FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year
ended November 30, 1995 Commission file number 0-748
McCORMICK & COMPANY, INCORPORATED
(Exact name of registrant as specified in its charter)
Maryland 52-0408290
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
18 Loveton Circle 21152
Sparks, Maryland
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (410) 771-7301
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
Not Applicable Not Applicable
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, No Par Value Common Stock Non-Voting, No Par Value
(Title of Class) (Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K [ X ]
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date.
Aggregate market value of the voting stock held by nonaffiliates of the
registrant . . . . . . . $183,598,203
The aggregate market value indicated above was calculated as follows:
The number of shares of voting stock held by nonaffiliates of the
registrant as of January 31, 1996 was 8,024,397. This number excludes
shares held by the McCormick Profit Sharing Plan and PAYSOP and its
Trustees, the McCormick Pension Plan and its Trustees, and the directors
and officers of the registrant, who may or may not be affiliates. This
number was then multiplied by the closing price of the stock as of
January 31, 1996, $22.88.
Class Number of Shares Outstanding Date
Common Stock 12,057,354 1/31/96
Common Stock Non-Voting 69,199,430 1/31/96
DOCUMENTS INCORPORATED BY REFERENCE
Document Part of 10-K into
which incorporated
Registrant's 1995 Annual Report to Part I, Part II, Part IV
Stockholders
Registrant's Proxy Statement dated 2/20/96 Part III, Part IV
PART I
As used herein, the "Registrant" means McCormick & Company, Incorporated
and its subsidiaries, unless the context otherwise requires.
Item 1. Business
The Registrant, a diversified specialty food company, is principally
engaged in the manufacture of spices, seasonings, flavorings and other
specialty food products and sells such products to the retail food
market, the foodservice market and to industrial food processors
throughout the world. The Registrant also, through subsidiary
corporations, manufactures and markets plastic packaging products for
the food, cosmetic and health care industries.
The Registrant's Annual Report to Stockholders for 1995, which is
enclosed as Exhibit 13, contains a description of the general
development, during the last fiscal year, of the business of
the Registrant, which was formed in 1915 under Maryland law as the
successor to a business established in 1889. Pages 9 through 12 and 30
through 36 of that Report are incorporated by reference. The
Registrant's net sales increased 10% in 1995 to $1,858,694,000 due to
both sales price and volume changes.
The Registrant operates in one business segment and has disclosed in
Note 9 of the Notes to Consolidated Financial Statements on page 28 of
its Annual Report to Stockholders for 1995, which Note is incorporated
by reference, the financial information about the business segment
required by this Item.
The Registrant's Annual Report to Stockholders for 1995 sets forth a
description of the business conducted by the Registrant on pages 9
through 12. Those pages of the Registrant's Annual Report are
incorporated by reference.
Principal Products/Marketing
Spices, seasonings, flavorings, and other specialty food products are
the Registrant's principal products. Spices, seasonings, flavorings,
and other specialty food products accounted for approximately 90% of net
sales on a consolidated basis during the three fiscal years ended
November 30, 1995. No other product or class of similar products or
services contributed as much as 10% to consolidated net sales during the
last three fiscal years. The Registrant's efforts will continue to be
directed primarily in the area of spices, seasonings, flavorings, and
other specialty food products.
The Registrant markets its consumer and foodservice products through its
own sales organization, food brokers and distributors. In the industrial
market, sales are made mostly through the Registrant's own sales force.
Products/Industry Segments
The Registrant has not announced or made public information about a new
product or industry segment that would require the investment of a
material amount of the assets of the Registrant or that otherwise is
material.
Raw Materials
Many of the spices and herbs purchased by the Registrant are imported
into the United States from the country of origin, although substantial
quantities of particular materials, such as paprika, dehydrated
vegetables, onion and garlic, and substantially all of the specialty
food ingredients other than spices and herbs, originate in the United
States. Some of the imported materials are purchased from dealers in the
United States. The Registrant is a direct importer of certain raw
materials, mainly black pepper, vanilla beans, cinnamon, herbs and seeds
from the countries of origin. The principal purpose of such purchases
is to satisfy the Registrant's own needs. The Registrant also sells
imported raw materials to other food processors.
The raw materials most important to the Registrant are onion, garlic and
capsicums (paprika and chili peppers), which are produced in the United
States, black pepper, most of which originates in India, Indonesia,
Malaysia and Brazil, and vanilla beans, a large proportion of which the
Registrant obtains from the Malagasy Republic and Indonesia. The
Registrant does not anticipate any material restrictions or shortages on
the availability of raw materials which would have a significant impact
on the Registrant's business in the foreseeable future.
Trademarks, Licenses and Patents
The Registrant owns a number of registered trademarks, which in the
aggregate may be material to the Registrant's business. However, the
loss of any one of those trademarks, with the exception of the
Registrant's "McCormick" and "Schilling" trademarks, would not have a
material adverse impact on the Registrant's business. The "McCormick"
and "Schilling" trademarks are extensively used by the Registrant in
connection with the sale of a substantial number of the Registrant's
products in the United States. The "McCormick" and "Schilling"
trademarks are registered and used in various foreign countries as well.
The terms of the trademark registrations are as prescribed by law and
the registrations will be renewed for as long as the Registrant deems
them to be useful.
The Registrant has entered into a number of license agreements
authorizing the use of its trademarks by persons in foreign countries.
In the aggregate, the loss of those license agreements would not have a
material adverse impact on the Registrant's business. The terms of the
license agreements are generally 3 to 5 years or until such time as
either party terminates the agreement. Those agreements with specific
terms are renewable upon agreement of the parties.
The Registrant owns various patents, but they are not viewed as material
to the Registrant's business.
Seasonal Nature of Business
Historically, the Registrant's sales and profits are lower in the first
two quarters of the fiscal year and increase in the third and fourth
quarters.
Working Capital
In order to meet increased demand for its products during its fourth
quarter, the Registrant usually builds its inventories during the second
and third quarters. In common with other companies, the Registrant
generally finances working capital items (inventory and receivables)
through short-term borrowings, which include the use of lines of credit
and the issuance of commercial paper. The Registrant's Annual Report to
Stockholders for 1995 sets forth a description of the Registrant's
liquidity and capital resources on pages 33 through 35, which pages are
incorporated by reference.
Customers
The Registrant has a large number of customers for its products. No
single customer accounted for as much as 10% of consolidated net sales
in 1995. In the same year, sales to the five largest customers
represented approximately 20% of consolidated net sales.
Backlog Orders
The dollar amount of backlog orders of the Registrant's business is not
material to an understanding of the Registrant's business, taken as a
whole.
Government Contracts
No material portion of the Registrant's business is subject to
renegotiation of profits or termination of contracts or subcontracts at
the election of the government.
Competition
Although the Registrant is a leader in sales of certain spices and
seasoning and flavoring products, and is the largest producer and
distributor of dehydrated onions and garlic in the United States, its
business is highly competitive. For further discussion, see pages 10 and
30 of the Registrant's Annual Report to Stockholders for 1995, which
pages are incorporated by reference.
Research and Quality Control
The Registrant has emphasized quality and innovation in the development,
production and packaging of its products. Many of the Registrant's
products are prepared from confidential formulae developed by its
research laboratories and product development departments. The long
experience of the Registrant in its field contributes substantially to
the quality of the products offered for sale. Quality specifications
exist for the Registrant's products, and continuing quality control
inspections and testing are performed. Total expenditures for these and
other related activities during fiscal years 1995, 1994 and 1993 were
approximately $39,473,000, $39,562,000 and $38,226,000 respectively. Of
these amounts, expenditures for research and development amounted to
$13,937,000 in 1995, $12,999,000 in 1994 and $12,259,000 in 1993. The
amount spent on customer-sponsored research activities is not material.
Environmental Regulations
Compliance with Federal, State and local provisions related to
protection of the environment has had no material effect on the
Registrant's business. No material capital expenditures for
environmental control facilities are expected to be made during this
fiscal year or the next.
Employees The Registrant had on average approximately 8,900 employees
during fiscal year 1995.
Foreign Operations
International businesses have made significant contributions to the
Registrant's growth and profits. In common with other companies with
foreign operations, the Registrant is subject in varying degrees to
certain risks typically associated with doing business abroad, such as
local economic and market conditions, exchange and price controls,
restrictions on investment, royalties and dividends and exchange rate
fluctuations.
Note 9 of the Notes to Consolidated Financial Statements on page 28 of
the Registrant's Annual Report to Stockholders for 1995, and page 31 of
the Registrant's Annual Report to Stockholders for 1995 contain the
information required by subsection (d) of Item 101 of Regulation S-K,
which pages are incorporated by reference.
Packaging Operations
The Registrant's Annual Report to Stockholders for 1995 sets forth a
description of the Registrant's packaging group on page 9, which page is
incorporated by reference. Setco, Inc. and Tubed Products, Inc., which
comprise Registrant's packaging group, are wholly owned subsidiaries of
the Registrant and are, respectively, manufacturers of plastic bottles
and plastic squeeze tubes.
Substantially all of the raw materials used in the packaging business
originate in the United States. The market for plastic packaging is
highly competitive. The Registrant is the largest single customer of
the packaging group. All intracompany sales have been eliminated from
the Registrant's consolidated financial statements.
Item 2. Properties
The location and general character of the Registrant's principal plants
and other materially important physical properties are as follows:
(a) Consumer Products
A plant is located in Hunt Valley, Maryland on approximately 52 acres
in the Hunt Valley Business Community. This plant, which contains
approximately 540,000 square feet, is owned in fee and is used for
processing and distributing spices and other food products. There is an
approximately 110,000 square foot office building located in Hunt
Valley, Maryland which is the headquarters for the Registrant's Consumer
Products division. Also in Hunt Valley, Maryland is a facility of
approximately 100,000 square feet which contains the Registrant's
printing operations and a warehouse. All of these facilities are owned
in fee. A plant of approximately 477,000 square feet located in
Salinas, California and a plant of approximately 108,000 square feet
located in Commerce, California are owned in fee and used for milling,
processing, packaging, and distributing spices and other food
products.
(b) Industrial Products
(i) A plant complex is located in Gilroy, California consisting of
connected and adjacent buildings owned in fee and providing
approximately 894,000 square feet of space for milling, dehydrating,
packaging, warehousing and distributing onion, garlic and capsicums.
Adjacent to this plant is a 4.3 acre cogeneration facility which
supplies steam to the dehydration business as well as electricity to
Pacific Gas & Electric Company. The cogeneration facility was financed
with an installment note secured by the property and equipment. This
note is non-recourse to the Registrant.
(ii) The Registrant has two principal plants devoted to industrial
flavoring products in the United States. A plant of 102,000 square feet
is located in Hunt Valley, Maryland and is owned in fee. A plant of
102,400 square feet is located in Dallas, Texas and is owned in fee.
(c) Spice Milling
Located adjacent to the consumer products plant in Hunt Valley is a
spice milling and cleaning plant which is owned in fee by the Registrant
and contains approximately 185,000 square feet. This plant services all
food product groups of the Registrant. Much of the milling and grinding
of raw materials for Registrant's seasoning products is done in this
facility.
(d) Packaging Products
The Registrant has four principal plants which are devoted to the
production of plastic containers. The facilities are located in
California, Massachusetts, New York and New Jersey, and range in size
from 178,000 to 280,000 square feet. The plants in New York and New
Jersey are leased.
(e) International
The Registrant has a plant in London, Ontario which is devoted to the
processing, packaging and distribution of food products. This facility
is approximately 145,000 square feet and is owned in fee.
(f) Research and Development
The Registrant has a facility in Hunt Valley, Maryland which houses
the research and development laboratories and the technical capabilities
of the industrial division. The facility is approximately 144,000 square
feet and is owned in fee.
Item 3. Legal Proceedings
There are no material pending legal proceedings to which the Registrant
or any of its subsidiaries is a party or to which any of their property
is subject.
Item 4. Submission of Matters to a Vote of Security Holders
No matter was submitted during the fourth quarter of Registrant's fiscal
year 1995 to a vote of security holders.
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder
Matters
The Registrant has disclosed at page 35 of its Annual Report to
Stockholders for 1995, which page is incorporated by reference, the
information relating to the market, market quotations, and dividends
paid on Registrant's common stocks required by this Item.
The approximate number of holders of common stock of the Registrant
based on record ownership as of January 31, 1996 was as follows:
Approximate Number
Title of Class of Record Holders
Common Stock, no par value 2,000
Common Stock Non-Voting, 10,500
no par value
Item 6. Selected Financial Data
The Registrant has disclosed the information required by this Item in
the Historical Financial Summary of its Annual Report to Stockholders
for 1995 at page 36, which page is incorporated by reference.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The Registrant's Annual Report to Stockholders for 1995 at pages 29
through 35 contains a discussion and analysis of the Company's financial
condition and results of operations for the three fiscal years ended
November 30, 1995. Said pages are incorporated by reference.
Item 8. Financial Statements and Supplementary Data
The financial statements and supplementary data for McCormick & Company,
Incorporated are included on pages 13 through 28 of the Annual Report to
Stockholders for 1995, which pages are incorporated by reference. The
report of independent auditors from Ernst & Young LLP on such financial
statements is included on page 37 of the Annual Report to Stockholders
for 1995; the supplemental schedule for 1993, 1994 and 1995 is included
on page 14 of this Report on Form 10-K.
The unaudited quarterly data required by Item 302 of Regulation S-K is
included in Note 10 of the Notes to Consolidated Financial Statements at
page 28 of the Registrant's Annual Report to Stockholders for 1995,
which Note is incorporated by reference.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
No response is required to this item.
PART III
Item 10. Directors and Executive Officers of the Registrant
The Registrant has filed with the Commission a definitive copy of its
Proxy Statement dated February 20, 1996, which sets forth the
information required by this Item at pages 3 through 9, which pages are
incorporated by reference. In addition to the executive officers and
directors discussed in the Proxy Statement, J. Allan Anderson and Donald
A. Palumbo are also executive officers of the Registrant.
Mr. Anderson is 49 years old and has had the following work experience
during the last five years: 1/92 to present - Vice President and
Controller; 3/91 to 1/92 - President and Chairman of the Board - Golden
West Foods, Inc. (a former subsidiary of the Company); 4/89 to 3/91 -
Vice President - Food Service & Industrial Groups.
Mr. Palumbo is 53 years old and has been the Company's Vice President
and Treasurer since January 1988.
Item 11. Executive Compensation
The Registrant has filed with the Commission a definitive copy of its
Proxy Statement dated February 20, 1996, which sets forth the
information required by this Item at pages 9 through 18, which pages are
incorporated by reference.
Item 12. Security Ownership of Certain Beneficial Owners and
Management
The Registrant has filed with the Commission a definitive copy of its
Proxy Statement dated February 20, 1996, which sets forth the
information required by this Item at pages 4 through 7, which pages are
incorporated by reference.
Item 13. Certain Relationships and Related Transactions
The Registrant has filed with the Commission a definitive copy of its
Proxy Statement dated February 20, 1996, which sets forth the
information required by this Item at page 7, which page is incorporated
by reference.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form
8-K
(a) The following documents are filed as a part of this
Form:
1. The consolidated financial statements for McCormick
& Company, Incorporated and subsidiaries which are listed in the Table
of Contents appearing on page 13 below.
2. The financial statement schedules required by Item
8 of this Form which are listed in the Table of Contents appearing on
page 13 below.
3. The exhibits which are filed as a part of this Form
and required by Item 601 of Regulation S-K are listed on the
accompanying Exhibit Index at pages 15 and 16 of this Report.
(b) The Registrant filed no reports during the last quarter
of its fiscal year 1995 on Form 8-K.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report on Form
10-K to be signed on its behalf by the undersigned, thereunto duly
authorized.
McCORMICK & COMPANY, INCORPORATED By:
/s/ Charles P. McCormick Jr.
Charles P. McCormick Jr.Chairman
of the Board & Chief Executive Officer February 20, 1996
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of
the Registrant and in the capacities and on the dates indicated.
Principal Executive Officer:
/s/ Charles P. McCormick Jr. Chairman of the Board &
Charles P. McCormick Jr. Board & Chief Executive
Officer February 20, 1996
Principal Financial Officer:
/s/ Robert G. Davey Vice President &
Robert G. Davey Chief Financial
Officer February 20, 1996
Principal Accounting Officer:
/s/ J. Allan Anderson Vice President &
J. Allan Anderson Controller February 20, 1996
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons, being a
majority of the Board of Directors of McCormick & Company, Incorporated,
on the date indicated:
THE BOARD OF DIRECTORS: DATE:
/s/ James J. Albrecht February 20, 1996
James J. Albrecht
/s/ James S. Cook February 20, 1996
James S. Cook
/s/ Robert G. Davey February 20, 1996
Robert G. Davey
/s/ Harold J. Handley February 20, 1996
Harold J. Handley
/s/ George W. Koch February 20, 1996
George W. Koch
/s/ Robert J. Lawless February 20, 1996
Robert J. Lawless
/s/ Charles P. McCormick, Jr. February 20, 1996
Charles P. McCormick, Jr.
/s/ George V. McGowan February 20, 1996
George V. McGowan
/s/ Carroll D. Nordhoff February 20, 1996
Carroll D. Nordhoff
/s/ Richard W. Single, Sr. February 20, 1996
Richard W. Single, Sr.
/s/ William E. Stevens February 20, 1996
William E. Stevens
/s/ Karen D. Weatherholtz February 20, 1996
Karen D. Weatherholtz
CROSS REFERENCE SHEET
PART I ITEM REFERENCED MATERIAL/PAGE(S)PART
Item 1. Business Registrant's 1995 Annual Report
to Stockholders/Pages 9-12, 28,
and 30-36
Item 2. Properties None.
Item 3. Legal Proceedings None.
Item 4. Submission of None.
Matters to a Vote
of Security Holders.
PART II Item 5. Market for the Registrant's 1995 Annual
Registrant's Common Report to Stockholders/
Equity and Related Page 35.
Stockholder Matters.
Item 6. Selected Financial Registrant's 1995 Annual
Data. Report to Stockholders/Page
36.
Item 7. Management's Registrant's 1995 Annual
Discussion and Report to Stockholders/Pages
Analysis of 29-35 Financial Condition
and Results of
Operations.
Item 8. Financial Registrant's 1995 Annual
Statements and Report to Stockholders/Pages
Supplementary 13-28 and 37 and Page 14 of
Data. of this Report.
Item 9. Changes in and None.
Disagreements with
Accountants on
Accounting and
Financial Disclosure.
PART III Item 10. Directors and Registrant's Proxy Statement
Executive Officers dated February 20, 1996/Pages
of the Registrant. 3-9.
Item 11. Executive Registrant's Proxy Statement
Compensation. dated February 20, 1996/Pages
9-18.
Item 12. Security Ownership Registrant's Proxy Statement
of Certain dated February 20, 1996/Pages
Beneficial Owners 4-7.
and Management.
Item 13. Certain Registrant's Proxy Statement
Relationships and dated February 20, 1996/Page
Related 7.
Transactions.
PART IV Item 14. Exhibits, Financial See Exhibit Index pages 15 and
Statement Schedules 16 and the Table of Contents
and Reports on Form and the Table of Contents at
8-K. page 13 of this Report.
McCORMICK & COMPANY, INCORPORATED
TABLE OF CONTENTS
AND RELATED INFORMATION
Included in the Company's 1995 Annual Report to Stockholders, the
following consolidated financial statements are incorporated by
reference in Item 8*:
Consolidated Balance Sheets, November 30, 1995 and 1994
Consolidated Statements of Income for the Years Ended November 30,
1995, 1994 and 1993
Consolidated Statements of Shareholders Equity for the Years Ended
November 30, 1995, 1994 and 1993
Consolidated Statements of Cash Flows for the Years Ended November 30,
1995, 1994 and 1993
Notes to Consolidated Financial Statements, November 30, 1995
Report of Independent Auditors
Included in Part IV of This Annual Report:
Supplemental Financial Schedules:
II - Valuation and Qualifying Accounts
Schedules other than those listed above are omitted because of the
absence of the conditions under which they are required or because the
information called for is included in the consolidated financial
statements or notes thereto.
*Pursuant to Rule 12b-23 issued by the Commission under the Securities
Exchange Act of 1934, as amended, a copy of the 1995 Annual Report to
Stockholders of the Registrant for its fiscal year ended November 30,
1995 accompanies this Annual Report Form 10-K.
<TABLE>
<CAPTION> SUPPLEMENTAL FINANCIAL SCHEDULE II
CONSOLIDATED
McCORMICK & COMPANY, INCORPORATED
VALUATION AND QUALIFYING ACCOUNTS
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
.......ADDITIONS......
BALANCE CHARGED CHARGED
AT TO COSTS TO BALANCE
BEGINNING AND OTHER AT END
DESCRIPTION OF YEAR EXPENSES ACCOUNTS DEDUCTIONS OF YEAR
<S> <C> <C> <C> <C> <C>
YEAR ENDED NOVEMBER 30, 1995
Deducted from assets to which they apply:
Allowance for doubtful receivables....... $ 2,520,000 $ 654,000 $ 629,000(F1) $ 2,545,000
Amortization of goodwill................. 28,921,000 6,626,000 $204,000(F4) 362,000(F2) 35,389,000
TOTAL $ 31,441,000 $ 7,280,000 $204,000 $ 991,000 $37,934,000
YEAR ENDED NOVEMBER 30, 1994
Deducted from assets to which they apply:
Allowance for doubtful receivables....... $ 2,530,000 $1,132,000 $1,142,000 (F1) $ 2,520,000
Amortization of goodwill................. 23,994,000 5,566,000 $847,000 (F2) 1,515,000 (F3) 28,921,000
29,000 (F4)
TOTAL $26,524,000 $6,698,000 $876,000 $2,657,000 $31,441,000
YEAR ENDED NOVEMBER 30, 1993
Deducted from assets to which they apply:
Allowance for doubtful receivables....... $ 2,651,000 $ 355,000 $ 476,000 (F1) $ 2,530,000
Amortization of goodwill................. 19,936,000 4,571,000 513,000 (F2) 23,994,000
TOTAL $22,587,000 $4,926,000 $ 989,000 $26,524,000
Notes:
<FN>
(F1) Accounts written off net of recoveries.
(F2) Foreign exchange translation adjustments.
(F3) Write-off of goodwill.
(F4) Other adjustments.
</FN>
</TABLE>
Exhibit Index
Item 601
Exhibit
Number Reference or Page
(2) Plan of acquisition,
reorganization, arrangement,
liquidation or succession Not applicable.
(3) Articles of Incorporation
and By-Laws
Restatement of Charter of Incorporated by reference from
McCormick & Company, Report on Form 10-K for the
Incorporated dated April fiscal year of 1990
16, 1990. as filed with the Securities
and Exchange Commission on
February 18, 1991.
Articles of Amendment to Incorporated by reference
Charter of McCormick & Company, from Registration Form S-8,
Incorporated dated April 1, Registration Statement no
1992. No. 33-59842 as filed with the
Securities and Exchange
Commission on March 19,
1993.
By-laws of McCormick & Company Incorporated by reference from
Incorporated-Restated and Amended Registrant's Form 10-Q for the
as of March 18, 1992. quarter ended February 28,
1995 as filed with the
Securities and Exchange
Commission on February 28,
1995.
(4) Instruments defining the rights of With respect to rights of
security holders, including securities, see Exhibit 3
indentures. (Restatement of Charter). No
instrument of Registrant with
respect to long-term debt
involves an amount of
authorized securities which
exceeds 10 percent of the
total assets of the Registrant
and its subsidiaries on a
consolidated basis.
Registrant agrees to furnish
a copy of any such instrument
upon request of the
Commission.
(9) Voting Trust Agreement. Not applicable.
(10) Material contracts. Registrant's supplemental
pension plan for certain
senior officers is described
in the McCormick Supplemental
Executive Retirement Plan, a
copy of which was attached as
Exhibit 10.1 to the
Registrant's Report on Form
10-K for the fiscal year 1992
as filed with the Securities
and Exchange Commission on
February 17, 1993, which
report is incorporated by
reference. Stock option
plans, in which directors,
officers and certain other
management employees
participate, are described in
the Registrant's S-8
Registration Statements Nos.
33-33725 and 33-58197 filed
with the Securities and
Exchange Commission on March
2, 1990 and March 23, 1995
respectively, which
statements are incorporated by
reference.
(11) Statement re computation of per- Page 17 of this Report on
share earnings. Form 10-K.
(12) Statements re computation of ratios. Pages 33-34 of Exhibit
13.
(13) Annual Report to Security Holders
McCormick & Company, Incorporated Bound separately with
Annual Report to Stockholders for separately numbered pages.
1995.
(16) Letter re change in certifying Not applicable.
accountant.
(18) Letter re change in accounting Not applicable.
principles.
(21) Subsidiaries of the Registrant Page 40 of Exhibit
13.
(22) Published report regarding matters Not applicable.
submitted to vote of securities holders
(23) Consent of independent auditors Page 18 of this Report on
Form 10-K.
(24) Power of attorney Not applicable.
(27) Financial Data Schedule Submitted in electronic
format only.
(28) Information from reports furnished Not applicable.
to state insurance regulatory authorities.
(99) Additional exhibits Registrant's definitive
Proxy Statement dated
February 20, 1996.
<TABLE>
<CAPTION>
McCormick and Company, Inc. Part I - Exhibit 11
(In Thousands Except Per Share Amounts)
Statement re Computation of Per-Share Earnings*
Year Ended November 30
Computation for Statement of Income 1995 1994 1993
<S> <C> <C> <C>
Net Income $97,521 $61,157 $73,054
Reconciliation of Weighted Average Number of
Shares Outstanding to Amount used in Primary
Earnings Per Share Computation
Weighted Average Number of Shares Outstanding 81,181 81,240 80,799
Add - Dilutive Effect of Outstanding Options
(as Determined by the Application of the
Treasury Stock Method) (F1) 138 391 967
Weighted Average Number of Shares Outstanding
As Adjusted for Equivalent Shares 81,319 81,631 81,766
PRIMARY EARNINGS PER SHARE $1.20 $0.75 $0.89
Year Ended November 30
Computation for Statement of Income 1995 1994 1993
Reconciliation of Weighted Average Number of
Shares Outstanding to Amount used in Fully Diluted
Earnings Per Share Computation
Weighted Average Number of Shares Outstanding 81,181 81,240 80,799
Add - Dilutive Effect of Outstanding Options
(As Determined by the Application of the
Treasury Stock Method) (F1) 159 391 990
Weighted Average Number of Shares Outstanding
As Adjusted for Equivalent Shares 81,340 81,631 81,789
FULLY DILUTED EARNINGS PER SHARE $1.20 $0.75 $0.89
*See 1995 Annual Report, Note (F1) of the Notes to Financial Statements.
<FN>
(F1) "This calculation is submitted in accordance with Regulation S-K item 601(b)(11) although not
required by footnote 2 to paragraph 14 of APB Opinion No. 15 because it results in dilution
of less than 3%."
</FN>
</TABLE>
Exhibit 23 -- Consent of Independent Auditors
We consent to the incorporation by reference in this Annual Report (Form
10-K) of McCormick & Company, Incorporated and subsidiaries of our
report dated January 15, 19965, included in the 1995 Annual Report to
Shareholders of McCormick & Company, Incorporated.
Our audits also included the financial statement schedules of McCormick
& Company, Incorporated and subsidiaries listed in Item 14(a). This
schedule is the responsibility of the Company's management.
Our responsibility is to express an opinion based on our audits. In our
opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a
whole, present fairly in all material respects the information set forth
therein.
We also consent to the incorporation by reference in the following
Registration Statements of McCormick & Company, Incorporated and
subsidiaries and in the related Prospectuses (if applicable) of our
report dated January 15, 1996, with respect to the consolidated
financial statements and schedule of McCormick & Company, Incorporated
and subsidiaries included in the 1995 Annual Report to Shareholders and
incorporated by reference in this Annual Report (Form 10-K) for the year
ended November 30, 1995.
Form Registration Number Date Filed
S-8 33-58197 3/23/95
S-3 33-66614 7/27/93
S-3 33-40920 5/29/91
S-8 33-33724 3/2/90
S-8 33-33725 3/2/90
S-3 33-32712 12/21/89
S-8 33-24660 3/16/89
S-8 33-24658 9/15/88
Ernst & Young
Baltimore, Maryland
February 20, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> NOV-30-1995
<PERIOD-END> NOV-30-1995
<CASH> 12465
<SECURITIES> 0
<RECEIVABLES> 226503
<ALLOWANCES> 2545
<INVENTORY> 383222
<CURRENT-ASSETS> 670718
<PP&E> 897393
<DEPRECIATION> 372586
<TOTAL-ASSETS> 1614341
<CURRENT-LIABILITIES> 646867
<BONDS> 349111
0
0
<COMMON> 160655
<OTHER-SE> 358598
<TOTAL-LIABILITY-AND-EQUITY> 1614341
<SALES> 1858694
<TOTAL-REVENUES> 1858694
<CGS> 1211517
<TOTAL-COSTS> 442224
<OTHER-EXPENSES> 530
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 55270
<INCOME-PRETAX> 149153
<INCOME-TAX> 53700
<INCOME-CONTINUING> 97521
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 97521
<EPS-PRIMARY> 1.20
<EPS-DILUTED> 1.20
</TABLE>
Mission
The primary mission of McCormick & Company, Incorporated is to
profitably expand its worldwide leadership position in the spice,
seasoning and flavoring markets.
Our Core Values
We believe in adding value for our shareholders.
We believe customers are the reason we exist.
We believe in successful achievement through teamwork and
participation.
We believe in doing business ethically and honestly.
We believe in respect and concern for one another.
The scent for this year's annual report is gingerbread
Who We Are
Photo of woman in lab inspecting peppercorns:The first step in
making sure spices are ready for the consumer is Quality Assurance.
Many tests are involved, including visual inspections.
<TABLE>
<CAPTION>
Financial Highlights
Year ended November 30
1995 1994 1993 1992 1991
<C> <C> <C> <C> <C>
<S> (dollars in millions except per-share data)
Consolidated net sales $1,858.7 $1,694.8 $1,556.6 $1,471.4 $1,427.9
Net income, before accounting change(F1) $ 97.5 $ 61.2 $ 99.7 $ 95.2 $ 80.9
Accounting change for postretirement benefits (26.6)
Net income $ 97.5 $ 61.2 $ 73.1 $ 95.2 $ 80.9
Earnings per share, before accounting
change(F2) $1.20 $.75 $1.22 $1.16 $.98
Earnings per share, total(F2) 1.20 .75 .89 1.16 .98
Dividends paid per share .52 .48 .44 .38 .28
Margins
Gross profit, consolidated operations 34.8% 37.1% 38.7% 39.7% 37.9%
Operating profit, consolidated operations 11.0% 7.6% 11.6% 11.4% 10.2%
Income from consolidated operations 5.1% 3.1% 5.7% 5.8% 5.1%
Income before accounting change 5.2% 3.6% 6.4% 6.5% 5.7%
Cash flows
From operating activities $ 59.4 $ 72.5 $ 80.6 $117.3 $ 74.4
(For) investing activities (78.5) (184.0) (145.0) (121.3) (61.5)
From/(for) financing activities 17.7 113.9 79.1 4.2 (11.6)
Debt to total capital 55.5% 54.6% 48.0% 42.5% 42.3%
Shareholders' equity $519.3 $490.0 $466.8 $437.9 $389.2
Return on shareholders' equity, before
accounting change(F3) 20.3% 12.8% 22.0% 23.3% 21.8%
Return on shareholders' equity, total(F3) 20.3% 12.8% 17.0% 23.3% 21.8%
Average shares outstanding and
equivalents (000's) 81,181 81,240 81,766 81,918 82,396
Ending shares outstanding and
equivalents (000's) 81,218 81,206 81,916 81,978 81,978
<FN>
(F1) Includes 1994 restructuring charge of $70.4.
(F2) Includes 1994 restructuring charge of $.57 per share.
(F3) Return on shareholders' equity before 1994 restructuring charge was 22.1%.
All share information is adjusted for a 2-for-1 stock split in January 1992.
Margin and return information for consolidated operations excludes the accounting change for postretirement benefits in
1993.
</FN>
</TABLE>
<TABLE>
<CAPTION>
Sales Dollar Distribution
(excludes share of unconsolidated earnings and 1994 restructuring charge)
1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
Materials and Related Expenses 51.66 48.86 47.46 48.76 49.66
Salaries, Wages and Employee
Benefits 20.2 21.9 22.7 21.3 20.7
Marketing, Administrative and
Related Expenses 14.0 14.3 15.2 15.8 16.8
Retained Earnings 3.0 3.6 3.5 3.7 3.8
Depreciation 3.0 3.4 3.0 2.7 2.6
Interest 3.0 2.3 2.0 2.1 1.9
Taxes 2.9 3.4 3.9 3.6 3.0
Dividends 2.3 2.3 2.3 2.1 1.6
$1.00 $1.00 $1.00 $1.00 $1.00
</TABLE>
Letter to Shareholders
Photo of Buzz and Bob Lawless:
Charles P. McCormick, Jr., (left) and
Robert J. Lawless (right)
We succeeded in fulfilling our primary mission in 1995. We did,
however, experience a disappointing year from a profit standpoint,
falling short of our expectations and budgets.
Earnings for the year were hurt by the most intensely competitive
atmosphere we have ever experienced, weakness in the Mexican
economy, higher raw material costs, and higher interest costs. In
addition, results were adversely affected by subpar performance
from some of our divisions and low returns on some of our recent
acquisitions and joint ventures.
We must assume that the competitive environment will continue.
This intense competition has caused us to take a critical look at
ourselves, review how we plan for the future and build market
share. As a result, McCormick is now managed more aggressively than
ever. The Company has already begun to shape a more focused
strategy for driving our brands and sustaining our global
expansion.
Our present debt level is too high. A major priority in 1996 will
be to reduce debt. A coordinated working capital program
now includes tighter controls on inventories, lower capital
spending and more critical consideration of any acquisition
opportunities.
The restructuring of our business, announced in October 1994, is
pretty much behind us. This program was designed to generate
continued long-term growth and profitability.
We recognize the strength of our brands and the need to increase
our support of them. Last spring, we began to invest in a national
radio ad campaign. The campaign asks consumers to "Flavor Up!" with
McCormick and supports a total "Flavor Up!" effort throughout the
Company. Our brands again increased market share during the year.
McCormick is the market leader in consumer seasoning and flavor
products, and we continue to take the leadership role in building
our category. We have added exciting new tastes through new product
introductions in the spice and extract section of retail stores as
well as in the seasoning mix, sauce and gravy section. Through new
products and acquisitions, we have also launched programs to build
profitable sales in the "perimeter" of the store, areas such as the
produce section, the seafood department and the meat department.
These initiatives also serve as a base for development of new ideas
for growing the business while focusing on our mission.
This mission also applies to products sold to foodservice and
catering customers as well as ingredients to major food companies
worldwide. The McCormick Flavor Division recorded excellent
progress during 1995. We currently supply more than 100 key
multi-national food companies and continue to leverage our
technologies to create innovative products that benefit our
customers. One of the highlights was the development of FlavorCell,
a new process for delivering a wide range of liquid and solid
flavoring materials to a variety of products.
There will be further internationalization, with certain
Asia/Pacific markets representing growth opportunities. Many of our
most important spices come from China, India and Indonesia,
countries with a combined population in excess of two billion
people. Due to this market potential, we are determined to
establish a significant presence there.
We have enjoyed great growth during the last decade, and in 1995
BusinessWeek listed McCormick fifth among top dividend increasers.
The companies recognized "have boosted cash payments each year -
and outstripped the overall market." During the same period,
earnings per share from continuing operations compounded at
an annual rate of more than 18 percent.
We wish to thank all of our employees for their outstanding effort.
Special thanks are due Gene Blattman, our retiring President & CEO.
We were most fortunate to have him when, in 1994, we suddenly lost
Bailey Thomas, our former Chairman & CEO. Gene's leadership was a
most important contribution to the Company. As he returns to the
West Coast, we are pleased that his health is receiving top
priority.
You should be encouraged that young, energetic executives have
risen to the ranks of senior management. As we begin 1996, we have
a dynamic Executive Committee which also includes Executive Vice
President Carroll Nordhoff and Vice President & CFO Bob Davey.
To further enhance our senior management team, we announced Robert
W. Schroeder as Vice President & General Manager of the McCormick/
Schilling Division, F. Christopher Cruger as Vice President &
General Manager of the Food Service Division, and Michael M. Brem
as President of Gilroy Foods, Incorporated.
Other organizational changes include the April 1996 retirement of
Harold J. Handley as Senior Vice President-Europe, who has been
succeeded by John C. Molan. Jack D. Letzer, Managing Director of
McCormick de Centro America, S.A. de C.V., retired and has been
succeeded by Arduino Bianchi.
As the worldwide leader in the spice industry with clear goals for
growth, McCormick has a bright future. We have endured short-term
performance disappointments before. These have never prevented
progress, and we are proud of our outstanding track record.
Despite the present challenges, we have never been more excited
about our goal to be "the best." Being the best means we examine
ourselves in the context of an intensely competitive global
environment; hold ourselves accountable for creating value for our
shareholders; provide top quality, value-added products for our
customers, and provide a rewarding work environment for our
employees.
We will be measuring ourselves in a new way. Our primary financial
objective is to create shareholder value. To do this, we will focus
on generating both positive and growing economic value added (EVA).
This will be accomplished by the following: increasing our
worldwide market share, more effectively managing our assets, and
growing earnings per share. Other financial objectives are to
achieve total debt to total capital of 45 percent or less and pay
out 30 to 40 percent of net income in dividends. Further
explanation is contained in the Report on Operations.
The officers and members of the Board of Directors join in thanking
our shareholders, customers, suppliers, and employees for your
continuing support.
Charles P. McCormick, Jr.Chairman & Chief
Executive Officer
(signature)
Robert J. Lawless President & Chief
Operating Officer
(signature)
Photo of FlavorCell Ad:FlavorCell ad in trade magazines announces
our new technology to the food processing industry.
Report on Operations
Keys to Growing Our Business
Photo of lady in supermarket looking at package:
Items in our Produce Partners line are located in
produce departments where they benefit from high-traffic perimeter
exposure. These products are in step with the healthy trend toward
more fruits and vegetables in the diet.
The year 1995 will be remembered as a challenging one for
McCormick. A series of demanding issues confronted the Company and
prevented us from achieving all of our financial objectives. They
included the weakness of the Mexican economy, higher than expected
raw material costs, lower garlic crop yields at our Gilroy Foods
operation, and an increased competitive environment in the domestic
consumer business. Over the year, we kept investors informed of
these issues and how we acted to minimize their impact. We continue
to work to resolve these issues. Our business is fundamentally
sound and positioned for global growth, sustained market leadership
and healthy shareholder return.
A Brief Look at Who We Are
McCormick's consumer and foodservice businesses are aligned
globally into three zones: the Americas Market, the European Market
and the Asia/Pacific Market, with central coordination coming from
our Maryland headquarters. Our packaging group is a U.S.-focused
business that supports both internal packaging needs at McCormick
and third party customers.
McCormick's oldest and largest business is dedicated to the
manufacture and sale of spices, herbs, extracts, proprietary
seasoning blends, sauces, and marinades. These consumer products
are sold in the United States, primarily under the McCormick brand
in the East, the Schilling brand in the West, in Canada under the
Club House brand, and in the United Kingdom under the Schwartz
brand. In other market zones, the McCormick brand name is primarily
used.
The Food Service Division serves broad-line foodservice
distributors and membership warehouse clubs.
The McCormick Flavor Group includes our industrial and fast
food spice, seasoning and flavor businesses. It sells to food
processors and major restaurant chains.
Gilroy Foods, our agriculturally-based California subsidiary, is
the world's largest producer of dehydrated onion and garlic.
McCormick's Packaging Group, including Setco and Tubed Products,
supplies plastic tubes and bottles to McCormick units and provides
packaging for other customers primarily in the pharmaceutical,
cosmetic and food industries.
Growing the Business Globally
Our efforts are focused on the global growth of our four major
businesses: consumer products, industrial ingredients, foodservice,
and packaging. We are the largest spice company in the world and
the leader in most markets where we compete. Not satisfied, we have
identified global growth as one of our strategic initiatives and
continue to work diligently to grow our market lead. Presently,
sales outside the United States, including sales by unconsolidated
affiliates, comprise 37 percent of combined total sales of
consolidated and unconsolidated units. We are building a McCormick
of the future that will have a sales mix more evenly divided with
half the sales dollars coming from markets outside
the U.S.
Specifically, we seek accelerated growth in China and India. Our
initial entry into both countries was for industrial business.
However, with combined populations of approximately two billion
people, and with a growing percentage of that population possessing
purchasing power, we feel these are viable markets for consumer,
foodservice and industrial businesses.
In the United Kingdom, our Schwartz brand is number one
with consumers. We also are using our acquisition of Tuko Oy's
spice business, now Oy McCormick, in Finland to expand into the
Baltic States and Russia. In Canada, South America and Australia,
we are also well positioned and expect retail expansion with the
introduction of new products.
Our acquisition a year ago of Noel Holdings, Ltd. in the U.K.
provides us with significant opportunities for growth in
foodservice as we leverage that brand throughout the European
continent. We are refocusing our efforts on the warehouse club
business globally with opportunities to re-establish the McCormick
and Schilling brands as leaders in this business. A new Food
Service Division management team is in place with focused
priorities and a strong desire to leverage current core
competencies.
On the industrial side, as stated before, we expect continued
global growth as our major multi-national customers continue their
expansion around the world. We have a competitive advantage because
of our reputation for consistent quality and product innovation.
Equally as important is the customer support provided by
McCormick's technical centers around the world. Our global customers
have confidence that McCormick will deliver.
We feel confident in the steps we are taking to grow and globalize
our business. In our consumer business we are successfully
differentiating ourselves from the competition and, in the process,
growing market share. In the industrial business, we supply most of
the major multi-national food processors. Because of our excellent
relationships with these food processors, we gain business when
they expand internationally. The same holds true in the foodservice
arena as McCormick follows key customers in their global expansion
initiatives.
How We Are Making It Happen
THE BRAND
As mentioned in the Letter to Shareholders, the retail environment
in 1995 was highly competitive. We will beat our competition and
grow our business with innovative products, new technologies,
increased quality, and lower costs. But we believe we have another
weapon in the arsenal that we might have previously underestimated.
In the United States, our customers have a strong bond with our key
brand names, McCormick in the East and Schilling in the West.
Perhaps, in the past, we took for granted the power of the brands.
Our "Flavor Up!" advertising campaign, started this past spring, is
at the forefront of an effort to create a McCormick that is more
aggressively marketed than ever before. It is an advertising
campaign that has been rolled out nationally and supports our
various promotional efforts. We are very pleased with the campaign.
We are committed to it and believe it is a positive step for us in
our resolve to build our branded consumer business. We are
determined to broaden the scope and power of our brands. We
also plan to leverage our brands on a global basis to maximize
synergies and propel growth.
THE CONSUMER
As part of our effort to refocus our attention on the consumer, we
are aware that a shopping trend has been established. Shoppers are
spending far more time in the perimeter areas of the grocery stores
and less time "up and down" the aisles. The perimeter is the
fastest growing area of the store, and we have adopted a strategy
to capitalize on this trend.
It is a strategy that has proven successful for us in the past. Our
acquisition of Golden Dipt a few years ago gave us a prominent
position in the seafood section. We have built a consumer franchise
with new Golden Dipt products as well as the expansion of our Old
Bay line. When we purchased the Old Bay brand a few years ago, it
was a popular, but regional, shrimp and crab seasoning. Since then,
our technical and marketing staffs have turned it into a complete
line of seafood seasonings that maintains a prominent position in
the seafood section throughout the United States.
Additional efforts made in this area of the grocery store include
a relaunched Produce Partners line. This line of 30 items is used
for toppings, complements for salads and vegetables, and is sold
directly in the produce section. Produce Partners has new graphics
and is packaged in foil containers specially designed to protect
our products from the periodic rinsing of produce items.
Our latest endeavor in the perimeter is a new product line we are
test marketing called Quick Classics. A line of refrigerated
sauces, marinades and seasoning mixes, Quick Classics is positioned
adjacent to the meat offerings, directly in the meat display cases.
These products and their location in the perimeter area of the
store are part of a strategy to help make the consumer's meal
decision an easier one and help stimulate additional purchases.
Other consumer trends bode well for us in our efforts to grow our
business. For example, total U.S. spice usage is increasing due to
the consumption of "healthier" foods. Many low-fat foods make
liberal use of seasonings to replace flavor loss which occurs in
using a fat substitute. Also, spices are replacing salt in many
people's diets. The demand for ethnic-style foods is enormous.
Annual spice consumption per capita totaled 3.19 pounds in 1990-94.
That is up nearly one pound compared to 1980-84.
PRODUCTS, TECHNOLOGY AND INNOVATION
Quality products are the lifeblood of any company. McCormick's
worldwide reputation for quality provides us with a major point of
differentiation from all our global competitors. We have an
impressive portfolio of value-added products, and that list will
grow.
One example of such value-added products is FlavorCell, which
is sold to food processors. It is a new proprietary technology with
a unique method to encapsulate a wide range of liquid and solid
flavors. FlavorCell was developed to overcome limitations in the
use of liquid and spray-dried flavors, as well as other
encapsulation technologies. Using FlavorCell, food processors
significantly enhance flavor stability and extend the shelf life
for up to two years. The flavor matches or exceeds that of
spray-dried ingredients, with a longer shelf life - and at a lower
cost. New innovative products like FlavorCell give our customers'
products a technical edge in the marketplace. FlavorCell is a
breakthrough product that offers unique benefits and is more
cost-effective than similar products now on the market.
Success in the industrial business depends on the ability to
develop new products, flavors and seasonings. To better serve our
customer needs and streamline product development, we significantly
expanded our technical resources. Our technical laboratories have
been more than doubled in size, allowing sufficient space for more
than 100 scientists and technicians to develop nearly 24,000 sample
products each year.
Another example of innovation took place in our Food Service
Division which developed the two-pound Handy Fill Pepper Pouch. For
a foodservice operator, one of the most tedious tasks is refilling
pepper shakers. Traditionally, the foodservice operator fills
pepper shakers in a variety of ways with most being time-consuming
and usually resulting in spillage. McCormick answered its
customers' need with the new Pepper Pouch, a flexible
pouch with a spout. It saves time and reduces spillage. McCormick
took what is often perceived as a commodity, pepper, and added
value to the foodservice operator through packaging.
Another example of our focus on innovation is a new product from
our Packaging Group that falls outside of the Group's usual product
line. We are supplying air-filled plastic cushions used in the
construction of walking shoes by a major international sports shoe
company.We will continue to strive for innovation in each of our
businesses: consumer, industrial, foodservice, and packaging.
LOWERING COSTS
The Company is committed, on a number of fronts, to lowering costs
and improving efficiencies in all parts of our business. The
restructuring begun in late 1994 has resulted in the closing of one
U.S. plant, the sale of two under-performing businesses (Golden
West Foods and Festin Foods), the realignment of some operations in
the United Kingdom, and a workforce reduction. In addition, a
foodservice plant will be closed in early 1996. As part of the
plant consolidations, specific plants were re-engineered with
improved design and new equipment.
The Company has arranged for the lease of a $21 million
distribution center in Maryland to be completed in March 1996. The
370,000-square-foot facility can be expanded to 600,000 square feet
and allows the consolidation of various distribution points into a
single location to improve efficiencies.
Our Global Sourcing program provides us with quality products at
better cost, and it allows us to be ahead of trends that might
impact crops. We can also use the infrastructure we create in these
source countries to springboard expansion into retail and
industrial businesses.
The Company is committed to reducing debt levels through aggressive
balance sheet management, and we have a number of programs in place
to accomplish this. For example, we will focus attention on working
capital improvement. We will better manage this significant
investment using a dedicated inventory champion and a management
incentive plan linked to performance.
As previously stated, our primary financial objective is to create
shareholder value. We will measure this value creation through
growth in economic value added (EVA). We will focus on this value
creation and not necessarily on quarter-to-quarter earnings per
share.
The Future
Leveraging our brands; refocusing on the consumer; developing
value-added products; lowering costs. By employing these
strategies, we are confident that McCormick will grow its market
lead, expand globally and enhance shareholder value. It is a vision
we are aggressively committed to achieve.
Photo of man in lab:
Routine laboratory analyses ensure the quality of our products
<TABLE>
<CAPTION>
Consolidated Income Year ended November 30
1995 1994 1993
(in thousands except per-share data)
<S> <C> <C> <C>
Net sales $1,858,694 $1,694,772 $1,556,566
Cost of goods sold 1,211,517 1,066,573 953,409
Gross profit 647,177 628,199 603,157
Selling, general and
administrative expense 446,128 429,518 422,700
Restructuring charge (credit) (3,904) 70,445
Profit from operations 204,953 128,236 180,457
Other income 7,378 6,175 6,397
Interest expense 55,270 38,659 31,102
Other expense 7,908 8,774 5,862
Income before income taxes
and accounting change 149,153 86,978 149,890
Provision for income taxes 53,700 33,750 60,500
Income from consolidated operations
before accounting change 95,453 53,228 89,390
Income from unconsolidated operations 2,068 7,929 10,290
Net income before cumulative effect on
prior years of accounting change 97,521 61,157 99,680
Cumulative effect on prior years of
accounting change for postretirement
benefits (26,626)
Net income $ 97,521 $ 61,157 $ 73,054
Earnings per common share
Before cumulative effect of
accounting change $1.20 $.75 $1.22
Cumulative effect on prior years of
accounting change (.33)
Earnings per common share $1.20 $.75 $ .89
Average shares outstanding 81,181 81,240 81,766
</TABLE>
See Notes to Financial Statements, pages 18 - 28
Consolidated Balance Sheet
<TABLE>
<CAPTION>
Assets November 30
1995 1994
(in thousands)
Current assets
Cash and cash equivalents $ 12,465 $ 15,566
Receivables
Trade 205,028 189,915
Other 21,475 21,416
Allowance for losses (2,545) (2,520)
223,958 208,811
Inventories
Finished products and work-in-process 250,865 249,054
Raw materials and supplies 132,357 125,413
383,222 374,467
Prepaid expenses 17,093 15,343
Deferred income taxes 33,980 43,470
Total current assets 670,718 657,657
Investments 46,658 62,410
Property, plant and equipment
Land and improvements 30,645 30,461
Buildings and improvements 211,859 211,456
Machinery and equipment 595,682 557,833
Construction in progress 59,207 37,307
897,393 837,057
Less accumulated depreciation and amortization 372,586 332,458
Property, plant and equipment - net 524,807 504,599
Goodwill - net 180,751 196,166
Prepaid allowances 183,357 143,181
Other assets 8,048 4,686
Trademarks, formulae, etc. 1 1
Human relations 1 1
$1,614,341 $1,568,701
See Notes to Financial Statements, pages 18 - 28
Liabilities and Shareholders' Equity
November 30
1995 1994
(in thousands)
<S> <C> <C>
Current liabilities
Notes payable $ 284,961 $ 202,542
Current portion of long-term debt 12,352 11,532
Outstanding checks 10,023 17,955
Trade accounts payable 136,651 128,236
Accrued payroll and employee benefits 41,935 48,404
Accrued sales allowances 36,516 38,373
Accrued restructuring costs 18,918 50,334
Other accrued liabilities 94,486 89,145
Income taxes 11,025 14,307
Total current liabilities 646,867 600,828
Long-term debt 349,111 374,288
Deferred income taxes 25,436 19,229
Employee benefit liabilities 72,088 68,375
Other liabilities 1,586 16,017
Total liabilities 1,095,088 1,078,737
Shareholders' equity Common Stock, no par value;
authorized 160,000,000
shares; issued and outstanding: 1995 - 12,089,000
shares, 1994 - 13,279,000 shares 48,133 50,006
Common Stock Non-Voting, no par value; authorized
160,000,000 shares; issued and outstanding:
1995 - 69,129,000 shares, 1994 - 67,927,000 shares 112,522 101,697
Retained earnings 387,657 343,285
Foreign currency translation adjustments (29,059) (5,024)
Total shareholders' equity 519,253 489,964
Commitments and contingencies $1,614,341 $1,568,701
</TABLE>
See Notes to Financial Statements, pages 18 - 28
<TABLE>
<CAPTION>
Consolidated Statement of Shareholders'Equity
Common Retained Currency Translation
Changes in Amounts Stocks Earnings Adjustments Total
(in thousands except per-share data)
<S> <C> <C> <C> <C>
Balance, December 1, 1992 $ 122,743 $ 318,711 $ (3,516) $ 437,938
Net income 73,054 73,054
Dividends declared ($.44/share) (35,553) (35,553)
Currency translation adjustments (6,507) (6,507)
Other adjustments (3,066) (3,066)
Shares purchased (3,580) (22,819) (26,399)
Shares issued 27,354 27,354
Balance, November 30, 1993 146,517 330,327 (10,023) 466,821
Net income 61,157 61,157
Dividends declared ($.48/share) (39,000) (39,000)
Currency translation adjustments 4,999 4,999
Other adjustments 842 842
Shares purchased (920) (10,041) (10,961)
Shares issued 6,106 6,106
Balance, November 30, 1994 151,703 343,285 (5,024) 489,964
Net income 97,521 97,521
Dividends declared ($.52/share) (42,205) (42,205)
Currency translation adjustments (24,035) (24,035)
Other adjustments 3,024 3,024
Shares purchased (2,362) (13,968) (16,330)
Shares issued 11,314 11,314
Balance, November 30, 1995 $160,655 $387,657 $(29,059) $519,253
</TABLE>
<TABLE>
<CAPTION>
Changes in Shares Issued and Outstanding
Common
Common Non-Voting
(in thousands)
<S> <C> <C>
Balance, November 30, 1992 14,357 65,951
Purchased and retired (286) (676)
Issued 791 862
Equal exchange (300) 300
Balance, November 30, 1993 14,562 66,437
Purchased and retired (111) (300)
Issued 281 337
Equal exchange (1,453) 1,453
Balance, November 30, 1994 13,279 67,927
Purchased and retired (435) (336)
Issued 298 485
Equal exchange (1,053) 1,053
Balance, November 30, 1995 12,089 69,129
</TABLE>
See Notes to Financial Statements, pages 18 - 28
<TABLE>
<CAPTION>
Consolidated Cash Flows
Year ended November 30
1995 1994 1993
(in thousands)
<S> <C> <C> <C>
Cash flows from operating activities
Net income $ 97,521 $ 61,157 $ 73,054
Adjustments to reconcile net income to
net cash provided by operating activities
Restructuring charge (credit) (3,904) 70,445
Cumulative effect of accounting change 26,626
Depreciation and amortization 63,698 62,540 50,522
Provision for (benefit from) deferred
income taxes 15,697 (27,095) (1,077)
Loss on sales of assets 483 1,305 201
Share of income from unconsolidated
operations (2,068) (7,929) (10,290)
Changes in operating assets and
liabilities net of effects from
businesses acquired or sold
Receivables (increase) (21,560) (24,895) (26,293)
Inventories (increase) (13,751) (41,011) (34,089)
Prepaid allowances (increase) (40,133) (16,914) (15,763)
Other assets (increase)/decrease (1,912) 1,593 1,326
Outstanding checks increase/(decrease) (7,932) (7,446) 1,252
Accounts payable and other accrued
liabilities increase/(decrease) (28,742) 21,451 5,521
Income taxes (decrease) (4,949) (26,763) (6,185)
Other noncurrent liabilities increase 6,959 2,694 5,379
Dividend received from unconsolidated
affiliate 3,345 10,391
Net cash provided by operating activities 59,407 72,477 80,575
Cash flows from investing activities
Acquisitions of businesses (82,573) (75,915)
Purchases of property, plant and equipment (82,140) (87,676) (76,063)
Proceeds from sale of assets 1,910 152 1,461
Proceeds/(payments) on settlement of
forward exchange contracts 4,361 (1,894) 9,288
Other investments (2,658) (12,035) (3,823)
Net cash (used in) investing activities (78,527) (184,026) (145,052)
Cash flows from financing activities
Notes payable increase 85,148 7,023 85,159
Long-term debt borrowings 165,692 38,535
Long-term debt repayments (20,186) (15,012) (10,002)
Stocks issued 11,314 6,106 27,354
Stocks acquired by purchase (16,330) (10,961) (26,399)
Dividends paid (42,202) (38,997) (35,551)
Net cash provided by financing activities 17,744 113,851 79,096
Effect of exchange rate changes on cash and
cash equivalents (1,725) 426 (3,587)
Increase/(decrease) in cash and cash equivalents (3,101) 2,728 11,032
Cash and cash equivalents at beginning of year 15,566 12,838 1,806
Cash and cash equivalents at end of year $ 12,465 $ 15,566 $ 12,838
</TABLE>
See Notes to Financial Statements, pages 18 - 28
Notes to Consolidated Financial Statements
(dollars in thousands except per-share data)
1. Summary of Accounting Policies:
Consolidation
The consolidated financial statements include the accounts of the
Company and all majority-owned subsidiaries. In the first quarter
of fiscal 1995, the Company changed the end of the reporting period
for foreign subsidiaries from October 31 to November 30 to provide
uniform reporting on a worldwide basis. Accordingly, an additional
month of operating results for those subsidiaries is included in
the 1995 financial statements. Investments in 20% to 50% owned
affiliates are accounted for under the equity method. Other
investments are accounted for under the cost method. All
significant intercompany transactions have been eliminated.
Cash and Cash Equivalents
The Company considers all highly liquid investments purchased with
an original maturity date of three months or less to be cash
equivalents.The Company's central cash management system is
designed to maintain zero balances at certain banks. Checks written
but not yet presented to these banks are included in the
Consolidated Balance Sheet as outstanding checks.
Inventories
Inventories are stated at the lower of cost (first-in, first-out)
or market.
Property, Plant and Equipment
Property, plant and equipment is stated at cost. Depreciation is
computed principally using the straight-line method over the
estimated useful lives of the related assets. Capitalized leased
assets and leasehold improvements are amortized over the shorter of
their estimated useful lives or the period of the related leases.
Amortization of capitalized leased assets is included in
depreciation and amortization expense.
The expense for depreciation and amortization of property, plant
and equipment was $56,347 in 1995; $56,845 in 1994 and $46,702 in
1993.
Goodwill
Goodwill is being amortized using the straight-line method over 40
years. Accumulated amortization of goodwill was $35,389 and
$28,921 at November 30, 1995 and 1994, respectively. On a periodic
basis, the Company estimates the future undiscounted cash flows of
the businesses to which goodwill relates in order to ensure that
the carrying value of such goodwill has not been impaired.
Prepaid Allowances
Prepaid allowances arise when the Company prepays sales discounts
and marketing allowances to certain customers in connection with
multi-year sales contracts. These costs are capitalized and
amortized over the lives of the contracts, generally ranging from
three to five years. The amounts reported in the Consolidated
Balance Sheet are stated at the lower of unamortized cost or
management's estimate of the net realizable value of these
costs.
Revenue Recognition
Sales revenue is recognized as products are shipped and services are rendered.
Research and Development
Research and development costs are charged to operations as
incurred. Such costs were $13,937 in 1995; $12,999 in 1994 and
$12,259 in 1993.
Earnings Per Share
Earnings per common share have been computed by dividing net income
by the weighted average number of common shares outstanding during
the period.
Foreign Currency Translation
The functional currency for the majority of the Company's
operations outside of the United States is the applicable local
currency. The translation from the applicable foreign currencies to
the United States dollar is performed for balance sheet accounts
using the current exchange rates in effect at the balance sheet
date and for revenue and expense accounts using the weighted
average exchange rate during the period. The gains or losses, net
of applicable deferred income taxes, resulting from such
translation are included in the foreign currency adjustments
account within shareholders' equity.
The Company periodically enters into forward exchange contracts to
hedge the impact of foreign currency fluctuations on its
investments in certain foreign subsidiaries. The gains and losses,
net of deferred income taxes, on these contracts are included in
the foreign currency translation adjustments account within
shareholders' equity.
Gains or losses resulting from foreign currency transactions and
the translation of the financial statements for those operations
outside of the United States whose functional currency is other
than the local currency are included in other income.
Credit Risk
The Company is potentially subjected to concentrations of credit
risk with trade accounts receivable, prepaid allowances and forward
exchange contracts for foreign currency. Because the Company has a
large and diverse customer base with no single customer accounting
for a significant percentage of trade accounts receivable and
prepaid allowances, there was no material concentration of credit
risk in these accounts at November 30, 1995. The Company evaluates
the credit worthiness of the counterparties to forward exchange
contracts for foreign currency and considers nonperformance credit
risk to be remote.
Accounting and Disclosure Changes
Effective December 1, 1992, the Company adopted Statement of
Financial Accounting Standards (SFAS) No. 106, "Employers'
Accounting for Postretirement Benefits Other than Pensions." SFAS
No. 106 requires the accrual of the expected costs of providing
postretirement benefits during the years that the employee renders
the necessary service. In connection with this adoption, the
Company recorded a one-time charge of $26,626, net of deferred
income tax benefit for accumulated postretirement benefits.
In March 1995, the Financial Accounting Standards Board (FASB)
issued Statement No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of." The
Statement requires that Long-Lived Assets be reviewed for
impairment whenever events or changes in circumstances indicate
that the carrying amount of the asset in question may not be
recoverable. The Company must adopt this Standard no later than in
its fiscal year beginning December 1, 1996. The effect of this
accounting change on the Company's financial statements is not
expected to be material.
In October 1995, the FASB issued Statement No. 123, "Accounting for
Stock-Based Compensation." Under this new Standard, the Company can
elect to recognize in the Income Statement compensation expense for
all employee stock compensation plans. Compensation expense would
be determined as the fair value of the instrument granted measured
at the grant date of the award using an option pricing model.
Alternatively, the Company can elect to continue the current method
of accounting for stock compensation plans under the existing rules
of Accounting Principles Board No. 25 which generally does not
require the recognition of compensation expense for such awards.
Should the latter alternative be selected by the Company,
disclosure of the compensation expense that would be recorded under
the new rules will be required in the Notes to the Financial
Statements. The Company must adopt the provisions of the new
Standard, or provide the additional disclosures in its fiscal year
beginning December 1, 1996. At this time, management has not
determined which alternative of this new Standard will be adopted
or when such adoption will take place.
The Accounting Standards Executive Committee of the AICPA adopted
Statement of Position 94-6 (SOP 94-6), "Disclosures of Certain
Significant Risks and Uncertainties and Financial Flexibility" on
December 30, 1994. The disclosures of SOP 94-6 focus primarily on
the nature of an entity's operations, the use of estimates in the
preparation of financial statements and risks and uncertainties
that could significantly affect the amounts reported in the
financial statements. The Company is required to provide these
disclosures beginning in their 1996 fiscal year. The Company has
not yet determined what additional disclosures may be necessary to
comply with SOP 94-6.
2. Investments:
The Company owns from 21.9% to 50% of its unconsolidated food
products affiliates. Although the Company reports its share of
earnings from the affiliates, their financial statements are not
consolidated with those of the Company. The Company's share of
undistributed earnings of the affiliates was $22,879 at November
30, 1995. Summarized yearend information from the financial
statements of these companies representing 100% of their businesses
follows:
Unconsolidated Affiliates
1995 1994 1993
Current assets $113,486 $144,781 $136,713
Noncurrent assets 70,670 80,087 68,974
Current liabilities 77,229 94,847 87,512
Noncurrent liabilities 42,362 43,157 35,138
Net sales 297,823 342,163 309,527
Gross profit 107,257 130,132 122,515
Net income 3,730 16,777 20,557
3. Financing Arrangements:
The Company's outstanding indebtedness is as follows:
1995 1994
Short-term notes payable
Commercial paper $261,705 $135,000
Other 23,256 67,542
$284,961 $202,542
Weighted-average interest rate 6.84% 6.42%
Long-term debt
8.95% note due 2001 $ 74,420 $ 74,343
9.00% and 9.75% installment notes
due through 1999 and 2001 24,318 35,864
5.78% - 7.77% medium-term notes
due 2004 to 2006 95,000 95,000
7.63% - 8.12% medium-term notes
due 2024 with put option in 2004 55,000 55,000
9.34% pound sterling installment
note due through 2001 16,447 18,787
10.00% Canadian dollar bond due 1999 7,352 7,266
3.13% yen note due 1999 4,993 7,280
9.74% Australian dollar note due 1999 8,918 9,218
Other 9,695 16,094
Total excluding non-recourse debt 296,143 318,852
11.68%non-recourse installment
note due 2006 52,968 55,436
$349,111 $374,288
The Company has available credit facilities with domestic and
foreign banks for various purposes. The available credit
facilities and the amounts outstanding under each category of
facility (and included in indebtedness above) are as follows:
<TABLE>
<CAPTION>
1995 1994
Total Amount Total Amount
Facility Borrowed Facility Borrowed
<S> <C> <C> <C> <C>
Available credit facilities
In support of commercial paper
issuance $380,000 $300,000
For the benefit of foreign
subsidiaries 83,185 $ 23,109 57,242 $ 17,978
Other 250,000 445,000 22,830
$713,185 $ 23,109 $802,242 $ 40,808
</TABLE>
The Company's long-term debt agreements contain various restrictive
covenants, including limitations on the payment of cash dividends.
Under the most restrictive covenants, $266,863 of retained earnings
was available for dividends at November 30, 1995.
The holders of the medium-term notes due 2024 have a one-time
option to require retirement of these notes during 2004.
The non-recourse installment note is secured by property and
equipment owned by Gilroy Energy Company, Inc. with a net book
value of $59,486 at November 30, 1995.
Maturities of long-term debt during the four years subsequent to
November 30, 1996 are as follows:
1997 - $12,799 1999 - $26,931
1998 - $12,199 2000 - $ 7,297
Credit facilities in support of commercial paper issuance require
a commitment fee of $364. All other credit facilities require no
commitment fee. Credit facilities for other purposes are subject to
the availability of funds.
At November 30, 1995, the Company had unconditionally guaranteed
the debt of affiliates amounting to $8,568.
Interest paid in 1995, 1994 and 1993 amounted to $46,518;
$40,699 and $31,739 respectively.
Rental expense under operating leases was $14,906 in 1995; $13,843
in 1994 and $12,416 in 1993. Future annual fixed rental payments
include the annual fixed rental payments under the lease
arrangement for the Consolidated Distribution Center expected to be
completed and leased by the Company in March 1996. Under the terms
of this lease, the Company has guaranteed that upon termination of
the lease, the residual value of the Consolidated Distribution
Center will not be less than 85% of the Center's original cost.
Future annual fixed rental payments for the years ending November
30, are as follows:
1996 - $ 10,160 1999 - $ 5,991
1997 - $ 8,805 2000 - $ 4,867
1998 - $ 7,018 Thereafter - $12,044
4. Employee Benefit Plans:
The net periodic cost of the Company's employee benefit
plans follows:
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Pension plans
Defined benefit plans
Service cost - benefits earned
during the period $ 5,509 $ 7,124 $ 6,137
Interest cost on projected
benefit obligations 9,972 9,909 9,272
Actual return on plan assets
including unrealized (gain)/loss (14,067) 116 (7,070)
Net amortization and deferral 6,904 (6,808) 852
Net pension cost 8,318 10,341 9,191
Multi-employer pension plans 2,087 1,977 1,591
Foreign retirement plans 2,952 2,013 1,907
Total pension expense $13,357 $14,331 $12,689
Profit sharing plan expense $ 3,150 $ 6,250 $ 6,500
Other postretirement benefits
Service cost $ 1,829 $ 2,368 $ 1,947
Interest cost 4,614 3,775 3,333
Amortization of prior service cost (111)
Total other postretirement benefit
expense $ 6,332 $ 6,143 $ 5,280
</TABLE>
Pension Plans
The Company has a non-contributory defined benefit plan (the
principal plan) covering substantially all United States employees
other than those covered under union-sponsored plans, and
a non-contributory defined benefit plan (the supplemental plan)
providing supplemental retirement benefits to certain officers. The
benefits provided by both plans are generally based on the
employee's years of service and compensation during the last five
years of employment. The Company's funding policy is to comply with
federal laws and regulations and to provide the principal plan with
assets sufficient to meet future benefit payments. The plan assets
for both plans consist principally of short-term money market
investments, fixed income securities and equity securities.
The principal plan and supplemental plan hold 385,181 and 43,803
shares, respectively, of the Company's stock at November 30,
1995.
The Company also contributes to union-sponsored, multi-employer
pension plans and certain retirement plans of its foreign
subsidiaries.
The following table sets forth the principal and supplemental
plans' funded status, amounts recognized in the Company's
Consolidated Balance Sheet and significant assumptions as
of September 30, the measurement date:
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Funded Status
Actuarial present value of
benefit obligation
Vested $ 103,788 $ 101,437
Non-vested 4,661 3,918
Accumulated benefit obligation $ 108,449 $ 105,355
Balance sheet recognition
Projected benefit obligations for
service rendered to date $ 132,063 $ 127,334
Plan assets at fair value 101,331 81,945
Projected benefit obligations
in excess of plan assets 30,732 45,389
Unrecognized net loss from
past experience different from
that assumed and effects of
changes in assumptions (18,330) (24,244)
Unrecognized net transition asset
and prior service cost 1,894 2,146
Additional minimum liability 5,047
Accrued pension cost $ 14,296 $ 28,338
Accrued pension costs included in
Accrued payroll and employee
benefit liabilities $ 13,600 $ 4,000
Accrued restructuring costs 13,800
Noncurrent employee benefit
liabilities 4,493 10,538
Other assets (3,797)
$ 14,296 $ 28,338
</TABLE>
<TABLE>
<CAPTION>
1995 1994
Principal Supplemental Principal Supplemental
Plan Plan Plan Plan
<S> <C> <C> <C> <C>
Significant assumptions
Weighted-average discount
rate 8.0% 8.5% 8.0% 8.5%
Rate of increase in
compensation levels 5.0% 5.0% 5.0% 5.0%
</TABLE>
The assumed long-term rate of return on plan assets has been 10.5%
for both plans for each of the three years in the period ended
November 30, 1995.
The work force reduction and voluntary special retirement program
that were components of the restructuring plan announced by the
Company in the fourth quarter of 1994 resulted in a curtailment and
settlement in the principal plan. The impact of the curtailment,
settlement and enhanced benefits of the special voluntary
retirement program resulted in an increase of accrued pension costs
of $13,800 in 1994.
Profit Sharing Plan
The Company makes contributions to the McCormick Profit Sharing
Plan in accordance with the Plan's provisions. The Profit Sharing
Plan is available to substantially all United States employees
other than those covered by union-sponsored benefit plans. The
Profit Sharing Plan assets consist principally of short-term money
market investments, fixed income securities and equity securities.
The Profit Sharing Plan holds 3,268,117 shares of the Company's
stock at November 30, 1995.
Other Postretirement Benefits
The Company provides health care and life insurance benefits to
eligible retirees having at least 10 years of service. Health care
benefits are also extended to eligible dependents of retirees as
long as the retiree remains covered. Health care benefits are
based on the retiree's age and service at retirement and require
other cost-sharing features, such as deductibles and coinsurance.
Life insurance protection is non-contributory. Other postretirement
benefit plans are not funded.
The following table sets forth the amounts recognized in the
Company's Consolidated Balance Sheet and significant assumptions as
of November 30, the measurement date:
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Accumulated other postretirement
benefit obligation
Current retirees $ 34,961 $ 19,808
Fully eligible active plan
participants 5,887 12,082
Other active plan participants 18,519 21,369
59,367 53,259
Unrecognized net (gain)/loss from
past experience different from
that assumed and effects of
changes in assumptions (1,473) 2,545
Unrecognized prior service cost 1,616
Accrued other postretirement
benefit liability $ 59,510 $ 55,804
Accrued other postretirement
costs included in
Accrued restructuring costs $ 4,200
Noncurrent employee benefits
liabilities $ 59,510 51,604
$ 59,510 $ 55,804
Significant assumption
Weighted-average discount rate 8.0% 8.5%
</TABLE>
The assumed weighted-average annual rate of increase in the per
capita cost of covered health care benefits is 12.4% for 1996. It
is assumed to decrease gradually to 5% in the year 2006 and remain
at that level thereafter. Increasing this assumed health care cost
trend rate by one percentage point in each year would increase the
accumulated postretirement benefit obligation at November 30, 1995
by $6,664 and the aggregate of the service and interest cost
components of net periodic other postretirement benefit cost for
1995 by $836.
The work force reduction plan and voluntary special retirement
program that were components of the restructuring plan announced by
the Company in the fourth quarter of 1994 resulted in a curtailment
of the other postretirement benefit plans. The restructuring charge
in 1994 included $4,200 representing the net pre-tax cost of other
postretirement benefits granted to individuals electing the
voluntary special retirement program who would not have otherwise
been entitled to the full amount of other postretirement benefits
under the provisions of the plans and the curtailment.
Stock Purchase and Option Plans
The Company has an Employee Stock Purchase Plan enabling
substantially all United States employees to purchase the Company's
common stock at the lower of the stock price on the grant date or
the exercise date. Under this plan a total of 3,146 employees had
outstanding subscriptions for a total of 391,504 shares with a
grant price of $22.00 per share at November 30, 1995. The last
date for exercise of the outstanding subscriptions is May 31, 1997.
Under the Company's 1984 and 1990 Stock Option Plans and the
McCormick (U.K.) Share Option Schemes, options to purchase shares
of the Company's common stock have been or may be granted to
employees. The option price for shares granted under these plans is
the fair market value on the grant date. At November 30, 1995, the
average exercise price of outstanding options was $22.13 per share,
and the expiration dates ranged from December 16, 1995 to March 14,
2005. The changes in outstanding stock options during the past
three years were:
<TABLE>
<CAPTION>
Common Price
Common Non-voting Range Per Share
(shares in thousands)
<S> <C> <C> <C>
Outstanding December 1, 1992 1,436 1,935 $ 3.55 - $26.00
Granted to 398 employees under
the Stock Option Plans and
4,254 employees in the Employee
Stock Purchase Plan 192 784 $22.63
Exercised (413) (830) $ 3.55 - $22.63
Cancelled or expired (7) (73) $18.00 - $26.00
Outstanding November 30, 1993 1,208 1,816 $ 4.41 - $26.00
Granted (to 415 employees) 384 130 $18.50 - $23.00
Exercised (340) (408) $ 4.56 - $22.63
Cancelled or expired (4) (137) $ 4.56 - $26.00
Outstanding November 30, 1994 1,248 1,401 $ 4.41 - $26.00
Granted to 412 employees under
the Stock Option Plans and
3,146 employees in the Employee
Stock Purchase Plan 376 604 $22.00
Exercised (293) (494) $ 4.41 - $23.00
Cancelled or expired (30) (253) $11.06 - $26.00
Outstanding November 30, 1995 1,301 1,258 $ 4.41 - $26.00
</TABLE>
Under all stock purchase and option plans, there were 2,270,228
shares reserved for future grants and 1,784,544 exercisable at
November 30, 1995 and 2,774,787 shares reserved for future grants
and 1,928,527 exercisable at November 30, 1994.
5. Income Taxes:
For financial reporting purposes, income before income taxes and
cumulative effect of accounting change includes the following
components:
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Pretax income
United States $120,817 $ 84,351 $132,450
International 28,336 2,627 17,440
$149,153 $ 86,978 $149,890
Significant components of the income tax
provision follow:
Current
United States $ 23,077 $ 43,348 $ 44,878
State 6,714 9,106 9,122
International 8,212 8,391 7,577
Total current 38,003 60,845 61,577
Deferred
United States 13,038 (19,199) (968)
State 2,049 (3,888) (230)
International 610 (4,008) 121
Total deferred 15,697 (27,095) (1,077)
$ 53,700 $ 33,750 $ 60,500
Tax expense allocated directly to
contributed capital was as follows:
Relating to employee stock options $ 439 $ 608 $ 2,304
Relating to translation adjustment
and foreign currency hedge transactions $ 0 $ 540 $ (3,291)
The reconciliation between income tax attributable to continuing operations computed at the United States
federal statutory rate and income taxes actually provided, follow:
</TABLE>
<TABLE>
<CAPTION>
1995 1994 1993
Amount Percent Amount Percent Amount Percent
<S> <C> <C> <C> <C> <C> <C>
Tax at United States statutory rate $52,204 35.0% $30,442 35.0% $52,408 35.0%
State income taxes, net of
United States benefits 6,399 4.3 3,855 4.4 5,695 3.8
(Lower)/higher effective income taxes
on earnings in other countries (423) (.3) 1,940 2.2 1,648 1.1
Rehabilitation investment and
other tax credits (3,553) (2.4) (1,156) (1.3) (1,199) (.8)
United States tax rate change effect
on deferred taxes 1,199 .8
Other items (927) (.6) (1,331) (1.5) 749 .5
Actual income taxes provided $53,700 36.0% $33,750 38.8% $60,500 40.4%
</TABLE>
The tax effects of temporary differences that give rise to significant
portions of deferred tax assets and liabilities consist of the following:
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Current deferred income tax assets
Restructuring charge $ 9,207 $ 19,677
Inventory capitalization 5,221 4,054
Employee benefits 8,229 8,352
Casualty insurance 2,712 2,737
State income tax 4,987 5,022
Coupon expense 1,420 1,743
Other 3,006 3,819
Total current deferred income tax assets 34,782 45,404
Current deferred income tax (liabilities)
Prepaid insurance (816) (1,758)
Other 14 (176)
Total current deferred income tax (liabilities) (802) (1,934)
Total net current deferred income tax asset $ 33,980 $ 43,470
Noncurrent deferred income tax assets
Employee benefits $ 29,376 $ 26,069
Restructuring 3,983
Other 8,304 8,448
Total noncurrent deferred income tax assets 37,680 38,500
Noncurrent deferred income tax (liabilities)
Tax over book depreciation (46,710) (44,344)
Property exchange (4,177) (4,177)
Other (12,229) (9,208)
Total noncurrent deferred income tax
(liability) (63,116) (57,729)
Total net noncurrent deferred income tax
(liability) $ (25,436) $ (19,229)
No valuation allowance is provided for deferred income tax assets.
</TABLE>
Income taxes are provided at rates applicable in the countries in
which the income is earned. Provision for United States income
taxes is not made for unremitted earnings of international
subsidiaries and affiliates as those earnings are considered to be
indefinitely reinvested. Upon distribution, these earnings would be
subject to United States income taxes (subject to an adjustment for
foreign tax credits) and withholding taxes payable to the various
other countries.
Determination of the unrecognized deferred tax liability for
temporary differences related to investments in international
subsidiaries and affiliates at November 30, 1995 and November 30,
1994 is not practicable. Unremitted earnings of such entities were
$70,584 at November 30, 1995.
Income taxes paid in 1995, 1994 and 1993 were $38,214; $84,384 and
$66,143, respectively.
6. Capital Stocks:
Holders of Common Stock have full voting rights except that (1) the
voting rights of persons who are deemed to own beneficially 10% or
more of the outstanding shares of voting Common Stock are limited
to 10% of the votes entitled to be cast by all holders of shares of
Common Stock regardless of how many shares in excess of 10% are
held by such person; (2) the Company has the right to redeem any or
all shares of stock owned by such person unless such person
acquires more than 90% of the outstanding shares of each class of
the Company's Common Stock; and (3) at such time as such person
controls more than 50% of the vote entitled to be cast by the
holders of outstanding shares of voting Common Stock,
automatically, on a share-for-share basis, all shares of Common
Stock Non-Voting will convert into shares of Common Stock.
Holders of Common Stock Non-Voting are entitled to vote on reverse
mergers and statutory share exchanges where the capital stock of
the Company is converted into other securities or property,
dissolution of the Company and the sale of substantially all of the
assets of the Company, as well as forward mergers and consolidation
of the Company.
Holders of Common Stock Non-Voting will vote as a separate class on
all matters on which the holders of Common Stock Non-Voting are
entitled to vote.
7. Fair Value:
The following methods and assumptions were used by the Company in
estimating fair value disclosures for financial instruments:
Cash and cash equivalents, trade receivables, short-term
borrowings, current portion of long-term debt, accounts
payable and accrued liabilities: The amounts reported in the
Consolidated Balance Sheet approximate fair value.
Long-term debt: The fair value of long-term debt, based on a
discounted cash flow analysis using the Company's current
incremental borrowing rate for debt of similar maturities is as
follows:
<TABLE>
<CAPTION>
1995 1994
Fair Carrying Fair Carrying
Value Value Value Value
<S> <C> <C> <C> <C>
Long-term debt $393,350 $349,111 $372,013 $374,288
</TABLE>
Forward exchange contracts for foreign currency: The fair value of
forward exchange contracts for foreign currency is estimated using
quoted market prices for comparable instruments. There were no
outstanding forward exchange contracts for foreign currency at
November 30, 1995.
Investments, consisting principally of investments in
unconsolidated affiliates, are not readily marketable. Therefore,
it is not practicable to estimate their fair value.
8. Business Restructuring:
In the fourth quarter of 1994, the Company recorded a $70,445
charge for restructuring its business operations. This
restructuring charge reduced 1994 net income for the year and for
the fourth quarter by $46,295 or $.57 per share. The charge
provided for costs associated with reducing the work force and a
program that eliminated redundant facilities and positions,
improved productivity and efficiency, and eliminated certain
businesses and product lines. Specific actions included reducing
approximately 600 positions worldwide through position eliminations
and a voluntary special retirement program; closing an industrial
products plant and a foodservice products plant and transferring
the production to other existing facilities; realigning some of our
operations in the U.K.; the sale of Golden West Foods, Inc., the
frozen foods subsidiary; and consolidating certain administrative
activities.
As of November 30, 1995, the Company reduced its work force by
approximately 540 due to position eliminations and retirements. One
production facility, an industrial products plant, was closed. A
foodservice products plant will be closed in early 1996. Production
will be transferred to other existing facilities. The frozen food
business, Golden West Foods, Inc., was sold. Several functional
activities, primarily at the Hunt Valley operations, were
consolidated.
The components of the restructuring charge and remaining liability
are as follows:
<TABLE>
<CAPTION>
11/30/95 11/30/94
Remaining Remaining Restructuring
Liability Liability Charge
<S> <C> <C> <C>
Work force reduction $ 977 $24,263 $24,375
Plant consolidations and closings 17,563 33,414 33,477
Other restructuring projects 378 6,513 12,593
18,918 64,190 70,445
Income tax benefits (6,459) (23,434) (24,150)
$12,459 $40,756 $46,295
</TABLE>
Included in the remaining liability are fixed asset write-offs of
$7,249.
9. Business Segment:
The Company operates in one segment, specialty foods, which
consists principally of manufacturing, marketing and distributing
seasonings, flavorings and food products. It also includes the
plastic packaging group. The following presents information about
operations in different geographic areas:
<TABLE>
<CAPTION>
North Other
America Europe Countries Total
<S> <C> <C> <C> <C>
1995
Net sales $1,443,674 $325,019 $90,001 $1,858,694
Net income 84,803 10,016 2,702 97,521
Assets 1,332,342 223,718 58,281 1,614,341
Liabilities 916,164 150,511 28,413 1,095,088
1994
Net sales $1,401,537 $239,353 $53,882 $1,694,772
Net income (loss) 69,186(a) (6,286)(a) (1,743) 61,157
Assets 1,324,474 202,612 41,615 1,568,701
Liabilities 910,323 147,565 20,849 1,078,737
(a) Includes 1994 net restructuring charge in North America of $34,162 and in Europe of $12,133.
1993
Net sales $1,315,848 $201,178 $39,540 $1,556,566
Net income before accounting change
for postretirement benefits 93,353 5,552 775 99,680
Assets 1,157,923 135,574 19,739 1,313,236
Liabilities 768,386 69,381 8,648 846,415
</TABLE>
10. Quarterly Data (Unaudited)
<TABLE>
<CAPTION>
1995 Quarters
1st 2nd 3rd 4th Year
<S> <C> <C> <C> <C> <C>
Net sales $425,433 $444,983 $431,982 $556,296 $1,858,694
Gross profit 141,816 151,311 143,623 210,427 647,177
Net income 19,346(a) 16,042 19,915 42,218 97,521(a)
Earnings per
common share $.24(a) $.20 $.25 $.52 $1.20(a)
(a) Includes restructuring credit of $2,342 or $.03 per share.
</TABLE>
<TABLE>
<CAPTION>
1994 Quarters
1st 2nd 3rd 4th Year
<S> <C> <C> <C> <C> <C>
Net sales $367,723 $396,342 $422,141 $508,566 $1,694,772
Gross profit 132,771 141,672 158,055 195,701 628,199
Net income (loss) 18,310 19,129 26,442 (2,724)(b) 61,157(b)
Earnings (loss) per common share $.23 $.24 $.33 $(.03)(b) $.75(b)
(b) Includes restructuring charge of $46,295 or $.57 per share.
</TABLE>
Management's
Discussion and Analysis
Photo of family and gingerbread cookies:
The old fashioned, gingerbread scent of this year's annual report
is a timeless reminder of McCormick/Schilling's presence in
kitchens.
Results of Operations
1995 compared to 1994
Sales from consolidated operations grew 10% in 1995 to a record
level of $1.9 billion. The substantial growth in sales was
primarily the result of volume gains across all operating units
with particularly strong performance from the industrial, European
and Asia/Pacific operations.
Sales from businesses acquired in 1994 contributed 3% of the
increase over prior year sales. Additionally, in the first quarter
of fiscal 1995, the Company changed the end of the reporting period
for foreign subsidiaries from October 31 to November 30 to provide
uniform reporting on a worldwide basis. The effect of this change
increased net sales by 2% over 1994. Net sales before acquisitions,
divestitures and the change for foreign subsidiaries grew 5% over
1994.
Sales of unconsolidated operations in 1995 were $298 million, a
decrease of 13% versus the prior year. The decrease was primarily
due to the devaluation of the peso and resulting economic problems
in Mexico. The Mexican peso was devalued approximately 52% in 1995.
While we continue to maintain a high market share for our Mexican
mayonnaise products, unit volumes declined 10% as a result of the
economic conditions that weakened consumer purchasing power.
The Company's gross profit margin decreased to 34.8% versus 37.1%
for the same period last year. The overall decline was a result of
higher raw material costs, higher mix of lower margin industrial
sales and lower crop yields for Gilroy Foods garlic. Multiple cost
increases in plastic resins and corrugated packaging negatively
impacted margins in our food and plastics businesses. Additionally,
increases in pepper costs had an adverse impact on all of our food
businesses. Gross margins improved as expected in our industrial
flavor and seasoning business. Competitive intensity in most of the
markets in which we do business increased in 1995. Pressure on
margins is being felt at all levels of distribution in the food
industry. We believe that this business environment is not likely
to change in the near term.
Profit from operations increased to 11.0% of sales from 7.6% in
1994. Excluding the restructuring charge and credit, operating
profit margins declined in 1995 to 10.8% from 11.7% in the prior
year. Cost savings, mainly in the administrative functions,
partially offset weakened gross profit margins. These savings are
the result of the Company's restructuring program. As of November
30, 1995, the Company reduced its work force by approximately 540
due to position eliminations, retirements, plant closings, and
dispositions. An industrial products plant was closed, and
production was transferred to other existing facilities. Golden
West Foods, Inc., a specialty frozen food business, was sold.
Several functional activities, primarily within Maryland, were
consolidated. It is anticipated that a foodservice products plant
will be closed in early 1996, and production will be transferred to
another existing facility. A consolidated distribution center is
expected to be completed in March 1996. Additionally, realignment
of some of our operations in the U.K. will occur throughout 1996
and into 1997. We believe continued benefits from these programs
will occur over the next two years. Some of the benefits from the
restructuring program were used to invest in the Company's national
advertising program. We anticipate continued investment in 1996 for
this program.
Interest expense increased to $55.3 million in 1995 versus $38.7
million in 1994. The higher financing costs were caused by higher
debt levels. Debt was used to finance acquisitions made in the
previous year, higher levels of prepaid allowances and higher
working capital levels. Increases in working capital were partially
caused by temporary inventory build-up as we consolidated plants
identified for closing in our restructuring program. We also made
strategic purchases of certain commodities which are expected to
rise in cost and/or be in short supply in 1996.
Unconsolidated income from joint ventures decreased to $2 million
in 1995, down from $8 million in 1994. As mentioned previously, the
decline was primarily the result of weakness in our Mexican
operations brought on by the devaluation of the Mexican peso.
The Company's effective income tax rate for the year was 36.0%, 2.8
percentage points lower than the comparable rate for 1994. Factors
contributing to the favorable rate were lower effective
international income tax rates and higher United States income tax
credits.
Earnings per share for 1995 were $1.20, up 60% over $.75 in 1994.
Excluding the restructuring charge in 1994 of $.57 and the
restructuring credit of $.03 in 1995, earnings per share in 1995
were down 11% versus the prior year. Net income was $97.5 million
in 1995, up 59% over 1994. Excluding the restructuring charge and
credit in 1994 and 1995 respectively, net income was down 11%.
1994 Compared to 1993
Consolidated net sales grew by 9% in 1994 to $1.7 billion. This
increase was achieved mainly through volume gains of 8% in total
for the Company. Strong growth occurred in many of our businesses
with significant increases in our European Zone, Asia/Pacific Zone,
industrial and packaging units. Partial year benefits from newly
acquired businesses and sales to fast food operators contributed to
our international growth. Consolidation of suppliers by the leading
food processors and restaurant chains in combination with our
reputation for service and quality resulted in continued volume
gains in our industrial division. Market growth and increased
penetration into the high value-added niche packaging business were
the drivers in the growth of that business. Sales of unconsolidated
operations in 1994 were $342 million, an increase of 10% over
1993.
Our earnings in 1994 were impacted by three significant factors in
addition to the restructuring. These were as follows: first, lower
margins in our industrial flavor and seasoning business due in part
to higher domestic commodity costs and the lag time in passing
these through in the form of price increases; second, our joint
venture in Mexico continued to experience challenges to their
leading position in mayonnaise and associated products which was
defended vigorously with high levels of promotional spending; and
third, an increase in interest expenses that resulted from rising
short-term rates and higher levels of debt.
Gross margins declined to 37.1% in 1994 from 38.7% in 1993. This is
due in part to the changing mix of our sales as lower gross margin
industrial sales increased at a faster rate than consumer product
sales. The margins were also lower due to the difficulty in passing
on the higher commodity costs to our industrial customers.
Profit from operations decreased to 7.6% of sales and included the
restructuring charge of $70 million, which is 4.2% of sales.
Excluding the restructuring charge, profit from operations in 1994
was 11.7%. Operating profit margins in 1993 and 1992 were 11.6% and
11.4%, respectively. Before the restructuring charge, these margins
showed a positive trend, even as gross margins declined. This is
due to our continuing efforts to control expenses and eliminate
non-value-added costs throughout the Company.
Interest expense increased to $38.7 million in 1994 versus $31.1
million in 1993. This was caused by rising interest rates and
higher debt levels. Debt was used to finance acquisitions in 1994
which totaled $83 million. Higher working capital was partially
caused by inventory build-up as we re-engineered our consumer
products plant in Hunt Valley, Maryland, and made strategic
purchases of certain commodities.
Unconsolidated income from joint ventures decreased to $8 million
in 1994, down from $10 million in 1993. As mentioned above, our
joint venture in Mexico reported significantly lower earnings due
to an investment in a marketing campaign to defend market share.
The Company's effective tax rate was 38.8% for 1994 compared to
40.4% for the prior year.
The Company earned $.75 per share in fiscal year 1994. This is a
decrease from the $.89 reported in 1993 and $1.16 in 1992. The
Company's 1994 earnings were reduced by a comprehensive
restructuring plan of its business operations causing a one-time
charge to earnings of $.57 per share. Earnings per share for 1993
were reduced by a $.33 one-time charge for an accounting change.
Foreign Currency Management
The Company is subjected to foreign currency translation risks at
all of its subsidiaries and affiliates located outside the United
States, principally in the United Kingdom, Canada, Australia, and
Mexico. Increases or decreases in the value of the applicable
foreign currency relative to the U.S. dollar can increase or
decrease the reported net assets of foreign subsidiaries and
reported net investments in foreign affiliates. During 1995, the
Mexican peso devaluation reduced the Company's equity by $17.9
million. Management periodically enters into forward contracts for
the delivery of foreign currencies to hedge certain exposures to
these increases or decreases. Generally, the Company's foreign
subsidiaries utilize local borrowings to limit their net asset
exposure. At yearend, the Company did not have any hedges in place
to cover net asset exposures.
The Company is also exposed to foreign exchange risk for
transactions that are denominated in other than the applicable
local currency. Where economically feasible, such transactions are
hedged with forward exchange contracts.
Liquidity and Capital Resources
The Company's current ratio was 1.0 at yearend compared to 1.1 and
1.4 at the end of 1994 and 1993, respectively. The decrease is
attributable to higher debt levels. The Company's current ratio
does not represent a complete measure of the cash resources
available to finance operating requirements.
We maintain relationships with a number of United States and
international banks that provide committed credit facilities of
$380 million which increase our liquidity. These facilities were
not in use at yearend.
Cash flows from operations decreased by $13 million due to an
increase in operating assets. This was primarily a result of
an increase in prepaid allowances paid to certain customers for
multi-year sales contracts. Additionally, spending in connection
with the restructuring program and further investments in working
capital contributed to the decline in operating cash flows. The
Company has begun a plan to improve working capital management
which is anticipated to result in the reductions in future
investments in working capital. Included in this effort is a
revised management incentive program in which working capital
management is a major component in determining incentive pay.
Capital expenditures were $82 million in 1995 compared with $88
million during 1994. The majority of our capital spending was
oriented toward projects that increased efficiency, improved yields
or expanded capacity. A significant portion of 1995's capital
spending was for the implementation of the various projects in
connection with the Company's restructuring program. In the near
term, the Company anticipates decreases in the current level of
capital spending.
The Company made no acquisitions in 1995. This compares to 1994 and
1993 when $83 million and $76 million, respectively, were spent on
acquisitions. This decrease reflects our intention to focus on the
successful integration of past acquisitions, to reduce our debt
level and to improve returns in our businesses.
Return on equity (ROE), calculated by dividing net income from
continuing operations by average shareholders' equity was 20.3%
versus 12.8% in 1994 and 22.0% in 1993. ROE before the impact of
the restructuring charge on net income was 22.1% in 1994.
Total debt to total capital was 55.5% in 1995 versus 54.6% in 1994,
compared to 48% in 1993. Long-term debt outstanding at yearend
1995 was $349 million compared to $374 million in 1994. There were
no new issuances of long-term debt in 1995, and the Company repaid
$20 million of its outstanding long-term obligations. In 1995, the
Company's long-term debt rating of "A" was reaffirmed by both major
debt-rating services. Short-term debt outstanding at yearend 1995
and 1994 was $285 million and $203 million, respectively,
consisting principally of commercial paper rated as A1/P1 quality
by the major rating agencies.
In June 1993, the Company authorized an additional 2 million share
repurchase program which was approximately 63% complete at fiscal
yearend.
Dividends have increased 14 times and have risen at a compounded
annual rate of 19% since 1987. Total dividends paid during fiscal
1995 were $42.2 million versus $39.0 million in 1994 and $35.6
million in 1993. The quarterly dividends paid during the past three
years are summarized below:
1995 1994 1993
First Quarter $.13 $.12 $.11
Second Quarter .13 .12 .11
Third Quarter .13 .12 .11
Fourth Quarter .13 .12 .11
Total $.52 $.48 $.44
In December 1995, the Board of Directors approved an 8% increase in
the quarterly dividend from $.13 to $.14 per share.
The high and low closing prices of common stock during fiscal
quarters as reported on the NASDAQ national market follow:
1995 1994
Quarter ended High Low High Low
February 28 $22.63 $18.13 $24.75 $21.00
May 31 23.25 20.44 23.50 20.00
August 31 23.25 20.75 22.50 17.75
November 30 26.50 21.50 20.38 17.75
<TABLE>
<CAPTION>
Sales
Consolidated 1995 1994 1993 1995 1994 1993
<S> <C> <C> <C> <C> <C> <C>
(in millions) (percentage of total)
Americas $ 727.6 $ 716.6 $ 706.0 39.1% 42.2% 45.4%
Europe 317.1 238.4 201.2 17.1% 14.1% 12.9%
Asia/Pacific 56.8 33.4 26.2 3.1% 2.0% 1.7%
Industrial 567.3 524.7 456.5 30.5% 30.9% 29.3%
Packaging 154.8 141.7 124.9 8.3% 8.4% 8.0%
Total Food and
Packaging 1,823.6 1,654.8 1,514.8 98.1% 97.6% 97.3%
Gilroy Energy 35.1 40.0 41.8 1.9% 2.4% 2.7%
Total $1,858.7 $1,694.8 $1,556.6 100.0% 100.0% 100.0%
</TABLE>
<TABLE>
<CAPTION>
Percentage Change 1995 1994 1993
Total Volume Price Total Volume Price Total Volume Price
Change Change Change Change Change Change Change Change Change
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Americas 1.5% 1.2% 0.3% 1.5% 1.2% 0.3% 4.1% 4.7% (0.6)%
Europe 33.0% 32.2% 0.8% 18.5% 14.9% 3.6% 0.1% 9.9% (9.8)%
Asia/Pacific 70.3% 61.8% 8.5% 27.4% 27.8% (0.4)% (6.4)% (3.4)% (3.0)%
Industrial 8.1% 6.8% 1.3% 14.9% 13.7% 1.2% 8.0% 9.5% (1.5)%
Packaging 9.2% 1.4% 7.8% 13.4% 9.9% 3.5% 28.6% 25.5% 3.1%
Total Food and
Packaging 10.2% 8.7% 1.5% 9.3% 8.0% 1.3% 6.2% 8.1% (1.9)%
Gilroy Energy (12.2)% (7.2)% (5.0)% (4.1)% 0.8% (4.9)% (5.8)% (4.3)% (1.5)%
Total 9.7% 8.3% 1.4% 8.9% 7.8% 1.1% 5.8% 7.7% (1.9)%
</TABLE>
Photo: New Distribution Center
<TABLE>
<CAPTION>
Historical Financial Summary (dollars in millions except per-share data)
Operating Results 1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales 1,858.7 1,694.8 1,556.6 1,471.4 1,427.9 1,323.0 1,246.1 1,220.3 1,078.5 975.7
Cost of goods sold 1,211.5 1,066.6 953.4 887.4 886.6 838.2 805.9 812.6 710.2 637.4
Gross profit 647.2 628.2 603.2 584.0 541.3 484.8 440.2 407.7 368.3 338.3
Selling, general &
admin. exp. 446.1 429.6 422.7 416.8 395.8 357.7 338.2 312.9 305.2 271.3
Restructuring charge
(credit) (3.9) 70.4
Operating profit 205.0 128.2 180.5 167.2 145.5 127.1 102.0 94.8 63.1 67.0
Interest & other
income/exp. (55.8) (41.2) (30.6) (28.9) (30.6) (22.8) (23.5) (31.0) (22.5) (23.5)
Income before income
taxes 149.2 87.0 149.9 138.3 114.9 104.3 78.5 63.8 40.6 43.5
Provision for income
taxes (53.7) (33.7) (60.5) (53.0) (42.8) (38.6) (29.5) (27.8) (16.6) (19.4)
Income-consolidated ops. 95.5 53.3 89.4 85.3 72.1 65.7 49.0 36.0 24.0 24.1
Income-unconsolidated ops. 2.0 7.9 10.3 9.9 8.8 3.7 3.5 (.4) .4 .3
Income - continuing ops. 97.5 61.2 99.7 95.2 80.9 69.4 52.5 35.6 24.4 24.4
Income - discont. real
estate ops.(F1) 83.0 .7 6.2 5.3
Accounting changes(F2) (26.6) 6.4
Net income 97.5 61.2 73.1 95.2 80.9 69.4 135.5 42.7 30.6 29.7
Gross profit margin 34.8% 37.1% 38.7% 39.7% 37.9% 36.6% 35.3% 33.4% 34.1% 34.7%
Operating profit margin 11.0% 7.6% 11.6% 11.4% 10.2% 9.6% 8.2% 7.8% 5.9% 6.9%
Profit margin -
consolidated 5.1% 3.1% 5.7% 5.8% 5.1% 5.0% 3.9% 3.0% 2.2% 2.5%
Percent change over
prior year Net sales 9.7% 8.9% 5.8% 3.0% 7.9% 6.2% 2.1% 13.2% 10.5% 11.8%
Income-continuing ops. 59.5% (38.6)% 4.7% 17.7% 16.6% 32.1% 47.5% 45.9% .0% 13.0%
Effective tax rate 36.0% 38.8% 40.4% 38.3% 37.2% 37.0% 37.6% 43.6% 40.9% 44.6%
Liquidity
Depreciation and
amortization 63.7 62.5 50.5 43.8 40.5 36.6 34.8 29.8 30.4 24.5
Capital expenditures 82.1 87.7 76.1 79.3 73.0 58.4 53.4 50.4 81.7 82.9
Current ratio 1.0 1.1 1.4 1.1 1.2 1.3 1.7 1.4 1.4 1.4
Capital Structure
Current debt 297.3 214.0 84.7 122.6 78.2 30.4 20.3 49.5 76.7 51.9
Long-term debt 349.1 374.3 346.4 201.0 207.6 211.5 210.5 229.4 198.1 126.8
Total debt 646.4 588.3 431.1 323.6 285.8 241.9 230.8 278.9 274.8 178.7
Shareholders' equity 519.3 490.0 466.8 437.9 389.2 364.4 346.2 294.3 280.6 271.6
Total capital 1,165.7 1,078.3 897.9 761.5 675.0 606.3 577.0 573.2 555.4 450.3
Total assets 1,614.3 1,555.7 1,313.2 1,130.9 1,037.4 946.9 864.5 846.4 776.5 648.1
Return on equity -
continuing ops. 20.3% 12.8% 22.0% 23.3% 21.8% 20.4% 15.5% 14.6% 11.1% 11.9%
Return on equity - total 20.3% 12.8% 17.0% 23.3% 21.8% 20.4% 40.0% 14.6% 11.3% 11.3%
Percent debt to total
capital 55.5% 54.6% 48.0% 42.5% 42.3% 39.9% 40.0% 48.7% 49.5% 39.7%
Per Common Share(F3)
Income - continuing ops. 1.20 .75 1.22 1.16 .98 .83 .60 .38 .26 .25
Income - discont. real
estate ops.(F1) .94 .01 .06 .06
Income before accounting
changes 1.20 .75 1.22 1.16 .98 .83 1.54 .39 .32 .31
Accounting changes(F2) (.33) .07
Total earnings 1.20 .75 .89 1.16 .98 .83 1.54 .46 .32 .31
EPS growth from
continuing ops. 60% (39)% 5% 18% 18% 38% 58% 46% 4% 14%
Book value 6.39 6.03 5.70 5.45 4.88 4.56 4.18 3.27 3.00 2.83
Common dividends
declared(F4) .53 .49 .45 .40 .31 .24 .19 .14 .13 .11
Market closing price:
High 26.50 24.75 30.25 28.75 22.88 13.38 12.50 7.25 6.44 5.66
Low 18.13 17.75 20.40 20.63 11.88 9.13 6.31 3.85 4.10 4.16
Dividend payout ratio(F5) 44.4% 36.4% 36.1% 32.8% 28.6% 28.9% 30.8% 36.5% 38.5% 37.4%
Average shares outstanding
and equivalents
(000's) 81,181 81,240 81,766 81,918 82,396 83,720 87,772 93,068 94,408 96,848
<FN>
(F1) The Company disposed of its wholly owned real estate subsidiary in 1989.
(F2) In 1993, the Company adopted SFAS No. 106, "Employers" Accounting for Postretirement Benefits Other than Pensions,"
and in 1988, it adopted SFAS No. 96, "Accounting for Income Taxes."
(F3) All share data adjusted for 2-for-1 stock splits in January 1992, January 1990 and April 1988.
(F4) Includes fourth quarter dividends for the years 1986 and 1988-1995, which were declared in December of each of those
years.
(F5) Dividend payout ratio does not include gain on sale of discontinued real estate operations, cumulative effect of
accounting changes and restructuring charge or credit.
</FN>
</TABLE>
Management's Responsibility
for Financial Statements
The consolidated financial statements of McCormick & Company,
Incorporated and subsidiaries have been prepared by the Company in
accordance with generally accepted accounting principles.
Management has primary responsibility for the financial information
presented and has applied judgment to the information available,
made estimates, and given due consideration to materiality in
preparing the financial information in this annual report.
The financial statements, in the opinion of management, present
fairly the consolidated financial position, results of operations,
and cash flows of the Company and subsidiaries for the stated dates
and periods in conformity with generally accepted accounting
principles. The financial statements in this report have been
audited by the Company's independent auditors, Ernst & Young LLP.
The independent auditors review and evaluate control systems and
perform such tests of the accounting information and records as
they consider necessary to reach their opinion on the Company's
consolidated financial statements. In addition, McCormick's
Internal Audit function performs audits of accounting records,
reviews accounting systems and internal controls, and recommends
improvements when appropriate.
The Audit Committee of the Board of Directors is composed of
outside directors. The committee meets periodically with the
Internal Audit staff, with members of management, and with the
independent auditors, in order to review annual audit plans,
financial information, and the Company's internal accounting and
management controls.
The Company believes that it maintains accounting systems and
related controls, and communicates policies and procedures, which
provide reasonable assurance that the financial records are
reliable, while providing appropriate information for management of
the business and maintaining accountability for assets.
Charles P. McCormick, Jr.
Chairman of the Board & Chief Executive Officer
Robert G. Davey
Vice President & Chief Financial Officer
J. Allan Anderson
Vice President & Controller, Chief Accounting Officer
Report of Independent Auditors
To the Shareholders
McCormick & Company, Incorporated
We have audited the accompanying consolidated balance sheets of
McCormick & Company, Incorporated and subsidiaries as of November
30, 1995 and 1994 and the related consolidated statements of
income, shareholders' equity, and cash flows for each of the
three years in the period ended November 30, 1995. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial
statements based on our audits.
We have conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial
position of McCormick & Company, Incorporated and subsidiaries at
November 30, 1995 and 1994 and the consolidated results of their
operations and their cash flows for each of the three years in the
period ended November 30, 1995 in conformity with generally
accepted accounting principles.
As discussed in Note 4 to the consolidated financial statements,
the Company changed its method of accounting for postretirement
benefits other than pensions in 1993.
Baltimore, Maryland
January 15, 1996
Directors and Officers
Board of Directors
Executive Committee
Charles P. McCormick, Jr.
H. Eugene Blattman*
Robert G. Davey
Robert J. Lawless
Carroll D. Nordhoff
James J. Albrecht
James S. Cook + ***
Executive in Residence
College of Business Administration
Northeastern University
Harold J. Handley**
George W. Koch + ***
Of Counsel
Kirkpatrick & Lockhart
George V. McGowan ***
Chairman of the Executive Committee
Baltimore Gas and Electric Company
Richard W. Single, Sr.
William E. Stevens + ***
President & Chief Executive Officer
United Industries Corp.
Karen D. Weatherholtz*
Retired January 1, 1996**
Retiring April 1, 1996+
Audit Committee Member***
Compensation Committee Member D
PHOTO:Left to right, seated: Nordhoff, Blattman*, McCormick,
Lawless, Davey;standing: Weatherholtz, Koch, Stevens, Cook,
Albrecht, Single, Handley**, McGowan.
Corporate Officers
Charles P. McCormick, Jr.
Chairman of the Board &
Chief Executive Officer
Robert J. Lawless
President
& Chief Operating Officer
Susan L. Abbott
Vice President -
Quality Assurance
James J. Albrecht
Group Vice President -
Asia/Pacific
J. Allan Anderson
Vice President &
Controller
Samuel E. Banks
Vice President - Acquisitions
& Financial Planning
Allen M. Barrett, Jr.
Vice President - Corporate
Communications
Robert G. Davey
Vice President & Chief
Financial Officer
Randall B. Jensen
Vice President - Operations
Resources
Christopher J. Kurtzman
Vice President & Treasurer
C. Robert Miller, II
Vice President - Management
Information Systems
Marshall J. Myers
Vice President - Research
& Technical Development
Carroll D. Nordhoff
Executive Vice President
Donald A. Palumbo
Vice President
Richard W. Single, Sr.
Vice President, Secretary
& General Counsel
Karen D. Weatherholtz
Vice President - Human Relations
Alan D. Wilson
Vice President -
Corporate Procurement
W. Geoffrey Carpenter
Assistant Secretary
& Associate Counsel
Robert W. Skelton
Assistant Secretary
& Associate General Counsel
David P. Smith
Assistant Treasurer
Gordon M. Stetz, Jr.
Assistant Treasurer -
Financial Services
McCormick Worldwide
THE AMERICAS MARKET ZONE
Consolidated Operating Units
McCormick/Schilling Division
Hunt Valley, Maryland
Robert W. Schroeder
Vice President & General
Manager
Food Service Division
Hunt Valley, Maryland
F. Christopher Cruger
Vice President & General Manager
McCormick Canada, Inc.
London, Ontario, Canada
Gerald W. Snowden
President
McCormick de Centro
America, S.A. de C.V.
San Salvador, El Salvador
Arduino Bianchi
Managing Director
McCormick de Venezuela, C.A.Caracas, Venezuela
Alberto Diaz
Managing Director
Affiliates
McCormick de Mexico,
S.A. de C.V. (50%)
Mexico City, Mexico
EUROPEAN MARKET ZONE
John C. Molan
Group Vice President - Europe
Consolidated Operating Units
Global Food Ingredients Europe
Buckinghamshire, England
Cameron D. F. Savage
Managing Director
McCormick U.K. plc
Buckinghamshire, England
John C. Molan
Managing Director
McCormick Glentham (Pty)
Limited
Midrand, South Africa
John C. Eales
Managing Director
McCormick S.A.
Regensdorf Z.H.,
Switzerland
Ernest Abouchar
Managing Director
Oy McCormick Ab
Helsinki, Finland
Risto T. Heiskanen
Managing Director
ASIA/PACIFIC MARKET ZONE
James J. Albrecht
Group Vice President - Asia/Pacific
Consolidated Operating Units
McCormick Foods Australia Pty. Ltd.
Clayton, Victoria, Australia
Russell Eves
Managing Director
McCormick (Guangzhou) Food Company, Ltd.
Guangzhou, China
Hector Veloso
General Manager
McCormick Ingredients Southeast
Asia Private Limited
Jurong, Republic of Singapore
K. K. Foo
Operations Director
McCormick Thailand, Inc.
Bangkok, Thailand
Victor K. Sy
President
Shanghai McCormick Seasoning & Foodstuffs Co., Ltd. (90%)
Shanghai, People's Republic of China
Victor K. Sy
President
Affiliates
McCormick-Lion Limited (49%)
Tokyo, Japan
McCormick Philippines, Inc. (50%)
Manila, Philippines
P.T. Kimballmas Sejati (50%)
Jakarta, Indonesia
P.T. McCormick Indonesia (50%)
Jakarta, Indonesia
Stange (Japan) K.K. (50%)
Tokyo, Japan
McCORMICK FLAVOR GROUP
Gary W. Zimmerman
Vice President & General Manager
Consolidated Operating Units
McCormick Flavor Division-U.S.A.
Hunt Valley, Maryland
Howard W. Kympton, III
Vice President & General Manager
McCormick Ingredients
Hunt Valley, Maryland
Thomas A. Barry
Vice President & General Manager
McCormick Pesa, S.A. de C.V.
Mexico City, Mexico
Robert E.Horn
President
Affiliates
AVT-McCormick Ingredients Limited (50%)
Cochin, India
McCormick & Wild, Inc. (50%)
Hunt Valley, Maryland
P.T. Sumatera Tropical Spices (30%)
Padang, Sumatera, Indonesia
Sesaco Corporation (21.9%)
Paris, Texas
Vaessen Shoemaker de Mexico, S.A. de C.V. (50%)
Mexico City, Mexico
GILROY FOODS, INCORPORATED
Michael M. Brem
President
Consolidated Operating Units
Gilroy Energy Company, Inc.
Robert P. Kraemer
President
Giza National Dehydration Company (81.7%)
Cairo, Egypt
Robert P. Kraemer
Managing Director
Affiliates
Supherb Farms (50%)
Turlock, California
PACKAGING GROUP
Dorsey N. Baldwin
Vice President
Consolidated Operating Units
Setco, Inc.
Anaheim, California
Donald E. Parodi
President
Tubed Products, Inc.
Easthampton, Massachusetts
Dorsey N. Baldwin
President
Minipack Systems Limited
Southampton, England
Andrew P. Goodman
President
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [ x ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ x ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11 (c) or
Section
240.14a-12
McCORMICK & COMPANY, INCORPORATED
(Name of Registrant as specified in its Charter)
The Board of Directors of McCormick & Company, Incorporated
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[ x ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(j)(2)
[ ] $500 per each party to the controversy pursuant to
Exchange Act Rule 14a-6(i)(3)
[ ] Fee computed on table below per Exchange Act Rules
14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction
applies:
________________________________________________
2) Aggregate number of securities to which transaction applies:
________________________________________________
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11:
________________________________________________
4) Proposed maximum aggregate value of transaction:
________________________________________________
[ ]Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous filing by
registration statement number, or the Form of Schedule and the date
of its filing.
1) Amount Previously Paid:
_______________________________________________
2) Form, Schedule of Registration Statement No.:
_______________________________________________
3) Filing Party:
_______________________________________________
4) Date Filed:
_______________________________________________
McCORMICK & COMPANY, INCORPORATED
18 Loveton Circle
Sparks, Maryland 21152
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS TO BE HELD MARCH 20, 1996
The Annual Meeting of the Stockholders of McCormick & Company,
Incorporated will be held at the Hunt Valley Inn, Hunt Valley,
Maryland at 10:00 a.m., March 20, 1996, for the purpose of
considering and acting upon:
(a) the election of directors to act until the next Annual
Meeting of Stockholders or until their respective successors are
duly elected and qualified;
(b) the ratification of the appointment of Ernst & Young as
independent auditors of the Company to serve for the 1996 fiscal
year; and
(c) any other matters that may properly come before such
meeting or any adjournments thereof.
The Board of Directors has fixed the close of business on
December 29, 1995 as the record date for the determination of
stockholders entitled to notice of, and to vote at, the Meeting or
any adjournments thereof.
Only holders of Common Stock shall be entitled to vote. Holders
of Common Stock Non-Voting are welcome to attend and participate in
this meeting.
IF YOU ARE A HOLDER OF COMMON STOCK, A PROXY CARD IS ENCLOSED.
PLEASE SIGN THE PROXY CARD PROMPTLY AND RETURN IT IN THE ENCLOSED
SELF-ADDRESSED ENVELOPE IN ORDER THAT YOUR STOCK MAY BE VOTED AT
THIS MEETING. THE PROXY MAY BE REVOKED BY YOU AT ANY TIME BEFORE IT
IS VOTED.
February 20, 1996 Richard W. Single, Sr.
Secretary
PROXY STATEMENT
GENERAL INFORMATION
This Proxy Statement is furnished on or about February 20, 1996
to the holders of Common Stock in connection with the solicitation
by the Board of Directors of the Company of proxies to be voted at
the Annual Meeting of Stockholders or any adjournments thereof. Any
proxy given may be revoked at any time insofar as it has not
been exercised. Such right of revocation is not limited or subject
to compliance with any formal procedure. The shares represented by
all proxies received will be voted in accordance with instructions
contained in the respective proxies. The cost of the solicitation
of proxies will be borne by the Company. In addition to the
solicitation of proxies by use of the mails, officers and regular
employees of the Company may solicit proxies by telephone,
telegraph, or personal interview. The Company also may request
brokers and other custodians, nominees, and fiduciaries to forward
proxy soliciting material to the beneficial owners of shares held
of record by such persons, and the Company may reimburse them for
their expenses in so doing.
At the close of business on December 29, 1995, there were
outstanding 12,058,571 shares of Common Stock which represent all
of the outstanding voting securities of the Company. Except for
certain voting limitations imposed by the Company's Charter on
beneficial owners of ten percent or more of the outstanding Common
Stock, each of said shares of Common Stock is entitled to one vote.
Only holders of record of Common Stock at the close of business on
December 29, 1995 will be entitled to vote at the meeting or any
adjournments thereof.
PRINCIPAL STOCKHOLDERS
On December 29, 1995, the assets of The McCormick Profit
Sharing Plan and PAYSOP (the "Plan") included 3,244,856 shares of
the Company's Common Stock, which represented 26.91% of the
outstanding shares of Common Stock. The address for the Plan is 18
Loveton Circle, Sparks, Maryland 21152. The Plan is not the
beneficial owner of the Common Stock for purposes of the voting
limitations described in the Company's Charter. Each Plan
participant has the right to vote all shares of Common Stock
allocated to such participant's Plan account. The Plan's Investment
Committee possesses investment discretion over the shares, except
that, in the event of a tender offer, each participant of the Plan
is entitled to instruct the Investment Committee as to whether
to tender Common Stock allocated to such participant's account.
Membership on the Investment Committee consists of three directors,
Robert G. Davey, Carroll D. Nordhoff, and Karen D. Weatherholtz,
and the Company's Vice President & Controller, J. Allan Anderson,
and the Company's Vice President & Treasurer, Donald A. Palumbo.
Mary D. McCormick, whose address is 830 West 40th Street,
Baltimore, Maryland 21211, held 614,220 shares of Common Stock as
of December 29, 1995, representing 5.1% of the outstanding shares
of Common Stock.
ELECTION OF DIRECTORS
On January 1, 1996, Mr. H. Eugene Blattman, the Company's President
and Chief Executive Officer and a member of the Board of Directors
and Executive Committee, retired from the Company. The Company is
grateful to Mr. Blattman for his leadership and many contributions
during his years of service.
On April 1, 1996, Mr. Harold J. Handley, the Company's Senior Vice
President - Europe, and a member of the Board of Directors, will
retire from the Company. Mr Handley will not seek re-election as a
Director of the Company on March 20, 1996. The Company is grateful
to Mr. Handley for his contributions during his years of
service.
The persons listed in the following table have been nominated for
election as directors to serve until the next Annual Meeting of
Stockholders or until their respective successors are duly elected
and qualified. Management has no reason to believe that any of the
nominees will be unavailable for election. In the event a
vacancy should occur, the proxy holders reserve the right to reduce
the total number of nominations for election. There is no family
relationship between any of the nominees. No nominee has a
substantial interest in any matter to be acted upon at
the Annual Meeting.
The following table shows, as of December 29, 1995, the names
and ages of all nominees, the principal occupation and business
experience of each nominee during the last five years, the year in
which each nominee was first elected to the Board of Directors, the
amount of securities beneficially owned by each nominee, and
directors and executive officers as a group, and the nature of such
ownership. Except as otherwise noted, no nominee owns more than one
percent of either class of the Company's common stock.
Required Vote of Stockholders. The favorable vote of at least a
majority of the shares of Common Stock of the Company present in
person or by proxy at a meeting at which a quorum is present is
required for the election of each nominee.
The Board of Directors recommends that stockholders vote for
each of the nominees listed below.
<TABLE>
<CAPTION>
Year First
Principal Occupation & Elected Amount and Nature* of
Name Age Business Experience Director Beneficial Ownership
<S> <C> <C> <C> <C>
Common
Non-
Common Voting
<C> <C>
James J. Albrecht 63 Group Vice President- 1987 79,160 47,046
Asia/Pacific (1993 to Present);
Vice President & Managing
Director-International Group
(1989 to 1993)
James S. Cook 67 Executive in Residence, 1982 2,250 3,850
Northeastern University (1986
to Present)
Robert G. Davey 46 Vice President & Chief 1994 19,045 6,348
Financial Officer (1994 to Present);
President, McCormick Canada,
Inc., a subsidiary of the Company
(1991 to 1994); Executive Vice
President & Chief Financial Officer,
McCormick Canada, Inc., (1989 to 1991)
George W. Koch 69 Of Counsel, Kirkpatrick & 1989 2,250 6,918
Lockhart (1992 to Present);
Partner, Kirkpatrick &
Lockhart (1990 to 1991)
Robert J. Lawless 49 President (1996 to Present) & 1994 22,117 23,535
Chief Operating Officer (1995
to Present); Executive Vice
President & Chief Operating
Officer (1995 to 1996); Senior
Vice President - The Americas
(1994 to 1995); Group Vice
President - Europe (1993 to 1994);
Vice President & Deputy Managing
Director, International Group
(1991 to 1993)
Charles P. McCormick, Jr. 67 Chairman of the Board 1955 267,397** 18,292
(1994 to Present); Chairman (2.22%)
Emeritus (1993 to 1994);
Chairman of the Board (1988 to
1993); Chief Executive Officer
(1987 to 1992)
George V. McGowan 67 Chairman of the Executive 1983 2,250 3,248
Committee, Baltimore Gas and
Electric Company (1993 to Present);
Chairman of the Board &
Chief Executive Officer, Baltimore
Gas and Electric Company
(1988 to 1992)
Carroll D. Nordhoff 50 Executive Vice President 1991 40,050 19,383
(1994 to Present); Executive
Vice President -The Americas
(1993 to 1994); Executive Vice
President - Corporate Operations
Staff (1992 to 1993); Vice President
& General Manager, Food Service
Division (1989 to 1992)
Richard W. Single, Sr. 57 Vice President (1987 to 1988 79,027 19,758***
Present); Secretary and
General Counsel (1986 to
Present)
William E. Stevens 53 President and Chief 1988 2,250 7,450
Executive Officer,
United Industries Corp.
(1989 to Present)
Karen D. Weatherholtz 45 Vice President - Human 1992 19,442 11,030
Relations (1988 to Present)
Directors and Executive Officers as a Group
(13 persons) . . . . . . . . . . . . . . . . 614,541 185,872
(5.10%)
</TABLE>
* Includes shares of Common Stock and Common Stock Non-Voting
known to be beneficially owned by directors and executive officers
alone or jointly with spouses, minor children and relatives (if
any) who have the same home as the director or executive officer.
Also includes the following numbers of shares which could be
acquired within 60 days of December 30, 1995 pursuant to the
exercise of stock options: Dr. Albrecht - 2,701 shares of Common
Stock, 2,701 shares of Common Stock Non-Voting; Mr. Cook - 2,250
shares of Common Stock, 2,250 shares of Common Stock Non-Voting;
Mr. Davey - 4,450 shares of Common Stock, 3,500 shares of Common
Stock Non-Voting; Mr. Koch - 2,250 shares of Common Stock, 2,250
shares of Common Stock Non-Voting; Mr. Lawless - 7,800 shares of
Common Stock, 6,600 shares of Common Stock Non-Voting; Mr.
McCormick - 7,500 shares of Common Stock, 7,500 shares of Common
Stock Non-Voting; Mr. McGowan - 2,250 shares of Common Stock,
2,250 shares of Common Stock Non-Voting; Mr. Nordhoff - 5,620
shares of Common Stock, 5,099 of Common Stock Non-Voting; Mr.
Single - 6,002 shares of Common Stock, 6,202 shares of Common
Stock Non-Voting; Mr. Stevens - 2,250 shares of Common Stock,
2,250 shares of Common Stock Non-Voting; Ms. Weatherholtz -
5,003 shares of Common Stock, 6,330 shares of Common Stock
Non-Voting; and directors and executive officers as a group -
57,216 shares of Common Stock, 56,932 shares of Common Stock
Non-Voting. Also includes shares of Common Stock which are
beneficially owned by certain directors and officers by virtue of
their participation in the McCormick Profit Sharing Plan and
PAYSOP: Dr. Albrecht - 8,074 shares; Mr. Davey - 1,008 shares; Mr.
Lawless - 1,480 shares; Mr. Nordhoff - 7,154 shares; Mr. Single -
15,553 shares; Ms. Weatherholtz - 8,188 shares; and directors and
executive officers as a group - 59,393 shares. Of these amounts,
approximately 378 shares are credited to the PAYSOP accounts of
the nominees and approximately 438 shares are credited to the
PAYSOP accounts of the directors and executive officers as a group.
** Includes 2,637 shares of Common Stock owned by Mr.
McCormick's wife. Mr. McCormick disclaims beneficial ownership of
said shares.
*** Includes 670 shares of Common Stock Non-Voting owned by Mr.
Single's son. Mr. Single disclaims beneficial ownership of said
shares.
Board Committees
The Board of Directors has established the following committees
to perform certain specific functions. There is no Nominating
Committee of the Board of Directors. Board Committee membership as
of February 20, 1996 is listed below.
Audit Committee. This Committee reviews the plan for and the
results of the independent audit and internal audit, reviews the
Company's financial information and internal accounting and
management controls, and performs other related duties. The
following directors are currently members of the Committee and
serve at the pleasure of the Board of Directors: Messrs. Cook,
Koch and Stevens. The Audit Committee held 6 meetings during the
last fiscal year.
Compensation Committee. This Committee establishes and oversees
executive compensation policy; makes decisions about base pay,
incentive pay and any supplemental benefits for the Chief Executive
Officer, other members of the Executive Committee, and any other
executives listed in the proxy statement as one of the five highest
paid executives; and approves the grant of stock options, the
timing of the grants, the price at which the options are to be
offered, and the amount of the options to be granted to employee
directors and officers. The following directors are members of the
Committee and serve at the pleasure of the Board of Directors:
Messrs. Cook, Koch, McGowan and Stevens. None of the Committee
members are employees of the Company or are eligible to
participate in the Company's stock option programs which are
administered by the Committee. The Compensation Committee held 6
meetings during the last fiscal year.
Executive Committee. This Committee possesses authority to
exercise all of the powers of the Board of Directors in the
management and direction of the affairs of the Company
between meetings of the Board of Directors, subject to specific
limitations and directions of the Board of Directors and subject to
limitations of Maryland law. This Committee also reviews and
approves all benefits and salaries of a limited group of
senior executives and reviews and approves individual awards under
approved stock option plans for all persons except directors and
officers (see Compensation Committee). The following directors are
currently members of the Committee and serve at the pleasure of the
Board of Directors: Messrs. Davey, Lawless, McCormick, and
Nordhoff. The Executive Committee held 22 meetings during the last
fiscal year.
Attendance at Meetings
During the last fiscal year, there were 9 regularly scheduled
meetings of the Board of Directors. All of the Directors were able
to attend at least 75% of the total number of meetings of the Board
and the Board Committees on which they served.
Other Directorships
Certain individuals nominated for election to the Board of
Directors hold directorships in other companies. Mr. Koch is a
director of Borden Chemicals and Plastics Company L.P. Mr. McGowan
is a director of Baltimore Gas and Electric Company, Baltimore Life
Insurance Company, Life of Maryland, Inc., NationsBank, N.A.,
Organization Resources Counselors, Inc., and UNC Incorporated.
REPORT ON EXECUTIVE COMPENSATION
Compensation Policy
The Company's executive compensation philosophy is to align the
interests of senior executive management with shareholder interests
through compensation linked to growth in profitability and stock
price performance. The principal elements of executive compensation
for the Company are base salary, annual management incentive bonus,
and stock options. Salary levels, annual bonus targets, and stock
option grant levels are established in part on the basis of median
levels of compensation expected to be paid during the fiscal year
to senior executive management of companies in the manufacturing
and food industries of a size comparable to that of the Company.
The Company makes these determinations on the basis of, among other
things, published surveys and periodic special studies conducted by
independent compensation consultants.
The Compensation Committee periodically engages an independent
compensation consultant to review the Company's executive
compensation policies and practices. The most recent study was
conducted in 1993 and early 1994 by Sibson and Company,
Inc. The independent consultant, whose findings and report were
reviewed by the Compensation Committee, confirmed that the base
salaries of senior executive management are consistent with the
median levels paid to senior executives having similar roles and
responsibilities at food and manufacturing companies of comparable
size. The independent consultant also concluded that the Company's
annual incentive bonus plan design, which is based on profit
growth, meets the Company's compensation objectives. The
independent consultant also concluded, however, that both target
and actual total compensation are below the average for the food
industry, primarily because the number of shares for which stock
options have been granted are less than those of comparable
companies.
Compensation Committee and Executive Committee Determinations
Salary levels of the Company's senior executive officers are
reviewed annually and, where appropriate, are adjusted to reflect
individual responsibilities and performance as well as the
Company's competitive position within the food industry.
The Compensation Committee sets base salaries by targeting
midpoints of the marketplace average and adjusting each executive
officer's salary to reflect individual performance, experience and
contribution. The Compensation Committee considers salaries paid to
senior executives at companies which are comparable to the Company
(based on line of business or sales volume) in establishing base
salaries for senior executive management of the Company. Those
companies considered included most of the fifteen companies in the
S&P Food Products Index and other manufacturing companies that are
not included in that index but had similar sales volumes.
Annual Management Incentive Bonuses for members of the
Executive Committee and any other executive officers identified in
the Summary Compensation Table on page 13 are determined by the
Compensation Committee. Bonuses for other senior management
are determined by the Executive Committee. Target bonuses are
established as a percentage of the midpoint of the salary range of
the executive officer's grade level, and the amount of the target
payable, if any, is based on the Company's financial performance.
Bonuses for the Chief Executive Officer and other officers who are
part of the Corporate staff are based on growth in the Company's
earnings per share (EPS) as compared to the previous year. Bonuses
vary depending on the level of growth in EPS. The targeted increase
in growth in EPS is intended to equal or exceed the growth rate of
other companies within the food industry. The amount of target
bonuses payable to operating unit executives is based on a formula,
weighted two thirds on growth in profit of the executive's
operating unit and one third on growth in the Company's EPS. The
independent consultant retained by the Compensation Committee
confirmed that target bonuses are consistent with median
levels established for executives having similar responsibilities
at comparable companies.
Stock Options
Stock options are granted by the Compensation Committee
to key management employees of the Company, including executive
officers. The purpose of stock option grants is to aid the Company
in securing and retaining capable employees by offering them an
incentive, in the form of a proprietary interest in the Company, to
join or continue in the service of the Company and to maximize
their efforts to promote its economic performance. This incentive
is created by granting options that have an exercise price of not
less than 100% of the fair market value of the underlying stock on
the date of grant, so that the employee may not profit from the
option unless the Company's stock price increases. Options
granted are designed to help the Company retain employees in that
they are not fully exercisable in the early years and "vest" only
if the employee remains with the Company. Accordingly, an employee
must remain with the Company for a period of years in order to
enjoy the full economic benefit of the option.
As indicated in the second paragraph of this Report on Executive
Compensation, the independent consultant retained by the
Compensation Committee concluded that the stock options granted to
the Company's executive officers provide less opportunity
for economic benefit than do stock options granted by comparable
companies. As a result, in 1994 the Compensation Committee approved
increases in the number of shares for which options were granted to
those management employees. These adjustments did not increase the
number of shares for which options were granted to the levels
granted by other comparable companies, although grant levels for
lower level managers were brought closer to market competitive
levels than those for more senior executives. The number of options
granted is a function of the recipient's salary grade level.
1995 Compensation Actions - Chief Executive Officer
The Chief Executive Officer participates in the same compensation
programs provided to other Company executives and officers.
The number of shares for which stock options are granted is a
function of the grade level of the position. A stock option grant
of 23,000 shares was approved for Mr. Blattman by the Compensation
Committee. This is the same number of shares previously granted to
the Chief Executive Officer.
The 1995 options were granted on March 15, 1995 at an option
price per share of $22.00, which was equal to 100% of the fair
market value of the stock on the date of grant.
In 1995, management salary increases were delayed from January
until July, and the average salary increase was 3% of the combined
base pay for all management employees, including executives. Mr.
Blattman requested that he not be considered for a salary increase;
therefore, none was given during fiscal year 1995.
For fiscal year 1995, Mr. Blattman did not receive a management
incentive bonus. He did, however, receive a payment equivalent to
that received by employees not in the management incentive bonus
program. The total payment received by Mr. Blattman was $14,000.
Mr. Blattman did not participate in the Compensation Committee's
deliberations of his annual bonus awards or stock option grants.
1995 Compensation Actions - Other Executive Officers
Compensation actions for other executive officers were made using
similar criteria as those used for Mr. Blattman. Salary increases,
bonuses and stock option grants for executive officers were granted
in a manner consistent with those granted to other Company
managers.
Submitted By:
Compensation Committee Executive Committee
George V. McGowan, Chairman H. Eugene Blattman, Chairman
James S. Cook Robert G. Davey
George W. Koch Robert J. Lawless
William E. Stevens Charles P. McCormick, Jr.
Carroll D. Nordhoff
Compensation Committee Interlocks and Insider Participation
During fiscal year 1995 the Compensation Committee was comprised
of four independent outside directors. Members are James S. Cook,
George W. Koch, George V. McGowan (Chairman) and William E.
Stevens. No member of the Committee has any interlocking or insider
relationship with the Company which is required to be reported
under the applicable rules and regulations of the Securities and
Exchange Commission.
At the close of fiscal year 1995, members of the Executive
Committee were H. Eugene Blattman (Chairman), Robert G. Davey,
Robert J. Lawless, Charles P. McCormick, Jr. and Carroll D.
Nordhoff. All except Mr. McCormick are employees and executive
officers of the Company. Mr. McCormick is a former CEO
and a retiree of the Company. Effective December 1, 1995, Mr.
McCormick again became CEO due to the retirement of Mr. Blattman.
The table beginning on page 4 of this Proxy Statement sets forth
the business experience of each of the members.
SUMMARY COMPENSATION TABLE
The following table sets forth the compensation paid by the
Company and its subsidiaries for services rendered during each of
the fiscal years ended November 30, 1995, 1994 and 1993 to the
Chief Executive Officer of the Company and each of the four
most highly compensated executive officers who were executive
officers on the last day of the 1995 fiscal year, determined by
reference to total annual salary and bonus for the 1995 fiscal
year.
<TABLE>
<CAPTION>
Long Term
Compensation
Annual Compensation Awards
Securities All Other
Name and Principal Fiscal Other Annual Underlying Compensation
Position Year Salary ($)<F1> Bonus ($) Compensation($) Options/SARs (#) ($)<F2>
<S> <C> <C> <C> <C> <C> <C>
H. Eugene Blattman 1995 405,400 14,000 <F3> 23,000 6,208
President & 1994 356,967 244,000 25,000 9,257
Chief Executive Officer 1993 322,067 239,125 13,000 9,401
James J. Albrecht 1995 246,171 30,968 <F3> 7,750 2,880
Group Vice President - 1994 242,717 173,400 7,750 7,029
Asia/Pacific 1993 236,483 168,500 5,000 7,920
Harold J. Handley 1995 258,580 27,744 <F3> 10,250 3,096
Senior Vice President; 1994 257,232 130,000 2,250 7,292
Europe 1993 246,317 64,800 8,000 7,944
Robert J. Lawless 1995 239,567 40,031 12,250 2,736
President & 1994 192,358 150,000 38,290<F4> 4,800 6,490
Chief Operating Officer 1993 167,583 113,000 37,668<F4> 3,000 6,613
Carroll D. Nordhoff 1995 242,629 8,447 <F3> 13,250 3,026
Executive Vice President 1994 232,508 100,000 13,250 6,932
1993 211,900 90,000 8,000 7,920
<FN>
(F1) Includes Corporate Board of Directors Fees and Service
Awards.
(F2) Amounts paid or accrued under the Company's Profit
Sharing Plan for the accounts of such individuals. Figures for 1995
are estimates. The stated figure includes payments persons would
have received under the Company's Profit Sharing Plan but for
certain limits imposed by the Internal Revenue Code:
(i) for 1995 for Messrs. Blattman, Albrecht, Handley, and
Nordhoff in the amounts of $3,472, $144, $360, and $290,
respectively; (ii) for 1994 for Messrs. Blattman, Albrecht, Handley
and Nordhoff, payments in the amounts of $2,439, $211, $474, and
$114, respectively, (iii) for 1993 for Messrs. Blattman and
Handley, payments in the amounts of $1,481 and $24, respectively.
(F3) There is no amount of Other Annual Compensation that is
required to be reported.
(F4) The Company paid Mr. Lawless $577 in 1994 and $17,959 in
1993 toward the additional taxes payable by him from the inclusion
in his income of travel expenses for his wife, which expenses were
incurred by the Company in relocating Mr. Lawless to the United
Kingdom in 1993, and to the United States in 1994, and in having
Mr. Lawless's wife accompany him on business trips. The travel
expenses of Mrs. Lawless were $23,770 in 1994 and $20,171
in 1993.
</FN>
</TABLE>
Compensation of Directors
Corporate Board of Directors' fees were paid at the rate of
$5,400 per year for each director who was an employee of the
Company during the fiscal year ended November 30, 1995. Fees paid
to each director who was not an employee of the Company presently
consist of an annual retainer fee of $18,000 and $1,100 for each
Board meeting attended and $900 for each Committee meeting
attended.
On July 18, 1994, Mr. McCormick was elected as Chairman of the
Board. Mr. McCormick's services in such capacity are consultative
in nature. During 1995, the Company paid Mr. McCormick $16,667 per
month for his services. Mr McCormick received an incentive payment
of $6,690 for services rendered during fiscal year 1995.
Pension Plan Table
The following table shows the estimated annual benefits (on a
single-life basis), including supplemental benefits, payable upon
retirement (assuming retirement at age 65) to participants in the
designated average compensation and years of service
classifications:
Years of Service
Average
Compensation 15 Years 20 Years 25 Years 30 Years 35 Years
$225,000 $58,445 $77,926 $97,408 $116,889 $136,371
250,000 64,970 86,626 108,283 129,939 151,596
300,000 78,020 104,026 130,033 156,039 182,046
350,000 91,070 121,426 151,783 182,139 212,486
400,000 104,120 138,826 173,533 208,239 242,946
450,000 117,170 156,226 195,283 234,339 273,396
500,000 130,220 173,626 217,033 260,439 303,846
550,000 143,270 191,026 238,783 286,539 334,296
The Company's Pension Plan is non-contributory. A majority of
the employees of the Company and participating subsidiaries are
eligible to participate in the Plan upon completing one year of
service and attaining age 21. The Plan provides benefits (which
are reduced by an amount equal to 50% of the participant's Social
Security benefit) based on an average of the participant's highest
consecutive 60 months of compensation, excluding any cash
bonuses, and length of service. In 1979, the Company adopted a
supplement to its Pension Plan to provide a limited group of its
senior executives with an inducement to retire before age 65. That
group of senior executives will receive credit for additional
service for employment after age 55. In 1983, the supplement was
expanded to include a significant portion of the senior executives'
bonuses in the calculation of pension benefits. The group of
senior executives includes those listed in the table on page 13.
For purposes of calculating the pension benefit, the average of
the highest consecutive 60 months of compensation for Dr. Albrecht
and Messrs. Blattman, Handley, Lawless, and Nordhoff as of November
30, 1995 was $363,597, $491,506, $358,661, $265,355 and $279,289,
respectively. The years of credited service for Dr. Albrecht and
Messrs. Blattman, Handley, Lawless, and Nordhoff as of the same
date were 12, 6, 8, 4, and 24 years, respectively.
Mr. Lawless is also entitled to receive pension benefits under
the registered pension plan ("RPP") offered to employees of
McCormick Canada, Inc. Benefits under the RPP are based on the
average of the participant's highest three consecutive
years of earnings. Upon retirement the Company has agreed to pay
Mr. Lawless a supplemental benefit equal to the excess, if any, of
the benefit calculated under the RPP (assuming all his service at
McCormick Canada and the Company had been under the RPP) over (i)
the pension benefit accrued under RPP (based on his years of
service with McCormick Canada) plus (ii) the benefit accrued under
the Company's Pension Plan (based on years of service with the
Company).
STOCK OPTIONS
During the last fiscal year, the Company has granted stock
options to certain employees, including executive officers,
pursuant to stock option plans approved by the Company's
stockholders.
<TABLE>
<CAPTION>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
Potential
Realizable Value
At Assumed
Annual Rates of
Stock Price
Appreciation For
Individual Grants* Option Term ($)**
Number of % of Total Exercise or Expiration
Securities Options/SARs Base Price Date
Name Underlying Granted To ($/Share)
Options/SARs Employees in
Granted (#) Fiscal Year
0% 5% 10%
<S> <C> <C> <C> <C> <C> <C> <C>
H. Eugene Blattman 23,000 4.6% $22.00 3/14/00 $0 $139,840 $308,890
James J. Albrecht 7,750 1.5% $22.00 3/14/00 $0 $47,120 $104,083
Harold J. Handley 10,250 2.0% $22.00 3/14/00 $0 $62,320 $137,658
Robert J. Lawless 12,250 2.4% $22.00 3/14/00 $0 $74,480 $164,518
Carroll D. Nordhoff 13,250 2.6% $22.00 3/14/00 $0 $80,560 $177,948
</TABLE>
* In general, the stock options are exercisable cumulatively as
follows: none of the shares granted during the first year of the
option; not more than 50% of the shares granted during the second
year of the option;and 100% of the shares granted, less any portion
of such option previously exercised, at any time during the period
between the end of the second year of the option and the expiration
date. Approximately 410 employees of the Company were granted
options under the Company's option plans during the last fiscal
year.
** The dollar amounts under these columns are the result of
calculations at 0%, and at the 5% and 10% compounded annual rates
set by the Securities and Exchange Commission, and therefore are
not intended to forecast future appreciation, if any, in the price
of the Company's common stock. The potential realizable values
illustrated at 5% and 10% compound annual appreciation assume
that the price of the Company's common stock increases $6.08 and
$13.43 per share, respectively, over the 5-year term of the
options. If the named executives realize these values, the
Company's stockholders will realize aggregate appreciation in the
price of the approximately 81 million shares of the Company's
common stock out- standing as of December 30, 1995 of
approximately $494 million and $1.09 billion, respectively, over
the same period.
<TABLE>
<CAPTION>
AGGREGATED OPTION/SAR EXERCISES IN LAST
FISCAL YEAR AND FY-END OPTION/SAR VALUES
Number of Value of
Shares Underlying Unexercised
Unexercisable In-the-Money
Shares Acquired Value Options/SARs Options/SARs
Name on Exercise (#) Realized ($) at FY-END (#) at FY-End ($)
Exercisable/ Exercisable/
Unexercisable Unexercisable
<S> <C> <C> <C> <C>
H. Eugene Blattman 0 $0 28,196/50,804 $79,167/$74,583
James J. Albrecht 8,800 $64,350 15,402/20,098 $56,652/$22,036
Harold J. Handley 10,000 $46,250 8,825/29,675 $1,293/$31,020
Robert J. Lawless 6,000 $42,375 14,400/14,650 $38,250/$21,406
Carroll D. Nordhoff 12,000 $99,375 10,719/31,781 $2,329/$35,484
</TABLE>
Set forth below is a line graph comparing the yearly percentage
change in the Company's cumulative total shareholder return (stock
price appreciation plus reinvestment of dividends) on the Company's
common stock with (i) the cumulative total return of the
Standard & Poor's 500 Stock Index, assuming reinvestment of
dividends, and (ii) the cumulative total return of the Standard &
Poor's Food Products Index, assuming reinvestment of dividends.
<TABLE>
<CAPTION>
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN *
Among McCormick & Company, Incorporated,
S&P 500 STOCK Index & S&P Food Products Index**
Description 1990 1991 1992 1993 1994 1995
<S> <C> <C> <C> <C> <C> <C>
McCormick & CO ($) $100.0 $182.23 $255.65 $212.31 $177.41 $225.96
S & P 500 ($) $100.0 $120.34 $142.57 $156.97 $158.61 $216.67
S & P Foods ($) $100.0 $131.23 $151.87 $140.40 $147.74 $189.88
</TABLE>
Assumes $100 invested on December 1, 1990 in McCormick & Company
common stock, S&P 500 Stock Index and S&P Food Products Index
* Total Return Assumes Reinvestment of Dividends
** Fiscal Year ending November 30
NOTIFICATION OF APPOINTMENT OF AUDITORS
The Board of Directors, upon recommendation of the Audit
Committee, has appointed the accounting firm of Ernst & Young to
serve as the independent auditors of the Company for the current
fiscal year subject to ratification by the stockholders of
the Company. Ernst & Young were first appointed to serve as
independent auditors of the Company in 1982 and are considered by
management of the Company to be well qualified.
Representatives of Ernst & Young are expected to be present at
the Annual Meeting. They will have an opportunity to make a
statement if they desire to do so and are expected to be available
to respond to appropriate questions.
Required Vote of Stockholders. The favorable vote of at least a
majority of the shares of Common Stock of the Company present in
person or by proxy at a meeting at which a quorum is present is
required for ratification of the appointment of independent
auditors.
The Board of Directors recommends that stockholders vote FOR
ratification.
OTHER MATTERS
Management knows of no other matters which may be presented for
consideration at the meeting. However, if any other matters
properly come before the meeting, it is the intention of the
persons named in the proxy to vote such proxy in accordance
with their judgment on such matters.
VOTING PROCEDURES
Each matter submitted to the stockholders for a vote is deemed
approved if a majority of the shares of Common Stock of the Company
present in person or by proxy at a meeting at which a quorum is
present votes in favor of the matter. The presence in person or by
proxy of stockholders entitled to cast a majority of all the votes
entitled to be cast at the meeting constitutes a quorum.
Stockholder votes are tabulated manually by the Company's
Shareholder Relations Office. Broker non-votes are neither counted
in establishing a quorum nor voted for or against matters presented
for stockholder consideration; proxy cards which are executed and
returned without any designated voting direction are voted in the
manner stated on the proxy card. Abstentions and broker non-votes
with respect to a proposal are not counted as favorable votes, and
therefore have the same effect as a vote against the proposal.
STOCKHOLDER PROPOSALS FOR 1997 ANNUAL MEETING
Proposals of stockholders to be presented at the 1997 Annual
Meeting must be received by the Secretary of the Company prior to
October 18, 1996 to be considered for inclusion in the 1997 proxy
material.
PROXY CARD
McCORMICK & COMPANY, INCORPORATED
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Charles P.McCormick, Jr., Robert J.
Lawless and Richard W. Single, Sr. and each of them, the proxies of
the undersigned, with several power of substitution, to vote all
shares of Common Stock which the undersigned is entitled to vote at
the Annual Meeting of Stockholders to be held on March 20, 1996,
and at any and all adjournments thereof, in accordance with the
following ballot and in accordance with their best judgment in
connection with such other business as may properly come before the
Meeting:
1. ELECTION OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE FOLLOWING
NOMINEES:
J. J. Albrecht, J. S. Cook, R.G. Davey, G. W. Koch, R.J. Lawless,
C. P. McCormick, Jr., G. V. McGowan, C. D. Nordhoff, R. W. Single,
Sr., W. E. Stevens, K. D. Weatherholtz
FOR all nominees listed above
WITHHELD for all nominees listed above
WITHHELD as to the following nominees
only:___________________________________________
2. RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS. THE BOARD
OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION.
FOR AGAINST ABSTAIN
3. IN THEIR DISCRETION, the proxies are authorized to vote on
such other matters as may properly come before the Meeting.
IN THE ABSENCE OF SPECIFIC INSTRUCTIONS APPEARING ON THE PROXY,
PROXIES WILL BE VOTED FOR THE ELECTION OF DIRECTORS; FOR THE
RATIFICATION OF THE APPOINTMENT OF AUDITORS, AND IN THE BEST
DISCRETION OF THE PROXIES AS TO ANY OTHER MATTERS WHICH THE PROXIES
DO NOT KNOW A REASONABLE TIME BEFORE THE SOLICITATION ARE TO BE
PRESENTED AT THE MEETING, OR AS MAY OTHERWISE PROPERLY COME BEFORE
THE MEETING.
Dated:________________________,1996
_____________________________________________________________
(Please sign as name(s) appear at left. If joint account,
both owners should sign)
