The J. M. Smucker Company Annual Report 2008

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FY2008 Annual Report · The J. M. Smucker Company

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Annual Report
~2008~

Financial Highlights

The J. M. Smucker Company

(Dollars in thousands, except per share data)

Net sales
Net income and net income per common share:

Net income
Net income per common share – assuming dilution

Income and income per common share before restructuring

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

Common shares outstanding at year end
Number of employees

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

Income before income taxes, restructuring, and merger
and integration costs
Income taxes

Income before restructuring and merger and integration costs

Year Ended April 30,

2008

2007

$2,524,774

$2,148,017

$ 170,379
3.00
$

$ 157,219
2.76
$

$ 178,881
$
3.15
54,622,612
3,250

$ 254,788
7,967
1,510
3,237

$ 165,152
$
2.89
56,779,850
3,025

$ 241,004
61
9,981
2,120

$ 267,502
88,621

$ 253,166
88,014

$ 178,881

$ 165,152

~ Contents ~

Letter to Shareholders

Business Overview

Recipes

Five-Year Summary of Selected Financial Data

Summary of Quarterly Results of Operations

Stock Price Data

Comparison of Five-Year Cumulative
Total Shareholder Return

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

~ On Our Cover ~

In the painting commissioned for this year’s cover,
artist Will Moses, great-grandson of legendary
painter Grandma Moses, transports us to an earlier time
at J. M. Smucker’s Orrville home, where families are
gathered to celebrate the goodness of the harvest.

Report of Management on Responsibility
for Financial Reporting

Consolidated Financial Statements

Notes to Consolidated Financial Statements

Directors, Officers, and General Managers

Properties

Corporate and Shareholder Information

Why We Are, Who We Are

...Our Culture

A culture of dotting the i’s and crossing the t’s…

Of doing the right things and doing things right…

A culture of growth — individual and as a company.

It’s who we are. It’s because of who we are.

It’s a result of living our Basic Beliefs…

Our Commitment to Each Other. To our customers,

and to our consumers.

As we look to the future of unlimited possibilities,

we recognize the principles that are instrumental

to our success…

A culture deeply rooted in our Basic Beliefs…

Guideposts for decisions at every level...

Why we are who we are.

A culture that encourages commitment to each other…

Clear communication and collaboration…

Vision…A culture of appreciation.

A family-sense of sharing in a job well done…

Where every person makes a difference.

Dear Shareholders and Friends:
(cid:55)(cid:55)(cid:55)

Fiscal 2008 was another record year for The J. M.
Smucker Company. This is especially gratifying in light

of the year’s challenging economic environment and

unprecedented commodity-driven cost increases, which

impacted all of our businesses.

~ Long-Term Performance ~

While we are proud of our ﬁscal 2008 results, they are

only a snapshot of a single year. We believe that success

is best measured over the long term, and we are pleased

to report that our compounded net sales and earnings

(cid:52) Sales, excluding divested businesses, were up

per share grew over the past decade by 16 percent and

22 percent, and net income grew eight percent.

10 percent, respectively.

(cid:52) Net income per share was $3.00, up from $2.76

last year, a nine percent increase.

(cid:52) Cash ﬂow from operations exceeded $190 million,

allowing for a dividend increase for the 28th time

in the last 31 years.

We attribute our ﬁscal 2008 success to:

(cid:52) Our loyal consumers and customers, who trust

the Smucker family of brands to deliver on the

promise of quality, taste, and value;

Just as important, we measure success by more than

a ﬁnancial yardstick. Our long-held values and philoso-

phies tell the true story of who we are—and with whom

you, as a shareholder, have entrusted your investment.

~ Our Purpose and Strategy ~

Our Company, brands, and people are about more

than making and marketing products.

At Smucker, our purpose is to help families share

memorable meals and moments. Key to achieving our

purpose is our strategic vision of owning and marketing

(cid:52) Our talented and dedicated employees, who

#1 food brands in North America. The Smucker family

continue to focus on our core business, while

of brands is a trusted part of everyday meals, casual

embracing change as we grow;

get-togethers, and special occasions—all of which foster

(cid:52) A clear strategy of owning and marketing leading

food brands in North America; and

(cid:52) Our long-term commitment to investing in our

brands, developing new products, and acquiring

strategic businesses.

family connections and lasting memories.

Bringing families together is best accomplished by

employees who feel like family themselves. At Smucker,

we maintain a unique family feeling by genuinely living

our Basic Beliefs: Quality, People, Ethics, Growth, and

Independence.

In ﬁscal 2008, we repurchased 2.9 million shares, total-

Our purpose is what brings Smucker employees to

ing almost $150 million. This action demonstrates our

work every day. Our strategy is what guides our organi-

conﬁdence in our Company and is an effective means

zation in a common direction and is the framework for

for continuing to create shareholder value.

serving our consumers, customers, employees, suppliers,

communities, and shareholders.

~ 2 ~

~ Serving Our Constituents ~

We view our suppliers and business partners as extended

Consumers Meeting consumers’ needs is the heart of

family, and we treat them accordingly. Whether it is the

all we do. We always seek to understand what consumers

brokers who stock the retail shelves, the drivers who

want and to meet their needs with quality products that

deliver our products, the farmers who supply our raw

are “good and good for you,” “easy for you,” and that

materials, or the people who create our advertising—

“make you smile.” That commitment, along with respon-

each supplier or partner plays a key role that we

sible marketing, helps establish a bond between our

appreciate and acknowledge.

brands and consumers. Consumer trust, which takes

years to build, is something we never take for granted.

Communities We take seriously our responsibility to

be good environmental stewards. Sustainability, a term

Customers We strive to satisfy our customers by

now popular throughout the industry, describes what

delivering outstanding service, offering fair prices, and

we have been doing for many years. We realize that sus-

creating jointly developed business plans that promise

tainability begins at home—in the 20 North American

mutual beneﬁts. Our emphasis on ethics, fairness, and

quality is vital to long-term, productive customer

communities in which we have ofﬁces and manufacturing

plants—and that our local efforts fan out in concentric

relationships.

A recent industry initiative called New Ways of Work-

ing Together aims to eliminate business disruptions,

so that—as a team—retailers and manufacturers can

focus more closely on satisfying consumers and grow-

ing business. While this is not a new objective for us,

we have taken a leadership position in this initiative,

because we believe it will beneﬁt everyone: retailers,

manufacturers, and ultimately, consumers.

circles that ultimately impact the world.

Shareholders In the ﬁnal analysis, we are conﬁdent

that if we do a good job of serving our consumers,

customers, employees, suppliers, and communities, we

will ultimately deliver good returns for our shareholders.

It is clear to us that to achieve lasting, measurable

results, we must serve each of our constituents with

sincerity, trust, creativity, and unwavering dedication to

Employees Smucker employees are quality people,

doing what is right. This is a longstanding commitment

each of whom brings important talents, perspectives,

on the part of thousands of thoughtful, capable people,

and skills to our Company. We believe that every

working with shared purpose in an atmosphere of

employee makes a difference.

collaboration—people who strive every day to help

Suppliers Achieving our strategy depends on dedicated

families create memorable meals and moments together.

suppliers and business partners who share our willingness

All of us at The J. M. Smucker Company thank you for

to go the extra mile in the name of quality and service.

your continued support and dedication.

Sincerely,

Tim Smucker Richard Smucker

~ 3 ~

(cid:55)(cid:55)(cid:55)
Whatever the occasion, we are
honored that our brands are included
in family meals every day. Our tradi-
tional favorites are joined by newly
added brands, helping us deliver on
our promise to offer products that are
good and good for you, convenient,
and that make you smile.
(cid:55)(cid:55)(cid:55)

Business Overview
(cid:55)(cid:55)(cid:55)

~ U.S. Retail Segment ~

This past year, we reintroduced “The Boys” television

Sales and proﬁts within our U.S. Retail segment grew
by 21 percent and four percent, respectively, in ﬁscal

2008. Contributing to this growth were our core busi-

ness, new products, and the ﬁrst full year of sales and

proﬁts from the Eagle Brand acquisition. We are espe-

cially pleased with the performance of our U.S. Retail

segment, given another year of record-high commodity

costs that impacted all of our businesses.

During uncertain economic times, the Smucker

family of brands steadfastly provides consumers with

highly proven, deeply trusted products. Smucker’s, Jif,

Pillsbury, Crisco, Eagle Brand, Hungry Jack, Martha

White, and White Lily are well-loved parts of the

everyday meals and special occasions that bring

families together.

We are passionate about serving our consumers and

customers, and we always seek better ways to meet

their needs. In January 2008, we appointed Advantage

Sales and Marketing as our single national broker for all

of our grocery business within the U.S. Retail segment.

This decision represents a major milestone in our go-to-

market strategy. It will help us further improve customer

service, realize a number of near-term efﬁciencies, and

position our Company for future growth.

Fruit Spreads & Peanut Butter Our Smucker’s and Jif

brands delivered record market-share growth in ﬁscal

2008. Consumers continue to reach for our many fruit

spread varieties and peanut butter products, enjoying

each on its own or

pairing them to create

the “Great American

PB&J.”

Our Smucker’s

Organic fruit

spreads and

Smucker’s Sugar

advertising campaign, featuring a young Tim and Richard

Smucker. Through a series of three new television

spots, consumers are reminded of the heritage of the

Smucker’s brand and the quality ingredients we select

for every jar of fruit spread.

Peanut butter, our largest category, sustained impres-

sive growth in ﬁscal 2008, as increasing numbers of

consumers include this “good for you” and affordable

protein in their pantries. We produced record volumes

of Jif peanut butter to satisfy growing consumer

demand and to help meet customers’ needs as

a result of a competitor’s supply disruption.

In ﬁscal 2008, we extended the Jif

brand to the snack nuts category.

Just as “choosy moms” and “choosy

dads” have

trusted Jif

peanut butter

for genera-

tions, consum-

ers who crave

the ﬁnest-quality peanuts, cashews, and mixed nuts

are drawn to Jif snack nuts. New television advertising

reminds snack nut consumers, “We have to be choosy.

We’re Jif.”

Uncrustables Sandwiches Smucker’s Uncrustables

sandwiches, which offer a convenient and fun way

to enjoy a peanut butter and jelly sandwich, continue

to bring smiles to the faces of consumers. Demand

remains strong, and the introduction this past year of

white whole wheat Smucker’s Uncrustables sandwiches

in strawberry and grape varieties affords consumers

another better-for-you alternative and broadens our

presence in the frozen aisle.

Free fruit spreads sweetened with Splenda® continue to

perform well and now include even more varieties for

consumers to choose from.

~ 6 ~

Ice Cream Toppings Nothing says “celebration” like

Eagle Brand dessert

Smucker’s ice cream toppings. The introduction in

ﬁscal 2008 of Smucker’s Triple Berry topping and

Smucker’s Sugar Free Chocolate and Sugar Free

Caramel Sundae

Syrups heightens

the fun and

further expands

our better-for-

you alternatives

in this category.

baking mixes, and

Magnolia sweetened

condensed milk

further broad-

ened our cross-

promotional

activities during

the busy fall and spring holiday baking periods.

Consumers often look for something exceptional to

serve to family and friends on special occasions. Our

newly introduced, simple-to-prepare Pillsbury Mint

Chocolate Brownies, Pillsbury Pumpkin Caramel Delight,

Potatoes, Pancakes, and Syrup This past year, we

and Eagle Brand Magic Cookie Bar and Decadent

extended the reach of our Hungry Jack brand by

Fudge dessert kits answer this desire with impossible-

continuing to focus on new products and expanding

to-resist convenience.

our product distribution and print and radio advertis-

Consumers continue to respond positively to our

ing. We began testing several products that will offer

better-for-you baking alternatives, including Pillsbury

consumers even greater convenience. Included are

Reduced Sugar cake mixes and frostings, Pillsbury

Hungry Jack refrigerated potatoes, Hungry Jack frozen

Reduced Sugar brownies, and Martha White whole-

biscuits, and Hungry Jack Snack’n Wafﬂes ready-to-eat,

grain mufﬁns and sweet yellow cornbread.

pre-sweetened wafﬂes.

Our Crisco olive oil products, which offer consumers

a trusted brand in the “good for you” olive oil category,

are a growing success. Thanks to ongoing momentum

and expanded distribution, these products will be

offered in the western United States in ﬁscal 2009.

Our introduction of Crisco Puritan canola oil with

Omega-3 DHA means consumers now have another

smart choice for adding nutritional value to their meals.

Unprecedented soybean, wheat, and milk commodity

Baking and Oils We continued to strengthen and expand

costs signiﬁcantly challenged our

our U.S. baking aisle leadership position in ﬁscal 2008.

Baking and Oils business in

Through our portfolio of baking brands, including

ﬁscal 2008. It is expected

Pillsbury, Eagle Brand, PET, Martha White, and White

that these costs will

Lily, we offer consumers products that meet nearly all

continue to rise in the

of their everyday and special-occasion baking needs.

foreseeable future,

We enjoyed the ﬁrst full year of sales from

brands that joined our portfolio as part of the Eagle

acquisition. The addition of Eagle Brand sweetened

condensed milk, Eagle Brand evaporated milk,

making the always-vital

need for cost and price

management more

critical than ever.

~ 7 ~

(cid:55)(cid:55)(cid:55)
We strive to help families share
memorable meals and moments.
Great-tasting products from
trusted brands make it easier for
families to spend time together.
(cid:55)(cid:55)(cid:55)

~ Special Markets Segment ~

Our Special Markets segment saw another record
year. Compared to ﬁscal 2007, sales in this segment,

excluding divested businesses, were up 25 percent.

Proﬁts increased 26 percent.

Canada Excluding divested businesses, our Canadian
business experienced a 35 percent growth in sales in

ﬁscal 2008. This signiﬁcant increase was driven largely

by a full year of Eagle Brand sales and our acquisition

of Carnation, the #1 evaporated milk in Canada. Late

in the ﬁscal year, we also acquired Europe’s Best frozen

fruits and vegetables.

Carnation and Europe’s Best join our already strong

portfolio of #1 brands in Canada, including Smucker’s,

Robin Hood, and Bick’s. The Carnation acquisition

further strengthens our leadership position in the

baking aisle, and Europe’s Best adds premium frozen

fruits and vegetables to our product portfolio.

Adding to a recent string of award-winning innovations

in the baking category, we introduced Robin Hood frozen

mufﬁns this past year. Together, Europe’s Best frozen

fruits and vegetables and Robin Hood frozen mufﬁns

enhance our presence in Canada’s retail freezer aisles.

Foodservice Our Foodservice and Schools business
grew by 27 percent in ﬁscal 2008. Key contributors

were our core portion control business, Smucker’s

Uncrustables sandwiches, and recent acquisitions

of Eagle Brand and the Snack’n Wafﬂes brand.

Beverage Our Beverage group continues to meet
consumer desire for products that are “good and

good for you” and made in a sustainable manner.

This business, driven by our R.W. Knudsen Family

and Santa Cruz Organic brands, grew in sales by nine

percent in ﬁscal 2008. We introduced new products,

including R.W. Knudsen Family Organic Pomegranate

Nectar, R.W. Knudsen Family Organic Black Currant

Nectar, and Sensible Sippers—juice boxes that provide

parents with a convenient alternative for offering

children organic juice, blended with just the right

amount of water, while at home or on the go.

Our Beverage business is an industry sustainability

leader, receiving the California Waste Reductions
Award for the eighth consecutive year.

International Consumers Consumers in more than
50 countries beyond the United States and Canada con-

tinue to enjoy our brands and products. The International

Snack’n Wafﬂes ready-to-eat, pre-sweetened wafﬂes

group remains focused on Mexico and the Caribbean,

offer consumers a convenient, handheld wafﬂe to

with business growing in these markets by six percent

enjoy while away from home.

and 66 percent, respectively, in ﬁscal 2008.

(cid:55)(cid:55)(cid:55)

We are pleased to welcome these additions to the
Smucker family of brands: Snack’n Wafﬂes ready-

to-eat, pre-sweetened wafﬂes; King Kelly California

Orange Marmalade; and,

in Canada, Carnation

evaporated milk and

Europe’s Best frozen

fruits and vegetables.

~ 10 ~

1/2

1/8

1/8
7

1/2
4
1

1/3
3
1
1/3

3/4
1
1
1/2

Ingredients

Ingredients
1/2

Ingredients
1

Prep time: 10 minutes
Ready in: 10 minutes
Makes 4 wraps

Sweet ‘n’ Hot
Southwestern Dip

jar Dickinson’s® Sweet ‘n’ Hot
Pepper & Onion Relish

A Touch of Orange
Apple Pie

Brownie Bites with
Caramel Fluff

Thai Peanut Butter
Chicken Wraps

Prep time: 5 minutes
Ready in: 2 hours
Makes approximately 2 cups

Prep time: 25 minutes
Cook time: 45 minutes
Ready in: 2 hours
Makes 8 servings

1-2 tablespoons Dickinson’s® Lime Curd
1/2

Prep time: 20 minutes
Bake time: 30 minutes
Ready in: 1 hour 30 minutes
Makes 12 servings

*Pad thai sauce is often located in
the Asian foods section of many
grocery stores.

cup mayonnaise
cup sour cream
teaspoon chili powder (optional)
Corn chips or tortilla chips

(8 oz.) package cream cheese, softened
jar Dickinson’s® Sweet ‘n’ Hot
Pepper & Onion Relish
Assorted crackers

VARIATION
Zesty Pepper ‘n’ Onion Dip
Ingredients
1
1

cup Jif ® Creamy Peanut Butter
or Jif ® Extra Crunchy Peanut Butter
cup pad thai sauce*
cup chopped green onions
burrito size tortillas
(6 oz.) package fully cooked, grilled
chicken breast strips, cut into
bite-size pieces or 1 1/3 cups cooked
chicken
cups shredded lettuce

(9-inch) double Classic Crisco® Pie Crust
(recipe available at Crisco.com)
cup sugar
tablespoon cornstarch
teaspoon ground cinnamon
teaspoon grated orange peel
teaspoon salt
teaspoon ground nutmeg
cups peeled, sliced Granny Smith apples,
about 2 pounds or 7 medium
tablespoons butter or margarine
Milk
Sugar

Crisco® Original No-Stick Cooking Spray
(12.35 oz.) package Pillsbury®
Reduced Sugar Chocolate Fudge
Brownie Mix
cup Crisco® Pure Vegetable Oil
tablespoons water
large egg
cup Smucker’s® Sugar Free
Caramel Topping
cups sugar free frozen whipped
topping, thawed
teaspoons mini semi-sweet
chocolate chips
Additional Smucker’s® Sugar Free
Caramel Topping (optional)

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cup lowfat vanilla yogurt
cup Smucker’s® Creamy Natural
Peanut Butter
cup Smucker’s® Cherry Sugar Free
Preserves or any Smucker’s®
Sugar Free or Low SugarTM flavor
of your choice
cups fresh fruit such as pineapple chunks,
sliced kiwi, melon balls, grapes,
assorted whole berries

2
1/4
1/8
1/2 pound fresh sea scallops, 10 to 20 count size
1/2 pound fresh tail-on shrimp, 21 to 25 count size
1
Dressing 1/4
1/2

cups Hungry Jack ® Buttermilk
Complete Pancake & Waffle Mix
cup finely chopped pecans or walnuts
cup Smucker’s® Sweet Orange
Marmalade
1 1/4 cups water
1/4
1

(6 oz.) package sliced portobello mushrooms
cup balsamic vinegar
teaspoon Dijon mustard
Salt and pepper to taste
tablespoon chopped fresh herbs (basil,
oregano, thyme)
cup Crisco® Pure Olive Oil
Crisco® Original No-Stick Cooking Spray
cups fresh mixed baby greens
cup baby grape tomatoes

1/4 cup hot water
(14 oz.) can Eagle Brand® Sweetened
Condensed Milk
large eggs, well beaten
teaspoon vanilla extract
cup chopped walnuts
Whipped cream or frozen whipped
topping, thawed (optional)

(9-inch) single Classic Crisco® Pie Crust
(recipe available at Crisco.com)
(1 oz.) squares unsweetened chocolate
cup butter or margarine

12
1
1 medium cucumber, halved lengthwise, sliced
1/2

2
1/4
1 1/2 tablespoons Kava® Coffee, dissolved in

each red and yellow bell peppers,
cut in julienne strips
cup shredded carrots
Freshly grated Parmesan cheese (optional)

Juice of 1 lime
tablespoons Crisco® Pure Olive Oil
teaspoon salt
teaspoon cayenne pepper

Orange Pecan
Waffles with Sweet
Orange Syrup

Fruit Kabobs with
Creamy Cherry
Peanut Butter Dip

Prep time: 30 minutes
Cook time: 45 minutes
Ready in: 1 hour 45 minutes
Makes 8 servings

Whipped cream or frozen whipped
topping, thawed

Prep time: 40 minutes
Cook time: 15 minutes
Ready in: 1 hour
Makes 6 servings

Prep time: 8 minutes
Cook time: 10 minutes
Ready in: 30 minutes
Makes 8 waffles

cup Crisco® Pure Vegetable Oil
large egg

Marmalade
teaspoon ground cinnamon

Grilled Seafood
Salad

Prep time: 15 minutes
Ready in: 15 minutes
Makes 8 servings

Ingredients
1
1/4

1 1/4 cups Smucker’s® Sweet Orange

Mocha Walnut Pie

Ingredients
1

Ingredients

Waffles 2

Orange
Syrup

Marinade

2
1
1

Salad

1/2

1/4

1/3

1/2

1/4

crisco.com

©/® The J. M. Smucker Company

dickinsonsfamily.com

REPEAT with remaining tortillas.

COVER and chill at least 1 hour. Serve with crackers.

TIP: This is a great sandwich and hamburger spread too!

COVER and chill 2 hours. Serve with corn chips or tortilla chips.

©/® The J. M. Smucker Company
Pillsbury is a trademark of The Pillsbury Company, LLC used
under license.

COMBINE brownie mix, oil, water and egg in medium bowl.
Stir 50 strokes with spoon. Spread evenly in prepared pan.

BAKE 30 to 32 minutes. Cool completely. Cut into cubes. Place half
of cubes in 1 1/2-quart serving dish.

PLACE tortilla on microwave-safe plate. Spread 1/4 peanut butter
mixture on tortilla to about 1/2-inch of edge. Microwave on HIGH
(100% power) 20 seconds.

TIP: For an easier option, unwrap the block of cream cheese and place
on a decorative plate. Pour relish over top. Serve with a small knife
and crackers.

COMBINE sugar, cornstarch, cinnamon, orange peel, salt and nutmeg in
small bowl. Place apples in unbaked pie crust. Sprinkle sugar mixture
over apples. Dot with butter. Moisten pastry edge with water.

ROLL out dough for top crust. Place onto filled pie. Trim 1/2-inch beyond
edge. Fold top crust under bottom crust edge to seal. Crimp and flute
edges. Cut slits in top crust or perforate with fork to allow steam to escape.

Sweet ‘n’ Hot Southwestern Dip (Pictured on page 4 )
Directions
STIR together all ingredients in small serving bowl.

LAYER with 1/4 chicken; top with 1/2 cup lettuce. Wrap burrito style:
Fold one edge of tortilla up about 1 inch over filling; fold right and
left sides over folded edge; roll up, ending with loose edge on bottom.
Cut in half diagonally.

BAKE 35 minutes. Remove pie from oven. Brush with milk. Sprinkle with
sugar. Cover edge of pie with foil, if necessary, to prevent overbrowning.
Bake an additional 10 minutes or until filling in center is bubbly and
crust is golden brown. Cool completely on wire rack.

STIR caramel topping in small bowl until smooth. Whisk in whipped
topping until blended. Spread half on top of brownie cubes in dish.
Make another layer of remaining brownie cubes and topping.
Sprinkle with mini chocolate chips. Drizzle with additional caramel
topping, if desired.

Brownie Biteswith Caramel Fluff (Pictured on page 5 )
Directions
HEAT oven to 350°F. Coat an 8 x 8-inch baking pan lightly with
no-stick cooking spray.

Thai Peanut Butter Chicken Wraps (Pictured on page 5 )
Directions
STIR together peanut butter, pad thai sauce and green onions in
medium bowl.

Zesty Pepper ‘n’ Onion Dip
Directions
BEAT cream cheese in medium bowl until smooth. Gradually mix
in relish. Spoon into small serving bowl.

A Touch of Orange Apple Pie (Pictured on page 4 )
Directions
PREPARE recipe for double crust pie. Roll out dough for bottom crust;
place in 9-inch pie plate. Press to fit without stretching dough. Trim even
with pie plate. Heat oven to 400ºF.

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Mocha Walnut Pie (Pictured on page 8 )
Directions
PREPARE recipe for single crust pie. Roll out dough; place in 9-inch
pie plate. Press to fit without stretching dough. Trim edge of dough,
leaving a 3/4-inch overhang. Fold edge under; flute dough as desired.
Heat oven to 350ºF.

Grilled Seafood Salad (Pictured on page 8 )
Directions
WHISK together lime juice, oil, salt and cayenne pepper in shallow dish.
Add scallops, shrimp and sliced mushrooms; turn to coat. Cover and
refrigerate 30 minutes.

SPRAY grill pan or sauté pan with no-stick cooking spray; heat to
medium high heat. Remove seafood and mushrooms from marinade;
discard marinade. Cook shrimp and scallops 2 to 3 minutes per side or
until seafood is cooked through and has browned highlights. Remove
from pan; set aside. Add mushrooms to pan; grill 4 to 5 minutes, turn-
ing once. Remove from pan.

Fruit Kabobs with Creamy Cherry Peanut Butter Dip (Pictured on page 9 )
Directions
WHISK together yogurt, peanut butter and preserves in small bowl
until thoroughly mixed. Spoon into small serving dish.

Orange Pecan Waffles with Sweet Orange Syrup (Pictured on page 8 )
Directions
HEAT waffle iron according to manufacturer’s instructions.

COMBINE pancake mix, nuts, 1/4 cup marmalade, water, oil and egg in
medium bowl. Stir until large lumps disappear. Bake in hot waffle iron
until steaming stops and waffle is golden brown.

BAKE 40 to 45 minutes or until center is set. Cool slightly. Serve warm
or chilled, topped with whipped cream or whipped topping,
if desired.

MELT chocolate and butter in medium saucepan over low heat. Stir in
dissolved coffee, sweetened condensed milk, eggs and vanilla; mix
well. Pour into pie crust. Top with walnuts.

ARRANGE salad ingredients on medium platter. Top with grilled seafood
and mushrooms. Drizzle dressing as desired over salad. Top with
Parmesan cheese, if desired.

COMBINE vinegar, mustard, salt, pepper and herbs in blender or food
processor. Process on high speed until mixture is well blended. With the
motor running, carefully pour in olive oil in a steady stream. Set aside.

PLACE 1 1/4 cups marmalade in microwave-safe bowl. Microwave on
HIGH (100% power) 1 minute. Add cinnamon; stir.

THREAD pieces of fruit onto wooden skewers. Arrange skewers and
dip on serving platter.

SERVE waffles with orange syrup and whipped cream or whipped
topping.

crisco.com
pillsburybaking.com
smuckers.com

crisco.com
hungryjack.com
smuckers.com

crisco.com
eaglebrand.com
kavacoffee.com

©/TM/® The J. M. Smucker Company

©/® The J. M. Smucker Company

smuckers.com

crisco.com

jif.com

Financial Review
✷✷✷

Five-Year Summary of Selected Financial Data

Summary of Quarterly Results of Operations

Stock Price Data

Comparison of Five-Year Cumulative
Total Shareholder Return

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

Report of Management on Responsibility
for Financial Reporting

Consolidated Financial Statements

Notes to Consolidated Financial Statements

Directors, Officers, and General Managers

Properties

Corporate and Shareholder Information

~ 13 ~

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, 2008. 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.

Year Ended April 30,

(Dollars in thousands, except per share data)

2008

2007

2006

2005

2004

Statements of Income:

Net sales
Income from continuing operations
Discontinued operations

$2,524,774
$ 170,379
—

$2,148,017
$ 157,219
—

$2,154,726
$ 143,354
—

$2,043,877
$ 130,460
(1,387)

$1,369,556
$ 111,298
52

Net income

$ 170,379

$ 157,219

$ 143,354

$ 129,073

$ 111,350

Financial Position:

Total assets
Cash and cash equivalents
Long-term debt
Shareholders’ equity

Other Data:

Capital expenditures
Common shares repurchased
Weighted-average shares
Weighted-average shares – assuming dilution
Earnings per common share:

Income from continuing operations
Discontinued operations

Net income

Income from continuing operations –

assuming dilution

Discontinued operations – assuming dilution

Net income – assuming dilution

Dividends declared per common share

$3,129,881
184,175
789,684
1,799,853

$2,693,823
200,119
392,643
1,795,657

$2,649,744
71,956
428,602
1,728,059

$2,635,894
58,085
431,560
1,690,800

$1,684,125
104,551
135,000
1,210,693

76,430
2,927,600
56,226,206
56,720,645

$
57,002
1,067,400
56,432,839
57,056,421

63,580
1,892,100
57,863,270
58,425,361

87,576
368,678
57,086,734
57,748,780

97,721
—
49,816,926
50,395,747

3.03
—

3.03

3.00
—

3.00

1.22

2.79
—

2.79

2.76
—

2.76

2.48
—

2.48

2.45
—

2.45

1.14

1.09

2.29
(0.03)

2.26

2.26
(0.02)

2.24

1.02

2.23
0.01

2.24

2.21
—

2.21

0.94

~ 14 ~

Summary of Quarterly Results of Operations
✷✷✷

The following is a summary of unaudited quarterly results of operations for the years ended April 30, 2008 and 2007.

(Dollars in thousands, except per share data)

2008

2007

Quarter Ended

Net Sales

Gross Profit

Net
Income

Earnings per
Common Share

Earnings per
Common Share –
Assuming Dilution

July 31, 2007
October 31, 2007
January 31, 2008
April 30, 2008

July 31, 2006
October 31, 2006
January 31, 2007
April 30, 2007

$561,513
707,890
665,373
589,998

$526,509
604,955
523,081
493,472

$185,984
218,488
195,453
182,239

$157,994
191,191
172,967
179,903

$40,761
50,166
42,401
37,051

$28,724
45,569
40,427
42,499

$0.72
0.88
0.75
0.68

$0.51
0.80
0.72
0.76

$0.71
0.87
0.75
0.67

$0.50
0.80
0.71
0.75

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 267,380 shareholders
as of June 17, 2008, of which 78,959 were registered holders of common shares.

2008

2007

Quarter Ended

July 31, 2007
October 31, 2007
January 31, 2008
April 30, 2008

July 31, 2006
October 31, 2006
January 31, 2007
April 30, 2007

High

$64.32
58.09
53.70
52.59

$47.25
49.14
49.98
57.43

Low

Dividends

$55.60
50.79
42.75
46.84

$39.11
43.00
45.00
46.97

$0.30
0.30
0.30
0.32

$0.28
0.28
0.28
0.30

~ 15 ~

Comparison of Five-Year Cumulative Total Shareholder Return
✷✷✷

Among The J. M. Smucker Company, the S&P 500 Index, and the S&P Packaged Foods & Meats Index

■

•
◆

■
•
◆

◆
•
■

◆
■
•

◆
•
■

$180

$160

$140

$120

$100

■

$80

$60

$40

$20

4/03

4/04

4/05

4/06

4/07

4/08

■
◆
•

The J. M. Smucker Company

S&P 500

S&P Packaged Foods & Meats

The J. M. Smucker Company
S&P 500
S&P Packaged Foods & Meats

April 30,

2003

2004

2005

2006

2007

2008

$100.00
100.00
100.00

$147.38
122.88
129.21

$142.81
130.66
138.28

$115.66
150.81
133.81

$168.57
173.79
159.84

$154.05
165.66
156.94

The above graph compares the cumulative total shareholder return for the five years ended April 30, 2008, for the Company’s
common shares, the S&P 500, and the S&P Packaged Foods and Meats index. These figures assume all dividends are reinvested
when received and are based on $100 invested in the Company’s common shares and the referenced index funds on April 30, 2003.

www.researchdatagroup.com/S&P.htm

~ 16 ~

Management’s Discussion and Analysis
✷✷✷

Executive Summary
✷✷✷

~ Summary of 2008 ~

The J. M. Smucker Company (the “Company”), headquartered

impacts of Eagle and other recent acquisitions, pricing and

in Orrville, Ohio, is the leading marketer and manufacturer of

volume gains, and favorable foreign currency exchange rates

fruit spreads, peanut butter, shortening and oils, ice cream top-

were realized. Company net sales increased 18 percent to

pings, sweetened condensed milk, and health and natural foods

$2,524.8 million in 2008 from $2,148.0 million in 2007 while

The Company realized strong sales growth in 2008 as the

beverages in North America.

The Company’s strategy is to own and market leading food

brands found in the center of the store and sold throughout

North America. Its family of brands includes Smucker’s, Jif,

Crisco, Pillsbury, Eagle Brand, R.W. Knudsen Family, Hungry

Jack, White Lily, and Martha White in the United States, along

with Robin Hood, Five Roses, Carnation, Europe’s Best, and

Bick’s in Canada. In addition to these brands, the Company

markets products under numerous other brands,

including

net income increased eight percent to $170.4 million in 2008

from $157.2 million in 2007. Net income per common share –

assuming dilution was $3.00 in 2008, an increase of nine per-

cent from $2.76 in 2007, resulting from the increase in net

income combined with a decrease in common shares outstand-

ing during the year.

~ Net Sales ~

Year Ended April 30,

Dickinson’s, Laura Scudder’s, Adams, Double Fruit (Canada),

(Dollars in thousands)

2008

2007

2006

and Santa Cruz Organic. The Company is widely known and

Net sales:

trusted for quality food products.

The Company distributes its products through grocery and

other retail outlets, foodservice establishments, schools, spe-

cialty and gourmet shops, health and natural foods stores, and

consumer direct vehicles such as the Internet and a showcase

store in Orrville, Ohio, and markets a wide variety of other

specialty products throughout North America and in many for-

eign countries.

U.S. retail market

$1,874,547

$1,547,064

$1,484,873

Special markets

650,227

600,953

669,853

Total net sales

$2,524,774

$2,148,017

$2,154,726

2008 Compared to 2007. Net sales increased $376.8 million, or

18 percent, in 2008 from 2007. Net sales increased 22 percent

over the same period, excluding the divested Canadian non-

branded, grain-based foodservice and industrial businesses

(“divested Canadian businesses”) sold in September 2006.

Since 1998, the Company has appeared on FORTUNE maga-

The acquired Eagle businesses contributed $236.2 million in

zine’s annual listing of the “100 Best Companies to Work For,”

net sales in 2008, accounting for approximately one-half of the

in the United States, ranking number one in 2004.

increase in net sales excluding the divested Canadian busi-

Results of Operations
✷✷✷

On May 1, 2007, the Company acquired Eagle Family Foods

Holdings, Inc. (“Eagle”) in a transaction valued at approxi-

nesses, while pricing contributed almost one-third of the

increase. Also contributing to net sales growth in 2008 were

gains in the Smucker’s, Jif, Crisco, and Hungry Jack brands, the

acquired Carnation canned milk business in Canada, and the

impact of favorable foreign exchange rates.

mately $248 million. The transaction has been accounted for as

In the U.S. retail market segment, comprised of the Company’s

a purchase business combination and the results of Eagle are

consumer and consumer oils and baking strategic business

included in the Company’s consolidated financial statements

areas, net sales were $1,874.5 million in 2008, up 21 percent

from the date of acquisition.

compared to $1,547.1 million in 2007. Net sales in the con-

~ 17 ~

sumer strategic business area increased nine percent led by

cent over the same period, excluding the divested Canadian

strong sales in peanut butter, fruit spreads, and Smucker’s

businesses and the U.S.

industrial

ingredient business

Uncrustables sandwiches. Excluding the contribution of $198.9

(“divested businesses”). This net sales growth was led prima-

million from the acquired Eagle business in 2008, net sales in

rily by volume gains in the Jif and Smucker’s brands, strong per-

the oils and baking strategic business area increased eight per-

formance across the businesses in the special markets

cent as sales gains were realized in baking mixes and oils.

segment, and the contribution of approximately $33.4 million

The special markets segment is comprised of the foodservice,

beverage, Canada, and international strategic business areas.

from the White Lily and Five Roses brands acquired during 2007.

Price increases were also taken on most brands during the year.

Net sales in this segment were $650.2 million in 2008, an

In the U.S. retail market segment net sales were $1,547.1 mil-

increase of eight percent compared to $601.0 million in 2007.

lion in 2007, up $62.2 million, or approximately four percent,

Excluding the divested Canadian businesses, net sales in the

over 2006. Net sales in the consumer strategic business area

special markets segment increased 24 percent in 2008 com-

were up seven percent for the year. The consumer increase

pared to 2007. Canada contributed significantly to the increase

was led by strong sales of Jif peanut butter, particularly in the

in special markets segment net sales due to the impacts of the

fourth quarter of the fiscal year resulting from increased

acquired Eagle and Carnation canned milk businesses and

demand for the product upon the recall of a competitor’s prod-

favorable foreign exchange rates. The acquisition of Europe’s

ucts. In addition, growth in natural peanut butter, fruit spreads,

Best brand of premium, all natural, frozen fruit and vegetables

toppings, and a 29 percent increase in Smucker’s Uncrustables

during the fourth quarter of 2008 also contributed slightly to

sandwiches during the year also contributed. In the consumer

the Canada sales increase. The foodservice strategic business

oils and baking strategic business area, sales were flat com-

area net sales increased 27 percent in 2008 compared to 2007,

pared to the prior year as sales gains in retail oils, frosting,

or 14 percent, excluding the contribution of $21.1 million of

flour, and the contribution of $14.8 million from the White Lily

Eagle net sales. Contributing to the foodservice improvement

brand acquired in October 2006 offset declines in baking mixes

in 2008 was continued growth of Smucker’s Uncrustables sand-

and a $14.7 million decrease in sales of industrial oils.

wiches, which realized a 15 percent increase, and a 12 percent

increase in traditional portion control products, primarily

peanut butter. Net sales in the beverage strategic business

area increased nine percent in 2008 compared to 2007 result-

ing from increases in R.W. Knudsen Family, Santa Cruz

Organic, and nonbranded products of seven, 14, and nine per-

cent, respectively. Net sales in the international strategic busi-

ness area increased two percent in 2008 despite the divestiture

of the Scotland business during the first quarter of 2008, driven

by a 19 percent increase in export sales and a six percent

increase in net sales in Mexico.

Net sales in the special markets segment were $601.0 million

in 2007, a decrease of 10 percent, compared to 2006.

Excluding divested businesses, special market net sales

increased nine percent for the same period. All strategic busi-

ness areas in special markets contributed to the increase.

Foodservice net sales increased 13 percent, due to a 10 per-

cent increase in sales of traditional portion control products, as

well as a 20 percent increase in Smucker’s Uncrustables sand-

wiches in the schools market. Beverage net sales increased 11

percent in 2007 compared to 2006, as sales of R. W. Knudsen

Family, Santa Cruz Organic, and nonbranded products

2007 Compared to 2006. Net sales in 2007 decreased $6.7 mil-

increased nine, 21, and 19 percent, respectively. Net sales in

lion, or less than one percent, from 2006 reflecting the impact

Canada increased five percent driven by the contribution of

of divestitures. Net sales increased $107.5 million, or five per-

approximately $18.6 million from the acquisition of the

~ 18 ~

Five Roses flour brand during the year and the impact of favor-

raw material cost increases of approximately $150 million com-

able exchange rates. In the international strategic business

pared to 2007, was not sufficient to maintain margins.

area, net sales increased 14 percent primarily due to continued

growth in export markets.

~ Operating Income ~

The following table presents components of operating income

as a percentage of net sales.

Year Ended April 30,

2008

2007

2006

31.0%

32.7%

32.2%

2.2%
7.5
3.4
6.3

2.4%
7.6
3.5
7.1

2.6%
7.4
3.6
6.7

Gross profit
Selling, distribution,

and administrative expenses:
Advertising
Marketing and selling
Distribution
General and administrative

Total selling, distribution,

and administrative expenses

19.4%

20.6%

20.3%

0.4%

0.1%

1.3%

Restructuring and merger
and integration costs
Other operating (income)

expense – net

Operating income

Selling, distribution, and administrative (“SD&A”) expenses

increased 11 percent from 2007 to $490.7 million in 2008,

resulting from increased marketing spending and additional

costs related to the acquired Eagle businesses. However, cor-

porate overhead expenses increased at a lesser rate than net

sales resulting in SD&A as a percent of net sales improving

from 20.6 percent in 2007 to 19.4 percent in 2008. Higher

restructuring and merger and integration costs in 2008 com-

pared to 2007 also negatively impacted operating income.

Other operating income – net of $3.9 million was recognized in

2008 resulting from a net insurance settlement related to

storm damage at a third-party distribution and warehouse facil-

ity in Memphis, Tennessee. Other operating expense – net of

$2.7 million was recognized in 2007 consisting of losses on dis-

posal of assets.

2007 Compared to 2006. Operating income increased $22.2 mil-

lion in 2007, or 10 percent, compared to 2006, and increased

from 10.8 percent of net sales in 2006 to 11.8 percent in 2007.

(0.1%)

0.2%

(0.2%)

The increase in operating income in 2007 was primarily due to

11.3%

11.8%

10.8%

improvements in gross profit and a decrease in merger and

integration costs. Gross profit increased from $692.9 million,

2008 Compared to 2007. Operating income increased 12 percent

or 32.2 percent of net sales in 2006, to $702.1 million, or

in 2008 to $284.2 million, compared to 2007 while decreasing

32.7 percent of net sales in 2007. The increase in gross profit

as a percentage of net sales from 11.8 percent in 2007 to 11.3

occurred, despite a record high commodity price environment,

percent in 2008. The impact of the lower margin Eagle busi-

due to the divestiture of the lower margin Canadian non-

nesses, record costs for soybean oil and wheat, and the mix of

branded businesses during the second quarter of 2007 and

products sold during the year resulted in a decline in gross

favorable product mix, particularly in the fourth quarter of

profit as a percentage of net sales from 32.7 percent in 2007 to

2007. These favorable contributions to gross profit were offset

31.0 percent in 2008. The margin on the Eagle businesses was

in part by an increase in restructuring related impairment

impacted by an increase in milk costs and an unfavorable mix

charges in 2007 associated with the Canadian divestiture.

of nonbranded sales during the year and accounted for approx-

Although the Company implemented pricing actions to miti-

imately one-half of the decrease in gross profit as a percentage

gate commodity cost increases totaling approximately $30 mil-

of net sales. The impact of price increases taken during the

lion during the year, these cost increases were not fully offset

year across all businesses, while essentially offsetting higher

for the year.

~ 19 ~

SD&A expenses increased $4.4 million in 2007, or approximately

to 2007 was mostly offset by a decrease in the effective tax rate

one percent, from 2006, and increased from 20.3 percent of net

from 34.8 percent in 2007 to 33.1 percent in 2008. The lower

sales in 2006 to 20.6 percent in 2007 due to costs associated with

effective tax rate for 2008 was primarily attributable to a lower

the Company’s transition to restricted stock-based compensation

state tax rate resulting from the favorable resolution of uncer-

programs and the related impact of adopting Statement of

tain tax positions.

Financial Accounting Standards No. 123 (revised), Share-Based

Payment. Selling expenses were also up in 2007 compared to

2006. Marketing and distribution expense decreased in 2007

from 2006 as the Company actively managed SD&A costs to help

offset the impact of higher raw material costs.

Income taxes were $83.8 million in 2007, an increase of $11.6

million, or 16 percent, from 2006. The increase is due prima-

rily to an increase in taxable income, combined with an

increase in the effective tax rate from 33.5 percent in 2006 to

34.8 percent in 2007. The effective tax rate in 2006 included

Other operating expense – net of $2.7 million was recognized

certain one-time benefits of the Company’s legal entity

in 2007 consisting of losses on disposal of assets. Other oper-

realignment that did not recur in 2007.

ating income – net of $3.4 million was recognized in 2006 as

the net gain on the sale of the Salinas facility of $5.6 million

offset losses on disposal of assets during the year.

~ Interest Income and Expense ~

Interest expense increased $18.8 million in 2008 compared to

2007, resulting from the issuance of $400 million in senior

notes on May 31, 2007, a portion of which was used to repay

~ Restructuring ~

During 2003, the Company announced plans to restructure cer-

tain operations as part of its ongoing efforts to refine its portfo-

lio, 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 strat-

egy. At the end of 2008, these restructurings were proceeding as

short-term debt used in financing the Eagle acquisition. The

planned.

investment of excess proceeds resulted in an increase in inter-

est income of $4.0 million during 2008 compared to 2007.

Interest expense decreased $0.7 million in 2007 compared to

2006 as a portion of the proceeds from the sale of the Canadian

nonbranded businesses was utilized to pay off balances out-

standing against the Company’s revolving credit facility during

the second quarter of 2007. Also during 2007 interest income

increased $2.6 million compared to 2006, primarily related to

an increase in invested funds during the year resulting from

the Canadian nonbranded businesses sale and an overall

increase in cash generated from operations.

~ Income Taxes ~

In conjunction with the restructurings, the Company has

recorded total charges of $58.5 million to date, including $4.7

million in 2008, $12.1 million in 2007, and $10.0 million in 2006.

The majority of these charges related to impairment and accel-

erated depreciation on buildings and machinery and equipment,

system conversion costs, employee separation costs, equipment

relocation expenses, and the disposition of inventories.

~ Subsequent Event ~

On June 4, 2008, the Company entered into a definitive agree-

ment with The Procter & Gamble Company (“P&G”) to merge

P&G’s Folgers coffee business with and into the Company.

Under the terms of the agreement, P&G will distribute the

Income taxes in 2008 were $84.4 million, up $0.6 million, or

Folgers business to P&G shareholders in a tax-free transaction,

one percent, from 2007. The increase in income taxes that

with a simultaneous merger with and into the Company. In the

would have resulted from higher income in 2008 as compared

merger, current P&G shareholders will receive approximately

~ 20 ~

53.5 percent of the Company’s shares and current Company

~ Operating Activities ~

shareholders will own approximately 46.5 percent of the com-

bined company upon closing. Upon closing, the Company will

have approximately 118 million shares outstanding. As part of

the transaction, the Company will assume an estimated $350

million of Folgers debt. The transaction is expected to be tax

free to both companies and P&G shareholders. In addition,

Company shareholders as of the record date, prior to the

merger, will receive a special dividend of $5 per share. The

The Company’s working capital requirements are greatest

during the first half of its fiscal year, primarily due to the need

to build inventory levels in advance of the “fall bake” season,

the seasonal procurement of fruit, and the purchase of raw

materials used in the Company’s pickle and relish business in

Canada. The acquisition of the Eagle businesses added further

to the cash requirements during the first half of the year.

record date for the special dividend will be determined by the

Cash provided by operating activities was $191.6 million

Company at a future date.

The transaction is expected to close in the fourth quarter of cal-

endar 2008, subject to customary closing conditions including

regulatory and Company shareholder approvals. The Company

expects to incur approximately $100 million in one-time costs

related to the transaction over the next two fiscal years.

The merger will be accounted for as a purchase business com-

bination. For accounting purposes, the Company will be treated

as the acquiring enterprise.

Liquidity and Capital Resources

✷✷✷

during 2008, a decrease of $81.8 million, or 30 percent, over

2007. The decrease in cash from operations was primarily due

to an increase in the cash required to support working capital

requirements. Working capital, excluding cash and cash equiv-

alents, as a percent of net sales increased to 14.0 percent in

2008 from 9.4 percent in 2007 primarily as a result of higher

inventory balances associated with increased raw material costs.

~ Investing Activities ~

Net cash used for investing activities totaled approximately

$262.5 million in 2008, as $220.9 million was used for business

acquisitions, primarily Eagle, the Carnation canned milk busi-

ness in Canada, and Europe’s Best. Capital expenditures were

(Dollars in thousands)

2008

2007

2006

net sales.

Year Ended April 30,

approximately $76.4 million during 2008, or three percent of

Net cash provided by
operating activities

Net cash used for

investing activities
Net cash provided by
(used for) financing
activities

$ 191,577

$273,424

$198,689

262,486

27,041

16,255

~ Financing Activities ~

49,839

(117,625)

(169,129)

notes on May 31, 2007, offset by the repayment of $148 million

Net cash provided by financing activities during 2008 consisted

primarily of the Company’s issuance of $400 million in senior

The Company’s principal source of funds is cash generated

from operations, supplemented by borrowings against the

of debt, including $115 million assumed in the Eagle acquisi-

tion, $152.5 million used to finance the repurchases of treasury

shares, and $68.1 million in dividend payments.

Company’s revolving credit facility. Total cash and investments

The purchase of treasury shares was comprised largely of

at April 30, 2008, were $200.2 million compared to $244.2 mil-

2,927,600 common shares, representing approximately five per-

lion at April 30, 2007.

cent of common shares outstanding at the beginning of 2008.

~ 21 ~

The shares were repurchased under the Board of Directors’

authorized share repurchase program, including 2.5 million

common shares under Rule 10b5-1 trading plans announced

and completed during 2008. Since November 2004, the

Company has repurchased 6,255,778 common shares under

Board authorization, leaving 3,744,222 common shares author-

ized for repurchase. Due to structuring requirements of the

recently announced Folgers transaction, there are specific con-

ditions which must be satisfied prior to any share repurchase,

and as a result, the Company does not anticipate that it will

repurchase shares for a period of two years following the clos-

Off-Balance Sheet Arrangements and
Contractual Obligations
✷✷✷

The Company does not have off-balance sheet arrangements,

financings, or other relationships with unconsolidated 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 con-

dition, or cash flows.

ing of the transaction.

The following table summarizes the Company’s contractual

Cash requirements for 2009, excluding funds necessary to

complete the Folgers merger, will include capital expenditures

estimated at approximately $85 million. In addition, regular

quarterly dividends are expected to approximate $70 million

(Dollars in millions)

and interest payments on long-term debt to approximate $46

Long-term

obligations at April 30, 2008.

Less
Than
Total One Year

One
to Three
Years

Three
to Five
Years

More
Than
Five
Years

million for the year.

Assuming there are no other material acquisitions or other sig-

nificant investments, the Company believes that cash on hand

and marketable securities, combined with cash provided by

debt obligations

$ 789.7 $ — $289.7

$ — $500.0

Operating lease
obligations

Purchase

obligations
Other long-term

38.7

4.7

8.9

8.5

16.6

784.4

600.6

171.9

4.0

7.9

operations, new borrowings anticipated in connection with the

liabilities

300.9

—

— 300.9

Folgers merger, and borrowings available under the revolving

Total

$1,913.7 $605.3

$470.5

$12.5

$825.4

credit facility, will be sufficient to meet 2009 cash require-

ments, including capital expenditures, the payment of the spe-

Purchase obligations in the above table include agreements to

cial dividend, the payment of quarterly dividends, repurchase

purchase goods or services that are enforceable and legally

of common shares, if any, and interest on existing debt out-

binding on the Company. Included in this category are certain

standing and any new borrowings.

obligations related to normal, ongoing purchase obligations in

which the Company has guaranteed payment to ensure avail-

ability of raw materials and packaging supplies. The Company

expects to receive consideration for these purchase obligations

in the form of materials. The purchase obligations in the above

table do not represent the entire anticipated purchases in the

future, but represent only those items for which the Company

is contractually obligated.

~ 22 ~

Critical Accounting Estimates and Policies
✷✷✷

ance are recognized as a change in management’s estimate in a

subsequent period. As the Company’s total promotional expen-

The preparation of financial statements in conformity with

accounting principles generally accepted in the United States

requires management to make estimates and assumptions that

in certain circumstances affect amounts reported in the accom-

panying consolidated financial statements. In preparing these

ditures, including amounts classified as a reduction of net sales,

represent approximately 26 percent of 2008 net sales, the like-

lihood exists of materially different reported results if factors

such as the level and success of the promotional programs or

other conditions differ from expectations.

financial statements, management has made its best estimates

Income Taxes. The future tax benefit arising from the net

and judgments of certain amounts included in the financial

deductible temporary differences and tax carryforwards is

statements, giving due consideration to materiality. The

approximately $59.7 million and $63.2 million, at April 30, 2008

Company does not believe there is a great likelihood that mate-

and 2007, respectively. Management believes that

the

rially different amounts would be reported under different con-

Company’s earnings during the periods when the temporary

ditions or using different assumptions related to the accounting

differences become deductible will be sufficient to realize the

policies described below. However, application of these

related future income tax benefits. For those jurisdictions

accounting policies involves the exercise of judgment and use

where the expiration date of tax carryforwards or the projected

of assumptions as to future uncertainties and, as a result,

operating results of the Company indicate that realization is

actual results could differ from these estimates.

not likely, a valuation reserve has been provided.

Revenue Recognition. The Company recognizes revenue when

In assessing the need for a valuation allowance, the Company

all of the following criteria have been met: a valid customer

estimates future taxable income, considering the viability of

order with a determinable price has been received; the product

ongoing tax planning strategies and the probable recognition of

has been shipped and title has transferred to the customer;

future tax deductions and loss carryforwards. Valuation

there is no further significant obligation to assist in the resale

allowances related to deferred tax assets can be affected by

of the product; and collectibility is reasonably assured. A pro-

changes in tax laws, statutory tax rates, and projected future

vision for estimated returns and allowances is recorded as a

taxable income levels. Under current accounting rules,

reduction of sales at the time revenue is recognized.

changes in estimated realization of deferred tax assets would

Trade Marketing and Merchandising Programs. In order to

support the Company's products, various promotional activities

are conducted through the retail trade, distributors, or directly

with consumers, including in-store display and product place-

result in either an adjustment to goodwill, if the change relates

to tax benefits associated with a business combination, or an

adjustment to income, in the period in which that determina-

tion is made.

ment programs, feature price discounts, coupons, and other

In the ordinary course of business, the Company is exposed to

similar activities. The Company regularly reviews and revises,

uncertainties related to tax filing positions and periodically

when it deems necessary, estimates of costs to the Company for

assesses these tax positions for all tax years that remain sub-

these promotional programs based on estimates of what will be

ject to examination, based upon the latest information avail-

redeemed by the retail trade, distributors, or consumers. These

able. For uncertain tax positions, the Company has recorded

estimates are made using various techniques including histori-

tax reserves, including any applicable interest and penalty

cal data on performance of similar promotional programs.

charges, in accordance with Financial Accounting Standards

Differences between estimated expense and actual perform-

Board Interpretation No. 48.

~ 23 ~

Long-Lived Assets. Historically, long-lived assets have been

reviews all of these assumptions on an ongoing basis to ensure

reviewed for impairment whenever events or changes in cir-

that the most reasonable information available is being consid-

cumstances indicate that the carrying amount of the asset may

ered. For 2009 expense recognition, the Company will use a

not be recoverable. Recoverability of assets to be held and

discount rate of 6.6 percent and 6.1 percent, and a rate of com-

used is measured by a comparison of the carrying amount of

pensation increase of 3.8 percent and 4.0 percent, for U.S. and

the assets to future net cash flows estimated to be generated

Canadian plans, respectively. The Company will use an

by such assets. If such assets are considered to be impaired,

expected rate of return on plan assets of 7.75 percent for U.S.

the impairment to be recognized is the amount by which the

plans. For the Canadian plans, the Company will use an

carrying amount of the assets exceeds the fair value of the

expected rate of return on plan assets of 7.0 percent for the

assets. However, determining fair value is subject to estimates

hourly plan and 7.5 percent for all other plans.

of both cash flows and interest rates and different estimates

could yield different results. There are no events or changes in

circumstances of which management is aware indicating that

the carrying value of the Company’s long-lived assets may not

be recoverable.

Recovery of Trade Receivables. In the normal course of busi-

ness, the Company extends credit to customers that satisfy

predefined criteria. The Company evaluates the collectibility of

trade receivables based on a combination of factors. When

aware that a specific customer may be unable to meet its finan-

Goodwill and Indefinite-Lived Intangible Assets. The annual

cial obligations, such as in the case of bankruptcy filings or

evaluation of goodwill and indefinite-lived intangible assets

deterioration in the customer’s operating results or financial

requires the use of estimates about future operating results for

position, the Company records a specific reserve for bad debt

each reporting unit to determine estimated fair value. Changes

to reduce the related receivable to the amount the Company

in forecasted operations can materially affect these estimates.

reasonably believes is collectible. The Company also records

Additionally, other changes in the estimates and assumptions,

reserves for bad debt for all other customers based on a vari-

including the discount rate and expected long-term growth

ety of factors, including the length of time the receivables are

rate, which drive the valuation techniques employed to esti-

past due, historical collection experience, and an evaluation of

mate the fair value of the reporting unit could change and,

current and projected economic conditions at the balance sheet

therefore, impact the assessments of impairment in the future.

date. Actual collections of trade receivables could differ from

Pension and Other Postretirement Benefit Plans. To determine

the Company’s ultimate obligation under its defined benefit

pension plans and other postretirement benefit plans, manage-

ment must estimate the future cost of benefits and attribute

that cost to the time period during which each covered

employee works. Various actuarial assumptions must be made

management’s estimates due to changes in future economic or

industry conditions or specific customers’ financial conditions.

Derivative Financial Instruments
and Market Risk
✷✷✷

in order to predict and measure costs and obligations many

The following discussions about the Company’s market risk

years prior to the settlement date, the most significant being

disclosures involve forward-looking statements. Actual results

the interest rates used to discount the obligations of the plans,

could differ from those projected in the forward-looking state-

the long-term rates of return on the plans’ assets, assumed pay

ments. The Company is exposed to market risk related to

increases, and the health care cost trend rates. Management,

changes in interest rates, foreign currency exchange rates, and

along with third-party actuaries and investment managers,

commodity prices.

~ 24 ~

Interest Rate Risk. The fair value of the Company’s cash and

Commodity Price Risk. Raw materials and other commodities

short-term investment portfolio at April 30, 2008, approxi-

used by the Company are subject to price volatility caused by

mates carrying value. Exposure to interest rate risk on the

supply and demand conditions, political and economic vari-

Company’s long-term debt is mitigated since it is at a fixed rate

ables, and other unpredictable factors. To manage the volatility

until maturity. Market risk, as measured by the change in fair

related to anticipated commodity purchases, the Company

value resulting from a hypothetical 10 percent change in inter-

uses futures and options with maturities generally less than

est rates, is not material. Based on the Company’s overall

one year. Certain of these instruments are designated as cash

interest rate exposure as of and during the year ended April 30,

flow hedges. The mark-to-market gains or losses on qualifying

2008, including derivative and other instruments sensitive to

hedges are included in other comprehensive income to the

interest rates, a hypothetical 10 percent movement in interest

extent effective, and reclassified into cost of products sold in

rates would not materially affect the Company’s results of

the period during which the hedged transaction affects earn-

operations. A hypothetical 100 basis point increase in short-

ings. The mark-to-market gains or losses on nonqualifying,

term interest rates would increase the Company’s interest

excluded, and ineffective portions of hedges are recognized in

expense by approximately $0.1 million. Interest rate risk can

cost of products sold immediately.

also be measured by estimating 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 hypotheti-

cal, immediate 100 basis point decrease in interest rates at

April 30, 2008, the fair value of the Company’s long-term debt

and interest rate portfolio, in aggregate, would increase by

approximately $41.3 million.

Foreign Currency Exchange Risk. The Company has operations

outside the United States with foreign currency denominated

assets and liabilities, primarily denominated in Canadian cur-

rency. Because the Company has foreign currency denomi-

nated assets and liabilities,

financial exposure may result,

primarily from the timing of transactions and the movement of

exchange rates. The foreign currency balance sheet exposures

as of April 30, 2008, are not expected to result in a significant

impact on future earnings or cash flows.

The following sensitivity analysis presents the Company’s

potential loss of fair value resulting from a hypothetical 10 per-

cent change in market prices.

(Dollars in thousands)

Raw material commodities:

High
Low
Average

Year Ended April 30,

2008

2007

$13,229
3,289
8,474

$4,514
1,333
3,105

Fair value was determined using quoted market prices and was

based on the Company’s net derivative position by commodity

at each quarter end during the fiscal year. The calculations are

not intended to represent actual losses in fair value that the

Company expects to incur. In practice, as markets move, the

Company actively manages its risk and adjusts hedging strate-

gies as appropriate. The commodities hedged have a high

Revenues from customers outside the United States repre-

inverse correlation to price changes of the derivative com-

sented 13 percent of net sales during 2008. Thus, certain rev-

modity instrument; thus, the Company would expect that any

enues and expenses have been, and are expected to be, subject

gain or loss in fair value of its derivatives would generally be

to the effect of foreign currency fluctuations and these fluctua-

offset by an increase or decrease in the fair value of the under-

tions may have an impact on operating results.

lying exposures.

~ 25 ~

Forward-Looking Statements
✷✷✷

Certain statements included in this Annual Report contain for-

ward-looking statements within the meaning of federal securi-

ties laws. The forward-looking statements may include

statements concerning the Company’s current expectations,

estimates, assumptions, and beliefs concerning future events,

 the success and cost of introducing new products and

the competitive response;

 the success and cost of marketing and sales programs
and strategies intended to promote growth in the
Company’s businesses, and in their respective markets;
 general competitive activity in the market, including
competitors’ pricing practices and promotional spending
levels;

conditions, plans, and strategies that are not historical fact.

 the concentration of certain of the Company’s busi-

Any statement that is not historical in nature is a forward-look-

nesses with key customers;

ing statement and may be identified by the use of words and

phrases such as “expects,” “anticipates,” “believes,” “will,”

“plans,” and similar phrases.

Federal securities laws provide a safe harbor for forward-look-

ing statements to encourage companies to provide prospective

information. The Company is providing this cautionary state-

ment in connection with the safe harbor provisions. Readers

are cautioned not to place undue reliance on any forward-look-

ing statements as such statements are by nature subject to

risks, uncertainties, and other factors, many of which are out-

side of the Company’s control and could cause actual results to

differ materially from such statements and from the

Company’s historical results and experience. These risks and

uncertainties include, but are not limited to, those set forth

under the caption “Risk Factors” in the Company’s Annual

Report on Form 10-K, as well as the following:

 general economic conditions in the U.S.;
 the volatility of commodity markets from which raw
materials are procured and the related impact on costs;
 crude oil price trends and its impact on transportation,

energy, and packaging costs;

 the ability of the Company to successfully implement

price changes;

 the ability of the Company to manage and maintain key
customer, supplier, and employee relationships;
 the loss of significant customers or a substantial reduc-
tion in orders from these customers or the bankruptcy
of any such customer;

 the ability of the Company to obtain any required financ-

ing;

 the timing and amount of capital expenditures and
restructuring, and merger and integration costs;
 the outcome of current and future tax examinations and
other tax matters, and their related impact on the
Company’s tax positions;

 the ability of the Company to obtain regulatory and
shareholders’ approval of the Folgers merger without
unexpected delays or conditions;

 the ability of the Company to integrate acquired and
merged businesses in a timely and cost effective
manner;

 foreign currency exchange and interest rate fluctuations;
 the timing and cost of acquiring common shares under the
Company’s share repurchase authorizations, if any; and
 other factors affecting share prices and capital markets

generally.

~ 26 ~

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 con-
trol 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 control over financial reporting as of April 30,
2008. 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 (“the COSO criteria”).

Based on the Company’s assessment of internal control over financial reporting under the COSO criteria, management concluded
the Company’s internal control over financial reporting was effective as of April 30, 2008.

Ernst & Young LLP, independent registered public accounting firm, audited the effectiveness of the Company’s internal control
over financial reporting as of April 30, 2008, and their report thereon is included on page 28 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

~ 27 ~

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 The J. M. Smucker Company’s internal control over financial reporting as of April 30, 2008, 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 responsible for maintaining effective internal
control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in
the accompanying Report of Management on Internal Control Over Financial Reporting. Our responsibility is to express an opin-
ion on 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 con-
trol over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal con-
trol over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating
effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary
in the circumstances. 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 relia-
bility of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted
accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) per-
tain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions 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 com-
pany are being made only in accordance with authorizations of management and directors of the company; and (3) provide rea-
sonable 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, pro-
jections 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 the policies or procedures may deteriorate.

In our opinion, The J. M. Smucker Company maintained, in all material respects, effective internal control over financial report-
ing as of April 30, 2008, 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, 2008 and 2007, and the related statements of consoli-
dated income, shareholders’ equity, and cash flows for each of the three years in the period ended April 30, 2008, and our report
dated June 19, 2008, expressed an unqualified opinion thereon.

Akron, Ohio
June 19, 2008

~ 28 ~

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, 2008 and 2007, and
the related statements of consolidated income, shareholders’ equity, and cash flows for each of the three years in the period ended
April 30, 2008. These financial statements are the responsibility of the Company’s management. Our responsibility is to express
an opinion on these financial statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated finan-
cial position of The J. M. Smucker Company at April 30, 2008 and 2007, and the consolidated results of its operations and its cash
flows for each of the three years in the period ended April 30, 2008, in conformity with U.S. generally accepted accounting principles.

As discussed in Note P, effective May 1, 2007, the Company adopted FASB Interpretation No. 48, Accounting for Uncertainty in
Income Taxes. Also, as discussed in Note I, effective April 30, 2007, the Company adopted Statement of Financial Accounting
Standards (“SFAS”) No. 158, Employees Accounting for Defined Benefit Pension and Other Postretirement Plans, an amendment of
FASB Statement Nos. 87, 88, 106, and 132(R); and as discussed in Note A, effective May 1, 2006, the Company adopted SFAS
123(R), Share-Based Payment.

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, 2008, based on criteria estab-
lished in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission and our report dated June 19, 2008, expressed an unqualified opinion thereon.

Akron, Ohio
June 19, 2008

~ 29 ~

Report of Management on Responsibility for Financial Reporting
✷✷✷

Shareholders

The J. M. Smucker Company

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 our best estimates and judgments.

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

Ernst & Young LLP, independent registered public accounting firm, has audited the Company’s financial statements in accordance
with the standards of the Public Company Accounting Oversight Board (United States). 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 of Directors, meets regularly with the
independent 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 regularly
satisfies itself as to the adequacy of controls, systems, and financial records. The manager of the internal audit department is
required to report directly to the chair of the audit committee as to internal audit matters.

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

Timothy P. Smucker

Chairman and
Co-Chief Executive Officer

Richard K. Smucker

President and
Co-Chief Executive Officer

Mark R. Belgya

Vice President,
Chief Financial Officer
and Treasurer

~ 30 ~

Statements of Consolidated Income

The J. M. Smucker Company

(Dollars in thousands, except per share data)

2008

2007

2006

Year Ended April 30,

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
Other operating (income) expense – net

Operating Income

Interest income
Interest expense
Other (expense) income – net

Income Before Income Taxes

Income taxes

Net Income

Earnings per common share:

Net Income

Net Income – Assuming Dilution

$2,524,774
1,741,100
1,510

$2,148,017
1,435,981
9,981

$2,154,726
1,459,611
2,263

782,164
490,665
7,967
3,237
(3,879)

284,174
13,259
(42,145)
(500)

254,788
84,409

702,055
442,814
61
2,120
2,689

254,371
9,225
(23,363)
771

241,004
83,785

692,852
438,457
17,934
7,722
(3,386)

232,125
6,630
(24,026)
841

215,570
72,216

$ 170,379

$ 157,219

$ 143,354

3.03

3.00

2.79

2.76

2.48

2.45

See notes to consolidated financial statements.

~ 31 ~

Consolidated Balance Sheets

The J. M. Smucker Company

~ Assets ~

(Dollars in thousands)

Current Assets

Cash and cash equivalents

Trade receivables, less allowance for doubtful accounts

Inventories:

Finished products

Raw materials

Other current assets

Total Current Assets

Property, Plant, and Equipment

Land and land improvements

Buildings and fixtures

Machinery and equipment

Construction in progress

Accumulated depreciation

Total Property, Plant, and Equipment

Other Noncurrent Assets

Goodwill

Other intangible assets, net

Marketable securities

Other noncurrent assets

Total Other Noncurrent Assets

April 30,

2008

2007

$ 184,175

$ 200,119

162,426

124,048

280,568

99,040

379,608

49,998

776,207

45,461

202,564

586,502

39,516

874,043

196,177

89,875

286,052

29,147

639,366

41,456

176,950

536,825

25,284

780,515

(377,747)

(326,487)

496,296

454,028

1,132,476

614,000

16,043

94,859

990,771

478,194

44,117

87,347

1,857,378

1,600,429

$3,129,881

$2,693,823

~ 32 ~

~ Liabilities and Shareholders’ Equity ~

(Dollars in thousands)

Current Liabilities

Accounts payable
Salaries, wages, and additional compensation
Accrued trade marketing and merchandising
Income taxes
Dividends payable
Current portion of long-term debt
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 –
54,622,612 in 2008 and 56,779,850 in 2007 (net of 10,807,615
and 8,619,519 treasury shares, respectively), at stated value

Additional capital
Retained income
Amount due from ESOP Trust
Accumulated other comprehensive income

Total Shareholders’ Equity

April 30,

2008

2007

$ 119,844
35,808
32,350
1,164
17,479
—
32,752

93,500
32,580
24,672
7,265
17,034
33,000
28,417

239,397

236,468

789,684
47,978
41,583
175,950
35,436

1,090,631

392,643
45,881
46,349
158,418
18,407

661,698

—

13,656
1,181,645
567,419
(5,479)
42,612

14,195
1,216,091
553,631
(6,017)
17,757

1,799,853

1,795,657

$3,129,881

$2,693,823

See notes to consolidated financial statements.

~ 33 ~

Statements of Consolidated Cash Flows

The J. M. Smucker Company

(Dollars in thousands)

Operating Activities

Net income
Adjustments to reconcile net income to net cash

provided by operations:
Depreciation
Amortization
Asset impairments and other restructuring charges
Share-based compensation expense
Gain on sale of assets
Deferred income tax expense
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

Year Ended April 30,

2008

2007

2006

$170,379

$157,219

$143,354

58,497
4,122
1,510
11,531
(1,903)
18,215

(17,599)
(35,022)
(16,208)
6,988
(22,302)
13,369

57,346
1,528
10,089
11,257
—
22,530

23,848
(8,146)
5,218
1,034
(15,079)
6,580

62,452
190
2,263
7,255
(5,638)
33,124

1,444
(6,601)
(24,369)
(64,019)
44,756
4,478

Net Cash Provided by Operating Activities

191,577

273,424

198,689

Investing Activities

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

Net Cash Used for Investing Activities

Financing Activities

Proceeds from long-term debt
Repayments of long-term debt
Revolving credit arrangements – net
Dividends paid
Purchase of treasury shares
Proceeds from stock option exercises
Other – net

Net Cash Provided by (Used for) Financing Activities

Effect of exchange rate changes on cash

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

Cash and Cash Equivalents at End of Year

( ) Denotes use of cash

See notes to consolidated financial statements.

~ 34 ~

(220,949)
(76,430)
3,407
(229,405)
257,536
3,532
(177)

(262,486)

400,000
(148,000)
—
(68,074)
(152,521)
17,247
1,187

49,839
5,126

(15,944)
200,119

(60,488)
(57,002)
84,054
(20,000)
26,272
2,313
(2,190)

(27,041)

—
—
(28,144)
(63,632)
(52,125)
25,766
510

(117,625)
(595)

128,163
71,956

—
(63,580)
8,754
(5,000)
31,101
3,747
8,723

(16,255)

—
(17,000)
(8,434)
(62,656)
(81,717)
3,783
(3,105)

(169,129)
566

13,871
58,085

$184,175

$200,119

$ 71,956

Statements of Consolidated Shareholders’ Equity

The J. M. Smucker Company

(Dollars in thousands,
except per share data)

Common
Shares
Outstanding

Common
Shares

Additional
Capital

Retained
Income

Deferred
Compen-

sation ESOP Trust

Amount

Accumulated
Other
Due from Comprehensive
Income (Loss)

Total
Shareholders’
Equity

Balance at May 1, 2005

58,540,386

$ 14,635

$ 1,240,110

$ 447,831

$(4,573)

$ (7,044)

(159)

$ 1,690,800

Net income
Foreign currency

translation adjustment
Minimum pension liability

adjustment

Unrealized loss on

available-for-sale securities

Unrealized loss on cash

flow hedging derivatives

Comprehensive Income

Purchase of treasury shares
Stock plans
Cash dividends declared –

$1.09 per share

Tax benefit of stock plans
Other

(1,936,423)
345,081

(484)
86

(41,910)
12,753

1,645

Balance at April 30, 2006

56,949,044

14,237

1,212,598

143,354

(39,323)

(62,795)

489,067

157,219

19,512

8,710

(650)

(204)

143,354

19,512

8,710

(650)

(204)

170,722

(81,717)
8,885

(62,795)
1,645
519

(3,954)

519

(8,527)

(6,525)

27,209

1,728,059

2,437

427

1,644

138

(1,100,194)
931,000

(275)
233

(23,915)
24,247

(27,935)

(64,720)

8,527

3,161

(14,098)

508

157,219

2,437

427

1,644

138

161,865

(52,125)
33,007

(64,720)

(14,098)
3,161
508

Balance at April 30, 2007

56,779,850

14,195

1,216,091

(2,991,920)
834,682

(748)
209

(66,075)
20,398

553,631

170,379

(85,698)

(68,519)

(2,374)

—

(6,017)

17,757

1,795,657

170,379

20,861

(2,920)

(379)

7,293

(379)

7,293

195,234

(152,521)
20,607

(68,519)

(2,374)
11,231
538

Balance at April 30, 2008

54,622,612

$13,656

$1,181,645

$567,419

$ — $(5,479)

$42,612

$1,799,853

See notes to consolidated financial statements.

~ 35 ~

11,231

538

Net income
Foreign currency

translation adjustment
Minimum pension liability

adjustment

Unrealized gain on

available-for-sale securities

Unrealized gain on cash

flow hedging derivatives

Comprehensive Income

Purchase of treasury shares
Stock plans
Cash dividends declared –

$1.14 per share

Adjustments to initially
apply Statement of
Financial Accounting
Standards No. 158,
net of tax of $7,377

Tax benefit of stock plans
Other

Net income
Foreign currency

translation adjustment

Pensions and other

postretirement liabilities

Unrealized loss on

available-for-sale securities

Unrealized gain on cash

flow hedging derivatives

Comprehensive Income

Purchase of treasury shares
Stock plans
Cash dividends declared –

$1.22 per share

Adjustments to initially

apply Financial Accounting
Standards Board
Interpretation No. 48
Tax benefit of stock plans
Other

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 sub-
sidiaries, 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 accounting prin-
ciples requires management to make certain estimates and assumptions that affect the amounts reported in the consolidated
financial statements and accompanying notes. Significant estimates in these consolidated financial statements include: allowances
for doubtful trade receivables, estimates of future cash flows associated with assets, asset impairments, useful lives for depreci-
ation and amortization, loss contingencies, net realizable value of inventories, accruals for trade marketing and merchandising pro-
grams, income taxes, 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 following cri-
teria have been met: a valid customer order with a determinable 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 20 percent, 20 percent, and 18 per-
cent of net sales in 2008, 2007, and 2006, respectively. These sales are primarily included in the U.S. retail market segment. No
other customer exceeded 10 percent of net sales for any year. Trade receivables at April 30, 2008 and 2007, included amounts due
from Wal-Mart Stores, Inc. and subsidiaries of $34,210 and $28,274, respectively.

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

Trade Marketing and Merchandising Programs: In order to support the Company’s products, various promotional activities are con-
ducted through the retail trade, distributors, or directly with consumers, including in-store display and product placement pro-
grams, feature price discounts, coupons, and other similar activities. The Company regularly reviews and revises, when it deems
necessary, estimates of costs to the Company for these promotional programs based on estimates of what will be redeemed by the
retail trade, distributors, or consumers. These estimates are made using various techniques including historical data on perform-
ance of similar promotional programs. Differences between estimated expense and actual performance are recognized as a change
in management’s estimate in a subsequent period. As the Company’s total promotional expenditures, including amounts classified
as a reduction of net sales, represent approximately 26 percent of 2008 net sales, the likelihood exists of materially different
reported results if factors such as the level and success of the promotional programs or other conditions differ from expectations.
Operating results for the year ended April 30, 2006, include an increase of approximately $6.7 million to net sales reflecting a
change in estimate of the expected liability for trade merchandising programs.

Advertising Expense: Advertising costs are expensed as incurred. Advertising expense was $55,522, $51,446, and $56,647 in 2008,
2007, and 2006, respectively.

Product Development Cost: Total product development costs including research and development costs and product formulation
costs were $9,547, $9,680, and $10,781 in 2008, 2007, and 2006, respectively.

Share-Based Payments: In December 2004, the Financial Accounting Standards Board issued Statement of Financial Accounting
Standards No. 123 (revised), Share-Based Payment (“SFAS 123R”). SFAS 123R is a revision of Statement of Financial Accounting
Standards No. 123, Accounting for Stock-Based Compensation (“SFAS 123”), supersedes Accounting Principles Board Opinion No. 25,
Accounting for Stock Issued to Employees (“APB 25”), and also amends Statement of Financial Accounting Standards No. 95,
Statement of Cash Flows. SFAS 123R requires that the cost of transactions involving share-based payments be recognized in the

~ 36 ~

financial statements based on a fair value-based measurement. The Company adopted SFAS 123R on May 1, 2006, using the mod-
ified prospective method. Under this method of adoption, prior year’s financial information was not restated. Prior to the adoption
of SFAS 123R, the Company accounted for share-based payments to employees using the intrinsic value method of APB 25. Under
APB 25, because the exercise price of the Company’s employee stock options equaled the market price of the underlying shares
on the date of grant, no compensation expense was recognized. Compensation expense recognized related to other share-based
awards was $11,531, $11,257, and $7,255 in 2008, 2007, and 2006, respectively. The related tax benefit recognized in the
Statements of Consolidated Income was $3,820, $3,913, and $2,430 in 2008, 2007, and 2006, respectively. Upon adoption of SFAS
123R, compensation expense is recognized over the requisite service period, which includes a one-year performance period plus
the defined forfeiture period, which is typically four years of service or the attainment of a defined age and years of service. No
compensation expense was capitalized related to share-based awards in 2008, 2007, and 2006.

As a result of adopting SFAS 123R on May 1, 2006, the Company’s income before income taxes and net income were $1,923 and
$1,255 lower in 2007, respectively, than if it had continued to account for share-based compensation under APB 25. The impact
of adopting SFAS 123R in 2007 was approximately $0.02 on both net income per common share and net income per common share –
assuming dilution.

Had the Company applied the fair value recognition provisions of SFAS 123 to share-based compensation for the period ended
April 30, 2006, the effect on net income and earnings per common share would have been as follows:

Net income, as reported
Add: Total share-based compensation expense included in the
determination of net income as reported, net of tax benefit

Less: Total share-based compensation expense determined under

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

Net income, as adjusted

Earnings per common share:
Net income, as reported
Add: Total share-based compensation expense included in the
determination of net income as reported, net of tax benefit

Less: Total share-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 share-based compensation expense included in the

determination of net income as reported, net of tax benefit – assuming dilution

Less: Total share-based compensation expense determined under

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

Net income, as adjusted – assuming dilution

Year Ended
April 30, 2006

$143,354

4,825

(9,177)

$139,002

2.48

0.08

(0.16)

2.40

2.45

0.09

(0.16)

2.38

Management estimated the fair value of stock option awards on the date of grant or modification using the Black-Scholes option-
pricing model. 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. The main inputs into the model are esti-
mated by management based on historical performance and management’s expectation of future results on the date of grant or

~ 37 ~

modification. The fair value of each option grant was estimated at the date of grant or modification using the following weighted-
average assumptions:

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

Fair value of options granted

Year Ended
April 30, 2006

5.71
4.90%
2.00%
25.20%

$ 8.76

As of April 30, 2008, total compensation cost related to nonvested share-based awards not yet recognized was approximately
$14,133. The weighted-average period over which this amount is expected to be recognized is approximately three years.

Corporate income tax benefit realized upon exercise or vesting of an award in excess of that previously recognized in earnings,
referred to as an excess tax benefit, is presented in the Statements of Consolidated Cash Flows as a financing activity. Realized
excess tax benefits are credited to additional capital in the Consolidated Balance Sheets. Realized shortfall tax benefits, amounts
which are less than that previously recognized in earnings, are first offset against the cumulative balance of excess tax benefits,
if any, and then charged directly to income tax expense. Under the transition rules for adopting SFAS 123R using the modified
prospective method, the Company calculated a cumulative balance of excess tax benefits from post-1995 years for the purpose of
accounting for future shortfall tax benefits and, as a result, has sufficient cumulative excess tax benefits to absorb arising short-
falls, such that earnings were not affected in 2008 or 2007. For 2008 and 2007, the actual tax deductible benefit realized from
share-based compensation was $11,231 and $3,161, including $11,107 and $3,346, respectively, of excess tax benefits realized
upon exercise or vesting of share-based compensation, and classified as other-net under financing activities on the Statement of
Consolidated Cash Flows.

Income Taxes: The Company accounts for income taxes using the liability method. Accordingly, deferred tax assets and liabilities
are recognized for the future tax consequences attributable to differences between financial statement carrying amounts of exist-
ing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.
The effect on deferred tax assets and liabilities of a change in the tax rate is recognized in income or expense in the period that
the change is effective. 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. A tax benefit is recognized when it is more likely than not to be sustained.

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, dis-
count stores, military commissaries, health and natural foods stores, foodservice distributors, and chain operators including:
hotels and restaurants, schools and other institutions. The Company’s operations outside the United States are principally 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. 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 receiv-
able is considered past due if payments have not been received within the agreed upon invoice terms. The allowance for doubtful
accounts at April 30, 2008 and 2007, was $911 and $821, respectively. Trade receivables are charged off against the allowance after
management determines the potential for recovery is remote.

~ 38 ~

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

Derivative Financial Instruments: The Company utilizes derivative instruments such as commodity futures and options contracts,
interest rate swaps, and foreign currency futures contracts to manage 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 pur-
pose 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 recognized immediately in the
Statements of Consolidated Income. For derivatives designated as a cash flow hedge that are used to hedge an anticipated trans-
action, changes in fair value are deferred and recorded in shareholders’ equity as a component of accumulated other comprehen-
sive income 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 deriv-
ative financial instruments for trading purposes or for speculation. For additional information, see Note N: 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. Rent expense in
2008, 2007, and 2006 totaled $23,902, $20,261, and $19,866, respectively.

Impairment of Long-Lived Assets: In accordance with Statement of Financial Accounting Standards No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets, long-lived assets, except goodwill and indefinite-lived intangible assets, are reviewed
for impairment when circumstances indicate the carrying value of an asset may not be recoverable. Recoverability of assets to be
held and used is measured by a comparison of the carrying amount of the assets to future net cash flows estimated by the
Company to be generated by such assets. If such assets are considered to be impaired, the impairment to be recognized is the
amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of by sale are
recorded as held for sale at the lower of carrying value or estimated net realizable value. During 2007, the Company recorded
impairment of approximately $8.5 million on long-lived assets associated with the Canadian nonbranded, grain-based foodservice
and industrial businesses divested during the year.

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,
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. For annual
impairment testing purposes, the Company’s reporting units are its operating segments. 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 estimated useful lives.

Other Investments in Securities: The Company maintains funds for the payment of benefits associated with nonqualified retire-
ment 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, 2008 and 2007, was $31,130 and $31,727, respectively. At April 30, 2008 and
2007, the deferred gain included in accumulated other comprehensive income was $1,404 and $2,089, 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 income.

~ 39 ~

Recently Issued Accounting Standards: In September 2006, the Financial Accounting Standards Board (“FASB”) issued Statement
of Financial Accounting Standards No. 157, Fair Value Measurements (“SFAS 157”). SFAS 157 and related interpretations provide
guidance for using fair value to measure assets and liabilities and only applies when other standards require or permit the fair
value measurement of assets and liabilities. It does not expand the use of fair value measurement. In February 2008, the FASB
issued Staff Position No. 157-2, Effective Date of FASB Statement No. 157 (“FSP SFAS 157-2”). FSP SFAS 157-2 amends SFAS 157
to delay the effective date of the standard, as it relates to nonfinancial assets and nonfinancial liabilities, to fiscal years beginning
after November 15, 2008, (May 1, 2009, for the Company). SFAS 157 for financial assets and financial liabilities is effective for
fiscal years beginning after November 15, 2007, (May 1, 2008, for the Company). The Company is currently assessing the impact
of SFAS 157, and related interpretations and amendments, on the consolidated financial statements.

In February 2007, the FASB issued Statement of Financial Accounting Standards No. 159, The Fair Value Option for Financial
Assets and Financial Liabilities (“SFAS 159”). SFAS 159 provides companies with an option to report selected financial assets and
liabilities at fair value. The objective of SFAS 159 is to reduce both complexity in accounting for financial instruments and the
volatility in earnings caused by measuring related assets and liabilities differently. SFAS 159 is effective for fiscal years beginning
after November 15, 2007, (May 1, 2008, for the Company). The Company is currently assessing the impact of SFAS 159 on the
consolidated financial statements.

In December 2007, the FASB issued Statement of Financial Accounting Standards No. 141(revised), Business Combinations
(“SFAS 141R”). SFAS 141R continues to require the purchase method of accounting to be applied to all business combinations,
but it significantly changes the accounting for certain aspects of business combinations. SFAS 141R establishes principles and
requirements for how the Company recognizes the assets acquired and liabilities assumed, recognizes the goodwill acquired, and
determines what information to disclose to enable the evaluation of the nature and financial effects of the business combination.
SFAS 141R is effective for business combinations for which the acquisition date is on or after the beginning of the first annual
reporting period beginning on or after December 15, 2008, (May 1, 2009, for the Company).

In March 2008, the FASB issued Statement of Financial Accounting Standards No. 161, Disclosures about Derivative Instruments
and Hedging Activities – an amendment of FASB Statement No. 133 (“SFAS 161”). SFAS 161 seeks to improve financial reporting
of derivative instruments and hedging activities by requiring enhanced disclosures regarding the impact on financial position,
financial performance, and cash flows. SFAS 161 is effective for fiscal years and interim periods beginning after November 15,
2008, (February 1, 2009, for the Company).

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 raw materials used by the Company are primarily commodities and agricultural-based products. Glass, plastic, caps, carton
board, and corrugate are the principle packaging materials used by the Company. The fruit and vegetable raw materials used by
the Company in the production of its food products are purchased from independent growers and suppliers. Sweeteners, peanuts,
oils, wheat and flour, milk, corn, and other ingredients are obtained from various suppliers. The cost and availability of many of
these commodities have fluctuated, and may continue to fluctuate over time. Raw materials are available from numerous sources
and the Company believes that it will continue to be able to obtain adequate supplies. The Company has not historically encoun-
tered shortages of key raw materials. The Company considers its relationship with key material suppliers to be good.

Approximately 31 percent of the Company’s employees, located at 10 facilities, are covered by union contracts. The contracts vary
in term depending on the location with one contract expiring in 2009.

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

~ 40 ~

Note B: Subsequent Events
✷✷✷

On June 4, 2008, the Company entered into a definitive agreement with The Procter & Gamble Company (“P&G”) to merge
P&G’s Folgers coffee business with and into the Company. Under the terms of the agreement, P&G will distribute the Folgers
business to P&G shareholders in a tax-free transaction, with a simultaneous merger with and into the Company. In the merger,
current P&G shareholders will receive approximately 53.5 percent of the Company’s shares and current Company shareholders
will own approximately 46.5 percent of the combined company upon closing. Upon closing, the Company will have approximately
118 million shares outstanding. As part of the transaction, the Company will be assuming an estimated $350 million of Folgers
debt. The transaction is expected to be tax free to both companies and P&G shareholders. In addition, Company shareholders as
of the record date, prior to the merger, will receive a special dividend of $5 per share. The record date for the special dividend will
be determined by the Company at a future date.

The transaction is expected to close in the fourth quarter of calendar 2008, subject to customary closing conditions including reg-
ulatory and Company shareholder approvals. The Company expects to incur approximately $100 million in one-time costs related
to the transaction over the next two fiscal years.

The merger will be accounted for as a purchase business combination. For accounting purposes, the Company will be treated as
the acquiring enterprise.

In addition, on May 13, 2008, the Company completed an acquisition of the Knott’s Berry Farm food brand and certain manufac-
turing equipment from ConAgra Foods, Inc.

Note C: Acquisitions
✷✷✷

On May 1, 2007, the Company completed its acquisition of Eagle, a privately held company headquartered in Columbus, Ohio, for
$133 million in cash and the assumption of $115 million in debt, in a transaction valued at approximately $248 million. Eagle is
the largest producer of canned milk in North America, with sales primarily in retail and foodservice channels. The acquisition
expands the Company’s position in the baking aisle and complements the Company’s strategy, which is to own and market lead-
ing North American food brands sold in the center of the store.

The Company utilized cash on-hand to fund the cash portion of the purchase price. The Company borrowed $130 million against
its revolving credit facility with a weighted-average interest rate of 5.60 percent, a portion of which was used to deposit
$118.8 million in escrow on the date of the transaction. The escrow deposit was in exchange for a covenant defeasance on Eagle’s
$115 million 8.75 percent Senior, subordinated Notes due January 2008, that were assumed on the acquisition date, as well as
accrued interest due through May 31, 2007. On May 31, 2007, the escrow was distributed to note holders in full payment of the
Senior Notes.

The Eagle 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.

~ 41 ~

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

Assets acquired:
Current assets
Property, plant, and equipment
Intangible assets
Goodwill
Other assets

Total assets acquired
Total current liabilities assumed

Net assets acquired

$ 48,725
20,044
100,070
100,547
651

$270,037
21,999

$248,038

In addition to Eagle, the Company completed a series of smaller acquisitions during 2008 including Europe’s Best, Inc. (“Europe’s
Best”), a privately owned company headquartered in Montreal, Quebec, and the Canadian Carnation brand canned milk business
from Nestlé Canada, for aggregate cash consideration of approximately $87 million.

The purchase price allocation to the identifiable intangible assets acquired is as follows:

Intangible assets with finite lives

Customer relationships (20 year estimated useful life)
Technology (20 year estimated useful life)

Intangible assets with indefinite lives

Total intangible assets

Goodwill

Eagle

Other

Total

$ 62,400
970
36,700

$100,070

$100,547

$16,703
—
19,643

$36,346

$34,660

$ 79,103
970
56,343

$136,416

$135,207

Of the total goodwill, $101,147 and $34,060 was assigned to the U.S. retail market and special markets segments, respectively.
For tax purposes, $23,327 is not deductible. The purchase price allocations of Europe’s Best and the Canadian Carnation brand
canned milk business are preliminary and subject to adjustment following the completion of the valuation process.

The results of the operations of each of the acquired businesses are included in the Company’s consolidated financial statements
from the date of the acquisition. Had the acquisitions occurred on May 1, 2006, unaudited, pro forma consolidated results for the
years ended April 30, 2008 and 2007, would have been as follows:

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

Year Ended April 30,

2008

2007

$2,602,005
$ 173,937
3.07
$

$2,451,698
$ 168,488
2.95
$

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

~ 42 ~

Note D: Restructuring
✷✷✷

In 2003, the Company announced its plan to restructure certain operations as part of its ongoing efforts to refine its portfolio, opti-
mize 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
brands sold in the center of the store.

To date, the Company has closed its fruit processing operations at its Watsonville, California, and Woodburn, Oregon, locations
and subsequently sold these facilities; completed the combination of its two manufacturing facilities in Ripon, Wisconsin, into one
expanded site; completed a restructuring program to streamline operations in Europe and the United Kingdom, including the exit
of a contract packaging arrangement and certain portions of its retail business; completed the sale of its U.S. industrial ingredi-
ent business; completed the realignment of distribution warehouses; sold the Salinas, California, facility after production was relo-
cated to plants in Orrville, Ohio, and Memphis, Tennessee; and sold the Canadian nonbranded businesses, which were acquired
as part of International Multifoods Corporation, to Horizon Milling G.P., a subsidiary of Cargill and CHS Inc., as part of a strate-
gic plan to focus the Canadian operations on its branded consumer retail and foodservice businesses. The restructurings resulted
in the reduction of approximately 410 full-time positions.

The Canadian nonbranded divestiture was completed on September 22, 2006. The sale and related restructuring activities have
resulted in expense of approximately $18.6 million, which was reported as a restructuring charge. Costs included noncash, long-
lived asset charges, as well as transaction, legal, severance, and pension costs. To date, charges of approximately $16.1 million
were recognized related to the Canadian restructuring.

The Company expects to incur total restructuring costs of approximately $69 million related to these initiatives, of which $58.5
million has been incurred since the announcement of the initiative in March 2003. The balance of the costs and remaining cash
payments, estimated to be approximately $10.5 million and $2.5 million, respectively, are related to the Canadian restructuring
and will primarily be incurred through 2009.

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.

Employee
Long-Lived
Separation Asset Charges

Equipment
Relocation

Other
Costs

Total

Total expected restructuring charge

$16,900

$20,700

$6,900

$24,500

$69,000

Balance at May 1, 2005
Charge to expense
Cash payments
Noncash utilization

Balance at April 30, 2006
Charge to expense
Cash payments
Noncash utilization

Balance at April 30, 2007
Charge to expense
Cash payments
Noncash utilization

Balance at April 30, 2008

$ 3,222
2,984
(4,512)
—

$ 1,694
357
(1,415)
(108)

528
53
(176)
—

$ —
1,699
—
(1,699)

$ —
9,292
—
(9,292)

$ —
1,510
—
(1,510)

$ 405

$ —

Remaining expected restructuring charge

400

$ —

~ 43 ~

$ —
2,414
(2,414)
—

$ —
67
(67)
—

$ —
112
(112)
—

$ —

$ —
2,888
(2,323)
(565)

$ —
2,385
(1,696)
(689)

$ —
3,072
(3,072)
—

$ 3,222
9,985
(9,249)
(2,264)

$ 1,694
12,101
(3,178)
(10,089)

528
4,747
(3,360)
(1,510)

$ —

$ 405

$10,100

$10,500

Approximately $1,510, $9,981, and $2,263 of the total restructuring charges of $4,747, $12,101, and $9,985 in 2008, 2007, and
2006, respectively, were reported in cost of products sold in the accompanying Statements of Consolidated Income, while the
remaining charges were reported in other restructuring costs. The restructuring costs classified as cost of products sold include
long-lived asset charges and inventory disposition costs. Total expected employee separation costs of approximately $16,900 are
being recognized over the estimated future service period of the related employees. The obligation related to employee separa-
tion costs is included in salaries, wages, and additional compensation in the Consolidated Balance Sheets.

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

Note E: Reportable Segments
✷✷✷

The Company operates in one industry: the manufacturing and marketing of food products. The Company has two reportable seg-
ments: U.S. retail market and special markets. The U.S. retail market segment includes the consumer and consumer oils and
baking strategic business areas. This segment primarily represents the domestic sales of Smucker’s, Jif, Crisco, Pillsbury, Eagle
Brand, Hungry Jack, White Lily, and Martha White branded products to retail customers. The special markets segment is com-
prised of the international, foodservice, beverage, and Canada strategic business areas. Special markets segment products are dis-
tributed domestically and in foreign countries through retail channels, foodservice distributors and operators (i.e., restaurants,
schools and universities, health care operations), and health and natural foods stores and distributors.

~ 44 ~

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
Share-based compensation expense
Restructuring costs
Merger and integration costs
Corporate administrative expenses
Other unallocated income (expense)

Year Ended April 30,

2008

2007

2006

$1,874,547
650,227

$1,547,064
600,953

$1,484,873
669,853

$2,524,774

$2,148,017

$2,154,726

$ 332,827
92,019

$ 319,795
72,974

$ 305,121
68,033

$ 424,846

$ 392,769

$ 373,154

13,259
(42,145)
(4,122)
(11,531)
(4,747)
(7,967)
(115,569)
2,764

9,225
(23,363)
(1,528)
(11,257)
(12,101)
(61)
(111,082)
(1,598)

6,630
(24,026)
(190)
(7,255)
(9,985)
(17,934)
(109,223)
4,399

Income before income taxes

$ 254,788

$ 241,004

$ 215,570

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

$2,199,433

$1,819,747

$1,746,111

$ 278,447
46,894

$ 282,069
46,201

$ 368,017
40,598

$ 325,341

$ 328,270

$ 408,615

$2,524,774

$2,148,017

$2,154,726

$2,604,909

$2,198,029

$2,101,109

$ 516,529
8,443

$ 484,641
11,153

$ 539,750
8,885

$ 524,972

$ 495,794

$ 548,635

$3,129,881

$2,693,823

$2,649,744

$1,895,500

$1,690,755

$1,662,389

$ 457,344
830

$ 357,486
6,216

$ 339,490
5,027

$ 458,174

$ 363,702

$ 344,517

$2,353,674

$2,054,457

$2,006,906

Segment profit represents revenue less direct and allocable operating expenses.

~ 45 ~

The following table presents product sales information.

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

Total

Year Ended April 30,

2008

2007

2006

19%
14
13
10
10
8
5
5
5
4
3
4

21%
15
14
11
—
11
5
5
4
5
3
6

19%
16
14
11
—
14
5
4
4
4
3
6

100%

As a result of the pending Folgers merger disclosed in Note B: Subsequent Events, the Company is in the process of evaluating
its current management organization and reporting structure. As part of this evaluation, the Company will evaluate its reportable
segment presentation upon closing of the pending transaction. If the evaluation results in a change in segment reporting, all his-
torical information will be retroactively conformed to the new presentation to the extent practical.

The following table sets forth the computation of earnings per common share and earnings per common share – assuming dilution.

Note F: Earnings per Share
✷✷✷

Numerator:

Net income for earnings per common share and

earnings per common share – assuming dilution

Denominator:

Weighted-average shares
Effect of dilutive securities:

Stock options
Restricted stock

Denominator for earnings per common share –

assuming dilution

Net income per common share

Net income per common share – assuming dilution

Year Ended April 30,

2008

2007

2006

$170,379

$157,219

$143,354

56,226,206

56,432,839

57,863,270

231,682
262,757

389,247
234,335

435,361
126,730

56,720,645

57,056,421

58,425,361

3.03

3.00

2.79

2.76

2.48

2.45

Options to purchase 24,248 and 200,967 common shares were outstanding during 2007 and 2006, respectively, 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 have been antidilutive.

~ 46 ~

Note G: Marketable Securities
✷✷✷

Under the Company’s investment policy, it may invest in debt securities deemed to be investment grade at time of purchase.
Currently, these investments are defined as mortgage-backed obligations, corporate bonds, municipal bonds, federal agency notes,
and commercial paper. However, in light of current market conditions, the Company has limited its investments primarily to high-
quality money market funds. The Company determines the appropriate categorization of 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. 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. Approximately $257,536, $26,272, and $31,101 of proceeds have been realized upon maturity or
sale of available-for-sale marketable securities in 2008, 2007, and 2006, respectively. The Company uses specific identification to
determine the basis on which securities are sold.

The following table is a summary of available-for-sale marketable securities, consisting entirely of mortgage-backed securities, at
April 30, 2008 and 2007.

Cost
Gross unrealized gains
Gross unrealized losses

Estimated fair value

Year Ended April 30,

2008

$16,532
—
(489)

$16,043

2007

$44,679
134
(696)

$44,117

Marketable securities in an unrealized loss position at April 30, 2008, consisted of two securities for a period of less than twelve
months. Based on management’s evaluation at April 30, 2008, 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 H: Goodwill and Other Intangible Assets
✷✷✷

A summary of changes in the Company’s goodwill during the years ended April 30, 2008 and 2007, by reportable segment is as
follows:

Balance at May 1, 2006
Acquisitions
Other

Balance at April 30, 2007
Acquisitions
Other

Balance at April 30, 2008

U.S. Retail
Market

902,097
34,800
(364)

936,533
101,147
4,331

Special
Markets

$ 38,870
15,434
(66)

$ 54,238
34,060
2,167

Total

940,967
50,234
(430)

990,771
135,207
6,498

$1,042,011

$90,465

$1,132,476

Included in the other category at April 30, 2008 and 2007, were tax adjustments related to various items recognized in goodwill
that are deductible for tax purposes.

~ 47 ~

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

April 30, 2008

April 30, 2007

Acquisition Accumulated
Cost Amortization

Net

Acquisition Accumulated
Cost Amortization

Net

Finite-lived intangible assets
subject to amortization:
Patents
Technology
Customer relationships
Trademarks

Total intangible assets

subject to amortization

Indefinite-lived intangible assets
not subject to amortization:
Trademarks

$ 1,000
970
79,103
6,785

$ 592
49
3,334
663

408
921
75,769
6,122

$ 1,000
—
—
6,592

$492
—
—
251

508
—
—
6,341

$ 87,858

$4,638

$ 83,220

$ 7,592

$743

6,849

Total other intangible assets

$618,638

$4,638

$614,000

$478,937

$530,780

$ —

$530,780

$471,345

$ —

$743

$471,345

$478,194

Amortization expense for finite-lived intangible assets was $3,895, $351, and $100 in 2008, 2007, and 2006, respectively. The
weighted-average useful life of the finite-lived intangible assets is 20 years. Based on the current amount of intangible assets sub-
ject to amortization, the estimated amortization expense for each of the succeeding five years is $4,500.

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, 2008. Goodwill impairment is tested at the reporting unit levels which are the
Company’s operating segments. No impairment was required to be recorded as a result of the annual impairment review.
Approximately $225 of impairment was recorded related to certain indefinite-lived intangible assets in 2007.

Note I: Pensions and Other Postretirement Benefits
✷✷✷

The Company has pension plans covering certain 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 requirements of applicable
government regulations.

In addition to providing pension benefits, the Company sponsors several unfunded, defined postretirement plans that provide
health care and life insurance benefits to certain retired domestic and Canadian employees. These plans are contributory, with
retiree contributions adjusted periodically, and contain other cost-sharing features, such as deductibles and coinsurance. Covered
employees generally are eligible for these benefits when they reach age 55 and have attained 10 years of credited service.

Effective April 30, 2007, the Company adopted Statement of Financial Accounting Standards No. 158, Employers’ Accounting for
Defined Benefit Pension and Other Postretirement Plans – an amendment of FASB Statement Nos. 87, 88, 106, and 132(R) (“SFAS
158”). SFAS 158 requires the recognition of a plan’s funded status as an asset for fully funded plans and as a liability for unfunded
or under-funded plans. Previously unrecognized actuarial gains and losses and prior service costs are now recorded in accumu-
lated other comprehensive income. The amounts recorded in accumulated other comprehensive income are modified as actuarial
assumptions and service costs change and such amounts are amortized to expense over a period of time through the net periodic
benefit cost.

~ 48 ~

The following table summarizes the components of net periodic benefit cost and other comprehensive income related to the
defined benefit pension and other postretirement plans.

Defined Benefit Pension Plans

Other
Postretirement Benefits

Benefit obligation at end of the year
Fair value of plan assets at end of the year

Funded status of the plans

Service cost
Interest cost
Company contributions
Participant contributions
Benefits paid
Net periodic benefit (credit) cost

$145,348
154,530

$137,005
147,284

$ 12,079
—

$ 12,473
—

$ 9,182

$ 10,279

$(12,079)

$(12,473)

$ 1,103
8,553
1,654
371
(9,406)
(2,849)

$ 1,696
6,607
8,465
628
(7,691)
(1,710)

58
669
1,090
—
(1,090)
727

200
714
802
—
(802)
964

~ 51 ~

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

Accumulated benefit obligation for all pension plans
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:

Projected benefit obligation
Fair value of plan assets

April 30,

2008

2007

$411,478

$410,389

80,762
37,686

85,596
37,686

80,324
39,183

85,084
39,183

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

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

Equity securities
Debt securities
Cash and other investments

Target
Allocation

50%
40
10

100%

Actual Allocation

April 30,

2008

54%
40
6

100%

2007

54%
40
6

100%

Included in equity securities are 317,552 of the Company’s common shares at April 30, 2008 and 2007. The market value of these
shares is $15,839 at April 30, 2008. The Company paid dividends of $381 on these shares during 2008.

The Company expects to contribute approximately $2.1 million to the pension plans in 2009. The Company expects to make the
following benefit payments for all benefit plans: $27 million in 2009, $27 million in 2010, $35 million in 2011, $30 million in 2012,
$30 million in 2013, and $160 million in 2014 through 2018.

Note J: Savings Plans
✷✷✷

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

ESOP loans bear interest at one-half percentage point over prime, are secured by the unallocated shares of the plan, and are
payable as a condition of allocating shares to participants. Interest incurred on ESOP debt was $376, $530, and $506 in 2008, 2007,
and 2006, respectively. Contributions to the plan, representing compensation expense, are made annually in amounts sufficient to

~ 52 ~

fund ESOP debt repayment and were $690, $684, and $558 in 2008, 2007, and 2006, respectively. Dividends on unallocated shares
are used to reduce expense and were $334, $356, and $380 in 2008, 2007, and 2006, respectively. The principal payments received
from the ESOP in 2008, 2007, and 2006 were $538, $508, and $519, respectively.

Dividends on allocated shares are credited to participant accounts and are used to purchase additional common shares for partic-
ipant accounts. Dividends on allocated and unallocated shares are charged to retained income 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, 2008, the ESOP held 269,398 unallocated and 702,502 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 cer-
tain collective bargaining agreements. The Company’s contributions under these plans are based on a specified percentage of
employee contributions. Charges to operations for these plans in 2008, 2007, and 2006 were $4,943, $4,138, and $4,213, respectively.

Note K: Share-Based Payments
✷✷✷

The Company provides for equity-based incentives to be awarded to key employees and nonemployee directors. Currently, these
incentives consist of restricted shares, restricted stock units, deferred shares, deferred stock units, performance units, and stock
options. These awards are administered through various plans, as described in the following paragraphs.

2006 Equity Compensation Plan: In August 2006, the Company’s shareholders approved the 2006 Equity Compensation Plan.
Awards under this plan may be in the form of stock options, stock appreciation rights, restricted shares, deferred stock units, per-
formance shares, performance units, incentive awards, and other share-based awards. Awards under this plan may be granted to
the Company’s nonemployee directors, consultants, officers, and other employees. Deferred stock units granted to nonemployee
directors vest immediately. At April 30, 2008, there were 2,352,462 shares available for future issuance under this plan. As a result
of this plan becoming effective in August 2006, no further awards will be made under the previously existing equity compensa-
tion plans listed below, except for certain defined circumstances included in the new plan.

1998 Equity and Performance Incentive Plan: This plan provides for the issuance of stock options and restricted shares, which may
include performance criteria, as well as stock appreciation rights, deferred shares, performance shares, and performance units.
As a result of the adoption of the 2006 Equity Compensation Plan, there are no common shares available for grant under this plan.
Options granted under this plan became exercisable at the rate of one-third per year, beginning one year after the date of grant.
The contractual term of the options is 10 years, and the option price is equal to the market value of the shares on the date of the
grant. Restricted shares and deferred shares issued under this plan are subject to a risk of forfeiture for at least three years in the
event of termination of employment or failure to meet performance criteria, if any. Restricted shares and deferred shares issued
to date under the plan are generally subject to a four-year forfeiture period, but may provide for the earlier termination of restric-
tions in the event of retirement, the attainment of a defined age and service requirements, permanent disability or death of an
employee, or a change in control of the Company.

Upon adoption of Statement of Financial Accounting Standards No. 123 (revised), Share-Based Payment (“SFAS 123R”), restricted
shares, deferred stock units, performance units, and performance shares are charged to expense over the requisite service period,
which includes a one-year performance period plus the defined forfeiture period. Performance units are granted to a limited
number of executives. At the beginning of each fiscal year, performance criteria are established for the restricted shares, deferred
stock units, and performance units to be earned during the year. At the end of the one-year performance period, the restricted
shares and deferred stock units are granted and the performance units and performance shares are converted into restricted
shares and all are subject to normal vesting over the remaining forfeiture period. The actual number of restricted shares issued
on the conversion date will depend on the actual performance achieved.

~ 53 ~

1987 Stock Option Plan: Options granted under this plan became 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. The maximum con-
tractual term on options issued under this plan is 10 years. As a result of the adoption of the 2006 Equity Compensation Plan,
there are no common shares available for future grant under this plan.

Nonemployee Director Stock Option Plan: This plan provides for the issuance of stock options to nonemployee directors annually.
Options granted under this plan became 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. The maximum contractual term on options issued under this plan is 10 years. As a
result of the adoption of the 2006 Equity Compensation Plan, there are no 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 International
Multifoods Corporation (“Multifoods”) in 1997. Effective with the Company’s acquisition of Multifoods, the Company assumed
the plan. After the acquisition, only former employees of Multifoods that are employed by the Company were eligible to receive
awards under the plan. The maximum contractual term on options issued under this plan is 10 years. As a result of the adoption
of the 2006 Equity Compensation Plan, there are no common shares available for future grant under this plan.

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

Under the 2006 Equity Compensation Plan, the Company has the option to settle share-based awards by issuing common shares
from treasury or issuing new Company common shares. For awards granted from the Company’s other equity compensation plans,
the Company issues common shares from treasury, except for plans that were acquired as part of the Multifoods acquisition, which
are settled by issuing new Company common shares.

~ Stock Options ~

Beginning in fiscal 2006, the Company replaced its employee stock option incentive program with a restricted shares program.
No stock options were issued to employees during 2008, 2007, and 2006. During 2006, 12,000 stock options were issued to non-
employee directors, with a grant date fair value of $11.45.

On April 12, 2006, the Executive Compensation Committee of the Company’s Board of Directors approved accelerating the vesting
of previously issued stock options that had exercise prices greater than $39.31, the closing price of the Company’s common shares
on the New York Stock Exchange on April 11, 2006. As a result, approximately 441,000 stock options with exercise prices of either
$43.38 or $44.17 became immediately exercisable. Approximately 110,000 and 331,000 of these options would originally have vested
in 2007 and 2008, respectively. The Company accelerated vesting in order to minimize future noncash compensation expense asso-
ciated with stock options upon adoption of SFAS 123R on May 1, 2006. By accelerating the vesting of those options, the Company
did not incur compensation expense related to those options of approximately $1.0 million and $2.7 million in 2008 and 2007, respec-
tively, that otherwise would have been required to be recognized in the respective periods upon adoption of SFAS 123R.

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

Outstanding at May 1, 2007

Exercised
Forfeited

Outstanding and exercisable at April 30, 2008

Options

2,147,358
(1,007,303)
(21,196)

1,118,859

Weighted-
Average
Exercise
Price

$35.65
32.36
55.60

$38.23

At April 30, 2008, the weighted-average remaining contractual term for stock options outstanding and exercisable was 4.9 years,
and the aggregate intrinsic value of these stock options was $13,036.

The total intrinsic value of options exercised during 2008, 2007, and 2006, was approximately $28,973, $9,409, and $3,674, respectively.

~ 54 ~

A summary of the Company’s restricted shares, deferred shares, deferred stock units, performance shares, and performance units
activity follows:

~ Other Equity Awards ~

Outstanding at May 1, 2007

Granted
Converted
Unrestricted
Forfeited

Outstanding at April 30, 2008

Restricted/
Deferred
Shares and
Deferred
Stock Units

427,845
140,290
67,440
(192,284)
(4,801)

438,490

Weighted-
Average
Grant Date
Fair Value

$ 42.92
57.50
57.73
44.45
49.65

$49.12

Performance
Shares and
Units

Weighted-
Average
Fair Value

67,440
65,830
(67,440)
—
—

65,830

$ 57.73
51.37
57.73
—
—

$51.37

The total fair value of equity awards other than stock options vesting in 2008, 2007, and 2006, was approximately $8,547, $4,276,
and $3,700, respectively. The weighted-average grant date fair value of restricted shares, deferred shares, deferred stock units,
performance shares, and performance units is the average of the high and the low share price on the date of grant. The following
table summarizes the weighted-average grant date fair values of the equity awards granted in 2008, 2007, and 2006.

Year Ended April 30,

2008
2007
2006

Restricted/
Deferred
Shares and
Deferred
Stock Units

140,290
172,669
199,640

Weighted-
Average
Grant Date
Fair Value

$57.50
40.80
50.11

Performance
Shares and
Units

65,830
67,440
63,310

Weighted-
Averagei
Grant Date
Fair Value

$51.37
57.73
40.41

The performance shares and units column represents the number of restricted shares received by certain executive officers, sub-
sequent to year end, upon conversion of the performance shares and units earned during the year. Restricted stock generally
vests four years from the date of grant or upon the attainment of a defined age and years of service.

Note L: Long-Term Debt and Financing Arrangements
✷✷✷

Long-term debt consists of the following:

6.77% Senior Notes due June 1, 2009
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
5.55% Senior Notes due April 1, 2022

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

Total long-term debt less current portion

April 30,

2008

2007

$ 75,000
—
10,000
100,000
204,684
400,000

$789,684
—

$789,684

$ 75,000
33,000
10,000
100,000
207,643
—

$425,643
33,000

$392,643

The notes are unsecured and interest is paid annually on the 6.60 percent Senior Notes and semiannually on the other notes. The
6.60 percent Senior Notes are guaranteed by Diageo plc. The guarantee may terminate, in limited circumstances, prior to the

~ 55 ~

maturity of the notes. Among other restrictions, the note purchase agreements contain certain covenants relating to liens, con-
solidated net worth, and sale of assets as defined in the agreements. The Company is in compliance with all covenants.

On May 31, 2007, the Company issued $400 million of 5.55 percent Senior Notes, due April 1, 2022, with required prepayments,
the first of which is $50 million on April 1, 2013. Proceeds from this issuance were used to repay borrowings under the revolv-
ing credit facility used in financing the acquisition of Eagle. Additional proceeds were used to finance other strategic and long-
term initiatives as determined by the Company.

The Company has available a $180 million revolving credit facility with a group of three 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, 2008, the Company did not have a balance
outstanding under the revolving credit facility. At April 30, 2008, the Company had standby letters of credit of approximately $9.5
million outstanding.

Interest paid totaled $44,584, $27,580, and $29,374 in 2008, 2007, and 2006, respectively. This differs from interest expense due
to the timing of payments, amortization of the fair value adjustment on the 6.60 percent Senior Notes, amortization of deferred
interest rate swap gains, and interest capitalized.

Note M: Contingencies
✷✷✷

The Company, like other food manufacturers, is from time to time subject to various administrative, regulatory, and other legal
proceedings arising in the ordinary course of business. The Company is not currently party to any pending proceedings which
could reasonably be expected to have a material adverse effect on the Company.

Note N: Derivative Financial Instruments
✷✷✷

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

Commodity Price Management: In connection with the purchase of inventories by the Company’s baking business in Canada and
the consumer oils and baking business in the United States, the Company enters into commodity futures and options contracts
to manage the price volatility and reduce the variability of future cash flows related to anticipated inventory purchases of flour,
milk, and edible oils. The Company also enters into commodity futures and options related to the delivery of natural gas to its
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 business meet the hedge criteria according to Statement of
Financial Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging Activities (“SFAS 133”), and are
accounted for as cash flow hedges. The mark-to-market gains or losses on qualifying hedges are deferred and included as a com-
ponent of other comprehensive income 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 ineffec-
tiveness 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.

~ 56 ~

The fair value of all derivative commodity instruments is included in current assets on the Consolidated Balance Sheets. As of
April 30, 2008 and 2007, the deferred gain, net of tax, included in accumulated other comprehensive income was $8,046 and $858,
respectively. The entire amount at April 30, 2008, is expected to be recognized in earnings as the related commodity is utilized
during 2009. The impact of commodities futures contracts and options recognized in earnings was a gain of $18,428, $4,940, and
$637 in 2008, 2007, and 2006, respectively. Included in these amounts are amounts related to nonqualifying, excluded, and inef-
fective portions of hedges resulting in a gain of $7,851, $1,552, and $1,742 in 2008, 2007, and 2006, respectively.

Foreign Exchange Rate Hedging: The Company may periodically utilize forward currency exchange contracts. The contracts gen-
erally have maturities of less than one year. These contracts are used to manage the effect of the foreign exchange fluctuations
on future cash payments related to purchases of certain assets. At the inception of the contract, the derivative is evaluated and
documented for SFAS 133 accounting treatment. If the contract qualifies for hedge accounting treatment, to the extent the hedge
is deemed effective, the associated mark-to-market gains and losses are deferred and included as a component of other compre-
hensive income. As of April 30, 2008, the deferred gain, net of tax, included in accumulated other comprehensive income was
$105. These gains or losses are reclassified to earnings in the period the contracts are executed. The ineffective portion of these
contracts is immediately recognized in earnings. Certain instruments used to manage foreign exchange exposures do not meet the
requirements for hedge accounting treatment and the change in value of these instruments is immediately recognized in earnings.

Note O: Other Financial Instruments
✷✷✷

Financial instruments, other than derivatives, that potentially subject the Company to significant concentrations of credit risk con-
sist principally of cash investments, marketable securities, and trade receivables. The Company places its cash investments with
high quality financial institutions and limits the amount of credit exposure to any one institution. The Company’s marketable secu-
rities 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 mortgage-backed obligations, corporate bonds, municipal bonds,
federal agency notes, and commercial paper. However, in light of current market conditions, the Company has limited its invest-
ments primarily to high-quality money market funds. The Company determines the appropriate categorization of its debt securi-
ties at the time of purchase and reevaluates such designation at each balance sheet date. With respect to trade receivables,
concentration of credit risk is limited due to the large number of customers. The Company does not require collateral from its
customers. The fair value of the Company’s financial instruments, other than certain of its fixed-rate long-term debt, approxi-
mates 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 $807,583 at April 30, 2008.

The following table provides information on the carrying amount and fair value of financial instruments, including derivative finan-
cial instruments.

April 30, 2008

April 30, 2007

Marketable securities
Derivative financial instruments (net assets)
Long-term debt:

Carrying
Amount

$ 16,043
1,269

75,000
—
10,000
100,000
204,684
400,000

Fair Value

$ 16,043
1,269

78,722
—
11,016
99,339
211,591
406,915

Carrying
Amount

$ 44,117
971

75,000
33,000
10,000
100,000
207,643
—

Fair Value

$ 44,117
971

77,905
33,400
10,867
96,278
208,037
—

~ 57 ~

Note P: 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
Pension and other employee benefits
Other

Total deferred tax liabilities

Deferred tax assets:
Loss carryforwards
Post-employment and other employee benefits
Tax credit carryforwards
Intangible assets
Other

Total deferred tax assets
Valuation allowance for deferred tax assets

Total deferred tax assets less allowance

Net deferred tax liability

April 30,

2008

2007

$148,182
59,359
11,280
8,000

$226,821

$8,858
43,902
990
4,866
10,962

$ 69,578
(9,890)

$ 59,688

$167,133

$139,445
54,925
10,976
4,434

$209,780

$ 12,783
42,240
12,203
4,579
8,031

$ 79,836
(16,626)

$ 63,210

$146,570

The following table summarizes domestic and foreign loss carryforwards at April 30, 2008.

Loss carryforwards:
Federal capital loss
State net operating loss
Foreign net operating loss

Total loss carryforwards

Related Tax
Deduction

Deferred
Tax Asset

Expiration Date

$ 11,205
111,345
4,213

$126,763

2010 to 2012
2009 to 2028
2017

$4,043
4,413
402

$8,858

Deferred tax assets at April 30, 2008, also include $990 of foreign tax credit carryforwards that are due to expire from 2010 to 2011.

~ 58 ~

The valuation allowance decreased by $6,736, primarily due to the write-off of deferred tax assets and corresponding full valua-
tion allowances associated with foreign tax credit carryforwards. The valuation allowance at April 30, 2008, includes approxi-
mately $9,210 for the domestic and foreign loss and tax credit carryforwards. Approximately $4,751 of the valuation allowance, if
subsequently recognized as a tax benefit under current accounting rules, would be allocated to reduce goodwill.

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 or deductions for foreign taxes already paid. It is not practical to esti-
mate the amount of additional taxes that might be payable on such undistributed earnings.

Income (loss) before income taxes is as follows:

Domestic
Foreign

Income 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

Year Ended April 30,

2008

2007

2006

$236,307
18,481

$254,788

$241,349
(345)

$241,004

$210,157
5,413

$215,570

Year Ended April 30,

2008

2007

2006

$ 59,239
3,580
3,375
18,215

$ 84,409

$ 59,207
(3,756)
5,804
22,530

$ 34,460
(81)
4,713
33,124

$ 83,785

$ 72,216

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

State and local income taxes, net of

federal income tax benefit

Other items – net

Effective income tax rate

Income taxes paid

Year Ended April 30,

2008

35.0%

0.4
(2.3)

33.1%

2007

35.0%

2.0
(2.2)

34.8%

2006

35.0%

0.8
(2.3)

33.5%

$ 73,786

$ 54,581

$ 5,882

In July 2006, the Financial Accounting Standards Board issued Interpretation No. 48, Accounting for Uncertainty in Income Taxes
(“FIN 48”), which is an interpretation of Statement of Financial Accounting Standards No. 109, Accounting for Income Taxes. FIN 48
clarifies the financial statement recognition and measurement criteria of a tax position taken or expected to be taken in a tax return.
FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure,
and transition. The Company adopted FIN 48 as of May 1, 2007.

~ 59 ~

The cumulative effect of applying this interpretation has been recorded as a decrease of $2,374 to retained income as of May 1,
2007. The Company’s unrecognized tax benefits upon adoption on May 1, 2007, were $19,591, of which $11,231 would affect the
effective tax rate, if recognized.

In accordance with the requirements of FIN 48, uncertain tax positions have been classified in the Consolidated Balance Sheets
as long term, except to the extent payment is expected within one year. The Company recognizes net interest and penalties related
to unrecognized tax benefits in income tax expense, consistent with the accounting method used prior to adopting FIN 48. As of
May 1, 2007, the Company’s accrual for tax-related net interest and penalties totaled $5,247.

The Company files income tax returns in the U.S. and various state, local, and foreign jurisdictions. With limited exceptions, the
Company is no longer subject to examination of U.S. federal, state and local, or foreign income taxes for years prior to 2004. The
Company is currently under examination by the Internal Revenue Service (“IRS”) for years ending 2007 and 2006. During 2008,
the Company reached an agreement with the IRS on proposed adjustments resulting from an examination of its federal income
tax returns for years ended in 2005 and 2004. As a result of this agreement, the Company reduced its unrecognized tax benefits
and net interest accrual by $4,871 and $667, respectively, and paid $7,726 in taxes and interest. The agreement did not have a
material effect on the Company’s effective tax rate for the year.

Within the next twelve months, it is reasonably possible that the Company could decrease its unrecognized tax benefits by an
estimated $4,540, primarily as a result of state settlement negotiations in process and the expiration of federal, state, and local
statute of limitation periods.

The Company’s unrecognized tax benefits as of April 30, 2008, are $21,902, of which $8,961 would affect the effective tax rate, if
recognized. As of April 30, 2008, the Company’s accrual for tax-related net interest and penalties totaled $4,865. The amount of
tax-related net interest and penalties charged to earnings during 2008 totaled $36.

A reconciliation of the Company’s unrecognized tax benefits is as follows:

Balance at May 1, 2007
Increases:

Current year tax positions
Current year acquisitions
Prior year tax positions

Decreases:

Prior year tax positions
Settlement with tax authorities
Expiration of statute of limitations periods

Balance at April 30, 2008

$19,591

117
6,752
5,869

1,642
7,395
1,390

$21,902

~ 60 ~

Note Q: Accumulated Other Comprehensive Income
✷✷✷

Comprehensive income is included in the Statements of Consolidated Shareholders’ Equity. The components of accumulated
other comprehensive income as shown on the Consolidated Balance Sheets are as follows:

Balance at May 1, 2005

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

Balance at April 30, 2006

Reclassification adjustments
Current period credit
Adjustments to initially apply

Statement of Financial Accounting
Standards No. 158

Income tax benefit (expense)

Balance at April 30, 2007

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

Foreign
Currency
Translation
Adjustment

$ 15,276
—
19,512
—

$ 34,788
—
2,437

—
—

$ 37,225
—
20,861
—

Pension
and Other

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

Liabilities

Unrealized Unrealized Gain
on Cash Flow
Hedging
Derivatives

$ (16,333)
—
13,527
(4,817)

$ (7,623)
—
826

(21,475)
6,978

$ (21,294)
—
(3,642)
722

(26)
—
(1,025)
375

$ (676)
—
2,593

—
(949)

968
—
(611)
232

924
$
(1,467)
1,146
117

$
720
(1,146)
1,354

—
(70)

$
858
(1,354)
12,885
(4,238)

Accumulated
Other
Comprehensive
Income

(159)
(1,467)
33,160
(4,325)

$ 27,209
(1,146)
7,210

(21,475)
5,959

$ 17,757
(1,354)
29,493
(3,284)

Balance at April 30, 2008

$58,086

$(24,214)

$ 589

$8,151

$42,612

~ 61 ~

Note R: Common Shares
✷✷✷

Voting: The Company’s Amended Articles of Incorporation (“the Articles”) provide that each holder of an outstanding common
share is entitled to one vote on each matter submitted to a vote of the shareholders except for the following specific matters:

 any matter that relates to or would result in the dissolution or liquidation of the Company;
 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;

 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;

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

arrangement, or agreement;

 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 authoriza-
tion of the lease, sale, exchange, transfer, or other disposition of all, or substantially all, of the Company’s assets;

 any matter submitted to the Company’s shareholders pursuant to Article Fifth (which relates to procedures applicable to cer-
tain business combinations) or Article Seventh (which relates to procedures applicable to certain proposed acquisitions of
specified percentages of the Company’s outstanding shares) of the Amended Articles of Incorporation, as they may be fur-
ther amended, or any issuance of common shares of the Company for which shareholder approval is required by applicable
stock exchange rules; and

 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 10 votes per share, if they meet the requirements set forth in the
Articles. Common shares which would be entitled to 10 votes per share are:

 common shares beneficially owned for four consecutive years as of the June 23, 2008, annual meeting record date; or
 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.

~ 62 ~

Shareholders’ Rights Plan: Pursuant to a shareholders’ rights plan established in 1999, one share purchase right is associated 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 10 percent or more of the outstanding common
shares. Rights held by persons who exceed the applicable thresholds will be void. Shares held by members of the Smucker family
are not subject to the thresholds. If exercisable, each right entitles the shareholder to buy one common share at a discounted
price. Under certain circumstances, the rights will entitle the holder to buy shares in an acquiring entity at a discounted price.

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

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

~ 63 ~

Directors, Officers, and General Managers

The J. M. Smucker Company

— Directors —

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

R. Douglas Cowan A
Chairman
The Davey Tree Expert Company
Kent, Ohio

Kathryn W. Dindo A, E
Retired Vice President
FirstEnergy Corp.
Akron, Ohio

Paul J. Dolan E
President
Cleveland Indians
Cleveland, Ohio

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

Nancy Lopez Knight G
Founder
Nancy Lopez Golf Company
Albany, Georgia

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
Advisor to Business and Non-Profit Leaders
Shaker Heights, Ohio

A Audit Committee Member
E Executive Compensation Committee Member
G Nominating and Corporate Governance

Committee Member

— Officers & General Managers —

Jeannette L. Knudsen
Securities and Acquisition Counsel
and Assistant Secretary

Debra A. Marthey
Assistant Treasurer

Larry W. Herman
General Manager, Foodservice

Gary A. Jeffcott
General Manager, International Market

David Lemmon
Managing Director, Canada

— Properties —

Corporate Offices:

Orrville, Ohio

Domestic Locations:

Chico, California

Cincinnati, Ohio

El Paso, Texas

Grandview, Washington

Havre de Grace, Maryland

Lexington, Kentucky

Memphis, Tennessee

New Bethlehem, Pennsylvania

Orrville, Ohio

Oxnard, California

Ripon, Wisconsin

Scottsville, Kentucky

Seneca, Missouri

Toledo, Ohio

West Fargo, North Dakota*

International Manufacturing
Locations:

Delhi Township, Ontario, Canada

Dunnville, Ontario, Canada

Sherbrooke, Quebec, Canada

Ste. Marie, Quebec, Canada

Sales and Administrative Offices:*

Bentonville, Arkansas

Markham, Ontario, Canada

Mexico City, Mexico

* Leased properties

Timothy P. Smucker
Chairman and Co-Chief Executive Officer

Richard K. Smucker
President and Co-Chief Executive Officer

Dennis J. Armstrong
Vice President, Logistics and

Operational Support

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

Vincent C. Byrd
Senior Vice President, Consumer Market

John W. Denman
Vice President and Controller

Barry C. Dunaway
Vice President, Corporate Development

M. Ann Harlan
Vice President, General Counsel
and Secretary

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

John F. Mayer
Vice President, Customer Development

Kenneth A. Miller
Vice President, Alternate Channels

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

Julia L. Sabin
Vice President and General Manager,
Smucker Quality Beverages, Inc.

Mark T. Smucker
Vice President, International

Paul Smucker Wagstaff
Vice President, Foodservice
and Beverage Markets

Albert W. Yeagley
Vice President, Quality Assurance

~ 64 ~

Corporate and Shareholder Information

The J. M. Smucker Company

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

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

Corporate Web Site
To learn more about The J. M. Smucker Company, visit
www.smuckers.com.

Annual Meeting
The annual meeting will be held at 11:00 a.m. Eastern Daylight
Time, Thursday, August 21, 2008, in Fisher Auditorium at the
Ohio Agricultural Research and Development Center,
1680 Madison Avenue, Wooster, Ohio 44691.

Corporate News and Reports
Corporate news releases, annual reports, and Securities and
Exchange Commission filings, including Forms 10-K, 10-Q, and
8-K, are available free of charge on the Company’s Web site.
They are also available without cost to shareholders who submit
a written request to:

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

Certifications
The Company’s Chief Executive Officers and Chief Financial
Officer 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 certifications 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 “Forward-Looking Statements” located on
page 26 in the Management’s Discussion and Analysis section.

©/™/® The J. M. Smucker Company or its subsidiaries. Pillsbury, Pillsbury
BEST, the Barrelhead logo and the Doughboy character are trademarks of
The Pillsbury Company, LLC used under license. Borden and Elsie trade-
marks used under license. Splenda and Splenda design are trademarks of
McNeil Nutritionals, LLC.

Independent Registered Public Accounting Firm
Ernst & Young LLP
Akron, Ohio

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 disburse-
ment agent is Computershare Investor Services, LLC.

Shareholder Services
The transfer agent and registrar for the Company,
Computershare Investor Services, LLC, is responsible for
assisting registered shareholders with a variety of matters
including:

✥ Shareholder investment program (BYDSSM)

– direct purchase of Company common shares
– dividend reinvestment
– automatic monthly cash investments

✥ Book-entry share ownership
✥ Share transfer matters (including name changes,

gifting, and inheritances)

✥ Direct deposit of dividend payments
✥ Nonreceipt of dividend checks
✥ Lost share certificates
✥ Changes of address
✥ Online shareholder account access
✥ Form 1099 income inquiries (including requests for

duplicate copies)

Shareholders may contact Shareholder Relations at the
corporate offices regarding other shareholder inquiries.

Transfer Agent and Registrar
Computershare Investor Services, LLC
250 Royall Street
Canton, MA 02021
Telephone: (800) 456-1169
Telephone outside the U.S., Canada, and
Puerto Rico: (312) 360-5254
Web site: www.computershare.com/contactus

The majority of this report was printed
on paper with a minimum of 25% post-
consumer waste recycled content.

All the Goodness of Smucker’s®... In a Store!

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Company Museum

Brand Products & Merchandise

Smucker’s Wall of Jam

The Café

Custom Gift Baskets

Unique Gift Sets

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With a Name Like Smucker’s, It Has to Be Good.®

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