Good morning and welcome ladies and gentlemen to the J.M. Smucker Company's First Quarter 2008 Earnings Conference Call. At this time, I'd like to inform you that this conference is being recorded and that all participants are in a listen-only mode. At the request of the company, we will open the conference up for questions and answers after the presentation. I will now turn the conference over to Mr. Mark Belgya. Please go ahead, sir.

Good morning everyone and welcome to the J.M. Smucker Company's first quarter 2008 earnings conference call. I am the company's Chief Financial Officer and thank you for joining us this morning. Also on the call from the company are Tim Smucker, Chairman and Co-CEO; Richard Smucker, President and Co-CEO; Vince Byrd, Senior Vice President-Consumer Market; Steve Oakland, Vice President and General Manager, Consumer Oils and Baking; Mark Smucker, Vice President-International and Paul Smucker Wagstaff, Vice President-Foodservice and Beverage Markets. After this brief introduction, I will turn the call over to Richard for opening comments. I will then review the financial results for the quarter, and Tim will provide closing remarks. At the conclusion of these comments, we will be available to answer your question. If you have not seen your press release, it is available on our website at smuckers.com. A replay is available on the website in downloadable MP3 format. If you have any follow-up questions or comments after today's call, please feel free to contact me. I would like to remind you that certain statements in this presentation and during the question-and-answer period that follows may relate to future events and expectations and as such constitute forward-looking statements within the meaning of the Private Securities Legislation Reform Act of 1995. I invite you to read the full disclosure statement concerning such forward-looking statements in the press release. I also want to point out that the company uses non-GAAP results for the purpose of evaluating performance internally. Additional discussion on non-GAAP information is also detailed in our press release. With that, I'll turn the call over to Richard.

Good morning and thank you for joining us this morning. I would like to begin by summarizing key highlights for the quarter. First, we delivered record financial results for the first quarter. Sales were up across all business areas led by our Jif, Crisco, Pillsbury and Uncrustable businesses. The acquisition of Eagle, which closed at the beginning of the quarter, added $43.5 million to sales and non-GAAP earnings per share were up 22%. Second, we increased our operating margin, despite a cost environment that remained extremely challenging. Margin improvements were led by the divestiture of our low margin, non-branded Canadian businesses, pricing actions that offset a portion of higher raw material cost and improved Uncrustable profitability. And finally, we continue to emphasize product development and are excited about the new products available for our seasonally strong second and third quarters, building on our good momentum. We have solid results in our U.S. Retail segment and another good quarter from Jif, as we continue to benefit from the temporary supply interruption. Uncrustables again experienced good growth as consumer demand remained strong, despite price increases that were in effect for the full quarter. Sales of the Smuckers brand were flat this quarter compared to a particularly strong quarter last year, when sales of fruit spreads were up 11%. Crisco realized strong sales growth in the quarter, despite the decline in value. Cost of soybean oil has reached 50 year high levels, based on commodity futures. We expect significant price volatility in this category to continue. Pillsbury experienced sales growth and share gains in the quarter. We were particularly pleased that we regained the number two position in the high margin frosting category. A steady stream of new products and our efforts over the past several years to fill distribution gaps have provided…

Thank you, Richard. Sales were up 17% for the quarter, excluding the non-branded Canadian businesses which were divested last September. Excluding the $43 million added by the Eagle acquisition, sales were up 8% with pricing gains contributing to the increase. Growth was led by our Jif, Crisco, Pillsbury and Uncrustable brands, our strong performance in Foodservice and Beverage and a contribution of the acquired White Lily brand. Peanut butter again had a strong quarter as a temporary interruption of supply in the market continued. We estimate that this contributed approximately $5 million to $7 million to sales in the quarter. GAAP earnings per share were $0.71 this quarter, and $0.50 in the first quarter of last year, including restructuring and merger and integration cost. Last year's first quarter included pre-tax charges of $7.1 million associated with the divested Canadian businesses. Excluding charges in both years, earnings per share were $0.72 this quarter and $0.59 in last year's quarter, a 22% increase. Operating margin for the quarter excluding charges improved 150 basis points from 10.8% to 12.3%. The margin improvement over last year was primarily due to the divestiture of the lower margin non-branded Canadian business, a favorable product mix, improved Uncrustables' profitability and the effect of price increases. SG&A cost as a percent of sales were up slightly, as marking and selling expenses increased at a higher rate than sales. Sales in our U.S. Retail segment were $418 million in the first quarter, up 8% compared to last year, excluding the addition of Eagle. Sales in our consumer business area were up 6%, led by increases in peanut butter and Uncrustables. Sales in the oils and baking business were up 10% excluding Eagle, led by oil, baking mixes and frostings and the contribution of White Lily. Sales of Uncrustables across…

Thank you, Mark and good morning everyone. We had another record quarter with solid sales growth and once again, despite significant cost increases, we were able to leverage our sales gains into even greater earnings growth. It all comes down to the execution of our strategy. We continue to evaluate our portfolio focusing on leading brands and generating growth through acquisitions, new products and increasing our brand's share of market. Looking at the acquisition component of our strategy, we generated sales growth with the addition of another number one brand in the baking aisle with Eagle brand. As we integrate their operations, we expect Eagle to also generate good earnings growth. Also this quarter, we completed an enabling acquisition with the purchase of the Snack 'n Waffles brand. Snack 'n Waffles are ready to eat frozen waffle products that do not require any syrup as the flavor is already baked into the waffle. Currently, they are served primarily in schools where they will complement our Uncrustables business and allow us to participate in the growing school breakfast program. We look forward to exploring opportunities in the grocery channel as well. Turning to the new products dimension of our growth strategy, we continue to develop offerings that are guided by our strategic architecture, meeting consumers' needs by offering product choices that either are good and good for you, make you smile or are easy for you. We have exceeded our goals for new product introduction and this steady stream of new products will help fuel growth over both the short and long-term. Looking at some examples of new products, we have extended our core consumer brands into two new categories in the grocery store and are very excited about their prospects. These products will be introduced in regional test markets. Given…

Thank you sir. [Operator Instructions]. And our first question will come from Christina McGlone with Deutsche Bank.

Good morning.

Good morning.

Just one housekeeping item first, Mike when you talk about the $0.72 in the quarter that includes about a $0.01 gain, right on the sale of the Scottish business?

Its $500,000 so it will have less than $0.01.

Okay. I guess first thing, Eagle Foods exceeded my expectations and I am wondering if you've seen growth in that business or maybe it was just a allocation among the quarter. And I guess you took a price increase, I am curious if distribution has grown on it and what kind of growth prospects have already occurred?

Hi Christina, its Steve. Yes, we took pricing, but we took pricing given the trade and given the fact that we closed May 1st. Really the impact of pricing was only in the final month of the quarter. I think they had a good month. They had a good month in their branded and their non-branded business and price obviously had something to do with it. But not a lot given the mechanics and the lead times you have to give the trade when you take price in a brand like that.

So, it fanned about $200 million in sales, I mean what would you expect it to grow this year on top line?

Well, I think pricing is going to impact that dramatically. Milk... the average milk price over the last five years was maybe $11 or $11.50. Milk is trading at $22 a hundredweight right now. So we have reflected pretty significant pricing in that. I mean our private label business went up about 30% and the rest of that business went up double-digits.

Okay. And then last year advertising was down, I believe about 9%. And it's down from what you are saying with the other new products that it will be up this year and I wanted to confirm that. And also I wanted to just understand the pattern, if it's going to be skewed toward any particular quarter and how that relates to last year?

Christina, this is Mark. I think that without being specific to just advertising, as we said marketing and selling was up for this quarter. And the marketing and the advertising follow towards the business through the year. So during the second, third quarter in the fall bake primarily, is when you are going to see the largest percentage. But I wouldn't say it is necessarily skewed. I think you will see it follow similar format. But it's definitely up over the last year I guess the bottom line.

Okay. And then it looks like the benefit that just kind of garnered from the Peter Pan recall has moderated that ConAgra is now back in the market. So was that just due to capacity constraints and how should we think about that going forward with Peter Pan reentering this month?

Hi Christina, this in Vince. Basically yes, we shipped every thing that we did produce during the quarter. In terms of what's coming down the pipe, as you are probably aware there's number of public statements by ConAgra coming back to the marketplace. And there are some very significant trading consumer promotions that will be got into place. But I think the bottom line is that is it will be up to the consumer to decide as to how much of that share of market will be gained or lost in the coming period. But clearly there will be some activities in the next two or three quarters.

Okay and then last question. Mark, the year end account receivables level was very low relative to history. And I am wondering if that had to do with the divestiture of the Canadian foodservice and industrial business or if it was some sort of one-time item of the period?

That would had something to do... I would say that if you look at our year end balance, which if I remember right was around $125 million or so. I think if you will look to 10, may be 10% increase that was probably a normalized run rate for year end balance, especially in the new business and price increase and so forth.

So your days receivable will still be lower relative to history?

Yes.

Okay, thank you.

We will go next to Eric Serotta with Merrill Lynch.

Well, Eric.

Mr. Serotta your line is open, please go ahead sir. We'll move to the next question with Farha Aslam with Stephens Inc.

Hi good morning.

Good morning.

With the kind of the low prices, do you anticipate the Eagle Family Foods acquisition to... I believe that was supposed to be neutral for fiscal '08. Is that still estimated to be on plan?

Hi Farha, its Steve. We think so, obviously we saw this, we couldn't take action until we actually own the business. A little bit of our inventory evaluation at the beginning of the year because of just the GAAP rules on how you handle those things while the transition hit it. So we started the business a little higher valued inventory maybe than you'd normally in a run rate, but we still feel like we got the right pricing in and we may have to take some more pricing, but our goal would be to meet that plan for the milk business for sure.

Okay. And could you just talk a little bit more about pricing overall in your business in the quarter. Could you break down sales overall for the entire company in terms of pricing, volume and mix that you achieved in the quarter?

Hi, this is Mark. We'll broad brush that for you, I would say that if you would strip out the Eagle acquisition, we will have 8% as a company top line. More than half of that would be price-related and then there was a little bit of mix behind that and then we had a little bit of favourable exchange rate. But the majority or at least in excess of 50% was primarily the pricing effect.

And so... and volume would be pretty much flat or was fine?

Volume was probably up somewhere 1% to 2% roughly. That kind of breaks down 4% to 5% pricing, 1% to 2% volumes, 1% mix and something less than 1% for foreign exchange.

Right. And could you just remind us what caused fruit spreads to be so strong in your... in the last year's quarter. Was it the sugar free introduction?

It was a number of things. There were number new product introductions and there was some promotional timing, but it was just a very, very strong quarter last year and but so if you strip... if you look over the two-year period, we are actually still up. That is up. We are obviously; with price increase we took this year in May that will be... we knew that that will affect the volume. But we do anticipate some of that coming back in the second quarter.

I think also it was the first time we ever had advertising to both brands that certainly hard to measure advertising, but I think that's going to have an impact.

And so going forward for this second half of the year you would expect volume and sales to be up in your fruit business?

We sure hope so.

And then... just following on some of Christina's question, are you seeing them get back their full shelf space or have you been able to... have you had to give up any shelf space to them going in to the back-to-school season?

We have not again I think it's public information that there are coming out with the limited numbers of Skews. We are now getting in to production of some of Skews that we had put on hold so that we can produce as much as the higher volume items but we are not using any shelf space at this point.

And you have been able to kind of pull back on some of the promotional support that you have been giving that brand over the last few months, I don't expect you to give competitive information, but kind of how are you approaching the return of this competitor back into the market?

Well without getting into specifics, it is true that we did pull some of the trade support, we've actually increased the consumer support to support the brand those been the first and the second quarters. But very honestly, we are not going to deal the brand down to the levels that are in the marketplace because we don't think that's good for the category.

And in terms of this kind of economic downturn, do you expect consumers to react to a low price point or do you... how do you anticipate them to focus on the brand versus the price point?

Well again, it's difficult to say that it will ultimately be up to the consumer, in some cases in history consumers have short memories, in other cases they don't. And so time will only tell how much of that total shares that they'll be able to regain.

But I think we will also just over the long-term, brand building we had with that brand isn't just the advertising, it's the time in time out the quality of that product receives. And I think we also had perhaps in long term that consumers really recognize the difference and there is a significant product difference we think. And we trust them... have over the years trusted consumers make those decisions wisely.

And near term... so near term you might see some fluctuations in terms of volume and some switching, but longer term you remain confident about the Jif brand and its that built into your model as you go forward?

Definitely.

Okay. And then when you look at your oil business, you guys commented a bit on the volatility in the market for soybean oil. Historically, you've been you had your soybean oil kind of early for the fall bake. So are you pretty secure with your pricing and margins for the fall bake and it's more a Easter timing issue that we need to be concerned with?

Hi Farha. Yes, obviously we start shipping fall bake as early as September to some customers so that product has to be on the pipeline to meet those demands. But we've seen 50 year highs on soybean oil, it was limit down yesterday. So you've just got tremendous volatility, managing that will be the key to the price points and I think the volume. We have taken three price increases on Crisco in 12 months. And that's not good for categories, just the mechanics of that going through there. So we would hope to see that settle down over the next year or so. But it's just been a difficult environment and we've been very transparent. We think we protected our margins and the category's margin over time and as per our volume at the top line, but we think that's the right strategy long-term.

So that touched your volume already or go top... volume going into fall bake?

Well no, I just think overtime and those price increases, there's no question we tend to lean on those. If your competitors follow after some period in that interim, it affects your volume. So I think that's been historically what's happening.

And the three price increases I'm sorry it over what part time period?

Over the last 12 months.

12 months, and what is the total increase of those times?

You know those are buy item and those are compounded, but they've been in the 5% or 6% range each.

Okay that's helpful. And then my final question, I'll pass it on. Is your foodservice business was exceptionally strong in this quarter? Is it driven by higher volumes in Uncrustables? Could you just share with us what caused the strength?

Sure. Hi Farha, this is Paul Wagstaff. And we did have a very strong quarter; half of that growth was driven by the acquisition of Eagle and White Lily, which contributed nicely to our quarter sales growth. The other portion of it was Uncrustables, which was also up nicely for foodservice about 25%. And then finally in our core business, we did have strong peanut butter PC portion control sales and that also contributed nicely.

Great. Thank you very much.

We will go next to Ann Gurkin with Davenport. Ann Gurkin - Davenport & Company, L.L.C.: Good morning.

Hi Ann. Ann Gurkin - Davenport & Company, L.L.C.: If I can just circle back to your comments regarding pricing, I apologize if I missed. What categories you are targeting to perhaps raise prices in?

I think, Ann its Mark, I think that the comments were pretty much with the... raw material increases we are seeing across in the company, so I think in every area we are looking, we spoke specifically to milk, to oil, to peanuts and to wheat so that and also in the beverage area. So I would expect that all the general managers will be looking at pricing. Ann Gurkin - Davenport & Company, L.L.C.: And if the potential price increases in the range of what you have taken over the past, say 12 months, the magnitude of the price increase?

Yes. We actually just don't know. It really depends upon each individual commodity. I would hope it wouldn't be this larger percentage. But we don't know that yet. Ann Gurkin - Davenport & Company, L.L.C.: Okay. And regarding fall bake, are we going to see, I guess bundling of brand or promotions, are you going to run that kind of strategy again?

Certainly. We have found that there is a lot of leverage, especially with just the mechanics of the promotion for the retailer and we've had nice smaller brand a couple of years in a row. Eagle brand, we think we can actually fit into some of that this year even though we are just closed. So, that's been very effective and very efficient for both us in the trade. Ann Gurkin - Davenport & Company, L.L.C.: That's great. Thank you very much.

[Operator Instructions]. We will go next to Jon Andersen with William Blair. Jon Andersen - William Blair & Company: Good morning and congratulations on a nice quarter.

Thank you, Jon. Jon Andersen - William Blair & Company: I had alittle clarification on the gross margin improvement in the quarter. Is there a way you can help us understand the relative contribution of the divestitures with the Canadian non-branded businesses versus mix versus Uncrustables relative to that overall gross margin improvement in the quarter?

John this Mark. Consistent with what I think you have seen in the last two quarters, the majority of gross profit improvement does come from the divestiture. I think, as we have talked in the past, that business was basically a cost plus. So the margins, the gross margin were particularly low and down. So I would say that by and large was the majority. I would say the Uncrustables profitability probably also contributed towards second inline. And then the mix is a little more difficult, but I would probably take that third in terms of order.

I think we could also say though that we have... Eagle added a lot of sales in the quarter, but because we didn't have the pricing impact until the last month, Eagle added very little bit, very little to the bottom line in the first quarter and if it would add what we would normally expect, our margins would have been even higher.

Well there is a lot of duplicate overhead on the Eagle businesses with transition. I think we've said it will be modestly accretive, but that probably won't happen until much later in the year. Jon Andersen - William Blair & Company: Fair enough. And then kind of follow-up question on that, with respect to the kind of operational integration of Eagle, can you just give us an update on where that is and we are still in track for I think it had been previously communicated about $9million of pre-tax cost savings by fiscal 2009?

Yes. Actually our team is on or ahead of plan on that. We've a great job so far. The... one of the key synergies for our customer was to get in on one invoice and that happened 8/1. We would hope that the rest of administrative changes happen by the end of this calendar year. So we are on track for both system and customer base. Jon Andersen - William Blair & Company: Great. Congratulations and keep up the good work.

Thank you.

Thanks you very much.

And we go to Christina McGlone with Deutsche Bank as a follow up.

Thank you for taking the follow up. I forgot to say thank you for the proper segment data, the profitability data. That was very helpful. I guess... I wanted to know when the capacity will be up and running, the new capacity or the expansion for peanut butter? Are we... are you almost done with that expansion?

Work is in process. It's a long term process we are looking at some very short term actions which are in place as we speak and then there is some longer term activities that will take several months to put into place. So it is allocated across the board.

Sowhat do you consider yourself, feel capacity constrained or is that eased up?

No we are still capacity constrained.

Okay. And then in terms of Uncrustables, are we at a good run rate now or should we expect profitability to continue to increase, or are there new product launches planned where we will see profitability come back a bit?

Hi Christina this is Paul. From an Uncrustables operations standpoint, we are in very good shape. I would think we could see some modest increase of the overall effectiveness of the facility. We are looking at new product launches which could impact our overall margins on that business. Again overall, the demand remains very strong for the business.

I guess I would say that on the core business, the core peanut butter and jelly, we will expect that those margins to continue to improve. But as we've said that is clearly a platform for us in future growth and as Paul indicated, that will be... it will be driven by the new product launches and with marketing support behind it.

Can you please remind me when it turned profitable last year?

Fourth quarter.

Fourth quarter.

Okay, thank you.

And we'll take another follow up from Farha Aslam with Stephens Inc.

Hi thanks for taking the follow up. Continuing on Uncrustables, could you tell us what your growth rate for Uncrustables is anticipated to be in fiscal 08' total?

Hey Farha, Paul here. Our growth rate is going to be on the high teens and that should continue for the remainder of the year.

And that includes both foodservice and retail?

That is correct.

And that is in volume or sales?

That is in sales.

That's in sales. And you now have three varieties of Uncrustables out?

We actually have more than that. We have peanut butter and jelly; we have peanut butter only and grilled cheese --

Allright, those are the --

Peanut butter and honey.

But those two are only running in test markets and they are being expanded and we are looking at additional varieties potentially by the end of the fiscal year.

Okay, so the two initial ones were... are in national ACV now?

Oh yes, definitely, the strawberry and the grain.

Yes and then the grilled cheese and the peanut butter and honey are, in what ACV are they?

They are very modest. They are probably around 25% or something in that neighbourhood.

Well the grilled cheese, grilled cheese is what that is roughly.

It is actually under 50%

Okay. Then the other two which is plain peanut butter and peanut butter and honey --

They are on sale in the VPS and those would be in about the 25% range.

The last two in 25% range.

Okay. And then when you look at... how pleased are you with those tests?

We are very pleased with them.

So you would be looking to expand the ACV of those?

Yes we would.

And then in addition you are going to add new varieties that you would be putting into test market later this year?

We hope to. Again, its going to be determined... we are really sorting up the capacity based upon the pricing actions that we took earlier this year. So it will determine then and the continued improvement in Scottsville. But yes, we are looking at some another new varieties there to keep the pipeline full.

And when you look at your capacity utilization at Scottsville, where is it now?

We are actually in good shape we have plenty of capacity for the next few years.

Okay, but in terms of where you want it to be in terms of operations of that plant, are you operating where you like it to be now because it's been sort of two years since that plant is open now?

We are operating very close to where we want to be. And again, we are making improvement so we are confident that we will get there.

Okay. And then longer term you would anticipate that this product to have margins equal to or had your U.S Retail business?

Now the original objective was to be right around corporate average.

Corporate average. And where would you think longer term you'd get there?

Well I guess it's going to be somewhat dependent upon the amount of new products, it's always in that pipeline. But we are very close to getting that already on the peanut butter and jelly component. So you know those can get to those margins and then the future possibilities that we will be determined based on the amount of your product introductions and the support.

And would you be willing to share with us kind of in terms of the sale, how much peanut butter and the core kind of peanut butter and jelly business is of the total portfolio of Uncrustables?

Farha, this is Mark. We would not... we are not going to get into really any category level detail, we would like to see Uncrustables just like our other categories sort of in the aggregate.

Okay great, thank you very much.

At this time there are no further questions, I'd like to turn the call back over to Tim Smucker for any additional and closing comments.

Well, thank you very much for your interest and we really appreciate your support and I just want to take the opportunity to thank the team. Clearly, the team is about we feel is an outstanding team and we obviously thank our consumers for their continuous support. Have a great day.

Thank you sir. Ladies and gentlemen, if you wish to access the rebroadcast after this live call, you may do so by dialing 1(888) 203-1112 or area code 719-457-0820 with the passcode of 4871503 or by accessing the website for downloadable MP3 format. This concludes our conference call for today. Thank you for your participation and have a good day. All parties may now disconnect.