Amount of (Gain) Loss Recognized in Earnings on Derivatives | ||||||||||||||
Derivatives not Designated as Hedges | Location of (Gain) Loss Recognized in Earnings | 2018 | 2017 | 2016 | ||||||||||
Foreign exchange forward contracts | Cost of products sold | $ | (1 | ) | $ | — | $ | — | ||||||
Foreign exchange forward contracts | Other expenses / (income) | (1 | ) | 14 | (1 | ) | ||||||||
Cross-currency swap contracts | Other expenses / (income) | — | — | 2 | ||||||||||
Commodity derivative contracts | Cost of products sold | (2 | ) | (11 | ) | 6 | ||||||||
Deferred compensation derivative contracts | Administrative expenses | (2 | ) | (3 | ) | (6 | ) | |||||||
Treasury rate lock contracts | Interest expense | (18 | ) | — | — | |||||||||
Total | $ | (24 | ) | $ | — | $ | 1 |
2018 | Costs Incurred to Date | ||||||
Americas Simple Meals and Beverages | $ | 86 | $ | 178 | |||
Global Biscuits and Snacks | 73 | 151 | |||||
Campbell Fresh | 5 | 11 | |||||
Corporate | 21 | 109 | |||||
Total | $ | 185 | $ | 449 |
2018 | 2017 | 2016 | |||||||||
Other expenses / (income) | |||||||||||
Amortization of intangible assets | $ | 34 | $ | 19 | $ | 20 | |||||
Impairment of intangible assets(1) | 737 | 212 | 141 | ||||||||
Net periodic benefit expense (income) other than the service cost | (231 | ) | (247 | ) | 274 | ||||||
Investment (gains) / losses | 10 | 9 | (3 | ) | |||||||
Transaction costs(2) | 53 | — | — | ||||||||
Legal settlements(3) | 22 | — | (25 | ) | |||||||
Other | (6 | ) | (2 | ) | (2 | ) | |||||
$ | 619 | $ | (9 | ) | $ | 405 | |||||
Advertising and consumer promotion expense(4) | $ | 394 | $ | 389 | $ | 397 | |||||
Interest expense | |||||||||||
Interest expense | $ | 204 | $ | 114 | $ | 118 | |||||
Less: Interest capitalized | 3 | 2 | 3 | ||||||||
$ | 201 | $ | 112 | $ | 115 |
(1) | See Note 5 for additional information. |
(2) | In 2018, we recognized transaction costs of $53 related to the acquisition of Snyder's-Lance. See Note 3 for additional information. |
(3) | In 2018, we recognized a charge of $22 related to the settlement of a legal claim. In 2016, we recorded a gain of $25 from a settlement of a claim related to the Kelsen acquisition. |
(4) | Included in Marketing and selling expenses. |
2018 | 2017 | 2016 | |||||||||
Total pre-tax stock-based compensation expense | $ | 61 | $ | 60 | $ | 64 | |||||
Tax-related benefits | $ | 11 | $ | 22 | $ | 24 |
2018 | 2017 | ||||||
Accounts receivable | |||||||
Customer accounts receivable | $ | 734 | $ | 561 | |||
Allowances | (20 | ) | (11 | ) | |||
Subtotal | $ | 714 | $ | 550 | |||
Other | 71 | 55 | |||||
$ | 785 | $ | 605 | ||||
Inventories | |||||||
Raw materials, containers and supplies | $ | 478 | $ | 377 | |||
Finished products | 721 | 525 | |||||
$ | 1,199 | $ | 902 | ||||
Other current assets | |||||||
Fair value of derivatives | $ | 10 | $ | 9 | |||
Other | 76 | 65 | |||||
$ | 86 | $ | 74 | ||||
Plant assets | |||||||
Land | $ | 122 | $ | 64 | |||
Buildings | 1,870 | 1,557 | |||||
Machinery and equipment | 4,751 | 4,243 | |||||
Projects in progress | 211 | 179 | |||||
Total cost | $ | 6,954 | $ | 6,043 | |||
Accumulated depreciation(1) | (3,721 | ) | (3,589 | ) | |||
$ | 3,233 | $ | 2,454 | ||||
Other assets | |||||||
Investments | $ | 92 | $ | 69 | |||
Deferred taxes | 30 | 36 | |||||
Pensions | 61 | 8 | |||||
Other | 41 | 26 | |||||
$ | 224 | $ | 139 |
2018 | 2017 | ||||||
Accrued liabilities | |||||||
Accrued compensation and benefits | $ | 220 | $ | 241 | |||
Fair value of derivatives | 5 | 43 | |||||
Accrued trade and consumer promotion programs | 189 | 131 | |||||
Accrued interest | 103 | 34 | |||||
Restructuring | 22 | 24 | |||||
Other | 137 | 88 | |||||
$ | 676 | $ | 561 | ||||
Other liabilities | |||||||
Pension benefits | $ | 150 | $ | 261 | |||
Deferred compensation | 90 | 96 | |||||
Postretirement benefits | 206 | 247 | |||||
Transition tax on unremitted foreign earnings | 7 | — | |||||
Unrecognized tax benefits | 22 | 34 | |||||
Restructuring | 24 | 2 | |||||
Other | 70 | 57 | |||||
$ | 569 | $ | 697 |
(1) | Depreciation expense was $360 in 2018, $299 in 2017 and $288 in 2016. Buildings are depreciated over periods ranging from 7 to 45 years. Machinery and equipment are depreciated over periods generally ranging from 2 to 20 years. |
2018 | 2017 | 2016 | |||||||||
Other expenses / (income) | |||||||||||
Amortization of intangible assets | $ | 34 | $ | 19 | $ | 20 | |||||
Impairment of intangible assets(1) | 737 | 212 | 141 | ||||||||
Net periodic benefit expense (income) other than the service cost | (231 | ) | (247 | ) | 274 | ||||||
Investment (gains) / losses | 10 | 9 | (3 | ) | |||||||
Transaction costs(2) | 53 | — | — | ||||||||
Legal settlements(3) | 22 | — | (25 | ) | |||||||
Other | (6 | ) | (2 | ) | (2 | ) | |||||
$ | 619 | $ | (9 | ) | $ | 405 | |||||
Advertising and consumer promotion expense(4) | $ | 394 | $ | 389 | $ | 397 | |||||
Interest expense | |||||||||||
Interest expense | $ | 204 | $ | 114 | $ | 118 | |||||
Less: Interest capitalized | 3 | 2 | 3 | ||||||||
$ | 201 | $ | 112 | $ | 115 |
(1) | See Note 5 for additional information. |
(2) | In 2018, we recognized transaction costs of $53 related to the acquisition of Snyder's-Lance. See Note 3 for additional information. |
(3) | In 2018, we recognized a charge of $22 related to the settlement of a legal claim. In 2016, we recorded a gain of $25 from a settlement of a claim related to the Kelsen acquisition. |
(4) | Included in Marketing and selling expenses. |
2018 | 2017 | 2016 | |||||||||
Cash Flows from Operating Activities | |||||||||||
Other | |||||||||||
Benefit related payments | $ | (59 | ) | $ | (58 | ) | $ | (57 | ) | ||
Other | (1 | ) | — | (3 | ) | ||||||
$ | (60 | ) | $ | (58 | ) | $ | (60 | ) | |||
Other Cash Flow Information | |||||||||||
Interest paid | $ | 152 | $ | 110 | $ | 113 | |||||
Interest received | $ | 4 | $ | 5 | $ | 4 | |||||
Income taxes paid | $ | 128 | $ | 320 | $ | 325 |
2018 | 2017 | |||||||
Net sales | $ | 10,222 | $ | 10,324 | ||||
Net earnings attributable to Campbell Soup Company | $ | 371 | $ | 773 | ||||
Net earnings per share attributable to Campbell Soup Company - basic | $ | 1.23 | $ | 2.53 | ||||
Net earnings per share attributable to Campbell Soup Company - assuming dilution | $ | 1.23 | $ | 2.52 |
Snyder's-Lance | Pacific Foods | |||||||
Cash | $ | 21 | $ | 7 | ||||
Accounts receivable | 221 | 16 | ||||||
Inventories | 219 | 48 | ||||||
Other current assets | 32 | 1 | ||||||
Plant assets | 696 | 78 | ||||||
Goodwill | 2,866 | 202 | ||||||
Other intangible assets | 2,947 | 366 | ||||||
Other assets | 65 | — | ||||||
Short-term debt | (1 | ) | — | |||||
Accounts payable | (124 | ) | (24 | ) | ||||
Accrued liabilities | (115 | ) | (6 | ) | ||||
Deferred income taxes | (640 | ) | — | |||||
Other liabilities | (28 | ) | — | |||||
Noncontrolling interest | (47 | ) | — | |||||
Total assets acquired and liabilities assumed | $ | 6,112 | $ | 688 |
Type | Life in Years | Value | ||||||||
Trademarks | Non-amortizable | Indefinite | $ | 2,131 | ||||||
Customer relationships | Amortizable | 15 | to | 22 | 808 | |||||
Other | Amortizable | 1.5 | 8 | |||||||
Total identifiable intangible assets | $ | 2,947 |
• | amortization of the acquisition date fair value adjustment to inventories of $42 that was recorded in Cost of products sold; |
• | $13 of Restructuring charges; |
• | $12 of Administrative expenses; and |
• | $18 gain in Interest expense on treasury rate lock contracts used to hedge the planned financing of the acquisition. |
2018 | 2017 | |||||||
Net sales | $ | 10,222 | $ | 10,324 | ||||
Net earnings attributable to Campbell Soup Company | $ | 371 | $ | 773 | ||||
Net earnings per share attributable to Campbell Soup Company - basic | $ | 1.23 | $ | 2.53 | ||||
Net earnings per share attributable to Campbell Soup Company - assuming dilution | $ | 1.23 | $ | 2.52 |
2019 | 2020 | 2021 | 2022 | 2023 | Thereafter |
$75 | $61 | $48 | $39 | $28 | $109 |
Foreign Currency Translation Adjustments(1) | Gains (Losses) on Cash Flow Hedges(2) | Pension and Postretirement Benefit Plan Adjustments(3) | Total Accumulated Comprehensive Income (Loss) | |||||||||||||
Balance at August 2, 2015 | $ | (166 | ) | $ | (5 | ) | $ | 3 | $ | (168 | ) | |||||
Other comprehensive income (loss) before reclassifications | 42 | (29 | ) | 59 | 72 | |||||||||||
Amounts reclassified from accumulated other comprehensive income (loss) | — | (7 | ) | (1 | ) | (8 | ) | |||||||||
Net current-period other comprehensive income (loss) | 42 | (36 | ) | 58 | 64 | |||||||||||
Balance at July 31, 2016 | $ | (124 | ) | $ | (41 | ) | $ | 61 | $ | (104 | ) | |||||
Other comprehensive income (loss) before reclassifications | 40 | 12 | 8 | 60 | ||||||||||||
Amounts reclassified from accumulated other comprehensive income (loss) | — | 7 | (16 | ) | (9 | ) | ||||||||||
Net current-period other comprehensive income (loss) | 40 | 19 | (8 | ) | 51 | |||||||||||
Balance at July 30, 2017 | $ | (84 | ) | $ | (22 | ) | $ | 53 | $ | (53 | ) | |||||
Other comprehensive income (loss) before reclassifications | (70 | ) | 16 | 7 | (47 | ) | ||||||||||
Amounts reclassified from accumulated other comprehensive income (loss) | — | 2 | (20 | ) | (18 | ) | ||||||||||
Net current-period other comprehensive income (loss) | (70 | ) | 18 | (13 | ) | (65 | ) | |||||||||
Balance at July 29, 2018 | $ | (154 | ) | $ | (4 | ) | $ | 40 | $ | (118 | ) |
(1) | Included a tax expense of $6 as of July 29, 2018, July 30, 2017, July 31, 2016, and August 2, 2015. |
(2) | Included a tax benefit of $4 as of July 29, 2018, $12 as of July 30, 2017, $23 as of July 31, 2016, and $5 as of August 2, 2015. |
(3) | Included a tax expense of $25 as of July 29, 2018, $30 as of July 30, 2017, $35 as of July 31, 2016, and $1 as of August 2, 2015. |
Details about Accumulated Other Comprehensive Income (Loss) Components | 2018 | 2017 | 2016 | Location of (Gain) Loss Recognized in Earnings | ||||||||||
(Gains) losses on cash flow hedges: | ||||||||||||||
Foreign exchange forward contracts | $ | 1 | $ | 6 | $ | (11 | ) | Cost of products sold | ||||||
Foreign exchange forward contracts | — | 1 | (2 | ) | Other expenses / (income) | |||||||||
Forward starting interest rate swaps | 2 | 4 | 4 | Interest expense | ||||||||||
Total before tax | 3 | 11 | (9 | ) | ||||||||||
Tax expense (benefit) | (1 | ) | (4 | ) | 2 | |||||||||
(Gain) loss, net of tax | $ | 2 | $ | 7 | $ | (7 | ) | |||||||
Pension and postretirement benefit adjustments: | ||||||||||||||
Prior service credit | $ | (27 | ) | $ | (25 | ) | $ | (1 | ) | Other expenses / (income) | ||||
Tax expense (benefit) | 7 | 9 | — | |||||||||||
(Gain) loss, net of tax | $ | (20 | ) | $ | (16 | ) | $ | (1 | ) |
2018 | 2017 | ||||||
Commercial paper | $ | 1,140 | $ | 874 | |||
Australian notes | 348 | 152 | |||||
Notes | 300 | — | |||||
Current portion of Canadian credit facility | 90 | — | |||||
Variable-rate bank borrowings | 22 | 10 | |||||
Capital leases | 1 | 1 | |||||
Other(1) | (5 | ) | — | ||||
Total short-term borrowings | $ | 1,896 | $ | 1,037 |
(1) | Includes unamortized net discount/premium on debt issuances and debt issuance costs. |
Type | Fiscal Year of Maturity | Rate | 2018 | 2017 | ||||||||
Canadian credit facility | 2019 | Variable | $ | 90 | $ | 130 | ||||||
Australian note | 2019 | 4.88% | 207 | 224 | ||||||||
Notes | 2019 | 4.50% | 300 | 300 | ||||||||
Notes | 2020 | Variable | 500 | — | ||||||||
Notes | 2021 | Variable | 400 | — | ||||||||
Senior Term Loan | 2021 | Variable | 900 | — | ||||||||
Notes | 2021 | 3.30% | 650 | — | ||||||||
Notes | 2021 | 4.25% | 500 | 500 | ||||||||
Debentures | 2021 | 8.88% | 200 | 200 | ||||||||
Notes | 2023 | 2.50% | 450 | 450 | ||||||||
Notes | 2023 | 3.65% | 1,200 | — | ||||||||
Notes | 2025 | 3.95% | 850 | — | ||||||||
Notes | 2025 | 3.30% | 300 | 300 | ||||||||
Notes | 2028 | 4.15% | 1,000 | — | ||||||||
Notes | 2043 | 3.80% | 400 | 400 | ||||||||
Notes | 2048 | 4.80% | 700 | — | ||||||||
Capital leases | 7 | 7 | ||||||||||
Other(1) | (59 | ) | (12 | ) | ||||||||
Total | $ | 8,595 | $ | 2,499 | ||||||||
Less current portion | 597 | — | ||||||||||
Total long-term debt | $ | 7,998 | $ | 2,499 |
(1) | Includes unamortized net discount/premium on debt issuances and debt issuance costs. |
Balance Sheet Classification | 2018 | 2017 | |||||||
Asset Derivatives | |||||||||
Derivatives designated as hedges: | |||||||||
Foreign exchange forward contracts | Other current assets | $ | 1 | $ | 3 | ||||
Total derivatives designated as hedges | $ | 1 | $ | 3 | |||||
Derivatives not designated as hedges: | |||||||||
Commodity derivative contracts | Other current assets | $ | 5 | $ | 5 | ||||
Deferred compensation derivative contracts | Other current assets | 1 | 1 | ||||||
Foreign exchange forward contracts | Other current assets | 3 | — | ||||||
Commodity derivative contracts | Other assets | — | 1 | ||||||
Total derivatives not designated as hedges | $ | 9 | $ | 7 | |||||
Total asset derivatives | $ | 10 | $ | 10 |
Balance Sheet Classification | 2018 | 2017 | |||||||
Liability Derivatives | |||||||||
Derivatives designated as hedges: | |||||||||
Foreign exchange forward contracts | Accrued liabilities | $ | 2 | $ | 1 | ||||
Forward starting interest rate swaps | Accrued liabilities | — | 22 | ||||||
Total derivatives designated as hedges | $ | 2 | $ | 23 | |||||
Derivatives not designated as hedges: | |||||||||
Commodity derivative contracts | Accrued liabilities | $ | 3 | $ | 1 | ||||
Foreign exchange forward contracts | Accrued liabilities | — | 19 | ||||||
Foreign exchange forward contracts | Other liabilities | — | 1 | ||||||
Commodity derivative contracts | Other liabilities | 1 | — | ||||||
Total derivatives not designated as hedges | $ | 4 | $ | 21 | |||||
Total liability derivatives | $ | 6 | $ | 44 |
2018 | 2017 | |||||||||||||||||||||||
Derivative Instrument | Gross Amounts Presented in the Consolidated Balance Sheet | Gross Amounts Not Offset in the Consolidated Balance Sheet Subject to Netting Agreements | Net Amount | Gross Amounts Presented in the Consolidated Balance Sheet | Gross Amounts Not Offset in the Consolidated Balance Sheet Subject to Netting Agreements | Net Amount | ||||||||||||||||||
Total asset derivatives | $ | 10 | $ | (3 | ) | $ | 7 | $ | 10 | $ | (3 | ) | $ | 7 | ||||||||||
Total liability derivatives | $ | 6 | $ | (3 | ) | $ | 3 | $ | 44 | $ | (3 | ) | $ | 41 |
Total Cash-Flow Hedge OCI Activity | |||||||||||||
Derivatives Designated as Cash-Flow Hedges | 2018 | 2017 | 2016 | ||||||||||
OCI derivative gain (loss) at beginning of year | $ | (34 | ) | $ | (64 | ) | $ | (10 | ) | ||||
Effective portion of changes in fair value recognized in OCI: | |||||||||||||
Foreign exchange forward contracts | 8 | (4 | ) | (9 | ) | ||||||||
Forward starting interest rate swaps | 15 | 23 | (36 | ) | |||||||||
Amount of (gain) loss reclassified from OCI to earnings: | Location in Earnings | ||||||||||||
Foreign exchange forward contracts | Cost of products sold | 1 | 6 | (11 | ) | ||||||||
Foreign exchange forward contracts | Other expenses / (income) | — | 1 | (2 | ) | ||||||||
Forward starting interest rate swaps | Interest expense | 2 | 4 | 4 | |||||||||
OCI derivative gain (loss) at end of year | $ | (8 | ) | $ | (34 | ) | $ | (64 | ) |
Amount of (Gain) Loss Recognized in Earnings on Derivatives | ||||||||||||||
Derivatives not Designated as Hedges | Location of (Gain) Loss Recognized in Earnings | 2018 | 2017 | 2016 | ||||||||||
Foreign exchange forward contracts | Cost of products sold | $ | (1 | ) | $ | — | $ | — | ||||||
Foreign exchange forward contracts | Other expenses / (income) | (1 | ) | 14 | (1 | ) | ||||||||
Cross-currency swap contracts | Other expenses / (income) | — | — | 2 | ||||||||||
Commodity derivative contracts | Cost of products sold | (2 | ) | (11 | ) | 6 | ||||||||
Deferred compensation derivative contracts | Administrative expenses | (2 | ) | (3 | ) | (6 | ) | |||||||
Treasury rate lock contracts | Interest expense | (18 | ) | — | — | |||||||||
Total | $ | (24 | ) | $ | — | $ | 1 |
2018 | 2017 | 2016 | |||||||||
Total pre-tax stock-based compensation expense | $ | 61 | $ | 60 | $ | 64 | |||||
Tax-related benefits | $ | 11 | $ | 22 | $ | 24 |
Options | Weighted- Average Exercise Price | Weighted- Average Remaining Contractual Life | Aggregate Intrinsic Value | |||||||||
(Options in thousands) | (In years) | |||||||||||
Outstanding at July 30, 2017 | 1,042 | $ | 52.08 | |||||||||
Granted | 575 | $ | 47.19 | |||||||||
Exercised | — | $ | — | |||||||||
Terminated | (80 | ) | $ | 50.05 | ||||||||
Outstanding at July 29, 2018 | 1,537 | $ | 50.36 | 8.2 | $ | — | ||||||
Exercisable at July 29, 2018 | 519 | $ | 51.40 | 7.5 | $ | — |
2018 | 2017 | 2016 | |||
Risk-free interest rate | 2.06% | 1.28% | 1.68% | ||
Expected dividend yield | 2.95% | 2.26% | 2.46% | ||
Expected volatility | 19.60% | 18.64% | 18.35% | ||
Expected term | 6 years | 6 years | 6 years | ||
Grant-date fair value | $6.67 | $7.51 | $6.86 |
Units | Weighted- Average Grant-Date Fair Value | |||||
(Restricted stock units in thousands) | ||||||
Nonvested at July 30, 2017 | 1,221 | $ | 50.86 | |||
Granted | 1,220 | $ | 44.18 | |||
Vested | (643 | ) | $ | 48.67 | ||
Forfeited | (146 | ) | $ | 48.27 | ||
Nonvested at July 29, 2018 | 1,652 | $ | 47.01 |
Units | Weighted- Average Grant-Date Fair Value | |||||
(Restricted stock units in thousands) | ||||||
Nonvested at July 30, 2017 | 1,774 | $ | 48.24 | |||
Granted | 943 | $ | 39.39 | |||
Vested | (815 | ) | $ | 43.39 | ||
Forfeited | (238 | ) | $ | 43.53 | ||
Nonvested at July 29, 2018 | 1,664 | $ | 46.66 |
2018 | 2017 | 2016 | |||
Risk-free interest rate | 1.58% | 0.85% | 0.92% | ||
Expected dividend yield | 2.95% | 2.26% | 2.46% | ||
Expected volatility | 19.07% | 17.78% | 17.25% | ||
Expected term | 3 years | 3 years | 3 years |
Impairment Charges | Fair Value | |||||||||||||||||||||||
July 29, 2018 | Plant Assets | Trademark | Goodwill | Plant Assets | Trademark | Goodwill | ||||||||||||||||||
Plum | $ | 54 | $ | 61 | ||||||||||||||||||||
April 29, 2018 | ||||||||||||||||||||||||
Deli | $ | 11 | $ | 13 | $ | 81 | $ | 53 | $ | 23 | $ | — | ||||||||||||
Bolthouse Farms refrigerated beverages and salad dressings | $ | 130 | $ | 384 | $ | 150 | $ | — | ||||||||||||||||
January 28, 2018 | ||||||||||||||||||||||||
Bolthouse Farms carrot and carrot ingredients | $ | 75 | $ | — | ||||||||||||||||||||
January 29, 2017 | ||||||||||||||||||||||||
Bolthouse Farms carrot and carrot ingredients | $ | 20 | $ | 127 | $ | 48 | $ | 75 | ||||||||||||||||
Garden Fresh Gourmet | $ | 1 | $ | 64 | $ | 37 | $ | 52 | ||||||||||||||||
July 31, 2016 | ||||||||||||||||||||||||
Bolthouse Farms carrot and carrot ingredients | $ | 35 | $ | 106 | $ | 68 | $ | 202 |
2018 | 2017 | |||||||
Fair value at beginning of year | $ | 49 | $ | 25 | ||||
Gains | 9 | 2 | ||||||
Purchases | 19 | 22 | ||||||
Fair value at end of year | $ | 77 | $ | 49 |
• | Level 1: Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. |
• | Level 2: Inputs other than quoted prices included in Level 1 that are observable for the asset or liability through corroboration with observable market data. |
• | Level 3: Unobservable inputs, which are valued based on our estimates of assumptions that market participants would use in pricing the asset or liability. |
Fair Value as of July 29, 2018 | Fair Value Measurements at July 29, 2018 Using Fair Value Hierarchy | Fair Value as of July 30, 2017 | Fair Value Measurements at July 30, 2017 Using Fair Value Hierarchy | ||||||||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||||||||
Assets | |||||||||||||||||||||||||||||||
Foreign exchange forward contracts(1) | $ | 4 | $ | — | $ | 4 | $ | — | $ | 3 | $ | — | $ | 3 | $ | — | |||||||||||||||
Commodity derivative contracts(2) | 5 | 5 | — | — | 6 | 6 | — | — | |||||||||||||||||||||||
Deferred compensation derivative contracts(3) | 1 | — | 1 | — | 1 | — | 1 | — | |||||||||||||||||||||||
Deferred compensation investments(4) | 6 | 6 | — | — | — | — | — | — | |||||||||||||||||||||||
Fair value option investments(5) | 77 | — | — | 77 | 50 | — | 1 | 49 | |||||||||||||||||||||||
Total assets at fair value | $ | 93 | $ | 11 | $ | 5 | $ | 77 | $ | 60 | $ | 6 | $ | 5 | $ | 49 |
Fair Value as of July 29, 2018 | Fair Value Measurements at July 29, 2018 Using Fair Value Hierarchy | Fair Value as of July 30, 2017 | Fair Value Measurements at July 30, 2017 Using Fair Value Hierarchy | ||||||||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||||||||
Liabilities | |||||||||||||||||||||||||||||||
Forward starting interest rate swaps(6) | $ | — | $ | — | $ | — | $ | — | $ | 22 | $ | — | $ | 22 | $ | — | |||||||||||||||
Foreign exchange forward contracts(1) | 2 | — | 2 | — | 21 | — | 21 | — | |||||||||||||||||||||||
Commodity derivative contracts(2) | 4 | 3 | 1 | — | 1 | 1 | — | — | |||||||||||||||||||||||
Deferred compensation obligation(4) | 108 | 108 | — | — | 112 | 112 | — | — | |||||||||||||||||||||||
Total liabilities at fair value | $ | 114 | $ | 111 | $ | 3 | $ | — | $ | 156 | $ | 113 | $ | 43 | $ | — |
(1) | Based on observable market transactions of spot currency rates and forward rates. |
(2) | Based on quoted futures exchanges and on observable prices of futures and options transactions in the marketplace. |
(3) | Based on LIBOR and equity index swap rates. |
(4) | Based on the fair value of the participants’ investments. |
(5) | Primarily represents investments in equity securities that are not readily marketable and are accounted for under the fair value option. The investments were funded by Acre. See Note 14 for additional information. Fair value is based on analyzing recent transactions and transactions of comparable companies, and the discounted cash flow method. In addition, allocation methods, including the option pricing method, are used in distributing fair value among various equity holders according to rights and preferences. Changes in the fair value of investments were not material in 2018 or 2017. |
(6) | Based on LIBOR swap rates. |
2018 | 2017 | |||||||
Fair value at beginning of year | $ | 49 | $ | 25 | ||||
Gains | 9 | 2 | ||||||
Purchases | 19 | 22 | ||||||
Fair value at end of year | $ | 77 | $ | 49 |
Impairment Charges | Fair Value | |||||||||||||||||||||||
July 29, 2018 | Plant Assets | Trademark | Goodwill | Plant Assets | Trademark | Goodwill | ||||||||||||||||||
Plum | $ | 54 | $ | 61 | ||||||||||||||||||||
April 29, 2018 | ||||||||||||||||||||||||
Deli | $ | 11 | $ | 13 | $ | 81 | $ | 53 | $ | 23 | $ | — | ||||||||||||
Bolthouse Farms refrigerated beverages and salad dressings | $ | 130 | $ | 384 | $ | 150 | $ | — | ||||||||||||||||
January 28, 2018 | ||||||||||||||||||||||||
Bolthouse Farms carrot and carrot ingredients | $ | 75 | $ | — | ||||||||||||||||||||
January 29, 2017 | ||||||||||||||||||||||||
Bolthouse Farms carrot and carrot ingredients | $ | 20 | $ | 127 | $ | 48 | $ | 75 | ||||||||||||||||
Garden Fresh Gourmet | $ | 1 | $ | 64 | $ | 37 | $ | 52 | ||||||||||||||||
July 31, 2016 | ||||||||||||||||||||||||
Bolthouse Farms carrot and carrot ingredients | $ | 35 | $ | 106 | $ | 68 | $ | 202 |
2018 | 2017 | ||||||||||||||
Fair Value | Fair Value | Redemption Frequency | Redemption Notice Period Range | ||||||||||||
Short-term investments | $ | 21 | $ | 31 | Daily | 1 Day | |||||||||
Commingled funds: | |||||||||||||||
Equities | 310 | 332 | Daily, | Monthly | 2 | to | 60 Days | ||||||||
Fixed income | 31 | 30 | Daily | 1 Day | |||||||||||
Blended | 85 | 86 | Primarily Daily | 1 | to | 20 Days | |||||||||
Real estate funds | 89 | 84 | Quarterly | 45 | to | 90 Days | |||||||||
Hedge funds(1) | 95 | 103 | Monthly | 5 | to | 30 Days | |||||||||
Total | $ | 631 | $ | 666 |
(1) | Includes a fund valued at $2 in 2017 which was substantially liquidated in 2018. |
• | Level 1: Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. |
• | Level 2: Inputs other than quoted prices included in Level 1 that are observable for the asset or liability through corroboration with observable market data. |
• | Level 3: Unobservable inputs, which are valued based on our estimates of assumptions that market participants would use in pricing the asset or liability. |
Type | Life in Years | Value | ||||||||
Trademarks | Non-amortizable | Indefinite | $ | 2,131 | ||||||
Customer relationships | Amortizable | 15 | to | 22 | 808 | |||||
Other | Amortizable | 1.5 | 8 | |||||||
Total identifiable intangible assets | $ | 2,947 |
Americas Simple Meals and Beverages | Global Biscuits and Snacks | Campbell Fresh(1) | Total | ||||||||||||
Net balance at July 31, 2016 | $ | 775 | $ | 757 | $ | 731 | $ | 2,263 | |||||||
Impairment charges | — | — | (191 | ) | (191 | ) | |||||||||
Foreign currency translation adjustment | 5 | 38 | — | 43 | |||||||||||
Net balance at July 30, 2017 | $ | 780 | $ | 795 | $ | 540 | $ | 2,115 | |||||||
Acquisitions | 202 | 2,866 | — | 3,068 | |||||||||||
Impairment charges | — | — | (540 | ) | (540 | ) | |||||||||
Foreign currency translation adjustment | (4 | ) | (59 | ) | — | (63 | ) | ||||||||
Net balance at July 29, 2018 | $ | 978 | $ | 3,602 | $ | — | $ | 4,580 |
(1) | The balance of goodwill is reflected net of accumulated impairment charges of $837 as of July 29, 2018, $297 as of July 30, 2017 and $106 as of July 31, 2016, respectively, related to the Bolthouse Farms carrot and carrot ingredients reporting unit, the deli reporting unit, and the Bolthouse Farms refrigerated beverages and salad dressings reporting unit. |
Intangible Assets | 2018 | 2017 | ||||||
Amortizable intangible assets | ||||||||
Customer relationships | $ | 1,116 | $ | 223 | ||||
Technology | 40 | 40 | ||||||
Other | 43 | 35 | ||||||
Total gross amortizable intangible assets | $ | 1,199 | $ | 298 | ||||
Accumulated amortization | (126 | ) | (92 | ) | ||||
Total net amortizable intangible assets | $ | 1,073 | $ | 206 | ||||
Non-amortizable intangible assets | ||||||||
Trademarks | 3,123 | 912 | ||||||
Total net intangible assets | $ | 4,196 | $ | 1,118 |
2018 | 2017 | 2016 | |||||||||
Income taxes: | |||||||||||
Currently payable: | |||||||||||
Federal | $ | 84 | $ | 238 | $ | 235 | |||||
State | 13 | 39 | 34 | ||||||||
Non-U.S. | 47 | 36 | 47 | ||||||||
144 | 313 | 316 | |||||||||
Deferred: | |||||||||||
Federal | (122 | ) | 77 | (17 | ) | ||||||
State | (2 | ) | 2 | — | |||||||
Non-U.S. | (9 | ) | 14 | (13 | ) | ||||||
(133 | ) | 93 | (30 | ) | |||||||
$ | 11 | $ | 406 | $ | 286 |
2018 | 2017 | 2016 | ||||||||||
Earnings before income taxes: | ||||||||||||
United States | $ | 143 | $ | 1,103 | $ | 705 | ||||||
Non-U.S. | 129 | 190 | 144 | |||||||||
$ | 272 | $ | 1,293 | $ | 849 |
2018 | 2017 | 2016 | ||||||
Federal statutory income tax rate | 21.0 | % | 35.0 | % | 35.0 | % | ||
State income taxes (net of federal tax benefit) | 4.3 | 2.1 | 2.7 | |||||
Tax effect of international items | 2.6 | (2.1 | ) | (3.0 | ) | |||
Settlement of tax contingencies | (6.2 | ) | — | — | ||||
Federal manufacturing deduction | (4.0 | ) | (2.1 | ) | (3.2 | ) | ||
Goodwill impairment | 18.7 | 3.4 | 4.3 | |||||
Claim settlement | — | — | (0.8 | ) | ||||
Tax Reform - impact on U.S. deferred tax assets and liabilities(1) | (66.3 | ) | — | — | ||||
Tax Reform - transition tax(1) | 19.6 | — | — | |||||
Effect of higher U.S. federal statutory tax rate(1) | 13.2 | — | — | |||||
Foreign exchange losses(2) | — | (3.9 | ) | — | ||||
Other | 1.1 | (1.0 | ) | (1.3 | ) | |||
Effective income tax rate | 4.0 | % | 31.4 | % | 33.7 | % |
(1) | The Tax Cuts and Jobs Act of 2017 (the Act) was enacted into law on December 22, 2017, and made significant changes to corporate taxation. Changes under the Act include: |
• | Reducing the federal corporate tax rate from 35% to 21% effective January 1, 2018. A blended rate will apply for fiscal 2018 non-calendar year end companies for the fiscal periods that include the effective date of the rate change. The impact of this is shown as \"Effect of higher U.S. federal statutory tax rate\"; |
• | Repealing the exception for deductibility of performance-based compensation to covered employees, which impacts us beginning in 2019, along with expanding the number of covered employees; |
• | Transitioning to a territorial system for taxation on foreign earnings along with the imposition of a transition tax in 2018 on the deemed repatriation of unremitted foreign earnings; |
• | Immediate expensing of machinery and equipment placed into service after September 27, 2017; |
• | Eliminating the deduction for domestic manufacturing activities, which impacts us beginning in 2019; |
• | Changes to the taxation of multinational companies, including a new minimum tax on Global Intangible Low-Taxed Income, a new Base Erosion Anti-Abuse Tax, and a new U.S. corporate deduction for Foreign-Derived Intangible Income, all of which are effective for us beginning in 2019; and |
• | Limiting the deductibility of interest expense to 30% of adjusted taxable income, which is effective for us beginning in 2019. |
(2) | The 2017 rate was favorably impacted by a $52 benefit primarily related to the sale of intercompany notes receivable to a financial institution, which resulted in the recognition of foreign exchange losses. |
2018 | 2017 | ||||||
Depreciation | $ | 342 | $ | 355 | |||
Amortization | 868 | 521 | |||||
Other | 35 | 20 | |||||
Deferred tax liabilities | 1,245 | 896 | |||||
Benefits and compensation | 144 | 241 | |||||
Pension benefits | 24 | 98 | |||||
Tax loss carryforwards | 65 | 36 | |||||
Capital loss carryforwards | 88 | 92 | |||||
Other | 92 | 95 | |||||
Gross deferred tax assets | 413 | 562 | |||||
Deferred tax asset valuation allowance | (133 | ) | (120 | ) | |||
Deferred tax assets, net of valuation allowance | 280 | 442 | |||||
Net deferred tax liability | $ | 965 | $ | 454 |
2018 | 2017 | 2016 | |||||||||
Balance at beginning of year | $ | 64 | $ | 63 | $ | 58 | |||||
Increases related to prior-year tax positions | — | 4 | 2 | ||||||||
Decreases related to prior-year tax positions | (37 | ) | — | — | |||||||
Increases related to current-year tax positions | 2 | 4 | 3 | ||||||||
Settlements | (1 | ) | (7 | ) | — | ||||||
Increase due to acquisitions | 4 | — | — | ||||||||
Balance at end of year | $ | 32 | $ | 64 | $ | 63 |
Increase / (decrease) in expense | 2017 | 2016 | ||||||
Cost of products sold | $ | 134 | $ | (148 | ) | |||
Marketing and selling expenses | $ | 38 | $ | (41 | ) | |||
Administrative expenses | $ | 62 | $ | (66 | ) | |||
Research and development expenses | $ | 13 | $ | (19 | ) | |||
Other expenses / (income) | $ | (247 | ) | $ | 274 |
Increase / (decrease) in expense | 2017 | 2016 | ||||||
Cost of products sold | $ | 134 | $ | (148 | ) | |||
Marketing and selling expenses | $ | 38 | $ | (41 | ) | |||
Administrative expenses | $ | 62 | $ | (66 | ) | |||
Research and development expenses | $ | 13 | $ | (19 | ) | |||
Other expenses / (income) | $ | (247 | ) | $ | 274 |
2018 | 2017 | |||||||||||||||||||||||
Derivative Instrument | Gross Amounts Presented in the Consolidated Balance Sheet | Gross Amounts Not Offset in the Consolidated Balance Sheet Subject to Netting Agreements | Net Amount | Gross Amounts Presented in the Consolidated Balance Sheet | Gross Amounts Not Offset in the Consolidated Balance Sheet Subject to Netting Agreements | Net Amount | ||||||||||||||||||
Total asset derivatives | $ | 10 | $ | (3 | ) | $ | 7 | $ | 10 | $ | (3 | ) | $ | 7 | ||||||||||
Total liability derivatives | $ | 6 | $ | (3 | ) | $ | 3 | $ | 44 | $ | (3 | ) | $ | 41 |
2018 | 2017 | |||||||||||||||||||||||
Derivative Instrument | Gross Amounts Presented in the Consolidated Balance Sheet | Gross Amounts Not Offset in the Consolidated Balance Sheet Subject to Netting Agreements | Net Amount | Gross Amounts Presented in the Consolidated Balance Sheet | Gross Amounts Not Offset in the Consolidated Balance Sheet Subject to Netting Agreements | Net Amount | ||||||||||||||||||
Total asset derivatives | $ | 10 | $ | (3 | ) | $ | 7 | $ | 10 | $ | (3 | ) | $ | 7 | ||||||||||
Total liability derivatives | $ | 6 | $ | (3 | ) | $ | 3 | $ | 44 | $ | (3 | ) | $ | 41 |
Pension | |||||||||||
2018 | 2017 | 2016 | |||||||||
Service cost | $ | 24 | $ | 26 | $ | 26 | |||||
Interest cost | 74 | 86 | 98 | ||||||||
Expected return on plan assets | (144 | ) | (144 | ) | (147 | ) | |||||
Recognized net actuarial (gain) loss | (104 | ) | (198 | ) | 302 | ||||||
Special termination benefits | 2 | — | — | ||||||||
Curtailment gains | (2 | ) | — | — | |||||||
Net periodic benefit expense (income) | $ | (150 | ) | $ | (230 | ) | $ | 279 |
Postretirement | |||||||||||
2018 | 2017 | 2016 | |||||||||
Service cost | $ | 1 | $ | 1 | $ | 1 | |||||
Interest cost | 7 | 10 | 15 | ||||||||
Amortization of prior service credit | (27 | ) | (25 | ) | (1 | ) | |||||
Recognized net actuarial (gain) loss | (16 | ) | (14 | ) | 23 | ||||||
Net periodic benefit expense (income) | $ | (35 | ) | $ | (28 | ) | $ | 38 |
Pension | Postretirement | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Obligation at beginning of year | $ | 2,450 | $ | 2,626 | $ | 276 | $ | 313 | ||||||||
Service cost | 24 | 26 | 1 | 1 | ||||||||||||
Interest cost | 74 | 86 | 7 | 10 | ||||||||||||
Actuarial gain | (110 | ) | (134 | ) | (16 | ) | (14 | ) | ||||||||
Participant contributions | — | — | 1 | 1 | ||||||||||||
Plan amendments | 2 | — | (11 | ) | (12 | ) | ||||||||||
Benefits paid | (165 | ) | (164 | ) | (26 | ) | (26 | ) | ||||||||
Medicare subsidies | — | — | 3 | 3 | ||||||||||||
Other | (2 | ) | (3 | ) | — | — | ||||||||||
Special termination benefits | 2 | — | — | — | ||||||||||||
Curtailment | (2 | ) | — | — | — | |||||||||||
Foreign currency adjustment | (16 | ) | 13 | — | — | |||||||||||
Benefit obligation at end of year | $ | 2,257 | $ | 2,450 | $ | 235 | $ | 276 |
2018 | 2017 | |||||||
Fair value at beginning of year | $ | 2,183 | $ | 2,111 | ||||
Actual return on plan assets | 137 | 208 | ||||||
Employer contributions | 5 | 5 | ||||||
Benefits paid | (155 | ) | (154 | ) | ||||
Foreign currency adjustment | (16 | ) | 13 | |||||
Fair value at end of year | $ | 2,154 | $ | 2,183 |
Pension | Postretirement | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Other assets | $ | 61 | $ | 8 | $ | — | $ | — | ||||||||
Accrued liabilities | 14 | 14 | 29 | 29 | ||||||||||||
Other liabilities | 150 | 261 | 206 | 247 | ||||||||||||
Net amounts recognized | $ | 103 | $ | 267 | $ | 235 | $ | 276 |
Amounts recognized in accumulated other comprehensive income (loss) consist of: | Pension | Postretirement | ||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Prior service (cost) credit | $ | (2 | ) | $ | — | $ | 67 | $ | 83 |
2018 | 2017 | |||||||
Projected benefit obligation | $ | 249 | $ | 2,270 | ||||
Accumulated benefit obligation | $ | 241 | $ | 2,232 | ||||
Fair value of plan assets | $ | 85 | $ | 1,995 |
Pension | Postretirement | |||||||
2018 | 2017 | 2018 | 2017 | |||||
Discount rate | 4.15% | 3.74% | 4.06% | 3.45% | ||||
Rate of compensation increase | 3.21% | 3.24% | 3.25% | 3.25% |
Pension | ||||||
2018 | 2017 | 2016 | ||||
Discount rate | 3.74% | 3.39% | 4.19% | |||
Expected return on plan assets | 6.84% | 7.09% | 7.35% | |||
Rate of compensation increase | 3.24% | 3.25% | 3.29% |
2018 | 2017 | |||
Health care cost trend rate assumed for next year | 6.75% | 7.25% | ||
Rate to which the cost trend rate is assumed to decline (ultimate trend rate) | 4.50% | 4.50% | ||
Year that the rate reaches the ultimate trend rate | 2023 | 2023 |
Strategic Target | 2018 | 2017 | |||
Equity securities | 42% | 42% | 48% | ||
Debt securities | 46% | 46% | 40% | ||
Real estate and other | 12% | 12% | 12% | ||
Total | 100% | 100% | 100% |
• | Level 1: Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. |
• | Level 2: Inputs other than quoted prices included in Level 1 that are observable for the asset or liability through corroboration with observable market data. |
• | Level 3: Unobservable inputs, which are valued based on our estimates of assumptions that market participants would use in pricing the asset or liability. |
Fair Value as of July 29, 2018 | Fair Value Measurements at July 29, 2018 Using Fair Value Hierarchy | Fair Value as of July 30, 2017 | Fair Value Measurements at July 30, 2017 Using Fair Value Hierarchy | ||||||||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||||||||
Short-term investments | $ | 61 | $ | 29 | $ | 32 | $ | — | $ | 46 | $ | 35 | $ | 11 | $ | — | |||||||||||||||
Equities: | |||||||||||||||||||||||||||||||
U.S. | 284 | 284 | — | — | 338 | 338 | — | — | |||||||||||||||||||||||
Non-U.S. | 230 | 230 | — | — | 290 | 290 | — | — | |||||||||||||||||||||||
Corporate bonds: | |||||||||||||||||||||||||||||||
U.S. | 597 | — | 597 | — | 537 | — | 537 | — | |||||||||||||||||||||||
Non-U.S. | 138 | — | 138 | — | 123 | — | 123 | — | |||||||||||||||||||||||
Government and agency bonds: | |||||||||||||||||||||||||||||||
U.S. | 70 | — | 70 | — | 60 | — | 60 | — | |||||||||||||||||||||||
Non-U.S. | 33 | — | 33 | — | 31 | — | 31 | — | |||||||||||||||||||||||
Municipal bonds | 61 | — | 61 | — | 58 | — | 58 | — | |||||||||||||||||||||||
Mortgage and asset backed securities | 15 | — | 15 | — | 8 | — | 8 | — | |||||||||||||||||||||||
Real estate | 10 | 4 | — | 6 | 17 | 10 | — | 7 | |||||||||||||||||||||||
Hedge funds | 34 | — | — | 34 | 38 | — | — | 38 | |||||||||||||||||||||||
Derivative assets | 8 | — | 8 | — | 9 | — | 9 | — | |||||||||||||||||||||||
Derivative liabilities | (4 | ) | — | (4 | ) | — | (10 | ) | — | (10 | ) | — | |||||||||||||||||||
Total assets at fair value | $ | 1,537 | $ | 547 | $ | 950 | $ | 40 | $ | 1,545 | $ | 673 | $ | 827 | $ | 45 | |||||||||||||||
Investments measured at net asset value: | |||||||||||||||||||||||||||||||
Short-term investments | 21 | 31 | |||||||||||||||||||||||||||||
Commingled funds: | |||||||||||||||||||||||||||||||
Equities | 310 | 332 | |||||||||||||||||||||||||||||
Fixed income | 31 | 30 | |||||||||||||||||||||||||||||
Blended | 85 | 86 | |||||||||||||||||||||||||||||
Real estate | 89 | 84 | |||||||||||||||||||||||||||||
Hedge funds | 95 | 103 | |||||||||||||||||||||||||||||
Total investments measured at net asset value: | 631 | 666 | |||||||||||||||||||||||||||||
Other items to reconcile to fair value of plan assets | (14 | ) | (28 | ) | |||||||||||||||||||||||||||
Total pension plan assets at fair value | $ | 2,154 | $ | 2,183 |
Real Estate | Hedge Funds | Total | ||||||||||
Fair value at July 30, 2017 | $ | 7 | $ | 38 | $ | 45 | ||||||
Actual return on plan assets | 2 | 2 | 4 | |||||||||
Purchases | — | — | — | |||||||||
Sales | (3 | ) | (6 | ) | (9 | ) | ||||||
Settlements | — | — | — | |||||||||
Transfers out of Level 3 | — | — | — | |||||||||
Fair value at July 29, 2018 | $ | 6 | $ | 34 | $ | 40 |
Real Estate | Hedge Funds | Total | ||||||||||
Fair value at July 31, 2016 | $ | 6 | $ | 45 | $ | 51 | ||||||
Actual return on plan assets | 1 | 2 | 3 | |||||||||
Purchases | 1 | 1 | 2 | |||||||||
Sales | (1 | ) | (10 | ) | (11 | ) | ||||||
Settlements | — | — | — | |||||||||
Transfers out of Level 3 | — | — | — | |||||||||
Fair value at July 30, 2017 | $ | 7 | $ | 38 | $ | 45 |
2018 | 2017 | ||||||||||||||
Fair Value | Fair Value | Redemption Frequency | Redemption Notice Period Range | ||||||||||||
Short-term investments | $ | 21 | $ | 31 | Daily | 1 Day | |||||||||
Commingled funds: | |||||||||||||||
Equities | 310 | 332 | Daily, | Monthly | 2 | to | 60 Days | ||||||||
Fixed income | 31 | 30 | Daily | 1 Day | |||||||||||
Blended | 85 | 86 | Primarily Daily | 1 | to | 20 Days | |||||||||
Real estate funds | 89 | 84 | Quarterly | 45 | to | 90 Days | |||||||||
Hedge funds(1) | 95 | 103 | Monthly | 5 | to | 30 Days | |||||||||
Total | $ | 631 | $ | 666 |
(1) | Includes a fund valued at $2 in 2017 which was substantially liquidated in 2018. |
Pension | Postretirement | |||||||
2019 | $ | 173 | $ | 29 | ||||
2020 | $ | 167 | $ | 28 | ||||
2021 | $ | 168 | $ | 26 | ||||
2022 | $ | 163 | $ | 25 | ||||
2023 | $ | 159 | $ | 24 | ||||
2024-2028 | $ | 777 | $ | 97 |
2018 | |||||||||||||||
First | Second | Third | Fourth | ||||||||||||
Net sales | $ | 2,161 | $ | 2,180 | $ | 2,125 | $ | 2,219 | |||||||
Gross profit | 783 | 766 | 618 | 649 | |||||||||||
Net earnings (loss) attributable to Campbell Soup Company | 275 | 285 | (393 | ) | 94 | ||||||||||
Per share - basic | |||||||||||||||
Net earnings (loss) attributable to Campbell Soup Company | .91 | .95 | (1.31 | ) | .31 | ||||||||||
Dividends | .35 | .35 | .35 | .35 | |||||||||||
Per share - assuming dilution | |||||||||||||||
Net earnings attributable to Campbell Soup Company | .91 | .95 | (1.31 | ) | .31 | ||||||||||
Market price | |||||||||||||||
High | $ | 54.37 | $ | 51.07 | $ | 48.10 | $ | 42.88 | |||||||
Low | $ | 45.00 | $ | 45.07 | $ | 39.79 | $ | 32.63 |
2018 | |||||||||||||||
First | Second | Third | Fourth | ||||||||||||
In 2018, the following charges (gains) were recorded in Net earnings attributable to Campbell Soup Company: | |||||||||||||||
Impairment charges | $ | — | $ | 74 | $ | 497 | $ | 41 | |||||||
Restructuring charges, implementation costs and other related costs | 12 | 46 | 45 | 33 | |||||||||||
Pension and postretirement benefit mark-to-market and curtailment adjustments | (9 | ) | — | — | (93 | ) | |||||||||
Transaction and integration costs | — | 19 | 46 | 8 | |||||||||||
Claim settlement | — | — | 15 | — | |||||||||||
Tax reform | — | (124 | ) | — | (6 | ) | |||||||||
Per share - assuming dilution | |||||||||||||||
Impairment charges | — | .25 | 1.65 | .14 | |||||||||||
Restructuring charges, implementation costs and other related costs | .04 | .15 | .15 | .11 | |||||||||||
Pension and postretirement benefit mark-to-market and curtailment adjustments | (.03 | ) | — | — | (.31 | ) | |||||||||
Transaction and integration costs | — | .06 | .15 | .03 | |||||||||||
Claim settlement | — | — | .05 | — | |||||||||||
Tax reform | — | (.41 | ) | — | (.02 | ) |
2017 | |||||||||||||||
First | Second | Third | Fourth | ||||||||||||
Net sales | $ | 2,202 | $ | 2,171 | $ | 1,853 | $ | 1,664 | |||||||
Gross profit | 851 | 811 | 665 | 598 | |||||||||||
Net earnings attributable to Campbell Soup Company | 292 | 101 | 176 | 318 | |||||||||||
Per share - basic | |||||||||||||||
Net earnings attributable to Campbell Soup Company | .95 | .33 | .58 | 1.05 | |||||||||||
Dividends | .35 | .35 | .35 | .35 | |||||||||||
Per share - assuming dilution | |||||||||||||||
Net earnings attributable to Campbell Soup Company | .94 | .33 | .58 | 1.04 | |||||||||||
Market price | |||||||||||||||
High | $ | 62.30 | $ | 63.50 | $ | 64.23 | $ | 59.14 | |||||||
Low | $ | 52.74 | $ | 52.59 | $ | 56.05 | $ | 50.62 |
2017 | |||||||||||||||
First | Second | Third | Fourth | ||||||||||||
In 2017, the following charges (gains) were recorded in Net earnings attributable to Campbell Soup Company: | |||||||||||||||
Impairment charges | $ | — | $ | 180 | $ | — | $ | — | |||||||
Restructuring charges, implementation costs and other related costs | 6 | — | 4 | 26 | |||||||||||
Pension and postretirement benefit mark-to-market adjustments | 13 | — | — | (129 | ) | ||||||||||
Sale of notes | — | — | — | (56 | ) | ||||||||||
Per share - assuming dilution | |||||||||||||||
Impairment charges | — | .58 | — | — | |||||||||||
Restructuring charges, implementation costs and other related costs | .02 | — | .01 | .09 | |||||||||||
Pension and postretirement benefit mark-to-market adjustments | .04 | — | — | (.42 | ) | ||||||||||
Sale of notes | — | — | — | (.18 | ) |
Details about Accumulated Other Comprehensive Income (Loss) Components | 2018 | 2017 | 2016 | Location of (Gain) Loss Recognized in Earnings | ||||||||||
(Gains) losses on cash flow hedges: | ||||||||||||||
Foreign exchange forward contracts | $ | 1 | $ | 6 | $ | (11 | ) | Cost of products sold | ||||||
Foreign exchange forward contracts | — | 1 | (2 | ) | Other expenses / (income) | |||||||||
Forward starting interest rate swaps | 2 | 4 | 4 | Interest expense | ||||||||||
Total before tax | 3 | 11 | (9 | ) | ||||||||||
Tax expense (benefit) | (1 | ) | (4 | ) | 2 | |||||||||
(Gain) loss, net of tax | $ | 2 | $ | 7 | $ | (7 | ) | |||||||
Pension and postretirement benefit adjustments: | ||||||||||||||
Prior service credit | $ | (27 | ) | $ | (25 | ) | $ | (1 | ) | Other expenses / (income) | ||||
Tax expense (benefit) | 7 | 9 | — | |||||||||||
(Gain) loss, net of tax | $ | (20 | ) | $ | (16 | ) | $ | (1 | ) |
2018 | 2017 | 2016 | 2015 | ||||||||||||
Restructuring charges | $ | 49 | $ | 18 | $ | 35 | $ | 102 | |||||||
Administrative expenses | 88 | 36 | 47 | 22 | |||||||||||
Cost of products sold | 45 | 4 | — | — | |||||||||||
Marketing and selling expenses | 3 | — | — | — | |||||||||||
Total pre-tax charges | $ | 185 | $ | 58 | $ | 82 | $ | 124 |
Recognized as of July 29, 2018 | |||
Severance pay and benefits | $ | 180 | |
Asset impairment/accelerated depreciation | 45 | ||
Implementation costs and other related costs | 224 | ||
Total | $ | 449 |
Severance Pay and Benefits | Other Restructuring Costs | Non-Cash Benefits(5) | Implementation Costs and Other Related Costs(6) | Asset Impairment/Accelerated Depreciation | Other Non-Cash Exit Costs(7) | Total Charges | ||||||||||||||||||
Accrued balance at August 3, 2014 | $ | — | $ | — | ||||||||||||||||||||
2015 charges | 87 | 8 | 7 | 22 | — | — | $ | 124 | ||||||||||||||||
2015 cash payments | (1 | ) | — | |||||||||||||||||||||
Foreign currency translation adjustment | (1 | ) | — | |||||||||||||||||||||
Accrued balance at August 2, 2015(1) | $ | 85 | $ | 8 | ||||||||||||||||||||
2016 charges | 34 | 1 | — | 47 | — | — | $ | 82 | ||||||||||||||||
2016 cash payments | (46 | ) | (9 | ) | ||||||||||||||||||||
Accrued balance at July 31, 2016(2) | $ | 73 | $ | — | ||||||||||||||||||||
2017 charges | 7 | — | — | 39 | 12 | — | $ | 58 | ||||||||||||||||
2017 cash payments | (54 | ) | — | |||||||||||||||||||||
Accrued balance at July 30, 2017(3) | $ | 26 | $ | — | ||||||||||||||||||||
2018 charges | 43 | — | 2 | 104 | 33 | 3 | $ | 185 | ||||||||||||||||
2018 cash payments | (31 | ) | — | |||||||||||||||||||||
Foreign currency translation adjustment | (1 | ) | — | |||||||||||||||||||||
Accrued balance at July 29, 2018(4) | $ | 37 | $ | — |
(1) | Includes $45 of severance pay and benefits recorded in Other liabilities in the Consolidated Balance Sheet. |
(2) | Includes $17 of severance pay and benefits recorded in Other liabilities in the Consolidated Balance Sheet. |
(3) | Includes $2 of severance pay and benefits recorded in Other liabilities in the Consolidated Balance Sheet. |
(4) | Includes $23 of severance pay and benefits recorded in Other liabilities in the Consolidated Balance Sheet. |
(5) | Represents postretirement and pension curtailment costs and pension special termination benefits. See Note 10 for additional information. |
(6) | Includes other costs recognized as incurred that are not reflected in the restructuring reserve in the Consolidated Balance Sheet. The costs are included in Administrative expenses, Cost of products sold, and Marketing and selling expenses in the Consolidated Statements of Earnings. |
(7) | Includes non-cash costs that are not reflected in the restructuring reserve in the Consolidated Balance Sheet. |
2018 | Costs Incurred to Date | ||||||
Americas Simple Meals and Beverages | $ | 86 | $ | 178 | |||
Global Biscuits and Snacks | 73 | 151 | |||||
Campbell Fresh | 5 | 11 | |||||
Corporate | 21 | 109 | |||||
Total | $ | 185 | $ | 449 |
Severance Pay and Benefits | Implementation and Integration Costs(1) | Total Charges | |||||||||
2018 charges | $ | 13 | 12 | $ | 25 | ||||||
2018 cash payments | (4 | ) | |||||||||
Accrued balance at July 29, 2018(2) | $ | 9 |
(1) | Includes other costs recognized as incurred that are not reflected in the restructuring reserve in the Consolidated Balance Sheet. The costs are included in Administrative expenses in the Consolidated Statements of Earnings. |
(2) | Includes $1 of severance pay and benefits recorded in Other liabilities in the Consolidated Balance Sheet. |
Total Program(1) | Change in Estimate | Recognized as of July 31, 2016 | |||||||||
Severance pay and benefits | $ | 41 | $ | (4 | ) | $ | 37 | ||||
Asset impairment | 12 | — | 12 | ||||||||
Other exit costs | 1 | — | 1 | ||||||||
Total | $ | 54 | $ | (4 | ) | $ | 50 |
(1) | Recognized as of August 2, 2015. |
Foreign Currency Translation Adjustments(1) | Gains (Losses) on Cash Flow Hedges(2) | Pension and Postretirement Benefit Plan Adjustments(3) | Total Accumulated Comprehensive Income (Loss) | |||||||||||||
Balance at August 2, 2015 | $ | (166 | ) | $ | (5 | ) | $ | 3 | $ | (168 | ) | |||||
Other comprehensive income (loss) before reclassifications | 42 | (29 | ) | 59 | 72 | |||||||||||
Amounts reclassified from accumulated other comprehensive income (loss) | — | (7 | ) | (1 | ) | (8 | ) | |||||||||
Net current-period other comprehensive income (loss) | 42 | (36 | ) | 58 | 64 | |||||||||||
Balance at July 31, 2016 | $ | (124 | ) | $ | (41 | ) | $ | 61 | $ | (104 | ) | |||||
Other comprehensive income (loss) before reclassifications | 40 | 12 | 8 | 60 | ||||||||||||
Amounts reclassified from accumulated other comprehensive income (loss) | — | 7 | (16 | ) | (9 | ) | ||||||||||
Net current-period other comprehensive income (loss) | 40 | 19 | (8 | ) | 51 | |||||||||||
Balance at July 30, 2017 | $ | (84 | ) | $ | (22 | ) | $ | 53 | $ | (53 | ) | |||||
Other comprehensive income (loss) before reclassifications | (70 | ) | 16 | 7 | (47 | ) | ||||||||||
Amounts reclassified from accumulated other comprehensive income (loss) | — | 2 | (20 | ) | (18 | ) | ||||||||||
Net current-period other comprehensive income (loss) | (70 | ) | 18 | (13 | ) | (65 | ) | |||||||||
Balance at July 29, 2018 | $ | (154 | ) | $ | (4 | ) | $ | 40 | $ | (118 | ) |
(1) | Included a tax expense of $6 as of July 29, 2018, July 30, 2017, July 31, 2016, and August 2, 2015. |
(2) | Included a tax benefit of $4 as of July 29, 2018, $12 as of July 30, 2017, $23 as of July 31, 2016, and $5 as of August 2, 2015. |
(3) | Included a tax expense of $25 as of July 29, 2018, $30 as of July 30, 2017, $35 as of July 31, 2016, and $1 as of August 2, 2015. |
Strategic Target | 2018 | 2017 | |||
Equity securities | 42% | 42% | 48% | ||
Debt securities | 46% | 46% | 40% | ||
Real estate and other | 12% | 12% | 12% | ||
Total | 100% | 100% | 100% |
• | Level 1: Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. |
• | Level 2: Inputs other than quoted prices included in Level 1 that are observable for the asset or liability through corroboration with observable market data. |
• | Level 3: Unobservable inputs, which are valued based on our estimates of assumptions that market participants would use in pricing the asset or liability. |
Fair Value as of July 29, 2018 | Fair Value Measurements at July 29, 2018 Using Fair Value Hierarchy | Fair Value as of July 30, 2017 | Fair Value Measurements at July 30, 2017 Using Fair Value Hierarchy | ||||||||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||||||||
Short-term investments | $ | 61 | $ | 29 | $ | 32 | $ | — | $ | 46 | $ | 35 | $ | 11 | $ | — | |||||||||||||||
Equities: | |||||||||||||||||||||||||||||||
U.S. | 284 | 284 | — | — | 338 | 338 | — | — | |||||||||||||||||||||||
Non-U.S. | 230 | 230 | — | — | 290 | 290 | — | — | |||||||||||||||||||||||
Corporate bonds: | |||||||||||||||||||||||||||||||
U.S. | 597 | — | 597 | — | 537 | — | 537 | — | |||||||||||||||||||||||
Non-U.S. | 138 | — | 138 | — | 123 | — | 123 | — | |||||||||||||||||||||||
Government and agency bonds: | |||||||||||||||||||||||||||||||
U.S. | 70 | — | 70 | — | 60 | — | 60 | — | |||||||||||||||||||||||
Non-U.S. | 33 | — | 33 | — | 31 | — | 31 | — | |||||||||||||||||||||||
Municipal bonds | 61 | — | 61 | — | 58 | — | 58 | — | |||||||||||||||||||||||
Mortgage and asset backed securities | 15 | — | 15 | — | 8 | — | 8 | — | |||||||||||||||||||||||
Real estate | 10 | 4 | — | 6 | 17 | 10 | — | 7 | |||||||||||||||||||||||
Hedge funds | 34 | — | — | 34 | 38 | — | — | 38 | |||||||||||||||||||||||
Derivative assets | 8 | — | 8 | — | 9 | — | 9 | — | |||||||||||||||||||||||
Derivative liabilities | (4 | ) | — | (4 | ) | — | (10 | ) | — | (10 | ) | — | |||||||||||||||||||
Total assets at fair value | $ | 1,537 | $ | 547 | $ | 950 | $ | 40 | $ | 1,545 | $ | 673 | $ | 827 | $ | 45 | |||||||||||||||
Investments measured at net asset value: | |||||||||||||||||||||||||||||||
Short-term investments | 21 | 31 | |||||||||||||||||||||||||||||
Commingled funds: | |||||||||||||||||||||||||||||||
Equities | 310 | 332 | |||||||||||||||||||||||||||||
Fixed income | 31 | 30 | |||||||||||||||||||||||||||||
Blended | 85 | 86 | |||||||||||||||||||||||||||||
Real estate | 89 | 84 | |||||||||||||||||||||||||||||
Hedge funds | 95 | 103 | |||||||||||||||||||||||||||||
Total investments measured at net asset value: | 631 | 666 | |||||||||||||||||||||||||||||
Other items to reconcile to fair value of plan assets | (14 | ) | (28 | ) | |||||||||||||||||||||||||||
Total pension plan assets at fair value | $ | 2,154 | $ | 2,183 |
Pension | Postretirement | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Other assets | $ | 61 | $ | 8 | $ | — | $ | — | ||||||||
Accrued liabilities | 14 | 14 | 29 | 29 | ||||||||||||
Other liabilities | 150 | 261 | 206 | 247 | ||||||||||||
Net amounts recognized | $ | 103 | $ | 267 | $ | 235 | $ | 276 |
Amounts recognized in accumulated other comprehensive income (loss) consist of: | Pension | Postretirement | ||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Prior service (cost) credit | $ | (2 | ) | $ | — | $ | 67 | $ | 83 |
Pension | Postretirement | |||||||
2018 | 2017 | 2018 | 2017 | |||||
Discount rate | 4.15% | 3.74% | 4.06% | 3.45% | ||||
Rate of compensation increase | 3.21% | 3.24% | 3.25% | 3.25% |
Pension | ||||||
2018 | 2017 | 2016 | ||||
Discount rate | 3.74% | 3.39% | 4.19% | |||
Expected return on plan assets | 6.84% | 7.09% | 7.35% | |||
Rate of compensation increase | 3.24% | 3.25% | 3.29% |
2018 | 2017 | |||||||
Projected benefit obligation | $ | 249 | $ | 2,270 | ||||
Accumulated benefit obligation | $ | 241 | $ | 2,232 | ||||
Fair value of plan assets | $ | 85 | $ | 1,995 |
Total Cash-Flow Hedge OCI Activity | |||||||||||||
Derivatives Designated as Cash-Flow Hedges | 2018 | 2017 | 2016 | ||||||||||
OCI derivative gain (loss) at beginning of year | $ | (34 | ) | $ | (64 | ) | $ | (10 | ) | ||||
Effective portion of changes in fair value recognized in OCI: | |||||||||||||
Foreign exchange forward contracts | 8 | (4 | ) | (9 | ) | ||||||||
Forward starting interest rate swaps | 15 | 23 | (36 | ) | |||||||||
Amount of (gain) loss reclassified from OCI to earnings: | Location in Earnings | ||||||||||||
Foreign exchange forward contracts | Cost of products sold | 1 | 6 | (11 | ) | ||||||||
Foreign exchange forward contracts | Other expenses / (income) | — | 1 | (2 | ) | ||||||||
Forward starting interest rate swaps | Interest expense | 2 | 4 | 4 | |||||||||
OCI derivative gain (loss) at end of year | $ | (8 | ) | $ | (34 | ) | $ | (64 | ) |
2018 | 2017 | 2016 | |||||||||
Cash Flows from Operating Activities | |||||||||||
Other | |||||||||||
Benefit related payments | $ | (59 | ) | $ | (58 | ) | $ | (57 | ) | ||
Other | (1 | ) | — | (3 | ) | ||||||
$ | (60 | ) | $ | (58 | ) | $ | (60 | ) | |||
Other Cash Flow Information | |||||||||||
Interest paid | $ | 152 | $ | 110 | $ | 113 | |||||
Interest received | $ | 4 | $ | 5 | $ | 4 | |||||
Income taxes paid | $ | 128 | $ | 320 | $ | 325 |
2018 | 2017 | |||||||
Fair value at beginning of year | $ | 2,183 | $ | 2,111 | ||||
Actual return on plan assets | 137 | 208 | ||||||
Employer contributions | 5 | 5 | ||||||
Benefits paid | (155 | ) | (154 | ) | ||||
Foreign currency adjustment | (16 | ) | 13 | |||||
Fair value at end of year | $ | 2,154 | $ | 2,183 |
Pension | Postretirement | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Obligation at beginning of year | $ | 2,450 | $ | 2,626 | $ | 276 | $ | 313 | ||||||||
Service cost | 24 | 26 | 1 | 1 | ||||||||||||
Interest cost | 74 | 86 | 7 | 10 | ||||||||||||
Actuarial gain | (110 | ) | (134 | ) | (16 | ) | (14 | ) | ||||||||
Participant contributions | — | — | 1 | 1 | ||||||||||||
Plan amendments | 2 | — | (11 | ) | (12 | ) | ||||||||||
Benefits paid | (165 | ) | (164 | ) | (26 | ) | (26 | ) | ||||||||
Medicare subsidies | — | — | 3 | 3 | ||||||||||||
Other | (2 | ) | (3 | ) | — | — | ||||||||||
Special termination benefits | 2 | — | — | — | ||||||||||||
Curtailment | (2 | ) | — | — | — | |||||||||||
Foreign currency adjustment | (16 | ) | 13 | — | — | |||||||||||
Benefit obligation at end of year | $ | 2,257 | $ | 2,450 | $ | 235 | $ | 276 |
2018 | 2017 | 2016 | |||||||||
Income taxes: | |||||||||||
Currently payable: | |||||||||||
Federal | $ | 84 | $ | 238 | $ | 235 | |||||
State | 13 | 39 | 34 | ||||||||
Non-U.S. | 47 | 36 | 47 | ||||||||
144 | 313 | 316 | |||||||||
Deferred: | |||||||||||
Federal | (122 | ) | 77 | (17 | ) | ||||||
State | (2 | ) | 2 | — | |||||||
Non-U.S. | (9 | ) | 14 | (13 | ) | ||||||
(133 | ) | 93 | (30 | ) | |||||||
$ | 11 | $ | 406 | $ | 286 |
Type | Fiscal Year of Maturity | Rate | 2018 | 2017 | ||||||||
Canadian credit facility | 2019 | Variable | $ | 90 | $ | 130 | ||||||
Australian note | 2019 | 4.88% | 207 | 224 | ||||||||
Notes | 2019 | 4.50% | 300 | 300 | ||||||||
Notes | 2020 | Variable | 500 | — | ||||||||
Notes | 2021 | Variable | 400 | — | ||||||||
Senior Term Loan | 2021 | Variable | 900 | — | ||||||||
Notes | 2021 | 3.30% | 650 | — | ||||||||
Notes | 2021 | 4.25% | 500 | 500 | ||||||||
Debentures | 2021 | 8.88% | 200 | 200 | ||||||||
Notes | 2023 | 2.50% | 450 | 450 | ||||||||
Notes | 2023 | 3.65% | 1,200 | — | ||||||||
Notes | 2025 | 3.95% | 850 | — | ||||||||
Notes | 2025 | 3.30% | 300 | 300 | ||||||||
Notes | 2028 | 4.15% | 1,000 | — | ||||||||
Notes | 2043 | 3.80% | 400 | 400 | ||||||||
Notes | 2048 | 4.80% | 700 | — | ||||||||
Capital leases | 7 | 7 | ||||||||||
Other(1) | (59 | ) | (12 | ) | ||||||||
Total | $ | 8,595 | $ | 2,499 | ||||||||
Less current portion | 597 | — | ||||||||||
Total long-term debt | $ | 7,998 | $ | 2,499 |
(1) | Includes unamortized net discount/premium on debt issuances and debt issuance costs. |
2018 | 2017 | ||||||
Depreciation | $ | 342 | $ | 355 | |||
Amortization | 868 | 521 | |||||
Other | 35 | 20 | |||||
Deferred tax liabilities | 1,245 | 896 | |||||
Benefits and compensation | 144 | 241 | |||||
Pension benefits | 24 | 98 | |||||
Tax loss carryforwards | 65 | 36 | |||||
Capital loss carryforwards | 88 | 92 | |||||
Other | 92 | 95 | |||||
Gross deferred tax assets | 413 | 562 | |||||
Deferred tax asset valuation allowance | (133 | ) | (120 | ) | |||
Deferred tax assets, net of valuation allowance | 280 | 442 | |||||
Net deferred tax liability | $ | 965 | $ | 454 |
Balance Sheet Classification | 2018 | 2017 | |||||||
Asset Derivatives | |||||||||
Derivatives designated as hedges: | |||||||||
Foreign exchange forward contracts | Other current assets | $ | 1 | $ | 3 | ||||
Total derivatives designated as hedges | $ | 1 | $ | 3 | |||||
Derivatives not designated as hedges: | |||||||||
Commodity derivative contracts | Other current assets | $ | 5 | $ | 5 | ||||
Deferred compensation derivative contracts | Other current assets | 1 | 1 | ||||||
Foreign exchange forward contracts | Other current assets | 3 | — | ||||||
Commodity derivative contracts | Other assets | — | 1 | ||||||
Total derivatives not designated as hedges | $ | 9 | $ | 7 | |||||
Total asset derivatives | $ | 10 | $ | 10 |
Balance Sheet Classification | 2018 | 2017 | |||||||
Liability Derivatives | |||||||||
Derivatives designated as hedges: | |||||||||
Foreign exchange forward contracts | Accrued liabilities | $ | 2 | $ | 1 | ||||
Forward starting interest rate swaps | Accrued liabilities | — | 22 | ||||||
Total derivatives designated as hedges | $ | 2 | $ | 23 | |||||
Derivatives not designated as hedges: | |||||||||
Commodity derivative contracts | Accrued liabilities | $ | 3 | $ | 1 | ||||
Foreign exchange forward contracts | Accrued liabilities | — | 19 | ||||||
Foreign exchange forward contracts | Other liabilities | — | 1 | ||||||
Commodity derivative contracts | Other liabilities | 1 | — | ||||||
Total derivatives not designated as hedges | $ | 4 | $ | 21 | |||||
Total liability derivatives | $ | 6 | $ | 44 |
Real Estate | Hedge Funds | Total | ||||||||||
Fair value at July 30, 2017 | $ | 7 | $ | 38 | $ | 45 | ||||||
Actual return on plan assets | 2 | 2 | 4 | |||||||||
Purchases | — | — | — | |||||||||
Sales | (3 | ) | (6 | ) | (9 | ) | ||||||
Settlements | — | — | — | |||||||||
Transfers out of Level 3 | — | — | — | |||||||||
Fair value at July 29, 2018 | $ | 6 | $ | 34 | $ | 40 |
Real Estate | Hedge Funds | Total | ||||||||||
Fair value at July 31, 2016 | $ | 6 | $ | 45 | $ | 51 | ||||||
Actual return on plan assets | 1 | 2 | 3 | |||||||||
Purchases | 1 | 1 | 2 | |||||||||
Sales | (1 | ) | (10 | ) | (11 | ) | ||||||
Settlements | — | — | — | |||||||||
Transfers out of Level 3 | — | — | — | |||||||||
Fair value at July 30, 2017 | $ | 7 | $ | 38 | $ | 45 |
2018 | 2017 | 2016 | ||||||
Federal statutory income tax rate | 21.0 | % | 35.0 | % | 35.0 | % | ||
State income taxes (net of federal tax benefit) | 4.3 | 2.1 | 2.7 | |||||
Tax effect of international items | 2.6 | (2.1 | ) | (3.0 | ) | |||
Settlement of tax contingencies | (6.2 | ) | — | — | ||||
Federal manufacturing deduction | (4.0 | ) | (2.1 | ) | (3.2 | ) | ||
Goodwill impairment | 18.7 | 3.4 | 4.3 | |||||
Claim settlement | — | — | (0.8 | ) | ||||
Tax Reform - impact on U.S. deferred tax assets and liabilities(1) | (66.3 | ) | — | — | ||||
Tax Reform - transition tax(1) | 19.6 | — | — | |||||
Effect of higher U.S. federal statutory tax rate(1) | 13.2 | — | — | |||||
Foreign exchange losses(2) | — | (3.9 | ) | — | ||||
Other | 1.1 | (1.0 | ) | (1.3 | ) | |||
Effective income tax rate | 4.0 | % | 31.4 | % | 33.7 | % |
(1) | The Tax Cuts and Jobs Act of 2017 (the Act) was enacted into law on December 22, 2017, and made significant changes to corporate taxation. Changes under the Act include: |
• | Reducing the federal corporate tax rate from 35% to 21% effective January 1, 2018. A blended rate will apply for fiscal 2018 non-calendar year end companies for the fiscal periods that include the effective date of the rate change. The impact of this is shown as \"Effect of higher U.S. federal statutory tax rate\"; |
• | Repealing the exception for deductibility of performance-based compensation to covered employees, which impacts us beginning in 2019, along with expanding the number of covered employees; |
• | Transitioning to a territorial system for taxation on foreign earnings along with the imposition of a transition tax in 2018 on the deemed repatriation of unremitted foreign earnings; |
• | Immediate expensing of machinery and equipment placed into service after September 27, 2017; |
• | Eliminating the deduction for domestic manufacturing activities, which impacts us beginning in 2019; |
• | Changes to the taxation of multinational companies, including a new minimum tax on Global Intangible Low-Taxed Income, a new Base Erosion Anti-Abuse Tax, and a new U.S. corporate deduction for Foreign-Derived Intangible Income, all of which are effective for us beginning in 2019; and |
• | Limiting the deductibility of interest expense to 30% of adjusted taxable income, which is effective for us beginning in 2019. |
(2) | The 2017 rate was favorably impacted by a $52 benefit primarily related to the sale of intercompany notes receivable to a financial institution, which resulted in the recognition of foreign exchange losses. |
2018 | 2017 | 2016 | ||||||||||
Net sales | ||||||||||||
Soup | $ | 2,615 | $ | 2,673 | $ | 2,690 | ||||||
Snacks | 3,344 | 2,511 | 2,479 | |||||||||
Other simple meals | 1,699 | 1,698 | 1,702 | |||||||||
Beverages | 1,024 | 1,008 | 1,090 | |||||||||
Other | 3 | — | — | |||||||||
Total | $ | 8,685 | $ | 7,890 | $ | 7,961 |
Pension | Postretirement | |||||||
2019 | $ | 173 | $ | 29 | ||||
2020 | $ | 167 | $ | 28 | ||||
2021 | $ | 168 | $ | 26 | ||||
2022 | $ | 163 | $ | 25 | ||||
2023 | $ | 159 | $ | 24 | ||||
2024-2028 | $ | 777 | $ | 97 |
Fair Value as of July 29, 2018 | Fair Value Measurements at July 29, 2018 Using Fair Value Hierarchy | Fair Value as of July 30, 2017 | Fair Value Measurements at July 30, 2017 Using Fair Value Hierarchy | ||||||||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||||||||
Assets | |||||||||||||||||||||||||||||||
Foreign exchange forward contracts(1) | $ | 4 | $ | — | $ | 4 | $ | — | $ | 3 | $ | — | $ | 3 | $ | — | |||||||||||||||
Commodity derivative contracts(2) | 5 | 5 | — | — | 6 | 6 | — | — | |||||||||||||||||||||||
Deferred compensation derivative contracts(3) | 1 | — | 1 | — | 1 | — | 1 | — | |||||||||||||||||||||||
Deferred compensation investments(4) | 6 | 6 | — | — | — | — | — | — | |||||||||||||||||||||||
Fair value option investments(5) | 77 | — | — | 77 | 50 | — | 1 | 49 | |||||||||||||||||||||||
Total assets at fair value | $ | 93 | $ | 11 | $ | 5 | $ | 77 | $ | 60 | $ | 6 | $ | 5 | $ | 49 |
Fair Value as of July 29, 2018 | Fair Value Measurements at July 29, 2018 Using Fair Value Hierarchy | Fair Value as of July 30, 2017 | Fair Value Measurements at July 30, 2017 Using Fair Value Hierarchy | ||||||||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||||||||
Liabilities | |||||||||||||||||||||||||||||||
Forward starting interest rate swaps(6) | $ | — | $ | — | $ | — | $ | — | $ | 22 | $ | — | $ | 22 | $ | — | |||||||||||||||
Foreign exchange forward contracts(1) | 2 | — | 2 | — | 21 | — | 21 | — | |||||||||||||||||||||||
Commodity derivative contracts(2) | 4 | 3 | 1 | — | 1 | 1 | — | — | |||||||||||||||||||||||
Deferred compensation obligation(4) | 108 | 108 | — | — | 112 | 112 | — | — | |||||||||||||||||||||||
Total liabilities at fair value | $ | 114 | $ | 111 | $ | 3 | $ | — | $ | 156 | $ | 113 | $ | 43 | $ | — |
(1) | Based on observable market transactions of spot currency rates and forward rates. |
(2) | Based on quoted futures exchanges and on observable prices of futures and options transactions in the marketplace. |
(3) | Based on LIBOR and equity index swap rates. |
(4) | Based on the fair value of the participants’ investments. |
(5) | Primarily represents investments in equity securities that are not readily marketable and are accounted for under the fair value option. The investments were funded by Acre. See Note 14 for additional information. Fair value is based on analyzing recent transactions and transactions of comparable companies, and the discounted cash flow method. In addition, allocation methods, including the option pricing method, are used in distributing fair value among various equity holders according to rights and preferences. Changes in the fair value of investments were not material in 2018 or 2017. |
(6) | Based on LIBOR swap rates. |
Intangible Assets | 2018 | 2017 | ||||||
Amortizable intangible assets | ||||||||
Customer relationships | $ | 1,116 | $ | 223 | ||||
Technology | 40 | 40 | ||||||
Other | 43 | 35 | ||||||
Total gross amortizable intangible assets | $ | 1,199 | $ | 298 | ||||
Accumulated amortization | (126 | ) | (92 | ) | ||||
Total net amortizable intangible assets | $ | 1,073 | $ | 206 | ||||
Non-amortizable intangible assets | ||||||||
Trademarks | 3,123 | 912 | ||||||
Total net intangible assets | $ | 4,196 | $ | 1,118 |
2019 | 2020 | 2021 | 2022 | 2023 | Thereafter |
$75 | $61 | $48 | $39 | $28 | $109 |
Americas Simple Meals and Beverages | Global Biscuits and Snacks | Campbell Fresh(1) | Total | ||||||||||||
Net balance at July 31, 2016 | $ | 775 | $ | 757 | $ | 731 | $ | 2,263 | |||||||
Impairment charges | — | — | (191 | ) | (191 | ) | |||||||||
Foreign currency translation adjustment | 5 | 38 | — | 43 | |||||||||||
Net balance at July 30, 2017 | $ | 780 | $ | 795 | $ | 540 | $ | 2,115 | |||||||
Acquisitions | 202 | 2,866 | — | 3,068 | |||||||||||
Impairment charges | — | — | (540 | ) | (540 | ) | |||||||||
Foreign currency translation adjustment | (4 | ) | (59 | ) | — | (63 | ) | ||||||||
Net balance at July 29, 2018 | $ | 978 | $ | 3,602 | $ | — | $ | 4,580 |
(1) | The balance of goodwill is reflected net of accumulated impairment charges of $837 as of July 29, 2018, $297 as of July 30, 2017 and $106 as of July 31, 2016, respectively, related to the Bolthouse Farms carrot and carrot ingredients reporting unit, the deli reporting unit, and the Bolthouse Farms refrigerated beverages and salad dressings reporting unit. |
2018 | 2017 | |||
Health care cost trend rate assumed for next year | 6.75% | 7.25% | ||
Rate to which the cost trend rate is assumed to decline (ultimate trend rate) | 4.50% | 4.50% | ||
Year that the rate reaches the ultimate trend rate | 2023 | 2023 |
2018 | 2017 | 2016 | ||||||||||
Earnings before income taxes: | ||||||||||||
United States | $ | 143 | $ | 1,103 | $ | 705 | ||||||
Non-U.S. | 129 | 190 | 144 | |||||||||
$ | 272 | $ | 1,293 | $ | 849 |
Intangible Assets | 2018 | 2017 | ||||||
Amortizable intangible assets | ||||||||
Customer relationships | $ | 1,116 | $ | 223 | ||||
Technology | 40 | 40 | ||||||
Other | 43 | 35 | ||||||
Total gross amortizable intangible assets | $ | 1,199 | $ | 298 | ||||
Accumulated amortization | (126 | ) | (92 | ) | ||||
Total net amortizable intangible assets | $ | 1,073 | $ | 206 | ||||
Non-amortizable intangible assets | ||||||||
Trademarks | 3,123 | 912 | ||||||
Total net intangible assets | $ | 4,196 | $ | 1,118 |
Pension | |||||||||||
2018 | 2017 | 2016 | |||||||||
Service cost | $ | 24 | $ | 26 | $ | 26 | |||||
Interest cost | 74 | 86 | 98 | ||||||||
Expected return on plan assets | (144 | ) | (144 | ) | (147 | ) | |||||
Recognized net actuarial (gain) loss | (104 | ) | (198 | ) | 302 | ||||||
Special termination benefits | 2 | — | — | ||||||||
Curtailment gains | (2 | ) | — | — | |||||||
Net periodic benefit expense (income) | $ | (150 | ) | $ | (230 | ) | $ | 279 |
Postretirement | |||||||||||
2018 | 2017 | 2016 | |||||||||
Service cost | $ | 1 | $ | 1 | $ | 1 | |||||
Interest cost | 7 | 10 | 15 | ||||||||
Amortization of prior service credit | (27 | ) | (25 | ) | (1 | ) | |||||
Recognized net actuarial (gain) loss | (16 | ) | (14 | ) | 23 | ||||||
Net periodic benefit expense (income) | $ | (35 | ) | $ | (28 | ) | $ | 38 |
2018 | |||||||||||||||
First | Second | Third | Fourth | ||||||||||||
Net sales | $ | 2,161 | $ | 2,180 | $ | 2,125 | $ | 2,219 | |||||||
Gross profit | 783 | 766 | 618 | 649 | |||||||||||
Net earnings (loss) attributable to Campbell Soup Company | 275 | 285 | (393 | ) | 94 | ||||||||||
Per share - basic | |||||||||||||||
Net earnings (loss) attributable to Campbell Soup Company | .91 | .95 | (1.31 | ) | .31 | ||||||||||
Dividends | .35 | .35 | .35 | .35 | |||||||||||
Per share - assuming dilution | |||||||||||||||
Net earnings attributable to Campbell Soup Company | .91 | .95 | (1.31 | ) | .31 | ||||||||||
Market price | |||||||||||||||
High | $ | 54.37 | $ | 51.07 | $ | 48.10 | $ | 42.88 | |||||||
Low | $ | 45.00 | $ | 45.07 | $ | 39.79 | $ | 32.63 |
2018 | |||||||||||||||
First | Second | Third | Fourth | ||||||||||||
In 2018, the following charges (gains) were recorded in Net earnings attributable to Campbell Soup Company: | |||||||||||||||
Impairment charges | $ | — | $ | 74 | $ | 497 | $ | 41 | |||||||
Restructuring charges, implementation costs and other related costs | 12 | 46 | 45 | 33 | |||||||||||
Pension and postretirement benefit mark-to-market and curtailment adjustments | (9 | ) | — | — | (93 | ) | |||||||||
Transaction and integration costs | — | 19 | 46 | 8 | |||||||||||
Claim settlement | — | — | 15 | — | |||||||||||
Tax reform | — | (124 | ) | — | (6 | ) | |||||||||
Per share - assuming dilution | |||||||||||||||
Impairment charges | — | .25 | 1.65 | .14 | |||||||||||
Restructuring charges, implementation costs and other related costs | .04 | .15 | .15 | .11 | |||||||||||
Pension and postretirement benefit mark-to-market and curtailment adjustments | (.03 | ) | — | — | (.31 | ) | |||||||||
Transaction and integration costs | — | .06 | .15 | .03 | |||||||||||
Claim settlement | — | — | .05 | — | |||||||||||
Tax reform | — | (.41 | ) | — | (.02 | ) |
2017 | |||||||||||||||
First | Second | Third | Fourth | ||||||||||||
Net sales | $ | 2,202 | $ | 2,171 | $ | 1,853 | $ | 1,664 | |||||||
Gross profit | 851 | 811 | 665 | 598 | |||||||||||
Net earnings attributable to Campbell Soup Company | 292 | 101 | 176 | 318 | |||||||||||
Per share - basic | |||||||||||||||
Net earnings attributable to Campbell Soup Company | .95 | .33 | .58 | 1.05 | |||||||||||
Dividends | .35 | .35 | .35 | .35 | |||||||||||
Per share - assuming dilution | |||||||||||||||
Net earnings attributable to Campbell Soup Company | .94 | .33 | .58 | 1.04 | |||||||||||
Market price | |||||||||||||||
High | $ | 62.30 | $ | 63.50 | $ | 64.23 | $ | 59.14 | |||||||
Low | $ | 52.74 | $ | 52.59 | $ | 56.05 | $ | 50.62 |
2017 | |||||||||||||||
First | Second | Third | Fourth | ||||||||||||
In 2017, the following charges (gains) were recorded in Net earnings attributable to Campbell Soup Company: | |||||||||||||||
Impairment charges | $ | — | $ | 180 | $ | — | $ | — | |||||||
Restructuring charges, implementation costs and other related costs | 6 | — | 4 | 26 | |||||||||||
Pension and postretirement benefit mark-to-market adjustments | 13 | — | — | (129 | ) | ||||||||||
Sale of notes | — | — | — | (56 | ) | ||||||||||
Per share - assuming dilution | |||||||||||||||
Impairment charges | — | .58 | — | — | |||||||||||
Restructuring charges, implementation costs and other related costs | .02 | — | .01 | .09 | |||||||||||
Pension and postretirement benefit mark-to-market adjustments | .04 | — | — | (.42 | ) | ||||||||||
Sale of notes | — | — | — | (.18 | ) |
Snyder's-Lance | Pacific Foods | |||||||
Cash | $ | 21 | $ | 7 | ||||
Accounts receivable | 221 | 16 | ||||||
Inventories | 219 | 48 | ||||||
Other current assets | 32 | 1 | ||||||
Plant assets | 696 | 78 | ||||||
Goodwill | 2,866 | 202 | ||||||
Other intangible assets | 2,947 | 366 | ||||||
Other assets | 65 | — | ||||||
Short-term debt | (1 | ) | — | |||||
Accounts payable | (124 | ) | (24 | ) | ||||
Accrued liabilities | (115 | ) | (6 | ) | ||||
Deferred income taxes | (640 | ) | — | |||||
Other liabilities | (28 | ) | — | |||||
Noncontrolling interest | (47 | ) | — | |||||
Total assets acquired and liabilities assumed | $ | 6,112 | $ | 688 |
2018 | 2017 | 2016 | 2015 | ||||||||||||
Restructuring charges | $ | 49 | $ | 18 | $ | 35 | $ | 102 | |||||||
Administrative expenses | 88 | 36 | 47 | 22 | |||||||||||
Cost of products sold | 45 | 4 | — | — | |||||||||||
Marketing and selling expenses | 3 | — | — | — | |||||||||||
Total pre-tax charges | $ | 185 | $ | 58 | $ | 82 | $ | 124 |
Recognized as of July 29, 2018 | |||
Severance pay and benefits | $ | 180 | |
Asset impairment/accelerated depreciation | 45 | ||
Implementation costs and other related costs | 224 | ||
Total | $ | 449 |
Total Program(1) | Change in Estimate | Recognized as of July 31, 2016 | |||||||||
Severance pay and benefits | $ | 41 | $ | (4 | ) | $ | 37 | ||||
Asset impairment | 12 | — | 12 | ||||||||
Other exit costs | 1 | — | 1 | ||||||||
Total | $ | 54 | $ | (4 | ) | $ | 50 |
Severance Pay and Benefits | Implementation and Integration Costs(1) | Total Charges | |||||||||
2018 charges | $ | 13 | 12 | $ | 25 | ||||||
2018 cash payments | (4 | ) | |||||||||
Accrued balance at July 29, 2018(2) | $ | 9 |
(1) | Includes other costs recognized as incurred that are not reflected in the restructuring reserve in the Consolidated Balance Sheet. The costs are included in Administrative expenses in the Consolidated Statements of Earnings. |
(2) | Includes $1 of severance pay and benefits recorded in Other liabilities in the Consolidated Balance Sheet. |
Severance Pay and Benefits | Other Restructuring Costs | Non-Cash Benefits(5) | Implementation Costs and Other Related Costs(6) | Asset Impairment/Accelerated Depreciation | Other Non-Cash Exit Costs(7) | Total Charges | ||||||||||||||||||
Accrued balance at August 3, 2014 | $ | — | $ | — | ||||||||||||||||||||
2015 charges | 87 | 8 | 7 | 22 | — | — | $ | 124 | ||||||||||||||||
2015 cash payments | (1 | ) | — | |||||||||||||||||||||
Foreign currency translation adjustment | (1 | ) | — | |||||||||||||||||||||
Accrued balance at August 2, 2015(1) | $ | 85 | $ | 8 | ||||||||||||||||||||
2016 charges | 34 | 1 | — | 47 | — | — | $ | 82 | ||||||||||||||||
2016 cash payments | (46 | ) | (9 | ) | ||||||||||||||||||||
Accrued balance at July 31, 2016(2) | $ | 73 | $ | — | ||||||||||||||||||||
2017 charges | 7 | — | — | 39 | 12 | — | $ | 58 | ||||||||||||||||
2017 cash payments | (54 | ) | — | |||||||||||||||||||||
Accrued balance at July 30, 2017(3) | $ | 26 | $ | — | ||||||||||||||||||||
2018 charges | 43 | — | 2 | 104 | 33 | 3 | $ | 185 | ||||||||||||||||
2018 cash payments | (31 | ) | — | |||||||||||||||||||||
Foreign currency translation adjustment | (1 | ) | — | |||||||||||||||||||||
Accrued balance at July 29, 2018(4) | $ | 37 | $ | — |
(1) | Includes $45 of severance pay and benefits recorded in Other liabilities in the Consolidated Balance Sheet. |
(2) | Includes $17 of severance pay and benefits recorded in Other liabilities in the Consolidated Balance Sheet. |
(3) | Includes $2 of severance pay and benefits recorded in Other liabilities in the Consolidated Balance Sheet. |
(4) | Includes $23 of severance pay and benefits recorded in Other liabilities in the Consolidated Balance Sheet. |
(5) | Represents postretirement and pension curtailment costs and pension special termination benefits. See Note 10 for additional information. |
(6) | Includes other costs recognized as incurred that are not reflected in the restructuring reserve in the Consolidated Balance Sheet. The costs are included in Administrative expenses, Cost of products sold, and Marketing and selling expenses in the Consolidated Statements of Earnings. |
(7) | Includes non-cash costs that are not reflected in the restructuring reserve in the Consolidated Balance Sheet. |
2018 | 2017 | 2016 | ||||||||||
Net sales | ||||||||||||
United States | $ | 7,032 | $ | 6,357 | $ | 6,437 | ||||||
Australia | 622 | 610 | 590 | |||||||||
Other countries | 1,031 | 923 | 934 | |||||||||
Total | $ | 8,685 | $ | 7,890 | $ | 7,961 |
2018 | 2017 | 2016 | ||||||||||
Long-lived assets | ||||||||||||
United States | $ | 2,778 | $ | 1,987 | $ | 1,967 | ||||||
Australia | 248 | 265 | 242 | |||||||||
Other countries | 207 | 202 | 198 | |||||||||
Total | $ | 3,233 | $ | 2,454 | $ | 2,407 |
2018 | 2017 | 2016 | ||||||||||
Net sales | ||||||||||||
Americas Simple Meals and Beverages | $ | 4,213 | $ | 4,256 | $ | 4,313 | ||||||
Global Biscuits and Snacks | 3,499 | 2,667 | 2,631 | |||||||||
Campbell Fresh | 970 | 967 | 1,017 | |||||||||
Corporate | 3 | — | — | |||||||||
Total | $ | 8,685 | $ | 7,890 | $ | 7,961 |
2018 | 2017 | 2016 | ||||||||||
Earnings before interest and taxes | ||||||||||||
Americas Simple Meals and Beverages | $ | 982 | $ | 1,111 | $ | 1,060 | ||||||
Global Biscuits and Snacks | 540 | 463 | 431 | |||||||||
Campbell Fresh | (43 | ) | (9 | ) | 60 | |||||||
Corporate(1) | (948 | ) | (147 | ) | (560 | ) | ||||||
Restructuring charges(2) | (62 | ) | (18 | ) | (31 | ) | ||||||
Total | $ | 469 | $ | 1,400 | $ | 960 |
2018 | 2017 | 2016 | ||||||||||
Depreciation and amortization | ||||||||||||
Americas Simple Meals and Beverages | $ | 158 | $ | 118 | $ | 117 | ||||||
Global Biscuits and Snacks | 144 | 98 | 96 | |||||||||
Campbell Fresh | 73 | 83 | 77 | |||||||||
Corporate(3) | 19 | 19 | 18 | |||||||||
Total | $ | 394 | $ | 318 | $ | 308 |
2018 | 2017 | 2016 | ||||||||||
Capital expenditures | ||||||||||||
Americas Simple Meals and Beverages | $ | 187 | $ | 117 | $ | 105 | ||||||
Global Biscuits and Snacks | 133 | 127 | 122 | |||||||||
Campbell Fresh | 46 | 47 | 74 | |||||||||
Corporate(3) | 41 | 47 | 40 | |||||||||
Total | $ | 407 | $ | 338 | $ | 341 |
(1) | Represents unallocated items. Pension and postretirement benefit mark-to-market adjustments and curtailments are included in Corporate. There were gains of $136 and $178 in 2018 and 2017, respectively, and losses of $313 in 2016. Costs related to the cost savings initiatives were $136, $40 and $47 in 2018, 2017 and 2016, respectively. Transaction and integration costs associated with the acquisition of Snyder's-Lance were $107 in 2018. Intangible asset impairment charges were $737, $212 and $141 in 2018, 2017 and 2016, respectively. See Note 5 for information on the intangible asset impairment charges. Plant asset impairment charges were $11 in 2018. A charge of $22 related to the settlement of a legal claim was included in 2018, and a gain of $25 from a settlement of a claim related to the Kelsen acquisition was included in 2016. |
(2) | See Note 7 for additional information. |
(3) | Represents primarily corporate offices. |
Units | Weighted- Average Grant-Date Fair Value | |||||
(Restricted stock units in thousands) | ||||||
Nonvested at July 30, 2017 | 1,774 | $ | 48.24 | |||
Granted | 943 | $ | 39.39 | |||
Vested | (815 | ) | $ | 43.39 | ||
Forfeited | (238 | ) | $ | 43.53 | ||
Nonvested at July 29, 2018 | 1,664 | $ | 46.66 |
Units | Weighted- Average Grant-Date Fair Value | |||||
(Restricted stock units in thousands) | ||||||
Nonvested at July 30, 2017 | 1,221 | $ | 50.86 | |||
Granted | 1,220 | $ | 44.18 | |||
Vested | (643 | ) | $ | 48.67 | ||
Forfeited | (146 | ) | $ | 48.27 | ||
Nonvested at July 29, 2018 | 1,652 | $ | 47.01 |
Options | Weighted- Average Exercise Price | Weighted- Average Remaining Contractual Life | Aggregate Intrinsic Value | |||||||||
(Options in thousands) | (In years) | |||||||||||
Outstanding at July 30, 2017 | 1,042 | $ | 52.08 | |||||||||
Granted | 575 | $ | 47.19 | |||||||||
Exercised | — | $ | — | |||||||||
Terminated | (80 | ) | $ | 50.05 | ||||||||
Outstanding at July 29, 2018 | 1,537 | $ | 50.36 | 8.2 | $ | — | ||||||
Exercisable at July 29, 2018 | 519 | $ | 51.40 | 7.5 | $ | — |
2018 | 2017 | 2016 | |||
Risk-free interest rate | 2.06% | 1.28% | 1.68% | ||
Expected dividend yield | 2.95% | 2.26% | 2.46% | ||
Expected volatility | 19.60% | 18.64% | 18.35% | ||
Expected term | 6 years | 6 years | 6 years | ||
Grant-date fair value | $6.67 | $7.51 | $6.86 |
2018 | 2017 | 2016 | |||
Risk-free interest rate | 1.58% | 0.85% | 0.92% | ||
Expected dividend yield | 2.95% | 2.26% | 2.46% | ||
Expected volatility | 19.07% | 17.78% | 17.25% | ||
Expected term | 3 years | 3 years | 3 years |
2018 | 2017 | ||||||
Commercial paper | $ | 1,140 | $ | 874 | |||
Australian notes | 348 | 152 | |||||
Notes | 300 | — | |||||
Current portion of Canadian credit facility | 90 | — | |||||
Variable-rate bank borrowings | 22 | 10 | |||||
Capital leases | 1 | 1 | |||||
Other(1) | (5 | ) | — | ||||
Total short-term borrowings | $ | 1,896 | $ | 1,037 |
(1) | Includes unamortized net discount/premium on debt issuances and debt issuance costs. |
2018 | 2017 | 2016 | |||||||||
Balance at beginning of year | $ | 64 | $ | 63 | $ | 58 | |||||
Increases related to prior-year tax positions | — | 4 | 2 | ||||||||
Decreases related to prior-year tax positions | (37 | ) | — | — | |||||||
Increases related to current-year tax positions | 2 | 4 | 3 | ||||||||
Settlements | (1 | ) | (7 | ) | — | ||||||
Increase due to acquisitions | 4 | — | — | ||||||||
Balance at end of year | $ | 32 | $ | 64 | $ | 63 |
Balance at Beginning of Period | Charged to/ (Reduction in) Costs and Expenses | Deductions | Acquisitions | Balance at End of Period | |||||||||||||||
Fiscal year ended July 29, 2018 | |||||||||||||||||||
Cash discount | $ | 4 | $ | 117 | $ | (117 | ) | $ | 2 | $ | 6 | ||||||||
Bad debt reserve | 2 | 1 | (2 | ) | 2 | 3 | |||||||||||||
Returns reserve(1) | 5 | 5 | (1 | ) | 2 | 11 | |||||||||||||
Total Accounts receivable allowances | $ | 11 | $ | 123 | $ | (120 | ) | $ | 6 | $ | 20 | ||||||||
Fiscal year ended July 30, 2017 | |||||||||||||||||||
Cash discount | $ | 4 | $ | 109 | $ | (109 | ) | $ | — | $ | 4 | ||||||||
Bad debt reserve | 3 | — | (1 | ) | — | 2 | |||||||||||||
Returns reserve(1) | 5 | — | — | — | 5 | ||||||||||||||
Total Accounts receivable allowances | $ | 12 | $ | 109 | $ | (110 | ) | $ | — | $ | 11 | ||||||||
Fiscal year ended July 31, 2016 | |||||||||||||||||||
Cash discount | $ | 5 | $ | 116 | $ | (117 | ) | $ | — | $ | 4 | ||||||||
Bad debt reserve | 4 | (1 | ) | — | — | 3 | |||||||||||||
Returns reserve(1) | 4 | 2 | (1 | ) | — | 5 | |||||||||||||
Total Accounts receivable allowances | $ | 13 | $ | 117 | $ | (118 | ) | $ | — | $ | 12 |
(1) | The returns reserve is evaluated quarterly and adjusted accordingly. During each period, returns are charged to net sales in the Consolidated Statements of Earnings as incurred. Actual returns were approximately $106 in 2018, $103 in 2017, and $95 in 2016, or less than 2% of net sales. |
• | Americas Simple Meals and Beverages segment includes the retail and food service businesses in the U.S. and Canada. The segment includes the following products: Campbell’s condensed and ready-to-serve soups; Swanson broth and stocks; Prego pasta sauces; Pace Mexican sauces; Campbell’s gravies, pasta, beans and dinner sauces; Swanson canned poultry; Plum food and snacks; V8 juices and beverages; Campbell’s tomato juice; and as of December 12, 2017, Pacific broth, soups, non-dairy beverages and other simple meals; |
• | Global Biscuits and Snacks segment represents an aggregation of the following operating segments: U.S. snacks operating segment, which includes Pepperidge Farm cookies, crackers, bakery and frozen products in U.S. retail, and Snyder’s-Lance pretzels, sandwich crackers, potato chips, tortilla chips and other snacking products in the U.S. and Europe; and the international biscuits and snacks operating segment, which includes Arnott’s biscuits in Australia and Asia Pacific, Kelsen cookies globally, the simple meals and shelf-stable beverages business in Australia and Asia Pacific, and beginning in 2018, the business in Latin America; and |
• | Campbell Fresh segment includes Bolthouse Farms fresh carrots, carrot ingredients, refrigerated beverages and refrigerated salad dressings; Garden Fresh Gourmet salsa, hummus, dips and tortilla chips; and the U.S. refrigerated soup business. |
2018 | 2017 | 2016 | ||||||||||
Net sales | ||||||||||||
Americas Simple Meals and Beverages | $ | 4,213 | $ | 4,256 | $ | 4,313 | ||||||
Global Biscuits and Snacks | 3,499 | 2,667 | 2,631 | |||||||||
Campbell Fresh | 970 | 967 | 1,017 | |||||||||
Corporate | 3 | — | — | |||||||||
Total | $ | 8,685 | $ | 7,890 | $ | 7,961 |
2018 | 2017 | 2016 | ||||||||||
Earnings before interest and taxes | ||||||||||||
Americas Simple Meals and Beverages | $ | 982 | $ | 1,111 | $ | 1,060 | ||||||
Global Biscuits and Snacks | 540 | 463 | 431 | |||||||||
Campbell Fresh | (43 | ) | (9 | ) | 60 | |||||||
Corporate(1) | (948 | ) | (147 | ) | (560 | ) | ||||||
Restructuring charges(2) | (62 | ) | (18 | ) | (31 | ) | ||||||
Total | $ | 469 | $ | 1,400 | $ | 960 |
2018 | 2017 | 2016 | ||||||||||
Depreciation and amortization | ||||||||||||
Americas Simple Meals and Beverages | $ | 158 | $ | 118 | $ | 117 | ||||||
Global Biscuits and Snacks | 144 | 98 | 96 | |||||||||
Campbell Fresh | 73 | 83 | 77 | |||||||||
Corporate(3) | 19 | 19 | 18 | |||||||||
Total | $ | 394 | $ | 318 | $ | 308 |
2018 | 2017 | 2016 | ||||||||||
Capital expenditures | ||||||||||||
Americas Simple Meals and Beverages | $ | 187 | $ | 117 | $ | 105 | ||||||
Global Biscuits and Snacks | 133 | 127 | 122 | |||||||||
Campbell Fresh | 46 | 47 | 74 | |||||||||
Corporate(3) | 41 | 47 | 40 | |||||||||
Total | $ | 407 | $ | 338 | $ | 341 |
(1) | Represents unallocated items. Pension and postretirement benefit mark-to-market adjustments and curtailments are included in Corporate. There were gains of $136 and $178 in 2018 and 2017, respectively, and losses of $313 in 2016. Costs related to the cost savings initiatives were $136, $40 and $47 in 2018, 2017 and 2016, respectively. Transaction and integration costs associated with the acquisition of Snyder's-Lance were $107 in 2018. Intangible asset impairment charges were $737, $212 and $141 in 2018, 2017 and 2016, respectively. See Note 5 for information on the intangible asset impairment charges. Plant asset impairment charges were $11 in 2018. A charge of $22 related to the settlement of a legal claim was included in 2018, and a gain of $25 from a settlement of a claim related to the Kelsen acquisition was included in 2016. |
(2) | See Note 7 for additional information. |
(3) | Represents primarily corporate offices. |
2018 | 2017 | 2016 | ||||||||||
Net sales | ||||||||||||
Soup | $ | 2,615 | $ | 2,673 | $ | 2,690 | ||||||
Snacks | 3,344 | 2,511 | 2,479 | |||||||||
Other simple meals | 1,699 | 1,698 | 1,702 | |||||||||
Beverages | 1,024 | 1,008 | 1,090 | |||||||||
Other | 3 | — | — | |||||||||
Total | $ | 8,685 | $ | 7,890 | $ | 7,961 |
2018 | 2017 | 2016 | ||||||||||
Net sales | ||||||||||||
United States | $ | 7,032 | $ | 6,357 | $ | 6,437 | ||||||
Australia | 622 | 610 | 590 | |||||||||
Other countries | 1,031 | 923 | 934 | |||||||||
Total | $ | 8,685 | $ | 7,890 | $ | 7,961 |
2018 | 2017 | 2016 | ||||||||||
Long-lived assets | ||||||||||||
United States | $ | 2,778 | $ | 1,987 | $ | 1,967 | ||||||
Australia | 248 | 265 | 242 | |||||||||
Other countries | 207 | 202 | 198 | |||||||||
Total | $ | 3,233 | $ | 2,454 | $ | 2,407 |
2018 | 2017 | ||||||
Accounts receivable | |||||||
Customer accounts receivable | $ | 734 | $ | 561 | |||
Allowances | (20 | ) | (11 | ) | |||
Subtotal | $ | 714 | $ | 550 | |||
Other | 71 | 55 | |||||
$ | 785 | $ | 605 | ||||
Inventories | |||||||
Raw materials, containers and supplies | $ | 478 | $ | 377 | |||
Finished products | 721 | 525 | |||||
$ | 1,199 | $ | 902 | ||||
Other current assets | |||||||
Fair value of derivatives | $ | 10 | $ | 9 | |||
Other | 76 | 65 | |||||
$ | 86 | $ | 74 | ||||
Plant assets | |||||||
Land | $ | 122 | $ | 64 | |||
Buildings | 1,870 | 1,557 | |||||
Machinery and equipment | 4,751 | 4,243 | |||||
Projects in progress | 211 | 179 | |||||
Total cost | $ | 6,954 | $ | 6,043 | |||
Accumulated depreciation(1) | (3,721 | ) | (3,589 | ) | |||
$ | 3,233 | $ | 2,454 | ||||
Other assets | |||||||
Investments | $ | 92 | $ | 69 | |||
Deferred taxes | 30 | 36 | |||||
Pensions | 61 | 8 | |||||
Other | 41 | 26 | |||||
$ | 224 | $ | 139 |
2018 | 2017 | ||||||
Accrued liabilities | |||||||
Accrued compensation and benefits | $ | 220 | $ | 241 | |||
Fair value of derivatives | 5 | 43 | |||||
Accrued trade and consumer promotion programs | 189 | 131 | |||||
Accrued interest | 103 | 34 | |||||
Restructuring | 22 | 24 | |||||
Other | 137 | 88 | |||||
$ | 676 | $ | 561 | ||||
Other liabilities | |||||||
Pension benefits | $ | 150 | $ | 261 | |||
Deferred compensation | 90 | 96 | |||||
Postretirement benefits | 206 | 247 | |||||
Transition tax on unremitted foreign earnings | 7 | — | |||||
Unrecognized tax benefits | 22 | 34 | |||||
Restructuring | 24 | 2 | |||||
Other | 70 | 57 | |||||
$ | 569 | $ | 697 |
(1) | Depreciation expense was $360 in 2018, $299 in 2017 and $288 in 2016. Buildings are depreciated over periods ranging from 7 to 45 years. Machinery and equipment are depreciated over periods generally ranging from 2 to 20 years. |