MCCORMICK & COMPANY 2004 ANNUAL REPORT 15. COMMITMENTS AND CONTINGENCIES 16. BUSINESS SEGMENTS AND GEOGRAPHIC AREAS Business Segments In each of its segments, the Company produces and sells many individual products which are similar in composition and nature. It is impractical to segregate and identify profits for each of these individual product lines. The Company measures segment performance based on operating income. Although the segments are managed sepa- rately due to their distinct distribution channels and marketing strategies, manufacturing and warehousing are often inte- grated to maximize cost efficiencies. Management does not segregate jointly utilized assets by individual segment for internal reporting, evaluating performance or allocating capi- tal. Asset-related information has been disclosed in aggregate. Accounting policies for measuring segment operating income and assets are substantially consistent with those described in Note 1, “Summary of Significant Accounting Policies.” 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. Corporate and other includes general corporate expenses and charges not directly attributable to the segments. Corporate assets include cash, deferred taxes, certain investments and fixed assets.  Segment information for the years ended November 30, 2003 and November 30, 2002 has been restated to exclude discontinued operations. Certain fixed overhead charges previ- ously allocated to Packaging were reallocated to other segments. The Company operates in two business segments: consumer and industrial. The Company sold its packaging segment during the third quarter of 2003 (see Note 3). The consumer and industrial segments manufacture, market and distribute spices, herbs, seasonings, condiments and other flavors throughout the world. The consumer segment sells to retail outlets, including grocery, drug, dollar and mass merchandise stores under a variety of brands, including McCormick and Zatarain’s in the U.S., Ducros, Vahine and Silvo in continental Europe, Club House in Canada, and Schwartz in the U.K. The industrial segment sells to other food processors and the restaurant industry both directly and through distributors and warehouse clubs.  The Company is a party to various pending legal proceedings and claims, tax issues and other matters arising out of the normal course of business. Although the results of pending claims and litigation cannot be predicted with certainty, in management’s opinion, the final outcome of these proceed- ings and claims, tax issues and other matters will not have a material effect on the consolidated results of operations, financial position or cash flows of the Company. Total Corporate (millions) Consumer Industrial Food & Other Total 2004 Net sales $1,339.8 $1,186.4 $2,526.2 – $2,526.2  Special charges (credits) 1.0 3.0 4.0 $ (6.5) (2.5) Operating income 269.7 113.6 383.3 (50.6) 332.7 Income from unconsolidated operations 12.3 2.3 14.6 – 14.6 Goodwill, net 664.9 48.0 712.9 – 712.9 Assets – – 2,179.1 190.5 2,369.6 Capital expenditures – – 65.6 4.2 69.8 Depreciation and amortization – – 61.1 10.9 72.0 2003 Net sales $1,162.3 $1,107.3 $2,269.6 – $2,269.6  Special charges 1.8 2.3 4.1 $ 1.4 5.5 Operating income 230.9 108.9 339.8 (44.3) 295.5 Income from unconsolidated operations 14.8 1.6 16.4 – 16.4 Goodwill, net 664.9 43.8 708.7 – 708.7 Assets – – 2,003.9 141.6 2,145.5 Capital expenditures – – 74.9 16.7 91.6 Depreciation and amortization – – 56.1 9.2 65.3 2002 Net sales $ 993.9 $1,051.0  $2,044.9  – $2,044.9 Special charges 2.7 1.8 4.5 $ 3.0 7.5 Operating income 191.9  107.3 299.2  (36.8)  262.4  Income from unconsolidated operations 21.2  1.2 22.4 – 22.4 Goodwill, net 458.2 40.5 498.7 – 498.7 Assets  (a) – – 1,636.7 153.4 1,790.1 Capital expenditures – – 86.8 13.6 100.4 Depreciation and amortization – – 46.8 6.6 53.4 (a) 2002 amount does not include $140.7 million of assets related to discontinued operations. 53