McCORMICK & COMPANY  2008 ANNUAL REPORT

	Strategic Focus                                                                          Our strategy – to improve margins, invest in our business and increase sales and profits – has been driving our success for the past 10 years and is our plan for growth in the future.       In the latter part of 2007 and in 2008, our progress with margin improvement was hampered by an environment of volatile costs for many raw and packaging materials. However, we continued to make progress with cost-savings programs, new capabilities and improved processes and in 2008, achieved $31 million in incremental cost savings. We are also improving margins with the acquisition of higher-margin brands and the introduction of higher-margin, more value-added new products. As we reduce the number of lower-margin products and customers, we eliminate complexity and further boost margins.       Product innovation is one of the leading investments to grow our business. New products launched in the past three years accounted for 8% of net sales in 2008. During this period, research and development expense rose 21.1%. We are also investing in greater marketing support to drive sales of our leading brands, with an increase of 29.2% since 2005. Another growth initiative is brand revitalization which encompasses marketing support as well as better merchandising, packaging and other improvements.       We are also growing our business with investments in acquisitions. Acquisitions have added 1.6% to average			annual sales growth in the past five years. Through acquisitions we are adding leading brands to extend our reach into new geographic regions where we currently have little or no distribution, with a particular interest in emerging markets that offer high growth potential. In our developed markets, we are seeking brands that have a niche position and meet a growing consumer trend. Due in part to our acquisition strategy, we intend to grow our consumer business at a faster pace than our industrial business.       Long-term, we expect to grow sales 4 to 6% with 2 to 3% from our base business, 1 to 2% from new products and 1 to 3% from acquisitions. In some years, pricing and foreign currency exchange rates may also impact our sales growth. In 2008, both of these factors had a favorable impact.       Our business generates strong cash flow. Actions to grow net income and improve working capital are designed to lead to higher levels of cash generation. Cash is our fuel for incremental product development, marketing support, strategic acquisitions and capital projects. Although currently curtailed while we pay down debt from the Lawry’s acquisition, we have a share repurchase program designed to lower shares outstanding. We are building total shareholder return with consistent dividend payments. We have paid dividends every year since 1925 and at the end of 2008, the Board declared our 23rd consecutive dividend increase.