J M Smucker Co (SJM) 2003 Q4 法說會逐字稿

Welcome ladies and gentlemen to the J.M. Smucker Company's fourth quarter and fiscal year 2003 earnings conference call. At this time, I would like to inform you that this conference is being recorded and that all participants are in a listen-only mode. At the request of the company, we will open the conference up for questions and answers after the presentation. I will now turn the conference call over to Mr. Richard Smucker. Please go ahead, sir.

Good morning, everyone and welcome to our conference call this morning.

I'm Richard Smucker, the company's President, Co-CEO and Chief Financial Officer. Thank you for joining us. On the call this morning from the Smucker Company are, Tim Smucker, our Chairman and Co-CEO, Vince Byrd, our Vice President and General Manager Consumer Market, Steve Oakland, our Vice President and General Manager Consumer Oils, and Mark Belgya, our Treasurer.

After this brief introduction, I will turn the call over to my brother, Tim, who will recap the year. Mark Belgya will then provide you with the review of our financial performance for the quarter, and I will cover our outlook for fiscal 2004.

At the conclusion of these comments, we will be available to answer your questions. If you have not seen our press release, it is available on our website at www.smuckers.com. If you have any follow-up questions after today's call, please feel free to contact me or Mark.

Before we begin, I would like to remind you that certain statements in this presentation and during the question and answer period that follows, may relate to future events and expectations, and as such constitute forward-looking statements within the meaning of the Private Securities Legislation Reform Act of 1995. I invite you to read the full disclosure statement concerning such forward-looking statements in the press release.

With that, I'll turn the call over to Tim.

Thank you, Richard and good morning everyone, and thank you for joining us on our call today.

The fourth quarter marked another record quarter for the Smucker Company in what has been a remarkable year for us. We are pleased with the performance of our traditional businesses during the quarter, as well as strong contributions once again from Jif and Crisco.

At this time last year, we were anticipating the merger that would being the Jif and Crisco brands into our company.

And at that time, you heard us identify three key objectives. First, successfully integrate the Jif and Crisco businesses, second, begin the revitalization of the Jif and Crisco brands, and third, maintain the momentum of our core businesses.

And to each of those objectives we have achieved each of them. The integration was extremely successful. In fact, several of our customers commented that it was one of the most, one of the smoothest they had seen in our industry.

We increased our marketing support behind Jif and Crisco by nearly 50% over the prior year, and expect to increase it by another 25% this year. Both brands exceeded our sales and profit projections and we expect to continue to enhance the brands' leadership positions.

Although we have seen stronger growth than anticipated across the board, the peanut butter category has been specifically noteworthy. Over the past several months, Jif has continued to gain share of market, and in fact, has recovered the lost share which occurred shortly before and immediatly after the close of the merger.

Some of the strength this year has been economy related. That is, in a difficult environment, we would expect to see peanut butter perform well. But we believe the main driver for the category has been our focus on rejuvenating the brand and the additional investments we have made that helped fuel the growth.

So the benefit has been two-fold as the category has grown, and we have gained share in a growing category.

We've had a somewhat similar experience in the oils category. Two oil brands changed hands and a third player countered by being very aggressive in the market.

This kind of activity is good for the whole category as it draws attention to it and to its brands. We have seen marked improvement in the Cisco brand during the year.

We were pleased to see growth in the consumer oils business during the fourth quarter as a result of the Easter bake period. The category has been getting attention and we expect our investment behind the brand will continue to yield good results.

And while there has been a lot attention paid to our new brands, we have been able to maintain the necessary focus on our core business to grow it by nearly 8%.

As we move into 2004 we are pleased with the positive direction of Jif and Crisco one year after the merger and the continued growth of the Smuckers brand. For the first time we will run a promotion in 2004 where all three brands are combined into one event, capitalizing on the synergistic marketing opportunity that these icon brands offer.

We also remain very enthusiastic about Smuckers Uncrustables. We currently are rolling the product out to the West Coast and expect to be in national distribution by the end of the summer with not only the peanut butter and jelly sandwich, but also our grilled cheese line extension.

Construction of the new Uncrustables facility in Scottsville, Kentucky is also on track for a May, 2004 startup. As we've noted previously, this is an important event as it will provide us the lower cost structure necessary to make a marked improvement in the Uncrustables' profitability.

And finally, in terms of our strategic focus on improving profitability, we are implementing our previously announced restructuring project, which includes the closing of three plants and a reduction in a number of SKU's. This project is on plan and will improve our overall cost to operate over the next number of years.

As we enter 2004, the momentum is strong. And we remain confident that 2004 will again be a record year.

Let me now turn the call over to Mark, who will speak specifically to the results for the fourth quarter and fiscal year.

Thank you, Tim. Good morning, everyone.

The company recorded sales for the fourth quarter ended April 30, 2003 of $329 million. The Jif and Crisco businesses contributed $143 million to sales during the quarter. If you exclude Jif and Crisco, sales increased nearly 6% over the fourth quarter of last year.

All business areas posted increases over the prior year, except for industrials, which was down as planned. You will recall that the company is currently in the process of rationalizing certain low margin contracts. If you'd exclude industrial, the company's traditional businesses were up 13% for the quarter.

Sales of Smucker brand were up 9% for the quarter. This came primarily in our grocery channel and was attributed to growth in our fruit spreads and our natural peanut butter category. In addition, the continued rollout of Uncrustables into the retail channel also contributed to growth during the quarter.

Sales in our special market segments were up 8% over last years fourth quarter, as all business areas realized increases except for industrial. We were especially pleased with the results in our traditional portion-controlled business, where sales of the Smucker branded products were up nearly 10%.

Also in the international area, our Canadian business continues to post strong quarter-over-quarter results.

The overall top line growth translated into strong earnings. Net income was $23.2 million or 46 cents per share in the fourth quarter this year, versus $6.7 million or 28 cents per share in the same period last year. Net income for the current quarter included merger-related costs of 2 cents per share and restructuring costs of 3 cents per share.

Net income in last years quarter included merger costs of 11 cents per share. If you exclude these costs, earnings per share would have been 51 cents this quarter and 39 cents last quarter.

Fourth quarter operating profits increased $28 million over last year and improved as a percent of sales going from 6% to 11.7%. These improvements are mainly a result of the addition of the higher-margin Jif and Crisco businesses to the product portfolio.

For the quarter, SG&A represented 22.2% of sales. An improvement of 190 basis points from 24.1 last year. Even with the marketing expenses, more than doubling last years fourth quarter, we were able to control selling and other administrative costs to allow for the overall improvement.

For the year, SG&A decreased from 24% of sales last year to 21.3% this year. This improvement was in line with our expectations coming out of the merger and it reflects the impact of the merger and our ability to allocate these costs over a broader revenue base.

Looking at the full year, sales were $1.312 billion, up 91% from last year and better than our full-year forecast. Although the Jif and Crisco businesses contributed $571 million to that total, our traditional businesses have also contributed strongly, up nearly 8% over last year, as all our business areas realize increases over the prior year.

Earnings per share for the year were $2.19, compared to $1.45 last year, excluding merger-related costs and restructuring costs in both years.

I will now turn the call back over to Richard who will discuss our expectations for fiscal 2004.

Thank you, Mark.

As Mark said, our performance for the quarter and year was strong. We are seeing the results of our strategic initiatives and we expect to see continued growth.

The fruit spreads, peanut butter, and topping categories all continue to exhibit good growth characteristics. The oils category, which has been soft in recent years, has strengthened. Our market-leading position in each of these categories positions us well to take advantage of the growth opportunities in each of them.

For next year, we expect to see revenue growth of over 6% in fiscal 2004 to approximately $1.4 billion. I want to mention several factors that are implicit in this forecast.

First, in fiscal 2003 we included only 11 months of sales for Jif and Crisco. The additional month of sales in 2004 will contribute approximately 40 to $45 million.

Second, we will continue to lose sales from the planned exit of low margin contracts in our industrial and food service areas. Additional contracts in the industrial area have been identified and we have made the strategic decision to discontinue as the master distributor in food service for the Lee & Perrins brand. We anticipate an additional reduction in sales of about 30 to $35 million resulting from these two activities.

And finally, as part of our restructuring program, we are eliminating approximately 1,000 SKUs, for roughly 40% of our total. This will result in a loss in corresponding sales of approximately $14 million, but have an insignificant impact on earnings.

All of these changes have been reflected in our $1.4 billion forecast. Our forecast for earnings is in the range of 113 to $115 million, which represents an increase in net income of 8% to 10%, thus achieving our strategic goal.

This income range results in earnings per share of $2.25 to $2.30. This guidance is based on the following factors. First, restructuring charges are excluded from the forecast. We expect to incur restructuring expenses of approximately $12 million or 15 cents per share during the year.

Just to recap, the total program is expected to be $18 million. $2.5 million was incurred in fiscal 2003. Savings in fiscal 2004 are not expected to be material, but will be reflected in future years.

Second, we expect construction of the Scottsville, Kentucky plant to be completed by May, 2004. The plant is tracking on budget.

We expect to incur startup costs of 2.5 to $3 million or 3 to 4 cents per share in the third and fourth quarters. In addition, increases in bread cost resulting from the wind-down of our agreements with current suppliers will impact earnings by approximately 3 cents per share. The impact of these additional one-time costs, which are specific to the new facility, total approximately 7 cents per share and have been included in the range of earnings estimates.

Third, we expect pension expenses to increase by approximately $4 million or 5 cents per share. This is the result of lowering the discount rate from 7 1/4 to 6 1/4%. Also, decreasing the return on our asset assumption to 8 3/4% and the lower asset values resulting from poor market performance this past couple of years. These are also already reflected in our range of $2.25 to $2.30.

And finally, the number of fully diluted outstanding shares used to calculate earnings per share will be $50.1 million, which is an increase over the shares outstanding for fiscal 2003.

Based on the mid-range of these earnings estimates, we would expect free cash flow before dividends of about $60 million. This includes capital expenditures of roughly $80 million, up $30 million over fiscal 2003, due to the expenditures on the Scottsville plant.

Fiscal 2004 depreciation and amortization is estimated at $40 million.

In closing, let me say that this year has been very rewarding. We recognize that without the talented and dedicated employees that make up our team we would not have been able to achieve our record results.

As we move forward, we will continue to look toward our basic beliefs to guide us and we believe that we have established a solid foundation for continued sales and earnings growth. In fact, we believe that the best is yet to come.

We thank you for your time and now we'll be happy to answer your questions.

Thank you, gentlemen. The question and answer session will begin at this time. If you're using a speaker phone, please pick up the handset before pressing any numbers. Should you have a question, please press star, 1 on your push-button telephone. If you wish to withdraw your question, please press star, 2. Your question will be taken in the order it is received. Please stand by for your first question. Our first question comes from John McMillin from Prudential. Please state your question.

Congratulations, great quarter.

Thank you, John.

Great year. Just to kind of -- this guidance for '04 is you know, much more a sanguine than it was three months ago. I know you weren't giving official guidance three months ago, but I'm just trying to get a feel for what changed between Cagney, which seems so long ago, and now.

If -- by the term sanguine you mean that we're more direct or more aggressive, I would think sanguine would be the opposite.

I'm sorry, you're certainly more positive about '04 margin gains. I think what you were expressing at Cagney was some concern that earnings growth would be below sales growth, and I know you were giving preliminary guidance there, but I'm just trying to see, in the last two or three months, you know, what's changed to make you more constructive on '04.

Well, I think a couple of things. One is we had a very, very good fourth quarter, as you saw from the results. And the momentum continues. And although you know, we now have completed almost -- well, four quarters basically, with Jif and Crisco, and we just feel much more comfortable since we've doubled the size of the business, we now have four quarters under our belt and we see the momentum's continuing and we really don't see a slowdown in that.

So I guess it's just a confidence level that the numbers are more solid, that our programs that we put in place are working, that the advertising that we've been doing on Crisco for the first time in four years is paying dividends, that the Jif business continues to be strong. So I think it's just a matter of confidence that we now have the businesses.

Can you give us apples to apple numbers for Jif and Crisco, just in terms of volume growth for fiscal '04, how you were able to grow the businesses?

You're talking about the year we just ended or next year?

Yes, the year you just ended.

John, this is Vince Byrd. In terms of the peanut butter business on a shipment basis, we think we're up roughly 7% to 8% on volume, versus their prior year.

And Crisco?

Hi, John, Steve Oakland.

Hi, Steve.

The Crisco business, we basically were able to stabilize that. That business declined if you remember, for the 22 straight periods before we started. And a lot of that, as we got started during the year, it was -- it continued to be soft, so we were able to get that business back even by the end of the year.

Okay. And just on a technical basis. I didn't know you were allowed to give earnings guidance, excluding restructuring charges. Am I missing something?

John, we gave it excluding because our point of comparison, we wanted to be able to make the leap from 2003, 2004, but we've gave the information, specifically what's been excluded, and we feel that the reconciliation of our GAAP number, if you will, to our non-GAAP number is sufficient to understand that movement.

Yeah, I have no problem with it, I just don't understand the rules here. Thanks a lot. Congratulations.

Thanks, John. We're trying to understand the rules too. [ LAUGHTER ]

Thank you. Our next question comes from George Askew from Legg Mason. Please state your question.

Yes, good morning. Nice quarter.

Thanks, George.

Could you give us kind of an overview of what you're seeing in traditional food service? I mean, I was struck by the growth in the portion-controlled business in the quarter. Are you seeing a rebound, you know, I'm excluding Uncrustables here, and just focusing on quick service and casual dining and what not. What are you seeing in the food services space in those areas?

A couple of things. For the industry in total, we're not seeing a significant rebound. Obviously from 9/11, there's been a slight rebound, but if you look at the industry trends and what the analysts for the industry are saying, that it's gonna be another slow year, we happen to be doing -- swimming upstream.

And I think it's partially because I think we've got a great sales team and also partially because people want to offer something special in their restaurants which says something about their restaurants and they can do that with a tabletop offering, which is the type of business that we have. It's a branded tabletop item. And it's a small expense that the operator has to pay to say something about the quality of what he offers his patrons. So we're actually swimming upstream though in that industry right now.

Gotcha. Was there an impact from the Fleming bankruptcy in the quarter?

It was. Mark --

Yes, there was, George. We were impacted. We reserved our exposure to Fleming. It was 2 cents for the quarter, and we believe that fully covers our exposure to the receivables outstanding from them.

Okay. Good. And then, could you give us a little bit of a sense you know, as you look forward into '04, what you see on the acquisition, you know, landscape, and does Steve's departure kind of change your strategy or your capabilities on the M&A front looking forward?

Well, it really doesn't change our outlook or strategy. A lot of that work, at least the contact work, is really, actually done by Tim and I. Because actually Tim -- we're not in the same room, but Tim, you can speak more to that because your association on the board of the GMA and the number of contacts you have. But we're still very active in the M&A look and that's not slowing down at all.

Just to add to that. Not one bit. In fact, I think the momentum continues. So although we were sorry to see Steve leave, we haven't lost a beat.

Okay, thank you very much.

Thank you. Our next question comes from Christiana McLone from Deutsche Bank. Please state your question.

Thank you, good morning. I guess following on a previous question, the sales growth guidance of 6% is above the 5 to 6% offered at Cagney and also includes the SKU rationalization and now this, I guess, discontinued distribution agreement in food service. So, it appears sales are definitely trending above your prior expectations and I'm wondering, in which particular area is that occurring, or is it really across the board?

It really is across the board on almost all our SPA's, with the exception of one we noted, industrial. I would also say that our long-term growth rates we've said was 4% from our core businesses, and you know, we are doing better than that and we just have some really good momentum right now, and right now we expect to see that to continue, certainly through next year and hopefully beyond.

Okay. And next question: I just wanted to get more clarity on the roll out of Uncrustables. So, the peanut butter and jelly as well as the grilled cheese will have national distribution in the retail channel by the end of the summer? Did I understand that correctly?

Yes, you did. What we're doing is we have about 70% ACV currently on the peanut butter and jelly. It's being rolled out, or has been rolled out to the remaining distribution, and we took cheese national with that as well. Now, that will be going through the distribution channels between now and the end of July, basically. We're trying to gear it up for back-to-school when all our support will hit. So we'll have peanut butter and jelly, the cheese, and we have a number of offerings as you know, within peanut butter and jelly in terms of the various packs sizes.

And then in the food service channel, is that rollout complete or are you still increasing the number of districts that you're in?

We're definitely increasing the number of districts. We're in about 4,000 districts right now across the country and we estimate that there are 24 or 25,000 districts in the nation. So, we have a long way to go there.

So, there will be a top line benefit from Uncrustables next year?

Oh yes.

And then in terms of margins, do we need to wait until the Kentucky plan is up and running before we see a margin contribution from Uncrustables, or could we see that next year?

No, you will not see it this coming year. It will be, probably, by the time the plant's up and running and all the bugs worked out, it will probably be the second quarter of fiscal 2005. You will not see it next year.

I would also add, Christiana, we continue to investment spend, so our investment in that product goes beyond just the cost structure. It's because of the support that we're giving it, primarily on the consumer side.

Okay. And then just last question, there's no change in your tax rate assumption for fiscal '04?

No, you can continue to use the 38.

Okay, thank you.

Thank you. Our next question comes from Mark Chekanow from Sidoti. Please state your question.

Good morning, gentlemen. Now that you'll be aniversarying into the ownership of Jif and Crisco, you just talked about the 7 to 8% at least on the Jif side for shipments versus year ago. At what point do we need to be more permanently aggressive with peanut butter assumptions? I know you've talked about the long-term category growth in 3 to 4%. But looking at your guidance, what type of shipment ranges are you looking at, especially on the Jif side? Are we still trending in the mid-to high single digits for your expectations?

No, I would say it's more in line with what our previous guidance has been. Clearly the category has grown in the fourth quarter higher than what we would have normally expected, but at this point we're making the assumptions based on the original guidance that you referenced earlier.

Okay, because when you initially took in this brand, I believe a lot of the earnings surpises or upside surprises from this year were on better-than-expected sales, so if you continue to expect the 3 to 4% by continuing to deliver somewhere in the 5, 6, to 7%, would the logic say that you would again exceed the estimates?

Well, you know, our estimates -- we always like to exceed our estimates if we can, but our estimates are pretty solid, so, and they're pretty aggressive for next year, so we think they're pretty right on.

But they do reflect a resumption of more historical growth trends as opposed --

That is true, that is true.

Okay, and can you talk a little about on the Uncrustables side. How much of the total sales is the trade spending eating up, and at what point would we get into a more normalized trade spending and really see the revenue benefit from Uncrustables?

Mark, we typically don't give that information. As I mentioned earlier, we are clearly investment spending in it, but the investment spending is clearly in trade, but the majority of it actually is in consumer, because as we have said many times, the key to this product is getting people the awareness of the product through advertising and demonstration, getting people to try it. And that's where the majority of our funds are being channeled at this point.

Okay, and just a little bit on Crisco. What are you currently working on to try to change the perception of the oils category as a limited product differentiation? What are you trying to do to differentiate Crisco from other brands in the private label?

I think the first thing, and the biggest thing is our message to the consumer to reconnect. Last year we were able to dust off some old creative and get back on television and in print. This year we just finished shooting the first fresh creative since 1997. So we've got increased spending on the consumer in advertising and a fresh message that we think gets that out.

But there's a number of other things going on. We just started shipping about two weeks ago corn oil for the first time. Crisco has not been in the pure corn oil segment. That's the third largest piece of the vegetable oil business. There's a number of other specific consumer initiatives to support the corn oil business as well as to support the ongoing message of Crisco's relevance to that.

Great, thank you.

Thank you. Our next question comes from Scott Van Winkle from Adams, Harkness Hill. Please state your question.

Hi, I have a couple of questions. The first, with the 1,000 SKU reduction, where is most of that focused?

A lot of that happens to be within our speciality business as you know, it's the smallest segment. And there were a number of speciality products as well as contract pack customers that we're getting out of, so it had very, very small margin impact or sales impact.

Okay, and on the Uncrustables, the grilled cheese being rolled out by the end of summer, is that faster than what you thought a few months ago and what is the difference there with that product that you seem to be a little more aggressive there than you were originally with the PB&Js?

It's clearly exceeded our expectations, we put it in two of the initial rollout markets. Typically when we would roll a new product out, we would normally do that over say a 3-year period. But we felt very confident in the results that we had in those initial markets and made the decision to go with it national this year.

It also increased our sales of our peanut butter and jelly item also, which was a little bit of surprise to us, but it was a nice benefit, and I think part of it was you just get more recognition and more shelf space in the frozen section.

Exactly.

Which -- between the peanut butter and jelly and the grilled cheese, if you exclude schools, I'm wondering if one's more successful than the other in food service.

Well, it's too early to tell because most of our food service business right now is schools, still probably about almost 85 to 90% of it in the food service side is school related. And we're just getting into the traditional food service areas with our Uncrustables, but I would think you know, intuitively, grilled cheese is a pretty great sandwich for kids on menus, so it should be just as good as jams and jellies, I would think.

And are there any other developments going on in the Uncrustables line? Further extensions?

Yes, there are, but we can't talk about them.

Thank you.

Thank you. Our next question comes again from Christiana McLone from Deutsche Bank. Please state your question.

Thanks. I have a follow-up for Steve. In terms of soy bean oil prices. If we see prices begin to come down with the new crop, are you at any way locked in at a higher price, that that could potentially compress your margins? And then if that happens and private labels start to reduce their prices at retail, would there be an automatic retail price decline by the branded players as well? How exactly does that work?

Well, as you know, the price, the futures prices, or the consumer prices of soy bean oil is relatively transparent in the vegetable oil business. Prices do go up and down. When we have a market where we have rising prices, as we've had over the last year, we would use mechanisms that would allow us to participate in the down side of that. So, although we are hedged and we have to have a position to be able to support our customers demand and be able to support you know, pricing for fall bake, that type of thing, we're obviously covered with mechanisms that allow us to participate should that fall.

And to protect our margins.

Yeah, protect our margins. Our strategy would be more option-based than future-based in a market like this.

We have mentioned this before, we make money three ways in the oils business. One is how we market it, second is how well we manufacturer and how efficient our plant is, and we believe that Proctor and Gamble really helped us by giving us a really world class, state-of-the-art plant, and the management team to go along with it. And then third, by how you buy the oils. And that team down there came from Proctor, and there's a group of five and they're very talented. Steve works with them on almost a daily basis to make sure that our marketing programs are covered, basically, whenever he puts out a marketing plan, he makes sure the margins are covered.

Sure.

But we're very careful about how we do that.

And in a rising market, you've got to protect yourself, should those prices turn around.

Okay.

So we're confident that we're in that position.

And is the corn oil category, is that growing faster than like canola or soy bean oil?

You know, it has historically. As you know, one of the major suppliers of that changed hands this year, that market's been a little bit turbulent, but historically yes, historically it's a very Hispanic product and those trends have been very good. I think you've got to look at a longer term trend than the short term trends because of the fact that the largest supplier that has changed hands, and there's been some changes in their strategy. So traditionally yes, and we think it will it continue.

What would be the long-term trend in terms of growth?

I think at times it's been growing at 2 to 3% a year, if you go back. You know, you've got to factor out the last 12 months or so.

Okay, thank you.

The other factor we might mention with that is that we've owned the business, basically now 12 months, but within the first ten months we came out with a new product for Crisco, which is the first time, besides being on air for the first time, within the first ten months we've rolled out a new product. So we expect to do those types of initiatives as quickly as possible.

Thank you.

Thank you. Our next question comes from Bob Simonson from William Blair. Please state your question.

Good morning. Richard, I didn't notice a cash flow statement in the press release, but I did notice you got a lot of cash. Was that due to shifts in your working capital needs during the years? Can you give us the actual capex number that you had last year and the depreciation number? And the second question is, you do have a lot of cash as you look at the priorities for this year and next year, this '04 and '05 years. I know it's the board's discretion as to the dividend. Can you talk a little bit to the rising dividend? Can you talk about, you gave a capex number for this year, maybe for the following year? And then obviously acquisitions. And I think, if I'm correct, you can start buying back shares not in the fiscal '04, but in '05. How do you rank these priorities of spending? What is a very proficient cash machine.

Bob this is Mark. Let me answer a few of the questions then I'll turn it over to Richard. Just in terms of absolute numbers, our capital expenditures for the past year was approximately $49 million, which is obviously well above prior, and as you mentioned next year we're looking at $80 million. In the following year we will see that number come down. We have stated that our traditional run rate, we believe, is somewhere between 40 and $45 million. Whether or not we get quite down to the level in '05 is unseen, but it will certainly be below '04's number. Our depreciation amortization for this past year was approximately $35 million, and again, as Richard noted, we see that going up to approximately $40 million next year.

And one other thing, Mark you might answer, our working capital as a percent of sales has dropped from--

Yeah, one of the points that we look at, it dropped from previous to the acquisition to about 16% of working cap and net sales at year end and that excludes cash. We've been able to lower that to below 9% for this past year, and that's reflective of the inventory turns, in particular of Jif and Crisco as well as the fact that most of those sales are to retail and the day turns there are much quicker than the rest of our business.

But we've made a significant effort too also in our core business to cut down our working capital needs and done a great job of doing that. Exactly. Also, just in terms of use of cash in the future -- obviously as you said, we can not buy stock back for another year or so. Acquisitions is our primary use in terms of going forward as we look for acquisitions, and as those come on board.

Also, our dividend policy, as you know, we went up this year and we've tried to keep our dividend pay-out rates somewhere between 40% and 45%. I think we're right about 40% right now.

Okay, thank you very much.

Thank you.

Just a reminder, ladies and gentlemen, if you do have a question, please press star, 1 on your push-button telephone at this time. Thank you. Our next question comes again from Scott Van Winkle from Adams, Harkness and Hill.

Do you have any consumption IRI data you could share with us? I remember last quarter your numbers were different than some of us had on the street.

This is Vince. I can share what you would have, I guess, this would be consistent with what you have in terms of again, you know, our focus tends to be on longer-term, 12 and 52 weeks, and also just again to remind you, that of course it doesn't include the club channel nor the Wal-Mart business, but I think this information's all public. You're aware that on fruit spread business our business was up 10%. The category was up nearly 5%. In peanut butter, the category was up 7%, we were up nearly 12%. And I have the oils number, the category was up 10% and we were up 17%. So in every case we outpaced the category and grew share.

Thank you.

Thank you. Just a reminder, ladies and gentlemen, if you do have a question, please press star, 1 on your push-button telephone at this time. Gentlemen, at this time I'm showing no further questions and I will now turn the conference call back to you to conclude.

Again, thank you very much for taking the time. We appreciate your interest and look forward to staying in touch and another great year. Thank you. Have a great day! Thanks.

Ladies and gentlemen, if you wish to access the rebroadcast after this live call, you may do so by dialing 1-800-428-6051 or 1-973-709-2089 with a pass code of 296697. This concludes our conference call for today. Thank you all for participating and have a nice day. All parties may now disconnect.