Campbell Soup Co (NYSE:CPB) recently reported its fourth quarter earnings and discussed the following topics in its earnings conference call.
Gross Margin Expansion
Andrew Lazar – Barclays Capital: Craig, I am wondering, I guess, why for – both the fourth quarter and the full year even when you exclude the negative mix impact on gross margin from the addition of Bolthouse. Maybe why we haven’t seen more significant gross margin expansion just because some of the high margin businesses, obviously, did quite well over the course of this past year and into the fourth quarter meaning Simple Meals, Pepperidge Farm, and such. So, little more color on that would helpful?
B. Craig Owens – SVP, CFO and CAO: Certainly, the success of soup this year has been a positive influence on gross margin, a more negative influence would have been somewhat higher promotional spend for the year and it brings us back to about flat at gross margin, excluding the impact of ruling in the acquisition.
Andrew Lazar – Barclays Capital: Maybe thoughts on just how that might look as we think forward for the year coming into ’14 around gross margin?
B. Craig Owens – SVP, CFO and CAO: As we look at gross margin and I think maybe we said this at Analyst Day, we see slightly mitigated inflationary pressure and we continue to forecast pretty good results from our Enabler Program and productivity savings, those should largely be offsetting. We’ve got a price increase that we talked about in our condensed soup line. It will not have quite as much positive impact as last year’s increase because we have not moved up promotional price points. So you’ve got some positives and some negatives. I guess it would be slightly positive to gross profit as we – to gross margin as we look forward.
Jason English – Goldman Sachs: I wanted to circle back on Europe. I guess I was surprised by the probability there and the impact on earnings. It seems like you’ve given us all the bad, but none of the potential good on this. So can you talk a little bit about the magnitude of stranded cost, the path to potentially working those down, anticipated proceeds, potential tax leakage and then use of that cash?
B. Craig Owens – SVP, CFO and CAO: So, with respect to stranded cost there is about $10 million of overhead that has previously been associated with Europe. So that’s not included in the discounted ops line, it moves back into corporate as we change the accounting there. Since the deal has not been completed, we are not disclosing at this point the sale price. As we look forward, we expect assuming everything goes well with the consultation with works councils and government approvals that we would probably close the deal in the first quarter. And then we would have all the details out on the sale proceeds and the tax impact there.
Jason English – Goldman Sachs: The $10 million of overhead and just staying on overhead, I noticed admin expenses for the firm overall as a percentage of sales are at a decade high. You’re talking a lot about productivity. Why aren’t you going more aggressively after attacking some of these costs?
B. Craig Owens – SVP, CFO and CAO: So, inside of the administrative costs, particularly if you look at the quarter there is – we’re cycling last year below target incentive cost payments with higher payment levels this year. We also have for the year as we look back higher pension expense and higher health benefit cost. If you start to strip out some of those impacts we have what we would call good results in our SG&A cost, particularly at the corporate level, and we continue to look at that. If you think about productivity overall, we had a great year in our Enabler program, inside of cost of sales we had – we were right at 3%, maybe slightly over 3% and we’d expect to be there again next year.