 Investor
Presentation October 2008 Investor Presentation October 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-6 Under the Securities Exchange Act of 1934 Subject Company: The J. M. Smucker Company Commission File No.: 333 - 152451 |
 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. The projected financial data included in this presentation reflect numerous estimates and assumptions
relating to, among other things, the ability of Smucker to successfully operate P&G’s coffee business (the “Coffee Business”) outside of P&G and Smucker’s existing business operations and are subject to significant economic,
industry and competitive uncertainties, including those risk factors referenced below, and, accordingly, such data may not be indicative of future results. 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, peanuts, 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) 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 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. 1 |
 2 Transaction Overview Transaction Overview • The transaction is structured as an exchange offer followed by a merger – Tendering P&G shareholders will exchange their P&G shares for shares in
Smucker – Smucker to guarantee $350MM of Folgers debt upon close – Smucker to finance special dividend • P&G shareholders will own ~53.5% of the combined company – ~63MM shares will be issued as part of the transaction – ~118MM shares outstanding for the combined Smucker – If the split-off is consummated but not fully subscribed, P&G will
distribute remaining Folgers shares (which will be converted into Smucker
shares) to its shareholders on a pro-rata basis Tendering & Accepted Shareholders Non-Tendering Shareholders Variable
Cap 12%
20% Discount
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 3 Why Invest in Smucker? Why Invest in Smucker? • A history of solid returns • Clear strategy of owning a strong portfolio of #1 brands • Making great brands better • Addition of an iconic #1 brand with Folgers • Enhanced estimated cash flow, margins, and strong balance sheet • Unique culture ® |
 4 • 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 |
 5 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 = 10.3% APR = 10.3% APR = 6.2% APR = 6.2% APR = 5.8% APR = 5.8% Base = $20 Base = $20 SJM versus Major Indices – November 30, 1959 through September 30, 2008 |
 6 $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 FY2008 = 15% 10-Year CAGR through FY2008 = 16% Sales Growth Sales Growth $1.4B $2.2B $2.5B |
 7 Income Growth Income Growth $0.0 $50.0 $100.0 $150.0 $200.0 FY2002 FY2003 FY2004 FY2005 FY2006 FY2007 FY2008 Net Income $30.9 $96.3 $129.1 $157.2 $111.4 $143.4 $170.4 5-Year CAGR through FY2008 = 12% 10-Year CAGR through FY2008 = 18% ($ in Millions) |
 8 Vision Statement Vision Statement 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 • New products that provide convenience, are “good and good for you," and make the consumer smile • Acquisition of other leading food brands |
 Enhanced
Center-of-Store Strategy Enhanced Center-of-Store
Strategy ABC Store • Greater relevance to retailers • Destination category • Enhanced cross promotional opportunities • Capitalize on relationship with sales agent • Distribution efficiency Center-of-the-store is an important profit center for retailers
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 10 Pro Forma Sales by Category Pro Forma Sales by Category 42% 42% 21% 21% 25% 25% 12% 12% Spreads Baking All Other Coffee Estimated After Transaction (1) (1) Based on FY2008 Smucker adjusted for approximately $1.8B of FY2008 Folgers net sales. |
 11 Source: IRI 52 Week Ending 9/7/08 -- TTL Grocery, Mass, Drug & Walmart Panel Does NOT include Private Label Smucker Market Share Leadership Smucker Market Share Leadership #1 in 8 out of 13 categories Folgers adds another #1 market share % Dollar Share of Category |
 12 Growing Market Opportunity Growing Market Opportunity $15.0 $8.0 $3.0 $1.0 FY 2002 FY 2004 FY2005 FY2009E Market opportunity ($ in billions) Greater opportunity as share of market in each category expands |
 13 Acquisition Expertise Acquisition Expertise 12 Center-of-Store Transactions in 6 years Enabling • Smaller in size • New capabilities • Capitalize on Smucker resources Bolt-on • Increase category presence • Leverage existing infrastructure Transformational • Large in size • Game changing • New markets & categories (1) Announced June 4, 2008 with expected closing November 2008
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 14 Making Great Brands Better Making Great Brands Better • Increased sales over 40% • Increased market share to over 40 share points from 34 share points • Increased operating margin • New products including Jif ® snack nuts and Jif To Go • Packaging and product innovator • Expanded Crisco ® brand in oils segment • New products including Simple Measures, Crisco Puritan ® with Omega-3 DHA and Crisco cooking sprays |
 15 Making Great Brands Better Making Great Brands Better • Expanded products and leveraged existing presence • Introduced new line extensions; grew frosting to the #2 brand • Improved product quality and enhanced packaging • Increased sales from $2 million to $115 million in ten years • New offerings • Produce five million sandwiches per week in an integrated bakery plant |
 16 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 in their their respective category, with an respective category, with an emphasis on North America emphasis on North America |
 17 Compelling Transaction Compelling Transaction • Acquisition of the #1 Folgers brand • Addition of rights to sell Dunkin’ Donuts ® in retail • Smucker’s first +$1B brand Expanding Leading Brands Strengthened Product Portfolio Scale Benefits & Synergies Attractive Financial Impact (1) • Builds upon established center-of-store strategy • Broadens and diversifies product offering • Provides attractive cross-marketing opportunities • Expect strong synergy opportunities of $80MM+ annually • Significantly enhances Smucker’s scale and expected profitability • Increased financial fundamentals • Expected to increase pro forma EBITDA margins by > 250 bps • Expected to be accretive to earnings (2) • Expected to more than triple FCF vs. FY2008 Smucker historical • Enhances already strong balance sheet (1) Pro forma FY2009E assumes Folgers transaction had closed on May 1, 2008 and
approximately $80MM in run- rate synergies. (2) EPS accretion based on dividend adjusted FY2009 full year run-rate financial
projections. |
 18 Strength of Folgers Strength of Folgers • Superior brand equity – Highest level of unaided consumer awareness • Strong market leader – #1 retail packaged coffee brand • Leader in product innovation – Folgers Crystals – Folgers decaffeinated – AromaSeal ™ plastic canister – Folgers Simply Smooth ™ |
 19 Dunkin’ Donuts Dunkin’ Donuts • Strong presence in gourmet coffee category • Long-term license of brand for retail • $130MM net sales from August 2007 to June 2008 |
 20 Percent of Sales from #1 Brands Percent of Sales from #1 Brands 75% of Sales Projected to Come From #1 Brands |
 21 The Best Part of Wakin’ Up… The Best Part of Wakin’ Up… |
 22 The Best Way to End the Day… The Best Way to End the Day… |
 23 Long Term Financial Objectives Long Term Financial Objectives Net Sales Growth Operating Profit Growth EPS Growth Dividend Payment 6% Organic 3-4% Acquisitions 2-3% 8% Improve Efficiencies Target 40% Payout > 8% Share Repurchase Debt Retirement |
 24 Net Sales and EBITDA Net Sales and EBITDA $0.0 $1.0 $2.0 $3.0 $4.0 $5.0 $6.0 FY2008 FY2009E FY2010E Net Sales $0 $250 $500 $750 $1,000 FY2008 FY2009E FY2010E 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% EBITDA (Excluding Merger and Integration Costs) Pro forma (1) (2) $2.5B $4.7B $4.9B $371 $820 $869 14.7% 17.3% 17.5% Pro forma (2) (1) Includes approximately $80 million in run-rate synergies. (2) Assumes Folgers transaction had closed on May 1, 2008. Pro forma Pro forma |
 25 Cash Flow From Operations Cash Flow From Operations 4% $ 116 $ (76) $ 192 FY2008 7% $ 390 $(115) $ 505 FY2009E (1) Pro forma $ 425 Free Cash Flow 7% Free Cash Flow Yield (2) $(120) Capital Expenditures $ 545 Cash Flow From Operations FY2010E Pro forma ($ in millions) (1) Assumes Folgers transaction had closed on May 1, 2008 and approximately $80MM
in run-rate synergies. (2) Based on approximately 57 million
shares outstanding and market price of $49.88 for FY2008 (based on closing
price of Smucker shares on April 30, 2008) and approximately 118 million shares outstanding and market price of $50.69 for FY2009E and FY2010E (based on closing price of Smucker shares on September 30, 2008). |
   Cash Flow
/ Allocation of Cash (after expiration of two year repurchase limitation)
Cash Flow / Allocation of Cash (after expiration of two year repurchase limitation) 5-Year Historic Use of Cash 28% 28% 22% 22% Acquisition Capital Expenditures Stock Repurchase Dividends 26 Free Cash Flow Free Cash Flow Free Cash Flow Cash From Operations Cash From Operations Dividends Dividends Acquisition Acquisition Repurchase Repurchase CapEx = 2½ - 3% of Net Sales |
 27 Synergy Opportunities Synergy Opportunities ($ in millions) 4% $ 80 $ 65 $ 15 Synergy Estimate Total Synergies Estimated Synergies as % of Projected 2009 Folgers Net Sales SG&A COGS |
 28 Debt Profile Supports Continued Growth Debt Profile Supports Continued Growth • Stronger balance sheet post-closing – Ample liquidity • Modest leverage and strong cash flow will facilitate pursuit of shareholder value – Investments – Acquisitions – Share repurchase / dividends FY2009E Standalone Smucker FY2009E (1) Combined Smucker Total Debt $790mm $1,540mm Debt / EBITDA 2.1x 1.9x Interest Coverage 8.1x 8.6x (2) (1) Assumes Folgers transaction had closed on May 1, 2008 and approximately $80MM
in run-rate synergies. (2) Interest coverage assumes an estimated
weighted-average borrowing rate of 6.0% on the anticipated financing in
part based on three-month forward LIBOR as of October 1, 2008. |
 29 Dividends and Share Repurchase Dividends and Share Repurchase $0 $50 $100 $150 $200 $250 $300 $350 $400 $450 FY2004 FY2005 FY2006 FY2007 FY2008 FY2009E Dividends Share Repurchase ($ in millions) (1) Estimated dividends assumes current quarterly dividend rate, payment of
special dividend, and payment of dividend on shares issued in the
Transaction for two quarters. (1) |
 30 Core Competencies Core Competencies Ability to Implement Ability to Implement Relationships Relationships Emotional Bond Emotional Bond Strategic Advantage Strategic Advantage |
 31 Relationships Relationships Retailers Sales Agent Employees Suppliers |
 32 Emotional Bond Emotional Bond Focus on Consumer Mealtime Moments Memorable Tag Lines “ With a Name Like Smucker’s, It Has to be Good ” “ Choosy Moms Choose Jif ” “ The Best Part of Wakin’ Up ” |
 33 Ability to Implement Ability to Implement Single IS Platform Acquisition experience Improved Productivity $283 $552 $777 $0 $300 $600 $900 $1,200 Sales / Employee (‘000’s) Net Income / Employee (‘000’s) $13 $35 $52 $0 $20 $40 $60 $80 $100 FY2002 FY2005 FY2008 FY2002 FY2005 FY2008 Continuity of process and people |
 34 15.0% 17.0% 19.0% 21.0% 23.0% 25.0% FY2002 FY2003 FY2004 FY2005 FY2006 FY2007 FY2008 24.6% 21.6% 21.7% 20.0% 20.3% 20.6% 19.4% SD&A as % of Net Sales SD&A as % of Net Sales |
 35 Why Invest in Smucker? Why Invest in Smucker? • A history of solid returns • Clear strategy of owning a strong portfolio of #1 brands • Making great brands better • Addition of an iconic #1 brand with Folgers • Enhanced estimated cash flow, margins, and strong balance sheet • Unique culture |
 The J. M.
Smucker Company The J. M. Smucker Company Investor Presentation October 2008 Investor Presentation October 2008 |
 Appendix
Appendix |
 38 Regulation G Compliance Regulation G Compliance You are also reminded that during this presentation, certain non-GAAP financial measures, such as EBITDA and Free Cash Flow may be discussed. These measures should not be considered an alternative to net income, or any other measure of financial performance or liquidity presented in accordance with generally accepted accounting principles (GAAP). These measures are not necessarily comparable to a similarly titled measure of another company. Please refer to the accompanying slides for information that reconciles these discussed figures with the most comparable GAAP measures. |
 39 Reconciliation of Non-GAAP Financial Measures Reconciliation of Non-GAAP Financial Measures ($ in Millions) FY2008 Income before income taxes $ 255 Add (deduct): Interest income (13) Interest expense 42 Amortization 4 Share-based compensation expense 12 Depreciation 58 Merger and integration costs 8 Cost of products sold - restructuring 2 Other restructuring costs 3 EBITDA $ 371 |
 40 Financial Forecasts Financial Forecasts The preceding financial forecasts were prepared by Smucker management in evaluating the
Transaction. For fiscal years after 2009 through 2013, Smucker assumed
compounded annual growth rates for Folgers and Smucker of approximately
2.5% and 5.0%, respectively, for net sales and approximately 3.9% and 6.1%,
respectively, for EBITDA, recognizing that year to year increases fluctuate between years. Synergies $ 350 $ 387 EBITDA FY2009 Forecast 35 79 Depreciation and amortization 1,304 1,970 Cost of goods sold $1,910 $2,829 Net sales 291 551 Selling, distribution and administration 606 859 Gross profit Combined EBITDA 315 308 Earnings before interest and taxes Folgers Smucker $737 83 $820 ($ in Millions) |
 41 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. Smucker has also filed a proxy statement with the SEC
which has been sent to the shareholders of Smucker. Shareholders are urged to read 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 can be obtained free of charge from the SEC’s website at www.sec.gov. The documents 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. |
 42 Additional Information Additional Information P&G, Folgers, the Folgers logo, AromaSeal, Folgers Gourmet
Selections, The Best Part of Wakin’ Up is Folgers in your Cup,
Millstone and the Millstone logo are the registered trademarks of The Procter & 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, and the Dunkin' Donuts Logo 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, Cargill, ADM, Wal-Mart, Kroger, Target, Safeway and Oracle. All other trademarks and logos are the trademarks of The J. M. Smucker Company. |