What changed in this filing

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Item 1. Financial Statements

2022-06-29 compared with 2022-03-29 · 218 added, 94 removed, 414 unchanged (43% of the section changed)

3 unchanged sentences

(in millions except per share amounts)

Three months ended February 28,

Three months ended May 31, Six months ended May 31,

2022 2021 2022 2021

Net sales $ 1,536.8 $ 1,556.7 $ 3,059.2 $ 3,038.2

11 unchanged sentences

Income from unconsolidated operations

10.4 23.4 19.7 36.7

Net income $ 118.5 $ 183.7 $ 273.4 $ 345.5

4 unchanged sentences

Cash dividends paid per share – voting and non-voting $ 0.37 $ 0.34 $ 0.74 $ 0.68

Cash dividends declared per share – voting and non-voting $ 0.37 $ 0.34 $ 0.37 $ 0.34

See notes to condensed consolidated financial statements (unaudited).

2 unchanged sentences

(in millions)

Three months ended February 28,

Three months ended May 31, Six months ended May 31,

2022 2021 2022 2021

Net income $ 118.5 $ 183.7 $ 273.4 $ 345.5

2 unchanged sentences

Unrealized components of pension and other postretirement plans 3.8 1.5 6.0 2.6

Currency translation adjustments 3.7 45.7

Currency translation adjustments, including for the three and six months ended May 31, 2022, $7.9 associated with the exit of our business in Russia ( 51.0 ) 54.2 ( 47.3 ) 99.9

Change in derivative financial instruments 21.7 1.6 26.8 0.6

Deferred taxes ( 13.9 ) 1.2 ( 14.9 ) 4.2

Total other comprehensive income 10.0 48.8

Total other comprehensive income (loss) ( 39.4 ) 58.5 ( 29.4 ) 107.3

Comprehensive income $ 80.3 $ 244.2 $ 247.7 $ 455.6

40 unchanged sentences

(in millions)

Three months ended February 28,

Six months ended May 31,

Operating activities

3 unchanged sentences

Stock-based compensation 36.9 42.6

Gain on the sale of intangible asset ( 13.6 ) —

Asset impairment charge 10.0 6.5

Amortization of inventory fair value adjustments associated with acquisitions — 6.3

6 unchanged sentences

Dividends from unconsolidated affiliates 18.6 20.0

Net cash flow provided by (used in) operating activities 17.9 ( 32.2 )

Net cash flow provided by operating activities 154.4 228.7

Investing activities

Acquisition of businesses (net of cash acquired) — ( 706.4 )

Proceeds from sale of unconsolidated operation — 65.4

Proceeds from sale of intangible asset 12.1 —

Capital expenditures (including software) ( 101.6 ) ( 112.8 )

Other investing activities 0.3 0.2

Net cash flow used in investing activities ( 89.2 ) ( 753.6 )

8 unchanged sentences

Dividends paid ( 198.2 ) ( 181.6 )

Net cash flow provided by financing activities 4.4 612.7

Net cash flow (used in) provided by financing activities ( 81.7 ) 377.9

Effect of exchange rate changes on cash and cash equivalents ( 9.4 ) 15.2

8 unchanged sentences

Non-Voting Shares Common Stock Amount Retained Earnings Accumulated Other Comprehensive (Loss) Income Non-controlling Interests Total Shareholders’ Equity

Three months ended February 28, 2022

Three months ended May 31, 2022

Balance, February 28, 2022 17.8 250.2 $ 2,091.3 $ 2,922.4 $ ( 416.0 ) $ 16.5 $ 4,614.2

Net income — 118.5 — — 118.5

Net income attributable to non-controlling interest — — — 1.2 1.2

Other comprehensive loss, net of tax — — ( 38.6 ) ( 0.8 ) ( 39.4 )

Dividends — ( 99.2 ) — — ( 99.2 )

Stock-based compensation 25.8 — — — 25.8

Shares purchased and retired ( 0.1 ) — ( 3.6 ) ( 8.1 ) — — ( 11.7 )

Shares issued 0.3 0.1 5.7 — — — 5.7

Equal exchange ( 0.2 ) 0.2 — — — — —

Balance, May 31, 2022 17.8 250.5 $ 2,119.2 $ 2,933.6 $ ( 454.6 ) $ 16.9 $ 4,615.1

Six months ended May 31, 2022

Balance, November 30, 2021 17.8 249.5 $ 2,055.1 $ 2,782.4 $ ( 426.5 ) $ 14.5 $ 4,425.5

1 unchanged sentence

Net income attributable to non-controlling interest — — — 3.7 3.7

Other comprehensive income (loss), net of tax — — 10.5 ( 0.5 ) 10.0

Other comprehensive loss, net of tax — — ( 28.1 ) ( 1.3 ) ( 29.4 )

Dividends — ( 99.2 ) — — ( 99.2 )

Stock-based compensation 36.9 — — — 36.9

2 unchanged sentences

Equal exchange ( 0.9 ) 0.9 — — — — —

Balance, May 31, 2022 17.8 250.5 $ 2,119.2 $ 2,933.6 $ ( 454.6 ) $ 16.9 $ 4,615.1

Three months ended May 31, 2021

Balance, February 28, 2021 18.0 249.0 $ 1,998.4 $ 2,573.6 $ ( 422.5 ) $ 15.2 $ 4,164.7

Three months ended February 28, 2021

Net income — 183.7 — — 183.7

Net income attributable to non-controlling interest — — — 2.0 2.0

Other comprehensive income (loss), net of tax — — 60.2 ( 1.7 ) 58.5

Dividends — ( 90.8 ) — — ( 90.8 )

Stock-based compensation 28.4 — — — 28.4

Shares purchased and retired — — ( 2.8 ) ( 6.0 ) — — ( 8.8 )

Shares issued 0.3 — 3.1 — — — 3.1

Equal exchange ( 0.2 ) 0.2 — — — — —

Balance, May 31, 2021 18.1 249.2 $ 2,027.1 $ 2,660.5 $ ( 362.3 ) $ 15.5 $ 4,340.8

Six months ended May 31, 2021

Balance, November 30, 2020 18.0 248.9 $ 1,981.3 $ 2,415.6 $ ( 470.8 ) $ 13.9 $ 3,940.0

1 unchanged sentence

Net income attributable to non-controlling interest — — — 2.8 2.8

Other comprehensive income, net of tax — — 48.3 0.5 48.8

Other comprehensive income (loss), net of tax — — 108.5 ( 1.2 ) 107.3

Dividends — ( 90.8 ) — — ( 90.8 )

Stock-based compensation 42.6 — — — 42.6

2 unchanged sentences

Equal exchange ( 0.3 ) 0.3 — — — — —

Balance, February 28, 2021 18.0 249.0 $ 1,998.4 $ 2,573.6 $ ( 422.5 ) $ 15.2 $ 4,164.7

Balance, May 31, 2021 18.1 249.2 $ 2,027.1 $ 2,660.5 $ ( 362.3 ) $ 15.5 $ 4,340.8

See notes to condensed consolidated financial statements (unaudited).

6 unchanged sentences

In our opinion, the accompanying condensed consolidated financial statements contain all adjustments, which are of a normal and recurring nature, necessary to present fairly the financial position and the results of operations for the interim periods presented.

The results of consolidated operations for the three-month period ended February 28, 2022 are not necessarily indicative of the results to be expected for the full year.

The results of consolidated operations for the six-month period ended May 31, 2022 are not necessarily indicative of the results to be expected for the full year.

Historically, our net sales, net income and cash flow from operations have been lower in the first half of the fiscal year and higher in the second half.

15 unchanged sentences

Our adoption of this new standard occurred during the three months ended February 28, 2022, in conjunction with the first phase-out of a LIBOR reference rate.

There was no material impact to our consolidated financial statements during the three months ended February 28, 2022, nor do we expect the adoption of this standard to have a material impact on our consolidated financial statements during the LIBOR transition period.

There was no material impact to our consolidated financial statements during the six months ended May 31, 2022, nor do we expect the adoption of this standard to have a material impact on our consolidated financial statements during the LIBOR transition period.

SPECIAL CHARGES AND TRANSACTION AND INTEGRATION EXPENSES

7 unchanged sentences

Certain ancillary expenses related to these actions approved by our Management Committee do not qualify for accrual upon approval but are included as special charges as incurred during the course of the actions.

We continue to evaluate changes to our organization structure to enable us to reduce fixed costs, simplify or improve processes, and improve our competitiveness.

The following is a summary of special charges recognized in the three months ended February 28, 2022 and 2021

We continue to evaluate changes to our organizational structure to enable us to reduce fixed costs, simplify or improve processes, and improve our competitiveness.

The following is a summary of special charges recognized in the three and six months ended May 31, 2022 and 2021

(in millions):

Three months ended February 28,

Three months ended May 31, Six months ended May 31,

2022 2021 2022 2021

Employee severance and related benefits $ 7.5 $ 4.5 $ 21.7 $ 4.8

Other costs (1)

Cash 2.1 2.7 6.0 3.5

Non-Cash 19.1 6.5 20.5 6.5

Total special charges 28.7 13.7 48.2 14.8

Gain on sale of exited brand ( 13.6 ) — ( 13.6 ) —

Total $ 15.1 $ 13.7 $ 34.6 $ 14.8

(1) Included in other costs for 2022 is non-cash accelerated depreciation of $ 1.4 million.

During the three months ended February 28, 2022, we recorded $ 19.5 million of special charges, consisting principally of $ 14.9 million associated with the transition of a manufacturing facility in Europe, Middle East, and Africa (EMEA), as more fully described below, streamlining actions of $ 2.1 million in the Americas region, and $ 1.5 million in the EMEA region.

In 2022, our Management Committee approved an initiative to consolidate our manufacturing operations into a net-zero carbon condiments manufacturing and distribution center facility with state-of-the-art technology in the United Kingdom.

During the three months ended May 31, 2022, we recorded $ 15.1 million of net special charges.

Those special charges principally consisted of $ 22.2 million associated with the exit of our consumer business in Russia, as more fully described below, $ 2.5 million associated with the transition of a manufacturing facility in Europe, Middle East, and Africa (EMEA), as more fully described below, and streamlining actions of $ 3.2 million in the Americas region, and $ 2.8 million in the EMEA region.

These charges were offset by a $ 13.6 million gain, on the sale of our Kohinoor brand discussed below as well as a reversal of $ 2.2 million of estimated costs associated with the exit of our rice product line in India upon settlement of a supply agreement related to that product line.

During the six months ended May 31, 2022, we recorded $ 34.6 million of net special charges.

Those special charges consisted principally of $ 22.2 million associated with the exit of our consumer business in Russia, as more fully described below, $ 17.4 million associated with the transition of a manufacturing facility in EMEA, as more fully described below, and streamlining actions of $ 5.3 million in the Americas region, and $ 4.3 million in the EMEA region.

In the second quarter of 2022, our Management Committee approved the exit of our consumer business in Russia.

As a result, we recorded $ 22.2 million of special charges.

These special charges included a non-cash impairment charge of $ 10.0 million associated with the Kamis brand name to reduce its carrying value to its estimated fair value, $ 2.5 million of employee severance and $ 1.8 million of other related exit costs directly associated with the exit plan that we anticipated will be paid in the next twelve months, and a non-cash $ 7.9 million reclassification of the cumulative translation adjustment previously reflected in accumulated other comprehensive income (loss) to earnings associated with the exit of our business in Russia.

In the first quarter of 2022, our Management Committee approved an initiative to consolidate our manufacturing operations in the United Kingdom into a net-zero carbon condiments manufacturing and distribution center facility with state-of-the-art technology.

We expect to execute these changes to our supply chain operations and improve profitability, from a combination of lower headcount and non-headcount costs, by consolidating our operations into a scalable platform while expanding our capacity.

1 unchanged sentence

Of that $ 30 million, we expect the costs to include employee severance and related benefits, non-cash accelerated depreciation, decommissioning and other property related lease exit costs, all directly related to the initiative.

During the three months ended February 28, 2022, we recorded $ 12.5 million in severance and related benefits costs, $ 1.4 million in accelerated depreciation and $ 1.0 million in third party expenses and other costs.

During the three months ended February 28, 2021, we recorded $ 1.1 million of special charges, consisting principally of streamlining actions of $ 0.6 million in the EMEA region and $ 0.5 million in the Americas region.

During the three months ended May 31, 2022, we recorded $ 1.3 million in accelerated depreciation and $ 1.2 million in third party expenses and other costs.

During the six months ended May 31, 2022, we recorded $ 12.5 million in severance and related benefits costs, $ 2.7 million in accelerated depreciation and $ 2.2 million in third party expenses and other costs.

We exited our Kohinoor rice product line in India in the fourth quarter of fiscal 2021.

During the three months ended May 31, 2022, we sold the Kohinoor brand name for $ 13.6 million, net of costs associated with the sale of $ 1.4 million, and reflected the gain of $ 13.6 million associated with this sale within special charges.

During the three months ended May 31, 2021, we recorded $ 13.7 million of special charges, consisting principally of a non-cash asset impairment charge of $ 6.5 million associated with an administrative site that was exited in conjunction with our decision to employ a hybrid work environment and $ 4.7 million of streamlining actions in the Americas region.

During the six months ended May 31, 2021, we recorded $ 14.8 million of special charges, consisting principally of the previously described non-cash asset impairment charge of $ 6.5 million, $ 5.2 million of streamlining actions in the Americas region, and $ 1.3 million of streamlining actions in the EMEA region.

In 2017, our Management Committee approved a multi-year initiative during which we expect to execute significant changes to our global processes, capabilities and operating model to provide a scalable platform for future growth.

3 unchanged sentences

Of that $ 60 million to $ 65 million, we estimate that approximately sixty percent will be attributable to cash payments associated with the related costs of the GE implementation and transition, including outside consulting and other costs, and approximately forty percent will be attributable to severance and related benefit payments, all directly related to this initiative.

We have spent a cumulative total of $ 40.7 million on this initiative through February 28, 2022.

As of February 28, 2022, reserves associated with special charges, which are expected to be paid during the next twelve months, are included in trade accounts payable and other accrued liabilities in our consolidated balance sheet.

The following is a breakdown by business segment of special charges for the three months ended February 28, 2022 and 2021 (in millions):

Three months ended February 28,

We have spent a cumulative total of $ 40.7 million on this initiative through May 31, 2022.

As of May 31, 2022, reserves associated with special charges, which are expected to be paid during the next twelve months, are included in trade accounts payable and other accrued liabilities in our consolidated balance sheet.

The following is a breakdown by business segment of special charges for the three and six months ended May 31, 2022 and 2021 (in millions):

Three months ended May 31, Six months ended May 31,

2022 2021 2022 2021

Consumer segment $ 10.7 $ 8.8 $ 14.3 $ 9.6

2 unchanged sentences

Transaction and Integration Expenses

The following are the transaction and integration expenses recognized during the three months ended February 28, 2022 and 2021 relating to the acquisitions of Cholula Hot Sauce ("Cholula") and FONA International, LLC ("FONA") (in millions):

The following are the transaction and integration expenses recognized during the three and six months ended May 31, 2022 and 2021 relating to the acquisitions of Cholula Hot Sauce ("Cholula") and FONA International, LLC ("FONA") (in millions):

Three months ended May 31, Six months ended May 31,

2022 2021 2022 2021

Transaction-related expenses included in cost of goods sold $ — $ — $ — $ 6.3

2 unchanged sentences

Total transaction and integration expenses $ 1.5 $ 6.9 $ 2.2 $ 32.0

We expect transaction and integration expenses related to our acquisition of FONA to total approximately $ 3 million in 2022.

We expect integration expenses related to our acquisition of FONA to total approximately $ 3 million in fiscal 2022.

FINANCIAL INSTRUMENTS

1 unchanged sentence

We do not enter into contracts for trading purposes, nor are we a party to any leveraged derivative instrument, and all derivatives are designated as hedges.

For the three months ended February 28, 2022 and 2021, hedge ineffectiveness was not material.

For the three and six months ended May 31, 2022 and 2021, hedge ineffectiveness was not material.

We are not a party to master netting arrangements, and we do not offset the fair value of derivative contracts with the same counterparty in our financial statement disclosures.

2 unchanged sentences

We are potentially exposed to foreign currency fluctuations affecting net investments in subsidiaries, transactions (both third-party and intercompany) and earnings denominated in foreign currencies.

We assess foreign currency risk based on transactional cash flows and translational volatility and may enter into forward contract and currency swaps with highly-rated financial institutions to reduce fluctuations in the long or short currency positions.

We assess foreign currency risk based on transactional cash flows and translational volatility and may enter into forward contract and

currency swaps with highly-rated financial institutions to reduce fluctuations in the long or short currency positions.

Forward contracts are generally less than 18 months duration.

Currency swap agreements are established in conjunction with the terms of the underlying debt issues.

At February 28, 2022, we had foreign currency exchange contracts to purchase or sell $ 636.5 million of foreign currencies as compared to $ 583.6 million at November 30, 2021.

At May 31, 2022, we had foreign currency exchange contracts to purchase or sell $ 482.0 million of foreign currencies as compared to $ 583.6 million at November 30, 2021.

All of these contracts were designated as hedges of anticipated purchases denominated in a foreign currency or hedges of foreign currency denominated assets or liabilities.

All foreign currency exchange contracts outstanding at February 28, 2022 have durations of less than 18 months, including $ 242.1 million of notional contracts that have durations of less than one month and are used to hedge short-term cash flow funding .

Contracts which are designated as hedges of anticipated purchases denominated in a foreign currency (generally purchases of raw materials in U.S.

dollars by operating units outside the U.S.) are considered cash flow hedges.

The gains and losses on these contracts are deferred in accumulated other comprehensive loss until the hedged item is recognized in cost of goods sold, at which time the net amount deferred in accumulated other comprehensive loss is also recognized in cost of goods sold.

Gains and losses from contracts that are designated as hedges of assets, liabilities or firm commitments are recognized through income, offsetting the change in fair value of the hedged item.

We also enter into fair value foreign currency exchange contracts to manage both exposure to currency fluctuations in certain intercompany loans between subsidiaries as well as currency exposure to third-party non-functional currency assets or liabilities.

At February 28, 2022, the notional value of these contracts was $ 413.4 million.

Any gains or losses recorded based on both the change in fair value of these contracts and the change in the currency component of the underlying loans are recognized in our consolidated income statement as Other income, net.

Hedges of foreign currency denominated assets and liabilities include foreign currency exchange contracts with a notional value of $ 381.9 million at May 31 , 2022.

These foreign currency exchange contracts manage both exposure to currency fluctuations in certain intercompany loans between subsidiaries as well as currency exposure to third-party non-functional currency assets or liabilities.

All foreign exchange contracts outstanding at May 31, 2022 have durations of less than 18 months, including $ 140.0 million of notional contracts that have durations of less than one month and are used to hedge short-term cash flow funding .

We also utilize cross currency interest rate swap contracts that are designated as net investment hedges.

2 unchanged sentences

We finance a portion of our operations with both fixed and variable rate debt instruments, principally commercial paper, notes and bank loans.

We utilize interest rate swap agreements to minimize worldwide financing costs and to achieve a desired mix of variable and fixed rate debt.

We utilize interest rate derivative contracts, including interest rate swap agreements and treasury locks, to minimize worldwide financing costs and to achieve a desired mix of variable and fixed rate debt.

The following table discloses the notional amount and fair values of derivative instruments on our balance sheet (in millions):

As of February 28, 2022 Asset Derivatives Liability Derivatives

Asset Derivatives Liability Derivatives

Balance sheet

2 unchanged sentences

location Notional

As of May 31, 2022

Interest rate contracts Other current

assets / Other long-term assets $ 600.0 $ 14.6 Other accrued liabilities $ — $ —

assets / Other long-term assets $ 200.0 $ 16.9 Other long-term liabilities $ 600.0 $ 16.8

Foreign exchange contracts Other current

3 unchanged sentences

Total $ 49.2 $ 27.5

As of November 30, 2021 Asset Derivatives Liability Derivatives

Balance sheet

location Notional

value Balance sheet

location Notional

As of November 30, 2021

Interest rate contracts Other current

assets / Other long-term assets $ 350.0 $ 23.1 Other accrued liabilities $ — $ —

assets / Other long-term assets $ 350.0 $ 23.1 Other long-term liabilities $ — $ —

Foreign exchange contracts Other current

4 unchanged sentences

Total $ 35.8 $ 10.8

During the first quarter of 2022, we entered into $ 250 million notional value interest rate swap contracts where we receive interest at 2.50 % and pay a variable rate of interest based on USD SOFR plus 0.745 %, which expire in April 2030, and are designated as fair value hedges of the changes in fair value of $ 250 million of the $ 500 million 2.50 % term notes due in 2030.The fair value of these interest rate swap contracts is offset by a corresponding increase or decrease in the value of the hedged debt.

In the first quarter of 2022, we entered into $ 250 million notional value interest rate swap contracts where we receive interest at 2.50 % and pay a variable rate of interest based on USD SOFR plus 0.684 %, which expire in April 2030, and are designated as fair value hedges of the changes in fair value of $ 250 million of the $ 500 million 2.50 % term notes due in 2030.

The fair value of these interest rate swap contracts is offset by a corresponding increase or decrease in the value of the hedged debt.

Also during the first quarter of 2022, we entered into cross currency interest rate swap contracts of (i) $ 250 million notional value to receive $ 250 million at USD SOFR plus 0.684 % and pay £ 184.1 million at GBP SONIA plus 0.5740 % and (ii) £ 184.1 million notional value to receive £ 184.1 million at GBP SONIA plus 0.574 % and pay € 219.2 million at Euro ESTR plus 0.667 %, both of which expire in April 2030.

In conjunction with the phase-out of LIBOR, during the first quarter of 2022 we amended our previously existing cross currency swaps which expire in August 2027 such that, effective February 15, 2022, we now pay and receive at GBP SONIA plus 0.859 % (previously GBP LIBOR plus 0.740 %).

The following tables disclose the impact of derivative instruments on our other comprehensive income (OCI), accumulated other comprehensive loss (AOCI) and our consolidated income statement for the three-months ended February 28, 2022 and 2021 (in millions):

During the three months ended May 31, 2022, we entered into a total of $ 200 million of treasury locks to manage our interest rate risk associated with the anticipated issuance of at least $ 200 million of fixed rate debt by August 2022.

These treasury locks have a maturity date of August 12, 2022.

The weighted average fixed rate of these agreements was 1.89 %.

We designated these treasury lock arrangements as cash flow hedges.

Amounts associated with these agreements, which currently include the related estimated fair value, are deferred in accumulated other comprehensive income.

The following tables disclose the impact of derivative instruments on our other comprehensive income (OCI), accumulated other comprehensive loss (AOCI) and our consolidated income statement for the three- and six-months ended May 31, 2022 and 2021 (in millions):

Fair Value Hedges

Three months ended February 28,

Derivative Income statement

location Income (expense)

Three months ended May 31, 2022 Three months ended May 31, 2021 Six months ended May 31, 2022 Six months ended May 31, 2021

Interest rate contracts Interest expense $ 2.6 $ 2.0 $ 4.8 $ 4.0

1 unchanged sentence

Derivative 2022 2021 Hedged item 2022 2021

Three months ended May 31,

Foreign exchange contracts Other income, net $ 3.7 $ ( 3.8 ) Intercompany loans Other income, net $ ( 3.3 ) $ 4.0

The gains (losses) recognized on fair value hedges relating to currency exposure on third-party non-functional currency assets or liabilities were not material during the three-months ended February 28, 2022 and 2021.

Six months ended May 31,

Foreign exchange contracts Other income, net $ 3.3 $ ( 5.9 ) Intercompany loans Other income, net $ ( 2.9 ) $ 6.5

Cash Flow Hedges

Three months ended February 28,

Derivative Gain (loss)

3 unchanged sentences

2022 2021 2022 2021

Three months ended May 31,

Interest rate contracts $ 16.9 $ — Interest

2 unchanged sentences

Total $ 16.4 $ ( 0.8 ) $ 0.4 $ ( 0.5 )

Six months ended May 31,

Interest rate contracts $ 16.9 $ 0.3 Interest

expense $ 0.3 $ 0.2

Foreign exchange contracts 2.4 ( 2.4 ) Cost of goods

sold — ( 0.3 )

Total $ 19.3 $ ( 2.1 ) $ 0.3 $ ( 0.1 )

For all cash flow and settled interest rate fair value hedge derivatives, the net amount of accumulated other comprehensive loss expected to be reclassified in the next 12 months is $ 2.2 million as an increase to earnings.

Net Investment Hedges

Three months ended February 28,

Derivative Gain (loss)

3 unchanged sentences

2022 2021 2022 2021

Three months ended May 31,

Cross currency contracts $ 21.4 $ ( 1.5 ) Interest

expense $ 1.2 $ 0.3

Six months ended May 31,

Cross currency contracts $ 22.1 $ ( 3.5 ) Interest

expense $ 1.7 $ 0.7

For all net investment hedges, no amounts have been reclassified out of accumulated other comprehensive loss.

8 unchanged sentences

Unobservable inputs that reflect the reporting entity’s own assumptions.

At February 28, 2022 and November 30, 2021, we had no financial assets or liabilities that were subject to a level 3 fair value measurement.

At May 31, 2022 and November 30, 2021, we had no financial assets or liabilities that were subject to a level 3 fair value measurement.

Our population of financial assets and liabilities subject to fair value measurements on a recurring basis are as follows (in millions):

February 28, 2022

Fair Value Level 1 Level 2

7 unchanged sentences

Foreign currency derivatives $ 4.7 $ — $ 4.7

Interest rate derivatives 16.8 — 16.8

Cross currency contracts 6.0 — 6.0

12 unchanged sentences

Total $ 10.8 $ — $ 10.8

At February 28, 2022 and November 30, 2021, the carrying amounts of interest rate derivatives, foreign currency derivatives, cross currency contracts, insurance contracts, and bond and other long-term investments are equal to their respective fair values.

At May 31, 2022 and November 30, 2021, the carrying amounts of interest rate derivatives, foreign currency derivatives, cross currency contracts, insurance contracts, and bond and other long-term investments are equal to their respective fair values.

Because of their short-term nature, the amounts reported in the balance sheet for cash and cash equivalents, receivables, short-

7 unchanged sentences

The following table sets forth the carrying amounts and fair values of our long-term debt including the current portion thereof (in millions):

February 28, 2022 November 30, 2021

May 31, 2022 November 30, 2021

Carrying amount $ 4,691.1 $ 4,743.6

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Although our defined benefit plans in the U.S., United Kingdom and Canada have generally been frozen, employees who are participants in the plans retained benefits accumulated up to the date of the freeze, based on credited service and eligible earnings, in accordance with the terms of the plans.

The following table presents the components of our pension (income) and other postretirement benefits expense for the three months ended February 28, 2022 and 2021 (in millions):

The following table presents the components of our pension (income) and other postretirement benefits expense for the three months ended May 31, 2022 and 2021 (in millions):

United States pension International pension Other postretirement benefits

5 unchanged sentences

Amortization of net actuarial losses 2.1 2.7 0.3 0.5 ( 0.1 ) —

Settlement loss — — — 0.4 — —

Total (income) expense $ ( 1.0 ) $ — $ ( 0.7 ) $ ( 0.5 ) $ 0.7 $ 0.8

During the three months ended February 28, 2022 and 2021, we contributed $ 2.0 million and $ 2.3 million, respectively, to our pension plans.

The following table presents the components of our pension (income) and other postretirement benefits expense for the six months ended May 31, 2022 and 2021 (in millions):

United States pension International pension Other postretirement benefits

2022 2021 2022 2021 2022 2021

Service cost $ 1.8 $ 1.9 $ 0.4 $ 0.5 $ 0.9 $ 1.0

Interest costs 13.2 13.0 3.6 3.5 0.8 0.8

Expected return on plan assets ( 21.4 ) ( 20.6 ) ( 6.3 ) ( 7.0 ) — —

Amortization of prior service costs 0.2 0.2 0.1 0.1 ( 0.2 ) ( 0.2 )

Amortization of net actuarial losses 4.3 5.5 0.7 1.1 ( 0.1 ) —

Settlement loss — — — 0.4 — —

Total (income) expense $ ( 1.9 ) $ — $ ( 1.5 ) $ ( 1.4 ) $ 1.4 $ 1.6

During the six months ended May 31, 2022 and 2021, we contributed $ 4.1 million and $ 5.2 million, respectively, to our pension plans.

Total contributions to our pension plans in fiscal year 2021 were $ 15.0 million.

All of the amounts in the tables above for pension (income) and other postretirement benefits expense, other than service cost, were included in other income, net within our consolidated income statements.

The net aggregate amount of pension and other postretirement benefits (income), excluding service cost components, was $( 2.5 ) million and $( 1.8 ) million for the three months ended February 28, 2022 and 2021, respectively.

The net aggregate amount of pension and other postretirement benefits (income), excluding service cost components, was $( 2.6 ) million and $( 1.4 ) million for the three months ended May 31, 2022 and 2021, respectively.

For the six months ended May 31, 2022 and 2021, the net aggregate amount of pension and other postretirement benefits income was $( 5.1 ) million and $( 3.2 ) million, respectively.

STOCK-BASED COMPENSATION

We have four types of stock-based compensation awards:

restricted stock units ("RSUs"), stock options, company stock

awarded as part of our long-term performance plan ("LTPP") and price-vested stock options.

restricted stock units ("RSUs"), stock options, company stock awarded as part of our long-term performance plan ("LTPP") and price-vested stock options.

The following table sets forth the stock-based compensation expense recorded in selling, general and administrative ("SG&A") expense (in millions):

Three months ended February 28,

Three months ended May 31, Six months ended May 31,

2022 2021 2022 2021

Stock-based compensation expense $ 25.8 $ 28.5 $ 36.9 $ 42.6

Our 2022 annual grant of stock options and RSUs is expected to occur in the second quarter, similar to the 2021 annual grant.

The following is a summary of our stock option activity for the three months ended February 28, 2022 and 2021:

Our 2022 annual grant of stock options and RSUs occurred in the second quarter, similar to the 2021 annual grant.

The weighted-average grant-date fair value of each stock option granted in 2022 was $ 22.14 and in 2021 was $ 18.36 as calculated under a lattice pricing model.

Substantially all of the stock options and RSUs granted in 2022 and 2021 vest ratably over a three-year period or, if earlier, upon the retirement eligibility date of the holder.

The fair values of stock option grants in the stated periods were computed using the following range of assumptions for our various stock compensation plans:

Risk-free interest rates 0.2 - 2.5% 0.0 - 1.8%

Dividend yield 1.5 % 1.5 %

Expected volatility 21.2 % 21.3 %

Expected lives (in years) 7.6 7.9

The following is a summary of our stock option activity for the six months ended May 31, 2022 and 2021:

(shares in millions) Number

2 unchanged sentences

Outstanding at beginning of period 5.0 $ 59.71 4.5 $ 53.56

Granted 0.7 97.26 0.8 89.16

Exercised ( 0.7 ) 46.25 ( 0.1 ) 44.22

1 unchanged sentence

Exercisable at end of the period 3.6 $ 57.87 3.8 $ 51.08

As of February 28, 2022, the intrinsic value (the difference between the exercise price and the market price) for all options outstanding was $ 145.5 million and for options currently exercisable was $ 128.0 million.

The total intrinsic value of all options exercised during the three months ended February 28, 2022 and 2021 was $ 32.6 million and $ 2.2 million, respectively.

The following is a summary of our RSU activity for the three months ended February 28, 2022 and 2021:

As of May 31, 2022, the intrinsic value (the difference between the exercise price and the market price) for all options outstanding was $ 130.3 million and for options currently exercisable was $ 124.3 million.

The total intrinsic value of all options exercised during the six months ended May 31, 2022 and 2021 was $ 38.2 million and $ 4.9 million, respectively.

The following is a summary of our RSU activity for the six months ended May 31, 2022 and 2021:

(shares in thousands) Number

7 unchanged sentences

Outstanding at end of period 496 $ 78.02 639 $ 70.03

The following is a summary of our price-vested stock options activity for the three months ended February 28, 2022 and 2021:

The following is a summary of our price-vested stock options activity for the six months ended May 31, 2022 and 2021:

(shares in thousands) Number

6 unchanged sentences

Outstanding at end of period 2,158 $ 9.40 2,376 $ 9.40

The following is a summary of our LTPP activity for the three months ended February 28, 2022 and 2021:

The following is a summary of our LTPP activity for the six months ended May 31, 2022 and 2021:

(shares in thousands) Number

7 unchanged sentences

Outstanding at end of period 395 $ 93.41 390 $ 86.80

Income tax expense for the three months ended February 28, 2022 included $ 10.3 million of net discrete tax benefits consisting principally of the following:

(i) $ 7.6 million of excess tax benefits associated with stock-based compensation, and (ii) $ 2.5 million of tax benefits related to the revaluation of deferred taxes resulting from enacted legislation.

Income tax expense for the three months ended February 28, 2021 included $ 5.3 million of net discrete tax expense consisting principally of the following:

(i) $ 11.4 million of deferred state tax expense directly related to our December 2020 acquisition of FONA, (ii) $ 4.5 million of tax benefits associated with the release of a valuation allowance due to a change in judgment about realizability of deferred tax assets, and (iii) $ 1.2 million of tax benefits from the reversal of certain reserves for unrecognized tax benefits associated with the resolution of tax uncertainties.

Other than additions for current year tax positions, there were no significant changes to unrecognized tax benefits during the three months ended February 28, 2022.

As of February 28, 2022, we believe the reasonably possible total amount of unrecognized tax benefits that could increase or decrease in the next 12 months as a result of various statute expirations, audit closures, and/or tax settlements would not be material to our consolidated financial statements.

Income tax expense for the three months ended May 31, 2022 included $ 9.0 million of net discrete tax benefits consisting principally of the following:

(i) $ 1.1 million of excess tax benefits associated with stock-based compensation, (ii) $ 4.1 million of net tax benefits associated with the adjustment of valuation allowances due to changes in judgment about the realizability of deferred tax assets, (iii) $ 1.3 million of tax benefits from the reversal of certain reserves for unrecognized tax benefits and related interest associated with the expiration of statutes of limitations in a non-U.S.

jurisdiction, and (iv) $ 2.3 million of tax benefits related to the sale of an asset associated with a previously exited line of business.

Income tax expense for the six months ended May 31, 2022 included $ 19.3 million of net discrete tax benefits consisting principally of the following:

(i) $ 8.7 million of excess tax benefits associated with stock-based compensation, (ii) $ 4.1 million of net tax benefits associated with an adjustment of valuation allowances due to changes in judgment about the realizability of deferred tax assets, (iii) $ 2.5 million of tax benefits related to the revaluation of deferred taxes resulting from enacted legislation, (iv) $ 2.3 million of tax benefits related to the sale of an asset associated with a previously exited line of business, and (v) $ 1.5 million from the resolution of tax uncertainties in non-U.S.

jurisdictions, including the reversal of certain reserves

for unrecognized tax benefits and related interest associated with the expiration of statutes of limitations in certain non-US jurisdictions.

Income tax expense for the three months ended May 31, 2021 included $ 5.3 million of net discrete tax benefits consisting principally of the following:

(i) $ 3.7 million of tax benefits from the reversal of certain reserves for unrecognized tax benefits and related interest associated with the expiration of a statute of limitations in a non-U.S.

jurisdiction and (ii) $ 1.5 million of excess tax benefits associated with share-based compensation.

Income tax expense for the six months ended May 31, 2021 was not impacted, on a net basis, by discrete tax items as discrete tax benefits and discrete tax expenses offset during the period.

Discrete tax items recognized during the six months ended May 31, 2021 consisted principally of the following:

(i) $ 11.4 million of deferred state tax expense directly related to our December 2020 acquisition of FONA, (ii) $ 4.9 million of tax benefits from the resolution of tax uncertainties in non-U.S.

jurisdictions, including the reversal of certain reserves for unrecognized tax benefits and related interest associated with the expiration of statutes of limitations, (iii) $ 4.5 million of tax benefits associated with the release of a valuation allowance due to a change in judgment about realizability of deferred tax assets, and (iv) $ 1.9 million of excess tax benefits associated with share-based compensation.

Other than the discrete tax benefits previously mentioned and additions for current year tax positions, there were no significant changes to unrecognized tax benefits during the six months ended May 31, 2022.

As of May 31, 2022, we believe the reasonably possible total amount of unrecognized tax benefits that could increase or decrease in the next 12 months as a result of various statute expirations, audit closures, and/or tax settlements would not be material to our consolidated financial statements.

CAPITAL STOCK AND EARNINGS PER SHARE

The following table sets forth the reconciliation of average shares outstanding (in millions):

Three months ended February 28,

Three months ended May 31, Six months ended May 31,

2022 2021 2022 2021

Average shares outstanding – basic 268.3 267.3 268.1 267.2

3 unchanged sentences

The following table sets forth the stock options and RSUs that were not considered in our earnings per share calculation since they were anti-dilutive (in millions):

Three months ended February 28,

Three months ended May 31, Six months ended May 31,

2022 2021 2022 2021

Anti-dilutive securities 0.5 0.6 0.5 0.1

The following table sets forth common stock activity (in millions):

Three months ended February 28,

Three months ended May 31, Six months ended May 31,

2022 2021 2022 2021

Shares issued under stock options, RSUs, LTPP and employee stock purchase plans 0.4 0.3 1.3 0.5

Shares repurchased under the stock repurchase program and shares withheld for taxes under stock options, RSUs, and LTPP 0.1 — 0.3 0.1

As of February 28, 2022, $ 567.4 million remained of the $ 600 million share repurchase program authorization approved by our Board of Directors in November 2019.

As of May 31, 2022, $ 563.1 million remained of the $ 600 million share repurchase program authorization approved by our Board of Directors in November 2019.

ACCUMULATED OTHER COMPREHENSIVE LOSS

The following table sets forth the components of accumulated other comprehensive loss, net of tax, where applicable (in millions):

February 28, 2022 November 30, 2021

May 31, 2022 November 30, 2021

Foreign currency translation adjustment (1)

$ ( 287.0 ) $ ( 233.3 )

Unrealized gain (loss) on foreign currency exchange contracts 5.1 0.6

Unrealized gain on foreign currency exchange contracts 8.6 0.6

Fair value of treasury locks 12.9 —

Unamortized value of settled interest rate swaps ( 0.4 ) ( 0.2 )

1 unchanged sentence

Accumulated other comprehensive loss $ ( 454.6 ) $ ( 426.5 )

(1) During the three months ended February 28, 2022, the foreign currency translation adjustment of accumulated other comprehensive loss decreased on a net basis by $ 4.6 million, including the impact of a $ 0.7 million increase associated with net investment hedges.

(1) During the six months ended May 31, 2022, the foreign currency translation adjustment of accumulated other comprehensive loss increased on a net basis by $ 53.7 million, net of a $ 22.1 million increase associated with net investment hedges.

These net investment hedges are more fully described in note 3.

The following table sets forth the amounts reclassified from accumulated other comprehensive income (loss) and into consolidated net income (in millions):

Three months ended Affected Line Items in the Condensed Consolidated Income Statement

February 28, 2022 February 28, 2021

Three months ended Six months ended Affected Line Items in the Condensed Consolidated Income Statement

May 31, 2022 May 31, 2021 May 31, 2022 May 31, 2021

(Gains)/losses on cash flow hedges:

5 unchanged sentences

Amortization of pension and postretirement benefit adjustments:

Amortization of prior service costs (credit) (1)

$ 0.1 $ 0.1 $ 0.1 $ 0.1 Other income, net

Amortization of net actuarial losses (1)

23 unchanged sentences

(in millions)

Three months ended February 28, 2022

Three months ended May 31, 2022

Net sales $ 866.1 $ 670.7 $ 1,536.8

1 unchanged sentence

Income from unconsolidated operations 8.4 2.0 10.4

Three months ended February 28, 2021

Three months ended May 31, 2021

Net sales $ 945.2 $ 611.5 $ 1,556.7

1 unchanged sentence

Income from unconsolidated operations 22.2 1.2 23.4

Six months ended May 31, 2022

Net sales $ 1,792.2 $ 1,267.0 $ 3,059.2

Operating income excluding special charges and transaction and integration expenses 291.8 109.1 400.9

Income from unconsolidated operations 16.8 2.9 19.7

Six months ended May 31, 2021

Net sales $ 1,892.0 $ 1,146.2 $ 3,038.2

Operating income excluding special charges and transaction and integration expenses 366.7 153.8 520.5

Income from unconsolidated operations 33.0 3.7 36.7

A reconciliation of operating income excluding special charges and transaction and integration expenses, to operating income is as follows (in millions):

Consumer Flavor Solutions Total

Three months ended February 28, 2022

Three months ended May 31, 2022

Operating income excluding special charges and transaction and integration expenses $ 124.8 $ 49.0 $ 173.8

2 unchanged sentences

Operating income $ 114.1 $ 43.1 $ 157.2

Three months ended February 28, 2021

Three months ended May 31, 2021

Operating income excluding special charges and transaction and integration expenses $ 176.8 $ 81.2 $ 258.0

Special charges 8.8 4.9 13.7

Transaction and integration expenses 3.1 3.8 6.9

Operating income $ 164.9 $ 72.5 $ 237.4

Six months ended May 31, 2022

Operating income excluding special charges and transaction and integration expenses $ 291.8 $ 109.1 $ 400.9

Special charges 14.3 20.3 34.6

Transaction and integration expenses — 2.2 2.2

Operating income $ 277.5 $ 86.6 $ 364.1

Six months ended May 31, 2021

Operating income excluding special charges and transaction and integration expenses $ 366.7 $ 153.8 $ 520.5

Special charges 9.6 5.2 14.8

Transaction-related expenses included in cost of goods sold 4.0 2.3 6.3

1 unchanged sentence

Operating income $ 345.8 $ 127.9 $ 473.7

The following table sets forth our net sales, by geographic area, for the three months ended February 28, 2022 and 2021 (in millions):

The following table sets forth our net sales, by geographic area, for the three and six months ended May 31, 2022 and 2021 (in millions):

Americas EMEA Asia/Pacific Total

Three months ended February 28, 2022 $ 1,022.5 $ 290.5 $ 209.4 $ 1,522.4

Three months ended February 28, 2021 964.8 302.4 214.3 1,481.5

Three months ended May 31, 2022 $ 1,102.6 $ 287.8 $ 146.4 $ 1,536.8

Three months ended May 31, 2021 1,081.4 304.9 170.4 1,556.7

Six months ended May 31, 2022 2,125.0 578.3 355.9 3,059.2

Six months ended May 31, 2021 2,046.2 607.3 384.7 3,038.2

SALE OF UNCONSOLIDATED OPERATIONS

On March 1, 2021, we sold our 26 % interest in Eastern Condiments Private Ltd (Eastern) for $ 65.4 million in cash, net of transaction expenses of $ 1.4 million.

Eastern was accounted for as an equity method investment with our proportionate share of earnings, prior to the sale, reflected in Income from unconsolidated operations in our consolidated income statement.

The sale of Eastern resulted in a gain of $ 13.4 million, net of tax of $ 5.7 million.

That gain is included in Income from unconsolidated operations in our consolidated income statement.

That gain also reflects a write-off of $ 1.4 million of foreign currency translation adjustment, a component of accumulated other comprehensive income.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements