10-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K
FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

[X] ANNUAL REPORT PURSUANT TO SECTIONS 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the fiscal year ended April 30, 2002

or

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from      to      

Commission file number 1-5111

THE J. M. SMUCKER COMPANY

(Exact name of registrant as specified in its charter)

Ohio	31-1813379
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

One Strawberry Lane Orrville, Ohio	44667-0280
(Address of principal executive offices)	(Zip code)

Registrant’s telephone number, including area code (330) 682-3000

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Name of each exchange on which registered
Common Shares, no par value	New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

     Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for at least the past 90 days. [X] Yes [ ] No

     Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ]

     As of July 24, 2002, 49,558,746 Common Shares of The J. M. Smucker Company were issued and outstanding. The aggregate market value of the Common Shares held by nonaffiliates of the registrant at July 24, 2002, was $1,456,854,809.

     Certain sections of the registrant’s definitive Proxy Statement, dated July 9, 2002, for the August 13, 2002 Annual Meeting of Shareholders, and of the 2002 Annual Report to Shareholders are incorporated by reference into Parts I, II, III, and IV of this Report.

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TABLE OF CONTENTS

PART I
	Item 1. Business
	Item 2. Properties
	Item 3. Legal Proceedings
	Item 4. Submissions of Matters to a Vote of Security Holders
PART II
	Item 5. Market for the Registrant’s Common Stock and Related Stockholder Matters
	Item 6. Selected Financial Data
	Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation
	Item 7A. Quantitative and Qualitative Disclosures About Market Risk
	Item 8. Financial Statements and Supplementary Data
	Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
PART III
	Item 10. Directors and Executive Officers of the Registrant
	Executive Officers of the Company
	Item 11. Executive Compensation
	Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
	Item 13. Certain Relationships and Related Transactions
PART IV
	Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
SIGNATURES
	ITEMS 14(a) (1) AND (2), (c) AND (d)
	SCHEDULE II — VALUATION AND QUALIFYING ACCOUNTS
EX-13 Excerpts Annual Report to Shareholders
EX-18 Ernst & Young Letter
EX-21 Subsidiaries
EX-23 Consent of Independent Auditors
EX-24 Power of Attorney

PART I

Item 1. Business

     The Company. The J. M. Smucker Company was established in 1897 and was incorporated in Ohio in 1921. The Company, often referred to as Smucker’s (a registered trademark), operates in one industry, the manufacturing and marketing of food products on a worldwide basis although the majority of the Company’s sales are in the United States. The Company’s distribution outside the United States is principally in Canada, Australia, Brazil, Mexico, China and the Pacific Rim, Europe, and the Middle East although products are exported to other countries as well. International sales represent less than 15% of total consolidated Company sales for fiscal 2002. Unless otherwise indicated by the context, the term “Company” as used in this report means the continuing operations of The J. M. Smucker Company and its subsidiaries within the domestic segment.

     On June 1, 2002, the Company merged the Jif peanut butter and Crisco shortening and oils businesses of The Procter & Gamble Company with and into the Company. Information regarding the merger is hereby incorporated by reference from the 2002 Annual Report to Shareholders, on pages 27 and 28 under “Note C: Subsequent Event.” As a result of the Jif and Crisco merger, the Company’s reportable segments will be restated to U.S. Retail Markets and Special Markets in the first quarter of fiscal 2003.

     Principal Products. The principal products of the Company are fruit spreads, dessert toppings, peanut butters, frozen peanut butter and jelly sandwiches, industrial fruit products, fruit and vegetable juices, beverages, syrups, condiments, and gift packages.

     Product sale information for the years 2002, 2001, and 2000 is hereby incorporated by reference from the 2002 Annual Report to Shareholders, on pages 28 through 30 under “Note D: Operating Segments.”

     In its domestic segment, the Company’s products are primarily sold through brokers to chain, wholesale, cooperative, independent grocery accounts and other consumer markets, to foodservice distributors and chains including hotels, restaurants, schools and other institutions, and to other food manufacturers.

     With the addition of the Jif and Crisco businesses in fiscal 2003, fruit spreads, peanut butter and shortening and oils are together expected to make up approximately 75% of the Company’s business.

     Sources and Availability of Raw Materials. The fruit raw materials used by the Company in the production of its food products are purchased from independent growers and suppliers. Because of the seasonal nature and volatility of quantities of most of the crops on which the Company depends, it is necessary to prepare and freeze stocks of fruit, fruit juices, berries, and other food products and to maintain them in cold storage warehouses. Sweeteners, peanuts, and other ingredients are obtained from various other sources.

     Trademarks and Patents. The Company’s products are produced under certain patents and marketed under numerous trademarks owned by the Company. Major trademarks include: Smucker’s, Dickinson’s, Lost Acres, Mary Ellen, Adams, Laura Scudder’s, Goober, Simply Fruit, Magic Shell, Sundae Syrup, Smucker’s Snackers, Uncrustables, R. W. Knudsen Family, After The Fall, Simply Nutritious, Recharge, Santa Cruz Organic, and Spritzer. In addition, the Company licenses the use of several other trademarks, none of which individually is material to the Company’s business.

     As a result of the merger of the Jif and Crisco businesses, the Company added the following

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trademarks: Jif, Simply Jif, Jif Smooth Sensations, and Crisco. In addition, Jif and Crisco have a portfolio of U.S. and foreign patents, and pending applications related to processes and products with varying durations.

     Other slogans or designs considered to be important Company trademarks include (without limitation) the slogan, “With a name like Smucker’s, it has to be good,” “Over 100 Years of Family-Made Goodness,” the Smucker’s banner, the Crock Jar shape, the Gingham design, and the Strawberry logo.

     The Company considers all of these trademarks to be essential to the Company’s business.

     Seasonality. Historically, the Company’s business has not been highly seasonal.

     Working Capital. Working capital requirements for the Company and much of the fruit spread industry are greatest during the late spring and summer months due to seasonal procurement of fruits and berries.

     Customers. The Company is not dependent on a single customer or a few customers, the loss of which would have a material adverse effect on the Company’s business. No single customer accounts for more than 10% of consolidated sales.

     With the completion of the Jif and Crisco merger, it is anticipated that in fiscal 2003 the Company will have one customer, Wal-Mart and its affiliates, with net sales exceeding 10%.

     Orders. Generally, orders are filled within a few days of receipt and the backlog of unfilled orders at any particular time is not and, has not been, material.

     Government Business. No material portion of the Company’s business is subject to negotiation of profits or termination of contracts at the election of the government.

     Competition. The Company is the market leader in the fruit spreads, dessert topping, health and natural foods beverages, natural peanut butter, and peanut butter combination categories. The Company’s business is highly competitive as all its brands compete for retail shelf space with other advertised and branded products as well as unadvertised and private label products. The Company’s brands compete with four major branded lines of fruit spreads and many private label brands. The competing brands exist on both a national and regional level. The continued growth of alternative store formats (i.e., club stores and mass merchandise stores), consolidation of retailers, manufacturers, and brokers within the food industry, and changes in business practices, resulting from both technological advances and new industry techniques, have all added additional variables for companies in the food industry to consider in order to remain competitive. The principal methods of and factors in competition are product quality, price, advertising, and promotion. Positive factors pertaining to the Company’s competitive position include well-recognized brands, strong brand management, varied product offerings, and a strong distribution network.

     The Jif brand has been a leader in the peanut butter category for over 20 years. The Jif brand is marked by its distinct product differentiation (“more fresh roasted peanut taste”) and a consistent advertising campaign (“Choosy Moms Choose Jif”). Crisco has been a leader in the shortening and cooking oils category for over 50 years. Jif and Crisco products are sold primarily in the United States to food retailers, food wholesales, club stores, and mass merchandisers. Jif and Crisco products are distributed to the Canadian market as well. Crisco’s oils business holds the number one volume share position among branded competitors in the grocery and drug channels, and the number one overall share with mass merchandisers. The positive factors pertaining to the Jif and Crisco businesses are the same as

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those mentioned in the preceding paragraph with respect to the Company’s traditional businesses. The oils category in which Crisco competes is a more competitive category than the others in which the Company’s brands compete due to a larger private label presence and more volatile commodity pricing.

     Research and Development. The Company predominantly utilizes in-house resources to both develop new products and improve existing products in each of its business areas. In relation to consolidated assets and operating expenses, amounts expensed for research and development in each of the areas and in the aggregate were not material in any of the last three years.

     Environmental Matters. Compliance with the provisions of federal, state, and local environmental regulations regarding either the discharge of materials into the environment or the protection of the environment is not expected to have a material effect upon the capital expenditures, earnings, or competitive position of the Company.

     Employees. At April 30, 2002, the Company had approximately 2,300 full-time employees, worldwide. Approximately 760 of these employees, located at six facilities, are covered by union contracts between the Company and the Teamsters. These contracts vary in term depending on the location. Although the Company believes its relations with its current employees are generally good, the Company is currently experiencing a strike of its employees at its Woodburn, Oregon fruit processing facility. During peak season, the Woodburn facility has employed as many as 200 employees. The facility is operating at normal capacity utilizing seasonal and supervisory staff.

     Upon completion of the Jif and Crisco merger on June 1, 2002, the Company added approximately 400 full-time employees.

     Segment and Geographic Information. Information concerning operating segments including international operations for the years 2002, 2001, and 2000 is hereby incorporated by reference from the 2002 Annual Report to Shareholders, on pages 28 through 30 under “Note D: Operating Segments.”

     Certain Forward-Looking Statements. This report includes certain forward-looking statements that are based on current expectations and are subject to a number of risks and uncertainties that could cause actual results to differ materially. These risks and uncertainties are hereby incorporated by reference from the Company’s 2002 Annual Report to Shareholders under “Certain Forward-Looking Statements” on page 17.

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Item 2. Properties

     The table below lists all the Company’s manufacturing and fruit processing facilities. All of the Company’s properties are maintained and updated on a regular basis, and the Company continues to make investment for expansion and technological improvements. The Company believes that existing capacity at these facilities is sufficient to sustain current operations and anticipated growth.

     The properties listed below are owned, except for the West Fargo, North Dakota, location, which is leased. There are no material performance obligations associated with the properties listed below. The corporate headquarters are located in Orrville, Ohio.

Domestic Manufacturing Locations	Products Produced
Orrville, Ohio	Fruit spreads, toppings, industrial fruit products, Smucker’s Snackers
Salinas, California	Fruit spreads, toppings, syrups
Memphis, Tennessee	Fruit spreads, toppings
Ripon, Wisconsin	Fruit spreads, toppings, condiments, industrial fruit products
New Bethlehem, Pennsylvania	Peanut butter and Goober products
Chico, California	Fruit and vegetable juices, beverages
Havre de Grace, Maryland	Fruit and vegetable juices, beverages
West Fargo, North Dakota	Frozen peanut butter and jelly sandwiches
Domestic Fruit Processing Locations	Fruit Processed
Watsonville, California	Strawberries, oranges, apples, peaches, apricots. Also, produces industrial fruit products and frozen peanut butter and jelly sandwiches.
Woodburn, Oregon	Strawberries, raspberries, blackberries, blueberries. Also, produces industrial fruit products.
Grandview, Washington	Grapes, cherries, strawberries, cranberries, apples, boysenberries, blackberries, red raspberries, red currants, and pears
Oxnard, California	Strawberries
International Manufacturing Locations	Products Produced
Ste-Marie, Quebec, Canada	Fruit spreads, sweet spreads, industrial products
Kyabram, Victoria, Australia	Fruit spreads, toppings, fruit pulps, fruit bars
Livingston, Scotland	Industrial fruit products
São José do Rio Pardo, Brazil	Industrial fruit products

     Upon completion of the Jif and Crisco merger, the Company acquired title to property located in Lexington, Kentucky (peanut butter production), and Cincinnati, Ohio (oils and shortening production).

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Item 3. Legal Proceedings

     The Company is not a party to any pending legal proceeding that would be considered material.

Item 4. Submissions of Matters to a Vote of Security Holders

     A special meeting of the shareholders of the Company was held on April 5, 2002, to consider and vote upon the proposal to merge the Jif peanut butter business and the Crisco shortening and oils businesses of The Procter & Gamble Company into the Company and to amend the Company’s articles of incorporation in connection with the merger. The proposal was approved as follows:

Votes For	Votes Against		Abstentions		Broker Nonvotes
50,771,318		300,892		62,018		0

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PART II

Item 5. Market for the Registrant’s Common Stock and Related Stockholder Matters

     The information pertaining to the market for the Company’s Common Shares and other related shareholder information is hereby incorporated by reference from the Company’s 2002 Annual Report to Shareholders under “Stock Price Data” on page 11.

     The information pertaining to the securities the Company has authorized for issuance under equity compensation plans is hereby incorporated by reference to Item 12 of this report on Form 10-K.

Item 6. Selected Financial Data

     Five-year summaries of selected financial data for the Company and discussions of items which materially affect the comparability of the selected financial data are hereby incorporated by reference from the Company’s 2002 Annual Report to Shareholders under the following captions and page numbers: “Five-Year Summary of Selected Financial Data” on page 10, “Note A: Accounting Policies” on pages 24 through 26 and “Note E: Nonrecurring Charge” on page 30.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation

     Management’s discussion and analysis of results of operations and financial condition, including a discussion of capital resources and liquidity, and critical accounting estimates and policies, is hereby incorporated by reference from the Company’s 2002 Annual Report to Shareholders under “Management’s Discussion and Analysis,” on pages 12 through 17.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

     Quantitative and qualitative disclosures about market risk are hereby incorporated by reference from the Company’s 2002 Annual Report to Shareholders under “Derivative Financial Instruments and Market Risk” on page 17.

Item 8. Financial Statements and Supplementary Data

     Consolidated financial statements of the Company at April 30, 2002 and 2001, and for each of the years in the three-year period ended April 30, 2002, with the report of independent auditors and selected unaudited quarterly financial data, are hereby incorporated by reference from the Company’s 2002 Annual Report to Shareholders under “Summary of Quarterly Results of Operations” on page 11 and beginning with “Management’s Report on Responsibility for Financial Reporting” on page 18 through “Note M: Common Shares” on page 39.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

     None.

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PART III

Item 10. Directors and Executive Officers of the Registrant

     Information regarding directors and nominees for directorship is incorporated herein by reference from the Company’s definitive Proxy Statement, dated July 9, 2002, for the 2002 Annual Meeting of Shareholders on August 13, 2002, on pages 3 through 5, under the caption “Election of Directors”.

     Information regarding disclosure of late filers pursuant to Item 405 of Regulation S-K is incorporated herein by reference from the Company’s definitive Proxy Statement, dated July 9, 2002, for the 2002 Annual Meeting of Shareholders on August 13, 2002, under the caption “Section 16(a) Beneficial Ownership Reporting Compliance” on page 16.

Executive Officers of the Company

     The names, ages as of July 1, 2002, and current positions of the executive officers of the Company are listed below. All executive officers serve at the pleasure of the Board of Directors, with no fixed term of office. Unless otherwise indicated, each individual has served as an executive officer of the Company for more than five years.

Name	Age		Years with Company		Position	Served as an Officer Since
Timothy P. Smucker		58		33	Chairman and Co-Chief Executive Officer		1973
Richard K. Smucker		54		29	President and Co-Chief Executive Officer		1974
Mark R. Belgya		41		17	Treasurer (1)		1997
Vincent C. Byrd		47		25	Vice President and General Manager,		1988
					Consumer Market
Barry C. Dunaway		39		15	Vice President-Corporate Development (2)		2001
Fred A. Duncan		56		24	Vice President-Special Markets		1984
Steven J. Ellcessor		50		16	Vice President-Finance and		1986
					Administration, Secretary, and Chief
					Financial Officer
Robert E. Ellis		55		24	Vice President-Human Resources		1996
M. Ann Harlan		42		3	General Counsel and Assistant Secretary (3)		2002
Donald D. Hurrle, Sr.		53		25	Vice President-Sales, Grocery Market (4)		2001
Richard G. Jirsa		56		27	Vice President-Information Services and		1978
					Corporate Controller
John D. Milliken		57		28	Vice President-Logistics and Western		1981
					Operations
Steven T. Oakland		41		19	Vice President and General Manager,		1999
					Consumer Oils (5)
Mark T. Smucker		32		4	Vice President and General Manager,		2001
					International Market (6)
Richard F. Troyak		54		23	Vice President–Operations (7)		1998
Paul Smucker Wagstaff		32		5	Vice President and General Manager,		2001
					Foodservice Market (8)

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(1)	Mr. Belgya was elected to his present position in June, 2001, having served from August, 1997 to May, 2001, as Corporate Controller.
(2)	Mr. Dunaway was elected to his present position in November, 2001, having served as Director, Corporate Development and Strategic Planning since February, 2000. Prior to that time, he served as Director, Business Development – Europe and Middle East since August, 1996.
(3)	Ms. Harlan was elected to her present position in April, 2002, having served as Assistant General Counsel and Assistant Secretary since August, 2000. Prior to that time, she served as Assistant General Counsel since January 1999. Before joining the Company, Ms. Harlan was a partner at the law firm of Calfee, Halter & Griswold LLP.
(4)	Mr. Hurrle was elected to his present position in April, 2001, having served as National Sales Manager – Grocery since November, 1990.
(5)	Mr. Oakland was elected to his present position in November, 2001, having served as Vice President and General Manager – Foodservice Market since February, 1999. Prior to that time, he served as General Manager, J.M. Smucker (Canada) Inc. since July, 1995.
(6)	Mr. Mark Smucker was elected to his present position in November, 2001, having served as General Manager and Managing Director, Smucker do Brasil since January, 2000. Prior to that time, he served as Director, Business Development – South America since May, 1998, and Manager, Business Development, South America since September, 1997.
(7)	Mr. Troyak was elected to his present position in September, 1998, having served as Director, East Coast Operations since October, 1997.
(8)	Mr. Wagstaff was elected to his present position in November, 2001, having served as General Manager, Uncrustables Market since May, 2000. Prior to that time, he served as Product Manager, Toppings, Peanut Butter and Specialties since January, 1997.

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Item 11. Executive Compensation

     Information regarding the compensation of directors and executive officers is incorporated by reference from the Company’s definitive Proxy Statement, dated July 9, 2002, for the 2002 Annual Meeting of Shareholders on August 13, 2002, on page 5 under “Director Compensation”, on pages 7 through 10 under “Report of the Executive Compensation Committee of the Board of Directors” and in the compensation tables on pages 11 through 12.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

     Information regarding security ownership of certain beneficial owners, of the named executive officers, and of directors and executive officers as a group, is hereby incorporated by reference from the Company’s definitive Proxy Statement, dated July 9, 2002, for the 2002 Annual Meeting of Shareholders on August 13, 2002, on pages 15 through 16, under “Ownership of Common Shares.”

     The information pertaining to the securities the Company has authorized for issuance under equity compensation plans is hereby incorporated by reference from the Company’s definitive Proxy Statement, dated July 9, 2002, for the 2002 Annual Meeting of Shareholders on August 13, 2002, under “Equity Compensation Plan Information” on page 13.

Item 13. Certain Relationships and Related Transactions

     Information regarding certain relationships and related transactions is hereby incorporated by reference from the Company’s definitive Proxy Statement dated July 9, 2002, for the 2002 Annual Meeting of Shareholders on August 13, 2002, beginning with “Election of Directors” on page 3 and continuing through “Director Compensation” on page 5.

     In addition to information incorporated by reference from the Company’s definitive Proxy Statement, Mr. William H. Steinbrink, a director of the Company, is a partner in the law firm of Jones, Day, Reavis and Pogue. Such firm provided legal services on behalf of the Company during fiscal 2002 on a variety of matters, and it is anticipated that such firm will provide services in fiscal 2003.

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PART IV

Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K

(a) 1,	2.	Financial Statements and Financial Statement Schedule
		The index to Consolidated Financial Statements and Financial Statement Schedule is included on page F-1 of this Report.
	3.	Exhibits

Exhibit
No.	Description
2	Agreement and Plan of Merger, dated October 9, 2001, by and among The Procter & Gamble Company, The Procter & Gamble Ohio Brands Company and The J. M. Smucker Company incorporated by reference to Form 8-K filed on October 12, 2001.
3(a)	Amended Articles of Incorporation incorporated by reference to Amendment No. 3 to Form S-4 filed on February 28, 2002.
3(b)	Amended Regulations incorporated by reference to Form S-4/A filed on February 28, 2002.
10(a)	Amended Restricted Stock Bonus Plan incorporated by reference to the 1994 Annual Report on Form 10-K.
10(b)	1987 Stock Option Plan incorporated by reference to the 1994 Annual Report on Form 10-K.
10(c)	Management Incentive Plan incorporated by reference to the 1996 Annual Report on Form 10-K.
10(d)	Nonemployee Director Stock Plan dated January 1, 1997 incorporated by reference to the 1997 Annual Report on Form 10-K.
10(e)	1998 Equity and Performance Incentive Plan incorporated by reference to Form 10-Q for the quarterly period ended October 31, 1998.
10(f)	Amended and Restated Rights Agreement, dated as of August 28, 2000, by and between the Company and ComputerShare Investor Services, LLC (successor to Harris Trust and Savings Bank) incorporated by reference to the Registration Statement on Form 8-A filed on August 28, 2000, as amended by Amendment No. 1 thereto, dated as of October 9, 2001, incorporated by reference to the Registration Statement on Form 8-A filed on October 22, 2002.
10(g)	Note Purchase Agreement (dated as of June 16, 1999) incorporated by reference to Form 10-Q for the quarterly period ended July 31, 1999.
10(h)	Top Management Supplemental Retirement Benefit Plan (May 1, 1999 Restatement) incorporated by reference to Form 10-Q for the quarterly period ended July 31, 1999.

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10(i)	Note Purchase Agreement (dated as of August 23, 2000) incorporated by reference to Form 10-Q for the quarterly period ended October 31, 2000.
10(j)	Nonemployee Director Stock Option Plan incorporated by reference to Form 10-Q for the quarterly period ended October 31, 2001.
13	Excerpts from 2002 Annual Report to Shareholders
18	Change in Accounting Principle
21	Subsidiaries of the Registrant
23	Consent of Independent Auditors
24	Powers of Attorney

All other required exhibits are either inapplicable to the Company or require no answer.

(b) Reports on Form 8-K filed in the Fourth Quarter of 2002.

On February 27, 2002, the Company filed a Current Report on Form 8-K with the Securities and Exchange Commission reporting it issued a press release to announce its earnings for the third quarter ended January 31, 2002.

(c)	The response to this portion of Item 14 is submitted as a separate section of this report.
(d)	The response to this portion of Item 14 is submitted as a separate section of this report.

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SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: July 26, 2002	The J. M. Smucker Company
	/s/ Steven J. Ellcessor
	By: Steven J. Ellcessor Vice President—Finance and Administration, Secretary, and Chief Financial Officer

     Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature	Title	Date
*
Timothy P. Smucker	Chairman and Co-Chief Executive Officer, and Director (Principal Executive Officer)	July 21, 2002
*
Richard K. Smucker	President and Co-Chief Executive Officer, and Director (Principal Executive Officer)	July 22, 2002
/s/ Steven J. Ellcessor
Steven J. Ellcessor	Vice President-Finance and Administration, Secretary, and Chief Financial Office (Principal Accounting Officer)	July 26, 2002
*
Richard G. Jirsa	Vice President-Information Services and Corporate Controller (Principal Accounting Officer)	July 22, 2002
*
Vincent C. Byrd	Director	July 19, 2002
*
Kathryn W. Dindo	Director	July 22, 2002
*
Fred A. Duncan	Director	July 24, 2002
*
Elizabeth Valk Long	Director	July 18, 2002
*
Charles S. Mechem, Jr.	Director	July 23, 2002
*
William H. Steinbrink	Director	July 18, 2002
*
William Wrigley, Jr.	Director	July 21, 2002

*     The undersigned, by signing his name hereto, does sign and execute this reports pursuant to the powers of attorney executed by the above-named officers and directors of the registrant, which are being filed herewith with the Securities and Exchange Commission on behalf of such officers and directors.

/s/ Steven J. Ellcessor

By: Steven J. Ellcessor

     Attorney-in-Fact

THE J. M. SMUCKER COMPANY

ANNUAL REPORT ON FORM 10-K

ITEMS 14(a) (1) AND (2), (c) AND (d)

INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE

CERTAIN EXHIBITS

FINANCIAL STATEMENT SCHEDULE

				Form 10-K Report		Annual Report To Shareholders
Data incorporated by reference from the 2002 Annual Report to Shareholders of The J. M. Smucker Company:
	Consolidated Balance Sheets at April 30, 2002 and 2001						20 - 21
	For the years ended April 30, 2002, 2001, and 2000:
			Statements of Consolidated Income				19
			Statements of Consolidated Cash Flows				22
			Statements of Consolidated Shareholders’ Equity				23
			Notes to Consolidated Financial Statements				24 - 39
	Consolidated financial statement schedule at April 30, 2002, or for the years ended April 30, 2002, 2001, and 2000:
		II. Valuation and qualifying accounts			F-2

     All other schedules are omitted because they are not applicable or because the information required is included in the Consolidated Financial Statements or the notes thereto.

F-1

THE J. M. SMUCKER COMPANY

SCHEDULE II — VALUATION AND QUALIFYING ACCOUNTS

YEARS ENDED APRIL 30, 2002, 2001, AND 2000

(Dollars in Thousands)

			Balance		Charged to			Charged to				Balance at
			at Beginning		Costs and			Other		Deductions		End of
Classification			of Year		Expenses			Accounts		(A)		Year
2002:
	Valuation allowance for
		Deferred tax assets	$	1,522	$	38		$	—	$	—	$	1,560
	Allowance for doubtful accounts			405		316			—		206		515
			$	1,927	$	354		$	—	$	206	$	2,075
2001:
	Valuation allowance for Deferred tax assets		$	1,728	$	(206	)	$	—	$	—	$	1,522
	Allowance for doubtful accounts			504		230			—		329		405
			$	2,232	$	24		$	—	$	329	$	1,927
2000:
	Valuation allowance for Deferred tax assets		$	1,695	$	33		$	—	$	—	$	1,728
	Allowance for doubtful accounts			733		291			—		520		504
			$	2,428	$	324		$	—	$	520	$	2,232

(A) Uncollectible accounts written off, net of recoveries.

F – 2 EX-13 3 l95505aexv13.txt EX-13 EXCERPTS ANNUAL REPORT TO SHAREHOLDERS Exhibit 13 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, 2002, as restated for the change in accounting for certain inventory from the last-in, first-out (LIFO) method to the first-in, first-out (FIFO) method, as discussed in Note B to the consolidated financial statements. The selected financial data was derived from the consolidated financial statements and should be read in conjunction with "Management's Discussion and Analysis of Results of Operations and Capital Resources and Liquidity" and the consolidated financial statements and notes thereto.

Year Ended April 30, - ----------------------------------------------------------------------------------------------------------------------------------- (Dollars in thousands, except per share data) 2002 2001 2000 1999 1998 - ----------------------------------------------------------------------------------------------------------------------------------- Statement of Income: Net sales $687,148 $651,242 $641,885 $612,662 $574,855 Income before cumulative effect of change in accounting method (1)(2) $30,851 $28,198 $26,273 $38,233 $34,771 Cumulative effect of change in accounting method (3)(4) --- (992) --- --- (2,958) - ----------------------------------------------------------------------------------------------------------------------------------- Net income $30,851 $27,206 $26,273 $38,233 $31,813 =================================================================================================================================== Financial Position: Long-term debt $135,000 $135,000 $75,000 $ --- $ --- Total assets 524,892 479,104 477,698 437,657 410,695 Shareholders' equity 280,144 250,785 320,608 331,548 308,926 =================================================================================================================================== Other Data: Earnings per Common Share: Income before cumulative effect of change in accounting method (1)(2) $ 1.26 $ 1.11 $ 0.92 $ 1.32 $ 1.20 Cumulative effect of change in accounting method (3)(4) --- (0.04) --- --- (0.10) - ----------------------------------------------------------------------------------------------------------------------------------- Net income $ 1.26 $ 1.07 $ 0.92 $ 1.32 $ 1.10 =================================================================================================================================== Income before cumulative effect of change in accounting method - assuming dilution (1)(2) $ 1.24 $ 1.10 $ 0.91 $ 1.31 $ 1.18 Cumulative effect of change in accounting method - assuming dilution (3)(4) --- (0.04) --- --- (0.10) - ----------------------------------------------------------------------------------------------------------------------------------- Net income - assuming dilution $ 1.24 $ 1.06 $ 0.91 $ 1.31 $ 1.08 =================================================================================================================================== Dividends declared per Common Share 0.64 0.64 0.61 0.57 0.53 ===================================================================================================================================

(1) Includes, in 2002, merger and integration costs of $5,031 ($3,160 after tax), or $0.13 per share, related to the "Jif" and "Crisco" transaction. (2) Includes, in 2001, a nonrecurring charge of $2,152 ($1,313 after tax), or $0.05 per share, relating to the sale of real estate, and in 2000, nonrecurring charges of $14,492 ($9,626 after tax), or $0.34 per share, relating to the impairment of certain long-lived assets, as discussed in Note E to the consolidated financial statements. (3) Reflects, in 2001, the impact of adopting the provisions of the Securities and Exchange Commission's Staff Accounting Bulletin No. 101, Revenue Recognition in Financial Statements (SAB 101), as discussed in Note A to the consolidated financial statements. Had SAB 101 been retroactively applied to all periods presented, earnings per Common Share would have been $0.01 lower in 1999. (4) Reflects, in 1998, the cumulative effect of adopting the provisions of the Emerging Issues Task Force of the Financial Accounting Standards Board Issue No. 97-13, Accounting for Costs Incurred in Connection with a Consulting Contract that Combines Business Process Reengineering and Information Technology Transformation (EITF 97-13). Summary of Quarterly Results of Operations The following is a summary of unaudited quarterly results of operations for the years ended April 30, 2002 and 2001, as restated for the change in accounting for certain inventory from the last-in, first-out (LIFO) method to the first-in, first-out (FIFO) method as discussed in Note B to the consolidated financial statements.

Earnings per Common Earnings per Common Share - Assuming (Dollars in thousands, except per share data) Share Dilution - ----------------------------------------------------------------------------------------------------------------------------- Income Income Income Before Before Before Cumulative Cumulative Cumulative Effect of Effect of Effect of Change in Change in Change in Quarter Net Gross Accounting Net Accounting Net Accounting Ended Sales Profit Method(1)(2) Income Method(1)(2) Income Method Net (3) (3) (1)(2)(3) Income - ----------------------------------------------------------------------------------------------------------------------------- Fiscal 2002 July 31, 2001 $169,792 $57,180 $ 8,547 $ 8,547 $0.35 $0.35 $0.35 $0.35 October 31, 2001 172,844 55,820 7,704 7,704 0.32 0.32 0.31 0.31 January 31, 2002 168,392 55,001 7,947 7,947 0.32 0.32 0.32 0.32 April 30, 2002 176,120 56,990 6,653 6,653 0.27 0.27 0.26 0.26 - ----------------------------------------------------------------------------------------------------------------------------- Fiscal 2001 July 31, 2000 $166,328 $55,177 $ 9,104 $ 8,112 $0.32 $0.28 $0.32 $0.28 October 31, 2000 169,837 53,635 5,759 5,759 0.23 0.23 0.23 0.23 January 31, 2001 153,628 50,625 5,905 5,905 0.25 0.25 0.24 0.24 April 30, 2001 161,449 47,857 7,430 7,430 0.31 0.31 0.30 0.30 - -----------------------------------------------------------------------------------------------------------------------------

Annual earnings per share may not equal the sum of the individual quarters due to differences in the average number of shares outstanding during the respective periods. (1) Includes merger and integration costs during fiscal 2002 third and fourth quarters of $558 ($0.02 per share) and $2,602 ($0.11 per share), respectively, related to the "Jif" and "Crisco" transaction. (2) Includes a nonrecurring charge during fiscal 2001 second quarter of $1,313 ($0.05 per share) relating to the sale of real estate, as discussed in Note E to the consolidated financial statements. (3) Fiscal 2001 fourth quarter income was increased by $1,100 ($0.05 per share) resulting from adjustments to the effective income tax rate. Stock Price Data The Company's 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 148,652 shareholders of record as of June 14, 2002.

Quarter Ended High Low Dividends - --------------------------------------------------------------------------------------------------- Fiscal 2002 July 31, 2001 $27.77 $23.91 $0.16 October 31, 2001 36.10 23.90 0.16 January 31, 2002 37.73 31.00 0.16 April 30, 2002 36.65 30.30 0.16 - --------------------------------------------------------------------------------------------------- Fiscal 2001 July 31, 2000 $19.50 $15.75 $0.16 October 31, 2000 25.00 17.88 0.16 January 31, 2001 29.00 21.63 0.16 April 30, 2001 29.00 23.95 0.16 - ---------------------------------------------------------------------------------------------------

MANAGEMENT'S DISCUSSION AND ANALYSIS The J. M. Smucker Company (Company) is a leading North American manufacturer and marketer of fruit spreads, natural peanut butter, dessert toppings, and health and natural foods beverages. The Company's operations and distribution outside of North America are principally in Australia, Brazil, China and the Pacific Rim, Europe, and the Middle East. On June 1, 2002, the Company consummated a transaction with The Procter & Gamble Company (P&G), whereby the "Jif" and "Crisco" businesses of P&G were merged with and into the Company. The merger will be accounted for as a purchase business combination, with the Company as the accounting acquirer. The addition of these two brands has created a new company with a leading brand position in seven food categories. The expected operating results and financial position of this new company are significantly different than those of the Company as reported in this annual report, in Management's Discussion and Analysis, and in the consolidated financial statements. See Note C to the consolidated financial statements for additional information on the merger and for pro forma financial information of the combined Company. During fiscal 2002, the Company changed from the last-in, first-out (LIFO) method of accounting for certain inventory to the first-in, first-out (FIFO) method. The results of operations included in this section for years prior to fiscal 2002 has been restated to reflect this change. RESULTS OF OPERATIONS Comparison of fiscal 2002 with fiscal 2001 Sales in fiscal 2002 were $687.1 million, up 6% over the $651.2 million in sales in the prior year. Excluding the impact of acquisitions, sales were up approximately $21 million or 3%. Sales in the domestic segment were $590.3 million, up 6%, while international segment sales were $96.8 million, a 4% increase. Company operating income was $59.8 million compared to $51.3 million in fiscal 2001, excluding the impact of $5 million ($3.2 million after tax, or $0.13 per share) in merger and integration costs associated with the "Jif" and "Crisco" merger in fiscal 2002 and excluding a $2.1 million ($1.3 million after tax, or $0.05 per share) nonrecurring charge in fiscal 2001. Fiscal 2002 net income, excluding the impact of merger and integration costs, was $34.0 million, or $1.39 per share ($1.37 per share, assuming dilution), compared to $29.5 million, or $1.16 per share ($1.15 per share, assuming dilution), last year. The fiscal 2001 results noted exclude the nonrecurring charge and the cumulative effect of an accounting change of $1.6 million ($1 million after tax, or $0.04 per share). During the fourth quarter of fiscal 2002, the Company elected to change the method of accounting for certain inventory from the LIFO method to the FIFO method. As a result, the Company restated its fiscal 2001 financial results, resulting in a reduction in net income of $3.5 million, or $0.14 per share. Sales in the domestic segment were up 6% due primarily to increases in the consumer, foodservice, and industrial business areas. The Company's consumer business grew 4%, due mostly to new products and growth in "Sugar Free" fruit spreads, natural peanut butters, and "Goober" peanut butter and jelly combination products. During the year, the Company discontinued selling its low-margin, value-priced "Sunberry Farms" brand. Consumer area sales increased in the grocery, club store, and mass retail channels and decreased modestly in the military and consumer direct channels. The Company's share of market in the fruit spreads category continues to grow, reaching an all-time high in excess of 40% across all retail segments. In the foodservice area, sales were up 9% as sales and distribution of "Smucker's Uncrustables" to schools continued to increase. Total foodservice sales of this product reached approximately $16 million, double the prior year. This new business helped offset a general softness in traditional foodservice sales, which were impacted during most of the year by the weak economy and declines in the travel and leisure industry following the events of last September 11. Despite those events, the traditional foodservice business realized a small increase, up 1% over the prior year. Sales in the beverage area were up 7% over the prior year, due primarily to increased sales of "R.W. Knudsen Family" and "Santa Cruz Organic" products. Sales in the Company's industrial business were up 11% for the year. The increase was due to the acquisition of the International Flavors and Fragrances, Inc. (IFF) fruit and vegetable preparation businesses in October 2001. The IFF acquisition contributed approximately $13 million to domestic sales and $0.05 per share to earnings during the year. On an annual basis, the business acquired from IFF is expected to contribute sales of approximately $25 million. This additional business is expected to offset a similar amount of current business in the industrial area that will be eliminated in fiscal 2003 due to low margins. The addition of the IFF business, along with the merger into the Company of the "Jif" and "Crisco" brands, has given the Company the opportunity to restructure its industrial business and focus on contracts that support long-term margin objectives. As a result, it is discontinuing select low-margin contracts. This will result in an approximate loss of $40 to $50 million in ingredient sales over the next two years; however, the impact on net income should be less than $1 million. The addition of the IFF business and the rationalization of low-margin product lines are consistent with the Company's overall strategic direction to diversify its customer base and improve profitability in the industrial area. In the international segment, the Company's Canadian business continued to perform well, with sales increasing 4% in the local currency. Export sales increased 3% and sales in the Company's Mexican market increased 22% over last year. Approximately $1.9 million of the $3.5 million increase in international sales was due to the addition of that portion of the business acquired from IFF that is located in Brazil. In Australia, the Henry Jones Foods business was up 1% in local currency compared to fiscal 2001. The impact of the strong U. S. dollar as compared primarily to the local currencies in Australia, Brazil, and Canada resulted in fiscal 2002 sales being approximately $5.4 million less than they would have been had exchange rates remained constant with exchange rates last year. The Company's gross profit margin was 32.7% in fiscal 2002, compared to 31.8% last year. The cost of products sold for the majority of the Company's businesses was consistent with last year, as raw material costs remained essentially flat. Selling, distribution, and administrative (SD&A) costs were 24.8% of sales, as compared to 24.0% last year. However, if the $5 million of merger and integration costs associated with the "Jif" and "Crisco" merger are excluded, SD&A costs as a percent of sales would have been comparable to last year. The dollar increase in SD&A expenses was primarily due to higher amortization charges associated with previously capitalized information systems implementation costs. Marketing expenses were down 1% from the prior year, primarily due to lower expenditures in the beverage and consumer direct areas. Interest expense increased $1.4 million over the prior year as the long-term debt placement that was completed during the second quarter of fiscal 2001 was on the books for a full year in fiscal 2002. The Company capitalized approximately $0.5 million in interest during fiscal 2002 that was associated with the Company's information technology reengineering project. Also during the year, the Company entered into interest rate swap agreements in order to manage interest rate exposure and lower financing costs. The Company effectively converted $17 million of fixed-rate debt (7.70% notes due in September 2005) and $33 million of fixed-rate debt (7.87% notes due in September 2007) to variable-rate debt. The interest rate swaps are considered fair value hedges and are 100% effective. The interest rate swaps reduced interest expense by approximately $0.6 million in fiscal 2002. The effective income tax rate for the year increased to 38.5% from 36.6% in fiscal 2001 due to a general increase in state and local taxes, foreign income taxes, and other nondeductible expenses. On June 1, 2002, the Company completed its merger of P&G's "Jif" peanut butter and "Crisco" shortening and oils businesses with and into the Company. Under the terms of the transaction, the "Jif" and "Crisco" businesses were contributed by P&G to a wholly-owned subsidiary, the shares of which were then distributed by P&G to its shareholders. That former subsidiary was then merged into the Company with the shareholders of P&G receiving one share of new Company stock for every 50 P&G shares that they held as of the record date for the distribution. Existing Company shareholders received 0.9451 of a new share for each existing share of the Company they held. As a result, 49.5 million shares were issued and are outstanding with the previous P&G shareholders holding approximately 52.5% of the total. The total price of the transaction, based on an average share price of $30 per share (calculated at the time the transaction was announced), was approximately $781 million. Comparison of fiscal 2001 with fiscal 2000 Sales in fiscal 2001 were $651.2 million, up from $641.9 million in fiscal 2000. Domestic sales were $557.9 million, up 1% over fiscal 2000, while the international segment realized an increase of $2.8 million or 3%. Excluding the impact of nonrecurring charges in both years and the cumulative effect of an accounting change in fiscal 2001, earnings for the year were $29.5 million, or $1.16 per share ($1.15 per share, assuming dilution), compared to $35.9 million, or $1.26 per share ($1.25 per share, assuming dilution), in fiscal 2000. Including the impact of nonrecurring charges and change in accounting method, earnings were $27.2 million, or $1.07 per share ($1.06 per share, assuming dilution), in fiscal 2001 compared to $26.3 million, or $0.92 per share ($0.91 per share, assuming dilution), in fiscal 2000. In the domestic segment, the Company's consumer business grew 4%, due primarily to an increase in sales of "Sugar Free" fruit spreads and natural peanut butters, along with growth in the club store channel. The Company also saw 4% growth in its foodservice business, driven in large part by the "Smucker's Uncrustables" line of thaw-and-serve peanut butter and jelly sandwiches in its schools market. Sales of traditional portion control items were flat compared to fiscal 2000. The specialty business was up for fiscal 2001 due primarily to new product sales. In the beverage area, sales of "R. W. Knudsen Family" and "Santa Cruz Organic" products continue to grow. However, overall beverage sales were flat compared to fiscal 2000 due to softness in "After The Fall" brand sales. In the industrial area, domestic sales were below fiscal 2000, as sales with new customers did not fully offset declines in sales with certain existing customers. In the international segment, the increase came from a full year inclusion of the Company's Brazilian operation. The Company's Canadian business performed well, contributing to overall segment performance for the second consecutive year. Sales were negatively impacted by exchange rates and increased competitive activity in the Company's Australian market. Sales in Mexico and the Company's European and Middle East markets were also down. The impact of a strong U.S. dollar, primarily in comparison to the Australian and Canadian dollars, resulted in fiscal 2001 sales being approximately $6.6 million less than they would have been had exchange rates been equal to fiscal 2000 levels. Had exchange rates remained constant, international sales would have been up 10%. The cost of products sold as a percentage of net sales increased to 68.2%, compared to 67.5% in fiscal 2000. During the year, the Company benefited from the lower cost of fruit packed during the summer months. However, these savings were offset by the impact of revaluing carryover fruit inventories (i.e., fruit packed in fiscal 2000) to reflect the current lower cost. The savings were also offset by increased energy costs, which were up 20% over fiscal 2000, and higher freight costs. SD&A expenses increased at approximately the same rate as sales. Marketing expenses were up 7% over fiscal 2000 related to the introduction of new products. This was somewhat offset by a 2% decrease in selling expenses and a less than 1% increase in administrative costs. During the second quarter of fiscal 2001, the Company finalized the sale of the former "Mrs. Smith's" real estate in Pottstown, Pennsylvania, resulting in a pretax loss of approximately $2.1 million, or $0.05 per share. This transaction represented the final nonrecurring charge relating to the previously announced financial review of certain businesses and assets by the Company, initiated in fiscal 2000. The total amount of nonrecurring charges taken in connection with the review was $16.6 million, with $14.5 million of that amount taken in fiscal 2000. Interest expense increased over fiscal 2000 due to the long-term debt placement completed during the second quarter of the fiscal year. During the year, the Company capitalized approximately $0.9 million of interest, primarily associated with the Company's information technology reengineering project. The effective income tax rate for the year was 36.6% compared to 36.5% in fiscal 2000. CAPITAL RESOURCES AND LIQUIDITY

Year Ended April 30, - ------------------------------------------------------------------------------------------------------------------ (Dollars in thousands) 2002 2001 2000 - ------------------------------------------------------------------------------------------------------------------ Net cash provided by operating activities $67,000 $88,196 $32,271 Net cash used for investing activities (20,510) (27,612) (39,818) Net cash (used for) provided by financing activities (5,808) (32,325) 31,254 - ------------------------------------------------------------------------------------------------------------------

The financial position of the Company remains strong with an increase in cash and cash equivalents of $40.8 million during the year. The increase in cash and cash equivalents reflects cash generated from operations of $67.0 million. Additional debt was not required to complete the merger of the "Jif" and "Crisco" businesses with and into the Company and total long-term debt as a percent of total capitalization was reduced from approximately 33% at April 30, 2002, to 11% following the merger. Fiscal 2002 capital expenditures were $23.5 million, including capitalized software and consulting costs of $3.9 million. This was down from $29.4 million in the previous year. Other significant uses of cash during the year included the payment of dividends of $0.64 per share or $15.6 million, $5.7 million for the acquisition from International Flavors and Fragrances, Inc., and the payment of merger and integration costs of $5 million. Capital expenditures for fiscal 2003 are budgeted at $59 million, representing a significant increase over the Company's historical levels. While capital expenditures in absolute terms are expected to more than double, the fiscal 2003 capital expenditures budget as a percent of sales is expected to be approximately 4.7% as compared to 3.4% in fiscal 2002. The planned increase in capital expenditures is primarily attributable to (i) building expansion projects at the corporate headquarters in Orrville, Ohio, necessary in order to consolidate functions and to house employees added in connection with the merger, and (ii) spending associated with plans to increase capacity and improve efficiencies in production of "Smucker's Uncrustables". Dividend payments in fiscal 2003 are also expected to increase as a result of the additional number of outstanding shares resulting from the merger of the "Jif" and "Crisco" businesses with and into the Company and a possible increase in the dividend rate. Assuming there are no other material acquisitions or other significant investments, the Company believes that cash on hand together with cash generated by operations and existing lines of credit will be sufficient to meet fiscal 2003 requirements, including the payment of dividends and interest on outstanding debt. CRITICAL ACCOUNTING ESTIMATES AND POLICIES The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that in certain circumstances affect amounts reported in the accompanying consolidated financial statements. In preparing these financial statements, management has made its best estimates and judgments of certain amounts included in the financial statements, giving due consideration to materiality. The Company does 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 policies involves the exercise of judgment and use of assumptions as to future uncertainties and, as a result, actual results could differ from these estimates. ACCRUED MARKETING AND MERCHANDISING. In order to support the Company's products, various marketing programs are offered to customers which reimburse them for a portion or all of their promotional activities related to the Company's products. The Company regularly reviews and revises, when it deems necessary, estimates of costs to the Company for these marketing and merchandising programs based on estimates of what has been incurred by customers. Actual costs incurred by the Company may differ significantly if factors such as the level and success of the customers' programs or other conditions differ from expectations. IMPAIRMENT OF LONG-LIVED ASSETS. Long-lived assets historically have been 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 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 fair value of the assets. There are no events or changes in circumstances of which management is aware indicating that the carrying value of the Company's long-lived assets may not be recoverable. As described below under "Recently Issued Accounting Standards," the accounting treatment for goodwill and other intangible assets will change significantly in fiscal 2003. PENSION PLANS AND OTHER POSTRETIREMENT BENEFIT PLANS. The measurement of liabilities related to defined benefit pension plans and other postretirement benefit plans is based on management's assumptions related to future events including interest rates, return on pension plan assets, rate of compensation increases, and health care cost trend rates. Actual pension plan asset performance will either reduce or increase unamortized pension losses at the end of fiscal 2003, which ultimately affects net income. ACCRUED EXPENSES. Management estimates certain material expenses in an effort to record those expenses in the period incurred. The most material accrued estimates relate to insurance-related expenses, including self-insurance. Workers' compensation and general liability insurance accruals are recorded based on insurance claims processed as well as historical claims experience for claims incurred, but not yet reported. These estimates are based on historical loss development factors. Employee medical insurance accruals are recorded based on medical claims processed as well as historical medical claims experience for claims incurred but not yet reported. Differences in estimates and assumptions could result in an accrual requirement materially different from the calculated accrual. OTHER MATTERS. The Company does not have off-balance sheet arrangements, financings, or other relationships with unconsolidated entities or other persons, also known as "special purpose entities." Transactions with related parties are in the ordinary course of business, are conducted on an arm's-length basis, and are not material to the Company's results of operation, financial condition, or cash flows. RECENTLY ISSUED ACCOUNTING STANDARDS In June 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 141, Business Combinations (SFAS 141) and No. 142, Goodwill and Other Intangible Assets (SFAS 142). SFAS 141 requires that the purchase method of accounting be used for all business combinations initiated after June 30, 2001. SFAS 141 also provides new criteria to determine whether an acquired intangible asset should be recognized separately from goodwill. The adoption of SFAS 141 had no impact on the Company's results of operations or financial condition. SFAS 142 is effective for the Company as of May 1, 2002. In accordance with SFAS 142, goodwill and intangible assets deemed to have indefinite lives will no longer be amortized but will be subject to impairment testing. Intangible assets with finite lives will continue to be amortized over their useful lives. SFAS 142 requires an initial goodwill and indefinite lived intangible asset impairment assessment in the year of adoption, and at a minimum, annual impairment testing thereafter. The discontinuance of goodwill and indefinite lived intangible asset amortization in fiscal 2003 will increase operating income by approximately $3.5 million. The Company has not completed its initial asset impairment assessment as required in adopting SFAS 142. In August 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets (SFAS 144). SFAS 144 addresses financial accounting and reporting for the impairment or disposal of long-lived assets to be held and used, to be disposed of other than by sale, and to be disposed of by sale. SFAS 144 is effective for the Company as of May 1, 2002. The adoption of SFAS 144 is not expected to have a material impact on the Company's results of operations or financial condition. DERIVATIVE FINANCIAL INSTRUMENTS AND MARKET RISK The following discussions about the Company's market risk disclosures involve forward-looking statements. Actual results could differ from those projected in the forward-looking statements. The Company is exposed to market risk related to changes in interest rates and foreign currency exchange rates. INTEREST RATE RISK. The fair value of the Company's cash and short-term investment portfolio, and the fair value of notes receivable and payable at April 30, 2002, approximate carrying value. Interest rate swaps are used to hedge underlying debt obligations and reduce overall interest expense. Market risk, as measured by the change in fair value resulting from a hypothetical 10% change in interest rates, is not material. Based on the Company's overall interest rate exposure as of and during the year ended April 30, 2002, including derivative and other instruments sensitive to interest rates, a hypothetical 10% movement in interest rates (relating to the Company's variable rate borrowings) would not materially affect the Company's results of operations. As of April 30, 2002, the Company had interest rate swap agreements on fixed rate obligations in the amount of $50 million. These exchange agreements are perfectly effective as defined by Statement of Financial Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging Activities (SFAS 133) and had a fair value of $0.5 million at April 30, 2002. The weighted average interest rate for these agreements was 4.88% at April 30, 2002. FOREIGN CURRENCY EXCHANGE RISK. The Company has concluded that its foreign currency exposure on future earnings or cash flows is not significant, and has currently chosen not to hedge its foreign currency exposure. The Company has operations outside the United States with foreign currency denominated assets and liabilities, primarily denominated in Australian, Brazilian, and Canadian currencies. Because the Company has 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, 2002, are not expected to result in a significant impact on future earnings or cash flows. Revenues from customers outside the United States represented approximately 14% of net sales during fiscal 2002. Thus, certain sales 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. CERTAIN FORWARD-LOOKING STATEMENTS This annual report includes certain forward-looking statements that are based on current expectations and are subject to a number of risks and uncertainties that could cause actual results to differ materially. These risks and uncertainties include, but are not limited to: - - the success and cost of integrating the "Jif" and "Crisco" businesses into the Company; - - the success and cost of new marketing and sales programs and strategies intended to promote new growth in the "Jif" and "Crisco" businesses and in their respective market shares; - - the success and cost of introducing new products; - - general competitive activity in the market; - - the ability of business areas to achieve sales targets and the costs associated with attempting to do so; - - the ability of the Company from time to time to successfully effect price increases; - - the ability to improve sales and earnings performance in the Company's formulated ingredient business; - - the exact time frame in which the loss of sales associated with discontinued industrial contracts will occur and the Company's ability to successfully cover or eliminate the overhead associated with those sales; - - costs associated with the implementation of new business and information systems; - - raw material and ingredient cost trends; and - - foreign currency exchange and interest rate fluctuations. Report of Independent Auditors Board of Directors and Shareholders The J. M. Smucker Company We have audited the accompanying consolidated balance sheets of The J. M. Smucker Company as of April 30, 2002 and 2001, and the related statements of consolidated income, shareholders' equity, and cash flows for each of the three years in the period ended April 30, 2002. 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 audits in accordance with auditing standards generally accepted in the 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, 2002 and 2001, and the consolidated results of its operations and its cash flows for each of the three years in the period ended April 30, 2002, in conformity with accounting principles generally accepted in the United States. As explained in Note B to the consolidated financial statements, the Company has given retroactive effect to a change in the method of accounting for certain inventory from the last-in, first-out (LIFO) method to the first-in, first-out (FIFO) method. Ernst & Young LLP Akron, Ohio June 6, 2002 Statements of Consolidated Income The J. M. Smucker Company

Year Ended April 30, - ----------------------------------------------------------------------------------------------------------------------- (Dollars in thousands, except per share data) 2002 2001 2000 - ----------------------------------------------------------------------------------------------------------------------- Net sales $ 687,148 $ 651,242 $ 641,885 Cost of products sold 462,157 443,948 432,993 - ----------------------------------------------------------------------------------------------------------------------- Gross Profit 224,991 207,294 208,892 Selling, distribution, and administrative expenses 165,172 155,973 153,297 Merger and integration costs 5,031 --- --- Nonrecurring charge --- 2,152 14,492 - ----------------------------------------------------------------------------------------------------------------------- Operating Income 54,788 49,169 41,103 Interest income 2,181 2,918 2,706 Interest expense (9,207) (7,787) (3,111) Other income - net 2,436 192 701 - ----------------------------------------------------------------------------------------------------------------------- Income Before Income Taxes and Cumulative Effect of Change in Accounting Method 50,198 44,492 41,399 Income taxes 19,347 16,294 15,126 - ----------------------------------------------------------------------------------------------------------------------- Income Before Cumulative Effect of Change in Accounting Method 30,851 28,198 26,273 Cumulative effect of change in accounting method, net of tax benefit of $572 --- (992) --- - ----------------------------------------------------------------------------------------------------------------------- Net Income $ 30,851 $ 27,206 $ 26,273 ======================================================================================================================= Earnings per Common Share: Income Before Cumulative Effect of Change in Accounting Method $ 1.26 $ 1.11 $ 0.92 Cumulative effect of change in accounting method --- (0.04) --- - ----------------------------------------------------------------------------------------------------------------------- Net Income per Common Share $ 1.26 $ 1.07 $ 0.92 ======================================================================================================================= Earnings per Common Share--Assuming Dilution: Income Before Cumulative Effect of Change in Accounting Method $ 1.24 $ 1.10 $ 0.91 Cumulative effect of change in accounting method --- (0.04) --- - ----------------------------------------------------------------------------------------------------------------------- Net Income per Common Share - Assuming Dilution $ 1.24 $ 1.06 $ 0.91 =======================================================================================================================

See notes to consolidated financial statements. Consolidated Balance Sheets The J. M. Smucker Company

Assets April 30, - ------------------------------------------------------------------------------------------------------------ (Dollars in thousands) 2002 2001 - ------------------------------------------------------------------------------------------------------------ Current Assets Cash and cash equivalents $ 91,914 $ 51,125 Trade receivables, less allowance for doubtful accounts 57,371 55,986 Inventories: Finished products 52,817 54,614 Raw materials, containers, and supplies 63,722 59,561 - ------------------------------------------------------------------------------------------------------------ 116,539 114,175 Other current assets 13,989 13,956 - ------------------------------------------------------------------------------------------------------------ Total Current Assets 279,813 235,242 - ------------------------------------------------------------------------------------------------------------ Property, Plant, and Equipment Land and land improvements 16,911 17,684 Buildings and fixtures 87,126 79,862 Machinery and equipment 242,590 247,235 Construction in progress 7,504 17,072 - ------------------------------------------------------------------------------------------------------------ 354,131 361,853 Accumulated depreciation (191,342) (190,283) - ------------------------------------------------------------------------------------------------------------ Total Property, Plant, and Equipment 162,789 171,570 - ------------------------------------------------------------------------------------------------------------ Other Noncurrent Assets Goodwill 33,510 33,788 Other intangible assets 14,825 11,848 Other assets 33,955 26,656 - ------------------------------------------------------------------------------------------------------------ Total Other Noncurrent Assets 82,290 72,292 - ------------------------------------------------------------------------------------------------------------ $ 524,892 $ 479,104 ============================================================================================================

Liabilities and Shareholders' Equity April 30, - ----------------------------------------------------------------------------------------------------------------- (Dollars in thousands) 2002 2001 - ----------------------------------------------------------------------------------------------------------------- Current Liabilities Accounts payable $ 32,390 $ 29,967 Salaries, wages, and additional compensation 22,866 15,250 Accrued marketing and merchandising 11,563 8,559 Income taxes 2,078 2,916 Dividends payable 3,979 3,897 Other current liabilities 7,555 7,473 - ----------------------------------------------------------------------------------------------------------------- Total Current Liabilities 80,431 68,062 ================================================================================================================= Noncurrent Liabilities Long-term debt 135,000 135,000 Postretirement benefits other than pensions 14,913 14,224 Deferred income taxes 4,105 4,981 Other noncurrent liabilities 10,299 6,052 - ----------------------------------------------------------------------------------------------------------------- Total Noncurrent Liabilities 164,317 160,257 - ----------------------------------------------------------------------------------------------------------------- Shareholders' Equity Serial Preferred Shares - no par value: Authorized - 3,000,000 shares; outstanding - none --- --- Common Shares - no par value: Authorized - 70,000,000 shares; outstanding - 24,869,463 in 2002 and 24,359,281 in 2001 (net of 7,555,113 and 8,065,295 treasury shares, respectively), at stated value 6,217 6,090 Additional capital 33,184 19,278 Retained income 267,793 253,226 Less: Deferred compensation (2,725) (2,248) Amount due from ESOP Trust (8,562) (8,926) Accumulated other comprehensive loss (15,763) (16,635) - ----------------------------------------------------------------------------------------------------------------- Total Shareholders' Equity 280,144 250,785 - ----------------------------------------------------------------------------------------------------------------- $ 524,892 $ 479,104 =================================================================================================================

See notes to consolidated financial statements. Statements of Consolidated Cash Flows The J. M. Smucker Company

Year Ended April 30, - --------------------------------------------------------------------------------------------------------------------------- (Dollars in thousands) 2002 2001 2000 - --------------------------------------------------------------------------------------------------------------------------- Operating Activities Net income $ 30,851 $ 27,206 $ 26,273 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 23,932 22,521 21,674 Amortization 4,625 4,400 4,524 Nonrecurring charge, net of tax benefit --- 1,313 9,626 Cumulative effect of change in accounting method, net of tax benefit --- 992 --- Deferred income tax expense (benefit) 1,545 2,040 (3,872) Changes in assets and liabilities, net of effect from business acquisitions: Trade receivables (1,217) 5,196 (11,678) Inventories (2,063) 17,326 (6,792) Other current assets (11) 3,830 (733) Accounts payable and accrued items 12,483 10,558 (9,174) Income taxes 25 (1,084) 2,580 Other - net (3,170) (6,102) (157) - --------------------------------------------------------------------------------------------------------------------------- Net Cash Provided by Operating Activities 67,000 88,196 32,271 - --------------------------------------------------------------------------------------------------------------------------- Investing Activities Additions to property, plant, and equipment (23,464) (29,385) (32,240) Businesses acquired, net of cash acquired (5,714) --- (9,056) Disposal of property, plant, and equipment 7,060 278 91 Other - net 1,608 1,495 1,387 - --------------------------------------------------------------------------------------------------------------------------- Net Cash Used for Investing Activities (20,510) (27,612) (39,818) - --------------------------------------------------------------------------------------------------------------------------- Financing Activities Proceeds from long-term debt --- 60,000 75,000 Repayment of short-term debt - net --- --- (8,966) Purchase of treasury shares (1,128) (80,964) (17,654) Dividends paid (15,568) (16,686) (17,212) Net amount received from ESOP Trust 364 297 303 Other - net 10,524 5,028 (217) - --------------------------------------------------------------------------------------------------------------------------- Net Cash (Used for) Provided by Financing Activities (5,808) (32,325) 31,254 Effect of exchange rate changes on cash 107 (907) (615) - --------------------------------------------------------------------------------------------------------------------------- Net increase in cash and cash equivalents 40,789 27,352 23,092 Cash and cash equivalents at beginning of year 51,125 23,773 681 - --------------------------------------------------------------------------------------------------------------------------- Cash and Cash Equivalents at End of Year $ 91,914 $ 51,125 $ 23,773 ===========================================================================================================================

( ) Denotes use of cash See notes to consolidated financial statements. Statements of Consolidated Shareholders' Equity The J. M. Smucker Company

Amount Accumulated Total Due Other Share- Deferred From Comprehen- holders' Common Additional Retained Compen- ESOP sive Equity (Dollars in thousands) Shares Capital Income sation Trust Loss --------------------------------------------------------------------------------------------------------------------- Balance at May 1, 1999, as $7,290 $15,604 $318,660 $(2,001) $(9,526) $(5,698) $324,329 previously stated Adjustment for the cumulative effect on the prior years of applying retroactively the change in the method of accounting for inventories (see Note B) 7,219 7,219 --------------------------------------------------------------------------------------------------------------------- Balance at May 1, 1999, as restated 7,290 15,604 325,879 (2,001) (9,526) (5,698) 331,548 Net income 26,273 26,273 Foreign currency translation adjustment (3,629) (3,629) ----------- Comprehensive Income 22,644 Purchase of treasury shares (237) (566) (16,851) (17,654) Stock plans 28 1,570 (1,090) 508 Cash dividends declared - $0.61 a share (17,323) (17,323) Tax benefit of stock plans 582 582 Other 303 303 --------------------------------------------------------------------------------------------------------------------- Balance at April 30, 2000 7,081 17,190 317,978 (3,091) (9,223) (9,327) 320,608 Net income 27,206 27,206 Foreign currency translation adjustment (7,308) (7,308) ----------- Comprehensive Income 19,898 Purchase of treasury shares (1,074) (4,027) (75,863) (80,964) Stock plans 83 4,820 843 5,746 Cash dividends declared - $0.64 a share (16,095) (16,095) Tax benefit of stock plans 1,295 1,295 Other 297 297 --------------------------------------------------------------------------------------------------------------------- Balance at April 30, 2001 6,090 19,278 253,226 (2,248) (8,926) (16,635) 250,785 Net income 30,851 30,851 Foreign currency translation adjustment 1,669 1,669 Minimum pension liability (797) (797) ----------- Comprehensive Income 31,723 Purchase of treasury shares (11) (483) (634) (1,128) Stock plans 138 11,590 (477) 11,251 Cash dividends declared - $0.64 a share (15,650) (15,650) Tax benefit of stock plans 2,799 2,799 Other 364 364 --------------------------------------------------------------------------------------------------------------------- Balance at April 30, 2002 $6,217 $33,184 $267,793 $(2,725) $(8,562) $(15,763) $ 280,144 =====================================================================================================================

See notes to consolidated financial statements. Notes to Consolidated Financial Statements The J. M. Smucker Company Note A: Accounting Policies Principles of Consolidation: The consolidated financial statements include the accounts of the Company and its subsidiaries, all of which are wholly owned. All significant intercompany transactions and accounts are eliminated in consolidation. Financial Instruments: Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash investments and accounts receivable. The Company places its cash investments with high quality financial institutions and limits the amount of credit exposure to any one institution. The Company considers all short-term investments with a maturity of three months or less when purchased to be cash equivalents. With respect to accounts receivable, concentration of credit risk is limited due to the large number of customers. The Company does not require collateral from its customers. The fair value of the Company's financial instruments, other than certain of its fixed-rate long-term debt, approximates their carrying amounts (see Note K). The fair value of the Company's fixed-rate long-term debt, estimated using current market rates and a discounted cash flow analysis, was approximately $129,470,000 at April 30, 2002. Derivative Financial Instruments: Effective May 1, 2001, the Company adopted Statement of Financial Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging Activities (SFAS 133). SFAS 133 requires that all derivative financial instruments, such as foreign exchange contracts and interest rate swap agreements, be recognized in the financial statements and measured at fair value regardless of the purpose or intent for holding them. Changes in the fair value of derivative financial instruments are either recognized periodically in income or shareholders' equity (as a component of other comprehensive income), depending on whether the derivative is being used to hedge changes in fair value or cash flows. The adoption of SFAS 133 did not have a material effect on the Company's results of operations, financial position, or cash flows in fiscal 2002. By policy, the Company has not historically entered into derivative financial instruments for trading purposes or for speculation. The Company has entered into interest rate swap agreements (see Note K). The interest rate swap agreements effectively modify the Company's exposure to interest risk by converting a portion of the Company's fixed-rate debt to a floating rate. Based on criteria defined in SFAS 133, the interest rate swaps are considered fair value hedges and are 100% effective. The interest rate swap and instrument being hedged is marked to market in the balance sheet. The mark-to-market value of both the fair value hedging instruments and the underlying debt obligations are recorded as equal and offsetting gains or losses in other expense. No other cash payments are made unless the contract is terminated prior to maturity, in which case the amount paid or received in settlement is established by agreement at the time of termination, and usually represents the net present value, at current rates of interest, of the remaining obligations to exchange payments under the terms of the contract. Any gains or losses upon the early termination of the interest rate swap contracts would be deferred and recognized over the remaining life of the contract. Use of Estimates: The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to 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 nonrecurring charges, allowances for doubtful accounts receivable, estimates of future cash flows associated with assets, asset impairments, useful lives for depreciation and amortization, loss contingencies, net realizable value of inventories, accruals for marketing and merchandising programs, and the determination of discount and other rate assumptions for defined benefit pension and other postretirement benefit expenses. Actual results could differ from these estimates. Revenue Recognition: The Company recognizes revenue when products are shipped and title has transferred to the customer. In December 1999, the Securities and Exchange Commission issued Staff Accounting Bulletin No. 101, Revenue Recognition in Financial Statements (SAB 101), which among other guidance clarified the Staff's view on various revenue recognition and reporting matters. The implementation of SAB 101 was accounted for as a change in accounting method and applied cumulatively as if the change occurred as of May 1, 2000. The effect of the change was a one-time, noncash reduction to the Company's earnings of $992,000 (net of tax of $572,000), or approximately $0.04 per share. Shipping and Handling Costs: Shipping and handling costs are included in cost of products sold. Stock Compensation: The Company has elected to follow Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees (APB 25), and related interpretations in accounting for its employee stock options. Under APB 25, because the exercise price of the Company's employee stock options equals the market price of the underlying stock on the date of grant, no compensation expense is recognized (see Note J). Inventories: Inventories are stated at the lower of cost or market. Cost is determined using the first-in, first-out (FIFO) method (see Note B). Goodwill and Other Intangible Assets: Goodwill and other intangible assets, principally trademarks and patents, are being amortized using the straight-line method over periods ranging from 5 to 40 years for acquisitions prior to July 1, 2001. During the periods presented, the Company continually evaluated whether events or circumstances occurred which would indicate that the carrying value may not be recoverable or that the useful life warrants revision. When events or circumstances indicated, the Company analyzed the future recoverability of the asset using an estimate of the related undiscounted future cash flows of the related business, and recognized any adjustment to the asset's carrying value on a current basis. Accumulated amortization of goodwill and other intangible assets at April 30, 2002 and 2001, was $34,189,000 and $30,300,000, respectively. Effective May 1, 2002, the Company is required to adopt Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets (SFAS 142). In accordance with this standard, goodwill and intangible assets deemed to have indefinite lives will no longer be amortized but will be subject to impairment testing. Intangible assets with finite lives will continue to be amortized over their useful lives. SFAS 142 requires an initial goodwill and indefinite lived intangible asset impairment assessment in the year of adoption and, at a minimum, annual impairment tests thereafter. The discontinuation of goodwill and indefinite lived intangible asset amortization in fiscal 2003 will increase operating income by approximately $3,500,000. The Company has not completed its initial asset impairment assessment as required in adopting SFAS 142. Property, Plant, and Equipment: Property, plant, and equipment are recorded at cost and are depreciated on a straight-line basis over the estimated useful lives of the assets (3 to 15 years for machinery and equipment, and 10 to 40 years for buildings, fixtures, and improvements). The Company leases certain land, buildings, and equipment for varying periods of time, with renewal options. Leases of cold storage facilities are continually renewed. Total rental expense in fiscal 2002, 2001, and 2000 totaled $10,430,000, $11,827,000, and $10,242,000, respectively. Rental expense for cold storage facilities, which is based on quantities stored, amounted to $2,324,000, $3,319,000, and $1,490,000 in fiscal 2002, 2001, and 2000, respectively. Software Costs: The Company capitalizes significant costs associated with the development and installation of internal use software. Amounts capitalized are amortized over the estimated useful lives of the software, ranging from 3 to 7 years, beginning with the project's completion. Net capitalized software costs as of April 30, 2002 and 2001, were $28,173,000 and $29,805,000, respectively, of which $3,484,000 and $7,382,000 were included in construction in progress. Interest costs of $524,000, $891,000, and $1,069,000 were capitalized during fiscal 2002, 2001, and 2000, respectively. Foreign Currency Translation: Assets and liabilities of the Company's foreign subsidiaries are translated using the exchange rates in effect at the balance sheet date, while income and expenses are translated using average rates. Translation adjustments are reported as a component of shareholders' equity in accumulated other comprehensive loss. Advertising Expense: Advertising costs are expensed as incurred. Advertising expense was $15,525,000, $14,178,000, and $12,855,000 in fiscal 2002, 2001, and 2000, respectively. Recently Issued Accounting Standards: In June 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 141, Business Combinations (SFAS 141). SFAS 141 requires that the purchase method of accounting be used for all business combinations initiated after June 30, 2001. SFAS 141 also provides new criteria to determine whether an acquired intangible asset should be recognized separately from goodwill. The adoption of SFAS 141 had no impact on the Company's results of operations or financial condition. In August 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets (SFAS 144). SFAS 144 addresses financial accounting and reporting for the impairment or disposal of long-lived assets to be held and used, to be disposed of other than by sale, and to be disposed of by sale. SFAS 144 is effective for the Company as of May 1, 2002. The adoption of SFAS 144 is not expected to have a material impact on the Company's results of operations or financial condition. Reclassifications: Certain prior year amounts have been reclassified to conform to current year classifications. Risks and Uncertainties: In the domestic markets, the Company's products are primarily sold through brokers to food retailers, food wholesalers, club stores, mass merchandisers, military commissaries, health and natural food stores, foodservice distributors and chain operators including hotels and restaurants, schools and other institutions, and to other food manufacturers. The Company's distribution outside the United States is principally in Canada, Australia, Brazil, Mexico, China and the Pacific Rim, Europe, and the Middle East. The fruit raw materials used by the Company are generally purchased from independent growers and suppliers. Because of the seasonal nature and volatility of quantities of most of the crops on which the Company depends, it is necessary to prepare and freeze stocks of fruit and fruit juices and to maintain them in cold storage warehouses. The Company believes there is no concentration of risk with any single customer or supplier whose failure or nonperformance would materially affect the Company's results. In addition, the Company insures its business and assets in each country against insurable risks, as and to the extent that it deems appropriate, based upon an analysis of the relative risks and costs. The Company believes that the risk of loss from noninsurable events would not have a material adverse effect on the Company's operations as a whole. Note B: Change in Accounting Principle During the fourth quarter of fiscal 2002, the Company changed its method of accounting for certain inventories from the last-in, first-out (LIFO) method to the first-in, first-out (FIFO) method. The effect of the change on fiscal 2002 net income and previously reported quarterly results in fiscal 2002 was not significant. The impact of the retroactive restatement on retained earnings as of May 1, 1999, was an increase of $7,219,000. The effect of the change on previously reported net income and per share amounts is as follows:

Year Ended April 30, ------------------------------------------------------------------------------------------------- (Dollars in thousands, except per share data) 2001 2000 ------------------------------------------------------------------------------------------------- Net income: Net income, as previously stated using the LIFO method $ 30,667 $ 26,357 Effect of the change to the FIFO method (3,461) (84) ------------------------------------------------------------------------------------------------- Net income, as restated $ 27,206 $ 26,273 ------------------------------------------------------------------------------------------------- Earnings per Common Share: Net income per Common Share, as previously stated using the LIFO method $ 1.21 $ 0.92 Effect of the change to the FIFO method (0.14) --- ------------------------------------------------------------------------------------------------- Net income per Common Share, as restated $ 1.07 $ 0.92 -------------------------------------------------------------------------------------------------

The Company adopted LIFO in fiscal 1977, when it was experiencing significant inflation in the cost of fruit and other raw materials, in order to better match current costs with current revenues. However, during the last ten years, on a cumulative basis, the Company has experienced deflation in fruit costs, primarily resulting from the global sourcing of fruit. The Company believes this trend will continue. The change to FIFO will conform all of the Company's inventory accounting to FIFO and will align the Company's inventory accounting with the majority of consumer product food companies. Further, the change to FIFO will result in an improvement to reporting interim results by eliminating the fluctuations resulting from the need to estimate the Company's fruit costs before the completion of the growing seasons and final pricing by vendors. Note C: Subsequent Event On June 1, 2002, the Company merged the "Jif" peanut butter and "Crisco" shortening and oils businesses of The Procter & Gamble Company (P&G) with and into the Company in a tax-free stock transaction. Under the terms of the agreement, P&G spun off its "Jif" and "Crisco" businesses to its shareholders and immediately thereafter those businesses were merged with and into the Company. P&G shareholders received one Company Common Share for every 50 P&G common shares that they held as of the record date for the distribution of the "Jif" and "Crisco" businesses to the P&G shareholders. The Company's shareholders received 0.9451 of a new Company Common Share for each Company Common Share that they held immediately prior to the merger. Approximately 26,000,000 Common Shares were issued to the P&G shareholders resulting in an aggregate purchase price of approximately $781,000,000 based on the average market price of the Company's Common Shares over the period from three days before to three days after the terms of the acquisition were announced. Upon completion of the merger, the Company had 49,531,376 shares outstanding. The merger and the combination of three brands - "Smucker's", "Jif" and "Crisco" - - enhances the Company's strategic and market position. For accounting purposes, the Company is the acquiring enterprise. The merger was accounted for as a purchase business combination. Accordingly, the results of the "Jif" and "Crisco" operations will be included in the Company's fiscal 2003 consolidated financial statements from the date of the merger. The purchase price will be allocated to the underlying assets acquired and liabilities assumed based upon their estimated fair values at the date of acquisition. The Company will determine the estimated fair values based on independent appraisals, discounted cash flows, quoted market prices, and estimates made by management. To the extent that the purchase price exceeds the fair value of the net identifiable tangible and intangible assets acquired, such excess will be allocated to goodwill. The following table summarizes the initial estimated fair values of the assets acquired and liabilities assumed at the date of acquisition. The allocation of the purchase price is preliminary and subject to adjustment following completion of the valuation process. (Dollars in thousands) June 1, 2002 - --------------------------------------------------------------------------- Assets: Tangible assets $156,460 Intangible assets not subject to amortization 280,000 Intangible assets subject to amortization (15 year weighted-average useful life) 37,333 Goodwill 454,094 - --------------------------------------------------------------------------- Total assets acquired 927,887 =========================================================================== Total liabilities assumed (146,887) =========================================================================== Net assets acquired $781,000 =========================================================================== The $454,094,000 of goodwill relates to the domestic segment and will not be deductible for tax purposes. Had the merger of the "Jif" and "Crisco" businesses with and into the Company occurred at the beginning of fiscal 2001, pro forma consolidated results would have been as follows: Year Ended April 30, ------------------------------------------------------------------------------ (Dollars in thousands) 2002 2001 ------------------------------------------------------------------------------ Net sales $1,283,000 $1,267,000 Operating income, excluding indirect expenses of the "Jif" and "Crisco" businesses $235,000 $230,000 ============================================================================== Note D: Operating Segments The Company operates in one industry: the manufacturing and marketing of food products. The Company has two reportable segments: domestic and international. The domestic segment represents the aggregation of the consumer, foodservice, beverage, specialty foods, and industrial business areas. Food products are distributed through various retail channels including grocery, mass retail, military, club store, health food, and specialty food markets along with restaurants, health care facilities, schools, and other institutions throughout the United States. These products include a variety of fruit spreads, dessert toppings, peanut butters, frozen peanut butter and jelly sandwiches, industrial fruit products, fruit and vegetable juices, beverages, syrups, condiments, and gift packages. The international segment consists of products that are similar in nature to those in the domestic segment but are distributed to geographical markets outside of the United States. The following table sets forth reportable segment information:

Year Ended April 30, - ------------------------------------------------------------------------------------------------------------------------ (Dollars in thousands) 2002 2001 2000 - ------------------------------------------------------------------------------------------------------------------------ Net sales: Domestic $ 590,327 $ 557,921 $ 551,324 International 96,821 93,321 90,561 - ------------------------------------------------------------------------------------------------------------------------ Total net sales $ 687,148 $ 651,242 $ 641,885 ======================================================================================================================== Depreciation: Domestic $ 21,838 $ 20,484 $ 19,789 International 2,094 2,037 1,885 - ------------------------------------------------------------------------------------------------------------------------ Total depreciation $ 23,932 $ 22,521 $ 21,674 ======================================================================================================================== Segment profit: Domestic $ 101,530 $ 87,276 $ 89,570 International 9,949 8,415 10,387 - ------------------------------------------------------------------------------------------------------------------------ Total segment profit 111,479 95,691 99,957 ======================================================================================================================== Interest income 2,181 2,918 2,706 Interest expense (9,207) (7,787) (3,111) Amortization expense (4,625) (4,400) (4,524) Nonrecurring charge --- (2,152) (14,492) Corporate administrative expenses (46,681) (39,443) (39,371) Merger and integration costs (5,031) --- --- Other unallocated income (expenses) 2,082 (335) 234 - ------------------------------------------------------------------------------------------------------------------------ Income before income taxes and cumulative effect of change in accounting method $ 50,198 $ 44,492 $ 41,399 ======================================================================================================================== Assets: Domestic $ 438,644 $ 402,021 $ 399,237 International 86,248 77,083 78,461 - ------------------------------------------------------------------------------------------------------------------------ Total assets $ 524,892 $ 479,104 $ 477,698 ======================================================================================================================== Long-lived assets: Domestic $ 211,380 $ 210,222 $ 207,478 International 33,699 33,640 38,774 - ------------------------------------------------------------------------------------------------------------------------ Total long-lived assets $ 245,079 $ 243,862 $ 246,252 ======================================================================================================================== Expenditures for additions to long-lived assets: Domestic $ 26,371 $ 27,714 $ 26,012 International 2,682 1,671 13,824 - ------------------------------------------------------------------------------------------------------------------------ Total expenditures for additions to long-lived assets 29,053 29,385 39,836 ======================================================================================================================== Current assets and liabilities included in businesses acquired, net of cash acquired 125 --- 1,460 - ------------------------------------------------------------------------------------------------------------------------ Total of additions to property, plant, and equipment and businesses acquired, net of cash acquired $ 29,178 $ 29,385 $ 41,296 - ------------------------------------------------------------------------------------------------------------------------

Segment profit represents revenue less direct and allocable operating expenses and excludes pretax nonrecurring charges of $2,152,000, relating to the domestic segment in fiscal 2001 and $13,536,000 and $956,000, relating to the domestic and international segments, respectively in fiscal 2000 (see Note E). The following table presents product sales information: Year Ended April 30, ----------------------------------------------------------------------------- 2002 2001 2000 ----------------------------------------------------------------------------- Fruit spreads 37% 38% 39% Industrial ingredients 16 15 15 Portion control 11 12 12 Juices and beverages 10 10 10 Toppings and syrups 8 9 9 Peanut butter 7 7 7 Other 11 9 8 ----------------------------------------------------------------------------- Total 100% 100% 100% ============================================================================= Note E: Nonrecurring Charge During fiscal 2001, the Company finalized the sale of the Pottstown manufacturing facility, representing a continuation of the Company's divestiture of the "Mrs. Smith's" pie business. In connection with this sale, the Company recorded a nonrecurring, noncash charge of $2,152,000 ($1,313,000 net of tax), or $0.05 per share. This transaction represented the final nonrecurring charge relating to the review of certain businesses and assets as discussed below. During fiscal 2000, the Company recorded a nonrecurring, noncash charge of $14,492,000 ($9,626,000 net of tax), or $0.34 per share. This charge was the result of a financial review by the Company of its businesses and assets, with a focus on those assets considered nonstrategic or underperforming. Approximately $10,700,000 of the charge resulted from the write-down of the carrying value of certain intangible assets, primarily goodwill, resulting from previous acquisitions of the "After The Fall" (ATF) beverage business in fiscal 1994 and "Kraft" brand fruit spreads acquired in fiscal 1997. The impairment charge related to the ATF intangible assets was prompted by a declining sales trend beginning in fiscal 1996 despite attempts by the Company to reverse this trend. The impairment charge related to the "Kraft" intangible assets resulted from sharp sales declines following the Company's relaunch of the products under the "Sunberry Farms" brand. Both of these acquisitions are included in the domestic segment. In addition, certain capitalized costs associated with unused or abandoned software acquired as part of the Company's information technology reengineering project and other abandoned fixed assets were written off. The write-down of the intangible assets was based on the Company's estimate of fair market value using future discounted cash flows projected to be generated by the respective assets under review over their estimated useful lives. Based upon the results of this analysis, the expected useful lives of the assets were reduced from periods ranging from five to forty years, to a range of two to ten years. Note F: Earnings per Share The following table sets forth the computation of earnings per Common Share and earnings per Common Share - assuming dilution:

Year Ended April 30, - ------------------------------------------------------------------------------------------------------------------------ (Dollars in thousands, except per share data) 2002 2001 2000 - ------------------------------------------------------------------------------------------------------------------------ Numerator: Net income for earnings per Common Share and earnings per Common Share - assuming dilution $ 30,851 $ 27,206 $ 26,273 - ------------------------------------------------------------------------------------------------------------------------ Denominator: Denominator for earnings per Common Share - weighted-average shares 24,457,194 25,428,117 28,670,770 Effect of dilutive securities: Stock options 336,582 148,698 56,380 Restricted stock 64,297 81,442 23,205 - ------------------------------------------------------------------------------------------------------------------------ Denominator for earnings per Common Share - assuming dilution 24,858,073 25,658,257 28,750,355 ======================================================================================================================== Net income per Common Share $ 1.26 $ 1.07 $ 0.92 ======================================================================================================================== Net income per Common Share - assuming dilution $ 1.24 $ 1.06 $ 0.91 ========================================================================================================================

Note G: Mergers and Acquisitions During fiscal 2002, the Company utilized cash on hand to complete one acquisition for $5,714,000. The acquisition was accounted for as a purchase business combination and the results of operations of the acquired company were included in the consolidated results of the Company from the acquisition date. As a result of this acquisition, approximately $1,702,000 in goodwill and $3,887,000 in other intangible assets were recorded in fiscal 2002. As the acquisition occurred subsequent to July 1, 2001, the resulting goodwill was not amortized during fiscal 2002. The other intangible assets are being amortized over their estimated useful life of ten years. During fiscal 2000, the Company utilized cash on hand to complete two acquisitions for a total of $9,056,000. Each of the acquisitions was accounted for as a purchase business combination and the results of operations of the acquired companies were included in the consolidated results of the Company from their respective acquisition dates. As a result of these acquisitions, approximately $2,869,000 in goodwill and $2,213,000 of other intangible assets were recorded in fiscal 2000. Note H: Pensions and Other Postretirement Benefits The Company has pension plans covering substantially all of its domestic employees. Benefits are based on the employee's years of service and compensation. The Company's plans are funded in conformity with the funding requirements of applicable government regulations. In addition to providing pension benefits, the Company sponsors several unfunded, defined postretirement plans that provide health care and life insurance benefits to substantially all active and retired domestic employees not covered by certain collective bargaining agreements, and their covered dependents and beneficiaries. 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. Net periodic benefit cost included the following components:

Defined Benefit Pension Other Postretirement (Dollars in thousands) Plans Benefits - -------------------------------------------------------------------------------------------------------------------------- Year Ended April 30, 2002 2001 2000 2002 2001 2000 - -------------------------------------------------------------------------------------------------------------------------- Service cost $ 2,414 $ 2,133 $ 2,216 $ 506 $ 424 $ 513 Interest cost 5,504 5,303 4,668 737 673 717 Expected return on plan assets (6,444) (6,571) (6,053) --- --- --- Amortization of prior service cost (credit) 1,087 1,086 927 (61) (61) (61) Amortization of initial net asset (234) (142) (91) --- --- --- Recognized net actuarial gain (177) (823) (272) (160) (218) (28) - -------------------------------------------------------------------------------------------------------------------------- Net periodic benefit cost $ 2,150 $ 986 $ 1,395 $1,022 $ 818 $1,141 ==========================================================================================================================

The following table sets forth the combined status of the plans as recognized in the consolidated balance sheets:

Defined Benefit Other Postretirement Pension Plans Benefits - ------------------------------------------------------------------------------------------------------------ April 30, April 30, - ------------------------------------------------------------------------------------------------------------ (Dollars in thousands) 2002 2001 2002 2001 - ------------------------------------------------------------------------------------------------------------ Change in benefit obligation: Benefit obligation at beginning of the year $ 74,898 $ 67,670 $ 9,991 $ 8,560 Service cost 2,414 2,133 506 424 Interest cost 5,504 5,303 737 673 Amendments 197 30 -- -- Actuarial loss 1,457 2,529 887 522 Participant contributions -- -- 193 188 Benefits paid (3,017) (2,767) (526) (376) - ------------------------------------------------------------------------------------------------------------ Benefit obligation at end of the year $ 81,453 $ 74,898 $ 11,788 $ 9,991 ============================================================================================================ Change in plan assets: Fair value of plan assets at beginning of the year $ 72,685 $ 74,226 $ -- $ -- Actual return on plan assets (2,499) 510 -- -- Company contributions 1,578 716 333 188 Participant contributions -- -- 193 188 Benefits paid (3,017) (2,767) (526) (376) - ------------------------------------------------------------------------------------------------------------ Fair value of plan assets at end of the year $ 68,747 $ 72,685 $ -- $ -- ============================================================================================================ Net amount recognized: Funded status of the plans $(12,706) $ (2,213) $(11,788) $ (9,991) Unrecognized net actuarial loss (gain) 1,370 (9,208) (2,433) (3,480) Unrecognized prior service cost (credit) 9,332 10,222 (692) (753) Unrecognized initial asset (765) (999) -- -- - ------------------------------------------------------------------------------------------------------------ Net benefit liability recognized $ (2,769) $ (2,198) $(14,913) $(14,224) ============================================================================================================ Prepaid benefit costs $ 5,589 $ 5,582 $ -- $ -- Accrued benefit liability (13,996) (10,239) (14,913) (14,224) Intangible asset 4,410 2,459 -- -- Minimum pension liability 1,228 -- -- -- - ------------------------------------------------------------------------------------------------------------ Net benefit liability recognized $ (2,769) $ (2,198) $(14,913) $(14,224) ============================================================================================================ Weighted average assumptions: Discount rate 7.25% 7.50% 7.25% 7.50% Expected return on plan assets 9.00% 9.00% -- -- Rate of compensation increase 4.50% 4.50% -- -- ============================================================================================================

For fiscal 2003, the assumed health care cost trend rates are 8.5% for all participants. The rate for participants under age 65 is assumed to decrease to 5% in 2007. The health care cost trend rate assumption has a significant effect on the amount of the other postretirement benefit obligation and periodic other postretirement benefit 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, 2002:

One Percentage Point - ------------------------------------------------------------------------------------------- (Dollars in thousands) Increase Decrease - ------------------------------------------------------------------------------------------- Effect on total service and interest cost components $ 270 $ (213) Effect on benefit obligation $ 1,999 $(1,597) ===========================================================================================

The projected benefit obligation and plan assets applicable to pension plans with projected benefit obligations in excess of plan assets was $36,626,000 and $20,065,000, respectively, at April 30, 2002, and $32,876,000 and $19,979,000, respectively, at April 30, 2001. Pension plan assets consist of listed stocks and government obligations, including 336,000 of the Company's Common Shares at April 30, 2002 and 2001. The market value of these shares is $11,659,000 at April 30, 2002. The Company paid dividends of $215,000 on these shares during the year. Prior service costs are being amortized over the average remaining service lives of the employees expected to receive benefits. The Company also charged to operations approximately $958,000, $870,000, and $854,000 in fiscal 2002, 2001, and 2000, respectively, for contributions to foreign pension plans and to plans not administered by the Company on behalf of employees subject to certain labor contracts. These amounts were determined in accordance with foreign actuarial computations and provisions of the labor contracts. The Company is unable to determine its share of either the accumulated plan benefits or net assets available for benefits under such plans. In addition, certain of the Company's active employees participate in multiemployer plans which provide defined postretirement health care benefits. The aggregate amount contributed to these plans, including the charge for net periodic postretirement benefit costs, totaled $1,851,000, $1,719,000, and $1,687,000 in fiscal 2002, 2001, and 2000, respectively. Note I: Savings Plans ESOP: The Company sponsors an Employee Stock Ownership Plan and Trust (ESOP) for domestic, nonrepresented employees. The Company has entered into loan agreements with the Trustee of the ESOP for purchases by the ESOP of the Company's Common Shares in amounts not to exceed a total of 1,200,000 unallocated Common Shares of the Company at any one time. These shares are to be allocated to participants over a period of not less than 20 years. ESOP loans bear interest at 1/2% over prime and are payable as shares are allocated to participants. Interest incurred on ESOP debt was $538,000, $768,000, and $846,000 in fiscal 2002, 2001, and 2000, respectively. Contributions to the plan are made annually in amounts sufficient to fund ESOP debt repayment. Dividends on unallocated shares are used to reduce expense and were $336,000, $362,000, and $363,000 in fiscal 2002, 2001, and 2000, respectively. The principal payments received from the ESOP in fiscal 2002, 2001, and 2000 were $364,000, $297,000, and $303,000, respectively. As permitted by Statement of Position 93-6, Employers' Accounting for Employee Stock Ownership Plans (SOP 93-6), the Company will continue to recognize future compensation using the cost basis as all shares currently held by the ESOP were acquired prior to 1993. At April 30, 2002, the ESOP held 525,048 unallocated shares. All shares held by the ESOP were considered outstanding in earnings per share calculations for all periods presented. 401(k) Plan: The Company offers employee savings plans under Section 401(k) of the Internal Revenue Code for all domestic employees not covered by certain collective bargaining agreements. The Company's contributions under these plans are based on a specified percentage of employee contributions. Charges to operations for these plans in fiscal 2002, 2001, and 2000 were $1,445,000, $1,421,000, and $1,193,000, respectively. Note J: Stock Benefit Plans The Company provides for equity-based incentives to be awarded to key employees through the 1998 Equity and Performance Incentive Plan, the Restricted Stock Bonus Plan adopted in 1979, and the 1987 Stock Option Plan, and to nonemployee directors through the Nonemployee Director Stock Option Plan adopted in fiscal 2002. 1998 Equity and Performance Incentive Plan: This plan provides for the issuance of stock options and restricted stock, which may include performance criteria, as well as stock appreciation rights, deferred shares, and performance shares. At April 30, 2002, there are 797,522 Common Shares available for future issuance under this plan. Of this total amount available for issuance, the amount of restricted stock available for issuance is limited to 436,700 Common Shares. Restricted stock issued under this plan is subject to a risk of forfeiture for at least three years in the event of termination of employment or failure to meet performance criteria, if any. All restricted shares issued to date under the plan are subject to a four-year forfeiture period. Options granted under this plan become exercisable at the rate of one-third per year, beginning one year after the date of grant, and the option price is equal to the market value of the shares on the date of the grant. Restricted Stock Bonus Plan: Shares awarded under this plan contain certain restrictions for four years relating, among other things, to forfeiture in the event of termination of employment and to transferability. Shares awarded are issued as of the date of the award and a deferred compensation charge is recorded at the market value of the shares on the date of the award. The deferred compensation charge is recognized as expense over the period during which restrictions are in effect. There are no Common Shares available for future issuance under this plan. In fiscal 2002 and 2000, 49,200 and 82,000 Common Shares were awarded under this plan, respectively. No awards were granted in fiscal 2001. 1987 Stock Option Plan: Options granted under this plan become exercisable at the rate of one-third per year, beginning one year after the date of grant, and the option price is equal to the market value of the shares on the date of the grant. There are 554,827 Common Shares available for future grant under this plan. Nonemployee Director Stock Option Plan: This plan provides for the issuance of 1,500 stock options to nonemployee directors annually, on September 1 of each year. Options granted under this plan become exercisable six months after the date of grant, and the option price is equal to the market value of the shares on the date of the grant. There are 100,000 Common Shares available for future grant under this plan. No grants were made under this plan in fiscal 2002 due to the pending "Jif" and "Crisco" transaction. As permitted by Statement of Financial Accounting Standards No. 123, Accounting for Stock Based Compensation (SFAS 123), the Company has elected to account for the stock options under Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees (APB 25). If compensation costs for the stock options granted in fiscal 2002, 2001, and 2000 had been determined based on the fair market value method of SFAS 123, the Company's pro forma net income and earnings per share would have been:

Year Ended April 30, - ---------------------------------------------------------------------------------------------------------- (Dollars in thousands, except per share data) 2002 2001 2000 - ---------------------------------------------------------------------------------------------------------- Net income As reported $30,851 $27,206 $26,273 Pro forma 29,790 26,018 25,229 Net income per Common Share As reported $1.26 $1.07 $0.92 Pro forma 1.22 1.02 0.88 Net income per Common Share - assuming dilution As reported $1.24 $1.06 $0.91 Pro forma 1.20 1.01 0.88 ==========================================================================================================

The fair value of each option grant was estimated at the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions: Year Ended April 30, - ------------------------------------------------------------------------------ 2001 2000 - ------------------------------------------------------------------------------ Average expected term (years) 5 5 Risk-free interest rate 5.75% 6.20% Dividend yield 2.60% 2.50% Volatility 27.00% 26.00% - ------------------------------------------------------------------------------ Fair value of options granted $ 6.13 $ 5.22 ============================================================================== A summary of the Company's stock option activity, and related information follows:

Weighted- Average Exercise Options Price - ---------------------------------------------------------------------------------------- Outstanding at May 1, 1999 2,525,702 $21.41 Granted 409,000 18.22 Exercised (245,734) 18.50 Forfeited (47,000) 18.78 - ---------------------------------------------------------------------------------------- Outstanding at April 30, 2000 2,641,968 $21.24 Granted 411,000 23.63 Exercised (562,261) 18.45 Forfeited (178,324) 23.93 - ---------------------------------------------------------------------------------------- Outstanding at April 30, 2001 2,312,383 $22.13 Granted --- --- Exercised (614,832) 23.59 Forfeited (31,135) 29.90 - ---------------------------------------------------------------------------------------- Outstanding at April 30, 2002 1,666,416 $21.45 Exercisable at April 30, 2000 1,918,301 $21.66 Exercisable at April 30, 2001 1,558,282 $22.41 Exercisable at April 30, 2002 1,298,028 $21.28 ========================================================================================

The following table summarizes the range of exercise prices and weighted-average exercise prices for options outstanding and exercisable at April 30, 2002, under the Company's stock benefit plans:

Weighted- Weighted- Average Weighted- Average Remaining Average Range of Exercise Contractual Exercise Exercise Prices Outstanding Price Life (years) Exercisable Price - -------------------------------------------------------------------------------------------------------------- $15.94--$23.00 866,762 $18.90 5.9 758,031 $18.99 $23.01--$31.50 799,654 $24.21 6.0 539,997 $24.49 ==============================================================================================================

The following table summarizes the Company's stock benefit plans in two categories - plans that have been approved by shareholders, and plans that have not:

Number of Common Number of Common Shares Shares to be issued Weighted-average available for future upon exercise of exercise price of issuance under equity Plan Category outstanding options outstanding options compensation plans - ------------------------------------------------------------------------------------------------------------------- Stock benefit plans approved by shareholders 1,666,416 $21.45 1,452,349 Stock benefit plans not approved by shareholders --- --- --- - ------------------------------------------------------------------------------------------------------------------ Total stock benefit plans 1,666,416 $21.45 1,452,349 ==================================================================================================================

Note K: Long-Term Debt and Financing Arrangements Long-term debt consists of the following:

April 30, - -------------------------------------------------------------------------------------- (Dollars in thousands) 2002 2001 - -------------------------------------------------------------------------------------- 6.77% Senior Notes due June 1, 2009 $ 75,000 $ 75,000 7.70% Series A Senior Notes due September 1, 2005 17,000 17,000 7.87% Series B Senior Notes due September 1, 2007 33,000 33,000 7.94% Series C Senior Notes due September 1, 2010 10,000 10,000 - -------------------------------------------------------------------------------------- Total long-term debt $135,000 $135,000 ======================================================================================

The notes are unsecured and interest is paid semiannually. Among other restrictions, the note purchase agreements contain certain covenants relating to liens, consolidated net worth, and sale of assets as defined in the agreements. The Company is in compliance with all covenants. During fiscal 2002, the Company entered into interest rate swap agreements in order to manage interest rate exposure and minimize financing costs. Effectively, the Company converted $17 million of fixed-rate debt (7.70% notes due in September 2005) and $33 million of fixed-rate debt (7.87% notes due in September 2007) to variable-rate debt with an effective interest rate of 4.88% at April 30, 2002. The interest rate swaps are considered fair value hedges and are 100% effective. As a result, the mark-to-market value of both the fair value hedging instruments and the underlying debt obligations are recorded as equal and offsetting gains or losses in other expense. The interest rate swaps had a fair value of $508,000 at April 30, 2002, with the corresponding adjustment to long-term debt included in other noncurrent liabilities. The fair value of interest rate swap agreements, obtained from the respective financial institutions, is based on current rates of interest and is computed as the net present value of the remaining exchange obligations under the terms of the contract. Interest paid totaled $9,800,000, $8,328,000, and $2,293,000 in fiscal 2002, 2001, and 2000, respectively. Financing arrangements: The Company has uncommitted lines of credit providing up to $90,000,000 for short-term borrowings. No amounts were outstanding at April 30, 2002. The interest rate to be charged on any outstanding balance is based on prevailing market rates. Note L: Income Taxes Deferred income taxes reflect the net 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 the Company's deferred tax assets and liabilities are as follows:

April 30, - --------------------------------------------------------------------------------------------- (Dollars in thousands) 2002 2001 - --------------------------------------------------------------------------------------------- Deferred tax liabilities: Depreciation $10,150 $12,639 Software and other deferred expenses 4,898 3,242 Change in inventory accounting method 1,769 --- Other (each less than 5% of total liabilities) 1,782 658 - --------------------------------------------------------------------------------------------- Total deferred tax liabilities 18,599 16,539 ============================================================================================= Deferred tax assets: Postretirement benefits other than pensions 6,136 6,034 Other employee benefits 5,091 4,679 Intangible assets 3,337 3,396 Other (each less than 5% of total assets) 4,039 4,003 - --------------------------------------------------------------------------------------------- Total deferred tax assets 18,603 18,112 Valuation allowance for deferred tax assets (1,560) (1,522) - --------------------------------------------------------------------------------------------- Total deferred tax assets less allowance 17,043 16,590 ============================================================================================= Net deferred tax (liability) asset $(1,556) $ 51 =============================================================================================

The Company has recorded a valuation allowance related to certain foreign deferred tax assets due to the uncertainty of their realization. Domestic income and foreign withholding taxes have not been recorded on 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 credits and deductions for foreign taxes already paid. Income before income taxes and cumulative effect of change in accounting method is as follows:

Year Ended April 30, - ---------------------------------------------------------------------------------------------------------------------- (Dollars in thousands) 2002 2001 2000 - ---------------------------------------------------------------------------------------------------------------------- Domestic $44,668 $40,809 $36,584 Foreign 5,530 3,683 4,815 - ---------------------------------------------------------------------------------------------------------------------- Income before income taxes and cumulative effect of change in accounting method $50,198 $44,492 $41,399 ======================================================================================================================

The components of the provision for income taxes are as follow:

Year Ended April 30, - ---------------------------------------------------------------------------------------------------------------------- (Dollars in thousands) 2002 2001 2000 - ---------------------------------------------------------------------------------------------------------------------- Current: Federal $13,447 $10,681 $15,000 Foreign 2,449 1,938 2,048 State and local 1,906 1,635 1,950 Deferred 1,545 2,040 (3,872) - ---------------------------------------------------------------------------------------------------------------------- Total income tax expense $19,347 $16,294 $15,126 ======================================================================================================================

A reconciliation of the statutory federal income tax rate and the effective income tax rate follows:

Percent of Pretax Income Year Ended April 30, - -------------------------------------------------------------------------------------------------------------------------- (Dollars in thousands) 2002 2001 2000 - -------------------------------------------------------------------------------------------------------------------------- Statutory federal income tax rate 35.0% 35.0% 35.0% Increase (decrease) in income taxes resulting from: State and local income taxes, net of federal income tax benefit 2.5 2.1 3.1 Research credits (1.9) (0.8) (1.6) Other items 2.9 0.3 --- - -------------------------------------------------------------------------------------------------------------------------- Effective income tax rate 38.5% 36.6% 36.5% ========================================================================================================================== Income taxes paid $15,736 $17,792 $19,761 ==========================================================================================================================

Note M: Common Shares Reclassification of Common Shares: In August 2000, the Company combined its Class A and Class B Common Shares into a single class of common shares with terms similar to the former Class A Common Shares. In conjunction with this combination, on August 28, 2000, the Company repurchased 4,272,524 Common Shares at $18.50 per share. The Company incurred approximately $1,363,000 of cost related to the combination and repurchase of Common Shares. Such costs were recorded as a reduction of shareholders' equity. Voting: The Company's Amended Articles of Incorporation provide that holders of the Company's Common Shares generally will be entitled to cast one vote per share on matters submitted to a vote of the shareholders. There are certain matters specified in the Amended Articles (including any matters that relate to or would result in the dissolution or liquidation of the Company; the amendment of the articles of incorporation or regulations of the Company other than any amendment that increases the number of votes to which holders of new Common Shares are entitled or expand the matters to which time phase voting applies; any proposal or other action to be taken by shareholders relating to the Company's shareholder rights plan or any successor plan; any matter relating to any benefit, stock option, compensation, or other similar plan; any matter that relates to or may result in a change in control of the Company including any merger, consolidation, majority share acquisition, control share acquisition, sale or other disposition of all, or substantially all, of the Company's assets; or any matter relating to the issuance, redemption, or repurchase of shares of the Company or any of its subsidiaries), however, with respect to which parties acquiring the Company's Common Shares will be entitled to cast one vote per share until they have held their shares for four years, after which time they will be entitled to cast ten votes per share on those specified matters. Shareholders' Rights Plan: Pursuant to a shareholders' rights plan established during fiscal 1999, each of the Company's Common Shares outstanding carries a share purchase right issued as a result of a dividend distribution declared by the Company's Board of Directors in April 1999 and distributed to shareholders of record on May 14, 1999. Under the plan, the rights will initially trade together with the Company's 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 the Company's Common Shares at a discounted price if a person or group acquires 10% or more of the outstanding Common Shares. Rights held by persons who exceed the applicable thresholds will be void. Shares held by members of the Smucker family are not subject to the thresholds. 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, the Company would issue one Common Share for each right, in each case subject to adjustment in certain circumstances. The Company's directors may, at their option, redeem all rights for $0.01 per right, generally at any time prior to the rights becoming exercisable. The rights will expire May 14, 2009, unless earlier redeemed, exchanged, or amended by the directors. Management's Report on Responsibility for Financial Reporting 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 accounting principles generally accepted in the United States and is based on our best estimates and judgments. The Company maintains systems of internal accounting controls supported by formal policies and procedures which are communicated throughout the Company. There is an extensive program of audits performed by the Company's internal audit staff and independent auditors designed to evaluate the adequacy of and adherence to these controls, policies, and procedures. Ernst & Young LLP, independent auditors, has audited the Company's financial statements. Management has made all financial records and related data available to Ernst & Young LLP during its audit. The Company's audit committee, comprising three nonemployee members of the Board, meets regularly with the independent auditors and management to review the work of the internal audit staff and the work, audit scope, timing arrangements, and fees of the independent auditors. The audit committee also regularly satisfies itself as to the adequacy of controls, systems, and financial records. The manager of the internal audit department is required to report directly to the chair of the audit committee as to internal audit matters. It is the Company's best judgment that its policies and procedures, its program of internal and independent audits, and the oversight activity of the audit committee work together to provide reasonable assurance that the operations of the Company are conducted according to law and in compliance with the high standards of business ethics and conduct to which the Company subscribes. Timothy P. Smucker Steven J. Ellcessor Chairman and Co-Chief Vice President -- Finance and Executive Officer Administration, Secretary, and Chief Financial Officer EX-18 4 l95505aexv18.txt EX-18 ERNST & YOUNG LETTER Exhibit 18 July 16, 2002 Mr. Steven J. Ellcessor Vice President-Finance and Administration, Secretary, and Chief Financial Officer The J. M. Smucker Company Strawberry Lane Orrville, Ohio 44667 Dear Mr. Ellcessor: Note B of the notes to the consolidated financial statements of The J. M. Smucker Company included in its annual report on Form 10-K for the year ended April 30, 2002 describes a change in the method of accounting for certain inventory from the last-in, first-out (LIFO) method to the first-in, first-out (FIFO) method. There are no authoritative criteria for determining a preferable inventory method based on the particular circumstances; however, we conclude that such change in the method of accounting is to an acceptable alternative method which, based on your business judgment to make this change and for the stated reasons, is preferable in your circumstances. Very truly yours, Ernst & Young LLP EX-21 5 l95505aexv21.txt EX-21 SUBSIDIARIES Exhibit 21 SUBSIDIARIES OF THE COMPANY ---------------------------

Subsidiaries State or Jurisdiction of Incorporation - ------------------------------------------------------------------------------------------------ After The Fall Products, Inc. Ohio J.M. Smucker (Pennsylvania), Inc. Pennsylvania The Dickinson Family, Inc. Ohio Henry Jones Foods Pty Ltd. Victoria, Australia Juice Creations Co. Ohio Knudsen & Sons, Inc. Ohio Smucker Quality Beverages, Inc. California Mary Ellen's Incorporated Ohio Smucker Holdings, Inc. Ohio Santa Cruz Natural Incorporated California Smucker Australia, Inc. Ohio J.M. Smucker (Canada) Inc. Ontario, Canada Smucker International, Ltd. U.S. Virgin Islands Smucker Latin America, Inc. Ohio J.M. Smucker de Mexico, S.A. de C.V. Mexico (domesticated in Delaware) Smucker Hong Kong Limited Hong Kong, People's Republic of China Smucker U.K., Inc. Ohio Alternative Attitudes, Inc. Ohio Sunberry Farms, Inc. Ohio Rocket Juice Company California Smucker Direct, Inc. Ohio Simply Smucker's Inc. Ohio J.M. Smucker (Scotland) Ltd. Scotland Smucker do Brasil Ltda. Sao Paulo, Brazil Hallco No. 39 Pty. Ltd. Victoria, Australia Smucker Fruit Processing California J.M. Smucker LLC Ohio Limited Liability Company

EX-23 6 l95505aexv23.txt EX-23 CONSENT OF INDEPENDENT AUDITORS Exhibit 23 Consent of Independent Auditors We consent to the incorporation by reference in this Annual Report (Form 10-K) of The J. M. Smucker Company of our report dated June 6, 2002, included in the 2002 Annual Report to Shareholders of The J. M. Smucker Company. Our audit also included the financial statement schedule of The J. M. Smucker Company listed in item 14(a). This schedule is the responsibility of the Company's management. Our responsibility is to express an opinion based on our audits. In our opinion, the financial statement schedule referred to above, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein. We also consent to the incorporation by reference in the Registration Statements (Form S-8 No. 33-21273 and Form S-8 No. 33-38011) pertaining to the 1987 Stock Option Plan, and Form S-3 No. 333-68416, of our report dated June 6, 2002, with respect to the consolidated financial statements incorporated herein by reference, and our report included in the preceding paragraph with respect to the financial statement schedule included in this Annual Report (Form 10-K) of The J. M. Smucker Company. ERNST & YOUNG LLP Akron, Ohio July 26, 2002 EX-24 7 l95505aexv24.txt EX-24 POWER OF ATTORNEY Exhibit 24 THE J. M. SMUCKER COMPANY REGISTRATION ON FORM 10-K POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that ELIZABETH VALK LONG, director of The J. M. Smucker Company, hereby appoints Timothy P. Smucker, Richard K. Smucker, and Steven J. Ellcessor, and each of them, with full power of substitution, as attorney or attorneys of the undersigned, to execute an Annual Report on Form 10-K for the fiscal year ended April 30, 2002, in a form that The J. M. Smucker Company deems appropriate and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, all pursuant to applicable legal provisions, with full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as the undersigned director might or could do in person, in furtherance of the foregoing. /s/ Elizabeth Valk Long -------------------------- Director 10-K 8 l95505ae10vkxpdfy.pdf PDF COPY OF THE J. M. SMUCKER 10-K begin 644 l95505ae10vkxpdfy.pdf M)5!$1BTQ+C(-)>+CS],-"C8V(#`@;V)J#3P\(`TO3&EN96%R:7IE9"`Q(`TO M3R`V."`-+T@@6R`W,S0@,S@V(%T@#2],(#$R.38U,R`-+T4@,C,S,S(@#2]. 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MZJ890B%B0?5%@]3?XPU2WRAE;YYA0H=F4>9GY-'RHL9Z^M-JJ\!11('9.E9' MF2P6$T,HY5%W+R3"A%H)B9/L:.4QFXFG/UF4#Y-Y.Q%5]A[-@LYZ>Q]\8.U* M,>_BVHL9?20M_+-)U5V+@XO+\:OPK>'JR;`T3<%6'"T]U?D%3-8XA'Z\M?TV M=3DZ-1UI]`E-;;R%:0[8;*25<[?96SP3Q^C\[RU#60&(PN-D&4TEU*($3&\> M?+(EA%P*M/7@$):>-G4G\`$UKP]*`CI4[U6/]\(SG@UW$E7W<_#$\#]B`*)E M"F5N9'-T7!E("]086=E7!E M("]086=E')E9@TP(#8V(`TP,#`P,#`P,#`P(#8U-3,U(&8-"C`P,#`P,C,Q-SD@,#`P M,#`@;@T*,#`P,#`R,S,S,B`P,#`P,"!N#0HP,#`P,#(S-#4W(#`P,#`P(&X- M"C`P,#`P,C -----END PRIVACY-ENHANCED MESSAGE-----

EX-13

                                                                      Exhibit 13

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, 2002, as restated for the change in accounting for
certain inventory from the last-in, first-out (LIFO) method to the first-in,
first-out (FIFO) method, as discussed in Note B to the consolidated financial
statements. The selected financial data was derived from the consolidated
financial statements and should be read in conjunction with "Management's
Discussion and Analysis of Results of Operations and Capital Resources and
Liquidity" and the consolidated financial statements and notes thereto.




                                                                                  Year Ended April 30,
- -----------------------------------------------------------------------------------------------------------------------------------
(Dollars in thousands, except per share data)                 2002           2001           2000            1999           1998
- -----------------------------------------------------------------------------------------------------------------------------------
                                                                                                          
Statement of Income:
    Net sales                                               $687,148       $651,242       $641,885        $612,662       $574,855
    Income before cumulative effect of change in
      accounting method (1)(2)                               $30,851        $28,198        $26,273         $38,233        $34,771
    Cumulative effect of change in accounting method
      (3)(4)                                                     ---           (992)           ---             ---         (2,958)
- -----------------------------------------------------------------------------------------------------------------------------------
    Net income                                               $30,851        $27,206        $26,273         $38,233        $31,813
===================================================================================================================================
Financial Position:
    Long-term debt                                          $135,000       $135,000        $75,000        $   ---        $   ---
    Total assets                                             524,892        479,104        477,698         437,657        410,695
    Shareholders' equity                                     280,144        250,785        320,608         331,548        308,926
===================================================================================================================================
Other Data:
    Earnings per Common Share:
       Income before cumulative effect of change in
         accounting method (1)(2)                            $  1.26        $  1.11        $  0.92         $  1.32        $  1.20
       Cumulative effect of change in accounting
         method (3)(4)                                           ---          (0.04)           ---             ---          (0.10)
- -----------------------------------------------------------------------------------------------------------------------------------
       Net income                                            $  1.26        $  1.07        $  0.92         $  1.32        $  1.10
===================================================================================================================================

       Income before cumulative effect of change in
         accounting method - assuming dilution (1)(2)        $  1.24        $  1.10        $  0.91         $  1.31        $  1.18
       Cumulative effect of change in accounting
         method - assuming
          dilution (3)(4)                                        ---          (0.04)           ---             ---          (0.10)
- -----------------------------------------------------------------------------------------------------------------------------------
       Net income - assuming dilution                        $  1.24        $  1.06        $  0.91         $  1.31        $  1.08
===================================================================================================================================

    Dividends declared per Common Share                         0.64           0.64           0.61            0.57           0.53
===================================================================================================================================


(1)  Includes, in 2002, merger and integration costs of $5,031 ($3,160 after
     tax), or $0.13 per share, related to the "Jif" and "Crisco" transaction.
(2)  Includes, in 2001, a nonrecurring charge of $2,152 ($1,313 after tax), or
     $0.05 per share, relating to the sale of real estate, and in 2000,
     nonrecurring charges of $14,492 ($9,626 after tax), or $0.34 per share,
     relating to the impairment of certain long-lived assets, as discussed in
     Note E to the consolidated financial statements.
(3)  Reflects, in 2001, the impact of adopting the provisions of the Securities
     and Exchange Commission's Staff Accounting Bulletin No. 101, Revenue
     Recognition in Financial Statements (SAB 101), as discussed in Note A to
     the consolidated financial statements. Had SAB 101 been retroactively
     applied to all periods presented, earnings per Common Share would have been
     $0.01 lower in 1999.
(4)  Reflects, in 1998, the cumulative effect of adopting the provisions of the
     Emerging Issues Task Force of the Financial Accounting Standards Board
     Issue No. 97-13, Accounting for Costs Incurred in Connection with a
     Consulting Contract that Combines Business Process Reengineering and
     Information Technology Transformation (EITF 97-13).



Summary of Quarterly Results of Operations

The following is a summary of unaudited quarterly results of operations for the
years ended April 30, 2002 and 2001, as restated for the change in accounting
for certain inventory from the last-in, first-out (LIFO) method to the first-in,
first-out (FIFO) method as discussed in Note B to the consolidated financial
statements.



                                                                                                       Earnings per Common
                                                                                Earnings per Common      Share - Assuming
(Dollars in thousands, except per share data)                                          Share                 Dilution
- -----------------------------------------------------------------------------------------------------------------------------
                                                             Income                 Income                 Income
                                                             Before                 Before                 Before
                                                         Cumulative             Cumulative             Cumulative
                                                          Effect of              Effect of              Effect of
                                                          Change in              Change in              Change in
                         Quarter        Net      Gross   Accounting       Net   Accounting       Net   Accounting
                           Ended      Sales     Profit  Method(1)(2)   Income  Method(1)(2)   Income       Method         Net
                                                                 (3)                    (3)             (1)(2)(3)      Income
- -----------------------------------------------------------------------------------------------------------------------------
                                                                                             
  Fiscal 2002      July 31, 2001    $169,792   $57,180      $ 8,547   $ 8,547        $0.35     $0.35       $0.35        $0.35
                October 31, 2001     172,844    55,820        7,704     7,704         0.32      0.32        0.31         0.31
                January 31, 2002     168,392    55,001        7,947     7,947         0.32      0.32        0.32         0.32
                  April 30, 2002     176,120    56,990        6,653     6,653         0.27      0.27        0.26         0.26

- -----------------------------------------------------------------------------------------------------------------------------
  Fiscal 2001      July 31, 2000    $166,328   $55,177      $ 9,104   $ 8,112        $0.32     $0.28        $0.32      $0.28
                October 31, 2000     169,837    53,635        5,759     5,759         0.23      0.23         0.23       0.23
                January 31, 2001     153,628    50,625        5,905     5,905         0.25      0.25         0.24       0.24
                  April 30, 2001     161,449    47,857        7,430     7,430         0.31      0.31         0.30       0.30

- -----------------------------------------------------------------------------------------------------------------------------


Annual earnings per share may not equal the sum of the individual quarters due
to differences in the average number of shares outstanding during the respective
periods.

(1)   Includes merger and integration costs during fiscal 2002 third and fourth
      quarters of $558 ($0.02 per share) and $2,602 ($0.11 per share),
      respectively, related to the "Jif" and "Crisco" transaction.
(2)   Includes a nonrecurring charge during fiscal 2001 second quarter of $1,313
      ($0.05 per share) relating to the sale of real estate, as discussed in
      Note E to the consolidated financial statements.
(3)   Fiscal 2001 fourth quarter income was increased by $1,100 ($0.05 per
      share) resulting from adjustments to the effective income tax rate.


Stock Price Data

The Company's 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 148,652 shareholders of
record as of June 14, 2002.



                                      Quarter Ended               High           Low     Dividends
- ---------------------------------------------------------------------------------------------------
                                                                                 
    Fiscal 2002                       July 31, 2001             $27.77        $23.91         $0.16
                                   October 31, 2001              36.10         23.90          0.16
                                   January 31, 2002              37.73         31.00          0.16
                                     April 30, 2002              36.65         30.30          0.16
- ---------------------------------------------------------------------------------------------------
    Fiscal 2001                       July 31, 2000             $19.50        $15.75         $0.16
                                   October 31, 2000              25.00         17.88          0.16
                                   January 31, 2001              29.00         21.63          0.16
                                     April 30, 2001              29.00         23.95          0.16
- ---------------------------------------------------------------------------------------------------








MANAGEMENT'S DISCUSSION AND ANALYSIS

The J. M. Smucker Company (Company) is a leading North American manufacturer and
marketer of fruit spreads, natural peanut butter, dessert toppings, and health
and natural foods beverages. The Company's operations and distribution outside
of North America are principally in Australia, Brazil, China and the Pacific
Rim, Europe, and the Middle East.

On June 1, 2002, the Company consummated a transaction with The Procter & Gamble
Company (P&G), whereby the "Jif" and "Crisco" businesses of P&G were merged with
and into the Company. The merger will be accounted for as a purchase business
combination, with the Company as the accounting acquirer. The addition of these
two brands has created a new company with a leading brand position in seven food
categories. The expected operating results and financial position of this new
company are significantly different than those of the Company as reported in
this annual report, in Management's Discussion and Analysis, and in the
consolidated financial statements. See Note C to the consolidated financial
statements for additional information on the merger and for pro forma financial
information of the combined Company.

During fiscal 2002, the Company changed from the last-in, first-out (LIFO)
method of accounting for certain inventory to the first-in, first-out (FIFO)
method. The results of operations included in this section for years prior to
fiscal 2002 has been restated to reflect this change.

RESULTS OF OPERATIONS

Comparison of fiscal 2002 with fiscal 2001

Sales in fiscal 2002 were $687.1 million, up 6% over the $651.2 million in sales
in the prior year. Excluding the impact of acquisitions, sales were up
approximately $21 million or 3%. Sales in the domestic segment were $590.3
million, up 6%, while international segment sales were $96.8 million, a 4%
increase. Company operating income was $59.8 million compared to $51.3 million
in fiscal 2001, excluding the impact of $5 million ($3.2 million after tax, or
$0.13 per share) in merger and integration costs associated with the "Jif" and
"Crisco" merger in fiscal 2002 and excluding a $2.1 million ($1.3 million after
tax, or $0.05 per share) nonrecurring charge in fiscal 2001. Fiscal 2002 net
income, excluding the impact of merger and integration costs, was $34.0 million,
or $1.39 per share ($1.37 per share, assuming dilution), compared to $29.5
million, or $1.16 per share ($1.15 per share, assuming dilution), last year. The
fiscal 2001 results noted exclude the nonrecurring charge and the cumulative
effect of an accounting change of $1.6 million ($1 million after tax, or $0.04
per share). During the fourth quarter of



fiscal 2002, the Company elected to change the method of accounting for certain
inventory from the LIFO method to the FIFO method. As a result, the Company
restated its fiscal 2001 financial results, resulting in a reduction in net
income of $3.5 million, or $0.14 per share.

Sales in the domestic segment were up 6% due primarily to increases in the
consumer, foodservice, and industrial business areas. The Company's consumer
business grew 4%, due mostly to new products and growth in "Sugar Free" fruit
spreads, natural peanut butters, and "Goober" peanut butter and jelly
combination products. During the year, the Company discontinued selling its
low-margin, value-priced "Sunberry Farms" brand. Consumer area sales increased
in the grocery, club store, and mass retail channels and decreased modestly in
the military and consumer direct channels. The Company's share of market in the
fruit spreads category continues to grow, reaching an all-time high in excess of
40% across all retail segments.

In the foodservice area, sales were up 9% as sales and distribution of
"Smucker's Uncrustables" to schools continued to increase. Total foodservice
sales of this product reached approximately $16 million, double the prior year.
This new business helped offset a general softness in traditional foodservice
sales, which were impacted during most of the year by the weak economy and
declines in the travel and leisure industry following the events of last
September 11. Despite those events, the traditional foodservice business
realized a small increase, up 1% over the prior year. Sales in the beverage area
were up 7% over the prior year, due primarily to increased sales of "R.W.
Knudsen Family" and "Santa Cruz Organic" products.

Sales in the Company's industrial business were up 11% for the year. The
increase was due to the acquisition of the International Flavors and Fragrances,
Inc. (IFF) fruit and vegetable preparation businesses in October 2001. The IFF
acquisition contributed approximately $13 million to domestic sales and $0.05
per share to earnings during the year. On an annual basis, the business acquired
from IFF is expected to contribute sales of approximately $25 million. This
additional business is expected to offset a similar amount of current business
in the industrial area that will be eliminated in fiscal 2003 due to low
margins. The addition of the IFF business, along with the merger into the
Company of the "Jif" and "Crisco" brands, has given the Company the opportunity
to restructure its industrial business and focus on contracts that support
long-term margin objectives. As a result, it is discontinuing select low-margin
contracts. This will result in an approximate loss of $40 to $50 million in
ingredient sales over the next two years; however, the impact on net income
should be less than $1 million. The addition of the IFF business and the
rationalization of low-margin product lines are consistent with the Company's
overall strategic direction to diversify its customer base and improve
profitability in the industrial area.



In the international segment, the Company's Canadian business continued to
perform well, with sales increasing 4% in the local currency. Export sales
increased 3% and sales in the Company's Mexican market increased 22% over last
year. Approximately $1.9 million of the $3.5 million increase in international
sales was due to the addition of that portion of the business acquired from IFF
that is located in Brazil. In Australia, the Henry Jones Foods business was up
1% in local currency compared to fiscal 2001. The impact of the strong U. S.
dollar as compared primarily to the local currencies in Australia, Brazil, and
Canada resulted in fiscal 2002 sales being approximately $5.4 million less than
they would have been had exchange rates remained constant with exchange rates
last year.

The Company's gross profit margin was 32.7% in fiscal 2002, compared to 31.8%
last year. The cost of products sold for the majority of the Company's
businesses was consistent with last year, as raw material costs remained
essentially flat. Selling, distribution, and administrative (SD&A) costs were
24.8% of sales, as compared to 24.0% last year. However, if the $5 million of
merger and integration costs associated with the "Jif" and "Crisco" merger are
excluded, SD&A costs as a percent of sales would have been comparable to last
year. The dollar increase in SD&A expenses was primarily due to higher
amortization charges associated with previously capitalized information systems
implementation costs. Marketing expenses were down 1% from the prior year,
primarily due to lower expenditures in the beverage and consumer direct areas.

Interest expense increased $1.4 million over the prior year as the long-term
debt placement that was completed during the second quarter of fiscal 2001 was
on the books for a full year in fiscal 2002. The Company capitalized
approximately $0.5 million in interest during fiscal 2002 that was associated
with the Company's information technology reengineering project. Also during the
year, the Company entered into interest rate swap agreements in order to manage
interest rate exposure and lower financing costs. The Company effectively
converted $17 million of fixed-rate debt (7.70% notes due in September 2005) and
$33 million of fixed-rate debt (7.87% notes due in September 2007) to
variable-rate debt. The interest rate swaps are considered fair value hedges and
are 100% effective. The interest rate swaps reduced interest expense by
approximately $0.6 million in fiscal 2002.

The effective income tax rate for the year increased to 38.5% from 36.6% in
fiscal 2001 due to a general increase in state and local taxes, foreign income
taxes, and other nondeductible expenses.

On June 1, 2002, the Company completed its merger of P&G's "Jif" peanut butter
and "Crisco" shortening and oils businesses with and into the Company. Under the
terms of the transaction, the "Jif" and "Crisco" businesses were contributed by
P&G to a wholly-owned subsidiary, the shares of which were then distributed by
P&G to its shareholders. That former subsidiary was then merged into the Company
with



the shareholders of P&G receiving one share of new Company stock for every 50
P&G shares that they held as of the record date for the distribution. Existing
Company shareholders received 0.9451 of a new share for each existing share of
the Company they held. As a result, 49.5 million shares were issued and are
outstanding with the previous P&G shareholders holding approximately 52.5% of
the total. The total price of the transaction, based on an average share price
of $30 per share (calculated at the time the transaction was announced), was
approximately $781 million.

Comparison of fiscal 2001 with fiscal 2000

Sales in fiscal 2001 were $651.2 million, up from $641.9 million in fiscal 2000.
Domestic sales were $557.9 million, up 1% over fiscal 2000, while the
international segment realized an increase of $2.8 million or 3%. Excluding the
impact of nonrecurring charges in both years and the cumulative effect of an
accounting change in fiscal 2001, earnings for the year were $29.5 million, or
$1.16 per share ($1.15 per share, assuming dilution), compared to $35.9 million,
or $1.26 per share ($1.25 per share, assuming dilution), in fiscal 2000.
Including the impact of nonrecurring charges and change in accounting method,
earnings were $27.2 million, or $1.07 per share ($1.06 per share, assuming
dilution), in fiscal 2001 compared to $26.3 million, or $0.92 per share ($0.91
per share, assuming dilution), in fiscal 2000.

In the domestic segment, the Company's consumer business grew 4%, due primarily
to an increase in sales of "Sugar Free" fruit spreads and natural peanut
butters, along with growth in the club store channel. The Company also saw 4%
growth in its foodservice business, driven in large part by the "Smucker's
Uncrustables" line of thaw-and-serve peanut butter and jelly sandwiches in its
schools market. Sales of traditional portion control items were flat compared to
fiscal 2000. The specialty business was up for fiscal 2001 due primarily to new
product sales. In the beverage area, sales of "R. W. Knudsen Family" and "Santa
Cruz Organic" products continue to grow. However, overall beverage sales were
flat compared to fiscal 2000 due to softness in "After The Fall" brand sales. In
the industrial area, domestic sales were below fiscal 2000, as sales with new
customers did not fully offset declines in sales with certain existing
customers.

In the international segment, the increase came from a full year inclusion of
the Company's Brazilian operation. The Company's Canadian business performed
well, contributing to overall segment performance for the second consecutive
year. Sales were negatively impacted by exchange rates and increased competitive
activity in the Company's Australian market. Sales in Mexico and the Company's
European and Middle East markets were also down. The impact of a strong U.S.
dollar, primarily in comparison to the Australian and Canadian dollars, resulted
in fiscal 2001 sales being approximately



$6.6 million less than they would have been had exchange rates been equal to
fiscal 2000 levels. Had exchange rates remained constant, international sales
would have been up 10%.

The cost of products sold as a percentage of net sales increased to 68.2%,
compared to 67.5% in fiscal 2000. During the year, the Company benefited from
the lower cost of fruit packed during the summer months. However, these savings
were offset by the impact of revaluing carryover fruit inventories (i.e., fruit
packed in fiscal 2000) to reflect the current lower cost. The savings were also
offset by increased energy costs, which were up 20% over fiscal 2000, and higher
freight costs. SD&A expenses increased at approximately the same rate as sales.
Marketing expenses were up 7% over fiscal 2000 related to the introduction of
new products. This was somewhat offset by a 2% decrease in selling expenses and
a less than 1% increase in administrative costs.

During the second quarter of fiscal 2001, the Company finalized the sale of the
former "Mrs. Smith's" real estate in Pottstown, Pennsylvania, resulting in a
pretax loss of approximately $2.1 million, or $0.05 per share. This transaction
represented the final nonrecurring charge relating to the previously announced
financial review of certain businesses and assets by the Company, initiated in
fiscal 2000. The total amount of nonrecurring charges taken in connection with
the review was $16.6 million, with $14.5 million of that amount taken in fiscal
2000.

Interest expense increased over fiscal 2000 due to the long-term debt placement
completed during the second quarter of the fiscal year. During the year, the
Company capitalized approximately $0.9 million of interest, primarily associated
with the Company's information technology reengineering project.

The effective income tax rate for the year was 36.6% compared to 36.5% in fiscal
2000.

CAPITAL RESOURCES AND LIQUIDITY



                                                                               Year Ended April 30,
- ------------------------------------------------------------------------------------------------------------------
(Dollars in thousands)                                                   2002            2001             2000
- ------------------------------------------------------------------------------------------------------------------
                                                                                                
Net cash provided by operating activities                               $67,000         $88,196          $32,271
Net cash used for investing activities                                  (20,510)        (27,612)         (39,818)
Net cash (used for) provided by financing activities                     (5,808)        (32,325)          31,254
- ------------------------------------------------------------------------------------------------------------------


The financial position of the Company remains strong with an increase in cash
and cash equivalents of $40.8 million during the year. The increase in cash and
cash equivalents reflects cash generated from operations of $67.0 million.
Additional debt was not required to complete the merger of the "Jif" and
"Crisco" businesses with and into the Company and total long-term debt as a
percent of total capitalization



was reduced from approximately 33% at April 30, 2002, to 11% following the
merger.

Fiscal 2002 capital expenditures were $23.5 million, including capitalized
software and consulting costs of $3.9 million. This was down from $29.4 million
in the previous year. Other significant uses of cash during the year included
the payment of dividends of $0.64 per share or $15.6 million, $5.7 million for
the acquisition from International Flavors and Fragrances, Inc., and the payment
of merger and integration costs of $5 million.

Capital expenditures for fiscal 2003 are budgeted at $59 million, representing a
significant increase over the Company's historical levels. While capital
expenditures in absolute terms are expected to more than double, the fiscal 2003
capital expenditures budget as a percent of sales is expected to be
approximately 4.7% as compared to 3.4% in fiscal 2002. The planned increase in
capital expenditures is primarily attributable to (i) building expansion
projects at the corporate headquarters in Orrville, Ohio, necessary in order to
consolidate functions and to house employees added in connection with the
merger, and (ii) spending associated with plans to increase capacity and improve
efficiencies in production of "Smucker's Uncrustables". Dividend payments in
fiscal 2003 are also expected to increase as a result of the additional number
of outstanding shares resulting from the merger of the "Jif" and "Crisco"
businesses with and into the Company and a possible increase in the dividend
rate.

Assuming there are no other material acquisitions or other significant
investments, the Company believes that cash on hand together with cash generated
by operations and existing lines of credit will be sufficient to meet fiscal
2003 requirements, including the payment of dividends and interest on
outstanding debt.

CRITICAL ACCOUNTING ESTIMATES AND POLICIES

The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that in certain circumstances affect amounts reported in the
accompanying consolidated financial statements. In preparing these financial
statements, management has made its best estimates and judgments of certain
amounts included in the financial statements, giving due consideration to
materiality. The Company does 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 policies involves the exercise of
judgment and use of assumptions as to future uncertainties and, as a result,
actual results could differ from these estimates.



ACCRUED MARKETING AND MERCHANDISING. In order to support the Company's products,
various marketing programs are offered to customers which reimburse them for a
portion or all of their promotional activities related to the Company's
products. The Company regularly reviews and revises, when it deems necessary,
estimates of costs to the Company for these marketing and merchandising programs
based on estimates of what has been incurred by customers. Actual costs incurred
by the Company may differ significantly if factors such as the level and success
of the customers' programs or other conditions differ from expectations.

IMPAIRMENT OF LONG-LIVED ASSETS. Long-lived assets historically have been
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 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 fair value of
the assets. There are no events or changes in circumstances of which management
is aware indicating that the carrying value of the Company's long-lived assets
may not be recoverable. As described below under "Recently Issued Accounting
Standards," the accounting treatment for goodwill and other intangible assets
will change significantly in fiscal 2003.

PENSION PLANS AND OTHER POSTRETIREMENT BENEFIT PLANS. The measurement of
liabilities related to defined benefit pension plans and other postretirement
benefit plans is based on management's assumptions related to future events
including interest rates, return on pension plan assets, rate of compensation
increases, and health care cost trend rates. Actual pension plan asset
performance will either reduce or increase unamortized pension losses at the end
of fiscal 2003, which ultimately affects net income.

ACCRUED EXPENSES. Management estimates certain material expenses in an effort to
record those expenses in the period incurred. The most material accrued
estimates relate to insurance-related expenses, including self-insurance.
Workers' compensation and general liability insurance accruals are recorded
based on insurance claims processed as well as historical claims experience for
claims incurred, but not yet reported. These estimates are based on historical
loss development factors. Employee medical insurance accruals are recorded based
on medical claims processed as well as historical medical claims experience for
claims incurred but not yet reported. Differences in estimates and assumptions
could result in an accrual requirement materially different from the calculated
accrual.



OTHER MATTERS. The Company does not have off-balance sheet arrangements,
financings, or other relationships with unconsolidated entities or other
persons, also known as "special purpose entities." Transactions with related
parties are in the ordinary course of business, are conducted on an arm's-length
basis, and are not material to the Company's results of operation, financial
condition, or cash flows.

RECENTLY ISSUED ACCOUNTING STANDARDS

In June 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 141, Business Combinations (SFAS 141) and No.
142, Goodwill and Other Intangible Assets (SFAS 142). SFAS 141 requires that the
purchase method of accounting be used for all business combinations initiated
after June 30, 2001. SFAS 141 also provides new criteria to determine whether an
acquired intangible asset should be recognized separately from goodwill. The
adoption of SFAS 141 had no impact on the Company's results of operations or
financial condition. SFAS 142 is effective for the Company as of May 1, 2002. In
accordance with SFAS 142, goodwill and intangible assets deemed to have
indefinite lives will no longer be amortized but will be subject to impairment
testing. Intangible assets with finite lives will continue to be amortized over
their useful lives. SFAS 142 requires an initial goodwill and indefinite lived
intangible asset impairment assessment in the year of adoption, and at a
minimum, annual impairment testing thereafter. The discontinuance of goodwill
and indefinite lived intangible asset amortization in fiscal 2003 will increase
operating income by approximately $3.5 million. The Company has not completed
its initial asset impairment assessment as required in adopting SFAS 142.

In August 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 144, Accounting for the Impairment or
Disposal of Long-Lived Assets (SFAS 144). SFAS 144 addresses financial
accounting and reporting for the impairment or disposal of long-lived assets to
be held and used, to be disposed of other than by sale, and to be disposed of by
sale. SFAS 144 is effective for the Company as of May 1, 2002. The adoption of
SFAS 144 is not expected to have a material impact on the Company's results of
operations or financial condition.

DERIVATIVE FINANCIAL INSTRUMENTS AND MARKET RISK

The following discussions about the Company's market risk disclosures involve
forward-looking statements. Actual results could differ from those projected in
the forward-looking statements. The Company is exposed to market risk related to
changes in interest rates and foreign currency exchange rates.



INTEREST RATE RISK. The fair value of the Company's cash and short-term
investment portfolio, and the fair value of notes receivable and payable at
April 30, 2002, approximate carrying value. Interest rate swaps are used to
hedge underlying debt obligations and reduce overall interest expense. Market
risk, as measured by the change in fair value resulting from a hypothetical 10%
change in interest rates, is not material. Based on the Company's overall
interest rate exposure as of and during the year ended April 30, 2002, including
derivative and other instruments sensitive to interest rates, a hypothetical 10%
movement in interest rates (relating to the Company's variable rate borrowings)
would not materially affect the Company's results of operations. As of April 30,
2002, the Company had interest rate swap agreements on fixed rate obligations in
the amount of $50 million. These exchange agreements are perfectly effective as
defined by Statement of Financial Accounting Standards No. 133, Accounting for
Derivative Instruments and Hedging Activities (SFAS 133) and had a fair value of
$0.5 million at April 30, 2002. The weighted average interest rate for these
agreements was 4.88% at April 30, 2002.

FOREIGN CURRENCY EXCHANGE RISK. The Company has concluded that its foreign
currency exposure on future earnings or cash flows is not significant, and has
currently chosen not to hedge its foreign currency exposure.

The Company has operations outside the United States with foreign currency
denominated assets and liabilities, primarily denominated in Australian,
Brazilian, and Canadian currencies. Because the Company has 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, 2002, are not expected to
result in a significant impact on future earnings or cash flows.

Revenues from customers outside the United States represented approximately 14%
of net sales during fiscal 2002. Thus, certain sales 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.




CERTAIN FORWARD-LOOKING STATEMENTS

This annual report includes certain forward-looking statements that are based on
current expectations and are subject to a number of risks and uncertainties that
could cause actual results to differ materially. These risks and uncertainties
include, but are not limited to:

- -     the success and cost of integrating the "Jif" and "Crisco" businesses into
      the Company;
- -     the success and cost of new marketing and sales programs and strategies
      intended to promote new growth in the "Jif" and "Crisco" businesses and in
      their respective market shares;
- -     the success and cost of introducing new products;
- -     general competitive activity in the market;
- -     the ability of business areas to achieve sales targets and the costs
      associated with attempting to do so;
- -     the ability of the Company from time to time to successfully effect price
      increases;
- -     the ability to improve sales and earnings performance in the Company's
      formulated ingredient business;
- -     the exact time frame in which the loss of sales associated with
      discontinued industrial contracts will occur and the Company's ability to
      successfully cover or eliminate the overhead associated with those sales;
- -     costs associated with the implementation of new business and information
      systems;
- -     raw material and ingredient cost trends; and
- -     foreign currency exchange and interest rate fluctuations.








Report of Independent Auditors


Board of Directors and Shareholders
The J. M. Smucker Company


We have audited the accompanying consolidated balance sheets of The J. M.
Smucker Company as of April 30, 2002 and 2001, and the related statements of
consolidated income, shareholders' equity, and cash flows for each of the three
years in the period ended April 30, 2002. 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 audits in accordance with auditing standards generally accepted
in the 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, 2002 and 2001, and the consolidated
results of its operations and its cash flows for each of the three years in the
period ended April 30, 2002, in conformity with accounting principles generally
accepted in the United States.

As explained in Note B to the consolidated financial statements, the Company has
given retroactive effect to a change in the method of accounting for certain
inventory from the last-in, first-out (LIFO) method to the first-in, first-out
(FIFO) method.




                                                     Ernst & Young LLP
Akron, Ohio
June 6, 2002






Statements of Consolidated Income
The J. M. Smucker Company




                                                                                          Year Ended April 30,
- -----------------------------------------------------------------------------------------------------------------------
(Dollars in thousands, except per share data)                                  2002              2001              2000
- -----------------------------------------------------------------------------------------------------------------------

                                                                                                     
Net sales                                                                 $ 687,148         $ 651,242         $ 641,885
Cost of products sold                                                       462,157           443,948           432,993
- -----------------------------------------------------------------------------------------------------------------------
Gross Profit                                                                224,991           207,294           208,892

Selling, distribution, and administrative expenses                          165,172           155,973           153,297
Merger and integration costs                                                  5,031               ---               ---
Nonrecurring charge                                                             ---             2,152            14,492
- -----------------------------------------------------------------------------------------------------------------------
Operating Income                                                             54,788            49,169            41,103

Interest income                                                               2,181             2,918             2,706
Interest expense                                                             (9,207)           (7,787)           (3,111)
Other income - net                                                            2,436               192               701
- -----------------------------------------------------------------------------------------------------------------------
Income Before Income Taxes and Cumulative Effect of Change in
   Accounting Method                                                         50,198            44,492            41,399

Income taxes                                                                 19,347            16,294            15,126
- -----------------------------------------------------------------------------------------------------------------------
Income Before Cumulative Effect of Change in Accounting Method               30,851            28,198            26,273

Cumulative effect of change in accounting method, net of tax
   benefit of $572                                                              ---              (992)              ---
- -----------------------------------------------------------------------------------------------------------------------
Net Income                                                                $  30,851         $  27,206         $  26,273
=======================================================================================================================

Earnings per Common Share:
Income Before Cumulative Effect of Change in Accounting Method            $    1.26         $    1.11         $    0.92
Cumulative effect of change in accounting method                                ---             (0.04)              ---
- -----------------------------------------------------------------------------------------------------------------------
Net Income per Common Share                                               $    1.26         $    1.07         $    0.92
=======================================================================================================================

Earnings per Common Share--Assuming Dilution:
Income Before Cumulative Effect of Change in Accounting Method            $    1.24         $    1.10         $    0.91
Cumulative effect of change in accounting method                                ---             (0.04)              ---
- -----------------------------------------------------------------------------------------------------------------------
Net Income per Common Share - Assuming Dilution                           $    1.24         $    1.06         $    0.91
=======================================================================================================================


See notes to consolidated financial statements.








Consolidated Balance Sheets
The J. M. Smucker Company




Assets
                                                                                           April 30,
- ------------------------------------------------------------------------------------------------------------
(Dollars in thousands)                                                              2002              2001
- ------------------------------------------------------------------------------------------------------------
                                                                                             
Current Assets
Cash and cash equivalents                                                        $  91,914         $  51,125
Trade receivables, less allowance for doubtful accounts                             57,371            55,986
Inventories:
   Finished products                                                                52,817            54,614
   Raw materials, containers, and supplies                                          63,722            59,561
- ------------------------------------------------------------------------------------------------------------
                                                                                   116,539           114,175
Other current assets                                                                13,989            13,956
- ------------------------------------------------------------------------------------------------------------
Total Current Assets                                                               279,813           235,242
- ------------------------------------------------------------------------------------------------------------

Property, Plant, and Equipment
Land and land improvements                                                          16,911            17,684
Buildings and fixtures                                                              87,126            79,862
Machinery and equipment                                                            242,590           247,235
Construction in progress                                                             7,504            17,072
- ------------------------------------------------------------------------------------------------------------
                                                                                   354,131           361,853
Accumulated depreciation                                                          (191,342)         (190,283)
- ------------------------------------------------------------------------------------------------------------

Total Property, Plant, and Equipment                                               162,789           171,570
- ------------------------------------------------------------------------------------------------------------

Other Noncurrent Assets
Goodwill                                                                            33,510            33,788
Other intangible assets                                                             14,825            11,848
Other assets                                                                        33,955            26,656
- ------------------------------------------------------------------------------------------------------------

Total Other Noncurrent Assets                                                       82,290            72,292
- ------------------------------------------------------------------------------------------------------------

                                                                                 $ 524,892         $ 479,104
============================================================================================================








Liabilities and Shareholders' Equity
                                                                                                 April 30,
- -----------------------------------------------------------------------------------------------------------------
(Dollars in thousands)                                                                     2002              2001
- -----------------------------------------------------------------------------------------------------------------
                                                                                                  
Current Liabilities
Accounts payable                                                                      $  32,390         $  29,967
Salaries, wages, and additional compensation                                             22,866            15,250
Accrued marketing and merchandising                                                      11,563             8,559
Income taxes                                                                              2,078             2,916
Dividends payable                                                                         3,979             3,897
Other current liabilities                                                                 7,555             7,473
- -----------------------------------------------------------------------------------------------------------------
Total Current Liabilities                                                                80,431            68,062
=================================================================================================================

Noncurrent Liabilities
Long-term debt                                                                          135,000           135,000
Postretirement benefits other than pensions                                              14,913            14,224
Deferred income taxes                                                                     4,105             4,981
Other noncurrent liabilities                                                             10,299             6,052
- -----------------------------------------------------------------------------------------------------------------
Total Noncurrent Liabilities                                                            164,317           160,257
- -----------------------------------------------------------------------------------------------------------------


Shareholders' Equity
Serial Preferred Shares - no par value:
   Authorized - 3,000,000 shares; outstanding - none                                        ---               ---
Common Shares - no par value:
   Authorized - 70,000,000 shares; outstanding - 24,869,463 in 2002 and
      24,359,281 in 2001 (net of 7,555,113 and 8,065,295 treasury shares,
      respectively), at stated value                                                      6,217             6,090
Additional capital                                                                       33,184            19,278
Retained income                                                                         267,793           253,226
Less:
   Deferred compensation                                                                 (2,725)           (2,248)
   Amount due from ESOP Trust                                                            (8,562)           (8,926)
   Accumulated other comprehensive loss                                                 (15,763)          (16,635)
- -----------------------------------------------------------------------------------------------------------------
Total Shareholders' Equity                                                              280,144           250,785
- -----------------------------------------------------------------------------------------------------------------
                                                                                      $ 524,892         $ 479,104
=================================================================================================================



See notes to consolidated financial statements.








Statements of Consolidated Cash Flows
The J. M. Smucker Company




                                                                                            Year Ended April 30,
- ---------------------------------------------------------------------------------------------------------------------------
(Dollars in thousands)                                                               2002             2001             2000
- ---------------------------------------------------------------------------------------------------------------------------
                                                                                                          
Operating Activities
   Net income                                                                    $ 30,851         $ 27,206         $ 26,273
   Adjustments to reconcile net income to net cash provided by
     operating activities:
     Depreciation                                                                  23,932           22,521           21,674
     Amortization                                                                   4,625            4,400            4,524
     Nonrecurring charge, net of tax benefit                                          ---            1,313            9,626
     Cumulative effect of change in accounting method, net of tax
        benefit                                                                       ---              992              ---
     Deferred income tax expense (benefit)                                          1,545            2,040           (3,872)
     Changes in assets and liabilities, net of effect from business
        acquisitions:
        Trade receivables                                                          (1,217)           5,196          (11,678)
        Inventories                                                                (2,063)          17,326           (6,792)
        Other current assets                                                          (11)           3,830             (733)
        Accounts payable and accrued items                                         12,483           10,558           (9,174)
        Income taxes                                                                   25           (1,084)           2,580
        Other - net                                                                (3,170)          (6,102)            (157)
- ---------------------------------------------------------------------------------------------------------------------------
Net Cash Provided by Operating Activities                                          67,000           88,196           32,271
- ---------------------------------------------------------------------------------------------------------------------------
Investing Activities
   Additions to property, plant, and equipment                                    (23,464)         (29,385)         (32,240)
   Businesses acquired,  net of cash acquired                                      (5,714)             ---           (9,056)
   Disposal of property, plant, and equipment                                       7,060              278               91
   Other - net                                                                      1,608            1,495            1,387
- ---------------------------------------------------------------------------------------------------------------------------
Net Cash Used for Investing Activities                                            (20,510)         (27,612)         (39,818)
- ---------------------------------------------------------------------------------------------------------------------------
Financing Activities
   Proceeds from long-term debt                                                       ---           60,000           75,000
   Repayment of short-term debt - net                                                 ---              ---           (8,966)
   Purchase of treasury shares                                                     (1,128)         (80,964)         (17,654)
   Dividends paid                                                                 (15,568)         (16,686)         (17,212)
   Net amount received from ESOP Trust                                                364              297              303
   Other - net                                                                     10,524            5,028             (217)
- ---------------------------------------------------------------------------------------------------------------------------
Net Cash (Used for) Provided by Financing Activities                               (5,808)         (32,325)          31,254
Effect of exchange rate changes on cash                                               107             (907)            (615)
- ---------------------------------------------------------------------------------------------------------------------------
Net increase in cash and cash equivalents                                          40,789           27,352           23,092
Cash and cash equivalents at beginning of year                                     51,125           23,773              681
- ---------------------------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents at End of Year                                         $ 91,914         $ 51,125         $ 23,773
===========================================================================================================================


(  )  Denotes use of cash

See notes to consolidated financial statements.










Statements of Consolidated Shareholders' Equity
The J. M. Smucker Company




                                                                                      Amount    Accumulated       Total
                                                                                         Due          Other      Share-
                                                                          Deferred      From     Comprehen-    holders'
                                        Common  Additional    Retained     Compen-      ESOP           sive      Equity
   (Dollars in thousands)               Shares     Capital      Income      sation     Trust           Loss
   ---------------------------------------------------------------------------------------------------------------------
                                                                                          
   Balance at May 1, 1999, as           $7,290     $15,604    $318,660     $(2,001)  $(9,526)       $(5,698)   $324,329
     previously stated
   Adjustment for the cumulative
     effect on the prior years of
     applying retroactively the
     change in the method of
     accounting for inventories
     (see Note B)                                                7,219                                            7,219
   ---------------------------------------------------------------------------------------------------------------------
   Balance at May 1, 1999, as
     restated                            7,290      15,604     325,879      (2,001)   (9,526)        (5,698)    331,548

   Net income                                                   26,273                                           26,273
   Foreign currency translation
     adjustment                                                                                      (3,629)     (3,629)
                                                                                                             -----------
   Comprehensive Income                                                                                          22,644

   Purchase of treasury shares            (237)       (566)    (16,851)                                         (17,654)

   Stock plans                              28       1,570                  (1,090)                                 508
   Cash dividends declared -
     $0.61 a share                                             (17,323)                                         (17,323)
   Tax benefit of stock plans                          582                                                          582
   Other                                                                                 303                        303
   ---------------------------------------------------------------------------------------------------------------------
   Balance at April 30, 2000             7,081      17,190     317,978      (3,091)   (9,223)        (9,327)    320,608

   Net income                                                   27,206                                           27,206
   Foreign currency translation
     adjustment                                                                                      (7,308)     (7,308)
                                                                                                             -----------
   Comprehensive Income                                                                                          19,898
   Purchase of treasury shares          (1,074)     (4,027)    (75,863)                                         (80,964)
   Stock plans                              83       4,820                     843                                5,746
   Cash dividends declared -
     $0.64 a share                                             (16,095)                                         (16,095)
   Tax benefit of stock plans                        1,295                                                        1,295
   Other                                                                                 297                        297
   ---------------------------------------------------------------------------------------------------------------------
   Balance at April 30, 2001             6,090      19,278     253,226      (2,248)   (8,926)       (16,635)    250,785

   Net income                                                   30,851                                           30,851
   Foreign currency translation
     adjustment                                                                                        1,669      1,669
   Minimum pension liability                                                                           (797)       (797)
                                                                                                             -----------
   Comprehensive Income                                                                                          31,723
   Purchase of treasury shares             (11)       (483)       (634)                                          (1,128)
   Stock plans                             138      11,590                    (477)                              11,251
   Cash dividends declared -
     $0.64 a share                                             (15,650)                                         (15,650)
   Tax benefit of stock plans                        2,799                                                        2,799
   Other                                                                                 364                        364
   ---------------------------------------------------------------------------------------------------------------------
   Balance at April 30, 2002            $6,217     $33,184    $267,793     $(2,725)  $(8,562)      $(15,763)  $ 280,144
   =====================================================================================================================



See notes to consolidated financial statements.








Notes to Consolidated Financial Statements
The J. M. Smucker Company


Note A:  Accounting Policies

         Principles of Consolidation: The consolidated financial statements
include the accounts of the Company and its subsidiaries, all of which are
wholly owned. All significant intercompany transactions and accounts are
eliminated in consolidation.

         Financial Instruments: Financial instruments that potentially subject
the Company to significant concentrations of credit risk consist principally of
cash investments and accounts receivable. The Company places its cash
investments with high quality financial institutions and limits the amount of
credit exposure to any one institution. The Company considers all short-term
investments with a maturity of three months or less when purchased to be cash
equivalents. With respect to accounts receivable, concentration of credit risk
is limited due to the large number of customers. The Company does not require
collateral from its customers. The fair value of the Company's financial
instruments, other than certain of its fixed-rate long-term debt, approximates
their carrying amounts (see Note K). The fair value of the Company's fixed-rate
long-term debt, estimated using current market rates and a discounted cash flow
analysis, was approximately $129,470,000 at April 30, 2002.

         Derivative Financial Instruments: Effective May 1, 2001, the Company
adopted Statement of Financial Accounting Standards No. 133, Accounting for
Derivative Instruments and Hedging Activities (SFAS 133). SFAS 133 requires that
all derivative financial instruments, such as foreign exchange contracts and
interest rate swap agreements, be recognized in the financial statements and
measured at fair value regardless of the purpose or intent for holding them.
Changes in the fair value of derivative financial instruments are either
recognized periodically in income or shareholders' equity (as a component of
other comprehensive income), depending on whether the derivative is being used
to hedge changes in fair value or cash flows. The adoption of SFAS 133 did not
have a material effect on the Company's results of operations, financial
position, or cash flows in fiscal 2002. By policy, the Company has not
historically entered into derivative financial instruments for trading purposes
or for speculation.

The Company has entered into interest rate swap agreements (see Note K). The
interest rate swap agreements effectively modify the Company's exposure to
interest risk by converting a portion of the Company's fixed-rate debt to a
floating rate. Based on criteria defined in SFAS 133, the interest rate swaps
are considered fair value hedges and are 100% effective. The interest rate swap
and instrument



being hedged is marked to market in the balance sheet. The mark-to-market value
of both the fair value hedging instruments and the underlying debt obligations
are recorded as equal and offsetting gains or losses in other expense. No other
cash payments are made unless the contract is terminated prior to maturity, in
which case the amount paid or received in settlement is established by agreement
at the time of termination, and usually represents the net present value, at
current rates of interest, of the remaining obligations to exchange payments
under the terms of the contract. Any gains or losses upon the early termination
of the interest rate swap contracts would be deferred and recognized over the
remaining life of the contract.

         Use of Estimates: The preparation of consolidated financial statements
in conformity with accounting principles generally accepted in the United States
requires management to 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
nonrecurring charges, allowances for doubtful accounts receivable, estimates of
future cash flows associated with assets, asset impairments, useful lives for
depreciation and amortization, loss contingencies, net realizable value of
inventories, accruals for marketing and merchandising programs, and the
determination of discount and other rate assumptions for defined benefit pension
and other postretirement benefit expenses. Actual results could differ from
these estimates.

         Revenue Recognition: The Company recognizes revenue when products are
shipped and title has transferred to the customer.

In December 1999, the Securities and Exchange Commission issued Staff Accounting
Bulletin No. 101, Revenue Recognition in Financial Statements (SAB 101), which
among other guidance clarified the Staff's view on various revenue recognition
and reporting matters. The implementation of SAB 101 was accounted for as a
change in accounting method and applied cumulatively as if the change occurred
as of May 1, 2000. The effect of the change was a one-time, noncash reduction to
the Company's earnings of $992,000 (net of tax of $572,000), or approximately
$0.04 per share.

         Shipping and Handling Costs: Shipping and handling costs are included
in cost of products sold.

         Stock Compensation: The Company has elected to follow Accounting
Principles Board Opinion No. 25, Accounting for Stock Issued to Employees (APB
25), and related interpretations in accounting for its employee stock options.
Under APB 25, because the exercise price of the Company's employee stock options
equals the market price of the underlying stock on the date of grant, no
compensation expense is recognized (see Note J).



         Inventories: Inventories are stated at the lower of cost or market.
Cost is determined using the first-in, first-out (FIFO) method (see Note B).

         Goodwill and Other Intangible Assets: Goodwill and other intangible
assets, principally trademarks and patents, are being amortized using the
straight-line method over periods ranging from 5 to 40 years for acquisitions
prior to July 1, 2001. During the periods presented, the Company continually
evaluated whether events or circumstances occurred which would indicate that the
carrying value may not be recoverable or that the useful life warrants revision.
When events or circumstances indicated, the Company analyzed the future
recoverability of the asset using an estimate of the related undiscounted future
cash flows of the related business, and recognized any adjustment to the asset's
carrying value on a current basis. Accumulated amortization of goodwill and
other intangible assets at April 30, 2002 and 2001, was $34,189,000 and
$30,300,000, respectively.

Effective May 1, 2002, the Company is required to adopt Statement of Financial
Accounting Standards No. 142, Goodwill and Other Intangible Assets (SFAS 142).
In accordance with this standard, goodwill and intangible assets deemed to have
indefinite lives will no longer be amortized but will be subject to impairment
testing. Intangible assets with finite lives will continue to be amortized over
their useful lives. SFAS 142 requires an initial goodwill and indefinite lived
intangible asset impairment assessment in the year of adoption and, at a
minimum, annual impairment tests thereafter. The discontinuation of goodwill and
indefinite lived intangible asset amortization in fiscal 2003 will increase
operating income by approximately $3,500,000. The Company has not completed its
initial asset impairment assessment as required in adopting SFAS 142.

         Property, Plant, and Equipment: Property, plant, and equipment are
recorded at cost and are depreciated on a straight-line basis over the estimated
useful lives of the assets (3 to 15 years for machinery and equipment, and 10 to
40 years for buildings, fixtures, and improvements).

The Company leases certain land, buildings, and equipment for varying periods of
time, with renewal options. Leases of cold storage facilities are continually
renewed. Total rental expense in fiscal 2002, 2001, and 2000 totaled
$10,430,000, $11,827,000, and $10,242,000, respectively. Rental expense for cold
storage facilities, which is based on quantities stored, amounted to $2,324,000,
$3,319,000, and $1,490,000 in fiscal 2002, 2001, and 2000, respectively.

         Software Costs: The Company capitalizes significant costs associated
with the development and installation of internal use software. Amounts
capitalized are amortized over the estimated useful lives



of the software, ranging from 3 to 7 years, beginning with the project's
completion. Net capitalized software costs as of April 30, 2002 and 2001, were
$28,173,000 and $29,805,000, respectively, of which $3,484,000 and $7,382,000
were included in construction in progress. Interest costs of $524,000, $891,000,
and $1,069,000 were capitalized during fiscal 2002, 2001, and 2000,
respectively.

         Foreign Currency Translation: Assets and liabilities of the Company's
foreign subsidiaries are translated using the exchange rates in effect at the
balance sheet date, while income and expenses are translated using average
rates. Translation adjustments are reported as a component of shareholders'
equity in accumulated other comprehensive loss.

         Advertising Expense: Advertising costs are expensed as incurred.
Advertising expense was $15,525,000, $14,178,000, and $12,855,000 in fiscal
2002, 2001, and 2000, respectively.

         Recently Issued Accounting Standards: In June 2001, the Financial
Accounting Standards Board issued Statement of Financial Accounting Standards
No. 141, Business Combinations (SFAS 141). SFAS 141 requires that the purchase
method of accounting be used for all business combinations initiated after June
30, 2001. SFAS 141 also provides new criteria to determine whether an acquired
intangible asset should be recognized separately from goodwill. The adoption of
SFAS 141 had no impact on the Company's results of operations or financial
condition.

In August 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 144, Accounting for the Impairment or
Disposal of Long-Lived Assets (SFAS 144). SFAS 144 addresses financial
accounting and reporting for the impairment or disposal of long-lived assets to
be held and used, to be disposed of other than by sale, and to be disposed of by
sale. SFAS 144 is effective for the Company as of May 1, 2002. The adoption of
SFAS 144 is not expected to have a material impact on the Company's results of
operations or financial condition.

         Reclassifications: Certain prior year amounts have been reclassified to
conform to current year classifications.

         Risks and Uncertainties: In the domestic markets, the Company's
products are primarily sold through brokers to food retailers, food wholesalers,
club stores, mass merchandisers, military commissaries, health and natural food
stores, foodservice distributors and chain operators including hotels and
restaurants, schools and other institutions, and to other food manufacturers.
The Company's distribution outside the United States is principally in Canada,
Australia, Brazil, Mexico, China and the Pacific Rim, Europe, and the Middle
East. The fruit raw materials used by the Company are generally



purchased from independent growers and suppliers. Because of the seasonal nature
and volatility of quantities of most of the crops on which the Company depends,
it is necessary to prepare and freeze stocks of fruit and fruit juices and to
maintain them in cold storage warehouses. The Company believes there is no
concentration of risk with any single customer or supplier whose failure or
nonperformance would materially affect the Company's results. In addition, the
Company insures its business and assets in each country against insurable risks,
as and to the extent that it deems appropriate, based upon an analysis of the
relative risks and costs. The Company believes that the risk of loss from
noninsurable events would not have a material adverse effect on the Company's
operations as a whole.

Note B:  Change in Accounting Principle

During the fourth quarter of fiscal 2002, the Company changed its method of
accounting for certain inventories from the last-in, first-out (LIFO) method to
the first-in, first-out (FIFO) method. The effect of the change on fiscal 2002
net income and previously reported quarterly results in fiscal 2002 was not
significant. The impact of the retroactive restatement on retained earnings as
of May 1, 1999, was an increase of $7,219,000.

The effect of the change on previously reported net income and per share amounts
is as follows:



                                                                        Year Ended April 30,
    -------------------------------------------------------------------------------------------------
    (Dollars in thousands, except per share data)                             2001             2000
    -------------------------------------------------------------------------------------------------
                                                                                     
    Net income:
        Net income, as previously stated using the LIFO
           method                                                         $ 30,667         $ 26,357
        Effect of the change to the FIFO method                             (3,461)             (84)
    -------------------------------------------------------------------------------------------------
    Net income, as restated                                               $ 27,206         $ 26,273
    -------------------------------------------------------------------------------------------------

    Earnings per Common Share:
        Net income per Common Share, as previously stated using
           the LIFO method                                                $   1.21         $   0.92
        Effect of the change to the FIFO method                              (0.14)             ---
    -------------------------------------------------------------------------------------------------
    Net income per Common Share, as restated                              $   1.07         $   0.92
    -------------------------------------------------------------------------------------------------


      The Company adopted LIFO in fiscal 1977, when it was experiencing
significant inflation in the cost of fruit and other raw materials, in order to
better match current costs with current revenues. However, during the last ten
years, on a cumulative basis, the Company has experienced deflation in fruit
costs, primarily resulting from the global sourcing of fruit. The Company
believes this trend will continue. The change to FIFO will conform all of the
Company's inventory accounting to FIFO and will align the Company's inventory
accounting with the majority of consumer product food companies. Further, the
change to FIFO will result in an improvement to reporting interim results by
eliminating the fluctuations



resulting from the need to estimate the Company's fruit costs before the
completion of the growing seasons and final pricing by vendors.

Note C:  Subsequent Event

On June 1, 2002, the Company merged the "Jif" peanut butter and "Crisco"
shortening and oils businesses of The Procter & Gamble Company (P&G) with and
into the Company in a tax-free stock transaction. Under the terms of the
agreement, P&G spun off its "Jif" and "Crisco" businesses to its shareholders
and immediately thereafter those businesses were merged with and into the
Company. P&G shareholders received one Company Common Share for every 50 P&G
common shares that they held as of the record date for the distribution of the
"Jif" and "Crisco" businesses to the P&G shareholders. The Company's
shareholders received 0.9451 of a new Company Common Share for each Company
Common Share that they held immediately prior to the merger. Approximately
26,000,000 Common Shares were issued to the P&G shareholders resulting in an
aggregate purchase price of approximately $781,000,000 based on the average
market price of the Company's Common Shares over the period from three days
before to three days after the terms of the acquisition were announced. Upon
completion of the merger, the Company had 49,531,376 shares outstanding.

The merger and the combination of three brands - "Smucker's", "Jif" and "Crisco"
- - enhances the Company's strategic and market position. For accounting purposes,
the Company is the acquiring enterprise. The merger was accounted for as a
purchase business combination. Accordingly, the results of the "Jif" and
"Crisco" operations will be included in the Company's fiscal 2003 consolidated
financial statements from the date of the merger.

The purchase price will be allocated to the underlying assets acquired and
liabilities assumed based upon their estimated fair values at the date of
acquisition. The Company will determine the estimated fair values based on
independent appraisals, discounted cash flows, quoted market prices, and
estimates made by management. To the extent that the purchase price exceeds the
fair value of the net identifiable tangible and intangible assets acquired, such
excess will be allocated to goodwill.







The following table summarizes the initial estimated fair values of the assets
acquired and liabilities assumed at the date of acquisition. The allocation of
the purchase price is preliminary and subject to adjustment following completion
of the valuation process.

(Dollars in thousands)                                        June 1, 2002
- ---------------------------------------------------------------------------
Assets:
   Tangible assets                                                $156,460
   Intangible assets not subject to amortization                   280,000
   Intangible assets subject to amortization (15 year
    weighted-average useful life)                                   37,333
   Goodwill                                                        454,094
- ---------------------------------------------------------------------------
Total assets acquired                                              927,887
===========================================================================
Total liabilities assumed                                         (146,887)
===========================================================================
Net assets acquired                                               $781,000
===========================================================================

The $454,094,000 of goodwill relates to the domestic segment and will not be
deductible for tax purposes.

Had the merger of the "Jif" and "Crisco" businesses with and into the Company
occurred at the beginning of fiscal 2001, pro forma consolidated results would
have been as follows:

                                                          Year Ended April 30,
 ------------------------------------------------------------------------------
 (Dollars in thousands)                                  2002             2001
 ------------------------------------------------------------------------------
 Net sales                                         $1,283,000       $1,267,000
 Operating income, excluding indirect
    expenses of the "Jif" and "Crisco"
    businesses                                       $235,000         $230,000
 ==============================================================================


Note D:  Operating Segments

The Company operates in one industry: the manufacturing and marketing of food
products. The Company has two reportable segments: domestic and international.
The domestic segment represents the aggregation of the consumer, foodservice,
beverage, specialty foods, and industrial business areas. Food products are
distributed through various retail channels including grocery, mass retail,
military, club store, health food, and specialty food markets along with
restaurants, health care facilities, schools, and other institutions throughout
the United States. These products include a variety of fruit spreads, dessert
toppings, peanut butters, frozen peanut butter and jelly sandwiches, industrial
fruit products, fruit and vegetable juices, beverages, syrups, condiments, and
gift packages. The international segment consists of products that are similar
in nature to those in the domestic segment but are distributed to geographical
markets outside of the United States.



The following table sets forth reportable segment information:




                                                                                      Year Ended April 30,
- ------------------------------------------------------------------------------------------------------------------------
(Dollars in thousands)                                                        2002              2001              2000
- ------------------------------------------------------------------------------------------------------------------------
                                                                                                    
Net sales:
  Domestic                                                               $ 590,327         $ 557,921         $ 551,324
  International                                                             96,821            93,321            90,561
- ------------------------------------------------------------------------------------------------------------------------
Total net sales                                                          $ 687,148         $ 651,242         $ 641,885
========================================================================================================================

Depreciation:
  Domestic                                                               $  21,838         $  20,484         $  19,789
  International                                                              2,094             2,037             1,885
- ------------------------------------------------------------------------------------------------------------------------
Total depreciation                                                       $  23,932         $  22,521         $  21,674
========================================================================================================================

Segment profit:
  Domestic                                                               $ 101,530         $  87,276         $  89,570
  International                                                              9,949             8,415            10,387
- ------------------------------------------------------------------------------------------------------------------------
Total segment profit                                                       111,479            95,691            99,957
========================================================================================================================
  Interest income                                                            2,181             2,918             2,706
  Interest expense                                                          (9,207)           (7,787)           (3,111)
  Amortization expense                                                      (4,625)           (4,400)           (4,524)
  Nonrecurring charge                                                          ---            (2,152)          (14,492)
  Corporate administrative expenses                                        (46,681)          (39,443)          (39,371)
  Merger and integration costs                                              (5,031)              ---               ---
  Other unallocated income (expenses)                                        2,082              (335)              234
- ------------------------------------------------------------------------------------------------------------------------
Income before income taxes and cumulative effect of change in
  accounting method                                                      $  50,198         $  44,492         $  41,399
========================================================================================================================

Assets:
  Domestic                                                               $ 438,644         $ 402,021         $ 399,237
  International                                                             86,248            77,083            78,461
- ------------------------------------------------------------------------------------------------------------------------
Total assets                                                             $ 524,892         $ 479,104         $ 477,698
========================================================================================================================

Long-lived assets:
  Domestic                                                               $ 211,380         $ 210,222         $ 207,478
  International                                                             33,699            33,640            38,774
- ------------------------------------------------------------------------------------------------------------------------
Total long-lived assets                                                  $ 245,079         $ 243,862         $ 246,252
========================================================================================================================

Expenditures for additions to long-lived assets:
  Domestic                                                               $  26,371         $  27,714         $  26,012
  International                                                              2,682             1,671            13,824
- ------------------------------------------------------------------------------------------------------------------------
Total expenditures for additions to
   long-lived assets                                                        29,053            29,385            39,836
========================================================================================================================
   Current assets and liabilities included in
      businesses acquired,  net of cash acquired                               125               ---             1,460
- ------------------------------------------------------------------------------------------------------------------------
Total of additions to property, plant, and equipment and
   businesses acquired, net of cash acquired                             $  29,178         $  29,385         $  41,296
- ------------------------------------------------------------------------------------------------------------------------





Segment profit represents revenue less direct and allocable operating expenses
and excludes pretax nonrecurring charges of $2,152,000, relating to the domestic
segment in fiscal 2001 and $13,536,000 and $956,000, relating to the domestic
and international segments, respectively in fiscal 2000 (see Note E).

The following table presents product sales information:

                                             Year Ended April 30,
  -----------------------------------------------------------------------------
                             2002                  2001                 2000
  -----------------------------------------------------------------------------
  Fruit spreads                37%                   38%                  39%
  Industrial ingredients       16                    15                   15
  Portion control              11                    12                   12
  Juices and beverages         10                    10                   10
  Toppings and syrups           8                     9                    9
  Peanut butter                 7                     7                    7
  Other                        11                     9                    8
  -----------------------------------------------------------------------------
  Total                       100%                  100%                 100%
  =============================================================================

Note E:  Nonrecurring Charge

During fiscal 2001, the Company finalized the sale of the Pottstown
manufacturing facility, representing a continuation of the Company's divestiture
of the "Mrs. Smith's" pie business. In connection with this sale, the Company
recorded a nonrecurring, noncash charge of $2,152,000 ($1,313,000 net of tax),
or $0.05 per share. This transaction represented the final nonrecurring charge
relating to the review of certain businesses and assets as discussed below.

During fiscal 2000, the Company recorded a nonrecurring, noncash charge of
$14,492,000 ($9,626,000 net of tax), or $0.34 per share. This charge was the
result of a financial review by the Company of its businesses and assets, with a
focus on those assets considered nonstrategic or underperforming. Approximately
$10,700,000 of the charge resulted from the write-down of the carrying value of
certain intangible assets, primarily goodwill, resulting from previous
acquisitions of the "After The Fall" (ATF) beverage business in fiscal 1994 and
"Kraft" brand fruit spreads acquired in fiscal 1997. The impairment charge
related to the ATF intangible assets was prompted by a declining sales trend
beginning in fiscal 1996 despite attempts by the Company to reverse this trend.
The impairment charge related to the "Kraft" intangible assets resulted from
sharp sales declines following the Company's relaunch of the products under the
"Sunberry Farms" brand. Both of these acquisitions are included in the domestic
segment. In addition, certain capitalized costs associated with unused or
abandoned software acquired as part of the



Company's information technology reengineering project and other abandoned fixed
assets were written off.

The write-down of the intangible assets was based on the Company's estimate of
fair market value using future discounted cash flows projected to be generated
by the respective assets under review over their estimated useful lives. Based
upon the results of this analysis, the expected useful lives of the assets were
reduced from periods ranging from five to forty years, to a range of two to ten
years.

Note F:  Earnings per Share

The following table sets forth the computation of earnings per Common Share and
earnings per Common Share - assuming dilution:



                                                                                 Year Ended April 30,
- ------------------------------------------------------------------------------------------------------------------------
(Dollars in thousands, except per share data)                         2002                 2001                 2000
- ------------------------------------------------------------------------------------------------------------------------

                                                                                                
Numerator:
   Net income for earnings per Common Share and earnings
      per Common Share - assuming dilution                     $    30,851          $    27,206          $    26,273
- ------------------------------------------------------------------------------------------------------------------------
Denominator:
   Denominator for earnings per Common Share -
      weighted-average shares                                   24,457,194           25,428,117           28,670,770
   Effect of dilutive securities:
      Stock options                                                336,582              148,698               56,380
      Restricted stock                                              64,297               81,442               23,205
- ------------------------------------------------------------------------------------------------------------------------
   Denominator for earnings per Common Share - assuming
      dilution                                                  24,858,073           25,658,257           28,750,355
========================================================================================================================

Net income per Common Share                                    $      1.26          $      1.07          $      0.92
========================================================================================================================

Net income per Common Share - assuming dilution                $      1.24          $      1.06          $      0.91
========================================================================================================================


Note G:  Mergers and Acquisitions

During fiscal 2002, the Company utilized cash on hand to complete one
acquisition for $5,714,000. The acquisition was accounted for as a purchase
business combination and the results of operations of the acquired company were
included in the consolidated results of the Company from the acquisition date.
As a result of this acquisition, approximately $1,702,000 in goodwill and
$3,887,000 in other intangible assets were recorded in fiscal 2002. As the
acquisition occurred subsequent to July 1, 2001, the resulting goodwill was not
amortized during fiscal 2002. The other intangible assets are being amortized
over their estimated useful life of ten years.



During fiscal 2000, the Company utilized cash on hand to complete two
acquisitions for a total of $9,056,000. Each of the acquisitions was accounted
for as a purchase business combination and the results of operations of the
acquired companies were included in the consolidated results of the Company from
their respective acquisition dates. As a result of these acquisitions,
approximately $2,869,000 in goodwill and $2,213,000 of other intangible assets
were recorded in fiscal 2000.

Note H:  Pensions and Other Postretirement Benefits

The Company has pension plans covering substantially all of its domestic
employees. Benefits are based on the employee's years of service and
compensation. The Company's plans are funded in conformity with the funding
requirements of applicable government regulations.

In addition to providing pension benefits, the Company sponsors several
unfunded, defined postretirement plans that provide health care and life
insurance benefits to substantially all active and retired domestic employees
not covered by certain collective bargaining agreements, and their covered
dependents and beneficiaries. 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.

Net periodic benefit cost included the following components:



                                                         Defined Benefit Pension                 Other Postretirement
(Dollars in thousands)                                            Plans                               Benefits
- --------------------------------------------------------------------------------------------------------------------------
Year Ended April 30,                                   2002       2001        2000           2002        2001        2000
- --------------------------------------------------------------------------------------------------------------------------

                                                                                                   
Service cost                                        $ 2,414    $ 2,133     $ 2,216         $  506       $ 424      $  513
Interest cost                                         5,504      5,303       4,668            737         673         717
Expected return on plan assets                       (6,444)    (6,571)     (6,053)           ---         ---         ---
Amortization of prior service cost (credit)           1,087      1,086         927            (61)        (61)        (61)
Amortization of initial net asset                      (234)      (142)        (91)           ---         ---         ---
Recognized net actuarial gain                          (177)      (823)       (272)          (160)       (218)        (28)

- --------------------------------------------------------------------------------------------------------------------------
Net periodic benefit cost                           $ 2,150    $   986     $ 1,395         $1,022       $ 818      $1,141
==========================================================================================================================







The following table sets forth the combined status of the plans as recognized in
the consolidated balance sheets:




                                                           Defined Benefit          Other Postretirement
                                                            Pension Plans                Benefits
- ------------------------------------------------------------------------------------------------------------
                                                               April 30,                 April 30,
- ------------------------------------------------------------------------------------------------------------
(Dollars in thousands)                                     2002         2001         2002         2001
- ------------------------------------------------------------------------------------------------------------
                                                                                  
Change in benefit obligation:
  Benefit obligation at beginning of the year          $ 74,898     $ 67,670     $  9,991     $  8,560
    Service cost                                          2,414        2,133          506          424
    Interest cost                                         5,504        5,303          737          673
    Amendments                                              197           30           --           --
    Actuarial loss                                        1,457        2,529          887          522
    Participant contributions                                --           --          193          188
    Benefits paid                                        (3,017)      (2,767)        (526)        (376)
- ------------------------------------------------------------------------------------------------------------
  Benefit obligation at end of the year                $ 81,453     $ 74,898     $ 11,788     $  9,991
============================================================================================================

Change in plan assets:
  Fair value of plan assets at beginning of the year   $ 72,685     $ 74,226     $     --     $     --
   Actual return on plan assets                          (2,499)         510           --           --
   Company contributions                                  1,578          716          333          188
   Participant contributions                                 --           --          193          188
   Benefits paid                                         (3,017)      (2,767)        (526)        (376)
- ------------------------------------------------------------------------------------------------------------
  Fair value of plan assets at end of the year         $ 68,747     $ 72,685     $     --     $     --
============================================================================================================

Net amount recognized:
  Funded status of the plans                           $(12,706)    $ (2,213)    $(11,788)    $ (9,991)
  Unrecognized net actuarial loss (gain)                  1,370       (9,208)      (2,433)      (3,480)
  Unrecognized prior service cost (credit)                9,332       10,222         (692)        (753)
  Unrecognized initial asset                               (765)        (999)          --           --
- ------------------------------------------------------------------------------------------------------------
Net benefit liability recognized                       $ (2,769)    $ (2,198)    $(14,913)    $(14,224)
============================================================================================================

Prepaid benefit costs                                  $  5,589     $  5,582     $     --     $     --
Accrued benefit liability                               (13,996)     (10,239)     (14,913)     (14,224)
Intangible asset                                          4,410        2,459           --           --
Minimum pension liability                                 1,228           --           --           --
- ------------------------------------------------------------------------------------------------------------
Net benefit liability recognized                       $ (2,769)    $ (2,198)    $(14,913)    $(14,224)
============================================================================================================

Weighted average assumptions:
  Discount rate                                            7.25%        7.50%        7.25%        7.50%
  Expected return on plan assets                           9.00%        9.00%          --           --
  Rate of compensation increase                            4.50%        4.50%          --           --
============================================================================================================





For fiscal 2003, the assumed health care cost trend rates are 8.5% for all
participants. The rate for participants under age 65 is assumed to decrease to
5% in 2007. The health care cost trend rate assumption has a significant effect
on the amount of the other postretirement benefit obligation and periodic other
postretirement benefit 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, 2002:




                                                                 One Percentage Point
- -------------------------------------------------------------------------------------------
(Dollars in thousands)                                          Increase         Decrease
- -------------------------------------------------------------------------------------------
                                                                           
Effect on total service and interest cost components            $   270          $  (213)
Effect on benefit obligation                                    $ 1,999          $(1,597)
===========================================================================================


The projected benefit obligation and plan assets applicable to pension plans
with projected benefit obligations in excess of plan assets was $36,626,000 and
$20,065,000, respectively, at April 30, 2002, and $32,876,000 and $19,979,000,
respectively, at April 30, 2001.

Pension plan assets consist of listed stocks and government obligations,
including 336,000 of the Company's Common Shares at April 30, 2002 and 2001. The
market value of these shares is $11,659,000 at April 30, 2002. The Company paid
dividends of $215,000 on these shares during the year. Prior service costs are
being amortized over the average remaining service lives of the employees
expected to receive benefits.

The Company also charged to operations approximately $958,000, $870,000, and
$854,000 in fiscal 2002, 2001, and 2000, respectively, for contributions to
foreign pension plans and to plans not administered by the Company on behalf of
employees subject to certain labor contracts. These amounts were determined in
accordance with foreign actuarial computations and provisions of the labor
contracts. The Company is unable to determine its share of either the
accumulated plan benefits or net assets available for benefits under such plans.

In addition, certain of the Company's active employees participate in
multiemployer plans which provide defined postretirement health care benefits.
The aggregate amount contributed to these plans, including the charge for net
periodic postretirement benefit costs, totaled $1,851,000, $1,719,000, and
$1,687,000 in fiscal 2002, 2001, and 2000, respectively.




Note I:  Savings Plans

         ESOP: The Company sponsors an Employee Stock Ownership Plan and Trust
(ESOP) for domestic, nonrepresented employees. The Company has entered into loan
agreements with the Trustee of the ESOP for purchases by the ESOP of the
Company's Common Shares in amounts not to exceed a total of 1,200,000
unallocated Common Shares of the Company at any one time. These shares are to be
allocated to participants over a period of not less than 20 years. ESOP loans
bear interest at 1/2% over prime and are payable as shares are allocated to
participants. Interest incurred on ESOP debt was $538,000, $768,000, and
$846,000 in fiscal 2002, 2001, and 2000, respectively. Contributions to the plan
are made annually in amounts sufficient to fund ESOP debt repayment. Dividends
on unallocated shares are used to reduce expense and were $336,000, $362,000,
and $363,000 in fiscal 2002, 2001, and 2000, respectively. The principal
payments received from the ESOP in fiscal 2002, 2001, and 2000 were $364,000,
$297,000, and $303,000, respectively.

As permitted by Statement of Position 93-6, Employers' Accounting for Employee
Stock Ownership Plans (SOP 93-6), the Company will continue to recognize future
compensation using the cost basis as all shares currently held by the ESOP were
acquired prior to 1993. At April 30, 2002, the ESOP held 525,048 unallocated
shares. All shares held by the ESOP were considered outstanding in earnings per
share calculations for all periods presented.

         401(k) Plan: The Company offers employee savings plans under Section
401(k) of the Internal Revenue Code for all domestic employees not covered by
certain collective bargaining agreements. The Company's contributions under
these plans are based on a specified percentage of employee contributions.
Charges to operations for these plans in fiscal 2002, 2001, and 2000 were
$1,445,000, $1,421,000, and $1,193,000, respectively.


Note J:  Stock Benefit Plans

The Company provides for equity-based incentives to be awarded to key employees
through the 1998 Equity and Performance Incentive Plan, the Restricted Stock
Bonus Plan adopted in 1979, and the 1987 Stock Option Plan, and to nonemployee
directors through the Nonemployee Director Stock Option Plan adopted in fiscal
2002.

         1998 Equity and Performance Incentive Plan: This plan provides for the
issuance of stock options and restricted stock, which may include performance
criteria, as well as stock appreciation rights, deferred shares, and performance
shares. At April 30, 2002, there are 797,522 Common Shares




available for future issuance under this plan. Of this total amount available
for issuance, the amount of restricted stock available for issuance is limited
to 436,700 Common Shares. Restricted stock issued under this plan is subject to
a risk of forfeiture for at least three years in the event of termination of
employment or failure to meet performance criteria, if any. All restricted
shares issued to date under the plan are subject to a four-year forfeiture
period. Options granted under this plan become exercisable at the rate of
one-third per year, beginning one year after the date of grant, and the option
price is equal to the market value of the shares on the date of the grant.

         Restricted Stock Bonus Plan: Shares awarded under this plan contain
certain restrictions for four years relating, among other things, to forfeiture
in the event of termination of employment and to transferability. Shares awarded
are issued as of the date of the award and a deferred compensation charge is
recorded at the market value of the shares on the date of the award. The
deferred compensation charge is recognized as expense over the period during
which restrictions are in effect. There are no Common Shares available for
future issuance under this plan. In fiscal 2002 and 2000, 49,200 and 82,000
Common Shares were awarded under this plan, respectively. No awards were granted
in fiscal 2001.

         1987 Stock Option Plan: Options granted under this plan become
exercisable at the rate of one-third per year, beginning one year after the date
of grant, and the option price is equal to the market value of the shares on the
date of the grant. There are 554,827 Common Shares available for future grant
under this plan.

         Nonemployee Director Stock Option Plan: This plan provides for the
issuance of 1,500 stock options to nonemployee directors annually, on September
1 of each year. Options granted under this plan become exercisable six months
after the date of grant, and the option price is equal to the market value of
the shares on the date of the grant. There are 100,000 Common Shares available
for future grant under this plan. No grants were made under this plan in fiscal
2002 due to the pending "Jif" and "Crisco" transaction.




As permitted by Statement of Financial Accounting Standards No. 123, Accounting
for Stock Based Compensation (SFAS 123), the Company has elected to account for
the stock options under Accounting Principles Board Opinion No. 25, Accounting
for Stock Issued to Employees (APB 25). If compensation costs for the stock
options granted in fiscal 2002, 2001, and 2000 had been determined based on the
fair market value method of SFAS 123, the Company's pro forma net income and
earnings per share would have been:




                                                                           Year Ended April 30,
- ----------------------------------------------------------------------------------------------------------
(Dollars in thousands, except per share data)                       2002           2001           2000
- ----------------------------------------------------------------------------------------------------------
                                                                                       
Net income
   As reported                                                     $30,851        $27,206       $26,273
   Pro forma                                                        29,790         26,018        25,229
Net income per Common Share
   As reported                                                       $1.26          $1.07         $0.92
   Pro forma                                                          1.22           1.02          0.88
Net income per Common Share - assuming dilution
   As reported                                                       $1.24          $1.06         $0.91
   Pro forma                                                          1.20           1.01          0.88
==========================================================================================================


The fair value of each option grant was estimated at the date of grant using the
Black-Scholes option pricing model with the following weighted-average
assumptions:


                                                     Year Ended April 30,
- ------------------------------------------------------------------------------
                                                       2001          2000
- ------------------------------------------------------------------------------
Average expected term (years)                             5             5
Risk-free interest rate                                5.75%         6.20%
Dividend yield                                         2.60%         2.50%
Volatility                                            27.00%        26.00%
- ------------------------------------------------------------------------------
Fair value of options granted                        $ 6.13        $ 5.22
==============================================================================





A summary of the Company's stock option activity, and related information
follows:




                                                                              Weighted-
                                                                                Average
                                                                               Exercise
                                                            Options              Price
- ----------------------------------------------------------------------------------------
                                                                         
Outstanding at May 1, 1999                                 2,525,702           $21.41
   Granted                                                   409,000            18.22
   Exercised                                                (245,734)           18.50
   Forfeited                                                 (47,000)           18.78
- ----------------------------------------------------------------------------------------
Outstanding at April 30, 2000                              2,641,968           $21.24
   Granted                                                   411,000            23.63
   Exercised                                                (562,261)           18.45
   Forfeited                                                (178,324)           23.93
- ----------------------------------------------------------------------------------------
Outstanding at April 30, 2001                              2,312,383           $22.13
   Granted                                                       ---              ---
   Exercised                                                (614,832)           23.59
   Forfeited                                                 (31,135)           29.90
- ----------------------------------------------------------------------------------------
Outstanding at April 30, 2002                              1,666,416           $21.45

Exercisable at April 30, 2000                              1,918,301           $21.66
Exercisable at April 30, 2001                              1,558,282           $22.41
Exercisable at April 30, 2002                              1,298,028           $21.28
========================================================================================


The following table summarizes the range of exercise prices and weighted-average
exercise prices for options outstanding and exercisable at April 30, 2002, under
the Company's stock benefit plans:




                                                               Weighted-
                                                Weighted-       Average                          Weighted-
                                                 Average       Remaining                          Average
           Range of                             Exercise      Contractual                        Exercise
       Exercise Prices       Outstanding          Price       Life (years)      Exercisable        Price
- --------------------------------------------------------------------------------------------------------------
                                                                                    
    $15.94--$23.00          866,762               $18.90         5.9              758,031          $18.99
    $23.01--$31.50          799,654               $24.21         6.0              539,997          $24.49
==============================================================================================================







The following table summarizes the Company's stock benefit plans in two
categories - plans that have been approved by shareholders, and plans that have
not:




                                           Number of Common                                Number of Common Shares
                                          Shares to be issued         Weighted-average      available for future
                                             upon exercise of         exercise price of     issuance under equity
Plan Category                             outstanding options        outstanding options     compensation plans
- -------------------------------------------------------------------------------------------------------------------
                                                                                          
Stock benefit plans approved
   by shareholders                              1,666,416                   $21.45                 1,452,349
Stock benefit plans not approved
   by shareholders                                    ---                      ---                       ---
- ------------------------------------------------------------------------------------------------------------------
Total stock benefit plans                       1,666,416                   $21.45                 1,452,349
==================================================================================================================


Note K: Long-Term Debt and Financing Arrangements


Long-term debt consists of the following:





                                                                    April 30,
- --------------------------------------------------------------------------------------
(Dollars in thousands)                                         2002            2001
- --------------------------------------------------------------------------------------
                                                                      
6.77% Senior Notes due June 1, 2009                         $ 75,000        $ 75,000
7.70% Series A Senior Notes due September 1, 2005             17,000          17,000
7.87% Series B Senior Notes due September 1, 2007             33,000          33,000
7.94% Series C Senior Notes due September 1, 2010             10,000          10,000
- --------------------------------------------------------------------------------------
Total long-term debt                                        $135,000        $135,000
======================================================================================


The notes are unsecured and interest is paid semiannually. Among other
restrictions, the note purchase agreements contain certain covenants relating to
liens, consolidated net worth, and sale of assets as defined in the agreements.
The Company is in compliance with all covenants.

During fiscal 2002, the Company entered into interest rate swap agreements in
order to manage interest rate exposure and minimize financing costs.
Effectively, the Company converted $17 million of fixed-rate debt (7.70% notes
due in September 2005) and $33 million of fixed-rate debt (7.87% notes due in
September 2007) to variable-rate debt with an effective interest rate of 4.88%
at April 30, 2002. The interest rate swaps are considered fair value hedges and
are 100% effective. As a result, the mark-to-market value of both the fair value
hedging instruments and the underlying debt obligations are recorded as equal
and offsetting gains or losses in other expense. The interest rate swaps had a
fair value of $508,000 at April 30, 2002, with the corresponding adjustment to
long-term debt included in other noncurrent liabilities. The fair value of
interest rate swap agreements, obtained from the respective financial
institutions, is based on current rates of interest and is computed as the net
present value of the remaining exchange obligations under the terms of the
contract.




Interest paid totaled $9,800,000, $8,328,000, and $2,293,000 in fiscal 2002,
2001, and 2000, respectively.

Financing arrangements: The Company has uncommitted lines of credit providing up
to $90,000,000 for short-term borrowings. No amounts were outstanding at April
30, 2002. The interest rate to be charged on any outstanding balance is based on
prevailing market rates.

Note L:  Income Taxes

Deferred income taxes reflect the net 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 the Company's deferred tax assets and liabilities are as follows:




                                                                             April 30,
- ---------------------------------------------------------------------------------------------
(Dollars in thousands)                                                   2002          2001
- ---------------------------------------------------------------------------------------------
                                                                              
Deferred tax liabilities:
   Depreciation                                                       $10,150       $12,639
   Software and other deferred expenses                                 4,898         3,242
   Change in inventory accounting method                                1,769           ---
   Other (each less than 5% of total liabilities)                       1,782           658
- ---------------------------------------------------------------------------------------------
Total deferred tax liabilities                                         18,599        16,539
=============================================================================================
Deferred tax assets:
   Postretirement benefits other than pensions                          6,136         6,034
   Other employee benefits                                              5,091         4,679
   Intangible assets                                                    3,337         3,396
   Other (each less than 5% of total assets)                            4,039         4,003
- ---------------------------------------------------------------------------------------------
Total deferred tax assets                                              18,603        18,112
Valuation allowance for deferred tax assets                            (1,560)       (1,522)
- ---------------------------------------------------------------------------------------------
Total deferred tax assets less allowance                               17,043        16,590
=============================================================================================
Net deferred tax (liability) asset                                    $(1,556)      $    51
=============================================================================================



The Company has recorded a valuation allowance related to certain foreign
deferred tax assets due to the uncertainty of their realization.

Domestic income and foreign withholding taxes have not been recorded on
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 credits and deductions for foreign taxes already paid.





Income before income taxes and cumulative effect of change in accounting method
is as follows:




                                                                                       Year Ended April 30,
- ----------------------------------------------------------------------------------------------------------------------
(Dollars in thousands)                                                         2002             2001              2000
- ----------------------------------------------------------------------------------------------------------------------
                                                                                                      
Domestic                                                                    $44,668          $40,809           $36,584
Foreign                                                                       5,530            3,683             4,815
- ----------------------------------------------------------------------------------------------------------------------
Income before income taxes and cumulative effect of
   change in accounting method                                              $50,198          $44,492           $41,399
======================================================================================================================



The components of the provision for income taxes are as follow:




                                                                                        Year Ended April 30,
- ----------------------------------------------------------------------------------------------------------------------
(Dollars in thousands)                                                         2002             2001              2000
- ----------------------------------------------------------------------------------------------------------------------
                                                                                                      
Current:
   Federal                                                                  $13,447          $10,681           $15,000
   Foreign                                                                    2,449            1,938             2,048
   State and local                                                            1,906            1,635             1,950
Deferred                                                                      1,545            2,040            (3,872)
- ----------------------------------------------------------------------------------------------------------------------
Total income tax expense                                                    $19,347          $16,294           $15,126
======================================================================================================================



A reconciliation of the statutory federal income tax rate and the effective
income tax rate follows:




Percent of Pretax Income                                                             Year Ended April 30,
- --------------------------------------------------------------------------------------------------------------------------
(Dollars in thousands)                                                         2002             2001              2000
- --------------------------------------------------------------------------------------------------------------------------
                                                                                                         
Statutory federal income tax rate                                              35.0%            35.0%             35.0%
Increase (decrease) in income taxes resulting from:
   State and local income taxes, net of federal income
     tax benefit                                                                2.5              2.1               3.1
   Research credits                                                            (1.9)            (0.8)             (1.6)

   Other items                                                                  2.9              0.3               ---

- --------------------------------------------------------------------------------------------------------------------------
Effective income tax rate                                                      38.5%            36.6%             36.5%
==========================================================================================================================

Income taxes paid                                                           $15,736          $17,792           $19,761
==========================================================================================================================



Note M:  Common Shares

         Reclassification of Common Shares: In August 2000, the Company combined
its Class A and Class B Common Shares into a single class of common shares with
terms similar to the former Class A Common Shares. In conjunction with this
combination, on August 28, 2000, the Company repurchased 4,272,524 Common Shares
at $18.50 per share. The Company incurred approximately $1,363,000 of cost
related to the combination and repurchase of Common Shares. Such costs were
recorded as a reduction of shareholders' equity.




         Voting: The Company's Amended Articles of Incorporation provide that
holders of the Company's Common Shares generally will be entitled to cast one
vote per share on matters submitted to a vote of the shareholders. There are
certain matters specified in the Amended Articles (including any matters that
relate to or would result in the dissolution or liquidation of the Company; the
amendment of the articles of incorporation or regulations of the Company other
than any amendment that increases the number of votes to which holders of new
Common Shares are entitled or expand the matters to which time phase voting
applies; any proposal or other action to be taken by shareholders relating to
the Company's shareholder rights plan or any successor plan; any matter relating
to any benefit, stock option, compensation, or other similar plan; any matter
that relates to or may result in a change in control of the Company including
any merger, consolidation, majority share acquisition, control share
acquisition, sale or other disposition of all, or substantially all, of the
Company's assets; or any matter relating to the issuance, redemption, or
repurchase of shares of the Company or any of its subsidiaries), however, with
respect to which parties acquiring the Company's Common Shares will be entitled
to cast one vote per share until they have held their shares for four years,
after which time they will be entitled to cast ten votes per share on those
specified matters.

         Shareholders' Rights Plan: Pursuant to a shareholders' rights plan
established during fiscal 1999, each of the Company's Common Shares outstanding
carries a share purchase right issued as a result of a dividend distribution
declared by the Company's Board of Directors in April 1999 and distributed to
shareholders of record on May 14, 1999.

Under the plan, the rights will initially trade together with the Company's
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 the Company's Common Shares at a discounted price if a person or
group acquires 10% or more of the outstanding Common Shares. Rights held by
persons who exceed the applicable thresholds will be void. Shares held by
members of the Smucker family are not subject to the thresholds. 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, the Company would issue one Common Share for each right, in
each case subject to adjustment in certain circumstances.




The Company's directors may, at their option, redeem all rights for $0.01 per
right, generally at any time prior to the rights becoming exercisable. The
rights will expire May 14, 2009, unless earlier redeemed, exchanged, or amended
by the directors.





Management's Report on Responsibility for Financial Reporting

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 accounting principles generally accepted in the
United States and is based on our best estimates and judgments.

The Company maintains systems of internal accounting controls supported by
formal policies and procedures which are communicated throughout the Company.
There is an extensive program of audits performed by the Company's internal
audit staff and independent auditors designed to evaluate the adequacy of and
adherence to these controls, policies, and procedures.

Ernst & Young LLP, independent auditors, has audited the Company's financial
statements. Management has made all financial records and related data available
to Ernst & Young LLP during its audit.

The Company's audit committee, comprising three nonemployee members of the
Board, meets regularly with the independent auditors and management to review
the work of the internal audit staff and the work, audit scope, timing
arrangements, and fees of the independent auditors. The audit committee also
regularly satisfies itself as to the adequacy of controls, systems, and
financial records. The manager of the internal audit department is required to
report directly to the chair of the audit committee as to internal audit
matters.

It is the Company's best judgment that its policies and procedures, its program
of internal and independent audits, and the oversight activity of the audit
committee work together to provide reasonable assurance that the operations of
the Company are conducted according to law and in compliance with the high
standards of business ethics and conduct to which the Company subscribes.




         Timothy P. Smucker                Steven J. Ellcessor
         Chairman and Co-Chief             Vice President -- Finance and
         Executive Officer                 Administration, Secretary, and Chief
                                           Financial Officer

EX-18

                                                                      Exhibit 18



July 16, 2002



Mr. Steven J. Ellcessor
Vice President-Finance and
  Administration, Secretary, and
  Chief Financial Officer
The J. M. Smucker Company
Strawberry Lane
Orrville, Ohio  44667

Dear Mr. Ellcessor:

Note B of the notes to the consolidated financial statements of The J. M.
Smucker Company included in its annual report on Form 10-K for the year ended
April 30, 2002 describes a change in the method of accounting for certain
inventory from the last-in, first-out (LIFO) method to the first-in, first-out
(FIFO) method. There are no authoritative criteria for determining a preferable
inventory method based on the particular circumstances; however, we conclude
that such change in the method of accounting is to an acceptable alternative
method which, based on your business judgment to make this change and for the
stated reasons, is preferable in your circumstances.


                                        Very truly yours,




                                        Ernst & Young LLP

EX-21

                                                                      Exhibit 21



                           SUBSIDIARIES OF THE COMPANY
                           ---------------------------




          Subsidiaries                                 State or Jurisdiction
                                                          of Incorporation
- ------------------------------------------------------------------------------------------------
                                                     
After The Fall Products, Inc.                           Ohio
J.M. Smucker (Pennsylvania), Inc.                       Pennsylvania
The Dickinson Family, Inc.                              Ohio
Henry Jones Foods Pty Ltd.                              Victoria, Australia
Juice Creations Co.                                     Ohio
Knudsen & Sons, Inc.                                    Ohio
Smucker Quality Beverages, Inc.                         California
Mary Ellen's Incorporated                               Ohio
Smucker Holdings, Inc.                                  Ohio
Santa Cruz Natural Incorporated                         California
Smucker Australia, Inc.                                 Ohio
J.M. Smucker (Canada) Inc.                              Ontario, Canada
Smucker International, Ltd.                             U.S. Virgin Islands
Smucker Latin America, Inc.                             Ohio
J.M. Smucker de Mexico, S.A. de C.V.                    Mexico (domesticated in Delaware)
Smucker Hong Kong Limited                               Hong Kong, People's Republic of China
Smucker U.K., Inc.                                      Ohio
Alternative Attitudes, Inc.                             Ohio
Sunberry Farms, Inc.                                    Ohio
Rocket Juice Company                                    California
Smucker Direct, Inc.                                    Ohio
Simply Smucker's Inc.                                   Ohio
J.M. Smucker (Scotland) Ltd.                            Scotland
Smucker do Brasil Ltda.                                 Sao Paulo, Brazil
Hallco No. 39 Pty. Ltd.                                 Victoria, Australia
Smucker Fruit Processing                                California
J.M. Smucker LLC                                        Ohio Limited Liability Company

EX-23

                                                                      Exhibit 23



                         Consent of Independent Auditors


We consent to the incorporation by reference in this Annual Report (Form 10-K)
of The J. M. Smucker Company of our report dated June 6, 2002, included in the
2002 Annual Report to Shareholders of The J. M. Smucker Company.

Our audit also included the financial statement schedule of The J. M. Smucker
Company listed in item 14(a). This schedule is the responsibility of the
Company's management. Our responsibility is to express an opinion based on our
audits. In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.

We also consent to the incorporation by reference in the Registration Statements
(Form S-8 No. 33-21273 and Form S-8 No. 33-38011) pertaining to the 1987 Stock
Option Plan, and Form S-3 No. 333-68416, of our report dated June 6, 2002, with
respect to the consolidated financial statements incorporated herein by
reference, and our report included in the preceding paragraph with respect to
the financial statement schedule included in this Annual Report (Form 10-K) of
The J. M. Smucker Company.



                                                            ERNST & YOUNG LLP



Akron, Ohio
July 26, 2002

EX-24

                                                                      Exhibit 24



                            THE J. M. SMUCKER COMPANY


                            REGISTRATION ON FORM 10-K


                                POWER OF ATTORNEY




         KNOW ALL MEN BY THESE PRESENTS, that ELIZABETH VALK LONG, director of
The J. M. Smucker Company, hereby appoints Timothy P. Smucker, Richard K.
Smucker, and Steven J. Ellcessor, and each of them, with full power of
substitution, as attorney or attorneys of the undersigned, to execute an Annual
Report on Form 10-K for the fiscal year ended April 30, 2002, in a form that The
J. M. Smucker Company deems appropriate and to file the same, with all exhibits
thereto and other documents in connection therewith, with the Securities and
Exchange Commission, all pursuant to applicable legal provisions, with full
power and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as the undersigned
director might or could do in person, in furtherance of the foregoing.




                                        /s/ Elizabeth Valk Long
                                        --------------------------
                                        Director