Good morning. And welcome to The J.M. Smucker Company’s Second Quarter 2011 Earnings Conference Call. At this time, I would like to inform you that this conference is being recorded and that all participants are in a listen-only mode. At the request of the company we will open the conference up for questions-and-answers after the presentation. Please limit yourself to two initial questions during the Q&A session and re-queue if you then have additional questions. I will now turn the conference over the Chief Financial Officer, Mr. Mark Belgya. Please go ahead, sir.

Good morning, everyone. And welcome to our second quarter earnings conference call. Thank you for joining us. On the call from the company are Tim Smucker, Chairman of the Board and Co-CEO; Richard Smucker, Executive Chairman and Co-CEO; Vince Byrd, President of Coffee Business; Steve Oakland, President of Smucker’s, Jif and Hungry Jack; Mark Smucker, President of Special Markets; and Paul Wagstaff, President, Oils and Baking. After this brief introduction, I will turn the call over to Tim for opening comments. I will then review the financial results for the quarter and Richard 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. 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, Vice President of Investor Relations. I would like to remind you that in both the prepared comments and during the question-and-answer period that follows 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 risks and uncertainties. I invite you to read the full disclosure of statement in the press release concerning such forward-looking statements. I also want to point out 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. I’ll now turn the call over to Tim.

Thank you, Mark. Good morning, everyone, and thank you for joining us. We are pleased to report another quarter of earnings growth, even though we continue to operate in a challenging economic and competitive environment. Let me summarize the key highlights for the quarter. First, sales for the quarter increased 1%, excluding the impact of divestitures and foreign exchange. Pricing and favorable mix offset an overall decline in volume. Second, on a non-GAAP basis, operating profit was up 10% and combined with a lower effective income tax rate resulted in a 13% increase in earnings per share. Third, we announced an expansion of our current restructuring project to improve the cost structure of our Canadian pickle and condiments business. And finally, we entered this year’s Fall Bake and Holiday period with strong multi-brand promotional programs that incorporate all of our major brands and we are optimistic about the season. Now, let me provide commentary on each of our four business segments. In our Coffee segment, sales and segment profit were up for the quarter despite a decline in volume. We anticipated volume declines in the quarter due to significant pricing actions taken earlier in the year to offset increased green coffee costs. The decrease driven by Folgers coffee was larger than anticipated as our primary competitor continued to be aggressive with promoted price points. Overall, we remain encouraged as we move through the Holiday period and into the remainder of the fiscal year. Our launch of Folgers Gourmet Selections and Millstone brand K-Cups this quarter, enhances our participation with the single serve category. We are pleased with the K-Cups performance to date as all major customers have accepted the product offering. Primary marketing support of the launch including television advertising began in November. The Dunkin’ Donuts coffee brand is continuing…

Thank you, Tim. Net sales for the quarter were equal with last year and up 1% excluding the impact of divestitures and foreign exchange. Pricing and a favorable sales mix overcame a 4% volume decrease that was driven by declines in our Oils and Baking brands and Folgers coffee in U.S. retail. GAAP earnings per share were $1.25 this quarter and $1.18 in the second quarter of last year, including charges related to restructuring and merger integration activities, excluding these charges earnings per share were $1.38 this quarter and $1.22 in last year’s second quarter, an increase of 13%. The quarter results benefited from a lower tax rate when compared to the prior year, gross profit excluding charges increased $14 million to 39.6% of net sales from 38.5% last year. Reflected in gross profit were unrealized mark-to-market losses on derivative contracts of approximately $6 million. Coffee pricing actions taken earlier in the year relative to the recognition of higher green coffee costs contributed to gross profit in the quarter. As you probably are aware, green coffee futures continue to increase during the quarter and into November hitting new 13-year highs for [America]. If these costs are sustained pricing actions in the future are likely, the impact of other raw material costs was mixed as milk, sugar and soybean oil were higher and peanuts and flour were lower. SG&A expenses declined 4% compared to the prior year and decreased as a percent of net sales from 18.2% to 17.4%, primarily due to a decrease in marketing expenses. You may recall last year’s second quarter included a significant marketing investment in support of brand building initiatives including advertising. We continue to invest in marketing behind our brand with the decrease in the quarter reflecting a return to more normalized level expense. In…

Thank you, Mark and good morning everyone. As Tim indicated, the current landscape remains challenging, yet we realized another quarter of earnings growth and are positioned for a good third quarter. We base this outlook on the strength of our brands and a combination of new products and marketing programs in place for the fall bake and holiday period. Marketing activities include several new television ads that are currently airing or are planned for the upcoming holiday period. Within coffee, we have new commercials supporting the Folgers and Dunkin’ Donuts brand as well as the recently launched K-Cups offering. In the food spreads category, our first ever Smucker’s holiday commercial began airing this week. This advertisement is a continuation of the voice campaigning which emphasizes the heritage of the Smucker’s brand. And finally, our national expansion of the Jif to Go product will be supported by increased marketing efforts. Additionally, we continue to invest in digital marketing as an opportunity to leverage technologies and strengthen our relationship with our constituents. This includes the recent launch of social media pages for some of our iconic brands including Folgers, Jif, Pillsbury and Crisco allowing our consumers new opportunities to interact with these brands. Turning now, to operational practices and cost structure, during the quarter we announced the expansion of our current restructuring project to address capacity underutilization in the Canadian pickle and condiments business. This initiative includes transitioning the majority of the Bick’s pickles and condiments production to third party manufacturers in the US, and the closing of our manufacturing facility in Ontario, Canada. Combined with our coffee and food spread supply chain initiatives, we now expect to achieve annual savings of approximately $68 million from these restructuring activities when fully implemented in fiscal 2015, excluding one-time costs. As Mark mentioned the…

(Operator Instructions) And our first question will come from Farha Aslam with Stephens Equity. Farha Aslam – Stephens Equity: Good morning.

Good morning, Farha. Farha Aslam – Stephens Equity: Congratulations on a great quarter.

Thank you, again. Farha Aslam – Stephens Equity: First question is, could you just give us some more color about the $6 million mark-to-market loss in the oils and baking division. How -- how does that work?

Sure, it’s Mark. Well the $6 million actually was for the total company for the quarter. But, obviously a portion of it -- but the way it works is there is a couple of different pieces of it. On the oil side, and I won’t get into a lot of technical matters here, but on the oil side we actually deferred gains or losses in hedging and match them to the period we actually used the physical inventory. So, that’s really any hedging gains or losses are put onto the balance sheet. So what flows through the P&L is mark-to-market on primarily wheat or flour hedges because of the rules -- the accounting rules around those hedges. So that’s typically what you will see coming through that would represent the large portion typically in any quarter for all of the segment as it relates to hedging. Farha Aslam – Stephens Equity: And that $6 million did include coffee, right?

That’s everything. Farha Aslam – Stephens Equity: That’s everything.

That’s all company hedging activity. Farha Aslam – Stephens Equity: All company. And then my follow-up would be on M&A, could you comment on the M&A environment in what you are seeing out there in terms of acquisition?

It’s probably heating up a little bit, although I wouldn’t say it’s out of the normal. Tim as well as Richard (inaudible)

I think that’s right. I think we continue to look at a number of opportunities, but it’s not the same as it has been before. Farha Aslam – Stephens Equity: Any particular areas of interest?

We have -- as you know, if you look at our strategy our number one brands sold in several stores primarily North America. So there is a lot of good brands out there, so I think that would be a nice fit with our portfolio. Farha Aslam – Stephens Equity: Thanks for the color.

Yeah. Okay.

Next, we’ll hear from Ed Aaron with RBC Capital Markets. Ed Aaron – RBC Capital Markets: Thanks. Good morning, everybody.

Hi, Ed.

Good morning, Ed. Ed Aaron – RBC Capital Markets: Wanted to ask first on, just on the promotional environment, you mentioned in coffee, you had more volume because of what your primary competitor was doing. It does seem like they pulled back a little bit, this month in particular, are you seeing signs of improvement there? And then on the baking business, you mentioned that you didn’t expect much near-term improvement in the competitive landscape, but one of your main competitors there announced a recent price increase. So just trying to understand that. Thanks.

Hi. This is Vince. I will take the coffee question first and I will turn it over to Paul. I would say clearly that there was a lot of competitive activity on coffee during our quarter. We’re particularly pleased actually with our results given that even though the coffee has risen significantly. If you look at our pricing of our bean roast and ground and premium coffee competitors, both of them were below last year’s levels basically. We have seen some indication of that starting to turn around. And as I think Tim or Richard mentioned in the formal remarks, we’re balancing everyday our volume, our share, -- our sales and our profitability.

This is Paul. In regards to baking side, I think the primary time frame we were talking about is Fall Bake. We don’t anticipate any change in promotional activity going on through Fall Bake. And as you know, we’re right in the middle of that as we speak. We have seen that announcement from one of our competitors taking the pricing up and that really is more of an impact for the fourth quarter. Ed Aaron – RBC Capital Markets: Got it. Thanks. One follow up, if I could, just -- you mentioned that you expect to have the hedge benefit again in coffee in Q3. If you do like a 20-week lag analysis on the coffee commodity, it’s hard to understand why there would be another benefit this quarter and if some research you do by, call it, to 18 to 22 weeks out, I’m just trying to understand that a little bit better.

Well, I guess without getting in to specifics, you’ve, for all kinds of purposes, you are correct, for 18 to 20 plus weeks out. There may -- there will be a small benefit in the third quarter, not as much as in the second, but a lot will depend on where the commodity rests for the balance of the fiscal year. So, we do anticipate a little bit of benefit in the third. But if something doesn’t happen with the commodity coming down, we will obviously be in a unfavorable position in the four at this point. Ed Aaron – RBC Capital Markets: Thanks for taking the questions.

Our next question will come from Alexia Howard of Sanford Bernstein.

Good morning.

Good morning. Alexia Howard – Sanford Bernstein: Hi. Couple of quick questions, the guidance for the sales outlook for the full year implies, I think, acceleration of the back half that you attributed mainly to pricing but it sounds as though the -- you are expecting the volume situation to stabilize versus being down this quarter. Could you talk a little bit about the dynamics there, what gives you the confidence that the volume situation will improve, maybe by segment, where are you expecting to see more pricing coming through and so on.

Hi, Alexia. This is Mark. I will just try to confirm your comments and then turn to the guys to comment from the respected areas. You are right. From the topline, the pricing we have in place particularly the full back half year impact of the 13% coffee that’s out there will drive a lot of that guidance and also volume, we are expecting to level off really across most of the business segments on the back half. So if there is any specific items, you want to add to that.

This is Vince. Again, I think we are confident with what we have in place. As mentioned earlier, we are seeing some indication that competitive price points are moving up. And -- but a lot will determine on where the commodity rests primarily in the third quarter but we hope to drive some volume and last year’s fourth quarter was not extremely strong in terms of our growth. So I think we can at least meet, hope we meet that for as we look forward.

Alexia, this is Paul Wagstaff. And on the oil side, we did see oils volume start to come back here in the recent four or five weeks and we would anticipate that continuing through the balance of the year. Alexia Howard – Sanford Bernstein: Got it. Thank you. And then…

Alexia, just to give you the consumer business of the peanut butter and fruit spreads businesses actually grew slightly in volume for the quarter. So we expect those trends to continue particularly in peanut butter as you know we took a price decline in the first quarter. Well, the impact, that’s really masked in second quarter because that’s the key promotional back to school period. So we should get the benefit of that in volume in the third and fourth quarters. Alexia Howard – Sanford Bernstein: Great. Got it. And then on the marketing side, obviously there was a pull back op marketing against, I guess, a lot of spending last year. Do you expect that to kind of shift from marketing in to more promotional activity to continue going forward or would you expect that marketing spend to stabilize or as an increase as we look out.

Well, let me just -- this is Tim. Let me just make a comment. Again, as we think about building the brands, long-term, you will see the fluctuations from time to time. But we are committed to building all the brands because as you know 70 plus percent of our business is the number one brands. And we’re committed to do that. There will be ups and downs by quarter but that hasn’t changed our overall commitment. So, I don’t know Vince…

Yeah. I would say I think it was in Mark’s formal remarks that last year was probably unreasonably high because we chose to invest back in incremental spending. This year is a normal level. We haven’t cut the marketing in the coffee business although we did increase some of our promotional spending as we spent back some of the green. And I’ll turn it to Paul or Steve to comment on their segments.

Yeah. I think -- this is Paul. On the oils and baking side, we have seen some intense competitive pressures and we have -- we do manage for the long-term, as Tim was mentioning, however, from a quarter-to-quarter basis, we did pull back some marketing and put it in to some promotional pricing and now, we would anticipate that as ongoing issue but short-term we are doing that.

In the U.S. retail Smucker, Jiff businesses, we will see marketing grow just a slightly faster pace than volume and I think, as in the prepared remarks, we’re excited about some of the new advertising creative and success on Jif to go and look forward to supporting those.

This is Mark. I would just add from a Canadian perspective that we had a very good year there, not only Fall Bake but in terms of the marketing than we have unprecedented levels of marketing spend and advertising activity to support the brands. So I think from that perspective it’s been positive for Canada as well. Alexia Howard – Sanford Bernstein: Great. Thank you very much. I will pass it on.

Our next question will come from Chuck Cerankosky with Northcoast Research. Chuck Cerankosky – Northcoast Research: Good morning, everyone. Nice quarter.

Hi Chuck. Chuck Cerankosky – Northcoast Research: Mark, could you look ahead just for a bit into next fiscal year? What do you think the tax rate will be?

Chuck, it will probably be up a little bit higher than this year, probably not dramatic. The impact issue we’re seeing is, this is the final year if you will, of maximizing the deductions be given to U.S. manufacturers that was sort of stepped up. And we finally hit the maximum percent. I don’t think you are going to see the decrease. Obviously, we don’t know what is going to change overall but that aside, probably up marginally from where we were being running last year or two. Chuck Cerankosky – Northcoast Research: Okay. Could you talk a little bit about Uncrustables in the context, what sounded like and otherwise good back to school but also where the consumer’s head is at regarding more expensive value added product?

Hi, Chuck. Steve Oakland. Uncrustables year-to- date is down just slightly. And it wasn’t the strongest quarter but if you remember in order to consolidate that all in to our Kentucky facility, we discontinued some of the items, the peanut butter only item, cheese item, those items which were in the last year’s comparables. So I think when you take that out, that’s about half of the loss when you take out some of the other timing of the events, so I think, we feel Uncrustables are doing fine, retail self turns are fine, and we think those numbers will improve a little bit in the retail segment as we get in to the back half of the year. Mark.

Yeah. I will add that. Food service business in schools has recently -- doing recently well. It’s basically flat, that’s the overall the total from a total venture and we are running the plant very well. We are producing as many sandwiches as we can and actually looking at expanding our capacity here in the fourth quarter. So that we can continue to meet demand. Chuck Cerankosky – Northcoast Research: All right. And then looking at coffee volume, promotional market was a little more than you would have expected. How long do you intend to put up with that kind of a volume detriment that you saw in the second quarter? Wish that already reverse.

Well, Chuck, again it’s a balancing act as we said earlier of measuring balancing volume share and profitability. You know, quite honestly, we just don’t think that some of the levels is good for the category and our customers long-term. Having said that, the Folgers brand obviously responds very, very well to promotional activity and we’ll just have to monitor as we go through the balance of the year.

All right. Thank you. And next we will go to Ken Goldman with J.P. Morgan. Ken Goldman – J.P. Morgan: Good morning.

Hi. Ken Goldman – J.P. Morgan: When we think about the algorithm between coffee cost pricing and volume, is there a breakeven relationship you look at between price and volume in order to keep pay profits flat. I guess, what I’m asking is you had 13% pricing, 7% volume loss this quarter in coffee. Is that enough going forward, if coffee costs stay where they are considering they are going to hit you harder, looks like in 2012 to maintain penny profit that year? And if not, how should we really think about the potential impact to your bottom line. I’m not really asking, I guess, for guidance next year, just for clarity as a general rule about how to think about that?

Well, I guess as we’ve stated previously, we are charged with growing our segment profits year-on-year, until margins may vary, percentages may vary year-on-year. And we are on plan to do that as we speak. Again, we will take pricing action as necessary to -- in order to protect margins primarily penny for penny. It’s again a balance between the volume, the share and the profitability if the commodity remains where it is, today, more than likely we will have to consider some action in the back half, because we obviously did anticipate where the commodity sits today when we took the pricing action back in August. It was a significant lower of that particular point.

One other thing just I add, there has been a tremendous amount of new product activity over the years. And that has that also plays obviously as we invest whether Dunkin’ Donuts, K-Cups other singles [or decaffeinated], all those kinds of activity, and there is a lot of that going on and a lot in the pipeline. So that will also have an impact. Ken Goldman – J.P. Morgan: And then as a follow up, has elasticity, has price elasticity been where you thought it was higher or little bit lower. I know it’s early, any help you can provide, that would be appreciated?

Well, Ken, again we take a long-term view of the business but it’s obvious that we were down in the quarter, none of us likes to see our volume move down and our share go down. But as you have pointed out in your analysis, a lot of that was not necessarily driven by our pricing action as much as it was driven by the key competitors’ pricing action which you’ve done a great job of articulating. So we’re again very pleased with the results overall when you considered all of the noise and the competitive activity that was going on in the quarter. Ken Goldman – J.P. Morgan: I already have a buy on you guys, flattery can’t increase that anymore.

We will hold off until next time. Ken Goldman – J.P. Morgan: Please. My head is big enough. All right. Thanks guys.

And next, we will go to Jason English, Goldman Sachs. Jason English – Goldman Sachs: Hey, good morning, guys.

Good morning, Jason. Jason English – Goldman Sachs: We don’t have a buy, so flatter away. Couple of questions. Obviously and fairly late in the queue, so there been a lot of questions asked already. I’ll just spilled on couple of small ones. Looking at your guidance now, after a strong quarter here, you are kind of implying roughly flat to modestly down EPS in the back half. But I hear you talking about pretty Fall Bake programming, this continued benefit of the hedge/price mismatch in coffee and the possibility of some share repurchase activity. What are some of the headwinds you are concerned about, as you’ve laid out this back half outlook?

Jason, this is Mark. Well, couple of things. One is, I think you guys are well aware of this, but last year we did have an abnormally low tax rate, particularly in the fourth quartet, so, a little bit of that comparison is driven by that. I think generally, while we agree with the positive comments you just said, there is still the risk and the uncertainty of what cost is going to do and any pricing actions, either ourselves or the competitive environment that we are facing. So, to some degree I think it’s a little bit of what happened in the last six months. We are feeling a little bit of reservation in the guidance.

Mark, I might ask that. This is an industry risk I think not just a Smucker risk. Of all the commodity costs going up, we track eight commodities but most of our competitors are buying those commodities. And, so as we look to raise price and protect our margins, everybody in the industry is going to be affected by that. So they will question us and what is the consumer going to do and how is the consumer going to respond and are they going to be more cautious. So I think we all have that to be alert to.

Hi, yeah. Let me just add one other thing, Richard. It’s just the political environment. I mean, you’ve seen today, [Bowls] announced Simpson 100 to tube today, yesterday and today and the consumer is looking for balance. There is a lot -

They are looking for certainty.

They are looking for certainty. And that isn’t just a consumer but it’s a customer. And the customers are trying different things and we are trying to navigate right through that and be consistent as we can and look for balance. So that’s all going to be, we are all dealing with that. Jason English – Goldman Sachs: Fair enough. So, stepping back and building on the conversation you just had with Ken. In coffee is a good example where category is pricing up, volume holding in okay, the issue, or the challenge you are faced with is not in aggregate category elasticity of that, but whether a cross elasticity of that with one competitor moving faster than the other, one promoting more aggressively than the other. This is I think broadly about the industry and prices rising as this wave of inflation hits. Is that the bigger risk that some move faster than others, some continue to promote a little bit longer than others and we just get a quarter or two of some disruption?

Yeah. I think that is true. I think that is exactly right and there is a risk there. Our strategy -- as the balance we talked about several times. We don’t believe that although we discount and offer we think value deals to our customers. You can’t deep discount your way to profitability or to long-term growth. And that really isn’t good for the industry or the category. And we’ve got -- there is a lot of hard evidence and if that’s true and so we try to continue to be, I would call a responsible competitor as opposed to taking some deep discounting approach. Jason English – Goldman Sachs: Yeah. I think that’s the right approach. Thanks a lot, guys. I will pass it on.

And next, we will go to Jane Gelfand with Barclays Capital. Jane Gelfand – Barclays Capital: Hi. Good morning, everyone.

Hi, Jane.

Good morning. Jane Gelfand – Barclays Capital: Hi. Just a quick question about the fiscal fourth quarter. There was a brief mentioned of a potential lag, the other why between coffee hedging and coffee pricing, at the same time you are clearly considering another pricing move. So I guess, what I’m wondering is what do you need to see to decide one way or the other whether you are going to price or not, or is it just -- the sustainability of the commodity level or a certain competitive environment? And then, is there enough time to decide that throughout the fiscal third quarter to ultimately sort of mitigate that gap? Is it enough to kind of or should we think about a serious lag or is it more of a dollar-for-dollar matching thing then you are going for the fiscal fourth quarter?

You articulated very well. All of those factors, it depends on where the commodity is, it depends on where our position is. And of course what is going on from a competitive environment. I will say in coffee, we have the luxury though of implementing pricing very, very quickly. So, once the decision is made we tend to implement that in a very short period of time unlike some other markets or some of our other product categories where we may not have that luxury. We are not concerned with the ability to implement it once the decision is made. But as I mentioned earlier, if the commodity does not take a dramatic change as to where it is today, we will be faced with some type of pricing action in action in the back half. Jane Gelfand – Barclays Capital: Go it. So, we shouldn’t be thinking about a serious lag between the pricing and the hedging come the fiscal fourth quarter.

No. Jane Gelfand – Barclays Capital: Okay. And then, just as a follow up on maybe use of cash. I’m wondering about maybe how your thought process may have evolved, as you were nearing the point of this kind of lapsing of the two-year lockup, just on the pacing and kind of timing of share repo, I’m wondering whether you chose to moderate that a little bit, or maybe because you are seeing the M&A environment heat up or at least the pipeline. I’m just wondering whether your thinking has changed at all, just given some of the things here you are seeing on the M&A side potentially?

Hi, Jane. It’s Mark. I don’t think I would characterize as any change in our thinking. I think we’ve been pretty consistent. I’m sure most of you on the phone have you seen our chart where we allocate or show deployment of our cash fairly evenly across the different outlets. So it relates to repurchase, we said time and again that we had the 3.7 million shares, that -- in fact if you go back before Folgers transaction, we were pretty active in the market. So to some degree our continuation of buyback shares is just a continuation of what we are doing prior to the transaction. But, I guess, generally I would say there has been no material change to our thinking as it relates to deployment of cash. Jane Gelfand – Barclays Capital: Fair enough. Thank you very much.

Thank you.

Our next question comes from Jon Anderson with William Blair. Jon Anderson – William Blair: Good morning, everyone.

Hey, John.

Good morning, John. Jon Anderson – William Blair: I had a question on Dunkin, which was particularly strong in the quarter, I think up double digits in volume. Just wondering, if you can bring us up to date on where you are in terms of distribution at grocery, what opportunities there are in terms of adding additional SKUs and facings on the shelf and until the outlook for growth going forward, can that kind of growth be sustained in the near to medium-term?

Sure. Well, first of all the growth in the quarter was driven by two primary reasons. First, increased distribution in terms of our core SKUs, so, that’s going to original and the others, but it was also significantly benefited by the launch of our seasonal items that we put into the marketplace and in fact in one major retailer, one of the seasonal items was the second highest selling SKU of the entire bagged coffee segment, second only to our Dunkin original. And, so the seasonals definitely did have a play during the quarter and continue to do so. Going forward, the team is continued to be challenged to have double digit growth in that. We have very few SKUs compared to our competitors, our ACV is very strong on your original and some of the top flavors, but there are opportunities to continue to expand the ACV significantly. Jon Anderson – William Blair: Thanks. That’s helpful. I know it’s very early, but is there early read on kind of the K-Cups rollout and initial sell through and what kind of programming -- media programming are you planning through the holiday season?

Yeah. Great question. First of all I’d just like to compliment and thanks our marketing and sales and operations team and the relationship that we have been able to establish with Green Mountain and Keurig. That project all came to cushion in a very, very short period of time. As -- it was mentioned in the former remarks, although we haven’t necessarily shifted to all customers at this point, all major customers have accepted it. We did kickoff some marketing support this past couple of weeks. We have for the first time I believe a K-Cups has been nationally advertised and we also dropped the [FSI] this past weekend, as some of the initial support and the initial reads are very, very positive. But it’s still early days at this point. Jon Anderson – William Blair: Thanks. Just, one last one if I might. Marketers inventories were up about 8%, year-on-year, just wondering if that’s a reflection of higher commodity costs and what’s in that number with the growth ahead of sales?

Yeah. It clearly is driving a lot of that year-over-year and if you look across and coffee it’s a significant piece of that, but our other businesses inventories are also [upset that is all]. Jon Anderson – William Blair: Okay. Thanks, congratulations.

Thank you.

Thank you.

And next, we’ll go to Ian Zaffino with Oppenheimer & Co. Ian Zaffino – Oppenheimer & Co.: Just going back to the whole farm, green coffee thing. Ignoring your hedges and given where commodity costs are right now, how much price would you need to take on the coffee side?

I don’t know that we would disclose that information necessarily. First of all, coffee is fluctuating $0.5 to $0.10 a day and it’s up another $0.5 this morning. So I guess I prefer not to give a range right now.

Ian, this is Mark. Just to that point -- if and when we do take any kind of pricing action coffee, we typically followed up with release. So you will know that, but it is our policy not to describe any pricing moving prior to any announcement. Ian Zaffino – Oppenheimer & Co.: Okay. And then the other question would be on the Folgers side, what it was the actual volume on the coffee side x, Dunkin’ Donuts and x the K-Cups?

Yeah. It was down about 7% in volume, but I would point out that it had a pretty difficult comp because last year it grew 5% in last year’s second quarter. Ian Zaffino – Oppenheimer & Co.: So that 7% is excluding Dunkin and K-Cups.

It would be a couple of percentage points lower with it. Ian Zaffino – Oppenheimer & Co.: Okay. So like a 9ish.

Yeah. Ian Zaffino – Oppenheimer & Co.: Okay. Thank you.

Next, we will hear from Eric Serotta, Wells Fargo Securities. Eric Serotta – Wells Fargo Securities: Good morning.

Eric, welcome back. Eric Serotta – Wells Fargo Securities: Thanks. Just a point of clarification here, the 7% commodity inflation number that you cited, is that pre-hedging, or does that include the impact of your commodity hedges?

That has been challenging. What we typically will say over the course of the year is, what our absolute anticipated cost increase over the fiscal year is, that number has moved from $70 million at the outset of the year to roughly to the numbers around 200 million, based on that cost. So that would be the expected cost we would incur during the fiscal period. Eric Serotta – Wells Fargo Securities: Okay. And then shifting gears a bit, if this was the first quarter in sometime that you didn’t highlight oils as an area of weakness, in fact you pointed to Crisco as an area of strength. Could you comment a little bit about the dynamics and the edible oil market, what you are seeing from your branded competitor and from private label?

Hi, Eric. This is Paul Wagstaff and we’ve definitely seen competitive pricing on both the private label and our number one competitor through the Fall Bake time period so far. I think what we did, we announced a price decline in August to better reflecting pricing on shelf that would be similar to our number one competitor and that has had a favorable impact on volume that we’ve seen that’s increased here recently. Eric Serotta – Wells Fargo Securities: Okay. Most of my other questions have been answered. So I will turn it back. Thank you.

Thank you.

And next, we will go to Scott Mushkin with Jefferies & Company. Scott Mushkin – Jefferies & Company: Thanks for taking my question. I know, again, we are waiting in queue. I want to take a step back and I know you guys referenced running the business for the long-term, a couple of different times. And as I look at the numbers coming out, now, we are just selling through the chainable, which seems to be coming out of a channel consumers baskets, it seems that we have about 65, maybe 70% of the business making oils and coffee, not showing great market share or volume growth over a multi-quarter period now. I put it in three. So I guess my question is oils clearly responded to what you did in August and that seems to be abating. When do you look at the other businesses and say, okay? No moss, we need to take some action. And I appreciate I think as I said before it’s not all about price, what do you do because company just builds on gaining share, making great brands, even better. How are we supposed to look at this as investors, when do we need to take some actions here. Can we look at the earnings we are putting up right now as over earning to a degree?

That’s not the way we look at it. We do take a long-term approach and actually this is the first quarter where we actually had a volume decline. But part of that volume decline was planned. And lot of the volume is in heavy items such as flour, we planned it to lose some margins and loss some volume in flour. Coffee was probably not planned because we had a great run for the last 24 months on coffee almost or actually, short of that, 21 months on coffee. In general, we are not seeing what you are seeing overall for long-term period. We recognized this quarter was down a little bit in volume. But that was - part of that was planned.

And Scott, this is Paul. The only other comment I’d make from competitive perspective, over last prior three -- almost four quarters, we’ve seen some unprecedented pricing action of our competitors that, again, going back to, I think a comment that Tim made earlier in the presentation, we want to focus on your balanced volume and share market and profitability. And we are just not what willing to at this point shave some of those the deep discounts, we don’t think that’s good for the category. That being said, we did made some changes on the oils and we think that’s rebounding nicely. Our baking business, we actually feel pretty good about for Fall Bake. So hopefully, we will see the results shortly.

In another part we haven’t talked about is mix and the types of products that we sell, it’s not just the volume it’s the mix of products that we sell. I know, especially in peanut butter and in fruit spreads, we are getting a better mix of products than we’ve ever had before. We are actually selling less great this year which is not a high margin item, but it’s a high weight item.

More strawberry

And more strawberry, which is much better in the same cost. You might speak to that, Mark.

Yeah. This is Mark Smucker. Just in special markets as well, we are seeing favorable mix across the board, pretty much in every one of our business units there and in Canada we are seeing, we have seen some decent share growth in many of those categories as well. In categories that are not typically growth categories, we have been able to increase our share at the expense of some of our competitors.

One other follow up, we were selling more alternative channels which aren’t measured as well. And so when you ask whether these numbers, they don’t really measure the alternative channels and probably most manufacturers in the consumer foods area are selling more in the alternative channels. We definitely are. And so that business picked up, nearly as well in some of the numbers that you are looking at. Scott Mushkin – Jefferies & Company: Thanks for all that color. I really appreciate it. And then, did you guys and I’m sorry I’m actually in a car, so I haven’t seen it, did you guys actually give us the hedging gain in coffee? Did you give us the dollars?

No. Because, it’s not really the hedging gains. The hedging -- actually is overall hedging losses for $6 million to the company. It is basically what you are seeing in coffee. It’s coming through the cost of goods sold. It’s not hedging gains in this regard. Scott Mushkin – Jefferies & Company: How much did it benefit, Mark, cost of goods sold? Do we know?

No. We wouldn’t quantify that Scott. It’s just basically a driven -- it’s the reason margins were as they were for the quarter in coffee. Scott Mushkin – Jefferies & Company: And the 6.6 million, is that coffee in there too? So that’s a net number or is it not part of that?

That is a net number. All company’s hedging activity across the board are in that. Scott Mushkin – Jefferies & Company: And was that sequentially, was that up or down?

It’s not dramatically different. I will tell you a year ago. It’s about -- it was about $5.5 million last year, so pretty even swing. But it’s not -- Last year, it wasn’t dramatically different. Scott Mushkin – Jefferies & Company: Great. Thanks very much.

Thanks a lot, Scott.

And next, we will go to Mitch Pinheiro with Janney Capital Markets. Mitch Pinheiro – Janney Capital Markets: Hey, guys. Good morning. Couple of questions. One, of the 2% K-Cups contribution, is that primarily channel fill versus takeaway?

Well, sure. I mean a lot of it is, but I can tell we had some very good reads from some early customers where the volume is turning and we’ve had reorders. So, but yeah, sure, a lot of that was the initial fill. Mitch Pinheiro – Janney Capital Markets: Looking at the next quarter, you will have a similar type of sort of the rest of the customers in the channel fill plus continue to takeaway, is that how is it going to be a similar kind of growth rate or contribution?

Yeah. No. I would -- we would still see significant growth rate I would think in the third and fourth quarter, as we fill the channels and get the initial -- the initial read on shelf takeoff. Mitch Pinheiro – Janney Capital Markets: Okay. And what is the likelihood of you introducing additional SKUs in K-Cups in the next 12 months.

It’s very likely. Mitch Pinheiro – Janney Capital Markets: Okay. In terms of broader questions and my last question, is -- I would love to, I’m looking at IRI in the categories and I look at the, the cook at home segment, a lot of the categories whether baking mixes and baking nuts and sugar and condensed milk and a lot of different cook at home categories seemed very weak in the last couple of reporting periods. What is your interpretation of that? Is that not the right characterization or was it really a tough comp to a year ago, or how would you look at this category as being weak on a volume basis?

Hi, Mitch. This is Paul Wagstaff. I think one of the comments I would say is that, there is a little bit of a timing issue. It seems like what we are seeing is consumers are shopping later than they did last year, as far as taking those types of products off the shelf. So we would anticipate to see those type of products being taken off of the shelf now versus in second quarter, which -- when you go back to previous years, there was more -- I’d say there was an earlier buy in from that consumer. So I wouldn’t say we are concerned, I just think it’s a little bit different timing. Mitch Pinheiro – Janney Capital Markets: Are you seeing any -- x the impact of Holiday, which is hard to do, but any other -- have you seen any change in trends, either leaning towards or away from the cooking at home?

No. I don’t think we have. I think we still feel that we are seeing consumers cook and bake more at home and that trend as we see it continues.

I think, another thing Paul, that some of our customers have limited some SKUs early last year and they thought that -- they found that wasn’t good idea. So they are putting those back, so you are seeing some of that now and that’s what -- to Paul’s comment that they are buying later now because they are getting more choice now. Mitch Pinheiro – Janney Capital Markets: Okay. All right. Thank you very much.

And next, we will go the Karen Lamark with Federated Investors. Karen Lamark – Federated Investors: Good morning. You may have answered it with your response to Jane about deployment of cash, but I wanted a little more clarity under dividend comments. I understand you are currently running less than your targeted payout ratio, but is one of your considerations are raising the target payout ratio and secondly are you considering taking some action on the dividend before April, which is when I think you typically do it. Thanks.

This is Mark. I think in terms of the dividend, first of all we have been pretty consistent with years with the 40% target, we think that’s appropriate. We do look at that periodically verses our peers, but right now I think the board is probably more focused on getting us closer to that target. It’s obviously something that we will look at going forward as we evaluate ways to return value. But that’s just something the board looks at every time and I think the fact that we are running a little below. We are just trying to point that out and the board will take that into consideration here in the next couple of meetings. Karen Lamark – Federated Investors: Okay. Should we still expect any action, as it is going to be taken, will be April or before that?

I really can’t speak for the board. I may think that we provide them with the information and they will take actions they see appropriate. Karen Lamark – Federated Investors: Okay. Thank you.

And unfortunately, we are out of time for questions today. Gentlemen, I would now like to turn the conference back to you to conclude.

Well, thank you very much for your interest and always great questions and I just want to reiterate what Richard said earlier that our team is -- just want to thank our team, it’s just a fantastic team and thank you for you support. Wish you a lot of memorable meals and moments over the next holiday season. So, thanks a lot. Have a great day.

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