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The J. M. Smucker Company Announces Fiscal 2014 Third Quarter Results



    The J. M. Smucker Company Announces Fiscal 2014 Third Quarter Results

- Q3 EPS up 12 percent; Q3 EPS up 13 percent excluding special project costs

- Q3 net sales decrease 6 percent reflecting price declines

- Company updates full year 2014 guidance

PR Newswire

ORRVILLE, Ohio, Feb. 14, 2014

ORRVILLE, Ohio, Feb. 14, 2014 /PRNewswire/ -- The J. M. Smucker Company (NYSE:
SJM) today announced results for the third quarter ended January 31, 2014, of
its 2014 fiscal year.  Results for the quarter and nine months ended January
31, 2014, include the operations of Enray Inc. ("Enray") since the completion
of the acquisition on August 20, 2013, and the impact of the Company's
licensing and distribution agreement with Cumberland Packing Corp.
("Cumberland"), which commenced on July 1, 2013.

Executive Summary

                Three Months Ended January 31,  Nine Months Ended January 31,
                2014      2013      % Increase  2014      2013      % Increase
                                    (Decrease)                      (Decrease)
                (Dollars in millions, except per share data)
Net sales       $         $         (6%)        $         $         (4%)
                 1,465.5   1,559.6               4,376.3   4,558.0
Operating       $         $         2%          $         $         4%
income          263.5     258.3                 727.6     696.4
  % of net      18.0%     16.6%                 16.6%     15.3%
  sales
Net income:
  Net income    $         $         8%          $         $         8%
                166.7     154.2                 446.7     413.9
  Net income
  per common    $         $                     $         $      
  share -       1.59      1.42      12%         4.24      3.78      12%
  assuming
  dilution
Operating
income          $         $                     $         $    
excluding       273.5     266.3     3%          754.1     746.2     1%
special project
costs 
  % of net      18.7%     17.1%                 17.2%     16.4%
  sales
Income
excluding
special project
costs:
  Income        $         $         9%          $         $         4%
                173.5     159.3                 464.5     446.8
  Income per
  common share  $         $         13%         $         $         8%
  - assuming    1.66      1.47                  4.41      4.08
  dilution

 

  o Third quarter net sales decreased 6 percent in 2014, compared to 2013,
    reflecting pricing actions taken since the beginning of the third quarter
    of 2013 and the impact of the planned exit of certain portions of the
    Company's business in its International, Foodservice, and Natural Foods
    segment.  The impacts of volume, excluding the planned exits, and mix
    changes were not significant to net sales in the third quarter of 2014. 
  o Operating income excluding the impact of restructuring, merger and
    integration, and certain pension settlement costs ("special project
    costs") increased 3 percent in the third quarter of 2014, compared to
    2013, reflecting gains in gross profit and lower corporate administrative
    expenses. 
  o Income excluding special project costs increased 9 percent in the third
    quarter of 2014, compared to 2013, reflecting the increase in operating
    income and further impacted by lower interest expense. 
  o Third quarter income per diluted share, excluding special project costs,
    increased 13 percent in 2014, compared to 2013, benefiting from the
    Company's share repurchase activities over the past year.

"We achieved record third quarter earnings per share and made good progress
against our strategic plan," commented Richard Smucker, Chief Executive
Officer.  "We continue to navigate through a challenging operating
environment.  This journey is supported by our leading market position with
strong and healthy brands.  Our innovation pipeline is extensive and our new
products are winning with customers.  We continue to optimize our supply chain
which, over time, improves our cost structure, margins, and cash flow, and
positions us for future growth." 

"Our overall retail business was solid for the quarter led by volume growth in
U.S. retail coffee, our largest business segment," stated Vince Byrd,
President and Chief Operating Officer.  "We also drove growth in a number of
our core categories as a result of the increased level of quality
merchandising achieved during the holiday season.  We underperformed in our
foodservice and spreads businesses, but view these as near-term issues.  While
the fourth quarter will be a difficult financial comparison, we are optimistic
about our prospect for growth as we head into the new fiscal year."

Net Sales

              Three Months Ended January 31,       Nine Months Ended January 31,
              2014     2013      Increase    %     2014     2013      Increase    %
                                 (Decrease)                           (Decrease)
              (Dollars in millions)
Net sales     $        $         $           (6%)  $        $         $           (4%)
              1,465.5   1,559.6      (94.1)        4,376.3   4,558.0  (181.7)
Adjust for
certain
noncomparable
items:
 Enray        (14.7)   -         (14.7)      (1%)  (26.0)   -         (26.0)      (1%)
 acquisition
 Cumberland
 distribution (9.0)    -         (9.0)       (1%)  (21.6)   -         (21.6)      0%
 agreement
 Foreign      8.3      -         8.3         1%    15.9     -         15.9        0%
 exchange
Net sales
adjusted for
certain       $        $         $           (7%)  $        $         $           (5%)
noncomparable 1,450.1   1,559.6    (109.5)         4,344.6   4,558.0  (213.4)

items
Amounts may
not add due
to rounding.

Net sales decreased 6 percent in the third quarter of 2014, compared to the
third quarter of 2013, primarily due to the impact of a 6 percent reduction in
net price realization reflecting price declines taken since the beginning of
the third quarter of 2013, notably on coffee and peanut butter.  A combined
$23.7 million from the acquired Enray business and the Cumberland distribution
agreement contributed positively to net sales in the third quarter of 2014. 
The unfavorable impacts of mix and foreign exchange each reduced net sales by
1 percent in the third quarter of 2014, compared to the third quarter of 2013.

Volume gains realized in Crisco^® oils, Folgers^® coffee, and the Robin Hood^®
brand were offset by declines in Pillsbury^® baking mixes and flour, and the
impact of the previously announced business exits in the International,
Foodservice, and Natural Foods segment.

Margins

                                 Three Months Ended  Nine Months Ended January
                                 January 31,         31,
                                 2014       2013     2014            2013
                                 (% of net sales)
Gross profit                     37.2%      34.4%    36.3%           34.0%
Selling, distribution, and
administrative expenses:
    Marketing                    5.4%       4.8%     5.5%            5.1%
    Selling                      3.5%       3.3%     3.5%            3.3%
    Distribution                 2.7%       2.6%     2.8%            2.6%
    General and administrative   5.5%       5.4%     5.8%            5.3%
Total selling, distribution, and 17.1%      16.1%    17.6%           16.2%
administrative expenses
Amortization                     1.7%       1.6%     1.7%            1.6%
Other restructuring, merger and
integration, and special         0.5%       0.4%     0.5%            0.9%
projects costs
Other operating income - net     (0.0%)     (0.3%)   (0.0%)          (0.1%)
Operating income                 18.0%      16.6%    16.6%           15.3%
Amounts may not add due to
rounding.

Gross profit increased $9.0 million, or 2 percent, in the third quarter of
2014, compared to 2013, due to lower commodity costs.  Excluding special
project costs as previously defined, gross profit increased $10.7 million, or
2 percent, during the same period.  Unrealized mark-to-market adjustments on
derivative contracts contributed $4.5 million to the increase in gross profit
as the impact was a gain of $4.0 million in the third quarter of 2014,
compared to a loss of $0.5 million in the third quarter of 2013.

Commodity costs were a net benefit to gross profit as lower costs, primarily
for green coffee, peanuts, and oils, were not entirely offset by lower net
price realization across the portfolio.  The additions of Enray and Cumberland
also contributed to gross profit in the third quarter of 2014, but were more
than offset by the impact of the exited businesses in the International,
Foodservice, and Natural Foods segment. Gross profit was reduced by an
unplanned adjustment which impacted net sales by approximately $10 million,
primarily related to the Company's foodservice hot beverage business trade
spending accrual.

Selling, distribution, and administrative expenses were flat in the third
quarter of 2014, compared to the third quarter of 2013, and increased as a
percentage of net sales from 16.1 percent to 17.1 percent.  Marketing expenses
increased 5 percent in the third quarter of 2014, compared to 2013.  General
and administrative and distribution expenses decreased 4 percent and 2
percent, respectively, in the third quarter of 2014, compared to 2013, while
selling expenses increased 1 percent.

Operating income increased $5.2 million in the third quarter of 2014, compared
to 2013.  Excluding special project costs in both periods, operating income
increased $7.2 million, and increased from 17.1 percent of net sales in the
third quarter of 2013 to 18.7 percent in the third quarter of 2014. 

Interest Expense and Income Taxes
Net interest expense decreased $5.4 million reflecting the impact of an
interest rate swap the Company entered into earlier in the fiscal year,
converting a portion of its debt from fixed-rate to variable-rate.

Income taxes were flat in the third quarter of 2014, compared to 2013, as an
increase in income before income taxes was offset by a lower effective tax
rate.  The effective tax rate decreased from 34.1 percent in the third quarter
of 2013 to 32.3 percent in 2014. 

Segment Performance

                     Three Months Ended January  Nine Months Ended January 31,
                     31,
                     2014    2013    % Increase  2014      2013     % Increase
                                     (Decrease)                     (Decrease)
                     (Dollars in millions)
Net sales:
 U.S. Retail Coffee  $       $       (8%)        $         $        (5%)
                     578.9   627.7               1,688.2   1,771.0
 U.S. Retail         $       $       (4%)        $         $        (1%)
 Consumer Foods      557.8   581.3               1,706.8   1,729.0
 International,      $       $                   $         $
 Foodservice, and    328.8   350.6   (6%)        981.3     1,058.0  (7%)
 Natural Foods 
Segment profit:
 U.S. Retail Coffee  $       $       4%          $         $        11%
                     182.3   175.2               508.9     459.8
 U.S. Retail         $       $       (1%)        $         $        (7%)
 Consumer Foods      105.6   106.2               301.2     325.1
 International,      $       $                   $         $    
 Foodservice, and      44.8    49.8  (10%)       135.6     148.7    (9%)
 Natural Foods
Segment profit
margin:
 U.S. Retail Coffee  31.5%   27.9%               30.1%     26.0%
 U.S. Retail         18.9%   18.3%               17.6%     18.8%
 Consumer Foods
 International,
 Foodservice, and    13.6%   14.2%               13.8%     14.1%
 Natural Foods

 

U.S. Retail Coffee
The U.S. Retail Coffee segment volume increased 2 percent in the third quarter
of 2014, compared to the third quarter of 2013, led by increases of 4 percent
in the Folgers^® brand and 8 percent in Dunkin' Donuts^® packaged coffee. 
Lower price realization and mix caused segment net sales to decrease 8 percent
in the third quarter of 2014, compared to the third quarter of 2013.  Pricing
actions taken to reflect the pass through of lower commodity costs included
both a price decline of approximately 6 percent taken in February 2013 and
incremental promotional spending during the recent holiday season.  Net sales
of K-Cup^® packs decreased 3 percent while volume increased 2 percent compared
to last year's third quarter.  Net sales of Folgers^® Gourmet Selections^®
K-Cup^® packs increased 4 percent in the third quarter of 2014, compared to
the third quarter of 2013, offset by a decrease in the Millstone^® branded
offerings.

The U.S. Retail Coffee segment profit increased 4 percent in the third quarter
of 2014, compared to record profits in the third quarter of 2013, as increased
volume, the net benefit of lower green coffee costs relative to price
realization, and decreased marketing expenses and manufacturing overhead were
only partially offset by unfavorable mix.  Unrealized mark-to-market
adjustments on derivative contracts were a gain of $1.2 million in the third
quarter of 2014, compared to a gain of $0.3 million in the third quarter of
2013. 

U.S. Retail Consumer Foods
The U.S. Retail Consumer Foods segment volume for the third quarter of 2014
was flat, compared to the third quarter of 2013.  Segment net sales decreased
4 percent in the third quarter of 2014, compared to 2013, primarily reflecting
the impact of lower net price realization.  Smucker's^® fruit spreads and
Jif^® brand volume decreased 2 percent and 1 percent, respectively,  in the
third quarter of 2014, compared to 2013.  Pricing actions taken since the
beginning of the third quarter of 2013 caused net sales for both brands to
decrease 7 percent over the same period.  Net sales and volume of Smucker's^®
Uncrustables^® frozen sandwiches achieved another strong quarter, up 18
percent and 19 percent, respectively.

Segment results in the baking aisle were mixed.  Crisco^® brand volume
increased 12 percent, while net sales increased 2 percent impacted by lower
price realization in the third quarter of 2014, compared to 2013.  Net sales
and volume for the overall Pillsbury^® brand both decreased 9 percent.  Net
sales and volume gains were realized in Pillsbury^® frostings, but were more
than offset by declines in flour and baking mixes which were attributed to
deeper promotional pricing by competitors in these categories that the Company
chose not to match.  Canned milk net sales increased 5 percent and volume was
flat during the third quarter of 2014, compared to 2013. 

The U.S. Retail Consumer Foods segment profit decreased $0.6 million, or 1
percent, in the third quarter of 2014, compared to the third quarter of 2013,
due to increased manufacturing overhead, marketing expenses, and other segment
support costs.  Segment profit benefited from overall lower commodity costs,
primarily for peanuts, oils, and flour, which were not entirely offset by
lower price realization.  Unrealized mark-to-market adjustments on derivative
contracts were a gain of $0.6 million in the third quarter of 2014, compared
to a gain of $0.4 million in the third quarter of 2013. 

International, Foodservice, and Natural Foods
Net sales in the International, Foodservice, and Natural Foods segment
decreased 6 percent in the third quarter of 2014, compared to 2013.  Excluding
the impacts of Enray, Cumberland, and foreign exchange, segment net sales
decreased 11 percent.  The net sales decrease was driven by the exited
portions of the Company's hot beverage business and Smucker's^® Uncrustables^®
frozen sandwiches with foodservice customers, the previously discussed
unplanned trade spending accrual adjustment of approximately $10 million, and
unfavorable sales mix.  Segment volume decreased 2 percent, excluding the
impact of Enray and Cumberland, as increases in the Robin Hood^® and Five
Roses^® brands in Canada were more than offset by the impact of the exited
foodservice businesses.

Segment profit decreased $5.0 million, or 10 percent, in the third quarter of
2014, compared to 2013, due to the trade spending accrual adjustment, the lost
profit on the exited foodservice businesses, and an increase in marketing
expenses.  Foreign exchange also negatively impacted segment profit.  Overall
commodity costs were lower in the third quarter of 2014, compared to 2013.
 The additions of Enray and Cumberland were not significant to segment profit
in the third quarter of 2014.  Unrealized mark-to-market adjustments on
derivative contracts were a gain of $2.2 million in the third quarter of 2014,
compared to a loss of $0.5 million in the third quarter of 2013. 

Other Financial Results and Measures

                 Three Months Ended January 31,  Nine Months Ended January 31,
                 2014      2013    %  Increase   2014      2013    %  Increase
                                   (Decrease)                      (Decrease)
                 (Dollars in millions)
Net cash
provided by      $         $       30%           $         $       (14%)
operating        421.1     324.0                 589.1     683.6
activities
Free cash flow   $         $       29%           $         $       (18%)
                 355.6     276.0                 440.2     537.1
EBITDA           $         $       3%            $         $       4%
                 329.9     319.2                 920.0     884.4
    % of net     22.5%     20.5%                 21.0%     19.4%
    sales

 

Cash provided by operating activities and free cash flow were $421.1 million
and $355.6 million in the third quarter of 2014, an increase of $97.1 million
and $79.6 million, compared to 2013, respectively.  The increase in both
measures was primarily due to a lower amount of cash required to fund working
capital, mostly due to a decrease in inventory levels and commodity costs.  

During the quarter ended January 31, 2014, the Company repurchased
approximately 0.6 million common shares for $61.4 million utilizing cash on
hand. 

Outlook
The Company reduced its net sales projection for fiscal 2014 to reflect a 5
percent decrease from 2013.  The Company also lowered its non-GAAP income per
diluted share estimate to a range of $5.55 to $5.60, excluding special project
costs of approximately $0.20 per diluted share.  The previous estimate was a
range of $5.72 to $5.82.  The updated guidance reflects the Company's third
quarter results including the unplanned trade spending accrual adjustment,
lower volume expectations for the fourth quarter, a more competitive pricing
environment in key categories, and foreign exchange headwinds.

"While we expect our fourth quarter earnings to be down compared to a strong
quarter last year, we want to reiterate that our business fundamentals remain
sound and our prospects for ongoing earnings growth continue," commented
Richard Smucker. "Our confidence is supported by aggressive innovation plans,
a more stable cost environment, and strategic deployment of our strong cash
flows.  We are well positioned for future growth."

Conference Call
The Company will conduct an earnings conference call and webcast today,
Friday, February 14, 2014, at 8:00 a.m. E.T.  The webcast can be accessed from
the Company's new website at www.jmsmucker.com/investor-relations.  For those
unable to listen to the live webcast, the webcast replay will be available at
www.jmsmucker.com/investor-relations following the call.  An audio replay will
also be available following the call until Friday, February 21, 2014, and can
be accessed by dialing 888-203-1112 or 719-457-0820, with an access code of
8975321.

Non-GAAP Measures
The Company uses non-GAAP financial measures including: net sales adjusted for
the noncomparable impact of the Enray acquisition, the Cumberland distribution
agreement, and foreign exchange rate; gross profit, operating income, income,
and 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.  The
Company believes that these measures provide useful information to investors
because they are the measures used to evaluate performance on a comparable
year-over-year basis.  The special project costs relate to specific
restructuring, merger and integration, and pension settlement projects that
are each nonrecurring in nature and can significantly affect the
year-over-year assessment of operating results.  These non-GAAP financial
measures are not intended to replace the presentation of financial results in
accordance with U.S. GAAP.  Rather, the presentation of these non-GAAP
financial measures supplements other metrics used by management to internally
evaluate its businesses, and facilitates the comparison of past and present
operations and liquidity.  These non-GAAP financial 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 financial measures to the comparable GAAP financial measure for the
current and prior year periods is included in the "Unaudited Non-GAAP
Financial Measures" tables. 

About The J. M. Smucker Company
For more than 115 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 natural
foods products in North America.  Its family of brands includes Smucker's^®,
Folgers^®, Dunkin' Donuts^®, Jif^®, Crisco^®, Pillsbury^®, Eagle Brand^®, R.W.
Knudsen Family^®, Hungry Jack^®, Cafe Bustelo^®, Cafe Pilon^®, truRoots^®,
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.jmsmucker.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^® is a trademark of Keurig, Incorporated, used
with permission.

The J. M. Smucker Company Forward-Looking Statements
This press release contains forward-looking statements, such as projected net
sales, 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, peanuts, soybean oil, wheat, milk, corn, 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 ultimately fully recover cost including
    the competitive, retailer, and consumer response, and the impact of the
    timing of the price changes to profits and cash flow in a particular
    period;
  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, extreme weather, 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 Folgers^® coffee products, and
    finished goods, such as K-Cup^® packs, 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 on a timely
    basis and on acceptable terms;
  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 January 31,        Nine Months Ended January 31,
                 2014         2013         % Increase  2014         2013         % Increase
                                           (Decrease)                            (Decrease)
                 (Dollars in millions, except per share data)
Net sales        $            $            -6%         $            $            -4%
                  1,465.5      1,559.6                  4,376.3      4,558.0
Cost of products 917.4        1,022.2      -10%        2,778.9      3,002.5      -7%
sold
Cost of products
sold -
restructuring    2.9          1.2          152%        6.7          7.6          -12%
and merger and
integration
Gross Profit     545.2        536.2        2%          1,590.7      1,547.9      3%
   Gross margin  37.2%        34.4%                    36.3%        34.0%
Selling,
distribution,
and              250.3        251.0        0%          770.8        740.4        4%
administrative
expenses
Amortization     24.9         24.2         3%          74.1         72.6         2%
Other
restructuring
and merger and   7.1          6.8          4%          19.8         35.5         -44%
integration
costs
Other special    -            -            n/m         -            6.7          -100%
project costs
Other operating  (0.6)        (4.1)        -86%        (1.6)        (3.7)        -58%
income - net
Operating Income 263.5        258.3        2%          727.6        696.4        4%
   Operating     18.0%        16.6%                    16.6%        15.3%
   margin
Interest expense (18.4)       (23.8)       -23%        (62.7)       (71.3)       -12%
- net
Other income     1.4          (0.5)        n/m         1.1          0.4          203%
(expense) - net
Income Before    246.5        234.0        5%          666.0        625.5        6%
Income Taxes
Income taxes     79.8         79.8         -           219.3        211.6        4%
Net Income       $            $            8%          $            $            8%
                 166.7        154.2                    446.7        413.9
   Net income    $            $                        $            $          
   per common       1.59         1.42      12%            4.24         3.78      12%
   share
   Net income
   per common    $            $                        $            $          
   share -          1.59         1.42      12%            4.24         3.78      12%
   assuming
   dilution
Dividends        $            $                        $            $          
declared per        0.58         0.52      12%            1.74         1.56      12%
common share
Weighted-average
shares           104,791,746  108,472,267  -3%         105,293,445  109,355,131  -4%
outstanding
Weighted-average
shares
outstanding –    104,805,369  108,491,922  -3%         105,308,655  109,380,394  -4%
assuming
dilution

 

The J. M. Smucker Company
Unaudited Condensed Consolidated Balance Sheets

                                January 31,      April 30, 2013  January 31,
                                2014                             2013
                                (Dollars in millions)
Assets
Current Assets:
 Cash and cash equivalents      $                $               $            
                                  168.6              256.4           438.8
 Trade receivables, less
 allowance for doubtful         365.2            313.7           360.2
 accounts
 Inventories                    864.8            945.5           878.2
 Other current assets           109.5            79.6            68.8
     Total Current Assets       1,508.1          1,595.2         1,746.0
Property, Plant, and Equipment  1,185.3          1,142.5         1,121.6
- Net
Other Noncurrent Assets:
 Goodwill                       3,096.6          3,052.9         3,053.7
 Other intangible assets - net  3,048.5          3,089.4         3,114.0
 Other noncurrent assets        150.5            151.8           149.2
     Total Other Noncurrent     6,295.6          6,294.1         6,316.9
     Assets
Total Assets                    $                $               $            
                                 8,989.0          9,031.8         9,184.5
Liabilities and Shareholders'
Equity
Current Liabilities:
 Accounts payable               $                $               $            
                                  220.2              285.8           251.6
 Current portion of long-term   150.0            50.0            50.0
 debt
 Other current liabilities      238.1            261.0           291.9
     Total Current Liabilities  608.3            596.8           593.5
Noncurrent Liabilities:
 Long-term debt                 1,879.4          1,967.8         2,018.5
 Other noncurrent liabilities   1,296.5          1,318.4         1,312.3
     Total Noncurrent           3,175.9          3,286.2         3,330.8
     Liabilities
Shareholders' Equity            5,204.8          5,148.8         5,260.2
Total Liabilities and           $                $               $            
Shareholders' Equity             8,989.0          9,031.8         9,184.5

 

The J. M. Smucker Company
Unaudited Condensed Consolidated Statements of Cash Flow

                                  Three Months Ended      Nine Months Ended
                                  January 31,             January 31,
                                  2014         2013       2014       2013
                                  (Dollars in millions)
Operating Activities
 Net income                       $            $          $          $        
                                    166.7          154.2      446.7      413.9
 Adjustments to reconcile net
 income to net cash provided by
 operating activities:
    Depreciation                  37.9         35.8       112.9      107.8
    Depreciation - restructuring  2.2          1.4        4.3        7.2
    and merger and integration
    Amortization                  24.9         24.2       74.1       72.6
    Share-based compensation      5.7          5.3        18.0       15.8
    expense
    Loss on sale of assets - net  0.7          0.7        1.7        3.4
    Changes in assets and
    liabilities, net of effect
    from businesses acquired:
       Trade receivables          96.9         109.3      (50.4)     (13.0)
       Inventories                154.8        97.5       80.3       82.9
       Accounts payable and       (78.0)       (96.9)     (73.1)     2.0
       accrued items
       Defined benefit pension    (3.3)        (22.9)     (6.3)      (30.5)
       contributions
       Accrued and prepaid taxes  14.9         6.6        (18.1)     (6.8)
    Other - net                   (2.3)        8.8        (1.0)      28.3
Net Cash Provided by Operating    421.1        324.0      589.1      683.6
Activities
Investing Activities
 Businesses acquired, net of cash 0.2          -          (101.8)    -
 acquired
 Additions to property, plant,    (65.5)       (48.0)     (148.9)    (146.5)
 and equipment
 Proceeds from disposal of        0.4          2.5        1.8        3.1
 property, plant, and equipment
 Other - net                      0.6          11.3       (8.3)      17.2
Net Cash Used for Investing       (64.3)       (34.2)     (257.2)    (126.2)
Activities
Financing Activities
 Revolving credit facility - net  (207.0)      -          -          -
 Quarterly dividends paid         (61.0)       (56.3)     (177.4)    (166.5)
 Purchase of treasury shares      (61.5)       (0.2)      (227.0)    (175.5)
 Proceeds from stock option       0.1          1.1        0.4        1.9
 exercises
 Other - net                      0.1          0.5        (1.2)      (7.1)
Net Cash Used for Financing       (329.3)      (54.9)     (405.2)    (347.2)
Activities
Effect of exchange rate changes   (9.4)        0.3        (14.5)     (1.1)
on cash
Net increase (decrease) in cash   18.1         235.2      (87.8)     209.1
and cash equivalents
Cash and cash equivalents at      150.5        203.6      256.4      229.7
beginning of period
Cash and Cash Equivalents at End  $            $          $          $        
of Period                           168.6          438.8      168.6      438.8

 

The J. M. Smucker Company
Unaudited Non-GAAP Financial Measures

                      Three Months Ended January    Nine Months Ended January
                      31,                           31,
                      2014           2013           2014           2013
                      (Dollars in millions, except per share data)
Reconciliation to
gross profit:
    Gross profit      $              $              $              $        
                      545.2          536.2           1,590.7        1,547.9
    Cost of products
sold - restructuring  2.9            1.2            6.7            7.6
and merger and
integration
    Gross profit      $              $              $              $        
excluding special     548.1          537.4           1,597.4        1,555.5
project costs
        % of net      37.4%          34.5%          36.5%          34.1%
sales
Reconciliation to
operating income:
    Operating income  $              $              $              $          
                      263.5          258.3          727.6            696.4
    Cost of products
sold - restructuring  2.9            1.2            6.7            7.6
and merger and
integration
    Other
restructuring and     7.1            6.8            19.8           35.5
merger and
integration costs
    Other special     -              -              -              6.7
project costs
    Operating income  $              $              $              $          
excluding special     273.5          266.3          754.1            746.2
project costs 
         % of net     18.7%          17.1%          17.2%          16.4%
sales
Reconciliation to net
income:
    Net income        $              $              $              $          
                      166.7          154.2          446.7            413.9
    Income taxes      79.8           79.8           219.3          211.6
    Cost of products
sold - restructuring  2.9            1.2            6.7            7.6
and merger and
integration
    Other
restructuring and     7.1            6.8            19.8           35.5
merger and
integration costs
    Other special     -              -              -              6.7
project costs
    Income before
income taxes,         $              $              $              $          
excluding special     256.5          242.0          692.5            675.3
project costs
    Income taxes, as  83.0           82.7           228.0          228.5
adjusted
    Income excluding  $              $              $              $          
special project costs 173.5          159.3          464.5            446.8
Weighted-average
common shares         103,980,819    107,528,722    104,456,496    108,405,604
outstanding
Weighted-average
participating shares  810,927        943,545        836,949        949,527
outstanding
Total
weighted-average      104,791,746    108,472,267    105,293,445    109,355,131
shares outstanding
Dilutive effect of    13,623         19,655         15,210         25,263
stock options
Total
weighted-average      104,805,369    108,491,922    105,308,655    109,380,394
shares outstanding -
assuming dilution
Income per common
share excluding       $              $              $              $          
special project costs    1.66           1.47           4.41             4.08
- assuming dilution

 

The J. M. Smucker Company
Unaudited Non-GAAP Financial Measures

                     Three Months Ended January      Nine Months Ended January
                     31,                             31,
                     2014             2013           2014           2013
                     (Dollars in millions)
Reconciliation to
net income:
    Net income       $                $              $              $        
                       166.7            154.2          446.7            413.9
    Income taxes     79.8             79.8           219.3          211.6
    Interest expense 18.4             23.8           62.7           71.3
- net
    Depreciation     37.9             35.8           112.9          107.8
    Depreciation -
restructuring and    2.2              1.4            4.3            7.2
merger and
integration
    Amortization     24.9             24.2           74.1           72.6
    Earnings before
interest, taxes,     $                $              $              $        
depreciation, and      329.9            319.2          920.0            884.4
amortization
        % of net     22.5%            20.5%          21.0%          19.4%
sales
Reconciliation to
cash provided by
operating
activities:
    Net cash         $                $              $              $        
provided by            421.1            324.0          589.1            683.6
operating activities
    Additions to
property, plant, and (65.5)           (48.0)         (148.9)        (146.5)
equipment
Free cash flow       $                $              $              $        
                       355.6            276.0          440.2            537.1
 

 

The Company uses non-GAAP financial measures including: net sales adjusted for
the noncomparable impact of the Enray acquisition, the Cumberland distribution
agreement, and foreign exchange rate; gross profit, operating income, income,
and 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. The Company
believes that these measures provide useful information to investors because
they are the measures used to evaluate performance on a comparable
year-over-year basis. The special project costs relate to specific
restructuring, merger and integration, and pension settlement projects that
are each nonrecurring in nature and can significantly affect the
year-over-year assessment of operating results. These non-GAAP financial
measures are not intended to replace the presentation of financial results in
accordance with U.S. GAAP. Rather, the presentation of these non-GAAP
financial measures supplements other metrics used by management to internally
evaluate its businesses, and facilitates the comparison of past and present
operations and liquidity. These non-GAAP financial 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 January  Nine Months Ended
                          31,                         January 31,
                          2014           2013         2014         2013
                          (Dollars in millions)
Net sales:
 U.S. Retail Coffee       $              $            $            $        
                           578.9          627.7       1,688.2      1,771.0
 U.S. Retail Consumer     557.8          581.3        1,706.8      1,729.0
 Foods
 International,
 Foodservice, and Natural 328.8          350.6        981.3        1,058.0
 Foods
Total net sales           $              $            $            $        
                          1,465.5        1,559.6      4,376.3      4,558.0
Segment profit:
 U.S. Retail Coffee       $              $            $            $          
                           182.3          175.2        508.9        459.8
 U.S. Retail Consumer     105.6          106.2        301.2        325.1
 Foods
 International,
 Foodservice, and Natural 44.8           49.8         135.6        148.7
 Foods
Total segment profit      $              $            $            $          
                           332.7          331.2        945.7        933.6
 Interest expense - net   (18.4)         (23.8)       (62.7)       (71.3)
 Cost of products sold -
 restructuring and merger (2.9)          (1.2)        (6.7)        (7.6)
 and integration
 Other restructuring and
 merger and integration   (7.1)          (6.8)        (19.8)       (35.5)
 costs
 Other special project    -              -            -            (6.7)
 costs
 Corporate administrative (59.2)         (64.9)       (191.6)      (187.4)
 expenses
 Other income (expense)   1.4            (0.5)        1.1          0.4
 - net
Income before income      $              $            $            $          
taxes                      246.5          234.0        666.0        625.5
Segment profit margin:
 U.S. Retail Coffee       31.5%          27.9%        30.1%        26.0%
 U.S. Retail Consumer     18.9%          18.3%        17.6%        18.8%
 Foods
 International,
 Foodservice, and Natural 13.6%          14.2%        13.8%        14.1%
 Foods

 

(Logo:  http://photos.prnewswire.com/prnh/20071219/SMUCKERLOGO )

 

SOURCE The J. M. Smucker Company

Website: http://www.smuckers.com
Contact: The J. M. Smucker Company, (330) 682-3000, Investors: Sonal Robinson,
Vice President, Investor Relations, Media: Maribeth Burns, Vice President,
Corporate Communications
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