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J. M. Smucker Announces Third Quarter Results

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


                                 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

                                                 January 31,
                                              1998       1997
                                           (Dollars in thousands)
    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

    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
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