sjm-20220131

0000091419-22-000017.txt : 20220301 0000091419-22-000017.hdr.sgml : 20220301 20220301161637 ACCESSION NUMBER: 0000091419-22-000017 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 82 CONFORMED PERIOD OF REPORT: 20220131 FILED AS OF DATE: 20220301 DATE AS OF CHANGE: 20220301 FILER: COMPANY DATA: COMPANY CONFORMED NAME: J M SMUCKER Co CENTRAL INDEX KEY: 0000091419 STANDARD INDUSTRIAL CLASSIFICATION: CANNED, FRUITS, VEG & PRESERVES, JAMS & JELLIES [2033] IRS NUMBER: 340538550 STATE OF INCORPORATION: OH FISCAL YEAR END: 0430 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-05111 FILM NUMBER: 22698234 BUSINESS ADDRESS: STREET 1: ONE STRAWBERRY LANE CITY: ORRVILLE STATE: OH ZIP: 44667 BUSINESS PHONE: 3306823000 MAIL ADDRESS: STREET 1: ONE STRAWBERRY LANE CITY: ORRVILLE STATE: OH ZIP: 44667 FORMER COMPANY: FORMER CONFORMED NAME: SMUCKER J M CO DATE OF NAME CHANGE: 19920703 10-Q 1 sjm-20220131.htm 10-Q sjm-20220131


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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

___________________________________________________

FORM 10-Q

___________________________________________________


☒			QUARTERLY REPORT PURSUANT TO SECTIONS 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: January 31, 2022


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 1-5111

___________________________________________________

The J. M. Smucker Company

(Exact name of registrant as specified in its charter)

___________________________________________________

Ohio

34-0538550

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer
Identification No.)

One Strawberry Lane

Orrville,

Ohio

44667-0280

(Address of principal executive offices)

(Zip code)

Registrant’s telephone number, including area code:

(330)

682-3000

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading symbol

Name of each exchange on which registered

Common shares, no par value

SJM

New York Stock Exchange

___________________________________________________

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ý No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ý

The Company had 108,458,394 common shares outstanding on February 22, 2022.

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TABLE OF CONTENTS


		Page No.
PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements
	Condensed Statements of Consolidated Income	2
	Condensed Statements of Consolidated Comprehensive Income	2
	Condensed Consolidated Balance Sheets	3
	Condensed Statements of Consolidated Cash Flows	4
	Condensed Statements of Consolidated Shareholders’ Equity	5
	Notes to Unaudited Condensed Consolidated Financial Statements	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	34

Item 4.	Controls and Procedures	36

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	37

Item 1A.	Risk Factors	37

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	38

Item 6.	Exhibits	38

SIGNATURES		39

INDEX OF EXHIBITS		40

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

THE J. M. SMUCKER COMPANY

CONDENSED STATEMENTS OF CONSOLIDATED INCOME

(Unaudited)


	Three Months Ended January 31,				Nine Months Ended January 31,
Dollars in millions, except per share data	2022		2021		2022		2021
Net sales	$	2,057.1	$	2,076.7	$	5,965.1	$	6,082.5
Cost of products sold (A)	1,374.0		1,267.3		3,931.1		3,679.5
Gross Profit	683.1		809.4		2,034.0		2,403.0
Selling, distribution, and administrative expenses	336.0		371.7		1,007.7		1,112.0
Amortization	55.3		57.0		166.1		176.1
Other intangible assets impairment charge	150.4		—		150.4		—
Other special project costs (A)	2.0		1.7		5.1		1.7
Other operating expense (income) – net	(11.2)		(27.2)		(17.1)		(34.9)
Operating Income	150.6		406.2		721.8		1,148.1
Interest expense – net	(39.5)		(43.5)		(122.9)		(134.7)
Other income (expense) – net	(1.5)		(1.2)		(15.3)		(34.8)
Income Before Income Taxes	109.6		361.5		583.6		978.6
Income tax expense	39.9		100.0		154.0		249.3
Net Income	$	69.7	$	261.5	$	429.6	$	729.3
Earnings per common share:
Net Income	$	0.64	$	2.32	$	3.96	$	6.42
Net Income – Assuming Dilution	$	0.64	$	2.32	$	3.96	$	6.42

(A) Special project costs include certain divestiture, acquisition, integration, and restructuring costs, which are recognized in cost of products sold and other special project costs. For more information, see Note 3: Integration and Restructuring Costs and Note 5: Reportable Segments.

See notes to unaudited condensed consolidated financial statements.

THE J. M. SMUCKER COMPANY

CONDENSED STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME

(Unaudited)


	Three Months Ended January 31,				Nine Months Ended January 31,
Dollars in millions	2022		2021		2022		2021
Net income	$	69.7	$	261.5	$	429.6	$	729.3
Other comprehensive income (loss):
Foreign currency translation adjustments	(7.0)		14.2		(9.0)		29.4
Cash flow hedging derivative activity, net of tax	3.4		2.9		8.4		8.2
Pension and other postretirement benefit plans activity, net of tax	4.7		6.3		8.6		36.7
Available-for-sale securities activity, net of tax	0.1		0.6		0.1		1.2
Total Other Comprehensive Income (Loss)	1.2		24.0		8.1		75.5
Comprehensive Income	$	70.9	$	285.5	$	437.7	$	804.8

See notes to unaudited condensed consolidated financial statements.

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THE J. M. SMUCKER COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)


Dollars in millions	January 31, 2022		April 30, 2021
ASSETS
Current Assets
Cash and cash equivalents	$	284.3	$	334.3
Trade receivables – net	563.2		533.7
Inventories:
Finished products	635.3		607.6
Raw materials	406.8		352.3
Total Inventory	1,042.1		959.9
Other current assets	98.6		113.8
Total Current Assets	1,988.2		1,941.7
Property, Plant, and Equipment
Land and land improvements	118.4		124.3
Buildings and fixtures	944.4		967.0
Machinery and equipment	2,466.3		2,469.7
Construction in progress	406.3		282.3
Gross Property, Plant, and Equipment	3,935.4		3,843.3
Accumulated depreciation	(1,939.9)		(1,841.8)
Total Property, Plant, and Equipment	1,995.5		2,001.5
Other Noncurrent Assets
Operating lease right-of-use assets	113.4		142.0
Goodwill	6,017.8		6,023.6
Other intangible assets – net	5,710.0		6,041.2
Other noncurrent assets	141.5		134.2
Total Other Noncurrent Assets	11,982.7		12,341.0
Total Assets	$	15,966.4	$	16,284.2

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Accounts payable	$	1,006.8	$	1,034.1
Accrued trade marketing and merchandising	208.3		200.6
Current portion of long-term debt	—		1,152.9
Short-term borrowings	94.0		82.0
Current operating lease liabilities	39.7		41.1
Other current liabilities	315.8		356.8
Total Current Liabilities	1,664.6		2,867.5
Noncurrent Liabilities
Long-term debt, less current portion	4,309.7		3,516.8
Deferred income taxes	1,334.5		1,349.3
Noncurrent operating lease liabilities	84.0		112.8
Other noncurrent liabilities	306.7		313.0
Total Noncurrent Liabilities	6,034.9		5,291.9
Total Liabilities	7,699.5		8,159.4
Shareholders’ Equity
Common shares	27.1		27.1
Additional capital	5,553.6		5,527.6
Retained income	2,955.5		2,847.5
Accumulated other comprehensive income (loss)	(269.3)		(277.4)
Total Shareholders’ Equity	8,266.9		8,124.8
Total Liabilities and Shareholders’ Equity	$	15,966.4	$	16,284.2

See notes to unaudited condensed consolidated financial statements.

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THE J. M. SMUCKER COMPANY

CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS

(Unaudited)


	Nine Months Ended January 31,
Dollars in millions	2022		2021
Operating Activities
Net income	$	429.6	$	729.3
Adjustments to reconcile net income to net cash provided by (used for) operations:
Depreciation	178.9		161.7
Amortization	166.1		176.1
Other intangible assets impairment charge	150.4		—
Pension settlement loss (gain)	7.5		30.8
Share-based compensation expense	15.2		20.9
Gain on divestitures – net	(9.6)		(27.2)
Other noncash adjustments – net	12.3		11.6
Make-whole payments included in financing activities	7.0		—

Changes in assets and liabilities, net of effect from divestitures:
Trade receivables	(30.7)		(50.4)
Inventories	(131.0)		(50.9)
Other current assets	22.5		0.9
Accounts payable	(15.2)		142.7
Accrued liabilities	(35.8)		88.7
Income and other taxes	(14.9)		20.1
Other – net	(9.7)		19.7
Net Cash Provided by (Used for) Operating Activities	742.6		1,274.0
Investing Activities

Additions to property, plant, and equipment	(244.5)		(198.7)
Proceeds from divestitures – net	130.2		569.3

Other – net	(17.6)		48.5
Net Cash Provided by (Used for) Investing Activities	(131.9)		419.1
Financing Activities
Short-term borrowings (repayments) – net	11.7		(82.4)
Proceeds from long-term debt	797.6		—
Repayments of long-term debt, including make-whole payments	(1,157.0)		(700.0)
Capitalized debt issuance costs	(10.4)		—
Quarterly dividends paid	(311.1)		(304.8)
Purchase of treasury shares	(7.7)		(504.1)
Proceeds from stock option exercises	16.2		0.7
Other – net	0.3		—
Net Cash Provided by (Used for) Financing Activities	(660.4)		(1,590.6)
Effect of exchange rate changes on cash	(0.3)		7.9
Net increase (decrease) in cash and cash equivalents	(50.0)		110.4
Cash and cash equivalents at beginning of period	334.3		391.1
Cash and Cash Equivalents at End of Period	$	284.3	$	501.5

( ) Denotes use of cash

See notes to unaudited condensed consolidated financial statements.

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THE J. M. SMUCKER COMPANY

CONDENSED STATEMENTS OF CONSOLIDATED SHAREHOLDERS’ EQUITY

(Unaudited)


	Nine Months Ended January 31, 2022
Dollars in millions	Common Shares Outstanding	Common Shares		Additional Capital		Retained Income		Accumulated Other Comprehensive Income (Loss)		Total Shareholders’ Equity
Balance at May 1, 2021	108,339,057	$	27.1	$	5,527.6	$	2,847.5	$	(277.4)	$	8,124.8
Net income						153.9				153.9
Other comprehensive income (loss)								(4.2)		(4.2)
Comprehensive income										149.7
Purchase of treasury shares	(50,203)	—		(6.1)		(0.7)				(6.8)
Stock plans	71,140	—		9.5						9.5
Cash dividends declared, $0.99 per common share						(106.9)				(106.9)

Balance at July 31, 2021	108,359,994	$	27.1	$	5,531.0	$	2,893.8	$	(281.6)	$	8,170.3
Net income						206.0				206.0
Other comprehensive income (loss)								11.1		11.1
Comprehensive income										217.1
Purchase of treasury shares	(5,676)	—		(0.6)		(0.1)				(0.7)
Stock plans	8,521	—		6.6						6.6
Cash dividends declared, $0.99 per common share						(106.9)				(106.9)

Balance at October 31, 2021	108,362,839	$	27.1	$	5,537.0	$	2,992.8	$	(270.5)	$	8,286.4
Net income						69.7				69.7
Other comprehensive income (loss)								1.2		1.2
Comprehensive income										70.9
Purchase of treasury shares	(1,505)	—		(0.2)		—				(0.2)
Stock plans	100,996	—		16.8						16.8
Cash dividends declared, $0.99 per common share						(107.0)				(107.0)

Balance at January 31, 2022	108,462,330	$	27.1	$	5,553.6	$	2,955.5	$	(269.3)	$	8,266.9

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	Nine Months Ended January 31, 2021
Dollars in millions	Common Shares Outstanding	Common Shares		Additional Capital		Retained Income		Accumulated Other Comprehensive Income (Loss)		Total Shareholders’ Equity
Balance at May 1, 2020	114,072,726	$	29.0	$	5,794.1	$	2,746.8	$	(379.0)	$	8,190.9
Net income						237.0				237.0
Other comprehensive income (loss)								18.1		18.1
Comprehensive income										255.1
Purchase of treasury shares	(42,194)	—		(5.5)		0.9				(4.6)
Stock plans	56,910	—		6.2						6.2
Cash dividends declared, $0.90 per common share						(102.4)				(102.4)
Other		(0.5)		0.5		—				—
Balance at July 31, 2020	114,087,442	$	28.5	$	5,795.3	$	2,882.3	$	(360.9)	$	8,345.2
Net income						230.8				230.8
Other comprehensive income (loss)								33.4		33.4
Comprehensive income										264.2
Purchase of treasury shares	(14,769)	—		(1.7)		0.1				(1.6)
Stock plans	24,588	—		9.5						9.5
Cash dividends declared, $0.90 per common share						(102.3)				(102.3)

Balance at October 31, 2020	114,097,261	$	28.5	$	5,803.1	$	3,010.9	$	(327.5)	$	8,515.0
Net income						261.5				261.5
Other comprehensive income (loss)								24.0		24.0
Comprehensive income										285.5
Purchase of treasury shares	(4,301,631)	(1.1)		(219.0)		(277.8)				(497.9)
Stock plans	(6,480)	—		7.5						7.5
Cash dividends declared, $0.90 per common share						(98.5)				(98.5)

Balance at January 31, 2021	109,789,150	$	27.4	$	5,591.6	$	2,896.1	$	(303.5)	$	8,211.6

See notes to unaudited condensed consolidated financial statements.

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THE J. M. SMUCKER COMPANY

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in millions, unless otherwise noted, except per share data)

Note 1: Basis of Presentation

The unaudited interim condensed consolidated financial statements of The J. M. Smucker Company (“Company,” “we,” “us,” or “our”) have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all the information and notes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments of a normal recurring nature considered necessary for a fair presentation have been included.

Operating results for the nine months ended January 31, 2022, are not necessarily indicative of the results that may be expected for the year ending April 30, 2022. For further information, reference is made to the consolidated financial statements and notes included in our Annual Report on Form 10-K for the year ended April 30, 2021.

Note 2: Recently Issued Accounting Standards

In November 2020, the U.S. Securities and Exchange Commission (the “SEC”) adopted the final rule under SEC Release No. 33-10890, Management’s Discussion and Analysis, Selected Financial Data, and Supplementary Financial Information, to modernize and simplify Management’s Discussion and Analysis and certain financial disclosure requirements. These updates are part of the SEC’s broader disclosure effectiveness initiative and reflect a principles-based, registrant-specific approach to disclosures, intended to improve the content and simplify compliance for registrants. During 2021, we early adopted certain updates to section 301, Selected Financial Data, and 302, Supplementary Financial Information. As required, we will complete the adoption of the remaining amendments during 2022 and do not anticipate that the adoption of these amendments will have a material impact on our financial statements and disclosures.

In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2019-12, Income Taxes (Topic 740) Simplifying the Accounting for Income Taxes, which removes certain exceptions for investments, intraperiod allocations and interim calculations, and adds guidance to reduce complexity in accounting for income taxes. ASU 2019-12 was effective for us on May 1, 2021. The accounting guidance for franchise taxes and foreign investments was adopted on a modified retrospective basis and all other applicable provisions were adopted on a prospective basis, as required by ASU 2019-12. The adoption of this ASU did not have a material impact on our financial statements and disclosures.

Note 3: Integration and Restructuring Costs

Integration and restructuring costs primarily consist of employee-related costs and other transition and termination costs related to certain divestiture, acquisition, integration, or restructuring activities. Employee-related costs include severance, retention bonuses, and relocation costs. Severance costs and retention bonuses are recognized over the estimated future service period of the impacted employees, and relocation costs are expensed as incurred. Other transition and termination costs include fixed asset-related charges, contract and lease termination costs, professional fees, and other miscellaneous expenditures associated with the integration or restructuring activities. With the exception of accelerated depreciation, these costs are expensed as incurred. These integration and restructuring costs are reported in cost of products sold and other special project costs in the Condensed Statements of Consolidated Income and are not allocated to segment profit. The obligation related to employee separation costs is included in other current liabilities in the Condensed Consolidated Balance Sheets.

Restructuring Costs: A restructuring program was approved by the Board of Directors (the “Board”) during 2021, associated with opportunities identified to reduce our overall cost structure and optimize our organizational design, inclusive of stranded overhead associated with the divestitures of the Crisco® and Natural Balance® businesses. During 2021, we substantially completed an organizational redesign related to our corporate headquarters and announced plans to close our Suffolk, Virginia, facility as a result of a new strategic partnership for the production of our Away From Home liquid coffee products. During the third quarter of 2022, we completed the transition of production to JDE Peet's, as anticipated. Furthermore, the restructuring program was expanded during the third quarter of 2022 to include certain costs associated with the divestitures of the private label dry pet food and natural beverage and grains businesses, as well as the recently announced plans to close our Ripon, Wisconsin, production facility by the end of calendar year 2022 to further optimize operations for our Consumer Foods business. For additional information related to the divestitures, see Note 4: Divestitures. We expect to incur costs of approximately $110.0 associated with the restructuring activities approved to date. Approximately half of these costs are

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expected to be other transition and termination costs associated with our cost reduction and margin management initiatives, inclusive of accelerated depreciation, while the remainder represents employee-related costs. We anticipate the activities associated with this restructuring program will be completed by the end of 2023, with the majority of the costs expected to be incurred by the end of calendar year 2022.

The following table summarizes our restructuring costs incurred related to the restructuring program.


	Three Months Ended January 31,				Nine Months Ended January 31,				Total Costs Incurred to Date at January 31, 2022
	2022		2021		2022		2021
Employee-related costs	$	1.4	$	1.7	$	3.8	$	1.7	$	21.1
Other transition and termination costs	7.4		—		18.8		—		25.6
Total restructuring costs	$	8.8	$	1.7	$	22.6	$	1.7	$	46.7

The obligation related to severance costs and retention bonuses was $3.7 and $14.6 at January 31, 2022 and April 30, 2021, respectively. As of January 31, 2022, cumulative noncash charges incurred to date were $20.3, including $6.7 and $15.9 incurred during the three and nine months ended January 31, 2022, respectively, and primarily consisted of accelerated depreciation.

Note 4: Divestitures

On January 31, 2022, we sold the natural beverage and grains businesses to Nexus Capital Management LP (“Nexus”). The transaction included products sold under the R.W. Knudsen® and TruRoots® brands, inclusive of certain trademarks, a licensing agreement for Santa Cruz Organic® beverages, dedicated manufacturing and distribution facilities in Chico, California, and Havre de Grace, Maryland, and approximately 150 employees who supported the natural beverage and grains businesses. The transaction did not include Santa Cruz Organic nut butters, fruit spreads, syrups, or applesauce. Under our ownership, the businesses generated net sales of $143.4 in 2021, primarily included in the U.S. Retail Consumer Foods segment. Net proceeds from the divestiture were $97.3, which were inclusive of a preliminary working capital adjustment and cash transaction costs, and will be finalized during the fourth quarter of 2022.

On December 1, 2021, we sold the private label dry pet food business to Diamond Pet Foods, Inc. (“Diamond Pet Foods”). The transaction included dry pet food products sold under private label brands, a dedicated manufacturing facility located in Frontenac, Kansas, and approximately 220 employees who supported the private label dry pet food business. The transaction did not include any branded products or our private label wet pet food business. Under our ownership, the business generated net sales of $94.0 in 2021, included in the U.S. Retail Pet Foods segment. Final net proceeds from the divestiture were $32.9, which were net of cash transaction costs.

Upon completion of these transactions during the third quarter of 2022, we recognized a pre-tax gain of $26.7 related to the natural beverage and grains businesses and a pre-tax loss of $17.1 related to the private label dry pet food business, which were included in other operating expense (income) – net within the Condensed Statement of Consolidated Income.

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The following table summarizes the net assets and liabilities disposed, which were measured at the lower of carrying amount or fair value less costs to sell.


	January 31, 2022
	Natural Beverage and Grains		Private Label Dry Pet Food
Assets disposed:
Inventories	$	28.3	$	19.0
Other current assets	0.5		—
Property, plant, and equipment – net	28.1		31.1
Operating lease right-of-use assets	0.4		0.1

Other intangible assets – net	13.6		—

Total assets disposed	$	70.9	$	50.2
Liabilities disposed:
Current operating lease liabilities	$	0.3	$	0.1

Noncurrent operating lease liabilities	0.1		—

Other noncurrent liabilities	0.1		—
Total liabilities disposed	0.5		0.1
Net assets disposed	$	70.4	$	50.1

On January 29, 2021, we sold the Natural Balance premium pet food business to Nexus. The transaction included pet food products sold under the Natural Balance brand, certain trademarks and licensing agreements, and select employees who supported the Natural Balance business. Under our ownership, the business generated net sales of $156.7 in 2021, included in the U.S. Retail Pet Foods segment. Final net proceeds from the divestiture were $33.8, which were net of cash transaction costs and a working capital adjustment. Upon completion of this transaction, we recognized a pre-tax loss of $89.5, of which $87.7 was recognized during the third quarter of 2021 and was included in other operating expense (income) – net within the Condensed Statement of Consolidated Income.

On December 1, 2020, we sold the Crisco oils and shortening business to B&G Foods, Inc. (“B&G Foods”). The transaction included oils and shortening products sold under the Crisco brand, primarily in the U.S. and Canada, certain trademarks and licensing agreements, dedicated manufacturing and warehouse facilities located in Cincinnati, Ohio, and approximately 160 employees who supported the Crisco business. Under our ownership, the business generated net sales of $198.9 in 2021, primarily included in the U.S. Retail Consumer Foods segment. Final net proceeds from the divestiture were $530.2, which were net of cash transaction costs and a working capital adjustment. Upon completion of this transaction, we recognized a pre-tax gain of $114.8, of which $114.9 was recognized during the third quarter of 2021 and was included in other operating expense (income) – net within the Condensed Statement of Consolidated Income.

Note 5: Reportable Segments

We operate in one industry: the manufacturing and marketing of food and beverage products. We have three reportable segments: U.S. Retail Pet Foods, U.S. Retail Coffee, and U.S. Retail Consumer Foods. The presentation of International and Away From Home represents a combination of all other operating segments that are not individually reportable.

The U.S. Retail Pet Foods segment primarily includes the domestic sales of Rachael Ray® Nutrish®, Meow Mix®, Milk-Bone®, 9Lives®, Kibbles ’n Bits®, Pup-Peroni®, and Nature’s Recipe® branded products; the U.S. Retail Coffee segment primarily includes the domestic sales of Folgers®, Dunkin’®, and Café Bustelo® branded coffee; and the U.S. Retail Consumer Foods segment primarily includes the domestic sales of Smucker’s® and Jif® branded products. International and Away From Home includes the sale of products distributed domestically and in foreign countries through retail channels and foodservice distributors and operators (e.g., health care operators, restaurants, lodging, hospitality, offices, K-12, colleges and universities, and convenience stores).

Segment profit represents net sales, less direct and allocable operating expenses, and is consistent with the way in which we manage our segments. However, we do not represent that the segments, if operated independently, would report operating profit equal to the segment profit set forth below, as segment profit excludes certain expenses such as amortization expense and impairment charges related to intangible assets, gains and losses on divestitures, the net change in cumulative unallocated gains and losses on commodity and foreign currency exchange derivative activities (“change in net cumulative unallocated derivative

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gains and losses”), certain divestiture, acquisition, integration, and restructuring costs (“special project costs”), as well as corporate administrative expenses.

Commodity and foreign currency exchange derivative gains and losses are reported in unallocated derivative gains and losses outside of segment operating results until the related inventory is sold. At that time, we reclassify the hedge gains and losses from unallocated derivative gains and losses to segment profit, allowing our segments to realize the economic effect of the hedge without experiencing any mark-to-market volatility. We would expect that any gain or loss in the estimated fair value of the derivatives would generally be offset by a change in the estimated fair value of the underlying exposures.

The following table reconciles segment profit to income before income taxes.


	Three Months Ended January 31,				Nine Months Ended January 31,
	2022		2021		2022		2021
Net sales:
U.S. Retail Pet Foods	$	696.6	$	768.6	$	2,046.2	$	2,169.9
U.S. Retail Coffee	661.8		625.9		1,850.1		1,791.5
U.S. Retail Consumer Foods	433.1		447.6		1,309.9		1,415.9
International and Away From Home	265.6		234.6		758.9		705.2
Total net sales	$	2,057.1	$	2,076.7	$	5,965.1	$	6,082.5
Segment profit:
U.S. Retail Pet Foods	$	95.7	$	135.1	$	275.2	$	385.3
U.S. Retail Coffee	213.4		210.7		572.5		595.4
U.S. Retail Consumer Foods	99.5		110.9		329.2		377.7
International and Away From Home	34.2		24.5		107.5		94.9
Total segment profit	$	442.8	$	481.2	$	1,284.4	$	1,453.3
Amortization	(55.3)		(57.0)		(166.1)		(176.1)

Other intangible assets impairment charge	(150.4)		—		(150.4)		—
Gain on divestitures – net	9.6		27.2		9.6		27.2
Interest expense – net	(39.5)		(43.5)		(122.9)		(134.7)
Change in net cumulative unallocated derivative gains and losses	(22.4)		33.8		(37.9)		81.5
Cost of products sold – special project costs (A)	(6.8)		—		(17.5)		—
Other special project costs (A)	(2.0)		(1.7)		(5.1)		(1.7)
Corporate administrative expenses	(64.9)		(77.3)		(195.2)		(236.1)
Other income (expense) – net	(1.5)		(1.2)		(15.3)		(34.8)
Income before income taxes	$	109.6	$	361.5	$	583.6	$	978.6

(A)Special project costs include certain divestiture, acquisition, integration, and restructuring costs, which are recognized in cost of products sold and other special project costs in the Condensed Statements of Consolidated Income. For more information, see Note 3: Integration and Restructuring Costs.

The following table presents certain geographical information.


	Three Months Ended January 31,				Nine Months Ended January 31,
	2022		2021		2022		2021
Net sales:
United States	$	1,921.8	$	1,939.5	$	5,574.2	$	5,651.4
International:
Canada	$	111.9	$	113.9	$	326.5	$	345.3
All other international	23.4		23.3		64.4		85.8
Total international	$	135.3	$	137.2	$	390.9	$	431.1
Total net sales	$