-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, lOFU16bXQYwPv8aPah9VsdloC4TJxDkXapzNfw26aWF74alt+T5JAqWOI63HBa8y 4LiqXIakPfCuyZhrtKv4vQ== 0000950110-94-000276.txt : 19940819 0000950110-94-000276.hdr.sgml : 19940819 ACCESSION NUMBER: 0000950110-94-000276 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940630 FILED AS OF DATE: 19940812 FILER: COMPANY DATA: COMPANY CONFORMED NAME: INTERNATIONAL FLAVORS & FRAGRANCES INC CENTRAL INDEX KEY: 0000051253 STANDARD INDUSTRIAL CLASSIFICATION: 2860 IRS NUMBER: 131432060 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-04858 FILM NUMBER: 94543828 BUSINESS ADDRESS: STREET 1: 521 W 57TH ST CITY: NEW YORK STATE: NY ZIP: 10019 BUSINESS PHONE: 2127655500 MAIL ADDRESS: STREET 2: 521 W 57TH ST CITY: NEW YORK STATE: NY ZIP: 10019 FORMER COMPANY: FORMER CONFORMED NAME: VANAMERIGEN HAEBLER INC DATE OF NAME CHANGE: 19680426 10-Q 1 FORM 10-Q FOR QTLY PERIOD ENDED JUNE 30, 1994 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarter Ended June 30, 1994 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. 10019-2905 ________________________________________ _______________ (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (212) 765-5500 Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Sections 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding twelve months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ____________ _________________ Number of shares outstanding as of August 8, 1994: 111,364,554 PART. I FINANCIAL INFORMATION 1 Item 1. Financial Statements INTERNATIONAL FLAVORS & FRAGRANCES INC. CONSOLIDATED BALANCE SHEET (Dollars in thousands) 6/30/94 12/31/93 ------- -------- Assets Current Assets: Cash & Cash Equivalents $193,391 $187,205 Short-term Investments 82,989 124,073 Trade Receivables 274,869 203,088 Allowances For Doubtful Accounts (6,755) (6,314) Inventories: Raw Materials 195,551 175,269 Work in Process 24,692 26,902 Finished Goods 107,285 100,755 -------- ------- Total Inventories 327,528 302,926 Other Current Assets 76,348 68,045 -------- ------- Total Current Assets 948,370 879,023 -------- ------- Property, Plant & Equipment, At Cost 680,299 610,629 Accumulated Depreciation (313,402) (287,212) -------- ------- 366,897 323,417 Other Assets 21,631 22,817 ---------- ---------- Total Assets $1,336,898 $1,225,257 ========== ========== Liabilities and Shareholders' Equity Current Liabilities: Bank Loans $ 14,212 $ 30,937 Accounts Payable-Trade 60,246 43,771 Dividends Payable 30,058 30,259 Income Taxes 60,244 45,512 Other Current Liabilities 77,767 76,108 ---------- ---------- Total Current Liabilities 242,527 226,587 ---------- ---------- Other Liabilities: Deferred Income Taxes 12,056 11,099 Long-term Debt 15,803 - Other 100,350 95,702 ---------- ---------- Total Other Liabilities 128,209 106,801 ---------- ---------- Shareholders' Equity: Common Stock(115,761,840 shares issued in '94 and 115,761,240 in '93) 14,470 14,470 Capital in Excess of Par Value 147,735 150,114 Retained Earnings 924,323 860,640 Cumulative Translation Adjustment 40,504 448 ---------- ---------- 1,127,032 1,025,672 Treasury Stock, at cost - 4,430,045 shares in '94 and 3,701,259 in '93 (160,870) (133,803) ---------- ---------- Total Shareholders' Equity 966,162 891,869 ---------- ---------- Total Liabilities and Shareholders' Equity $1,336,898 $1,225,257 ========== ========== See Notes to Consolidated Financial Statements INTERNATIONAL FLAVORS & FRAGRANCES 2 CONSOLIDATED STATEMENT OF INCOME (Dollars in thousands except per share amounts) 3 Months Ended 6/30 -------------------------- 1994 1993 ---- ---- Net Sales $345,210 $321,262 -------- -------- Cost of Goods Sold 173,607 161,946 Research and Development Expenses 19,923 18,728 Selling and Administrative Expenses 50,116 48,745 Interest Expense 5,379 3,627 Other (Income) Expense, Net (7,356) (8,658) -------- -------- 241,669 224,388 -------- -------- Income Before Taxes on Income 103,541 96,874 Taxes on Income 38,625 35,940 -------- -------- Net income $ 64,916 $ 60,934 ======== ======== Earnings per share * $0.58 $0.53 Dividends Paid Per Share * $0.27 $0.25 6 Months Ended 6/30 ------------------------- 1994 1993 ---- ---- Net Sales $668,747 $630,406 -------- -------- Cost of Goods Sold 339,227 321,041 Research and Development Expenses 39,276 37,486 Selling and Administrative Expenses 98,961 96,943 Interest Expense 11,544 6,853 Other (Income) Expense, Net (17,810) (18,200) -------- -------- 471,198 444,123 -------- -------- Income Before Taxes on Income 197,549 186,283 Taxes on Income 73,692 69,122 -------- -------- Net income $123,857 $117,161 ======== ======== Earnings Per Share * $1.11 $1.02 Dividends Paid Per Share * $0.54 $0.50 Average Number of Shares Outstanding (000) 111,642 114,627 * Reflects three-for-one stock split, distributed on January 19, 1994 to shareholders of record on December 28, 1993. See Notes to Consolidated Financial Statements INTERNATIONAL FLAVORS & FRAGRANCE 3 CONSOLIDATED STATEMENT OF CASH FLOW (Dollars in thousands) 6 Months Ended 6/30 ------------------------- 1994 1993 ---- ---- Cash Flows From Operating Activities: Net Income $123,857 $117,161 Adjustments to Reconcile to Net Cash Provided by Operations: Depreciation 17,790 17,577 Deferred Income Taxes 3,639 575 Changes in Assets and Liabilities: Current Receivables (67,240) (61,384) Inventories (11,411) (2,754) Current Payables 29,629 27,877 Other, Net (3,850) 2 -------- ------- Net Cash Provided by Operations 92,414 99,054 -------- ------- Cash Flows From Investing Activities: Proceeds From Sale/Maturities Short Term Investment 92,966 160,237 Purchases of Short Term Investments (49,664) (131,019) Additions to Property, Plant & Equipment, Net of Minor Disposals (44,169) (28,151) -------- ------- Net Cash Provided by (Used in) Investing Activities (867) 1,067 -------- ------- Cash Flows From Financing Activities: Cash Dividends Paid (60,374) (57,562) Increase (Decrease) in Bank Loans (5,692) (646) Proceeds From Issuance of Stock Under Stock Option 2,755 2,550 Purchase of Treasury Stock (32,433) (40,848) -------- ------- Net Cash Used In Financing Activities (95,744) (96,506) -------- ------- Effect of Exchange Rate Changes on Cash and Cash Equivalents 10,383 (17,360) -------- ------- Net Change in Cash and Cash Equivalents 6,186 (13,745) Cash and Cash Equivalents at Beginning of Year 187,205 210,798 -------- ------- Cash and Cash Equivalents at End of Period $193,391 $197,053 ======== ======== Interest Paid $ 11,673 $ 7,180 Income Taxes Paid $ 54,263 $ 55,866 See Notes to Consolidated Financial Statements 4 Notes to Consolidated Financial Statements These interim statements and management's discussion and analysis should be read in conjunction with the consolidated financial statements and their related notes, and management's discussion and analysis of results of operations and financial condition included in the Company's 1993 Annual Report to Shareholders. Effective January 1, 1994, the Company adopted Statement of Financial Accounting Standards No. 115, Accounting For Certain Debt and Equity Securities, classifying all marketable securities as available for sale. The effect of adopting this standard was not material. The financial statements at and for the quarter and six month period ended June 30, 1994 include the balances and results of operations of the Company's 80% owned joint venture, International Flavors & Fragrances (Hangzhou) Co., Ltd. The inclusion of these accounts was not material to the Company's financial condition or results of operations. In the opinion of the Company's management, all normal recurring adjustments necessary for a fair statement of the results for the interim periods have been made. Earnings per share were calculated on the basis of the average number of shares of common stock outstanding during the applicable period. Earnings per share amounts reflect the three-for-one stock split distributed on January 19, 1994 to shareholders of record on December 28, 1993. Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition Operations Worldwide net sales for the second quarter of 1994 increased 7% over the prior year to $345,210,000. For the first six months of 1994, net sales increased 6% over the prior year to $668,747,000. Sales increases in flavor and fragrance products were recorded in both the second quarter and the six month periods. The sales increase for the second quarter and the first six months of 1994, as compared to the same period in 1993, was unfavorably affected by the translation of European currencies into the stronger U.S. dollar. If the dollar exchange rate had remained the same during 1994 and 1993, the sales increase for both the second quarter and the six months ended June 30, 1994 would have been 9%. Net income for the second quarter was $64,916,000, an increase of 7% from the second quarter 1993. Net income for the first six months of 1994 was $123,857,000, an increase of 6% over the comparable 1993 period. This profit growth was primarily the result of the sales increase during these periods. 5 The percentage relationship of cost of goods sold and other operating expenses to sales for the first half 1994 and 1993 remained fairly constant, especially on an overall basis: First Six Months --------------------- 1994 1993 ---- ---- Cost of Goods Sold 50.7% 50.9% Research and Development Exp. 5.9% 5.9% Selling and Administrative Exp. 14.8% 15.4% Interest expense was $5,379,000 for the second quarter of 1994, compared to $3,627,000 for the second quarter 1993. For the first six months 1994, interest expense amounted to $11,544,000, compared to $6,853,000 in the first six months of 1993. The higher interest expense in 1994 resulted mainly from the higher level of borrowings and higher interest rates in Brazil. In both 1994 and 1993, the borrowing levels in Brazil generated significant offsetting exchange gains which were included in Other Income. The effective tax rate for the second quarter and first six months of 1994 was 37.3%, as compared to 37.1% for the comparable periods in 1993. Financial Condition The financial condition of the Company continued to be strong during the second quarter. Cash, cash equivalents and short-term investments totalled $276,380,000 at June 30, 1994. At June 30, 1994, working capital was $705,843,000 compared to $652,436,000 at December 31, 1993. Gross additions to property, plant and equipment during the first half of 1994 were $44,904,000. In January 1994, the Company's cash dividend was increased 8% to an annual rate of $1.08 per share, and $.27 per share was paid to shareholders in both the first and second quarter. The Company anticipates that its growth, capital expenditure programs and share repurchase program will be funded from internal sources. The cumulative translation adjustment component of Shareholders' Equity at June 30, 1994 was $40,504,000 compared to $448,000 at December 31, 1993. Changes in the component result from translating the net assets of the majority of the Company's foreign subsidiaries into U.S. dollars at current exchange rates as required by the Statement of Financial Accounting Standards No. 52 on accounting for foreign currency translation. 6 PART II. OTHER INFORMATION ITEM 1. Legal Proceedings In July 1994, the Company and its three primary liability insurers entered into an agreement settling the action commenced by such insurers in November 1991. That action had sought a declaratory judgment that the insurers were under no duty to defend or indemnify the Company with respect to pending or future waste site claims and recovery of sums previously paid by the carriers in defending the Company against such claims. In the settlement, the Company and the insurers have agreed to share defense and indemnity costs up to an agreed amount. The settlement of the declaratory judgment action is consistent with the Company's previously stated belief that the amounts it will probably have to pay in connection with waste site claims 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 and because payment will be made over an extended time period. ITEM 4. Submission of Matters to a Vote of Security Holders At the annual meeting of Registrant's shareholders held Thursday, May 12, 1994, at which 96,679,766 shares or 86.5% of Registrant's Common stock were represented in person or by proxy, the 12 nominees for director of Registrant, as listed in Registrant's proxy statement dated April 5, 1994 previously filed with the Commission, were duly elected to Registrant's Board of Directors. There was no solicitation of proxies in opposition to these nominees. ITEM 6. Exhibits and Reports on Form 8-K (a) Exhibits None (b) Reports on Form 8-K Registrant filed no report on Form 8-K during the quarter for which this report on Form 10-Q is filed. 7 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. INTERNATIONAL FLAVORS & FRAGRANCES INC. Dated: August 10, 1994 By: /s/ THOMAS H. HOPPEL -------------------------------------------------- Thomas H. Hoppel, Vice President & Treasurer Dated: August 10, 1994 By: /s/ STEPHEN A. BLOCK -------------------------------------------------- Stephen A. Block, Vice-President Law and Secretary -----END PRIVACY-ENHANCED MESSAGE-----