Joyce Brooks - Assistant Treasurer Robert J. Lawless - Chairman and CEO Francis A. Contino - EVP, Strategic Planning and CFO Alan D. Wilson - President and COO

Terry Bivens - Bear Stearns Jonathan Feeney - Wachovia Securities Eric Serotta - Merrill Lynch Christopher Growe - A. G. Edwards Eric Katzman - Deustche Bank Robert Moskow - Credit Suisse Gil Alexander - Darphil Associates Mitch Pinheiro - Janney, Montgomery, Scott Oliver Wood - Stifel Nicolaus Andrew Lazar - Lehman Brothers

Good morning. My name Morsa and I will be your conference operator today. At this time, I would like to welcome everyone for the McCormick & Company Third Quarter Financial Results Conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks there will be a question-and-answer period. [Operator Instructions]. Thank you. It is now my pleasure to turn the floor over to Joyce Brooks. Ma'am you may begin your conference.

Good morning and thank you for joining this morning's teleconference. With me on today's call are Bob Lawless, Chairman and CEO of McCormick, Alan Wilson, President and COO, Fran Contino, Executive Vice President, Strategic Planning and CFO and Paul Beard, Vice President of Finance and Treasurer. Also sitting in on today's call is Gordon Stetz, currently Vice President of Finance for Europe, who will replace Fran as CFO effective November 1st. Bob will be discussing McCormick's financial results for the third quarter ending August 31st, including business update and will provide an outlook for the fourth quarter and year. At the end of his remarks, we look forward to your questions. Before we begin our discussion, please note that during the course of this conference call, we may make projections or other forward-looking statements and actual results could differ materially from those projected in our forward-looking statements. In addition, information we present today, which excludes restructuring charges are not GAAP measures and we present this information for comparative purposes alongside the most directly comparable GAAP measures. Please refer to this morning's press release, which is posted on our website for more specific information on these topics. As indicated in the press release, 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. Today's event is being webcast and following the call an audio replay can be abscessed at ir.mccormick.com. I would now like to turn the discussion over to Bob.

Thank you, Joyce. And good morning to those on the call and joining… those joining us by webcast. I want to begin by stating that we are pleased with our third quarter results with both sales and profits ahead of expectations. We grew sales 8% and reporting earnings per share of $0.43, which was $0.45 on a comparable basis, excluding restructuring charges. Our consumer business performance was particularly strong this quarter with sales up 9% and 16% increase in operating income, excluding restructuring charges. On the other hand, we had a tough quarter for industrial business, which is working through challenges from increased raw material costs and general weakness in the restaurant industry. Let me discuss each of these businesses in more detail starting with our consumer business. Sales for this part of our business rose 8.5% with a favorable impact of 2.4% from foreign exchange rates; an increase of 6.1% was primarily driven by higher volume. Consumer sales in the Americas were up 7.9% this quarter with a 0.5% benefit from foreign currency. Sales were affected significantly by an estimated $9 million to $11 million of earlier sales for the fall season in the U. S. consumer business. By encouraging our customers to buy early, we are able to achieve operative… operational efficiency by moving some of our production out of the peak fourth quarter. We also expect to benefit from early store placement for promoted items. This move added 3.5% to 4.5% to the third quarter sales in the Americas. While this action will lower fourth quarter sales the percentage reduction will close to the 3%, as this is our peak sales period for the consumer business in the Americas. For a second quarter now, we were unfavorably impacted by the expansion into private label line by one…

Thanks Bob for those kind remarks. I will try to keep my composure as this is a kind of a sentimental day for me, but I did want to tell you how fortunate I feel that I am given the fact that I made the decision nearly 10 years ago to come with McCormick. There couldn’t have been a more rewarding experience and the Company has done extremely well and it’s been a joy for me, particularly working side-by-side with you and under your great leadership. I would also like to say that one of the many joys of being a CFO is having an opportunity to work in Investor Relations. And I would like to thank everybody on the call and listening in, who have given me the opportunity to meet them and to share the story about McCormick. It surely is something that I really enjoyed. And finally I would like to close with saying how pleased and delighted to welcome Gordon into this role. Gordon is a person, I have now known for all those 10 years and a person that is so well-qualified with little succession learning curve time that will be necessary. In fact he is ready to go and we are very fortunate to have. So thanks to all of you on the call I really appreciate it.

Thank you Fran, but an important thing to remember, you are not going anywhere until we get these tough questions out of the way in the next 10 or 15 or 20 minutes. Let me share some final thoughts with you. Our business is not without challenges. As was clear in today’s message, our industrial business is in a period right now, where it’s under pressure with steep cost increases for several commodities and a general weakness in the restaurant industry. We have been able to offset these headwinds and expect to do so in the future by the following items. Tremendous progress with our revitalization programs designed to improve the consumer shopping experience, increase purchases and reduce customer labor costs. Progress with innovative new products that meet today’s trends towards flavor, wellness and convenience. Progress with our efforts to lower costs through our restructuring program, at the midway point this program has been well executed and we are on track to meet or exceed our savings targets. And throughout McCormick employees are focused on the right things to move our business forward and to achieve a positive change. Our accomplishments are doing the financial performance that includes a 7.5% year-to-date sales growth and most importantly a 16% increase in earnings per share on a comparable basis, excluding restructuring charges. And at the same time, as I said earlier, we maintain our guidance for the year despite these costs pressures. Together with Alan, Fran and Gordon and the rest of the leadership team at McCormick, I am extremely confident that our market position, growth initiatives and sustainable throughout strategy will lead to increased value for McCormick shareholders. To our shareholders and everyone on the call, we thank you for your interest and attention. And now we would like to discuss your questions. Question and Answer

Thank you. [Operator Instructions]. Your first question is coming from Terry Bivens with Bear Stearns. Please go ahead.

Good morning everyone.

Good morning, Terry.

And Fran, good luck, hit them straight. Bob, just with regard to your remarks this morning, I must say, a little bit more… little bit less buoyant than I thought they might be. Let’s… on the issue of the advance shipments there, I guess, my expectation had been that, I know, you guys are trying to expand the fall into a cooking season, but I guess I thought that now you stand apart a little bit from the normal holiday sales, so I guess I was a bit surprised to hear to what added to Q3 might be subtracted from Q4. Can you give us a little bit more color on that, the thinking behind that?

Well, I think, Terry in the past years we have talked and Alan talked on previous conference calls where we always had intention this time of the year to make sure the stores, warehouses and in fact the stores had inventory appropriately placed for the fall season, because it’s such a significant part of the year for us. And the strategy, we implemented, we think are very simple. We gave them extended payment terms to allow them to place orders to ensure the inventories and their warehouses and through the stores. And whether it’s a one to one transfer, what I said… tried to say in the call was, that’s our expectation at this point in time. But we are very optimistic for the fall season that the inventories are there and the challenges associated with retail inventory management in the trade creates pressure on everybody in the consumer products industry and really gives us excitement that we are there this year versus other years.

Have you made any assumptions in your fourth quarter estimates for reorders?

We really haven't at this particular point in time, that the real strategy is the inventories out of our distribution centers and to their distribution centers.

Okay. And just briefly on commodities. If you could give us a little more color on the pass-through mechanism, for example, as I look at cheese, if you just look at block prices, it looks like they should have peaked in Q3 and should be coming down in Q4. But I took from the tenure of your remarks that the commodity pressure if anything is going to be slightly greater in Q4.

Bear in mind the process, Terry and for everyone on the call that we have in the industrial business, obviously there is a lag or gap between the prices going up and our ability to pass-through the quarterly price increases to our customers.

Right.

So cheese is a perfect example and I would concur completely with you, cheese prices have sort of peaked. But we are in the process of passing those peak prices on to our customers during the fourth quarter and you could logically think we would see some litigation as we move into 2008, on that particular commodity. But once again we are in an unprecedented period, as far as price increases in our business on five or six or seven items. And the ability to pass the price increases through and keep the same gap and time that we have always had, we find and I think its evidenced in our report in the third quarter that gap is increasing and as a result we see that tension in the fourth quarter in industrial business.

Okay. Thank you very much.

Thanks, Terry.

Thank you. Your next question is coming from John Feeney with Wachovia. Please go ahead.

Good morning. Thank you.

Good morning, Jon.

Congratulations Fran. It’s been a pleasure working with you.

Thank you.

Bob could you… we are talking about that wholesale call customers that’s expanded their private label initiatives. Could you refresh our memory as to two branded, your brands, are you confident your brands offer the retailer better per square foot. Profit economics and private label and if so do you have the data going to have these conversations to with other retailers, so that more of this activity doesn’t come up.

We are... this Alan Wilson. We are confident that our brands bring significant value and command a premium to private label and that it is good proposition. There is certainly a place for private label in the mix and a place for a strong, the strong leading national brand in that mix. Certain customers have… in some cases having more aggressive private label strategy, not just in our category, but across the whole store. And so we work with them to try to make sure that they are maximizing the best value for our categories, as they are making those decisions, that we have a tremendous amount of data on what the consumer want and we try as best we can to sell that and work with those customers to maximize the value to the consumer and for them through there sales are in profits.

The only thing I would add Jon, if that we continue to sell McCormick’s products; McCormick’s branded products throughout the distribution system of this particular costumers. So, no one on the call should do this, this is an overall customer that's eroding to zero. They have taken certain selected items in our category and chosen to put them in a particular private label, as Alan had said. And you can rest assured, we work real hard in that and we do participate in some of the sales of the private label items. At the same time there is a tremendous demand for our branded items on the North American scale and we worked very hard on that.

Yes, sure. We are just seeing where both producers if both of you are in this command position to talked about value chain wide economics. So, your particular branded skew versus the private label skew, I guess, hopefully, you will be… convinced people that they ought to be expecting the branded side not the private label side?

That's okay.

Just one other question if you wouldn’t mind, on the industrial business, do you talked about… increasingly about… these not good of the foodservice industry in the U. S. and how that's affecting your business? Is there a negative margin mix between, say your small ingredients business like Doritos, et cetera versus restaurant that we might be… and some other lower margins there?

Well, I don’t know if there is a negative margin mix. I think Jon, that goes back to what we talked about earlier in the call is the escalation of some of these particular raw material prices is particularly specific to the commodity use in that foodservice sector versus other sectors. So may be answer to your question is, yes, it's impacting the margins on that sector and as a result of the pass-throughs, there is a gap in timing, as I addressed earlier.

That makes perfect sense, Robert. Just wanted like-for-like, I mean is a dollar of revenues to a restaurant in the U. S. a comparable margin to a dollar of revenues to a food manufacturer; typically… typically higher margin one or the other? Or is it the same?

I would say very similar in a normalized cost environment, Jonathan.

Okay.

Thanks so much.

Thanks very much.

Thank you. Your next question is coming from Eric Serotta with Merrill Lynch. Please go ahead.

Good morning.

Good morning Eric.

Bob, you explained the increase in receivables and inventories a bit, but when I take a step back and look at the broader picture, we have seen sort of a steady march up in the cash conversion cycle over the past more than a year. Just wondering when you foresee a turn in that for the positive? And how long you see that taking to get back to more normalized level in terms of the cash conversion cycle?

Eric, you know as we address every quarter conference call, we have had restructuring process with all the major facilities in the world and especially, on the industrial side of our business, we want to that customer service, so everything we saw in inventory increase was premeditated by the management team. So, while we have said before the inventories are too high, we don’t want anybody on the call to think they are high and not being managed. We were in control of what we are doing. We are adding to that and now two things that are continuing to be pressure, one is currency… foreign currency and the other is overall cost increases in a raw material base, which weren’t budgeted as we work back to December 1st, 2006. For a fiscal year 2007, we see mitigation of that. We are… more comparable numbers are in the fourth quarter 2007 and obviously, much more comparable as we move into the first quarter 2008 to the second quarter of 2008. So, it’s a fluid situation, as I said in the script, we are not happy with the inventory levels that at this particular point in time. They are going down in the consumer and industrial businesses in North America and Europe. I don’t want anybody on the call to think there isn’t tremendous activities around lowering inventories. That’s being mitigated by the fact of foreign currency exchange and by the overall pressures on cost.

Okay. And since you guys are now more than half way through the restructuring program and I think you have completed the major announced facility consolidation, should we expect moderating impact from inventory build for facility consolidation and then I have a final question on consumer.

That is correct except for the European situation. Bear in mind, we put SAP Europe and the restructuring programs in the overall savings for 2008 of $10 million will come from our European and Middle-East and African operations. So, we will see some elevation there, Eric but North American environment should be reduced yes.

Okay. And then just looking at the Americas consumer topline it was up 3% to 4%, you said on an underlined basis excluding the seasonal pull… pull forward of that $9 million to $11 million. Did you specify what the mix was there between pricing and volume, as well as what pepper price pass-through, was in particular?

We didn’t specify it but its about 1% pricing.

It’s about 1% price and is that true organic price mix or is that pepper price pass-through for that 1%?

The only pricing we took this year was pepper.

Okay. The extra month of Simply Asia added approximately what in the quarter?

Virtually diminimus in the quarter.

Okay. Great. Well, thanks a lot, good luck.

Thanks.

Thank you your next question is coming from Chris Growe with A. G. Edwards. Please go ahead.

Thank you. Good morning.

Good morning.

Hi guys. I just want to follow-up quickly on the working capital question and that is; your account receivable in the quarter, can you attribute the growth over and above sales mostly to the U. S. consumer division, the favorable term you offer there?

Yes. Yes.

Okay. I just want to be clear on that. And then relative to your gross margin, you attributed about 90 basis points decline roughly to the industrial division. You have an accelerated… I guess you had an acceleration of cost savings coming through that position then to help offset that… therefore to keep profitability pretty constant year-over-year. Is that right or--?

That is correct. I mean the summary on our industrial businesses… the programs that we put in place in 2006, which obviously improved the benefits of 2007 is totally being mitigated by the overall cost increases in our business. And Chris then, as I addressed with the lag then… the lag is getting price revenue for that is wider than we have anticipated before. But everybody should realize we still have the same protocols in place. And the offsetting price increases for the commodity increases will in fact happen in our industrial business, we are just in a larger gap on time than we normally be.

Okay. And then… why don’t you give us an update on the, sort of the SKU reductions that are occurring on cost industrial division. Should we expect some sort of pick-up there in those… in that activity or are you pleased with the progress so far and focusing on those core customers?

Yes. Please with where we are today. I don’t think a pick-up would be appropriate at this point Chris. At some point in time this is going to curtail all off and I think as I said in the call, somewhere above 2% was the impact we had in the quarter relative to the SKU reduction and that’s going to tail off as we move into 2008.

Okay. And I am sorry, just one more follow-up and that is relative to the cost savings. You just mentioned $10 million in 2008. That’s mostly coming from Europe. Is that sort of the total amount of cost savings roughly coming that are coming through next year?

That’s what we indicated in our total restructuring program, Chris when we made $10 million in 2006, $30 million in ’07 and $10 million in ’08. Please bear in mind that we haven’t got our 2008 budgeting process together and our budget together so while I wouldn’t say that’s the only cost savings, that’s the one we have publicly stated at this point in time.

Fair enough.

Okay?

Okay. Thanks a lot.

Thanks Chris.

Thank you. Your next question is coming from Eric Katzman with Deustche Bank. Please go ahead.

Hi, good morning everybody.

Morning Eric.

Fran, best of luck. Yes, Gordon you are going to have some big shoes to fill. In terms of long-term targets… raised your long-term target expectation back at your analysts meeting in New York. And I am wondering now, with hindsight given the volatility that we are seeing in raw material costs, across the Board if you think that may been a little bit too aggressive, Bob?

I don’t think so, Eric. And that was driven by the cost savings programs we had. We are still very comfortable with the topline sales growth both in the consumer and industrial businesses. I think we are fine. I think the piece that surprised us, which we addressed in the conference call, is the tremendous volatility that has taken place all of week-by-week in some of these commodities. And thus our ability to pass these through on a quarterly basis to our customers, that gap, as I said to Chris, that gap is larger than we anticipated but I don’t think at this point in time we should modify any of our long-term goals. What I also said though, Eric was that it’s going to have an impact as we move into the early part of 2008.

Okay. And then kind of… I guess, talking about the mix issue. While consumer trends may be moving away from foodservice given that people have to eat. In some respects, I would normally think that and maybe this is a kind of, something that would occur longer than just a one quarter phenomenon. And I would assume that the change from industrial sales, i.e. QSR foodservice moving to consumer is going to be a mix shift positive for you? Isn’t… shouldn’t that--?

I would say the answer to that is yes. And what gives us encouragement is that the program that our U. S. consumer folks put in place where we had inventory placed in their warehouses in the third quarter for sale in the fourth quarter and you are quite right. I don’t think this is an immediate transformation between the foodservice and eat-at-home. But we think the holiday season this year just because of this phenomenon inventories being available will be positive for our U. S. consumer business.

And then… just last question and then I will pass it on. I guess one of the concerns in the industry today is as we… as prices move up, consumers may trade down. Are you seeing just more broadly in terms of your overall consumer product line in the U. S.? Are you seeing the consumer trade down at all in terms of any prices that you have put through, so… like for example, you said you put through a price increase in pepper. Is McCormick pepper selling less than private label pepper?

McCormick pepper has had some volume hits this year but the overall category has as well, so we haven’t seen necessarily a big shift in share. But we really work hard at maintaining our price gap between the brand and private label.

The other thing I would say, Eric to add what Alan said is, if you look at the volatility in commodities that we addressed. Other than pepper, most of those are part of our industrial business as opposed to our consumer business, maybe different than other consumer products manufacture companies that appear today. So, we increased prices on pepper quite regularly in 2007. But our focus right today on this cost segment and what the conference call script hopefully addressed was, this is an industrial business phenomenon with us, not a general business phenomenon.

Okay. Thank you very much.

Thanks Eric.

Thank you. Your next question is coming from Robert Moskow with Credit Suisse. Please go ahead.

Thank you. Good afternoon and good luck to you Fran.

Hey Rob.

I wanted to know your cash flow from operations is down substantially from the prior year. Its $22 million year-to-date and it was over $100 million a year ago. Do you have any guidance for us on free cash flow this year and do you expect free cash flow to be down?

Yes. A list of items that led to this decline are really timing issues and some shift in some of the activities, inner liability account. I just wanted to point out for instance that we had nearly $30 million of benefits primarily incentive payments that were greater than in this time period reflecting the bonuses we paid on the 2006 year compared to the lower bonuses or practically no benefits in the… for the 2005 year. And then we had higher restructuring charges in this period… in this nine months period, than we had the year before. And we are having… we have had some increases in our receivables in this period, reflecting some of our higher sales growth that we talked about. And in the European operation, purely timing with VAT payments from one period to the next. So, we feel pretty confident that our cash flow will return to the levels that it has been at and that we expect our free cash flow not to be suffering. In fact, we are starting to see our ITO improved, which means that our inventory relative to our sales growth is starting to improve.

The other thing, Rob, we… you know as we addressed, we bought a lot of stock forward in the third quarter versus the fourth quarter and that to shift in the movement there. And the fourth quarter obviously is the significant volume quarter for us, so just to reinforce with Fran and I don’t think there is any tension around the free cash flow from McCormick in ’07.

The free cash flow was about $230 million in ’06, should we think it’s about the same in ’07, or little below?

I think a little bit below in 2007 versus 2006.

Okay. And then maybe a catch up in ’08, a share purchasing starts off at the commodity cost again?

That’s correct, yes.

Okay. And then, could you more specific for us on the option expense. You have said that competition expense was a benefit in this quarter. I have about $4 million of options expense in the quarter last year?

It really wasn’t anything to do with options; it all has to do with incentive competition.

Incentive compensation.

And I think as Fran says, Rob, it’s a significant swing from 2007 third quarter versus 2006 third quarter.

Give us a sense about how much?

Well, it’s a period when we show up what we expect our benefits to be for Europe and it has an impact but we have not disclosed that matter. So, but it’s large enough to talk about.

Okay. And lastly, you set out an industrial business margin expansion goal of 250 basis to 350 basis points, is that goal now delayed?

Exactly, Rob exactly. It’s not dismissed and it’s not off the radar screen at all for industrial folks. But based upon what's happened just recently in the delay in timing some of these pass-throughs is not delayed, yes. We said by the end of 2008, we get the 250 basis points to 350 basis points, that’s obviously going to bounce in the 2000… fiscal 2009.

And the industrial customer, you rationalized your industrial customer base a lot to get to the… it’s a big customers and this might be a little far fetched. But the customers they do a let go, do you have any sense, the ones you let go were faster growing? Or… and maybe you have kind of left here with them slower growing ones or is that really not an issue, think about it?

I think the Rob, the answer to that is, if you look at our sales growth, we are very comfortable with our sales growth, globally in the industrial business. So, the answer is really no. We are comfortable with the portfolio that we have streamlined down to and once again, these cost increases are really on the foodservice side of our business, not on the food manufacturer side of our business. And it’s a phenomenon that we are in and the good news is there is protocols in placed to work ourselves out of this, its just taking a little more time.

Okay. Thank you very much.

Thanks Rob.

Thank you. Your next question is coming from Gil Alexander with Darphil Associates. Please go ahead.

Good morning.

Good morning.

On the fourth quarter, could you give us some estimate of what you think your restructuring… your restructuring charge will be?

What… we really don’t break that out by quarter, the only thing I would say is that the restructuring charges as Fran addressed earlier, in 2007, we are primarily pre-structure savings I should say, we were impacting the first and second quarter more than the third quarter and fourth quarter.

Thank you very much.

Thanks very much.

Thank you. Your next question is coming from Mitch Pinheiro with Janney, Montgomery, Scott. Please go ahead.

Hey good morning.

Hey good morning.

Hey Fran, best wishes. Don’t hit him straight, hit him long. Hey real quick, could you talk a little bit about what you are seeing in the marketplace relative to safety. And has McCormick, have you seen increase activity relative on industrial side to ingredient suppliers et cetera?

Obviously, this is Alan. With the lot of the discussion today, there is an increase emphasis by our customers and our consumers on food safety. And we think that plays pretty well to our strength, because that’s something that we really emphasize inside and with our customers. But it is certainly being highlights; it got everybody’s attention right now. We think that place is one of our strength.

Are you seeing, I mean could that represent incremental growth in ’08?

I think it’s a competitive differentiator over time, Mitch, versus, as Alan said versus McCormick and other suppliers, yes.

Okay.

Once again though, I think it's important to realize that it will be a competitive differentiator or but it’s a cost associated with that. It's built into our budgeting process and our forecast process. But we do have a global quality program. We think in our sector it’s an unparallel whether it’s an issue in China or India or North America, we have the appropriate resources applied against it and its getting tremendous focus under Alan’s leadership.

Well, its competitive differentiation and that expertise may seem like maybe there is pricing in it for you, in other words paying a premium for that. Improved food safety, sort of dynamics in your organization, I didn’t know if that’s possible?

It’s something we work on everyday on many…

Yes, obviously. But speaking of pricing and one thing I want to understand is we are still three months from fiscal… I guess two months from fiscal '08 right? And so in terms of the pricing… the re-pricing of the pass-throughs, is there that much of a lag or is this is a situation where… I mean why wouldn't we be pretty lot closer to or lot smaller of a pricing lag there?

I think it’s the speed and volatility, Mitch with what prices are going up. I mean you just take soya, we could charge soya, we get everybody in the same room. And it’s going up daily, not weekly or monthly like commodities used to go up. And then it will drop down a little bit and go up again. So, it’s the tremendous volatility.

Okay.

And bear in mind, we have quarterly pricing protocols and so we have to factor that in the overall pricing mechanism we have with our customers.

Will prices fall quicker on the lag, on the other side? Or do you think it will be equal to the--?

I think, it's equal.

Okay. Advertising and marketing expense in the third quarter, did you talk about … did you talk about that? I didn’t… if you did, I didn't hear it.

If it's… once again the situation we find ourselves in we are not cutting our marketing expenses and advertising expenses 2007 over 2006. And I think one of the things, you always want to hear, Mitch, is the fourth quarter… the fourth quarter in 2007 will be on par with 2006. But the important thing is remember in 2006, we increased marketing and advertising expense significantly in the fourth quarter.

Okay. All right. Thank you. And one more thing, in the consumer business with the… sort of $9 million to $11 million sort of advance shipments, is this… you talked about some of the positives in manufacturing in your heavy season and being… having stuff in place in the stores earlier. Is there any other dynamic positive or negative to consumer margins related to this? Is there anything have to think about as far as margins are concerned there?

I don’t think so, Mitch. Now, there is nothing, now let’s… now once again, the absorption during the fourth quarter in both of our businesses because of the significant volume is not something that we really worry about.

Okay.

Okay.

Thank you.

Okay.

Thank you. Your next question is coming from Oliver Wood with Stifel Nicolaus. Please go ahead.

Great. Thanks a lot. I just have one question; it’s a follow-up on the advanced shipments. I just wanted to make sure; I heard correctly that the $9 million to $11 million sales translates into $0.02 in EPS and I am asking because when I do the math, I get a much smaller impact on EPS?

No, that's not right. That’s $0.02, about $4 million.

Okay.

Okay.

So, where the… I shouldn’t say we are advanced, much higher margin product set?

Consumer… yes, the consumer business, it's the time of the year, that its flows through, so that’s our estimate what the impact is at this point.

Okay. Great. Thanks so much.

Thank you.

Thank you. Your next question is coming from Andrew Lazar with Lehman Brothers. Please go ahead.

Good morning.

Good morning, Andrew.

And Fran, I want to wish you the best as well and thank you for all your help over the years.

Thank you.

With respect to America's consumer, the organic sales growth rate was, as you mentioned Bob, 3% to 4%. And that was a pretty healthy uptick from where we were more recently and even last quarter, where I think it was close to the 1% or so. And given obviously they are very healthy variable contribution margins on that business. I am trying to get a sense of the drivers behind the better organic sales growth, I assuming that the thing you have been doing all along, it's the revitalization, the shelving and all that. I guess the question, do you feel like you hit an inflection point in that business specifically, so America’s consumer, where maybe that type of year-over-year growth in the upcoming quarters, meaning 3% or 4% organic is more likely and there is a building confidence if that’s the way it can go.

I think it’s the later, Andrew, even we are confident of our consumer business, we are confident of Zatarain's growth continued, Simply Asia is continuing to grow in that area. Hispanic and seafood areas continue to grow and I think as we look at this overall, when we call consumer merchandising program or we are putting in the new racks, we are putting new products. We are taking out SKUs, making a better more shopable for the consumers, that's in very much the embryonic stages. So, as we would see that, moving toward the fourth quarter and into ’08 and ’09, we expect increased volume gains under that, as the consumer becomes much more familiar with the very, very confusing category. And we are seeing results of that now and we are very positive, encouraged by that and we think for the future, that just accrues more benefits on the consumer side.

Okay. And then… last thing on the early shipment. Just curious, how was… what was the main issue? Is it… was out of stocks, I guess, one of the bigger issues that you are trying to resolve, at the retailer in pass kind of holiday periods.

Yes, couple of things…

I think you able to help you get that.

It’s making sure that the displays are in the store when the consumer is ready to buy them. And getting them through to the customers’ supply chain quickly enough to make that happen. We believe we have seen it before that the earlier the displays are in the store, the more the consumer ends up buying.

So, you a hoping it’s obviously not a one for… a direct one-for-one shift at the end of the day?

That’s what we are counting on.

Okay. And then I guess with respect to… back in New York, you talked a lot about the role that acquisitions have played in the growth of McCormick over the last couple of years and that was something obviously you are going to think… long and hard obviously going forward, a bigger contributor. It obviously you didn't come up on the call, but there is no reason I guess so much you actually pull the trigger on something. But is there anything changed on that front with respect to either the pipeline or what you are seeing or strategically and how you think about it?

No, not at all. The only hope we have is maybe with the situation in the equity markets… the private equity markets maybe some of the multiples may come down a little bit, but nothing’s changed from McCormick standpoint. No.

And last year… do you… and I missed this. I apologize. What’s your… now your best guess around full year tax rate?

32, this year. Or did you say next year?

Actually this year. For full year ‘07.

31.

31. Okay. Great. Thank you very much.

Thanks, Andrew.

Thank you. There appear to be no further questions. I would like to turn the floor back over to Joyce Brooks for any closing comments.

Thank you. This concludes today’s call. Till October 4th, you may access the telephone replay of the call by dialing 877-549-4471 and the access code for the replay is 9133189. You can also listen to our replay on the website after 2 PM today. If you have further questions or points to discuss regarding today’s information, please give me a call at 410-771-7244.

Thank you. This concludes today’s McCormick and Company third quarter financial results conference call. You may now disconnect.