In summarizing its fiscal second-quarter performance Friday, jam purveyor Smucker (NYSE:SJM) said: "The performance of our brands was strong and exceeded our expectations for the quarter." From which an investor can presume only that Smucker had pretty low expectations.

According to the company's earnings release, sales increased 57% from fiscal Q2 2004 to the just-closed Q2 2005. But if you look more closely, in Q2 2003, which predated Smucker's purchase of International Multifoods Corp., the company had sales of $374.2 million. One year later, total sales did indeed increase by 57%, or $214.7 million. But $209.2 million of that came from the new Multifoods unit. In other words, the company's organic growth amounted to just $5.5 million, or 1.5%. That's less than the rate of inflation but apparently still more than the company had expected to achieve.

The sales numbers for the first six months of fiscal 2005 look similar. Total sales of $1.002 billion were $288.9 million more than the company produced in the first half of fiscal 2004. Again, almost all of that increase came prepackaged in the form of the Multifoods unit, which brought with it $284.5 million in sales. Result: Organic sales growth was just $4.4 million, or 0.6%.

Overall, year-to-date earnings from Smucker's core operations and from Multifoods combined rose 8.7% to $1.25 per diluted share. Unfortunately for existing shareholders, though, that wasn't the only thing that rose. On a weighted average basis, the company's basic share count increased 12.7% year on year (Multifoods was paid for primarily in Smucker stock). Moreover, net debt (long-term debt minus cash) now stands at $400 million, up from last year's $78.2 million.

Operationally, it seems that Smucker acquired a fair number of logistical problems when it bought Multifoods. For example, while sales increased 41% because of the addition of Multifoods' revenues, accounts receivable jumped more than 90% and inventories nearly 80%.

In short, Smucker has problems galore. But looking on the bright side, practically anything good that the company can accomplish over the next 12 months should generate a positive comparison with this year's results. If the company can begin paying down debt, keep stock dilution in check, and grow sales and profits organically, the market may accord it the higher price-to-earnings ratios now assigned to more profitable competitors Unilever (NYSE:UN) and Kraft (NYSE:KFT), and Smucker may retain its lead over less profitable competitors ConAgra (NYSE:CAG) and Ralcorp (NYSE:RAH).

For more Foolish news and views on Smucker, twist open the following:

Fool contributor Rich Smith has no position in any of the companies mentioned in this article.