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CASE 3-2 Analyzing and Interpreting Liabilities Refer to the annual report of Campbell Soup Company in Appendix A. Campbell Soup Required: a. Identify Campbell Soup's major categories of liabilities. Identify which of these liabilities require recognition of interest expense. 6. Reconcile activity in the long-term borrowing account for Year 11. c. Describe the composition of Campbell Soup's long-term liabilities account using its note 19. CASE 3-3 Analyzing and Interpreting Equity Page 220 Refer to the annual report of Campbell Soup Company in Appendix A. Campbell Soup Required: a. Determine the book value per share of Campbell Soup's common stock for Year 11. 6. Identify the par value of Campbell Soup's common shares. Determine the number of common shares authorized, issued, and outstanding at the end of Year 11. c. Determine how many common shares Campbell Soup repurchased as treasury stock for Year 11. Determine the price at which Campbell Soup repurchased the shares. CHECK (C) Year 11 repurchase price $51.72 Financial Statement Campbell Soup Supplemental Schedule of Sales and Earnings Page A47 million dollars) Year 10 Year 9 Year 11 Earnings Sales Sales Earnings Sales Earnings Contributions by division Campbell North America Campbell U.S.A. Campbell Canada $3,911.8 352.0 $632.7 35.3 $3,932.7 384.0 $370.8 25.6 $3,666.9 313.4 $2423 23.8 4,263.8 668.0 4,316.7 396 + 3,980.3 266.1 Campbell Biscuit and Bakery Pepperidge Farm International Biscuit 569.0 219.4 73.6 17.6 582.0 1953 57.0 89 548.4 178.0 53.6 11.7 788.4 91.2 777.3 65.9 726.4 653 1,222.9 39.4 1,189.8 (168.6) 1,030.3 (1178) Campbell International Interdivision (71.0) (780) (64.9) Total sales 56,204.1 $6,205.8 $5,672.1 Total operating earnings Unallocated corporate expenses Interest, net Foreign currency translation adjustments Taxes on earnings 798.6 (41.1) (90.2) .1 (265.9) 293.7 (16.5) (94.0) (3.8) (175.0) 213.6 (313) (558) (20.0) (93.4) Net sarnings $401.5 $4.4 $13.1 Net earnings per shure $3.16 9.03 5.10 Contributions by die son ist Year 10 include the age of, restructuring and communal charges of $339.7 million as fellows Campbell U.S.A. $121.8 million, Campbell Canada 66 million, Pepperidge Far SIT millionerna Biscuit $143 million and Campbell Fernational $185.4 cm. Contributions by division in Year 9 include the effects of restructuring and wriwal charges of $143.0 million as follows Campbell US.A. $183.1 million, Campbell Canada $60 illon, Pepperidge Farm $7.1 million, International Bicut $95 million, and Campbell Inkernational $1373 million Consolidated Statements of Earnings Page A52 (ons) Year 11 Year 10 Year 9 15 NET SALES $6,204.1 $6,205.8 $5,672.1 14 15 16 Costs and expenses Cost of products sold Marketing and selling expenses Administrative expenses Research and development expenses Interest expense (Note 3) Interest income Foreign exchange losses, net (Note 4) Other expense (Note 5) 4,0955 9562 306.7 56.3 116.2 (26.0) 8 262 4,238.2 980.5 290.7 53.7 111.6 (176) 4,001.6 818.8 252.1 47.7 94.1 (383) 19 20 21 193 14.7 32.4 21 26.2 Other expense (Note 5) Divestitures, restructuring and unusual charges (Note 6) 14.7 339.1 32.4 343.0 22 220 Total costs and expenses $5,531.9 $6,0342 $5,570.7 23 Earnings before equity in earnings of affiliates and minority interests 21 Equity in earnings of affiliates 25 Minority interests $ 6722 2.4 (72) $ 1716 13.5 (5.7 $ 101.4 10.4 (5.3) 26 Earnings before taxes 27 Taxes on earnings (Note 9) 667.4 263.9 179.4 175.0 106.5 93.4 28 Met earnings $ 401.5 S 4.4 $ 13.1 29 Net earnings per share (Note 23) 3.16 $ .03 $ .10 30 Weighted average shares outstanding 127.0 1296 1293 CONSOLIDATED BALANCE SHEETS Page A53 (undo dellars) July 28 Year 11 July 29 Year 10 Current Assets 31 Cash and cash equivalents (Note 12) 32 Other temporary investments, at cost which approximates market Accounts receivable (Note 13) 34 Inventories (Note 14) 35 Prepaid expenses (Note 15) 36 Total current assets $178.9 12.8 527.4 706.7 92.7 1,518.5 $80.7 22.5 624.5 819.8 1180 1.665.5 341 35 Inventories (Note 14) Prepaid expenses (Note 15) Total current assets 706.7 92.7 819.8 118.0 1.665.5 36 1,518.5 37 Plant sets, net of depreciation (Note 16) 38 Intangible assets, net of amortiration (Note 17) 39 Other essats (Note 18) 1.790.4 435.5 404.6 1.717.7 383.4 349 0 Total assets $4,149.0 $4,115.6 42 $282.2 482.4 408.7 37.0 67.7 $2023 5252 491.9 323 46.4 1,278.0 1,298.1 7726 805.8 Current Liabilities 40 Notes payable (Note 19) 1 Payable to suppliers and others Accrued liabilities (Note 20) 13 Dividend payable 4 Accrued income taxes 45 Total current liabilities 16 long-term debt (More 101 Other limbilities, principally deferred income taxes (Note 21) Shareswmers' Equity (Note 22) 48 Preferred stock, authorized 40,000,000 shares, none issued 49 Capital stock, $.15 par value; authorized 140,000,000 shares, issued 135,622,676 shares 50 Capital surplus Earnings retained in the business 52 Capital stock in treasury, 8,618,911 shares in Year 11 and 6,353,697 shares in Year 10, at cost 53 Cumulative translation adjustments (Note 4) 55 Total shareowners' equity 305.0 3199 51 20.3 107.3 1,912.6 (270.4) 23.6 1.793.4 20.3 61.9 1,653.3 (1072) 63.5 1,691.8 55 Total liabilities and shareowners' equity $4,149.0 $4,115.6 CONSOLIDATED STATEMENTS OF CASH FLOWS Page A54 (million dollars Year 10 Year 9 56 $4015 $4.4 $13.1 208.6 57 58 59 60 61 62 63 64 Cash Flows from Operating Activities Net earnings To reconcile net earnings to net cash provided by operating activities: Depreciation and amortization Divestitures and restructuring provisions Deferred taxes Other, net (Increase) decrease in accounts receivable (Increase) decrease in inventories Net change in other current assets and liabilities Net cash provided by operating activities 35.5 63.2 17.1 48.7 30.6 805.2 200.9 339.1 3.9 18.6 (60.4) 10.7 (68.8) 448.4 1923 343.0 (678) 373 (468) (113.2) (6) 3573 66 67 Cash Flows from Investing Activities Purchases of plant assets Sales of plant assets Businesses acquired (361.1) 43.2 (180.1) (387.6) 34.9 (41.6) (284.1) 39.8 (1358) Net cash used in investing activities (478.7) (387.5) (473.2) Cash Flows from Financing Activities Long-term borrowings Repayments of long-term borrowings 74 Increase (decrease) in borrowings with less than three month maturities 75 Other short-term borrowings 76 Repayments of other short-term borrowings 77 Dividends paid 78 Treasury stock purchases Treasury stock issued 80 Othernet Net cash provided by (used in) financing activities 82 Effect of exchange rate changes on cash 83 Net Increase (decrease) in cash and cash equivalents 84 Cash and cash equivalents at beginning of year 85 Cash and cash equivalent at end of year 402.8 (129.9) (137.9) 117.3 (206.4) (137.5) (1756) 47.7 (1) (2196) (8.7) 98.2 80.7 79 12.6 (225) (2.7) 153.7 (89.8) (124.3) (41.1) 12.4 (1) (101.8) .7 (40.2) 120.9 $80.7 126.5 (536) 108.2 227.1 (1923) (86.7) (8.1) 18.5 235 163.1 (12.1) 35.1 85.8 $120.9 81 $178.9 Page A55 Capital Stock Cumulative in Translation Treasuryl Adjustments S(75.2) $28.5 Total Shareowners Equity $1,895.0 13.1 (8.1) (116.4) (8.1) CONSOLIDATED STATEMENTS OF SHAREOWNERS' EQUITY (milion dollars) Earning Retained Preferred Capital Capital in the Stock Stock Surplus Business 86 Balance at July 31, Year 8 $20.3 S423 $1,879.1 Net earnings 13.1 Cash dividends (5.90 per share) (116.4) Treasury stock purchased Treasury stock issued under Management incentive and Stock option plans 85 Translation adjustments Balance at July 30, Year 9 20.3 50.8 1,775.8 Net earnings Cash dividends (5.98 per share) (126.9) Treasury stock purchased Treasury stock issued under Management incentive and Stock option plans 11.1 Translation adjustments Balance at July 29, Year 10 20.3 61.9 1,653.3 88 Net earnings 401.5 89 Cash dividends 12.6 (26.4) 2.1 21.1 (26.4) 1.7783 (70.7) (126.9) (41.1) (41.1) 4.6 61.4 63.5 15.7 61.4 1,691.8 401.5 (1072) 101.5 4015 (1422) (142.2) (175.6) (175.6) 88 Net earnings 89 Cash dividends ($1.12 per share) 90 Treasury stock purchased 91 Treasury stock issued under Management incentive und Steck eption plans 92 Translation adjustments 93 Sale of foreign operations 94 Balance et July 21, Your 45.4 12.+ (29.9) (10.0) $23.6 57.8 (29.9) (10,0) $1,793.4 $203 $107.3 $1,912.6 $(270.4) 95 Changes in Number of Shares thousands of shares) Issued 1356227 Our standing 1290386 Treasury 6.5841 Balance at July 31. Year 8 Year 111 Year 101 Year 9 Net sales United States $4,495.6 $4,527.2 $4,233.4 Europe 1.149.1 1.101.4 983.7 Other foreign countries 656.0 6736 5429 Adjustment and elimination (964) (879) Consolidated $6,204.1 $6,205 8 $5,6721 Earnings (los) before taxes United States $694.8 $427.8 $294.5 Europe 48.8 (178.7) (21.3) Other foreign countries 55.0 446 (59.6) 798.6 293.7 213.6 Unallocated corporate expenses (41.1) (16.5) (31.3) Interest, net (90.2) (940) (558) Foreign currency translation adjustment (200) Consolidated $667.4 $179.4 $1065 Identifiable assets United States $2,693.4 $2,535.0 52.460.5 Europe 7113 942.2 886,9 Other foreign countries 744.3 6384 384.7 Consolidated $4,149.0 54.115.6 $3,932.1 nsfers between geographic areas are recorded at cost plus markup or at market. Identifiable assets are all assets identified with rations in each geographic area. Interest Expense Year 11 Year 101 Year 9 $136.9 $976 98 Interest expense 99less interest expense capitalized 100 20.7 $116.2 $1219 103 $111.6 35 $94.1 Page A57 Foreign Currency Translation ctuations in foreign exchange rates resulted in decreases in net earnings of $3 in Year 11, $3.2 in Year 10 and L1 in Year 9. The balances in the Cumulative translation adjustments account are the following: Year 111 Year 101 Year 9 Europe Canada Australia Other $ 5.6 3.8 13.4 3.6 16.1 6 $635 $(3.5) (2.5) 7.3 8 $ 2.1 .8 $2.5.6 During Year 9, the Company made several acquisitions at a cost of $137.9, including a soup and pickle manufacturing business in Canada. The cost of the acquisitions was allocated as follows: 109 Working capital Fixed Assets Intangibles, principally goodwill Long-term liabilities and other $ 39,9 346 655 (21) $137.9 These acquisition were accounted for as purchase transactions, and operations of the acquired companies are included in the presented as they would not vary materially from the reported amounts and would not be indicative of results Page A58 anticipated following acquisition due to significant changes made to acquired companies operations. 110 Pension Plans and Retirement Benefits Pension Plans. Substantially all of the employees of the Company and its domestic and Canadian subsidiaries are covered by noncontributory defined benefit pension plans. Plan benefits are generally based on years of service and employees' compensation during the last years of employment. Benefits are paid from funds previously provided to trustees and insurance companies or are paid directly by the Company or its subsidiaries. Actuarial assumptions and plan provisions are reviewed regularly by the Company and its independent actuaries to ensure that plan assets will be adequate to provide pension and survivor benefits. Plan assets consist primarily of shares of or units in common stock, fixed income, real estate and money market funds. Pension expense included the following: Year 11 Year 101 Year 9 $ 22.1 $ 19.3 $ 17.2 For Domestic and Canadian trusted plans 111 Service cost-benefits earned during the year 112 Interest cost on projected benefit obligation 113 Actual return on plan 110 Net amortization and deferral 69.0 633 58.8 (73.6) (271) (113.8) 6.3 578 (382) 173 24.0 20.0 6.8 115 Other pension expense 116 Consolidated pension expense $31.4 523.7 $26.8 Principal actuarial assumptions used in the United States were: 0.00% 0.00% Measurements of projected benefit obligation Discount rate 8.75% 118 Long-term rate of compensation increase 3.73% 119 Long-term rate of return on plan assets 9.00% The funded status of the plans was as follows: 5.50% 5.00% 9.00% 9.00% lettings 120 July 28 Year 11 July 29, Year 10 (059.4) (113.3) (LOLO) 7739 54.9 Accumulated benefit obligation (714.6) Elfect of projected future salary increases Projected benefit obligation (827.7) (760.4) Plan assets at market value 857.7 Plan assets in excess of projected benefit obligation 30.0 13.5 Unrecognized net loss 122.9 Unrecognized prior service cost Unrecognized net assets A transition Prepaid pension expense $ 172.5 $ 116,2 Pension coverage for employees of the Company's foreign subsidiaries, other than Canada, and other supplemental pension benefits of the Company are provided to the extent determined appropriate through their respective plans. Obligations under such plans are systematically provided for by depositing funds with trusts or under insurance contracts. The assets and obligations of these plans are not material Saving Plans. The Company sponsors employee savings plans which cover substantially all domestic employees. After one year of 86.3 55.9 (395) are not material Pension coverage for employees of the Company's foreign subsidiaries, other than Canada, and other supplemental pension benefits of the Company are provided to the extent determined appropriate through their respective plans. Obligations under such plans are systematically provided for by depositing funds with trusts or under insurance contracts. The assets and obligations of these plans Saring Plans. The Company sponsors employee savings plans which cover substantially all domestic employees. After one year of continuous service the Company matches 50% of employee contributions up to five percent of compensation within certain limits. In fiscal Year 12, the Company will increase its contribution by up to 20% if certain earnings' goals are achieved. Amounts charged to costs and expenses were $10.0 in Year 11, 510.6 in Year 10, and $10.7 in Year 9. Retirae Benefits. The Company and its domestic subsidiaries provide certain health care and life insurance benefits to substantially all retired employees and their dependents. The cost of these retiree health and life insurance benefits are expensed as claims are paid and amounted to $15.3 in Year 11, $12.6 in Year 10, and $11.0 in Year 9. Substantially all retirees of foreign subsidiaries are provided health care benefits by government sponsored plans. The cost of life insurance provided to retirees of certain foreign subsidiaries is not significant 121 Taxes on Earnings Page A59 The provision for income taxes consists of the following: Year 11 Year 101 Year 9 $185.8 25.4 212 2304 $132.4 208 17.9 171.1 $118.8 20.9 21.5 161.2 Currently payable 122 Federal 123 State 124 Foreign 124A Deferred 125 Federal 126 Suate 127 Foreign 127A 1278 21.9 7.5 12 2.6 .1 3.9 $175.0 . (49.3) (8.0) (10.5 (678) $ 93.4 35.5 $265.9 The deferred income taxes result from temporary differences between financial statement earnings and taxable earnings as follows: Year 9 Year 11 Year 100 $ 5.9 S 186 117 $11.9 8.3 (3.5) 128 Depreciation 129 Pensions 130 Prefunded employee benefits 131Accruals not currently deductable for tax purposes 132 Divestitures, restructuring and unusual charges 133 Other (11.4) (5.8) 29,3 (782) Settings (111) (4.7 $ 3.9 $35.5 m S(67.8) Show transcribed image text CASE 3-2 Analyzing and Interpreting Liabilities Refer to the annual report of Campbell Soup Company in Appendix A. Campbell Soup Required: a. Identify Campbell Soup's major categories of liabilities. Identify which of these liabilities require recognition of interest expense. 6. Reconcile activity in the long-term borrowing account for Year 11. c. Describe the composition of Campbell Soup's long-term liabilities account using its note 19. CASE 3-3 Analyzing and Interpreting Equity Page 220 Refer to the annual report of Campbell Soup Company in Appendix A. Campbell Soup Required: a. Determine the book value per share of Campbell Soup's common stock for Year 11. 6. Identify the par value of Campbell Soup's common shares. Determine the number of common shares authorized, issued, and outstanding at the end of Year 11. c. Determine how many common shares Campbell Soup repurchased as treasury stock for Year 11. Determine the price at which Campbell Soup repurchased the shares. CHECK (C) Year 11 repurchase price $51.72 Financial Statement Campbell Soup Supplemental Schedule of Sales and Earnings Page A47 million dollars) Year 10 Year 9 Year 11 Earnings Sales Sales Earnings Sales Earnings Contributions by division Campbell North America Campbell U.S.A. Campbell Canada $3,911.8 352.0 $632.7 35.3 $3,932.7 384.0 $370.8 25.6 $3,666.9 313.4 $2423 23.8 4,263.8 668.0 4,316.7 396 + 3,980.3 266.1 Campbell Biscuit and Bakery Pepperidge Farm International Biscuit 569.0 219.4 73.6 17.6 582.0 1953 57.0 89 548.4 178.0 53.6 11.7 788.4 91.2 777.3 65.9 726.4 653 1,222.9 39.4 1,189.8 (168.6) 1,030.3 (1178) Campbell International Interdivision (71.0) (780) (64.9) Total sales 56,204.1 $6,205.8 $5,672.1 Total operating earnings Unallocated corporate expenses Interest, net Foreign currency translation adjustments Taxes on earnings 798.6 (41.1) (90.2) .1 (265.9) 293.7 (16.5) (94.0) (3.8) (175.0) 213.6 (313) (558) (20.0) (93.4) Net sarnings $401.5 $4.4 $13.1 Net earnings per shure $3.16 9.03 5.10 Contributions by die son ist Year 10 include the age of, restructuring and communal charges of $339.7 million as fellows Campbell U.S.A. $121.8 million, Campbell Canada 66 million, Pepperidge Far SIT millionerna Biscuit $143 million and Campbell Fernational $185.4 cm. Contributions by division in Year 9 include the effects of restructuring and wriwal charges of $143.0 million as follows Campbell US.A. $183.1 million, Campbell Canada $60 illon, Pepperidge Farm $7.1 million, International Bicut $95 million, and Campbell Inkernational $1373 million Consolidated Statements of Earnings Page A52 (ons) Year 11 Year 10 Year 9 15 NET SALES $6,204.1 $6,205.8 $5,672.1 14 15 16 Costs and expenses Cost of products sold Marketing and selling expenses Administrative expenses Research and development expenses Interest expense (Note 3) Interest income Foreign exchange losses, net (Note 4) Other expense (Note 5) 4,0955 9562 306.7 56.3 116.2 (26.0) 8 262 4,238.2 980.5 290.7 53.7 111.6 (176) 4,001.6 818.8 252.1 47.7 94.1 (383) 19 20 21 193 14.7 32.4 21 26.2 Other expense (Note 5) Divestitures, restructuring and unusual charges (Note 6) 14.7 339.1 32.4 343.0 22 220 Total costs and expenses $5,531.9 $6,0342 $5,570.7 23 Earnings before equity in earnings of affiliates and minority interests 21 Equity in earnings of affiliates 25 Minority interests $ 6722 2.4 (72) $ 1716 13.5 (5.7 $ 101.4 10.4 (5.3) 26 Earnings before taxes 27 Taxes on earnings (Note 9) 667.4 263.9 179.4 175.0 106.5 93.4 28 Met earnings $ 401.5 S 4.4 $ 13.1 29 Net earnings per share (Note 23) 3.16 $ .03 $ .10 30 Weighted average shares outstanding 127.0 1296 1293 CONSOLIDATED BALANCE SHEETS Page A53 (undo dellars) July 28 Year 11 July 29 Year 10 Current Assets 31 Cash and cash equivalents (Note 12) 32 Other temporary investments, at cost which approximates market Accounts receivable (Note 13) 34 Inventories (Note 14) 35 Prepaid expenses (Note 15) 36 Total current assets $178.9 12.8 527.4 706.7 92.7 1,518.5 $80.7 22.5 624.5 819.8 1180 1.665.5 341 35 Inventories (Note 14) Prepaid expenses (Note 15) Total current assets 706.7 92.7 819.8 118.0 1.665.5 36 1,518.5 37 Plant sets, net of depreciation (Note 16) 38 Intangible assets, net of amortiration (Note 17) 39 Other essats (Note 18) 1.790.4 435.5 404.6 1.717.7 383.4 349 0 Total assets $4,149.0 $4,115.6 42 $282.2 482.4 408.7 37.0 67.7 $2023 5252 491.9 323 46.4 1,278.0 1,298.1 7726 805.8 Current Liabilities 40 Notes payable (Note 19) 1 Payable to suppliers and others Accrued liabilities (Note 20) 13 Dividend payable 4 Accrued income taxes 45 Total current liabilities 16 long-term debt (More 101 Other limbilities, principally deferred income taxes (Note 21) Shareswmers' Equity (Note 22) 48 Preferred stock, authorized 40,000,000 shares, none issued 49 Capital stock, $.15 par value; authorized 140,000,000 shares, issued 135,622,676 shares 50 Capital surplus Earnings retained in the business 52 Capital stock in treasury, 8,618,911 shares in Year 11 and 6,353,697 shares in Year 10, at cost 53 Cumulative translation adjustments (Note 4) 55 Total shareowners' equity 305.0 3199 51 20.3 107.3 1,912.6 (270.4) 23.6 1.793.4 20.3 61.9 1,653.3 (1072) 63.5 1,691.8 55 Total liabilities and shareowners' equity $4,149.0 $4,115.6 CONSOLIDATED STATEMENTS OF CASH FLOWS Page A54 (million dollars Year 10 Year 9 56 $4015 $4.4 $13.1 208.6 57 58 59 60 61 62 63 64 Cash Flows from Operating Activities Net earnings To reconcile net earnings to net cash provided by operating activities: Depreciation and amortization Divestitures and restructuring provisions Deferred taxes Other, net (Increase) decrease in accounts receivable (Increase) decrease in inventories Net change in other current assets and liabilities Net cash provided by operating activities 35.5 63.2 17.1 48.7 30.6 805.2 200.9 339.1 3.9 18.6 (60.4) 10.7 (68.8) 448.4 1923 343.0 (678) 373 (468) (113.2) (6) 3573 66 67 Cash Flows from Investing Activities Purchases of plant assets Sales of plant assets Businesses acquired (361.1) 43.2 (180.1) (387.6) 34.9 (41.6) (284.1) 39.8 (1358) Net cash used in investing activities (478.7) (387.5) (473.2) Cash Flows from Financing Activities Long-term borrowings Repayments of long-term borrowings 74 Increase (decrease) in borrowings with less than three month maturities 75 Other short-term borrowings 76 Repayments of other short-term borrowings 77 Dividends paid 78 Treasury stock purchases Treasury stock issued 80 Othernet Net cash provided by (used in) financing activities 82 Effect of exchange rate changes on cash 83 Net Increase (decrease) in cash and cash equivalents 84 Cash and cash equivalents at beginning of year 85 Cash and cash equivalent at end of year 402.8 (129.9) (137.9) 117.3 (206.4) (137.5) (1756) 47.7 (1) (2196) (8.7) 98.2 80.7 79 12.6 (225) (2.7) 153.7 (89.8) (124.3) (41.1) 12.4 (1) (101.8) .7 (40.2) 120.9 $80.7 126.5 (536) 108.2 227.1 (1923) (86.7) (8.1) 18.5 235 163.1 (12.1) 35.1 85.8 $120.9 81 $178.9 Page A55 Capital Stock Cumulative in Translation Treasuryl Adjustments S(75.2) $28.5 Total Shareowners Equity $1,895.0 13.1 (8.1) (116.4) (8.1) CONSOLIDATED STATEMENTS OF SHAREOWNERS' EQUITY (milion dollars) Earning Retained Preferred Capital Capital in the Stock Stock Surplus Business 86 Balance at July 31, Year 8 $20.3 S423 $1,879.1 Net earnings 13.1 Cash dividends (5.90 per share) (116.4) Treasury stock purchased Treasury stock issued under Management incentive and Stock option plans 85 Translation adjustments Balance at July 30, Year 9 20.3 50.8 1,775.8 Net earnings Cash dividends (5.98 per share) (126.9) Treasury stock purchased Treasury stock issued under Management incentive and Stock option plans 11.1 Translation adjustments Balance at July 29, Year 10 20.3 61.9 1,653.3 88 Net earnings 401.5 89 Cash dividends 12.6 (26.4) 2.1 21.1 (26.4) 1.7783 (70.7) (126.9) (41.1) (41.1) 4.6 61.4 63.5 15.7 61.4 1,691.8 401.5 (1072) 101.5 4015 (1422) (142.2) (175.6) (175.6) 88 Net earnings 89 Cash dividends ($1.12 per share) 90 Treasury stock purchased 91 Treasury stock issued under Management incentive und Steck eption plans 92 Translation adjustments 93 Sale of foreign operations 94 Balance et July 21, Your 45.4 12.+ (29.9) (10.0) $23.6 57.8 (29.9) (10,0) $1,793.4 $203 $107.3 $1,912.6 $(270.4) 95 Changes in Number of Shares thousands of shares) Issued 1356227 Our standing 1290386 Treasury 6.5841 Balance at July 31. Year 8 Year 111 Year 101 Year 9 Net sales United States $4,495.6 $4,527.2 $4,233.4 Europe 1.149.1 1.101.4 983.7 Other foreign countries 656.0 6736 5429 Adjustment and elimination (964) (879) Consolidated $6,204.1 $6,205 8 $5,6721 Earnings (los) before taxes United States $694.8 $427.8 $294.5 Europe 48.8 (178.7) (21.3) Other foreign countries 55.0 446 (59.6) 798.6 293.7 213.6 Unallocated corporate expenses (41.1) (16.5) (31.3) Interest, net (90.2) (940) (558) Foreign currency translation adjustment (200) Consolidated $667.4 $179.4 $1065 Identifiable assets United States $2,693.4 $2,535.0 52.460.5 Europe 7113 942.2 886,9 Other foreign countries 744.3 6384 384.7 Consolidated $4,149.0 54.115.6 $3,932.1 nsfers between geographic areas are recorded at cost plus markup or at market. Identifiable assets are all assets identified with rations in each geographic area. Interest Expense Year 11 Year 101 Year 9 $136.9 $976 98 Interest expense 99less interest expense capitalized 100 20.7 $116.2 $1219 103 $111.6 35 $94.1 Page A57 Foreign Currency Translation ctuations in foreign exchange rates resulted in decreases in net earnings of $3 in Year 11, $3.2 in Year 10 and L1 in Year 9. The balances in the Cumulative translation adjustments account are the following: Year 111 Year 101 Year 9 Europe Canada Australia Other $ 5.6 3.8 13.4 3.6 16.1 6 $635 $(3.5) (2.5) 7.3 8 $ 2.1 .8 $2.5.6 During Year 9, the Company made several acquisitions at a cost of $137.9, including a soup and pickle manufacturing business in Canada. The cost of the acquisitions was allocated as follows: 109 Working capital Fixed Assets Intangibles, principally goodwill Long-term liabilities and other $ 39,9 346 655 (21) $137.9 These acquisition were accounted for as purchase transactions, and operations of the acquired companies are included in the presented as they would not vary materially from the reported amounts and would not be indicative of results Page A58 anticipated following acquisition due to significant changes made to acquired companies operations. 110 Pension Plans and Retirement Benefits Pension Plans. Substantially all of the employees of the Company and its domestic and Canadian subsidiaries are covered by noncontributory defined benefit pension plans. Plan benefits are generally based on years of service and employees' compensation during the last years of employment. Benefits are paid from funds previously provided to trustees and insurance companies or are paid directly by the Company or its subsidiaries. Actuarial assumptions and plan provisions are reviewed regularly by the Company and its independent actuaries to ensure that plan assets will be adequate to provide pension and survivor benefits. Plan assets consist primarily of shares of or units in common stock, fixed income, real estate and money market funds. Pension expense included the following: Year 11 Year 101 Year 9 $ 22.1 $ 19.3 $ 17.2 For Domestic and Canadian trusted plans 111 Service cost-benefits earned during the year 112 Interest cost on projected benefit obligation 113 Actual return on plan 110 Net amortization and deferral 69.0 633 58.8 (73.6) (271) (113.8) 6.3 578 (382) 173 24.0 20.0 6.8 115 Other pension expense 116 Consolidated pension expense $31.4 523.7 $26.8 Principal actuarial assumptions used in the United States were: 0.00% 0.00% Measurements of projected benefit obligation Discount rate 8.75% 118 Long-term rate of compensation increase 3.73% 119 Long-term rate of return on plan assets 9.00% The funded status of the plans was as follows: 5.50% 5.00% 9.00% 9.00% lettings 120 July 28 Year 11 July 29, Year 10 (059.4) (113.3) (LOLO) 7739 54.9 Accumulated benefit obligation (714.6) Elfect of projected future salary increases Projected benefit obligation (827.7) (760.4) Plan assets at market value 857.7 Plan assets in excess of projected benefit obligation 30.0 13.5 Unrecognized net loss 122.9 Unrecognized prior service cost Unrecognized net assets A transition Prepaid pension expense $ 172.5 $ 116,2 Pension coverage for employees of the Company's foreign subsidiaries, other than Canada, and other supplemental pension benefits of the Company are provided to the extent determined appropriate through their respective plans. Obligations under such plans are systematically provided for by depositing funds with trusts or under insurance contracts. The assets and obligations of these plans are not material Saving Plans. The Company sponsors employee savings plans which cover substantially all domestic employees. After one year of 86.3 55.9 (395) are not material Pension coverage for employees of the Company's foreign subsidiaries, other than Canada, and other supplemental pension benefits of the Company are provided to the extent determined appropriate through their respective plans. Obligations under such plans are systematically provided for by depositing funds with trusts or under insurance contracts. The assets and obligations of these plans Saring Plans. The Company sponsors employee savings plans which cover substantially all domestic employees. After one year of continuous service the Company matches 50% of employee contributions up to five percent of compensation within certain limits. In fiscal Year 12, the Company will increase its contribution by up to 20% if certain earnings' goals are achieved. Amounts charged to costs and expenses were $10.0 in Year 11, 510.6 in Year 10, and $10.7 in Year 9. Retirae Benefits. The Company and its domestic subsidiaries provide certain health care and life insurance benefits to substantially all retired employees and their dependents. The cost of these retiree health and life insurance benefits are expensed as claims are paid and amounted to $15.3 in Year 11, $12.6 in Year 10, and $11.0 in Year 9. Substantially all retirees of foreign subsidiaries are provided health care benefits by government sponsored plans. The cost of life insurance provided to retirees of certain foreign subsidiaries is not significant 121 Taxes on Earnings Page A59 The provision for income taxes consists of the following: Year 11 Year 101 Year 9 $185.8 25.4 212 2304 $132.4 208 17.9 171.1 $118.8 20.9 21.5 161.2 Currently payable 122 Federal 123 State 124 Foreign 124A Deferred 125 Federal 126 Suate 127 Foreign 127A 1278 21.9 7.5 12 2.6 .1 3.9 $175.0 . (49.3) (8.0) (10.5 (678) $ 93.4 35.5 $265.9 The deferred income taxes result from temporary differences between financial statement earnings and taxable earnings as follows: Year 9 Year 11 Year 100 $ 5.9 S 186 117 $11.9 8.3 (3.5) 128 Depreciation 129 Pensions 130 Prefunded employee benefits 131Accruals not currently deductable for tax purposes 132 Divestitures, restructuring and unusual charges 133 Other (11.4) (5.8) 29,3 (782) Settings (111) (4.7 $ 3.9 $35.5 m S(67.8) Show transcribed image text