Delivering High Performance in 2010

We had excellent financial performance in 2010, meeting or exceeding our financial objectives for the year. We achieved a fifth consecutive year of double-digit earnings per share growth on a comparable basis and demonstrated the resiliency of our business during a period of high unemployment, volatile material costs and a difficult retail and foodservice environment.

Earnings per share were $2.75. On a comparable basis, excluding the impact of the reversal of a significant tax accrual in 2010 and restructuring charges in 2009, this was a 13% increase. This increase was above our long-term objective for the business and ahead of our initial goal for 2010, to grow earnings per share 6 to 8% on a comparable basis.

Underpinning our 2010 profit performance was a 0.9 percentage point increase in gross profit margin, nearly twice that of our initial goal. Our Comprehensive Continuous Improvement program—CCI—delivered $54 million in cost savings, which was well ahead of our $35 to $40 million target for the year. Margins were also boosted by a more favorable mix of products, particularly in our industrial business. Operating income margin for the industrial business ended the year at 8.0% compared to 6.7% in 2009, when measured on a comparable basis excluding restructuring charges recorded in 2009.

For the total Company, we grew net sales 5%, and in local currency the increase was 3%. While consumers remain under pressure in many of our markets, product innovation, higher marketing support and new distribution led to a solid increase in sales volumes. Our growth rate in emerging markets was particularly strong for McCormick and its joint venture partners. This growth included a double-digit increase in China and in our joint venture in Mexico. Partially offsetting our volume growth was the impact of reduced pricing, as lower costs, primarily for dairy ingredients, were passed through to industrial customers. Toward the end of 2010 our material and packaging costs began to increase, and we have responded with higher pricing.

We continue to focus on generating cash from our business and in 2010 reported cash flow from operations of $388 million. During the year, we completed paying down the debt related to our acquisition of Lawry’s in 2008. We also used cash for capital expenditures, an acquisition and a new joint venture. We returned $221 million of cash to our shareholders in dividends and share repurchases.

In November 2010, your Board approved the 25th consecutive annual increase in our dividend. McCormick is one of fewer than 50 companies in the S&P 500 with this distinctive record of raising shareholder dividends.