Mark Belgya - Chief Financial Officer Tim Smucker - Chairman of the Board and Co-CEO Richard Smucker - Executive Chairman and Co-CEO Vince Byrd – President Coffee Business Steve Oakland - President Consumer Business Paul Smucker Wagstaff - President Oils and Baking Mark Smucker - President of Special Markets

Eric Katzman - Deutsche Bank Farha Aslam – Stephens Inc. Chuck Cerankosky – FTN Capital Markets Jon Andersen - William Blair Mitch Pinheiro - Janney Montgomery Scott John McMillan – Lord Abbett Michael Keating – Breeden Tom Maher – Lord Abbett Eric Serotta - Merrill Lynch

Welcome to The J.M. Smucker Company Third Quarter 2009 Earnings Conference Call.

I am the company’s Chief Financial Officer, thank you for joining us this morning. Also on the call from the company this morning are Tim Smucker, Chairman of the Board and Co-CEO; Richard Smucker, Executive Chairman and Co-CEO; Vince Byrd, President of our Coffee Business; Steve Oakland, President Consumer Business area; Paul Smucker Wagstaff, President Oils and Baking; and Mark Smucker, President of Special Markets who is joining us remotely.

After this brief introduction I will turn the call over to Richard for opening comments. I will then review the financial results for the quarter and Tim will provide closing remarks.

At the conclusion of these comments we will be available to answer your questions. If you’ve not seen our press release it is available on our website at Smuckers.com.

Please note that we have enhanced the financial tables included in our release and hope you find the information helpful. A replay of this call is available on the website.

If you have any follow up questions or comments after today’s call please feel free to contact me or Sonal Robinson, Director of Investor Relations. I would like to remind you that certain statements in this presentation and during the question and answer period that follows may relate to future events and expectations and as such, constitute forward looking statements within the meaning of the Private Securities Legislation Reform Act of 1995.

I invite you to read the full disclosure statement concerning such forward looking statements in the press release. I also want to point out that the company uses non-GAAP results for the purpose of evaluating performance internally.

Additional discussion on non-GAAP information is also detailed in our press release and on our website. With that I’ll turn the call over to Richard.

Since we closed the Folgers merger on November 6th many of our quarter over quarter explanations will reflect the coffee business. We understand the addition of Folgers makes comparisons to last year more difficult but it emphasizes the impact the coffee business will be bringing in terms of scale, margin improvements, and cash flow.

With that let me begin by summarizing the key highlights for the quarter. First, we achieved record sales for the quarter; in fact, it marked our first billion dollar sales quarter in our history.

While Folgers contributed significantly to the quarter’s top line increase sales in our base business were also up. If you exclude all acquisitions and the impact of foreign exchange sales on our base business increased 6%.

Second, we saw significant margin expansion particularly at the gross margin level due to the addition of Folgers and improvement in many core categories. Additionally, both operating and EBITDA margins increased significantly over last year’s third quarter.

Third, non-GAAP net income more than doubled from $45 million to $100 million. Non-GAAP earnings per share were up 11% as the increase in income was partially offset by additional shares outstanding related to the Folgers transaction.

Fourth, these earnings translated into record cash flow from operations. Fifth, we completed a successful fall bake in both the US and Canada contributing to strong quarter over quarter gains in profitability.

Finally, the Folgers integration is progressing as planned. We appreciate the commitment of all of our employees both in combining Folgers and maintaining their focus on our core businesses.

Let me now provide some commentary around our businesses. In the Consumer area the Smucker’s, Jif and Hungry Jack brands realized sales increases over the prior year.

Much of the increase was due to pricing although Hungry Jack once again realized volume gains in pancake mixes, syrups and instant potatoes. Our fruit spreads and peanut butter volumes were down 3% on a combined basis.

As most of you know, the peanut butter category has been under pressure since early January. IRI data for the period ending January 25th indicated the category volume declined 22%.

To date, our brands have experienced a lesser decline. From the onset we aggressively communicated to our consumers that none of our products were involved in the recall and they could feel comfortable about Jif and Smucker peanut butter products.

We ran ads in USA Today and 100 major newspapers and aired national TV commercials reassuring consumers that Jif is the brand to trust. We believe these messages are starting to reach the consumers but it will take some time for the category to return to a more normal pattern.

Turning to Oils and Baking, this business area had its largest quarter ever in both sales and operating margin with Crisco, Pillsbury and Eagle Brand Milk all up. Strong merchandising programs coupled with investments in marketing and new products contributed to a successful fall bake period.

In particular the canned milk business, acquired in 2008, realized strong profit gains as a result of a better matching pricing in milk costs along with production efficiencies. In addition, we continue to see gains in Pillsbury where the business has benefited from improved execution of our fall bake programs and greater involvement from our retailers.

Due to our performance during fall bake we anticipate a competitive reaction for the Easter bake period, primarily in oils, consistent with our strategy to profitably manage the category. We will provide marketing and promotional support where appropriate during the Easter season but not take short term actions that would impact our long term profitability.

In the Special market segment sales increased 17% with the addition of Folgers, Europe’s Best and Knott’s Berry Farm contributing to most of the gain. These increases more then offset the impact of unfavorable exchange rates, volume declines in beverage and the traditional portion control foodservice business.

In summary, we delivered a strong and record quarter. We are particularly pleased with our margin improvement and the conversion of earnings to cash.

With some relief in commodity market prices and pricing in line with our costs our sales gains resulted in more profitable growth then we were able to realize last year as costs were rapidly rising. Folgers contributed significantly to the quarter not only with sales but improved margins and increased cash flows.

We anticipate many more opportunities going forward. I’d now like to turn the call back to Mark to have him review the financial results in more detail.

Sales for the quarter increased $517 million or 78%. Folgers contributed $469 million with Europe’s Best and Knott’s Berry Farm adding another $23 million.

The weaker Canadian dollar reduced sales by $16 million. Excluding these items sales were up 6% for the quarter broken down as follows; pricing accounted for approximately 13% more then offsetting a reduction in volume and mix of 7%.

Much of the volume decline was in the Oil and Flours categories and was anticipated due to significant price increases taken since the prior year. GAAP earnings per share were $0.68 this quarter and $0.75 in the third quarter of last year including restructuring and merger integration costs.

Merger and integration costs were $33 million or $0.20 per share this quarter and primarily consisted of employee related costs and transitional services expenses related to the Folgers transaction. Excluding all restructuring and merger charges in both years, earnings per share were $0.88 this quarter and $0.79 in last years quarter, an increase of 11%.

Gross profit increased $206 million in the quarter and gross margin improved from 29.4% last year to 33.9% this quarter. The addition of the higher margin Folgers sales drove much of the dollar increase.

Gross profit on the base Smucker business improved 17% or 260 basis points as pricing actions taken over the last 12 months helped offset higher costs primarily soybean oil, peanuts, wheat and fruit. Compared to last year we are better positioned in terms of matching price with commodity costs and margins have once again started to improve, allowing us to recover margin loss over the past couple of years.

Last quarter rapid declines in the cost of soybean oil and wheat caused the recognition of mark to market charges of approximately $24 million on non-qualifying commodity hedges. We expected a portion of these hedge losses to reverse going forward not as a mark to market reversal of the charge but rather as lower cost of goods sold.

We estimate that the majority of the mark to market amount was recorded in the quarter as reduction of cost of goods. Most of the remainder will flow through cost of goods sold next quarter and the rest be returned to the consumer through price decreased taken in January on oil and flour.

SG&A expenses increased approximately $90 million reflecting the addition of Folgers, a decrease as a percent of net sales from 18.2% to 17.9%. Marketing expenses more than doubled in the quarter with the addition of Folgers.

Smucker’s base business also increased its marketing at a higher rate then sales growth mostly in support of Crisco Olive Oil which had advertising on air during November through January timeframe. As we noted in our release, amortization expense increased significantly during the quarter, reflecting the preliminary valuation of the intangible assets associated with the Folgers transaction.

The additional amortization reflected the purchase price to finite live intangible assets and some adjustment to amortize live. The purchase price allocation work in still in process and as a result future expense may vary from the amounts recorded.

We plan to have the allocation completed by the end of our fiscal year. Based on preliminary values we recorded $19 million in amortization related to Folgers in the quarter, $11 million higher then previous estimates.

Assuming the same amount if recorded in the fourth quarter we expect $22 million or $0.17 per share of additional expense for the year. This adjustment does not impact our previous EBITDA or free cash flow estimates as amortization of course is a non-cash charge.

We estimate depreciation and amortization to range between $125 and $135 million for fiscal 2009 up from original estimates of $100 to $115 million. Operating income increased almost $96 million for the quarter excluding charges and increased as a percent of sales from 10.9% to 14.3% even including the additional amortization expense.

This margin would have been 170 basis points higher or 16% excluding amortization. Let me now comment on segment results where we have added a third segment to report the US Retail Coffee business.

Away from home coffee results are included in the Foodservice business area for the quarter. Canada results which were not material to the quarter were included in US Retail.

We expect to report Canada results within the Special Market segment in future periods. Sales in our US Retail segment were up 9% in the third quarter.

In the Consumer area sales were up 9% with increases across almost all brands. In the Oils and Baking business area sales also increased 9% compared to last year primarily due to price increases and volume gains in baking mixes, frosting and canned milk.

US Retail segment profit increased 39% in the quarter with much of the improving coming from the Oils and Baking area. The segment margin improved from 15.8% in last years third quarter to 20.1% this year.

This marks the highest segment profit for US Retail in the last seven quarters. The US Retail Coffee segment represents the domestic sales of Folgers, Millstone, and Dunkin’ Donuts branded coffee to retail customers and contributed $443 million to net sales and $90 million to segment profit for the third quarter of 2009.

Sales on a pro-forma basis increased 4% for the quarter as growth in Dunkin’ Donuts contributed to net sales and margin growth. Total sales in the Special Market segment increased 17% due mostly to the impact of acquisitions.

Profits in the Special Market segment increased 7% for the quarter. Starting with Canada net sales in US dollars were flat with last year as the addition of Europe’s Best, acquired in March 2008 and pricing offset unfavorable foreign exchange impact.

Canada also realized gains in Smucker’s and Robin Hood brands. In the Foodservice area the addition of Folgers and Knott’s Berry Farm contributed most of the growth.

These were partially offset by negative trends in away from home dining. Finally, sales were also down in our beverage business as the premium natural beverage products in our portfolio particularly hard hit in the current economic environment.

Looking at other key EPS components interest expense was up $11 million reflecting an increase in the borrowings of $750 million associated with the Folgers transaction. Our effective income tax rate was 31.8% consistent with last year.

Weighted average shares outstanding for the quarter increased from 56.8 million to 114.6 million as the result of the Folgers transaction. This brought the year to date weighted average outstanding shares to 74.7 million.

There are two other financial measures on which I’d like to briefly comment. First is cash from operations.

Due to the addition of the Folgers business the conclusion of the fall bake cycle and the strong earnings from our base Smucker business, cash provided from operations achieved a record $280 million for the quarter, nearly doubling last years amount. As a result of the strong cash flow generated this quarter we now have $360 million of cash and equivalents on hand at the end of January.

Second, as part of our original Folgers investor presentations we estimated a first full year pro-forma EBITDA of $820 million or 17.3% margin. This EBITDA estimate was based on the combination of Smucker and Folgers stand alone businesses and full recognition of synergies.

In this definition EBITDA excluded merger related costs and added back share based compensation expense as amortization. We are pleased that for the third quarter EBITDA as defined above, was $215 million or 18.2% of net sales compared to $92.2 million or 13.9% in last years third quarter.

Both measures for the quarter are tracking ahead of the levels included as first year pro-forma targets and give a comfort in our original estimate. A reconciliation of GAAP earnings to EBITDA is included in our press release.

Before turning the call over to Tim I would like to provide an update to synergies. You’ll recall at the time of the Folgers announcement we targeted synergies of approximately $80 million.

These synergies represented our estimate of costs that could be eliminated by combining the Folgers business into Smucker compared to Folgers operating as a stand alone company. The majority of these costs were in the SG&A area.

We remain on track to achieve the $80 million and lower run model cost compared to the stand alone model once fully integrated. To date, we estimate we’ve eliminated $50 million in full year costs on a non-GAAP basis partly through cost reduction and primarily through cost avoidance.

We expect to achieve all synergies by the end of fiscal 2010. I would now like to turn the call over to Tim.

The addition of Folgers this quarter has once again dramatically changed how the Smucker Company looks not only in terms of sales and profits but more importantly in terms of growth opportunities for all of our brands. We look forward to updating you on our progress in future quarters.

As Richard noted, our base business, particularly Oils and Baking had a very good quarter. During last weeks CAGNY conference we summarized our key accomplishments related to the Folgers integration and commented that integration is progressing as planned.

We have combined two organizations with the majority of the previous Folgers management team joining the Smucker team, providing continuity, depth and knowledge. We want to thank all of the employees who have helped us to get to this point.

We also want to recognize those involved with our biggest integration accomplishment to date which occurred at the beginning of February. We successfully completed customer facing, the first of three primary integration milestones.

We combined the coffee inventories into our distribution centers and now Folgers products can be ordered, shipped and invoiced with other Smucker brands. We also transitioned Folgers trade fund management to our best in class Siebel system.

In short, we transitioned from P&G systems on to our Oracle platform for the majority of customer related systems and processes. This is accomplished in less than three months after closing the deal, demonstrating our ability to implement one of our three core competencies.

Further, it allows us to exit portions of the transition services agreement. The remaining two integration milestones relate to transition of the coffee plant systems to our Oracle platform expected to occur this May and the transition of the supply chain activities related to sourcing of green coffee expected to occur in the fall.

Let me now provide an update to our outlook. First, as Mark noted, we are still on track to deliver our original pro-forma EBITDA numbers for the first full year of integration to Folgers.

The update relates mostly to items we would expect to affect the fourth quarter but with minimal impact on next fiscal year. We estimate sales for the year will range between $3.6 and $3.7 billion, this reflects the impact of anticipate competitive activity in Oils, pressures on our peanut butter business and price decreases.

We have also adjusted our income for diluted share before restructuring and merger and integration costs to be in a range of $3.15 to $3.30 primarily due to the following items. First, as Mark mentioned, we have updated amortization expense based on the preliminary evaluation of Folgers assets and expect additional non-cash amortization expense of $0.17 per share.

Second, we expect an impact in the range of $0.05 to $0.07 per share related to peanut butter. The peanut butter impact applies not only to retail branded peanut butter but also Smucker’s Uncrustables and our portion control products.

Our estimates include additional promotion and advertising support for the brands through this period. Third, we are impacted by a higher percent of Folgers marketing occurring during the period of Smucker ownership then previously forecast.

We anticipate the incremental impact to be in a range of about $15 million. Based on this range of estimated earnings per share we project adjusted EBITDA for the year of approximately $600 million or 16.4% of sales.

This compares to last years full year adjusted EBITDA of $371 million, 14.7% of sales. Before closing I would also like to take the opportunity to address the importance of brand trust.

Quality, as you know, is one of our five basic beliefs of our company and our commitment to quality is the reason that our consumers have confidence in all of our products. They know that each jar of our peanut butter will be both safe and delicious.

We are confident our stringent quality assurance practices ensure the safety of our products. We recognize that as the category leader we have a special responsibility to aggressively reassure consumers about our category and our products.

As noted, we continue to communicate directly to our consumer with this message and they continue to trust in our commitment to quality and safety. In summary, we are pleased to have closed our first quarter with the Folgers business and look forward to completing the integration and taking advantage of the many opportunities that are available ahead of us.

Second, we delivered solid sales and earnings in the quarter with a strong fall bake. Finally, in the face of the difficult economic environment we believe that our brands and categories are well positioned.

More then ever we believe number one brands provide a strategic advantage and with the addition of Folgers, approximately 75% of our projected sales will come from number one brands. We understand the level on uncertainty that exists in the market today and we remain cautiously optimistic in our view of the near term.

We remain very positive of our long term prospects. We thank you for your time today and now are happy to answer any of your questions.

Did I hear you correctly that you have about $3.00 of cash on the books per share?

Yes, we have $360 million, that’s correct.

Is the fiscal fourth quarter is that normally a positive cash flow quarter or a use of cash?

It’s usually a net positive; it’s not a large one, one way or the other. We’ll start procuring fruit and starting building inventories in the first quarter of next fiscal.

You signaled based on the adjusted EBITDA numbers being greater then target. Is the cash that you’re generating that you’ve actually put on the books above your plan?

Yes it is. As Richard said, the EBITDA is definitely targeting now, granted the quarter is a large quarter, it is ahead of plan.

We expected, I think I made mentioned last week at CAGNY with the completion of the fall bake then the absolute cash flow from Folgers. It is above.

In terms of the assumptions for the fiscal fourth quarter, are you already seeing more aggressive competition in edible oils and that’s what’s leading you to assume that Easter was going to be a tough market or is this just pure anticipation and you haven’t really seen that much of a change in the market to date.

We have seen competitive response already for the fourth quarter in the oils area and it is pretty aggressive.

Is any of the sales change forecast a function of coffee pricing and the pass through? The last two moves you’ve made in coffee have been down.

Yes, we commented last week there have been two price declines taken. One right before we closed the deal and then we took one about 10 days after we closed.

Those would be in the 6% to 8% range. Neither one of those would have been anticipated when we put out the original number.

The additional $0.08 of advertising and promotional spending behind Folgers, at CAGNY you kind of indicated that competition was acting pretty rationally within the category; especially since you took ownership I guess Kraft was pretty aggressive before the close of the deal. Have you seen something recently that’s become tougher or is this part of the long term plan to reinvest in the business.

You nailed it. Its more about the long term, it’s not about competitive activity going on currently.

Can you detail the amortization change and give us a little more detail on what was the cause of that and why the numbers vary from your original expectations?

First of all, as I said, it is a preliminary value; we will finalize that at the end of the fiscal. To turn the clock back, when we put out our preliminary financials around Folgers we had approximately $1.1 billion in intangible assets outside of goodwill and made certain assumptions about amortizable life and also if they would require amortization.

As we have gotten into the valuation during this quarter, and literally this was hot off the press right at the end of the quarter, we got into more details. Basically what we found was there are certain identifiable intangible assets that are being established that do require amortization and in some instances is actually a little bit shorter life then we originally anticipated.

It really is a function of there’s just more amortizable intangible assets then we had originally estimated and a little bit of adjustment on the shorter life.

When you’re looking at your $200 million or so decline in guidance of sales could you break that out a little bit in terms of how much is due to the decline in commodities and therefore you’re giving back pricing, how much would be the peanut butter hit and then how much would be the additional promotional activity that you’re seeing.

To step through from our original estimate $3.8 to $4.0 billion kind of a little bit to the question that Eric asked. As we add the first round of coffee and some other minor changes we worked our way down from the high end that $3.8 to $4.0 billion and moved down lower.

As we got to this quarter then with Paul’s comment on the oils, with the additional coffee and then with the oils and flour price declines that we took in January that’s kind of where we crossed over that threshold from $3.8 million into our current. I don’t have the breakdown, I would say probably the majority of it is price declines across oils, flour and coffee, and anticipate oils that we’ll see likely in the fourth quarter.

Oils and flour dropped 13% so that affected four months of our last part of the year.

Two other things, exchange rate they backed off about $30 to $40 million of sales because of the weaker Canadian. The last item, of course which is news, some anticipated loss on peanut butter.

It’s a combination of those four our five items that moved the target down.

As you’re seeing the economy and consumer develop at CAGNY you were fairly confident about your ability to maintain pricing in the face of declines in commodity costs. The recent activity you’ve seen in the oils category for Easter, are you seeing it in any of your other businesses and are you concerned about the level of promotional activity at the grocery store.

No, that’s typical for this time of the year to see those types of pricing challenges that our competitors have out there. We’re pretty comfortable and I don’t think we’re seeing that pressure in other parts of the business.

On the amortization are there any offsets going on here as these amortization charges go up, if you’re finding assets in one category does it pull them out of another category that maybe say depreciation goes down?

On the fixed asset side the fair value adjustments were pretty much in line with our expectations. Basically what you’re seeing is where we are adding these assets that require amortization for all intents and purposes coming out of goodwill which of course is not amortizable.

Just the allocation?

Yes, but the fair value of the fixed assets, the preliminary valuation is pretty much in line with our original estimates.

As the depreciable lives decrease does this mean in a year or two we might see a fall off in these amounts and these charges?

No, when I said that we had assumed pretty lengthy lives consistent with our policy of around 20 years. The adjustments we’re talking about are 10 years so not a one or two year impact.

Its non-cash.

That’s correct.

With the nice cash build that we see at the end of the quarter any interest in paying down debt faster?

We have $650 million coming due and obviously in this environment to have cash on hand is a good thing. Our first pay down of that will be in June.

We’re currently looking at our options but we have $650 million on the table this year to consider for pay down.

Where is private label having the biggest impact across your products?

I’d say the biggest area is in the base oil business, they picked up significant ground on a volume percentage basis. That is where we are seeing the biggest impact.

That being said, our Crisco brand is still doing fairly well.

How about a category like peanut butter where we’ve had these recalls, is Jif gaining share?

Our Jif business is holding up within the category pretty well. Our declines are significantly less then the category and we’ve put a number of both consumer and trade events in for the next two months.

We feel like this is an opportunity, we can take some share, we’re really proud of the Jif business and there’s some customers that we can reach that we haven’t reached before.

You haven’t really commented on the inflation outlook, maybe you could talk a little bit about what you think fiscal ’09 comes in at then maybe if you are willing to give a view on fiscal 2010.

In terms of this fiscal our costs are going to track a little bit better then we originally thought. Last quarter we were at $140 million for the year, we’re going to probably be just a little bit better then that.

That reflects the lower costs. We talked about last quarter we expected particularly in our oils and baking we saw that come through this quarter, we expect that to continue.

The markets below the $0.30 per pound range right now so we think that will stick for a while, that’s going to benefit us. In terms of other cost projects I don’t think we’re seeing anything really significantly moving up or down.

Oil has affected resin which has been a little bit in our favor to help offset some costs. Coffee is in pretty good shape as we stand here today.

The more important thing is that we’re not chasing it with price any more. We’ve got our pricing in place and so if we have to work it any direction it’s not significant.

We have good credibility with our customers in terms of when we take a price increase its truly justified and when we have reason to take price declines those are justifiable. Next year with commodity costs down pricing will be pretty stable.

Maybe you’ve answered this question in some of the categories already but could you run through some of the other businesses and say whether you are gaining share both in dollar and volume terms or losing share.

If we look at fruit spreads and peanut butter it’s very difficult right now to look at peanut butter. There’s so much noise from a year ago.

If you remember, our competitor came back a year ago in the first quarter and there was all kinds of noise there and they’re down significantly this year. Private label is up a little bit.

We are up as well, not quite as much as private label but it’s really in the last month or so. If you look at the trends on the quarter our shares are stable.

Peanut butter, I hate to comment on because there’s just too much noise. Fruit spreads, we are up in dollars, we’re off a little bit in touch and that’s consistent with all the brands in the category.

A little bit of mix change, some of our traditional fruit spreads are very strong. That’s encouraging in this economy.

A general comment is where our brands are number one in the category we’re definitely doing better then our competitors especially our branded competitors. Where we have number three brands or so that’s a little more challenge.

As we pointed out, most of our brands are number one in the category.

The Pillsbury cake mix and frosting are both growing up in volume and in dollar share so we’re seeing some real nice gains there.

Is there any adjustment that we should make for the tax rate or your ability to pay down debt is pretty quick so is there any more leverage that we might assume on interest expense, capital expenditures is there any change there in terms of the outlook?

On CapEx I would go with our original assumptions, I don’t really see any significant change on that. In terms of tax, we might see just an ever slight increase; we’re 32.8% probably around 33% but nothing material there.

From a pay down in debt and interest assumption I don’t think I would suggest any kind of change now. I don’t see any pay down of any sort occurring until next fiscal.

Of course we’ll provide a little more color on that at our next call. Probably all the previous assumptions are still fair.

I was wondering if you could comment at first a little bit on is sell in versus sell through in the quarter and whether you saw those two measures in a relative alignment and whether there were any de-stocking activities that impacted your business in the third quarter and your expectations looking out to the fourth quarter.

I can speak to the consumer business, if anything the retailer is cautious so their inventories are tight. If there’s any of that it’s behind us.

Obviously everybody’s up in the air on what exactly demand will be. Will there be different mix in the grocery store?

Our retailer’s inventories are tight; I don’t think we should expect any future inventory issues on our business.

That also reflects our long term focus on our consumer promotions and that we really have developed a relationship and a trust with our brands and with our customers that they’re not buying in what they don’t need and we’re pretty honest with them to not buy in. That’s really been helpful.

We’ve had minimal impact on what’s called de-stocking.

With respect to peanut butter, coming back for a moment, the $0.05 to $0.07 impact, you anticipate that to be fully impacted in the fourth quarter and is there any expectation that this could persist beyond that given your experience.

It is for the fourth quarter, that’s our best estimate. The consumer ultimately will make that decision.

We do think that our message is starting to reach out. We hope that the right message is out there and over the next three, four months it should settle out.

If there is a change we’ll certainly update you on the next call.

On synergies the $80 million in cost synergies this year were originally identified related to the Folgers transaction. Did I hear you say that you’ve hit a $50 million run rate already on that?

I’m trying to get more color around that.

Yes, you did hear me. What we mean by that of course we have not incurred $50 million through any financials yet but we’ve identified either cost avoidance or cost reduction a full year amount of $50 million.

Let me just give you an example, I think it speaks volumes. If you look at the original run model of Folgers and let’s say that there was a particular area, position that was included in the Folgers run model, some sort of cost that is redundant in our company.

We of course never absorb that cost, never will. We’re counting that as a full year synergy.

That’s where the $50 million comes from, it’s primarily SG&A, we’re still working on identifying and implementing some of the cost of goods sold opportunities.

I wanted to make sure I understand the full year guidance. The $3.15 to $3.30 per share range includes $0.27, $0.28 of the non-cash amortization?

Yes, that’s right.

If I add $0.28 the $0.11 in Q3 and $0.17 in Q4 I come up with a guidance range of about $3.43 to $3.58 is that correct?

There’s $22 million so on a full year EPS basis that amounts to $0.17 a share. If you go to the high end of our range $3.30 add back it would be $3.47.

If I follow your math it’s $3.32 to $3.47.

That $0.17 includes the third quarter number?

Yes.

Its $0.17 in total?

That’s correct.

On share count is that going to be about 118 million for Q4?

That’s correct.

The mark to market charge, did that $24 million flow through cost of goods sold?

Some of it yes, it did flow through, not the entire $24 million. We’re estimating something more then half of that.

It comes through as a lower cost on actual physical contract so you’re seeing that COG. Some of that will come through in the fourth quarter but also some of it is funding the price declines that we went effective with last month.

When I look at the EBITDA margin of 18% how’s that look for the fourth quarter, is there any seasonality to that that would boost it in the third quarter or should we expect that kind of run rate in Q4?

That probably is a little seasonally adjusted to be higher. Of course our second and third quarters are our largest because of fall bake and now coffee adds to that.

I would think that it would be something less. Just to frame that in, when we looked at our pro-forma we expected margins in the 17% range.

That gives you a little sense of how the average might work out.

On the coffee business if heard you correctly total price declines are in the 6% to 8% is that correct?

That’s correct.

How have volumes in coffee performed relative to the price declines.

The category is clearly down a percent or so if you look at the syndicated data. We’re pretty much in line with that.

We are benefiting from a mix of higher Dunkin’ Donut sales and lower Millstone and away from home sales.

How much is away from in the whole Folgers business?

It’s relatively small, its less than $100 million or right at $100 million.

You did a good job explaining the sales differential from your prior guidance. You said the Canadian dollar, the exchange rate effect is $30 to $40 million, that’s for the full year?

Yes, most of that was the back half of this year.

The majority of this whole decline is in the pricing on oils, flour and coffee, is that correct?

That’s correct of the overall decline.

Your stock is down 7% pre-market. People don’t like surprises particularly in your kind of stock.

I wonder how this estimate for goodwill could be that far off. I agree it’s much to do about nothing its non-cash but when you did find it out did you contemplate telling people at CAGNY?

We found out during our closing process during the quarter. The way it came about is that as I mentioned the valuation work had been done and got into the specifics we’ve identified certain assets that required the amortization it was during our closing process.

It must have been a lot of assets that required. Basically this was a lot; it’s twice the size of what people thought or what you thought.

Was it twice the amount of assets, can you give us a little more color what caused the big change?

Our original intangible assets were about $1.1 billion and that was what was in our planned financials. As we stand today the intangibles that have been identified are about between $1.3 and $1.4 billion.

There are two specific assets that have been established around technology and contractual relationship that as we’ve gotten more familiar with the business and gotten to the valuation of these assets realized that our value should be set up as separate assets not included as goodwill or anything like that. Those are the primary assets that are driving the additional amortization.

Could you give us an update on Uncrustables especially if you’re seeing some of the other varieties picking up the slack at the peanut butter sku is getting through that?

Uncrustables is doing pretty well; obviously we are expecting some downturn from the peanut butter issue. The good news is that the sales have been pretty solid and the business continues to be profitable.

Can you give us on sales and volumes in the quarter?

In the foodservice area I can speak to that. Volumes were basically flat for the quarter because we did see a few school districts pull out of Uncrustables temporarily in the last month.

As far as the retail market is concerned, if you remember the peanut butter media really hit the middle of January. The impact on the third quarter on retail Uncrustables was small.

It’s easy though to think that we’ll have a little challenge in retail Uncrustables this next quarter. A lot of the communication that has come out from the FDA, etc.

is that national brand retail peanut butters are not affected. There are some 1,800 items that are affected.

Obviously its going to take us a while to get our message out that Uncrustables is clearly not part of that. We do expect probably the first month of the quarter or so to be soft.

We don’t expect a long term hit on Uncrustables.

Are you seeing any channel shift between mass, including super centers, warehouse clubs and traditional super markets as consumers buy your products and adjust to the economy?

The value channels are really doing very well across all products and all brands. Whether it be club or dollar or mass they’re all doing very well.

In general we’re seeing some shifts in our businesses, some are up. For example, Hungry Jack Pancakes, Hungry Jack Syrup, Hungry Jack Potatoes are all up because those are comfort foods, people eating home more.

On our fruit spreads our traditional fruit spreads are solid, in fact, they’re up slightly. Our low sugar and Simply Fruit which cost more per ounce are seeing a decline in volume.

Across our line we’re seeing a shift. Fortunately we have a number of lines that are doing well during this time and others that are more challenged then others.

One very positive point is coffee is a very solid category during tough economic times. Obviously that’s a good addition right now.

I get the $0.05 to $0.07 a share in peanut butter and the higher amortization expense. What I want a little more color on is when you say that there’s a higher percentage of Folgers marketing costs that were incurred during the period that you guys owned it what does that mean that $15 million and is that recurring or is it just the one time.

We’re basically spending the marketing that was originally in the pro-forma that were presented to us and what we built into the plan. What we basically have if you think about it, it’s a shift in the marketing the timing of it is when it was incurred before we closed and the amount that will be incurred after we close.

The marketing budget basically remains the same for the entire fiscal year but there’s a shift of those dollars from what benefited the previous owner to what we will then incur in the back half.

It is, if you will, a current year only impact because next year we’ll obviously have the full year in the budget assuming no major increase in budget will remain relatively constant.

We shouldn’t include this in the run rate; you guys are looking at as more of a one time.

Yes, this is just basically a flip between the two ownership periods.

On the amortization question can you give us a sense in fiscal 2010 what we should be expecting on a quarterly basis?

It would be the same that we’re seeing now so it was $19 million. The only thing I would caution is that next year of course we’ll have our weighted average shares outstanding for the year will reflect 12 months of the outstanding amount.

The EPS impact actually will be a little less the dollar amount would be about $19 million a quarter. Again, to reiterate, we’re still working through that and we’ll have any update at our fourth quarter call.

Last quarter you mentioned that there could be a significant impact from the write up of acquired inventories as required under GAAP purchase accounting. You said that you’d identify the amount if it was material although you said that it would be included in your ongoing numbers not in merger related costs.

I’m just wondering could you update us, was there a material impact there, how much was it, and was that included in the merger related costs or is that something separate.

We did incur that as part of our opening balance sheet. We did take a $12 million adjustment to cost of goods sold that ran through our normal cost of goods sold not through merger integration costs.

That was all because of the write up in inventory to fair value. It pretty much came in at amount and timing exacting as we thought.

Was that in the pro-forma numbers that you had put out in terms of pro-forma EBITDA and was that in your EPS guidance or is that something that’s separate from that.

There was an estimate of course that was the guidance that was put out last June was obviously well in advance of our view. There was some estimate of that.

You haven’t adjusted your fiscal 2010 guidance yet. Clearly the incremental amortization will be recurring in fiscal 2010, depending on the timing as consumers get back to the market in terms of peanut butter maybe you could see a month or so of carry over.

Are there any other moving pieces since the last call that, of course there are a lot of moving pieces, are there any pieces that in aggregate that were missing that would cause you to change your fiscal 2010 outlook beyond.

The one that comes to mind, it’s real easy to think of downside, I would only put in the frame that this is an additional item that we know from an expense standpoint. We’ll clearly give more direction on our next call.

As we spoke at CAGNY, you probably heard from other food companies, pension expense is due to the market performance over the past 12 months is going to be up assuming no significant turn around between now and April 30th. That’s the one item; we’re really not in a position yet to quantify that.

That would be only additional item for consideration. I put that in the context that that is just one known down item.

If you just saw the quarter we ended it was a fabulous quarter all of our businesses are solid. Some brands are up a little bit more, some product lines are down a little bit more.

We’re well positioned. We see no fundamental changes.

Our cash flow projections are all right in line. We’re actually ahead of the cash flow projections that we had with the Folgers acquisition on a 12 month run basis.

Although we’re not giving guidance for next year at this time, we see no fundamental change to our business that would change our outlook, things are solid.

Clearly as a couple people alluded to earlier the amortization is a non-cash item and should be something we’re looking through anyways. Lastly, in terms of being at a $50 million run rate versus your $80 million total estimate in terms of synergies do you see possible upside to that, the $80 million?

At this point we still feel really comfortable with the $80 million.

It looks like some of the companies in the industry have been proactive about taking the cash, putting it into the pension assets and therefore reducing the possible swing of expense. Do you have the ability to do that or are you over funded so that it wouldn’t be tax effective to put the cash in?

We will look at that, as a matter of fact, that’s one of the things that we are looking at right now. I will say that that would not have a material effect because going into the year we were fully funded.

Albeit we’re short on assets to liabilities but funding up really doesn’t give you quite the P&L effect that maybe other companies would in our case.

There was a previous question regarding the spending on Folgers. I know that you’re long term oriented but is it incorrect to assume that the out performance this quarter given that amortization expense was unexpected by everybody so the core business was actually better.

Is it wrong to think that you’re taking roughly $0.10 of higher amortization expense this quarter and plowing that back into the Folgers business in terms of higher advertising and promotional spending in the fourth quarter?

We haven’t been able to make changes that quickly. The answer is no.

Thank you very much for all the interest in the call. We feel we are very optimistic about the results we had, the cash is better then we thought which is tremendous.

Going forward clearly the fact that we have 75% of our business in number one brands and the basic beliefs of this company are what stand us well in this kind of economy. Thank you very much for your interest and your support.

Have a great day.