Exhibit 99 to Form 8-K
Unaudited Pro Forma Financial Information
McCormick & Company, Incorporated
The Company completed the sale of substantially all of the assets
of Gilroy Foods, Incorporated (GFI) and Gilroy Energy Company,
Inc. (GEC) as described in Item 2 of this Form 8-K. In addition
the sale of GEC necessitated the prepayment of the Company's
11.68% nonrecourse installment note due 2006 (GEC note). The
following unaudited pro forma financial statements reflect all
three of these transactions. The Company will record all of
these transactions in the third quarter ended August 31, 1996,
and the gain and losses on these transactions are not expected to
be materially different than those reflected in these pro forma
financial statements.
The unaudited Pro Forma Condensed Consolidated Statements of
Income for the year ended November 30, 1995 and the six months
ended May 31, 1996 are prepared assuming that the sales of GFI
and GEC and the prepayment of GEC notes had taken place on
December 1, 1994. The unaudited Pro Forma Condensed Consolidated
Balance Sheet as of May 31, 1996 is prepared assuming that the
sales and prepayment of debt had taken place on that date.
The pro forma financial statements have been prepared assuming
that the net proceeds of the sale of GEC and GFI and the
prepayment of GEC notes was used to repay short term borrowings.
On August 29, 1996 when the net proceeds from these transactions
were received, the Company used substantially all of those
proceeds to immediately reduce short term borrowings. However,
in the near term the Company also intends to use these proceeds
to fund a 10 million share stock repurchase program announced on
September 3, 1996, to fund future acquisitions and for general
corporate purposes as the Company expands its core business.
The pro forma financial statements have been prepared by
adjusting the historical financial statements for the effect of
sales, expenses, assets and liabilities which might have occurred
had the sales of GFI and GEC and the prepayment of GEC notes
taken place on the dates indicated. These pro forma financial
statements are provided for informational purposes only and are
not necessarily indicative of what the financial statements of
the Company would have been had the transactions taken place on
the dates indicated. Further, these pro forma financial
statements do not purport to indicate the future results of
operations or financial position of the Company.
These pro forma financial statements should be read in connection
with the historical financial statements of the Company that have
been filed with the Commission.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited)
MAY 31, 1996
McCORMICK & COMPANY, INCORPORATED
(In Thousands)
Actual Adjustments Pro Forma
ASSETS
Current Assets
Cash and cash equivalents $ 20,787 $ $ 20,787
Accounts receivable - net 185,330 (19,879)(a) 165,451
Inventories 353,266 (104,497)(a) 248,769
Other current assets 51,590 1,554 (b) 50,363
(2,781)(a)
Total current assets 610,973 (125,603) 485,370
Property - net 528,434 (132,021)(a) 396,413
Goodwill - net 175,500 (8,006)(a) 167,494
Prepaid allowances 167,618 167,618
Other assets 68,688 4,663 (b) 73,351
Total assets $1,551,213 $(260,967) $1,290,246
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Short-term borrowings $294,348 $ 62,920 (d) $ 97,493
(259,775)(c)
Accounts payable, trade 134,082 (11,073)(a) 123,009
Accrued liabilities 165,025 20,646 (b) 189,731
4,060 (e)
Total current liabilities 593,455 (183,222) 410,233
Long-term debt 337,805 (50,120)(d) 287,685
Deferred income taxes 19,428 (19,428)(b)
Employee benefit liabilities 89,824 89,824
Other liabilities 2,326 (397)(a) 1,929
Total liabilities 1,042,838 (253,167) 789,671
Shareholders' Equity
Common Stock 49,843 49,843
Common Stock Non-Voting 116,302 116,302
Retained earnings 378,354 ( 7,800)(f) 370,554
Foreign currency translation adj. (36,124) (36,124)
Total shareholders' equity 508,375 ( 7,800)(f) 500,575
Total liabilities and
shareholders' equity $1,551,213 $(260,967) $1,290,246
(a) To reflect the net assets of GFI and GEC sold.
(b) To reflect the tax effects of the GFI and GEC sales and the tax effects of the
prepayment of the GEC notes.
(c) To reflect the use of proceeds from the sale of GFI and GEC to pay down short-term
borrowings.
(d) To reflect the prepayment of the GEC 11.68% non-recourse installment note due 2006,
through the issuance of short-term borrowings.
(e) To reflect accrued liabilities of GFI and GEC sold, liabilities assumed by McCormick
in the sale of GFI and GEC, and expenses of the sale of GFI and GEC.
(f) To reflect an estimated after tax loss on the prepayment of GEC notes. The combined
gain on GEC sale and loss on GFI sale are estimated to be zero. The Company estimates
that its after tax gain or loss on the sale of GFI and GEC could range from a loss of
$3 million to a gain of $3 million.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME (Unaudited)
FOR THE YEAR ENDED NOVEMBER 30, 1995
McCORMICK & COMPANY, INCORPORATED
(In Thousands Except Per Share Amounts)
Actual Adjustments Pro Forma
Net sales $1,858,694 $(167,608)(a) $1,691,086
Cost of goods sold 1,211,517 (104,582)(a) 1,106,935
Gross profit 647,177 (63,026) 584,151
Selling, general and
administrative expense 446,128 (30,669)(a) 415,459
Restructuring credit (3,904) (3,904)
Profit from operations 204,953 (32,357) 172,596
Other inc. (expense) - net (530) (162)(a) 7,308
8,000 (c)
Interest expense 55,270 (6,488)(e) 38,365
(10,417)(b)
Income before income taxes 149,153 (7,614) 141,539
Income taxes 53,700 (2,817)(d) 50,883
Income from consolidated
operations 95,453 (4,797) 90,656
Income (loss) from uncon-
solidated operations 2,068 2,068
Net income $ 97,521 $ (4,797) $ 92,724
Earnings per common share $1.20 $1.14
Weighted average common shares
outstanding 81,181 81,181
(a) To reflect the elimination of the operating results of GFI and GEC which were included
in the consolidated results for the periods presented.
(b) To reflect the net reduction of interest expense due to the assumed prepayment of short-
term borrowings. Short-term borrowings were assumed to be reduced by the net proceeds
(after expenses and tax payments) from the sale of GFI and GEC. Short-term borrowings
were assumed to be increased by the prepayment of GEC notes net of the related tax
benefits. The interest rate used was 6.08% for the year ended November 30, 1995 and
5.6% for the six months ended May 31, 1996. These rates approximated the Corporation's
average short-term borrowing rates during the respective periods. The effect on pro
forma net income of a 1/8% variance in the assumed interest rate would be approximately
$130 thousand.
(c) To reflect income earned on a non-compete agreement with Calpine Corporation. It is
assumed that the Corporation would not have violated the terms of the non-compete
agreement during the pro forma periods presented.
(d) To reflect the income tax effect of the pro forma adjustments. Tax effects were
calculated using the marginal tax rates for the taxing jurisdictions affected by the
adjustments.
(e) To reflect the reduction of interest expense for the assumed prepayment of the GEC
notes.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME (Unaudited)
FOR THE SIX MONTHS ENDED MAY 31, 1996
McCORMICK & COMPANY, INCORPORATED
(In Thousands Except Per Share Amounts)
Actual Adjustments Pro Forma
Net sales $867,486 $( 77,857)(a) $789,629
Cost of goods sold 590,574 (54,732)(a) 535,842
Gross profit 276,912 (23,125) 253,787
Selling, general and
administrative expense 223,501 (14,110)(a) 209,391
Profit from operations 53,411 (9,015) 44,396
Other inc. (expense) - net 608 (240)(a) 3,868
3,500 (c)
Interest expense 24,394 (3,099)(e) 16,133
(5,162)(b)
Income before income taxes 29,625 2,506 32,131
Income taxes 10,505 927 (d) 11,432
Income from consolidated
operations 19,120 1,579 20,699
Income (loss) from uncon-
solidated operations 1,225 1,225
Net income $ 20,345 $ 1,579 $ 21,924
Earnings per common share $0.25 $0.27
Weighted average common shares
outstanding 81,275 81,275
(a) To reflect the elimination of the operating results of GFI and GEC which were included
in the consolidated results for the periods presented.
(b) To reflect the net reduction of interest expense due to the assumed prepayment of short-
term borrowings. Short-term borrowings were assumed to be reduced by the net proceeds
(after expenses and tax payments) from the sale of GFI and GEC. Short-term borrowings
were assumed to be increased by the prepayment of GEC notes net of the related tax
benefits. The interest rate used was 6.08% for the year ended November 30, 1995 and
5.6% for the six months ended May 31, 1996. These rates approximated the Corporation's
average short-term borrowing rates during the respective periods. The effect on pro
forma net income of a 1/8% variance in the assumed interest rate would be approximately
$130 thousand.
(c) To reflect income earned on a non-compete agreement with Calpine Corporation. It is
assumed that the Corporation would not have violated the terms of the non-compete
agreement during the pro forma periods presented.
(d) To reflect the income tax effect of the pro forma adjustments. Tax effects were
calculated using the marginal tax rates for the taxing jurisdictions affected by the
adjustments.
(e) To reflect the reduction of interest expense for the assumed prepayment of the GEC
notes.