What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-01-23 compared with 2024-01-25 · 121 added, 156 removed, 1383 unchanged (17% of the section changed)

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Our internal control over financial reporting as of November 30, 2024 has been audited by Ernst & Young LLP.

President & Chief Executive Officer

Chairman, President & Chief Executive Officer

Executive Vice President &

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How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of the Company's controls over the Company’s indefinite-lived intangible asset impairment assessments, including controls over management’s review of its asset groupings and the significant assumptions described above.

We tested controls over the review of methodologies used, significant assumptions and inputs, and completeness and accuracy of the data used in the measurements.

We tested controls over the review of methodologies used, significant assumptions and inputs, asset groupings, and completeness and accuracy of the data used in the measurements.

To test the estimated fair value of the Company’s indefinite-lived intangible assets, we performed audit procedures that included, among others, evaluating the asset groupings used by the Company to perform its impairment assessments, assessing the methodologies, and testing the significant assumptions discussed above and the underlying data used by the Company in its analyses.

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Common stock;

authorized 640.0 shares;

issued and outstanding:

2023–16.8 shares, 2022–17.4 shares 597.1 568.6

640.0 shares authorized;

15.7 and 16.8 shares issued and outstanding, respectively

Common stock non-voting;

authorized 640.0 shares;

issued and outstanding:

2023–251.3 shares, 2022–250.6 shares 1,602.5 1,570.0

640.0 shares authorized;

252.3 and 251.3 shares issued and outstanding, respectively

1,649.6 1,602.5

Retained earnings 3,545.0 3,249.7

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Stock-based compensation 47.4 63.4 60.3

Loss (gain) on the sale of businesses and intangible assets 1.2 ( 63.2 ) —

Loss (gain) on the sale of businesses — 1.2 ( 63.2 )

Asset impairments included in special charges — — 10.0

Amortization of inventory fair value adjustments associated with acquisitions — — 6.3

Loss (gain) on sale of assets 0.2 ( 0.5 ) 0.2

(Gain) loss on sale of assets ( 2.1 ) 0.2 ( 0.5 )

Deferred income tax expense (benefit) ( 30.3 ) ( 5.4 ) 21.8

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Investing activities

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

Proceeds from sale of business — 1.0 95.2

Proceeds from sale of unconsolidated operation — — 65.4

Proceeds from sale of intangible asset — — 13.6

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Other financing activities 8.0 1.6 —

Net cash (used in) provided by financing activities ( 1,184.2 ) ( 487.2 ) 22.0

Net cash used in financing activities ( 583.1 ) ( 1,184.2 ) ( 487.2 )

Effect of exchange rate changes on cash and cash equivalents ( 50.3 ) 40.0 ( 35.6 )

Decrease in cash and cash equivalents ( 167.4 ) ( 17.7 ) ( 71.9 )

Increase (decrease) in cash and cash equivalents 19.5 ( 167.4 ) ( 17.7 )

Cash and cash equivalents at beginning of year 166.6 334.0 351.7

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Foreign Currency Translation

For majority-owned or controlled subsidiaries and affiliates, if located outside of the U.S., with functional currencies other than the U.S.

dollar, asset and liability accounts are translated at the rates of exchange at the balance sheet date and the resultant translation adjustments are included in accumulated other comprehensive income (loss), a separate component of shareholders’ equity.

Income and expense items are translated at average monthly rates of exchange.

Gains and losses from foreign currency transactions of these majority-owned or controlled subsidiaries and affiliates — that is, transactions denominated in other than their functional currency — other than intercompany transactions designated as long-term investments, are included in net income.

For majority-owned or controlled subsidiaries and affiliates located outside of the U.S.

that use functional currencies other than the U.S.

dollar, asset and liability accounts are translated at the exchange rates in effect at the balance sheet date.

The resulting translation adjustments are included in accumulated other comprehensive income (loss), which is a separate component of shareholders’ equity.

Income and expense items are translated at average monthly exchange rates.

Gains and losses from foreign currency transactions of these majority-owned or controlled subsidiaries and affiliates — specifically, transactions denominated in currencies other than their functional currency—are included in net income, except for intercompany transactions designated as long-term investments.

Our unconsolidated affiliates located outside the U.S.

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Capitalization of these costs stops, and amortization begins, when the project is substantially complete and ready for use.

The net book value of capitalized software totaled $ 159.9 million and $ 160.6 million at November 30, 2023 and 2022, respectively.

Capitalized software is classified within "Other long-term assets" in the consolidated balance

Capitalized software is classified within "Other long-term assets" in the consolidated balance sheet.

Software is amortized using the straight-line method over estimated useful lives ranging from 3 to 13 years, but not exceeding the expected life of the product.

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The terms of our payment obligation are not impacted by a supplier’s participation in the SCF.

Under the SCF, qualifying suppliers may elect to sell their receivables from us to an SCF Bank.

Under the SCF, qualifying suppliers may elect to sell their receivables from us to a SCF Bank.

These participating suppliers negotiate their receivables sales arrangements directly with the respective SCF Bank.

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(millions) Americas EMEA APAC Total

Net sales $ 4,756.9 $ 1,212.8 $ 692.5 $ 6,662.2

Net sales $ 4,551.7 $ 1,116.4 $ 682.4 $ 6,350.5

Net sales $ 4,396.1 $ 1,191.3 $ 730.5 $ 6,317.9

2024 $ 4,801.9 $ 1,239.3 $ 682.5 $ 6,723.7

2023 $ 4,756.9 $ 1,212.8 $ 692.5 $ 6,662.2

2022 $ 4,551.7 $ 1,116.4 $ 682.4 $ 6,350.5

Performance Obligations

Our revenues primarily result from contracts or purchase orders with customers, which generally are both short-term in nature and have a single performance obligation—the delivery of our products to customers.

We assess the

goods and services promised in our customers’ contracts or purchase orders and identify a performance obligation for each promise to transfer a good or service (or bundle of goods or services) that is distinct.

We assess the goods and services promised in our customers’ contracts or purchase orders and identify a performance obligation for each promise to transfer a good or service (or bundle of goods or services) that is distinct.

To identify the performance obligations, we consider all the goods or services promised, whether explicitly stated or implied based on customary business practices.

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The corridor approach defers all actuarial gains and losses resulting from variances between actual results and actuarial assumptions.

Those unrecognized gains and losses are amortized when the net gains and losses exceed 10% of the greater of the market-related value of plan assets or the projected benefit obligation at the beginning of the year.

Those unrecognized gains and losses are amortized when the net gains and losses exceed 10% of

the greater of the market-related value of plan assets or the projected benefit obligation at the beginning of the year.

The amount in excess of the corridor is amortized over the average remaining life expectancy of retired plan participants, for plans whose benefits have been frozen, or the average remaining service period to retirement date of active plan participants.

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The guidance does not affect recognition or measurement in our consolidated financial statements.

ACQUISITIONS AND DISPOSITIONS

Acquisition of FONA International LLC

On December 30, 2020, we purchased FONA International, LLC and certain of its affiliates (FONA), a privately held company, for a purchase price of approximately $ 708.2 million, net of cash acquired.

That purchase price includes the payment of $ 2.6 million during 2021 associated with the final working capital adjustment.

FONA is a leading manufacturer of clean and natural flavors providing solutions for a diverse customer base across various applications for the food, beverage and nutritional markets.

The acquisition of FONA expands the breadth of our flavor solutions segment into attractive categories, as well as extends our technology platform and strengthens our capabilities.

The acquisition was funded with cash and commercial paper.

At the time of the acquisition, annual sales of FONA were approximately $ 114 million.

The results of FONA’s operations have been included in our financial statements as a component of our flavor solutions segment from the date of acquisition.

Transaction and Integration Expenses Associated with the Cholula and FONA Acquisitions

The following are the transaction and integration expenses recognized related to the Cholula and FONA acquisitions for the years ended November 30 (in millions):

2023 2022 2021

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

Other transaction expenses — — 13.8

Integration expenses — 2.2 15.2

Total transaction and integration expenses $ — $ 2.2 $ 35.3

We valued finished goods and work-in-process inventory associated with our December 30, 2020, purchase of FONA International, LLC and certain of its affiliates (FONA) and our November 30, 2020 acquisition of Cholula using a net realizable value approach, which resulted in total a step-up of $ 6.3 million that was recognized in cost of goods sold in 2021 as the related inventory was sold.

Raw materials and packaging inventory was valued using the replacement cost approach.

Disposal of Kitchen Basics

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.

In November 2024, the FASB issued ASU No.

Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures that requires more detailed disclosure about certain costs and expenses presented in the income statement, including inventory purchases, employee compensation, selling expense and depreciation expense.

The guidance is effective for our annual period ending November 30, 2028 and our interim periods during the fiscal year ending November 30, 2029.

The guidance does not affect recognition or measurement in our consolidated financial statements.

SPECIAL CHARGES

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 President and Chief Executive Officer.

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, President and Chief Executive Officer.

Upon presentation of any such proposed action (generally including details with respect to estimated costs, which typically consist principally of employee severance and related benefits, together with ancillary costs associated with the action that may include a non-cash component, such as an asset impairment, or a component which relates to inventory adjustments that are included in cost of goods sold;

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Gain on sale of exited brand — — ( 13.6 )

Special charges included in Cost of goods sold — — 4.7

Total special charges $ 9.5 $ 61.2 $ 51.6

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

During 2023, we recorded $ 61.2 million of special charges, consisting principally of $ 42.8 million associated with our GOE program, as more fully described below, $ 8.7 million associated with the transition of a manufacturing facility in EMEA, as more fully described below, and streamlining actions of $ 8.8 million in the Americas region, and $ 0.9 million in the EMEA region.

During 2022, we recorded $ 51.6 million of special charges, consisting principally of $ 23.3 million associated with the exit of our consumer business in Russia, as more fully described below, $ 21.5 million associated with the transition of a manufacturing facility in EMEA, as more fully described below, and streamlining actions of $ 8.0 million in the Americas region, and $ 7.1 million in the EMEA region, and $ 5.6 million associated with a U.S.

During 2024, we recognized $ 9.5 million of special charges, consisting of $ 4.5 million associated with our GOE program, as more fully described below, and $ 5.0 million associated with the transition of a manufacturing facility in EMEA, as more fully described below.

During 2023, we recognized $ 61.2 million of special charges, consisting principally of $ 42.8 million associated with our GOE program, as more fully described below, $ 8.7 million associated with the transition of a manufacturing facility in EMEA, as more fully described below, and streamlining actions of $ 8.8 million in the Americas region, and $ 0.9 million in the EMEA region.

During 2022, we recognized $ 51.6 million of special charges, consisting principally of $ 23.3 million associated with the exit of our consumer business in Russia, as more fully described below, $ 21.5 million associated with the transition of a manufacturing facility in EMEA, as more fully described below, and streamlining actions of $ 8.0 million in the Americas region, and $ 7.1 million in the EMEA region, and $ 5.6 million associated with a U.S.

voluntary retirement program, as more fully described below.

These charges were partially 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.

These charges were partially offset by a $ 13.6 million gain on the sale of our Kohinoor brand, 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.

In 2022, our Management Committee approved the GOE program.

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As of November 30, 2022, we had accrued special charges of $ 5.6 million consisting of employee severance and related benefits.

Upon all eligible employees submitting their notifications by the end of December 2022, we accrued an additional $ 19.7 million during the first quarter of 2023.

Upon all eligible

employees submitting their notifications by the end of December 2022, we accrued an additional $ 19.7 million during the first quarter of 2023.

All related payments were made in fiscal year 2023 as all of the affected employees retired from the Company in 2023.

Other special charges recognized during the year ended November 30, 2023, under our GOE program included $ 13.4 million in severance and related benefits costs and $ 9.7 million of third-party expenses and other costs.

Other special charges recognized during the year ended November 30, 2024, under our GOE program included $ 4.2 million in severance and related benefit costs and $ 0.3 million of third-party expenses and other costs.

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

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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 through 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.

We expect the cost of the initiative to approximate $ 41 million—to be recognized as special charges in our consolidated income statement through 2024 - including 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 2024, we recognized a reversal of $ 1.5 million associated with severance and related benefit costs, based on a change in estimate, and $ 6.5 million in third-party expenses and other costs.

During 2023, we recognized $ 1.6 million in accelerated depreciation and $ 7.1 million in third party expenses and other costs.

During 2022, we recognized $ 12.6 million in severance and related benefits costs, $ 6.2 million in accelerated depreciation, and $ 2.7 million in third-party expenses and other costs.

During 2021, we recorded $ 51.1 million of special charges, of which $ 46.4 million was recognized in Special charges and $ 4.7 million was recognized in Cost of goods sold on our consolidated income statement.

Special charges in 2021 consisted principally of $ 19.5 million associated with our exit of our rice product line in India, as more fully described below, $ 6.2 million associated with the transition of a manufacturing facility in EMEA, streamlining actions of $ 10.3 million in the Americas region, $ 4.8 million in the EMEA region and $ 0.8 million in the APAC region, and $ 0.8 million related to our Global Business Services (GBS) operating model initiative, together with a non-cash asset impairment charge of $ 6.0 million associated with an administrative site that was sold in conjunction with our decision to employ a hybrid work environment.

In 2021, we recorded a total of $ 19.5 million of special charges related to the exit of our Kohinoor rice product line in India.

This action principally relates to the discontinuance of Kohinoor's rice business consistent with our focus on higher margin products to enable the business to focus on both its flavor solutions and non-rice consumer business.

As a result of the Kohinoor rice product line exit, we determined that an impairment of the Kohinoor brand name had occurred in 2021 and recorded a non-cash impairment charge of $ 7.4 million reducing its carrying value to zero.

Also, as a result of this action, we determined that the value of our customer relationship asset in India was also impaired as a result of the lower level of anticipated sales and recorded a non-cash impairment charge of $ 3.8 million.

We also recognized $ 3.6 million of employee severance and other related exit costs associated directly associated with the exit plan.

In addition, as a result of the Kohinoor product line discontinuance in 2021, we recognized a $ 4.7 million charge in cost of goods sold, which represents a provision for the excess of the carrying value of rice inventories over the estimated net realizable value of such discontinued inventories and a contractual obligation associated with terminating a rice supply agreement.

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

GOODWILL AND INTANGIBLE ASSETS

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Decrease from sale of business — — — ( 0.4 )

— ( 0.4 ) ( 21.5 ) —

Foreign currency fluctuations ( 26.5 ) ( 6.1 ) 41.4 6.2

End of year $ 3,583.1 $ 1,644.4 $ 3,609.6 $ 1,650.5

(1) The 2022 sale of Kitchen Basics is further described in note 2.

INVESTMENTS IN AFFILIATES

Income from unconsolidated operations was $ 74.2 million, $ 56.4 million, and $ 37.8 million in 2024, 2023, and 2022, respectively.

Income from unconsolidated operations in 2021 includes a gain on a sale of unconsolidated operations of $ 13.4 million as described below.

Our principal earnings from unconsolidated affiliates are from our 50 % interest in McCormick de Mexico, S.A.

Profit from this joint venture represented 95 % of income from unconsolidated operations in 2024, 95 % in 2023 and 84 % in 2022.

The relative impact of McCormick de Mexico, S.A.

on income from unconsolidated operations in 2021 was impacted by the gain on our sale of an unconsolidated operation.

Summarized annual and year-end information from the financial statements of unconsolidated affiliates representing 100 % of the businesses follows:

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Royalty income from unconsolidated affiliates was $ 37.0 million, $ 35.1 million and $ 27.3 million for 2024, 2023, and 2022, respectively.

Sale of Unconsolidated Operation

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

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

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

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

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

FINANCING ARRANGEMENTS

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(1) Interest rate swaps, settled upon the issuance of these notes, effectively set the interest rate on the $ 250 million notes at a weighted-average fixed rate of 3.45 % .

Separately, t he fixed interest rate on $ 100 million of the 3.25 % notes due in 2025 is effectively converted to a variable rate by interest rate swaps through 2025.

Separately, the fixed interest rate on $ 100 million of the 3.25 % notes due in 2025 is effectively converted to a variable rate by interest rate swaps through 2025.

Net interest payments are based on USD SOFR plus 1.487 % (previously U.S.

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(2) Interest rate swaps, settled upon the issuance of these notes, effectively set the interest rate on the $ 750 million notes at a weighted-average fixed rate of 3.44 %.

Separately, the fixed interest rate on $ 250 million of the 3.40 % notes due in 2027 is effectively converted to a variable rate by interest rate swaps through 2027.

Separately, the fixed interest rate on $ 250 million of the 3.40 % notes due in 2027 is effectively converted to a

variable rate by interest rate swaps through 2027.

Net interest payments are based on USD SOFR plus 0.907 % (previously U.S.

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(4) Treasury lock agreements, settled upon issuance of these notes, effectively set the interest rate on these $ 500 million notes at a weighted-average fixed rate of 5.00 %.

(5) Treasury lock agreements, settled upon issuance of these notes, effectively set the interest rate on these $ 500 million notes at a weighted-average fixed rate of 4.68 %.

(6) Includes unamortized discounts, premiums, and debt issuance costs of $( 26.0 ) million and $( 25.4 ) million as of November 30, 2024 and 2023, respectively.

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Thereafter 2,357.3

In October 2024, we issued $ 500 million aggregate principal amount of 4.70 % unsecured senior notes due 2034.

Interest is payable semi-annually in April and October each year, beginning on April 15, 2025.

As part of the issuance of new debt, we entered and settled treasury locks in a notional amount of $ 150 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 gain of $ 0.9 million to be amortized to interest expense over the life of the underlying debt.

In April 2023, we issued $ 500 million aggregate principal amount of 4.95 % unsecured senior notes due 2033.

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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.

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.

We have available credit facilities with domestic and foreign banks for various purposes.

Some of these lines are committed lines and others are uncommitted lines and could be withdrawn at various times.

Our committed lines include a five -year $ 1.5 billion revolving credit facility, which will expire in June 2026 and a 364 -day $ 500 million revolving credit facility, which was entered into in June 2023 and will expire in June 2024.

Upon entering into the June 2023 364 -day $ 500 million revolving credit facility, we simultaneously cancelled the 364 -day $ 500 million revolving credit facility which was set to expire in July 2023.

Our committed lines include a five-year $ 1.5 billion revolving credit facility, which will expire in June 2026 and a 364 -day $ 500 million revolving credit facility, which was entered into in August 2024 and expires in August 2025.

We previously maintained a 364 -day $ 500 million revolving credit facility that was entered into in June 2023 and expired in June 2024.

Upon entering into the June 2023 364 -day $ 500 million revolving credit facility, we simultaneously cancelled the 364 -day $ 500 million revolving credit facility which was entered into in July 2022 and was set to expire in July 2023.

In the second quarter of 2023, we amended our five-year revolving credit facility expiring in June 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 % (previously LIBOR plus 1.25 %).

The pricing of that credit facility is based on a credit rating grid that contains a fully drawn maximum pricing of the credit facility equal to SOFR plus 1.75 % (previously LIBOR plus 1.75 %).

The current pricing for the 364 -day credit facility, on a fully drawn basis, is SOFR plus 1.23 %.

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

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

The pricing of that credit facility is based on a credit rating grid that contains a fully drawn maximum pricing of the credit facility equal to Term SOFR plus 1.75 % (previously LIBOR plus 1.75 %).

The current pricing for the 364 -day credit facility, on a fully drawn basis, is Term SOFR plus 1.23 %.

The pricing of that 364 -day credit facility is based on a credit rating grid that contains a fully drawn maximum pricing of the credit facility equal to Term SOFR plus 1.60 %.

These credit facilities require a fee, and commitment fees were $ 2.3 million, $ 2.4 million and $ 2.1 million for 2024, 2023, and 2022, respectively.

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

The outstanding amount of receivables sold under this program were approximately $ 19.6 million at November 30, 2023.

The incremental costs of factoring receivables under this arrangement were insignificant in 2023.

The outstanding amount of receivables sold under this program were approximately $ 106.9 million and $ 19.6 million as of November 30, 2024 and 2023, respectively.

The incremental costs of factoring receivables under this arrangement were insignificant in 2024 and 2023.

The proceeds from the sales of receivables are included in cash flows from operating activities on the consolidated cash flow statement.

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(ii) certain machinery and equipment, including forklifts;

and (iii) automobiles, delivery trucks and other vehicles, including an airplane.

and (iii) automobiles, delivery trucks and other vehicles.

A limited number of our lease agreements include rental payments that are adjusted periodically based on a market rate or index.

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The variable component is based on SOFR plus a margin, based on our credit rating.

During the years ended November 30, 2023 and 2022, we recognized $ 27.9 million and $ 5.2 million, respectively, of rent expense related to the leased asset.

During the years ended November 30, 2024, 2023 and 2022, we recognized $ 28.8 million, $ 27.9 million, and $ 5.2 million, respectively, of rent expense related to the leased asset.

The lease contains options to negotiate a renewal of the lease or to purchase or request the lessor to sell the facility at the end of the lease term.

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Supplemental cash flow and other information related to leases for the years ended November 30 were as follows (in millions):

2024 2023 2022

Cash paid for amounts included in the measurements of lease liabilities:

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

At November 30, 2023, we had foreign currency exchange contracts to purchase or sell $ 1,000.4 million of foreign currencies as compared to $ 560.5 million at November 30, 2022.

The following is a summary of the notional amounts of outstanding foreign currency exchange contracts as of November 30, 2024 and 2023:

(millions) 2024 2023

Fair value hedges $ 818.1 $ 765.4

Cash flow hedges 216.1 235.0

Total $ 1,034.2 $ 1,000.4

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 November

30, 2023 have durations of less than 18 months, including $ 189.0 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 November 30, 2024 have durations of less than 12 months, including $ 200.1 million of notional contracts that have durations of less than one month and are used to hedge short-term cash flow funding.

Contracts which are designated as hedges of foreign currency denominated assets are considered fair value hedges.

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.

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

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

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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 contracts with a notional value of $ 765.4 million and $ 355.5 million at November 30, 2023 and 2022, respectively.

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

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

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

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

As of November 30, 2023 and 2022, we have outstanding interest rate swap contracts for a notional amount of $ 600 million.

The following is a summary of our outstanding interest rate swaps as of November 30, 2024 and 2023 ($ amounts in millions).

Fair value hedge of changes in fair value of:

$250 3.25% notes due 2025 $750 3.40% notes due 2027 $500 2.50% notes due 2030

$ 250 3.25 % notes due 2025

$ 750 3.40 % notes due 2027

$ 500 2.50 % notes due 2030

Notional $ 100.0 $ 250.0 $ 250.0

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Expiration November 2025 August 2027 April 2030

(1) We amended our $ 100 million interest rate swaps which expire in November 2025 such that, effective February 15, 2023, we pay and receive at USD SOFR plus 1.487 % (previously U.S.

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

three-month LIBOR plus 1.22 %).

(2) We amended our $ 250 million interest rate swaps which expire in August 2027 such that, effective February 15, 2023, we pay and receive at USD SOFR plus 0.907 % (previously U.S.

(2) In 2023, we amended our $ 250 million interest rate swaps which expire in August 2027 such that, effective February 15, 2023, we pay and receive at USD SOFR plus 0.907 % (previously U.S.

three-month LIBOR plus 0.685 %).

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Interest rate contracts Other current

assets/Other long-term assets $ — $ — Other accrued liabilities $ 600.0 $ 52.8

assets/Other long-term assets $ — $ — Other accrued liabilities/Other long-term liabilities $ 600.0 $ 37.9

Foreign exchange contracts Other current assets 374.4 5.2 Other accrued liabilities 659.8 12.5

Cross currency contracts Other current assets/Other long-term assets 719.6 24.6 Other long-term liabilities 238.9 7.5

Cross currency contracts Other current assets/Other long-term assets 945.5 36.8 Other accrued liabilities/Other long-term liabilities — —

Total $ 42.0 $ 50.4

5 unchanged sentences

Interest rate contracts Other current

assets/Other long-term assets $ — $ — Other accrued liabilities $ 600.0 $ 42.4

assets/Other long-term assets $ — $ — Other accrued liabilities/Other long-term liabilities $ 600.0 $ 52.8

Foreign exchange contracts Other current assets 161.3 2.5 Other accrued liabilities 839.1 16.0

Cross currency contracts Other current assets/Other long-term assets 680.0 44.5 Other long-term liabilities 226.1 8.3

Cross currency contracts Other current assets/Other long-term assets 719.6 24.6 Other accrued liabilities/Other long-term liabilities 238.9 7.5

Total $ 27.1 $ 76.3

18 unchanged sentences

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

In July 2022, we settled the $ 200 million notional treasury locks upon determining we would not issue fixed rate debt but rather enter into the previously described $ 500 million

364 -day revolving credit facility.

In July 2022, we settled the $ 200 million notional treasury

locks upon determining we would not issue fixed rate debt but rather enter into the previously described $ 500 million 364 -day revolving credit facility.

The proceeds received upon settlement of these treasury lock arrangements were $ 18.7 million and were recognized in Other income, net in our consolidated income statements for the year ended November 30, 2022.

The amount of gain or loss recognized in income on the ineffective portion of derivative instruments is not material.

For all cash flow and settled interest rate fair value hedge derivatives, the net amount of accumulated other comprehensive income expected to be reclassified into income related to these contracts in the next twelve months is a $ 1.5 million increase to earnings.

Net investment hedges (millions)

38 unchanged sentences

Foreign currency derivatives 12.5 — 12.5

Cross currency contracts 7.5 — 7.5

Total $ 50.4 $ — $ 50.4

38 unchanged sentences

$ ( 491.2 ) $ ( 388.6 )

(1) During the year ended November 30, 2023, the foreign currency translation adjustment of accumulated other comprehensive loss decreased on a net basis by $( 99.6 ) million, inclusive of $( 18.4 ) million of unrealized losses associated with net investment hedges.

(1) During the year ended November 30, 2024, the foreign currency translation adjustment of accumulated other comprehensive loss increased on a net basis by $ 86.3 million, inclusive of $ 19.5 million of unrealized gains associated with net investment hedges.

During the year ended November 30, 2023, the foreign currency translation adjustment of accumulated other comprehensive loss decreased on a net basis by $( 99.6 ) million, inclusive of $( 18.4 ) million of unrealized losses associated with net investment hedges.

These net investment hedges are more fully described in Note 7.

27 unchanged sentences

employees and retirees.

We previously froze the accrual of certain defined benefit pension plans in the U.S.

and the United Kingdom with effective dates of the plan being frozen occurring between December 31, 2016 and November 30, 2018.

previously froze the accrual of future benefits under our pension plans in Canada with an effective date of November 30, 2019.

We previously froze the accrual of certain defined benefit pension plans in the U.S., the United Kingdom and Canada with effective dates of the plan being frozen occurring between December 31, 2016 and November 30,

Although those plans have 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.

67 unchanged sentences

Accumulated other comprehensive loss, net of tax 84.8 70.4 31.1 28.6

Our defined benefit pension plans investment strategy is subject to the asset/liability profiles of the plans in each individual country.

The investment objectives of the defined benefit pension plans are to provide assets to meet the current and future obligations of the plans at a reasonable cost to us.

The goal is to optimize the long-term return across the portfolio of investments at a moderate level of risk.

Our goal is to optimize the long-term return on plan assets at a moderate level of risk.

The investment policy specifies the type of investment vehicles appropriate for the plans, asset allocation guidelines, criteria for the selection of investment managers, procedures to monitor overall investment performance as well as investment manager performance.

Higher-returning assets include mutual, co-mingled and other funds comprised of equity securities, utilizing both active and passive investment styles.

2 unchanged sentences

This advice is based in part on the duration of each plan’s liability.

The investment return performances are evaluated quarterly against specific benchmark indices and against a peer group of funds of the same asset classification.

The allocations of U.S.

18 unchanged sentences

equity securities (a)

108.5 35.5 73.0

International equity securities (b)

4 unchanged sentences

Insurance contracts (f)

Other types of investments:

Real estate (g)

Natural resources (h)

Total $ 597.0 $ 4.4 $ 592.6

24 unchanged sentences

International equity securities (b)

147.0 136.2 10.8

Fixed income securities:

5 unchanged sentences

Real estate (g)

27.6 23.1 4.5

Natural resources (h)

4 unchanged sentences

Private debt funds(l) 20.4

Real estate (m) 14.8

Total investments $ 630.7

4 unchanged sentences

International equity securities (b)

112.6 — 112.6

Fixed income securities:

2 unchanged sentences

Insurance contracts (f)

Real estate (g) 4.6 4.6

Total investments $ 267.0 $ 10.6 $ 256.4

32 unchanged sentences

For the plans’ hedge funds, private equity funds and private debt funds, we engage an independent advisor to compare the funds’ returns to other funds with similar strategies.

Each fund is required to have an annual audit by

an independent accountant, which is provided to the independent advisor.

Each fund is required to have an annual audit by an independent accountant, which is provided to the independent advisor.

This provides a basis of comparability relative to similar assets.

Equity securities in the U.S.

As of November 30, 2023, equity securities in the U.S.

pension plans included McCormick stock with a fair value of $ 35.5 million ( 0.6 million shares and 5.4 % of total U.S.

pension plan assets) and $ 46.2 million ( 0.6 million shares and 7.0 % of total U.S.

pension plan assets) at November 30, 2023 and 2022, respectively.

pension plan assets).

Dividends paid on these shares were $ 0.8 million and $ 0.9 million in 2024 and 2023, respectively.

13 unchanged sentences

employees who are employed on December 31 of each year.

Some of our smaller subsidiaries sponsor separate 401(k) retirement plans.

Some of our smaller subsidiaries sponsor separate

401(k) retirement plans.

Our contributions charged to expense under all U.S.

53 unchanged sentences

Total unrecognized stock-based compensation expense related to our LTPP is variable in nature and is dependent on the Company's execution against established performance metrics under performance cycles related to this plan.

As of November 30, 2023, we have 4.6 million shares remaining available for future issuance under our stock-based compensation programs.

As of November 30, 2024, we have 3.0 million shares of common stock remaining available for future issuance under our stock-based compensation programs.

The following summarizes the key terms, a summary of activity, and the methods of valuation for each of our stock-based compensation awards.

28 unchanged sentences

Risk-free interest rates 4.1 % - 5.5 %

3.5 % - 4.9 %

0.2 % - 2.5 %

Dividend yield 2.3 % 1.9 % 1.5 %

14 unchanged sentences

Exercisable—end of year 4.4 $ 69.91 4.0 $ 64.74 3.5 $ 58.03

As of November 30, 2023, the intrinsic value (the difference between the exercise price and the market price) for options currently outstanding and exercisable was $ 32.2 million.

As of November 30, 2024, the intrinsic value (the difference between the exercise price and the market price) for options currently outstanding was $ 60.6 million and for options exercisable was $ 55.6 million.

At November 30, 2024 the differences between options outstanding and options expected to vest and their related weighted-average exercise prices, aggregate intrinsic values, and weighted-average remaining lives were not material.

10 unchanged sentences

2.2 7.3 72.19 1.1 5.4 70.79

$ 78.01 - $ 98.00

2.2 7.4 88.78 1.6 7.1 89.93

6.1 5.9 $ 72.25 4.4 4.8 $ 69.91

Price-Vested Stock Options

22 unchanged sentences

Beginning of year 2,055 $ 9.40 2,107 $ 9.40 2,193 $ 9.40

Granted — — — — 15 9.66

Forfeited — — ( 52 ) 9.40 ( 86 ) 9.40

40 unchanged sentences

Changes in prior year tax contingencies ( 1.4 ) ( 0.8 ) ( 0.8 )

Acquisition-related state tax rate change, net of federal benefits — — 1.2

Valuation allowance release ( 0.4 ) ( 0.6 ) ( 0.5 )

Legal entity reorganization ( 2.3 ) — —

Valuation allowances 0.7 ( 0.4 ) ( 0.6 )

research credits ( 1.3 ) ( 1.5 ) ( 1.0 )

21 unchanged sentences

At November 30, 2024, we also have U.S.

foreign tax credit carryforwards of $ 6.5 million, $ 3.9 million, $ 4.2 million and $ 3.2 million which expire in 2030, 2031, 2032, and 2033, respectively.

foreign tax credit carryforwards of $ 21.4 million.

Of these carryforwards, $ 6.2 million expires in 2030, $ 8.1 million from 2031 through 2032, and $ 7.1 million from 2033 through 2034.

A valuation allowance has been provided to cover deferred tax assets that are not more likely than not realizable.

The net decrease of $ 0.5 million in the valuation allowance from November 30, 2022 to November 30, 2023 resulted primarily from the net decrease of valuation allowances for net operating losses and other tax attributes in the U.S.

The net increase of $ 7.6 million in the valuation allowance from November 30, 2023 to November 30, 2024 resulted primarily from the net increase of valuation allowances for net operating losses and other tax attributes in the U.S.

and certain non-U.S.

jurisdictions.

Our intent is to continue to reinvest undistributed earnings of our non-U.S.

subsidiaries and joint ventures indefinitely.

Income taxes are not provided for unremitted earnings of our non-U.S.

subsidiaries and joint ventures where our intention is to reinvest those earnings indefinitely.

As of November 30, 2024, we have $ 1.6 billion of earnings that are considered indefinitely reinvested.

We have not provided any deferred taxes with respect to items such as foreign withholding taxes, other income taxes, or foreign exchange gain or loss.

We have not provided any deferred taxes with respect to items such as foreign withholding taxes, other income taxes, or foreign exchange gain or loss with respect to those earnings.

It is not practicable for us to determine the amount of unrecognized tax expense on these reinvested international earnings.

14 unchanged sentences

Tax settlements or statute of limitation expirations could result in a change to our uncertain tax positions.

We believe that the reasonably possible total amount of unrecognized tax benefits as of November 30, 2023 that could

decrease in the next 12 months as a result of various statute expirations, audit closures and/or tax settlements would not be material.

We believe that the reasonably possible total amount of unrecognized tax benefits as of November 30, 2024 that could decrease in the next 12 months as a result of various statute expirations, audit closures and/or tax settlements would not be material.

We file income tax returns in the U.S.

8 unchanged sentences

CAPITAL STOCK AND EARNINGS PER SHARE

On April 5, 2021, following approval by the Company’s shareholders on March 31, 2021, amendments to the Company’s Charter became effective that increased the number of authorized shares of each class of common stock from 320,000,000 to 640,000,000 and established the par value of each class of common stock at $ 0.01 per share.

We have 640,000,000 authorized shares of each class of common stock with an established the par value for each class of common stock at $ 0.01 per share.

The par value and additional paid in capital associated with each class of common stock is recorded in Common stock and Common stock non-voting in our consolidated balance sheet.

24 unchanged sentences

The consumer and flavor solutions segments manufacture, market and distribute spices, seasoning mixes, condiments and other flavorful products throughout the world.

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,” “Lawry’s,” “Zatarain’s,” “Simply Asia,” “Thai Kitchen,” “Ducros,” “Vahiné,” "Cholula," “Schwartz,” “Club House,” “Kamis,” "DaQiao," "La Drogheria," "Stubb's," "OLD BAY" 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 businesses in China and, prior to 2022, India, where foodservice sales are managed by and reported in our consumer segment.

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,” “Lawry’s,” “Zatarain’s,” “Simply Asia,” “Thai Kitchen,” “Ducros,” “Vahiné,” "Cholula," “Schwartz,” “Club House,” “Kamis,” "DaQiao," "La Drogheria," "Stubb's," "OLD BAY," 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 businesses in China where foodservice sales are managed by and reported in our consumer segment.

We measure segment performance based on operating income excluding special charges as this activity is managed separately from the business segments.

We also exclude transaction and integration expenses related to our acquisitions, including the recent acquisitions of Cholula and FONA, from our measure of segment performance as these expenses are similarly managed separately from the business segments.

We also exclude transaction and integration expenses related to our acquisitions, as applicable, from our measure of segment performance as these expenses are similarly managed separately from the business segments.

These transaction and integration expenses excluded from our segment performance measure include the amortization of the acquisition-date fair value adjustment of inventories that is included in cost of goods sold, costs directly associated with that acquisition and costs associated with integrating the businesses.

3 unchanged sentences

Sales to one of our consumer segment customers, Wal-Mart Stores, Inc., accounted for approximately 12 %, 12 %, and 12 % of consolidated sales in 2024, 2023, and 2022, respectively.

Sales to one of our flavor solutions segment customers, PepsiCo, Inc., accounted for approximately 13 % of consolidated sales in 2023, and approximately 11 % of consolidated sales in both 2022 and 2021.

Sales to one of our flavor solutions segment customers, PepsiCo, Inc., accounted for approximately 13 %, 13 %, and 11 % of consolidated sales in 2024, 2023, and 2022, respectively.

Accounting policies for measuring segment operating income and assets are consistent with those described in Note 1.

13 unchanged sentences

Net sales $ 3,807.3 $ 2,854.9 $ 6,662.2 $ — $ 6,662.2

Operating income excluding special charges and transaction and integration expenses

710.7 206.7 917.4 — 917.4

Operating income excluding special charges 735.5 288.7 1,024.2 — 1,024.2

Income from unconsolidated operations 54.7 1.7 56.4 — 56.4

13 unchanged sentences

Operating income $ 736.9 $ 323.4 $ 1,060.3

Operating income excluding special charges and transaction and integration

expenses $ 710.7 $ 206.7 $ 917.4

Operating income excluding special charges $ 735.5 $ 288.7 $ 1,024.2

Special charges 35.8 25.4 61.2

Transaction and integration expenses — 2.2 2.2

Operating income $ 699.7 $ 263.3 $ 963.0

1 unchanged sentence

expenses 710.7 206.7 917.4

Special charges and transaction-related expenses included in cost of

goods sold 8.7 2.3 11.0

Other special charges 31.5 14.9 46.4

Other transaction and integration expenses 7.8 21.2 29.0

Special charges 23.9 27.7 51.6

Transaction and integration expenses — 2.2 2.2

Operating income $ 686.8 $ 176.8 $ 863.6

32 unchanged sentences

Gain (loss) on sale of business $ — $ ( 1.2 ) $ 49.6

$ ( 1.2 ) $ 49.6 $ —

Gain on settlement of treasury locks (1)

3 unchanged sentences

$ 47.4 $ 43.9 $ 98.3

(1) The 2022 sale of Kitchen Basics is further described in note 2.

(1) The settlement of these treasury locks is further described in Note 7.

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.

At November 30 (millions) 2024 2023

43 unchanged sentences

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-K

Item 8. Financial Statements and Supplementary Data