0000950110-95-000588.txt : 19950815 0000950110-95-000588.hdr.sgml : 19950815 ACCESSION NUMBER: 0000950110-95-000588 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950814 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: INTERNATIONAL FLAVORS & FRAGRANCES INC CENTRAL INDEX KEY: 0000051253 STANDARD INDUSTRIAL CLASSIFICATION: INDUSTRIAL ORGANIC CHEMICALS [2860] IRS NUMBER: 131432060 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-04858 FILM NUMBER: 95563413 BUSINESS ADDRESS: STREET 1: 521 W 57TH ST CITY: NEW YORK STATE: NY ZIP: 10019 BUSINESS PHONE: 2127655500 MAIL ADDRESS: STREET 2: 521 W 57TH ST CITY: NEW YORK STATE: NY ZIP: 10019 FORMER COMPANY: FORMER CONFORMED NAME: VANAMERIGEN HAEBLER INC DATE OF NAME CHANGE: 19680426 10-Q 1 FOR QUARTER ENDED 06/30/95 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarter Ended June 30, 1995 Commission file number 1-4858 INTERNATIONAL FLAVORS & FRAGRANCES INC. (Exact Name of Registrant as specified in its charter) New York 13-1432060 --------------------------------------------- --------------------------- (State or other jurisdiction of incorporation (IRS Employer or organization) Identification No.) 521 West 57th Street, New York, N.Y. 10019-2960 --------------------------------------------- --------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (212) 765-5500 Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Sections 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding twelve 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 the past 90 days. Yes X No --------- ---------- Number of shares outstanding as of August 9, 1995: 111,282,278 1 PART. I FINANCIAL INFORMATION Item 1. Financial Statements INTERNATIONAL FLAVORS & FRAGRANCES INC. CONSOLIDATED BALANCE SHEET (Dollars in thousands) 6/30/95 12/31/94 ---------- ---------- Assets Current Assets: Cash & Cash Equivalents .................... $ 183,350 $ 230,581 Short-term Investments ..................... 94,193 71,227 Trade Receivables .......................... 303,235 228,434 Allowances For Doubtful Accounts ........... (8,413) (7,448) Inventories: Raw Materials ................ 239,217 211,071 Work in Process .............. 25,907 25,600 Finished Goods ............... 139,927 125,434 ---------- ---------- Total Inventories ............ 405,051 362,105 Other Current Assets ....................... 88,452 79,587 ---------- ---------- Total Current Assets ....................... 1,065,868 964,486 ---------- ---------- Property, Plant & Equipment, At Cost ........ 805,146 736,912 Accumulated Depreciation .................... (363,704) (331,182) ---------- ---------- 441,442 405,730 Other Assets ................................ 27,881 29,509 ---------- ---------- Total Assets ................................ $1,535,191 $1,399,725 ========== ========== Liabilities and Shareholders' Equity Current Liabilities: Bank Loans ................................. $ 13,811 $ 9,740 Accounts Payable-Trade ..................... 62,662 56,861 Dividends Payable .......................... 34,480 34,554 Income Taxes ............................... 83,780 70,505 Other Current Liabilities .................. 86,542 88,063 ---------- ---------- Total Current Liabilities ................... 281,275 259,723 ---------- ---------- Other Liabilities: Deferred Income Taxes ...................... 10,870 14,350 Long-term Debt ............................. 15,603 14,342 Other ...................................... 108,205 103,231 ---------- ---------- Total Other Liabilities ..................... 134,678 131,923 ---------- ---------- Shareholders' Equity: Common Stock(115,761,840 shares issued in '95 and in '94) ........................... 14,470 14,470 Capital in Excess of Par Value ............. 143,923 146,022 Retained Earnings .......................... 1,038,422 961,847 Cumulative Translation Adjustment .......... 91,895 41,798 ---------- ---------- 1,288,710 1,164,137 ---------- ---------- Treasury Stock, at cost--4,518,091 shares in '95 and 4,297,540 in '94 ............... (169,472) (156,058) ---------- ---------- Total Shareholders' Equity ................. 1,119,238 1,008,079 ---------- ---------- Total Liabilities and Shareholders' Equity .. $1,535,191 $1,399,725 ========== ========== See Notes to Consolidated Financial Statements 2 INTERNATIONAL FLAVORS & FRAGRANCES INC. CONSOLIDATED STATEMENT OF INCOME (Dollars in thousands except per share amounts) 3 Months Ended 6/30 ------------------------- 1995 1994 -------- -------- Net Sales ...................................... $394,306 $345,210 -------- -------- Cost of Goods Sold ............................. 197,911 173,607 Research and Development Expenses .............. 22,729 19,923 Selling and Administrative Expenses ............ 55,603 50,116 Interest Expense ............................... 1,047 5,379 Other (Income) Expense, Net .................... (3,034) (7,356) -------- -------- 274,256 241,669 -------- -------- Income Before Taxes on Income .................. 120,050 103,541 Taxes on Income ................................ 44,348 38,625 -------- -------- Net Income ..................................... $ 75,702 $ 64,916 ======== ======== Earnings Per Share ............................. $0.68 $0.58 Dividends Paid Per Share ....................... $0.31 $0.27 6 Months Ended 6/30 ------------------------- 1995 1994 -------- -------- Net Sales ...................................... $767,900 $668,747 -------- -------- Cost of Goods Sold ............................. 388,695 339,227 Research and Development Expenses .............. 44,870 39,276 Selling and Administrative Expenses ............ 109,165 98,961 Interest Expense ............................... 1,612 11,544 Other (Income) Expense, Net .................... (7,534) (17,810) -------- -------- 536,808 471,198 -------- -------- Income Before Taxes on Income .................. 231,092 197,549 Taxes on Income ................................ 85,434 73,692 -------- -------- Net Income ..................................... $145,658 $123,857 ======== ======== Earnings Per Share ............................. $1.31 $1.11 Dividends Paid Per Share ....................... $0.62 $0.54 Average Number of Shares Outstanding (000's) ... 111,492 111,642 See Notes to Consolidated Financial Statements 3 INTERNATIONAL FLAVORS & FRAGRANCES INC. CONSOLIDATED STATEMENT OF CASH FLOWS (Dollars in thousands) 6 Months Ended 6/30 ------------------------- 1995 1994 -------- -------- Cash Flows From Operating Activities: Net Income ...................................... $145,658 $123,857 Adjustments to Reconcile to Net Cash Provided by Operations: Depreciation .................................. 20,446 17,790 Deferred Income Taxes ......................... 5,126 3,639 Changes in Assets and Liabilities: Current Receivables .......................... (71,083) (67,240) Inventories .................................. (30,265) (11,411) Current Payables ............................. 11,735 29,629 Other, Net ................................... (6,129) (3,850) -------- -------- Net Cash Provided by Operations ................. 75,488 92,414 -------- -------- Cash Flows From Investing Activities: Proceeds From Sale/Maturities Short-Term Investments .................................... 49,115 92,966 Purchases of Short-Term Investments ............. (69,342) (49,664) Additions to Property, Plant & Equipment, Net of Minor Disposals ......................... (37,018) (44,169) -------- -------- Net Cash Provided by (Used in) Investing Activities ..................................... (57,245) (867) -------- -------- Cash Flows From Financing Activities: Cash Dividends Paid to Shareholders ............. (69,157) (60,374) Increase (Decrease) in Bank Loans ............... 3,395 (21,829) Increase (Decrease) in Long-Term Debt ........... (1,237) 16,137 Proceeds From Issuance of Stock Under Stock Option Plans ................................... 5,293 2,755 Purchase of Treasury Stock ...................... (21,037) (32,433) -------- -------- Net Cash Used In Financing Activities ........... (82,743) (95,744) -------- -------- Effect of Exchange Rate Changes on Cash and Cash Equivalents ............................... 17,269 10,383 -------- -------- Net Change in Cash and Cash Equivalents ......... (47,231) 6,186 Cash and Cash Equivalents at Beginning of Year .. 230,581 187,205 -------- -------- Cash and Cash Equivalents at End of Period ...... $183,350 $193,391 ======== ======== Interest Paid ................................... $ 2,004 $ 11,673 Income Taxes Paid ............................... $ 69,463 $ 54,263 See Notes to Consolidated Financial Statements 4 Notes to Consolidated Financial Statements These interim statements and management's related discussion and analysis should be read in conjunction with the consolidated financial statements and their related notes, and management's discussion and analysis of results of operations and financial condition included in the Company's 1994 Annual Report to Shareholders. In the opinion of the Company's management, all normal recurring adjustments necessary for a fair statement of the results for the interim periods have been made. Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition Operations Worldwide net sales for the second quarter of 1995 increased 14% over the prior year to $394,306,000. For the first six months of 1995, net sales increased 15% over the prior year to $767,900,000. Sales increases were recorded in flavor and fragrance products in both the second quarter and six month periods. The sales increase in the second quarter and the first six months of 1995 was favorably affected by translating stronger foreign currencies into the U.S. dollar. Net income for the second quarter of 1995 was $75,702,000, an increase of 17% from the 1994 second quarter. Net income for the first six months of 1995 was $145,658,000, an increase of 18% over the comparable 1994 period. The profit growth recorded by the Company was primarily the result of the sales increase for the period. Earnings per share for the second quarter and first six months in 1995 were $.68 and $1.31, as compared to $.58 and $1.11 in the prior year quarter and six month periods, respectively. The percentage relationship of cost of goods sold and other operating expenses to sales for the first half 1995 and 1994 remained fairly constant, especially on an overall basis. First Six Months ------------------- 1995 1994 ---- ---- Cost of Goods Sold ............................... 50.6% 50.7% Research and Development Expense ................. 5.8% 5.9% Selling and Administrative Expense ............... 14.2% 14.8% Interest expense was $1,047,000 for the second quarter of 1995, compared to $5,379,000 for the second quarter 1994. For the first six months of 1995, interest expense amounted to $1,612,000 compared to $11,544,000 in the first six months of 1994. The lower interest expense in 1995 resulted primarily from the lower average level of borrowings and lower interest rates in Brazil, where such 5 borrowings were used as hedges against devaluations in that country. In 1994, the higher borrowing levels and interest rates in Brazil generated significant offsetting exchange gains which were included in Other Income. Other Income for the second quarter 1995 was $3,034,000 and was $7,534,000 for the first six months of 1995, compared to $7,356,000 and $17,810,000 for the corresponding periods in 1994; the decline in 1995 was primarily due to lower exchange gains resulting from the hedging activities in Brazil mentioned above. The effective tax rates for the second quarter and first six months of 1995 were 36.9% and 37.0%, respectively, as compared to 37.3% for the comparable periods in 1994. Financial Condition The financial condition of the Company continued to be strong during the second quarter. Cash, cash equivalents and short-term investments totaled $277,543,000 at June 30, 1995. At June 30, 1995, working capital was $784,593,000 compared to $704,763,000 at December 31, 1994. Gross additions to property, plant and equipment during the first half of 1995 were $37,439,000. In January 1995, the Company's cash dividend was increased 14.8% to an annual rate of $1.24 per share, and $.31 per share was paid to shareholders in both the first and second quarters. The Company anticipates that its growth, capital expenditure programs and share repurchase program will be funded from internal sources. The cumulative translation adjustment component of Shareholders' Equity at June 30, 1995 was $91,895,000 compared to $41,798,000 at December 31, 1994. Changes in the component result from translating the net assets of the majority of the Company's foreign subsidiaries into U.S. dollars at current exchange rates as required by the Statement of Financial Accounting Standards No. 52 on accounting for foreign currency translation. 6 PART II. OTHER INFORMATION ITEM 4. Submission of Matters to a Vote of Security Holders At the annual meeting of Registrant's shareholders held Thursday May 11, 1995, at which 96,641,018 shares, or 86.6%, of Registrant's Common Stock were represented in person or by proxy, the 12 nominees for director of Registrant, as listed in Registrant's proxy statement dated March 28, 1995 previously filed with the Commission, were duly elected to Registrant's Board of Directors. There was no solicitation of proxies in opposition to these nominees. At such annual meeting, the shareholders also voted with respect to the other matter submitted for shareholder consideration as follows, the vote being legally sufficient to adopt the proposal: Proposal to amend the Registrant's Management Incentive Compensation Plan to preserve the deductibility under the Internal Revenue Code of compensation paid under the Plan. No. of Shares Voted ------------------- FOR ........................ 94,357,879 AGAINST .................... 1,379,383 ABSTAIN .................... 353,980 ITEM 6. Exhibits and Reports on Form 8-K (a) Exhibit 27--Financial Data Schedule (b) Reports on Form 8-K Registrant filed no report on Form 8-K during the quarter for which this report on Form 10-Q is filed. 7 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. INTERNATIONAL FLAVORS & FRAGRANCES INC. Dated: August 11, 1995 By:__________________________________________________ Thomas H. Hoppel, Vice-President & Treasurer Dated: August 11, 1995 By:__________________________________________________ Stephen A. Block, Vice-President Law and Secretary EX-27 2 6-MOS ENDED JUNE-30-95
5 The schedule contains summary financial information extracted from the Consolidated Balance Sheet & Consolidated Statement of Income and is qualified in its entirety by reference to such financial statements. Amounts in thousands of dollars, except per share amounts. 6-MOS DEC-31-1995 JUN-30-1995 183,350 94,193 303,235 (8,413) 405,051 1,065,868 805,146 (363,704) 1,535,191 281,275 15,603 14,470 0 0 1,104,768 1,535,191 767,900 767,900 388,695 542,730 (7,534) 0 1,612 231,092 85,434 145,658 0 0 0 145,658 $1.31 $1.31