-----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, MS4G71OLCx03bQjgX3DvI2bg/mJHIaSK+VDa+PYgibz/QdpqyIxNBY3nRqFowlfH Nn43IQod0vxUIwHF4ivIzQ== 0000950152-96-004657.txt : 19960916 0000950152-96-004657.hdr.sgml : 19960916 ACCESSION NUMBER: 0000950152-96-004657 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960731 FILED AS OF DATE: 19960913 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: 96629635 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 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 July 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 July 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 July 31, --------------------------- 1996 1995 ------------ ------------ (Dollars in thousands, except per share data) Net Sales $134,154 $133,897 Cost of products sold 85,883 85,295 ------------ ----------- 48,271 48,602 Selling, distribution, and administrative expenses 35,042 32,844 ------------ ---------- 13,229 15,758 Other income (expense) Interest income 437 157 Interest expense (750) (390) Other - net (85) 426 ----------- ----------- Income Before Income Taxes 12,831 15,951 Income taxes 5,342 6,567 ----------- ----------- Income from continuing operations 7,489 9,384 Income from discontinued operations, net of income taxes --- 140 ----------- ----------- Net income $ 7,489 $ 9,524 ----------- ----------- Income per Common Share* Continuing Operations $ .26 $ .33 Discontinued Operations, net of income taxes --- --- ----------- ----------- Net income per Common Share $ .26 $ .33 ----------- ----------- Dividends declared on Class A Common Shares $ .13 $ .13 ----------- ----------- Dividends declared on Class B Common Shares $ .13 $ .13 ----------- ----------- * Computed on the weighted average number of Class A Common Shares and Class B Common Shares out- standing, namely 29,165,770 29,163,678 =========== ===========
See notes to condensed consolidated financial statements. 3 Sequential Page No. 3 THE J. M. SMUCKER COMPANY CONDENSED CONSOLIDATED BALANCE SHEETS
July 31, 1996 April 30, 1996 (Unaudited) (Audited) ----------- ---------- ASSETS (Dollars in Thousands) CURRENT ASSETS Cash and cash equivalents $12,243 $ 17,647 Trade receivables, less allowances 45,614 40,241 Inventories: Finished products 40,836 37,381 Raw materials, containers, and supplies 72,843 58,114 --------- --------- 113,679 95,495 Assets of discontinued operations - net 22,131 42,250 Other current assets 18,569 18,829 --------- --------- Total Current Assets 212,236 214,462 PROPERTY, PLANT, AND EQUIPMENT Land and land improvements 13,729 13,719 Buildings and fixtures 73,268 73,400 Machinery and equipment 164,805 163,078 Construction in progress 2,836 2,615 --------- --------- 254,638 252,812 Less allowances for depreciation (113,805) (109,728) --------- --------- Total Property, Plant and Equipment 140,833 143,084 OTHER NONCURRENT ASSETS Intangible assets 43,426 44,098 Assets of discontinued operations - net -0- 13,875 Notes receivable 13,859 -0- Other assets 8,708 9,433 --------- --------- Total Other Noncurrent Assets 65,993 67,406 --------- --------- $419,062 $424,952 ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable $ 40,388 $ 37,211 Other current liabilities 36,183 30,299 --------- --------- Total Current Liabilities 76,571 67,510 NONCURRENT LIABILITIES Long-term debt 43,100 60,800 Other noncurrent liabilities 20,475 20,301 --------- --------- Total Noncurrent Liabilities 63,575 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 272,501 269,036 Less: Deferred compensation (606) (727) Amount due from ESOP Trust (10,251) (10,251) Currency translation adjustment (1,485) (479) --------- -------- Total Shareholders' Equity 278,916 276,341 --------- --------- $419,062 $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)
Three Months Ended July 31 ---------------------- (Dollars in Thousands) 1996 1995 --------- ---------- CASH FLOWS FROM OPERATING ACTIVITIES Income from continuing operations $ 7,489 $ 9,384 Adjustments (7,645) (7,132) --------- --------- NET CASH (USED FOR) PROVIDED BY OPERATING ACTIVITIES (156) 2,252 CASH FLOWS FROM INVESTING ACTIVITIES Additions to property, plant, and equipment (2,683) (8,697) Proceeds from the sale of property, plant, and equipment 160 121 Proceeds from the sale of assets of discontinued operations 19,589 -0- --------- --------- NET CASH PROVIDED BY (USED FOR) INVESTING ACTIVITIES 17,066 (8,576) CASH FLOWS FROM FINANCING ACTIVITIES Decrease in long-term debt (17,700) -0- Proceeds from short-term debt -0- 24,500 Dividends paid (3,783) (3,779) Other - net (617) 159 --------- --------- NET CASH (USED FOR) PROVIDED BY FINANCING ACTIVITIES (22,100) 20,880 Cash flows (used for) provided by continuing operations (5,190) 14,556 Cash flows used for discontinued operations (277) (11,376) Effect of exchange rate changes 63 40 --------- --------- Net (Decrease)/Increase in cash and cash equivalents (5,404) 3,220 Cash and cash equivalents at beginning of period 17,647 11,244 --------- --------- Cash and cash equivalents at end of period $12,243 $14,464 ========= =========
( ) 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 financial 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 three-month period ended July 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 July 31, 1996, 35,000,000 Class A Common Shares and 35,000,000 Class B Common Shares were authorized. At July 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 July 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, notes receivable, and assumption of certain liabilities. 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 quarters ended July 31, 1996 and 1995 were $2,926,000 and $14,068,000, respectively. Income tax expense allocated to the discontinued operations was $101,000 in fiscal 1996. 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 July 31, 1996, the current portion of assets of discontinued operations consists 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 periods ended July 31, 1996 and 1995, respectively. Results of Operations - --------------------- Sales for the first quarter ended July 31, 1996, were $134,154,000, up slightly over the same period last year. Sales were up over the prior year in the Foodservice, Industrial, International, and Specialty Foods business areas. The Foodservice area recorded the largest dollar gain with sales up 6% for the quarter, primarily on continued growth in sales of portion control items. The Industrial area also realized a 6% increase over last year, due mostly to sales of new formulated fruit products to existing customers. Consumer area sales were down approximately 3% from the first quarter of last year due to decreased sales of fruit spreads and dessert toppings. The fruit spreads category in general remained soft during the first quarter and private label growth continued. The Company's share-of-market declines began to level off during the quarter, however, and showed some signs of strengthening. The decline in fruit spreads and dessert toppings was offset somewhat by increased sales of peanut butter as the Company continued the introduction of its reduced fat peanut butter products. Sales also were down slightly from last year in the Beverage area due in part to a continued shortage of raw materials for organic juice products. Earnings for the quarter were $7,489,000, or $.26 per share, compared to $9,524,000, or $.33 per share for the same period last year. The decrease in earnings is due in part to increased marketing expenditures in support of fruit spreads sales. Also playing a part were higher costs for fruit raw materials and higher administrative expenses in connection with the strategy initiative mentioned below under "Financial Condition - Liquidity and Capital Resources". 7 Sequential Page No. 7 Costs of products sold during the quarter increased from 63.7% of net sales last year to 64.0% in the first quarter of fiscal 1997. The increase was the result of a general increase in the overall cost of fruit raw materials. The impact of the increase in fruit costs likely will impact earnings throughout the remainder of the current fiscal year. Selling, distribution, and administrative costs increased approximately 7% over the same quarter last year. Marketing expenditures were up approximately $1,500,000 and accounted for two-thirds of the increase in SD & A costs. Interest expense was up over the same period last year despite lower average outstanding debt balances. A significant portion of the fiscal 1996 first quarter interest expense was allocated to the Mrs. Smith's business and is therefore included in the discontinued operations line on the income statement. When the fiscal 1996 interest allocated to Mrs. Smith's is taken into consideration, fiscal 1997 interest expense is down approximately 38% from last year. The increase in interest income over last year's first quarter is primarily attributable to interest income recognized on the Company's outstanding note receivable from Flowers Industries, Inc. Income taxes increased at a slightly greater rate than income before tax due to increased state and local taxes. Financial Condition - Liquidity and Capital Resources - ----------------------------------------------------- The overall financial position remains strong as the Company continues to reduce its outstanding long-term debt balance. Cash received to-date from the sale of the Mrs. Smith's business and from continuing operations has allowed the Company to reduce its debt balance from $60,800,000 at April 30, 1996, to $43,100,000 at July 31, 1996. This decrease occurred despite the fact the Company borrowed against its revolving credit line during the quarter to finance seasonal procurement of fruit. Other significant uses of cash during the quarter were capital expenditures and the payment of dividends. During the second quarter, the Company will continue to borrow against its credit line in order to finance the remaining seasonal fruit purchases and other working capital requirements. The Company expects to receive cash proceeds of approximately $24,500,000 relating to the sale of the Mrs. Smith's business 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 project undertaken during the latter half of fiscal 1996. This project resulted in the identification of a new strategic direction for the Company which is expected to cause the launch of several new ventures in the near future. As a result, higher levels of investment spending are anticipated during the remainder of the fiscal year and next year to support the ventures. Although the Company has not determined the precise level of investment spending that will be required, it expects the combination of cash received from the sale of the Mrs. Smith's business and cash generated from continuing operations to be sufficient to meet the investment needs 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 ------------------- On June 14, 1996, the Company filed a current Report on Form 8-K with the Securities and Exchange Commission reporting that the Company was selling its Mrs. Smith's pie business to a subsidiary of Flowers Industries, Inc. 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. September 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 9 Sequential Page No. 9 INDEX OF EXHIBITS That are filed with the Commission and the New York Stock Exchange
Assigned Exhibit No. * Description - -------------------------------------------------------------------- 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. 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, 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 3-MOS APR-30-1997 MAY-01-1996 JUL-31-1996 12,243 0 48,580 601 113,679 212,236 254,638 113,805 419,062 76,571 0 7,290 0 0 271,626 491,062 134,154 134,154 85,883 85,883 35,042 0 750 12,831 5,342 7,489 0 0 0 7,489 .26 .26
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