Exhibit 99.1
The J. M. Smucker Company Announces Strategic Actions
Selling U.S. Industrial Business
Closing of Salinas, California, Facility by End of Calendar 2005
Restructuring of U.S. Distribution Operations
ORRVILLE, Ohio, Nov. 29 /PRNewswire-FirstCall/ -- The J. M. Smucker
Company (NYSE: SJM) today announced several actions to refine its portfolio
and improve its cost base as well as service levels in support of its long-
term strategy.
The Company's strategy is to own and market leading North American icon
brands sold in the center of the store. In support of this strategy, through
its Supply Chain Optimization Project (SCOP), the Company continues to
optimize its production capacity, improve productivity and operating
efficiencies as well as lower its overall cost base and improve its services.
As a result, the Company has announced its intent to sell its U.S. industrial
business, discontinue operations at its Salinas, California, facility and
restructure its U.S. distribution operations.
Refine Strategic Focus: Sale of Industrial Business
Over the past two years, the Company has continuously acted to improve the
margins of its industrial business by exiting low margin contracts in excess
of $50 million. Though margins have improved, the Company has decided to sell
its U.S. industrial business in support of its branded strategy. The Company
has entered into an agreement to sell its industrial bakery ingredients
business, located in Orrville, Ohio, to Baldwin Richardson Foods Co., a
privately owned food company located in Chicago, Illinois. The sale is
expected to close by the end of calendar year 2004. The Company will continue
production of industrial bakery ingredients for Baldwin Richardson through
September 2005.
The Company has also entered into a separate letter of intent to sell its
dairy ingredients business, manufactured in both Oxnard, California, as well
as Orrville, Ohio, to Sabroso Company, a privately owned producer and
distributor of fruit products headquartered in Medford, Oregon. The sale is
expected to close by the end of the Company's fiscal 2005 third quarter.
Smucker will continue to operate the Oxnard plant as a fruit processing
facility.
The industrial businesses will continue to be reported in continuing
operations through their divestiture period. The net impact on fiscal 2005
earnings is not anticipated to be material. Industrial sales planned for 2005
are approximately $60 million.
Further SCOP Initiatives: Closing of Salinas, California, Facility and
Restructuring of Distribution Operations
The Company's SCOP initiative is an ongoing project that supports its
branded product strategy with the goal of providing the lowest delivered costs
to its customers. In support of this program, the Company has announced plans
to discontinue operations and close its Salinas, California, facility and
redistribute the production to the Orrville, Ohio, and Memphis, Tennessee,
facilities. The Company expects to close the plant by the end of calendar
year 2005. In addition, as part of an ongoing focus on efficiency, the
Company will revise its distribution network to better meet the needs of its
consumers and customers.
Reflecting on today's announcement, Tim Smucker, chairman and co-chief
executive officer, commented, "In following our Basic Beliefs, we are
committed to being fair in assisting each employee affected by these
decisions. We will strive to make an orderly transition over the next 12
months, as we continue to implement our strategy. While these are difficult
decisions, we believe they are important in positioning the Company for future
growth."
As a result of the announced actions, the Company expects to record
additional restructuring charges of approximately $15 million, of which an
estimated $6 million will be recorded in the current fiscal year and the
remainder in fiscal 2006. Included in the restructuring charges are cash
outlays of approximately $13 million that relate primarily to severance-
related costs and equipment relocation expenses. The Company estimates that
the annual pretax benefit from the restructuring will be approximately
$4 million to $6 million upon full implementation. At least one-third of that
amount is expected to be realized in fiscal 2006 and the full amount should
begin to be realized in fiscal 2007. These benefits represent a combination of
a reduction in overhead related to the closed facilities and a reduction in
overall delivered costs.
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, peanut butter, shortening and
oils, ice cream toppings, and health and natural foods beverages in North
America under such icon brands as Smucker's(R), Jif(R), and Crisco(R). In
June 2004, the Company expanded its family of products to include such brands
as Pillsbury(R) baking mixes and ready-to-spread frostings; Hungry Jack(R)
pancake mixes, syrups and potato side dishes, and Martha White(R) baking mixes
and ingredients in the U.S., along with Robin Hood(R) flour and baking mixes,
and Bick's(R) pickles and condiments in Canada. For over 107 years, The J. M.
Smucker Company has been headquartered in Orrville, Ohio, and has been family
run for four generations. The J. M. Smucker Company was recognized as the top
company in FORTUNE Magazine's 2003 annual survey of The 100 Best Companies to
Work For and has ranked consistently in the top 25 companies each year since
FORTUNE began the list in 1998. The J. M. Smucker Company has over 4,500
employees worldwide and distributes products in more than 45 countries.
The J. M. Smucker Company Forward-Looking Language
This press release contains forward-looking statements, including
statements regarding estimates of future earnings and cash flows that are
subject to risks and uncertainties that could cause actual results to differ
materially. Uncertainties that could affect actual results include, but are
not limited to, the timing of the close of the proposed sale of the industrial
businesses, the timing and costs associated with both the closing of the
Salinas, California, facility as well as the restructuring of the distribution
network, the realization of expected savings, and other factors affecting
share prices and capital markets generally. Other risks and uncertainties
that may materially affect the Company are detailed from time to time in the
respective reports filed by the Company with the Securities and Exchange
Commission, including Forms 10-Q, 10-K, and 8-K.
SOURCE J. M. Smucker Company
-0- 11/29/2004
/CONTACT: Investors, Mark R. Belgya, Vice President and Treasurer, or
Media, Maribeth Badertscher, Manager, Corporate Communications, both of The J.
M. Smucker Company, +1-330-682-3000/
/Web site: http://www.smuckers.com /
(SJM)
CO: J. M. Smucker Company; Baldwin Richardson Foods Co.; Sabroso Company
ST: Ohio
IN: FOD REA
SU: TNM