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JM Smucker Processed & Packaged Goods. Connor Myers. “With a name like Smucker’s , it has to be good”. Background. Founded in 1897 in Orville, Ohio. Full-Time Employees: 4,875 Revenues of 5.72 Billion Dollars in 2013. Comparable Companies (Processed & Packaged Goods). Starbucks (SBUX)

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Presentation Transcript
background
Background
  • Founded in 1897 in Orville, Ohio.
  • Full-Time Employees: 4,875
  • Revenues of 5.72 Billion Dollars in 2013
comparable companies processed packaged goods
Comparable Companies (Processed & Packaged Goods)
  • Starbucks (SBUX)
  • Green Mountain Coffee (GMCR)
  • Mondelez (MDLZ)
module 11 adjusting enterprise operations
Module 11: Adjusting Enterprise Operations
  • Adjustment A: Inventory Method
  • Adjustment B: Operating Leases
  • Adjustment C: Employee Stock Options
inventory method
Inventory Method

Since everything is kept under FIFO no inventory adjustment is needed

operating leases
Operating Leases
  • Do not have any information about capital leases (similar to P&G)
  • So used weighted average cost of capital that we calculated in Module 6: 5.26%
sjm s estimated lease liability
SJM’s estimated lease liability
  • As a result: Adjust SJM’s NEA upwards by $88.6
      • 19.84 in the current period
      • 68.76 in the non-current period
adjustments to balance sheet
Adjustments to Balance Sheet

Adjustments to Income Statement

stock options
Stock Options

Beginning Year Price: $73.54

End Year Price: $99.29

slide14

Step 1: Compute value of options exercisable at beginning of year using beginning of year share price

    • (73.54-42.18) * 124,814 = $3.914 million
  • Step 2: Compute value of options exercisable at beginning of year using end of year share price
    • (99.29-42.18) * 124,814 = $7.128 million
  • Step 3: Estimate value of ESOs exercised during current year using estimate of average share price
    • (86.42-40.91) * 77,408 = $3.522 million
slide15

Step 4: Estimate value of ESOs cancelled during current year:

    • Can’t do it because no information on cancelled options
  • Step 5: Compute value of options exercisable at end of year using end of year share price:
    • (99.29-44.26) * 47,433 = $2.61 million
  • Step 6: Compute estimate of additional share-based compensation from information computed above:
    • $2.61 million - $7.128 million + $3.522 million = -0.996 million
slide16

Increase NFL by (5) $2.61 million

    • Decrease CSE by (5) $2.61 million
  • (Increase) EPAT by (6) 0.996 million
  • (Decrease) FEAT by (2) – (1) – (3) – (4) 0.308 million
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