ORRVILLE, Ohio, Feb. 17 /PRNewswire/ -- The J. M. Smucker Company (NYSE: SJM.A, SJM.B), Orrville, Ohio, announced today that earnings for the third quarter ending January 31, 1998, were $8,033,000, excluding the effect of an accounting change, up 23% over the $6,533,000 for the same period last year. On a diluted basis, earnings per share were $.27 compared to $.22 last year. Sales for the three-month period were $130,658,000 versus $120,251,000 in last year's third quarter, an increase of 9%.
Sales for the first nine months of the fiscal year, according to the Company, were $423,234,000, up 9% over the $388,176,000 last year. Earnings for the first nine months were up 22%, excluding the effect of the accounting change. Diluted earnings per share were $.91 for the period compared to $.75 last year.
During the quarter, the Emerging Issues Task Force of the Financial Accounting Standards Board issued a consensus ruling which requires that certain "business process reengineering and information technology transformation" costs that have previously been capitalized, now need to be expensed as incurred. In accordance with this ruling, the Company incurred a one-time, after tax charge in this quarter of $2,958,000, or $.10 per share, for the cumulative effect of expensing previously capitalized costs. This cumulative effect adjustment reduced quarterly and year-to-date earnings per share to $.17 and $.81, respectively.
According to the Company, nearly all the sales increase in the third quarter was in the Consumer and Industrial areas. On a year-to-date basis, the Consumer, Industrial, Foodservice, and Specialty business areas all reported increases in sales. In the Consumer area, the majority of the increase in the quarter was the result of growth in sales of fruit spreads in the grocery and mass retail markets. Sales of dessert toppings also were up over the previous year. The addition of Kraft brand fruit spreads, acquired during the fourth quarter of fiscal 1997, also contributed to the sales growth during the quarter. The Industrial area's growth came in the bakery, yogurt filling, and frozen dairy categories, as a result of a combination of new products and increased sales of existing products.
Although sales in the International area were flat for the quarter, primarily due to the impact of the strong American dollar versus Australian and Canadian currencies, the area's earnings for the year are up. Additionally, the Company's retail businesses in Australia and Canada remain strong, with share of market gains in fruit spreads being achieved in both countries.
With regard to earnings, the Company stated that the increase was primarily the result of volume growth, lower costs on certain raw materials, and a decrease in interest expense. These savings were offset in part by an increase in selling, distribution, and administrative costs, related primarily to higher marketing expenditures and expenses associated with the Company's information technology reengineering project.
The J.M. Smucker Company is the nation's leading producer of branded preserves, jams, jellies, and other fruit spread products, health and natural foods beverages, ice cream toppings, and natural peanut butter.
THE J. M. SMUCKER COMPANY CONDENSED STATEMENTS OF CONSOLIDATED INCOME (Unaudited) Three Months Ended Nine Months Ended January 31, January 31, 1998 1997 1998 1997 (Dollars in thousands, except per share data) Net sales $130,658 $120,251 $423,234 $388,176 Cost of products sold 83,426 80,383 275,393 260,423 Gross profit 47,232 39,868 147,841 127,753 Selling, distribution, and administrative expenses 35,005 28,862 105,741 89,942 Operating income 12,227 11,006 42,100 37,811 Interest income 552 529 1,732 1,516 Interest expense (30) (371) (120) (1,790) Other income (expense) - net 412 (177) 712 (388) Income before income taxes and cumulative effect of accounting change 13,161 10,987 44,424 37,149 Income taxes 5,128 4,454 17,816 15,309 Net income before cumulative effect of accounting change 8,033 6,533 26,608 21,840 Cumulative effect of accounting change, net of tax 2,958 -- 2,958 -- Net income $5,075 $6,533 $23,650 $21,840 Net income per Common Share (Basic and Diluted) Income before cumulative effect of accounting change $.27 $.22 $.91 $.75 Cumulative effect of accounting change (.10) -- (.10) -- Net income $.17 $.22 $.81 $.75 Dividends declared per share: Class A $.13 $.13 $.39 $.39 Class B $.13 $.13 $.39 $.39 Basic Shares Outstanding 29,034,886 29,092,074 29,039,548 29,097,111 Diluted Shares Outstanding 29,382,091 29,152,866 29,318,864 29,172,081 The Company adopted Statement of Financial Accounting Standards (SFAS) No. 128, Earnings per Share, in the third quarter of fiscal 1998. All previous quarters presented have been restated to conform with the provisions of SFAS No. 128. The J. M. Smucker Company CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) January 31, 1998 1997 (Dollars in thousands) ASSETS Current Assets: Cash and cash equivalents $24,836 $12,196 Trade receivables 42,238 43,234 Inventories 109,126 105,963 Assets of discontinued operations, net -- 1,928 Other current assets 9,404 14,321 Total Current Assets 185,604 177,642 Property, Plant & Equipment, Net 141,048 136,865 Noncurrent Assets 63,476 65,324 Total $390,128 $379,831 LIABILITIES & SHAREHOLDERS' EQUITY Current Liabilities: Accounts payable $26,991 $23,006 Other current liabilities 42,523 33,715 Total Current Liabilities 69,514 56,721 Long-term Debt -- 15,600 Other Noncurrent Liabilities 21,733 20,840 Shareholders' Equity, Net 298,881 286,670 Total $390,128 $379,831