Business Segments

6 Months Ended

May 31, 2016

Segment Reporting [Abstract]

BUSINESS SEGMENTS

BUSINESS SEGMENTS

We operate in two business segments: consumer and industrial. The consumer and industrial segments manufacture, market and distribute spices, seasoning mixes, condiments and other flavorful products throughout the world. Our consumer segment sells to retail outlets, including grocery, mass merchandise, warehouse clubs, discount and drug stores under the “McCormick” brand and a variety of brands around the world, including “Lawry’s”, “Zatarain’s”, “Simply Asia”, “Thai Kitchen”, “Ducros”, “Vahine”, “Schwartz”, “Club House”, “Kamis”, “Kohinoor”, “DaQiao”, “Drogheria & Alimentari”, "Stubb's", and "Gourmet Garden". Our industrial 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, we regard the products within each of our segments to be fairly homogenous. It is impracticable to segregate and identify sales and profits for individual product lines.

We measure segment performance based on operating income excluding special charges as this activity is managed separately from the business segments. 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 internal reporting, evaluating performance or allocating capital. Because of manufacturing integration for certain products within the segments, products are not sold from one segment to another but rather inventory is transferred at cost. Intersegment sales are not material.

	Consumer		Industrial			Total
			(in millions)
Three months ended May 31, 2016
Net sales	$	641.8	$	421.5		$	1,063.3
Operating income excluding special charges	86.4		42.5			128.9
Income from unconsolidated operations	6.2		1.5			7.7
Three months ended May 31, 2015
Net sales	$	599.8	$	424.3		$	1,024.1
Operating income excluding special charges	80.8		42.0			122.8
Income from unconsolidated operations	7.6		(0.2		)	7.4
Six months ended May 31, 2016
Net sales	$	1,275.6	$	817.9		$	2,093.5
Operating income excluding special charges	180.7		78.9			259.6
Income from unconsolidated operations	13.8		2.3			16.1
Six months ended May 31, 2015
Net sales	$	1,220.1	$	814.4		$	2,034.5
Operating income excluding special charges	172.3		72.6			244.9
Income from unconsolidated operations	17.7		(0.4		)	17.3

A reconciliation of operating income excluding special charges (which we use to measure segment profitability) to operating income is as follows (in millions):

	Consumer		Industrial		Total
Three months ended May 31, 2016
Operating income	$	82.9	$	42.1	$	125.0
Add: Special charges	3.5		0.4		3.9
Operating income excluding special charges	$	86.4	$	42.5	$	128.9
Three months ended May 31, 2015
Operating income	$	65.1	$	38.7	$	103.8
Add: Special charges	15.7		3.3		19.0
Operating income excluding special charges	$	80.8	$	42.0	$	122.8
Six months ended May 31, 2016
Operating income	$	175.9	$	78.2	$	254.1
Add: Special charges	4.8		0.7		5.5
Operating income excluding special charges	$	180.7	$	78.9	$	259.6
Six months ended May 31, 2015
Operating income	$	137.4	60.1		$	197.5
Add: Special charges	34.9		12.5		47.4
Operating income excluding special charges	$	172.3	72.6		244.9