The J. M. Smucker Company Annual Report 2009

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FY2009 Annual Report · The J. M. Smucker Company

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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,

2009

2008

$3,757,933

$2,524,774

$ 265,953
$ 3.12

$ 170,379
$ 3.00

$ 321,617
$ 3.77
118,422,123
4,700

$ 396,065
72,666
—
10,229

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

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

$ 478,960
157,343

$ 267,502
88,621

$ 321,617

$ 178,881

CONTENTS

Our Culture

Letter to Shareholders

Business Overview

Our Commitment to Sustainability

Our Store and Café

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 Management on Responsibility
for Financial Reporting

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

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

Consolidated Financial Statements

Notes to Consolidated Financial Statements

Directors and Officers

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 consumers

and to our customers.

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.

Knott’s Buff

Black

PMS 871

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:

This past fiscal year has been one of the most remark-
able and unprecedented in our Company’s history.

We delivered excellent results across the business while

successfully completing the largest merger in our history.

In November 2008, we added Folgers—the #1 U.S. Retail

coffee brand—to our portfolio. The strategic rationale

for this transaction is compelling:
W Expands our portfolio of strong, #1 food brands

in North America.

W Adds a nearly $2 billion brand that delivers strong

profitability and increased cash flow.
W Continues to enhance our size and scale.
W Expands our product offerings to consumers

throughout the day and evening.

W Enhances our organization with talented new

employees and provides all employees with growth

opportunities as part of a Company strongly rooted

in our Basic Beliefs of Quality, People, Ethics, Growth,

and Independence.

Fiscal Year 2009

Our fiscal year results are particularly gratifying given

challenges in the broader economy and record commod-

ity costs that pressured margins during the first

half of the year. Our results reflect the continued imple-

mentation of our Strategy and the considerable talent

and dedication of our employees:
W Sales were $3.8 billion, up 49 percent over last year.
W Net income per share was $3.12, up from $3.00 last

year, a four percent increase.

W Cash flow from operations exceeded $440 million.
Total cash and investments as of April 30, 2009,

were $470 million.

W In addition to our regular dividend payments, a
special one-time dividend of $5.00 per share was

issued to Smucker shareholders of record as of

September 30, 2008. This one-time dividend was

part of the overall Folgers transaction and an

example of how we continue to provide long-

term value to our shareholders.

Long-Term Performance

We are confident that our exceptional employees and

strong portfolio of leading, icon brands will continue to

deliver long-term growth. As we look forward, we expect

to grow sales by six percent and earnings per share by

eight percent or more over the long term.

Several favorable factors will fuel continued momentum:
W We remain committed to a clear and proven strategy
of owning and marketing leading food brands in

North America.

W Market share continues to grow across almost

every category in which we compete and more than

75 percent of our sales come from #1 food brands.

W Consumers are eating more meals at home.
W Families continue to look for value and our brands

offer a variety of choices. Value refers not only to the

price consumers pay, but the quality, convenience, and

overall product experience they receive for the price.

Quality has been one of our Basic Beliefs throughout

our history and product safety is at the forefront of

everything we do. We deeply value the trust that our

consumers place in The J. M. Smucker Company and

we work every day to preserve that trust.

W The addition of Folgers has enabled the Company
to leverage its distribution, sales, operations, and

administrative functions and we are on track to

achieve $80 million in stated synergies within the

first 18 months of owning the Coffee business.

Leveraging our increased scale will enable us to

grow bottom-line profitability at a faster pace than

our top-line growth.

W We have an outstanding team, and they have delivered
record core business results this year, while integrating

the largest merger in our history. The commitment

of our employees to the values and principles upon

which the Company was founded will continue to

guide how we do business in both prosperous and

uncertain economic times.

At Smucker, Our Purpose is to bring families
together to share memorable meals and moments.
We have always defined success by more than
financial performance. We believe how we do
things is just as important as what we do.

Our Purpose and Our Brands

We offer consumers diverse brands and products that

are part of everyday meals, casual get-togethers, and

special occasions. And, more than just providing a meal

or snack, The J.M. Smucker Company has a meaningful

impact on society with a portfolio of brands that brings

families together to share memorable meals and moments.

These moments are repeated millions of times each day

across North America and research suggests that time

spent together builds stronger, healthier families.

The world has changed dramatically since our Company

was founded over 110 years ago. Life is more hurried,

yet consumers continue to find comfort in simple

pleasures enjoyed with family and friends. We take great

pride in the small, but important role that our brands

play in the lives of our consumers by offering trusted

products during all parts of the day:
W Each morning families awake to the fresh aroma of
Folgers or Dunkin’ Donuts coffee and pour a glass of

W And, in the evening, friends and family sit down to
talk about their day while enjoying a cup of Folgers

coffee with a piece of Pillsbury cake or a brownie.

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 of Quality, People, Ethics, Growth, and

Independence.

Our Purpose is what brings Smucker employees to work

every day. Our Strategy is what guides our organization

in a common direction and is the framework for serving

our consumers, customers, employees, suppliers, com-

munities, and shareholders.

We look forward to the continued successful integration

of the Coffee business, leveraging our increased scale,

and providing consumers with trusted, simple pleasures

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

that “make you smile.”

refreshing R.W. Knudsen Family juice. They start the

We believe the best is yet to come for the Company and

day together with warm biscuits made from Martha

all our valued constituents.

White flour and covered with Smucker’s preserves or

Jif peanut butter.

W For a meal or a snack, children and adults alike enjoy
the homemade taste of peanut butter and jelly with

Sincerely,

a convenient Smucker’s Uncrustables sandwich.

Tim Smucker Richard Smucker

Business Overview

U.S. RETAIL COFFEE MARKET SEGMENT
Folgers, Dunkin’ Donuts, and Millstone

the U.S. Retail segments and was also representing

the Coffee business for Procter & Gamble at the

time of the merger. This continuity of representation,

The Folgers merger added $856 million in sales and

in combination with our experienced and talented

$241 million in segment profit during fiscal 2009.

Smucker sales force, has enabled us to hit the

Folgers became the 12th brand in our Company’s

ground running with our customers.

portfolio that enjoys the #1 market share position in

W A smooth transition and partnership with Procter &

its category.

As part of the merger, we also acquired the Millstone

coffee brand and the licensing rights to manufacture

and distribute Dunkin’ Donuts coffee products through

retail channels. Dunkin’ Donuts coffee and Millstone

coffee participate in the growing gourmet segment of

the coffee category.

The momentum of the Coffee business is significant.

Coffee segment sales and profits for the period of

Smucker ownership

have exceeded the

financial expecta-

tions we established

upon the close of

the transaction in

November 2008.

We attribute this

success to several

factors:
W The passion, dedication, and focus of our employees.
W The strong, #1 market share position of the Folgers

Gamble.

Since the close of the transaction in November, a

number of significant integration milestones have been

achieved:
W Our coffee organization is in place.
W Customers can order and receive Folgers products
along with the rest of our Smucker products.

Smucker systems

and processes are

in place at all four

of the coffee manu-

facturing facilities.

During fiscal

2009, Folgers coffee

introduced an en-

hanced, proprietary

roasting process,

which ensures rich, pure Mountain Grown taste in

every cup. Folgers coffee beans are now pre-roasted to

improve roasting consistency and ensure a rich taste.

coffee brand across the United States.

In addition to this unprecedented innovation, the

W Continued rapid growth of Dunkin’ Donuts coffee in

retail.

Coffee business introduced Folgers Brazilian Blend,

Folgers Gourmet Selections Brazilian Sunrise, and

W Consumers are enjoying more meals at home in the

Dunkin’ Donuts Dark.

current economic environment.

W The Folgers, Dunkin’ Donuts, and Millstone coffee
brands are perfect complements to our other

U.S. Retail products and position us well to offer

consumers even more choices throughout the

day and evening.

W Advantage Sales and Marketing is our single

national broker for the grocery business within

We have been privileged to partner with
Miriam Weinstein, the author of the
thought-provoking and inspiring book,
The Surprising Power of Family Meals,
which details the far-reaching benefits of
family mealtime and cites research that
families that eat together are stronger,
smarter, healthier, and happier.

During the second half of fiscal 2009, we were

to pair beautifully with its famous jelly partner, and we

pleased to update and release some of the best televi-

offer consumers an increasing number of ways to enjoy

sion advertising for our Folgers brand emphasizing the

this “good for you” and affordable source of protein.

core brand equity of Folgers: The Best Part of Wakin’ Up.

In fiscal 2009, we introduced Reduced Fat Jif-to-Go —

We look forward to introducing new television advertis-

ing in fiscal 2010.

We were honored this past year when Dunkin’ Donuts

coffee was named the #2 most successful new prod-

uct introduction in retail during calendar year 2008 by

Information Resources, Inc. (IRI).

U.S. RETAIL CONSUMER MARKET SEGMENT
Smucker’s, Jif, and Hungry Jack

individual servings of peanut butter for consumer

convenience while away from home. We also introduced

Sales and profits within our U.S. Retail Consumer

another better for you alternative to our Jif product line

Market Segment grew by 10 percent and seven percent,

with the addition of Jif Natural peanut butter spread —

respectively, in fiscal 2009.

a no-stir, shelf-stable offering.

Fruit Spreads and Peanut Butter The “Great American

As the peanut butter category leader, we have made

PB&J” has been part of family meals for generations and

significant investments in advertising, new products,

is particularly relevant for the comfort and value it offers

and technology in recent years. During the past year we

in the current economic environment. As consumers

ran three new television advertising spots highlighting

reach for what is America’s favorite sandwich,

we continue to offer both traditional and

new alternatives.

During fiscal 2009, we introduced

how Jif peanut butter helps bring families together to

share memorable meals and moments. This campaign

built on the brand’s core “choosy moms” equity.

Toppings Smucker’s ice cream toppings help

make desserts memorable at holiday celebrations,

warm-weather gatherings, and other special occasions.

Adding to the dessert experience in fiscal 2009 were Smuck-

er’s Spoonables in Dark Chocolate or Apple Cinnamon

and Magic Shell Cupcake flavored

ice cream topping.

Potatoes, Pancakes,

Smucker’s Orchard’s Finest preserves. Consumers can

enjoy this new fruit spreads offering in Strawberry, Blue-

berry, Cherry, and Triple Berry.

Consumers have trusted Knott’s Berry Farm jellies,

jams, preserves, and syrups since 1920, and during

fiscal 2009 we added this brand to our Company’s

portfolio. Knott’s Berry Farm products complement

our existing fruit spreads and expand our offerings, par-

ticularly in the western part of the United States.

Peanut butter, our second largest category, continues

For every occasion, our goal is
to help families share special
moments by offering a variety of
quality products that are good
and good for you, convenient,
and that make you smile.

and Syrup Everybody’s

happy when it’s Hungry Jack, and during fiscal 2009

we made sure this was true for breakfast, lunch, or

dinner. Hungry Jack Buttermilk or Blueberry wheat-blend

pancakes offer consumers another “good for you” value

alternative in the morning. New Hungry Jack potatoes in

Redskin & Yukon Gold add variety and “easy for you”

convenience to lunch and dinner.

U.S. RETAIL OILS AND BAKING MARKET SEGMENT
Crisco, Pillsbury, Eagle Brand, Martha White,
White Lily, PET, and Magnolia

Sales and profits within our U.S. Retail Oils and Baking

Market Segment grew by 14 percent and 25 percent,

respectively, in fiscal 2009.

Over the past five years our U.S. leadership position

in the baking aisle has continued to strengthen. Our

portfolio of baking brands includes Crisco, Pillsbury,

Eagle Brand, Martha White, White Lily, PET, and Magnolia.

When all the categories in which these brands compete

are combined, we are the largest supplier in the total

baking category and our momentum has never been

stronger. Our success can be attributed to a focus on

quality, innovation, and seamless implementation.

Our consumers continually seek new and unique ways

to meet their everyday and special-occasion

baking needs. For the first time in many years, we are

bringing Pillsbury cookies to the center of the store

with the introduction of Funfetti, Chocolate Chunk,

and Reduced-Sugar cookie mix varieties.

The introduction of Pillsbury Brownie Minis brownie

mix in Milk Chocolate and Chocolate Fudge prove that

fun, convenience, and portion control can combine to

create a delectable treat.

And, whether you choose to frost Pillsbury Brownie

Minis or a Pillsbury cake, frosting has never been easi-

er— or more fun—than with our new, easy-to-dispense

aerosol can that delivers the same great-tasting frosting

as our ready-to-spread products. Consumers can frost

an entire cake with a single can of Pillsbury Easy Frost

frosting in a variety of flavors including Chocolate,

Vanilla, and Cream Cheese.

The Martha White brand has a rich history,

and through the years has been indispensable

in kitchens across the South. We aim to preserve

the traditions of the brand, while offering

Martha White consumers modern-day,

convenient products.

Our Crisco olive oil products are now available

nationally and offer consumers a trusted brand in the

“good for you” olive oil category. The growing success

of these products was aided during the year with

television advertising and other consumer support

that highlighted the many uses for olive oil, including

dressing a crisp salad, grilling flavorful vegetables, or

baking a golden chicken.

SPECIAL MARKETS SEGMENT

Our Special Markets segment is primarily comprised

of products that are distributed through channels other

than traditional U.S. Retail markets. The businesses in

this segment include Canada, Foodservice, Natural

Foods, and International. Compared to fiscal 2008, our

Special Markets segment grew sales and segment profits

by 24 percent and 21 percent, respectively.

Canada We offer Canadian consumers a variety of

brands that hold the #1 position in the Canadian mar-

ketplace including Smucker’s fruit spreads and toppings,

Europe’s Best premium frozen fruits and vegetables,

Carnation evaporated milk, Eagle Brand sweetened

condensed milk, Robin Hood flour and baking mixes,

and Bick’s pickles and condiments. Canadian sales

were up 28 percent versus fiscal 2008, primarily driven

by acquisitions.

During fiscal 2009, we offered the Canadian consumer

even more Crisco brand choices when we expanded

distribution of Crisco olive oil into Canada with six

new product offerings. “Good for you,” whole-wheat,

all purpose flour was also introduced during the year

under both the Robin Hood and Five Roses brands.

Moving into fiscal 2010, Folgers coffee will be an

increasingly important part of our Canadian portfolio.

We will focus on expanding distribution and look

forward to making Folgers coffee available to even

more Canadian consumers.

Foodservice The economy has been particularly

challenging for the foodservice industry this year as con-

sumers choose to eat more meals at home. With

the addition of Folgers coffee, our overall Foodservice

We strongly believe in the power
of family meals as a way for family
members to connect with one another
and establish an important ritual
that allows family and friends to
grow together.

business grew by 34 percent in fiscal 2009. Our core

business was down slightly, but fared better than the

overall industry due to the strength of our branded

products.

Our first full year of Snack’n Waffles product sales was

strong. Snack’n Waffles ready-to-eat, pre-sweetened

waffles offer consumers a convenient, hand-held waffle

to enjoy at home or on the go. Better for you, whole-

grain varieties of Maple, Cinnamon, and Blueberry were

introduced this year.

Investments in our Scottsville manufacturing facil-

Smucker Natural Foods, Inc., continues to meet

ity have positioned us for continued growth of both

consumer expectations for products that are “good and

Smucker’s Uncrustables sandwiches and Snack’n Waffles

good for you” and made in a sustainable manner. The

ready-to-eat waffles.

business is an industry sustainability leader, receiving

The addition of coffee to the portfolio will expand our

the California Waste Reduction Awards Program (WRAP)

offerings to traditional customers and positions us well

Award for the ninth consecutive year.

with new customers, in new channels, including office

New products introduced this past year include

settings where coffee is a staple.

R.W. Knudsen Family Organic Yumberry and Organic

Smucker Natural Foods Smucker Natural Foods,

Inc., formerly Smucker Quality Beverage, Inc., has been

renamed to better reflect the broader set of products

Goji Berry. Santa Cruz Organic ready-to-drink, Fair-Trade-

CertifiedTM teas in Raspberry, Peppermint, Lemon, and

Mango flavors were also introduced during the year.

offered under the R.W. Knudsen Family and Santa Cruz

International Consumers in more than 65 countries

Organic brands and the strategic focus of the business

beyond the United States and Canada continue to enjoy

going forward. Over the years, the business has evolved

our brands and products. Sales and profits grew by

to offer natural food products in categories including

three percent and 72 percent, respectively, during the

beverages, peanut butter, dessert toppings, and fruit

fiscal year. Puerto Rico is our largest export market and

sauces. Across the categories in which it competes,

our brands continue to enjoy #1 market positions across

almost every category in which we compete.

Our International business provides important

insights into emerging trends and helps us maintain

a global perspective on our consumers, customers,

and suppliers.

Special moments shared with one
another provide the opportunity to
teach valuable life lessons or to share
stories that tie families together.

Our Commitment to Sustainability

Create a better tomorrow by focusing on our
environmental impact and social responsibility.

OUR STRATEGIC FOCUS

Since 1897, our Company has considered both

environmental and social sustainability to be one of

our many responsibilities as a good corporate citizen.

Today, sustainability remains a key strategic focus area

W Received the Waste Reduction Awards Program
(WRAP) Award, administered by the California

Integrated Waste Management Board, at our Chico,

California, manufacturing facility for the ninth year.
W Increased focus on the identification and implemen-
tation of environmental sustainability opportunities

for the Company. We keep our environmental impact

across the Company by putting Green Teams in

and social responsibilities at the forefront with a clear

place at every manufacturing facility.

set of sustainability goals that set the direction for our

organization:

W Reduce utility usage by 25% over next five years
W Create zero waste – 75% reduction over five years
W Maintain a social sustainability leadership role

W Constructing a solar warehouse at our Chico,

California, manufacturing facility that will have a

zero-energy footprint upon completion.

W Continuing to offer consumers a variety of organic
products that restore, maintain, and enhance eco-

logical harmony.

OUR ENVIRONMENTAL IMPACT

OUR SOCIAL RESPONSIBILITIES

The Company has implemented and managed

Smucker has a long track record of promoting

a variety of programs, including the utilization of

initiatives and programs that support and enhance the

renewable energy technology, improved wastewater

quality of life in the communities in which we operate.

management, increased usage of sustainable raw ma-

Education has always been a primary focus of our

terials, and reuse of resources rather than consuming

social sustainability resources. Examples include:

new ones. Specific examples include:

W Reduced the use of resin in Jif peanut butter jars
by 2.2 million pounds —enough resin to produce

34 million jars.

W Played a key role in the establishment of the
Heartland Education initiative in Ohio, which

focuses on improving education through a partner-

ship between community organizations, parents,

W Reduced delivery truck traffic and energy con-
sumption when we began producing plastic

bottles for Crisco products at our own manufac-

schools, and local businesses.

W Continuing to support
United Way and Boys

turing facility in Cincinnati, rather than having

& Girls Clubs of

the bottles shipped to us by a third party.
W Received LEED Certification for new buildings

and renovations on our Corporate Campus and

America with our

time and financial

resources.

other locations.

Bring this ad to The J.M. Smucker Company
Store and Café and receive 10% off your entire
purchase of $25 or more!* ADV062809

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

For over 110 years, The J.M. Smucker Company has been
committed to bringing you quality products from its
family of brands and helping families create memorable
mealtime moments.

Smucker’s Wall of Jam

Today, we are pleased to continue this proud tradition by
presenting our brands, our history, and our culture through
a unique sensory experience at our Company Store.

Company Museum

Browse products and merchandise, learn about our
Company’s heritage, and enjoy delicious recipes. We can
also help you with gift baskets for friends, family, and
business associates through the newly added custom gift
basket corner.

The Café

Brand Products & Merchandise

Custom Gift Baskets

Unique Gift Sets

Open Mon-Sat 9am-6pm • Route 57, 1/4 mi. N. of Route 30 • 333 Wadsworth Rd., Orrville, Ohio 44667
Phone: 330-684-1500 • www.smuckers.com

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

©/™/® The J.M. Smucker Company. Pillsbury, the Barrelhead logo, and the Doughboy character are trademarks of The Pillsbury Company, LLC, used under license.
*Offer valid through 12/31/09. Limit one coupon per customer per day.

Asparagus with
Citrus Dressing

Prep time: 15 minutes
Cook time: 6 minutes
Ready in: 40 minutes
Makes 4 to 5 servings

Prep time: 10 minutes
Cook time: 5 minutes
Ready in: 15 minutes
Makes 6 servings

Prep time: 40 minutes
Cook time: 1 minute
Ready in: 1 hour
Makes 8 servings

Raspberry Mocha
Mousse Parfaits

Berries and Cream
Cake Roll

Cheesy Potato
Pancakes with
Sausage

Prep time: 20 minutes
Bake time: 10 minutes
Ready in: 3 hours 15 minutes
Makes 12 servings

Ingredients
1 lb. asparagus
5 cups water
1 1/2 teaspoons salt, divided
3 tablespoons orange juice
2 tablespoons fresh lemon juice
2 teaspoons sugar
1 teaspoon Dijon-style mustard
1/4 teaspoon black pepper
1/3 cup Crisco® Light Olive Oil
or Crisco Puritan® Omega-3 DHA
Canola Oil

Ingredients
4 (1 oz.) squares unsweetened chocolate
1 (14 oz.) can Eagle Brand® Sweetened
Condensed Milk
1 1/2 teaspoons vanilla extract
1 tablespoon Folgers® Instant Coffee
Crystals
1 teaspoon hot water
1 cup (1/2 pint) heavy cream
1 can refrigerated whipped cream
2 cups frozen Nature’s PeakTM Select
Raspberries or fresh red raspberries

Ingredients
1 (12 oz.) package breakfast sausage patties
Crisco® Original No-Stick Cooking Spray
1 cup Hungry Jack® Buttermilk Complete
Pancake & Waffle Mix
1 1/2 cups Hungry Jack® Mashed
Potato flakes
2 1/2 cups milk
2 large eggs
2 tablespoons Crisco® Pure Vegetable Oil
2 tablespoons Hungry Jack® Regular
Syrup (optional)
1/2 cup shredded carrots
1/4 cup sliced green onion
1/4 cup grated Parmesan cheese
1/2 cup shredded sharp Cheddar cheese

Ingredients
Crisco® No-Stick Cooking Spray with
Pillsbury® Flour
4 large eggs, separated
3/4 cup granulated sugar
1 teaspoon vanilla extract
3/4 cup Pillsbury SOFTASILK® Cake Flour,
or Pillsbury BEST® All Purpose Flour
3/4 teaspoon baking powder
1/4 teaspoon salt
Powdered sugar
1 cup Smucker’s® Strawberry Preserves,
or Smucker’s® Low SugarTM Strawberry
Reduced Sugar Preserves
1 cup heavy cream
Fresh fruit and mint sprigs for garnish
(optional)

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Ingredients
Crisco® Original No-Stick Cooking Spray
1 1/4 cups Pillsbury BEST® All Purpose
Flour
1/2 cup sugar
1 teaspoon baking powder
1/4 teaspoon salt
2 tablespoons Crisco® Pure Canola Oil
1 large egg
1/2 cup Smucker’s® Chunky Natural
Peanut Butter, plus 1 tablespoon
1/2 cup Smucker’s® Low SugarTM
Strawberry Reduced Sugar Preserves

Ingredients
1/2 cup cornstarch
1/4 cup Pillsbury BEST® All Purpose Flour
1/4 cup soy sauce
1/4 cup sugar
2 large eggs, lightly beaten
2 green onions, chopped
2 cloves garlic, crushed
1 tablespoon sesame seeds
1 teaspoon salt
1 1/2 lbs. chicken wings, separated at
joints, tips discarded
Crisco® Pure Vegetable Oil

Ingredients
SALAD
2 (15 oz.) cans black beans, rinsed and
drained
1/2 large sweet onion (such as Vidalia®),
chopped fine
2 tomatoes, seeded and chopped
1/2 cup (about 8 oz.) chopped fresh
mushrooms
1 fresh jalapeño pepper, seeded and minced

PINEAPPLE BLUE CHEESE DIP
1/2 cup mayonnaise
1/2 cup sour cream
1/4 cup crumbled blue cheese
1 (8 oz.) can crushed pineapple, drained
1/8 teaspoon salt
1/8 teaspoon black pepper
1 teaspoon sugar

APRICOT-PINEAPPLE SALSA
1 (24 oz.) container tropical mixed fruit,
drained
1/4 cup Smucker’s® Apricot-Pineapple
Preserves or Smucker’s® Apricot Preserves
1 tablespoon fresh lime juice
1 tablespoon fresh cilantro, chopped

DRESSING
1/2 cup Crisco® Pure Vegetable Oil
1 teaspoon chili powder
1 clove garlic, minced
1/2 teaspoon salt
Juice from 1 lime
Cilantro (optional)

Ingredients
BURGER PATTIES
1 1/4 lbs. ground beef chuck
2 teaspoons jerk spice seasoning
1/2 teaspoon salt
Cayenne pepper, to taste

Crisco® Butter Flavor No-Stick
Cooking Spray
4 slices provolone cheese, halved
8 (4-inch) pita pockets, with top 1/4 of
pita cut off

Caribbean Mini-Burgers
with Apricot-Pineapple
Salsa

Hawaiian Chicken Wings with
Pineapple Blue Cheese Dip

Prep time: 15 minutes
Bake time: 25 minutes
Ready in: 1 hour 30 minutes
Makes 16 servings

Prep time: 15 minutes
Cook time: 10 minutes
Ready in: 25 minutes
Makes 8 mini-burgers

Prep time: 15 minutes
Cook time: 10 minutes
Ready in: 3 hours
Makes 4 servings

Prep time: 10 minutes
Ready in: 10 minutes
Makes 6 servings

Peanut Butter Berry Bars

Black Bean Salad

crisco.com

©/® The J. M. Smucker Company

crisco.com
hungryjack.com

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

SPRAY skillet or griddle with no-stick cooking spray. Heat skillet over
medium-high heat or electric griddle to 375°F.

COMBINE pancake mix and potato flakes in large bowl. Whisk together
milk, eggs and oil in medium bowl. Whisk in syrup, if desired. Add
liquids to dry ingredients, stirring just until large lumps disappear.
Blend in carrots, onion, Parmesan cheese and cooked sausage.

POUR 1/4 cup batter for each pancake onto hot skillet or griddle. Cook
3 minutes. Turn. Cook an additional 2 to 3 minutes or until golden
brown. Place 3 or 4 pancakes on dinner plate. Sprinkle with Cheddar
cheese before serving.

PLACE 5 cups water and 1 teaspoon salt in large deep skillet; bring to
a boil. Add asparagus spears. Boil, uncovered, 4 to 5 minutes for thin
spears, 8 to 10 minutes for thick spears, or until crisp-tender. Drain well.
Transfer asparagus to serving plate.

POUR sweetened condensed milk into large bowl. Beat in melted
chocolate and vanilla. Dissolve coffee in hot water. Add to chocolate
mixture, beating until smooth. Chill 15 minutes. Chill beaters and
mixing bowl from electric mixer 10 minutes in preparation for
next step.

Raspberry Mocha Mousse Parfaits (Pictured on page 5 )
Directions
MELT chocolate in a microwave-safe dish on HIGH (100% power) in
20-second intervals until melted. Stir until smooth.

Cheesy Potato Pancakes with Sausage (Pictured on page 5 )
Directions
COOK and crumble sausage patties in large skillet over medium heat
until fully browned. Drain, if necessary.

Asparagus with Citrus Dressing (Pictured on page 5 )
Directions
SNAP off tough asparagus ends; discard. Peel ends of spears with sharp
paring knife or vegetable peeler, if desired.

BEAT cream in chilled bowl with chilled beaters until stiff. Fold into
chilled chocolate mixture. Reserve 8 raspberries for garnish. Layer
parfait glasses as follows: 1/4 cup chocolate mousse, refrigerated
whipped cream, 1/4 cup raspberries, 1/4 cup chocolate mousse.
Refrigerate parfaits 20 minutes before serving. Just before serving,
garnish each with refrigerated whipped cream and single raspberry.

COMBINE orange juice, lemon juice, sugar, mustard, pepper and
remaining 1/2 teaspoon salt in jar with tight fitting lid; shake well.
Add oil; shake well again. Pour as much dressing as desired over warm
asparagus. Serve at room temperature.
TIP: This salad can also be served chilled. Do not top spears with dressing
until just prior to serving.

Berries and Cream Cake Roll (Pictured on page 5 )
Directions
HEAT oven to 375°F. Spray 15 x 10 x 1-inch jelly roll pan with no-stick cooking
spray with flour.
BEAT egg whites on high speed 4 to 5 minutes or until stiff peaks form. Beat egg
yolks in separate bowl 3 minutes or until slightly thick and light yellow in color.
Add sugar and vanilla to egg yolks; continue to beat 1 minute. Sift together flour,
baking powder and salt in small bowl. Add to egg yolk mixture. Fold in beaten
egg white. Pour into prepared pan, spreading batter evenly.
BAKE 8 to 10 minutes or until golden brown. Sprinkle powdered sugar onto
clean kitchen towel. Loosen cake edges from pan. Immediately invert onto towel.
Gently roll towel and cake into a log, starting at long end. Cool completely,
about 45 minutes. Chill beaters and mixing bowl from electric mixer 10 minutes
in preparation for next step.
STIR preserves slightly for easier spreading. Beat cream in chilled bowl with chilled
beaters until stiff. Unroll cake; spread carefully with preserves, then with whipped
cream. Reroll cake without towel. Wrap in plastic wrap. Chill 2 to 3 hours or overnight.
SPRINKLE with powdered sugar; garnish with fruit and mint, if desired, before
serving.

Hawaiian Chicken Wings with Pineapple Blue Cheese Dip (Pictured on page 9 )
Directions
COMBINE cornstarch, flour, soy sauce, sugar, eggs, green onions,
garlic, sesame seeds and salt in large resealable food storage bag.
Mix thoroughly.

Caribbean Mini-Burgers with Apricot-Pineapple Salsa (Pictured on page 9 )
Directions
CRUMBLE ground beef in medium bowl; add seasoning, salt and
cayenne. Gently combine ingredients well. Shape meat into eight
4-inch patties. Refrigerate until ready to grill.

COMBINE flour, sugar, baking powder and salt in medium bowl. Add
oil and egg. Mix with fork to make fine crumbs. Reserve 1/2 cup of
mixture for topping. Press remaining crumbs into bottom of prepared
pan. Bake 10 to 12 minutes or until surface is dry. Mix 1/2 cup
reserved crumbs and 1 tablespoon peanut butter with fork until
evenly moistened; set aside.

COAT cool grill grate with no-stick cooking spray. Heat grill to
medium-high (350°F to 400°F). Grill patties 3 to 5 minutes per side
or until juices run clear. Top each burger with half slice of cheese
during last 2 minutes of grilling. Place a burger in each pita; top with
Apricot-Pineapple Salsa.

Peanut Butter Berry Bars (Pictured on page 9 )
Directions
HEAT oven to 375°F. Coat 8 x 8-inch pan with no-stick cooking spray.

SPREAD 1/2 cup peanut butter gently over partially baked crust,
letting heat from bars soften peanut butter. Spread preserves over
peanut butter. Sprinkle with peanut butter crumbs. Bake 15 to 17
minutes or until center is set. Cool. Cut into bars.

HEAT 2 inches oil in a deep fryer or deep heavy skillet. Fry chicken
pieces, a few at a time, 8 to 10 minutes or until golden brown and no
longer pink in center, turning to brown evenly. Drain on paper towels.

CUT pineapple from fruit mix in quarters; chop remaining fruit into
3/8-inch pieces. Place fruit in small bowl. Add preserves, lime juice
and cilantro; stir to combine.

SERVE at room temperature or chilled. Garnish with cilantro sprigs,
if desired.

WHISK together dressing ingredients in small bowl. Pour dressing
over bean mixture; toss well.

RINSE chicken; pat dry. Add to cornstarch mixture. Toss to coat.
Marinate at least 2 hours.

COMBINE all dip ingredients; refrigerate until ready to serve. Makes
about 2 cups.

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

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

Black Bean Salad
Directions

crisco.com
pillsburybaking.com
smuckers.com

©/® The J. M. Smucker Company
Vidalia is a trademark of The Georgia
Department of Agriculture.

crisco.com
pillsburybaking.com
smuckers.com

COMBINE salad ingredients in medium bowl.

crisco.com
pillsburybaking.com

eaglebrand.com
folgers.com

PINEAPPLE BLUE CHEESE DIP

crisco.com
smuckers.com

©/® The J. M. Smucker Company

crisco.com

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, 2009. 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 Financial Condition” and the consolidated financial statements and notes
thereto.

Year Ended April 30,

(Dollars in thousands, except per share data)

2009

2008

2007

2006

2005

Statements of Income:

Net sales
Income from continuing operations
Discontinued operations

$3,757,933
$ 265,953
—

$2,524,774
$ 170,379
—

$2,148,017
$ 157,219
—

$2,154,726
$ 143,354
—

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

Net income

$ 265,953

$ 170,379

$ 157,219

$ 143,354

$ 129,073

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:

$8,192,161
456,693
910,000
4,939,931

$3,129,881
171,541
789,684
1,799,853

$2,693,823
199,541
392,643
1,795,657

$2,649,744
71,832
428,602
1,728,059

$2,635,894
57,580
431,560
1,690,800

$ 108,907
—
84,823,849
85,285,211

$ 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

Income from continuing operations
Discontinued operations

$ 3.14
—

$ 3.03
—

$ 2.79
—

$ 2.48
—

$ 2.29
(0.03)

Net income

$ 3.14

$ 3.03

$ 2.79

$ 2.48

$ 2.26

Income from continuing operations –

assuming dilution

Discontinued operations – assuming dilution

$ 3.12
—

$ 3.00
—

$ 2.76
—

$ 2.45
—

$ 2.26
(0.02)

Net income – assuming dilution

$ 3.12

$ 3.00

$ 2.76

$ 2.45

$ 2.24

Dividends declared per common share

$ 6.31

$ 1.22

$ 1.14

$ 1.09

$ 1.02

SUMMARY OF QUARTERLY RESULTS OF OPERATIONS

The following is a summary of unaudited quarterly results of operations for the years ended April 30, 2009 and 2008.

(Dollars in thousands, except per share data)

2009

2008

Quarter Ended

Net Sales

Gross Profit

July 31, 2008
October 31, 2008
January 31, 2009
April 30, 2009

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

$ 663,657
843,142
1,182,594
1,068,540

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

$207,779
243,419
401,041
399,190

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

Net
Income

Earnings per
Common Share

Earnings per
Common Share –
Assuming Dilution

$42,291
51,453
77,941
94,268

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

$0.78
0.95
0.68
0.80

$0.72
0.88
0.75
0.68

$0.77
0.94
0.68
0.80

$0.71
0.87
0.75
0.67

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 and special dividends declared. There were approximately 305,072
shareholders as of June 18, 2009, of which 78,401were registered holders of common shares.

2009

2008

Quarter Ended

High

Low

Dividends

July 31, 2008
October 31, 2008
January 31, 2009
April 30, 2009

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

$55.58
56.69
46.00
46.49

$64.32
58.09
53.70
52.59

$40. 18
40.08
37.22
34.09

$55.60
50.79
42.75
46.84

$0.32
5.32
0.32
0.35

$0.30
0.30
0.30
0.32

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

4/04

4/05

4/06

4/07

4/08

4/09

■

◆
•

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,

2004

2005

2006

2007

2008

2009

$100.00
100.00
100.00

$ 96.90
106.34
107.02

$ 78.48
122.73
103.56

$114.38
141.43
123.71

$104.53
134.82
121.47

$93.15
87.21
96.14

The above graph compares the cumulative total shareholder return for the five years ended April 30, 2009, for the Company’s
common shares, the S&P 500 Index, 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, 2004.

Copyright © 2009, S&P, a division of The McGraw-Hill Companies, Inc. All rights reserved.
www.researchdatagroup.com/S&P.htm

MANAGEMENT’S DISCUSSION AND ANALYSIS

EXECUTIVE SUMMARY

basic beliefs still serve as a foundation for the Company’s deci-

For more than 100 years, The J. M. Smucker Company

sion making and actions.

(“Company”), headquartered in Orrville, Ohio, has been com-

The Company’s strategic vision is to own and market food

mitted to offering consumers trusted, quality products that

brands which hold the number one market position in their

help families create memorable mealtime moments. Today,

category, with an emphasis on North America. In support of

the Company is the leading marketer and manufacturer of

this vision, the Company in recent years has expanded its port-

fruit spreads, retail packaged coffee, peanut butter, shortening

folio of number one and leading, icon brands through the

and oils, sweetened condensed milk, ice cream toppings, and

acquisition of brands such as Folgers, Jif, Crisco, Pillsbury, Eagle

health and natural foods beverages in North America.

Brand, and Hungry Jack in the United States and Robin Hood,

Its family of brands includes Smucker’s, Folgers, Jif, Crisco,

Five Roses, Carnation, Europe’s Best, and Bick’s in Canada.

Pillsbury, Eagle Brand, R.W. Knudsen Family, Hungry Jack, White

The Company’s strategic long-term annual growth objectives

Lily, and Martha White in the United States, along with Robin

are to increase net sales by six percent and earnings per share

Hood, Five Roses, Carnation, Europe’s Best, and Bick’s in Canada.

by eight percent or greater. While year-to-year the net sales

In addition to these brands, the Company markets products

contribution from acquisitions will vary, the Company expects

under numerous other brands, including Dunkin’ Donuts,

organic growth, including new products, to add three to four

Millstone, Dickinson’s, Laura Scudder’s, Adams, Double Fruit

percent per year and acquisitions to contribute the remainder.

(Canada), and Santa Cruz Organic.

The Company has four reportable segments: U.S. retail con-

sumer market, U.S. retail oils and baking market, U.S. retail coffee

market, and special markets. The Company’s three U.S. retail

market segments in total comprised nearly 80 percent of the

Company’s net sales in fiscal 2009 and represent a major por-

tion of the strategic focus area for the Company – the sale of

branded food products with leadership positions to consumers

through retail outlets in North America. The special markets

segment represents sales outside of the U.S. retail market seg-

ments and includes the Company’s Canada, foodservice, natu-

ral foods (formerly beverage), and international business areas.

In each of the U.S. retail market segments, the Company’s

products are sold primarily to food retailers, food wholesalers,

drug stores, club stores, mass merchandisers, discount and

dollar stores, and military commissaries. In the special markets

segment, the Company’s products are distributed domesti-

cally and in foreign countries through retail channels, foodser-

RESULTS OF OPERATIONS

On November 6, 2008, the Company completed a merger

transaction with The Folgers Coffee Company (“Folgers”),

previously a subsidiary of The Procter & Gamble Company

(“P&G”), valued at approximately $3.7 billion. In addition to

the Folgers merger, the Company completed a series of other

acquisitions during 2009 and 2008, including the Knott’s Berry

Farm brand, Europe’s Best, Inc., the Canadian Carnation brand

canned milk business, and Eagle Family Foods Holdings, Inc.

(“Eagle”), for aggregate cash consideration of approximately

$279 million and the assumption of $115 million in debt. The

transactions have been accounted for as purchase business

combinations and the results of each business are included in

the Company’s consolidated financial statements from the

date of the transaction.

— Summary of 2009 —

vice distributors and operators (i.e., restaurants, schools and

The Company realized strong sales and margin growth in 2009.

universities, healthcare operators), and health and natural

Despite the impact of a global recession and credit crisis, the

foods stores and distributors.

STRATEGIC ELEMENTS

impact of the Folgers transaction and improved profitability in

the Company’s U.S. retail oils and baking market segment con-

tributed to the strong 2009 performance. Company net sales

increased 49 percent, led by the contributions from Folgers.

The Company remains rooted in its Basic Beliefs of Quality,

The Company generally benefited from the consumer trend of

People, Ethics, Growth, and Independence, established by its

preparing and eating more meals at home. Operating and net

founder and namesake more than a century ago. Today, these

income increased 59 percent and 56 percent, respectively. Net

income per common share – assuming dilution increased

2008 Compared to 2007

approximately four percent reflecting the impact of additional

common shares issued, increased interest expense, and

(Dollars in millions)

2008

2007

increased merger and integration costs, all related to the Folgers

Net sales

$2,524.8

$2,148.0

$ 376.8

18%

transaction.

— Net Sales —

2009 Compared to 2008

Year Ended April 30,

(Dollars in millions)

2009

2008

Increase
(Decrease)

Net sales

Adjust for

$ 3,757.9

$2,524.8 $ 1,233.1

49%

Adjust for

noncomparable items:

Acquisitions

Divestitures

Foreign currency
exchange

Net sales without

acquisitions, divestitures,
and foreign currency
exchange

(279.7)

—

(279.7)

—

(80.7)

80.7

(29.5)

—

(29.5)

$2,215.6

$2,067.3

$ 148.3

Year Ended April 30,

Increase
(Decrease)

noncomparable items:

Acquisitions

(1,032.4)

35.2

Foreign currency
exchange

Net sales without

acquisitions and
foreign currency
exchange

—

(1,032.4)

35.2

Net sales increased $376.8 million, or 18 percent, in 2008 from

2007. The acquired Eagle businesses contributed $236.2 mil-

lion in net sales in 2008. Excluding acquisitions, the divested

Canadian nonbranded, grain-based foodservice and industrial

$ 2,760.7

$2,524.8 $ 235.9

businesses (“divested Canadian businesses”) sold in 2007, and

foreign currency exchange, net sales increased seven percent

Net sales were $3,757.9 million in 2009, an increase of $1,233.1

over the same period mostly due to the impact of pricing. Also

million, or 49 percent, compared to 2008. Acquisitions con-

contributing to net sales growth in 2008 were gains in the

tributed approximately $1,032.4 million of the increase, includ-

Smucker’s, Jif, Crisco, and Hungry Jack brands.

ing $924.8 million from Folgers, while the foreign currency

exchange impact, primarily due to the weakening Canadian

dollar, reduced net sales by approximately $35.2 million.

Excluding acquisitions and foreign currency exchange, net sales

increased nine percent. The increase reflects a 10 percent net

pricing gain which offset a one percent volume and mix decline.

Over the last several years, the Company has implemented

price increases necessary to offset rising costs. While pricing

was the main driver of the net sales growth, excluding acqui-

sitions, a number of categories experienced volume gains,

including Smucker’s fruit spreads, toppings, and syrups,

Pillsbury baking mixes and frostings, Hungry Jack pancakes,

syrups, and potato side dishes, and Eagle Brand canned milk.

Sales increases for these categories reflect recent back-to-

home meal trends. Volume declines were concentrated in oils

and flour, as anticipated, due to significant price increases

taken over the prior year in these categories, and peanut

butter products due to the U.S. Food and Drug Administration’s

(“FDA”) recall of another manufacturer’s foodservice peanut

butter and ingredient peanut products during the first quarter

of the 2009 calendar year.

— Operating Income —

The following table presents components of operating

income as a percentage of net sales.

Gross profit

Selling, distribution,

and administrative expenses:

Advertising

Marketing and selling

Distribution

General and administrative

Total selling, distribution,

and administrative expenses

Amortization

Restructuring and merger
and integration costs

Other operating expense

(income) – net

Operating income

Year Ended April 30,

2009

33.3%

2008

31.0%

2007

32.7%

2.1%

2.2%

2.4%

7.2

3.5

5.1

17.9%

1.1%

2.2

0.1

12.0%

7.5

3.4

6.2

19.3%

0.1%

0.4

(0.1)

11.3%

7.6

3.5

7.0

20.5%

0.1%

0.1

0.2

11.8%

2009 Compared to 2008

$70.2 million higher in 2009 compared to 2008, as integra-

Overall, gross profit increased $469.3 million and improved

tion activities related to Folgers commenced and a defined

from 31.0 percent in 2008 to 33.3 percent of net sales in 2009.

benefit settlement charge related to the Company’s divested

The primary driver of the gross profit improvement was the

Canadian businesses was finalized, reducing operating

addition of Folgers. The Company improved gross profit on its

margin by 2.2 percentage points.

base business by approximately 12 percent despite higher

costs, estimated at $135 million, on many key ingredients as

compared to 2008. During the year, current pricing came

more in line with these higher costs, contributing to the gross

profit increase. In addition, costs on certain raw materials have

stabilized, and in some cases decreased, allowing the Company

to continue to recover margin lost over the past few years while

also returning some pricing to customers.

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

increased $187.0 million, or 38 percent, in 2009 compared to

2008. An increase in marketing and distribution expenses,

much of which was related to the addition of Folgers,

accounted for approximately 63 percent of the SD&A increase.

Most SD&A expenses, particularly selling and corporate over-

head, increased at a lesser rate than net sales resulting in an

overall decrease in SD&A expense as a percent of net sales

from 19.3 percent to 17.9 percent, further contributing to the

improvement in operating margin.

Amortization expense increased $36.2 million to 1.1 percent of

net sales compared to 0.1 percent of net sales in the same

period in 2008 reflecting the addition of finite-lived intangible

assets associated with the Folgers transaction. Although the val-

uation of these intangible assets is still subject to revision, the

Company does not expect future amortization expense to vary

2008 Compared to 2007

Operating income increased 12 percent in 2008 to $284.2 mil-

lion compared to 2007, while decreasing as a percentage of

net sales from 11.8 percent in 2007 to 11.3 percent in 2008.

The impact of the lower margin Eagle businesses, record costs

for soybean oil and wheat, and the mix of products sold

during the year resulted in a decline in gross profit as a per-

centage of net sales from 32.7 percent in 2007 to 31.0 percent

in 2008. The margin on the Eagle businesses was impacted by

a significant increase in milk costs and an unfavorable mix of

nonbranded sales during the year and accounted for approxi-

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

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

year across all businesses, while essentially offsetting higher

raw material cost increases of approximately $150 million

compared to 2007, was not sufficient to maintain margins.

SD&A increased 10 percent from 2007 to $486.6 million in

2008, resulting from increased marketing spending and addi-

tional costs related to the acquired Eagle businesses. However,

corporate overhead expenses increased at a lesser rate than

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

from 20.5 percent in 2007 to 19.3 percent in 2008. Higher

restructuring and merger and integration costs in 2008 com-

pared to 2007 also negatively impacted operating income.

materially from the amounts recorded on an annualized basis.

Other operating income – net of $3.9 million was recognized

in 2008 resulting from a net insurance settlement. Other oper-

Other operating expense – net of $3.6 million was recognized

ating expense – net of $2.7 million was recognized in 2007

in 2009 consisting of losses on disposal of assets. Other oper-

consisting of losses on disposal of assets.

ating 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 facility in

Memphis, Tennessee.

— Interest Income and Expense —

Interest expense increased $20.3 million in 2009 compared to

2008, resulting from the October 23, 2008, issuance of

$400.0 million in Senior Notes with a weighted-average interest

Operating income increased 59 percent in 2009 compared to

rate of 6.60 percent, and the addition of Folgers’ $350.0 mil-

2008 and improved from 11.3 percent to 12.0 percent of net

lion LIBOR-based variable rate debt at the merger date.

sales. Restructuring and merger and integration costs were

Interest income decreased $6.3 million during 2009 compared

to 2008 primarily due to a decrease in the average investment

effective tax rate for 2008 was primarily attributable to a lower

balance and lower interest rates throughout the year.

state tax rate resulting from the favorable resolution of uncer-

Interest expense increased $18.8 million in 2008 compared to

2007, resulting from the May 31, 2007, issuance of $400.0 million

in Senior Notes with an interest rate of 5.55 percent, a portion

of which was used to repay short-term debt used in financing

the Eagle acquisition. The investment of excess proceeds resulted

in an increase in interest income of $4.0 million during 2008

compared to 2007.

— Income Taxes —

Income taxes increased $45.7 million, or 54 percent, during

2009 compared to 2008, slightly less than the percentage

increase in income before taxes as the effective tax rate was 32.9

percent in 2009 compared to 33.1 percent in 2008 primarily as

a result of an increase in the domestic manufacturers deduction.

tain tax positions.

— Segment Results —

With the addition of Folgers, the Company added the U.S.

retail coffee market reportable segment representing the

domestic sales of Folgers, Millstone, and Dunkin’ Donuts

branded coffee to retail customers. Coffee sales to other than

domestic retail customers are included in the special markets

segment. In addition, corporate organizational changes made

in association with the Folgers transaction have resulted in the

Company presenting two new reportable segments – U.S.

retail consumer market and U.S. retail oils and baking market.

The U.S. retail consumer market segment primarily includes

sales of Smucker’s, Jif, and Hungry Jack branded products while

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

the U.S. retail oils and baking market segment includes sales

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

of Crisco, Pillsbury, Eagle Brand, White Lily, and Martha White

would have resulted from higher income in 2008 as compared

branded products, each to domestic retail customers. As a result

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

of the change in segment reporting, all historical information

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

has been reclassified to conform to the new presentation.

(Dollars in millions)

Net sales:

U.S. retail consumer market
U.S. retail oils and baking market
U.S. retail coffee market
Special markets

Segment profit:

U.S. retail consumer market
U.S. retail oils and baking market
U.S. retail coffee market
Special markets

Segment profit margin:

U.S. retail consumer market
U.S. retail oils and baking market
U.S. retail coffee market
Special markets

Year Ended April 30,

2009

2008

%
Increase
(Decrease)

2008

2007

%
Increase
(Decrease)

10%
14
n/a
24

25
n/a
21

$1,103.3
995.5
855.6
803.6

$ 249.3
124.2
241.0
111.7

$998.6
876.0
—
650.2

$233.2
99.6
—
92.0

22.6%
12.5
28.2
13.9

23.4%
11.4
n/a
14.2

40
n/a
8

7%
(2)
n/a
26

$998.6
876.0
—
650.2

$233.2
99.6
—
92.0

$920.5
626.6
—
601.0

$ 217.9
101.9
—
73.0

23.4%
11.4
n/a
14.2

23.7%
16.3
n/a
12.1

U.S. Retail Consumer Market

sales to 12.5 percent despite higher costs on many key ingre-

Net sales in the U.S. retail consumer market segment increased

dients. Current pricing is more in line with these higher costs

10 percent in 2009 to $1,103.3 million compared to $998.6

resulting in margin recoveries in oils, canned milk, and

million in 2008. The Knott’s Berry Farm and Europe’s Best acqui-

regional baking brands.

sitions contributed approximately $25.7 million of the net

sales. Volume gains in Smucker’s fruit spreads, toppings, and

syrups, and Hungry Jack pancakes, syrups, and potato side

dishes, combined with price increases, offset volume declines

in peanut butter and Smucker’s Uncrustables sandwiches of

approximately two and three percent, respectively. During

January 2009, the FDA initiated a recall of another manufac-

turer’s foodservice peanut butter and ingredient peanut prod-

ucts. As a result, volume in the retail peanut butter category

declined approximately seven percent in the food, drug, and

mass retail stores channel as estimated by Information

Resources, Inc. for the 12-week period ended April 19, 2009.

The Company’s products experienced a lesser decline and

Net sales in the U.S. retail oils and baking market segment

were $876.0 million in 2008, an increase of 40 percent, com-

pared to $626.6 million in 2007. Excluding the contribution of

$198.9 million from the acquired Eagle business in 2008, net

sales increased eight percent as sales gains were realized in

Pillsbury baking mixes and Crisco oils. Segment profit

decreased two percent in 2008 to $99.6 million, and declined

from 16.3 percent to 11.4 percent of net sales, reflecting the

impact of the Eagle business combined with record costs for

soybean oil and wheat. The margin on the Eagle business was

impacted by an increase in milk costs and an unfavorable mix

of nonbranded sales.

these category pressures appeared to be reversing in the final

U.S. Retail Coffee Market

month of the fiscal year with volume growth in April. U.S. retail

The U.S. retail coffee market segment contributed $855.6 mil-

consumer market segment profit increased seven percent to

lion to net sales in 2009 as the business benefited from growth

$249.3 million in 2009 compared to $233.2 million in 2008

in the coffee category, primarily driven by the Folgers brand.

while decreasing as a percentage of net sales from 23.4 percent

Additionally, the continued expansion of the Dunkin’ Donuts

to 22.6 percent. Profit margins were impacted by cost increases

brand in the gourmet category contributed approximately

on certain raw materials, declines in peanut butter sales during

$106.8 million to net sales. The U.S. retail coffee market seg-

the year, and other unfavorable sales mix changes.

ment contributed $241.0 million in segment profit represent-

Net sales in the U.S. retail consumer market segment were

$998.6 million in 2008, an increase of eight percent compared

to $920.5 million in 2007, with gains in Smucker’s fruit spreads

and Smucker’s Uncrustables sandwiches, Jif, and Hungry Jack.

Segment profit in the U.S. retail consumer market increased

ing a profit margin of 28.2 percent, the highest of any of the

Company’s reportable segments, reflecting favorable green

coffee market conditions, reduced marketing expenditures,

and minimal allocations of operating support during its tran-

sitional year.

seven percent in 2008 to $233.2 million, but decreased as a

Special Markets

percentage of net sales from 23.7 percent to 23.4 percent, pri-

The special markets segment is comprised of the Canada,

marily due to changes in sales mix.

foodservice, natural foods (formerly beverage), and interna-

U.S. Retail Oils and Baking Market

tional strategic business areas.

Net sales in the U.S. retail oils and baking market segment

Net sales in the special markets segment were $803.6 million

increased 14 percent in 2009 to $995.5 million from $876.0

in 2009, an increase of 24 percent from 2008, as acquisitions

million in 2008. Increases in Pillsbury, Crisco, and Eagle Brand

and pricing gains offset unfavorable foreign currency

canned milk, primarily due to the effect of price increases

exchange. The merger with Folgers added $69.2 million of the

taken in the later part of 2008, and volume gains in baking

increase and the Knott’s Berry Farm, Europe’s Best, and the

mixes, frostings, and canned milk accounted for the increase.

Canadian Carnation canned milk business acquisitions con-

While total volume in the segment was down almost four per-

tributed $81.9 million. The gains from merger and acquisitions

cent, much of the decline was expected and reflects the

and pricing more than offset volume declines in the foodser-

impact of last year’s price increases in oils and flour. Segment

vice portion control business resulting from a general decline

profit increased 25 percent in 2009 to $124.2 million from

in away-from-home dining, and Smucker Uncrustables and

$99.6 million in 2008 and improved from 11.4 percent of net

other peanut butter products correlated to the FDA recall of

another manufacturer’s foodservice peanut butter and ingredi-

Cash provided by operating activities was approximately

ent peanut products. Consumer demand for natural foods

$444.8 million in 2009, a record, and increased $265.3 million

products was also soft due to the current economic environ-

compared to 2008, as the impact of the Folgers business has

ment. Special markets segment profit increased 21 percent

added to net income adjusted for noncash items.

from 2008 to $111.7 million in 2009, while decreasing as a per-

centage of net sales from 14.2 percent in 2008 to 13.9 percent

in 2009 as profit margins were impacted by the acquisitions.

Net cash used for investing activities was approximately

$174.8 million in 2009, compared to $262.5 million in 2008,

consisting of $77.3 million used for business acquisitions, pri-

Net sales in the special markets segment were $650.2 million

marily the Knott’s Berry Farm brand, and capital expenditures

in 2008, an increase of eight percent compared to 2007.

of approximately $108.9 million. Capital expenditures increased

Excluding the divested Canadian businesses, net sales in the

$32.5 million, or 42 percent, but decreased as a percent of net

special markets segment increased 24 percent in 2008 com-

sales from 3.0 percent to 2.9 percent.

pared to 2007. Acquisitions, including Eagle, the Canadian

Carnation business, and Europe’s Best, contributed $70.8 mil-

lion while foreign currency exchange contributed $29.5 mil-

lion to the increase in net sales. Segment profit in the special

markets segment increased 26 percent to $92.0 million in

2008 compared to 2007 as the segment benefited from the

impact of acquisitions and improved profitability on Smucker’s

Uncrustables sandwiches.

FINANCIAL CONDITION

— Liquidity —

Year Ended April 30,

Cash provided by financing activities during 2009 consisted

primarily of the proceeds from the Company’s issuance of

$400.0 million in Senior Notes. A portion of the proceeds was

used to fund the payment of a $5.00 per share one-time spe-

cial dividend, totaling approximately $274.0 million, on

October 31, 2008. In addition, quarterly dividend payments of

approximately $110.9 million were made in 2009, resulting in

total dividend payments of $384.9 million.

— Capital Resources —

The following table presents the Company’s capital structure.

April 30,

2009

2008

(Dollars in thousands)

2009

2008

2007

(Dollars in thousands)

Net cash provided by
operating activities

Net cash used for

investing activities

Net cash provided by
(used for) financing
activities

$444,828

$179,521

$272,970

Current portion of long-term debt

276,726

—

Note payable

$ 350,000 $ —

(174,816)

(262,486)

(27,041)

Long-term debt

Total debt

Shareholders’ equity

12,601

49,839

(117,625)

Total capital

910,000

789,684

$1,536,726 $ 789,684

4,939,931

1,799,853

$6,476,657 $2,589,537

The Company’s principal source of funds is cash generated

In addition to borrowings outstanding, the Company has

from operations, supplemented by borrowings against the

available a $180.0 million revolving credit facility with a group

Company’s revolving credit facility. Total cash and cash equiv-

of three banks that expires in 2011.

alents increased to $456.7 million at April 30, 2009, compared

to $171.5 million at April 30, 2008, due to the strong cash flow

generated by the Folgers business.

The Company’s working capital requirements are greatest

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

to build coffee and oil and baking inventory levels in advance

Total debt at April 30, 2009, includes $400.0 million in Senior

Notes with a weighted-average interest rate of 6.6 percent

issued on October 23, 2008, and $350.0 million resulting

from the Company’s guarantee of Folgers’ LIBOR-based vari-

able rate note due November 7, 2009, with a weighted-aver-

age interest rate of 1.8 percent at April 30, 2009.

of the “fall bake” and holiday season, additional coffee inven-

Approximately $627 million of debt will mature in 2010.

tories in advance of the Atlantic hurricane season, and the sea-

Additional cash requirements for 2010 will include capital

sonal procurement of fruit and vegetables.

expenditures of approximately $120 million, quarterly dividends

of approximately $165 million, and interest payments on debt

Accounting Standards Board Interpretation No. 48, Accounting

obligations of approximately $75 million for the year. Absent

for Uncertainty in Income Taxes (“FIN 48”), since the Company

any other material acquisitions or other significant invest-

is unable to reasonably estimate the timing of cash settlements

ments, the Company believes that cash on hand, combined

with the respective taxing authorities. The Company’s unrecog-

with cash provided by operations and borrowings available

nized tax benefits as of April 30, 2009, were $13,794.

under existing credit facilities, will be sufficient to meet cash

requirements for the next twelve months, including capital

expenditures, the payment of quarterly dividends, and princi-

pal and interest on debt outstanding.

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.

The following table summarizes the Company’s contractual

obligations at April 30, 2009.

(Dollars in millions)

Less
Than
Total One Year

One

to Three
Years

Three
to Five
Years

More
Than
Five
Years

Debt obligations

$1,536.7 $ 626.7

$10.0 $100.0

$800.0

CRITICAL ACCOUNTING ESTIMATES AND POLICIES

The preparation of financial statements in conformity with

U.S. generally accepted accounting principles requires man-

agement to make estimates and assumptions that in certain

circumstances affect amounts reported in the accompanying

consolidated financial statements. In preparing these financial

statements, management has made its best estimates and

judgments of certain amounts included in the financial state-

ments, giving due consideration to materiality. The Company

does not believe there is a great likelihood that materially dif-

ferent amounts would be reported under different conditions

or using different assumptions related to the accounting poli-

cies described below. However, application of these account-

ing policies involves the exercise of judgment and use of

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

results could differ from these estimates.

Revenue Recognition. The Company recognizes revenue

when all of the following criteria have been met: a valid cus-

tomer order with a determinable price has been received; the

product has been shipped and title has transferred to the cus-

Operating lease
obligations

Purchase

obligations

Other long-term

liabilities

38.7

8.6

11.0

8.3

10.8

tomer; there is no further significant obligation to assist in the

596.5

564.9

23.2

3.4

5.0

resale of the product; and collectibility is reasonably assured.

A provision for estimated returns and allowances is recorded

118.5

—

118.5

as a reduction of sales at the time revenue is recognized.

Total

$2,290.4 $1,200.2

$44.2 $111.7

$934.3

Trade Marketing and Merchandising Programs. In order to

support the Company’s products, various promotional activi-

Purchase obligations in the above table include agreements to

ties are conducted through the retail trade, distributors, or

purchase goods or services that are enforceable and legally

directly with consumers, including in-store display and prod-

binding on the Company. Included in this category are certain

uct placement programs, feature price discounts, coupons,

obligations related to normal, ongoing purchase obligations

and other similar activities. The Company regularly reviews and

in which the Company has guaranteed payment to ensure

revises, when it deems necessary, estimates of costs to the

availability of raw materials and packaging supplies. The

Company for these promotional programs based on estimates

Company expects to receive consideration for these purchase

of what will be redeemed by the retail trade, distributors, or

obligations in the form of materials. The purchase obligations

consumers. These estimates are made using various techniques

in the above table do not represent the entire anticipated pur-

including historical data on performance of similar promotional

chases in the future, but represent only those items for which

programs. Differences between estimated expense and actual

the Company is contractually obligated. The table excludes

performance are recognized as a change in management’s esti-

the liability for unrecognized tax benefits under Financial

mate in a subsequent period. As the Company’s total promo-

tional expenditures, including amounts classified as a reduction

of both cash flows and discount rates and different estimates

of net sales, represent approximately 25 percent of 2009 net

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

sales, the likelihood exists of materially different reported results

circumstances of which management is aware indicating that

if factors such as the level and success of the promotional pro-

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

grams or other conditions differ from expectations.

be recoverable.

Income Taxes. The future tax benefit arising from the net

Goodwill and Indefinite-Lived Intangible Assets. The

deductible temporary differences and tax carryforwards is

annual evaluation of goodwill and indefinite-lived intangible

approximately $94.7 million and $59.7 million, at April 30,

assets requires the use of estimates about future operating

2009 and 2008, respectively. Management believes that the

results for each reporting unit to determine estimated fair

Company’s earnings during the periods when the temporary

value. Changes in forecasted operations can materially affect

differences become deductible will be sufficient to realize the

these estimates. Additionally, other changes in the estimates

related future income tax benefits. For those jurisdictions

and assumptions, including the discount rate and expected

where the expiration date of tax carryforwards or the pro-

long-term growth rate, which drive the valuation techniques

jected operating results of the Company indicate that realiza-

employed to estimate the fair value of the reporting unit could

tion is not likely, a valuation reserve has been provided.

change and, therefore, impact the assessments of impairment

In assessing the need for a valuation allowance, the Company

estimates future taxable income, considering the viability of

ongoing tax planning strategies and the probable recognition

of future tax deductions and loss carryforwards. Valuation

allowances related to deferred tax assets can be affected by

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

taxable income levels. Under current accounting rules,

changes in estimated realization of deferred tax assets would

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.

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

uncertainties related to tax filing positions and periodically

assesses these tax positions for all tax years that remain subject

to examination, based upon the latest information available.

For uncertain tax positions, the Company has recorded tax

reserves, including any applicable interest and penalty

charges, in accordance with FIN 48.

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

reviewed for impairment whenever events or changes in cir-

cumstances indicate that the carrying amount of the asset may

not be recoverable. Recoverability of assets to be held and

in the future.

Pension and Other Postretirement Benefit Plans. To deter-

mine the Company’s ultimate obligation under its defined

benefit pension plans and other postretirement benefit plans,

management must estimate the future cost of benefits and

attribute that cost to the time period during which each cov-

ered employee works. Various actuarial assumptions must be

made in order to predict and measure costs and obligations

many years prior to the settlement date, the most significant

being the interest rates used to discount the obligations of the

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

assumed pay increases, and the health care cost trend rates.

Management, along with third-party actuaries and investment

managers, reviews all of these assumptions on an ongoing

basis to ensure that the most reasonable information available

is being considered. For 2010 expense recognition, the

Company will use a discount rate of 7.4 percent and 5.4 per-

cent, and a rate of compensation increase of 4.1 percent and

4.0 percent, for U.S. and Canadian plans, respectively. The

Company anticipates using an expected rate of return on plan

assets of 7.75 percent for U.S. plans. For the Canadian plans,

the Company will use an expected rate of return on plan

assets of 7.0 percent for the hourly plan and 7.5 percent for all

other plans.

used is measured by a comparison of the carrying amount of

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

the assets to future net cash flows estimated to be generated

ness, the Company extends credit to customers that satisfy

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

predefined criteria. The Company evaluates the collectibility of

the impairment to be recognized is the amount by which the

trade receivables based on a combination of factors. When

carrying amount of the assets exceeds the fair value of the

aware that a specific customer may be unable to meet its

assets. However, determining fair value is subject to estimates

financial obligations, such as in the case of bankruptcy filings

or deterioration in the customer’s operating results or financial

sures as of April 30, 2009, are not expected to result in a sig-

position, the Company records a specific reserve for bad debt

nificant impact on future earnings or cash flows.

to reduce the related receivable to the amount the Company

reasonably believes is collectible. The Company also records

reserves for bad debt for all other customers based on a variety

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

due, historical collection experience, and an evaluation of cur-

rent and projected economic conditions at the balance sheet

Revenues from customers outside the U.S. represented 11 per-

cent of net sales during 2009. Thus, certain revenues and

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

effect of foreign currency fluctuations and these fluctuations

may have an impact on operating results.

date. Actual collections of trade receivables could differ from

Commodity Price Risk. Raw materials and other commodities

management’s estimates due to changes in future economic or

used by the Company are subject to price volatility caused by

industry conditions or specific customers’ financial conditions.

supply and demand conditions, political and economic vari-

DERIVATIVE FINANCIAL INSTRUMENTS

AND MARKET RISK

The following discussions about the Company’s market risk

disclosures involve forward-looking statements. Actual results

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

ments. The Company is exposed to market risk related to

changes in interest rates, foreign currency exchange rates, and

commodity prices.

ables, and other unpredictable factors. To manage the volatil-

ity related to anticipated commodity purchases, the Company

uses futures and options with maturities generally less than

one year. Certain of these instruments are designated as cash

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

hedges are included in other comprehensive income to the

extent effective, and reclassified into cost of products sold in

the period during which the hedged transaction affects earn-

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

excluded, and ineffective portions of hedges are recognized in

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

cost of products sold immediately.

short-term investment portfolio at April 30, 2009, approxi-

mates carrying value. Exposure to interest rate risk on the

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

until maturity. Based on the Company’s overall interest rate

exposure as of and during the year ended April 30, 2009,

including derivative and other instruments sensitive to interest

rates, a hypothetical 10 percent movement in interest rates

would not materially affect the Company’s results of opera-

tions. Interest rate risk can 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 hypothetical, immediate 100 basis point

decrease in interest rates at April 30, 2009, the fair value of the

Company’s long-term debt would increase by approximately

$67.8 million.

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,

2009

2008

$16,374

$13,229

3,949

9,785

3,289

8,474

Fair value was determined using quoted market prices and

was based on the Company’s net derivative position by com-

modity at each quarter end during the fiscal year. The calcula-

tions are not intended to represent actual losses in fair value

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

Foreign Currency Exchange Risk. The Company has opera-

move, the Company actively manages its risk and adjusts

tions outside the U.S. with foreign currency denominated

hedging strategies as appropriate. The commodities hedged

assets and liabilities, primarily denominated in Canadian cur-

have a high inverse correlation to price changes of the deriva-

rency. Because the Company has foreign currency denomi-

tive commodity instrument; thus, the Company would expect

nated assets and liabilities, financial exposure may result,

that any gain or loss in fair value of its derivatives would gen-

primarily from the timing of transactions and the movement

erally be offset by an increase or decrease in the fair value of

of exchange rates. The foreign currency balance sheet expo-

the underlying exposures.

FORWARD-LOOKING STATEMENTS

and strategies intended to promote growth in the

Certain statements included in this Annual Report contain for-

ward-looking statements within the meaning of federal secu-

rities laws. The forward-looking statements may include

statements concerning the Company’s current expectations,

estimates, assumptions, and beliefs concerning future events,

Company’s businesses;

✷ general competitive activity in the market, including
competitors’ pricing practices and promotional spend-

ing levels;

✷ the impact of food safety concerns, involving either the

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

Company or its competitors’ products;

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

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

✷ the concentration of certain of the Company’s busi-
nesses with key customers and suppliers and the abil-

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

ity to manage and maintain key relationships;

“plans,” and similar phrases.

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

ing statements to encourage companies to provide prospec-

tive information. The Company is providing this cautionary

statement in connection with the safe harbor provisions.

Readers are cautioned not to place undue reliance on any for-

ward-looking statements as such statements are by nature

✷ the loss of significant customers or a substantial reduc-
tion in orders from these customers or the bankruptcy

of any such customer;

✷ changes in consumer coffee preferences, and other
factors affecting the coffee business, which represents

a substantial portion of the Company’s business;

✷ the ability of the Company to obtain any required

subject to risks, uncertainties, and other factors, many of

financing;

which are outside of the Company’s control and could cause

actual results to differ materially from such statements and

✷ the timing and amount of the Company’s capital
expenditures, restructuring, and merger and integra-

from the Company’s historical results and experience. These

tion costs;

risks and uncertainties include, but are not limited to those set

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

✷ impairments in the carrying value of goodwill, other
intangible assets, or other long-lived assets or changes

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

in useful lives of other intangible assets;

✷ volatility of commodity markets from which raw materials,
particularly green coffee beans, wheat, soybean oil, milk,

and peanuts are procured and the related impact on

costs;

✷ risks associated with hedging and derivative strategies
employed by the Company to manage commodity pric-

✷ the outcome of current and future tax examinations,
changes in tax laws, and other tax matters, and their

related impact on the Company’s tax positions;

✷ foreign currency and interest rate fluctuations;

✷ political or economic disruption due to the global

recession and credit crisis;

ing risks, including the risk that such strategies could

✷ other factors affecting share prices and capital markets

result in significant losses and adversely impact the

generally; and

Company’s liquidity;

✷ the successful completion of the integration of the coffee
business with the Company’s business, operations, and

culture and the ability to realize synergies and other

potential benefits of the merger within the time frames

currently contemplated;

✷ crude oil price trends and their impact on transportation,

energy, and packaging costs;

✷ the ability to successfully implement price changes;

✷ the success and cost of introducing new products and the

competitive response;

✷ the other factors described under “Risk Factors” in regis-
tration statements filed by the Company with the

Securities and Exchange Commission and in the other

reports and statements filed by the Company with the

Securities and Exchange Commission, including its most

recent Annual Report on Form 10-K and proxy materials.

Readers are cautioned not to unduly rely on such forward-

looking statements, which speak only as of the date made,

when evaluating the information presented in this annual

report. The Company does not assume any obligation to

update or revise these forward-looking statements to

✷ the success and cost of marketing and sales programs

reflect new events or circumstances.

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,
2009. 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”).

On November 6, 2008, the Company completed the merger with The Folgers Coffee Company (“Folgers”). As permitted by the
Securities and Exchange Commission, management excluded the non-integrated Folgers operations from its assessment of inter-
nal control over financial reporting as of April 30, 2009. Non-integrated Folgers operations constituted approximately six per-
cent of total assets (excluding goodwill and other intangible assets) as of April 30, 2009, and 12 percent of net sales for the year
then ended. Folgers operations will be included in the Company’s assessment as of April 30, 2010.

Based on the Company’s assessment of internal control over financial reporting under the COSO criteria, management con-
cluded the Company’s internal control over financial reporting was effective as of April 30, 2009.

Ernst & Young LLP, independent registered public accounting firm, audited the effectiveness of the Company’s internal control
over financial reporting as of April 30, 2009, and their report thereon is included on page 29 of this report.

Timothy P. Smucker
Chairman of the Board
and Co-Chief Executive Officer

Richard K. Smucker
Executive Chairman
and Co-Chief Executive Officer

Mark R. Belgya
Vice President and
Chief Financial Officer

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 commu-
nicated throughout the Company. There is a program of audits performed by the Company’s internal audit staff designed to eval-
uate 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 accor-
dance with the standards of the Public Company Accounting Oversight Board (United States). Management has made all finan-
cial 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 reg-
ularly 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 oversight
activity of the audit committee work together to provide reasonable assurance that the operations of the Company are conducted
according to law and in compliance with the high standards of business ethics and conduct to which the Company subscribes.

Timothy P. Smucker
Chairman of the Board
and Co-Chief Executive Officer

Richard K. Smucker
Executive Chairman
and Co-Chief Executive Officer

Mark R. Belgya
Vice President and
Chief Financial Officer

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, 2009, 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
opinion 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
control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operat-
ing effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered neces-
sary 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 U.S. generally
accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures
that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispo-
sitions 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 U.S. generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the com-
pany; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or dis-
position 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.

As indicated in the accompanying Report of Management on Internal Control Over Financial Reporting, the Company completed
the merger with The Folgers Coffee Company (“Folgers”) in 2009. As permitted by the Securities and Exchange Commission,
management excluded the non-integrated Folgers operations from its assessment of internal control over financial reporting as
of April 30, 2009. Non-integrated Folgers operations constituted approximately six percent of total assets (excluding goodwill
and other intangible assets) as of April 30, 2009, and 12 percent of net sales for the year then ended. Our audit of internal con-
trol over financial reporting of The J. M. Smucker Company as of April 30, 2009, did not include an evaluation of the internal con-
trols over financial reporting of the non-integrated operations of Folgers.

In our opinion, The J. M. Smucker Company maintained, in all material respects, effective internal control over financial report-
ing as of April 30, 2009, 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, 2009 and 2008, and the related statements of con-
solidated income, shareholders’ equity, and cash flows for each of the three years in the period ended April 30, 2009, and our
report dated June 22, 2009, expressed an unqualified opinion thereon.

Akron, Ohio

June 22, 2009

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, 2009 and 2008,
and the related statements of consolidated income, shareholders’ equity, and cash flows for each of the three years in the period
ended April 30, 2009. 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 state-
ments are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and dis-
closures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated
financial position of The J. M. Smucker Company at April 30, 2009 and 2008, and the consolidated results of its operations and
its cash flows for each of the three years in the period ended April 30, 2009, in conformity with U.S. generally accepted account-
ing principles.

As discussed in Note O, effective May 1, 2007, the Company adopted FASB Interpretation No. 48, Accounting for Uncertainty in
Income Taxes. Also, as discussed in Note H, 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).

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, 2009, based on criteria
established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission and our report dated June 22, 2009, expressed an unqualified opinion thereon.

Akron, Ohio

June 22, 2009

STATEMENTS OF CONSOLIDATED INCOME

The J. M. Smucker Company

(Dollars in thousands, except per share data)

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

Gross Profit
Selling, distribution, and administrative expenses
Amortization
Merger and integration costs
Other restructuring costs
Other operating expense (income) – net

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

Income Before Income Taxes
Income taxes

Net Income

Earnings per common share:

Net Income

Net Income – Assuming Dilution

Year Ended April 30,

2009

2008

2007

$3,757,933
2,506,504
—

1,251,429
673,565
40,314
72,666
10,229
3,624

451,031
6,993
(62,478)
519

396,065
130,112

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

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

782,164
486,592
4,073
7,967
3,237
(3,879)

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

254,788
84,409

702,055
441,286
1,528
61
2,120
2,689

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

241,004
83,785

$ 265,953

$ 170,379

$ 157,219

3.14

3.12

3.03

$ 3.00

2.79

2.76

See notes to consolidated financial statements.

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,

2009

2008

$ 456,693

$ 171,541

266,037

162,426

409,592

194,334

603,926

72,235

280,568

99,040

379,608

62,632

1,398,891

776,207

51,131

273,343

901,614

48,593

45,461

202,564

586,502

39,516

1,274,681

874,043

(436,248)

(377,747)

838,433

496,296

2,791,391

1,132,476

3,098,976

12,813

51,657

614,000

16,043

94,859

5,954,837

1,857,378

$8,192,161

$3,129,881

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
Notes payable
Other current liabilities

Total Current Liabilities

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

Total Noncurrent Liabilities

Shareholders’ Equity
Serial preferred shares – no par value:

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

Common shares – no par value:

Authorized – 150,000,000 shares; outstanding –
118,422,123 in 2009 and 54,622,612 in 2008 (net of 10,179,989
and 10,807,615 treasury shares, respectively), at stated value

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

Total Shareholders’ Equity

April 30,

2009

2008

$ 198,954
61,251
54,281
17,690
41,448
276,726
350,000
60,886

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

1,061,236

239,397

910,000
66,401
38,182
1,145,808
30,603

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

2,190,994

1,090,631

—

29,606
4,547,921
424,504
(4,830)
(57,270)

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

4,939,931

1,799,853

$8,192,161

$3,129,881

See notes to consolidated financial statements.

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
Defined benefit pension contributions
Income taxes
Other – net

Year Ended April 30,

2009

2008

2007

$265,953

$170,379

$157,219

79,450
40,314
9,093
22,105
—
25,525

(78,631)
34,669
38,792
67,883
(34,665)
22,941
(48,601)

58,497
4,073
1,510
11,531
(1,903)
18,215

(17,599)
(35,022)
(16,208)
6,988
(3,538)
(22,302)
4,900

57,346
1,528
10,089
11,257
—
22,530

23,848
(8,146)
5,218
1,034
(10,955)
(15,079)
17,081

Net Cash Provided by Operating Activities

444,828

179,521

272,970

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

(77,335)
(108,907)
—
—
3,013
2,965
5,448

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

Net Cash Used for Investing Activities

(174,816)

(262,486)

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

400,000
—
—
(384,876)
(4,025)
1,976
(474)

12,601
2,539

285,152
171,541

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

49,839
5,126

(28,000)
199,541

(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)

127,709
71,832

Cash and Cash Equivalents at End of Year

$456,693

$171,541

$199,541

( ) Denotes use of cash

See notes to consolidated financial statements.

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

Amount

Accumulated
Other
Due from Comprehensive
Income (Loss)

ESOP Trust

Total
Shareholders’
Equity

Balance at May 1, 2006

56,949,044

$ 14,237

$ 1,212,598

$ 489,067

$(8,527) $(6, 525)

$ 27,209

$ 1,72 8,059

157,219

(1,100,194)
931,000

(275)
233

(23,915)
24,247

(27,935)

8,527

Balance at April 30, 2007

56,779,850

14,195

1,216,091

(2,991,920)
834,682

(748)
209

(66,075)
20,398

(85,698)

Balance at April 30, 2008

54,622,612

13,656

1,181,645

(64,720)

553,631

170,379

3,161

11,231

(68,519)

(2,374)

567,419

265,953

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

Net income
Foreign currency

translation adjustment

Pensions and other
postretirement liabilities

Unrealized loss on

available-for-sale securities

Unrealized loss on cash

flow hedging derivatives

Comprehensive Income

Purchase of treasury shares
Purchase business
combination

Stock plans
Cash dividends declared –

$6.31 per share

Tax benefit of stock plans
Other

2,437

427

1,644

138

(14,098)

508

157,219

2,437

427

1,644

138

161,865

(52,125)
33,007

(64,720)

(14,098)
3,161
508

—

(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

538

—

(5,479)

42,612

1,799,853

265,953

(47,024)

(43,479)

(2,798)

(6,581)

166,071

(4,025)

3,366,353
17,522

(408,845)
2,353
649

(81,685)

(20)

(3,982)

(23)

63,166,532
714,664

15,792
178

3,350,561
17,344

(408,845)

2,353

649

Balance at April 30, 2009

118,422,123 $29,606

$4,547,921 $424,504 $ — $(4,830) $(57,270) $4,939,931

See notes to consolidated financial statements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The J. M. Smucker Company

(Dollars in thousands, except per share data)

NOTE A: ACCOUNTING POLICIES

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
principles 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 depreciation and amortization, loss contingencies, net realizable value of inventories, accruals for trade marketing and mer-
chandising programs, 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
criteria 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 col-
lectibility is reasonably assured.

Major Customer: Sales to Wal-Mart Stores, Inc. and subsidiaries amounted to approximately 24 percent, 20 percent, and 20 per-
cent of net sales in 2009, 2008, and 2007, respectively. These sales are primarily included in the three U.S. retail market segments.
No other customer exceeded 10 percent of net sales for any year. Trade receivables at April 30, 2009 and 2008, included amounts
due from Wal-Mart Stores, Inc. and subsidiaries of $73,196 and $34,210, 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 conducted through the retail trade, distributors, or directly with consumers, including in-store display and product place-
ment programs, 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 performance of similar promotional programs. Differences between estimated expense and actual performance are rec-
ognized 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 25 percent of 2009 net sales, the likelihood
exists of materially different reported results if factors such as the level and success of the promotional programs or other con-
ditions differ from expectations.

Advertising Expense: Advertising costs are expensed as incurred. Advertising expense was $77,363, $55,522, and $51,446 in
2009, 2008, and 2007, respectively.

Research and Development Cost: Total research and development costs, including product formulation costs, were $14,498,
$9,547, and $9,680 in 2009, 2008, and 2007, respectively.

Share-Based Payments: Compensation expense is recognized over the requisite service period, which includes a one-year per-
formance period plus the defined forfeiture period, which is typically four years of service or the attainment of a defined age and
years of service. Compensation expense recognized related to share-based awards was $22,105, $11,531, and $11,257 in 2009,
2008, and 2007, respectively. Of the total compensation expense for share-based awards recorded, $8,062 is included in merger
and integration costs in the Statements of Consolidated Income in 2009. The related tax benefit recognized in the Statements of
Consolidated Income was $7,261, $3,820, and $3,913 in 2009, 2008, and 2007, respectively.

As of April 30, 2009, total compensation cost related to nonvested share-based awards not yet recognized was approximately
$31,186. The weighted-average period over which this amount is expected to be recognized is approximately three years.

Corporate income tax benefits 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. For 2009, 2008, and 2007, the actual tax deductible benefit realized
from share-based compensation was $2,353, $11,231, and $3,161, including $2,372, $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 Statements of Consolidated Cash Flows.

Income Taxes: The Company accounts for income taxes using the liability method. Accordingly, deferred tax assets and liabili-
ties are recognized for the future tax consequences attributable to differences between financial statement carrying amounts of
existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.
The effect on deferred tax assets and liabilities of a change in the tax rate is recognized in income or expense in the period that
the change is effective. 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 mar-
kets, the Company’s products are sold primarily to food retailers, food wholesalers, drug stores, club stores, mass merchandisers,
discount and dollar stores, and military commissaries. 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 doubt-
ful accounts at April 30, 2009 and 2008, was $2,001 and $911, respectively. Trade receivables are charged off against the
allowance after management determines the potential for recovery is remote.

Inventories: Inventories are stated at the lower of cost or market. Cost for all inventories is determined using the first-in, first-out
(“FIFO”) method.

As of the date of merger with The Folgers Coffee Company (“Folgers”), the Company initially elected to continue the applica-
tion of the last-in, first-out (“LIFO”) method of accounting for certain acquired Folgers retail coffee inventory. After further eval-
uation, the Company changed its method of accounting for its retail coffee inventories from the LIFO method of accounting to
the FIFO method. The Company believes the change is preferable as the FIFO method better reflects the current value of inven-
tories on the Consolidated Balance Sheets, and it provides better matching of revenue and expense in the Statements of
Consolidated Income, due to the current and anticipated volatility of the underlying commodity prices. Furthermore, the appli-
cation of the FIFO method provides a uniform costing method across the Company’s operations, and will enhance comparabil-
ity with peers within the food and beverage industry.

The change in accounting method from the LIFO to FIFO method was completed in accordance with Statement of Financial
Accounting Standards No. 154, Accounting Changes and Error Corrections. As of April 30, 2009, coffee inventory valued using the
LIFO method was the equivalent to the value using the FIFO method. Due to the application of purchase accounting and the
lower of cost or market principle, the Company had not recorded a LIFO reserve. Accordingly, there was no impact on the
Company’s consolidated financial statements resulting from the change in accounting for inventory.

Derivative Financial Instruments: The Company utilizes derivative instruments such as commodity futures and options con-
tracts and foreign currency forwards and options contracts to manage exposure to changes in commodity prices and foreign
currency exchange rates. The Company accounts for these derivative instruments in accordance with Statement of Financial
Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging Activities (“SFAS 133”). SFAS 133 requires that
all derivative instruments be recognized in the financial statements and measured at fair value regardless of the purpose or intent
for holding them. For derivatives designated as a cash flow hedge that are used to hedge an anticipated transaction, changes in

fair value are deferred and recorded in shareholders’ equity as a component of accumulated other comprehensive (loss) 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 measures hedge effectiveness at inception and verifies effectiveness on a
quarterly basis using prospective and retrospective testing. 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 historically has not entered into derivative financial instruments for trading purposes or for speculation. For additional
information, see Note M: 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
2009, 2008, and 2007 totaled $36,547, $23,902, and $20,261, 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 foodser-
vice 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.
A discounted cash flow analysis is utilized to estimate the fair value of the Company’s reporting units. For annual impairment
testing purposes, the Company’s reporting units are its operating segments. The discount rates utilized in the analysis are devel-
oped using a weighted-average cost of capital methodology. In addition to the annual test, the Company will test for impair-
ment 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 on a straight-line basis over their estimated useful lives. For additional infor-
mation, see Note G: Goodwill and Other Intangible Assets.

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. At April 30, 2009 and
2008, the fair value of these investments included in other assets was $29,273 and $31,130, respectively. Included in accumu-
lated other comprehensive (loss) income at April 30, 2009 and 2008, was an unrealized loss of $2,763 and an unrealized gain
of $1,404, respectively.

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

Recently Issued Accounting Standards: Effective May 1, 2008, the Company adopted the financial statement presentation
requirements of Financial Accounting Standards Board (“FASB”) Staff Position (“FSP”) No. FIN 39-1, An Amendment to FASB
Interpretation No. 39, (“FSP FIN 39-1”). Among other amendments, FSP FIN 39-1 requires the Company to make an accounting
policy election to offset or not offset fair value amounts recognized for derivative instruments and fair value amounts recognized
for the right to reclaim cash collateral or the obligation to return cash collateral arising from derivative instruments recognized
at fair value with the same counterparty under a master netting arrangement. The effects of FSP FIN 39-1 are to be applied ret-
rospectively to all periods presented. The Company has elected to not offset fair value amounts recognized for derivative instru-
ments and its cash margin accounts executed with the same counterparty. The Company maintained cash margin accounts of

$16,619 and $12,634 at April 30, 2009 and 2008, respectively, that are included in other current assets in the Consolidated
Balance Sheets. Prior to adoption, the Company’s cash margin accounts were included in cash and cash equivalents in the
Consolidated Balance Sheets as they were not considered material. The retrospective application of FSP FIN 39-1 had no impact
on the Company’s financial position or results of operations for all periods presented and resulted in a decrease of $12,056 and
$454 in cash provided by operating activities for the years ended April 30, 2008 and 2007, respectively.

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 require-
ments for how the Company recognizes the assets acquired and liabilities assumed, recognizes the goodwill acquired, and deter-
mines 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 made by the Company after May 1, 2009.

In April 2008, the FASB issued FSP No. FAS 142-3, Determination of the Useful Life of Intangible Assets (“FSP FAS 142-3”). FSP FAS
142-3 amends the factors to be considered in developing renewal or extension assumptions used to determine the useful life of
intangible assets under Statement of Financial Accounting Standards (“SFAS”) No. 142, Goodwill and Other Intangible Assets. Its
intent is to improve the consistency between the useful life of an intangible asset and the period of expected cash flows used to
measure its fair value. This FSP is effective May 1, 2009, for the Company.

In June 2008, the FASB issued FSP Emerging Issues Task Force 03-6-1, Determining Whether Instruments Granted in Share-Based
Payment Transactions are Participating Securities (“FSP EITF 03-6-1”). FSP EITF 03-6-1 clarifies that unvested share-based payment
awards that contain nonforfeitable rights to dividends or dividend equivalents whether paid or unpaid are participating securi-
ties and are to be included in the computation of earnings per share under the two-class method described in SFAS No. 128,
Earnings per Share. This FSP is effective May 1, 2009, for the Company, and requires all presented prior period earnings per share
data to be adjusted retrospectively.

In December 2008, the FASB issued FSP No. FAS 132 (R)-1, Employers’ Disclosures about Postretirement Benefit Plan Assets (“FSP
FAS 132R-1”). FSP FAS 132R-1 provides guidance on employers’ disclosures about plan assets of a defined benefit pension or
other postretirement plan. This FSP is effective April 30, 2010, for the Company.

The Company is currently assessing the impact, if any, on the consolidated financial statements of recently issued accounting
standards that are not yet effective 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 in each of its segments are primarily commodities and agricultural-based products.
Glass, plastic, steel cans, 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 grow-
ers and suppliers. Green coffee, peanuts, oils, sweeteners, milk, wheat and flour, 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. Green coffee is the world’s second largest traded commodity and is sourced solely from foreign countries. Green coffee
supply and price are subject to high volatility due to factors such as weather, pest damage, and political and economic condi-
tions in the source countries. Raw materials are generally available from numerous sources and the Company believes that it will
continue to be able to obtain adequate supplies. The Company has not historically encountered shortages of key raw materials.
The Company considers its relationship with key material suppliers to be good.

Approximately 34 percent of the Company’s employees, located at 11 facilities, are covered by union contracts. The contracts
vary in term depending on the location with seven contracts expiring in 2010.

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

NOTE B: MERGERS AND ACQUISITIONS

On November 6, 2008, the Company merged The Folgers Coffee Company (“Folgers”), a subsidiary of The Procter & Gamble
Company (“P&G”), with a wholly-owned subsidiary of the Company. Under the terms of the agreement, P&G distributed the
Folgers common shares to electing P&G shareholders in a tax-free transaction, which was immediately followed by the conver-
sion of Folgers common stock into Company common shares. As a result of the merger, Folgers became a wholly-owned sub-
sidiary of the Company. In the merger, P&G shareholders received approximately 63.2 million common shares of the Company
valued at approximately $3,366.4 million based on the average closing price of the Company’s common shares for the period
beginning two trading days before and concluding two trading days after the announcement of the transaction on June 4, 2008.
After closing the transaction on November 6, 2008, the Company had approximately 118 million common shares outstanding.
As part of the transaction, the Company’s debt obligations increased by $350.0 million as a result of Folgers’ LIBOR-based vari-
able rate note. In addition, on October 23, 2008, the Company issued $400.0 million in Senior Notes with a weighted-average
interest rate of 6.6 percent. A portion of the proceeds was used to fund the payment of a $5.00 per share one-time special div-
idend on the Company’s common shares, totaling approximately $274.0 million, on October 31, 2008.

The transaction with Folgers, the leading marketer and manufacturer of retail packaged coffee products in the U.S., is consistent
with the Company’s strategy to own and market number one brands in North America. For accounting purposes, the Company
is the acquiring enterprise. The merger was accounted for as a purchase business combination. Accordingly, the results of the
Folgers business are included in the Company’s consolidated financial statements from the date of the merger. The aggregate
purchase price was approximately $3,735.8 million, including $19.4 million of capitalized transaction-related expenses and
$350.0 million of Folgers’ debt. In addition, the Company incurred costs of $63.4 million in 2009 that were directly related to
the merger and integration of Folgers. Due to the nature of these costs, they were expensed as incurred. Total transaction costs
of $82.8 million incurred to date include approximately $8.1 million in noncash expense items.

The Folgers purchase price was allocated to the underlying assets acquired and liabilities assumed based upon their estimated
fair values at the date of merger. 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
estimated fair value of the net identifiable tangible and intangible assets acquired, such excess was allocated to goodwill.

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

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

Total assets acquired

Liabilities assumed:
Current liabilities
Deferred tax liabilities
Other noncurrent liabilities

Total liabilities assumed

Net assets acquired

$ 300,532
322,580
2,515,000
1,638,063
4,278

$4,780,453

$ 87,283
953,666
3,750

$1,044,699

$3,735,754

Total Folgers goodwill was assigned to the U.S. retail coffee market segment. Of the total goodwill, $1,627.5 million is not
deductible for tax purposes. Although subject to adjustment following the completion of the valuation process, the Folgers pur-
chase price allocation is substantially complete.

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

Intangible assets with finite lives:

Customer and contractual relationships (20-year estimated useful life)
Technology (12-year estimated useful life)

Intangible assets with indefinite lives

Total intangible assets

$1,089,000
133,000
1,293,000

$2,515,000

In addition to the Folgers merger, the Company completed a series of other acquisitions during 2009 and 2008, including Knott’s
Berry Farm food brand, Europe’s Best, Inc., the Canadian Carnation brand canned milk business, and Eagle Family Foods
Holdings, Inc., for aggregate cash consideration of approximately $279 million and the assumption of $115 million in debt. The
results of the operations of each of the merged or acquired businesses are included in the Company’s consolidated financial state-
ments from the date of the transaction. Had the transactions occurred on May 1, 2007, unaudited, pro forma consolidated results
for the years ended April 30, 2009 and 2008, would have been as follows:

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

Year Ended April 30,

2009

2008

$4,684,746
357,265
3.03

$4,354,690
340,176
2.84

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

NOTE C: RESTRUCTURING

In 2003, the Company announced its plan to restructure certain operations as part of its ongoing efforts to refine its portfolio,
optimize its production capacity, improve productivity and operating efficiencies, and improve the Company’s overall cost base
as well as service levels in support of its long-term strategy. The Company has completed a number of transactions resulting in
the rationalization or divestiture of manufacturing facilities and businesses in the United States, Europe, and Canada, including
the 2007 sale of the Canadian nonbranded businesses, which were acquired as part of International Multifoods Corporation. The
restructurings resulted in the reduction of approximately 410 full-time positions.

The Company has incurred total restructuring costs of approximately $69.0 million related to these initiatives since the
announcement in March 2003. Total restructuring charges of $10,229, $4,747, and $12,101 in 2009, 2008, and 2007, respec-
tively, were reported in the accompanying Statements of Consolidated Income. Of the total restructuring charges, approximately
$1,510 and $9,981 were reported in cost of products sold in 2008 and 2007, respectively, and no restructuring charges were
reported in cost of products sold in 2009. The restructuring costs classified as cost of products sold include long-lived asset
charges and inventory disposition costs. The Company believes the restructuring plan is substantially complete.

NOTE D: REPORTABLE SEGMENTS

The Company operates in one industry: the manufacturing and marketing of food products. The Company has four reportable
segments: U.S. retail consumer market, U.S. retail oils and baking market, U.S. retail coffee market, and special markets. With the
addition of The Folgers Coffee Company (“Folgers”) and the resulting organizational changes made in association with the
Folgers transaction, the Company created the U.S. retail consumer market segment, U.S. retail oils and baking market segment,
and U.S. retail coffee market segment. The U.S. retail consumer market segment primarily includes domestic sales of Smucker’s,
Jif, and Hungry Jack branded products; the U.S. retail oils and baking market segment includes domestic sales of Crisco, Pillsbury,
Eagle Brand, White Lily, and Martha White branded products; the U.S. retail coffee market segment represents the domestic sales
of Folgers, Millstone, and Dunkin’ Donuts branded coffee to retail customers; and the special markets segment is comprised of the
Canada, foodservice, natural foods (formerly beverage), and international strategic business areas. Special markets segment
products are distributed 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.

As a result of the change in segment reporting, all historical information has been reclassified to conform to the new presentation.

The following table sets forth reportable segment and geographical information.

Net sales:

U.S. retail consumer market
U.S. retail oils and baking market
U.S. retail coffee market
Special markets

Total net sales

Segment profit:

U.S. retail consumer market
U.S. retail oils and baking market
U.S. retail coffee 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 (expense) income

Year Ended April 30,

2009

2008

2007

$1,103,264
995,474
855,571
803,624

$ 998,556
875,991
—
650,227

$ 920,505
626,559
—
600,953

$3,757,933

$2,524,774

$2,148,017

$ 249,313
124,150
240,971
111,741

$ 233,201
99,626
—
92,019

$ 217,897
101,898
—
72,974

$ 726,175

$ 424,846

$ 392,769

6,993
(62,478)
(40,314)
(14,043)
(10,229)
(72,666)
(133,313)
(4,060)

13,259
(42,145)
(4,073)
(11,531)
(4,747)
(7,967)
(115,618)
2,764

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

Income before income taxes

$ 396,065

$ 254,788

$ 241,004

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

$3,353,362

$2,199,433

$1,819,747

$ 356,300
48,271

$ 278,447
46,894

$ 282,069
46,201

$ 404,571

$ 325,341

$ 328,270

$3,757,933

$2,524,774

$2,148,017

$ 7,670,192

$2,547,609

$2,198,029

$ 514,993
6,976

$ 573,829
8,443

$ 484,641
11,153

$ 521,969

$ 582,272

$ 495,794

$8,192,161

$3,12 9,881

$2,693,823

$6,406,085

$1,895,494

$ 1,690,755

$ 386,948
237

$ 457,345
835

$ 357,486
6,216

$ 387,185

$ 458,180

$ 363,702

$6,793,270

$2,353,674

$2,054,457

Segment profit represents revenue less direct and allocable operating expenses.

The following table presents product sales information.

Coffee
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
Other

Total

Year Ended April 30,

2009

2008

2007

25%
14
11
9
8
7
7
4
3
3
3
6

—%
19
14
13
10
10
8
5
5
5
4
7

—%
21
15
14
11
—
11
5
5
4
5
9

100%

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

NOTE E: 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,

2009

2008

2007

$265,953

$170,379

$157,219

84,823,849

56,226,206

56,432,839

98,938
362,424

231,682
262,757

389,247
234,335

85,285,211

56,720,645

57,056,421

$ 3.14

$ 3.12

$ 3.03

$ 3.00

$ 2.79

$ 2.76

NOTE F: MARKETABLE SECURITIES

Under the Company’s investment policy, it may invest in debt securities deemed to be investment grade at the 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 recent investments pri-
marily 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 security’s 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 $3,013, $257,536, and $26,272 of proceeds have been realized upon maturity or
sale of available-for-sale marketable securities in 2009, 2008, and 2007, 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, 2009 and 2008.

Cost
Gross unrealized losses

Estimated fair value

Year Ended April 30,

2009

2008

$13,519
(706)

$12,813

$16,532
(489)

$16,043

There were two marketable securities in an unrealized loss position for greater than twelve months at April 30, 2009. Based on
management’s evaluation at April 30, 2009, 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 G: GOODWILL AND OTHER INTANGIBLE ASSETS

A summary of changes in the Company’s goodwill during the years ended April 30, 2009 and 2008, by reportable segment is
as follows:

Balance at April 30, 2007
Acquisitions
Other

Balance at April 30, 2008
Acquisitions
Other

U.S. Retail
Consumer
Market

U.S. Retail
Oils and Baking
Market

$ 340,010
600
866

$ 341,476
—
(180)

$ 596,523
100,547
3,465

$ 700,535
—
(883)

U.S. Retail
Coffee
Market

$ —
—
—

$ —
1,638,063
—

Special
Markets

$ 54,238
34,060
2,167

$ 90,465
35,435
(13,520)

Total

$ 990,771
135,207
6,498

$ 1,132,476
1,673,498
(14,583)

Balance at April 30, 2009

$341,296

$699,652

$1,638,063

$112,380

$2,791,391

Included in the other category at April 30, 2009 and 2008, were foreign currency exchange and tax-related adjustments.

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

April 30, 2009

April 30, 2008

Acquisition Accumulated
Amortization

Cost

Net

Acquisition
Cost

Accumulated
Amortization

Net

Finite-lived intangible assets
subject to amortization:
Customer and contractual relationships $1,176,006
134,970
Patents and technology
6,460
Trademarks

$35,433 $1,140,573
128,639
5,492

6,331
968

$ 79,103
1,970
6,785

$3,334
641
663

$ 75,769
1,329
6,122

Total intangible assets
subject to amortization

Indefinite-lived intangible assets

not subject to amortization:
Trademarks

$1,317,436

$42,732 $1,274,704

$ 87,858

$4,638

$ 83,220

$1,824,272

— $1,824,272

$530,780

$ —

$530,780

Total other intangible assets

$3,141,708

$42,732 $3,098,976

$618,638

$4,638

$614,000

Amortization expense for finite-lived intangible assets was $38,094, $3,895, and $351 in 2009, 2008, and 2007, respectively. The
weighted-average useful life of the finite-lived intangible assets is 19 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 $71,400.

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 was per-
formed as of February 1, 2009. Goodwill impairment is tested at the reporting unit level which is the Company’s operating seg-
ments. Approximately $1,491 and $225 of impairment was recorded related to certain indefinite-lived intangible assets in 2009
and 2007, respectively, and no impairment was recorded in 2008.

NOTE H: PENSIONS AND OTHER POSTRETIREMENT BENEFITS

The Company has pension plans covering certain 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 gov-
ernment regulations.

In addition to providing pension benefits, the Company sponsors several unfunded, defined postretirement plans that provide
health care and life insurance benefits to 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 (loss) income. The amounts recorded in accumulated other comprehensive (loss) income are modi-
fied 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.

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

Defined Benefit Pension Plans

Other
Postretirement Benefits

Year Ended April 30,

2009

2008

2009

2008

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
Settlement loss
Company contributions
Participant contributions
Benefits paid
Net periodic benefit cost (credit)

$ 94,633
75,899

$145,348
154,530

$ 10,866
—

$ 12,079
—

$(18,734)

$ 9,182

$(10,866)

$(12,079)

$ 816
7,963
9,908
2,497
328
(9,407)
9,596

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

$ 46
631
—
607
—
(607)
665

$ 58
669
—
1,090
—
(1,090)
727

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,

2009

2008

$344,901

$411,478

244,070
183,585

252,573
185,516

80,762
37,686

85,596
37,686

The Company employs a total return on investment approach for the defined benefit pension plans’ assets. A mix of equities,
fixed income, and alternative investments are used to maximize the long-term rate of return on assets for the level of risk. In deter-
mining 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

Actual Allocation

April 30,

2009

39%
40
21

100%

2008

54%
40
6

100%

Target

Allocation

45%
44
11

100%

Included in equity securities were 317,552 of the Company’s common shares at April 30, 2009 and 2008. The market value of
these shares was $12,512 at April 30, 2009. The Company paid dividends of $1,994 on these shares during 2009.

The Company expects to contribute approximately $4 million to the pension plans in 2010. The Company expects to make the
following benefit payments for all benefit plans: $26 million in 2010, $27 million in 2011, $35 million in 2012, $28 million in
2013, $29 million in 2014, and $158 million in 2015 through 2019.

NOTE I: 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 expense incurred on ESOP debt was $261, $376, and $530 in
2009, 2008, and 2007, respectively. Contributions to the plan, representing compensation expense, are made annually in
amounts sufficient to fund ESOP debt repayment and were $614, $690, and $684 in 2009, 2008, and 2007, respectively.
Dividends on unallocated shares are used to reduce expense and were $1,461, $334, and $356 in 2009, 2008, and 2007, respec-
tively. The principal payments received from the ESOP in 2009, 2008, and 2007 were $649, $538, and $508, respectively.

Dividends on allocated shares are credited to participant accounts and are used to purchase additional common shares for par-
ticipant 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, 2009, the ESOP held 231,594 unallocated and 818,552 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 cov-
ered by certain collective bargaining agreements. The Company’s contributions under these plans are based on a specified per-
centage of employee contributions. Charges to operations for these plans in 2009, 2008, and 2007 were $7,282, $4,943, and
$4,138, respectively.

NOTE J: 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 primarily through the 2006 Equity Compensation Plan approved by the Company’s
shareholders in August 2006. Awards under this plan may be in the form of stock options, stock appreciation rights, restricted
shares, deferred stock units, performance 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, 2009, there were 1,719,101 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 pre-
viously existing equity compensation plans, except for certain defined circumstances included in the new plan.

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 acquisi-
tion, which are settled by issuing new Company common shares.

Stock Options: The following table is a summary of the Company’s stock option activity and related information.

Outstanding at May 1, 2008

Exercised
Forfeited

Outstanding and exercisable at April 30, 2009

Options

1,118,859
(114,369)
(12,330)

992,160

Weighted-
Average
Exercise
Price

$38.23
2 7.17
52.92

$39.32

At April 30, 2009, the weighted-average remaining contractual term for stock options outstanding and exercisable was 4.2 years
and the aggregate intrinsic value of these stock options was approximately $78.

The total intrinsic value of options exercised during 2009, 2008, and 2007 was approximately $2,871, $28,973, and $9,409,
respectively.

Other Equity Awards: The following table is a summary of the Company’s restricted shares, deferred shares, deferred stock units,
and performance units.

Outstanding at May 1, 2008

Granted
Converted
Vested
Forfeited

Outstanding at April 30, 2009

Restricted/
Deferred
Shares and
Deferred
Stock Units

438,490
570,359
65,830
(226,857)
(9,156)

838,666

Weighted-
Average
Grant Date
Fair Value

$49.12
42.29
51.37
49.00
47.39

$44.70

Performance
Units

65,830
114,440
(65,830)
—
—

114,440

Weighted-
Average
Fair Value

$51.37
43.44
51.37
—
—

$43.44

The total fair value of equity awards other than stock options vesting in 2009, 2008, and 2007 was approximately $11,117,
$8,547, and $4,276, 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 2009, 2008, and 2007.

Year Ended April 30,

2009
2008
2007

Restricted/
Deferred
Shares and
Deferred
Stock Units

570,359
140,290
172,669

Weighted-
Average
Grant Date
Fair Value

$42.29
57.50
40.80

Performance
Shares and
Units

114,440
65,830
67,440

Weighted-
Average
Grant Date
Fair Value

$43.44
51.37
57.73

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.

Long-term debt consists of the following:

NOTE K: DEBT AND FINANCING ARRANGEMENTS

6.77% Senior Notes due June 1, 2009
6.60% Senior Notes due November 13, 2009
7.94% Series C Senior Notes due September 1, 2010
4.78% Senior Notes due June 1, 2014
6.12% Senior Notes due November 1, 2015
6.63% Senior Notes due November 1, 2018
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,

2009

2008

$ 75,000
201,726
10,000
100,000
24,000
376,000
400,000

$1,186,726
276,726

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

$789,684
—

$ 910,000

$789,684

In addition, as part of the merger with The Folgers Coffee Company (“Folgers”) on November 6, 2008, the Company’s debt
obligations increased by $350.0 million as a result of the guarantee of Folgers’ term loan facility with two banks. Interest on the
facility is based on prevailing federal funds rate, U.S. prime, or LIBOR, as determined by the Company, and is payable either on a
quarterly basis, or at the end of a borrowing term. At April 30, 2009, the weighted-average interest rate on the facility was 1.8 per-
cent. This facility matures on November 9, 2009.

On October 23, 2008, the Company issued $400.0 million in Senior Notes in two series with maturity dates of November 1, 2015
and November 1, 2018. A portion of the proceeds from the Senior Notes was used to fund costs related to the Folgers merger
and the payment of a $5.00 per share one-time special dividend, totaling approximately $274.0 million, on October 31, 2008.

All of the Company’s Senior Notes are unsecured and interest is paid annually on the 6.60 percent Senior Notes and semiannually
on the other notes. Prepayments are required on the 5.55 percent Senior Notes, the first of which is $50.0 million on April 1, 2013.
The 6.60 percent Senior Notes are guaranteed by Diageo plc, an unrelated third party. The guarantee may terminate, in limited
circumstances, prior to the maturity of the notes.

The Company has available a $180.0 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, 2009, the Company did not have a bal-
ance outstanding under the revolving credit facility. At April 30, 2009, the Company had standby letters of credit of approxi-
mately $22.9 million outstanding.

The Company’s debt instruments contain certain financial covenant restrictions including consolidated net worth and debt to
capitalization requirements. The Folgers’ term loan facility also contains leverage and interest coverage ratios. The Company is
in compliance with all covenants.

Interest paid totaled $52,918, $44,584, and $27,580 in 2009, 2008, and 2007, 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, debt issuance costs, and interest capitalized.

NOTE L: 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 a defendant in a variety of legal proceedings. Plaintiffs
in a few of those cases seek substantial damages. The Company cannot predict with certainty the results of these proceedings.
However, the Company believes that the final outcome of these proceedings will not materially affect the Company’s financial
position, results of operations, or cash flows.

NOTE M: DERIVATIVE FINANCIAL INSTRUMENTS

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

Commodity Price Management: 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 green coffee, edible oils,
flour, and milk. The Company also enters into commodity futures and options to manage price risk for energy input costs,
including natural gas and diesel fuel. The derivative instruments generally have maturities of less than one year. Certain of the
derivative instruments associated with the Company’s U.S. retail oils and baking market and U.S. retail coffee market segments
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 qualify-
ing hedges are deferred and included as a component 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. The mark-to-market gains or losses
on nonqualifying, excluded, and ineffective portions of hedges are recognized in cost of products sold immediately.

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-
modity’s futures contracts are highly effective in hedging price risks associated with the commodity purchased. Hedge effective-
ness is measured at inception and on a quarterly basis.

Foreign Currency Exchange Rate Hedging: The Company utilizes foreign currency forwards and options contracts to manage
the effect of foreign currency exchange fluctuations on future cash payments related to purchases of certain raw materials, fin-
ished goods, and fixed assets. The contracts generally have maturities of less than one year. At the inception of the contract, the
derivative is evaluated and documented for SFAS 133 accounting treatment. If the contract qualifies for hedge accounting treat-
ment, 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 comprehensive income. These gains or losses are reclassified to earnings in the period the contract is exe-
cuted. The ineffective portion of these contracts is immediately recognized in earnings. Certain instruments used to manage for-
eign currency exchange exposures do not meet the requirements for hedge accounting treatment and the change in value of
these instruments is immediately recognized in cost of products sold.

As of April 30, 2009, the Company had the following outstanding derivative contracts:

Commodity contracts
Foreign currency exchange contracts

Gross Contract
Notional Amount

$276,644
$ 41,999

The following table sets forth the fair value of derivative instruments as recognized in the Consolidated Balance Sheet at
April 30, 2009.

Derivatives designated as hedging instruments under SFAS 133:

Commodity contracts

Derivatives not designated as hedging instruments under SFAS 133:

Commodity contracts
Foreign currency exchange contracts

Total

Total derivatives

Other
Current Assets

Other
Current Liabilities

$3,782

$1,562

$ 414
—

$ 414

$4,196

$2,278
332

$2,610

$4,172

The following table presents information on the mark-to-market gains and losses recognized on derivatives in SFAS 133 cash flow
hedging relationships, all of which hedge commodity price risk.

Loss recognized in other comprehensive loss, net of tax (effective portion)
Loss reclassified from accumulated other comprehensive loss

to cost of products sold, net of tax (effective portion)

Gain recognized in cost of products sold, net of tax (ineffective portion)

Three Months Ended
April 30, 2009
(Unaudited)

$ (188)

(4,551)
37

The entire amount of the deferred gain included in accumulated other comprehensive loss at April 30, 2009, is expected to be
recognized in earnings as the related commodity is utilized during 2010.

The following table presents the mark-to-market losses recognized on derivatives not designated as hedging instruments under
SFAS 133. These losses were recognized in cost of products sold.

Commodity contracts
Foreign currency exchange contracts

Total

Three Months Ended
April 30, 2009
(Unaudited)

$ 1,563
701

$ 2,264

NOTE N: OTHER FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS

Financial instruments, other than derivatives, that potentially subject the Company to significant concentrations of credit risk
consist principally of cash investments, marketable securities, and trade receivables. The Company’s marketable securities are in
debt securities. Under the Company’s investment policy, it may invest in securities deemed to be investment grade at the time
of purchase. Currently, these investments are defined as mortgage-backed obligations, corporate bonds, municipal bonds, fed-
eral agency notes, and commercial paper. However, in light of recent market conditions, the Company has limited recent invest-
ments primarily to high-quality money market funds. The Company determines the appropriate categorization of its debt
securities 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 following table provides information on the carrying amount and fair value of financial instruments, including derivative
financial instruments.

Marketable securities
Other investments and securities
Derivative financial instruments (net assets)
Fixed rate long-term debt

April 30, 2009

April 30, 2008

Carrying
Amount

Fair Value

$ 12,813 $ 12,813
29,273
24
1,234,728

29,273
24
1,186,726

Carrying
Amount

$ 16,043
31,130
1,269
789,684

Fair Value

$ 16,043
31,130
1,269
807,583

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 was effective for fiscal years beginning after
November 15, 2007. The Company adopted the provisions of SFAS 157 effective May 1, 2008. The adoption of SFAS 157 did not
have a material impact on the Company’s condensed consolidated financial statements.

SFAS 157 valuation techniques are based on observable and unobservable inputs. Observable inputs reflect readily obtainable
data from independent sources, while unobservable inputs reflect the Company’s market assumptions. SFAS 157 classifies these
inputs into the following hierarchy:

Level 1 Inputs – Quoted prices for identical instruments in active markets.

Level 2 Inputs – Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in
markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are
observable.

Level 3 Inputs – Instruments with primarily unobservable value drivers.

The following table is a summary of the fair values of the Company’s financial assets.

Marketable securities(A)
Other investments and securities(B)
Derivatives(C)

Total

Level 1

$ —
8,147
24

$8,171

Level 2

$12,813
21,126
—

$33,939

Level 3

$ —
—
—

$ —

Fair Value at
April 30, 2009

Fair Value at
April 30, 2008

$12,813
29,273
24

$42,110

$16,043
31,130
1,269

$48,442

(A) The Company’s marketable securities consist entirely of mortgage-backed securities. The securities are broker-priced, and valued by a third party using
an evaluated pricing methodology. An evaluated pricing methodology is a valuation technique which uses inputs that are derived principally from or cor-
roborated by observable market data.

(B) The Company maintains funds for the payment of benefits associated with nonqualified retirement plans. These funds consist of equity securities listed
in active markets and municipal bonds. The municipal bonds are valued by a third party using an evaluated pricing methodology.

(C) The Company’s derivatives are valued using quoted market prices. For additional information, see Note M: Derivative Financial Instruments.

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:

NOTE O: INCOME TAXES

Deferred tax liabilities:

Intangible assets
Property, plant, and equipment
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,

2009

2008

$1,062,680
117,736
11,362
29,357

$1,221,135

$ 8,918
69,051
2,997
5,896
16,867

$ 103,729
(9,026)

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

$226,821

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

$ 69,578
(9,890)

$ 94,703

$ 59,688

$1,126,432

$ 167,133

The following table summarizes domestic and foreign loss carryforwards at April 30, 2009.

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

Total loss carryforwards

Related Tax
Deduction

$ 11,692
86,169
8,215

$106,076

Deferred
Tax Asset

$4,238
3,702
978

$8,918

Expiration Date

2010 to 2014
2010 to 2028
2026 to 2028

Deferred tax assets at April 30, 2009, also include $990 of foreign tax credit carryforwards that are due to expire in 2010, net
state tax credit carryforwards of $1,495 that are due to expire in 2018, and net foreign jurisdictional tax credit carryforwards of
$512 that are due to expire in 2028.

The valuation allowance decreased by $864, primarily due to the expiration of state net operating losses that had a full valua-
tion allowance. The valuation allowance at April 30, 2009, includes approximately $8,878 for the domestic and foreign loss and
tax credit carryforwards. Approximately $4,197 of the valuation allowance, if subsequently recognized as a tax benefit under cur-
rent accounting rules, would be allocated to reduce goodwill. Effective May 1, 2009, the Company will adopt Statement of
Financial Accounting Standards No. 141 (revised), Business Combinations (“SFAS 141R”) and subsequent recognition of these tax
benefits would be recorded through earnings or additional paid in capital.

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,

2009

2008

2007

$378,293
17,772

$236,307
18,481

$241,349
(345)

$396,065

$254,788

$241,004

Year Ended April 30,

2009

2008

2007

$ 97,182
1,688
5,717
25,525

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

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

$130,112

$ 84,409

$ 83,785

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%

2009

35.0%

0.6
(2.7)

32.9%

2007

35.0%

2.0
(2.2)

34.8%

$ 69,107

$ 73,786

$ 54,581

Effective May 1, 2007, the Company adopted Financial Accounting Standards Board 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 cumulative effect of applying this interpretation has been recorded
as a decrease of $2,374 to retained income as of May 1, 2007.

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.

The Company files income tax returns in the U.S. and various state, local, and foreign jurisdictions. The Company is no longer
subject to examination of U.S. federal income taxes for years prior to 2006 and, with limited exceptions, the Company is no
longer subject to examination of state and local or foreign income taxes for years prior to 2005. In May 2009, the Company
reached an agreement with the Internal Revenue Service (“IRS”) on proposed adjustments resulting from an examination of its
federal income tax returns for years ended in 2007 and 2006. During 2007, 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 the agreement in 2007, 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 agreements 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 $3,568, primarily as a result of the expiration of federal, state, and local statute of limitation periods.

The Company’s unrecognized tax benefits as of April 30, 2009, were $13,794, of which $5,694 would affect the effective tax rate,
if recognized. Upon adoption of SFAS 141R, unrecognized tax benefits recorded in business combinations may impact the effec-
tive rate, if recognized. As of April 30, 2009, the Company’s accrual for tax-related net interest and penalties totaled $2,883. The
amount of tax-related net interest and penalties credited to earnings during 2009 totaled $1,982.

The Company’s unrecognized tax benefits as of April 30, 2008, were $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,
Increases:

Current year tax positions
Prior year tax positions
Acquisitions

Decreases:

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

Balance at April 30,

2009

2008

$21,902

$19,591

118
274
3,103

8,338
1,370
1,711
184

117
5,869
6,752

1,642
7,395
1,390
—

$13,794

$21,902

NOTE P: ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME

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

Balance at May 1, 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)

Balance at April 30, 2008

Reclassification adjustments
Current period (charge) credit
Income tax benefit

Foreign
Currency
Translation
Adjustment

$ 34,788
—
2,437

—
—

$ 37,225
—
20,861
—

$ 58,086
—
(47,024)
—

Pension
and Other
Postretirement
Liabilities

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

Unrealized Gain
on Cash Flow
Hedging
Derivatives

Accumulated
Other
Comprehensive
(Loss) Income

$ (7,623)
—
826

$ (676)
—
2,593

$ 720
(1,146)
1,354

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

(21,475)
6,978

$ (21,294)

—
(3,642)
722

$ (24,214)

—
(65,828)
22,349

—
(949)

$ 968
—
(611)
232

$ 589
—
(4,384)
1,586

—
(70)

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

$ 8,151
(12,885)
2,494
3,810

(21,475)
5,959

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

$ 42,612
(12,885)
(114,742)
27,745

Balance at April 30, 2009

$ 11,062

$(67,693)

$(2,209)

$ 1,570

$ (57,270)

NOTE Q: COMMON SHARES

Voting: The Company’s Amended Articles of Incorporation (“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, or the Regulations of the Company, or the adoption of amended Articles,
other than the adoption of any amendment or amended Articles that increases the number of votes to which holders of

common shares are entitled or expands 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 Articles, as they may be further 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 Board 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 include:

✷ common shares beneficially owned as of November 6, 2008, and for which there has not been a change in beneficial owner-

ship after November 6, 2008; 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.

Shareholders’ Rights Plan: Pursuant to a shareholders’ rights plan adopted by the Company’s Board of Directors on May 20,
2009, 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 $0.001 per right, generally at any time prior to the rights
becoming exercisable. The rights will expire June 3, 2019, unless earlier redeemed, exchanged, or amended by the directors.

— DIRECTORS —

Vincent C. Byrd
President, U.S. Retail – Coffee
The J. M. Smucker Company

R. Douglas Cowan A
Director
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

Alex Shumate G
Managing Partner
Squire, Sanders & Dempsey L.L.P.
Columbus, Ohio

Mark T. Smucker
President, Special Markets
The J. M. Smucker Company

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

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

William H. Steinbrink G
Principal
Unstuk, LLC
Shaker Heights, Ohio

Paul Smucker Wagstaff
President, U.S. Retail – Oils and Baking
The J. M. Smucker Company

A Audit Committee Member

Executive Compensation Committee
Member

G Nominating and Corporate Governance

Committee Member

DIRECTORS AND OFFICERS

The J. M. Smucker Company

— OFFICERS —

Timothy P. Smucker
Chairman of the Board and
Co-Chief Executive Officer

Richard K. Smucker
Executive Chairman and
Co-Chief Executive Officer

Dennis J. Armstrong
Vice President, Logistics and
Operations Support

Mark R. Belgya
Vice President and Chief Financial Officer

James A. Brown
Vice President, U.S. Grocery Sales

Vincent C. Byrd
President, U.S. Retail – Coffee

John W. Denman
Vice President and Controller

Barry C. Dunaway
Senior Vice President, Corporate and
Organization Development

M. Ann Harlan
Vice President and General Counsel

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

Jeannette L. Knudsen
Corporate Secretary

John F. Mayer
Vice President, Sales, Grocery Market

Kenneth A. Miller
Vice President, Alternate Channels

Steven Oakland
President, U.S. Retail – Smucker’s,
Jif, and Hungry Jack

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

Christopher P. Resweber
Vice President, Marketing Communications

Julia L. Sabin
Vice President and General Manager,
Smucker Natural Foods, Inc.

Mark T. Smucker
President, Special Markets

Paul Smucker Wagstaff
President, U.S. Retail – Oils and Baking

Albert W. Yeagley
Vice President, Industry and
Government Affairs

Debra A. Marthey
Treasurer

— PROPERTIES —

Corporate Offices:

Orrville, Ohio

Domestic Manufacturing

Locations:

Chico, California

Cincinnati, Ohio

El Paso, Texas

Grandview, Washington

Havre de Grace, Maryland

Kansas City, Missouri

Lexington, Kentucky

Memphis, Tennessee

New Bethlehem, Pennsylvania

New Orleans, Louisiana (2)

Orrville, Ohio

Oxnard, California

Ripon, Wisconsin

Scottsville, Kentucky

Seneca, Missouri

Sherman, Texas

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:**

Akron, Ohio

Bentonville, Arkansas
Edina, Minnesota

Markham, Ontario, Canada

Mexico City, Mexico

* Retired as of June 30, 2009
** Leased properties

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

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.

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

Shareholder Services

Annual Meeting

The annual meeting will be held at 11:00 a.m. Eastern Daylight
Time, Wednesday, August 19, 2009, 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.

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 (CIPSM)

– 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 Services 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

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 27 in the Management’s Discussion and Analysis section.

©/™/® The J. M. Smucker Company or its subsidiaries. Pillsbury, the
Barrelhead logo, and the Doughboy character are trademarks of The Pillsbury
Company, LLC, used under license. Borden and Elsie trademarks used under
license. Dunkin’ Donuts is a trademark of DD IP Holder LLC used under
license. Carnation is a trademark of Société des Produits Nestlé S.A.

The financial section of this report
was printed on paper with a 50% post-
consumer recycled content. The balance
of the report was printed on elemental
chlorine-free paper with a 25% post-
consumer recycled content.

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