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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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.
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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.
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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.
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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.
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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
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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.