Sequential Page
No. 1 of 12 Pages

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended October 31, 2000

OR

( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to ____________

Commission File Number      1-5111     

THE J. M. SMUCKER COMPANY

STRAWBERRY LANE
ORRVILLE, OHIO 44667
(330) 682-3000

The Company has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months and has been subject to such filing requirements for the past 90 days.

The Company had 24,186,382 Common Shares outstanding on October 31, 2000.

The Exhibit Index is located at Sequential Page No. 12.

Table of Contents

Sequential Page
No. 2

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

THE J. M. SMUCKER COMPANY
CONDENSED STATEMENTS OF CONSOLIDATED INCOME
(Unaudited)

See notes to condensed consolidated financial statements

Table of Contents

Sequential Page
No. 3

THE J. M. SMUCKER COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)

See notes to condensed consolidated financial statements

Table of Contents

Sequential Page
No. 4

THE J. M. SMUCKER COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

( ) Denotes use of cash

See notes to condensed consolidated financial statements

Table of Contents

Sequential Page
No. 5

THE J. M. SMUCKER COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note A — Basis of Presentation

      The accompanying unaudited, condensed, consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. Operating results for the six-month period ended October 31, 2000, are not necessarily indicative of the results that may be expected for the year ended April 30, 2001. For further information, reference is made to the consolidated financial statements and footnotes included in the Company’s Annual Report on Form 10-K for the year ended April 30, 2000.

Note B — Common Shares

      At October 31, 2000, 70,000,000 Common Shares were authorized. There were 24,186,382 and 28,325,280 shares outstanding at October 31, 2000 and April 30, 2000, respectively. Shares outstanding are shown net of 8,238,194 and 4,099,296 treasury shares at October 31, 2000 and April 30, 2000, respectively.

      In August 2000, the Company combined the Class A and Class B Common Shares into a single class of Common Shares with terms similar to the former Class A Common Shares. In conjunction with this combination, the Company repurchased 4,272,524 Common Shares at $18.50 per share. The Company incurred approximately $1,310,000 of expenses related to the combination and repurchase of Common Shares. These amounts were recorded as a reduction of shareholders’ equity. Prior year share information has been reclassified to conform to current year classification.

Table of Contents

Sequential Page
No. 6

Note C — Operating Segments

      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. The following table sets forth operating segments information:

Note D — Financing Arrangements

      The Company has an uncommitted line of credit providing up to $65,000,000 for short-term borrowings. No amounts were outstanding at October 31, 2000.

Long-term debt consists of the following:

Interest on the notes is paid semiannually. Among other restrictions, the note purchase agreements contain certain covenants relating to liens, consolidated net worth, and sale of assets as defined in the agreement. The Company is in compliance with all covenants.

Table of Contents

Sequential Page
No. 7

Note E — Income Per Share

      The following table sets forth the computation of earnings per Common Share and earnings per Common Share — assuming dilution:

Note F — Comprehensive Income

      During the three-month periods ended October 31, 2000 and 1999, total comprehensive income was $2,476,000 and $8,950,000, respectively. Total comprehensive income for the six-month periods ended October 31, 2000 and 1999 was $11,504,000 and $19,021,000, respectively. Comprehensive income consists of net income and foreign currency translation adjustments.

Note G — Recently Issued Accounting Standards

      In December 1999, the Securities and Exchange Commission Staff issued Staff Accounting Bulletin 101, Revenue Recognition in Financial Statements (SAB 101). SAB 101 provides criteria that must be met before revenue is recognized in the financial statements. The Company currently plans to adopt SAB 101 in the fourth quarter of fiscal 2001. Although the Company has not yet completed its evaluation of the potential impact of adopting SAB 101 on future earnings, it does not expect the impact to be significant.

      In May 2000, the Emerging Issues Task Force of the Financial Accounting Standards Board issued Consensus Ruling 00-14, Accounting for Certain Sales Incentives (EITF 00-14). EITF 00-14 addresses the accounting for sales incentives offered to consumers and requires reporting of cash incentives as a reduction of revenue rather than as a selling expense. The Company currently plans to adopt EITF 00-14 in the fourth quarter of fiscal 2001. Adopting EITF 00-14 will not impact future earnings.

Note H — Reclassifications

      Certain prior year amounts have been reclassified to conform to current year classifications.

Table of Contents

Sequential Page
No. 8

Item 2. Management’s Discussion and Analysis

      This discussion and analysis deals with comparisons of material changes in the condensed, consolidated financial statements for the three-month and six-month periods ended October 31, 2000 and 1999, respectively.

Results of Operations

      Sales for the second quarter were $166,862,000, up 2% over last year’s $163,965,000 while sales for the six-month period were $330,529,000 compared to $325,460,000 a year ago.

      Sales in the domestic segment were flat compared to last year’s second quarter. The Company’s consumer business grew 2%, with continued strong share-of-market results in fruit spreads and toppings. The sales growth came from the warehouse club-store channel where sales nearly doubled last year’s second quarter. Military sales were also up. The Company continued to see growth in its foodservice business, driven in large part by the continued success of the Smucker’s Uncrustables line of thaw-and-serve peanut butter and jelly sandwiches. Sales in the beverage area, which had lagged the previous year for the first five months, rebounded strongly in October to finish the quarter 3% ahead of last year . The specialty business was also up for the quarter due primarily to new product sales. Sales in the domestic industrial business were off from the prior year as it continued to be adversely affected by softness in the businesses of certain of its ingredient customers.

      In the international segment, sales were up 18% for the quarter, and 15% year to date, primarily due to the Company’s new businesses in Scotland and Brazil, along with continued growth in the Canadian business. This growth occurred despite the impact of unfavorable exchange rates, primarily in Australia, and soft sales in the Company’s European market. Had exchange rates held constant with the prior year, international sales would have been up 24% and 20% on a quarter and year-to-date basis, respectively.

      The cost of products sold during the quarter decreased slightly from 66.5% to 66.1% as the Company began to benefit from the lower cost of fruit packed during the summer months. These lower costs helped offset the impact of higher costs experienced in the first quarter, and lowered the cost of products sold for the first half of the year to 65.3% which is comparable to the same period last year.

      Selling, distribution and administrative expenses increased primarily due to increased marketing costs related to the introduction of new products and increased administrative costs associated with the continued rollout of the Company’s information technology reengineering (ITR) project.

      During the quarter the Company finalized the sale of the former Mrs. Smith’s real estate in Pottstown, Pennsylvania, resulting in a pretax loss of approximately $2,152,000 or $.05 per share. This transaction represents the final nonrecurring charge relating to the previously announced financial review of certain businesses and assets by the Company, initiated in fiscal 2000. The total amount of nonrecurring charges taken in connection with the review was $16,644,000, with $14,492,000 of that amount taken in fiscal 2000 and the remainder in the current quarter.

      Interest expense increased over the prior year due to the long-term debt placement completed during the quarter. During the quarter the Company capitalized approximately $172,000 in interest associated with the Company’s ITR project. Year to date, the Company has capitalized approximately $477,000 in interest associated with the ITR project.

Table of Contents

Sequential Page
No. 9

      The effective income tax rate increased from last year primarily due to tax credits included in the prior year rate.

Financial Condition — Liquidity and Capital Resources

      The financial position of the Company remains strong despite a decrease in cash and cash equivalents of $14,566,000 during the first half of the year.

      During the second quarter, the Company repurchased 4,272,524 Common Shares at $18.50 per share in conjunction with the shareholder value enhancement plan approved by shareholders at their annual meeting in August. In addition, the Company incurred approximately $1,310,000 of expenses related to the combination of Class A and Class B Common Shares and the repurchase of Common Shares which was recorded as a reduction of shareholders’ equity. The Company funded these repurchases with a combination of proceeds from the issuance of senior, unsecured notes in the amount of $60,000,000 and cash on hand. The weighted-average interest rate on these notes is 7.83% and is payable each March 1st and September 1st. The notes mature over terms of five to ten years.

      In addition to the share repurchase, other significant uses of cash during both the quarter and six-month period, included the seasonal procurement of fruit, capital expenditures, and the payment of dividends. Looking forward, the Company believes that cash on hand together with cash generated by operations, proceeds from the long-term debt placement, and available lines of credit will be sufficient to meet its fiscal 2001 cash requirements, including the payment of dividends and interest on debt outstanding.

Recently Issued Accounting Standards

      In December 1999, the Securities and Exchange Commission Staff issued Staff Accounting Bulletin 101, Revenue Recognition in Financial Statements (SAB 101). SAB 101 provides criteria that must be met before revenue is recognized in the financial statements. The Company currently plans to adopt SAB 101 in the fourth quarter of fiscal 2001. Although the Company has not yet completed its evaluation of the potential impact of adopting SAB 101 on future earnings, it does not expect the impact to be significant.

      In May 2000, the Emerging Issues Task Force of the Financial Accounting Standards Board issued Consensus Ruling 00-14, Accounting for Certain Sales Incentives (EITF 00-14). EITF 00-14 addresses the accounting for sales incentives offered to consumers and requires reporting of cash incentives as a reduction of revenue rather than as a selling expense. The Company currently plans to adopt EITF 00-14 in the fourth quarter of fiscal 2001. Adopting EITF 00-14 will not impact future earnings.

Certain Forward-Looking Statements

      This quarterly report includes certain forward-looking statements that are based on current expectations and are subject to a number of risks and uncertainties. These risks and uncertainties include, but are not limited to, the success and cost of introducing new products, cost associated with the implementation of new business and information systems, the ability of the Company to manage effectively capacity constraints relating to new products, raw material and ingredient cost trends, and foreign currency exchange and interest rate fluctuations.

Table of Contents

Sequential Page
No. 10

PART II. OTHER INFORMATION

Item 4. Submission of Matters to a Vote of Security Holders

      The annual meeting of shareholders of the Company was held on August 15, 2000. At the meeting, the names of Fred A. Duncan, Charles S. Mechem, Jr., and Timothy P. Smucker were placed in nomination for the Board of Directors to serve three-year terms ending in 2003. All three nominees were elected with the results as follows:

The shareholders also voted on the combination of Class A and Class B Common Shares and the appointment of Ernst & Young LLP as the Company’s independent auditors for the 2001 fiscal year. The measures were approved as follows:

Only Class A shareholders were eligible to vote on the election of directors and appointment of auditors. Both Class A and Class B shareholders were eligible to vote on the share combination.

Item 6. Exhibits and Reports on Form 8-K

Table of Contents

Sequential Page
No. 11

SIGNATURES

      Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Table of Contents

Sequential Page
No. 12

INDEX OF EXHIBITS

That are filed with the Commission and
The New York Stock Exchange

             *   Exhibits 2, 3, 4, 11, 15, 18, 19, 22, 23, 24, and 99 are either inapplicable to the Company or require no answer.