The following items impacted the comparability of net earnings and net earnings per share:
Continuing Operations
• In the third quarter of fiscal 2009, the company recorded pre-tax restructuring related costs of $6 million ($4 million after tax or $.01 per share) in Cost of products sold associated with the previously announced initiatives to improve operational efficiency and long-term profitability. In the nine-months ended May 3, 2009, the company recorded pre-tax restructuring related costs of $21 million ($14 million after tax or $.04 per share) in Cost of products sold. In the third quarter of fiscal 2008, the company recorded a pre-tax restructuring charge of $172 million ($100 million after tax or $.26 per share) associated with the previously announced initiatives. See Note (m) to the Consolidated Financial Statements and "Restructuring Charges" for additional information;

• In the third quarter of fiscal 2009, the company recognized an $11 million ($7 million after tax or $.02 per share) favorable net adjustment on commodity hedge positions. The aggregate year-to-date impact from open commodity hedges was $14 million ($9 million after tax or $.02 per share) of unrealized losses;

• In the second quarter of fiscal 2008, the company recognized a non-cash tax benefit of $13 million ($.03 per share) from the favorable resolution of a state tax contingency in the United States;

Discontinued Operations
• In the second quarter of fiscal 2009, the company recorded a $4 million tax benefit ($.01 per share) related to the sale of the Godiva Chocolatier business; and

• 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) from the sale of the Godiva Chocolatier business. The total after tax gain recognized in fiscal 2008 on the sale was $462 million or $1.20 per share as certain costs were recognized in the second quarter.

The items impacting comparability are summarized below:

                                                                    Three Months Ended
                                                           2009                            2008
                                                 Earnings           EPS           Earnings           EPS
(millions, except per share amounts)              Impact          Impact           Impact          Impact

Earnings from continuing operations              $     174        $  0.49        $       54        $  0.14


Earnings from discontinued operations            $       -        $     -        $      478        $  1.25


Net earnings1                                    $     174        $  0.49        $      532        $  1.40


Continuing operations:

Restructuring charges and related costs          $       4        $  0.01        $      100        $  0.26

Net adjustment on commodity hedges                      (7 )        (0.02 )               -              -

Discontinued operations:

Gain on sale of Godiva Chocolatier business      $       -        $     -        $     (467 )      $ (1.23 )


Impact of significant items on net earnings      $      (3 )      $ (0.01 )      $     (367 )      $ (0.97 )

1 The sum of the individual per share amounts does not equal due to rounding.

The company reported earnings from continuing operations of $174 million for the third quarter ended May 3, 2009, versus $54 million in the comparable quarter a year ago. Earnings per share from continuing operations were $.49 compared to $.14 a year ago. After factoring in the items impacting comparability, earnings from continuing operations increased primarily due to lower administrative costs, improved gross margin performance and lower advertising, partially offset by the unfavorable impact of currency. Earnings per share from continuing operations in the current quarter benefited from a reduction in the weighted average diluted shares outstanding, which was primarily due to share repurchases utilizing the net proceeds from the divestiture of the Godiva Chocolatier business and the company's strategic share repurchase programs. Earnings per share from continuing operations were negatively impacted by $.04 from currency translation in 2009.
Earnings from discontinued operations in the prior-year quarter were $478 million, or $1.25 per share, and included the $467 million gain from the sale of the Godiva Chocolatier business. The operations of Godiva contributed to earnings of $.03 per share in 2008.

After factoring in the items impacting comparability, net earnings and net earnings per share increased. Net earnings per share were negatively impacted by $.04 from currency translation in 2009. Net earnings per share in the current quarter benefited from a reduction in the weighted average diluted shares outstanding, primarily due to share repurchases utilizing the net proceeds from the divestiture of the Godiva Chocolatier business and the company's strategic share repurchase programs.

                                                                  Nine Months Ended
                                                        2009                            2008
                                              Earnings           EPS           Earnings           EPS
(millions, except per share amounts)           Impact          Impact           Impact          Impact

Earnings from continuing operations           $     663        $  1.84        $      582        $  1.51


Earnings from discontinued operations         $       4        $  0.01        $      494        $  1.28


Net earnings                                  $     667        $  1.85        $    1,076        $  2.79


Continuing operations:

Restructuring charges and related costs       $      14        $  0.04        $      100        $  0.26

Unrealized losses on commodity hedges                 9           0.02                 -              -

Benefit from resolution of state tax
contingency                                           -              -               (13 )        (0.03 )

Discontinued operations:

Tax benefit from the sale of Godiva
Chocolatier business                          $      (4 )      $ (0.01 )      $        -        $     -

Gain on sale of Godiva Chocolatier
business                                              -              -              (462 )        (1.20 )


Impact of significant items on net
earnings                                      $      19        $  0.05        $     (375 )      $ (0.97 )

For the nine-months ended May 3, 2009, net sales decreased 4% to $6.058 billion from $6.283 billion last year. The impact of currency translation and divestitures accounted for 7 percentage points of the decline. For the nine-months ended May 3, 2009, net earnings were $667 million compared to $1,076 million a year ago. Net earnings per share were $1.85 compared to $2.79 a year ago.

For the nine-months ended May 3, 2009, earnings from continuing operations were $663 million compared to $582 million a year ago. Earnings per share from continuing operations were $1.84 compared to $1.51 a year ago. After factoring in the items impacting comparability, earnings from continuing operations increased compared to the prior year primarily due to lower interest expense and reduced administrative costs, which were partly offset by the negative impact of currency translation. After factoring in the items impacting comparability, earnings per share from continuing operations increased in the current period due in part to the benefit from a reduction in the weighted average diluted shares outstanding. The reduction was primarily due to share repurchases utilizing the net proceeds from the divestiture of the Godiva Chocolatier business and the company's strategic share repurchase programs. Earnings per share from continuing operations were negatively impacted by $.08 from currency translation in fiscal 2009.
For the nine-months ended May 3, 2009, earnings from discontinued operations of $4 million represented an adjustment to the tax liability associated with the sale of the Godiva Chocolatier business. Earnings from discontinued operations were $494 million in 2008 and included the $462 million gain from the sale of the Godiva Chocolatier business. Earnings per share from discontinued operations were $.01 in 2009 and $1.28 in 2008. The operations of Godiva contributed to earnings of $.08 per share in 2008.
After factoring in the items impacting comparability, net earnings declined due to the impact of the Godiva divestiture, partially offset by higher earnings from continuing operations. Net earnings per share increased reflecting a reduction in the weighted average diluted shares outstanding, which was primarily due to share repurchases utilizing the net proceeds from the divestiture of the Godiva Chocolatier business and the company's strategic share repurchase programs.
Developments in Key Strategic Initiatives The company continues to implement previously announced plans and programs intended to advance its seven key strategies to achieve long-term sustainable sales and earnings growth. These plans and programs, which include a number of initiatives designed to meet the growing consumer interest in health and nutrition, are more fully described in the company's 2008 Annual Report on Form 10-K, as updated in the company's Form 10-Q for the fiscal period ended February 1, 2009. Consistent with the strategy of strengthening the company's business through outside partnerships and acquisitions, on May 4, 2009, the company completed the acquisition of artisan bread maker Ecce Panis, Inc. The company plans to run the Ecce Panis business as part of its Pepperidge Farm bakery operations. On May 26, 2009, the company announced it had entered into an agreement with Coca-Cola Hellenic Bottling Company S.A. for the distribution of Campbell's Domashnaya Klassika (Campbell's Home Classics) concentrated broth and other soup products in Russia. This arrangement is expected to significantly expand distribution of the company's products in Russia.

THIRD QUARTER
Sales
An analysis of net sales by reportable segment follows:

                                                       (millions)
                                                    2009        2008       % Change

       U.S. Soup, Sauces and Beverages            $   808     $   811           - %
       Baking and Snacking                            431         502         (14 )
       International Soup, Sauces and Beverages       297         400         (26 )
       North America Foodservice                      150         167         (10 )

                                                  $ 1,686     $ 1,880         (10 )%

An analysis of percent change of net sales by reportable segment follows:

                                                                          International
                                       U.S. Soup,         Baking              Soup,                North
                                       Sauces and          and             Sauces and             America
                                       Beverages         Snacking           Beverages           Foodservice         Total
Volume and Mix                             (7 )%             (2 )%               (7 )%                 (8 )%          (6 )%
Price and Sales Allowances                  5                 6                   5                     6              6
(Increased)/Decreased
Promotional Spending 1                      1                (1 )                (3 )                  (5 )           (1 )
Currency                                    -                (9 )               (16 )                  (3 )           (6 )
Acquisitions/(Divestitures)                 1                (8 )                (5 )                   -             (3 )

                                            - %             (14 )%              (26 )%                (10 )%         (10 )%

1 Represents revenue reductions from trade promotion and consumer coupon redemption programs.

In U.S. Soup, Sauces and Beverages, total U.S. soup sales decreased 2 percent. Sales of condensed soups increased 2 percent with gains in cooking varieties, which benefited from increased at-home eating, partially offset by a decline in eating varieties. Sales of ready-to-serve soups decreased 7 percent due to declines in sales of the convenience platform, which includes soups in microwavable bowls and cups. Broth sales decreased 2 percent. U.S. soup sales benefited from the Wolfgang Puck soup, stock and broth business acquired in June 2008. Beverage sales decreased primarily due to a decline in V8 vegetable juice. Prego pasta sauce sales and PaceMexican sauce sales increased double digits as consumers increased at-home eating.
In Baking and Snacking, Pepperidge Farm achieved sales growth with double-digit gains in Goldfishsnack crackers and in Milano cookies. The introduction of Granola cookies contributed to the increase. On an as reported basis, Arnott's sales declined due to the divestiture of certain salty snack food brands in May 2008, the reduction of the private label biscuit and industrial chocolate businesses associated with the closing of a production facility in Australia and the unfavorable

impact of currency. Excluding these items, Arnott's sales increased due to solid growth in both savory and sweet biscuit products with especially strong growth in Indonesia.
In International Soup, Sauces and Beverages, sales decreased in Europe primarily due to the unfavorable impact of currency, the divestiture of the company's French sauce and mayonnaise business in September 2008, and lower sales in Germany and France. In Canada, sales declined due to the unfavorable impact of currency and lower soup sales. In Asia Pacific, sales increased primarily due to gains in the Australian soup business and Malaysia, partially offset by the unfavorable impact of currency.
In North America Foodservice, excluding the impact of currency, sales declined primarily due to weakness in the food service sector. Gross Profit
Gross profit, defined as Net sales less Cost of products sold, decreased from $726 million in 2008 to $685 million in 2009. As a percent of sales, gross profit increased from 38.6% in 2008 to 40.6% in 2009. The percentage point increase was due to higher selling prices (approximately 3.8 percentage points), productivity improvements (approximately 2.0 percentage points), mix (approximately 0.7 percentage point), and a favorable net adjustment on commodity hedge positions (approximately 0.7 percentage point), partially offset by costs related to the initiatives to improve operational efficiency and long-term profitability (approximately 0.4 percentage point), increased promotional spending (approximately 0.6 percentage point), and the impact of cost inflation and other factors (approximately 4.2 percentage points). Marketing and Selling Expenses
Marketing and selling expenses as a percent of sales were 14.6% in 2009 and 15.1% in 2008. Marketing and selling expenses decreased 13% in 2009 from 2008. The decrease was primarily due to the impact of currency (approximately 5 percentage points), lower advertising expenses (approximately 3 percentage points) and lower selling expenses (approximately 2 percentage points). The lower advertising expense was primarily in U.S. Soup, Sauces and Beverages, following a significant first half increase to support the launch of new soup products.
Administrative Expenses
Administrative expenses as a percent of sales were 7.7% in 2009 and 8.4% in 2008. Administrative expenses decreased by 18% in 2009 from 2008, primarily due to the impact of currency (approximately 5 percentage points), lower long-term compensation costs (approximately 8 percentage points), and the impact of cost reduction efforts and other factors (approximately 5 percentage points).

Operating Earnings
An analysis of operating earnings by reportable segment follows:

                                                            (millions)
                                                          20091     20082

              U.S. Soup, Sauces and Beverages            $ 195     $ 172
              Baking and Snacking                           57       (92 )
              International Soup, Sauces and Beverages      29        40
              North America Foodservice                     13        (4 )

                                                           294       116
              Corporate                                     (8 )     (34 )

                                                         $ 286     $  82

1 Operating earnings by segment include restructuring related costs of $1 million in Baking and Snacking and $5 million in North America Foodservice and a favorable net adjustment from the change in valuation of commodity hedges of $11 million in Corporate. See Note
(m) for
additional
information
on
restructuring
charges.

2 Operating earnings by segment include a restructuring charge of $172 million as follows:
Baking and
Snacking -
$144 million,
International
Soup, Sauces
and Beverages
- $6 million, and North America Foodservice - $22 million. See Note
(m) for
additional
information.

Earnings from U.S. Soup, Sauces and Beverages increased 13% in 2009 versus 2008, due to lower advertising following significant increases in the first half, and lower administrative expenses.
Earnings from Baking and Snacking were $57 million in 2009 compared to a loss of $92 million in 2008. The current quarter included $1 million in other exit costs and the prior-year quarter included $144 million of restructuring charges related to the initiatives to improve operational efficiency and long-term profitability. The remaining increase was due to gains in Pepperidge Farm and Arnott's, partially offset by the unfavorable impact of currency. Earnings from International Soup, Sauces and Beverages decreased 28%, or $11 million, in 2009 versus 2008. The prior-year quarter included $6 million of restructuring charges related to the initiatives to improve operational efficiency and long-term profitability. The remaining decline in operating earnings was due to the unfavorable impact of currency and lower earnings in Europe, partially offset by gains in the Asia Pacific region and Canada. Earnings from North America Foodservice were $13 million in 2009 compared to a loss of $4 million in 2008. The current quarter included $5 million in accelerated depreciation and other exit costs and the prior-year quarter included $22 million of restructuring charges related to the initiatives to improve operational efficiency and long-term profitability. Excluding these charges, operating earnings were comparable to a year ago.
Corporate expenses in 2009 decreased from $34 million in 2008 to $8 million. The decrease was due to an $11 million favorable net adjustment from the change in valuation of commodity hedging included in the current year, lower long-term compensation costs and lower expenses associated with the implementation of the SAP enterprise-resource planning system in North America. Beginning in fiscal 2009, unrealized gains and losses on commodity hedging activities are recorded in unallocated corporate expenses as these open positions represent hedges of future purchases.

Upon closing of the contracts, the realized gain or loss is transferred to segment operating earnings. This allows the segments to reflect the economic effects of the hedge without exposure to quarterly volatility of unrealized gains and losses. In prior periods, unrealized gains and losses on commodity hedging activities were not material.
Nonoperating Items
Net interest expense decreased to $26 million from $37 million in the prior year, primarily due to significantly lower short-term interest rates. The effective tax rate for the quarter was 33.1% in 2009. The effective rate benefit for the year-ago quarter was 20%. The prior-year quarter included a $72 million tax benefit on the $172 million pre-tax restructuring charge. After factoring in the restructuring related benefit, the effective rate increased primarily due to the benefit of tax planning strategies which reduced the rate in fiscal 2008.

NINE MONTHS
Sales
An analysis of net sales by reportable segment follows:

                                                       (millions)
                                                    2009        2008       % Change

       U.S. Soup, Sauces and Beverages            $ 3,134     $ 3,001           4 %
       Baking and Snacking                          1,380       1,525         (10 )
       International Soup, Sauces and Beverages     1,068       1,248         (14 )
       North America Foodservice                      476         509          (6 )

                                                  $ 6,058     $ 6,283          (4 )%

An analysis of percent change of net sales by reportable segment follows:

                                                                          International
                                       U.S. Soup,         Baking              Soup,                North
                                       Sauces and          and             Sauces and             America
                                       Beverages         Snacking           Beverages           Foodservice        Total
Volume and Mix                             (2 )%             (2 )%               (4 )%                 (8 )%         (2 )%
Price and Sales Allowances                  8                 8                   5                     6             7
Increased Promotional Spending 1           (2 )              (2 )                (1 )                  (2 )          (2 )
Currency                                    -                (6 )               (11 )                  (2 )          (4 )
Divestitures                                -                (8 )                (3 )                   -            (3 )

                                            4 %             (10 )%              (14 )%                 (6 )%         (4 )%

1 Represents revenue reductions from trade promotion and consumer coupon redemption programs.

In U.S. Soup, Sauces and Beverages, total U.S. soup sales increased 6% as ready-to-serve soup sales increased 4%, condensed soup sales increased 6% and broth sales increased 10%. The ready-to-serve soup sales increase was primarily due to the successful launches of Campbell's Select Harvest soups and Campbell's V8 soups, partially offset by declines in Chunky canned soups and in the convenience platform. In condensed, sales increased in both cooking and eating varieties. The increase in broth sales was driven by the growth of the base business and the introduction of Swanson stock products. The Wolfgang Puck soup, stock and broth business acquired in June 2008 contributed modestly to soup sales growth. Beverage sales decreased slightly due to declines in V8vegetable juice, partially offset by gains in V8 V-Fusion juice. Prego pasta sauce sales increased double digits and sales of Pace Mexican sauces increased as consumers increased at-home eating.
In Baking and Snacking, Pepperidge Farm achieved sales growth with gains in the cookies and crackers and bakery businesses. On an as reported basis, Arnott's sales declined due to the divestiture of certain salty snack food brands in May 2008 and the unfavorable impact of currency. Excluding these items, Arnott's sales increased due to significant growth in savory crackers. Sales of biscuits in Indonesia grew strongly.
In International Soup, Sauces and Beverages, sales declined primarily due to the impact of currency and divestitures. Excluding currency and divestitures, sales were comparable to a year ago as gains in Asia Pacific and Canada were offset by declines in Europe.
In North America Foodservice, sales declined primarily due to weakness in the food service sector and the unfavorable impact of currency.

Gross Profit
Gross profit, defined as Net sales less Cost of products sold, decreased from $2.507 billion in 2008 to $2.393 billion in 2009. As a percent of sales, gross profit decreased from 39.9% in 2008 to 39.5% in 2009. The percentage point decrease was due to unrealized losses on commodity hedges (approximately . . .