<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended April 30, 1997
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 1-5111
THE J. M. SMUCKER COMPANY
Ohio 34-0538550
State of Incorporation I.R.S. Employer Identification No.
One Strawberry Lane
Orrville, Ohio 44667-0280
Principal executive offices
Telephone number: (330) 682-3000
Securities registered pursuant to Section 12(b) of the Act:
Class A Common Shares, no par value Registered on the
Class B Common Shares, no par value New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
The Registrant 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 at least the past 90 days.
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ X ]
As of June 30, 1997, 14,398,467 Class A Common Shares and 14,769,703 Class B
Common Shares of The J. M. Smucker Company were issued and outstanding. The
aggregate market value of the voting Common Shares (Class A) held by
non-affiliates of the Registrant at June 30, 1997, was $238,548,954.
Certain sections of the Registrant's definitive Proxy Statement, dated July 9,
1997, for the August 12, 1997 Annual Meeting of Shareholders and of the 1997
Annual Report to Shareholders are incorporated by reference into Parts I, II,
III and IV of this Report.
<PAGE> 2
PART I
ITEM 1. BUSINESS
THE COMPANY. The J. M. Smucker Company was begun in 1897 and was
incorporated in Ohio in 1921. The Company, often referred to as Smucker's (a
registered trademark), operates in one industry, the manufacturing and marketing
of food products on a worldwide basis. Unless otherwise indicated by the
context, the term "Company" as used in this report means the continuing
operations of The J. M. Smucker Company and its subsidiaries.
DISCONTINUED OPERATIONS. On May 31, 1996, the Company completed the
sale of its Mrs. Smith's frozen pie business to a subsidiary of Flowers
Industries, Inc. for a combination of cash and notes receivable. In connection
with this divestiture, the Company also has entered into agreements to lease
property, plant, and equipment of the Mrs. Smith's frozen pie business to
Flowers Industries, Inc. under 10-year operating lease agreements, which include
the exclusive right and option to purchase such assets during the term of the
leases. The future minimum rental revenue from these leases is approximately
$28,935,000.
PRINCIPAL PRODUCTS. The principal products of the Company are fruit
spreads, dessert toppings, peanut butter, industrial fruit products (such as
bakery and yogurt fillings), fruit and vegetable juices, juice beverages,
syrups, condiments, and gift packages.
The Company is structured around six strategic business areas:
Consumer, Beverage, International, Foodservice, Industrial, and Specialty Foods.
Within the domestic markets, the Company's products are primarily sold through
brokers to chain, wholesale, cooperative, and independent grocery accounts and
other consumer markets, and to foodservice distributors and chains including
hotels, restaurants, and institutions. Industrial products such as bakery and
fruit fillings are typically sold directly to other food manufacturers and
marketers for inclusion in their products.
The Company's distribution outside the United States is principally in
Canada, Australia and the Pacific Rim, and Latin America, although products are
exported to other countries as well. International sales represent approximately
12.2% of total consolidated Company sales.
SOURCES AND AVAILABILITY OF RAW MATERIALS. The fruit raw materials used
by the Company in the production of its food products are generally purchased
from independent growers and suppliers, although the Company grows some
strawberries for its own use. Because of the seasonal nature and volatility of
quantities of most of the crops on which the Company depends, it is necessary to
prepare and freeze stocks of fruit, fruit juices, berries, and other food
products and to maintain them in cold storage warehouses. Sweeteners, peanuts,
and other ingredients are obtained from various other sources.
<PAGE> 3
PATENTS AND TRADEMARKS. The Company's products are marketed under
numerous trademarks owned by the Company. The principal trademarks are the
Company's names and certain designs of products. Major trademarks include:
Smucker's, The R. W. Knudsen Family, After The Fall, Simply Nutritious, Mary
Ellen, Dickinson's, Lost Acres, IXL, Laura Scudder's, Simply Fruit, Good
Morning, Double Fruit, Low Sugar, Goober, Magic Shell, Sundae Syrup, Recharge,
Santa Cruz Original, Spritzer, and Heinke. In addition, the Company licenses the
use of several other trademarks, none of which individually is material to the
Company's business.
Other slogans or designs considered to be important trademarks to the
Company include the slogan, "With a name like Smucker's, it has to be good," "
100 Years of Family-Made Goodness," the Smucker's banner, the Crock Jar shape,
the Gingham design, and the strawberry logo.
SEASONALITY. Historically, the Company's business has not been highly
seasonal.
WORKING CAPITAL. Working capital requirements are greatest during the
late spring and summer months due to seasonal procurement of fruits, berries,
and peanuts. During this period, short-term borrowings may be used to augment
working capital generated by sales.
CUSTOMERS. The Company is not dependent either on a single customer or
on a very few customers for a major part of its sales. No single domestic or
foreign customer accounts for more than 10% of consolidated sales.
ORDERS. Generally, orders are filled within a few days of receipt and
the backlog of unfilled orders at any particular time is not material.
GOVERNMENT BUSINESS. The Company has no material portion of its
business which may be subject to negotiation of profits or termination of
contracts at the election of the government.
COMPETITION. The Company is the U.S. market leader in the fruit
spreads, ice cream topping, and natural peanut butter categories. The Company's
business is highly competitive as all its brands compete for retail shelf space
with other advertised and branded products as well as unadvertised and private
label products. The growth of alternative store formats (i.e. warehouse club and
mass merchandise stores) and changes in business practices, resulting from both
technological advances and new industry techniques, have added additional
variables for companies in the food industry to consider in order to remain
competitive. The principal methods of and factors in competition are product
quality, price, advertising, and promotion.
RESEARCH AND DEVELOPMENT. The Company predominantly utilizes in-house
programs to both develop new products and improve existing products in each of
its strategic business areas. In relation to consolidated assets and operating
expenses, amounts expensed in each of the areas or in the aggregate were not
material in any of the last three years.
ENVIRONMENTAL MATTERS. Compliance with the provisions of federal,
state, and local environmental regulations regarding either the discharge of
materials into the environment or the protection of the environment is not
expected to have a material effect upon the capital expenditures, earnings, or
competitive position of the Company.
EMPLOYEES. At April 30, 1997, the Company had approximately 1,950
full-time employees, worldwide.
<PAGE> 4
SEGMENT AND GEOGRAPHIC INFORMATION. Information concerning
international operations for the years 1997, 1996, and 1995 is hereby
incorporated by reference from the 1997 Annual Report to Shareholders, on page
24 under Note B: "Operating Segments."
ITEM 2. PROPERTIES
The table below lists all the Company's manufacturing and fruit
processing facilities. All of the Company's properties are maintained and
updated on a regular basis, and the Company continues to make investment for
expansion and technological improvements. All production properties listed below
are owned except the facility in Oxnard, California, which is leased. In
addition to the locations listed below, acreage is leased in California for the
growing of strawberries. The Company also leases property in Pottstown,
Pennsylvania to a subsidiary of Flowers Industries, Inc. The corporate
headquarters are located in Orrville, Ohio.
<TABLE>
<CAPTION>
DOMESTIC MANUFACTURING LOCATIONS PRODUCTS PRODUCED
- ----------------------------------------------------------------------------------------
<S> <C>
Orrville, Ohio Fruit spreads, toppings, industrial fruit products
Salinas, California Fruit spreads, toppings
Memphis, Tennessee Fruit spreads, toppings
Ripon, Wisconsin Fruit spreads, toppings, condiments
New Bethlehem, Pennsylvania Peanut butter and Goober products
Chico, California Fruit and vegetable juices, beverages
Havre de Grace, Maryland Fruit and vegetable juices, beverages
FRUIT PROCESSING LOCATIONS FRUIT PROCESSED
- ----------------------------------------------------------------------------------------
Watsonville, California Strawberries, oranges, apples, peaches, apricots.
Also, produces industrial fruit products.
Woodburn, Oregon Strawberries, raspberries, blackberries,
blueberries. Also produces industrial fruit
products.
Grandview, Washington Grapes, cherries, strawberries, cranberries
Oxnard, California Strawberries
INTERNATIONAL MANUFACTURING
LOCATIONS PRODUCTS PRODUCED
- ----------------------------------------------------------------------------------------
Ste-Marie, Quebec, Canada Fruit spreads, pie fillings, sweet spreads
Kyabram, Victoria, Australia Fruit spreads, toppings, fruit pulps
</TABLE>
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ITEM 3. LEGAL PROCEEDINGS
The Company is not a party to any pending legal proceeding which would
be considered material.
ITEM 4. SUBMISSIONS OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
EXECUTIVE OFFICERS OF THE COMPANY
The names, ages as of July 1, 1997, and positions of the executive
officers of the Company are listed below. All executive officers serve at the
pleasure of the Board of Directors, with no fixed term of office. Paul H.
Smucker is the father of Tim and Richard K. Smucker and the father-in-law of H.
Reid Wagstaff. All of the officers have held various positions with the Company
for more than five years.
<TABLE>
<CAPTION>
Years with Served as an
Name Age Company Position Officer Since
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Paul H. Smucker 80 58 Chairman of the Executive Committee 1946
Tim Smucker 53 28 Chairman 1973
Richard K. Smucker 49 24 President 1974
Vincent C. Byrd 42 20 Vice President and General Manager, 1988
Consumer Market
K. Edwin Dountz 55 21 Vice President - Sales 1982
Fred A. Duncan 51 19 Vice President and General Manager, 1984
Industrial Market
Steven J. Ellcessor 45 11 Vice President - Administration, 1986
Secretary, and General Counsel
Robert E. Ellis 50 19 Vice President - Human Resources 1996
Richard G. Jirsa 51 22 Corporate Controller 1978
Charles A. Laine 61 32 Vice President and General Manager, 1984
International and Beverage Markets
R. Alan McFalls 52 20 Vice President - Corporate Development and 1984
Planning
John D. Milliken 52 23 Vice President - Logistics and Business Process 1981
Reengineering
Robert R. Morrison 62 36 Vice President - Operations 1967
H. Reid Wagstaff 62 21 Vice President - Government and Environmental 1994
Affairs
Philip P. Yuschak 58 21 Treasurer 1989
</TABLE>
<PAGE> 6
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS
The information pertaining to the market for the Company's Common
Shares and other related shareholder information is hereby incorporated by
reference from the Company's 1997 Annual Report to Shareholders under the
caption "Stock Price Data" on page 13.
ITEM 6. SELECTED FINANCIAL DATA
Five year summaries of selected financial data for the Company and
discussions of accounting changes which materially affect the comparability of
the selected financial data are hereby incorporated by reference from the
Company's 1997 Annual Report to Shareholders under the following captions and
page numbers: "Five Year Summary of Selected Financial Data" on page 12 and Note
C: "Acquisitions and Divestitures" on page 25.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS
Management's discussion and analysis of results of operations and
financial condition, including a discussion of liquidity and capital resources,
is hereby incorporated by reference from the Company's 1997 Annual Report to
Shareholders, on pages 14 and 15.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Consolidated financial statements of the Company at April 30, 1997,
1996, and 1995, and for each of the three years in the period ended April 30,
1997, with the report of independent auditors and selected unaudited quarterly
financial data, are hereby incorporated by reference from the Company's 1997
Annual Report to Shareholders on page 13 and pages 16 through 31.
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
<PAGE> 7
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information regarding directors and nominees for directorship is
incorporated herein by reference from the Company's definitive Proxy Statement,
dated July 9, 1997, for the 1997 Annual Meeting of Shareholders on August 12,
1997, on pages 2 through 4, under the caption "Election of Directors." For
information concerning the Company's executive officers, see "Executive Officers
of the Company" set forth in Part I hereof.
Information regarding disclosure of late filers pursuant to Item 405 of
Regulation S-K is incorporated herein by reference from the Company's definitive
Proxy Statement, dated July 9, 1997, for the 1997 Annual Meeting of Shareholders
on August 12, 1997, on pages 13 and 14 under the caption "Ownership of Common
Shares."
ITEM 11. EXECUTIVE COMPENSATION
Information regarding the compensation of directors and executive
officers is incorporated by reference from the Company's definitive Proxy
Statement, dated July 9, 1997, for the 1997 Annual Meeting of Shareholders on
August 12, 1997, under the following captions and page numbers: "Additional
Information Concerning the Board of Directors of the Company" on pages 4 and 5,
and beginning with "Report of the Executive Compensation Committee of the Board
of Directors" on page 5 and continuing through "Pension Plan" on page 11.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information regarding security ownership of certain beneficial owners
of the named executive officers, and of directors and executive officers as a
group, is hereby incorporated by reference from the Company's definitive Proxy
Statement, dated July 9, 1997, for the 1997 Annual Meeting of Shareholders on
August 12, 1997, on pages 13 and 14 under the caption "Ownership of Common
Shares."
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information regarding certain relationships and related transactions is
hereby incorporated by reference from the Company's definitive Proxy Statement
dated July 9, 1997, for the 1997 Annual Meeting of Shareholders on August 12,
1997, under the captions "Election of Directors" and "Additional Information
Concerning the Board of Directors of the Company" on pages 2 through 5.
<PAGE> 8
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) 1, 2. Financial Statements and Financial Statement Schedules
The index to Consolidated Financial Statements and Financial
Statement Schedules is included on page F-1 of this Report.
3. Exhibits
Exhibit
No. Description
- --------------------------------------------------------------------------------
3(a) 1991 Amended Articles of Incorporation incorporated by
reference to the 1992 Annual Report on Form 10-K.
3(b) Amended Regulations incorporated by reference to the
1988 Annual Report on Form 10-K.
10(a) Amended Restricted Stock Bonus Plan incorporated by
reference to the 1994 Annual Report on Form 10-K.
10(b) Top Management Supplemental Retirement Benefit Plan
incorporated by reference to the 1994 Annual Report on
Form 10-K.
10(c) 1987 Stock Option Plan incorporated by reference to
the 1994 Annual Report on Form 10-K.
10(d) Management Incentive Plan incorporated by reference to
the 1996 Annual Report on Form 10-K.
10(e) Nonemployee Director Stock Plan dated January 1, 1997
13 Excerpts from 1997 Annual Report to Shareholders
21 Subsidiaries of the Registrant
23 Consent of Independent Auditors
24 Powers of Attorney
27 Financial Data Schedules
All other required exhibits are either inapplicable to the Company
or require no answer.
Copies of exhibits are not attached hereto, but the Company
will furnish any of the foregoing exhibits to any shareholder
upon written request. Please address inquiries to: The J. M.
Smucker Company, Strawberry Lane, Orrville, Ohio 44667,
Attention: Steven J. Ellcessor, Secretary. A fee of $1 per
page will be charged to help defray the cost of handling,
copying, and return postage.
<PAGE> 9
(b) Reports on Form 8-K filed in the Fourth Quarter of 1997.
On April 23, 1997, the Company filed a Current Report on Form 8-K with the
Securities and Exchange Commission reporting that it issued a press
release announcing the Company's Board of Directors had authorized the
purchase, from time to time, of up to 1,000,000 Class A and/or Class B
Common Shares in total.
(c) The response to this portion of Item 14 is submitted as a separate
section of this report.
(d) The response to this portion of Item 14 is submitted as a separate
section of this report.
<PAGE> 10
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report on Form 10-K to
be signed on its behalf by the undersigned, thereunto duly authorized.
Date: July 23, 1997 The J. M. Smucker Company
By: Steven J. Ellcessor
Secretary
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this Report on Form 10-K has been signed below by the following persons
on behalf of the Registrant and in the capacities and on the date indicated.
<TABLE>
<S> <C>
- ----------------------------------------
Paul H. Smucker Chairman of the Executive Committee and Director
(Principal Executive Officer)
- ----------------------------------------
Tim Smucker Chairman and Director
(Principal Executive Officer)
- ----------------------------------------
Richard K. Smucker President and Director
(Principal Executive Officer)
(Principal Financial Officer)
- ----------------------------------------
Richard G. Jirsa Corporate Controller
(Principal Accounting Officer)
- ----------------------------------------
Kathryn W. Dindo Director
- ----------------------------------------
Elizabeth Valk Long Director
- ----------------------------------------
Russell G. Mawby Director By: Steven J. Ellcessor
Attorney-in-Fact
- ----------------------------------------
Charles S. Mechem, Jr. Director
Date: July 23, 1997
- ----------------------------------------
Robert R. Morrison Director
- ----------------------------------------
William H. Steinbrink Director
- ----------------------------------------
Benjamin B. Tregoe, Jr. Director
- ----------------------------------------
William Wrigley, Jr. Director
</TABLE>
<PAGE> 11
THE J. M. SMUCKER COMPANY
ANNUAL REPORT ON FORM 10-K
ITEMS 14(a) (1) AND (2), (c) AND (d)
INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
CERTAIN EXHIBITS
FINANCIAL STATEMENT SCHEDULES
<TABLE>
<CAPTION>
Form Annual
10-K Report To
Report Shareholder
------ -----------
<S> <C> <C>
Data incorporated by reference from the 1997 Annual Report
to Shareholders of The J. M. Smucker Company:
Consolidated Balance Sheets at April 30, 1997 and 1996........................ 18-19
For the years ended April 30, 1997, 1996, and 1995:
Statements of Consolidated Income ......................................... 17
Statements of Consolidated Cash Flows ..................................... 20
Statements of Consolidated Shareholders' Equity ........................... 21
Notes to Consolidated Financial Statements ................................ 22-31
Consolidated financial statement schedules at April 30, 1997,
or for the years ended April 30, 1997, 1996, and 1995:
II. Valuation and qualifying accounts .................................... F-2
</TABLE>
All other schedules are omitted because they are not applicable or because
the information required is included in the Consolidated Financial Statements or
the notes thereto.
F-1
<PAGE> 12
THE J. M. SMUCKER COMPANY
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
YEARS ENDED APRIL 30, 1997, 1996 AND 1995
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Balance at Charged to Charged to Deduc- Balance at
Beginning Costs and Other tions End of
Classification of Year Expenses Accounts (A) Period
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1997:
Valuation allowance for
deferred tax assets $2,009 $ 85 $ --- $ --- $2,094
Allowance for doubtful accounts 687 93 --- 427 353
-------------------------------------------------------------------------
$2,696 $ 178 $ --- $ 427 $2,447
=========================================================================
1996:
Valuation allowance for
deferred tax assets $2,660 $ (651) $ --- $ --- $2,009
Allowance for doubtful accounts 475 385 --- 173 687
-------------------------------------------------------------------------
$3,135 $ (266) $ --- $ 173 $2,696
=========================================================================
1995:
Valuation allowance for
deferred tax assets $2,265 $ 395 $ --- $ --- $2,660
Allowance for doubtful accounts 419 195 --- 139 475
-------------------------------------------------------------------------
$2,684 $ 590 $ --- $ 139 $3,135
=========================================================================
</TABLE>
(A) Uncollectible accounts written off, net of recoveries.
F-2
<PAGE> 1
Exhibit 10(e)
================================================================================
THE J. M. SMUCKER COMPANY
NONEMPLOYEE DIRECTOR STOCK PLAN
EFFECTIVE JANUARY 1, 1997
================================================================================
<PAGE> 2
CONTENTS
- --------------------------------------------------------------------------------
PAGE
----
Article 1. Establishment, Purpose, and Duration ....................... 1
1.1. Establishment of the Plan .................................. 1
1.2. Purpose of the Plan ........................................ 1
1.3. Duration of the Plan ....................................... 1
Article 2. Definitions ................................................ 1
Article 3. Administration ............................................. 3
3.1. The Compensation Committee ................................. 3
3.2. Administration by the Committee ............................ 3
3.3. Decisions Binding. ......................................... 3
Article 4. Eligibility and Participation .............................. 3
4.1. Eligibility ................................................ 3
4.2. Actual Participation ....................................... 3
Article 5. Awards for Existing Nonemployee Directors .................. 3
5.1. Grant of Deferred Stock Units .............................. 3
5.2. Vesting of Deferred Stock Units ............................ 3
Article 6. Deferred Stock Units for New Nonemployee Directors ......... 4
6.1. Initial Grant of Deferred Stock Units ...................... 4
6.2. Annual Awards of Deferred Stock Units ...................... 4
6.3. Vesting of Deferred Stock Units ............................ 4
Article 7. Deferral of Retainers, Committee Fees, and Meeting Fees .... 4
7.1. Deferral of Retainers, Committee Fees, and Meeting Fees .... 4
7.2. Election ................................................... 4
7.3. Number of Deferred Stock Units ............................. 4
7.4. Vesting of Deferred Stock Units ............................ 4
Article 8. Deferred Stock Units ....................................... 4
8.1. Deferred Stock Unit Account ................................ 4
8.2. Dividend Equivalents ....................................... 5
8.3. Amount of Payout ........................................... 5
8.4. Timing and Method of Payout ................................ 5
8.5. Funding Mechanism for Deferred Stock Units ................. 6
Article 9. Amendment, Modification, and Termination ................... 6
9.1. Amendment, Modification, and Termination ................... 6
9.2. Awards Previously Granted .................................. 6
Article 10. Miscellaneous............................................... 6
10.1. Gender and Number........................................... 6
10.2. Severability................................................ 6
10.3. Beneficiary Designation..................................... 6
10.4. Nonalienation of Interest................................... 7
10.5. Interest of Participant..................................... 7
10.6. No Right of Nomination...................................... 7
10.7. Shares Available............................................ 7
10.8. Successors.................................................. 7
10.9. Requirements of Law......................................... 7
10.10 Governing Law............................................... 7
<PAGE> 3
THE J. M. SMUCKER COMPANY
NONEMPLOYEE DIRECTOR STOCK PLAN
ARTICLE 1. ESTABLISHMENT, PURPOSE, AND DURATION
1.1. ESTABLISHMENT OF THE PLAN. The J. M. Smucker Company hereby
establishes an incentive compensation plan to be known as the "The J. M. Smucker
Company Nonemployee Director Stock Plan" (the "Plan"), as set forth in this
document. The Plan provides for the acquisition of Deferred Stock Units by
Nonemployee Directors, subject to the terms and provisions set forth herein.
Upon approval by the Board of Directors of the Company, the Plan shall
become effective as of January 1, 1997 (the "Effective Date"), and shall remain
in effect as provided in Section 1.3 herein.
1.2. PURPOSE OF THE PLAN. The purpose of the Plan is to promote the
achievement of long-term objectives of the Company by linking the personal
interests of Nonemployee Directors to those of the Company's shareholders and to
attract and retain Nonemployee Directors of outstanding competence.
1.3. DURATION OF THE PLAN. The Plan shall commence on the Effective
Date and shall remain in effect subject to the right of the Board of Directors
to terminate the Plan at any time pursuant to Article 9. However, in no event
may an Award be granted under the Plan on or after December 31, 2015. The
maximum number of Shares paid out under the Plan shall be 100,000 (as adjusted
pursuant to Section 8.1) unless otherwise determined by the Board of Directors.
ARTICLE 2. DEFINITIONS
Whenever used in the Plan, the following terms shall have the meanings
set forth below when the initial letter of the word is capitalized:
(a) "Award" means, individually or collectively, an award under
this Plan of Deferred Stock Units.
(b) "Beneficial Owner" shall have the meaning ascribed to such
term in Rule 13d-3 of the General Rules and Regulations under
the Exchange Act.
(c) "Board" or "Board or Directors" means the Board of Directors
of the Company.
(d) "Code" means the Internal Revenue Code of 1986, as amended
from time to time.
(e) "Committee" means the Compensation Committee of the Board of
Directors of the Company.
(f) "Company" means The J. M. Smucker Company, an Ohio
corporation, together with any and all Subsidiaries, and any
successor thereto as provided in Section 10.8.
<PAGE> 4
(g) "Deferred Stock Unit" or "Unit" means an Award acquired by a
Participant as a measure of participation under the Plan, and
is the equivalent of one Share.
(h) "Director" means any individual who is a member of the Board
of Directors of the Company.
(i) "Disability" means a permanent and total disability, within
the meaning of Code Section 22(e)(3).
(j) "Employee" means any full-time, nonunion, salaried employee of
the Company or of the Company's Subsidiaries. For purposes of
the Plan, an individual whose only employment relationship
with the Company is as a Director, shall not be deemed to be
an Employee.
(k) "Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, or any successor Act thereto.
(l) "Existing Nonemployee Director" means a Nonemployee Director
whose original election to the Board occurred prior to the
Effective Date.
(m) "Fair Market Value" shall mean the average of the highest and
lowest quoted selling prices for Shares on the relevant date,
or (if there were no sales on such date) the weighted average
of the means between the highest and lowest quoted selling
prices on the nearest day before and the nearest day after the
relevant date.
(n) "New Nonemployee Director" means a Nonemployee Director whose
original election to the Board occurred after the Effective
Date.
(o) "Nonemployee Director" means any individual who is a member of
the Board of Directors of the Company, but who is neither a
current nor a retired Employee of the Company.
(p) "Participant" means a Nonemployee Director of the Company who
has an outstanding Award granted under the Plan.
(q) "Person" shall have the meaning ascribed to such term in
Section 3(a)(9) of the Exchange Act and used in Sections 13(d)
and 14(d) thereof, including a "group" as defined in Section
13(d).
(r) "Retirement" means any termination of services on the Board at
a time when the Director has served on the Board for at least
five (5) years.
(s) "Shares" means the Class A Common Shares of the Company, no
par value, or such other securities as may have been
substituted for such Shares pursuant to any adjustment of
Accounts under Section 8.1 of the Plan.
(t) "Subsidiary" means any corporation in which the Company owns
directly, or indirectly through subsidiaries, at least fifty
percent (50%) of the total combined voting power of all
classes of stock, or any other entity
2
<PAGE> 5
(including, but not limited to, partnerships and joint
ventures) in which the Company owns at least fifty percent
(50%) of the combined equity thereof.
ARTICLE 3. ADMINISTRATION
3.1. THE COMPENSATION COMMITTEE. The Plan shall be administered by the
Compensation Committee of the Board of Directors of the Company, subject to the
restrictions set forth in the Plan.
3.2. ADMINISTRATION BY THE COMMITTEE. The Committee shall have the full
power, discretion, and authority to interpret and administer the Plan in a
manner which is consistent with the Plan's provisions. However, in no event
shall the Committee have the power to determine Plan eligibility, or to
determine the number, the value, the vesting period, or the timing of Awards to
be made under the Plan (all such determinations being automatic pursuant to the
provisions of the Plan).
3.3. DECISIONS BINDING. All determinations and decisions made by the
Committee pursuant to the Plan, and all related orders or resolutions of the
Committee shall be final, conclusive, and binding on all persons, including the
Company, its shareholders, Employees, Participants, and their estates and
beneficiaries.
ARTICLE 4. ELIGIBILITY AND PARTICIPATION
4.1. ELIGIBILITY. Persons eligible to participate in the Plan are
limited to Nonemployee Directors who are serving on the Board on the date of
each scheduled Award under the Plan.
4.2. ACTUAL PARTICIPATION. All Nonemployee Directors are eligible to
participate as follows:
(a) All Existing Nonemployee Directors shall receive Awards of
Deferred Stock Units pursuant to Article 5;
(b) All New Nonemployee Directors herein shall receive Awards
of Deferred Stock Units pursuant to Article 6; and
(c) All Nonemployee Directors shall be eligible to acquire
Deferred Stock Units in connection with deferrals pursuant
to Article 7.
ARTICLE 5. AWARDS FOR EXISTING NONEMPLOYEE DIRECTORS
5.1. GRANT OF DEFERRED STOCK UNITS. On the Effective Date, each
Existing Nonemployee Director shall receive a one-time Award of seven thousand
five hundred (7,500) Deferred Stock Units.
5.2. VESTING OF DEFERRED STOCK UNITS. A Participant's Deferred Stock
Units shall become vested at the rate of one thousand five hundred (1,500)
Shares per year for each year of service on the Board, beginning on the first
anniversary of his or her original election to the Board; PROVIDED, HOWEVER,
that upon death or Disability, all of a Participant's outstanding Deferred Stock
Units shall vest immediately. Participants with five (5) or more years of
service on the Board as of the Effective Date shall receive fully
3
<PAGE> 6
vested Deferred Stock Units. Any Deferred Stock Units not vested at the time of
payout set forth in Section 8.4 shall be forfeited.
ARTICLE 6. DEFERRED STOCK UNITS FOR NEW NONEMPLOYEE DIRECTORS
6.1. INITIAL GRANT OF DEFERRED STOCK UNITS. Each individual who is a
New Nonemployee Director, shall receive an Award of four hundred (400) Deferred
Stock Units on the date of his or her original election to the Board.
6.2. ANNUAL AWARDS OF DEFERRED STOCK UNITS. Commencing with the annual
meeting of the Company's shareholders following his or her original election to
the Board, each New Nonemployee Director shall receive four hundred (400)
Deferred Stock Units, effective as of the day following each annual
shareholders' meeting, subject to a lifetime maximum of six thousand (6,000)
Deferred Stock Units to be granted to any individual New Nonemployee Director
under this Article 6.
6.3. VESTING OF DEFERRED STOCK UNITS. All Deferred Stock Units awarded
under this Article 6 shall vest one hundred percent (100%) upon the award of
such Deferred Stock Units.
ARTICLE 7. DEFERRAL OF RETAINERS, COMMITTEE FEES, AND MEETING FEES
7.1. DEFERRAL OF RETAINERS, COMMITTEE FEES, AND MEETING FEES. During
the term of this Plan, any Nonemployee Director may elect to receive all or
fifty percent (50%) of the cash portion of his or her annual retainer, committee
fees, and meeting fees in the form of Deferred Stock Units. Such election to
receive Deferred Stock Units shall be subject to the provisions of this Article
7.
7.2. ELECTION. Any election to receive all or fifty percent (50%) of a
Nonemployee Director's annual retainer, committee fees, and meeting fees in the
form of Deferred Stock Units shall be made before the first day of the year for
which such compensation would otherwise be paid. New Nonemployee Directors,
however, may make such election with respect to their initial retainer upon
their original election to the Board. Each such election may pertain to more
than one (1) scheduled retainer payment.
7.3. NUMBER OF DEFERRED STOCK UNITS. The number of Deferred Stock Units
to be granted in connection with an election pursuant to Section 7.2 shall equal
the cash portion of the retainer and fees being deferred into Deferred Stock
Units, divided by the Fair Market Value of a Share on the date of the scheduled
payment of the amount deferred.
7.4. VESTING OF DEFERRED STOCK UNITS. Subject to the terms of this
Plan, all Deferred Stock Units acquired under this Article 7 shall vest one
hundred percent (100%) upon the acquisition of such Deferred Stock Units.
ARTICLE 8. DEFERRED STOCK UNITS
8.1. DEFERRED STOCK UNIT ACCOUNT. A Deferred Stock Unit Account (the
"Account") shall be established and maintained by the Company for each
Participant who receives an Award under the Plan. Each Account shall be the
record of the Deferred
4
<PAGE> 7
Stock Units acquired by the Participant under Articles 5, 6, and 7 of the Plan
on each applicable grant date, shall be maintained solely for accounting
purposes, and shall not require a segregation of any Company assets.
The Board shall make or provide for such adjustments in the number and
kind of Shares in each Director's Account as the Board, in its sole discretion,
exercised in good faith, shall determine is equitably required to prevent
dilution or enlargement of the rights of the Nonemployee Directors that would
otherwise result from (a) any stock dividend, stock split, combination of
shares, recapitalization or any other change in the capital structure of the
Company, (b) any merger, consolidation, spin-off, split-off, spin-out,
split-up, reorganization, partial or complete liquidation or other distribution
of assets, issuance of rights or warrants to purchase securities, or (c) any
other corporate transaction or event having an effect similar to any of the
foregoing.
8.2. DIVIDEND EQUIVALENTS. Dividend equivalents shall be earned on
Deferred Stock Units provided under this Plan. Such dividend equivalents shall
be converted into equivalent amounts of Deferred Stock Units and added to
Participant's Accounts. Deferred Stock Units resulting from dividend equivalents
shall become vested to the extent the underlying Deferred Stock Units become
vested in accordance with Section 5.2 of the Plan.
8.3. AMOUNT OF PAYOUT. Except as provided otherwise in this Plan, the
total amount payable to a Participant shall be one Share for each Deferred Stock
Unit, if any, at the date of payout as determined in accordance with Section
8.4.
8.4. TIMING AND METHOD OF PAYOUT. Except as otherwise provided herein,
vested Deferred Stock Units shall be paid to Participants, in Shares, within
thirty (30) days following each Participant's termination of service on the
Board. Payout of a Participant's Account shall be made in one of the following
forms as elected by the Participant:
(a) By payment in Shares in a single distribution;
(b) By payment in Shares in not greater than ten annual
installments; or
(c) A combination of (a) and (b) above. The Participant shall
designate the percentage payable under each option.
Fractional Shares shall be rounded down to the nearest whole Share, and such
fractional amount shall be paid in cash.
The Participant's election of the form of payout shall be made by
written notice filed with the Committee at least one year prior to the
Participant's voluntary termination as a Director. Any such election may be
changed by the Participant at any time or from time to time; provided that any
election made less than one year prior to the Director's voluntary termination
as a Director shall not be valid, and in such case payment shall be made in
accordance with the Participant's prior election. Absent an election from the
Participant, the payment shall be made in Shares in a single distribution. In
the event of a Director's death, the balance of his or her Account shall be
distributed to his or her beneficiary in shares in a single distribution, even
if the Participant had elected distribution in installments.
5
<PAGE> 8
Each Participant shall have the right to require the Company to retain
so much of any distribution as may be necessary to provide for the payment of
applicable taxes, and the Company will cause the amount so retained to be paid
or deposited on behalf of the Participant.
8.5. FUNDING MECHANISM FOR DEFERRED STOCK UNITS. The Company shall be
entitled, but not obligated, to establish a grantor trust or similar funding
mechanism to fund the Company's obligations under this Plan; PROVIDED, HOWEVER,
that any funds contained therein shall remain subject to the claims of the
Company's general creditors. The funding mechanism shall constitute an unfunded
arrangement and shall not affect the status of the Plan as an unfunded plan
maintained for the purpose of providing compensation for a select group of
management for purposes of Title I of the Employee Retirement Income Securities
Act of 1974. This mechanism may be funded through the acquisition of Shares and
in that event, Existing Nonemployee Directors shall be given the right to direct
the exercise of voting rights with respect to their respective interests in
those Shares.
ARTICLE 9. AMENDMENT, MODIFICATION, AND TERMINATION
9.1. AMENDMENT, MODIFICATION, AND TERMINATION. Subject to the terms set
forth in this Section 9.1, the Board may terminate, amend, or modify the Plan at
any time and from time to time.
9.2. AWARDS PREVIOUSLY GRANTED. Unless required by law, no termination,
amendment, or modification of the Plan shall in any material manner adversely
affect any Award previously provided under the Plan, without the written consent
of the Participant holding the Award.
ARTICLE 10. MISCELLANEOUS
10.1. GENDER AND NUMBER. Except where otherwise indicated by the
context, any masculine term used herein also shall include the feminine; the
plural shall include the singular and the singular shall include the plural.
10.2. SEVERABILITY. In the event any provision of the Plan shall be
held illegal or invalid for any reason, the illegality or invalidity shall not
affect the remaining parts of the Plan, and the Plan shall be construed and
enforced as if the illegal or invalid provision had not been included.
10.3. BENEFICIARY DESIGNATION. Each Participant under the Plan may,
from time to time, name any beneficiary or beneficiaries (who may be named
contingently or successively) to whom any benefit under the Plan is to be paid
in the event of his or her death. Each designation will revoke all prior
designations by the same Participant, shall be in a form prescribed by the
Board, and will be effective only when filed by the Participant in writing with
the Board during his or her lifetime. In the absence of any such designation or
if no designated beneficiary survives the Participant, benefits remaining unpaid
at the Participant's death shall be paid to the Participant's estate in Shares
in a single distribution.
6
<PAGE> 9
10.4. NONALIENATION OF INTEREST. Except as permitted by this Plan, no
right or interest under this Plan of any Participant or beneficiary shall,
without the written consent of the Company, be (i) assignable or transferable in
any manner, (ii) subject to alienation, anticipation, sale, pledge, encumbrance,
attachment, garnishment, or other legal process, or (iii) in any manner liable
for or subject to the debts or liabilities of the Participant or beneficiary.
10.5. INTEREST OF PARTICIPANT. The obligation of the Company under the
Plan to make payment under this Plan merely constitutes the unsecured promise of
the Company to make payments in the form of its Shares, as provided herein, and
no Participant or beneficiary shall have any interest in, or lien or prior claim
upon, any property of the Company. It is the intention of the Company that the
Plan be unfunded for tax purposes and for purposes of Title I of the Employee
Retirement Income Securities Act of 1974.
10.6. NO RIGHT OF NOMINATION. Nothing in the Plan shall be deemed to
create any obligation on the part of the Board to nominate any Director for
reelection by the Company's shareholders.
10.7. SHARES AVAILABLE. Shares delivered by the Company under the Plan
shall be treasury shares, or Shares which have been or may be reacquired by the
Company. Any funding mechanism as described in Section 8.5 of this Plan may
acquire treasury shares from the Company or purchase Shares on the open market.
10.8. SUCCESSORS. All obligations of the Company under the Plan with
respect to Awards granted hereunder shall be binding on any successor to the
Company, whether the existence of such successor is the result of a direct or
indirect purchase, merger, consolidation, or otherwise, of all or substantially
all of the business and/or assets of the Company.
10.9. REQUIREMENTS OF LAW. The granting of Awards under the Plan shall
be subject to all applicable laws, rules, and regulations, and to such approvals
by any governmental agencies or national securities exchanges as may be
required.
10.10. GOVERNING LAW. The Plan, and all agreements hereunder, shall be
construed in accordance with and governed by the internal, substantive laws of
the State of Ohio.
7
<PAGE> 1
Exhibit 13
Five Year Summary of Selected Financial Data
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
Year Ended April 30, 1997 1996 1995 1994 1993
- ----------------------------------------------------------------------------------------------------------------------------
(Dollars in thousands, except per share data)
<S> <C> <C> <C> <C> <C>
Statement of Income:
Net sales $542,602 $528,576 $510,888 $478,228 $462,160
Income before cumulative effect
of change in accounting method 30,935 29,453 32,461 31,931 37,399
Income from continuing operations (1) 30,935 29,453 32,461 31,931 32,945
(Loss) Income from discontinued
operations (2) --- (140) 3,842 (1,433) ---
Net income 30,935 29,313 36,303 30,498 32,945
- ----------------------------------------------------------------------------------------------------------------------------
Financial Position:
Long-term debt --- 60,800 67,100 48,558 887
Total assets 384,773 424,952 405,995 362,851 294,811
- ----------------------------------------------------------------------------------------------------------------------------
Other Data:
Per Common Share:
Income before cumulative effect
of change in accounting method 1.06 1.01 1.11 1.10 1.27
Income from continuing operations (1) 1.06 1.01 1.11 1.10 1.12
Income (Loss) from discontinued
operations (2) --- --- 0.14 (0.05) ---
Net income 1.06 1.01 1.25 1.05 1.12
Dividends declared per Common Share:
Class A 0.52 0.52 0.505 0.47 0.43
Class B 0.52 0.52 0.505 0.47 0.43
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Includes, in 1993, the cumulative effect of adopting the provisions of
Statement of Financial Accounting Standards No. 106, Employers' Accounting
for Postretirement Benefits Other Than Pensions.
(2) Represents Mrs. Smith's as described in Note C to the consolidated
financial statements.
<PAGE> 2
Summary of Quarterly Results of Operations
The following is a summary of unaudited quarterly results of operations for the
years ended April 30, 1997 and 1996.
<TABLE>
<CAPTION>
Income
Income Income (Loss) Net
Income (Loss) per Share per Share Income
from From from from per
Quarter Net Gross Continuing Discontinued Net Continuing Discontinued Common
Ended Sales Profit Operations Operations Income Operations Operations Share
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997 July 31 $134,154 $48,271 $7,489 $ --- $7,489 $0.26 $ --- $0.26
October 31 142,844 48,687 7,818 --- 7,818 0.26 --- 0.26
January 31 124,479 44,096 6,533 --- 6,533 0.23 --- 0.23
April 30 141,125 52,599 9,095 --- 9,095 0.31 --- 0.31
- -------------------------------------------------------------------------------------------------------------------------------
1996 July 31 $133,897 $48,602 $9,384 $140 $9,524 $0.33 $ --- $0.33
October 31 142,563 49,380 8,635 781 9,416 0.29 0.03 0.32
January 31 121,207 44,834 5,856 481 6,337 0.20 0.02 0.22
April 30 130,909 48,665 5,578 (1,542) 4,036 0.19 (0.05) 0.14
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Stock Price Data
The Company's Class A and Class B Common Shares are listed on the New York Stock
Exchange - ticker symbols SJMA and SJMB, respectively. The table below presents
the high and low market prices for the shares and the quarterly dividends
declared. The number of Class A and Class B shareholders of record as of June
30, 1997 was 6,692 and 4,302, respectively.
<TABLE>
<CAPTION>
Class A Common Shares Class B Common Shares
- --------------------------------------------------------------------------------------------------------------------------------
Quarter Ended High Low Dividends Quarter Ended High Low Dividends
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1997 July 31 $21.75 $17.75 $0.13 July 31 $20.38 $17.50 $0.13
October 31 18.25 16.50 0.13 October 31 17.75 15.38 0.13
January 31 18.75 16.50 0.13 January 31 17.38 15.50 0.13
April 30 18.88 16.25 0.13 April 30 17.75 15.63 0.13
- --------------------------------------------------------------------------------------------------------------------------------
1996 July 31 $23.63 $20.75 $0.13 July 31 $21.38 $18.63 $0.13
October 31 22.50 19.63 0.13 October 31 22.00 18.00 0.13
January 31 21.75 17.88 0.13 January 31 19.25 15.25 0.13
April 30 22.25 19.63 0.13 April 30 20.63 18.00 0.13
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 3
Management's Discussion and Analysis
On May 31, 1996, the Company completed the sale of the Mrs. Smith's frozen pie
business to a subsidiary of Flowers Industries, Inc. Mrs. Smith's has been
reflected as a discontinued operation in the accompanying financial statements
for fiscal 1997 and prior years. Therefore, this discussion and analysis refers
only to the continuing businesses of the Company.
Results of Operations
COMPARISON OF 1997 WITH 1996
During 1997, sales increased nearly 3%, or $14,026,000, over those of the prior
year. The Company's Industrial, Foodservice, and Beverage business areas all
realized sales increases. The largest increase came in the Industrial area,
which achieved a sales increase of 23% over fiscal 1996. The majority of the
increase was related to an increase in new and existing business with current
customers. The Foodservice area realized a 6% increase in sales, due mostly to
volume gains in the portion control and toppings categories. In the Beverage
area, the introduction of the R. W. Knudsen Family's Simply Nutritious line of
functional / fortified beverages into the natural foods market accounted for
much of that area's growth.
Sales in the Consumer area were approximately equal to last year's as a modest
decline in grocery was offset by a 15% increase in the mass retail market. Total
fruit spreads volume in fiscal 1997 was up over 3%, as the Company recognized
substantial gains in its share of the fruit spreads market during the latter
half of the year. The dollar sales growth was primarily the result of increased
sales of traditional fruit spreads in the mass retail and warehouse clubstore
markets and expanded distribution of Smucker's Light, which the Company
rolled-out nationally during fiscal 1997. While the roll-out of Light enabled
the Company to expand its dominant position in the low calorie / light segment,
the fruit-only segment continued to decline. In the peanut butter category,
sales increased over last year due to volume growth in Goober products and the
roll-out of reduced fat natural peanut butter. Dessert toppings sales were down
from fiscal 1996, due mostly to significant competitive activity. Although sales
in the Consumer area remained basically unchanged from last year, profitability
decreased from fiscal 1996 due to increased marketing expenses, higher fruit
costs, and mix of products sold.
In the International area, operating income improved approximately $2,650,000,
although sales were down approximately $4,500,000 from the prior year. The sales
decline was mostly due to the divestiture of Elsenham Quality Foods, the
Company's U. K. subsidiary, in December, 1995. The Company realized sales growth
in its Australasian (including China) and Mexican markets. Approximately
one-half of the increase in the Australasian market was due to increased sales,
and the remainder resulted from favorable exchange rates.
<PAGE> 4
Net income increased approximately 6% this year, as earnings per share rose from
$1.01 to $1.06. Sales growth contributed significantly to the overall increase
in earnings, particularly in the fourth quarter. The gross profit percentage on
these sales decreased from 36.2% to 35.7% as a result of a general increase in
the overall cost of fruit raw materials, although this was mitigated somewhat in
the second half of the year by the effect of lower corn sweetener prices. Other
factors that contributed to the improved profitability for the year included the
Company's ongoing cost reduction efforts, including improvements in plant
efficiencies and reduced freight and distribution costs, along with the
previously mentioned improvement in the Company's International business.
Interest expense also decreased approximately $645,000 as the Company reduced
its outstanding debt balance during the year.
COMPARISON OF 1996 WITH 1995
Sales in fiscal year 1996 increased 3.5%, or $17,688,000, over those of the
prior year. Each of the Company's business areas recorded sales increases, led
by the Foodservice area's 11% growth as sales in all of its product categories
increased. Sales within the International area increased 7%, resulting from
continued growth in Latin America and entrance into new markets in Eastern
Europe and Mexico. Beverage sales grew 6% with most of the increase coming from
the inclusion of a full year of After The Fall sales. Both the Industrial and
Specialty Foods areas contributed solid years, each with increases of over
$1,000,000 in sales. Although the Consumer area's sales were up only slightly
for the year, they were stronger in the fourth quarter in which there was an 8%
increase over the same quarter of fiscal 1995.
Gross profit grew at a 6% rate, increasing the gross profit margin to 36.2% from
35.4%. The increase was due in part to lower costs of certain fruits and raw
materials and also to operational efficiencies in the manufacturing plants. The
growth in gross profit was offset by a 9% increase in the Company's selling,
distribution, and administrative expenses. The increase was due to a greater
emphasis on marketing programs to combat competitive pressures in the Consumer
fruit spreads category, as well as resources devoted to consulting projects.
<PAGE> 5
Income from continuing operations decreased 9% this year as earnings per share
from continuing operations fell from $1.11 to $1.01. Several factors contributed
to the decline. Interest expense for the year was up due to both an increase in
the average outstanding debt balance and interest rates, which averaged
approximately one percentage point higher than during the prior year. Also,
other income decreased $1,755,000 this year, primarily due to two factors.
First, the fourth quarter included a charge of approximately $1,000,000 for
costs associated with the withdrawal of beverage products which contained an
undeclared sweetener. In addition, lower profits on frozen fruit sales also
contributed to the decline in other income.
A $6,996,000 loss is included in income before income taxes on the disposal of
Elsenham Quality Foods, Ltd. This loss represents the write-off of the Company's
investment in Elsenham (see Note C). The tax benefit associated with the
Elsenham divestiture resulted in a net tax credit and significantly reduced the
effective tax rate for the year to 34.2%. Excluding the impact of the Elsenham
transaction, the tax rate would have been 42.8% for the year (compared to 40.9%
in fiscal 1995). The after-tax impact from this transaction was not material.
Capital Resources and Liquidity
The Company's cash position and overall financial condition strengthened during
fiscal 1997 as the Company retired its entire outstanding debt during the year,
using a combination of proceeds from the sale of Mrs. Smith's and cash provided
from continuing operations. Significant uses of cash during the year included
$15,751,000 in capital expenditures, down from record levels last year, and
dividends. Dividends paid in fiscal 1997 on all Common Shares were at $0.52 per
share or $15,113,000 in total. In addition, during the fourth quarter the
Company used cash to acquire the rights to the Kraft retail fruit spreads
business in the United States. The Kraft business, which represents
approximately a 2% share of the U. S. fruit spreads market, did not contribute
materially to the financial results of the fourth quarter.
At the end of the year, the Company replaced its $125,000,000 credit facility
with two lines of credit, providing up to $60,000,000 in short-term borrowings.
The Company expects to borrow against its lines of credit during fiscal 1998 to
finance its annual procurement of fruit and to meet other cash requirements. In
addition to working capital requirements, approximately $15,000,000 is expected
to be spent in support of the Company's information technology and reengineering
project. Other capital expenditures are planned at approximately $17,000,000.
The majority of these cash outlays are expected to occur in the first half of
the fiscal year.
<PAGE> 6
During fiscal 1997, the Company announced that its Board of Directors had
authorized the purchase, from time to time, of up to one million of its Class A
and/or Class B Common Shares in total. At this time, the Company does not expect
to repurchase the entire one million shares during the upcoming year, although
that possibility exists.
Assuming that there are no additional acquisitions or other investments
requiring cash outlays and the results of operations are at least comparable to
fiscal 1997, the Company expects cash provided from operations and borrowings to
be sufficient to meet cash requirements in fiscal 1998.
Certain Forward-Looking Statements
This annual report includes certain forward-looking statements that are based on
current expectations and are subject to a number of risks and uncertainties.
Actual results may differ depending on a number of factors including: the
success of the Company's fruit spreads marketing program during the coming year;
competitive activity, including private label; the mix of products sold and the
level of marketing expenditures needed to generate those sales; an increase in
fruit costs or costs of any other significant ingredients; the ability of the
Company to maintain and/or improve sales and earnings performance of its
non-retail business areas; and the implementation of the Company's information
technology project.
<PAGE> 7
Statements of Consolidated Income
The J. M. Smucker Company
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
(Dollars in thousands, except per share data)
- --------------------------------------------------------------------------------------------------
Year Ended April 30, 1997 1996 1995
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales $ 542,602 $ 528,576 $ 510,888
Cost of products sold 348,949 337,095 330,287
- --------------------------------------------------------------------------------------------------
Gross Profit 193,653 191,481 180,601
Selling, distribution, and administrative expenses 140,449 137,487 126,045
- --------------------------------------------------------------------------------------------------
Operating Income 53,204 53,994 54,556
Interest income 2,048 1,173 770
Other (expense) income - net (338) (983) 772
- --------------------------------------------------------------------------------------------------
54,914 54,184 56,098
Interest expense 1,748 2,393 1,218
Loss on disposal of foreign subsidiary -- 6,996 --
- --------------------------------------------------------------------------------------------------
Income before Income Taxes 53,166 44,795 54,880
Income taxes 22,231 15,342 22,419
- --------------------------------------------------------------------------------------------------
Income from Continuing Operations $ 30,935 $ 29,453 $ 32,461
Discontinued Operations:
Income from discontinued operations, net -- 1,284 3,842
of income taxes
Loss on discontinuance, net of income taxes -- (1,424) --
- --------------------------------------------------------------------------------------------------
Net Income $ 30,935 $ 29,313 $ 36,303
==================================================================================================
Income per Common Share:
Continuing Operations $ 1.06 $ 1.01 $ 1.11
Discontinued Operations -- -- 0.14
- --------------------------------------------------------------------------------------------------
Net Income per Common Share $ 1.06 $ 1.01 $ 1.25
==================================================================================================
</TABLE>
See notes to consolidated financial statements
<PAGE> 8
Consolidated Balance Sheets
The J. M. Smucker Company
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
(Dollars in thousands)
- -------------------------------------------------------------------------------------------------------------
Assets April 30,
- -------------------------------------------------------------------------------------------------------------
1997 1996
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Current Assets
Cash and cash equivalents $ 24,091 $ 17,647
Trade receivables, less allowance for doubtful accounts 48,140 40,241
Income tax refundable --- 2,998
Inventories:
Finished products 39,054 37,381
Raw materials, containers, and supplies 55,052 58,114
- -------------------------------------------------------------------------------------------------------------
94,106 95,495
Assets of discontinued operations - net --- 42,250
Other current assets 12,135 15,831
- -------------------------------------------------------------------------------------------------------------
Total Current Assets 178,472 214,462
- -------------------------------------------------------------------------------------------------------------
Property, Plant, and Equipment
Land and land improvements 13,820 13,719
Buildings and fixtures 74,709 73,400
Machinery and equipment 170,160 163,078
Construction in progress 6,881 2,615
- -------------------------------------------------------------------------------------------------------------
265,570 252,812
Accumulated depreciation (125,935) (109,728)
- -------------------------------------------------------------------------------------------------------------
Total Property, Plant, and Equipment 139,635 143,084
- -------------------------------------------------------------------------------------------------------------
Other Noncurrent Assets
Goodwill 34,041 31,336
Trademarks and patents 11,352 12,762
Assets of discontinued operations - net --- 13,875
Notes receivable 13,109 ---
Other assets 8,164 9,433
- -------------------------------------------------------------------------------------------------------------
Total Other Noncurrent Assets 66,666 67,406
- -------------------------------------------------------------------------------------------------------------
$384,773 $424,952
==============================================================================================================
</TABLE>
<PAGE> 9
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
(Dollars in thousands)
- -----------------------------------------------------------------------------------------------------------------------
Liabilities and Shareholders' Equity April 30,
- -----------------------------------------------------------------------------------------------------------------------
1997 1996
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Current Liabilities
Accounts payable $36,582 $37,211
Salaries, wages, and additional compensation 9,636 8,845
Accrued marketing and merchandising 11,057 9,750
Income taxes 4,116 ---
Dividends payable 3,823 3,810
Other current liabilities 6,802 7,894
- -----------------------------------------------------------------------------------------------------------------------
Total Current Liabilities 72,016 67,510
- -----------------------------------------------------------------------------------------------------------------------
Noncurrent Liabilities
Long-term debt --- 60,800
Postretirement benefits other than pensions 11,068 10,541
Deferred income taxes 7,604 8,488
Other noncurrent liabilities 2,194 1,272
- -----------------------------------------------------------------------------------------------------------------------
Total Noncurrent Liabilities 20,866 81,101
- -----------------------------------------------------------------------------------------------------------------------
Shareholders' Equity
Serial Preferred Shares - no par value: --- ---
Authorized-3,000,000 shares; outstanding-none
Common Shares - no par value:
Class A - Authorized-35,000,000 shares; 3,606 3,597
outstanding-14,423,126 in 1997 and 14,387,639 in 1996
(net of 1,789,162 and 1,824,649 treasury shares,
respectively), at stated value
Class B - (Non-voting) Authorized-35,000,000 shares; 3,696 3,696
outstanding-14,785,203 in 1997, and 14,782,339 in 1996
(net of 1,427,085 and 1,429,949 treasury shares,
respectively), at stated value
Additional capital 12,439 11,469
Retained income 284,605 269,036
Less:
Deferred compensation (1,396) (727)
Amount due from ESOP Trust (10,027) (10,251)
Currency translation adjustment (1,032) (479)
- -----------------------------------------------------------------------------------------------------------------------
Total Shareholders' Equity 291,891 276,341
- -----------------------------------------------------------------------------------------------------------------------
$384,773 $424,952
=======================================================================================================================
</TABLE>
See notes to consolidated financial statements
<PAGE> 10
Statements of Consolidated Cash Flows
The J. M. Smucker Company
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
(Dollars in thousands)
- ----------------------------------------------------------------------------------------------------------
Year Ended April 30, 1997 1996 1995
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating Activities
Income from continuing operations $ 30,935 $ 29,453 $ 32,461
Adjustments to reconcile income from continuing
operations to net cash provided by operating activities:
Depreciation 18,337 15,288 13,292
Amortization 3,502 2,185 2,872
Loss on disposal of foreign subsidiaries -- 6,996 --
Deferred income taxes 4,026 764 119
Changes in assets and liabilities, net of effects from
business acquisitions and discontinued operations:
Trade receivables (8,043) 1,931 678
Inventories 1,792 (9,738) (7,137)
Other current assets (1,174) (350) (7,058)
Accounts payable and accrued items 341 3,841 (2,384)
Income Taxes 7,114 (6,856) 1,734
Other - net 2,693 4,297 (1,028)
- ----------------------------------------------------------------------------------------------------------
Net Cash Provided by Operating Activities 59,523 47,811 33,549
- ----------------------------------------------------------------------------------------------------------
Investing Activities
Business acquired - net of cash (5,593) -- (28,780)
Additions to property, plant, and equipment (15,751) (25,585) (18,963)
Proceeds from the sale of property, plant, and equipment 627 722 580
Proceeds from the sale of assets of discontinued operations 44,695 -- --
Other - net 767 1,494 724
- ----------------------------------------------------------------------------------------------------------
Net Cash Provided by (Used for) Investing Activities 24,745 (23,369) (46,439)
- ----------------------------------------------------------------------------------------------------------
Financing Activities
Proceeds from long-term debt -- -- 18,542
Reduction in long-term debt (60,800) (6,300) --
(Purchase) sale of Common Shares - net (245) 98 (195)
Net amount received from ESOP 224 190 229
Dividends paid (15,113) (15,123) (14,503)
Other - net 140 1,104 348
- ----------------------------------------------------------------------------------------------------------
Net Cash (Used for) Provided by Financing Activities (75,794) (20,031) 4,421
- ----------------------------------------------------------------------------------------------------------
Cash flows provided by (used in) continuing operations 8,474 4,411 (8,469)
Cash flows (used in)provided by discontinued operations (1,858) 1,901 5,527
Effect of exchange rate changes on cash (172) 91 127
Net increase (decrease) in cash and cash equivalents 6,444 6,403 (2,815)
Cash and cash equivalents at beginning of year 17,647 11,244 14,059
- ----------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents at End of Year $ 24,091 $ 17,647 $ 11,244
- ----------------------------------------------------------------------------------------------------------
</TABLE>
( ) Denotes use of cash
See notes to consolidated financial statements
<PAGE> 11
Statements of Consolidated Shareholders' Equity
The J. M. Smucker Company
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
(Dollars in thousands)
- ---------------------------------------------------------------------------------------------------------------------------
Amount
Common Shares Deferred due Currency Share-
-------------- Additional Retained Compen- from ESOP Translation holders'
Class A Class B Capital Income sation Trust Adjustment Equity
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at April 30, 1994 $3,590 $3,687 $9,261 $233,420 $ (576) $(10,670) $(4,310) $234,402
Net income 36,303 36,303
Purchase of treasury shares (2) (3) (190) (195)
Stock plans 8 8 1,337 (716) 637
Cash dividends declared- (14,679) (14,679)
$.505 a share
Other 368 229 927 1,524
- ---------------------------------------------------------------------------------------------------------------------------
Balance at April 30, 1995 $3,596 $3,695 $10,963 $254,854 $(1,292) $(10,441) $(3,383) $257,992
Net income 29,313 29,313
Purchase of treasury shares (14) (14)
Stock plans 1 1 110 565 677
Cash dividends declared- (15,117) (15,117)
$.52 a share
Other 396 190 2,904 3,490
- ---------------------------------------------------------------------------------------------------------------------------
Balance at April 30, 1996 $3,597 $3,696 $11,469 $269,036 $ (727) $(10,251) $ (479) $276,341
Net income 30,935 30,935
Purchase of treasury shares (3) (2) (240) (245)
Stock plans 12 841 (669) 184
Cash dividends declared- (15,126) (15,126)
$.52 a share
Other 131 224 (553) (198)
- ---------------------------------------------------------------------------------------------------------------------------
Balance at April 30, 1997 $3,606 $3,696 $12,439 $284,605 $ (1,396) $(10,027) $(1,032) $291,891
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to consolidated financial statements
<PAGE> 12
Notes to Consolidated Financial Statements
The J. M. Smucker Company
On May 31, 1996, the Company completed the sale of the Mrs. Smith's frozen pie
business to a subsidiary of Flowers Industries, Inc. Mrs. Smith's has been
reflected as a discontinued operation in the accompanying financial statements
for fiscal 1997 and prior years. Accordingly, unless otherwise stated, the
accompanying notes for all years presented exclude amounts related to this
discontinued business.
Note A: Accounting Policies
Principles of Consolidation: The consolidated financial statements
include the accounts of the Company and its subsidiaries, all of which are
wholly-owned. All significant intercompany transactions and accounts are
eliminated in consolidation.
Cash and Cash Equivalents: The Company considers all short-term
investments with a maturity of three months or less to be cash equivalents.
Financial Instruments: The fair value of the Company's financial
instruments approximates their carrying amounts.
Use of Estimates: The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those
estimates.
Stock Compensation: Effective May 1, 1996, the Company adopted
Statement of Financial Accounting Standards No. 123, Accounting for Stock-Based
Compensation (SFAS 123). Under SFAS 123, companies may elect to adopt the fair
value method of accounting for stock-based compensation or continue to use
Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to
Employees (APB 25) to measure expense associated with stock-based compensation.
The Company has elected to continue to follow APB 25 which results in net income
and earnings per share that are not materially different from amounts determined
using the fair value method of SFAS 123.
<PAGE> 13
Inventories: The Company values its inventories at the lower of cost or
market, with market considered as replacement value. Cost is determined on the
last-in, first-out (LIFO) method for the majority of domestic inventories.
Inventories not on the LIFO method are valued principally by the first-in,
first-out (FIFO) method. If the FIFO method (which approximates current cost)
had been used for all inventories, the balances would have been $13,643,000 and
$10,502,000 higher than reported at April 30, 1997 and 1996, respectively.
Goodwill and Intangible Assets: The excess cost over net assets of
businesses acquired and other intangibles, principally trademarks and patents,
are being amortized using the straight-line method over periods ranging from 5
to 40 years. The Company continually evaluates whether events or circumstances
have occurred which would indicate the carrying value may not be recoverable or
the useful life warrants revision. When factors indicate that goodwill and other
intangible assets should be evaluated for possible impairment, the Company
analyzes the future recoverability of the asset using an estimate of the related
undiscounted future cash flows of the business, and recognizes any adjustment to
its carrying value on a current basis. Accumulated amortization of goodwill and
intangible assets at April 30, 1997 and 1996, was $17,209,000 and $14,545,000,
respectively.
Property, Plant, and Equipment: Property, plant, and equipment are
recorded at cost and are depreciated on a straight-line basis over the estimated
useful lives of the assets, as follows: 3 to 15 years for machinery and
equipment, and 10 to 40 years for buildings, fixtures, and improvements.
Property sold or retired is eliminated from the accounts in the year of
disposition.
Software Costs: The Company capitalizes significant costs associated
with the development and installation of internal use software. Amounts deferred
are amortized over the estimated useful lives of the software beginning with the
project's completion. Net deferred internal software costs as of April 30, 1997
and 1996 were $4,976,000 and $689,000, respectively.
Foreign Currency Translation: Assets and liabilities of the Company's
foreign subsidiaries are translated using the exchange rates in effect at the
balance sheet date, while income and expenses are translated using average
rates. Translation adjustments are reported as a separate component of
shareholders' equity.
Advertising Expense: Advertising costs are expensed as incurred.
Advertising expense was $10,321,000, $9,421,000, and $10,213,000 in fiscal 1997,
1996, and 1995, respectively.
<PAGE> 14
Recently Issued Accounting Standards: In March 1995, the Financial
Accounting Standards Board (FASB) issued Statement of Financial Accounting
Standards No. 121, Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of (SFAS 121), which requires impairment losses
to be recorded on long-lived assets used in operations when indicators of
impairment are present and the undiscounted cash flows estimated to be generated
by those assets are less than the assets' carrying amount. SFAS 121 also
addresses the accounting for long-lived assets that are expected to be disposed
of. The Company adopted SFAS 121 in the first quarter of fiscal 1997 and the
impact was not material.
In February 1997, the FASB issued Statement of Financial Accounting
Standards No. 128, Earnings Per Share (SFAS 128). SFAS 128 replaces the
presentation of primary earnings per share (EPS) under Accounting Principles
Board Opinion No. 15 and related Interpretations, with the presentation of basic
EPS (which primarily gives effect only to common shares actually outstanding)
and requires dual presentation of basic and diluted EPS on the face of the
income statement for all of the entities with complex capital structures. The
Company is required to adopt SFAS 128 during fiscal 1998. The Company has not
completed its evaluation of the potential impact of this new standard on EPS in
future periods, but it does not expect a material impact on earnings per share.
Risks and Uncertainties: The principal products of the Company are
fruit spreads, dessert toppings, peanut butter, industrial fruit products (such
as bakery and yogurt fillings), fruit and vegetable juices, juice beverages,
syrups, condiments, and gift packages. Within the domestic markets, the
Company's products are primarily sold through brokers to chain, wholesale,
cooperative, and independent grocery accounts and other consumer markets, and to
foodservice distributors and chains including hotels, restaurants, and
institutions. Industrial products are typically sold directly to other food
manufacturers. The Company's distribution outside the United States is
principally in Canada, Australia and the Pacific Rim, and Latin America. The
fruit raw materials used by the Company are generally purchased from independent
growers and suppliers, although the Company grows some strawberries for its own
use. Because of the seasonal nature and volatility of quantities of most of the
crops on which the Company depends, it is necessary to prepare and freeze stocks
of fruit and fruit juices and to maintain them in cold storage warehouses. The
Company believes there is no concentration of risk with any single customer or
supplier whose failure or non-performance would materially affect the Company's
results. In addition, the Company insures its business and assets in each
country against insurable risks in a manner that it deems appropriate. It
believes that the risk of loss from non-insurable events would not have a
material adverse effect on the Company's operations as a whole.
<PAGE> 15
Net Income Per Common Share: Net income per Common Share is based on
the weighted-average number of the Class A Common Shares and Class B Common
Shares considered outstanding during the year.
Note B: Operating Segments
The Company operates in one industry: the manufacturing and marketing of food
products. The following presents information about operations in different
geographic areas:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
(Dollars in thousands)
- --------------------------------------------------------------------------------------
Year Ended April 30, 1997 1996 1995
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales:
United States $476,558 $458,040 $444,796
Foreign 66,044 70,536 66,092
- --------------------------------------------------------------------------------------
Total net sales $542,602 $528,576 $510,888
- --------------------------------------------------------------------------------------
Operating income:
United States $85,507 $ 87,905 $ 84,544
Foreign 5,045 2,392 2,123
- --------------------------------------------------------------------------------------
90,552 90,297 86,667
Corporate expenses (37,348) (36,303) (32,111)
- --------------------------------------------------------------------------------------
Total operating income $53,204 $ 53,994 $ 54,556
- --------------------------------------------------------------------------------------
Identifiable assets:
United States $326,739 $365,697 $344,734
Foreign 58,034 59,255 61,261
- --------------------------------------------------------------------------------------
Total assets $384,773 $424,952 $405,995
- --------------------------------------------------------------------------------------
</TABLE>
Identifiable assets include corporate and all other assets identified
with operations in each geographic area. There was no material amount of
transfers between geographic areas.
<PAGE> 16
Note C: Acquisitions and Divestitures
Acquisitions
- ------------
In fiscal 1995, the Company acquired the Laura Scudder's natural peanut butter
business and After The Fall Products, Inc. In conjunction with these
acquisitions, the Company purchased $5,250,000 and $17,746,500 of intangible
assets, respectively, consisting primarily of goodwill. The Company plans to
amortize the intangible assets over 40 years using the straight-line method.
The Company recorded these transactions using the purchase method of accounting
and, accordingly, results of operations subsequent to the dates of acquisition
are included in the consolidated financial statements.
Divestitures
- ------------
As previously noted, on May 31, 1996, the Company completed the sale of its Mrs.
Smith's frozen pie business to a subsidiary of Flowers Industries, Inc. for a
combination of cash and notes receivable. In connection with this divestiture,
the Company also entered into agreements to lease certain property, plant, and
equipment to a Flowers Industries subsidiary under operating lease agreements.
Mrs. Smith's revenues were $2,926,000, $104,582,000, and $117,391,000 for the
years ended April 30, 1997, 1996, and 1995, respectively. Based upon debt
specifically identified to Mrs. Smith's, interest expense of $271,000,
$3,244,000, and $3,297,000 was allocated to discontinued operations in fiscal
1997, 1996, and 1995, respectively. Income tax (benefit) or expense allocated to
discontinued operations was ($2,069,000) and $2,658,000 in fiscal 1996 and 1995,
respectively.
The net assets sold have been reported in the accompanying consolidated balance
sheet at April 30, 1996 as assets of discontinued operations and are classified
as current and noncurrent based on the timing of the consideration to be
received. A summary of the net assets sold is as follows:
<PAGE> 17
<TABLE>
<CAPTION>
(Dollars in thousands) April
30,
- ------------------------------------------------------
1996
---------
<S> <C>
Accounts receivable $ 9,638
Inventory 26,685
Intangibles 29,692
Other assets 398
---------
Assets 66,413
Accounts payable $ 4,197
Accrued compensation 1,579
Accrued marketing 4,198
Other liabilities 314
---------
Liabilities 10,288
---------
Net assets $ 56,125
=========
</TABLE>
In December 1995, the Company divested its English subsidiary, Elsenham Quality
Foods Ltd., resulting in a pretax loss of $6,996,000. A tax benefit of
$6,870,000 was recognized associated with this transaction.
<PAGE> 18
Note D: Retirement Plans
The Company has pension plans covering substantially all of its employees.
Benefits are based on the employee's years of service and compensation. The
Company's plans are funded in conformity with the funding requirements of
applicable government regulations. Net periodic pension cost included the
following components:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
Year Ended April 30,
- ----------------------------------------------------------------------------------------------------------
(Dollars in thousands) 1997 1996 1995
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost-benefits earned during the period $ 1,481 $ 1,537 $ 1,640
Interest cost on projected benefit obligation 3,816 3,684 3,404
Actual return on plan assets (3,681) (6,343) (2,640)
Deferred (loss) gain (498) 2,620 (927)
Net amortization and deferral 381 373 386
- ----------------------------------------------------------------------------------------------------------
Net periodic pension cost $ 1,499 $ 1,871 $ 1,863
- ----------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 19
The following sets forth in the aggregate the funded status and amounts
recognized in the Company's consolidated balance sheets for all
Company-administered domestic pension plans:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
April 30,
- ----------------------------------------------------------------------------------------------------------------
(Dollars in thousands) 1997 1996
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Actuarial present value of accumulated benefit obligation:
Vested benefits $40,695 $39,984
Non-vested benefits 3,440 4,090
- ----------------------------------------------------------------------------------------------------------------
Accumulated benefit obligation 44,135 44,074
- ----------------------------------------------------------------------------------------------------------------
Projected benefit obligation for service
rendered to date 50,840 51,773
Plan assets at fair value 50,055 47,359
- ----------------------------------------------------------------------------------------------------------------
Projected benefit obligation in excess of plan assets (785) (4,414)
Unrecognized prior service cost 4,989 5,350
Unrecognized net gain from past experience (4,212) (449)
Unamortized net asset at transition (1,413) (1,504)
- ----------------------------------------------------------------------------------------------------------------
Accrued pension cost $(1,421) $(1,017)
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
The expected long-term rate of return on plan assets was 9% for 1997,
1996, and 1995. Plan assets consist of listed stocks and government obligations,
including 168,000 of both of the Company's Class A and Class B Common Shares at
April 30, 1997 and 1996. The discount rate was 7.75% and 7.5% in 1997 and 1996,
respectively, while the rate of increase in future compensation levels used in
determining the actuarial present value of the projected benefit obligations was
5.25% and 5.5% in 1997 and 1996, respectively. Prior service costs are being
amortized over the average remaining service lives of the employees expected to
receive benefits. Included in the above table is the unfunded supplemental
retirement benefit plan which had a projected benefit obligation of $6,889,000
and $6,798,000 in 1997 and 1996, respectively.
The Company also charged to operations approximately $687,000,
$651,000, and $691,000 in 1997, 1996, and 1995, respectively, for contributions
to foreign pension plans and to plans not administered by the Company on behalf
of employees subject to certain labor contracts. These amounts were determined
in accordance with foreign actuarial computations and provisions of those labor
contracts. For those plans not self-administered, the Company is unable to
determine its share of either the accumulated plan benefits or net assets
available for benefits under those plans.
<PAGE> 20
Note E: Postretirement Benefits Other Than Pensions
In addition to providing pension benefits, the Company sponsors several unfunded
defined postretirement plans which provide health care and life insurance
benefits to substantially all active and retired, domestic, non-represented
employees, and their covered dependents and beneficiaries. These plans are
contributory, with retiree contributions adjusted periodically, and contain
other cost-sharing features, such as deductibles and coinsurance. Covered
employees generally are eligible for these benefits when they have reached age
55 and attained 10 years of service.
<PAGE> 21
Net periodic postretirement benefit cost related to these plans for 1997, 1996,
and 1995 included the following components:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
Year Ended April 30,
- --------------------------------------------------------------------------------------------------
(Dollars in thousands) 1997 1996 1995
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost $ 424 $ 427 $ 472
Interest cost 708 657 662
Net amortization and deferral (12) (64) ---
- --------------------------------------------------------------------------------------------------
Net periodic postretirement benefit cost $1,120 $1,020 $1,134
- --------------------------------------------------------------------------------------------------
</TABLE>
The following table sets forth the combined status of the plans as recognized in
the consolidated balance sheets at April 30, 1997 and 1996:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
April 30,
- ------------------------------------------------------------------------------------------
(Dollars in thousands) 1997 1996
- ------------------------------------------------------------------------------------------
<S> <C> <C>
Accumulated benefit obligation:
Retirees $3,256 $2,685
Fully eligible active participants 1,604 1,373
Other active participants 4,728 4,676
Unrecognized actuarial gain 1,480 1,807
- ------------------------------------------------------------------------------------------
Postretirement benefits other than pensions $11,068 $10,541
- ------------------------------------------------------------------------------------------
</TABLE>
The discount rate assumption used to determine the actuarial present value of
the accumulated postretirement benefit obligation was 7.75% in 1997 and 7.5% in
1996. For 1998, the assumed health care cost trend rates are 9.25% for
participants under age 65 and 7.25% for participants age 65 or older. Both rates
are assumed to decrease gradually to 5% in the year 2003. The health care cost
trend rate assumption has a significant effect on the amount of the obligation
and periodic cost reported. A one percent annual increase in the assumed cost
trend rate in each year would increase the accumulated postretirement benefit
obligation as of April 30, 1997, by $1,692,000 and the net periodic
postretirement benefit cost for the year by $250,000.
In addition, certain of the Company's active employees participate in
multi-employer plans which provide defined postretirement health care benefits.
The aggregate amount contributed to these plans, including the charge for net
periodic postretirement benefit costs, totaled $1,439,000, $1,469,000, and
$1,431,000 in 1997, 1996, and 1995, respectively.
<PAGE> 22
Note F: Stock Benefit Plans
ESOP: The Company sponsors an Employee Stock Ownership Plan and Trust
(ESOP) for domestic, non-represented employees. The Company has entered into
loan agreements with the Trustee of the ESOP for purchases by the Trustee in
amounts not to exceed a total of 1,200,000 unallocated Common Shares of the
Company at any one time. These shares are to be allocated to participants over a
period of not less than 20 years. ESOP loans bear interest at 1/2% over prime
and are payable as shares are allocated to participants. Contributions to the
plan are made annually in amounts sufficient to fund ESOP debt repayment.
Dividends on unallocated shares are used to reduce expense and were $377,000,
$398,000, and $406,000 in 1997, 1996, and 1995, respectively. The principal
payments received from the ESOP in 1997, 1996, and 1995 were $224,000, $190,000,
and $229,000, respectively.
Effective May 1, 1994, the Company adopted Statement of Position
93-6, Employers' Accounting for Employee Stock Ownership Plans (SOP 93-6). This
statement requires that compensation expense be measured based upon the fair
value of shares committed to be released to plan participants. Under the
"grandfather" provision of SOP 93-6, the Company did not apply the statement to
shares purchased prior to the transition date of December 31, 1992. Since all
shares currently held by the ESOP were acquired prior to 1993, the Company will
continue to recognize future compensation expense using the cost basis. At April
30, 1997, the ESOP held 725,048 unallocated shares consisting of 244,124 Class A
and 480,924 Class B Common Shares. All shares held by the ESOP were considered
outstanding in earnings per share calculations for all periods presented.
Savings Plan: The Company offers an employee savings plan under Section
401(k) of the Internal Revenue Code for all domestic employees not covered by
collective bargaining agreements. The Company's contributions under the plan are
based on a specified percentage of employee contributions. Charges to operations
for this plan in 1997, 1996, and 1995 were $901,000, $890,000, and $871,000,
respectively.
<PAGE> 23
Restricted Stock: The Restricted Stock Bonus Plan provides for issuance
of Common Shares to key employees. There are 74,600 Class A and 117,600 Class B
Common Shares available for issuance under the plan at April 30, 1997. Shares
awarded under this plan contain certain restrictions for four years relating,
among other things, to forfeiture in the event of termination of employment and
to transferability. Shares awarded are issued as of the effective date of the
award and recorded at market value. A corresponding deferred compensation charge
is expensed over the period during which restrictions are in effect. In fiscal
1995, an award of 31,000 shares of Class A and Class B Common Shares was made.
There were no awards made during either fiscal 1997 or 1996.
Stock Options: The Company has a stock option plan covering officers
and certain key employees. Options granted under this plan become exercisable at
the rate of one-third per year, beginning one year after the date of grant and
the option price is equal to the market value of the shares on the effective
date of the grant.
<PAGE> 24
A summary of the Company's stock option activity, and related information
follows:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
Weighted- Weighted-
Class A Average Class B Average
Options Exercise Price Options Exercise Price
------- -------------- ------- --------------
<S> <C> <C> <C> <C>
Outstanding at April 30, 1994 858,100 $22.93 393,800 $17.57
Granted 87,500 23.69 87,500 21.50
Exercised --- --- --- ---
Forfeited --- --- --- ---
- ---------------------------------------------------------------------------------------------------------------------------
Outstanding at April 30, 1995 945,600 $23.00 481,300 $18.28
Granted 148,500 18.00 148,500 15.94
Exercised (3,500) 15.94 (3,500) 15.94
Forfeited (6,200) 21.84 (4,200) 20.58
- ---------------------------------------------------------------------------------------------------------------------------
Outstanding at April 30, 1996 1,084,400 $22.34 622,100 $17.72
Granted 168,000 17.25 168,000 16.25
Exercised (3,288) 11.19 (3,288) 11.19
Forfeited (9,500) 21.50 (6,500) 16.87
- ---------------------------------------------------------------------------------------------------------------------------
Outstanding at April 30, 1997 1,239,612 $21.69 780,312 $17.44
Exercisable at April 30, 1997 948,113 $22.78 488,813 $17.90
Available for Future Grants
at April 30,
1995 838,331 1,302,631
1996 502,866 965,166
1997 344,366 803,666
===========================================================================================================================
</TABLE>
The following table summarizes the range of exercise prices and weighted-average
exercise prices for options outstanding and exercisable at April 30, 1997 under
the Company's stock option plan:
<PAGE> 25
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
Weighted-
Average
Weighted- Remaining Weighted-
Range of Average Contractual Average
Share Class Exercise Prices Outstanding Exercise Price Life (yrs.) Exercisable Exercise Price
- ---------------- ----------------- -------------- --------------- -------------- ------------ ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
Class A $11.19 - $20.00 694,312 $17.61 5.5 431,479 $17.65
Class A $20.01 - $31.50 545,300 $26.89 5.8 516,634 $27.06
Class B $11.19 - $21.50 780,312 $17.44 5.7 488,813 $17.90
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
The Company granted stock options during fiscal 1996 for the purchase of 150,000
Class B Common Shares to non-employees for consulting services rendered. The
options, which contain a weighted-average exercise price of $20.75 per share and
become exercisable in fiscal 1998, were all considered outstanding at April 30,
1997. The Company recognized expense relating to these options of $66,000 and
$165,000 in fiscal 1997 and 1996, respectively.
<PAGE> 26
Note G: Credit Facilities
At the end of fiscal 1997, the Company replaced its previously existing
$125,000,000 revolving credit facility with two new lines of credit, providing
up to $60,000,000 for short-term borrowings. The interest rate to be charged on
any outstanding balances is based on prevailing prime rates. Interest paid on
all borrowings approximated total interest expense in each of the three years
ended April 30, 1997, 1996, and 1995.
Note H: Leases
The Company leases certain land, buildings, and equipment for varying periods of
time, with renewal options. Leases of cold storage facilities are continually
renewed for short periods. Rental expense in 1997, 1996, and 1995 totaled
$9,783,000, $10,264,000, and $9,908,000, respectively; included therein were
cold storage facility rentals, based on quantities stored, amounting to
$4,357,000, $4,699,000, and $5,012,000, respectively.
<PAGE> 27
Note I: Income Taxes
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax reporting. Significant components
of the Company's deferred tax assets and liabilities are as follows:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
(Dollars in thousands) April 30,
- ----------------------------------------------------------------------------------------------------------
1997 1996
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Deferred tax liabilities:
Depreciation $13,551 $12,673
Other (each less than 5% of total liabilities) 1,893 1,494
- ----------------------------------------------------------------------------------------------------------
Total deferred tax liabilities 15,444 14,167
Deferred tax assets:
Postretirement benefits other than pensions 4,697 4,209
Other employee benefits 3,118 3,825
Foreign net operating loss carryforwards 1,234 1,232
Intangible assets 359 3,420
Marketing accruals 217 1,052
Other (each less than 5% of total assets) 4,408 3,083
- ----------------------------------------------------------------------------------------------------------
Total deferred tax assets 14,033 16,821
Valuation allowance for deferred tax assets (2,094) (2,009)
- ----------------------------------------------------------------------------------------------------------
Deferred tax assets less allowance 11,939 14,812
- ----------------------------------------------------------------------------------------------------------
Net deferred tax (liability) asset $(3,505) $ 645
- ----------------------------------------------------------------------------------------------------------
</TABLE>
At April 30, 1997, the Company has foreign net operating loss carryforwards of
$3,600,000 for income tax purposes with dates expiring from 2001 to 2004. The
Company has recorded a valuation allowance related to foreign tax loss
carryforwards and certain other foreign deferred tax assets due to the
uncertainty of their realization.
<PAGE> 28
Significant components of the provision for income taxes are as follows:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
(Dollars in thousands)
- -------------------------------------------------------------------------------------------------------------------------
Year Ended April 30, 1997 1996 1995
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Current
Federal $15,337 $12,787 $19,240
State and local 2,868 1,791 3,060
Deferred 4,026 764 119
- -------------------------------------------------------------------------------------------------------------------------
Total income tax expense from continuing operations $22,231 $15,342 $22,419
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
A reconciliation of the statutory federal income tax rate and the effective tax
rate follows:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
(Dollars in thousands)
- ----------------------------------------------------------------------------------------------------------------------
Percent of Pretax Income
- ----------------------------------------------------------------------------------------------------------------------
Year Ended April 30, 1997 1996 1995
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Statutory federal income tax rate 35.0% 35.0% 35.0%
Decrease in income taxes resulting from:
Loss on divestiture of foreign subsidiary --- (8.6) ---
Increase in income taxes resulting from:
State and local income taxes, net of
federal income tax benefit 3.5 3.4 3.6
Foreign losses not utilized --- 1.7 0.7
Other items 3.3 2.7 1.6
- ----------------------------------------------------------------------------------------------------------------------
Effective income tax rate 41.8% 34.2% 40.9%
- ----------------------------------------------------------------------------------------------------------------------
Income taxes paid, including amounts for discontinued
operations $10,200 $17,979 $22,521
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
Note J: Common Shares
The Company's Amended Articles of Incorporation provide that but for certain
exceptions, those acquiring the Company's Class A Common Shares will be entitled
to cast one vote per share on matters requiring shareholder approval until they
have held their shares for four years, after which time they will be entitled to
cast ten votes per share. The Company's Class B Common Shares are non-voting,
except under certain conditions outlined in the Company's Amended Articles of
Incorporation.
<PAGE> 1
<TABLE>
<CAPTION>
Exhibit 21
SUBSIDIARIES OF THE COMPANY
State or Jurisdiction
Subsidiaries of Incorporation
- -------------------------------------------------- ---------------------------
<S> <C>
After The Fall Products, Inc. Ohio
J. M. Smucker (Pennsylvania), Inc. Pennsylvania
The Dickinson Family, Inc. Ohio
Henry Jones Foods Pty. Ltd. Victoria, Australia
Juice Creations Co. Ohio
Knudsen & Sons, Inc. Ohio
Smucker Quality Beverages, Inc. California
Mary Ellen's, Incorporated Ohio
Smucker Holdings, Inc. Ohio
Santa Cruz Natural Incorporated California
Smucker Australia, Inc. Ohio
J. M. Smucker (Canada) Inc. Ontario, Canada
Smucker International, Ltd. U.S. Virgin Islands
Smucker Latin America, Inc. Ohio
J. M. Smucker de Mexico, S.A. de C.V. Mexico (domesticated
in Delaware)
JMS Specialty Foods, Inc. Wisconsin
Smucker Hong Kong Limited Hong Kong
Smucker U.K., Inc. Ohio
Alternative Attitudes, Inc. Ohio
</TABLE>
<PAGE> 1
Exhibit 23
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Annual Report on Form 10-K
of The J. M. Smucker Company of our report dated June 10, 1997, included in the
1997 Annual Report to Shareholders of The J. M. Smucker Company.
Our audit also included the financial statement schedule of The J. M. Smucker
Company listed in item 14(a). This schedule is the responsibility of the
Company's management. Our responsibility is to express an opinion based on our
audits. In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.
We also consent to the incorporation by reference in the Registration Statements
(Form S-8 No. 33-21273 and Form S-8 No. 33-38011) pertaining to the 1987 Stock
Option Plan of our report dated June 10, 1997, with respect to the consolidated
financial statements incorporated herein by reference, and our report included
in the preceding paragraph with respect to the financial statement schedule
included in this Annual Report on Form 10-K of The J. M. Smucker Company.
ERNST & YOUNG LLP
Akron, Ohio
July 18, 1997
<PAGE> 1
Exhibit 24
THE J. M. SMUCKER COMPANY
REGISTRATION ON FORM 10-K
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that KATHRYN W. DINDO, director of The
J. M. Smucker Company, hereby appoints Timothy P. Smucker, Richard K. Smucker,
and Steven J. Ellcessor, and each of them, with full power of substitution, as
attorney or attorneys of the undersigned, to execute an Annual Report on Form
10-K for the fiscal year ended April 30, 1997, in a form that The J. M. Smucker
Company deems appropriate and to file the same, with all exhibits thereto and
other documents in connection therewith, with the Securities and Exchange
Commission, all pursuant to applicable legal provisions, with full power and
authority to do and perform each and every act and thing requisite and necessary
to be done, as fully to all intents and purposes as the undersigned director
might or could do in person, in furtherance of the foregoing.
/s/ Kathryn W. Dindo
--------------------------------
Director
<PAGE> 2
THE J. M. SMUCKER COMPANY
REGISTRATION ON FORM 10-K
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that RIGHARD G. JIRSA, corporate
controller of The J. M. Smucker Company, hereby appoints Timothy P. Smucker,
Richard K. Smucker, and Steven J. Ellcessor, and each of them, with full power
of substitution, as attorney or attorneys of the undersigned, to execute an
Annual Report on Form 10-K for the fiscal year ended April 30, 1997, in a form
that The J. M. Smucker Company deems appropriate and to file the same, with all
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, all pursuant to applicable legal provisions,
with full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as the
undersigned corporate controller might or could do in person, in furtherance of
the foregoing.
/s/ Richard G. Jirsa
--------------------------------
Corporate Controller
<PAGE> 3
THE J. M. SMUCKER COMPANY
REGISTRATION ON FORM 10-K
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that ELIZABETH VALK LONG, director of
The J. M. Smucker Company, hereby appoints Timothy P. Smucker, Richard K.
Smucker, and Steven J. Ellcessor, and each of them, with full power of
substitution, as attorney or attorneys of the undersigned, to execute an Annual
Report on Form 10-K for the fiscal year ended April 30, 1997, in a form that The
J. M. Smucker Company deems appropriate and to file the same, with all exhibits
thereto and other documents in connection therewith, with the Securities and
Exchange Commission, all pursuant to applicable legal provisions, with full
power and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as the undersigned
director might or could do in person, in furtherance of the foregoing.
/s/ Elizabeth Valk Long
--------------------------------
Director
<PAGE> 4
THE J. M. SMUCKER COMPANY
REGISTRATION ON FORM 10-K
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that RUSSELL G. MAWBY, director of The
J. M. Smucker Company, hereby appoints Timothy P. Smucker, Richard K. Smucker,
and Steven J. Ellcessor, and each of them, with full power of substitution, as
attorney or attorneys of the undersigned, to execute an Annual Report on Form
10-K for the fiscal year ended April 30, 1997, in a form that The J. M. Smucker
Company deems appropriate and to file the same, with all exhibits thereto and
other documents in connection therewith, with the Securities and Exchange
Commission, all pursuant to applicable legal provisions, with full power and
authority to do and perform each and every act and thing requisite and necessary
to be done, as fully to all intents and purposes as the undersigned director
might or could do in person, in furtherance of the foregoing.
/ s / Russell G. Mawby
--------------------------------
Director
<PAGE> 5
THE J. M. SMUCKER COMPANY
REGISTRATION ON FORM 10-K
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that CHARLES S. MECHEM, JR., director
of The J. M. Smucker Company, hereby appoints Timothy P. Smucker, Richard K.
Smucker, and Steven J. Ellcessor, and each of them, with full power of
substitution, as attorney or attorneys of the undersigned, to execute an Annual
Report on Form 10-K for the fiscal year ended April 30, 1997, in a form that The
J. M. Smucker Company deems appropriate and to file the same, with all exhibits
thereto and other documents in connection therewith, with the Securities and
Exchange Commission, all pursuant to applicable legal provisions, with full
power and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as the undersigned
director might or could do in person, in furtherance of the foregoing.
/s/ Charles S. Mechem, Jr.
--------------------------------
Director
<PAGE> 6
THE J. M. SMUCKER COMPANY
REGISTRATION ON FORM 10-K
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that ROBERT R. MORRISON, director of
The J. M. Smucker Company, hereby appoints Timothy P. Smucker, Richard K.
Smucker, and Steven J. Ellcessor, and each of them, with full power of
substitution, as attorney or attorneys of the undersigned, to execute an Annual
Report on Form 10-K for the fiscal year ended April 30, 1997, in a form that The
J. M. Smucker Company deems appropriate and to file the same, with all exhibits
thereto and other documents in connection therewith, with the Securities and
Exchange Commission, all pursuant to applicable legal provisions, with full
power and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as the undersigned
director might or could do in person, in furtherance of the foregoing.
/s/ Robert R. Morrison
--------------------------------
Director
<PAGE> 7
THE J. M. SMUCKER COMPANY
REGISTRATION ON FORM 10-K
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that PAUL H. SMUCKER, director of The
J. M. Smucker Company, hereby appoints Timothy P. Smucker, Richard K. Smucker,
and Steven J. Ellcessor, and each of them, with full power of substitution, as
attorney or attorneys of the undersigned, to execute an Annual Report on Form
10-K for the fiscal year ended April 30, 1997, in a form that The J. M. Smucker
Company deems appropriate and to file the same, with all exhibits thereto and
other documents in connection therewith, with the Securities and Exchange
Commission, all pursuant to applicable legal provisions, with full power and
authority to do and perform each and every act and thing requisite and necessary
to be done, as fully to all intents and purposes as the undersigned director
might or could do in person, in furtherance of the foregoing.
/s/ Paul H. Smucker
--------------------------------
Director
<PAGE> 8
THE J. M. SMUCKER COMPANY
REGISTRATION ON FORM 10-K
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that RICHARD K. SMUCKER, director of
The J. M. Smucker Company, hereby appoints Timothy P. Smucker and Steven J.
Ellcessor, and each of them, with full power of substitution, as attorney or
attorneys of the undersigned, to execute an Annual Report on Form 10-K for the
fiscal year ended April 30, 1997, in a form that The J. M. Smucker Company deems
appropriate and to file the same, with all exhibits thereto and other documents
in connection therewith, with the Securities and Exchange Commission, all
pursuant to applicable legal provisions, with full power and authority to do and
perform each and every act and thing requisite and necessary to be done, as
fully to all intents and purposes as the undersigned director might or could do
in person, in furtherance of the foregoing.
/s/ Richard K. Smucker
--------------------------------
Director
<PAGE> 9
THE J. M. SMUCKER COMPANY
REGISTRATION ON FORM 10-K
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that TIMOTHY P. SMUCKER, director of
The J. M. Smucker Company, hereby appoints Richard K. Smucker and Steven J.
Ellcessor, and each of them, with full power of substitution, as attorney or
attorneys of the undersigned, to execute an Annual Report on Form 10-K for the
fiscal year ended April 30, 1997, in a form that The J. M. Smucker Company deems
appropriate and to file the same, with all exhibits thereto and other documents
in connection therewith, with the Securities and Exchange Commission, all
pursuant to applicable legal provisions, with full power and authority to do and
perform each and every act and thing requisite and necessary to be done, as
fully to all intents and purposes as the undersigned director might or could do
in person, in furtherance of the foregoing.
/s/ Timothy P. Smucker
--------------------------------
Director
<PAGE> 10
THE J. M. SMUCKER COMPANY
REGISTRATION ON FORM 10-K
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that WILLIAM H. STEINBRINK, director of
The J. M. Smucker Company, hereby appoints Timothy P. Smucker, Richard K.
Smucker, and Steven J. Ellcessor, and each of them, with full power of
substitution, as attorney or attorneys of the undersigned, to execute an Annual
Report on Form 10-K for the fiscal year ended April 30, 1997, in a form that The
J. M. Smucker Company deems appropriate and to file the same, with all exhibits
thereto and other documents in connection therewith, with the Securities and
Exchange Commission, all pursuant to applicable legal provisions, with full
power and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as the undersigned
director might or could do in person, in furtherance of the foregoing.
/s/ William H. Steinbrink
--------------------------------
Director
<PAGE> 11
THE J. M. SMUCKER COMPANY
REGISTRATION ON FORM 10-K
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that BENJAMIN B. TREGOE, JR., director
of The J. M. Smucker Company, hereby appoints Timothy P. Smucker, Richard K.
Smucker, and Steven J. Ellcessor, and each of them, with full power of
substitution, as attorney or attorneys of the undersigned, to execute an Annual
Report on Form 10-K for the fiscal year ended April 30, 1997, in a form that The
J. M. Smucker Company deems appropriate and to file the same, with all exhibits
thereto and other documents in connection therewith, with the Securities and
Exchange Commission, all pursuant to applicable legal provisions, with full
power and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as the undersigned
director might or could do in person, in furtherance of the foregoing.
/s/ Benjamin B. Tregoe, Jr.
--------------------------------
Director
<PAGE> 12
THE J. M. SMUCKER COMPANY
REGISTRATION ON FORM 10-K
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that WILLIAM WRIGLEY, JR., director of
The J. M. Smucker Company, hereby appoints Timothy P. Smucker, Richard K.
Smucker, and Steven J. Ellcessor, and each of them, with full power of
substitution, as attorney or attorneys of the undersigned, to execute an Annual
Report on Form 10-K for the fiscal year ended April 30, 1997, in a form that The
J. M. Smucker Company deems appropriate and to file the same, with all exhibits
thereto and other documents in connection therewith, with the Securities and
Exchange Commission, all pursuant to applicable legal provisions, with full
power and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as the undersigned
director might or could do in person, in furtherance of the foregoing.
/s/ William Wrigley, Jr.
--------------------------------
Director
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> APR-30-1997
<PERIOD-START> MAY-01-1996
<PERIOD-END> APR-30-1997
<CASH> 24,091
<SECURITIES> 0
<RECEIVABLES> 48,493
<ALLOWANCES> 353
<INVENTORY> 94,106
<CURRENT-ASSETS> 178,472
<PP&E> 265,570
<DEPRECIATION> (125,935)
<TOTAL-ASSETS> 384,773
<CURRENT-LIABILITIES> 72,016
<BONDS> 0
<COMMON> 7,302
0
0
<OTHER-SE> 284,589
<TOTAL-LIABILITY-AND-EQUITY> 384,773
<SALES> 542,602
<TOTAL-REVENUES> 542,602
<CGS> 348,949
<TOTAL-COSTS> 348,949
<OTHER-EXPENSES> 140,449
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,748
<INCOME-PRETAX> 53,166
<INCOME-TAX> 22,231
<INCOME-CONTINUING> 30,935
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 30,935
<EPS-PRIMARY> 1.06
<EPS-DILUTED> 1.06
</TABLE>
