 Lehman Brothers
Back-to-School Consumer Conference Presentation September 2008 Lehman Brothers Back-to-School Consumer Conference Presentation September 2008 The J. M. Smucker Company The J. M. Smucker Company Filed by The J. M. Smucker Company Pursuant to Rule 425 under the Securities Act of 1933 and Deemed Filed Pursuant to Rule 14a-12 Under the Securities Exchange Act of 1934 Subject Company: The J. M. Smucker Company Commission File No.: 333 - 152451 |
 Richard Smucker
Executive Chairman & Co-CEO Tim Smucker Chairman of the Board & Co-CEO Vince Byrd President, Coffee SBA Mark Belgya VP, CFO & Treasurer Sonal Robinson Director, Investor Relations Richard Smucker Executive Chairman & Co-CEO Tim Smucker Chairman of the Board & Co-CEO Vince Byrd President, Coffee SBA Mark Belgya VP, CFO & Treasurer Sonal Robinson Director, Investor Relations |
 2 The J. M. Smucker Company The J. M. Smucker Company |
 Forward
Looking Statement Forward Looking Statement 3 This presentation contains forward-looking statements, such as projected operating results, earnings
and cash flows, that are subject to known and unknown risks and uncertainties that could cause
actual results to differ materially from any future results, performance or achievements
expressed or implied by those forward-looking statements. You should understand that the risks, uncertainties, factors and assumptions listed and discussed in this presentation, including the following important
factors and assumptions, could affect the future results of Smucker following the transactions
between P&G and Smucker (the “Transactions”) and could cause actual results to
differ materially from those expressed in the forward-looking statements: (i) volatility of commodity markets from which raw materials, particularly corn, wheat, soybean oil, milk and green coffee beans, are procured and the
related impact on costs; (ii) the successful integration of P&G’s coffee business
(the “Coffee Business”) with Smucker’s business, operations and culture and the ability to realize synergies and other potential benefits of the Transactions within the time frames
currently contemplated; (iii) crude oil price trends and their impact on transportation,
energy, and packaging costs; (iv) the ability to successfully implement price changes; (v) the
success and cost of introducing new products and the competitive response; (vi) the success and cost of marketing and sales programs and strategies intended to promote growth in Smucker’s businesses, which will include the
Coffee Business after the completion of the Transactions; (vii) general competitive activity
in the market, including competitors’ pricing practices and promotional spending levels;
(viii) the concentration of certain of Smucker’s businesses, which will include the Coffee Business after the completion of the Transactions, with key customers and the ability to manage and maintain key customer relationships;
(ix) the loss of significant customers or a substantial reduction in orders from these
customers or the bankruptcy of any such customer; (x) changes in consumer coffee preferences,
and other factors affecting the Coffee Business, which will represent a substantial portion of Smucker’s business after the completion of the Transactions; (xi) the ability of Smucker and Folgers to obtain any required
financing; (xii) the timing and amount of Smucker’s capital expenditures, restructuring,
and merger and integration costs; (xiii) the outcome of current and future tax examinations
and other tax matters, and their related impact on Smucker’s tax positions; (xiv) foreign currency and interest rate fluctuations; (xv) other factors affecting share prices and capital markets generally; and (xvi) the other
factors described under “Risk Factors” in the registration statements filed by
Folgers and Smucker with the Securities and Exchange Commission and in the other reports and
statements filed by Smucker with the Securities and Exchange Commission, including its most recent Annual Report on Form 10-K and the preliminary proxy materials prepared in connection with the Folgers transaction.
You 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 presentation. None of
Smucker, Folgers, P&G or any of their respective advisors assumes any obligation to update
or revise these forward-looking statements to reflect new events or circumstances. |
 4 Additional Information Additional Information Smucker and Folgers have filed registration statements with the U. S. Securities and
Exchange Commission (“SEC”) registering the common shares to be issued to P&G shareholders in connection with the Folgers transaction but those registration statements have not become
effective. Smucker has also filed a proxy statement with the SEC that
will be sent to the shareholders of Smucker after it has been finalized. Shareholders are urged to read the proxy statement and the prospectus
included in the registration statements and any other relevant documents
when they become available, because they will contain important information
about Smucker, Folgers and the proposed transaction. The proxy statement, prospectus and other documents relating to the proposed transaction (when they are
available) can be obtained free of charge from the SEC’s website at
www.sec.gov. The documents (when they are available) can also be obtained free of charge from Smucker upon written request to The J. M. Smucker Company, Shareholder Relations, Strawberry Lane, Orrville, Ohio 44667 or by calling (330) 684-3838, or from P&G upon written request to The Procter & Gamble Company, Shareholder
Services Department, P.O. Box 5572, Cincinnati, Ohio 45201-5572 or by
calling (800) 742-6253. This communication is not a solicitation of a
proxy from any security holder of Smucker and shall not constitute an offer
to sell or the solicitation of an offer to buy securities, nor shall there be any sale of securities in any jurisdiction in which such solicitation or sale would be unlawful
prior to registration or qualification under the securities laws of such
jurisdiction. However, P&G, Smucker and certain of their respective directors and executive officers may be deemed to be participants in the
solicitation of proxies from shareholders in connection with the proposed
transaction under the rules of the SEC. Information about the
directors and executive officers of The J. M. Smucker Company may be found in its 2008 Annual Report on Form 10-K filed with the SEC on June 27, 2008, and its definitive proxy
statement relating to its 2008 Annual Meeting of Shareholders filed with
the SEC on July 14, 2008. Information about the directors and
executive officers of The Procter & Gamble Company may be found in its 2008 Annual Report on Form 10-K filed with the SEC on August 28, 2008, and its definitive proxy statement
relating to its 2008 Annual Meeting of Shareholders filed with the SEC on
August 29, 2008. |
 5 Agenda Agenda • Strategy and Growth Objectives • Folgers – An Excellent Fit • “Great Brands” and Smucker Business Update • Financial Results |
 6 Share Price Performance Share Price Performance $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 S&P 500 DJIA SJM Note: The graph shows the value of $20 (Smucker’s IPO price in 1959) invested over a
48+ year period in Smucker’s common stock, the DJIA and S&P
500. Indexed Share Price APR = 10.5% APR = 10.5% APR = 6.4% APR = 6.4% APR = 5.9% APR = 5.9% Base = $20 Base = $20 SJM versus Major Indices – November 30, 1959 through August 25, 2008 |
 7 Why Invest in Smucker? Why Invest in Smucker? • A history of solid returns • Clear strategy of owning a strong portfolio of #1 brands • Addition of an iconic #1 brand with Folgers • Enhanced cash flow and strong balance sheet • Unique culture |
 8 Basic Beliefs Basic Beliefs |
 •
Over 110 years old • Headquartered in Orrville, Ohio • Leading North American brands • Five generations of family management • Basic Beliefs The J. M. Smucker Company The J. M. Smucker Company 9 |
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 11 Vision Statement Vision Statement We will achieve balanced growth through: • Increased market share of our brands • New products that provide convenience, are “good and good for you," and make the consumer smile • Acquisition of other leading food brands We will own and market food brands which hold the #1 market position in their respective category, with an emphasis on North America |
 12 Long-Term Objectives Long-Term Objectives 6% Organic 3- 4% Acquisitions 2-3% 8% Improve Efficiencies >8% Share Repurchase Debt Retirement Target 40% Payout Net Sales Growth Operating Profit Growth E.P.S. Growth Dividend Payment |
 13 $0.0 $0.5 $1.0 $1.5 $2.0 $2.5 $3.0 FY2002 FY2003 FY2004 FY2005 FY2006 FY2007 FY2008 Net Sales $650MM $1.3B $2.0B $2.1B 5-Year CAGR through FY 2008 = 15% 10-Year CAGR through FY 2008 = 16% Sales Growth Sales Growth $1.4B $2.2B $2.5B |
 $0.00 $0.50 $1.00 $1.50 $2.00 $2.50 $3.00 $3.50 $4.00 FY2002 FY2003 FY2004 FY2005 FY2006 FY2007 FY2008 Earnings Per Share (Non-GAAP) $1.38 $2.14 $2.60 $2.89 Earnings Growth Earnings Growth $2.42 $2.77 5-Year CAGR through FY 2008 = 8% 10-Year CAGR through FY 2008 = 10% $3.15 (a) Excludes merger, integration and restructuring charges. (a) 14 |
 15 Smucker Market Share Leadership – U.S. Smucker Market Share Leadership – U.S. 6.9% 67.1% 66.3% 46.4% 46.4% 45.4% 44.3% 43.1% 19.9% 18.7% 18.7% 15.2% 10.1% 0% 10% 20% 30% 40% 50% 60% 70% 80% % Dollar Share of Category #2 #2 #2 #2 #1 #1 #3 #3 #3 #3 #1 #1 #1 #1 #1 #1 #1 #1 #1 #1 #1 #1 #1 #1 #1 in 8 out of 13 categories Shrtng ICT
Peanut Fruit Nat Natural Swtnd Baking Flour Edible Potatoes Pancake Syrups Butter Spreads Beverages Pt Btr Cond
Milk Mixes Oils
Mixes $204MM $154MM $994MM $838MM
$267MM $161MM $150MM $1.6B
$599MM $1.3B $411MM $365MM $592MM #3 #3 Source: IRI 52 Week Ending 8/10/08 -- TTL Grocery, Mass, Drug & Walmart Panel Does NOT include Private Label |
 3.8% 7.5% 8.1% 35.0% 48.3% 51.5% 51.9% 52.2% 58.3% 58.4% 59.6% 0% 10% 20% 30% 40% 50% 60% 70% #1 #1 #1 #1 #1 #1 #1 #1 #3 #3 #3 #3 #4 #4 Toppings Evap. Milk
Flour Swtnd. Shorten. Frozen Condiments
Fruit Oils Hot Cereal Peanut Cond. Milk Fruit Spreads Butter $12MM $53.5MM $127MM
$20MM $28MM $106MM $166MM $152MM $134MM $114MM
$167MM #1 #1 #1 #1 #1 #1 Smucker Market Share Leadership – Canada Smucker Market Share Leadership – Canada #1 #1 #1 in 8 out of 11 categories 16 % Dollar Share of Category |
 17 Percent of Sales from #1 Brands Percent of Sales from #1 Brands 75% of Sales Projected to Come From #1 Brands 75% of Sales Projected to Come From #1 Brands |
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 19 Folgers Folgers 1850 Folgers founded in San Francisco by James A. Folger The J. M. Smucker Company founded in Orrville, Ohio by Jerome M. Smucker 1897 |
 20 Attractive Strategic Fit Attractive Strategic Fit • • Strong #1 Brand Strong #1 Brand • • Center-of-Store Center-of-Store • • North America North America VISION STATEMENT VISION STATEMENT We will own and market food We will own and market food brands which hold the #1 brands which hold the #1 market market position position in in their their respective category, with an respective category, with an emphasis on North America emphasis on North America |
 21 Clear Leader in U.S. Retail Coffee Clear Leader in U.S. Retail Coffee • #1 Retail Packaged Coffee Manufacturer • #1 Retail Packaged Coffee Brand • #1 Retail Packaged Coffee SKU • #1 Retail Decaffeinated Packaged Coffee Brand • #1 Retail Instant Packaged Coffee Brand • #1 Retail Gourmet Packaged Coffee SKU |
 22 Kraft 24% Folgers 48% Rest of Market 28% U.S. At Home Coffee Market Share U.S. At Home Coffee Market Share Source: P&G internal estimate based on All Outlet Data 1 Excludes approximately $1.2B of packaged roast & ground product sold outside P&G / FCC channels and approximately $0.5B of RTD retail coffee business 2 Calendar 2007 retail sales for Mainstream Roast & Ground and Single Serve
$2.8B Mainstream Roast & Ground Mainstream Roast & Ground |
 23 Market Category Size Market Category Size $15.0 $8.0 $3.0 $1.0 FY 2002 FY 2004 FY2005 FY2009 Market opportunity ($ in billions) Greater opportunity as share of market in each category expands |
 24 Projected Sales by Category Projected Sales by Category 42% 42% 21% 21% 25% 25% 12% 12% Spreads Baking All Other Coffee Estimated After Transaction |
 25 Relationships Relationships • Same core consumer target • Marketing expertise…over 30 years of experience effectively marketing to this target 25 “With a name like Smucker’s, it has to be good .” |
 26 Memorable Slogans Memorable Slogans “ Choosy Moms Choose Jif ” “ The Best Part of Wakin’ Up ” “ With a Name Like Smucker’s, It Has to be Good ” |
 27 Natural Beverage Aisle Center-of-Store Strategy Center-of-Store Strategy Baking Aisle Spreads / Condiments Aisle Frozen Aisle Specialty Aisle Coffee Aisle |
 28 Dunkin’ Donuts Dunkin’ Donuts • Strong presence in gourmet coffee category |
 29 Added Scale Added Scale Revenue ($ in billions) 1.2 Treehouse 2.0 Flower Foods 2.5 Smucker (Current) 2.9 McCormick 3.3 Ralcorp 3.7 Del Monte 4.7 Smucker (2) 6.2 Hormel 7.9 Campbell 10.1 HJ Heinz 11.6 ConAgra 11.8 Kellogg 12.3 Sara Lee $13.7 General Mills (1) (1) Comparison company revenue based on last completed fiscal year. Ralcorp revenue adjusted for pro forma impact of Post cereal transaction. (2) Pro forma 2009 – Assumes Folgers transaction had closed on May 1, 2008. • Greater relevance to retailer • Present buying opportunities • Benefit from administrative infrastructure • Capitalize on relationship with Advantage, our national sales agent |
 Go-to-Market Sales Go-to-Market Sales National Sales Agent - 3 rd largest principal Key Direct Account Teams Already in Place 30 _ _ |
 31 Folgers Financial Benefits Folgers Financial Benefits • Accretive transaction • Increases sales to almost $5 billion in first full year • Enhances cash flow and creates stronger balance sheet |
 32 Great Home for Folgers Great Home for Folgers |
 Transaction Overview Transaction Overview • Reverse Morris Trust structure • P&G shareholders will own 53.5% of the combined company shares – ~63 million shares will be issued – ~118 million shares outstanding • Smucker to pay $5 special one-time dividend to Smucker shareholders, as of a record date prior to close • Smucker to guarantee $350 million of Folgers debt upon close • Smucker to finance special dividend (~$300 million) • Closing expected in fourth quarter of calendar 2008 33 |
 34 Key Milestones Key Milestones • Seamless integration with customers and consumers • Assembling the team and addressing all employee related issues • Achieve the $80 million synergy level |
 35 Achievements Achievements • Regulatory clearance from FTC • Proxy and registration statement in comment period with SEC • Announced leadership team to oversee Folgers business • Ongoing integration planning sessions • Gained further insight into the brands • Expanded knowledge of coffee supply chain and coffee procurement |
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 37 Folgers – An Excellent Fit Folgers – An Excellent Fit |
 The J.
M. Smucker Company The J. M. Smucker Company |
 39 Focus on Consumers Focus on Consumers |
 40 • Increased sales over 40% • Increase operating margin • Invested in consumer marketing • $33mm capital investment in Lexington plant • Market share increased to over 40% • Jif-to-Go • Jif Natural • Jif Snack Nuts • New roaster technology • Jar light-weighting Making Great Brands Better Making Great Brands Better 40 |
 41 • Maintained share leadership through commodity volatility • Innovator in oils category • Commodity buying group key to success • $45mm capital investment in Cincinnati plant • Trans Fat Free Shortening • Crisco Peanut Oil • Crisco Olive Oil • Crisco Sprays • Simple Measures – packaging innovation • Crisco with Omega-3 DHA Making Great Brands Better Making Great Brands Better |
 • Improved product quality • Leveraged presence of Doughboy • Frostings improved to #2 brand in category • Pillsbury Bake-Off • Reduced sugar cake mixes and frostings • Expand Funfetti products • Enhanced packaging 42 Making Great Brands Better Making Great Brands Better |
 43 The Best Part of Wakin’ Up… The Best Part of Wakin’ Up… |
 44 The Best Way to End the Day… The Best Way to End the Day… |
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 46 Consumer Consumer Oils / Baking International Canada Foodservice Beverage Business Area Segment Special Special Markets Markets Brands U.S. U.S. Retail Retail Market Market Smucker Business Segments Smucker Business Segments |
 47 Eagle Brand Eagle Brand |
 Cross
Promotions Cross Promotions 48 |
 49 Uncrustables Uncrustables • Achieved $120 million in net sales |
 50 Hungry Jack Hungry Jack |
 Canada Canada |
 52 Canada – Category Leader Canada – Category Leader |
 53 Canada – New Categories Canada – New Categories |
 The J.
M. Smucker Company The J. M. Smucker Company |
 55 FY 2009 1 st Quarter Income Statement Highlights FY 2009 1 st Quarter Income Statement Highlights (1)% 11.4% $ 64 9.6% $ 63 Income Before Taxes 7.3% 100.0% 6.4% 100.0% $ 41 $ 562 4% $ 42 Net Income $ 664 Net Sales Quarter Ended July 31, 2008 Quarter Ended July 31, 2007 ($ in millions, except EPS) % Chg Non-GAAP EPS excludes merger, integration and restructuring charges. 8% $ 0.71 $ 0.77 EPS 14% $ 0.72 $ 0.82 EPS (Non-GAAP) 18% |
 56 Consumer Consumer Oils / Baking Business Area Segment U.S. Retail Segment FY09 Net Sales vs. Prior Year +11% +11% +15% +15% +13% +13% SBAs SBAs Segments Segments • Consumer sales led by price and volume gains • Consumer oils and baking sales up due to price increases and volume gains in baking mixes and frostings FY 2009 1 st Quarter U.S. Retail Market Segment FY 2009 1 st Quarter U.S. Retail Market Segment |
 57 International Canada Foodservice Beverage Business Area Segment Special Markets Segment FY09 Net Sales vs. Prior Year +79% +79% -1% -1% +13% +13% +11% +11% +34% +34% SBAs SBAs Segments Segments • Acquisition of Carnation and Europe’s Best businesses and favorable exchange rates in Canada • Knott’s Berry Farm in foodservice • Pricing FY 2009 1 st Quarter Special Markets Segment FY 2009 1 st Quarter Special Markets Segment |
 58 FY 2009 1 st Quarter Margins FY 2009 1 st Quarter Margins 2% $ 2 $ 70 $ 72 Operating Income 12.6% 11.4% Margin % $ 5 $ 22 $ 102 $ 71 12.5% 33.1% $ 186 $ 562 7% $ 76 Operating Income (Non-GAAP) 31.3% Margin % 10.8% Margin % 12% $ 208 Gross Profit 18% $ 664 Net Sales 2008 2007 ($ in millions) % Chg Quarter Ended July 31, $ Chg Margin Factors: - Pricing offset higher cost but did not maintain margin - Nonrecurring peanut butter sales in FY 2008 - Unfavorable product mix + Decrease in administrative expenses as percent of sales + Eagle business margin improvement |
 59 Selling, Distribution & Administrative Selling, Distribution & Administrative 17 18 19 20 21 22 Q2 Q3 Q4 Q1 Most Recent Previous Trailing four quarters Oct. 2006 19.2 Oct. 2007 18.6 Jan. 2007 20.8 Jan. 2008 18.5 April 2007 20.6 April 2008 19.4 July 2007 20.8 July 2008 19.9 Percent of Net Sales |
 60 Cash Flow From Operations Cash Flow From Operations $ 34 $(22) $ 56 Quarter Ended July 31, 2008 $ (7) $(17) $ 10 Quarter Ended July 31, 2007 Free Cash Flow Capital Expenditures Cash Flow From Operations ($ in millions) |
 61 Folgers Synergies Folgers Synergies JMS Infrastructure JMS Infrastructure Net Sales Operations Sales
& Supply Chain Corporate & Marketing
Admin. Synergies Synergies ~$80+ million COGS SD&A COGS SD&A |
 62 Net Sales and EBITDA Net Sales and EBITDA $0.0 $0.5 $1.0 $1.5 $2.0 $2.5 $3.0 $3.5 $4.0 $4.5 $5.0 FY2008 FY2009 Net Sales $0 $250 $500 $750 $1,000 FY2008 FY2009 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% EBITDA (Excluding Merger and Integration Costs) Pro forma * (a) $2.5B $4.7B $371 $820 14.7% 17.3% Pro forma (a) * Includes approximately $83 million in synergies. (a) Assumes Folgers transaction had closed on May 1, 2008.
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 63 Debt Profile Supports Continued Growth Debt Profile Supports Continued Growth • Stronger balance sheet post-closing • Modest leverage and strong cash flow will facilitate pursuit of shareholder value – Investments – Acquisitions – Share repurchase / dividends (a) Assumes Folgers transaction had closed on May 1, 2008. 2009 Standalone Smucker 2009 (a) Combined Smucker Total Debt $790mm $1,440mm Debt / EBITDA 2.1x 1.8x Interest Coverage 8.1x 9.7x |
 64 Cash Flow From Operations Cash Flow From Operations $ 116 $ (76) $ 192 FY 2008 $ 400 $(115) $ 515 FY 2009 (a) Pro forma Free Cash Flow Capital Expenditures Cash Flow From Operations ($ in millions) (a) Assumes Folgers transaction had closed on May 1, 2008.
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 Cash
Flow / Allocation of Cash (after expiration of two year repurchase limitation)
Cash Flow / Allocation of Cash (after expiration of two year repurchase limitation) 5-Year Historic Use of Cash 28% 28% 22% 22% Acquisition Capital Expenditures Stock Repurchase Dividends Free Cash Flow Cash From Operations Dividends Acquisition Repurchase CapEx = 2½ - 3% of Sales CapEx = 2½ - 3% of Sales 65 |
 66 The J. M. Smucker Company The J. M. Smucker Company |
 67 Why Invest in Smucker? Why Invest in Smucker? • A history of solid returns • Clear strategy of owning a strong portfolio of #1 brands • Addition of an iconic #1 brand with Folgers • Enhanced cash flow and strong balance sheet • Unique culture |
 68 Additional Information Additional Information FOLGERS, the FOLGERS logo, AROMASEAL, FOLGERS GOURMET SELECTIONS and THE BEST PART OF WAKIN' UP IS FOLGERS IN YOUR CUP are the registered trademarks of The Proctor & Gamble Company.
PILLSBURY, the PILLSBURY Logo, and Poppin' Fresh the Pillsbury Doughboy
are the registered trademarks of The Pillsbury Company, LLC. CARNATION is
the registered trademark of Societe des Produits Nestle S.A. DUNKIN'
DONUTS, the DUNKIN' DONUTS Logo, and AMERICA RUNS ON DUNKIN' are the registered trademarks of DD IP Holder LLC. The following trademarks and
their corresponding logos are the trademarks of their respective owners: ADVANTAGE SALES AND MARKETING, WAL-MART, FOOD LION, COSTCO WHOLESALE, KROGER, SUPERVALU, BJ'S WHOLESALE CLUB, TARGET, SAFEWAY, and DOLLAR GENERAL. All other trademarks and logos are the trademarks of The J. M. Smucker Company. |
 Lehman Brothers
Back-to-School Consumer Conference Presentation September 2008 Lehman Brothers Back-to-School Consumer Conference Presentation September 2008 The J. M. Smucker Company The J. M. Smucker Company |