<PAGE> 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, 1995
---------------------------
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
(216) 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 14,386,339 Class A Common Shares and 14,780,839
Class B Common Shares outstanding on January 31, 1995.
The Exhibit Index is located at Sequential Page No. 9.
<PAGE> 2
Sequential Page
No. 2
PART I. FINANCIAL INFORMATION
THE J. M. SMUCKER COMPANY
CONDENSED STATEMENTS OF CONSOLIDATED INCOME
(Unaudited)
<TABLE>
Item 1. Financial Statements
--------------------
<CAPTION>
Three Months Ended Nine Months Ended
January 31, January 31
------------------- ------------------
1995 1994 1995 1994
-------- --------- -------- --------
(Dollars in thousands, except per share data)
<S> <C> <C> <C> <C>
Net Sales $157,348 $115,616 $486,034 $358,756
Cost of products sold 100,600 74,708 315,791 229,286
-------- -------- -------- --------
56,748 40,908 170,243 129,470
Selling, distribution, and
administrative expenses 41,841 29,021 119,341 86,250
-------- -------- -------- --------
14,907 11,887 50,902 43,220
Interest income 108 214 473 651
Other income (net) 749 375 2,772 926
-------- -------- -------- --------
15,764 12,476 54,147 44,797
Interest expense 1,299 116 3,423 210
-------- -------- -------- --------
INCOME BEFORE INCOME TAXES 14,465 12,360 50,724 44,587
Income taxes 5,776 4,973 20,494 17,871
-------- -------- -------- --------
NET INCOME $ 8,689 $ 7,387 $ 30,230 $ 26,716
======== ======== ======== ========
Net income per Common Share* $ .30 $ .26 $ 1.04 $ .92
======== ======== ======== ========
Dividends declared on
Class A Common Shares $ .125 $ .115 $ .375 $ .345
======== ======== ======== ========
Dividends declared on
Class B Common Shares $ .125 $ .115 $ .375 $ .345
======== ======== ======== ========
<FN>
* Computed on the weighted average
number of Class A Common Shares
and Class B Common Shares out-
standing, namely 29,167,667 29,162,460 29,157,201 29,191,050
</TABLE>
See notes to condensed, consolidated financial statements.
<PAGE> 3
Sequential Page
No. 3
THE J. M. SMUCKER COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
January 31, 1995 April 30, 1994
(Unaudited)
----------- ----------
ASSETS (Dollars in Thousands)
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 10,385 $ 14,059
Trade receivables, less allowances 46,297 47,828
Inventories:
Finished products 49,352 42,463
Raw materials, containers, and supplies 72,160 60,773
-------- --------
121,512 103,236
Other current assets 8,244 6,562
-------- --------
Total Current Assets 186,438 171,685
PROPERTY, PLANT, AND EQUIPMENT
Land and land improvements 14,115 13,533
Buildings and fixtures 71,705 68,362
Machinery and equipment 137,849 130,403
Construction in progress 7,386 6,486
-------- --------
231,055 218,784
Less allowances for depreciation (92,752) (81,278)
-------- ---------
Total Property, Plant and Equipment 138,303 137,506
OTHER NONCURRENT ASSETS
Goodwill 40,721 21,833
Other assets 50,799 47,617
-------- --------
Total Other Noncurrent Assets 91,520 69,450
-------- --------
$416,261 $378,641
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 30,308 $ 37,322
Notes payable 15,198 4,327
Income taxes 4,023 2,124
Other current liabilities 42,846 39,422
-------- --------
Total Current Liabilities 92,375 83,195
NONCURRENT LIABILITIES 68,467 61,044
SHAREHOLDERS' EQUITY
Class A Common Shares, outstanding shares: 3,597 3,590
14,386,339 and 14,362,999 at stated value
Class B Common Shares (nonvoting), out- 3,695 3,687
standing shares: 14,780,839 and 14,749,039
at stated value
Additional capital 10,964 9,261
Retained income 252,638 233,420
Less:
Deferred compensation (1,532) (576)
Amount due from ESOP Trust (10,441) (10,670)
Currency translation adjustment (3,502) (4,310)
-------- --------
Total Shareholders' Equity 255,419 234,402
-------- --------
$416,261 $378,641
======== ========
</TABLE>
See notes to condensed, consolidated financial statements.
<PAGE> 4
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No. 4
THE J. M. SMUCKER COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
January 31
--------------------
(Dollars in Thousands)
1995 1994
-------- --------
<S> <C> <C>
NET CASH PROVIDED FROM OPERATING ACTIVITIES $ 26,228 $ 14,882
CASH FLOWS FROM INVESTING ACTIVITIES
Business acquired - net of cash (28,780) (15,853)
Additions to property, plant, and
equipment (12,766) (12,935)
Other - net (728) (263)
-------- --------
NET CASH USED FOR INVESTING ACTIVITIES (42,274) (29,051)
CASH FLOWS FROM FINANCING ACTIVITIES
Dividends paid (10,900) (10,021)
Proceeds from long-term debt 7,501 -0-
Proceeds from short-term debt 15,198 -0-
Other - net 404 (791)
------- --------
NET CASH PROVIDED BY/(USED FOR)
FINANCING ACTIVITIES 12,203 (10,812)
Effect of exchange rate changes 169 (171)
Net Decrease in Cash and
Cash Equivalents (3,674) (25,152)
Cash and Cash Equivalents at
Beginning of Period 14,059 50,445
-------- --------
Cash and Cash Equivalents at
End of Period $ 10,385 $ 25,293
======== ========
<FN>
( ) Denotes use of cash
</TABLE>
See notes to condensed, consolidated financial statements.
<PAGE> 5
Sequential Page
No. 5
THE J. M. SMUCKER COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note A - Basis of Presentation
---------------------
The accompanying unaudited, condensed, consolidated financial
statements have been prepared in accordance with the instructions to Form 10-Q
and 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. The
seasonal nature of the Mrs. Smith's business significantly impacts the
Company's second and third quarter financial results. 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, 1994.
Note B - Common Shares
-------------
At January 31, 1995, 35,000,000 Class A Common Shares and 35,000,000
Class B Common Shares were authorized. Outstanding shares of each class are
shown net of 1,825,949 Class A and 1,431,449 Class B treasury shares at January
31 and 1,851,949 Class A and 1,462,449 Class B treasury shares at April 30,
1994.
Note C - Acquisitions
------------
On July 1, 1994, the Company completed its cash acquisition of
substantially all of the assets of After The Fall Products, Inc., located in
Brattleboro, Vermont. That company's business consisted primarily of the sale
of natural juices and juice beverages under the After The Fall brand. In
addition, on December 9, 1994, the Company acquired for cash the Laura
Scudder's natural peanut butter business from BAMA Foods Inc., a wholly-owned
subsidiary of Welch Foods Inc. In conjunction with these acquisitions, the
Company purchased $17,746,500 and $5,250,000 of intangible assets,
respectively. The Company plans to amortize them over 40 years using the
straight line method. Both acquisitions were recorded using the purchase
method of accounting.
Note D - Accounting Reclassifications
----------------------------
Certain prior year amounts have been reclassified to conform to
current year classifications.
Note E - 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.
* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *
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, 1995 and 1994, respectively.
<PAGE> 6
Sequential Page
No. 6
Results of Operations
- ---------------------
Sales for the third quarter ended January 31, 1995 were $157,348,000, up
approximately 36% over the same period last year. All business areas with the
exception of Specialty Foods, reported increases in sales for the quarter.
Approximately 87% of the sales gain was attributed to the Mrs. Smith's pie
business which was acquired in March 1994. The Mrs. Smith's business is
seasonal in nature and traditionally realizes the largest percentage of its
annual sales during the fall and holiday season. The Foodservice and
International business areas realized the highest percentage increases for the
quarter up 13% and 10%, respectively. The Consumer area had the largest dollar
increase, which was attributable to the increase in sales within the beverage
market, primarily due to the After The Fall acquisition. On a year-to-date
basis, sales are above the prior year by $127,278,000, or 35%, again primarily
due to Mrs. Smith's.
Earnings for the quarter were $8,689,000, or $.30 per share, compared to
$7,387,000, or $.26 per share. The increase in earnings for both the quarter
and year-to-date over the same periods last year was attributable to the Mrs.
Smith's acquisition. Earnings on the Company's core business were essentially
unchanged. Due to the seasonal nature of the Mrs. Smith's business, which is
centered around the last four months of the calendar year, it is not expected
to contribute to earnings in the fourth quarter.
The cost of products sold during both the quarter and year-to-date
increased over the same period last year due primarily to the impact of Mrs.
Smith's and After The Fall acquisitions, which currently operate at margins
below the Company's average. In addition, higher costs of certain fruits and
sweeteners and increased plant overhead costs also contributed to the increase.
Several factors contributed to the fact that the rate of increase in
selling, distribution, and administrative costs for the quarter exceeded the
rate of sales growth. The primary contributors were additional marketing
dollars to support the Mrs. Smith's business; increased distribution costs,
partially due to the expansion of the beverage business; and increased
administrative overhead expenses. Selling, distribution, and admininistrative
expenses also increased for the nine-month period, due both to the factors
noted and to slightly higher marketing expenses on existing business.
Interest expense increased significantly from the same period last year due
to the additional debt incurred in connection with the recent acquisitions.
This was somewhat offset by other income (net), which was up considerably for
the quarter and nine-month period. This is primarily attributable to the
inclusion of non-operating revenue from the Mrs. Smith's operation and to
improved profitability on the sale of excess fruit inventories.
<PAGE> 7
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No. 7
For the quarter, the increase in income taxes was slightly less than
the percentage increase in income before tax due to lower state and local
taxes. On a year-to-date basis, income taxes have increased at a slightly
greater rate than income before tax due to a higher estimated effective federal
tax rate.
Financial Condition - Liquidity and Capital Resources
- -----------------------------------------------------
The Company's financial position continues to be strong as cash
generated from operations increased significantly during the quarter. Cash
collected on the second quarter Mrs Smith's receivables and the end of the
fruit procurement period were the primary causes for the cash increase. The
major uses of cash during the third quarter were the payment of dividends,
capital expenditures, and the acquisition of the Laura Scudder's peanut butter
business.
During the fourth quarter, the Company anticipates that, in the
absence of further acquisitions or similar unplanned events, cash from
operations will be sufficient to further reduce the outstanding debt balance.
On March 11, 1995, the Company's Watsonville, California, processing
plant was flooded by the Pajaro River after a levee broke during severe storms.
The Watsonville facility processes fresh fruit and stores frozen fruit. The
Company has not yet been able to get into the plant to assess damages. The
Company does not expect the flooding to have a material effect on the Company's
overall operations or performance, but no definitive assessment can be made at
this time.
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.
<PAGE> 8
Sequential Page
No. 8
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 17, 1995 THE J. M. SMUCKER COMPANY
BY STEVEN J. ELLCESSOR
Secretary
AND RICHARD K. SMUCKER
President
<PAGE> 9
Sequential Page
No. 9
INDEX OF EXHIBITS
That are filed with the Commission and
the New York Stock Exchange
<TABLE>
<CAPTION>
Assigned Sequential
Exhibit No. * Description Page No.
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
4 (a) Industrial Development Revenue Bond Project **
Agreement dated as of December 1, 1986.
(b) Promissory Note between The J. M. Smucker **
Company and the First of America Bank -
Central dated as of March 15, 1993.
27 Financial data schedules pursuant to Article 5
in Regulation S-X.
99 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 (previously filed with first
quarter 10-Q dated September 14, 1994).
<FN>
* Exhibits 2, 10, 11, 15, 18, 19, 20, 23, 24 and 25 are either
inapplicable to the Company or require no answer.
** As permitted by Item 601(b)(4)(iii) of Regulation S-K, no copy
of this instrument is filed; however, a copy will be furnished
to the Commission upon request.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> APR-30-1995
<PERIOD-START> NOV-01-1994
<PERIOD-END> JAN-31-1995
<CASH> 10,385
<SECURITIES> 0
<RECEIVABLES> 48,882
<ALLOWANCES> 2,585
<INVENTORY> 121,512
<CURRENT-ASSETS> 186,438
<PP&E> 231,055
<DEPRECIATION> 92,752
<TOTAL-ASSETS> 416,261
<CURRENT-LIABILITIES> 92,375
<BONDS> 0
<COMMON> 7,292
0
0
<OTHER-SE> 248,127
<TOTAL-LIABILITY-AND-EQUITY> 416,261
<SALES> 157,348
<TOTAL-REVENUES> 157,348
<CGS> 100,600
<TOTAL-COSTS> 100,600
<OTHER-EXPENSES> 41,841
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,299
<INCOME-PRETAX> 14,465
<INCOME-TAX> 5,776
<INCOME-CONTINUING> 8,689
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,689
<EPS-PRIMARY> .30
<EPS-DILUTED> .30
</TABLE>
