-----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, NCmaJ7OVH4294Zqm8asZ7Yl1GtN2ZT1xFSlck7FQnCWQZ5kcS+qMxEaE8wLkYq9T i6MJybJqIeZfiMQbvcb1Ug== 0000950152-96-001020.txt : 19960318 0000950152-96-001020.hdr.sgml : 19960318 ACCESSION NUMBER: 0000950152-96-001020 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960131 FILED AS OF DATE: 19960315 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: 96535404 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 SMUCKER'S 10-Q 1 Sequential Page No. 1 of 9 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 January 31, 1996 ------------------------------- 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 14,387,639 Class A Common Shares and 14,782,339 Class B Common Shares outstanding on January 31, 1996. The Exhibit Index is located at Sequential Page No. 9. 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 Nine Months Ended January 31, January 31 -------------------------------- -------------------------- 1996 1995 1996 1995 ---------- ----------- ----------- ----------- (Dollars in thousands, except per share data) Net Sales $159,681 $157,348 $486,798 $486,034 Cost of products sold 104,544 100,600 319,582 315,791 -------- -------- -------- -------- 55,137 56,748 167,216 170,243 Selling, distribution, and administration 42,467 41,841 121,501 119,341 Interest income 454 108 1,031 473 Other income - net 82 749 1,833 2,772 Interest expense (1,795) (1,299) (4,800) (3,423) Loss on disposal of foreign subsidiary --- --- (6,996) --- -------- -------- -------- -------- INCOME BEFORE INCOME TAXES 11,411 14,465 36,783 50,724 Income taxes 5,074 5,776 11,506 20,494 -------- -------- -------- -------- NET INCOME $ 6,337 $8,689 $25,277 $30,230 -------- -------- -------- -------- Net income per Common Share* $ .22 $ .30 $ .87 $ 1.04 -------- -------- -------- -------- Dividends declared on Class A Common Shares $ .13 $ .125 $ .39 $ .375 -------- -------- -------- -------- Dividends declared on Class B Common Shares $ .13 $ .125 $ .39 $ .375 -------- -------- -------- -------- * Computed on the weighted average number of Class A Common Shares and Class B Common Shares outstanding, namely: 29,167,391 29,167,667 29,164,865 29,157,201
See notes to condensed, consolidated financial statements. 3 Sequential Page No. 3 THE J. M. SMUCKER COMPANY CONDENSED CONSOLIDATED BALANCE SHEETS
January 31,1996 April 30, 1995 (Unaudited) (Audited) ASSETS ----------- --------- CURRENT ASSETS (Dollars in Thousands) Cash and cash equivalents $ 15,661 $ 11,244 Trade receivables, less allowances 53,702 53,600 Inventories: Finished products 47,206 49,825 Raw materials, containers, and supplies 76,608 60,849 -------- -------- 123,814 110,674 Other current assets 14,488 16,318 -------- -------- Total Current Assets 207,665 191,836 PROPERTY, PLANT, AND EQUIPMENT Land and land improvements 13,344 14,260 Buildings and fixtures 72,568 72,079 Machinery and equipment 155,514 144,141 Construction in progress 7,875 5,605 ------- ------- 249,301 236,085 Less allowances for depreciation (106,338) (95,960) --------- -------- Total Property, Plant and Equipment 142,963 140,125 OTHER NONCURRENT ASSETS Goodwill 39,751 40,621 Trademarks and patents 39,002 40,019 Other assets 9,911 8,416 ------- -------- Total Other Noncurrent Assets 88,664 89,056 -------- -------- $439,292 $421,017 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable $ 33,936 $ 40,527 Notes payable 7,000 0 Salaries, wages, and additional compensation 9,330 10,235 Accrued marketing and merchandising 18,483 14,260 Other current liabilities 12,162 14,821 ------- ------- Total Current Liabilities 80,911 79,843 NONCURRENT LIABILITIES 84,188 83,182 SHAREHOLDERS' EQUITY Class A Common Shares, outstanding shares: 3,597 3,596 14,387,639 at stated value Class B Common Shares (Non-voting), out- 3,696 3,695 standing shares: 14,782,339 at stated value Additional capital 11,239 10,963 Retained income 268,889 254,854 Less: Deferred compensation (868) (1,292) Amount due from ESOP Trust (10,251) (10,441) Currency translation adjustment (2,109) (3,383) --------- --------- Total Shareholders' Equity 274,193 257,992 -------- -------- $439,292 $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)
Nine Months Ended January 31 ---------------------- (Dollars in Thousands) 1996 1995 -------- -------- NET CASH PROVIDED FROM OPERATING ACTIVITIES $26,640 $ 26,228 CASH FLOWS FROM INVESTING ACTIVITIES Business acquired - net of cash -0- (28,780) Additions to property, plant, and equipment (21,261) (12,766) Proceeds from the sale of property, plant, and equipment 668 -0- Insurance proceeds to replace property, 1,494 -0- plant, and equipment Other - net -0- (728) -------- -------- NET CASH USED FOR INVESTING ACTIVITIES (19,099) (42,274) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from short-term debt 7,000 15,198 Proceeds from long-term debt -0- 7,501 Dividends paid (11,337) (10,900) Other - net 1,172 404 ------- ------- NET CASH (USED FOR) PROVIDED BY FINANCING ACTIVITIES (3,165) 12,203 Effect of exchange rate changes 41 169 Net Increase/(Decrease) in Cash and Cash Equivalents 4,417 (3,674) Cash and Cash Equivalents at Beginning of Period 11,244 14,059 ------- -------- Cash and Cash Equivalents at End of Period $15,661 $ 10,385 ======= ========
( ) 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 January 31, 1996, 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 1,824,649 Class A and 1,429,949 Class B treasury shares at January 31, 1996, and 1,827,449 Class A and 1,433,449 Class B treasury shares at April 30, 1995. Note C- Divestitures ------------ On March 1, 1996, the Company announced that it had reached an agreement in principle to sell its Mrs. Smith's frozen pie business to ConAgra Frozen Foods, a ConAgra, Inc. company. The previously announced agreement to sell the Mrs. Smith's business to a subsidiary of SBI Brands Inc. was no longer in effect and had expired prior to the Company beginning discussion with ConAgra. The sale, which the Company hopes to complete by the end of the fiscal year, is expected to result in a loss to the Company. The exact amount of the loss cannot be determined until the transaction is completed. Based upon current information, however, the Company does not expect it to be significant in relation to its total investment. On December 15, 1995, the Company completed the divestiture of its English subsidiary, Elsenham Quality Foods Ltd. The acquisition by Cheergrey Limited, an English specialty foods holding company, resulted in a pretax loss of $6,996,000. A tax benefit of $6,870,000 was recognized associated with this transaction and, therefore, the after-tax impact is not material. 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 nine-month periods ended January 31, 1996 and 1995, respectively. Results of Operations - --------------------- Sales for the third quarter ended January 31, 1996 were $159,681,000, representing an increase of approximately 1% over the same period last year. Sales were up in the Mrs. Smith's, Foodservice, Specialty, and International business areas but down in the Consumer, Beverage, and Industrial areas. Mrs. Smith's third quarter sales were up approximately 5% over the same period last year due to a shift in the timing of marketing and promotional spending to later in the holiday season. In the Foodservice area, continued volume growth in the portion control category contributed to that area's sales increase. In the Consumer business area, sales of fruit spreads continue behind the prior year, both as a result of soft demand in the category generally and continued private label activity in the grocery market. On a year-to-date basis, Company sales were even with the sales reported for the first three quarters of fiscal year 1995. Mrs. Smith's sales were approximately 10% behind the prior year due primarily to the Company's discontinuation of the SmartStyle line, which was in national distribution last year. In the Consumer area, sales were down approximately two percentage points. Year-to-date sales in all other business areas remained well ahead of last year. Earnings for the quarter were $6,337,000, or $.22 per share, compared to $8,689,000, or $.30 per share for the same period last year. The decline in earnings is attributable to the reduction in earnings contribution from Mrs. Smith's and the shortfall in Consumer fruit spread sales. The decrease in contribution from Mrs. Smith's for the quarter was primarily due to the impact of new marketing and sales initiatives implemented for this year's holiday season. Year-to-date earnings are $.87 per share compared to $1.04 per share last year. The cost of products sold during both the quarter and the nine-month period increased as a percentage of sales compared to the same periods last year due to two key factors. First, margins at Mrs. Smith's continued to be impacted by the competitive decision to increase the size 7 Sequential Page No. 7 of four of its best selling pies. The second factor related to the mix of products sold during the quarter as the shortfall in Consumer sales was replaced by sales in business areas that currently earn lower margins. The percentage increase in selling, distribution, and administration cost for the quarter was consistent with the increase in sales for the same period. Interest expense was up for both the quarter and nine-month periods due to an increase in the average outstanding debt balance and higher interest rates, which averaged approximately one percentage point higher than during the same nine-month period in fiscal 1995. Despite the increased borrowing levels, the Company's interest income was also up over last year's third quarter and first nine months, primarily due to larger cash balances in Australia and Canada. Income earned by the Company on non-operating activities was below last year due to lower profitability on the sale of excess frozen fruit inventories. Based upon projected year-end results, the estimated effective federal tax rate increased during the quarter. As a result, a retroactive adjustment to reflect the higher tax rate for the first nine months was recorded. The overall effective tax rate for the nine-month period is significantly lower than fiscal 1995 due to the impact of the tax benefit associated with the divestiture of Elsenham Quality Foods. Financial Condition - Liquidity and Capital Resources - ----------------------------------------------------- The Company's financial position continues to be strong despite the modest increase in debt since April 30, 1995. Cash generated from operations increased significantly during the third quarter due to the collections of Mrs. Smith's second quarter receivables and the end of the fruit procurement period. The major uses of cash during both the quarter and nine-month period were capital expenditures and the payment of dividends. The pending sale of the Mrs. Smith's pie business (see footnote C) is anticipated to be completed during the fourth quarter. The Company expects that the combination of proceeds from the sale and cash generated from 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. Subsequent to quarter-end, the Company discovered that apple juice concentrate supplied to its beverage subsidiary, Smucker Quality Beverages, Inc. ("SQB"), contained an undeclared sweetener. Although the finished products manufactured from this concentrate presented no health hazards, the presence of the undeclared sweetener caused SQB to withdraw product from the marketplace. The costs associated with SQB's withdrawal of the product have not been finalized but are expected to be approximately $1,000,000. The loss is not insured and, although the Company will pursue its options to recover from responsible parties, it is not possible at this time to assess the likelihood of recovery. This expense will be charged to earnings during the fourth quarter of fiscal 1996. 8 Sequential Page No. 8 Item 6. Exhibits and Reports on Form 8-K -------------------------------- (a) Exhibits -------- See the Index of Exhibits that appears on Sequential Page No. 9 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. March 15, 1996 THE J. M. SMUCKER COMPANY BY STEVEN J. ELLCESSOR Secretary AND RICHARD K. SMUCKER President 9 Sequential Page No. 9 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 SMUCKER'S EX-27
5 1,000 9-MOS APR-30-1996 NOV-01-1995 JAN-31-1996 15,661 0 56,124 2,422 123,814 207,665 249,301 106,338 439,292 80,911 0 7,293 0 0 266,900 439,292 486,798 486,798 319,582 319,582 121,501 0 4,800 36,783 11,506 25,277 0 0 0 25,277 .87 .87
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