EX-99 2 c92321exv99.htm PRESS RELEASE exv99
 

Sensient Technologies Corporation
Earnings Release — Year ended December 31, 2004
February 15, 2005 		  Page 1

FOR IMMEDIATE RELEASE

     
Contact:
  Dick Hobbs
  (414) 347-3836

Sensient Technologies Corporation
Reports Earnings for the Year Ended December 31, 2004

Annual Revenue Exceeds $1 Billion for First Time in Company History
Record Cash Flow of Over $125 Million

     MILWAUKEE—February 15, 2005 — Sensient Technologies Corporation (NYSE: SXT) announced today that revenue increased 6.1% to $1.047 billion for the year ended December 31, 2004, from $987.2 million reported for 2003. Diluted earnings per share for 2004 equaled $1.58. Diluted earnings per share in the prior year were $1.73 and included a special charge of $6.5 million ($4.7 million, or 10 cents, after tax) and a one-time benefit of $13.3 million ($8.2 million, or 17 cents, after tax) related to the elimination of the subsidy for certain post-retirement programs. Cash flows from operating activities in 2004 reached a record level of $125.7 million.

     Revenue for the fourth quarter ended December 31, 2004, increased 12.0% to $272.3 million, up from $243.1 million for the same period in 2003. Diluted earnings per share for the fourth quarter 2004 increased 2.5% to 41 cents compared to 40 cents for the prior year’s fourth quarter. Fourth quarter 2003 results included a special charge and a one-time benefit as described above. The fourth quarter results for 2003 and 2004 included tax benefits of approximately five cents per share for the settlement of prior years’ tax liabilities, the implementation of tax planning strategies and other adjustments. In addition, the fourth quarter of 2004 included a $3.0 million ($1.9 million, or four cents, after tax) charge related to the divestiture of a small flavor product line.

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Sensient Technologies Corporation
Earnings Release — Year ended December 31, 2004
February 15, 2005 		  Page 2

     “In 2004, we achieved record revenue exceeding $1 billion and record cash flow,” said Kenneth P. Manning, Chairman, President and CEO of Sensient Technologies Corporation.

     Sensient also reported today that its independent auditor, Deloitte & Touche, has identified control deficiencies that will prevent the auditor from issuing an unqualified report on the Company’s internal controls over financial reporting as of December 31, 2004. The deficiencies identified by Deloitte & Touche, which relate to documentation in the area of income taxes and in the accounting for a single receivable, did not result in any errors in the Company’s 2004 financial statements, and are not expected to prevent Deloitte & Touche from providing an unqualified opinion on Sensient’s 2004 financial statements.

     The items in question were identified by the Company’s internal control activities and the Company believes it has addressed the documentation questions identified by Deloitte & Touche. Sensient’s management is in the process of finalizing its evaluation of internal controls over financial reporting prior to the filing of its Form 10-K for the year ended December 31, 2004.

BUSINESS REVIEW

     Flavors & Fragrances Group revenue rose 5.7% to $628.8 million for the year ended December 31, 2004, compared to $594.7 million in the prior year. Full year operating income was $81.3 million compared to $83.8 million in 2003. Revenue for the fourth quarter of 2004 was up 6.2% to $160.9 million. Fourth quarter operating profit was $17.5 million compared to $19.9 million in the same period in the prior year.

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Sensient Technologies Corporation
Earnings Release — Year ended December 31, 2004
February 15, 2005 		  Page 3

     Group revenue in 2004 benefited from favorable foreign exchange rates and growth in sales of traditional flavors in the North American market. Operating income was favorably impacted by foreign exchange rates and higher profitability from sales of traditional flavors in Europe and North America. The write-off of a receivable related to a previously divested product line reduced operating income in the fourth quarter of 2004 by $3.0 million.

     Color Group revenue increased 6.4% to $383.8 million for the year ended December 31, 2004, compared to $360.7 million for 2003. Operating income for 2004 was $68.0 million versus $71.6 million in the prior year. For the fourth quarter 2004, Color Group revenue increased 23.6% to $101.7 million. Quarterly operating profit was $17.6 million, up from $12.2 million in the prior year’s fourth quarter.

     Favorable foreign exchange rates and continued growth in the sale of cosmetic and pharmaceutical colors boosted annual Color Group revenue. Sales of North American food and beverage colors were lower during 2004, but showed improvement in the second half of the year. Results for the fourth quarter also reflect higher sales and profits from inkjet inks, primarily related to the winding up of a supply agreement with an original equipment manufacturer.

2005 OUTLOOK

For 2005, Sensient expects diluted earnings per share to be $1.65.

     “We are on track to achieve our cash flow and debt reduction objectives,” said Mr. Manning. “We expect our businesses to continue to strengthen in 2005.”

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Sensient Technologies Corporation
Earnings Release — Year ended December 31, 2004
February 15, 2005 		  Page 4

CONFERENCE CALL

     The Company will host a conference call to discuss its 2004 financial results at 9:00 a.m. Central Standard Time (CST) on Tuesday, February 15, 2005. To make a reservation for the conference call, please contact InterCall Teleconferencing at (706) 645-6973 and refer to the Sensient Technologies Corporation conference call.

     A replay will be available beginning at 1:00 p.m. CST on February 15, 2005, through midnight on February 22, 2005, by calling (706) 645-9291 and referring to passcode 3924818. A transcript of the call will also be posted on the Company’s web site at www.sensient-tech.com after the call concludes.

     This release contains forward-looking statements (as that term is defined in the Private Securities Litigation Reform Act of 1995) that reflect management’s current assumptions and estimates of future economic circumstances, industry conditions, company performance and financial results. A variety of factors could cause the company’s actual results and experience to differ materially from the anticipated results, including, but not limited to the factors noted in this press release and in the Management’s Discussion and Analysis in our most recently filed annual report on Form 10-K for the year ended December 31, 2003 and quarterly report on Form 10-Q for the quarter ended September 30, 2004. The forward-looking statements in this press release speak only as to the date of this release. Sensient Technologies Corporation expressly disclaims any obligation or undertaking to release publicly any updates or revisions to such statements to reflect any change in its expectations upon which such statements are based.

ABOUT SENSIENT TECHNOLOGIES

     Sensient Technologies Corporation is a leading global manufacturer and marketer of colors, flavors and fragrances. Sensient employs advanced technologies at facilities around the world to develop specialty food and beverage systems, cosmetic and pharmaceutical systems, inkjet and specialty inks, display imaging chemicals, and other specialty chemicals. The company’s customers include major international manufacturers representing some of the world’s best-known brands. Sensient is headquartered in Milwaukee, Wisconsin.

     www.sensient-tech.com

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Page 5

Sensient Technologies Corporation
(In thousands, except percentages and per share amounts)

Consolidated Statements of Earnings

                                                 
    Three Months Ended December 31,     Twelve Months Ended December 31,  
    2004     2003     % Change     2004     2003     % Change  
Revenue
   $ 272,314     $ 243,061       12.0     $ 1,047,133     $ 987,209       6.1  
 
                                                
Cost of products sold
     192,101       172,684       11.2       734,596       677,414       8.4  
Selling and administrative expenses
     49,946       34,166       46.2       183,381       165,835       10.6  
Special charges
     —       6,476               —       6,476          
 
                                        
 
                                                
Operating income
     30,267       29,735       1.8       129,156       137,484       (6.1 )
Interest expense
     8,291       6,681               31,265       29,140          
 
                                        
 
                                                
Earnings before income taxes
     21,976       23,054       (4.7 )     97,891       108,344       (9.6 )
Income taxes
     2,859       4,420               23,973       26,912          
 
                                        
 
                                                
Net earnings
   $ 19,117     $ 18,634       2.6     $ 73,918     $ 81,432       (9.2 )
 
                                        
Earnings per share:
                                                
Basic
   $ 0.41     $ 0.40       2.5     $ 1.59     $ 1.74       (8.6 )
 
                                        
 
                                                
Diluted
   $ 0.41     $ 0.40       2.5     $ 1.58     $ 1.73       (8.7 )
 
                                        
 
                                                
Average common shares outstanding:
                                                
Basic
     46,675       46,509       0.4       46,562       46,741       (0.4 )
 
                                        
 
                                                
Diluted
     47,094       46,733       0.8       46,877       47,041       (0.3 )
 
                                        
                                                 
Results by Segment   Three Months Ended December 31,     Twelve Months Ended December 31,  
    2004     2003     % Change     2004     2003     % Change  
Revenue
                                                
 
                                                
Flavors & Fragrances
   $ 160,910     $ 151,474       6.2     $ 628,791     $ 594,674       5.7  
Color
     101,696       82,291       23.6       383,798       360,677       6.4  
Corporate & Other
     19,427       17,484       11.1       71,445       66,278       7.8  
Intersegment elimination
     (9,719 )     (8,188 )             (36,901 )     (34,420 )        
 
                                        
 
                                                
Consolidated
   $ 272,314     $ 243,061       12.0     $ 1,047,133     $ 987,209       6.1  
 
                                        
 
                                                
Operating Income
                                                
 
                                                
Flavors & Fragrances
   $ 17,533     $ 19,878       (11.8 )   $ 81,323     $ 83,756       (2.9 )
Color
     17,605       12,172       44.6       67,991       71,607       (5.0 )
Corporate & Other
     (4,871 )     (2,315 )             (20,158 )     (17,879 )        
 
                                        
 
                                                
Consolidated
   $ 30,267     $ 29,735       1.8     $ 129,156     $ 137,484       (6.1 )
 
                                        

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Page 6

Sensient Technologies Corporation
(In thousands, except per share amounts)

Consolidated Condensed Balance Sheets

                 
December 31,   2004     2003  
Current assets
   $ 536,244     $ 536,730  
Intangibles (net)
     470,331       446,475  
Property, plant and equipment (net)
     415,651       391,798  
Other assets
     66,352       78,525  
 
            
 
                
Total Assets
   $ 1,488,578     $ 1,453,528  
 
            
 
                
Current liabilities
   $ 255,225     $ 282,420  
Long-term debt
     525,153       525,924  
Accrued employee and retiree benefits
     34,571       30,208  
Other liabilities
     14,931       34,858  
Shareholders’ equity
     658,698       580,118  
 
            
 
                
Total Liabilities and Shareholders’ Equity
   $ 1,488,578     $ 1,453,528  
 
            
                 
Consolidated Statements of Cash Flows            
Twelve Months Ended December 31,   2004     2003  
Net cash provided by operating activities
   $ 125,732     $ 56,543  
 
            
 
                
Cash flows from investing activities:
                
Acquisition of property, plant and equipment
     (49,845 )     (74,208 )
Acquisition of businesses (net of cash acquired)
     —       (19,307 )
Proceeds from sale of assets
     2,016       8,223  
Decrease in other assets
     3,065       112  
 
            
 
                
Net cash used in investing activities
     (44,764 )     (85,180 )
 
            
 
                
Cash flows from financing activities:
                
Proceeds from additional borrowings
     199,760       121,761  
Debt and capital lease payments
     (259,420 )     (52,044 )
Purchase of treasury stock
     —       (17,931 )
Dividends paid
     (28,096 )     (28,154 )
Proceeds from options exercised and other equity transactions
     4,213       4,809  
 
            
 
                
Net cash (used in) provided by financing activities
     (83,543 )     28,441  
 
            
 
                
Effect of exchange rate changes on cash and cash equivalents
     1,568       1,343  
 
            
 
                
Net (decrease) increase in cash and cash equivalents
     (1,007 )     1,147  
Cash and cash equivalents at beginning of period
     3,250       2,103  
 
            
Cash and cash equivalents at end of period
   $ 2,243     $ 3,250  
 
            
                 
Supplemental Information            
Twelve Months Ended December 31,   2004     2003  
Depreciation and amortization
   $ 46,243     $ 43,098  
 
                
Dividends per share
   $ 0.60     $ 0.59  

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