-----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, TRl65CFjRdqv8v9Zrg4Wk9bRUBi7MeO24W6o7m36yeRGcYDk31KzLpJPMsswhgeB HpYJYt7SOh6A/5Urvaf1Zg== 0000950110-96-000305.txt : 19960329 0000950110-96-000305.hdr.sgml : 19960329 ACCESSION NUMBER: 0000950110-96-000305 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960328 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-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-04858 FILM NUMBER: 96540194 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-K 1 ANNUAL REPORT SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------- FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 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 (IRS EMPLOYER INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.) 521 WEST 57TH STREET, NEW YORK, N.Y. 10019 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (212) 765-5500 SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: Name of each exchange Title of each class on which registered ------------------- ------------------- Common Stock, par value 12-1/2(cent) per share New York Stock Exchange SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: NONE (TITLE OF CLASS) 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, and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendments to this Form 10-K. [ ] The Registrant denies that any of its common stock is held by an "affiliate" of the Registrant within the meaning of Rule 405 of the Securities and Exchange Commission. See "Stock Ownership" in proxy statement incorporated by reference herein. The aggregate market value of all of the outstanding voting stock of Registrant as of March 22, 1996 was $5,482,520,951. Indicate the number of shares outstanding of each of the Registrant's classes of common stock, as of March 22, 1996. 111,038,399 SHARES OF COMMON STOCK, PAR VALUE 12-1/2(CENT) PER SHARE DOCUMENTS INCORPORATED BY REFERENCE The information called for by Part III [Items 10, 11, 12 and 13] is hereby incorporated by reference from the Registrant's definitive proxy statement for the 1996 Annual Meeting of Shareholders to be filed pursuant to Regulation 14A. PART I ITEM 1. BUSINESS. International Flavors & Fragrances Inc., incorporated in New York in 1909, is a leading creator and manufacturer of flavor and fragrance products used by other manufacturers to impart or improve flavor or fragrance in a wide variety of consumer products. Fragrance products are sold principally to manufacturers of perfumes, cosmetics, soaps and detergents, and flavor products to manufacturers of prepared foods, beverages, dairy foods, pharmaceuticals and confectionery products. The present world-wide scope of the Company's business is in part the result of the combination in December 1958 of the business theretofore conducted primarily in the United States by the Company under the name van Ameringen-Haebler, Inc. ("VAH") with the business conducted primarily in Europe by N. V. Polak & Schwarz's Essencefabrieken, a Dutch corporation ("P & S"). The P & S enterprise, founded in Holland in 1889, was also engaged in the manufacture and sale of flavor and fragrance products, with operations in a number of countries where VAH was not an important factor. The major manufacturing facilities of the Company are located in the United States, Holland, France, Germany, Great Britain, Ireland, Spain, Switzerland, Argentina, Brazil, Mexico, Australia, China, Hong Kong, Indonesia and Japan. Manufacturing facilities are also located in eight other countries. The Company maintains its own sales and distribution facilities in 33 countries and is represented by sales agents in additional countries. The Company's principal executive offices are located at 521 West 57th Street, New York, New York 10019 (Tel. No. 212-765-5500). Except as the context otherwise indicates, the term "the Company" as used herein refers to the Registrant and its subsidiaries. MARKETS Fragrance products are used by customers in the manufacture of such consumer products as soaps, detergents, cosmetic creams, lotions and powders, lipsticks, after-shave lotions, deodorants, hair preparations and air fresheners, as well as in other consumer products designed solely to appeal to the sense of smell, such as perfumes and colognes. The cosmetics industry, including perfumes and toiletries, is one of the Company's two largest customer groups. Most of the major United States companies in this industry are customers of the Company, and five of the largest United States cosmetics companies are among its principal customers. The household products industry, including soaps and detergents, is the other important customer group. Four of the largest United States household product manufacturers are major customers of the Company. In the five years ended December 31, 1995, sales of fragrance products accounted for approximately 59%, 60%, 59%, 59% and 57%, respectively, of the Company's total sales. Flavor products are sold principally to the food and beverage industries for use in such consumer products as soft drinks, candies, baked goods, desserts, prepared foods, dietary foods, dairy products, drink powders, pharmaceuticals and alcoholic beverages. Two of the Company's largest customers for flavor products are major producers of prepared foods and beverages in the United States. In the five years ended December 31, 1995, sales of flavor products accounted for approximately 41%, 40%, 41%, 41% and 43%, respectively, of the Company's total sales. PRODUCTS The Company's principal fragrance and flavor products consist of compounds of large numbers of ingredients blended by it under formulas created by its perfumers and flavorists. Most of these compounds contribute the total fragrance or flavor to the consumer products in which they are used. This fragrance or flavor characteristic is often a major factor in the public selection and acceptance of the consumer end product. A smaller amount of compounds is sold to manufacturers who further blend them to achieve the finished fragrance or flavor in their consumer products. Thousands of compounds are produced by the Company, and new compounds are constantly being created in order to meet the many and changing characteristics of its customers' end products. Most of the fragrance compounds and many of the flavor compounds are created and produced for the exclusive use of particular customers. The Company's flavor products also include extractives, concentrated juices and concentrates derived from various fruits, vegetables, nuts, herbs and spices as well as microbiologically derived ingredients. The Company's products are sold in solid and liquid forms and in amounts ranging from a few pounds to many tons, depending upon the nature of the product. The ingredients used by the Company in its compounds are both synthetic and natural. Most of the synthetic ingredients are manufactured by the Company. While the major part of the Company's production of synthetic ingre- 1 dients is used by it in its compounds, a substantial portion is sold to others. The natural ingredients are derived from flowers, fruits and other botanical products as well as from animal products. They contain varying numbers of organic chemicals, which are responsible for the fragrance or flavor of the natural product. The natural products are purchased for the larger part in processed or semi-processed form. Some are used in compounds in the state in which they are purchased and others after further processing. Natural products, together with various chemicals, are also used as raw materials for the manufacture of synthetic ingredients by chemical processes. MARKET DEVELOPMENTS The demand for consumer products utilizing flavors and fragrances has been stimulated and broadened by changing social habits resulting from such factors as increases in personal income, employment of women, teen-age population, leisure time, health concerns and urbanization and by the continued growth in world population. In the fragrance field, these developments have expanded the market for colognes, toilet waters, deodorants, soaps with finer fragrance quality, men's toiletries and other products beyond traditional luxury items such as perfumes. In the flavor field, similar market characteristics have stimulated the demand for such products as convenience foods, soft drinks and low-cholesterol and low-fat food products that must conform to expected tastes. New and improved methods of packaging, application and dispensing have been developed for many consumer products which utilize some of the Company's flavor or fragrance products. These developments have called for the creation by the Company of many new compounds and ingredients compatible with the newly introduced materials and methods of application used in consumer end products. PRODUCT DEVELOPMENT AND RESEARCH The development of new fragrance and flavor compounds is a complex artistic and technical process calling upon the combined knowledge and talents of the Company's creative perfumers and flavorists and its application chemists and research chemists. Through long experience the perfumers and flavorists develop and refine their skill for creating fragrances or flavors best suited to the market requirements of the customers' products. An important contribution to the creation of new fragrance and flavor products is the development in the Company's research laboratories of new ingredients having fragrance or flavor value. The principal functions of the fragrance research program are to isolate and synthesize fragrance components found in natural substances and through chemical synthesis to develop new materials and better techniques for utilization of such materials. The principal functions of the flavor research program are to isolate and produce natural flavor ingredients utilizing improved processes. The work of the perfumers and flavorists is conducted in 28 fragrance and flavor laboratories in 22 countries. The Company maintains a research center at Union Beach, New Jersey. The Company spent $90,846,000 in 1995, $81,369,000 in 1994 and $75,275,000 in 1993 on its research and development activities, all of which activities were financed by the Company. These expenditures are expected to increase in 1996 to approximately $97,000,000. Of the amount expended in 1995 on such activities, 56% was for fragrances and the balance was for flavors. The Company employed 765 persons in 1995 and 748 persons in 1994 in such activities. The business of the Company is not materially dependent upon any patents, trademarks or licenses. DISTRIBUTION Most of the Company's sales are made through its own sales force, operating from eight sales offices in the United States and 42 sales offices in 32 foreign countries. Sales in other countries are made through sales agencies. For the year ended December 31, 1995, 30% of the Company's sales were to customers in North America, 36% in Western Europe and 34% in the rest of the world. See Note 9 of the Notes to the Consolidated Financial Statements for other information with respect to the Company's international operations. The Company estimates that during 1995 its 30 largest customers accounted for about 52% of its sales, its four largest customers and their affiliates accounted for about 11%, 6%, 5% and 3%, respectively, of its sales, and no other single customer accounted for more than 3% of sales. GOVERNMENTAL REGULATION Manufacture and sale of the Company's products are subject to regulation in the United States by the Food and Drug Administration, the Agriculture Department, the Alcohol, Tobacco and Firearms Bureau of the Treasury 2 Department, the Environmental Protection Agency, the Occupational Safety and Health Administration and state authorities. The foreign subsidiaries are subject to similar regulation in a number of countries. Compliance with existing governmental requirements regulating the discharge of materials into the environment has not materially affected the Company's operations, earnings or competitive position. The Company expects to spend in 1996 approximately $3,900,000 in capital projects and $16,400,000 in operating expenses and governmental charges for the purpose of complying with such requirements. The Company expects that in 1997 capital expenditures, operating expenses and governmental charges for such purpose will not be materially different. RAW MATERIAL PURCHASES Some 5,000 different raw materials are purchased from many sources all over the world. The principal natural raw material purchases consist of essential oils, extracts and concentrates derived from fruits, vegetables, flowers, woods and other botanicals, animal products and raw fruits. The principal synthetic raw material purchases consist of organic chemicals. The Company believes that alternate sources of materials are available to enable it to maintain its competitive position in the event of any interruption in the supply of raw materials from present sources. COMPETITION The Company has more than 50 competitors in the United States and world markets. While no single factor is responsible, the Company's competitive position is based principally on the creative skills of its perfumers and flavorists, the technological advances resulting from its research and development and the customer service and support provided by its marketing and application groups. Although statistics are not available, the Company believes that it is one of the four largest companies producing and marketing on an international basis a wide range of fragrance and flavor products of the types manufactured by it for sale to manufacturers of consumer products. In particular countries and localities, the Company faces the competition of numerous companies specializing in certain product lines, among which are some larger than the Company and some more important in a particular product line or lines. Most of the Company's customers do not buy all their fragrance or flavor products from the same supplier, and some customers make their own fragrance or flavor compounds with ingredients supplied by the Company or others. EMPLOYEE RELATIONS The Company at December 31, 1995 employed approximately 4,650 persons, of whom about 1,550 were employed in the United States, 510 in Holland, 270 in France, 270 in England and 2,050 elsewhere. The Company has never experienced a work stoppage or strike and it considers that its employee relations are satisfactory. 3 ITEM 2. PROPERTIES. The principal manufacturing and research properties of the Company are as follows:
Location Operation -------- --------- UNITED STATES New York, NY ...................... Fragrance laboratories. Union Beach, NJ ................... Production of fragrance chemical ingredients; research and development center. Hazlet, NJ ........................ Production of fragrance compounds; fragrance laboratories. South Brunswick, NJ ............... Production of flavor ingredients and compounds and fruit preparations; flavor laboratories. Salem, OR ......................... Production of fruit and vegetable concentrates, fruit and vegetable preparations and flavor ingredients. Menomonee Falls, WI ............... Production of flavor compounds, flavor ingredients, bacterial cultures and fruit preparations. HOLLAND Hilversum ......................... Flavor and fragrance laboratories. Tilburg ........................... Production of flavor and fragrance compounds and flavor ingredients. FRANCE Bois-Colombes ..................... Fragrance laboratories; flavor laboratories. Dijon ............................. Production of fragrance compounds, flavor ingredients and compounds and fruit preparations. GERMANY Emmerich/Rhein .................... Production of fruit preparations and flavor ingredients and compounds; flavor laboratories. GREAT BRITAIN Haverhill ......................... Production of flavor compounds and ingredients, fruit preparations and fragrance chemical ingredients; flavor laboratories. IRELAND Drogheda .......................... Production of fragrance compounds. SPAIN Benicarlo ......................... Production of fragrance chemical ingredients. Colmenar .......................... Production of flavor compounds and fruit preparations; flavor laboratories. SWITZERLAND Reinach-Aargau .................... Production of fruit preparations and flavor ingredients and compounds; flavor laboratories. ARGENTINA Garin ............................. Production of fruit preparations and flavor ingredients and compounds; production of fragrance compounds; flavor laboratories. BRAZIL Rio de Janeiro .................... Production of flavor ingredients and compounds, fruit preparations and fragrance compounds and chemical ingredients; flavor laboratories. Sao Paulo ......................... Fragrance laboratory. MEXICO Tlalnepantla ...................... Production of flavor compounds, fruit preparations and fragrance compounds and chemical ingredients; flavor and fragrance laboratories. AUSTRALIA Dee Why ........................... Production of flavor compounds; flavor and fragrance laboratories.
4
Location Operation -------- --------- CHINA Guangzhou ......................... Production of flavor and fragrance compounds; flavor laboratories. HONG KONG ........................... Production of fragrance compounds; fragrance laboratories. INDONESIA Jakarta ........................... Production of flavor and fragrance compounds and ingredients; flavor and fragrance laboratories. JAPAN Tokyo ............................. Flavor and fragrance laboratories. Gotemba ........................... Production of flavor and fragrance compounds.
The principal executive offices of the Company and its New York laboratory facilities are located at 521 West 57th Street, New York City. Such offices and all of the above facilities of the Company are owned in fee, except those in Wisconsin, China, Hong Kong, and the Indonesian landsite, which are leased. The Company believes that the remaining facilities meet its present needs, but that additional facilities will be required to meet anticipated growth in sales. ITEM 3. LEGAL PROCEEDINGS. Various Federal and State authorities and private parties claim that the Company is a potentially responsible party as a generator of waste materials for alleged pollution at a total of 11 waste sites operated by third parties located principally in New Jersey and Pennsylvania. The governmental authorities seek to recover costs incurred and to be incurred to clean up the sites. The private suits generally seek damages for alleged injuries and, in one case, a waste site's owners/operators seek contribution and indemnification for their share of remedial action costs incurred and to be incurred at the site. The waste site claims and suits usually involve million dollar amounts, and most of them are asserted against many potentially responsible parties. Remedial activities typically consist of several phases carried out over a period of years. Most site remedies begin with investigation and feasibility studies, followed by physical removal, destruction, treatment or containment of contaminated soil and debris, and sometimes by groundwater monitoring and treatment. The Company believes that the amounts it probably will have to pay for clean-up costs and damages at all sites will not be material to the Company's financial condition, results of operations or liquidity, because of the involvement of other large potentially responsible parties at most sites, because payment will be made over an extended time period and because, pursuant to an agreement reached in July 1994 with three of the Company's liability insurers, defense costs and indemnity amounts payable by the Company in respect of the sites will be shared by the insurers up to an agreed amount. 5 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. Not applicable. EXECUTIVE OFFICERS OF REGISTRANT:
Year First Became Name Office and Other Business Experience(2) Age Officer ---- --------------------------------------- --- ------- Eugene P. Grisanti(1) .............. President; Chairman of the Board 66 1964 Hugh R. Kirkpatrick ................ Senior Vice-President; Director 59 1985 Hendrik C. van Baaren .............. Senior Vice-President; Director 56 1983 Stephen A. Block ................... Vice-President and Secretary since 1993; 51 1993 Senior Vice President, General Counsel, Secretary and Director, International Specialty Products Inc. from 1991 to 1992 and GAF Corporation from 1990 to 1992 Ronald S. Fenn ..................... Vice-President 58 1986 Thomas H. Hoppel ................... Vice-President and Treasurer; Director 65 1976 Ira Katz ........................... Vice-President 62 1987 Carlos A. Lobbosco ................. Vice-President 56 1993 Lewis G. Lynch, Jr. ................ Vice-President 60 1975 Stuart R. Maconochie ............... Vice-President 56 1989 Rudolf Merz ........................ Vice-President 56 1982 Michael D. Sweeney ................. Vice-President 52 1994 Douglas J. Wetmore ................. Controller since 1992; employed by Price 38 1992 Waterhouse LLP, independent accountants, for more than one year prior thereto
- ---------- (1) Chairman of Executive Committee of the Board of Directors. (2) Employed by the Company or an affiliated company for the last five years, except as otherwise indicated. 6 PART II ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SECURITY HOLDER MATTERS. (a) Market Information. The Company's common stock is traded principally on the New York Stock Exchange. The high and low stock prices for each quarter during the last two years were: 1995 1994 --------------------- ---------------------- Quarter High Low High Low - ------- ------ ------ ------ ------ First ..................... $53.13 $45.13 $39.25 $35.63 Second .................... 53.63 45.63 40.50 35.63 Third ..................... 53.38 46.38 44.38 38.88 Fourth .................... 55.88 45.88 47.88 40.38 (b) Approximate Number of Equity Security Holders. (A) (B) Number of Record Holders as Title of Class of December 31, 1995 -------------- --------------------------- Common stock, par value 12-1/2(cent) per share ... 5,506 (c) Dividends. Cash dividends declared per share for each quarter since January 1994 were as follows: 1996 1995 1994 ---- ---- ---- First ........... $.34 $.31 $.27 Second .......... .31 .27 Third ........... .31 .27 Fourth .......... .34 .31 ITEM 6. SELECTED FINANCIAL DATA.
1995 1994 1993 1992 1991 ---------- ---------- ---------- ---------- ---------- (Dollars in thousands except per share amounts) Net sales ............................. $1,439,487 $1,315,237 $1,188,645 $1,126,446 $1,016,968 ========== ========== ========== ========== ========== Income before accounting changes(a) ... $ 248,817 $ 226,022 $ 202,471 $ 176,683 $ 168,674 Accounting changes, net of tax(b) ..... -- -- -- (6,089) -- ---------- ---------- ---------- ---------- ---------- Net income ............................ $ 248,817 $ 226,022 $ 202,471 $ 170,594 $ 168,674 ========== ========== ========== ========== ========== Earnings per share(c): Income before accounting changes(a) ... $2.24 $2.03 $1.78 $1.53 $1.47 Accounting changes(b) ................. -- -- -- (0.05) -- ---------- ---------- ---------- ---------- ---------- Net income ............................ $2.24 $2.03 $1.78 $1.48 $1.47 ========== ========== ========== ========== ========== Total assets .......................... $1,534,269 $1,399,725 $1,225,257 $1,267,594 $1,217,372 ========== ========== ========== ========== ========== Long-term debt ........................ $ 11,616 $ 14,342 -- -- -- ========== ========== ========== ========== ========== Cash dividends declared per share(c) .. $1.27 $1.12 $1.02 $0.93 $0.83 ========== ========== ========== ========== ==========
- ---------- (a) Reflects nonrecurring charge ($13,021 after tax) in 1992 resulting from the Registrant's plan to consolidate European aroma chemical production. (b) The accounting changes, net of tax, in 1992, represent the effects of adopting required accounting standards for income taxes and postretirement benefits other than pensions. (c) Per share amounts reflect three-for-one stock split distributed on January 19, 1994 to shareholders of record on December 28, 1993. 7 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION. Operations In 1995, worldwide net sales of $1,439,487,000 exceeded 1994 net sales by $124,250,000 or 9%, while 1994 worldwide net sales exceeded 1993 net sales by $126,592,000 or 11%. Sales of fragrance products in 1995 were $819,263,000, an increase of $46,477,000 or 6% over 1994. This follows a $73,541,000 or 11% increase in 1994 over 1993. Sales of flavor products in 1995 were $620,224,000, an increase of $77,773,000 or 14% over 1994, while 1994 flavor sales increased $53,051,000 or 11% over 1993. The growth in the Company's worldwide sales reflects the continuing increased demand for its fragrance and flavor products. Sales outside the United States represented approximately 70% of total sales in 1995, 1994 and 1993. The following table shows net sales on a geographic basis:
Percent Percent Sales by destination (Dollars in thousands) 1995 Change 1994 Change 1993 - ------------------------------------------ ---------- ------- ---------- -------- ---------- North America ................................. $ 437,227 4% $ 418,565 11% $ 378,403 Western Europe ................................ 520,382 11% 470,281 9% 432,345 Other Areas ................................... 481,878 13% 426,391 13% 377,897 ---------- ---------- ---------- Total net sales ............................. $1,439,487 9% $1,315,237 11% $1,188,645 ========== ========== ==========
In 1995, the Company achieved another year of solid growth in sales with increases recorded in all geographic areas. Fragrance sales were strongest in Europe and the Far East. Flavor sales were strong in all areas of the world with exceptional gains achieved in Latin America. During 1995, sales were favorably affected by translating stronger foreign currencies into the U.S. dollar. In 1994, good sales increases were recorded in both fragrances and flavors in all geographic areas. Fragrance sales were strongest in Western Europe and Latin America, while flavor sales achieved their best gains in North America, the Far East and Latin America. During 1994, sales were virtually unaffected by currency translation. Operating profit (as shown in Note 9 of the Notes to the Consolidated Financial Statements) was $390,702,000 in 1995, $354,425,000 in 1994 and $311,156,000 in 1993. Operating profit in 1995 increased $36,277,000 or 10% over the prior year, while operating profit in 1994 increased $43,269,000 or 14% over the prior year. In 1995, operating profit was favorably affected by currency translation, while in 1994, currency translation had no significant effect on operating profit. In both 1995 and 1994, the profit growth was primarily the result of the sales growth for the period. Although the Company's reported sales and earnings are affected by the strengthening or weakening of the U.S. dollar, this has no long-term effect on the underlying strength of our business. The percentage relationship of cost of goods sold and other operating expenses to sales were as follows: 1995 1994 1993 ---- ---- ---- Cost of goods sold .............. 51.9% 51.5% 51.6% Research and development expenses ....................... 6.3% 6.2% 6.3% Selling and administrative expenses ....................... 15.1% 15.8% 16.3% Cost of goods sold includes the cost of materials purchased and internal manufacturing expenses. As a percentage of sales, this cost has remained fairly constant over the last few years. Research and development expenses have consistently been between 6% and 7% of sales. These activities contribute in a significant way to the Company's business. The expenses are for the development of new and improved products, technical product support, compliance with governmental regulations and help in maintaining our relationships with our customers who are often dependent on technical advances. Selling and administrative expenses, which are necessary to support our increased sales, have gradually declined as a percentage of sales over the last several years. 8 Interest expense amounted to $3,160,000, $13,470,000 and $17,359,000 in 1995, 1994 and 1993, respectively. This expense relates primarily to bank loans taken out by some of the Company's subsidiaries and may be significantly affected by very high interest rates in hyperinflationary countries where local bank borrowing is used as a hedge against devaluations. Interest expense decreased in both 1995 and 1994, primarily due to lower average interest rates, mainly in Brazil. The borrowings in Brazil were intended to serve as hedges against the devaluations which occurred in that country, particularly in 1993 and during the first half of 1994. In both 1994 and 1993, substantial offsetting exchange gains, included in other income, were generated in Brazil. More details on bank loans and long-term debt are contained in Note 5 of the Notes to the Consolidated Financial Statements. Other income was $12,871,000 in 1995, compared to $25,213,000 in 1994 and $35,132,000 in 1993. The decrease in other income in 1995 was primarily due to lower exchange gains attributable to the hedging activities in Brazil mentioned above. The decrease in other income in 1994 resulted primarily from reduced interest income, due to lower interest rates and a lower average level of investments, and somewhat lower exchange gains. The worldwide effective tax rate for 1995 was 36.8%, compared to 37.3% for 1994 and 37.5% for 1993. Note 6 of the Notes to the Consolidated Financial Statements contains additional information on income taxes. Net income in 1995 totaled $248,817,000, an increase of $22,795,000 or 10% from the prior year. Net income in 1994 was $226,022,000, an increase of $23,551,000 or 12% over 1993. Net income in 1993 was $202,471,000. Earnings per share for 1995 increased 10% to $2.24 from $2.03 in 1994, following an increase of 14% from $1.78 reported in 1993. Effective January 1, 1994, the Company adopted Statement of Financial Accounting Standards No. 115 (FAS 115), Accounting for Certain Investments in Debt and Equity Securities. FAS 115 addresses the classification, accounting and reporting of investments in equity securities which have readily determinable market values, and for all investments in debt securities. The Company has classified all such investments as available for sale and, in accordance with the provisions of FAS 115, recorded them at fair value. The effect of adopting FAS 115 was not material. In October 1995, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 123 (FAS 123), Accounting for Stock-Based Compensation, which is effective for 1996. Under FAS 123, companies can elect, but are not required, to recognize compensation expense for all stock-based awards using a fair-value methodology. The Company expects to adopt the disclosure-only provisions of the standard in 1996. Compliance with existing governmental requirements regulating the discharge of materials into the environment has not materially affected the Company's operations, earnings or competitive position. In 1995, the Company spent approximately $3,400,000 on capital projects and about $15,700,000 in operating expenses and governmental charges for the purpose of complying with such regulations. Expenditures for these purposes will continue for the foreseeable future and at a slightly higher rate each year. In addition, the Company is party to a number of proceedings brought under the Comprehensive Environmental Response, Compensation and Liability Act or similar state statutes. It is expected that the impact of any judgments in or voluntary settlements of such proceedings will not be material to the Company's financial condition, results of operations or liquidity. Financial Condition The favorable cash flow from operations for the Company, as shown in the Consolidated Statement of Cash Flows, reflects the continuing growth of sales and earnings. The financial condition of the Company continued to be strong during 1995. Cash, cash equivalents and short-term investments totaled $296,933,000 at December 31, 1995, compared to $301,808,000 and $311,278,000 at December 31, 1994 and 1993, respectively. Short-term investments held by the Company are high quality, readily marketable instruments. Working capital totaled $759,576,000 at year-end 1995, compared to $704,763,000 and $652,436,000 at December 31, 1994 and 1993, respectively. Gross additions to property, plant and equipment were $96,196,000, $103,019,000 and $82,286,000 in 1995, 1994 and 1993, respectively, and are expected to approximate $100,000,000 in 1996. In September 1992, the Board of Directors authorized the repurchase of up to 7.5 million shares of the Company's common stock on the open market or through private transactions, as market and business conditions warrant. The reacquired shares will be available for use under the Company's employee benefit plans and for general 9 corporate purposes. At December 31, 1995, approximately 5.7 million shares of common stock had been repurchased under this program. The Company has virtually no long-term debt and anticipates that its growth and capital expenditure programs, and the above share repurchase plan will continue to be funded from internal sources. During 1995, the Company paid dividends to shareholders totaling $138,048,000, while $120,520,000 was paid in 1994, and $114,555,000 in 1993. In January 1996, the cash dividend was increased 9.7% to an annual rate of $1.36 per share. This increase follows an increase of 14.8% in January 1995 and 8.0% in January 1994. The Company believes these increases in dividends to its shareholders can be made without limiting future growth and expansion. The Statement of Financial Accounting Standards No. 52 on accounting for foreign currency translation requires translation of the net assets of the majority of the Company's foreign subsidiaries into U.S. dollars at current exchange rates. The cumulative translation adjustment component of Shareholders' Equity at December 31, 1995 was $75,049,000 compared to $41,798,000 at December 31, 1994. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. INDEX TO FINANCIAL STATEMENTS:
Page No. -------- Consolidated Statements of Income and Retained Earnings for the three years ended December 31, 1995 ............................................................................ 11 Consolidated Balance Sheet--December 31, 1995 and 1994 ........................................ 12 Consolidated Statement of Cash Flows for the three years ended December 31, 1995 .............. 13 Notes to Consolidated Financial Statements .................................................... 14 Report of Independent Accountants ............................................................. 22 Financial Statement Schedules: VIII--Valuation and Qualifying Accounts and Reserves for the three years ended December 31, 1995 ....................................................................... S-1
All other schedules are omitted because they are not applicable or the required information is shown in the financial statements or notes thereto.
QUARTERLY FINANCIAL DATA (UNAUDITED) (DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS) Net income Net sales Gross profit Net income per share ---------------------- ------------------- ------------------- -------------- Quarter 1995 1994 1995 1994 1995 1994 1995 1994 - ------- ---------- ---------- -------- -------- -------- -------- ----- ----- First ................. $ 373,594 $ 323,537 $182,810 $157,917 $ 69,956 $ 58,941 $0.63 $0.53 Second ................ 394,306 345,210 196,395 171,603 75,702 64,916 0.68 0.58 Third ................. 360,083 341,684 173,378 165,119 63,326 58,906 0.57 0.53 Fourth ................ 311,504 304,806 139,933 142,772 39,833 43,259 0.36 0.39 ---------- ---------- -------- -------- -------- -------- ----- ----- $1,439,487 $1,315,237 $692,516 $637,411 $248,817 $226,022 $2.24 $2.03 ========== ========== ======== ======== ======== ======== ===== =====
10
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS Year Ended December 31, --------------------------------------- 1995 1994 1993 ---------- ---------- ---------- (Dollars in thousands except per share amounts) CONSOLIDATED STATEMENT OF INCOME Net sales ........................................................ $1,439,487 $1,315,237 $1,188,645 ---------- ---------- ---------- Cost of goods sold ............................................... 746,971 677,826 613,793 Research and development expenses ................................ 90,846 81,369 75,275 Selling and administrative expenses .............................. 217,658 207,429 193,582 Interest expense ................................................. 3,160 13,470 17,359 Other (income) expense, net ...................................... (12,871) (25,213) (35,132) ---------- ---------- ---------- 1,045,764 954,881 864,877 ---------- ---------- ---------- Income before taxes on income .................................... 393,723 360,356 323,768 Taxes on income .................................................. 144,906 134,334 121,297 ---------- ---------- ---------- NET INCOME ...................................................... $ 248,817 $ 226,022 $ 202,471 ========== ========== ========== NET INCOME PER SHARE ............................................ $2.24 $2.03 $1.78 ========== ========== ========== CONSOLIDATED STATEMENT OF RETAINED EARNINGS At beginning of year ............................................. $ 961,847 $ 860,640 $ 774,140 Net income ....................................................... 248,817 226,022 202,471 ---------- ---------- ---------- 1,210,664 1,086,662 976,611 Cash dividends declared .......................................... 141,243 124,815 115,971 ---------- ---------- ---------- At end of year ................................................... $1,069,421 $ 961,847 $ 860,640 ========== ========== ==========
See Notes to Consolidated Financial Statements 11
CONSOLIDATED BALANCE SHEET ASSETS December 31, -------------------------- 1995 1994 ---------- ---------- (Dollars in thousands) CURRENT ASSETS: Cash and cash equivalents .................................................... $ 251,430 $ 230,581 Short-term investments ....................................................... 45,503 71,227 Receivables: Trade ....................................................................... 253,913 228,434 Allowance for doubtful accounts ............................................. (8,602) (7,448) Other ....................................................................... 28,881 28,259 Inventories .................................................................. 414,547 362,105 Prepaid and deferred charges ................................................. 50,305 51,328 ---------- ---------- Total Current Assets ........................................................ 1,035,977 964,486 PROPERTY, PLANT AND EQUIPMENT ................................................... 468,585 405,730 OTHER ASSETS .................................................................... 29,707 29,509 ---------- ---------- Total Assets .................................................................... $1,534,269 $1,399,725 ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Bank loans ................................................................... $ 12,185 $ 9,740 Accounts payable ............................................................. 63,282 56,861 Accrued payrolls and bonuses ................................................. 17,571 15,386 Dividends payable ............................................................ 37,749 34,554 Income taxes ................................................................. 70,471 70,505 Other current liabilities .................................................... 75,143 72,677 ---------- ---------- Total Current Liabilities ................................................... 276,401 259,723 ---------- ---------- OTHER LIABILITIES: Long-term debt ............................................................... 11,616 14,342 Deferred income taxes ........................................................ 13,420 14,350 Retirement and other liabilities ............................................. 116,272 103,231 ---------- ---------- Total Other Liabilities ..................................................... 141,308 131,923 ---------- ---------- SHAREHOLDERS' EQUITY: Common stock 12-1/2(cent) par value; authorized 500,000,000 shares; issued 115,761,840 shares ................................................... 14,470 14,470 Capital in excess of par value ............................................... 142,476 146,022 Retained earnings ............................................................ 1,069,421 961,847 Cumulative translation adjustment ............................................ 75,049 41,798 ---------- ---------- 1,301,416 1,164,137 Treasury stock, at cost--4,808,005 shares in 1995 and 4,297,540 shares in 1994 .................................................... (184,856) (156,058) ---------- ---------- Total Shareholders' Equity .................................................. 1,116,560 1,008,079 ---------- ---------- Total Liabilities and Shareholders' Equity ...................................... $1,534,269 $1,399,725 ========== ==========
See Notes to Consolidated Financial Statements 12
CONSOLIDATED STATEMENT OF CASH FLOWS Year Ended December 31, --------------------------------------- 1995 1994 1993 ---------- ---------- ---------- (Dollars in thousands) CASH FLOWS FROM OPERATING ACTIVITIES: Net income ....................................................... $ 248,817 $ 226,022 $ 202,471 Adjustments to reconcile to net cash provided by operations: Depreciation .................................................... 40,702 36,358 35,067 Deferred income taxes ........................................... 6,444 (3,809) 615 Changes in assets and liabilities: Current receivables ............................................ (16,475) (14,040) (36,614) Inventories .................................................... (43,505) (45,950) (17,144) Current payables ............................................... 6,121 47,669 24,933 Other, net ..................................................... 2,234 (6,719) (3,042) ---------- ---------- ---------- Net cash provided by operations ..................................... 244,338 239,531 206,286 ---------- ---------- ---------- CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from sales/maturities of short-term investments ..................................................... 160,128 165,387 305,574 Purchases of short-term investments .............................. (130,780) (111,763) (215,789) Additions to property, plant and equipment, net of minor disposals ................................................. (94,483) (101,135) (81,134) ---------- ---------- ---------- Net cash provided by (used in) investing activities ................. (65,135) (47,511) 8,651 ---------- ---------- ---------- CASH FLOWS FROM FINANCING ACTIVITIES: Cash dividends paid to shareholders .............................. (138,048) (120,520) (114,555) Increase (decrease) in bank loans ................................ 2,246 (24,791) 18,029 (Decrease) increase in long-term debt ............................ (2,571) 13,392 -- Proceeds from issuance of stock under stock option plans ......... 8,581 5,622 3,722 Purchase of treasury stock ....................................... (41,386) (32,433) (125,734) ---------- ---------- ---------- Net cash used in financing activities ............................... (171,178) (158,730) (218,538) ---------- ---------- ---------- Effect of exchange rate changes on cash and cash equivalents ........ 12,824 10,086 (19,992) ---------- ---------- ---------- NET CHANGE IN CASH AND CASH EQUIVALENTS ............................. 20,849 43,376 (23,593) CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR ...................... 230,581 187,205 210,798 ---------- ---------- ---------- CASH AND CASH EQUIVALENTS AT END OF YEAR ............................ $ 251,430 $ 230,581 $ 187,205 ========== ========== ==========
See Notes to Consolidated Financial Statements 13 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES NATURE OF OPERATIONS The Company is the leading creator and manufacturer of flavors and fragrances used by others to impart or improve flavor or fragrance in a wide variety of consumer products. Fragrance products are sold principally to makers of perfumes and cosmetics, hair and other personal care products, soaps and detergents, household and other cleaning products and area fresheners. Flavors are sold primarily to makers of dairy, meat and other processed foods, beverages, snacks and savory foods, confectionery, sweet and baked goods, pharmaceutical and oral care products and animal foods. PRINCIPLES OF CONSOLIDATION The consolidated financial statements include the accounts of the Company and all subsidiaries. CURRENCY TRANSLATION The assets and liabilities of non-U.S. subsidiaries which operate in a local currency environment are translated into U.S. dollars at year-end exchange rates. Income and expense items are translated at average exchange rates during the year. Accumulated translation adjustments are shown as a separate component of shareholders' equity. For those subsidiaries which operate in U.S. dollars, or which operate in a highly inflationary environment, inventory and property, plant and equipment are translated using the approximate exchange rates at the time of acquisition. All other assets and liabilities are translated at year-end exchange rates. Except for inventories charged to cost of goods sold and depreciation, which are remeasured for historical rates of exchange, all income and expense items are translated at average exchange rates during the year. Gains and losses as a result of remeasurements are included in income. CASH EQUIVALENTS Highly liquid investments with maturities of three months or less at date of purchase are considered to be cash equivalents. INVENTORIES Inventories are stated at the lower of cost (generally on an average basis) or market. PROPERTY, PLANT AND EQUIPMENT Depreciation is calculated on a straight-line basis over the estimated useful lives for substantially all properties. When properties are retired or otherwise disposed of, the asset and related accumulated depreciation are removed from the accounts and the resultant gain or loss is included in income. INCOME TAXES Deferred income taxes reflect the impact of temporary differences between the amount of assets and liabilities recognized for financial reporting purposes and such amounts recognized for tax purposes, based on tax laws as currently enacted. Additional taxes which would result from dividend distributions by subsidiary companies to the parent company are provided to the extent such dividends are anticipated. No provision is made for additional taxes on undistributed earnings of subsidiary companies which are intended to be permanently invested in such subsidiaries. RETIREMENT BENEFITS Current service costs of retirement plans and postretirement health care and life insurance benefits are accrued currently. Prior service costs resulting from improvements in these plans are amortized over periods ranging from 10 to 20 years. FINANCIAL INSTRUMENTS The fair value of financial instruments is determined by reference to various market data and other valuation techniques, as appropriate. Unless otherwise disclosed, the fair values of financial instruments approximate their recorded values. 14 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) RISK AND UNCERTAINTIES The diversity of the Company's products, customers and geographic operations significantly reduces the risk that a severe impact will occur in the near term as a result of changes in its customer base, competition, sources of supply or markets. It is unlikely that any one event would have a severe impact on the Company's operating results. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. Actual results could differ from those estimates. NET INCOME PER SHARE Net income per share is based on the weighted average number of shares outstanding. The number of shares used in the computations were 111,262,000, 111,527,000 and 113,925,000 in 1995, 1994 and 1993, respectively. NOTE 2. MARKETABLE SECURITIES Marketable securities are included in cash equivalents and short-term investments, as appropriate. Effective January l, 1994, the Company adopted Statement of Financial Accounting Standards No. 115, Accounting for Certain Investments in Debt and Equity Securities, which addresses the classification, accounting and reporting of investments in equity securities which have readily determinable market values, and for all investments in debt securities. The effect of adopting the standard was not material. At December 31,1995 and 1994, marketable securities totaling $120,230,000 and $124,654,000, respectively, were available for sale and recorded at fair value which approximated cost. Realized gains and losses on the sale of marketable securities were not material. NOTE 3. INVENTORIES December 31, ------------------------------- 1995 1994 -------- -------- (Dollars in thousands) Raw materials ................................ $233,759 $211,071 Work in process .............................. 27,739 25,600 Finished goods ............................... 153,049 125,434 -------- -------- $414,547 $362,105 ======== ======== NOTE 4. PROPERTY, PLANT AND EQUIPMENT December 31, ------------------------------- 1995 1994 -------- -------- (Dollars in thousands) Land ......................................... $ 36,219 $ 35,678 Buildings and improvements ................... 264,462 231,016 Machinery and equipment ...................... 470,680 397,845 Construction in progress ..................... 67,845 72,373 -------- -------- 839,206 736,912 Accumulated depreciation ..................... 370,621 331,182 -------- -------- $468,585 $405,730 ======== ======== NOTE 5. BORROWINGS Bank loans (all foreign) averaged $12,124,000 in 1995, $15,937,000 in 1994 and $15,294,000 in 1993. The highest levels were $17,131,000 in 1995, $28,677,000 in 1994 and $30,937,000 in 1993. The 1995 weighted average annual interest rate on these loans (based on balances outstanding at the end of each month) was approximately 13% and the average rate on loans outstanding at December 31, 1995 was 8%. These rates compare to 92% and 16%, 15 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) respectively, in 1994, and 129% and 94%, respectively, in 1993. In 1994 and 1993, the interest rates were substantially affected by very high rates in hyperinflationary countries, principally Brazil, where local borrowing was used as a hedge against devaluations. Excluding these countries, the weighted average annual interest rate and the average rate on loans outstanding at December 31 would have been 6% and 7%, respectively, in 1994, and 8% and 5%, respectively, in 1993. Long-term debt (all foreign) consists of various loans from financial institutions, with interest rates ranging between 3.5% to 4.0%, and with terms of between five and fifteen years. Aggregate payments for the next five years of long-term debt outstanding at December 31, 1995 are $2,323,000 annually in 1996 through 1998, $1,452,000 in 1999 and $581,000 in 2000. At December 31, 1995 and 1994, the estimated fair value of long-term debt, based on borrowing rates currently available to the Company with similar terms and maturities, approximated the recorded amount. Cash payments for interest were $3,326,000 in 1995, $13,743,000 in 1994 and $17,661,000 in 1993. At December 31, 1995, the Company and its subsidiaries had available unused lines of bank credit aggregating approximately $61,200,000. NOTE 6. INCOME TAXES 1995 1994 1993 -------- -------- -------- (Dollars in thousands) U.S. income before taxes ......... $101,764 $ 98,122 $ 86,428 Foreign income before taxes ...... 291,959 262,234 237,340 -------- -------- -------- Total income before taxes ........ $393,723 $360,356 $323,768 ======== ======== ======== The following table shows the components of current and deferred income tax expense by taxing jurisdiction, both domestic and foreign: 1995 1994 1993 -------- -------- -------- (Dollars in thousands) Current Federal ......................... $ 26,806 $ 40,737 $ 34,386 State and local ................. 5,600 7,155 7,504 Foreign ......................... 106,056 90,251 78,792 -------- -------- -------- 138,462 138,143 120,682 -------- -------- -------- Deferred Federal ......................... 1,418 (4,063) (926) State and local ................. (339) (304) (733) Foreign ......................... 5,365 558 2,274 -------- -------- -------- 6,444 (3,809) 615 -------- -------- -------- Total income taxes ............. $144,906 $134,334 $121,297 ======== ======== ======== At December 31, 1995 and 1994, gross deferred tax assets were $52,300,000 and $52,600,000, respectively; gross deferred tax liabilities were $43,200,000 and $36,600,000, respectively. No valuation allowance was required for deferred tax assets. The principal components of deferred tax assets (liabilities) were: 1995 1994 -------- -------- (Dollars in thousands) Employee and retiree benefits .................... $ 30,000 $ 27,000 Inventory ........................................ 9,500 10,300 Property, plant and equipment .................... (24,400) (20,400) Other, net ....................................... (6,000) (900) -------- -------- $ 9,100 $ 16,000 ======== ======== 16 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) A reconciliation between the U.S. federal income tax rate and the effective tax rate is:
1995 1994 1993 ---- ---- ---- Statutory tax rate .............................................. 35.0% 35.0% 35.0% Difference in effective tax rate on foreign earnings and remittances ................................................ 2.1 1.4 1.7 State and local taxes ........................................... 0.9 1.2 1.4 Other, net ...................................................... (1.2) (0.3) (0.6) ---- ---- ---- Effective tax rate .............................................. 36.8% 37.3% 37.5% ==== ==== ====
Income taxes paid were $139,523,000 in 1995, $107,347,000 in 1994 and $110,789,000 in 1993. Undistributed earnings of foreign subsidiares for which no deferred taxes have been provided approximated $503,000,000 at December 31, 1995. Any additional U.S. taxes payable on these foreign earnings, if remitted, would be substantially offset by credits for foreign taxes already paid. NOTE 7. SHAREHOLDERS' EQUITY On December 14, 1993, the Board of Directors approved a three-for-one stock split. The certificates representing the additional shares were distributed on January 19, 1994 to shareholders of record on December 28, 1993. The issuance of the additional shares resulted in a transfer of $9,647,000 from Capital in excess of par value to Common stock. All per share amounts for the current and prior periods presented in these financial statements reflect this stock split. The following table shows treasury shares acquired and, as appropriate, the use of treasury shares for stock plans. Number Amount of (in Shares thousands) --------- --------- Balance January 1, 1993 .......................... 165,684 $ 17,959 Acquisitions ..................................... 1,163,082 126,128 Used for stock plans ............................. (95,013) (10,284) Three-for-one stock split ........................ 2,467,506 -- --------- -------- Balance December 31, 1993 ........................ 3,701,259 133,803 Acquisitions ..................................... 888,583 32,920 Used for stock plans ............................. (292,302) (10,665) --------- -------- Balance December 31, 1994 ........................ 4,297,540 156,058 Acquisitions ..................................... 877,738 42,251 Used for stock plans ............................. (367,273) (13,453) --------- -------- Balance December 31, 1995 ........................ 4,808,005 $184,856 ========= ======== Transactions in treasury shares resulted in net charges to Capital in excess of par value of $5,822,000, $4,092,000 and $3,546,000 in 1993, 1994 and 1995, respectively. Changes in the cumulative translation adjustment were (in thousands): Balance January 1, 1993 ........................ $ 50,476 Translation adjustments ........................ (50,028) -------- Balance December 31, 1993 ...................... 448 Translation adjustments ........................ 41,350 -------- Balance December 31, 1994 ...................... 41,798 Translation adjustments ........................ 33,251 -------- Balance December 31, 1995 ...................... $ 75,049 ======== 17 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) On February 13, 1990, the Company adopted a shareholder protection rights agreement (the "Rights Agreement") and declared a dividend of one right on each share of common stock outstanding on February 28, 1990 or issued thereafter. Until a person or group acquires 20% or more of the Company's common stock or commences a tender offer that will result in such person or group owning 20% or more, the rights will be evidenced by the common stock certificates, will automatically trade with the common stock and will not be exercisable. Thereafter, separate rights certificates will be distributed and each right will entitle its holder to purchase one share of common stock for an exercise price of $66.67. If any person or group acquires 20% or more of the Company's common stock, then 10 business days thereafter (the "Flip-in Date") each right (other than rights beneficially owned by holders of 20% or more of the common stock or transferees thereof, which rights become void) will entitle its holder to purchase, for the exercise price, a number of shares of common stock having a market value of twice the exercise price. If the Company is involved in a merger or sells more than 50% of its assets or earning power, each right will entitle its holder to purchase, for the exercise price, a number of shares of common stock of the acquiring company having a market value of twice the exercise price. If any person or group acquires between 20% and 50% of common stock, the Company's Board of Directors may, at its option, exchange one share of common stock for each right. The rights may by redeemed by the Board of Directors for $0.0033 per right prior to the Flip-in Date. The rights will expire on February 28, 2000, unless previously redeemed by the Board in accordance with the terms of the Rights Agreement. Dividends paid per share were $1.24, $1.08 and $1.00 in 1995, 1994 and 1993, respectively. NOTE 8. STOCK OPTIONS The Company has various stock option plans under which the Company's officers, directors and key employees may be granted options to purchase the Company's common stock at 100% of the market price on the day the option is granted. Stock option transactions were: Shares of Common Stock ------------------------- Available Under for Option Option ---------- --------- Balance January 1, 1993 .......................... 3,107,235 1,944,798 Granted .......................................... (780,000) 780,000 Exercised ........................................ -- (225,039) Terminated ....................................... 40,104 (40,104) --------- --------- Balance December 31, 1993 ........................ 2,367,339 2,459,655 Granted .......................................... (790,500) 790,500 Exercised ........................................ -- (292,302) Terminated ....................................... 51,149 (51,149) Lapsed ........................................... (18,621) -- --------- --------- Balance December 31, 1994 ........................ 1,609,367 2,906,704 Granted .......................................... (804,500) 804,500 Exercised ........................................ -- (367,273) Terminated ....................................... 58,299 (58,299) --------- --------- Balance December 31, 1995 ........................ 863,166 3,285,632 ========= ========= During 1995, options to purchase common stock were granted at the exercise price of $49.88 per share. At December 31, 1995, the price range for shares under option was $13.67 to $49.88; options for 1,169,857 shares were exercisable at that date. During 1995, 367,273 shares of common stock under option were exercised at prices ranging from $9.46 to $36.21. Except for certain options granted to foreign employees which can be exercised immediately, options generally become exercisable no earlier than two years from the date of grant. All options expire ten years after date of grant. 18 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) In October 1995, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 123 (FAS 123), Accounting for Stock-Based Compensation, which is effective for 1996. Under FAS 123, companies can elect, but are not required, to recognize compensation expense for all stock-based awards using a fair-value methodology. The Company expects to adopt the disclosure-only provisions of the standard in 1996. NOTE 9. INTERNATIONAL OPERATIONS
1995 (Dollars in thousands) -------------------------------------------------------------------- United Western Other States Europe Foreign Eliminations Consolidated -------- -------- -------- ------------ ------------ Sales to unaffiliated customers ........ $450,644 $604,036 $384,807 $ -- $1,439,487 Transfers between areas ................ 72,959 96,642 15,143 (184,744) -- -------- -------- -------- --------- ---------- Total sales .......................... $523,603 $700,678 $399,950 $(184,744) $1,439,487 ======== ======== ======== ========= ========== Operating profit ....................... $106,739 $203,131 $ 84,269 $ (3,437) $ 390,702 ======== ======== ======== ========= Unallocated expenses ................... (6,690) Interest expense ....................... (3,160) Other income (expense), net ............ 12,871 ---------- Income before taxes on income ........ $ 393,723 ========== Identifiable assets .................... $492,751 $437,589 $378,209 $ (58,753) $1,249,796 ======== ======== ======== ========= Unallocated assets ..................... 284,473 ---------- Total assets ......................... $1,534,269 ========== 1994 (Dollars in thousands) -------------------------------------------------------------------- United Western Other States Europe Foreign Eliminations Consolidated -------- -------- -------- ------------ ------------ Sales to unaffiliated customers ........ $428,156 $537,258 $349,823 $ -- $1,315,237 Transfers between areas ................ 69,969 76,442 10,488 (156,899) -- -------- -------- -------- --------- ---------- Total sales .......................... $498,125 $613,700 $360,311 $(156,899) $1,315,237 ======== ======== ======== ========= ========== Operating profit ....................... $105,903 $167,483 $ 83,554 $ (2,515) $ 354,425 ======== ======== ======== ========= Unallocated expenses ................... (5,812) Interest expense ....................... (13,470) Other income (expense), net ............ 25,213 ---------- Income before taxes on income ........ $ 360,356 ========== Identifiable assets .................... $428,539 $423,807 $286,724 $ (31,984) $1,107,086 ======== ======== ======== ========= Unallocated assets ..................... 292,639 ---------- Total assets ......................... $1,399,725 ========== 1993 (Dollars in thousands) -------------------------------------------------------------------- United Western Other States Europe Foreign Eliminations Consolidated -------- -------- -------- ------------ ------------ Sales to unaffiliated customers ........ $386,639 $491,359 $310,647 $ -- $1,188,645 Transfers between areas ................ 66,494 61,031 7,902 (135,427) -- -------- -------- -------- --------- ---------- Total sales .......................... $453,133 $552,390 $318,549 $(135,427) $1,188,645 ======== ======== ======== ========= ========== Operating profit ....................... $ 97,519 $148,769 $ 67,286 $ (2,418) $ 311,156 ======== ======== ======== ========= Unallocated expenses ................... (5,161) Interest expense ....................... (17,359) Other income (expense), net ............ 35,132 ---------- Income before taxes on income ........ $ 323,768 ========== Identifiable assets .................... $362,630 $371,963 $241,321 $ (55,111) $ 920,803 ======== ======== ======== ========= Unallocated assets ..................... 304,454 ---------- Total assets ......................... $1,225,257 ==========
19 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) Transfers between geographic areas are accounted for at prices which approximate arm's length market prices. Unallocated assets are principally cash and short-term investments. Net foreign exchange losses of $2,535,000 in 1995, and net gains of $13,543,000 in 1994 and $15,197,000 in 1993 are included in Other income (expense), net. Worldwide sales to the Company's largest customer amounted to 11%, 13% and 12% of worldwide net sales in 1995, 1994 and 1993, respectively. NOTE 10. RETIREMENT BENEFITS The Company and most of its subsidiaries have pension and/or other retirement benefit plans covering substantially all employees. Pension benefits are generally based on years of service and on compensation during the final years of employment. Plan assets, both for the U.S. and non-U.S. plans, consist primarily of equity securities and corporate and government fixed income securities. Substantially all pension benefit costs are funded as accrued; however, such funding is limited, where applicable, to amounts deductible for income tax purposes. Certain other retirement benefits are provided by balance sheet accruals. Contributions to defined contribution plans are mainly determined as a percentage of profits.
Pension expense included the following components: U.S. Plans Non-U.S. Plans ------------------------------- --------------------------------- 1995 1994 1993 1995 1994 1993 ------- ------- ------- -------- -------- -------- (Dollars in thousands) Service cost for benefits earned ....... $ 4,449 $ 4,784 $ 3,915 $ 4,993 $ 4,078 $ 3,654 Interest cost on projected benefit obligation ............................ 8,954 8,210 7,654 10,333 8,658 7,681 Actual return on plan assets ........... (24,674) 676 (7,888) (9,769) (8,576) (7,616) Net amortization and deferrals ......... 14,700 (9,982) (409) 348 261 266 ------- ------- ------- -------- -------- -------- Defined benefit plans .................. 3,429 3,688 3,272 5,905 4,421 3,985 Defined contribution and other retirement plans ...................... 2,288 2,165 2,049 2,332 2,761 2,831 ------- ------- ------- -------- -------- -------- Total pension expense ................ $ 5,717 $ 5,853 $ 5,321 $ 8,237 $ 7,182 $ 6,816 ======= ======= ======= ======== ======== ========
The funded status of pension plans at December 31 was: U.S. Plans Non-U.S. Plans -------------------- --------------------- 1995 1994 1995 1994 -------- -------- -------- -------- (Dollars in thousands) Actuarial present value of benefit obligation: Vested benefit obligation .................................... $ 98,059 $ 88,900 $101,764 $ 83,206 Non-vested benefit obligation ................................ 5,227 4,685 7,003 6,243 -------- -------- -------- -------- Accumulated benefit obligation ............................... $103,286 $ 93,585 $108,767 $ 89,449 ======== ======== ======== ======== Projected benefit obligation .................................. $126,330 $115,091 $148,324 $124,235 Plan assets at fair value ..................................... 145,785 119,806 137,239 116,450 -------- -------- -------- -------- Plan assets in excess of (less than) projected benefit obligation ................................................... 19,455 4,715 (11,085) (7,785) Unrecognized net (gain) loss .................................. (5,677) 7,439 4,461 2,263 Remaining balance of unrecognized net (asset) liability established at adoption of FAS 87 ............................ (4,461) (4,900) 2,658 2,602 -------- -------- -------- -------- Net pension asset (liability) ............................... $ 9,317 $ 7,254 $ (3,966) $ (2,920) ======== ======== ======== ========
20 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) Principal actuarial assumptions used to determine the above data were:
U.S. Plans Non-U.S. Plans ---------------- ---------------------- 1995 1994 1995 1994 ---- ---- -------- --------- Discount rate .................................................. 7.5% 7.5% 5.0%-8.5% 5.0%-8.0% Weighted average rate of compensation increase ................. 4.5% 4.5% 3.0%-6.0% 3.0%-6.0% Long-term rate of return on plan assets ........................ 8.0% 8.0% 4.5%-8.0% 5.0%-8.0%
In addition to pension benefits, certain health care and life insurance benefits are provided to all United States employees upon retirement from the Company. Such coverage is provided through insurance plans with premiums based on benefits paid. The Company does not generally provide health care and life insurance coverage for retired employees of foreign subsidiaries; however, such benefits are provided in most foreign countries by government-sponsored plans, and the cost of these programs is not significant to the Company. Expense recognized for postretirement benefits other than pensions included the following components: 1995 1994 1993 ------ ------ ------ (Dollars in thousands) Service cost for benefits earned ...... $1,176 $1,189 $ 914 Interest on benefit obligation ........ 3,079 3,110 2,636 ------ ------ ------ Total benefit expense ............... $4,255 $4,299 $3,550 ====== ====== ====== The components of the benefit obligation of the U.S. plan, included in Retirement and other liabilities, at December 31 were: 1995 1994 ------- ------- (Dollars in thousands) Retirees ................................................ $18,685 $18,128 Active employees eligible to retire ..................... 8,519 7,869 Other active employees .................................. 18,130 14,277 ------- ------- Accumulated benefit obligation .......................... 45,334 40,274 Unrecognized net loss ................................... (7,344) (4,276) ------- ------- Net benefit liability ................................. $37,990 $35,998 ======= ======= Principal actuarial assumptions used to determine the above data were: 1995 1994 ----- ----- Discount rate .............................................. 7.5% 8.0% Initial medical cost trend rate ............................ 9.5% 10.5% Ultimate medical cost trend rate ........................... 5.0% 5.0% Medical cost trend rate decreases to ultimate rate in year . 2002 2002 The effect of a one percent increase in the assumed medical rate of inflation would increase the accumulated postretirement benefit obligation by approximately $7,400,000; the annual service and interest cost would not be materially affected. 21 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) NOTE 11. FINANCIAL INSTRUMENTS AND CONCENTRATIONS OF CREDIT RISK The Company sometimes uses forward exchange contracts to reduce its exposure to fluctuations in foreign currency exchange rates. These contracts, the counterparties to which are major international financial institutions, generally involve the exchange of one currency for a second currency at a future date, and have maturities which do not exceed six months. Gains and losses on such contracts are recognized in income as incurred, effectively offsetting the losses and gains on the foreign currency transactions that are hedged. At December 31, 1995 and 1994, the value of outstanding foreign currency exchange contracts was not material. The Company has no significant concentrations of risk in financial instruments. Temporary cash investments are made in a well-diversified portfolio of high-quality, liquid obligations of government, corporate and financial institutions. There are also limited concentrations of credit risk with respect to trade receivables because of the large number of customers spread across many industries and geographic areas. NOTE 12. CONTINGENT LIABILITIES There are various lawsuits and claims pending against the Company. Management believes that any liability resulting from those actions or claims will not have a material adverse effect on the Company's financial condition, results of operations or liquidity. REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors and Shareholders of INTERNATIONAL FLAVORS & FRAGRANCES INC. In our opinion, the accompanying consolidated balance sheet and the related consolidated statements of income and retained earnings and of cash flows present fairly, in all material respects, the financial position of International Flavors & Fragrances Inc. and its subsidiaries at December 31, 1995 and 1994, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1995, in conformity with generally accepted accounting principles. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. PRICE WATERHOUSE LLP 1177 Avenue of the Americas New York, New York 10036 January 31, 1996 ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. None. 22 PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K. (a) See Item 8 on page 10. (b) No reports on Form 8-K were filed during the last quarter of the year ended December 31, 1995. (c) Exhibits. Number ------ 3 Restated Certificate of Incorporation of Registrant, incorporated by reference to Exhibit 3 to Registrant's Report on Form 10-K for fiscal year ended December 31, 1993 (File No. 1-4858). 3(b) By-laws of Registrant, incorporated by reference to Exhibit 3(b) to Registrant's Report on Form 10-K for fiscal year ended December 31, 1993 (File No. 1-4858). 4(a) Shareholder Protection Rights Agreement dated as of February 20, 1990 between Registrant and The Bank of New York, as Rights Agent, incorporated by reference to Exhibit 4 to Registrant's Report on Form 8-K dated February 13, 1990 (File No. 1-4858). 4(b) Amendment No. 1 dated as of April 6, 1990 to Shareholder Protection Rights Agreement, incorporated by reference to Exhibit 4 to Registrant's Report on Form 10-Q dated May 14, 1990 (File No. 1-4858). 4(c) Amendment No. 2 dated as of March 8, 1994 to Shareholder Protection Rights Agreement, incorporated by reference to Exhibit 4(c) to Registrant's Report on Form 10-K for fiscal year ended December 31, 1993 (File No. 1-4858). 4(d) Specimen certificates of Registrant's Common Stock bearing legend notifying of Shareholder Protection Rights Agreement, incorporated by reference to Exhibit 4(b) to Registrant's Report on Form 10-K for fiscal year ended December 31, 1989 (File No. 1-4858). 9 Not applicable. 10(a) Agreement dated as of January 1, 1992 between Registrant and Eugene P. Grisanti, Chairman and President of Registrant, incorporated by reference to Exhibit 10(a) to Registrant's Report on Form 10-K for fiscal year ended December 31, 1991 (File No. 1-4858). 10(b) Form of Executive Severance Agreement approved by Registrant's Board of Directors on February 14, 1989 incorporated by reference to Exhibit 28(b) to Registrant's Report on Form 10-K for fiscal year ended December 31, 1988 (File No. 1-4858). 10(c) Registrant's Executive Death Benefit Plan effective July 1, 1990, incorporated by reference to Exhibit 28 to Registrant's Report on Form 10-K for fiscal year ended December 31, 1990 (File No. 1-4858). 10(d) Supplemental Retirement Investment Plan adopted by Registrant's Board of Directors on November 14, 1989 incorporated by reference to Exhibit 28 to Registrant's Report on Form 10-K for fiscal year ended December 31, 1989 (File No. 1-4858). 10(e) Supplemental Retirement Plan adopted by Board of Directors on October 29, 1986, incorporated by reference to Exhibit 10(b) to Registrant's Report on Form 10-K for fiscal year ended December 31, 1986 (File No. 1-4858). 10(f) Restated Management Incentive Compensation Plan of Registrant, incorporated by reference to Exhibit A to the Registrant's Proxy Statement dated March 28, 1995 (File No. 1-4858). 10(h) Stock Option Plan for Non-Employee Directors, incorporated by reference to Exhibit A to the Proxy Statement of Registrant dated April 3, 1990 (File No. 1-4858). 10(i) Registrant's Directors' Deferred Compensation Plan adopted by Registrant's Board of Directors on September 15, 1981, incorporated by reference to Exhibit 10-A to Registrant's Report on Form 10-Q dated November 12, 1981 (File No. 1-4858). 23 Number ------ 10(j) Director Charitable Contribution Program adopted by the Board of Directors on February 14, 1995 incorporated by reference to Exhibit 10(j) to Registrant's Report on Form 10-K for the fiscal year ended December 31, 1994 (File No. 1-4858). 11 Not applicable. 12 Not applicable. 13 Not applicable. 16 Not applicable. 18 Not applicable. 21 List of Principal Subsidiaries. See page E-1 of this Form 10-K. 22 Not applicable. 23 Consent of Price Waterhouse LLP. See page 26 of this Form 10-K. 24 Powers of Attorney authorizing George Rowe, Jr. and Stephen A. Block to sign this report and amendments thereto on behalf of certain directors and officers of the Registrant. 27 Financial Data Schedule (EDGAR version only). 28 Not applicable. 99 None. 24 PURSUANT TO THE REQUIREMENTS OF SECTION 13 OF THE SECURITIES EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED HEREUNTO DULY AUTHORIZED. INTERNATIONAL FLAVORS & FRAGRANCES INC. (REGISTRANT) By /s/ THOMAS H. HOPPEL ----------------------------- THOMAS H. HOPPEL VICE-PRESIDENT AND TREASURER Dated: March 28, 1996 PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE REGISTRANT AND IN THE CAPACITIES AND ON THE DATE INDICATED: PRINCIPAL EXECUTIVE OFFICER: EUGENE P. GRISANTI President and Chairman of the Board PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER: THOMAS H. HOPPEL Vice-President, Treasurer and Director By /S/ STEPHEN A. BLOCK ---------------------------- STEPHEN A. BLOCK ATTORNEY-IN-FACT DIRECTORS: MARGARET HAYES ADAME ROBIN CHANDLER DUKE RICHARD M. FURLAUD HUGH R. KIRKPATRICK HERBERT G. REID March 28, 1996 GEORGE ROWE, JR. STANLEY M. RUMBOUGH, JR. HENRY P. VAN AMERINGEN HENDRIK C. VAN BAAREN WILLIAM D. VAN DYKE, III ORIGINAL POWERS OF ATTORNEY AUTHORIZING GEORGE ROWE, JR. AND STEPHEN A. BLOCK, AND EACH OF THEM, TO SIGN THIS REPORT ON BEHALF OF CERTAIN DIRECTORS AND OFFICERS OF THE REGISTRANT HAVE BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. 25 CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in the Prospectus constituting part of this Registration Statement on Form S-3 (No. 33-23513) of our report dated January 31, 1996 appearing on page 22 of International Flavors & Fragrances Inc.'s Annual Report on Form 10-K for the year ended December 31, 1995. We also consent to the references to us under the headings "Experts" and "Selected Financial Data" in such Prospectus. However, it should be noted that Price Waterhouse LLP has not prepared or certified such "Selected Financial Data". PRICE WATERHOUSE LLP 1177 Avenue of the Americas New York, New York 10036 March 28, 1996 26 SCHEDULE VIII
INTERNATIONAL FLAVORS & FRAGRANCES INC. AND SUBSIDIARIES SCHEDULE VIII--VALUATION AND QUALIFYING ACCOUNTS AND RESERVES (IN THOUSANDS OF DOLLARS) FOR THE YEAR ENDED DECEMBER 31, 1995 Additions Trans- Balance at charged to lation Balance beginning costs and Accounts adjust- at end of period expenses written off ments of period ---------- ---------- ----------- --------- --------- Allowance for doubtful accounts .............. $7,448 $1,632 $ 700 $ 222 $8,602 ====== ====== ====== ===== ====== FOR THE YEAR ENDED DECEMBER 31, 1994 Additions Trans- Balance at charged to lation Balance beginning costs and Accounts adjust- at end of period expenses written off ments of period ---------- ---------- ----------- --------- --------- Allowance for doubtful accounts .............. $6,314 $1,599 $ 724 $ 259 $7,448 ====== ====== ====== ===== ====== FOR THE YEAR ENDED DECEMBER 31, 1993 Additions Trans- Balance at charged to lation Balance beginning costs and Accounts adjust- at end of period expenses written off ments of period ---------- ---------- ----------- --------- --------- Allowance for doubtful accounts .............. $6,105 $ 768 $ 280 $(279) $6,314 ====== ====== ====== ===== ======
S-1 EXHIBIT 21 LIST OF REGISTRANT'S PRINCIPAL SUBSIDIARIES There is furnished below a list of the principal subsidiaries of Registrant. All the voting stock of each subsidiary, other than directors' qualifying shares, if any, is wholly owned by Registrant or a subsidiary of Registrant, except that International Flavors & Fragrances I.F.F. (France) S.a.r.1. is owned 70% by International Flavors & Fragrances I.F.F. (Nederland) B.V. and 30% by Registrant, I.F.F. Essencias e Fragrancias Ltda. is owned 63% by Registrant and 37% by International Flavors & Fragrances I.F.F. (Nederland) B.V., and International Flavours & Fragrances I.F.F. (Great Britain) Ltd. is owned 49% by International Flavors & Fragrances I.F.F. (Nederland) B.V. and 51% by Aromatics Holdings Limited.
Organized under NAME OF COMPANY laws of --------------- ---------------- International Flavors & Fragrances Inc. ................................................. New York International Flavors & Fragrances I.F.F. (Nederland) B.V. ............................ The Netherlands Aromatics Holdings Limited .......................................................... Ireland IFF-Benicarlo, S.A. ............................................................... Spain Irish Flavours and Fragrances Limited ............................................. Ireland International Flavours & Fragrances I.F.F. (Great Britain) Ltd. ................... England International Flavors & Fragrances I.F.F. (Italia) S.r.l. ......................... Italy International Flavors & Fragrances I.F.F. (Deutschland) G.m.b.H. ........................................................................... Germany International Flavors & Fragrances I.F.F. (Switzerland) A.G. ........................ Switzerland International Flavors & Fragrances I.F.F. (France) S.a.r.l. ......................... France International Flavors & Fragrances S.A.C.I. ............................................. Argentina I.F.F. Essencias e Fragrancias Ltda. .................................................... Brazil International Flavours & Fragrances (Australia) Pty. Ltd. ............................... Australia International Flavours & Fragrances (Far East) Ltd. ..................................... Hong Kong International Flavors & Fragrances (Japan) Ltd. ....................................... Japan P.T. Essence Indonesia .................................................................. Indonesia International Flavors & Fragrances (Mexico) S.A. de C.V. ................................ Mexico International Flavors & Fragrances I.F.F. (Espana) S.A. ................................. Spain ALVA Insurance Limited .................................................................. Bermuda IFF Concentrates Inc. ................................................................... Oregon Auro Tech, Inc. ......................................................................... Wisconsin IFF Fruit Specialties Inc. .............................................................. Wisconsin
E-1 EXHIBIT INDEX Number Description ------ ----------- 3 Restated Certificate of Incorporation of Registrant, incorporated by reference to Exhibit 3 to Registrant's Report on Form 10-K for fiscal year ended December 31, 1993 (File No. 1-4858). 3(b) By-laws of Registrant, incorporated by reference to Exhibit 3(b) to Registrant's Report on Form 10-K for fiscal year ended December 31, 1993 (File No. 1-4858). 4(a) Shareholder Protection Rights Agreement dated as of February 20, 1990 between Registrant and The Bank of New York, as Rights Agent, incorporated by reference to Exhibit 4 to Registrant's Report on Form 8-K dated February 13, 1990 (File No. 1-4858). 4(b) Amendment No. 1 dated as of April 6, 1990 to Shareholder Protection Rights Agreement, incorporated by reference to Exhibit 4 to Registrant's Report on Form 10-Q dated May 14, 1990 (File No. 1-4858). 4(c) Amendment No. 2 dated as of March 8, 1994 to Shareholder Protection Rights Agreement, incorporated by reference to Exhibit 4(c) to Registrant's Report on Form 10-K for fiscal year ended December 31, 1993 (File No. 1-4858). 4(d) Specimen certificates of Registrant's Common Stock bearing legend notifying of Shareholder Protection Rights Agreement, incorporated by reference to Exhibit 4(b) to Registrant's Report on Form 10-K for fiscal year ended December 31, 1989 (File No. 1-4858). 9 Not applicable. 10(a) Agreement dated as of January 1, 1992 between Registrant and Eugene P. Grisanti, Chairman and President of Registrant, incorporated by reference to Exhibit 10(a) to Registrant's Report on Form 10-K for fiscal year ended December 31, 1991 (File No. 1-4858). 10(b) Form of Executive Severance Agreement approved by Registrant's Board of Directors on February 14, 1989 incorporated by reference to Exhibit 28(b) to Registrant's Report on Form 10-K for fiscal year ended December 31, 1988 (File No. 1-4858). 10(c) Registrant's Executive Death Benefit Plan effective July 1, 1990, incorporated by reference to Exhibit 28 to Registrant's Report on Form 10-K for fiscal year ended December 31, 1990 (File No. 1-4858). 10(d) Supplemental Retirement Investment Plan adopted by Registrant's Board of Directors on November 14, 1989 incorporated by reference to Exhibit 28 to Registrant's Report on Form 10-K for fiscal year ended December 31, 1989 (File No. 1-4858). 10(e) Supplemental Retirement Plan adopted by Board of Directors on October 29, 1986, incorporated by reference to Exhibit 10(b) to Registrant's Report on Form 10-K for fiscal year ended December 31, 1986 (File No. 1-4858). 10(f) Restated Management Incentive Compensation Plan of Registrant, incorporated by reference to Exhibit A to the Registrant's Proxy Statement dated March 28, 1995 (File No. 1-4858). 10(h) Stock Option Plan for Non-Employee Directors, incorporated by reference to Exhibit A to the Proxy Statement of Registrant dated April 3, 1990 (File No. 1-4858). 10(i) Registrant's Directors' Deferred Compensation Plan adopted by Registrant's Board of Directors on September 15, 1981, incorporated by reference to Exhibit 10-A to Registrant's Report on Form 10-Q dated November 12, 1981 (File No. 1-4858). Number ------ 10(j) Director Charitable Contribution Program adopted by the Board of Directors on February 14, 1995 incorporated by reference to Exhibit 10(j) to Registrant's Report on Form 10-K for the fiscal year ended December 31, 1994 (File No. 1-4858). 11 Not applicable. 12 Not applicable. 13 Not applicable. 16 Not applicable. 18 Not applicable. 21 List of Principal Subsidiaries. See page E-1 of this Form 10-K. 22 Not applicable. 23 Consent of Price Waterhouse LLP. See page 26 of this Form 10-K. 24 Powers of Attorney authorizing George Rowe, Jr. and Stephen A. Block to sign this report and amendments thereto on behalf of certain directors and officers of the Registrant. 27 Financial Data Schedule (EDGAR version only). 28 Not applicable. 99 None. EX-24 2 POWER OF ATTORNEY POWER OF ATTORNEY The undersigned director and/or officer of International Flavors & Fragrances Inc., a New York corporation, which is about to file with the Securities and Exchange Commission, under the provisions of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, an Annual Report on Form 10-K, hereby constitutes and appoints George Rowe, Jr. and Stephen A. Block his (her) attorneys, and each of them his (her) attorney with power to act without the other, with full power of substitution and resubstitution, for him (her) and in his (her) name, place and stead to sign in any and all capacities such Annual Report, and any and all amendments thereto, and to file the same with all exhibits thereto and other documents in connection therewith, granting unto said attorneys, and each of them, full power and authority to do so and to perform all and every act necessary to be done in connection therewith, as fully to all intents and purposes as he (she) might or could do if personally present, hereby ratifying the acts of his (her) said attorneys and each of them. IN WITNESS WHEREOF, the undersigned has hereunto set his (her) hand and seal this 13th day of February 1996. MARGARET HAYES ADAME (L.S.) ------------------------------ Margaret Hayes Adame POWER OF ATTORNEY The undersigned director and/or officer of International Flavors & Fragrances Inc., a New York corporation, which is about to file with the Securities and Exchange Commission, under the provisions of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, an Annual Report on Form 10-K, hereby constitutes and appoints George Rowe, Jr. and Stephen A. Block his (her) attorneys, and each of them his (her) attorney with power to act without the other, with full power of substitution and resubstitution, for him (her) and in his (her) name, place and stead to sign in any and all capacities such Annual Report, and any and all amendments thereto, and to file the same with all exhibits thereto and other documents in connection therewith, granting unto said attorneys, and each of them, full power and authority to do so and to perform all and every act necessary to be done in connection therewith, as fully to all intents and purposes as he (she) might or could do if personally present, hereby ratifying the acts of his (her) said attorneys and each of them. IN WITNESS WHEREOF, the undersigned has hereunto set his (her) hand and seal this 13th day of February 1996. ROBIN CHANDLER DUKE (L.S.) ------------------------------ Robin Chandler Duke POWER OF ATTORNEY The undersigned director and/or officer of International Flavors & Fragrances Inc., a New York corporation, which is about to file with the Securities and Exchange Commission, under the provisions of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, an Annual Report on Form 10-K, hereby constitutes and appoints George Rowe, Jr. and Stephen A. Block his (her) attorneys, and each of them his (her) attorney with power to act without the other, with full power of substitution and resubstitution, for him (her) and in his (her) name, place and stead to sign in any and all capacities such Annual Report, and any and all amendments thereto, and to file the same with all exhibits thereto and other documents in connection therewith, granting unto said attorneys, and each of them, full power and authority to do so and to perform all and every act necessary to be done in connection therewith, as fully to all intents and purposes as he (she) might or could do if personally present, hereby ratifying the acts of his (her) said attorneys and each of them. IN WITNESS WHEREOF, the undersigned has hereunto set his (her) hand and seal this 13th day of February 1996. RICHARD M. FURLAUD (L.S.) ------------------------------ Richard M. Furlaud POWER OF ATTORNEY The undersigned director and/or officer of International Flavors & Fragrances Inc., a New York corporation, which is about to file with the Securities and Exchange Commission, under the provisions of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, an Annual Report on Form 10-K, hereby constitutes and appoints George Rowe, Jr. and Stephen A. Block his (her) attorneys, and each of them his (her) attorney with power to act without the other, with full power of substitution and resubstitution, for him (her) and in his (her) name, place and stead to sign in any and all capacities such Annual Report, and any and all amendments thereto, and to file the same with all exhibits thereto and other documents in connection therewith, granting unto said attorneys, and each of them, full power and authority to do so and to perform all and every act necessary to be done in connection therewith, as fully to all intents and purposes as he (she) might or could do if personally present, hereby ratifying the acts of his (her) said attorneys and each of them. IN WITNESS WHEREOF, the undersigned has hereunto set his (her) hand and seal this 13th day of February 1996. EUGENE P. GRISANTI (L.S.) ------------------------------ Eugene P. Grisanti POWER OF ATTORNEY The undersigned director and/or officer of International Flavors & Fragrances Inc., a New York corporation, which is about to file with the Securities and Exchange Commission, under the provisions of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, an Annual Report on Form 10-K, hereby constitutes and appoints George Rowe, Jr. and Stephen A. Block his (her) attorneys, and each of them his (her) attorney with power to act without the other, with full power of substitution and resubstitution, for him (her) and in his (her) name, place and stead to sign in any and all capacities such Annual Report, and any and all amendments thereto, and to file the same with all exhibits thereto and other documents in connection therewith, granting unto said attorneys, and each of them, full power and authority to do so and to perform all and every act necessary to be done in connection therewith, as fully to all intents and purposes as he (she) might or could do if personally present, hereby ratifying the acts of his (her) said attorneys and each of them. IN WITNESS WHEREOF, the undersigned has hereunto set his (her) hand and seal this 13th day of February 1996. THOMAS H. HOPPEL (L.S.) ------------------------------ Thomas H. Hoppel POWER OF ATTORNEY The undersigned director and/or officer of International Flavors & Fragrances Inc., a New York corporation, which is about to file with the Securities and Exchange Commission, under the provisions of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, an Annual Report on Form 10-K, hereby constitutes and appoints George Rowe, Jr. and Stephen A. Block his (her) attorneys, and each of them his (her) attorney with power to act without the other, with full power of substitution and resubstitution, for him (her) and in his (her) name, place and stead to sign in any and all capacities such Annual Report, and any and all amendments thereto, and to file the same with all exhibits thereto and other documents in connection therewith, granting unto said attorneys, and each of them, full power and authority to do so and to perform all and every act necessary to be done in connection therewith, as fully to all intents and purposes as he (she) might or could do if personally present, hereby ratifying the acts of his (her) said attorneys and each of them. IN WITNESS WHEREOF, the undersigned has hereunto set his (her) hand and seal this 13th day of February 1996. HUGH R. KIRKPATRICK (L.S.) ------------------------------ Hugh R. Kirkpatrick POWER OF ATTORNEY The undersigned director and/or officer of International Flavors & Fragrances Inc., a New York corporation, which is about to file with the Securities and Exchange Commission, under the provisions of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, an Annual Report on Form 10-K, hereby constitutes and appoints George Rowe, Jr. and Stephen A. Block his (her) attorneys, and each of them his (her) attorney with power to act without the other, with full power of substitution and resubstitution, for him (her) and in his (her) name, place and stead to sign in any and all capacities such Annual Report, and any and all amendments thereto, and to file the same with all exhibits thereto and other documents in connection therewith, granting unto said attorneys, and each of them, full power and authority to do so and to perform all and every act necessary to be done in connection therewith, as fully to all intents and purposes as he (she) might or could do if personally present, hereby ratifying the acts of his (her) said attorneys and each of them. IN WITNESS WHEREOF, the undersigned has hereunto set his (her) hand and seal this 13th day of February 1996. HERBERT G. REID (L.S.) ------------------------------ Herbert G. Reid POWER OF ATTORNEY The undersigned director and/or officer of International Flavors & Fragrances Inc., a New York corporation, which is about to file with the Securities and Exchange Commission, under the provisions of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, an Annual Report on Form 10-K, hereby constitutes and appoints George Rowe, Jr. and Stephen A. Block his (her) attorneys, and each of them his (her) attorney with power to act without the other, with full power of substitution and resubstitution, for him (her) and in his (her) name, place and stead to sign in any and all capacities such Annual Report, and any and all amendments thereto, and to file the same with all exhibits thereto and other documents in connection therewith, granting unto said attorneys, and each of them, full power and authority to do so and to perform all and every act necessary to be done in connection therewith, as fully to all intents and purposes as he (she) might or could do if personally present, hereby ratifying the acts of his (her) said attorneys and each of them. IN WITNESS WHEREOF, the undersigned has hereunto set his (her) hand and seal this 13th day of February 1996. GEORGE ROWE, JR. (L.S.) ------------------------------ George Rowe, Jr. POWER OF ATTORNEY The undersigned director and/or officer of International Flavors & Fragrances Inc., a New York corporation, which is about to file with the Securities and Exchange Commission, under the provisions of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, an Annual Report on Form 10-K, hereby constitutes and appoints George Rowe, Jr. and Stephen A. Block his (her) attorneys, and each of them his (her) attorney with power to act without the other, with full power of substitution and resubstitution, for him (her) and in his (her) name, place and stead to sign in any and all capacities such Annual Report, and any and all amendments thereto, and to file the same with all exhibits thereto and other documents in connection therewith, granting unto said attorneys, and each of them, full power and authority to do so and to perform all and every act necessary to be done in connection therewith, as fully to all intents and purposes as he (she) might or could do if personally present, hereby ratifying the acts of his (her) said attorneys and each of them. IN WITNESS WHEREOF, the undersigned has hereunto set his (her) hand and seal this 13th day of February 1996. STANLEY M. RUMBOUGH, JR. (L.S.) ------------------------------ Stanley M. Rumbough, Jr. POWER OF ATTORNEY The undersigned director and/or officer of International Flavors & Fragrances Inc., a New York corporation, which is about to file with the Securities and Exchange Commission, under the provisions of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, an Annual Report on Form 10-K, hereby constitutes and appoints George Rowe, Jr. and Stephen A. Block his (her) attorneys, and each of them his (her) attorney with power to act without the other, with full power of substitution and resubstitution, for him (her) and in his (her) name, place and stead to sign in any and all capacities such Annual Report, and any and all amendments thereto, and to file the same with all exhibits thereto and other documents in connection therewith, granting unto said attorneys, and each of them, full power and authority to do so and to perform all and every act necessary to be done in connection therewith, as fully to all intents and purposes as he (she) might or could do if personally present, hereby ratifying the acts of his (her) said attorneys and each of them. IN WITNESS WHEREOF, the undersigned has hereunto set his (her) hand and seal this 13th day of February 1996. HENRY P. VAN AMERINGEN (L.S.) ------------------------------ Henry P. van Ameringen POWER OF ATTORNEY The undersigned director and/or officer of International Flavors & Fragrances Inc., a New York corporation, which is about to file with the Securities and Exchange Commission, under the provisions of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, an Annual Report on Form 10-K, hereby constitutes and appoints George Rowe, Jr. and Stephen A. Block his (her) attorneys, and each of them his (her) attorney with power to act without the other, with full power of substitution and resubstitution, for him (her) and in his (her) name, place and stead to sign in any and all capacities such Annual Report, and any and all amendments thereto, and to file the same with all exhibits thereto and other documents in connection therewith, granting unto said attorneys, and each of them, full power and authority to do so and to perform all and every act necessary to be done in connection therewith, as fully to all intents and purposes as he (she) might or could do if personally present, hereby ratifying the acts of his (her) said attorneys and each of them. IN WITNESS WHEREOF, the undersigned has hereunto set his (her) hand and seal this 13th day of February 1996. HENDRIK C. VAN BAAREN (L.S.) ------------------------------ Hendrik C. van Baaren POWER OF ATTORNEY The undersigned director and/or officer of International Flavors & Fragrances Inc., a New York corporation, which is about to file with the Securities and Exchange Commission, under the provisions of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, an Annual Report on Form 10-K, hereby constitutes and appoints George Rowe, Jr. and Stephen A. Block his (her) attorneys, and each of them his (her) attorney with power to act without the other, with full power of substitution and resubstitution, for him (her) and in his (her) name, place and stead to sign in any and all capacities such Annual Report, and any and all amendments thereto, and to file the same with all exhibits thereto and other documents in connection therewith, granting unto said attorneys, and each of them, full power and authority to do so and to perform all and every act necessary to be done in connection therewith, as fully to all intents and purposes as he (she) might or could do if personally present, hereby ratifying the acts of his (her) said attorneys and each of them. IN WITNESS WHEREOF, the undersigned has hereunto set his (her) hand and seal this 13th day of February 1996. WILLIAM D. VAN DYKE, III (L.S.) ------------------------------ William D. Van Dyke, III EX-27 3 FINANCIAL DATA SCHEDULE
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. 1000 12-MOS DEC-31-1995 DEC-31-1995 251,430 45,503 253,913 (8,602) 414,547 1,035,977 839,206 (370,621) 1,534,269 276,401 11,616 14,470 0 0 1,102,090 1,534,269 1,439,487 1,439,487 746,971 1,053,843 (12,871) 1,632 3,160 393,723 144,906 248,817 0 0 0 248,817 2.24 2.24
-----END PRIVACY-ENHANCED MESSAGE-----