What changed in this filing

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Item 1. Financial Statements

2023-06-29 compared with 2023-03-28 · 212 added, 86 removed, 417 unchanged (42% 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,

2023 2022 2023 2022

Net sales $ 1,659.2 $ 1,536.8 $ 3,224.7 $ 3,059.2

11 unchanged sentences

Income from unconsolidated operations

10.3 10.4 24.3 19.7

Net income $ 152.1 $ 118.5 $ 291.2 $ 273.4

4 unchanged sentences

Cash dividends paid per share – voting and non-voting $ 0.39 $ 0.37 $ 0.78 $ 0.74

Cash dividends declared per share – voting and non-voting $ 0.39 $ 0.37 $ 0.39 $ 0.37

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,

2023 2022 2023 2022

Net income $ 152.1 $ 118.5 $ 291.2 $ 273.4

5 unchanged sentences

Tax benefit (expense) 5.2 ( 13.9 ) 6.2 ( 14.9 )

Total other comprehensive income 41.6 10.0

Total other comprehensive income (loss) 5.9 ( 39.4 ) 47.5 ( 29.4 )

Comprehensive income $ 160.0 $ 80.3 $ 341.5 $ 247.7

40 unchanged sentences

(in millions)

Three months ended February 28,

Six months ended May 31,

Operating activities

3 unchanged sentences

Stock-based compensation 38.5 36.9

Gain on the sale of intangible asset — ( 13.6 )

Asset impairment charge — 10.0

Income from unconsolidated operations ( 24.3 ) ( 19.7 )

7 unchanged sentences

Investing activities

Proceeds from sale of intangible asset — 12.1

Capital expenditures (including software) ( 118.6 ) ( 101.6 )

Other investing activities 2.5 0.3

Net cash flow used in investing activities ( 116.1 ) ( 89.2 )

1 unchanged sentence

Short-term borrowings, net ( 776.8 ) 128.0

Long-term debt borrowings 496.4 —

Payment of debt issuance costs ( 1.1 ) —

Long-term debt repayments ( 9.1 ) ( 15.3 )

3 unchanged sentences

Dividends paid ( 209.2 ) ( 198.2 )

Net cash flow (used in) provided by financing activities ( 44.7 ) 4.4

Net cash flow used in financing activities ( 518.1 ) ( 81.7 )

Effect of exchange rate changes on cash and cash equivalents 33.4 ( 9.4 )

Increase (decrease) in cash and cash equivalents 22.8 ( 13.3 )

Decrease in cash and cash equivalents ( 206.6 ) ( 25.9 )

Cash and cash equivalents at beginning of period 334.0 351.7

6 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, 2023

Three months ended May 31, 2023

Balance, February 28, 2023 17.4 250.8 $ 2,152.1 $ 3,155.1 $ ( 437.1 ) $ 17.6 $ 4,887.7

Net income — 152.1 — — 152.1

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

Other comprehensive income, net of tax — — 5.6 0.3 5.9

Dividends — ( 104.6 ) — — ( 104.6 )

Stock-based compensation 26.7 — — — 26.7

Shares purchased and retired ( 0.3 ) — ( 7.9 ) ( 11.2 ) — — ( 19.1 )

Shares issued 0.3 — 6.2 — — — 6.2

Equal exchange ( 0.2 ) 0.2 — — — — —

Balance, May 31, 2023

17.2 251.0 $ 2,177.1 $ 3,191.4 $ ( 431.5 ) $ 19.9 $ 4,956.9

Six months ended May 31, 2023

Balance, November 30, 2022

3 unchanged sentences

Other comprehensive income (loss), net of tax — — 49.1 ( 1.6 ) 47.5

Dividends — ( 104.6 ) — — ( 104.6 )

Stock-based compensation 38.5 — — — 38.5

2 unchanged sentences

Equal exchange ( 0.4 ) 0.4 — — — — —

Balance, May 31, 2023

17.2 251.0 $ 2,177.1 $ 3,191.4 $ ( 431.5 ) $ 19.9 $ 4,956.9

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 income (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

Three months ended February 28, 2022

Six months ended May 31, 2022

Balance, November 30, 2021

3 unchanged sentences

Other comprehensive income (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, February 28, 2022

Balance, May 31, 2022

17.8 250.5 $ 2,119.2 $ 2,933.6 $ ( 454.6 ) $ 16.9 $ 4,615.1

4 unchanged sentences

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all the information and notes required by United States generally accepted accounting principles (U.S.

GAAP) for complete financial statements.

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, 2023 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.

The results of consolidated operations for the six-month period ended May 31, 2023 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 of the fiscal year.

The historical increase in net sales, net income and cash flow from operations in the second half of the year has largely been due to the consumer business cycle in the U.S., where customers typically purchase more products in the fourth quarter due to the Thanksgiving and Christmas holiday seasons.

4 unchanged sentences

Deferral of the Sunset Date of Topic 848 which deferred the sunset date of Topic 848 which provides optional expedients for a limited time for accounting for transactions affected by the London Interbank Offered Rate (LIBOR) being discontinued.

Arrangements that were entered into in 2022, including our 364-day revolving credit facility expiring in July 2023, fixed to variable interest rate swaps expiring in April 2030, and cross-currency interest rate swaps expiring in April 2030, do not use LIBOR as a reference rate.

Arrangements that were entered into in 2022, including our fixed to variable interest rate swaps expiring in April 2030, and cross-currency interest rate swaps expiring in April 2030, do not use LIBOR as a reference rate.

During the first quarter of 2023 we amended our interest rate swaps expiring in November 2025 and August 2027, and the cross currency and interest rate swaps expiring in August 2027 to no longer use LIBOR.

Also, in March 2023 we amended our five-year revolving credit facility expiring in July 2026 to no longer use LIBOR.

Our adoption of this standard commenced during 2022, in conjunction with the first phase-out of a LIBOR reference rate.

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

Our adoption of this standard was completed in the second quarter of 2023.

There was no material impact to our consolidated financial statements.

Recently Issued Accounting Pronouncements — Pending Adoption

11 unchanged sentences

Special charges consist of expenses, including related impairment charges, associated with certain actions undertaken to reduce fixed costs, simplify or improve processes, and improve our competitiveness and are of such significance in terms of both up-front costs and organizational/structural impact to require advance approval by our Management Committee, comprised of our senior management, including our Chairman and Chief Executive Officer.

Expenses associated with any approved action are classified as special charges upon recognition and monitored on an on-going basis

through completion.

Expenses associated with any approved action are classified as special charges upon recognition and monitored on an on-going basis through completion.

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 organizational structure 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, 2023 and 2022

The following is a summary of special charges recognized in the three and six months ended May 31, 2023 and 2022

(in millions):

Three months ended February 28,

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

2023 2022 2023 2022

Employee severance and related benefits $ 7.0 $ 7.5 $ 31.8 $ 21.7

Cash 5.8 2.1 8.0 6.0

Non-Cash 0.4 19.1 1.2 20.5

Total special charges 13.2 28.7 41.0 48.2

During the three months ended February 28, 2023, we recorded $ 27.8 million of special charges, consisting principally of $ 24.8 million associated with our Global Operating Effectiveness (GOE) program, as more fully described below, $ 0.9 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 $ 1.3 million in the Americas region, and $ 0.8 million in the EMEA region.

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 EMEA, as more fully described below, streamlining actions of $ 2.1 million in the Americas region, and $ 1.5 million in the EMEA region.

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

Total $ 13.2 $ 15.1 $ 41.0 $ 34.6

During the three months ended May 31, 2023, we recorded $ 13.2 million of special charges, consisting principally of $ 8.6 million associated with our Global Operating Effectiveness (GOE) program, as more fully described below, $ 1.3 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.

During the six months ended May 31, 2023, we recorded $ 41.0 million of special charges, consisting principally of $ 33.4 million associated with our GOE program, as more fully described below, $ 2.2 million associated with the transition of a manufacturing facility in EMEA, as more fully described below, and streamlining actions of $ 4.5 million in the Americas region, and $ 0.9 million in the EMEA region.

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 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 2022, our Management Committee approved the GOE program.

5 unchanged sentences

All related payments will be made in fiscal year 2023 as all of the affected employees will leave the company in 2023.

Other special charges recognized during the three months ended February 28, 2023, under our GOE program included $ 4.5 million in severance and related benefits costs and $ 0.6 million of third party expenses and other costs.

Other special charges recognized during the three months ended May 31, 2023, under our GOE program included $ 7.0 million in severance and related benefits costs and $ 1.6 million of third party expenses and other costs.

Other special charges recognized during the six-months ended May 31, 2023, under our GOE program included $ 11.5 million in severance and related benefits costs and $ 2.2 million of third party expenses and other costs.

In 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.

We expect the cost of the initiative to approximate $ 40 million—to be recognized as special charges in our consolidated income statement during 2022 and 2023.

Of that $ 40 million, we expect the costs to include employee severance and related benefits, non-cash accelerated depreciation, equipment relocation costs, decommissioning and other property related lease exit costs, all directly related to the initiative.

During the three months ended February 28, 2023, we recorded $ 0.4 million in accelerated depreciation and $ 0.5 million in third party expenses and other costs.

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.

In total, $ 21.5 million of special charges related to this initiative were recognized in 2022.

As of February 28, 2023, reserves associated with special charges of $ 33.0 million, are included in 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, 2023 and 2022 (in millions):

Three months ended February 28,

We expect the cost of the initiative to approximate $ 40 million which will be recognized as special charges in our consolidated income statement during 2022 and 2023.

Of that $ 40 million, we expect the costs to include employee severance and related

benefits, non-cash accelerated depreciation, equipment relocation costs, decommissioning and other property related lease exit costs, all directly related to the initiative.

During the three months ended May 31, 2023, we recognized $ 0.4 million in accelerated depreciation and $ 0.9 million in third party expenses and other costs.

During the six months ended May 31, 2023, we recognized $ 0.8 million in accelerated depreciation and $ 1.4 million in third party expenses and other costs.

During the three months ended May 31, 2022, we recognized $ 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 recognized $ 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.

As of May 31, 2023, accruals associated with special charges of $ 29.9 million, are included in 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, 2023 and 2022 (in millions):

Three months ended May 31,

Six months ended May 31,

2023 2022 2023 2022

Consumer segment $ 8.4 $ 10.7 $ 27.4 $ 14.3

2 unchanged sentences

Integration Expenses

Integration expenses recognized during the three months ended February 28, 2022 were $ 0.7 million relating to the acquisition of FONA International, LLC (FONA).

FINANCIAL INSTRUMENTS

Integration expenses recognized during the three and six months ended May 31, 2022 were $ 1.5 million and $ 2.2 million, respectively, relating to the acquisition of FONA International, LLC (FONA).

FINANCING ARRANGEMENTS AND FINANCIAL INSTRUMENTS

On April 6, 2023, we issued $ 500 million aggregate principal amount of 4.950 % unsecured senior notes due 2033.

Interest is payable semiannually in April and October of each year, beginning on October 15, 2023.

The net proceeds received from the issuance of these notes of $ 496.4 million were used to repay a portion of the Company's outstanding commercial paper borrowings.

As part of the issuance of new debt, we entered and settled treasury locks in a notional amount of $ 250.0 million to manage our interest rate risk associated with the issuance of the unsecured senior notes.

We designated the treasury lock arrangements as cash flow hedges with the realized loss of $ 2.6 million to be amortized to interest expense over the life of the underlying debt.

As of May 31, 2023, we had a 364-day $ 500 million revolving credit facility outstanding which was scheduled to expire in July 2023.

In June 2023, we entered into a 364-day $ 500 million revolving credit facility which will expire in June 2024 and simultaneously cancelled the 364-day facility expiring in July 2023.

The current pricing for that credit facility, on a fully drawn basis, is SOFR + 1.23 %.

The pricing of the credit facility is based on a credit rating grid that contains a fully drawn maximum pricing of the credit facility equal to SOFR + 1.60 %.

The provisions of this revolving credit facility restrict subsidiary indebtedness and require us to maintain a minimum interest coverage ratio, consistent with our $ 1.5 billion five-year revolving credit facility.

We do not expect that this covenant would limit our access to this revolving credit facility for the foreseeable future.

We use derivative financial instruments to enhance our ability to manage risk, including foreign currency, net investment and interest rate exposures, which exist as part of our ongoing business operations.

5 unchanged sentences

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, 2023, we had foreign currency exchange contracts to purchase or sell $ 509.6 million of foreign currencies as compared to $ 560.5 million at November 30, 2022.

At May 31, 2023, we had foreign currency exchange contracts to purchase or sell $ 840.0 million of foreign currencies as compared to $ 560.5 million at November 30, 2022.

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.

Hedge ineffectiveness was not material.

All foreign currency exchange contracts outstanding at February 28, 2023 have durations of less than 18 months, including $ 146.8 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.

All foreign currency exchange contracts outstanding at May 31, 2023 have durations of less than 18 months,

including $ 154.8 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 inventory 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 income until the hedged item is recognized in cost of goods sold, at which time the net amount deferred in accumulated other comprehensive income is also recognized in cost of goods sold.

Hedges of foreign currency denominated assets and liabilities include foreign currency exchange contracts with a notional value of $ 362.5 million at February 28, 2023.

Hedges of foreign currency denominated assets and liabilities include foreign currency exchange contracts with a notional value of $ 725.6 million at May 31, 2023.

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.

11 unchanged sentences

location Notional

As of February 28, 2023

As of May 31, 2023

Interest rate contracts Other current

14 unchanged sentences

Total $ 55.5 $ 52.2

In conjunction with the phase-out of LIBOR, during the first quarter of 2023 we amended our previously existing cross currency swaps which expire in August 2027 such that, effective February 15, 2023, we now pay and receive at USD Secured Overnight Financing Rate (SOFR) plus 0.907 % (previously three-month U.S.

In conjunction with the phase out of LIBOR, in the first quarter of 2023 we amended our previously existing cross currency swaps which expire in August 2027 such that, effective February 15, 2023, we now pay and receive at USD Secured Overnight Financing Rate (SOFR) plus 0.907 % (previously three-month U.S.

LIBOR plus 0.685 %).

In conjunction with the phase-out of LIBOR, during the first quarter of 2023, we amended our $ 100 million interest rate swaps which expire in November 2025 and our $ 250 million interest rate swaps that expire in August 2027, such that, effective February 15, 2023 we now pay and receive at USD SOFR plus 1.487 % (previously U.S.

In addition, we amended our $ 100 million interest rate swaps which expire in November 2025 and our $ 250 million interest rate swaps that expire in August 2027, such that, effective February 15, 2023, we now pay and receive at USD SOFR plus 1.487 % (previously U.S.

three-month LIBOR plus 1.22 %) and USD SOFR plus 0.907 % (previously U.S.

three-month LIBOR plus 0.685 %), respectively.

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, 2023 and 2022 (in millions):

During the three months ended May 31, 2023, we amended our five-year revolving credit facility expiring in July 2026 to no longer use LIBOR.

The current pricing for the five-year credit facility, on a fully drawn basis, is SOFR plus 1.25 %.

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, 2023 and 2022 (in millions):

Fair Value Hedges

Three months ended February 28,

Derivative Income statement

location (Expense) income

Three months ended May 31, 2023 Three months ended May 31, 2022 Six months ended May 31, 2023 Six months ended May 31, 2022

Interest rate contracts Interest expense $ ( 4.0 ) $ 2.6 $ ( 7.7 ) $ 4.8

1 unchanged sentence

Derivative 2023 2022 Hedged item 2023 2022

Three months ended May 31,

Foreign exchange contracts Other income, net $ ( 6.5 ) $ 3.7 Intercompany loans Other income, net $ 7.2 $ ( 3.3 )

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, 2023 and 2022.

Six months ended May 31,

Foreign exchange contracts Other income, net $ ( 5.7 ) $ 3.3 Intercompany loans Other income, net $ 7.1 $ ( 2.9 )

Cash Flow Hedges

4 unchanged sentences

2023 2022 2023 2022

Three months ended February 28,

Three months ended May 31,

Interest rate contracts $ ( 2.6 ) $ 16.9 Interest

2 unchanged sentences

Total $ ( 3.9 ) $ 16.4 $ — $ 0.4

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 $ 1.1 million as an increase to earnings.

Six months ended May 31,

Interest rate contracts $ ( 2.6 ) $ 16.9 Interest

expense/ Other income, net $ 0.2 $ 0.3

Foreign exchange contracts ( 2.4 ) 2.4 Cost of goods

sold ( 1.3 ) —

Total $ ( 5.0 ) $ 19.3 $ ( 1.1 ) $ 0.3

As of May 31, 2023, the net amount of accumulated other comprehensive loss associated with all cash flow and settled interest rate fair value hedge derivatives expected to be reclassified in the next 12 months is $ 1.3 million as an decrease to earnings.

Net Investment Hedges

4 unchanged sentences

2023 2022 2023 2022

Three months ended February 28,

Three months ended May 31,

Cross currency contracts $ ( 3.8 ) $ 21.4 Interest

expense $ 2.9 $ 1.2

Six months ended May 31,

Cross currency contracts $ ( 9.6 ) $ 22.1 Interest

expense $ 6.2 $ 1.7

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, 2023 and November 30, 2022, we had no financial assets or liabilities that were subject to a level 3 fair value measurement.

At May 31, 2023 and November 30, 2022, 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, 2023

Fair Value Level 1 Level 2

21 unchanged sentences

Total $ 52.2 $ — $ 52.2

At February 28, 2023 and November 30, 2022, the carrying amounts of interest rate derivatives, foreign currency derivatives, cross currency contracts, insurance contracts, and bond and other long-term investments were equal to their respective fair values.

At May 31, 2023 and November 30, 2022, the carrying amounts of interest rate derivatives, foreign currency derivatives, cross currency contracts, insurance contracts, and bond and other long-term investments were 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-term borrowings and trade accounts payable approximate fair value.

6 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, 2023 November 30, 2022

May 31, 2023 November 30, 2022

Carrying amount $ 4,403.3 $ 3,912.9

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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, 2023 and 2022 (in millions):

The following table presents the components of our pension (income) and other postretirement benefits expense for the three months ended May 31, 2023 and 2022 (in millions):

United States pension International pension Other postretirement benefits

6 unchanged sentences

Total (income) expense $ ( 0.9 ) $ ( 1.0 ) $ ( 1.3 ) $ ( 0.7 ) $ 0.3 $ 0.7

During the three months ended February 28, 2023 and 2022, we contributed $ 1.9 million and $ 2.0 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, 2023 and 2022 (in millions):

United States pension International pension Other postretirement benefits

2023 2022 2023 2022 2023 2022

Service cost $ 1.0 $ 1.8 $ 0.3 $ 0.4 $ 0.6 $ 0.9

Interest costs 18.1 13.2 4.8 3.6 1.2 0.8

Expected return on plan assets ( 21.2 ) ( 21.4 ) ( 7.4 ) ( 6.3 ) — —

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

Amortization of net actuarial losses (gains) 0.1 4.3 ( 0.1 ) 0.7 ( 1.0 ) ( 0.1 )

Total (income) expense $ ( 1.8 ) $ ( 1.9 ) $ ( 2.3 ) $ ( 1.5 ) $ 0.6 $ 1.4

During the six months ended May 31, 2023 and 2022, we contributed $ 3.6 million and $ 4.1 million, respectively, to our pension plans.

Total contributions to our pension plans in fiscal year 2022 were $ 11.4 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 $( 2.6 ) million and $( 2.5 ) million for the three months ended February 28, 2023 and 2022, respectively.

The net aggregate amount of pension and other postretirement benefits (income), excluding service cost components, was $( 2.8 ) million and $( 2.6 ) million for the three months ended May 31, 2023 and 2022, respectively.

For the six months ended May 31, 2023 and 2022, the net aggregate amount of pension and other postretirement benefits income, excluding service cost components was $( 5.4 ) million and $( 5.1 ) million, respectively.

STOCK-BASED COMPENSATION

2 unchanged sentences

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,

2023 2022 2023 2022

Stock-based compensation expense $ 26.7 $ 25.8 $ 38.5 $ 36.9

Our 2023 annual grant of stock options and RSUs is expected to occur in the second quarter, similar to the 2022 annual grant.

The following is a summary of our stock option activity for the three months ended February 28, 2023 and 2022:

Our 2023 annual grant of stock options and RSUs occurred in the second quarter, similar to the 2022 annual grant.

The weighted -average grant-date fair value of each stock option granted in 2023 was $ 19.35 and in 2022 was $ 22.14 as calculated under a lattice pricing model.

Substantially all of the stock options and RSUs granted in 2023 and 2022 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 3.5 % - 4.9 %

0.2 % - 2.5 %

Dividend yield 1.9 % 1.5 %

Expected volatility 21.8 % 21.2 %

Expected lives (in years) 7.3 7.6

The following is a summary of our stock option activity for the six months ended May 31, 2023 and 2022:

(shares in millions) Number

6 unchanged sentences

Exercisable at end of the period 4.0 $ 63.77 3.6 $ 57.87

As of February 28, 2023, the intrinsic value (the difference between the exercise price and the market price) for all options outstanding was $ 60.7 million and for options currently exercisable was $ 59.9 million.

The total intrinsic value of all options exercised during the three months ended February 28, 2023 and 2022 was $ 2.1 million and $ 32.6 million, respectively.

The following is a summary of our RSU activity for the three months ended February 28, 2023 and 2022:

As of May 31, 2023, the intrinsic value (the difference between the exercise price and the market price) for all options outstanding was $ 95.8 million and for options currently exercisable was $ 92.4 million.

The total intrinsic value of all options exercised during the six months ended May 31, 2023 and 2022 was $ 7.4 million and $ 38.2 million, respectively.

The following is a summary of our RSU activity for the six months ended May 31, 2023 and 2022:

(shares in thousands) Number

7 unchanged sentences

Outstanding at end of period 488 $ 77.51 496 $ 78.02

The following is a summary of our price-vested stock options activity for the three months ended February 28, 2023 and 2022:

The following is a summary of our price-vested stock options activity for the six months ended May 31, 2023 and 2022:

(shares in thousands) Number

3 unchanged sentences

Outstanding at beginning of period 2,107 $ 9.40 2,193 $ 9.40

Granted — — — —

Forfeited ( 50 ) 9.40 ( 35 ) 9.40

Outstanding at end of period 2,057 $ 9.40 2,158 $ 9.40

The following is a summary of our LTPP activity for the three months ended February 28, 2023 and 2022:

The following is a summary of our LTPP activity for the six months ended May 31, 2023 and 2022:

(shares in thousands) Number

7 unchanged sentences

Outstanding at end of period 426 $ 93.67 395 $ 93.41

Income tax expense for the three months ended February 28, 2023 included $ 3.8 million of net discrete tax benefits consisting principally of the following:

(i) $ 3.2 million of tax benefits associated with the adjustment of a valuation allowance due to changes in judgment about the realizability of the deferred tax asset, (ii) $ 0.8 million of tax benefits related to the revaluation of deferred taxes resulting from changes in tax rates, and (iii) $ 0.2 million of tax expense associated with stock-based compensation.

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.

Other than additions for current year tax positions, there we re no significant changes to unrecognized tax benefits during the three months ended February 28, 2023.

As of February 28, 2023, 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, 2023 included $ 3.0 million of net discrete tax benefits consisting principally of the following:

(i) $ 1.2 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, (ii) $ 1.2 million of tax benefit related to a tax settlement, and (iii) $ 0.6 million of excess tax benefits associated with stock-based compensation.

Income tax expense for the six months ended May 31, 2023 included $ 6.8 million of net discrete tax benefits consisting principally of the following:

(i) $ 3.2 million of tax benefits associated with the adjustment of a valuation allowance due to changes in judgment about the realizability of the deferred tax asset, (ii) $ 1.2 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, (iii) $ 1.2 million of tax benefit related to a tax settlement (iv) $ 0.8 million of tax benefits related to the revaluation of deferred taxes resulting from changes in tax rates, and (v) $ 0.4 million of excess tax benefits associated with stock-based compensation.

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.

Other than the discrete tax benefits previously mentioned and additions for current year tax positions, there we re no significant changes to unrecognized tax benefits during the six months ended May 31, 2023.

As of May 31, 2023, 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,

2023 2022 2023 2022

Average shares outstanding – basic 268.4 268.3 268.3 268.1

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,

2023 2022 2023 2022

Anti-dilutive securities 1.9 0.5 2.0 0.5

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,

2023 2022 2023 2022

Shares issued under stock options, RSUs, LTPP and employee stock purchase plans 0.3 0.4 0.6 1.3

Shares repurchased under the stock repurchase program and shares withheld for taxes under stock options, RSUs, and LTPP 0.3 0.1 0.4 0.3

As of February 28, 2023, $ 532.4 million remained of the $ 600 million share repurchase program authorization approved by our Board of Directors in November 2019.

As of May 31, 2023, $ 518.6 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, 2023 November 30, 2022

May 31, 2023 November 30, 2022

Foreign currency translation adjustment (1)

$ ( 343.1 ) $ ( 405.3 )

Unrealized gain on foreign currency exchange contracts ( 0.4 ) 3.8

Unrealized gain (loss) on foreign currency exchange contracts ( 5.0 ) 3.8

Unamortized value of settled interest rate swaps ( 2.9 ) ( 0.6 )

1 unchanged sentence

Accumulated other comprehensive loss $ ( 431.5 ) $ ( 480.6 )

(1) During the three months ended February 28, 2023, the foreign currency translation adjustment of accumulated other comprehensive loss increased on a net basis by $ 49.0 million, inclusive of $ 5.8 million of unrealized losses associated with net investment hedges.

(1) During the six months ended May 31, 2023, the foreign currency translation adjustment of accumulated other comprehensive loss decreased on a net basis by $ 62.2 million, inclusive of $ 9.6 million of unrealized losses 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, 2023 February 28, 2022

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

May 31, 2023 May 31, 2022 May 31, 2023 May 31, 2022

(Gains)/losses on cash flow hedges:

5 unchanged sentences

Amortization of pension and postretirement benefit adjustments:

Amortization of net actuarial losses (1)

Amortization of prior service costs (1)

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

Amortization of net actuarial (gains) losses (1)

$ ( 0.6 ) $ 2.3 ( 1.0 ) 4.9 Other income, net

Total before tax ( 0.5 ) 2.4 ( 0.9 ) 5.0

20 unchanged sentences

(in millions)

Three months ended February 28, 2023

Three months ended May 31, 2023

Net sales $ 912.1 $ 747.1 $ 1,659.2

1 unchanged sentence

Income from unconsolidated operations 10.8 ( 0.5 ) 10.3

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

Six months ended May 31, 2023

Net sales $ 1,821.6 $ 1,403.1 $ 3,224.7

Operating income excluding special charges 327.0 134.8 461.8

Income from unconsolidated operations 24.6 ( 0.3 ) 24.3

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

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, 2023

Three months ended May 31, 2023

Operating income excluding special charges $ 153.6 $ 81.4 $ 235.0

1 unchanged sentence

Operating income $ 145.2 $ 76.6 $ 221.8

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

The following table sets forth our net sales, by geographic area, for the three and three months ended February 28, 2023 and 2022 (in millions):

Six months ended May 31, 2023

Operating income excluding special charges $ 327.0 $ 134.8 $ 461.8

Special charges 27.4 13.6 41.0

Operating income $ 299.6 $ 121.2 $ 420.8

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

The following table sets forth our net sales, by geographic area, for the three and six months ended May 31, 2023 and 2022 (in millions):

Americas EMEA Asia/Pacific Total

Three months ended February 28, 2023

Three months ended May 31, 2023

$ 1,177.9 $ 310.6 $ 170.7 $ 1,659.2

Three months ended February 28, 2022

Three months ended May 31, 2022

1,102.6 287.8 146.4 1,536.8

Six months ended May 31, 2023

2,272.5 594.6 357.6 3,224.7

Six months ended May 31, 2022

2,125.0 578.3 355.9 3,059.2

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