<PAGE> 1
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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, 1999
[ ] 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 July 21, 1999, 14,355,215 Class A Common Shares and 14,690,676 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 July 21, 1999, was $290,135,473.
Certain sections of the Registrant's definitive Proxy Statement, dated July
15, 1999, for the August 17, 1999 Annual Meeting of Shareholders, and of the
1999 Annual Report to Shareholders are incorporated by reference into Parts I,
II, III, and IV of this Report.
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<PAGE> 2
PART I
ITEM 1. BUSINESS
THE COMPANY. The J. M. Smucker Company was established 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 operating lease agreements, which include the
exclusive right and option to purchase such assets during the term of the
leases.
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.
In its domestic segment, the Company's products are primarily sold
through brokers to chain, wholesale, cooperative, independent grocery accounts
and other consumer markets, to foodservice distributors and chains including
hotels, restaurants, and institutions, and to other food manufacturers.
The Company's distribution outside the United States is principally in
Canada, Australia, Mexico, Latin America, the Pacific Rim, and Greater Europe,
although products are exported to other countries as well. International sales
represent approximately 12% of total consolidated Company sales for fiscal 1999.
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, through a joint
venture, 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.
TRADEMARKS. The Company's products are marketed under numerous
trademarks owned by the Company. Major trademarks include: "Smucker's"," The R.
W. Knudsen Family", "After The Fall", "Simply Nutritious", "Mary Ellen",
"Dickinson's", "Lost Acres", "IXL", "Adams", "Laura Scudder's", "Simply Fruit",
"Good Morning", "Double Fruit", "Goober", "Magic Shell", "Sundae Syrup",
"Recharge", "Santa Cruz Organic", "Sunberry Farms", "Spritzer", "Smucker's
Snackers" and "Smucker's Baking Healthy". In addition, the Company licenses the
use of several other trademarks, none of which individually is material to the
Company's business.
<PAGE> 3
Other slogans or designs considered to be important Company trademarks
include (without limitation) the slogan, "With a name like `Smucker's', it has
to be good", "Over 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.
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. No material portion of the Company's business is
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, dessert topping, health and natural foods beverages, natural peanut
butter, and peanut butter combination 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
resources to both develop new products and improve existing products in each of
its business areas. In relation to consolidated assets and operating expenses,
amounts expensed for research and development in each of the areas and 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, 1999, the Company had approximately 2,100
full-time employees, worldwide.
SEGMENT AND GEOGRAPHIC INFORMATION. Information concerning
international operations for the years 1999, 1998, and 1997 is hereby
incorporated by reference from the 1999 Annual Report to Shareholders, on pages
22 and 23 under Note B: "Operating Segments".
<PAGE> 4
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. The properties listed below are owned,
except for the West Fargo, North Dakota location which is leased. 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
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<S> <C>
Orrville, Ohio Fruit spreads, toppings, industrial fruit
products, "Smucker's Snackers"
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
West Fargo, North Dakota Frozen peanut butter and jelly sandwiches
FRUIT PROCESSING LOCATIONS FRUIT PROCESSED
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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,
apples
Oxnard, California Strawberries
INTERNATIONAL MANUFACTURING LOCATIONS PRODUCTS PRODUCED
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Ste-Marie, Quebec, Canada Fruit spreads, pie fillings, sweet spreads
Kyabram, Victoria, Australia Fruit spreads, toppings, fruit pulps, fruit bars
Livingston, Scotland Industrial fruit products
</TABLE>
ITEM 3. LEGAL PROCEEDINGS
The Company is not a party to any pending legal proceeding that would
be considered material.
ITEM 4. SUBMISSIONS OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
<PAGE> 5
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 1999 Annual Report to Shareholders under the
caption "Stock Price Data" on page 9.
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 1999 Annual Report to Shareholders under the following captions and
page numbers: "Five-Year Summary of Selected Financial Data" on page 8, Note A:
"Accounting Policies" on pages 20 through 22, and Note D: "Acquisitions and
Divestiture" 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 1999 Annual Report to
Shareholders, on pages 10 through 13.
ITEM 7a. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Quantitative and qualitative disclosures about market risk is hereby
incorporated by reference from the Company's 1999 Annual Report to Shareholders
on pages 12 and 13.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Consolidated financial statements of the Company at April 30, 1999,
1998, and 1997, and for each of the three years in the period ended April 30,
1999, with the report of independent auditors and selected unaudited quarterly
financial data, are hereby incorporated by reference from the Company's 1999
Annual Report to Shareholders on page 9 and pages 14 through 31.
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
<PAGE> 6
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 15, 1999, for the 1999 Annual Meeting of Shareholders on August 17,
1999, on pages 2 through 4, under the caption "Election of Directors".
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 15, 1999, for the 1999 Annual Meeting of
Shareholders on August 17, 1999, on pages 13 through 15, under the caption
"Ownership of Common Shares".
EXECUTIVE OFFICERS OF THE COMPANY
The names, ages as of July 1, 1999, 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. 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
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<S> <C> <C> <C> <C>
Timothy P. Smucker 55 30 Chairman 1973
Richard K. Smucker 51 26 President 1974
Mark R. Belgya 38 14 Corporate Controller 1997
Vincent C. Byrd 44 22 Vice President and General Manager, Consumer 1988
Market
K. Edwin Dountz 57 23 Vice President-Sales 1982
Fred A. Duncan 53 21 Vice President and General Manager, Industrial 1984
Market
Steven J. Ellcessor 47 13 Vice President-Administration, Secretary, and 1986
General Counsel
Robert E. Ellis 52 21 Vice President-Human Resources 1996
Richard G. Jirsa 53 24 Vice President-Information Services 1978
Eloise L. Mackus 49 5 Vice President and General Manager, 1999
International Market
R. Alan McFalls 54 22 Vice President-Corporate Development and 1984
Planning
John D. Milliken 54 25 Vice President-Logistics 1981
Steven T. Oakland 38 16 Vice President and General Manager, Foodservice 1999
Market
Richard F. Troyak 51 20 Vice President-Operations 1998
H. Reid Wagstaff 64 23 Vice President-Government and Environmental 1994
Affairs
Philip P. Yuschak 60 23 Treasurer 1989
</TABLE>
<PAGE> 7
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 15, 1999, for the 1999 Annual Meeting of Shareholders on
August 17, 1999, beginning with "Additional Information Concerning the Board of
Directors of the Company" on page 4 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 15, 1999, for the 1999 Annual Meeting of Shareholders on
August 17, 1999, on pages 13 through 15 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 15, 1999, for the 1999 Annual Meeting of Shareholders on August 17,
1999, 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 SCHEDULE AND REPORTS ON FORM 8-K
(a) 1, 2. Financial Statements and Financial Statement Schedule
The index to Consolidated Financial Statements and Financial
Statement Schedule is included on page F-1 of this Report.
3. Exhibits
Exhibit
No. Description
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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
incorporated by reference to the 1997 Annual Report on Form
10-K.
10(f) 1998 Equity and Performance Incentive Plan incorporated by
reference to Form 10-Q for the quarterly period ended October
31, 1998.
10(g) Rights Agreement (including a Form of Certificate of Adoption
of Amendment to Amended Articles of Incorporation as Exhibit A
thereto, a Form of Right Certificate as Exhibit B thereto, and
a Summary of Rights to Purchase Preferred Stock as Exhibit C
thereto) incorporated by reference to Form 8-K filed April 23,
1999.
13 Excerpts from 1999 Annual Report to Shareholders
21 Subsidiaries of the Registrant
23 Consent of Independent Auditors
24 Powers of Attorney
27 Financial Data Schedules
<PAGE> 9
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.
(b) Reports on Form 8-K filed in the Fourth Quarter of 1999.
On April 23, 1999, 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 declared a
dividend distribution of one Class A right for each share of Class A
Common Stock, and one Class B right for each share of Class B Common
Stock, of the Company outstanding as of May 14, 1999. The dividend was
declared pursuant to the terms of a Rights Agreement dated as of April
22, 1999 by and between the Company and Harris Trust and Savings Bank,
as Rights Agent.
(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, 1999 The J. M. Smucker Company
/s/ Steven J. Ellcessor
-------------------------
By: Steven J. Ellcessor
Vice President--Administration, Secretary,
and General Counsel
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>
- ----------------------------------------
Timothy P. Smucker Chairman and Director
(Principal Executive Officer)
- ----------------------------------------
Richard K. Smucker President and Director
(Principal Executive Officer)
(Principal Financial Officer)
- ----------------------------------------
Mark R. Belgya Corporate Controller
(Principal Accounting Officer)
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Vincent C. Byrd Director
- ----------------------------------------
Kathryn W. Dindo Director
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Fred A. Duncan Director
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Elizabeth Valk Long Director
/s/ Steven J. Ellcessor
- ---------------------------------------- -----------------------------
Russell G. Mawby Director By: Steven J. Ellcessor
Attorney-in-Fact
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Charles S. Mechem, Jr. Director
Date: July 23, 1999
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Robert R. Morrison Director
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William H. Steinbrink Director
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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 SCHEDULE
CERTAIN EXHIBITS
FINANCIAL STATEMENT SCHEDULE
<TABLE>
<CAPTION>
Form Annual
10-K Report To
Report Shareholder
------ -----------
<S> <C> <C>
Data incorporated by reference from the 1999 Annual Report
to Shareholders of The J. M. Smucker Company:
Consolidated Balance Sheets at April 30, 1999 and 1998 . . . . . . . . 16 - 17
For the years ended April 30, 1999, 1998, and 1997:
Statements of Consolidated Income . . . . . . . . . . . . . . . . . 15
Statements of Consolidated Cash Flows . . . . . . . . . . . . . . . 18
Statements of Consolidated Shareholders' Equity . . . . . . . . . . 19
Notes to Consolidated Financial Statements . . . . . . . . . . . . . 20 - 31
Consolidated financial statement schedule at April 30, 1999,
or for the years ended April 30, 1999, 1998, and 1997:
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, 1999, 1998 AND 1997
(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) Year
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1999:
Valuation allowance for
deferred tax assets $1,731 $ (36) $ --- $ --- $1,695
Allowance for doubtful accounts 428 343 --- 38 733
==========================================================================
$2,159 $ 307 $ --- $ 38 $2,428
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1998:
Valuation allowance for
deferred tax assets $2,094 $ (363) $ --- $ --- $1,731
Allowance for doubtful accounts 353 163 --- 88 428
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$2,447 $ (200) $ --- $ 88 $2,159
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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
==========================================================================
</TABLE>
(A) Uncollectible accounts written off, net of recoveries.
F - 2
<PAGE> 1
Exhibit 13
<TABLE>
<CAPTION>
Five-Year Summary of Selected Financial Data
Year Ended April 30,
- ----------------------------------------------------- -------------- --------------- -------------- --------------- --------------
(Dollars in thousands, except per share data) 1999 1998 1997 1996 1995
- ----------------------------------------------------- -------------- --------------- -------------- --------------- --------------
<S> <C> <C> <C> <C> <C>
Statement of Income:
Net sales $602,457 $565,476 $524,107 $517,832 $503,618
Income from continuing operations
before cumulative effect of change in
accounting method 37,763 36,348 30,935 29,453 32,461
Income (Loss) from discontinued
operations (1) --- --- --- (140) 3,842
Cumulative effect of change in
accounting method (2) --- (2,958) --- --- ---
Net income 37,763 33,390 30,935 29,313 36,303
- ----------------------------------------------------- -------------- --------------- -------------- --------------- --------------
Financial Position:
Long-term debt --- --- --- 60,800 67,100
Total assets 433,883 407,973 384,773 424,952 405,995
- ----------------------------------------------------- -------------- --------------- -------------- --------------- --------------
Other Data:
Earnings per Common Share:
Income from continuing operations
before cumulative effect of change in
accounting method 1.30 1.25 1.06 1.01 1.12
Income from discontinued
operations (1) --- --- --- --- 0.13
Cumulative effect of change in
accounting method (2) --- (0.10) --- --- ---
Net income 1.30 1.15 1.06 1.01 1.25
Income from continuing operations
before cumulative effect of change in
accounting method - assuming dilution 1.29 1.24 1.06 1.00 1.11
Income from discontinued
operations - assuming dilution (1) --- --- --- --- 0.13
Cumulative effect of change in
accounting method - assuming
dilution (2) --- (0.10) --- --- ---
Net income - assuming dilution 1.29 1.14 1.06 1.00 1.24
Dividends declared per Common Share:
Class A 0.57 0.53 0.52 0.52 0.505
Class B 0.57 0.53 0.52 0.52 0.505
- ----------------------------------------------------- -------------- --------------- -------------- --------------- --------------
</TABLE>
(1) Represents "Mrs. Smith's" as described in Note D to the consolidated
financial statements.
(2) Reflects, in 1998, the cumulative effect of adopting the provisions of the
Emerging Issues Task Force of the Financial Accounting Standards Board
consensus ruling No. 97-13, Accounting for Costs Incurred in Connection
with a Consulting Contract that Combines Business Process Reengineering and
Information Technology Transformation (EITF 97-13), as discussed in Note A
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, 1999 and 1998.
<TABLE>
<CAPTION>
Net Income per Common Net Income per Common Share -
(Dollars in thousands, except per share data) Share Assuming Dilution
- ----------------------------------------------------------------------------------------------- -- -------------------------------
Income Income Income
Before Before Before
Cumulative Cumulative Cumulative
Effect of Effect of Effect of
Quarter Net Gross Accounting Net Accounting Net Accounting Net
Ended Sales Profit Change Income Change Income Change Income
- -------- ------------- ------------ ---------- ------------- ---------- ------------- --------- -- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1999 July 31 $150,500 $53,862 $10,416 $10,416 $0.36 $0.36 $0.36 $0.36
October 31 154,894 51,690 9,063 9,063 0.31 0.31 0.31 0.31
January 31 140,772 49,055 8,245 8,245 0.28 0.28 0.28 0.28
April 30 156,291 51,906 10,039 10,039 0.35 0.35 0.34 0.34
- -------- ------------- ------------ ---------- ------------- ---------- ------------- --------- -- --------------- ---------------
1998 July 31 $147,389 $51,396 $9,973 $9,973 $0.34 $0.34 $0.34 $0.34
October 31 145,187 49,213 8,602 8,602 0.30 0.30 0.29 0.29
January 31 130,658 47,232 8,033 5,075 0.27 0.17 0.27 0.17
April 30 142,242 52,022 9,740 9,740 0.34 0.34 0.33 0.33
- -------- ------------- ------------ ---------- ------------- ---------- ------------- --------- -- --------------- ---------------
</TABLE>
Annual earnings per share may not equal the sum of the individual quarters
due to differences in the average number of shares outstanding during the
respective periods.
Stock Price Data
The Company's Class A and Class B Common Shares are listed on the New York Stock
Exchange - ticker symbols SJM.A and SJM.B, 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 23, 1999 was 5,850 and 3,738, 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>
1999 July 31 $25.56 $23.31 $0.14 July 31 $25.31 $22.75 $0.14
October 31 24.50 20.75 0.14 October 31 24.06 20.19 0.14
January 31 25.69 22.13 0.14 January 31 24.00 20.63 0.14
April 30 24.56 20.81 0.15 April 30 22.31 17.50 0.15
- -------- ----------------- --------- -------- ------------- ----------- ----------------- --------- --------- ------------
1998 July 31 $24.13 $16.38 $0.13 July 31 $23.00 $16.13 $0.13
October 31 29.44 22.63 0.13 October 31 27.00 22.25 0.13
January 31 27.75 23.63 0.13 January 31 25.25 22.81 0.13
April 30 28.06 23.63 0.14 April 30 27.19 23.75 0.14
- -------- ----------------- --------- -------- ------------- ----------- ----------------- --------- --------- ------------
</TABLE>
<PAGE> 3
Management's Discussion and Analysis
Results of Operations
COMPARISON OF 1999 WITH 1998
Sales in fiscal 1999 were $602,457,000, an increase of $36,981,000 or 6.5% over
those of the prior year. All of the Company's domestic segment businesses
realized an increase over fiscal 1998 with the largest dollar growth occurring
in the consumer and industrial markets. The combined dollar growth of these two
markets accounted for approximately 60% of the Company's total increase in
sales. Domestic segment sales increased $30,524,000 or 6%, while the
international segment was up $6,457,000 or nearly 10%.
The growth in the consumer market was primarily in sales to the grocery channel
with the majority of the increase the result of: (i) a favorable mix of products
sold within the fruit spreads category; (ii) the introduction earlier this year
of "Smucker's Snackers", the Company's new shelf-stable peanut butter and jelly
offering for lunches and snacks; and (iii) the acquisition of the "Adams"
natural peanut butter brand in December 1998. In addition, sales to warehouse
club stores were also up over the prior year. The Company's market position in
the core fruit spreads, toppings, and natural peanut butter categories remained
strong with share of market growing in each area.
In the international segment, the majority of the growth occurred in the
Australasian market and was primarily due to the impact of the acquisition of
the "Allowrie" brand of fruit spreads, which was purchased in May 1998. Gains
were also realized in Mexico where sales increased nearly 50% over the prior
year. Overall, acquisitions contributed approximately 10% to international sales
for the year. The growth in international occurred despite the continued adverse
effect of exchange rates on the results in Australia and Canada. Had the
exchange rates held constant with last year, international sales would have been
up approximately $6,740,000 or an additional 10%.
Income for the year increased approximately 4% as earnings per share rose to
$1.30 from $1.25, before the cumulative-effect adjustment in the prior year.
Investment spending in several areas caused the increase in earnings to lag
behind the percentage increase in sales. Cost of products sold increased as a
percentage of sales from 64.7% to 65.7% due to the impact of an increase in the
cost of certain fruits, and costs associated with implementing production
improvements. Selling, distribution, and administrative expenses (SD&A),
although up from the same period last year, increased at a slower rate than
sales. The increase in SD&A was due to higher marketing costs, primarily to
support the introduction of "Smucker's Snackers", the Company's consumer direct
initiative, and sales of current products. Distribution expenses were also up.
Income tax expense decreased from fiscal 1998 as the Company lowered its
effective income tax rate from 40.2% to 38.7%. The decrease in the tax rate was
primarily due to a reduction in state and local taxes.
<PAGE> 4
Comparison of 1998 with 1997
Fiscal 1998 sales increased $41,369,000, or nearly 8%, over those of fiscal
1997. In the domestic segment businesses, the largest percentage increase came
in the industrial market where sales once again achieved double-digit growth
over fiscal 1997. Industrial growth came from a combination of new and existing
products in the bakery, yogurt filling, and frozen dairy categories. Sales also
increased significantly in the domestic fruit spreads category with the majority
of the increase coming from the Company's grocery and mass retail markets.
Record sales in the mass retail market resulted in this channel contributing
nearly 15% of the Company's overall sales growth for the year. The addition of
the "Kraft" brand fruit spreads business, acquired during the fourth quarter of
fiscal 1997, also contributed to the fiscal 1998 sales increase. Sales of
dessert toppings rebounded from 1997 and "Goober" sales also were up.
In the international segment, sales and profit contribution were up over fiscal
1997. Although sales were up over fiscal 1997, the increase was impacted by the
effect of a stronger U.S. dollar versus the Australian and Canadian dollars. If
the relation of the latter two currencies to the U.S. dollar had remained
constant with fiscal 1997 levels, the Company would have reported additional
sales of approximately $4,000,000. The Company's consumer businesses in
Australia and Canada remained strong with share of market gains achieved in both
countries. Sales gains were also realized in export sales to the Greater Europe
and Latin America markets.
Income before the cumulative effect of an accounting change increased
approximately 17% over fiscal 1997 as earnings per share rose from $1.06 to
$1.25. During the third quarter, the Emerging Issues Task Force of the Financial
Accounting Standards Board issued a consensus ruling requiring that certain
"business process reengineering and information technology transformation" costs
that had previously been capitalized needed to be expensed as incurred. In
accordance with this ruling, the Company incurred a one time, net of tax charge
in the third quarter of $2,958,000, or $.10 per share, for the cumulative effect
of expensing previously capitalized costs. This cumulative-effect adjustment
reduced earnings per share for the year to $1.15.
In addition to the sales growth, certain other factors contributed to the
improved earnings. The Company's gross profit improved from 33.4% of sales in
fiscal 1997 to 35.3% in fiscal 1998, due mostly to lower raw material fruit and
sweetener costs and a more profitable mix of products sold. In addition,
interest expense decreased $1,603,000 from fiscal 1997, as the Company incurred
only seasonal borrowings against its lines of credit. Somewhat offsetting these
cost reductions was an increase in selling, distribution, and administrative
expenses with the majority of the higher costs relating to two areas. First,
marketing expenditures increased approximately 25% in fiscal 1998, primarily in
support of initiatives within the fruit spreads category. Secondly,
administrative expenses were up significantly due to costs incurred in
conjunction with the Company's ongoing information technology reengineering
project.
<PAGE> 5
Capital Resources and Liquidity
The Company's overall financial condition remains strong despite a decrease in
cash and cash equivalents of $27,801,000 compared to April 30, 1998. During the
year, the Company completed several small acquisitions utilizing cash of
$26,590,000. In addition to acquisitions, other significant uses of cash during
the year were capital expenditures, including capitalized software and
consulting costs, and the payment of dividends. Dividends paid on all Common
Shares increased to $.56 per share or $16,246,000 in total, while capital
expenditures amounted to $38,693,000.
Although cash generated from operations amounted to $43,525,000, the impact of
the acquisitions and higher-than-average inventory balances during the year
resulted in an outstanding short-term debt balance of $8,966,000 at year end.
This debt was financed by borrowings against the Company's $50,000,000
uncommitted lines of credit, with a weighted-average interest rate of 5.48% at
April 30, 1999.
Subsequent to the end of the year, the Company issued 10-year, senior, unsecured
notes in the amount of $75,000,000 due June 1, 2009. The interest rate on these
notes is 6.77%. Interest is payable each June 1st and December 1st. Principal is
due at the end of the term. The Company plans to use the proceeds to refinance
existing indebtedness and for general corporate purposes such as stock
repurchases, acquisitions, and new product ventures. Finally, capital
expenditures are estimated at $26,000,000 for fiscal 2000. With the combination
of cash provided from operations and the proceeds from the long-term debt
placement, the Company expects its cash to be sufficient to meet fiscal 2000
requirements.
Year 2000
As part of the information technology reengineering (ITR) project previously
reported, the Company has completed an assessment of the Year 2000 issue as it
may affect its information technology (IT) systems. The new IT systems being
installed are fully Year 2000 compliant and will replace 80% of the Company's
noncompliant IT systems. The remaining 20% of such systems will be corrected, as
discussed below. The total ITR project cost, which includes an enterprise-wide
information system and business process reengineering, is estimated at
approximately $34,000,000, excluding internal staff costs. To date, the Company
has incurred approximately 82% of these costs.
A substantial portion of the ITR project is expected to be completed prior to
any anticipated impact of the Year 2000 issue on the Company's IT systems.
Implementation of components of the ITR project has been prioritized to ensure
replacement of the IT systems most affected by the Year 2000 issue.
Implementation progress has proceeded as planned. The Company has all critical
components implemented in test locations and anticipates full domestic
implementation by September 1, 1999, with international implementation to be
complete by November 1, 1999. With regard to the IT systems that either are not
being replaced by the ITR project or will not be replaced in time to meet the
change in millennium, the Company has plans in place to make corrections to the
affected software. The Company engaged outside consultants to assist with these
<PAGE> 6
corrections, which it estimates will cost approximately $2,000,000 in
additional expense, of which approximately 80% has been spent to date. The
Company expects to complete planned corrections by September 1, 1999. The
Company believes that with conversion to the new software and with the
scheduled modifications to existing software, the Year 2000 issue will not pose
significant operational problems for its IT systems.
The Company also has developed a plan to identify and replace all non-IT systems
that have Year 2000 issues. The cost to replace non-IT systems is not expected
to be material. In addition, the Company is in the process of contacting all
critical vendors to obtain status information on their Year 2000 issues. The
Company also has plans to contact all major customers in the coming months.
The worst case scenario of the Company, its vendors, or its customers not being
fully Year 2000 compliant includes temporary plant closings, delays in delivery
of finished goods or receipt of raw materials, invoice and collection errors,
and possible inventory and supply obsolescence. Should these events occur, the
impact on the Company's results of operations, financial condition, and cash
flows could be material. The Company believes that its approach to the Year 2000
issue should reduce the likelihood of any such disruptions and should help to
minimize the adverse effects if they do occur. As developed, contingency plans
and related cost estimates will be continually updated as additional information
becomes available.
The costs of the ITR project, the date on which the Company believes it will
complete the Year 2000 modifications, and the statements with regard to the
potential effect of the Year 2000 issue on the Company's operations and
financial condition are based on management's best estimates, which were derived
utilizing numerous assumptions of future events, including the continued
availability of certain resources and other factors. However, there can be no
guarantee that these estimates will be achieved and actual results could differ
materially from those anticipated. Specific factors that might cause such
material differences include, but are not limited to, the availability and cost
of personnel trained in this area, the ability to locate and correct all
relevant computer codes, and similar uncertainties.
Market Risk Disclosures
The following discussions about the Company's market risk disclosures involve
forward-looking statements. Actual results could differ materially from those
projected in the forward-looking statements. The Company is exposed to market
risk related to changes in interest rates and foreign currency exchange rates.
Interest Rate Risk. The fair value of the Company's cash and short-term
investment portfolio and the fair value of notes receivable at April 30, 1999,
approximated carrying value. Given the short-term nature of these instruments,
market risk, as measured by the change in fair value resulting from a
hypothetical 10% change in interest rates, is not material. Based on the
Company's overall interest rate exposure as of and during the year ended April
30, 1999, a hypothetical 10% movement in interest rates would not materially
<PAGE> 7
affect the Company's results of operations.
Foreign Currency Exchange Risk. After analyzing the risk, the Company has chosen
at this time not to hedge its foreign currency exposure. Therefore, it has not
entered into any forward foreign exchange contracts to hedge foreign currency
transactions.
The Company has operations outside the United States with foreign currency
denominated assets and liabilities, primarily denominated in Australian and
Canadian dollars. Because the Company has foreign currency denominated assets
and liabilities, financial exposure may result, primarily from the timing of
transactions and the movement of exchange rates. The unhedged foreign currency
balance sheet exposures as of April 30, 1999, are not expected to result in a
significant impact on future earnings or cash flows.
Revenues from customers outside the United States represented approximately 12%
of net sales during fiscal 1999. As the Company has expanded its international
operations, its sales and expenses denominated in foreign currencies have
increased and that trend is expected to continue. Thus, certain sales and
expenses have been, and are expected to be, subject to the effect of foreign
currency fluctuations and these fluctuations may have an impact on operating
results.
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 marketing programs during the coming year; competitive
activity; the mix of products sold and level of marketing expenditures needed to
generate sales; an increase in fruit costs or costs of other significant
ingredients, including sweeteners; the ability of the Company to maintain and/or
improve sales and earnings performance of its nonretail business areas; foreign
currency exchange and interest rate fluctuations; level of capital resources
required for and success of future acquisitions; and the successful
implementation of the Company's information technology reengineering project and
Year 2000 modifications.
<PAGE> 8
Statements of Consolidated Income
The J. M. Smucker Company
<TABLE>
<CAPTION>
Year Ended April 30,
- ----------------------------------------------------------------- --------------- ---------------- ----------------
(Dollars in thousands, except per share data) 1999 1998 1997
- ----------------------------------------------------------------- --------------- ---------------- ----------------
<S> <C> <C> <C>
Net sales $602,457 $565,476 $524,107
Cost of products sold 395,944 365,613 348,949
- ----------------------------------------------------------------- --------------- ---------------- ----------------
Gross Profit 206,513 199,863 175,158
Selling, distribution, and administrative expenses 147,538 142,799 121,954
- ----------------------------------------------------------------- --------------- ---------------- ----------------
Operating Income 58,975 57,064 53,204
Interest income 1,948 2,525 2,048
Interest expense (179) (145) (1,748)
Other income (expense) - net 887 1,315 (338)
- ----------------------------------------------------------------- --------------- ---------------- ----------------
Income Before Income Taxes and Cumulative Effect
of Change in Accounting Method 61,631 60,759 53,166
Income taxes 23,868 24,411 22,231
- ----------------------------------------------------------------- --------------- ---------------- ----------------
Income Before Cumulative Effect of Change in
Accounting Method 37,763 36,348 30,935
Cumulative effect of change in accounting method,
net of tax benefit of $1,980 --- (2,958) ---
- ----------------------------------------------------------------- --------------- ---------------- ----------------
Net Income $ 37,763 $ 33,390 $ 30,935
================================================================= =============== ================ ================
Earnings per Common Share:
Income Before Cumulative Effect of Change in
Accounting Method $ 1.30 $ 1.25 $ 1.06
Cumulative effect of change in accounting method --- (0.10) ---
- ----------------------------------------------------------------- --------------- ---------------- ----------------
Net Income Per Common Share $ 1.30 $ 1.15 $ 1.06
================================================================= =============== ================ ================
Earnings per Common Share - Assuming Dilution:
Income Before Cumulative Effect of Change in
Accounting Method $ 1.29 $ 1.24 $ 1.06
Cumulative effect of change in accounting method --- (0.10) ---
- ----------------------------------------------------------------- --------------- ---------------- ----------------
Net Income per Common Share - Assuming Dilution $ 1.29 $ 1.14 $ 1.06
================================================================= =============== ================ ================
</TABLE>
See notes to consolidated financial statements
<PAGE> 9
Consolidated Balance Sheets
The J. M. Smucker Company
<TABLE>
<CAPTION>
Assets
April 30,
- ------------------------------------------------------------------------ --------------------------------
(Dollars in thousands) 1999 1998
- ------------------------------------------------------------------------ --------------- ----------------
<S> <C> <C>
Current Assets
Cash and cash equivalents $ 8,683 $ 36,484
Trade receivables, less allowance for doubtful accounts 51,858 48,732
Inventories:
Finished products 51,983 41,264
Raw materials, containers, and supplies 62,217 62,201
- ------------------------------------------------------------------------ --------------- ----------------
114,200 103,465
Other current assets 11,401 12,825
- ------------------------------------------------------------------------ --------------- ----------------
Total Current Assets 186,142 201,506
- ------------------------------------------------------------------------ --------------- ----------------
Property, Plant, and Equipment
Land and land improvements 15,729 15,058
Buildings and fixtures 83,290 78,658
Machinery and equipment 201,913 177,372
Construction in progress 23,296 13,147
- ------------------------------------------------------------------------ --------------- ----------------
324,228 284,235
Accumulated depreciation (157,685) (140,521)
- ------------------------------------------------------------------------ --------------- ----------------
Total Property, Plant, and Equipment 166,543 143,714
- ------------------------------------------------------------------------ --------------- ----------------
Other Noncurrent Assets
Goodwill 45,371 32,722
Trademarks and patents 15,256 9,688
Other assets 20,571 20,343
- ------------------------------------------------------------------------ --------------- ----------------
Total Other Noncurrent Assets 81,198 62,753
- ------------------------------------------------------------------------ --------------- ----------------
$433,883 $407,973
======================================================================== =============== ================
</TABLE>
<PAGE> 10
<TABLE>
<CAPTION>
Liabilities and Shareholders' Equity
April 30,
------------------------------------------------------------------------- --------------------------------
(Dollars in thousands) 1999 1998
------------------------------------------------------------------------- ----------------- --------------
<S> <C> <C>
Current Liabilities
Accounts payable $ 40,262 $ 41,410
Notes payable 8,966 ---
Salaries, wages, and additional compensation 10,264 11,225
Accrued marketing and merchandising 8,588 13,319
Income taxes 4,700 6,731
Dividends payable 4,377 4,082
Other current liabilities 10,474 8,133
------------------------------------------------------------------------- ----------------- --------------
Total Current Liabilities 87,631 84,900
------------------------------------------------------------------------- ----------------- --------------
Noncurrent Liabilities
Postretirement benefits other than pensions 12,775 11,858
Deferred income taxes 7,007 6,804
Other noncurrent liabilities 2,141 2,234
------------------------------------------------------------------------- ----------------- --------------
Total Noncurrent Liabilities 21,923 20,896
------------------------------------------------------------------------- ----------------- --------------
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;
outstanding - 14,432,619 in 1999 and 14,387,402 in
1998 (net of 1,779,669 and 1,824,886 treasury
shares, respectively), at stated value 3,608 3,597
Class B - (Nonvoting) Authorized - 35,000,000 shares;
outstanding - 14,726,576 in 1999 and 14,754,734 in
1998 (net of 1,485,712 and 1,457,554 treasury
shares, respectively), at stated value 3,682 3,689
Additional capital 15,604 14,608
Retained income 318,660 298,316
Less:
Deferred compensation (2,001) (2,255)
Amount due from ESOP Trust (9,526) (9,787)
Accumulated other comprehensive loss (5,698) (5,991)
------------------------------------------------------------------------- ----------------- --------------
Total Shareholders' Equity 324,329 302,177
------------------------------------------------------------------------- ----------------- --------------
$433,883 $407,973
==========================================================================================================
</TABLE>
See notes to consolidated financial statements
<PAGE> 11
Statements of Consolidated Cash Flows
The J. M. Smucker Company
<TABLE>
<CAPTION>
Year Ended April 30,
- ---------------------------------------------------------------------------- -------------- -------------- ---------------
(Dollars in thousands) 1999 1998 1997
- ---------------------------------------------------------------------------- -------------- -------------- ---------------
Operating Activities
<S> <C> <C> <C>
Net income $37,763 $33,390 $30,935
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation 19,660 18,780 18,337
Amortization 3,734 3,759 3,502
Cumulative effect of change in accounting method, net of
tax benefit --- 2,958 ---
Deferred income tax expense (benefit) 120 (2,285) 4,026
Changes in assets and liabilities, net of effects from business
acquisitions and discontinued operations:
Trade receivables (2,627) (1,697) (8,043)
Inventories (9,332) (10,522) 1,792
Other current assets 1,587 653 (1,174)
Accounts payable and accrued items (5,123) 10,855 341
Income taxes (1,292) 5,683 7,114
Other - net (965) (533) 2,693
- ---------------------------------------------------------------------------- -------------- -------------- ---------------
Net Cash Provided by Operating Activities 43,525 61,041 59,523
- ---------------------------------------------------------------------------- -------------- -------------- ---------------
Investing Activities
Additions to property, plant, and equipment (38,693) (29,058) (15,751)
Businesses acquired - net of cash (26,590) (1,406) (5,593)
Proceeds from the sale of property, plant, and equipment 747 682 627
Proceeds from the sale of assets of discontinued operations --- --- 44,695
Other - net 1,288 1,196 767
- ---------------------------------------------------------------------------- -------------- -------------- ---------------
Net Cash (Used for) Provided by Investing Activities (63,248) (28,586) 24,745
- ---------------------------------------------------------------------------- -------------- -------------- ---------------
Financing Activities
Reduction in long-term debt --- --- (60,800)
Proceeds from short-term debt -- net 8,966 --- ---
Purchase of Common Shares - net (811) (4,465) (245)
Dividends paid (16,246) (15,100) (15,113)
Net amount received from ESOP Trust 261 240 224
Other - net 101 160 140
- ---------------------------------------------------------------------------- -------------- -------------- ---------------
Net Cash (Used for) Financing Activities (7,729) (19,165) (75,794)
- ---------------------------------------------------------------------------- -------------- -------------- ---------------
Cash flows (used for) provided by continuing operations (27,452) 13,290 8,474
Cash flows used in discontinued operations --- --- (1,858)
Effect of exchange rate changes on cash (349) (897) (172)
- ---------------------------------------------------------------------------- -------------- -------------- ---------------
Net (decrease) increase in cash and cash equivalents (27,801) 12,393 6,444
Cash and cash equivalents at beginning of year 36,484 24,091 17,647
- ---------------------------------------------------------------------------- -------------- -------------- ---------------
Cash and Cash Equivalents at End of Year $ 8,683 $36,484 $24,091
============================================================================ ============== ==============================
</TABLE>
( ) Denotes use of cash
See notes to consolidated financial statements
<PAGE> 12
Statements of Consolidated Shareholders' Equity
The J. M. Smucker Company
<TABLE>
<CAPTION>
Accumulated
Other Total
Deferred Amount Comprehen- Share-
Common Shares Additional Retained Compen- Due From sive holders'
(Dollars in thousands) Class A Class B Capital Income Sation ESOP Trust Loss Equity
- --------------------------- --------- -------- ------------ ---------- ---------- ------------ ------------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
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
Foreign currency
translation adjustment (553) (553)
----------
Comprehensive Income 30,382
Purchase of treasury
shares (3) (2) (240) (245)
Stock plans 12 841 (669) 184
Cash dividends declared -
$.52 a share (15,126) (15,126)
Other 131 224 355
- --------------------------- --------- -------- ------------ ---------- ---------- ------------ ------------- ----------
Balance at April 30, 1997 $3,606 $3,696 $12,439 $284,605 $(1,396) $(10,027) $(1,032) $291,891
Net income 33,390 33,390
Foreign currency
translation adjustment (4,959) (4,959)
----------
Comprehensive Income 28,431
Purchase of treasury
shares (33) (18) (94) (4,320) (4,465)
Stock plans 24 11 1,629 (859) 805
Cash dividends declared -
$.53 a share (15,359) (15,359)
Other 634 240 874
- --------------------------- --------- -------- ------------ ---------- ---------- ------------ ------------- ----------
Balance at April 30, 1998 $3,597 $3,689 $14,608 $298,316 $(2,255) $(9,787) $(5,991) $302,177
Net income 37,763 37,763
Foreign currency
translation adjustment 293 293
----------
Comprehensive Income 38,056
Purchase of treasury
shares (5) (3) (17) (786) (811)
Stock plans 16 (4) 360 (92) 254 534
Cash dividends declared -
$.57 a share (16,541) (16,541)
Other 653 261 914
- --------------------------- --------- -------- ------------ ---------- ---------- ------------ ------------- ----------
Balance at April 30, 1999 $3,608 $3,682 $15,604 $318,660 $(2,001) $(9,526) $(5,698) $324,329
=========================== ========= ======== =========== ========== ========== ============ ============= ==========
</TABLE>
See notes to consolidated financial statements
<PAGE> 13
Notes to Consolidated Financial Statements
The J. M. Smucker Company
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 when purchased 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: The Company has elected to follow Accounting
Principle Board Opinion No. 25, Accounting for Stock Issued to Employees (APB
25), and related interpretations in accounting for its employee stock options.
Under APB 25, because the exercise price of the Company's employee stock options
equals the market price of the underlying stock on the date of grant, no
compensation expense is recognized.
If compensation cost for the stock options granted in 1999, 1998, and 1997 had
been determined based on the fair value method of Statement of Financial
Accounting Standards No. 123, Accounting for Stock-Based Compensation (SFAS
123), the Company's net income and earnings per share would not have been
materially different from amounts determined using the intrinsic method of APB
25.
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 $11,776,000 and
$11,006,000 higher than reported at April 30, 1999 and 1998, 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
<PAGE> 14
to 40 years. The Company continually evaluates whether events or circumstances
have occurred which would indicate that the carrying value may not be
recoverable or that 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 the asset's carrying value on a current basis.
Accumulated amortization of goodwill and intangible assets at April 30, 1999
and 1998, was $23,601,000 and $20,223,000, 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.
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 1999, 1998, and 1997 totaled
$12,762,000, $10,950,000, and $9,783,000, respectively; included therein were
cold storage facility rentals, based on quantities stored, amounting to
$4,999,000, $4,956,000, and $4,357,000, respectively.
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, ranging from 3 to
7 years, beginning with the project's completion. Net deferred internal use
software costs as of April 30, 1999 and 1998, were $20,296,000 and $8,794,000,
respectively, of which $13,843,000 and $8,794,000 were included in construction
in progress. Capitalized interest costs of $528,000 were included at April 30,
1999.
In November 1997, the Emerging Issues Task Force (EITF) of the Financial
Accounting Standards Board issued a consensus ruling on accounting for business
process reengineering costs. EITF 97-13, Accounting for Costs Incurred in
Connection with a Consulting Contract that Combines Business Process
Reengineering and Information Technology Transformation, requires that the cost
of business process reengineering activities that are part of a project to
acquire, develop, or implement internal use software, whether done internally or
by third parties, be expensed as incurred. Previously, the Company capitalized
certain of these costs as systems' development costs.
In accordance with EITF 97-13, the Company incurred a one-time, net of tax
charge of $2,958,000, or $.10 per share, in the third quarter of fiscal 1998 for
the cumulative effect of expensing these previously capitalized costs.
Consistent with the requirements of EITF 97-13, no restatement of prior year
financial statements has been made. Such costs had primarily been incurred
during the fourth quarter of fiscal 1997.
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
<PAGE> 15
rates. Translation adjustments are reported as a component of shareholders'
equity in accumulated other comprehensive loss.
Advertising Expense: Advertising costs are expensed as incurred.
Advertising expense was $12,685,000, $10,809,000, and $10,321,000 in fiscal
1999, 1998, and 1997, respectively.
Recently Issued Accounting Standards: In 1998, the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards No. 133,
Accounting for Derivative Instruments and Hedging Activities (SFAS 133). SFAS
133 changes the accounting related to derivative instruments. Currently, the
Company does not have significant participation in derivative instruments.
Although the Company has not yet completed its evaluation of the potential
impact of adopting SFAS 133 on future earnings, it does not expect the impact to
be material. The Company is required to adopt this statement in fiscal 2002.
During fiscal 1999, the Company adopted Statement of Financial Accounting
Standards No. 130, Reporting Comprehensive Income (SFAS 130). This statement
established standards for reporting of comprehensive income and its components
in the financial statements. Comprehensive income consists of net income and
foreign currency translation adjustments and is presented in the Statements of
Consolidated Shareholders' Equity. The adoption of SFAS 130 had no impact on the
Company's net income or total shareholders' equity. Prior year financial
statements have been reclassified to conform to the requirements of SFAS 130.
Risks and Uncertainties: The principal products of the Company are
fruit spreads, dessert toppings, peanut butter, industrial fruit products, fruit
and vegetable juices, juice beverages, syrups, condiments, and gift packages. In
the domestic markets, the Company's products are primarily sold through brokers
to chain, wholesale, cooperative, independent grocery accounts and other
consumer markets, to foodservice distributors and chains including hotels,
restaurants, institutions, and to other food manufacturers. The Company's
distribution outside the United States is principally in Canada, Australia,
Mexico, Latin America, the Pacific Rim, and Greater Europe. 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 nonperformance would materially affect the Company's
results. In addition, the Company insures its business and assets in each
country against insurable risks as and to the extent that it deems appropriate
based upon an analysis of the relative risks and costs. It believes that the
risk of loss from noninsurable events would not have a material adverse effect
on the Company's operations as a whole.
<PAGE> 16
Note B: Operating Segments
During the fourth quarter of fiscal 1999, the Company adopted Statement of
Financial Accounting Standards No. 131, Disclosures about Segments of an
Enterprise and Related Information (SFAS 131). SFAS 131 establishes new
standards for reporting information about operating segments and related
disclosures about products and services, geographic areas, and major customers.
Segment information prior to 1999 has been restated to comply with SFAS 131.
The Company operates in one industry: the manufacturing and marketing of food
products. The Company has two reportable segments, domestic and international.
The domestic segment represents the aggregation of the consumer, foodservice,
beverage, specialty foods, consumer direct, and industrial business areas. Food
products are distributed through various retail channels including grocery, mass
retail, military, warehouse club, health food, and specialty food markets along
with restaurants, health care facilities, schools, and other institutions
throughout the United States. These products include a variety of fruit spreads,
dessert toppings, natural peanut butters, fruit and vegetable-based beverages,
formulated fruit-based fillings, and gift boxes. The international segment
consists of products that are similar in nature to those in the domestic segment
but are distributed to geographical markets outside of the United States,
principally in Canada, Australia, Mexico, Latin America, the Pacific Rim, and
Greater Europe.
<PAGE> 17
The following table sets forth operating segments information:
<TABLE>
<CAPTION>
Year Ended April 30,
- --------------------------------------------------------------------------------------
(Dollars in thousands) 1999 1998 1997
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales:
Domestic $ 528,596 $ 498,072 $ 458,063
International 73,861 67,404 66,044
- --------------------------------------------------------------------------------------
Total net sales $ 602,457 $ 565,476 $ 524,107
======================================================================================
Depreciation:
Domestic $ 18,296 $ 17,442 $ 16,974
International 1,364 1,338 1,363
- --------------------------------------------------------------------------------------
Total depreciation $ 19,660 $ 18,780 $ 18,337
======================================================================================
Segment profit:
Domestic $ 94,489 $ 92,511 $ 86,991
International 7,134 6,559 5,500
- --------------------------------------------------------------------------------------
Total segment profit 101,623 99,070 92,491
======================================================================================
Interest income 1,948 2,525 2,048
Interest expense (179) (145) (1,748)
Amortization expense (3,734) (3,759) (3,502)
Corporate administrative expenses (37,912) (42,013) (34,520)
Other unallocated expenses (115) 5,081 (1,603)
- --------------------------------------------------------------------------------------
Income before income taxes and cumulative
effect of change in accounting method $ 61,631 $ 60,759 $ 53,166
======================================================================================
Total assets:
Domestic $ 371,403 $ 351,943 $ 324,296
International 62,480 56,030 60,477
- --------------------------------------------------------------------------------------
Total assets $ 433,883 $ 407,973 $ 384,773
======================================================================================
Expenditures for additions to long-lived assets:
Domestic $ 53,737 $ 27,829 $ 20,617
International 10,538 2,635 727
- --------------------------------------------------------------------------------------
Total expenditures for additions to long-lived
assets $ 64,275 $ 30,464 $ 21,344
======================================================================================
</TABLE>
Segment profit represents revenue less direct and allocable operating expenses.
The following presents product sales information:
<TABLE>
<CAPTION>
Year Ended April 30,
- -------------------------------------- --------------------- ---------------------- ---------------------
1999 1998 1997
- -------------------------------------- --------------------- ---------------------- ---------------------
<S> <C> <C> <C>
Fruit spreads 41% 43% 43%
Juices and beverages 10 11 12
Industrial ingredients 17 17 15
Portion control 12 12 13
Toppings and syrups 9 9 8
Peanut butter 6 5 5
Other 5 3 4
- ----------------------------------------- --------------------- ---------------------- -------------------
Total 100% 100% 100%
========================================= ===================== ====================== ===================
</TABLE>
<PAGE> 18
Note C: Earnings per Share
The following table sets forth the computation of earnings per Common Share and
earnings per Common Share - assuming dilution:
<TABLE>
<CAPTION>
Year Ended April 30,
- ------------------------------------------------------ ----------------- ---------------- ----------------
(Dollars in thousands, except per share data) 1999 1998 1997
- ------------------------------------------------------ ----------------- ---------------- ----------------
<S> <C> <C> <C>
Numerator:
Net income for earnings per
Common Share and earnings per
Common Share - assuming dilution $37,763 $33,390 $30,935
- ------------------------------------------------------ ----------------- ---------------- ----------------
- ------------------------------------------------------ ----------------- ---------------- ----------------
Denominator:
Denominator for earnings per
Common Share - weighted-average
shares 29,057,593 29,038,723 29,104,969
Effect of dilutive securities:
Stock options 179,679 247,155 42,190
Restricted stock 37,447 59,400 32,921
- ------------------------------------------------------ ----------------- ---------------- ----------------
Denominator for earnings per Common
Share - assuming dilution 29,274,719 29,345,278 29,180,080
====================================================== ================= ================ ================
Earnings per Common Share $ 1.30 $ 1.15 $ 1.06
====================================================== ================= ================ ================
Earnings per Common Share - assuming
dilution $ 1.29 $ 1.14 $ 1.06
====================================================== ================= ================ ================
</TABLE>
Options to purchase 433,800 Class A and 149,500 Class B Common Shares at $24.31
to $31.50 per share were outstanding during fiscal 1999 but were not included in
the computation of earnings per Common Share - assuming dilution, as the
options' exercise prices were greater than the average market price of the
Common Shares and, therefore, the effect would be antidilutive.
Note D: Acquisitions and Divestiture
During fiscal 1999, the Company completed five acquisitions for an aggregate of
$26,590,000 in cash. The acquisitions were made utilizing cash on hand as well
as borrowings under the Company's uncommitted lines of credit. Each of the
acquisitions was accounted for as a purchase and the results of operations of
the acquired companies were included in the consolidated results of the Company
from their respective acquisition dates. As a result of the acquisitions,
approximately $15,054,000 in goodwill and $6,393,000 in trademarks were recorded
and are being amortized using the straight-line method over a period of 20
years.
<PAGE> 19
In May 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. This divestiture was treated as a discontinued operation
in fiscal 1996. 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.
Note E: Pensions and Other Postretirement Benefits
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.
In addition to providing pension benefits, the Company sponsors several unfunded
defined postretirement plans that provide health care and life insurance
benefits to substantially all active and retired, domestic employees not covered
by certain collective bargaining agreements, 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.
During 1999, the Company adopted Statement of Financial Accounting Standards No.
132, Employers' Disclosures about Pensions and Other Postretirement Benefits
(SFAS 132). SFAS 132 standardizes disclosure requirements without changing the
recognition or measurement of pension or postretirement benefit plans. All
disclosures for prior periods shown below have been restated to conform to the
disclosure requirements of SFAS 132.
Net periodic benefit cost included the following components:
<TABLE>
<CAPTION>
(Dollars in thousands) Defined Benefit Pension Plans Other Postretirement Benefits
- ------------------------------------------- ------------------------------------- -- -----------------------------------
Year Ended April 30, 1999 1998 1997 1999 1998 1997
- ------------------------------------------- ------------ ----------- ------------ -- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Service cost $1,841 $1,500 $1,592 $490 $393 $424
Interest cost 4,043 3,822 3,705 662 732 708
Expected return on plan assets (5,703) (4,398) (4,179) --- --- ---
Amortization of prior service costs 489 489 472 (61) (20) ---
Amortization of initial net asset (91) (91) (91) (27) (43) ---
Recognized net actuarial gain (322) (19) --- --- --- (12)
- ------------------------------------------- ------------ ----------- ------------ -- ----------- ----------- -----------
Net periodic benefit cost $ 257 $1,303 $1,499 $1,064 $1,062 $1,120
=========================================== ============ =========== ============ == =========== =========== ===========
</TABLE>
<PAGE> 20
The following table sets forth the combined status of the plans as recognized in
the consolidated balance sheets at April 30, 1999 and 1998:
<TABLE>
<CAPTION>
Defined Benefit Pension Other Postretirement
Plans Benefits
- ---------------------------------------------------------------- --------------- -------------- ---------------- ---------------
April 30, April 30,
(Dollars in thousands) 1999 1998 1999 1998
- ---------------------------------------------------------------- --------------- -------------- ---------------- ---------------
<S> <C> <C> <C> <C>
Change in benefit obligation:
Benefit obligation at beginning of the year $59,156 $50,840 $10,397 $9,438
Service cost 1,841 1,500 490 393
Interest cost 4,043 3,822 662 732
Amendments 5,565 271 --- (956)
Actuarial (gain) loss (598) 4,848 (960) 1,163
Benefits paid (2,120) (2,125) (147) (373)
- ---------------------------------------------------------------- --------------- -------------- -- ---------------- ---------------
Benefit obligation at end of the year $67,887 $59,156 $10,442 $10,397
================================================================ =============== ============== == ================ ===============
Change in plan assets:
Fair value of plan assets at beginning of the year $63,313 $50,055 $ --- $ ---
Actual return on plan assets 2,493 15,039 --- ---
Asset gain (loss) 795 (420) --- ---
Company contributions 773 764 147 373
Benefits paid (2,120) (2,125) (147) (373)
- ---------------------------------------------------------------- --------------- -------------- -- ---------------- ---------------
Fair value of plan assets at end of the year $65,254 $63,313 $ --- $ ---
================================================================ =============== ============== == ================ ===============
Funded status of the plan $(2,633) $ 4,157 $(10,442) $(10,397)
- ---------------------------------------------------------------- --------------- -------------- -- ---------------- ---------------
Unrecognized net actuarial gain (7,426) (9,566) (1,458) (525)
Unrecognized prior service cost 9,847 4,771 (875) (936)
Unrecognized initial asset (1,232) (1,323) --- ---
- ---------------------------------------------------------------- --------------- -------------- -- ---------------- ---------------
Accrued benefit cost $(1,444) $(1,961) $(12,775) $(11,858)
================================================================ =============== ============== == ================ ===============
Weighted average assumptions:
Discount rate 7% 7% 7% 7%
Expected return on plan assets 9% 9% --- ---
Rate of compensation increase 5% 5% --- ---
- ---------------------------------------------------------------- --------------- -------------- -- ---------------- ---------------
</TABLE>
For fiscal 2000, the assumed health care cost trend rates are 7% for
participants under age 65 and 5% for participants age 65 or older. The rate for
participants under age 65 is 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 change
in the assumed cost trend rate would have the following effect:
<TABLE>
<CAPTION>
One - Percentage Point
- ------------------------------------------------------------------ ------------------------------------------
(Dollars in thousands) Increase Decrease
- ------------------------------------------------------------------ ------------------- -- -------------------
<S> <C> <C>
Effect on total service and interest cost components $ 252 $ (193)
Effect on postretirement benefit obligation $ 1,919 $(1,506)
- ------------------------------------------------------------------ ------------------- -- -------------------
</TABLE>
The projected benefit obligation applicable to pension plans with accumulated
benefit obligations in excess of plan assets was $12,252,000 and $10,173,000 at
April 30, 1999 and 1998, respectively, primarily due to a supplemental
<PAGE> 21
retirement benefit plan. The accumulated benefit obligation related to these
plans was $9,831,000 and $8,049,000, while the fair value of assets was
$3,137,000 and $3,010,000 at April 30, 1999 and 1998, respectively.
Pension 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, 1999 and 1998. The market value of these shares is $6,552,000 at April
30, 1999. The Company paid dividends of $188,000 on these shares during the
year. Prior service costs are being amortized over the average remaining service
lives of the employees expected to receive benefits.
The Company also charged to operations approximately $808,000, $716,000, and
$687,000 in 1999, 1998, and 1997, 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.
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 $1,569,000, $1,727,000, and
$1,439,000 in 1999, 1998, and 1997, respectively.
Note F: Savings Plans
ESOP: The Company sponsors an Employee Stock Ownership Plan and Trust
(ESOP) for domestic, nonrepresented 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 $361,000,
$363,000, and $377,000 in 1999, 1998, and 1997, respectively. The principal
payments received from the ESOP in 1999, 1998, and 1997 were $261,000, $240,000,
and $224,000, respectively.
The Company measures compensation expense based upon the fair value of the
shares committed to be released to plan participants in accordance with
Statement of Position 93-6, Employers' Accounting for Employee Stock Ownership
Plans (SOP 93-6). As permitted by SOP 93-6, the Company does not apply the
statement to shares purchased prior to 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, 1999, the ESOP held 645,048 unallocated shares consisting of 164,124 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.
<PAGE> 22
401(k) Plan: The Company offers employee savings plans under Section
401(k) of the Internal Revenue Code for all domestic employees not covered by
certain collective bargaining agreements. The Company's contributions under
these plans are based on a specified percentage of employee contributions.
Charges to operations for these plans in 1999, 1998, and 1997 were $1,098,000,
$981,000, and $901,000, respectively.
Note G: Stock Benefit Plans
The Company provides for equity-based incentives to be awarded to key
employees through its 1998 Equity and Performance Incentive Plan, the Restricted
Stock Bonus Plan adopted in 1979, and the 1987 Stock Option Plan.
1998 Equity and Performance Incentive Plan: This plan provides for the
issuance of stock options and restricted stock, which may include performance
criteria, as well as stock appreciation rights, deferred shares, and performance
shares. At April 30, 1999, there are 608,000 Class A and 608,000 Class B Common
Shares available for future issuance under this plan. Of this total amount
available for issuance, the amount of restricted stock is limited to 225,000
Class A and 225,000 Class B Common Shares. Restricted shares issued under this
plan are subject to a risk of forfeiture for at least three years, in the event
of termination of employment or failure to meet performance criteria. Options
for 92,000 Class A and 92,000 Class B Common Shares were awarded under the plan
in fiscal 1999, with an option price equal to the market price at the date of
grant. The options granted during 1999 become exercisable at the rate of
one-third per year, beginning one year after the date of grant.
Restricted Stock Bonus Plan: 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. There are 44,100 Class A and 87,100 Class B
Common Shares available for issuance under the plan at April 30, 1999. In fiscal
1998, an award of 30,500 shares of Class A and Class B Common Shares was made
while no awards were granted in 1999 and 1997.
1987 Stock Option Plan: 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. There are 121,700 Class A and 581,000 Class B
Common Shares available for future grant under this plan.
<PAGE> 23
A summary of the Company's stock option activity, and related information
follows:
<TABLE>
<CAPTION>
Weighted- Weighted-
Average Average
Class A Exercise Class B Exercise
Options Price Options Price
- ------------------------------------------------------ -------------- --------------- -------------- --------------
<S> <C> <C> <C> <C>
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
Granted 151,500 25.78 151,500 24.31
Exercised (71,876) 14.44 (68,576) 13.84
Forfeited (1,000) 17.63 (1,000) 16.10
- ------------------------------------------------------ --------------- --------------- -------------- --------------
Outstanding at April 30, 1998 1,318,236 $22.56 862,236 $18.93
Granted 169,500 21.91 169,500 20.88
Exercised (65,901) 16.05 (67,201) 15.67
Forfeited (5,334) 22.63 (5,334) 21.44
- ------------------------------------------------------ --------------- --------------- -------------- --------------
Outstanding at April 30, 1999 1,416,501 $22.78 959,201 $19.49
Exercisable at April 30, 1997 948,113 $22.78 448,813 $17.90
Exercisable at April 30, 1998 1,008,069 $22.87 552,069 $18.26
Exercisable at April 30, 1999 1,097,501 $22.91 640,201 $18.65
- ------------------------------------------------------ --------------- --------------- -------------- --------------
</TABLE>
The following table summarizes the range of exercise prices and weighted-average
exercise prices for options outstanding and exercisable at April 30, 1999, under
the Company's stock benefit plans:
<TABLE>
<CAPTION>
Weighted-
Weighted- Average Weighted-
Average Remaining Average
Share Range of Exercise Contractual Exercise
Class Exercise Prices Outstanding Price Life (yrs.) Exercisable Price
- ------------ --------------------- ----------------- --------------- ---------------- ---------------- ------------------
<S> <S> <C> <C> <C> <C> <C>
Class A $17.25--$22.50 726,201 $19.09 5.4 506,868 $18.35
Class A $22.51--$31.50 690,300 $26.67 4.8 590,633 $26.82
Class B $15.94--$24.31 959,201 $19.49 5.9 640,201 $18.65
- ------------ --------------------- ----------------- --------------- ---------------- ---------------- ------------------
</TABLE>
In addition to the above, the Company granted stock options during fiscal 1996
for the purchase of 150,000 Class B Common Shares to nonemployees for consulting
services rendered. The options, which contain a weighted-average exercise price
of $20.75, were all considered outstanding and exercisable at April 30, 1999.
<PAGE> 24
Note H: Financing Arrangements
The Company has available two uncommitted lines of credit providing up to
$50,000,000 for short-term borrowings of which $41,034,000 was available at
April 30, 1999. The interest rate to be charged on any outstanding balance is
based on prevailing market rates. The weighted-average interest rate at April
30, 1999 was 5.48%. Interest paid at April 30, 1999, 1998, and 1997 totaled
$751,000, $109,000, and $1,804,000, respectively.
On June 18, 1999, the Company issued $75,000,000 of 6.77% senior, unsecured
notes due June 1, 2009. The Company plans to use the proceeds to refinance
existing indebtedness and to fund general corporate purposes such as stock
repurchases, acquisitions, and new product ventures.
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>
April 30,
- ---------------------------------------------------------------- ----------------------------
(Dollars in thousands) 1999 1998
- ---------------------------------------------------------------- -------------- -------------
<S> <C> <C>
Deferred tax liabilities:
Depreciation $12,819 $13,244
Other (each less than 5% of total liabilities) 3,359 2,035
- ---------------------------------------------------------------- -------------- -------------
Total deferred tax liabilities 16,178 15,279
================================================================ ============== =============
Deferred tax assets:
Postretirement benefits other than pensions 5,429 5,092
Other employee benefits 3,989 4,007
Other (each less than 5% of total assets) 6,994 6,631
- ---------------------------------------------------------------- -------------- -------------
Total deferred tax assets 16,412 15,730
Valuation allowance for deferred tax assets (1,695) (1,731)
- ---------------------------------------------------------------- -------------- -------------
Total deferred tax assets less allowance 14,717 13,999
================================================================ ============== =============
Net deferred tax liability $(1,461) $ (1,280)
================================================================ ============== =============
</TABLE>
At April 30, 1999, the Company has foreign net operating loss carryforwards of
$960,000 for income tax purposes expiring in 2003. The Company has recorded a
valuation allowance related to certain foreign deferred tax assets due to the
uncertainty of their realization. The change in the valuation allowance relates
principally to the utilization of certain foreign net operating loss
carryforwards.
<PAGE> 25
No U.S. income or foreign withholding taxes have been recorded on undistributed
earnings of foreign subsidiaries since these amounts are considered to be
permanently reinvested. Any additional taxes payable on the earnings of foreign
subsidiaries, if remitted, would be partially offset by U.S. tax credits and
deductions for foreign taxes already paid.
Income before income taxes and cumulative effect of change in accounting method
is as follows:
<TABLE>
<CAPTION>
Year Ended April 30,
- ------------------------------------------------------------------- ---------------- ----------------- ----------------
(Dollars in thousands) 1999 1998 1997
- ------------------------------------------------------------------- ---------------- ----------------- ----------------
<S> <C> <C> <C>
Domestic $57,778 $57,061 $50,540
Foreign 3,853 3,698 2,626
- ------------------------------------------------------------------- ---------------- ----------------- ----------------
Income before income taxes and cumulative effect of
change in accounting method $61,631 $60,759 $53,166
=================================================================== ================ ================= ================
</TABLE>
The components of the provision for income taxes are as follows:
<TABLE>
<CAPTION>
Year Ended April 30,
- ------------------------------------------------------------------- ---------------- ----------------- ----------------
(Dollars in thousands) 1999 1998 1997
- ------------------------------------------------------------------- ---------------- ----------------- ----------------
<S> <C> <C> <C>
Current:
Federal $19,706 $21,684 $14,577
Foreign 1,445 1,499 760
State and local 2,597 3,513 2,868
Deferred 120 (2,285) 4,026
- ------------------------------------------------------------------- ---------------- ----------------- ----------------
Total income tax expense $23,868 $24,411 $22,231
=================================================================== ================ ================= ================
</TABLE>
A reconciliation of the statutory federal income tax rate and the effective
income tax rate follows:
<TABLE>
<CAPTION>
Percent of Pretax Income Year Ended April 30,
- ------------------------------------------------------------------- ---------------------------------------------------
(Dollars in thousands) 1999 1998 1997
- ------------------------------------------------------------------- ---------------- ----------------- ----------------
<S> <C> <C> <C>
Statutory federal income tax rate 35.0% 35.0% 35.0%
Increase in income taxes resulting from:
State and local income taxes, net of federal income
tax benefit 2.7 3.8 3.5
Other items 1.0 1.4 3.3
- ------------------------------------------------------------------- ---------------- ----------------- ----------------
Effective income tax rate 38.7% 40.2% 41.8%
=================================================================== ================ ================= ================
Income taxes paid $23,542 $20,755 $10,200
=================================================================== ================ ================= ================
</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 nonvoting,
except under certain conditions outlined in the Company's Amended Articles of
Incorporation.
<PAGE> 26
Pursuant to a shareholders' rights plan established during fiscal 1999, each
outstanding share of the Company's Class A and Class B Common Shares carries a
share purchase right issued as a result of a dividend distribution declared by
the Company's Board of Directors in April 1999 and distributed to shareholders
of record on May 14, 1999.
Under the plan, the rights will initially trade together with the Company's
Common Shares and will not be exercisable. In the absence of further action by
the directors, the rights generally will become exercisable and allow the holder
to acquire the Company's Class A Common Shares or Class B Common Shares at a
discounted price if a person or group acquires 10% or more of the outstanding
Class A Common Shares or 15% or more of the Company's outstanding Common Shares.
Rights held by persons who exceed the applicable thresholds will be void. Shares
held by members of the Smucker family are not subject to the thresholds. If
exercisable, each right entitles the shareholder to buy one Common Share at a
discounted price. Under certain circumstances, the rights will entitle the
holder to buy shares in an acquiring entity at a discounted price.
The plan also includes an exchange option. In general, if the rights become
exercisable, the directors may, at their option, effect an exchange of part or
all of the rights - other than rights that have become void - for Common Shares.
Under this option, the Company would issue one Class A Common Share for each
Class A right and one Class B Common Share for each Class B right, in each case
subject to adjustment in certain circumstances.
The Company's directors may, at their option, redeem all rights for $.01 per
right, generally at any time prior to the rights becoming exercisable. The
rights will expire May 14, 2009, unless earlier redeemed, exchanged, or amended
by the directors.
<PAGE> 1
Exhibit 21
SUBSIDIARIES OF THE COMPANY
Subsidiaries State or Jurisdiction
of Incorporation
- --------------------------------------------------------------------------------
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, People's
Republic of China
Smucker U.K., Inc. Ohio
Alternative Attitudes, Inc. Ohio
Sunberry Farms, Inc. Ohio
Rocket Juice Company California
Smucker Direct, Inc. Ohio
Simply Smucker's Inc. Ohio
Menusaver, Inc. Ohio
J.M. Smucker (Scotland) Ltd. Scotland
Smucker Do Brasil Ltda. Sao Paulo, Brazil
<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 18, 1999, included in the
1999 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 18, 1999, 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.
/s/ ERNST & YOUNG LLP
Akron, Ohio
July 21, 1999
<PAGE> 1
Exhibit 24
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, 1999, 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> 2
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, 1999, 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> 3
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, 1999, 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> 4
THE J. M. SMUCKER COMPANY
REGISTRATION ON FORM 10-K
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that VINCENT C. BYRD, 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, 1999, 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/ Vincent C. Byrd
------------------------------
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, 1999, 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 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, 1999, 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> 7
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, 1999, 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> 8
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, 1999, 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
<PAGE> 9
THE J. M. SMUCKER COMPANY
REGISTRATION ON FORM 10-K
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that MARK R. BELGYA, 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, 1999, 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/ Mark R. Belgya
------------------------------
Corporate Controller
<PAGE> 10
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, 1999, 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> 11
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, 1999, 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> 12
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, 1999, 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> 13
THE J. M. SMUCKER COMPANY
REGISTRATION ON FORM 10-K
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that FRED A. DUNCAN, 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, 1999, 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/ Fred A. Duncan
------------------------------
Director
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<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> APR-30-1999
<PERIOD-START> MAY-01-1998
<PERIOD-END> APR-30-1999
<CASH> 8,683
<SECURITIES> 0
<RECEIVABLES> 52,591
<ALLOWANCES> (733)
<INVENTORY> 114,200
<CURRENT-ASSETS> 186,142
<PP&E> 324,228
<DEPRECIATION> (157,685)
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0
0
<COMMON> 7,290
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<TOTAL-LIABILITY-AND-EQUITY> 433,883
<SALES> 602,457
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<OTHER-EXPENSES> 147,538
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<INCOME-TAX> 23,868
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