The J. M. Smucker Company Announces Fiscal 2013 Second Quarter Results and Updates Full Year Guidance
The J. M. Smucker Company Announces Fiscal 2013 Second Quarter Results and
Updates Full Year Guidance
-- Acquisition and favorable sales mix drive an 8 percent net sales increase
-- EPS up 21 percent; EPS up 12 percent excluding special project costs
-- Strong cash generated from operations
-- Company increases EPS outlook for fiscal 2013
PR Newswire
ORRVILLE, Ohio, Nov. 16, 2012
ORRVILLE, Ohio, Nov. 16, 2012 /PRNewswire/ -- The J. M. Smucker Company (NYSE:
SJM) today announced results for the second quarter ended October 31, 2012, of
its 2013 fiscal year. Results for the quarter and six months ended October
31, 2012, include the operations of the North American foodservice coffee and
hot beverage business acquired from Sara Lee Corporation ("Sara Lee
foodservice business") since the completion of the acquisition on January 3,
2012.
Executive Summary
Three Months Ended October 31, Six Months Ended October 31,
2012 2011 % Increase 2012 2011 % Increase
(Decrease) (Decrease)
(Dollars in millions, except per share data)
Net sales $ $ 8% $ $ 11%
1,628.7 1,513.9 2,998.4 2,702.8
Operating income $ $ 17% $ $ 12%
247.5 211.6 438.1 392.3
% of net sales 15.2% 14.0% 14.6% 14.5%
Net income:
Income $ $ 17% $ $ 9%
148.8 127.2 259.7 238.8
Income per $ $ 21% $ $ 13%
diluted share 1.36 1.12 2.36 2.09
Operating income $ $ $ $
excluding special 261.5 241.6 8% 479.8 447.3 7%
project costs
% of net sales 16.1% 16.0% 16.0% 16.5%
Net income
excluding special
project costs:
Income $ $ 8% $ $ 4%
158.1 147.0 287.4 275.2
Income per $ $ 12% $ $ 9%
diluted share 1.45 1.29 2.62 2.41
o The acquired Sara Lee foodservice business contributed $90.7 million and
$177.5 million to net sales for the three and six months ended October 31,
2012, respectively.
o Operating income and net income excluding the impact of restructuring,
merger and integration, and certain pension settlement costs ("special
project costs") each increased 8 percent in the second quarter. Included
in these amounts for the second quarter last year was a pre-tax loss on
divestiture of approximately $11.3 million.
o Second quarter net income excluding special project costs per diluted
share increased 12 percent, which includes the benefit from the Company's
share repurchase activities over the past year.
"We delivered another strong quarter of solid sales and earnings growth,"
commented Richard Smucker, Chief Executive Officer. "Our long-term strategy
continues to serve us well in consistently delivering results. Our iconic
brands are trusted and have demonstrated their strength and resilience. We
have a team of highly talented employees that are fully committed to our
culture and to implementing our strategy. All of which point to our Company
being well-positioned for continued profitable growth."
"Overall consumer spending appears to be on the upswing which is welcome news
for the industry," added Vince Byrd, President and Chief Operating Officer.
"The tactical adjustments we made to address market conditions are working.
We have optimized price points, closed price gaps, and strengthened
merchandising. Consumers continue to respond positively to these actions and
to our brand-building initiatives, product innovations, and new brand
additions. We are well-poised for the holiday season and another year of
growth."
Net Sales
Three Months Ended October 31, Six Months Ended October 31,
2012 2011 Increase % 2012 2011 Increase %
(Decrease) (Decrease)
(Dollars in millions)
Net sales $ $1,513.9 $ 8% $ $ $ 11%
1,628.7 114.8 2,998.4 2,702.8 295.7
Adjust for
certain
noncomparable
items:
Acquisition (90.7) - (90.7) (6%) (177.5) - (177.5) (7%)
Divestiture - (3.0) 3.0 0% - (8.0) 8.0 0%
Foreign (2.1) - (2.1) (0%) 3.4 - 3.4 0%
exchange
Net sales
adjusted for
noncomparable
impact of $ $1,510.9 $ 2% $ $ $ 5%
acquisition, 1,535.9 24.9 2,824.4 2,694.8 129.6
divestiture,
and foreign
exchange
Amounts may not add due to rounding.
Net sales increased 8 percent in the second quarter of 2013, compared to the
second quarter of 2012, due to the impact of the acquired Sara Lee foodservice
business and favorable sales mix. Overall net price realization was slightly
lower as price declines on coffee offset increases taken on peanut butter over
the past year. Volume gains realized in Folgers® coffee, Robin Hood® and Five
Roses® flour in Canada, and Dunkin' Donuts® packaged coffee were offset by
decreases in Pillsbury® baking mixes, Crisco® shortening and oils, Jif® peanut
butter, and Smucker's® fruit spreads. Overall volume, based on weight and
excluding acquisition, decreased 2 percent in the second quarter of 2013,
compared to the second quarter of 2012. Favorable sales mix in the quarter
was driven by volume growth in the Company's coffee brands, including K-Cups®,
which are higher priced per pound, compared to other products within the
Company's portfolio.
Margins
Three Months Ended Six Months Ended
October 31, October 31,
2012 2011 2012 2011
(% of net sales)
Gross profit 33.3% 32.9% 33.7% 34.4%
Selling, distribution, and administrative
expenses:
Marketing 5.1% 4.9% 5.2% 5.3%
Selling 3.2% 3.1% 3.3% 3.3%
Distribution 2.5% 2.7% 2.6% 2.9%
General and administrative 5.0% 4.9% 5.2% 5.3%
Total selling, distribution, and 15.8% 15.6% 16.3% 16.8%
administrative expenses
Amortization 1.5% 1.4% 1.6% 1.5%
Other restructuring, merger and 0.7% 1.1% 1.2% 1.2%
integration, and special projects costs
Loss on divestiture 0.0% 0.7% 0.0% 0.4%
Other operating expense - net 0.1% 0.1% 0.0% 0.0%
Operating income 15.2% 14.0% 14.6% 14.5%
Amounts may not add due to rounding.
Gross profit increased $43.2 million, or 9 percent, in the second quarter of
2013, compared to 2012. Excluding special project costs, gross profit
increased $33.0 million, or 6 percent, driven by the acquired Sara Lee
foodservice business and strong coffee growth. Gross margin was 33.4 percent
in the second quarter of 2013, compared to 33.8 percent in the second quarter
of 2012, excluding special project costs.
Overall commodity costs were slightly lower during the second quarter of 2013,
compared to the second quarter of 2012, as lower green coffee costs offset
higher costs for peanuts and certain other commodities. However, the benefit
to gross profit of overall lower costs was mostly offset by lower overall net
price realization. Unrealized mark-to-market adjustments on derivative
contracts did not contribute to the change in year-over-year gross profit and
were a loss of $10.3 million in the second quarter of 2013, compared to a loss
of $10.2 million in the second quarter of 2012.
Selling, distribution, and administrative expenses increased 9 percent in the
second quarter of 2013, compared to the second quarter of 2012, driven in part
by the acquired Sara Lee foodservice business, and increased as a percentage
of net sales from 15.6 percent to 15.8 percent. Marketing, selling, and
general and administrative expenses increased 11 percent, 10 percent, and 9
percent, respectively.
Higher amortization expense was recognized in the second quarter of 2013,
compared to 2012, primarily related to the intangible assets associated with
the Sara Lee foodservice business acquisition.
Operating income increased $35.9 million in the second quarter of 2013,
compared to 2012. Excluding special project costs in both periods, operating
income increased $19.9 million, or 8 percent, and increased from 16.0 percent
of net sales in 2012 to 16.1 percent in 2013. Both operating income measures
include a loss on divestiture of $11.3 million in 2012.
Interest and Income Taxes
Interest expense increased $4.8 million in the second quarter of 2013,
compared to 2012, primarily representing the cost of higher average debt
outstanding, due to the Company's October 2011 public debt issuance.
Income taxes increased $9.4 million, or 14 percent, in the second quarter of
2013, compared to 2012, reflecting an increase in income before income taxes
offset slightly by a lower effective tax rate. The effective tax rate was
33.6 percent in the second quarter of 2013, compared to 34.1 percent in 2012.
Segment Performance
Three Months Ended October Six Months Ended October 31,
31,
2012 2011 % Increase 2012 2011 % Increase
(Decrease) (Decrease)
(Dollars in millions)
Net sales:
U.S. Retail $ $ 1% $ $ 2%
Coffee 622.5 617.5 1,143.3 1,117.6
U.S. Retail 619.3 615.2 1% 1,147.8 1,074.7 7%
Consumer Foods
International,
Foodservice, and 387.0 281.2 38% 707.4 510.5 39%
Natural Foods
Segment profit:
U.S. Retail $ $ 13% $ $ 2%
Coffee 158.2 140.0 284.6 279.7
U.S. Retail 111.1 116.0 (4%) 219.0 195.0 12%
Consumer Foods
International,
Foodservice, and 58.2 39.0 49% 98.9 77.5 28%
Natural Foods
Segment profit
margin:
U.S. Retail 25.4% 22.7% 24.9% 25.0%
Coffee
U.S. Retail 17.9% 18.8% 19.1% 18.1%
Consumer Foods
International,
Foodservice, and 15.0% 13.9% 14.0% 15.2%
Natural Foods
U.S. Retail Coffee
The U.S. Retail Coffee segment net sales increased 1 percent in the second
quarter of 2013, compared to the second quarter of 2012, as increased volume
and favorable sales mix driven primarily by K-Cups® offset the impact of price
declines taken since the second quarter of 2012. Segment volume increased 6
percent in the second quarter of 2013, compared to the second quarter of 2012,
as the Folgers® brand increased 6 percent and Dunkin' Donuts® packaged coffee
increased 11 percent. Net sales of Folgers Gourmet Selections® and Millstone®
K-Cups® remained strong and increased $36.4 million, compared to the second
quarter of 2012. K-Cups® represented 6 percentage points of segment net sales
growth, while contributing only 1 percentage point growth to volume.
The U.S. Retail Coffee segment profit increased $18.3 million, or 13 percent,
in the second quarter of 2013, compared to the second quarter of 2012, as
favorable mix and volume growth exceeded a significant increase in marketing
expenses. The impact of lower green coffee costs was more than offset by
price declines but did not significantly impact segment profit. Unrealized
mark-to-market adjustments, which represented a loss of $4.5 million in the
second quarter of 2013, compared to a loss of $10.1 million in the second
quarter of 2012, contributed $5.6 million to the segment profit increase.
U.S. Retail Consumer Foods
The U.S. Retail Consumer Foods segment net sales also increased 1 percent in
the second quarter of 2013, compared to 2012, as the impact of higher net
price realization offset a 6 percent decline in segment volume and unfavorable
sales mix. Jif® brand net sales increased 20 percent in the second quarter of
2013, compared to 2012, primarily reflecting price increases taken since the
second quarter of 2012. Volume of the Jif® brand decreased 6 percent compared
to the strong quarter last year which benefited from early consumer buy-in in
advance of a 30 percent price increase in the third quarter of 2012.
Smucker's® fruit spreads net sales and volume were down 11 percent during the
same period. Net sales and volume of Smucker's® Uncrustables® frozen
sandwiches increased 13 percent and 11 percent, respectively, in the second
quarter of 2013, compared to 2012, benefiting from new distribution at certain
retailers.
Crisco® brand net sales and volume decreased 12 percent and 8 percent,
respectively, in the second quarter of 2013, compared to 2012, resulting from
declines at a key retailer. For the same period, net sales for the Pillsbury®
brand increased 2 percent, while volume decreased 5 percent mostly reflecting
the tonnage impact of the previously announced cake mix downsizing. Canned
milk net sales and volume increased 2 percent and 5 percent, respectively,
during the second quarter of 2013, compared to 2012.
The U.S. Retail Consumer Foods segment profit decreased $4.8 million, or 4
percent, in the second quarter of 2013, compared to the second quarter of
2012. Unrealized mark-to-market adjustments, which were a loss of $5.0 million
in the second quarter of 2013, compared to a loss of $0.4 million in the
second quarter of 2012, represented $4.6 million of the segment profit
decrease. Overall raw material costs recognized were higher in the quarter
most significantly for peanuts but were essentially offset by higher net price
realization, and a decrease in marketing and other support costs. A portion
of planned marketing expenditures in the second quarter of 2013 was redirected
to promotional spending, and contributed to the decrease in marketing
expense.
International, Foodservice, and Natural Foods
Net sales in the International, Foodservice, and Natural Foods segment
increased 38 percent in the second quarter of 2013, compared to 2012, driven
by the acquired Sara Lee foodservice business, which contributed $90.7
million, or 32 percentage points, of the net sales growth. Excluding the
impact of acquisition, divestiture, and foreign exchange, segment net sales
increased 6 percent over the same period last year. Volume was up 4 percent
with gains realized in the Robin Hood® and Five Roses® Canadian flour brands
as well as nonbranded beverages.
Segment profit increased $19.2 million in the second quarter of 2013, compared
to 2012, which included an $11.3 million loss on divestiture. Excluding this
loss, segment profit increased $7.9 million, or 16 percent, primarily due to
the contribution of the Sara Lee foodservice business. Unrealized
mark-to-market adjustments were a loss of $2.4 million in the second quarter
of 2013, compared to a loss of $0.1 million in the second quarter of 2012.
Other Financial Results and Measures
Three Months Ended October 31, Six Months Ended October 31,
2012 2011 % Increase 2012 2011 % Increase
(Decrease) (Decrease)
(Dollars in millions)
Net cash provided $ $ $ $
by operating 182.9 118.2 55% 359.6 59.9 n/m
activities
Free cash flow $ $ 161% $ $ n/m
130.7 50.1 261.2 (75.8)
EBITDA $ $ 13% $ $ 10%
310.5 273.8 565.2 514.0
% of net 19.1% 18.1% 18.8% 19.0%
sales
Cash provided by operating activities increased $64.7 million in the second
quarter of 2013, compared to the second quarter of 2012, and resulted in an
increase in cash provided by operating activities of $299.7 million for the
first six months of 2013, primarily due to a lower amount of cash required to
fund inventory during the period, compared to 2012. Capital expenditures
decreased $37.2 million in the first six months of 2013, compared to 2012, and
combined with the increase in cash provided by operating activities resulted
in a $336.9 million increase in free cash flow over the same period.
During the second quarter of 2013, the Company repurchased 2.0 million common
shares for approximately $170.9 million under the Company's August 2012 Rule
10b5-1 trading plan, completing the purchase of shares included under the
plan. At October 31, 2012, the Company had approximately 1.9 million common
shares remaining available for repurchase under the Board of Directors'
authorization.
Outlook
For fiscal 2013, the Company expects net sales to increase approximately 7
percent, compared to 2012, including an incremental eight-month contribution
from the Sara Lee foodservice business. Non-GAAP net income per diluted share
is expected to range from $5.12 to $5.22, excluding special project costs of
approximately $0.40 per diluted share. Previously, the range was $5.00 to
$5.10 per diluted share excluding special project costs.
Conference Call
The Company will conduct an earnings conference call and webcast today,
Friday, November 16, 2012, at 8:30 a.m. E.T. The webcast can be accessed from
the Company's website at www.smuckers.com. For those unable to listen to the
live webcast, the webcast replay will be available at www.smuckers.com
following the call. An audio replay will also be available following the call
until Friday, November 23, 2012, and can be accessed by dialing 888-203-1112
or 719-457-0820, with a pass code of 9289404.
Non-GAAP Measures
The Company uses non-GAAP measures including net sales adjusted for the
noncomparable impact of acquisition, divestiture, and foreign exchange rate;
gross profit, operating income, net income, and net income per diluted share,
excluding special project costs; earnings before interest, taxes,
depreciation, and amortization ("EBITDA"); and free cash flow as key measures
for purposes of evaluating performance internally. These non-GAAP measures
are not intended to replace the presentation of financial results in
accordance with U.S. generally accepted accounting principles ("GAAP").
Rather, the presentation of these non-GAAP measures supplements other metrics
used by management to internally evaluate its businesses, and facilitates the
comparison of past and present operations. These non-GAAP measures may not be
comparable to similar measures used by other companies and may exclude certain
nondiscretionary expenses and cash payments. A reconciliation of certain
non-GAAP measures to the comparable GAAP items for the current and prior year
quarter and year-to-date periods is included in the "Unaudited Non-GAAP
Measures" table.
About The J. M. Smucker Company
For more than 110 years, The J. M. Smucker Company has been committed to
offering consumers quality products that bring families together to share
memorable meals and moments. Today, Smucker is a leading marketer and
manufacturer of fruit spreads, retail packaged coffee, peanut butter,
shortening and oils, ice cream toppings, sweetened condensed milk, and health
and natural foods beverages in North America. Its family of brands includes
Smucker's®, Folgers®, Dunkin' Donuts®, Jif®, Crisco®, Pillsbury®, Eagle
Brand®, R.W. Knudsen Family®, Hungry Jack®, Café Bustelo®, Café Pilon®, White
Lily® and Martha White® in the United States, along with Robin Hood®, Five
Roses®, Carnation® and Bick's® in Canada. The Company remains rooted in the
Basic Beliefs of Quality, People, Ethics, Growth and Independence established
by its founder and namesake more than a century ago. For more information
about the Company, visit www.smuckers.com.
The J. M. Smucker Company is the owner of all trademarks referenced herein,
except for the following, which are used under license: Pillsbury® is a
trademark of The Pillsbury Company, LLC; Carnation® is a trademark of Societe
des Produits Nestle S.A.; and Dunkin' Donuts® is a registered trademark of DD
IP Holder, LLC.
Dunkin' Donuts® brand is licensed to The J. M. Smucker Company for packaged
coffee products sold in retail channels such as grocery stores, mass
merchandisers, club stores, and drug stores. This information does not
pertain to Dunkin' Donuts® coffee or other products for sale in Dunkin'
Donuts® restaurants. K-Cup® and K-Cups® are trademarks of Keurig,
Incorporated.
The J. M. Smucker Company Forward-Looking Statements
This press release contains forward-looking statements, such as projected
operating results, earnings, and cash flows, that are subject to known and
unknown risks and uncertainties that could cause actual results to differ
materially from any future results, performance, or achievements expressed or
implied by those forward-looking statements. Readers should understand that
the risks, uncertainties, factors, and assumptions listed and discussed in
this press release, including the following important factors and assumptions,
could affect the future results of the Company and could cause actual results
to differ materially from those expressed in the forward-looking statements:
o volatility of commodity markets from which raw materials, particularly
green coffee beans, wheat, soybean oil, milk, peanuts, and sugar, are
procured and the related impact on costs;
o risks associated with derivative and purchasing strategies employed by the
Company to manage commodity pricing risks, including the risk that such
strategies could result in significant losses and adversely impact the
Company's liquidity;
o crude oil price trends and their impact on transportation, energy, and
packaging costs;
o the ability to successfully implement and realize the full benefit of
price changes that are intended to fully recover cost and the competitive,
retailer, and consumer response;
o the success and cost of introducing new products and the competitive
response;
o the success and cost of marketing and sales programs and strategies
intended to promote growth in the Company's businesses;
o general competitive activity in the market, including competitors' pricing
practices and promotional spending levels;
o the ability of the Company to successfully integrate acquired and merged
businesses in a timely and cost effective manner;
o the successful completion of the Company's restructuring programs and the
ability to realize anticipated savings and other potential benefits within
the time frames currently contemplated;
o the impact of food security concerns involving either the Company's or its
competitors' products;
o the impact of accidents and natural disasters, including crop failures and
storm damage;
o the concentration of certain of the Company's businesses with key
customers and suppliers, including single-source suppliers of certain raw
materials, such as packaging for its most popular Folgers® coffee
products, and finished goods, such as K-Cups®, and the ability to manage
and maintain key relationships;
o the loss of significant customers, a substantial reduction in orders from
these customers, or the bankruptcy of any such customer;
o changes in consumer coffee preferences and other factors affecting the
coffee business, which represents a substantial portion of the Company's
business;
o a change in outlook or downgrade in the Company's public credit ratings by
a rating agency;
o the ability of the Company to obtain any required financing;
o the timing and amount of capital expenditures, share repurchases, and
restructuring costs;
o impairments in the carrying value of goodwill, other intangible assets, or
other long-lived assets or changes in useful lives of other intangible
assets;
o the impact of new or changes to existing governmental laws and regulations
and their application;
o the impact of future legal, regulatory, or market measures regarding
climate change;
o the outcome of current and future tax examinations, changes in tax laws,
and other tax matters, and their related impact on the Company's tax
positions;
o foreign currency and interest rate fluctuations;
o political or economic disruption;
o other factors affecting share prices and capital markets generally; and
o risks related to other factors described under "Risk Factors" in other
reports and statements filed by the Company with the Securities and
Exchange Commission, including its most recent Annual Report on Form 10-K.
Readers are cautioned not to unduly rely on such forward-looking statements,
which speak only as of the date made, when evaluating the information
presented in this press release. The Company does not undertake any
obligation to update or revise these forward-looking statements to reflect new
events or circumstances.
The J. M. Smucker Company
Unaudited Condensed Consolidated Statements of Income
Three Months Ended October 31, Six Months Ended October 31,
2012 2011 % Increase 2012 2011 % Increase
(Decrease) (Decrease)
(Dollars in thousands, except per share data)
Net sales $ $ 8% $ $ 11%
1,628,746 1,513,905 2,998,449 2,702,788
Cost of products 1,084,377 1,002,517 8% 1,980,343 1,749,890 13%
sold
Cost of products
sold -
restructuring 2,458 12,719 (81%) 6,422 23,145 (72%)
and merger and
integration
Gross Profit 541,911 498,669 9% 1,011,684 929,753 9%
Gross margin 33.3% 32.9% 33.7% 34.4%
Selling,
distribution,
and 257,187 236,602 9% 489,403 453,154 8%
administrative
expenses
Amortization 24,203 20,559 18% 48,394 40,794 19%
Other
restructuring 8,230 10,356 (21%) 19,140 20,253 (5%)
costs
Other merger and
integration 3,243 6,871 (53%) 9,512 11,556 (18%)
costs
Other special - - n/m 6,669 - n/m
project costs
Loss on - 11,287 (100%) - 11,287 (100%)
divestiture
Other operating 1,506 1,380 9% 499 392 27%
expense - net
Operating Income 247,542 211,614 17% 438,067 392,317 12%
Operating 15.2% 14.0% 14.6% 14.5%
margin
Interest income 378 324 17% 656 626 5%
Interest expense (24,266) (19,448) 25% (48,148) (34,870) 38%
Other income - 564 711 (21%) 908 1,954 (54%)
net
Income Before 224,218 193,201 16% 391,483 360,027 9%
Income Taxes
Income taxes 75,371 65,954 14% 131,773 121,257 9%
Net Income $ $ 17% $ $ 9%
148,847 127,247 259,710 238,770
Net income $ $ $ $
per common 1.36 1.12 21% 2.37 2.09 13%
share
Net income
per common $ $ $ $
share - 1.36 1.12 21% 2.36 2.09 13%
assuming
dilution
Dividends $ $ $ $
declared per 0.52 0.48 8% 1.04 0.96 8%
common share
Weighted-average
shares 109,224,855 113,893,035 (4%) 109,796,564 114,085,291 (4%)
outstanding
Weighted-average
shares
outstanding – 109,251,455 113,944,705 (4%) 109,824,632 114,139,945 (4%)
assuming
dilution
The J. M. Smucker Company
Unaudited Condensed Consolidated Balance Sheets
October 31, 2012 April 30, 2012 October 31, 2011
(Dollars in thousands)
Assets
Current Assets:
Cash and cash equivalents $ $ $
203,555 229,708 496,288
Trade receivables 469,367 347,518 462,169
Inventories 975,427 961,576 1,143,951
Other current assets 87,713 104,663 91,299
Total Current Assets 1,736,062 1,643,465 2,193,707
Property, Plant, and 1,113,446 1,096,089 948,225
Equipment - Net
Other Noncurrent Assets:
Goodwill 3,053,549 3,054,618 2,897,981
Other intangible assets - 3,138,056 3,187,007 3,099,067
net
Other noncurrent assets 147,640 134,047 76,440
Total Other Noncurrent 6,339,245 6,375,672 6,073,488
Assets
$ $ $
9,188,753 9,115,226 9,215,420
Liabilities and
Shareholders' Equity
Current Liabilities:
Accounts payable $ $ $
290,054 274,725 260,653
Current portion of 50,000 50,000 -
long-term debt
Other current liabilities 366,011 292,247 284,268
Total Current 706,065 616,972 544,921
Liabilities
Noncurrent Liabilities:
Long-term debt 2,019,196 2,020,543 2,071,852
Other noncurrent 1,310,745 1,314,325 1,235,298
liabilities
Total Noncurrent 3,329,941 3,334,868 3,307,150
Liabilities
Shareholders' Equity 5,152,747 5,163,386 5,363,349
$ $ $
9,188,753 9,115,226 9,215,420
The J. M. Smucker Company
Unaudited Condensed Consolidated Statements of Cash Flow
Three Months Ended Six Months Ended October
October 31, 31,
2012 2011 2012 2011
(Dollars in thousands)
Operating Activities
Net income $ $ $ $
148,847 127,247 259,710 238,770
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation 35,920 28,227 71,974 55,796
Depreciation -
restructuring and merger 2,254 12,712 5,844 23,127
and integration
Amortization 24,203 20,559 48,394 40,794
Share-based compensation 6,196 6,522 10,505 12,554
expense
Other noncash (255) 860 (249) 1,769
restructuring activities
Loss on sale of assets - 1,684 2,001 2,698 2,726
net
Loss on divestiture - 11,287 - 11,287
Changes in assets and
liabilities, net of effect
from
businesses acquired:
Trade receivables (78,301) (113,874) (122,291) (106,362)
Inventories 44,096 58,241 (14,594) (272,613)
Accounts payable and 37,731 15,753 98,851 71,133
accrued items
Proceeds from
settlement of interest - 17,718 - 17,718
rate swaps - net
Defined benefit pension (6,536) (805) (7,569) (4,496)
contributions
Accrued and prepaid (58,229) (74,275) (13,423) (33,069)
taxes
Other - net 25,289 5,999 19,768 800
Net Cash Provided by Operating 182,899 118,172 359,618 59,934
Activities
Investing Activities
Business acquired, net of cash - - - (362,846)
acquired
Additions to property, plant, (52,176) (68,075) (98,458) (135,707)
and equipment
Proceeds from divestiture - 9,268 - 9,268
Sales and maturities of - - - 18,600
marketable securities
Proceeds from disposal of 322 773 578 903
property, plant, and equipment
Other - net (11,861) (2,232) 5,852 (2,250)
Net Cash Used for Investing (63,715) (60,266) (92,028) (472,032)
Activities
Financing Activities
Revolving credit agreement - - (306,700) - -
net
Proceeds from long-term debt - - 748,560 - 748,560
net
Quarterly dividends paid (57,331) (54,666) (110,176) (104,825)
Purchase of treasury shares (171,062) (39,207) (175,302) (44,592)
Proceeds from stock option 575 276 760 518
exercises
Other - net 144 (7,635) (7,564) (5,101)
Net Cash (Used for) Provided by (227,674) 340,628 (292,282) 594,560
Financing Activities
Effect of exchange rate changes 571 (4,721) (1,461) (6,019)
on cash
Net (decrease) increase in cash (107,919) 393,813 (26,153) 176,443
and cash equivalents
Cash and cash equivalents at 311,474 102,475 229,708 319,845
beginning of period
Cash and Cash Equivalents at $ $ $ $
End of Period 203,555 496,288 203,555 496,288
The J. M. Smucker Company
Unaudited Non-GAAP Measures
Three Months Ended Six Months Ended October
October 31, 31,
2012 2011 2012 2011
(Dollars in thousands, except per share data)
Gross profit excluding $ $ $ $
special project costs ^(1) 544,369 511,388 1,018,106 952,898
% of net sales 33.4% 33.8% 34.0% 35.3%
Operating income excluding $ $ $ $
special project costs ^(2) 261,473 241,560 479,810 447,271
% of net sales 16.1% 16.0% 16.0% 16.5%
Net income excluding special
project costs: ^(3)
Income $ $ $ $
158,105 146,976 287,402 275,216
Income per common share $ $ $ $
-- assuming dilution 1.45 1.29 2.62 2.41
^(1) Reconciliation to gross
profit:
Gross profit $ $ $ $
541,911 498,669 1,011,684 929,753
Cost of products sold -
restructuring and merger 2,458 12,719 6,422 23,145
and integration
Gross profit excluding $ $ $ $
special project costs 544,369 511,388 1,018,106 952,898
^(2) Reconciliation to
operating income:
Operating income $ $ $ $
247,542 211,614 438,067 392,317
Cost of products sold -
restructuring and merger 2,458 12,719 6,422 23,145
and integration
Other restructuring 8,230 10,356 19,140 20,253
costs
Other merger and 3,243 6,871 9,512 11,556
integration costs
Other special project - - 6,669 -
costs
Operating income $ $ $ $
excluding special 261,473 241,560 479,810 447,271
project costs
^(3) Reconciliation to net
income:
Net income $ $ $ $
148,847 127,247 259,710 238,770
Income taxes 75,371 65,954 131,773 121,257
Cost of products sold -
restructuring and merger 2,458 12,719 6,422 23,145
and integration
Other restructuring 8,230 10,356 19,140 20,253
costs
Other merger and 3,243 6,871 9,512 11,556
integration costs
Other special project - - 6,669 -
costs
Income before income $ $ $ $
taxes, excluding special 238,149 223,147 433,226 414,981
project costs
Income taxes, as 80,044 76,171 145,824 139,765
adjusted
Net income excluding $ $ $ $
special project costs 158,105 146,976 287,402 275,216
The J. M. Smucker Company
Unaudited Non-GAAP Measures
Three Months Ended Six Months Ended October
October 31, 31,
2012 2011 2012 2011
(Dollars in thousands, except per share data)
Earnings before interest, $ $ $ $
taxes, depreciation, and 310,483 273,823 565,187 513,988
amortization^(4)
% of net sales 19.1% 18.1% 18.8% 19.0%
Free cash flow ^(5) $ $ $ $
130,723 50,097 261,160 (75,773)
^(4) Reconciliation to
net income:
Net income $ $ $ $
148,847 127,247 259,710 238,770
Income taxes 75,371 65,954 131,773 121,257
Interest income (378) (324) (656) (626)
Interest expense 24,266 19,448 48,148 34,870
Depreciation 35,920 28,227 71,974 55,796
Depreciation -
restructuring and 2,254 12,712 5,844 23,127
merger and
integration
Amortization 24,203 20,559 48,394 40,794
Earnings before
interest, taxes, $ $ $ $
depreciation, and 310,483 273,823 565,187 513,988
amortization
Reconciliation to
^(5) cash provided by
operating
activities:
Cash provided by $ $ $ $
operating 182,899 118,172 359,618 59,934
activities
Additions to
property, plant, (52,176) (68,075) (98,458) (135,707)
and equipment
Free cash flow $ $ $ $
130,723 50,097 261,160 (75,773)
The Company uses non-GAAP measures including net sales adjusted for the
noncomparable impact of acquisition, divestiture, and foreign exchange rate;
gross profit, operating income, net income, and net income per diluted share,
excluding special project costs; earnings before interest, taxes,
depreciation, and amortization ("EBITDA"); and free cash flow as key measures
for purposes of evaluating performance internally. These non-GAAP measures are
not intended to replace the presentation of financial results in accordance
with U.S. GAAP. Rather, the presentation of these non-GAAP measures supplement
other metrics used by management to internally evaluate its businesses, and
facilitates the comparison of past and present operations. These non-GAAP
measures may not be comparable to similar measures used by other companies and
may exclude certain nondiscretionary expenses and cash payments.
The J. M. Smucker Company
Unaudited Reportable Segments
Three Months Ended October Six Months Ended October
31, 31,
2012 2011 2012 2011
(Dollars in thousands)
Net sales:
U.S. Retail Coffee $ $ $ $
622,470 617,523 1,143,263 1,117,632
U.S. Retail Consumer 619,308 615,192 1,147,752 1,074,692
Foods
International,
Foodservice, and Natural 386,968 281,190 707,434 510,464
Foods
Total net sales $ $ $ $
1,628,746 1,513,905 2,998,449 2,702,788
Segment profit:
U.S. Retail Coffee $ $ $ $
158,211 139,958 284,599 279,669
U.S. Retail Consumer 111,126 115,955 218,961 194,974
Foods
International,
Foodservice, and Natural 58,180 38,991 98,866 77,536
Foods
Total segment profit $ $ $ $
327,517 294,904 602,426 552,179
Interest income 378 324 656 626
Interest expense (24,266) (19,448) (48,148) (34,870)
Share-based compensation (6,009) (5,593) (10,125) (10,744)
expense
Cost of products sold -
restructuring and merger (2,458) (12,719) (6,422) (23,145)
and integration
Other restructuring (8,230) (10,356) (19,140) (20,253)
costs
Other merger and (3,243) (6,871) (9,512) (11,556)
integration costs
Other special project - - (6,669) -
costs
Corporate administrative (60,035) (47,751) (112,491) (94,164)
expenses
Other income - net 564 711 908 1,954
Income before income $ $ $ $
taxes 224,218 193,201 391,483 360,027
Segment profit margin:
U.S. Retail Coffee 25.4% 22.7% 24.9% 25.0%
U.S. Retail Consumer 17.9% 18.8% 19.1% 18.1%
Foods
International,
Foodservice, and Natural 15.0% 13.9% 14.0% 15.2%
Foods
(Logo: http://photos.prnewswire.com/prnh/20071219/SMUCKERLOGO )
SOURCE The J. M. Smucker Company
Website: http://www.smuckers.com
Contact: Investors, Sonal Robinson, Vice President, Investor Relations or
Media, Maribeth Badertscher, Vice President, Corporate Communications, both of
The J. M. Smucker Company, +1-330-682-3000
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