Jm smucker processed packaged goods
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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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JM Smucker Processed & Packaged Goods

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Jm smucker processed packaged goods

JM SmuckerProcessed & Packaged Goods

Connor Myers


Jm smucker processed packaged goods

“With a name like Smucker’s, it has to be good”


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


Accounting for adjustments

Accounting for Adjustments


Stock options

Stock Options

Beginning Year Price:$73.54

End Year Price:$99.29


Jm smucker processed packaged goods

  • 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


Jm smucker processed packaged goods

  • 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


Jm smucker processed packaged goods

  • 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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