Executive Summary

Net sales and earnings for 2009 exceeded levels anticipated when the Company updated its outlook in February mainly due to the strength of Folgers. During April 2009, volume and sales in the retail coffee category increased significantly after 12 to 18 months of flat to declining volume. Folgers grew at more than double the category rate, increasing its share of market during this time period. In addition, base Smucker business also achieved solid sales growth. Favorable operating margin added to the impact of stronger sales, resulting in non-GAAP income per diluted share also exceeding the Company's expectations.

                Three Months Ended April 30,        Year Ended April 30,                -----------------------------       ---------------------                                       %                               %                                   Increase                        Increase                    2009    2008  (Decrease)      2009      2008  (Decrease)                    ----    ----  ----------      ----      ----  ----------                        (Dollars in millions, except per share data)    Net sales    $1,068.5  $590.0       81%    $3,757.9  $2,524.8       49%   Operating    income        $157.4   $61.7      155%      $451.0    $284.2       59%     % of net      sales         14.7%   10.5%                 12.0%     11.3%   Net income:     Income        $94.3   $37.1      154%      $266.0    $170.4       56%     Income per      diluted      share        $0.80   $0.67       19%       $3.12     $3.00        4%   EBITDA         $199.8   $77.1      159%      $571.3    $346.2       65%    --  Excluding the impact of acquisitions and foreign exchange, net sales       increased 3 percent and 9 percent for the fourth quarter and fiscal       2009, respectively, compared to the same periods in 2008.   --  Amortization expense of $0.10 and $0.01 per diluted share in the       fourth quarter, and $0.32 and $0.05 per diluted share are included in       the years ended 2009 and 2008, respectively.   --  Restructuring and merger and integration costs of $0.22 and $0.06 per       diluted share are included in the fourth quarter of 2009 and 2008,       respectively.  Excluding these items, the Company's non-GAAP income       per diluted share was $1.02 and $0.73 for the fourth quarter of 2009       and 2008, respectively, an increase of 40 percent.    --  Restructuring and merger and integration costs of $0.65 and $0.15 per       diluted share are included in 2009 and 2008, respectively.  Excluding       these costs in both years, the Company's non-GAAP income per diluted       share was $3.77 and $3.15 in 2009 and 2008, respectively, an increase       of 20 percent.   

"In a year when the economy and external events presented a significant challenge, we are gratified to have achieved another record year of sales and earnings," commented Tim Smucker, Chairman of the Board and Co-Chief Executive Officer. "Our core business continues to produce solid results and the recently added coffee business's performance has exceeded our expectations. We attribute our continuing success to a clear and proven strategy of owning and marketing leading North American food brands, our ability to make great brands even better, and most importantly, the commitment, continuity, and talent of our team in executing our strategy."

"This year, we successfully completed the largest merger in our Company's history when we added Folgers to our portfolio," added Richard Smucker, Executive Chairman and Co-Chief Executive Officer. "With the addition of Folgers, more than 75 percent of our sales come from number one food brands--brands that consumers know and trust to deliver in any economic environment. With a portfolio of iconic brands and dedicated and talented employees, we expect to continue to deliver long-term growth and shareholder value."

   Net Sales                Three Months Ended April 30,       Year Ended April 30,               ----------------------------       --------------------                                Increase                         Increase                  2009    2008 (Decrease) %      2009      2008 (Decrease) %                  ----    ----  -------- ---     ----      ----  -------- ---                                  (Dollars in millions)    Net sales  $1,068.5  $590.0   $478.5  81% $3,757.9  $2,524.8  $1,233.1 49%   Adjust for    non-    comparable    items:    Acquisitions:     Folgers   $(456.3)         $(456.3)      $(924.8)            $(924.8)     Other       (18.0)           (18.0)       (107.6)             (107.6)                 -----            -----        ------              ------               $(474.3)         $(474.3)    $(1,032.4)          $(1,032.4)     Foreign      exchange    16.2             16.2          35.2                35.2                  ----  ------     ---- ---      ----  --------      ---- ---   Net sales    without    acquisitions    and foreign    exchange    $610.4  $590.0    $20.4   3% $2,760.7  $2,524.8    $235.9  9%                ======  ======    ===== ===  ========  ========    ====== ===   

Net sales were up 81 percent in the fourth quarter of 2009 compared to 2008, primarily due to the addition of Folgers. Pricing actions taken during the latter part of 2008 and early 2009, were the primary drivers of the net sales growth without acquisitions. While the impact of volume and mix was not significant, a number of categories experienced volume gains in the fourth quarter, including Pillsbury(R) baking mixes and frostings, Hungry Jack(R) potatoes, pancakes, and syrups, and Eagle Brand(R) sweetened condensed milk. As expected, volume declines were primarily concentrated in the oils category, due to competitive activity and gains by private label. Peanut butter also experienced a slight volume decline reflecting pressures in the category caused by the FDA recall of another manufacturer's foodservice peanut butter and ingredient peanut products earlier this year. However, initiatives by the peanut butter industry, and marketing efforts by the Company and other branded competitors, resulted in the category recovering more quickly than anticipated.

   Margins                                              Three Months                                                Ended       Year Ended                                              April 30,      April 30,                                             ------------   ------------                                             2009   2008    2009    2008                                             ----   ----    ----    ----                                                   (% of net sales)    Gross profit                              37.4%  30.9%   33.3%   31.0%   Selling, distribution, and administrative    expenses:     Marketing and selling                    7.7%   9.4%    9.3%    9.7%     Distribution                             3.4%   3.5%    3.5%    3.4%     General and      administrative                          5.9%   7.2%    5.1%    6.2%                                              ---    ---     ---     ---                                             17.0%  20.1%   17.9%   19.3%                                             ====   ====    ====    ====   Amortization                               1.6%   0.2%   1.1%     0.1%   Restructuring and merger and integration    costs                                     3.7%   0.6%   2.2%     0.4%   Other operating expense (income) - net     0.4%  (0.5%)  0.1%    (0.1%)                                              ---   ----    ---     ----   Operating Income                          14.7%  10.5%   12.0%   11.3%                                             ====   ====    ====    ====   

Overall, gross profit increased $217.0 million in the fourth quarter of 2009 compared to 2008 with Folgers contributing over 90 percent of the increase. This resulted in an overall improvement in gross margin from 30.9 percent in the fourth quarter of 2008 to 37.4 percent in 2009. The addition of the Folgers business raises the Company's gross margin level. In addition, Folgers' gross margin was favorably impacted by its strong sales, favorable green coffee market conditions, and favorable product sales mix. Gross profit on the Company's base business improved by approximately 7 percent, or 0.9 percentage points.

Selling, distribution, and administrative ("SD&A") expenses increased 53 percent for the fourth quarter of 2009 compared to 2008 with the addition of Folgers accounting for most of the increase. Most SD&A expenses increased at a lesser rate than net sales, resulting in an overall decrease in SD&A from 20.1 percent of net sales to 17.0 percent. Marketing expense as a percentage of net sales decreased during the quarter, as the Company focused on planning activities to reenergize the Folgers traditional roast and ground category, including strengthening the core equity advertising. Due to this shift in brand messaging, marketing initiatives originally planned and budgeted for in the fourth quarter of 2009 were not incurred. Instead, incremental investments are expected in 2010 to support the Company's new marketing initiatives. Selling and corporate administrative expenses also decreased as a percentage of net sales, reflecting the synergies of the combined businesses.

Amortization expense, a noncash item, increased $15.8 million to 1.6 percent of net sales, compared to 0.2 percent of net sales in the same period in 2008, primarily reflecting the addition of intangible assets associated with the Folgers transaction.

Other operating expense - net increased $6.5 million during the fourth quarter compared to the same quarter last year. This year's expense reflected losses on the disposition of property, plant, and equipment, while last year's fourth quarter included a net positive insurance settlement related to storm damage.

Operating income more than doubled compared to the fourth quarter of 2008 and improved from 10.5 percent to 14.7 percent of net sales. Restructuring and merger and integration costs were $34.6 million higher in the fourth quarter of 2009 compared to 2008, reducing operating margin by 3.7 percentage points as integration activities related to Folgers continued. During the quarter, the Company recorded a $9.1 million noncash pension charge, included in restructuring costs, associated with its nonbranded Canadian businesses divested in 2007. Excluding the impact of restructuring and merger and integration costs, operating income increased from 11.3 percent to 18.4 percent of net sales.

Other

During the third quarter, the Company's debt obligations increased by Folgers' $350 million LIBOR-based variable rate debt. In addition, the Company issued $400 million in Senior Notes with a weighted-average interest rate of 6.6 percent in October 2008. As a result, interest expense increased $8.1 million during the fourth quarter of 2009 compared to 2008.

Income tax expense increased $30.9 million during the fourth quarter of 2009 compared to 2008. The effective tax rate increased to 33.2 percent in the fourth quarter of 2009 compared to 30.0 percent in 2008. The fourth quarter 2008 effective tax rate reflected the benefits realized from the resolution of previously open tax positions. For the year, the effective tax rate decreased slightly from 33.1 percent in 2008 to 32.9 percent for fiscal 2009.

Segment Performance

With the addition of Folgers, the Company added the U.S. retail coffee market reportable segment representing the domestic sales of Folgers(R), Millstone(R), and Dunkin' Donuts(R) branded coffee to retail customers. Coffee sales to other than domestic retail customers are included in the special markets segment. In addition, corporate organizational changes made in association with the Folgers transaction have resulted in the Company presenting two new reporting segments - U.S. retail consumer market and U.S. retail oils and baking market. The U.S. retail consumer market primarily includes sales of Smucker's(R), Jif(R), and Hungry Jack(R) branded products while the U.S. retail oils and baking market primarily includes sales of Crisco(R), Pillsbury(R), Eagle Brand(R), and Martha White(R) branded products, each to domestic retail customers. As a result of the change in segment reporting, all historical information presented has been conformed to the new presentation. See "Unaudited Reportable Segments Supplemental Information" tables for conformed presentation of historical fiscal 2009 and fiscal 2008 reporting periods.

                 Three Months Ended April 30,       Year Ended April 30,                 -----------------------------      --------------------                                       %                               %                                    Increase                        Increase                     2009    2008  (Decrease)       2009    2008   (Decrease)                     ----    ----  ----------       ----    ----   ----------                                      (Dollars in millions)    Net sales:     U.S.      retail      consumer      market       $257.1  $245.5       5%      $1,103.3  $998.6       10%     U.S.      retail      oils and      baking      market        185.2   173.4       7%         995.5   876.0       14%     U.S.      retail      coffee      market        412.6       -      n/a         855.6       -       n/a     Special      markets       213.6   171.0      25%         803.6   650.2       24%     Segment profit:     U.S.      retail      consumer      market        $58.7   $55.0       7%        $249.3  $233.2        7%     U.S.      retail      oils and      baking      market         17.7    21.3     (17%)        124.2    99.6       25%     U.S.      retail      coffee      market        150.8       -      n/a         241.0       -       n/a     Special      markets        37.6    24.4      54%         111.7    92.0       21%    Segment profit    margin:     U.S.      retail      consumer      market         22.8%   22.4%                22.6%     23.4%     U.S.      retail      oils and      baking      market          9.5%   12.3%                12.5%     11.4%     U.S.      retail      coffee      market         36.5%    n/a                 28.2%     n/a     Special      markets        17.6%   14.3%                13.9%     14.2%    U.S. Retail Consumer Market  

U.S. retail consumer market segment net sales for the quarter were up 5 percent compared to the prior year with increases in Smucker's(R) fruit spreads and toppings, Hungry Jack(R), and Jif(R) primarily due to pricing gains. The Knott's Berry Farm(R) and Europe's Best(R) acquisitions contributed net sales of approximately $4.6 million. Overall volume in the consumer market was flat with gains in syrups, pancakes, and potato side dishes, offsetting modest declines in fruit spreads and peanut butter, and a softening in sales of Smucker's(R) Uncrustables(R).

U.S. retail consumer market profit increased 7 percent for the fourth quarter of 2009 compared to the same period in 2008, reflecting sales growth, lower marketing and selling costs, and the recognition of synergies. Segment profit margin for the quarter improved from 22.4 percent of net sales in 2008 to 22.8 percent in 2009.

U.S. Retail Oils and Baking Market

Net sales in the U.S. retail oils and baking market segment were up 7 percent for the fourth quarter of 2009 compared to 2008, due to a combination of volume and pricing gains. Total volume in the U.S. retail oils and baking market was up 4 percent, as increases in baking mixes, frostings and flour offset declines in oils and private label canned milk.

U.S. retail oils and baking market profit decreased $3.6 million, or 17 percent, for the fourth quarter compared to the same period in 2008. Gross profit in the oils and baking market improved due to better profitability in the baking business, and a better match of prices to costs this year compared to last year. However, marketing expenses increased significantly over the fourth quarter of 2008, primarily in support of Crisco(R) olive oil, resulting in an overall decline in segment profit.

U.S. Retail Coffee Market

The U.S. retail coffee market segment contributed $412.6 million to net sales in the fourth quarter. Compared to the same three-month period last year prior to the transaction, net sales increased 6 percent with volume increasing approximately 16 percent, offset by price decreases taken over the last twelve months to reflect sustained cost decreases for green coffee. Folgers benefited from improved sales execution led by a fully integrated sales team during the Easter holiday, the first key promotional period under the Company's ownership. Additionally, the continued expansion of the Dunkin' Donuts(R) brand in the gourmet category continued to outpace growth in traditional roast and ground.

The U.S. retail coffee market segment added $150.8 million in segment profit for the fourth quarter of 2009 representing a 36.5 percent segment profit margin. Margins in the coffee segment were well above historical averages and are not expected to continue at this level due to gains in gross profit and the timing of marketing expenses.

Special Markets

Net sales in the fourth quarter for the special markets segment increased 25 percent. The acquisition of Folgers added $43.7 million to special markets net sales and, combined with price increases and the contribution of the Knott's Berry Farm(R) and Europe's Best(R) acquisitions, more than offset the impact of foreign exchange and volume declines in foodservice portion control and natural foods (formerly beverage) caused by the current economic environment.

Special markets segment profit increased 54 percent for the quarter of 2009 compared to 2008, again resulting from the impact of recent acquisitions. Profit margin for the quarter improved from 14.3 percent in the fourth quarter of 2008 to 17.6 percent in 2009.

Other Financial Results and Measures

For the fourth quarter of 2009, earnings before interest, taxes, depreciation, and amortization ("EBITDA") was $199.8 million, or 18.7 percent of net sales, compared to $77.1 million, or 13.1 percent of net sales in the fourth quarter of 2008, primarily reflecting the impact of the Folgers merger. For the full year of 2009, EBITDA was $571.3 million, or 15.2 percent of net sales, compared to $346.2 million, or 13.7 percent for the full year of 2008.

Cash provided by operating activities during the quarter was $155.8 million leading to an overall increase in cash and cash equivalents of $96.8 million. As a result, the Company had $456.7 million in cash and cash equivalents on hand at April 30, 2009. Free cash flow, defined as cash provided by operating activities less capital expenditures, was $131.8 million for the fourth quarter of 2009 compared to a negative $24.6 million in the comparable period last year.

Outlook

For fiscal 2010, net sales are expected to increase to approximately $4.5 billion, up 20 percent over fiscal 2009. Owning the Folgers business for the full year, compared to the six months included in 2009, is anticipated to contribute an additional $800 to $850 million to net sales. Income per diluted share, excluding merger and integration costs of $0.17 to $0.19 per diluted share, is expected to range between $3.65 and $3.80.