McCormick & Company, Incorporated (NYSE: MKC) yesterday reported a 15% increase in sales and a 9% increase in earnings per share for the third quarter of fiscal 2001.

Sales for the quarter were $571 million, an increase of 15% versus the third quarter of 2000. Excluding foreign exchange and the Ducros business, sales increased 4%. Gross profit margin for the quarter was 40.1%, 5.2 percentage points above last year. This increase resulted from a shift in product mix to higher margin, more value-added products, including the acquired Ducros business, as well as cost reductions. Operating income increased 10% to $56 million.

Earnings per share for the quarter ended August 31 increased to 49 cents from 45 cents in 2000. Results from Ducros for the quarter diluted earnings by 3 cents per share. In the third quarter, excluding dilution from the Ducros acquisition, earnings per share for 2001 were 52 cents, an increase of 7 cents versus the prior year. This was achieved through 2 cents of higher operating income, 3 cents in reduced interest expense, 1 cent of other income and 1 cent from a lower effective tax rate.

Consumer Business

Sales for McCormick's consumer business rose 30% versus last year's third quarter and increased 4% excluding the impact of Ducros and foreign exchange. In local currency, consumer sales were up 4% in the Americas, 3% in Europe (excluding Ducros) and 6% in Asia. This strong performance was driven by a combination of volume, product mix, and pricing. Operating income for the consumer business was $28.3 million, 5% below last year's quarter. This is a result of the dilutive effect of Ducros and higher investment spending in the quarter, such as advertising and the Beyond 2000 program. Year-to-date, operating income for the consumer business was $82.0 million, an increase of 8% above last year.

Industrial Business

Industrial sales increased 6% versus last year's third quarter and 4% excluding the impact of Ducros and foreign exchange. In local currency, industrial sales increased 5% in the Americas, 3% in Europe (excluding Ducros) and 4% in Asia. Higher volumes this quarter drove most of the increase. Operating income for the quarter increased to $30.3 million, a 30% increase versus last year. Margin improvement in the industrial business was particularly strong due to product mix and cost reduction initiatives. Year-to-date, operating income for the industrial business was $73.9 million, an increase of 25% above last year.

Packaging Business

The packaging business reported third party sales up 1% versus last year's third quarter. Operating income (including intersegment business) was $4.8 million, even with last year's result.

Chairman's Comments

Commented Robert J. Lawless, Chairman, President & CEO, ``We are extremely pleased with our results for the first nine months of 2001. Sales increased 16%, tracking well against our 12-14% target range. Excluding Ducros and foreign exchange, year-to-date sales are up 4% with increases in each of our three business segments.

"Gross profit margin continued to improve this quarter and year-to-date is 39.4% compared to a year-to-date result of 35.1% in 2000. We have two key initiatives behind this improvement. First, a more profitable product mix as we shift our focus and resources toward higher margin, more value-added products. Second, our cost reduction initiatives, including the Beyond 2000 program, are driving costs out of our processes, particularly in the global procurement of materials. For 2001, we are likely to exceed our goal of a 40% gross profit margin.

"We initially targeted 2001 earnings per share growth of 8-10%, with relatively even performance in the first half of the year, followed by strong second half results. We have reached an earnings per share increase of 9% in the first three quarters. In our last quarterly earnings release we commented on risk in the second half related to foreign exchange, inventory reduction efforts by our retail customers, and some minor dilution from Ducros. Even though certain of these risks impacted our third quarter results, the strong performance across many of our businesses enabled us to exceed our internal expectations. As we begin our largest and final quarter of the fiscal year, we continue to face risks. Although these risks may be magnified by last week's tragic events, we have sound fundamentals and excellent momentum. Given the current environment, our outlook for earnings per share growth remains at the top end of our 8-10% target.

"Our key initiatives for 2001 are delivering positive results. Successful margin improvement is creating profit growth and providing additional funds to drive sales through new product development and brand support. Another major area of focus in 2001 has been the acquisition of Ducros, which occurred one year ago. I am pleased to report that we have successfully integrated Ducros and that this business is meeting our expectations.

"I congratulate the employees of McCormick on a great quarter. The Company is meeting its goals and remains committed to delivering superior financial results and shareholder value. We are confident that 2001 will be an excellent year for McCormick and its shareholders."

Forward-Looking Statement

Certain information contained in this release, including expected trends in net sales and earnings performance, are "forward-looking statements" within the meaning of Section 21E of the Securities and Exchange Act of 1934. Forward-looking statements are based on management's current views and assumptions and involve risks and uncertainties that could be materially affected by external factors such as: actions of competitors, customer relationships, fluctuations in the cost and availability of supply chain resources and foreign economic conditions, including currency rate fluctuations. The Company undertakes no obligation to update or revise publicly, any forward-looking statements, whether as a result of new information, future events or otherwise.

About McCormick

McCormick & Company, Inc. is the global leader in the manufacture, marketing and distribution of spices, seasonings and flavors to the entire food industry -- to foodservice and food processing businesses as well as to retail outlets. In addition, the packaging group manufactures and markets specialty plastic bottles and tubes for personal care and other industries.

                      McCormick & Company, Incorporated

    Third Quarter Report

    Consolidated Income Statement (Unaudited)
    (In thousands except per-share data)

                             Three Months Ended           Nine Months Ended

                             8/31/01    8/31/00           8/31/01     8/31/00

     NET SALES
         Consumer            $261,619    $201,857         $791,632   $606,305
         Industrial           263,262     248,605          739,549    705,164
         Packaging             45,829      45,404          140,173    132,524

     Total Net sales          570,710     495,866        1,671,354  1,443,993

         Cost of goods sold   341,765     323,011        1,012,401    936,824

     Gross profit             228,945     172,855          658,953    507,169

         Gross profit margin    40.1%       34.9%            39.4%      35.1%

         Selling, general &
          administrative
          expense             172,506     121,707          508,005    378,058

         Special charges          -            57              -        1,023

     Operating income          56,439      51,091          150,948    128,088

         Interest expense      12,699       9,089           40,770     24,808

         Other
          (income)/expense     (1,370)         19           (2,270)       105

     Income before income
      taxes                    45,110      41,983          112,448    103,175

         Income taxes          14,931      14,950           37,220     36,788

     Net income from
      consolidated
      operations               30,179      27,033           75,228     66,387

         Income from
          unconsolidated
          operations            4,639       4,232           13,899     13,497

         Minority interest       (506)        -             (1,593)       -

     NET INCOME               $34,312     $31,265          $87,534    $79,884


     EARNINGS PER SHARE -
      BASIC                     $0.50       $0.46            $1.27      $1.16

     EARNINGS PER SHARE -
      ASSUMING DILUTION         $0.49       $0.45            $1.25      $1.15


     Average shares
      outstanding - basic      69,085      68,425           68,809     68,908

     Average shares
      outstanding - assuming
      dilution                 70,127      69,047           69,979     69,611


Note: The Company has reclassified amortization of goodwill from other income to selling, general & administrative expense. All amounts have been reclassified to conform to the current year presentation. Goodwill amortization was $9,673 and $3,776 for the nine months ended August 31, 2001 and 2000, respectively, and was $3,138 and $1,260 for the three months ended August 31, 2001 and 2000, respectively.

    Condensed Consolidated Balance Sheet (Unaudited)
    (In thousands)

                                         8/31/01          8/31/00
     Assets
     Receivables                         $271,405         $186,456
     Inventories                          295,088          274,170
     Prepaid allowances                   103,697          114,216
     Property, plant and
      equipment, net                      408,686          354,847
     Other assets                         651,242          680,850
             Total assets              $1,730,118       $1,610,539


     Liabilities and
      shareholders' equity
     Short-term borrowings               $328,878         $606,832
     Other current
      liabilities                         367,087          321,585
     Long-term debt                       454,212          233,334
     Other liabilities                    154,642          101,289
     Shareholders' equity                 425,299          347,499
             Total liabilities
              and shareholders'
              equity                   $1,730,118       $1,610,539