Notes to Consolidated Financial Statements

In November 2004, the FASB issued SFAS No. 151, "Inventory Costs," which is effective for our 2006 fiscal year. We anticipate no significant effect upon adoption of this statement.

In January 2003, the FASB issued Interpretation No. 46, "Consolidation of Variable Interest Entities." We adopted Interpretation No. 46 as it relates to special purpose entities in the fourth quarter of 2003. As a result of this adoption, we consolidated the lessor of a leased distribution center and recorded a cumulative effect of an accounting change of $2.1 million (net of income tax benefit of $1.2 million).

Reclassifications

Certain amounts in prior years have been reclassified to conform to the current year presentation. The effect of these reclassifications is not material to the consolidated financial statements.

2. ACQUISITIONS

On November 1,2004, we purchased C.M. van Sillevoldt B.V. (Silvo), the market leader in the Dutch spices and herbs consumer market, for €58 million in cash (equivalent to $74.5 million) funded with cash from operations and current credit facilities. Silvo sells spices, herbs and seasonings under the Silvo brand in the Netherlands and the India brand as well as private label store brands in Belgium. The brand has a strong heritage, high recognition among consumers and is the leading brand of herbs and spices in the Netherlands. The acquisition was accounted for under the purchase method, and the results of operations have been included in consolidated results from the date of acquisition. The excess of the purchase price over the estimated fair value of the tangible net assets purchased of $59.4 million was initially classified as goodwill in the consumer segment in 2004. In the fourth quarter of 2005, we completed the purchase price allocation for the Silvo acquisition. A detailed analysis of the intangible assets resulted in our conclusion that the excess purchase price should be accounted for as the value of the acquired brand name and goodwill. No other intangible assets were identified as a result of this analysis. We concluded that a large portion of the value of the excess purchase price resides in the Dutch consumers' cultural connections with the Silvo brand name. Based on an analysis of the premium value that is derived from consumer loyalty and trust in the Silvo brand's quality, we assigned $35.0 million of the excess purchase price to this unamortizable brand. Given Silvo's strong brand name recognition in the marketplace, we intend to use and support the brand name indefinitely. The remaining $24.4 million of excess purchase price remained as goodwill in the consumer segment.

On June 4, 2003, we purchased Zatarain's, the leading New Orleans-style food brand in the United States, for $180.0 million in cash funded with commercial paper borrowings. Zatarain's manufactures and markets flavored rice and dinner mixes, seafood seasonings and many other products that add flavor to food. The acquisition was accounted for under the purchase method, and the results of operations have been included in our consolidated results from the date of acquisition. In the second quarter of 2004, we completed the purchase price allocation for the Zatarain's acquisition. The excess of the purchase price over the estimated fair value of the net assets purchased was $176.2 million, which includes $3.4 million of fees directly related to the acquisition. An analysis of the various types of intangible assets resulted in a determination that the excess purchase price should be classified as the value of the acquired brand name and goodwill. No other intangible assets were identified as a result of this analysis. We have concluded that a substantial portion of the value of the excess purchase price resides in consumer trust and recognition of the Zatarain's brand name as authentic New Orleans-style cuisine. As a result, we have assigned $106.4 million of the excess purchase price to this unamortizable brand based on an analysis of the premium value that is derived from consumer loyalty and trust in the brand's quality. Zatarain's brand name has been used since 1889, and we intend to use and support the brand name indefinitely. The remaining $69.8 million of excess purchase price remained as goodwill in the consumer segment.

On January 9, 2003, we acquired the Uniqsauces business, a condiment business based in Europe, for $19.5 million in cash. Uniqsauces manufactures and markets condiments to retail grocery and food service customers, including quick service restaurants. The acquisition was accounted for under the purchase method, and the results of operations have been included in consolidated results from the date of acquisition. The purchase price of this acquisition was allocated entirely to fixed assets and working capital. No goodwill was recorded as a result of this acquisition.