This Assignment will require you to dig deep into the structure and composition of Campbell Soups liabilities (debt) and equity. This will help you better understand the sources of funding in any business. Locate the Campbell Soup Cases 3-2 and 3-3 on pages 219 and 220 of your text. Be sure to submit thoughtful and substantial answers to the questions following each case. Response successfully answers Assignment questions for these cases. 3-2 Identity Liabilities and Interest Expense and reconcile long term borrowing activity. 10 3-3 Identify par value, the number of shares issued and the number of shares authorized. 10 Responses exhibit strong critical thinking and appropriate analysis. 3-2 Describe the composition of the long term liabilities. 10 3-3 Determine the book value per share of the common stock
CASE 32 Analyzing and Interpreting Liabilities
Refer to the annual report of Campbell Soup Company in Appendix A.
Campbell Soup
Required:
a. Identify Campbell Soups major categories of liabilities. Identify which of these liabilities require recognition of interest expense.
b. Reconcile activity in the long-term borrowing account for Year 11.
c. Describe the composition of Campbell Soups long-term liabilities account using its note 19.
Page 220CASE 33 Analyzing and Interpreting Equity
Refer to the annual report of Campbell Soup Company in Appendix A.
Campbell Soup
Required:
a. Determine the book value per share of Campbell Soups common stock for Year 11.
b. Identify the par value of Campbell Soups 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
**You may not need all the info below to answer the question. I have attached just in case**
Campbell Soup Supplemental Schedule of Sales and Earnings (million dollars) Year 10 Year 9 Year 111 Earnings Sales Sales Earnings Sales Earnings 1 Contributions ly division Campbell North America Campbell U.S.A. Campbell Canada $3,911.8 352.0 $632.7 35.3 668.0 $3,932.7 384.0 4,316.7 $370.8 25.6 396.4 $3,666.9 313.4 3,9803 $242.3 23.8 4,263.8 266.1 Campbell Biscuit and Bakery Pepperidge Farm International Biscuit 57,0 569.0 219.4 73.6 17.6 91.2 582.0 1953 8.9 548.4 178.0 726.4 53.6 11.7 65.3 788.4 7773 65.9 Campbell International 1,222.9 39.4 1,189.8 (168.6) 1,030.3 (117.8) Interdivision (71.0) (78.0) (64.9) 111111 111111 Total sales $6,204.1 $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) 293.7 (16.5) (94.0) (3.8) (175.0) 213.6 (31.3) (55.8) (20.0) (93.4) (265.9) Not earnings $401.5 $4.4 $13.1 Not earnings per share $3.16 $.03 $.10 Contributions by division in Year 10 include the effects of diveures, restructuring and unusual charges of $339.1 million as follows: Campbell U.S.A. $121.8 million, Campbell Canada $6.6 million, Pepperidge Farm $11.0 million, International Biscuit $143 million, and Campbell International $185.1 million. Contributions by division in Year 9 include the effects of restructuring and unusual charges of $343.0 million as follows: Campbell U.S.A. 5183.1 million, Campbell Canada 56.0 million, Pepperidge Farm $7.1 million, International Biscuit $9.5 million, and Campbell International $1373 million Consolidated Statements of Earnings (millions) Year 11 Year 10 Year 9 13 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) Divestitures, restructuring and unusual charges (Note 6) 4,095.5 956.2 306.7 56.3 116.2 (26.0) 4,258.2 980.5 290.7 53.7 111.6 (17.6) 3.3 14.7 339.1 4,001.6 818.8 252.1 47.7 94.1 (38.3) 19.3 32.4 343.0 20 21 22 26.2 22A Total costs and expenses $5,531.9 $6,034.2 $5,570.7 $ 101.4 23 Earnings before equity in earnings of affiliates and minority interests 24 Equity in earnings of affiliates 25 Minority interests 672.2 2.4 (7.2) 5 1716 13.5 (5.7) 10.4 (5.3) 26 Earnings before taxes 27 Taxes on earnings (Note 9) 667.4 265.9 179.4 _175.0 106.5 93.4 28 Net earnings $ 401.5 $ 4.4 $ 13.1 29 Net earnings per share (Note 22) $ 3.16 5 .03 $ 10 30 Weighted average shares outstanding 127.0 129,6 1293 CONSOLIDATED BALANCE SHEETS (million dollars) July 28, Year 11 July 29, Year 10 31 32 33 Current Assets Cash and cash equivalents (Note 12) Other temporary investments, at cost which approximates market Accounts receivable (Note 13) Inventories (Note 14) Prepaid expenses (Note 15) Total current assets $178.9 12.8 527.4 706.7 92.7 $80.7 22.5 624.5 819.8 118.0 35 36 1,518.5 1,665.5 37 Plant assets, net of depreciation (Note 16) 38 Intangible assets, net of amortization (Note 17) 39 Other assets (Note 18) 1,790.4 435.5 404.6 1,717.7 383.4 349.0 Total assets $4,149.0 $4,115.6 10 12 Ac Current Liabilities Notes payable (Note 19) Payable to suppliers and others Accrued liabilities (Note 20) Dividend payable Accrued income taxes Total current liabilities $282.2 482.4 408.7 37.0 67.7 1,278.0 $202.3 525.2 491.9 323 46.4 43 44 1,298.1 46 Long-term debt (Note 19) 772.6 805.8 47 Other liabilities, principally deterred income taxes (Note 21) 305.0 319.9 50 51 Shareowners' Equity (Note 22) Preferred stock; authorized 40,000,000 shares: none issued Capital stock, $.15 par value; authorized 140,000,000 shares, issued 135,622,676 shares Capital surplus Earnings retained in the business Capital stock in treasury, 8618,911 shares in Year 11 and 6,353,697 shares in Year 10, at cost Cumulative translation adjustments (Note 4) Total shareowners' equity 20.3 107.3 1,912.6 (270.4) 23.6 1,793.4 20.3 61.9 1,6533 (1072) 63.5 1,691.8 Total liabilities and shareowners' equity $4,149.0 $4,115.6 CONSOLIDATED STATEMENTS OF CASH FLOWS (million dollars) Year 11 Year 10 | Year 9 56 $401.5 $4.4 $13.1 208.6 200.9 339.1 EEVE 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 3.9 18.6 35.5 63.2 17.1 48.7 30.6 192.3 343.0 (67.8) 37.3 (46.8) (113.2) (60.4) 10.7 (68.8) 448.4 (6) 805.2 357.3 66 67 68 Cash Flows from Investing Activities Purchases of plant assets Sales of plant assets Businesses acquired Sales of businesses Increase in other assets Net change in other temporary investments Net cash used in investing activities (361.1) 43.2 (180.1) 67.4 (57.8) (387.6) 34.9 (41.6) 21.7 (18.6) (284.1) 39.8 (135.8) 4.9 (107.0) 9.0 (473.2) 69 70 9.7 3.7 (478.7) (387.5) Cash Flows from Financing Activities 174 Cash Flows from Financing Activities Long-term borrowings 73 Repayments of long-term borrowings Increase (decrease) in borrowings with less than three month maturities Other short-term borrowings Repayments of other short-term borrowings Dividends paid 78 Treasury stock purchases 79 Treasury stock issued 80 Other, net 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 equivalents at end of year 402.8 (129.9) (137.9) 117.3 (206.4) (137.5) (175.6) 47.7 (.1) (219.6) (8.7) 98.2 80.7 $178.9 12.6 (22.5) (2.7) 153.7 (89.8) (124.3) (41.1) 12.4 (1) (1018) 126.5 (53.6) 108.2 227.1 (192.3) (86.7) (8.1) 18.5 23.5 163.1 (12.1) 35.1 85.8 (40.2) 120.9 $80.7 $120.9 CONSOLIDATED STATEMENTS OF SHAREOWNERS' EQUITY (million dollars) Preferred Stock 1 Capital Stock 1 $20.3 Capital Surplus 1 $423 Earnings Retained in the Business $1,879.1 13.1 Capital Stock Cumulative Translation Treasuryl Adjustments $(75.2) Total Shareowners Equity $1,895.0 13.1 $285 (116.4) (8.1) (116.4) (8.1) 8.5 12.6 (26.4) 21.1 (26.4) 1,778.3 20.3 2 50.8 1,775.8 4.4 (70.7) (126.9) (41.1) (126.9) (41.1) 86 Balance at July 31, Year 8 Net earnings Cash dividends ($.90 per share) Treasury stock purchased Treasury stock issued under Management incentive and Stock option plans Translation adjustments 87 Balance at July 30, Year 9 Net earnings Cash dividends ($.98 per share) Treasury stock purchased Treasury stock issued under Management incentive and Stock option plans Translation adjustments Balance at July 29, Year 10 88 Net earnings 89 Cash dividends ($1.12 per share) 90 Treasury stock purchased 91 Treasury stock issued under Management incentive and Stock option plans 92 Translation adjustments 93 Sale of foreign operations 94 Balance at July 28, Year 11 11.1 4.6 61.4 15.7 61.4 1,691.8 401.5 20.3 61.9 (107.2) 63.5 1,653.3 401.5 (142.2) (175.6) (142.2) (175.6) 45.4 12.4 (29.9) (10.0) $23.6 57.8 (29.9) (10.0) $1,793.4 - $20.3 $107.3 $1,912.6 $(270.4) 174 Cash Flows from Financing Activities Long-term borrowings 73 Repayments of long-term borrowings Increase (decrease) in borrowings with less than three month maturities Other short-term borrowings Repayments of other short-term borrowings Dividends paid 78 Treasury stock purchases 79 Treasury stock issued 80 Other, net 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 equivalents at end of year 402.8 (129.9) (137.9) 117.3 (206.4) (137.5) (175.6) 47.7 (.1) (219.6) (8.7) 98.2 80.7 $178.9 12.6 (22.5) (2.7) 153.7 (89.8) (124.3) (41.1) 12.4 (1) (1018) 126.5 (53.6) 108.2 227.1 (192.3) (86.7) (8.1) 18.5 23.5 163.1 (12.1) 35.1 85.8 (40.2) 120.9 $80.7 $120.9 CONSOLIDATED STATEMENTS OF SHAREOWNERS' EQUITY (million dollars) Preferred Stock 1 Capital Stock 1 $20.3 Capital Surplus 1 $423 Earnings Retained in the Business $1,879.1 13.1 Capital Stock Cumulative Translation Treasuryl Adjustments $(75.2) Total Shareowners Equity $1,895.0 13.1 $285 (116.4) (8.1) (116.4) (8.1) 8.5 12.6 (26.4) 21.1 (26.4) 1,778.3 20.3 2 50.8 1,775.8 4.4 (70.7) (126.9) (41.1) (126.9) (41.1) 86 Balance at July 31, Year 8 Net earnings Cash dividends ($.90 per share) Treasury stock purchased Treasury stock issued under Management incentive and Stock option plans Translation adjustments 87 Balance at July 30, Year 9 Net earnings Cash dividends ($.98 per share) Treasury stock purchased Treasury stock issued under Management incentive and Stock option plans Translation adjustments Balance at July 29, Year 10 88 Net earnings 89 Cash dividends ($1.12 per share) 90 Treasury stock purchased 91 Treasury stock issued under Management incentive and Stock option plans 92 Translation adjustments 93 Sale of foreign operations 94 Balance at July 28, Year 11 11.1 4.6 61.4 15.7 61.4 1,691.8 401.5 20.3 61.9 (107.2) 63.5 1,653.3 401.5 (142.2) (175.6) (142.2) (175.6) 45.4 12.4 (29.9) (10.0) $23.6 57.8 (29.9) (10.0) $1,793.4 - $20.3 $107.3 $1,912.6 $(270.4) 95 Changes in Number of Shares (thousands of shares) Out- standing Treasury Issued 135,622.7 135,622.7 Balance at July 31, Year 8 Treasury stock purchased Treasury stock issued under Management incentive and Stock option plans Balance at July 30, Year 9 Treasury stock purchased Treasury stock issued under Management incentive and Stock option plans Balance at July 29, Year 10 Treasury stock purchased Treasury stock issued under Management incentive and Stock option plans Balance at July 28, Year 11 129,038.6 (250.6) 790.6 129,578.6 (833.0) 523.4 129,269.0 (3,395.4) 1,130.2 127,003.8 6,584.1 250.6 (790.6) 6,044,1 833.0 (523.4) 6,353.7 3,395.4 (1,130.2) 8,618.9 135,622.7 135,622.7 96 Summary of Significant Accounting Policies Page A56 Consolidation. The consolidated financial statements include the accounts of the Company and its majority-owned subsidiaries. Significant intercompany transactions are eliminated in consolidation. Investments in affiliated owned 20% or more are accounted for by the equity method. Inventories. Substantially all domestic inventories are priced at the lower of cost or market, with cost determined by the last-in, first-out (LIFO) method. Other inventories are priced at the lower of average cost or market Intangibles. The excess of cost of investments over net assets of purchased companies is amortized on a straight-line basis over periods not exceeding forty years. Plant Assets. Alterations and major overhauls which substantially extend the lives of properties or materially increase their capacity are capitalized. The amounts for property disposals are removed from plant asset and accumulated depreciation accounts and any resultant gain or loss is included in earnings. Ordinary repairs and maintenance are charged to operating costs. Depreciation. Depreciation provided in costs and expenses is on the straight-line method. The United States, Canadian and certain other foreign companies use accelerated methods of depreciation for income tax purposes. Pension Plans. Pension costs are accrued over employees careers based on plan benefit formulas. Cash and Cash Equivalents. All highly liquid debt instruments purchased with a maturity of three months or less are classified as Cash Equivalents. Financial Instruments. In managing interest rate exposure, the Company at times enters into interest rate swap agreements. When interest rates change, the difference to be paid or received is accrued and recognized as interest expense over the life of the agreement. In order to hedge foreign currency exposures on firm commitments, the Company at times enters into forward foreign exchange contracts. Gains and losses resulting from these instruments are recognized in the same period as the underlying hedged transaction. The Company also at times enters into foreign currency swap agreements which are effective as hedges of net investments in foreign subsidiaries. Realized and unrealized gains and losses on these currency swaps are recognized in the Cumulative Translation Adjustments account in Shareowners Equity. 973 Geographic Area Information The Company is predominantly engaged in the prepared convenience foods industry. The following presents information about operations in different geographic areas: Year 1l Year 101 Year 9 $4,495.6 1,149.1 656.0 $4,527.2 1,101.4 673.6 $4,233.4 983.7 542.9 Net sales United States Europe Other foreign countries Adjustment and elimination Consolidated Earnings (loss) before taxes United States (96.6) (96.4) $6,204.1 $6,205.8 (87.9) $5,672.1 $694.8 $427.8 $294.5 Campbell Soup Supplemental Schedule of Sales and Earnings (million dollars) Year 10 Year 9 Year 111 Earnings Sales Sales Earnings Sales Earnings 1 Contributions ly division Campbell North America Campbell U.S.A. Campbell Canada $3,911.8 352.0 $632.7 35.3 668.0 $3,932.7 384.0 4,316.7 $370.8 25.6 396.4 $3,666.9 313.4 3,9803 $242.3 23.8 4,263.8 266.1 Campbell Biscuit and Bakery Pepperidge Farm International Biscuit 57,0 569.0 219.4 73.6 17.6 91.2 582.0 1953 8.9 548.4 178.0 726.4 53.6 11.7 65.3 788.4 7773 65.9 Campbell International 1,222.9 39.4 1,189.8 (168.6) 1,030.3 (117.8) Interdivision (71.0) (78.0) (64.9) 111111 111111 Total sales $6,204.1 $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) 293.7 (16.5) (94.0) (3.8) (175.0) 213.6 (31.3) (55.8) (20.0) (93.4) (265.9) Not earnings $401.5 $4.4 $13.1 Not earnings per share $3.16 $.03 $.10 Contributions by division in Year 10 include the effects of diveures, restructuring and unusual charges of $339.1 million as follows: Campbell U.S.A. $121.8 million, Campbell Canada $6.6 million, Pepperidge Farm $11.0 million, International Biscuit $143 million, and Campbell International $185.1 million. Contributions by division in Year 9 include the effects of restructuring and unusual charges of $343.0 million as follows: Campbell U.S.A. 5183.1 million, Campbell Canada 56.0 million, Pepperidge Farm $7.1 million, International Biscuit $9.5 million, and Campbell International $1373 million Consolidated Statements of Earnings (millions) Year 11 Year 10 Year 9 13 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) Divestitures, restructuring and unusual charges (Note 6) 4,095.5 956.2 306.7 56.3 116.2 (26.0) 4,258.2 980.5 290.7 53.7 111.6 (17.6) 3.3 14.7 339.1 4,001.6 818.8 252.1 47.7 94.1 (38.3) 19.3 32.4 343.0 20 21 22 26.2 22A Total costs and expenses $5,531.9 $6,034.2 $5,570.7 $ 101.4 23 Earnings before equity in earnings of affiliates and minority interests 24 Equity in earnings of affiliates 25 Minority interests 672.2 2.4 (7.2) 5 1716 13.5 (5.7) 10.4 (5.3) 26 Earnings before taxes 27 Taxes on earnings (Note 9) 667.4 265.9 179.4 _175.0 106.5 93.4 28 Net earnings $ 401.5 $ 4.4 $ 13.1 29 Net earnings per share (Note 22) $ 3.16 5 .03 $ 10 30 Weighted average shares outstanding 127.0 129,6 1293 CONSOLIDATED BALANCE SHEETS (million dollars) July 28, Year 11 July 29, Year 10 31 32 33 Current Assets Cash and cash equivalents (Note 12) Other temporary investments, at cost which approximates market Accounts receivable (Note 13) Inventories (Note 14) Prepaid expenses (Note 15) Total current assets $178.9 12.8 527.4 706.7 92.7 $80.7 22.5 624.5 819.8 118.0 35 36 1,518.5 1,665.5 37 Plant assets, net of depreciation (Note 16) 38 Intangible assets, net of amortization (Note 17) 39 Other assets (Note 18) 1,790.4 435.5 404.6 1,717.7 383.4 349.0 Total assets $4,149.0 $4,115.6 10 12 Ac Current Liabilities Notes payable (Note 19) Payable to suppliers and others Accrued liabilities (Note 20) Dividend payable Accrued income taxes Total current liabilities $282.2 482.4 408.7 37.0 67.7 1,278.0 $202.3 525.2 491.9 323 46.4 43 44 1,298.1 46 Long-term debt (Note 19) 772.6 805.8 47 Other liabilities, principally deterred income taxes (Note 21) 305.0 319.9 50 51 Shareowners' Equity (Note 22) Preferred stock; authorized 40,000,000 shares: none issued Capital stock, $.15 par value; authorized 140,000,000 shares, issued 135,622,676 shares Capital surplus Earnings retained in the business Capital stock in treasury, 8618,911 shares in Year 11 and 6,353,697 shares in Year 10, at cost Cumulative translation adjustments (Note 4) Total shareowners' equity 20.3 107.3 1,912.6 (270.4) 23.6 1,793.4 20.3 61.9 1,6533 (1072) 63.5 1,691.8 Total liabilities and shareowners' equity $4,149.0 $4,115.6 CONSOLIDATED STATEMENTS OF CASH FLOWS (million dollars) Year 11 Year 10 | Year 9 56 $401.5 $4.4 $13.1 208.6 200.9 339.1 EEVE 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 3.9 18.6 35.5 63.2 17.1 48.7 30.6 192.3 343.0 (67.8) 37.3 (46.8) (113.2) (60.4) 10.7 (68.8) 448.4 (6) 805.2 357.3 66 67 68 Cash Flows from Investing Activities Purchases of plant assets Sales of plant assets Businesses acquired Sales of businesses Increase in other assets Net change in other temporary investments Net cash used in investing activities (361.1) 43.2 (180.1) 67.4 (57.8) (387.6) 34.9 (41.6) 21.7 (18.6) (284.1) 39.8 (135.8) 4.9 (107.0) 9.0 (473.2) 69 70 9.7 3.7 (478.7) (387.5) Cash Flows from Financing Activities 174 Cash Flows from Financing Activities Long-term borrowings 73 Repayments of long-term borrowings Increase (decrease) in borrowings with less than three month maturities Other short-term borrowings Repayments of other short-term borrowings Dividends paid 78 Treasury stock purchases 79 Treasury stock issued 80 Other, net 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 equivalents at end of year 402.8 (129.9) (137.9) 117.3 (206.4) (137.5) (175.6) 47.7 (.1) (219.6) (8.7) 98.2 80.7 $178.9 12.6 (22.5) (2.7) 153.7 (89.8) (124.3) (41.1) 12.4 (1) (1018) 126.5 (53.6) 108.2 227.1 (192.3) (86.7) (8.1) 18.5 23.5 163.1 (12.1) 35.1 85.8 (40.2) 120.9 $80.7 $120.9 CONSOLIDATED STATEMENTS OF SHAREOWNERS' EQUITY (million dollars) Preferred Stock 1 Capital Stock 1 $20.3 Capital Surplus 1 $423 Earnings Retained in the Business $1,879.1 13.1 Capital Stock Cumulative Translation Treasuryl Adjustments $(75.2) Total Shareowners Equity $1,895.0 13.1 $285 (116.4) (8.1) (116.4) (8.1) 8.5 12.6 (26.4) 21.1 (26.4) 1,778.3 20.3 2 50.8 1,775.8 4.4 (70.7) (126.9) (41.1) (126.9) (41.1) 86 Balance at July 31, Year 8 Net earnings Cash dividends ($.90 per share) Treasury stock purchased Treasury stock issued under Management incentive and Stock option plans Translation adjustments 87 Balance at July 30, Year 9 Net earnings Cash dividends ($.98 per share) Treasury stock purchased Treasury stock issued under Management incentive and Stock option plans Translation adjustments Balance at July 29, Year 10 88 Net earnings 89 Cash dividends ($1.12 per share) 90 Treasury stock purchased 91 Treasury stock issued under Management incentive and Stock option plans 92 Translation adjustments 93 Sale of foreign operations 94 Balance at July 28, Year 11 11.1 4.6 61.4 15.7 61.4 1,691.8 401.5 20.3 61.9 (107.2) 63.5 1,653.3 401.5 (142.2) (175.6) (142.2) (175.6) 45.4 12.4 (29.9) (10.0) $23.6 57.8 (29.9) (10.0) $1,793.4 - $20.3 $107.3 $1,912.6 $(270.4) 174 Cash Flows from Financing Activities Long-term borrowings 73 Repayments of long-term borrowings Increase (decrease) in borrowings with less than three month maturities Other short-term borrowings Repayments of other short-term borrowings Dividends paid 78 Treasury stock purchases 79 Treasury stock issued 80 Other, net 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 equivalents at end of year 402.8 (129.9) (137.9) 117.3 (206.4) (137.5) (175.6) 47.7 (.1) (219.6) (8.7) 98.2 80.7 $178.9 12.6 (22.5) (2.7) 153.7 (89.8) (124.3) (41.1) 12.4 (1) (1018) 126.5 (53.6) 108.2 227.1 (192.3) (86.7) (8.1) 18.5 23.5 163.1 (12.1) 35.1 85.8 (40.2) 120.9 $80.7 $120.9 CONSOLIDATED STATEMENTS OF SHAREOWNERS' EQUITY (million dollars) Preferred Stock 1 Capital Stock 1 $20.3 Capital Surplus 1 $423 Earnings Retained in the Business $1,879.1 13.1 Capital Stock Cumulative Translation Treasuryl Adjustments $(75.2) Total Shareowners Equity $1,895.0 13.1 $285 (116.4) (8.1) (116.4) (8.1) 8.5 12.6 (26.4) 21.1 (26.4) 1,778.3 20.3 2 50.8 1,775.8 4.4 (70.7) (126.9) (41.1) (126.9) (41.1) 86 Balance at July 31, Year 8 Net earnings Cash dividends ($.90 per share) Treasury stock purchased Treasury stock issued under Management incentive and Stock option plans Translation adjustments 87 Balance at July 30, Year 9 Net earnings Cash dividends ($.98 per share) Treasury stock purchased Treasury stock issued under Management incentive and Stock option plans Translation adjustments Balance at July 29, Year 10 88 Net earnings 89 Cash dividends ($1.12 per share) 90 Treasury stock purchased 91 Treasury stock issued under Management incentive and Stock option plans 92 Translation adjustments 93 Sale of foreign operations 94 Balance at July 28, Year 11 11.1 4.6 61.4 15.7 61.4 1,691.8 401.5 20.3 61.9 (107.2) 63.5 1,653.3 401.5 (142.2) (175.6) (142.2) (175.6) 45.4 12.4 (29.9) (10.0) $23.6 57.8 (29.9) (10.0) $1,793.4 - $20.3 $107.3 $1,912.6 $(270.4) 95 Changes in Number of Shares (thousands of shares) Out- standing Treasury Issued 135,622.7 135,622.7 Balance at July 31, Year 8 Treasury stock purchased Treasury stock issued under Management incentive and Stock option plans Balance at July 30, Year 9 Treasury stock purchased Treasury stock issued under Management incentive and Stock option plans Balance at July 29, Year 10 Treasury stock purchased Treasury stock issued under Management incentive and Stock option plans Balance at July 28, Year 11 129,038.6 (250.6) 790.6 129,578.6 (833.0) 523.4 129,269.0 (3,395.4) 1,130.2 127,003.8 6,584.1 250.6 (790.6) 6,044,1 833.0 (523.4) 6,353.7 3,395.4 (1,130.2) 8,618.9 135,622.7 135,622.7 96 Summary of Significant Accounting Policies Page A56 Consolidation. The consolidated financial statements include the accounts of the Company and its majority-owned subsidiaries. Significant intercompany transactions are eliminated in consolidation. Investments in affiliated owned 20% or more are accounted for by the equity method. Inventories. Substantially all domestic inventories are priced at the lower of cost or market, with cost determined by the last-in, first-out (LIFO) method. Other inventories are priced at the lower of average cost or market Intangibles. The excess of cost of investments over net assets of purchased companies is amortized on a straight-line basis over periods not exceeding forty years. Plant Assets. Alterations and major overhauls which substantially extend the lives of properties or materially increase their capacity are capitalized. The amounts for property disposals are removed from plant asset and accumulated depreciation accounts and any resultant gain or loss is included in earnings. Ordinary repairs and maintenance are charged to operating costs. Depreciation. Depreciation provided in costs and expenses is on the straight-line method. The United States, Canadian and certain other foreign companies use accelerated methods of depreciation for income tax purposes. Pension Plans. Pension costs are accrued over employees careers based on plan benefit formulas. Cash and Cash Equivalents. All highly liquid debt instruments purchased with a maturity of three months or less are classified as Cash Equivalents. Financial Instruments. In managing interest rate exposure, the Company at times enters into interest rate swap agreements. When interest rates change, the difference to be paid or received is accrued and recognized as interest expense over the life of the agreement. In order to hedge foreign currency exposures on firm commitments, the Company at times enters into forward foreign exchange contracts. Gains and losses resulting from these instruments are recognized in the same period as the underlying hedged transaction. The Company also at times enters into foreign currency swap agreements which are effective as hedges of net investments in foreign subsidiaries. Realized and unrealized gains and losses on these currency swaps are recognized in the Cumulative Translation Adjustments account in Shareowners Equity. 973 Geographic Area Information The Company is predominantly engaged in the prepared convenience foods industry. The following presents information about operations in different geographic areas: Year 1l Year 101 Year 9 $4,495.6 1,149.1 656.0 $4,527.2 1,101.4 673.6 $4,233.4 983.7 542.9 Net sales United States Europe Other foreign countries Adjustment and elimination Consolidated Earnings (loss) before taxes United States (96.6) (96.4) $6,204.1 $6,205.8 (87.9) $5,672.1 $694.8 $427.8 $294.5
