The J. M. Smucker Company Annual Report 2005

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FY2005 Annual Report · The J. M. Smucker Company

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Annual Report
; 2005 :

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 from continuing operations:

Income
Income per common share – assuming dilution

Income and income per common share from continuing operations

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 income from continuing operations:

Income from continuing operations before income taxes
Merger and integration costs
Cost of products sold – restructuring
Other restructuring costs

Income from continuing operations before income taxes,
restructuring, and merger and integration costs
Income taxes

Income from continuing operations before
restructuring and merger and integration costs

Year Ended April 30,

2005

2004

$2,043,877

$1,369,556

$ 129,073
$ 2.24

$ 111,350
$ 2.21

$ 130,460
$ 2.26

$ 111,298
$ 2.21

$ 150,401
$ 2.60
58,540,386
3,700

$ 122,035
$ 2.42
50,174,707
2,950

$ 204,614
17,954
2,466
10,854

$ 177,170
1,266
8,464
7,362

$ 235,888
85,487

$ 194,262
72,227

$ 150,401

$ 122,035

; Contents :

Letter to Shareholders
Five-Year Summary of Selected Financial Data
Summary of Quarterly Results of Operations
Stock Price Data
Management’s Discussion and Analysis
Report of Management on Internal Control
Over Financial Reporting
Report of Independent Registered Public
Accounting Firm on Internal Control
Over Financial Reporting
Report of Independent Registered Public
Accounting Firm on the Consolidated
Financial Statements
Consolidated Financial Statements
Notes to Consolidated Financial Statements
Report of Management on Responsibility
for Financial Reporting
Directors, Officers, and General Managers
Properties
Shareholder Information

1
9
10
10
11

22
23
28

55
56
56
57

; On Our Cover :

California artist Loran Speck is internationally known
for his still-life paintings rendered in the light-infused
style of the Old Masters.This work in oils, which
Mr. Speck created especially for our cover, celebrates the
simplicity and purity of the wholesome ingredients
represented in our family of brands.

Dear Shareholders and Friends:

Fiscal 2005 was another record year for The J. M. Smucker Company. Momentum has never been stronger

behind our core brands, including Smucker’s, Jif, Crisco, R.W. Knudsen Family, and Santa Cruz Organic.

The acquisition of International Multifoods Corporation in June 2004 contributed significantly to our 2005
results.We have nearly completed the seamless integration of this business, thanks to our employees’ dedication,
hard work, and attention to detail.We welcome Pillsbury, Hungry Jack, Martha White, Bick’s, Robin Hood, Pet, and
Golden Temple to our family of brands.

; Implementing Our Strategy :
We remain confident in our strategy of owning and marketing leading, North American icon brands sold
in the center of the store. Key strategic initiatives in 2005 included:
d Acquiring Multifoods, a move clearly in line with our strategy.Through this acquisition, we added

a number of leading icon brands, including Bick’s and Robin Hood, two top Canadian brands.
Now, consistent with our geographic emphasis on North America, we are one of
Canada’s major food companies.

d Completing the divestiture of a number of businesses,

which allowed us to focus our resources on our North American,
branded, retail strategy. Divestitures included the Henry Jones
Foods business in Australia, our industrial ingredient businesses
in the U.S. and Brazil, and Multifoods’ U.S. Foodservice and
Bakery division.

d Earning recognition, for the eighth consecutive year, as one of Fortune magazine’s “100 Best Companies

to Work For.” Once again, this honor is testimony to our employees and their commitment to our
Basic Beliefs: Quality, People, Ethics, Growth, and Independence.

d Starting up our new, state-of-the-art Uncrustables plant in Scottsville, Kentucky. Demand for

Uncrustables continues to grow, and we remain excited about this opportunity. Although the startup of the
new facility has taken longer than anticipated, we are confident that in the year ahead we will be positioned
to meet customer supply requirements.

d Continuing our Supply Chain Optimization Project with the objective of providing the lowest total

delivered cost to our customers and, ultimately, our consumers. Major initiatives in 2005 included the decision
to consolidate our fruit spread manufacturing facilities and the establishment of a new distribution network.

d Maintaining our commitment to collaborating with industry and business
partners to address shared opportunities.We have taken a leadership position in GS1,
an organization whose goal is to define and implement worldwide standards aimed at
improving the visibility and efficiency of supply and demand chains. Key initiatives

include data synchronization and electronic product coding (EPC).
d Providing a wide variety of quality products to meet consumers’ diverse
needs. We continually explore opportunities to promote nutrition and wellness. Our
pledge to provide healthy foods that “make you smile” extends to everyone, as evidenced by our broad

array of products, which offer our consumers many choices to suit their unique dietary requirements.

As a result of these strategic initiatives and many others, we achieved record results in fiscal 2005. Sales

were $2 billion, up 49 percent. Earnings were $129 million, up 16 percent, and earnings per share were
$2.24, up one percent.

— 1 —

Our U.S. retail
brands have been

a part of family

meals and special

occasions for more

than a century.

The addition of

Pillsbury, Hungry Jack

and Martha White to

our family of brands

further strengthens

our commitment to

providing products

that are convenient,

good and good for you,

and that make

you smile.

Credit for achieving these record results goes to the entire Smucker team, which is dedicated to serving all
of our constituents: consumers, customers, employees, suppliers, and the communities in which we work. If we
serve our constituents well, we will achieve our objective of providing long-term value for you, our shareholder.

Following are highlights from each of our business areas.

; U.S. Retail Segment :
Our largest reporting segment, U.S. Retail, had another outstanding year, with total sales up 40 percent.
Sales of our core brands—which in this segment include Smucker’s, Jif, and Crisco —grew five percent.

In addition to the above-mentioned brands, U.S. Retail includes sales of Pillsbury, Hungry Jack, Martha White,

and Pet products to grocery, mass retail, drug, dollar, military, and warehouse club channels.We continue
to grow our market share leadership in the fruit spread, peanut butter, ice cream topping, oil, and
shortening categories.

Fruit Spreads & Peanut Butter—Consistent with our commitment to providing our consumers with

the highest quality and variety of choices, we launched a number of new products this past year. Sales of
Smucker’s Squeeze fruit spreads have exceeded our expectations.This packaging option, which is popular

with both adults and kids, resulted from our ongoing efforts to understand what
consumers want in terms of convenience and ease of use.We also added four new
items to our range of peanut butter products: Jif Peanut Butter & Honey, for those
who enjoy a bit of golden sweetness with the fresh-roasted taste of Jif; Smucker’s
Natural Peanut Butter with Honey; and Adams and Laura Scudder natural peanut butters,

made with 100 percent organic peanuts.

We also initiated a long-term plan of marketing to Hispanic consumers,

including new advertising in selected markets.

Uncrustables—We are pleased with the continued demand for Smucker’s Uncrustables peanut butter and

jelly and grilled cheese sandwiches. Uncrustables are an easy way to enjoy one of life’s simple pleasures—
a wholesome, satisfying sandwich that tastes as good as homemade.

Ice Cream Toppings—Our selection of ice cream toppings—like our range of fruit spreads—offers
consumers a wide choice of flavors, varieties, sizes, and packages.We are currently launching a product called
Sundae Singles, which deliver Smucker’s delicious, rich toppings in a single serving container. Sundae Singles are
perfect for small households or for use as a dip for fruit or other snacks.

Potatoes, Pancakes, and Syrup—With Hungry Jack now part of our family of brands, we participate

in the prepared side dish and breakfast baking mix segments. In addition, Hungry Jack
breakfast syrups complement our Smucker’s fruit syrups, expanding our presence in
that category. Hungry Jack is a well-established brand, trusted for providing consistent,
homemade goodness. Since acquiring Hungry Jack, our focus has been on expanding
distribution, improving product formulations, updating packaging, and developing
a long-term brand strategy and marketing support plan.

Baking and Oils—Adding Pillsbury, Martha White, and Pet brands to our Crisco
business gives us a significant presence in the baking aisle.We believe that this stable
of leading, icon brands offers customers and consumers the solutions they seek and
will allow us to drive growth in the baking category.

Our new Crisco 64-ounce Simple Measures bottle—the first packaging innovation in the

category for a number of years—has been well received. Simple Measures features a cap that functions
as a built-in measuring cup.When the cap is replaced, unused oil drains neatly back into the bottle.

— 4 —

Recent market conditions have resulted in lower soybean costs, a development that follows a two-year period

during which soybean prices hit a 20-year high. In January 2005, we were able to lower prices for Crisco oil
and shortening, and we have seen a corresponding upturn in sales.

Sales of Pillsbury baking products exceeded our expectations in 2005, our first year of owning the business.

Throughout the category, value-added baking mix kits are driving profitability for both manufacturers and
retailers.We are fully participating in this trend with our Pillsbury Ultimate Dessert Kits. Currently offered in
three varieties, with four more planned, Ultimate Dessert Kits allow consumers to create impressive desserts
in minutes. And according to Good Housekeeping magazine, the nation’s best-tasting
brownie mix is our Pillsbury Fudge Supreme Chocolate Extreme.

The Pillsbury Doughboy, one of America’s best-loved brand icons, turned 40
this year, and we have planned a number of family-fun celebrations, including
a sampling tour that will travel to 20 cities across the country this summer.

We also welcome to the Smucker family our employees at the Toledo, Ohio,

baking mix plant.We look forward to their many contributions.

; Special Markets Segment :
Our Special Markets segment includes our Canadian, Beverage, International, and Foodservice businesses.
In 2005, we divested our Industrial fruit ingredient business, which had been part of Special Markets. Segment
sales increased 74 percent over the prior year, primarily as a result of the addition of the Multifoods business in
Canada. Sales for this segment, excluding Industrial, were up 96 percent.

Canada—Although we have served Canada for a number of years, adding the Multifoods business signifi-
cantly increased our total sales and branded presence in that market.We therefore have established the division
as a new strategic business area.Today in Canada, we sell Bick’s —the leading pickle and condiment brand—
and Robin Hood —the number-one flour brand—along with Smucker’s, Jif, and Crisco products.

We continue to provide Canadian consumers with Smucker’s fruit spreads produced by our employees in

Ste. Marie, Quebec.

Bick’s pickles, famous for their “crunch,” are produced in Dunnville, Ontario. Bick’s condiments have been a

part of family picnics and holiday occasions since 1952.

Robin Hood has provided high-quality, consistent flour for the discerning Canadian baker since 1909. In addition
to flour, Robin Hood offers baking mixes and hot cereals and recently introduced a new line of pancake mixes
in a convenient, resealable bag. Our employees operate a total of three Robin Hood flour mills, which are
located in Saskatoon, Saskatchewan; Port Colborne, Ontario; and Montreal, Quebec; and two baking mix
plants, one in Burlington, Ontario, and one in Montreal, Quebec.

In addition to our branded retail flour business, we are a major supplier of flour and value-added, grain-based

products to the foodservice and industrial baking industries.

In the year ahead, we will be launching new advertising for Bick’s and Robin Hood, including the first television

campaign for either brand in a number of years.

We would especially like to thank our employees in Canada for their tremendous effort and dedication over
this past year. Significant changes resulted from the merger of our two businesses in Canada, and we believe
we are well positioned for long-term growth and success.

Beverage—We continue to grow our leadership position in the natural foods channel with sales of

R.W. Knudsen natural beverages and Santa Cruz Organic products.

Sales for the division were up six percent compared to last year.The increase was driven by distribution gains
in natural food stores, mainstream grocery stores, mass retail, and the warehouse club channel. Smucker Quality
Beverages continues to meet today’s consumer needs through the development of innovative, new products
that are “good and good for you.”

— 5 —

In Canada, our
products have a rich

heritage of bringing

smiles to families

at every meal.

Robin Hood and

Bick’s —together with

Smucker’s, Jif and

Crisco —provide us

with even greater

opportunities to offer

our consumers

high quality,

wholesome products

from brands and a

Company they trust.

Foodservice—Our Foodservice division recorded another strong year, with sales of Smucker’s and Dickinson’s
portion control products up seven percent during fiscal 2005. Foodservice operators continue to associate our
brands with value and quality. In our portion control business, we are experiencing significant growth with
healthcare and eldercare providers. Consistent with our philosophy of providing consumers a variety of
choices, we offer foodservice operators many of our retail products, including our Sugar Free fruit spreads,
in portion control servings.

Sales to schools grew six percent in 2005.We remain pleased with the demand from primary and secondary
schools for our Smucker’s Uncrustables peanut butter and jelly sandwiches. Uncrustables are a regular menu item
in many of the nation’s school cafeterias.

International—Primary markets for our International business are Mexico, Latin America, the Caribbean,

the Middle East, Asia, and Scotland. Products from our family of brands also are exported to more than
45 countries. Sales for International were up one percent. Henry Jones Foods and Smucker do Brasil, which
were divested in 2005, were previously reported within our International business. Results for these two
businesses have been classified within discontinued operations.

; Supply Chain :
We continue to explore opportunities to more effectively and efficiently move products from field to
store shelf.We all benefit when consumers have easy access to high-quality products at the lowest delivered cost.
With the addition of the brands acquired from Multifoods, we have established a new distribution network.
This allows our customers to order all of our products from one distribution point, decreasing delivery times.
To better satisfy our customers’ and consumers’ needs, we have implemented several supply chain technology

initiatives and are performing leading-edge work with EPC.When information is successfully synchronized,
processing invoices and replenishing store shelves becomes more efficient.

As part of our Supply Chain Optimization Project, we announced the difficult decision to close our Salinas,

California, facility. Fruit spread production from the Salinas facility will be relocated to Orrville, Ohio, and
Memphis,Tennessee.We thank our employees in Salinas for their many years of dedication to our Company.

; Outlook :
We have never been more excited about our future, and we believe the best is yet to come. As we implement

our strategy, we are confident for the following reasons:
d Our Company is rich in heritage, with a strong culture and a tradition of commitment to quality that goes

back more than 108 years.We are rooted in history, yet we look to the future.

d We are focused on owning and managing icon food brands with a position of market leadership in North America.
d We possess considerable expertise in marketing and growing brands. Leveraging that strength will yield

significant growth.

d We remain dedicated to our Basic Beliefs—the time-honored principles that serve as our Company’s

foundation and stand as guideposts for our strategy and endeavors.
We thank you, our shareholders, for your continued support and long-term investment in our Company.
And we express sincere thanks to our employees for their never-ending dedication to “doing the right things,
and doing things right.”

Sincerely,

Tim Smucker

Richard Smucker

— 8 —

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, 2005, restated for
discontinued operations, as discussed in Note C to the consolidated financial statements. 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)

2005

2004

2003

2002

2001

Year Ended April 30,

Statement of Income:

Net sales
Income from continuing operations

before cumulative effect of change in
accounting method

Discontinued operations
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 from continuing operations

before cumulative effect of change in
accounting method
Discontinued operations
Cumulative effect of change in

accounting method

Net income

$2,043,877

$1,369,556

$1,270,098

$649,997

$615,268

$ 130,460
(1,387)

$ 111,298
52

94,212
2,130

$ 29,324
1,527

$ 28,100
122

—

(1,016)

$ 129,073

$ 111,350

$ 96,342 $ 30,851

$ 27,206

$ 431,560 $ 135,000 $ 135,000
1,615,407
1,684,125
2,635,894
1,124,171
1,210,693
1,690,800

$135,000
524,892
280,144

$135,000
479,104
250,785

$ 2.29
(0.03)

$ 2.23 $ 1.99
0.05

0.01

$ 1.27
0.06

$ 1.17
—

—

(0.04)

$ 2.26

$ 2.24 $ 2.04

$ 1.33

$ 1.13

Income from continuing operations

before cumulative effect of change in
accounting method – assuming dilution
Discontinued operations – assuming dilution
Cumulative effect of change in

accounting method – assuming dilution

2.26
(0.02)

$ 2.21
—

$ 1.97
0.05

$ 1.25
0.06

$ 1.16
—

—

(0.04)

Net income – assuming dilution

$ 2.24

2.21

$ 2.02

$ 1.31

$ 1.12

Dividends declared per common share

$ 1.02

$ 0.94

$ 0.83

$ 0.68

— 9 —

Summary of Quarterly Results of Operations

The following is a summary of unaudited quarterly results of operations for the years ended April 30, 2005 and 2004.

(Dollars in thousands, except per share data)

Earnings per
Common Share

Earnings per
Common Share –
Assuming Dilution

2005

2004

Quarter Ended

July 31, 2004
October 31, 2004
January 31, 2005
April 30, 2005

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

Income from
Continuing
Net Sales Gross Profit Operations

Net
Income

Income from
Continuing
Operations

$413,267 $144,188
188,881
588,922
174,198
550,234
150,149
491,454

$339,176
374,203
343,788
312,389

$119,426
132,970
126,526
103,679

$27,487
40,663
35,524
26,786

$26,357
32,719
31,120
21,102

$32,848
38,005
36,108
22,112

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

$0.51
0.70
0.61
0.46

$0.53
0.66
0.62
0.42

Net
Income

$0.61
0.65
0.62
0.38

$0.52
0.64
0.63
0.44

Income from
Continuing
Operations

$0.50
0.69
0.60
0.45

$0.53
0.65
0.62
0.42

Net
Income

$0.60
0.65
0.61
0.38

$0.51
0.64
0.62
0.44

The first quarter of 2005 and all quarters of 2004 reflect the restatement of previously reported quarterly information for discontinued operations,
as discussed in Note C to the consolidated financial statements.
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
respective 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 346,900 share-
holders as of the June 20, 2005 record date, of which 89,141 were registered holders of common shares.

Quarter Ended

High

Low

Dividends

2005

2004

July 31, 2004
October 31, 2004
January 31, 2005
April 30, 2005

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

$53.12
47.00
47.63
51.65

$42.01
43.82
47.56
53.50

$40.80
41.85
43.44
46.31

$35.64
37.61
43.10
46.03

$0.25
0.25
0.25
0.27

$0.23
0.23
0.23
0.25

— 10 —

Management’s Discussion and Analysis

; Executive Summary :

The J. M. Smucker Company (“the Company”), headquar-
tered in Orrville, Ohio, is the leading manufacturer and
marketer of jams, jellies, preserves, and other fruit spreads
in the U.S. It is also the leader in dessert toppings, peanut
butter, shortening and oils, and health and natural foods bev-
erages in North America under such icon brands as
Smucker’s, Jif, and Crisco, and markets a wide variety of other
specialty products throughout North America and in many
foreign countries. The Company is widely known and
trusted for quality food products.

In addition to the Smucker's, Jif, and Crisco brands, the
Company’s expanded portfolio in fiscal 2005 includes the
following icon brands in the U.S.: Pillsbury flour, 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; in Canada:
Robin Hood flour and baking mixes; Bick’s pickles and condi-
ments; and Golden Temple atta flour and rice. In addition to
these leading brands, the Company markets products under
numerous other brands,
including Dickinson's, Laura
Scudder's, Adams, Double Fruit (Canada), R.W. Knudsen Family,
and Santa Cruz Organic.

The Company distributes its products through grocery and
other retail outlets, foodservice establishments, schools,
specialty and gourmet shops, health and natural foods
stores, and consumer direct vehicles such as the Internet and
a showcase store in Orrville, Ohio.

Since the 1998 inception of Fortune magazine’s annual survey
of the “100 Best Companies to Work For,” the Company has
consistently been recognized as one of the top 25 companies
to work for in the United States. The Company has over
3,500 employees worldwide and distributes products in
more than 45 countries.

; Results of Operations :

On June 18, 2004, the Company completed its acquisition
of Minneapolis-based International Multifoods Corporation
(“Multifoods”) in a tax-free stock and cash transaction
valued at approximately $871 million. Multifoods had con-
solidated net sales for the fiscal year ended February 28,
2004, of approximately $908 million. With the acquisition,
the Company added an array of North American icon
brands, marketed in the center of the store, to the existing

Smucker family of brands. This transaction has been
accounted for as a purchase business combination. The
results of Multifoods’ operations are included in the
Company’s consolidated financial statements from the date
of the acquisition.

The Company’s strategy is to own and market leading North
American icon brands sold in the center of the store. In sup-
port of this strategy, 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 gain of
approximately $9 million ($1.5 million, net of tax). On
October 6, 2004, the Company sold its Brazilian subsidiary,
Smucker do Brasil, Ltda., to Cargill, Incorporated, generat-
ing proceeds of approximately $6.9 million in cash and
resulting in a loss of approximately $5.9 million ($2.8 mil-
lion, net of tax).

On February 18, 2005, the Company sold the Multifoods
U.S. foodservice and bakery products businesses, including
the Canadian foodservice locations operated under the
Gourmet Baker name, which were acquired as part of
Multifoods. This sale to Value Creations Partners, Inc. gen-
erated proceeds consisting of $33 million in cash and a
$10 million subordinated promissory note.

The Australian subsidiary, the Brazilian subsidiary, and the
Multifoods U.S. foodservice and bakery products businesses
are considered to be discontinued operations and are
excluded from the discussions below.

— Net Sales —

The following table presents net sales information.

Year Ended April 30,

(Dollars in thousands)

2005

2004

2003

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

$ 354,260 $ 327,696 $ 293,140
535,434
605,041
—
—
61,297
69,569

618,892
356,165
75,874

Total U.S. retail market $1,405,191 $1,002,306 $ 889,871

Special markets:

Multifoods brands
Other brands

$ 270,066 $ — $ —
380,227

367,250

368,620

Total special markets

$ 638,686 $ 367,250 $ 380,227

Total net sales

$2,043,877 $1,369,556 $1,270,098

— 11 —

Sales in 2005 increased $674.3 million, or 49 percent, from
2004. The acquired Multifoods businesses contributed
$626.2 million of the total increase. Excluding the contri-
bution of the Multifoods brands, sales were up nearly four
percent. Other factors favorably impacting sales in 2005
were foreign exchange rates and the pricing environment in
the shortening and oils business.

In the U.S. retail market segment, sales were $1,405.2 mil-
lion in 2005, up $402.9 million, or approximately 40 per-
cent, from 2004.The Multifoods contribution for 2005 was
$356.2 million. The Company’s sales of Smucker’s, Jif, and
Crisco contributed approximately ten percent of the total
sales increase for the segment. In addition, sales of
Uncrustables increased 37 percent in 2005 as the Company
continued to build on the success experienced in 2004.

The special markets segment is comprised of the foodser-
vice, beverage, Canada, international, and industrial busi-
ness areas.The Canadian business acquired from Multifoods
has been combined with the Company’s previous Canadian
business to form the new Canada business area. Sales in this
segment were $638.7 million in 2005 compared to $367.3
million in 2004, an increase of 74 percent.The overall sales
increase reflects the segment’s addition of sales in our
Canada business and the growth in the foodservice and bev-
erage areas, which were offset by the divestiture of the
industrial business. The Multifoods contribution for 2005
was $270.1 million. Excluding the contribution from
Multifoods and the industrial business, the special markets
segment would have been up five percent in 2005.

In the foodservice area, 2005 sales were up five percent
from 2004 due to a seven percent growth in traditional por-
tion control items, primarily under the Smucker’s brand, and
increased sales in the schools market. Sales of Uncrustables
increased six percent in 2005 in the schools market despite
capacity constraints that were experienced during the first
half of the year.

Beverage area sales were up six percent in 2005. Sales of
R.W. Knudsen Family and Santa Cruz Organic products were
up nine and five percent, respectively, for 2005, while sales
of After The Fall continued to decline, as a result of the strate-
gic decision to regionalize this brand. Nonbranded sales for
the business area were up six percent in 2005.

In the international area, sales were up one percent in 2005
from 2004. Sales in Mexico and Latin America experienced
strong growth in 2005 with the entire geographic region up

over 26 percent from 2004. The South Asia export market
was also strong for the year with sales up ten percent. Sales
in Scotland and other export markets were down eight per-
cent and 35 percent, respectively, from 2004 primarily due
to the restructuring program in Europe and the United
Kingdom in the first quarter of the year.

Finally, sales in the Company’s industrial business were
down 22 percent for 2005.Approximately 70 percent of this
decline, or $10.5 million in sales, was the result of planned
decreases associated with the strategic decision to exit cer-
tain low-margin contracts. The remaining shortfall was
caused by the sale of the ingredients business in 2005 result-
ing in a gain of approximately $1.2 million ($0.7 million,
net of tax).

Sales in 2004 increased $99.5 million, or eight percent, over
2003.The Jif and Crisco business 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 mil-
lion, 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 shortening and oils business.

In the U.S. retail market segment, sales were $1,002.3 mil-
lion in 2004, up $112.4 million, or nearly 13 percent, from
2003. Jif and Crisco contributed over 60 percent of the over-
all 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 addi-
tion, sales of Uncrustables increased significantly in 2004 as
the Company completed its national rollout. The only area
within the segment realizing declines during 2004 was spe-
cialty foods, which was down three percent due to a planned
decrease in nonbranded business.

Sales in the special markets segment were $367.3 million in
2004 compared to $380.2 million in 2003, a decrease of
three 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
four percent in 2004. Sales in 2004 were up in the Canada,
beverage, and foodservice areas, while sales in the industrial
area were down from 2003.

In Canada, sales were up 24 percent in 2004 from 2003 due
primarily to favorable exchange rates, which contributed

— 12 —

approximately $8.2 million to the overall sales growth of
$12.3 million. As measured in local currency, Canadian sales
were strong, up eight percent in 2004, due primarily to the
impact of the additional month of Crisco sales.

In the international area, sales were down three percent
despite strong growth in 2004 in Mexico and Latin America,
up over 20 percent from 2003. All other regions, including
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 constraints that were experienced during much of
the year. Effective May 2003, the Company discontinued its
role as master distributor for the Lea & Perrins brand. 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 pri-
marily 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 per-
cent, 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 associated with the strategic decision to exit cer-
tain low-margin contracts.The remaining shortfall was caused
by softness in sales of bakery ingredients.

— Operating Income —

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

Gross profit
Selling, distribution, and

administrative:
Advertising
Marketing and selling
Distribution
General and administrative

Total selling, distribution,

and administrative

Restructuring and merger and

integration

Operating income

Year Ended April 30,

2005

2004

2003

32.2%

35.2%

2.4%
7.7
2.9
7.0

3.9%
7.8
2.0
8.0

3.6%
8.1
2.2
7.7

20.0%

21.7%

21.6%

1.4%

10.8%

0.6%

12.9%

0.9%

12.7%

Operating income increased $43.8 million for 2005, or
25 percent, over 2004 while operating margin decreased
from 12.9 percent to 10.8 percent, due to the inclusion of
the lower margin Multifoods brands. Included in 2005 oper-
ating income was approximately $31.3 million of restruc-
turing and merger and integration related costs, while 2004
included $17.1 million of similar charges. Positive contribu-
tors to operating income in 2005 included the overall
growth of the higher margin U.S. retail market segment,
including gains in the Smucker’s, Jif, and Crisco brands. The
Company’s gross margin was 32.2 percent in 2005 versus
35.2 percent in 2004. The addition of the lower-margin
Multifoods brands was a primary contributor to this differ-
ence, along with higher raw material costs and costs associ-
ated with the start up of the Scottsville, Kentucky, facility.

Selling, distribution, and administrative (“SD&A”) expenses
increased 37 percent during 2005, but decreased as a per-
cent of net sales to 20.0 percent from 21.7 percent. The
Company increased its marketing expense by 20 percent
during 2005 in support of the Smucker’s and Jif brands, the
continued retail rollout of Uncrustables, as well as support of
the newly acquired Multifoods brands. In addition, the
Company incurred certain costs related to the maintenance
of Multifoods’ Minnetonka, Minnesota, facility that will
close by June 30, 2005. Other factors contributing to the
total expense increase in SD&A were increased expenses to
support the acquired business and increased costs associated

— 13 —

with regulatory requirements. This increase in costs was
more than offset by the overall increase in sales due to the
acquisition.

Operating income increased $16.0 million for 2004, or ten
percent, over 2003 while operating margin improved slightly
to 12.9 percent compared to 12.7 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 contributors 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 market segment.The
Company’s gross margin was 35.2 percent in both years as
strong margins in fruit spreads, peanut butter, and beverage
were offset by higher soybean oil costs in shortening and oils.

Selling, distribution, and administrative expenses increased
eight percent in 2004 and increased as a percent of net sales
to 21.7 percent from 21.6 percent.The Company increased
its marketing expense by eight percent during 2004 in sup-
port 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
pension 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.

— Interest Income and Expense —

Interest expense increased $16.3 million in 2005 due to an
increase in the Company’s debt outstanding associated with
the Multifoods acquisition. Interest income increased by
$1.9 million in 2005 due to an increase in the average invest-
ment yield and interest earned on promissory notes received
in conjunction with divestitures during the year.

Interest expense decreased $2.2 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 $1.1
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.

— Other Income and Expense —

In 2004, other income (net) was $3.6 million, which
included a $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 2005 were $74.2 million, up $8.3 million,
or 13 percent, from 2004. The increase is due primarily to
an increase in pretax earnings of $27.4 million, or 15 per-
cent.The consolidated effective income tax rate in 2005 was
36.2 percent, compared to 37.2 percent in 2004.The reduc-
tion in the effective tax rate was due primarily to benefits
realized from the addition of the Multifoods organization.

Income taxes in 2004 were $65.9 million, up $8.4 million,
or 15 percent, from 2003. The increase is due primarily to
an increase in pretax earnings of $25.5 million, or 17 per-
cent.The consolidated effective income tax rate in 2004 was
37.2 percent, compared to 37.9 percent in 2003.The reduc-
tion in the effective tax rate was due primarily to benefits
realized from the organizational restructuring associated
with the Jif and Crisco merger.

— Restructuring —

and

During 2003, the Company announced plans to restructure
certain operations as part of its ongoing efforts to refine its
portfolio, optimize its production capacity, improve produc-
improve the
tivity and operating efficiencies,
Company’s overall cost base as well as service levels in sup-
port of its long-term strategy. As a result of these plans, the
Company expects to record total restructuring charges of
approximately $40 million, to be recognized through 2006.
Included in the restructuring charge are expected cash out-
lays of approximately $28 million that relate primarily to
employee separation costs and equipment relocation
expenses.At the end of 2005, these restructurings were pro-
ceeding as planned. During 2004, the Company closed its
fruit processing operations at its Watsonville, California, and
Woodburn, Oregon, locations and subsequently sold these
facilities. Uncrustables production at the West Fargo, North
Dakota, location is expected to be discontinued in 2006. In

— 14 —

Ripon,Wisconsin, the Company completed the combination
of its two manufacturing facilities into one expanded site.

In the first quarter of 2005, the Company completed a
restructuring program to streamline operations in Europe
and the United Kingdom, including the exit of a contract
packaging arrangement and certain segments of the retail
business. In the third quarter of fiscal 2005, the Company
announced plans to discontinue operations at its Salinas,
California, facility and restructure its U.S. distribution
operations. Production from the Salinas facility will be relo-
cated to plants in Orrville, Ohio, and Memphis, Tennessee,
by December 31, 2005. Also, as part of the restructuring,
the Company sold its U.S. industrial business in two sepa-
rate transactions in the last half of the year.

In conjunction with the restructurings, the Company has
recorded a total charge of $31.7 million, of which $2.5 mil-
lion was recorded in 2003, $15.8 million in 2004, and $13.3
million in 2005.The Company estimates that it will incur an
additional $8.3 million in 2006 related to these programs.
The majority of these charges related to employee separa-
tion costs, accelerated depreciation on machinery and
equipment, equipment relocation expenses, and the disposi-
tion of inventories. To date, cash payments related to the
restructuring charges have been approximately $16.7 mil-
lion.The remaining cash payments, estimated to be approx-
imately $11 million, will be paid through 2006.

; Liquidity and Capital Resources :

(Dollars in thousands)

2005

2004

2003

Year Ended April 30,

Net cash provided by
operating activities

Net cash used for

investing activities

Net cash used for

financing activities

$194,401

$118,573

$174,808

119,449

160,693

51,566

72,280

40,037

28,419

The Company’s principal source of funds is cash generated
from operations, supplemented by borrowings against the
Company’s revolving credit instrument. Total cash and
investments at April 30, 2005, were $134.9 million com-
pared to $161.2 million at April 30, 2004. The decrease was
primarily the result of the Company’s use of available funds
to finance the cash portion of the Multifoods acquisition.

— Operating Activities —

Historically, the Company’s working capital requirements
are greatest during the first half of its fiscal year. The addi-
tion of the Multifoods businesses further increases the work-
ing capital needs during the first six months of the fiscal
year. This is due primarily to the need to build inventory
levels in advance of the “fall bake” season and the seasonal
procurement of raw materials used in the Company’s pickle
and condiment business in Canada.Working capital, exclud-
ing cash and short-term investments, as a percent of annual
sales decreased from 11.4 percent for the year ended April 30,
2004, to 8.4 percent for the year ended April 30, 2005.

Cash provided by operating activities was approximately
$194.4 million during 2005. The positive cash generated
resulted from the increase in income from continuing oper-
ations and an increase in depreciation, a noncash charge,
partially offset by increases in working capital requirements.
The increase in working capital consisted primarily of pay-
ments of accounts payable and accrued items, and higher
inventory and trade receivables balances. In addition, the
Company made contributions to its qualified and nonquali-
fied retirement benefit plans totaling approximately $18
million and funded restructuring and merger and acquisition
related costs of approximately $40 million.

— Investing Activities —

Net cash used for investing activities during the year
included the use of approximately $99 million in cash to
finance the Multifoods acquisition, offset by the proceeds
from the sale of HJF, the Brazilian subsidiary, the Multifoods
U.S. foodservice and bakery products business, and the U.S.
industrial business. Capital expenditures were approxi-
mately $87.6 million during 2005. This compares to $97.7
million in 2004.

— Financing Activities —

During the first quarter of 2005, the Company entered into
two separate financing arrangements in order to provide the
necessary funding requirements to retire Multifoods’ debt
outstanding at the time of the closing of the acquisition, to
fund merger related costs incurred during 2005, and to pro-
vide for working capital requirements. On May 27, 2004,
the Company issued $100 million 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

— 15 —

unsecured revolving credit facility with a group of four
banks. Interest on this bank debt is based on prevailing U.S.
Prime, Canadian Base Rate, LIBOR, or Canadian CDOR, as
determined by the Company, and is payable either on a quar-
terly basis, or at the end of the borrowing term.

At April 30, 2005, the Company had a balance outstanding
of approximately $33.4 million against the revolver. In addi-
tion, the Company paid dividends of $56.1 million during
the year.

During 2005, the Company’s Board of Directors authorized
management to repurchase up to one million shares of its
common stock.The buyback program will be implemented
at management’s discretion. In conjunction with this pro-
gram, the Company administered a voluntary odd-lot pro-
gram which allowed shareholders with fewer than 100
shares to either sell all of their shares or to purchase addi-
tional shares to increase their holdings up to 100 shares. As
a result, the Company repurchased 59,478 common shares
after taking into effect shareholders who opted to increase
their holdings to 100 shares. In addition to the voluntary
odd-lot program, the Company repurchased 309,200 shares
on the open market through April 30, 2005. The Company
used cash of approximately $17 million for these repurchases.

Cash requirements for 2006 will include capital expendi-
tures estimated to range from $75 to $80 million. In addi-
tion, dividends are expected to approximate $63 million and
interest payments on long-term debt to approximate $27
million for the year. The Company will utilize $17 million
during the year to payoff the 7.70 percent Series A Senior
Notes that are due on September 1, 2005. The Company
also expects continued merger related costs requiring
approximately $12 million in 2006 related to the Multifoods
acquisition. Finally, contributions to the Company’s quali-
fied and nonqualified retirement benefit plans are estimated
at $17 million.

— Contractual Obligations —

The following table summarizes the Company’s contractual
obligations at April 30, 2005.

Less
Than
One
Year

One
to Three
Years

Three
to Five
Years

More
Than
Five
Years

(Dollars in millions)

Total

Long-term

debt obligations $ 448.6 $ 17.0 $ 33.0 $288.6 $110.0

Operating lease
obligations

Purchase

obligations

Other long-term

10.5

1.7

2.8

2.2

3.8

470.3

339.3

120.0

9.4

1.6

liabilities

205.2

—

— 205.2

Total

$1,134.6 $358.0 $155.8 $300.2 $320.6

In conjunction with the acquisition of Multifoods, the
Company has assumed certain guarantees that resulted from
the sale by Multifoods, in September 2002, of its foodser-
vice distribution business to Wellspring Distribution
Corporation (“Wellspring”). These guarantees relate to cer-
tain real estate and tractor-trailer fleet lease obligations of
the business.The guarantee requires the lessor to pursue col-
lection and other remedies against Wellspring before
demanding payment from the Company. In addition, the
Company’s obligation related to the tractor-trailer fleet
lease is limited to 75 percent of the amount outstanding
after the lessor has exhausted its remedies against
Wellspring. The fleet guarantee will expire in September
2006, and the real estate guarantees will expire in
September 2010. At April 30, 2005, the Company’s out-
standing guarantees for the lease obligations of Wellspring
were $13.1 million related to the tractor-trailer fleet lease
and $10.9 million related to the real estate lease.

Assuming there are no other material acquisitions or other
significant investments, the Company believes that cash on
hand and investments, combined with cash provided by
operations, and borrowings available under the revolving
credit facility, will be sufficient to meet 2006 cash require-
ments, including the payment of dividends, repayment of
debt, repurchase of common shares, and interest on debt
outstanding.

The possibility that the Company would be required to
honor the contingent liabilities under the guarantee is
largely dependent upon the future operations of Wellspring
and the value of the underlying leased properties. The
Company currently has no liability recorded related to the
guarantee. Should a reserve be required in the future, it
would be recorded at the time the obligation was considered
to be probable and estimable.

— 16 —

; Critical Accounting Estimates and Policies :

The preparation of financial statements in conformity with
accounting principles generally accepted in the United
States requires management to make estimates and assump-
tions that in certain circumstances affect amounts reported
in the accompanying consolidated financial statements. In
preparing these financial statements, management has made
its best estimates and judgments of certain amounts
included in the financial statements, giving due considera-
tion to materiality.The Company does not believe there is a
great likelihood that materially different amounts would be
reported under different 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 Trade Marketing and Merchandising. In
order to support the Company's products, various trade
marketing programs are offered to customers, that reim-
burse them for a portion, or all of their promotional activi-
ties related to the Company's products. The Company
regularly reviews and revises, when it deems necessary, esti-
mates of costs to the Company for these trade marketing and
merchandising programs based on estimates 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
estimated 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. However, determining
fair value is subject to estimates of both cash flows and inter-
est 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 indefi-
nite-lived intangible assets requires the use of estimates
about future operating results for each reporting unit to
determine estimated fair value. Changes in forecasted oper-
ations 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 valuation techniques employed to estimate
the fair value of the reporting unit could change and, there-
fore, impact the assessments 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 postretire-
ment benefit plans, management must estimate the future
cost of benefits 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, man-
agement uses assumptions related to inflation, investment
returns, mortality, employee turnover, rate of compensation
increases, medical costs, and discount rates. Management,
along with third-party actuaries, reviews all of these
assumptions on an ongoing basis to ensure that the most rea-
sonable information available is being considered. For 2006
expense recognition, the Company will use a discount rate
of 5.75 percent and 5.50 percent, an expected rate of return
on plan assets of 8.5 percent and 8.0 percent, and a rate of
compensation increase of 4.4 percent and 4.0 percent, for
U.S. and Canadian plans, respectively.

Accrued Expenses. Management estimates certain mate-
rial expenses in an effort to record those expenses in the
period incurred. The most material accrued estimates are
including self-insurance.
insurance-related expenses,
Workers’ compensation 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 factors. 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 materi-
ally different from the calculated accrual.

Recovery of Trade Receivables. In the normal course of
business, the Company extends credit to customers that sat-
isfy predefined criteria. The Company evaluates the col-
lectibility of trade receivables based on a combination of

— 17 —

factors. When aware of a specific customer’s inability to
meet its financial obligations, such as in the case of bank-
ruptcy filings 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 eco-
nomic conditions at the balance sheet date. Actual collec-
tions of trade receivables could differ from management’s
estimates due to changes in future economic or industry
conditions or specific customers’ financial conditions.

Restructuring. During 2003, the Company announced
plans to restructure certain operations as part of its ongoing
efforts to refine its portfolio, optimize its production capac-
ity, improve productivity and operating efficiencies, and
improve the Company’s overall cost base as well as service
levels in support of its long-term strategy. 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 agree-
ment or estimated by management based on historical expe-
rience. Actual amounts could differ from the original
estimates.

Share-Based Payments. 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 com-
pensation expense is recognized. In December 2004, the
Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 123 (revised), Share-
Based Payments (“SFAS 123R”). SFAS 123R is a revision of
SFAS 123 and supersedes APB 25. SFAS 123R requires that
the cost of transactions involving share-based payments be
recognized in the financial statements based on a fair value-
based measurement. As required by SFAS 123R, the
Company will recognize expenses related to stock options

granted to employees as of its first quarter in fiscal 2007. In
anticipation of adoption of SFAS 123R, the Company has
also elected to replace its current employee stock option
incentive program with a restricted stock program as of May
2005. All stock option awards that are outstanding and vest
after April 30, 2006, will be reflected in compensation
expense over the period in which they vest.

; Derivative Financial Instruments :
and Market Risk

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, 2005,
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, 2005, including derivative and
other instruments sensitive to interest rates, a hypothetical
ten percent movement in interest rates would not materially
affect the Company’s results of operations. A hypothetical
100 basis point increase in short-term interest rates would
increase the Company’s interest expense by approximately
$0.8 million. Interest rate risk can also be measured by esti-
mating the net amount by which the fair value of the
Company’s financial liabilities would change as a result of
movements in interest rates. Based on a hypothetical, imme-
diate 100 basis point decrease in interest rates at April 30,
2005, the market value of the Company’s long-term debt
and interest rate portfolio, in aggregate, would increase by
approximately $22 million.

Foreign Currency Exchange Risk. The Company uti-
lizes foreign exchange contracts, typically with maturities of
less than one year, to hedge foreign exchange fluctuation.
The contracts are accounted for as cash flow hedges.A hypo-
thetical 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.

— 18 —

; Certain Forward-Looking Statements :

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 uncertain-
ties include, but are not limited to:
d the Company’s ability to effectively ramp-up and manage
capacity related to Uncrustables products at the Scottsville,
Kentucky, facility, and the costs associated to do so;
d 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;

d the ability of the business areas to achieve sales targets and

the costs associated with attempting to do so;

d the ability to successfully implement price changes, par-

ticularly in the oils and baking business;

d the success and cost of introducing new products;
d the timing and amount of capital expenditures, restruc-

turing, and merger and integration costs;

d the ability to achieve the amount and timing of the esti-
mated savings associated with the Multifoods acquisition;
d the strength of commodity markets from which raw
materials are procured and the related impact on costs;

d raw material, ingredient, and energy cost trends;
d foreign currency exchange and interest rate fluctuations;
d general competitive activity in the market; and
d other factors affecting share prices and capital markets

generally.

The Company has operations outside the United States with
foreign currency denominated assets and liabilities, prima-
rily denominated in Canadian currency. Because the
Company has foreign currency denominated assets and lia-
bilities, 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,
2005, are not expected to result in a significant impact on
future earnings or cash flows.

Revenues from customers outside the United States repre-
sented 18 percent of net sales during 2005. Thus, certain
revenues 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 and other com-
modities used by the Company are subject to price volatility
caused by supply and demand conditions, political and eco-
nomic variables, and other unpredictable factors.To manage
the volatility related to anticipated commodity purchases,
the Company uses futures and options with maturities gen-
erally less than one year. Certain of these instruments are
designated as cash flow hedges.The mark-to-market gains or
losses on qualifying hedges are included in other compre-
hensive income or loss to the extent effective, and reclassi-
fied 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.

; Off-Balance Sheet Arrangements :

The Company does not have off-balance sheet arrange-
ments, financings, or other relationships with unconsoli-
dated entities or other persons, also known as “variable
interest entities.” 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.

— 19 —

Report of Management on Internal Control Over Financial Reporting

Shareholders
The J. M. Smucker Company

Management of The J. M. Smucker Company is responsible for establishing and maintaining adequate accounting and
internal control systems over financial reporting for the Company. The Company’s internal control system is designed
to provide reasonable assurance that the Company has the ability to record, process, summarize, and report reliable
financial information on a timely basis.

The Company’s management assessed the effectiveness of the Company’s internal controls over financial reporting as of
April 30, 2005. In making this assessment, management used the criteria established in Internal Control – Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

On June 18, 2004, the Company completed the acquisition of International Multifoods Corporation (“Multifoods”). As
permitted by the Securities and Exchange Commission, management excluded the Multifoods Canadian operations
from its assessment of internal control over financial reporting as of April 30, 2005. Multifoods Canada constituted
approximately eight percent of total assets (excluding goodwill and other indefinite-lived intangible assets) as of April 30,
2005, and 13 percent of net sales for the year then ended. Multifoods Canada will be included in the Company’s assess-
ment as of April 30, 2006.

Based on the Company’s assessment of internal control over financial reporting under Internal Control–Integrated Framework,
management concluded the Company’s internal control over financial reporting was effective as of April 30, 2005.

Ernst & Young LLP, independent registered public accounting firm, audited the Company’s assessment of internal con-
trol over financial reporting as of April 30, 2005, and their report thereon is included on page 21 of this report.

Timothy P. Smucker
Chairman and
Co-Chief Executive Officer

Richard K. Smucker
President and
Co-Chief Executive Officer

Mark R. Belgya
Vice President,
Chief Financial Officer
and Treasurer

— 20 —

Report of Independent Registered Public Accounting Firm
on Internal Control Over Financial Reporting

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

We have audited management’s assessment, included in the accompanying Report of Management on Internal Control Over
Financial Reporting, that The J. M. Smucker Company maintained effective internal control over financial reporting as of
April 30, 2005, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (“the COSO criteria”).The J. M. Smucker Company’s management is responsi-
ble for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal
control over financial reporting. Our responsibility is to express an opinion on management’s assessment and an opinion on
the effectiveness of the Company’s internal control over financial reporting based on our audit.

We conducted our audit 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 effective
internal control over financial reporting was maintained in all material respects. Our audit included obtaining an under-
standing of internal control over financial reporting, evaluating management’s assessment, testing and evaluating the design
and operating effectiveness of internal control, and performing such other procedures as we considered necessary in the cir-
cumstances.We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with gener-
ally accepted accounting principles. A company’s internal control over financial reporting includes those policies and proce-
dures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transaction
and disposition of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the
company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use,
or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with policies or procedures may deteriorate.

As indicated in the accompanying Report of Management on Internal Control Over Financial Reporting, on June 18, 2004,
the Company completed the acquisition of International Multifoods Corporation (“Multifoods”). As permitted by the
Securities and Exchange Commission, management excluded the Multifoods Canadian operations from its assessment of
internal control over financial reporting as of April 30, 2005. Multifoods Canada constituted approximately eight percent of
total assets (excluding goodwill and other indefinite-lived intangible assets) as of April 30, 2005, and 13 percent of net sales
for the year then ended. Our audit of internal control over financial reporting of The J. M. Smucker Company as of April 30,
2005 also did not include an evaluation of Multifoods Canada.

In our opinion, management’s assessment that The J. M. Smucker Company maintained effective internal control over finan-
cial reporting as of April 30, 2005, is fairly stated, in all material respects, based on the COSO criteria. Also, in our opin-
ion, The J. M. Smucker Company maintained, in all material respects, effective internal control over financial reporting as
of April 30, 2005, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States),
the consolidated balance sheets of The J. M. Smucker Company as of April 30, 2005 and 2004, and the related statements of
consolidated income, shareholders’ equity, and cash flows for each of the three years in the period ended April 30, 2005,
and our report dated June 24, 2005, expressed an unqualified opinion thereon.

Akron, Ohio
June 24, 2005

— 21 —

Report of Independent Registered Public Accounting Firm
on the Consolidated Financial Statements

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, 2005 and 2004,
and the related statements of consolidated income, shareholders’ equity, and cash flows for each of the three years in the
period ended April 30, 2005.These financial statements are the responsibility of the Company’s management. Our respon-
sibility 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 finan-
cial 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 sig-
nificant 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 consoli-
dated financial position of The J. M. Smucker Company at April 30, 2005 and 2004, and the consolidated results of its oper-
ations and its cash flows for each of the three years in the period ended April 30, 2005, in conformity with U.S. generally
accepted accounting principles.

We also have audited in accordance with the standards of the Public Company Accounting Oversight Board (United States),
the effectiveness of The J. M. Smucker Company’s internal control over financial reporting as of April 30, 2005, based on
criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission and our report dated June 24, 2005, expressed an unqualified opinion thereon.

Akron, Ohio
June 24, 2005

— 22 —

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 From Continuing Operations

Before Income Taxes

Income taxes

Income From Continuing Operations
Discontinued operations, net of tax
Loss on sale of discontinued operations, net of tax

Net Income

Earnings per Common Share:

Income From Continuing Operations
Discontinued operations

Net Income

Year Ended April 30,

2005

2004

2003

$2,043,877
1,383,995
2,466

$1,369,556
878,491
8,464

$1,270,098
821,543
1,256

657,416
407,839
17,954
10,854

220,769
4,683
(22,555)
1,717

204,614
74,154

130,460
(134)
(1,253)

482,601
296,954
1,266
7,362

177,019
2,761
(6,209)
3,599

177,170
65,872

111,298
52
—

447,299
274,440
10,511
1,281

161,067
1,626
(8,375)
(2,608)

151,710
57,498

94,212
2,130
—

$ 129,073

$ 111,350

$ 96,342

$ 2.29
(0.03)

$ 2.23
0.01

$ 1.99
0.05

$ 2.26

$ 2.24

$ 2.04

Income From Continuing Operations – Assuming Dilution
Discontinued operations – assuming dilution

$ 2.26
(0.02)

$ 2.21
—

$ 1.97
0.05

Net Income – Assuming Dilution

$ 2.24

$ 2.21

$ 2.02

See notes to consolidated financial statements.

— 23 —

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

Assets of discontinued operations

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

April 30,

2005

2004

$ 58,085

$ 104,551

17,739

145,734

176,205

108,282

284,487

—

49,806

555,851

42,018

175,718

533,340

26,053

777,129

15,074

93,617

104,663

75,200

179,863

46,202

11,544

450,851

29,076

122,003

313,362

70,021

534,462

(256,028)

(216,941)

521,101

317,521

951,208

469,758

59,074

78,902

1,558,942

523,660

317,237

41,589

33,267

915,753

$2,635,894

$1,684,125

— 24 —

Liabilities and Shareholders’ Equity

(Dollars in thousands)

Current Liabilities
Accounts payable
Notes payable
Salaries, wages, and additional compensation
Accrued trade marketing and merchandising
Income taxes
Dividends payable
Current portion of long-term debt
Liabilities of discontinued operations
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 –

58,540,386 in 2005 and 50,174,707 in 2004 (net of 6,585,055
and 6,493,226 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,

2005

2004

$ 105,290
33,378
56,796
41,727
5,610
15,807
17,000
—
32,684

$ 62,232
—
51,114
25,303
2,915
12,544
—
8,548
12,564

308,292

175,220

431,560
35,921
50,179
110,505
8,637

636,802

135,000
2,315
19,384
136,255
5,258

298,212

—

14,635
1,240,110
447,831

(4,573)
(7,044)
(159)

12,543
829,323
387,065

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

1,690,800

1,210,693

$2,635,894

$1,684,125

See notes to consolidated financial statements.

— 25 —

Statements of Consolidated Cash Flows
— The J.M.Smucker Company —

(Dollars in thousands)

Operating Activities

Income from continuing operations
Adjustments to reconcile income from continuing

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

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

Net Cash Provided by Operating Activities

Investing Activities

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

Year Ended April 30,

2005

2004

2003

$130,460

$111,298

$ 94,212

54,077
1,971
36,247

(2,015)
(5,257)
24,966
(43,595)
(3,394)
941

194,401

(99,062)
80,027
(87,576)
(88,803)
67,094
2,406
6,465

36,147
2,414
6,113

(1,190)
(20,341)
3,819
3,478
(18,012)
(5,153)

34,968
1,420
(3,680)

(42,135)
(11,903)
(965)
55,579
23,722
23,590

118,573

174,808

(9,196)
—
(97,721)
(86,439)
28,957
9,161
(5,455)

(10,767)
—
(48,083)
—
—
1,150
6,134

(51,566)

—
—
—
—
(33,603)
—
5,184

(28,419)
(10,585)
1,366

85,604
84,408

Net Cash Used for Investing Activities

(119,449)

(160,693)

Financing Activities

Proceeds from long-term debt
Repayments of long-term debt
Proceeds from revolving credit arrangements – net
Repayments of short-term debt
Dividends paid
Purchase of treasury shares
Other – net

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

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

100,000
(37,500)
33,155
(113,622)
(56,057)
(16,869)
18,613

(72,280)
(46,005)
(3,133)

(46,466)
104,551

—
—
—
—
(45,724)
(1,148)
6,835

(40,037)
16,170
526

(65,461)
170,012

Cash and Cash Equivalents at End of Year

$ 58,085

$104,551

$170,012

( ) Denotes use of cash

See notes to consolidated financial statements.

— 26 —

(Dollars in thousands,
except per share data)

Balance at May 1, 2002
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
Balance at April 30, 2003
Net income
Foreign currency translation

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
Balance at April 30, 2004
Net income
Foreign currency translation

adjustment

Minimum pension liability

adjustment

Unrealized loss on available-

for-sale securities

Unrealized loss on cash flow

hedging derivatives

Statements of Consolidated Shareholders’ Equity
— The J.M.Smucker Company —

Common

Outstanding

Shares Common
Shares

Total
Shareholders’
Equity
23,504,129 $ 6,217 $ 33,184 $ 267,793 $(2,725) $(8,562) $(15,763) $ 280,144
96,342

Additional
Capital

Retained
Income

96,342

Amount
Deferred Due from
ESOP
Compen-
Trust
sation

Accumulated
Other
Compre-
hensive
Loss

26,023,466
239,945

6,506
60

774,979
5,628

(100)

(341)
12,442

1,635
341
815,767

49,767,540

(41,071)

323,064
111,350

469
(2,825) (8,093)

407,167

101

10,543

(528)

(3,244)

(46,821)

3,013

50,174,707

12,543

829,323

387,065
129,073

(6,069)

509
(7,584)

8,268

(8,629)

(296)

236

(296)

236
95,921
781,485
5,588

(41,071)
1,635
469
(16,184) 1,124,171
111,350

6,697

3,403

545

954

6,697

3,403

545

954
122,949
6,872

(46,821)
3,013
509
(4,585) 1,210,693
129,073

15,277

(10,310)

(275)

(266)

(275)

(266)
133,499
395,258
(16,869)
22,451

Comprehensive Income
Business acquired
Purchase of treasury shares
Stock plans
Cash dividends declared –

$1.02 a share

Tax benefit of stock plans
Other
Balance at April 30, 2005

8,032,997
(368,678)
701,360

2,008
(92)
176

393,250
(7,790)
20,779

4,548

(8,987)

(59,320)

58,540,386 $14,635 $1,240,110 $ 447,831

See notes to consolidated financial statements.

— 27 —

1,496

(59,320)
4,548
540
$(4,573) $(7,044) $ (159) $1,690,800

540

Notes to Consolidated Financial Statements
— The J.M.Smucker Company —

(Dollars in thousands, except per share data)

; Note A: Accounting Policies :
Principles of Consolidation:The consolidated financial statements include the accounts of the Company, its wholly-owned
subsidiaries, and any majority-owned investment. Intercompany transactions and accounts are eliminated in consolidation.

Use of Estimates:The preparation of consolidated financial statements in conformity with U.S. generally accepted account-
ing principles requires management to make certain estimates and assumptions that affect the amounts reported in the con-
solidated financial statements and accompanying notes. Significant estimates in these consolidated financial statements include:
restructuring costs, allowances for doubtful trade receivables, 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 trade 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, net of estimated returns and allowances, when all of the fol-
lowing 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 significant obligation to assist in the resale of the product; and
collectibility is reasonably assured.

Major Customer: Sales to Wal-Mart Stores, Inc., and subsidiaries amounted to approximately 16 percent, 16 percent, and
14 percent of net sales in 2005, 2004, and 2003, respectively. These sales are primarily included in the U.S. retail market.
Trade receivables at April 30, 2005 and 2004, included amounts due from Wal-Mart Stores, Inc., and subsidiaries of $22,951
and $12,732, respectively. No other customer exceeded ten percent of net sales for any year.

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

Trade Marketing and Merchandising Promotions: In order to support the Company’s products, various trade mar-
keting 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.

Advertising Expense: Advertising costs are expensed as incurred. Advertising expense was $50,002, $54,027, and
$45,154 in 2005, 2004, and 2003, respectively.

Product Development Cost: Total product development costs including research and development costs and product
formulation costs were $10,397, $7,496, and $6,354 in 2005, 2004, and 2003, 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. Compensation expense related to restricted stock awards was $1,609,
$1,512, and $706 in 2005, 2004, and 2003, respectively.

— 28 —

If compensation costs for 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
Add:Total stock-based compensation expense related to

restricted stock awards included in the determination of
net income as reported, net of tax benefit

Less:Total stock-based compensation expense determined

Year Ended April 30,

2005

2004

2003

$129,073

$111,350

$96,342

1,026

950

439

under fair value-based methods for all awards, net of tax benefit

(4,686)

(3,748)

Net income, as adjusted

$125,413

$108,552

(3,024)

$93,757

Earnings per common share:
Net income, as reported
Add:Total stock-based compensation expense related to

restricted stock awards included in the determination of
net income as reported, net of tax benefit

Less: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
Add:Total stock-based compensation expense related to

restricted stock awards included in the determination of
net income as reported, net of tax benefit – assuming dilution

Less: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

$ 2.26

$ 2.24

$ 2.04

0.02

(0.08)

0.02

(0.08)

$ 2.20

$ 2.24

$ 2.18

$ 2.21

—

(0.06)

$ 1.98

$ 2.02

0.01

—

(0.08)

(0.07)

(0.06)

$ 2.17

$ 2.15

$ 1.96

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

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

Fair value of options granted

2005

7
3.74%
2.25%
26.31%

$11.64

Year Ended April 30,
2004

5
3.21%
2.50%
26.80%

$9.45

2003

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 and average expected term.

Income Taxes:The Company accounts for income taxes using the liability method.Accordingly, deferred tax assets and lia-
bilities 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

— 29 —

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.Tax benefits are recognized when it is probable that the deduction will be
sustained. A valuation allowance is established when it is more likely than not that all or a portion of a deferred tax asset will
not be realized.

Cash and Cash Equivalents: The Company considers all short-term investments with a maturity of three months or less
when purchased to be cash equivalents.

Trade Receivables: In the normal course of business, the Company extends credit to customers. Trade receivables, less
allowance for doubtful accounts, reflect the net realizable value of receivables, and approximate fair value. 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 includ-
ing: hotels and restaurants, schools and other institutions. The Company’s operations outside the United States are princi-
pally in Canada where the Company’s products are primarily sold through brokers to a concentration of food retailers and
other retail and foodservice channels similar to those in domestic markets, and by a direct sales force to other food manu-
facturers.The Company believes there is no concentration of risk with any single customer whose failure or nonperformance
would materially affect the Company’s results other than as discussed in Major Customer. On a regular basis, the Company
evaluates its trade receivables and establishes an 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, 2005 and
2004, was $976 and $950, respectively.Trade receivables are charged off against the allowance after management determines
the potential for recovery is remote.

Inventories: Inventories, excluding grain-based inventories in Canada, are stated at the lower of cost or market. Cost is
determined using the first-in, first-out method. In Canada, grain-based inventories are valued on the basis of replacement
market prices prevailing at the end of the period.

Derivative Financial Instruments:The Company utilizes derivative instruments such as commodity futures and options
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 in accordance
with Statement of Financial Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging Activities (“SFAS
133”). SFAS 133 requires that all derivative instruments be recognized in the financial statements and measured at fair value
regardless of the purpose or intent for holding them. For derivatives that are designated as a fair value hedge and used to
hedge an existing asset or liability, both the derivative and hedged item are recognized at fair value with any changes recog-
nized immediately in the Statements of Consolidated Income. For derivatives designated as a cash flow 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. The Company utilizes regression
analysis to determine correlation between the value of the hedged item and the value of the derivative instrument utilized
to identify instruments that meet the criteria for hedge accounting. 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 instruments for trading purposes or for specula-
tion. For additional information see Note O: Derivative Financial Instruments.

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 20 years for machinery and equipment, and 10 to 40 years for
buildings, fixtures, and improvements).

The Company leases certain land, buildings, and equipment for varying periods of time, with renewal options. Leases of cold
storage facilities are continually renewed. Rent expense in 2005, 2004, and 2003 totaled $18,191, $16,311, and $16,967,
respectively. Rent expense for cold storage facilities, which is based on quantities stored, amounted to $5,206, $3,365, and
$3,458 in 2005, 2004, and 2003, respectively.

— 30 —

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 esti-
mated 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 dis-
posed of are recorded at the lower of carrying value or estimated net realizable value.

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 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 for impairment of 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. Finite-lived intangible assets
are amortized over their useful lives.

Other Investments in Securities: The Company maintains funds for the payment of benefits associated with nonquali-
fied retirement plans. These funds include investments considered to be available-for-sale marketable securities. The fair
value of these investments included in other assets at April 30, 2005 and 2004, was $23,982 and $15,016, respectively.

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 November 2004, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 151, Inventory Costs – an amendment of ARB No. 43 (“SFAS 151”). SFAS 151
clarifies that abnormal amounts of idle facility expense, freight, handling costs, and spoilage should be expensed as incurred
and not included in overhead absorbed and capitalized as an inventoriable cost. Further, SFAS 151 requires that allocation of
fixed production overheads to conversion costs should be based on normal capacity of the production facilities. SFAS 151 is
effective for inventory costs incurred during fiscal years beginning after June 15, 2005. Companies must apply the standard
prospectively. The Company has not yet determined the impact of adopting SFAS 151; however, the Company does not
expect the impact, if any, to have a material impact on the Company’s results of operations or financial position.

In December 2004, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 123
(revised), Share-Based Payments (“SFAS 123R”). SFAS 123R is a revision of Statement of Financial Accounting Standards No. 123,
Accounting for Stock-Based Compensation, and supersedes Accounting Principles Board Opinion No. 25, Accounting for Stock
Issued to Employees. SFAS 123R requires that the cost of transactions involving share-based payments be recognized in the
financial statements based on a fair value-based measurement. SFAS 123R is effective for fiscal years beginning after June 15,
2005 (May 1, 2006 for the Company).The adoption of SFAS 123R will not have a material impact on the Company’s results
of operations or financial position.

The American Jobs Creation Act of 2004 (“AJCA”) was enacted by the U.S. Congress on October 22, 2004. The AJCA
repeals an export incentive, creates a new deduction for qualified domestic manufacturing activities, and includes a special
one-time deduction of 85 percent of certain foreign earnings repatriated to the U.S. In December 2004, the Financial
Accounting Standards Board issued Staff Position No. FAS 109-1, “Application of FASB Statement No. 109, Accounting for
Income Taxes, to the Tax Deduction on Qualified Production Activities Provided by the American Jobs Creation Act of 2004”
(“FSP FAS 109-1”). In accordance with FSP FAS 109-1, the Company will treat the deduction for qualified domestic manu-
facturing activities as a special deduction in future years as realized. The deduction for qualified domestic manufacturing
activities did not impact the Company’s results of operations or financial position in 2005. The Company has not yet com-
pleted its evaluation of the deduction for qualified domestic manufacturing activities on the Company’s future effective tax
rate. The phase-out of the export incentive is not expected to have a material impact on the Company’s effective tax rate

— 31 —

in the future. In December 2004, the Financial Accounting Standards Board issued Staff Position No. FAS 109-2, “Accounting
and Disclosure Guidance for the Foreign Earnings Repatriation Provision within the American Jobs Creation Act of 2004,”
allowing companies additional time to evaluate the effect of the AJCA on plans for reinvestment or repatriation of foreign
earnings.The Company is in the process of evaluating the effects of the repatriation provision, however, the Company does
not expect the impact of repatriation of foreign earnings, if any, to have a material impact on the Company’s results of oper-
ations or financial position.

Risks and Uncertainties: 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.

The raw materials used by the Company are primarily commodities and agricultural-based products. The fruit, pickle, and
condiment raw materials used by the Company in the production of food products are purchased from independent grow-
ers and suppliers. Sweeteners, peanuts, oils, wheat and flour, and other ingredients are obtained from various other sources.
Although availability and costs vary from year to year, raw materials are available from numerous sources and the Company
believes it will continue to be able to obtain adequate supplies. Approximately 39 percent of the Company’s employees,
located at 12 facilities, are covered by union contracts.The contracts vary in term depending on the location with one con-
tract set to expire in 2006.

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

; Note B: Multifoods Acquisition :
On June 18, 2004, the Company completed its acquisition of Minneapolis-based International Multifoods Corporation
(“Multifoods”) in a tax-free stock and cash transaction valued at approximately $871 million. Multifoods had consolidated
net sales for the fiscal year ended February 28, 2004, 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. The
acquisition of Multifoods added the Pillsbury flour, 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 brands to the U.S. retail
market business. Multifoods’ primary Canadian brands include: Robin Hood flour and baking mixes, Bick’s pickles and condi-
ments, and Golden Temple flour and rice in the growing ethnic food category.

Under the terms of the acquisition agreement, Multifoods’ shareholders received $25 per share in a combination of 80 per-
cent Company common shares and 20 percent cash. Approximately $98 million in cash was paid and 8,032,997 common
shares were issued to the Multifoods’ shareholders, valued at approximately $386 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 repaid
Multifoods’ secured debt of approximately $151 million, assumed $216 million of 6.602 percent, senior, unsecured notes,
and incurred $10 million of capitalized acquisition costs. In addition, the Company incurred costs of $17,954 and $1,266,
in 2005 and 2004, respectively, that were directly related to the acquisition and integration of Multifoods. Due to the nature
of these costs, they were expensed as incurred.The Company expects to incur an additional $12 million in acquisition and
integration costs in 2006. 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 four banks, at
prevailing market interest rates.

The purchase price was allocated to the underlying assets acquired and liabilities assumed based upon their fair values at the
date of acquisition. The Company determined the estimated fair values based on independent appraisals, discounted cash
flow analyses, quoted market prices, and estimates made by management.To the extent the purchase price exceeded the fair
value of the net identifiable tangible and intangible assets acquired, such excess was recorded as goodwill. The results of
Multifoods’ operations are included in the Company’s consolidated financial statements from the date of the acquisition.

— 32 —

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the date of acqui-
sition, subject to final adjustment in the first quarter of 2006.

Assets acquired:
Current assets
Property, plant, and equipment
Intangible assets not subject to amortization
Goodwill
Deferred income taxes
Other assets

Total assets acquired

Liabilities assumed:
Current liabilities
Postretirement benefits other than pensions
Other noncurrent liabilities

Total liabilities assumed

Net assets acquired

$ 203,259
164,355
154,000
426,232
65,870
35,652

$1,049,368

$ 124,826
26,680
27,355

$ 178,861

$ 870,507

The $426,232 of goodwill was assigned to the U.S. retail market and special markets and will not be deductible for tax
purposes.

Had the acquisition of Multifoods occurred at the beginning of 2004, 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,

2005

2004

$2,131,000
217,000
123,000
2.09

$2,086,000
234,000
134,000
2.29

The unaudited, pro forma consolidated results are based on historical financial statements of the Company and those of the
acquired business and do not necessarily indicate the results of operations that would have resulted had the acquisition been
completed at the beginning of the applicable period presented, nor is it indicative of the results of operations in future periods.

The unaudited, pro forma consolidated results for the year ended April 30, 2004, combines the Consolidated Statement of
Operations of Multifoods for the year ended February 28, 2004, with the Company’s Statement of Consolidated Income for
the year ended April 30, 2004. The pro forma consolidated results for the year ended April 30, 2005, combines the unau-
dited Consolidated Condensed Statement of Operations of Multifoods for the period from May 1, 2004, until the date of
acquisition with the Company’s Statement of Consolidated Income for the year ended April 30, 2005. Included in the
Company’s Statement of Consolidated Income for the year ended April 30, 2005, are certain nonrecurring expenses associ-
ated with the acquisition and the start up of the Company’s Scottsville, Kentucky, plant.

— 33 —

Upon acquisition, certain executives of Multifoods were terminated, triggering change of control provisions contained in
their employment contracts. In addition, the Company centralized all administrative and supply chain functions performed
in Minnetonka, Minnesota, with the Company’s existing structure to leverage existing administrative, selling, marketing, and
distribution networks. As a result, the Minnetonka location will close by June 30, 2005, resulting in the relocation or invol-
untary termination of all employees. Severance agreements have been entered into with all affected employees.

The Company has recognized the severance costs as a liability assumed as of the acquisition date, resulting in additional good-
will. The following table summarizes the activity with respect to the severance reserves established and the total amount
expected to be incurred.

Accrual charged to goodwill
Cash payments

Balance at April 30, 2005

Change of
Control

$12,271
(12,271)

$ —

Other
Employee
Separation

$11,076
(8,073)

$ 3,003

; Note C: Discontinued Operations :
During 2005, the Company sold several businesses consistent with its stated long-term strategy. 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 gain of approximately $9 million ($1.5 million, net of tax). On
October 6, 2004, the Company sold its Brazilian subsidiary, Smucker do Brasil, Ltda., to Cargill, Incorporated, generating
proceeds of approximately $6.9 million in cash and resulting in a loss of approximately $5.9 million ($2.8 million, net of tax).

In addition, on February 18, 2005, the Company sold the Multifoods U.S. foodservice and bakery products businesses, as
well as the Canadian foodservice locations operated under the Gourmet Baker name, which were acquired as part of
Multifoods. The sale to Value Creations Partners, Inc. generated proceeds consisting of $33 million in cash and a subordi-
nated promissory note with a face value of $10 million, and a fair value of approximately $6.8 million. No gain or loss was
recorded on this transaction.

The financial position, results of operations, and cash flows of these three businesses are reported as discontinued operations
and all prior periods have been restated.

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

Net sales
Income from discontinued operations before income tax
Income from discontinued operations

Year Ended April 30,

2005

$135,658
3,338
(1,387)

2004

$47,456
1,649
52

2003

$41,645
3,679
2,130

Income from discontinued operations for the year ended April 30, 2005, includes a $1.3 million loss, net of taxes, on the
divestitures of HJF and the Brazilian subsidiary. Interest expense of $600 has been allocated to the U.S. foodservice and
bakery business for the year ended April 30, 2005.

— 34 —

The following table summarizes the carrying values of the assets and liabilities of discontinued operations included in the
Consolidated Balance Sheet at April 30, 2004.

Assets of discontinued operations:

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

Total assets of discontinued operations

Liabilities of discontinued operations:

Current liabilities
Noncurrent liabilities

Total liabilities of discontinued operations

$20,609
12,187
7,483
5,878
45

$46,202

$ 8,211
337

$ 8,548

; Note D: Merger :
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 share-
holders 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 approxi-
mately $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.

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
financial statements from the date of the merger. The aggregate purchase price was approximately $792,252, including
$10,767 of capitalized acquisition related expenses. In addition, the Company incurred costs of $10,511 in 2003 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.

— 35 —

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 prop-
erty, plant, and equipment and identified intangible assets. A summary of the assets acquired and liabilities assumed in the
merger follows:

Assets acquired:
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

$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 is not deductible for tax purposes.

; Note E: Restructuring :
During 2003, the Company announced its plan to restructure certain operations as part of its ongoing efforts to refine its
portfolio, optimize its production capacity, improve productivity and operating efficiencies, and improve the Company’s
overall cost base as well as service levels in support of its long-term strategy.The Company’s strategy is to own and market
leading North American icon brands sold in the center of the store.

During 2004, the Company closed its fruit processing operations at its Watsonville, California, and Woodburn, Oregon, loca-
tions and subsequently sold these facilities. Uncrustables production at the West Fargo, North Dakota, location is expected to
be discontinued in fiscal 2006. In Ripon,Wisconsin, the Company completed the combination of its two manufacturing facil-
ities into one expanded site.

In the first quarter of fiscal 2005, the Company completed a restructuring program to streamline operations in Europe and
the United Kingdom, including the exit of a contract packaging arrangement and certain segments of its retail business. In
the third quarter of fiscal 2005, the Company announced its intent to discontinue operations at its Salinas, California, facil-
ity and restructure its U.S. distribution operations. Production from the Salinas facility will be relocated to plants in
Orrville, Ohio, and Memphis, Tennessee, by December 31, 2005. During the last half of fiscal 2005, the Company com-
pleted the sale of its U.S. industrial business.

Upon completion, the restructurings will result in the elimination of approximately 535 full-time positions.

The Company expects to incur total restructuring costs of approximately $40 million related to these initiatives, of which
$31.7 million has been incurred from the fourth quarter of fiscal 2003 through April 30, 2005.The balance of the costs will
be incurred through the third quarter of 2006. The remaining cash payments, estimated to be approximately $11 million,
will be paid through the end of 2006.

— 36 —

The following table summarizes the activity with respect to the restructuring and related asset impairment charges recorded
and reserves established and the total amount expected to be incurred.

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
Charge to expense
Cash payments
Noncash utilization

Balance at April 30, 2005

Remaining expected restructuring charge

Employee
Long-Lived
Separation Asset Charges

Equipment
Relocation

Other Costs

Total

$14,700

$ —
1,116
—
—

$ 1,116
5,702
(2,421)
—

$ 4,397
6,222
(6,660)
(737)

$ 3,222

$ 1,660

$8,400

$ —
1,055
—
(1,055)

$ —
6,113
—
(6,113)

$ —
1,002
—
(1,002)

$ —

$ 230

$7,900

$ —
—
—
—

$ —
827
(827)
—

$ —
3,548
(3,548)
—

$ —

$3,525

$9,000

$ —
366
(200)
(166)

$ —
3,184
(843)
(1,192)

$1,149
2,548
(2,159)
(1,538)

$ —

$2,902

$40,000

$ —
2,537
(200)
(1,221)

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

$ 5,546
13,320
(12,367)
(3,277)

$ 3,222

$ 8,317

Approximately $2,466, $8,464, and $1,256 of the total restructuring charges of $13,320, $15,826, and $2,537 in 2005,
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 $14,700 are being recognized over the estimated future service period of the related employees.The obliga-
tion related to employee separation costs is included in 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 pro-
duction facilities until they close. Other costs include miscellaneous expenditures associated with the Company’s restruc-
turing initiative and are expensed as incurred.These costs include professional fees and other closed facility costs.

; Note F: Reportable Segments :
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 consumer oils
and baking business areas. Prior to the acquisition of Multifoods, this segment primarily represented the domestic sales of
Smucker’s, Jif, and Crisco branded products to retail customers. With the addition of Multifoods, domestic sales of Pillsbury,
Hungry Jack, Martha White, and Pet branded products to retail customers are now included in this segment.The special mar-
kets segment is comprised of the foodservice, beverage, Canada, international, and industrial business areas. The Canadian
business acquired from Multifoods has been combined with the Company’s previous Canadian business to form the new
Canada business area and includes sales of Smucker’s, Jif, Crisco, Robin Hood, Bick’s, and Golden Temple. Special markets seg-
ment products are distributed through retail channels, foodservice distributors and operators (i.e., restaurants, schools and
universities, health care operations), other food manufacturers, health and natural food stores, and in foreign countries.

— 37 —

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)

Year Ended April 30,

2005

2004

2003

$1,405,191
638,686

$1,002,306
367,250

$ 889,871
380,227

$2,043,877

$1,369,556

$1,270,098

$ 295,045
64,049

$ 231,068
47,649

$ 197,709
50,102

$ 359,094

$ 278,717

$ 247,811

4,683
(22,555)
(1,971)
(13,320)
(17,954)
(103,843)
480

2,761
(6,209)
(2,414)
(15,826)
(1,266)
(80,468)
1,875

1,626
(8,375)
(1,420)
(2,537)
(10,511)
(72,110)
(2,774)

Income from continuing operations before income taxes

$ 204,614

$ 177,170

$ 151,710

Net sales:
Domestic
International:

Canada
All other international

Total international

Total net sales

Assets:

Domestic
International:

Canada
All other international

Total international

Total assets

Long-lived assets:

Domestic
International:

Canada
All other international

Total international

Total long-lived assets

$1,677,863

$1,278,243

$1,190,190

338,798
27,216

64,295
27,018

51,964
27,944

$ 366,014

$ 91,313

$ 79,908

$2,043,877

$1,369,556

$1,270,098

$2,107,999

$1,592,829

$1,515,210

517,343
10,552

33,213
58,083

34,126
66,071

$ 527,895

$ 91,296

$ 100,197

$2,635,894

$1,684,125

$1,615,407

$1,709,622

$1,214,258

$1,108,407

364,334
6,087

12,508
6,508

12,123
5,730

$ 370,421

$ 19,016

$ 17,853

$2,080,043

$1,233,274

$1,126,260

Segment profit represents revenue less direct and allocable operating expenses.

— 38 —

The following table presents product sales information.

Peanut butter
Shortening and oils
Fruit spreads
Flour and baking ingredients
Baking mixes and frostings
Portion control
Juices and beverages
Toppings and syrups
Pickles and condiments
Uncrustables frozen sandwiches
Industrial ingredients
Other

Total

2005

Year Ended April 30,
2004

2003

20%
17
14
13
11
4
4
4
3
3
3
4

28%
24
19
—
—
7
6
5
—
4
4
3

26%
23
19
—
—
6
6
5
—
3
7
5

100%

; Note G: Earnings per Share :
The following table sets forth the computation of earnings per common share and earnings per common share – assuming
dilution.

2005

Year Ended April 30,
2004

2003

Numerator:

Income from continuing operations for earnings per common share

and earnings per common share – assuming dilution

$130,460

$111,298

$94,212

Denominator:

Denominator for earnings per common share –

weighted-average shares
Effect of dilutive securities:

Stock options
Restricted stock

57,086,734

49,816,926

47,309,257

533,875
128,171

502,166
76,655

366,629
88,891

Denominator for earnings per common share – assuming dilution

57,748,780

50,395,747

47,764,777

Income from continuing operations per common share

$ 2.29

$ 2.23

$ 1.99

Income from continuing operations per common share –

assuming dilution

$ 2.26

$ 2.21

$ 1.97

Options to purchase 213,516 common shares at $49.60 to $57.09 per share were outstanding during 2005 but were not
included in the computation of earnings per common share – assuming dilution, as the options’ exercise prices were greater
than the average market price of the common shares and, therefore, the effect would be antidilutive.

— 39 —

; Note H: Marketable Securities :
The Company invests in debt securities. Under the Company’s investment policy, it will invest in securities deemed to be
investment grade at time of purchase. 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 cate-
gorized all debt securities as available 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 necessary 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. Approximately $67,094 and $28,957 of proceeds have been realized upon maturity
of available-for-sale marketable securities in 2005 and 2004, respectively, resulting in no gains or losses.

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

U.S. corporate securities
Mortgage-backed securities

Balance at April 30, 2005

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

Balance at April 30, 2004

Cost

$28,012
49,375

$77,387

Cost

$23,187
9,015
24,453

$56,655

Gross
Unrealized
Gains

$ —
132

$ 132

Gross
Unrealized
Gains

78
7
100

Gross
Unrealized
Losses

$ (492)
(214)

$ (706)

Gross
Unrealized
Losses

$ (35)

—
(142)

$ 185

$ (177)

Estimated
Fair Value

$27,520
49,293

$76,813

Estimated
Fair Value

$23,230
9,022
24,411

$56,663

The contractual maturities of these available-for-sale marketable securities were as follows:

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

Total marketable securities

April 30, 2005

April 30, 2004

Cost

$17,910
10,102
49,375

$77,387

Estimated
Fair Value

$17,739
9,781
49,293

$76,813

Cost

$15,086
17,116
24,453

$56,655

Estimated
Fair Value

$15,074
17,178
24,411

$56,663

— 40 —

Marketable securities in an unrealized loss position at April 30, 2005, are presented in the following table by length of time
the securities were in an unrealized loss position.

Less than 12 months
More than 12 months

Balance at April 30, 2005

Cost

$61,671
2,620

$64,291

Estimated
Fair Value

$60,984
2,601

$63,585

Unrealized
Loss

Number
of Securities

$687
19

$706

7
1

Based on management’s evaluation at April 30, 2005, considering the nature of the investments, the credit worthiness of the
issuers, and the intent and ability of the Company to hold the securities for the period necessary to recover the cost of the
securities, the decline in the fair values was determined to be temporary.

; Note I: Goodwill and Other Intangible Assets :
A summary of changes in the Company’s goodwill during the years ended April 30, 2005 and 2004, by reportable segment
is as follows:

Balance at May 1, 2003
Acquisition
Other

Balance at April 30, 2004
Acquisition
Divestiture
Other

Balance at April 30, 2005

U.S. Retail
Market

$502,303
4,759
—

$507,062
403,515
—
—

$910,577

Special
Markets

$16,449
—
149

$16,598
23,443
(1,420)
2,010

$40,631

Total

$518,752
4,759
149

$523,660
426,958
(1,420)
2,010

$951,208

Included in the loss on sale of discontinued operations is the disposal of approximately $7,483 of goodwill associated with
HJF and the Company’s Brazilian subsidiary.

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

Finite-lived intangible assets:

Patents
Customer lists and formulas

Total intangible assets subject to

amortization

Indefinite-lived intangible assets:

Trademarks

Total intangible assets not subject to

amortization

Total other intangible assets

April 30, 2005

April 30, 2004

Acquisition Accumulated
Cost Amortization

Net

Acquisition Accumulated
Cost Amortization

Net

$ 1,000
—

$292
—

$ 708
—

$ 1,000
3,887

$ 192
972

$ 808
2,915

$ 1,000

$292

$ 708

$ 4,887

$1,164

$ 3,723

$469,050

$ —

$469,050

$313,514

$ — $313,514

$469,050

$470,050

$ — $469,050

$313,514

$ — $313,514

$292

$469,758

$318,401

$1,164

$317,237

— 41 —

Amortization expense for finite-lived intangible assets was approximately $361, $490, and $480 in 2005, 2004, and 2003,
respectively.The weighted-average useful life of the finite-lived intangible asset is ten years. Based on the current amount of
intangible assets subject to amortization, the estimated amortization expense for each of the succeeding five years is $100.
Approximately $154,000 was recorded to indefinite-lived intangible assets from the Multifoods acquisition during 2005.

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, 2005. Goodwill impairment is tested at the reporting unit
level which are the Company’s operating segments. No impairment was required to be recorded as a result of the annual
impairment review.

; Note J: Pensions and Other Postretirement Benefits :
The Company has pension plans covering substantially all of its domestic and Canadian employees. Benefits are based on the
employee’s years of service and compensation. The Company’s plans are funded in conformity with the funding require-
ments of applicable government regulations.

In addition to providing pension benefits, the Company sponsors several unfunded, defined postretirement plans that pro-
vide health care and life insurance benefits to certain retired domestic and Canadian employees. These plans are contribu-
tory, 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:

Year Ended April 30,

Service cost
Interest cost
Expected return on plan assets
Amortization of prior service cost (credit)
Amortization of initial net asset
Recognized net actuarial loss (gain)
Special termination benefits
Curtailment loss

Defined Benefit Pension Plans
2005

2004

2003

$ 7,596
19,593
(24,655)
1,457
(224)
825
193
544

$4,152
6,617
(5,584)
1,456
(227)
1,397
—
—

$3,121
5,976
(6,106)
1,239
(234)
131
—
—

Other
Postretirement Benefits
April 30,

2005

2004

5.75%
4.40%

5.50%
4.00%

6.25%
4.50%

—
—

5.75%
—

5.50%
—

6.25%
—

—
—

For 2006, the assumed health care trend rates are ten percent and nine percent, for U.S. and Canadian plans, respectively.
The rate for participants under age 65 is assumed to decrease to five percent in 2011, and four and one-half percent in 2014,
for U.S. and Canadian plans, respectively.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, 2005:

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

One Percentage Point
Increase

Decrease

$ 1,018
10,030

$ (798)
(8,153)

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

Increase (decrease) in minimum liability included

in other comprehensive income or loss

Accumulated benefit obligation for all pension plans

April 30,

2005

2004

$ 16,122
373,744

$ (5,582)
104,753

The following table sets forth additional information related to the Company’s defined benefit pension plans with an accu-
mulated benefit obligation in excess of plan assets and defined benefit pension plans with a projected benefit obligation in
excess of plan assets.

Plans with an accumulated benefit obligation in excess of plan assets:

Accumulated benefit obligation
Fair value of plan assets

Plans with a projected benefit obligation in excess of plan assets:

Accumulated benefit obligation
Fair value of plan assets

— 44 —

April 30,

2005

2004

$187,002
140,372

242,278
197,233

$ 49,451
25,810

104,753
84,520

The Company employs a total return on investment approach for the defined benefit pension plans’ assets. A mix of equi-
ties and fixed income investments are used to maximize the long-term rate of return on assets for the level of risk.The objec-
tives 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 funding 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, the asset allocation, and expec-
tations 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

67%
33
—

100%

Actual Allocation
April 30,

2005

61%
37
2

100%

2004

71%
27
2

100%

Included in equity securities are 317,552 of the Company’s common shares at April 30, 2005 and 2004. The market value
of these shares is $15,757 at April 30, 2005.The Company paid dividends of $318 on these shares during 2005.

The Company expects to contribute approximately $15 million and $2 million to the pension and other postretirement ben-
efit plans, respectively, in 2006.The Company expects to make the following benefit payments for all benefit plans: $28 mil-
lion in 2006, $23 million in 2007, $32 million in 2008, $25 million in 2009, $26 million in 2010, and $139 million in 2011
through 2015.

The Company also charged to operations approximately $123, $488, and $707 in 2005, 2004, and 2003, respectively, for
contributions to plans not administered by the Company on behalf of employees subject to certain labor contracts. These
amounts were determined in accordance with provisions of the labor contracts. The Company is unable to determine its
share of either the accumulated plan benefits or net assets available for benefits under such plans.

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 bene-
fit costs, totaled $1,408, $1,639, and $2,316 in 2005, 2004, and 2003, respectively.

; Note K: Savings Plans :
ESOP: The Company sponsors an Employee Stock Ownership Plan and Trust (“ESOP”) for certain domestic, nonrepre-
sented 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 $407, $356, and $406 in 2005,
2004, and 2003, respectively. Contributions to the plan, representing compensation expense, are made annually in amounts
sufficient to fund ESOP debt repayment and were $476, $497, and $558 in 2005, 2004, and 2003, respectively. Dividends on
unallocated shares are used to reduce expense and were $398, $395, and $368 in 2005, 2004, and 2003, respectively. The
principal payments received from the ESOP in 2005, 2004, and 2003 were $540, $509, and $469, respectively.

— 45 —

Dividends on allocated shares are credited to participant accounts and are used to purchase additional common shares for
participant 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, 2005, the ESOP held 382,810 unallocated and 639,473 allocated shares.All shares held by the ESOP were
considered outstanding in earnings per share calculations for all periods presented.

Defined Contribution Plans: The Company offers employee savings plans for all domestic and Canadian employees not
covered by certain collective bargaining agreements. The Company’s contributions under these plans are based on a speci-
fied percentage of employee contributions. Charges to operations for these plans in 2005, 2004, and 2003 were $4,654,
$3,455, and $2,635, respectively.

; Note L: Stock Benefit Plans :
The Company provides for equity-based incentives to be awarded to key employees through the 1998 Equity and
Performance Incentive Plan, the 1987 Stock Option Plan, and the Amended and Restated 1997 Stock-Based Incentive 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, restricted stock units, and per-
formance shares. At April 30, 2005, there were 1,536,003 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 759,225 common
shares. Restricted stock issued under this plan is subject to a risk of forfeiture for at least three years in the event of termina-
tion of employment or failure to meet performance criteria, if any. All restricted shares issued to date under the plan are sub-
ject 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.

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 4,494 common shares available for future grant under this plan.

Amended and Restated 1997 Stock-Based Incentive Plan: This plan was initially adopted by shareholders of
Multifoods in 1997. Effective with the Company’s acquisition of Multifoods, the Company assumed the plan.After the acqui-
sition, only former employees of Multifoods that are employed by the Company will be eligible to receive awards under the
plan.There are 220,294 common shares available for future grant under this plan.

As a result of the acquisition, the Company also assumed two additional stock benefit plans. However, no common shares
are available for future grant under the plans.

Nonemployee Director Stock Option Plan: This plan provides for the issuance of stock options to nonemployee direc-
tors 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 48,510 common
shares available for future grant under this plan.

— 46 —

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

Outstanding at May 1, 2002

Granted
Exercised
Forfeited

Outstanding at April 30, 2003

Granted
Exercised
Forfeited

Outstanding at April 30, 2004

Assumed in the Multifoods acquisition
Granted
Exercised
Forfeited

Outstanding at April 30, 2005

Exercisable at April 30, 2003
Exercisable at April 30, 2004
Exercisable at April 30, 2005

Weighted-
Average
Exercise
Price

$22.69
33.72
22.69
30.15

$28.03
43.32
25.22
33.98

$30.64
41.77
44.21
30.87
47.31

$35.53

$22.73
25.58
32.68

Options

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

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

2,563,573
921,824
549,000
(740,024)
(122,191)

3,172,182

1,258,103
1,407,281
2,024,247

The following table summarizes the range of exercise prices and weighted-average exercise prices for options outstanding
and exercisable at April 30, 2005, under the Company’s stock benefit plans.

Range of
Exercise Prices

$16.87–$25.00
$25.01–$37.50
$37.51–$57.09

Outstanding

678,080
1,197,913
1,296,189

Weighted-
Average
Exercise Price

$21.78
32.90
45.14

Weighted-
Average
Remaining
Contractual
Life (years)

4.1
6.6
7.0

Exercisable

678,080
818,915
527,252

Weighted-
Average
Exercise Price

$21.78
32.55
46.92

— 47 —

; Note M: Long -Term Debt and Financing Arrangements :

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
4.78% Senior Notes due June 1, 2014
6.60% Senior Notes due November 13, 2009

Total long-term debt
Current portion of long-term debt

Total long-term debt less current portion

April 30,

2005

$ 75,000
17,000
33,000
10,000
100,000
213,560

$448,560
17,000

$431,560

2004

$ 75,000
17,000
33,000
10,000
—
—

$135,000
—

$135,000

In connection with the acquisition of Multifoods, the Company assumed $200 million of 6.602 percent, senior, unsecured
notes due November 13, 2009, with a fair value of approximately $216 million at the acquisition date. The notes assumed
are guaranteed by Diageo plc. The guarantee may terminate, in a limited circumstance, prior to the maturity of the notes.
In addition, on May 27, 2004, the Company issued $100 million of 4.78 percent, senior, unsecured notes due June 1, 2014.

The notes are unsecured and interest is paid annually on the notes assumed in the Multifoods acquisition and semiannually
on the remaining notes. Among other restrictions, the note purchase agreements contain certain covenants relating to liens,
consolidated net worth, and sale of assets as defined in the agreements.The Company is in compliance with all covenants.

On June 17, 2004, the Company entered into a five-year, $180 million revolving credit facility with a group of four banks.
Interest on the revolving credit facility is based on prevailing U.S. prime, Canadian Base Rate, LIBOR, or Canadian CDOR,
as determined by the Company, and is payable either on a quarterly basis, or at the end of the borrowing term. At April 30,
2005, the Company had approximately $33.4 million outstanding under the revolving credit facility at a weighted average
interest rate of 3.04 percent. At April 30, 2005, the Company had standby letters of credit of approximately $20.3 million
outstanding.

Interest paid totaled $29,075, $10,364, and $10,061 in 2005, 2004, and 2003, respectively.This differs from interest expense
due to the timing of payments, amortization of the fair value adjustment on the notes assumed in the Multifoods acquisition,
amortization of deferred interest rate swap gains, and interest capitalized of $1,000, $1,850, and $442 in 2005, 2004, and
2003, respectively.

— 48 —

; Note N: Guarantees :
In September 2002, Multifoods sold its foodservice distribution business to Wellspring Distribution Corporation
(“Wellspring”) while continuing to guarantee certain real estate and tractor-trailer fleet lease obligations of the business. As
a result of the Company’s acquisition of Multifoods, the Company now is obligated under these guarantees. The guarantee
requires the lessor to pursue collection and other remedies against Wellspring before demanding payment from the
Company. In addition, the Company’s obligation related to the tractor-trailer fleet lease is limited to 75 percent of the
amount outstanding after the lessor has exhausted its remedies against Wellspring. The fleet guarantee will expire in
September 2006 and the real estate guarantees will expire in September 2010.

The possibility that the Company would be required to honor the contingent liabilities under the guarantee is largely
dependent upon the future operations of Wellspring and the value of the underlying leased properties. The Company cur-
rently has no liability recorded related to the guarantee. Should a reserve be required in the future, it would be recorded at
the time the obligation was considered to be probable and estimable.

At April 30, 2005, the Company’s guarantees outstanding for the lease obligations of Wellspring were $13,116 related to
the tractor-trailer fleet lease and $10,930 related to the real estate lease.

; Note O: Derivative Financial Instruments :
The Company is exposed to market risks, such as changes in interest rates, currency exchange rates, and commodity pric-
ing.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 flour and
baking business in Canada, and the consumer oils and baking business in the United States, the Company enters into com-
modity futures and options contracts to manage the price volatility and reduce the variability of future cash flows related to
anticipated inventory purchases of wheat, flour, and edible oils. The Company also enters into commodity futures and
options related to the delivery of natural gas to the manufacturing plants in the United States. The derivative instruments
generally have maturities of less than one year. Certain of the derivative instruments associated with the Company’s oils busi-
ness 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 qualify-
ing 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 the commodity purchased. Hedge inef-
fectiveness 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.

The mark-to-market value of all derivative commodity instruments is included in current assets on the Consolidated Balance
Sheets. As of April 30, 2005 and 2004, the deferred gain, net of tax, included in accumulated other comprehensive loss was
$916 and $1,237, respectively.This entire amount at April 30, 2005, is expected to be recognized in earnings as the related
commodity is utilized during 2006.The impact of commodities futures contracts and options recognized in earnings was a
loss of $10,915 in 2005, and a gain of $3,967 and $4,050, in 2004 and 2003, respectively. Included in these amounts are
amounts related to nonqualifying, excluded, and ineffective portions of hedges resulting in a loss of $2,389 in 2005, and a
gain of $351 and $3,226, in 2004 and 2003, 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

— 49 —

Company’s exposure to interest risk by converting a portion of the Company’s fixed-rate debt to a floating rate.The inter-
est 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 underlying 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 repre-
sents 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 recog-
nized over the remaining life of the contract.

During 2004 and 2003, the Company terminated its interest rate swap agreements prior to maturity. 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 origi-
nal swap agreements as a reduction of future interest expense. At April 30, 2005 and 2004, the balance of the deferred gains
related to the terminated swaps was $2,334 and $3,530, respectively, and is included in other noncurrent liabilities on the
Consolidated Balance Sheets.

Foreign Exchange Rate Hedging: The Company utilizes 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 payments related
to purchases of certain assets. 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. The mark-to-market value of all foreign exchange rate
derivatives are included in other current assets on the Consolidated Balance Sheets. Included in accumulated other compre-
hensive loss was a deferred gain, net of tax, of $8 and a deferred loss, net of tax, of $47 at April 30, 2005 and 2004, respec-
tively.The entire amount at April 30, 2005, is expected to be recognized in earnings during 2006.

; Note P: Other Financial Instruments :
Financial instruments, other than derivatives, that potentially subject the Company to significant concentrations of credit
risk consist principally of cash investments, marketable securities, and trade receivables.The Company places its cash invest-
ments with high quality financial institutions and limits the amount of credit exposure to any one institution.The Company’s
marketable securities are in debt securities. Under the Company’s investment policy, it will invest in securities deemed to
be investment grade at time of purchase. 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 trade receivables, concentration of credit risk is limited due to the large number of cus-
tomers.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
$465,797 at April 30, 2005.

— 50 —

The following table provides information on the carrying amount and fair value of financial instruments, including deriva-
tive financial instruments.

Marketable securities

Current
Noncurrent
Long-term debt

Derivative financial instruments

April 30, 2005

April 30, 2004

Carrying
Amount

Fair Value

Carrying
Amount

Fair Value

$ 17,739
59,074

$15,074
41,589

75,000
17,000
33,000
10,000
100,000
213,560
1,754

82,185
17,347
36,051
11,654
98,892
219,668
1,754

75,000
17,000
33,000
10,000
—
—
(424)

75,906
16,943
35,061
11,105
—
—
(424)

; Note Q: Income Taxes :
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 and amortization
Other (each less than five percent of total liabilities)

Total deferred tax liabilities

Deferred tax assets:
Loss carryforwards
Employee benefits
Tax credit carryforwards
Intangible assets
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,

2005

2004

$130,711
68,228
13,816

$212,755

$ 64,160
41,237
12,139
7,103
13,109

$137,748
(24,280)

$113,468

$ 99,287

$115,433
35,575
7,396

$158,404

$ 256
18,510
—
1,860
3,949

$ 24,575
(266)

$ 24,309

$134,095

The Company acquired a number of tax loss and credit carryforwards as a result of the Multifoods acquisition. The valua-
tion allowance for deferred tax assets at April 30, 2005, primarily relates to these acquired deferred tax assets.

— 51 —

The following table summarizes domestic and foreign loss carryforwards at April 30, 2005.

Loss carryforwards:

Federal net operating loss
Federal capital loss
State net operating loss
Foreign net operating loss

Total loss carryforwards

The following table summarizes tax credit carryforwards at April 30, 2005.

Tax credit carryforwards:

Foreign tax credit
Alternative minimum tax credit

Total tax credit carryforwards

Related Tax
Deduction

Deferred Tax
Asset

Expiration Date

$141,462
19,779
101,936
1,117

$264,294

$49,512
7,322
6,959
367

$64,160

2021 to 2024
2009 to 2010
2006 to 2027
2011 to 2014

Deferred Tax
Asset

Expiration Date

$ 9,448
2,691

$12,139

2010 to 2015
Indefinite

The valuation allowance at April 30, 2005, includes approximately $23,195 for the above domestic and foreign loss and tax
credit carryforwards.

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 from continuing operations before income taxes is as follows:

Domestic
Foreign

Income from continuing operations before income taxes

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

Current:
Federal
Foreign
State and local
Deferred

Total income tax expense – continuing operations

Total income tax expense – discontinued operations

Year Ended April 30,

2005

$184,707
19,907

$204,614

2004

$169,004
8,166

$177,170

2003

$147,581
4,129

$151,710

Year Ended April 30,

2005

2004

2003

$ 28,645
4,490
4,772
36,247

$ 74,154

$ 4,725

$ 52,604
2,692
4,463
6,113

$ 65,872

$ 1,597

$ 53,767
1,331
6,080
(3,680)

$ 57,498

$ 1,549

— 52 —

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,

2005

35.0%

1.8
—
(0.6)

36.2%

2004

35.0%

0.7
—
1.5

37.2%

2003

35.0%

2.5
(0.1)
0.5

37.9%

$60,359

$70,927

$45,052

; Note R: Accumulated Other Comprehensive Loss :
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:

Balance at May 1, 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

Reclassification adjustments
Current period (credit) charge
Income tax benefit

Balance at April 30, 2005

Minimum
Pension
Liability
Adjustment

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

Unrealized
Gain on
Cash Flow

Accumulated
Other
Hedging Comprehensive
Loss

Derivatives

$ —
477
(181)

$ 296
—
(872)
327

$(249)
—
436
(161)

$ 26

$ — $ 15,763
5,745
(5,324)

(381)
145

$ (236)

381
(1,889)
554

$(1,190)
1,889
(1,467)
(156)

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

$ 4,585
1,797
(94)
(6,129)

$ (924)

$ 159

Foreign
Currency
Translation
Adjustment

$ 14,966
(8,268)
—

$ 6,698
—
(6,697)
—

$ 1
(92)
(15,185)
—

$ 797
13,917
(5,288)

$ 9,426
—
(5,582)
2,179

$ 6,023
—
16,122
(5,812)

$(15,276)

$16,333

— 53 —

; Note S: Common Shares :
Voting:The Company’s Amended and Restated Articles of Incorporation (“the Articles”) provide that each holder of an out-
standing common share is entitled to one vote on each matter submitted to a vote of the shareholders except for the fol-
lowing specific matters:
d any matter that relates to or would result in the dissolution or liquidation of the Company;
d the adoption of any amendment of the articles of incorporation, or the regulations of the Company, or the adoption of
amended articles of incorporation, other than the adoption of any amendment or amended articles of incorporation that
increases the number of votes to which holders of common shares are entitled or expand the matters to which time phase
voting applies;

d any proposal or other action to be taken by the shareholders of the Company, relating to the Company’s rights agreement

or any successor plan;

d any matter relating to any stock option plan, stock purchase plan, executive compensation plan, or other similar plan,

arrangement, or agreement;

d adoption of any agreement or plan of or for the merger, consolidation, or majority share acquisition of the Company or
any of its subsidiaries with or into any other person, whether domestic or foreign, corporate or noncorporate, or the
authorization of the lease, sale, exchange, transfer, or other disposition of all, or substantially all, of the Company’s assets;

d any matter submitted to the Company’s benefit, stock option, compensation, or other similar plan; and
d any matter relating to the issuance of common shares, or the repurchase of common shares that the Company’s board of
directors determines is required or appropriate to be submitted to the Company’s shareholders under the Ohio Revised
Code or applicable stock exchange rules.

On the matters listed above, common shares are entitled to ten votes per share, if they meet the requirements set forth in
the Articles. Shares which would be entitled to ten votes per share are:
d common shares owned at the close of business on May 31, 2002;
d common shares received as a result of the Jif and Crisco brands merger on June 1, 2002;
d common shares received as a result of the Multifoods acquisition on June 18, 2004; or
d common shares received through the Company’s various equity plans.

In the event of a change in beneficial ownership, the new owner of that share will be entitled to only one vote with respect
to that share on all matters until four years pass without a further change in beneficial ownership of the share.

Shareholders’ Rights Plan: Pursuant to a shareholders’ rights plan established in 1999, one share purchase right is asso-
ciated 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
becoming exercisable.The rights will expire May 14, 2009, unless earlier redeemed, exchanged, or amended by the directors.

— 54 —

Report of Management 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 U.S. generally accepted accounting principles and is based on management’s best estimates and judgments.

The Company maintains systems of internal accounting controls supported by formal policies and procedures that are com-
municated throughout the Company.There is an extensive program of audits performed by the Company’s internal audit staff
and independent registered public accounting firm designed to evaluate the adequacy of and adherence to these controls, poli-
cies, and procedures.

Ernst & Young LLP, independent registered public accounting firm, has audited the Company’s financial statements in accor-
dance with the standards of the Public Company Accounting Oversight Board. 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 inde-
pendent registered public accounting firm and management to review the work of the internal audit staff and the work, audit
scope, timing arrangements, and fees of the independent registered public accounting firm.The audit committee also regu-
larly satisfies itself as to the adequacy of controls, systems, and financial records. The director of the internal audit depart-
ment 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
oversight activity of the audit committee work together to provide reasonable assurance that the operations of the Company
are conducted 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 and
Co-Chief Executive Officer

Mark R. Belgya
Vice President,
Chief Financial Officer
and Treasurer

— 55 —

Directors, Officers, and General Managers
— The J. M. Smucker Company —

; Directors :

; Officers & General Managers :

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

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

Kathryn W. Dindo A, E
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 A, E
Former Executive Vice President
Time Inc.
New York, New York

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

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

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

Timothy P. Smucker
Chairman and Co-Chief Executive Officer
The J. M. Smucker Company
William H. Steinbrink G
Interim President
Wittenberg University
Springfield, Ohio

A Audit Committee Member
E Executive Compensation
Committee Member

G Nominating and Corporate Governance

Committee

Timothy P. Smucker
Chairman and Co-Chief Executive Officer
Richard K. Smucker
President and Co-Chief Executive Officer
Mark R. Belgya
Vice President, Chief Financial Officer
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 F. Mayer
Vice President, Customer Development
John D. Milliken
Vice President, Logistics and Western
Operations
Steven Oakland
Vice President and General Manager,
Consumer Oils and Baking
Andrew G. Platt
Vice President, Information Services
and Chief Information Officer
Christopher P. Resweber
Vice President, Marketing Services
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
John W. Denman
Assistant Controller
Adam M. Ekonomon
Assistant General Counsel
and Assistant Secretary

— 56 —

Debra A. Marthey
Assistant Treasurer
Gary A. Jeffcott
General Manager, Industrial
and International Markets
Julia L. Sabin
General Manager, Beverage Market

; Properties :

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
Toledo, Ohio
West Fargo, North Dakota*

International Manufacturing
Locations:
Burlington, Ontario, Canada
Delhi Township, Ontario, Canada
Dunnville, Ontario, Canada
Livingston, Scotland
Montreal, Quebec, Canada
(bakery mix facility)**

Montreal, Quebec, Canada (flour mill)
Port Colborne, Ontario, Canada**
Ste. Marie, Quebec, Canada
Saskatoon, Saskatchewan, Canada

Sales and Administrative Offices:*
Bentonville, Arkansas
Calgary, Alberta, Canada
Concord, Ontario, Canada
Markham, Ontario, Canada
Minnetonka, Minnesota
Mexico City, Mexico
Montreal, Quebec, Canada
Rexdale, Ontario, Canada

* Leased properties
** Land is leased under a long-term arrangement.

However, the building is owned.

Shareholder Information
— The J. M.Smucker Company —

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 tax Form 1099 information.

Dividend Reinvestment/
Direct Stock Purchase Plan

Computershare Trust Company, Inc.
sponsors and administers a direct stock
purchase plan, Computershare BYDSSM,
that includes dividend reinvestment
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
typically 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 approximately two weeks before
the payment date.The Company’s
dividend disbursement agent is
Computershare Investor Services, LLC.

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 tax 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 correspondence related to
direct stock purchases and dividend
reinvestment 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 Registered
Public Accounting Firm

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

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,
Friday, August 19, 2005, 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 avail-
able without cost to shareholders who
submit a written request to:

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

Stock Listing

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

Certifications

The Company’s Chief Executive
Officers have certified to the New York
Stock Exchange that they are not aware
of any violation by the Company of
New York Stock Exchange corporate
governance standards.The Company
has also filed with the Securities and
Exchange Commission certain certifica-
tions relating to the quality of the
Company’s public disclosures.These
certifications are filed as exhibits to
the Company’s Annual Report on
Form 10-K.

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.
Pillsbury is a trademark of The Pillsbury Company, used under license.

Decadent Peanut Butter Pie

Classic Thumbprint Cookies

Yield: 8 servings

Prepared chocolate cookie pie crust

Ingredients:
1
1 Cup Jif ® Creamy Peanut Butter
Package (8 oz.) cream cheese,
1
at room temperature

1/2 Cup sugar
1 Container (12 oz.) frozen, non-dairy
whipped topping, thawed, divided
Jar (11.75 oz.) Smucker’s® Hot Fudge
Topping, divided

Drizzle:
2 Tablespoons Smucker’s® Hot Fudge

Topping

2 Tablespoons Jif ® Creamy Peanut Butter

Yield: 3 dozen cookies

Ingredients:
2 Cups Pillsbury Best® All-Purpose or

Large eggs, separated

Unbleached Flour
1/2 Cup brown sugar, packed
1 Cup butter, at room temperature
2
1/4 Teaspoon salt
11/2 Teaspoons vanilla
2 Cups walnuts or pecans, finely chopped
1 Cup Smucker’s® Preserves or Jam,
any flavor or combination of flavors

Banana Brownie Split Sundaes

Chicken Tortilla Soup

Yield: 10 servings

Ingredients:
1

Package (19.5 oz.) Pillsbury® Brownie
Classic Traditional Fudge Brownie Mix

1/2 Cup Crisco®Vegetable Oil
1/4 Cup water
Eggs
2
1 Quart (4 cups) strawberry ice cream
2–3 Bananas, sliced
1 Cup fresh strawberries, sliced
1 Cup Smucker’s® Hot Fudge Ice Cream

Topping, warmed

2/3 Cup frozen, non-dairy whipped topping,

thawed

Yield: 6–8 servings

Ingredients:

Crisco® No-Stick Cooking Spray
6-inch tortillas

8
2 Tablespoons Crisco® Canola Oil
1 Medium onion, chopped
2 Cups cooked chicken, diced
1 Can (15 1/4 oz.) whole kernel corn, drained
1 Can (15 oz.) black beans, drained
1 Can (15 oz.) diced tomatoes, with juice
1 Can (4 oz.) chopped green chilies, drained
Package (11/4 oz.) taco seasoning mix
1
2 Cans (14 1/2 oz.) chicken broth
1 Tablespoon lime juice

Shredded cheddar cheese, chopped cilantro,
sour cream, lime slices

Sesame Beef Stir Fry

Cheesy Potato Corn Cakes

Yield: 4 servings

Ingredients:
5 Tablespoons dark soy sauce
8 Tablespoons Crisco® Canola or Vegetable Oil
2 Teaspoons honey
2 Teaspoons Dijon mustard
1/2 Teaspoon red pepper flakes
1 Pound flank steak, cut into thin strips
2 Cloves garlic, minced
2 Teaspoons fresh ginger, minced
1 Medium onion, thinly sliced
1 Red bell pepper, thinly sliced
1 Green pepper, thinly sliced
1
Bunch broccoli, cut into flowerets
1 Can (8 oz.) sliced water chestnuts
3 Tablespoons sesame seeds, toasted

Steamed rice

Yield: 8 Servings
(16 corn cakes)

Ingredients:
2 Cups Hungry Jack® Mashed Potato Flakes
1 Can (11 oz.) whole kernel corn with red and

green peppers, drained
3/4 Cup shredded cheddar cheese
2 Tablespoons Pillsbury Best® All Purpose

or Unbleached Flour

2 Tablespoons Martha White® Corn Meal
11/2 Teaspoons seasoned salt
1 Teaspoon dried basil leaves
1/2 Teaspoon garlic powder
1/4 Teaspoon pepper
2 Cups milk
1
Egg, beaten
1/4 Cup butter or margarine

Grated Parmesan cheese, if desired

Peanut Butter Kiss Cookies

Herbed Cornbread Dressing with Dried Fruit

Yield: 5 dozen cookies

Ingredients:
1/2 Cup margarine
1/2 Cup Smucker’s® Natural or Jif ® Creamy

Egg

Peanut Butter
1/2 Cup granulated sugar
1/2 Cup firmly packed brown sugar
1
2 Tablespoons milk
1 Teaspoon vanilla
13/4 Cups Pillsbury Best® All-Purpose Flour
1 Teaspoon baking powder
1/4 Teaspoon salt
1/8 Teaspoon baking soda
1

Bag chocolate candies, unwrapped

Yield: 8–10 servings

Ingredients:
2 Packages (6 oz.) Martha White®

Buttermilk Cornbread Mix, prepared
according to package directions

1/2 Cup butter
1 Cup celery, chopped
1/2 Cup onion, chopped
1 Package (6 oz.) dried apricots, coarsely

chopped (about 1 cup)

1/3 Cup sweetened dried cranberries
1/4 Cup fresh parsley, chopped
11/2 Teaspoons dried sage leaves
1/2 Teaspoon dried thyme leaves
1/2 Teaspoon pepper
11/2 Cups chicken broth

Classic Thumbprint Cookies
Preparation Directions:
• Preheat oven to 350°F. Coat two baking sheets with cooking spray.
• In large mixing bowl, beat sugar, butter, egg yolks, vanilla and salt.
Slowly add the flour and stir until well blended.
• In a small bowl, beat egg whites until foamy. Put nuts in a separate bowl.
• Using a teaspoon, scoop out dough and shape into 1-inch balls. Dip
each dough ball into the egg whites, then roll in the nuts and place on a
prepared baking sheet. Using a teaspoon or your thumb, make a round
indentation in the top of each cookie, being sure not to make a hole all
the way through the dough.
• Bake cookies for 8 minutes (they will not be fully baked); remove from
oven. Using a teaspoon or other small spoon, scoop the preserves into the
indentation of each cookie. Return cookies to oven to bake another 6–10
minutes, or until lightly browned. Remove from oven; cool on a wire rack.
©/TM/® The J. M. Smucker Company.
Pillsbury and Pillsbury Best are trademarks of The Pillsbury Company, used under license.

Decadent Peanut Butter Pie
Preparation Directions:
• In a medium bowl, beat together the Jif Peanut Butter, cream cheese
and sugar. Gently fold in 3 cups whipped topping. Spoon mixture into
prepared pie shell. Using a spatula, smooth mixture to edges of pie.
• Reserving 2 tablespoons of Smucker’s Hot Fudge topping, place remaining
topping into a microwave-safe bowl, or glass measuring cup. Microwave
for 1 minute. Stir. Spread topping over pie to cover the peanut butter
layer. Refrigerate until serving time.
• Just before serving, spread the remaining whipped topping over the
hot fudge layer, being careful not to mix the two layers.
• Place the 2 tablespoons hot fudge topping in a small ziptop bag and knead
for a few seconds. Cut a tiny hole in the corner of the bag and drizzle
over pie. Do the same with 2 tablespoons peanut butter going in the
opposite direction of the hot fudge.
©/TM/® The J. M. Smucker Company.
Pillsbury and Pillsbury Best are trademarks of The Pillsbury Company, used under license.

Chicken Tortilla Soup
Preparation Directions:
• Preheat oven to 350°F. Spray a baking sheet and both sides of the corn
tortillas with Crisco No-Stick Cooking Spray. Slice the tortillas into
strips; sprinkle lightly with salt. Place on baking sheet; bake for
12–15 minutes or until crisp and lightly browned. Set aside.
• Meanwhile, in a Dutch oven or soup pot, heat Crisco Canola Oil
over medium high heat. Add onions and sauté until soft. Add chicken,
corn, beans, tomatoes, chilies and taco seasoning; stir to combine.
Add chicken broth; stir. Bring to a boil; reduce heat and simmer,
10–15 minutes. Stir in lime juice.
• To serve, place a few tortilla strips into soup bowl; ladle soup over.
Sprinkle with cheese and cilantro.Top with remaining tortilla strips.
Garnish with sour cream and a lime slice.

Banana Brownie Split Sundaes
Preparation Directions:
• Preheat oven to 350°F. Line 15 x10 x1-inch baking pan with foil,
leaving 2 inches of foil hanging over each end. Lightly grease foil.
• Prepare brownies as directed on package using water, oil and eggs.
Spread batter evenly in greased foil-lined pan. Bake 15–20 minutes.
Cool 1 hour.
• To remove brownies from pan, lift foil ends; place on flat surface.
Cut brownies using 2 1/2 to 3-inch star-shaped or round cookie
cutter. Remove from foil with spatula. (Save scraps from cutouts for
another use.)
• To serve, scoop ice cream into individual bowls; top with banana slices
and strawberries. Drizzle with ice cream topping and dollop with
whipped topping. Garnish with brownie stars.

©/TM/® The J. M. Smucker Company.
Pillsbury and Pillsbury Best are trademarks of The Pillsbury Company, used under license.

Cheesy Potato Corn Cakes
Preparation Directions:
• In large bowl, combine potato flakes, corn, cheddar cheese, flour,
corn meal, seasoned salt, basil, garlic powder and pepper; mix well.
Add milk and egg; mix well. Let stand 2–3 minutes or until liquid
is absorbed.
• Melt 1 to 2 tablespoons of the butter in 12-inch nonstick skillet over
medium heat. Drop potato mixture by 1/4 cupfuls into skillet. Carefully
press each to form 3-inch round. Cook 6–8 minutes or until golden
brown, turning once. Sprinkle with Parmesan cheese. Repeat with
remaining butter and potato mixture.

Sesame Beef Stir Fry
Preparation Directions:
• In a medium bowl, whisk together soy sauce, 4 tablespoons Crisco Oil,
honey, mustard, and red pepper flakes.
• Add steak and toss. Marinate, covered at room temperature for 15 minutes.
• In a wok or heavy skillet, heat 2 tablespoons oil over moderately
high heat until hot, but not smoking.
• Sauté garlic, ginger, onion, bell peppers and broccoli, stirring,
5–7 minutes.Transfer mixture to another bowl.
• Heat 2 tablespoons oil in wok over high heat until hot, but not smoking.
• Sauté steak, stirring about 2 minutes.
• Stir in sautéed vegetables, water chestnuts and sesame seeds until
heated through.
• Serve over steamed rice with additional soy sauce.

©/TM/® The J. M. Smucker Company.
Pillsbury and Pillsbury Best are trademarks of The Pillsbury Company, used under license.

Herbed Cornbread Dressing with Dried Fruit
Preparation Directions:
• Preheat oven to 375°F. Grease a shallow 21/2-quart baking dish or pan.
Coarsely crumble cornbread; place in large bowl. In large skillet, cook
onions and celery in butter over medium high heat until vegetables are
tender, stirring occasionally. Add vegetable mixture and all remaining
ingredients to cornbread; mix well, stirring gently so cornbread
does not crumble completely. Spoon into greased baking dish.
Bake 30–35 minutes or until golden brown.

Peanut Butter Kiss Cookies
Preparation Directions:
• Preheat oven to 375°F. In a large mixer bowl, beat margarine and peanut
butter with electric mixer on medium speed about 30 seconds. Add the
sugars and beat until fluffy. Add egg, milk, and vanilla. Beat well.
• In a mixing bowl, stir together flour, baking powder, salt, and baking
soda.With mixer on low speed, gradually add flour mixture to peanut
butter mixture, beating well. If necessary, cover and chill about
one hour for easier handling.
• Shape dough into one-inch balls. Roll in additional granulated sugar.
Place about two inches apart on ungreased cookie sheets.
Bake 10–12 minutes, or until edges are firm.
• Immediately press a chocolate candy atop each cookie.With a spatula,
lift cookies onto cooling rack.When cool, store in an airtight container.

©/TM/® The J. M. Smucker Company.
Pillsbury and Pillsbury Best are trademarks of The Pillsbury Company, used under license.

— All the Goodness of Smucker’s® In a Store —

Simply Smucker’s ©, our showcase store, features more than 300 flavors and
varieties of Smucker products as well as a wide selection of home accessories
and specialty gifts.We even offer fresh-baked cookies and crumbcakes
prepared at our in-store bakery. Beginning this July, you can enjoy your
favorite Smucker’s ice cream toppings on a sundae made especially for you!

For more information, please visit us at:
www.smuckers.com/simplysmuckers

(cid:1)(cid:2)

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
www.smuckers.com