Business Segments And Geographic Areas

12 Months Ended

Nov. 30, 2019

Segment Reporting Information, Profit (Loss) [Abstract]

BUSINESS SEGMENTS AND GEOGRAPHIC AREAS

Business Segments

We operate in two business segments: consumer and flavor solutions. The consumer and flavor solutions segments manufacture, market and distribute spices, seasoning mixes, condiments and other flavorful products throughout the world. Our consumer segment sells to retail channels, including grocery, mass merchandise, warehouse clubs, discount and drug stores, and e-commerce under the “McCormick” brand and a variety of brands around the world, including “French's,” “Frank's RedHot,” “Lawry’s,” “Zatarain’s,” “Simply Asia,” “Thai Kitchen,” “Ducros,” “Vahiné,” “Schwartz,” “Club House,” “Kamis,” “Kohinoor,” "DaQiao," "Drogheria & Alimentari," "Stubb's" and "Gourmet Garden." Our flavor solutions segment sells to food manufacturers and the foodservice industry both directly and indirectly through distributors.

In each of our segments, we produce and sell many individual products which are similar in composition and nature. With their primary attribute being flavor, the products within each of our segments are regarded as fairly homogenous. It is impracticable to segregate and identify sales and profits for each of these individual product lines.

Historically, we have measured segment performance based on operating income excluding special charges as this activity is managed separately from the business segments. Beginning in 2017, we also excluded transaction and integration expenses related to our acquisition of RB Foods from our measure of segment performance as these expenses are similarly managed separately from the business segments. These transaction and integration expenses excluded from our segment performance measure include the amortization of the acquisition-date fair value adjustment of inventories that is included in cost of goods sold, costs directly associated with that acquisition and costs associated with integrating the RB Foods business. Although the segments are managed separately due to their distinct distribution channels and marketing strategies, manufacturing and warehousing are often integrated to maximize cost efficiencies. We do not segregate jointly utilized assets by individual segment for purposes of internal reporting, performance evaluation, or capital allocation.

In 2019, the Company transferred management responsibility for certain export operations in both its consumer and flavor solutions segments between geographies within each respective segment, shifting from the Americas to the

Asia/Pacific regions within each segment, with no change in segment sales or segment operating income for either the consumer or flavor solutions segment in total.

We have a large number of customers for our products. Sales to one of our consumer segment customers, Wal-Mart Stores, Inc., accounted for approximately 11% of consolidated sales in 2019, 2018 and 2017. Sales to one of our flavor solutions segment customers, PepsiCo, Inc., accounted for approximately 10% of consolidated sales in both 2019 and 2018 and approximately 11% in 2017.

Accounting policies for measuring segment operating income and assets are consistent with those described in note 1. Because of integrated manufacturing for certain products within the segments, products are not sold from one segment to another but rather inventory is transferred at cost. Inter-segment sales are not material. Corporate assets include cash, deferred taxes, investments and certain fixed assets.

Business Segment Results



(millions)	Consumer		Flavor Solutions		Total segments		Corporate & other		Total
2019
Net sales	$	3,269.8	$	2,077.6	$	5,347.4	$	—	$	5,347.4
Operating income excluding special charges	676.3		302.2		978.5		—		978.5
Income from unconsolidated operations	31.8		9.1		40.9		—		40.9
Assets	—		—		9,950.3		411.8		10,362.1
Capital expenditures	—		—		121.8		51.9		173.7
Depreciation and amortization	—		—		118.0		40.8		158.8
2018
Net sales	$	3,247.0	$	2,055.8	$	5,302.8	$	—	$	5,302.8
Operating income excluding special charges and transaction and integration expenses	637.1		292.8		929.9		—		929.9
Income from unconsolidated operations	29.5		5.3		34.8		—		34.8
Assets	—		—		10,015.8		240.6		10,256.4
Capital expenditures	—		—		126.3		42.8		169.1
Depreciation and amortization	—		—		115.0		35.7		150.7
2017
Net sales	$	2,901.6	$	1,828.7	$	4,730.3	$	—	$	4,730.3
Operating income excluding special charges and transaction and integration expenses	562.4		221.3		783.7		—		783.7
Income from unconsolidated operations	28.9		5.0		33.9		—		33.9
Assets	—		—		10,036.7		349.1		10,385.8
Capital expenditures	—		—		153.6		28.8		182.4
Depreciation and amortization	—		—		99.8		25.4		125.2

A reconciliation of operating income excluding special charges and, for 2018 and 2017, transaction and integration expenses, to operating income for 2019, 2018 and 2017 is as follows:



(millions)	Consumer		Flavor Solutions		Total
2019
Operating income excluding special charges	$	676.3	$	302.2	$	978.5
Less: Special charges	13.1		7.7		20.8
Operating income	$	663.2	$	294.5	$	957.7

2018
Operating income excluding special charges and transaction and integration expenses	$	637.1	$	292.8	$	929.9
Less: Special charges	10.0		6.3		16.3
Less: Transaction and integration expenses	15.0		7.5		22.5
Operating income	$	612.1	$	279.0	$	891.1

2017
Operating income excluding special charges and transaction and integration expenses	$	562.4	$	221.3	$	783.7
Less: Special charges	15.3		6.9		22.2
Less: Transaction and integration expenses included in cost of goods sold	13.6		7.3		20.9
Less: Other transaction and integration expenses	27.1		13.7		40.8
Operating income	$	506.4	$	193.4	$	699.8

Geographic Areas

We have net sales and long-lived assets in the following geographic areas:



(millions)	United States		EMEA		Other countries		Total
2019
Net sales	$	3,226.3	$	986.1	$	1,135.0	$	5,347.4
Long-lived assets	6,397.0		1,032.4		875.4		8,304.8
2018
Net sales	$	3,145.0	$	1,021.1	$	1,136.7	$	5,302.8
Long-lived assets	6,411.0		1,057.1		874.6		8,342.7
2017
Net sales	$	2,748.7	$	948.9	$	1,032.7	$	4,730.3
Long-lived assets	6,329.1		1,125.3		881.2		8,335.6

Long-lived assets include property, plant and equipment, goodwill and intangible assets, net of accumulated depreciation and amortization.