SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Form 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended August 31, 1998 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, P. O. Box 6000, Sparks, MD 21152-6000
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (410) 771-7301
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 filing requirements for
the past 90 days. Yes X No
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable
date.
Shares Outstanding
September 30, 1998
Common Stock 9,759,492
Common Stock Non-Voting 62,939,921
<PAGE>
McCORMICK & COMPANY, INCORPORATED
INDEX - FORM 10-Q
August 31, 1998
Page No.
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements:
Condensed Consolidated Income Statement 2
Condensed Consolidated Balance Sheet 3
Condensed Consolidated Statement of Cash Flows 4
Notes to Condensed Consolidated Financial Statements 5
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 9
Part II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 14
SIGNATURES 15
Exhibit Index 16
<PAGE>
McCORMICK & COMPANY, INCORPORATED
CONDENSED CONSOLIDATED INCOME STATEMENT (UNAUDITED)
(In Thousands Except Per Share Amounts)
Three Months Ended Nine Months Ended
August 31, August 31,
1998 1997 1998 1997
Net sales $444,793 $422,870 $1,295,448 $1,243,992
Cost of goods sold 298,518 284,326 874,713 834,268
Gross profit 146,275 138,544 420,735 409,724
Selling, general and
administrative expense 107,295 106,181 320,608 319,876
Restructuring charges
(credits) 129 (3,726) 808 (3,340)
Operating income 38,851 36,089 99,319 93,188
Interest expense 9,616 9,367 27,313 27,051
Other (income) expense-net (1,162) (1,090) (3,903) (4,400)
Income before income taxes 30,397 27,812 75,909 70,537
Provision for income taxes 10,943 10,930 27,327 26,738
Net income from consolidated
continuing operations 19,454 16,882 48,582 43,799
Income from unconsolidated
operations 1,996 2,317 5,168 5,426
Net income from continuing
operations 21,450 19,199 53,750 49,225
Income from discontinued
operations, net of income
taxes - 1,013 - 1,013
Net income $ 21,450 $ 20,212 $ 53,750 $ 50,238
Earnings per common share -
basic and diluted
Continuing operations $0.29 $0.26 $0.73 $0.65
Discontinued operations - 0.01 - 0.01
Earnings per common share -
basic and diluted $0.29 $0.27 $0.73 $0.66
Cash dividends declared per
common share $0.16 $0.15 $0.48 $0.45
See notes to condensed consolidated financial statements.
(2)<PAGE>
McCORMICK & COMPANY, INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEET
(In Thousands)
Aug. 31, Aug. 31, Nov. 30,
1998 1997 1997
(unaudited) (unaudited)
ASSETS
Current Assets
Cash and cash equivalents $ 8,934 $ 10,588 $ 13,500
Accounts receivable - net 179,647 189,570 217,198
Inventories
Raw materials and supplies 121,130 124,282 124,998
Finished products and work-in
process 157,692 137,881 127,086
278,822 262,163 252,084
Other current assets 25,112 47,144 23,736
Total current assets 492,515 509,465 506,518
Property, plant and equipment 722,007 687,427 693,516
Less: Accumulated depreciation (337,737) (303,538) (313,501)
Total property, plant and
equipment - net 384,270 383,889 380,015
Goodwill - net 158,264 156,871 157,962
Prepaid allowances 162,592 140,321 130,943
Other assets 76,268 85,118 80,794
Total assets $1,273,909 $1,275,664 $1,256,232
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Short-term borrowings $ 240,543 $ 215,112 $ 112,313
Current portion of long-term debt 13,540 9,088 8,989
Trade accounts payable 137,987 127,055 150,330
Other accrued liabilities 169,163 188,531 226,617
Total current liabilities 561,233 539,786 498,249
Long-term debt 262,016 275,780 276,489
Other long-term liabilities 90,023 85,973 88,384
Total liabilities 913,272 901,539 863,122
Shareholders' Equity
Common stock 48,893 45,331 44,408
Common stock non-voting 120,277 115,275 115,042
Retained earnings 233,994 246,163 264,309
Foreign currency translation adj. (42,527) (32,644) (30,649)
Total shareholders' equity 360,637 374,125 393,110
Total liabilities and
shareholders' equity $1,273,909 $1,275,664 $1,256,232
See notes to condensed consolidated financial statements.
(3)<PAGE>
McCORMICK & COMPANY, INCORPORATED
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
(In Thousands)
Nine Months Ended
Aug. 31, Aug. 31,
1998 1997
Cash flows from operating activities
Net income $ 53,750 $ 50,238
Adjustments to reconcile net income to net cash
provided by operating activities
Non cash charges and credits
Depreciation and amortization 39,602 37,430
Restructuring charges (credits) 808 (3,340)
Income from unconsolidated operations (5,168) (5,426)
Other 828 (374)
Changes in operating assets and liabilities
Accounts receivable 33,518 22,380
Inventories (30,241) (24,962)
Prepaid allowances (32,262) 8,806
Accounts payable, trade (9,756) (23,055)
Other assets and liabilities (49,294) (24,630)
Net cash provided by operating activities 1,785 37,067
Cash flows from investing activities
Capital expenditures (44,530) (36,890)
Acquisitions of businesses (8,940) (3,315)
Proceeds from sale of assets 1,759 2,576
Other (977) (3,380)
Net cash used in investing activities (52,688) (41,009)
Cash flows from financing activities
Short-term borrowings, net 129,454 118,969
Long-term debt borrowings 3,345 -
Long-term debt repayments (10,441) (10,892)
Common stock issued 14,780 6,349
Common stock acquired by purchase (53,824) (90,367)
Dividends paid (35,299) (34,329)
Net cash provided by (used in) financing activities 48,015 (10,270)
Effect of exchange rate changes on cash and
cash equivalents (1,678) 2,382
Decrease in cash and cash equivalents (4,566) (11,830)
Cash and cash equivalents at beginning of period 13,500 22,418
Cash and cash equivalents at end of period $ 8,934 $ 10,588
See notes to condensed consolidated financial statements.
(4)<PAGE>
McCORMICK & COMPANY, INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Basis of Presentation
The accompanying unaudited condensed consolidated financial
statements have been prepared in accordance with the instructions
to Form 10-Q and do not include all the information and notes
required by generally accepted accounting principles for complete
financial statements. In the opinion of management, the
accompanying condensed consolidated financial statements contain
all adjustments necessary to present fairly the financial position
and the results of operations for the interim periods.
The results of consolidated operations for the three and nine month
periods ended August 31, 1998 are not necessarily indicative of the
results to be expected for the full year. Historically, the
Company's consolidated sales and profits are lower in the first
half of the fiscal year and increase in the second half.
For further information, refer to the consolidated financial
statements and notes included in the Company's Annual Report on
Form 10-K for the year ended November 30, 1997.
Business Restructuring
In the third quarter of 1996, the Company began implementation of
a restructuring plan and recorded a restructuring charge of $58.1
million in 1996. This charge reduced net income by $39.6 million
or $0.49 per share. In addition, there were additional charges
directly related to the restructuring plan which could not be
accrued in 1996. In the fourth quarter of 1994, the Company
recorded a charge of $70.4 million for restructuring its business
operations. Except for the realignment of some of the Company's
overseas operations, this restructuring plan is complete.
In the third quarter of 1997, the Company reevaluated its
restructuring plans. Most of the actions under these plans were
completed or near completion and resulted in losses being less than
originally anticipated. In addition, an agreement in principal to
dispose of an overseas food brokerage and distribution business
with 6% of consolidated net sales was not consummated, resulting in
a restructuring credit of $9.5 million. Concurrent with the
reevaluation of restructuring plans, the Company initiated plans to
streamline the food brokerage and distribution business and close
a domestic packaging plant, resulting in a restructuring charge of
$5.7 million. Charges related to these initiatives included
severance and personnel costs of $2.5 million and a $3.2 million
writedown of assets to net realizable value.
The restructuring liability remaining at August 31, 1998 was
$2.3 million for severance and personnel costs and other exit
costs. The Company expects to have all restructuring programs
completed in 1998.
(5)<PAGE>
Accounting and Disclosure Changes
In February 1998, the FASB issued Statement of Financial Accounting
Standards No. 132, "Employers' Disclosures about Pensions and Other
Postretirement Benefits" (SFAS No. 132). This statement, which
will be adopted by the Company in the fourth quarter of fiscal
1998, does not change the recognition or measurement of pension or
postretirement benefit plans, but revises and standardizes
disclosure requirements. The effect on the Company will be limited
to the presentation of its disclosures.
In March 1998, the AICPA issued Statement of Position 98-1
"Accounting For the Costs of Computer Software Developed For or
Obtained For Internal-Use" (SOP 98-1). This statement, which will
be adopted by the Company in the fourth quarter of fiscal 1998,
requires the capitalization of certain costs incurred in connection
with developing or obtaining software for internal-use. Because
the Company is substantially in compliance with the provisions of
SOP 98-1, adoption of this statement will not have a material
effect on its financial statements.
In April 1998, the AICPA issued Statement of Position 98-5,
"Reporting on the Costs of Start-up Activities" (SOP 98-5). This
statement, which is effective for fiscal years beginning after
December 15, 1998, requires that costs of start-up activities,
including organization costs, be expensed as incurred. The Company
does not anticipate that the adoption of SOP 98-5 will have a
material impact on its financial statements.
In the first quarter of 1998, the Company adopted SFAS No. 128,
"Earnings per Share" (SFAS No. 128). This statement revised the
standards for computation and presentation of earnings per share
(EPS), requiring the presentation of basic and diluted EPS on the
income statement. Basic EPS is based on the weighted average
shares outstanding during the applicable period. Diluted EPS
reflects the potential dilution which could occur if all dilutive
securities (such as outstanding stock options) were converted to
common shares. The EPS amounts for all periods have been presented
in compliance with SFAS No. 128. No changes to previously
presented EPS were necessary.
The following table sets forth the computation of basic and diluted
earnings per common share in accordance with the provisions of SFAS
No. 128.
Three Months Ended Nine Months Ended
8/31/98 8/31/97 8/31/98 8/31/97
(In thousands, except per share amounts)
Numerator:
Net income from continuing
operations $21,450 $19,199 $53,750 $49,225
Net income from discontinued
operations - 1,013 - 1,013
Net income $21,450 $20,212 $53,750 $50,238
(6)<PAGE>
Three Months Ended Nine Months Ended
8/31/98 8/31/97 8/31/98 8/31/97
Denominator:
Denominator for basic
earnings per common share -
weighted average shares 73,154 75,117 73,452 76,079
Effect of dilutive
securities:
Stock options 643 207 593 174
Employee stock purchase
plan 59 11 52 15
Denominator for diluted
earnings per common share -
weighted average shares 73,856 75,335 74,097 76,268
Earnings per common share -
basic and diluted
Continuing operations $0.29 $0.26 $0.73 $0.65
Discontinued operations - 0.01 - 0.01
Earnings per common share -
basic and diluted $0.29 $0.27 $0.73 $0.66
In June 1998, the FASB issued SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities." This statement,
which is effective for fiscal years beginning after June 15, 1999,
will require the Company to recognize all derivatives on the
balance sheet at fair value. Derivatives that do not qualify as
hedges under the new standard must be adjusted to fair value
through income. If a derivative qualifies as a hedge, depending on
the nature of the hedge, changes in the fair value of derivatives
will either be offset against the change in fair value of the
hedged assets, liabilities, or firm commitments through earnings or
recognized in other comprehensive income until the hedged item is
recognized in earnings. The ineffective portion of a derivative's
change in value will be immediately recognized in earnings. The
Company is currently evaluating the effect that implementation of
SFAS No. 133 will have on its results of operations and financial
position.
Financial Instruments
During the first quarter of 1998, the Company entered into a
foreign currency option contract to sell Mexican pesos forward to
hedge the net investment in its Mexican subsidiary and affiliate.
This contract, which expires in December 1998, had a notional
amount of $8.3 million at August 31, 1998.
During the third quarter of 1998, the Company entered into foreign
currency forward contracts to buy Australian dollars forward to
hedge a firm Australian dollar commitment. These contracts, which
expire by August 1999, had a notional amount of $7.5 million at
August 31, 1998. The Company also entered into foreign currency
(7)<PAGE>
option contracts to sell Canadian dollars forward to hedge
anticipated transactions associated with the purchase of certain
commodities. These contracts, which expire by February 1999, had
a notional amount of $15.0 million at August 31, 1998.
As of August 31, 1998, the fair value of foreign currency forward
and option contracts approximated the contract values.
In the second quarter of 1998, the Company entered into forward
starting interest rate swap contracts to achieve a desired
proportion of variable versus fixed rate debt. The forward
starting interest rate swaps will hedge domestic variable rate debt
which will be used to retire 8.95% notes due in July 2001.
Interest rate payments will be fixed at 6.35% until July 2011. The
amounts paid or received on hedges related to debt will be
recognized as an adjustment to interest expense. At August 31,
1998, the notional amount of the forward starting interest rate
swaps was $75.0 million and the cost to settle the contracts was
$3.1 million. The Company intends to hold the forward starting
interest rate swaps until maturity.
The fair value of financial instruments is based on third-party
market quotes. The Company does not hold or issue financial
instruments for trading purposes.
Subsequent Event
On September 30, 1998, the Company initiated a reorganization of
its Venezuelan business. The financial impact of this
reorganization, which includes the sale or closure of various plant
operations, will be recorded in the fourth quarter of 1998. The
expected completion of this reorganization and all outstanding
restructuring projects in the fourth quarter of 1998 will not have
a material effect on the results of operations or financial
condition of the Company.
(8)<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Overview
For the quarter ended August 31, 1998, the Company reported net
income of $21.5 million versus $20.2 million for the comparable
period last year. Basic and diluted earnings per share were $0.29
for the third quarter of 1998, compared to $0.27 last year. For
the nine months ended August 31, 1998, the Company reported net
income of $53.8 million versus $50.2 million for the comparable
period last year. Basic and diluted earnings per share were $0.73
for the first nine months of 1998, compared to $0.66 last year.
During the third quarter of 1997, the Company recorded adjustments
relating to a favorable revaluation of reserves for restructuring
programs and discontinued operations and unfavorable adjustments at
its Venezuelan operation, principally related to the correction of
a prior period currency translation error. Excluding these items,
net income for the third quarter and nine months ended August 31,
1997 was $19.9 million and $50.1 million, respectively, and basic
and diluted earnings per share were $0.27 and $0.66 per share,
respectively.
The increase in third quarter earnings as compared to last year was
primarily due to increased sales and income in the U.S. food
business. During the third quarter of 1998, the U.S. food business
recorded a 10% sales increase and a comparable operating income
increase due to distribution gains announced earlier this year and
continued improved performance in the dry seasoning mix and core
spice and herb businesses. Unfavorable currency exchange rates in
a number of foreign markets and weakness in the plastic packaging
business negatively impacted the third quarter of 1998.
During the third quarter of 1998, the Company purchased a line of
wet and dry mustards, curry powders and various meal lines in
Australia and Canada which will be marketed under the Keen's and
Rice-a-Riso brand names.
Results of Operations
Net sales increased 5.2% for the quarter ended August 31, 1998 as
compared to the corresponding period of 1997. The effect of
foreign currency exchange rate changes, primarily in our Australian
and Canadian operations, decreased sales by 1.7% compared to last
year. Unit volume increased 2.8% as compared to last year, while
the combined effects of price and product mix increased sales by
4.1%. Net sales increases in our U.S. consumer business were both
volume and product mix related and were favorably impacted by
distribution gains and improved performance in the dry seasoning
mix and core spice and herb businesses. U.S. industrial and
foodservice businesses were favorably impacted by volume growth,
partially due to new distribution. Weak demand for customers'
products from Asian countries as well as general market softness,
principally for plastic tubes, contributed to volume declines in
the packaging business.
(9)<PAGE>
For the nine months ended August 31, 1998, the 4.1% increase in net
sales versus the prior year was mainly driven by a combination of
price and mix changes. The effect of foreign currency exchange
rate changes decreased sales by approximately 1% when compared to
last year. Net sales improved compared to last year in all major
operating groups except the packaging business. Increases were
primarily due to a combination of price and mix changes in the U.S.
food business.
Operating income as a percentage of net sales, excluding
restructuring, increased to 8.8% from 7.7% for the quarter and
increased to 7.7% from 7.2% for the nine months as compared to last
year. Excluding the impact of adjustments at the Company's
Venezuelan operation in the third quarter of 1997, operating income
as a percentage of net sales for the third quarter and nine months
ended August 31, 1997 was 8.5% and 7.5%, respectively.
Gross profit as a percentage of net sales increased to 32.9% from
32.8% for the third quarter as compared to last year. Without the
impact of the Venezuelan operation adjustment in 1997, gross profit
would have dropped 0.6% versus last year. Increased commodity
pricing pressures and product and customer mix issues negatively
impacted the U.S. industrial and foodservice businesses, while
reduced volume in the packaging business reduced efficiencies.
Margins were also negatively impacted, primarily in Australia and
Canada, by increased commodity costs due to foreign currency
exchange rate changes. These were partially offset by continued
gross profit improvements in the U.S. consumer business, primarily
due to a favorable product mix. For the nine months ended
August 31, 1998, gross profit as a percentage of net sales
decreased to 32.5% from 32.9%. The gross profit percentage of most
operating groups decreased versus last year, primarily due to
commodity pricing pressures and other factors existing in the third
quarter results as discussed above. While the future movement of
commodity costs are uncertain, a variety of programs, including
periodic commodity purchases and customer price adjustments, are
being used by the Company to address these fluctuations.
For the third quarter, selling, general and administrative expenses
increased in dollar terms versus last year mainly due to increased
promotional spending within the U.S. consumer business, partially
offset by lower earnings-based employee compensation costs.
Selling, general, and administrative expenses as a percentage of
sales decreased slightly in the third quarter and the nine months
ended August 31, 1998 as compared to last year. Advertising and
promotion expenses as a percentage of net sales were approximately
equal to the prior year for both the third quarter and nine months
ended August 31, 1998.
Interest expense for the third quarter and the first nine months of
1998 was up slightly as compared to last year primarily due to
higher debt levels. Short-term borrowing rates in the third
quarter of 1998 were slightly lower than the corresponding periods
last year.
(10)<PAGE>
Other income for the third quarter of 1998 and 1997 included $1.8
and $2.0 million, respectively, of income from the three year non-
compete agreement with Calpine Corporation, entered into as a part
of the 1996 sale of Gilroy Energy Company, Inc. For the first nine
months of 1998 and 1997, $5.3 and $6.0 million, respectively, has
been realized.
The Company's effective tax rate for the quarter and nine months
ended August 31, 1998 was 36.0%, as compared to 39.3% and 37.9%,
respectively, for the comparable periods in 1997. The decrease in
the tax rate was due to tax planning initiatives associated with
the Company's foreign operations and the non-deductibility of
certain Venezuelan adjustments in 1997.
Income from unconsolidated operations decreased to $2.0 million in
the third quarter of 1998 from $2.3 million in the comparable
quarter last year. The decrease is due to our Mexican joint
venture, which realized translation losses from the devaluation of
the Mexican Peso, recognized in accordance with hyper-inflationary
accounting rules. For the first nine months of 1998, income from
unconsolidated operations is down slightly from last year.
Business Restructuring
In the third quarter of 1996, the Company began implementation of
a restructuring plan and recorded a restructuring charge of $58.1
million in 1996. This charge reduced net income by $39.6 million
or $0.49 per share. In addition, there were additional charges
directly related to the restructuring plan which could not be
accrued in 1996. In the fourth quarter of 1994, the Company
recorded a charge of $70.4 million for restructuring its business
operations. Except for the realignment of some of the Company's
overseas operations, this restructuring plan is complete.
In the third quarter of 1997, the Company reevaluated its
restructuring plans. Most of the actions under these plans were
completed or near completion and resulted in losses being less than
originally anticipated. In addition, an agreement in principal to
dispose of an overseas food brokerage and distribution business
with 6% of consolidated net sales was not consummated, resulting in
a restructuring credit of $9.5 million. Concurrent with the
reevaluation of restructuring plans, the Company initiated plans to
streamline the food brokerage and distribution business and close
a domestic packaging plant, resulting in a restructuring charge of
$5.7 million. Charges related to these initiatives included
severance and personnel costs of $2.5 million and a $3.2 million
writedown of assets to net realizable value.
The restructuring liability remaining at August 31, 1998 was $2.3
million for severance and personnel costs and other exit costs.
The Company expects to have all restructuring programs completed in
1998.
(11)<PAGE>
Financial Condition
In the Condensed Consolidated Statement of Cash Flows, cash flows
from operating activities decreased from a cash inflow of $37.1
million at August 31, 1997 to a cash inflow of $1.8 million at
August 31, 1998. Prepaid allowances increased as the Company added
new distribution and completed a period of numerous customer
renewals in the first half of 1998. In addition, other accrued
liabilities were negatively impacted by increased tax payments and
earnings-based employee compensation costs.
Investing activities used cash of $52.7 million in the first nine
months of 1998 versus $41.0 million in the comparable period of
1997. Capital expenditures were greater than last year primarily
due to the implementation of certain projects to support new
distribution in the retail and foodservice businesses and existing
customer growth in the industrial business. Acquisitions of
businesses in 1998 are for the purchase of a line of wet and dry
mustards, curry powders and various meal lines in Australia and
Canada which will be marketed under the Keen's and Rice-a-Riso
brand names.
Cash flows from financing activities include the purchase of 0.5
million shares of common stock under the Company's previously
announced 10 million share buyback program. To date 8.6 million
shares have been repurchased under this program.
The Company's ratio of debt to total capital was 58.9% as of
August 31, 1998, up from 57.2% at August 31, 1997 and 50.3% at
November 30, 1997. The increase was due primarily to the effect of
the stock buyback program, combined with higher working capital
requirements.
Management believes that internally generated funds and its
existing sources of liquidity are sufficient to meet current and
anticipated financing requirements over the next 12 months.
Year 2000
The year 2000 (Y2K) issue is the result of computer programs
written using two digits (rather than four) to define the
applicable year. Absent corrective actions, programs with date-
sensitive logic may recognize "00" as 1900 rather than 2000. This
could result in miscalculations or system failures, significantly
impacting the ability to operate our businesses.
The Company's work on the Y2K compliance program began in 1996. An
internal Y2K team, working with outside consultants, developed a
process to identify and correct Y2K issues. As a result of this
process, the Company has inventoried and assessed all systems and
developed remediation programs where needed for all business-
critical information technology applications. Implementation of
remediation programs for these applications is substantially
complete and compliance testing continues. It is expected that
this process will be complete by the middle of 1999.
(12)<PAGE>
The Company is investigating the Y2K compliance status of
suppliers, customers and other third parties. All third parties
have been contacted to determine their status. For certain
business-critical third parties with key system interfaces,
additional compliance attainment efforts, including interface
testing, have been undertaken. All business-critical third parties
have stated they will be Y2K compliant on a timely basis.
Since the compliance program began, the Company has incurred
approximately $8.8 million in expenses, including consulting fees,
internal staff costs and other expenses. The Company expects to
incur additional expenses of approximately $4.6 million through
2000 to be compliant. In addition, the Company has procured
replacement systems that, in addition to being Y2K compliant,
provide enhanced capability to benefit future operations.
Management believes that internally generated funds and existing
sources of liquidity are sufficient to meet the expected funding
requirements.
Although the Company believes it is taking the appropriate steps to
achieve Y2K compliance, noncompliant third party systems could
cause disruptions to various business activities and significant
additional costs. Contingency plans are being developed to
mitigate this risk.
Forward-Looking Information
Certain statements contained in this report, including expected
commodity price fluctuations, cost recovery program results,
restructuring and Y2K compliance program spending levels and
completion timing, and cost and benefit estimates for the
Venezuelan reorganization are "forward-looking statements" within
the meaning of Section 21E of the Securities and Exchange Act of
1934. Because forward-looking statements are based on management's
current views and assumptions and involve risks and uncertainties
that could significantly affect expected results, operating results
could be materially affected by external factors such as: actions
of competitors, customer relationships, Y2K preparedness of
significant external parties, demand for certain operating assets
in Venezuela, fluctuations in the cost and availability of supply
chain resources and foreign economic conditions, including currency
rate fluctuations and inflation rates.
(13)<PAGE>
Part II - Other Information
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits See Exhibit Index at page 16
of this Report on Form 10-Q.
(b) Reports on Form 8-K. None.
(14)<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
McCORMICK & COMPANY, INCORPORATED
Date: October 14, 1998 By: /s/ Francis A. Contino
Francis A. Contino
Executive Vice President
& Chief Financial Officer
Date: October 14, 1998 By: /s/ J. Allan Anderson
J. Allan Anderson
Vice President & Controller
(15)<PAGE>
Exhibit Index
Item 601
Exhibit
Number Reference or Page
(2) Plan of acquisition, Not applicable.
reorganization, arrangement,
liquidation or succession.
(3) Articles of Incorporation and By-Laws
Restatement of Charter of Incorporated by reference from
McCormick & Company, Registration Form S-8,
Incorporated dated April 16, Registration No. 33-39582 as
1990. filed with the Securities and
Exchange Commission on
March 25, 1991.
Articles of Amendment to Incorporated by reference from
Charter of McCormick & Registration Form S-8
Company, Incorporated Registration Statement
dated April 1, 1992. No. 33-59842 as filed with
the Securities and Exchange
Commission on March 19, 1993.
By-laws of McCormick & Incorporated by reference from
Company, Incorporated - Registrant's Form 10-Q for the
Restated and Amended as quarter ended May 31, 1996 as
of June 17, 1996. filed with the Securities and
Exchange Commission on
July 12, 1996.
(4) Instruments defining the With respect to rights of
rights of security holders, holders of equity securities,
including indentures. see Exhibit 3 (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.
(10) Material contracts. Not applicable.
(11) Statement re computation Not applicable.
of per share earnings.
(16)<PAGE>
Exhibit Index
(continued)
Item 601
Exhibit
Number Reference or Page
(15) Letter re unaudited interim Not applicable.
financial information.
(18) Letter re change in Not applicable.
accounting principles.
(19) Report furnished to Not applicable.
security holders.
(22) Published report regarding Not applicable.
matters submitted to vote
of security holders.
(23) Consent of experts. Not applicable.
(24) Power of attorney. Not applicable.
(27) Financial Data Schedule Submitted in electronic
format only.
(99) Additional exhibits. Not applicable.
(17)
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0
0
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