMPBELL SOUP COMPANY Consolidated Statements of Comprehensive Income (millions) 2014 Pre-tax amount 2013 Tax (expense) benefit Net earnings. . . . . . . . . . . . . . . . . . . . After-tax amount $ Pre-tax amount 2012 Tax (expense) benefit 807 After-tax amount $ Pre-tax amount Tax (expense) benefit 449 After-tax amount $ 764 Other comprehensive income (loss): Foreign currency translation: Foreign currency translation adjustments. . . . . . . . . . . . . . . . . . $ (12) $ Reclassification of currency translation adjustments realized upon disposal of business. . . . . . . (1) (13) (22) 3 (19) Unrealized gains (losses) arising during period . . . . . . . . . . . . . . . . (12) 4 Reclassification adjustment for (gains) losses included in net earnings . . . . . . . . . . . . . . . . . . . . Net actuarial gain (loss) arising during the period . . . . . . . . . . . . . Reclassification of prior service credit included in net earnings . . . $ (95) $ 3 (92) $ (127) $ (8) (135) (8) 20 (8) 12 15 (5) 10 4 (1) 3 (55) 20 (35) 322 (103) 219 (428) 151 (277) (2) (2) (39) 74 Cash-flow hedges: Pension and other postretirement benefits: Reclassification of net actuarial loss included in net earnings . . . . 113 Other comprehensive income (loss). $ 10 Total comprehensive income (loss) . $ (13) (3) $ Total comprehensive income (loss) attributable to noncontrolling interests . . . . . . . . . . . . . . . . . . . . . . . . Total comprehensive income (loss) attributable to Campbell Soup Company . . . . . . . . . . . . . . . . . . . . . . 804 (2) 124 $ 373 $ (2) (1) (1) (54) 70 83 (29) 54 210 $ (458) $ 109 (163) $ (10) $ 814 659 (349) $ (10) $ 669 415 (10) $ 425 See accompanying Notes to Consolidated Financial Statements. 34 mar35312_app_640-705.indd 651 10/18/15 11:52 AM 652\t\u0003 Appendix CAMPBELL SOUP COMPANY Consolidated Balance Sheets (millions, except per share amounts) August 3, 2014 Current assets Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Accounts receivable, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Current assets of discontinued operations held for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Plant assets, net of depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other intangible assets, net of amortization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Non-current assets of discontinued operations held for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Current liabilities Short-term borrowings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Payable to suppliers and others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Dividend payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Accrued income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Current liabilities of discontinued operations held for sale. . . . . . . . . . . . . . . . . . . . . . . . . . . Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Long-term debt. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Deferred taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Non-current liabilities of discontinued operations held for sale . . . . . . . . . . . . . . . . . . . . . . . . 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 28, 2013 232 670 1,016 182 2,100 2,318 2,433 1,175 87 8,113 1,771 527 553 101 37 2,989 2,244 548 729 6,510 $ $ $ $ 12 330 2,198 (356) (569) 1,615 (12) 1,603 8,113 $ 333 635 925 135 193 2,221 2,260 2,297 1,021 131 393 8,323 1,909 523 617 100 19 114 3,282 2,544 489 776 22 7,113 12 362 1,772 (364) (565) 1,217 (7) 1,210 8,323 See accompanying Notes to Consolidated Financial Statements. 35 mar35312_app_640-705.indd 652 10/18/15 11:52 AM Appendix\t653 CAMPBELL SOUP COMPANY Consolidated Statements of Cash Flows (millions) 2014 2013 2012 53 weeks 52 weeks 52 weeks Cash flows from operating activities: Net earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ Adjustments to reconcile net earnings to operating cash flow 807 $ 449 $ 764 Impairment charge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 396 Restructuring charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 51 10 Stock-based compensation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 113 79 Depreciation and amortization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 305 407 262 Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 (171) 45 Gain on sale of business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (141) Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118 155 118 Changes in working capital Accounts receivable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (38) (48) (18) Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (56) (146) 32 Prepaid assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (22) 5 (3) Accounts payable and accrued liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (93) (69) (19) Pension fund contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (47) (87) (71) Receipts from (payments of) hedging activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4) 22 7 Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (53) (58) (86) Net cash provided by operating activities . . . . . . . . . . . . . . . . . . . . . . . . . 899 1,019 1,120 Cash flows from investing activities: Purchases of plant assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (347) Sales of plant assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Businesses acquired, net of cash acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (329) Sale of business, net of cash divested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 520 Other, net. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (17) (1) (2,154) (323) Net cash used in investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (336) (323) 5 1 (1,806) (134) Cash flows from financing activities: Net short-term borrowings (repayments) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 208 825 (257) Long-term borrowings (repayments) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2) Repayments of notes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (700) (400) Dividends paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (391) (367) (373) Treasury stock purchases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (76) (153) (412) Treasury stock issuances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 83 112 Excess tax benefits on stock-based compensation . . . . . . . . . . . . . . . . . . . . . . . . . . 13 12 8 1,250 Contributions from noncontrolling interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 3 2 Other, net. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (16) Net cash provided by (used in) financing activities . . . . . . . . . . . . . . . . . . (925) Effect of exchange rate changes on cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (9) Net change in cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,237 (920) (36) (26) (169) 66 (149) Cash and cash equivalents continuing operations beginning of period. . . . . . 333 335 484 Cash and cash equivalents discontinued operations beginning of period . . . . Cash and cash equivalents discontinued operations end of period . . . . . . . . . 68 (68) Cash and cash equivalents continuing operations end of period . . . . . . . . . . . $ 232 $ 333 $ 335 See accompanying Notes to Consolidated Financial Statements. 36 mar35312_app_640-705.indd 653 10/18/15 11:52 AM 654\t\u0003 Appendix CAMPBELL SOUP COMPANY Consolidated Statements of Equity (millions, except per share amounts) Campbell Soup Company Shareholders' Equity Capital Stock Issued Shares Balance at July 31, 2011 . . . . . 542 In Treasury Amount $ 20 Shares Amount Additional Paid-in Capital (222) $ (8,021) $ 331 Earnings Retained in the Business $ 9,185 Accumulated Other Comprehensive Income (Loss) $ Noncontrolling Interests (427) $ Contribution from noncontrolling interest . . . . . . . 774 (10) Other comprehensive income (loss). . . . . . . . . . . . . . . . . . . . . (349) Dividends ($1.16 per share). . . Treasury stock purchased. . . . . (13) (412) 5 174 542 20 (230) (2) (8,259) 329 9,584 (776) 458 211 Dividends ($1.16 per share). . . 898 3 3 (9) 449 (1) 210 (371) (219) (8) 323 12 (153) (153) 219 7,907 (7,899) 4 141 33 (11) (364) 362 174 1,772 (565) (7) 5 Net earnings (loss) . . . . . . . . . Other comprehensive income (loss). . . . . . . . . . . . . . . . . . . . . 818 Dividends ($1.248 per share). (392) (11) (4) Treasury stock purchased . . . (2) (76) Treasury stock issued under management incentive and stock option plans. . . . . . . . . . 3 84 Balance at August 3, 2014 . . . (371) Treasury stock issued under management incentive and stock option plans . . . . . . . . . . 323 $ 12 (10) $ (349) 172 Other comprehensive income (loss). . . . . . . . . . . . . . . . . . . . . (4) 2 764 (412) Net earnings (loss) . . . . . . . . . . Treasury stock purchased. . . . . 1,096 (375) Contribution from noncontrolling interest . . . . . . . Balance at July 28, 2013 . . . . . Contribution from noncontrolling interest. . . . . . (375) Treasury stock issued under management incentive and stock option plans . . . . . . . . . . Treasury stock retired. . . . . . . . $ 2 Net earnings (loss) . . . . . . . . . . Balance at July 29, 2012 . . . . . 8 Total Equity 1 1,210 5 807 (3) (392) (76) (32) (356) $ 330 52 $ 2,198 $ (569) $ (12) $ 1,603 See accompanying Notes to Consolidated Financial Statements. 37 mar35312_app_640-705.indd 654 10/18/15 11:52 AM Appendix\t655 Notes to Consolidated Financial Statements (currency in millions, except per share amounts) 1. Summary of Significant Accounting Policies Campbell Soup Company, together with its subsidiaries (the company), is a manufacturer and marketer of high-quality, branded convenience food products. Basis of Presentation The consolidated financial statements include the accounts of the company and entities in which the company maintains a controlling financial interest. Intercompany transactions are eliminated in consolidation. Certain amounts in prior-year financial statements were reclassified to conform to the current-year presentation.The company's fiscal year ends on the Sunday nearest July 31. There were 53 weeks in 2014, and 52 weeks in 2013 and 2012. Use of Estimates Generally accepted accounting principles require management to make estimates and assumptions that affect assets, liabilities, revenues and expenses. Actual results could differ from those estimates. Revenue Recognition Revenues are recognized when the earnings process is complete. This occurs when products are shipped in accordance with terms of agreements, title and risk of loss transfer to customers, collection is probable and pricing is fixed or determinable. Revenues are recognized net of provisions for returns, discounts and allowances. Certain sales promotion expenses, such as feature price discounts, in-store display incentives, cooperative advertising programs, new product introduction fees and coupon redemption costs, are classified as a reduction of sales. The recognition of costs for promotion programs involves the use of judgment related to performance and redemption estimates. Estimates are made based on historical experience and other factors. Costs are recognized either upon sale or when the incentive is offered, based on the program. Revenues are presented on a net basis for arrangements under which suppliers perform certain additional services. Cash and Cash Equivalents All highly liquid debt instruments purchased with a maturity of three months or less are classified as cash equivalents. Inventories All inventories are valued at the lower of average cost or market. Property, Plant and Equipment Property, plant and equipment are recorded at historical cost and are depreciated over estimated useful lives using the straight-line method. Buildings and machinery and equipment are depreciated over periods not exceeding 45 years and 20 years, respectively. Assets are evaluated for impairment when conditions indicate that the carrying value may not be recoverable. Such conditions include significant adverse changes in business climate or a plan of disposal. Repairs and maintenance are charged to expense as incurred. Goodwill and Intangible Assets Goodwill and intangible assets deemed to have indefinite lives are not amortized but rather are tested at least annually for impairment, or when 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 is 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. 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. See Note 6 for information on intangible assets and an impairment charge recognized in 2013. Derivative Financial Instruments The company uses derivative financial instruments primarily for purposes of hedging exposures to fluctuations in foreign currency exchange rates, interest rates, commodities and equity-linked employee benefit obligations. These derivative contracts are entered into for periods consistent with the related underlying exposures and do not constitute positions independent of those exposures. The company does not enter into derivative contracts for speculative purposes and does not use leveraged instruments. The company's derivative programs include strategies that qualify and strategies that do not qualify for hedge accounting treatment. To qualify for hedge accounting, the hedging relationship, both at inception of the hedge and on an ongoing basis, is expected to be highly effective in achieving offsetting changes in the fair value of the hedged risk during the period that the hedge is designated. 38 mar35312_app_640-705.indd 655 10/18/15 11:53 AM 656\t\u0003 Appendix All derivatives are recognized on the balance sheet at fair value. For derivatives that qualify for hedge accounting, on the date the derivative contract is entered into, the company designates the derivative as a hedge of the fair value of a recognized asset or liability or a firm commitment (fair-value hedge), a hedge of a forecasted transaction or of the variability of cash flows to be received or paid related to a recognized asset or liability (cash-flow hedge), or a hedge of a net investment in a foreign operation. Some derivatives may also be considered natural hedging instruments (changes in fair value act as economic offsets to changes in fair value of the underlying hedged item) and are not designated for hedge accounting. Changes in the fair value of a fair-value hedge, along with the gain or loss on the underlying hedged asset or liability (including losses or gains on firm commitments), are recorded in current-period earnings. The effective portion of gains and losses on cashflow hedges are recorded in other comprehensive income (loss), until earnings are affected by the variability of cash flows. If the hedge is no longer effective, all changes in the fair value of the derivative are included in earnings each period until the instrument matures. If a derivative is used as a hedge of a net investment in a foreign operation, its changes in fair value, to the extent effective as a hedge, are recorded in other comprehensive income (loss). Any ineffective portion of designated hedges is recognized in current-period earnings. Changes in the fair value of derivatives that are not designated for hedge accounting are recognized in current-period earnings. Cash flows from derivative contracts are included in Net cash provided by operating activities. Advertising Production Costs Advertising production costs are expensed in the period that the advertisement first takes place or when a decision is made not to use an advertisement. Research and Development Costs The costs of research and development are expensed as incurred. Costs include expenditures for new product and manufacturing process innovation, and improvements to existing products and processes. Costs primarily consist of salaries, wages, consulting, and depreciation and maintenance of research facilities and equipment. Income 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 temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are recorded to reduce deferred tax assets when it is more likely than not that a tax benefit will not be realized. 2. Recent Accounting Pronouncements In December 2011, the Financial Accounting Standards Board (FASB) issued guidance related to disclosures about offsetting (netting) of assets and liabilities in the statement of financial position. The guidance requires entities to disclose gross information and net information about both instruments and transactions that are offset in the statement of financial position, and instruments and transactions subject to an agreement similar to a master netting arrangement. The scope includes financial instruments and derivative instruments. In January 2013, the FASB issued an amendment to the guidance to limit the scope of the new balance sheet offsetting disclosures to derivatives, repurchase agreements, and securities lending transactions to the extent that they are offset in the financial statements or subject to an enforceable master netting arrangement or similar arrangement. The disclosures were required for fiscal years, and interim periods within those years, beginning on or after January 1, 2013. The company adopted the guidance in the first quarter of 2014. The adoption resulted in additional disclosures, but did not have an impact on the company's consolidated financial statements. See Note 14. In July 2012, the FASB issued revised gu