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 February 28, 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, 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
February 28, 1995
Common Stock 13,091,000
Common Stock Non-Voting 68,127,000
10Q.mz
McCORMICK & COMPANY, INCORPORATED
INDEX
Page No.
Part I. FINANCIAL INFORMATION
Condensed Consolidated Balance Sheets 2
Condensed Consolidated Statements of Income 3
Condensed Consolidated Statements of Cash Flows 4
Notes to Condensed Consolidated Financial Statements 5,6,7
Management's Discussion and Analysis of Financial
Condition and Results of Operations 8,9,10
Part II. OTHER INFORMATION 11
PART I. FINANCIAL INFORMATION
McCORMICK & COMPANY, INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands)
Feb. 28, Feb. 28, Nov. 30,
ASSETS 1995 1994 1994
Current Assets
Cash and cash equivalents $ 11,460 $ 18,201 $ 15,566
Accounts receivable - net 185,426 159,968 208,811
Inventories
Raw materials 134,931 113,830 125,413
Work in process 54,311 48,403 42,987
Finished goods 212,554 168,843 206,067
401,796 331,076 374,467
Prepaid expenses 16,016 13,369 15,343
Deferred income taxes 43,470 13,003 43,470
Total current assets 658,168 535,617 657,657
Investments 52,581 66,097 62,410
Property - net 505,506 474,247 504,599
Excess cost of acquisitions - net 187,281 134,330 196,166
Prepaid allowances 209,499 146,902 143,181
Other assets 6,386 4,569 4,688
Total assets $1,619,421 $1,361,762 1,568,701
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Notes payable $325,469 $171,350 $202,542
Current portion long-term debt 13,725 8,275 11,532
Outstanding checks 21,188 12,062 17,955
Accounts payable, trade 113,618 95,621 128,236
Accrued payroll 30,720 15,742 30,424
Accrued sales allowances 26,449 25,719 38,373
Accrued restructuring costs 22,070 - 50,334
Other accrued expenses and liab. 103,265 81,694 107,125
Income taxes 11,755 17,780 14,307
Total current liabilities 668,259 428,243 600,828
Long-term debt 368,265 343,562 374,288
Deferred income taxes 20,383 39,959 19,229
Employee benefit liabilities 70,902 67,670 68,375
Other liabilities 16,592 4,959 16,017
Total liabilities 1,144,401 884,393 1,078,737
Shareholders' Equity
Common Stock, no par value 50,758 50,944 50,006
Common Stock Non-Voting, no par 104,760 98,919 101,697
Retained earnings 345,790 336,616 343,285
Foreign currency translation adj. (26,288) (9,110) (5,024)
Total shareholders' equity 475,020 477,369 489,964
Total liabilities and
shareholders' equity $1,619,421 $1,361,762 1,568,701
See notes to financial statements.
(2)
McCORMICK & COMPANY, INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(Dollars In Thousands Except Per Share Amounts)
Three Months Ended
February 28, February 28,
1995 1994
Net sales $425,433 $367,723
Cost of goods sold 283,617 234,952
Gross profit 141,816 132,771
Selling, general and
administrative expense 97,873 96,532
Profit from operations 43,943 36,239
Other income (expense) - net 1,849 (63)
Interest expense 13,650 8,126
Income before income taxes 32,142 28,050
Provision for income taxes 12,000 10,790
Income from consolidated operations 20,142 17,260
Income (loss) unconsolidated operations (796) 1,050
Net income $ 19,346 $ 18,310
Earnings per common share $0.24 $0.23
Cash dividends declared per
common share $0.13 $0.12
See notes to financial statements.
(3)
McCORMICK & COMPANY, INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Dollars In Thousands)
Three Months Ended
Feb. 28, Feb. 28,
1995 1994
Cash flows from operating activities
Net income $ 19,346 $ 18,310
Depreciation and amortization 16,050 13,130
Provision for deferred income taxes 1,208 932
Gain on sale of assets (1) (49)
Share of (income) loss unconsolidated oper. 796 (1,050)
Dividend received unconsolidated subsidiary - -
Changes in assets and liabilities net of
businesses acquired and disposed (131,556) (65,344)
Net cash used in operating activities (94,157) (34,071)
Cash flows from investing activities
Acquisitions of businesses (981) (23,083)
Purchases of property, plant and equipment (16,805) (21,284)
Proceeds from sale of assets 67 31
Other investments (2,524) (106)
Net cash used in investing activities (20,243) (44,442)
Cash flows from financing activities
Notes payable 123,897 75,182
Long-term debt
Borrowings 110 20,059
Repayments (3,633) (2,242)
Common stocks
Issued 5,097 3,626
Acquired by purchase (7,314) (2,577)
Dividends paid (10,544) (9,724)
Minority interest 499 -
Net cash provided by financing activities 108,112 84,324
Effect of exchange rate changes on cash and
cash equivalents 2,182 (448)
Increase/(Decrease) in cash and cash equivalents (4,106) 5,363
Cash and cash equivalents at beginning of period 15,566 12,838
Cash and cash equivalents at end of period $ 11,460 $ 18,201
See notes to financial statements.
(4)
McCORMICK & COMPANY, INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands Except per Share Amounts)
1. In the opinion of the Company, the accompanying consolidated
financial statements contain all adjustments (consisting of
only normal recurring accruals) necessary to present fairly
the financial position as of February 28, 1995, February 28,
1994 and November 30, 1994, and the results of operations for
the three month periods ended February 28, 1995 and February
28, 1994, and the cash flows for the three month periods ended
February 28, 1995 and February 28, 1994. Certain
reclassifications have been made to the 1994 financial
statements to conform with the 1995 presentation.
2. The results of consolidated operations for the three month
periods ended February 28, 1995 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 two quarters of the fiscal year, and
increase in the third and fourth quarters.
3. Earnings per common share for the three month period ended
February 28, 1995 was computed by dividing net income by the
weighted average number of common shares outstanding
(81,191,000). Earnings per common share for the three month
period ended February 28, 1994 was computed by dividing net
income by the weighted average number of common shares
outstanding (81,136,000). The dilutive effect of common stock
equivalents is not material.
4. Interest paid during the three month periods ended February
28, 1995 and February 28, 1994 was $12,300 and $11,200
respectively. Income taxes paid during the same periods were
$12,200 and $7,200 respectively.
5. Changes in foreign currency exchange rates required
adjustments to both the Excess Cost of Acquisition account and
the Foreign Currency Translation Adjustments account at
February 28, 1995 and are primarily responsible for the
changes in the translation adjustment account for the periods
presented. These exchange rate changes plus amounts recorded
as a result of business acquisitions largely account for the
change in the Excess Cost of Acquisition account for the
periods presented.
6. During the first quarter of 1995 the Company renewed certain
prepaid allowance contracts. Payments associated with these
contracts are reflected in the Prepaid Allowance account at
February 28, 1995.
(5)
The estimated fair values of the Company's significant
financial instruments at February 28, 1995 follows:
Estimated Carrying
Fair Value Amount
Cash & cash equivalents................ $ 11,460 $ 11,460
Trade receivables...................... 162,913 162,913
Short-term borrowings.................. 325,469 325,469
Current portion of long-term debt...... 13,725 13,725
Accounts payable and accrued expenses.. 296,122 296,122
Long-term debt......................... 354,997 368,265
The table below summarizes by currency the contractual amounts
of the Company's forward exchange contracts, all of which are
held for purposes other than trading, at February 28, 1995:
Asset
Forward Carrying Fair
Contracts Amount Value
Currency: Mexican Peso $10,000 $5,485 $4,024
8. At February 28, 1995 the Company had available credit
facilities with domestic and foreign banks in the aggregate of
$320,000. There were no borrowings outstanding against these
facilities.
9. 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 provides for costs associated with reducing the
workforce and a program that will eliminate redundant
facilities and positions, improve productivity and efficiency,
and eliminate certain businesses and product lines. Specific
actions include a reduction of 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; realignment of some
of our operations in the U.K.; offering for sale the Golden
West Foods, Inc. frozen foods subsidiary; and consolidating
certain administrative activities.
As of February 28, 1995, the Company has reduced its workforce
by approximately 250 positions due to position eliminations
and retirements; has begun closing its production facilities
in Hayward, California and Hunt Valley, Maryland and is
transferring the production to other existing facilities; and
has consolidated several functional activities primarily at
the Hunt Valley operations. The components of the
restructuring charge and remaining liability at February 28,
1995 are as follows:
(6)
Restructuring 11/30/94 2/28/95
Charge Liability Liability
Workforce reduction $ 24,375 $ 24,263 $ 2,915
Plant consolidations
and closings 33,477 33,414 29,849
Other restructuring
projects 12,593 6,513 5,210
70,445 64,190 37,974
Income tax benefits (24,150) (23,434) (13,000)
$ 46,295 $ 40,756 $ 24,974
Included in the remaining liability are fixed asset write-offs
of $11,791 and other asset write-offs of $2,097.
The pre-tax restructuring liability which is anticipated to be
expended in the next 12 months is included as a current
liability in the balance sheet. The remaining portion is
included in other non-current liabilities.
(7)
McCORMICK & COMPANY, INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Consolidated net sales for the quarter ended February 28, 1995
increased 16% over the corresponding period last year. This
increase was largely attributable to sales volume gains. Sales
increases were posted by the Company's industrial, European and
Asia/Pacific operations. Acquisitions made during the past twelve
months accounted for 6% of the increase.
Earnings per share was $.24, up slightly from $.23 last year. Net
income increased 5.7%. Gross profit margins, however, declined to
33.3% from 36.1% last year as a result of a higher mix of
industrial sales which have a lower gross margin.
Profit from operations was up 21% or $7.7 million from last year.
This was due to an increase in earnings from our foreign
operations, our industrial spice and flavorings business and
favorable results and adjustments from our restructuring program
announced in the fourth quarter of 1994. Earnings were unfavorably
impacted by $5.5 million of higher interest expense which resulted
from both higher debt levels and interest rates.
Income from our unconsolidated joint ventures was down $1.8 million
or approximately $.02 per share due primarily to the economic
problems in Mexico. The Mexican peso was devalued by approximately
40% in the first quarter of 1995. This devaluation had the effect
of reducing shareholders' equity in the amount of approximately
$13 million. During 1994, the Company had entered into a forward
contract for the delivery of Mexican Pesos in April of 1995 to
hedge its exposure to a devaluation of this particular currency,
therefore, the devaluation did not have a significant impact on the
results of operations for the first quarter of 1995. Management is
taking steps to help mitigate the impact on future earnings of the
devaluation, including price increases where possible, identifying
U.S. import opportunities for Mexican-sourced raw materials and
additional sales opportunities.
Return on equity (ROE) calculated by dividing twelve months to date
net income by average shareholders' equity during that period,
increased to 13.0% at February 28, 1995 from 12.8% at year-end 1994
versus 21.8% at February 28, 1994. The restructuring charge booked
in the fourth quarter of FY 1994 is the primary reason for the
decline in ROE versus the first quarter of 1994.
In the first quarter the Company changed the accounting cycle for
certain foreign operations to be concurrent with, and achieve
uniformity with the domestic cycle. This was done in preparation
for the reengineering of global financial systems. The effect of
this change increased net income by $0.8 million.
(8)
Restructuring
In the fourth quarter of 1994, the Company announced a
comprehensive restructuring of its business operations. As a
result of this program, the Company recorded a restructuring charge
in the amount of $70 million before tax and $46 million after tax.
While the majority of the restructuring plan will be completed late
in 1995, the following progress has been made during the first
quarter of 1995:
* The worldwide workforce has been reduced by approximately 250
positions effective February 1, 1995 through position
eliminations and a special early retirement program. In
conjunction with this workforce reduction, termination
benefits of approximately $3.5 million were paid and charged
to the restructuring liability in the first quarter of 1995.
The remaining cost of this portion of the workforce reduction
will be paid by the Company's employee benefit plans as
retirement benefits. The additional employee benefit plan
liabilities associated with these retirement benefits
approximate $18 million and have been charged to the
restructuring liability in the first quarter of 1995. The
remainder of the workforce reduction up to our goal of the
elimination of 600 positions will be completed as production
facilities identified for closure in the restructuring plan
are closed. Severance costs were reduced by approximately
$0.5 million as a result of a higher than expected rate of
employee elections to transfer to positions at other locations
and other opportunities to continue employment.
* The process of closing the McCormick Flavor Group's plant in
Hayward, California and the Food Service Division's plant in
Hunt Valley, Maryland are underway. It is expected that these
plants will be closed and their production needs absorbed by
other facilities by year end. Negotiations for the sale of
Golden West Foods, Inc. are currently underway. The expected
before tax loss on the disposal of these facilities was
reduced by $1.5 million on the basis of current estimates.
* Plans for the realignment of some operating facilities in the
U.K. are being finalized. The physical realignment is
expected to begin late in 1995 and be completed in 1996.
* In conjunction with the workforce reduction effected
February 1, 1995, the Company has completed or has plans to
complete the consolidation of certain administrative
functions. These remaining consolidations will be completed
during 1995.
* The sale of the Company's interest in a Moroccan joint venture
was completed during the quarter with a reserve reduction of
$1 million.
(9)
* The Company is negotiating for the construction of a
$20 million consolidated distribution center to distribute the
finished goods produced by all of its Hunt Valley plants.
Construction of this facility is expected to be completed in
early 1996. Upon completion of the facility, the Company will
have the option to either purchase or lease the facility. On
the basis of negotiations thus far, the reserve for costs
associated with this project has been reduced by $0.9 million.
Cash expenditures associated with the restructuring plan during the
first quarter of 1995 totaled $2.6 million net of anticipated tax
benefits.
Savings from the portions of the restructuring plan that were
completed in the first quarter of 1995 will consist principally of
lower personnel costs after February 1, 1995. These savings will
be invested in the Company's brands through product development and
consumer promotion activities.
Financial Condition
The Company's capital structure (excluding $55.4 million
non-recourse debt) was 57.9% debt to total capital at February 28,
1995, up from 52.0% at year-end 1994 and 49.4% at February 28,
1994. During the first quarter of 1995, the Company increased its
net borrowings approximately $120 million. This cash was primarily
used to secure long term business contracts, provide for capital
spending, fund seasonal working capital needs in the first quarter,
and to temporarily fund the cash payments made under the
restructuring plan. The Company has begun a plan to improve
working capital management which is anticipated to result in
reductions in the investment in inventories by the end of 1995.
Working capital reductions under this plan will be used to reduce
debt and fund the costs of the restructuring plan. The Company's
current ratio declined during the quarter to 1.0 from 1.1 at year-
end 1994 largely due to the Company's increased use of commercial
paper borrowings. The Company maintains $320 million of committed
credit facilities that provide additional liquidity. These
facilities were not in use at the end of the first quarter.
(10)
PART II - OTHER INFORMATION
Item 6 Exhibits and Reports on Form 8-K
(a) Exhibits
Item 601
Exhibit
Number Reference
(3) Articles of Incorporation
and By-Laws
Restatement of Charter of Incorporated by reference
McCormick & Company, from Registrant's Form S-8
Incorporated dated Registration Statement
April 16, 1990. No. 33-39582 as filed with
the Securities and Exchange
Commission on March 25, 1991.
Articles of Amendment to Incorporated by reference
Charter of McCormick & from Registration Form S-8
Company, Incorporated Registration Statement
dated April 1, 1992. No. 33-59842 as filed with
the SEC on March 19, 1993.
By-Laws of McCormick & Attached.
Company, Incorporated -
Restated and Amended as
of March 18, 1992.
(10) Material Contracts Consulting agreement between
Registrant and Charles P.
McCormick, Jr. dated
August 1, 1994.
(b) Reports on Form 8-K
None.
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: April 14, 1995 By:
Robert G. Davey
Vice President &
Chief Financial Officer
Date: April 14, 1995 By:
J. Allan Anderson
Vice President & Controller
(11)
Exhibit 3
BY-LAWS
of
McCORMICK & COMPANY, INCORPORATED
RESTATED AND AMENDED
AS OF MARCH 18, 1992
---------------------------------
ARTICLE I.
Office
1. 1Principal Office. The principal office shall be
at 18 Loveton Circle, P.O. Box 6000, Sparks, Maryland 21152-6000.
The Corporation may also have offices at such
other places as the Board of Directors may from time to time
appoint, or the business of the Corporation may require.
2. 2Seal. The seal of the Corporation shall be in
circular form with the words:
McCormick & Company, Incorporated
Maryland 1915
encircling a large Mc.
ARTICLE II.
Stockholders' Meetings.
3. 3Place of Meeting. All meetings of the
stockholders shall be held at the time and place determined by the
Board of Directors of the Corporation.
4. 4Annual Meeting. An annual meeting for the
election of Directors and for the transaction of such other
business as maybe properly brought before the meeting shall be held
on the third Wednesday in March of every year beginning with the
year 1972.
5. Notice of Annual Meeting. At least ten days prior
to the meeting, written notice of the annual meeting shall be
mailed to each stockholder, in accordance with the Charter and laws
of the State of Maryland, at such address as shall appear on the
books of the Corporation.
6. Quorum. The holders of a majority of the stock
issued and outstanding, and entitled to vote thereat, present in
person, or represented by proxy, shall constitute a quorum at all
meetings of the stockholders for the transaction of business. If,
however, such majority shall not be present, or represented at any
meeting of the stockholders, the stockholders entitled to vote
thereat, present in person, or by proxy, shall have power to
adjourn the meeting from time to time, without notice other than
announcement at the meeting, until the requisite amount of voting
stock shall be present. At such adjourned meeting, at which the
requisite amount of voting stock shall be represented, any business
may be transacted which might have been transacted at the meeting
as originally notified.
7. Voting of Stockholders. At each meeting of
stockholders, every stockholder having the right to vote shall be
entitled to vote in person, or by proxy. Proxies shall be in
writing, and dated, but need not be sworn to, witnessed or
acknowledged, and shall be filed with the Secretary at or before
the meeting. Each stockholder shall have one vote for each share
of stock having voting power, registered in his name on the books
of the Corporation, except that no share of stock shall be voted at
any election for directors which has been transferred on the books
of the Corporation within twenty days next preceding such election.
The vote for directors, and, upon the demand of any stockholder,
the vote upon any question before the meeting, shall be by ballot.
All elections shall be had and all questions decided by a majority
of the votes entitled to be cast in the aggregate by all
stockholders present in person or by proxy at such meeting.
8. 5List of Stockholders. A complete record of
stockholders entitled to vote at the ensuing election, arranged
in alphabetical order, with the residence of each and the number of
voting shares held by each shall be prepared by the Secretary and
filed in the office of the Secretary, at least ten days before
every election.
9. Special Meetings. Special meetings of the
stockholders, for any purpose or purposes, unless otherwise
prescribed by the statute, may be called by the President, and
shall be called by the President or Secretary upon written request
of a majority of the Board of Directors, or at the request in
writing of stockholders owning a majority in amount of the entire
capital stock of the corporation issued and outstanding and
entitled to vote. Such request shall state the purpose or purposes
of the proposed meeting.
10. Business at Special Meetings. Business transacted
at all special meetings shall be confined to the objects stated in
the call.
11. 6Written Notice of Special Meeting. Written
notice of a special meeting of stockholders, stating the time,
place and object thereof shall be mailed, postage prepaid, at least
ten days before such meeting, to each stockholder entitled to vote
thereat, at such address as appears on the books of the
Corporation.
ARTICLE III
Directors - Management of Company Vested in Directors.
12. 7Management Vested in Directors. The business and
affairs of this Company shall be managed under the direction of
its Board of Directors. Directors shall be elected at the Annual
Meeting of Stockholders, and each Director shall be elected to
serve until his successor shall be elected and shall qualify, or
until his death, resignation or removal. A Director who is an
employee of the Corporation shall cease to be a Director concurrent
with his termination, resignation or retirement from active
employment; provided however, that the Chairman of the Board of
Directors may continue to serve until the next Annual Meeting of
Stockholders following his retirement from active employment.
Non-employee directors shall be ineligible for election or
re-election to the Board of Directors after reaching age 70. The
Board of Directors shall keep minutes of its meetings and a full
account of its transactions. The number of Directors may, by a
vote of a majority of the entire Board of Directors, be increased
or decreased to such number (not less than three, nor, unless this
Section has been amended by the Board, more than 20) as the Board
of Directors may deem proper or expedient, but such action shall
not affect the tenure of office of any Director.
13. 8Chairman and Vice Chairman of the Board of
Directors. The Board shall from time to time designate one of its
members as Chairman of the Board of Directors and may designate
another of its members as Vice Chairman of the Board of Directors.
It shall be the duty of the Chairman of the Board of Directors to
preside at all meetings of the Board and of stockholders, and of
the Vice Chairman, if any, to preside at such meetings in the
absence of the Chairman.
14. Residual Power in Directors. In addition to the
powers and authorities by these By-Laws expressly conferred upon
them, the Board may exercise all such powers of the Corporation and
do all such lawful acts and things as are not by statute, or by the
certificate of incorporation, or by these By-Laws directed or
required to be exercised or done by the stockholders.
15. 9Compensation of Directors. The Board of
Directors shall by resolution determine what, if any, fees shall be
paid to the Directors for their services as members of the Board.
Expenses of attendance, if any, may be allowed for attendance at
each or any regular or special meeting of the Board.
16. 10Annual Meeting of the Board of Directors. After
each meeting of stockholders at which the Board of Directors shall
have been elected, the Board of Directors shall meet for the
purpose of organization, and the transaction of other business at
such time and place as may be designated by the stockholders at
said meeting or, in the absence of such designation, shall meet as
soon as practicable at such place as may be designated by the Board
of Directors. No notice of such meeting shall be necessary to the
newly elected directors in order legally to constitute a meeting,
provided a majority of the whole Board shall be present.
17. Regular Meetings. Regular meetings of the Board
may be held without notice at such time and place as shall from
time to time be determined by the Board.
18. Special Meetings. Special Meetings of the Board
may be called by the Chairman of the Board, the President, or the
Secretary by notice served personally upon each Director, or
mailed, telegraphed or telephoned to his address as shown upon the
books of the Company. Special meetings shall be called by the
Chairman of the Board, the President or Secretary in like manner
and with like notice on the written request of a majority of the
Directors.
19. Quorum. At all meetings of the Board, a majority
of the Directors shall be necessary and sufficient to constitute a
quorum for the transaction of business, and the act of a majority
of the Directors present at any meeting at which there is a quorum
shall be the act of the Board of Directors, except as may be
otherwise specifically provided by statute or by the certificate of
incorporation or by these By-Laws.
20. Removal of Directors. At any meeting of
stockholders called for the purpose, any director may by the vote
of a majority of all the shares of stock outstanding and entitled
to vote be removed from office, with or without cause, and another
may be appointed in the place of the person so removed, which other
shall serve for the remainder of the term.
21. Vacancies on Board of Directors. If any member
shall die or resign, or if the stockholders shall remove any
director without appointing another in his place, a majority of the
remaining directors (although such majority is less than a quorum)
may elect a successor to hold office for the unexpired portion of
the term of the director whose place shall have become vacant and
until his successor shall have been duly chosen and qualified.
Vacancies in the Board of Directors created by an increase in the
number of directors may be filled by the vote of a majority of the
entire Board, as constituted prior to such increase, and directors
so elected by the Board to fill such vacancies shall hold office
until the next succeeding annual meeting of the stockholders and
thereafter until their successors shall be elected and qualified.
22. 12Committees. The Board of Directors, by
resolution, is authorized to appoint an Executive Committee from
among its members and grant to such committee any and all powers
and duties authorized by the applicable provisions of the Annotated
Code of Maryland, including specifically the authority for members
of the Executive Committee present at a meeting whether or not a
quorum is present, to appoint a member of the Board of Directors to
act in the place of an absent member of the Executive Committee.
The Board of Directors, by resolution, may provide for
such other standing or special committees from among the Directors
or employees of the Corporation, as the Board deems desirable,
necessary or expedient, and may discontinue the same at the Board's
pleasure. Each such committee shall have such power and perform
such duties not inconsistent with law or these By-Laws, as may be
assigned to it by the Board of Directors.
23. Compensation of Committees. Compensation of
committee members may be such as may be allowed by the Board of
Directors.
ARTICLE IV.
Officers.
24. 13Executive Officers. The Officers of this
Corporation shall be a Chairman of the Board of Directors, a
President, one or more Executive Vice Presidents, one or more Vice
Presidents, a Secretary, a Treasurer and other such officers as the
Board of Directors may deem necessary or expedient for the proper
conduct of the business of the Corporation. The officers of the
Corporation shall be elected annually by the Board of Directors at
its first meeting following the annual meeting of stockholders.
Each such officer shall hold office for a term of one year and
thereafter until his successor is elected and qualified, or until
his death, resignation, or removal.
25. 14Chairman of the Board of Directors. The
Chairman of the Board of Directors shall have general direction
over the policies and affairs of the Corporation. He shall, when
present, preside at all meetings of stockholders and the Board of
Directors. Except where by law the signature of the President is
required, the Chairman shall possess the same power as the
President to sign all certificates, contracts, and other
instruments of the Corporation which may be authorized by the Board
of Directors. During the absence or disability of the President,
he shall exercise all the powers and discharge all the duties of
the President. The Chairman of the Board or the President may be
the Chief Executive Officer of the Corporation.
26. 15President. The President shall have general and
active management of the business operations of the Corporation.
The President may also be the Chairman of the Board of Directors.
He shall report to the Chairman of the Board and shall keep the
Board of Directors informed concerning all matters within his
knowledge which the interests of the Corporation may require to be
brought to their notice. He shall have prepared annually a full
and true statement of the affairs of the Corporation which shall be
submitted to the stockholders at the Annual Meeting and he shall
have additional powers, obligations, and duties as may be assigned
to him by the Board of Directors. The President or an Executive
Vice President may be the Chief Operating Officer of the
Corporation.
27. Executive Vice Presidents and Vice Presidents.
The Executive Vice Presidents and Vice Presidents shall have all
such powers and duties as may be assigned to them by the President
or the Board of Directors. In the absence of the President and
Chairman of the Board, an Executive Vice President or Vice
President may be designated to perform the duties and functions of
the President.
28. Secretary. The Secretary shall keep a full and
accurate record of all meetings of the stockholders and
directors, and shall have the custody of all books and papers
belonging to the Company which are located in its principal office.
He shall give, or cause to be given, notice of all meetings of the
stockholders and of the Board of Directors, and all other notices
required by law or by these By-Laws. He shall be the custodian of
the corporate seal or seals; he shall see that the corporate seal
is affixed to all documents, the execution of which on behalf of
the Corporation under its seal is duly authorized, and when so
affixed may attest the same; and in general, he shall perform all
duties ordinarily incident to the office of a Secretary of a
Corporation, and such other duties as from time to time may be
assigned to him by the Board of Directors.
29. Treasurer. The Treasurer shall have charge of and
be responsible for all funds, securities, receipts and
disbursements of the Corporation, and shall deposit, or cause to be
deposited, in the name of the Corporation all monies or other
valuable effects in such banks, trust companies, or other
depositories as shall, from time to time, be selected by the Board
of Directors; he shall render to the President and to the Board of
Directors whenever requested, an account of the financial condition
of the Corporation; and in general, shall perform all the duties
ordinarily incident to the office of a Treasurer of a corporation,
and such other duties as may be assigned to him by the Board of
Directors or by the President.
30. Subordinate Officers. The Board of Directors may
elect such subordinate officers as it may deem desirable. Each
such officer shall hold office for such period, and shall have such
authority and perform such duties, as the Board of Directors may
prescribe. The Board of Directors may, from time to time, authorize
any officer to appoint subordinate officers and to prescribe the
powers and duties thereof.
31. Duties of Subordinate Officers. In addition to
any other duties prescribed by the Board of Directors, a
subordinate officer, if directed by the Board of Directors, shall
perform all or any part of the duties herein granted any officer.
32. Compensation. The Board of Directors shall have
power to fix the compensation of all officers and employees of the
Corporation. It may authorize any officer upon whom the power of
appointing subordinate officers may have been conferred to fix
the compensation of such subordinate officers, or may appoint a
committee to fix the salaries of all officers and may appoint an
individual to fix the salaries of employees.
33. Officers Holding More Than One Office. Two or
more offices (except that of President and Vice President) may be
held by the same person, but no officer shall execute, acknowledge
or verify any instrument in more than one capacity.
34. Removal. The Board of Directors shall have power
at any regular or special meeting to remove any officer with or
without cause, and such action shall be conclusive on the officer
so removed. The Board may authorize any officer to remove
subordinate officers.
35. Vacancies. The Board of Directors at any regular
or special meeting shall have power to fill a vacancy occurring in
any office for the unexpired portion of the term.
ARTICLE V.
Power to Sign Papers and Instruments of Corporation
36. The Board of Directors, from time to time, shall
have full power and authority to appoint such officer or officers,
agent or agents, as it shall deem necessary, proper, or expedient,
to sign all deeds, mortgages, bonds, indentures, contracts, checks,
drafts, notes, obligations, orders for the payment of money, and
other instruments, papers, or documents which may be necessary,
proper or expedient in order to carry on the business of the
Corporation.
ARTICLE VI.
Other Management Boards
37. The Board of Directors may provide for such other
management boards as they deem proper, necessary, and desirable
for efficient management of the Corporation's business, and may
discontinue or change the same at the Board's pleasure. Such
boards shall be selected from executive, administative, or
professional employees of the Corporation or its subsidiaries, or
from employees showing potential ability in these classifications
as determined by scientific rating charts. Each such management
board shall have such power and perform such duties not
inconsistent with law or these By-Laws, as may be assigned to it by
the Board of Directors. Each such management board shall be
governed by their own By-Laws, not inconsistent with law or these
By-Laws.
38. Compensation of the other management boards, or
members thereof, may be such as allowed by the Board of Directors
or by a duly authorized individual or committee so authorized by
the Board.
ARTICLE VII.
39. Fiscal Year. The fiscal year of the Corporation
shall commence on whatever date is determined as most practical by
the Board of Directors, and shall end twelve months thereafter.
ARTICLE VIII.
40. Dividends. Dividends upon the capital stock of
the Corporation, subject to the provisions of the certificate of
incorporation, if any, may be declared by the Board of Directors
at any regular or special meeting, pursuant to law. Dividends may
be paid in cash, in property, or in shares of the capital stock.
Before payment of any dividend, there may be set aside out of any
funds of the Corporation available for dividends such sum or sums
as the Directors from time to time, in their absolute discretion,
think proper as a reserve fund to meet contingencies, or for
equalizing dividends; or for repairing or maintaining any property
of the Corporation; or for such other purposes as the Directors
shall think conducive to the interests of the Corporation.
ARTICLE IX.
Stock
41. Certificates. Each stockholder shall be entitled
to a stock certificate or certificates certifying the number and
kind of shares owned by him. Said certificate shall be issued,
signed and sealed by such officers and in such manner as may be
directed by the Board of Directors.
42. Transfer of Shares. Shares of stock shall be
transferable only on the books of the Corporation by the holder
thereof in person, or by his duly authorized attorney, or by
endorsement satisfactory to the Corporation, and on surrender of
the certificate or certificates so duly endorsed.
43. 16Closing Books of the Corporation Against
Transfer of Stock; Record Dates. The Board of Directors may fix a
time not exceeding twenty (20) days preceding the date of any
meeting of stockholders, any dividend payment date, or any date for
the allotment of rights, during which the books of the Corporation
shall be closed against the transfer of stock. In lieu of
providing for the closing of the books against transfer of stock as
aforesaid, the Board of Directors may fix in advance a time not
exceeding ninety (90) days preceding any dividend date, or any date
for the allotment of rights, as record date for the determination
of the stockholders entitled to receive such dividend or rights, as
the case may be, and, in that event, only stockholders of record on
such date shall be entitled to receive such dividend or rights, as
the case may be. Except as set forth in Paragraph 7 of these
By-Laws, the Board of Directors may fix in advance a time not
exceeding ninety (90) days preceding any meeting of stockholders as
record date for the determination of stockholders entitled to vote
at a stockholders' meeting to be called by the Board of Directors.
44. Mutilated, Lost or Destroyed Certificates. The
holder of any mutilated certificate shall immediately notify the
Corporation, and the Board of Directors may, in its discretion,
cause one or more certificates, for the same number of shares in
the aggregate, to be issued to such holder upon the surrender of
the mutilated certificate. Any person claiming a certificate of
stock to be lost or destroyed shall make an affidavit or
affirmation of that fact. The Board of Directors, in its sole
discretion, and subject to such terms and conditions as the Board
of Directors may determine, may issue new stock certificate or
certificates in place of the lost, mutilated, or destroyed
certificate or certificates.
45. Registered Stockholders. The Corporation shall be
entitled to treat the holder of record of any share or shares as
the holder in fact thereof, and accordingly shall not be bound to
recognize any equitable, or other claim, or interest, in such
shares on the part of any other person, whether or not it shall
have express or other notice thereof, save as expressly provided by
the laws of Maryland.
ARTICLE X.
Sundry Provisions.
46. 17Notices. Whenever under the provisions of these
By-Laws notice is required to be given to any director, officer
or stockholder, it shall not be construed to require personal
notice, but such notice may be given in writing, by mail, by
depositing the same in the post office or letterbox in a post paid
sealed wrapper, addressed to such director, officer or stockholder
at such address as appears on the books of the Corporation, or in
default of other address, to such director, officer, or stockholder
at the General Post Office in the City of Baltimore, Maryland, and
such notice shall be deemed to be given at the time when the same
shall be thus mailed. Any director, officer or stockholder may
waive any notice required to be given under these By-Laws.
47. Stock of Other Corporations. Shares of stock in
other corporations owned or held by the Corporation may be voted by
the Corporation by such officer, agent or proxy as the Board of
Directors may from time to time appoint and, in the absence of such
appointment, may be voted by the President or a Vice President, or
by proxy or proxies appointed by the President or a Vice President.
Any and all proxies, waivers, consents and other instruments may be
executed and any and all other action may be taken by the
Corporation as owner or holder of shares of stock in other
corporation by such officer, agent or proxy as the Board of
Directors may appoint, or, in the absence of such appointment, by
the President or a Vice President.
48. 18Indemnification.
(a) The Corporation shall indemnify (i) its
directors to the full extent provided by the General Laws of the
State of Maryland now or hereafter in force, including the advance
of expenses under the procedures provided by such laws; (ii) its
officers to the same extent it shall indemnify its directors; and
(iii) its officers who are not directors to such further extent as
shall be authorized by the Board of Directors and be consistent
with law. The foregoing shall not limit the authority of the
Corporation to indemnify other employees and agents consistent with
law.
(b) The provision of paragraph (a) shall apply to
all proceedings arising (i) after the time of adoption of this
by-law amendment (the "effective date") in connection with any
facts and circumstances occurring after the effective date; (ii)
after the effective date in connection with any facts or
circumstances occurring before the effective date; and (iii) prior
to the effective date, whether before or after July 1, 1981, to the
extent necessary or appropriate to make any indemnification
provisions of the Corporation consistent with applicable
indemnification provisions of the General Laws of the State of
Maryland. This by-law shall not limit any rights of any person
with respect to facts and circumstances occurring or proceedings
arising prior to the effective date to the extent such rights are
consistent with law applicable to the time in question.
49. 19Amendments.
(a) Except as hereinafter provided, these
By-Laws, or any of them, or any additional or amended By-Laws, may
be altered or repealed and any By-Laws may be adopted at any
regular meeting of the Board of Directors without notice, or at any
special meeting, the notice of which shall set forth the terms of
the proposed amendments, by the vote of a majority of the entire
Board.
(b) This Section 49 of the By-Laws relating to
amendments be amended only at a regular meeting of stockholders
without notice, or at a special meeting of stockholders, the
notice of which shall set forth the terms of the proposed
amendment, in either case by the vote of a majority of the votes
entitled to be cast in the aggregate by all stockholders present in
person or by proxy at such meeting.
FOOTNOTES
1Amended 12/20/68 & 3/18/92
2Amended 3/5/58
3Amended 3/1/71
4Amended 2/3/65 & 3/1/71 & 1/24/72
5Amended 3/5/58 & 3/17/80
6Amended 3/5/58
7Amended 7/19/82 & 9/2l/87
8Amended 7/25/69 & 11/30/70
9Amended 3/16/83
10Amended 3/1/71
11Amended 3/5/58
12Amended 9/16/68 & 11/30/70
13Amended 11/30/70 & 3/21/79
14Amended 3/21/79 & 2/16/87
15Amended 7/25/69 & 11/30/70 & 3/21/79
& 2/16/87
16Amended 3/5/58 & 1/24/72 & 2/16/87
17Amended 3/5/58
18Corrected 3/3/48 & 7/19/82 & 10/18/82
19Added 3/5/58
5689C.#17C
Exhibit 10
August 1, 1994
Mr. Charles P. McCormick, Jr.
6761 S.E. North Marina Way
Stuart, Florida 34996
Dear Buzz:
On behalf of the Board of Directors of McCormick & Company,
Incorporated (the "Company"), I would like to take this
opportunity to confirm your election to the role of Chairman of
the Board by unanimous vote of the Board at its meeting on July
18, 1994.
In your role as Chairman, you have agreed to provide your
counsel, guidance and expertise regarding the affairs of the
Company as from time to time may be requested by the Board of
Directors and/or the President of the Company. To that end, it
is anticipated that such consultative services will require that
you devote approximately 10-12 days per month to the affairs of
the Company. You have agreed to continue to provide such
services as Chairman until such time as the Board of Directors
has determined that an orderly transition of that position and
its attendant duties can be effectuated.
In consideration of your agreement to render such services,
you will receive a monthly stipend of Sixteen Thousand Six
Hundred Sixty-Six Dollars and Sixty-Seven Cents ($16,666.67),
payable on or about the fifteenth day of each month, together
with such additional cash payments as may be deemed appropriate
by the Compensation Committee of the Board of Directors
consistent with the performance of the Company. In addition, the
Company will reimburse you for reasonable and customary expenses
incurred by you in providing such services, including, but not
necessarily limited to, travel expenses, meals, lodging, and
business related entertainment.
Charles P. McCormick, Jr.
August 1, 1994
Page 2
If the foregoing correctly expresses our understanding,
please sign a copy of this letter in the space provided below and
return it to me.
Very truly yours,
McCORMICK & COMPANY, INCORPORATED
BY: /s/H. Eugene Blattman
H. Eugene Blattman
President & CEO
BY: /s/Karen D. Weatherholtz
Karen D. Weatherholtz
Vice President-Human Relations
Secretary-Compensation
Committee
AGREED AND ACCEPTED this
23rd day of August, 1994.
BY: /s/Charles P. McCormick, Jr.
Charles P. McCormick, Jr.
SGL1093.DMD
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