Ohio
|
001-05111
|
34-0538550
|
||
(State or Other Jurisdiction
|
(Commission
|
(IRS Employer
|
||
of Incorporation)
|
File Number)
|
Identification No.)
|
||
One Strawberry Lane
|
||
Orrville, Ohio
|
44667-0280
|
|
(Address of Principal Executive Offices)
|
(Zip Code)
|
Registrant’s telephone number, including area code:
|
(330) 682-3000
|
Not Applicable
|
(Former Name or Former Address, if Changed Since Last Report)
|
¨
|
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
|
¨
|
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
|
¨
|
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
|
¨
|
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
|
|
(d)
|
Exhibits
|
Exhibit
Number
|
Exhibit
Description
|
|
99.1
|
Press Release, dated August 18, 2011
|
THE J. M. SMUCKER COMPANY
|
|||
By:
|
/s/ Mark R. Belgya
|
||
Mark R. Belgya
|
|||
Senior Vice President and Chief Financial Officer
|
Date:
|
August 18, 2011
|
Exhibit
Number
|
Exhibit
Description
|
|
99.1
|
Press Release, dated August 18, 2011
|
|
·
|
Q1 net sales and EPS both increase 14 percent; EPS up 8 percent, excluding charges
|
|
·
|
Rowland Coffee results included in Q1
|
|
·
|
Company updates outlook for growth in fiscal 2012
|
Three Months Ended July 31,
|
||||||||||||
2011
|
2010
|
% Increase
|
||||||||||
(Dollars in millions, except per share data)
|
||||||||||||
Net sales
|
$ | 1,188.9 | $ | 1,047.3 | 14 | % | ||||||
Operating income
|
$ | 180.7 | $ | 165.2 | 9 | % | ||||||
% of net sales
|
15.2 | % | 15.8 | % | ||||||||
Net income:
|
||||||||||||
Income
|
$ | 111.5 | $ | 102.9 | 8 | % | ||||||
Income per diluted share
|
$ | 0.98 | $ | 0.86 | 14 | % |
|
·
|
Non-GAAP income per diluted share was $1.12 and $1.04 for the first quarters of 2012 and 2011, respectively, an increase of 8 percent.
|
|
·
|
Non-GAAP income per diluted share excludes restructuring and merger and integration costs (“special project costs”) of $0.14 and $0.18 per diluted share, in the first quarters of 2012 and 2011, respectively.
|
|
·
|
Results for the first quarter of 2012 were impacted by a higher effective tax rate of 33.2 percent, compared to 31.3 percent in the first quarter of 2011.
|
|
·
|
Income per diluted share in the first quarter of 2012 benefited from a decrease in weighted-average common shares outstanding, as a result of the Company’s share repurchase activity during the second half of fiscal 2011.
|
Three Months Ended July 31,
|
||||||||||||||||
2011
|
2010
|
Increase
|
%
|
|||||||||||||
(Dollars in millions)
|
||||||||||||||||
Net sales
|
$ | 1,188.9 | $ | 1,047.3 | $ | 141.6 | 14 | % | ||||||||
Adjust for certain noncomparable items:
|
||||||||||||||||
Acquisition
|
(23.2 | ) | - | (23.2 | ) | (2 | )% | |||||||||
Foreign exchange
|
(7.2 | ) | - | (7.2 | ) | (1 | )% | |||||||||
Net sales excluding acquisition and foreign exchange
|
$ | 1,158.5 | $ | 1,047.3 | $ | 111.2 | 11 | % |
Three Months Ended July 31,
|
||||||||
2011
|
2010
|
|||||||
(% of net sales)
|
||||||||
Gross profit
|
36.3 | % | 39.0 | % | ||||
Selling, distribution, and administrative expenses:
|
||||||||
Marketing
|
5.8 | % | 6.6 | % | ||||
Selling
|
3.4 | % | 3.4 | % | ||||
Distribution
|
3.2 | % | 3.5 | % | ||||
General and administrative
|
5.8 | % | 5.9 | % | ||||
18.2 | % | 19.4 | % | |||||
Amortization
|
1.7 | % | 1.8 | % | ||||
Other restructuring and merger and integration costs
|
1.2 | % | 2.0 | % | ||||
Other operating (income) expense — net
|
(0.1 | )% | 0.1 | % | ||||
Operating income
|
15.2 | % | 15.8 | % |
Three Months Ended July 31,
|
||||||||||||
2011
|
2010
|
% Increase
(Decrease)
|
||||||||||
(Dollars in millions)
|
||||||||||||
Net sales:
|
||||||||||||
U.S. Retail Coffee
|
$ | 500.1 | $ | 393.6 | 27 | % | ||||||
U.S. Retail Consumer Foods
|
459.5 | 448.5 | 2 | % | ||||||||
International, Foodservice, and Natural Foods
|
229.3 | 205.2 | 12 | % | ||||||||
Segment profit:
|
||||||||||||
U.S. Retail Coffee
|
$ | 139.7 | $ | 111.9 | 25 | % | ||||||
U.S. Retail Consumer Foods
|
79.0 | 93.4 | (15 | )% | ||||||||
International, Foodservice, and Natural Foods
|
38.5 | 35.5 | 9 | % | ||||||||
Segment profit margin:
|
||||||||||||
U.S. Retail Coffee
|
27.9 | % | 28.4 | % | ||||||||
U.S. Retail Consumer Foods
|
17.2 | % | 20.8 | % | ||||||||
International, Foodservice, and Natural Foods
|
16.8 | % | 17.3 | % |
Three Months Ended July 31,
|
||||||||||||
2011
|
2010
|
%
Increase
|
||||||||||
(Dollars in millions)
|
||||||||||||
Net Cash Used for Operating Activities
|
$ | (58.2 | ) | $ | (27.2 | ) | 114 | % | ||||
EBITDA
|
$ | 240.2 | $ | 223.2 | 8 | % | ||||||
% of net sales
|
20.2 | % | 21.3 | % |
·
|
volatility of commodity markets from which raw materials, particularly green coffee beans, wheat, soybean oil, milk, and peanuts, are procured and the related impact on costs;
|
·
|
risks associated with derivative and purchasing strategies employed by the Company to manage commodity pricing risks, including the risk that such strategies could result in significant losses and adversely impact the Company’s liquidity;
|
·
|
crude oil price trends and their impact on transportation, energy, and packaging costs;
|
·
|
the ability to successfully implement and realize the full benefit of price changes and the competitive response;
|
·
|
the success and cost of introducing new products and the competitive response;
|
·
|
the success and cost of marketing and sales programs and strategies intended to promote growth in the Company’s businesses;
|
·
|
general competitive activity in the market, including competitors’ pricing practices and promotional spending levels;
|
·
|
the ability of the Company to successfully integrate acquired and merged businesses in a timely and cost effective manner;
|
·
|
the successful completion of the Company’s restructuring programs, and the ability to realize anticipated savings and other potential benefits within the time frames currently contemplated;
|
·
|
the impact of food safety concerns involving either the Company or its competitors’ products;
|
·
|
the impact of accidents and natural disasters, including crop failures and storm damage;
|
·
|
the concentration of certain of the Company’s businesses with key customers and suppliers and the ability to manage and maintain key relationships;
|
·
|
the loss of significant customers, a substantial reduction in orders from these customers, or the bankruptcy of any such customer;
|
·
|
changes in consumer coffee preferences and other factors affecting the coffee business, which represents a substantial portion of the Company’s business;
|
·
|
the ability of the Company to obtain any required financing;
|
·
|
the timing and amount of capital expenditures, share repurchases, and restructuring costs;
|
·
|
impairments in the carrying value of goodwill, other intangible assets, or other long-lived assets or changes in useful lives of other intangible assets;
|
·
|
the impact of changes in, or the Company’s failure to comply with, laws and regulations applicable to the Company’s products or business operations;
|
·
|
the impact of future legal, regulatory, or market measures regarding climate change;
|
·
|
the outcome of current and future tax examinations, changes in tax laws, and other tax matters, and their related impact on the Company’s tax positions;
|
·
|
foreign currency and interest rate fluctuations;
|
·
|
political or economic disruption;
|
·
|
other factors affecting share prices and capital markets generally; and
|
·
|
the other factors described under “Risk Factors” in other reports and statements filed by the Company with the Securities and Exchange Commission, including its most recent Annual Report on Form 10-K.
|
Investors:
|
Media:
|
Sonal Robinson
|
Maribeth Badertscher
|
Vice President, Investor Relations
|
Vice President, Corporate Communications
|
Three Months Ended July 31,
|
||||||||||||
2011
|
2010
|
% Increase
(Decrease) |
||||||||||
(Dollars in thousands, except per share data)
|
||||||||||||
Net sales
|
$ | 1,188,883 | $ | 1,047,312 | 14 | % | ||||||
Cost of products sold
|
747,373 | 629,424 | 19 | % | ||||||||
Cost of products sold - restructuring
|
9,666 | 9,453 | 2 | % | ||||||||
Cost of products sold - merger and integration
|
760 | - | n/m | |||||||||
Gross Profit
|
431,084 | 408,435 | 6 | % | ||||||||
Gross margin
|
36.3 | % | 39.0 | % | ||||||||
Selling, distribution, and administrative expenses
|
216,552 | 203,261 | 7 | % | ||||||||
Amortization
|
20,235 | 18,497 | 9 | % | ||||||||
Other restructuring costs
|
9,897 | 18,104 | (45 | )% | ||||||||
Other merger and integration costs
|
4,685 | 2,656 | 76 | % | ||||||||
Other operating (income) expense — net
|
(988 | ) | 750 | (232 | )% | |||||||
Operating Income
|
180,703 | 165,167 | 9 | % | ||||||||
Operating margin
|
15.2 | % | 15.8 | % | ||||||||
Interest income
|
302 | 433 | (30 | )% | ||||||||
Interest expense
|
(15,422 | ) | (16,539 | ) | (7 | )% | ||||||
Other income — net
|
1,243 | 693 | 79 | % | ||||||||
Income Before Income Taxes
|
166,826 | 149,754 | 11 | % | ||||||||
Income taxes
|
55,303 | 46,873 | 18 | % | ||||||||
Net Income
|
$ | 111,523 | $ | 102,881 | 8 | % | ||||||
Net income per common share
|
$ | 0.98 | $ | 0.86 | 14 | % | ||||||
Net income per common share– assuming dilution
|
$ | 0.98 | $ | 0.86 | 14 | % | ||||||
Dividends declared per common share
|
$ | 0.48 | $ | 0.40 | 20 | % | ||||||
Weighted-average shares outstanding
|
114,277,547 | 119,300,926 | (4 | )% | ||||||||
Weighted-average shares outstanding – assuming dilution
|
114,335,184 | 119,440,490 | (4 | )% |
July 31, 2011
|
April 30, 2011
|
July 31, 2010
|
||||||||||
(Dollars in thousands)
|
||||||||||||
Assets
|
||||||||||||
Current Assets:
|
||||||||||||
Cash and cash equivalents
|
$ | 102,475 | $ | 319,845 | $ | 522,773 | ||||||
Trade receivables
|
350,293 | 344,410 | 305,418 | |||||||||
Inventories
|
1,213,821 | 863,579 | 765,927 | |||||||||
Other current assets
|
73,183 | 109,165 | 106,510 | |||||||||
Total Current Assets
|
1,739,772 | 1,636,999 | 1,700,628 | |||||||||
Property, Plant, and Equipment, Net
|
925,687 | 867,882 | 847,192 | |||||||||
Other Noncurrent Assets:
|
||||||||||||
Goodwill
|
2,903,713 | 2,812,746 | 2,806,888 | |||||||||
Other intangible assets, net
|
3,132,761 | 2,940,010 | 3,007,187 | |||||||||
Other noncurrent assets
|
80,090 | 66,948 | 57,209 | |||||||||
Total Other Noncurrent Assets
|
6,116,564 | 5,819,704 | 5,871,284 | |||||||||
$ | 8,782,023 | $ | 8,324,585 | $ | 8,419,104 | |||||||
Liabilities and Shareholders' Equity
|
||||||||||||
Current Liabilities:
|
||||||||||||
Accounts payable
|
$ | 288,082 | $ | 234,916 | $ | 183,600 | ||||||
Current portion of long-term debt
|
- | - | 10,000 | |||||||||
Revolving credit agreement
|
306,700 | - | - | |||||||||
Other current liabilities
|
280,452 | 247,760 | 260,636 | |||||||||
Total Current Liabilities
|
875,234 | 482,676 | 454,236 | |||||||||
Noncurrent Liabilities:
|
||||||||||||
Long-term debt, net of current portion
|
1,318,489 | 1,304,039 | 1,300,000 | |||||||||
Other noncurrent liabilities
|
1,240,046 | 1,245,507 | 1,269,760 | |||||||||
Total Noncurrent Liabilities
|
2,558,535 | 2,549,546 | 2,569,760 | |||||||||
Shareholders' Equity
|
5,348,254 | 5,292,363 | 5,395,108 | |||||||||
$ | 8,782,023 | $ | 8,324,585 | $ | 8,419,104 |
Three Months Ended July 31,
|
||||||||
2011
|
2010
|
|||||||
(Dollars in thousands)
|
||||||||
Operating Activities
|
||||||||
Net income
|
$ | 111,523 | $ | 102,881 | ||||
Adjustments to reconcile net income to net cash used for operating activities:
|
||||||||
Depreciation
|
27,569 | 29,360 | ||||||
Depreciation - restructuring and merger and integration
|
10,415 | 9,453 | ||||||
Amortization
|
20,235 | 18,497 | ||||||
Share-based compensation expense
|
6,032 | 5,328 | ||||||
Other noncash restructuring charges
|
909 | 3,849 | ||||||
Loss on sale of assets - net
|
725 | 134 | ||||||
Changes in assets and liabilities, net of effect from business acquired:
|
||||||||
Trade receivables
|
7,512 | (66,958 | ) | |||||
Inventories
|
(330,854 | ) | (111,907 | ) | ||||
Accounts payable and accrued items
|
55,389 | 32,969 | ||||||
Defined benefit pension contributions
|
(3,691 | ) | (10,544 | ) | ||||
Income taxes
|
30,616 | (43,555 | ) | |||||
Other -net
|
5,391 | 3,255 | ||||||
Net Cash Used for Operating Activities
|
(58,229 | ) | (27,238 | ) | ||||
Investing Activities
|
||||||||
Business acquired, net of cash acquired
|
(362,855 | ) | - | |||||
Additions to property, plant, and equipment
|
(67,632 | ) | (26,946 | ) | ||||
Sale and maturity of marketable securities
|
18,600 | - | ||||||
Purchases of marketable securities
|
- | (57,037 | ) | |||||
Other - net
|
112 | 330 | ||||||
Net Cash Used for Investing Activities
|
(411,775 | ) | (83,653 | ) | ||||
Financing Activities
|
||||||||
Revolving credit agreement - net
|
306,700 | - | ||||||
Proceeds from long-term debt
|
- | 400,000 | ||||||
Quarterly dividends paid
|
(50,159 | ) | (47,594 | ) | ||||
Purchase of treasury shares
|
(5,385 | ) | (5,033 | ) | ||||
Other - net
|
2,776 | 3,538 | ||||||
Net Cash Provided by Financing Activities
|
253,932 | 350,911 | ||||||
Effect of exchange rate changes
|
(1,298 | ) | (817 | ) | ||||
Net (decrease) increase in cash and cash equivalents
|
(217,370 | ) | 239,203 | |||||
Cash and cash equivalents at beginning of period
|
319,845 | 283,570 | ||||||
Cash and cash equivalents at end of period
|
$ | 102,475 | $ | 522,773 | ||||
( ) Denotes use of cash
|
Three Months Ended July 31,
|
||||||||
2011
|
2010
|
|||||||
(Dollars in thousands, except per
share data) |
||||||||
Gross profit excluding special project costs (1)
|
$ | 441,510 | $ | 417,888 | ||||
% of net sales
|
37.1 | % | 39.9 | % | ||||
Operating income excluding special project costs (2)
|
$ | 205,711 | $ | 195,380 | ||||
% of net sales
|
17.3 | % | 18.7 | % | ||||
Income excluding special project costs: (3)
|
||||||||
Income
|
$ | 128,240 | $ | 123,637 | ||||
Income per common share — assuming dilution
|
$ | 1.12 | $ | 1.04 | ||||
(1) Reconciliation to gross profit:
|
||||||||
Gross profit
|
$ | 431,084 | $ | 408,435 | ||||
Cost of products sold - restructuring
|
9,666 | 9,453 | ||||||
Cost of products sold - merger and integration
|
760 | - | ||||||
Gross profit excluding special project costs
|
$ | 441,510 | $ | 417,888 | ||||
(2) Reconciliation to operating income:
|
||||||||
Operating income
|
$ | 180,703 | $ | 165,167 | ||||
Cost of products sold - restructuring
|
9,666 | 9,453 | ||||||
Cost of products sold - merger and integration
|
760 | - | ||||||
Other restructuring costs
|
9,897 | 18,104 | ||||||
Other merger and integration costs
|
4,685 | 2,656 | ||||||
Operating income excluding special project costs
|
$ | 205,711 | $ | 195,380 | ||||
(3) Reconciliation to net income:
|
||||||||
Income before income taxes
|
$ | 166,826 | $ | 149,754 | ||||
Cost of products sold - restructuring
|
9,666 | 9,453 | ||||||
Cost of products sold - merger and integration
|
760 | - | ||||||
Other restructuring costs
|
9,897 | 18,104 | ||||||
Other merger and integration costs
|
4,685 | 2,656 | ||||||
Income before income taxes, excluding special project costs
|
191,834 | 179,967 | ||||||
Income taxes, as adjusted
|
63,594 | 56,330 | ||||||
Income excluding special project costs
|
$ | 128,240 | $ | 123,637 |
Three Months Ended July 31,
|
||||||||
2011
|
2010
|
|||||||
(Dollars in thousands, except per
share data)
|
||||||||
Earnings before interest, taxes, depreciation, and amortization (4)
|
$ | 240,165 | $ | 223,170 | ||||
% of net sales
|
20.2 | % | 21.3 | % | ||||
Free cash flow (5)
|
$ | (125,861 | ) | $ | (54,184 | ) | ||
(4) Reconciliation to net income:
|
||||||||
Income before income taxes
|
$ | 166,826 | $ | 149,754 | ||||
Interest income
|
(302 | ) | (433 | ) | ||||
Interest expense
|
15,422 | 16,539 | ||||||
Depreciation
|
27,569 | 29,360 | ||||||
Depreciation - restructuring and merger and integration
|
10,415 | 9,453 | ||||||
Amortization
|
20,235 | 18,497 | ||||||
Earnings before interest, taxes, depreciation, and amortization
|
$ | 240,165 | $ | 223,170 | ||||
(5) Reconciliation to cash used for operating activities:
|
||||||||
Cash used for operating activities
|
$ | (58,229 | ) | $ | (27,238 | ) | ||
Additions to property, plant, and equipment
|
(67,632 | ) | (26,946 | ) | ||||
Free cash flow
|
$ | (125,861 | ) | $ | (54,184 | ) |
Three Months Ended July 31,
|
||||||||
2011
|
2010
|
|||||||
(Dollars in thousands)
|
||||||||
Net sales:
|
||||||||
U.S. Retail Coffee
|
$ | 500,109 | $ | 393,570 | ||||
U.S. Retail Consumer Foods
|
459,500 | 448,522 | ||||||
International, Foodservice, and Natural Foods
|
229,274 | 205,220 | ||||||
Total net sales
|
$ | 1,188,883 | $ | 1,047,312 | ||||
Segment profit:
|
||||||||
U.S. Retail Coffee
|
$ | 139,711 | $ | 111,882 | ||||
U.S. Retail Consumer Foods
|
79,019 | 93,355 | ||||||
International, Foodservice, and Natural Foods
|
38,545 | 35,521 | ||||||
Total segment profit
|
$ | 257,275 | $ | 240,758 | ||||
Interest income
|
302 | 433 | ||||||
Interest expense
|
(15,422 | ) | (16,539 | ) | ||||
Share-based compensation expense
|
(5,151 | ) | (4,340 | ) | ||||
Cost of products sold - restructuring
|
(9,666 | ) | (9,453 | ) | ||||
Cost of products sold - merger and integration
|
(760 | ) | - | |||||
Other restructuring costs
|
(9,897 | ) | (18,104 | ) | ||||
Other merger and integration costs
|
(4,685 | ) | (2,656 | ) | ||||
Corporate administrative expenses
|
(46,413 | ) | (41,038 | ) | ||||
Other income — net
|
1,243 | 693 | ||||||
Income before income taxes
|
$ | 166,826 | $ | 149,754 | ||||
Segment profit margin:
|
||||||||
U.S. Retail Coffee
|
27.9 | % | 28.4 | % | ||||
U.S. Retail Consumer Foods
|
17.2 | % | 20.8 | % | ||||
International, Foodservice, and Natural Foods
|
16.8 | % | 17.3 | % |
Three Months Ended
|
||||||||||||||||
July 31, 2010
|
October 31, 2010
|
January 31, 2011
|
April 30, 2011
|
|||||||||||||
(Dollars in thousands)
|
||||||||||||||||
Net sales:
|
||||||||||||||||
U.S. Retail Coffee
|
$ | 393,570 | $ | 477,287 | $ | 554,667 | $ | 505,345 | ||||||||
U.S. Retail Consumer Foods
|
448,522 | 543,045 | 518,492 | 442,984 | ||||||||||||
International, Foodservice, and Natural Foods
|
205,220 | 258,581 | 239,192 | 238,838 | ||||||||||||
Total net sales
|
$ | 1,047,312 | $ | 1,278,913 | $ | 1,312,351 | $ | 1,187,167 | ||||||||
Segment profit:
|
||||||||||||||||
U.S. Retail Coffee
|
$ | 111,882 | $ | 149,099 | $ | 158,093 | $ | 117,059 | ||||||||
U.S. Retail Consumer Foods
|
93,355 | 113,127 | 102,160 | 97,813 | ||||||||||||
International, Foodservice, and Natural Foods
|
35,521 | 51,420 | 29,890 | 42,749 | ||||||||||||
Total segment profit
|
$ | 240,758 | $ | 313,646 | $ | 290,143 | $ | 257,621 | ||||||||
Segment profit margin:
|
||||||||||||||||
U.S. Retail Coffee
|
28.4 | % | 31.2 | % | 28.5 | % | 23.2 | % | ||||||||
U.S. Retail Consumer Foods
|
20.8 | % | 20.8 | % | 19.7 | % | 22.1 | % | ||||||||
International, Foodservice, and Natural Foods
|
17.3 | % | 19.9 | % | 12.5 | % | 17.9 | % |