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J. M. Smucker Announces Third Quarter Results

ORRVILLE, Ohio, Feb. 17 /PRNewswire/ -- The J. M. Smucker Company, (NYSE: SJM.A and SJM.B), announced today that sales for the third quarter ending January 31, 2000, were up approximately 7%, to $150,428,000 from $140,772,000 in the prior year third quarter. Earnings per share for the three-month period, before the impact of nonrecurring charges, were even with the same period last year at $.28 per share. Aggregate earnings for the third quarter were $7,955,000 (before nonrecurring charges), compared to $8,245,000 last year.

The Company also announced sales for the first nine months of the fiscal year were $475,888,000 compared to $446,166,000 last year, an increase of over 6.5%. Earnings for the nine-month period were up 2.4% to $28,381,000 or $.99 per share before the impact of nonrecurring charges, compared to earnings of $27,724,000 or $.95 per share for the same period last year. On a diluted basis, earnings per share before nonrecurring charges were $.98 year-to-date, compared to $.95 last year.

Overall sales growth momentum continued in the third quarter with all business areas other than industrial up in sales over the prior year. The foodservice area and international contributed the majority of the sales increase for the quarter. On a year-to-date basis, all business areas are up in sales over the same period last year.

In the foodservice area, the increase in sales was the result of volume growth in the portion control segment, the addition of Lea & Perrins products to the foodservice product line, and sales of the new Smucker's Uncrustables frozen peanut butter and jelly sandwich. In the international segment, sales in Canada contributed significantly to the increase over the prior year. The Company's businesses in Mexico and Australia and its export business in Europe also posted solid gains. 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 year-to-date. The softness in industrial sales in the quarter was due principally to lower than anticipated orders from certain major customers.

Commenting on the results, Tim Smucker, the Company's chairman, said, "We are very pleased with the volume and earnings growth in our foodservice, international, beverage, and specialty business areas. Our new Smucker's Uncrustables product is a big hit with schools, and we expect sales of that line to continue to grow. Although consumer sales were up only modestly during the quarter, our share of market in fruit spreads hit a new high of 40%. With sales growth continuing in traditional fruit spreads and in our Smucker's Snackers line introduced last year, we expect stronger consumer results going forward. We also expect industrial sales to rebound in the fourth quarter, assisted by the contributions of our new operation in Brazil."

With respect to the earnings results, Mr. Smucker stated, "We have realized the operational savings that we identified several years ago as part of our Project Appleseed, and we are now beginning to see some of the benefits anticipated from our information technology project. The savings achieved are being offset currently by the effect of the soft third quarter sales in consumer and industrial, investments in new products, and higher selling costs. We believe, though, that our new product introductions and our ongoing cost reduction efforts will spur greater growth of both sales and earnings in the future."

During the quarter, the Company initiated the financial review of its businesses and assets that it announced last November. Although the review is not complete, the Company expects the total impact of nonrecurring charges resulting from implementation of the actions identified in the review to be no more than $20 million on a pretax basis (or less than 5% of total assets). Based on the results of the review to date, the Company has taken a charge of $4,805,000 or $.11 per share during the third quarter. The majority of the charge in the third quarter resulted from the write-off of certain capitalized costs associated with unused software acquired as part of its computer system project. The carrying costs of certain intangible assets are still being reviewed, and the Company expects any resulting write-down of those assets to be taken in the fourth quarter. Also, the former Mrs. Smith's real estate in Pottstown, Pennsylvania has been put up for sale, and the Company anticipates that it may incur a loss on that sale. The effect of the nonrecurring items on future earnings is not expected to be significant.

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             Nine Months Ended
                              January 31,                    January 31,
                         2000            1999             2000         1999
                            (Dollars in thousands, except per share data)

    Net sales        $  150,428      $  140,772       $  475,888   $  446,166
    Cost of
      products sold      95,937          91,717          308,496      291,559
    Gross profit         54,491          49,055          167,392      154,607
    Selling, distribution,
      and administrative
      expenses           41,437          35,465          122,036      110,185
    Nonrecurring charge   4,805              --            4,805           --
    Operating income      8,249          13,590           40,551       44,422

    Interest income         578             370            2,056        1,433
    Interest expense     (1,284)           (252)          (2,617)        (512)
    Other income
      (expense) - net       173              97              790          583
    Income before
      income taxes        7,716          13,805           40,780       45,926
    Income taxes          2,753           5,560           15,391       18,202
    Net income          $ 4,963         $ 8,245          $25,389      $27,724

    Net Income per
      Common Share      $   .17         $   .28          $   .88      $   .95

    Net Income per
      Common Share
      - assuming
      dilution          $   .17         $   .28          $   .88      $   .95

    Dividends declared
      per share:
    Class A             $   .15         $   .14          $   .45      $   .42
    Class B             $   .15         $   .14          $   .45      $   .42

    Common Shares
      outstanding    28,544,401      29,071,579       28,810,677   29,047,187
    Common Shares
      - assuming
      dilution       28,602,865      29,294,068       28,906,847   29,286,151

                          The J. M. Smucker Company

                                                   January 31,
                                           2000                 1999
                                             (Dollars in thousands)

    Current Assets:
      Cash and cash equivalents          $ 26,054            $  5,824
      Trade receivables                    55,566              49,841
      Inventories                         140,247             125,918
      Other current assets                 12,548              12,127
         Total Current Assets             234,415             193,710

    Property, Plant & Equipment, Net      173,339             164,113

    Noncurrent Assets                      80,382              76,285
         Total                           $488,136            $434,108

    Current Liabilities:
      Accounts payable                   $ 33,821            $ 33,419
      Other current liabilities            34,985              64,087
         Total Current Liabilities         68,806              97,506

    Long Term Debt                         75,000                  --
    Other Noncurrent Liabilities           21,898              21,186
    Shareholders' Equity, Net             322,432             315,416
         Total                           $488,136            $434,108

SOURCE  The J.M. Smucker Company

CONTACT: Steven J. Ellcessor, Vice President - Finance and Administration and General Counsel of The J. M. Smucker Company, 330-682-3000/

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