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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q

(Mark One)
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended August 31, 2024
OR
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from              to             
Commission File Number 001-14920
 McCORMICK & COMPANY, INCORPORATED
(Exact name of registrant as specified in its charter)
Maryland52-0408290
(State or other jurisdiction of
incorporation or organization)		(I.R.S. Employer
Identification No.)
 
24 Schilling Road, Suite 1,
Hunt Valley, MD21031
(Address of principal executive offices)(Zip Code)
Registrant’s telephone number, including area code    (410) 771-7301

Securities registered pursuant to Section 12(b) of the Act:
 Trading
Title of each classSymbol(s)Name of each exchange on which registered
Common Stock, Par Value $0.01 per shareMKC.VNew York Stock Exchange
Common Stock Non-Voting, Par Value $0.01 per shareMKCNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes   ☒    No  ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer
☒
Accelerated Filer☐
Non-Accelerated Filer☐Smaller Reporting Company☐
Emerging Growth Company☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.      ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒


Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
 Shares Outstanding
August 31, 2024
Common Stock16,165,577 
Common Stock Non-Voting252,191,469 



TABLE OF CONTENTS

3
PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

McCORMICK & COMPANY, INCORPORATED
CONDENSED CONSOLIDATED INCOME STATEMENT (UNAUDITED)
(in millions except per share amounts)
 
Three months ended August 31,Nine months ended August 31,
 2024202320242023
Net sales$1,679.8 $1,684.7 $4,925.7 $4,909.4 
Cost of goods sold1,029.9 1,061.9 3,056.9 3,108.2 
Gross profit649.9 622.8 1,868.8 1,801.2 
Selling, general and administrative expense361.5 371.7 1,106.8 1,088.3 
Special charges 1.9 6.1 7.9 47.1 
Operating income286.5 245.0 754.1 665.8 
Interest expense53.5 52.7 156.7 155.5 
Other income, net13.2 7.1 36.7 30.7 
Income from consolidated operations before income taxes246.2 199.4 634.1 541.0 
Income tax expense41.0 42.7 116.8 117.4 
Net income from consolidated operations205.2 156.7 517.3 423.6 
Income from unconsolidated operations
17.9 13.4 56.0 37.7 
Net income$223.1 $170.1 $573.3 $461.3 
Earnings per share – basic$0.83 $0.63 $2.13 $1.72 
Earnings per share – diluted$0.83 $0.63 $2.13 $1.71 
Average shares outstanding – basic268.6 268.4 268.5 268.4 
Average shares outstanding – diluted269.7 270.1 269.6 269.8 
Cash dividends paid per share – voting and non-voting$0.42 $0.39 $1.26 $1.17 
Cash dividends declared per share – voting and non-voting$0.42 $0.39 $0.84 $0.78 
See notes to condensed consolidated financial statements (unaudited).

4
McCORMICK & COMPANY, INCORPORATED
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)
(in millions)
 
Three months ended August 31,
Nine months ended August 31,
 2024202320242023
Net income$223.1 $170.1 $573.3 $461.3 
Net income attributable to non-controlling interest2.1 0.7 6.0 3.5 
Other comprehensive income (loss):
Unrealized components of pension and other postretirement plans(1.6)(0.6)(2.8)(2.5)
Currency translation adjustments(5.0)28.8 (0.4)85.8 
Change in derivative financial instruments0.7 8.4 (3.1)(5.4)
Tax benefit3.7 1.2 5.2 7.4 
Total other comprehensive income (loss), net of tax(2.2)37.8 (1.1)85.3 
Comprehensive income$223.0 $208.6 $578.2 $550.1 
See notes to condensed consolidated financial statements (unaudited).

5

McCORMICK & COMPANY, INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEET
(in millions)
 
August 31,
2024		November 30,
2023
 (unaudited) 
ASSETS
Cash and cash equivalents$200.8 $166.6 
Trade accounts receivable, net of allowances660.9 587.5 
Inventories, net
Finished products645.0 570.0 
Raw materials and work-in-process597.6 556.5 
1,242.6 1,126.5 
Prepaid expenses and other current assets140.0 121.0 
Total current assets2,244.3 2,001.6 
Property, plant and equipment, net1,399.5 1,324.7 
Goodwill5,277.7 5,260.1 
Intangible assets, net3,332.7 3,356.7 
Other long-term assets950.7 919.2 
Total assets$13,204.9 $12,862.3 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Short-term borrowings$1,180.7 $272.2 
Current portion of long-term debt64.2 799.3 
Trade accounts payable1,227.8 1,119.3 
Other accrued liabilities671.6 908.1 
Total current liabilities3,144.3 3,098.9 
Long-term debt3,343.1 3,339.9 
Deferred taxes836.2 861.2 
Other long-term liabilities430.3 478.8 
Total liabilities7,753.9 7,778.8 
Shareholders’ equity
Common stock594.4 597.1 
Common stock non-voting1,640.3 1,602.5 
Retained earnings3,577.2 3,249.7 
Accumulated other comprehensive loss(390.4)(388.6)
Total McCormick shareholders' equity5,421.5 5,060.7 
Non-controlling interests29.5 22.8 
Total shareholders’ equity5,451.0 5,083.5 
Total liabilities and shareholders’ equity$13,204.9 $12,862.3 
See notes to condensed consolidated financial statements (unaudited).

6

McCORMICK & COMPANY, INCORPORATED
CONDENSED CONSOLIDATED CASH FLOW STATEMENT (UNAUDITED)
(in millions)
 
Nine months ended August 31,
 20242023
Operating activities
Net income$573.3 $461.3 
Adjustments to reconcile net income to net cash flow provided by operating activities:
Depreciation and amortization157.5 150.4 
Stock-based compensation39.9 51.1 
Deferred income tax expense (benefit)(37.2)1.7 
Income from unconsolidated operations(56.0)(37.7)
Changes in operating assets and liabilities
Trade accounts receivable(72.2)(22.9)
Inventories (108.9)139.7 
Trade accounts payable112.3 (90.4)
Other assets and liabilities(202.1)(43.6)
Dividends from unconsolidated affiliates56.6 50.5 
Net cash flow provided by operating activities463.2 660.1 
Investing activities
Capital expenditures (including software)(189.3)(187.2)
Other investing activities0.2 2.4 
Net cash flow used in investing activities(189.1)(184.8)
Financing activities
Short-term borrowings, net908.6 (850.0)
Long-term debt borrowings — 496.4 
Payment of debt issuance costs— (1.1)
Long-term debt repayments(752.8)(12.7)
Proceeds from exercised stock options12.8 15.9 
Taxes withheld and paid on employee stock awards(8.9)(10.8)
Common stock acquired by purchase(29.0)(26.7)
Dividends paid(338.3)(313.8)
Other financing activities1.7 1.6 
Net cash flow used in financing activities(205.9)(701.2)
Effect of exchange rate changes on cash and cash equivalents(34.0)46.6 
Increase (decrease) in cash and cash equivalents34.2 (179.3)
Cash and cash equivalents at beginning of period166.6 334.0 
Cash and cash equivalents at end of period$200.8 $154.7 
See notes to condensed consolidated financial statements (unaudited).
7


McCORMICK & COMPANY, INCORPORATED
CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (UNAUDITED)
(in millions)
(millions)Common Stock SharesCommon Stock
Non-Voting Shares		Common Stock AmountRetained EarningsAccumulated Other Comprehensive (Loss) IncomeNon-controlling InterestsTotal Shareholders’ Equity
Three months ended August 31, 2024
Balance, May 31, 202416.6 251.9 $2,234.7 $3,480.3 $(387.6)$26.8 $5,354.2 
Net income— 223.1 — — 223.1 
Net income attributable to non-controlling interest— — — 2.1 2.1 
Other comprehensive income (loss), net of tax— — (2.8)0.6 (2.2)
Dividends— (112.9)— — (112.9)
Stock-based compensation8.8 — — — 8.8 
Shares purchased and retired(0.3)— (11.3)(13.3)— — (24.6)
Shares issued0.1 — 2.5 — — — 2.5 
Equal exchange(0.2)0.2 — — — — — 
Balance, August 31, 2024
16.2 252.1 $2,234.7 $3,577.2 $(390.4)$29.5 $5,451.0 
Nine months ended August 31, 2024
Balance, November 30, 2023
16.8 251.3 $2,199.6 $3,249.7 $(388.6)$22.8 $5,083.5 
Net income— 573.3 — — 573.3 
Net income attributable to non-controlling interest— — — 6.0 6.0 
Other comprehensive income (loss), net of tax— — (1.8)0.7 (1.1)
Dividends— (225.6)— — (225.6)
Stock-based compensation39.9 — — — 39.9 
Shares purchased and retired(0.5)— (18.7)(20.2)— — (38.9)
Shares issued0.7 — 13.9 — — — 13.9 
Equal exchange(0.8)0.8 — — — — — 
Balance, August 31, 2024
16.2 252.1 $2,234.7 $3,577.2 $(390.4)$29.5 $5,451.0 
Three months ended August 31, 2023
Balance, May 31, 202317.2 251.0 $2,177.1 $3,191.4 $(431.5)$19.9 $4,956.9 
Net income— 170.1 — — 170.1 
Net income attributable to non-controlling interest— — — 0.7 0.7 
Other comprehensive income, net of tax— — 37.6 0.2 37.8 
Dividends— (104.7)— — (104.7)
Stock-based compensation12.6 — — — 12.6 
Shares purchased and retired(0.1)— (3.0)(5.1)— — (8.1)
Shares issued0.1 — 4.8 — — — 4.8 
Equal exchange(0.2)0.2 — — — — — 
Balance, August 31, 2023
17.0 251.2 $2,191.5 $3,251.7 $(393.9)$20.8 $5,070.1 
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Nine months ended August 31, 2023
Balance, November 30, 2022
17.4 250.6 $2,138.6 $3,022.5 $(480.6)$18.7 $4,699.2 
Net income— 461.3 — — 461.3 
Net income attributable to non-controlling interest— — — 3.5 3.5 
Other comprehensive income (loss), net of tax— — 86.7 (1.4)85.3 
Dividends— (209.3)— — (209.3)
Stock-based compensation51.1 — — — 51.1 
Shares purchased and retired(0.5)— (15.7)(22.8)— — (38.5)
Shares issued0.7 — 17.5 — — — 17.5 
Equal exchange(0.6)0.6 — — — — — 
Balance, August 31, 2023
17.0 251.2 $2,191.5 $3,251.7 $(393.9)$20.8 $5,070.1 
See notes to condensed consolidated financial statements (unaudited).

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McCORMICK & COMPANY, INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

1.ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all the information and notes required by United States generally accepted accounting principles (GAAP) for complete financial statements. In our opinion, the accompanying condensed consolidated financial statements contain all adjustments, which are of a normal and recurring nature, necessary to present fairly the financial position and the results of operations for the interim periods presented.
The results of consolidated operations for the nine-month period ended August 31, 2024 are not necessarily indicative of the results to be expected for the full year. Historically, our net sales, net income and cash flow from operations have been lower in the first half of the fiscal year and higher in the second half of the fiscal year. The historical increase in net sales, net income and cash flow from operations in the second half of the year has largely been due to the consumer business cycle in the U.S., where customers typically purchase more products in the fourth quarter due to the Thanksgiving and Christmas holiday seasons.
For further information, refer to the consolidated financial statements and notes included in our Annual Report on Form 10-K for the year ended November 30, 2023.
Accounts Payable - Supplier Finance Program
As more fully described in our Annual Report on Form 10-K for the year ended November 30, 2023, we participate in a Supply Chain Financing program (SCF) with several global financial institutions (SCF Banks). Under the SCF, qualifying suppliers may elect to sell their receivables from us to an SCF Bank, enabling participating suppliers to negotiate their receivables sales arrangements directly with the respective SCF Bank. We are not party to those agreements and have no economic interest in a supplier’s decision to sell a receivable.
All outstanding amounts related to suppliers participating in the SCF are recorded within the line entitled Trade accounts payable in our condensed consolidated balance sheets, and the associated payments are included in operating activities within our consolidated statements of cash flows. As of August 31, 2024 and November 30, 2023, the amounts due to suppliers participating in the SCF and included in trade accounts payable were approximately $394.8 million and $300.5 million, respectively.
Accounting Pronouncement Partially Adopted
In September 2022, the FASB issued ASU No. 2022-04: 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. The guidance does not affect the recognition, measurement or financial statement presentation of supplier finance program obligations. We adopted the new standard's requirements to disclose the key terms of the programs and information about obligations outstanding as of November 30, 2023. The standard’s requirement to disclose a roll-forward of obligations outstanding will be effective for our fiscal year ending November 30, 2025. The partial adoption of this standard did not have a material impact on our consolidated financial statements, nor do we expect the adoption of the future disclosure requirements to have a material impact on our consolidated financial statements.
Recently Issued Accounting Pronouncements — Pending Adoption
In November 2023, the FASB issued ASU No. 2023-07: Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures that requires entities to report incremental information about significant segment expenses included in a segment’s profit or loss measure as well as the name and title of the chief operating decision maker. The guidance also requires interim disclosures related to reportable segment profit or loss and assets that had previously only been disclosed annually. The new standard is effective for our annual period ending November 30, 2025 and our interim periods during the fiscal year ending November 30, 2026. The guidance does not affect recognition or measurement in our consolidated financial statements.
In December 2023, the FASB issued ASU No. 2023-09: Income Taxes (Topic 740): Improvements to Income Tax Disclosures that requires entities to disclose additional information about federal, state, and foreign income taxes primarily related to the income tax rate reconciliation and income taxes paid. The new standard also eliminates certain existing disclosure requirements
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related to uncertain tax positions and unrecognized deferred tax liabilities. The guidance is effective for our fiscal year ending November 30, 2026. The guidance does not affect recognition or measurement in our consolidated financial statements.

2.      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. Expenses associated with any approved action are classified as special charges upon recognition and monitored on an on-going basis through completion. Certain ancillary expenses related to these actions approved by our Management Committee do not qualify for accrual upon approval but are included as special charges as incurred during the course of the actions.
We continue to evaluate changes to our organizational structure to reduce fixed costs, simplify or improve processes, and improve our competitiveness.
The following is a summary of special charges recognized in the three and nine months ended August 31, 2024 and 2023
(in millions):
Three months ended August 31,Nine months ended August 31,
 2024202320242023
Employee severance and related benefits$— $1.1 $3.1 $32.9 
Other costs
Cash1.9 4.4 4.8 12.4 
Non-Cash— 0.6 — 1.8 
Total special charges$1.9 $6.1 7.947.1

During the three months ended August 31, 2024, we recorded $1.9 million of special charges, consisting principally of $0.7 million associated with our Global Operating Effectiveness (GOE) program, as more fully described below, and $1.2 million associated with the transition of a manufacturing facility in Europe, Middle East, and Africa (EMEA), as more fully described below.
During the nine months ended August 31, 2024, we recorded $7.9 million of special charges, consisting principally of $5.3 million associated with our GOE program, as more fully described below, and $2.6 million associated with the transition of a manufacturing facility in EMEA, as more fully described below.
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 GOE program, as more fully described below, $1.7 million associated with the transition of a manufacturing facility in 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.
In 2022, our Management Committee approved the GOE program, which is expected to eliminate costs associated with our supply chain operations, as well as across the remainder of the organization. The GOE program included a voluntary retirement plan, which included enhanced separation benefits to certain U.S. employees aged 55 years or older with at least ten years of service to the company. This voluntary retirement plan commenced in November 2022, and participants were required to submit their notifications by December 30, 2022. The GOE program also includes other employee separation actions as other related costs within the program. The total costs incurred under the GOE program were approximately $48 million as of November 30, 2023. Special charges recognized during the three months ended August 31, 2024, under our GOE program included $0.7 million in severance and related benefits costs. Special charges recognized during the nine months ended August 31, 2024, under our GOE program included $4.6 million in severance and related benefits costs and $0.7 million of third-party expenses and other costs. 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. Special
11
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—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. The total costs incurred under this program were approximately $36 million as of November 30, 2023. During the three months ended August 31, 2024, we recognized a reversal of $0.7 million associated with severance and related benefits costs and $1.9 million in third-party expenses and other costs. During the nine months ended August 31, 2024, we recognized a reversal of $1.5 million associated with severance and related benefits costs and $4.1 million in third-party expenses and other costs. 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.
As of August 31, 2024, accruals associated with special charges of $4.2 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, 2024 and 2023 (in millions):
Three months ended August 31,
Nine months ended August 31,
 2024202320242023
Consumer segment$0.5 $2.2 $3.8 $29.6 
Flavor solutions segment1.4 3.9 4.1 17.5 
Total special charges$1.9 $6.1 $7.9 $47.1 


3.    FINANCING ARRANGEMENTS AND FINANCIAL INSTRUMENTS
In August 2024, we entered into a 364-day $500 million revolving credit facility which will expire in August 2025 (the 364-day facility). The current pricing for the 364-day facility, on a fully drawn basis, is SOFR + 1.23%. The pricing of the 364-day facility is based on a credit rating grid that contains a fully drawn maximum pricing of the facility equal to SOFR + 1.60%. The provisions of this revolving credit facility restrict subsidiary indebtedness and require us to maintain a minimum interest coverage ratio, consistent with our five-year $1.5 billion revolving credit facility (the five-year facility). We do not expect that this covenant would limit our access to the 364-day facility or the five-year facility for the foreseeable future.
During the three months ended August 31, 2024, we repaid our $700.0 million 3.15% notes due in August 2024.
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. We do not enter into contracts for trading purposes, nor are we a party to any leveraged derivative instrument, and all derivatives are designated as hedges. We are not a party to master netting arrangements, and we do not offset the fair value of derivative contracts with the same counterparty in our financial statement disclosures. The use of derivative financial instruments is monitored through regular communication with senior management and the use of written guidelines.
Foreign currency exchange risk. We are potentially exposed to foreign currency fluctuations affecting net investments in subsidiaries, transactions (both third-party and intercompany) and earnings denominated in foreign currencies. We assess foreign currency risk based on transactional cash flows and translational volatility and may enter into forward contract and currency swaps with highly-rated financial institutions to reduce fluctuations in the long or short currency positions.



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The following is a summary of the notional amounts of outstanding foreign currency exchange contracts as of August 31, 2024 and November 30, 2023 (in millions):
August 31, 2024November 30, 2023
Fair value hedges$864.8 $765.4 
Cash flow hedge245.9 235.0 
Total$1,110.7 $1,000.4 
All of these contracts were designated as hedges of foreign currency denominated assets or liabilities or hedges of anticipated purchases denominated in a foreign currency. Hedge ineffectiveness was not material. All foreign currency exchange contracts outstanding at August 31, 2024 have durations of less than 15 months, including $252.7 million of notional contracts that have an initial duration 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 inventory in U.S. dollars by operating units outside the U.S.) are considered cash flow hedges. The gains and losses on these contracts are deferred in accumulated other comprehensive income until the hedged item is recognized in cost of goods sold, at which time the net amount deferred in accumulated other comprehensive income is also recognized in cost of goods sold.
We also utilize cross currency interest rate swap contracts that are designated as net investment hedges. Gains or losses on net investment hedges, exclusive of interest accruals, are included in foreign currency translation adjustments in accumulated other comprehensive loss. We exclude the interest accruals on cross-currency interest rate swap contracts from the assessment and measurement of hedge effectiveness. We recognize the interest accruals on cross-currency interest rate swap contracts within interest expense.
Interest rate risk. We finance a portion of our operations with both fixed and variable rate debt instruments, principally commercial paper, notes and bank loans. We utilize interest rate derivative contracts, including interest rate swap agreements, to minimize worldwide financing costs and to achieve a desired mix of variable and fixed rate debt.
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The following table discloses the notional amount and fair values of derivative instruments on our balance sheet (in millions):
Asset DerivativesLiability Derivatives
 Balance sheet
location		Notional
amount		Fair
value		Balance sheet
location		Notional
amount		Fair
value
As of August 31, 2024
Interest rate contractsOther current
assets / Other long-term assets		$— $— Other accrued
liabilities / Other long-term liabilities		$600.0 $36.0 
Foreign exchange contractsOther current
assets		367.3 2.4 Other accrued
liabilities		743.4 16.7 
Cross currency contractsOther current assets / Other long-term assets486.8 18.6 Other accrued liabilities / Other long-term liabilities497.0 5.9 
Total$21.0 $58.6 
As of November 30, 2023
Interest rate contractsOther current
assets / Other long-term assets		$— $— Other accrued
liabilities / Other long-term liabilities		$600.0 $52.8 
Foreign exchange contractsOther current
assets		161.3 2.5 Other accrued
liabilities		839.1 16.0 
Cross currency contractsOther current
assets / Other long-term assets		719.6 24.6 Other long-term liabilities238.9 7.5 
Total$27.1 $76.3 
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, 2024 and 2023 (in millions):
Fair Value Hedges
DerivativeIncome statement
location		Expense (income)
  Three months ended August 31, 2024Three months ended August 31, 2023Nine months ended August 31, 2024Nine months ended August 31, 2023
Interest rate contractsInterest expense$5.2 $4.9 $15.4 $12.6 
Income statement locationGain (loss) recognized in incomeIncome statement locationGain (loss) recognized in income
Derivative20242023Hedged item20242023
Three months ended August 31,
Foreign exchange contractsOther income, net$(5.5)$(12.4)Intercompany loansOther income, net$4.6 $10.0 
Nine months ended August 31,
Foreign exchange contractsOther income, net$(12.2)$(18.1)Intercompany loansOther income, net$8.5 $17.1 
The gains (losses) recognized on fair value hedges relating to currency exposure on third-party non-functional currency assets or liabilities were not material during the three and nine months ended August 31, 2024 and 2023.
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Cash Flow Hedges
DerivativeGain (loss)
recognized in OCI		Income
statement
location		Gain (loss)
reclassified from
AOCI
20242023 20242023
Three months ended August 31,
Interest rate contracts$— $— Interest
expense		$(0.2)$— 
Foreign exchange contracts(0.3)0.7 Cost of goods sold0.4 (0.4)
Total$(0.3)$0.7 $0.2 $(0.4)
Nine months ended August 31,
Interest rate contracts$— $(2.6)Interest
expense		$(0.5)$0.2 
Foreign exchange contracts(0.6)(1.7)Cost of goods
sold		1.9 0.9 
Total$(0.6)$(4.3)$1.4 $1.1 

As of August 31, 2024, the net amount of accumulated other comprehensive loss associated with all cash flow and settled interest rate cash flow hedge derivatives expected to be reclassified in the next 12 months is $0.8 million as a decrease to earnings.
Net Investment Hedges
DerivativeGain (loss)
recognized in OCI		Income
statement
location		Gain (loss)
excluded from the assessment of hedge effectiveness
 20242023 20242023
Three months ended August 31,
Cross currency contracts$(9.4)$(8.0)Interest
expense		$2.4 $2.7 
Nine months ended August 31,
Cross currency contracts$(4.4)$(17.6)Interest
expense		$7.0 $8.9 
For all net investment hedges, no amounts have been reclassified out of accumulated other comprehensive loss. The amounts noted in the tables above for OCI do not include any adjustments for the impact of deferred income taxes.
We maintain a nonrecourse accounts receivable sale program whereby certain eligible U.S. receivables are sold to a 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. The outstanding amounts of receivables sold under this program were $21.1 million and $19.6 million as of August 31, 2024, and November 30, 2023, respectively. As collecting agent on the sold receivables, we had $3.3 million and $1.6 million of cash collected that was not yet remitted to the third-party financial institution as of August 31, 2024, and November 30, 2023, respectively. The incremental costs of selling receivables under this arrangement were insignificant for the three months and nine months ended August 31, 2024.
4.    FAIR VALUE MEASUREMENTS
Fair value can be measured using valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow), and the cost approach (cost to replace the service capacity of an asset or replacement cost). Accounting standards utilize a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels:
•Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.
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•Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.
•Level 3: Unobservable inputs that reflect the reporting entity’s own assumptions.
At August 31, 2024 and November 30, 2023, 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, 2024
  
Fair ValueLevel 1Level 2
Assets
Cash and cash equivalents$200.8 $200.8 $— 
Insurance contracts124.7 — 124.7 
Bonds and other long-term investments5.6 5.6 — 
Foreign currency derivatives2.4 — 2.4 
Cross currency contracts18.6 — 18.6 
Total$352.1 $206.4 $145.7 
Liabilities
Foreign currency derivatives$16.7 $— $16.7 
Interest rate derivatives36.0 — 36.0 
Cross currency contracts5.9 — 5.9 
Total$58.6 $— $58.6 
 
November 30, 2023
  
Fair ValueLevel 1Level 2
Assets
Cash and cash equivalents$166.6 $166.6 $— 
Insurance contracts114.7 — 114.7 
Bonds and other long-term investments0.3 0.3 — 
Foreign currency derivatives2.5 — 2.5 
Cross currency contracts24.6 — 24.6 
Total$308.7 $166.9 $141.8 
Liabilities
Foreign currency derivatives$16.0 $— $16.0 
Interest rate derivatives52.8 — 52.8 
Cross currency contracts7.5 — 7.5 
Total$76.3 $— $76.3 
At August 31, 2024 and November 30, 2023, 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. Investments in affiliates are not readily marketable, and it is not practicable to estimate their fair value.
Insurance contracts, bonds, and other long-term investments are comprised of fixed income and equity securities held for certain non-qualified U.S. employee benefit plans and are stated at fair value on the balance sheet. The fair values of insurance contracts are based upon the underlying values of the securities in which they are invested and are from quoted market prices from various stock and bond exchanges for similar type assets. The fair values of bonds and other long-term investments are based on quoted market prices from various stock and bond exchanges. The fair values for interest rate derivatives, foreign currency derivatives, and cross currency contracts are based on values for similar instruments using models with market-based inputs.
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The following table sets forth the carrying amounts and fair values of our long-term debt including the current portion thereof (in millions):
August 31, 2024November 30, 2023
Carrying amount$3,407.3 $4,139.2 
Level 1 valuation techniques$3,141.0 $3,682.0 
Level 2 valuation techniques116.1 159.0 
Total fair value$3,257.1 $3,841.0 
The fair value for Level 2 long-term debt is determined by using quoted prices for similar debt instruments.
5.     EMPLOYEE BENEFIT AND RETIREMENT PLANS    
We sponsor defined benefit pension plans in the U.S. and certain foreign locations. In addition, we sponsor defined contribution plans in the U.S. We also contribute to defined contribution plans in locations outside the U.S., including government-sponsored retirement plans. We also currently provide postretirement medical and life insurance benefits to certain U.S. employees and retirees. We previously froze the accrual of future benefits under certain defined benefit pension plans in the U.S. and certain foreign locations. 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 August 31, 2024 and 2023 (in millions):
 United States pensionInternational pensionOther postretirement benefits
 202420232024202320242023
Service cost$0.3 $0.5 $0.1 $0.2 $0.2 $0.4 
Interest costs9.4 9.0 2.6 2.5 0.6 0.7 
Expected return on plan assets(9.9)(10.6)(4.0)(3.9)— — 
Amortization of prior service costs0.2 0.2 0.1 — — (0.1)
Amortization of net actuarial losses (gains)(0.1)0.1 (0.1)— (0.7)(0.6)
Total (income) expense $(0.1)$(0.8)$(1.3)$(1.2)$0.1 $0.4 
The following table presents the components of our pension (income) and other postretirement benefits expense for the nine months ended August 31, 2024 and 2023 (in millions):
 United States pensionInternational pensionOther postretirement benefits
 202420232024202320242023
Service cost$1.1 $1.5 $0.4 $0.5 $0.6 $1.0 
Interest costs28.0 27.1 7.9 7.3 1.8 1.9 
Expected return on plan assets(29.7)(31.8)(12.0)(11.3)— — 
Amortization of prior service costs0.4 0.4 0.1 0.1 (0.2)(0.3)
Amortization of net actuarial losses (gains)(0.3)0.2 (0.2)(0.1)(2.0)(1.6)
Total (income) expense $(0.5)$(2.6)$(3.8)$(3.5)$0.2 $1.0 
During the nine months ended August 31, 2024 and 2023, we contributed $5.2 million and $7.4 million, respectively, to our pension plans. Total contributions to our pension plans in fiscal year 2023 were $9.2 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 $(1.9) million and $(2.7) million for the three months ended August 31, 2024 and 2023, respectively. For the nine months ended August 31, 2024 and 2023, the net aggregate amount of pension and other postretirement benefits income, excluding service cost components was $(6.2) million and $(8.1) million, respectively.

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6.    STOCK-BASED COMPENSATION
We have four types of stock-based compensation awards: restricted stock units (RSUs), stock options, company stock awarded as part of our long-term performance plan (LTPP) and price-vested stock options. The following table sets forth the stock-based compensation expense recorded in selling, general and administrative (SG&A) expense (in millions):
 Three months ended August 31,Nine months ended August 31,
 2024202320242023
Stock-based compensation expense$8.8 $12.6 $39.9 $51.1 

Our 2024 annual grant of stock options and RSUs occurred in the second quarter, similar to the 2023 annual grant. Additionally, during the first quarter, approximately 380,000 stock option shares were granted.
The weighted-average grant-date fair value of each stock option granted in 2024 was $17.63 and in 2023 was $19.35, each as calculated under a lattice pricing model. Substantially all of the stock options and RSUs granted in 2024 and 2023 vest ratably over a three-year period or, if earlier, upon the retirement eligibility date of the holder. The fair values of stock option grants in the stated periods were computed using the following assumptions for our various stock compensation plans:
20242023
Risk-free interest rates4.1% - 5.5%3.5% - 4.9%
Dividend yield2.3%1.9%
Expected volatility22.8%21.8%
Expected lives (in years)7.17.3
The following is a summary of our stock option activity for the nine months ended August 31, 2024 and 2023:
 20242023
(shares in millions)Number
of
Shares		Weighted-
Average
Exercise
Price		Number
of
Shares		Weighted-
Average
Exercise
Price
Outstanding at beginning of period5.3 $70.43 4.8 $67.08 
Granted1.2 72.88 0.9 81.79 
Exercised(0.3)41.83 (0.4)47.85 
Forfeited(0.1)84.04 — — 
Outstanding at end of the period6.1 $72.06 5.3 $70.43 
Exercisable at end of the period4.4 $69.64 3.9 $64.29 
As of August 31, 2024, the intrinsic value (the difference between the exercise price and the market price) for all options outstanding was $68.9 million and for options currently exercisable was $62.1 million. The total intrinsic value of all options exercised during the nine months ended August 31, 2024 and 2023 was $8.4 million and $11.1 million, respectively.
The following is a summary of our RSU activity for the nine months ended August 31, 2024 and 2023:
 20242023
(shares in thousands)Number
of
Shares		Weighted-
Average
Grant-Date
Fair Value		Number
of
Shares		Weighted-
Average
Grant-Date
Fair Value
Outstanding at beginning of period494 $76.94 480 $77.62 
Granted278 72.67 243 78.33 
Vested(192)84.69 (225)78.16 
Forfeited(25)80.06 (19)85.58 
Outstanding at end of period555 $71.97 479 $77.38 
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The following is a summary of our price-vested stock options activity for the nine months ended August 31, 2024 and 2023:
 20242023
(shares in thousands)Number
of
Shares		Weighted-
Average
Grant-Date Fair Value		Number
of
Shares		Weighted-
Average
Grant-Date
Fair Value
Outstanding at beginning of period2,055 $9.40 2,107 $9.40 
Forfeited— — (52)9.40 
Outstanding at end of period2,055 $9.40 2,055 $9.40 
The following is a summary of our LTPP activity for the nine months ended August 31, 2024 and 2023:
 20242023
(shares in thousands)Number
of
Shares		Weighted-
Average
Grant-Date
Fair Value		Number
of
Shares		Weighted-
Average
Grant-Date
Fair Value
Outstanding at beginning of period474 $94.34 451 $106.32 
Granted192 66.49 167 89.00 
Vested(181)98.30 (176)86.14 
Forfeited(17)84.71 (18)93.18 
Outstanding at end of period468 $81.63 424 $93.68 

7.    INCOME TAXES
Income tax expense for the three months ended August 31, 2024 included $16.3 million of net discrete tax benefits consisting principally of the following: (i) $5.5 million of tax benefit from the reversal of certain reserves for unrecognized tax benefits and related interest associated with the expiration of statutes of limitations, (ii) $5.5 million of tax benefit from the reversal of certain reserves for unrecognized tax benefits and related interest associated with the effective settlement from conclusion of a tax examination, (iii) $8.3 million of tax benefits resulting from state tax matters, and related deferred taxes, (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) $4.6 million of tax expense associated with the adjustment of a valuation allowance due to changes in judgment about the realizability of the deferred tax asset.
Income tax expense for the nine months ended August 31, 2024 included $34.9 million of net discrete tax benefits consisting principally of the following: (i) $19.4 million of tax benefits associated with the recognition of a deferred tax asset related to an international legal entity reorganization, (ii) $6.8 million of tax benefit from the reversal of certain reserves for unrecognized tax benefits and related interest associated with the expiration of statutes of limitations, (iii) $5.5 million of tax benefit from the reversal of certain reserves for unrecognized tax benefits and related interest associated with the effective settlement from conclusion of a tax examination, (iv) $6.4 million of tax benefits resulting from state tax matters, and related deferred taxes, (v) $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 (vi) $4.6 million of tax expense associated with the adjustment of a valuation allowance due to changes in judgment about the realizability of the deferred tax asset.
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
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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.
Other than the discrete tax benefits previously mentioned above and additions for current year tax positions, there were no significant changes to unrecognized tax benefits during the nine months ended August 31, 2024.
As of August 31, 2024, 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.

8.    CAPITAL STOCK AND EARNINGS PER SHARE
The following table sets forth the reconciliation of average shares outstanding (in millions):
Three months ended August 31,Nine months ended August 31,
 2024202320242023
Average shares outstanding – basic268.6 268.4 268.5 268.4 
Effect of dilutive securities:
Stock options/RSUs/LTPP1.1 1.7 1.1 1.4 
Average shares outstanding – diluted269.7 270.1 269.6 269.8 
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 August 31,Nine months ended August 31,
 2024202320242023
Anti-dilutive securities3.6 1.8 3.4 1.8 
The following table sets forth common stock activity (in millions):
Three months ended August 31,Nine months ended August 31,
 2024202320242023
Shares issued under stock options, RSUs, LTPP and employee stock purchase plans 0.1 0.1 0.7 0.7 
Shares repurchased under the stock repurchase program and shares withheld for taxes under stock options, RSUs, and LTPP0.3 0.1 0.5 0.5 
As of August 31, 2024, $472.5 million remained of the $600 million share repurchase program authorization approved by our Board of Directors in November 2019.
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9.    ACCUMULATED OTHER COMPREHENSIVE LOSS

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

August 31, 2024November 30, 2023
Foreign currency translation adjustment (1)
$(302.6)$(305.7)
Unrealized gain (loss) on foreign currency exchange contracts(1.9)0.8 
Unamortized value of settled interest rate swaps(2.3)(2.7)
Pension and other postretirement costs(83.6)(81.0)
Accumulated other comprehensive loss$(390.4)$(388.6)
(1)During the nine months ended August 31, 2024, the foreign currency translation adjustment of accumulated other comprehensive loss decreased on a net basis by $3.1 million, inclusive of $4.4 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 endedNine months endedAffected Line Items in the Condensed Consolidated Income Statement
August 31, 2024August 31, 2023August 31, 2024August 31, 2023
(Gains)/losses on cash flow hedges:
Interest rate derivatives$0.2 $— $0.5 $(0.2)Interest expense
Foreign exchange contracts(0.4)0.4 (1.9)(0.9)Cost of goods sold
Total before tax(0.2)0.4 (1.4)(1.1)
Tax effect— (0.1)0.3 0.3 Income tax expense
Net, after tax$(0.2)$0.3 $(1.1)$(0.8)
Amortization of pension and postretirement benefit adjustments:
Amortization of prior service costs (1)
$0.3 $0.1 $0.3 $0.2 Other income, net
Amortization of net actuarial (gains)(1)
$(0.9)$(0.5)(2.5)(1.5)Other income, net
Total before tax(0.6)(0.4)(2.2)(1.3)
Tax effect0.1 0.1 0.5 0.3 Income tax expense
Net, after tax$(0.5)$(0.3)$(1.7)$(1.0)
(1)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).

10.    BUSINESS SEGMENTS
We operate in two business segments: consumer and flavor solutions. The consumer and flavor solutions segments manufacture, market and distribute spices, herbs, 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”, “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.
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We measure segment performance based on operating income excluding special charges, as this activity is managed separately from the business segments.
Although the segments are managed separately due to their distinct distribution channels and marketing strategies, manufacturing and warehousing are often integrated to maximize cost efficiencies. We do not segregate jointly utilized assets by individual segment for purposes of internal reporting, performance evaluation, or capital allocation. Because of manufacturing integration for certain products within the segments, products are not sold from one segment to another but rather inventory is transferred at cost. Intersegment sales are not material.
ConsumerFlavor SolutionsTotal
 (in millions)
Three months ended August 31, 2024
Net sales$937.4 $742.4 $1,679.8 
Operating income excluding special charges186.8