ITEM 1. BUSINESS
THE COMPANY Campbell Soup Company ("Campbell" or the "company"), together with its consolidated subsidiaries, is a global manufacturer and marketer of high quality, branded convenience food products. Campbell was incorporated as a business corporation under the laws of New Jersey on November 23, 1922; however, through predecessor organizations, it traces its heritage in the food business back to 1869.
During 1999, the company divested its Fresh Start Bakeries business.
The company operates in three business segments: Soup and Sauces, Biscuits and Confectionery, and Away From Home. The Soup and Sauces segment includes the worldwide soup businesses, Prego spaghetti sauce, Franco-American pastas and gravies, Pace Mexican foods, Swanson broths, Home Pride sauces in the United Kingdom and the V8 and V8 Splash beverage business. The Biscuits and Confectionery segment includes the Pepperidge Farm, Godiva and Arnotts Limited businesses. The Away From Home segment represents products, including Campbell's soups, Pace Tabletop picante and Campbell's Specialty Kitchens entrees, which are distributed to the food service and home meal replacement markets. See also "Management's Discussion and Analysis of Results of Operations and Financial Condition" at pages 27 to 34 of the Company's 1999 Annual Report to Shareowners for the fiscal year ended August 1, 1999 ("1999 Annual Report"), which is incorporated herein by reference. Additional financial information about the company's business segments is incorporated by reference from the section of the Notes to Consolidated Financial Statements entitled "Business and Geographic Segment Information" from pages 40 and 41 of the 1999 Annual Report.
INGREDIENTS The ingredients required for the manufacture of the company's food products are purchased from various suppliers. As a result of the company's portfolio reconfiguration program, the company sold or spun off certain of its ingredient and container operations and entered into various supply agreements covering those purchases. The company does not anticipate any material restrictions on availability or shortages of ingredients that would have a significant impact on the company's businesses.
While all such ingredients are available from numerous independent suppliers, raw materials are subject to fluctuations in price attributable to a number of factors, including changes in crop size, cattle cycles, government-sponsored agricultural programs and weather conditions during the growing and harvesting seasons. Ingredient inventories are at a peak during the late fall and decline during the winter and spring. Since many ingredients of suitable quality are available in sufficient quantities only at certain seasons, the company makes commitments for the purchase of such ingredients during their respective seasons.
CUSTOMERS In the United States, sales solicitation activities are conducted by the company's own sales force and through broker and distributor arrangements. The company's products are generally resold to consumers in retail stores, restaurants and other food service establishments. No material part of the
business is dependent upon a single customer. Shipments are made promptly by the company after receipt and acceptance of orders.
TRADEMARKS AND TECHNOLOGY The company markets its food products globally under a number of significant trademarks. The company considers such trademarks, taken as a whole, to be of material importance to its business and, consequently, aggressively seeks to protect its rights in them.
Although the company owns a number of valuable patents, it does not regard any segment of its business as being dependent upon any single patent or any group of related patents.
COMPETITION The company experiences vigorous competition for sales of its principal products in its major markets, both within the United States and abroad, from numerous competitors of varying sizes. The principal areas of competition are quality, price, advertising, promotion and service.
WORKING CAPITAL For information relating to the company's cash and other working capital items, see pages 27 through 34 of the company's 1999 Annual Report in the section entitled "Management's Discussion and Analysis of Results of Operations and Financial Condition", which are incorporated herein by reference.
RESEARCH AND DEVELOPMENT During the last three fiscal years, the company's expenditures on research activities relating to new products and the improvement of existing products were approximately $66 million in 1999, $71 million in 1998 and $68 million in 1997.
EMPLOYEES At August 1, 1999, there were approximately 24,500 persons employed by the company.
FOREIGN OPERATIONS For information with respect to the revenue, operating profitability and identifiable assets attributable to the company's foreign operations, see pages 40 and 41 of the 1999 Annual Report in the section of the Notes to Consolidated Financial Statements entitled "Business and Geographic Segment Information", which is incorporated herein by reference.
FINANCIAL INFORMATION For information with respect to revenue, operating profitability and identifiable assets attributable to the company's business segments, see pages 40 and 41 of the 1999 Annual Report in the section of the Notes to Consolidated Financial Statements entitled "Business and Geographic Segment Information", which is incorporated herein by reference.
RECENT DEVELOPMENTS The information presented on page 34 of the 1999 Annual Report in the section entitled "Management's Discussion and Analysis of Results of Operations and Financial Condition" is incorporated herein by reference.
FORWARD-LOOKING STATEMENTS From time to time, the company makes oral and written statements which reflect the company's current expectations regarding future results of operations, economic performance, financial condition and achievements of the company. The company tries, wherever possible, to identify these forward looking statements by using words such as "anticipate", "believe", "estimate", "expect" and similar expressions. These statements reflect the company's current plans and expectations and are based on information currently available to it. They rely on a number of assumptions and estimates which could be inaccurate and which are subject to risks and uncertainties.
Campbell wishes to caution the reader that the following important factors and those important factors described in other Securities and Exchange Commission filings of the company, or in the company's 1999 Annual Report, could affect the company's actual results and could cause such results to vary materially from those expressed in any forward-looking statements made by, or on behalf of, the company:
- - the impact of strong competitive response to the company's efforts to leverage its brand power with product innovation, promotional programs and new advertising;
- - the inherent risks in the marketplace associated with new product introductions, including uncertainties about trade and consumer acceptance;
- - the company's ability to achieve sales and earnings forecasts, which are based on assumptions about sales volume and product mix;
- - the continuation of the company's successful record of integrating acquisitions into its existing operations and the availability of new acquisition and alliance opportunities that build shareowner wealth;
- - the company's ability to achieve its cost savings objectives, including the projected outcome of supply chain management programs;
- - the difficulty of predicting the pattern of inventory movements by the company's trade customers;
- - the impact of unforeseen economic and political changes in international markets where the company competes such as currency exchange rates, inflation rates, recession, foreign ownership restrictions and other external factors over which the company has no control; and
- - the ability of the company and its key service providers, vendors, suppliers, customers and governmental entities to replace, modify or upgrade computer systems in ways that adequately address the Year 2000 issue. Specific factors that might cause actual results to vary materially from the results anticipated include the ability to identify and correct all relevant computer codes and embedded chips, unanticipated difficulties or delays in the implementation of the company's remediation plans and the ability of third parties to adequately address their own Year 2000 issues.
This discussion of uncertainties is by no means exhaustive but is designed to highlight important factors that may impact the company's outlook.
ITEM 2.
ITEM 2. PROPERTIES
The company's principal executive offices and main research facilities are company-owned and located in Camden, New Jersey. The following table sets forth the company's principal manufacturing facilities:
PRINCIPAL MANUFACTURING FACILITIES
The company also operates retail confectionery shops in the United States, Canada, Europe and Japan; retail bakery thrift stores in the United States; a mail order facility; and other plants and facilities at various locations in the United States and abroad.
Management believes that the company's manufacturing and processing plants are well maintained and are generally adequate to support the current operations of the businesses.
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS
In management's opinion, there are no pending claims or litigation, the outcome of which would have a material effect on the consolidated results of operations, financial position or cash flows of the company.
The company has been named as a potentially responsible party in a number of proceedings brought under the Comprehensive Environmental Response, Compensation and Liability Act, commonly known as Superfund. Although the impact on these proceedings cannot be predicted at this time due to the large number of other potentially responsible parties and the speculative nature of clean-up cost estimates, the ultimate disposition is not expected to have a material effect on the consolidated results of operations, financial position, or cash flows of the company.
ITEM 4.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
EXECUTIVE OFFICERS OF THE COMPANY
The following list of executive officers as of October 1, 1999, is included as an item in Part I of this Form 10-K:
Each of the above-named officers has been employed by the company in an executive or managerial capacity for at least five years, except Basil L. Anderson, Jerry S. Buckley, Timothy Callahan, Andrew K. Hughson, Ellen Oran Kaden, and Dale F. Morrison. Dale F. Morrison served as President, Frito Lay North (1994-1995) and Vice President Marketing and Sales, Frito Lay Central Division (1993-1994) prior to joining Campbell in 1995. Basil L. Anderson served as Chief Financial Officer (1992-1996) of Scott Paper Company prior to joining Campbell in 1996. Ellen Oran Kaden served as Executive Vice President, General Counsel and Secretary (1994-1998) and Senior Vice President, General Counsel and Secretary (1993-1994) of CBS Inc. prior to joining Campbell in 1998. Jerry S. Buckley served as Assistant Managing Editor, Gannett Company, Inc. (1994-1995) and Senior Editor/Senior Writer, U.S. News & World Report (1987-1994) prior to joining Campbell in 1995. Timothy Callahan served as Vice President and General Manager (1997-1998), Vice President - Marketing and Sales (1995-1997) and Category Director (1993-1995) of Kraft Foods - Post Cereal Division prior to joining Campbell in 1998. Andrew K. Hughson served as General Manager, Kellogg France, Belgium and the Netherlands (1994-1996) and Assistant to the Chairman, Kellogg Company, Global Marketing (1993-1994) prior to joining Campbell in 1996.
There is no family relationship among any of the company's executive officers or between any such officer and any director of Campbell. Executive officers of Campbell are elected at the November 1999 meeting of the Board of Directors.
PART II
ITEM 5.
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED SHAREOWNER MATTERS
Campbell's capital stock is listed and principally traded on the New York Stock Exchange. Campbell's capital stock is also listed and traded on the Philadelphia Stock Exchange, The International Stock Exchange of the United Kingdom and the Republic of Ireland Limited and the Swiss Exchange. On September 20, 1999, there were 38,722 holders of record of Campbell's capital stock. The market price and dividend information with respect to Campbell's capital stock are set forth on page 47 of the 1999 Annual Report in the section of the Notes to Consolidated Financial Statements entitled "Quarterly Data
(unaudited)" which is incorporated herein by reference. Future dividends will be dependent upon future earnings, financial requirements and other factors.
ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA
The information called for by this Item is set forth on page 49 of the 1999 Annual Report in the section entitled "Six-Year Review Consolidated" which is incorporated herein by reference. Such information should be read in conjunction with the Consolidated Financial Statements and Notes thereto of the company included in Item 8 of this Report.
ITEM 7.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
The information presented on pages 27 through 34 of the 1999 Annual Report in the section entitled "Management's Discussion and Analysis of Results of Operations and Financial Condition" is incorporated herein by reference.
ITEM 7A.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information presented on pages 30 through 32 of the 1999 Annual Report in the section entitled "Management's Discussion and Analysis of Results of Operations and Financial Condition" is incorporated herein by reference.
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS
The information presented on pages 35 through 48 of the 1999 Annual Report is incorporated herein by reference. With the exception of the aforementioned information and the information incorporated by reference in Items 1, 5, 6, 7, and 7A, the 1999 Annual Report is not deemed to be filed as part of this Form 10-K.
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 10.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The sections entitled "Election of Directors" and "Directors and Executive Officers Stock Ownership Reports" set forth on pages 1 through 4 and page 30 of Campbell's Notice of Annual Meeting and Proxy Statement dated October 8, 1999 (the "1999 Proxy Statement") are incorporated herein by reference.
The information required by this Item relating to the executive officers of Campbell is set forth in Part I of this Report on pages 5 and 6 under the heading "Executive Officers of the Company."
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION
The information set forth on pages 15 through 25 of the 1999 Proxy Statement in the section entitled "Compensation of Executive Officers" is incorporated herein by reference.
ITEM 12.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this Item is set forth at pages 5 through 7 of the 1999 Proxy Statement in the sections entitled "Security Ownership of Directors and Executive Officers" and "Security Ownership of Certain Beneficial Owners" and is incorporated herein by reference.
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
PART IV
ITEM 14.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) The following documents are filed as part of this report:
1. FINANCIAL STATEMENTS
- Consolidated Statements of Earnings for 1999, 1998 and 1997
- Consolidated Balance Sheets as of August 1, 1999 and August 2,
- Consolidated Statements of Cash Flows for 1999, 1998 and 1997
- Consolidated Statements of Shareowners' Equity for 1999, 1998 and 1997
- Summary of Significant Accounting Policies
- Notes to Consolidated Financial Statements
- Report of Independent Accountants
- The foregoing Financial Statements are incorporated into Part II, Item 8 of this Report by reference to pages 35 through 48 of the 1999 Annual Report.
2. FINANCIAL STATEMENT SCHEDULES
None.
3. EXHIBITS
(b) Reports on Form 8-K
There were no reports on Form 8-K filed by the Company during the fourth quarter of fiscal 1999.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, Campbell has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: October 8, 1999
CAMPBELL SOUP COMPANY
By:/s/ Basil L. Anderson -------------------------------- Basil L. Anderson Executive Vice President and Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of Campbell and in the capacity and on the date indicated.
Date: October 8, 1999
/s/ Basil L. Anderson /s/ Gerald S. Lord --------------------- ------------------ Basil L. Anderson Gerald S. Lord Executive Vice President Vice President - Controller and Chief Financial Officer
INDEX OF EXHIBITS
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