-----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, RJM/RIcTfIqCscwjfziTRyhBTT15Hfh+Blekt01KhOnEHhl+6lI9HFancFVSo6HG lPwNCaNIAMpKjOH1NxSEbw== 0001275287-07-000814.txt : 20070216 0001275287-07-000814.hdr.sgml : 20070216 20070216071607 ACCESSION NUMBER: 0001275287-07-000814 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20070216 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20070216 DATE AS OF CHANGE: 20070216 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: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-05111 FILM NUMBER: 07629386 BUSINESS ADDRESS: STREET 1: STRAWBERRY LN CITY: ORRVILLE STATE: OH ZIP: 44667 BUSINESS PHONE: 3306823000 MAIL ADDRESS: STREET 1: STRAWBERRY LANE, P.O. BOX 280 CITY: ORRVILLE STATE: OH ZIP: 44667 8-K 1 jm8991.txt FORM 8-K ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of report (Date of earliest event reported): February 16, 2007 THE J. M. SMUCKER COMPANY -------------------------------------------------- (Exact Name of Registrant as Specified in Charter) Ohio 1-5111 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) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: [ ] 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)) ================================================================================ ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION On February 16, 2007, The J. M. Smucker Company (the "Company") issued a press release announcing the financial results for the third quarter and nine months ended January 31, 2007, of its 2007 fiscal year. A copy of the press release is attached to this Current Report on Form 8-K as Exhibit 99.1 and is incorporated herein by reference. The information in this Form 8-K, including the exhibit attached hereto, is furnished and shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section and shall not be deemed incorporated by reference into any registration statement or other document filed pursuant to the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such a filing. ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS (d) Exhibits EXHIBIT NUMBER EXHIBIT DESCRIPTION ------- ------------------------------------------------------------ 99.1 Press Release, dated February 16, 2007 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. THE J. M. SMUCKER COMPANY By: /s/ Mark R. Belgya ---------------------------------------- Mark R. Belgya Vice President, Chief Financial Officer, and Treasurer Date: February 16, 2007 EXHIBIT INDEX EXHIBIT NUMBER EXHIBIT DESCRIPTION - ------- -------------------------------------------------------------------- 99.1 Press Release, dated February 16, 2007 EX-99.1 2 jm8991ex991.txt EXHIBIT 99.1 Exhibit 99.1 THE J. M. SMUCKER COMPANY ANNOUNCES THIRD QUARTER RESULTS ORRVILLE, Ohio, Feb. 16 /PRNewswire-FirstCall/ -- The J. M. Smucker Company (NYSE: SJM) today announced results for the third quarter ended January 31, 2007, of its 2007 fiscal year. Third Quarter Results Three months ended January 31, ----------------------- % Increase 2007 2006 (Decrease) ---------- ---------- ---------- (Dollars in millions, except per share data) Net sales $ 523.1 $ 536.5 (2)% Net income: Income $ 40.4 $ 31.3 29% Income per common share $ 0.71 $ 0.54 31% Net sales increased 6 percent in the third quarter, excluding the Canadian nonbranded, grain-based foodservice and industrial businesses sold in September 2006 and the U.S. industrial ingredient business ("divested businesses"). Growth in the Smucker's(R), Jif(R), and Crisco(R) brands, strong performance across the special markets segment, and the contribution of previously acquired brands resulted in the increase. Higher sales, gross margin improvements, a reduction in restructuring and merger and integration costs, a lower effective tax rate, and a decrease in shares outstanding, all contributed to an increase in earnings per share for the quarter. Net income for the third quarter of 2007 included pretax restructuring charges of $0.5 million, or approximately $0.01 per diluted share, while net income for the third quarter of 2006 included pretax merger and integration costs of $7.8 million, or $0.08 per diluted share, and restructuring charges of $5.4 million, or $0.06 per diluted share. Excluding these costs in both years, the Company's income per diluted share would have been $0.72 in the third quarter of 2007, and $0.68 in the third quarter of 2006. Included in last year's third quarter earnings was a pretax gain of $5.6 million, or $0.06 per diluted share, related to the sale of the Company's Salinas, California, facility. The Company's operations also generated substantial levels of cash during the quarter. Cash from operations for the third quarter of 2007 was $104.6 million of which $15.3 million was used to repurchase 322,000 common shares, including shares repurchased to complete the previously announced Rule 10b5-1 plan. "We achieved good results for the quarter with sales growth and share of market gains across most of our brands," commented Richard Smucker, president and co-chief executive officer. "Earnings grew at an even stronger rate, despite escalating raw material costs, as we are realizing the benefits of previous actions we have taken to offset cost increases and improve our overall profitability. We expect the cost environment to remain difficult and we will continue to take actions to mitigate the cost increases." Nine-Month Results Nine months ended January 31, ----------------------- % Increase 2007 2006 (Decrease) ---------- ---------- ---------- (Dollars in millions, except per share data) Net sales $ 1,654.5 $ 1,653.0 -- Net income: Income $ 114.7 $ 107.7 7% Income per common share $ 2.01 $ 1.83 10% Net sales were up 5 percent for the first nine months of fiscal 2007 over 2006 after excluding divested businesses. Net income for the first nine months of 2007 included pretax restructuring charges of $11.3 million, or $0.13 per diluted share, primarily related to the divestiture of the grain-based Canadian operations. Net income for the comparable period in 2006 included pretax merger and integration costs of $14.8 million, or $0.16 per diluted share, and restructuring charges of $9.1 million, or $0.10 per diluted share. Excluding these costs in both years, the Company's income per diluted share would have been $2.14 for the first nine months of 2007, and $2.09 for the first nine months of 2006. The Company uses income and income per diluted share, excluding restructuring and merger and integration costs, as key performance measures of results of operations for purposes of evaluating performance internally. These non-GAAP measures are not intended to replace the presentation of financial results in accordance with U.S. GAAP. Rather, the presentation of results excluding such charges is consistent with the way management internally evaluates its businesses, facilitates the comparison of past and present operations, and provides a more comprehensive understanding of the financial results. A reconciliation of non-GAAP measures to net income for the current quarter and nine-month period is included in the "Unaudited Financial Highlights" table. Margins
Three months ended Nine months ended January 31, January 31, ------------------------ ------------------------ 2007 2006 2007 2006 ---------- ---------- ---------- ---------- (% of net sales) Gross margin 33.1% 30.5% 31.6% 32.2% Selling, distribution, and administrative expenses 20.8% 19.3% 20.1% 20.2% Operating margin 12.3% 8.9% 11.3% 10.6%
The increase in operating margin was primarily due to improvements in gross margin. The impact of the Canadian divestiture earlier in the year, combined with favorable product mix, accounted for the majority of the improvement in gross margin. Pricing actions taken to date have also contributed to margin improvement. The Company continues to incur high commodity costs impacting both raw material and freight and continues to take pricing actions to offset a portion of the increased costs. Due to the timing of these pricing actions, all cost increases have not been fully offset. Selling, distribution, and administrative expenses as a percentage of net sales increased primarily due to higher marketing and administrative expenses compared to the same period last year. Distribution expenses decreased from the prior year. Segment Performance
Three months ended Nine months ended January 31, January 31, ------------------------------------ ------------------------------------ % Increase % Increase Net sales 2007 2006 (Decrease) 2007 2006 (Decrease) - ---------------------------- ---------- ---------- ---------- ---------- ---------- ---------- (Dollars in millions) U.S. retail market $ 393.8 $ 375.8 5% $ 1,181.6 $ 1,147.2 3% Special markets $ 129.3 $ 160.7 (20)% $ 473.0 $ 505.8 (6)% Special markets excluding divested businesses $ 129.2 $ 116.0 11% $ 394.6 $ 356.0 11%
U.S. Retail Market U.S. retail market segment sales for the quarter were up 5 percent, with sales in the consumer strategic business area up 4 percent and sales in the consumer oils and baking strategic business area up 5 percent. Increases in the consumer strategic business area were led by gains in peanut butter, fruit spreads, toppings, and Uncrustables(R). In the consumer oils and baking strategic business area, sales gains in retail oils, frostings, baking ingredients, and the contribution of the White Lily(R) brand acquired earlier in the year offset declines in sales of industrial oils and baking mixes. For the first nine months, sales in the consumer strategic business area were up 5 percent, and sales in the oils and baking strategic business area were flat. Special Markets Sales in the third quarter for the special markets segment, excluding divested businesses, increased 11 percent. All strategic business areas in special markets were up with foodservice up 15 percent, Canada up 10 percent, beverage up 8 percent, and international up 15 percent. Increased sales of traditional portion control products, as well as increases in Uncrustables in the schools market contributed to the foodservice improvement. The increase in Canada was driven by the acquisition of the Five Roses(R) flour brand earlier in the year, the impact of favorable exchange rates, and growth in pickles and relishes. Outlook The Company remains committed to its long-term sales growth goal of 8 percent, one-half of which is to come from its core business and new products, and the remainder from acquisitions. Long-term earnings per share growth would be in line with sales growth. The Company expects 2007 sales to increase by approximately 4 percent over last year, excluding approximately $100 million in sales related to the divestiture of the Canadian nonbranded, grain-based foodservice and industrial businesses. Although the cost environment continues to be challenging, the Company's goal remains to increase income per common share for the year in line with the core growth assumption of 4 percent from fiscal 2006 income per common share of $2.65, which excludes restructuring and merger and integration costs, the gain on the sale of the Company's Salinas, California, plant, and nonrecurring tax benefits. Conference Call The Company will conduct an earnings conference call and webcast on Friday, February 16, 2007, at 8:30 a.m. E.T. The webcast, as well as a replay in downloadable MP3 format, can be accessed from the Company's website at www.smuckers.com. For those unable to listen to the webcast, an audio replay will be available following the call and can be accessed by dialing 888-203- 1112 or 719-457-0820, with a pass code of 6495745, and will be available until Friday, February 23, 2007. About The J. M. Smucker Company The J. M. Smucker Company is the leading marketer and manufacturer of fruit spreads, peanut butter, shortening and oils, ice cream toppings and health and natural foods beverages in North America. Its family of brands includes Smucker's(R), Jif(R), Crisco(R), Pillsbury(R), R.W. Knudsen Family(R), Hungry Jack(R), White Lily(R) and Martha White(R) in the United States, along with Robin Hood(R) and Bick's(R) in Canada. The Company remains rooted in the Basic Beliefs of Quality, People, Ethics, Growth and Independence established by its founder and namesake more than a century ago. Since 1998, the Company has appeared on FORTUNE Magazine's annual listing of the 100 Best Companies to Work For in the United States, ranking number one in 2004. For more information about the company, visit www.smuckers.com. The J. M. Smucker Company Forward-Looking Language This press release contains forward-looking statements, including statements regarding estimates of future earnings and cash flows that are subject to risks and uncertainties that could cause actual results to differ materially. Uncertainties that could affect actual results include, but are not limited to, volatility of commodity markets from which raw materials are procured and the related impact on costs, volatility of energy and fuel costs, the success in introducing new products and the competitive response, particularly in the consumer oils and baking area, costs of new marketing and sales programs and strategies intended to promote growth in the Company's businesses, the ability to successfully implement price changes, the timing and amount of restructuring costs, the timing of acquiring common shares under the Company's share repurchase authorization, and other factors affecting share prices and capital markets generally. Other risks and uncertainties that may materially affect the Company are detailed from time to time in the respective reports filed by the Company with the Securities and Exchange Commission, including Forms 10-Q, 10-K, and 8-K. The J. M. Smucker Company Unaudited Condensed Consolidated Statements of Income
Three Months Ended Nine Months Ended January 31, January 31, ---------------------------- ---------------------------- 2007 2006 2007 2006 ------------ ------------ ------------ ------------ (Dollars in thousands, except per share data) Net sales $ 523,081 $ 536,453 $ 1,654,545 $ 1,653,048 Cost of products sold 349,425 371,981 1,122,412 1,120,193 Cost of products sold - restructuring 689 618 9,981 865 Gross Profit 172,967 163,854 522,152 531,990 Selling, distribution, and administrative expenses 108,789 103,610 333,274 334,259 Other restructuring costs (199) 4,783 1,337 8,248 Merger and integration costs - 7,764 - 14,784 Operating Income 64,377 47,697 187,541 174,699 Interest income 2,629 1,709 6,625 4,858 Interest expense (5,656) (5,984) (17,681) (18,116) Other (expense) income - net (902) 6,150 (1,210) 6,269 Income Before Income Taxes 60,448 49,572 175,275 167,710 Income taxes 20,021 18,260 60,555 60,057 Net Income $ 40,427 $ 31,312 $ 114,720 $ 107,653 Net income per common share $ 0.72 $ 0.54 $ 2.03 $ 1.85 Net income per common share - assuming dilution $ 0.71 $ 0.54 $ 2.01 $ 1.83 Dividends declared per common share $ 0.28 $ 0.27 $ 0.84 $ 0.81 Weighted-average shares outstanding 56,185,039 57,944,604 56,494,799 58,106,913 Weighted-average shares outstanding - assuming dilution 56,787,600 58,486,412 57,060,218 58,708,209
The J. M. Smucker Company Unaudited Condensed Consolidated Balance Sheets January 31, April 30, 2007 2006 ------------ ------------ (Dollars in thousands) ASSETS Current Assets: Cash and cash equivalents $ 152,168 $ 71,956 Marketable securities - 14,882 Trade receivables 117,619 148,014 Inventories 277,289 279,088 Assets held for sale (1) - 90,250 Other current assets 34,850 38,648 Total Current Assets 581,926 642,838 Property, Plant, and Equipment, net 453,274 456,554 Other Noncurrent Assets: Goodwill 988,797 940,967 Other intangible assets, net 476,720 472,915 Marketable securities 46,984 34,107 Other assets 108,177 102,363 Total Noncurrent Assets 1,620,678 1,550,352 $ 2,655,878 $ 2,649,744 LIABILITIES & SHAREHOLDERS' EQUITY Current Liabilities: Accounts payable $ 80,619 $ 88,963 Notes payable - 28,620 Current portion of long-term debt 33,000 - Other current liabilities 133,876 117,857 Total Current Liabilities 247,495 235,440 Noncurrent Liabilities: Long-term debt, net of current portion 393,383 428,602 Other noncurrent liabilities 259,609 257,643 Total Noncurrent Liabilities 652,992 686,245 Shareholders' Equity, net 1,755,391 1,728,059 $ 2,655,878 $ 2,649,744 (1) Accounts related to the Company's Canadian nonbranded, grain-based foodservice and industrial business, which was divested in September 2006. The J. M. Smucker Company Unaudited Condensed Consolidated Statements of Cash Flow Nine Months Ended January 31, --------------------------- 2007 2006 ------------ ------------ (Dollars in thousands) Operating Activities Net income $ 114,720 $ 107,653 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 42,387 47,133 Amortization 1,186 74 Asset impairments and other restructuring charges 10,089 865 Share-based compensation expense 8,282 5,889 Gain on sale of assets - (5,638) Working capital 35,378 (31,396) Net Cash Provided by Operating Activities 212,042 124,580 Investing Activities Business acquired, net of cash acquired (60,488) - Proceeds from sale of business 84,054 8,754 Additions to property, plant, and equipment (42,903) (42,715) Other - net 2,251 33,321 Net Cash Used for Investing Activities (17,086) (640) Financing Activities Dividends paid (47,820) (47,044) Purchase of treasury shares (51,943) (30,122) Other - net (11,655) (15,372) Net Cash Used for Financing Activities (111,418) (92,538) Effect of exchange rate changes (3,326) (241) Net increase in cash and cash equivalents 80,212 31,161 Cash and cash equivalents at beginning of period 71,956 58,085 Cash and cash equivalents at end of period $ 152,168 $ 89,246 ( ) Denotes use of cash The J. M. Smucker Company Unaudited Financial Highlights
Three Months Ended Nine Months Ended January 31, January 31, ---------------------------- --------------------------- 2007 2006 2007 2006 ------------ ------------ ------------ ------------ (Dollars in thousands, except per share data) Net sales $ 523,081 $ 536,453 $ 1,654,545 $ 1,653,048 Net income and net income per common share: Net income $ 40,427 $ 31,312 $ 114,720 $ 107,653 Net income per common share -- assuming dilution $ 0.71 $ 0.54 $ 2.01 $ 1.83 Income excluding restructuring and merger and integration costs: (1) Income $ 40,828 $ 39,711 $ 122,127 $ 122,993 Income per common share -- assuming dilution $ 0.72 $ 0.68 $ 2.14 $ 2.09 (1) Reconciliation to net income Income before income taxes $ 60,448 $ 49,572 $ 175,275 $ 167,710 Merger and integration costs - 7,764 - 14,784 Cost of products sold - restructuring 689 618 9,981 865 Other restructuring costs (199) 4,783 1,337 8,248 Income excluding income taxes, restructuring, and merger and integration costs 60,938 62,737 186,593 191,607 Income taxes 20,110 23,026 64,466 68,614 Income excluding restructuring and merger and integration costs $ 40,828 $ 39,711 $ 122,127 $ 122,993
The Company uses income and income per diluted share, excluding restructuring and merger and integration costs, as key performance measures of results of operations for purposes of evaluating performance internally. These non-GAAP measures are not intended to replace the presentation of financial results in accordance with U.S. GAAP. Rather, the presentation of results excluding such charges is consistent with the way management internally evaluates its businesses, facilitates the comparison of past and present operations and provides a more comprehensive understanding of the financial results. SOURCE J. M. Smucker Company -0- 02/16/2007 /CONTACT: Investors, Mark R. Belgya, Vice President, Chief Financial Officer and Treasurer, or Media, Maribeth Badertscher, Director, Corporate Communications, of The J. M. Smucker Company, +1-330-682-3000/ /Web site: http://www.smuckers.com/ -----END PRIVACY-ENHANCED MESSAGE-----