McCormick Reports Strong Sales and Profits for Second Quarter
Net sales for the quarter were $468 million, up 8% over the second quarter of 1998. Second quarter sales rose 8% for both the Company's worldwide consumer food business and the industrial and food service businesses. Before special charges, operating income for the global food businesses increased more than 15%. Sales for the Company's packaging business rose 4%, and operating income increased at a similar rate. For the first half, net sales were $910 million, an increase of 7% over 1998.
In the quarter, gross margins increased to 33.7% from 32.4% in 1998. Compared to the second quarter of 1998, quarter end inventories were 5% lower, and operating cash flow improved by $22 million.
Commented Robert J. Lawless, Chairman, President & CEO, "We are extremely pleased with progress toward achieving our 1999 targets. Sales growth initiatives and improvements in all areas of our operations contributed to another successful quarter. Again this quarter, our consumer programs in the U.S. boosted sales of the Company's branded products. Supply chain management, programs to improve manufacturing efficiencies, and working capital management are underway in our consumer, industrial and packaging operations worldwide. These efforts continue to deliver good results as evidenced by gross margin improvement, inventory reduction, and operating cash flow.
"Our excellent results and positive momentum during the first six months give us confidence that 1999 will be a very successful year for McCormick."
Second Quarter Report McCormick & Company, Incorporated
Consolidated Income Statement (Unaudited)
(in thousands except per-share data)
Three months ended Six months ended
5/31/99 5/31/98 5/31/99 5/31/98
NET SALES $468,178 $435,453 $909,721 $850,655
Cost of goods sold 310,443 294,165 606,647 576,195
Gross profit 157,735 141,288 303,074 274,460
Percentage 33.7% 32.4% 33.3% 32.3%
Selling, general and administrative expense 122,084 110,238 234,762 213,313
Special charges 14,665 611 14,665 679
Operating income 20,986 30,439 53,647 60,468
Interest expense 8,154 9,308 16,288 17,697
Other (income) expense, net (1,181) (1,226) (2,276) (2,741)
Income before income taxes 14,013 22,357 39,635 45,512
Income taxes 10,274 8,048 19,472 16,384
Net income from consolidated operations 3,739 14,309 20,163 29,128
Income from unconsolidated operations 2,057 1,782 3,803 3,172
NET INCOME $5,796 $16,091 $23,966 $32,300
EARNINGS PER SHARE - BASIC AND DILUTED $0.08 $0.22 $0.33 $0.44
Average shares outstanding - basic 71,502 73,457 71,922 73,615
Average shares outstanding - diluted 71,919 74,159 72,430 74,231
Condensed Consolidated Balance Sheet (Unaudited)
(in thousands)
5/31/99 5/31/98
Assets
Receivables $182,866 $173,906
Inventories 262,201 275,050
Prepaid allowances 150,255 158,083
Property, plant and equipment, net 366,593 380,023
Other assets 260,651 265,003
Total assets $1,222,566 $1,252,065
Liabilities and shareholders' equity
Short-term borrowings $206,678 $231,650
Other current liabilities 320,766 299,965
Long-term debt 243,401 258,971
Other liabilities 100,675 88,942
Shareholders' equity 351,046 372,537
Total liabilities and shareholders' equity $1,222,566 $1,252,065