-----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, WhNNmQSA/1UqsxuSOa4BFxXl8Wqg9Ibe8pCS95XD/FVgNHeJAr/6bbsvRWyjZRO0 e7Xv5Z938u8ITnTFrZoUGA== 0000950152-96-006605.txt : 19961216 0000950152-96-006605.hdr.sgml : 19961216 ACCESSION NUMBER: 0000950152-96-006605 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19961031 FILED AS OF DATE: 19961213 SROS: NONE 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: 96680537 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, 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 (330) 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 14,375,149 Class A Common Shares and 14,782,339 Class B Common Shares outstanding on October 31, 1996. 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, --------------------------- --------------------------- 1996 1995 1996 1995 ---------- ----------- ----------- ---------- (Dollars in thousands, except per share data) Net sales $ 142,844 $ 142,563 $ 276,998 $ 276,460 Cost of products sold (94,157) (93,183) (180,040) (178,478) ------------ ------------ ------------ ------------ 48,687 49,380 96,958 97,982 Selling, distribution, and administrative expenses (35,111) (34,205) (70,153) (67,049) ------------ ------------ ------------ ------------ 13,576 15,175 26,805 30,933 Other income (expense) Interest income 550 421 987 577 Interest expense (669) (993) (1,419) (1,383) Provision for disposal of foreign subsidiary -0- (6,996) -0- (6,996) Other - net (126) 123 (211) 550 ------------ ------------ ------------ ------------ Income before income taxes 13,331 7,730 26,162 23,681 Income taxes (credit) 5,513 (905) 10,855 5,662 ------------ ------------ ------------ ------------ Income from continuing operations 7,818 8,635 15,307 18,019 Income from discontinued operations, net of income taxes -0- 781 -0- 921 ------------ ------------ ------------ ------------ Net income $ 7,818 $ 9,416 $ 15,307 $ 18,940 ------------ ------------ ------------ ------------ Income per Common Share* Continuing operations $ .26 $ .29 $ .52 $ .62 Discontinued operations, net of income taxes* -- .03 -- .03 ------------ ------------ ------------ ------------ Net income per Common Share* $ .26 $ .32 $ .52 $ .65 ------------ ------------ ------------ ------------ Dividends declared on Class A and Class B Common Shares ** $ .13 $ -- $ .26 $ .13 ------------ ------------ ------------ ------------ * Computed on the weighted average number of Class A Common Shares and Class B Common Shares out- standing, namely 29,157,488 29,163,532 29,161,628 29,163,606 ============ ============ ============ ============ ** 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 THE J. M. SMUCKER COMPANY Sequential Page CONDENSED CONSOLIDATED BALANCE SHEETS No. 3 (Unaudited)
October 31, 1996 April 30, 1996 ---------------- -------------- (Dollars in Thousands) ASSETS CURRENT ASSETS Cash and cash equivalents $ 11,794 $ 17,647 Trade receivables, less allowances 48,023 40,241 Inventories: Finished products 41,422 37,381 Raw materials, containers, and supplies 79,477 58,114 --------- --------- 120,899 95,495 Assets of discontinued operations - net 8,121 42,250 Other current assets 13,099 18,829 --------- --------- Total Current Assets 201,936 214,462 PROPERTY, PLANT, AND EQUIPMENT Land and land improvements 13,794 13,719 Buildings and fixtures 73,557 73,400 Machinery and equipment 165,559 163,078 Construction in progress 3,100 2,615 --------- --------- Less allowances for depreciation 256,010 252,812 (117,877) (109,728) --------- --------- Total Property, Plant and Equipment 138,133 143,084 OTHER NONCURRENT ASSETS Intangible assets 43,219 44,098 Assets of discontinued operations - net -0- 13,875 Notes receivable 13,845 -0- Other assets 9,557 9,433 --------- --------- Total Other Noncurrent Assets 66,621 67,406 --------- --------- $ 406,690 $ 424,952 ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable $ 30,925 $ 37,211 Other current liabilities 34,169 30,299 --------- --------- Total Current Liabilities 65,094 67,510 NONCURRENT LIABILITIES Long-term debt 36,200 60,800 Other noncurrent liabilities 20,637 20,301 --------- --------- 56,837 81,101 SHAREHOLDERS' EQUITY Class A Common Shares 3,594 3,597 Class B Common Shares (Non-Voting) 3,696 3,696 Additional capital 11,467 11,469 Retained income 276,537 269,036 Less: Deferred compensation (527) (727) Amount due from ESOP Trust (10,027) (10,251) Currency translation adjustment 19 (479) --------- --------- Total Shareholders' Equity 284,759 276,341 --------- --------- $ 406,690 $ 424,952 ========= =========
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) 1996 1995 ---------- --------- CASH FLOWS FROM OPERATING ACTIVITIES Income from continuing operations $ 15,307 $ 18,019 Adjustments (18,710) (23,437) -------- -------- NET CASH USED FOR OPERATING ACTIVITIES (3,403) (5,418) CASH FLOWS FROM INVESTING ACTIVITIES Additions to property, plant, and (4,307) (15,447) equipment Proceeds from the sale of property, plant, and equipment 261 193 Proceeds from the sale of assets of discontinued operations 33,997 -0- Other - net -0- 1,015 -------- -------- NET CASH PROVIDED BY (USED FOR) INVESTING ACTIVITIES 29,951 (14,239) CASH FLOWS FROM FINANCING ACTIVITIES Decrease in long-term debt (24,600) -0- Proceeds from short-term debt -0- 55,700 Dividends paid (7,566) (3,779) Other - net (21) 908 -------- -------- NET CASH (USED FOR) PROVIDED BY FINANCING ACTIVITIES (32,187) 52,829 Cash flows (used for) provided by continuing operations (5,639) 33,172 Cash flows used for discontinued operations (277) (31,338) Effect of exchange rate changes 63 341 -------- -------- Net (decrease)/increase in cash and cash equivalents (5,853) 2,175 Cash and cash equivalents at beginning of period 17,647 11,244 -------- -------- Cash and cash equivalents at end of period $ 11,794 $ 13,419 ======== ======== ( ) Denotes use of cash
See notes to condensed consolidated financial statements. 5 Sequential Page No. 5 THE J. M. SMUCKER COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Note A - Basis of Presentation --------------------- The accompanying unaudited, condensed, consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they 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. Operating results for the six-month period ended October 31, 1996, are not necessarily indicative of the results that may be expected for the year ended April 30, 1997. 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, 1996. On May 31, 1996, the Company completed the sale of its Mrs. Smith's frozen pie business to Flowers Industries, Inc. As a result, Mrs. Smith's has been reflected as a discontinued operation in the accompanying financial statements. Accordingly, the accompanying notes and financial statements for all periods presented exclude amounts related to the discontinued business. Note B - Common Shares ------------- At October 31, 1996, 35,000,000 Class A Common Shares and 35,000,000 Class B Common Shares were authorized. At October 31, 1996, there were 14,375,149 and 14,782,339 outstanding shares of Class A Common and Class B Common, respectively, while 14,387,639 Class A and 14,782,339 Class B Common Shares were outstanding at April 30, 1996. Outstanding shares of each class are shown net of 1,837,139 Class A and 1,429,949 Class B treasury shares at October 31, 1996, and 1,824,649 Class A and 1,429,949 Class B treasury shares at April 30, 1996. Note C - 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. Note D - Divestitures ------------ As noted above, the Company completed the sale of its Mrs. Smith's frozen pie business during the first quarter for a combination of cash and notes receivable. In connection with this divestiture, the Company entered into agreements to lease certain property, plant, and equipment to a subsidiary of Flowers Industries, Inc. Mrs. Smith's revenues for the three-month and six-month periods ended October 31, 1995 were $14,068,000 and $50,657,000, respectively, and income tax expense allocated to the discontinued operations was $101,000 and $770,000, respectively. Mrs. Smith's recorded revenue of $2,926,000 in the first quarter of fiscal 1997, prior to the sale. 6 Sequential Page No. 6 The net assets relating to the Mrs. Smith's business have been reported in the accompanying balance sheets as assets of discontinued operations and are classified as current and noncurrent based on the timing of the consideration to be received. At October 31, 1996, the current portion of assets of discontinued operations consisted of the remaining raw material and finished good inventories to be purchased by Flowers Industries, Inc. The notes receivable relating to the divestiture are classified in the Company's balance sheets based upon the repayment terms. ********* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * 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, 1996 and 1995. On May 31, 1996, the Company completed the sale of its Mrs. Smith's frozen pie business to Flowers Industries, Inc. As a result, Mrs. Smith's has been reflected as a discontinued operation in the accompanying financial statements. Therefore, this discussion and analysis refers to only the continuing businesses of the Company. Results of Operations - --------------------- Sales for the second quarter ended October 31, 1996, were $142,844,000, up slightly over the same period last year. The Consumer, Foodservice, Industrial, and Beverage business areas all reported sales increases for the second quarter. The Industrial area recorded the largest percentage gain (19% increase over last year), based predominately on sales of new products to existing customers. Consumer area sales were up approximately 1% over the second quarter of last year as a result of increases in sales of fruit spreads and reduced fat peanut butter. Sales of dessert toppings were down for the same period due to strong competitive activity in the toppings category. In the International area, sales were 16% behind last year's second quarter. The absence of sales from Elsenham Quality Foods Ltd., the Company's former U.K. subsidiary that was divested at the beginning of the third quarter last year, accounted for the majority of the decline. Despite the decrease in sales, the overall contribution of the International area to profits was up over last year. Sales for the first six months of the fiscal year were $276,998,000, compared to $276,460,000 during the first half of last year. The Industrial and Foodservice areas recorded sales growth of 13% and 6%, respectively, during the first half of the fiscal year. Consumer area sales were down 1% primarily in fruit spreads and dessert toppings. International area sales were down almost 8% from last year, due mostly to the impact of the Elsenham divestiture. Income for continuing operations for the second quarter was $7,818,000, or $.26 per share, compared to income from continuing operations of $8,635,000, or $.29 per share, for the same period last year. Year-to-date income from continuing operations was $.52 per share, compared to $.62 per share for the same period last year. 7 Sequential Page No. 7 Costs of products sold increased from last year as a percentage of net sales during the second quarter and for the first six months of fiscal 1997. The increase was the result of a general increase in the overall cost of fruit raw materials. This factor likely will impact earnings throughout the remainder of the current fiscal year as the Company has elected, with limited exceptions, not to increase prices to cover increased costs. Selling, distribution, and administrative costs increased 3% during the second quarter and 5% year-to-date. Costs associated with the discontinuation of the Company's truck fleet and expenses associated with the Company's strategic initiatives were the key factors in the quarter-to-quarter increase. Interest expense was $669,000 for the second quarter of fiscal 1997, compared to interest expense of $993,000 for the same period last year, primarily due to lower average debt levels. Interest income for the quarter and year-to-date was up as a result interest earned on the note receivable from Flowers Industries, Inc. The tax benefit associated with the divestiture of the Elsenham subsidiary resulted in a net tax credit for the second quarter of fiscal 1996. Excluding the impact of this transaction, the tax rate would have been 40.5% in the second quarter of last year, compared to 41.4% in the current year. Financial Condition - Liquidity and Capital Resources - ----------------------------------------------------- The overall financial position remains strong as the Company continues to reduce its debt balances. Cash proceeds to-date from the sale of the Mrs. Smith's business together with cash from continuing operations has allowed the Company to reduce its debt balance from $60,800,000 at April 30, 1996, to $36,200,000 at October 31, 1996. This decrease occurred despite the fact the Company borrowed against its revolving credit line during the first two quarters to finance seasonal procurement of fruit. Other significant uses of cash during the quarter and six-month periods were capital expenditures and the payment of dividends. The Company has received to-date in fiscal 1997 approximately $34,000,000 from the sale of the Mrs. Smith's business and expects to receive additional cash proceeds of approximately $8,000,000 during the remainder of the fiscal year. At the Company's annual shareholders' meeting in August, management announced the results of a company-wide strategy review undertaken during the latter half of fiscal 1996. During the second quarter, the Company determined that approximately $8,000,000 in expenditures during the remainder of fiscal 1997 will be necessary to support projects identified as part of the strategy review. The Company expects the combination of cash still to be received from the sale of the Mrs. Smith's business and cash generated from continuing operations to be sufficient both to meet all cash requirements and to retire a majority of the remaining debt balance by April 30, 1997. 8 Sequential Page No. 8 Item 4. Submission of Matters to a Vote of Security Holders --------------------------------------------------- The annual meeting of shareholders of the Company was held on August 14, 1996. At the meeting, the names of Lena C. Bailey, Robert R. Morrison, Paul H. Smucker, and William Wrigley, Jr. were placed in nomination for the Board of Directors to serve three-year terms ending in 1999. All four nominees were elected with the results as follows:
Votes For Votes Withheld ---------- -------------- Lena C. Bailey 61,333,643 699,673 Robert R. Morrison 61,417,190 616,126 Paul H. Smucker 61,424,520 608,796 William Wrigley, Jr. 61,369,996 663,320
The shareholders also voted on the ratification of the appointment of Ernst & Young LLP as the Company's independent auditors for the 1997 fiscal year. The measure was approved as follows: Votes For Votes Against Abstentions --------- ------------- ----------- 61,506,136 195,612 331,568 No broker non-votes were identified with regard to either matter submitted to the shareholders. In September 1996, an open board position was created with the resignation of Dr. Lena C. Bailey due to ill health. Dr. Bailey, the former dean of the College of Human Ecology at The Ohio State University, had worked with the Company for many years as a consultant and had served as a member of the Board of Director since 1986. The Company has elected not to fill the open position at this time. 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, 1996 THE J. M. SMUCKER COMPANY /s/ Steven J. Ellcessor ----------------------- BY STEVEN J. ELLCESSOR Vice President-Administration, Secretary, and General Counsel /s/ Richard K. Smucker ---------------------- 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) 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. (b) Second Amendment Agreement further extending the term of 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 26, 1996, incorporated by reference to the Annual Report on Form 10-K for the period ended April 30, 1996. 27 Financial data schedules pursuant to Article 5 in Regulation S-X. * Exhibits 2, 3, 10, 11, 15, 18, 19, 22, 23, and 24 are either inapplicable to the Company or require no answer.
EX-27 2 EXHIBIT 27
5 1,000 6-MOS APR-30-1997 MAY-01-1996 OCT-31-1996 11,794 0 48,613 590 120,899 201,936 256,010 117,877 406,690 65,094 0 7,290 0 0 277,469 406,690 276,998 276,998 180,040 180,040 70,153 0 1,419 26,162 10,855 15,307 0 0 0 15,307 .52 .52
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