-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, M5Bj/iInlz+RKNrwoa5ckgBrin0wjh6m9Z7Cf+5e4yGBiu3bo3akZX0Xfdjns819 7iZ7zZz0PCTXmHlZNCtt5g== 0000950152-95-002924.txt : 19951214 0000950152-95-002924.hdr.sgml : 19951214 ACCESSION NUMBER: 0000950152-95-002924 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19951031 FILED AS OF DATE: 19951213 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: SMUCKER J M CO CENTRAL INDEX KEY: 0000091419 STANDARD INDUSTRIAL CLASSIFICATION: CANNED, FRUITS, VEG & PRESERVES, JAMS & JELLIES [2033] IRS NUMBER: 340538550 STATE OF INCORPORATION: OH FISCAL YEAR END: 0430 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-05111 FILM NUMBER: 95601298 BUSINESS ADDRESS: STREET 1: STRAWBERRY LN CITY: ORRVILLE STATE: OH ZIP: 44667 BUSINESS PHONE: 2166823000 MAIL ADDRESS: STREET 1: STRAWBERRY LANE, P.O. BOX 280 CITY: ORRVILLE STATE: OH ZIP: 44667 10-Q 1 THE J. M. SMUCKER COMPANY 10-Q 1 Sequential Page No. 1 of 10 Pages UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended October 31, 1995 ------------------------- OR ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to --------- --------- Commission File Number 1-5111 ------------------------------ THE J. M. SMUCKER COMPANY Ohio 34-0538550 - ----------------------- ----------------------- State of Incorporation IRS Identification No. STRAWBERRY LANE ORRVILLE, OHIO 44667 (216) 682-3000 The Company has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months and has been subject to such filing requirements for the past 90 days. The Company had 14,384,139 Class A Common Shares and 14,778,839 Class B Common Shares outstanding on October 31, 1995. The Exhibit Index is located at Sequential Page No. 10. 2 Sequential Page No. 2 PART I. FINANCIAL INFORMATION THE J. M. SMUCKER COMPANY CONDENSED STATEMENTS OF CONSOLIDATED INCOME (Unaudited) Item 1. Financial Statements --------------------
Three Months Ended Six Months Ended October 31 October 31 ------------------------ ---------------------- 1995 1994 1995 1994 -------- -------- -------- -------- (Dollars in thousands, except per share data) Net Sales $179,152 $184,339 $327,117 $328,686 Cost of products sold 120,419 119,787 215,038 213,190 -------- -------- -------- -------- 58,733 64,552 112,079 115,496 Selling, distribution, and administration 42,050 43,762 79,034 79,501 Interest income 421 169 577 365 Other income - net 877 1,324 1,751 2,023 Interest expense (1,804) (1,385) (3,005) (2,124) Provision for disposal of foreign subsidiary (6,996) --- (6,996) --- -------- -------- -------- -------- INCOME BEFORE INCOME TAXES 9,181 20,898 25,372 36,259 Income taxes (Credit) (235) 8,572 6,432 14,718 -------- -------- -------- -------- NET INCOME $ 9,416 $12,326 $18,940 $21,541 -------- -------- -------- -------- Net income per Common Share* $ .32 $ .42 $ .65 $ .74 -------- -------- -------- -------- Dividends declared on Class A Common Shares** $ --- $ .125 $ .13 $ .25 -------- -------- -------- -------- Dividends declared on Class B Common Shares** $ --- $ .125 $ .13 $ .25 -------- -------- -------- -------- * Computed on the weighted average number of Class A Common Shares and Class B Common Shares outstanding, namely: 29,163,532 29,172,179 29,163,606 29,151,961
** The Board of Directors declared a $.13 dividend on both Class A and Class B Common Shares on November 13, 1995. See notes to condensed, consolidated financial statements. 3 Sequential Page No. 3 THE J. M. SMUCKER COMPANY CONDENSED CONSOLIDATED BALANCE SHEETS
October 31, 1995 April 30, 1995 (Unaudited) (Audited) ----------- --------- (Dollars in Thousands) ASSETS CURRENT ASSETS Cash and cash equivalents $ 13,419 $ 11,244 Trade receivables, less allowances 91,946 53,600 Inventories: Finished products 60,851 49,825 Raw materials, containers, and supplies 82,330 60,849 -------- -------- 143,181 110,674 Other current assets 14,713 16,318 -------- -------- Total Current Assets 263,259 191,836 PROPERTY, PLANT, AND EQUIPMENT Land and land improvements 14,731 14,260 Buildings and fixtures 72,787 72,079 Machinery and equipment 153,770 144,141 Construction in progress 9,523 5,605 ------- ------- 250,811 236,085 Less allowances for depreciation (103,790) (95,960) --------- -------- Total Property, Plant and Equipment 147,021 140,125 OTHER NONCURRENT ASSETS Goodwill 40,228 40,621 Trademarks and patents 39,431 40,019 Other assets 10,110 8,416 -------- -------- Total Other Noncurrent Assets 89,769 89,056 -------- -------- $500,049 $421,017 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable $ 44,742 $ 40,527 Notes payable 55,700 0 Salaries, wages, and additional compensation 10,672 10,235 Accrued marketing and merchandising 18,647 14,260 Income taxes 3,138 3,858 Other current liabilities 8,877 10,963 ------ ------- Total Current Liabilities 141,776 79,843 NONCURRENT LIABILITIES 83,662 83,182 SHAREHOLDERS' EQUITY Class A Common Shares, outstanding shares: 3,596 3,596 14,384,139 at stated value Class B Common Shares (Non-voting), out- 3,695 3,695 standing shares: 14,778,839 at stated value Additional capital 10,963 10,963 Retained income 269,861 254,854 Less: Deferred compensation (1,010) (1,292) Amount due from ESOP Trust (10,251) (10,441) Currency translation adjustment (2,243) (3,383) --------- --------- Total Shareholders' Equity 274,611 257,992 -------- -------- $500,049 $421,017 ======== ========
See notes to condensed, consolidated financial statements. 4 Sequential Page No. 4 THE J. M. SMUCKER COMPANY CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Six Months Ended October 31 ----------------------------- (Dollars in Thousands) 1995 1994 -------- -------- NET CASH USED FOR OPERATING ACTIVITIES $(36,756) $ (32,087) CASH FLOWS FROM INVESTING ACTIVITIES Business acquired - net of cash -0- (22,309) Additions to property, plant, and equipment (15,447) (8,192) Proceeds from the sale of property, plant, and equipment 193 196 Insurance proceeds to replace property, 1,015 -0- plant, and equipment Other - net -0- (412) -------- --------- NET CASH USED FOR INVESTING ACTIVITIES (14,239) (30,717) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from short-term debt 55,700 54,798 Proceeds from long-term debt -0- 7,501 Dividends paid (3,779) (7,267) Other - net 908 135 ------- ------- NET CASH PROVIDED BY FINANCING ACTIVITIES 52,829 55,167 Effect of exchange rate changes 341 177 Net Increase/(Decrease) in Cash and Cash Equivalents 2,175 (7,460) Cash and Cash Equivalents at Beginning of Period 11,244 14,059 ------- ------- Cash and Cash Equivalents at End of Period $13,419 $ 6,599 ======= =======
( ) Denotes use of cash See notes to condensed, consolidated financial statements. 5 Sequential Page No. 5 THE J. M. SMUCKER COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note A - Basis of Presentation --------------------- The accompanying unaudited, condensed, consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The seasonal nature of the Mrs. Smith's business has its most significant impact on the Company's business during the second and third quarters. For further information, reference is made to the consolidated financial statements and footnotes included in the Company's Annual Report on Form 10-K for the year ended April 30, 1995. Note B - Common Shares ------------- At October 31, 1995, 35,000,000 Class A Common Shares and 35,000,000 Class B Common Shares were authorized. Outstanding shares of each class are shown net of 1,828,149 Class A and 1,433,449 Class B treasury shares at October 31, 1995, and 1,827,449 Class A and 1,433,449 Class B treasury shares at April 30, 1995. Note C- Pending Divestitures -------------------- During the second quarter, the Company reached an agreement in principle to divest its English subsidiary, Elsenham Quality Foods Ltd. As a result, the Company established a provision for the disposal of this subsidiary in the amount of $6,996,000 during the quarter, representing the write-off of its investment in Elsenham. The tax benefit associated with the transaction is estimated at $6,870,000. The net impact on earnings is immaterial once the tax benefit is taken into consideration. The acquisition by Cheergrey Limited, an English specialty foods holding company, is expected to be completed by the end of the calendar year. Subsequent to the end of the quarter, the Company also reached an agreement in principle to sell its Mrs. Smith's frozen pie business to a subsidiary of SBI Brands Inc., a newly-formed food brands holding company. This transaction is expected to be completed by the end of the third quarter. Due to the seasonal nature of the Mrs. Smith's business, the majority of its fiscal 1996 sales and earnings contribution will have been realized by the Company prior to the completion of the sale. The sale of the Mrs. Smith's business is not expected to have a material impact on the operating results of the Company during the remainder of fiscal 1996. Note D - Accounting Reclassifications ---------------------------- Certain prior year amounts have been reclassified to conform to current year classifications. 6 Sequential Page No. 6 Note E - Income Per Share ---------------- Income per share has been computed based on the weighted average number of shares of the Class A Common Shares and Class B Common Shares considered outstanding during the period. * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * Item 2. Management's Discussion and Analysis ------------------------------------ This discussion and analysis deals with comparisons of material changes in the condensed, consolidated financial statements for the three-month and six-month periods ended October 31, 1995 and 1994, respectively. Results of Operations - --------------------- Sales for the second quarter ended October 31, 1995 were $179,152,000, down approximately 3% over the same period last year. Sales were down in the Consumer and Mrs. Smith's business areas but up in the Beverage, Foodservice, Industrial, International, and Specialty areas. In the Consumer area, the decline in sales was principally attributable to shortfalls in grocery market sales of fruit spreads. Fruit spread volume decreased at a lesser rate than the percentage decrease in dollar sales due to a shift in the mix of products sold. The decline in sales of traditional fruit spreads corresponded with a continuing increase during the quarter in the share of market of private label fruit spreads. Sales of natural peanut butter, Goober, and dessert toppings all increased over last year. Mrs. Smith's second quarter sales were down 17% from the same quarter last year. Approximately one-half of the total decline was anticipated and was due partly to the Company's discontinuation of the SmartStyle line which was in national distribution during last fiscal year. Also, last year's second quarter included approximately $2,200,000 of non-recurring sales to a foodservice customer. The remaining sales shortfall was in the retail pies segment and related to a decision to move a greater proportion of marketing and promotional spending to later in the holiday season. In the Company's other business areas, the International, Industrial and Specialty Foods areas realized the largest sales growth. In the International area, the trend of strong sales of Smucker's branded fruit spreads in Eastern Europe and the Middle East continued from last quarter. Latin America sales were also up over last year. Volume growth in the bakery fruit filling and fruit flakes categories contributed to the growth in the Industrial area. 7 Sequential Page No. 7 On a year-to-date basis, Company sales were essentially flat in comparison with the first six months of fiscal 1995. The Mrs. Smith's business was down 19% from last year and the Consumer area was slightly behind the prior year, but growth in the other business areas helped offset most of the shortfall. Earnings for the quarter were $9,416,000, or $.32 per share, compared to $12,326,000, or $.42 per share for the same period last year. The decline in earnings is attributable to the Mrs. Smith's and Consumer businesses. The Company's other business areas contributed increased earnings over last year. The decrease in contribution from Mrs. Smith's was a combination of lower sales volume and the impact of new marketing and sales initiatives which were instituted for this year's holiday season. The decrease in earnings in the Consumer area was primarily the result of lower fruit spread sales volumes. Also included in the second quarter results was the provision for the disposal of a subsidiary in the amount of $6,996,000, representing the write-off of the Company's investment in Elsenham. See footnote C for further information relating to the divestiture. The cost of products sold during the quarter increased as a percentage of sales due to the impact of two key factors. First, margins at Mrs. Smith's were impacted by a competitive decision to increase the size of four of its best selling pies from eight inches to nine inches. The second factor relates to the mix of products sold during the quarter. The percentage decrease in selling, distribution, and administration costs for the quarter and year-to-date was consistent with the slight decline in overall sales for the same periods. Interest expense was up for both the quarter and six-month periods due to an increase in the average outstanding debt balance and higher interest rates, which averaged approximately two percentage points higher than in fiscal 1995. Despite the increased borrowing levels, the Company's interest income was also up over last year's second quarter and first six months, primarily due to larger cash balances in Australia and Canada. Income earned by the Company on non-operating activities decreased from last year due to lower profitability on the sale of excess frozen fruit inventories. The tax benefit associated with the Elsenham divestiture resulted in a net tax credit (see footnote C) for the second quarter and significantly reduced the effective tax rate for the first half of the year to 25.4%. Excluding the impact of the Elsenham transaction the tax rate would have been 41.0% for the quarter which is consistent with last year's second quarter rate. 8 Sequential Page No. 8 Financial Condition - Liquidity and Capital Resources - ----------------------------------------------------- The Company's financial position continues to be strong despite the increase in debt since April 30, 1995. This increase was primarily to fund the seasonal procurement of fruit and finance the building of pie inventories in preparation for Mrs. Smith's fall and holiday season. The majority of fruit purchases occur during the first half of the year. Other significant uses of cash during both the quarter and six-month period were capital expenditures and the payment of dividends. During the quarter, the Company's borrowing requirements exceeded by a minor amount the $125 million maximum level available on its revolving credit line. To supplement the credit revolver, the Company borrowed against a $25 million uncommitted line of credit established with Society National Bank of Cleveland. The pending sale of the Mrs. Smith's pie business (see footnote C) is anticipated to be completed during the third quarter. The Company expects that the combination of proceeds from the sale and cash generated from continuing operations will be sufficient to pay off or significantly reduce the level of outstanding debt by the end of the fiscal year, assuming no other significant investment opportunities or expenditures are identified. Item 4. Submission of Matters to a Vote of Security Holders --------------------------------------------------- The annual meeting of shareholders of the Company was held on August 15, 1995. At the meeting, the names of Russell G. Mawby, Richard K. Smucker, and William H. Steinbrink were placed in nomination for the Board of Directors to serve three-year terms ending in 1998. All three nominees were elected with the results as follows:
Votes For Votes Withheld --------- -------------- Russell G. Mawby 63,218,548 382,648 Richard K. Smucker 63,223,545 377,651 William H. Steinbrink 63,148,757 452,439
The shareholders also voted on the ratification of the appointment of Ernst & Young LLP as the Company's independent auditors for the 1996 fiscal year. The measure was approved as follows: Votes For Votes Against Abstentions --------- ------------- ----------- 63,281,976 170,473 148,747 No broker non-votes were identified with regard to either matter submitted to the shareholders. 9 Sequential Page No. 9 Item 6. Exhibits and Reports on Form 8-K -------------------------------- (a) Exhibits -------- See the Index of Exhibits that appears on Sequential Page No. 10 of this report. (b) Reports on Form 8-K ------------------- No Reports on Form 8-K were required to be filed during the quarter for which this report is filed. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. December 13, 1995 THE J. M. SMUCKER COMPANY BY STEVEN J. ELLCESSOR Secretary AND RICHARD K. SMUCKER President 10 Sequential Page No. 10 INDEX OF EXHIBITS That are filed with the Commission and the New York Stock Exchange Assigned Sequential Exhibit No. * Description Page No. - ------------------------------------------------------------------------------- 4 (a) Industrial Development Revenue Bond Project ** Agreement dated as of December 1, 1986. (b) Revolving credit agreement between The J. M. Smucker Company and Society National Bank (individually and as Agent), National City Bank, and the First National Bank of Chicago dated as of April 27, 1994, incorporated by reference to the Quarterly Report on Form 10-Q for the period ended July 31, 1994. (c) First Amendment to the revolving credit agreement between The J. M. Smucker Company and Society National Bank (individually and as Agent), National City Bank, and the First National Bank of Chicago dated as of April 25, 1995, incorporated by reference to the Annual Report on Form 10-K for the period ended April 30, 1995. 27 Financial data schedules pursuant to Article 5 in Regulation S-X. * Exhibits 2, 10, 11, 15, 18, 19, 22, 23, and 24 are either inapplicable to the Company or require no answer. ** As permitted by Item 601(b)(4)(iii) of Regulation S-K, no copy of this instrument is filed; however, a copy will be furnished to the Commission upon request. EX-27 2 EXHIBIT 27
5 1,000 6-MOS APR-30-1996 AUG-01-1995 OCT-31-1995 13,419 0 94,893 2,947 143,181 263,259 250,811 103,790 500,049 141,776 0 7,291 0 0 267,320 500,049 327,117 327,117 215,038 215,038 79,034 0 3,005 25,372 6,432 18,940 0 0 0 18,940 .65 .65
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