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 ( www.smucker.com ) 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 STATEMENTS OF CONSOLIDATED INCOME (Unaudited) 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 CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) October 31, 1999 1998 (Dollars in thousands) ASSETS 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 LIABILITIES & SHAREHOLDERS' EQUITY 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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