SecProbe.io

CORRESP
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filename1.htm

U.S.
Securities and Exchange Commission

Division
of Corporation Finance

100
F Street, N.E.

Washington,
DC  20549-7010

Attn:
Jill S. Davis

  RE:

  McCormick & Company, Incorporated (the
  “Company”)

  Form 10-K for Fiscal Year Ended
  November 30, 2007

  Filed January 28, 2008

  File No. 001-14920

Dear
Ms. Davis:

Please find set forth below our responses to the
comments raised by the Staff (the “Staff”) of the Securities and Exchange
Commission (the Commission) in its letter dated February 28, 2008, with
respect to the above-captioned Form 10-K. For ease of reference, we have
reproduced below the full text of the Staff’s comments, each of which is
followed by the Company’s response. Capitalized terms not defined herein shall
have the meanings given to them in the Form 10-K.

Item
9A. Controls and Procedures

Disclosure
Controls and Procedures, page 11

1.               You disclose that you
maintain a system of disclosure controls and procedures “that is designed to
provide reasonable assurance that information which is required to be disclosed
is accumulated and communicated to management in a timely manner.” Item 307 of
Regulation S-K requires that you disclose your officer’s conclusions regarding
the effectiveness of your disclosure controls and procedures as that term is defined
in Rule 13a-15(e) of the Exchange Act.  The definition in Rule 13a-15(e) is
more comprehensive than that included in your disclosure and includes “controls
and other procedures of an issuer that are designed to ensure that information
required to be disclosed…is recorded, processed, summarized and reported,
within the time periods specified in the Commission’s rules and forms.”  Please conform your definition to the
definition within Rule 13a-15(e) of the Exchange Act.

McCormick &
Company, Inc. Response:

1.               Our intention
was not to make our definition of “disclosure controls and procedures” more
restrictive than the definition contained in Rule 13a-15(e) of the
Exchange Act.  Our officers did use the
Rule 13a-15(e) definition when reaching conclusions regarding the
effectiveness of our controls and procedures.
In future filings, we will revise our disclosure to refer directly to
the definition of disclosure controls and procedures in Rule 13a-15(e) of
the Exchange Act, as follows:

The Company’s management,
with the participation of the Company’s Chief Executive Officer and Chief
Financial Officer, has evaluated the effectiveness of the Company’s disclosure
controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of
the Securities Exchange Act of 1934, as of the end of the period covered
by this report. Based on that evaluation, the Company’s Chief Executive Officer
and Chief Financial Officer concluded that the Company’s disclosure controls
and procedures were effective in providing reasonable assurance that the
information required to be disclosed in this report has been recorded,
processed, summarized and reported as of the end of the period covered by this
report.

Exhibit 13
— 2007 Annual Report

Management’s
Discussion and Analysis — Results of Operations, page 18

2.               We note that you identify
various factors and offsetting trends that impacted the year to year trends of
your results of operations and the related financial statement line items.  For example, you state that your gross profit
margin for 2007 as compared to 2006 was “unfavorably impacted by higher
material cost in 2007 that were only partially offset by price increases…..”
without quantifying the impact of each factor and without discussion of the
business developments or external events that underlie the increases in
material costs.  Please expand your
management’s discussion and analysis to explain in greater detail what gave
rise to the factors that you have identified, and indicate whether or not you
expect them to have a continuing impact on your results of operations in the
future.  Additionally, to the extent that
material increases offset material decreases, those increases and decreases
should be separately quantified in your management’s discussion and analysis.  Please refer to “Commission Guidance Regarding
Management’s Discussion and Analysis of Financial Condition and Results of
Operations.”

McCormick &
Company, Inc. Response:

2.               In our Management’s
Discussion and Analysis section, we discussed material factors affecting our
results of operations as well as the trends and performance indicators reviewed
by management.  To the extent the
information is available, we provide quantification of the significant factors
affecting various components of our financial results including sales, cost of
goods sold and our resulting gross profit margin.  For example, we disclosed and quantified the
impact of Simply Asia Foods on our net sales and the impact of restructuring
costs and savings on our gross margin.
In the cases where quantification is not possible, we discussed the
trends that our management considers as they evaluate our financial
results.  As the Staff identified, we
disclosed that our “[g]ross profit margin was unfavorably impacted by higher
material costs in 2007 that were only partially offset by price increases.”  The Staff has requested that we quantify the
impact of higher material costs.  Because
we purchase hundreds of different raw materials, it is extraordinarily
difficult to quantify the impact of rising prices.  Our cost of goods sold is impacted by not
only the total

amount
of raw materials purchased but also the relative mix of raw materials (i.e. the
ratio of more expensive raw materials to less expensive raw materials).  In addition, the price for each raw material
does not change in lock step with other raw materials.  Some goods are significantly increasing in
cost while others are only slightly increasing or even decreasing.  The end result of the interplay of these
various factors is that our management can not specifically quantify the impact
of rising prices, but instead must focus on macro trends.  Therefore, we can only disclose that our cost
of goods sold is increasing in part due to the increased cost of raw materials
and the negative impact of this increased cost on our gross profit margin is
only partially offset by our efforts to pass the price increases on to our
customers.

In
future filings, we will continue to provide as much quantification of the
various factors and trends impacting our results of operations as we have
available.  In addition, we will expand
our discussion to the extent possible to include more disclosure relating to
the external events that underlie such trends.
In certain circumstances, we may be able to point to specific raw
materials (such as we did with the impact of vanilla prices in 2005 and 2006)
or specific certain external events such as weather or political disruptions
that are significantly impacting our overall cost of raw materials.  However, there were no such significant, specific
raw materials or significant, specific external events that dramatically impacted
our overall cost of raw materials in 2007.

When
possible, we will also disclose when we reasonably expect these external events
will have a continued impact on our future results of operations.  However, as noted above, we source raw
material from world markets which are driven by global supply and demand. We
are generally not in a position to comment on the macro-economic drivers of world
commodity prices.

Critical Accounting Estimates and Assumptions

Goodwill and Intangible Asset Valuation, page 32

3.               We note your policy
to test goodwill and non-amortizable intangible assets for impairment if events
or circumstance indicate that it is more likely than not that the fair value of
a reporting unit or the non-amortizable intangible asset is below its carrying
amount.  Please revisit your policy to
ensure that it conforms the criteria of paragraph 17 of FAS 142, which
indicates impairment testing should occur if events or changes in circumstances
indicate that the asset might be impaired.
Please clarify your policy disclosure accordingly.  Please also tell us whether the application
of the clarified policy materially effects your previously-issued financial
statements or the results of your impairment analysis and testing.

McCormick &
Company, Inc. Response:

3.               Our disclosure on page 32
about triggering events for impairment testing of goodwill and non-amortizable
intangibles was meant to explain paragraph 17 of FAS 142.  It

was
not meant to be more expansive or restrictive than those requirements of
paragraph 17 under FAS 142.  Accordingly we
believe that our policy is in-line with paragraph 17 of FAS 142 and there is no
effect on previously issued financial statements.  In future filings we will conform the wording
to more closely match paragraph 17 of FAS 142.
Specifically, we will revise the wording of Note 1 to our audited
financial statements and Critical Accounting Estimates and Assumptions of
Managements Discussion and Analysis to read as follows in our 2008 Form 10-K:

We review the carrying value of goodwill and non-amortizable intangible
assets and conduct tests of impairment on an annual basis as described below.
We also test goodwill for impairment if events or circumstances indicate that
it is more likely than not that the fair value of a reporting unit is below its
carrying amount and test non-amortizing intangible assets for impairment if
events or changes in circumstances indicate that the asset might be impaired.
Separable intangible assets that have finite useful lives are amortized over
those lives.

Contractual
Obligations and Commercial Commitments

Contractual
Cash Obligations Due by Year, page 30

4.               We note your
disclosure that you have excluded your pension and postretirement funding from
the table of contractual cash obligations because of the variability resulting
from future changes in legislation and assumptions.  Please include these amounts in your table
using your current assumptions about future legislation, estimates, and funding
expectations.

McCormick &
Company, Inc. Response:

4.               We understand that the
intent of the contractual cash obligations table is to give our investors the
best picture of future cash flows of current commitments.  We also understand that the Commission has
encouraged filers to try to best portray these future cash obligations in
compliance with the spirit of this disclosure.
The nature of pension and postretirement funding can be much more
volatile than the future cash flow of contractual commitments, such as rental
expense.  As the staff noted in its
Interpretation: Commission Guidance Regarding Management’s Discussion and
Analysis of Financial Condition and Results of Operations (FR 72), one starting
point for a company’s discussion and analysis of cash requirements is the
tabular disclosure of contractual obligations, supplemented with additional
information that is material to an understanding of the company’s cash
requirements.  Therefore we felt it was more
appropriate to supplement the tabular disclosure with the pension and
postretirement funding for the next year since it was more reliable than
estimating the cash flows over longer periods.
Footnote 46 to FR 72 specifically indicates that amounts to be funded to
cover post-employment (including retirement) benefits, such as pension
obligations, may not be included in the tabular disclosure of contractual
obligations and therefore should be addressed separately if material.  We believe that

we
have complied with this requirement through the presentation of our anticipated
2008 pension and postretirement funding as supplemental disclosure after the
table.

Financial Information — Financial Statements

Note 2 — Acquisitions, page 45

5.               In regards to
your acquisition of Lawry’s and Adolph’s brands, please tell us your conclusions
as to whether you are required to furnish financial statements pursuant to Rule 3-05
and Article 11 of Regulation S-X.
Please tell us the summary basis for your conclusion and, if applicable,
when you expect to furnish the related financial statements.

McCormick &
Company, Inc. Response:

5.               We believe that
the Lawry’s and Adolph’s brands potential acquisition will exceed the “significant
subsidiary” test and will require both pro-forma financial information and
audited financial statements of the acquired entity once the acquisition is consummated.  We will report the closing of the acquisition
on Form 8-K, pursuant to Item 2.01 of the Form, within four business days
after the closing.  We will file the
required financial statements within 71 days thereafter, in accordance with
Item 9.01 of Form 8-K.  As discussed
in Note 2 to the consolidated financial statements included in our Form 10-K,
at November 30, 2007 the closing of the Lawry’s and Adolph’s acquisition is
subject to the expiration or termination of the Hart-Scott-Rodino waiting
period (which has not yet occurred) and other customary closing conditions.

Note
5 — Investments in Affiliates, page 47

6.               Please expand
your disclosure to include the information to be disclosed by paragraphs 20(a) and
20(b) of APBO No. 18.

McCormick &
Company, Inc. Response:

6.               The information
required by paragraph 20(a)(1) of APBO No. 18 (the name of each investee
and percentage of ownership of common stock) will be included in future
filings.  Specifically, we will add the
following disclosure to the notes to our financial statements:

Our principal investment in unconsolidated affiliates is a 50% interest
in McCormick de Mexico, S.A. de C.V.
Through March of 2006, we also had a 50% interest in Signature
Brands LLC.

The
information required by paragraph 20(a)(2) (the accounting policies of the
investor with respect to investments in common stock) is disclosed in the Consolidation
section of Note 1 in the Notes to our consolidated financial statements for
2007.  The information required by
paragraph 20(a)(3) (the difference, if any, between the amount at which an
investment is carried and the

amount
of underlying equity in net assets and the accounting treatment of the
difference) is not material and therefore has not been disclosed.  Note 7 in the notes to consolidated financial
statements for 2007 includes the statement “Investments in affiliated are not
readily marketable” which we believe makes clear that we do not have any
investments in common stock for which quoted market price is available.  Accordingly we believe that the disclosures called
for by paragraph 20(b) are not applicable.
Further, the Company does not have any investments of the type described
in footnote 13 to paragraph 20(b) and therefore paragraph 20(b) is
not applicable to us.

Note
13 — Commitments and Contingencies, page 57

7.               We note your
disclosure regarding reserves for claims and litigation.  Please expand your disclosure to describe the
nature and amount of any loss contingencies that have been accrued. Refer to
paragraph 9 of FAS 5.  If no such amounts
have been accrued, or to the extent you determine that the accrual is immaterial,
please disclose that fact.

McCormick &
Company, Inc. Response:

7.               At November 30,
2007, we had no loss contingencies of a material nature, and the amounts that
we had accrued for claims and litigation were not material. Accordingly, we believe
that no disclosure in addition to that already provided in Note 13 of the notes
to our consolidated financial statements is necessary.

Note
14 — Business Segments and Geographic Areas, page 57

8.               We note you
disclose “operating income excluding restructuring charges” as your measure for
evaluating segment performance.  We also
note that this amount is wholly comprised of amounts attributed to both your
consumer and