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J. M. Smucker Announces Second Quarter Results

ORRVILLE, Ohio, Nov. 17 /PRNewswire/ -- The J. M. Smucker Company, Orrville, Ohio (NYSE: SJM.A and SJM.B), announced today that sales for the second quarter ending October 31, 1999, were up approximately 6%, to $163,965,000 from $154,894,000 in the prior year second quarter. Earnings for the three-month period were $9,389,000 or $.33 per share, up 3.6% over earnings of $9,063,000 or $.31 per share for the same period last year. On a diluted basis, earnings per share were $.32 compared to $.31 per share last year.

The Company also announced that sales for the first six months of the fiscal year were $325,460,000 compared to $305,394,000 last year, an increase of over 6%, while earnings for the same period were up 5%. Earnings per share for the first six months were $.71 compared to $.67, and $.70 per share versus $.67 per share on a diluted basis.

According to the Company, the majority of the sales increase came from the foodservice, consumer and international markets, with the new consumer direct business (catalogue and Internet sales plus the Company's new headquarters retail outlet) also making a contribution. In the foodservice area, the increase in sales was the result of volume growth in the portion control segment and the addition of Lea & Perrins products to the foodservice group's offerings as a result of the distribution agreement entered into with Lea & Perrins, Inc. last year. In the consumer area, the continued rollout of Smucker's Snackers, introduced last year, and the inclusion of the Adams natural peanut butter business, acquired in December 1998, were key causes for the increase in that market.

In the international segment, the majority of the increase for the quarter occurred in Canada. The relative weakness of the U. S. dollar against both the Australian and Canadian currencies also favorably impacted international sales in the quarter and for the six-month period.

The increase in earnings was attributed by the Company to the growth in sales and to improved efficiencies at its manufacturing facilities, offset by higher marketing, selling, and distribution expenses. Interest expense also increased significantly over the prior year due to the Company's long-term debt placement, which was completed during the first quarter.

The Company also announced that it is in the process of reviewing its businesses and assets in order to identify opportunities to divest of certain assets and improve financial returns. The analysis will focus on assets and businesses considered non-strategic or underperforming in comparison with Company return objectives. The Company expects to complete its evaluation in the third quarter and anticipates that any impact on earnings resulting from the evaluation would occur during the third or fourth quarter of the current fiscal year.

Commenting on the planned restructuring, Steven J. Ellcessor, the Company's vice president-finance and administration, said, "We are very pleased with the current performance of our businesses and with their prospects, and we believe that we have strategies in place for those businesses that will drive future sales and earnings growth. At the same time, we believe we need to take a hard look at certain assets on our books. Taking action to trim assets may impact our earnings in the third or fourth quarter but it will give us a stronger balance sheet on which to base future growth."

This release contains certain forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially. These risks and uncertainties are detailed from time to time in reports filed by the Company with the Securities and Exchange Commission, including Forms 10-Q and 10-K.

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          Six Months Ended
                                 October 31,                October 31,
                             1999         1998          1999          1998
                             (Dollars in thousands, except per share data)

    Net sales              $163,965     $154,894      $325,460      $305,394
    Cost of products sold   109,092      103,204       212,559       199,842
    Gross profit             54,873       51,690       112,901       105,552
    Selling, distribution,
      and administrative
      expenses               39,804       37,378        80,599        74,720
    Operating income         15,069       14,312        32,302        30,832

    Interest income             755          438         1,478         1,063
    Interest expense           (853)        (256)       (1,333)         (260)
    Other income
      (expense) - net           250          191           617           486
    Income before income
      taxes                  15,221       14,685        33,064        32,121
    Income taxes              5,832        5,622        12,638        12,642
    Net income              $ 9,389      $ 9,063       $20,426       $19,479

    Net income per
      Common Share             $.33         $.31          $.71          $.67
    Net income per Common
      Share - assuming
      dilution                 $.32         $.31          $.70          $.67

    Dividends declared per share:
    Class A                    $.15         $.14          $.30          $.28
    Class B                    $.15         $.14          $.30          $.28

    Common Shares
      outstanding        28,840,103   29,043,137    28,943,816    29,034,992
    Common Shares
      outstanding -
      assuming dilution  28,955,964   29,231,947    29,058,839    29,282,193

                          The J. M. Smucker Company

                                                   October 31,
                                               1999           1998
                                              (Dollars in thousands)
    Current Assets:
      Cash and cash equivalents               $25,019         $5,129
      Trade receivables                        66,410         53,606
      Inventories                             146,395        138,482
      Other current assets                     12,575         13,388
        Total Current Assets                  250,399        210,605

    Property, Plant & Equipment, Net          171,700        160,858

    Noncurrent Assets                          83,315         62,920
          Total                              $505,414       $434,383

    Current Liabilities:
      Accounts payable                        $42,054        $38,006
      Other current liabilities                37,788         64,485
        Total Current Liabilities              79,842        102,491

    Long-term Debt                             75,000             --
    Other Noncurrent Liabilities               21,835         21,052
    Shareholders' Equity, Net                 328,737        310,840
          Total                              $505,414       $434,383

SOURCE  J.M. Smucker Company
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