Filed by The J. M. Smucker Company
Commission File No. 333-73830
Subject Company: The Procter & Gamble Company
Pursuant to Rule 425 under the Securities Act of 1933
This document is being filed pursuant to Rule 425 under the Securities Act of
1933 and is deemed filed pursuant to Rule 14a-12 under the Securities Exchange
Act of 1934.
THE J. M. SMUCKER COMPANY ANNOUNCES 10% INCREASE IN SALES & EPS
FOR THIRD QUARTER
CITES CONTINUED STRONG TOP AND BOTTOM LINE GROWTH IN CORE BUSINESSES
Orrville, Ohio, February 14, 2002 -- The J.M. Smucker Company (NYSE:SJM)
announced today that sales for the third quarter ended January 31, 2002, were
$168.4 million, up 10 percent from $153.6 million for the quarter ended January
31, 2001. Diluted earnings were $0.32 per share, a 10 percent increase over
$0.29 per share for the third quarter last year. This includes approximately
$.02 per share of costs associated with the pending merger of the Jif and Crisco
brands into the Smucker Company.
"Our core businesses continue to perform strongly with good top and bottom line
growth. This is key to our long-term strategy to maintain our number one market
position and grow market share as we prepare to integrate the Jif and Crisco
brands," stated Tim Smucker, Chairman and Co-CEO. "This growth and brand
strength positions the Company for the addition of new brands as well as
opportunities to structure our current businesses for greater company efficiency
going forward."
Commenting on the transaction, Mr. Smucker continued, "We continue to receive
very strong support for our plans to merge the Jif and Crisco brands into The
J.M. Smucker Company. We remain extremely confident in the strategic fit and
overall value of this transaction, which is accretive in nature and positions
our Company with a strong balance sheet and provides a platform for future
growth. We look forward to welcoming these brands as well as our new employees
and shareholders to The J. M. Smucker Company."
The Company also reaffirmed that fourth quarter and year-end anticipated results
are still in line with analysts' earnings expectations in the range of $1.33 to
$1.37. This excludes the impact of any spending related to the merger.
Net earnings for the quarter increased 13 percent to $7.9 million, as compared
to $7.0 million for the third quarter of last year. Earnings before interest,
taxes, depreciation and amortization (EBITDA) were also up 13 percent, while
EBITDA per share increased to $0.87 from $0.79 for the three-month period last
year.
NINE-MONTH RESULTS
------------------
Sales for the nine-month period ended January 31, 2002, were up four percent to
$511.0 million, compared to $489.8 million for the nine months ended January 31,
2001. Diluted earnings per share for the first nine months were $0.98 per share,
up five percent from $0.93 per share in the prior year. EBITDA per share
increased 13 percent from $2.38 per share to $2.68. Net earnings for the first
nine months of the fiscal year were $24.2 million, flat compared to $24.1
million for the same period last year, due primarily to an increase in interest
expense and income taxes. Fiscal 2001 earnings exclude the impact of
nonrecurring charges and changes in accounting.
BUSINESS LINE RESULTS
---------------------
DOMESTIC BUSINESS
Sales in the domestic business segment were up nine percent for the quarter
resulting from increased sales in the consumer, foodservice, beverage, and
industrial business areas.
CONSUMER
Sales in the Company's consumer business were up six percent in the third
quarter as compared to the same period last year. The increase came primarily in
the grocery and warehouse club store channels with sales of natural peanut
butter, toppings, sugar-free fruit spreads, and Goober peanut butter and jelly
combination products driving sales. The Company's share of market in the fruit
spreads category continues to grow.
FOODSERVICE
Sales in the foodservice area for the third quarter increased over 13 percent,
marking this area's third consecutive quarter of double-digit growth. Sales and
distribution of Smucker's Uncrustables to schools accounted for nearly 60
percent of the total increase. Additionally, the traditional foodservice
channel, which services the dining, travel, and leisure industries, rebounded
from a soft second quarter, posting an increase in sales of six percent.
BEVERAGE
Sales in the beverage area were up nine percent, with approximately one-half of
the increase coming from The R.W. Knudsen Family and Santa Cruz Organic brands.
For the year, beverage sales are up nearly seven percent over last year.
INDUSTRIAL
Sales in the Company's industrial business were up over 30 percent for the third
quarter. The increase was due primarily to the acquisition of the International
Flavors and Fragrances, Inc. (IFF) fruit and vegetable preparation businesses in
October 2001. IFF contributed approximately $5.4 million to sales and $.02 per
share to earnings during the quarter. A similar contribution is expected in the
fourth quarter.
The addition of the IFF business, along with the Jif and Crisco brands, has
given the Company the opportunity to restructure its industrial business and
focus on contracts that support long-term margin objectives and, as a result, it
is discontinuing select low margin contracts. This will result in an approximate
loss of $40-50 million in ingredient sales over the next two years; however, the
after tax earnings impact from these sales is less than one million dollars.
"This decision is part of the Company's primary focus on building leading retail
food brands. While the industrial business will remain a viable area, we need to
identify opportunities that will provide profit returns that are more comparable
to the Company's overall average," stated Richard Smucker, President and Co-CEO.
INTERNATIONAL BUSINESS
The Company's international businesses also recorded a strong third quarter with
sales up $2.5 million, an 11 percent increase over the third quarter of fiscal
2001. Overall, exchange rates continue to have a negative impact on the
Company's international results. Had exchange rates remained constant with last
year, overall international sales would have been approximately $1.4 million
higher in the third quarter and nearly $5 million higher on a year-to-date
basis.
The increase in sales occurred in nearly every part of the Company's
international business segment with the majority of the growth coming from its
Australian, Brazilian, and Export businesses. Sales of Henry Jones Foods, the
Company's Australian subsidiary, were up 13 percent, despite the ongoing effects
of a weak Australian dollar. Sales in Brazil increased 25 percent due to the
international portion of the IFF acquisition, offsetting the exchange rate
impact.
EXPENSES
--------
The cost of products sold for the majority of the Company's businesses were
consistent with last year, as raw material costs remained essentially flat. The
Company's gross profit margin was lower as a percent of sales than in the prior
year quarter due to expenses associated with meeting capacity requirements for
Smucker's Uncrustables and the fact that the business acquired from IFF
currently has margins that are below the corporate average. Selling,
distribution, and administrative (SD&A) costs were within budgeted levels,
despite incurring approximately $0.9 million of transition expenses related to
the Jif and Crisco transaction. Marketing expenses for the quarter were down
eight percent from the prior year, primarily due to lower expenditures in the
beverage and consumer-direct areas. Going forward, the Company expects to see
SD&A costs become a lower percentage of sales than they are today, even with the
increased marketing support planned for the new brands.
JIF & CRISCO
------------
The Company also reported that its plans to merge the Jif and Crisco brands into
the Company remain on track for closing in the second calendar quarter of this
year. The Company is finalizing its discussions with the Securities and Exchange
Commission with regard to its prospectus/proxy statement. To ensure an adequate
period of time between the mailing of the
proxy materials and the date of the special shareholders' meeting, the Company
will move the meeting from its originally announced date of March 1, 2002, to a
later date yet to be determined.
CONFERENCE CALL
---------------
The Company will conduct a third quarter conference call and webcast today at
8:30 a.m. (ET). The webcast can be accessed from the Company's website at
www.smuckers.com. For those unable to listen to the webcast, a replay will be
available following the call and can be accessed by calling 800-428-6051 in the
United States or 973-709-2089 internationally and entering replay passcode
232191. The audio replay will be available until 11:00 p.m. ET, Sunday, February
17, 2002.
ABOUT THE J.M. SMUCKER COMPANY
------------------------------
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.
CONTACT:
Steven J. Ellcessor
Vice President--Finance and Administration,
Secretary, and General Counsel
(330) 682-3000
THE J. M. SMUCKER COMPANY
STATEMENTS OF CONSOLIDATED INCOME
(Unaudited)
Three Months Ended Nine Months Ended
January 31, January 31,
------------------------------ ------------------------------
2002 2001 2002 2001
-------------- ------------ ------------ --------------
(Dollars in thousands, except per share data)
Net sales $ 168,392 $ 153,628 $ 511,028 $ 489,793
Cost of products sold 113,391 101,185 343,027 327,054
------------ ------------ ------------ ------------
55,001 52,443 168,001 162,739
Selling, distribution, and administrative expenses 40,701 39,691 123,693 120,209
Nonrecurring charge -- -- -- 2,152
------------ ------------ ------------ ------------
14,300 12,752 44,308 40,378
Other income (expense)
Interest income 380 568 1,713 2,030
Interest expense (2,073) (2,192) (6,710) (5,058)
Other - net 421 (38) 358 (387)
------------ ------------ ------------ ------------
Income before income taxes and cumulative effect of
change in accounting method 13,028 11,090 39,669 36,963
Income taxes 5,081 4,051 15,471 14,157
------------ ------------ ------------ ------------
Income before cumulative effect of change in 7,947 7,039 24,198 22,806
accounting method
Cumulative effect of change in accounting method -- -- -- (992)
------------ ------------ ------------ ------------
Net income $ 7,947 $ 7,039 $ 24,198 $ 21,814
============ ============ ============ ============
Earnings per Common Share:
Income before cumulative effect of change in
accounting method $ 0.32 $ 0.29 $ 0.99 $ 0.88
Cumulative effect of change in accounting method -- -- -- (0.04)
------------ ------------ ------------ ------------
Net income per Common Share $ 0.32 $ 0.29 $ 0.99 $ 0.84
============ ============ ============ ============
Earnings per Common Share - assuming dilution:
Income before cumulative effect of change in
accounting method $ 0.32 $ 0.29 $ 0.98 $ 0.88
Cumulative effect of change in accounting method -- -- -- (0.04)
------------ ------------ ------------ ------------
Net income per Common Share - assuming dilution $ 0.32 $ 0.29 $ 0.98 $ 0.84
============ ============ ============ ============
Dividends declared per share $ 0.16 $ 0.16 $ 0.48 $ 0.48
============ ============ ============ ============
Common Shares outstanding 24,548,867 24,089,174 24,367,732 25,830,130
============ ============ ============ ============
Common Shares outstanding - assuming dilution 25,016,341 24,414,128 24,754,045 26,019,370
============ ============ ============ ============
The J. M. Smucker Company
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
January 31,
-------------------
2002 2001
-------- --------
(Dollars in thousands)
ASSETS
Current Assets:
Cash and cash equivalents $ 67,440 $ 30,788
Trade receivables 54,424 52,459
Inventories 123,343 122,064
Other current assets 14,749 14,301
-------- --------
Total Current Assets 259,956 219,612
Property, Plant & Equipment, Net 164,975 172,385
Noncurrent Assets 78,369 71,901
-------- --------
$503,300 $463,898
======== ========
LIABILITIES & SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 30,580 $ 27,626
Other current liabilities 46,353 38,138
-------- --------
Total Current Liabilities 76,933 65,764
Long-term Debt 135,000 135,000
Other Noncurrent Liabilities 23,212 18,991
Shareholders' Equity, Net 268,155 244,143
-------- --------
$503,300 $463,898
======== ========
SECURITIES LAWS LEGEND:
-----------------------
THE J. M. SMUCKER COMPANY HAS FILED WITH THE COMMISSION A PROXY
STATEMENT-PROSPECTUS AND OTHER RELEVANT DOCUMENTS CONCERNING THE PROPOSED MERGER
OF THE JIF AND CRISCO BUSINESSES WITH AND INTO THE J. M. SMUCKER COMPANY.
INVESTORS ARE URGED TO READ THE PROXY STATEMENT-PROSPECTUS AND OTHER RELEVANT
DOCUMENTS FILED WITH THE COMMISSION BECAUSE THEY CONTAIN IMPORTANT INFORMATION
ON THE PROPOSED TRANSACTION. YOU WILL BE ABLE TO OBTAIN THE DOCUMENTS FILED WITH
THE COMMISSION FREE OF CHARGE AT THE WEBSITE MAINTAINED BY THE COMMISSION AT
WWW.SEC.GOV. IN ADDITION, YOU MAY OBTAIN DOCUMENTS FILED WITH THE COMMISSION BY
THE J. M. SMUCKER COMPANY FREE OF CHARGE BY REQUESTING THEM IN WRITING FROM THE
J. M. SMUCKER COMPANY, STRAWBERRY LANE, ORRVILLE, OHIO 44667, ATTENTION:
INVESTOR RELATIONS, OR BY TELEPHONE AT 330-682-3000.
THE J. M. SMUCKER COMPANY AND ITS DIRECTORS AND EXECUTIVE OFFICERS MAY BE DEEMED
TO BE PARTICIPANTS IN THE SOLICITATION OF PROXIES FROM THE J. M. SMUCKER
COMPANY'S SHAREHOLDERS. A LIST OF THE NAMES OF THOSE DIRECTORS AND EXECUTIVE
OFFICERS AND DESCRIPTIONS OF THEIR INTERESTS IN THE J. M. SMUCKER COMPANY IS
CONTAINED IN THE J. M. SMUCKER COMPANY'S PROXY STATEMENT DATED JULY 10, 2001,
WHICH IS FILED WITH THE COMMISSION. SHAREHOLDERS MAY OBTAIN ADDITIONAL
INFORMATION ABOUT THE INTEREST OF THE DIRECTORS AND EXECUTIVE OFFICERS IN THIS
TRANSACTION BY READING THE PROXY STATEMENT-PROSPECTUS.