Cites Continued Strength in Core Business Sales and Earnings Growth
ORRVILLE, Ohio, Nov. 15 /PRNewswire/ -- The J.M. Smucker Company, (NYSE: SJM - news), announced today that sales for the second quarter ended October 31, 2001, were $172.8 million, up two percent from $169.8 million for the quarter ended October 31, 2000. Diluted earnings per share were $0.32, a 10 percent increase from $0.29 per share for the second quarter last year, excluding the impact of a nonrecurring charge of approximately $0.05 per share taken in the second quarter of last year.
Net earnings for the quarter increased five percent to $7.9 million, as compared to $7.5 million for the second quarter of last year, excluding the nonrecurring charge. Earnings before interest, taxes, depreciation and amortization (EBITDA) were up eight percent over last year, excluding the nonrecurring charge and EBITDA per share increased 11 percent to $0.89 from $0.80 for the prior year.
Richard Smucker, President and Co-CEO stated, ``Despite current uneasy economic conditions, our balance sheet and cash position remain very strong. This is driven by the solid performance of our core businesses and the strength of our Smucker's brand. The addition of the Jif and Crisco brands, when that transaction closes next spring, will enhance our strengths and will be highly accretive to earnings, providing us with substantial cash flow as well as a platform for future growth.''
Sales for the six-month period ended October 31, 2001, were also up two percent to $342.6 million, compared to $336.2 million for the six months ended October 31, 2000. Diluted earnings per share for the first six months were $0.66 per share, up three percent from $0.64 per share in the prior year, excluding the impact of the nonrecurring charge and changes in accounting in fiscal 2001. EBITDA per share increased 14 percent from $1.58 per share to $1.80 per share. Net earnings for the first six months of the fiscal year were $16.3 million, down slightly from $17.1 million for the same period last year, primarily as a result of higher interest costs associated with the $60 million in senior debt incurred to help fund the Company's repurchase of 4.3 million shares in August of 2000.
Richard Smucker continued, ``Results for both the quarter and first six months of the year reflect our strong core business performance and growth. In addition, sales of our new Smucker's Uncrustables thaw-and-serve peanut butter and jelly sandwich have more than doubled this year, and we look forward to further growth as we expand its sales into other parts of the country.''
Business Line Results
Sales in the domestic business segment were up two percent for the quarter over the prior year resulting from increased sales in the consumer, foodservice, and beverage business areas. Consumer area sales increased primarily in the grocery, club store, and mass retail channels. Sales of natural peanut butter, Goober peanut butter and jelly combination products, and sugar-free fruit spreads were the primary contributors to this increase. The Company's record share of market in the fruit spreads category continues to grow and consumer area sales were up over four percent for the first six months as compared to the same period last year.
Sales in the foodservice area were up 10 percent for the quarter, as sales and distribution of the Smucker's Uncrustables to schools and traditional foodservice customers continued to increase. These increases offset continued softness in traditional foodservice sales due to the weakening economy and sharp declines in travel and leisure following the incidents of September 11.
Sales in the beverage area were up three percent over the prior year due primarily to increased sales of R.W. Knudsen Family and Santa Cruz Organic products. Beverage sales year-to-date are up six percent over last year.
The industrial area of the domestic segment continued to be challenged during the quarter by price competition and soft sales with major customers. Sales for the quarter were down three percent from the prior year. During the second quarter, however, the Company completed its previously announced acquisition of the fruit and vegetable preparation businesses of International Flavors and Fragrances, Inc. (IFF). Although the acquisition did not have a material impact on the results for the quarter, the Company expects the IFF business to contribute sales and profits of approximately $10 million and $1 million, respectively, for the remainder of the year.
The strong U.S. dollar as compared to Australian and Brazilian currencies continues to negatively impact the international business segment. International sales were down $357,000 from the second quarter of last year. However, if exchange rates had remained consistent with last year, sales would have been approximately $1.8 million higher in the second quarter and nearly $3.5 million higher for the first six months.
Australian and Canadian sales were both down two percent from the prior year, also due to weakened exchange rates. However in local Australian currency, the business was up six percent, marking a sharp rebound from a soft first quarter. The Canadian business continued to increase its share of the fruit spreads market in Canada, and sales were up in the Company's Latin American, European, and Middle Eastern markets.
With respect to cash flow and earnings, expenses for the quarter were within expectations, with selling, distribution, and administrative costs slightly positive. Raw material costs overall were essentially flat. Cost of products sold was negatively impacted by costs associated with expanding production capacity for Smucker's Uncrustables and by higher utility costs. Marketing expenditures decreased from last year's level while administrative costs increased, primarily due to higher amortization charges associated with information systems implementations.
Jif & Crisco Transaction
The Company also commented on the status of its previously announced Jif and Crisco transaction with The Procter and Gamble Company, reporting that it had received approval from the U.S. antitrust authorities, clearing one of the regulatory steps required for completion of the merger. The Company indicated that plans for the merger of the Jif and Crisco businesses continue on schedule and announced that it would hold a special shareholders' meeting on March 1, 2002, to vote on the transaction. The record date for that meeting will be December 31, 2001. The Company hopes to mail proxy materials in the latter part of January 2002, and continues to anticipate a spring 2002 closing for the transaction.
``We are extremely pleased with the very favorable responses that we have received from shareholders, employees, and others regarding our announced plans to merge the Jif and Crisco brands into The J.M. Smucker Company,'' stated Tim Smucker, Chairman and Co-CEO. ``We remain confident in the value and accretive nature of this transaction. The addition of these classic food brands is a natural and strategic fit within our company. The transaction will strengthen our ability to acquire other complementary leading food brands and will provide an opportunity for greater top- and bottom-line results, clearly enhancing shareholder value.''
The J. M. Smucker Company ( www.smuckers.com ) was founded in 1897, when the Company's namesake and founder sold his first product-apple butter-from the back of a horse-drawn wagon. Today, over a century later, the Company is the market leader in fruit spreads, ice cream toppings, health and natural foods beverages, and natural peanut butter in North America. The Company has over 2,000 employees worldwide and distributes products in more than 70 countries.
This release contains certain forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially, including uncertainties relating to the Company's operating performance, the cost of fruit and other ingredients and raw materials, the success of its marketing programs, the satisfaction of conditions precedent to the completion of the proposed transaction with The Procter & Gamble Company, and the successful integration of the Jif and Crisco businesses. 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 STATEMENTS OF CONSOLIDATED INCOME (Unaudited) Three Months Ended Six Months Ended October 31, October 31, 2001 2000 2001 2000 (Dollars in thousands, except per share data) Net sales $172,844 $169,837 $342,636 $336,165 Cost of products sold 116,761 115,465 229,636 225,869 Total 56,083 54,372 113,000 110,296 Selling, distribution, and administrative expenses 41,307 40,660 82,992 80,518 Nonrecurring charge --- 2,152 --- 2,152 Total 14,776 11,560 30,008 27,626 Other income (expense) Interest income 602 712 1,333 1,462 Interest expense (2,356) (1,968) (4,637) (2,866) Other - net (130) (150) (63) (349) Income before income taxes and cumulative effect of change in accounting method 12,892 10,154 26,641 25,873 Income taxes 5,028 3,945 10,390 10,106 Income before cumulative effect of change in accounting method 7,864 6,209 16,251 15,767 Cumulative effect of change in accounting method --- --- --- (992) Net income $ 7,864 $ 6,209 $16,251 $14,775 Earnings per Common Share: Income before cumulative effect of change in accounting method $0.32 $0.25 $0.67 $0.59 Cumulative effect of change in accounting method --- --- --- (0.04) Net income per Common Share $0.32 $0.25 $0.67 $0.55 Earnings per Common Share - assuming dilution: Income before cumulative effect of change in accounting method $0.32 $0.24 $0.66 $0.59 Cumulative effect of change in accounting method --- --- --- (0.04) Net income per Common Share - assuming dilution $0.32 $0.24 $0.66 $0.55 Dividends declared per share $0.16 $0.16 $0.32 $0.32 Common Shares outstanding 24,285,486 25,213,864 24,277,163 26,700,608 Common Shares outstanding - assuming dilution 24,721,355 25,403,573 24,622,897 26,821,991 The J. M. Smucker Company CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) October 31, 2001 2000 (Dollars in thousands) ASSETS Current Assets: Cash and cash equivalents $33,218 $9,207 Trade receivables 60,627 64,416 Inventories 132,416 132,202 Other current assets 14,381 13,185 Total Current Assets 240,642 219,010 Property, Plant & Equipment, Net 171,086 170,905 Noncurrent Assets 76,679 72,196 Total $488,407 $462,111 LIABILITIES & SHAREHOLDERS' EQUITY Current Liabilities: Accounts payable $34,111 $33,557 Other current liabilities 44,918 37,199 Total Current Liabilities 79,029 70,756 Long-term Debt 135,000 135,000 Other Noncurrent Liabilities 21,021 19,180 Shareholders' Equity, Net 253,357 237,175 Total $488,407 $462,111
Great things are happening at The J.M. Smucker Co See for yourself.