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, 1994 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 incorporation or
organization)(I.R.S. Employer Identification No.)
18 Loveton Circle
Sparks, Maryland 21152
(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 . . . . . . . $190,760,977
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, 1995 was 8,718,509. 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, 1995, $21.88.
Class Number of Shares Outstanding Date
Common Stock . . . . . . 13,199,186 . . . . . . . . 1/31/95
Common Stock Non-Voting . 68,045,563 . . . . . . . . 1/31/95
DOCUMENTS INCORPORATED BY REFERENCE
Document Part of Form 10-K into which incorporated
Registrant's 1994 Annual Report to Stockholders Part I, Part II,
Part IV
Registrant's Proxy Statement dated 2/15/95. . . 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 1994, 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 21 of
that Report are incorporated by reference. The Registrant's net
sales increased 8.9% in 1994 to $1,694,772,000 due to both sales
price and volume changes.
The Registrant operates in one business segment and has
disclosed in Note 10 of the Notes to Consolidated Financial
Statements on page 35 of its Annual Report to Stockholders for
1994, which Note is incorporated by reference, the financial
information about the business segment required by this Item.
SPECIALTY FOOD BUSINESS
The Registrant's Annual Report to Stockholders for 1994 sets
forth a description of the business conducted by the
Registrant on pages 9 through 11. 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, 1994. 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.
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.
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 1994. 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
specialty food 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 13 and 17 of the Registrant's Annual Report to
Stockholders for 1994, 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 1994, 1993 and 1992 were
approximately $39,562,000, $38,226,000, and $35,968,000
respectively. Of these amounts, expenditures for research and
development amounted to $12,999,000 in 1994, $12,259,000 in 1993,
and $11,844,000 in 1992. 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 1994.
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 10 of the Notes to Consolidated Financial Statements on
page 35 of the Registrant's Annual Report to Stockholders for 1994,
and page 13 of the Registrant's Annual Report to Stockholders for
1994 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 1994 sets
forth a description of the Registrant's packaging group on page 11,
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. A plant of approximately 475,000 square feet located in
Salinas, California is owned in fee and is 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 109,000 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 1994 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 19 of its Annual Report to
Stockholders for 1994, 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, 1995 was as
follows:
Approximate Number
Title of Class of Record Holders
Common Stock, no par value 2,086
Common Stock Non-Voting, 10,880
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 1994 at pages 20 and 21, which pages are
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 1994 at
pages 12 through 19 contains a discussion and analysis of the
Company's financial condition and results of operations for the
three fiscal years ended November 30, 1994. 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 23 through 36 of the
Annual Report to Stockholders for 1994, which pages are
incorporated by reference. The report of independent auditors from
Ernst & Young on such financial statements is included on page 37
of the Annual Report to Stockholders for 1994; the supplemental
schedule for 1992, 1993 and 1994 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 11 of the Notes to Consolidated Financial
Statements at page 36 of the Registrant's Annual Report to
Stockholders for 1994, 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 15, 1995, 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 48 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 subsidiary of
the Company); 4/89 to 3/91 - Vice President - Food Service &
Industrial Groups;
Mr. Palumbo is 52 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 15, 1995, 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 15, 1995 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 15, 1995 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 one report during the last quarter
on Form 8-K dated October 12, 1994 which reported the issuance
of a press release.
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/ H. Eugene Blattman
H. Eugene Blattman
President & Chief Executive Officer February 20, 1995
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/ H. Eugene Blattman President &
H. Eugene Blattman Chief Executive Officer February 20, 1995
Principal Financial Officer:
/s/ Robert G. Davey Vice President &
Robert G. Davey Chief Financial Officer February 20, 1995
Principal Accounting Officer:
/s/ J. Allan Anderson Vice President &
J. Allan Anderson Controller February 20, 199
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/H. Eugene Blattman
H. Eugene Blattman
President & Chief Executive Officer February 20, 1995
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/H. Eugene Blattman President &
H. Eugene Blattman Chief Executive Officer February 20, 1995
Principal Financial Officer:
/s/Robert G. Davey Vice President &
Robert G. Davey Chief Financial Officer February 20, 1995
Principal Accounting Officer:
/s/J. Allan Anderson Vice President &
J. Allan Anderson Controller February 20, 1995
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, 1995
James J. Albrecht
/s/ H. Eugene Blattman February 20, 1995
H. Eugene Blattman
/s/ James S. Cook February 20, 1995
James S. Cook
/s/ Robert G. Davey February 20, 1995
Robert G. Davey
/s/ Harold J. Handley February 20, 1995
Harold J. Handley
/s/ George W. Koch February 20, 1995
George W. Koch
/s/ Robert J. Lawless February 20, 1995
Robert J. Lawless
/s/ Charles P. McCormick, Jr. February 20, 1995
Charles P. McCormick, Jr.
/s/ George V. McGowan February 20, 1995
George V. McGowan
/s/ Carroll D. Nordhoff February 20, 1995
Carroll D. Nordhoff
/s/ Richard W. Single, Sr. February 20, 1995
Richard W. Single, Sr.
/s/ William E. Stevens February 20, 1995
William E. Stevens
/s/ Karen D. Weatherholtz February 20, 1995
Karen D. Weatherholtz
CROSS REFERENCE SHEET
PART ITEM REFERENCED MATERIAL/PAGE(S)
PART I Item 1. Business Registrant's 1994 Annual
Report to
Stockholders/Pages 7-21 and
35.
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 1994 Annual
Registrant's Report to Stockholders/Page
Common 19. Equity and Related
Stockholder Matters.
Item 6. Selected Financial Registrant's 1994 Annual
Data. Report to
Stockholders/Pages 20-21.
Item 7. Management's Registrant's 1994 Annual
Discussion and Report to
Analysis of Stockholders/Pages 12-19.
Financial Condition
and Results of
Operations.
Item 8. Financial Statements Registrant's 1994 Annual
and Supplementary Report to
Data. Stockholders/Pages 23-36
and Page 14 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
and Executive Statements dated February
Officers 15, 1995/Pages 3-9.
of the Registrant.
Item 11.Executive Registrant's Proxy
Compensation. Statement dated February
15, 1995/Pages 9-18.
Item 12.Security Ownership Registrant's Proxy
of Certain Statement dated February
Owners and Management.15, 1995/Pages 4-7.
Item 13.Certain Relationships Registrant's Proxy
and Related Statement dated February
Transactions. 15, 1995/Page 7.
PART IV Item 14.Exhibits, Financial See Exhibit Index pages 15
Statement Schedules and 16 and the Table of
and Reports on Form Contents at page 13 of
8-K. this Report.
McCORMICK & COMPANY, INCORPORATED
TABLE OF CONTENTS
AND RELATED INFORMATION
Included in the Company's 1994 Annual Report to Stockholders, the
following consolidated financial statements are
incorporated by reference in Item 8*:
Consolidated Balance Sheets, November 30, 1994 and 1993
Consolidated Statements of Income for the Years Ended November 30,
1994, 1993 and 1992
Consolidated Statements of Shareholders Equity for the Years Ended
November 30, 1994, 1993 and 1992
Consolidated Statements of Cash Flows for the Years Ended November
30, 1994, 1993 and 1992
Notes to Consolidated Financial Statements, November 30, 1994
Report of Independent Auditors
Included in Part IV of This Annual Report:
Supplemental Financial Schedules:
VIII - 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 1994
Annual Report to Stockholders of the Registrant for its fiscal
year ended November 30, 1994 accompanies this Annual Report Form
10-K.
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
McCormick & Company, from Registrant's Report
Incorporated dated April 16, on Form 10-K for the
1990. fiscal year of 1990
as filed with the Securities
and Exchange Commission on
February 18, 1991.
By-laws of McCormick & Incorporated by reference from
Company, Incorporated - Registrant's Report on Form
Restated and Amended as of 10-K for the fiscal year of 1989
September 21, 1987. as filed with the Securities
and Exchange Commission on
February 20, 1990.
(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.
(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.
2-96166, 33-33725 and 33-39582
filed with the Securities and
Exchange Commission on March 1,
1985, March 2, 1990 and
March 25, 1991 respectively,
which statements are
incorporated by reference.
(11) Statement re computation of Page 17 of this Report on
per share earnings. Form 10-K.
(12) Statements re computation Pages 15-19 of Exhibit 13.
of ratios.
(13) Annual Report to Security Holders
McCormick & Company, Bound separately with
Incorporated Annual Report separately numbered pages.
to Stockholders for 1993.
(16) Letter re change in certifying Not applicable.
accountant.
(18) Letter re change in accounting Not applicable.
principles.
(21) Subsidiaries of the Registrant Page 39 of Exhibit 13.
(22) Published report regarding Not applicable.
matters submitted to vote of
securities holders
(23) Consent of independent Page 18 of this Report on
auditors Form 10-K.
(24) Power of attorney Not applicable.
(27) Financial Data Schedule Not applicable.
(28) Information from reports Not applicable.
to state insurance regulatory
authorities
(99) Additional exhibits Registrant's definitive Proxy
Statement dated February 15, 1995
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 16, 1995, included in the 1994 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). These schedules are the responsibility of the Company's
management. Our responsibility is to express an opinion based on
our audits. In our opinion, the financial statement schedules
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 16, 1995, with respect to the consolidated
financial statements and schedules of McCormick & Company,
Incorporated and subsidiaries included in the 1994 Annual Report to
Shareholders and incorporated by reference in this Annual Report
(Form 10-K) for the year ended November 30, 1994.
Form Registration Number Date Filed
S-3 33-66614 7/23/93
s-8 33-59842 3/19/93
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 12/1/89
S-8 33-24660 10/7/88
S-8 33-24658 9/15/88
S-8 2-96166 3/1/85
Ernst & Young
Baltimore, Maryland
February 20, 1995
McCormick & Company, Incorporated
1994 Annual Report
McCORMICK & COMPANY, INCORPORATED is the largest spice company in
the world. The Company is the leader in the manufacture, marketing
and distribution of spices, seasonings, flavors, and other food
products to the food industry - retail outlets, foodservice and
food processors. A packaging group manufactures and markets plastic
bottles and tubes for food, personal care and other industries.
Founded in 1889, McCormick "pioneered with products and
people," and in 1932 started participative management. For more
than 60 years, McCormick has thrived with Multiple Management - a
philosophy and system of management development - which, along with
enlightened leadership, helps shape our corporate culture.
Multiple Management encourages a belief in the "power of people,"
recognizes the dignity of the individual, the dynamics of human
relationships, the need for participation at all levels of
employment, and the importance of sharing the rewards of success.
Headquartered in Sparks, Maryland, McCormick has sales of $1.7
billion. Recently, Fortune magazine ranked the Company 270 on the
Fortune 500. Worldwide, McCormick has 9,000 employees - people
loyal to a heritage of product quality and customer service which
has made McCormick a success over the years. Publicly held and
traded on NASDAQ, the Company has more than 25,000 shareholders -
many are employees. McCormick has paid dividends every year since
1925.
The 1995 Annual Meeting will be held at 10:00 a.m., Wednesday,
March 15, 1995, at Marriott's Hunt Valley Inn, 245
Shawan Road (exit 20A off I-83 north of Baltimore), Hunt Valley,
Maryland 21031.
DEDICATION TO BAILEY A. THOMAS
Following the sudden death last July of Bailey A. Thomas, our
Chairman and CEO, an editorial in THE BALTIMORE SUN
referred to him as the "Spicemeister," one who "knew the spice
business inside and out," and a man who "had a
global vision for McCormick that has paid off handsomely."
The editorial also stated, "His folksy manner was genuine. He
liked people. His colleagues were amazed that he knew everyone by
first name. He also would conjure up hilarious stunts to keep
workers and managers laughing. But there was no mistaking his sharp
mind and deep devotion to his company."
Born on a small truck farm on the Eastern Shore of Maryland,
Bailey attended a four-room schoolhouse which had neither
electricity nor running water. By age 11, he had started his own
business selling Christmas cards. His life story from rural farm
boy to Chairman of one of the nation's Fortune 300 corporations is
a real Horatio Alger story.
Bailey's 33-year McCormick career was marked by
numerous business accomplishments, a reputation for integrity, and
his ability to smile and create smiles in others. He played a major
role in leading the Company to its most profitable years ever and
a commitment to major global expansion. To many, Bailey was a very
sharp businessman. To us, he was a friend.
[Photograph of Bailey A. Thomas, former Chairman and CEO, omitted]
[Photograph of Company product encircled by globe, which appears
at the bottom of each odd-numbered page beginning on page 1 and
ending on page 21, and also pages 37 and 39, omitted]
[Stamps stating the name of some of the source countries for
the Company's products, and a drawing of those products, which
appear throughout the report, omitted]
Contents
Dedication to Bailey A. Thomas 1
Mission, Financial Objectives
and Core Values. . . 2
Financial Highlights. . 3
Letter to Shareholders. 5
Report on Operations. . 9
Management's Discussion and Analysis 12
Historical Financial Summary 20
Income. . . . . . . . . 23
Balance Sheet . . . . . 24
Statement of Shareholders' Equity 25
Cash Flows. . . . . . . 26
Notes to Financial Statements 27
Management's Responsibility for
Financial Statements 37
Report of Independent Auditors 37
Directors and Officers. 38
McCormick Worldwide . . 39
Investor Information Inside back cover
The scent of this year's annual report is Vanilla Butter & Nut
Flavor.
MISSION
The primary mission of McCormick & Company, Incorporated is to
expand its worldwide leadership position in the spice, seasoning
and flavoring markets.
FINANCIAL OBJECTIVES
These objectives are highlighted on pages 20 and 21 in the
Historical Financial Summary.
Exceed a 20% return on equity.
Achieve an average net sales growth rate of 10% per year.
Maintain an average earnings per share growth rate of 15% per year
over time.
Pay out 25% to 35% of net income in dividends.
Maintain total debt to total capital at 40% or less, excluding
non-recourse debt.
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.
FINANCIAL HIGHLIGHTS
Year ended November 30
1994 1993 1992 1991 1990
(dollars in millions except per-share data)
Consolidated net sales $1,694.8 $1,556.6 $1,471.4 $1,427.9 $1,323.0
Net income, before accounting
change(F1) $ 61.2 $ 99.7 $ 95.2 $ 80.9 $ 69.4
Accounting change for postretirement
benefits (26.6)
Net income $ 61.2 $ 73.1 $ 95.2 $ 80.9 $ 69.4
Earnings per share, before
accounting change(F2) $ .75 $ 1.22 $ 1.16 $ .98 $ .83
Earnings per share, total(F2) .75 .89 1.16 .98 .83
Dividends per share (paid) .48 .44 .38 .28 .23
Margins
Gross profit, consolidated
operations 37.1% 38.7% 39.7% 37.9% 36.6%
Operating profit, consolidated
operations 7.6% 11.6% 11.4% 10.2% 9.6%
Income from consolidated
operations 3.1% 5.7% 5.8% 5.1% 5.0%
Income before accounting change 3.6% 6.4% 6.5% 5.7% 5.2%
Debt to total capital excluding
non-recourse debt 52.0% 44.3% 37.4% 36.4% 32.9%
Debt to total capital 54.6% 48.0% 42.5% 42.3% 39.9%
Shareholders' equity $ 490.0 $ 466.8 $ 437.9 $ 389.2 $ 364.4
Return on shareholders' equity,
before accounting change(F3) 12.8% 22.0% 23.3% 21.8% 20.4%
Return on shareholders' equity,
total(F3) 12.8% 17.0% 23.3% 21.8% 20.4%
Average shares outstanding and
equivalents (000's) 81,240 81,766 81,918 82,396 83,720
Ending shares outstanding and
equivalents (000's) 81,206 81,916 81,978 81,978 82,176
1 Includes 1994 restructuring charge of $70.4.
2 Includes 1994 restructuring charge of $.57 per share.
3 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.
SALES DOLLAR DISTRIBUTION
(excludes share of unconsolidated earnings and 1994 restructuring charge)
1994 1993 1992 1991 1990
Materials and Related
Expenses 48.8cents 47.4cents 48.7cents 49.6cents 51.0cents
Salaries, Wages and
Employee Benefits 21.9 22.7 21.3 20.7 20.4
Marketing, Administrative
and Related Expenses 11.6 12.6 13.1 14.0 13.1
Retained Earnings 3.6 3.5 3.7 3.8 3.6
Taxes 3.4 3.9 3.6 3.0 2.9
Depreciation 3.4 3.0 2.7 2.6 2.5
Distribution and Warehousing 2.7 2.6 2.7 2.8 2.9
Dividends 2.3 2.3 2.1 1.6 1.4
Interest 2.3 2.0 2.1 1.9 2.2
$1.00 $1.00 $1.00 $1.00 $1.00
[Pie chart depicting the above SALES DOLLAR DISTRIBUTION for 1994
omitted]
[Photograph of miscellaneous products of the Company and other
objectives,
omitted]
LETTER TO SHAREHOLDERS
We are pleased to report that 1994 was another record year for
McCormick, with sales increasing 9 percent and earnings, on a
comparable basis with 1993, increasing 8 percent. Our quarterly
cash dividend on common stock also increased 8 percent by Board
approval on December 19, 1994. This marked the 70th year of
consecutive dividend payments by your Company. During the last five
years (1990-1994), dividend payments have increased at a compounded
rate in excess of 21 percent. Considering both our industry and
competitive environments, 1994 results were respectable although
results fell short of our long-term objectives. There are several
key reasons why the year was not up to our standards. An increase
in commodity prices resulted in some decline in our industrial
margins. We anticipate improvement in 1995. In addition, due to
promotional expenses required to protect market share against
aggressive competition, our joint venture in Mexico was less
profitable than anticipated. Finally, we experienced increased
competition and price cutting in our consumer business. Near term
we expect this to continue.
We are taking the necessary steps to ensure that we continue to
increase market share in our core business. These steps include
remaining competitive, increasing marketing spending, investing in
new products, and upgrading and modernizing our plants and
equipment. These actions will keep us on the leading edge of our
industry.
RESTRUCTURING
In October, we announced a comprehensive restructuring of our
business operations, including plant consolidations, functional and
departmental consolidations, and staff reductions. The action will
result in a reduction of approximately 600 positions, or 7 percent
of our worldwide workforce. The restructuring is designed to
generate continued long-term growth and profitability, meet the
competitive challenges of the future, and enhance shareholder and
employee value. Benefits of this action, including support for the
McCormick brands and assistance in meeting our financial
objectives, will be felt near the end of 1995 and during 1996.
FUTURE
The Company announced seven new acquisitions and two new joint
ventures during 1994. In addition, we are increasing our equity
position in our consumer and industrial business in Shanghai,
China, to 90 percent, subject to governmental approval. That the
new businesses are located in Mexico, Indonesia, Finland, India,
Switzerland, Australia, and the United Kingdom indicates the
strength of our commitment to worldwide growth in spices,
seasonings and flavorings.
We will support our global strategy to become the leader in all
those zones where we operate. We are very pleased with our strong
performance in the United Kingdom and see further opportunities in
Europe. And we see great potential in Asia/Pacific where millions
of consumers are ready to be introduced to our products.
As our key customers continue to grow, we have the opportunity to
grow with them and offer a wide range of capabilities. We are going
to be innovative, take greater advantage of our brands, and strive
to take action to be selected by more companies as their preferred
supplier. We will continue to grow our leadership position in each
of our categories.
With strong retail and industrial sales, we are building momentum
for the future. We see industrial margins returning to better
levels as well as the benefits of recent acquisitions, cost
improvements, and restructuring.
What we envision for McCormick is an organization that will
continue to beat the competition, be well positioned for the
future, and remain independent by achieving excellent sales and
profits.
According to the American Spice Trade Association, the annual
consumption of spices could reach one billion pounds by the turn of
the century. The most significant development in the United States
spice scene today involves the "hot trend" in spices. Consumption
in the United States of black pepper, red pepper, mustard, and
ginger, the "hot" spices, has increased almost 50 percent in just
the past five years.
Such data provides ample evidence for us to be enthusiastic about
consumer trends and eager to be innovative with new products and
services. We will be focusing on those parts of our business,
whether they be new technologies, key processes, or small
improvements, which can really make a difference n our performance.
PERSONNEL
We were saddened last summer by the sudden death of Bailey A.
Thomas, our Chairman and CEO. It is largely due to Bailey's vision
that we operate today as a global organization, and we will
continue to grow the Company in the successful way he envisioned.
As a result of our untimely loss, Charles P. McCormick, Jr., who
had been serving as Chairman Emeritus, has returned as Chairman of
the Board. H. Eugene Blattman was promoted to President & CEO.
Other organizational changes during the year included the
appointment of Carroll D. Nordhoff as Executive Vice President of
the Corporation, Robert J. Lawless as Senior Vice President-The
Americas, Harold J. Handley as Senior Vice President-Europe, Dorsey
N. Baldwin as Vice President-Packaging Group, and Robert W.
Schroeder as Vice President-Sales & Marketing for the
McCormick/Schilling Division.
In addition, James A. Hooker retired as Vice President & Chief
Financial Officer and was succeeded by Robert G. Davey. John W.
Felton retired as Vice President-Corporate Communications and was
succeeded by Allen M. Barrett, Jr. John H. Nelson retired as Vice
President-Science & Technology. Alan D. Wilson was appointed Vice
President-Procurement. Donald E. Parodi was named President of
Setco, Inc.
For more than 60 years, we have been enriched by Multiple
Management, which promotes participation at all levels
of employment and the importance of sharing the rewards of success.
Because we focus on the customer and practice the basic core values
that have made McCormick a success, we are excited about our future
and expect to reach our objectives over time.
The officers and members of the Board of Directors join in
thanking our shareholders, customers, suppliers, and
employees for your support. We look forward to your participation
in a bright future for McCormick & Company.
Charles P. McCormick, Jr.
Chairman of the Board
H. Eugene Blattman
President & Chief Executive Officer
[Photograph of Charles P. McCormick, Jr., Chairman of Board, and
H. Eugene Blattman, President and CEO, omitted]
[Picture of various products of the Company, and certain other
objects, omitted]
Report on Operations
In October, the Company announced a comprehensive restructuring of
its business operations, including plant consolidations, functional
and departmental consolidations, and staff reductions. Trends in
our industry suggest that competition will continue to intensify.
The restructuring takes place during a period of financial strength
for the Company in order to position ourselves for continued future
earnings growth. The restructuring program represents an investment
in our future and will improve our competitive position.
Specifically, the major elements of the restructuring plan
include closing the McCormick Flavor Group's production acility in
Hayward, California. Products manufactured there will now be
produced at McCormick's facility in Salinas, California. The Food
Service Division's spice production operation in Hunt Valley,
Maryland, will be closed with products manufactured there being
shifted to the Company's consumer products plant also in
Hunt Valley. Golden West Foods, our frozen food subsidiary in
Bedford, Virginia, will be offered for sale. There will also be a
realignment of some of McCormick's operations in the United
Kingdom. There will be other functional consolidations and staff
reductions throughout the Company. A more detailed description of
the Company's restructuring plan is contained in Management's
Discussion and Analysis.
THE AMERICAS MARKET ZONE
McCormick's oldest and largest business is the manufacture and
retail sale of spices, herbs, extracts, proprietary seasoning
blends, sauces, and marinades. These consumer products are sold in
the United States, primarily under the McCormick name in the East,
the Schilling label in the West, and in Canada under the Club
House brand. In other markets of the Americas Zone, the McCormick
brand name is primarily used.
While both sales and profits of our consumer business reached
records levels, growth has slowed from the rates experienced over
the past few years. Consumer eating trends are causing a gradual
shift in the channels through which we sell our spices and
seasonings. Although total spice consumption is increasing, we are
seeing a slight decline in home use, as consumers seek the
convenience of foods prepared outside the home.
Additionally, competition has intensified over the past few
years. Our challenge and our strategy is to grow our leadership
position in this market. We will achieve this by building on our
strong brand, innovating with new products and processes and by
operating our plants and offices more efficiently.
As in previous years, we continued a strategy to grow our retail
business by introducing new products. More than 30 new products
were introduced in 1994, many in response to new consumer eating
trends. Examples include:
Rotisserie Recipe Chicken Seasonings
Seasoned Pepper Blends
Fajita and Caribbean Jerk International Seasonings
Classic and Spicy Pizza Seasonings, and
Cake Mate Flintstone Candy Decorations.
Additional new products were introduced specifically aimed at
health-conscious consumers. They included:
The McCormick Collection's Fat Free Recipe Blends
Old Bay Fat Free Tartar & Cocktail Sauces
Golden Dipt Fat Free Marinades, and
Lower Sodium Taco Seasoning.
Operationally, improvements occurred at our largest plant in
Hunt Valley, Maryland. The plant was entirely reengineered,
including the relocation of production lines, the installation of
robotic palletizers and the conversion to high-speed foil
production to start in March 1995. Improved administrative
processes have also reduced costs.
At McCormick Canada, the Club House Division experienced healthy
retail growth in a flat market. Expanded distribution and the
introduction of several new retail and foodservice products helped
maintain our leadership in that market. Hy's, a leading brand of
steak house seasonings in Canada, was acquired during the year.
It was a strong year for our operations in Central and South
America. Despite a recession, McCormick de Venezuela had a solid
year, culminating in the acquisition of Salsa Ideal, a tomato
ketchup manufacturer. McCormick de Centro America, our subsidiary
in El Salvador, celebrated its 25th anniversary by enjoying its
third consecutive year of record sales and profits. Leading market
share positions in Central America in virtually all its product
lines and market segments were increased.
The Food Service Division primarily serves broad-line
foodservice distributors and warehouse clubs. Sales to
distributors increased by 8 percent, exceeding the market average
growth. The continued consolidation of warehouse clubs had an
adverse impact on sales and profits for this division. New
distribution gains are being made with restaurant chains. McCormick
was the first to market a line of Rotisserie Style Chicken Glazes
to capitalize on a new, popular eating trend.
[Photograph of three employees, omitted]
THE EUROPEAN MARKET ZONE
McCormick's European Zone enjoyed a record financial year, led by
solid gains at our operations in the United Kingdom. A number of
new products was launched under the Schwartz brand, including three
new pour-over sauces:
Garlic & Pepper, Pepper & Mushroom, and Curry. Sales of the new
pour-over sauce line have been well above expectations.
McCormick (UK) acquired Noel Holdings, Ltd., the leading supplier
of specialty foods to the U.K. foodservice industry. Its product
line includes herbs, spices, seasonings, and gherkins, plus a wide
range of sauces, condiments and drink mixes. Noel offers McCormick
significant opportunities for growth in the foodservice sector.
In Switzerland, the Company acquired the herb and spice company,
Butty. This acquisition increases McCormick's presence in the Swiss
consumer market and significantly strengthens access to the Swiss
foodservice arena.
In Finland, McCormick acquired the spice business of Tuko Oy, a
major food distributor to the retail grocery and foodservice trade.
Tuko had been a McCormick licensee for many years. Under the new
structure, our products have been introduced into the Nordic
countries, Russia and the Baltic States.
[Photograph of four employees and bottling line, omitted]
THE ASIA/PACIFIC MARKET ZONE
The Asia/Pacific Zone had a record year in sales and earnings.
Sales growth was well balanced among consumer, foodservice and
industrial businesses. With many underdeveloped, but rapidly
expanding markets, the Asia/Pacific Zone has high growth potential.
This was one of the most exciting years or McCormick Australia
since it became a wholly owned subsidiary 25 years ago. In
addition to record sales and profits, McCormick Australia acquired
the dessert business of Traders Pty. Ltd. This included the
Aeroplane Jelly (gelatin) brand, one of the most well-known brands
in Australia.
McCormick's strategy is to combine our expertise in flavorings with
Traders brands to expand the dessert category overall. A major
renovation of our Melbourne manufacturing facility was begun. It
will enable us to serve our fast food and retail customers more
effectively.
McCormick and P.T. Rodamas of Jakarta, Indonesia, formed a new
joint venture, P.T. McCormick Indonesia. The new company will
manufacture and market spices, herbs, seasonings, condiments, and
sauces. This is a major step to build a presence in a key country
of more than 180 million people.
This past year saw McCormick take strategic steps to capitalize
on the enormous potential of the Chinese market. Our sales of
consumer products in China continue to grow. Additionally, we are
increasing our equity position in this joint venture, underscoring
our optimism for growth in this emerging market.
MCCORMICK FLAVOR GROUP
The McCormick Flavor Group includes our industrial and fast food
spice, seasoning and flavor businesses. It sells to food processors
and major restaurant chains. Solid gains were made in sales and
distribution. The Flavor Group, however, experienced margin
pressure and an earnings decline as a result of increased operating
and raw material costs and delay in passing these costs through in
the form of price increases. Consequently, the Group fell short
of financial objectives.
In a move to improve efficiencies, the Corporate Research and
Development Function and the McCormick Flavor Division Technical
Function merged, allowing McCormick to capitalize on the synergies
of the two groups and heighten the focus on customer support and
new product development.
The Flavor Group opened a 52,000-square-foot Atlanta Distribution
Center. This facility will provide improved distribution services
to customers in the Southeast United States while lowering
warehouse and distribution costs for other McCormick units.
McCormick Ingredients spice mill facility, celebrating its 10th
anniversary, achieved the highest plant sanitation rating
attainable from the American Institute of Baking.
Outside the United States, the Flavor Group took steps to
continue to grow our business. In Mexico, we acquired
Grupo Pesa, a leading seasoning supplier to Mexico's food
processing industry. In India, we formed a joint venture
with A.V. Thomas Group called AVT-McCormick Ingredients Ltd.
Located in Cochin, the new company will produce whole
and ground naturally sterilized spices for direct shipment to
Europe, the United States and other world markets. This acquisition
is a strategic addition to our global supply network.
Construction has also begun for a manufacturing facility in
Guangzhou, China. It will produce sauces, syrups and toppings for
major industrial and fast food customers. Production start-up is
targeted for November 1995.
GILROY FOODS, INCORPORATED
Gilroy Foods, McCormick's agriculturally-based California
subsidiary, reported improved results over last year's
abnormally poor year. Sales and profits were up, but both failed to
meet objectives. Price competition and higher than expected costs
depressed margins. Additionally, delays in the start-up of Gilroy's
new manufacturing facility in Egypt had an adverse profit impact.
There was continued growth for SupHerb Farms, our joint venture
with Daregal of France. Shipments of SupHerb's quick frozen herbs
began this summer, and the response from our customers has been
favorable.
Gilroy Energy Company concluded its seventh successful year of
operation.
PACKAGING GROUP
McCormick's Packaging Group, including Setco and Tubed Products,
supplies plastic tubes and bottles to McCormick units and provides
packaging for other customers in the pharmaceutical, cosmetics and
food industries.
Tubed Products grew faster than the market in its specialized
niche and had another successful year. At its Oxnard, California
and Easthampton, Massachusetts plants, tube manufacturing and
decorating lines were added.
In addition, the Company acquired Minipack Systems Limited of
Hampshire, United Kingdom. Minipack produces plastic sample
containers.
Results for Setco did not meet expectations. Price increases
could not cover rapidly escalating raw material costs.
Additionally, the unit's Brooklyn, New York, facility experienced
operational problems which impacted profits. Improvements late in
the year should yield better results in 1995.
MANAGEMENT'S DISCUSSION AND ANALYSIS
Overview - 1994
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.
Earnings growth of 8% before restructuring in 1994 and the
accounting change in 1993 was below the Company's earnings growth
objective of 15%. Contributing to the lower growth ratewere price
and cost pressure in the industrial business, competitive
conditions in North American consumer products and higher interest
expenses.
Sales of $1.69 billion increased 9% over 1993. In 1993,
consolidated sales increased 6% over 1992. Sales of
unconsolidated operations in 1994 were $342 million, an increase of
10% over 1993. In 1993, these operations increased sales 16% over
1992.
Return on equity declined to 12.8% versus 22.0% in 1993 and 23.3%
in 1992. Return on equity in 1994 before the effect of the
restructuring charge was 22.1%.
Gross profit was 37.1% of net sales in 1994 versus 38.7% in 1993.
Profit from operations was 7.6% in 1994 versus 11.6% in 1993. The
restructuring charge discussed above, equal to 4.2% of net sales,
accounted for the decline.
Net income was 3.6% of net sales in 1994 versus 6.4% in 1993 and
6.5% in 1992.
Dividends were increased in December 1993 to an annual rate of
$.48 per share and again in December 1994 to $.52 per share. These
dividend increases reflect management's continued confidence in the
long-term outlook for the Company.
Even in an environment of intense competition for shelf space and
a focus on cost reduction and operating efficiencies within our
industry, domestic consumer products reported higher sales and
profits. This was a result of continued growth of product offerings
on the perimeter of the grocery store, new products aimed at
health-conscious consumers and price increases.
The European Zone, aided by acquisitions, had excellent growth in
sales and profits making 1994 a record financial year. Acquisitions
in the United Kingdom, Switzerland and Finland added to our Number
One position in the U.K. and the Swiss consumer markets and
positioned us for growth in Scandinavia, Russia and Eastern
Europe.
In Asia/Pacific, sales and operating profit grew significantly
despite adverse economic conditions in some areas. The acquisition
of the Aeroplane Jelly (gelatin) brand from Traders Pty. in the
fourth quarter of 1994 added to the excellent performance.
Most of our industrial businesses reported significant sales
increases during 1994. The exception was our Food Service Division
which lost sales volume as a result of consolidations in the
warehouse club market. Our Gilroy Foods unit improved operating
profit margins after a year in which higher onion costs materially
reduced Gilroy's margins. Our industrial flavor and seasoning
business had an excellent year in terms of sales growth as
we became the supplier of choice with many of our industrial
customers. However, gross margins came under pressure due to
increased costs in several commodities. As a result, this business
reported lower operating profit in 1994 compared to 1993.
Sales at our packaging operations increased significantly in
1994. Profits were not up to expectations due in large part to
temporarily higher costs associated with the integration of a 1993
acquisition. During 1994, the Company made its first packaging
acquisition outside the United States with the purchase of Minipack
Systems Limited in the United Kingdom.
Earnings of our unconsolidated joint ventures decreased to $8
million in 1994 from $10 million in 1993. McCormick de Mexico, the
largest of our unconsolidated joint ventures, incurred higher
marketing expense in an intensely competitive marketplace in order
to maintain market share.
We are confident that our focus on increasing global market
share, new products that meet changing consumer trends, cost
containment, total quality, and superior customer service will
continue to increase shareholder value.
CONSOLIDATED NET SALES ($ MILLIONS)
[At this point a bar graph entitled Consolidated Net Sales
depicting consolidated net sales in millions of dollars for the
fiscal years 1990 through 1994 appears and is represented by the
following table]
YEAR CONSOLIDATED NET SALES ($MILLIONS)
1990 1,323
1991 1,428
1992 1,471
1993 1,557
1994 1,694
Sales
Consolidated 1994 1993 1992 1994 1993 1992
(in millions) (percentage of total)
Americas $ 716.6 $ 706.0 $ 678.1 42.2% 45.4% 46.1%
Europe 238.4 201.2 201.0 14.1% 12.9% 13.7%
Asia/Pacific 33.4 26.2 28.0 2.0% 1.7% 1.9%
Industrial 524.7 456.5 422.8 30.9% 29.3% 28.7%
Packaging 141.7 124.9 97.2 8.4% 8.0% 6.6%
Total Food and
Packaging 1,654.8 1,514.8 1,427.1 97.6% 97.3% 97.0%
Gilroy Energy 40.0 41.8 44.3 2.4% 2.7% 3.0%
Total $1,694.8 $1,556.6 $1,471.4 100.0% 100.0% 100.0%
Percentage Change 1994 1993 1992
Total Volume Price Total Volume Price Total Volume Price
Change Change Change Change Change Change Change Change Change
Americas 1.5% 1.2% 0.3% 4.1% 4.7% (0.6)% (6.9)% (7.4)% 0.5%
Europe 18.5% 14.9% 3.6% 0.1% 9.9% (9.8)% 14.8% 11.0% 3.8%
Asia/Pacific 27.4% 27.8% (0.4)% (6.4)% (3.4)% (3.0)% 5.9% 10.6% (4.7)%
Industrial 14.9% 13.7% 1.2% 8.0% 9.5% (1.5)% 10.4% 12.8% (2.4)%
Packaging 13.4% 9.9% 3.5% 28.6% 25.5% 3.1% 32.4% 34.3% (1.9)%
Total Food and
Packaging 9.3% 8.0% 1.3% 6.2% 8.1% (1.9)% 3.0% 3.1% (0.1)%
Gilroy Energy (4.1)% 0.8% (4.9)% (5.8)% (4.3)% (1.5)% 4.7% 4.3% 0.4%
Total 8.9% 7.8% 1.1% 5.8% 7.7% (1.9)% 3.0% 3.1% (0.1)%
SALES
Sales from consolidated operations grew by 9% in 1994 to a record
level of $1.69 billion. Sales in 1993 of $1.56 billion increased 6%
over 1992.
Sales of the Americas Zone include our domestic consumer products
business, the Food Service Division, Golden West Foods, and wholly
owned subsidiaries in Canada, where the Club House brand is
marketed, El Salvador, and Venezuela. This area is our largest and
most mature market. It is also highly competitive, making
distribution gains more challenging than in the past. Despite these
difficult conditions, sales were up modestly for 1994, with
gains similar to 1993. New products introduced by
McCormick/Schilling that follow consumer eating trends to more
ethnic, value-added, and healthy foods contributed to sales growth.
We also introduced new products into the categories that occupy the
perimeter of the grocery store which is the most heavily traveled
part of the store. Old Bay Fat Free Tartar & Cocktail Sauces and
Golden Dipt Fat Free Marinades target both the health trend and the
perimeter marketing strategy. Food Service sales to distributors
increased at a rate greater than the market. However, these gains
were offset by distribution losses to warehouse clubs as that
market channel continued to consolidate. McCormick Canada showed
healthy growth in a flat market due to the introduction of new
products and expanded distribution. The operations in El Salvador
and Venezuela had exceptional years with a combined increase
greater than our Corporate objective.
We will continue to support a strategy of introducing new
products into the higher traffic areas of the grocery
store as well as new products that meet changing consumer eating
trends. As with last year, high levels of discounts and allowances
are being required to defend our distribution base. We are firmly
committed to strengthen our leadership position, support the
McCormick brand and aggressively pursue market share in a highly
competitive environment that is likely to continue in 1995.
Sales in the European Zone grew significantly, with contributions
from acquisitions made during 1994 in Finland, Switzerland and the
U.K. Our retail business in the U.K. added line extensions to the
very successful Creamy Pepper dry pour-over sauce, which has become
one of the highest selling items under the Schwartz label. The
acquisition in Finland has gained new distribution in the Baltic
States and Russia.
Asia/Pacific sales grew to record levels in 1994 as sales to fast
food operators were a significant factor in this growth. The
acquisition of the Aeroplane Jelly brand in the fourth quarter also
contributed, and adds a new category, desserts, to our product
offerings in the region.
Industrial sales were up in 1994 due to our continued success
with leading restaurant chains and food processing companies. Our
full array of products from basic ingredients to highly
sophisticated flavors, plus a reputation for service, quality and
product development, make us the supplier of choice with our
customers. These capabilities have led to success in supplying
seasonings for a number of new salty snack products as well as the
highly successful rotisserie chicken products offered by many
restaurants. Also adding to our growth is the fact that our
customers are consolidating their suppliers in an attempt to reduce
costs. Due to our "one-stop shopping" capabilities, we are
increasing our volumes with them.
Our packaging business grew in 1994 due to market growth and
increased penetration of those markets. We have added production
lines at Tubed Products' facilities and entered into the
international market with the acquisition of Minipack Systems in
the United Kingdom. Minipack produces sample size replicas of
branded products. This acquisition complements our portfolio of
high value-added, niche packaging products. These investments will
enable us to continue to provide customers with high quality,
specialty packaging.
Consolidated sales in 1993 were 6% ahead of sales in 1992. This
increase came primarily from the sales of flavor systems and
seasonings for new consumer products launched by our industrial
customers. The acquisition of Admiral Plastics' bottle business and
new products in the consumer products business that serve the
consumer demand for variety and convenience also contributed to
growth in 1993.
Unconsolidated sales from our joint venture units reached $342
million, a 10% increase over 1993. In 1993, sales from joint
ventures were 16% ahead of 1992. We look to joint ventures as an
important vehicle to grow our business around the world and will
continue to develop them to take advantage of opportunities on a
global basis.
In 1994, our consolidated sales increased 9% over 1993, which is
an improvement over the compounded growth rate over the last three
years of 6%. We believe, however, the objective of 10% is
attainable over time for the following reasons:
Domestic consumer products, largest of our businesses in the
Americas Zone, operates in a mature market with changing consumer
preferences for convenience, value and variety. New products were
introduced in 1994, and more will be offered in 1995 to meet these
needs. The trend to more highly seasoned ethnic foods continues,
and we will target new product development here as well. We have
seen excellent results from our "perimeter of the store" marketing
strategy and will focus promotional activity in this area to
increase usage of products in this category. We plan to support the
McCormick brand aggressively in order to maintain our premiere
status in our market.
Our Canadian subsidiary, selling under the Club House brand,
operates in much the same environment as our domestic consumer
products business. We will use the same strategy of providing the
consumer convenience, value and variety to increase sales in this
operating unit. We will also seek niche acquisitions to enhance
this business.
The European Zone will take advantage of recent acquisitions in the
U.K., Switzerland and Finland to increase our sales in the U.K.,the
European continent, Russia, and the Baltic countries. The
acquisitions in the U.K. have solidified our presence in all three
market channels consumer, foodservice and industrial and have given
us an opportunity in the packaging industry for the first time.
Asia/Pacific provides tremendous opportunity for growth. Increasing
disposable income in the emerging economies of China and Indonesia
enables consumers to buy branded spices that are conveniently
packaged and offer a higher level of quality. We have positioned
ourselves in this region through joint ventures and wholly owned
subsidiaries to take advantage of growth opportunities.
Our industrial business unit had sales growth that was well over
our Corporate objective of 10%. Our customers are major food
processors and restaurant chains who demand the product
development, service, quality, and technical resources that we can
provide. We are able to offer them a combination of superior
capabilities and one-stop shopping for all their ingredient and
flavor requirements. We believe our reputation as a quality
supplier and our singular status as a full-line ingredient and
flavor house will enable us to grow the industrial business at a
rate that exceeds the Corporate sales growth objective.
In 1994, we made our first international acquisition in the
specialized packaging niche we serve. We believe future growth will
come from further domestic market penetration and expansion of
newly acquired Minipack's capabilities in the U.S. market. We
expect this business to grow at a rate near our Corporate
objective.
EARNINGS
1994 1993 1992 1994 1993 1992
(in millions) (percentage of sales)
Gross profit $628.2 $603.2 $584.0 37.1% 38.7% 39.7%
Restructuring
charge 70.4 4.2%
Profit from
operations 128.2 180.5 167.2 7.6% 11.6% 11.4%
Income before
taxes 87.0 149.9 138.3 5.1% 9.6% 9.4%
Net income before accounting
change 61.2 99.7 95.2 3.6% 6.4% 6.5%
Net Income 61.2 73.1 95.2 3.6% 4.7% 6.5%
Earnings per share before
accounting change .75 1.22 1.16
Earnings per share $ .75 $ .89 $ 1.16
EARNINGS
Our objective is to grow earnings per share (EPS) at 15% per year
over time. Total earnings per share in 1994 were $.75. EPS in 1993
was $.89 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 in 1993 were reduced by a $.33 one-time charge
for an accounting change. In addition, in 1993 higher onion costs
at our Gilroy Foods unit and the higher federal corporate income
tax rate negatively impacted earnings.
In 1994, we experienced increasing competitive intensity in most
of the markets in which we do business. Pressure on margins is
being felt at all levels of distribution of the food industry. We
believe that this business environment is not likely to change in
the near term. Consequently, we announced in October a
comprehensive restructuring of our business operations, including
plant consolidations, functional and departmental consolidations
and staff reductions. This action was taken after months of careful
evaluation and planning with participation from all business units
and staff functions. Opportunities were identified to
consolidate certain manufacturing facilities and administrative
activities to eliminate redundancies and improve productivity and
efficiency. We believe these actions support our mission to expand
our worldwide leadership position in the spice, seasoning and
flavoring markets and will position us to achieve our stated
financial objectives. We are undertaking this action now, while
sales and earnings growth is strong, to position our Company
for the future and stay ahead of the competition. The specific
actions that will be taken are as follows:
A reduction of approximately 600 positions or 7% of our worldwide
workforce through position eliminations and a voluntary special
retirement program. The majority of these positions will be
eliminated over the next six months,
Closing the McCormick Flavor Group's production facility in
Hayward, California, and consolidating products manufactured there
with production at our facility in Salinas, California,
Closing the Food Service Division's plant in Hunt Valley, Maryland,
and transferring production to the consumer products plant in Hunt
Valley,
Realignment of some of our operations in the U.K.,
Golden West Foods, Inc., our frozen food subsidiary in Bedford,
Virginia, will be offered for sale, and
Consolidation of certain administrative activities to reduce
redundancy and paperwork.
The consolidation of facilities and administrative activities
will be accomplished over the next two years.
Strong consideration was given to the impact on our employees.
The voluntary special retirement program will create openings to
absorb some of the displaced employees. We have also provided
enhanced severance benefits as well as transition and outplacement
services.
The restructuring charges totaled $70 million before tax and $46
million after tax. Cash expenditures associated with the
restructuring program, net of tax benefits to be received, total
$53 million, of which $42 millionare in capital expenditures.
Approximately $31 million will be required in 1995 and $22 million
in 1996. The Company will fund the cash required by the
restructuring program through income tax benefits from the plan,
working capital reductions and by limiting total capital spending.
As a result, implementation of the restructuring plan is not
expected to have a material effect on the liquidity of the Company.
The savings from the plan are expected to begin late in 1995 and
will be used to invest in the Company's brands through product
development and consumer promotional activity, maintain low-cost
producer status in our core businesses, and support our global
expansion strategy. These programs should enable the Company to
achieve its financial objectives over time.
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 in vegetable oil, wheat
flour and dairy products and the lag time in being able to pass
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 increase 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.
We believe this situation is temporary, and margins in our
industrial flavor and seasoning business should improve in 1995.
Profit from operations decreased to 7.6% of sales and includes
the restructuring charge of $70 million, which is 4.2% of sales.
Excluding the restructuring charge, profit from operations in 1994
was 11.8%. Operating profit margins in 1993 and 1992 were 11.6% and
11.4%, respectively. Before the restructuring charge, these margins
show a positive trend, even as gross margins decline. 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 which
are expected to rise in cost and/or be in short supply in 1995.
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.
Joint ventures will provide opportunities for earnings growth in
the future, and we will continue to develop ventures on a global
basis.
Earnings per share in 1993 were $.89 compared to $1.16 in 1992.
Earnings in 1993 were impacted by the following factors: first,
operating margins at Gilroy Foods were lower during the first three
quarters of the year due to high onion costs; second, adoption of
SFAS No. 106 reduced earnings $.33 per share; and third, the higher
federal corporate income tax rate reduced earnings per share by
$.03.
The Company remains committed to the achievement of 15% earnings
growth over time. However, in the near term, achieving the
objective remains a challenge due to the intensely competitive
domestic and international markets and the expectation for a
continued low inflationary environment. In order to accomplish our
objective over time, we must:
Achieve sales growth of 10%,
Successfully implement the restructuring plan. Success will be
measured by:
Efficiencies gained in the consumer products plants in Salinas,
California, and Hunt Valley, Maryland, after consolidation with the
Hayward, California, facility and the Food Service plant in Hunt
Valley,
Cost reduction in the U.K. operations as facility modernization and
realignment is implemented,
Productivity gains in administrative functions, and
Increased growth of McCormick branded products.
Continue our total quality process which empowers employees to seek
process improvement continuously and to act in the best interests
of customers and shareholders,
Focus capital spending on projects that will maintain our low-cost
producer status on a worldwide basis,
Continue to remove costs from the system through our global
sourcing and supply chain management programs, and
Increase contributions from our unconsolidated joint ventures.
We do not believe that current projected rates of inflation will
have a material effect on our operating results.
During the year, the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 112, "Employers' Accounting for
Postemployment Benefits." This standard requires that employers
accrue a liability for their obligation to provide postemployment
benefits as employees earn the right to receive them, provided that
payment of the benefits is probable and the amount of the benefits
can be reasonably estimated. The effect of this accounting change
was not material on the Company's financial statements. In 1993,
the Company adopted SFAS No.106, "Employers' Accounting for
Postretirement Benefits Other than Pensions." This accounting
change resulted in a one-time, non-cash charge of $26.6 million
after tax or $.33 per share. Additionally, this accounting method
resulted in an increase in the ongoing after-tax cost of
postretirement benefits of $2.2 million or $.03 per share.
LIQUIDITY
1994 1993 1992
(in millions)
Net income $ 61.2 $ 73.1 $ 95.2
Restructuring charge 70.4
Accounting change for
postretirement benefits 26.6
Depreciation and other
non-cash charges 28.8 39.4 31.5
Dividends received from
unconsolidated subsidiaries 3.3 10.4 5.6
Change in operating assets
and liabilities (91.2) (68.9) (15.0)
Cash flow from operations $ 72.5 $ 80.6 $117.3
Current ratio 1.1 1.4 1.1
LIQUIDITY
The Company's current ratio was 1.1 at yearend compared to 1.4 and
1.1 at the end of 1993 and 1992, respectively. The decrease is
attributable to the rise in short-term debt that was used as the
financing vehicle for acquisitions made during 1994 and the
increase in inventory levels during the year. 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 domestic and foreign banks that
provide committed credit facilities of $300 million which increase
our liquidity. These facilities were not in use at yearend.
Overall cash flows from operations were reduced by approximately
$8 million from 1993 due to an increase in operating assets. This
was primarily a result of an increase in inventory levels during
the reengineering of the Hunt Valley, Maryland, consumer products
facility and strategic purchases of commodities expected to
increase in price or be in short supply in 1995. Inventory turnover
rate was 3.0 in 1994; 3.1 in both 1993 and 1992. Accounts
receivable were also higher due primarily to the timing of sales in
November as more sales occurred in the latter part of the month and
were not collected at November 30.
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 have the impact of
increasing or decreasing the reported net assets of foreign
subsidiaries and reported net investments in foreign affiliates.
Management periodically enters into forward contracts for the
delivery of foreign currencies to hedge certain of its exposures to
these increases or decreases. Had these hedges not been in place,
net assets would have increased or (decreased) by $1.7 million in
1994, $0 in 1993 and $(4.9) million in 1992. At November 30,
1994, the Company's only outstanding forward contract was a hedge
against a portion of its net investments in Mexico. In addition,
during the latter part of 1994, the Company's United Kingdom and
Australian subsidiaries have utilized local borrowings to limit
their net asset exposure.
The Company is also exposed to foreign exchange risk for
transactions that are denominated in other than the applicable
local currency. Such transactions that are significant to the
Company are hedged with forward exchange contracts. The impact of
this risk and the related hedging activity was not material to the
Company during the three-year period ended November 30, 1994. The
Company's exposure to foreign exchange risk from unsettled
transactions at November 30, 1994, is not considered to be
material.
In December 1994, and January 1995, the Mexican peso was devalued
by approximately 35%. This devaluation will require an unfavorable
adjustment in 1995 to shareholders' equity of approximately $14
million. Management does not expect the impact of the devaluation
at this level to have a material effect on earnings in the future.
RETURN ON EQUITY
Return on equity (ROE), calculated by dividing net income from
continuing operations by average shareholders' equity, was 12.8%
versus 22.0% in 1993 and 23.3% in 1992. The restructuring charge is
the primary reason for the decline in ROE. ROE before the impact
of the restructuring charge on net income and equity was 22.1%.
Management is committed to achieving our ROE objective of
exceeding 20% and has implemented programs to improve margins and
increase asset utilization. Margin improvement will be accomplished
by the following:
Operational efficiencies through implementation of the
restructuring plan,
Emphasis on capital investments in plant and equipment that will
maintain our low-cost producer status, and
Continued emphasis on total quality and global sourcing to improve
performance and customer service.
Asset utilization will be improved with our efforts in the
following areas:
Consolidation of the manufacturing facilities as part of the
restructuring plan to increase capacity utilization,
Increasing the significance of working capital management in our
incentive compensation program, and
Disposal of those assets that are not meeting our return
objectives.
CAPITAL STRUCTURE/DEBT FINANCING
Our objective is to maintain total debt to total capital at 40% or
less, excluding non-recourse debt.
Total debt to total capital, excluding non-recourse debt of $57.6
million associated with Gilroy Energy Company, was 52.0% at yearend
versus 44.3% in 1993 and 37.4% in 1992.
During 1994, acquisitions and capital expenditures remained at a
relatively high level. Working capital requirements, particularly
inventory, as discussed previously, increased above 1993. These are
the primary factors causing the Company to exceed its objective.
Management is implementing programs to bring our debt/capital
ratio within our objective over time. The principal program is to
reduce inventories significantly. This is a major priority for
operating management and is included in a revised management
incentive program as an important component of incentive pay.
In 1994, the Company's long-term debt rating of "A" was
reaffirmed by both major debt-rating services. Operating
cash flows remain strong and should be sufficient to cover capital
expenditures and dividend payouts in 1995.
During 1994, the Company issued the remaining $120 million in
medium-term notes under the $150 million program authorized in
1993. Notes issued in 1994 under the program have expiration dates
ranging from 2004 to 2024 at rates of 6.24% to 8.12%. At yearend,
$150 million of the notes had been issued with expiration dates
ranging from 2004 to 2024 at rates of 5.78% to 8.12%. The notes due
in 2024 have put options with notification dates in 2004.
In June 1993, the Company authorized an additional 2 million
share repurchase program which was approximately 33% complete at
fiscal yearend.
CAPITAL EXPENDITURES ($ MILLIONS)
[At this point a bar graph entitled Capital Expenditures and
depicting property additions and depreciation in millions of
dollars for the fiscal years 1990 through 1994 appears and is
represented by the following table]
YEAR PROPERTY ADDITIONS DEPRECIATION
($MILLIONS) ($MILLIONS)
1990 58 33
1991 73 37
1992 79 40
1993 76 47
1994 88 57
CAPITAL EXPENDITURES
Capital expenditures were $88 million in 1994 versus $76 million in
1993 and $79 million in 1992. The majority of our capital spending
is oriented toward projects that increase efficiency and improve
yields or expand capacity. Major capital spending projects in 1994
included the following:
Installation of new bottle and tube equipment to support new
business in our packaging group,
Reengineering of the Hunt Valley consumer packaging operation to
reduce costs, fully automate case packing and improve throughput,
Initial phases of construction of a new facility in Guangzhou,
China, to produce sauces, syrups and toppings for major industrial
and fast food customers,
Upgrading of existing facility and installation of wet sauce
process and packaging equipment at McCormick Australia,
Installation of a thermal energy storage system to increase power
output at Gilroy Energy, and
Expansion of capacity and efficiency improvements at our Toronto
industrial seasoning plant.
We will continue to pursue capital spending projects which will
add profitable growth and help ensure our position as a low-cost
producer. We anticipate that capital spending in 1995, including
capital associated with our restructuring plan, will be at the same
level as recent years.
DIVIDENDS
Dividends have increased 13 times since 1987 and have risen at a
compounded rate of 21%. Total dividends paid during fiscal 1994
were $39.0 million versus $35.6 million in 1993 and $30.4 million
in 1992. In December 1993, the Board of Directors authorized an
increase in the annual dividend rate from $.44 per share to $.48
per share. The quarterly dividends paid during the past three years
are summarized below.
DIVIDENDS PAID PER SHARE (DOLLARS)
[At this point a bar graph depicting dividends paid per share for
the fiscal the fiscal years 1990 through 1994 appears and is
represented by the following table]
YEAR DIVIDENDS PAID PER SHARE (DOLLARS)
1990 .23
1991 .28
1992 .38
1993 .44
1994 .48
1994 1993 1992
First Quarter $.12 $.11 $.09
Second Quarter .12 .11 .09
Third Quarter .12 .11 .10
Fourth Quarter .12 .11 .10
Total $.48 $.44 $.38
In December 1994, the Board of Directors approved an increase in
the quarterly dividend from $.12 to $.13 per share, an 8% increase.
Our objective is to pay dividends equal to 25-35% of current net
income to shareholders of common stocks.
PRICE RANGE OF COMMON STOCK
The high and low closing prices of common stock during fiscal
quarters as reported on the NASDAQ national market
follow:
1994 1993
Quarter ended High Low High Low
February 28 $24.75 $21.00 $30.25 $24.75
May 31 23.50 20.00 26.00 22.50
August 31 22.50 17.75 24.75 20.50
November 30 20.38 17.75 26.25 21.63
Historical Financial Summary
(dollars in millions except per-share data)
OPERATING RESULTS 1994 1993 1992 1991 1990 1989 1988 1987 1986 1985
Net sales 1,694.8 1,556.6 1,471.4 1,427.9 1,323.0 1,246.1 1,220.3 1,078.5 975.7 873.0
Cost of goods sold 1,066.6 953.4 887.4 886.6 838.2 805.9 812.6 710.2 637.4 564.5
Gross profit 628.2 603.2 584.0 541.3 484.8 440.2 407.7 368.3 338.3 308.5
Selling, general & admin.
exp. 429.6 422.7 416.8 395.8 357.7 338.2 312.9 305.2 271.3 247.9
Restructuring charge 70.4
Operating profit 128.2 180.5 167.2 145.5 127.1 102.0 94.8 63.1 67.0 60.6
Interest & other
income/exp. (41.2) (30.6) (28.9) (30.6) (22.8) (23.5) (31.0) (22.5) (23.5) (21.4)
Income before income
taxes 87.0 149.9 138.3 114.9 104.3 78.5 63.8 40.6 43.5 39.2
Provision for income
taxes (33.7) (60.5) (53.0) (42.8) (38.6) (29.5) (27.8) (16.6) (19.4) (18.1)
Income - consolidated
ops. 53.3 89.4 85.3 72.1 65.7 49.0 36.0 24.0 24.1 21.1
Income - unconsolidated
ops. 7.9 10.3 9.9 8.8 3.7 3.5 (.4) .4 .3 .5
Income - continuing
ops. 61.2 99.7 95.2 80.9 69.4 52.5 35.6 24.4 24.4 21.6
Income - discont. real
estate ops.(F1) 83.0 .7 6.2 5.3 6.2
Accounting changes(F2) (26.6) 6.4
Net income 61.2 73.1 95.2 80.9 69.4 135.5 42.7 30.6 29.7 27.8
Gross profit margin 37.1% 38.7% 39.7% 37.9% 36.6% 35.3% 33.4% 34.1% 34.7% 35.3%
Operating profit margin 7.6% 11.6% 11.4% 10.2% 9.6% 8.2% 7.8% 5.9% 6.9% 6.9%
Profit margin -
consolidated 3.1% 5.7% 5.8% 5.1% 5.0% 3.9% 3.0% 2.2% 2.5% 2.4%
Percent change over prior year
Net sales 8.9% 5.8% 3.0% 7.9% 6.2% 2.1% 13.2% 10.5% 11.8% 10.7%
Income - continuing ops. (38.6)% 4.7% 17.7% 16.6% 32.1% 47.5% 45.9% .0% 13.0% (21.7)%
Effective tax rate 38.8% 40.4% 38.3% 37.2% 37.0% 37.6% 43.6% 40.9% 44.6% 46.2%
LIQUIDITY
Depreciation and
amortization 62.5 50.5 43.8 40.5 36.6 34.8 29.8 30.4 24.5 23.5
Capital expenditures 87.7 76.1 79.3 73.0 58.4 53.4 50.4 81.7 82.9 41.3
Current ratio 1.1 1.4 1.1 1.2 1.3 1.7 1.4 1.4 1.4 1.3
CAPITAL STRUCTURE
Current debt 211.9 82.6 120.5 76.7 30.4 20.3 49.5 76.7 51.9 56.5
Long-term debt 318.8 288.8 141.3 145.8 148.2 147.2 166.1 139.5 102.2 94.8
Non-recourse debt 57.6 59.7 61.8 63.3 63.3 63.3 63.3 58.6 24.6
Total debt 588.3 431.1 323.6 285.8 241.9 230.8 278.9 274.8 178.7 151.3
Shareholders' equity 490.0 466.8 437.9 389.2 364.4 346.2 294.3 280.6 271.6 261.1
Total capital 1,078.3 897.9 761.5 675.0 606.3 577.0 573.2 555.4 450.3 412.4
Total assets 1,555.7 1,313.2 1,130.9 1,037.4 946.9 864.5 846.4 776.5 648.1 582.4
Return on equity -
continuing ops. 12.8% 22.0% 23.3% 21.8% 20.4% 15.5% 14.6% 11.1% 11.9% 11.9%
Return on equity -
total 12.8% 17.0% 23.3% 21.8% 20.4% 40.0% 14.6% 11.3% 11.3% 11.3%
Percent debt to total
capital 54.6% 48.0% 42.5% 42.3% 39.9% 40.0% 48.7% 49.5% 39.7% 36.7%
Debt to capital excluding
non-recourse debt 52.0% 44.3% 37.4% 36.4% 32.9% 32.6% 42.3% 43.5% 36.2% 36.7%
PER COMMON SHARE(F3)
Income - continuing ops. .75 1.22 1.16 .98 .83 .60 .38 .26 .25 .22
Income - discont. real
estate ops.(F1) .94 .01 .06 .06 .06
Income before accounting
changes .75 1.22 1.16 .98 .83 1.54 .39 .32 .31 .28
Accounting changes(F2) (.33) .07
Total earnings .75 .89 1.16 .98 .83 1.54 .46 .32 .31 .28
EPS growth from
continuing ops. (39)% 5% 18% 18% 38% 58% 46% 4% 14% (21)%
Book value 6.03 5.70 5.45 4.88 4.56 4.18 3.27 3.00 2.83 2.68
Common dividends
declared(F4) .49 .45 .40 .31 .24 .19 .14 .13 .11 .11
Market closing price:
High 24.75 30.25 28.75 22.88 13.38 12.50 7.25 6.44 5.66 4.75
Low 17.75 20.40 20.63 11.88 9.13 6.31 3.85 4.10 4.16 3.85
Dividend payout
ratio(F5) 36.4% 36.1% 32.8% 28.6% 28.9% 30.8% 36.5% 38.5% 37.4% 38.6%
Average shares outstanding
And equivalents (000's) 81,240 81,766 81,918 82,396 83,720 87,772 93,068 94,408 96,848 98,000
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 1988-1993, 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.
[Photograph of various Company products, and other objects,
omitted]
Consolidated Income
Year ended November 30
1994 1993 1992
(in thousands except per-share data)
Net sales $1,694,772 $1,556,566 $1,471,369
Cost of goods sold 1,066,573 953,409 887,394
Gross profit 628,199 603,157 583,975
Selling, general and
administrative expense 429,518 422,700 416,788
Restructuring charge 70,445
Profit from operations 128,236 180,457 167,187
Other income 6,175 6,397 8,778
Interest expense 38,659 31,102 30,895
Other expense 8,774 5,862 6,757
Income before income taxes 86,978 149,890 138,313
Provision for income taxes 33,750 60,500 53,000
Income from consolidated
operations 53,228 89,390 85,313
Income from unconsolidated
operations 7,929 10,290 9,904
Net income before cumulative
effect on prior years of
accounting change 61,157 99,680 95,217
Cumulative effect on prior years of accounting change
for postretirement benefits (26,626)
Net Income $ 61,157 $ 73,054 $ 95,217
Earnings per common share
Before cumulative effect
of accounting change $ .75 $ 1.22 $ 1.16
Cumulative effect on
prior years of accounting
change (.33)
Earnings per common share $ .75 $ .89 $ 1.16
See Notes to Financial Statements, pages 27-35
CONSOLIDATED BALANCE SHEET
November 30
Assets 1994 1993
(in thousands)
Current assets
Cash and cash equivalents $ 15,566 $ 12,838
Receivables
Trade 189,915 158,904
Other 21,416 18,727
Allowance for losses (2,520) (2,530)
208,811 175,101
Inventories
Finished products and
work-in-process 249,054 215,538
Raw materials and supplies 125,413 105,713
374,467 321,251
Prepaid expenses 15,343 17,960
Deferred income taxes 43,470 13,003
Total current assets 657,657 540,153
Investments 62,410 45,728
Property, plant and equipment
Land and improvements 30,461 28,566
Buildings and improvements 211,456 199,621
Machinery and equipment 557,833 494,143
Construction in progress 37,307 32,492
837,057 754,822
Less accumulated depreciation
and amortization 332,458 289,212
Property, plant and equipment
- net 504,599 465,610
Excess cost of acquisitions - net 196,166 130,638
Prepaid allowances 143,181 126,399
Other assets 4,686 4,706
Goodwill, trademarks, formulae, etc. 1 1
Human relations 1 1
$1,568,701 $1,313,236
See Notes to Financial Statements, pages 27-35
November 30
Liabilities and Shareholders' Equity 1994 1993
(in thousands)
Current liabilities
Notes payable $ 202,542 $ 76,389
Current portion of long-term debt 11,532 8,299
Outstanding checks 17,955 25,401
Trade accounts payable 128,236 113,884
Accrued payroll 30,424 29,781
Accrued sales allowances 38,373 31,240
Accrued restructuring costs 50,334
Other accrued expenses and liabilities 107,125 90,980
Income taxes 14,307 16,893
Total current liabilities 600,828 392,867
Long-term debt 374,288 346,436
Deferred income taxes 19,229 39,006
Employee benefit liabilities 68,375 63,875
Other liabilities 16,017 4,231
Total liabilities 1,078,737 846,415
Shareholders' equity
Common Stock, no par value; authorized 160,000,000
shares; issued and outstanding:
1994 - 13,279,000 shares,
1993 - 14,562,000 shares 50,006 53,470
Common Stock Non-Voting, no par value;
authorized 160,000,000 shares; issued
and outstanding: 1994 -
67,927,000 shares, 1993 -
66,437,000 shares 101,697 93,047
Retained earnings 343,285 330,327
Foreign currency translation adjustments (5,024) (10,023)
Total shareholders' equity 489,964 466,821
Commitments and contingent liabilities $1,568,701 $1,313,236
See Notes to Financial Statements, pages 27-35
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
Common Retained Currency Translation
Changes in Amounts Stocks Earnings Adjustments Total
(in thousands except per-share data)
Balance, December 1, 1991 . $100,257 $280,572 $ 8,374 $389,203
Net income. . . . . . . . . 95,217 95,217
Dividends declared ($.38/share) (30,435) (30,435)
Currency translation adjustments (11,890) (11,890)
Shares purchased. . . . . . (4,633) (26,643) (31,276)
Shares issued . . . . . . . 27,119 27,119
Balance, November 30, 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
CHANGES IN SHARES ISSUED AND OUTSTANDING Common
Common Non-Voting
(in thousands)
Balance, November 30, 1991. . . . . . . 14,441 65,241
Purchased and retired . . . . . . . . . (393) (861)
Issued. . . . . . . . . . . . . . . . . 1,073 807
Equal exchange. . . . . . . . . . . . . (764) 764
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
See Notes to Financial Statements, pages 27-35
CONSOLIDATED CASH FLOWS
Year ended November 30
1994 1993 1992
(in thousands)
Cash flows from operating activities
Net income. . . . . . . . . . . . . . . . $ 61,157 $ 73,054 $ 95,217
Adjustments to reconcile net income to net
cash provided by operating activities
Restructuring charges. . . . . . . . . . 70,445
Cumulative effect of accounting change . 26,626
Depreciation and amortization. . . . . . 62,540 50,522 43,839
Provision for deferred income taxes. . . (27,095) (1,077) (706)
Loss/(gain) on sales of assets . . . . . 1,305 201 (1,779)
Share of income from unconsolidated operations (7,929) (10,290) (9,904)
Changes in operating assets and liabilities net of effects
from businesses acquired or sold
Receivables (increase)/decrease. . . . (24,895) (26,293) 1,446
Inventories (increase) . . . . . . . . (41,011) (34,089) (14,795)
Prepaid expenses (increase)/decrease . 2,621 1,719 (64)
Prepaid allowances (increase). . . . . (16,914) (15,763) (8,577)
Other assets (increase)/decrease . . . (1,028) (393) 209
Outstanding checks increase/(decrease) (7,446) 1,252 (10,068)
Accounts payable increase. . . . . . . 5,597 7,117 15,408
Accrued payroll increase/(decrease). . 643 (1,884) 2,276
Accrued sales allowances increase/(decrease) 7,133 4,358 (1,378)
Other accrued expenses and liabilities
increase/(decrease) 8,078 (4,070) (10,319)
Income taxes payable increase/(decrease) (26,763) (6,185) 5,065
Other non-current liabilities increase 2,694 5,379 5,820
Dividend received from unconsolidated affiliate 3,345 10,391 5,635
Net cash provided by operating activities 72,477 80,575 117,325
Cash flows from investing activities
Acquisitions of businesses. . . . . . . . (82,573) (75,915) (43,703)
Purchases of property, plant and equipment (87,676) (76,063) (79,345)
Proceeds from sale of assets. . . . . . . 152 1,461 5,726
Proceeds/(payments) on settlement of forward
exchange contracts (1,894) 9,288
Other investments . . . . . . . . . . . . (12,035) (3,823) (3,965)
Net cash (used in) investing activities. (184,026) (145,052) (121,287)
Cash flows from financing activities
Notes payable increase. . . . . . . . . . 7,023 85,159 69,075
Long-term debt borrowings . . . . . . . . 165,692 38,535 4,714
Long-term debt repayments . . . . . . . . (15,012) (10,002) (34,954)
Stocks issued . . . . . . . . . . . . . . 6,106 27,354 27,077
Stocks acquired by purchase . . . . . . . (10,961) (26,399) (31,276)
Dividends paid. . . . . . . . . . . . . . (38,997) (35,551) (30,431)
Net cash provided by financing activities 113,851 79,096 4,205
Effect of exchange rate changes on cash
and cash equivalents 426 (3,587) (4,461)
Increase/(decrease) in cash and cash equivalents 2,728 11,032 (4,218)
Cash and cash equivalents at beginning of year 12,838 1,806 6,024
Cash and cash equivalents at end of year. . $ 15,566 $ 12,838 $ 1,806
See Notes to Financial Statements, pages 27-35
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. Subsidiaries outside
the United States and Canada are consolidated using an October 31
yearend. Investments in 20 percent to 50 percent 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 $56,845 in 1994; $46,702 in 1993 and $40,033 in
1992.
EXCESS COST OF ACQUISITIONS
The excess cost of acquisitions of subsidiaries and affiliates is
being amortized using the straight-line method over 40 years.
Accumulated amortization of excess cost of acquisitions was $28,921
and $23,994 at November 30, 1994 and 1993, respectively.
The Company evaluates the realizability of the excess cost of
acquisitions based upon expectations of undiscounted future cash
flows and operating income for each business having a material
goodwill balance. Based upon its most recent analysis, the Company
believes that no material impairment of the excess cost of
acquisitions exists at November 30, 1994.
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 $12,999 in 1994; $12,259 in 1993 and
$11,844 in 1992.
INCOME TAXES
The Company provides for income taxes using the liability method
pursuant to Statement of Financial Accounting Standards (SFAS) No.
109, "Accounting for Income Taxes." Deferred income taxes are
provided for temporary differences arising between the tax basis of
assets and liabilities and their book basis as reported in the
financial statements.
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 (81,240,000 shares in 1994; 80,799,000 shares in
1993 and 80,116,000 shares in 1992), plus dilutive common
equivalent shares applicable to outstanding stock option and
purchase plans (no shares used in 1994; 967,000 shares in 1993 and
1,802,000 shares in 1992).
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.
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 is based on a
discounted cash flow analysis using the Company's current
incremental borrowing rate for debt of similar maturities.
Forward exchange contracts for foreign currency: The fair value of
forward exchange contracts for foreign currency are estimated using
quoted market prices for comparable instruments.
Investments, consisting principally of investments in
unconsolidated affiliates, are not readily marketable. Therefore,
it is not practicable to estimate their fair value.
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, 1994. The Company evaluates
the creditworthiness of the counterparties to forward exchange
contracts for foreign currency and considers nonperformance credit
risk to be remote.
ACCOUNTING CHANGES
In November 1994, the Company adopted SFAS No. 112, "Employers'
Accounting for Postemployment Benefits." SFAS No. 112 requires the
accrual of the expected costs of providing certain benefits after
employment, but before retirement, principally the Company's
long-term disability benefits, during the years that the employee
renders the necessary service. The adoption of SFAS No. 112 did not
have a material impact on net income for 1994. Prior year
financial statements have not been restated for the effects of
applying SFAS No. 112.
Effective December 1, 1992, the Company adopted 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. Prior year financial
statements have not been restated for the effects of applying SFAS
No. 106.
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 $22,440 at November
30, 1994.
Summarized yearend information from the financial statements of
these companies representing 100% of their businesses follows:
Unconsolidated Affiliates
1994 1993 1992
Current assets $144,781 $136,713 $120,410
Non-current assets 80,087 68,974 57,611
Current liabilities 94,847 87,512 80,748
Non-current liabilities 43,157 35,138 26,566
Net sales 342,163 309,527 268,182
Gross profit 130,132 122,515 110,001
Net income $ 16,777 $ 20,557 $ 19,756
3. Financing Arrangements:
The Company's outstanding indebtedness is as follows:
1994 1993
Short-term notes payable:
Commercial paper $135,000 $ 60,000
Other. . . . . . 67,542 16,389
$202,542 $ 76,389
Weighted-average interest rate 6.42% 3.94%
Long-term debt:
8.95% note due 2001 $ 74,343 $ 74,279
9.00% and 9.75% installment
notes due through 2000
and 2002 . . . 35,864 47,409
5.78% - 7.77% medium-term
notes due 2004 to 2006 95,000 30,000
7.63% - 8.12% medium-term
notes due 2024 with put
option in 2004 55,000
9.34% pound sterling
installment note due
through 2001 . 18,787
10.00% Canadian dollar bond
due 1999 . . . 7,266 7,489
3.13% yen note due 1999 7,280
9.74% Australian dollar note
due 1999 . . . 9,218
Commercial paper supported
by note agreements 120,000
Other. . . . . . 16,094 9,671
Total excluding non-recourse
debt . . . . . 318,852 288,848
11.68% non-recourse
installment note due 2006 55,436 57,588
$374,288 $346,436
The Company's long-term debt agreements contain various
restrictive covenants, including limitations on the payment of cash
dividends. Under the most restrictive covenants, $227,536 of
retained earnings was available for dividends at November 30, 1994.
The holders of the medium-term notes due 2024 have a one-time
option to require retirement of these notes during 2004.
Certain commercial paper notes have been classified as long-term
debt at November 30, 1993, reflecting the Company's ability and
intent at that time to refinance this amount on a long-term basis.
The non-recourse installment note is secured by property and
equipment owned by Gilroy Energy Company, Inc. with a net book
value of $64,238 at November 30, 1994.
Maturities of long-term debt during the four years subsequent to
November 30, 1995 are as follows:
1996 - $12,870 1998 - $11,672
1997 - $12,414 1999 - $27,723
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:
1994 1993
Total Amount Total Amount
Facility Borrowed Facility Borrowed
Available credit facilities:
In support of commercial
paper issuance $300,000 $290,000
For the benefit of foreign
subsidiaries . 57,242 17,978 37,446 $ 3,692
Other . . . . . 445,000 22,830 200,000 4,000
$802,242 $40,808 $527,446 $ 7,692
Credit facilities in support of commercial paper issuance require
a commitment fee of $300. All other credit facilities require no
commitment fee. Credit facilities for other purposes are subject to
the availability of funds.
At November 30, 1994, the Company had unconditionally guaranteed
the debt of affiliates amounting to $11,742.
Interest paid in 1994, 1993 and 1992 amounted to $40,699; $31,739
and $32,243 respectively, of which $124; $73 and $127 were
capitalized in 1994, 1993 and 1992, respectively.
Rental expense under operating leases was $13,843 in 1994;
$12,416 in 1993 and $11,772 in 1992. Future annual fixed rental
payments for the years ending November 30, are as follows:
1995 - $9,812 1998 - $4,618
1996 - $7,539 1999 - $4,395
1997 - $7,671 Thereafter - $12,690
4. Employee Benefit Plans:
The net periodic cost of the Company's employee benefit plans
follows:
1994 1993 1992
Pension plans:
Defined benefit plans
Service cost -
benefits earned
during the period $ 7,124 $ 6,137 $ 4,912
Interest cost on
projected benefit
obligations 9,909 9,272 8,741
Actual return on
plan assets including
unrealized (gain)/loss 116 (7,070) (7,238)
Net amortization
and deferral (6,808) 852 700
Net pension cost 10,341 9,191 7,115
Multi-employer
pension plans 1,977 1,591 1,477
Foreign retirement plans 2,013 1,907 1,988
Total pension expense $14,331 $12,689 $10,580
Profit sharing plan expense $ 6,250 $ 6,500 $ 5,700
Postretirement benefits
Service cost $ 2,368 $ 1,947
Interest cost 3,775 3,333
Total postretirement benefit
expense $ 6,143 $ 5,280 $ 2,360
PENSION PLANS
The Company has a non-contributory defined benefit plan (the
principal plan) covering substantially all domestic 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 holds 306,573 shares of the Company's stock at
November 30, 1994.
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:
1994 1993
Before Impact of Net at
Workforce Workforce Measurment
Reduction Reduction Date
Funded Status:
Actuarial present value of
benefit obligation
Vested $102,976 $ (1,539) $101,437 $108,071
Non-vested 4,590 (672) 3,918 4,177
Accumulated benefit obligation $107,566 $ (2,211) $105,355 $112,248
Balance sheet recognition
Projected benefit obligation
for service rendered to date $134,572 $ (7,238) $127,334 $144,209
Plan assets at fair value 98,193 (16,248) 81,945 103,207
Projected benefit obligation in
excess of plan assets 36,379 9,010 45,389 41,002
Unrecognized net loss from past
experience different from that
assumed of changes in
assumptions (29,724) 5,480 (24,244) (39,512)
Unrecognized net transition asset
and prior service cost 2,836 (690) 2,146 3,529
Additional minimum liability 5,047 5,047 6,710
Accrued pension cost $ 14,538 $ 13,800 $ 28,338 $ 11,729
Accrued pension costs included in:
Accrued expenses $ 4,000 $ 4,000
Accrued restructuring costs $ 13,800
Noncurrent employee benefit liabilities $ 10,538 $ 7,729
1994 1993
Principal Supplemental Principal Supplemental
Plan Plan Plan Plan
Significant assumptions:
Weighted-average discount rate 8.0% 8.5% 7.0% 7.5%
Rate of increase in
compensation levels 5.0% 5.0% 5.0% 5.0%
Long-term rate of return
on plan assets 10.5% 10.5% 10.5% 10.5%
The workforce reduction and voluntary special retirement program
that are components of the restructuring plan announced by the
Company in the fourth quarter of 1994 resulted in a curtailment of
the principal plan. A significant number of individuals electing
the voluntary special retirement program are expected to elect to
receive their benefits in lump sum distributions which result in a
settlement of a portion of the pension liability. The impact of the
curtailment, settlement and enhanced benefits of the special
voluntary retirement program are presented above.
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 domestic 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 3,711,487 shares of the Company's stock
at November 30, 1994.
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. Medical 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. These 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:
1994 1993
Accumulated postretirement
benefit obligation
Current retirees $ 19,808 $ 18,357
Fully eligible active plan
participants 12,082 10,725
Other active plan
participants 21,369 18,377
53,259 47,459
Unrecognized net loss from
past experience different from
that assumed and effects of
changes in assumptions 2,545
Accrued postretirement
benefit liability $ 55,804 $ 47,459
Accrued postretirement costs
included in:
Accrued restructuring costs $ 4,200
Noncurrent employee benefit
liabilities $ 51,604 $ 47,459
Significant assumption:
Weighted-average
discount rate 8.50% 7.75%
The assumed weighted-average annual rate of increase in the per
capita cost of covered health care benefits is 13% for 1995. It is
assumed to decrease gradually to 6% 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, 1994,
by $6,584 and the aggregate of the service and interest cost
components of net periodic postretirement benefit cost for 1994 by
$914.
The workforce reduction plan and voluntary special retirement
program that are components of the restructuring plan announced by
the Company in the fourth quarter of 1994 resulted in a curtailment
of the postretirement benefit plan. The restructuring charge
includes $4,200 representing the net pre-tax cost of postretirement
benefits granted to individuals electing the voluntary special
retirement program who would not have otherwise been entitled to
the full amount of postretirement benefits under the provisions of
the plan and the curtailment.
The Company adopted the provisions of SFAS No. 106 in the fourth
quarter of 1993. SFAS No. 106 requires the Company to accrue the
cost of postretirement benefits during the years that employees
render 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 addition to
this one-time charge, the Company's postretirement benefit expense
increased by approximately $4,175 and $3,666 in 1994 and 1993
respectively due to SFAS No. 106. Prior to the adoption of SFAS No.
106, the Company recorded as postretirement benefit expense, the
amount actually paid for such benefits during the year.
STOCK PURCHASE AND OPTION PLANS
The Company has an Employee Stock Purchase Plan enabling
substantially all domestic 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 2,512 employees had
outstanding subscriptions for a total of 373,902 shares with a
grant price of $22.63 per share at November 30, 1994. The last date
for exercise of the outstanding subscriptions is May 31, 1995.
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, 1994, the
average exercise price of outstanding options was $19.54 per share,
and the expiration dates ranged from January 14, 1995 to June 23,
2004. The changes in outstanding stock options during the past
three years were:
Common Price
Common Non-voting Range Per Share
(shares in thousands)
Outstanding December 1, 1991. . 1,808 2,585 $3.55-$18.00
Granted (to 370 employees). . 189 193 $26.00
Exercised . . . . . . . . . . (545) (771) $3.55-$18.00
Cancelled or expired. . . . . (16) (72) $4.66-$26.00
Outstanding November 30, 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
Under all stock purchase and option plans, there were 2,774,787
shares reserved for future grants and 1,928,527 exercisable at
November 30, 1994 and 4,205,919 shares reserved for future grants
and 2,406,408 exercisable at November 30, 1993.
5. Income Taxes:
For financial reporting purposes, income before income taxes
includes the following components:
1994 1993 1992
Pretax income:
Domestic. . . . . . $ 84,351 $132,450 $125,249
Foreign . . . . . . 2,627 17,440 13,064
$ 86,978 $149,890 $138,313
Significant components of the income tax provision follow:
Current:
Federal . . . . . . $ 43,348 $ 44,878 $ 40,298
Foreign . . . . . . 8,391 7,577 5,122
State . . . . . . . 9,106 9,122 8,286
Total current . . . 60,845 61,577 53,706
Deferred:
Federal . . . . . . (19,199) (968) (718)
Foreign (4,008) 121 32
State . . . . . . . (3,888) (230) (20)
Total deferred. . . (27,095) (1,077) (706)
$ 33,750 $ 60,500 $ 53,000
Tax expense allocated directly to contributed capital was as
follows:
Relating to employee
stock options $ 608 $ 2,304 $ 4,116
Relating to translation adjustments
and foreign currency hedge
transactions. . . . $ 540 $(3,291) $(2,834)
The reconciliation between income tax attributable to continuing
operations computed at the United States federal statutory rate and
income taxes actually provided, follow:
1994 1993 1992
Amount Percent Amount Percent Amount Percent
Tax at federal statutory rate $30,442 35.0% $52,408 35.0% $47,027 34.0%
State income taxes, net of
federal benefits 3,855 4.4 5,695 3.8 5,533 4.0
Higher effective income
taxes in other countries 1,940 2.2 1,648 1.1 692 .5
Rehabilitation investment
and other tax credits (1,156) (1.3) (1,199) (.8) (829) (.6)
Federal tax rate change
effect on deferred taxes 1,199 .8
Other items (1,331) (1.5) 749 .5 577 .4
Actual income taxes
provided $33,750 38.8% $60,500 40.4% $53,0003 8.3%
The significant components of the deferred income tax asset and
(liability) follow:
1994 1993
Current deferred income tax assets:
Restructuring charge. . . . $ 19,677
Inventory capitalization . 4,054 $ 5,041
Employee benefits . . . . . 8,352
Casualty insurance. . . . . 2,737 3,540
State income tax. . . . . . 5,022 2,261
Coupon expense. . . . . . . 1,743 1,852
Other . . . . . . . . . . . 3,819 4,568
Total current deferred income
tax assets 45,404 17,262
Current deferred income tax (liabilities):
Prepaid insurance . . . . . (1,758) (1,807)
Employee benefits . . . . . (875)
Other . . . . . . . . . . . (176) (1,577)
Total current deferred
income tax (liabilities) (1,934) (4,259)
Total net current deferred
income tax asset $ 43,470 $ 13,003
Noncurrent deferred income tax assets:
Employee benefits . . . . . $ 26,069 $ 25,350
Restructuring . . . . . . . 3,983
Other . . . . . . . . . . . 8,448 4,827
Total noncurrent deferred
income tax assets 38,500 30,177
Noncurrent deferred income tax (liabilities):
Tax over book depreciation. (44,344) (53,214)
Property exchange . . . . . (4,177) (7,440)
Other . . . . . . . . . . . (9,208) (8,529)
Total noncurrent deferred
income tax (liabilities) (57,729) (69,183)
Total net noncurrent deferred
income tax (liability) $ (19,229) $ (39,006)
No valuation allowance is provided for deferred income tax assets.
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 foreign subsidiaries
and affiliates as those earnings are considered to be indefinitely
reinvested. Upon distribution, these earnings would be subject to
United States federal income taxes (subject to an adjustment for
foreign tax credits) and withholding taxes payable to the various
foreign countries.
Determination of the unrecognized deferred tax liability for
temporary differences related to investments in foreign
subsidiaries and foreign affiliates at November 30, 1994 and
November 30, 1993 is not practical. Unremitted earnings of such
entities were $65,953 at November 30, 1994.
Income taxes paid in 1994, 1993 and 1992 were $84,384; $66,143
and $46,521, 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 votes 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 fair value of the Company's financial instruments at
November 30, 1994 and 1993 follows:
1994 1993
Fair Carrying Fair Carrying
Value Value Value Value
Cash and cash equivalents $ 15,566 $ 15,566 $ 12,838 $ 12,838
Trade receivables 189,915 189,915 158,904 158,904
Short-term borrowings 202,542 202,542 76,389 76,389
Current portion of long-term
debt. . . . . . 11,532 11,532 8,299 8,299
Accounts payable and
accrued expenses 354,492 354,492 265,885 265,885
Long-term debt. . 347,365 374,288 378,701 346,436
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 November 30, 1994:
Carrying
Forward Amount Fair
Contracts (Liability) Value
Currency: Mexican Peso $10,000 $(308) $(440)
8. Acquisitions:
During 1994 the Company made the following acquisitions:
Grupo Pesa, a Mexican seasoning company;
the spice business of Tuko Oy of Finland;
the retail seasoning brand of Hy's Fine Foods, Ltd. of Canada;
the dessert business of Traders Pty., Ltd. of Australia;
Butty, a Swiss herb and spice business;
Minipack Systems Limited, a packaging business in the United
Kingdom; and
Noel Holdings, Ltd., a leading supplier of specialty foods based in
the United Kingdom.
The assets and liabilities acquired in these transactions have
been recorded using the purchase method of accounting at their
estimated fair values at the date of acquisition. The aggregate
purchase price of all acquisitions was $82,573 including $65,105
allocated to excess cost of acquisitions which is being amortized
principally over 40 years. The accompanying financial statements
include the results of operations of the acquired businesses from
the date of acquisition. While all of these investments are
expected to contribute positively to the Company's future sales and
earnings, none of them was material in relation to the Company's
consolidated financial statements, and therefore, proforma
financial information has not been presented.
9. 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
provides for costs associated with reducing the workforce and a
two-year 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.
The workforce reduction accomplished through position
eliminations will be substantially completed during 1995.
The voluntary special retirement program was available on December
1, 1994 and closed on February 1, 1995. The components of the
restructuring charge and remaining liability at November 30, 1994
are as follows:
Restructuring Remaining
Charge Liability
Workforce reduction $24,375 $24,263
Plant consolidations
and closings 33,477 33,414
Other restructuring
projects 12,593 6,513
70,445 64,190
Income tax benefits (24,150) (23,434)
$46,295 $40,756
Included in the restructuring charge are fixed asset write-offs
of $12,945 and other asset write-offs of $7,410.
The pre-tax restructuring liability which is anticipated to be
expended in 1995 is included as a current liability in the balance
sheet. The remaining portion is included in other non-current
liabilities.
10. 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:
North Other
America Europe Countries Total
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
1992
Net sales . . $1,233,590 $201,025 $36,754 $1,471,369
Net income. . 91,261 2,671 1,285 95,217
Assets. . . . 986,186 126,429 18,264 1,130,879
Liabilities . 620,942 64,859 7,140 692,941
11. Quarterly Data (Unaudited)
1994 Quarters
1st 2nd 3rd 4th Year
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)(a) 61,157(a)
Earnings (loss) per
common share. $.23 $.23 $.32 $(.03)(a) $.75(a)
(a) . . . . . . Includes restructuring charge of $46,295 or $.57 per share.
1993 Quarters
1st 2nd 3rd 4th Year
Net sales . . . $339,585 $361,300 $394,928 $460,753 $1,556,566
Gross profit. . 122,902 132,427 155,226 192,602 603,157
Income before cumulative
effect of accounting
change. . . . 17,264(a) 17,536(b) 24,367(c) 40,513(d) 99,680
Cumulative effect of
accounting change for
postretirement
benefits (26,626) (26,626)
Net income (loss) (9,362)(a) 17,536(b) 24,367(c) 40,513(d) 73,054
Earnings per common share
before cumulative effect
of accounting change $.21(a) $.21(b) $.30(c) $.50(d) $1.22
Cumulative effect of
accounting change for
postretirement
benefits (.33) (.33)
Earnings (loss) per
common share. $(.12)(a) $.21(b) $.30(c) $.50(d) $.89
(a) Reflects $557 or $.01 per share reduction due to accounting
change for postretirement benefits. As originally reported, net
income was $17,821 or $.22 per share.
(b) Reflects $557 or $.01 per share reduction due to accounting
change for postretirement benefits. As originally reported, net
income was $18,093 or $.22 per share.
(c) Reflects $557 reduction due to accounting change for
postretirement benefits. As originally reported, net income was
$24,924 or $.30 per share. Also reflects $.02 per share reduction
due to the increase in the federal corporate tax rate.
(d) Reflects $558 or $.01 per share reduction due to accounting
change for postretirement benefits and $.01 per share reduction due
to the increase in the federal corporate tax rate.
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.
H. Eugene Blattman
President & 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, 1994 and 1993, and the related consolidated statements of
income, shareholders' equity, and cash flows for each of the three
years in the period ended November 30, 1994. 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, 1994 and 1993, and the consolidated
results of their operations and their cash flows for each of the
three years in the period ended November 30, 1994 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 16, 1995
[Photograph of members of the Board of Directors, omitted]
DIRECTORS AND OFFICERS
BOARD OF DIRECTORS
Executive Committee
Charles P. McCormick, Jr.
H. Eugene Blattman
Robert G. Davey
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
Robert J. Lawless
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
# Audit Committee Member
* Compensation Committee Member
CORPORATE OFFICERS
Charles P. McCormick, Jr.
Chairman of the Board
H. Eugene Blattman
President & Chief Executive 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
Harold J. Handley
Senior Vice President - Europe
Randall B. Jensen
Vice President - Operations Resources
Robert J. Lawless
Senior Vice President - The Americas
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 & Treasurer
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
Christopher J. Kurtzman
Assistant Treasurer - Domestic
John D. O'Neill, Jr.
Assistant Treasurer - Financial Services
Robert W. Skelton
Assistant Secretary & Associate General Counsel
David P. Smith
Assistant Treasurer - International
McCormick Worldwide
The Americas
Market Zone
Robert J. Lawless
Senior Vice President -
The Americas
CONSOLIDATED
OPERATING UNITS
McCORMICK/SCHILLING
DIVISION
Hunt Valley, Maryland
Robert J. Lawless
General Manager
FOOD SERVICE DIVISION
Hunt Valley, Maryland
Robert J. Murphy
Vice President & General Manager
MOJAVE FOODS
CORPORATION
Commerce, California
Phillip L. Moore
Managing Director
McCORMICK CANADA, INC.
London, Ontario, Canada
Gerald W. Snowden
President
McCORMICK de CENTRO
AMERICA, S.A. de C.V.
San Salvador, El Salvador
Jack D. Letzer
Managing Director
McCORMICK de
VENEZUELA, C.A.
Caracas, Venezuela
Alberto Diaz
Managing Director
GOLDEN WEST FOODS, INC.
Bedford, Virginia
Steen A. Metz
President
AFFILIATES
FESTIN FOODS CORP. (50%)
Carlsbad, California
McCORMICK de MEXICO
S.A. de C.V. (50%)
Mexico City, Mexico
European Market Zone
Harold J. Handley
Senior Vice President - Europe
CONSOLIDATED
OPERATING UNITS
McCORMICK U.K. plc
High Wycombe
Buckinghamshire, England
Harold J. Handley
Managing Director
GLENTHAM INTERNATIONAL
(S.A.) (Pty) LIMITED
Midrand, South Africa
John C. Eales
Managing Director
McCORMICK INGREDIENTS EUROPE, INC.
Bloomendaal, Netherlands
Cameron Savage
Managing Director
McCORMICK S.A.
Regensdorf Z.H., Switzerland
Ernest Abouchar
Managing Director
Oy McCORMICK Ab
Helsinki, Finland
Richard D. Frisch
Acting 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 THAILAND, INC.
Bangkok, Thailand
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
SHANGHAI McCORMICK
SEASONING & FOODSTUFFS
COMPANY, LIMITED (35%)
Shanghai, People's Republic of China
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 (GUANGZHOU) FOOD COMPANY, LTD.
Guangzhou, China
Gary W. Zimmerman
Managing Director
McCORMICK PESA, S.A. de C.V.
Mexico City, Mexico
Robert E. Horn
President
McCORMICK INGREDIENTS
SOUTHEAST ASIA PRIVATE
LIMITED
Jurong, Republic of Singapore
Robert C. Williamson
Managing Director
AFFILIATES
AVT-McCORMICK INGREDIENTS
LIMITED (50%)
Cochin, India
KANCOR FLAVOURS AND EXTRACTS LIMITED (40%)
Angamally, India
McCORMICK & WILD, INC. (50%)
Hunt Valley, Maryland
P.T. SUMATERA TROPICAL SPICES (30%)
Padang, Sumatera, Indonesia
SESACO CORPORATION (21.9%)
Rockford, Illinois
STANGE (JAPAN) K.K. (50%)
Tokyo, Japan
VAESSEN SHOEMAKER de
MEXICO, S.A. de C.V. (50%)
Mexico City, Mexico
Gilroy Foods, Incorporated
Van Tunstall
President
CONSOLIDATED
OPERATING UNITS
GILROY ENERGY COMPANY, INC.
Robert P. Kraemer
President
GIZA NATIONAL DEHYDRATION
COMPANY (81.7%)
Cairo, Egypt
John E. Call
Managing Director
AFFILIATES
SUPHERB FARMS (50%)
Turlock, California
ALIMENTOS DESHIDRATADOS del BAJIO S.A. de C.V. (33.3%)
Celaya, Mexico
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
Regularly priced at $24.95, the cookbook is available to
McCormick shareholders for the one-time special price
of $15.95, plus shipping and handling, until November 30, 1995.
Please send me:
_____McCORMICK/SCHILLING'S NEW SPICE COOKBOOK
at $15.95 each $________
5% sales tax applicable on cookbooks shipped
within Maryland $________
Shipping and handling, $3.00 each book $________
Enclosed is my check or money order made
payable to McCormick & Company, Inc.
for the total $________
Please provide:
Name. . . . . . . . . . . . . . .
(Please print clearly.)
Address . . . . . . . . . . . . .
(No P.O. Boxes.)
City __________________________ State ________ Zip
Daytime phone number ( _____ ). .
[Photograph of new spice cookbook, omitted]
Send this coupon, photocopy or complete information, plus the
amount of your order by check or money order, to:
McCormick/Schilling Spices
PO Box 2026A
Rock Island, Illinois 61204-2026
Offer good only in the continental U.S. For orders to be shipped
outside the continental U.S., write to the above address. Offer
expires November 30, 1995 or while supplies last. Offer not
valid where taxed or restricted.
Please allow 4-6 weeks for delivery.
A Special Offer For
McCormick Shareholders
McCORMICK/SCHILLING'S NEW SPICE COOKBOOK presents a palette of
traditional tastes and new pleasers, such as vanilla butter sauce
for lobster, and peppercorn ice cream. Designed to accommodate all
skill levels of cooks, the new cookbook features three recipe
sections: easy 20-minute family recipes, fine dining, and
party-themed entertaining. It also offers a history of spices,
general cooking instructions, and flavor profiles of all the
major herbs and spices to help you paint with flavors.
The cookbook presents an appealing place where tantalizing tastes
meet our modern lifestyle from quick and easy Southwest White
Chili to Oysters Rockefeller to a Make-Your-Own-Curry Party. From
soup to nuts, it's there.
Start with the Show Stopper Soup and finish with the Dessert
Spices. There's even something especially for children - edible toy
party favors for the kids to make. Fast, fancy and fun - there's
something for everyone.
INVESTOR INFORMATION
Corporate Address
McCormick & Company,
Incorporated
18 Loveton Circle
Sparks, MD 21152-6000
USA
(410) 771-7301
Common Stock
Traded Over-the-Counter,
NASDAQ National Market List
Symbol: MCCRK
Common Stock Dividend
Dates - 1995
Record Date Payment Date
3/31/95 4/10/95
7/06/95 7/14/95
9/29/95 10/09/95
12/29/95 1/19/96
Shareholder/Investor Relations
For inquiries concerning shareholder records, certificates,
dividends or dividend reinvestment, please contact the
Shareholder Relations Office at the Corporate address or telephone:
(800) 424-5855 or
(410) 771-7537
To obtain without cost a copy of the annual report filed with the
Securities & Exchange Commission on Form 10-K, please contact the
Treasurer's Office at the Corporate address.
For general questions about McCormick or information in the
annual or quarterly reports, please contact the Treasurer's Office
at the Corporate address or telephone:
Report Ordering:
(800) 424-5855 or
(410) 771-7155
Analysts' Inquiries:
(410) 771-7244
Missing or Destroyed Certificates or Checks
Shareholders whose certificates or dividend checks are missing or
destroyed should notify the Shareholder Relations Office
immediately so that a "stop" can be placed on the old certificate
or check, and a new certificate or check can be issued.
Address Change
Shareholders should advise the Shareholder Relations Office
immediately of any change in address. Please include
the old address and the new address.
All changes of address must be submitted in writing.
TRANSFER AGENT AND REGISTRAR
Please contact the Shareholder Relations Office at the Corporate
address or telephone:
(800) 424-5855 or
(410) 771-7786
Multiple Dividend Checks and Duplicate Mailings
Some shareholders hold their stock in different but similar names
(for example, as John Q. Doe and J.Q. Doe). When this occurs, it is
necessary to create a separate account for each name. Even though
the mailing addresses are the same, we are required to mail
separate dividend checks and annual and quarterly reports for each
account.
We encourage shareholders to eliminate multiple dividend checks
and mailings by contacting the Shareholder Relations Office and
requesting an account consolidation.
Shareholders who want to eliminate duplicate mailings but still
receive multiple dividend checks and proxy material may do so by
contacting the Shareholder Relations Office.
DIVIDEND REINVESTMENT PLAN
Shareholders may automatically reinvest their dividends and make
optional cash purchases of stock through the Company's Dividend
Reinvestment Plan, subject to limitations set forth in the Plan
prospectus. A Plan prospectus and enrollment form may be obtained
by contacting the Shareholder Relations Office at:
(800) 424-5855 or
(410) 771-7537
Trademarks
Use of trademark symbols in this annual report indicates trademarks
owned or used by McCormick & Company, Incorporated.
This entire report is printed on recycled paper.
McCormick & Company, Incorporated
18 Loveton Circle
Sparks, MD 21152-6000
USA
(410) 771-7301
Appendix to Exhibit 13: Registrant's Annual Report to Stockholders
for 1994
Graphics Appendix List
EDGAR Version Typeset Version
Section - Management's
Discussion and Analysis -
Bar graph captioned Bar graph entitled Consolidated
"Consolidated Net Sales Net Sales depicting consolidated
(Millions") - omitted net sales in millions of dollars
for fiscal years 1990 through
1994. The text and numbers used
in this graph appear in the text
of the EDGAR version.
Section - Management's Discussion
and Analysis - Subsection Capital
Structure/Debt Financing -
Bar graph captioned Bar graph entitled Capital
"Capital Expenditures Expenditures and depicting
property ($ Millions") - omitted additions and depreciation in
millions of dollars for fiscal
years 1990 through 1994. The
text and numbers used in this
graph appear in the text of the
EDGAR version.
Section - Management's Discussion
and Analysis - Subsection Capital
Expenditures - Bar graph captioned Bar graph entitled Dividends
"Dividends Paid Per Share Paid Per Share depicting
(Dollar)" - omitted dividends paid per share for the
fiscal years 1990 through 1994.
The text and numbers used in
this graph appear in the
text of the EDGAR version.
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 15, 1995
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 15, 1995, 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 approval of the 1995 Employees Stock Purchase Plan,
which Plan, as set forth in Exhibit A to the Proxy Statement, has
been adopted by the Board of Directors subject to the approval of
the stockholders;
(c) the ratification of the appointment of Ernst & Young as
independent auditors of the Company to serve for the 1995 fiscal
year; and
(d) 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 30, 1994 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 15, 1995 Richard W. Single, Sr.
Secretary
PROXY STATEMENT
GENERAL INFORMATION
This Proxy Statement is furnished on or about February 15, 1995
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 30, 1994, there were
outstanding 13,135,585 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 30, 1994 will be entitled to vote at the meeting or any
adjournments thereof.
PRINCIPAL STOCKHOLDER
On December 30, 1994, the assets of The McCormick Profit
Sharing Plan and PAYSOP (the "Plan") included 3,670,451 shares of
the Company's Common Stock, which represented 27.94% 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 jurisdiction 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.
ELECTION OF DIRECTORS
On July 1, 1994, Mr. James A. Hooker, the Company's Vice President
and Chief Financial Officer and a member of the Board of Directors
and Executive Committee, retired from the Company. The Company is
grateful to Mr. Hooker for his contributions during his years of
service.
On July 14, 1994, Mr. Bailey A. Thomas, the Company's Chairman of
the Board and Chief Executive Officer, died. Mr. Thomas was
replaced as Chairman of the Board by past-Chairman, Mr. Charles P.
McCormick, Jr. The Company greatly benefitted from Mr. Thomas'
wisdom, wit and experience over his many years of dedicated
service.
Messrs. Robert J. Lawless and Robert G. Davey were elected to the
Board of Directors on June 20, 1994. Neither gentleman has
previously stood for election to the Board at the Annual Meeting of
Stockholders.
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 30, 1994, 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.
Year
First
Principal Occupation & Elected Amount & Nature* of
Name Age Business Experience Director Beneficial Ownership
Common
Non-
Common Voting
James J. Albrecht 62 Group Vice President - 1987 83,555 51,636
Asia/Pacific (1993 to
Present); Vice President
& Managing Director-
International Group
(1989 to 1993)
H. Eugene Blattman 58 President (1993 to Present) 1991 22,594 20,724
& Chief Executive Officer
(1994 to Present); Chief
Operating Officer (1992 to 1994);
Executive Vice President
(1992 to 1993); Vice President
- Flavor and Agribusiness Group
(1991 - 1992); Chairman of the
Board (1990 to 1992) & President
(1989 to 1991) of Gilroy Foods,
Incorporated, a subsidiary of
the Company
James S. Cook 66 Executive in Residence, 1982 1,750 3,350
Northeastern University (1986
to Present)
Robert G. Davey 45 Vice President & Chief 1994 20,066 6,650
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)
Harold J. Handley 58 Senior Vice President - 1990 14,202 21,054
Europe(1994 to Present); Senior
Vice President (1993 to Present);
Vice President (1990 - 1993) &
General Manager (1989 to 1994)-
McCormick/Schilling Division
George W. Koch 68 Of Counsel, Kirkpatrick & 1989 1,750 6,320
Lockhart (1992 to Present);
Partner, Kirkpatrick &
Lockhart (1990 to 1991);
President & Chief Executive
Officer - Grocery Manufacturers
of America, Inc. (1966 to 1990)
Robert J. Lawless 48 Senior Vice President - 1994 21,018 22,942
The Americas
(1994 to Present);
Group Vice President - Europe
(1993 to 1994); Vice President
& Deputy Managing Director,
International Group (1991 to
1993); President, McCormick
Canada, Inc., a subsidiary of the
Company (1989 to 1991)
Charles P. McCormick, Jr.66 Chairman of the Board 1955 307,329** 24,792
(1994 to Present);
Chairman (2.34%)
Emeritus (1993 to 1994);
Chairman of the Board (1988 to
1993); Chief Executive Officer
(1987 to 1992)
George V. McGowan 66 Chairman of the Executive 1983 1,750 2,725
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 49 Executive Vice President 1991 40,705 23,827
(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. 56 Vice President (1987 to 1988 78,335 20,588***
Present); Secretary and
General Counsel (1986 to
Present)
William E. Stevens 52 President and Chief 1988 1,750 6,950
Executive Officer,
United Industries Corp.
(1988 to Present)
Karen D. Weatherholtz 44 Vice President - Human 1992 24,742 14,959
Relations (1988 to Present)
Directors and Executive Officers as a Group
15 persons)
674,550 275,490
(5.10%)
* 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, 1994 pursuant to the exercise of
stock options: Dr. Albrecht - 10,152 shares of Common Stock,
10,152 shares of Common Stock Non-Voting; Mr. Blattman - 6,834
shares of Common Stock, 6,833 shares of Common Stock Non-Voting;
Mr. Cook - 1,750 shares of Common Stock, 1,750 shares of Common
Stock Non-Voting; Mr. Davey - 6,650 shares of Common Stock, 6,650
shares of Common Stock Non-Voting; Mr. Handley - 6,455 shares of
Common Stock, 6,456 shares of Common Stock Non-Voting; Mr. Koch -
1,750 shares of Common Stock, 1,750 shares of Common Stock
Non-Voting; Mr. Lawless - 8,250 shares of Common Stock, 8,250
shares of Common Stock Non-Voting; Mr. McCormick - 14,000 shares
of Common Stock, 14,000 shares of Common Stock Non-Voting; Mr.
McGowan - 1,750 shares of Common Stock, 1,750 shares of Common
Stock Non-Voting; Mr. Nordhoff - 8,808 shares of Common Stock,
8,807 of Common Stock Non-Voting; Mr. Single - 7,216 shares of
Common Stock, 9,569 shares of Common Stock Non-Voting; Mr. Stevens
- - 1,750 shares of Common Stock, 1,750 shares of Common Stock
Non-Voting; Ms. Weatherholtz - 8,854 shares of Common Stock,
8,852 shares of Common Stock Non-Voting; and directors and
executive officers as a group - 98,714 shares of Common Stock,
102,064 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 - 7,874 shares; Mr. Blattman
- - 2,760 shares; Mr. Davey - 101 shares; Mr. Handley - 2,279
shares; Mr. Lawless - 1,443 shares; Mr. Nordhoff - 6,867 shares;
Mr. Single - 14,437 shares; Ms. Weatherholtz - 7,334 shares; and
directors and executive officers as a group - 57,278 shares. Of
these amounts, approximately 368 shares are credited to the PAYSOP
accounts of the nominees and approximately 426 shares are credited
to the PAYSOP accounts of the directors and executive officers as
a group.
** Includes 2,574 shares of Common Stock owned by Mr.
McCormick's wife. Mr. McCormick disclaims beneficial ownership of
said shares.
*** Includes 655 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 15, 1995 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 or acquisition 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 4
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. Blattman, Davey, Lawless, McCormick, and
Nordhoff. The Executive Committee held 26 meetings during the last
fiscal year.
ATTENDANCE AT MEETINGS
During the last fiscal year, there were 9 regularly scheduled
meetings, and one special meeting, of the Board of Directors. All
of the Directors were able to attend at least 92% 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. Cook is a
director of Chemet Corporation. 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, Hartland & Co., 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.
During 1993 and early 1994, the Compensation Committee engaged
an independent compensation consultant, Sibson and Co., Inc., to
review the Company's executive compensation policies and practices.
As part of its review, the independent consultant compared the
compensation of the Company's senior executive officers with the
compensation of executive officers of other food and manufacturing
companies. 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 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 performance graph that appears on page 18
compares the performance of the Company's common stock to that of
the S&P Food Products Index and the S&P 500 Index. Sibson and Co.,
Inc. recommended that the Compensation Committee consider 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 were 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, 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 optionsgranted is a function of the
recipient's
salary grade level.
1994 COMPENSATION ACTIONS - MR. THOMAS; MR. BLATTMAN
The Chief Executive Officer participates in the same
compensation programs provided to other Company executives and
officers.
Effective January 1, 1994, the Compensation Committee increased
Mr. Thomas' annual rate of base pay by a total of 2.5% compared to
the annualized rate of pay for Mr. Thomas in effect in January
1993. This percentage increase was generally consistent with the
salary increases granted for other senior executives this year.
(The percentage increase in base pay was generally higher for
management employees other than the senior executives). Mr.
Blattman's annual rate of base pay was raised on the same date by
a total of 2.6% compared to his annualized rate of pay in January
1993. This increase brought Mr. Blattman's rate of pay to the
minimum of his salary range at that time.
Stock option grants were approved for both Mr. Thomas and Mr.
Blattman in 1994 by the Compensation Committee. The number of
shares for which options were granted was not based on corporate
performance but was a function of grade level. Although the
findings of the independent consultant cited above would have
supported higher grants, the Compensation Committee approved
options for the following number of shares for the Messrs. Thomas
and Blattman:
1994 Grant 1993 Grant
Mr. Thomas 23,000 shares 13,000 shares
Mr. Blattman 18,000 shares 13,000 shares
The 1994 options were granted on March 16, 1994 at an option
price per share of $23.00, which was equal to 100% of the fair
market value of the stock on the date of grant.
In July 1994 Mr. Thomas passed away and Mr. Blattman was
promoted to CEO and President. At that time Mr. Blattman's salary
grade was adjusted and his base pay was increased by 21.8%. This
increase brought his base pay to a level just above the minimum for
that grade.
In consequence of his promotion, Mr. Blattman was also granted
a stock option for 7,000 shares at a price of $18.50, which was
equal to 100% of the fair market value of the stock on the date of
grant.
For fiscal year 1994, the Compensation Committee approved a
management incentive bonus for Mr. Blattman in an amount equal to
his target bonus, adjusted for corporate performance. The target
bonus was set as a percentage of the mid-point of the salary range.
The adjustment reflects the level of Company EPS growth over the
previous fiscal year and is established based on growth rates which
are competitive with the food industry.
Neither Mr. Thomas nor Mr. Blattman participated in the
Compensation Committee's deliberations of their salary increases,
annual bonus awards or stock option grants.
1994 COMPENSATION ACTIONS - OTHER EXECUTIVE OFFICERS
Compensation actions for other executive officers were made
using similar criteria as those used for Messrs. Thomas and
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 1994 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 1994, members of the Executive
Committee were H. Eugene Blattman (Chairman), Robert G. Davey,
Charles P. McCormick, Jr. and Carroll D. Nordhoff. Mr. Lawless
became a member of the Committee in January 1995. All except Mr.
McCormick are employees and executive officers of the Company. Mr.
McCormick is a former CEO and a retiree of the Company. 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, 1994, 1993 and 1992 to each
Chief Executive Officer of the Company during fiscal year 1994 and
each of the four most highly compensated executive officers who
were executive officers on the last day of the fiscal year,
determined by reference to total annual salary and bonus for the
1994 fiscal year.
Annual Compensation Long Term
Compensation
Awards All
Securities Other
Name & Principal Fiscal Salary Other Annual Underlying Compensation
Position Year ($) Bonus ($) Compensation Options/SARs(#) ($)
Bailey A. Thomas 1994 372,063 0 23,000 14,393
Chairman of the Board & 1993 492,387 377,875 13,000 13,492
Chief Executive Officer 1992 444,460 475,570 13,000 15,331
(12/1/93 to 7/14/94)
H. Eugene Blattman 1994 356,967 244,000 25,000 9,257
President & 1993 322,067 239,125 13,000 9,401
Chief Executive Officer 1992 270,233 252,700 8,000 7,509
(7/18/94 to Present)
James J. Albrecht 1994 242,717 173,400 7,750 7,029
Group Vice President - 1993 236,483 168,500 5,000 7,920
Asia/Pacific 1992 225,483 165,000 5,000 7,477
Harold J. Handley 1994 257,232 130,000 12,250 7,292
Senior Vice President; 1993 246,317 64,800 8,000 7,944
Europe 1992 228,400 125,000 8,000 7,556
Robert J. Lawless 1994 192,358 150,000 38,290 4,800 6,490
Senior Vice President - 1993 167,583 113,000 37,668 3,000 6,613
The Americas 1992 152,100 85,000 3,000 3,476
Carroll D. Nordhoff 1994 232,508 100,000 13,250 6,932
Executive Vice President 1993 211,900 90,000 8,000 7,920
1992 176,817 131,480 8,000 5,396
Includes Corporate Board of Directors Fees and Service
Awards.
Amounts paid or accrued under the Company's Profit
Sharing Plan for the accounts of such individuals. Figures for 1994
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 1994
for Messrs. Thomas, Blattman, Albrecht, Handley and Nordhoff,
payments in the amounts of $7,575, $2,439, $211, $474, and $114,
respectively, (ii) for 1993 for Messrs. Thomas, Blattman and
Handley, payments in the amounts of $6,445, $1,481 and $24,
respectively; (iii) for 1992 for Messrs. Thomas, Blattman, Albrecht
and Handley, payments in the amounts of $8,671, $1, $1 and $48,
respectively.
There is no amount of Other Annual Compensation that is
required to be reported.
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.
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, 1994. 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 to replace Mr.
Thomas as Chairman of the Board. Mr. McCormick's services in such
capacity are consultative in nature. The Company has agreed to pay
Mr. McCormick $16,667 per month for his services, together with
such additional cash payments as may be deemed appropriate by the
Compensation Committee, consistent with the performance of the
Company. Mr McCormick received a bonus of $42,000 for services
rendered during fiscal year 1994.
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
$200,000 $51,926 $69,234 $86,543 $103,851 $121,160
250,000 64,976 86,634 108,293 129,951 151,610
300,000 78,026 104,034 130,043 156,051 182,060
350,000 91,076 121,434 151,793 182,151 212,510
400,000 104,126 138,834 173,543 208,251 242,960
450,000 117,176 156,234 195,293 234,351 273,410
500,000 130,226 173,634 217,043 260,451 303,860
550,000 143,276 191,034 238,793 286,551 334,310
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, 1994 was $371,827, $443,539, $342,260, $198,848 and $255,284,
respectively. The years of credited service for Dr. Albrecht and
Messrs. Blattman, Handley, Lawless, and Nordhoff as of the same
date were 11, 5, 7, 3, and 23 years, respectively.
Mr. Lawless is also entitled to receive pension benefits under
the registered pension plan ("RPP") offered to employees of
McCormick Canada, Inc. Benefits under the RPP are based on the
average of the participant's highest three consecutive years of
earnings. Upon retirement the Company has agreed to pay Mr. Lawless
a supplemental benefit equal to the excess, if any, of the benefit
calculated under the RPP (assuming all his service at
McCormick Canada and the Company had been under the RPP) over (i)
the pension benefit accrued under RPP (based on his years of
service with McCormick Canada) plus (ii) the benefit accrued under
the Company's Pension Plan (based on years of service with the
Company).
STOCK OPTIONS
During the last fiscal year, the Company has granted stock
options to certain employees, including executive officers,
pursuant to stock option plans approved by the Company's
stockholders.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
Potential
Realizable Value
At Assumed
Annual Rates of
Stock Price
Appreciation For
Individual Grants* Option Term ($)**
Number of % of Total Exercise
Securities Options/SARs or Base
Underlying Granted to Price Expiration
Options/SARs Employees in ($/Share) Date
Name Granted (#) Fiscal Year 0% 5% 10%
Bailey A. Thomas 23,000 4.5% $23.00 3/15/99 $0 $146,050 $322,920
H. Eugene Blattman 18,000 4.9%*** $23.00 3/15/99 $0 $114,300 $252,720
7,000 $18.50 7/31/99 $ 35,770 $ 79,030
James J. Albrecht 7,750 1.5% $23.00 3/15/99 $0 $ 49,213 $108,810
Harold J. Handley 12,250 2.4% $23.00 3/15/99 $0 $ 77,788 $171,990
Robert J. Lawless 4,800 0.9% $23.00 3/15/99 $0 $ 30,480 $ 67,392
Carroll D. Nordhoff 13,250 2.6% $23.00 3/15/99 $0 $ 84,138 $186,030
* 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 $6.35 and $14.04
per share ($5.11 and $11.29 per share in the case of the $18.50
option),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
outstanding as of December 30, 1994 of approximately $515
million and $1.14 billion, respectively, over the same period.
*** Percentage of Total Options based on aggregate of both grants
AGGREGATED OPTION/SAR EXERCISES IN LAST
FISCAL YEAR AND FY-END OPTION/SAR VALUES
Number of Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options/SARs Options/SARs
at FY-End (#) at FY-End ($)
Shares Acquired Value Exercisable/ Exercisable/
Name on Exercise (#) Realized ($) Unexercisable Unexercisable
Bailey A. Thomas 77,017 $739,955 49,000/49,000 0/0
H. Eugene Blattman 6,000 $ 46,125 13,667/42,333 $10,000/$3,500
James J. Albrecht 16,000 $262,000 20,304/16,246 $79,850/0
Harold J. Handley 0 0 12,911/25,339 $10,000/0
Robert J. Lawless 8,000 $134,000 16,500/6,300 $53,625/0
Carroll D. Nordhoff 10,000 $165,000 17,615/23,635 $53,625/0
Set forth below is a line graph comparing the yearly percentage
change in the Company's cumulative total shareholder return (stock
price appreciation plus reinvestment of dividends) on the Company's
common stock with (i) the cumulative total return of the Standard
& Poor's 500 Stock Index, assuming reinvestment of dividends, and
(ii) the cumulative total return of the Standard & Poor's Food
Products Index, assuming reinvestment of dividends.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN *
Among McCormick & Company, Incorporated,
S&P 500 STOCK Index & S&P Food Products Index**
STARTING
BASIS
DESCRIPTION 1989 1990 1991 1992 1993 1994
McCormick & Co. (%) -6.17 82.23 40.29 -16.95 -16.44
McCormick & Co. ($) $100.00 $93.83 $170.98 $239.86 $199.20 $166.46
S & P 500 (%) -3.47 20.34 18.47 10.10 0.00
S & P 500 ($) $100.00 $96.53 $116.17 $137.62 $151.52 $151.52
S & P Foods (%) 8.99 31.23 15.73 -7.55 5.23
S & P Foods ($) $100.00 $108.99 $143.03 $165.53 $153.03 $161.02
Assumes $100 invested on December 1, 1989 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
1995 EMPLOYEES STOCK PURCHASE PLAN
Since 1966 it has been the policy of the Company to make
available to virtually all of its employees the opportunity to
purchase shares of the Company's stock through employees stock
purchase plans. Since the Board of Directors believes that these
plans have been successful in achieving their purposes, a new
employees stock purchase plan is being submitted to the
stockholders at this time.
On January 23, 1995, the Board of Directors adopted the 1995
Employees Stock Purchase Plan, which is designed to meet the
requirements of the Internal Revenue Code for employee stock
purchase plans. The full text of the Plan is set forth in Exhibit
A to this Proxy Statement and reference is made thereto for a
complete statement of its terms and provisions. If the Plan is not
approved by the required vote of stockholders, it will terminate.
The Company intends to file a registration statement under the
Securities Act of 1933 to register the shares subject to the Plan
prior to the issuance of any securities subject to issuance under
the Plan.
Participation in the Plan is limited to persons who on March 15,
1995 are employees of the Company or designated subsidiaries and
affiliates and, with stated exceptions, all such employees are
eligible to participate. It is estimated that approximately 6,200
employees will be eligible to participate in the Plan.
Under the Plan, options are to be granted on March 15, 1995 to
each eligible employee to purchase a maximum number of shares of
Common Stock Non-Voting of the Company which, at the March 15, 1995
price, would approximate 10% of said employee's compensation for
one year, as defined in the Plan. Payment for all shares purchased
would be made through payroll deductions over a 24 month period,
beginning June 1, 1995. Interest on all such amounts would be
accrued by the Company at the rate of 5% per year, and would be
paid to the employees after completion of payment for their
shares or upon prior withdrawal from the Plan. The purchase price
per share is the NASDAQ National Market closing price of the
Company's Common Stock Non-Voting in the over-the-counter market as
reported in "The Wall Street Journal" for either March 15, 1995 or
for the date of exercise, whichever price is lower. The closing
price of the Common Stock Non-Voting as reported in "The Wall
Street Journal" for February 3, 1995 was $22.50.
Subject to certain limitations set forth in the Plan, employees
are permitted, at any time prior to May 31, 1997, to terminate or
reduce their payroll deductions, to reduce their options to
purchase, to exercise their options in whole or in part, or to
withdraw all or part of the balance in their accounts, with
interest.
The Plan also contains provisions governing the rights and
privileges of employees or their representatives in the event of
termination of employment, retirement, severance, lay-off,
disability, death or other events.
Certificates for all shares of stock purchased under the Plan
will be delivered as soon as practicable after May 31, 1997, or on
such earlier date as full payment is made for all shares which the
employee has elected to purchase. No employee or his or her legal
representative will have any rights as a stockholder with respect
to any shares to be purchased until completion of payments for all
the shares and the issuance of the stock certificate.
The Plan contemplates that all funds contributed by employees
will be under the control of the Company and can be used for any
corporate purposes.
The Company has been advised by counsel that, under the Internal
Revenue Code, if a participant acquires stock upon the exercise of
an option under the Plan, no income will result to such participant
upon such exercise, and the Company will be allowed no deduction as
a result of such purchase, if the following conditions are met: (i)
the Plan is approved by the stockholders of the Company on or
before January 22, 1996; (ii) at all times during the period
beginning with the date of the granting of the option and ending on
the day three months before the date of such exercise the
participant was an employee of the Company or of a subsidiary or
affiliate of the Company; and (iii) the participant makes no
disposition of the stock within two years after the date of
granting the option and makes no disposition of the stock within
one year after the transfer of the stock to such participant. In
the event of a sale or other disposition of such stock by the
option holder after compliance with the applicable conditions set
forth above, any gain realized over the price paid for the stock
will be treated as long-term capital gain, and any loss will be
treated as long-term capital loss in the year of the sale. If the
condition stated in clause (i) or (ii) is not met, compensation
income will result to a participant upon the exercise of an option;
if the conditions in clause (iii) are not met, compensation income
will result to the participant upon the early disposition of stock.
In either case the amount of compensation will be equal to the
excess of the value of the stock on the date of exercise over the
purchase price, except that in the case of a person subject to
Section 16(b) of the Securities Exchange Act of 1934, the amount of
compensation income will be determined based on the value of the
stock on the date on which the Section 16(b) restriction lapses
(and the inclusion in income of the compensation will be delayed
until that time). In general, such amount of compensation income
will be subject to regular income tax rates. If the option holder
is treated as having received compensation income, an equivalent
deduction generally will be allowed to the Company. For the purpose
of the foregoing, an option is exercised on May 31, 1997 or such
earlier date as the employee makes an irrevocable election to
purchase stock. No income will result to participant upon the
issuance of the options.
The Company has been further advised by counsel that the
interest accrued on an employee's stock purchase account will be
taxable income in the year paid or applied to the purchase of stock
on behalf of such employee and an equivalent deduction will be
allowed to the Company. The following table shows the estimated
maximum number of shares of Common Stock Non-Voting that each
listed person, and each listed group, will be entitled to acquire
in accordance with the provisions of the 1995 Employees Stock
Purchase Plan (based on the stock price in effect on February 3,
1995). The Dollar Value equals the number of shares that can be
acquired by each person or group multiplied by the February 3, 1995
stock price.
NEW PLAN BENEFITS
1995 Employees Stock Purchase Plan *
Name and Position Dollar Value ($) Number of Units
H. Eugene Blattman $40,005 1,778
President and
Chief Executive Officer
James J. Albrecht $23,783 1,057
Group Vice President - Asia/Pacific
Harold J. Handley $25,335 1,126
Senior Vice President - Europe
Robert J. Lawless $21,015 934
Senior Vice President - The Americas
Carroll D. Nordhoff $23,445 1,042
Executive Vice President
Executive Officer Group
(10 persons) $215,550 9,580
Outside Director
Group (5 persons) N/A N/A
Non-Executive Officer/
Employee Group $19,645,875 873,150
(approximately 6,200 persons)
* Messrs. Davey, Single, and Ms. Weatherholtz, who are nominees
to the Board of Directors in addition to the persons listed in the
New Plan Benefits table, will receive options under the Plan to
purchase the following number of shares of Common Stock Non-Voting:
Mr. Davey, 824 shares; Mr. Single, 777 shares, and Ms.
Weatherholtz, 637 shares. Director nominees who are not employees
of the Company are not eligible to participate in the Plan. No
person will receive options for as much as 5% of the shares subject
to the Plan.
The Plan contemplates that the Company will make available
sufficient shares of its Common Stock Non-Voting to allow each
eligible employee to elect to purchase the full number of shares
covered by the options granted. On the basis of the closing price
of the shares of the Company's Common Stock Non-Voting on February
3, 1995, it is estimated that a maximum of 883,000 shares will be
required if each eligible employee elects to participate to the
full extent of his or her option. The Plan provides for adjustments
in the case of certain changes in the Company's capital structure.
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 approval of the Plan.
The Board of Directors recommends that stockholders vote FOR the
approval of the Plan.
RATIFICATION 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 1996 ANNUAL MEETING
Proposals of stockholders to be presented at the 1996 Annual
Meeting must be received by the Secretary of the Company prior to
October 18, 1995 to be considered for inclusion in the 1996 proxy
material.
EXHIBIT A
McCORMICK & COMPANY, INCORPORATED
1995 EMPLOYEES STOCK PURCHASE PLAN
SECTION 1 - PURPOSE
The purpose of this Plan is to afford to employees of
McCormick & Company, Incorporated and designated
subsidiaries and affiliates (namely, Festin Foods Corp., Flavour
Ingredients Limited, Gilroy Foods, Incorporated, McCormick Canada,
Inc., McCormick & Wild, Inc., Mojave Foods Corporation, Setco,
Inc., and Tubed Products, Inc.) (the "Corporations") an opportunity
to acquire shares of Common Stock Non-Voting of McCormick &
Company, Incorporated (the "Company") pursuant to options to
purchase granted by this Plan to them.
SECTION 2 - NUMBER OF SHARES OFFERED
The offering pursuant to this Plan is for a number of shares of
the Company's Common Stock Non-Voting sufficient to allow each
employee to elect to purchase the full number of shares purchasable
pursuant to the terms of Section 6 of this Plan.
SECTION 3 - ELIGIBLE EMPLOYEES
All persons who on March 15, 1995, are employees of the
Corporations will be eligible to participate in this Plan,
except for the following who shall not be eligible:
(a) Any employee whose customary employment as of March 15, 1995,
was 19 hours or less per week or for not more than 5 months during
the calendar year;
(b) Any employee who, immediately after March 15, 1995, would own
(as defined in the Internal Revenue Code, Sections 423 and 424(d))
stock, and/or hold outstanding options to purchase stock,
possessing 5% or more of the total combined voting power or value
of all classes of stock of the Company or of any subsidiary;
(c) Any employee whose grant of an option hereunder would permit
his rights to purchase stock under this Plan and under all other
employee stock purchase plans, if any, of the Company or its
subsidiaries to accrue at a rate which exceeds $25,000 of the fair
market value of such stock (determined at the time such option is
granted) for each calendar year in which such option is outstanding
at any time; and
(d) Any employee residing in a state where the offer or sale of the
shares provided by this Plan is not authorized or permitted by
applicable state law.
SECTION 4 - EFFECTIVE DATE
The options under this Plan are granted as of March 15, 1995,
subject to approval of this Plan by the stockholders of the Company
within 12 months of its adoption by the Board of Directors.
SECTION 5 - PURCHASE PRICE
The purchase price for all shares shall be the NASDAQ National
Market closing price of the Company's Common Stock Non-Voting on
the over-the-counter market as reported in THE WALL STREET JOURNAL
either:
(a) For March 15, 1995 (which is the date of the grant), or
(b) For the date such option is exercised, whichever price is
lower.
SECTION 6 - NUMBER OF SHARES PURCHASABLE
Each eligible employee is, by the terms of this Plan, granted an
option to purchase a maximum number of shares of Common Stock
Non-Voting of the Company (increased by any fractional amount
required to make a whole share) which, at the purchase price, as
determined in accordance with Section 5(a), will most closely
approximate 10% of his compensation for one year, as below defined.
Notwithstanding any other provision of this Plan, no employee may
elect to purchase less than five shares nor may any options be
exercised for less than five shares.
Such compensation for one year shall be deemed to be the base
wage paid to such employee by the Corporations. The
base wage for such employee shall be computed as follows:
(a) The straight-line hourly base wage rate of such
employee in effect on March 15, 1995, multiplied by 2080 hours (40
hours per week multiplied by 52 weeks), or by such number as the
Company deems to constitute the number of hours in a normal work
year for such employee; or
(b) The salary of such employee in effect on March 15,
1995, annualized.
SECTION 7 - ELECTION TO PURCHASE AND PAYROLL DEDUCTION
No later than April 28, 1995, an eligible employee may elect to
purchase all or part of the shares which he is entitled to purchase
under Section 6. Such election shall be made by the execution and
delivery to the Corporations of an approved written form
authorizing uniform periodic payroll deductions over a two-year
period beginning June 1, 1995, in such amounts as will in the
aggregate (exclusive of interest which, it is contemplated, will be
paid to the employee at the end of such period) equal the total
option price for all of the shares covered by this election to
purchase. If an employee fails to make such election by April 28,
1995, the option provided by this Plan shall terminate on that
date. Except as otherwise provided in the Plan, after payroll
deductions have begun, prepayment for the total shares purchasable
will be permitted at any time prior to May 31, 1997. In the event
an employee makes such prepayment, there shall be no payroll
deductions under the Plan on behalf of said employee after such
prepayment.
SECTION 8 - INTEREST ON PAYROLL DEDUCTIONS
The Company and participating subsidiaries and affiliates will
maintain a record of amounts credited to each employee authorizing
a payroll deduction pursuant to Section 7. Interest will accrue on
payroll deductions beginning June 1, 1995, on the average balance
of such deductions during the period of this Plan at the rate of 5%
per year. Such interest shall be payable to the employee on or
about May 31, 1997, or at such time as said employee may for any
reason terminate his election to purchase shares under this Plan,
or at such time as said employee exercises his option to purchase
stock under the Plan and provides or pays in full the sum necessary
to purchase such shares.
SECTION 9 - CHANGES IN ELECTIONS TO PURCHASE
An employee may, at any time prior to May 31, 1997, by written
notice to the Corporations, direct the Corporations to reduce or
cease payroll deductions (or, if the payment for shares is being
made through periodic cash payments, notify the Corporations that
such payments will be reduced or terminated) or withdraw part or
all of the money in his account and continue payroll deductions, in
accordance with the following alternatives:
(a) Exercise his option to purchase the number of shares
which may be purchased at the purchase price with all or any
specified part of the amount (including interest) then credited to
his account,and withdraw any amount (including interest) remaining
in such account; or
(b) Reduce the amount of his subsequent payroll deductions
(or periodic cash payments) and/or withdraw all or any specified
part of the amount then credited to his account, in which event his
option to purchase shall be reduced to the number of shares which
may be purchased, at the March 15, 1995 price, with the amount,
if any, remaining in his account (exclusive of interest) plus
the aggregate amount of the authorized payroll deductions (or
periodic cash payments) to be made thereafter; or
(c) Withdraw the amount (including interest) in his
account and terminate his option to purchase.
An employee may make only one withdrawal of all or part of his
account and continue his payroll deductions. If the employee
thereafter wishes to withdraw any funds from his account, he must
withdraw the entire amount (including interest) in his account and
terminate his option to purchase.
Any reduction made in the number of shares subject to an option
to purchase is subject to the provisions of Section 6 and shall be
permanent.
SECTION 10 - VOLUNTARY TERMINATION OF EMPLOYMENT OR DISCHARGE
In the event an employee voluntarily leaves the employ of the
Corporations, otherwise than by retirement under a plan of the
Corporations, or is discharged for cause prior to May 31, 1997, he
can elect within 10 days after termination of his employment to:
(a) Exercise his option to purchase the number of shares
which may be purchased at the purchase price with all or any
specified part of the amount (including interest) then credited to
his account,and withdraw any amount (including interest) remaining
in such account; or
(b) Withdraw the amount (including interest) in his account and
terminate his option to purchase; or
(c) Exercise his option up to the number of shares purchasable
under this Plan (Section 6) with full payment for such shares.
If the employee fails to make an election within 10 days after
termination of employment, he shall be deemed to have elected
subsection 10(b) above.
SECTION 11 - RETIREMENT OR SEVERANCE
In the event an employee who has an option to purchase shares
leaves the employ of the Corporations on or after March 15, 1995,
because of retirement under a plan of the Corporations, or because
of termination of his employment by the Corporations for any reason
except discharge for cause, he may elect, within 10 days after the
date of such retirement or termination, to:
(a) In the event of retirement only, continue his option to
purchase shares by making periodic cash payments to the
Corporations in amounts equal to the payroll deductions previously
authorized; or
(b) Exercise his option for the number of shares which may
be purchased at the purchase price with all or any specified part
of the amount (including interest) then credited to his account,and
withdraw any amount (including interest) remaining in such
account; or
(c) Exercise his option up to the number of shares
purchasable under this Plan (Section 6) with full payment
for such shares within said 10 day period; or
(d) Withdraw the amount (including interest) in his account
and terminate his option to purchase.
In the event the employee does not make an election within the
aforesaid 10 day period, he will be deemed to have elected
subsection 11(d) above.
SECTION 12 - LAY-OFF, AUTHORIZED LEAVE OF ABSENCE OR DISABILITY
Payroll deductions for shares for which an employee has an
option to purchase may be suspended during any period of absence of
the employee from work due to lay-off, authorized leave of absence
or disability or, if the employee so elects, periodic payments for
such shares may continue to be made in cash.
If such employee returns to active service prior to May 31,
1997, his payroll deductions will be resumed and if said employee
did not make periodic cash payments during his period of absence,
he shall, by written notice to his employing Corporation within 10
days after his return to active service, but not later than May 31,
1997, elect:
(a) To make up any deficiency in his account resulting from
a suspension of payroll deductions by an immediate cash payment; or
(b) Not to make up such deficiency, in which event the
number of shares to be purchased by him shall be reduced to the
number of whole shares which may be purchased at the March 15, 1995
price,with the amount, if any, then credited to his account
(including interest) plus the aggregate amount, if any, of all
payroll deductions to be made there-after; or
(c) Withdraw the amount (including interest) in his account
and terminate his option to purchase.
An employee on lay-off, authorized leave of absence or
disability on May 31, 1997, shall deliver written notice
to his employing Corporation on or before May 31, 1997, electing
one of the alternatives provided in the foregoing clauses (a), (b)
and (c) of this Section 12. If any employee fails to deliver such
written notice within 10 days after his return to active service or
by May 31, 1997, whichever is earlier, he shall be deemed to have
elected subsection 12(c) above.
If the period of an employee's lay-off, authorized leave of
absence or disability shall terminate on or before May
31, 1997, and the employee shall not resume active employment with
the Corporations, he shall make an election in accordance with the
provisions of Section 10 of this Plan.
SECTION 13 - DEATH
In the event of the death of an employee while his option to
purchase shares is in effect, the legal representatives of such
employee may, within 90 days after his death (but not later than
May 31, 1997) by written notice to the employing Corporation, elect
to:
(a) Make up any deficiency in such employee's account
occurring after his death or by reason of his prior illness and
to continue to make periodic cash payments for the remainder of the
period ending May 31,1997; or
(b) Withdraw the amount (including interest) in his account
and terminate his option to purchase; or
(c) Exercise the employees option for the number of shares
which may be purchased at the purchase price with all or any
specified part of the amount (including interest) then credited to
his account, and withdraw any amount (including interest) remaining
in such account; or
(d) Exercise his option up to the number of shares
purchasable under this Plan (Section 6) with full payment for such
shares.
In the event the legal representatives of such employee fail to
deliver such written notice to the employing Corporation within the
prescribed period, the election to purchase shares shall terminate
and the amount, including interest, then credited to the employee's
account shall be paid to such legal representatives.
SECTION 14 - FAILURE TO MAKE PERIODIC CASH PAYMENTS
Under any of the circumstances contemplated by this Plan, where
the purchase of shares is to be made through periodic cash payments
in lieu of payroll deductions, the failure to make any such
payments shall reduce, to the extent of the deficiency in such
payments, the number of shares purchasable under this Plan.
SECTION 15 - FUNDS IN STOCK OPTION ACCOUNTS
Amounts credited to the employee's account shall be under the
control of the Company and may be used for any corporate purpose.
Amounts credited to the accounts of employees of subsidiaries and
affiliates of the Company named in Section 1 of this Plan shall be
remitted to the Company from time to time. The amount, exclusive of
interest, credited to the account of each employee shall be applied
to pay for shares purchased by such employee and any amount
not used for this purpose shall be repaid to the employee by the
Company.
SECTION 16 - RIGHTS AS STOCKHOLDER
No employee, former employee, or his representatives shall have
any rights as a stockholder with respect to any shares of stock
which any employee has elected to purchase under this Plan until
full payment for all shares has been made and a certificate for
such shares has been issued. Certificates for shares will be
issued as soon as practicable after full payment for such shares
has been made. However, certificates for shares will not be issued
prior to approval of the Plan by the stockholders of the Company.
SECTION 17 - NON-ASSIGNABILITY
No assignment or transfer by any employee, former employee or
his legal representatives of any option, election to purchase
shares or any other interest under this Plan will be recognized;
any purported assignment or transfer, whether voluntary or by
operation of law (except by will or the laws of descent and
distribution), shall have the effect of terminating such option,
election to purchase or other interest. An employee's option and
election to purchase shall be exercisable only by him during his
lifetime and upon his death, by his legal representative in
accordance with Section 13. If an election to purchase is
terminated by reason of the provisions of this Section 17,
the only right thereafter continuing shall be the right to have the
amount then credited to the employee's account, including interest,
paid to the employee or other person entitled thereto, as the case
may be.
SECTION 18 - EFFECT OF CHANGES IN SHARES
In the event of any change in the capital stock of the Company
through merger, consolidation or reorganization, or in the event of
any dividend to holders of shares of the Common Stock Non-Voting of
the Company payable in stock of the same class in an amount in
excess of 2% in any year, or in the event of a stock split, or in
the event of any other change in the capital structure of the
Company, the Company will make such adjustments with respect to the
shares of stock subject to this offering as it deems equitable to
prevent dilution or enlargement of the rights of participating
employees.
SECTION 19 - ADMINISTRATION; MISCELLANEOUS
(a) The Salary and Benefits Committee of the Company (the
"Committee") or such employee or employees as they may
designate, shall be responsible for the administration of this
Plan, including the interpretation of its provisions, and the
decision of the Committee or of such other employee or employees
with respect to any question arising under the Plan shall be
final and binding for all purposes.
(b) Uniform policies shall be pursued in the administration
of this Plan and there shall be no discrimination between
particular employees or groups of employees. The Committee, or such
employee or employees as they may designate to administer this
Plan, shall have the authority, which shall be exercised without
discrimination, to make exceptions to the provisions of this Plan
under unusual circumstances where strict adherence to such
provisions would work undue hardship.
(c) The Company may allow a reasonable extension of the
time within which an election to purchase shares under this Plan
shall be made, if it shall determine there are circumstances
warranting such action, in which event such extension shall be made
available on a uniform basis to all employees similarly
situated; provided that in no event shall the period for payroll
deductions be extended beyond May 31,1997.
SECTION 20 - AMENDMENT AND DISCONTINUANCE
The Board of Directors of the Company may alter, suspend or
terminate the Plan; provided, however, that, except to conform the
Plan from time to time to the requirements of the Internal Revenue
Code with respect to employee stock purchase plans, no action of
the Board shall increase the period during which this Plan shall
remain in effect, or further limit the employees of the
Corporations who are eligible to participate in the Plan, or
increase the maximum period during which any option granted under
the Plan may remain unexercised, or (other then as set forth in
Section 18 above) increase the number of shares of stock to be
optioned under the Plan or reduce the purchase price per share,
with respect to the shares optioned or to be optioned under the
Plan, or without the consent of the holder of the option, otherwise
alter or impair any option granted under the Plan.
PROXY CARD
McCORMICK & COMPANY, INCORPORATED
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Charles P. McCormick, Jr., H.
Eugene Blattman 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
15, 1995, 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, H. E. Blattman, J. S. Cook, R.G. Davey, H.J.
Handley, 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. PROPOSAL TO APPROVE THE 1995 EMPLOYEES STOCK PURCHASE PLAN.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL.
FOR AGAINST ABSTAIN
3. RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION.
FOR AGAINST ABSTAIN
4. 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
APPROVAL OF THE 1995 EMPLOYEES STOCK PURCHASE PLAN; 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: ________________________, 1995
___________________________________
___________________________________
(Please sign as name(s) appear at left. If joint account, both
owners should sign)
