McCormick & Company Earnings Call Nuggets: Core Ingredient Cost Outlook and Price Points
Core Ingredient Cost Outlook
David Driscoll – Citigroup: Two questions, one on the cost outlook, the inflation outlook, and one on that comment about 2014 tax and retirement costs. On the cost outlook, I believe what you wrote there was, in 2014, you’re looking for low-single-digit material cost increases. I guess, I just wanted to get your impressions that if we have a deflation in the grain markets, potentially affecting much of the grocery store, how do you see your business in 2014, in comparison to what might be many other categories, in fact, seeing price declines while you guys are actually having to take pricing. So that’s the first one?
Alan D. Wilson – Chairman, President and CEO: Our commodities certainly are different. Most of our products are grown outside the U.S. in areas that are within a few degrees of the equator and there is a lot of different dynamics that impact that, weather, like monsoons in India can impact some of our costs. We are certainly not expecting cost declines across our core spice and seasonings ingredients. We may see some that impact more of our Industrial business and things like grains, but we are going to be a little counter to what you may be seeing in some of the other commodities. I’ll let Gordon take the other part of the question.
David Driscoll – Citigroup: Second question was just on 2014 tax and retirement costs. It seemed like from the comments, both from the lump sum payment, like I’m struggling to understand why that’s not favorable to the retirement cost picture going forward in 2014. The tax rate, it doesn’t seem like it should be moving up much. So when you make this comment that it’s less of a headwind, that still suggest that it is a headwind, it’s just less of a headwind. But kind of why is it? It doesn’t seem like it perhaps should be.
Gordon M. Stetz – EVP and CFO: David, just to focus first on the retirement going forward, what we are seeing when we say less of a headwind is, really we’re speaking to the fact that this year’s increase in the operating income expense impact of that was a function of the interest rate environment, primarily where rates declined at the end of last year when we established our valuation. Our expectation given the rate environment is certainly that rates and as well as everyone knows this on the call, rates shouldn’t decline any further. So at a minimum, we would expect that our expense not to go up like it did this year. Then, if it is a favorability, it will be purely a function of what the rate environment is at November 30 when we establish the valuation date. To your point on tax rate, again, the favorable rate that we experienced in 2012, was primarily a function of a transaction we did, which was cash repatriation, which we did not duplicate this year and do not anticipate a similar transaction at this stage, as we look into 2014. So again, we’re not looking for any unfavorable comparison related to the tax rate as we head into 2014, as we had experienced in 2013.