Greetings and welcome to the McCormick second quarter 2010 conference call. (Operator Instructions) It is now my pleasure to introduce your host Joyce Brooks, Vice President, Investor Relations, for McCormick.

Good morning to everyone on today's call and to those joining us by webcast. The purpose of our call is to provide an update on our business, review McCormick's second quarter financial results, and share our latest 2010 outlook. We have posted a set of slides to accompany today's call at our Website, ir.mccormick.com. In the room with me are Gordon Stetz, Executive Vice President and CFO; and Paul Beard, Senior Vice President, Finance and Treasurer. Alan Wilson, Chairman, President and CEO is also on the call, but dialing in from a different location. Alan will begin with the business update, followed by Gordon who will review our financial results and outlook. After that we look forward to discussing your questions. As a reminder, our presentation today contains projections and other forward-looking statements, and 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. It is now my pleasure to turn the discussion over to Alan.

Thanks, Joyce. Good morning everyone, and thanks for joining us. We're pleased to report another quarter of strong financial performance at McCormick. Our results for the second quarter demonstrated our passion for flavor and the effectiveness of our strategy to invest in the business and to fuel our growth with improved margins. Product innovation, increased brand marketing, and distribution gains drove the top-line, and above target progress with our CCI program has gross profit margin up 110 basis points year-to-date. This level of success was accomplished in the midst of a global economy that remains challenging in a number of our markets. Although conditions remain difficult, based on these results and our latest outlook, we're well positioned heading into the second half. This morning, I would like to begin with an update on the business environment, and progress with our growth initiatives. After that I'll comment briefly on this week's announcement of a new share repurchase program. Across our primary markets in locations around the world, we see varying degrees of economic recovery. From our perspective, consumers in the Americas remain cautious but seem more willing to explore new flavors. Increased retail purchases of our new products, our more exotic gourmet spices, and our authentic ethnic brands suggest that there's a willingness to branch out and to experiment with more distinctive flavors. We believe other food manufacturers are seeing this too based on the product innovation activity in our industrial business. While parts of the food service channel continue to be a bit weak, we saw some increased demand from food service distributors. In addition, some of our industrial customers in the Americas are once again focusing on the strongest part of our value proposition, quality and reliability, which has won us an increased share of their business. In Europe,…

Thanks, Alan, and good morning everyone. Let me provide some additional details behind our second quarter financial results, and begin with a look at our consumer business and top-line growth on slide 11. In the Americas region, sales rose 4%, and in local currency the increase was 2%, due to favorable volume and product mix. An important part of the second quarter sales increase came from Recipe Inspirations and Perfect Pinch. And for a number of other products, the positive results we reported in the first quarter extended into the second quarter. For example, in the U.S. we had another quarter of increased sales of our spices and herbs, which outpaced the sales growth rate of the private label items we supply. In addition, we achieved double digit increases for Grill Mates, gourmet items and Simply Asia products. Also in the Americas, we had excellent growth during this period in Canada, with promotions behind grilling products and new distribution gains for Billy Bee Honey. Consumer sales in EMEA were flat to the year-ago quarter, and down 3% in local currency. Currency through the second quarter still had a positive impact. Sales this quarter were impacted by a significant decrease in several European markets struggling with severe economic declines. In these markets, we are seeing not only weak consumer demand, but retailers pulling back on inventory levels. Our largest consumer markets in this region, France and the U.K. have fared better. We achieved volume growth through the first half, and while private label continues to outpace the growth of brands, the rate of increase has moderated in the latest period. Given this backdrop and recent trends, we remain cautious in the third and fourth quarter outlook for our consumer business in EMEA. In the Asia-Pacific region, second quarter sales increased 22%,…

Gordon, before we ask the operator to put through the first question, let me start by addressing recent questions from investors regarding pressure by U.S. retailers to reduce branded SKUs. In the U.S. market, we've not only maintained shelf space, but across all outlets have grown our share. Since 2008, we've expanded distribution of our brands in alternative channels such as dollar stores. For the past 18 months, there's been a great deal of speculation concerning various spice category solutions at Wal-Mart. I'd like to share with you that later this summer, the core spice and herb section of Wal-Mart super centers will be merchandised in a consistent manner across the United States with an assortment consisting primarily of McCormick branded products and a limited number of great value private brand items. Wal-Mart has also agreed to carry our new Recipe Inspiration items in most of their stores nationally. We're very pleased with the opportunity to demonstrate the strength of our brands with their valued customers. Operator, let's open up the line for questions.

(Operator Instructions) Our first question comes from Alexia Howard with Sanford Bernstein.

I want to talk about the marketing spending outlook in the second half of the year. You've obviously seen quite a big step up in the first half. Are you anticipating that that kind of pace is going to continue in the second half?

No, we expect it to moderate a bit. It's still going to be more than it was last year, but it won't be nearly at the rate at which we have spent in the first half. A lot of our first half spending has been behind introduction of new products, and we'll get some more of a normal level of advertising. Remember, we've had increased step-ups in the last couple of years, in the fourth quarter, and we'll continue to increase it, but not as much as we have the first half of the year.

Are you anticipating a continued step up in promotional activity? We're hearing a lot of the retailers are asking for incremental promotional spending at this point. Do you anticipate that stepping up in the second half?

I don't see so much of a step up, because as you recall, we added a lot of high value promotions over the past year. So I wouldn't say it's going to decrease, but I wouldn't expect to see that kind of increase as we had in the back half of the year.

Our next question comes from Alex Bisson with Northcoast Research.

Just quickly on the marketing spend; I guess I was looking for just a little bit bigger increase in the quarter just ended. So am I right to think that the marketing spend came in a bit below plan?

No, it was pretty well on plan. We're spending about what we said. Gordon, you want to add any perspective on that?

Absolutely, it's pacing the way we had anticipated. The big events that we were supporting this quarter, we supported, and that was largely behind the Recipe Inspirations and Perfect Pinch. So, there was really no change to our original thinking on that.

When you look at the step up in marketing spend for the second half, you noted a lot of it will be in Europe. Will that be focused on markets that are performing better from kind of a global macro standpoint or will it go into the markets that have been more adversely impacted?

It will be primarily in the U.K. and France, which is our largest markets and the markets that are performing the best. And the reason for that is that's where we get our best returns. We are considering what we need to do in some of the weaker markets, but we believe we will get our best returns investing behind our biggest businesses.

And then just one final one on the new product introductions. It looks like the trial in consumer awareness has been outstanding. But I was wondering if you could talk a little bit about the repeat usage or the repeat purchase you're seeing within the two big, kind of platforms, Recipe Inspirations and Perfect Pinch?

Well, still hard to get an early read, but based on the turn rates that we're seeing, we're very, very pleased especially with Recipe Inspirations. Perfect Pinch is also doing very well, but the purchase cycle is a little longer so it's harder to read that. Recipe Inspirations are, use it once and replace it. So it's still a pretty early read, but one that we're very encouraged with, and pretty similar to what we saw in the test markets. So we think we've got a very good product here.

Our next question comes from Ken Goldman with JPMorgan.

Just wanted to make sure I understood the Wal-Mart statement you made, Alan. Are you suggesting that the tests are over and that they're going with Wal-Mart? What's really different there besides what was previously, where you were still selling a lot of Wal-Mart and maybe some private label to them too?

What it really means is that, effectively, the great value test is over. And Wal-Mart has made the decision to merchandise in those test stores pretty much the way they have merchandised around the rest of the country. So, that's the outcome of that. It's hopefully lists some of the concerns that have been out there for the last 18 months or so.

Is there any read to that besides, that it's just good news overall where they decided to go with McCormick branded solutions as most of their shelves set there?

We are taking it as great news.

Ok. And then can you address the industrial business, really great sales growth there in some regions. But it's always a lumpy business as you guys have suggested in the past, how should we think about the sustainability of some the growth via QSR there in some of regions?

Well I think, what we're seeing and recall, we had pretty strong sales comparisons to last year as we were supporting the launch of some significant new products in the US. So, we are pretty pleased with what we've seen from the sales growth perspective. We do expect it to continue in the foreseeable future. We've got good momentum in Europe. The Americans has good momentum behind the products that we are selling and the customers are supporting the products that we are selling. And we're seeing continued distribution expansion and new product wins in Asia. So we believe that at least the current outlook as we see it, barring some major economic changes that sends people back out of restaurants that we're feeling pretty good about the food service part of our industrial business.

Next we have Robert Moskow with Credit Suisse.

I just wanted to ask another follow up on the Wal-Mart. Are they testing also a merchandising set where there is kind of like a low priced branded product as well? I remember doing a store check, right around your headquarters there, where I saw some brands that were kind of maybe second and third tier. Is there another test still going on? Credit Suisse: I just wanted to ask another follow up on the Wal-Mart. Are they testing also a merchandising set where there is kind of like a low priced branded product as well? I remember doing a store check, right around your headquarters there, where I saw some brands that were kind of maybe second and third tier. Is there another test still going on?

Yes. That's not so much the test, what they've done is merchandise. And they will continue to have in different parts of the store some regional brands; it’s less of a test, for instance in high Hispanic areas there is some Hispanic focused brands. And I think you saw some of those. So they will continue to have those in distribution, but the predominant course by set will be McCormick and some great value private brand.

Okay. And then also a follow up on operating profit for the quarter. When I look at it, I guess quantitatively it’s up about $8 million year-over-year when you adjust for the restructuring charges. But then you've also said that there were some incremental charges in the U.K. last year about $7 million. So, is operating profit roughly maybe up $1 million year-over-year if you normalize for that? Credit Suisse: Okay. And then also a follow up on operating profit for the quarter. When I look at it, I guess quantitatively it’s up about $8 million year-over-year when you adjust for the restructuring charges. But then you've also said that there were some incremental charges in the U.K. last year about $7 million. So, is operating profit roughly maybe up $1 million year-over-year if you normalize for that?

You are isolating one event; I mean there's a number of factors in there. So, obviously we spent up in the quarter as well, $8 million which was not in the prior year. And also we had the impact of the higher pension costs. And as we described, that's on an annual basis about $14 million impact and that goes through each quarter on pretty much a pro rata basis. So, if you do the math the way you described that you are accurate, but I'd be cautious that there are a number of things that we've spent up against for the purpose of driving our business.

Okay thanks. And just lastly, but I guess the good news is that the back half of the year does imply more growth despite the currency headwind and despite higher benefit expense. I am getting roughly 4% operating income growth, something along those lines. Do you think that's about fair? Credit Suisse: Okay thanks. And just lastly, but I guess the good news is that the back half of the year does imply more growth despite the currency headwind and despite higher benefit expense. I am getting roughly 4% operating income growth, something along those lines. Do you think that's about fair?

Yes, that math is correct if you are guiding towards, as we've said we are guiding towards the upper end of the range and that's the way it would work out.

Our next question comes from Eric Katzman with Deutsche Bank.

I have got a couple of questions. I guess in the 15 years that I've been following you, I don't ever remember you mentioning Spain or Portugal. So I understand what's going on in those markets, but did the business basically just collapse? I mean it can't be that big to begin with?

It's not that big, but what it did is offset some growth that we had in the U.K. and France. It was a big enough decline that we thought we'd call it out. Gordon, do you want to add anything to that?

Absolutely, I mean, what we wanted to make sure, is people understood that the large core markets are still hanging in there and there are markets surrounding those core markets that have had some difficulties.

That's what the financial markets are telling us, but I was just surprised that you kind of called it out as an issue for the consolidated segment results. But, okay. Then just a more specific issue I noticed on the balance sheet and may be this occurred earlier, but I just didn't pick up on it, Gordon. The intangibles were down by a fair amount year-over-year, did you have some kind of revaluing of the intangibles? Because I don't remember you taking a charge or anything on that?

No, that's a function of the currency rates. And as you know, at a point in time at the end of the quarter, you strike your currency rate and then the year-to-year fluctuations in currency flow-through accumulated other comprehensive income. So the fact that the euro, which is one of the larger items on that which is the Ducros acquisition back in 2000, the fact that the euro started to decrease was reading through both the intangible and then other comprehensive income.

Congratulations on the Wal-Mart decision. It's nice to see that brands are still of value. But you talked a little bit at the Analyst Day about Sam's Club, Alan. Is there any update as to how that test is going and when we might expect a decision from that Club store?

No update that we can really talk about. We're very pleased with what we're seeing and we think consumers are really pleased to have a great brand available in the store.

Our next question comes from Mitch Pinheiro with Janney Montgomery Scott.

On the industrial business and the passthroughs you're seeing, which are the raw material and input costs that you're passing to the favorable pricing on?

It's the large commodities that we tend to work with customers on the ups and downs. The biggest impacts currently are dairy products. And as we take positions on things like cheese with our customers, if they go up we pass it through, if it goes down we pass it through. And we do the same thing on soybean oil, flower or the other large items that are impacted like that.

So in this particular quarter, it was primarily dairy products?

Yes.

And how about some of the hard-to-track spices, vanilla, pepper, how are the pricing outlook on those items?

Well, we're seeing increased upward pressure on specifically pepper and garlic. Garlic is up I think about 50% over the last 16, 18 months. Pepper has climbed in the last several months. So there has been some upward pressure in those. So we look at what we're doing there and what we think the outlook is as we make our pricing decisions. Those would necessarily be passed through automatically. We make a more rational decision on those; although for customers that are buying in bulk, they're buying based on whatever the price is on the day that we quoted. So it's not necessarily contract pricing for those either. But in our consumer business, as you know, we take pricing more strategically than tactically. So we are seeing some upward pressure in a number of the input costs.

So when you talk in terms of incremental promotional spending, you don't see any increased step-up in the second half I think is what you said.

We're still going to have fairly high levels of promotional activity as we did last year.

So when we look at pricing as part of your second half sales input, is pricing expected to be flat or how would you characterize that?

Gordon, you may want to help me on this. Our current assumption on pricing is relatively flat, although there'll still be some downward pressure in the industrial business as we pass things through based on our current guidance.

Yes, absolutely right.

And just the last question on the non-consolidated operations. You had a terrific growth obviously in the first half there. Is the second half still anticipated to be up, but less up? Is that what I understood?

Yes, that's correct, Mitch. As you recall from last year, we started to see good improvement in that business towards the second half of the year. So the comparison is starting to be more difficult. So we're anticipating growth, but certainly not on the magnitude that we saw in the first six months.

Our next question comes from Ann Gurkin with Davenport.

Just wonder if I can get a little more detail on where you see pressure on raw material and packaging costs.

If I had to highlight anything that's creating pressure right now, packaging costs are under some amount of pressure. But the larger impacts to us are pepper and garlic. And in the past, as you know, as we've managed these, sometimes we've found it necessary to take price increases on specific commodity items when they start to climb. And I'm not announcing anything like that today, but we have shown that we have the ability to do that as we need to. But it's not the first lever we try to pull.

You also talked about new customer wins. Can you give any more detail as to what area or any other update on that comment?

As you know, we've talked about expanding the sales of branded products and specifically the dollar channel and showing the good results that they get when they do that and replace that with a controlled economy label. And that's a lot of what we were talking about there.

Our next question comes from Robert Dickerson with Consumer Edge Research.

I was curious the strategy in the past has been to hold pricing and if we kind of look in the back half for the year, if you're seeing some pressure on the commodity side. And you have picked up some volume share at least in the last quarterly period. I was just curious if there would be some pricing coming through, how are you thinking about that with just respect to volume share and competition with private label, just in the spice category?

Well, that's something we always have to weigh between recovering input costs and the impact on volume. So it is something that we do a lot of work on and run out of elasticity to determine at what point do we need to pass pricing through and how do we do it, because we've got a choice of taking pricing on specific items which we can do a little more straightforward and quicker than we can do a general price increase. And at this point, we're not prepared to talk about any strategy behind it, but that's how we tend to think about it. We definitely want to make sure that we stay competitive and aren't necessarily surrendering share to private label.

And then just a quick follow-up. If that's the case, would it be fair to say that at least for the time being kind of current strategy would be that hopefully not lower prices more, but rather increase the marketing such that you can hold pricing and I guess the perception of the overall brand relative to private label?

Yes. But remember also, if for instance we have to raise prices on things like pepper, private label prices will also need to be increased as well. So we run that balance all the time.

And last just on growth CapEx. I'm still somewhat new to the sector, but I'm just curious, in the past if you've ever kind of broken out maintenance CapEx relative to growth and kind of how you see that growth proceeding throughout the rest of the year?

Historically we haven't broken it out in that fashion. But I can tell you broadly, when we manage CapEx, we manage for a return in excess of our cost of capital and we look at the total portfolio. So we make sure that the growth component in that portfolio can more than offset the no-return component of, say, roof replacements and things like that. So we manage it on a total portfolio basis to make sure that total spend is delivering nicely above our cost of capital.

Our next question comes from Andrew Lazar with Barclays Capital.

Alan, we've heard a couple of food companies talk about when they spend on promotions these days, they are not getting quite as much lift as they've kind of historically seen, just given the environment that's out there. And I am just curious if that's something you've experienced or have some thoughts on?

Absolutely, and we've really talked about this before. We are spending, as we are doing value promotions, we know those are some of the lowest ROI spends that we have. And we are trying to make them as good as possible, but we felt in the tough economy that it was important that we do that. And we're continually evaluating what the right level of spend are and what the right periods to spend them to get the most impact are. But I think I would agree with what the other companies are saying; we are seeing a lower impact from some of the value promotions. We are seeing a pretty good impact still from our more consumer driven recipe strategies and health and wellness advertising that are really helping. But I would agree with what the other companies were saying.

And one last follow up from me on the Wal-Mart piece. I know there are some that might have believed that if the situation worked out in your favor, which it seems to have to done, and that's a good thing, that it would come with some change in the economics to McCormick, right, of dealing with that customer or that channel or what have you in order to keep the shelf sort of the way it is. And so I was just curious if you had some thoughts around that and if there had been real change in the way your economics to a given channel or customer to keep the shelf space the way you wanted it to be? Barclays Capital: And one last follow up from me on the Wal-Mart piece. I know there are some that might have believed that if the situation worked out in your favor, which it seems to have to done, and that's a good thing, that it would come with some change in the economics to McCormick, right, of dealing with that customer or that channel or what have you in order to keep the shelf sort of the way it is. And so I was just curious if you had some thoughts around that and if there had been real change in the way your economics to a given channel or customer to keep the shelf space the way you wanted it to be?

Yes, as you know, we are not going to talk specifically about what we are doing with specific customers. But I will say we are just happy with how things have worked out and we believe it's going to be a positive for both McCormick and for the customer.

Our next question comes from Eric Katzman with Deutsche Bank

Thanks for taking the follow up. I guess I also noticed within the release that it seems as if Asia, both on consumer and the industrial side, has really picked up, particularly in China. I know you went through some pretty significant SKU cuts there a year or two ago. Maybe you can just talk a little bit more about kind of why that market seems to be reinvigorated at the moment?

Industrial first, which is the bigger part of the business in China; last year was – we’re seeing some of the same things we were, where the QSRs were not doing the new items and weren't promoting as heavily as they had in the past. And there were some real declines in their sales. We've seen that pick back up, and we've seen the innovation activity pick back up. On the consumer side, we've continued to upgrade the talent in our organization and we believe we're hitting on the things that consumers are looking to buy. We're investing and continuing to expand our presence in our major cities, as well as expand in new products and in some distribution. So we believe that is a region, and specifically China is a country that we should be growing, and we should be growing consistently. And we think the formula is working for us right now.

And then, just one last one. I guess Alan because McCormick has in many ways a broad view of the consumer with the private label that you do along with the gourmet items, and then on the industrial side, everything from flavoring to basic kind of food service ingredient stuff, it just seems that again, maybe following up on Andrew's kind of broad view of things that we're just getting so many different signals out of the economy. And is that your sense as to kind of what's happening out there? That like on the one hand you may have a consumer that's willing to trade-up, but the others are still being very cautious. And maybe the same thing could be said, like countries between U.K. and France doing okay, versus Spain and Portugal collapsing or what have you?

Yes, I think there is still a bit of cautious optimism that we see, both with consumers and with customers. Some of the consumers are climbing back out of the bunker and they're trying new flavors and are experimenting a little more. But we still have an issue where jobs haven't necessarily recovered. I would say it's still fragile. And so I think it is a bit of a mixed signal around the world. And I would say that in most of the developed economies that there is a base of consumers where they really feel that the worst may be over. But then there's still a bit of fragility to that, and respond and react to any little bit of nervousness and bad news. So it's kind of a hard read right now.

And ladies and gentlemen, there are no further questions at this time. I will now turn the conference back over to Ms. Brooks for closing remarks.