-----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, Lf2XKpRze7Q6cCg3QqdAsMDebYsNxK1DKQ1zTfRkA6KbHCRED7QI2ABI0LzCMJdS pb1lZ4iivN8d/iIPFCcBAQ== 0000950152-97-001801.txt : 19970313 0000950152-97-001801.hdr.sgml : 19970313 ACCESSION NUMBER: 0000950152-97-001801 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970131 FILED AS OF DATE: 19970312 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: 97555234 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'S COMPANY 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, 1997 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 14,374,013 Class A Common Shares and 14,784,203 Class B Common Shares outstanding on January 31, 1997. 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, ------------------------------- ----------------------------- 1997 1996 1997 1996 ------------- ------------- ------------ ------------- (Dollars in thousands, except per share data) Net sales $ 124,479 $ 121,207 $ 401,477 $ 397,667 Cost of products sold (80,383) (76,373) (260,423) (254,851) ------------ ------------ ------------ ------------ 44,096 44,834 141,054 142,816 Selling, distribution, and administrative expenses (33,090) (33,390) (103,243) (100,439) ------------ ------------ ------------ ------------ 11,006 11,444 37,811 42,377 Other income (expense) Interest income 529 454 1,516 1,031 Interest expense (371) (983) (1,790) (2,367) Provision for disposal of foreign subsidiary -0- -0- -0- (6,996) Other - net (177) (330) (388) 329 ------------ ------------ ------------ ------------ Income before income taxes 10,987 10,585 37,149 34,374 Income taxes 4,454 4,729 15,309 10,499 ------------ ------------ ------------ ------------ Income from continuing operations 6,533 5,856 21,840 23,875 Income from discontinued operations, net of income taxes -0- 481 -0- 1,402 ------------ ------------ ------------ ------------ Net income $ 6,533 $ 6,337 $ 21,840 $ 25,277 ============ ============ ============ ============ Income per Common Share* Continuing operations $ .23 $ .20 $ .75 $ .82 Discontinued operations, net of income taxes -- .02 -- .05 ------------ ------------ ------------ ------------ Net income per Common Share* $ .23 $ .22 $ .75 $ .87 ============ ============ ============ ============ Dividends declared on Class A and Class B Common Shares $ .13 $ .13 $ .39 $ .39 ============ ============ ============ ============ * Computed on the weighted average number of Class A Common Shares and Class B Common Shares out- standing, namely 29,157,741 29,167,391 29,160,335 29,164,865 ============ ============ ============ ============
See notes to condensed consolidated financial statements. 3 THE J. M. SMUCKER COMPANY Sequential Page CONDENSED CONSOLIDATED BALANCE SHEETS No. 3 (Unaudited)
January 31, 1997 April 30, 1996 ---------------- -------------- (Dollars in Thousands) ASSETS CURRENT ASSETS Cash and cash equivalents $ 12,196 $ 17,647 Trade receivables, less allowances 43,234 40,241 Inventories: Finished products 38,923 37,381 Raw materials, containers, and supplies 67,040 58,114 --------- --------- 105,963 95,495 Assets of discontinued operations - net 1,928 42,250 Other current assets 14,321 18,829 --------- --------- Total Current Assets 177,642 214,462 PROPERTY, PLANT, AND EQUIPMENT Land and land improvements 13,804 13,719 Buildings and fixtures 74,068 73,400 Machinery and equipment 165,791 163,078 Construction in progress 4,782 2,615 --------- --------- 258,445 252,812 Less allowances for depreciation (121,580) (109,728) --------- --------- Total Property, Plant and Equipment 136,865 143,084 OTHER NONCURRENT ASSETS Intangible assets 42,496 44,098 Assets of discontinued operations - net -0- 13,875 Notes receivable 13,601 -0- Other assets 9,227 9,433 --------- --------- Total Other Noncurrent Assets 65,324 67,406 --------- --------- $ 379,831 $ 424,952 ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable $ 23,006 $ 37,211 Other current liabilities 33,715 30,299 --------- --------- Total Current Liabilities 56,721 67,510 NONCURRENT LIABILITIES Long-term debt 15,600 60,800 Other noncurrent liabilities 20,840 20,301 --------- --------- 36,440 81,101 SHAREHOLDERS' EQUITY Class A Common Shares 3,594 3,597 Class B Common Shares (Non-Voting) 3,696 3,696 Additional capital 11,585 11,469 Retained income 279,286 269,036 Less: Deferred compensation (448) (727) Amount due from ESOP Trust (10,027) (10,251) Currency translation adjustment (1,016) (479) --------- --------- Total Shareholders' Equity 286,670 276,341 --------- --------- $ 379,831 $ 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)
Nine Months Ended January 31, --------------------------- (Dollars in Thousands) 1997 1996 ------------- ------------ CASH FLOWS FROM OPERATING ACTIVITIES Income from continuing operations $ 21,840 $ 23,875 Adjustments (3,220) (1,732) -------- -------- NET CASH PROVIDED BY OPERATING ACTIVITIES 18,620 22,143 CASH FLOWS FROM INVESTING ACTIVITIES Additions to property, plant, and equipment (8,174) (21,261) Proceeds from the sale of property, plant, and equipment 588 668 Proceeds from the sale of assets of discontinued operations 40,434 -0- Other - net -0- 1,494 -------- -------- NET CASH PROVIDED BY (USED FOR) INVESTING ACTIVITIES 32,848 (19,099) CASH FLOWS FROM FINANCING ACTIVITIES Decrease in long-term debt (45,200) -0- Proceeds from short-term debt -0- 7,000 Dividends paid (11,346) (11,337) Other - net 96 1,172 -------- -------- NET CASH USED FOR FINANCING ACTIVITIES (56,450) (3,165) Cash flows used for continuing operations (4,982) (121) Cash flows (used for) provided by discontinued (277) 4,497 operations Effect of exchange rate changes (192) 41 -------- -------- Net (decrease) increase in cash and cash equivalents (5,451) 4,417 Cash and cash equivalents at beginning of period 17,647 11,244 -------- -------- Cash and cash equivalents at end of period $ 12,196 $ 15,661 ======== ======== ( ) 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 considered necessary for a fair presentation have been included. Operating results for the nine-month period ended January 31, 1997, 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 January 31, 1997, 35,000,000 Class A Common Shares and 35,000,000 Class B Common Shares were authorized. At January 31, 1997, there were 14,374,013 and 14,784,203 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 1,838,275 Class A and 1,428,085 Class B treasury shares at January 31, 1997, 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 Flowers Industries, Inc. Mrs. Smith's revenues for the three-month and nine-month periods ended January 31, 1996 were $38,474,000 and $89,131,000, respectively, and income tax expense allocated to the discontinued operations was $345,000 and $1,006,000, 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 January 31, 1997, 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 nine-month periods ended January 31, 1997 and 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. Therefore, this discussion and analysis refers to only the continuing businesses of the Company. Results of Operations - --------------------- Sales for the third quarter ended January 31, 1997, were $124,479,000, up 3% over the same period last year. The Industrial, Beverage, Foodservice, and Specialty Foods business areas all reported sales increases for the third quarter. The Industrial area recorded the largest dollar and percentage growth, based predominately on sales of new products, introduced earlier in the fiscal year, to existing customers. The Beverage area also recorded a substantial third quarter increase, due primarily to volume increases on Knudsen & Sons brands. The Foodservice area continued to grow steadily during the third quarter, and the Specialty Foods area began to rebound somewhat from a slow first half of the year. Consumer area sales were slightly down from the third quarter last year due primarily to lower sales in the Company's mass retail market. Although fruit spreads volume was down slightly for the period, dollar share of market in this category is trending more positively. Sales of toppings, Goober, and natural peanut butter all increased during the quarter. In the International area, sales were behind last year both for the quarter and year-to-date, due primarily to the absence of sales from Elsenham Quality Foods, the Company's United Kingdom subsidiary that was divested during the third quarter last year. Sales for the first nine months of the fiscal year were $401,477,000, compared to $397,667,000 during the same period last year. The Industrial area has recorded double-digit sales growth during the first three quarters of the fiscal year, and the Foodservice and Beverage areas each have recorded more modest sales increases. Consumer area sales were down slightly due primarily to fruit spreads and dessert toppings. International area sales were down from last year due mostly to the impact of the Elsenham divestiture. 7 Sequential Page No. 7 Income from continuing operations for the third quarter was $6,533,000, or $.23 per share, compared to income from continuing operations of $5,856,000, or $.20 per share, for the same period last year. Year-to-date income from continuing operations was $.75 per share, compared to $.82 per share for the same period last year. Costs of products sold increased from last year as a percentage of net sales during the third quarter and for the first nine 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. Sweetener costs, on the other hand, are expected to be lower during the fourth quarter than during the first part of the year, and this will offset to some extent the higher fruit costs. Selling, distribution, and administrative costs were down approximately 1% for the third quarter due primarily to lower distribution costs and other cost reduction efforts. In addition, last year's third quarter included consulting costs associated with the Company's strategy and operations project. On a year-to-date basis, however, selling, distribution, and administrative costs have increased 3% as a result of increased marketing expenditures and costs associated with the Company's strategic initiatives. Interest expense was $371,000 for the third quarter of fiscal 1997, compared to $983,000 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 of interest earned on the note receivable from Flowers Industries, Inc. The tax rate was 40.5% in the third quarter, compared to 44.7% last year. During the quarter the Company revised its estimated effective federal tax rate for the year, resulting in a nine-month retroactive adjustment to tax expense. The tax rate for the first nine months of fiscal 1997 was 41.2%, compared to 30.5% for the same period last year. The substantially lower rate last year was due to a tax benefit associated with the divestiture of Elsenham Quality Foods Ltd. that was recognized during the second quarter last 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 have allowed the Company to reduce its debt balance from $60,800,000 at April 30, 1996, to $15,600,000 at January 31, 1997. The Company has received to-date in fiscal 1997 approximately $40,000,000 from the sale of the Mrs. Smith's business. Significant uses of cash during the third quarter and year-to-date were capital expenditures and the payment of dividends. In the Company's second quarter 10-Q, it was stated that approximately $8,000,000 would be spent during the remainder of fiscal 1997 to support projects identified as part of a company-wide strategy review undertaken during the latter half of fiscal 1996. It now appears that some portion of that $8,000,000 will instead be expended during the first quarter of fiscal 1998. In either event, however, the Company expects cash generated from continuing operations to be sufficient to meet all cash requirements during the fourth quarter and to retire a majority of the remaining debt balance by April 30, 1997. 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 12, 1997 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 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) 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, 24, and 99 are either inapplicable to the Company or require no answer.
EX-27 2 EXHIBIT 27
5 1,000 9-MOS APR-30-1997 MAY-01-1996 JAN-31-1997 12,196 0 43,855 621 105,963 177,642 258,445 121,580 379,831 56,721 0 7,290 0 0 279,380 379,831 401,477 401,477 260,423 260,423 103,243 0 1,790 37,149 15,309 21,840 0 0 0 21,840 .75 .75
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