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2012 AnnuAl RepoRt
One Strawberry Lane / Orrville, Ohio 44667 / (330) 682-3000
smuckers.com
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A T h e J. M. S mu cke r C o mp any 2 012 A nnu al Rep o r t
Financial HigHligHts
(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 excluding
special project costs:(1)
Income
Income per common share – assuming dilution
Common shares outstanding at year end
Number of employees
Year Ended April 30,
2012
2011
$ 5,525,782
$ 4,825,743
$ 459,744
4.06
$
$ 479,482
4.05
$
$ 535,579
4.73
$
110,284,715
4,850
$ 555,133
4.69
$
114,172,122
4,500
(1) Refer to “Non-GAAP Measures” located on page 32 in the “Management’s Discussion and Analysis” section
for a reconciliation to the comparable GAAP financial measure.
contents
1
Why We Are, Who We Are
4
Letter to Shareholders
8
U.S. Retail Coffee
12
U.S. Retail Consumer Foods
16
International, Foodservice,
and Natural Foods
20
Sustainability and Smucker
21
Financial Review
24
Management’s Discussion
and Analysis
about our cover
“Adams-Morgan”
©2011-2012 – Mitchell Johnson
Based in Silicon Valley, California, artist Mitchell Johnson
is best known for his oil/linen paintings and his particular
use of flat color and pattern. Johnson’s paintings can be
found in more than 600 collections across the U.S. and
have appeared in many publications and feature films.
41
Consolidated Financial Statements
46
Notes to Consolidated
Financial Statements
sHareHolder inFormation
Corporate offiCe
The J. M. Smucker Company
One 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 WebSite
To learn more about The J. M. Smucker Company, visit smuckers.com.
annuaL Meeting
The annual meeting will be held at 11:00 a.m. Eastern Time, Wednesday,
August 15, 2012, in the 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 website. They are also available without cost to
shareholders who submit a written request to:
The J. M. Smucker Company
Attention: Corporate Secretary
One Strawberry Lane
Orrville, Ohio 44667
CertifiCationS
The Company’s Chief Executive Officer and Chief Financial Officer have
certified to the New York Stock Exchange that they are not aware of any
violation by the Company of the 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.
forWard-Looking StateMentS
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 36 in the “Management’s Discussion and Analysis” section.
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 disbursement agent is Computershare Investor Services, LLC.
SharehoLder ServiCeS
The transfer agent and registrar for the Company, Computershare
Investor Services, LLC, is responsible for assisting registered
shareholders with a variety of matters, including:
Shareholder investment program (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, Massachusetts 02021
Telephone: (800) 456-1169
Telephone outside the U.S., Canada, and
Puerto Rico: (312) 360-5254
Website: computershare.com/investor
The J. M. Smucker Company is the owner of all trademarks referenced herein, except for the following which are used under license:
Pillsbury®, the Barrelhead logo and the Doughboy character are trademarks of The Pillsbury Company, LLC; Carnation® is a trademark
of Société des Produits Nestlé S.A.; Dunkin’ Donuts® is a registered trademark of DD IP Holder, LLC; and Douwe Egberts® and Pickwick®
are registered trademarks of Sara Lee/DE B.V. Borden® and Elsie are also trademarks used under license.
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B T h e J. M. S mu cke r C o mp any 2 012 A nnu al Rep o r t
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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.
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.
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Our purpOse
Helping to bring families together to
share memorable meals and moments.
While strong financial results are important, we are driven by a greater purpose – helping to bring
families together to share memorable meals and moments. We know, and research demonstrates,
that families who eat together are happier and healthier. Shared family meals can lead to better
grades, healthier eating habits, fewer behavioral problems, less family tension, and closer family
bonds. We continue to partner with Miriam Weinstein, author of The Surprising Power of Family
Meals, to provide resources and assistance on making the most of your mealtime through our
website, PowerOfFamilyMeals.com. By focusing our business around convenient, delicious, and
nutritious products, we help support the power of the family meal and all its benefits.
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Dear ShareholDerS anD FrienDS:
Fiscal 2012 was a challenging yet successful year for
The J. M. Smucker Company as we introduced a record
number of products, acquired new businesses, and
made brand investments – all while achieving solid
results and returning value to our shareholders. In
fiscal 2012, sales reached a new high of $5.5 billion,
an increase of 15 percent over fiscal 2011. Non-GAAP
earnings rose to a record $4.73 per share compared
to $4.69 in the prior year.
These accomplishments have been achieved despite a
challenging economic environment where consumers
have remained under pressure, impacting volume
in many categories across the industry, and where
commodity costs remained high. Our stability amid
these challenges reflects the Smucker portfolio of
iconic brands’ abilities to provide value and to meet
a wide variety of consumer needs throughout the day.
We are building upon this strength by continuing to
make investments that deliver great products to our
consumers and returns to our shareholders.
Brand Investment
Product innovation, in particular, is a major focus
and one that our retail customers expect of us as
category leaders. We met this expectation in fiscal
2012 by launching more than 60 new products. In
total, the new products introduced in the last three
years contributed more than five percent of fiscal
2012 net sales.
Product innovation is guided by our focus on meeting
the diverse needs of our consumers for taste, health,
convenience, and emotional fulfillment as these new
product examples demonstrate:
Pillsbury ® Pink Lemonade Premium Cookie and
Cake Mixes
Jif ® To Go™ in Natural and Chocolate Silk varieties
Smucker’s® Uncrustables® reduced sugar
sandwiches on whole wheat
Folgers® Gourmet Selections® and Millstone®
single-serve K-Cup® portion packs in new flavors
By focusing on innovation, Pillsbury has moved
from the #3 to #2 position in the dessert baking mix
category in recent years. The momentum behind
our innovation efforts will continue in fiscal 2013,
when we expect to introduce as many as 100 new
products across our brand portfolio.
Our brand support extends to the marketplace through
media investments that include both traditional
outlets, such as television spots, and new digital
approaches. Today, our brands host nearly 30 social
media sites and seven mobile websites and offer
a variety of interactive contact, such as eCoupon
support, to consumers.
Business Expansion
Acquisitions have played a transformative role in
our growth strategy over the past decade. During
this time, for example, Smucker has become the #1
manufacturer of at-home retail coffee in the United
States beginning with the acquisition of the Folgers
brand in 2008. In fiscal 2012 we acquired Rowland
Coffee Roasters, Inc., which included the leading
Hispanic Café Bustelo® and Café Pilon® brands. With a
successful integration completed during fiscal 2012, we
are looking forward to further expanding distribution
in key markets and leveraging the brands’ presence
among a growing base of Hispanic consumers.
During the year, the Company completed the
acquisition of a majority of the North American
foodservice coffee and hot beverage business of
Sara Lee Corporation. This transaction added the
market-leading liquid coffee concentrate and other
hot beverages to our portfolio, which allows us to
further participate in the away-from-home hot
beverage business. Beyond these new offerings,
this transaction has had a strategic impact on our
foodservice business by nearly doubling its size,
adding a direct sales force, and enhancing its ability
to offer a full hot beverage solution to foodservice
operators and customers. We were honored to
welcome more than 400 employees to the Company
as part of these two transactions.
Beyond North America, we continue to work toward
the development of a long-term meaningful presence
in China. New developments include the establishment
of a Shanghai office and a minority investment in the
privately owned Guilin Seamild Biologic Technology
Development Co., Ltd. (“Seamild”). Our investment in
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this family-run business, which enjoys an established
presence in the rapidly growing oats category, will
be an effective vehicle to learn more about Chinese
consumers and successful go-to-market strategies
in China.
Supply Chain Investments
We remain focused on two important investment
projects that will help drive operational excellence
through our supply chain. We continue to move
forward with the consolidation of our coffee manufac-
turing operations and the expansion initiatives
currently underway at our coffee manufacturing
facilities in New Orleans, Louisiana. In fiscal 2013,
a new state-of-the-art fruit spreads manufacturing
facility is expected to become operational in Orrville,
Ohio. Both projects will not only simplify our supply
chain but also provide greater flexibility to support
product innovation, improve quality, and optimize
capacity to accommodate future growth.
Responsible Capital Management
These significant and ongoing levels of reinvestment
underscore the long-term approach that we take in
our business. Certain benefits from these investments
are readily apparent, but most will emerge over time
and serve us well for years to come. It is particularly
gratifying to be able to support sizable reinvestment
initiatives while also returning value to our share-
holders. The ability to do both underscores our
Company’s strong cash generation capabilities in
which we deploy cash between business growth
initiatives and shareholder return programs. During
fiscal 2012, these programs included a 15 percent
increase in dividends paid per share and the
repurchase of more than four million common
shares for approximately $305 million.
Further focusing on our capital management
structure, we entered the public debt market for
the first time in Company history. In October 2011,
we issued $750 million in 10-year notes to further
our financial flexibility.
An Effective Combination for Growth
As one of our Basic Beliefs, Growth is defined as
reaching for that potential whether through the
acquisition of new brands, the development of new
products and new markets, the discovery of new
management or manufacturing capabilities, or the
personal growth and development of our people
and their ideas. We know from experience that
when we combine our unique culture with our
strategy and our ability to implement, meaningful
growth will be the result. Over the past decade,
this combination has enabled Smucker to evolve
from a fruit spreads-focused company with sales of
$650 million into a broader business with multiple
iconic brands, approaching sales of $6 billion. Going
forward, we believe this same combination of culture,
strategy, and implementation will continue to
successfully evolve our business to ever-higher levels
of performance. In the process, we will continue to
fulfill Our Purpose – helping to bring families together
to share memorable meals and moments.
Looking ahead to fiscal 2013, our focus will be on
further enhancing long-term shareholder value by:
A focus on innovation, with plans to significantly
increase the number of new product introductions
as compared to last year
Optimizing pricing, with an increased emphasis
on opening price point offerings for value-
conscious consumers
Realizing synergies from our supply chain
optimization projects and recent acquisitions
Continuing to evolve our sustainability initiatives,
particularly in the area of green coffee
As we close another successful year in the
100-plus-year history of The J. M. Smucker Company,
we remain committed to our Basic Beliefs of Quality,
People, Ethics, Growth, and Independence to guide
both our strategic decisions and daily behavior. We
believe the best is yet to come for our Company, and
we appreciate your continued support. We extend our
deepest gratitude to our constituents who contribute
to our success – consumers, customers, employees,
suppliers, communities, and shareholders.
Sincerely,
Tim Smucker
Richard Smucker
June 20, 2012
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Our family Of brands
Our portfolio encompasses numerous products that represent Our Vision to own and
market food brands that hold the #1 position in their respective categories. Today,
seven of our categories in the United States and seven of our categories in Canada
hold #1 market share positions. Our products can be part of meals – whether
breakfast, lunch, dinner, or snack options – throughout the day. We are honored to
have our products be a part of your family meals and to be a staple in your pantries.
Memorable Meals and Moments
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Our family Of brands
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U.S. Retail
Coffee
In just four short years, Smucker has established a wide-ranging presence in
the coffee marketplace – a presence that demonstrates our diverse portfolio’s
ability to meet the unique needs of consumers by offering products in every
segment with different blends, flavors, sizes, and convenience attributes.
In addition to the Folgers, Millstone, and Dunkin’ Donuts® brands, we are
pleased to have added the leading Hispanic Café Bustelo and Café Pilon
brands in the past year.
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Our Brands
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T h e J. M. S mu cke r C o mp any 2 012 A nnu al Rep o r t 9
keeping the coffee market momentum going
Sales for U.S. Retail Coffee grew 19 percent during fiscal 2012, though higher commodity
costs resulted in only a slight increase in segment profitability. Our coffee business
continued to capitalize on the increasing popularity of the single-serve K-Cup® portion
packs, which is creating attractive growth opportunities for us.
these single-serve packages account for more than $1 billion in annual sales in the channels
we participate in today and continue to command more space on retail shelves. our Folgers
Gourmet Selections and Millstone branded k-cups are following a similar trajectory, with sales
increasing more than 200 percent in grocery, mass, drug store, and club retail channels last year
to approximately $180 million on an annual basis.
During fiscal 2012, we further expanded our participation in the single-serve category by signing
an agreement with green mountain coffee roasters to include Folgers Gourmet Selections and
Millstone brands in its new keurig Vue™ brewing system. We also introduced Folgers Instant Coffee
Single-Serve Packets to provide consumers with another one-cup solution, and to complement the
Folgers instant coffee line.
the Dunkin’ Donuts brand is another growth vehicle for our retail coffee business. With annual
retail sales in excess of $300 million today, Dunkin’ Donuts has three of the top-10 premium
coffee Skus in measured channels; its 12-ounce original blend occupies the top slot, with sales
nearly 2.5 times those of its closest competitor.
We remain focused on our core Folgers roast and ground products, which participate in the
largest segment in the category, as well as on growing the Dunkin’ Donuts and Folgers Gourmet
Selections brands in the premium segment. in addition, the popularity of Dunkin’ Donuts seasonal
offerings is strong, with sales doubling from fiscal 2011 to fiscal 2012.
our investment priorities include new product innovation and acquisitions that can tap into
channels where we see growth potential, such as leveraging the Café Bustelo and Café Pilon brands
in the growing hispanic market. We also are focused on innovation in our supply chain through
capital investments, which have already provided savings, and by realizing efficiencies with future
integration of acquired facilities. finally, we continue to work proactively on our strategy to balance
cost management with the responsibilities of green coffee sustainability.
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keeping the coffee market momentum going
u.S. retail coffee
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U.S. Retail
Consumer
Foods
Our U.S. Retail Consumer Foods segment encompasses many of the industry’s
most iconic food brands, including category leaders such as Smucker’s fruit
spreads and Jif peanut butter, as well as Crisco® oils, Pillsbury baking mixes and
frostings, Eagle Brand® sweetened condensed milk, Hungry Jack® pancake mix
and syrup, and Martha White® and White Lily® flours.
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Our Brands
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GrowinG ThrouGh ideas and innovaTion
U.S. Retail Consumer Foods grew net sales seven percent during fiscal 2012 in the face of
volume and competitive pressures, which resulted in a three percent decline in profitability.
New product introductions were particularly helpful to sales growth during the year.
recent new product launches have focused on consumers’ need for convenience, such as
Jif To Go, which added natural and chocolate silk varieties during the past year. Jif also is expanding
into the specialty nut butter category with the launch of two chocolate hazelnut spread varieties
in fiscal 2013. This type of product innovation has helped us increase sales by over 60 percent
since we acquired the Jif brand in 2002.
Pillsbury is another brand that has experienced significant growth since we acquired it seven
years ago, with its baking mixes and frosting sales increasing approximately 50 percent. recent
product introductions have included Pink Lemonade Premium Cookie Mix, sugar Free Classic
Yellow Premium Cake Mix and Funfetti® Cookie Pop Kit.
several new products launched in fiscal 2012, including sugar-free Smucker’s fruit spread varieties
with Truvia sweetener and Smucker’s Uncrustables sandwiches whole wheat offering. we also
responded to consumer requests with the introduction of two new flavors of Smucker’s Orchard’s
Finest® preserves – Pacific Grove orange Marmalade Medley and Lakeside raspberry Cranberry.
during the year, we continued to make significant investments in our manufacturing facilities.
our new orrville manufacturing facility will begin initial production this summer and should result
in long-term cost efficiencies. in addition, capacity expansions at our Smucker’s Uncrustables
sandwiches plant in scottsville, Kentucky, will enable us to capitalize on continued strong
consumer demand.
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GrowinG ThrouGh ideas and innovaTion
u.s. retail Consumer Foods
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International,
Foodservice, and
natural foods
Our International operations include our Canadian and Mexican entities as well
as the products we export to more than 65 countries for consumers around the
world to enjoy. In Canada, we market many of our retail brands, including the
#1 Bick’s® and Robin Hood® brands. Our Foodservice division markets our
branded products to foodservice operators. The Natural Foods business includes
R.W. Knudsen Family® and Santa Cruz Organic® juice brands, both pioneers
in organic foods.
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Our Brands
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Realizing TRansfoRmaTional oppoRTuniTies
Our International, Foodservice, and Natural Foods segment experienced transformative
change this year with the newly acquired Sara Lee North American foodservice away-
from-home coffee and hot beverage business. Segment net sales increased 20 percent
and segment profit grew six percent in fiscal 2012.
The acquisition of a majority of the north american foodservice coffee and hot beverage business
of sara lee Corporation enables us to participate in the liquid coffee business, which is consistent
with our desire to compete in all forms of coffee. given the importance of coffee to foodservice
operators, this business enables us to offer a complete hot beverage solution to this customer base.
The transaction also provided us with a unique opportunity to establish a multi-year innovation
partnership with the new coffee company that will be spun off from sara lee, which will allow us
to collaborate on new technologies in the liquid coffee category.
The integration of the sara lee foodservice coffee and hot beverage business was accomplished in
record time, with major systems and processes transitioned within approximately four months.
in addition, we redesigned our foodservice sales organization and go-to-market approach. The
resulting direct sales team will significantly enhance our customer relationships, which, in turn,
should create new long-term growth opportunities.
Coffee also was a big story for us in Canada this year with the launch of Folgers Gourmet Selections
K-Cups, which was the Company’s most successful Canadian new product launch in our history.
Consistent with Our Vision of maintaining a global perspective, we entered the Chinese marketplace
in fiscal 2012 by making a minority investment in seamild, a privately-owned manufacturer
and marketer of oats products. as a leading retail oats brand in China, their oatmeal and oat-
based products are sold primarily under the Seamild brand, with distribution in retail channels
throughout China. as a leader in the oats category, their portfolio of quality, trusted products
aligns with Our Vision to own and market food brands that hold the #1 market position in their
respective categories.
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International, Foodservice,
and Natural Foods
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Sustainability and
Smucker
Create a better tomorrow by focusing on preserving our culture, ensuring
our long-term economic viability, limiting our environmental impact,
and being socially responsible.
Our Sustainability Strategy succinctly states what we consider to be an
inherent part of who we are as a Company and how we operate as a business.
Since our founding in 1897, we have believed in doing the right things and
doing things right. Today, this belief is manifested by such initiatives as working
toward a set of five-year sustainability goals, participating in the Carbon
Disclosure Project, leveraging our green coffee sustainability strategy,
investing in supply chain efficiencies, and supporting the Boys & Girls
Clubs of America, to name just a few. We invite all our constituents to read
about these and other initiatives in our 2012 Corporate Responsibility Report
available at smuckers.com.
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PeanuT BuTTer BlOSSOmS
creamy almOnd candy
grilled TOmaTO and
BaSil BruScheTTa
Turkey Salad wiTh
Orange PeanuT dreSSing
PeanuT BuTTer jalaPeÑO POPPerS
Berry yOgurT BreakfaST BOwlS
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Creamy almOnd Candy
PREP TIME: 10 MIN
MAkES: 3 1/4 POUNDS
PeanuT buTTer blOSSOmS
PREP TIME: 30 MIN
COOk TIME: 10 MIN
MAkES: 4 DOZEN COOkIES
• 1 1/2 pounds vanilla-flavored
candy coating*
• 1 (14 oz.) can Eagle Brand® Sweetened
• 1/8 teaspoon salt
• 1 teaspoon almond extract
• 3 cups (about 1 pound) whole almonds,
Condensed Milk
dirECTionS
toasted**
1. MELT candy coating, sweetened condensed milk and salt in a heavy saucepan
over low heat. Remove from heat. Stir in almond extract and then almonds.
2. SPREAD evenly onto wax-paper-lined 15 x 10-inch jellyroll pan. Chill 2 hours or
until firm.
3. TURN onto cutting board. Peel off paper; cut into triangles or squares.
Store leftovers tightly covered at room temperature.
MiCroWAVE METHod
1. COMBINE candy coating, sweetened condensed milk and salt in 2-quart glass
measuring cup. Microwave on HIGH (100% power) 3 to 5 minutes, stirring after each
1 1/2 minutes. Stir until smooth. Proceed as above.
• 1/2 cup Crisco® Butter Flavor
• 1 3/4 cups Pillsbury BEST®
All-Vegetable Shortening
• 1/2 cup Jif® Creamy Peanut Butter
• 1/2 cup firmly packed brown sugar
• 1/2 cup granulated sugar
• 1 large egg
• 2 tablespoons milk
• 1 teaspoon vanilla extract
dirECTionS
1. HEAT oven to 375°F.
All Purpose Flour
• 1 teaspoon baking soda
• 1/2 teaspoon salt
• Sugar
• 48 foil-wrapped milk chocolate
pieces, unwrapped
2. CREAM together shortening, peanut butter, brown sugar and 1/2 cup sugar. Add egg,
milk and vanilla. Beat well.
3. STIR together flour, baking soda and salt. Add to creamed mixture. Beat on low speed
until stiff dough forms.
4. SHAPE into 1-inch balls. Roll in sugar. Place 2 inches apart on ungreased cookie sheet.
TIP: *Also called confectioners’ coating.
5. BAkE 10 to 12 minutes or until golden brown.
** To toast almonds, spread in single layer in heavy-bottomed skillet.
Cook over medium heat 2 to 3 minutes, stirring frequently, until nuts
are lightly browned. Remove from skillet immediately. Cool before using.
6. TOP each cookie immediately with an unwrapped chocolate piece, pressing down
firmly so that cookie cracks around edge.
©/® The J. M. Smucker Company
©/® The J. M. Smucker Company
Pillsbury BEST is a trademark of The Pillsbury Company, LLC, used under license.
Turkey Salad wiTh
Orange PeanuT dreSSing
PreP TIMe: 30 MIn
MakeS: 5 (1/2 CUP) ServInGS
Orange Peanut Dressing
• 1 (10.25 oz.) jar Smucker’s® Low Sugar™
Reduced Sugar Sweet Orange
Marmalade (1 cup)
• 1/3 cup Smucker’s® Natural Chunky
Peanut Butter, stirred
• 1/4 cup light salad dressing
• 1/4 cup low-fat sour cream
• 1/2 teaspoon curry powder
dirECTionS
Turkey Salad
• 1 cup julienne-cut carrots
• 1/2 cup dried cranberries
• 1 pound fully cooked smoked turkey
from deli, sliced 1/2-inch thick and
cut into 1/2-inch cubes
• 1 cup diced Granny Smith apples
• 1 head Boston or Bibb lettuce,
with leaves separated
1. COMBINE marmalade, peanut butter, salad dressing, sour cream and curry powder
in a mixing bowl until well blended.
2. ADD carrots, cranberries, turkey and apples to Orange Peanut Dressing in mixing bowl;
stir well to combine. At this point, salad can be made ahead and held overnight
in the refrigerator.
3. FORM a lettuce cup using one or two lettuce leaves; place on salad plate.
Fill with 1/2 cup turkey salad. Repeat to make 5 servings.
grilled TOmaTO and
baSil bruSCheTTa
COOk TIME: 5 MIN
PREP TIME: 10 MIN
MAkES: 4 SERVINGS
• Crisco® Original No-Stick Cooking Spray
• 4 to 6 ripe plum tomatoes, cored, seeded
• 1 tablespoon cider or balsamic vinegar
• 2 tablespoons Crisco® 100% extra virgin
and diced
Olive Oil
• 2 tablespoons chopped fresh basil
• 1/2 teaspoon salt
• 1/4 teaspoon freshly ground black pepper
• 12 thin slices Italian or French bread
• Salt and pepper
• Fresh basil leaves for garnish (optional)
dirECTionS
1. COAT grill grate or broiler pan with no-stick cooking spray. Heat grill or broiler.
2. TOSS tomatoes with basil, salt, pepper, vinegar and oil in medium bowl.
Let stand 10 minutes to blend flavors.
3. SPRAY both sides of bread slices with no-stick cooking spray. Sprinkle with salt
and pepper. Grill about 5 minutes, turning once, or just until bread is lightly browned
and crisp.
4. TOP with tomato mixture. Garnish with fresh basil leaves, if desired.
©/® The J. M. Smucker Company
©/® The J. M. Smucker Company
berry yOgurT breakfaST bOwlS
PREP TIME: 10 MIN
MAkES: 2 SERVINGS
PeanuT buTTer jalaPeÑO POPPerS
COOk TIME: 10 MIN
MAkES: 35 POPPERS
PREP TIME: 30 MIN
• 1 medium banana, sliced
• 1/4 cup Smucker’s® Sugar Free Red
Raspberry Preserves
• 1/2 cup fresh red raspberries
• 1 (6 oz.) container Greek-style vanilla yogurt
• 1/2 cup lowfat granola cereal
dirECTionS
1. DIVIDE banana slices evenly into two serving dishes. Stir preserves in small bowl until
smooth. Fold in raspberries to coat. Spoon evenly over bananas.
• 5 fresh jalapeño peppers, seeded and
chopped
• 1 cup shredded Monterey Jack cheese
• 1/3 cup Jif® Creamy Peanut Butter
• 2 tablespoons Crosse & Blackwell®
Major Grey’s Chutney
• 1/2 teaspoon Cajun seasoning
• 2 eggs, beaten
• 1/2 cup Pillsbury BEST® All Purpose Flour
• 1 cup plain panko breadcrumbs
• Crisco® Pure Peanut Oil
• Salt, to taste
• 1 cup sour cream
• 3 tablespoons minced fresh chives
2. STIR yogurt until smooth. Spoon evenly over raspberry mixture. Sprinkle with granola.
dirECTionS
Serve immediately.
1. STIR jalapeños, cheese, peanut butter, chutney and Cajun seasoning in medium bowl
until blended. Shape into 1/2-inch round balls.
2. PLACE egg, flour and breadcrumbs into three separate small bowls. Coat each ball in
flour, then egg and breadcrumbs. Chill on baking sheet 1 hour.
3. HEAT 2 inches oil to 350°F in a 6-quart saucepan. Fry poppers 1 1/2 to 2 minutes
each or until golden brown. Drain on paper towel. Season with salt.
4. COMBINE sour cream and chives. Serve with poppers.
©/® The J. M. Smucker Company
©/® The J. M. Smucker Company
Pillsbury BEST is a trademark of The Pillsbury Company, LLC, used under license.
36560_Card.indd 2
6/25/12 12:40 PM
2012 FinAnCiAl Review
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, 2012. The selected financial
data was derived from the consolidated financial statements and should be read in conjunction with the “Results of Operations” and
“Financial Condition” sections of “Management’s Discussion and Analysis” and the consolidated financial statements and notes thereto.
(Dollars in thousands, except per share data)
Statements of Income:
Net sales
Gross profit
% of net sales
Operating income
% of net sales
Net income
Financial Position:
Cash and cash equivalents
Total assets
Total debt
Shareholders’ equity
Statements of Cash Flows:
Net cash provided by operating activities
Capital expenditures
Quarterly dividends paid
Purchase of treasury shares
Share Data:
Weighted-average shares outstanding
Weighted-average shares outstanding –
assuming dilution
Dividends declared per common share
Earnings per Common Share:
Net income
Net income – assuming dilution
Year Ended April 30,
2012
2011
2010
2009
2008
$ 5,525,782
$ 1,845,223
$ 4,825,743
$ 1,798,517
$ 4,605,289
$ 1,786,690
$ 3,757,933
$ 1,251,429
$ 2,524,774
$ 782,164
33.4%
37.3%
38.8%
33.3%
31.0%
$ 778,283
$ 784,272
$ 790,909
$ 452,275
$ 284,559
14.1%
16.3%
17.2%
12.0%
11.3%
$ 459,744
$ 479,482
$ 494,138
$ 265,953
$ 170,379
$ 229,708
9,115,226
2,070,543
5,163,386
$ 319,845
8,324,585
1,304,039
5,292,363
$ 283,570
7,974,853
910,000
5,326,320
$ 456,693
8,192,161
1,536,726
4,939,931
$ 171,541
3,129,881
789,684
1,799,853
$ 730,929
274,244
213,667
315,780
$ 391,562
180,080
194,024
389,135
$ 713,478
136,983
166,224
5,569
$ 446,993
108,907
110,668
4,025
$ 182,918
76,430
68,074
152,521
113,263,951
118,165,751
118,951,434
85,448,592
56,641,810
113,313,567
1.92
$
118,276,086
1.68
$
119,081,445
1.45
$
85,547,530
6.31
$
56,873,492
1.22
$
$
4.06
4.06
$
4.06
4.05
$
4.15
4.15
$
3.11
3.11
$
3.01
3.00
Non-GAAP Measures: (1)
Gross profit excluding special project costs
% of net sales
Operating income excluding special project costs
% of net sales
Income and income per common share
excluding special project costs:
Income
Income per common share – assuming dilution
$ 1,888,385
$ 1,852,606
$ 1,790,560
$ 1,251,429
$ 783,674
34.2%
38.4%
38.9%
33.3%
31.0%
$ 893,938
$ 897,423
$ 830,312
$ 535,170
$ 297,273
16.2%
18.6%
18.0%
14.2%
11.8%
$ 535,579
4.73
$
$ 555,133
4.69
$
$ 520,782
4.37
$
$ 321,617
3.76
$
$ 178,881
3.15
$
(1) Refer to “Non-GAAP Measures” located on page 32 in the “Management’s Discussion and Analysis” section for a reconciliation to the comparable GAAP financial measure.
NET SALES
(Dollars in billions)
$5.5
$4.6
$4.8
$3.8
$2.5
NON-GAAP
INCOME PER COMMON SHARE –
ASSUMING DILUTION
$4.69
$4.73
$4.37
$3.76
$3.15
ASSETS
(Dollars in billions)
$8.2
$8.0
$9.1
$8.3
$3.1
2008
2009
2010
2011
2012
2008
2009
2010
2011
2012
2008
2009
2010
2011
2012
T h e J. M. S mu cke r C o mp any 2 012 A nnu al Rep o r t 21
SummarY oF QuarterlY reSultS oF operationS
The J. M. Smucker Company
The following is a summary of unaudited quarterly results of operations for the years ended April 30, 2012 and 2011.
(Dollars in thousands, except per share data)
Quarter Ended
Net Income per
Common Share –
Net Sales Gross Profit Net Income Common Share Assuming Dilution
Net Income per
2012
2011
July 31, 2011 $1,188,883
1,513,905
1,467,641
1,355,353
October 31, 2011
January 31, 2012
April 30, 2012
July 31, 2010 $1,047,312
1,278,913
1,312,351
1,187,167
October 31, 2010
January 31, 2011
April 30, 2011
$431,084
498,669
465,685
449,785
$408,435
494,670
474,414
420,998
$111,523
127,247
116,844
104,130
$102,881
149,726
131,995
94,880
$0.98
1.12
1.03
0.93
$0.86
1.25
1.12
0.82
$0.98
1.12
1.03
0.93
$0.86
1.25
1.11
0.82
Annual net income per common share may not equal the sum of the individual quarters due to differences in the average number
of shares outstanding during the respective periods.
Stock price data
The Company’s common shares are listed on the New York Stock Exchange – ticker symbol SJM. The table below presents the
high and low market prices for the shares and the quarterly dividends declared. There were approximately 284,900 shareholders
as of June 15, 2012, of which approximately 51,800 were registered holders of common shares.
2012
2011
Quarter Ended
July 31, 2011
October 31, 2011
January 31, 2012
April 30, 2012
July 31, 2010
October 31, 2010
January 31, 2011
April 30, 2011
High
$80.26
78.62
81.40
81.97
$63.75
64.55
66.28
75.46
Low
$73.76
66.43
71.24
70.50
$53.27
57.20
60.46
61.16
Dividends
$0.48
0.48
0.48
0.48
$0.40
0.40
0.44
0.44
2 2 T h e J. M. S mu cke r C o mp any 2 012 A nnu al Rep o r t
compariSon oF Five-Year cumulative
total Shareholder return
The J. M. Smucker Company
Among The J. M. Smucker Company, the S&P 500 Index, and the S&P Packaged Foods & Meats Index
$250
$200
$150
$100
$50
$0
4/07
4/08
4/09
4/10
4/11
4/12
The J. M. Smucker Company
S&P 500
S&P Packaged Foods & Meats
April 30,
The J. M. Smucker Company
S&P 500
S&P Packaged Foods & Meats
2007
$100.00
100.00
100.00
2008
$91.39
95.32
98.19
2009
$81.44
61.66
77.72
2010
2011
2012
$129.79
85.61
108.80
$163.91
100.36
126.50
$178.21
105.13
143.03
The above graph compares the cumulative total shareholder return for the five years ended April 30, 2012, for the Company’s
common shares, the S&P 500 Index, and the S&P Packaged Foods & 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, 2007.
Copyright© 2012 Standard & Poor’s, a division of The McGraw-Hill Companies Inc. All rights reserved.
www.researchdatagroup.com/S&P.htm
T h e J. M. S mu cke r C o mp any 2 012 A nnu al Rep o r t 2 3
management’S diScuSSion and analYSiS
The J. M. Smucker Company
STR ATegiC el eM enTS
The Company remains rooted in its Basic Beliefs of Quality,
People, Ethics, Growth, and Independence, established by its
founder and namesake, Jerome Smucker, more than a century
ago. Today, these basic beliefs are the core of the Company’s
unique culture and serve as a foundation for decision making
and actions. The Company has been led by four generations of
family leadership, having had only five chief executive officers
in 115 years. This continuity of management and thought
extends to the broader leadership team that embodies the values
and embraces the business practices that have contributed to
the Company’s consistent growth.
The Company’s strategic vision is to own and market food brands
which hold the number one market position in their category,
with an emphasis on North America while embracing a global
perspective.
The Company’s strategic long-term growth objectives are to
increase net sales by six percent and earnings per share by
greater than eight percent annually. While the net sales con-
tribution from acquisitions will vary from year to year, the
Company expects organic growth, including new products,
to add three to four percent per year and acquisitions to
contribute the remainder over the long term.
e x eCuTiv e SuMMARy
For more than 110 years, The J. M. Smucker Company (“Company”),
headquartered in Orrville, Ohio, has been committed to offering
consumers products that bring families together to share
memorable meals and moments. Today, the Company is a leading
marketer and manufacturer of fruit spreads, retail packaged
coffee, peanut butter, shortening and oils, ice cream toppings,
sweetened condensed milk, and health and natural foods
beverages in North America.
Its family of brands includes Smucker’s, Folgers, Dunkin’
Donuts, Jif, Crisco, Pillsbury, Eagle Brand, R.W. Knudsen Family,
Hungry Jack, Café Bustelo, Café Pilon, White Lily, and Martha
White in the United States, along with Robin Hood, Five Roses,
Carnation, and Bick’s in Canada. In addition to these brands,
the Company markets products under numerous other brands,
including Millstone, Dickinson’s, Laura Scudder’s, Adams,
Double Fruit (Canada), and Santa Cruz Organic.
The Company has three reportable segments: U.S. Retail Coffee,
U.S. Retail Consumer Foods, and International, Foodservice, and
Natural Foods. The Company’s two U.S. retail market segments
in total comprised nearly 80 percent of the Company’s net sales
in 2012 and represent a major portion 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 International, Foodservice, and Natural
Foods segment represents sales outside of the U.S. retail
market segments.
In both 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 International,
Foodservice, and Natural Foods segment, the Company’s
products are distributed domestically and in foreign countries
through retail channels, foodservice distributors and operators
(e.g., restaurants, lodging, schools and universities, health care
operators), and health and natural foods stores and distributors.
24 T h e J. M. S mu cke r C o mp any 2 012 A nnu al Rep o r t
management’S diScuSSion and analYSiS
The J. M. Smucker Company
ReSulTS oF ope R ATionS
On January 3, 2012, the Company completed the acquisition of
a majority of the North American foodservice coffee and hot
beverage business of Sara Lee Corporation (“Sara Lee foodservice
business”) for $420.6 million. On May 16, 2011, the Company
acquired the coffee brands and business operations of Rowland
Coffee Roasters, Inc. (“Rowland Coffee”), a privately-held company
headquartered in Miami, Florida, for $362.8 million. The acquisi-
tions have been accounted for as purchase business combinations,
and the results of each business are included in the Company’s
con solidated financial statements from the date of acquisition.
(Dollars in millions, except per share data)
Net sales
Gross profit
% of net sales
Operating income
% of net sales
Net income:
Net income
Net income per common share – assuming dilution
Gross profit excluding special project costs (1)
% of net sales
Operating income excluding special project costs (1)
% of net sales
Income excluding special project costs: (1)
Income
Income per common share – assuming dilution
Year Ended April 30,
2012
$5,525.8
$1,845.2
2011
$4,825.7
$1,798.5
33.4%
37.3%
$ 778.3
$ 784.3
14.1%
16.3%
2010
$4,605.3
$1,786.7
38.8%
$ 790.9
17.2%
$ 459.7
4.06
$
$1,888.4
$ 479.5
$
4.05
$1,852.6
34.2%
38.4%
$ 893.9
$ 897.4
16.2%
18.6%
$ 494.1
$
4.15
$1,790.6
38.9%
$ 830.3
18.0%
$ 535.6
4.73
$
$ 555.1
4.69
$
$ 520.8
4.37
$
2012
% Increase
(Decrease)
2011
% Increase
(Decrease)
15%
3%
5%
1%
(1)%
(1)%
(4)%
—%
2%
—%
(4)%
1%
(3)%
(2)%
3%
8%
7%
7%
(1) Refer to “Non-GAAP Measures” located on page 32 in the “Management’s Discussion and Analysis” section for a reconciliation to the comparable GAAP financial measure.
Summary of 2012
Net sales in 2012 increased 15 percent, compared to 2011,
as the impact of price increases and the contribution from
acquisitions more than offset a five percent decline in volume.
While the net effect of price increases more than offset overall
higher raw material costs, the decrease in volume, along with
increased selling and general and administrative expenses,
resulted in a one percent decline in operating income for 2012,
compared to 2011. Excluding restructuring and merger and
integration costs (“special project costs”), operating margin
declined to 16.2 percent from 18.6 percent in 2011. GAAP and
non-GAAP results include the impact of an $11.3 million loss
on divestiture in 2012 and a noncash impairment charge of
$17.2 million in 2011, both related to the Europe’s Best frozen
fruit and vegetable business, which was sold in October 2011.
The Company’s net income per diluted share was flat in 2012,
compared to 2011, and increased one percent excluding special
project costs, reflecting the benefit of a decrease in weighted-
average common shares outstanding as a result of the Company’s
share repurchase activity during 2012 and the second half
of 2011.
Summary of 2011
Net sales in 2011 increased five percent, compared to 2010,
primarily due to price increases. Sales mix and the impact of
foreign exchange also contributed to more than offset the
impact of the potato products divestiture in March 2010 and
a one percent decline in volume. While the net effect of price
increases more than offset overall higher raw material costs,
increased special project costs and impairment charges
resulted in a one percent decline in operating income. Excluding
special project costs, operating income increased eight percent
for 2011, compared to 2010. The Company’s net income per
diluted share decreased two percent, yet increased seven
percent excluding special project costs, for 2011, compared
to 2010.
T h e J. M. S mu cke r C o mp any 2 012 A nnu al Rep o r t 2 5
Net Sales
2012 Compared to 2011
(Dollars in millions)
Net sales
Adjust for certain
noncomparable items:
Acquisitions
Divestiture
Foreign exchange
Net sales adjusted for the
noncomparable impact of
acquisitions, divestiture,
and foreign exchange
Year Ended April 30,
Increase
2012
2011 (Decrease) %
$5,525.8 $4,825.7 $ 700.0 15%
(239.5)
—
(6.5)
—
(16.7)
—
(239.5) (5)
16.7 —
(6.5) —
$5,279.8 $4,809.0 $ 470.7 10%
Amounts may not add due to rounding.
Net sales for 2012 increased $700.0 million, or 15 percent, compared
to 2011, driven primarily by the impact of higher realized prices
and acquisitions. The Sara Lee foodservice business and Rowland
Coffee acquisitions contributed $124.2 million and $115.3 million,
respectively, to 2012 net sales. Excluding acquisitions, the Europe’s
Best divestiture, and the impact of foreign exchange, net sales
were up 10 percent in 2012, compared to 2011, and volume
decreased five percent, driven by Crisco oils, Folgers coffee, Jif
peanut butter, and Pillsbury flour. The volume decline resulted
from lower consumer purchases due mostly to significantly higher
retail prices and the competitive environment.
2011 Compared to 2010
(Dollars in millions)
Net sales
Adjust for certain
noncomparable items:
Divestitures
Foreign exchange
Net sales adjusted for the
noncomparable impact
of divestitures and
foreign exchange
Amounts may not add due to rounding.
Year Ended April 30,
Increase
2011
2010 (Decrease) %
$4,825.7 $4,605.3 $220.5 5%
—
(22.1)
(40.4)
—
40.4 1
(22.1) —
$4,803.7 $4,564.9 $238.8 5%
Net sales for 2011 increased $220.5 million, or five percent,
compared to 2010, as the net impact of pricing contributed
approximately four percent to net sales and the overall impact
of sales mix was favorable. The impact of the potato products
divestiture and foreign exchange was not significant. Overall
volume decreased one percent. Volume gains were realized in
Jif peanut butter, Crisco oils, natural foods beverages, Smucker’s
fruit spreads, Dunkin’ Donuts packaged coffee, and Pillsbury
frostings. Volume declines were primarily in Pillsbury flour and
baking mixes.
2 6 T h e J. M. S mu cke r C o mp any 2 012 A nnu al Rep o r t
Operating Income
The following table presents the components of operating
income as a percentage of net sales.
Gross profit
Selling, distribution, and
administrative expenses:
Marketing
Advertising
Selling
Distribution
General and administrative
Total selling, distribution, and
administrative expenses
Amortization
Impairment charges
Other restructuring and merger
and integration costs
Loss (gain) on divestitures
Other operating (income)
expense – net
Operating income
Amounts may not add due to rounding.
Year Ended April 30,
2012
33.4%
2010
2011
37.3% 38.8%
2.7%
2.2
3.3
2.8
5.2
16.2%
1.6
0.1
1.3
0.2
3.4%
2.4
3.3
3.2
5.6
3.8%
2.8
3.3
3.3
5.9
17.9% 19.1%
1.5
0.4
1.2
—
1.6
0.3
0.8
(0.3)
—
—
14.1% 16.3% 17.2%
0.2
2012 Compared to 2011
Gross profit increased $46.7 million, or three percent, in 2012,
compared to 2011, due to the contribution from acquisitions
and lower special project costs included in cost of products sold.
Excluding these special project costs, gross profit increased
$35.8 million. Raw material costs were higher in 2012, compared
to 2011, most significantly for green coffee, edible oils, peanuts,
flour, milk, and sweetener. Higher prices in place during the
year more than offset these higher costs, most significantly
on peanut butter, but did not offset the overall impact of volume
declines. Gross margin contracted from 38.4 percent in 2011 to
34.2 percent in 2012, excluding special project costs.
Selling, distribution, and administrative expenses (“SD&A”)
increased three percent in 2012, compared to 2011, yet decreased
as a percentage of net sales from 17.9 percent to 16.2 percent,
reflecting the impact of price increases on net sales. The Company’s
total marketing expense decreased $9.3 million, or three percent,
in 2012, compared to 2011, although the portion allocated to
advertising increased $4.5 million during the same period.
A portion of the marketing expense decline was redeployed
to trade and consumer promotions during 2012, which were
reflected as a reduction of net sales. Selling expenses and
general and administrative expenses increased 15 percent
and six percent, respectively, primarily due to the Sara Lee
foodservice business and Rowland Coffee acquisitions.
Distribution expenses decreased one percent.
ManageMent’s Discussion anD analysisThe J. M. Smucker Company
Noncash impairment charges of $4.6 million and $17.6 million were
recognized in 2012 and 2011, respectively. The 2012 impairment
charge related to a regional canned milk trademark, while the
majority of the 2011 charge resulted from the write-down to
estimated fair value of the intangible assets of the Europe’s Best
business. In 2012, the Company recognized an $11.3 million
loss on the sale of Europe’s Best.
Operating income decreased $6.0 million, or one percent, in 2012,
compared to 2011. Special project costs increased $2.5 million
in 2012, compared to 2011, as a decrease in restructuring costs
due to the closure of several facilities was offset by an increase
in integration costs related to the Sara Lee foodservice business
and Rowland Coffee acquisitions. Excluding the impact of special
project costs in both periods, operating income decreased from
18.6 percent of net sales in 2011 to 16.2 percent in 2012.
2011 Compared to 2010
Gross profit increased $11.8 million in 2011, compared to 2010,
as the increase in net sales offset the impact of overall higher
raw material and freight costs and $50.2 million of incremental
special project costs included in cost of products sold, consisting
primarily of accelerated depreciation. Excluding special project
costs, gross profit increased $62.0 million, or three percent,
yet decreased as a percent of net sales from 38.9 percent in 2010
to 38.4 percent in 2011. Raw material cost increases were most
significant for green coffee, soybean oil, milk, and sugar and
more than offset lower costs for peanuts. Price increases taken
during the year, mostly on the Company’s coffee brands to off-
set higher green coffee costs, drove the gross profit increase in
2011, but did not generate gross margin expansion compared to
2010. Gross margin was also reduced by price declines in effect
on Crisco oils during part of 2011 in response to com petitive
dynamics, despite higher soybean oil costs.
SD&A decreased two percent in 2011, compared to 2010, and
decreased as a percentage of net sales from 19.1 percent to
17.9 percent. Marketing expenses, including advertising, decreased
eight percent in 2011, compared to 2010, which included record
investment in print, online, and television advertisement in
support of the Company’s largest brands. Distribution expenses
decreased one percent in 2011, compared to 2010, related
generally to declines in sales volume. Selling expenses increased
three percent but remained flat as a percentage of net sales.
General and administrative expenses increased two percent,
primarily related to higher depreciation charges and digital
marketing initiatives, but were lower as a percentage of net sales.
Noncash impairment charges of $17.6 million and $11.7 million
were recognized in 2011 and 2010, respectively, resulting from
the write-down to estimated fair value of certain of the Company’s
intangible assets, primarily the Europe’s Best trademark and
customer relationship. A $12.9 million gain was recognized on the
potato products divestiture in 2010. Other operating expense –
net of $0.6 and $10.3 million was recognized in 2011 and 2010,
respectively, consisting of losses on the disposition of assets.
Operating income decreased $6.6 million, or one percent,
in 2011, compared to 2010, including an overall $73.7 million
increase in special project costs. Excluding the impact of special
project costs in both periods, operating income increased
$67.1 million, or eight percent, and improved from 18.0 percent
of net sales in 2010 to 18.6 percent in 2011. Special project
costs were higher in 2011, compared to 2010, driven by costs
related to the Company’s restructuring project, which were
only slightly offset by lower integration costs.
Interest Income and Expense
Interest income decreased slightly in 2012, compared to 2011,
due to lower investment balances. Interest expense increased
$11.7 million during 2012, compared to 2011, due to higher
debt outstanding as a result of the Company’s October 2011
public issuance of $750.0 million in Notes. The increased
borrowing costs were somewhat offset by the benefit of the
Company’s interest rate swap activities and higher capitalized
interest associated with the Company’s capital expenditures.
During the second quarter of 2012, the Company terminated
two interest rate swaps, resulting in a net settlement gain of
$17.7 million to be recognized over the remaining life of the
underlying debt instruments, including $1.7 million in 2012.
Interest income was flat in 2011, compared to 2010. Interest
expense increased $4.4 million during 2011, compared to 2010,
due to higher average debt outstanding. The interest expense
impact of $625.0 million of debt repayments in 2010, most of
which were made in the second half of the year, was more than
offset by the interest expense associated with the issuance of
$400.0 million in 4.50 percent Senior Notes on June 15, 2010.
Income Taxes
Income taxes increased two percent in 2012, compared to 2011,
despite a two percent decrease in income before income taxes
during the same period. The effective tax rate increased to
34.4 percent in 2012 from 33.1 percent in 2011, primarily due
to decreased tax benefits related to the domestic manufacturing
deduction and slightly higher state income taxes in 2012,
compared to 2011.
Income taxes increased slightly in 2011, compared to 2010,
despite a two percent decrease in income before income taxes
during the same period. The effective tax rate increased to
33.1 percent in 2011 from 32.4 percent in 2010, primarily due
to higher current and deferred state income taxes and reduced
tax benefits associated with the Canadian operations, partially
offset by increased tax benefits related to the domestic
manufacturing deduction in 2011, compared to 2010.
T h e J. M. S mu cke r C o mp any 2 012 A nnu al Rep o r t 27
ManageMent’s Discussion anD analysisThe J. M. Smucker Company
Restructuring
In calendar 2010, the Company announced its plan to restructure
its coffee, fruit spreads, and Canadian pickle and condiments
operations as part of its ongoing efforts to enhance the long-term
strength and profitability of its leading brands. The initiative is
a long-term investment to optimize production capacity and
lower the overall cost structure. It includes capital investments
for a new state-of-the-art food manufacturing facility in Orrville,
Ohio; consolidation of coffee production in New Orleans, Louisiana;
and the transition of the Company’s pickle and condiments
production to third-party manufacturers.
Upon completion, the restructuring plan will result in a reduction
of approximately 850 full-time positions and the closing of six of
the Company’s facilities – Memphis, Tennessee; Ste. Marie, Quebec;
Sherman, Texas; Kansas City, Missouri; Dunnville, Ontario; and
Delhi Township, Ontario. The Sherman, Dunnville, Delhi Township,
and Kansas City facilities have been closed and approximately
70 percent of the full-time positions have been reduced as of
April 30, 2012.
During 2012, the Company increased anticipated restructuring
costs from approximately $235.0 million to $245.0 million,
consisting primarily of increases to employee separation and
site preparation and equipment relocation charges. The Company
has incurred cumulative costs of $188.8 million related to the
initiative through April 30, 2012, including $81.1 million in 2012
consisting primarily of $34.2 million of long-lived asset charges,
mainly accelerated depreciation, and $20.4 million of employee
separation costs. The majority of the remaining costs are antici-
pated to be recognized over the next two fiscal years.
Segment Results
The Company has three reportable segments: U.S. Retail Coffee,
U.S. Retail Consumer Foods, and International, Foodservice,
and Natural Foods. The U.S. Retail Coffee segment primarily
represents the domestic sales of Folgers, Dunkin’ Donuts,
Millstone, Café Bustelo, and Café Pilon branded coffee; the U.S.
Retail Consumer Foods segment primarily includes domestic
sales of Smucker’s, Crisco, Jif, Pillsbury, Eagle Brand, Hungry Jack,
and Martha White branded products; and the International,
Foodservice, and Natural Foods segment is comprised of products
distributed domes tically and in foreign countries through retail
channels, foodservice distributors and operators (e.g., restaurants,
lodging, schools and universities, health care operators), and
health and natural foods stores and distributors.
(Dollars in millions)
Net sales:
U.S. Retail Coffee
U.S. Retail Consumer Foods
International, Foodservice, and Natural Foods
Segment profit:
U.S. Retail Coffee
U.S. Retail Consumer Foods
International, Foodservice, and Natural Foods
Segment profit margin:
U.S. Retail Coffee
U.S. Retail Consumer Foods
International, Foodservice, and Natural Foods
Year Ended April 30,
2012
2011
2010
$2,297.7
2,094.5
1,133.6
$1,930.9
1,953.0
941.8
$1,700.5
2,004.7
900.1
$ 543.0
393.3
168.6
$ 536.1
406.5
159.6
$ 484.0
407.7
140.4
23.6%
18.8
14.9
27.8%
20.8
16.9
28.5%
20.3
15.6
2012
% Increase
(Decrease)
2011
% Increase
(Decrease)
19%
7
20
1%
(3)
6
14%
(3)
5
11%
—
14
2 8 T h e J. M. S mu cke r C o mp any 2 012 A nnu al Rep o r t
ManageMent’s Discussion anD analysisThe J. M. Smucker Company
U.S. Retail Coffee
Net sales for the U.S. Retail Coffee segment increased 19 percent
in 2012, compared to 2011, including the net realization of price
increases. The acquisition of Rowland Coffee contributed
$99.3 million to segment net sales, representing five percentage
points of the increase. Excluding Rowland Coffee, segment volume
decreased eight percent. Volume declined for the Folgers brand
in line with the overall segment, and was primarily attributed to
consumer response to higher prices and aggressive private label
price points by certain key retailers. Additionally, volume decreased
five percent for Dunkin’ Donuts packaged coffee. Contributing
to favorable sales mix in 2012, net sales of Folgers Gourmet
Selections and Millstone K-Cups totaled $178.2 million, an
increase of $125.2 million, compared to 2011, and represented six
percentage points of segment net sales growth, but contributed
only one percentage point growth to volume. Segment profit
increased one percent in 2012, compared to 2011, despite volume
declines, due to the Rowland Coffee acquisition, while segment
profit margin declined to 23.6 percent from 27.8 percent in
2011. Price increases realized during the year more than offset
higher green coffee costs, and, along with a decrease in segment
marketing and distribution expenses, also contributed to
segment profit.
Net sales for the U.S. Retail Coffee segment increased 14 percent
in 2011, compared to 2010. Price increases taken during the
year contributed approximately 11 percent to net sales and
more than offset a one percent volume decline. The introduction
of Folgers Gourmet Selections and Millstone K-Cups offerings
in the second quarter of the fiscal year added approximately
three percent to U.S. Retail Coffee segment net sales in 2011.
Volume decreased two percent for the Folgers brand, while
Dunkin’ Donuts packaged coffee increased six percent in 2011,
compared to 2010. Segment profit increased 11 percent in 2011,
compared to 2010, as price increases realized during the year
more than offset higher green coffee costs. Segment marketing
expenses decreased 17 percent in 2011, compared to 2010, as
advertising was at more typical levels in 2011 and incremental
investments were made in 2010. Segment profit margin
declined to 27.8 percent in 2011 from 28.5 percent in 2010.
U.S. Retail Consumer Foods
The U.S. Retail Consumer Foods segment net sales increased
seven percent in 2012, compared to 2011, as the impact of price
increases more than offset a six percent decline in segment
volume. Jif peanut butter net sales increased 16 percent in 2012,
compared to 2011, reflecting price increases taken over the past
year, somewhat offset by a six percent volume decline. The overall
decline in peanut butter volume was due to consumer response
to significantly higher retail prices, lost peanut butter distribution
with a key retailer during the year, and competitive activity.
Smucker’s fruit spreads net sales increased one percent and
volume was down four percent during the same period, primarily
due to competitive activity, as well as fewer cross-promotional
activities with peanut butter. Crisco brand net sales, including the
realization of higher prices, increased five percent, while volume
was down 15 percent as the brand experienced substantial price
competition with private label offerings by certain retailers.
For the same period, net sales for the Pillsbury brand increased
nine percent and volume was flat, as declines in flour were off-
set by increases in baking mixes. Canned milk net sales increased
three percent and volume decreased four percent during 2012,
compared to 2011. U.S. Retail Consumer Foods segment profit
decreased three percent in 2012, compared to 2011, primarily
due to an impairment charge of approximately $4.6 million related
to a regional canned milk trademark and higher segment distri-
bution and selling expenses. Price increases taken during 2012,
most notably on peanut butter, essentially offset both higher
commodity costs and the volume decline. Segment profit margin
was 18.8 percent in 2012, compared to 20.8 percent in 2011.
Net sales and volume for the U.S. Retail Consumer Foods
segment decreased three percent in 2011, compared to 2010.
Net sales and volume decreased one percent for the same
period excluding potato products. Net sales included the impact
of a peanut butter price reduction of five percent taken at the
beginning of the fiscal year as well as Crisco oil price declines
in effect during much of the year. Volume gains were realized
in Jif peanut butter, Crisco oils, Smucker’s fruit spreads, and
Hungry Jack pancake mixes and syrups, offset by declines in
Pillsbury flour and baking mixes. The declines in Pillsbury flour
and baking mixes were the result of planned reductions in
lower-margin products and a competitive and promotional
environment during most of the year. Regional baking brands
and canned milk were also down. While segment profit in 2011
was flat compared to 2010, segment profit margin improved
from 20.3 percent to 20.8 percent, as decreases in supply chain
costs and marketing expenses in 2011 more than offset
the gain of approximately $12.9 million on divested potato
products included in 2010.
T h e J. M. S mu cke r C o mp any 2 012 A nnu al Rep o r t 2 9
ManageMent’s Discussion anD analysisThe J. M. Smucker Company International, Foodservice, and Natural Foods
Net sales for the International, Foodservice, and Natural Foods
segment increased 20 percent in 2012, compared to 2011. The
acquisition of the Sara Lee foodservice business contributed
$124.2 million to segment net sales, while Rowland Coffee
contributed $16.0 million. In total, the impact of the acquisitions
represented 15 percentage points of the increase in segment net
sales. Excluding the impact of acquisitions, the Europe’s Best
divestiture in Canada, and foreign exchange, segment net sales
increased seven percent compared to the same period last year
and volume declined two percent. International, Foodservice, and
Natural Foods segment profit increased six percent, but declined
to 14.9 percent of net sales in 2012 from 16.9 percent of net sales
in 2011, partially reflecting the acquisition of the lower-margin
Sara Lee foodservice business. An $11.3 million loss was recognized
on the Europe’s Best divestiture in 2012, while a $17.2 million
noncash impairment charge related to Europe’s Best intangible
assets was recognized in 2011.
On March 26, 2012, the Company acquired a 25 percent equity
interest in Guilin Seamild Biologic Technology Development Co.,
Ltd. (“Seamild”), a privately-owned manufacturer and marketer
of oats products headquartered in Guilin in the Guangxi province
of China, for $35.9 million. Seamild is accounted for as an equity
method investment. It did not have a material impact on the
Company’s or segment’s results of operations for the year ended
April 30, 2012, and is not expected to materially impact the
results of operations in 2013.
Net sales and volume for the International, Foodservice, and
Natural Foods segment increased five percent and two percent,
respectively, for 2011, compared to 2010. Excluding foreign
exchange, net sales increased two percent compared to the
same period in 2010. International, Foodservice, and Natural
Foods segment profit increased 14 percent and improved to
16.9 percent of net sales in 2011 from 15.6 percent of net sales
in 2010. An impairment charge of $17.2 million related to
Europe’s Best intangible assets was recorded in 2011, compared
to $7.3 million in 2010. The incremental impairment charge of
$9.9 million reduced segment profit margin by 1.1 percentage
points. However, segment profit in 2011 benefited from lower
supply chain costs and favorable sales mix, primarily driven by
Folgers coffee, which more than offset the impact of the higher
impairment charge.
FinAn CiAl C ondi Tion
Liquidity
(Dollars in millions)
Net cash provided by
operating activities
Net cash used for investing
activities
Net cash provided by (used for)
financing activities
Net cash provided by
operating activities
Additions to property, plant,
and equipment
Year Ended April 30,
2012
2011
2010
$ 730.9 $ 391.6 $ 713.5
(1,035.9)
(192.9)
(104.4)
219.6
(170.4)
(788.5)
$ 730.9 $ 391.6 $ 713.5
(274.2)
(180.1)
(137.0)
Free cash flow
$ 456.7 $ 211.5 $ 576.5
Amounts may not add due to rounding.
The Company’s principal source of funds is cash generated
from operations, supplemented by borrowings against the
Company’s revolving credit facility. Total cash and cash
equivalents decreased to $229.7 million at April 30, 2012,
compared to $319.8 million at April 30, 2011.
The Company typically expects a significant use of cash to fund
working capital requirements during the first half of each fiscal
year, primarily due to seasonal fruit procurement, the buildup
of inventories to support the Fall Bake and Holiday period, and
the additional increase of coffee inventory in advance of the
Atlantic hurricane season. The Company expects cash provided
by operations in the second half of its fiscal year to significantly
exceed the amount in the first half of the year, upon completion
of the Company’s Fall Bake and Holiday period.
Cash provided by operating activities was $730.9 million,
$391.6 million, and $713.5 million in 2012, 2011, and 2010,
respectively. The increase in cash provided by operating activities
in 2012, compared to 2011, was primarily related to a decrease
in working capital requirements due to lower inventory levels
and a decrease in income tax payments. Additionally, as the
Easter holiday occurred later in 2011, more of the collection
cycle occurred during the first quarter of 2012 than it did during
2011. This increase to cash from operations related to receivables
was partially offset by the Sara Lee foodservice business and
Rowland Coffee receivables and the impact of higher prices.
The decrease in cash provided by operating activities in 2011,
compared to 2010, was primarily related to increases in
commodity costs on higher inventory levels, an increase in
income tax payments, and the timing of the Easter holiday.
3 0 T h e J. M. S mu cke r C o mp any 2 012 A nnu al Rep o r t
ManageMent’s Discussion anD analysisThe J. M. Smucker Company
The significant increase in commodity costs, primarily green coffee
in the second half of 2011, was reflected in higher trade receivables
and inventory balances, offset somewhat by the related impact
of an increase in accounts payable in 2011, compared to 2010.
Also contributing to the higher trade receivables was the Easter
holiday occurring later in 2011 than in 2010 resulting in more
of the collection cycle being deferred into the next fiscal year.
Approximately $80.0 million of the increase in income tax pay-
ments represented a change in the timing of the payments.
Cash used for investing activities was $1,035.9 million,
$192.9 million, and $104.4 million in 2012, 2011, and 2010,
respectively. Cash used for investing activities in 2012 consisted
mainly of $737.3 million related to the Sara Lee foodservice
business and Rowland Coffee acquisitions and a record
$274.2 million in capital expenditures, including approximately
$134.2 million related to expenditures associated with the
Company’s restructuring project. The increased cash used for
investing activities in 2011, compared to 2010, was primarily
due to the purchase of $75.6 million of marketable securities
in 2011 and increased capital expenditures. Cash used for
capital expenditures increased to $180.1 million in 2011,
compared to $137.0 million in 2010, primarily related to
expenditures associated with the Company’s restructuring
project and corporate headquarters expansion.
Cash provided by financing activities during 2012 was
$219.6 million. Proceeds of $748.6 million related to the Company’s
public debt issuance were partially offset by quarterly dividend
payments of $213.7 million and the purchase of treasury shares
for $315.8 million, primarily representing the repurchase of
approximately 4.1 million common shares available under Board
of Directors’ authorizations. Cash used for financing activities
during 2011 was $170.4 million. The Company’s issuance of
$400.0 million in Senior Notes was more than offset by quarterly
dividend payments of $194.0 million and the purchase of treasury
shares for $389.1 million, including the repurchase of approxi-
mately 5.7 million common shares. Cash used for financing
activities during 2010 was $788.5 million, which consisted
primarily of $625.0 million in debt repayments and $166.2 million
in quarterly dividend payments. The increased dividend
payments in 2011, compared to 2010, resulted from increases
in the quarterly dividend rate during the period.
Capital Resources
The following table presents the Company’s capital structure.
(Dollars in millions)
Current portion of long-term debt
Long-term debt
Total debt
Shareholders’ equity
Total capital
Amounts may not add due to rounding.
April 30,
2012
$ 50.0
2,020.5
$2,070.5
5,163.4
$
2011
—
1,304.0
$1,304.0
5,292.4
$7,233.9
$6,596.4
On October 18, 2011, the Company completed a public offering
of $750.0 million in aggregate principal amount of 3.50 percent
Notes due October 15, 2021. The Company received proceeds
of approximately $748.6 million, net of an offering discount of
$1.4 million. The 3.50 percent Notes may be redeemed at any
time prior to maturity, at the option of the Company. The Notes
are senior unsecured obligations and rank equally with the
Company’s other unsecured and unsubordinated debt and are
guaranteed fully and unconditionally, on a joint and several basis,
by J. M. Smucker LLC and The Folgers Coffee Company, two of the
Company’s 100 percent wholly-owned subsidiaries. A portion
of the proceeds was used to fund the Sara Lee foodservice
business acquisition and for the repayment of borrowings
outstanding under the Company’s revolving credit facility,
resulting from funding the Rowland Coffee acquisition. The
remainder of the proceeds was used for general corporate
purposes, including share repurchases.
On July 29, 2011, the Company entered into a second amended
and restated credit agreement with a group of 10 banks, which
provides for an unsecured revolving credit line of $1.0 billion and
matures July 29, 2016. At April 30, 2012, the Company did not
have a balance outstanding under the revolving credit facility.
During 2012, the Company repurchased approximately 4.1 million
common shares, including 3.5 million under Rule 10b5-1 trading
plans, for $305.3 million. At April 30, 2012, approximately
3.9 million common shares remain available for repurchase
under the Board of Directors’ most recent authorization.
There is no guarantee as to the exact number of shares that
will be repurchased or when such purchases may occur.
Cash requirements for 2013 will include capital expenditures
of approximately $210.0 million to $220.0 million, including
amounts related to the restructuring program, quarterly
dividend payments of almost $215.0 million based on current
rates and common shares outstanding, interest and principal
payments on debt obligations of approximately $100.0 million
and $50.0 million, respectively, and contributions to the
defined benefit pension plans of approximately $32.0 million for
the year, including $20.0 million of lump-sum cash settlements.
Absent any further acquisitions or other significant investments,
the Company believes that cash on hand, combined with cash
provided by operations and borrowings available under its credit
facility, will be sufficient to meet cash requirements for the
next 12 months, including capital expenditures, the payment of
quarterly dividends, interest and principal on debt outstanding,
and pension contributions.
T h e J. M. S mu cke r C o mp any 2 012 A nnu al Rep o r t 31
ManageMent’s Discussion anD analysisThe J. M. Smucker Company
non - g A Ap Me A SuReS
The Company uses non-GAAP measures including net sales
excluding acquisitions, divestitures, and foreign exchange rate
impact; gross profit, operating income, income, and income
per diluted share, excluding special project costs; and free cash
flow as key measures for purposes of evaluating performance
internally. These non-GAAP measures are not intended to
replace the presentation of financial results in accordance
with U.S. generally accepted accounting principles (“GAAP”).
Rather, the presentation of these non-GAAP measures
supplements other metrics used by management to internally
evaluate its businesses and facilitate the comparison of
past and present operations. These non-GAAP measures may
not be comparable to similar measures used by other com-
panies and may exclude certain nondiscretionary expenses
and cash payments. The following table reconciles certain
non-GAAP financial measures to the comparable GAAP
financial measure.
Year Ended April 30,
(Dollars in thousands, except per share data)
2012
2011
2010
2009
2008
Reconciliation to gross profit:
Gross profit
Cost of products sold – restructuring
Cost of products sold – merger and integration
$1,845,223
38,552
4,610
$1,798,517
54,089
—
$1,786,690
3,870
—
$1,251,429
—
—
$782,164
1,510
—
Gross profit excluding special project costs
$1,888,385
$1,852,606
$1,790,560
$1,251,429
$783,674
Reconciliation to operating income:
Operating income
Cost of products sold – restructuring
Cost of products sold – merger and integration
Other restructuring costs
Other merger and integration costs
$ 778,283
38,552
4,610
42,589
29,904
$ 784,272
54,089
—
47,868
11,194
$ 790,909
3,870
—
1,841
33,692
$ 452,275
—
—
10,229
72,666
$284,559
1,510
—
3,237
7,967
Operating income excluding special project costs
$ 893,938
$ 897,423
$ 830,312
$ 535,170
$ 297,273
Reconciliation to net income:
Net income
Income taxes
Cost of products sold – restructuring
Cost of products sold – merger and integration
Other restructuring costs
Other merger and integration costs
Income before income taxes excluding
special project costs
Income taxes, as adjusted
Income excluding special project costs
Weighted-average shares – assuming dilution
Income per common share excluding special
project costs – assuming dilution
$ 459,744
241,414
38,552
4,610
42,589
29,904
$ 479,482
237,682
54,089
—
47,868
11,194
$ 494,138
236,615
3,870
—
1,841
33,692
$ 265,953
130,112
—
—
10,229
72,666
$170,379
84,409
1,510
—
3,237
7,967
$ 816,813
281,234
$ 830,315
275,182
$ 770,156
249,374
$ 535,579
113,313,567
$ 555,133
118,276,086
$ 520,782
119,081,445
$ 478,960
157,343
$ 321,617
85,547,530
$ 267,502
88,621
$178,881
56,873,492
$
4.73
$
4.69
$
4.37
$
3.76
$
3.15
3 2 T h e J. M. S mu cke r C o mp any 2 012 A nnu al Rep o r t
ManageMent’s Discussion anD analysisThe J. M. Smucker Company
oFF- BAl An Ce Shee T ARR AngeM enTS And
C onTR ACTuAl oB lig ATionS
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, con-
ducted at an arm’s length basis, and not material to the Company’s
results of operations, financial condition, or cash flows.
The following table summarizes the Company’s contractual
obligations at April 30, 2012.
Less
One
Than to Three
Years
Total One Year
Three
to Five
Years
More
Than
Five
Years
$2,070.5 $ 50.0 $150.0 $136.5 $1,734.0
749.6
97.6
183.7
169.0
299.3
89.3
22.4
34.5
21.5
10.9
1,301.8 1,111.3
190.5
—
—
295.9
—
4.0
—
291.9
(Dollars in millions)
Long-term debt
obligations
Interest
payments
Operating lease
obligations
Purchase
obligations
Other noncurrent
liabilities
Total
$4,507.1 $1,281.3 $ 562.7 $327.0 $2,336.1
Purchase obligations in the above table include agreements to
purchase goods or services that are enforceable and legally binding
on the Company. Included in this category are certain obligations
related to normal, ongoing purchase obligations in which the
Company has guaranteed payment to ensure availability of raw
materials and packaging supplies. The Company expects to receive
consideration for these purchase obligations in the form of mate-
rials. The purchase obligations in the above table do not represent
the entire anticipated purchases in the future, but represent only
those items for which the Company is contractually obligated.
Other noncurrent liabilities in the above table exclude the
liability for unrecognized tax benefits and tax-related net interest
and penalties of approximately $25.7 million under Financial
Accounting Standards Board Accounting Standards Codification
740, Income Taxes, since the Company is unable to reasonably
estimate the timing of cash settlements with the respective
taxing authorities.
CRiTiCAl ACCounTing eST iMATeS A nd p oliCieS
The preparation of financial statements in conformity with GAAP
requires management 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 statements, giving due consideration to materiality.
The Company does not believe there is a great likelihood that
materially different amounts would be reported under different
conditions or using different assumptions related to the
accounting policies described below. However, application of
these accounting policies involves the exercise of judgment
and use of assumptions as to future uncertainties and, as a
result, actual results could differ from these estimates.
Revenue Recognition: The Company recognizes revenue 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 collectibility is reasonably assured.
A provision for estimated returns and allowances is recognized
as a reduction of sales at the time revenue is recognized.
Trade Marketing and Merchandising Programs: In order to
support the Company’s products, various promotional activities
are conducted through retail trade, distributors, or directly with
consumers, including in-store display and product placement
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 retail trade, distributors, or consumers. These estimates are
made using various techniques including his torical data on
performance of similar promotional programs. Differences
between estimated expenditures and actual performance are
recognized as a change in management’s estimate in a subsequent
period. As the Company’s total promotional expenditures, including
amounts classified as a reduction of net sales, represented
approximately 23 percent of net sales in 2012, the possibility
exists of materially different reported results if factors such
as the level and success of the promotional programs or other
conditions differ from expectations.
Income Taxes: The future tax benefit arising from the net
deductible temporary differences and tax carryforwards is
approximately $154.1 million and $116.9 million at April 30,
2012 and 2011, respectively. Management believes that the
Company’s earnings during the periods when the temporary
differences become deductible will be sufficient to realize the
related future income tax benefits. For those jurisdictions
where the expiration date of tax carryforwards or the projected
operating results of the Company indicate that realization is
not likely, a valuation allowance has been provided.
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. Changes in estimated realization of
deferred tax assets would result in an adjustment to income
in the period in which that determination is made.
T h e J. M. S mu cke r C o mp any 2 012 A nnu al Rep o r t 3 3
ManageMent’s Discussion anD analysisThe J. M. Smucker Company
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 recognized a liability
for unrecognized tax benefits, including any applicable interest
and penalty charges.
Long-Lived Assets: Long-lived assets, except goodwill and
indefinite-lived intangible assets, are reviewed for impairment
whenever events or changes in circumstances indicate that
the carrying amount of the asset may not be recoverable.
Recoverability of assets to be held and used is measured by a
comparison of the carrying amount of the assets to future net
cash flows estimated to be generated by such assets. If such assets
are considered to be impaired, the impairment to be recognized
is the amount by which the carrying amount of the assets exceeds
the estimated fair value of the assets. However, determining fair
value is subject to estimates of both cash flows and discount
rates and different estimates could yield different results. There
are no events or changes in circumstances of which management
is aware that indicate the carrying value of the Company’s long-
lived assets may not be recoverable at April 30, 2012.
Goodwill and Other Indefinite-Lived Intangible Assets: The
Company is required to test goodwill for impairment annually
and more often if indicators of impairment exist. To test for
goodwill impairment, the Company estimates the fair value of
each of its reporting units using both a discounted cash flow
valuation technique and a market-based approach. The impair-
ment test incorporates the Company’s estimates of future cash
flows, allocations of certain assets, liabilities, and cash flows
among reporting units, future growth rates, terminal value
amounts, and the applicable weighted-average cost of capital
used to discount those estimated cash flows. The estimates and
projections used in the calculation of fair value are consistent
with the Company’s current and long-range plans, including
anticipated changes in market conditions, industry trends,
growth rates, and planned capital expenditures. Changes in
forecasted operations and other estimates and assumptions
could impact the assessment of impairment in the future.
At April 30, 2012, goodwill totaled $3.1 billion. Goodwill is
substantially concentrated within the U.S. Retail Coffee and U.S.
Retail Consumer Foods segments. No goodwill impairment was
recognized as a result of the annual evaluation performed as of
February 1, 2012. The estimated fair value of each reporting unit was
substantially in excess of its carrying value as of the annual test date.
The Company’s other indefinite-lived intangible assets, consisting
entirely of trademarks, are also tested for impairment annually
and whenever events or changes in circumstances indicate their
carrying value may not be recoverable. To test these assets for
impairment, the Company estimates the fair value of each asset
based on a discounted cash flow model using various inputs,
including projected revenues, an assumed royalty rate, and a
discount rate. Changes in these estimates and assumptions
could impact the assessment of impairment in the future.
3 4 T h e J. M. S mu cke r C o mp any 2 012 A nnu al Rep o r t
At April 30, 2012, other indefinite-lived intangible assets totaled
$1.8 billion. Trademarks that represent the Company’s leading,
iconic brands comprise more than 90 percent of the total carrying
value of its other indefinite-lived intangible assets. Each of these
trademarks had an estimated fair value substantially in excess
of its carrying value as of the annual test date, with the exception
of trademarks acquired during the year ended April 30, 2012.
Management has concluded that the risk of impairment related
to these trademarks is remote at April 30, 2012.
Pension and Other Postretirement Benefit Plans: To determine
the Company’s ultimate obligation under its defined benefit
pension plans and other postretirement benefit plans, manage-
ment must estimate the future cost of benefits and attribute
that cost to the time period during which each covered employee
works. Various actuarial assumptions must be made 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 con sidered. For 2013
expense recognition, the Company will use a discount rate of
4.7 percent and 4.2 percent, and a rate of compensation increase
of 4.1 percent and 4.0 percent for the U.S. and Canadian plans,
respectively. The Company anticipates using an expected rate
of return on plan assets of 7.0 percent for U.S. plans. For the
Canadian plans, the Company anticipates using an expected
rate of return on plan assets of 6.0 percent for the hourly plan
and 6.3 percent for all other plans.
Recovery of Trade Receivables: In the normal course of business,
the Company extends credit to customers that satisfy predefined
criteria. The Company evaluates the collectibility of trade receivables
based on a combination of factors. When aware that a specific
customer may be unable to meet its financial obligations, such as
in the case of bankruptcy filings or deterioration in the customer’s
operating results or financial position, the Company records a
specific reserve for bad debt to reduce the related receivable to
the amount the Company reasonably believes is collectible. The
Company also records reserves for bad debt for all other customers
based on a variety of factors, including the length of time the
receivables are past due, historical collection experience, and
an evaluation of current and projected economic conditions at
the balance sheet date. Actual collections of trade receivables
could differ from management’s estimates due to changes in
future economic or industry conditions or specific customers’
financial conditions.
deR ivATiv e FinAn CiAl i nSTRuMenTS And
MARk e T RiSk
The following discussions about the Company’s market risk
disclosures involve forward-looking statements. Actual results
could differ from those projected in the forward-looking
statements. The Company is exposed to market risk related
to changes in interest rates, foreign currency exchange rates,
and commodity prices.
ManageMent’s Discussion anD analysisThe J. M. Smucker Company Interest Rate Risk: The fair value of the Company’s cash and
cash equivalents at April 30, 2012, approximates carrying value.
Exposure to interest rate risk on the Company’s long-term debt
is mitigated due to fixed-rate maturities. In an effort to achieve
a mix of variable versus fixed-rate debt under favorable market
conditions at the time, the Company entered into an interest
rate swap in 2011 on a portion of fixed-rate Senior Notes. The
Company received a fixed rate and paid variable rates based on
the London Interbank Offered Rate. The interest rate swap was
designated as a fair value hedge and used to hedge against changes
in the fair value of the debt. The instrument was recognized at
fair value on the Consolidated Balance Sheet at April 30, 2011, and
changes in the fair value were recognized in interest expense.
The change in the fair value of the interest rate swap was offset
by the change in the fair value of the long-term debt. In August
2011, the Company terminated this interest rate swap prior to
maturity. As a result of the early termination, the Company
received $27.0 million in cash, which included $3.1 million of
interest receivable, and will realize a $23.9 million reduction of
future interest expense through November 1, 2018, the maturity
date of the underlying debt. The unamortized benefit at April 30,
2012, was $21.9 million and is reflected as an increase in the
long-term debt balance.
In August 2011, the Company also entered into a forward-starting
interest rate swap to partially hedge the risk of an increase in
the benchmark interest rate during the period leading up to the
$750.0 million 3.50 percent Notes public offering. The interest
rate swap was designated as a cash flow hedge. The mark-to-
market gains or losses on the swap were deferred and included as
a component of accumulated other comprehensive (loss) income
to the extent effective, and reclassified to interest expense in the
period during which the hedged transaction affected earnings. In
October 2011, in conjunction with the pricing of the 3.50 percent
Notes, the Company terminated the interest rate swap prior to
maturity resulting in a loss of $6.2 million. The resulting loss will
be recognized in interest expense over the life of the related debt.
The ineffective portion of the hedge was reclassified to interest
expense upon termination of the swap and was not material.
Based on the Company’s overall interest rate exposure as of and
during the year ended April 30, 2012, including derivatives and other
instruments sensitive to interest rates, a hypothetical 10 percent
movement in interest rates would not materially affect the Company’s
results of operations. In measuring interest rate risk by the amount
of net change in the fair value of the Company’s financial liabilities,
a hypothetical one percent decrease in interest rates at April 30,
2012, would increase the fair value of the Company’s long-term
debt by approximately $117.0 million.
rates. The foreign currency balance sheet exposures as of
April 30, 2012, are not expected to result in a significant
impact on future earnings or cash flows.
The Company utilizes foreign currency exchange forwards
and options contracts to manage the price volatility of foreign
currency exchange fluctuations on future cash payments primarily
related to purchases of certain raw materials, finished goods, and
fixed assets in Canada. The contracts generally have maturities of
less than one year. Instruments currently used to manage foreign
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.
If the contract qualifies for hedge accounting treatment, to the
extent the hedge is deemed effective, the associated mark-to-
market gains and losses are deferred and included as a component
of accumulated other comprehensive (loss) income. These gains
or losses are reclassified to earnings in the period the contract is
executed. The ineffective portion of these contracts is immediately
recognized in earnings. Based on the Company’s hedged foreign
currency positions as of April 30, 2012, a hypothetical 10 percent
change in exchange rates would not result in a material loss
of fair value.
Revenues from customers outside the U.S. represented nine
percent of net sales during 2012. Thus, certain revenues and
expenses have been, and are expected to be, subject to the
effect of foreign currency fluctuations, and these fluctuations
may have an impact on operating results.
Commodity Price Risk: Raw materials and other commodities
used by the Company are subject to price volatility caused by
supply and demand conditions, political and economic variables,
weather, investor speculation, and other unpredictable factors.
To manage the volatility related to anticipated commodity pur-
chases, 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 accumulated other
comprehensive (loss) income to the extent effective, and reclas-
sified to 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.
The following sensitivity analysis presents the Company’s
potential loss of fair value resulting from a hypothetical
10 percent change in market prices.
Foreign Currency Exchange Risk: The Company has operations
outside the U.S. with foreign currency denominated assets
and liabilities, primarily denominated in Canadian currency.
Because the Company has foreign currency denominated assets
and liabilities, financial exposure may result, primarily from
the timing of transactions and the movement of exchange
(Dollars in millions)
Raw material commodities:
High
Low
Average
Year Ended April 30,
2012
2011
$28.0
6.4
14.6
$24.5
6.6
14.7
T h e J. M. S mu cke r C o mp any 2 012 A nnu al Rep o r t 3 5
ManageMent’s Discussion anD analysisThe J. M. Smucker Company
management’S diScuSSion and analYSiS
The J. M. Smucker Company
The estimated fair value was determined using quoted market
prices and was based on the Company’s net derivative position
by commodity at each quarter end during the fiscal year. The
calculations are not intended to represent actual losses in fair
value that the Company expects to incur. In practice, as markets
move, the Company actively manages its risk and adjusts hedging
strategies as appropriate. The commodities hedged have a high
inverse correlation to price changes of the derivative commodity
instrument; thus, the Company would expect that any gain or
loss in the estimated fair value of its derivatives would generally
be offset by an increase or decrease in the estimated fair
value of the underlying exposures.
FoRwARd - lo ok ing STATeM enTS
Certain statements included in this Annual Report contain
forward-looking statements within the meaning of federal
securities laws. The forward-looking statements may include
statements concerning the Company’s current expectations,
estimates, assumptions, and beliefs concerning future events,
conditions, plans, and strategies that are not historical fact.
Any statement that is not historical in nature is a forward-
looking statement and may be identified by the use of words
and phrases such as “expects,” “anticipates,” “believes,” “will,”
“plans,” and similar phrases.
Federal securities laws provide a safe harbor for forward-looking
statements to encourage companies to provide prospective
information. The Company is providing this cautionary state-
ment in connection with the safe harbor provisions. Readers
are cautioned not to place undue reliance on any forward-
looking statements as such statements are by nature subject
to risks, uncertainties, and other factors, many of which are
outside of the Company’s control and could cause actual
results to differ materially from such statements and from the
Company’s historical results and experience. These risks and
uncertainties include, but are not limited to, those set forth
under the caption “Risk Factors” in the Company’s Annual
Report on Form 10-K, as well as the following:
• volatility of commodity markets from which raw materials,
particularly green coffee beans, wheat, soybean oil, milk,
peanuts, and sugar, are procured and the related impact
on costs;
• risks associated with derivative and purchasing strategies
employed by the Company to manage commodity pricing
risks, including the risk that such strategies could result
in significant losses and adversely impact the Company’s
liquidity;
• crude oil price trends and their impact on transportation,
energy, and packaging costs;
• the ability to successfully implement and realize the full
benefit of price changes that are intended to fully recover
cost and the competitive, retailer, and consumer response;
• the success and cost of introducing new products and the
competitive response;
3 6 T h e J. M. S mu cke r C o mp any 2 012 A nnu al Rep o r t
• the success and cost of marketing and sales programs and
strategies intended to promote growth in the Company’s
businesses;
• general competitive activity in the market, including com
petitors’ pricing practices and promotional spending levels;
• the ability of the Company to successfully integrate acquired
and merged businesses in a timely and cost-effective manner;
• the successful completion of the Company’s restructuring
programs and the ability to realize anticipated savings and
other potential benefits within the time frames currently
contemplated;
• the impact of food security concerns involving either the
Company’s or its competitors’ products;
• the impact of accidents and natural disasters, including
crop failures and storm damage;
• the concentration of certain of the Company’s businesses
with key customers and suppliers and the ability to manage
and maintain key relationships;
• the loss of significant customers, a substantial reduction
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;
• a change in outlook or downgrade in the Company’s public
credit rating by a rating agency;
• the ability of the Company to obtain any required financing;
• the timing and amount of capital expenditures, share
repurchases, and restructuring costs;
• impairments in the carrying value of goodwill, other
intangible assets, or other long-lived assets or changes in
useful lives of other intangible assets;
• the impact of new or changes to existing governmental
laws and regulations and their application;
• the impact of future legal, regulatory, or market measures
regarding climate change;
• 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;
• other factors affecting share prices and capital markets
generally; and
• risks related to other factors described under “Risk Factors”
in the other reports and statements filed by the Company
with the Securities and Exchange Commission.
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 undertake any obligation to
update or revise these forward-looking statements to reflect
new events or circumstances.
report oF management on internal control
over Financial reporting
The J. M. Smucker Company
Shareholders
The J. M. Smucker Company
Management of The J. M. Smucker Company is responsible for establishing and maintaining adequate accounting and internal
control systems over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Securities and Exchange
Act of 1934, as amended. 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, with the participation of the principal financial and executive officers, assessed the effectiveness
of the Company’s internal control over financial reporting as of April 30, 2012. In making this assessment, management used the
criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission (“the COSO criteria”).
Based on the Company’s assessment of internal control over financial reporting under the COSO criteria, management concluded
the Company’s internal control over financial reporting was effective as of April 30, 2012.
Ernst & Young LLP, an independent registered public accounting firm, audited the effectiveness of the Company’s internal control
over financial reporting as of April 30, 2012, and their report thereon is included on page 38 of this report.
Richard K. Smucker
Chief Executive Officer
Mark R. Belgya
Senior Vice President and
Chief Financial Officer
T h e J. M. S mu cke r C o mp any 2 012 A nnu al Rep o r t 37
report oF independent regiStered public accounting
Firm on internal control over Financial reporting
The J. M. Smucker Company
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, 2012, 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
control 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 operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we
considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures
that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the
company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use,
or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
In our opinion, The J. M. Smucker Company maintained, in all material respects, effective internal control over financial
reporting as of April 30, 2012, 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, 2012 and 2011, and the related statements
of consolidated income, shareholders’ equity, and cash flows for each of the three years in the period ended April 30, 2012,
and our report dated June 20, 2012, expressed an unqualified opinion thereon.
Akron, Ohio
June 20, 2012
3 8 T h e J. M. S mu cke r C o mp any 2 012 A nnu al Rep o r t
report oF independent regiStered public accounting
Firm on the conSolidated Financial StatementS
The J. M. Smucker Company
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, 2012 and 2011, and
the related statements of consolidated income, shareholders’ equity, and cash flows for each of the three years in the period ended
April 30, 2012. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated
financial position of The J. M. Smucker Company at April 30, 2012 and 2011, and the consolidated results of its operations and
its cash flows for each of the three years in the period ended April 30, 2012, in conformity with U.S. generally accepted
accounting principles.
We also have audited in accordance with the standards of the Public Company Accounting Oversight Board (United States),
The J. M. Smucker Company’s internal control over financial reporting as of April 30, 2012, 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 20, 2012, expressed an unqualified opinion thereon.
Akron, Ohio
June 20, 2012
T h e J. M. S mu cke r C o mp any 2 012 A nnu al Rep o r t 3 9
report oF management on reSponSibilitY
For Financial reporting
The J. M. Smucker Company
Shareholders
The J. M. Smucker Company
Management of The J. M. Smucker Company is responsible for the preparation, integrity, accuracy, and consistency of the
consolidated financial statements and the related financial information in this report. Such information has been prepared
in accordance 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
communicated throughout the Company. There is a program of audits performed by the Company’s internal audit staff designed
to evaluate the adequacy of and adherence to these controls, policies, and procedures.
Ernst & Young LLP, an independent registered public accounting firm, has audited the Company’s financial statements in accordance
with the standards of the Public Company Accounting Oversight Board (United States). Management has made all financial records
and related data available to Ernst & Young LLP during its audit.
The Company’s audit committee, comprised of three non-employee members of the Board of Directors, meets regularly with the
independent registered public accounting firm and management to review the work of the internal audit staff and the work, audit
scope, timing arrangements, and fees of the independent registered public accounting firm. The audit committee also regularly
satisfies itself as to the adequacy of controls, systems, and financial records. The manager of the internal audit department is
required to report directly to the chair of the audit committee as to internal audit matters.
It is the Company’s best judgment that its policies and procedures, its program of internal and independent audits, and the
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.
Richard K. Smucker
Chief Executive Officer
Mark R. Belgya
Senior Vice President and
Chief Financial Officer
4 0 T h e J. M. S mu cke r C o mp any 2 012 A nnu al Rep o r t
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
Cost of products sold – merger and integration
Gross Profit
Selling, distribution, and administrative expenses
Amortization
Impairment charges
Other restructuring costs
Other merger and integration costs
Loss (gain) on divestitures
Other operating (income) expense – 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
See notes to consolidated financial statements.
Year Ended April 30,
2012
2011
2010
$5,525,782
3,637,397
38,552
4,610
1,845,223
892,683
88,060
4,590
42,589
29,904
11,287
(2,173)
778,283
1,504
(81,296)
2,667
701,158
241,414
$4,825,743
2,973,137
54,089
—
1,798,517
863,114
73,844
17,599
47,868
11,194
—
626
784,272
2,512
(69,594)
(26)
717,164
237,682
$4,605,289
2,814,729
3,870
—
1,786,690
878,221
73,657
11,658
1,841
33,692
(13,607)
10,319
790,909
2,793
(65,187)
2,238
730,753
236,615
$ 459,744
$ 479,482
$ 494,138
$ 4.06
$ 4.06
$ 4.15
$ 4.06
$ 4.05
$ 4.15
T h e J. M. S mu cke r C o mp any 2 012 A nnu al Rep o r t 41
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
Other noncurrent assets
Total Other Noncurrent Assets
See notes to consolidated financial statements.
April 30,
2012
2011
$ 229,708
347,518
$ 319,845
344,410
643,517
318,059
961,576
104,663
518,243
345,336
863,579
109,165
1,643,465
1,636,999
89,599
460,242
1,160,307
142,983
1,853,131
(757,042)
1,096,089
3,054,618
3,187,007
134,047
6,375,672
77,074
347,950
1,022,670
76,778
1,524,472
(656,590)
867,882
2,812,746
2,940,010
66,948
5,819,704
$9,115,226
$8,324,585
4 2 T h e J. M. S mu cke r C o mp any 2 012 A nnu al Rep o r t
conSolidated balance SheetS
The J. M. Smucker Company
LIABILITIES AND ShAREhOLDERS’ EquITy
(Dollars in thousands)
Current Liabilities
Accounts payable
Accrued compensation
Accrued trade marketing and merchandising
Dividends payable
Current portion of long-term debt
Other current liabilities
Total Current Liabilities
Noncurrent Liabilities
Long-term debt
Defined benefit pensions
Other postretirement benefits
Deferred income taxes
Other noncurrent liabilities
Total Noncurrent Liabilities
Shareholders’ Equity
Serial preferred shares – no par value:
Authorized – 6,000,000 shares; outstanding – none
Common shares – no par value:
Authorized – 150,000,000 shares; outstanding – 110,284,715 at April 30, 2012, and
114,172,122 at April 30, 2011 (net of 18,320,450 and 14,432,043 treasury shares,
respectively), at stated value
Additional capital
Retained income
Amount due from ESOP Trust
Accumulated other comprehensive (loss) income
Total Shareholders’ Equity
See notes to consolidated financial statements.
April 30,
2012
2011
$ 274,725
83,261
62,111
52,937
50,000
93,938
616,972
2,020,543
147,551
68,829
992,692
105,253
3,334,868
$ 234,916
62,313
62,588
50,236
—
72,623
482,676
1,304,039
98,722
59,789
1,042,823
44,173
2,549,546
—
—
27,571
4,261,171
961,207
(2,572)
(83,991)
5,163,386
28,543
4,396,592
866,933
(3,334)
3,629
5,292,363
$9,115,226
$8,324,585
T h e J. M. S mu cke r C o mp any 2 012 A nnu al Rep o r t 4 3
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
Depreciation – restructuring and merger and integration
Amortization
Impairment charges
Share-based compensation expense
Other noncash restructuring charges
Loss on sale of assets – net
Loss (gain) on divestitures
Deferred income tax benefit
Changes in assets and liabilities, net of effect from businesses acquired:
Trade receivables
Inventories
Other current assets
Accounts payable and accrued items
Proceeds from settlement of interest rate swaps – net
Defined benefit pension contributions
Accrued and prepaid taxes
Other – net
Net Cash Provided by Operating Activities
Investing Activities
Businesses acquired, net of cash acquired
Additions to property, plant, and equipment
Equity investment in affiliate
Proceeds from divestitures
Purchases of marketable securities
Sales and maturities of marketable securities
Proceeds from disposal of property, plant, and equipment
Other – net
Net Cash used for Investing Activities
Financing Activities
Repayment of bank note payable
Repayments of long-term debt
Proceeds from long-term debt
Quarterly dividends paid
Purchase of treasury shares
Proceeds from stock option exercises
Other – net
Net Cash Provided by (used for) Financing Activities
Effect of exchange rate changes on cash
Net (decrease) increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Year Ended April 30,
2012
2011
2010
$ 459,744
$ 479,482
$ 494,138
120,366
38,570
88,060
4,590
21,711
8,030
3,390
11,287
(17,218)
9,286
(48,189)
2,978
72,774
17,718
(11,428)
(2,959)
(47,781)
730,929
(737,255)
(274,244)
(35,874)
9,268
—
18,600
4,039
(20,398)
(1,035,864)
—
—
748,560
(213,667)
(315,780)
2,826
(2,313)
219,626
(4,828)
(90,137)
319,845
112,226
53,569
73,844
17,599
24,044
8,540
2,867
—
(59,801)
(102,625)
(204,159)
(33,443)
84,633
—
(16,779)
(78,393)
29,958
391,562
—
(180,080)
—
—
(75,637)
57,100
5,830
(126)
(192,913)
—
(10,000)
400,000
(194,024)
(389,135)
14,525
8,215
(170,419)
8,045
36,275
283,570
108,225
3,870
73,657
11,658
25,949
—
5,776
(13,607)
(39,320)
31,521
(46,160)
2,683
(34,620)
—
(4,436)
56,227
37,917
713,478
—
(136,983)
—
19,554
—
13,519
205
(738)
(104,443)
(350,000)
(275,000)
—
(166,224)
(5,569)
6,413
1,832
(788,548)
6,390
(173,123)
456,693
Cash and Cash Equivalents at End of year
$ 229,708
$ 319,845
$ 283,570
( ) Denotes use of cash
See notes to consolidated financial statements.
4 4 T h e J. M. S mu cke r C o mp any 2 012 A nnu al Rep o r t
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
Accumulated
Other
Amount
Total
Due from Comprehensive Shareholders’
Equity
(Loss) Income
ESOP Trust
118,422,123 $ 29,606
Balance at May 1, 2009
Net income
Foreign currency translation adjustment
Pensions and other
postretirement liabilities
Unrealized gain on available-for-sale
securities
Unrealized gain on cash flow
hedging derivatives
$4,547,921 $ 424,504
494,138
$(4,830)
$(57,270) $4,939,931
494,138
45,926
45,926
(12,313)
(12,313)
2,652
2,652
424
424
(122,483)
819,512
(31)
205
(5,383)
29,584
(155)
(172,424)
3,005
29,780
4,575,127
746,063
479,482
761
(4,069)
(20,581)
24,773
(5,832,423)
885,393
(1,458)
221
(225,677)
39,832
(162,000)
(196,612)
7,310
28,543
4,396,592
866,933
459,744
735
(3,334)
3,629
(14,785)
Comprehensive Income
Purchase of treasury shares
Stock plans
Cash dividends declared –
$1.45 per share
Tax benefit of stock plans
Other
119,119,152
Balance at April 30, 2010
Net income
Foreign currency translation adjustment
Pensions and other
postretirement liabilities
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 –
$1.68 per share
Tax benefit of stock plans
Other
114,172,122
Balance at April 30, 2011
Net income
Foreign currency translation adjustment
Pensions and other
postretirement liabilities
Unrealized gain on available-for-sale
securities
Unrealized loss on cash flow
hedging derivatives
(5,928)
(5,928)
1,359
1,359
4,006
4,006
530,827
(5,569)
29,789
(172,424)
3,005
761
5,326,320
479,482
24,773
503,692
(389,135)
40,053
(196,612)
7,310
735
5,292,363
459,744
(14,785)
(48,329)
(48,329)
742
742
(25,248)
(25,248)
372,124
(315,780)
25,460
(216,368)
4,825
762
Comprehensive Income
Purchase of treasury shares
Stock plans
Cash dividends declared –
$1.92 per share
Tax benefit of stock plans
Other
(4,236,430)
349,023
(1,059)
87
(165,619)
25,373
(149,102)
(216,368)
4,825
762
Balance at April 30, 2012
110,284,715 $ 27,571 $4,261,171 $ 961,207
$(2,572)
$(83,991) $5,163,386
See notes to consolidated financial statements.
T h e J. M. S mu cke r C o mp any 2 012 A nnu al Rep o r t 4 5
(Dollars in thousands, unless otherwise noted, except per share data)
Note 1
AccouNtiNg Policies
Principles of Consolidation: The consolidated financial statements include the accounts of the Company, its wholly-owned
subsidiaries, and its majority-owned investments, if any. 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 and residual
values for depreciation and amortization, loss contingencies, net realizable value of inventories, accruals for trade marketing and
merchandising 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 collectibility is
reasonably assured.
Major Customer: Sales to Wal-Mart Stores, Inc. and subsidiaries amounted to approximately 26 percent of net sales in both 2012 and
2011, and 27 percent of net sales in 2010. These sales are primarily included in the two U.S. retail market segments. No other
customer exceeded 10 percent of net sales for any year. Trade receivables at April 30, 2012 and 2011, included amounts due from
Wal-Mart Stores, Inc. and subsidiaries of $84,068 and $87,623, 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 retail trade, distributors, or directly with consumers, including in-store display and product placement 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 retail trade,
distributors, or consumers. These estimates are made using various techniques including historical data on performance of similar
promotional programs. Differences between estimated expenditures and actual performance are recognized as a change in management’s
estimate in a subsequent period. As the Company’s total promotional expenditures, including amounts classified as a reduction of
net sales, represented approximately 23 percent of net sales in 2012, a possibility exists of materially different reported results if
factors such as the level and success of the promotional programs or other conditions differ from expectations.
Advertising Expense: Advertising costs are expensed as incurred. Advertising expense was $119,600, $115,066, and $130,583
in 2012, 2011, and 2010, respectively.
Research and Development Costs: Total research and development costs were $21,931, $20,981, and $20,963 in 2012, 2011,
and 2010, respectively.
Share-Based Payments: Share-based compensation expense is recognized over the requisite service period, which includes
a one-year performance period plus the defined forfeiture period, which is typically four years of service or the attainment
of a defined age and years of service.
The following table summarizes amounts related to share-based payments.
Share-based compensation expense included in selling,
distribution, and administrative expenses
Share-based compensation expense included in other merger and integration costs
Share-based compensation expense included in other restructuring costs
Total share-based compensation expense
Related income tax benefit
4 6 T h e J. M. S mu cke r C o mp any 2 012 A nnu al Rep o r t
Year Ended April 30,
2012
2011
2010
$19,292
2,419
105
$21,816
$ 7,511
$19,896
4,148
290
$24,334
$ 8,064
$20,687
5,262
—
$25,949
$ 8,402
Notes to CoNsolidated FiNaNCial statemeNtsThe J. M. Smucker Company
As of April 30, 2012, total unrecognized share-based compensation cost related to nonvested share-based awards was
approximately $29,881. The weighted-average period over which this amount is expected to be recognized is 2.9 years.
Corporate income tax benefits realized upon exercise or vesting of an award in excess of that previously recognized in earnings,
referred to as excess tax benefits, are 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 2012, 2011, and 2010, the actual tax deductible benefit realized from
share-based compensation was $4,825, $7,310, and $3,005, including $4,832, $6,990, and $2,908, respectively, of excess tax
benefits realized upon exercise or vesting of share-based compensation, and classified as other – net, under financing activities
in the Statements of Consolidated Cash Flows.
Defined Contribution Plans: The Company offers employee savings plans for domestic and Canadian employees. The Company’s
contributions under these plans are based on a specified percentage of employee contributions. Charges to operations for these
plans in 2012, 2011, and 2010 were $16,078, $16,440, and $15,625, respectively.
Income Taxes: The Company accounts for income taxes using the liability method. Accordingly, deferred tax assets and liabilities
are recognized for the future tax consequences attributable to differences between financial statement carrying amounts of
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 applicable 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.
The Company accounts for the financial statement recognition and measurement criteria of a tax position taken or expected to be
taken in a tax return under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 740, Income
Taxes. FASB ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods,
disclosure, and transition.
In accordance with the requirements of FASB ASC 740, 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.
Cash and Cash Equivalents: The Company considers all short-term, highly-liquid 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. The Company evaluates its trade
receivables and establishes an allowance for doubtful accounts based on a combination of factors. When aware that a specific
customer has been impacted by circumstances such as bankruptcy filings or deterioration in the customer’s operating results or
financial position, potentially making it unable to meet its financial obligations, the Company records a specific reserve for bad
debt to reduce the related receivable to the amount the Company reasonably believes is collectible. The Company also records
reserves for bad debt for all other customers based on a variety of factors, including the length of time the receivables are past due,
historical collection experience, and an evaluation of current and projected economic conditions at the balance sheet date. Trade
receivables are charged off against the allowance after management determines the potential for recovery is remote. At April 30,
2012 and 2011, the allowance for doubtful accounts was $1,715 and $1,882, respectively. The net provision for the allowance for
doubtful accounts decreased $167 and $480 in 2012 and 2010, respectively, and increased $361 in 2011. 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.
Inventories: Inventories are stated at the lower of cost or market. Cost for all inventories is determined using the first-in, first-out
method applied on a consistent basis.
The cost of finished products and work-in-process inventory includes materials, direct labor, and overhead. Work-in-process is included
in finished products in the Consolidated Balance Sheets and was $78,344 and $77,594 at April 30, 2012 and 2011, respectively.
T h e J. M. S mu cke r C o mp any 2 012 A nnu al Rep o r t 47
Notes to CoNsolidated FiNaNCial statemeNtsThe J. M. Smucker Company Derivative Financial Instruments: The Company utilizes derivative instruments such as basis contracts, commodity futures and
options contracts, foreign currency forwards and options, and interest rate swaps to manage exposures in commodity prices, foreign
currency exchange rates, and interest rates. The Company accounts for these derivative instruments in accordance with FASB ASC 815,
Derivatives and Hedging, which requires all derivative instruments to 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 recognized 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. Hedge effectiveness is measured at inception and on a monthly basis.
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. Derivatives designated as fair value hedges that are used to hedge against changes in the
fair value of the underlying long-term debt are recognized at fair value on the Consolidated Balance Sheets. Changes in the fair value
of the derivative are recognized in the Statements of Consolidated Income and are offset by the change in the fair value of the under-
lying long-term debt. By policy, the Company historically has not entered into derivative financial instruments for trading purposes
or for speculation. For additional information, see Note 12: Derivative Financial Instruments.
Property, Plant, and Equipment: Property, plant, and equipment is recognized at cost and is depreciated on a straight-line basis
over the estimated useful life of the asset (3 to 20 years for machinery and equipment, 3 to 7 years for capitalized software costs,
and 5 to 40 years for buildings, fixtures, and improvements).
In 2012, the Company acquired a majority of the North American foodservice coffee and hot beverage business of Sara Lee Corporation
(“Sara Lee foodservice business”), which included $36,168 of coffee brew equipment. Brew equipment is recorded at cost and depre-
ciated on a straight-line basis over an estimated useful life of 3 to 5 years. Brew equipment is included in machinery and equipment
in the Consolidated Balance Sheet and was $37,100 at April 30, 2012. For additional information, see Note 2: Acquisitions.
The Company leases certain land, buildings, and equipment for varying periods of time, with renewal options. Rent expense in 2012,
2011, and 2010 totaled $56,502, $57,572, and $55,010, respectively. As of April 30, 2012, the Company’s minimum operating lease
obligations were as follows: $22,445 in 2013, $20,577 in 2014, $13,889 in 2015, $11,929 in 2016, and $9,561 in 2017.
Impairment of Long-Lived Assets: In accordance with FASB ASC 360, Property, Plant, and Equipment, 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 estimated fair
value of the assets. Assets to be disposed of by sale are recognized as held for sale at the lower of carrying value or estimated net
realizable value.
Goodwill and Other Intangible Assets: Goodwill is the excess of the purchase price paid over the estimated fair value of the net assets
of the business acquired. In accordance with FASB ASC 350, Intangibles – Goodwill and Other, goodwill and other 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 other indefinite-lived intangible assets as of February 1 of each year. A discounted cash flow valuation
technique and a market-based approach are 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 developed
using a weighted-average cost of capital methodology. In addition to the annual test, the Company will test for impairment if
events or circumstances occur that would more likely than not reduce the fair value of a reporting unit below its carrying amount.
Finite-lived intangible assets are amortized on a straight-line basis over their estimated useful lives. For additional information,
see Note 7: Goodwill and Other Intangible Assets.
Marketable Securities and Other Investments: Under the Company’s investment policy, it may invest in debt securities deemed to
be investment grade at the time of purchase for general corporate purposes. The Company determines the appropriate categor ization
of debt securities at the time of purchase and reevaluates such designation at each balance sheet date. The Company categorized all
debt securities as available for sale as it had the intent to convert these investments into cash if and when needed. Classification
of available-for-sale marketable securities as current or noncurrent is based on whether the conversion to cash is expected to be
necessary for operations in the upcoming year, which is consistent with the security’s maturity date.
4 8 T h e J. M. S mu cke r C o mp any 2 012 A nnu al Rep o r t
Notes to CoNsolidated FiNaNCial statemeNtsThe J. M. Smucker Company Securities categorized as available for sale are stated at fair value, with unrealized gains and losses reported as a component of
accumulated other comprehensive (loss) income. The fair value of available-for-sale marketable securities was $18,600 at April 30,
2011, and was included in other current assets. All available-for-sale securities had matured or were sold prior to April 30, 2012.
Proceeds of $18,600, $57,100, and $13,519 have been realized upon maturity or sale of available-for-sale marketable securities in
2012, 2011, and 2010, respectively. The Company uses specific identification to determine the basis on which securities are sold.
The Company also maintains funds for the payment of benefits associated with nonqualified retirement plans. These funds include
investments considered to be available-for-sale marketable securities. At April 30, 2012 and 2011, the fair value of these investments
was $43,217 and $41,560, respectively, and was included in other noncurrent assets. Included in accumulated other comprehensive
(loss) income at April 30, 2012 and 2011, were unrealized gains of $3,984 and $2,817, 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: In June 2011, the FASB issued Accounting Standard Update (“ASU”) 2011-05, Presentation
of Comprehensive Income, which eliminates the option to present the components of other comprehensive income as part of the
statement of shareholders’ equity and requires the presentation of net income and other comprehensive income to be in a single
continuous statement of comprehensive income or in two separate but consecutive statements. ASU 2011-05 does not change the
components that are recognized in net income or other comprehensive income. In December 2011, the FASB issued ASU 2011-12,
Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other
Comprehensive Income in ASU 2011-05, which defers the requirement to present on the face of the financial statements reclassification
adjustments for items that are reclassified from accumulated other comprehensive income to net income while the FASB further
deliberates this aspect of the standard. ASU 2011-05, as amended by ASU 2011-12, will be effective May 1, 2012, for the Company.
Adoption of this guidance requires retrospective application and will affect the presentation of certain elements of the Company’s
financial statements, but will not otherwise have an impact on the financial statements.
In September 2011, the FASB issued ASU 2011-08, Testing Goodwill for Impairment, which simplifies the testing of goodwill for
impairment. ASU 2011-08 will allow the Company the option to perform either a qualitative test or the first step of the two-step
quantitative goodwill impairment test to assess the likelihood that the estimated fair value of a reporting unit is less than the carrying
amount. This ASU will also be effective May 1, 2012, for the Company. The Company anticipates that adoption of ASU 2011-08
could change the annual process for goodwill impairment testing, but will not impact the financial statements or disclosures.
In December 2011, the FASB issued ASU 2011-11, Disclosures about Offsetting Assets and Liabilities. ASU 2011-11 requires the
disclosure of both gross and net information about instruments and transactions eligible for offset in the consolidated balance sheet.
This ASU will be effective May 1, 2013, for the Company and will require retrospective application. The Company anticipates the
adoption of ASU 2011-11 will not impact the financial statements, but will expand the disclosures related to derivative instruments.
Risks and uncertainties: 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 principal packaging materials used by the
Company. The fruit and vegetable raw materials used by the Company in the production of its food products are purchased from
independent growers and suppliers. Green coffee, peanuts, edible oils, sweeteners, milk, flour, corn, and other ingredients are
obtained from various suppliers. The availability, quality, and cost of many of these commodities have fluctuated, and may continue
to fluctuate, over time. Green coffee is sourced solely from foreign countries and its supply and price are subject to high volatility
due to factors such as weather, global supply and demand, pest damage, and political and economic conditions in the source
countries. Raw materials are generally available from numerous sources, although the Company has elected to source certain plastic
packaging materials from single sources of supply pursuant to long-term contracts. While availability may vary year to year, the
Company believes that it will continue to be able to obtain adequate supplies and that alternatives to single-sourced materials are
available. The Company has not historically encountered significant shortages of key raw materials. The Company considers its
relationships with key material suppliers to be good.
Approximately 28 percent of the Company’s employees are covered by union contracts at 11 locations. The contracts vary in term
depending on the location, with three contracts expiring in 2013.
T h e J. M. S mu cke r C o mp any 2 012 A nnu al Rep o r t 4 9
Notes to CoNsolidated FiNaNCial statemeNtsThe J. M. Smucker Company 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.
Reclassifications: Certain prior year amounts have been reclassified to conform to current year classifications.
Note 2
AcquisitioNs
On January 3, 2012, the Company completed the acquisition of a majority of the North American foodservice coffee and hot beverage
business of Sara Lee Corporation, including a state-of-the-art liquid coffee manufacturing facility in Suffolk, Virginia, for $420.6 million
in an all-cash transaction. Utilizing proceeds from the 3.50 percent Notes issued in October 2011, the Company paid $375.6 million,
net of a working capital adjustment, and will pay Sara Lee Corporation an additional $50.0 million in declining installments over
the next 10 years. The additional $50.0 million obligation was included in other current liabilities and other noncurrent liabilities in
the Consolidated Balance Sheet and recorded at a present value of $45.0 million as of the date of acquisition. In addition, the Company
has incurred one-time costs of $14.2 million through April 30, 2012, directly related to the merger and integration of the acquired
Sara Lee foodservice business, and the charges were reported in other merger and integration costs in the Statement of Consolidated
Income. Total one-time costs related to the acquisition are estimated to be approximately $25.0 million, consisting primarily of transition
services provided by Sara Lee Corporation and employee separation and relocation costs, nearly all of which are cash related. The
Company expects the remaining costs to be incurred over the next two fiscal years.
The acquisition included the market-leading liquid coffee concentrate business sold under the licensed Douwe Egberts brand, along
with a variety of roast and ground coffee, cappuccino, tea, and cocoa products, sold through foodservice channels in North America.
Liquid coffee concentrate adds a unique, high-quality, and technology-driven form of coffee to the Company’s existing foodservice
product offering.
The purchase price was allocated to the underlying assets acquired and liabilities assumed based upon their estimated fair values
at the date of acquisition. The Company determined the estimated fair values based on independent appraisals, discounted cash
flow analyses, and estimates made by management. The purchase price exceeded the estimated fair value of the net identifiable
tangible and intangible assets acquired, and, as such, the excess was allocated to goodwill. The amount allocated to goodwill
was primarily attributable to anticipated synergies and market expansion. The following table summarizes the estimated fair
values of the assets acquired and liabilities assumed at the acquisition date.
Assets acquired:
Cash and cash equivalents
Other current assets
Property, plant, and equipment
Intangible assets
Goodwill
Other noncurrent assets
Total assets acquired
Liabilities assumed:
Current liabilities
Noncurrent liabilities
Total liabilities assumed
Net assets acquired
$ 1,221
42,619
92,775
138,900
149,948
863
$426,326
$
3,599
2,097
$
5,696
$420,630
Goodwill of $149.9 million was assigned to the International, Foodservice, and Natural Foods segment. Of the total goodwill,
$143.3 million is deductible for income tax purposes.
The purchase price allocated to the identifiable intangible assets acquired is as follows:
Intangible assets with finite lives:
Customer relationships (10-year useful life)
Technology (10-year useful life)
Trademarks (6-year weighted-average useful life)
Total intangible assets
5 0 T h e J. M. S mu cke r C o mp any 2 012 A nnu al Rep o r t
$ 92,000
23,800
23,100
$138,900
Notes to CoNsolidated FiNaNCial statemeNtsThe J. M. Smucker Company
The results of operations of the Sara Lee foodservice business are reported in the Company’s consolidated financial statements
from the date of acquisition and include $124.2 million of total net sales, included in the International, Foodservice, and Natural
Foods segment financial results, and did not have a material impact on segment profit for the year ended April 30, 2012.
On May 16, 2011, the Company completed the acquisition of the coffee brands and business operations of Rowland Coffee
Roasters, Inc. (“Rowland Coffee”), a privately-held company headquartered in Miami, Florida, for $362.8 million. The acquisition
included a manufacturing, distribution, and office facility in Miami. The Company utilized cash on hand and borrowed $180.0 million
under its revolving credit facility to fund the transaction. In addition, the Company has incurred one-time costs of $10.7 million
through April 30, 2012, directly related to the merger and integration of Rowland Coffee, which includes approximately $4.6 million
in noncash expense items that were reported in cost of products sold. The remaining charges were reported in other merger and
integration costs in the Statement of Consolidated Income. Total one-time costs related to the acquisition are estimated to be
approximately $25.0 million, including approximately $10.0 million of noncash charges, primarily accelerated depreciation,
associated with consolidating coffee production currently in Miami into the Company’s existing facilities in New Orleans, Louisiana.
The Company expects the remaining costs to be incurred over the next two fiscal years.
The acquisition of Rowland Coffee, a leading producer of espresso coffee in the U.S., strengthens and broadens the Company’s
leadership in the U.S. retail coffee category by adding the leading Hispanic brands, Café Bustelo and Café Pilon, to the Company’s
portfolio of brands.
The purchase price was allocated to the underlying assets acquired and liabilities assumed based upon their estimated fair values at
the date of acquisition. The Company determined the estimated fair values based on independent appraisals, discounted cash flow
analyses, and estimates made by management. The purchase price exceeded the estimated fair value of the net identifiable tangi-
ble and intangible assets acquired, and, as such, the excess was allocated to goodwill. The amount allocated to goodwill was pri-
marily attributable to anticipated synergies and market expansion. The following table summarizes the estimated fair values of the
assets acquired and liabilities assumed at the acquisition date.
Assets acquired:
Current assets
Property, plant, and equipment
Intangible assets
Goodwill
Total assets acquired
Liabilities assumed:
Current liabilities
Total liabilities assumed
Net assets acquired
$ 33,971
29,227
213,500
91,675
$368,373
$ 5,527
$ 5,527
$362,846
Goodwill of $84.8 million and $6.9 million was assigned to the U.S. Retail Coffee and the International, Foodservice, and Natural Foods
segments, respectively. Of the total goodwill, $88.7 million is deductible for income tax purposes.
The purchase price allocated to the identifiable intangible assets acquired is as follows:
Intangible assets with finite lives:
Customer relationships (19-year weighted-average useful life)
Trademark (10-year useful life)
Intangible assets with indefinite lives:
Trademarks
Total intangible assets
$147,800
1,600
64,100
$213,500
The results of operations of the Rowland Coffee business are included in the Company’s consolidated financial statements from the
date of acquisition and include $99.3 million and $16.0 million of total net sales and $13.9 million and $2.5 million of total segment
profit included in the U.S. Retail Coffee and International, Foodservice, and Natural Foods segment financial results, respectively,
for the year ended April 30, 2012.
T h e J. M. S mu cke r C o mp any 2 012 A nnu al Rep o r t 51
Notes to CoNsolidated FiNaNCial statemeNtsThe J. M. Smucker Company
If the Sara Lee foodservice business and Rowland Coffee acquisitions had occurred on May 1, 2010, pro forma consolidated net sales
would have been approximately $5.7 billion and $5.3 billion for the years ended April 30, 2012 and 2011, respectively, and the
contribution of the acquired businesses would not have had a material impact to reported consolidated earnings for the years ended
April 30, 2012 and 2011. The pro forma consolidated results do not give effect to the synergies of the acquisitions and are not
indicative of the results of operations in future periods.
Note 3
equity method iNvestmeNt
On March 26, 2012, the Company acquired a 25 percent equity interest in Guilin Seamild Biologic Technology Development Co., Ltd.
(“Seamild”), a privately-owned manufacturer and marketer of oats products headquartered in Guilin in the Guangxi province of China, for
$35.9 million. Seamild’s products, primarily oatmeal and oat-based cereals, are sold under the leading Seamild brand with distribution
in retail channels throughout China. Seamild’s portfolio of quality, trusted products aligns with the Company’s strategy of owning and
marketing leading food brands.
The initial investment in Seamild was recorded at cost and is included in other noncurrent assets in the Consolidated Balance Sheet
at April 30, 2012. The difference between the carrying amount of the investment and the underlying equity in net assets is primarily
attributable to goodwill and other intangible assets. Under the equity method of accounting, the investment is adjusted for the
Company’s proportionate share of earnings or losses, including consideration of basis differences resulting from the difference between
the initial carrying amount of the investment and the underlying equity in net assets. The investment did not have a material impact
on the Company’s consolidated financial statements for the year ended April 30, 2012.
Note 4
restructuriNg
In calendar 2010, the Company announced its plan to restructure its coffee, fruit spreads, and Canadian pickle and condiments
operations as part of its ongoing efforts to enhance the long-term strength and profitability of its leading brands. The initiative is
a long-term investment to optimize production capacity and lower the overall cost structure. It includes capital investments for a
new state-of-the-art food manufacturing facility in Orrville, Ohio; consolidation of coffee production in New Orleans, Louisiana;
and the transition of the Company’s pickle and condiments production to third-party manufacturers.
Upon completion, the restructuring plan will result in a reduction of approximately 850 full-time positions and the closing of six of
the Company’s facilities – Memphis, Tennessee; Ste. Marie, Quebec; Sherman, Texas; Kansas City, Missouri; Dunnville, Ontario; and
Delhi Township, Ontario. The Sherman, Dunnville, Delhi Township, and Kansas City facilities have been closed and approximately
70 percent of the full-time positions have been reduced as of April 30, 2012.
During 2012, the Company increased its estimate of the total anticipated restructuring costs from approximately $235.0 million
to $245.0 million, consisting primarily of increases to employee separation and site preparation and equipment relocation charges.
The Company has incurred cumulative costs of $188.8 million related to the initiative through April 30, 2012. The majority of the
remaining costs are anticipated to be recognized over the next two fiscal years.
5 2 T h e J. M. S mu cke r C o mp any 2 012 A nnu al Rep o r t
Notes to CoNsolidated FiNaNCial statemeNtsThe J. M. Smucker Company The following table summarizes the restructuring activity, including the liabilities recorded and the total amount expected to be incurred.
Total expected restructuring charge
Balance at May 1, 2009
Charge to expense
Cash payments
Noncash utilization
Balance at April 30, 2010
Charge to expense
Cash payments
Noncash utilization
Balance at April 30, 2011
Charge to expense
Cash payments
Noncash utilization
Balance at April 30, 2012
Long-Lived
Asset Charges
$105,000
Employee
Separation
$ 71,000
Site Preparation
and Equipment
Relocation
$ 31,000
$
$
$
—
3,870
—
(3,870)
—
53,569
—
(53,569)
—
34,195
—
(34,195)
$
—
1,139
(50)
—
$ 1,089
36,010
(18,361)
(8,540)
$ 10,198
20,364
(13,754)
(8,030)
$
$
—
407
(407)
—
—
6,192
(6,192)
—
$
—
12,963
(12,963)
—
Production
Start-up
$ 26,000
$
$
—
16
(16)
—
—
5,194
(5,194)
—
$
—
10,689
(10,689)
—
Other Costs
$12,000
Total
$245,000
$
—
279
(279)
—
$
—
992
(992)
—
$
—
2,930
(2,930)
—
$
—
5,711
(752)
(3,870)
$ 1,089
101,957
(30,739)
(62,109)
$ 10,198
81,141
(40,336)
(42,225)
$
—
$ 8,778
$
—
$
—
$
—
$ 8,778
Remaining expected restructuring charge
$ 13,366
$ 13,487
$ 11,438
$ 10,101
$ 7,799
$ 56,191
During the years ended April 30, 2012, 2011, and 2010, total restructuring charges of $81.1 million, $102.0 million, and $5.7 million,
respectively, were reported in the Statements of Consolidated Income. Of the total restructuring charges, $38.6 million, $54.1 million,
and $3.9 million were reported in cost of products sold in the years ended April 30, 2012, 2011, and 2010, respectively. The remaining
charges were reported in other restructuring costs. The restructuring costs classified as cost of products sold primarily include
long-lived asset charges for accelerated depreciation related to property, plant, and equipment that will be used at the affected
production facilities until they are closed or sold.
Employee separation costs include severance, retention bonuses, and pension costs. Severance costs and retention bonuses are
being recognized over the estimated future service period of the affected employees. The obligation related to employee separation
costs is included in other current liabilities in the Consolidated Balance Sheets. For additional information on the impact of
the restructuring plan on defined benefit pension and other postretirement benefit plans, see Note 8: Pensions and Other
Postretirement Benefits.
Other costs include professional fees, costs related to closing the facilities, and miscellaneous expenditures associated with the
Company’s restructuring initiative and are expensed as incurred.
Note 5
rePortAble segmeNts
The Company operates in one industry: the manufacturing and marketing of food products. The Company has three reportable
segments: U.S. Retail Coffee, U.S. Retail Consumer Foods, and International, Foodservice, and Natural Foods. The U.S. Retail Coffee
segment primarily represents the domestic sales of Folgers, Dunkin’ Donuts, Millstone, Café Bustelo, and Café Pilon branded coffee;
the U.S. Retail Consumer Foods segment primarily includes domestic sales of Smucker’s, Crisco, Jif, Pillsbury, Eagle Brand, Hungry
Jack, and Martha White branded products; and the International, Foodservice, and Natural Foods segment is comprised of products
distributed domestically and in foreign countries through retail channels, foodservice distributors and operators (e.g., restaurants,
lodging, schools and universities, health care operators), and health and natural foods stores and distributors.
T h e J. M. S mu cke r C o mp any 2 012 A nnu al Rep o r t 5 3
Notes to CoNsolidated FiNaNCial statemeNtsThe J. M. Smucker Company
Segment profit represents revenue, less direct and allocable operating expenses, and is consistent with the way in which the
Company manages segments. However, the Company does not represent that the segments, if operated independently, would
report the segment profit set forth below, as segment profit excludes certain operating expenses such as corporate administrative
expenses. Segment assets represent direct and allocable assets, including certain corporate-held assets such as property, plant,
and equipment, and are also set forth in the following table.
Net sales:
U.S. Retail Coffee
U.S. Retail Consumer Foods
International, Foodservice, and Natural Foods
Total net sales
Segment profit:
U.S. Retail Coffee
U.S. Retail Consumer Foods
International, Foodservice, and Natural Foods
Total segment profit
Interest income
Interest expense
Share-based compensation expense
Cost of products sold – restructuring
Cost of products sold – merger and integration
Other restructuring costs
Other merger and integration costs
Corporate administrative expenses
Other income (expense) – net
Income before income taxes
Assets:
U.S. Retail Coffee
U.S. Retail Consumer Foods
International, Foodservice, and Natural Foods
Unallocated (A)
Total assets
Depreciation, amortization, and impairment charges:
U.S. Retail Coffee
U.S. Retail Consumer Foods
International, Foodservice, and Natural Foods
Unallocated (B)
Total depreciation, amortization, and impairment charges
Additions to property, plant, and equipment:
U.S. Retail Coffee
U.S. Retail Consumer Foods
International, Foodservice, and Natural Foods
Total additions to property, plant, and equipment
Year Ended April 30,
2012
2011
2010
$2,297,737
2,094,456
1,133,589
$5,525,782
$ 543,012
393,300
168,572
$1,104,884
1,504
(81,296)
(19,292)
(38,552)
(4,610)
(42,589)
(29,904)
(191,654)
2,667
$1,930,869
1,953,043
941,831
$4,825,743
$ 536,133
406,455
159,580
$1,102,168
2,512
(69,594)
(19,896)
(54,089)
—
(47,868)
(11,194)
(184,849)
(26)
$1,700,458
2,004,700
900,131
$4,605,289
$ 484,006
407,721
140,404
$1,032,131
2,793
(65,187)
(20,687)
(3,870)
—
(1,841)
(33,692)
(181,132)
2,238
$ 701,158
$ 717,164
$ 730,753
$5,033,561
2,612,732
1,179,624
289,309
$9,115,226
$ 102,323
46,744
37,698
64,821
$ 251,586
$ 86,903
159,544
27,797
$ 274,244
$4,830,127
2,416,037
684,434
393,987
$8,324,585
$ 95,423
43,280
41,680
76,855
$ 257,238
$ 59,910
88,217
31,953
$ 180,080
$4,625,502
2,327,466
694,478
327,407
$7,974,853
$
99,490
44,727
28,976
24,217
$ 197,410
$
52,198
58,457
26,328
$ 136,983
(A) Primarily represents unallocated cash and cash equivalents and corporate-held investments.
(B) Primarily represents unallocated depreciation expense included in cost of products sold – restructuring, cost of products sold – merger and intergration, and corporate
administrative expenses.
5 4 T h e J. M. S mu cke r C o mp any 2 012 A nnu al Rep o r t
Notes to CoNsolidated FiNaNCial statemeNtsThe J. M. Smucker Company
The following table presents certain geographical information.
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 (excluding goodwill and other intangibles):
Domestic
International:
Canada
All other international
Total international
Total long-lived assets (excluding goodwill and other intangibles)
The following table presents product sales information.
Coffee
Peanut butter
Fruit spreads
Shortening and oils
Baking mixes and frostings
Canned milk
Flour and baking ingredients
Portion control
Juices and beverages
Handheld frozen sandwiches
Toppings and syrups
Other
Total product sales
Year Ended April 30,
2012
2011
2010
$5,014,695
$4,358,091
$4,167,042
$ 447,004
64,083
$ 511,087
$5,525,782
$ 409,710
57,942
$ 467,652
$4,825,743
$ 385,870
52,377
$ 438,247
$4,605,289
$8,721,449
$7,912,311
$ 7,591,931
$ 386,026
7,751
$ 393,777
$9,115,226
$ 406,576
5,698
$ 412,274
$8,324,585
$ 376,788
6,134
$ 382,922
$7,974,853
$1,164,802
$ 885,952
$ 854,523
$ 28,072
37,262
$ 65,334
$1,230,136
$ 48,172
706
$ 48,878
$ 934,830
$ 61,743
712
$ 62,455
$ 916,978
Year Ended April 30,
2012
2011
2010
48%
12
7
7
6
5
5
2
2
2
2
2
44%
12
8
7
6
5
5
3
3
2
2
3
40%
12
8
8
6
5
5
3
3
3
2
5
100%
100%
100%
T h e J. M. S mu cke r C o mp any 2 012 A nnu al Rep o r t 5 5
Notes to CoNsolidated FiNaNCial statemeNtsThe J. M. Smucker Company
Note 6
eArNiNgs Per shAre
The following table sets forth the computation of net income per common share and net income per common share − assuming
dilution under the two-class method.
Computation of net income per common share:
Net income
Net income allocated to participating securities
Net income allocated to common stockholders
Year Ended April 30,
2012
2011
2010
$459,744
4,267
$455,477
$479,482
4,692
$474,790
$494,138
4,321
$489,817
Weighted-average common shares outstanding
112,212,677
117,009,362
117,911,160
Net income per common share
$ 4.06
$ 4.06
$ 4.15
Computation of net income per common share – assuming dilution:
Net income
Net income allocated to participating securities
Net income allocated to common stockholders
Weighted-average common shares outstanding
Dilutive effect of stock options
Weighted-average common shares outstanding – assuming dilution
$459,744
4,266
$455,478
112,212,677
49,616
112,262,293
$479,482
4,690
$474,792
$494,138
4,318
$489,820
117,009,362
110,335
117,911,160
130,011
117,119,697
118,041,171
Net income per common share – assuming dilution
$ 4.06
$ 4.05
$ 4.15
The following table reconciles the weighted-average common shares used in the basic and diluted earnings per share disclosures
to the total weighted-average shares outstanding.
Weighted-average common shares outstanding
Weighted-average participating shares outstanding
Weighted-average shares outstanding
Dilutive effect of stock options
Year Ended April 30,
2012
112,212,677
1,051,274
113,263,951
49,616
2011
117,009,362
1,156,389
118,165,751
110,335
2010
117,911,160
1,040,274
118,951,434
130,011
Weighted-average shares outstanding – assuming dilution
113,313,567
118,276,086
119,081,445
5 6 T h e J. M. S mu cke r C o mp any 2 012 A nnu al Rep o r t
Notes to CoNsolidated FiNaNCial statemeNtsThe J. M. Smucker Company
Note 7
goodwill ANd other iNtANgible Assets
A summary of changes in the Company’s goodwill during the years ended April 30, 2012 and 2011, by reportable segment
is as follows:
Balance at May 1, 2010
Other
Balance at April 30, 2011
Acquisitions
Other
Balance at April 30, 2012
U.S. Retail
Coffee
$1,635,413
(47)
$1,635,366
84,845
86
$1,720,297
U.S. Retail
Consumer
Foods
$ 1,034,395
1,772
$ 1,036,167
—
(925)
$1,035,242
International,
Foodservice, and
Natural Foods
$137,922
3,291
$141,213
156,778
1,088
$299,079
Total
$2,807,730
5,016
$2,812,746
241,623
249
$3,054,618
Included in the other category at April 30, 2012 and 2011, were foreign currency exchange and other adjustments.
The Company’s other intangible assets and related accumulated amortization and impairment charges are as follows:
April 30, 2012 April 30, 2011
Accumulated
Amortization/
Impairment
Acquisition
Cost
Charges Net
Accumulated
Amortization/
Impairment
Charges
Acquisition
Cost
Net
Finite-lived intangible assets
subject to amortization:
Customer and contractual relationships $1,415,084
Patents and technology
158,770
Trademarks
62,554
$238,419 $1,176,665
121,882
43,700
36,888
18,854
$1,180,000
134,970
35,153
$168,125 $1,011,875
108,990
28,501
25,980
6,652
Total intangible assets
subject to amortization
Indefinite-lived intangible assets
not subject to amortization:
Trademarks
$1,636,408
$294,161 $1,342,247
$1,350,123
$200,757 $1,149,366
$1,855,621
$ 10,861 $1,844,760
$1,799,862
$ 9,218 $1,790,644
Total other intangible assets
$3,492,029
$305,022 $3,187,007
$3,149,985
$209,975 $2,940,010
Amortization expense for finite-lived intangible assets was $87,721, $73,438, and $72,417 in 2012, 2011, and 2010, respectively.
The weighted-average useful life of the finite-lived intangible assets is 18 years. Based on the amount of intangible assets subject to
amortization at April 30, 2012, the estimated amortization expense for each of the succeeding five years is approximately $96,000.
The Company reviews goodwill and other indefinite-lived intangible assets at least annually for impairment. The annual impairment
review was performed as of February 1, 2012. Goodwill impairment is tested at the reporting unit level which is the Company’s
operating segments.
Nonrecurring fair value adjustments of $4,590, $17,599, and $11,658 were recognized related to the impariment of certain intangible
assets in 2012, 2011, and 2010, respectively. The impairment recognized in 2012 was related to a finite-lived trademark. The impairment
was recognized in the fourth quarter when the Company evaluated the historical performance and future growth of this regional
canned milk brand. The Company utilized Level 3 inputs based on management’s best estimates and assumptions to estimate the
fair value of the trademark and concluded the trademark had no value. The majority of the impairment recognized in 2011 and 2010
was related to the Europe’s Best trademark and customer relationship. In October 2011, the Company sold the Europe’s Best frozen
fruit and vegetable business, resulting in a loss of $11,287.
T h e J. M. S mu cke r C o mp any 2 012 A nnu al Rep o r t 57
Notes to CoNsolidated FiNaNCial statemeNtsThe J. M. Smucker Company
Note 8
PeNsioNs ANd other PostretiremeNt beNefits
The Company has defined benefit 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 government regulations.
In addition to providing pension benefits, the Company sponsors several unfunded, defined postretirement plans that provide
health care and life insurance benefits to certain retired domestic and Canadian employees. These plans are contributory, with
retiree contributions adjusted periodically, and contain other cost-sharing features, such as deductibles and coinsurance. Covered
employees generally are eligible for these benefits when they reach age 55 and have attained 10 years of credited service.
Upon completion of the restructuring activity discussed in Note 4: Restructuring, approximately 850 full-time positions will be reduced.
The Company has included the estimated impact of the planned reductions in measuring the U.S. and Canadian benefit obligation of
the pension plans and other postretirement plans at April 30, 2012. As a result, the benefit obligation of the pension plans and other
postretirement plans decreased by approximately $2,700 and increased by approximately $1,900, respectively. Included in the
following tables are charges recognized for termination benefits, curtailment, and settlement as a result of the restructuring plan.
The following table summarizes the components of net periodic benefit cost and the change in accumulated other comprehensive
(loss) income related to the defined benefit pension and other postretirement plans.
Defined Benefit Pension Plans Other Postretirement Benefits
Year Ended April 30,
Service cost
Interest cost
Expected return on plan assets
Amortization of prior service cost (credit)
Amortization of net actuarial loss (gain)
Curtailment loss (gain)
Settlement loss
Termination benefit cost
Net periodic benefit cost
2012
$ 8,050
26,210
(26,955)
1,117
9,381
1,124
1,066
1,838
$ 21,831
2011
$ 7,504
25,491
(26,848)
1,146
10,294
4,095
—
8,395
2010
$ 5,755
24,788
(22,894)
1,362
6,291
—
—
—
$ 30,077
$ 15,302
$
$
—
(82,125)
1,117
9,381
1,124
1,066
1,092
23
$(68,322) $
(359) $ (1,334)
(13,713)
1,362
6,291
—
—
(5,932)
(71)
(13,533)
1,146
10,294
4,095
—
(2,032)
—
(389) $(13,397)
Other changes in plan assets and benefit liabilities
recognized in accumulated other comprehensive
(loss) income before income taxes:
Prior service cost arising during the year
Net actuarial loss arising during the year
Amortization of prior service cost (credit)
Amortization of net actuarial loss (gain)
Curtailment loss (gain)
Settlement loss
Foreign currency translation
Other adjustments
Net change for year
Weighted-average assumptions used in determining
net periodic benefit costs:
U.S. plans:
Discount rate
Expected return on plan assets
Rate of compensation increase
Canadian plans:
Discount rate
Expected return on plan assets
Rate of compensation increase
2012
$ 2,348
3,075
—
(425)
(43)
(115)
—
2,030
$ 6,870
$
—
(4,163)
(425)
(43)
(115)
—
(69)
—
$(4,815)
2011
$ 1,620
2,775
—
(489)
(536)
—
—
2,413
2010
$ 1,525
2,607
—
(489)
(1,043)
—
—
—
$ 5,783
$ 2,600
$ (925)
(7,769)
(489)
(536)
—
—
104
—
$
—
(3,248)
(489)
(1,043)
—
—
173
—
$(9,615)
$(4,607)
5.50%
7.00
4.14
5.00%
6.66
4.00
5.80%
7.50
4.15
5.30%
7.08
4.00
7.40%
7.75
3.79
5.40%
7.33
4.00
5.50%
—
—
5.00%
—
—
5.80%
—
—
5.30%
—
—
7.40%
—
—
5.40%
—
—
The Company uses a measurement date of April 30 to determine defined benefit pension plans and other postretirement benefits’
assets and benefit obligations.
5 8 T h e J. M. S mu cke r C o mp any 2 012 A nnu al Rep o r t
Notes to CoNsolidated FiNaNCial statemeNtsThe J. M. Smucker Company
The following table sets forth the combined status of the plans as recognized in the Consolidated Balance Sheets.
April 30,
Change in benefit obligation:
Benefit obligation at beginning of year
Service cost
Interest cost
Amendments
Actuarial loss
Participant contributions
Benefits paid
Foreign currency translation adjustments
Curtailment
Settlement
Termination benefit cost
Other adjustments
Benefit obligation at end of year
Change in plan assets:
Fair value of plan assets at beginning of year
Actual return on plan assets
Company contributions
Participant contributions
Benefits paid
Foreign currency translation adjustments
Settlement
Other adjustments
Fair value of plan assets at end of year
Funded status of the plans
Other noncurrent assets
Defined benefit pensions
Accrued compensation
Postretirement benefits other than pensions
Net benefit liability
Defined Benefit Pension Plans
Other Postretirement Benefits
2012
2011
2012
2011
$ 503,346
8,050
26,210
—
60,019
514
(28,603)
(5,052)
398
(4,974)
1,838
—
$ 561,746
$ 407,600
5,246
11,428
514
(28,603)
(4,744)
(4,974)
—
$ 386,467
$(175,279)
$
—
(147,551)
(27,728)
—
$(175,279)
$450,728
7,504
25,491
359
30,276
498
(30,502)
8,446
2,151
—
8,395
—
$503,346
$ 367,322
45,743
16,779
498
(30,502)
7,760
—
—
$ 407,600
$ (95,746)
$
2,976
(98,722)
—
—
$ (95,746)
$ 59,789
2,348
3,075
—
4,278
1,412
(3,595)
(526)
(115)
—
2,030
133
$ 68,829
$
—
—
2,165
1,412
(3,595)
—
—
18
$
—
$(68,829)
$
—
—
—
(68,829)
$(68,829)
$ 45,592
1,620
2,775
925
7,769
1,077
(3,674)
1,270
—
—
2,413
22
$ 59,789
$
—
—
2,576
1,077
(3,674)
—
—
21
$
—
$(59,789)
$
—
—
—
(59,789)
$(59,789)
The Company will offer terminated pension participants a lump-sum cash settlement in order to reduce the Company’s future
pension obligation and administrative costs. Approximately $20,000 of the $27,728 in accrued compensation relates to the anticipated
lump-sum payments.
The following table summarizes amounts recognized in accumulated other comprehensive (loss) income in the Consolidated Balance
Sheets, before income taxes.
April 30,
Net actuarial (loss) gain
Prior service (cost) credit
Total recognized in accumulated
other comprehensive (loss) income
Defined Benefit Pension Plans
Other Postretirement Benefits
2012
$(204,471)
(2,966)
2011
$(134,306)
(4,809)
2012
$2,293
1,704
2011
$6,683
2,129
$(207,437)
$(139,115)
$3,997
$8,812
During 2013, the Company expects to recognize amortization of net actuarial losses and prior service cost of $13,298 and $588,
respectively, in net periodic benefit cost.
T h e J. M. S mu cke r C o mp any 2 012 A nnu al Rep o r t 5 9
Notes to CoNsolidated FiNaNCial statemeNtsThe J. M. Smucker Company
The following table sets forth the assumptions used in determining the benefit obligations.
April 30,
Weighted-average assumptions used in determining benefit obligation:
U.S. plans:
Discount rate
Rate of compensation increase
Canadian plans:
Discount rate
Rate of compensation increase
Defined Benefit Pension Plans
Other
Postretirement Benefits
2012
2011
2012
2011
4.70%
4.14
4.20%
4.00
5.50%
4.14
5.00%
4.00
4.70%
—
4.20%
—
5.50%
—
5.00%
—
For 2013, the assumed health care trend rates are 8.0 percent and 6.5 percent for the U.S. and Canadian plans, respectively. The rate
for participants under age 65 is assumed to decrease to 5.0 percent in 2019 and 4.5 percent in 2017 for the U.S. and Canadian plans,
respectively. The health care cost trend rate assumption has a significant effect on the amount of the other postretirement benefits
obligation and periodic other postretirement benefits cost reported.
A one-percentage point annual change in the assumed health care cost trend rate would have the following effect as of April 30, 2012:
Effect on total service and interest cost components
Effect on benefit obligation
One-Percentage Point
Increase
Decrease
$ 209
3,274
$ 176
2,844
The following table sets forth selective information pertaining to the Company’s Canadian pension and other postretirement
benefit plans.
Defined Benefit Pension Plans
Other Postretirement Benefits
2012
$125,708
104,475
2011
$123,600
113,814
2012
$ 13,255
—
2011
$ 12,898
—
$ (21,233)
$ (9,786)
$(13,255)
$(12,898)
$
1,362
5,616
(7,018)
2,983
—
1,066
—
—
$
1,470
5,713
(6,912)
4,836
185
—
933
6
$
39
570
—
(4)
(115)
—
—
—
$
34
596
—
(39)
—
—
—
(1)
$
4,009
$
6,231
$
490
$
590
$
6,123
514
(9,324)
3,066
(4,744)
(4,974)
$
4,629
498
(8,595)
10,419
7,760
—
$
762
—
(762)
—
—
—
$
771
—
(771)
—
—
—
Year Ended April 30,
Benefit obligation at end of year
Fair value of plan assets at end of year
Funded status of the plans
Components of net periodic benefit cost:
Service cost
Interest cost
Expected return on plan assets
Amortization of net actuarial loss (gain)
Curtailment loss (gain)
Settlement loss
Termination benefit cost
Other
Net periodic benefit cost
Changes in plan assets:
Company contributions
Participant contributions
Benefits paid
Actual return on plan assets
Foreign currency translation
Settlement loss
6 0 T h e J. M. S mu cke r C o mp any 2 012 A nnu al Rep o r t
Notes to CoNsolidated FiNaNCial statemeNtsThe J. M. Smucker Company
The following table sets forth additional information related to the Company’s defined benefit pension plans.
The following table sets forth additional information related to the Company’s defined benefit pension plans.
Accumulated benefit obligation for all pension plans
Accumulated benefit obligation for all pension plans
Plans with an accumulated benefit obligation in excess of plan assets:
Plans with an accumulated benefit obligation in excess of plan assets:
Accumulated benefit obligation
Accumulated benefit obligation
Fair value of plan assets
Fair value of plan assets
Plans with a projected benefit obligation in excess of plan assets:
Plans with a projected benefit obligation in excess of plan assets:
Projected benefit obligation
Projected benefit obligation
Fair value of plan assets
Fair value of plan assets
April 30,
April 30,
2012
2012
$523,584
$523,584
2011
2011
$468,604
$468,604
523,584
523,584
386,467
386,467
436,329
436,329
371,895
371,895
561,746
561,746
386,467
386,467
473,555
473,555
374,741
374,741
The Company employs a total return on investment approach for the defined benefit pension plans’ assets. A mix of equity, fixed-income,
The Company employs a total return on investment approach for the defined benefit pension plans’ assets. A mix of equity, fixed-income,
and alternative investments is used to maximize the long-term rate of return on assets for the level of risk. In determining the expected
and alternative investments is used to maximize the long-term rate of return on assets for the level of risk. In determining the expected
long-term rate of return on the defined benefit pension plans’ assets, management considers the historical rates of return, the nature
long-term rate of return on the 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.
of investments, the asset allocation, and expectations of future investment strategies.
The following tables summarize the fair value of the major asset classes for the U.S. and Canadian defined benefit pension plans
The following tables summarize the fair value of the major asset classes for the U.S. and Canadian defined benefit pension plans
and the levels within the fair value hierarchy in which the fair value measurements fall.
and the levels within the fair value hierarchy in which the fair value measurements fall.
Cash and cash equivalents (A)
Cash and cash equivalents (A)
Equity securities:
Equity securities:
U.S. (B)
U.S. (B)
International (C)
International (C)
Fixed-income securities:
Fixed-income securities:
Bonds (D)
Bonds (D)
Fixed income (E)
Fixed income (E)
Other types of investments:
Other types of investments:
Hedge funds (F)
Hedge funds (F)
Private equity funds (F)
Private equity funds (F)
Quoted Prices in
Quoted Prices in
Active Markets for
Active Markets for
Identical Assets
Identical Assets
(Level 1)
(Level 1)
$ 13,999
$ 13,999
79,582
79,582
65,361
65,361
82,109
82,109
76,866
76,866
—
—
—
—
Significant
Significant
Observable
Observable
Inputs
Inputs
(Level 2)
(Level 2)
—
—
$
$
16,872
16,872
13,029
13,029
—
—
—
—
—
—
—
—
Total financial assets measured at fair value
Total financial assets measured at fair value
$317,917
$317,917
$29,901
$29,901
Significant
Significant
Unobservable
Unobservable
Inputs
Inputs
(Level 3)
(Level 3)
—
—
$
$
—
—
—
—
—
—
—
—
22,351
22,351
16,298
16,298
$38,649
$38,649
Fair Value at
Fair Value at
April 30, 2012
April 30, 2012
$ 13,999
$ 13,999
96,454
96,454
78,390
78,390
82,109
82,109
76,866
76,866
22,351
22,351
16,298
16,298
$386,467
$386,467
T h e J. M. S mu cke r C o mp any 2 012 A nnu al Rep o r t 61
Notes to CoNsolidated FiNaNCial statemeNtsThe J. M. Smucker Company
Cash and cash equivalents (A)
Equity securities:
U.S. (B)
International (C)
Fixed-income securities:
Bonds (D)
Fixed income (E)
Other types of investments:
Hedge funds (F)
Private equity funds (F)
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
$ 6,006
Significant
Observable
Inputs
(Level 2)
—
$
Significant
Unobservable
Inputs
(Level 3)
—
$
82,457
40,189
65,126
45,515
—
—
18,930
41,808
17,610
34,544
—
—
Fair Value at
April 30, 2011
$ 6,006
106,164
81,997
82,736
80,059
37,451
13,187
$407,600
4,777
—
—
—
37,451
13,187
$55,415
Total financial assets measured at fair value
$239,293
$112,892
(A) This category includes money market holdings with maturities of three months or less and are classified as Level 1. Based on the short-term nature of these assets, carrying value
approximates fair value.
(B) This category is invested primarily in a portfolio of common stocks included in the Russell 1000 Index and traded on active exchanges. The Level 1 assets are valued using quoted
market prices for identical securities in active markets. The Level 2 assets are funds that consist of equity securities traded on active exchanges. The Level 3 assets are valued at
approximate fair value. No assets were classified as Level 3 as of April 30, 2012.
(C) This category is invested primarily in common stocks and other equity securities traded on active exchanges whose issuers are located outside of the U.S. The fund invests primarily
in developed countries, but may also invest in emerging markets. The Level 1 assets are valued using quoted market prices for identical securities in active markets. The Level 2
assets are funds that consist of equity securities traded on active exchanges.
(D) This category seeks to duplicate the return characteristics of high-quality corporate bonds with a duration range of 10 to 13 years. The Level 1 assets are valued using quoted market
prices for identical securities in active markets. The Level 2 assets are funds that consist of bonds traded on active exchanges. No assets were classified as Level 2 as of April 30, 2012.
(E) This category is comprised of a core fixed-income fund that invests at least 80 percent of its assets in investment-grade U.S. corporate and government fixed-income securities,
including mortgage-backed securities. The Level 1 assets are valued using quoted market prices for identical securities in active markets. The Level 2 assets are funds that consist
of fixed-income securities traded on active exchanges. No assets were classified as Level 2 as of April 30, 2012.
(F) The hedge funds category is comprised of hedge funds of funds which invest in equity hedge, directional, relative value, and event-driven funds. The hedge funds have quarterly
liquidity with 65 days’ notice. The private equity funds category is comprised of one fund that consists primarily of limited partnership interests in corporate finance and venture
capital funds. The private equity fund cannot be redeemed and return of principal is based on the liquidation of the underlying assets. Both the hedge funds and the private equity
fund are classified as Level 3 assets and are valued based on each fund’s net asset value (“NAV”). NAV is calculated based on the estimated fair value of the underlying investment
funds within the portfolio and is corroborated by management’s review.
The following table presents a rollforward of activity for Level 3 assets between May 1, 2011 and April 30, 2012.
Balance at May 1, 2011
Purchases and sales – net
Actual return on plan assets sold during the period
Actual return on plan assets still held at reporting date
Balance at April 30, 2012
U.S. Equity
Securities
$ 4,777
2,999
(7,776)
—
$ —
Hedge
Funds
$ 37,451
(13,616)
(893)
(591)
$ 22,351
Private
Equity Funds
$13,187
1,095
—
2,016
$16,298
Total
$55,415
(9,522)
(8,669)
1,425
$38,649
The Company’s current investment policy is to invest approximately 45 percent of assets in equity securities, 41 percent in fixed-
income securities, and 14 percent in cash and other investments. Included in equity securities were 317,552 of the Company’s
common shares at April 30, 2012 and 2011. The market value of these shares was $25,287 at April 30, 2012. The Company paid
dividends of $597 on these shares during 2012.
The Company expects to contribute approximately $32 million, including $20 million of anticipated lump-sum cash settlements,
to the defined benefit pension plans in 2013. The Company expects the following payments to be made from the defined benefit
pension and other postretirement benefit plans: $47 million in 2013, $34 million in 2014, $33 million in 2015, $40 million in 2016,
$34 million in 2017, and $185 million in 2018 through 2022.
6 2 T h e J. M. S mu cke r C o mp any 2 012 A nnu al Rep o r t
Notes to CoNsolidated FiNaNCial statemeNtsThe J. M. Smucker Company
Note 9
shAre-bAsed PAymeNts
The Company provides for equity-based incentives to be awarded to key employees and non-employee 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 2010 Equity and Incentive Compensation Plan approved by the
Company’s shareholders in August 2010. Awards under this plan may be in the form of stock options, stock appreciation rights,
restricted shares, restricted stock units (which may also be referred to as 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 and its subsidiaries’
non-employee directors, consultants, officers, and other employees. Deferred stock units granted to non-employee directors vest
immediately. At April 30, 2012, there were 7,311,613 shares available for future issuance under this plan.
Under the 2010 Equity and Incentive Compensation Plan, the Company has the option to settle share-based awards by issuing
common shares from treasury, issuing new Company common shares, or issuing a combination of common shares from treasury
and 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, 2011
Exercised
Outstanding and exercisable at April 30, 2012
Options
196,925
(72,084)
124,841
Weighted-Average
Exercise Price
$41.18
39.46
$42.18
At April 30, 2012, the weighted-average remaining contractual term for stock options outstanding and exercisable was 1.8 years
and the aggregate intrinsic value of these stock options was approximately $4,675.
The total intrinsic value of options exercised during 2012, 2011, and 2010 was approximately $2,644, $13,355, and $5,876, 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, 2011
Granted
Converted
Vested
Forfeited
Restricted/Deferred
Shares and
Deferred Stock Units
1,157,266
152,180
125,360
(430,831)
(12,985)
Weighted-Average
Grant Date
Fair Value
$ 49.39
78.32
77.53
52.60
52.91
Performance
Units
125,360
99,455
(125,360)
—
—
Weighted-Average
Fair Value
$ 77.53
76.37
77.53
—
—
Outstanding at April 30, 2012
990,990
$55.95
99,455
$76.37
T h e J. M. S mu cke r C o mp any 2 012 A nnu al Rep o r t 6 3
Notes to CoNsolidated FiNaNCial statemeNtsThe J. M. Smucker Company
The total fair value of equity awards other than stock options vesting in 2012, 2011, and 2010 was approximately $22,663, $17,680,
and $16,273, respectively. The weighted-average grant date fair value of restricted shares, deferred shares, deferred stock units,
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 2012, 2011, and 2010.
Year Ended April 30,
2012
2011
2010
Restricted/
Deferred
Shares and
Deferred
Stock Units
152,180
303,863
504,580
Weighted-
Average
Grant Date
Fair Value
$78.32
58.32
44.63
Performance
Units
99,455
125,360
190,010
Weighted-
Average
Grant Date
Fair Value
$76.37
77.53
57.37
The performance units column represents the number of restricted shares received by certain executive officers, subsequent to
year end, upon conversion of the performance units earned during the year. Restricted stock generally vests four years from the
date of grant or upon the attainment of a defined age and years of service.
Note 10
debt ANd fiNANciNg ArrANgemeNts
Long-term debt consists of the following:
4.78% Senior Notes due June 1, 2014
6.12% Senior Notes due November 1, 2015
6.63% Senior Notes due November 1, 2018
3.50% Notes due October 15, 2021
5.55% Senior Notes due April 1, 2022
4.50% Senior Notes due June 1, 2025
Total long-term debt
Current portion of long-term debt
Total long-term debt, less current portion
Year Ended April 30,
2012
$ 100,000
24,000
397,906
748,637
400,000
400,000
$2,070,543
50,000
$2,020,543
2011
$ 100,000
24,000
380,039
—
400,000
400,000
$1,304,039
—
$1,304,039
On October 18, 2011, the Company completed a public issuance of $750.0 million in aggregate principal amount of 3.50 percent
Notes due October 15, 2021. Interest is payable semiannually beginning April 15, 2012. The Company received proceeds of $748.6 million,
net of an offering discount of $1.4 million. The discount is being amortized to interest expense over the life of the 3.50 percent Notes,
resulting in an effective rate of 3.52 percent. The 3.50 percent Notes may be redeemed at any time prior to maturity, at the option of
the Company. The 3.50 percent Notes are senior unsecured obligations and rank equally with the Company’s other unsecured and
unsubordinated debt and are guaranteed fully and unconditionally, on a joint and several basis, by J. M. Smucker LLC and The Folgers
Coffee Company, two of the Company’s 100 percent wholly-owned subsidiaries. A portion of the proceeds was used to fund the
Sara Lee foodservice business acquisition and for the repayment of borrowings outstanding under the Company’s revolving credit
facility, resulting from funding the Rowland Coffee acquisition. The remainder was used for general corporate purposes, including
share repurchases.
In anticipation of the 3.50 percent Notes public issuance, the Company entered into a forward-starting interest rate swap in August 2011
to partially hedge the risk of an increase in the benchmark interest rate during the period leading up to the public issuance. The interest
rate swap was designated as a cash flow hedge with a notional amount of $500.0 million. On October 13, 2011, in conjunction with
the pricing of the 3.50 percent Notes, the Company terminated the interest rate swap prior to maturity. The termination resulted in
a loss of $6.2 million, which will be amortized over the life of the related debt offering. For additional information, see Note 12:
Derivative Financial Instruments.
6 4 T h e J. M. S mu cke r C o mp any 2 012 A nnu al Rep o r t
Notes to CoNsolidated FiNaNCial statemeNtsThe J. M. Smucker Company
In 2011, the Company entered into an interest rate swap on the 6.63 percent Senior Notes due November 1, 2018, converting the
Senior Notes from a fixed to a variable-rate basis until maturity. The interest rate swap was designated as a fair value hedge of the
underlying debt obligation with a notional amount of $376.0 million. In August 2011, the Company terminated the interest rate swap
prior to maturity. As a result of the early termination, the Company received $27.0 million in cash, which included $3.1 million of
interest receivable, and realized a gain of $23.9 million, which was deferred and will be recognized as a reduction of future interest
expense through November 1, 2018. The unamortized benefit at April 30, 2012, was $21.9 million and the fair value adjustment
of the interest rate swap at April 30, 2011, was $4.0 million, and both were recorded as an increase in the long-term debt balance.
For additional information, see Note 12: Derivative Financial Instruments.
All of the Company’s Senior Notes are unsecured and interest is paid semiannually. Scheduled payments are required on the
5.55 percent Senior Notes, the first of which is $50.0 million on April 1, 2013, and on the 4.50 percent Senior Notes, the first of
which is $100.0 million on June 1, 2020.
Interest paid totaled approximately $86.6 million, $62.1 million, and $76.5 million in 2012, 2011, and 2010, respectively. This differs
from interest expense due to the timing of payments, amortization of fair value adjustments, amortization of debt issuance costs,
and interest capitalized.
On July 29, 2011, the Company entered into a second amended and restated credit agreement with a group of 10 banks, which
provides for an unsecured revolving credit line of $1.0 billion and matures July 29, 2016. The Company’s borrowings under the
credit facility bear interest based on the prevailing U.S. Prime Rate, Canadian Base Rate, London Interbank Offered Rate (“LIBOR”),
or Canadian Dealer Offered Rate, as determined by the Company. Interest is payable either on a quarterly basis or at the end of the
borrowing term. At April 30, 2012, the Company did not have a balance outstanding under the revolving credit facility. The Company
had standby letters of credit of approximately $7.8 million outstanding at April 30, 2012.
The Company’s debt instruments contain certain financial covenant restrictions including consolidated net worth, a leverage ratio,
and an interest coverage ratio. The Company is in compliance with all covenants.
Note 11
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 currently a defendant in a variety of such legal proceedings.
The Company cannot predict with certainty the ultimate results of these proceedings or reasonably determine a range of potential
loss. The Company’s policy is to accrue costs for contingent liabilities when such liabilities are probable and amounts can be
reasonably estimated. Based on the information known to date, the Company does not believe the final outcome of these proceedings
will have a material adverse effect on the Company’s financial position, results of operations, or cash flows.
Note 12
derivAtive fiNANciAl iNstrumeNts
The Company is exposed to market risks, such as changes in commodity prices, foreign currency exchange rates, and interest rates.
To manage the volatility related to these exposures, the Company enters into various derivative transactions. By policy, the Company
historically has not entered into derivative financial instruments for trading purposes or for speculation.
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 key raw materials, notably green coffee,
edible oils, and flour. The Company also enters into commodity futures and options contracts 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.
T h e J. M. S mu cke r C o mp any 2 012 A nnu al Rep o r t 6 5
Notes to CoNsolidated FiNaNCial statemeNtsThe J. M. Smucker Company Certain of the derivative instruments associated with the Company’s U.S. Retail Coffee and U.S. Retail Consumer Foods segments
meet the hedge criteria and are accounted for as cash flow hedges. The mark-to-market gains or losses on qualifying hedges are
deferred and included as a component of accumulated other comprehensive (loss) income to the extent effective, and reclassified
to cost of products sold in the period during which the hedged transaction affects earnings. Cash flows related to qualifying hedges
are classified consistently with the cash flows from the hedged item in the Statements of Consolidated Cash Flows. In order to
qualify as a hedge of commodity price risk, it must be demonstrated that the changes in the fair value of the commodity’s futures
contracts are highly effective in hedging price risks associated with the commodity purchased. Hedge effectiveness is measured
and assessed at inception and on a monthly basis. The mark-to-market gains or losses on nonqualifying and ineffective portions
of commodity hedges are recognized in cost of products sold immediately.
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 primarily related to purchases of certain raw materials,
finished goods, and fixed assets in Canada. The contracts generally have maturities of less than one year. At the inception of the
contract, the derivative is evaluated and documented for hedge accounting treatment. Instruments currently used to manage foreign
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. If the contract qualifies for hedge accounting treatment, to the
extent the hedge is deemed effective, the associated mark-to-market gains and losses are deferred and included as a component
of accumulated other comprehensive (loss) income. These gains or losses are reclassified to earnings in the period the contract is
executed. The ineffective portion of these contracts is immediately recognized in earnings.
Interest Rate hedging: The Company utilizes interest rate swaps to mitigate the exposure to interest rate risk. At the inception of
the contract, the instrument is evaluated and documented for hedge accounting treatment.
In August 2011, the Company entered into a forward-starting interest rate swap agreement to partially hedge the risk of an increase in
the benchmark interest rate during the period leading up to the $750.0 million 3.50 percent Notes public offering. The interest rate
swap was designated as a cash flow hedge. The mark-to-market gains or losses on the swap were deferred and included as a component
of accumulated other comprehensive (loss) income to the extent effective, and reclassified to interest expense in the period during which
the hedged transaction affected earnings. In October 2011, in conjunction with the pricing of the 3.50 percent Notes, the Company
terminated the interest rate swap prior to maturity, resulting in a loss of $6.2 million. The resulting loss will be recognized in interest
expense ratably over the life of the related debt. The ineffective portion of the hedge was reclassified to interest expense upon termination
of the swap. For additional information, see Note 10: Debt and Financing Arrangements.
The Company’s interest rate swap on the 6.63 percent Senior Notes due November 1, 2018, met the criteria to be designated as a
fair value hedge. The Company received a fixed rate and paid variable rates, hedging the underlying debt and the associated changes
in the fair value of the debt. The interest rate swap was recognized at fair value in the Consolidated Balance Sheet at April 30, 2011,
and changes in the fair value were recognized in interest expense. Gains and losses recognized in interest expense on the instrument
had no net impact to earnings, as the change in the fair value of the derivative was equal to the change in fair value of the underlying
debt. In August 2011, the Company terminated the interest rate swap on the 6.63 percent Senior Notes prior to maturity, resulting
in a gain of $23.9 million which was deferred and will be recognized over the remaining life of the underlying debt as a reduction
of future interest expense. In 2012, the Company recognized $2.0 million of the gain with the remaining to be recognized as follows:
$2.9 million in 2013, $3.0 million in 2014, $3.2 million in 2015, $3.4 million in 2016, and the remaining $9.4 million in 2017 through
2019. For additional information, see Note 10: Debt and Financing Arrangements.
6 6 T h e J. M. S mu cke r C o mp any 2 012 A nnu al Rep o r t
Notes to CoNsolidated FiNaNCial statemeNtsThe J. M. Smucker Company The following table sets forth the fair value of derivative instruments recognized in the Consolidated Balance Sheets.
April 30, 2012
April 30, 2011
Derivatives designated as hedging instruments:
Commodity contracts
Interest rate contract
Total derivatives designated as hedging instruments
Derivatives not designated as hedging instruments:
Commodity contracts
Foreign currency exchange contracts
Other
Current
Assets
Other
Current
Liabilities
$ 6,569
—
$19,510
—
$ 6,569
$19,510
$ 3,166
436
$ 3,631
982
Total derivatives not designated as hedging instruments
$ 3,602
$ 4,613
Total derivative instruments
$10,171
$24,123
Other
Current
Assets
$ 3,408
5,423
$ 8,831
$ 9,887
317
$10,204
$19,035
Other
Other
Current Noncurrent
Liabilities
Liabilities
$
—
—
$
—
$5,432
3,204
$8,636
$8,636
$
—
1,384
$1,384
$
—
—
$
—
$1,384
The Company has elected to not offset fair value amounts recognized for commodity derivative instruments and its cash margin
accounts executed with the same counterparty. The Company maintained cash margin accounts of $32,529 and $12,292 at April 30,
2012 and 2011, respectively, that are included in other current assets in the Consolidated Balance Sheets.
The following table presents information on pre-tax commodity contract net gains and losses recognized on derivatives designated
as cash flow hedges.
(Losses) gains recognized in other comprehensive (loss) income (effective portion)
Gains reclassified from accumulated other comprehensive (loss) income
to cost of products sold (effective portion)
Change in accumulated other comprehensive (loss) income
(Losses) gains recognized in cost of products sold (ineffective portion)
Year Ended April 30,
2012
$(31,830)
1,887
$(33,717)
$
(853)
2011
$21,082
14,780
$ 6,302
$
611
Included as a component of accumulated other comprehensive (loss) income at April 30, 2012 and 2011, were deferred pre-tax net
losses of $24,287 and deferred pre-tax net gains of $9,430, respectively, related to commodity contracts. The related tax impact
recognized in accumulated other comprehensive (loss) income was a benefit of $8,820 and expense of $3,430 at April 30, 2012 and
2011, respectively. The entire amount of the deferred net loss included in accumulated other comprehensive (loss) income at April 30,
2012, is expected to be recognized in earnings within one year as the related commodity is sold.
The following table presents information on the pre-tax losses recognized on the interest rate swap designated as a cash flow hedge.
Losses recognized in other comprehensive (loss) income (effective portion)
Losses reclassified from accumulated other comprehensive (loss) income
to interest expense (effective portion)
Change in accumulated other comprehensive (loss) income
Losses recognized in interest expense (ineffective portion)
Year Ended April 30,
2012
$(6,192)
(278)
$(5,914)
$
(19)
2011
$ —
—
$ —
$ —
Included as a component of accumulated other comprehensive (loss) income at April 30, 2012, were deferred pre-tax losses of
$5,914 related to the termination of the interest rate contract, of which approximately $500 will be recognized over the next
12 months. The related tax benefit recognized in accumulated other comprehensive (loss) income was $2,133 at April 30, 2012.
T h e J. M. S mu cke r C o mp any 2 012 A nnu al Rep o r t 6 7
Notes to CoNsolidated FiNaNCial statemeNtsThe J. M. Smucker Company
The following table presents the net realized and unrealized gains and losses recognized in cost of products sold on derivatives not
designated as qualified hedging instruments.
Gains (losses) on commodity contracts
Gains (losses) on foreign currency exchange contracts
2012
$16,306
951
Gains (losses) recognized in cost of products sold (derivatives not designated as hedging instruments) $17,257
The following table presents the gross contract notional value of outstanding derivative contracts.
2011
$(3,994)
(3,290)
$(7,284)
Year Ended April 30,
Commodity contracts
Foreign currency exchange contracts
Interest rate contract
April 30,
2012
$983,381
94,424
—
2011
$869,107
73,158
376,000
Note 13
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 and trade receivables. With respect to trade receivables, 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 of Note 1: Accounting Policies. The Company does not require collateral from its
customers. The Company’s financial instruments, other than its long-term debt, are recognized at estimated fair value in the
Consolidated Balance Sheets.
The following table provides information on the carrying amount and fair value of the Company’s financial assets (liabilities).
Marketable securities
Other investments
Derivative financial instruments – net
Long-term debt
April 30, 2012
April 30, 2011
$
Carrying
Amount
—
43,217
(13,952)
(2,070,543)
$
Fair Value
—
43,217
(13,952)
(2,443,514)
$
Carrying
Amount
18,600
41,560
9,015
(1,304,039)
$
Fair Value
18,600
41,560
9,015
(1,648,614)
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date. 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.
6 8 T h e J. M. S mu cke r C o mp any 2 012 A nnu al Rep o r t
Notes to CoNsolidated FiNaNCial statemeNtsThe J. M. Smucker Company
The following tables summarize the fair values and the levels within the fair value hierarchy in which the fair value measurements
fall for the Company’s financial assets (liabilities).
Other investments: (B)
Equity mutual funds
Municipal obligations
Other investments
Derivatives: (C)
Commodity contracts – net
Foreign currency exchange contracts – net
Long-term debt (D)
Quoted Prices in
Active Markets
for Identical
Assets (Level 1)
Significant
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Fair Value at
April 30, 2012
$ 14,649
—
1,132
$
—
20,392
7,044
(12,788)
(1)
(777,023)
(618)
(545)
(1,666,491)
$ —
—
—
$
14,649
20,392
8,176
—
—
—
(13,406)
(546)
(2,443,514)
Total financial instruments measured at fair value
$(774,031)
$(1,640,218)
$ —
$(2,414,249)
Marketable securities (A)
Other investments: (B)
Equity mutual funds
Municipal obligations
Other investments
Derivatives: (C)
Commodity contracts – net
Foreign currency exchange contracts – net
Interest rate contract – net
Long-term debt (D)
Quoted Prices in
Active Markets
for Identical
Assets (Level 1)
Significant
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Fair Value at
April 30, 2011
$
—
$
18,600
$ —
$
18,600
14,011
—
464
7,863
(2,887)
—
—
—
20,042
7,043
—
—
4,039
(1,648,614)
—
—
—
—
—
—
—
14,011
20,042
7,507
7,863
(2,887)
4,039
(1,648,614)
Total financial instruments measured at fair value
$19,451
$(1,598,890)
$ —
$(1,579,439)
(A) The Company’s marketable securities consisted entirely of commercial paper at April 30, 2011, and were broker-priced and valued by a third party using valuation techniques
which utilize inputs that are derived principally from or corroborated by observable market data. All securities had matured or were sold at values that were consistent with the
previously estimated fair values prior to April 30, 2012.
(B) The Company’s other investments consist of funds maintained for the payment of benefits associated with nonqualified retirement plans. The funds include equity securities
listed in active markets and municipal obligations valued by a third party using valuation techniques which utilize inputs that are derived principally from or corroborated by
observable market data. As of April 30, 2012, the Company’s municipal obligations are scheduled to mature as follows: $3,536 in 2013, $732 in 2014, $2,739 in 2015, $927 in
2016, and the remaining $12,458 in 2017 and beyond.
(C) The Company’s Level 1 derivatives are valued using quoted market prices for identical instruments in active markets. The Level 2 derivatives are valued using quoted prices for
similar assets or liabilities in active markets and inputs other than quoted prices that are observable for the asset or liability. The Company’s interest rate swap was valued using
the income approach, observable Level 2 market expectations at the measurement date, and standard valuation techniques to convert future amounts to a single discounted
present value. The specific inputs used to value the swap included futures contracts valued based on LIBOR, LIBOR cash and swap rates, and credit risk at commonly quoted
intervals. For additional information, see Note 12: Derivative Financial Instruments.
(D) The Company’s long-term debt is comprised of public Notes classified as Level 1 and private Senior Notes classified as Level 2. The public Notes are traded in an active secondary
market and valued using quoted prices. The value of the private Senior Notes is based on the net present value of each interest and principal payment calculated, utilizing an interest
rate derived from a fair market yield curve. For additional information, see Note 10: Debt and Financing Arrangements.
T h e J. M. S mu cke r C o mp any 2 012 A nnu al Rep o r t 6 9
Notes to CoNsolidated FiNaNCial statemeNtsThe J. M. Smucker Company
Note 14
iNcome tAxes
Deferred income taxes reflect the tax effects of temporary differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax reporting. Significant components of the Company’s deferred
tax assets and liabilities are as follows:
Deferred tax liabilities:
Intangible assets
Property, plant, and equipment
Other
Total deferred tax liability
Deferred tax assets:
Post-employment and other employee benefits
Tax credit and loss 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,
2012
2011
$1,018,262
106,218
8,107
$1,132,587
$ 107,543
5,494
3,370
40,719
$ 157,126
(3,072)
$ 154,054
$ 978,533
$1,025,301
111,537
10,016
$1,146,854
$ 84,723
4,583
3,279
27,668
$ 120,253
(3,324)
$ 116,929
$1,029,925
The following table summarizes domestic and foreign loss and credit carryforwards at April 30, 2012.
Tax carryforwards:
Federal capital loss carryforward
State loss carryforwards
State tax credit carryforwards
Foreign jurisdictional tax credit carryforwards
Total tax carryforwards
Related Tax
Deduction
Deferred
Tax Asset
Valuation
Allowance
Expiration
Date
$ 1,917
63,482
—
—
$65,399
$ 694
3,154
1,636
10
$5,494
$
—
2,935
—
—
$2,935
2017
2013 to 2031
2019
2015
The Company evaluates the realizability of deferred tax assets for each of the jurisdictions in which it operates. Included in the
overall valuation allowance is $137 for other deferred tax assets where it is more likely than not that those assets will not be realized.
The total valuation allowance decreased by $252, $146, and $5,556 in 2012, 2011, and 2010, respectively, primarily due to the
expiration of state loss carryforwards that had full valuation allowances.
Deferred income taxes have not been provided on approximately $200,100 of 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 deductions or tax credits for foreign taxes paid. It is not practical to estimate
the amount of additional taxes that might be payable on such undistributed earnings.
70 T h e J. M. S mu cke r C o mp any 2 012 A nnu al Rep o r t
Notes to CoNsolidated FiNaNCial statemeNtsThe J. M. Smucker Company
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:
Federal
Foreign
State and local
Year Ended April 30,
2012
$706,366
(5,208)
$701,158
2011
$729,654
(12,490)
$717,164
2010
$712,226
18,527
$730,753
Year Ended April 30,
2012
2011
2010
$228,255
6,798
23,579
(10,273)
(6,867)
(78)
$271,361
4,554
21,568
(51,011)
(7,338)
(1,452)
$256,444
6,584
12,907
(21,362)
(4,386)
(13,572)
Total income tax expense
$241,414
$237,682
$236,615
A reconciliation of the statutory federal income tax rate and the effective income tax rate is as follows:
Percent of Pretax Income
Statutory federal income tax rate
State and local income taxes, net of federal income tax benefit
Domestic manufacturing deduction
Other items – net
Effective income tax rate
Income taxes paid
2012
35.0%
2.3
(3.1)
0.2
34.4%
Year Ended April 30,
2011
35.0%
2.2
(3.8)
(0.3)
33.1%
2010
35.0%
1.2
(1.9)
(1.9)
32.4%
$257,762
$365,994
$212,981
T h e J. M. S mu cke r C o mp any 2 012 A nnu al Rep o r t 71
Notes to CoNsolidated FiNaNCial statemeNtsThe J. M. Smucker Company
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, with limited exceptions, for tax years prior to 2008 for U.S. federal, state, and local income taxes and tax
years prior to 2005 for foreign income taxes. During 2011, the Company reached agreement with the Internal Revenue Service (“IRS”)
on proposed adjustments resulting from the examination of its federal income tax returns for the tax periods ended April 30, 2008,
June 30, 2009, and April 30, 2010. The agreement did not have a material effect on the Company’s effective tax rate or financial
position. The Company is a voluntary participant in the Compliance Assurance Process (“CAP”) offered by the IRS and is currently
under a CAP examination for the tax year ended April 30, 2012. Through the contemporaneous exchange of information with the
IRS, this program is designed to identify and resolve tax positions with the IRS prior to the filing of a tax return, which allows the
Company to remain current with its IRS examinations.
Within the next 12 months, it is reasonably possible that the Company could decrease its unrecognized tax benefits by an estimated
$636, primarily as a result of the expiration of statute of limitations periods.
The Company’s unrecognized tax benefits as of April 30, 2012 and 2011, were $23,977 and $20,261, respectively. Of the unrecognized
tax benefits, $16,410 and $13,939 would affect the effective tax rate, if recognized, as of April 30, 2012 and 2011, respectively. The
Company’s accrual for tax-related net interest and penalties totaled $1,704 and $1,792 as of April 30, 2012 and 2011, respectively.
The amount of tax-related net interest and penalties charged to earnings totaled $88 for 2012, and credited to earnings totaled
$497 and $594 during 2011 and 2010, respectively.
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
Foreign currency translation
Decreases:
Prior year tax positions
Settlement with tax authorities
Expiration of statute of limitations periods
Foreign currency translation
Balance at April 30,
2012
$20,261
2011
$15,322
3,617
2,103
157
—
287
1,874
—
5,237
4,106
—
271
31
3,985
117
$23,977
$20,261
72 T h e J. M. S mu cke r C o mp any 2 012 A nnu al Rep o r t
Notes to CoNsolidated FiNaNCial statemeNtsThe J. M. Smucker Company
Note 15
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 in the Consolidated Balance Sheets are as follows:
Balance at May 1, 2009
Reclassification adjustments
Current period credit (charge)
Income tax benefit (expense)
Balance at April 30, 2010
Reclassification adjustments
Current period credit (charge)
Income tax benefit (expense)
Balance at April 30, 2011
Reclassification adjustments
Current period (charge) credit
Income tax benefit (expense)
Balance at April 30, 2012
Foreign
Currency
Translation
Adjustment
$ 11,062
—
45,926
—
$ 56,988
—
24,773
—
$ 81,761
—
(14,785)
—
$ 66,976
Pension
and Other
Postretirement
Liabilities
$ (67,693)
—
(18,004)
5,691
Unrealized
Gain (Loss) on
Available-for-
Sale Securities
$(2,209)
—
4,162
(1,510)
Unrealized (Loss)
Gain on Cash
Flow Hedging
Derivatives
$ 1,570
(2,494)
3,128
(210)
Accumulated
Other
Comprehensive
(Loss) Income
$ (57,270)
(2,494)
35,212
3,971
$ (80,006)
—
(10,004)
4,076
$ (85,934)
—
(73,137)
24,808
$(134,263)
$
443
—
2,124
(765)
$ 1,802
—
1,167
(425)
$ 2,544
$ 1,994
(3,128)
9,430
(2,296)
$ 6,000
(9,430)
(30,201)
14,383
$ (20,581)
(3,128)
26,323
1,015
$
3,629
(9,430)
(116,956)
38,766
$(19,248)
$ (83,991)
Income tax benefit (expense) is determined using the applicable deferred tax rate for each component of accumulated other
comprehensive (loss) income.
T h e J. M. S mu cke r C o mp any 2 012 A nnu al Rep o r t 7 3
Notes to CoNsolidated FiNaNCial statemeNtsThe J. M. Smucker Company
Note 16
guArANtor ANd NoN-guArANtor fiNANciAl iNformAtioN
On October 13, 2011, the Company filed a registration statement on Form S-3 registering certain securities described therein, including
debt securities which are guaranteed by certain of the Company’s subsidiaries. The Company issued $750.0 million of 3.50 percent
Notes pursuant to the registration statement that are fully and unconditionally guaranteed, on a joint and several basis, by the following
100 percent wholly-owned subsidiaries of the Company: J. M. Smucker LLC and The Folgers Coffee Company (“subsidiary guarantors”).
The following condensed consolidated financial information for the Company, the subsidiary guarantors, and the non-guarantor
subsidiaries is provided. The principal elimination entries relate to investments in subsidiaries and intercompany balances and
transactions, including transactions with the Company’s 100 percent wholly-owned subsidiary guarantors and non-guarantor
subsidiaries. The Company has accounted for investments in subsidiaries using the equity method.
CondenSed STATeMenTS oF ConSolidATed inCoMe
Year Ended April 30, 2012
Net sales
Cost of products sold
Gross Profit
Selling, distribution, and administrative
expenses, restructuring, and merger
and integration costs
Amortization and impairment charges
Other operating (income) expense – net
Operating Income
Interest (expense) income – net
Other income (expense) – net
Equity in net earnings of subsidiaries
Income Before Income Taxes
Income taxes
Net Income
The J. M. Smucker
Company (Parent)
Subsidiary Non-Guarantor
Subsidiaries
Guarantors
Eliminations
Consolidated
$ 4,302,743
3,741,054
$1,547,757
1,408,792
$3,822,370
2,682,636
$(4,147,088)
(4,151,923)
$5,525,782
3,680,559
561,689
138,965
1,139,734
4,835
1,845,223
243,392
11,196
(1,325)
308,426
(80,675)
1,404,340
(1,095,007)
537,084
77,340
61,457
—
(1,251)
78,759
2,969
443
184,217
266,388
1,140
660,327
81,454
11,690
386,263
(2,086)
(3,605)
79,192
459,764
162,934
—
—
—
4,835
—
(1,398,511)
831,598
(562,078)
—
965,176
92,650
9,114
778,283
(79,792)
2,667
—
701,158
241,414
$ 459,744
$ 265,248
$ 296,830
$ (562,078)
$ 459,744
74 T h e J. M. S mu cke r C o mp any 2 012 A nnu al Rep o r t
Notes to CoNsolidated FiNaNCial statemeNtsThe J. M. Smucker Company
CondenSed STATeMenTS oF ConSolidATed inCoMe
Year Ended April 30, 2011
Net sales
Cost of products sold
Gross Profit
Selling, distribution, and administrative
expenses, restructuring, and merger
and integration costs
Amortization and impairment charges
Other operating (income) expense – net
Operating Income
Interest (expense) income – net
Other (expense) income – net
Equity in net earnings of subsidiaries
Income Before Income Taxes
Income taxes
Net Income
The J. M. Smucker
Company (Parent)
Subsidiary Non-Guarantor
Subsidiaries
Guarantors
Eliminations
Consolidated
$3,880,940
3,196,825
$2,805,614
2,546,492
$3,759,833
2,884,851
$(5,620,644)
(5,600,942)
$4,825,743
3,027,226
684,115
259,122
874,982
(19,702)
1,798,517
216,731
5,188
(665)
462,861
(67,687)
(1,338)
203,115
596,951
117,469
79,263
64,675
(2,599)
117,783
3,400
1,735
83,879
206,797
21,838
626,182
21,580
3,890
223,330
(2,795)
(423)
67,256
287,368
98,375
—
—
—
(19,702)
—
—
(354,250)
(373,952)
—
922,176
91,443
626
784,272
(67,082)
(26)
—
717,164
237,682
$ 479,482
$ 184,959
$ 188,993
$ (373,952)
$ 479,482
CondenSed STATeMenTS oF ConSolidATed inCoMe
Year Ended April 30, 2010
Net sales
Cost of products sold
Gross Profit
Selling, distribution, and administrative
expenses, restructuring, and merger
and integration costs
Amortization and impairment charges
Other operating (income) expense – net
Operating Income
Interest (expense) income – net
Other income (expense) – net
Equity in net earnings of subsidiaries
Income Before Income Taxes
Income taxes
Net Income
The J. M. Smucker
Company (Parent)
Subsidiary Non-Guarantor
Subsidiaries
Guarantors
Eliminations
Consolidated
$3,675,770
3,259,807
$2,899,461
2,383,363
$3,723,605
2,858,293
$(5,693,547)
(5,682,864)
$4,605,289
2,818,599
415,963
516,098
865,312
(10,683)
1,786,690
193,036
10,200
(22,546)
235,273
(53,264)
151
393,208
575,368
81,230
107,407
65,681
7,083
335,927
12,429
17,609
61,459
427,424
77,280
613,311
9,434
12,175
230,392
(21,559)
(15,522)
35,223
228,534
78,105
—
—
—
(10,683)
—
—
(489,890)
(500,573)
—
913,754
85,315
(3,288)
790,909
(62,394)
2,238
—
730,753
236,615
$ 494,138
$ 350,144
$ 150,429
$ (500,573)
$ 494,138
T h e J. M. S mu cke r C o mp any 2 012 A nnu al Rep o r t 75
Notes to CoNsolidated FiNaNCial statemeNtsThe J. M. Smucker Company
CondenSed ConSolidATed BAl AnCe SheeTS
April 30, 2012
The J. M. Smucker
Company (Parent)
Subsidiary Non-Guarantor
Subsidiaries
Guarantors
Eliminations
Consolidated
ASSETS
Current Assets
Cash and cash equivalents
Inventories
Other current assets
Total Current Assets
Property, Plant, and Equipment
Investments in Subsidiaries and Intercompany
Other Noncurrent Assets
Goodwill
Other intangible assets – net
Other noncurrent assets
Total Other Noncurrent Assets
LIABILITIES AND ShAREhOLDERS’ EquITy
Current Liabilities
Noncurrent Liabilities
Long-term debt
Deferred income taxes
Other noncurrent liabilities
Total Noncurrent Liabilities
Shareholders’ Equity
$ 108,281
—
334,220
442,501
220,354
5,684,496
981,606
435,713
59,992
1,477,311
$
—
161,411
3,499
164,910
389,163
4,241,145
$ 121,427
815,030
114,462
1,050,919
486,572
702,550
$
—
(14,865)
—
(14,865)
—
(10,628,191)
—
—
11,137
11,137
2,073,012
2,751,294
62,918
4,887,224
—
—
—
—
$ 229,708
961,576
452,181
1,643,465
1,096,089
—
3,054,618
3,187,007
134,047
6,375,672
$7,824,662
$4,806,355
$7,127,265
$(10,643,056)
$9,115,226
$ 323,608
$ 101,714
$ 191,650
$
—
$ 616,972
2,020,543
104,822
212,303
2,337,668
5,163,386
—
311
20,031
—
887,559
89,299
—
—
—
20,342
4,684,299
976,858
5,958,757
—
(10,643,056)
2,020,543
992,692
321,633
3,334,868
5,163,386
$7,824,662
$4,806,355
$7,127,265
$(10,643,056)
$9,115,226
76 T h e J. M. S mu cke r C o mp any 2 012 A nnu al Rep o r t
Notes to CoNsolidated FiNaNCial statemeNtsThe J. M. Smucker Company
CondenSed ConSolidATed BAl AnCe SheeTS
April 30, 2011
The J. M. Smucker
Company (Parent)
Subsidiary Non-Guarantor
Subsidiaries
Guarantors
Eliminations
Consolidated
ASSETS
Current Assets
Cash and cash equivalents
Inventories
Other current assets
Total Current Assets
Property, Plant, and Equipment
Investments in Subsidiaries and Intercompany
Other Noncurrent Assets
Goodwill
Other intangible assets – net
Other noncurrent assets
Total Other Noncurrent Assets
LIABILITIES AND ShAREhOLDERS’ EquITy
Current Liabilities
Noncurrent Liabilities
Long-term debt
Deferred income taxes
Other noncurrent liabilities
Total Noncurrent Liabilities
Shareholders’ Equity
$ 206,845
—
364,377
571,222
193,321
4,872,622
981,606
440,174
50,012
1,471,792
$
—
182,531
8,190
190,721
305,519
802,936
—
3,116
15,106
18,222
$ 113,000
700,750
81,008
894,758
369,042
1,209,603
1,831,140
2,496,720
1,830
4,329,690
$
—
(19,702)
—
(19,702)
—
(6,885,161)
—
—
—
—
$ 319,845
863,579
453,575
1,636,999
867,882
—
2,812,746
2,940,010
66,948
5,819,704
$7,108,957
$1,317,398
$6,803,093
$(6,904,863)
$8,324,585
$ 234,262
$
81,239
$ 167,175
$
—
$ 482,676
1,304,039
115,985
162,308
1,582,332
5,292,363
—
—
16,447
—
926,838
23,929
—
—
—
16,447
1,219,712
950,767
5,685,151
—
(6,904,863)
1,304,039
1,042,823
202,684
2,549,546
5,292,363
$7,108,957
$1,317,398
$6,803,093
$(6,904,863)
$8,324,585
T h e J. M. S mu cke r C o mp any 2 012 A nnu al Rep o r t 7 7
Notes to CoNsolidated FiNaNCial statemeNtsThe J. M. Smucker Company
CondenSed STATeMenTS oF ConSolidATed CASh FlowS
Year Ended April 30, 2012
Net Cash Provided by (used for) Operating Activities
$ 1,622,917 $ 165,048
$(1,057,036)
$ — $ 730,929
The J. M. Smucker
Company (Parent) Guarantors
Subsidiary Non-Guarantor
Subsidiaries Eliminations
Consolidated
Investing Activities
Businesses acquired, net of cash acquired
Additions to property, plant, and equipment
Equity investment in affiliate
Proceeds from divestitures
Sales and maturities of marketable securities
Proceeds from disposal of property, plant, and equipment
Other – net
—
(52,994)
—
—
18,600
168
—
—
(133,605)
—
—
—
396
(3,495)
(737,255)
(87,645)
(35,874)
9,268
—
3,475
(16,903)
Net Cash used for Investing Activities
(34,226)
(136,704)
(864,934)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(737,255)
(274,244)
(35,874)
9,268
18,600
4,039
(20,398)
(1,035,864)
748,560
(213,667)
(315,780)
2,826
—
(2,313)
219,626
(4,828)
(90,137)
319,845
—
—
—
—
1,935,225
—
1,935,225
(4,828)
8,427
113,000
$ 121,427
$ — $
229,708
Financing Activities
Proceeds from long-term debt
Quarterly dividends paid
Purchase of treasury shares
Proceeds from stock option exercises
Intercompany
Other – net
Net Cash (used for) Provided by Financing Activities
Effect of exchange rate changes on cash
Net (decrease) increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
748,560
(213,667)
(315,780)
2,826
(1,906,881)
(2,313)
(1,687,255)
—
(98,564)
206,845
Cash and Cash Equivalents at End of year
$ 108,281
$
( ) Denotes use of cash
—
—
—
—
(28,344)
—
(28,344)
—
—
—
—
7 8 T h e J. M. S mu cke r C o mp any 2 012 A nnu al Rep o r t
Notes to CoNsolidated FiNaNCial statemeNtsThe J. M. Smucker Company
CondenSed STATeMenTS oF ConSolidATed CASh FlowS
Year Ended April 30, 2011
The J. M. Smucker
Company (Parent) Guarantors
Subsidiary Non-Guarantor
Subsidiaries Eliminations
Consolidated
Net Cash Provided by Operating Activities
$ 212,428
$ 92,965
$ 86,169
$ —
$ 391,562
Investing Activities
Additions to property, plant, and equipment
Purchases of marketable securities
Sales and maturities of marketable securities
Proceeds from disposal of property, plant, and equipment
Other – net
(59,072)
(75,637)
57,100
1,081
(43)
(53,416)
—
—
305
37
(67,592)
—
—
4,444
(120)
Net Cash used for Investing Activities
(76,571)
(53,074)
(63,268)
Financing Activities
Repayments of long-term debt
Proceeds from long-term debt
Quarterly dividends paid
Purchase of treasury shares
Proceeds from stock option exercises
Intercompany
Other – net
Net Cash (used for) Provided by Financing Activities
Effect of exchange rate changes on cash
Net (decrease) increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
(10,000)
400,000
(194,024)
(389,135)
14,525
24,152
7,740
(146,742)
—
(10,885)
217,730
—
—
—
—
—
(39,891)
—
(39,891)
—
—
—
—
—
—
—
—
15,739
475
16,214
8,045
47,160
65,840
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(180,080)
(75,637)
57,100
5,830
(126)
(192,913)
(10,000)
400,000
(194,024)
(389,135)
14,525
—
8,215
(170,419)
8,045
36,275
283,570
Cash and Cash Equivalents at End of year
$ 206,845
$
—
$113,000
$ —
$ 319,845
( ) Denotes use of cash
T h e J. M. S mu cke r C o mp any 2 012 A nnu al Rep o r t 7 9
Notes to CoNsolidated FiNaNCial statemeNtsThe J. M. Smucker Company
CondenSed STATeMenTS oF ConSolidATed CASh FlowS
Year Ended April 30, 2010
Net Cash Provided by (used for) Operating Activities
$ 499,197
$ 218,064
$ (3,783)
$ —
$ 713,478
The J. M. Smucker
Company (Parent) Guarantors
Subsidiary Non-Guarantor
Subsidiaries Eliminations
Consolidated
(33,511)
—
—
20
(32)
(33,523)
—
—
—
—
—
64,621
(561)
64,060
6,390
33,144
32,696
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(136,983)
19,554
13,519
205
(738)
(104,443)
(350,000)
(275,000)
(166,224)
(5,569)
6,413
—
1,832
(788,548)
6,390
(173,123)
456,693
$ 65,840
$ —
$ 283,570
Investing Activities
Additions to property, plant, and equipment
Proceeds from divestitures
Sales and maturities of marketable securities
Proceeds from disposal of property, plant, and equipment
Other – net
(41,148)
19,554
13,519
—
(706)
(62,324)
—
—
185
—
Net Cash used for Investing Activities
(8,781)
(62,139)
(350,000)
—
—
—
—
194,075
—
(155,925)
—
—
—
—
Financing Activities
Repayment of bank note payable
Repayments of long-term debt
Quarterly dividends paid
Purchase of treasury shares
Proceeds from stock option exercises
Intercompany
Other – net
Net Cash (used for) Provided by Financing Activities
Effect of exchange rate changes on cash
Net (decrease) increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
—
(275,000)
(166,224)
(5,569)
6,413
(258,696)
2,393
(696,683)
—
(206,267)
423,997
Cash and Cash Equivalents at End of year
$ 217,730
$
( ) Denotes use of cash
8 0 T h e J. M. S mu cke r C o mp any 2 012 A nnu al Rep o r t
Notes to CoNsolidated FiNaNCial statemeNtsThe J. M. Smucker Company
Note 17
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, dated
as of May 20, 2009, between the Company and Computershare Trust Company, N.A. or any successor plan;
• any matter relating to any stock option plan, stock purchase plan, executive compensation plan, executive benefit 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 authorization 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 certain
business combinations) or Article Seventh (which relates to procedures applicable to certain proposed acquisitions of specified
percentages of the Company’s outstanding common 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 must meet one of the following criteria:
• common shares beneficially owned as of November 6, 2008, and for which there has not been a change in beneficial ownership
after November 6, 2008; or
• common shares received through the Company’s various equity plans which have not been sold or otherwise transferred since
November 6, 2008.
In the event of a change in beneficial ownership, the new owner of that common 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 threshold will be void. Shares held by members of the Smucker family are not subject
to the threshold. 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.
T h e J. M. S mu cke r C o mp any 2 012 A nnu al Rep o r t 81
Notes to CoNsolidated FiNaNCial statemeNtsThe J. M. Smucker Company directorS and oFFicerS
The J. M. Smucker Company
DIRECTORS
Vincent C. Byrd
President and Chief Operating Officer
The J. M. Smucker Company
R. Douglas Cowan A
Director and Retired Chairman and
Chief Executive Officer
The Davey Tree Expert Company
Kent, Ohio
Kathryn W. Dindo A, E
Retired Vice President and
Chief Risk Officer
FirstEnergy Corp.
Akron, Ohio
Paul J. Dolan E
Chairman and Chief Executive Officer
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
Auburn, Alabama
Gary A. Oatey G
Chairman and Chief Executive Officer
Oatey Co.
Cleveland, Ohio
Alex Shumate G
Managing Partner, North America
Squire, Sanders & Dempsey L.L.P.
Columbus, Ohio
Mark T. Smucker
President, U.S. Retail Coffee
The J. M. Smucker Company
Richard K. Smucker
Chief Executive Officer
The J. M. Smucker Company
Timothy P. Smucker
Chairman of the Board
The J. M. Smucker Company
William h. Steinbrink G
Principal
Unstuk LLC
Shaker Heights, Ohio
Paul Smucker Wagstaff
President, U.S. Retail Consumer Foods
The J. M. Smucker Company
ExECUTIVE OFFICERS
Timothy P. Smucker
Chairman of the Board
Richard K. Smucker
Chief Executive Officer
Paul Smucker Wagstaff
President, U.S. Retail Consumer Foods
Albert W. yeagley
Vice President, Industry and
Government Affairs
Dennis J. Armstrong
Senior Vice President, Logistics and
Operations Support
PROPERTIES
Corporate Office:
Orrville, Ohio
Mark R. Belgya
Senior Vice President and
Chief Financial Officer
James A. Brown
Vice President, U.S. Grocery Sales
Vincent C. Byrd
President and Chief Operating Officer
John W. Denman
Vice President and Controller
Barry C. Dunaway
Senior Vice President and
Chief Administrative Officer
Tamara J. Fynan
Vice President, Marketing Services
Jeannette L. Knudsen
Vice President, General Counsel and
Corporate Secretary
David J. Lemmon
Vice President and Managing Director,
Canada
John F. Mayer
Vice President, U.S. Retail Sales
Kenneth A. Miller
Vice President and General Manager,
Foodservice
Steven Oakland
President, International, Foodservice,
and Natural Foods
Andrew G. Platt
Vice President, Information Services and
Chief Information Officer
Christopher P. Resweber
Senior Vice President, Corporate
Communications and Public Affairs
Julia L. Sabin
Vice President, Industry and
Government Affairs
Mark T. Smucker
President, U.S. Retail Coffee
Domestic Manufacturing Locations:
Chico, California
Cincinnati, Ohio
El Paso, Texas
Grandview, Washington
Harahan, Louisiana
Havre de Grace, Maryland
Lexington, Kentucky
Memphis, Tennessee
Miami, Florida
New Bethlehem, Pennsylvania
New Orleans, Louisiana (2)
Orrville, Ohio
Oxnard, California
Ripon, Wisconsin
Scottsville, Kentucky
Seneca, Missouri
Suffolk, Virginia
Toledo, Ohio
International Manufacturing Locations:
Sherbrooke, Quebec, Canada
Ste. Marie, Quebec, Canada
A Audit Committee Member
E Executive Compensation
Committee Member
G Nominating and Corporate
Governance Committee Member
8 2 T h e J. M. S mu cke r C o mp any 2 012 A nnu al Rep o r t
Financial HigHligHts
(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 excluding
special project costs:(1)
Income
Income per common share – assuming dilution
Common shares outstanding at year end
Number of employees
Year Ended April 30,
2012
2011
$ 5,525,782
$ 4,825,743
$ 459,744
4.06
$
$ 479,482
4.05
$
$ 535,579
4.73
$
110,284,715
4,850
$ 555,133
4.69
$
114,172,122
4,500
(1) Refer to “Non-GAAP Measures” located on page 32 in the “Management’s Discussion and Analysis” section
for a reconciliation to the comparable GAAP financial measure.
contents
1
Why We Are, Who We Are
4
Letter to Shareholders
8
U.S. Retail Coffee
12
U.S. Retail Consumer Foods
16
International, Foodservice,
and Natural Foods
20
Sustainability and Smucker
21
Financial Review
24
Management’s Discussion
and Analysis
about our cover
“Adams-Morgan”
©2011-2012 – Mitchell Johnson
Based in Silicon Valley, California, artist Mitchell Johnson
is best known for his oil/linen paintings and his particular
use of flat color and pattern. Johnson’s paintings can be
found in more than 600 collections across the U.S. and
have appeared in many publications and feature films.
41
Consolidated Financial Statements
46
Notes to Consolidated
Financial Statements
sHareHolder inFormation
Corporate offiCe
The J. M. Smucker Company
One 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 WebSite
To learn more about The J. M. Smucker Company, visit smuckers.com.
annuaL Meeting
The annual meeting will be held at 11:00 a.m. Eastern Time, Wednesday,
August 15, 2012, in the 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 website. They are also available without cost to
shareholders who submit a written request to:
The J. M. Smucker Company
Attention: Corporate Secretary
One Strawberry Lane
Orrville, Ohio 44667
CertifiCationS
The Company’s Chief Executive Officer and Chief Financial Officer have
certified to the New York Stock Exchange that they are not aware of any
violation by the Company of the 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.
forWard-Looking StateMentS
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 36 in the “Management’s Discussion and Analysis” section.
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 disbursement agent is Computershare Investor Services, LLC.
SharehoLder ServiCeS
The transfer agent and registrar for the Company, Computershare
Investor Services, LLC, is responsible for assisting registered
shareholders with a variety of matters, including:
Shareholder investment program (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, Massachusetts 02021
Telephone: (800) 456-1169
Telephone outside the U.S., Canada, and
Puerto Rico: (312) 360-5254
Website: computershare.com/investor
The J. M. Smucker Company is the owner of all trademarks referenced herein, except for the following which are used under license:
Pillsbury®, the Barrelhead logo and the Doughboy character are trademarks of The Pillsbury Company, LLC; Carnation® is a trademark
of Société des Produits Nestlé S.A.; Dunkin’ Donuts® is a registered trademark of DD IP Holder, LLC; and Douwe Egberts® and Pickwick®
are registered trademarks of Sara Lee/DE B.V. Borden® and Elsie are also trademarks used under license.
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A T h e J. M. S mu cke r C o mp any 2 012 A nnu al Rep o r t