Business Context and Reporting Period
Company: The J. M. Smucker Company (Smucker's)
Filing Type: Form 10-K (Annual Report)
Reporting Period: Fiscal year ended April 30, 1998
Industry: Manufacturing and marketing of food products worldwide.
Operations: The Company operates in one industry, producing fruit spreads, dessert toppings, peanut butter, industrial fruit products, juices, and condiments. It is the U.S. market leader in fruit spreads, dessert toppings, and natural peanut butter. International sales represented approximately 12% of total consolidated sales for fiscal 1998.
Discontinued Operations: The Company sold its "Mrs. Smith's" frozen pie business on May 31, 1996, and continues to lease related assets to the buyer.
Key Financial Metrics
Note: Specific revenue, profit, cash flow, margin, debt, and liquidity figures are not provided in the text of this filing. These items are incorporated by reference from the 1998 Annual Report to Shareholders.
- Revenue, Profit, and Cash Flow: Not stated in the provided text.
- Margins: Not stated in the provided text.
- Debt and Liquidity: Not stated in the provided text. The filing notes that working capital requirements peak in late spring/summer, potentially requiring short-term borrowings.
- Valuation and Qualifying Accounts (in thousands):
- 1998 Ending Balance: Valuation allowance for deferred tax assets: $1,731; Allowance for doubtful accounts: $428.
- 1997 Ending Balance: Valuation allowance for deferred tax assets: $2,094; Allowance for doubtful accounts: $353.
Material Changes and Operational Highlights
- Divestiture: Completed the sale of the "Mrs. Smith's" frozen pie business in May 1996. The Company entered into operating lease agreements to lease property, plant, and equipment back to the buyer.
- Employee Count: Approximately 2,000 full-time employees worldwide as of April 30, 1998.
- Customer Concentration: No single domestic or foreign customer accounts for more than 10% of consolidated sales.
- Seasonality: Business is not highly seasonal, though working capital needs increase during late spring and summer for raw material procurement.
Guidance, Risks, and Management Commentary
Management Commentary: Detailed discussion of results of operations, liquidity, and capital resources is incorporated by reference from the 1998 Annual Report to Shareholders (pages 7-9).
Risks and Contingencies:
- Competition: Highly competitive environment involving product quality, price, advertising, and promotion. Competition includes private label products and alternative store formats (warehouse clubs).
- Raw Materials: Dependence on seasonal crops (strawberries, peanuts, etc.) requires maintaining frozen stocks in cold storage. Prices and quantities are volatile.
- Legal Proceedings: No pending legal proceedings considered material.
- Environmental: Compliance with environmental regulations is not expected to have a material effect on capital expenditures or earnings.
- Market Risk: No quantitative or qualitative disclosures about market risk were provided in this text.
Investor Verification Checklist
- Financial Statements: Verify specific revenue, net income, and cash flow figures in the 1998 Annual Report to Shareholders (pages 10-26), as they are not listed in this 10-K text.
- Segment Data: Review the 1998 Annual Report to Shareholders (pages 18-19) for detailed international operations and segment information.
- Stock Data: Confirm stock price data and shareholder information in the 1998 Annual Report to Shareholders (page 6).
- Executive Compensation: Review the definitive Proxy Statement (dated July 13, 1998) for details on director and executive compensation.
- Divestiture Impact: Assess the long-term financial impact of the 1996 "Mrs. Smith's" sale and subsequent lease agreements.