Campbell Soup Company (NYSE:CPB) today reported net earnings for the quarter ended April 27, 2008 of $532 million, or $1.40 per share, compared to $217 million, or $0.55 per share, in the year-ago period. The current quarter’s reported net earnings included a gain from the sale of the Godiva business, partially offset by charges associated with previously announced restructuring initiatives. Excluding all items impacting comparability in both periods, adjusted net earnings were $165 million compared to $179 million in the prior year’s quarter and adjusted net earnings per share were $0.43 in the current quarter compared to $0.45 in the year-ago period.

A detailed reconciliation of the adjusted fiscal 2008 and 2007 financial information to the reported information is attached to this release.

On March 18, 2008, Campbell completed the sale of the Godiva business, the results of which are reported as discontinued operations for all periods. Additionally, in the third quarter, Campbell recorded restructuring charges related to previously announced initiatives to improve operational efficiency and enhance long-term profitability, including the sale of certain salty snack foods brands and assets in Australia, the closure of production facilities in Australia and Canada, and the streamlining of its management structure.

The current and prior quarter’s net earnings included items that impacted comparability. These items are summarized below:

In the third quarter, earnings from continuing operations were $54 million compared to $210 million in the prior year. Earnings per share from continuing operations for the current quarter were $0.14 compared to earnings per share of $0.53 in the year-ago period. Excluding items impacting comparability in both years, adjusted earnings from continuing operations in the third quarter were $154 million compared to $172 million in the year-ago period. Adjusted earnings per share from continuing operations were $0.40 compared to $0.44 in the prior-year period.

Earnings from discontinued operations for the quarter were $478 million compared to $7 million in the prior-year period. The current quarter included a $707 million pre-tax gain, $467 million after tax, or $1.23 per share, related to the sale of the Godiva business. Excluding the gain on the sale, adjusted earnings from discontinued operations were $11 million, or $0.03 per share, compared to $7 million, or $0.02 per share, a year ago.

For the third quarter, sales increased 7 percent to $1.880 billion. Sales growth for the quarter reflects the following factors:

• Volume and mix added 1 percent
• Price and sales allowances added 3 percent
• Increased promotional spending subtracted 1 percent
• Currency added 4 percent

Douglas R. Conant, Campbell's President and Chief Executive Officer, said, “We delivered solid sales growth in the quarter across many of our businesses, including beverages, baking and snacking, and international. However, in U.S. soup, as anticipated, we had a difficult third quarter as we were lapping a very strong quarter a year ago and we took significant pricing actions to address the dramatic increases in cost inflation. While third quarter adjusted net earnings were below last year, we anticipate a strong finish to our fiscal year.Looking ahead to next year, we have plans in place both in terms of new products, especially lower sodium varieties, and marketing programs that we believe will enable us to continue to grow our U.S. soup business.”

Conant continued, “Looking at our broader portfolio, we continued to have strong results in several key businesses. In healthy beverages, our U.S. beverage business again delivered double-digit sales growth. In baked snacks, both Pepperidge Farm and Arnott’s also had very solid sales gains. Our international businesses delivered improved sales performance and we continue to be encouraged by the early results in our emerging markets of Russia and China. Finally, with the sale of Godiva and our recent actions to improve operational efficiency and exit underperforming businesses in Australia, we have further sharpened our focus on simple meals, baked snacks, and healthy beverages. We believe this increased focus positions us well for long-term, profitable growth.”

Consistent with its previous guidance, Campbell expects adjusted net earnings per share growth between 5 and 7 percent from the fiscal 2007 adjusted base of $1.95.

The current and prior period’s net earnings included items that impacted comparability. These items are summarized below:

Net earnings for the nine months of fiscal 2008 were $1.076 billion, or $2.79 per share, compared to $793 million, or $1.99 per share, in the year-ago period.

Excluding items impacting comparability, adjusted net earnings were $701 million compared to $718 million in the year-ago period. Adjusted net earnings per share were $1.82 in the current period compared to $1.80 in the prior period, an increase of 1 percent.

For the nine months of fiscal 2008, earnings from continuing operations were $582 million versus $734 million a year earlier. Earnings per share from continuing operations were $1.51 compared to $1.84 a year ago.

Excluding the above-referenced items in both years, adjusted earnings from continuing operations for the nine months were $669 million compared to $682 million a year ago and adjusted earnings per share from continuing operations were $1.74 compared to $1.71 a year ago, an increase of 2 percent.

Earnings from discontinued operations for the nine months were $494 million versus $59 million a year ago. Excluding items impacting comparability in both years, adjusted earnings from discontinued operations for the nine months were $32 million, or $0.08 per share, compared to $36 million, or $0.09 per share, a year ago.

For the nine months of fiscal 2008, net sales were $6.283 billion, an increase of 7 percent. Sales growth for the nine months reflects the following factors:

• Volume and mix added 3 percent
• Price and sales allowances added 2 percent
• Increased promotional spending subtracted 1 percent
• Currency added 3 percent

Third Quarter Financial Details from Continuing Operations

• Gross margin decreased to 38.6 percent from 39.9 percent in the prior year. The decline was primarily due to escalating cost inflation, which was only partially offset by higher selling prices and productivity gains.
• Marketing and selling expense increased $7 million to $284 million, primarily due to currency.
• Administrative expense increased $30 million to $158 million. The prior year included a non-cash benefit of $20 million from the reversal of legal reserves. The remaining change is due to currency and higher compensation costs.
• Restructuring expense of $172 million included $120 million related to the impairment charges to adjust the net assets of certain Australian salty snack brands to be sold to net realizable value, $38 million for plant closures, and $14 million related to streamlining the company’smanagement structure.
• Campbell recorded a tax rate benefit of 20.0 percent compared to a tax rate expense of 13.2 percent a year ago. The current quarter included a $72 million tax benefit related to the $172 million restructuring charge. Excluding the rate impact related to restructuring, the tax rate would have been 29.0 percent. The prior year tax rate included the tax benefit from the APA settlement and a rate impact from the reversal of legal reserves. Excluding these rate impacts, the prior year tax rate would have been 21.1 percent, which benefited from the reversal of tax reserves related to the favorable resolution of the company’s 2002 to 2004 U.S. federal income tax audits.
• At the end of the quarter, total debt was $2.116 billion compared to $2.616 billion a year ago. Net debt, or total debt minus cash and cash equivalents, was $2.066 billion compared to $2.342 billion a year ago, a decrease of $276 million.

Nine Months Financial Details from Continuing Operations

• Gross margin decreased to 39.9 percent from 41.0 percent. The decline was primarily due to cost inflation and higher promotional spending, which were only partially offset by productivity gains and higher selling prices.
• Marketing and selling expense increased $54 million to $899 million, primarily due to currency and higher advertising expense.
• Administrative expense increased $39 million to $440 million. The prior year included a non-cash benefit of $20 million from the reversal of legal reserves. The remaining change is due to currency and higher compensation costs.
• Restructuring expense of $172 million included $120 million related to the impairment charges to adjust the net assets of certain Australian salty snack brands to be sold to net realizable value, $38 million for plant closures, and $14 million related to streamlining the company’s management structure.
• Other Expense was $4 million compared to Other Income of $18 million a year ago. The prior year included a $23 million gain on the sale of the idle Pepperidge Farm facility.
• Cash flow from operations for the nine months of fiscal 2008 was $574 million compared to $623 million in the prior period. The current year included a payment of approximately $230 million related to income taxes associated with the sale of the Godiva business. The prior year included payments of $186 million to settle foreign currency hedges.
• During the nine months, Campbell repurchased 12.7 million shares for $435 million under three programs: the three-year $600 million share repurchase plan announced in November 2005; the program announced in March 2008 to use approximately $600 million of the net proceeds of the sale of Godiva to repurchase shares; and Campbell’s ongoing practice of buying back shares sufficient to offset shares issued under incentive compensation plans.

Summary of Fiscal 2008 Third Quarter Results by Segment

U.S. Soup, Sauces and Beverages

Sales for U.S. Soup, Sauces and Beverages were $811 million compared to $810 million a year ago. The change in sales reflects the following factors:

• Volume and mix subtracted 1 percent
• Price and sales allowances added 2 percent
• Increased promotional spending subtracted 1 percent

Total soup sales for the quarter decreased 3 percent compared to a 10 percent increase in the year-ago quarter, driven by the following:

• Sales of “Campbell’s” condensed soups were flat. Sales growth in eating varieties was offset by a decline in cooking varieties. The company achieved sales gains in “Campbell’s Healthy Request” and lower sodium condensed soups.
• Sales of ready-to-serve soups decreased 9 percent. Sales of both “Campbell’s Select” and “Campbell’s Chunky” cans declined. Sales of convenience products, which include soups in microwavable bowls and cups, were down slightly as sales gains in cups were more than offset by a decline in bowls. Across the ready-to-serve portfolio, sales were adversely impacted by less effective promotional spending and lower levels of advertising.
• U.S. soup sales benefited from “Campbell’s” lower sodium soups, which continued to perform well.
• Sales of “Swanson” broth increased 5 percent due to growing consumer demand for aseptically-packaged broths and the introduction of additional sizes of aseptic varieties.

Highlights of this segment’s other businesses include:

• Beverage sales increased double digits due to growth in “V8 V-Fusion” juice. The introduction of new flavor varieties helped drive “V8 V-Fusion” juice sales. Sales of “V8” vegetable juice declined slightly in the quarter compared to a very strong quarter a year ago.
• “Prego” pasta sauce sales were flat, and sales of “Pace” Mexican sauces decreased slightly.

Operating earnings were $172 million compared with $181 million in the prior-year period. The decrease in operating earnings was primarily due to cost inflation, partially offset by higher net selling prices and productivity gains.

For the nine months, U.S. Soup, Sauces and Beverages sales increased 4 percent to $3.001 billion. A breakdown of the change in sales follows:

• Volume and mix added 4 percent
• Price and sales allowances added 1 percent
• Increased promotional spending subtracted 1 percent

For the nine months, soup sales increased 1 percent compared to a 6 percent increase a year ago.

• Sales of condensed soup declined 1 percent
• Sales of ready-to-serve soup were flat
• Broth sales increased 11 percent

Operating earnings were $767 million compared to $777 million in the year-ago period. The decline in operating earnings was driven by cost inflation and higher promotional and advertising spending, which was only partially offset by higher sales and productivity improvements.

Baking and Snacking

Sales for Baking and Snacking were $502 million, an increase of 14 percent from a year ago. A breakdown of the change in sales follows:

• Volume and mix added 4 percent
• Price and sales allowances added 6 percent
• Increased promotional spending subtracted 1 percent
• Currency added 6 percent
• The divestiture of the company’s Papua New Guinea operations subtracted 1 percent

Further details of sales results include the following:

Operating losses were $92 million compared with $45 million of operating earnings a year ago. The current quarter included $144 million of restructuring charges. The remaining increase in operating earnings was primarily driven by the favorable impact of currency and gains at Arnott’s. Pepperidge Farm earnings were flat due to higher commodity costs.

For the nine months, sales increased 11 percent to $1.525 billion. A breakdown of the change in sales follows:

• Volume and mix added 2 percent
• Price and sales allowances added 5 percent
• Currency added 5 percent
• The divestiture of the company’s Papua New Guinea operations subtracted 1 percent

Operating earnings were $48 million compared to $189 million in the year-ago period. The current period included $144 million of restructuring charges. Operating earnings in the prior period included a $23 million gain from the sale of the Pepperidge Farm facility. Excluding the gain from the sale and restructuring charges, the remaining increase in operating earnings was primarily due to the favorable impact of currency and strong performance in Pepperidge Farm and Arnott’s biscuits, partially offset by a decline in the snack foods business.

International Soup, Sauces and Beverages

Sales for International Soup, Sauces and Beverages were $400 million, an increase of 17 percent compared to a year ago. The change in sales reflects the following factors:

• Volume and mix added 3 percent
• Price and sales allowances subtracted 1 percent
• Reduced promotional spending added 1 percent
• Currency added 14 percent

Further details of sales results include the following:

• Sales in Europe increased primarily due to the favorable impact of currency, partially offset by a decline in Germany, where the company exited the private label soup business.
• Sales in the Asia Pacific region increased due to the favorable impact of currency and double-digit growth in the Australian soup business.
• Canada sales increased due to the favorable impact of currency and growth in ready-to-serve soup and beverages.

Operating earnings were $40 million compared to $43 million in the year-ago period. The current quarter included $6 million in restructuring charges. The remaining increase in operating earnings was driven by the favorable impact of currency and gains in Australia and Canada, partially offset by costs associated with the launch of new products in Russia and China.

For the nine months, sales increased 14 percent to $1.248 billion. A breakdown of the change in sales follows:

• Volume and mix added 3 percent
• Currency added 11 percent

Operating earnings increased to $152 million from $150 million in the year-ago period. The current period included $6 million of restructuring charges. The remaining increase in operating earnings was primarily due to the favorable impact of currency and gains in the Australian soup business, partially offset by costs associated with the launch of new products in Russia and China.

North America Foodservice

Sales were $167 million, an increase of 6 percent. A breakdown of the change in sales follows:

• Volume and mix subtracted 1 percent
• Price and sales allowances added 2 percent
• Reduced promotional spending added 3 percent
• Currency added 2 percent

Excluding the favorable impact of currency, sales growth was driven by gains in canned and frozen soup, partially offset by a decline in refrigerated soup.

Operating losses were $4 million compared to operating earnings of $13 million in the prior period. The current quarter included $22 million of restructuring charges. The remaining increase in operating earnings was primarily due to higher sales.

For the nine months, sales increased 2 percent to $509 million. A breakdown of the change in sales follows:

• Price and sales allowances added 1 percent
• Increased promotional spending subtracted 1 percent
• Currency added 2 percent.

Operating earnings decreased to $40 million from $61 million in the year-ago period. The current period included $22 million of restructuring charges.

Non-GAAP Financial Information

A reconciliation of the adjusted fiscal 2008 and 2007 financial information to the reported financial information is attached to this release and can also be found on the company’s website at www.campbellsoupcompany.com in the “Investor Center” section.

Conference Call

The company will host a conference call to discuss these results on May 19, 2008 at 10:00 a.m. Eastern Standard Time. U.S. participants may access the call at 1-866-814-1913 and non-U.S. participants at 1-703-639-1357. Participants should call at least five minutes prior to the starting time. The passcode is “Campbell Soup” and the conference leader is Len Griehs. The call will also be broadcast live over the Internet at www.campbellsoupcompany.com and can be accessed by clicking on the “Shareholder Event / Webcast” banner. A recording of the call will be available approximately two hours after it is completed through midnight May 26, 2008 at 1-888-266-2081 or 1-703-925-2533. The access code is 1236095.

Reporting Segments

Campbell Soup Company earnings results are reported for the following segments:

U.S. Soup, Sauces and Beverages includes the following retail businesses: “Campbell’s” brand condensed and ready-to-serve soups, “Swanson” broth and canned poultry businesses, “Prego” pasta sauce, “Pace” Mexican sauce, “Campbell’s Chunky” chili, “Campbell’s” canned pasta, gravies and beans, “Campbell’s Supper Bakes” meal kits, “V8” vegetable juices, “V8 V-Fusion” juices, “V8 Splash” juice beverages, and “Campbell’s” tomato juice.

Baking and Snacking includes the following businesses: “Pepperidge Farm” cookies, crackers, breads and frozen products in U.S. retail, “Arnott’s” biscuits in Australia and Asia Pacific, and “Arnott’s” salty snacks in Australia.

International Soup, Sauces and Beverages includes the soup, sauce and beverage businesses outside of the United States, including Canada, Europe, Mexico, Latin America, and the Asia Pacific region.

North America Foodservice includes the Away From Home business in the U.S. and Canada.

About Campbell Soup Company

Campbell Soup Company is a global manufacturer and marketer of high-quality foods and simple meals, including soup, baked snacks, and healthy beverages. Founded in 1869, the company has a portfolio of market-leading brands, including “Campbell’s,”“Pepperidge Farm,”“Arnott’s,” and “V8.” For more information on the company, visit Campbell’s website at www.campbellsoup.com.

Forward-Looking Statements

This release contains “forward-looking statements” that reflect the company’s current expectations about its future plans and performance, including statements concerning the impact of marketing investments and strategies, pricing, share repurchase, new product introductions and innovation, cost-saving initiatives, quality improvements, and portfolio strategies, including divestitures, on sales, earnings, and margins. These forward-looking statements rely on a number of assumptions and estimates that could be inaccurate and which are subject to risks and uncertainties. Actual results could vary materially from those anticipated or expressed in any forward-looking statement made by the company. Please refer to the company’s most recent Form 10-K and subsequent filings for a further discussion of these risks and uncertainties. The company disclaims any obligation or intent to update the forward-looking statements in order to reflect events or circumstances after the date of this release.

Reconciliation of GAAP and Non-GAAP Financial Measures

Third Quarter Ended April 27, 2008

Campbell Soup Company uses certain non-GAAP financial measures as defined by the Securities and Exchange Commission in certain communications. These non-GAAP financial measures are measures of performance not defined by accounting principles generally accepted in the United States and should be considered in addition to, not in lieu of, GAAP reported measures.

Net Debt

The company believes that net debt is a non-GAAP measure that provides additional meaningful comparisons between the company’s financial position at April 27, 2008 and April 29, 2007, and also a useful perspective on the financial condition of the business. Interest income earned on cash and cash equivalents partially offsets interest expense on debt. Cash and cash equivalents are available to repay outstanding debt upon maturity.

The table below summarizes information on total debt and cash and cash equivalents:

Items Impacting Net Earnings

The company believes that financial information excluding certain transactions not considered to be part of the ongoing business improves the comparability of year-to-year results. Consequently, the company believes that investors may be able to better understand its earnings results if these transactions are excluded from the results.

The following items impacted net earnings:

(1) In the third quarter of fiscal 2008, the company recorded a pre-tax charge of $172 million ($100 million after tax or $0.26 per share) in earnings from continuing operations associated with the previously announced initiatives to improve operational efficiency and long-term profitability, including selling certain salty snack food brands and assets in Australia, closing certain production facilities in Australia and Canada, and streamlining the company’s management structure.

(2) In the third quarter of fiscal 2008, the company recognized a pre-tax gain of $707 million ($467 million after tax or $1.23 per share) in earnings from discontinued operations from the sale of the Godiva Chocolatier business. The total after-tax gain on the sale was $462 million or $1.20 per share.

(3) In the second quarter of fiscal 2008, the company recorded a non-cash tax benefit of $13 million ($0.03 per share) in earnings from continuing operations from the favorable resolution of a state tax contingency in the United States.

(4) In the third quarter of fiscal 2007, the company recorded a pre-tax non-cash benefit of $20 million ($13 million after tax or $0.03 per share) in earnings from continuing operations from the reversal of legal reserves due to favorable results in litigation.

(5) In the third quarter of fiscal 2007, the company recorded a tax benefit of $22 million resulting from the settlement of bilateral advance pricing agreements (“APA”) among the company, the United States, and Canada related to royalties. In addition, the company reduced net interest expense by $4 million ($3 million after tax). The aggregate impact on earnings from continuing operations was $25 million or $0.06 per share.

(6) In the second quarter of fiscal 2007, the company recorded a pre-tax gain of $23 million ($14 million after tax or $0.04 per share) in earnings from continuing operations associated with the sale of an idle manufacturing facility.

(7) In the first quarter of fiscal 2007, the company completed the sale of its businesses in the United Kingdom and Ireland. The total after-tax gain recognized on the sale in 2007 in earnings from discontinued operations was $24 million ($0.06 per share). Of this amount, $1 million was recognized in the fourth quarter of fiscal 2007. Additionally, in the fourth quarter of fiscal 2007, a $7 million tax benefit ($0.02 per share) was recognized from the favorable resolution of tax audits in the United Kingdom.

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