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Presentation July 2008 Summary Presentation Investor Presentation July 2008 Summary Presentation 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 |
 2 Forward Looking Statement Forward Looking Statement 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 prospectus, including the following important factors and assumptions, could
affect the future results of Smucker following 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 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) he ability to successfully implement price changes; (iv) the success and cost of introducing new
products and the competitive response; (v) 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; (vi) general competitive activity in the market, including competitors’ pricing practices and promotional spending levels; (vii) 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; (viii) the loss of significant customers or a substantial reduction in orders from these customers or the bankruptcy of any such customer; (ix) 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; (x) the ability of Smucker and Folgers to obtain any required financing; (xi) the timing and amount of Smucker’s capital expenditures, restructuring, and
merger and integration costs; (xii) the outcome of current and future tax
examinations and other tax matters, and their related impact on Smucker’s tax positions; (xiii) foreign currency and interest rate fluctuations;
(xiv) other factors affecting share prices and capital markets generally; and (xv) 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 prospectus. 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. |
 3 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 and 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 2007
Annual Report on Form 10-K filed with the SEC on August 28, 2007, and
its definitive proxy statement relating to its 2007 Annual Meeting of
Shareholders filed with the SEC on August 28, 2007. |
 4 Why Invest in Smucker? Why Invest in Smucker? • A history and culture of solid returns • Clear strategy of owning a strong portfolio of #1 brands • Strategic acquisition of Folgers • Enhances #1 brand portfolio • Increases market categories from $8 billion to $15 billion • Creates sales growth to $5 billion company • Accretive transaction • Significantly enhances cash flow |
 5 Why Invest in Smucker? Why Invest in Smucker? • Strong cash flow and balance sheet • Continuity of management • Current value of Smucker stock vs. peers • Strong forecasted results in current fiscal year • Special $5.00 dividend in calendar 2008 • Current share performance vs. peers |
 1897 • Over 110 years old • Headquartered in Orrville, Ohio • Leading North American brands • Five generations of family management • Basic Beliefs: quality, people, ethics, growth, & independence The J. M. Smucker Company The J. M. Smucker Company 6 |
 7 $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 S&P 500 DJIA SJM Share Price Performance Share Price Performance 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 = 10.2% APR = 10.2% APR = 6.4% APR = 6.4% APR = 5.9% APR = 5.9% Base = $20 Base = $20 SJM versus Major Indices – November 30, 1959 through July 21, 2008 |
 8 We will own and market food brands which hold the #1 market position in their respective category, with an emphasis on North America We will achieve balanced growth through: • Increased market share of our brands • Acquisition of other leading food brands • New products that provide convenience, are good and "good for you," and make the consumer smile Vision Statement Vision Statement |
 9 Long-Term Objectives Long-Term Objectives Net Sales Growth Dividend Payment Operating Profit Growth EPS Growth 6% Organic 3- 4% Acquisitions 2-3% 8% Improve Efficiencies +8% Share Repurchase Debt Retirement Target 40% Payout |
 10 $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) 11 |
 12 FY 2003 FY 2003 FY 2005 FY 2005 FY 2007 FY 2007 FY 2008 FY 2008 KING KELLY FY 2009 FY 2009 FY 2004 FY 2004 (a) Integration in process.
(b) Announced but not closed. 12 Transactions 12 Transactions (a) (b) |
 “A
Perfect Fit” |
 14 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 position market position in their in their respective category, with an respective category, with an emphasis on North America emphasis on North America Note: The parties expect this transaction to close during the fourth calendar quarter of 2008, pending regulatory approval. |
 15 Percent of Sales from #1 Brands Percent of Sales from #1 Brands ~75% of Sales Projected to Come From #1 Brands |
 16 Center-of-Store Strategy Center-of-Store Strategy Baking Aisle Spreads / Condiments Aisle Frozen Aisle Specialty Aisle Coffee Aisle Natural Beverage Aisle |
 17 Compelling Transaction Compelling Transaction • $1 billion brand • Expands portfolio of #1 brands • Builds on “Center of the Store” focus • Enhanced scale • Financial benefits • Great home for Folgers brand and employees |
 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 18 |
 19 Builds on Center of Store Focus Builds on Center of Store Focus $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 |
 • Large $31B market – High household penetration – Frequency of use is increasing – High consumer purchase frequency that drives traffic for retailers – Consistent performance through economic cycles • Evolving consumer trends – Emergence of "coffee house culture" – Strong, iconic brands crossing over – Product proliferation Source: Datamonitor as of March 2008; United States Retail & Foodservice Coffee
2007 U.S. Coffee Market U.S. Coffee Market Coffee Category Highlights Coffee Category Highlights Coffee Market Overview Coffee Market Overview Total Market: $30.7B Retail-Package/ At-Home 23% Foodservice/ Away From Home 67% Retail-Prepared/ Away From Home 10% Roast & Ground 79% Instant 12% Pods 1% Ready to Drink 8% Total At-Home Market: $6.9B 20 At-Home Coffee Market |
 21 Folgers 48% Kraft 24% Rest of Market 28% U.S. At Home Coffee Market Share by Segment U.S. At Home Coffee Market Share by Segment 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
Folgers 19% Kraft / Starbucks 33% Rest of Market 48% Folgers 32% Nestle 24% Rest of Market 44% $0.9B $1.5B $2.8B Packaged Coffee 1 Mainstream Roast & Ground 2 Gourmet Coffee 2 Single Serve 2 |
 22 Added Scale Added Scale Revenue ($ 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 • Capitalize on relationship with Advantage, our national broker • Purchasing efficiencies • Benefit from administrative infrastructure • Greater opportunities for employees |
 23 Financial Benefits Financial Benefits • Accretive transaction • Operating margin expansion • Significantly enhanced cash flow • Strong balance sheet with modest debt level • Greater float – more shares outstanding |
 Iconic
Brands Iconic Brands 24 |
 Household Slogans Household Slogans “ With a Name Like Smucker’s, It Has to be Good ” “ Choosy Moms Choose Jif ” “ The Best Part of Wakin’ Up ” “ Start Something Good With Crisco ” “ Everybody’s Happy When It’s Hungry Jack ” “ America Runs on Dunkin’ ” 25 |
 26 Marketing Synergies – Meals Marketing Synergies – Meals • The Best Part of Waking Up… |
 27 Marketing Synergies – Meals Marketing Synergies – Meals • The Best Way to End the Day… |
   28
Folgers Synergies Folgers Synergies Synergies Synergies ~$80+ million Net Sales Operations Sales
& Supply Chain Corporate & Marketing
Admin. JMS Infrastructure COGS SD&A |
 29 Projected Sales by Category Projected Sales by Category 42% 42% 7% 7% 8% 8% 11% 11% 6% 6% 15% 15% 11% 11% Fruit Spreads Peanut Butter Oils & Shortening Baking Canned Milk All Other Coffee Estimated After Transaction |
 30 Net Sales and EBITDA Net Sales and EBITDA $0.0 $1.0 $2.0 $3.0 $4.0 $5.0 $6.0 FY2008 FY2009 FY2010 Net Sales $0 $250 $500 $750 $1,000 FY2008 FY2009 FY2010 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 $4.9B $371 $820 $869 14.7% 17.3% 17.5% Pro forma (a) * Includes approximately $83 million in synergies. (a) Assumes Folgers transaction had closed on May 1, 2008. Pro forma Pro forma |
 31 Cash Flow From Operations Cash Flow From Operations $ 116 $ (76) $ 192 FY 2008 $ 400 $(115) $ 515 FY2009 (a) Pro forma $ 430 Free Cash Flow $(120) Capital Expenditures $ 550 Cash Flow From Operations FY 2010 Pro forma ($ in millions) (a) Assumes Folgers transaction had closed on May 1, 2008.
|
 32 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 |
 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 33 |
 34 Why Invest in Smucker? Why Invest in Smucker? • A history and culture of solid returns • Clear strategy of owning a strong portfolio of #1 brands • Strategic acquisition of Folgers • Enhances #1 brand portfolio • Increases market categories from $8 billion to $15 billion • Creates sales growth to $5 billion company • Accretive transaction • Significantly enhances cash flow |
 35 Why Invest in Smucker? Why Invest in Smucker? • Strong cash flow and balance sheet • Continuity of management • Current value of Smucker stock vs. peers • Strong forecasted results in current fiscal year • Special $5.00 dividend in calendar 2008 • Current share performance vs. peers |
 36 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. . |
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Presentation July 2008 Summary Presentation Investor Presentation July 2008 Summary Presentation The J. M. Smucker Company The J. M. Smucker Company |