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may be carried forward indefinitely. The current statutory
rates in these countries range from 15% to 28%.
A valuation allowance has been provided to record
deferred tax assets at their net realizable value. The $0.1
million net decrease in the valuation allowance was due to
an additional valuation allowance of $1.1 million related to
losses generated in 2007 which may not be realized in
future periods, $0.5 million additional valuation allowance
requirement related to prior years, and higher foreign
currency exchange rates, offset by a decrease in the valuation
allowance of $1.7 million. The $1.7 million decrease
primarily relates to the utilization of tax losses and the
disposition of a non-U.S. subsidiary.
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 $434.4
million at November 30, 2007.
11. 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, 2007, 2006 and 2005 follows:
12. 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,
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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.
13. COMMITMENTS AND CONTINGENCIES
During the normal course of our business, we are occasionally
involved with various claims and litigation.
Reserves are established in connection with such matters
when a loss is probable and the amount of such loss can
be reasonably estimated. No reserves are established for
losses which are only reasonably possible. The determination
of probability and the estimation of the actual amount
of any such loss is inherently unpredictable, and it is therefore
possible that the eventual outcome of such claims
and litigation could exceed the estimated reserves, if any.
However, we believe that the likelihood that any such
excess might have a material adverse effect on our financial
statements is remote.
14. BUSINESS SEGMENTS AND GEOGRAPHIC AREAS
Business Segments
We operate in two business segments: consumer and
industrial. The consumer and industrial segments manufacture,
market and distribute spices, herbs, seasoning
blends and other flavors throughout the world. The
consumer segment sells to retail outlets, including
grocery, mass merchandise, warehouse clubs, discount
and drug stores under the McCormick® brand and a variety
of brands around the world, including Zatarain’s®,
Simply Asia ,Thai Kitchen, Ducros®, Vahine, Silvo® ,
Club House® and Schwartz®. The industrial segment sells
to other food manufacturers and the food service industry
both directly and indirectly through distributors.
In each of our segments, we produce and sell many
individual products which are similar in composition and
nature. It is impractical to segregate and identify revenue
and profits for each of these individual product lines.
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