The J. M. Smucker Company Annual Report 2004

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FY2004 Annual Report · The J. M. Smucker Company

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ANNUAL REPORT
— 2004 —

FINANCIAL HIGHLIGHTS
— The J. M. Smucker Company —

(Dollars in thousands, except per share data)

Net sales
Net income and net income per common share:

Net income
Net income per common share – assuming dilution

Income and income per common share

before restructuring and merger and integration costs: (1)
Income
Income per common share – assuming dilution

Common shares outstanding at year end
Number of employees

(1)Reconciliation to net income:
Income before income taxes
Merger and integration costs
Cost of products sold – restructuring
Other restructuring costs

Income before income taxes, restructuring,

and merger and integration costs

Income taxes

Income before restructuring and merger and integration costs

Year Ended April 30,

2004

2003

$1,417,011

$1,311,744

$ 111,350
$ 2.21

$ 96,342
$ 2.02

$ 121,993
$ 2.42

$ 104,432
$ 2.19

50,174,707
2,950

49,767,540
2,775

$ 178,819
1,266
8,464
7,362

$ 155,390
10,511
1,256
1,281

$ 195,911
73,918

$ 168,438
64,006

$ 121,993

$ 104,432

CONTENTS

ON OUR COVER

Letter to Shareholders

“Freedom from Want,” by Norman Rockwell

Five-Year Summary of Selected Financial Data

Created for the March 6, 1943, issue of
the Saturday Evening Post

In honoring us as America’s best place to work, Fortune
magazine observed that The J. M. Smucker Company is
“...a throwback to a simpler time. If Norman Rockwell were
to design a corporation, this would be it.” This year’s cover
represents what our “Family of Brands” is all about…
bringing generations of friends and families together to
celebrate the goodness of homemade meals.

Summary of Quarterly Results of Operations

Stock Price Data

Management’s Discussion and Analysis

Report of Registered Public Accounting Firm

Consolidated Financial Statements

Notes to Consolidated Financial Statements

Management’s Report on Responsibility for
Financial Reporting

Directors, Officers, and General Managers

Properties

Shareholder Information

DEAR SHAREHOLDERS AND FRIENDS:

Fiscal 2004 was remarkable in the history of The J. M. Smucker Company.
It was a year of many achievements that will contribute to our Company’s strength and

success for a long time to come. Each of our 2004 accomplishments is significant in its

own right. The fact that we marked so many milestones in a single year is testimony

to the foresight, hard work, and dedication of the entire Smucker team.

Most notably, in 2004:

acquisitions will increase our

adherence to our Company’s found-

✸ We completed our first full year

of ownership of the Jif and Crisco

brands, which helped contribute

sales by more than 50 percent and

ing principles and the atmosphere

grow our earnings per share over

we foster.

the next several years.

Our “Basic Beliefs”— Quality,

to another year of record sales

✸ The J. M. Smucker Company

and profits.

✸ We announced our purchase

of International Multifoods

topped Fortune magazine’s annual

list of “The 100 Best Companies

to Work For.”

People, Ethics, Growth, and

Independence — are the foundation

on which we base all of our decisions

and actions. Our employees’ dedica-

tion to these beliefs earned us this

Corporation, which, in the

We begin our discussion of the

year’s award. And while being

U.S., includes the icon brands

year’s highlights by expressing our

named number one is a tremendous

Pillsbury, Hungry Jack, and

gratitude for being chosen “The Best

honor, we remain committed to

Martha White, and in Canada,

Company to Work For.” While we

doing what’s right every day,

Robin Hood and Bick’s. These

did not actively pursue this recogni-

regardless of formal recognition.

tion, we believe it is the result of our

Smucker’s, Jif, and Crisco are the heart of our
U.S. Retail business and exemplify our commitment

to providing products that are “convenient,

good and good for you, and that make you smile.”

International Multifoods

under our other Canadian brands,

opportunities to create new products

AcquisitionI

We were very pleased in 2004

to come to an agreement to pur-

chase International Multifoods

Corporation. This acquisition sup-

ports our strategy to own and market

North American icon brands that

are sold in the center of the store and

that hold the number-one market

position or have the potential to do so.

In Canada, Robin Hood flour and

Bick’s pickles and condiments both

hold leadership positions in their

respective markets and categories.

Combining the Multifoods business

with Smucker’s existing business in

Canada gives us significant critical

mass in the market, with total sales,

in U.S. dollars, of approximately

$400 million. It also enhances our

including Smucker’s, Jif, Crisco,

Double Fruit, Map-O-Spread,

and Shirriff.

In the United States, our owner-

ship of Crisco, Pillsbury, and Martha

White — all sold in the baking

aisle — along with Hungry Jack,

Smucker’s, and Jif, creates for us

many opportunities to enhance our

consumer and trade promotions,

particularly during the all-important

holiday baking season.

Our brands have similar histories,

are enjoyed at family occasions, and

are found in almost every American

home. These brands support our

vision of providing our consumers

We welcome these brands to

with products that are convenient,

our family and believe they provide

good and good for you, and that

a foundation to add shareholder

bring smiles to families at every

value for many years. For the next

meal occasion.

12 months, we will concentrate on

The brands acquired from

facilitating a successful, smooth

Multifoods will add more than

integration, and we will invest in the

50 percent to our sales, and the

brands to achieve sales growth. We

synergies the Multifoods acquisition

expect to obtain $40 to $60 million in

provide will add to our profits,

benefits during the next three years,

beginning in the first year, but pri-

mostly from leveraging our sales and

marily in the second and third years

distribution network and through

after the close of the transaction.

overhead reductions.

Record ResultsI

We achieved record results in

fiscal 2004, creating a strong base for

future growth. Sales were $1.4 billion,

up eight percent. Earnings were

$111 million, up 16 percent. Our

earnings number is significant, as it

is more than three times greater than

it was just two years ago. Earnings

per share were $2.21, up nine percent,

and reflect increased shares out-

Our Company’s strong performance

standing as a result of the Jif and

was broad-based, with all of our primary

Crisco merger.

brands — Smucker’s, Jif, Crisco, and

Market capitalization of our

R.W. Knudsen Family — achieving

Company has increased from

record sales and earning levels.

$850 million two years ago to

Following is a discussion of key

$2.6 billion today, and our shares

points in each of our business areas.

outstanding have grown from

25 million to 50 million, giving our

shareholders the greatest liquidity

in the history of our Company.

This is important as we continue

to execute our growth strategy.

Smucker’s, Jif, and Crisco are the heart of our
U.S. Retail business and exemplify our commitment

to providing products that are “convenient,

good and good for you, and that make you smile.”

International Multifoods

under our other Canadian brands,

opportunities to create new products

AcquisitionI

We were very pleased in 2004

to come to an agreement to pur-

chase International Multifoods

Corporation. This acquisition sup-

ports our strategy to own and market

North American icon brands that

are sold in the center of the store and

that hold the number-one market

position or have the potential to do so.

In Canada, Robin Hood flour and

Bick’s pickles and condiments both

hold leadership positions in their

respective markets and categories.

Combining the Multifoods business

with Smucker’s existing business in

Canada gives us significant critical

mass in the market, with total sales,

in U.S. dollars, of approximately

$400 million. It also enhances our

including Smucker’s, Jif, Crisco,

Double Fruit, Map-O-Spread,

and Shirriff.

In the United States, our owner-

ship of Crisco, Pillsbury, and Martha

White — all sold in the baking

aisle — along with Hungry Jack,

Smucker’s, and Jif, creates for us

many opportunities to enhance our

consumer and trade promotions,

particularly during the all-important

holiday baking season.

Our brands have similar histories,

are enjoyed at family occasions, and

are found in almost every American

home. These brands support our

vision of providing our consumers

We welcome these brands to

with products that are convenient,

our family and believe they provide

good and good for you, and that

a foundation to add shareholder

bring smiles to families at every

value for many years. For the next

meal occasion.

12 months, we will concentrate on

The brands acquired from

facilitating a successful, smooth

Multifoods will add more than

integration, and we will invest in the

50 percent to our sales, and the

brands to achieve sales growth. We

synergies the Multifoods acquisition

expect to obtain $40 to $60 million in

provide will add to our profits,

benefits during the next three years,

beginning in the first year, but pri-

mostly from leveraging our sales and

marily in the second and third years

distribution network and through

after the close of the transaction.

overhead reductions.

Record ResultsI

We achieved record results in

fiscal 2004, creating a strong base for

future growth. Sales were $1.4 billion,

up eight percent. Earnings were

$111 million, up 16 percent. Our

earnings number is significant, as it

is more than three times greater than

it was just two years ago. Earnings

per share were $2.21, up nine percent,

and reflect increased shares out-

Our Company’s strong performance

standing as a result of the Jif and

was broad-based, with all of our primary

Crisco merger.

brands — Smucker’s, Jif, Crisco, and

Market capitalization of our

R.W. Knudsen Family — achieving

Company has increased from

record sales and earning levels.

$850 million two years ago to

Following is a discussion of key

$2.6 billion today, and our shares

points in each of our business areas.

outstanding have grown from

25 million to 50 million, giving our

shareholders the greatest liquidity

in the history of our Company.

This is important as we continue

to execute our growth strategy.

Our newest U.S. brands — Pillsbury, Hungry Jack, and
Martha White — are at home on every table, whether the

occasion is a family gathering, special celebration, or

simply a satisfying meal on a busy day.

Scottsville, Kentucky, will provide us

the cooking oil category during that

with increased capacity and lower

key selling period. Crisco also has

operating costs far into the future.

benefited from increased advertising,

— Jif —

Consumer response to our invest-

ment in the Jif brand has exceeded

our expectations, with sales growing

20 percent in volume since we

acquired the brand. In fiscal 2004,

Jif sales grew by 15 percent, and the

brand achieved a record 36 percent

share of market. Our Smucker’s,

Laura Scudder, and Adam’s natural

peanut butter brands also grew,

boosting our overall share of the

including the first television

campaign in more than five years.

Crisco regained its position as the

category innovator, thanks to our

launch of new products, including

shortening with zero grams of trans

fat per serving, olive oil spray, and

100% corn oil.

Special Markets SegmentI

peanut butter market to 43 percent.

Our Special Markets segment

We continue to increase advertising

includes our Beverage, International,

and consumer programs to support

Foodservice, and Industrial busi-

the Jif brand, and we are making

nesses. Segment sales increased

significant capital investments to

eight percent over the prior year,

increase the capacity of our facility

excluding our Industrial area, where

in Lexington, Kentucky.

we expected a sales decline due to

— Crisco —

the planned exit of low-margin

contracts.

43.5 percent, largely due to sales

growth in our Sugar Free and

Squeeze offerings.

The continued success of

Uncrustables also contributed to

the growth of the Smucker’s brand.

Consumer demand for Uncrustables

In fiscal 2004, we continued

products led us to make the single

to see positive momentum in our

largest capital investment in the

Crisco business. Driven by strong

history of our Company. Our new

“fall bake” consumer and trade

$70 million production facility in

support, we gained market share in

U.S. Retail SegmentI

U.S. Retail, our largest segment,

had another outstanding year with

total sales up 13 percent. This seg-

ment includes sales of Smucker’s,

Jif, and Crisco products to grocery,

drug, mass retail, and warehouse

club channels.

Important, too, is the wide array

as well as our recently introduced

of choices we offer in terms of vari-

zero grams trans fat per serving

eties, flavors, sizes, packaging, and

Crisco shortening.

ingredients. We continue to respond

to consumers who seek products

to satisfy individual dietary needs.

Most recent examples include our

Sugar Free and Low Sugar fruit

spreads and Simply Jif peanut butter,

which appeal to consumers who are

watching their carbohydrate intake,

— Smucker’s —

Sales of Smucker’s products grew

12 percent, thanks to our continued

leadership in the fruit spreads, ice

cream toppings, and natural peanut

butter segments. Our fruit spreads

share of market reached a record

Our newest U.S. brands — Pillsbury, Hungry Jack, and
Martha White — are at home on every table, whether the

occasion is a family gathering, special celebration, or

simply a satisfying meal on a busy day.

Scottsville, Kentucky, will provide us

the cooking oil category during that

with increased capacity and lower

key selling period. Crisco also has

operating costs far into the future.

benefited from increased advertising,

— Jif —

Consumer response to our invest-

ment in the Jif brand has exceeded

our expectations, with sales growing

20 percent in volume since we

acquired the brand. In fiscal 2004,

Jif sales grew by 15 percent, and the

brand achieved a record 36 percent

share of market. Our Smucker’s,

Laura Scudder, and Adam’s natural

peanut butter brands also grew,

boosting our overall share of the

including the first television

campaign in more than five years.

Crisco regained its position as the

category innovator, thanks to our

launch of new products, including

shortening with zero grams of trans

fat per serving, olive oil spray, and

100% corn oil.

Special Markets SegmentI

peanut butter market to 43 percent.

Our Special Markets segment

We continue to increase advertising

includes our Beverage, International,

and consumer programs to support

Foodservice, and Industrial busi-

the Jif brand, and we are making

nesses. Segment sales increased

significant capital investments to

eight percent over the prior year,

increase the capacity of our facility

excluding our Industrial area, where

in Lexington, Kentucky.

we expected a sales decline due to

— Crisco —

the planned exit of low-margin

contracts.

43.5 percent, largely due to sales

growth in our Sugar Free and

Squeeze offerings.

The continued success of

Uncrustables also contributed to

the growth of the Smucker’s brand.

Consumer demand for Uncrustables

In fiscal 2004, we continued

products led us to make the single

to see positive momentum in our

largest capital investment in the

Crisco business. Driven by strong

history of our Company. Our new

“fall bake” consumer and trade

$70 million production facility in

support, we gained market share in

U.S. Retail SegmentI

U.S. Retail, our largest segment,

had another outstanding year with

total sales up 13 percent. This seg-

ment includes sales of Smucker’s,

Jif, and Crisco products to grocery,

drug, mass retail, and warehouse

club channels.

Important, too, is the wide array

as well as our recently introduced

of choices we offer in terms of vari-

zero grams trans fat per serving

eties, flavors, sizes, packaging, and

Crisco shortening.

ingredients. We continue to respond

to consumers who seek products

to satisfy individual dietary needs.

Most recent examples include our

Sugar Free and Low Sugar fruit

spreads and Simply Jif peanut butter,

which appeal to consumers who are

watching their carbohydrate intake,

— Smucker’s —

Sales of Smucker’s products grew

12 percent, thanks to our continued

leadership in the fruit spreads, ice

cream toppings, and natural peanut

butter segments. Our fruit spreads

share of market reached a record

In Canada, the addition of leading brands like
Robin Hood and Bick’s allows us to provide the consumer

with an even wider variety of high-quality products,

gives us entry into exciting new categories,

and opens the door to countless opportunities.

— Beverage —

Brazil due to economic conditions

Beverage sales were up eight per-

and in Scotland because of increased

cent compared to last year due to the

competition.

fact that our branded share in the

natural foods channel achieved a new

high of 54.5 percent. 2004 product

launches that contributed to the sales

increase included R.W. Knudsen

organic Blueberry Nectar, organic

Mango Nectar, organic Orange

Carrot Nectar, and Santa Cruz

Organic 750 ml Sparkling Limeade

and Lemonade.

— Foodservice —

Foodservice sales increased

11 percent, excluding the impact

of planned discontinued sales from

a distribution arrangement with

Lea & Perrins, Inc. Sales of our

portion control items, particularly

our Smucker’s brand, experienced

solid growth. Sales of Uncrustables,

despite capacity constraints earlier

— International —

in the year, increased 39 percent

International sales were up 14 per-

in the school segment. We remain

cent. As measured in local currencies,

optimistic about the short- and long-

our Canadian, Australian, and

term growth potential for this unique

Mexican divisions realized sales

sandwich concept. The startup of

increases of eight, six, and 25 percent,

our dedicated Uncrustables facility

respectively. Sales were down in

in Scottsville, Kentucky, occurred

on schedule in May, and we expect

to achieve projected capacity and

cost objectives.

— Industrial —

softness in the sales of bakery ingredi-

ents. Whenever possible, we work

closely with our Industrial customers

to develop ingredients for new prod-

ucts or product varieties that satisfy

changing consumer preferences. Our

Industrial focus remains on sustaining

Sales were down 34 percent versus

and building profitable business

last year. Approximately half of

with existing customers while maxi-

the decrease was planned, and

mizing our utilization of assets.

the remainder was caused by

Supply ChainI

Our Supply Chain Optimization

Project (SCOP) and the implemen-

tation of the Smucker Quality

Management System (SQMS), two

major initiatives we began in 2003,

are under way and will remain in

progress even beyond next year.

— Supply Chain Optimization

In terms of product rationalization,

Project (SCOP) —

we have eliminated almost 1,000 of

The objective of SCOP is to

approximately 3,000 products. We

reduce total delivered costs to our

targeted low-volume and low-margin

customers. We are focusing on deter-

items that represented less than three

mining the most efficient locations to

percent of sales and less than two

produce and distribute our products

percent of incremental profits. Our

and will continue to look for over-

goal was to eliminate redundancies

head cost-reduction opportunities as

in sizes, flavors, and recipes without

we integrate Multifoods’ brands with

limiting the variety consumers

our current business.

expect from us.

In Canada, the addition of leading brands like
Robin Hood and Bick’s allows us to provide the consumer

with an even wider variety of high-quality products,

gives us entry into exciting new categories,

and opens the door to countless opportunities.

— Beverage —

Brazil due to economic conditions

Beverage sales were up eight per-

and in Scotland because of increased

cent compared to last year due to the

competition.

fact that our branded share in the

natural foods channel achieved a new

high of 54.5 percent. 2004 product

launches that contributed to the sales

increase included R.W. Knudsen

organic Blueberry Nectar, organic

Mango Nectar, organic Orange

Carrot Nectar, and Santa Cruz

Organic 750 ml Sparkling Limeade

and Lemonade.

— Foodservice —

Foodservice sales increased

11 percent, excluding the impact

of planned discontinued sales from

a distribution arrangement with

Lea & Perrins, Inc. Sales of our

portion control items, particularly

our Smucker’s brand, experienced

solid growth. Sales of Uncrustables,

despite capacity constraints earlier

— International —

in the year, increased 39 percent

International sales were up 14 per-

in the school segment. We remain

cent. As measured in local currencies,

optimistic about the short- and long-

our Canadian, Australian, and

term growth potential for this unique

Mexican divisions realized sales

sandwich concept. The startup of

increases of eight, six, and 25 percent,

our dedicated Uncrustables facility

respectively. Sales were down in

in Scottsville, Kentucky, occurred

on schedule in May, and we expect

to achieve projected capacity and

cost objectives.

— Industrial —

softness in the sales of bakery ingredi-

ents. Whenever possible, we work

closely with our Industrial customers

to develop ingredients for new prod-

ucts or product varieties that satisfy

changing consumer preferences. Our

Industrial focus remains on sustaining

Sales were down 34 percent versus

and building profitable business

last year. Approximately half of

with existing customers while maxi-

the decrease was planned, and

mizing our utilization of assets.

the remainder was caused by

Supply ChainI

Our Supply Chain Optimization

Project (SCOP) and the implemen-

tation of the Smucker Quality

Management System (SQMS), two

major initiatives we began in 2003,

are under way and will remain in

progress even beyond next year.

— Supply Chain Optimization

In terms of product rationalization,

Project (SCOP) —

we have eliminated almost 1,000 of

The objective of SCOP is to

approximately 3,000 products. We

reduce total delivered costs to our

targeted low-volume and low-margin

customers. We are focusing on deter-

items that represented less than three

mining the most efficient locations to

percent of sales and less than two

produce and distribute our products

percent of incremental profits. Our

and will continue to look for over-

goal was to eliminate redundancies

head cost-reduction opportunities as

in sizes, flavors, and recipes without

we integrate Multifoods’ brands with

limiting the variety consumers

our current business.

expect from us.

Celebrating the joy of eating,
bringing loved ones together, and making

every dining occasion easier and more enjoyable…

this is what The J. M. Smucker Company’s

“Family of Brands” is all about.

Based on our branded North

Basic Beliefs. Fundamentally,

with a special place in the hearts of

American product strategy, this

SQMS promotes the identification

our consumers that includes strong

past year we closed and sold our fruit

and reapplication of best practices

associations with family meals and

processing locations in Woodburn,

throughout the organization.

fond memories. Each of these brands

Oregon, and Watsonville, California.

The overall goal of SQMS is to

has great potential for growth on its

We continue to process strawberries

encourage total employee involve-

own, but together, each will lift the

at our Oxnard, California, plant and

ment to identify and eliminate loss

others higher.

grapes at our facility in Grandview,

and ultimately achieve zero defects.

More than a family of brands, our

Washington. We still process more

Our Cincinnati and Lexington

Company is a family of people. We

than 80 percent of the total volume

plants have utilized SQMS concepts

firmly believe that today’s employees

of fruit we require.

for the last few years with excellent

are the most talented, energized indi-

In 2004, we made a nearly

results. Both of these plants will

viduals we have ever assembled.

$2 million investment to consolidate

serve as models as we implement

They are dedicated to steady and

our facilities in Ripon, Wisconsin.

SQMS across the Company.

balanced growth and to achieving it

This year, we will consolidate

Uncrustables production from

West Fargo, North Dakota, and

Watsonville, California, into our

new plant in Scottsville, Kentucky.

OutlookI

— Smucker Quality Management

We began our discussion by

Systems (SQMS) —

commenting that fiscal 2004 was

A major fiscal 2005 initiative is to

a remarkable year. But even more

ethically, honestly, and always with

the consumer first in mind.

We thank you, our shareholders,

for your support, and express our

appreciation to our customers,

consumers, suppliers, and employees

for their loyalty and dedication

throughout the years.

implement SQMS in our plants and

important is the considerable

Sincerely,

administrative functions. SQMS

promise the future holds.

brings to our Company proven work

The J. M. Smucker Company is

systems that are consistent with our

a family of respected brands, each

Tim Smucker

Richard Smucker

FINANCIAL REVIEW
I

Five-Year Summary of Selected Financial Data

Summary of Quarterly Results of Operations

Stock Price Data

Management’s Discussion and Analysis

Report of Registered Public Accounting Firm

Consolidated Financial Statements

Notes to Consolidated Financial Statements

Management’s Report on Responsibility for
Financial Reporting

Directors, Officers, and General Managers

Properties

Shareholder Information

FIVE-YEAR SUMMARY OF SELECTED FINANCIAL DATA

The following table presents selected financial data for each of the five years in the period ended April 30, 2004. The selected
financial data was derived from the consolidated financial statements and should be read in conjunction with “Management’s
Discussion and Analysis of Results of Operations and Liquidity and Capital Resources” and the consolidated financial statements
and notes thereto.

(Dollars in thousands, except per share data)

2004

2003

2002

2001

2000

Year Ended April 30,

Statement of Income:

Net sales
Income before cumulative effect of change

in accounting method

Cumulative effect of change in

accounting method

Net income

Financial Position:

Long-term debt
Total assets
Shareholders’ equity

Other Data:

Earnings per common share:

Income before cumulative effect of change

in accounting method

Cumulative effect of change in

accounting method

Net income

Income before cumulative effect of change

$1,417,011

$1,311,744

$687,148

$651,242

$641,885

$ 111,350

$ 96,342

$ 30,851

$ 28,198

$ 26,273

—

(992)

—

$ 111,350

$ 96,342 $ 30,851

$ 27,206

$ 26,273

$ 135,000
1,684,125
1,210,693

$ 135,000
1,615,407
1,124,171

$135,000
524,892
280,144

$135,000
479,104
250,785

$ 75,000
477,698
320,608

$ 2.24

$ 2.04

1.33

$ 1.17

$ 0.97

—

(0.04)

—

$ 2.24

$ 2.04

$ 1.33

$ 1.13

$ 0.97

in accounting method – assuming dilution

$ 2.21

$ 2.02

$ 1.31

$ 1.16

$ 0.97

Cumulative effect of change

in accounting method – assuming dilution

—

(0.04)

—

Net income – assuming dilution

$ 2.21

$ 2.02

$ 1.31

$ 1.12

$ 0.97

Dividends declared per common share

$ 0.94

$ 0.83

$ 0.68

$ 0.65

SUMMARY OF QUARTERLY RESULTS OF OPERATIONS

The following is a summary of unaudited quarterly results of operations for the years ended April 30, 2004 and 2003.

(Dollars in thousands, except per share data)

2004

2003

Quarter Ended

Net Sales

Gross Profit

Net Income

July 31, 2003
October 31, 2003
January 31, 2004
April 30, 2004

July 31, 2002
October 31, 2002
January 31, 2003
April 30, 2003

$350,307
385,998
355,297
325,409

$274,936
366,975
340,826
329,007

$120,699
135,229
129,408
107,442

$ 92,352
126,412
122,931
114,386

$25,785
32,067
31,318
22,180

$16,017
29,087
27,993
23,245

Net Income per
Net Income per
Common Share –
Common Share Assuming Dilution

$0.52
0.64
0.63
0.44

$0.39
0.59
0.56
0.47

$0.51
0.64
0.62
0.44

$0.39
0.58
0.56
0.46

Annual earnings per share may not equal the sum of the individual quarters due to differences in the average number of shares outstanding during the respec-
tive periods.

STOCK PRICE DATA

The Company’s common shares are listed on the New York Stock Exchange — ticker symbol SJM. The table below presents the
high and low market prices for the shares and the quarterly dividends declared. There were approximately 477,420 shareholders
as of the June 14, 2004 record date, of which 129,565 were registered holders of common shares.

2004

2003

Quarter Ended

July 31, 2003
October 31, 2003
January 31, 2004
April 30, 2004

July 31, 2002
October 31, 2002
January 31, 2003
April 30, 2003

High

$42.01
43.82
47.56
53.50

$37.50
38.84
42.25
40.80

Low

$35.64
37.61
43.10
46.03

$28.71
32.03
33.30
33.00

Dividends

$0.23
0.23
0.23
0.25

$0.20
0.20
0.20
0.23

MANAGEMENT’S DISCUSSION AND ANALYSIS

RESULTS OF OPERATIONS
I
On June 18, 2004, the Company completed its acquisition of
Minneapolis-based International Multifoods Corporation
(Multifoods). Multifoods’ primary brands in the United
States include Pillsbury baking mixes and ready-to-spread
frostings; Hungry Jack pancake mixes, syrup, and potato side
dishes; Martha White baking mixes and ingredients; and Pet
evaporated milk and dry creamer. In Canada, Multifoods has
market leadership positions with Robin Hood flour and baking
mixes, and Bick’s pickles and condiments. This transaction
will be accounted for as a purchase business combination.

The operating results and financial position of the Company
after the acquisition are expected to be significantly different
including
from those reported
Management’s Discussion and Analysis and the consolidated
financial statements. See Note B to the consolidated financial
statements for additional information on the acquisition and
pro forma financial information of the combined Company.

in this annual report,

— Net Sales —

The following table presents net sales information.

Year Ended April 30,

(Dollars in thousands)

2004

2003

2002

U.S. retail market:
Smucker’s brand
Jif and Crisco brands
Other brands

Total U.S. retail

market

$ 327,696 $ 293,140
553,394
43,337

631,607
43,003

$ 278,472
—
45,164

$1,002,306

$ 889,871

$ 323,636

Special markets

$ 414,705 $ 421,873

$ 363,512

Total net sales

$1,417,011

$1,311,744

$ 687,148

Sales in 2004 increased $105.3 million, or eight percent, from
2003. The Jif and Crisco brands contributed $85.0 million of
the increase in 2004. Net sales for 2004 benefited from one
additional month of Jif and Crisco sales totaling $47.3 million,
as the merger closed on June 1, 2002, one month into the 2003
fiscal year. Other factors favorably impacting sales in 2004
were foreign exchange rates and price increases in the short-
ening and oils business.

In the U.S. retail market segment, sales were $1,002.3 million
in 2004, up $112.4 million, or nearly 13 percent, from 2003.

Jif and Crisco contributed nearly 70 percent of the overall
2004 sales increase for the segment. Smucker’s branded sales
also had strong growth during 2004, up 12 percent over 2003,
as the Company realized increased sales in its fruit spreads
and natural peanut butter categories. In addition, sales of
Uncrustables increased significantly in 2004 as the Company
completed its national rollout. The only area within the seg-
ment realizing declines during 2004 was specialty foods, which
was down three percent due to a planned decrease in non-
branded business.

The special markets segment is comprised of the interna-
tional, foodservice, beverage, and industrial business areas.
Sales in this segment were $414.7 million in 2004 compared to
$421.9 million in 2003, a decrease of two percent. This decline
reflects the planned exit of certain low-margin contracts in
both the industrial and foodservice business areas. Excluding
these planned decreases, the special markets segment would
have been up five percent in 2004. Sales in 2004 were up in the
international, beverage, and foodservice areas, while sales in
the industrial area were down from 2003.

In the international area, sales were up 14 percent in 2004
from 2003 due primarily to favorable exchange rates, which
contributed approximately $16.5 million to the overall sales
growth of $17.2 million. As measured in local currency,
Canadian sales were strong, up eight percent in 2004, due pri-
marily to the impact of the additional month of Crisco sales.
Sales of Henry Jones Foods (HJF) in Australia were up six
percent in 2004 due primarily to growth in sales to industrial
customers. Sales in Mexico and Latin America experienced
strong growth in 2004 with the entire market up over 20 percent
from 2003. All other regions, including Brazil and Scotland,
and other export markets were down from 2003.

In the foodservice area, 2004 sales were up three percent from
2003 due to a six percent growth in traditional portion control
items, primarily under the Smucker’s brand, and increased
sales in the schools market. Sales of Uncrustables increased
39 percent in 2004 in the schools market despite capacity con-
straints that were experienced during much of the year.
Effective May 2003, the Company discontinued its role as
master distributor for Lea & Perrins, Inc. This decision
resulted in the reduction in 2004 of approximately $8 million
of sales that had been included in 2003. Excluding this impact,
sales in the foodservice area were up 11 percent in 2004.

Beverage area sales were up eight percent in 2004, due
primarily to strong growth in its nonbranded business, which
was up nearly 40 percent. Sales of R.W. Knudsen Family and
Santa Cruz Organic products also were up nine and 14 percent,
respectively, for 2004, while sales of After The Fall declined
20 percent as a result of the strategic decision to regionalize
this brand.

Finally, sales in the Company’s industrial business were down
34 percent for 2004. Approximately half of this decline, or
$20 million in sales, was the result of planned decreases asso-
ciated with the strategic decision to exit certain low-margin
contracts. The remaining shortfall was caused by softness in
sales of bakery ingredients.

Overall, Company sales in 2003 were $1,311.7 million, up
91 percent, compared to $687.1 million in 2002. The Jif and
Crisco brands contributed $571.0 million to 2003 sales from
the close of the transaction on June 1, 2002. Excluding the Jif
and Crisco contribution, sales increased $53.6 million or eight
percent over 2002. Sales in the U.S. retail market segment
were $889.9 million in 2003, up $566.3 million, while special
markets segment sales were $421.8 million compared to
$363.5 million in 2002.

In the U.S. retail market segment, Jif and Crisco contributed
nearly 98 percent of the overall 2003 sales increase for the
segment. Sales of Smucker’s branded products increased five
percent for 2003 as the Company realized increased sales in its
fruit spreads, toppings, natural peanut butter, and Goober cat-
egories. The retail rollout during 2003 of Uncrustables to
70 percent of the country also contributed to the segment’s
growth. The only area within the segment realizing a decline
during 2003 was specialty foods, which was down nine percent.

In the Company’s special markets, sales in 2003 were up
16 percent over 2002 with all business areas recording an
increase in sales. In foodservice, sales in 2003 were up 16 per-
cent due to a combination of growth in Smucker’s traditional
portion control items and continued growth of sales of
Uncrustables in the schools market. International sales were
up 26 percent in 2003 due primarily to the addition of Crisco
in the Canadian market. Excluding Jif and Crisco, Canada’s
sales increased six percent as measured in local currency. The
Canadian business was favorably impacted by exchange rates
throughout 2003 as sales were up nine percent in U.S. dollars,
excluding the impact of Jif and Crisco sales. In Australia, HJF
sales were up eight percent in U.S. dollars for 2003, but rela-

tively flat in local currency due to competitive activity in the
fruit spreads category. In Brazil, sales in 2003 were up over 61
percent in local currency, but up 21 percent in U.S. dollars
due to an unfavorable exchange rate impact. On the whole,
exchange rates did not have a significant impact on interna-
tional results in 2003, but they did fluctuate widely by coun-
try. Export sales increased 14 percent in 2003 due to increases
in Latin America.

Beverage area sales were up 23 percent over 2002, due prima-
rily to increased sales of R.W. Knudsen Family and Santa Cruz
Organic products and the success of new products introduced
early in the 2003 fiscal year. Finally, sales in the Company’s
industrial business were up two percent for 2003, despite the
planned loss of approximately $21 million in sales resulting
from the strategic decision to exit certain low-margin con-
tracts. Helping to offset this loss was the full year inclusion of
sales from the International Flavors & Fragrances Inc. busi-
ness, acquired in October 2001.

— Operating Income —

The following table presents components of operating income
as a percentage of net sales.

Gross profit
Gross profit
Selling, distribution, and

Selling, distribution, and
administrative :
administrative:
Advertising
Advertising
Marketing and selling
Marketing and selling
Distribution
Distribution
General and administrative
General and administrative

Total selling, distribution
Total selling, distribution,

and administrative
and administrative

Year Ended April 30,

2004

2003

2002
2002

34.8%

32.7%

(3.9)
(7.8)
(2.0)
(7.9)

(3.5)
(8.1)
(2.1)
(7.6)

(2.3)
(9.9)
(1.9)
(9.9)

(21.6)% (21.3)%

(24.0)%

Merger and integration
Restructuring and merger

(0.5)
and integration

(0.1)
(0.1) %

(0.6)%

(0.8)
—
(1.0)%

(0.7)

(0.7)%

Operating income
Operating income

12.6%

12.5%

8.0%

Operating income increased $14.1 million for 2004, or nine
percent, over 2003 while operating margin remained rela-
tively unchanged at 12.6 percent compared to 12.5 percent.
Included in 2004 operating income was approximately $17.1
million of restructuring and merger related costs, while 2003
included $13.0 million of similar charges. Positive contribu-
tors to operating income in 2004 included margins earned on
the additional month of Jif and Crisco sales in May and the

overall growth of the higher margin U.S. retail segment. The
Company’s gross margin was 34.8 percent in 2004 and 2003.
Strong margins in fruit spreads, peanut butter, and beverages
were offset by higher soybean oil costs in shortening and oils.

Selling, distribution, and administrative (SD&A) expenses
increased nine percent in 2004 and increased as a percent of
net sales to 21.6 percent from 21.3 percent. The Company
increased its marketing expense by ten percent during 2004 in
support of Jif and Crisco and the retail rollout of Uncrustables.
Other factors contributing to the increase in SD&A during
2004 were overall higher employee benefit costs, notably pen-
sion and health care, legal fees, and outside services. These
were somewhat offset by selling and distribution expenses
which increased at a rate less than sales.

In 2003, operating income was $164.5 million, or 12.5 percent
of sales, for the year representing a significant increase in both
dollars and as a percentage of sales compared to 2002. This
increase was attributable to improvements in both gross
margin and lower SD&A, as a percent of sales. The
Company’s gross margin was 34.8 percent in 2003, compared
to 32.7 percent in 2002. The addition of the higher margin Jif
and Crisco businesses and the impact of lower peanut costs
resulting from the 2002 Farm Bill drove the overall improve-
ment in gross margin during 2003. Excluding Jif and Crisco,
cost of products sold for the remainder of the business was con-
stant with 2002, as raw material costs remained essentially flat.

SD&A costs were 21.3 percent and 24.0 percent of sales in
2003 and 2002, respectively. The improvement in the expense
ratio during 2003 reflects the impact of the Jif and Crisco
merger where the Company has been able to utilize its exist-
ing administrative infrastructure and thus allocate costs over
a broader revenue base. This reduction in SD&A as a percent
of sales was in-line with the Company’s expectations from the
merger. Marketing expenses increased at a greater rate than
sales in 2003 as the Company implemented its strategic plans
to increase support for both the Jif and Crisco brands and to
accelerate its rollout of Uncrustables.

As of May 1, 2002, the Company adopted Statement of
Financial Accounting Standards No. 142, Goodwill and Other
Intangible Assets (SFAS 142), and in accordance with this pro-
nouncement, goodwill and indefinite-lived intangible assets
are not amortized but are reviewed at least annually for
impairment. The adoption of this standard resulted in a
decrease in 2003 SD&A costs of approximately $3.5 million
compared to 2002.

— Interest Income and Expense —

Interest expense decreased $2.4 million in 2004 due to an
increase in interest capitalized during the year and the effect
of interest rate swaps associated with the Company’s long-
term debt. The increase in capitalized interest was related to
the construction of the Uncrustables facility in Scottsville,
Kentucky. The impact of the swaps reduced interest expense
by $2.1 million in 2004. Interest income increased by $1.3
million in 2004 due to an increase in the average investment
balance and a change in the Company’s investment policy,
which allowed the Company to take advantage of higher
yielding investment instruments.

In 2003, interest expense decreased $0.5 million from 2002,
also as a result of favorable interest rate swaps, which lowered
expense by $1.4 million. This was offset by a decrease in cap-
italized interest of $0.1 million during 2003 compared to the
amount capitalized in 2002 of $0.5 million. Interest income
decreased slightly in 2003 despite an overall increase in
investment balances due to lower interest rates throughout
the year.

— Other Income and Expense —

In 2004, other income (net) was $3.1 million, which included
the $2.1 million gain recognized on the sale of the
Watsonville, California, facility (see Restructuring). In 2003,
other expense (net) included a write down of certain minor
equity investments to their estimated fair value. The amount
of the write down included in other expense (net) was $1.4
million.

— Income Taxes —

Income taxes in 2004 were $67,469, up $8,421, or 14 percent,
from 2003. The increase is due primarily to an increase in
pretax earnings of $23,429, or 15 percent. The consolidated
effective income tax rate in 2004 was 37.7 percent, compared
to 38.0 percent in 2003. The reduction in the effective tax rate
was due primarily to benefits realized from the organizational
restructuring associated with the Jif and Crisco merger.

Income taxes in 2003 were $59,048, up $39,701, or 205 per-
cent, from 2002 due primarily to an increase in pretax earn-
ings of $105,192, or 210 percent. The consolidated effective
tax rate was 38.0 percent in 2003, compared to 38.5 percent in
2002. The reduction in the effective tax rate was primarily due
to the Company’s adoption of SFAS 142 on May 1, 2002.

— Restructuring —

During 2003, the Company announced plans to restructure
certain operations as part of its ongoing efforts to optimize its
production capacity, improve productivity and operating effi-
ciencies, and lower the Company’s overall cost base. These
initiatives included reducing the Company’s involvement in
fruit processing, centralizing production and distribution of
Uncrustables, and reducing the number of stock keeping units
(SKU) produced by the Company. As a result of the plan, the
Company expected to record a restructuring charge of
approximately $18 million, to be recognized through 2005.
Included in the restructuring charge were expected cash out-
lays of approximately $12 million that relate primarily to
employee separation costs and equipment relocation expenses.
The Company estimated that the annual pretax benefit from
the plan would be approximately $10 million upon full imple-
mentation in 2006. These benefits represent a combination of
eliminated overhead related to the closed facilities and a
reduction in Uncrustables operating costs. At the end of 2004,
these restructurings were proceeding as planned. During
2004, the Company closed down its fruit processing opera-
tions at both its Watsonville, California, and Woodburn,
Oregon, facilities and subsequently sold these facilities. Space
within the Watsonville facility is being leased back from the
buyer until Uncrustables production is closed down at this
facility. The Company plans to discontinue Uncrustables
production at its Watsonville site and close its West Fargo,
North Dakota, facility during 2005. In Ripon, Wisconsin, the
Company completed the combination of its two manufactur-
ing facilities into one expanded site. In the area of SKU reduc-
tion, the Company has eliminated over 80 percent of the total
items identified.

In addition to the plan discussed above, during the fourth
quarter of 2004 the Company undertook another restructur-
ing program to streamline its operations in Europe and the
United Kingdom. This included the exit of a contract packag-
ing arrangement and certain segments of the retail business in
Europe and the United Kingdom, which generated annual

sales of approximately $3 million. The Company will con-
tinue to manufacture industrial fruit products at its facility
located in Scotland. This restructuring will be completed during
the first quarter of 2005.

In conjunction with the restructurings, the Company has
recorded a total charge of $18.3 million, of which $2.5 million
was recorded in 2003 and $15.8 million in 2004. The
Company estimates that it will incur an additional $3 million
in 2005 related to these programs. The majority of these
charges related to employee separation costs, accelerated
depreciation on machinery and equipment, equipment reloca-
tion expenses, and the disposition of inventories. To date, cash
payments related to the restructuring charges have been
approximately $4.3 million. The remaining cash payments,
estimated to be approximately $7 million, will be paid
through 2005.

— Subsequent Events —

On June 18, 2004, the Company completed its acquisition of
Multifoods in a transaction valued at approximately $850
million. The transaction was paid in approximately 8 million
shares of Company common stock valued at approximately
$387 million, cash of approximately $98 million, the assump-
tion of $200 million of debt, and the payoff of $152 million of
Multifoods’ existing secured debt. Available cash and pro-
ceeds of new debt issued were used to fund the cash require-
ments of the acquisition. Under the terms of the agreement,
Multifoods’ shareholders received $25 per share in a combi-
nation of 80 percent stock and 20 percent cash.

On May 10, 2004, the Company entered into an agreement to
sell HJF to SPC Ardmona Ltd., an Australian food company,
in an all cash transaction. The transaction closed during the
first quarter of 2005, resulting in net proceeds of approxi-
mately $35.7 million and a net gain of approximately $9.5
million. Results of HJF’s operations are included in the inter-
national business area of the Company’s special markets.
During 2004, HJF contributed approximately $37 million in
sales and $3 million in operating income.

LIQUIDITY AND CAPITAL RESOURCES
I

Year Ended April 30,
Year Ended April 30,

Net cash used for financing activities in 2004 primarily con-
sisted of the payment of dividends of $0.92 per share, or $45.7
million, up from $33.6 million in 2003.

(Dollars in thousands)
(Dollars in thousands)

2004
2004

2003
2003

2002

Net cash provided by
Net cash provided by
operating activities
operating activities

Net cash used for
Net cash used for

$125,936
$ 125,936

$167,600
$167,600

$69,799
$ 69,799

investing activities
investing activities

$(162,539)
$(162,539)

(52,979)
$ (52,979)

(20,510)
$(20,510)

Net cash used for
Net cash used for

financing activities
financing activities

(40,038)
$ (40,038)

(28,419)
$ (28,419)

(8,607)
$ (8,607)

The Company’s principal source of funds is cash generated
from operations. Due to an increase in cash generated from
operations since the Jif and Crisco merger, the Company
expanded its range of investments during the year beyond
cash and cash equivalents. For comparative purposes, total
cash and investments were $163.3 million at April 30, 2004,
compared to $181.2 million at April 30, 2003. Under the
Company’s investment policy, it will invest in securities
deemed to be investment grade. Currently, these investments
are defined as government-backed mortgage obligations, cor-
porate bonds, municipal bonds, and commercial paper.

Cash provided by operations was nearly $125.9 million in
2004, compared to $167.6 million last year. The decrease in
cash from operations was primarily due to an increase in the
use of cash necessary to support working capital require-
ments. Working capital, excluding cash and investments,
increased from $118.2 million at April 30, 2003, to $128.7 mil-
lion at April 30, 2004. The primary cause for the increase was
higher inventory balances resulting from the increase in
soybean costs both in raw materials and finished goods and
general growth in the business. In addition, the Company
made contributions to its qualified and nonqualified pension
plans totaling approximately $12 million.

Net cash used for investing activities in 2004 included a
record year of capital expenditures of $100.1 million, up from
$49.5 million in the previous year. The majority of these
expenditures were associated with the construction of the
Scottsville facility and equipment additions at the Jif facility
located in Lexington, Kentucky. Other investing activities
included the payment of merger and integration related
expenses and the acquisition of the Crosse & Blackwell brand
of fruit spreads, chutneys, sauces, and glazes during the
fourth quarter of 2004.

Cash requirements for 2005 will include funds necessary to
complete the acquisition of Multifoods. The Company
expects to utilize approximately $100 million of existing cash
on hand to help finance the acquisition, in addition to bor-
rowings described below. Capital expenditures for 2005 are
estimated to range from $80 to $85 million, including approx-
imately $20 to $30 million related to the Multifoods’ busi-
nesses. In addition, based on current rates, dividends are
expected to approximate $56 million and interest payments to
approximate $28 million. The Company also expects to incur
approximately $90 million in costs associated with the
Multifoods transaction.

Subsequent to April 30, 2004, the Company entered into two
separate financing arrangements in order to provide the neces-
sary funding required to complete the acquisition of
Multifoods. On May 27, 2004, the Company issued $100 mil-
lion of 4.78 percent senior, unsecured notes due June 1, 2014.
Subsequently, on June 17, 2004, the Company entered into a
five-year, $180 million revolving credit facility with a group of
four banks. Interest on this bank debt is based on prevailing
prime, federal funds rate, or LIBOR, as determined by the
Company, and is payable on a quarterly basis. At the close of
the Multifoods transaction, the Company drew down $52 mil-
lion of the $180 million available under this revolving credit
facility. Among other restrictions, both the senior, unsecured
notes and the revolving credit facility carry certain covenants
relating to liens, consolidated net worth, and sale of assets.
These covenants are consistent with those included in the
Company’s senior, unsecured notes outstanding at April 30,
2004. Proceeds from these financing arrangements were used
to retire existing secured debt of Multifoods, fund transaction
related costs, and provide for general corporate purposes.

Assuming there are no other material acquisitions or other
significant investments, the Company believes that cash on
hand combined with the cash provided by operations, pro-
ceeds received from the previously discussed financing
instruments, and borrowings available under the revolving
credit facility, will be sufficient to meet 2005 requirements,
including the payment of dividends and interest on outstand-
ing debt.

— Contractual Obligations —

The following table summarizes the Company’s contractual
obligations at April 30, 2004.

Less
than
one
year

One Three
to five
years

to three
years

More
than
five
years

(Dollars in millions)

Total

Long-term

debt obligations $135.0 $ — $ 17.0

$33.0 $ 85.0

Operating lease
obligations

Purchase

3.9

2.0

1.8

0.1

—

obligations

368.8

233.7

117.1

14.8

3.2

Other long-term

liabilities

163.5

—

— 163.5

Total

$671.2

$235.7

$135.9

$47.9 $251.7

CRITICAL ACCOUNTING ESTIMATES
AND POLICIES
I
The preparation of financial statements in conformity with
accounting principles generally accepted in the United States
requires management to make estimates and assumptions
that in certain circumstances affect amounts reported in the
accompanying consolidated financial statements. In prepar-
ing these financial statements, management has made its best
estimates and judgments of certain amounts included in the
financial statements, giving due consideration to materiality.
The Company does not believe there is a great likelihood that
materially different amounts would be reported under differ-
ent conditions or using different assumptions related to the
accounting policies described below. However, application of
these accounting policies involves the exercise of judgment
and use of assumptions as to future uncertainties and, as a
result, actual results could differ from these estimates.

Accrued Marketing and Merchandising. In order to sup-
port the Company’s products, various marketing programs
are offered to customers, which reimburse them for a portion,
or all of their promotional activities related to the Company’s
products. The Company regularly reviews and revises, when
it deems necessary, estimates of costs to the Company for
these marketing and merchandising programs based on esti-
mates of what has been incurred by customers. Actual costs
incurred by the Company may differ significantly if factors
such as the level and success of the customers’ programs or
other conditions differ from expectations.

Impairment of Long-Lived Assets. Historically, long-
lived assets have been reviewed for impairment whenever
events or changes in circumstances indicate that the carrying
amount of the asset may not be recoverable. Recoverability of
assets to be held and used is measured by a comparison of the
carrying amount of the assets to future net cash flows esti-
mated to be generated by such assets. If such assets are con-
sidered to be impaired, the impairment to be recognized is the
amount by which the carrying amount of the assets exceeds
the fair value of the assets. However, determining fair value is
subject to estimates of both cash flows and interest rates and
different estimates could yield different results. There are no
events or changes in circumstances of which management is
aware indicating that the carrying value of the Company’s
long-lived assets may not be recoverable, with the exception
of planned restructuring activities noted under Restructuring.

Goodwill and Other Indefinite-Lived Intangible Assets.
The annual evaluation of goodwill and other indefinite-lived
intangible assets requires the use of estimates about future
operating results for each reporting unit to determine their
estimated fair value. Changes in forecasted operations can
materially affect these estimates. Additionally, other changes
in the estimates and assumptions, including the discount rate
and expected long-term growth rate, which drive the valua-
tion techniques employed to estimate the fair value of the
reporting unit could change and, therefore, impact the assess-
ments of impairment in the future.

Pension Plans and Other Postretirement Benefit Plans.
To determine the Company’s ultimate obligation under its
defined benefit pension plans and other postretirement bene-
fit plans, management must estimate the future cost of bene-
fits and attribute that cost to the time period during which
each covered employee works. To record the related net assets
and obligations of such benefit plans, management uses
assumptions related to inflation, investment returns, mortal-
ity, employee turnover, rate of compensation increases, med-
ical costs, and discount rates. Management, along with
third-party actuaries, reviews all of these assumptions on an
ongoing basis to ensure that the most reasonable information
available is being considered. For 2005 expense recognition,
the Company will use a discount rate of 6.25 percent, an
expected rate of return on plan assets of 8.50 percent, and a
rate of compensation increase of 4.50 percent.

Accrued Expenses. Management estimates certain material
expenses in an effort to record those expenses in the period
incurred. The most material accrued estimates are insurance-
related expenses, including self-insurance. Workers’ compen-
sation and general liability insurance accruals are recorded
based on insurance claims processed, as well as historical
claims experience for claims incurred but not yet reported.
These estimates are based on historical loss development fac-
tors. Employee medical insurance accruals are recorded based
on medical claims processed, as well as historical medical
claims experience for claims incurred but not yet reported.
Differences in estimates and assumptions could result in an
accrual requirement materially different from the calculated
accrual.

Recovery of Accounts Receivable. In the normal course of
business, the Company extends credit to customers that sat-
isfy predefined criteria. The Company evaluates the col-
lectibility of accounts receivable based on a combination of
factors. When aware of a specific customer’s inability to meet
its financial obligations, such as in the case of bankruptcy fil-
ings or deterioration in the customer’s operating results or
financial position, the Company records a specific reserve for
bad debt to reduce the related receivable to the amount the
Company reasonably believes is collectible. The Company
also records reserves for bad debt for all other customers
based on a variety of factors, including the length of time the
receivables are past due, historical collection experience, and
an evaluation of current and projected economic conditions at
the balance sheet date. Actual collections of accounts receiv-
able could differ from management’s estimates due to changes
in future economic or industry conditions or specific cus-
tomers’ financial conditions.

Restructuring. During 2003 and 2004, the Company
announced its plans to restructure certain operations as part
of its ongoing efforts to optimize its production capacity,
improve productivity and operating efficiencies, and lower
the Company’s overall cost base. The expected restructuring

charge includes estimates related to employee separation
costs, the closure and consolidation of facilities, contractual
obligations, and the valuation of certain assets including
property, plant, and equipment, and inventories. Estimates of
such costs are determined by contractual agreement or esti-
mated by management based on historical experience. Actual
amounts could differ from the original estimates.

DERIVATIVE FINANCIAL INSTRUMENTS
AND MARKET RISK
I
The following discussions about the Company’s market risk
disclosures involve forward-looking statements. Actual
results could differ from those projected in the forward-looking
statements. The Company is exposed to market risk related to
changes in interest rates, foreign currency exchange rates, and
commodity prices.

Interest Rate Risk. The fair value of the Company’s cash
and short-term investment portfolio at April 30, 2004,
approximates carrying value. Exposure to interest rate risk on
the Company’s long-term debt is mitigated since it is at a
fixed rate until maturity. Market risk, as measured by the
change in fair value resulting from a hypothetical ten percent
change in interest rates, is not material. Based on the
Company’s overall interest rate exposure as of and during the
year ended April 30, 2004, including derivative and other
instruments sensitive to interest rates, a hypothetical ten per-
cent movement in interest rates would not materially affect
the Company’s results of operations.

Foreign Currency Exchange Risk. The Company utilizes
foreign exchange contracts, typically with maturities of less
than one year, to hedge foreign exchange fluctuations. The
contracts are accounted for as cash flow hedges. A hypotheti-
cal ten percent strengthening or weakening of the U.S. dollar
would not have a material impact on the cash flows or the
financial results of the Company.

The Company has operations outside the United States with
foreign currency denominated assets and liabilities, primarily
denominated in Canadian currency. Because the Company
has foreign currency denominated assets and liabilities,
financial exposure may result, primarily from the timing of
transactions and the movement of exchange rates. The foreign
currency balance sheet exposures as of April 30, 2004, are not
expected to result in a significant impact on future earnings or
cash flows.

Revenues from customers outside the United States repre-
sented less than ten percent of net sales during 2004. Thus,
certain sales and expenses have been, and are expected to be,
subject to the effect of foreign currency fluctuations and these
fluctuations may have an impact on operating results.

Commodity Price Risk. Raw materials used by the
Company’s consumer oils business are subject to price
volatility caused by supply conditions, political and economic
variables, and other unpredictable factors. To manage the
volatility related to anticipated inventory purchases to be
made by the consumer oils business, the Company uses
futures and options with maturities generally less than one
year. These instruments are designated as cash flow hedges.
The mark-to-market gains or losses on qualifying hedges are
included in other comprehensive income or loss to the extent
effective, and reclassified into cost of products sold in the
period during which the hedged transaction affects earnings.
The mark-to-market gains or losses on nonqualifying,
excluded, and ineffective portions of hedges are recognized in
cost of products sold immediately and were not significant.

OFF-BALANCE SHEET ARRANGEMENTS
I
The Company does not have off-balance sheet arrangements,
financings, or other relationships with unconsolidated enti-
ties or other persons, also known as “variable interest enti-
ties.” Transactions with related parties are in the ordinary
course of business, are conducted at an arm’s-length basis,
and are not material to the Company’s results of operations,
financial condition, or cash flows.

CERTAIN FORWARD-LOOKING
STATEMENTS
I
This annual report includes certain forward-looking state-
ments that are based on current expectations and are subject
to a number of risks and uncertainties that could cause actual
results to differ materially. These risks and uncertainties
include, but are not limited to:

•

the success and cost of integrating Multifoods into the
Company;

the finalization of the allocation of the Multifoods pur-
chase price to the underlying assets acquired and liabilities
assumed and the impact it could have on future deprecia-
tion and amortization expense;

the success and cost of marketing and sales programs and
strategies intended to promote growth in the Multifoods’
businesses, the Company’s existing businesses, and in
their respective markets;

the ability of the business areas to achieve sales targets and
the costs associated with attempting to do so;

the ability to successfully implement price changes, partic-
ularly in the consumer oils business;

the success and cost of introducing new products, notably
Uncrustables products;

the exact time frame in which the new manufacturing facil-
ity in Scottsville, Kentucky, will attain peak operating effi-
ciency and the Company’s ability to effectively manage
capacity constraints related to Uncrustables products until
that time;

the estimated costs and benefits associated with the
Company’s plan to restructure certain of its operations;

the strength of commodity markets from which raw mate-
rials are procured and the related impact on costs;

raw material and ingredient cost trends;

foreign currency exchange and interest rate fluctuations;

• general competitive activity in the market; and

• other factors affecting share prices and capital markets

generally.

REPORT OF REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Shareholders
The J. M. Smucker Company

We have audited the accompanying consolidated balance sheets of The J. M. Smucker Company as of April 30, 2004 and 2003,
and the related statements of consolidated income, shareholders’ equity, and cash flows for each of the three years in the period
ended April 30, 2004. These financial statements are the responsibility of the Company’s management. Our responsibility is to
express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable
basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated
financial position of The J. M. Smucker Company at April 30, 2004 and 2003, and the consolidated results of its operations and
its cash flows for each of the three years in the period ended April 30, 2004, in conformity with U.S. generally accepted account-
ing principles.

As discussed in Note C to the consolidated financial statements, the Company adopted Statement of Financial Accounting
Standards No.142, Goodwill and Other Intangible Assets, as of May 1, 2002.

Akron, Ohio
June 7, 2004

STATEMENTS OF CONSOLIDATED INCOME
— The J. M. Smucker Company —

(Dollars in thousands, except per share data)

Net sales
Cost of products sold
Cost of products sold – restructuring

Gross Profit
Selling, distribution, and administrative expenses
Merger and integration costs
Other restructuring costs

Operating Income
Interest income
Interest expense
Other income (expense) – net

Income Before Income Taxes
Income taxes

Net Income

Earnings per Common Share:

Year Ended April 30,

2004

2003

2002

$1,417,011
915,769
8,464

$1,311,744
854,407
1,256

492,778
305,475
1,266
7,362

178,675
3,379
(6,374)
3,139

178,819
67,469

456,081
279,760
10,511
1,281

164,529
2,039
(8,752)
(2,426)

155,390
59,048

$687,148
462,157
—

224,991
165,172
5,031
—

54,788
2,181
(9,207)
2,436

50,198
19,347

$ 111,350

$ 96,342

$ 30,851

Net Income per Common Share

$ 2.24

$ 2.04

$ 1.33

Net Income per Common Share – Assuming Dilution

$ 2.21

$ 2.02

$ 1.31

See notes to consolidated financial statements.

April 30,

2004

2003

$ 106,602

$ 181,225

15,074

102,707

—

101,364

107,607

81,373

188,980

11,895

85,495

83,632

169,127

14,944

425,258

466,660

29,553

127,194

328,235

70,319

26,250

117,612

331,325

21,503

555,301

496,690

(225,593)

(221,704)

329,708

274,986

531,143

323,115

41,589

33,312

525,942

320,409

—

27,410

929,159

873,761

$1,684,125

$1,615,407

CONSOLIDATED BALANCE SHEETS
— The J. M. Smucker Company —

ASSETS

(Dollars in thousands)

Current Assets

Cash and cash equivalents

Marketable securities

Trade receivables, less allowance for doubtful accounts

Inventories:

Finished products

Raw materials

Other current assets

Total Current Assets

Property, Plant, and Equipment

Land and land improvements

Buildings and fixtures

Machinery and equipment

Construction in progress

Accumulated depreciation

Total Property, Plant, and Equipment

Other Noncurrent Assets

Goodwill

Other intangible assets, net

Marketable securities

Other assets

Total Other Noncurrent Assets

LIABILITIES AND SHAREHOLDERS’ EQUITY

(Dollars in thousands)

Current Liabilities
Accounts payable
Salaries, wages, and additional compensation
Accrued marketing and merchandising
Income taxes
Dividends payable
Other current liabilities

Total Current Liabilities

Noncurrent Liabilities
Long-term debt
Defined benefit pensions
Postretirement benefits other than pensions
Deferred income taxes
Other noncurrent liabilities

Total Noncurrent Liabilities

Shareholders’ Equity
Serial preferred shares – no par value:

Authorized – 3,000,000 shares; outstanding – none

Common shares – no par value:

Authorized – 150,000,000 shares; outstanding – 50,174,707 in 2004

and 49,767,540 in 2003 (net of 6,493,226 and 6,900,393 treasury shares,
respectively), at stated value

Additional capital
Retained income
Less:

Deferred compensation
Amount due from ESOP Trust
Accumulated other comprehensive loss

Total Shareholders’ Equity

April 30,

2004

2003

$ 66,300
52,507
25,303
5,622
12,544
12,607

$ 68,704
31,788
29,252
18,783
11,447
7,300

174,883

167,274

135,000
2,315
19,384
136,255
5,595

298,549

135,000
31,502
17,614
134,018
5,828

323,962

—

12,543
829,323
387,065

(6,069)
(7,584)
(4,585)

12,442
815,767
323,064

(2,825)
(8,093)
(16,184)

1,210,693

1,124,171

$1,684,125

$1,615,407

See notes to consolidated financial statements.

Year Ended April 30,

2004

2003

2002

$111,350

$ 96,342

$30,851

37,444
2,414
6,113

35,934
1,817
(3,680)

(92)
(16,692)
3,028
3,353
(15,979)
(5,003)

(43,016)
(12,062)
(889)
56,169
24,280
12,705

23,932
4,625
1,545

(1,217)
(2,063)
(11)
12,483
2,824
(3,170)

69,799

(23,464)
—
(5,714)
—
7,060
1,608

STATEMENTS OF CONSOLIDATED CASH FLOWS
— The J. M. Smucker Company —

(Dollars in thousands)

Operating Activities

Net income
Adjustments to reconcile net income to net cash

provided by operating activities:
Depreciation
Amortization
Deferred income tax expense (benefit)
Changes in assets and liabilities, net of effect from

business acquisitions:
Trade receivables
Inventories
Other current assets
Accounts payable and accrued items
Income taxes
Other – net

Net Cash Provided by Operating Activities

125,936

167,600

Investing Activities

Additions to property, plant, and equipment
Purchase of marketable securities
Businesses acquired, net of cash acquired
Sale and maturities of marketable securities
Disposal of property, plant, and equipment
Other – net

(100,094)
(86,439)
(9,196)
28,957
9,687
(5,454)

(49,525)
—
(10,767)

—
1,179
6,134

Net Cash Used for Investing Activities

(162,539)

(52,979)

(20,510)

Financing Activities

Dividends paid
Other – net

Net Cash Used for Financing Activities
Effect of exchange rate changes on cash

Net (decrease) increase in cash and cash equivalents
Cash and cash equivalents at beginning of year

Cash and Cash Equivalents at End of Year

( ) Denotes use of cash

(45,724)
5,686

(40,038)
2,018

(74,623)
181,225

(33,603)
5,184

(28,419)
3,109

89,311
91,914

(15,568)
6,961

(8,607)
107

40,789
51,125

$106,602

$181,225

$91,914

See notes to consolidated financial statements.

STATEMENTS OF CONSOLIDATED SHAREHOLDERS’ EQUITY
— The J. M. Smucker Company —

(Dollars in thousands,
except per share data)

Shares Common
Shares

Outstanding

Additional
Capital

Retained
Income

Common

Amount
Deferred Due From
ESOP
Compen-
Trust
sation

Accumulated
Other
Compre-
hensive
Loss

Total
Shareholders’
Equity

Balance at May 1, 2001

23,021,956

$ 6,090 $ 19,278

$253,226

$(2,248) $(8,926) $(16,635) $ 250,785

Net income
Foreign currency translation

adjustment

Minimum pension liability

adjustment

Comprehensive Income

Purchase of treasury shares
Stock plans
Cash dividends declared –

$0.68 a share

Tax benefit of stock plans
Other

30,851

(40,341)
522,514

(11)
138

(483)

11,590

(634)

(477)

(15,650)

2,799

364

1,669

(797)

31,723

(1,128)
11,251

(15,650)
2,799
364

Balance at April 30, 2002

23,504,129

6,217

33,184

267,793

(2,725)

(8,562) (15,763)

280,144

Net income
Foreign currency translation

adjustment

Minimum pension liability

adjustment

Unrealized loss on available-

for-sale securities

Unrealized gain on cash flow

hedging derivatives

Comprehensive Income

Business acquired
Stock plans
Cash dividends declared –

$0.83 a share

Tax benefit of stock plans
Other

96,342

8,268

(8,629)

(296)

236

(296)

236

95,921

781,485
5,588

(41,071)
1,635
469

26,023,466
239,945

6,506
60

774,979
5,628

(100)

(41,071)

(341)

1,635
341

469

Balance at April 30, 2003

49,767,540

12,442

815,767

323,064

(2,825)

(8,093)

(16,184)

1,124,171

Net income
Foreign currency translation

adjustment

Minimum pension liability

adjustment

Unrealized gain on available-

for-sale securities

Unrealized gain on cash flow

hedging derivatives

Comprehensive Income

Stock plans
Cash dividends declared –

$0.94 a share

Tax benefit of stock plans
Other

111,350

407,167

101

10,543

(528)

(3,244)

(46,821)

3,013

509

111,350

6,697

3,403

545

954

545

954

122,949

6,872

(46,821)
3,013
509

Balance at April 30, 2004

50,174,707 $12,543 $829,323

$387,065

$(6,069) $(7,584) $ (4,585) $1,210,693

See notes to consolidated financial statements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
— The J. M. Smucker Company —

(Dollars in thousands, except per share data)

NOTE A: ACCOUNTING POLICIES
G
Principles of Consolidation: The consolidated financial statements include the accounts of the Company, its wholly-owned sub-
sidiaries, and any majority-owned investment. All significant intercompany transactions and accounts are eliminated in consolidation.

Use of Estimates: The preparation of consolidated financial statements in conformity with accounting principles generally
accepted in the United States requires management to make certain estimates and assumptions that affect the amounts reported
in the consolidated financial statements and accompanying notes. Significant estimates in these consolidated financial statements
include: restructuring costs, allowances for doubtful accounts receivable, estimates of future cash flows associated with assets,
asset impairments, useful lives for depreciation and amortization, loss contingencies, net realizable value of inventories, accruals
for marketing and merchandising programs, and the determination of discount and other rate assumptions for defined benefit
pension and other postretirement benefit expenses. Actual results could differ from these estimates.

Revenue Recognition: The Company recognizes revenue when all of the following criteria have been met: a valid customer order
with a fixed price has been received; the product has been shipped and title has transferred to the customer; there is no further sig-
nificant obligation to assist in the resale of the product; and collectibility is reasonably assured.

Marketing and Merchandising Promotions: In order to support the Company’s products, various marketing programs are
offered to customers, which reimburse them for a portion, or all of their promotional expenses related to the Company’s products.
The Company recognizes the cost of these programs based on estimates of what has been incurred by customers. Such costs are
included as a reduction of sales.

Financial Instruments: Financial instruments, other than derivatives, that potentially subject the Company to significant con-
centrations of credit risk consist principally of cash investments, marketable securities, and accounts receivable. The Company
places its cash investments with high quality financial institutions and limits the amount of credit exposure to any one institution.
The Company considers all short-term investments with a maturity of three months or less when purchased to be cash equiva-
lents. The Company’s marketable securities are primarily in debt securities. Under the Company’s investment policy, it will invest
in securities deemed to be investment grade. Currently, these investments are defined as government-backed mortgage obliga-
tions, corporate bonds, municipal bonds, and commercial paper. The Company determines the appropriate categorization of its
debt securities at the time of purchase and reevaluates such designation at each balance sheet date. The Company has categorized
all debt securities as available for sale, because it currently has the intent to convert these investments into cash if and when
needed. With respect to accounts receivable, concentration of credit risk is limited due to the large number of customers. The
Company does not require collateral from its customers. The fair value of the Company’s financial instruments, other than certain
of its fixed-rate long-term debt, approximates their carrying amounts. The fair value of the Company’s fixed-rate long-term debt,
estimated using current market rates and a discounted cash flow analysis, was approximately $139,000 at April 30, 2004.

Major Customer: Sales to Wal-Mart Stores, Inc., and subsidiaries amounted to approximately 13 percent and 14 percent of net
sales in 2004 and 2003, respectively. These sales are primarily included in the U.S. retail market. No other customer exceeded ten
percent of net sales for any year.

Derivative Financial Instruments: The Company utilizes derivative instruments such as commodity futures contracts, interest
rate swaps, and foreign currency futures contracts to hedge exposure to changes in commodity prices, interest rates, and foreign
currency exchange rates. The Company accounts for these derivative instruments under Statement of Financial Accounting
Standards No. 133, Accounting for Derivative Instruments and Hedging Activities (SFAS 133). SFAS 133 requires that all deriva-
tive instruments be recognized in the financial statements and measured at fair value regardless of the purpose or intent for hold-
ing them. For derivatives that are designated as a hedge and used to hedge an existing asset or liability, both the derivative and
hedged item are recognized at fair value with any changes recognized immediately in the Statements of Consolidated Income. For
derivatives designated as a hedge that are used to hedge an anticipated transaction, changes in fair value are deferred and recorded
in shareholders’ equity as a component of accumulated other comprehensive loss to the extent the hedge is effective and then

recognized in the Statements of Consolidated Income in the period during which the hedged transaction affects earnings. Any
ineffectiveness associated with the hedge or changes in fair value of derivatives that are nonqualifying are recognized immediately
in the Statements of Consolidated Income. By policy, the Company has not historically entered into derivative financial instru-
ments for trading purposes or for speculation.

Allowance for Doubtful Accounts: On a regular basis, the Company evaluates its accounts receivable and establishes the
allowance for doubtful accounts based on a combination of specific customer circumstances, credit conditions, and historical
write-offs and collections. A receivable is considered past due if payments have not been received within the agreed upon invoice
terms. The allowance for doubtful accounts at April 30, 2004 and 2003, was $1,047 and $972, respectively.

Inventories: Inventories are stated at the lower of cost or market. Cost is determined using the first-in, first-out method.

Goodwill and Other Intangible Assets: Goodwill is the excess of the purchase price paid over the fair value of the net assets of
the business acquired. In accordance with the Statement of Financial Accounting Standards No. 142, Goodwill and Other
Intangible Assets (SFAS 142), goodwill and indefinite-lived intangible assets are not amortized but are reviewed at least annually
for impairment. The Company conducts its annual test of impairment for goodwill and indefinite-lived intangible assets as of
February 1, of each year. In addition, the Company will test for impairment if events or circumstances occur that would more
likely than not reduce the fair value of a reporting unit below its carrying amount. Other finite-lived intangible assets are amor-
tized over their useful lives. Prior to the adoption of SFAS 142 in 2003, goodwill and other intangible assets, principally trade-
marks and patents, were amortized using the straight-line method over periods ranging from 5 to 40 years for acquisitions prior
to July 1, 2001.

Property, Plant, and Equipment: Property, plant, and equipment are recorded at cost and are depreciated on a straight-line
basis over the estimated useful lives of the assets (3 to 15 years for machinery and equipment, and 10 to 40 years for buildings, fix-
tures, and improvements).

The Company leases certain land, buildings, and equipment for varying periods of time, with renewal options. Leases of cold stor-
age facilities are continually renewed. Rent expense in 2004, 2003, and 2002 totaled $16,783, $17,324, and $10,430, respectively.
Rent expense for cold storage facilities, which is based on quantities stored, amounted to $2,671, $2,801, and $2,324 in 2004, 2003,
and 2002, respectively.

Impairment of Long-Lived Assets: In accordance with Statement of Financial Accounting Standards No. 144, Accounting for
the Impairment or Disposal of Long-Lived Assets, long-lived assets, except goodwill and indefinite-lived intangible assets, are
reviewed for impairment when circumstances indicate the carrying value of an asset may not be recoverable. Recoverability of
assets to be held and used is measured by a comparison of the carrying amount of the assets to future net cash flows estimated by
the Company to be generated by such assets. If such assets are considered to be impaired, the impairment to be recognized is the
amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are recorded at the
lower of carrying value or estimated net realizable value.

Software Costs: The Company capitalizes significant costs associated with the development and installation of internal use soft-
ware. Amounts capitalized are amortized over the estimated useful lives of the software, ranging from three to seven years, begin-
ning with the project’s completion. Net capitalized software costs as of April 30, 2004 and 2003, were $28,682 and $27,504,
respectively, of which $5,834 and $4,400 were included in construction in progress.

Shipping and Handling Costs: Shipping and handling costs are included in cost of products sold.

Advertising Expense: Advertising costs are expensed as incurred. Advertising expense was $55,101, $45,783, and $15,525 in
2004, 2003, and 2002, respectively.

Stock Compensation: As provided under Statement of Financial Accounting Standards No. 123, Accounting for Stock-Based
Compensation (SFAS 123), the Company has elected to follow Accounting Principles Board Opinion No. 25, Accounting for Stock
Issued to Employees (APB 25), and related interpretations in accounting for its employee stock options. Under APB 25, because
the exercise price of the Company’s employee stock options equals the market price of the underlying stock on the date of grant,
no compensation expense is recognized.

If compensation costs for the stock options granted had been determined based on the fair market value method of SFAS 123, the
Company’s pro forma net income and earnings per share would have been as follows:

Net income, as reported
Total stock-based compensation expense determined under
fair value-based methods for all awards, net of tax benefit

Net income, as adjusted

Earnings per common share:
Net income, as reported
Total stock-based compensation expense determined under
fair value-based methods for all awards, net of tax benefit

Net income, as adjusted

Net income, as reported – assuming dilution
Total stock-based compensation expense determined under

fair value-based methods for all awards, net of tax benefit –
assuming dilution

Net income, as adjusted – assuming dilution

Year Ended April 30,

2004

2003

2002

$111,350

$96,342

$30,851

(2,774)

(2,581)

(1,061)

$108,576

$93,761

$29,790

$ 2.24

$ 2.04

$ 1.33

(0.06)

(0.04)

$ 2.18

$ 2.21

$ 1.98

$ 2.02

$ 1.29

$ 1.31

(0.06)

(0.04)

$ 2.15

$ 1.96

$ 1.27

The fair value of each option grant was estimated at the date of grant using the Black-Scholes option-pricing model with the fol-
lowing weighted-average assumptions:

Average expected term (years)
Risk-free interest rate
Dividend yield
Volatility

Fair value of options granted

Year Ended April 30,

2004

2003

5
3.21%
2.50%
26.80%

$9.45

5
4.08%
2.50%
27.70%

$8.06

The Black-Scholes option-pricing model was developed for use in estimating the fair value of traded options that have no vesting
restrictions and are fully transferable. In addition, option valuation models require the input of highly subjective assumptions,
including the expected share price volatility.

Income Taxes: The Company accounts for income taxes using the liability method. Under that method, deferred tax assets and
liabilities are recognized for the future tax consequences attributable to differences between financial statement carrying amounts
of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax
rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.
The effect on deferred tax assets and liabilities of a change in the tax rate is recognized in income or expense in the period that the
change is effective.

Foreign Currency Translation: Assets and liabilities of the Company’s foreign subsidiaries are translated using the exchange
rates in effect at the balance sheet date, while income and expenses are translated using average rates. Translation adjustments are
reported as a component of shareholders’ equity in accumulated other comprehensive loss.

Recently Issued Accounting Standards: In April 2003, the Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 149, Amendment of Statement 133 on Derivative Instruments and Hedging Activities (SFAS 149). SFAS
149 amends and clarifies accounting for derivative instruments, including certain derivative instruments embedded in other con-
tracts, and for hedging activities under Statement 133. SFAS 149 is effective for contracts entered into or modified after June 30,
2003, and for hedging relationships designated after June 30, 2003. The guidance should be applied prospectively. The adoption
of SFAS 149 did not have a material impact on the Company’s results of operations or financial position.

In May 2003, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 150, Accounting
for Certain Financial Instruments with Characteristics of both Liabilities and Equity (SFAS 150). SFAS 150 requires that certain
financial instruments, which under previous guidance could be accounted for as equity, be classified as liabilities in statements of
financial position. SFAS 150 is effective for financial instruments entered into or modified after May 31, 2003. The adoption of
SFAS 150 did not have a material impact on the Company’s results of operations or financial position.

In January 2003, the Financial Accounting Standards Board issued Interpretation No. 46, Consolidation of Variable Interest
Entities (FIN 46). FIN 46 requires unconsolidated variable interest entities to be consolidated by their primary beneficiaries if the
entities do not effectively disperse the risks and rewards of ownership among their owners and other parties involved. The con-
solidation requirements of FIN 46 apply immediately to variable interest entities created after January 31, 2003, and to variable
interest entities or arrangements existing before February 1, 2003, in the fourth quarter of calendar 2003. The adoption of FIN 46
did not have a material impact on the Company’s results of operations or financial position.

Risks and Uncertainties: In the domestic markets, the Company’s products are primarily sold through brokers to food retailers,
food wholesalers, club stores, mass merchandisers, military commissaries, health and natural food stores, foodservice distributors,
and chain operators including: hotels and restaurants, schools and other institutions, and other food manufacturers. The
Company’s operations outside the United States are principally in Canada. The Company believes there is no concentration of risk
with any single customer or supplier whose failure or nonperformance would materially affect the Company’s results. In addition,
the Company insures its business and assets in each country against insurable risks, to the extent that it deems appropriate, based
upon an analysis of the relative risks and costs. The Company believes that the risk of loss from noninsurable events would not
have a material adverse effect on the Company’s operations as a whole.

Reclassifications: Certain prior year amounts have been reclassified to conform to current year classifications.

NOTE B: SUBSEQUENT EVENT — MULTIFOODS ACQUISITION (UNAUDITED)
G
On June 18, 2004, the Company completed its acquisition of Minneapolis-based International Multifoods Corporation
(Multifoods) in a tax-free stock transaction valued at approximately $850 million. Multifoods had consolidated 2004 sales of
approximately $908 million. With the acquisition, the Company adds an array of North American icon brands, marketed in the
center of the store, to the Smucker family of brands. In addition to the Company’s Smucker’s, Jif, and Crisco brands, the Company
will include brands that hold leading positions in virtually all of their categories or markets. Multifoods’ primary U.S. brands
include: Pillsbury baking mixes and ready-to-spread frostings; Hungry Jack pancake mixes, syrup, and potato side dishes; Martha
White baking mixes and ingredients; and Pet evaporated milk and dry creamer. Multifoods’ primary Canadian brands include:
Robin Hood flour and baking mixes, Bick’s pickles and condiments, and the Golden Temple brand of flour and rice in the growing
ethnic food category.

Under the terms of the agreement, Multifoods’ shareholders received $25 per share in a combination of 80 percent Company stock
and 20 percent cash. Approximately $98 million in cash was paid and 8 million common shares were issued to the Multifoods’ share-
holders, valued at approximately $387 million using the average closing price of the Company’s common shares for three days prior
to the close of the transaction. In addition, the Company paid off Multifoods’ existing secured debt of approximately $152 million,
assumed $200 million of 6.60 percent senior, unsecured notes, and expects to incur approximately $90 million in acquisition related
expenses. In connection with the acquisition, the Company issued $100 million of 4.78 percent ten-year, senior, unsecured notes,
and secured a revolving credit facility of $180 million provided through a group of banks, at prevailing market interest rates.

Long-term debt principal after the close of the acquisition consists of the following:

6.77% Senior Notes due June 1, 2009
7.70% Series A Senior Notes due September 1, 2005
7.87% Series B Senior Notes due September 1, 2007
7.94% Series C Senior Notes due September 1, 2010
4.78% Senior Notes due June 1, 2014
6.60% Senior Notes due November 13, 2009

Total long-term debt

June 18, 2004

$ 75,000
17,000
33,000
10,000
100,000
200,000

$435,000

The purchase price will be allocated to the underlying assets acquired and liabilities assumed based upon their fair values at the
date of acquisition. The Company will determine the estimated fair values based on independent appraisals, discounted cash flow,
quoted market prices, and estimates made by management. To the extent the purchase price exceeds the fair value of the net iden-
tifiable tangible and intangible assets acquired, such excess will be allocated to goodwill.

The following table summarizes the initial estimated fair values of the assets acquired and liabilities assumed at the date of acquisition.

Assets:

Tangible assets
Intangible assets not subject to amortization
Intangible assets subject to amortization (ten-year weighted-average useful life)
Goodwill

Total assets acquired

Total liabilities assumed

Net assets acquired

June 18, 2004

$ 620,000
187,000
8,000
320,000

$1,135,000

$ (285,000)

$ 850,000

The allocation of the purchase price is preliminary and subject to adjustment following completion of the valuation process. The
$320,000 of goodwill will be allocated to the U.S. retail market and special markets upon finalization of the allocation of purchase
price and will not be deductible for tax purposes.

Had the acquisition of Multifoods occurred at the beginning of 2003, unaudited, pro forma consolidated results would have been
as follows:

Net sales
Operating income
Net income
Net income per common share – assuming dilution

Year Ended April 30,

2004

2003

$2,336,000
$ 232,000
$ 135,000
$ 2.32

$2,248,000
$ 227,000
$ 120,000
$ 2.16

NOTE C: CHANGES IN ACCOUNTING PRINCIPLE
G
Effective May 1, 2002, the Company adopted Statement of Financial Accounting Standards No. 142, Goodwill and Other
Intangible Assets (SFAS 142). In accordance with SFAS 142, goodwill and indefinite-lived intangible assets are not amortized but
are reviewed at least annually for impairment. Prior to the adoption of SFAS 142, amortization expense was recorded for goodwill
and other intangible assets. Had the provisions of SFAS 142 been applied to all periods presented, 2002 net income would have
increased $2,177 to $33,028, resulting in net income per common share of $1.43 and net income per common share — assuming
dilution of $1.41.

NOTE D: MERGER
G
On June 1, 2002, the Company merged the Jif peanut butter and Crisco shortening and oils businesses of The Procter & Gamble
Company (P&G) with and into the Company in a tax-free stock transaction. Under the terms of the agreement, P&G spun off its
Jif and Crisco businesses to its shareholders and immediately thereafter those businesses were merged with and into the Company.
P&G shareholders received one Company common share for every 50 P&G common shares that they held as of the record date
for the distribution of the Jif and Crisco businesses to the P&G shareholders. The Company’s shareholders received 0.9451 of a
new Company common share for each Company common share that they held immediately prior to the merger. Approximately
26,023,000 common shares were issued to the P&G shareholders, valued at approximately $781,485 based on the average market
price of the Company’s common shares over the period from three days before to three days after the terms of the merger were
announced. Upon completion of the merger, the Company had 49,531,376 common shares outstanding.

The conversion of the Company’s common shares into new Company common shares has been treated in a manner similar to a
reverse stock split.

The merger and the combination of three brands — Smucker’s, Jif, and Crisco — enhances the Company’s strategic and market
position. The merger was accounted for as a purchase business combination and for accounting purposes, the Company was the
acquiring enterprise. Accordingly, the results of the Jif and Crisco operations are included in the Company’s consolidated finan-
cial statements from the date of the merger. The aggregate purchase price was approximately $792,252, including $10,767 of cap-
italized acquisition related expenses. In addition, the Company incurred costs of $10,511 and $5,031 in 2003 and 2002,
respectively, that were directly related to the merger and integration of Jif and Crisco. Due to the nature of these costs, they were
expensed as incurred.

The assets acquired and liabilities assumed in the merger of the Jif and Crisco businesses were recorded at estimated fair values as
determined by Company management. The Company obtained independent appraisals for the fair value of property, plant, and
equipment and identified intangible assets. A summary of the assets acquired and liabilities assumed in the merger follows:

Assets:

Tangible assets
Intangible assets not subject to amortization
Intangible asset subject to amortization (ten-year useful life)
Goodwill

Total assets acquired

Total liabilities assumed

Net assets acquired

June 1, 2002

$ 138,152
305,000
1,000
488,950

$ 933,102

$(140,850)

$ 792,252

The $488,950 of goodwill relates to the U.S. retail market segment and will not be deductible for tax purposes.

Had the merger of the Jif and Crisco businesses with and into the Company occurred at the beginning of 2002, unaudited, pro forma
consolidated results would have been as follows:

Net sales
Operating income, excluding indirect expenses of the

Jif and Crisco businesses

Year Ended April 30,

2003

2002

$1,355,000

$1,283,000

$ 188,000

$ 235,000

NOTE E: RESTRUCTURING
G
During 2003, the Company announced its plan to restructure certain operations as part of its ongoing efforts to optimize its pro-
duction capacity, improve productivity and operating efficiencies, and lower the Company’s overall cost base. These initiatives
include reducing the Company’s involvement in fruit processing, centralizing production and distribution of the Uncrustables
product line, and significantly reducing the number of items available for sale. The program calls for the closing of three of the
Company’s plants — Watsonville, California; Woodburn, Oregon; and West Fargo, North Dakota. At the end of 2004, these
restructurings were proceeding as planned. During 2004, the Company closed down its fruit processing operations at both its
Watsonville and Woodburn locations and subsequently sold these facilities. Space within the Watsonville facility is being leased
back from the buyer until Uncrustables production is closed down at this facility. Production at both the Watsonville and
West Fargo locations is expected to be completed in 2005. In Ripon, Wisconsin, the Company completed the combination of its
two manufacturing facilities into one expanded site. Upon completion, the restructurings will result in the elimination of approx-
imately 335 full-time positions.

In addition, the Company undertook another restructuring program to streamline operations in Europe and the United Kingdom
during the fourth quarter of 2004. This included the exit of a contract packaging arrangement and certain segments of its retail
business in Europe and the United Kingdom, which generated annual sales of approximately $3 million. The Company will con-
tinue to manufacture industrial fruit products at its facility located in Scotland. This restructuring is expected to be completed
during the first quarter of 2005.

The Company expects to incur restructuring costs of approximately $21,000, of which $15,826 and $2,537 were recognized in
2004 and 2003, respectively. The balance of the costs will be incurred in 2005. The remaining cash payments, estimated to be
approximately $7,000, will be paid through 2005.

The following table summarizes the activity with respect to the restructuring and related asset impairment charges recorded and
reserves established during 2004 and 2003, and the total amount expected to be incurred in connection with the initiatives.

Total expected restructuring charge

Balance at May 1, 2002
Charge to expense
Cash payments
Noncash utilization

Balance at April 30, 2003
Charge to expense
Cash payments
Noncash utilization

Balance at April 30, 2004

Remaining expected restructuring charge

Employee
Long-Lived
Separation Asset Charges

Equipment
Relocation

$7,900

$ —
1,116
—
—

$1,116
5,702
(2,421)
—

$4,397

$1,082

$7,600

$ —
1,055
—

(1,055)

$ —
6,113
—

(6,113)

$ —

$ 432

$1,700

$ —
—
—
—

$ —
827
(827)
—

$ —

$ 873

Other Costs

Total

$3,800

$21,000

$ —
366
(200)
(166)

$ —
3,184
(843)
(1,192)

$1,149

$ 250

$ —
2,537
(200)
(1,221)

$ 1,116
15,826
(4,091)
(7,305)

$ 5,546

$ 2,637

Approximately $8,464 and $1,256 of the total restructuring charges of $15,826 and $2,537 in 2004 and 2003, respectively, were
reported in costs of products sold in the accompanying Statements of Consolidated Income, while the remaining charges were
reported in other restructuring costs. The restructuring costs included in cost of products sold include long-lived asset charges and
inventory disposition costs. Expected employee separation costs of approximately $7,900 are being recognized over the estimated
future service period of the related employees. The obligation related to employee separation costs is included in the current
liabilities line item, salaries, wages, and additional compensation, in the Consolidated Balance Sheets.

Long-lived asset charges include accelerated depreciation related to machinery and equipment that will be used by the production
facilities until they close. Other costs include miscellaneous expenditures associated with the Company’s restructuring initiative
and are expensed as incurred. These costs include employee relocation, professional fees, and other closed facility costs.

NOTE F: REPORTABLE SEGMENTS
G
The Company operates in one industry: the manufacturing and marketing of food products. The Company has two reportable
segments: U.S. retail market and special markets. The U.S. retail market segment includes the consumer and the consumer oils
businesses. This segment represents the primary strategic focus area for the Company — the sale of branded food products with
leadership positions to consumers through mainstream domestic retail outlets. The special markets segment represents the aggre-
gation of the foodservice, international, industrial, and beverage businesses. Special markets segment products are distributed
through foreign countries, foodservice distributors and operators (i.e., restaurants, schools and universities, and health care oper-
ations), other food manufacturers, and health and natural food stores.

The following table sets forth reportable segment and geographical information.

Net sales:

U.S. retail market
Special markets

Total net sales

Segment profit:

U.S. retail market
Special markets

Total segment profit

Interest income
Interest expense
Amortization expense
Restructuring costs
Merger and integration costs
Corporate administrative expenses
Other unallocated income (expenses)

Income before income taxes

Net sales:

Domestic
International

Total net sales

Assets:

Domestic
International

Total assets

Long-lived assets:

Domestic
International

Total long-lived assets

Segment profit represents revenue less direct and allocable operating expenses.

The following table presents product sales information.

Peanut butter
Shortening and oils
Fruit spreads
Portion control
Juices and beverages
Toppings and syrups
Industrial ingredients
Uncrustables frozen sandwiches
Other

Total

Year Ended April 30,

2004

2003

2002

$1,002,306
414,705

$ 889,871
421,873

$323,636
363,512

$1,417,011

$1,311,744

$687,148

$ 231,068
49,298

$ 197,709
53,960

$ 68,691
42,788

$ 280,366

$ 251,669

$111,479

3,379
(6,374)
(2,414)
(15,826)
(1,266)
(80,459)
1,413

2,039
(8,752)
(1,817)
(2,537)
(10,511)
(72,110)
(2,591)

2,181
(9,207)
(4,625)
—

(5,031)
(46,681)
2,082

$ 178,819

$ 155,390

$ 50,198

$1,278,243
138,768

$1,190,190
121,554

$590,327
96,821

$1,417,011

$1,311,744

$687,148

$1,590,236
93,889

$1,511,553
103,854

$438,644
86,248

$1,684,125

$1,615,407

$524,892

$1,216,497
42,370

$1,109,859
38,888

$211,380
33,699

$1,258,867

$1,148,747

$245,079

Year Ended April 30,

2004

2003

2002

27%
23
20
6
6
5
5
4
4

26%
22
20
6
5
5
8
3
5

7%
—
37
11
10
8
16
3
8

100%

NOTE G: EARNINGS PER SHARE
G
The following table sets forth the computation of earnings per common share and earnings per common share – assuming dilution.

Numerator:

Net income for earnings per common share and

earnings per common share – assuming dilution

Denominator:

Denominator for earnings per common share –

weighted-average shares
Effect of dilutive securities:

Stock options
Restricted stock

Denominator for earnings per common share –

assuming dilution

Net income per common share

Net income per common share – assuming dilution

Year Ended April 30,

2004

2003

2002

$111,350

$96,342

$30,851

49,816,926

47,309,257

23,114,494

502,166
76,655

366,629
88,891

318,104
60,767

50,395,747

47,764,777

23,493,365

$ 2.24

$ 2.21

$ 2.04

$ 2.02

$ 1.33

$ 1.31

NOTE H: MARKETABLE SECURITIES
G
The Company invests primarily in debt securities. Under the Company’s investment policy, it will invest in securities deemed to
be investment grade. Currently, these investments are defined as government-backed mortgage obligations, corporate bonds,
municipal bonds, and commercial paper. The Company determines the appropriate categorization of its debt securities at the time
of purchase and reevaluates such designation at each balance sheet date. The Company has categorized all debt securities as avail-
able for sale, because it currently has the intent to convert these investments into cash if and when needed. Classification of these
available-for-sale marketable securities as current or noncurrent is based on whether the conversion to cash is expected to be nec-
essary for current operations, which is currently consistent with the securities maturity date.

Securities categorized as available for sale are stated at fair value, with unrealized gains and losses reported as a component of other
comprehensive income or loss. At April 30, 2004, the aggregate fair value of available-for-sale marketable securities was $56,663.
Net unrealized holding gains of $8 were included as a component of other comprehensive income or loss.

The following table is a summary of available-for-sale marketable securities.

U.S. corporate securities
Government-backed obligations
Mortgage-backed securities

Balance at April 30, 2004

Cost

$23,187
9,015
24,453

$56,655

Gross
Unrealized
Gains

Gross
Unrealized
Losses

$ 78
7
100

$185

$ (35)
—
(142)

$(177)

Estimated
Fair Value

$23,230
9,022
24,411

$56,663

The contractual maturities of these available-for-sale marketable securities as of April 30, 2004, were as follows:

Due in one year or less
Due after one to five years
Mortgage-backed securities

Balance at April 30, 2004

Cost

$15,086
17,116
24,453

$56,655

Estimated
Fair Value

$15,074
17,178
24,411

$56,663

NOTE I: GOODWILL AND OTHER INTANGIBLES
G
A summary of changes in the Company’s goodwill during the years ended April 30, 2004 and 2003, by reportable segment is as
follows:

Balance at May 1, 2002
Acquisition
Other

Balance at April 30, 2003
Acquisition
Other

Balance at April 30, 2004

U.S. Retail
Market

$ 13,353
488,950
—

$502,303
4,759
—

$507,062

Special
Markets

$20,157
—
3,482

$23,639
—
442

Total

$ 33,510
488,950
3,482

$525,942
4,759
442

$24,081

$531,143

The Company’s other intangible assets and related accumulated amortization is as follows:

Finite-lived intangible assets:

Patents
Customer lists and formulas

Total intangible assets subject to

amortization

Indefinite-lived intangible assets:

April 30, 2004

April 30, 2003

Acquisition Accumulated
Cost Amortization

Net

Acquisition Accumulated
Cost Amortization

Net

$ 1,000
3,887

$ 192
972

$ 808
2,915

$ 1,000
3,887

$ 91
583

$ 909
3,304

$ 4,887

$1,164

$ 3,723

$ 4,887

$674

$ 4,213

Trademarks

$319,392

$ — $319,392

$316,196

$ —

$316,196

Total intangible assets not subject to

amortization

$319,392

$ —

$319,392

Total other intangible assets

$324,279

$1,164

$323,115

$316,196

$321,083

$ —

$674

$316,196

$320,409

Amortization expense for finite-lived intangible assets was approximately $490 and $480 in 2004 and 2003, respectively. The
weighted-average useful life of the finite-lived intangible assets is ten years. Based on the current amount of intangible assets sub-
ject to amortization, the estimated amortization expense for each of the succeeding five years is $490.

Pursuant to Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets, the Company is required
to review goodwill and indefinite-lived intangible assets at least annually for impairment. The annual impairment review of all
appropriate assets was performed as of February 1, 2004. No impairment was required to be recorded as a result of the annual
impairment review.

NOTE J: PENSIONS AND OTHER POSTRETIREMENT BENEFITS
G
The Company has pension plans covering substantially all of its domestic employees. Benefits are based on the employee’s years
of service and compensation. The Company’s plans are funded in conformity with the funding requirements of applicable gov-
ernment regulations.

In addition to providing pension benefits, the Company sponsors several unfunded, defined postretirement plans that provide
health care and life insurance benefits to substantially all active and retired domestic employees not covered by certain collective
bargaining agreements, and their covered dependents and beneficiaries. These plans are contributory, with retiree contributions
adjusted periodically, and contain other cost-sharing features, such as deductibles and coinsurance. Covered employees generally
are eligible for these benefits when they reach age 55 and have attained ten years of credited service.

Net periodic benefit cost included the following components:

Defined Benefit Pension Plans

Other Postretirement Benefits

April 30,

2004

2003

2004

2003

$107,718
4,152
6,617
47
—
4,055
—
(3,295)

$ 81,453
3,121
5,976
5,252
—
15,331
—
(3,415)

$ 21,734
1,087
1,342
—
—
3,778
220
(986)

$ 11,788
695
990
214
2,018
6,908
205
(1,084)

Benefit obligation at end of the year

$119,294

$107,718

$ 27,175

$ 21,734

Change in plan assets:

Fair value of plan assets at beginning of the year

Actual return on plan assets
Company contributions
Participant contributions
Benefits paid

$ 64,173
17,132
6,510
—

(3,295)

$ 68,747
(4,160)
3,001
—
(3,415)

$ —
—
766
220
(986)

$ —
—
879
205
(1,084)

Fair value of plan assets at end of the year

$ 84,520

$ 64,173

$ —

Net amount recognized:

Funded status of the plans
Unrecognized net actuarial loss
Unrecognized prior service cost (credit)
Unrecognized initial asset

$ (34,774)
17,946
11,936
(304)

$ (43,545)
26,836
13,345
(531)

$(27,175)
8,181
(390)
—

$(21,734)
4,553
(433)
—

Net benefit liability recognized

$ (5,196)

$ (3,895)

$(19,384)

$(17,614)

Accrued benefit liability
Prepaid benefit cost
Intangible asset
Minimum pension liability

$ (23,641)
4,803
4,079
9,563

$ (32,385)
—
13,345
15,145

$(19,384)
—
—
—

$(17,614)
—
—
—

Net benefit liability recognized

$ (5,196)

$ (3,895)

$(19,384)

$(17,614)

Weighted-average assumptions used in

determining benefit obligation:
Discount rate
Expected return on plan assets
Rate of compensation increase

6.25%
8.75%
4.50%

6.25%
9.00%
4.50%

6.25%
—
—

The following table sets forth additional information related to the Company’s defined benefit pension plans.

(Decrease) increase in minimum liability included in

other comprehensive income or loss

Accumulated benefit obligation for all pension plans

April 30,

2004

2003

$ (5,582)
$104,753

$13,917
$96,560

The following table sets forth additional information related to the Company’s defined benefit pension plans with an accumulated
benefit obligation in excess of plan assets.

Accumulated benefit obligation
Fair value of plan assets

April 30,

2004

2003

$49,451
$25,811

$96,560
$64,173

The Company employs a total return on investment approach for the defined benefit pension plans’ assets. A mix of equities and
fixed income investments are used to maximize the long-term rate of return on assets for the level of risk. The objectives of this
strategy are to achieve full funding of the accumulated benefit obligation, and to achieve investment experience over time that will
minimize pension expense volatility and hold to a feasible minimum the Company’s contributions required to maintain full fund-
ing status. In determining the expected long-term rate of return on defined benefit pension plans’ assets, management considers
the historical rates of return, the nature of investments, and expectations of future investment strategies.

The Company’s pension plans’ asset target and actual allocations are as follows:

Equity securities
Debt securities
Cash and other investments

Target
Allocation

70%
30
—

100%

Actual Allocation

April 30,

2004

71%
27
2

100%

2003

70%
28
2

100%

Included in equity securities is 317,552 of the Company’s common shares at April 30, 2004 and April 30, 2003. The market value
of these shares is $15,643 at April 30, 2004. The Company paid dividends of $292 on these shares during 2004. Prior service costs
are being amortized over the average remaining service lives of the employees expected to receive benefits.

The Company expects to contribute approximately $16.5 million and $1 million to the pension and other postretirement benefit plans,
respectively, in 2005.

The Company also charged to operations approximately $1,031, $1,129, and $958 in 2004, 2003, and 2002, respectively, for con-
tributions to foreign pension plans and to plans not administered by the Company on behalf of employees subject to certain labor
contracts. These amounts were determined in accordance with foreign actuarial computations and provisions of the labor con-
tracts. The Company is unable to determine its share of either the accumulated plan benefits or net assets available for benefits
under such plans.

In May 2004, the Financial Accounting Standards Board issued Staff Position No. 106-2, Accounting and Disclosure Requirements
Related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (FSP 106-2). FSP 106-2 permits a spon-
sor of a postretirement health care plan that provides a prescription drug benefit to make a one-time election to defer accounting
for the effects of the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (the Act) and requires certain

disclosures pending determination as to whether the sponsor’s postretirement health care plan can reasonably expect to qualify for
beneficial treatment under the Act. The Company sponsors several unfunded, defined, postretirement benefit plans that provide
health care benefits to substantially all active and retired domestic employees not covered by collective bargaining agreements.
Based on a preliminary analysis of the Act, it appears that the Company’s retiree medical plans can reasonably expect to qualify for
beneficial treatment under the Act without change to the plans. The Company has included the estimated impact of the subsidy in
measuring the accumulated benefit obligation at April 30, 2004, resulting in a reduction of $267 in the accumulated benefit obliga-
tion related to benefits attributed to past service. The effect of the subsidy had no impact on net periodic benefit cost in 2004.

For 2005, the assumed health care cost trend rates are nine percent for all participants. The rate for participants under age 65 is
assumed to decrease to five percent in 2010. The health care cost trend rate assumption has a significant effect on the amount of
the other postretirement benefits obligation and periodic other postretirement benefits cost reported. A one-percentage point
annual change in the assumed health care cost trend rate would have the following effect as of April 30, 2004:

Effect on total service and interest cost components
Effect on benefit obligation

One Percentage Point

Increase

Decrease

$ 542
$5,461

$ (416)
$(4,261)

Certain of the Company’s active employees participate in multiemployer plans that provide defined postretirement health care
benefits. The aggregate amount contributed to these plans, including the charge for net periodic postretirement benefit costs,
totaled $1,639, $2,316, and $1,851 in 2004, 2003, and 2002, respectively.

NOTE K: SAVINGS PLANS
G
ESOP: The Company sponsors an Employee Stock Ownership Plan and Trust (ESOP) for certain domestic, nonrepresented
employees. The Company has entered into loan agreements with the Trustee of the ESOP for purchases by the ESOP of the
Company’s common shares in amounts not to exceed a total of 1,134,120 unallocated common shares of the Company at any one
time. These shares are to be allocated to participants over a period of not less than 20 years.

ESOP loans bear interest at one-half percentage point over prime, are secured by the unallocated shares of the plan, and are
payable as a condition of allocating shares to participants. Interest incurred on ESOP debt was $356, $406, and $538 in 2004, 2003,
and 2002, respectively. Contributions to the plan, representing compensation expense, are made annually in amounts sufficient to
fund ESOP debt repayment and were $497, $558, and $707 in 2004, 2003, and 2002, respectively. Dividends on unallocated
shares are used to reduce expense and were $395, $368, and $336 in 2004, 2003, and 2002, respectively. The principal payments
received from the ESOP in 2004, 2003, and 2002 were $509, $469, and $364, respectively.

Dividends on allocated shares are credited to participant accounts and are used to purchase additional common shares for partic-
ipant accounts. Dividends on allocated and unallocated shares are charged to retained earnings by the Company.

As permitted by Statement of Position 93-6, Employers’ Accounting for Employee Stock Ownership Plans, the Company will con-
tinue to recognize future compensation using the cost basis as all shares currently held by the ESOP were acquired prior to 1993.
At April 30, 2004, the ESOP held 420,615 unallocated shares. All shares held by the ESOP were considered outstanding in earn-
ings per share calculations for all periods presented.

401(k) Plan: The Company offers employee savings plans under Section 401(k) of the Internal Revenue Code for all domestic
employees not covered by certain collective bargaining agreements. The Company’s contributions under these plans are based on
a specified percentage of employee contributions. Charges to operations for these plans in 2004, 2003, and 2002 were $3,455,
$2,635, and $1,445, respectively.

NOTE L: STOCK BENEFIT PLANS
G
The Company provides for equity-based incentives to be awarded to key employees through the 1998 Equity and Performance
Incentive Plan, the Restricted Stock Bonus Plan adopted in 1979, and the 1987 Stock Option Plan, and to nonemployee directors
through the Nonemployee Director Stock Option Plan adopted in 2002.

1998 Equity and Performance Incentive Plan: This plan provides for the issuance of stock options and restricted stock, which
may include performance criteria, as well as stock appreciation rights, deferred shares, and performance shares. At April 30, 2004,
there were 2,023,337 common shares available for future issuance under this plan. Of this total amount available for issuance, the
amount of restricted stock available for issuance is limited to 758,225 common shares. Restricted stock issued under this plan is
subject to a risk of forfeiture for at least three years in the event of termination of employment or failure to meet performance cri-
teria, if any. All restricted shares issued to date under the plan are subject to a four-year forfeiture period. Options granted under
this plan become exercisable at the rate of one-third per year, beginning one year after the date of grant, and the option price is
equal to the market value of the shares on the date of the grant.

Restricted Stock Bonus Plan: Shares awarded under this plan contain certain restrictions for four years relating to, among other
things, forfeiture in the event of termination of employment and to transferability. Shares awarded are issued as of the date of the
award and a deferred compensation charge is recorded at the market value of the shares on the date of the award. The deferred
compensation charge is recognized as expense over the period during which restrictions are in effect. In 2002, 46,499 common
shares were awarded under this plan. No awards were granted from this plan in 2003 and 2004. There are no common shares avail-
able for future issuance under this plan.

1987 Stock Option Plan: Options granted under this plan become exercisable at the rate of one-third per year, beginning one
year after the date of grant, and the option price is equal to the market value of the shares on the date of the grant. There are 10,162
common shares available for future grant under this plan.

Nonemployee Director Stock Option Plan: This plan provides for the issuance of stock options to nonemployee directors
annually, on September 1 of each year. Options granted under this plan become exercisable six months after the date of grant, and
the option price is equal to the market value of the shares on the date of the grant. There are 60,510 common shares available for
future grant under this plan.

A summary of the Company’s stock option activity, and related information follows:

Outstanding at May 1, 2001

Granted
Exercised
Forfeited

Outstanding at April 30, 2002

Granted
Exercised
Forfeited

Outstanding at April 30, 2003

Granted
Exercised
Forfeited

Outstanding at April 30, 2004

Exercisable at April 30, 2002
Exercisable at April 30, 2003
Exercisable at April 30, 2004

Weighted-
Average
Exercise
Price

$ 23.41
—
24.96
31.63

$ 22.69
33.72
22.69
30.15

$ 28.03
43.32
25.22
33.98

$ 30.64

$ 22.45
$ 22.73
$ 25.58

Options

2,185,174
—
(581,062)
(29,424)

1,574,688
1,275,000
(220,356)
(13,247)

2,616,085
388,000
(385,455)
(55,057)

2,563,573

1,279,258
1,258,103
1,407,281

The following table summarizes the range of exercise prices and weighted-average exercise prices for options outstanding and
exercisable at April 30, 2004, under the Company’s stock benefit plans.

Range of
Exercise Prices

$16.87–$25.30
$25.31–$36.99
$37.00–$43.38

Outstanding

859,250
1,322,323
382,000

Weighted-
Average
Exercise Price

$21.61
$32.84
$43.31

Weighted-
Average
Remaining
Contractual
Life (years)

4.8
7.6
9.5

Exercisable

859,250
539,031
9,000

Weighted-
Average
Exercise Price

$21.61
$31.66
$40.61

NOTE M: LONG-TERM DEBT AND FINANCING ARRANGEMENTS
G

Long-term debt consists of the following:

6.77% Senior Notes due June 1, 2009
7.70% Series A Senior Notes due September 1, 2005
7.87% Series B Senior Notes due September 1, 2007
7.94% Series C Senior Notes due September 1, 2010

Total long-term debt

April 30,

2004

2003

$ 75,000
17,000
33,000
10,000

$135,000

The notes are unsecured and interest is paid semiannually. Among other restrictions, the note purchase agreements contain cer-
tain covenants relating to liens, consolidated net worth, and sale of assets as defined in the agreements. The Company is in com-
pliance with all covenants.

Interest paid totaled $10,300, $10,613, and $9,800 in 2004, 2003, and 2002, respectively.

Financing arrangements: At April 30, 2004, the Company had uncommitted lines of credit providing up to $105,000 for short-
term borrowings. No amounts were outstanding at April 30, 2004. The interest rate to be charged on any outstanding balance is
based on prevailing market rates. Subsequent to April 30, 2004, the uncommitted lines of credit were replaced with a $180,000
revolving credit facility (see Note B).

NOTE N: DERIVATIVE FINANCIAL INSTRUMENTS
G
The Company is exposed to market risks, such as changes in interest rates, currency exchange rates, and commodity pricing. To
manage the volatility relating to these exposures, the Company enters into various derivative transactions.

Commodity price management: In connection with the purchase of raw materials used by the Company’s consumer oils busi-
ness, primarily soybean and canola oils, the Company enters into commodity futures and options contracts to manage the price
volatility related to anticipated inventory purchases. The commodity futures contracts generally have maturities of less than one
year, meet the hedge criteria according to Statement of Financial Accounting Standards No. 133, Accounting for Derivative
Instruments and Hedging Activities, and are accounted for as cash flow hedges. The mark-to-market gains or losses on qualifying
hedges are deferred and included as a component of other comprehensive income or loss to the extent effective, and reclassified
into cost of products sold in the period during which the hedged transaction affects earnings.

In order to qualify as a hedge of commodity price risk, it must be demonstrated that the changes in the fair value of the com-
modities futures contracts are highly effective in hedging price risks associated with commodity purchases and related trans-
portation costs. Hedge ineffectiveness is measured on a quarterly basis. The mark-to-market gains or losses on nonqualifying,
excluded, and ineffective portions of hedges are recognized in cost of products sold immediately and were not significant.

As of April 30, 2004 and 2003, the deferred gain, net of tax, included in accumulated other comprehensive loss was $1,237 and
$236, respectively. This entire amount at April 30, 2004, is expected to be recognized in earnings during 2005. Gains on com-
modities futures contracts and options recognized in earnings during 2004 and 2003 were $3,967 and $4,050, respectively.

Interest rate hedging: The Company’s policy is to manage interest cost using a mix of fixed- and variable-rate debt. To manage
this mix in a cost efficient manner, the Company may periodically enter into interest rate swaps in which the Company agrees to
exchange, at specified intervals, the difference between fixed and variable interest amounts calculated by reference to an agreed-
upon notional principal amount. The interest rate swap agreements effectively modify the Company’s exposure to interest risk by
converting a portion of the Company’s fixed-rate debt to a floating rate. The interest rate swap and the instrument being hedged
is marked to market in the balance sheet. The mark-to-market value of both the fair value hedging instruments and the underly-
ing debt obligations are recorded as equal and offsetting gains or losses in other income or expense. No other cash payments are
made unless the contract is terminated prior to maturity, in which case the amount paid or received in settlement is established by
agreement at the time of termination, and usually represents the net present value, at current rates of interest, of the remaining
obligations to exchange payments under the terms of the contract. Any gains or losses upon the early termination of the interest
rate swap contracts are deferred and recognized over the remaining life of the contract.

During 2003 and 2004, the Company terminated its interest rate swap agreements prior to maturity. These agreements were orig-
inally entered in fiscal 2002, in December 2002, and in July 2003. As a result of the early terminations, the Company received $924
and $4,092 in cash in 2004 and 2003, respectively, and realized corresponding gains, which have been deferred. These deferred
gains will be recognized in earnings over the remaining lives of the original swap agreements as a reduction of future interest
expense. At April 30, 2004 and 2003, the balance of the deferred gains related to the terminated swaps was $3,530 and $3,640,
respectively, and is included in other noncurrent liabilities.

Foreign exchange rate hedging: During 2004, the Company entered into several forward currency exchange contracts with
maturities of less than one year. These contracts are used to hedge the effect of foreign exchange fluctuations on future cash pay-
ments related to purchases of equipment. These contracts are accounted for as cash-flow hedges with associated mark-to-market
gains and losses deferred and included as a component of other comprehensive income or loss. These gains or losses are reclassi-
fied to earnings in the period the futures contracts are executed. At April 30, 2004, the deferred loss, net of tax, included in accu-
mulated other comprehensive loss was $47.

NOTE O: INCOME TAXES
G
Deferred income taxes reflect the tax effects of temporary differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax reporting. Significant components of the Company’s deferred
tax assets and liabilities are as follows:

Deferred tax liabilities:

Intangible assets
Depreciation
Other (each less than five percent of total liabilities)

Total deferred tax liabilities

Deferred tax assets:

Postretirement benefits other than pensions
Other employee benefits
Pensions
Intangible assets
Marketing accruals
Other (each less than five percent of total assets)

Total deferred tax assets
Valuation allowance for deferred tax assets

Total deferred tax assets less allowance

Net deferred tax liability

April 30,

2004

2003

$115,729
28,021
14,947

$118,925
28,109
7,982

$158,697

$155,016

$ 7,661
7,780
3,554
3,945
1,652
2,708

$ 27,300
(2,078)

$ 7,217
7,267
6,715
4,041
2,036
3,915

$ 31,191
(1,755)

$ 25,222

$ 29,436

$133,475

$125,580

The Company has recorded a valuation allowance related to certain foreign deferred tax assets due to the uncertainty of their realization.

Domestic income and foreign withholding taxes have not been recorded on undistributed earnings of foreign subsidiaries since
these amounts are considered to be permanently reinvested. Any additional taxes payable on the earnings of foreign subsidiaries,
if remitted, would be partially offset by domestic tax credits and deductions for foreign taxes already paid.

Income before income taxes is as follows:

Domestic
Foreign

Income before income taxes

Year Ended April 30,

2004

2003

2002

$169,004
9,815

$147,581
7,809

$44,668
5,530

$178,819

$155,390

$50,198

The components of the provision for income taxes are as follows:

Current:
Federal
Foreign
State and local

Deferred

Total income tax expense

Year Ended April 30,

2004

2003

2002

$52,604
4,289
4,463
6,113

$67,469

$53,767
2,881
6,080
(3,680)

$59,048

$13,447
2,449
1,906
1,545

$19,347

A reconciliation of the statutory federal income tax rate and the effective income tax rate follows:

Percent of Pretax Income

Statutory federal income tax rate
Increase (decrease) in income taxes resulting from:

State and local income taxes, net of federal income tax benefit
Research credits
Other items

Effective income tax rate

Income taxes paid

Year Ended April 30,

2004

35.0%

1.6
—
1.1

2003

35.0%

2.5
(0.1)
0.6

2002

35.0%

2.5
(1.9)
2.9

37.7%

38.0%

38.5%

$72,109

$46,119

$18,003

NOTE P: ACCUMULATED OTHER COMPREHENSIVE LOSS
G
Comprehensive income is included in the Statements of Consolidated Shareholders’ Equity. The components of accumulated
other comprehensive loss as shown on the Consolidated Balance Sheets are as follows:

Foreign
Currency
Translation
Adjustment

Minimum
Pension
Liability
Adjustment

Unrealized
(Gain) Loss
on Available-
for-Sale
Securities

Unrealized
Gain on
Cash Flow

Accumulated
Other
Hedging Comprehensive
Loss

Derivatives

Balance at May 1, 2001

Current period (credit) charge
Income tax benefit

Balance at April 30, 2002

Current period (credit) charge
Income tax (benefit) expense

Balance at April 30, 2003

Reclassification adjustments
Current period credit
Income tax expense

Balance at April 30, 2004

$16,635
(1,669)
—

$14,966
(8,268)

—

$ 6,698
—

(6,697)

—

$ 1

$ —
1,228
(431)

$ 797
13,917
(5,288)

$9,426
—

(5,582)
2,179

$6,023

$ —
—
—

$ —
477
(181)

$ 296
—
(872)
327

$(249)

$ —
—
—

$ —
(381)
145

$ (236)
381
(1,889)
554

$16,635
(441)
(431)

$15,763
5,745
(5,324)

$16,184
381
(15,040)
3,060

$(1,190)

$ 4,585

NOTE Q: COMMON SHARES
G
Voting: The Company’s Amended Articles of Incorporation provide that holders of the Company’s common shares generally will
be entitled to cast one vote per share on matters submitted to a vote of the shareholders. There are certain matters specified in the
Amended Articles (including any matters that relate to or would result in the dissolution or liquidation of the Company; the
amendment of the articles of incorporation or regulations of the Company other than any amendment that increases the number
of votes to which holders of new common shares are entitled or expand the matters to which time phase voting applies; any pro-
posal or other action to be taken by shareholders relating to the Company’s shareholder rights plan or any successor plan; any
matter relating to any benefit, stock option, compensation, or other similar plan; any matter that relates to or may result in a
change in control of the Company including any merger, consolidation, majority share acquisition, control share acquisition, sale
or other disposition of all, or substantially all, of the Company’s assets; or any matter relating to the issuance, redemption, or
repurchase of shares of the Company or any of its subsidiaries), however, with respect to which parties acquiring the Company’s
common shares will be entitled to cast one vote per share until they have held their shares for four years, after which time they will
be entitled to cast ten votes per share on those specified matters.

Shareholders’ Rights Plan: Pursuant to a shareholders’ rights plan established during 1999, one share purchase right is associ-
ated with each of the Company’s outstanding common shares.

Under the plan, the rights will initially trade together with the Company’s common shares and will not be exercisable. In the
absence of further action by the directors, the rights generally will become exercisable and allow the holder to acquire the
Company’s common shares at a discounted price if a person or group acquires ten percent or more of the outstanding common
shares. Rights held by persons who exceed the applicable thresholds will be void. Shares held by members of the Smucker family
are not subject to the thresholds. If exercisable, each right entitles the shareholder to buy one common share at a discounted price.
Under certain circumstances, the rights will entitle the holder to buy shares in an acquiring entity at a discounted price.

The plan also includes an exchange option. In general, if the rights become exercisable, the directors may, at their option, effect
an exchange of part or all of the rights, other than rights that have become void, for common shares. Under this option, the
Company would issue one common share for each right, in each case subject to adjustment in certain circumstances.

The Company’s directors may, at their option, redeem all rights for $0.01 per right, generally at any time prior to the rights becom-
ing exercisable. The rights will expire May 14, 2009, unless earlier redeemed, exchanged, or amended by the directors.

NOTE R: SUBSEQUENT EVENT
G
On June 16, 2004, the Company sold its Australian subsidiary, Henry Jones Foods (HJF) to SPC Ardmona Ltd. The transaction
generated proceeds of approximately $35.7 million in cash and resulted in a net gain of approximately $9.5 million. The sale of the
subsidiary is consistent with the Company’s stated strategy of owning and marketing North American icon brands.

Results of HJF’s operations are included in the special markets segment.

The following table summarizes the carrying values of the assets and liabilities of HJF included in the Consolidated Balance Sheets:

Assets:

Current assets
Property, plant, and equipment
Goodwill
Other intangible assets, net
Other assets

Total assets disposed

Liabilities:

Current liabilities
Noncurrent liabilities

Total liabilities

Accumulated other comprehensive (income) loss

Net assets

April 30,

2004

2003

$16,515
8,535
2,713
5,878
687

$34,328

$ 4,962
336

$ 5,298

$25,136
7,262
2,381
5,117
363

$40,259

$ 4,409
304

$ 4,713

$ (2,353)

$ 3,044

$26,677

$38,590

The following table summarizes the operating results of HJF included in the Statements of Consolidated Income.

Net sales
Operating income

Year Ended April 30,

2004

2003

2002

$36,864
$ 3,435

$27,996
$ 2,305

$25,850
$ 2,253

MANAGEMENT’S REPORT ON RESPONSIBILITY FOR FINANCIAL REPORTING

Management of The J. M. Smucker Company is responsible for the preparation, integrity, accuracy, and consistency of the con-
solidated financial statements and the related financial information in this report. Such information has been prepared in accor-
dance with accounting principles generally accepted in the United States and is based on our best estimates and judgments.

The Company maintains systems of internal accounting controls supported by formal policies and procedures that are communi-
cated throughout the Company. There is an extensive program of audits performed by the Company’s internal audit staff and
independent auditors designed to evaluate the adequacy of and adherence to these controls, policies, and procedures.

Ernst & Young LLP, independent auditors, has audited the Company’s financial statements. Management has made all financial
records and related data available to Ernst & Young LLP during its audit.

The Company’s audit committee, comprised of three nonemployee members of the Board, meets regularly with the independent
auditors and management to review the work of the internal audit staff and the work, audit scope, timing arrangements, and fees
of the independent auditors. The audit committee also regularly satisfies itself as to the adequacy of controls, systems, and finan-
cial records. The manager of the internal audit department is required to report directly to the chair of the audit committee as to
internal audit matters.

It is the Company’s best judgment that its policies and procedures, its program of internal and independent audits, and the over-
sight activity of the audit committee work together to provide reasonable assurance that the operations of the Company are con-
ducted according to law and in compliance with the high standards of business ethics and conduct to which the Company
subscribes.

Timothy P. Smucker
Chairman and
Co-Chief Executive Officer

Richard K. Smucker
President, Co-Chief Executive Officer,
and Chief Financial Officer

DIRECTORS, OFFICERS, AND GENERAL MANAGERS
— The J. M. Smucker Company —

DIRECTORSG

OFFICERS & GENERAL

MANAGERSG

Vincent C. Byrd
Senior Vice President, Consumer Market
The J. M. Smucker Company

Timothy P. Smucker
Chairman and
Co-Chief Executive Officer

R. Douglas Cowan
Chairman and Chief Executive Officer
The Davey Tree Expert Company
Kent, Ohio

Kathryn W. Dindo
Vice President and Chief Risk Officer
FirstEnergy Corp.
Akron, Ohio

Fred A. Duncan
Senior Vice President, Special Markets
The J. M. Smucker Company

Elizabeth Valk Long
Former Executive Vice President
Time Inc.
New York, New York

Charles S. Mechem, Jr.
Retired Chairman
Convergys Corporation
Cincinnati, Ohio

Gary A. Oatey
Chairman and Chief Executive Officer
Oatey Company
Cleveland, Ohio

Richard K. Smucker
President, Co-Chief Executive Officer,
and Chief Financial Officer
The J. M. Smucker Company

Timothy P. Smucker
Chairman and
Co-Chief Executive Officer
The J. M. Smucker Company

William H. Steinbrink
Interim President
Wittenberg University
Springfield, Ohio

Richard K. Smucker
President, Co-Chief Executive Officer,
and Chief Financial Officer

Mark R. Belgya
Vice President and Treasurer

Vincent C. Byrd
Senior Vice President, Consumer Market

Barry C. Dunaway
Vice President, Corporate Development

Fred A. Duncan
Senior Vice President, Special Markets

Robert E. Ellis
Vice President, Human Resources

M. Ann Harlan
Vice President, General Counsel
and Secretary

Donald D. Hurrle, Sr.
Vice President, Sales, Grocery Market

Richard G. Jirsa
Vice President and Corporate Controller

John D. Milliken
Vice President, Logistics and
Western Operations

Steven Oakland
Vice President and General Manager,
Consumer Oils

Andrew G. Platt
Vice President, Information Services
and Chief Information Officer

Mark T. Smucker
Vice President and Managing Director,
Canada

Richard F. Troyak
Vice President, Operations

Paul Smucker Wagstaff
Vice President and General Manager,
Foodservice Market

Adam M. Ekonomon
Assistant General Counsel
and Assistant Secretary

Debra A. Marthey
Assistant Treasurer

Gary A. Jeffcott
General Manager, Industrial and
International Markets

Julia L. Sabin
General Manager,
Beverage Market

PROPERTIESG

Corporate Offices:

Orrville, Ohio

Domestic Locations:

Chico, California

Cincinnati, Ohio

Grandview, Washington

Havre de Grace, Maryland

Lexington, Kentucky

Memphis, Tennessee

New Bethlehem, Pennsylvania

Orrville, Ohio

Oxnard, California

Ripon, Wisconsin

Salinas, California

Scottsville, Kentucky

Watsonville, California*

West Fargo, North Dakota*

International Manufacturing
Locations:

Livingston, Scotland

São José do Rio Pardo, Brazil

Ste-Marie, Quebec, Canada

Sales Offices:*

Bentonville, Arkansas

Mexico City, Mexico

São Paulo, Brazil

Toronto, Ontario, Canada

* Leased properties

Company’s Principal Place
of Business

The J. M. Smucker Company
Strawberry Lane
Orrville, Ohio 44667
(330) 682-3000

Annual Meeting

The annual meeting will be held at
11:00 a.m. Eastern Daylight Time,
Thursday, August 12, 2004, in the
Fisher Auditorium at the
Ohio Agricultural Research
and Development Center
1680 Madison Avenue
Wooster, Ohio

Form 10-K

A copy of the Company’s Form 10-K
is available on the Company’s Web site
at www.smuckers.com. It is also available
without cost to shareholders who
request it by writing to:

The J. M. Smucker Company
Strawberry Lane
Orrville, Ohio 44667
Attention: Secretary

SHAREHOLDER INFORMATION
— The J. M. Smucker Company —

Stock Listing

Shareholder Inquiries

Inquiries regarding dividend payments,
loss or nonreceipt of a dividend check,
address changes, stock transfers (including
name changes, gifts, and inheritances),
lost share certificates, and Form 1099
information should be addressed to:

Computershare Investor Services, LLC
2 North LaSalle Street
P.O. Box A3504
Chicago, Illinois 60602-3504
(800) 456-1169

All questions, inquiries, remittances, and
other correspondences related to direct
stock purchases and dividend reinvest-
ment services should be addressed to:

Computershare Investor Services, LLC
2 North LaSalle Street
P.O. Box A3309
Chicago, Illinois 60602-3309
(800) 456-1169

All other inquiries may be directed to:

The J. M. Smucker Company
Shareholder Relations
Strawberry Lane
Orrville, Ohio 44667
(330) 684-3838

For Additional Information

To learn more about The J. M. Smucker
Company, visit us at www.smuckers.com.

Independent Auditors

Ernst & Young LLP
222 South Main Street
Akron, Ohio 44308

The J. M. Smucker Company’s common
shares are listed on the New York Stock
Exchange — ticker symbol SJM.

Transfer Agent and Registrar for
the Company’s Shares

The transfer agent and registrar for the
Company’s common shares is:

Computershare Investor Services, LLC
2 North LaSalle Street
P.O. Box A3504
Chicago, Illinois 60602-3504
(800) 456-1169

The transfer agent has primary responsi-
bility for administering the common
shares held by registered shareholders
in the direct registration system, share
transfers, payment of dividends whether
by check or reinvestment, and issuance
of Form 1099 information.

Dividend Reinvestment/
Direct Stock Purchase Plan

Computershare Trust Company, Inc.
sponsors and administers a direct stock
purchase plan that includes dividend
reinvestment, Computershare BYDSSM,
for investors in common shares of
The J. M. Smucker Company. The plan
brochure can be downloaded from
www.computershare.com.

Dividends

The Company’s Board of Directors
normally declares a cash dividend each
quarter. Dividends are generally payable
on the first business day of March, June,
September, and December. The record
date is two weeks before the payment
date. The Company’s dividend disburse-
ment agent is Computershare Investor
Services, LLC.

This annual report includes certain forward-looking statements that are based on current expectations and are subject to a number of risks and uncertainties.

Please reference “Certain Forward-Looking Statements” located on page 19 in the Management’s Discussion and Analysis section.

All brand references in italics throughout this Annual Report represent trademarks of The J. M. Smucker Company.

n i v ersary!

5 th

O u r

ALL THE GOODNESS OF SMUCKER’S® IN A STORE

Simply Smucker’s®, our showcase store, is celebrating its fifth anniversary!

Open since May 1999, over 200,000 people visit Simply Smucker’s

each year. The store features over 300 different flavors and varieties

of Smucker products as well as a wide variety of household

accessories and specialty gifts. We even have a bakery offering

fresh-baked muffins, cookies, and crumbcakes.

For more information, please visit us at

www.smuckers.com/simplysmuckers

333 Wadsworth Road
(Rt. 57, one-quarter mile north of Rt. 30)
Orrville, Ohio 44667
(330) 684-1500
Monday – Saturday 9:00 a.m. to 6:00 p.m.
Closed Sunday

The J. M. Smucker Company

Strawberry Lane
Orrville, Ohio 44667
(330) 682-3000