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McCORMICK & COMPANY 2007 ANNUAL REPORT

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

affiliates was $46.6 million at November 30, 2007. Royalty income from unconsolidated affiliates was $11.4 million, $11.1 million and $10.5 million for 2007, 2006 and 2005, respectively.

6. FINANCING ARRANGEMENTS
Our outstanding debt is as follows:

(1) The variable interest rate on $75 million of commercial paper is hedged by interest rate swaps through 2011. Net interest payments are fixed at 6.35% during this period.
(2) Interest rate swaps, settled upon the issuance of the medium-term notes, effectively fixed the interest rate on $150 million of the notes at a weighted average fixed rate of 7.71%.
(3) The fixed interest rate on the 3.35% medium-term notes due
in 2009 is effectively converted to a variable rate by interest rate swaps through 2009. Net interest payments are based on LIBOR minus .21% during this period.
(4) The fixed interest rate on $100 million of the 5.20% medium-term notes due in 2015 is effectively converted to a variable rate by interest rate swaps through 2015. Net interest payments are based on LIBOR minus .05% during this period.

Subsequent to our 2007 fiscal year end, we issued $250 million of 5.75% medium-term notes which are due in 2017. These notes were also subject to an interest rate hedge as further discussed in note 7. The net proceeds will be used to repay $150 million of debt maturing in 2008 with the remainder used to repay short-term debt. Since we have the ability and intent to refinance, $150 million of current maturity of long-term debt has been classified as long-term debt in the 2007 balance sheet and included in maturities based on a 2017 due date.
Maturities of long-term debt, not including the $250 million notes issued in December 2007, during the years subsequent to November 30, 2008

are as follows (in millions):
         2009 – $50.4
         2010 – $14.4
         2011 – $100.1
         2012 –     –
         Thereafter – $405.0
     In July 2006, we issued $100 million of 5.80% medium-term notes due 2011. Net interest is payable semi-annually in arrears in January and July of each year. The net proceeds from this offering were used to pay down the commercial paper debt placed in June 2006 for the acquisition of Simply Asia Foods.
     In December 2005, we issued $200 million of 5.20% medium-term notes due 2015. Net interest is payable semi-annually in arrears in June and December of each year. The net proceeds from this offering were used to pay down long-term debt which matured in 2006.
     We have available credit facilities with domestic and foreign banks for various purposes. In July 2007, we entered into a $500 million five-year revolving credit agreement with various domestic banks for general business purposes. Our current pricing under the new credit agreement, on a fully drawn basis, is LIBOR plus 0.25%. The agreement, which replaces a previously existing $400 million revolving credit agreement, expires in July 2012. The amount of unused credit facilities at November 30, 2007 was $605.8 million, of which $500.0 million supports a commercial paper borrowing arrangement. Of these unused facilities, $105.8 million expire in 2008 and $500.0 million expire in 2012. Some credit facilities issuance require a commitment fee. Annualized commitment fees at November 30, 2007 and 2006 were $0.3 million.
     Rental expense under operating leases was $27.0 million in 2007, $25.4 million in 2006 and $24.6 million in 2005. Future annual fixed rental payments for the years ending November 30 are as follows (in millions):
         2008 – $19.0
         2009 – $14.3
         2010 – $11.9
         2011 – $ 7.4
         2012 – $ 4.3
         Thereafter – $ .8
    At November 30, 2007, we had guarantees outstanding of $1.5 million with terms of one year or less. At November 30, 2007 and 2006, we had outstanding letters of credit of $30.7 million and $28.7 million, respectively.

McCormick & Company 2007 Annual Report 48