-----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, K29kM7DWESGEAZIpWxzCYAk1zKYDZtJtOxTqqUOeEmtSuGx6uH0UFcHfkG+iT76O p2/G61AiYPkaKSRQ6m+K6Q== 0000950110-97-001254.txt : 19970814 0000950110-97-001254.hdr.sgml : 19970814 ACCESSION NUMBER: 0000950110-97-001254 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970813 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: INTERNATIONAL FLAVORS & FRAGRANCES INC CENTRAL INDEX KEY: 0000051253 STANDARD INDUSTRIAL CLASSIFICATION: INDUSTRIAL ORGANIC CHEMICALS [2860] IRS NUMBER: 131432060 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-04858 FILM NUMBER: 97658774 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 ================================================================================ 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, 1997 Commission File Number 1-4858 INTERNATIONAL FLAVORS & FRAGRANCES INC. ----------------------------------------------------- (Exact Name of Registrant as specified in its charter) NEW YORK 13-1432060 -------------------------------------------- ------------------ (State or other jurisdiction of incorporation (IRS Employer or organization) identification No.) 521 WEST 57TH STREET, NEW YORK, N.Y. 10019-2960 --------------------------------------- ------------------ (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (212) 765-5500 Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Sections 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding twelve months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ---- ---- Number of shares outstanding as of August 8, 1997: 109,279,253 ================================================================================ 1 PART I. FINANCIAL INFORMATION Item 1. Financial Statements INTERNATIONAL FLAVORS & FRAGRANCES INC. CONSOLIDATED BALANCE SHEET (DOLLARS IN THOUSANDS) 6/30/97 12/31/96 ---------- ---------- Assets - ------ Current Assets: Cash & Cash Equivalents ......................... $ 208,529 $ 261,370 Short-term Investments .......................... 46,326 56,613 Trade Receivables ............................... 305,217 253,484 Allowance For Doubtful Accounts ................. (7,674) (8,733) Inventories: Raw Materials ..................... 201,734 211,124 Work in Process ................... 16,519 24,644 Finished Goods .................... 131,248 133,310 ---------- ---------- Total Inventories ................. 349,501 369,078 Other Current Assets ............................ 90,477 74,544 ---------- ---------- Total Current Assets ............................ 992,376 1,006,356 ---------- ---------- Property, Plant & Equipment, At Cost ............... 859,233 878,224 Accumulated Depreciation ........................... (406,487) (410,427) ---------- ---------- 452,746 467,797 Other Assets ....................................... 33,702 32,760 ---------- ---------- Total Assets ....................................... $1,478,824 $1,506,913 ========== ========== Liabilities and Shareholders' Equity - ------------------------------------ Current Liabilities: Bank Loans ...................................... $ 22,903 $ 18,929 Accounts Payable-Trade .......................... 62,190 57,681 Dividends Payable ............................... 39,300 39,628 Income Taxes .................................... 77,445 56,832 Other Current Liabilities ....................... 99,820 107,394 ---------- ---------- Total Current Liabilities ....................... 301,658 280,464 ---------- ---------- Other Liabilities: Deferred Income Taxes ........................... 15,043 16,941 Long-term Debt .................................. 7,351 8,289 Retirement and Other Liabilities ................ 124,654 124,682 ---------- ---------- Total Other Liabilities ............................ 147,048 149,912 ---------- ---------- Shareholders' Equity: Common Stock (115,761,840 shares issued in '97 and in '96) .................................. 14,470 14,470 Capital in Excess of Par Value .................. 137,547 138,480 Restricted Stock ................................ (10,125) -- Retained Earnings ............................... 1,154,432 1,106,572 Cumulative Translation Adjustment ............... 4,283 47,555 ---------- ---------- 1,300,607 1,307,077 Treasury Stock, at cost--6,644,763 shares in '97 and 5,790,323 in '96 .................. (270,489) (230,540) ---------- ---------- Total Shareholders' Equity ...................... 1,030,118 1,076,537 ---------- ---------- Total Liabilities and Shareholders' Equity ......... $1,478,824 $1,506,913 ========== ========== See Notes to Consolidated Financial Statements 2 INTERNATIONAL FLAVORS & FRAGRANCES INC. CONSOLIDATED STATEMENT OF INCOME (DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS) 3 Months Ended 6/30 ------------------------ 1997 1996 -------- -------- Net Sales ..................................... $381,470 $374,397 -------- -------- Cost of Goods Sold ............................ 204,055 201,807 Research and Development Expenses ............. 23,496 23,096 Selling and Administrative Expenses ........... 57,001 55,355 Nonrecurring Charge ........................... -- 49,707 Interest Expense .............................. 618 747 Other (Income) Expense, Net ................... (2,497) (2,699) -------- -------- 282,673 328,013 -------- -------- Income Before Taxes on Income ................. 98,797 46,384 Taxes on Income ............................... 35,488 16,681 -------- -------- Net Income .................................... $ 63,309 $ 29,703 ======== ======== Earnings Per Share ............................ $0.58 $0.26 Dividends Paid Per Share ...................... $0.36 $0.34 6 Months Ended 6/30 ------------------------ 1997 1996 -------- -------- Net Sales ..................................... $764,283 $757,164 -------- -------- Cost of Goods Sold ............................ 411,348 405,878 Research and Development Expenses ............. 47,069 46,045 Selling and Administrative Expenses ........... 113,331 110,676 Nonrecurring Charge ........................... -- 49,707 Interest Expense .............................. 1,177 1,293 Other (Income) Expense, Net ................... (6,568) (7,113) -------- -------- 566,357 606,486 -------- -------- Income Before Taxes on Income ................. 197,926 150,678 Taxes on Income ............................... 71,373 54,811 -------- -------- Net Income .................................... $126,553 $ 95,867 ======== ======== Earnings Per Share ............................ $1.16 $0.86 Average Number of Shares Outstanding (000's) .. 109,420 111,032 Dividends Paid Per Share ...................... $0.72 $0.68 See Notes to Consolidated Financial Statements 3 INTERNATIONAL FLAVORS & FRAGRANCES INC. CONSOLIDATED STATEMENT OF CASH FLOWS (DOLLARS IN THOUSANDS) 6 Months Ended 6/30 -------------------- 1997 1996 --------- -------- Cash Flows From Operating Activities: - ------------------------------------- Net Income ............................................. $ 126,553 $ 95,867 Adjustments to Reconcile to Net Cash Provided by Operations: Nonrecurring Charge .............................. -- 49,707 Depreciation ..................................... 24,765 23,078 Deferred Income Taxes ............................ (2,071) (11,263) Changes in Assets and Liabilities: Current Receivables ........................... (80,435) (51,696) Inventories ................................... 5,522 25,410 Current Payables .............................. 26,421 99 Other, Net .................................... 360 (444) --------- -------- Net Cash Provided by Operations ........................ 101,115 130,758 --------- -------- Cash Flows From Investing Activities: - ------------------------------------- Proceeds From Sales/Maturities of Short-term Investments .......................................... 14,573 12,424 Purchases of Short-term Investments .................... (4,900) (43,830) Additions to Property, Plant & Equipment, Net of Minor Disposals ............................... (24,131) (45,278) --------- -------- Net Cash Used in Investing Activities .................. (14,458) (76,684) --------- -------- Cash Flows From Financing Activities: - ------------------------------------- Cash Dividends Paid to Shareholders .................... (79,021) (75,503) Increase in Bank Loans ................................. 3,979 4,937 Decrease in Long-term Debt ............................. (1,008) (1,138) Proceeds From Issuance of Stock Under Stock Option Plans ........................................ 7,389 6,288 Purchase of Treasury Stock ............................. (59,752) (5,319) --------- -------- Net Cash Used In Financing Activities .................. (128,413) (70,735) --------- -------- Effect of Exchange Rate Changes on Cash and Cash Equivalents .......................................... (11,085) (7,969) --------- -------- Net Change in Cash and Cash Equivalents ................ (52,841) (24,630) Cash and Cash Equivalents at Beginning of Year ......... 261,370 251,430 --------- -------- Cash and Cash Equivalents at End of Period ............. $ 208,529 $226,800 ========= ======== Interest Paid .......................................... $ 1,090 $ 1,263 Income Taxes Paid ...................................... $ 46,816 $ 48,451 See Notes to Consolidated Financial Statements 4 Notes to Consolidated Financial Statements These interim statements and management's related discussion and analysis should be read in conjunction with the consolidated financial statements and their related notes, and management's discussion and analysis of results of operations and financial condition included in the Company's 1996 Annual Report to Shareholders. In the opinion of the Company's management, all normal recurring adjustments necessary for a fair statement of the results for the interim periods have been made. In February 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 128 (FAS 128), Earnings per Share, which is effective for both interim and annual periods ending after December 15, 1997. FAS 128 simplifies the rules of computing earnings per share and prescribes that companies present basic and diluted earnings per share amounts, as defined, on the face of the income statement. The Company is studying the implications of FAS 128 but does not believe the impact on earnings per share will be material. In June 1997, the Financial Accounting Standards Board issued Statements of Financial Accounting Standards No. 130 (FAS 130) and 131 (FAS 131), Reporting Comprehensive Income, and Disclosures about Segments of an Enterprise and Related Information, respectively. FAS 130 establishes standards for reporting and display of comprehensive income and its components, and requires that an enterprise classify items of other comprehensive income by their nature in a financial statement, and display the accumulated balance of other comprehensive income separately in the statement of financial position. FAS 131 establishes standards for the way public business enterprises report information about operating segments in annual financial statements and requires that such enterprises report selected information about operating segments in interim reports to shareholders. Both standards are effective for periods beginning after December 15, 1997. The Company is currently evaluating the standards and the reporting implications thereof. Effective January 1, 1997, the Company adopted Statement of Position 96-1 (SOP 96-1), Accounting for Environmental Remediation Liabilities issued by the American Institute of Certified Public Accountants. SOP 96-1 establishes guidance for when environmental liabilities should be recorded and the factors to be considered in determining amounts recognized. The effect of adopting this standard was not material to the Company. As described in Note 2 of the Notes to the Consolidated Financial Statements included in the Company's 1996 annual report to shareholders, the Company undertook a program to expand and streamline its aroma chemical production facilities during 1996. The aroma chemical streamlining resulted in a nonrecurring pretax charge to second quarter 1996 earnings of $49,707,000 ($31,315,000 after tax or $.29 per share). At December 31, 1996, the remaining balance in the reserve was as follows: Employee related ...................... $10,069,000 Closing manufacturing plants .......... 32,632,000 ----------- Total ............................... $42,701,000 =========== Utilization of the reserve since December 31, 1996 has not been material. 5 In connection with an employment contract, the Company made a restricted stock award effective January 1, 1997. The restrictions generally relate to continuous employment and expire over a five year period from the date of grant. Compensation expense is recognized over the restricted period. Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition Operations Worldwide net sales for the second quarter of 1997 were $381,470,000, compared to $374,397,000 in the 1996 second quarter. For the first six months of 1997, net sales totaled $764,283,000, compared to $757,164,000 for the six month period in 1996. Sales in the second quarter and first six months of 1997 were affected by the translation of local currency sales gains into the stronger U.S. dollar. If the dollar exchange rate had remained the same during these periods, worldwide sales would have increased approximately 6% and 5%, respectively, over the sales reported in the comparable periods last year. Local sales increases were particularly strong in the emerging market areas of Latin America and the Far East, with good increases also achieved in Western Europe. Net income for the second quarter of 1997 totaled $63,309,000 compared to $61,018,000 in the prior year second quarter; net income for the first six months of 1997 totaled $126,553,000 compared to $127,182,000 for the comparable 1996 period. Earnings per share for the second quarter and first six months of 1997 were $.58 and $1.16, as compared to $.55 and $1.15 per share in the prior year quarter and six month periods, respectively. The 1996 amounts exclude the effect of the one-time charge to second quarter earnings for streamlining the Company's aroma chemical operations; including this charge, net income for the second quarter and six months ended June 30, 1996 was $29,703,000 and $95,867,000, respectively, and earnings per share were $.26 and $.86, respectively. The percentage relationship of cost of goods sold and other operating expenses to sales for the first half 1997 and 1996 remained fairly constant, especially on an overall basis. First Half ----------------- 1997 1996 ---- ---- Cost of Goods Sold ............................ 53.8% 53.6% Research and Development Expense .............. 6.2% 6.1% Selling and Administrative Expense ............ 14.8% 14.6% As described in Note 2 of the Notes to the Consolidated Financial Statements included in the Company's 1996 annual report to shareholders, the Company undertook a program to expand and streamline its aroma chemical production facilities during 1996. The aroma chemical streamlining resulted in a nonrecurring pretax charge to second quarter 1996 earnings of $49,707,000 ($31,315,000 after tax or $.29 per share). At December 31, 1996, the remaining balance in the reserve was as follows: Employee related ..................... $10,069,000 Closing manufacturing plants ......... 32,632,000 ----------- Total .............................. $42,701,000 =========== 6 Utilization of the reserve since December 31, 1996 has not been material. Financial Condition The financial condition of the Company continued to be strong. Cash, cash equivalents and short-term investments totaled $254,855,000 at June 30, 1997. At June 30, 1997, working capital was $690,718,000 compared to $725,892,000 at December 31, 1996. Gross additions to property, plant and equipment during the first half of 1997 were $24,390,000. In September 1996, the Company announced a plan to repurchase up to an additional 7.5 million shares of its common stock. An existing program to repurchase 7.5 million shares, which has been in effect since 1992, was completed in the first quarter of 1997. Repurchases will be made from time to time on the open market or through private transactions as market and business conditions warrant. The repurchased shares will be available for use in connection with the Company's employee benefit plans and for other general corporate purposes. In January 1997, the Company's cash dividend was increased 5.9% to an annual rate of $1.44 per share, and $.36 per share was paid to shareholders in both the first and second quarters of 1997. The Company anticipates that its growth, capital expenditure programs and share repurchase programs will be funded from internal sources. The cumulative translation adjustment component of Shareholders' Equity at June 30, 1997 was $4,283,000 compared to $47,555,000 at December 31, 1996. 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. 7 PART II. OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders At the annual meeting of Registrant's shareholders held Thursday, May 8, 1997, at which 99,156,961 shares, or 90.2%, of Registrant's Common Stock were represented in person or by proxy, the 12 nominees for director of Registrant, as listed in Registrant's proxy statement dated March 27, 1997 previously filed with the Commission, were duly elected to Registrant's Board of Directors. There was no solicitation of proxies in opposition to these nominees. At such annual meeting, the shareholders also voted with respect to the other matter submitted for shareholder consideration as follows, the vote being legally sufficient to adopt the proposal: Proposal to approve registrant's 1997 Employee Stock Option Plan, covering up to 3.5 million shares of Registrant's Common Stock. No. of Shares ------------- FOR ................................. 95,774,417 AGAINST ............................. 2,532,442 ABSTAIN AND NON-VOTING .............. 850,102 8 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits Number ------ 3(a) Amendment to By-laws adopted May 8, 1997. 10(a) Registrant's 1997 Employee Stock Option Plan incorporated by reference to Exhibit A to the Proxy Statement of Registrant dated April 27, 1997 (File No. 1-4858). 27 Financial Data Schedule (EDGAR version only). (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. 9 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 13, 1997 By: /s/ THOMAS H. HOPPEL -------------------------------------------------- Thomas H. Hoppel, Vice-President and Chief Financial Officer Dated: August 13, 1997 By: /s/ STEPHEN A. BLOCK -------------------------------------------------- Stephen A. Block, Vice-President Law and Secretary EX-3.(A) 2 RESOLUTIONS EXHIBIT 3(a) RESOLUTION ADOPTED MAY 8, 1997 BY BOARD OF DIRECTORS OF INTERNATIONAL FLAVORS & FRAGRANCES INC. AMENDING BY-LAWS IN RESPECT OF ANNUAL MEETING DATE ---------------------------------------- RESOLVED that Section 1 of Article I of the By-laws of the Corporation, as amended, is hereby amended, effective with the 1999 Annual Meeting of Shareholders, to read in its entirety as follows: "SECTION 1. ANNUAL MEETING. The annual meeting of the stockholders of the Corporation for the election of directors and for the transaction of such other business as may properly come before the meeting shall be held on the third Thursday of May in each year, if not a legal holiday, and if a legal holiday, then on the next succeeding day not a legal holiday, at the office of the Corporation or at such other place and at such hour as shall be designated in the notice thereof." EX-27 3 ARTICLE 5 FDS FOR IFF 10-Q
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 6-MOS DEC-31-1997 JUN-30-1997 208,529 46,326 305,217 (7,674) 349,501 992,376 859,233 (406,487) 1,478,824 301,658 7,351 0 0 14,470 1,015,648 1,478,824 764,283 764,283 411,348 571,748 (6,568) 0 1,177 197,926 71,373 126,553 0 0 0 126,553 1.16 1.16
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