Sonal Robinson, Vice President of Investor Relations Richard Smucker - Chief Executive Officer Vince Byrd - President and Chief Operating Officer Mark Belgya - Chief Financial Officer Paul Wagstaff - President, US Retail Consumer Foods Steve Oakland - President, International Foodservice and Natural Foods Mark Smucker - President, US Retail Coffee

Eric Katzman - Deutsche Bank Andrew Lazar - Barclays Alexia Howard - Sanford Bernstein David Driscoll - Citi Jonathan Feeney - Janney Akshay Jagdale - KeyBanc Chris Growe - Stifel Robert Moskow - Credit Suisse Chuck Cerankosky - Northcoast Research Farha Aslam - Stephens, Inc Jason English - Goldman Sachs Thilo Wrede - Jefferies John Baumgartner - Wells Fargo

Good morning, and welcome to the J.M. Smucker Company's Third Quarter 2014 Earnings Conference Call. (Operator Instructions) I will now turn the conference over to Sonal Robinson, Vice President of Investor Relations. Please go ahead, Ms. Robinson.

Good morning, everyone, and welcome to our third quarter earnings conference call. Thank you for joining us today. On the call with me are Richard Smucker, Chief Executive Officer; Vince Byrd, President and Chief Operating Officer; Mark Belgya, Chief Financial Officer; Steve Oakland, President, International Foodservice and Natural Foods; Mark Smucker, President, US Retail Coffee; and Paul Wagstaff, President, US Retail Consumer Foods. Following this brief introduction, Richard will comment on highlights and the challenges we faced in the quarter. Vince will then provide an update on the dynamics occurring within our business segments. And Mark will close with additional comments on our financial results for the quarter and our updated outlook for the full year. Before I turn the call over to Richard, let me remind you that we may make forward-looking statements during the call that reflect the company's current expectations about future plans and performance. These forward-looking statements rely on a number of assumptions and estimates, and actual results may differ materially due to risks and uncertainties. I encourage you to read the full disclosure statement in the press release concerning forward-looking statements. Additionally, please note the company uses non-GAAP results for the purpose of evaluating performance internally. Discussion on non-GAAP information is detailed in our press release located on our new corporate website at jmsmucker.com. A replay of this call will also be available on the website. If you have any follow-up questions or comments after today's call, do not hesitate to contact me or Mark Belgya. Let me now turn the call over to Richard.

Thank you, Sonal. Good morning, everyone, and thank you for joining us. My commentary today will focus on three key messages: first, a solid performance in the quarter; second, the change in our outlook for the year; and finally, that the fundamentals of business remain sound and that our expectations for continued earnings growth beyond the fourth quarter are positive. When we last spoke to you in November, we outlined our plans for the holiday quarter, including our expectation for a solid merchandising support and the significant increase in third quarter earnings per share over the prior year. As we reported this morning, we're pleased to have delivered another quarter of record earnings per share. We had a good fall bake and holiday season and we're pleased with the quality of merchandising achieved. Non-GAAP EPS increased by 13% to $1.66. While these results were strong, they were below our expectations. Before I discuss the key highlights for the quarter, let me also comment on our revised outlook for the year, which was included in our press release this morning. We adjusted non-GAAP earnings per share guidance for the fiscal year from the prior range of $5.72 to $5.82 to the range revised to $5.55 to $5.60, forcing a soft fourth quarter against the strong prior year where earnings per share were up 17% over the prior year last year. Let me comment on two factors that softened our EPS growth for the third quarter and are contributing to our adjustment of annual guidance. First, weaker than expected topline results within our peanut butter and fruit spreads businesses. As you may recall, we have previously indicated that peanut butter was expected to be a key growth driver for our total company results this quarter. Vince will elaborate on why this fell short of our high expectations. Second, profitability within the foodservice hot beverage business that we acquired from Sara Lee was lower than expected, reflecting an on-planned adjustment of approximately $10 million in our trade spending accrual balance. Additionally, as we enter our fourth quarter, our outlook incorporates that our US Retail volume is expected to fall short of a very strong fourth quarter achieved in the prior year. Additionally, competitive pricing in a number of our key categories is expected to continue. And lastly, while our business in Canada had a very strong third quarter, we continue to face foreign currency headwinds. We view these issues as near-term challenges. And in our 117 year history, we've faced similar challenges before. We have the ability to adjust quickly where needed, while still maintaining a long-term view of the business. I want to emphasize that our business fundamentals remain strong and our prospects for ongoing earnings growth continues. Our confidence is supported by aggressive innovation plans, strong brand support and a more stable raw material cost environment and the strategic deployment of our strong cash flows. For these reasons, we're confident that our company is well positioned for growth in the coming year. Let me now return to the third quarter and provide an overview of the highlights. We are pleased with the volume growth in our largest business, Coffee, and the performance of our Folgers and Dunkin' Donuts coffee brands, which both had a very strong quarter. In addition, Crisco enjoyed a very strong holiday merchandising season as did our overall Canadian baking portfolio. The company sales were impacted by volume, planned product rationalization and competitive pricing. These factors combined with our pricing actions and recent trade activities resulted in lower net sales compared to the prior year. Innovation remained key to our performance behind contributions from recently launched items such as Dunkin' Donuts Bakery Coffee Series, Jif Whips and new varieties of Pillsbury baking products. Our seasonal business for Dunkin' Donuts Coffee and Pillsbury baking continues to be a real strength for us. For the current fiscal year, we have achieved our target of introducing 100 new products and we're excited about our initiatives planned for fiscal 2015, some of which Vince will preview in a few minutes. To further support our brands, we continue to maintain a consistent ongoing advertising presence. We're actively engaged with consumers as we speak. In connection with our Olympics sponsorship of Team USA, new television advertising, digital and media support and in-store merchandising. Consumers continue to demonstrate their excitement and our involvement with Team USA and retailers have provided exceptional merchandising support. With the fall bake and holiday season complete, we saw a strong cash generation from operations during the quarter. While we anticipate full year cash from operations to come in slightly lower than originally planned, we believe our fiscal 2014 free cash flow target of $600 million is still achievable, aided by constant shift in timing for certain capital spending. As the company continues to generate significant cash flow levels, we remain committed to utilizing this cash to enhance shareholder value. While we've achieved our target or repurchasing 2% of our shares annually each year, we're giving strong consideration to continuing repurchasing outstanding shares under the current Board authorization. Let me close my comments by reinforcing that we are confident in our ability to navigate and address the current short-term challenges we are facing, while remain committed to the long-term growth goals of the company. We acknowledge the outlook for the fourth quarter is down from our previous guidance and are working diligently to minimize the impact. We believe we have the right strategy in place and will make the tactical adjustments as we go. Our team is the best in the industry and we're confident in their ability to drive ongoing profitable growth. With that, I'll turn the call over to Vince for an update on our business segments.

Thank you and good morning, everyone. As Richard indicated, we were encouraged by our results in a number of areas during the third quarter, while other areas of our business were more challenged. Let me provide some additional commentary on this performance as I discuss our three business segments. Beginning with US Retail Coffee, the momentum experienced in the first half of the year continued into the third quarter as volume in this segment grew 2%. Highlights for the quarter included sound execution of our holiday marketing and merchandising plans, including new advertisement for several brands of our portfolio; volume gains for the Folgers brand, which grew 4%, driven by roast and ground coffee; and for the Dunkin' Donuts brand, which was up 8% behind growth in the base business; and contributions from innovation. Share of market gains within both the mainstream and premium coffee segments for the latest 12-week IRI scan period. And finally, third quarter coffee segment profit grew 4% year-over-year. Performance for our K-Cup business continued to be mixed as sales grew for the Folgers Gourmet Selections was offset by anticipated sharp declines with Millstone, reflecting the continuation of the competitive dynamics discussed last quarter. As a result, we now anticipate full year K-Cup sales to be up slightly for 2014. Looking forward, we remain optimistic about the business over the long term with a number of initiatives expected to provide growth in fiscal 2015. These include, first, commencing distribution of our K-Cup offerings in new channels including the dollar class of trade and the e-commerce channel. Secondly, introducing three new K-Cup varieties are continuing to provide marketing support to the platform and to our brands. And thirdly, continuing to expand our relationship with Green Mountain. This includes participating in their latest innovation, the next-generation brewer platform expected to launch later in the calendar year. In addition, during the quarter, Green Mountain began marketing and selling Folgers Gourmet Selections K-Cups in the Foodservice channel under a distribution agreement, further extending the brand's footprint. Looking to the fourth quarter, we anticipate the favorable benefit of green coffee cost year-over-year to continue, albeit at a lower amount. While costs are expected to decrease, we anticipate segment profit will be down from the record level in the prior year due to the timing of our net price realization to cost that occurs from quarter-to-quarter and a softer volume outlook. We continue to manage the business on an annual basis and these price to cost timing impacts are expected. For the full fiscal year, we expect to deliver a solid year and record coffee segment profit. Let me conclude my coffee remarks with a brief update on the recent news in the commodity market. As you are likely aware, Arabica futures have climbed over 20% since the beginning of the calendar year. While we do not comment on our specific hedge position, we feel consummate in our ability to adjust pricing when warranted. Let me shift to Consumer Foods, where overall volume for the third quarter was flat and below our expectations, driven by shortfalls in peanut butter and fruit spreads. This was partially offset by the strong performance of our Crisco oils business along with volume gains for Pillsbury frostings. Expanding on peanut butter, although we faced a difficult comp of 17% growth for the Jif brand in last year's third quarter, we were optimistic entering the period as a result of strong merchandising programs and better pricing versus the prior year. Although we executed this plan, we believe our competitors in the category maintained a temporary cost advantage and their adjusted frequency of merchandising were significantly greater than anticipated, resulting in the number two brand regaining share they had lost in the prior year. Ultimately, this dynamic impacted our volume performance in the quarter. We anticipate that pricing level of competitive activity will continue through the fourth quarter. Yet, given our expectation that we'll no longer have a peanut cost disadvantage versus our competitors as we enter the new fiscal year, we expect to be well positioned to compete responsibly in fiscal 2015. Additionally, we remain optimistic about our brand building efforts behind Jif. Innovation in particular continues to be a key contributor. Jif Whips continued to perform well with 12-week ACV of 80% and strong repeat purchase rates. Additionally, during the quarter, Jif Hazelnut was relaunched, showcasing new packaging along with a new variety. Both the Whips and Hazelnut product lines are being supported by robust marketing campaign, including TV advertising. Turning now to fruit spreads, there are two key issues affecting our business and share trends. First, we faced a competitor that was dealing extensively to levels that were unprofitable for us and we chose not to meet them. Secondly, there is a segment of consumers that are shifting away from artificially-sweetened products that is impacting what we refer to as our better-for-you line of fruit spreads. Reflecting this trend, we are focused on ensuring we have the right product offerings to meet the needs of our consumers. This is evidenced by our recent launch of Smucker's Natural Fruit Spreads and we are encouraged with early results of this offering. Our innovation efforts include the opportunity to expand the Smucker's brand into categories beyond fruit spreads. To that end, we are excited to announce the launch of Smucker's Fruitables, a new line of fruit pouches providing consumers a convenient and great casing on-the-go snack option. This all-natural offering will be available in four blended fruit flavors with shipments beginning early next fiscal year. I will conclude with a few comments on the International, Foodservice, and Natural Foods segment, where the integration of a foodservice beverage business acquired from Sara Lee continued to have a significant impact on the segment results for the third quarter. Let me address three key points related to this business. First, expanding on the $10 million adjustment that Richard spoke to, during the last several months, we transitioned the trade spending management activity and other back-office operations to our teams at Orrville. The complexities inherent in the foodservice channel contracts and the transition in processes and systems acquired from Sara Lee all contributed to an under-accrual of certain trade liabilities. Going forward, we have addressed the underlying issues and do not expect further significant adjustment. Secondly, we finalized the planned exit of the private label coffee foodservice business during the quarter. We're encouraged to have completed this transition, allowing us to move forward with a focus on growing the branded roast and ground and the liquid coffee concentrate business. Lastly, we recognize that the profitability of this acquired business to date has fallen short of original expectations. However, with the integration and the rationalization activities now complete, our teams are focused on ensuring this business meets its full potential. As a result, we anticipate profitability within the business will improve as we enter the new fiscal year. Turning briefly to the rest of the segment, a key highlight for the quarter was the strong sales and profit performance of our Canadian business with volume and market share gains achieved across nearly all categories in the portfolio. Lastly, within Natural Foods, we remain pleased with the performance of the recently acquired Enray business, including the truRoots brand, and we look forward to completing the integration activities by the end of the fiscal year. In summary, we continue to navigate through a challenging operating environment and remain confident in our ability to do so, all the while remain committed to our strategy and the key initiatives we have spoken to previously. These include building our brand through investments in innovation and marketing, including support behind our Olympics sponsorship, improving our supply chain, capitalizing on acquisitions and ultimately positioning the company for long-term growth. I will now turn the call over to Mark to discuss our consolidated results.

Thank you, Vince, and good morning, everyone. Net sales decreased 6% in the quarter, reflecting lower net price realization. Excluding the impact of planned rationalization in our Foodservice business, volume was slightly up in the quarter. Acquisitions added 2 percentage points in growth, while exchange rate and mix each reduced sales by 1%. The weaker Canadian dollar will continue to negatively impact results in the fourth quarter and next fiscal year. GAAP earnings per share were $1.59 this quarter and $1.42 in the third quarter of last year. Excluding special project costs, earnings per share were $1.66 this quarter and $1.47 last year, an increase of 13%. The growth in EPS was partially driven by gross profit, which excluding special project cost, increased $11 million or 2%. And lower commodity costs were only partially offset by pricing. This resulted in gross margin improving to 37.4%, an increase of nearly 300 basis points over the prior year. The positive impact of the lower tax rate, a decrease in interest expense, reflecting the company's interest rate swap, and a reduction in average shares outstanding from a year ago all contributed to the year-over-year EPS growth for the quarter. Turning to cash flow, cash provided by operations were the strong $421 million in the quarter compared to $324 million last year. The increase primarily reflected greater reduction in our overall inventory dollars during the quarter as it compared to the same period last year. We're adjusting our 2014 CapEx estimate to $240 million from the previous range of $250 to $270 million. This lower CapEx guidance reflects actual spending to date and the decision to defer spending of certain projects until next fiscal year. Reflecting this shift in timing, our initial projection for fiscal 2015 is to maintain CapEx at around $240 million level. We will confirm this estimate in June during our year-end call. While the current year projection is lower than the guidance we provided at the beginning of the year, total CapEx spend over the two fiscal years is in line with our original expectations. This CapEx guidance includes a revised estimate relating to expanding our Memphis facility to support peanut butter production. The initial $70 million estimate increased to $90 million, reflecting scope changes to the significance of project. Free cash flow was $355 million for the third quarter, bringing the total to $440 million for the first nine months of 2014. As Richard indicated, our full year free cash flow target remained at $600 million. As of January 31, we had no borrowings outstanding against our revolving credit agreement. Let me conclude our prepared comments by updating full year sales and EPS outlook. We anticipate 2014 net sales will decrease approximately 5% from the prior year, which equates to approximately 7% decline in fourth quarter. This revised sales outlook reflects the impact of list price changes and other pricing levers to primarily reflect lower cost recognized throughout the year, including coffee. A note, we took an 8% list price decrease in oils earlier this month. US Retail volume declines were approximately 2% to 3% for the quarter due to strong prior year comps and expected competitive pricing in certain key categories. Continued headwinds from foreign exchange in Canada were offset somewhat by sales contribution from [ph] active business. From an SG&A perspective, we're actively managing our costs and now expect full year SG&A to increase slightly less than the 4% increase realized in the first nine months of 2014. Given our fourth quarter outlook and third quarter actual results, we're adjusting our annual non-GAAP income per share, guiding to a range of $5.55 to $5.60. This range is based on approximately 105 million shares outstanding for the purpose of calculating annual EPS. The range forces the fourth quarter EPS estimate below the prior year. As a reminder, the prior year's fourth quarter benefited from a number of factors, including stronger than expected volume performance across our US Retail business, favorable absorption of manufacturing overhead and lower tax rate. Let me conclude reiterating the key points that Richard made at the beginning of our call. We had a solid third quarter performance, resulting significant year-over-year EPS growth. Yet, recognizing these results were below our aggressive expectations and anticipated soft fourth quarter, we have lowered our full year outlook. However, our business fundamentals remain sound and we're optimistic as we look forward to fiscal 2015. Specifically to this last point, while we provide our 2015 guidance when we release our year-end results in June, I would like to preview some of the key reasons for optimism as we head into the new year. Recognizing the competitive environment and foreign exchange will remain headwinds, we expect to benefit from the following: our robust innovation pipeline, additional supply chain cost savings particularly related to our fruit spreads operations, further reductions in our recognized peanut costs that will improve our competitive positioning. The last thing is the product rationalization that significantly impacted our International, Foodservice and Natural Foods segment and the full year impact from any 2014 share repurchase activities. And as a reminder, we should mention we will be looking at share repurchase opportunities. We currently have approximately 2.8 million shares still outstanding under Board authorization. We look forward to sharing more on these items during our year-end call as we will discuss our plans for delivering another year of earnings growth. And with that, we will open up the call to your questions. So, operator, would you please queue up the first question.

(Operator Instructions) Our first question comes from Eric Katzman with Deutsche Bank. Eric Katzman - Deutsche Bank: I guess first question has to do with the jam and jelly spread business. I don't know if you listened to the McCormick call, but they dominate their category in spice and seasonings and yet they've seen the consumer change where they're buying or maybe buying some alternative products in different parts of the store. So is it kind of a somewhat similar situation for you that you've got aggressive competitors on the low end and that maybe the consumer changing a little bit on the higher end?

Yeah, from this perspective, really there're a couple of things that are going on. First off, I would point out that our strawberry and variety products actually have had a very good year overall. And so we've been pleased with their performance so far. The great business, which is really due to our competitive situation, has not done as well. We've seen some impact there due to competition. It's really a better-for-you segment, which includes some of the sugar-free options that we've struggled with the most, and that kind of goes to your comments on the consumer taste and the consumer trends that are going away from artificially-sweetened products. And so we are looking at ways to address that. Some of the things we're doing to that end are the Uncrustables business, which is a way for moms to give their kids the PB&G sandwich, that continues to do very well and it's up double-digit and we expect that to continue. And then also, we're in process of launching a Smucker's Fruitful product, which is like an applesauce fruit-based product that we're seeing some nice trending upward with the consumers in that category is growing. So I think we're looking at ways of how do we expand this market brand to meet some of the other consumer needs. Eric Katzman - Deutsche Bank: In coffee, Vince, I think you said that your market share over the last 12 weeks IRI was up. And obviously your volume numbers were pretty decent in the business. Can you explain why, like Nielsen would show your share down? Is that the difference, the single-serve K-Cup share losses, I guess, you experienced year-over-year?

Eric, my comments were that we gained share in roast and ground and premium and actually we gained share in this segment as well. When you roll it all off though with K-Cups, we did not gain share, and that's just a matter of the math if you think about our share in the K-Cup and as that becomes a bigger piece of the pie. We obviously don't have the same 33 share that we have on the rest of the business. So it's becomes a math exercise to some degree. But we did gain share in all other segments.

We'll go to our next question from Andrew Lazar with Barclays. Andrew Lazar - Barclays: Richard, I think it was maybe about two years ago where you had expressed a belief that there would not be a race to the bottom with respect to promotional activity. And I know you've got some specific challenges in businesses that you're addressing. But would you say any of the recent competitive environments or some of the broader view that you see maybe just changed that view at all or not so much?

I would say in general it's changed our view that much in certain categories, specifically peanut butter. Peanut cost came down significantly the last year or so. We have gained a lot of market share doing that transition. And because we had kind of higher peanut cost than some of our competitors during that time, they took advantage of giving that back during the past couple of quarters. And even though actually our peanut butter sales were up this year in terms of units, they weren't up as much as we thought they were going to be and we lost some share to our competitor. But in general, it's competitive up there. I can't say that it's not competitive. And we're running a lot of promotions, but if you look at all of our margins in the industry, everybody's margin is up over the prior year, because commodity costs have come down. And I think most manufacturers have given some of that back in trade spending, but not all of it. So you'll see a higher trade spending because of that, but margins are better overall. Andrew Lazar - Barclays: With respect to share repurchase potential, it's more a matter of clearing it with the Board and power that more than anything else, I guess, structural that would perhaps keep you from being more active in the marketplace, given where the stock has come down to, is that a fair assessment?

Just to clarify the 2.8 million shares actually have been approved by the Board. And so it's just a function of putting your program into places we so choose. But there is no further authorization. Now once we got that, we would obviously have to go back to the Board. But there is no limitations for 2.8 million shares.

We'll take our next question from Alexia Howard from Sanford Bernstein. Alexia Howard - Sanford Bernstein: I think coming back to the peanut butter profitability, you mentioned the temporary cost versus another player. Can you just give us a little bit of a better idea about what that is or why that situation has arisen, and how confident are you that that resolves in fiscal '15?

Going back to a little bit of history on the peanut cost or peanut market, we saw peanut cost go up significantly. And one of the things that we do as being a large peanut buyer in the market is we went out helped the farmers, the sellers to make sure that they had a supplier, which was us, buy peanuts. And as we do that, again we don't get into the details on how long our purchase will go out, but we went out pretty long in that process. And as the peanut cost came down, we went out longer than most of our competitors. And so as you look at trying to go in the marketplace and price your product based on what your cost is, we were just longer than our competitors. So that's what we're seeing right now in the third quarter. We'll see that continue a little bit in the fourth quarter. We also know our peanut percentages going forward and while I'm not going to give you the details on what those are or how long, we do feel very confident that by first quarter, we'll be getting into our lower cost peanuts that are very similar to what we believe our competitors are. Alexia Howard - Sanford Bernstein: On the Foodservice side of the business or for that whole segment, it sounded last quarter that you expected a rebound in profitability in that segment in the second half. Clearly that's not come through this quarter. Do you have any better visibility as to when that business should start to rebound year-over-year in terms of profitability?

Yes, we did expect that to be better. And as both Richard and Vince detailed on the call, we're disappointed in the transition difficulties we've had with the Sara Lee business. But we're not disappointed in the strategic value of that business. That business gave us a couple of things that gave us scale in Foodservice and it gave us a proprietary technology base to away-from-home coffee business. So we're convinced those things can deliver what we thought. We are frustrated that we're not there now. I would say we will have some of that impact in the fourth quarter, and we think that the next fiscal year we should see that business start to improve margins and profits.

And we'll go to David Driscoll with Citi. David Driscoll - Citi: Richard, you said in the release that in the third quarter, lower commodity costs were a net benefit to gross profits. Overall, given all your comments, do you see this continuing on balance across the company?

In general, yes, although we've been pretty stable at this point in time. We don't expect them to drop much more. Coffee is actually starting to get a jump, as you know. So I think we've hit the low point. And now they're, I would call them, stable with the exception of coffee, but we're in a pretty good market position on our coffee purchases.

Just to add a couple of other comments. We mentioned that part of the fourth quarter results, we accumulated favorable green costs throughout the year and we constantly talk about the timing of this recognition to costs versus price. And so year-to-date, we continue to recognize the overall favorable cost to pricing. That will flip, particularly in coffee in the fourth quarter and that is a key factor which is driving the fourth quarter results. David Driscoll - Citi: You made a relatively key statement here in saying that your guidance reduction in the fourth quarter, does it overly negatively influences your thoughts for the next fiscal year, et cetera. But you make the statement in print in the release that lower fourth quarter volumes and a more competitive pricing environment in key categories. I think the big challenge today for all of us on the outside is going to be to understand why those comments would be isolated to the fourth quarter and not something that would percolate into subsequent quarters. Can you give us some thoughts on that?

I guess I would go back to Mark Belgya's concluding remarks as we look at our innovation pipeline, we have further supply chain savings. We're lapping a lot of the Sara Lee integration is behind us. We'll have the full year impact of the stock buyback. And I will go back to cost, because our cost structure as we go into the new fiscal year, with the exception of coffee, virtually across the board, we'll have reductions in our overall mix of costs. So we feel very good about what that will allow us to do and maybe be more competitive in certain areas. But again, we'll never be the lowest. We have very strong brands. We never feel that we need to be the lowest in the marketplace and that we'll selectively make decisions about where we spend those funds. But we're very optimistic as we move into the new year.

And our next question will be from Jonathan Feeney with Janney. Jonathan Feeney - Janney: When you look at the guidance reduction and really in the context of full year, you gave us some factors, but how much of it is the peanut butter shortfall, how much of it is incremental K-Cup profitability, just trying to give us a sense of just where you were beginning in Q3 and then the change in guidance? What segments of the business are the heaviest down and by what approximate magnitude?

This is one of the things when we adjust guidance going in fourth quarter, obviously forces to the fourth quarter. But I think it's important to step back and look at where our expectations were at the end of third quarter. So a big picture, I would say roughly, whatever number you're working with, it's roughly $0.20 of guidance adjustment. About half of that you can attribute to third quarter and half the fourth quarter. When we spoke to you in the last quarter, we were specifically [ph] citing that Consumer Foods and International, Foodservice, Natural Foods segments would drive the very strong third quarter. As you heard this morning, primarily between peanut butter and the adjustment in our Sara Lee business, that really took away the earning. Obviously if you add those back, we'll be well on our way. Now if you look at the fourth quarter then, the key drivers if you're talking about coffee, it shifted cost to price. That's having a significant negative impact. Following the quarter, it's more heavily skewed in coffee. We're continuing to be affected by FX. The Canadian dollar leaked in significantly more than we had built into our plan in the October timeframe. Jonathan Feeney - Janney: You're getting down to levels of debt to EBITDA here by market historical standards and you had a lot of success making acquisitions. Can you comment about the acquisition environment and your priorities? And maybe failing that, do you borrow and become more aggressive on the share repurchase side, given the low interest rates?

Well, those are both things that we look at, Jonathan. Obviously on the acquisition side, we've said this before, we have a number of brands out there that we would love to acquire if they become available for sale. We've been aggressive in pursuing those. But those are like fishing. You don't know if it's good. As far as stock repurchase, I think Mark mentioned back that we have some authorization available right now and we can utilize that if we so desire, and we can go back to our Board and I think our Board will be supportive of making more investment in Smucker's. So both of those we can pursue.

Our next question will be from Akshay Jagdale with KeyBanc. Akshay Jagdale - KeyBanc: First question is on coffee. I know you're not ready to comment about '15, but you did make some comments on R&D, innovation, et cetera. Coffee has had a really strong year this year and is a big piece of the pie. So can you just talk a little bit about the expanded relationship with Green Mountain and the new channels that you're entering in dollar and e-commerce? What has changed, when did it change and what do you think the opportunity is there? And if you could just talk a little bit about what you think about the 2.0 benefit that was revealed, that would be helpful.

First of all, we do have a fair amount of innovation, a mix of three new items coming into the market in this next fiscal year net. Two of those are the Hispanic initiatives. So we're hoping to support Green Mountain's Hispanic initiative in that sense. So we are optimistic about that. That's good. And as you mentioned, dollar and online channels, we are very optimistic. I wouldn't give specific numbers about those channels. But essentially, we are just now beginning to shift those channels and we are in the dollar channel a significant player. And in the online channel, we are a rapidly growing player. And as you know, K-Cups in the online channel are a big piece of their pie. And so that would be clearly good for us. As it relates to 2.0, obviously we're very excited to be involved in the new system. And as you can imagine, as we said last call, we will participate in that system, including all of the different pots or cups that it will offer. And clearly, I think the way we think about it is it validates our partnership with Green Mountain. We are with a great partner and we're optimistic about that. I think it's going to take some time and this is an aggression more of them as to how long the machine convergence takes and it's going to take some time. But clearly, it validates that we're with the right partner. Akshay Jagdale - KeyBanc: And then distribution in Foodservice that started this quarter and also the timing of when these changes or triggered and why?

In the Foodservice market, K-Cups do really well on a couple of segments in lodging and in office coffee. And as you can imagine, Green Mountain has a large install base in the organizations to support that. So the opportunity to work with them to access that install base and to get our brands in front of those consumers in those venues makes sense. We just thought it was a great opportunity. It's just starting. So I believe it's just starting in that space and it'll start this summer in Canada. And we'll very excited about the opportunity, but I would expect that to take a year or two to build.

I wanted to make sure we answered your first question. In terms of innovation in coffee and coffee in general, Mark and team have probably over 30 new items that will be launched next year. He was specific to the K-Cup in talking about the two or three. And then I think secondly, I would just reinforce when you ask about the timing of these things, we have a very sound relationship with Green Mountain, and that agreement has continued to evolve since the day we signed it three or four years ago and only continues to get stronger as we evaluate opportunities to add value to their company, our company and to consumers. So I think our party movers are we still feel very comfortable with that relationship and it's getting better and stronger by the day.

And we'll go to our next question from Chris Growe with Stifel. Chris Growe - Stifel: I think there was an earlier question about promotional spending. And I'm just trying to understand maybe, Richard, just the view on the consumer and how they're reacting to some of those more aggressive promotional spending? Is it truly looking volumes and is it something that you may have to go down that road a little more heavily to try and fight against competitors?

Obviously we want to make sure that we're priced properly and that we don't lose market share. So when we need to, we will meet competition. And it's been a little more aggressive this fall bake. But we haven't given up margin too much for doing that. And so overall, we feel pretty good where we are. If you looked at our margins, our margins are better than they were at the prior year. But I think you find that true with most consumer food companies. But it really goes by category. I think peanut butter is probably one of the most competitive right now. And that's because we've got some good competition in that area. That being said, our peanut butter volume is still up for the year. So it's going to be competitive out there, but it's not that much different than it has been historically. And we do go through these cycles. So this is not that unusual. Chris Growe - Stifel: Just a quick second question on retail inventory levels? Kraft said their inventory levels were high for them at retail, maybe even across the industry. Are you seeing any change in the retail inventory levels maybe in the quarter or something you anticipate?

No, I can't say that we have seen a significant increase in our customers' inventory levels.

We'll take our next question from Robert Moskow with Credit Suisse. Robert Moskow - Credit Suisse: I guess I wanted to drill down a little bit on roast and ground. You said you had some market share gains ex-K-Cup. Where do you think you got those gains from? Maxwell House has been marketing more aggressively and I think that that was a concern that a lot of people had. Do you feel like you're offending them all in your bigger roast and ground?

Really we grew share across, as Vince said, all of our key segments, the mainstream premium and instant. But as it relates typically to roast and ground, we have actually been out-taking the category. And so the largest share gains from both us and our number one competitor really have come from private label. And I think that is largely a function of just the price compression in the market that all of our prices are closer together and consumers can't afford to trade up. Robert Moskow - Credit Suisse: The Foodservice business that you bought from Sara Lee, it doesn't sound like you have any plans to have an asset right down or anything like that. Do you think it can come back? Can you talk a little bit from the topline perspective like what your customers are telling you about this technology that you have that's proprietary, about the benefits of scale? From a customer standpoint, are you getting positive feedback? Do you have any new business wins you can talk about in Foodservice?

If you remember, this summer, we started to brand the Folgers and that momentum is just picking up. In fact, we had the best quarter that we've had since we've owned the liquid coffee business in the third quarter. Unfortunately, liquid coffee is only half of that business. And the roast and ground and the private label, all the things that came with the deal, the Sara Lee business. It had been a difficult transition. So it's really two different businesses. Roast and ground has been a very good transition. Yes, there're systems and processes and things that came from Sara Lee that we've had to put on the Smucker's systems. But the core liquid coffee business has been up. It's growing a little faster now. And we think the Folgers brand, now that there is a front-of-house brand in that, we have an opportunity. And we believe we're going to bring a new piece of equipment to market this summer. So we'll have our first new piece of news equipment-wise this summer. So all of those things together make us feel pretty good about it. Robert Moskow - Credit Suisse: So that's what's driving your optimism for fiscal '15 to get back to growth?

Yeah, that's correct. And some of the charts that you saw, a little bit of chart is on the business that was discontinued.

Our next question will come from Chuck Cerankosky with Northcoast Research. Chuck Cerankosky - Northcoast Research: If you comment a little more broadly on private label. You talked about a few seconds ago in the ground business, but across the rest of your categories, including specifically K-Cup.

I guess when you think about the K-Cup segment, let me talk more in terms of the unlicensed player. So as talked last quarter, we had seen growth there. We expected to see if that noise has continued in the category. Again, I think it's important to point out that we do have some data that would indicate that licensed players actually get higher repeat purchase rates. So that bodes well. But clearly, as we look at K-Cup, we have some pretty consistent that private label, whether it's licensed or unlicensed, could still get into that 10% to 15% range of the category, which is typical for most of our categories.

Private label hasn't been much of a factor. Obviously it's still a decent player, but there's more of a branded competition that we've been seeing there. On the oil side of the business, again, I think we've done very well there and private label is still very large in that category. And then on the baking side, private label really doesn't have much of a presence there. So overall, it's more of focusing on branded competition than on private label. Chuck Cerankosky - Northcoast Research: And I guess they remain in peanut butter, as it has been. Mark, a question for you in that trade accrual adjustment. Do you see all of it flow through the Foodservice segment or International, Foodservice segment, or was that a cash or non-cash item? How do you think about that?

It was all through Internationa, Foodservice and National Foods, and it would be because these are promotional programs that are offered to our customer base. They affect the ultimate selling price. It is cash.

And we'll take our next question from Farha Aslam with Stephens, Inc. Farha Aslam - Stephens, Inc: Two questions, the first regarding innovation. One of your reasons for confidence for next year is your innovation pipeline. Could you share with us kind of how much innovation contributes annually in general and in particular next year how incremental and how much can we expect from innovation?

Just the big picture, as we said, when you look at our organic growth rate within our base, the key driver is our target for a long time 1% and we see that. And even last year, I believe I remember the numbers, the way we need to find new products, which are products that came out of a three-year window. It made up 10% of our total sales last year. So that percentage of contribution continue to grow and we feel that will continue. I believe it was in the scripted comments, we have 100 new products for this year. It was on top of 80 or so of the prior year and that's across the brand portfolio. So that's going to continue. That's the kind of metrics that you can think about as we move forward. And I think you'll see key contributions coming next year, which we've touched on a few already this morning. Farha Aslam - Stephens, Inc: And then in terms of supply chain, the other reason for your confidence that you're not going to have some of the supply chain integration issues. What's the total cost do you think that will flow through sort of these supply chain integration issues that are not extraordinary, but are impacting earnings?

I would say, Farha, that from the new Orrville facility that comes online, so we'll get the full year benefit of that. And I think what we said publicly, that's probably about a $10 million contribution. And then as Steve discussed, some of the costs that we've incurred in terms of the Sara Lee transition will go away. I don't think we're really in a position to talk about that. But you can kind of get a sense it's going to three quarters. There is some opportunity there. And then there is just the ongoing focus on our cost structure. We realize the importance of that in today's food space and although we don't have any projects to talk about, it's just ongoing efforts just to look at that.

The other announcement that we've made of course is with the acquisition of the Café Bustelo, later in fiscal '15, we'll be rationalizing that facility. And although the benefit will probably be minimal in '15, it will provide some benefit going forward. Farha Aslam - Stephens, Inc: And did you have the Scottsville facility any kind of incremental cost there that was through the P&L?

We have invested heavily in Scottsville. And for the first time, we hope this summer we'll have capacity ahead of demand significantly. So there may be a little bit of overhead weighing on that, but it's going to allow us to promote aggressively in both Foodservice and Retail, something we've not ever really been able to do in that business. And so we're excited to see if we can fill that capacity quickly. But we've expanded the bakery this last year. We're including new production lines in the next several months. And that overhead may weigh on that business a little bit in the first three quarters of the year, but I would hope we fill it up by the end of the year.

And we'll take our next question from Jason English with Goldman Sachs. Jason English - Goldman Sachs: I've got a couple of questions for Mark Smucker on coffee. First, in terms of pricing, as you mentioned, you've seen coffee sort of down a little bit. As we flash forward and think about the pricing environment, clearly K-Cups are much bigger portion of the category today, running up, close to 40% of ground coffee, the competitive dynamics in that set would suggest that price growth in that category is unlikely even in a rising commodity environment. What does this mean for implications on pricing on roast and ground?

First of all, I would just remind you that the K-Cup segment, if you think about it versus roast and ground, the cost component that is coffee is very small. Now clearly, it has an impact. You can't discount it, but there is a number of other packaging components and what have you. I think you're correct that pricing in that segment moving up is less likely, but I also think if you go back to what our friends at Green Mountain said on their call, the pricing still seems to be rational. And even though there has been a little more promotional activity, more frequent and so forth, that segment obviously continues to grow and we should see the tiering that exists there. We have some data that would suggest our brands do not support us tiering and we can maintain our price levels at where they're at. So we feel very good about where we are. And then as you know in roast and ground, clearly we always try to be transparent with our customers and we will move on pricing when we need to. That said, the environment in the roast and ground, I don't know that we're ready to commit to saying that the current levels at Arabic are sustained. There has been some fundamental driven with the giants in Brazil, but there's also been a fair amount of speculation in that market. And so I think we need to wait and see what the coffee markets are going to do. Jason English - Goldman Sachs: It's been difficult to get a good feel as to the underlying growth rates of your coffee business, given all the price volatility, et cetera. But if I step back and look at the full five-year cycle, it looks like your volume CAGR has been around negative-1%. This quarter we saw an end to (inaudible) of your coffee business is a category that's away from you? And if not, then why?

Are you saying minus-1% for our business and minus-1% for the category? Jason English - Goldman Sachs: Minus-1% for your compound volume growth rate over five years?

No, I would say that minus-1% for the roast and ground in the total category is probably fair. On our business, though, there have been some fluctuations. But of late, we've been growing it. And I would say that I don't think our numbers would match what you're showing. I think we can continue to grow at and we have continued to actually grow our volume in the past few quarters, given all the efforts we put on outpacing that category. But overall, I think we're positioned well to continue to grow in total on coffee.

And I would add that obviously our premium segment has grown fairly significantly with our relationship with Dunkin' Donuts and we acquired it. It's under a $50 million and I think it's $350 million or something north of that now. So again, our strategy of participating in all segments has proven to be a good one.

Next we'll go to Thilo Wrede with Jefferies. Thilo Wrede - Jefferies: I had two questions for you and I apologize for making the first one a multi-part question. But I think the last time you talked about SG&A spending, you gave us 8% growth guidance. Now you talked it down to 4%. In my math, it's about a 25% benefit to EPS. So the question is, is it correct? And what does it mean for your marketing spending in the fourth quarter, especially with the Olympics?

Just to clarify, I think the 4% was representing the increase, not a percent of sales. Thilo Wrede - Jefferies: 8% growth versus now 4% growth? Or did I get my numbers wrong there?

In part, that reduction is marketing-driven. We did have much higher expectations from a higher marketing spend. A lot of that reduction is probably due to that. We've also focused on the last six months obviously with the guidance to look upon controllable spending to bring that down as well. We can get offline with the specifics of the breakdown.

I think from a marketing overall perspective, we feel very good that we've actually had very good execution in our marketing plans, the TV advertising that you've hopefully you've seen of the Olympics so far with the Jif, Smucker's and Crisco on the Folgers brand. Again, we feel very pleased with positioning and where we've seen. We've seen and heard some very good mother-in-law research from consumers that they really enjoyed the spots. So we think it's doing its job and we're pleased with how we've been able to get those in the marketplace and the timing.

And I think on coffee as well, same thing. We have been able to do everything that we felt we needed to do this year and support our brands. It is true that some of the marketing dollars, not a lot, has transitioned to more targeted in-store marketing activities that we count at trade.

And just to tie that off, our total marketing spending was still up 6% over prior year, which has been a good increase for us. Thilo Wrede - Jefferies: And then the other question I have was on the Smucker's Fruitful product. I've seen that's an interesting line extension for Smucker's. My question is I think Smucker's jams by definition are also highly sweetened food products. So if this product presumably is supposed to be sold to mothers who feed this to their children, does this image of highly sweetened food product, does that create an obstacle for this product to be successful when you consider what the applesauce products that are out there, how they look in terms of added sugar?

With Fruitful product, actually the Smucker's brand, we've done some really good research on how the consumers see this market brand. And they do see it as a food product. And we do have obviously with our jam and jelly-based sweetened products come with sugar, some with corn syrup and some with artificial sweeteners. But again, we feel that this product that we're launching is that the only ingredient on the label is just fruits. So for example, on the apple version on that, it is just apples. There's nothing that's included. We don't have any other sweetener that's included. So we feel that actually does tie in with what we see the consumers, just from a research perspective, are seeing and giving the Smucker's brand credibility. So we're actually confident that Fruitful will do well and the consumers see it in the right way.

And the consumers, really the main thing that they look at the Smucker's brand is trust more than anything else. They trust the Smucker's brand. So that far outweighs the fact that they may see it also in the sweetened product. But trust is the most important attribute.

Our next question will be from John Baumgartner with Wells Fargo. John Baumgartner - Wells Fargo: Just in terms of the peanut butter business, just to clarify, have you increased price promotion or reduced prices since you spoke to us last quarter, or is it your intent to continue the volume decline? And do you believe that this cost will improve?

We've not taken any of the price declines since the last time we've talked. In fact, we felt very good that our price is better than what it was last year. Our promotion and our merchandising actually was better than last year. The competitive nature of that took place in the third quarter going into the fourth quarter. But overall we feel good with where our pricing is for the time being. And again, our volume has actually increased overall. And so it just hasn't increased as much as we'd like to see. John Baumgartner - Wells Fargo: In terms of the coffee, I think you've expressed that part of K-Cups recovery from here is predicated on shake-out of the unlicensed brand. But I think we're now hearing a pretty large private little player is bringing new capacity on line (inaudible) distribution of building. So I guess my question is do you still see the unlicensed shake-out is going to do good, and if it doesn't, how much that impacts your K-Cup acceleration in fiscal 2015?

Yeah, there will be some shake-out. Clearly some of the customers have acknowledged a probably too much space in the stores for K-Cups. So there's clearly going to be some rationalization. And the branded players, the licensed players rather could feel some impact of that. That said, I think our confidence goes back to the strength of the Folgers brand. Vince mentioned in his script that Millstone has been impacted. We're working actively to restate that brand. Again, we got a new brand in [ph] Rustello coming into the system. And then just overall, our Folgers branded K-Cup continues to grow.

And we'll take our next question from David Driscoll with Citi. David Driscoll - Citi: Mark, this is also for you on coffee. When you look at the traditional ground and roast in the red can, the darn thing is just incredibly iconic. You see it from the moment you walk into the aisle. When you look at the K-Cup boxes, the Folgers K-Cup box, it's not actually red, it's red, yellow, it's got purple on it. It doesn't have the same iconic nature that the red can has? And I'm just curious about your thoughts on shopability and what your customers would tell you? Could you just be a little bit more specific as to what you're going to do to revitalize Millstone?

You're right. The red can is iconic. Our core red can business this quarter has been fantastic. I think some of the growth has been tempered by opening price points. But as you pointed out, the packaging is a little different on K-Cup. So two responses. One is that technically our Folgers Gourmet Selections brand. And so the graphics are a little different. They're supposed to be a little more upscale. That said, we're going through another packaging iteration with K-Cups right now. And I think you're going to see several SKUs that are going to convert to core Folgers and you're going to see the other SKUs that are going to have a stronger Folgers presence on shelves. And then as it relates to your Millstone question, we are restaging and repackaging the entire line. As you know, we've gotten out of the bulk business or are just about out of the bulk business. And so that will be primarily a bagged coffee and K-Cup offering much more premium packaging, so it is a packaging, but it is also the support that we're going to be providing for that brand going into the next fiscal year that gives us confidence.

And we'll go to our follow-up question from Akshay Jagdale with KeyBanc. Akshay Jagdale - KeyBanc: I want to ask on coffee as well. So have you seen the 2.0 machine and why are you excited about 2.0? What do you think it does to the market opportunity?

Clearly, our teams are very engaged with Green Mountain and they are already working on formulating the products that will go into that 2.0 machine. So we're doing small pots. We're going to participate in that. That's what we're very pleased about. And then some of the interactive technology and the ability for that machine to only brew licensed cups is obviously very exciting. I will go back to my prior comment and I think it's going to take some time for that system to come on-stream in a significant way. But for all the reasons I mentioned, we're very excited about it. And again, this partnership with Green Mountain is better than ever and continues to expand.

I would just like to go back just to confirm one number that was on an earlier question about the SG&A. It has gone from 8% to 4% and as the year-over-year increase and as I suggested, most of it's driven by the marketing and also the favorable spending in our G&A areas. Akshay Jagdale - KeyBanc: You mentioned a little bit about retailer reactions. Can you talk specifically about what retailers are telling you? Obviously it's a dynamic category. So what has happened and more recently a lot more is happening with the lawsuit from Treehouse? Can you just summarize the reaction you're seeing and maybe comment a little further on what you said about shelf space? And looks like you're saying some larger is going to reduce the shelf space and it might impact licensed, here is why licensed more than non-licensed, but could you just talk a little about the reaction from retailers?

I don't think, first of all, that it's going to impact licensed more than unlicensed. I don't think that is true. I think clearly that quality and cost advantage that the licensed players enjoy are a benefit to them. I can't give you specifics customers that are talking about this. But as you travel or visiting stores, I think you'll notice that there's a difference from one grocery store to the next in terms of how much space they have allocated to the K-Cup section. So I just think that as there is a lot of brands out there, some of the specific items may not be there in a year. And so I think we just need to wait that out and continue to support our brands and trust that our brands hold.

And that concludes our question-and-answer session. I will now turn the conference call back to management to conclude.

I would like to thank everybody for being on the call today. We think that we obviously gave different guidance for the quarter, but feel very strong about that we're going to start the new fiscal year and look forward to answering your questions as the queries go on. Thank you very much.

And that concludes today's conference call. Ladies and gentlemen, if you wish to access the rebroadcast after this live call, you may do so by dialing 888-203-1112 or 719-457-0820 with a passcode of 8975321. This concludes our conference call for today. Thank you all for participating and have a nice day. All parties may now disconnect.