MCCORMICK & COMPANY 2004 ANNUAL REPORT letter to shareholders fellow shareholders,  2004 was a terrific year at McCormick. Sales reached a record $2.5 billion. We completed the implementation of our B2K program in the U.S. The goal for the first year of our $70 million cost reduction program was exceeded. We reached $1.0 billion in gross profit and increased gross profit margin 0.3 percentage points. With $350 million in cash from operations we paid $77 million in dividends, repurchased $175 million of shares and acquired Silvo, the leading brand of spices and herbs in the Netherlands, for $75 million. new products, introducing effective promotions and acquiring Zatarain’s mid-year in 2003. We also benefited from higher  pricing for vanilla and favorable foreign currency. Sales for our consumer business rose 15%, following a 17% increase in 2003. Our industrial business picked up steam with a 7% sales increase following a 5% increase in 2003. Second, we set a range for earnings per share of $1.51 to $1.54. We ended the year with earnings per share of $1.52. With higher sales, improved gross profit margins, cost reduction savings and the proceeds from the settlement of a lawsuit claim, we were able to offset some cost increases in areas including employee bene- fits and fuel. More importantly, we were able to invest in the business for future growth, increasing advertising and product develop- ment expense during 2004. Our third target was to generate $350- $400 million from 2004 to 2006 in cash flow from operations, after net capital expenditures and dividends. Our 2004 result of $206 million has us well on our way toward meeting this target. We generated higher cash from a number of sources including higher net income, reduced inventory and lower prepaid allowances. During 2004, we increased divi- dends paid by 20% to $77 million from $64 million in 2003.  For each step of our strategy: improve margins, invest in the business and increase sales and profits...we are turning up the heat! A key to margin improvement is our B2K program, a global initiative that is significantly improving our business processes through state-of-the-art technology. With the implementation for the U.S. complete, our plan is to move international businesses onto this platform by 2006. Utilizing the power of B2K, employees are improving the supply chain throughout the Company. As a result, we significantly reduced costs in 2004, exceeding our $15 million objective. In 2005 we expect to reduce costs an additional $25 million and in 2006 an additional $30 million. Margin improvement fuels our growth. We will use a portion Now in our 115th year, we continue to build shareholder value. In fact, total annual return for our shareholders has been 20% during the past five years, twice that of our peer compa- nies. Everywhere you look, you’ll discover that McCormick is turning up the heat. At the beginning of 2004, with confidence in our business and ability to perform, we set several financial goals.  Our first objective was to grow sales 7-9%. We achieved sales growth of 11%. This was the result of launching successful record results for 2004 4 turning up the heat  Robert J. Lawless