2015 ANNUAL REPORT
U.S. RETAIL
COFFEE
7
WHY WE ARE, WHO WE ARE...
OUR CULTURE
A culture of dotting the i’s and crossing the t’s…
Of doing the right things and doing things right…
U.S. RETAIL
CONSUMER
FOODS
11
A culture of growth – individual and as a company.
INTERNATIONAL,
FOODSERVICE &
NATURAL FOODS
15
It’s who we are. It’s because of who we are.
It’s a result of living our Basic Beliefs…
Our Commitment to Each Other. To our consumers
and to our customers.
As we look to the future of unlimited possibilities,
we recognize the principles that are
instrumental to our success…
A culture deeply rooted in our Basic Beliefs…
Guideposts for decisions at every level…
U.S. RETAIL
PET FOODS
19
Why we are who we are.
A culture that encourages commitment to each other…
Clear communication and collaboration…
Vision…A culture of appreciation.
A family-sense of sharing in a job well done…
Where every person makes a difference.
SUSTAINABILITY
AT SMUCKER
22
FINANCIAL
HIGHLIGHTS
24
DEAR SHAREHOLDERS AND FRIENDS,
W
hat a remarkable year this has been for your Company!
We started the year in two major lines of business,
consumer foods and coffee. We ended the year by adding a
third business, pet foods, with the acquisition of Big Heart Pet
Brands (“Big Heart”). This investment is a great addition for
a number of reasons, most notably adding to Our Purpose
of helping to bring families together to share memorable
meals and moments. Pets are truly cherished members of
the family, and we can now serve the mealtime and snacking
needs of the “whole” family.
Our vision for the Company is to own and market food brands
that hold the #1 market position in their respective category,
with an emphasis on North America. Big Heart helps fulfill this
vision with beloved brands such as Milk-Bone®, which holds the
#1 position in the growing pet snacks category, Kibbles ’n Bits®,
9Lives®, Meow Mix®, Milo’s Kitchen®, Pup-Peroni®, and
Natural Balance®, to name a few.
The addition of Big Heart gives us
an important and growing third
platform of our business and further
solidifies our position as a major
food company in North America
with projected annual sales of
approximately $8 billion. More
importantly, it places Smucker
among the top 10 food suppliers
to our retail customers. We own a
portfolio of major brands that
consumers trust, and we have a
reputation with our customers as
good partners with a track record
for profitably growing the categories
in which we participate.
With our traditional business and brands, we continue to
innovate and offer new products that are in line with consumer
trends. This past year, 7 percent of our sales came from
products we did not offer three years ago. Two major consumer
trends that influence our innovation and acquisition strategies
include a rise in snacking occasions and the desire for simple
ingredients. In response to these opportunities, we have
developed “good and good for you” snacks and simple-ingredient
varieties of many of our products. Some examples include
Jif To Go® Dippers™ peanut butter snacks, Smucker’s® Fruit-Fulls®
blended fruit pouches, and Pillsbury™ Purely Simple™ baking
mixes, which provide delicious baked goods with fewer
ingredients. To help accelerate our growth in snacks and
simple ingredients, we acquired Sahale Snacks (“Sahale”)
located in Seattle, Washington. Sahale is a leading producer,
marketer, and innovator of nut and fruit snacks, bringing to
Smucker a capability of innovation in the snacking category.
Our consumer foods business had
a solid year of performance. Our
Smucker’s fruit spreads business
grew market share, and Jif ®
peanut butter, with the help of
stable peanut costs, was able to
reverse the margin pressure we felt the prior year. The key
challenge this year was in coffee, as much higher green coffee
costs led to higher retail pricing and margin compression.
With our coffee costs beginning to moderate in fiscal 2016
and a number of initiatives planned, we remain confident in
the long-term prospects of our coffee business.
We continue to see a change in consumers’ behavior in
terms of where and how they shop. This is transforming the
landscape in retailing as omni-channel retailing grows and
the mobile economy encourages a consumer environment
where products and the information about them must be
readily available and accurate.
These changes, along with economic pressure driving our
retail customers and competitors to merge and consolidate,
will provide us with both opportunities and challenges.
We long ago concluded we must be willing to challenge and
change our tactics and strategies to adapt to consumer demands.
What we will not change, however, are the values upon which
our Company was founded. Our values and principles guide
both strategic decisions and daily behaviors and define our
culture, which we view as the key to our success. It is a
culture that believes every individual makes a difference,
and that the best is yet to come. Our fellow employees are
committed to “doing the right things and doing things
right.” We have a talented and dedicated team that is
enhanced by those who joined us from Sahale and Big Heart.
We enter fiscal 2016 as a larger, stronger, and more diversified
company. We are excited by the opportunities ahead, and
we have a proven track record of achieving long-term results.
We wish to extend our gratitude to our employees, who
continue to provide the highest level of quality and service to
our constituents, and to our shareholders for your continued
support and confidence in The J. M. Smucker Company. With
a robust commitment to innovation across our businesses;
an additional platform of growth in pet food and pet snacks;
and compelling brands, we believe we have the right strategy
to continue delivering value to our shareholders while
helping to bring families together to share memorable meals
and moments.
Sincerely,
Tim Smucker
Richard Smucker
June 25, 2015
2 THE J. M. SMUCKER COMPANY
2015 ANNUAL REPORT 3
5
OUR BRANDS
For more than 115 years, The J. M. Smucker Company has been committed to offering consumers
quality products that help bring families together to share memorable meals and moments.
OUR PURPOSE
Helping to bring families together
to share memorable meals and moments.
Being together with the ones we love
isn’t just a pleasant way to spend time —
it’s vital to a healthy, happy, fulfilling life.
In fact, the more family and friends
spend time with each other,
the richer their lives become.
TM
We believe we can help strengthen families through
the memorable meals and
moments they share, and we can help
make every day a little more special
by nurturing the bonds that bring people
and their pets closer together.
And the stronger families are today,
the stronger our society will be tomorrow.
Quite simply, life tastes better together.
™
®
4 THE J. M. SMUCKER COMPANY
U.S. RETAIL
COFFEE
Our leading position in the U.S. at-home retail coffee category is the
result of a diverse portfolio of strong brands led by Folgers® and
Dunkin’ Donuts®. Smucker is the market leader in this $9 billion category,
with a 27 percent dollar share. We participate in all key segments
through various product types and packaging and across a variety
of price points, providing consumers with quality, convenience,
value, and choice.
6 THE J. M. SMUCKER COMPANY
2015 ANNUAL REPORT 7
DELIVERING QUALITY,
CONVENIENCE, VALUE,
AND CHOICE
S
ince entering the coffee category in fiscal 2009, we have consistently grown
segment profit while managing through periods of volatility in green coffee costs.
In fiscal 2015, however, a sharp increase in green coffee prices led to challenges for
our U.S. Retail Coffee segment as consumers reacted to higher price points on our
core roast and ground offerings, impacting sales and product volumes. As a result,
segment performance was below our initial expectations. For the year, net sales
totaled $2.1 billion, while segment profit was $549.2 million.
Notwithstanding these challenges, we remain confident in our at-home retail coffee
strategy. We are applying our deep knowledge of this business and have implemented
measures that we expect to drive improved performance going forward.
SEGMENT AS A PERCENTAGE
OF NET SALES
37%
STRENGTHENING COFFEE LEADERSHIP
Mainstream roast and ground coffee remains the largest volume segment in
the coffee category. Folgers strong, iconic brand identification resulting from
a combination of quality products, marketing and distribution, and consistently
satisfying consumers creates a compelling marketplace advantage. We are making
strong investments in our marketing initiatives in support of our base Folgers
business and new product offerings. Additionally, we are on track to complete
the conversion of our large can Folgers offerings to a reduced canister
size, which should help us meet consumer preference for lower price
points on shelf.
Premium represents a large and growing segment, and our Dunkin’
Donuts and Folgers Gourmet Selections® offerings provide an array of
options and price points for the premium consumer. Dunkin’ Donuts
holds the #2 position in the premium coffee space and continues to
benefit from the strong coffee heritage of the Dunkin’ Donuts brand.
Today we offer more than 20 Dunkin’ Donuts retail coffee varieties. We
recently expanded our partnership with Dunkin’ Brands Group, Inc.,
and Keurig Green Mountain, Inc., to begin distributing and marketing
Dunkin’ Donuts K-Cup® pods in grocery, mass merchandisers, and other
retail channels in fiscal 2016. Initial retailer and consumer response
to the launch has been strong.
Folgers strong, iconic
brand identification
resulting from a
combination of quality
products, marketing
and distribution, and
consistently satisfying
consumers creates a
compelling marketplace
advantage.
In fiscal 2015, we also successfully introduced Café Bustelo® K-Cup®
pods into distribution, building on the brand’s growth in the core
mainstream segment and enhancing the brand’s appeal with Hispanic
and millennial consumers. K-Cup® pod adoption continues to increase
as more consumers seek single-serve convenience, and our broad
assortment of K-Cup® pod offerings across our Folgers, Dunkin’ Donuts,
Café Bustelo, and Millstone® brands positions us to benefit from this growth. Strong
consumer response led total Keurig® pod volume to increase 5 percent in fiscal 2015.
We continue to pursue innovations that help provide consumers with a great cup of
coffee just the way they want it, when they want it. Folgers Perfect Measures™ are a
breakthrough product launched in select markets that consist of 100 percent roast
and ground coffee in premeasured tablets, with zero additives. They provide consumers
who prefer a brewed pot of coffee a convenient, no-mess solution. We also introduced
Folgers Flavors™ coffee enhancers, which let coffee connoisseurs create their own
personalized, flavorful cup of coffee, and Folgers Iced Café™ coffee drink concentrates,
a new offering that contains concentrated and ground coffee, sweetener, and flavor
for a complete on-the-go cold coffee solution when added to milk.
10
8 THE
THEJ.J.M.
M.SMUCKER
SMUCKERCOMPANY
COMPANY
2015 ANNUAL REPORT 9
U.S. RETAIL
CONSUMER
FOODS
Whether it’s a delicious breakfast, a homemade lunch, a flavorful snack,
or a baked delight that helps turn everyday occasions into celebrations,
Smucker products are part of millions of family meals each day. The
categories we serve with our highly regarded brands include fruit spreads,
peanut butter, baking mixes and frostings, fruit and nut snack mixes,
shortening and oils, and sweetened condensed milk.
12
10 THE J.
J.M.
M. SMUCKER COMPANY
2015 ANNUAL REPORT 11
JIF AND SMUCKER’S
CATEGORY
LEADERSHIP
F
iscal 2015 was a year of momentum for many of our key brands and categories.
U.S. Retail Consumer Foods achieved $2.1 billion in net sales and record segment
profit of $432.9 million. The key back-to-school and holiday periods were among
the most successful in our Company’s history, driven by the strength of Smucker’s,
Jif, Crisco®, and Smucker’s Uncrustables® brands. Led by the Jif brand, we hold the
#1 position in the peanut butter category with a 46 percent dollar share of the
market – more than twice that of our nearest branded competitor. Smucker’s is also
the brand leader in fruit spreads with a 44 percent dollar share, far surpassing the
closest branded competitor.
SEGMENT AS A PERCENTAGE
OF NET SALES
37%
MORE WAYS TO ENJOY SMUCKER’S AND JIF
Our focus remains on innovation and leveraging growth opportunities, as we look to
build Smucker’s and Jif into $1 billion brands. We are bringing new options to the
fruit spreads category with the launch of Smucker’s Fruit & Honey™, a line of fruit
spreads naturally sweetened with honey. Meanwhile, consumers’ desire for affordable
and delicious plant-sourced protein is helping drive growth in America’s leading
peanut butter brand – Jif – as we introduce new product and packaging options
that provide these benefits in new, flavorful ways. For example, we added new
varieties to Jif Whips, a light, fluffy textured peanut butter spread ideal for dipping,
with new on-trend flavors Salty Caramel and seasonal Pumpkin Pie Spice.
Our focus has always been on providing consumers with choices, and in fiscal 2015
we added more offerings across our consumer foods portfolio, including protein options,
simple ingredients, and non-GMO products. Within our peanut butter brands, for
example, while the peanuts used to produce our Jif peanut butter have always been
non-GMO, this year we made the decision to source all remaining minor ingredients
used in the majority of our Jif peanut butter products from non-GMO sources.
Our strategy calls for continued innovation to drive growth across the Jif brand, and
our recently completed Memphis, Tennessee, peanut butter manufacturing facility
provides additional capacity and flexibility to support future brand growth.
INNOVATIVE SNACKS THAT TRAVEL ANYWHERE
Consumers continue to seek flavorful, on-the-go snacks, and our fiscal 2015 acquisition
of Sahale is well aligned with this trend. As a leading manufacturer of premium nut
and fruit snack mixes and new layered nut bars, the Sahale Snacks® brand provides
a platform to accelerate our snack offerings across our entire branded portfolio.
Families seeking “Grab and Go” convenience continue to turn to Smucker’s Uncrustables
sandwiches as a perfect lunchtime and snacking solution. This year, we expanded
the reach of Smucker’s Uncrustables sandwiches with the introduction of a
12 THE J. M. SMUCKER COMPANY
chocolate-flavored hazelnut variety. The enduring appeal of Smucker’s Uncrustables
sandwiches has led to 13 consecutive quarters of double-digit volume growth in
the U.S. retail market. In fiscal 2015, we served more than 300 million Smucker’s
Uncrustables sandwiches through our retail and foodservice channels. With
the completion of our expanded manufacturing facility in Scottsville, Kentucky,
we have the capacity to support further growth.
Smucker’s Fruit-Fulls pure blended fruit pouches also address growing demand
for on-the-go, “better-for-you” snacking. With no preservatives, added sweeteners,
or artificial flavors, Fruit-Fulls provide consumers with a convenient option in
the more than $300 million fruit pouch category. Our assortment now includes
a line of blended fruit pouches with oats and chia.
We also expanded our Jif To Go snacking portfolio to include Jif To Go Dippers, which
combine pretzels with Jif To Go single-serve cups of peanut butter for a complete
snack offering.
Among our baking brands, Pillsbury™ launched gluten-free cake and cookie mix
options as well as a new line of Purely Simple cake, cookie, and frosting mixes
made with simple ingredients with no colors, preservatives, or artificial flavors.
Meanwhile, Crisco had a second consecutive strong year aided by moderation in
commodity costs. The brand also recently expanded into specialty oils with the
launch of Crisco coconut oil and is now the only brand with a presence in every
segment of the shortening and oils category.
2015 ANNUAL REPORT 13
INTERNATIONAL,
FOODSERVICE, AND
NATURAL FOODS
Our International, Foodservice, and Natural Foods segment includes
sales outside the U.S. retail channel as well as a growing assortment of
natural foods products. International operations are focused primarily
on Canada, Mexico, and China. We are also a preferred supplier to
North American foodservice operators, including casual and fine
dining establishments, schools and universities, hospitals, and
business and industry customers.
16
14 THE J. M. SMUCKER COMPANY
2015 ANNUAL REPORT 15
BROADENING OUR
REACH & CAPABILITIES
I
nternational, Foodservice, and Natural Foods segment profit growth was positive
in the second half of the year, and we concluded fiscal 2015 encouraged by the
momentum building across all the businesses in this segment. For the fiscal year,
net sales were $1.3 billion, while segment profit totaled $166.7 million. We are
focused on attractive growth opportunities ahead, including capitalizing on the
potential of the recently acquired Big Heart pet business in the Canadian market.
In fiscal 2015, foreign currency effects in Canada obscured the performance of
our strong underlying businesses. Notwithstanding those currency challenges, we
were pleased to achieve volume market share gains across nearly all categories
in which we operate in Canada. We also extended the reach of our brands with
new products. For example, we entered the convenience bake segment with the
launch of Robin Hood® quick bread mixes. In China, our minority investment in
Seamild, a privately owned manufacturer and marketer of oats products, made
positive contributions to our performance as the category demonstrated healthy
growth among Chinese consumers. We are optimistic about the potential for
continued growth in this dynamic market.
Foodservice remains a category filled with opportunities for expansion through new
customer relationships and product innovation. We have strong momentum with
our Smucker’s portion control offerings and Smucker’s Uncrustables sandwiches.
Specific to Smucker’s Uncrustables sandwiches, we are beginning to realize the
initial benefits of re-entering the USDA school foodservice program and anticipate
regaining much of this previously exited business over the next few years. With our
planned exit of the private label foodservice hot beverage business complete and
the conversion to our Folgers branded liquid coffee offering proceeding as planned,
we now have the right portfolio in place for sustained growth.
In Natural Foods, our branded
beverage portfolio continued to
perform well. Our R.W. Knudsen
Family® juice business saw strong
volume growth in fiscal 2015, and
our packaging redesign for the
Santa Cruz Organic® brand was
well received by both customers
and consumers. Additionally,
the non-beverage portion of our
16 THE J. M. SMUCKER COMPANY
SEGMENT AS A PERCENTAGE
OF NET SALES
22%
We are focused on attractive growth
opportunities ahead, including
capitalizing on the potential of the
recently acquired Big Heart pet
business in the Canadian market.
Santa Cruz Organic business increased significantly in volume, driven by the
performance of the brand’s peanut butter products and applesauce pouches.
Looking ahead to fiscal 2016, we have gained distribution for both Santa Cruz
Organic and truRoots®, a brand of grains, beans, and pastas that are gluten-free
and certified organic. Acquired in 2013, the truRoots brand has helped extend the
breadth of our Natural Foods offerings through its wide range of sprouted and
non-sprouted items, including quinoa, chia, rice, lentils, and pastas, among others.
2015 ANNUAL REPORT 17
U.S. RETAIL
PET FOODS
Following our acquisition of Big Heart, our newest segment,
U.S. Retail Pet Foods, is a leader in the large and growing
pet food and pet snacks categories. With many of America’s beloved
pet food brands now part of our portfolio, we hold the #1 position
in dog snacks, the #2 position in dry cat food, and a strong presence
in premium pet food and pet snacks.
18 THE J. M. SMUCKER COMPANY
2015 ANNUAL REPORT 19
NURTURING BONDS
WITH VERY SPECIAL
FAMILY MEMBERS
T
he addition of Big Heart, a leading producer, distributor, and marketer of
premium-quality pet food and pet snacks in the U.S., creates a strong growth
platform for our Company. U.S. household pet ownership is growing in nearly every
age demographic, and today approximately two-thirds of U.S. households have at
least one family pet. Importantly, with 90 percent of pet parents considering their
pets to be cherished members of the family, we have a unique opportunity to deepen
the emotional bonds we create with consumers while remaining true to Our
Purpose by helping meet the mealtime and snacking needs of the whole family.
A STRONG PORTFOLIO OF BELOVED BRANDS
Milk-Bone, Pup-Peroni, and Milo’s Kitchen are leading snack and treat brands. With a
38 percent dollar share, led by the Milk-Bone brand, we are the leader in dog snacks,
a growing, $2.2 billion category. Meow Mix and 9Lives brands are well-loved cat food
favorites, contributing to our strong position in dry cat food.
SEGMENT AS A PERCENTAGE
OF NET SALES*
4%
*Reflects the six weeks of activity included in 2015 results.
U.S. household pet ownership is growing in nearly every
age demographic, and today approximately two-thirds
of U.S. households have at least one family pet.
20 THE J. M. SMUCKER COMPANY
Increasing numbers of consumers are turning to pet specialty retailers to meet the
health and dietary needs of their pets — driving growth in this channel. In fact, sales
in pet specialty are increasing at nearly twice the rate of the total category. We are
well positioned to benefit in this channel with two great brands: Nature’s Recipe®
and Natural Balance. Natural Balance’s strong in-store presence with sampling and
merchandising programs has helped propel it to historical double-digit growth rates.
Our fiscal 2015 results incorporated only six weeks of activity for the pet food business
due to timing of the transaction close. Looking toward fiscal 2016, we are optimistic
about the growth prospects for this more than $2 billion business. Big Heart
demonstrates strong competencies in the areas that will contribute to continued growth:
consumer insights, research and development, technology, and manufacturing.
Together, these capabilities add up to innovations such as the recent launch of
Milk-Bone® Brushing Chews™ dental treats. This innovative entry, which reframes
dog oral care, uses proprietary
manufacturing processes to create
a bone with twists and nubs. This
award-winning product is off to a
strong start as consumers embrace
an effective new way to address
their dog’s oral health needs.
We anticipate continued growth
in U.S. Retail Pet Foods as we focus
on innovation, merchandising,
and research and development.
2015 ANNUAL REPORT 23
21
Responsibility and citizenship have defined
Smucker since our founding. Through fiscal
2015, we continued to make solid progress
toward our Economic, Environmental, and
Social sustainability goals.
I
n 2009, we established three rigorous five-year environmental goals to achieve by
the end of 2014. Since then, we have surpassed our waste diversion goal and made
significant progress toward our water intensity goal, and our greenhouse gas emissions
intensity has remained relatively flat due to changes in our manufacturing footprint.
During that initial five-year period, we learned from both our challenges and our
successes, and our performance helped form our 2020 targets to increase our rate
of waste diversion from landfill to 95 percent; to reduce water usage by 15 percent;
and to reduce greenhouse gas emissions by 10 percent. We are also on track to
fulfill two important responsible sourcing commitments as we work with our
suppliers and partners to develop a fully sustainable and traceable palm oil supply
chain and to increase our certified green coffee purchases. Read about these
accomplishments and more in our 2015 Corporate Responsibility Report available
in the Corporate Responsibility section of our website at jmsmucker.com.
SUSTAINABILITY
AT SMUCKER
WASTE DIVERSION
Year ended Dec. 31,
Measuring Our Impact
87.2%
85.6%
2013
2014
WATER INTENSITY
Complete information for
all facilities is not currently
available.
Year ended Dec. 31,
(gallons per EU*)
3.62
3.59
2013
2014
*Equivalent Unit (EU) is an
internal measure of volume
based on tonnage.
EMISSIONS INTENSITY
Year ended Dec. 31,
(tonnes CO2e per 1,000 EU*)
1.27
1.28
2013
2014
*Equivalent Unit (EU) is an
internal measure of volume
based on tonnage.
PRODUCT CHOICE
Within the Smucker family of brands, our goal is to offer consumers a variety of products to meet their diverse
needs as we fulfill Our Purpose of helping to bring families together to share memorable meals and moments.
Our Pillsbury™ Purely Simple baking
and frosting mixes are made with simple
ingredients with no colors, preservatives,
or artificial flavors.
24
22 THE J. M. SMUCKER COMPANY
Sahale Snacks offers a variety of unique
ingredient combinations and adventurous
flavor profiles that take everyday snacking
Beyond Ordinary® and expands our glutenfree and non-GMO choices.
All of our Santa Cruz Organic and R.W. Knudsen
Family juices are Non-GMO Project® Verified.
Smucker’s Fruit-Fulls pure blended fruit pouches
meet on-the-go, “better-for-you” snacking needs,
and contain no preservatives, added sweeteners,
or artificial flavors.
Crisco coconut oil provides an alternative
oil option and is certified USDA organic.
Milk-Bone Brushing Chews dental treats
provide an easy and effective way to care
for your dog’s teeth.
2015 ANNUAL REPORT 25
23
CHICKEN WITH PEANUT CURRY
YOGURT SAUCE
SOUTHWESTERN SPROUTED
LENTIL SALAD
GLUTEN-FREE* CHOCOLATE FROSTED
DEVIL’S FOOD CUPCAKES
APPLE PEANUT BUTTER SNACK
2015 FINANCIAL HIGHLIGHTS
The J. M. Smucker Company
YEAR ENDED APRIL 30,
2015
2014
$5,692.7
$5,610.6
Net income
$ 344.9
$ 565.2
Net income per common share – assuming dilution
$
$
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
Net sales
NET INCOME AND NET INCOME PER COMMON SHARE
3.33
5.42
INCOME AND INCOME PER COMMON SHARE EXCLUDING CERTAIN
ITEMS AFFECTING COMPARABILITY(A)
Income
$ 402.5
$ 584.9
Income per common share – assuming dilution
$
$
COMMON SHARES OUTSTANDING AT YEAR END
NUMBER OF EMPLOYEES
(A)
3.88
5.61
119,577,333
101,697,400
7,370
4,775
Refer to “Non-GAAP Measures” located on pages 36-37 in the “Management’s Discussion and Analysis”
section for a reconciliation to the comparable GAAP financial measure.
24 THE J. M. SMUCKER COMPANY
* Ensure all recipe ingredients are gluten free by referencing
the ingredient labels, as products may vary. If uncertain,
contact the ingredient manufacturer.
CHICKEN SPINACH SALAD WITH
STRAWBERRY POPPY SEED DRESSING
BLUEBERRY ORANGE
STREUSEL MUFFINS
SOUTHWESTERN SPROUTED
LENTIL SALAD
CHICKEN WITH PEANUT CURRY
YOGURT SAUCE
INGREDIENTS
1cup truRoots® Organic
Sprouted Green Lentils
1 teaspoon ground cumin
3 tablespoons olive oil
2 tablespoons lime juice
1½ teaspoons minced garlic
½ teaspoon salt or to taste
¼teaspoon freshly ground
black pepper
18 grape tomatoes, halved
½ cup carrots, shredded
2 green onions, sliced
2tablespoons cilantro
leaves, finely chopped
1jalapeno pepper,
seeded and minced
INGREDIENTS
2tablespoons Crisco®
Pure Canola Oil
3 to 4 cloves garlic, chopped
1 cup onion, chopped
1cup red and green bell
peppers, chopped
1 tablespoon curry powder
4skinless, boneless chicken
breasts, cut into 1-inch
pieces
Salt and pepper
1 cup plain yogurt
½cup Jif® Creamy Peanut
Butter or
½cup Jif® Extra Crunchy
Peanut Butter
¼teaspoon red pepper flakes
Hot cooked rice
PREP TIME: 15 minutes
COOK TIME: 25 minutes
YIELD: 4 servings
DIRECTIONS
1.PREPARE sprouted lentils according
to package instructions. Drain any
excess water; transfer lentils to bowl
and let cool to room temperature.
2.HEAT small skillet over low heat.
Add ground cumin and cook until just
fragrant, about one minute.
3.COMBINE cumin, olive oil, lime,
garlic, salt and pepper in large bowl.
Whisk to combine. Add cooled lentils,
tomatoes, carrots, green onions,
cilantro and jalapeno. Toss well.
4.COVER and chill in refrigerator, or
let stand 1 hour before serving for
flavors to blend.
©/® The J. M. Smucker Company
INGREDIENTS
2Gala apples cored,
cut into slices
¼cup Smucker’s® Natural
Creamy Peanut Butter,
stirred
¼ cup plain yogurt
1tablespoon apple juice
¼teaspoon ground
cinnamon
2tablespoons dry roasted
sunflower kernels
DIRECTIONS
1.HEAT oil in a large skillet over medium
heat. Add garlic, onion and peppers.
Cook just until tender. Stir in curry
powder. Cook 1 minute.
2.SEASON chicken with salt and pepper.
Add to skillet. Cook and stir until
browned. Combine yogurt, peanut butter
and red pepper flakes. Stir into skillet.
Simmer until sauce is hot.
3.SEASON to taste with additional
salt and pepper, if needed. Serve with
cooked rice.
©/® The J. M. Smucker Company
APPLE PEANUT BUTTER SNACK
PREP TIME: 10 minutes
YIELD: 2 servings
DIRECTIONS
1.PLACE apple slices on serving plates. Stir
together peanut butter, yogurt, apple juice
and cinnamon until blended.
2.SPOON peanut butter mixture evenly on
apples. Sprinkle with sunflower kernels.
GLUTEN-FREE* CHOCOLATE FROSTED
DEVIL’S FOOD CUPCAKES
INGREDIENTS
2cups Pillsbury BESTTM
Multi-Purpose Gluten-Free
Flour Blend
¾cup unsweetened
cocoa powder
1½ teaspoons baking soda
¾ teaspoon baking powder
¾ teaspoon salt
¾ cup butter, softened
1¾ cups sugar
3large eggs, at room
temperature
1½ teaspoons vanilla extract
1½ cups hot water
1container PillsburyTM
Creamy Supreme®
Chocolate Fudge Flavored
Frosting
PREP TIME: 20 minutes
COOK TIME: 20 minutes
YIELD: 24 cupcakes
DIRECTIONS
1.HEAT oven to 350°F. Line muffin cups
with 24 paper baking cups.
2.COMBINE flour blend, cocoa powder, baking
soda, baking powder and salt in medium
bowl. Beat butter in large bowl with electric
mixer on medium speed until creamy. Add
sugar gradually. Beat about 4 minutes or until
smooth. Add eggs, beating after each
addition. Beat in vanilla. Add flour mixture
gradually on low speed. Add hot water. Stir
until batter is smooth. Divide evenly into
prepared baking cups.
3.BAKE 18 to 20 minutes or until toothpick
inserted in center comes out clean.
Remove to wire rack to cool completely.
Frost cupcakes as desired.
* Ensure all recipe ingredients are gluten free by referencing the ingredient labels,
as products may vary. If uncertain, contact the ingredient manufacturer.
©/® The J. M. Smucker Company
©/® The J. M. Smucker Company
BLUEBERRY ORANGE STREUSEL MUFFINS
INGREDIENTS
Crisco® Original No-Stick
Cooking Spray
1¼cups Hungry Jack®
Complete Blueberry
Wheat Flavored
Pancake & Waffle Mix
(Just Add Water)
1 large egg
¼ cup sour cream
¼cup Smucker’s® Sweet
Orange Marmalade
1 tablespoon butter
3 tablespoons sugar
3tablespoons Pillsbury
BESTTM All Purpose Flour
©/® The J. M. Smucker Company
PREP TIME: 15 minutes
COOK TIME: 15 minutes
YIELD: 6 muffins
DIRECTIONS
1.HEAT oven to 375°F. Coat 6 muffin cups
with no-stick cooking spray.
2.PLACE pancake mix in medium bowl. Beat
egg in small bowl. Blend in sour cream and
orange marmalade. Add egg mixture to
pancake mix, stirring just until moistened.
Divide evenly into prepared muffin cups.
3.MELT butter in small bowl. Using a fork,
cut in sugar and flour until evenly
moistened and crumbs form. Sprinkle
about 1 tablespoon on top of each muffin.
4.BAKE 14 to 16 minutes or until golden
brown and toothpick inserted in center
comes out clean. Cool 5 minutes. Run
a knife around edge of each muffin
before removing from pan.
CHICKEN SPINACH SALAD WITH
STRAWBERRY POPPY SEED DRESSING
INGREDIENTS
STRAWBERRY POPPY SEED
DRESSING
½cup Smucker’s® Natural
Strawberry Fruit Spread
3 tablespoons water
2tablespoons balsamic
vinegar or white balsamic
vinegar
1½ teaspoons poppy seeds
½ teaspoon seasoned salt
¼cup Crisco® Pure Olive Oil
CHICKEN SPINACH SALAD
2(6 oz.) packages baby
spinach leaves
¼ cup red onion, chopped
2(6 oz.) packages
refrigerated, fully cooked,
grilled chicken breast strips
½cup Parmesan cheese,
shaved
©/® The J. M. Smucker Company
2015 FINANCIAL REVIEW
PREP TIME: 15 minutes
COOK TIME: 10 minutes
YIELD: 4 servings
PREP TIME: 20 minutes
YIELD: 4 main dish servings
DIRECTIONS
FOR DRESSING:
1.COMBINE fruit spread, water, vinegar,
poppy seeds and seasoned salt in small
bowl. Whisk in oil gradually until slightly
thickened. Cover and chill until ready
to serve.
FOR SALAD:
2.DIVIDE spinach onto four serving plates.
Top with onions. Mound chicken strips
onto center of each serving. Drizzle with
desired amount of dressing. Sprinkle
with cheese. Serve immediately.
The J. M. Smucker Company
FIVE-YEAR SUMMARY OF SELECTED FINANCIAL DATA
The following table presents selected financial data for each of the five years in the period ended April 30, 2015. The selected
­financial data should be read in conjunction with the “Results of Operations” and “Financial Condition” sections of “Management’s
Discussion and Analysis” and the consolidated financial statements and notes thereto.
Year Ended April 30,
20152014201320122011
(Dollars in millions, except per share data)
Statements of Income:
Net sales
Gross profit
% of net sales
Operating income
% of net sales
Net income
$ 5,692.7$5,610.6$5,897.7$5,525.8$4,825.7
$ 1,968.7$2,031.0$2,027.6$1,845.2$1,798.5
34.6%36.2%34.4%33.4%37.3%
$   772.0
$  919.0
$  910.4
$  778.3
$  784.3
13.6%16.4%15.4%14.1%16.3%
$   344.9
$  565.2
$  544.2
$  459.7
$  479.5
Financial Position:
Cash and cash equivalents
Total assets
Total debt
Shareholders’ equity
$   125.6
$  153.5
$  256.4
$  229.7
$  319.8
16,882.69,060.29,024.19,106.58,322.1
6,170.92,216.32,010.12,061.81,301.5
7,086.95,029.65,148.85,163.45,292.3
Liquidity:
Net cash provided by operating activities
Capital expenditures
Free cash flow (A)
Quarterly dividends paid
Purchase of treasury shares
Earnings before interest, taxes, depreciation,
and amortization (A)
$   733.2
$  856.0
$  855.8
$  730.9
$  391.6
247.7279.5206.5274.2180.1
485.5576.5649.3456.7211.5
254.0238.0222.8213.7194.0
24.3508.5364.2315.8389.1
871.31,185.51,161.61,028.01,023.9
Share Data:
Weighted-average shares outstanding
Weighted-average shares outstanding –
assuming dilution
Dividends declared per common share
103,691,978104,332,241108,827,897113,263,951118,165,751
103,697,261104,346,587108,851,153113,313,567118,276,086
$    2.56
$   2.32
$   2.08
$   1.92
$   1.68
Earnings per Common Share:
Net income
Net income – assuming dilution
$    3.33
$   5.42
$   5.00
$   4.06
$   4.06
3.335.425.004.064.05
Other Non-GAAP Measures: (A)
Gross profit excluding certain items
affecting comparability
% of net sales
Operating income excluding certain items
affecting comparability
% of net sales
Income and income per common share
excluding certain items affecting comparability:
Income
Income per common share – assuming dilution
$ 1,999.4$2,035.1$2,032.5$1,896.9$1,851.4
35.1%36.3%34.5%34.3%38.4%
$   859.3
$  948.7
$  964.8
$  902.5
$  896.3
15.1%16.9%16.4%16.3%18.6%
$   402.5
$    3.88
$  584.9
$   5.61
$  580.4
$   5.33
$  541.2
$   4.78
$  554.3
$   4.69
(A) Refer to “Non-GAAP Measures” located on pages 36-37 in the “Management’s Discussion and Analysis” section for a reconciliation to the comparable GAAP financial measure.
NET SALES
(Dollars in billions)
$5.5
$5.9
$5.6
$5.7
$4.8
NON-G A A P
I NC OM E PE R C OM M ON S H A RE –
A S S U M I NG DI L U TI ON ( A )
$5.33
$4.69
ASSETS
(Dollars in billions)
$16.9
$5.61
$4.78
$3.88
$8.3
2011
2012
2013
2014
2015
2011
2012
2013
2014
2015
2011
$9.1
$9.0
$9.1
2012
2013
2014
2015
2015 ANNUAL REPORT 25
SUMMARY OF QUARTERLY RESULTS OF OPERATIONS
COMPARISON OF FIVE-YEAR CUMULATIVE
TOTAL SHAREHOLDER RETURN
The J. M. Smucker Company
The J. M. Smucker Company
Among The J. M. Smucker Company, the S&P Packaged Foods & Meats Index, and the S&P 500 Index
The following is a summary of unaudited quarterly results of operations for the years ended April 30, 2015 and 2014.
Net Income Net Income (Loss)
Net Income
(Loss) per per Common Share –
(Dollars in millions, except per share data)
Quarter Ended
Net Sales Gross Profit
(Loss) Common Share Assuming Dilution
2015
July 31, 2014
October 31, 2014
January 31, 2015
April 30, 2015
$1,323.8
1,481.8
1,440.0
1,447.1
$478.7
536.5
522.9
430.6
$116.0
158.3
160.9
(90.3)
$ 1.14
1.55
1.58
(0.82)
$ 1.14
1.55
1.58
(0.82)
2014
July 31, 2013
October 31, 2013
January 31, 2014
April 30, 2014
$1,350.9
1,559.9
1,465.5
1,234.3
$492.9
552.6
545.2
440.3
$126.6
153.4
166.7
118.5
$ 1.19
1.46
1.59
1.16
$ 1.19
1.46
1.59
1.16
$300
$250
$200
$150
$100
Annual net income (loss) per common share may not equal the sum of the individual quarters due to differences in the average
number of shares outstanding during the respective periods, primarily due to share repurchases and the issuance of shares related
to the Big Heart Pet Brands acquisition.
$50
$0
4/10
STOCK PRICE DATA
4/11
4/12
4/13
4/14
4/15
The J. M. Smucker Company
S&P Packaged Foods & Meats
Our common shares are listed on the New York Stock Exchange – ticker symbol SJM. The table below presents the high and low
­market prices for the shares and the quarterly dividends declared. There were approximately 285,600 shareholders of record as of
June 15, 2015, of which approximately 45,200 were registered holders of common shares.
Quarter Ended
High
Low
Dividends
2015
July 31, 2014
October 31, 2014
January 31, 2015
April 30, 2015
$107.74
104.51
107.21
118.64
$ 95.89
95.60
97.28
101.88
$0.64
0.64
0.64
0.64
2014
July 31, 2013
October 31, 2013
January 31, 2014
April 30, 2014
$113.18
114.72
112.05
100.89
$ 96.75
103.80
96.30
87.10
$0.58
0.58
0.58
0.58
S&P 500
The J. M. Smucker Company
S&P Packaged Foods & Meats
S&P 500
April 30,
2010
2011
2012
2013
2014
2015
$100.00
$126.29
$137.31
$182.49
$174.65
$214.53
100.00
116.26
131.46
168.31
185.21
212.95
100.00 117.22122.79143.54172.87195.31
The above graph compares the cumulative total shareholder return for the five years ended April 30, 2015, for our common shares,
the S&P Packaged Foods & Meats Index, and the S&P 500 Index. These figures assume all dividends are reinvested when received
and are based on $100 invested in our common shares and the referenced index funds on April 30, 2010.
Copyright© 2015 Standard & Poor’s, a division of The McGraw-Hill Companies Inc. All rights reserved.
www.researchdatagroup.com/S&P.htm
26 THE J. M . SMUCKER COMPANY
2015 ANNUAL REPORT 27
MANAGEMENT’S DISCUSSION AND ANALYSIS
The J. M. Smucker Company
MANAGEMENT’S DISCUSSION AND ANALYSIS
The J. M. Smucker Company
(Dollars in millions, unless otherwise noted, except per share data)
DESCRIPTION OF THE COMPANY
For more than 115 years, The J. M. Smucker Company (“Company,”
“we,” “us,” or “our”) headquartered in Orrville, Ohio, has been
committed to offering consumers quality products that bring
families together to share memorable meals and moments.
Today, we are a leading marketer and manufacturer of consumer
food and beverage products and pet food and pet snacks in
North America with projected annual net sales of approximately
$8.0 billion. In consumer foods and beverages, our brands
include Smucker’s®, Folgers®, Jif ®, Dunkin’ Donuts®, Crisco®,
Pillsbury ®, R.W. Knudsen Family ®, Hungry Jack ®, Café Bustelo®,
Martha White®, truRoots®, Sahale Snacks®, Robin Hood®,
and Bick’s®. In pet food and pet snacks, our brands include
Meow Mix ®, Milk-Bone®, Kibbles ’n Bits®, Natural Balance®,
and 9Lives®.
We have four reportable segments: U.S. Retail Coffee, U.S. Retail
Consumer Foods, U.S. Retail Pet Foods, and International,
Foodservice, and Natural Foods. The U.S. retail market segments
in total comprised over 75 percent of net sales in 2015 and
­represent a major portion of our strategic focus – the sale of
branded food products with leadership positions to consumers
through retail outlets in North America. In the U.S. retail market
segments, our products are sold primarily to food retailers,
food wholesalers, drug stores, club stores, mass merchandisers,
discount and dollar stores, military commissaries, and pet
­specialty stores. The International, Foodservice, and Natural
Foods segment represents sales outside of the U.S. retail market
segments. In this segment, our products are distributed
domestically and in foreign countries through retail channels,
foodservice distributors and operators (e.g., restaurants,
­lodging, schools and universities, health care operators), and
natural foods stores and distributors.
STRATEGIC OVERVIEW
We remain rooted in our Basic Beliefs of Quality, People,
Ethics, Growth, and Independence established by our founder
and namesake, Jerome Smucker, more than a century ago.
Today, these Basic Beliefs are the core of our unique corporate
culture and serve as a foundation for decision making and
actions. We have been led by four generations of family leadership, having had only five chief executive officers in 118 years.
This continuity of management and thought extends to the
broader leadership team that embodies the values and
embraces the business practices that have contributed to our
consistent growth.
Our strategic vision is to own and market food brands which
hold the #1 market position in their category, with an emphasis
on North America while maintaining a global perspective.
28 THE J. M . SMUCKER COMPANY
Our strategic long-term growth objectives are to increase net
sales by 6 percent and earnings per share, measured on a
­non-GAAP basis, by greater than 8 percent annually on average.
While the net sales contribution from acquisitions will vary
from year to year, we expect organic growth, including new
products, to add 3 to 4 percent per year and acquisitions to
contribute the remainder over the long term.
Net sales has increased at a compound annual growth rate
of 4 percent over the past five years. Although the increase falls
below our objective, we remain committed to achieving our
top-line growth objective over the long-term by capitalizing on
acquisitions that are a strategic fit and generating organic
growth through innovation and other brand building activities.
During 2015, we acquired Big Heart Pet Brands (“Big Heart”).
Big Heart is a leading producer, distributor, and marketer of
premium-quality, branded pet food and pet snacks in the U.S.
This transformational acquisition has provided an immediate
and significant presence in the large and growing $21.0 billion
pet food and pet snacks categories, and has increased our
­center-of-the-store presence with consumers and retailers.
Our acquisition earlier this year of Sahale Snacks, Inc.
(“Sahale”), a manufacturer and marketer of premium, branded
nut and fruit snacks, has provided an established platform for
growth in the snacking space. We also continued our focus on
innovation, launching Café Bustelo K-Cup® pods and Jif To Go
Dippers TM in 2015. Our new product initiatives for 2016 include
Dunkin’ Donuts K-Cup® pods and Milk-Bone Good Morning TM
dog vitamin treats.
As a result of new borrowings in 2015 used to partially
finance the Big Heart acquisition, our cash deployment strategy over the next three to five years will include a significant
focus on debt repayment, while we continue our current
­dividend policy and our investment in the business through
capital expenditures.
RESULTS OF OPERATIONS
On March 23, 2015, we completed the acquisition of Big Heart,
and on September 2, 2014, we completed the acquisition of
Sahale. Both transactions were accounted for as purchase
business combinations, and the operations of the businesses
are included in our 2015 consolidated financial statements
from the date of acquisition. Results for 2015 and 2014 include
Enray Inc. (“Enray”) since the completion of the acquisition
on August 20, 2013, and the impact of our licensing and
­distribution agreement with Cumberland Packing Corp.
(“Cumberland”), which commenced on July 1, 2013.
The acquisition of Big Heart was a cash and stock transaction
valued at $5.9 billion, which included the assumption of
$2.6 billion in debt that we refinanced at closing. We issued
17.9 million shares of our common stock to the shareholders
of Blue Acquisition Group, Inc., Big Heart’s parent company,
and paid $1.2 billion in cash, which is subject to a working
capital adjustment. After the closing of the transaction, we had
approximately 120.0 million common shares outstanding.
We funded the non-equity portion of the acquisition, the refinancing of the assumed debt, and the prepayment of a portion
of our existing debt through the combination of a $1.8 billion
bank term loan and $3.7 billion in long-term notes.
We expect to incur approximately $225.0 in one-time costs
related to the Big Heart acquisition, of which approximately
$150.0 are expected to be cash charges. The one-time costs
consist primarily of employee-related costs, outside services
and consulting costs, and other costs directly related to the
acquisition. These costs are ­anticipated to be incurred pri­
marily over the next three years, with approximately one-half
expected to be recognized in 2016. We incurred costs of $36.0
in 2015 related to the inte­gration of Big Heart.
Year Ended April 30,
2015
2014
% Increase
% Increase
201520142013
(Decrease)
(Decrease)
Net sales
Gross profit
% of net sales
Operating income
% of net sales
Net income:
Net income
Net income per common share – assuming dilution
Gross profit excluding certain items affecting comparability (A)
% of net sales
Operating income excluding certain items affecting
comparability (A)
% of net sales
Income excluding certain items affecting comparability: (A)
Income
Income per common share – assuming dilution
$5,692.7$5,610.6$5,897.7
$1,968.7$2,031.0$2,027.6
34.6%36.2%34.4%
$  772.0
$  919.0
$  910.4
13.6%16.4%15.4%
$  344.9
$  565.2
$  544.2
$   3.33
$   5.42
$   5.00
$1,999.4$2,035.1$2,032.5
35.1%36.3%34.5%
$  859.3
$  948.7
$  964.8
15.1%16.9%16.4%
$  402.5
$   3.88
$  584.9
$   5.61
$  580.4
$   5.33
1%
(3)%
(5)%
0%
(16)%
1%
(39)%
(39)%
(2)%
4%
8%
0%
(9)%
(2)%
(31)%
(31)%
1%
5%
(A) Refer to “Non-GAAP Measures” located on pages 36-37 in the “Management’s Discussion and Analysis” section for a reconciliation to the comparable GAAP financial measure.
Summary of 2015
Summary of 2014
Net sales in 2015 increased 1 percent, compared to 2014,
reflecting the contribution from acquisitions, partially offset by
volume declines in the U.S. Retail Coffee segment. Operating
income decreased 16 percent, primarily due to the sales volume
decline, a $47.0 fair value purchase accounting adjustment to
acquired Big Heart inventory, and Big Heart integration costs of
$36.0. Operating income excluding the impact of restruc­turing
and merger and integration costs and unallocated gains and
losses on commodity and foreign currency exchange deriva­tives­
(“certain items affecting comparability”) decreased 9 percent
over the same period. Net income per diluted share decreased
39 percent in 2015, compared to 2014, and decreased 31 percent
excluding certain items affecting comparability. The significant
decreases from the prior year resulted from the ­recognition of
$173.3 of other debt costs incurred in 2015 in connection with
the Big Heart acquisition and the related refinancing activities,
as well as the decrease in operating income.
Net sales in 2014 decreased 5 percent, compared to 2013,
reflecting pricing actions and the impact of the planned
exit of certain portions of our business in the International,
Foodservice, and Natural Foods segment. Operating income
increased 1 percent in 2014, compared to 2013, mainly driven
by lower special project costs, partially offset by an increase
in selling, distribution, and administrative (“SD&A”) expenses.
Excluding certain items affecting comparability, operating
income decreased 2 percent in 2014, compared to the prior
period. Net income per diluted share increased 8 percent in
2014, compared to 2013, and increased 5 percent excluding
certain items affecting comparability. Both measures reflect
the benefit of a decrease in weighted-average common shares
outstanding as a result of our share repurchase activities
­during 2014 and 2013 and lower interest expense in 2014.
2015 ANNUAL REPORT 29
MANAGEMENT’S DISCUSSION AND ANALYSIS
MANAGEMENT’S DISCUSSION AND ANALYSIS
The J. M. Smucker Company
The J. M. Smucker Company
Net Sales
2014 Compared to 2013
2015 Compared to 2014
Year Ended April 30,
Year Ended April 30,
Increase
2015
2014 (Decrease) %
Increase
2014
2013(Decrease) %
Net sales
$5,692.7 $5,610.6 $ 82.1 1%
Adjust for certain
noncomparable items:
Acquisitions
(295.0)
— (295.0)(5)
Distribution agreement
(6.1)
—
(6.1)—
Foreign currency
exchange
35.0
— 35.01
Net sales adjusted
for certain
noncomparable items (A) $5,426.6 $5,610.6 $(184.0)(3)%
Net sales
$5,610.6 $5,897.7 $(287.1) (5)%
Adjust for certain
noncomparable items:
Acquisition
(39.9)
— (39.9) (1)
Distribution agreement (30.1)
— (30.1) (1)
Foreign currency
exchange
24.9
—
24.9 —
Net sales adjusted
for certain
noncomparable items (A) $5,565.5 $5,897.7 $(332.2)(6)%
Amounts may not add due to rounding.
Amounts may not add due to rounding.
(A) Net sales adjusted for certain noncomparable items is a non-GAAP measure used
in evaluating performance internally. This measure provides useful information
to investors because it enables comparison of results on a year-over-year basis.
Net sales adjusted for certain noncomparable items in the table above excludes
the impact of the Big Heart and Sahale acquisitions, the incremental impact of
the Enray acquisition and the Cumberland distribution agreement, and foreign
currency exchange.
(A) Net sales adjusted for certain noncomparable items is a non-GAAP measure used
in evaluating performance internally. This measure provides useful information to
investors because it enables comparison of results on a year-over-year basis. Net sales
adjusted for certain noncomparable items in the table above excludes the impact
of the Enray acquisition, the Cumberland distribution agreement, and foreign
currency exchange.
Net sales increased 1 percent in 2015, compared to 2014, due
to a $295.0 contribution from acquisitions in 2015, primarily
the Big Heart contribution of $244.5. Excluding the impact of
acquisitions, the distribution agreement, and foreign currency
exchange, net sales decreased 3 percent over the same period,
primarily due to volume declines in the U.S. Retail Coffee segment driven by the Folgers brand and the impact of the private
label foodservice hot beverage business exits. Volume declines
were also realized in the Pillsbury baking brand, while volume
gains were realized in Crisco oils and Jif peanut butter. Foreign
currency exchange represented 1 percentage point of the
net sales decrease. The impact of net price realization was
essentially neutral as lower net price realization on the Jif
and Crisco brands mostly offset higher net price realization
on the Folgers brand.
Net sales for 2014 decreased $287.1, or 5 percent, compared
to 2013, primarily due to a 5 percent reduction in net price
realization, reflecting pricing actions taken on coffee and peanut butter, slightly offset by the $70.0 combined contribution
from Enray and Cumberland. Volume gains realized in Crisco
oils, Folgers coffee, and Jif peanut butter were offset by the
impact of the business exits in the International, Foodservice,
and Natural Foods segment, declines in Pillsbury baking mixes
and flour, and planned declines in certain Santa Cruz Organic®
beverages.
Operating Income
The following table presents the components of operating
income as a percentage of net sales.
Year Ended April 30,
2015 20142013
Gross profit
Selling, distribution,
and administrative expenses:
Marketing
Advertising
Selling
Distribution
General and administrative
Total selling, distribution, and
administrative expenses
Amortization
Other special project costs
Other operating income – net
Operating income
34.6% 36.2%34.4%
3.1% 3.0%2.8%
1.9 2.22.2
3.7 3.63.3
2.9 2.82.7
6.6 6.05.5
18.1% 17.6%16.5%
1.9 1.81.6
1.0 0.50.8
— —(0.1)
13.6% 16.4%15.4%
2015 Compared to 2014
Gross profit decreased $62.3, or 3 percent, in 2015, compared
to 2014, driven by lower volume and the impact of higher
costs, which were not fully offset by higher net price realization.
Higher green coffee costs in 2015, compared to 2014, were not
fully recovered by higher net price realization. This unfavorable
net impact was partially offset by lower peanut costs in 2015,
which were not fully offset by lower net prices. The Big Heart
business contributed $46.1 to gross profit in 2015, which
included the one-time unfavorable impact of a fair value
purchase accounting adjustment to acquired inventory that
increased costs of products sold by $47.0. Excluding certain
items affecting comparability, primarily consisting of a $29.8
unfavorable change in the impact of unallocated derivative
gains and losses, gross profit decreased $35.7, or 2 percent,
over the same period.
SD&A expenses increased $42.5, or 4 percent, in 2015, compared
to 2014, driven by the addition of Big Heart, partially offset by
a decrease in marketing expense, mainly in the U.S. Retail
Coffee segment.
Amortization expense increased $12.0, or 12 percent, in 2015,
compared to 2014, primarily due to the addition of Big Heart
finite-lived intangible assets during the fourth quarter. We estimate that total annual amortization expense will increase to
approximately $210.0 in 2016 based on the current valuation
of these assets, which is subject to revision.
Operating income increased $8.6, or 1 percent, in 2014,
­compared to 2013. A $26.0 decrease in total special project
costs in 2014, compared to 2013, more than offset the increase
in SD&A expenses. The decrease in special project costs reflected
the substantial progress made on the related projects, with
lower costs incurred in 2014, compared to 2013. Excluding certain items affecting comparability in both periods, operating
income decreased $16.1, or 2 percent.
Interest Expense and Other Debt Costs
Net interest expense was essentially flat in 2015, compared
to 2014, as the impact of incremental interest related to the
debt issued to finance the Big Heart acquisition was offset by
the impact of long-term debt repayments made over the last
12 months. In 2016, we anticipate annual interest expense of
approximately $180.0 based on our new debt ­structure, the
current interest rate outlook, and debt repayment assumptions.
In addition to interest expense, we incurred $173.3 of other
debt costs during 2015 related to the Big Heart acquisition.
The majority of these costs were make-whole payments
incurred when we prepaid our outstanding privately placed
Senior Notes of $1.1 billion.
Net interest expense decreased $14.0 during 2014, compared
to 2013, primarily due to the impact of an interest rate swap
entered into during the second quarter of 2014.
Income Taxes
Operating income decreased $147.0, or 16 percent, in 2015,
compared to 2014, reflecting Big Heart integration costs of
$36.0 in 2015. Excluding certain items affecting comparability,
operating income decreased $89.4, or 9 percent.
Income taxes decreased 37 percent in 2015, compared to
2014, primarily as a result of a 38 percent reduction in income
before income taxes. The effective tax rate of 34.1 percent in
2015 was slightly higher than the rate in 2014.
2014 Compared to 2013
Gross profit was flat in 2014, compared to 2013, and remained
flat excluding certain items affecting comparability. Favorable
mix, partially driven by coffee, and the contribution from
Enray and Cumberland were offset by the impact of the exited
businesses in the International, Foodservice, and Natural Foods
segment and higher trade spending related to our retail coffee
and foodservice hot beverage businesses. Overall commodity
costs decreased in 2014, compared to 2013, driven by lower
green coffee costs, but were offset by lower net price realization.
Income taxes increased 4 percent in 2014, compared to 2013,
primarily as a result of a 4 percent increase in income before
income taxes. The effective tax rate of 33.5 percent in 2014
was comparable to the rate in 2013.
SD&A expenses increased 2 percent in 2014, compared to 2013.
General and administrative expenses increased 3 percent,
­primarily driven by certain corporate initiatives, partially offset
by a decrease in incentive compensation costs, while selling
expense increased 2 percent.
Commodities Overview
The raw materials we use are primarily commodities,
­agricultural-based products, and packaging materials. The
most significant of these materials, based on 2015 cost of
­products sold, are green coffee, peanuts, plastic, edible oils,
and wheat. Green coffee, edible oils, and wheat are traded on
active regulated exchanges, and the price of these commodities
fluctuates based on market conditions. Derivative instruments,
including futures and options, are used to minimize the impact
of price volatility for these commodities.
We source green coffee from more than 20 coffee-producing
countries. Its price is subject to high volatility due to factors such
as weather, global supply and demand, pest damage, investor
speculation, and political and economic conditions in the
source countries.
Amounts may not add due to rounding.
30 THE J. M . SMUCKER COMPANY
2015 ANNUAL REPORT 31
MANAGEMENT’S DISCUSSION AND ANALYSIS
MANAGEMENT’S DISCUSSION AND ANALYSIS
The J. M. Smucker Company
We source peanuts, edible oils, and wheat mainly from
North America. We are one of the largest procurers of peanuts
in the U.S. and frequently enter into long-term purchase
­contracts for various periods of time to mitigate the risk of a
shortage of this key commodity. The edible oils we purchase
are mainly soybean and canola. The price of peanuts, edible
oils, and wheat are driven primarily by weather, which impacts
crop sizes and yield, as well as global demand, especially from
large importing countries such as China and India. In addition,
edible oil prices have been impacted by soybean and canola
demand from the biofuels industry.
We frequently enter into long-term contracts to purchase
­plastic packaging, which is sourced mainly from within the
U.S. Plastic resin is made from petrochemical feedstock and
natural gas feedstock, and the price can be influenced by
feedstock, energy, and crude oil prices, as well as global
­economic conditions.
The J. M. Smucker Company
Consumer Foods segment primarily includes domestic sales
of Jif, Smucker’s, Pillsbury, and Crisco branded products; the
U.S. Retail Pet Foods segment primarily includes domestic
sales of Meow Mix, Milk-Bone, Kibbles ’n Bits, Natural Balance,
9Lives, Pup-Peroni ®, Gravy Train®, and Nature’s Recipe®
branded products; and the International, Foodservice, and
Natural Foods segment is ­comprised of products distributed
domestically and in foreign countries through retail channels,
foodservice distributors and operators (e.g., restaurants, lodging,
schools and universities, health care operators), and natural foods
stores and distributors. Pet food and pet snacks sales outside
of the U.S. retail market segment are reflected in International,
Foodservice, and Natural Foods.
Segment Results
Effective May 1, 2014, commodity and foreign currency
exchange derivative gains and losses are reported in unallocated
derivative gains and losses outside of segment operating
results until the related inventory is sold. At that time, we
reclassify the hedge gain or loss from unallocated derivative
gains and losses to segment profit, allowing our segments to
realize the economic effect of the hedge without experiencing
any mark-to-market volatility. Prior year results have been
­modified to exclude the unrealized gains and losses on
­commodity and foreign currency exchange derivatives.
The Big Heart transaction resulted in a new reportable segment
for 2015. We now have four reportable segments: U.S. Retail
Coffee, U.S. Retail Consumer Foods, U.S. Retail Pet Foods, and
International, Foodservice, and Natural Foods. The U.S. Retail
Coffee segment primarily represents the domestic sales of
Folgers and Dunkin’ Donuts branded coffee; the U.S. Retail
As a result of leadership changes announced in the fourth
quarter of 2015, we are finalizing our internal financial reporting
structure and the impact on reportable segments for 2016.
All historical information will be retroactively conformed to
the new ­presentation once it is finalized.
In 2015, our overall commodity costs were slightly higher than
in 2014, primarily due to higher green coffee costs, which were
mostly offset by lower costs for peanuts and oils.
Year Ended April 30,
2015
2014
% Increase
% Increase
201520142013
(Decrease)
(Decrease)
Net sales:
U.S. Retail Coffee
U.S. Retail Consumer Foods
U.S. Retail Pet Foods
International, Foodservice, and Natural Foods
Segment profit (loss):
U.S. Retail Coffee
U.S. Retail Consumer Foods
U.S. Retail Pet Foods
International, Foodservice, and Natural Foods
Segment profit (loss) margin:
U.S. Retail Coffee
U.S. Retail Consumer Foods
U.S. Retail Pet Foods
International, Foodservice, and Natural Foods
32 THE J. M . SMUCKER COMPANY
$2,076.1$2,161.7$2,306.5
(4)%
(6)%
2,104.82,172.62,214.8
(3)
(2)
239.1——n/an/a
1,272.71,276.31,376.4
(0)
(7)
$  549.2
$  639.8
$  603.8
432.9393.0413.9
(15.3) — —
166.7167.8196.7
26.5%29.6%26.2%
20.618.118.7
(6.4)——
13.113.114.3
(14)%
6 %
10
(5)
n/an/a
(1) (15)
U.S. Retail Coffee
The U.S. Retail Coffee segment net sales decreased 4 percent
in 2015, compared to 2014, driven by a 10 percent decrease in
volume, primarily due to an 11 percent decrease in the Folgers
brand. Volume for the Café Bustelo brand increased 4 percent
over the same period, while Dunkin’ Donuts packaged coffee
volume decreased 4 percent. The impact of the volume decline
was partially offset by favorable net price realization and
sales mix. The benefit of list price increases taken in 2015 was
­partially offset by the impact of an increase in promotional
spending during the year. Volume and net sales of Keurig®
pods increased 5 percent and 2 percent, respectively, in 2015,
­compared to 2014. Segment profit decreased $90.6 in 2015,
compared to 2014, primarily due to the volume decline and
the unfavorable impact of higher costs, which were not fully
recovered by higher net price realization, driven by Keurig®
pods profitability. Mix and a decrease in ­marketing expense
contributed favorably to segment profit in 2015.
Net sales for the U.S. Retail Coffee segment decreased 6 percent
in 2014, compared to 2013, reflecting lower net price realization
driven by a price decline of approximately 6 percent taken in
February 2013 and incremental promotional spending which
reflected actions taken to pass through lower costs realized
during the year. Segment volume increased 2 percent in 2014,
compared to 2013, as the Folgers brand and Dunkin’ Donuts
packaged coffee increased 3 percent and 7 percent, respectively,
and were partially offset by a decline in the Millstone brand,
which was mainly due to the planned exit of the bulk business.
Net sales of Keurig® pods decreased 1 percent in 2014, compared to 2013, due to an increase in the number of competitors,
including many unlicensed participants, that entered the
­market during 2014. Segment profit increased 6 percent in
2014, compared to 2013, primarily due to the volume growth
and the price to cost relationship during the year.
U.S. Retail Consumer Foods
The U.S. Retail Consumer Foods segment volume decreased
1 percent in 2015, compared to 2014, and segment net sales
decreased 3 percent over the same period, reflecting lower
net price realization, primarily for the Jif and Crisco brands,
partially offset by a $24.4 contribution from the Sahale
business and favorable sales mix. Jif brand volume increased
2 percent in 2015, compared to 2014, while net sales decreased
4 percent, impacted by a 7 percent list price decline taken in
November 2014 and increased promotional spending.
Smucker’s Uncrustables® frozen sandwiches volume and net
sales increased 17 percent and 14 percent, respectively. Crisco
brand volume increased 1 percent, while net sales decreased
7 percent, impacted by a 9 percent list price decline taken in
the fourth quarter of 2014. Volume for the Pillsbury brand
decreased 5 percent, and was the primary contributor to the
segment volume decline, and net sales decreased 9 percent.
Segment profit increased $39.9 in 2015, compared to 2014,
driven by lower commodity costs, primarily for peanuts and oils,
which were not entirely offset by lower net price realization.
Net sales for the U.S. Retail Consumer Foods segment
decreased 2 percent in 2014, compared to 2013, due to overall
lower net price realization, partially offset by a 1 percent
increase in segment volume. Jif brand volume increased
2 percent in 2014, compared to 2013, while Smucker’s fruit
spreads volume was flat. Pricing actions caused net sales for
both brands to decrease 4 percent over the same period.
Smucker’s Uncrustables frozen sandwiches net sales and
­volume increased 20 percent and 22 percent, respectively,
in 2014, compared to 2013, benefiting from new distribution.
Crisco brand volume increased 11 percent, while net sales
increased 3 percent, impacted by lower net price realization
in 2014, compared to 2013. For the same period, net sales and
volume for the Pillsbury brand decreased 5 percent and 4 percent,
respectively. Canned milk net sales increased 2 percent, while
volume decreased 1 percent. Segment profit decreased 5 percent
in 2014, compared to 2013. While overall commodity costs
decreased, primarily for peanuts and oils, they were more than
offset by lower net price realization across the portfolio and
drove the decrease in segment profit. An increase in segment
support costs also contributed to the segment profit decrease.
U.S. Retail Pet Foods
The U.S. Retail Pet Foods segment had net sales of $239.1 and
a segment loss of $15.3 for 2015, representing six weeks of
operations since the close of the acquisition. The segment loss
reflected the one-time unfavorable impact of a fair value purchase accounting adjustment to acquired inventory, which
increased cost of products sold for the segment. Incremental
promotional spending and marketing expense to support new
product introductions and certain other initiatives also
reduced segment profit.
International, Foodservice, and Natural Foods
Net sales in the International, Foodservice, and Natural Foods
segment was flat in 2015, compared to 2014. Excluding the
impact of Big Heart and Sahale, the incremental impact of Enray
and Cumberland, and foreign currency exchange, segment net
sales remained flat and ­volume decreased 3 percent. The volume
decline reflects the impact of the planned exit of our private
label foodservice hot beverage business and decreases in Santa
Cruz Organic beverages and the Robin Hood and Five Roses®
brands, while volume gains were achieved in the R.W. Knudsen
Family brand. Segment profit decreased $1.1 in 2015, compared
to 2014, due to the realization of higher costs in Canada, which
were attributed to sourcing certain products from the U.S.,
reflecting the impact of a weaker Canadian dollar compared to
a year ago, and an increase in green coffee costs. The impact of
higher costs and the segment volume decline were mostly offset
by favorable mix.
2015 ANNUAL REPORT 33
MANAGEMENT’S DISCUSSION AND ANALYSIS
MANAGEMENT’S DISCUSSION AND ANALYSIS
The J. M. Smucker Company
Net sales for the International, Foodservice, and Natural Foods
segment decreased 7 percent in 2014, compared to 2013. The
Enray and Cumberland businesses contributed a combined
$70.0 to segment net sales in 2014. Excluding the impact of
Enray, Cumberland, and foreign currency exchange, segment
net sales and volume decreased 11 percent and 5 percent,
respectively. The decrease in segment volume was primarily
due to the impact of the exited portions of our hot beverage
and Smucker’s Uncrustables frozen sandwich businesses with
foodservice customers and planned declines in Santa Cruz
Organic lemonades. Lower net price realization, higher trade
spending related to our foodservice hot beverage business,
including an accrual adjustment, and unfavorable sales mix
also contributed to the decrease in net sales. Segment profit
decreased 15 percent in 2014, compared to 2013, primarily
due to the higher trade spending and the impact of the exited
portions of our foodservice business.
FINANCIAL CONDITION
Liquidity
Our principal source of funds is cash generated from operations,
supplemented by borrowings against our commercial paper
program and revolving credit facility. Total cash and cash
equivalents decreased to $125.6 at April 30, 2015, compared
to $153.5 at April 30, 2014.
We typically expect a significant use of cash to fund working
capital requirements during the first half of each fiscal year,
primarily due to the buildup of inventories to support the
Fall Bake and Holiday period, the additional increase of coffee
inventory in advance of the Atlantic hurricane season, and
­seasonal fruit procurement. We expect cash provided by
­operations in the second half of the fiscal year to significantly
exceed the amount in the first half of the year, upon completion of the Fall Bake and Holiday period. Total cash provided
by operating activities in the second half of 2015 was $649.3,
as compared to $83.9 provided through the first half of 2015.
34 THE J. M . SMUCKER COMPANY
The J. M. Smucker Company
The following table presents selected cash flow information.
Net cash provided by
operating activities
Net cash used for
investing activities
Net cash provided by (used
for) financing activities
Year Ended April 30,
20152014 2013
$  733.2
$ 856.0
$ 855.8
(1,595.7)(370.3) (185.6)
863.2(575.5) (641.0)
Net cash provided by
operating activities
$  733.2 $ 856.0
$ 855.8
Additions to property, plant,
and equipment
(247.7)(279.5) (206.5)
Free cash flow (A)
$  485.5
$ 576.5
$ 649.3
(A) Free cash flow is a non-GAAP measure used by management to evaluate the
amount of cash available for debt repayment, dividend distribution, acquisition
opportunities, share repurchases, and other corporate purposes.
Cash provided by operating activities decreased $122.8 in
2015, compared to 2014, primarily due to reduced net income
in 2015, as well as a greater amount of cash required to fund
working capital, driven by the payment in the fourth quarter of
2015 of liabilities assumed as part of the Big Heart acquisition.
Cash provided by operating activities in 2014, compared to 2013,
was essentially flat as a result of higher net income in 2014,
which was offset by an increase in the cash required to fund
working capital. This increase in the use of cash was primarily
due to the timing of the 2014 Easter holiday and increased
income tax payments, partially offset by a decrease in pension
contributions in 2014, compared to 2013.
In 2015, cash used for investing activities consisted primarily
of $1.3 billion related to the acquisitions of Big Heart and
Sahale and $247.7 in capital expenditures. In 2014, cash used
for investing activities consisted primarily of $279.5 in capital
expenditures and $101.8 related to the acquisitions of Enray
and Silocaf of New Orleans, Inc. In 2013, cash used for investing
activities consisted mainly of $206.5 in capital expenditures.
Cash provided by financing activities during 2015 consisted
primarily of $5.4 billion in long-term debt proceeds which were
partially offset by $4.2 billion in long-term debt repayments
and quarterly dividend payments of $254.0. New borrowings
in 2015 were comprised of a $1.8 billion bank term loan and
$3.7 billion in long-term notes. Long-term debt repayments
in 2015 were comprised of the $2.6 billion repayment of the
Big Heart debt assumed, the $1.1 billion prepayment of our
­outstanding privately placed Senior Notes and the related
make-whole payments, the $200.0 prepayment on the $1.8 billion
bank term loan, and the $100.0 scheduled repayment of certain
Senior Notes. Cash used for financing activities during 2014
consisted primarily of the purchase of treasury shares for $508.5,
mainly representing the repurchase of 4.9 million common
shares available under a Board of Directors’ authorization,
quarterly dividend payments of $238.0, and a Senior Notes
principal payment of $50.0, partially offset by $248.4 of borrowings under our revolving credit facility. Cash used for
financing activities during 2013 consisted primarily of the
­purchase of treasury shares for $364.2, mainly representing
the repurchase of 4.0 million common shares available under
Board of Directors’ authorizations, quarterly dividend payments
of $222.8, and a Senior Notes principal payment of $50.0.
Capital Resources
The following table presents our capital structure.
April 30,
20152014
Current portion of long-term debt $ — $  100.0
Short-term borrowings
226.0243.2
Long-term debt, less current portion
5,944.91,873.1
Total debt $ 6,170.9$2,216.3
Shareholders’ equity
7,086.95,029.6
Total capital $13,257.8$7,245.9
Voluntary prepayments are permitted without premium or
penalty and are applied to the schedule of required annual
minimum payment obligations in direct order of maturity.
As of April 30, 2015, we have prepaid $200.0 on the Term Loan,
and therefore no additional payments are required until
January 31, 2017.
On March 20, 2015, we completed an offering of $3.7 billion in
Senior Notes due beginning March 15, 2018 through March 15,
2045. The proceeds from the offering, along with the Term Loan,
were used to partially finance the Big Heart acquisition, pay off
the $2.6 billion in debt assumed as part of the Big Heart acquisition, and prepay our outstanding privately placed Senior Notes
of $1.1 billion. The prepayment of our outstanding private
placement notes resulted in make-whole payments and other
financing costs which comprised the majority of other debt
costs of $173.3.
We have available a $1.5 billion revolving credit facility with a
group of 11 banks that matures in September 2018. Additionally,
during the second quarter of 2015, we entered into a commercial paper program under which we can issue short-term,
­unsecured commercial paper not to exceed $1.0 billion at
any time. The commercial paper program is backed by our
revolving credit facility and reduces what we can borrow under
the revolving credit facility by the amount of commercial paper
outstanding. As of April 30, 2015, we had $226.0 of short-term
borrowings outstanding, all of which were issued under our
commercial paper program, at a weighted-average interest rate
of 0.45 percent.
We are in compliance with all of our debt covenants.
For additional information on our new borrowings, revolving
credit facility, commercial paper program, and debt
covenants, see Note 6: Debt and Financing Arrangements.
On March 2, 2015, we entered into a senior unsecured
­delayed-draw Term Loan Credit Agreement (“Term Loan”) with
a syndicate of banks and an available commitment amount of
$1.8 billion. The full amount of the Term Loan was drawn on
March 23, 2015, to partially finance the Big Heart acquisition.
The weighted-average interest rate on the Term Loan at April
30, 2015, was 1.53 percent. The Term Loan requires quarterly
amortization payments of 2.5 percent of the original principal
amount starting in the third quarter of 2016.
2015 ANNUAL REPORT 35
MANAGEMENT’S DISCUSSION AND ANALYSIS
The J. M. Smucker Company
As of April 30, 2015, we had approximately 10.0 million
­common shares available for repurchase under Board of
Directors’ authorizations, including 5.0 million common shares
which were authorized in October 2014.
We intend to utilize a portion of the cash we generate over the
next three to five years for debt repayment, while continuing
our current dividend policy and our investment in the business
through capital expenditures. Due to our focus on debt repayment, we do not expect to repurchase any shares in the near
term nor actively pursue significant acquisitions.
The following table presents certain cash requirements related
to 2016 financing and investing activities. Although no principal
payments are required on our debt obligations in 2016 due to
the $200.0 prepayment on the $1.8 billion Term Loan in 2015,
we intend to utilize a portion of cash provided by operations
for debt repayment as noted above.
Dividend payments – based on current rates
and common shares outstanding
Capital expenditures
Interest payments – based on current interest
rate outlook
Projection
Year Ended
April 30, 2016
$310.0
200.0
180.0
Absent any further acquisitions or other significant investments,
we believe that cash on hand, combined with cash provided
by operations and borrowings available under our commercial
paper program and revolving credit facility, will be sufficient to
meet cash requirements for the next 12 months. As of April 30,
2015, approximately $107.2 of total cash and cash equivalents
was held by our international subsidiaries. We do not intend
to repatriate these funds to meet these obligations. Should we
repatriate these funds, we will be required to provide taxes
based on the applicable U.S. tax rates net of any foreign tax
credit consideration.
36 THE J. M . SMUCKER COMPANY
NON-GAAP MEASURES
We use non-GAAP financial measures including: net sales
adjusted for the noncomparable impact of the Big Heart and
Sahale acquisitions, the incremental impact of the Enray
­acquisition and the Cumberland distribution agreement, and
foreign currency exchange; gross profit, operating income,
income, and income per diluted share, excluding certain items
affecting comparability; and free cash flow, as key measures
for purposes of evaluating performance internally. We believe
that these measures provide useful ­information to investors
because they are the measures we use to evaluate performance
on a comparable year-over-year basis. Effective May 1, 2014, we
have defined certain items affecting comparability to include
restructuring and merger and integration costs (“special project costs”) and unallocated gains and losses on commodity and
foreign currency exchange derivatives (“unallocated derivative
gains and losses”) and modified prior year results to conform
to the new definition. The special project costs relate to specific
restructuring and merger and integration projects that are
each nonrecurring in nature and can significantly affect the
year-over-year assessment of operating results. Unallocated
derivative gains and losses reflect the changes in fair value of
our commodity and foreign currency exchange contracts and
also affect comparability on a year-over-year basis. These
­non-GAAP financial measures are not intended to replace the
presentation of financial results in accordance with U.S.
­generally accepted accounting principles (“GAAP”). Rather,
the presentation of these non-GAAP financial measures
supplements other metrics we use to internally ­evaluate our
businesses and facilitate the comparison of past and present
operations and liquidity. These non-GAAP financial measures
may not be comparable to similar measures used by other
companies and may exclude certain nondiscretionary
expenses and cash payments.
MANAGEMENT’S DISCUSSION AND ANALYSIS
The J. M. Smucker Company
The following table reconciles certain non-GAAP financial measures to the comparable GAAP financial measure. Prior year
results have been modified to exclude the unrealized gains and losses on commodity and foreign currency exchange derivatives
to conform to the new definition. See page 30 for a reconciliation of net sales adjusted for certain noncomparable items to the
­comparable GAAP financial measure.
Year Ended April 30,
2015 2014201320122011
Reconciliation to gross profit:
Gross profit
Unallocated derivative losses (gains)
Cost of products sold – special project costs
$1,968.7 $2,031.0$2,027.6$1,845.2$1,798.5
24.5 (5.3)(6.6) 8.5(1.2)
6.2 9.411.543.254.1
Gross profit excluding certain items affecting comparability
$1,999.4 $2,035.1$2,032.5$1,896.9$1,851.4
Reconciliation to operating income:
Operating income
Unallocated derivative losses (gains)
Cost of products sold – special project costs
Other special project costs
$  772.0
$  919.0
$  910.4
$  778.3
$  784.3
24.5 (5.3)(6.6) 8.5(1.2)
6.2 9.411.543.254.1
56.6 25.649.572.559.1
Operating income excluding certain items affecting comparability $  859.3
$  948.7
$  964.8
$  902.5
$  896.3
Reconciliation to net income:
Net income
Income taxes
Unallocated derivative losses (gains)
Cost of products sold – special project costs
Other special project costs
$  344.9
$  565.2
$  544.2
$  459.7
$  479.5
178.1 284.5273.1241.5237.7
24.5 (5.3)(6.6) 8.5(1.2)
6.2 9.411.543.254.1
56.6 25.649.572.559.1
Income before income taxes excluding certain items
affecting comparability
Income taxes, as adjusted
$  610.3
$  879.4
$  871.7
$  825.4
$  829.2
207.8 294.5291.3284.2274.9
Income excluding certain items affecting comparability
Weighted-average shares – assuming dilution
Income per common share excluding certain items
affecting comparability – assuming dilution
$  402.5
$  584.9
$  580.4
$  541.2
$  554.3
103,697,261 104,346,587108,851,153113,313,567118,276,086
$   3.88
$   5.61
$   5.33
$   4.78
$   4.69
Reconciliation to net income:
Net income
Income taxes
Interest expense – net
Depreciation
Amortization
$  344.9
$  565.2
$  544.2
$  459.7
$  479.5
178.1 284.5273.1241.5237.7
79.9 79.493.479.867.1
157.5 157.5154.1158.9165.8
110.9 98.996.888.173.8
Earnings before interest, taxes, depreciation,
and amortization
$  871.3 $1,185.5$1,161.6$1,028.0$1,023.9
Free cash flow:
Net cash provided by operating activities
Additions to property, plant, and equipment
$  733.2
$  856.0
$  855.8
$  730.9
$  391.6
(247.7)(279.5)(206.5)(274.2)(180.1)
Free cash flow
$  485.5
$  576.5
$  649.3
$  456.7
$  211.5
2015 ANNUAL REPORT 37
MANAGEMENT’S DISCUSSION AND ANALYSIS
MANAGEMENT’S DISCUSSION AND ANALYSIS
The J. M. Smucker Company
The J. M. Smucker Company
OFF-BALANCE SHEET ARRANGEMENTS
Income Taxes: We account for income taxes using the liability
method. In the ordinary course of business, we are exposed
to uncertainties related to tax filing positions and periodically
assess the technical merits of these tax positions for all tax
years that remain subject to examination, based upon the latest
information available. For uncertain tax positions, we have
­recognized a liability for unrecognized tax benefits, including
any applicable interest and penalty charges.
We do not have material off-balance sheet arrangements, financings, or other relationships with unconsolidated entities or other
persons, also known as variable interest entities. Transactions with related parties are in the ordinary course of business, conducted
on an arm’s-length basis, and not material to our results of operations, financial condition, or cash flows.
CONTRACTUAL OBLIGATIONS
The following table summarizes our contractual obligations by fiscal year at April 30, 2015.
Total 2016 2017–2018 2019–2020
2021 and
beyond
Long-term debt obligations, including current portion (A)
Interest payments (B)
Operating lease obligations (C)
Purchase obligations (D)
Other liabilities (E)
$5,950.0
$ —
$  737.5
$1,812.5
$3,400.0
2,215.9173.8377.9355.2
1,309.0
222.143.176.549.153.4
1,192.51,091.6 89.0 11.9
—
315.320.239.021.8
234.3
Total
$9,895.8
$1,328.7
$1,319.9
$2,250.5
$4,996.7
(A) Excludes the impact of offering discounts, make-whole payments, and debt issuance costs.
(B) Includes interest payments on our long-term debt, which reflects estimated payments for our variable-rate debt based on the current interest rate outlook.
(C) Includes the minimum rental commitments under non-cancelable operating leases.
(D) Includes agreements that are enforceable and legally bind us to purchase goods or services, including certain obligations related to normal, ongoing purchase obligations
in which we have guaranteed payment to ensure availability of raw materials, packaging supplies, and co-pack arrangements. We expect to receive consideration for these
purchase obligations in the form of materials. These purchase obligations do not represent the entire anticipated purchases in the future, but represent only those items
for which we are contractually obligated.
(E) Mainly consists of projected commitments associated with our defined benefit pension and other postretirement benefit plans. The liability for unrecognized tax benefits
and tax-related net interest of $48.4 under Financial Accounting Standards Board Accounting Standards Codification 740, Income Taxes, is excluded, since we are unable
to reasonably estimate the timing of cash settlements with the respective taxing authorities.
CRITICAL ACCOUNTING ESTIMATES AND POLICIES
The preparation of financial statements in conformity with
U.S. GAAP requires that we make estimates and assumptions
that in certain circumstances affect amounts reported in the
accompanying consolidated financial statements. In preparing
these financial statements, we have made our best estimates
and judgments of certain amounts included in the financial
statements, giving due consideration to materiality. We do not
believe there is a great likelihood that materially different
amounts would be reported under different conditions or
using different assumptions related to the accounting policies
described below. However, application of these accounting pol­
icies involves the exercise of judgment and use of assumptions
as to future uncertainties and, as a result, actual results could
differ from these estimates.
Revenue Recognition: We recognize revenue, net of estimated
returns and allowances, when all of the following criteria have
been met: a valid customer order with a determinable price
has been received; the product has been shipped and title has
transferred to the customer; there is no further significant
­obligation to assist in the resale of the product; and collectability
38 THE J. M . SMUCKER COMPANY
is reasonably assured. Trade marketing and merchandising
programs are classified as a reduction of sales. A provision for
estimated returns and allowances is recognized as a reduction
of sales at the time revenue is recognized.
Trade Marketing and Merchandising Programs: In order
to support our products, various promotional activities are
conducted through retail trade, distributors, or directly with
consumers, including in-store display and product placement
programs, feature price discounts, coupons, and other similar
activities. We regularly review and revise, when we deem
­necessary, estimates of costs for these promotional programs
based on estimates of what will be redeemed by retail trade,
distributors, or consumers. These estimates are made using
various techniques, including historical data on performance of
similar promotional programs. Differences between estimated
expenditures and actual performance are recognized as a
change in estimate in a subsequent period. As total pro­
motional expenditures, including amounts classified as a
reduction of sales, represented 29 percent of net sales in 2015,
the possibility exists of materially different reported results
if factors such as the level and success of the promotional
­programs or other conditions differ from expectations.
In assessing the need for a valuation allowance, we estimate
future taxable income, considering the viability of ongoing
tax planning strategies and the probable recognition of future
tax deductions and loss carryforwards. Valuation allowances
related to deferred tax assets can be affected by changes in tax
laws, statutory tax rates, and projected future taxable income
levels. Changes in estimated realization of deferred tax assets
would result in an adjustment to income in the period in which
that determination is made.
The future tax benefit arising from the net deductible
­temporary differences and tax carryforwards is $270.0 and
$140.7 at April 30, 2015 and 2014, respectively. We believe
that the earnings during the periods when the temporary
­differences become deductible will be sufficient to realize the
related future income tax benefits. For those jurisdictions
where the expiration date of tax carryforwards or the projected
operating results indicate that realization is not likely, a
valuation allowance would have been provided.
Long-Lived Assets: Long-lived assets, except goodwill and
indefinite-lived intangible assets, are reviewed for impairment
whenever events or changes in circumstances indicate that
the carrying amount of the asset may not be recoverable.
Recoverability of assets to be held and used is measured by a
comparison of the carrying amount of the assets to future net
undiscounted cash flows estimated to be generated by such
assets. If such assets are considered to be impaired, the impairment to be recognized is the amount by which the carrying
amount of the assets exceeds the estimated fair value of the
assets. However, determining fair value is subject to estimates
of both cash flows and discount rates, and different estimates
could yield different results. There are no events or changes in
circumstances of which we are aware that indicate the carrying value of our long-lived assets may not be recoverable at
April 30, 2015.
Goodwill and Other Indefinite-Lived Intangible Assets:
A significant portion of our assets is goodwill and other
­intangible assets, the majority of which are not amortized but
are reviewed at least annually for impairment. At April 30, 2015,
the carrying value of goodwill and other intangible assets
totaled $13.0 billion, compared to total assets of $16.9 billion
and total shareholders’ equity of $7.1 billion. If the carrying
value of these assets exceeds the current estimated fair value,
the asset is considered impaired and would result in a noncash
charge to earnings. Any such impairment charge would reduce
earnings and could be material. Events and conditions that
could result in impairment include a sustained drop in the
market price of our common shares, increased competition or
loss of market share, obsolescence, or product claims that
result in a significant loss of sales or profitability over the
­product life.
We are required to test goodwill for impairment annually
and more often if indicators of impairment exist. To test for
goodwill impairment, we estimate the fair value of each of our
reporting units using both a discounted cash flow valuation
technique and a market-based approach. The impairment test
incorporates estimates of future cash flows; allocations of
­certain assets, liabilities, and cash flows among reporting
units; future growth rates; terminal value amounts; and the
applicable weighted-average cost of capital used to discount
those estimated cash flows. The estimates and projections
used in the calculation of fair value are consistent with our
­current and long-range plans, including anticipated changes in
market conditions, industry trends, growth rates, and planned
capital expenditures. Changes in forecasted operations and
other estimates and assumptions could impact the assessment
of impairment in the future.
At April 30, 2015, goodwill totaled $6.0 billion, which included
$2.9 billion related to the Big Heart acquisition. Prior to the
Big Heart acquisition, goodwill was substantially concentrated
within the U.S. Retail Coffee and U.S. Retail Consumer Foods
segments. No goodwill impairment was recognized as a result
of the annual evaluation performed as of February 1, 2015.
The estimated fair value of each of our six reporting units was
substantially in excess of its carrying value as of the annual
test date.
2015 ANNUAL REPORT 39
MANAGEMENT’S DISCUSSION AND ANALYSIS
The J. M. Smucker Company
Other indefinite-lived intangible assets, consisting entirely of
trademarks, are also tested for impairment annually and
whenever events or changes in circumstances indicate their
carrying value may not be recoverable. To test these assets for
impairment, we estimate the fair value of each asset based on
a discounted cash flow model using various inputs, including
projected revenues, an assumed royalty rate, and a discount
rate. Changes in these estimates and assumptions could
impact the assessment of impairment in the future.
At April 30, 2015, other indefinite-lived intangible assets
totaled $3.3 billion, which included $1.5 billion related to the
Big Heart acquisition. Trademarks that represent our leading
brands prior to the Big Heart acquisition comprised more than
50 percent of the total carrying value of other indefinite-lived
intangible assets. These leading brand trademarks had an
­estimated fair value substantially in excess of its carrying value
as of the annual test date.
The goodwill and intangible assets resulting from the recent
Big Heart acquisition could be more susceptible to future
impairment as carrying value currently represents estimated
fair value. A change to the assumptions regarding future
­performance of the pet food business, or a portion of it, or a
change to other assumptions, could result in impairment
losses in the future.
Pension and Other Postretirement Benefit Plans: To determine
the ultimate obligation under our defined benefit pension and
other postretirement benefit plans, we must estimate the
future cost of benefits and attribute that cost to the time
period during which each covered employee works. Various
actuarial assumptions must be made in order to predict and
measure costs and obligations many years prior to the settlement date, the most significant being the interest rates used to
discount the obligations of the plans, the long-term rates of
return on the plans’ assets, mortality assumptions, assumed
pay increases, and the health care cost trend rates. We, along
with third-party actuaries and investment managers, review
all of these assumptions on an ongoing basis to ensure that
the most reasonable information available is being considered.
For 2016 expense recognition, we will use a weighted-average
discount rate of 4.01 percent and 3.51 percent, and a rate of
compensation increase of 4.06 percent and 3.00 percent for
the U.S. and Canadian plans, respectively. We anticipate using
an expected rate of return on plan assets of 6.58 percent for
U.S. plans. For the Canadian plans, we anticipate using an
expected rate of return on plan assets of 5.00 percent for the
hourly plan and 5.90 percent for all other plans.
As part of the Big Heart acquisition, we assumed the obligation
for pension and other postretirement plans and now participate
in one multi-employer p
­ ension plan. For additional information,
see Note 7: Pensions and Other Postretirement Benefits.
40 THE J. M . SMUCKER COMPANY
DERIVATIVE FINANCIAL INSTRUMENTS AND MARKET RISK
The following discussions about our market risk disclosures
involve forward-looking statements. Actual results could differ
from those projected in the forward-looking statements. We
are exposed to market risk related to changes in interest rates,
­foreign currency exchange rates, and commodity prices.
Interest Rate Risk: The fair value of our cash and cash
­equivalents at April 30, 2015, approximates carrying value.
We are exposed to interest rate risk with regards to existing
debt consisting of fixed- and variable-rate maturities. Our
interest rate exposure primarily includes U.S. Treasury rates,
London Interbank Offered Rate, and commercial paper rates
in the U.S.
We utilize derivative instruments to manage changes in the
fair value of our debt. Interest rate swaps mitigate the risk
­associated with the underlying hedged item. At the inception
of the contract, the instrument is evaluated and documented
for hedge accounting treatment. If the contract is designated as
a cash flow hedge, the swap would be recognized at fair value
on the balance sheet and the mark-to-market gains or losses
on the swap are deferred and included as a component of
accumulated other comprehensive loss to the extent effective,
and reclassified to interest expense in the period during which
the hedged transaction affects earnings. If the contract is
­designated as a fair value hedge, the swap would be recognized
at fair value on the balance sheet, and changes in the fair value
would be recognized in interest expense. Generally, changes in
the fair value of the derivative are equal to changes in the fair
value of the underlying debt and have no net impact on earnings.
In February 2015, we entered into a series of forward-starting
interest rate swaps to partially hedge the risk of an increase in
the benchmark interest rate during the period leading up to
the anticipated issuance of our long-term Senior Notes. The
interest rate swaps were designated as cash flow hedges with an
aggregate notional amount of $1.1 billion. On March 12, 2015,
in conjunction with the pricing of the series of Senior Notes,
we terminated the interest rate swaps prior to maturity.
The termination resulted in a net loss of $4.0, which will be
amortized over the life of the remaining debt.
MANAGEMENT’S DISCUSSION AND ANALYSIS
The J. M. Smucker Company
Based on our overall interest rate exposure as of and during
the year ended April 30, 2015, including derivatives and other
instruments sensitive to interest rates, a hypothetical 10 percent
movement in interest rates would not materially affect our
results of operations. In measuring interest rate risk by the
amount of net change in the fair value of our financial liabilities,
a hypothetical 1 percent decrease in interest rates at April 30,
2015, would increase the fair value of our long-term debt
by $396.4.
Foreign Currency Exchange Risk: We have operations outside
the U.S. with foreign currency denominated assets and liabilities, primarily denominated in Canadian currency. Because we
have foreign currency denominated assets and liabilities,
financial exposure may result, primarily from the timing of
transactions and the movement of exchange rates. The foreign
currency balance sheet exposures as of April 30, 2015, are not
expected to result in a significant impact on future earnings or
cash flows.
We utilize foreign currency exchange forwards and options
contracts to manage the price volatility of foreign currency
exchange fluctuations on future cash payments in Canada,
­primarily related to purchases of certain raw materials and
­finished goods. The contracts generally have maturities of less
than one year. The change in value of these instruments is
immediately recognized in cost of products sold. Based on
our hedged foreign currency positions as of April 30, 2015, a
­hypothetical 10 percent change in exchange rates would result
in a $12.7 loss of fair value.
Beginning in 2015, we elected to no longer qualify instruments
used to manage foreign currency exchange exposures for
hedge accounting treatment. Therefore, the gains and losses on
all foreign currency forwards and options contracts were
immediately recognized in cost of products sold.
Commodity Price Risk: We use certain raw materials and
other commodities that are subject to price volatility caused
by supply and demand conditions, political and economic
­variables, weather, investor speculation, and other unpredictable factors. To manage the volatility related to anticipated
commodity purchases, we use futures and options with
­maturities of generally less than one year.
Beginning in 2015, we elected to no longer qualify commodity
derivatives for hedge accounting treatment. As a result, the gains
and losses on all commodity derivatives were immediately
­recognized in cost of products sold.
The following sensitivity analysis presents our potential loss
of fair value resulting from a hypothetical 10 percent change
in market prices related to raw material commodities.
Year Ended April 30,
20152014
High $39.6$22.7
Low
19.35.7
Average
28.611.9
The estimated fair value was determined using quoted
market prices and was based on our net derivative position by
commodity at each quarter end during the fiscal year. The
­calculations are not intended to represent actual losses in fair
value that we expect to incur. In practice, as markets move,
we actively manage our risk and adjust hedging strategies as
appropriate. The commodities hedged have a high inverse
­correlation to price changes of the derivative commodity
instrument; thus, we would expect that any gain or loss in the
estimated fair value of its derivatives would generally be offset
by an increase or decrease in the estimated fair value of the
underlying exposures.
Revenues from customers outside the U.S., subject to foreign
currency exchange, represented 8 percent of net sales during
2015. Thus, certain revenues and expenses have been, and
are expected to be, subject to the effect of foreign currency
fluctuations, and these fluctuations may have an impact on
operating results.
During 2014, we entered into an interest rate swap, designated
as a fair value hedge, on a portion of fixed-rate Senior Notes in
an effort to achieve a mix of variable- versus fixed-rate debt
under favorable market conditions. On January 16, 2015, we
terminated this interest rate swap agreement prior to maturity.
As a result of the early termination, we received $58.1 in cash,
which included $4.6 of accrued and prepaid interest and a
$53.5 benefit that is deferred as a component of the carrying
value of the long-term debt and will be recognized ratably as a
reduction to future interest expense over the remaining life of
the related debt. At April 30, 2015, the remaining benefit of
$51.3 was recorded as an increase in the long-term debt balance.
2015 ANNUAL REPORT 41
MANAGEMENT’S DISCUSSION AND ANALYSIS
The J. M. Smucker Company
REPORT OF MANAGEMENT ON INTERNAL CONTROL
OVER FINANCIAL REPORTING
The J. M. Smucker Company
FORWARD-LOOKING STATEMENTS
Certain statements included in this Annual Report contain
­forward-looking statements within the meaning of federal
securities laws. The forward-looking statements may include
statements concerning our current expectations, estimates,
assumptions, and beliefs concerning future events, conditions,
plans, and strategies that are not historical fact. Any statement
that is not historical in nature is a forward-looking statement
and may be identified by the use of words and phrases such
as “expect,” “anticipate,” “believe,” “intend,” “will,” “plan,” and
­similar phrases.
Federal securities laws provide a safe harbor for forward-looking
statements to encourage companies to provide prospective
information. We are providing this cautionary statement in
connection with the safe harbor provisions. Readers are cautioned not to place undue reliance on any forward-looking
statements, as such statements are by nature subject to risks,
uncertainties, and other factors, many of which are outside of
our control and could cause actual results to differ materially
from such statements and from our historical results and
­experience. These risks and uncertainties include, but are not
limited to, those set forth under the caption “Risk Factors” in
our Annual Report on Form 10-K, as well as the following:
• our ability to successfully integrate acquired and merged
businesses in a timely and cost-effective manner and
retain key suppliers, customers, and employees;
• our ability to achieve synergies and cost savings related
to the Big Heart acquisition in the amounts and within
the time frames currently anticipated;
• our ability to generate sufficient cash flow to meet
our deleveraging objectives within the time frames
­currently anticipated;
• a change in outlook or downgrade in our public credit
­ratings by a rating agency below investment grade;
• our ability to obtain any required financing on a timely
basis and on acceptable terms;
• volatility of commodity markets from which raw materials,
particularly green coffee beans, peanuts, soybean oil,
wheat, milk, corn, sugar, poultry meal, and soybean meal,
are procured and the related impact on costs;
• risks associated with derivative and purchasing strategies
we employ to manage commodity pricing risks, including
the risk that such strategies could result in significant
losses and adversely impact our liquidity;
• crude oil price trends and their impact on transportation,
energy, and packaging costs;
• the availability of reliable transportation, which may be
affected by the cost of fuel, regulations affecting the
industry, labor shortages, service failures by third-party
service providers, accidents, or natural disasters, on
acceptable terms;
42 THE J. M . SMUCKER COMPANY
• our ability to successfully implement and realize the full
benefit of price changes that are intended to ultimately
fully recover cost, including the competitive, retailer,
and consumer response, and the impact of the timing
of the price changes to profits and cash flow in a
­particular period;
• the success and cost of introducing new products and the
competitive response;
• the success and cost of marketing and sales programs and
strategies intended to promote growth in our businesses;
• general competitive activity in the market, including competitors’ pricing practices and promotional spending levels;
• the impact of food security concerns involving either our
products or our competitors’ products;
• the impact of accidents, extreme weather, and natural
disasters, including crop failures and storm damage;
• the concentration of certain of our businesses with key
customers and suppliers, including single-source suppliers
of certain key raw materials, such as packaging for our
Folgers coffee products, and finished goods, such as
K-Cup® pods, and the ability to manage and maintain
key relationships;
• the loss of significant customers, a substantial reduction
in orders from these customers, or the bankruptcy of any
such customer;
• the timing and amount of capital expenditures and
share repurchases;
• impairments in the carrying value of goodwill, other
intangible assets, or other long-lived assets or changes in
useful lives of other intangible assets;
• the impact of new or changes to existing governmental
laws and regulations and their application;
• the impact of future legal, regulatory, or market measures
regarding climate change;
• the outcome of current and future tax examinations,
changes in tax laws, and other tax matters, and their
related impact on our tax positions;
• foreign currency and interest rate fluctuations;
• political or economic disruption;
• other factors affecting share prices and capital markets
generally; and
• risks related to other factors described under “Risk
Factors” in other reports and statements we have filed
with the Securities and Exchange Commission.
Shareholders
The J. M. Smucker Company
Management is responsible for establishing and maintaining adequate accounting and internal control systems over financial
reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Securities and Exchange Act of 1934, as amended.
Our internal control system is designed to provide reasonable assurance that we have the ability to record, process, summarize,
and report reliable financial information on a timely basis.
Our management, with the participation of the principal financial and executive officers, assessed the effectiveness of the
internal control over financial reporting as of April 30, 2015. In making this assessment, we used the criteria established in
Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission
(1992 Framework) (“the COSO criteria”).
On March 23, 2015, we completed the acquisition of Big Heart Pet Brands (“Big Heart”). As permitted by the Securities and
Exchange Commission, we excluded the Big Heart operations from our assessment of internal control over financial reporting
as of April 30, 2015. Big Heart operations constituted 46 percent of total assets (including goodwill and other intangible assets
of $6.9 billion) as of April 30, 2015, and 4 percent of net sales and less than 5 percent of operating income for the year then
ended. Big Heart operations will be included in our assessment as of April 30, 2016.
Based on our assessment of internal control over financial reporting under the COSO criteria, we concluded the internal control
over financial reporting was effective as of April 30, 2015.
Ernst & Young LLP, an independent registered public accounting firm, audited the effectiveness of our internal control over financial
reporting as of April 30, 2015, and their report thereon is included on page 44 of this report.
Richard K. Smucker Chief Executive Officer
Mark R. Belgya
Senior Vice President and
Chief Financial Officer
Readers 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 Annual Report. We do not undertake any obligation
to update or revise these forward-looking statements to
reflect new events or circumstances.
2015 ANNUAL REPORT 43
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM ON INTERNAL CONTROL OVER FINANCIAL REPORTING
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM ON THE CONSOLIDATED FINANCIAL STATEMENTS
The J. M. Smucker Company
The J. M. Smucker Company
Board of Directors and Shareholders
The J. M. Smucker Company
Board of Directors and Shareholders
The J. M. Smucker Company
We have audited The J.M. Smucker Company’s internal control over financial reporting as of April 30, 2015, based on criteria
established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission (1992 framework) (“the COSO criteria”). The J.M. Smucker Company’s management is responsible for maintaining
effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial
reporting included in the accompanying Report of Management on Internal Control Over Financial Reporting. Our responsibility
is to express an opinion on the Company’s internal control over financial reporting based on our audit.
We have audited the accompanying consolidated balance sheets of The J.M. Smucker Company as of April 30, 2015 and 2014,
and the related statements of consolidated income, comprehensive income, shareholders’ equity, and cash flows for each of the
three years in the period ended April 30, 2015. These financial statements are the responsibility of the Company’s management.
Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States).
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal
control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of
internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design
and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered
necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
­reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures
that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
­dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to
­permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the
­company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use,
or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
­projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
As indicated in the accompanying Report of Management on Internal Control Over Financial Reporting, management’s assessment
of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of Big Heart
Pet Brands, which is included in the 2015 consolidated financial statements of The J.M. Smucker Company and constituted
46 percent of total assets as of April 30, 2015, and 4 percent of net sales and approximately 5 percent of operating income for
the year then ended. Our audit of internal control over financial reporting of The J.M. Smucker Company also did not include an
evaluation of the internal control over financial reporting of Big Heart Pet Brands.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial
­statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a
­reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated
financial position of The J. M. Smucker Company at April 30, 2015 and 2014, and the consolidated results of its operations and its cash
flows for each of the three years in the period ended April 30, 2015, in conformity with U.S. generally accepted accounting principles.
As discussed in Note 1 to the consolidated financial statements, the Company changed its classification of debt issuance costs as a
result of the adoption of the amendments to the Financial Accounting Standards Board Accounting Standards Codification resulting
from Accounting Standards Update No. 2015-03, Interest – Imputation of Interest (Subtopic 835-30) Simplifying the Presentation
of Debt Issuance Costs.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States),
The J.M. Smucker Company’s internal control over financial reporting as of April 30, 2015, based on criteria established in
Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission
(1992 framework) and our report dated June 25, 2015, expressed an unqualified opinion thereon.
Akron, Ohio
June 25, 2015
In our opinion, The J.M. Smucker Company maintained, in all material respects, effective internal control over financial reporting
as of April 30, 2015, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States),
the consolidated balance sheets of The J.M. Smucker Company as of April 30, 2015 and 2014, and the related statements
of ­consolidated income, comprehensive income, shareholders’ equity, and cash flows for each of the three years in the period
ended April 30, 2015, and our report dated June 25, 2015, expressed an unqualified opinion thereon.
Akron, Ohio
June 25, 2015
44 THE J. M . SMUCKER COMPANY
2015 ANNUAL REPORT 45
REPORT OF MANAGEMENT ON RESPONSIBILITY
FOR FINANCIAL REPORTING
STATEMENTS OF CONSOLIDATED INCOME
The J. M. Smucker Company
The J. M. Smucker Company
Shareholders
The J. M. Smucker Company
Management of The J.M. Smucker Company is responsible for the preparation, integrity, accuracy, and consistency of the
­consolidated financial statements and the related financial information in this report. Such information has been prepared in
accordance with U.S. generally accepted accounting principles and is based on our best estimates and judgments.
Net sales
Cost of products sold
Year Ended April 30,
(Dollars in millions, except per share data)
201520142013
We maintain systems of internal accounting controls supported by formal policies and procedures that are communicated
throughout the Company. There is a program of audits performed by our internal audit staff designed to evaluate the adequacy
of and adherence to these controls, policies, and procedures.
Ernst & Young LLP, an independent registered public accounting firm, has audited our financial statements in accordance with
the standards of the Public Company Accounting Oversight Board (United States). Management has made all financial records and
related data available to Ernst & Young LLP during its audit.
Our audit committee, comprised of four non-employee members of the Board of Directors, meets regularly with the independent
registered public accounting firm and management to review the work of the internal audit staff and the work, audit scope, timing
arrangements, and fees of the independent registered public accounting firm. The audit committee also regularly satisfies itself as
to the adequacy of controls, systems, and financial records. The director of the internal audit department is required to report
directly to the chair of the audit committee as to internal audit matters.
It is our best judgment that our policies and procedures, our program of internal and independent audits, and the oversight
­activity of the audit committee work together to provide reasonable assurance that our operations are conducted according
to law and in compliance with the high standards of business ethics and conduct to which we subscribe.
$5,692.7$5,610.6$5,897.7
3,724.03,579.63,870.1
Gross Profit
1,968.72,031.02,027.6
Selling, distribution, and administrative expenses
1,031.3988.8973.9
Amortization
110.998.996.8
Other special project costs
56.625.649.5
Other operating income – net
(2.1)(1.3)(3.0)
Operating Income
772.0919.0910.4
Interest expense – net
(79.9)(79.4)(93.4)
Other debt costs
(173.3)— —
Other income – net
4.210.1 0.3
Income Before Income Taxes
523.0849.7817.3
Income taxes
178.1284.5273.1
Net Income
$  344.9
$  565.2
$  544.2
Earnings per common share:
Net Income
$   3.33
$   5.42
$   5.00
Net Income – Assuming Dilution
$   3.33
$   5.42
$   5.00
Dividends Declared per Common Share
$   2.56
$   2.32
$   2.08
See notes to consolidated financial statements.
Richard K. Smucker Chief Executive Officer
Mark R. Belgya
Senior Vice President and
Chief Financial Officer
STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME
The J. M. Smucker Company
Year Ended April 30,
(Dollars in millions)
201520142013
Net income
Other comprehensive (loss) income:
Foreign currency translation adjustments
Cash flow hedging derivative activity, net of tax
Pension and other postretirement benefit plans activity, net of tax
Available-for-sale securities activity, net of tax
$344.9$565.2$544.2
(34.0)(29.8) (5.5)
(20.5)26.5 8.0
(3.6)29.4 2.9
(0.1)(1.1) 2.0
Total Other Comprehensive (Loss) Income
(58.2)25.0 7.4
Comprehensive Income
$286.7$590.2$551.6
See notes to consolidated financial statements.
46 THE J. M . SMUCKER COMPANY
2015 ANNUAL REPORT 47
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS
The J. M. Smucker Company
The J. M. Smucker Company
ASSETS
LIABILITIES AND SHAREHOLDERS’ EQUITY
April 30,
April 30,
(Dollars in millions)
20152014
(Dollars in millions)
20152014
Current Assets
Cash and cash equivalents
Trade receivables, less allowance for doubtful accounts
Inventories:
Finished products
Raw materials
Current Liabilities
Accounts payable
Accrued compensation
Accrued trade marketing and merchandising
Dividends payable
Current portion of long-term debt
Short-term borrowings
Other current liabilities
Other current assets
$   125.6
$  153.5
430.1309.4
815.0571.5
348.6359.5
1,163.6931.0
333.0145.2
$   402.8
$  289.2
100.457.3
104.958.5
76.559.0
—100.0
226.0243.2
112.078.6
Total Current Assets
2,052.31,539.1
Total Current Liabilities
1,022.6885.8
Property, Plant, and Equipment
Land and land improvements
Buildings and fixtures
Machinery and equipment
Construction in progress
113.799.7
666.3516.0
1,783.81,384.0
135.3163.9
Accumulated depreciation
2,699.12,163.6
(1,020.8)(898.0)
Noncurrent Liabilities
Long-term debt
Defined benefit pensions
Other postretirement benefits
Deferred income taxes
Other noncurrent liabilities
5,944.91,873.1
188.9135.7
74.658.5
2,473.31,020.7
91.456.8
Total Noncurrent Liabilities
8,773.13,144.8
Total Property, Plant, and Equipment
1,678.31,265.6
Total Liabilities
9,795.74,030.6
Other Noncurrent Assets
Goodwill
6,009.83,098.2
Other intangible assets – net
6,950.33,024.3
Other noncurrent assets
191.9133.0
Shareholders’ Equity
Serial preferred shares – no par value:
Authorized – 6,000,000 shares; outstanding – none
Common shares – no par value:
Authorized – 300,000,000 shares; outstanding – 119,577,333 at April 30, 2015,
and 101,697,400 at April 30, 2014 (net of 26,920,397 and 26,907,765 treasury shares,
respectively), at stated value
Additional capital
Retained income
Amount due from ESOP Trust
Accumulated other comprehensive loss
Total Other Noncurrent Assets
13,152.06,255.5
Total Assets
$16,882.6$9,060.2
See notes to consolidated financial statements.
——
29.925.4
6,007.73,965.8
1,159.21,091.0
(0.1)(1.0)
(109.8)(51.6)
Total Shareholders’ Equity
7,086.95,029.6
Total Liabilities and Shareholders’ Equity
$16,882.6$9,060.2
See notes to consolidated financial statements.
48 THE J. M . SMUCKER COMPANY
2015 ANNUAL REPORT 49
STATEMENTS OF CONSOLIDATED SHAREHOLDERS’ EQUITY
STATEMENTS OF CONSOLIDATED CASH FLOWS
The J. M. Smucker Company
The J. M. Smucker Company
Year Ended April 30,
(Dollars in millions)
201520142013
Operating Activities
Net income
Adjustments to reconcile net income to net cash provided by operations:
Depreciation
Amortization
Share-based compensation expense
Other restructuring activities
Loss on sale of assets – net
Gain on sale of marketable securities
Other noncash adjustments
Make-whole payments included in financing activities
Defined benefit pension contributions
Deferred income tax expense (benefit)
Changes in assets and liabilities, net of effect from businesses acquired:
Trade receivables
Inventories
Other current assets
Accounts payable
Accrued liabilities
Proceeds from settlement of interest rate swaps – net
Income and other taxes
Other – net
$ 344.9
$ 565.2
$ 544.2
157.5157.5154.1
110.998.996.8
23.522.921.3
— —(0.7)
6.03.04.8
—(3.7) —
(12.0)(0.2) 0.1
163.3——
(15.7) (9.4)(40.0)
7.7 (8.0)(15.6)
21.8 6.133.2
25.315.415.2
74.1(26.9) 4.6
(25.4) 3.311.2
(140.3)9.1(6.7)
53.5——
(41.6)(9.5) 3.5
(20.3)32.3 29.8
Net Cash Provided by Operating Activities
733.2856.0855.8
Investing Activities
Businesses acquired, net of cash acquired
Additions to property, plant, and equipment
Sales and maturities of marketable securities
Proceeds from disposal of property, plant, and equipment
Other – net
(1,320.5)(101.8)
—
(247.7)(279.5)(206.5)
—10.0 —
2.610.7 3.3
(30.1) (9.7)17.6
Net Cash Used for Investing Activities
(1,595.7)(370.3)(185.6)
Financing Activities
Short-term (repayments) borrowings – net
Proceeds from long-term debt
Repayments of long-term debt, including make-whole payments
Quarterly dividends paid
Purchase of treasury shares
Proceeds from stock option exercises
Other – net
(22.4)248.4
—
5,382.5——
(4,193.9)(50.0)(50.0)
(254.0)(238.0)(222.8)
(24.3)(508.5)(364.2)
0.80.52.2
(25.5)(27.9) (6.2)
Accumulated
Common
Amount
Other
Total
Shares
Common
Additional
Retained
Due from Comprehensive Shareholders’
(Dollars in millions)
Outstanding
Shares
Capital
Income ESOP Trust
Loss
Equity
Balance at May 1, 2012
110,284,715
$27.6
$4,261.2 $  961.2
$(2.6)
$ (84.0)
Net income
544.2
Other comprehensive income
7.4
Comprehensive Income
Purchase of treasury shares
(4,062,682)
(1.0)
(158.5)
(204.7)
Stock plans (includes tax
benefit of $2.9)
264,902
22.4
Cash dividends declared
(225.2)
Other
0.8
$5,163.4
544.2
7.4
551.6
(364.2)
Balance at April 30, 2013
106,486,935
26.6
4,125.1
1,075.5
(1.8)
(76.6)
Net income
565.2
Other comprehensive income
25.0
Comprehensive Income
Purchase of treasury shares
(5,072,158)
(1.3)
(199.0)
(308.2)
Stock plans (includes tax
benefit of $7.3)
282,623
0.1
39.7
Cash dividends declared
(241.6)
Other
0.1
0.8
5,148.8
565.2
25.0
590.2
(508.5)
Balance at April 30, 2014
101,697,400
25.4
3,965.8
1,091.0
(1.0)
(51.6)
Net income
344.9
Other comprehensive loss
(58.2)
Comprehensive Income
Purchase of treasury shares
(225,262)
(0.1)
(19.2)
(5.0)
Issuance of shares for acquisition
17,892,565
4.5
2,031.0
Stock plans (includes tax
benefit of $5.9)
212,630
0.1
30.1
Cash dividends declared
(271.5)
Other
(0.2)
0.9
5,029.6
344.9
(58.2)
286.7
(24.3)
2,035.5
Balance at April 30, 2015
119,577,333
$29.9
$6,007.7
$1,159.2
$(0.1)
$(109.8)
22.4
(225.2)
0.8
39.8
(241.6)
0.9
30.2
(271.5)
0.7
$7,086.9
See notes to consolidated financial statements.
Net Cash Provided by (Used for) Financing Activities 863.2 (575.5)(641.0)
Effect of exchange rate changes on cash
(28.6)(13.1) (2.5)
Net (decrease) increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
(27.9)(102.9) 26.7
153.5256.4229.7
Cash and Cash Equivalents at End of Year
$ 125.6
$ 153.5
$ 256.4
( ) Denotes use of cash
See notes to consolidated financial statements.
50 THE J. M . SMUCKER COMPANY
2015 ANNUAL REPORT 51
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The J. M. Smucker Company
The J. M. Smucker Company
(Dollars in millions, unless otherwise noted, except per share data)
The following table summarizes amounts related to share-based payments.
NOTE 1
ACCOUNTING POLICIES
Principles of Consolidation: The consolidated financial statements include the accounts of the Company, its wholly-owned
­subsidiaries, and its majority-owned investments, if any. Intercompany transactions and accounts are eliminated in consolidation.
Use of Estimates: The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting
­principles (“GAAP”) requires that we make certain estimates and assumptions that affect the amounts reported in the consolidated
financial statements and accompanying notes. Significant estimates in these consolidated financial statements include: allowances
for doubtful trade receivables, estimates of future cash flows associated with assets, asset impairments, useful lives and residual
values of long-lived assets used in determining depreciation and amortization, net realizable value of inventories, accruals for trade
marketing and merchandising programs, income taxes, and the determination of discount and other assumptions for defined
­benefit pension and other postretirement benefit expenses. Actual results could differ from these estimates.
Cash and Cash Equivalents: We consider all short-term, highly-liquid investments with a maturity of three months or less when
­purchased to be cash equivalents.
Revenue Recognition: We recognize revenue, net of estimated returns and allowances, when all of the following criteria have been
met: a valid customer order with a determinable price has been received; the product has been shipped and title has transferred
to the customer; there is no further significant obligation to assist in the resale of the product; and collectability is reasonably
assured. Trade marketing and merchandising programs are classified as a reduction of sales. A provision for estimated returns and
allowances is recognized as a reduction of sales at the time revenue is recognized.
Shipping and Handling Costs: Transportation costs included in cost of products sold relate to the costs incurred to ship our
­products. Distribution costs are included in selling, distribution, and administrative expenses and relate to the warehousing costs
incurred to store our products.
Trade Marketing and Merchandising Programs: In order to support our products, various promotional activities are conducted
through retail trade, distributors, or directly with consumers, including in-store display and product placement programs, feature
price discounts, coupons, and other similar activities. We regularly review and revise, when we deem necessary, estimates of
costs for these promotional programs based on estimates of what will be redeemed by retail trade, distributors, or consumers.
These estimates are made using various techniques, including historical data on performance of similar promotional programs.
Differences between estimated expenditures and actual performance are recognized as a change in estimate in a subsequent
period. As the total promotional expenditures, including amounts classified as a reduction of sales, represented 29 percent,
27 percent, and 25 percent of net sales in 2015, 2014, and 2013, respectively, the possibility exists of materially different reported
results if factors such as the level and success of the promotional programs or other conditions differ from expectations.
Advertising Expense: Advertising costs are expensed as incurred. Advertising expense was $107.0, $124.7, and $131.6 in 2015,
2014, and 2013, respectively.
Research and Development Costs: Research and development costs are expensed as incurred and are included in selling,
­distribution, and administrative expense in the Statements of Consolidated Income. Total research and development expense was
$32.5, $24.3, and $24.7 in 2015, 2014, and 2013, respectively.
Share-Based Payments: Share-based compensation expense, excluding stock options issued in 2015, is recognized on a straight-line
basis over the requisite service period, which includes a one-year performance period plus the defined forfeiture period, which is
typically four years of service or the attainment of a defined age and years of service. For options granted in 2015, compensation
expense is recognized ratably over the service period for each vesting tranche from the grant date through the end of the requisite
service period if it is probable that the performance criteria will be met. The options will vest over a period of one to three years,
dependent on continued service of the option holder, as well as the achievement of the performance objectives established on the
grant date. For further discussion on the stock options issued in 2015, see Note 10: Share-Based Payments.
Year Ended April 30,
201520142013
Share-based compensation expense included in selling, distribution,
and administrative expenses
Share-based compensation expense included in other special project costs
$22.3$22.1$20.5
1.20.80.8
Total share-based compensation expense
$23.5$22.9$21.3
Related income tax benefit
$ 8.0$ 7.7$ 7.1
As of April 30, 2015, total unrecognized share-based compensation cost related to nonvested share-based awards was $48.9.
The weighted-average period over which this amount is expected to be recognized is 2.5 years.
Corporate income tax benefits realized upon exercise or vesting of an award in excess of that previously recognized in earnings,
referred to as excess tax benefits, are presented in the Statements of Consolidated Cash Flows as a financing activity. Realized
excess tax benefits are credited to additional capital in the Consolidated Balance Sheets. Realized shortfall tax benefits, amounts
which are less than those previously recognized in earnings, are first offset against the cumulative balance of excess tax benefits,
if any, and then charged directly to income tax expense. For 2015, 2014, and 2013, the excess tax benefits realized upon exercise
or vesting of share-based compensation were $5.9, $7.3, and $2.9, respectively.
Defined Contribution Plans: We offer employee savings plans for domestic and Canadian employees. Our contributions under
these plans are based on a specified percentage of employee contributions. Charges to operations for these plans in 2015, 2014,
and 2013 were $21.1, $20.1, and $18.6, respectively. For information on our defined benefit plans, see Note 7: Pensions and Other
Postretirement Benefits.
Income Taxes: We account for income taxes using the liability method. Accordingly, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between financial statement carrying amounts of existing assets
and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to
apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on
deferred tax assets and liabilities of a change in the applicable tax rate is recognized in income or expense in the period that the
change is enacted. A valuation allowance is established when it is more likely than not that all or a portion of a deferred tax asset
will not be realized. A tax benefit is recognized when it is more likely than not to be sustained.
We account for the financial statement recognition and measurement criteria of a tax position taken or expected to be taken in
a tax return under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 740, Income Taxes.
FASB ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods,
and disclosure.
In accordance with the requirements of FASB ASC 740, uncertain tax positions have been classified in the Consolidated Balance
Sheets as noncurrent, except to the extent payment is expected within one year. We recognize net interest and penalties related
to unrecognized tax benefits in income tax expense.
Trade Receivables: In the normal course of business, we extend credit to customers. Trade receivables, less allowances, reflects the
net realizable value of receivables and approximates fair value. We evaluate our trade receivables and establish an allowance for
doubtful accounts based on a combination of factors. When aware that a specific customer has been impacted by circumstances
such as bankruptcy filings or deterioration in the customer’s operating results or financial position, potentially making it unable to
meet its financial obligations, we record a specific reserve for bad debt to reduce the related receivable to the amount we reasonably
believe is collectible. We also record reserves for bad debt for all other customers based on a variety of factors, including the length
of time the receivables are past due, historical collection experience, and an evaluation of current and projected economic conditions
at the balance sheet date. Trade receivables are charged off against the allowance after we determine that the potential for recovery
is remote. At April 30, 2015 and 2014, the allowance for doubtful accounts was $1.0 and $0.9, respectively. We believe there is no
concentration of risk with any single customer whose failure or nonperformance would materially affect results other than as
­discussed in Note 3: Reportable Segments.
Inventories: Inventories are stated at the lower of cost or market. Cost for all inventories is determined using the first-in, first-out
method applied on a consistent basis.
52 THE J. M . SMUCKER COMPANY
2015 ANNUAL REPORT 53
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The J. M. Smucker Company
The J. M. Smucker Company
The cost of finished products and work-in-process inventory includes materials, direct labor, and overhead. Work-in-process is
included in finished products in the Consolidated Balance Sheets and was $81.5 and $62.1 at April 30, 2015 and 2014, respectively.
Equity Method Investments: Investments in common stock of entities other than our subsidiaries are accounted for under the
equity method in accordance with FASB ASC 323, Investments – Equity Method and Joint Ventures. Under the equity method, the
initial investment is recorded at cost and the investment is subsequently adjusted for its proportionate share of earnings or losses,
including consideration of basis differences resulting from the difference between the initial carrying amount of the investment and
the underlying equity in net assets. The difference between the carrying amount of the investment and the u
­ nderlying equity in
net assets is primarily attributable to goodwill and other intangible assets.
Derivative Financial Instruments: We account for derivative instruments in accordance with FASB ASC 815, Derivatives and
Hedging, which requires all derivative instruments to be recognized in the financial statements and measured at fair value,
­regardless of the purpose or intent for holding them.
Effective May 1, 2014, we elected to no longer qualify commodity derivatives or instruments used to manage foreign currency
exchange exposures for hedge accounting treatment and, as a result, the derivative gains and losses are immediately recognized in
earnings. Prior to 2015, certain of our derivative instruments met the hedge criteria and were accounted for as cash flow hedges.
The mark-to-market gains and losses on qualifying hedges were deferred and included as a component of accumulated other
­comprehensive loss to the extent effective, and reclassified to cost of products sold in the period during which the hedged
­transaction affected earnings. The deferred net gains included in accumulated other comprehensive loss, net of tax, were $18.3
at April 30, 2014. Although we no longer perform the assessments required to achieve hedge accounting for derivative positions,
we believe all of our commodity derivatives are economic hedges of our risk exposure.
We utilize derivative instruments to manage changes in the fair value and cash flows of our debt. Interest rate swaps mitigate the
risk associated with the underlying hedged item. At the inception of the contract, the instrument is evaluated and documented for
hedge accounting treatment. If the contract is designated as a cash flow hedge, the mark-to-market gains or losses on the swap are
deferred and included as a component of accumulated other comprehensive loss to the extent effective, and reclassified to interest
expense in the period during which the hedged transaction affects earnings. If the contract is designated as a fair value hedge, the
swap is recognized at fair value on the balance sheet, and changes in the fair value are recognized in interest expense. Generally,
changes in the fair value of the derivative are equal to changes in the fair value of the underlying debt and have no net impact
on earnings.
Property, Plant, and Equipment: Property, plant, and equipment is recognized at cost and is depreciated on a straight-line basis
over the estimated useful life of the asset (3 to 20 years for machinery and equipment, 1 to 7 years for capitalized software costs,
and 5 to 40 years for buildings, fixtures, and improvements).
We lease certain land, buildings, and equipment for varying periods of time, with renewal options. Rent expense in 2015, 2014,
and 2013 totaled $67.1, $60.6, and $59.2, respectively. As of April 30, 2015, our minimum operating lease obligations were as follows:
$43.1 in 2016, $40.5 in 2017, $36.0 in 2018, $27.1 in 2019, and $22.0 in 2020.
In accordance with FASB ASC 360, Property, Plant, and Equipment, long-lived assets, other than goodwill and indefinite-lived
­intangible assets, are reviewed for impairment when circumstances indicate the carrying value of an asset may not be recoverable.
Recoverability of assets to be held and used is measured by a comparison of the carrying amount of the assets to future net
­undiscounted cash flows we estimate to be generated by such assets. If such assets are considered to be impaired, the impairment
to be recognized is the amount by which the carrying amount of the assets exceeds their estimated fair value. Assets to be disposed
of by sale are recognized as held for sale at the lower of carrying value or fair value less cost to sell.
Goodwill and Other Intangible Assets: Goodwill is the excess of the purchase price paid over the estimated fair value of the net
assets of a business acquired. In accordance with FASB ASC 350, Intangibles – Goodwill and Other, goodwill and other indefinitelived intangible assets are not amortized but are reviewed at least annually for impairment. We conduct our annual test for
­impairment of goodwill and other indefinite-lived intangible assets as of February 1 of each year. As of the annual impairment test,
we had six reporting units. A discounted cash flow valuation technique was utilized to estimate the fair value of our reporting
units and indefinite-lived intangible assets. We also used a ­market-based approach to estimate the fair value of our reporting
units. The discount rates utilized in the cash flow analyses were developed using a weighted-average cost of capital methodology.
In addition to the annual test, we test for impairment if events or circumstances occur that would more likely than not reduce the
fair value of a reporting unit below its carrying amount. Finite-lived intangible assets are amortized on a straight-line basis over
their estimated useful lives. For additional information, see Note 5: Goodwill and Other Intangible Assets.
Marketable Securities and Other Investments: We maintain funds for the payment of benefits associated with nonqualified
­retirement plans. These funds include investments considered to be available-for-sale marketable securities. At April 30, 2015 and
2014, the fair value of these investments was $48.4 and $55.4, respectively, and was included in other noncurrent assets in the
Consolidated Balance Sheets. Included in accumulated other comprehensive loss at April 30, 2015 and 2014, were unrealized
­pre-tax gains of $5.2 and $5.3, respectively.
54 THE J. M . SMUCKER COMPANY
We have a 25 percent equity interest in Guilin Seamild Biologic Technology Development Co., Ltd. (“Seamild”), a privately-owned
manufacturer and marketer of oats products in China. The initial investment in Seamild in 2013 was $35.9 and is included in other
noncurrent assets in the Consolidated Balance Sheets. The value of our investment in Seamild did not change significantly and did
not have a material impact on the International, Foodservice, and Natural Foods segment or the consolidated financial statements
for the years ended April 30, 2015 and 2014.
As part of the Big Heart Pet Brands (“Big Heart”) acquisition, we acquired a 50 percent equity interest in Natural Blend Vegetable
Dehydration LLC (“Natural Blend”) and a 20 percent equity interest in Mountain Country Foods, LLC (“Mountain Country Foods”).
Natural Blend is a privately-owned producer and supplier of dehydrated sweet potato products to Big Heart co-manufacturers.
Mountain Country Foods is a privately-owned co-manufacturer of Big Heart pet products.
Our initial investments in Natural Blend of $10.6 and Mountain Country Foods of $19.1 were recorded at a preliminary fair value
as required under purchase accounting and are included in other noncurrent assets in the Consolidated Balance Sheets. The value
of these investments did not have a material impact on the U.S. Retail Pet Foods segment or the consolidated financial statements
for the year ended April 30, 2015. For additional information related to the acquisition, see Note 2: Acquisitions.
Foreign Currency Translation: Assets and liabilities of foreign subsidiaries are translated using the exchange rates in effect at the
balance sheet dates, while income and expenses are translated using average rates. Translation adjustments are reported as a
­component of shareholders’ equity in accumulated other comprehensive loss. Included in accumulated other comprehensive loss
at April 30, 2015 and 2014, was a foreign currency loss of $2.3 and a gain of $31.7, respectively.
Recently Issued Accounting Standards: In April 2015, the FASB issued Accounting Standards Update (“ASU”) 2015-03, Interest –
Imputation of Interest (Subtopic 835-30) Simplifying the Presentation of Debt Issuance Costs. ASU 2015-03 requires debt issuance
costs to be presented in the ­balance sheet as a direct deduction from the carrying amount of the related debt. ASU 2015-03 is
effective for us on May 1, 2016, but we have elected early adoption. As of April 30, 2015, we have reclassified debt issuance costs
associated with our long-term debt from other noncurrent assets to long-term debt. Prior year amounts have been reclassified
to conform to the current year ­classification in accordance with ASU 2015-03.
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). ASU 2014-09 will be effective
for us on May 1, 2017, and will require either retrospective application to each prior reporting period presented or retrospective
application with the cumulative effect of initially applying the standard recognized at the date of adoption. We are currently
­evaluating the impact the application of ASU 2014-09 will have on our financial statements and disclosures.
Risks and Uncertainties: The raw materials we use are primarily commodities, agricultural-based products, and packaging
­materials. The principal packaging materials we use are glass, plastic, metal cans, caps, carton board, and corrugate. Green coffee,
peanuts, edible oils, sweeteners, milk, wheat, corn, poultry meal, soybean meal, and other ingredients are obtained from various
suppliers. The availability, quality, and cost of many of these commodities have fluctuated, and may continue to fluctuate over
time. Green coffee is sourced solely from foreign countries and its supply and price are subject to high volatility due to factors such
as weather, global supply and demand, pest damage, speculative influences, and political and economic conditions in the source
countries. Raw materials are generally available from numerous sources, although we have elected to source certain plastic
­packaging materials and finished goods from single sources of supply pursuant to long-term contracts. While availability may vary
from year to year, we believe that we will continue to be able to obtain adequate supplies and that alternatives to single-sourced
materials are ­available. We have not historically encountered significant shortages of key raw materials. We consider our
­relationships with key material suppliers to be good.
Of our total employees, 28 percent are covered by union contracts at 10 manufacturing locations. The contracts vary in term, with
three contracts expiring in 2016, representing 11 percent of our total employees.
We insure our business and assets in each country against insurable risks, to the extent that we deem appropriate, based upon an
analysis of the relative risks and costs.
2015 ANNUAL REPORT 55
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The J. M. Smucker Company
The J. M. Smucker Company
NOTE 2
As a result of the acquisition, we recognized a total of $2.9 billion of goodwill, of which $91.5 is deductible for tax purposes.
Goodwill represents the value we expect to achieve through the implementation of operational synergies and growth opportunities
across our segments. The final allocation of goodwill to our reporting units was not complete as of April 30, 2015, due to the
timing of the acquisition, but will be complete by the end of 2016. Certain estimated values for the acquisition, including goodwill,
­intangible assets, property, plant, and equipment, contingent liabilities, and income taxes, are not yet finalized. The purchase price
was preliminarily allocated based on information available at the acquisition date and is subject to change as we complete our
analysis of the fair values at the date of acquisition during the measurement period not to exceed one year as permitted under
FASB ASC 805, Business Combinations.
ACQUISITIONS
On March 23, 2015, we completed the acquisition of Big Heart, a leading producer, distributor, and marketer of premium-quality,
branded pet food and pet snacks in the U.S., through the acquisition of Blue Acquisition Group, Inc. (“BAG”), Big Heart’s parent
company. As a result of the acquisition, the assets and liabilities of BAG are now held by a direct wholly-owned subsidiary of
the Company.
The total consideration paid in connection with the acquisition was $5.9 billion, as set forth below, which included the issuance
of 17.9 million of our common shares to BAG’s shareholders, valued at $2.0 billion based on the average stock price of our common
shares on March 23, 2015. After the closing of the transaction, we had approximately 120.0 million common shares outstanding.
We assumed $2.6 billion in debt, including Big Heart’s senior secured term loan and senior notes, and we paid an additional
$1.2 billion in cash, which is subject to a working capital adjustment. As part of the transaction, new debt of $5.4 billion was
borrowed, consisting of a $1.8 billion bank term loan and $3.7 billion in long-term notes, and Big Heart’s debt obligations and
our existing private ­placement Senior Notes were paid off.
Shares issued
$2,035.5
Assumed debt from Big Heart
2,630.2
Cash consideration, net of cash acquired
1,240.0
Total purchase price
$5,905.7
The transaction was accounted for under the acquisition method of accounting and, accordingly, the results of Big Heart’s
­operations, including $244.5 in revenue and an operating loss of $26.0, are included in our consolidated financial statements
from the date of acquisition.
The purchase price was preliminarily allocated to the identifiable intangible assets acquired as follows:
Intangible assets with finite lives:
Customer relationships (25-year useful life)
$2,289.8
Trademarks (15-year useful life)
257.0
Intangible assets with indefinite lives:
Trademarks
1,463.0
Total intangible assets
Big Heart’s results of operations are included in our consolidated financial statements from the date of the transaction. Had the
transaction occurred on May 1, 2013, unaudited pro forma consolidated results for the years ended April 30, 2015 and 2014, would
have been as follows:
Total one-time costs related to the acquisition are expected to be approximately $225.0, of which approximately $150.0 are
expected to be cash charges. The one-time costs consist primarily of employee-related costs, outside service and consulting costs,
and other costs directly related to the acquisition. These one-time costs are anticipated to be incurred primarily over the next
three years, with one-half of the costs expected to be recognized in 2016. We incurred costs of $36.0 to date that were directly
related to the merger and ­integration of Big Heart, and the majority of these charges were reported in other special project costs
in the Statement of Consolidated Income. Due to the nature of these costs, they were expensed as incurred.
The Big Heart purchase price was preliminarily allocated to the underlying assets acquired and liabilities assumed based upon
their estimated fair values at the date of acquisition. We determined the estimated fair values based on independent appraisals,
discounted cash flow analyses, quoted market prices, and estimates made by management. The purchase price exceeded the
­estimated fair value of the net identifiable tangible and intangible assets acquired and, as such, the excess was allocated to goodwill.
The following table summarizes the preliminary fair values of the assets acquired and liabilities assumed at the acquisition date.
Assets acquired:
Trade receivables
$  142.0
Inventories
257.7
Other current assets
210.7
Property, plant, and equipment
324.0
Intangible assets
4,009.8
Goodwill
2,871.2
Other noncurrent assets
38.0
Total assets acquired
$7,853.4
$4,009.8
Net sales
Net income
Net income per common share – assuming dilution
Year Ended April 30,
20152014
$7,732.5$7,800.7
541.8547.7
4.534.48
The unaudited pro forma consolidated results are based on our historical financial statements and those of Big Heart, and do not
necessarily indicate the results of operations that would have resulted had the acquisition been completed at the beginning of the
applicable period presented. The most significant pro forma adjustments relate to the elimination of acquisition-related costs
incurred prior to the close of the transaction, amortization of intangible assets, depreciation of property, plant, and equipment,
elimination of other debt costs discussed in Note 6: Debt and Financing Arrangements, and higher interest expense associated
with the bank term loan and long-term notes. Of these adjustments, the elimination of acquisition-related costs and other debt
costs of $108.3 and $173.3, respectively, are nonrecurring. The unaudited pro forma consolidated results do not give effect to the
synergies of the acquisition and are not indicative of the results of operations in future periods.
In addition to the Big Heart acquisition, on September 2, 2014, we completed the acquisition of Sahale Snacks, Inc. (“Sahale”),
a privately-held manufacturer and marketer of premium, branded nut and fruit snacks for $80.5 in cash consideration, net of a
working capital adjustment. As a result, Sahale became a wholly-owned subsidiary of the Company. The purchase price was
­allocated to the underlying assets acquired and liabilities assumed based upon their estimated fair values at the date of acquisition.
The purchase price allocation included total intangible assets of $30.4. The purchase price exceeded the estimated fair value of the
net identifiable tangible and intangible assets acquired and, as a result, the excess was allocated to goodwill. Preliminary valuations
resulted in Sahale goodwill of $47.9, and the entire amount was assigned to the U.S. Retail Consumer Foods segment. Sahale
­goodwill is preliminary as of April 30, 2015, pending the finalization of our tax basis. The results of operations of Sahale are
included in the consolidated financial statements from the date of the transaction and did not have a material impact on the year
ended April 30, 2015.
Liabilities assumed:
Current liabilities
$  398.9
Deferred tax liabilities
1,464.0
Other noncurrent liabilities
84.8
Total liabilities assumed
$1,947.7
Net assets acquired
$5,905.7
56 THE J. M . SMUCKER COMPANY
2015 ANNUAL REPORT 57
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The J. M. Smucker Company
The J. M. Smucker Company
During 2014, we completed two acquisitions for aggregate net cash consideration of $101.8, net of working capital adjustments.
Enray Inc. (“Enray”), a leading manufacturer and marketer of premium organic, gluten-free ancient grain products, was acquired in
August 2013. Silocaf of New Orleans, Inc. (“Silocaf”), a strategic investment related to our green coffee supply chain, was acquired
in September 2013.
As disclosed in Note 2: Acquisitions, we acquired Big Heart in a cash and stock transaction on March 23, 2015. The transaction
resulted in a new reportable segment for 2015. There was no impact to our historical reportable segments, as there were no
changes to the internal way we managed and reported those segments for 2015. However, we are in the process of finalizing our
internal financial reporting structure and the impact on reportable segments for 2016 as a result of recent leadership changes.
All historical ­information will be retroactively conformed to the new presentation once it is finalized.
The purchase price for each business acquired was allocated to the underlying assets acquired and liabilities assumed based upon
their estimated fair values at the date of acquisition. The purchase price allocations included intangible assets of $37.6 in total for
Enray and Silocaf. The purchase price for both Enray and Silocaf exceeded the estimated fair value of the net identifiable tangible
and intangible assets acquired and as a result, the excess was allocated to goodwill. Valuations resulted in Enray goodwill of $29.3,
which was assigned to the International, Foodservice, and Natural Foods segment, and Silocaf goodwill of $22.8, which was
assigned to the U.S. Retail Coffee segment. The results of operations for both of the acquired businesses are included in the
­consolidated financial statements from the dates of the transactions and did not have a material impact on the years ended
April 30, 2015 and 2014.
NOTE 3
REPORTABLE SEGMENTS
We operate in one industry: the manufacturing and marketing of food products. We have four reportable segments: U.S. Retail
Coffee, U.S. Retail Consumer Foods, U.S. Retail Pet Foods, and International, Foodservice, and Natural Foods. The U.S. Retail Coffee
segment primarily represents the domestic sales of Folgers and Dunkin’ Donuts branded coffee; the U.S. Retail Consumer Foods
segment primarily includes domestic sales of Crisco, Jif, Smucker’s, and Pillsbury branded products; the U.S. Retail Pet Foods segment
primarily includes domestic sales of Meow Mix, Milk-Bone, Kibbles ’n Bits, Natural Balance, 9Lives, Pup-Peroni, Gravy Train, and
Nature’s Recipe branded products; and the International, Foodservice, and Natural Foods segment is comprised of products
distributed ­domestically and in foreign countries through retail channels, foodservice distributors and operators (e.g., restaurants,
lodging, schools and universities, health care operators), and natural foods stores and distributors. Pet food and pet snacks sales
outside of the U.S. retail market segment are reflected in International, Foodservice, and Natural Foods.
Segment profit represents net sales, less direct and allocable operating expenses, and is consistent with the way in which we
­manage our segments. However, we do not represent that the segments, if operated independently, would report operating profit
equal to the segment profit set forth below, as segment profit excludes certain operating expenses such as corporate administrative
expenses and, effective May 1, 2014, unallocated gains and losses on commodity and foreign currency exchange derivative activities.
Commodity and foreign currency exchange derivative gains and losses are reported in unallocated derivative gains and losses
­outside of segment operating results until the related inventory is sold. At that time, we reclassify the hedge gains and losses from
unallocated derivative gains and losses to segment profit, allowing our segments to realize the economic effect of the hedge without
experiencing any mark-to-market volatility. We would expect that any gain or loss in the estimated fair value of the derivatives
would generally be offset by a change in the estimated fair value of the underlying exposures. Prior year segment results have been
modified to exclude the unrealized gains and losses on commodity and foreign currency exchange derivatives to conform to the
new definition.
Year Ended April 30,
201520142013
Net sales:
U.S. Retail Coffee
U.S. Retail Consumer Foods
U.S. Retail Pet Foods
International, Foodservice, and Natural Foods
$ 2,076.1$2,161.7$2,306.5
2,104.82,172.62,214.8
239.1——
1,272.71,276.31,376.4
Total net sales
$ 5,692.7$5,610.6$5,897.7
Segment profit (loss):
U.S. Retail Coffee
U.S. Retail Consumer Foods
U.S. Retail Pet Foods
International, Foodservice, and Natural Foods
$   549.2
$  639.8
$  603.8
432.9393.0413.9
(15.3)— —
166.7167.8196.7
Total segment profit
$ 1,133.5$1,200.6$1,214.4
Interest expense – net
Other debt costs
Unallocated derivative (losses) gains
Cost of products sold – special project costs
Other special project costs
Corporate administrative expenses
Other income – net
(79.9)(79.4)(93.4)
(173.3)— —
(24.5)5.3 6.6
(6.2) (9.4)(11.5)
(56.6)(25.6)(49.5)
(274.2)(251.9)(249.6)
4.210.1 0.3
Income before income taxes
$   523.0
$  849.7
$  817.3
Assets:
U.S. Retail Coffee
$ 4,854.0$4,885.6$4,882.4
U.S. Retail Consumer Foods
2,846.02,684.12,618.2
U.S. Retail Pet Foods
7,611.8——
International, Foodservice, and Natural Foods
1,327.21,248.91,201.3
Unallocated (A)
243.6241.6322.2
Total assets
$16,882.6$9,060.2$9,024.1
Depreciation, amortization, and impairment charges:
U.S. Retail Coffee
$   102.7
$   99.9
$  100.7
U.S. Retail Consumer Foods
54.152.947.1
U.S. Retail Pet Foods
14.3——
International, Foodservice, and Natural Foods
66.067.463.7
Unallocated (B)
31.336.239.4
Total depreciation, amortization, and impairment charges
$   268.4
Additions to property, plant, and equipment:
U.S. Retail Coffee
U.S. Retail Consumer Foods
U.S. Retail Pet Foods
International, Foodservice, and Natural Foods
$    56.7
$   50.7
$   46.5
113.2138.8 85.1
19.4——
58.490.074.9
Total additions to property, plant, and equipment
$   247.7
$  256.4
$  279.5
$  250.9
$  206.5
(A) Primarily represents unallocated cash and cash equivalents and corporate-held investments.
(B) Primarily represents unallocated corporate administrative expense, mainly depreciation and software amortization.
58 THE J. M . SMUCKER COMPANY
2015 ANNUAL REPORT 59
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The J. M. Smucker Company
The J. M. Smucker Company
The following table presents certain geographical information.
Sales to Wal-Mart Stores, Inc. and subsidiaries amounted to 28 percent of net sales in 2015, 27 percent of net sales in 2014, and
26 percent of net sales in 2013. These sales are primarily included in our U.S. retail market segments. No other customer exceeded
10 percent of net sales for any year. Trade receivables at April 30, 2015 and 2014, included amounts due from Wal-Mart Stores, Inc.
and subsidiaries of $122.6 and $76.6, respectively.
Net sales:
United States
International:
Canada
All other international
Year Ended April 30,
201520142013
$ 5,188.5$5,092.0$5,355.9
NOTE 4
$   413.8
$  437.2
$  459.5
90.481.482.3
The following table sets forth the computation of net income per common share and net income per common share − assuming
dilution under the two-class method.
Total international
$   504.2
Total net sales
$ 5,692.7$5,610.6$5,897.7
Assets:
United States
International:
Canada
All other international
$  518.6
$  541.8
EARNINGS PER SHARE
Year Ended April 30,
201520142013
$16,407.0$8,638.6$8,577.7
Net income
Net income allocated to participating securities
$344.9$565.2$544.2
2.24.54.7
$   362.1
$  257.7
$  396.3
113.5163.9 50.1
Net income allocated to common stockholders
$342.7$560.7$539.5
Total international
$   475.6
$  446.4
Weighted-average common shares outstanding
Dilutive effect of stock options
103,038,271103,504,121 107,881,519
5,28314,34623,256
Total assets
$16,882.6$9,060.2$9,024.1
Weighted-average common shares outstanding – assuming dilution
103,043,554103,518,467 107,904,775
Net income per common share
$ 3.33$ 5.42$ 5.00
Net income per common share – assuming dilution
$ 3.33$ 5.42$ 5.00
Long-lived assets (excluding goodwill and other intangible assets):
United States
International:
Canada
All other international
$  421.6
$ 1,815.0$1,343.2$1,227.0
$    14.3
$   16.5
$   20.6
40.938.939.0
Total international
$    55.2
Total long-lived assets (excluding goodwill and other intangible assets)
$ 1,870.2$1,398.6$1,286.6
$   55.4
$   59.6
The following table presents product category sales as a percentage of consolidated net sales.
Year Ended April 30,
201520142013
Coffee
44%46%48%
Peanut butter
131313
Fruit spreads
666
Shortening and oils
666
Baking mixes and frostings
566
Canned milk
454
Flour and baking ingredients
444
Juices and beverages
333
Frozen handheld
333
Pet food
3——
Portion control
222
Toppings and syrups
122
Pet snacks
1——
Other
543
Total product sales
60 THE J. M . SMUCKER COMPANY
NOTE 5
GOODWILL AND OTHER INTANGIBLE ASSETS
A summary of changes in goodwill during the years ended April 30, 2015 and 2014, by reportable segment is as follows:
U.S. Retail
Coffee
U.S. Retail
International,
Consumer
U.S. Retail Foodservice, and
Foods
Pet Foods
Natural Foods
Total
Balance at May 1, 2013
Acquisitions
Other
$1,720.3
$1,034.6
$ —
$298.0
$3,052.9
22.8 — —29.352.1
—(2.4) —(4.4)(6.8)
Balance at April 30, 2014
Acquisitions
Other
$1,743.1
$1,032.2
$ —
$322.9
$3,098.2
(0.3) 47.92,810.3 60.92,918.8
0.1(2.5) —(4.8)(7.2)
Balance at April 30, 2015
$1,742.9
$1,077.6
$2,810.3
$379.0
$6,009.8
The amounts classified as other represent foreign currency exchange for the years ended April 30, 2015 and 2014.
100%100%100%
2015 ANNUAL REPORT 61
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The J. M. Smucker Company
The J. M. Smucker Company
The following table summarizes our other intangible assets and related accumulated amortization and impairment charges,
including foreign currency exchange.
NOTE 6
April 30, 2015
In April 2015, the FASB issued ASU 2015-03, Interest – Imputation of Interest (Subtopic 835-30) Simplifying the Presentation of Debt
Issuance Costs. ASU 2015-03 requires debt issuance costs to be presented in the balance sheet as a direct deduction from the carrying
amount of the related debt. ASU 2015-03 is effective for us on May 1, 2016, but we have elected early adoption. As of April 30, 2015,
we have reclassified debt issuance costs associated with our long-term debt from other noncurrent assets to long-term debt. Prior
year amounts have been reclassified to conform to the current year classification in accordance with ASU 2015-03, resulting in
an adjustment to long-term debt of $6.7 for the year ended April 30, 2014.
April 30, 2014
AccumulatedAccumulated
Amortization/Amortization/
Impairment
Impairment
Charges/
Charges/
Foreign Foreign
Acquisition
CurrencyAcquisition Currency
Cost
Exchange
Net
CostExchange
DEBT AND FINANCING ARRANGEMENTS
Net
Finite-lived intangible assets subject
to amortization:
Customer and contractual relationships
Patents and technology
Trademarks
$3,733.9 $477.9$3,256.0 $1,436.2 $392.6$1,043.6
169.0 74.894.2 164.5 61.9102.6
328.0 47.6280.4 70.0 36.533.5
Total intangible assets subject
to amortization
$4,230.9 $600.3$3,630.6 $1,670.7
$491.0$1,179.7
Indefinite-lived intangible assets
not subject to amortization:
Trademarks
$3,338.0 $ 18.3$3,319.7 $1,858.9
$ 14.3$1,844.6
Total other intangible assets
$7,568.9 $618.6$6,950.3 $3,529.6
$505.3$3,024.3
Long-term debt consists of the following:
Amortization expense for finite-lived intangible assets was $110.3, $98.7, and $96.6 in 2015, 2014, and 2013, respectively. The
weighted-average useful lives of the customer and contractual relationships, patents and technology, and trademarks are 23 years,
13 years, and 15 years, respectively. The weighted-average useful life of total finite-lived intangible assets is 22 years. Based on the
amount of intangible assets subject to amortization at April 30, 2015, including the amortization for Big Heart based on the
­preliminary purchase price allocation, the estimated amortization expense is $212.2 for 2016, $211.5 for 2017, $209.1 for 2018,
$208.9 for 2019, and $207.4 for 2020.
We review goodwill and other indefinite-lived intangible assets at least annually for impairment. The annual impairment review
was performed as of February 1, 2015. Goodwill impairment is tested at the reporting unit level. At February 1, 2015, we had six
reporting units. No goodwill impairment was recognized as a result of the annual evaluation performed as of February 1, 2015.
The estimated fair value of each reporting unit and material other indefinite-lived intangible asset was substantially in excess of its
carrying value as of the annual test date. An immaterial nonrecurring fair value adjustment was recognized in 2015 and included
in amortization on the Statement of Consolidated Income.
April 30, 2015
April 30, 2014
PrincipalCarryingPrincipal Carrying
OutstandingAmountOutstanding
Amount
4.78% Senior Notes due June 1, 2014
6.12% Senior Notes due November 1, 2015
6.63% Senior Notes due November 1, 2018
3.50% Senior Notes due October 15, 2021
5.55% Senior Notes due April 1, 2022
4.50% Senior Notes due June 1, 2025
1.75% Senior Notes due March 15, 2018
2.50% Senior Notes due March 15, 2020
3.00% Senior Notes due March 15, 2022
3.50% Senior Notes due March 15, 2025
4.25% Senior Notes due March 15, 2035
4.38% Senior Notes due March 15, 2045
Term Loan Credit Agreement due March 23, 2020
$ —
$ —
$  100.0
$  100.0
——24.024.0
——376.0391.4
750.0796.0750.0758.8
——300.0299.2
——400.0399.7
500.0496.9——
500.0494.3——
400.0395.3——
1,000.0991.9——
650.0641.8——
600.0583.8——
1,550.01,544.9——
Total long-term debt
Current portion of long-term debt
$5,950.0$5,944.9$1,950.0$1,973.1
——100.0100.0
Total long-term debt, less current portion
$5,950.0$5,944.9$1,850.0$1,873.1
On June 1, 2014, we repaid $100.0 related to the 4.78 percent Senior Notes as scheduled.
On March 2, 2015, we entered into a $3.8 billion 364-day senior unsecured Bridge Term Loan Credit Agreement (“Bridge Loan”)
as committed financing for the Big Heart acquisition as disclosed in Note 2: Acquisitions. No balances were drawn against this
­facility as alternate permanent financing was obtained to finance the acquisition. Included in other debt costs on the Statement
of Consolidated Income at April 30, 2015, was $21.5 related to financing fees associated with the Bridge Loan. This facility was
­terminated on March 20, 2015.
Also on March 2, 2015, we entered into a senior unsecured delayed-draw Term Loan Credit Agreement (“Term Loan”) with a
­syndicate of banks and an available commitment amount of $1.8 billion. The full amount of the Term Loan was drawn on March 23,
2015, to partially finance the Big Heart acquisition. The Term Loan included $5.2 of capitalized debt issuance costs to be amortized
to interest expense over the time for which the debt is outstanding. Borrowings under the Term Loan bear interest on the prevailing
U.S. Prime Rate or London Interbank Offered Rate (“LIBOR”), based on our election, and is payable either on a quarterly basis or
at the end of the borrowing term. The weighted-average interest rate on the Term Loan at April 30, 2015, was 1.53 percent. The
Term Loan requires quarterly amortization payments of 2.5 percent of the original principal amount starting in the third quarter
of 2016. Voluntary prepayments are permitted without premium or penalty and are applied to the schedule of required quarterly
minimum payment obligations in direct order of maturity. As of April 30, 2015, we have prepaid $200.0 on the Term Loan, and
therefore no additional payments are required until January 31, 2017.
62 THE J. M . SMUCKER COMPANY
2015 ANNUAL REPORT 63
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The J. M. Smucker Company
The J. M. Smucker Company
On March 20, 2015, we completed an offering of $3.7 billion in Senior Notes due beginning March 15, 2018 through March 15, 2045.
The Senior Notes included $46.4 of capitalized debt issuance costs and offering discounts to be amortized to interest expense
over the time for which the debt is outstanding. As part of the Big Heart acquisition, we assumed $1.7 billion in debt related to
Big Heart’s senior secured term loan agreement and $0.9 billion in debt related to their 7.625 percent senior notes. We repaid
these obligations upon completion of the acquisition. The proceeds from the offering, along with the Term Loan, were used to
­partially finance the Big Heart acquisition, pay off the debt assumed as part of the Big Heart acquisition, and prepay our privately
placed Senior Notes. The prepayment of our Senior Notes resulted in a principal prepayment of $1.1 billion and $163.3 of related
make-whole payments. Other debt costs of $173.3 on the Statement of Consolidated Income consist primarily of make-whole
­payments and Bridge Loan financing fees, offset by the write-off of the remaining fair value interest rate swap gain.
NOTE 7
All of our Senior Notes outstanding at April 30, 2015, are unsecured and interest is paid semiannually. There are no required
­scheduled principal payments on our Senior Notes. We may prepay at any time all or part of the Senior Notes at 100 percent of the
principal amount thereof, together with the accrued and unpaid interest, and any applicable make-whole amount.
In February 2015, we entered into a series of forward-starting interest rate swaps to partially hedge the risk of an increase in the
benchmark interest rate during the period leading up to the anticipated issuance of our long-term Senior Notes. The interest rate
swaps were designated as cash flow hedges with an aggregate notional amount of $1.1 billion. On March 12, 2015, in conjunction
with the pricing of the series of Senior Notes, we terminated the interest rate swaps prior to maturity. The termination resulted in
a net loss of $4.0, which will be amortized over the life of the remaining debt. For additional information, see Note 8: Derivative
Financial Instruments.
During the second quarter of 2015, we entered into a commercial paper program under which we can issue short-term, unsecured
commercial paper not to exceed $1.0 billion at any time. The commercial paper program is backed by our revolving credit facility
and reduces what we can borrow under the revolving credit facility by the amount of commercial paper outstanding. Commercial
paper will be used as a continuing source of short-term financing for general corporate purposes. As of April 30, 2015, we had
$226.0 of short-term borrowings outstanding, all of which were issued under our commercial paper program at a weighted-average
interest rate of 0.45 percent.
We have available a $1.5 billion revolving credit facility with a group of 11 banks that matures in September 2018. Borrowings
under the revolving credit facility bear interest based on the prevailing U.S. Prime Rate, Canadian Base Rate, LIBOR, or Canadian
Dealer Offered Rate, based on our election. Interest is payable either on a quarterly basis or at the end of the borrowing term.
During 2015, we amended this credit facility to alter the financial covenant restrictions and provide financial flexibility for the
Big Heart acquisition. At April 30, 2015, we did not have a balance outstanding under the revolving credit facility.
During 2014, we entered into an interest rate swap, with a notional amount of $750.0, on the 3.50 percent Senior Notes due
October 15, 2021, converting the Senior Notes from a fixed- to a variable-rate basis. The interest rate swap was designated as a
fair value hedge of the underlying debt obligation. On January 16, 2015, we terminated the interest rate swap agreement prior to
maturity. As a result of the early termination, we received $58.1 in cash, which included $4.6 of accrued and prepaid interest
and a $53.5 benefit that is deferred as a component of the carrying value of the long-term debt and will be recognized ratably as a
reduction to future interest expense over the remaining life of the related debt. At April 30, 2015, the remaining benefit of $51.3
was recorded as an increase in the long-term debt balance. The fair value adjustment of the interest rate swap at April 30, 2014,
was $14.9 and was also recorded as an increase in the long-term debt balance. For additional information, see Note 8: Derivative
Financial Instruments.
Interest paid totaled $92.3, $83.3, and $97.7 in 2015, 2014, and 2013, respectively. This differs from interest expense due to the
­timing of payments, amortization of fair value swap adjustments, effect of the interest rate swap, amortization of debt issuance
costs, and capitalized interest.
Our debt instruments contain certain financial covenant restrictions, including a leverage ratio and an interest coverage ratio.
We are in compliance with all covenants.
PENSIONS AND OTHER POSTRETIREMENT BENEFITS
We have defined benefit pension plans covering certain U.S. and Canadian employees, including the recently acquired pension
and other postretirement plans of Big Heart, as discussed in Note 2: Acquisitions. Pension benefits are based on the employee’s
years of service and compensation levels. Our plans are funded in conformity with the funding requirements of applicable
­government regulations.
In addition to providing pension benefits, we sponsor several unfunded postretirement plans that provide health care and life
insurance benefits to certain retired U.S. and Canadian employees. These plans are contributory, with retiree contributions
adjusted periodically, and contain other cost-sharing features, such as deductibles and coinsurance. Covered employees generally
are eligible for these benefits when they reach age 55 and have attained 10 years of credited service.
During 2013, a portion of our terminated pension participants received lump-sum cash settlements in order to reduce our future
pension obligation and administrative costs. The charges related to the lump-sum cash settlements are included below in settlement
loss and were reported in other special project costs in the Statement of Consolidated Income for the year ended April 30, 2013.
The lump-sum offerings in 2013 concluded the pension settlement special project cost activities.
The following table summarizes the components of net periodic benefit cost and the change in accumulated other comprehensive
loss related to the defined benefit pension and other postretirement plans.
Year Ended April 30,
Defined Benefit Pension Plans
201520142013
Other Postretirement Benefits
201520142013
Service cost
Interest cost
Expected return on plan assets
Amortization of prior service cost (credit)
Amortization of net actuarial loss (gain)
Settlement loss
$  9.0
$  8.7
$  8.8
$ 2.3
$ 2.3
$ 2.5
23.221.823.9
2.42.33.0
(25.6)(25.4)(25.3)
———
1.01.21.0 (1.1)(1.1)(0.4)
10.013.213.1
(0.1)— —
3.5 —6.7
———
Net periodic benefit cost
$ 21.1
Other changes in plan assets and benefit liabilities
recognized in accumulated other comprehensive
loss before income taxes:
Prior service (cost) credit arising during the year
Net actuarial (loss) gain arising during the year
Amortization of prior service cost (credit)
Amortization of net actuarial loss (gain)
Curtailment loss
Settlement loss
Foreign currency translation
$ (0.3)
$ —
$ (4.0)
$ —
$ 1.7
$ 9.6
(23.7)19.3(20.5)
1.6 7.5(4.5)
1.01.21.0 (1.1)(1.1)(0.4)
10.013.213.1
(0.1)— —
— —2.0
———
3.5 —6.7
———
2.72.90.9
———
Net change for year
$ (6.8)
Weighted-average assumptions used in determining
net periodic benefit costs:
U.S. plans:
Discount rate
Expected return on plan assets
Rate of compensation increase
Canadian plans:
Discount rate
Expected return on plan assets
Rate of compensation increase
$ 19.5
$ 36.6
$ 28.2
$ (0.8)
$ 3.5
$ 0.4
$ 3.5
$ 8.1
$ 5.1
$ 4.7
4.42%3.99%4.70%
6.726.757.00
4.134.134.12
4.27%3.80%4.70%
———
———
4.11%3.65%4.20%
5.645.786.17
3.003.004.00
4.10%3.70%4.20%
———
———
We amortize gains and losses for our postretirement plans over the average expected future period of vested service. For plans
that consist of less than five percent of participants that are active, average life expectancy is used instead of the average expected
useful service period.
64 THE J. M . SMUCKER COMPANY
2015 ANNUAL REPORT 65
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The J. M. Smucker Company
The J. M. Smucker Company
We use a measurement date of April 30 to determine defined benefit pension and other postretirement benefit plans’ assets and
benefit obligations. The following table sets forth the combined status of the plans as recognized in the Consolidated Balance Sheets.
The following table sets forth the weighted-average assumptions used in determining the benefit obligations.
April 30,
April 30,
Defined Benefit Pension Plans
Other Postretirement Benefits
2015201420152014
Change in benefit obligation:
Benefit obligation at beginning of year
Service cost
Interest cost
Amendments
Actuarial loss (gain)
Participant contributions
Benefits paid
Foreign currency translation adjustments
Settlement
Acquisition
Other adjustments
$ 542.3
$ 575.7
$ 58.5
$ 67.1
9.08.72.32.3
23.221.8 2.42.3
0.3——(1.7)
39.8(19.7) (1.6)(7.5)
0.10.10.71.2
(31.8)(34.2) (4.4)(3.5)
(10.6)(10.1) (1.1)(1.1)
(8.6)— ——
176.7—
18.9—
——
0.1(0.6)
Benefit obligation at end of year
$ 740.4
$ 542.3
$ 75.8
$ 58.5
U.S. plans:
Discount rate
Rate of compensation increase
Canadian plans:
Discount rate
Rate of compensation increase
Defined Benefit Pension Plans
Other Postretirement Benefits
2015201420152014
4.01%4.45%3.97%4.30%
4.064.13 ——
3.51%4.11%3.50%4.10%
3.003.00 ——
For 2016, the assumed health care trend rates are 7.5 percent and 5.0 percent for the U.S. and Canadian plans, respectively. The
rate for participants under age 65 is assumed to decrease to 5.0 percent in 2026 and 4.5 percent in 2017 for the U.S. and Canadian
plans, respectively. The health care cost trend rate assumption impacts the amount of the other postretirement benefits obligation
and periodic other postretirement benefits cost reported. A one percentage point annual change in the assumed health care cost
trend rate would have the following effect as of April 30, 2015:
One Percentage Point
Increase
Decrease
Change in plan assets:
Fair value of plan assets at beginning of year
Actual return on plan assets
Company contributions
Participant contributions
Benefits paid
Settlement
Acquisition
Foreign currency translation adjustments
$ 402.1
$ 410.7
$ —
$ —
41.725.0 ——
15.79.43.72.3
0.10.10.71.2
(31.8)(34.2) (4.4)(3.5)
(8.6)— ——
141.1———
(10.3)(8.9) ——
Effect on total service and interest cost components
Effect on benefit obligation
Fair value of plan assets at end of year
$ 550.0
Funded status of the plans
$(190.4)$(140.2) $(75.8)$(58.5)
Benefit obligation at end of year
Fair value of plan assets at end of year
$104.4$113.3 $ 10.9
$ 11.4
104.1105.6
——
Defined benefit pensions
Other noncurrent assets
Accrued compensation
Postretirement benefits other than pensions
$(188.9)$(135.7) $ —
$ —
2.0———
(3.5)(4.5)(1.2)—
——
(74.6)(58.5)
Funded status of the plans
$ (0.3)
Net benefit liability
$(190.4)$(140.2) $(75.8)$(58.5)
Components of net periodic benefit cost:
Service cost
Interest cost
Expected return on plan assets
Amortization of net actuarial loss
$  0.4$  0.5 $ —
$ —
4.34.20.40.5
(5.6)(5.8) ——
0.91.3 ——
Net periodic benefit cost
$ —$  0.2 $  0.4
Changes in plan assets:
Company contributions
Participant contributions
Benefits paid
Actual return on plan assets
Foreign currency translation
$  5.1$  5.4 $  0.7
$  0.8
0.10.1 ——
(8.4)(8.6)(0.7)(0.8)
11.910.6 ——
(10.3)(8.9) ——
$ 402.1
$ —
$ —
The following table summarizes amounts recognized in accumulated other comprehensive loss in the Consolidated Balance Sheets,
before income taxes.
April 30,
Defined Benefit Pension Plans
Other Postretirement Benefits
2015201420152014
Net actuarial (loss) gain
Prior service (cost) credit
$(174.2)$(166.7) $  6.9
$  5.3
(4.2)(4.9)10.311.5
Total recognized in accumulated other comprehensive loss
$(178.4)$(171.6) $ 17.2
$0.1
2.5
$0.1
2.3
The following table sets forth selective information pertaining to our Canadian pension and other postretirement benefit plans,
which is included in the consolidated information presented on pages 65 and 66.
Year Ended April 30,
Defined Benefit Pension Plans
Other Postretirement Benefits
2015201420152014
$ (7.7)
$(10.9)$(11.4)
$  0.5
$ 16.8
During 2016, we expect to recognize amortization of net actuarial losses and prior service credit of $10.7 and $0.5, respectively,
in net periodic benefit cost.
66 THE J. M . SMUCKER COMPANY
2015 ANNUAL REPORT 67
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The J. M. Smucker Company
The J. M. Smucker Company
The following table sets forth additional information related to our defined benefit pension plans.
April 30,
20152014
$691.8$507.3
Accumulated benefit obligation for all pension plans
Plans with an accumulated benefit obligation in excess of plan assets:
Accumulated benefit obligation
Fair value of plan assets
Plans with a projected benefit obligation in excess of plan assets:
Projected benefit obligation
Fair value of plan assets
$481.6$507.3
337.8402.1
$669.3$542.3
477.3402.1
We employ a total return on investment approach for the defined benefit pension plans’ assets. A mix of equity, fixed-income,
and alternative investments is used to maximize the long-term rate of return on assets for the level of risk. In determining the
expected long-term rate of return on the defined benefit pension plans’ assets, we consider the historical rates of return, the nature
of investments, the asset allocation, and expectations of future investment strategies. The actual rate of return was 11.6 percent
and 6.9 percent for the years ended April 30, 2015 and 2014, respectively.
The following tables summarize the fair value of the major asset classes for the U.S. and Canadian defined benefit pension plans
and the levels within the fair value hierarchy in which the fair value measurements fall.
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
Cash and cash equivalents (A)
Equity securities:
U.S.(B)
International (C)
Fixed-income securities:
Bonds (D)
Fixed income (E)
Other types of investments (F)
$  4.6
Total financial assets measured at fair value
$386.0
Significant
Observable
Inputs
(Level 2)
$ —
Significant
Unobservable
Inputs
(Level 3)
$ —
105.045.5
81.024.5
Fair Value at
April 30, 2015
$  4.6
—
150.5
—
105.5
$18.5
Cash and cash equivalents (A)
Equity securities:
U.S.(B)
International (C)
Fixed-income securities:
Bonds (D)
Fixed income (E)
Other types of investments (F)
$  2.0
Total financial assets measured at fair value
$358.3
Significant
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
$ —
$ —
91.0 16.4
72.312.4
Fair Value at
April 30, 2014
$  2.0
—107.4
—84.7
148.2——
148.2
44.8——
44.8
— —15.015.0
$28.8
$15.0
$402.1
(A) This category includes money market holdings with maturities of three months or less and are classified as Level 1 assets. Based on the short-term nature of these assets, carrying
value approximates fair value.
(B) This category is invested primarily in a diversified portfolio of common stocks and index funds that invest in U.S. stocks with market capitalization ranges similar to those found
in the S&P 500 Index and/or the various Russell Indexes and are traded on active exchanges. The Level 1 assets are valued using quoted market prices for identical securities in
active markets. The Level 2 assets are pooled or common collective trust funds that consist of equity securities traded on active exchanges.
(C) This category is invested primarily in common stocks and other equity securities traded on active exchanges whose issuers are located outside the U.S. The fund invests primarily
in developed countries, but may also invest in emerging markets. The Level 1 assets are valued using quoted market prices for identical securities in active markets. The Level 2
assets are pooled or common collective trust funds that consist of equity securities traded on active exchanges.
(D) This category is comprised of bond funds, which seek to duplicate the return characteristics of high-quality corporate bonds with a duration range of 10 to 13 years. The Level 1
assets are valued using quoted market prices for identical securities in active markets.
151.3——
151.3
44.168.5 —
112.6
— 7.018.525.5
$145.5
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
$550.0
(E) This category is comprised of fixed-income funds that invest primarily in government-related bonds of non-U.S. issuers and include investments in the Canadian market as well
as emerging markets. The Level 1 assets are valued using quoted market prices for identical securities in active markets. Contained within the Level 2 assets is a Core Plus pool
of funds investing primarily in high-yield, emerging market debt and global bonds, as well as an international bond fund which invests in fixed-income securities denominated in
currencies other than U.S. dollars. The Level 2 assets are pooled or common collective trust funds that consist of fixed-income securities traded on active exchanges.
(F) This category is comprised of a global alpha collective trust fund, a private limited investment partnership, and a private equity fund in 2015. In 2014, the category was
­comprised only of the private equity fund. The global alpha collective trust fund is comprised of U.S. and global equity and fixed-income securities inclusive of derivatives within
the asset mix. This collective trust fund is classified as a Level 2 asset, whereby the underlying securities are valued utilizing quoted market prices for identical securities in active
markets. The private investment limited partnership is classified as a Level 3 asset. The investments in the partnership are valued at estimated fair value based on audited
financial statements received from the general partner. The private equity fund consists primarily of limited partnership interests in corporate finance and venture capital
funds. The private equity fund is classified as a Level 3 asset and is valued based on the fund’s net asset value (“NAV”). NAV is calculated based on the estimated fair value of the
underlying investment funds within the portfolio and is corroborated by our review. The private equity fund and private investment limited partnership cannot be redeemed
and the return of principal is based on the liquidation of the underlying assets.
The following table presents a rollforward of activity for Level 3 assets.
20152014
Balance at May 1,
Big Heart pension assets acquired
Actual return on plan assets still held at reporting date
$15.0$15.0
2.8—
0.7—
Balance at April 30,
$18.5$15.0
The current investment policy is to invest 50 percent of assets in both equity securities and fixed-income securities. Included in
equity securities were 317,552 of our common shares at April 30, 2015. The total market value of these shares was $36.8 at April 30,
2015. We paid dividends of $0.8 on these shares during 2015.
We expect to contribute approximately $3.5 to the defined benefit pension plans in 2016. We expect the following payments to be
made from the defined benefit pension and other postretirement benefit plans: $49.9 in 2016, $51.0 in 2017, $56.6 in 2018, $53.5
in 2019, $60.2 in 2020, and $304.0 in 2021 through 2025.
68 THE J. M . SMUCKER COMPANY
2015 ANNUAL REPORT 69
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The J. M. Smucker Company
The J. M. Smucker Company
As a result of the Big Heart acquisition we now participate in one multi-employer pension plan, the Bakery and Confectionery
Union and Industry International Pension Fund (“Bakery and Confectionery Union Fund”) (52-6118572), which provides defined
benefits to certain union employees. During 2015, a total of $1.7 was contributed to the plan, of which $0.1 was contributed since
acquisition and was recognized in the Statement of Consolidated Income.
Interest Rate Hedging: We utilize derivative instruments to manage changes in the fair value of our debt. Interest rate swaps
­mitigate the risk associated with the underlying hedged item. At the inception of the contract, the instrument is evaluated and
­documented for hedge accounting treatment. If the contract is designated as a cash flow hedge, the mark-to-market gains or losses
on the swap are deferred and included as a component of accumulated other comprehensive loss to the extent effective, and
reclassified to interest expense in the period during which the hedged transaction affects earnings. If the contract is designated ­
as a fair value hedge, the swap would be recognized at fair value on the balance sheet and changes in the fair value would be
­recognized in interest expense. Generally, changes in the fair value of the derivative are equal to changes in the fair value of the
underlying debt and have no impact on earnings.
The risks of participating in multi-employer pension plans are different from the risks of participating in single-employer pension
plans in the following respects: the assets contributed to the multi-employer plan by one employer may be used to provide benefits
to employees of other participating employers; if a participating employer stops contributing to the plan, the unfunded obligations
of the plan allocable to the withdrawing employer may be the responsibility of the remaining participating employers; and, if we
stop par­ticipating in the multi-employer pension plan, we may be required to pay the plan an amount based on our allocable
share of the underfunded status of the plan, referred to as a withdrawal liability.
The Pension Protection Act of 2006 ranks the funded status of multi-employer pension plans depending upon a plan’s current
and projected funding. A plan is in the Red Zone (Critical) if it has a current funded percentage less than 65 percent. A plan is in the
Yellow Zone (Endangered) if it has a current funded percentage of less than 80 percent, or projects a credit balance deficit within
seven years. A plan is in the Green Zone (Healthy) if it has a current funded percentage greater than 80 percent and does not have
a projected credit balance deficit within seven years. The zone status is based on the plan’s year end, not our fiscal year end. The
zone status is based on information that we received from the plan and is certified by the plan’s actuary. During calendar year 2014,
the Bakery and Confectionery Union Fund was in Red Zone status. Although the current funding status as of calendar year 2014
was 65.1 percent, the plan’s actuary concluded that the funding status is more likely than not to fall below 65 percent within the
next five years and has classified the Bakery and Confectionery Union Fund in Red Zone status. A funding improvement plan or
rehabilitation plan has been implemented.
NOTE 8
DERIVATIVE FINANCIAL INSTRUMENTS
We are exposed to market risks, such as changes in commodity prices, foreign currency exchange rates, and interest rates.
To manage the volatility related to these exposures, we enter into various derivative transactions. We have policies in place that
define acceptable instrument types we may enter into and establish controls to limit our market risk exposure.
Commodity Price Management: We enter into commodity futures and options contracts to manage the price volatility and reduce
the variability of future cash flows related to anticipated inventory purchases of key raw materials, notably green coffee, edible oils,
corn, and wheat. We also enter into commodity futures and options contracts to manage price risk for energy input costs, including
natural gas and diesel fuel. Our derivative instruments generally have maturities of less than one year.
Effective May 1, 2014, we elected to no longer qualify commodity derivatives for hedge accounting treatment and, as a result,
the derivative gains and losses are immediately recognized in earnings. Prior to 2015, certain of our derivative instruments met
the hedge criteria and were accounted for as cash flow hedges. The mark-to-market gains and losses on qualifying hedges were
deferred and included as a component of accumulated other comprehensive loss to the extent effective, and reclassified to cost
of products sold in the period during which the hedged transaction affected earnings. Cash flows related to qualifying hedges are
classified consistently with the cash flows from the hedged item in the Statements of Consolidated Cash Flows. Although we no
­longer perform the assessments required to achieve hedge accounting for derivative positions, we believe all of our commodity
derivatives are economic hedges of our risk exposure.
The commodities hedged have a high inverse correlation to price changes of the derivative commodity instrument. Thus, we
would expect that over time any gain or loss in the estimated fair value of the derivatives would generally be offset by an increase
or decrease in the estimated fair value of the underlying exposures.
Foreign Currency Exchange Rate Hedging: We utilize foreign currency forwards and options contracts to manage the effect of
­foreign currency exchange fluctuations on future cash payments in Canada, primarily related to purchases of certain raw materials
and finished goods. The contracts generally have maturities of less than one year.
Effective May 1, 2014, we elected to no longer qualify instruments used to manage foreign currency exchange exposures for
hedge accounting treatment. Prior to 2015, instruments used to manage foreign currency exchange exposures did not qualify for
hedge accounting treatment and the change in value of these instruments was immediately recognized in cost of products sold.
70 THE J. M . SMUCKER COMPANY
On February 24, 2015, we entered into a series of forward-starting interest rate swaps to hedge a portion of the interest rate risk
related to our anticipated issuance of Senior Notes. The notional hedged amount was $1.1 billion, with expected maturity tenors
of 10, 20, and 30 years. The swap agreements were designated as cash flow hedges, where changes in fair value are recorded in
other comprehensive (loss) income. On March 12, 2015, in conjunction with the pricing of the Senior Notes, we terminated the
interest rate swaps prior to maturity. The termination resulted in a net loss of $4.0, which will be amortized over the life of the
remaining debt as an increase to interest expense and approximately $0.2 per year will be recognized beginning in 2026 through
2045. For additional information, see Note 6: Debt and Financing Arrangements.
During 2014, we entered into an interest rate swap on the 3.50 percent Senior Notes due October 15, 2021, which was
designated as a fair value hedge and used to hedge against the changes in the fair value of the debt. We received cash flows from
the counterparty at a fixed rate and paid the counterparty variable rates based on LIBOR. On January 16, 2015, we terminated the
interest rate swap on the 3.50 percent Senior Notes prior to maturity. As a result of the early termination, we received $58.1 in
cash, which included $4.6 of accrued and prepaid interest. The remaining benefit was deferred and will be recognized over the
remaining life of the underlying debt as a reduction of future interest expense and will be recognized as follows: $7.4 in 2016,
$7.6 in 2017, $7.8 in 2018, $8.0 in 2019, $8.1 in 2020, $8.4 in 2021, and $4.0 in 2022. For additional information, see Note 6:
Debt and Financing Arrangements.
The following table sets forth the gross fair value of derivative instruments recognized in the Consolidated Balance Sheets.
April 30, 2015
April 30, 2014
OtherOtherOtherOther
Current
CurrentNoncurrentNoncurrent
AssetsLiabilities AssetsLiabilities
OtherOtherOther
Current
CurrentNoncurrent
AssetsLiabilitiesLiabilities
Derivatives designated as hedging instruments:
Commodity contracts
Interest rate contract
$ —
$ —
$ —
$ —$23.4$10.9 $ —
————18.0 — 3.1
Total derivatives designated as hedging
instruments
$ —
$ —
$ —
$ —$41.4$10.9 $3.1
Derivatives not designated as hedging instruments:
Commodity contracts
$ 6.4
$23.9$0.2$3.8
$11.6
$ 5.8
$ —
Foreign currency exchange contracts
4.8
1.0——1.40.7 —
Total derivatives not designated as hedging
instruments
$11.2
$24.9$0.2$3.8
Total derivative instruments
$11.2
$24.9$0.2$3.8$54.4$17.4 $3.1
$13.0
$ 6.5
$ —
We have elected to not offset fair value amounts recognized for our exchange-traded commodity derivative instruments and our
cash margin accounts executed with the same counterparty that are generally subject to enforceable netting agreements. We are
required to maintain cash margin accounts in connection with funding the settlement of our open positions. At April 30, 2015
and 2014, we maintained cash margin account balances of $38.2 and $8.1, respectively, included in other current assets in the
Consolidated Balance Sheets. The change in the cash margin account balances is included in other – net, investing activities in
the Statements of Consolidated Cash Flows. In the event of default and immediate net settlement of all of our open positions with
individual counterparties, all of our derivative liabilities would be fully offset by either our derivative asset positions or margin
accounts based on the net asset or liability position with our individual counterparties.
2015 ANNUAL REPORT 71
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The J. M. Smucker Company
The J. M. Smucker Company
The following table presents information on pre-tax commodity contract net gains and losses recognized on derivatives designated
as cash flow hedges prior to May 1, 2014, and pre-tax losses related to the termination of interest rate swaps.
The following table presents the gross contract notional value of outstanding derivative contracts.
Year Ended April 30,
Year Ended April 30,
20152014
20152014
Commodity contracts
Foreign currency exchange contracts
Interest rate contract
(Losses) gains recognized in other comprehensive (loss) income (effective portion)
Gains (losses) reclassified from accumulated other comprehensive loss to cost of products sold
(effective portion)
Losses reclassified from accumulated other comprehensive loss to interest expense (effective portion)
$ (4.0)
Change in accumulated other comprehensive loss
$(32.5)
$ 41.9
Gains recognized in cost of products sold (ineffective portion)
Losses recognized in interest expense (ineffective portion)
$ —
$ (0.1)
$  1.4
$ —
$ 21.0
29.1(20.3)
(0.6)(0.6)
Due to our election to no longer qualify commodity derivatives for hedge accounting treatment, there was no remaining balance
in accumulated other comprehensive loss at April 30, 2015. Included as a component of accumulated other comprehensive loss at
April 30, 2014, was a deferred pre-tax net gain of $29.1 related to commodity contracts. The related tax expense recognized in
­accumulated other comprehensive loss was $10.8 at April 30, 2014.
Also included as a component of accumulated other comprehensive loss at April 30, 2015 and 2014, were deferred pre-tax losses of
$8.2 and $4.8, respectively, related to the termination of interest rate swaps. The related tax benefit recognized in accumulated
other comprehensive loss was $2.9 and $1.7 at April 30, 2015 and 2014, respectively. Approximately $0.6 of the pre-tax loss will be
recognized over the next 12 months.
The following table presents the net gains and losses recognized in cost of products sold on derivatives not designated as qualified
hedging instruments.
Year Ended April 30,
20152014
(Losses) gains on commodity contracts
Gains on foreign exchange contracts
$(48.5)$5.2
8.83.3
Total (losses) gains recognized in costs of products sold
$(39.7)$8.5
Commodity and foreign currency exchange derivative gains and losses are reported in unallocated derivative gains and losses
­outside of segment operating results until the related inventory is sold. At that time, we reclassify the hedge gains and losses from
unallocated derivative gains and losses to segment profit, allowing our segments to realize the economic effect of the hedge without
experiencing any mark-to-market volatility. The following table presents the activity in unallocated derivative gains and losses.
Year Ended April 30,
20152014
Net (losses) gains on mark-to-market valuation of unallocated derivative positions
Net losses (gains) on derivative positions reclassified to segment operating profit
$(39.7)
$ 8.5
15.2(3.2)
Net mark-to-market valuation of certain derivative positions recognized in unallocated (losses) gains
$(24.5)
The net cumulative unallocated derivative losses at April 30, 2015, was $20.4, including net realized losses of $13.9.
$ 5.3
NOTE 9
OTHER FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS
Financial instruments, other than derivatives, that potentially subject us to significant concentrations of credit risk consist
­principally of cash investments, short-term borrowings, and trade receivables. The carrying value of these financial instruments
approximates fair value. With respect to trade receivables, we believe there is no concentration of risk with any single customer
whose failure or nonperformance would materially affect our results other than as discussed in Note 3: Reportable Segments.
We do not require collateral from our customers. Our other financial instruments, with the exception of long-term debt, are
­recognized at estimated fair value in the Consolidated Balance Sheets.
The following table provides information on the carrying amount and fair value of our financial instruments.
Other investments
Derivative financial instruments – net
Long-term debt
April 30, 2015
April 30, 2014
Carrying Carrying
Amount
Fair Value
Amount
Fair Value
$ 48.4
$ 48.4
$ 55.4
$ 55.4
(17.3)(17.3) 33.933.9
(5,944.9)(6,011.3) (1,973.1)(2,239.1)
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date. Valuation techniques are based on observable and unobservable
inputs. Observable inputs reflect readily obtainable data from independent sources, while unobservable inputs reflect our
market assumptions.
The following tables summarize the fair values and the levels within the fair value hierarchy in which the fair value measurements
fall for our financial instruments.
Other investments: (A)
Equity mutual funds
Municipal obligations
Money market funds
Derivatives: (B)
Commodity contracts – net
Foreign currency exchange contracts – net
Long-term debt (C)
Total financial instruments measured at fair value
72 THE J. M . SMUCKER COMPANY
$640.6$790.3
136.4158.1
—750.0
Quoted Prices in
Active Markets
for Identical
Assets (Level 1)
$ 9.7
—
0.8
Significant
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
$ —
37.9
—
(12.4)
(8.7)
(0.2)
4.0
(4,459.0)(1,552.3)
$(4,461.1)
$(1,519.1)
$ —
—
—
Fair Value at
April 30, 2015
$ 9.7
37.9
0.8
—
(21.1)
—
3.8
— (6,011.3)
$ —
$(5,980.2)
2015 ANNUAL REPORT 73
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The J. M. Smucker Company
Quoted Prices in
Active Markets
for Identical
Assets (Level 1)
Other investments: (A)
Equity mutual funds
Municipal obligations
Money market funds
Derivatives: (B)
Commodity contracts – net
Foreign currency exchange contracts – net
Interest rate contract – net
Long-term debt (C)
Total financial instruments measured at fair value
Significant
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
The J. M. Smucker Company
Fair Value at
April 30, 2014
$  12.0
$ —
$ —
$ 12.0
—34.4 —34.4
9.0
—
—
9.0
13.5
4.8
—
0.7
—
14.9
(772.0)(1,467.1)
$(737.5)
$(1,412.3)
—
18.3
—
0.7
—
14.9
— (2,239.1)
$ —
$(2,149.8)
(A) O
ther investments consist of funds maintained for the payment of benefits associated with nonqualified retirement plans. The funds include equity securities listed in active
markets, municipal obligations valued by a third party using valuation techniques that utilize inputs that are derived principally from or corroborated by observable market
data, and money market funds with maturities of three months or less. Based on the short-term nature of these money market funds, carrying value approximates fair value.
As of April 30, 2015, our municipal obligations are scheduled to mature as follows: $0.9 in 2016, $1.3 in 2017, $1.1 in 2018, $3.0 in 2019, and the remaining $31.6 in 2020 and
beyond. For additional information, see Marketable Securities and Other Investments in Note 1: Accounting Policies.
(B) Level 1 commodity contract and foreign currency exchange derivatives are valued using quoted market prices for identical instruments in active markets. Level 2 commodity
­contract and foreign currency exchange derivatives are valued using quoted prices for similar assets or liabilities in active markets. The Level 2 interest rate contract derivative is
valued using the income approach, observable Level 2 market expectations at the measurement date, and standard valuation techniques to convert future amounts to a single
discounted present value. Level 2 inputs for the interest rate contract are limited to quoted prices for similar assets or liabilities in active markets and inputs other than quoted
prices that are observable for the asset or liability. For additional information, see Note 8: Derivative Financial Instruments.
(C) L
ong-term debt is comprised of $750.0 in public Senior Notes and the $3.7 billion Senior Notes issued in 2015 classified as Level 1 and the Term Loan classified as Level 2 in 2015.
Long-term debt is comprised of public Senior Notes classified as Level 1 and private Senior Notes classified as Level 2 in 2014. The public Senior Notes are traded in an active
­secondary market and valued using quoted prices. The value of the private Senior Notes and Term Loan are based on the net present value of each interest and principal payment
calculated, utilizing an interest rate derived from a fair market yield curve for private Senior Notes or an estimated yield curve obtained from independent pricing sources for
­similar types of term loan borrowing arrangements. For additional information, see Note 6: Debt and Financing Arrangements.
NOTE 10
SHARE-BASED PAYMENTS
We provide for equity-based incentives to be awarded to key employees and non-employee directors. Currently, these incentives
consist of restricted shares, restricted stock units (which may also be referred to as deferred stock units), performance units, and
stock options. These awards are administered primarily through the 2010 Equity and Incentive Compensation Plan approved by
our shareholders in August 2010. Awards under this plan may be in the form of stock options, stock appreciation rights, restricted
shares, restricted stock units, performance shares, performance units, incentive awards, and other share-based awards. Awards
under this plan may be granted to our non-employee directors, consultants, officers, and other employees. Deferred stock units
granted to non-employee directors vest immediately and, along with dividends credited on those deferred stock units, are paid out
in the form of common shares upon termination of service as a non-employee director. At April 30, 2015, there were 5,820,288
shares available for future issuance under this plan.
Under the 2010 Equity and Incentive Compensation Plan, we have the option to settle share-based awards by issuing common
shares from treasury, issuing new Company common shares, or issuing a combination of common shares from treasury and new
Company common shares.
The fair value of each option is estimated on the date of grant using a Black-Scholes option-pricing model with the following
weighted-average assumptions for stock options granted:
2015
Expected volatility (%)
Dividend Yield (%)
Risk-free interest rate (%)
Expected life of stock option (years)
25.0%
2.2%
1.5%
5.6
Expected volatility was calculated in accordance with the provisions of FASB ASC 718, Compensation – Stock Compensation, based
on consideration of both historical and implied volatilities. The expected life of a stock option represents the period from the grant
date through the expected exercise date of the option. This was calculated using a simplified method whereby the midpoint between
the vesting date and the end of the contractual term is utilized to compute the expected term. A simplified method was used in
this calculation given the change in demographics since our last stock option issuance in 2005; therefore, we expect that the exercise
patterns under this grant will be different from those under previous stock option grants.
The following table is a summary of our option activity.
Number
of Options
Weighted-Average
Exercise Price
Outstanding at May 1, 2014
33,667
$ 44.50
Granted955,000 112.59
Exercised31,667 44.29
Outstanding at April 30, 2015
Exercisable at April 30, 2015
957,000
2,000
$112.45
$ 47.78
The average remaining contractual term for options outstanding and exercisable at April 30, 2015, are 9.9 and 0.3 years, respectively.
The aggregate intrinsic value of options outstanding and exercisable at April 30, 2015, are $3.3 and $0.1, respectively. The options
granted in 2015 have a weighted-average grant date fair value of $21.68 per option. No options were granted in 2014 and 2013. The
total intrinsic value of options exercised was $1.9, $0.8, and $3.4 for 2015, 2014, and 2013, respectively. The closing market price of
our common stock on the last trading day of 2015 was $115.92 per share.
For options granted during 2015, compensation cost will be recognized ratably over the service period for each vesting tranche from
the grant date through the end of the requisite service period to the extent the performance objectives are likely to be achieved.
Compensation cost for stock option awards totaled $1.2 for the year ended April 30, 2015, and was included in other s­ pecial project
costs in the Statement of Consolidated Income. No compensation cost was incurred during 2014 and 2013. The tax benefit related to
the stock option expense for 2015 was $0.4. At April 30, 2015, we had $18.5 of total unrecognized compensation expense, net of
estimated forfeitures, related to stock options that will be recognized over a weighted-average period of 2.0 years.
Cash received from option exercises for the years ended April 30, 2015, 2014, and 2013 was $0.8, $0.5, and $2.2, respectively.
Stock Options: During 2015, we granted 955,000 stock options under the 2010 Equity and Incentive Compensation Plan. The options
vest over a period of one to three years dependent on the continued service of the option holder, as well as the achievement of
­
performance objectives established on the grant date. The exercise price of all options granted is equal to the market value of the
shares on the date of grant. All options granted during 2015 have a contractual term of 10 years.
74 THE J. M . SMUCKER COMPANY
2015 ANNUAL REPORT 75
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The J. M. Smucker Company
The J. M. Smucker Company
Other Equity Awards: The following table is a summary of our restricted shares, deferred stock units, and performance units.
A reconciliation of the statutory federal income tax rate and the effective income tax rate is as follows:
Restricted Shares
and Deferred
Stock Units
Outstanding at May 1, 2014
Granted
Converted
Vested
Forfeited
Outstanding at April 30, 2015
839,188
109,091
101,020
(416,328)
(36,082)
596,889
Weighted-Average
Grant Date
Performance
Fair Value
Units
$ 76.54
104.82
104.91
68.59
90.65
$ 91.21
Weighted-Average
Conversion Date
Fair Value
101,020
75,848
(101,020)
—
—
75,848
Year Ended April 30,
Restricted Shares
and Deferred
Stock Units
2015
2014
2013
109,091
167,134
109,770
Weighted-Average
Grant Date
Performance
Fair Value
Units
$104.82
101.08
76.37
Statutory federal income tax rate
State and local income taxes
Domestic manufacturing deduction
Other items – net
$111.41
Income taxes paid
Weighted-Average
Conversion Date
Fair Value
75,848
101,020
106,666
$111.41
104.91
100.54
The performance units column represents the number of restricted shares received by certain executive officers, subsequent
to year end, upon conversion of the performance units earned during the year. Restricted shares and deferred stock units
generally vest four years from the date of grant or upon the attainment of a defined age and years of service, subject to certain
retention requirements.
NOTE 11
INCOME TAXES
Income before income taxes is as follows:
Year Ended April 30,
201520142013
Domestic
$500.7$827.4$791.9
Foreign
22.322.325.4
Income before income taxes
$523.0$849.7$817.3
The components of the provision for income taxes are as follows:
Current:
Federal
Foreign
State and local
Deferred:
Federal
Foreign
State and local
Total income tax expense
76 THE J. M . SMUCKER COMPANY
Percent of Pretax Income
201520142013
$104.91
111.41
104.91
—
—
The weighted-average grant date fair value of equity awards other than stock options that vested in 2015, 2014, and 2013 was
$28.6, $20.8, and $11.8, respectively. The vesting date fair value of equity awards other than stock options that vested in 2015,
2014, and 2013 was $43.4, $40.2, and $15.4, respectively. The weighted-average grant date fair value of restricted shares and
deferred stock units is the average of the high and the low share price on the date of grant. The weighted-average conversion date
fair value of performance units is the average of the high and the low share price on the date of conversion to restricted shares. The
following table summarizes the weighted-average fair values of the equity awards granted in 2015, 2014, and 2013.
Year Ended April 30,
Effective income tax rate
35.0%35.0%35.0%
2.41.91.8
(2.9)(3.0)(3.1)
(0.4)(0.4)(0.3)
34.1%33.5%33.4%
$199.3$294.4$279.2
We are a voluntary participant in the Compliance Assurance Process (“CAP”) program offered by the Internal Revenue Service
(“IRS”) and are currently under a CAP examination for the tax year ended April 30, 2015. Through the contemporaneous exchange
of information with the IRS, this program is designed to identify and resolve tax positions with the IRS prior to the filing of a tax
return, which allows us to remain current with our IRS examinations. The IRS has completed the CAP examinations for tax years
ended April 30, 2012, 2013, and 2014. Tax years prior to 2012 are no longer subject to U.S. federal tax examination. With limited
exceptions, we are no longer subject to examination for state and local jurisdictions for tax years prior to 2011 and for tax years
prior to 2008 for foreign jurisdictions. BAG has been notified that the IRS will examine its federal income tax returns for the fiscal
year ending April 27, 2014, and the period ending March 22, 2015.
Deferred income taxes reflect the tax effects of temporary differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax reporting. Significant components of our deferred tax assets
and liabilities are as follows:
April 30,
20152014
Deferred tax liabilities:
Intangible assets
Property, plant, and equipment
Other
$2,499.4$1,028.7
158.094.5
9.619.4
Total deferred tax liabilities
$2,667.0$1,142.6
Deferred tax assets:
Post-employment and other employee benefits
Tax credit and loss carryforwards
Intangible assets
Inventory
Property, plant, and equipment
Other
$  143.4
$  103.3
44.8—
22.17.6
11.6—
19.4—
32.9
29.8
Total deferred tax assets
Valuation allowance
$  274.2
$  140.7
(4.2)—
Total deferred tax assets, less allowance
$  270.0
Net deferred tax liability
$2,397.0$1,001.9
$  140.7
Year Ended April 30,
201520142013
$147.8$265.4$262.1
4.74.26.1
17.922.920.5
2.3 (13.9)(15.6)
0.52.40.9
4.9 3.5(0.9)
$178.1$284.5$273.1
2015 ANNUAL REPORT 77
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The J. M. Smucker Company
The J. M. Smucker Company
The following table summarizes domestic loss and credit carryforwards at April 30, 2015.
NOTE 12
Related Tax
Deduction
Deferred
Tax Asset
Valuation
Allowance
Tax carryforwards:
Federal loss carryforwards
State loss carryforwards
Federal tax credit carryforwards
State tax credit carryforwards
$104.6
119.4
—
—
$36.6
5.9
0.5
1.8
$4.2
—
—
—
Total tax carryforwards
$224.0
$44.8
$4.2
ACCUMULATED OTHER COMPREHENSIVE LOSS
Expiration Date
The components of accumulated other comprehensive loss, including the reclassification adjustments for items that are reclassified
from accumulated other comprehensive loss to net income, are shown below.
2035
2020 to 2035
2035
2021
We evaluate the realizability of deferred tax assets for each of the jurisdictions in which we operate. The total valuation allowance
increased by $4.2 related to a federal capital loss carryforward recorded with the Big Heart acquisition.
Deferred income taxes have not been provided on approximately $248.6 of undistributed earnings of foreign subsidiaries since
these amounts are considered to be permanently reinvested. Any additional taxes payable on the earnings of foreign subsidiaries,
if remitted, would be partially offset by domestic tax deductions or tax credits for foreign taxes paid. It is not practical to estimate
the amount of additional taxes that might be payable on such undistributed earnings.
Our unrecognized tax benefits as of April 30, 2015, 2014, and 2013, were $45.0, $29.1, and $29.7, respectively. Of the unrecognized
tax benefits, $32.2, $19.5, and $20.6 would affect the effective tax rate, if recognized, as of April 30, 2015, 2014, and 2013, respectively.
Our accrual for tax-related net interest and penalties totaled $3.4 as of April 30, 2015, and $2.0 as of April 30, 2014 and 2013. Interest
charged to earnings totaled $0.7, $0.1, and $0.3 during 2015, 2014, and 2013, respectively.
Within the next 12 months, it is reasonably possible that we could decrease our unrecognized tax benefits by an estimated $2.1,
­primarily as a result of the expiration of statute of limitation periods.
Foreign
Unrealized
Pension
Unrealized
Accumulated
Currency
(Loss) Gain on
and Other
Gain on
Other
TranslationCash Flow Hedging
Postretirement Available-for-Sale Comprehensive
Adjustment
Derivatives (A)Liabilities (B)Securities (C)Loss
Balance at May 1, 2012
Reclassification adjustments
Current period (charge) credit
Income tax expense
$ 67.0
—
(5.5)
—
$(19.2)
40.1
(27.5)
(4.6)
$(134.3)
20.4
(16.5)
(1.0)
$ 2.5
—
3.1
(1.1)
$ (84.0)
60.5
(46.4)
(6.7)
Balance at April 30, 2013
Reclassification adjustments
Current period (charge) credit
Income tax (expense) benefit
$ 61.5
—
(29.8)
—
$(11.2)
20.9
21.0
(15.4)
$(131.4)
13.3
31.4
(15.3)
$ 4.5
(3.7)
1.9
0.7
$ (76.6)
30.5
24.5
(30.0)
Balance at April 30, 2014
Reclassification adjustments
Current period charge
Income tax benefit
$ 31.7
—
(34.0)
—
$ 15.3
(28.5)
(4.0)
12.0
$(102.0)
9.8
(16.2)
2.8
$ 3.4
—
(0.1)
—
$ (51.6)
(18.7)
(54.3)
14.8
Balance at April 30, 2015
$ (2.3)
$ (5.2)
$(105.6)
$ 3.3$(109.8)
(A) Of the total reclassification adjustments from accumulated other comprehensive loss, $29.1 of income and $20.3 and $39.6 of expense were reclassified to cost of products sold
related to commodity derivatives during 2015, 2014, and 2013, respectively. An additional $0.6 during 2015 and 2014, and $0.5 during 2013 was reclassified to interest expense
related to the interest rate swap. At April 30, 2015, the remaining balance in accumulated other comprehensive loss related entirely to the interest rate swap.
(B) Amortization of net losses was reclassified from accumulated other comprehensive loss to selling, distribution, and administrative expenses.
(C) The gain on the sale of marketable securities was reclassified from accumulated other comprehensive loss to other income – net during 2014.
A reconciliation of our unrecognized tax benefits is as follows:
201520142013
Balance at May 1,
Increases:
Current year tax positions
Prior year tax positions
Acquired businesses
Decreases:
Prior year tax positions
Settlement with tax authorities
Expiration of statute of limitations periods
$29.1 $29.7$24.0
Balance at April 30,
$45.0 $29.1$29.7
78 THE J. M . SMUCKER COMPANY
2.4 5.14.8
1.2 0.12.5
13.4 ——
0.4 1.60.2
— 1.51.0
0.7 2.70.4
NOTE 13
RESTRUCTURING
During 2010, we announced plans to restructure our coffee and fruit spreads operations as part of our ongoing efforts to enhance
the long-term strength and profitability of our leading brands. Since then, we expanded our restructuring plan to include the
Canadian pickle and condiments operations and the capacity expansion of our peanut butter business. Pickle and condiments
production was transitioned to third-party manufacturers during 2012. The consolidation of coffee production in New Orleans,
Louisiana, related to these restructuring initiatives is complete, and the transitioned retail and foodservice fruit spreads volume
is being produced at our new facility in Orrville, Ohio. All of the impacted facilities have been closed, resulting in the reduction
of 850 full-time positions as anticipated.
We have incurred total restructuring costs of $263.8 through April 30, 2015. As of April 30, 2015, all restructuring activities related
to the approved plans were complete.
2015 ANNUAL REPORT 79
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The J. M. Smucker Company
The J. M. Smucker Company
The following table summarizes the restructuring activity, including the liabilities recorded and the total amount incurred.
NOTE 14
Site Preparation
Long-Lived
Employee and Equipment
Asset Charges
Separation
Relocation
We, like other food manufacturers, are from time to time subject to various administrative, regulatory, and other legal proceedings
arising in the ordinary course of business. We are currently a defendant in a variety of such legal proceedings. We cannot predict
with certainty the ultimate results of these proceedings or reasonably determine a range of potential loss. Our policy is to accrue costs
for contingent liabilities when such liabilities are probable and amounts can be reasonably estimated. Based on the information
known to date, we do not believe the final outcome of these proceedings will have a material adverse effect on our financial position,
results of operations, or cash flows.
Production
Start-up Other Costs
Total
Total restructuring charge
$102.7
$64.0
$ 45.5
$ 42.2
$ 9.4
$263.8
Balance at May 1, 2012
Charge to expense
Cash payments
Noncash utilization
$ —
8.2
—
(8.2)
$ 8.8
3.4
(4.5)
—
$ —
13.4
(13.4)
—
$ —
10.8
(10.8)
—
$ —
3.0
(3.0)
—
$  8.8
38.8
(31.7)
(8.2)
Balance at April 30, 2013
Charge to expense
Cash payments
Noncash utilization
$ —
2.7
—
(2.7)
$ 7.7
2.6
(8.4)
(0.2)
$ —
7.2
(7.2)
—
$ —
7.2
(7.2)
—
$ —
1.1
(1.1)
—
$  7.7
20.8
(23.9)
(2.9)
Balance at April 30, 2014
Charge to expense
Cash payments
Noncash utilization
$ —
0.1
—
(0.1)
$ 1.7
0.5
(1.7)
—
$ —
5.3
(5.3)
—
$ —
8.4
(8.4)
—
$ —
1.1
(1.1)
—
$  1.7
15.4
(16.5)
(0.1)
Balance at April 30, 2015
$ —
$ 0.5
$ —
$ —
$ —
$ 0.5
During the years ended April 30, 2015, 2014, and 2013, total restructuring charges of $15.4, $20.8, and $38.8, respectively, were
reported in the Statements of Consolidated Income. Of the total restructuring charges, $1.1, $5.1, and $10.0 were reported in cost of
products sold in the years ended April 30, 2015, 2014, and 2013, respectively. The remaining charges were reported in other special
project costs. The restructuring costs classified as cost of products sold primarily include long-lived asset charges for accelerated
depreciation related to property, plant, and equipment that had been used at the affected production facilities prior to closure.
Employee separation costs include severance, retention bonuses, and pension costs. Severance costs and retention bonuses are
recognized over the estimated future service period of the affected employees.
Other costs include professional fees, costs related to closing the facilities, and miscellaneous expenditures associated with the
restructuring initiative and are expensed as incurred.
CONTINGENCIES
On October 9, 2013, Big Heart entered into a Purchase Agreement with Del Monte Pacific Limited and its subsidiary, Del Monte
Foods Consumer Products, Inc. (which changed its name to Del Monte Foods, Inc.) (“DMFI”). Big Heart sold to DMFI the interests
of certain subsidiaries related to Big Heart’s consumer products business and generally all assets and liabilities primarily related
to the consumer products business for a purchase price of $1.7 billion, subject to a post-closing working capital adjustment. In
­connection with the closing of the transaction, Big Heart received approximately $110.0 in i­ ncremental proceeds representing the
preliminary working capital adjustment subject to a true-up in accordance with the terms of the Purchase Agreement. Big Heart
made a claim of $16.3 for the working capital adjustment related to the sale of the consumer products business. In June 2014,
Big Heart received a notice of disagreement from DMFI disputing the $16.3 working capital a
­ djustment, as well as the incremental preliminary working capital adjustment of approximately $110.0 paid by DMFI at closing. Pursuant to the terms of the
Purchase Agreement, the working capital dispute has been submitted to a mutually agreed upon i­ ndependent certified public
accounting firm of national recognition in the U.S. We believe that the working capital adjustment presented to DMFI is appropriate
and is in accordance with the terms of the Purchase Agreement, and we plan to vigorously defend Big Heart’s position. However, we
cannot currently predict the ultimate outcome of this dispute and have not recorded a receivable or liability as part of the Big Heart
acquisition, but are continuing to evaluate the impact on the opening balance sheet.
NOTE 15
GUARANTOR AND NON-GUARANTOR FINANCIAL INFORMATION
Our 3.50 percent Senior Notes due October 15, 2021, are fully and unconditionally guaranteed, on a joint and several basis, by
J.M. Smucker LLC and The Folgers Coffee Company (the “subsidiary guarantors”), which are 100 percent wholly-owned subsidiaries
of the Company. A subsidiary guarantor will be released from its obligations under the indenture governing the notes (a) if we
­exercise our legal or covenant defeasance option or if our obligations under the indenture are discharged in accordance with the
terms of the indenture or (b) upon delivery of an officer’s certificate to the trustee that the subsidiary guarantor does not guarantee
our obligations under any of our other primary senior indebtedness and that any other guarantees of such primary senior
­indebtedness of the subsidiary guarantor have been released other than through discharges as a result of payment by such
­guarantor on such guarantees.
Condensed consolidating financial statements for the Company, the subsidiary guarantors, and the other subsidiaries of the
Company that are not guaranteeing the indebtedness under the 3.50 percent Senior Notes (the “non-guarantor subsidiaries”) are
provided below. The principal elimination entries relate to investments in subsidiaries and intercompany balances and transactions,
including transactions with our 100 percent wholly-owned subsidiary guarantors and non-guarantor subsidiaries. We have
accounted for investments in subsidiaries using the equity method.
80 THE J. M . SMUCKER COMPANY
2015 ANNUAL REPORT 81
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The J. M. Smucker Company
CONDENSED CONSOLIDATING STATEMENTS OF
COMPREHENSIVE INCOME
The J. M. Smucker Company
CONDENSED CONSOLIDATING STATEMENTS OF
COMPREHENSIVE INCOME
Year Ended April 30, 2015
The J. M. Smucker
Company (Parent)
Subsidiary Non-Guarantor
Guarantors
Subsidiaries
Eliminations
Consolidated
$2,998.0$1,184.0$6,622.4$(5,111.7)$5,692.7
2,457.8
1,080.0
5,301.6
(5,115.4)
3,724.0
Net sales
Cost of products sold
Gross Profit
Selling, distribution, and administrative
expenses and other special project costs
Amortization
Other operating expense (income) – net
234.9
53.8
799.2
—
1,087.9
4.2—
106.7—
110.9
0.3
(2.4)
—
—
(2.1)
Operating Income
Interest (expense) income – net
Other debt costs
Other income – net
Equity in net earnings of subsidiaries
300.5 52.6414.9 3.7772.0
(80.7)
1.2
(0.4)
—
(79.9)
(173.3)
—
—
—
(173.3)
0.6
0.1
3.5
—
4.2
312.6
131.4
52.7
(496.7)
—
Income Before Income Taxes
Income taxes
360.0185.3470.7(493.0)523.0
15.1
0.4
162.6
—
178.1
540.2 104.01,320.8
3.71,968.7
Net Income
Other comprehensive loss, net of tax
$  344.9
(58.2)
$  184.9
(18.5)
$  308.1
(43.3)
$  (493.0)
61.8
$  344.9
(58.2)
Comprehensive Income
$  286.7
$  166.4
$  264.8
$  (431.2)
$  286.7
Eliminations
Consolidated
CONDENSED CONSOLIDATING STATEMENTS OF
COMPREHENSIVE INCOME Net sales
Cost of products sold
Net sales
Cost of products sold
The J. M. Smucker
Company (Parent)
Subsidiary Non-Guarantor
Guarantors
Subsidiaries
Eliminations
Consolidated
$4,447.6 $1,296.4 $5,430.3$(5,276.6)$5,897.7
3,957.3
1,190.6
4,015.0
(5,292.8)
3,870.1
Gross Profit
Selling, distribution, and administrative
expenses and other special project costs
Amortization
Other operating (income) expense – net
490.3 105.81,415.3
Operating Income
Interest (expense) income – net
Other income (expense) – net
Equity in net earnings of subsidiaries
289.2 65.1539.9 16.2910.4
(94.4)
1.2
(0.2)
—
(93.4)
0.7
1.1
(1.5)
—
0.3
408.6
156.7
66.4
(631.7)
—
Income Before Income Taxes
Income taxes
604.1 224.1 604.6(615.5)817.3
59.9 0.4212.8
—273.1
16.22,027.6
199.0
42.9
781.5
4.8 —92.0
(2.7)
(2.2)
1.9
—
1,023.4
—96.8
—
(3.0)
Net Income
Other comprehensive income, net of tax
$  544.2
7.4
$  223.7
9.0
$  391.8
4.1
$  (615.5)
(13.1)
$  544.2
7.4
Comprehensive Income
$  551.6
$  232.7
$  395.9
$  (628.6)
$  551.6
Year Ended April 30, 2014
The J. M. Smucker
Company (Parent)
Subsidiary Non-Guarantor
Guarantors
Subsidiaries
$3,162.8 $1,278.8 $6,601.3$(5,432.3)$5,610.6
2,573.6
1,166.0
5,268.5
(5,428.5)
3,579.6
Gross Profit
Selling, distribution, and administrative
expenses and other special project costs
Amortization
Other operating (income) expense – net
197.1
47.5
769.8
4.2 —94.7
(1.3)
0.9
(0.9)
Operating Income
Interest (expense) income – net
Other income (expense) – net
Equity in net earnings of subsidiaries
389.2 64.4 469.2 (3.8)919.0
(80.8)
1.2
(1.5)
1.7
(79.4)
10.8
—
1.0
(1.7)
10.1
345.1
141.4
64.4
(550.9)
—
Income Before Income Taxes
Income taxes
664.3 207.0 533.1(554.7)849.7
99.1 0.4185.0
—284.5
589.2
112.8 1,332.8
(3.8)2,031.0
—
1,014.4
—98.9
—
(1.3)
Net Income
Other comprehensive income, net of tax
$  565.2
25.0
$  206.6
27.4
$  348.1
6.0
$  (554.7)
(33.4)
$  565.2
25.0
Comprehensive Income
$  590.2
$  234.0
$  354.1
$  (588.1)
$  590.2
82 THE J. M . SMUCKER COMPANY
Year Ended April 30, 2013
2015 ANNUAL REPORT 83
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The J. M. Smucker Company
CONDENSED CONSOLIDATING BALANCE SHEETS
Total Current Assets
Property, Plant, and Equipment – Net
Investments in Subsidiaries
Intercompany Receivable
Other Noncurrent Assets
Goodwill
Other intangible assets – net
Other noncurrent assets
Total Other Noncurrent Assets
Total Assets
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Noncurrent Liabilities
Long-term debt
Deferred income taxes
Intercompany payable
Other noncurrent liabilities
CONDENSED CONSOLIDATING BALANCE SHEETS
April 30, 2015
The J. M. Smucker
Company (Parent)
ASSETS
Current Assets
Cash and cash equivalents
Inventories
Other current assets
The J. M. Smucker Company
Subsidiary Non-Guarantor
Guarantors
Subsidiaries
Eliminations
Consolidated
$     7.1
$ —
$   118.5
$ —
$   125.6
—180.3979.6 3.7
1,163.6
427.4
4.8
343.5
(12.6)
763.1
434.5 185.11,441.6
(8.9)2,052.3
258.0591.3829.0
—
1,678.3
14,610.4 4,179.7
272.4(19,062.5)
—
—305.2133.1(438.3) —
April 30, 2014
The J. M. Smucker
Company (Parent)
ASSETS
Current Assets
Cash and cash equivalents
Inventories
Other current assets
Subsidiary Non-Guarantor
Guarantors
Subsidiaries
Eliminations
Consolidated
$     6.8
$ —
$  146.7
$ —
$  153.5
—173.3761.4 (3.7)931.0
360.2
9.9
94.6
(10.1)
454.6
367.0 183.2 1,002.7 (13.8)1,539.1
233.6551.1480.9
—
1,265.6
8,367.6 4,063.3
237.9(12,668.8)
—
— 315.5 1,132.2(1,447.7)
—
1,082.0—
4,927.8—
6,009.8
501.1
—
6,449.2
—
6,950.3
55.6
10.5
125.8
—
191.9
Total Current Assets
Property, Plant, and Equipment – Net
Investments in Subsidiaries
Intercompany Receivable
Other Noncurrent Assets
Goodwill
Other intangible assets – net
Other noncurrent assets
1,082.0
505.5
58.5
—2,016.2
—
2,518.8
11.1
63.4
—3,098.2
—
3,024.3
—
133.0
1,638.7
Total Other Noncurrent Assets
1,646.0
11.14,598.4
—6,255.5
10.511,502.8
—13,152.0
$16,941.6 $5,271.8 $14,178.9$(19,509.7)$16,882.6
Total Assets
$10,614.2$5,124.2$7,452.1
$(14,130.3)$9,060.2
5,944.9———
5,944.9
106.9
—
2,366.4
—
2,473.3
3,080.2——
(3,080.2)—
238.7
15.2
101.0
—
354.9
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Noncurrent Liabilities
Long-term debt
Deferred income taxes
Intercompany payable
Other noncurrent liabilities
Total Noncurrent Liabilities
9,370.7
15.2 2,467.4(3,080.2)8,773.1
Total Noncurrent Liabilities
4,993.9
Total Liabilities
9,854.7
97.8 2,936.0(3,092.8)9,795.7
Total Liabilities
5,584.6
Total Shareholders’ Equity
7,086.9 5,174.0 11,242.9(16,416.9) 7,086.9
Total Shareholders’ Equity
5,029.65,007.66,319.7
(11,327.3)5,029.6
Total Liabilities and Shareholders’ Equity
84 THE J. M . SMUCKER COMPANY
$   484.0
$   82.6
$   468.6
$ (12.6)
$ 1,022.6
$16,941.6 $5,271.8 $14,178.9$(19,509.7)$16,882.6
$   590.7
$  103.8
$  201.4
$ (10.1)
$  885.8
1,873.1———
1,873.1
107.6
—
913.1
—
1,020.7
2,792.9——
(2,792.9)—
220.3
12.8
17.9
—
251.0
12.8
931.0(2,792.9)3,144.8
116.6 1,132.4(2,803.0)4,030.6
Total Liabilities and Shareholders’ Equity $10,614.2$5,124.2$7,452.1
$(14,130.3)$9,060.2
2015 ANNUAL REPORT 85
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The J. M. Smucker Company
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
The J. M. Smucker Company
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
Year Ended April 30, 2015
The J. M. Smucker Subsidiary Non-Guarantor
Company (Parent) Guarantors Subsidiaries Eliminations Consolidated
Net Cash Provided by Operating Activities
$  239.2
$ 87.8
$  406.2
$ —
$  733.2
—
—
—
2,715.3
287.3
—
(1,320.5)
(247.7)
2.6
—
—
(30.1)
Investing Activities
Businesses acquired, net of cash acquired
Additions to property, plant, and equipment
Proceeds from disposal of property, plant, and equipment
Equity investments in subsidiaries
Repayments from (disbursements of) intercompany loans
Other – net
(1,240.0)
(56.3)
—
(2,715.3)
—
—
—
(93.3)
1.1
—
10.2
(5.8)
(80.5)
(98.1)
1.5
—
(297.5)
(24.3)
Net Cash (Used for) Provided by Investing Activities
(4,011.6)
(87.8)
(498.9)3,002.6 (1,595.7)
Financing Activities
Short-term repayments – net
Proceeds from long-term debt
Repayments of long-term debt, including
make-whole payments
Quarterly dividends paid
Purchase of treasury shares
Proceeds from stock option exercises
Investments in subsidiaries
Intercompany payable
Other – net
(1,580.8)—
(2,613.1)—
(4,193.9)
(254.0)
—
—
—
(254.0)
(24.3)
—
—
—
(24.3)
0.8
—
—
—
0.8
—
—
2,715.3
(2,715.3)
—
287.3
—
—
(287.3)
—
(33.5)
—
8.0
—
(25.5)
Net Cash Provided by (Used for) Financing Activities
Effect of exchange rate changes on cash
3,772.7
—
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and Cash Equivalents at End of Year
(5.3)
5,382.5
—
—
—
—
0.3
6.8
—
—
$ 7.1
$ —
(17.1)
—
(22.4)
5,382.5
—
—
93.1(3,002.6)
(28.6)
—
(28.2)
146.7
$ 118.5
863.2
(28.6)
—
—
(27.9)
153.5
$ —
$  125.6
Year Ended April 30, 2014
The J. M. Smucker Subsidiary Non-Guarantor
Company (Parent) Guarantors Subsidiaries Eliminations
Net Cash Provided by Operating Activities
Consolidated
$ 297.8
$ 168.5
$ 389.7
$ —
$ 856.0
Investing Activities
Businesses acquired, net of cash acquired
Additions to property, plant, and equipment
Sales and maturities of marketable securities
Proceeds from disposal of property, plant, and equipment
Equity investments in subsidiaries
Repayments from (disbursements of) intercompany loans
Other – net
—
(31.1)
10.0
—
(108.9)
—
(3.2)
—
(163.2)
—
0.6
(17.1)
9.3
0.2
(101.8)
(85.2)
—
10.1
—
(283.0)
(6.7)
—
—
—
—
126.0
273.7
—
(101.8)
(279.5)
10.0
10.7
—
—
(9.7)
Net Cash (Used for) Provided by Investing Activities
(133.2)(170.2) (466.6) 399.7 (370.3)
Financing Activities
Short-term borrowing – net
Repayments of long-term debt
Quarterly dividends paid
Purchase of treasury shares
Proceeds from stock option exercises
Investments in subsidiaries
Intercompany payable
Other – net
248.4
(50.0)
(238.0)
(508.5)
0.5
—
273.7
8.1
—
—
—
—
—
—
—
1.7
Net Cash (Used for) Provided by Financing Activities
Effect of exchange rate changes on cash
(265.8)
—
1.7
—
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of year
(101.2)
108.0
Cash and Cash Equivalents at End of Year
$   6.8
—
—
$ —
—
—
—
—
—
126.0
—
(37.7)
—
—
—
—
—
(126.0)
(273.7)
—
248.4
(50.0)
(238.0)
(508.5)
0.5
—
—
(27.9)
88.3(399.7) (575.5)
(13.1)
—
(13.1)
(1.7)
148.4
$ 146.7
—
—
$ —
(102.9)
256.4
$ 153.5
( ) Denotes use of cash
( ) Denotes use of cash
86 THE J. M . SMUCKER COMPANY
2015 ANNUAL REPORT 87
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The J. M. Smucker Company
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
The J. M. Smucker Company
Net Cash Provided by Operating Activities
NOTE 16
Year Ended April 30, 2013
The J. M. Smucker Subsidiary Non-Guarantor
Company (Parent) Guarantors Subsidiaries Eliminations
Consolidated
$ 201.7
$  46.4
$ 607.7
$ —
$ 855.8
Investing Activities
Additions to property, plant, and equipment
Proceeds from disposal of property, plant, and equipment
Equity investments in subsidiaries
Repayments from (disbursements of) intercompany loans
Other – net
(33.6)
—
(3.7)
—
(9.5)
(103.1)
0.1
(174.2)
227.4
3.4
(69.8)
3.2
—
(693.6)
23.7
—
—
177.9
466.2
—
(206.5)
3.3
—
—
17.6
Net Cash (Used for) Provided by Investing Activities
(46.8) (46.4) (736.5)644.1 (185.6)
Financing Activities
Repayments of long-term debt
Quarterly dividends paid
Purchase of treasury shares
Proceeds from stock option exercises
Investments in subsidiaries
Intercompany payable
Other – net
(50.0)
(222.8)
(364.2)
2.2
9.9
466.2
3.5
—
—
—
—
—
—
—
Net Cash (Used for) Provided by Financing Activities
Effect of exchange rate changes on cash
(155.2)
—
— 158.3(644.1) (641.0)
—
(2.5)
—
(2.5)
Net (decrease) increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
(0.3)
108.3
—
—
Cash and Cash Equivalents at End of Year
( ) Denotes use of cash
$ 108.0
$ —
—
—
—
—
168.0
—
(9.7)
27.0
121.4
$ 148.4
—
—
—
—
(177.9)
(466.2)
—
—
—
$ —
(50.0)
(222.8)
(364.2)
2.2
—
—
(6.2)
26.7
229.7
$ 256.4
COMMON SHARES
Voting: The Amended Articles of Incorporation (“Articles”) provide that each holder of a common share outstanding is entitled to
one vote on each matter submitted to a vote of the shareholders, except for the following specific matters:
• any matter that relates to or would result in the dissolution or liquidation of the Company;
• the adoption of any amendment to the Articles or Amended Regulations, or the adoption of amended Articles, other than the
adoption of any amendment or amended Articles that increases the number of votes to which holders of our common shares
are entitled or expands the matters to which time-phased voting applies;
• any proposal or other action to be taken by our shareholders relating to the Rights Agreement, dated as of May 20, 2009,
between the Company and Computershare Trust Company, N.A. or any successor plan;
• any matter relating to any stock option plan, stock purchase plan, executive compensation plan, executive benefit plan, or
other similar plan, arrangement, or agreement;
• the adoption of any agreement or plan of or for the merger, consolidation, or majority share acquisition of us or any of our
subsidiaries with or into any other person, whether domestic or foreign, corporate or noncorporate, or the authorization of
the lease, sale, exchange, transfer, or other disposition of all, or substantially all, of our assets;
• any matter submitted to our shareholders pursuant to Article Fifth (which relates to procedures applicable to certain business
combinations) or Article Seventh (which relates to procedures applicable to certain proposed acquisitions of specified
­percentages of our outstanding common shares) of the Articles, as they may be further amended, or any issuance of our
­common shares for which shareholder approval is required by applicable stock exchange rules; and
• any matter relating to the issuance of our common shares or the repurchase of our common shares that the Board of Directors
(“Board”) determines is required or appropriate to be submitted to our shareholders under the Ohio Revised Code or a
­ pplicable
stock exchange rules.
On the matters listed above, common shares are entitled to 10 votes per share if they meet the requirements set forth in the
Articles. Common shares which would be entitled to 10 votes per share must meet one of the following criteria:
• common shares for which there has not been a change in beneficial ownership in the past four years; or
• common shares received through our various equity plans that have not been sold or otherwise transferred.
In the event of a change in beneficial ownership, the new owner of that common share will be entitled to only one vote with respect
to that share on all matters until four years pass without a further change in beneficial ownership of the share.
Shareholders’ Rights Plan: Pursuant to a Shareholders’ Rights Plan adopted by the Board on May 20, 2009, one share purchase
right is associated with each of our outstanding common shares.
Under the plan, the rights will initially trade together with our common shares and will not be exercisable. In the absence of further
action by the directors, the rights generally will become exercisable and allow the holder to acquire our common shares at a
­discounted price if a person or group acquires 10 percent or more of our outstanding common shares. Rights held by persons who
exceed the applicable threshold will be void. Shares held by members of the Smucker family are not subject to the threshold.
If exercisable, each right entitles the shareholder to buy one common share at a discounted price. Under certain circumstances,
the rights will entitle the holder to buy shares in an acquiring entity at a discounted price.
The plan also includes an exchange option. In general, if the rights become exercisable, the directors may, at their option, effect
an exchange of part or all of the rights, other than rights that have become void, for common shares. Under this option, we would
issue one common share for each right, in each case subject to adjustment in certain circumstances.
88 THE J. M . SMUCKER COMPANY
2015 ANNUAL REPORT 89
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DIRECTORS AND OFFICERS
The J. M. Smucker Company
The J. M. Smucker Company
The directors may, at their option, redeem all rights for $0.001 per right, generally at any time prior to the rights becoming
­exercisable. The rights will expire June 3, 2019, unless earlier redeemed, exchanged, or amended by the directors.
DIRECTORS
In connection with the Big Heart acquisition, we and the rights agent entered into an amendment to the plan providing that
­neither the approval, execution, delivery, or performance of the merger agreement or the shareholders agreement entered into
in connection with the transaction will in any way give rise to any provision of the plan becoming effective, and that none
of Blue Holdings I, L.P., the controlling stockholder of BAG, or any of its affiliates will be deemed to be an acquiring person for
­purposes of the plan.
Repurchase Programs: We did not repurchase any shares in 2015 and at April 30, 2015, had approximately 10.0 million common
shares available for repurchase under the Board’s authorizations. We do not expect to repurchase any of these shares in the near
term due to our focus on debt repayment.
We repurchased 4.9 million common shares for $495.0 in 2014 and 4.0 million common shares for $359.4 in 2013.
Nancy Lopez Knight G
Founder
Nancy Lopez Golf Company
Auburn, Alabama
Alex Shumate G
Managing Partner, North America
Squire Patton Boggs (US) LLP
Columbus, Ohio
Kathryn W. Dindo A, E
Retired Vice President and
Chief Risk Officer
FirstEnergy Corp.
Akron, Ohio
Elizabeth Valk Long A, E
Former Executive Vice President
Time Inc.
New York, New York
Mark T. Smucker
President and President,
Consumer and Natural Foods
The J. M. Smucker Company
Paul J. Dolan E
Chairman and Chief Executive Officer
Cleveland Indians
Cleveland, Ohio
Gary A. Oatey G
Executive Chairman
Oatey Co.
Cleveland, Ohio
Richard K. Smucker
Chief Executive Officer
The J. M. Smucker Company
Robert B. Heisler, Jr. A
Retired Chairman of the Board
KeyBank
Cleveland, Ohio
Sandra Pianalto A
Retired President and
Chief Executive Officer
Federal Reserve Bank of Cleveland
Cleveland, Ohio
Vincent C. Byrd
Vice Chairman
The J. M. Smucker Company
A
Timothy P. Smucker
Chairman of the Board
The J. M. Smucker Company
David J. West
President, Big Heart Pet Food and Snacks
The J. M. Smucker Company
Audit Committee Member; E Executive Compensation Committee Member; G Nominating and Corporate Governance Committee Member
EXECUTIVE OFFICERS
Timothy P. Smucker
Chairman of the Board
Richard K. Smucker
Chief Executive Officer
Dennis J. Armstrong
Senior Vice President, Logistics and
Operations Support
Mark R. Belgya
Senior Vice President and
Chief Financial Officer
James A. Brown
Vice President, Customer Development
Vincent C. Byrd
Vice Chairman
John W. Denman
Vice President,
Human Resources Operations
90 THE J. M . SMUCKER COMPANY
Barry C. Dunaway
President, International and
Chief Administrative Officer
Tamara J. Fynan
Vice President, Marketing Services
Steven Oakland
President, Coffee and Foodservice
Jill R. Penrose
Vice President, Human Resources
Kevin G. Jackson
Vice President and
General Manager, Foodservice
Christopher P. Resweber
Senior Vice President,
Corporate Communications and
Public Affairs
Jeannette L. Knudsen
Vice President, General Counsel and
Corporate Secretary
Julia L. Sabin
Vice President, Industry and
Government Affairs
David J. Lemmon
Vice President and Managing Director,
Canada and International
Mark T. Smucker
President and President,
Consumer and Natural Foods
John F. Mayer
Vice President, U.S. Retail Sales
David J. West
President, Big Heart Pet Food and Snacks
2015 ANNUAL REPORT 91
OUR LOCATIONS
SHAREHOLDER INFORMATION
The J. M. Smucker Company
CORPORATE OFFICE
The J. M. Smucker Company
One Strawberry Lane
Orrville, Ohio 44667
Telephone: (330) 682-3000
CORPORATE OFFICE
Orrville, Ohio
DOMESTIC MANUFACTURING LOCATIONS
Bloomsburg, Pennsylvania
Buffalo, New York
Chico, California
Cincinnati, Ohio
Decatur, Alabama
El Paso, Texas
Grandview, Washington
Harahan, Louisiana
Havre de Grace, Maryland
Lawrence, Kansas
Lexington, Kentucky
Livermore, California
Memphis, Tennessee
New Bethlehem, Pennsylvania
New Orleans, Louisiana (3)
Orrville, Ohio
INTERNATIONAL MANUFACTURING LOCATION
Sherbrooke, Quebec, Canada
Oxnard, California
Ripon, Wisconsin
Scottsville, Kentucky
Seattle, Washington
Seneca, Missouri
Suffolk, Virginia
Toledo, Ohio
Topeka, Kansas
STOCK LISTING
Our common shares are listed on the New York Stock Exchange —
ticker symbol SJM.
CORPORATE WEBSITE
To learn more about The J. M. Smucker Company,
visit jmsmucker.com.
ANNUAL MEETING
The annual meeting will be held at 11:00 a.m. Eastern Time,
August 12, 2015, in the Fisher Auditorium at the Ohio
Agricultural Research and Development Center,
1680 Madison Avenue, Wooster, Ohio 44691.
CORPORATE NEWS AND REPORTS
Corporate news releases, annual reports, and Securities and
Exchange Commission filings, including Forms 10-K, 10-Q,
and 8-K, are available free of charge on our website,
jmsmucker.com/investor-relations. They are also available
without cost to shareholders who submit a written request to:
The J. M. Smucker Company
Attention: Corporate Secretary
One Strawberry Lane
Orrville, Ohio 44667
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Ernst & Young LLP
Akron, Ohio
DIVIDENDS
Our Board of Directors typically declares a cash dividend each
quarter. Dividends are generally payable on the first business
day of March, June, September, and December. The record date is
approximately two weeks before the payment date. Our dividend
disbursement agent is Computershare Investor Services, LLC.
SHAREHOLDER SERVICES
Our transfer agent and registrar, Computershare Investor
Services, LLC, is responsible for assisting registered
shareholders with a variety of matters including:
• Shareholder investment program (CIPSM)
– Direct purchase of our common shares
– Dividend reinvestment
– Automatic monthly cash investments
• Book-entry share ownership
• Share transfer matters (including name changes, gifting,
and inheritances)
• Direct deposit of dividend payments
• Nonreceipt of dividend checks
• Lost share certificates
• Changes of address
• Online shareholder account access
• Form 1099 income inquiries (including requests for
duplicate copies)
CERTIFICATIONS
Shareholders may contact Shareholder Services at the corporate
offices regarding other shareholder inquiries.
FORWARD-LOOKING STATEMENTS
Computershare
P.O. Box 30170
College Station, TX 77842
Telephone: (800) 622-6757
Telephone outside U.S., Canada, and Puerto Rico:
(312) 360-5254
Website: computershare.com/investor
Our Chief Executive Officer has certified to the New York Stock
Exchange that he is not aware of any violation by the Company
of the New York Stock Exchange’s corporate governance listing
standards. We have also filed with the Securities and Exchange
Commission certain certifications relating to the quality of our
public disclosures. These certifications are filed as exhibits to
our Annual Report on Form 10-K.
TRANSFER AGENT AND REGISTRAR
This Annual Report includes certain forward-looking statements
that are based on current expectations and are subject to
a number of risks and uncertainties. Please reference
“Forward-Looking Statements” located on page 42 in the
“Management’s Discussion and Analysis” section.
The J. M. Smucker Company is the owner of all trademarks, except for the following, which are used under license: PillsburyTM, the
Barrelhead logo, and the Doughboy character are trademarks of The Pillsbury Company, LLC; Carnation® is a trademark of Société des
Produits Nestlé S.A.; Dunkin’ Donuts® is a registered trademark of DD IP Holder, LLC; Sweet’N Low®, NatraTaste®, Sugar In The Raw®,
and the other “In The Raw” trademarks are registered trademarks of Cumberland Packing Corp. and its affiliates; and Douwe Egberts®
and Pickwick® are registered trademarks of D.E Master Blenders 1753 N.V. Borden® and Elsie are also trademarks used under license.
K-Cup® and Keurig® are trademarks of Keurig Green Mountain, Inc., used with permission. Non-GMO Project® Verified is a trademark
of the Non-GMO Project, Inc.
Painting on the front cover by Jonathan Linton, Ashburn, VA.
Designed by Corporate Reports Inc. | Atlanta, GA | www.corporatereport.com
92 THE J. M . SMUCKER COMPANY
2015 ANNUAL REPORT
2015 ANNUAL REPORT
One Strawberry Lane • Orrville, Ohio 44667 • 330.682.3000
jmsmucker.com
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