BUSINESSMcCormick is a global leader in flavor. At the time of the acquisition, annual sales of Cholula were approximately $96 million. In China, we market our products under the McCormick and DaQiao® brands. For these products, we are a category leader in our primary markets. We have a large number of customers for our products. We generally have not used derivatives to manage the volatility related to this risk. Our profitability may suffer as a result of competition in our markets. Natural disasters could include an earthquake, fire, flood, tornado or severe storm. We operate our business and market our products internationally. ITEM 1B. UNRESOLVED STAFF COMMENTSNone. We focus on acquisition opportunities that meet the growing demand for flavor and health. We financed this fiscal 2021 acquisition with cash and short-term borrowings. Diluted earnings per share was $2.78 in 2020 and $2.62 in 2019. The effective tax rate was 19.8% in 2020 as compared to 19.2% in 2019. Pricing actions increased sales by 2.8% in 2020 as compared the prior year level. We recorded a net benefit of $301.5 million associated with the U.S. Tax Act during 2018. 2016-16, which we adopted on December 1, 2018. Pricing actions added 0.2% to sales in 2019. Under those agreements, the applicable leverage ratio is reduced periodically. Our leverage ratio can be temporarily impacted by our acquisition activity. It was a use of cash in 2020, 2019 and 2018. The change in trade accounts receivable was a source of cash in 2020, 2019 and 2018. The acquisition was funded with cash and short-term borrowings. Consolidations in these industries have created larger customers. We estimate the fair value of a reporting unit by using a discounted cash flow model. We conducted our audit in accordance with the standards of the PCAOB. Intercompany transactions have been eliminated. Actual amounts could differ from these estimates. Undiscounted cash flow analyses are used to determine if an impairment exists. Revenues are recorded net of trade and sales incentives and estimated product returns. Any taxes collected on behalf of government authorities are excluded from net sales. All other costs of advertising are expensed as incurred. We have elected to treat GILTI as a current period expense when incurred. See note 7 for further details. In December 2019, the FASB issued ASU No. These optional expedients can be applied from March 2020 through December 31, 2022. The purchase price was approximately $4.21 billion. Interest is payable semiannually in arrears in April and October of each year. Prior to payoff, the five-year loan bore interest at LIBOR plus 1.25%. The term of the lease is five years after commencement. Hedge ineffectiveness was not material. These funds typically have redemption periods of approximately 10 years. ( This provides a basis of comparability relative to similar assets. The subsidy provided under these plans is based primarily on age at date of retirement. 1-14920, as filed with the Securities and Exchange Commission on January 28, 2020. ( .$))300- $ #A"24T#\\P M " .$))300* ! \\F/TI_;K^2_[7J% MAH(B8J4E9:7F)F:I*6FIZBIJK2UMKXN;K$QKT]?;W^/GZ$0 " 0,"! M\'G.YO[&^C=Y(R+FQMH([2[MXKG45FE9$BF=J6UAXH*A\\ONYNJ M/FW_ #!_ $Q ( F )E\\K.$P]-UX_-&)Y2DA;25Q-3D M]*6UQ=7E]59F=H:6IK;&UN;V-T=79W\'EZWQ]?G]Q$ @(! @0$ P0%!@+RLX3#TW7C\\T:4I(6TE7I[?\'_]H # ,! ( J\'D//@?\'T\\ASGCCCCC MCCG @!@\\& !#] D #_[ 11\'5C:WD 0 $ 9 _^X #D%D M;V)E &3 ?_; ( Changes in enacted tax rates are reflect