Notes to Consolidated Financial Statements

U.S. income taxes are not provided for unremitted earnings of international subsidiaries and affiliates where our intention is to reinvest these earnings permanently or to repatriate the earnings when it is tax effective to do so. Accordingly, we believe that any U.S. tax on repatriated earnings would be substantially offset by U.S. foreign tax credits. Unremitted earnings of such entities were $273.7 million at November 30, 2005.

12. STOCK-BASED COMPENSATION PLANS

Under our various stock option plans, options to purchase shares of our Common Stock were granted to employees and directors. The option price for shares granted under these plans is the fair market value on the grant date and the grants have 10-year terms.

Our ESPP enables employees to purchase McCormick common stock non-voting at the lower of the stock price at grant date or exercise date. Options granted under this plan have a two-year term.

A summary of our stock option activity for the years ended November 30, 2005, 2004 and 2003 follows:

A summary of our stock options outstanding at November 30, 2005 follows:

Under all stock purchase and option plans, there were 9.9 million and 12.6 million shares reserved for future grants at November 30, 2005 and 2004, respectively.

Included in stock options exercised are non-cash option swaps and taxes paid with shares of $1.5 million, $12.8 million and $1.1 million for 2005,2004 and 2003, respectively. These amounts have been excluded from common stock issued and acquired by purchase in the consolidated cash flow statement as these are non-cash transactions.

13. EARNINGS PER SHARE

The reconciliation of shares outstanding used in the calculation of basic and diluted earnings per share for the years ended November 30, 2005, 2004 and 2003 follows:

14.  CAPITAL STOCKS

Holders of Common Stock have full voting rights except that

(1)  the voting rights of persons who are deemed to own beneficially 10% or more of the outstanding shares of Common Stock are limited to 10% of the votes entitled to be cast by all holders of shares of Common Stock regardless of how many shares in excess of 10% are held by such person;

(2)  we have the right to redeem any or all shares of stock owned by such person unless such person acquires more than 90% of the outstanding shares of each class of our common stock; and (3) at such time as such person controls more than 50% of the vote entitled to be cast by the holders of outstanding shares of Common Stock, automatically, on a share-for-share basis, all shares of Common Stock Non-Voting will convert into shares of Common Stock.

Holders of Common Stock Non-Voting will vote as a separate class on all matters on which they are entitled to vote. Holders of Common Stock Non-Voting are entitled to vote on reverse mergers and statutory share exchanges where our capital stock is converted into other securities or property, dissolution of the Company and the sale of substantially all of our assets, as well as forward mergers and consolidation of the Company.

15. COMMITMENTS AND CONTINGENCIES

We are a party to various pending legal proceedings and claims, tax issues and other matters arising out of the normal course of business. Although the results of pending claims and litigation cannot be predicted with certainty, in management's opinion, the final outcome of these proceedings and claims, tax issues and other matters will not have a material effect on our consolidated results of operations, financial position or cash flows.