Alan D. Wilson - Chairman, Chief Executive Officer and President Gordon M. Stetz - Chief Financial Officer, Executive Vice President, Director and Chairman of Investment Committee Joyce L. Brooks - Vice President of Investor Relations and Member of Investment Committee

Andrew Lazar - Barclays Capital, Research Division Ann H. Gurkin - Davenport & Company, LLC, Research Division Christopher Growe - Stifel, Nicolaus & Co., Inc., Research Division Thilo Wrede - Jefferies & Company, Inc., Research Division Eric Serotta - Wells Fargo Securities, LLC, Research Division Robert Moskow - Crédit Suisse AG, Research Division Alexia Howard - Sanford C. Bernstein & Co., LLC., Research Division Akshay S. Jagdale - KeyBanc Capital Markets Inc., Research Division Robert Dickerson - Consumer Edge Research, LLC Mitchell B. Pinheiro - Janney Montgomery Scott LLC, Research Division Eric R. Katzman - Deutsche Bank AG, Research Division Kenneth Goldman - JP Morgan Chase & Co, Research Division

Greetings, and welcome to McCormick's Fourth Quarter 2011 Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Joyce Brooks, Vice President, Investor Relations for McCormick. Thank you. Ms. Brooks, you may begin.

Good morning, and welcome to our review of McCormick's fourth quarter financial results and 2012 outlook. We have posted a set of slides to accompany today's call at our website, ir.mccormick.com. With me are Alan Wilson, Chairman, President and CEO; and Gordon Stetz, Executive Vice President and CFO. Also joining us for the first time is Mike Smith, who was named Vice President, Treasury and Investor Relations in October. Mike has been with McCormick since 1991 and brings to this role his experience in a variety of leadership positions, most recently as Vice President of Finance for a U.S. consumer business. This morning, Alan's going to begin with some highlights from 2011 and then discuss our perspective on the current business environment and McCormick's growth opportunities as we head into 2012. Gordon will provide a review of our fourth quarter financial performance and introduce our 2012 financial guidance. After that, we look forward to discussing your questions and some closing remarks from Alan. As a reminder, our presentation today contains projections and other forward-looking statements. Actual results could differ materially from those projected. The company undertakes no obligation to update or revise publicly any forward-looking statements whether as a result of new information, future events or other factors. As seen on slide 2, our forward-looking statement also provides information on risk factors that could affect our financial results. In addition, certain information that we will present today are not GAAP measures. This relates to financial results from 2010 that exclude items affecting comparability. We present this non-GAAP information for comparative purposes alongside the most recently comparable GAAP measures. Reconciliations of GAAP to non-GAAP measures can be found in the presentation slides for our call. It is now my pleasure to turn the discussion over to Alan.

Thanks, Joyce. Good morning, everyone, and thanks for joining us. McCormick's financial results in the 2011 fourth quarter were a strong finish to a year of solid growth and important accomplishments. We delivered these results in a period of volatile material cost and a challenging economic environment in many of our markets. Our financial performance demonstrated the resiliency of our business and the ability of our leadership team and employees throughout the company to adapt to the current environment. I want to recognize and thank our employees for their efforts and achievements. We grew sales in the fourth quarter by 13%, including a 5% benefit from our latest acquisition activity. Pricing rose 6%, yet we still achieved a 1% increase in volume and product mix. Product innovation, higher brand marketing and distribution gains helped drive the sales growth. Fourth quarter earnings per share were $0.98 compared to $0.99 in the fourth quarter of 2010. Operating income rose 4% despite $7 million of transaction cost related to acquisitions completed in 2011, which lowered earnings per share by $0.05. We also had an unfavorable impact from a higher tax rate, increased interest expense and a slight decline in income from unconsolidated operations. Gordon will go into more details, but if you consider these headwinds, we had solid underlying growth in earnings per share, which reflected our strong sales performance and significant CCI cost savings. For the full year, we grew sales 11% and 9% in local currency. This was well ahead of our initial expectation for 5% to 7% growth in local currency. Acquisitions were not in our initial range and added 2% of our growth for the year. Pricing added 5% to sales, above our initial projection, as we responded to a double-digit increase in material cost. In light of these…

Thanks, Alan, and good morning, everyone. Given the difficult economic situation that consumers are facing in many of our large markets, we were encouraged by our solid financial performance for the fourth quarter and operating results, which were generally in line with our expectations. In each of our 2 segments, we grew sales at a double-digit rate, with a 13% increase for the total business. Operating income was up 4% net of a 4% headwind from acquisition-related transaction cost, and we delivered earnings per share of $0.98 compared to $0.99 in the fourth quarter of 2010, including the unfavorable impacts of these transaction costs and tax rate. Let's start with top line growth and a look at our consumer business. As seen on Slide 14, we grew consumer business sales 13.5%, with a 12% increase in local currency. In a period of increased pricing, our volumes held up well, and we had a strong contribution from acquisition activity in the fourth quarter of 2011. In the Americas region, we grew consumer business sales 7%. As seen on Slide 15, sales from Kitchen Basics added 3% to growth, and the effect of currency was minimal. Pricing was up 7% this period with the impact of both our December 2010 price increase and the pricing actions that went into effect in the fourth quarter of 2011. Along with these price increases, we had some shift in sales as customers purchased product in advance of the increases. In fact, we were affected by an estimated $10 million shift into the fourth quarter of 2010 from the first quarter of fiscal 2011 and by an estimated $10 million shift into the third quarter of 2011 from the fourth quarter of 2011. So compared to the year ago period, these shifts in customer purchases created…

[Operator Instructions] Our first question is coming from Akshay Jagdale of KeyBanc Capital Markets.

So my first question is regarding fiscal '12 growth and your EPS outlook. Just is it possible for you to talk to us about the growth in terms of base business versus acquisition and the cost that you had last year? So the way I thought about the growth is I've broken out the growth between base business growth and then the accretion from your acquisitions as well as the lower cost related to the transactions that you did. So it seems to me that base business growth is going to be well below sort of your normal long-term growth rate in terms of operating income. And it looks like it's mainly because of higher commodity cost, and it looks like all of it's going to hit you, really, in 1Q. Am I reading that correctly? Or am I missing something? I know the retirement benefit expense may be something to do with it, but is that the right way to think about it?

Yes. Certainly, as we're building our budgets and plans, we look at the incrementality, the acquisitions. And as we indicated last year, those acquisitions are expected to be accretive and the guidance we gave was $0.07 and $0.09. I'd say we're still within that guidance as we built our outlook for 2012. So the factors that you pointed to, which we talked about in the call, the material cost as well as the pension, I’d just like to emphasize that, are impacting the base business.

So if you just look at longer term, obviously, you've done a tremendous job of building shareholder value, and your targets internally as well are very much in line with shareholders’. So it seems like some exogenous factors, just commodity costs that are out of your control, have impacted your base business significantly over the last, let's call it 12 months. So should we expect that to sort of reverse as we go forward? So the base business has been growing at a lower rate than normal recently. But if commodity costs level out or even come down, should we expect to see that growth sort of come back in a sense that maybe at some point, you start growing at a much faster rate for a short period of time than you have been recently? Is that a possibility? Or you're -- you think if that happens, you will just reinvest back in the business and continue to grow sort of 9% to 11% on the bottom line?

We would -- what’s happened with all the cost volatility over the last couple of years has impacted our long-term growth model, which is built around being able to invest behind the business but also to improve margins in a fairly stable cost environment. So what we've been doing is adapting our business over the last, really, 2 years to take more pricing than we would typically take. Certainly, as with our strong CCI programs, as we start to see stability -- even if we don't see a big retreat in cost, as we start to see stability, our model kind of starts to work again, because our CCI program is generally built towards increasing our margins, while our pricing is just to offset cost. What we've seen in the last 2 years is we've needed a combination of pricing and CCI to offset the increased costs.

So in other words, I mean, just would you -- would we -- should we expect to see an acceleration in growth even if it's above your long-term target? I mean, is that possible? Or would you -- if that happens, would you tend to invest that in future growth initiatives?

I think we've been pretty balanced through the combination of investment for growth behind our consumer and our industrial businesses and returning returns to shareholders to increase EPS. So we would likely spend some of the money, and we would likely take some of the earnings.

Our next question is coming from Ken Goldman of JPMorgan Chase & Co. Kenneth Goldman - JP Morgan Chase & Co, Research Division: So you're the second food manufacturer in the last couple of weeks to call out weak overall food trends in traditional channels, not just in spices, obviously, but overall. And I think this is maybe counter to what some people expected as the economy maybe slowly recovers. So just curious for your insight there. Do you think traffic's maybe down because of continued high pricing? And I'm sure that's a big part of it, or there's some other drivers we're not seeing. Maybe club and dollar stores are just doing something better and unique in terms of marketing and attracting consumers. Just curious, I know you don't have a presence across the whole store, but I'm curious what your insights are there.

I think there is some impact, as some of the other manufacturers have talked about, of people moving to other channels, like dollar and club and that sort of thing. What we are seeing is some consumer behavior, which we've not seen before, that has led to a decline in the most recent period in the data that we have. Kenneth Goldman - JP Morgan Chase & Co, Research Division: Okay. And what would you say is the normal run rate, separate subject, for your CCI annual savings? I know it's difficult to forecast these items. Sometimes they come in, obviously, faster or slower than expected. But how should we think about this going forward? Because a $25 million swing year-on-year is not insignificant.

Year-on-year, we try to target about $50 million of CCI savings, just below, and for the last couple of years, we've been able to overachieve that. And I'd also point out, the $40 million goal that we set this year, we expect is a goal that we’ll hit and likely exceed. So we're setting targets and trying to drive it. It's really a part of our ongoing operations, and we've got some good ideas and some good projects that we think will be good, that will help us. Kenneth Goldman - JP Morgan Chase & Co, Research Division: Okay. So you do see the $40 million -- I know you're not promising this -- but as potentially conservative?

We typically hit what -- at least hit what we say we're going to hit.

Our next question is coming from Alexia Howard of Sanford C. Bernstein. Alexia Howard - Sanford C. Bernstein & Co., LLC., Research Division: Just one quick question as a follow-up to Ken's question and then something on new products. Are you seeing a pickup in the restaurant sector? And is that putting pressure, as far as you're seeing it, on the packaged food space in general? I'm just wondering whether it's not just growth in dollar stores and alternative channels but maybe a pickup in the restaurant sector, which you may have a good handle on from your industrial business, might be causing some of the pressure on the packaged food sector. And then secondly, in new products, you mentioned new products represent about 9% of sales at the moment. What do you think is the right long-term level of that? Can you accelerate that? And maybe can you make any commentary about how quickly that's expanded over the last 2 or 3 years?

Yes. Thanks, Alexia. In the fourth quarter, we did see some positive volume growth in the restaurant sector, which we kind of view as healthy, because it's been a couple of years of pretty significant declines. And so I don't want to speculate on what -- if consumers are eating out and not cooking at home, I don't think we're seeing that return as much, but we did see some positive volume growth late in the year in our food service business. Secondly, on the new products, we would expect a new product sales to be in -- to be something in the order of 10% to 12%, so 9% over the last 3 years, we would expect, as we go forward, that to be a higher percentage.

Our next question is coming from Thilo Wrede of Jefferies & Company. Thilo Wrede - Jefferies & Company, Inc., Research Division: Are your industrial contracts, are they completely repriced now to reflect not only the inflation that you saw in 2011 but also to reflect the inflation you're expecting for 2012?

For the most part -- I mean, we've got a broad range of contracts with customers across the world, but generally, we are appropriately priced. Now a lot of the major commodities like wheat and soybean oil gets passed through as those commodities change. So as we see increases, we price. And then as we see decreases, we pass through that pricing. But I'd say, by and large, as we caught up in the fourth quarter, that we're appropriately priced. And we'll -- as we see additional inflation, we'll deal with that. Or if we see some softening in cost, we'll deal with that. Thilo Wrede - Jefferies & Company, Inc., Research Division: And then could you give just a little bit more color on your comment that you will resume the share repurchases? Is that going to start soon? Or is that more back loaded in the fiscal year?

I would suggest that you would -- by the end of the first quarter, you'll start to see activity as we report.

Our next question is coming from Rob Moskow of Crédit Suisse Group. Robert Moskow - Crédit Suisse AG, Research Division: Just a couple of follow-ups. If the share repurchase continues, do you think you could ever get back to your long-term guidance of 2% reduction in share count as a result of share repurchase? And then secondly, your cost inflation for this year is a lot higher than I thought it would be, up in the high-single digit range. Is it your objective to just kind of wait and see before taking another price increase? Or are you comfortable that the pricing that you have in the market right now plus the CCI is enough to just get you back to keep the gross margins from falling further? And then one more follow-up. Regarding the acquisitions, is there any dilution to your gross margin from those acquisitions?

I'll take the pricing commodity question, let Gordon handle the share buyback and the margin question. But in terms of our pricing, as we see it today, we don't anticipate taking additional -- significant additional pricing. Now we also didn't anticipate that as we went into the fourth quarter of this year if you talked -- when we talked last January, but what we saw was a fairly significant run-up in cost, and so we thought we had to do that. And you can see from our margin performance that we did have to do that. But as we sit here today, we don't anticipate significant pricing for the rest of the year, but again, we'll adapt our plans as we see cost. And I'll let Gordon handle the other 2 questions.

Yes, in terms of the 2%. The 2% on our long-term guidance, we think about this either as an accretive acquisition, Rob, or a share repurchase. In the absence of -- and you'll -- this year, in our guidance, we talked about the 7% to 9%, and that, in fact, reflects a 2% to 3% type of a benefit on EPS. In the absence of an acquisition, we would be buying back shares in that financial leverage to return to a 2% benefit on the shares outstanding, and that's purely opportunistic based on what the pipeline is. In terms of the dilutive impact, I'd say, without getting too specific on the gross margin structures, that the acquisition -- we talked about the operating income margin of the Kamis acquisition at 16% to 17%. Its margin structure is a healthy margin structure that reflects strong consumer businesses that we -- in the rest of our European businesses. And the business in India as an emerging market, as you would expect, would be lower margin structure. But again, that's higher growth, and we would expect to get scale in margin improvement over time in that one. Robert Moskow - Crédit Suisse AG, Research Division: Gordon and Alan, it's -- this is the second year in a row that we've had EPS guidance that's well below the normal range of 9% to 11%. When do you think you get back to that normal range, if not better?

I think in a stable environment, a stable cost environment, we can certainly execute that. But what we want to do is give you the best transparency over what we're seeing at this point.

Our next question is coming from Chris Growe of Stifel, Nicolaus & Co. Christopher Growe - Stifel, Nicolaus & Co., Inc., Research Division: I had -- first, a quick one, sort of a follow-up. The accretion from acquisitions in 2012, is that just the absence of cost? Is there actual accretion as well on top of the absence of those costs, the $11 million of cost, in 2011?

There's actual accretion, incremental profit after interest, and that's that 7% to 9% number that we've guided to previously. Christopher Growe - Stifel, Nicolaus & Co., Inc., Research Division: $0.07 to $0.09 per share, then you had the $0.06 drag. So we can just back into some rough math if it's going to benefit EPS in 2012.

I'm sorry? I -- would you say that again, Chris? Christopher Growe - Stifel, Nicolaus & Co., Inc., Research Division: So it's $0.07 to $0.09 of accretion in 2012?

That's correct. Christopher Growe - Stifel, Nicolaus & Co., Inc., Research Division: And that's -- again, you're comparing against roughly $0.07 in cost in 2011.

Right. So -- but remember also, the other thing that's offsetting that $0.07 is an incremental $9 million of retirement benefit. But yes, your math is correct. Christopher Growe - Stifel, Nicolaus & Co., Inc., Research Division: Okay. Yes. And then I want to understand, with the marketing increase for the year, in '12, the $10 million increase, does that incorporate acquisitions? And then if I could add to that, does that also -- is that -- a broad consumer support, does that include promotion as well?

It's -- I'll answer for the first one, and Gordon can talk more about how things get allocated. But the $10 million increase is about half from the base business and about half coming from acquisitions.

And depending on the nature of the promotional expense, the $10 million does contemplate more consumer-facing promotional. But there probably will be additional dollars, as Alan indicated, on some of the value messaging that would be between gross and net. Christopher Growe - Stifel, Nicolaus & Co., Inc., Research Division: Okay. And so I guess I'm -- so the -- my last question, sort of a follow-up to that would be as you're shifting more to promotion, that seems like it's mostly occurring in Europe consumer. I think you started that or did some of that in 2011 as well. I mean, have you seen that stabilize the business or does that need to step up a little more heavily in '12 to try and stabilize be it trade down to private label or just some of the more difficult consumer trends in the business?

It's very similar to what we did in 2009, when we saw the weakness. And it's putting an emphasis, one, on the messaging to consumers on value, and we're ramping that up and then secondly, using some of our promotion plans and really targeting those. So we expect there will be some balance. We’re kind of rebalancing our whole marketing program for the year to make sure that we're getting back to a healthy volume growth. Christopher Growe - Stifel, Nicolaus & Co., Inc., Research Division: Okay. So we should see better volumes throughout the year, and a suspicion that that’s spending, correct?

We expect that -- we expect it to have a positive impact.

Our next question is coming from Ann Gurkin of Davenport & Company. Ann H. Gurkin - Davenport & Company, LLC, Research Division: Just wanted to return to your comments regarding your outlook for the U.K. and France. Do you think it's going to get worse from here for '12 -- have you modeled that -- or look like Q4? Can you just give me some more details, I guess, particularly on France?

Well, as I -- we said in our remarks, France in the fourth quarter continues to be resilient. We had sales growth mainly through price execution, but volumes held up in a tough environment. U.K. continues to be challenging. So as we -- and we've seen stabilization in the other markets, which we had expected would occur as we progressed through 2011. So I guess that outlook that I've just described is a similar outlook as we look into 2012, and that's baked into our thinking. And then obviously, we have the benefit of the acquisition that we just did in Europe as well.

Yes. It's a pretty steady state outlook. Obviously, we're not contemplating any major collapse in Europe or anything like that, but we expect it to be a continued pressure. Ann H. Gurkin - Davenport & Company, LLC, Research Division: Great. That's helpful. And then secondly, on -- it was nice to hear that private label is increasing prices. Is that gap between branded and private label pretty much in line with historic measures? Can you comment on that?

Yes. We -- the gap is pretty similar to historical levels, but what we are doing is really analyzing the price thresholds that we've crossed to understand the impact on volume. But if I look at the year and even in the 4-week period, we've seen private label prices go up at about the same level on a percentage basis as brand.

Our next question is coming from Eric Katzman of Deutsche Bank.

A couple of questions. I guess I want to follow up on Ken's initial question, because I think it's a very important one. I just -- I'm not -- I mean, are you as confused as I am in terms of trying to understand how QSR can be up, because obviously QSR purchases per serving are so much more expensive than cooking your own food at home. And yet, the industry and yourself today are talking about pretty significant elasticity hits. And it sounds like, if anything, as 2011 progressed, that dynamic got worse. So why should we be at all confident that even with a little bit of advertising or more promotion, that this consumer who is just so cautious can be convinced to kind of open up the wallet for core products or all the new products that you're putting out there?

I think as you point out, it is a better value than necessarily going to a restaurant and much cheaper to cook at home. And that's what we're trying to convince the consumer and show them that for a lower cost, you can actually have a better and healthier meal. But there is a consumer behavior that we are, again, watching and targeting, and us and our retail partners will be working on how we do that. Now on the other side of that, we also have a pretty significant participation in those restaurant sales. And as that goes through our food service distribution business, it's not necessarily a bad tradeoff for us.

Okay. And then if I could follow up on the raw material side of things. We have no visibility on a lot of your raw materials. And we kind of got a surprise last quarter, and it sounded like you were a bit surprised at how much those items had moved up. But is it because you've locked in via raw material purchases that your costs in 2012, Gordon, are going to be up so much? Because I would normally assume that whether it's, I don't know, cinnamon or pepper or vanilla farmers are going to plant from fence post to fence post to try to exploit the higher prices. So have you kind of hurt yourself a little by buying in so much inventory?

No. Actually, our inventory positions are better than the current market's, because we're out seeing and anticipating what's going to happen. So we're not upside down at all on our inventory. We're still seeing some competition for land in some of those emerging markets where people aren't necessarily planting more pepper volumes. And when they decide to do that, it takes about 3 years before they have significant yields. We've seen them move to shorter cash crops like cassava, which is a thickener that's used. So there is continuing to be pressure on the spice commodities that we buy, but our strategic inventory positions are an advantage for us.

So just with that -- Alan, with that time lag on the farmer intent and the yield, so are -- do you think that this could be a multi-year issue on raw materials even if you're a little bit better than the spot market for, I don't know, whatever, the next couple of quarters based on your inventory?

Yes. Specifically in pepper, we've seen pepper almost quadruple in -- or triple in 4 years and double in the last 18 months. Now we don't anticipate it's going to continue to rise at that kind of rate, but we have not seen significant softness. I mean, it softens from time to time, and we take advantage of that, but we haven't seen significant softness to this point in that. It has been a couple of years of that acceleration. I think that's my main point, is -- and typically, a lot of our materials are on those kind of cycles, where they'll be up for a couple of years and then as plantings increase and yields go up, then they start to come down again.

Our next question is coming from Eric Serotta of Wells Fargo Investments.

Most of my questions have been answered, but I wanted to follow up on your comments about mix. You commented how you had some negative overall segment mix from industrial growing a bit faster than consumer and some negative mix within industrial. I'm wondering whether you could comment upon the mix impact within consumer. How did your sort of premium products perform relative to your more baseline products? And was mix a positive or a negative contributor in the consumer segment?

This is Gordon. I'd say mix was not a major factor in the overall consumer segment performance. Most of the volume performance within the quarter that was impacted within consumer relates to the timing issues that I spoke about earlier, mainly in the U.S. consumer business, and that's a volume issue.

Okay. And how did your premium products perform relative to your base or core products?

Yes. If we're speaking about the gourmet relative to, say, red cap, they were generally in line with each other. There wasn't any divergence between the 2.

Our next question is coming from Andrew Lazar of Barclays Capital.

Just 2 quick ones. One, have you been able to -- I've generally thought that you and others can manage any kind of a shift from a channel perspective, whether it be from traditional grocery to alternative channels, can manage that in a relatively sort of margin-neutral way, at least. And we've had one company recently talk about this being kind of a negative hit for them, albeit it was a private label entity. So I just want to get a sense of how you manage that and if you typically are able to manage that in a pretty margin-neutral way, sort of at a minimum. And then just a quick follow-up.

Generally, we can manage it in a fairly margin-neutral way. I think what the other company was talking about is a move in their business to more opening price point-type business from a standard private label-type product. We do very little opening price point. We do some but not very much. Ours tend to be more standard private label. And then our whole selling story is to do the right thing for the whole category. So even where we have a private label presence in an alternative channel, we are also bringing branded solutions to those customers. So we -- it helps maintain a similar kind of margin than what we see across the rest of our business.

Got it. Okay. And then also wanted to ask -- I don't want to beat this too much. I'm just trying to get an understanding, because I still find myself very confused over sort of recent consumer behavior or just lack of kind of consumption, I guess, if you will, from the -- just the broader consumer given the weakness we've seen broadly in the industry. So do we think that it's primarily just some of the normal elasticity that this industry sees when they get pricing through? Or are they -- is the consumer -- I've heard everything from they're wasting less product in their household than they typically do. I assume there's maybe some inventory de-stocking at retailer levels. Like, I'm just trying to get a sense of if we think there's something that's beyond normal elasticity that the consumer's dealing with. Or -- because I'm still very confused. And I hear all these different answers, but no one seems to have a great -- sort of really a great read on it.

I don't know that we have great insight on it at this point. I mean, for our products, warm weather at this time of year isn't necessarily a good thing. We like a little cold weather to get people back to cooking chili. And so we kind of see that, and I know people have talked about that as part of the issue. But I don't think we have a firm handle on really what's happened in the very short period. Now if you look over the course of the longer-term 6 months and 12 months, the pattern isn't that dramatically different than what we've seen historically. But I think what everybody's kind of looking at is what happened in the last couple of weeks of the year.

Right. Right. And the last thing is in the quarter at least, it looks like x the sort of a volume shift in your Americas consumer business, volume was still flat to up in spite of all that, admittedly your quarter ends in November, but it wasn't like we saw some -- at least, at this stage, some huge volume sort of decline.

No. That's correct.

Our next question is coming from Robert Dickerson of Consumer Edge Research.

Just a couple of quick easy questions. I guess first is just on taxes. I haven't really -- I haven't heard anyone ask a question on taxes. I'm kind of surprised. I know, I think, what, the beginning of the year, the guidance was for 31%, and I know in Q3, you had the benefit and got $0.09. And then I think the expectation -- I may have even asked this last quarter -- the expectation for full year wasn't really changed. But you did come in quite below such that you got basically 29% tax rate for the year which, if you just do the math, winds up being more than half of your EPS improvement. So if I'm thinking about fiscal '12, you're guiding to 30%, but I'm assuming there's no -- there's nothing within that 30% that could potentially make it lower again.

A couple of things. One is that we actually had an unfavorability on the tax relative to prior year. The -- what you may be citing in terms of...

No, I'm just talking about guidance. I...

Yes. Okay. Versus the guidance. I understand.

Yes. Like you beat last year and you beat this year both on tax.

Yes. Obviously, tax is a very difficult thing to forecast. You're just trying to anticipate mix of earnings, and it's also a volatile legislative environment. And there are programs and tax credits and things that get hung up in the heated discussion right now, and you cannot include that in any type of a guidance as you start a year until these things land and are resolved. So we start with our best estimate as to what we know now in the legislative environment, as to what we know now as it relates to currencies and its impact on the mix of earnings and the earnings themselves, and that's our guidance. Obviously, there's things that resolve during the course of the year that can be favorable and unfavorable. Last year, they tended to be more favorable than our initial guidance. So I can tell you the best I can say at the moment is the guidance we're giving you is based on all the knowledge we have at this moment on all those factors.

Okay. Fair enough. Okay. And then just a quick follow-up question from what Chris asked before on the acquisitions, just to be clear. I know -- so this year, it was the $0.07 in cost that's been -- that's inclusive in earnings. But then next year, we're saying $0.07 to $0.09 in accretion? Or is it really $0.07 year-over-year benefit from not having the cost and then there's an additional $0.02 potential upside, which is really the accretion?

No. It's going back to Chris' point. We are not repeating the $0.07 of transaction cost, and we have an incremental benefit from the acquisitions in $0.07 and $0.09. And again -- then that's offset by the incremental retirement cost of $9 million or partially offset all of those numbers.

So kind of on average, about $0.14 of benefit for '12?

Yes. Yes.

That's correct.

We've run a bit over an hour. Why don't we take one more question and then we'll turn it back over to Alan.

Our last question is coming from Mitch Pinheiro of Janney Montgomery Scott.

I'll let everybody go. My questions have been answered.

Just to wrap up, at -- just a couple of comments. We've been pretty effective at adapting our business to meet a very challenging environment. As we head into 2012, we're managing through this with cost -- the cost volatility with our pricing and our CCI. Our product innovation and our marketing support are meeting consumer demands for flavor, convenience and value. As we've increased our participation in emerging markets with the acquisition of leading brands, we expect that to drive higher growth. I'm confident that we're well positioned, and we've got the leadership and the employees in place to meet the challenges and deliver a year of strong financial performance for McCormick shareholders. We appreciate your time and attention. We'll turn it back over to Joyce.

Thanks, Alan. I'd like to add my thanks to everyone listening on today's call. We hope you can also join our next earnings call, which is planned for Tuesday, March 27 and that you have on your calendar our McCormick Investor Day scheduled in New York on April 17. Through February 2, you may access a telephone replay of today's call by dialing (877) 660-6853. The account number for this replay is 309, and the ID number is 383424. You can also listen to a replay on our website later today. If anyone has additional questions regarding today's information, please give me a call at (410) 771-7244.