Shareholders pepper McCormick

Spice company fields questions on nutmeg, accounting

March 21, 2002|By Kristine Henry | Kristine Henry,SUN STAFF

The questions posed by shareholders to McCormick & Co. officials yesterday ranged from whether the company still makes whole nutmeg to whether McCormick has the same firm do consulting and accounting - a practice that has come under scrutiny since the debacle involving Enron Corp. and Arthur Andersen LLP.

The approximately 950 shareholders who made their way through the rain to Hunt Valley Inn for McCormick's annual meeting learned that the company still makes whole nutmeg but that some store managers need to be cajoled into carrying it.

They were also told that the spice-maker's accounting firm, Ernst & Young, does almost no consulting work for the company. McCormick is in the midst of a $100 million project to streamline operations and boost efficiencies, about $20 million of which will go toward consulting fees. That project is being handled by the firm Deloitte Touche Tohmatsu.

"One of our five core values, which we print each year in the annual report, speaks directly to business ethics," Chairman and Chief Executive Officer Robert J. Lawless told the audience. "It states, `We believe our business must be conducted honestly and ethically.' As chairman of this company, I pledge to you our commitment that this core value has never and will never be compromised."

Ernst & Young previously handled external and internal auditing at McCormick, but in January the company decided that internal audits should be handled separately and is changing that system.

Despite the specter of Enron, it was an upbeat meeting on the heels of record profit last year of $146.6 million on sales of $2.4 billion. The company also reported Tuesday that it had a record first quarter with profits of $33.8 million on sales of $519 million.

John and Marcella McMillan drove from Shrewsbury, Pa., to attend the meeting as they have been doing for the past three or four years.

"It's just a nice thing to see, especially since it's one of our best-performing stocks," John McMillan said.

With the share price on the rise, McCormick announced last month a 2-for-1 stock split effective April 8 for shareholders of record as of next Monday. Company officials said the move was a signal of their confidence in the company.

Shares of McCormick rose 16 percent last year while the Standard & Poor's 500 index fell 13 percent. The stock was up 43 cents yesterday to close at $49.28 - an all-time high.

Shareholders were also shown several McCormick commercials - always a highlight of the meeting - and presented with slides of other products that contain McCormick flavorings, including Lay's gourmet potato chips, cheddar-cheese-flavored Rold Gold pretzels and Turkey Hill ice cream.

A twitter went through the crowd when it was announced that new sea salt and peppercorn grinders would be included in the product "goody bags" handed out after every meeting.

"I've been coming for years," said 85-year-old Dorothy Caffrey of Catonsville. "I like knowing about [the company] and I like getting the free samples - it's the truth."

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