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The J. M. Smucker Management Discusses Q4 2012 Results - Earnings Call Transcript

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, U.S. Retail Coffee; and Paul Smucker Wagstaff, President, U.S. Retail Consumer Foods.

After this brief introduction, I will turn the call over to Richard for an overview of fiscal 2012 and initial thoughts as we head into 2013. Vince will then provide commentary on our business segments, and Mark will close with additional comments on our financial results and our outlook for 2013.

During the call today, we may make forward-looking statements 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 risk and uncertainties. I invite you to read the full disclosure statement in the press release concerning forward-looking statements.

Let me also remind you that the company uses non-GAAP results for the purpose of evaluating performance internally. Additional discussion on non-GAAP information is detailed in our press release located on our website at smuckers.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, please contact me or Mark Belgya.

I will now turn the call over to Richard.

Richard K. Smucker

Thank you, Sonal. Good morning, everyone, and thank you for joining us.

As we look back over the past year, one marked by unprecedented levels of commodity cost increases and an uncertain macroeconomic environment, we are pleased to have delivered another year of record sales and year-over-year earnings per share growth. Let me begin by recapping our key accomplishments during the past fiscal year.

Sales increased 15% to more than $5.5 billion for the year, as each of our business segments achieved strong sales growth. In addition, non-GAAP earnings per share increased to $4.73 compared to $4.69 in the prior year. Through responsible pricing leadership, we addressed cost inflation exceeding $500 million for the year, resulting in prices increasing by double digits in several categories. Like many other food companies, the combination of these higher prices and economic uncertainty impacted our overall value. 2012 marked a record year for the company's innovation efforts. Sales from new products exceeded $300 million representing over 5% of net sales. The continued success of our K-Cup offering contributed significantly to these sales, exceeding our plan for the year. Notably, IRI recently recognized our K-Cup introduction as the #1 new beverage launch in calendar 2011. Innovation also played a key role in gaining the #2 market share position in the baking mixes and frosting category.

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