FORM 10-Q

Table of Contents

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Table of Contents

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Table of Contents

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-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, N3kbIy3fWvrAOvUavBM4BVbtjp7jM2//NKsLPjIX0B93/uPRa86YYLCy7+WK2qmD uyoOHpZTrq6owbe4Wz3CBQ== 0000950123-09-031805.txt : 20090807 0000950123-09-031805.hdr.sgml : 20090807 20090807112322 ACCESSION NUMBER: 0000950123-09-031805 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20090630 FILED AS OF DATE: 20090807 DATE AS OF CHANGE: 20090807 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SENSIENT TECHNOLOGIES CORP CENTRAL INDEX KEY: 0000310142 STANDARD INDUSTRIAL CLASSIFICATION: INDUSTRIAL ORGANIC CHEMICALS [2860] IRS NUMBER: 390561070 STATE OF INCORPORATION: WI FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-07626 FILM NUMBER: 09994060 BUSINESS ADDRESS: STREET 1: 777 EAST WISCONSIN AVENUE CITY: MILWAUKEE STATE: WI ZIP: 53202 BUSINESS PHONE: 4142716755 MAIL ADDRESS: STREET 1: PO BOX 737 CITY: MILWAUKEE STATE: WI ZIP: 53201 FORMER COMPANY: FORMER CONFORMED NAME: UNIVERSAL FOODS CORP DATE OF NAME CHANGE: 19920703 10-Q 1 c52889e10vq.htm FORM 10-Q FORM 10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

(Mark One)


þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: June 30, 2009


o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 1-7626

SENSIENT TECHNOLOGIES CORPORATION

(Exact name of registrant as specified in its charter)


Wisconsin		39-0561070

(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)

777 East Wisconsin Avenue, Milwaukee, Wisconsin 53202-5304

(Address of principal executive offices)

Registrant’s telephone number, including area code: (414) 271-6755

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for at least the past 90 days. Yes þ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule
12b-2 of the Exchange Act. (Check one):


Large accelerated filer þ	Accelerated filer o	Non-accelerated filer o	Smaller reporting company o
		(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.


Class		Outstanding at July 31, 2009

Common Stock, par value $0.10 per share		48,771,948

SENSIENT TECHNOLOGIES CORPORATION
INDEX


		Page No.
PART I. FINANCIAL INFORMATION:

Item 1. Financial Statements:
Consolidated Condensed Statements of Earnings - - Three and Six Months Ended June 30, 2009 and 2008.		1

Consolidated Condensed Balance Sheets - - June 30, 2009 and December 31, 2008.		2

Consolidated Condensed Statements of Cash Flows - - Six Months Ended June 30, 2009 and 2008.		3

Notes to Consolidated Condensed Financial Statements.		4

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.		11

Item 3. Quantitative and Qualitative Disclosures About Market Risk.		14

Item 4. Controls and Procedures.		14

PART II. OTHER INFORMATION:

Item 1. Legal Proceedings.		15

Item 1A. Risk Factors.		17

Item 4. Submission of Matters to a Vote of Security Holders.		17

Item 6. Exhibits.		17

Signatures.		18

Exhibit Index.		19
EX-10.1
EX-31
EX-32

PART I. FINANCIAL INFORMATION


ITEM 1.		FINANCIAL STATEMENTS

SENSIENT TECHNOLOGIES CORPORATION

CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
(In thousands except per share amounts)
(Unaudited)


	Three Months				Six Months
	Ended June 30,				Ended June 30,
	2009		2008		2009		2008
Revenue	$	303,959	$	332,795	$	586,783	$	640,214

Cost of products sold		209,269		231,073		405,563		442,850

Selling and administrative expenses		51,433		56,869		99,579		112,878


Operating income		43,257		44,853		81,641		84,486

Interest expense		5,650		8,480		12,896		17,058


Earnings before income taxes		37,607		36,373		68,745		67,428

Income taxes		11,788		10,913		21,319		21,291


Net earnings	$	25,819	$	25,460	$	47,426	$	46,137


Average number of common shares outstanding:
Basic		48,301		47,569		48,223		47,434


Diluted		48,554		48,166		48,453		47,986


Earnings per common share:
Basic	$	.53	$	.54	$	.98	$	.97


Diluted	$	.53	$	.53	$	.98	$	.96


Dividends per common share	$	.19	$	.18	$	.38	$	.36

See accompanying notes to consolidated condensed financial statements.

SENSIENT TECHNOLOGIES CORPORATION

CONSOLIDATED CONDENSED BALANCE SHEETS
(In thousands)


	June 30,
	2009			December 31,
	(Unaudited)			2008 *
ASSETS

CURRENT ASSETS:
Cash and cash equivalents	$	15,589		$	8,498
Trade accounts receivable, net		209,197			198,903
Inventories		378,126			381,246
Prepaid expenses and other current assets		41,721			38,876


TOTAL CURRENT ASSETS		644,633			627,523


OTHER ASSETS		39,030			40,878

INTANGIBLE ASSETS, NET		13,541			13,754

GOODWILL		449,706			440,416

PROPERTY, PLANT AND EQUIPMENT:
Land		48,009			47,315
Buildings		251,650			248,366
Machinery and equipment		607,546			594,858
Construction in progress		54,102			40,200

		961,307			930,739
Less accumulated depreciation		(553,894	)		(527,873	)

		407,413			402,866


TOTAL ASSETS	$	1,554,323		$	1,525,437


LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Trade accounts payable	$	82,009		$	82,976
Accrued salaries, wages and withholdings from employees		18,549			24,269
Other accrued expenses		43,449			52,825
Income taxes		3,720			1,988
Short-term borrowings		37,646			34,213


TOTAL CURRENT LIABILITIES		185,373			196,271

OTHER LIABILITIES		28,887			27,272

ACCRUED EMPLOYEE AND RETIREE BENEFITS		39,385			37,616

LONG-TERM DEBT		427,231			445,682

SHAREHOLDERS’ EQUITY:
Common stock		5,396			5,396
Additional paid-in capital		83,307			82,261
Earnings reinvested in the business		902,393			873,444
Treasury stock, at cost		(111,106	)		(116,217	)
Accumulated other comprehensive loss		(6,543	)		(26,288	)


TOTAL SHAREHOLDERS’ EQUITY		873,447			818,596


TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	1,554,323		$	1,525,437


*		Condensed from audited financial statements.

See accompanying notes to consolidated condensed financial statements.

SENSIENT TECHNOLOGIES CORPORATION

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)


	Six Months
	Ended June 30,
	2009			2008
Net cash provided by operating activities	$	55,445		$	38,486


Cash flows from investing activities:
Acquisition of property, plant and equipment		(19,602	)		(22,876	)
Proceeds from sale of assets		4			25
Other investing activity		(366	)		1,410


Net cash used in investing activities		(19,964	)		(21,441	)


Cash flows from financing activities:
Proceeds from additional borrowings		216,138			9,052
Debt payments		(228,695	)		(21,562	)
Dividends paid		(18,476	)		(17,235	)
Proceeds from options exercised and other equity transactions		4,522			11,785


Net cash used in financing activities		(26,511	)		(17,960	)


Effect of exchange rate changes on cash and cash equivalents		(1,879	)		673


Net increase (decrease) in cash and cash equivalents		7,091			(242	)
Cash and cash equivalents at beginning of period		8,498			10,522


Cash and cash equivalents at end of period	$	15,589		$	10,280

See accompanying notes to consolidated condensed financial statements.

SENSIENT TECHNOLOGIES CORPORATION

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)

1.		Accounting Policies

		In the opinion of Sensient Technologies Corporation (the “Company”), the accompanying unaudited consolidated condensed financial statements contain all adjustments (consisting of only normal recurring adjustments) which are necessary to present fairly the financial position of the Company as of June 30, 2009 and December 31, 2008, the results of operations for the three and six months ended June 30, 2009 and 2008, and cash flows for the six months ended June 30, 2009 and 2008. The results of operations for any interim period are not necessarily indicative of the results to be expected for the full year.

		The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

		Expenses are charged to operations in the year incurred. However, for interim reporting purposes, certain expenses are charged to operations based on a proportionate share of estimated annual amounts rather than as they are actually incurred.

		Refer to the notes in the Company’s annual consolidated financial statements for the year ended December 31, 2008, for additional details of the Company’s financial condition and a description of the Company’s accounting policies, which have been continued without change.

2.		Share-Based Compensation

		The Company adopted Statement of Financial Accounting Standards (“SFAS”) No. 123(R), Share-Based Payment, on January 1, 2006, using the modified prospective transition method. The Company recognized $0.3 million and $0.6 million of share-based compensation expense for the quarters ended June 30, 2009 and 2008, respectively. For the six months ended June 30, 2009 and 2008, the Company recognized $1.0 million and $0.8 million of share-based compensation expense, respectively.

		The Company estimated the fair value of stock options using the Black-Scholes option pricing model. For the six months ended June 30, 2009, the Company did not issue any stock options. The weighted-average fair value of stock options awarded during the six months ended June 30, 2008 was $6.77 per share. Significant assumptions used in estimating the fair value of the awards granted during the six months ended June 30, 2008 are as follows:


	2008
Dividend yield		2.3	%
Volatility		26.3	%
Risk-free interest rate		3.1	%
Expected term (years)		5.3

3.		Fair Value

		On January 1, 2008, the Company adopted SFAS No. 157, Fair Value Measurements. This Statement defines fair value for financial assets and liabilities, establishes a framework for measuring fair value in generally accepted accounting principles (“GAAP”) and expands disclosures about fair value measurements. As of June 30, 2009 and 2008, the Company’s only assets and liabilities subject to this statement are forward contracts (all currently accounted for as cash flow hedges) and mutual fund investments. Both of these financial instruments were previously being recorded by the Company at fair value that meets the requirements as defined by SFAS No. 157. There was no impact on the Company’s net earnings and financial position as a result of adopting this standard. The fair value of the forward contracts based on current pricing obtained for comparable derivative products (Level 2 inputs per SFAS No. 157) at June 30, 2009 and 2008 was an asset of $0.1 million and $0.9 million, respectively. The fair value of the investments based on June 30, 2009 and 2008 market quotes (Level 1 inputs per SFAS No. 157) was an asset of $13.1 million and $16.4 million, respectively.

		On June 30, 2009, the Company adopted Financial Accounting Standards Board Staff Position (“FSP”) No. 107-1, which extends the disclosure requirements of SFAS No. 107, Disclosure about Fair Value of

Financial Instruments, to interim financial statements. The carrying values of the Company’s cash and cash equivalents, trade accounts receivable, accounts payable, accrued expenses and short term borrowings approximated fair values as of June 30, 2009. The fair value of the Company’s long-term debt, including current maturities, is estimated using discounted cash flows based on the Company’s current incremental borrowing rates for similar types of borrowing arrangements. The carrying value of the long-term debt at June 30, 2009 was $427.2 million. The fair value of the long-term debt at June 30, 2009 was $430.8 million. There is no impact on the Company’s net earnings or financial position as a result of adopting FSP No. 107-1.

4.		Segment Information

		Operating results by segment for the periods and at the dates presented are as follows:


	Flavors &				Corporate &
(In thousands)	Fragrances		Color		Other			Consolidated
Three months ended June 30, 2009:
Revenue from external customers	$	193,663	$	89,305	$	20,991		$	303,959
Intersegment revenue		3,892		4,419		226			8,537

Total revenue	$	197,555	$	93,724	$	21,217		$	312,496


Operating income (loss)	$	34,249	$	15,001	$	(5,993	)	$	43,257
Interest expense		—		—		5,650			5,650

Earnings (loss) before income taxes	$	34,249	$	15,001	$	(11,643	)	$	37,607


Three months ended June 30, 2008:
Revenue from external customers	$	205,988	$	103,794	$	23,013		$	332,795
Intersegment revenue		5,490		3,547		617			9,654

Total revenue	$	211,478	$	107,341	$	23,630		$	342,449


Operating income (loss)	$	33,700	$	19,288	$	(8,135	)	$	44,853
Interest expense		—		—		8,480			8,480

Earnings (loss) before income taxes	$	33,700	$	19,288	$	(16,615	)	$	36,373


	Flavors &				Corporate &
(In thousands)	Fragrances		Color		Other			Consolidated
Six months ended June 30, 2009:
Revenue from external customers	$	374,387	$	172,982	$	39,414		$	586,783
Intersegment revenue		7,716		7,832		474			16,022

Total revenue	$	382,103	$	180,814	$	39,888		$	602,805


Operating income (loss)	$	64,206	$	28,732	$	(11,297	)	$	81,641
Interest expense		—		—		12,896			12,896

Earnings (loss) before income taxes	$	64,206	$	28,732	$	(24,193	)	$	68,745


Six months ended June 30, 2008:
Revenue from external customers	$	394,329	$	202,296	$	43,589		$	640,214
Intersegment revenue		10,389		7,816		995			19,200

Total revenue	$	404,718	$	210,112	$	44,584		$	659,414


Operating income (loss)	$	62,516	$	37,793	$	(15,823	)	$	84,486
Interest expense		—		—		17,058			17,058

Earnings (loss) before income taxes	$	62,516	$	37,793	$	(32,881	)	$	67,428

Beginning in the first quarter of 2009, the Company’s operations in Japan, previously reported in the Flavors & Fragrances Group, are reported in the Corporate and Other segment. Results for 2008 have been restated to reflect this change.

Inventories

At June 30, 2009 and December 31, 2008, inventories included finished and in-process products totaling $275.3 million and $269.8 million, respectively, and raw materials and supplies of $102.8 million and $111.4 million, respectively.

Retirement Plans

The Company’s components of annual benefit cost for the defined benefit plans for the periods presented are as follows:


	Three Months Ended						Six Months Ended
	June 30,						June 30,
(In thousands)	2009			2008			2009			2008
Service cost	$	311		$	338		$	615		$	669
Interest cost		747			751			1,470			1,498
Expected return on plan assets		(271	)		(291	)		(522	)		(578	)
Amortization of prior service cost		456			488			911			975
Amortization of actuarial loss		52			58			102			116


Defined benefit expense	$	1,295		$	1,344		$	2,576		$	2,680

During the three and six months ended June 30, 2009, the Company made contributions to its defined benefit pension plans of $0.9 million and $1.9 million, respectively. Total contributions to Company defined benefit pension plans are expected to be $4.5 million in 2009.

Comprehensive Income

Comprehensive income is comprised of the following:


	Three Months Ended					Six Months Ended
	June 30,					June 30,
(In thousands)	2009			2008		2009		2008
Net earnings	$	25,819		$	25,460	$	47,426	$	46,137

Currency translation adjustments		46,665			2,966		19,685		30,145
Net unrealized (loss) gain on cash flow hedges		(60	)		603		60		1,183


Net comprehensive income	$	72,424		$	29,029	$	67,171	$	77,465

Cash Flows from Operating Activities

Cash flows from operating activities are detailed below:


	Six Months Ended
	June 30,
(In thousands)	2009			2008
Cash flows from operating activities:
Net earnings	$	47,426		$	46,137
Adjustments to arrive at net cash provided by operating activities:
Depreciation and amortization		21,015			22,784
Share-based compensation		1,047			763
Loss on assets		616			878
Deferred income taxes		1,374			481
Changes in operating assets and liabilities		(16,033	)		(32,557	)


Net cash provided by operating activities	$	55,445		$	38,486

Debt

In October 2008, the Company entered into a $105 million senior unsecured term loan agreement (“Term Loan”) with a group of five banks. In March 2009, the Company borrowed the entire $105 million available and used the proceeds to repay amounts outstanding under the Company’s committed revolving credit facility. On April 1, 2009, the Company retired the entire portion of the Company’s public debt with proceeds from the Company’s revolving credit facility. The Term Loan matures on June 15, 2012 and the interest rate on the Term Loan is based on floating rates at the Company’s election of either (1) the higher of (a) the prime rate or (b) the federal funds rate plus 0.5% or (2) a Eurodollar base rate derived from LIBOR plus a margin (initially 225 basis points but subject to adjustment as the Company’s leverage ratio changes). The Company may prepay the Term Loan in whole or in part prior to the maturity date without any penalty.

10.

Derivative Instruments and Hedging Activity

On January 1, 2009, the Company adopted SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities. This statement provides disclosure requirements pertaining to a Company’s use of derivative instruments and its hedging activities. There is no impact on the Company’s net earnings or financial position as a result of adopting this standard.

The Company may use derivative instruments for the purpose of hedging currency, commodity and interest rate exposures, which exist as part of ongoing business operations. As a policy, the Company does not engage in speculative or leveraged transactions, nor does the Company hold or issue financial instruments for trading purposes. Hedge effectiveness is determined by how closely the changes in the fair value of the hedging instrument offset the changes in the fair value or cash flows of the hedged transaction. Hedge accounting, which generally results in the deferral of derivative gains and losses until such time as the underlying transaction is recognized in net earnings, is permitted only if the hedging relationship is expected to be highly effective at the inception of the transaction and on an ongoing basis. Any ineffective portions are recognized in earnings immediately.

The Company manages its exposure to foreign exchange risk by the use of forward exchange contracts and foreign currency denominated debt to reduce the effect of fluctuating foreign currencies on short-term foreign currency denominated intercompany transactions, non-functional currency raw material purchases, non-functional currency sales and other known foreign currency exposures. These derivatives may or may not be designated as hedges under SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities. These forward exchange contracts have maturities of less than twelve months. The Company’s primary hedging activities and their accounting treatment are summarized below:

Forward contracts designated as cash flow hedges – The forward exchange contracts that have been designated as hedges are accounted for as cash flow hedges. The Company had $6.3 million of forward exchange contracts, designated as hedges, outstanding as of June 30, 2009. The fair value of these forward exchange contracts as of June 30, 2009 was an asset of $0.1 million classified in Other Assets in the Company’s consolidated balance sheet. The gains or losses on these instruments are deferred in accumulated other comprehensive income (“OCI”) until the underlying transaction is recognized in net earnings. As of June 30, 2009, a loss of $60,000 was deferred in OCI in the Company’s consolidated balance sheet. For the three and six month period ended June 30, 2009, a loss of $5,000 and a gain of $1.3 million, respectively, were reclassified into earnings in the Company’s consolidated statement of earnings which offset the earnings impact of the related non-functional asset or liability that was hedged in each of the same periods. Over the next twelve months, the Company expects to reclassify a loss of $60,000 from OCI into net earnings.

Forward contracts not designated as cash flow hedges – The Company also utilizes forward exchange contracts that are not designated as cash flow hedges under SFAS No. 133. These contracts are marked-to-market in net earnings immediately, at the same time as the non-functional asset or liability is marked-

to-market in net earnings. The Company had $19.8 million of forward exchange contracts, not designated as hedges, outstanding as of June 30, 2009 and recognized gains of $1.3 million and $0.5 million in net earnings for the three and six month period ended June 30, 2009, respectively, which offset the earnings impact of the related non-functional asset or liability in each of the same periods. As of June 30, 2009, the fair values of these forward contracts were an asset of $20,000 and a liability of $40,000 which were classified in Other Assets and Other Liabilities, respectively, in the Company’s consolidated balance sheet.

Net investment hedges – The Company has certain debt denominated in Euros and Swiss Francs. These debt instruments have been designated as partial hedges of the Company’s Euro and Swiss Franc net asset positions. Changes in the fair value of this debt attributable to changes in the spot foreign exchange rate are recorded in foreign currency translation in OCI. As of June 30, 2009, the total value of the Company’s Euro and Swiss Franc debt was $138.0 million. A loss of $7.4 million and a gain of $10,000 have been recorded as foreign currency translation in OCI for the three and six month period ended June 30, 2009.

11.

Subsequent Events

On June 30, 2009, the Company adopted SFAS No. 165, Subsequent Events. This statement provides disclosure requirements regarding subsequent events. There is no impact on the Company’s net earnings or financial position as a result of adopting this statement. As of August 7, 2009, the issue date of these interim financial statements, there have been no events or transactions that have occurred since June 30, 2009 or are pending that have a material effect on the Company’s interim financial statements for the period ended June 30, 2009.

12.

Commitments and Contingencies

Environmental Matters

The Company is involved in various significant environmental matters, which are described below. The Company is also involved in other site closure and related environmental remediation and compliance activities at a manufacturing site related to a 2001 acquisition by the Company for which reserves for environmental matters were established as of the date of purchase. Actions that are legally required are substantially complete.

Superfund Claim

In July 2004, the Environmental Protection Agency (“EPA”) notified the Company’s subsidiary Sensient Colors Inc. (“Sensient Colors”) that it may be a potentially responsible party (“PRP”) under the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”) for activities at the General Color Company Superfund Site in Camden, New Jersey (the “Site”). The EPA requested reimbursement of $10.9 million in clean-up costs, plus interest. Sensient Colors advised the EPA that the Site had been expressly excluded from the Company’s 1988 stock purchase of H. Kohnstamm & Company, Inc. (now Sensient Colors). The selling shareholders had retained ownership of and liability for the Site, and some became owners of General Color Company, which continued to operate there until the mid-1990s. In a letter to the EPA in January 2005, the Company outlined legal challenges to the recoverability of certain costs and urged the EPA to pursue General Color Company and related parties. The EPA informed Sensient Colors that it was unwilling to discuss these legal challenges without prior conditions. In 2006, a private developer, Westfield Acres Urban Renewal Association II, LP, pursuant to an agreement with the EPA, began redevelopment efforts at the Site (construction of affordable housing) by demolishing buildings thereon. Thereafter, the EPA removed allegedly contaminated soil from the locations where the buildings once stood.

In March 2007, the United States filed a complaint in the U.S. District Court in New Jersey against Sensient Colors claiming “over $16 million” in response costs allegedly incurred and to be incurred by the EPA pursuant to CERCLA. Sensient Colors moved to dismiss the United States’ complaint, which motion was denied by the Court in October 2007. Sensient Colors timely filed its answer and affirmative defenses to the United States’ complaint, as well as a third-party complaint against current and former owners and/or operators of the Site. The United States moved to strike Sensient Colors’ affirmative defenses. In an August 12, 2008 Opinion and Order, following briefs and oral argument, the Court partly granted and partly denied the United States’ motion, effectively preserving most of Sensient Colors’ affirmative defenses, either as originally pled or with changes outlined by the Court. Sensient Colors promptly filed an amended pleading incorporating the revised

affirmative defenses. On July 29, 2008, Sensient Colors filed a third-party complaint adding Kohnstamm Inc. (a Canadian affiliate of General Color Company) and its president Avtar Singh as defendants.

In late August 2008, in the course of reviewing documents produced by the EPA, Sensient Colors discovered an e-mail exchange between EPA officials that Sensient Colors believes supports many of the legal theories and affirmative defenses advanced by Sensient Colors in the litigation and undermines key United States cost recovery claims. By letter dated August 26, 2008, based on the above document and other evidence adduced in the case, Sensient Colors demanded that the United States dismiss its case with prejudice and reimburse Sensient Colors for attorneys’ fees and costs incurred. In response to the August 26, 2008 letter, the United States withdrew, without prejudice, its then-pending motion to limit the scope of review to EPA’s administrative record and told the Court that it would respond to Sensient’s letter by September 10, 2008. The United States then sought additional time for its review of Sensient Colors’ demand. In an October 3, 2008 Letter Order, the Court directed the United States to provide Sensient with notice of its decision with respect to the demand for dismissal by October 31, 2008. In a letter to Sensient Colors dated October 31, 2008, the United States declined to voluntarily dismiss the case but agreed, with certain conditions, not to oppose depositions of current and former EPA employees on the issues raised in Sensient Colors’ letter of August 26, 2008. The United States reserved its rights to seek limitations on discovery and to seek to limit review of EPA’s choice of response action to the administrative record.

Using the evidence that supports its demand for dismissal, Sensient Colors moved for leave to amend its responsive pleading to include a new affirmative defense, a counterclaim against the United States and the EPA, and third-party claims against certain EPA employees or agents. After briefing, the motion for leave to amend was argued before the magistrate judge on November 18, 2008. On February 13, 2009, the magistrate issued an opinion and order denying Sensient Colors’ motion for leave to amend. Sensient Colors appealed the magistrate’s decision to the district court judge. On July 22, 2009, the district court judge issued a decision affirming the magistrate’s opinion and order, largely on sovereign immunity grounds.

Sensient Colors also issued subpoenas or deposition notices to numerous current or former EPA officials. Motions were filed to block the depositions of former EPA Administrator Christine Todd Whitman, former EPA Regional Administrator Jane Kenny, and EPA On-Scene Coordinator David Rosoff. On January 28, 2009, the magistrate judge issued an opinion and order denying or delaying Sensient Color’s ability to conduct the foregoing depositions. Sensient Colors exercised its right to appeal the magistrate’s decision to the district court judge. On July 22, 2009, the district court judge issued a decision reversing the magistrate and ordering the depositions of Kenny and Rosoff to proceed.

On May 8, 2009, Sensient Colors filed a motion for summary judgment seeking dismissal with prejudice of the United States’ claims. That motion is fully briefed and awaits action by the district court judge.

Sensient Colors intends to vigorously defend its interests in the litigation. It is evaluating, among other things, the pursuit of additional PRPs and additional challenges to the EPA’s right to recover its claimed response costs. A portion of Sensient Colors’ legal defense costs is being paid by insurers with a reservation of coverage rights. Litigation to resolve coverage issues is pending.

Pleasant Gardens Realty Corp. v. H. Kohnstamm & Co., et al.

The owner of Pleasant Gardens (“Property”), an apartment complex adjacent to the General Color Superfund Site, filed a complaint in New Jersey state court in November 2003 against H. Kohnstamm & Co. (now Sensient Colors), the Company, General Color Company, and unknown defendants. Plaintiff seeks to hold defendants liable, in an unspecified amount, for damages related to the alleged contamination of the Property. Plaintiff voluntarily dismissed the Company without prejudice. Sensient Colors filed an answer denying liability and asserting affirmative defenses. Limited discovery has occurred. In November 2006, the Camden Redevelopment Agency (“Agency”) filed condemnation litigation against plaintiff (and other purported interested parties) to take the Property. Sensient Colors is not a party to the condemnation litigation. In advance of its filing, the Agency notified plaintiff that its appraiser had assessed the fair market value of the Property at $7.7 million and that its environmental consultant had estimated the costs for environmental cleanup, purportedly to meet requirements of the New Jersey Department of Environmental Protection (“DEP”), at $7.5 million. Sensient Colors and plaintiff have pursued a reduction in the scope and cost of the Agency’s proposed environmental cleanup in meetings with the DEP, the Agency and another party involved in the condemnation, the New Jersey Schools Construction Corporation (“NJSCC”). To the extent that there is a reduction in the condemnation value of the Property due to the Agency’s remediation of contamination for which Sensient Colors is allegedly responsible, such reduction may become a part of the damages claimed by plaintiff. In March 2007, plaintiff filed an amended complaint naming the Agency, the NJSCC and the DEP as

additional defendants in furtherance of this effort. In April 2007, Sensient Colors filed its answer to the amended complaint, including cross claims against these newly added parties. The Agency, the DEP and the New Jersey Schools Development Authority (“NJSDA”) (which replaced the NJSCC as a state agency effective August 7, 2007) each filed answers, cross-claims and counter-claims; Sensient Colors has responded to all three cross-claims. Document discovery was completed in July 2008, and expert and rebuttal expert reports have been exchanged. Depositions are on-going.

Sensient Colors advised the Court and the other parties in this litigation of the developments in the Superfund Claim as described above. Sensient Colors took supplemental depositions of several DEP officials and served subpoenas upon five current or former EPA officials. The United States, though not a party to the Pleasant Gardens case, initially sought to quash those subpoenas before the Pleasant Gardens court. On November 17, 2008, the United States removed the subpoenas and related proceedings to federal court. At an initial court conference on the removed proceedings on February 19, 2009, the federal magistrate judge asked for additional briefing on the issue of the government’s standing to seek to quash the state court subpoenas. Briefing on the issue of standing and on the merits of the motion to quash has been completed and the parties await a decision from the magistrate judge.

On January 8, 2009, the judge recused himself from the Pleasant Gardens case (as well as the related insurance coverage case) because of a conflict of interest and the Pleasant Gardens case was reassigned to another judge. In light of the recusal and reassignment, the new judge re-scheduled the trial to commence no earlier than June 1, 2009, and indicated that depending on how certain outstanding discovery issues are resolved, the trial may be deferred further. On April 20, 2009 the court further extended the pretrial schedule and set a trial date for October 5, 2009. On July 24, 2009, Sensient Colors filed a motion for summary judgment on the grounds that the DEP’s proposed remedy was arbitrary and capricious.

As of June 30, 2009, the liabilities related to environmental matters are estimated to be between $0.7 million and $29.0 million, excluding accrued interest and enforcement costs. As of June 30, 2009, the Company has accrued $1.0 million, which is all related to the environmental reserves established in connection with a 2001 acquisition. This accrual represents management’s best estimate of these liabilities; however, the actual liabilities may be above the levels reserved or estimated, in which case the Company would need to take charges or establish reserves in later periods. Also, the Company has not been able to make a reasonable estimate of the liabilities, if any, related to some of the environmental matters discussed above. The Company has not recorded any potential insurance recoveries related to these liabilities, as receipts are not yet assured. There can be no assurance that additional environmental matters will not arise in the future.

Commercial Litigation

The Company is involved in various claims and litigation arising in the normal course of business. In the judgment of management, which relies in part on information from Company counsel, the ultimate resolution of these actions will not materially affect the consolidated financial statements of the Company except as described above.


ITEM 2.		MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

			OVERVIEW

			Revenue for the second quarter of 2009 was $304.0 million compared to $332.8 million recorded in the prior year’s second quarter. For the six months ended June 30, 2009, revenue was $586.8 million compared to $640.2 million in the prior year’s first half. The impact of foreign exchange rates reduced consolidated revenue by 8.2% and 8.8% in the quarter and six months ended June 30, 2009, respectively. Revenue for the Flavors & Fragrances segment decreased 6.6% and 5.6% for the three and six months ended June 30, 2009, respectively, from the comparable periods last year. Color segment revenue decreased 12.7% and 13.9% for the second quarter and six months ended June 30, 2009, respectively, from the comparable periods last year. Corporate and Other revenue decreased 10.2% and 10.5% for the quarter and six months ended June 30, 2009, respectively, from the comparable periods last year. The impact of foreign exchange rates decreased quarterly revenue for the Flavors & Fragrances Group by 7.7%, the Color Group by 9.8% and Corporate and Other by 6.7%. The impact of foreign exchange rates decreased year-to-date revenue for the Flavors & Fragrances Group by 8.2%, the Color Group by 10.2% and Corporate and Other by 8.5%. Additional information on group results can be found in the Segment Information section.

			The gross profit margin increased 60 basis points to 31.2% for the quarter ended June 30, 2009, from 30.6% for the same period in 2008. For the six months ended June 30, 2009 and 2008, the gross profit margin was 30.9% and 30.8%, respectively. Higher selling prices more than offset the increased cost of raw materials and unfavorable product mix in both periods.

			Selling and administrative expenses as a percent of revenue were 16.9% and 17.1% in the quarters ended June 30, 2009 and 2008, respectively. For the six months ended June 30, 2009, selling and administrative expenses as a percent of revenue improved 60 basis points to 17.0%. Lower expense for performance based compensation and professional fees were partially offset by an increase in other employee related costs.

			Operating income was $43.3 million and $44.9 million for the quarters ended June 30, 2009 and 2008, respectively. Operating income was $81.6 million and $84.5 million for the six months ended June 30, 2009 and 2008, respectively. The impact of foreign exchange rates reduced operating income by 9.5% and 10.5% in the quarter and six months ended June 30, 2009, respectively. The change in operating income was due to the revenue, margin and expense changes discussed above. Additional information can be found in the Segment Information section.

			Interest expense for the second quarter of 2009 was $5.7 million, a decrease of 33.4% from the prior year’s quarter. Interest expense was $12.9 million and $17.1 million for the six months ended June 30, 2009 and 2008, respectively. The decrease was the result of lower interest rates combined with lower average debt balances.

			The effective income tax rates were 31.3% and 30.0% for the quarters ended June 30, 2009 and 2008, respectively. The effective income tax rates were 31.0% and 31.6% for the six months ended June 30, 2009 and 2008, respectively. The effective tax rates in both 2009 and 2008 were reduced by changes in estimates associated with the finalization of prior year foreign tax items. The Company expects the effective tax rate for the remainder of 2009 to be 32.5%, excluding the income tax expense or benefit related to discrete items, which will be reported separately in the quarter in which they occur.

			SEGMENT INFORMATION

			Beginning in the first quarter of 2009, the Company’s operations in Japan, previously reported in Flavors & Fragrances Group, are reported with the Asia Pacific Group. The Asia Pacific Group is included in the Corporate and Other segment. Results for 2008 have been restated to reflect this change.

			Flavors & Fragrances –

			Revenue for the Flavors & Fragrances segment in the second quarters of 2009 and 2008 was $197.6 million and $211.5 million, respectively. The decrease was primarily due to the unfavorable impact of foreign exchange rates ($16.3 million) and lower revenue in Europe ($4.3 million). These items were partially offset by higher revenue in North America ($5.4 million) and Latin America ($1.3 million). The lower revenue in Europe was primarily due to lower volumes partially offset by higher selling prices. The increased revenue in North America

and Latin America was primarily related to higher selling prices. Increased volumes of dehydrated flavors and dairy flavors were offset by decreased volumes of other products.

			For the quarter ended June 30, 2009, operating income increased 1.6% to $34.2 million from $33.7 million last year. The increase was primarily attributable to higher profit in North America ($2.7 million) and Latin America ($0.4 million). The unfavorable impact of exchange rates decreased operating income by approximately $2.2 million, or 6.7%. The increased operating income in the above markets was primarily due to improved pricing partially offset by higher raw material and unfavorable product mix. Operating income as a percent of revenue was 17.3%, an increase of 140 basis points from the comparable quarter last year, primarily due to the reasons provided above.

			For the six months ended June 30, 2009 and 2008, revenue for the Flavors & Fragrances segment was $382.1 million and $404.7 million, respectively. The decrease in revenue was primarily due to the unfavorable impact of exchange rates ($33.2 million) and lower revenue in Europe ($2.3 million). These items were partially offset by higher revenue in North America ($10.1 million) and Latin America ($2.8 million). The lower revenue in Europe was primarily due to lower volumes partially offset by higher selling prices. The increased revenue in North America and Latin America was primarily due to higher selling prices. Increased volumes of dehydrated flavors and dairy flavors were offset by decreased volumes of other products.

			Operating income was $64.2 million and $62.5 million for the six months ended June 30, 2009 and 2008, respectively. The increase in operating income was primarily related to North America ($4.8 million) and Latin America ($1.2 million). The unfavorable impact of exchange rates decreased operating profit by $4.6 million, or 7.3%. The increases in North America and Latin America were primarily due to improved pricing partially offset by higher raw material costs and unfavorable product mix.

			Color –

			Revenue for the Color segment for the second quarter of 2009 was $93.7 million compared to $107.3 million reported in the prior year’s second quarter. The decrease in revenue was primarily due to the unfavorable effect of foreign exchange rates ($10.6 million) and lower sales of non-food colors ($5.3 million). Sales of food and beverage colors were up $2.2 million in the quarter, primarily due to higher selling prices. The lower sales of non-food colors were primarily due to lower volumes as a result of current economic conditions.

			Operating income for the quarter ended June 30, 2009, was $15.0 million versus $19.3 million in the comparable period last year. The decrease was primarily due to the unfavorable impact of foreign exchange rates ($1.9 million) and lower profit in non-food colors ($2.4 million). The lower profit in non-food colors was primarily driven by lower volumes combined with increased raw material costs. The Group expects margins will improve over the remainder of 2009 as a result of increased selling prices and reduced raw material costs. Operating income as a percent of revenue was 16.0% compared to 18.0% in the prior year’s quarter.

			The Color Group revenue was $180.8 million and $210.1 million for the six months ended June 30, 2009 and 2008, respectively. The decrease was primarily due to the unfavorable impact of foreign exchange rates ($21.5 million) and lower sales of non-food colors ($10.3 million). Sales of food and beverage colors were up $2.5 million for the six months ended June 30, 2009, primarily related to higher selling prices. The lower sales of non-food colors were primarily due to lower volumes as a result of current economic conditions.

			Operating income was $28.7 million and $37.8 million for the six months ended June 30, 2009 and 2008, respectively. The decrease was primarily due to the unfavorable impact of foreign exchange rates ($3.9 million), lower profit in non-food colors ($3.4 million) and lower profit on sales of food and beverage colors ($1.7 million). The lower profit in non-food colors was primarily due to reduced volumes and higher raw material costs. The lower profit from sales of food and beverage colors was primarily due to higher raw material costs and lower volumes partially offset by higher selling prices. Operating income as a percent of revenue was 15.9% compared to 18.0% in the prior year’s first six months.

			LIQUIDITY AND FINANCIAL CONDITION

			The Company’s ratio of debt to total capital improved to 34.7% as of June 30, 2009, from 37.0% as of December 31, 2008. The improvement was due to higher equity and lower outstanding debt balances.

			Net cash provided by operating activities was $55.4 million for the six months ended June 30, 2009, compared to $38.5 million for the comparable period last year. The increase in cash provided by operating activities was primarily due to less cash required to fund working capital increases in the first six months of 2009 compared to the same period in 2008.

			Net cash used in investing activities was $20.0 million and $21.4 million for the six months ended June 30, 2009 and 2008, respectively. Capital expenditures were $19.6 million and $22.9 million for the year-to-date periods ended June 30, 2009 and 2008, respectively.

			Net cash used in financing activities was $26.5 million in the first six months of 2009 and $18.0 million in the comparable period of 2008. In the first six months of 2009, net repayments on debt were $12.6 million compared to $12.5 million for the first six months of 2008. For purposes of the cash flow statement, net changes in debt exclude the impact of foreign exchange rates. Dividends of $18.5 million and $17.2 million were paid during the six months ended June 30, 2009 and 2008, respectively, reflecting the Company’s higher dividend of $0.38 per share in the first half of 2009 compared to $0.36 per share in the same period in 2008. In the first six months of 2009 and 2008, the Company’s cash provided from operations was able to fund capital expenditures and pay dividends.

			The Company’s financial position remains strong. In the first quarter of 2009, the Company borrowed under its term loan that was completed in October 2008. The proceeds from this term loan were used to retire maturing debt. The Company expects that its cash flows from operations and existing lines of credit can be used to meet future cash requirements for operations, capital expenditures and dividend payments to shareholders.

			CONTRACTUAL OBLIGATIONS

			There have been no material changes in the Company’s contractual obligations during the quarter ended June 30, 2009. For additional information about contractual obligations, refer to page 23 of the Company’s 2008 Annual Report, portions of which were filed as Exhibit 13.1 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2008.

			OFF-BALANCE SHEET ARRANGEMENTS

			The Company had no off-balance sheet arrangements as of June 30, 2009.

			CRITICAL ACCOUNTING POLICIES

			There have been no material changes in the Company’s critical accounting policies during the quarter ended June 30, 2009. For additional information about critical accounting policies, refer to pages 21 and 22 of the Company’s 2008 Annual Report, portions of which were filed as Exhibit 13.1 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2008.


ITEM 3.		QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes in the Company’s exposure to market risk during the quarter ended June 30, 2009. For additional information about market risk, refer to pages 22 and 23 of the Company’s 2008 Annual Report, portions of which were filed as Exhibit 13.1 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2008.


ITEM 4.		CONTROLS AND PROCEDURES

			Evaluation of Disclosure Controls and Procedures: The Company carried out an evaluation, under the supervision and with the participation of management, including the Company’s Chairman and Chief Executive Officer and its Senior Vice President and Chief Financial Officer, of the effectiveness, as of the end of the period covered by this report, of the design and operation of the disclosure controls and procedures, as defined in Rule 13a-15(e) of the Exchange Act of 1934. Based upon that evaluation, the Company’s Chairman and Chief Executive Officer and its Senior Vice President and Chief Financial Officer have concluded that the disclosure controls and procedures were effective as of the end of the period covered by this report.

			Change in Internal Control Over Financial Reporting: There has been no change in the Company’s internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) during the Company’s most recent quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

			FORWARD-LOOKING STATEMENTS

			This document contains forward-looking statements that reflect management’s current assumptions and estimates of future economic circumstances, industry conditions, Company performance and financial results. Forward-looking statements include statements in the future tense, statements referring to any period after June 30, 2009, and statements including the terms “expect,” “believe,” “anticipate” and other similar terms that express expectations as to future events or conditions. The Private Securities Litigation Reform Act of 1995 provides a safe harbor for such forward-looking statements. Such forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors that could cause actual events to differ materially from those expressed in those statements. A variety of factors could cause the Company’s actual results and experience to differ materially from the anticipated results. These factors and assumptions include the pace and nature of new product introductions by the Company’s customers; the Company’s ability to successfully implement its growth strategies; the outcome of the Company’s various productivity-improvement and cost-reduction efforts; changes in costs of raw materials and energy; industry and economic factors related to the Company’s domestic and international business; competition from other suppliers of color, flavors and fragrances; growth or contraction in markets for products in which the Company competes; terminations and other changes in customer relationships; industry and customer acceptance of price increases; currency exchange rate fluctuations; cost and availability of credit; results of litigation, environmental investigations or other proceedings; complications as a result of existing or future information technology system applications and hardware; the matters discussed under Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2008; and the matters discussed above under Item 2 including the critical accounting policies described therein. The Company does not undertake to publicly update or revise its forward-looking statements even if experience or future changes make it clear that any projected results expressed or implied therein will not be realized.

PART II. OTHER INFORMATION


ITEM 1.		LEGAL PROCEEDINGS

Superfund Claim

the magistrate judge issued an opinion and order denying or delaying Sensient Color’s ability to conduct the foregoing depositions. Sensient Colors exercised its right to appeal the magistrate’s decision to the district court judge. On July 22, 2009, the district court judge issued a decision reversing the magistrate and ordering the depositions of Kenny and Rosoff to proceed.

Pleasant Gardens Realty Corp. v. H. Kohnstamm & Co., et al.

On January 8, 2009, the judge recused himself from the Pleasant Gardens case (as well as the related insurance coverage case) because of a conflict of interest and the Pleasant Gardens case was reassigned to another judge. In light of the recusal and reassignment, the new judge re-scheduled the trial to commence no earlier than June 1, 2009, and, indicated that depending on how certain outstanding discovery issues are resolved, the trial may be deferred further. On April 20, 2009 the court further extended the pretrial schedule and set a trial date for October 5, 2009. On July 24, 2009, Sensient Colors filed a motion for summary judgment on the grounds that the DEP’s proposed remedy was arbitrary and capricious.


ITEM 1A.		RISK FACTORS

See “Risk Factors” in Item 1A of the Company’s annual report on Form 10-K for the year ended December 31, 2008.


ITEM 4.		SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

The information responsive to this item was provided in, and is incorporated by reference from, Item 4 of the Company’s quarterly report on Form 10-Q for the quarter ended March 31, 2009, filed on May 8, 2009.


ITEM 6.		EXHIBITS

See Exhibit Index following this report.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	SENSIENT TECHNOLOGIES CORPORATION
Date: August 7, 2009	By:	/s/ John L. Hammond
		John L. Hammond, Senior Vice President,
		General Counsel & Secretary



Date: August 7, 2009	By:	/s/ Richard F. Hobbs
		Richard F. Hobbs, Senior Vice
		President & Chief Financial Officer

SENSIENT TECHNOLOGIES CORPORATION

EXHIBIT INDEX
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED JUNE 30, 2009


Exhibit	Description	Incorporated by Reference From	Filed Herewith

10.1	Separation Agreement with Former Officer		X

31	Certifications of the Company’s		X
	Chairman & Chief Executive Officer and
	Senior Vice President & Chief Financial
	Officer pursuant to Rule 13a-14(a) of
	the Exchange Act

32	Certifications of the Company’s		X
	Chairman & Chief Executive Officer and
	Senior Vice President & Chief Financial
	Officer pursuant to 18 United States
	Code § 1350

EX-10.1 2 c52889exv10w1.htm EX-10.1 EX-10.1

EXHIBIT 10.1

SEPARATION AGREEMENT AND RELEASE

AGREEMENT made as of the 23rd day of April 2009, by Robert J. Edmonds (“Executive”) and Sensient Technologies Corporation (the “Company”).

WHEREAS Executive’s employment as President and Chief Operating Officer of the Company will terminate on April 23, 2009 (the “Separation Date”); and

WHEREAS Executive and the Company desire to resolve all aspects of the employment relationship between them and to provide in writing for the payment of certain compensation and benefits to Executive.

NOW, THEREFORE, IN CONSIDERATION OF the mutual promises hereinafter set forth, the sufficiency of which is hereby acknowledged, the parties agree as follows:

1. Effective Date. This Agreement will become effective only upon expiration of the revocation period described in Section 18 hereof (the “Effective Date”).

2. Compensation and Benefits. Subject to Executive’s compliance with the terms and conditions hereof, the Company will provide the following compensation and benefits to Executive:

2.1 Compensation. For the twelve (12) month period beginning on April 24, 2009 (the “Compensation Period”), the Company will make payments to Executive at the semi-monthly rate of Fifteen Thousand Dollars ($15,000.00). Payments will be made in accordance with the Company’s standard payroll practices.

2.2 Management Incentive Plan. Executive will not be eligible to participate in the fiscal 2009 Management Incentive Plan.

2.3 Benefits. During the Compensation Period, Executive and his eligible dependents may elect to receive medical, dental and vision coverage at the employee rate, with the balance of the eighteen-month period after the Separation Date at the non-employee rate, in accordance with the provisions of the Consolidated Omnibus Budget Reconciliation Act (“COBRA”). Except as otherwise expressly provided in this Agreement or required by applicable law or regulation, Executive’s participation in all

Company sponsored or maintained benefit programs terminated on the Separation Date.

2.4 ESOP/Savings Plan. Executive will not be eligible to participate in the Company’s contributions to the Sensient Technologies Corporation Retirement Employee Stock Ownership Plan (“ESOP”) or the Sensient Technologies Corporation Savings Plan (“Savings Plan”) after the Separation Date.

2.5 Automobile. The Company will transfer to Executive clear title to the automobile previously leased by the Company and provided to him for his use, if so requested by Executive and upon payment by Executive to the Company of an amount equal to the automobile’s fair market value as determined by the Company. If Executive does not wish to purchase the automobile, he will return it to the Company on or before April 23, 2009.

2.6 Stock Options and Restricted Stock. Executive will retain his vested stock options and be eligible to exercise such options in accordance with the provisions of the applicable stock option plan. Nothing in this Agreement will be construed to entitle Executive to any further vesting or grants of stock options or restricted stock after the Separation Date.

2.7 Outplacement. Executive will be eligible to receive outplacement services provided by Lee Hecht Harrison for a period not to exceed three (3) months from the Effective Date.

2.8 Vacation. On the Effective Date, the Company will pay the Executive for five (5) days of vacation pay. Executive will not be eligible for any vacation benefit after the Separation Date.

3. Deductions. The Company will deduct from payments made under this Agreement any federal, state or local withholdings or other taxes or charges which the Company is from time to time required to deduct under applicable law, and all amounts payable to Executive under this Agreement are stated herein before any such deduction(s).

4. Releases.

Release by Executive. In consideration of the Company’s agreement to provide Executive the compensation and benefits described in subsections 2.1 through 2.8 above and the release set forth in section 4 below, Executive, an adult individual, for himself, his heirs, personal representatives, successors and assigns, does hereby remise, release and forever discharge the Company and all of its past, present and future officers, directors, agents, employees, shareholders, partners, employee benefit plans, insurers, attorneys, divisions, parent corporations, subsidiary corporations, affiliated corporations, successors, assigns and all persons acting by, through, under or in concert with any of them (such entities and individuals are referred to hereinafter collectively as the “Released Parties”) of and from any and all manner of action or actions, cause or causes of action, suits, debts, covenants, contracts, agreements, judgments, executions, claims, demands and expenses (including attorneys’ fees and costs) whatsoever in law or equity, whether known or unknown, which he has had, now has or may have against the Released Parties, or any of them, for or by reason of any transaction, matter, event, cause or thing whatsoever occurring prior to or on the date of this Agreement, whether based on tort, express or implied contract, or any federal, state or local law, statute or regulation, specifically including but not limited to (i) any and all claims arising out of or related to any employment, change in control or other agreement (whether oral or written) between Executive and the Company; and (ii) any and all claims arising out of or related to Executive’s employment with the Company, including but not limited to claims under the Wisconsin Family and Medical Leave Act, the Federal Family and Medical Leave Act, the Wisconsin Fair Employment Act, Title VII of the Civil Rights Act of 1964, as amended, the Age Discrimination in Employment Act of 1967, as amended, the Americans With Disabilities Act, the Civil Rights Act of 1991, and the Employee Retirement Income Security Act, as amended. Nothing in the waiver or release set forth in this

subsection will be construed to constitute any waiver or release by Executive of any rights or claims under this Agreement.

Release by the Company. Subject to the limitations stated herein, the Company does hereby remise, release and forever discharge Executive of and from any and all manner of action or actions, cause or causes of action, suits, debts, covenants, contracts, agreements, judgments, executions, claims, demands and expenses (including attorneys’ fees and costs) whatsoever in law or equity, whether known or unknown, which it has had, now has or may have against him, for or by reason of any transaction, matter, event, cause or thing whatsoever occurring prior to or on the date of this Agreement, whether based on tort, express or implied contract, or any federal, state or local law, statute or regulation; provided, however, that this subsection 4.2 will not constitute a release of Executive by the Company for any liability (as defined in Wis. Stat. § 180.0850 (4)) incurred because Executive breached or failed to perform a duty he owed to the Company and the breach or failure constitutes any of the circumstances described in Wis. Stat. § 180.0851 (2)(a). Nothing in the waiver or release set forth in this subsection will be construed to constitute any waiver or release by the Company of any rights or claims under this Agreement.

5. Entire Agreement. This Agreement supersedes all other agreements or understandings (whether oral or written) between Executive and the Company and constitutes the entire agreement of the parties. Executive acknowledges and agrees that the compensation and benefits stated above constitute the sole liability of the Company to him and that he will have no right to receive any other compensation or benefits of any kind except as expressly set forth in this Agreement.

6. Agreement Not to Sue. Executive agrees not to initiate or cause to be initiated any federal, state or local lawsuit or to commence any federal, state or local administrative action, investigation or proceeding of any kind against the Released Parties, or any of them, based on any transaction, matter, cause or thing occurring prior to or on the date of this Agreement.

7. Prohibited Activities. To induce the Company to enter into this Agreement and to protect the Company from unfair competition, Executive (a) represents and warrants that he did not engage in any Prohibited Activities prior to the Effective Date, and (b) covenants that he will not engage in any Prohibited Activities in the future. If Executive engages in Prohibited Activities at any time, then notwithstanding any other terms of this Agreement, the Company’s duty to provide the compensation and benefits identified in Section 2 above will automatically terminate and Executive agrees that he will repay to the Company as liquidated damages an amount equal to all of the compensation provided to Executive by the Company pursuant to Section 2.1 between the date of this Agreement and date of such violation, the parties agreeing that such measure of liquidated damages is reasonable and appropriate and the amount of the damages the Company would experience as a result of Executive’s breach of such obligations would not otherwise be readily calculable. The Company will provide written notice to Executive of such violation. Such remedy will be in addition to any other remedy to which the Company may be entitled. For the purpose hereof, “Prohibited Activities” means any (i) violation of the provisions of Section 8 hereof; (ii) inducement or attempted inducement of any employee, officer, director, sales representative, consultant or other personnel of the Company, to terminate his or her employment or breach his or her agreements with the Company; (iii) Disparagement, as defined in Section 19 hereof; or (iv) Litigation Assistance, as defined in Section 22 hereof.

8. Confidential Information. The parties agree that the Company’s customer lists, long-range plans, budgets, acquisition strategies, procedures, operations, methods of operation, pricing, financial performance, techniques, formulas, marketing plans, contemplated product improvements or new product developments, computer software and programs, proprietary information and other data relating to aspects of its business (collectively, “Confidential Information”) are established and protected at great expense and provide the Company with substantial competitive advantage in conducting its business. The parties further agree that by virtue of Executive’s employment with the Company, he has had and has access to, and is entrusted with Confidential Information, and that the Company would suffer great loss and injury if he would disclose this information or use it to compete with the Company. Therefore, Executive agrees that he

will not, directly or indirectly, either individually or as an employee, officer, agent, partner, shareholder, owner, trustee, beneficiary, co-venturer, distributor, consultant or in any other capacity, use or disclose, or cause to be used or disclosed, any Confidential Information, without the Company’s consent. The restrictions set forth in this Section will apply so long as the Confidential Information has not by legitimate means become generally known and in the public domain.

9. Company Property. Executive warrants that on or before the Separation Date, he returned to the Company all property of the Company then in his possession, including without limitation Company credit cards, keys, security access cards, and all records, drawings, manuals, reports, files, memoranda, correspondence, financial data, vendor and customer lists, papers and documents kept or made by Executive in connection with his employment as an employee or officer of the Company, as well as any copies thereof, in whatsoever form they may.

10. No Admission of Liability. It is understood and agreed that this Agreement is intended to provide for the amicable separation of Executive from employment with the Company and that neither this Agreement nor the furnishing of the consideration provided for in this Agreement will be deemed or construed at any time or for any purpose as an admission of liability by the Released Parties. Liability for any and all claims for relief is expressly denied by the Released Parties.

11. Nondisclosure. Executive agrees not to disclose the terms of this Agreement to any person or entity, other than his spouse, attorney or accountant, without the written consent of the Company.

12. Acknowledgment. Executive hereby acknowledges and agrees that the compensation and benefits provided for in this Agreement, including but not limited to the compensation and benefits described in subsections 2.1 through 2.8 above, are greater than those to which he is entitled by any contract, employment policy or otherwise. Executive further acknowledges that he was advised by the Company to consult with an attorney prior to executing this Agreement, and he was also advised by the Company that he had at least twenty-one (21) days within which to consider this Agreement.

13. Governing Law and Forum. This Agreement will be governed by and construed under the laws of the State of Wisconsin without regard to its conflict-of-laws

principles. Executive submits to the exclusive jurisdiction and venue of the state courts located in Milwaukee County, Wisconsin and waives any objection to such jurisdiction or venue, including any objection that Milwaukee County is an inconvenient forum.

14. Notices. Any notice or other communication under this Agreement will be given in writing and sent by certified or registered mail, postage prepaid, or by FedEx or other overnight delivery service for next-day delivery, to the following addresses, or such other addresses as the parties shall provide in accordance with this Section 14:

	(a)		If to Executive, then to:

			Robert J. Edmonds 1740 W. Green Brook Road River Hills, WI 53217

	(b)		If to the Company, then to:

			Mr. Douglas S. Pepper Vice President – Administration Sensient Technologies Corporation 777 East Wisconsin Avenue Milwaukee, WI 53202-5304

15. Severability. The provisions of this Agreement are severable. If any provision is adjudged void, unenforceable or contrary to law, it is the intention of the parties that such provision shall not thereby be terminated, but shall be deemed amended to the extent required to render it valid and enforceable, such amendment to apply only in the jurisdiction of the court which has made such adjudication. The balance of the Agreement nonetheless will remain in full force and effect; provided, however, that if Section 7 of this Agreement is adjudged void, unenforceable or contrary to law as a result of any action initiated by or on behalf of Executive, the Company will have the option either to terminate the Agreement in its entirety, in which case the Company will be entitled to the return of all payments and benefits previously paid or provided hereunder, or to require that the balance of the Agreement remain in full force and effect.

16. Voluntary Agreement. Executive acknowledges that he has read this Agreement, that he is fully aware of its contents and its legal effect, that he understands all of its terms including the release contained in Section 4, that the preceding paragraphs recite the sole consideration for this Agreement, that all agreements and understandings between the parties are embodied and expressed herein, and that he has been afforded

ample opportunity to consider this Agreement and enters into this Agreement freely, knowingly and without coercion and not in reliance upon any representations or promises made by the Company or its counsel or the Released Parties, other than those contained herein.

17. Binding Agreement. This Agreement will be binding upon and inure to the benefit of Executive’s personal or legal representatives and heirs and will be binding upon and insure to the benefit of the Company’s successors and assigns.

18. Right to Revoke. For a period of seven (7) days following the execution of this Agreement, Executive may revoke this Agreement, and the Agreement will not become effective or enforceable until this seven (7) day revocation period has expired.

19. No Disparagement. Executive represents and warrants that he has not heretofore made any comments to the media or to others in any form, including all internet message postings and all other written and oral media, that are disparaging, derogatory or detrimental to the good name or business reputation of any of the Released Parties (“Disparagement”).

20. Post-Employment References. Executive will direct prospective employers seeking information concerning his employment with the Company to send their inquiries, in writing, to the attention of Mr. Douglas S. Pepper, Vice President — Administration. The Company will respond only to written inquiries and, in accordance with its policy, will limit its response to Executive’s dates of employment, last position held and final rate of pay. If the Company’s response to any such inquiry is in writing, a copy of such response will be provided to Executive.

21. No Reemployment or Reinstatement. Executive waives any right to reinstatement to employment or re-employment with the Company. Executive acknowledges and agrees that neither the Company nor any of the Released Parties has any contractual or other obligation to rehire, reemploy or recall him to employment or to otherwise accept application from or consider him for employment in the future and Executive agrees that he will not apply for employment with the Company or any division, subsidiary and affiliated corporations of the Company.

22. No Litigation Assistance. Executive represents and warrants that he has not provided assistance to any person in connection with any claim, lawsuit, administrative

charge or other proceeding brought against any of the Released Parties (“Litigation Assistance”) and that he will not do so, unless compelled by court process. Executive represents and warrants that he is not aware of any such claim or action that has been filed or is going to be filed against the Company by any present or former employee of the Company or any other party. Executive further agrees that in the event he is served with any subpoena or other legal process that may require him to take any action prohibited by Sections 7, 8 or 11 or this Section 22, Executive will within forty-eight (48) hours give written notice of said fact to the Company, with a copy of the subpoena or other legal process, and will cooperate with the Company in any lawful effort it makes to block or limit the enforceability or scope of such subpoena or other process; provided, that notice under this Section 22 may be given by facsimile with a confirming copy by overnight mail.

23. Headings. The headings herein are for reference purposes only and will not affect in any way the meaning and interpretation of this Agreement.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first set forth above.

Sensient Technologies Corporation

EX-31 3 c52889exv31.htm EX-31 EX-31

EXHIBIT 31

CERTIFICATION
Pursuant to Rule 13a-14(a) of the Exchange Act

I, Kenneth P. Manning, certify that:

I have reviewed this quarterly report on Form 10-Q of Sensient Technologies Corporation;

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

	a)		designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

	b)		designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

	c)		evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

	d)		disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

	a)		all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

	b)		any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 7, 2009


/s/ Kenneth P. Manning Kenneth P. Manning, Chairman & Chief Executive Officer

EXHIBIT 31

CERTIFICATION
Pursuant to Rule 13a-14(a) of the Exchange Act

I, Richard F. Hobbs, certify that:

I have reviewed this quarterly report on Form 10-Q of Sensient Technologies Corporation;

	a)		designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

	b)		designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

	c)		evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

	d)		disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

	a)		all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

	b)		any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 7, 2009


/s/ Richard F. Hobbs Richard F. Hobbs, Senior Vice President & Chief Financial Officer

EX-32 4 c52889exv32.htm EX-32 EX-32

EXHIBIT 32

CERTIFICATION
Pursuant to 18 United States Code § 1350

The undersigned hereby certifies that the Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2009 of Sensient Technologies Corporation (the “Company”) filed with the Securities and Exchange Commission on or about the date hereof fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in such report fairly presents, in all material respects, the financial condition and results of operations of the Company.

A signed original of this written statement required by Section 906 has been provided to Sensient Technologies Corporation and will be retained by Sensient Technologies Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

EXHIBIT 32

CERTIFICATION
Pursuant to 18 United States Code § 1350

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Douglas S. Pepper
Vice President – Administration

Robert J. Edmonds