MCCORMICK & COMPANY 2004 ANNUAL REPORT based on employee service and compensation prior to that date. The accumulated benefit obligation differs from the projected benefit obligation in that it includes no assumption about future compensation levels. The accumulated benefit obligation for the U.S. pension plans was $299.1 million and $281.2 million as of September 30, 2004 and 2003, respectively. The accumulated benefit obligation for the international pension plans was $124.9 million and $98.9 million as of November 30, 2004 and 2003, respectively. Minimum pension liability adjustments result when the accumulated benefit obligation exceeds the fair value of plan assets and are recorded so that the recorded pension liabil- ity is at a minimum equal to the accumulated benefit obligation. Minimum pension liability adjustments are non- cash adjustments that are reflected as an increase (or decrease) in the pension liability and an offsetting charge to shareholders’ equity, net of tax, through comprehensive income rather than net income. At the September 30, 2004 measurement date, the defi- ciency of the pension plans’ assets compared to the accumulated benefit obligations decreased resulting in a decrease in the minimum pension liability of $7.3 million. This amount was recorded as a decrease in accrued pension liability, a $4.4 million increase in other comprehensive income, a $2.8 million decrease in deferred taxes, and $0.1 million decrease in intangible assets. At the September 30, 2003 measurement date, the deficiency of the pension plans’ assets compared to the accumulated benefit obligations increased resulting in an increase in the minimum pension liability of $20.6 million. This amount was recorded as an increase in accrued pension liability, a $14.4 million decrease in other comprehensive income, a $6.4 million increase in deferred taxes and a $0.2 million decrease in intangible assets. The Company’s actual and target weighted-average asset allocations of U.S. pension plan assets as of September 30, 2004 and 2003, by asset category, are as follows: The average actual and target asset allocations of the inter- national pension plans’ assets as of November 30, 2004 and 2003, by asset category, are as follows: Included in the United States in the preceding table is a benefit obligation of $36.0 million and $32.4 million for 2004 and 2003, respectively, related to an unfunded pension plan. The accrued liability related to this plan was $31.7 million and $27.6 million as of November 30, 2004 and 2003, respectively. The assets related to this plan are held in a Rabbi Trust and accordingly have not been included in the preceding table. These assets were $19.0 million and $14.4 million as of November 30, 2004 and 2003, respectively. Amounts recognized in the consolidated balance sheet consist of the following: The accumulated benefit obligation is the present value of pension benefits (whether vested or unvested) attributed to employee service rendered before the measurement date and 49 November 30, Asset Category 2004 2003 Target Equity securities 64.7% 63.9% 64.9% Debt securities 32.5% 35.3% 34.4% Real estate .2% .4% .3% Other 2.6% .4% .4% Total 100.0% 100.0% 100.0% September 30, Asset Category 2004 2003 Target Equity securities 68.0% 67.8% 70.0% Debt securities 30.3% 30.4% 30.0% Other 1.7% 1.8% – Total 100.0% 100.0% 100.0% United States International (millions) 2004 2003 2004 2003 Prepaid pension cost – – $ 1.3 – Accrued pension liability  $ (61.3) $ (75.8) (34.3) $(26.7)  Intangible assets .4 .5 .3 .3 Deferred income taxes 33.5 38.6 10.2 7.9 Accumulated other  comprehensive income 55.5 65.2 23.6 18.3 Net amount recognized $ 28.1 $ 28.5 $ 1.1 $ (.2) United States International  (millions) 2004 2003 2004 2003 Change in benefit obligation Benefit obligation at beginning of year $ 334.4 $ 280.4 $ 110.6 $ 82.5 Service cost 11.6 11.0 5.4 4.6 Interest costs 19.8 19.3 6.7 5.4 Employee contributions – .–  1.8 2.0 Plan changes and other – – (.9) .8  Curtailment gain – .(11.6) – (1.3) Settlement payments  .– .– – (.5)  Actuarial loss  2.5 45.7 11.3 9.8 Benefits paid (18.7) (10.4) (4.9) (4.7)  Foreign currency impact – .–  11.8 12.0 Benefit obligation at  end of year $ 349.6 $ 334.4 $ 141.8 $ 110.6 Change in fair value of plan assets Fair value of plan assets at beginning of year $ 205.4 $ 161.8 $ 73.0 $ 56.7 Actual return on plan assets 27.1 30.4 7.5 7.5 Employer contributions 22.0 22.0 6.7 3.6 Employee contributions  – .– 1.8 2.0  Settlement payments  .– .– . – (.5) Benefits paid (16.8) (8.8) (4.9) (4.7) Net transfer in (out) – .–  (.9) .– Foreign currency impact  – .–  7.7 8.4 Fair value of plan assets at end of year  $ 237.7 $ 205.4 $ 90.9 $ 73.0 Funded status  $(111.9) $(129.0) $ (50.9) $ (37.6) Unrecognized net actuarial loss 139.6 157.0 50.7 36.5 Unrecognized prior  service cost .4 .5  .4 .4  Unrecognized transition liability – –  (.1) (.2) Employer contributions – .–  1.0 .7  Net amount recognized $ 28.1 $ 28.5 $ 1.1 $ (.2)