What changed in this filing

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Item 1. Financial Statements

2023-10-03 compared with 2023-06-29 · 157 added, 121 removed, 508 unchanged (35% of the section changed)

3 unchanged sentences

(in millions except per share amounts)

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

Three months ended August 31, Nine months ended August 31,

2023 2022 2023 2022

24 unchanged sentences

(in millions)

Three months ended May 31,

Six months ended May 31,

Three months ended August 31,

Nine months ended August 31,

2023 2022 2023 2022

49 unchanged sentences

(in millions)

Six months ended May 31,

Nine months ended August 31,

Operating activities

4 unchanged sentences

Gain on the sale of intangible asset — ( 13.6 )

Gain on the sale of a business — ( 49.6 )

Asset impairment charge — 10.0

Income from unconsolidated operations ( 37.7 ) ( 27.2 )

Changes in operating assets and liabilities

Changes in operating assets and liabilities (net of effect of business disposed)

Trade accounts receivable ( 22.9 ) ( 43.6 )

5 unchanged sentences

Investing activities

Proceeds from sale of business — 95.2

Proceeds from sale of intangible asset — 13.6

11 unchanged sentences

Dividends paid ( 313.8 ) ( 297.5 )

Other financing activities 1.6 —

Net cash flow used in financing activities ( 701.2 ) ( 173.7 )

9 unchanged sentences

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

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

Three months ended August 31, 2023

Balance, May 31, 2023 17.2 251.0 $ 2,177.1 $ 3,191.4 $ ( 431.5 ) $ 19.9 $ 4,956.9

Net income — 170.1 — — 170.1

6 unchanged sentences

Equal exchange ( 0.2 ) 0.2 — — — — —

Balance, May 31, 2023

Balance, August 31, 2023

17.0 251.2 $ 2,191.5 $ 3,251.7 $ ( 393.9 ) $ 20.8 $ 5,070.1

Six months ended May 31, 2023

Nine months ended August 31, 2023

Balance, November 30, 2022

2 unchanged sentences

Net income attributable to non-controlling interest — — — 3.5 3.5

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

Other comprehensive income, net of tax — — 86.7 ( 1.4 ) 85.3

Dividends — ( 209.3 ) — — ( 209.3 )

3 unchanged sentences

Equal exchange ( 0.6 ) 0.6 — — — — —

Balance, May 31, 2023

Balance, August 31, 2023

17.0 251.2 $ 2,191.5 $ 3,251.7 $ ( 393.9 ) $ 20.8 $ 5,070.1

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

Three months ended August 31, 2022

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

Net income — 222.9 — — 222.9

Net income attributable to non-controlling interest — — — 1.5 1.5

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

Other comprehensive income, net of tax — — ( 135.4 ) ( 1.0 ) ( 136.4 )

Dividends — ( 99.2 ) — — ( 99.2 )

3 unchanged sentences

Equal exchange ( 0.1 ) 0.1 — — — — —

Balance, May 31, 2022

Balance, August 31, 2022

17.6 250.6 $ 2,130.9 $ 3,048.4 $ ( 590.0 ) $ 17.4 $ 4,606.7

Six months ended May 31, 2022

Nine months ended August 31, 2022

Balance, November 30, 2021

2 unchanged sentences

Net income attributable to non-controlling interest — — — 5.2 5.2

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

Other comprehensive income, net of tax — — ( 163.5 ) ( 2.3 ) ( 165.8 )

Dividends — ( 198.4 ) — — ( 198.4 )

3 unchanged sentences

Equal exchange ( 1.0 ) 1.0 — — — — —

Balance, May 31, 2022

Balance, August 31, 2022

17.6 250.6 $ 2,130.9 $ 3,048.4 $ ( 590.0 ) $ 17.4 $ 4,606.7

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 six-month period ended May 31, 2023 are not necessarily indicative of the results to be expected for the full year.

The results of consolidated operations for the nine-month period ended August 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.

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Liabilities - Supplier Finance Programs (Topic 450-50):

Disclosure of Supplier Finance Program Obligations that requires entities that use supplier finance programs in connection with the purchase of goods and services to disclose the key terms of the programs and information about obligations outstanding at the end of the reporting period, including a roll forward of those obligations.

Disclosure of Supplier Finance Program Obligations that requires entities that use supplier finance programs in connection with the purchase of goods and services to enhance the transparency of these programs by disclosing the key terms of the programs and information about obligations outstanding at the end of the reporting period, including a roll forward of those obligations.

The guidance does not affect the recognition, measurement or financial statement presentation of supplier finance program obligations.

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Early adoption is permitted.

We are currently evaluating the impact that this new guidance will have on our consolidated financial statements.

We do not believe the adoption of this new standard will have a material impact on our consolidated financial statements.

SPECIAL CHARGES AND TRANSACTION AND INTEGRATION EXPENSES

1 unchanged sentence

In our consolidated income statement, we include a separate line item captioned "Special charges" in arriving at our consolidated operating income.

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.

1 unchanged sentence

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 and six months ended May 31, 2023 and 2022

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

(in millions):

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

Three months ended August 31, Nine months ended August 31,

2023 2022 2023 2022

5 unchanged sentences

Total $ 6.1 $ 3.4 $ 47.1 $ 38.0

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.

During the three months ended August 31, 2023, we recorded $ 6.1 million of special charges, consisting principally of $ 3.6 million associated with our Global Operating Effectiveness (GOE) program, as more fully described below, $ 1.7 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 $ 0.8 million in the Americas region.

During the nine months ended August 31, 2023, we recorded $ 47.1 million of special charges, consisting principally of $ 37.0 million associated with our GOE program, as more fully described below, $ 3.9 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 $ 0.9 million in the EMEA region.

During the three months ended August 31, 2022, we recorded $ 3.4 million of special charges.

Those special charges principally consisted of $ 1.0 million associated with the transition of a manufacturing facility in EMEA, as more fully described below, $ 0.8 million associated with the exit of our consumer business in Russia, as more fully described below, and streamlining actions of $ 0.4 million in the Americas region, and $ 1.2 million in the EMEA region.

During the nine months ended August 31, 2022, we recorded $ 38.0 million of net special charges.

Those special charges consisted principally of $ 23.0 million associated with the exit of our consumer business in Russia, as more fully described below, $ 18.4 million associated with the transition of a manufacturing facility in EMEA, as more fully described below, and streamlining actions of $ 5.7 million in the Americas region, and $ 5.5 million in the EMEA region.

7 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 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.

Other special charges recognized during the three months ended August 31, 2023, under our GOE program included $ 0.9 million in severance and related benefits costs and $ 2.7 million of third-party expenses and other costs.

Other special charges recognized during the nine months ended August 31, 2023, under our GOE program included $ 12.4 million in severance and related benefits costs and $ 4.9 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 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,

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, 2023 and the first half of 2024.

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 August 31, 2023, we

recognized $ 0.4 million in accelerated depreciation and $ 1.3 million in third party expenses and other costs.

During the nine months ended August 31, 2023, we recognized $ 1.2 million in accelerated depreciation and $ 2.7 million in third party expenses and other costs.

During the three months ended August 31, 2022, we recorded $ 0.6 million in accelerated depreciation and $ 0.4 million in third party expenses and other costs.

During the nine months ended August 31, 2022, we recorded $ 12.5 million in severance and related benefits costs, $ 3.3 million in accelerated depreciation and $ 2.6 million in third party expenses and other costs.

As of August 31, 2023, accruals associated with special charges of $ 20.7 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 nine months ended August 31, 2023 and 2022 (in millions):

Three months ended August 31,

Nine months ended August 31,

2023 2022 2023 2022

3 unchanged sentences

Integration Expenses

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).

Integration expenses recognized during the nine months ended August 31, 2022 were $ 2.2 million, 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.

Interest is payable semi-annually 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.

1 unchanged sentence

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.

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 $ 500 million revolving credit facility which was set to expire in July 2023.

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

2 unchanged sentences

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

On September 1, 2023, we repaid our $ 250 million, 3.50 % notes due in September 2023.

In the third quarter 2023, we executed a nonrecourse accounts receivable sale program whereby certain eligible U.S.

receivables are sold to third party financial institution in exchange for cash.

The program provides us with an additional means for managing liquidity.

Under the terms of the arrangement, we act as the collecting agent on behalf of the financial institution.

We account for the transfer of receivables as a sale at the point control is transferred through derecognition of the receivable on our condensed consolidated balance sheet.

Receivables sold under this program were approximately $ 26.1 million during the three and nine months ended August 31, 2023.

Of that amount, we collected $ 11.3 million on behalf of the financial institution during the three and nine months ended August 31, 2023.

The incremental costs of selling receivables under this arrangement were insignificant for the three and nine months ended August 31, 2023.

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.

6 unchanged sentences

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

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.

At August 31, 2023, we had foreign currency exchange contracts to purchase or sell $ 966.5 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 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.

All foreign currency exchange contracts outstanding at August 31, 2023 have durations of less than 18 months, including $ 178.6 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.

1 unchanged sentence

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 $ 725.6 million at May 31, 2023.

Hedges of foreign currency denominated assets and liabilities include foreign currency exchange contracts with a notional value of $ 757.3 million at August 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 May 31, 2023

As of August 31, 2023

Interest rate contracts Other current

16 unchanged sentences

LIBOR plus 0.685 %).

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.

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.

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.

In the second quarter of 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):

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 nine months ended August 31, 2023 and 2022 (in millions):

Fair Value Hedges

1 unchanged sentence

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

Three months ended August 31, 2023 Three months ended August 31, 2022 Nine months ended August 31, 2023 Nine months ended August 31, 2022

Interest rate contracts Interest expense $ ( 4.9 ) $ 0.6 $ ( 12.6 ) $ 5.4

1 unchanged sentence

Derivative 2023 2022 Hedged item 2023 2022

Three months ended May 31,

Three months ended August 31,

Foreign exchange contracts Other income, net $ ( 12.4 ) $ 3.6 Intercompany loans Other income, net $ 10.0 $ ( 3.2 )

Six months ended May 31,

Nine months ended August 31,

Foreign exchange contracts Other income, net $ ( 18.1 ) $ 6.9 Intercompany loans Other income, net $ 17.1 $ ( 6.1 )

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 and six months ended May 31, 2023 and 2022.

Cash Flow Hedges

4 unchanged sentences

2023 2022 2023 2022

Three months ended May 31,

Three months ended August 31,

Interest rate contracts $ — $ 1.8 Interest

2 unchanged sentences

Total $ 0.7 $ 4.6 $ ( 0.4 ) $ 19.5

Six months ended May 31,

Nine months ended August 31,

Interest rate contracts $ ( 2.6 ) $ 18.7 Interest

1 unchanged sentence

Foreign exchange contracts ( 1.7 ) 5.2 Cost of goods

sold ( 1.3 ) —

Total $ ( 4.3 ) $ 23.9 $ 1.1 $ 19.8

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.

As of August 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 $ 0.5 million as a decrease to earnings.

Net Investment Hedges

4 unchanged sentences

2023 2022 2023 2022

Three months ended May 31,

Three months ended August 31,

Cross currency contracts $ ( 8.0 ) $ 29.7 Interest

expense $ 2.7 $ 2.4

Six months ended May 31,

Nine months ended August 31,

Cross currency contracts $ ( 17.6 ) $ 51.8 Interest

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

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.

At August 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):

August 31, 2023

Fair Value Level 1 Level 2

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Total $ 52.2 $ — $ 52.2

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.

At August 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):

May 31, 2023 November 30, 2022

August 31, 2023 November 30, 2022

Carrying amount $ 4,390.1 $ 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 May 31, 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 August 31, 2023 and 2022 (in millions):

United States pension International pension Other postretirement benefits

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Amortization of net actuarial losses (gains) 0.1 2.2 — 0.3 ( 0.6 ) ( 0.1 )

Settlement loss — — — 0.2 — —

Total (income) expense $ ( 0.8 ) $ ( 0.9 ) $ ( 1.2 ) $ ( 0.7 ) $ 0.4 $ 0.7

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):

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

United States pension International pension Other postretirement benefits

5 unchanged sentences

Amortization of net actuarial losses (gains) 0.2 6.5 ( 0.1 ) 1.0 ( 1.6 ) ( 0.2 )

Settlement loss — — — 0.2 — —

Total (income) expense $ ( 2.6 ) $ ( 2.8 ) $ ( 3.5 ) $ ( 2.2 ) $ 1.0 $ 2.1

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

During the nine months ended August 31, 2023 and 2022, we contributed $ 7.4 million and $ 9.9 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 $( 2.8 ) 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.

The net aggregate amount of pension and other postretirement benefits (income), excluding service cost components, was $( 2.7 ) million and $( 2.4 ) million for the three months ended August 31, 2023 and 2022, respectively.

For the nine months ended August 31, 2023 and 2022, the net aggregate amount

of pension and other postretirement benefits income, excluding service cost components was $( 8.1 ) million and $( 7.5 ) million, respectively.

STOCK-BASED COMPENSATION

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

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

Three months ended August 31, Nine months ended August 31,

2023 2022 2023 2022

9 unchanged sentences

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:

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

(shares in millions) Number

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Exercisable at end of the period 3.9 $ 64.29 3.5 $ 57.97

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:

As of August 31, 2023, the intrinsic value (the difference between the exercise price and the market price) for all options outstanding was $ 78.1 million and for options currently exercisable was $ 77.9 million.

The total intrinsic value of all options exercised during the nine months ended August 31, 2023 and 2022 was $ 11.1 million and $ 40.2 million, respectively.

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

(shares in thousands) Number

7 unchanged sentences

Outstanding at end of period 479 $ 77.38 490 $ 77.86

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

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

(shares in thousands) Number

5 unchanged sentences

Outstanding at end of period 2,055 $ 9.40 2,131 $ 9.40

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

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

(shares in thousands) Number

7 unchanged sentences

Outstanding at end of period 424 $ 93.68 393 $ 93.40

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.

Income tax expense for the three months ended August 31, 2023 included $ 3.3 million of net discrete tax benefits consisting principally of the following:

(i) $ 2.2 million of tax benefits from the net reversal of certain prior year reserves for unrecognized tax benefits and related interest in non-U.S.

jurisdictions, (ii) $ 0.8 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 non-U.S.

jurisdictions, (iii) $ 0.6 million of excess tax benefits associated with stock-based compensation, (iv) $ 1.5 million of tax benefits resulting from an adjustment to a prior year tax accrual, and related deferred taxes, based on the final returns filed, and (v) $ 1.9 million of tax expense related to certain unremitted prior year earnings.

Income tax expense for the nine months ended August 31, 2023 included $ 10.1 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) $ 2.2 million of tax benefits from the net reversal of certain prior reserves for unrecognized tax benefits and related interest in non-U.S.

jurisdictions, (iii) $ 2.0 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 non-U.S.

jurisdictions, (iv) $ 1.2 million of tax benefit related to a tax settlement, (v) $ 0.8 million of tax benefits related to the revaluation of deferred taxes resulting from changes in tax rates, (vi) $ 1.0 million of excess tax benefits associated with stock-based compensation, (vii) $ 1.5 million of tax benefits resulting from an adjustment to a prior year tax accrual, and related deferred taxes, based on the final returns filed, and (viii) $ 1.9 million of tax expense related to certain unremitted prior year earnings.

Income tax expense for the three months ended August 31, 2022 included $ 3.8 million of net discrete tax expense consisting principally of the following:

(i) $ 11.6 million of tax expense related to the sale of a business, (ii) $ 1.4 million of net tax benefits related to the revaluation of deferred taxes resulting from enacted legislation, (iii) $ 4.7 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 and (iv) $ 1.3 million of tax benefits resulting from an adjustment to a prior year tax accrual based on the final return filed.

Income tax expense for the nine months ended August 31, 2022 included $ 15.5 million of net discrete tax benefits consisting principally of the following:

(i) $ 9.0 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) $ 3.9 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, (v) $ 6.2 million of tax benefits from the resolution of tax uncertainties, including the reversal of certain reserves for unrecognized tax benefits and related interest associated with the expiration of statutes of limitations, (vi) $ 1.3 million of tax

benefits resulting from an adjustment to a prior year tax accrual based on the final return filed, and (vii) $ 11.6 million of tax expense related to the sale of a business.

As of August 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 May 31, Six months ended May 31,

Three months ended August 31, Nine months ended August 31,

2023 2022 2023 2022

4 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 May 31, Six months ended May 31,

Three months ended August 31, Nine months ended August 31,

2023 2022 2023 2022

1 unchanged sentence

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

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

Three months ended August 31, Nine months ended August 31,

2023 2022 2023 2022

1 unchanged sentence

Shares repurchased under the stock repurchase program and shares withheld for taxes under stock options, RSUs, and LTPP 0.1 0.2 0.5 0.5

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.

As of August 31, 2023, $ 510.5 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):

May 31, 2023 November 30, 2022

August 31, 2023 November 30, 2022

Foreign currency translation adjustment (1)

$ ( 312.1 ) $ ( 405.3 )

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

Unrealized gain on foreign currency exchange contracts 1.8 3.8

Unamortized value of settled interest rate swaps ( 2.8 ) ( 0.6 )

1 unchanged sentence

Accumulated other comprehensive loss $ ( 393.9 ) $ ( 480.6 )

(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.

(1) During the nine months ended August 31, 2023, the foreign currency translation adjustment of accumulated other comprehensive loss decreased on a net basis by $ 93.2 million, inclusive of $ 17.6 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 Six months ended Affected Line Items in the Condensed Consolidated Income Statement

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

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

August 31, 2023 August 31, 2022 August 31, 2023 August 31, 2022

(Gains)/losses on cash flow hedges:

Interest rate derivatives $ — $ ( 0.1 ) $ ( 0.2 ) $ ( 0.4 ) Interest expense

Treasury lock contracts (1)

— ( 18.7 ) — ( 18.7 ) Other income, net

Foreign exchange contracts 0.4 ( 0.7 ) ( 0.9 ) ( 0.7 ) Cost of goods sold

10 unchanged sentences

Net, after tax $ ( 0.3 ) $ 2.2 $ ( 1.0 ) $ 6.0

(1) The settlement of these treasury locks is further described in note 11.

(2) This accumulated other comprehensive income (loss) component is included in the computation of total pension (income) and other postretirement benefits expense (refer to note 5 for additional details).

4 unchanged sentences

Our consumer segment sells to retail channels, including grocery, mass merchandise, warehouse clubs, discount and drug stores, and e-commerce under the “McCormick” brand and a variety of brands around the world, including “French’s”, “Frank’s RedHot”, “OLD BAY”, “Lawry’s”, “Zatarain’s”, “Simply Asia”, “Thai Kitchen”, “Ducros”, “Vahine”, “Cholula”, “Schwartz”, “Club House”, “Kamis”, “DaQiao”, “La Drogheria”, “Stubb's”, and “Gourmet Garden”.

Our flavor solutions segment sells to food manufacturers and the foodservice industry both directly and indirectly through distributors, with the exception of our business in China, where foodservice sales are managed by and reported in our consumer segment.

Our flavor solutions

segment sells to food manufacturers and the foodservice industry both directly and indirectly through distributors, with the exception of our business in China, where foodservice sales are managed by and reported in our consumer segment.

In each of our segments, we produce and sell many individual products which are similar in composition and nature.

10 unchanged sentences

(in millions)

Three months ended May 31, 2023

Three months ended August 31, 2023

Net sales $ 937.1 $ 747.6 $ 1,684.7

1 unchanged sentence

Income from unconsolidated operations 11.9 1.5 13.4

Three months ended May 31, 2022

Three months ended August 31, 2022

Net sales $ 927.9 $ 667.7 $ 1,595.6

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

Operating income excluding special charges 183.7 54.9 238.6

Income from unconsolidated operations 6.6 0.9 7.5

Six months ended May 31, 2023

Nine months ended August 31, 2023

Net sales $ 2,758.7 $ 2,150.7 $ 4,909.4

1 unchanged sentence

Income from unconsolidated operations 36.5 1.2 37.7

Six months ended May 31, 2022

Nine months ended August 31, 2022

Net sales $ 2,720.1 $ 1,934.7 $ 4,654.8

3 unchanged sentences

Consumer Flavor Solutions Total

Three months ended May 31, 2023

Three months ended August 31, 2023

Operating income excluding special charges $ 173.3 $ 77.8 $ 251.1

1 unchanged sentence

Operating income $ 171.1 $ 73.9 $ 245.0

Three months ended May 31, 2022

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

Three months ended August 31, 2022

Operating income excluding special charges $ 183.7 $ 54.9 $ 238.6

Special charges 1.8 1.6 3.4

Transaction and integration expenses — 1.5 1.5

Operating income $ 181.9 $ 53.3 $ 235.2

Six months ended May 31, 2023

Nine months ended August 31, 2023

Operating income excluding special charges $ 500.3 $ 212.6 $ 712.9

1 unchanged sentence

Operating income $ 470.7 $ 195.1 $ 665.8

Six months ended May 31, 2022

Nine months ended August 31, 2022

Operating income excluding special charges and transaction and integration expenses $ 475.5 $ 164.0 $ 639.5

2 unchanged sentences

Operating income $ 459.4 $ 139.9 $ 599.3

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 May 31, 2023

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

Americas EMEA APAC Total

Three months ended August 31, 2023

$ 1,203.3 $ 304.4 $ 177.0 $ 1,684.7

Three months ended May 31, 2022

Three months ended August 31, 2022

1,141.7 262.9 191.0 1,595.6

Six months ended May 31, 2023

Nine months ended August 31, 2023

3,475.8 899.0 534.6 4,909.4

Six months ended May 31, 2022

Nine months ended August 31, 2022

3,266.8 841.2 546.8 4,654.8

OTHER INCOME, NET

The following is a summary of other income, net recognized in the three and nine months ended August 31, 2023 and 2022

(in millions):

Three months ended August 31, Nine months ended August 31,

2023 2022 2023 2022

Gain on sale of business $ — $ 49.6 $ — $ 49.6

Gain on settlement of treasury lock — 18.7 — 18.7

Pension and other postretirement benefit income 2.7 2.4 8.0 7.5

Interest income 9.4 4.8 26.4 11.7

Other ( 5.0 ) 1.9 ( 3.7 ) 2.4

Total other income, net $ 7.1 $ 77.4 $ 30.7 $ 89.9

During the three months ended May 31, 2022, we entered into treasury lock arrangements with a notional amount totaling $ 200 million in order to manage our interest rate risk associated with the anticipated issuance of at least $ 200 million of fixed

rate debt by August 2022.

We designated these treasury lock arrangements as cash flow hedges with any unrealized gain, prior to settlement, recognized in accumulated other comprehensive income.

During the three months ended August 31, 2022, we settled $ 200 million notional treasury locks upon determining we would not issue fixed rate debt but rather enter into a $ 500 million 364-day revolving credit facility.

The proceeds received upon settlement of these treasury lock arrangements were $ 18.7 million.

On August 3, 2022, we sold the Kitchen Basics business for $ 95.2 million in cash, net of transaction expenses of $ 3.8 million.

Assets disposed of principally included inventory, intangible assets ($ 6.3 million) and goodwill ($ 21.5 million).

The sale of Kitchen Basics resulted in a pre-tax gain of $ 49.6 million.

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