Special Shareholders Meeting October 16, 2008 Special Shareholders Meeting October 16, 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 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 operation 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 statement 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. |
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 |
Folgers Timeline Folgers Timeline November October P&G Launches Exchange Offer October 8 Investor Roadshows October 8-24 JMS Pays Special Dividend October 31 Exchange Offer Expires November 5 Transaction Closes November 6 Special Shareholders Meeting October 16 Exchange Ratio Determined November 3 Note: This timeline is projected and subject to change. |
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 |
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 |
$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 |
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) |
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 |
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 |
Compelling Transaction Compelling Transaction Expanding Leading Brands Strengthened Product Portfolio Scale Benefits & Synergies Attractive Financial Impact |
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. |
Percent of Sales from #1 Brands Percent of Sales from #1 Brands 75% of Sales Projected to Come From #1 Brands |
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 ™ |
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 |
The Best Part of Wakin’ Up… The Best Way to End the Day… |
Net Sales, EBITDA and Free Cash Flow Net Sales, EBITDA and Free Cash Flow $0.0 $1.0 $2.0 $3.0 $4.0 $5.0 $6.0 FY2008 FY2009E Net Sales $0 $250 $500 $750 $1,000 FY2008 FY2009E 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 $371 $820 14.7% 17.3% Pro forma (2) (1) Includes approximately $80 million in run-rate synergies. (2) Assumes Folgers transaction had closed on May 1, 2008. (3) Free cash flow for FY2008 is cash flow from operations of $192MM less capital expenditures of $76MM. FY2009E Pro forma is cash flow from operations of $505MM less capital expenditures of $115MM. $0 $100 $200 $300 $400 FY2008 FY2009E Free Cash Flow (3) (Excluding Merger and Integration Costs) $116 $390 Pro forma (1) (2) ($ in Millions) ($ in Millions) |
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 |
Special Shareholders Meeting October 16, 2008 Special Shareholders Meeting October 16, 2008 The J. M. Smucker Company The J. M. Smucker Company |
This presentation contains certain non-GAAP financial measures, such as EBITDA and Free Cash Flow. 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.
Additional Information
Smucker and The Folgers Coffee Company (“Folgers”) have filed registration statements with the U. S. Securities and Exchange Commission (“SEC”) registering the shares of Folgers common stock and Smucker common shares to be issued to P&G shareholders in connection with the Folgers transaction. In connection with the exchange offer for the shares of common stock of Folgers, P&G filed on October 8, 2008 a tender offer statement with the SEC. P&G shareholders are urged to read the prospectus included in the registration statements, the tender offer statement and any other relevant documents, because they contain important information about Smucker, Folgers and the proposed transaction. The prospectus, tender offer statement 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 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, or from Smucker upon written request to The J. M. Smucker Company, Shareholder Relations, Strawberry Lane, Orrville, Ohio 44667 or by calling (330) 684-3838.
This communication 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. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.