SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM 10-K
Annual Report Pursuant to Section 13 of
The Securities Exchange Act of 1934
For the fiscal year ended December 31, 1994 Commission File Number 1-4858
International Flavors & Fragrances Inc.
(Exact name of Registrant as specified in its charter)
New York 13-1432060
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
521 West 57th Street, New York, N.Y. 10019
(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 (cents) 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 21, 1995 was $5,802,705,844.
Indicate the number of shares outstanding of each of the Registrant's
classes of common stock, as of March 21, 1995.
111,590,497 shares of Common Stock, par value 12 1/2 (cents) 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 1995 Annual Meeting of Shareholders to be filed pursuant to Regulation 14A.
<PAGE>
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 Essence-fabrieken, 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, China, Hong Kong, Indonesia and Japan. Manufacturing
facilities are also located in nine 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 freshen-
ers, 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, 1994, sales of fragrance products accounted
for approximately 61%, 59%, 60%, 59% and 59%, 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 custom-
ers for flavor products are major producers of prepared foods and beverages in
the United States. In the five years ended December 31, 1994, sales of flavor
products accounted for approximately 39%, 41%, 40%, 41% and 41%, 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
<PAGE>
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 29 fragrance and
flavor laboratories in 23 countries. The Company maintains a research center at
Union Beach, New Jersey. The Company spent $81,369,000 in 1994, $75,275,000 in
1993 and $71,113,000 in 1992 on its research and development activities, all of
which activities were financed by the Company. These expenditures are expected
to increase in 1995 to approximately $92,000,000. Of the amount expended in 1994
on such activities, 56% was for fragrances and the balance was for flavors. The
Company employed 748 persons in 1994 and 724 persons in 1993 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, 1994, 32% of the Company's sales were to customers in
North America, 36% in Western Europe and 32% in the rest of the world. See Note
10 of the Notes to the Consolidated Financial Statements for other information
with respect to the Company's international operations.
The Company estimates that during 1994 its 30 largest customers accounted
for about 55% of its sales, its four largest customers and their affiliates
accounted for about 13%, 6%, 5% and 4%, 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
<PAGE>
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 1995 approximately
$3,900,000 in capital projects and $15,900,000 in operating expenses and
governmental charges for the purpose of complying with such requirements. The
Company expects that in 1996 capital expenditures, operating expenses and
governmental charges for such purpose will not be materially
different.
Raw Material Purchases
Some 2,000 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, 1994 employed approximately 4,570 persons, of
whom about 1,540 were employed in the United States, 490 in Holland, 280 in
France, 280 in England and 1,980 elsewhere. The Company has never experienced a
work stoppage or strike and it considers that its employee relations are
satisfactory.
3
<PAGE>
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, food ingredients,
bacterial cultures and fruit preparations.
HOLLAND
Hilversum ................ Flavor and fragrance laboratories.
Tilburg .................. Production of flavor and fragrance compounds.
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;
fragrance laboratories.
Colmenar ................. Production of flavor compounds and fruit
preparations.
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; fragrance and flavor
laboratories.
Sao Paulo ................ Fragrance laboratory.
MEXICO
Tlalnepantla ............. Production of flavor compounds, fruit preparations
and fragrance compounds and chemical ingredients;
flavor and fragrance laboratories.
CHINA
Guangzhou ................ Production of flavor and fragrances compounds;
flavor laboratories.
4
<PAGE>
Location Operation
-------- ---------
HONG KONG .................. Production of fragrance compounds; flavor and
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 and
fruit preparations.
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 ten waste sites operated by third parties 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
<PAGE>
Item 4. Submission of Matters to a Vote of Security Holders.
Not applicable.
Executive officers of Registrant:
<TABLE>
<CAPTION>
Year First
Became
Name Office and Other Business Experience(2) Age Officer
---- --------------------------------------- --- -------
<S> <C> <C> <C>
Eugene P. Grisanti(1) ...... President; Chairman of the Board 65 1964
Hugh R. Kirkpatrick ........ Senior Vice-President; Director 58 1985
Hendrik C. van Baaren ...... Senior Vice-President; Director 55 1983
Raul J. Barreto ............ Vice-President 61 1993
Stephen A. Block ........... Vice-President and Secretary since 1993; 50 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 57 1986
Thomas H. Hoppel ........... Vice-President and Treasurer; Director 64 1976
Ira Katz ................... Vice-President 61 1987
Carlos A. Lobbosco ......... Vice-President 55 1993
Lewis G. Lynch, Jr. ........ Vice-President 59 1975
Stuart R. Maconochie ....... Vice-President 55 1989
Rudolf Merz ................ Vice-President 55 1982
William A. Myers, Jr. ...... Vice-President 64 1987
Joel P. Pearlstein ......... Vice-President 58 1986
Sidney W. Rossuck, Jr. ..... Vice-President 63 1987
Michael D. Sweeney ......... Vice-President 51 1994
Douglas J. Wetmore ......... Controller since 1992; employed by Price 37 1992
Waterhouse, independent accountants, for
more than 2 years prior thereto
</TABLE>
-----------
(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
<PAGE>
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, adjusted for the three-for-one stock split distributed January 19, 1994,
were:
1994 1993
----------------- -----------------
Quarter High Low High Low
------- ---- --- ---- ---
First .................. $ 39.25 $ 35.63 $ 38.80 $ 34.42
Second ................. 40.50 35.63 39.83 36.80
Third .................. 44.38 38.88 38.50 33.00
Fourth ................. 47.88 40.38 38.05 33.88
(b) Approximate Number of Equity Security Holders.
(A) (B)
Number of record holders as
Title of Class of December 31, 1994
-------------- --------------------
Common stock, par value 12 1/2(cents) per share ..... 5,289
(c) Dividends.
Cash dividends declared per share for each quarter since January 1993* were
as follows:
1995 1994 1993
---- ---- ----
First .................. $.31 $.27 $.25
Second ................. .27 .25
Third .................. .27 .25
Fourth ................. .31 .27
-------------
* Reflects three-for-one stock split distributed January 19, 1994.
Item 6. Selected Financial Data.
<TABLE>
<CAPTION>
1994 1993 1992 1991 1990
---- ---- ---- ---- ----
(Dollars in thousands except per share amounts)
<S> <C> <C> <C> <C> <C>
Net sales ............................. $ 1,315,237 $ 1,188,645 $ 1,126,446 $ 1,016,968 $ 962,810
=========== =========== =========== =========== ===========
Income before accounting changes(a) ... $ 226,022 $ 202,471 $ 176,683 $ 168,674 $ 156,681
Accounting changes, net of tax(b) ..... -- -- (6,089) -- --
----------- ----------- ----------- ----------- -----------
Net income ............................ $ 226,022 $ 202,471 $ 170,594 $ 168,674 $ 156,681
=========== =========== =========== =========== ===========
Earnings per share(c):
Income before accounting changes(a) ... $2.03 $1.78 $1.53 $1.47 $1.37
Accounting changes(b) ................. -- -- (0.05) -- --
----- ----- ----- ----- -----
Net income ............................ $2.03 $1.78 $1.48 $1.47 $1.37
===== ===== ===== ===== =====
Total assets .......................... $ 1,399,725 $ 1,225,257 $ 1,267,594 $ 1,217,372 $ 1,129,395
=========== =========== =========== =========== ===========
Long-term debt ........................ $ 14,342 -- -- -- --
=========== =========== =========== =========== ===========
Cash dividends declared per share(c)... $1.12 $1.02 $0.93 $0.83 $0.74
===== ===== ===== ===== =====
</TABLE>
----------------
(a) Reflects nonrecurring charge ($13,021 after tax) in 1992 resulting from the
Registrant's plan to consolidate European aroma chemical production.
(b) The accounting changes, net of tax, in 1992, represent the effects of
adopting required accounting standards for income taxes and postretirement
benefits other than pensions.
(c) Per share amounts reflect three-for-one stock split distributed
on January 19, 1994 to shareholders of record on December 28, 1993.
7
<PAGE>
Item 7. Management's Discussion and Analysis of Results of Operations and
Financial Condition.
Operations
In 1994, worldwide net sales of $1,315,237,000 exceeded 1993 net sales by
$126,592,000 or 11%, while 1993 worldwide net sales exceeded 1992 net sales by
$62,199,000 or 6%. Sales of fragrance products in 1994 were $772,786,000, an
increase of $73,541,000 or 11% over 1993. This follows a $20,706,000 or 3%
increase in 1993 over 1992. Sales of flavor products in 1994 were $542,451,000,
an increase of $53,051,000 or 11% over 1993, while 1993 flavor sales increased
$41,493,000 or 9% over 1992. The increase in the Company's worldwide sales
reflects the continuing demand for its fragrance and flavor products.
Sales outside the United States represented approximately 70% of total
sales in 1994, 1993 and 1992. The following table shows net sales on a
geographic basis:
<TABLE>
<CAPTION>
Sales by Destination Percent Percent
(Dollars in thousands) 1994 Change 1993 Change 1992
---------------------- ---- ------ ---- ------ ----
<S> <C> <C> <C> <C> <C>
North America ....... $ 418,565 11% $ 378,403 9% $ 347,055
Western Europe ...... 470,281 9% 432,345 -4% 449,354
Other Areas ......... 426,391 13% 377,897 15% 330,037
---------- ---------- ----------
Total net sales ... $1,315,237 11% $1,188,645 6% $1,126,446
========== ========== ==========
</TABLE>
In 1994, good unit 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.
In 1993, sales increases were recorded in both flavors and fragrances on a
worldwide basis. Sales increases in fragrances were strongest in Western Europe,
on a local currency basis, and Latin America, while flavor sales achieved their
most significant increases in North America, Latin America and the Far East. The
sales increases in North America and Europe were achieved despite the
recessionary economies in the United States and several major European
countries. During 1993, the increase in sales moderated somewhat on translation
of local currencies into a significantly stronger U.S. dollar; if the dollar
exchange rate remained the same during 1993 and 1992, sales would have increased
approximately 7% in Western Europe and 10% worldwide.
Operating profit (as shown in Note 10 of the Notes to the Consolidated
Financial Statements) was $354,425,000 in 1994, $311,156,000 in 1993 and
$268,146,000 in 1992. Operating profit in 1994 increased $43,269,000 or 14% over
the prior year, while operating profit in 1993 increased $22,977,000 or 8% over
1992; the 1993 increase excludes the effects of the 1992 nonrecurring charge
discussed below. In 1994, operating profit was not significantly affected by
currency translation. In 1993, the stronger dollar had an unfavorable impact on
the translation of Western European operating results into dollars. In both 1994
and 1993, 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
weakening or strengthening 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:
1994 1993 1992
---- ---- ----
Cost of goods sold ................ 51.5% 51.6% 51.7%
Research and development
expenses ......................... 6.2% 6.3% 6.3%
Selling and administrative
expenses ......................... 15.8% 16.3% 16.8%
Cost of goods sold includes the cost of materials purchased and internal
manufacturing expenses. This cost has gradually declined as a percentage of
sales 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
8
<PAGE>
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 declined as a percentage of sales over the past three
years.
Interest expense amounted to $13,470,000, $17,359,000 and $12,436,000 in
1994, 1993 and 1992, respectively. This expense relates primarily to bank loans
taken out by some of the Company's subsidiaries and is significantly affected by
very high interest rates in hyperinflationary countries where local borrowing is
used as a hedge against devaluations. Interest expense decreased in 1994
primarily due to lower interest rates, mainly in Brazil. Interest expense
increased in 1993 primarily due to higher interest rates, again mainly in
Brazil. The bank loans in Brazil were intended to serve as hedges against the
devaluations which occurred in that country during these years. In all three
years, 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 6 of the Notes to the Consolidated Financial Statements.
Other income was $25,213,000 in 1994, compared to $35,132,000 in 1993 and
$30,288,000 in 1992. 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. Other income increased
in 1993 over 1992 due to higher exchange gains, mainly in Brazil, offset by
somewhat lower interest income, principally due to a lower average level of
investments and lower interest rates.
The worldwide effective tax rate for 1994 was 37.3%, compared to 37.5% for
1993 and 37.2% for 1992. Note 7 of the Notes to the Consolidated Financial
Statements contains additional information on income taxes.
Earnings for 1994 were $226,022,000, increasing $23,551,000 or 12% from the
prior year. Earnings for 1993 were $202,471,000, an increase of $12,767,000 or
7% over 1992. The 1993 increase excludes the effects of adopting required
accounting standards and a nonrecurring charge in 1992; after giving effect to
the 1992 accounting changes and the nonrecurring charge, earnings increased
$31,877,000 in 1993. Net income in 1992 was $170,594,000.
Earnings per share for 1994 increased 14% to $2.03 from $1.78 in 1993,
following an increase of 9% from $1.64 reported in 1992. These amounts exclude
the per share effect of the 1992 accounting changes and nonrecurring charge;
1993 earnings per share increased 20% from $1.48 in 1992 after giving effect to
the nonrecurring charge and the accounting changes.
The 1992 nonrecurring charge resulted from the Company's plan to achieve
significant cost savings by consolidating its European production of aroma
chemicals in two plants, instead of the then existing three. The decision to
effect this transfer resulted in a one-time pretax charge of $20,033,000
($13,021,000 after tax). The consolidation of such production facilities was
completed in 1994.
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.
Effective January 1, 1992, the Company adopted Statements of Financial
Accounting Standards No. 106 (FAS 106) and No. 109 (FAS 109). FAS 106,
Employers' Accounting for Postretirement Benefits Other Than Pensions, requires
that non-pension retirement benefits, which are primarily health care, be
recognized in the financial statements on the accrual basis instead of when
paid, as was the previous practice. The adoption of FAS 106 resulted in a pretax
charge of $29,632,000 ($18,149,000 after tax) representing the cumulative
transition effect of adopting this standard. FAS 109, Accounting For Income
Taxes, required the Company to change its method of accounting for income taxes
from the deferred method to the liability method. The effect of adopting FAS 109
was a tax benefit of $12,060,000.
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 1994, the Company spent
approximately $3,700,000 on capital projects and about $15,100,000 in operating
expenses and governmental charges for the purpose of complying with such
regulations. Expenditures for these purposes are
9
<PAGE>
expected to 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 1994.
Cash, cash equivalents and short-term investments totaled $301,808,000 at
December 31, 1994, compared to $311,278,000 and $429,972,000 at December 31,
1993 and 1992, respectively. Short-term investments held by the Company are high
quality, readily marketable instruments. Working capital totaled $704,763,000 at
year-end 1994, compared to $652,436,000 and $770,412,000, at December 31, 1993
and 1992, respectively. In 1993, the reduction in cash, cash equivalents and
short-term investments, and working capital was primarily attributable to the
purchase of treasury shares in connection with the Company's authorized share
repurchase program. Gross additions to property, plant and equipment were
$103,019,000, $82,286,000 and $51,095,000 in 1994, 1993 and 1992, respectively,
and are expected to approximate $105,000,000 in 1995.
In December 1993, the Board of Directors approved a three-for-one stock
split. The additional shares were distributed on January 19, 1994 to
shareholders of record on December 28, 1993. All share and per share amounts in
this report reflect this stock split.
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 corporate purposes. At December 31, 1994, approximately
4.9 million shares of common stock had been repurchased under this program.
The Company anticipates that its growth and capital expenditure programs,
and the above share repurchase plan will continue to be funded from internal
sources.
During 1994, the Company paid dividends to shareholders totaling
$120,520,000, while $114,555,000 was paid in 1993 and $104,495,000 in 1992. In
January 1995, the cash dividend was increased 14.8% to an annual rate of $1.24
per share. This increase follows an increase of 8% in January 1994 and 10% in
January 1993. 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, 1994 was $41,798,000 compared to $448,000 at December 31,
1993.
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, 1994 ................... 11
Consolidated Balance Sheet--December 31, 1994 and 1993 .......... 12
Consolidated Statement of Cash Flows for the three years ended
December 31, 1994 ............................................. 13
Notes to Consolidated Financial Statements ...................... 14
Report of Independent Accountants ............................... 23
Financial Statement Schedules:
VIII--Valuation and Qualifying Accounts and Reserves for the
three years ended December 31, 1994 ....................... 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.
10
<PAGE>
<TABLE>
<CAPTION>
QUARTERLY FINANCIAL DATA (Unaudited)
(Dollars in thousands except per share amounts)
Net income
Net sales Gross profit Net income per share
----------------- ----------------- ----------------- ------------
Quarter 1994 1993 1994 1993 1994 1993 1994 1993
------- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
First $ 323,537 $ 309,144 $ 157,917 $ 150,049 $ 58,941 $ 56,227 $ 0.53 $ 0.49
Second 345,210 321,262 171,603 159,316 64,916 60,934 0.58 0.53
Third 341,684 298,650 165,119 143,828 58,906 49,636 0.53 0.44
Fourth 304,806 259,589 142,772 121,659 43,259 35,674 0.39 0.32
---------- ---------- ---------- ---------- ---------- ---------- ------ ------
$1,315,237 $1,188,645 $ 637,411 $ 574,852 $ 226,022 $ 202,471 $ 2.03 $ 1.78
========== ========== ========== ========== ========== ========== ====== ======
</TABLE>
Per share amounts reflect three-for-one stock split distributed on January
19, 1994 to shareholders of record on December 28, 1993.
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
<TABLE>
<CAPTION>
Year Ended December 31,
---------------------------------
1994 1993 1992
---- ---- ----
(Dollars in thousands except per share amounts)
<S> <C> <C> <C>
CONSOLIDATED STATEMENT OF INCOME
Net sales ................................ $ 1,315,237 $ 1,188,645 $ 1,126,446
----------- ----------- -----------
Cost of goods sold ....................... 677,826 613,793 582,018
Research and development expenses ........ 81,369 75,275 71,113
Selling and administrative expenses ...... 207,429 193,582 189,633
Nonrecurring charge ...................... -- -- 20,033
Interest expense ......................... 13,470 17,359 12,436
Other (income) expense, net .............. (25,213) (35,132) (30,288)
----------- ----------- -----------
954,881 864,877 844,945
----------- ----------- -----------
Income before taxes on income ............ 360,356 323,768 281,501
Taxes on income .......................... 134,334 121,297 104,818
----------- ----------- -----------
Income before accounting changes ......... 226,022 202,471 176,683
Accounting changes, net of tax ........... -- -- (6,089)
----------- ----------- -----------
NET INCOME .............................. $ 226,022 $ 202,471 $ 170,594
=========== =========== ===========
EARNINGS PER SHARE:
Income before accounting changes ......... $ 2.03 $ 1.78 $ 1.53
Accounting changes ....................... -- -- (0.05)
----------- ----------- -----------
NET INCOME .............................. $ 2.03 $ 1.78 $ 1.48
=========== =========== ===========
CONSOLIDATED STATEMENT OF RETAINED EARNINGS
At beginning of year ..................... $ 860,640 $ 774,140 $ 710,931
Net income ............................... 226,022 202,471 170,594
----------- ----------- -----------
1,086,662 976,611 881,525
Cash dividends declared .................. 124,815 115,971 107,385
----------- ----------- -----------
At end of year ........................... $ 961,847 $ 860,640 $ 774,140
=========== =========== ===========
</TABLE>
See Notes to Consolidated Financial Statements
11
<PAGE>
CONSOLIDATED BALANCE SHEET
ASSETS
<TABLE>
<CAPTION>
December 31,
--------------------
1994 1993
---- ----
(Dollars in thousands)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents ........................ $ 230,581 $ 187,205
Short-term investments ........................... 71,227 124,073
Receivables:
Trade ........................................... 228,434 203,088
Allowance for doubtful accounts.................. (7,448) (6,314)
Other ........................................... 28,259 24,851
Inventories ...................................... 362,105 302,926
Prepaid and deferred charges ..................... 51,328 43,194
----------- -----------
Total Current Assets ............................ 964,486 879,023
PROPERTY, PLANT AND EQUIPMENT ....................... 405,730 323,417
OTHER ASSETS ........................................ 29,509 22,817
----------- -----------
Total Assets ........................................ $ 1,399,725 $ 1,225,257
=========== ===========
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY
<S> <C> <C>
CURRENT LIABILITIES:
Bank loans ....................................... $ 9,740 $ 30,937
Accounts payable ................................. 56,861 43,771
Accrued payrolls and bonuses ..................... 15,386 11,749
Dividends payable ................................ 34,554 30,259
Income taxes ..................................... 70,505 45,512
Other current liabilities ........................ 72,677 64,359
----------- -----------
Total Current Liabilities ....................... 259,723 226,587
----------- -----------
OTHER LIABILITIES:
Long-term debt ................................... 14,342 --
Deferred income taxes ............................ 14,350 11,099
Retirement and other liabilities ................. 103,231 95,702
----------- -----------
Total Other Liabilities ......................... 131,923 106,801
----------- -----------
SHAREHOLDERS' EQUITY:
Common stock 12 1/2 [cent] par value; authorized
500,000,000 shares; issued 115,761,840 shares
in 1994 and 115,761,240 shares in 1993 ......... 14,470 14,470
Capital in excess of par value ................... 146,022 150,114
Retained earnings ................................ 961,847 860,640
Cumulative translation adjustment ................ 41,798 448
----------- -----------
1,164,137 1,025,672
Treasury stock, at cost--4,297,540 shares in
1994 and 3,701,259 shares in 1993 ............... (156,058) (133,803)
----------- -----------
Total Shareholders' Equity ...................... 1,008,079 891,869
----------- -----------
Total Liabilities and Shareholders' Equity .......... $ 1,399,725 $ 1,225,257
=========== ===========
</TABLE>
See Notes to Consolidated Financial Statements
12
<PAGE>
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Year Ended December 31,
------------------------------
1994 1993 1992
---- ---- ----
(Dollars in thousands)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income .................................................. $ 226,022 $ 202,471 $ 170,594
Adjustments to reconcile to net cash provided by operations:
Depreciation .............................................. 36,358 35,067 34,023
Accounting changes, net of tax ............................ -- -- 6,089
Nonrecurring charge ....................................... -- -- 20,033
Deferred income taxes ..................................... (3,809) 615 4,933
Changes in assets and liabilities:
Current receivables ..................................... (14,040) (36,614) (19,248)
Inventories ............................................. (45,950) (17,144) (18,711)
Current payables ........................................ 47,669 24,933 16,253
Other, net .............................................. (6,719) (3,042) (10,385)
--------- --------- ---------
Net cash provided by operations ............................... 239,531 206,286 203,581
--------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales/maturities of short-term
investments ............................................... 165,387 305,574 320,991
Purchases of short-term investments ......................... (111,763) (215,789) (271,055)
Additions to property, plant and equipment, net of
minor disposals ........................................... (101,135) (81,134) (49,446)
--------- --------- ---------
Net cash provided by (used in) investing activities ........... (47,511) 8,651 490
--------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash dividends paid to shareholders ........................ (120,520) (114,555) (104,495)
Increase (decrease) in bank loans .......................... (24,791) 18,029 (1,135)
Increase in long-term debt ................................. 13,392 -- --
Proceeds from issuance of stock under stock option plans ... 5,622 3,722 5,229
Purchase of treasury stock ................................. (32,433) (125,734) (17,939)
--------- --------- ---------
Net cash used in financing activities ......................... (158,730) (218,538) (118,340)
--------- --------- ---------
Effect of exchange rate changes on cash and cash equivalents .. 10,086 (19,992) (8,908)
--------- --------- ---------
NET CHANGE IN CASH AND CASH EQUIVALENTS ....................... 43,376 (23,593) 76,823
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR ................ 187,205 210,798 133,975
--------- --------- ---------
CASH AND CASH EQUIVALENTS AT END OF YEAR ...................... $ 230,581 $ 187,205 $ 210,798
========= ========= =========
</TABLE>
See Notes to Consolidated Financial Statements
13
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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.
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 111,527,000,
113,925,000 and 115,454,000 in 1994, 1993 and 1992, respectively.
14
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
NOTE 2. NONRECURRING CHARGE
In 1992, the Company undertook a plan to achieve significant cost savings
by consolidating its European production of aroma chemicals in two plants,
instead of the then existing three. This action resulted in a charge to earnings
of $20,033,000 ($13,021,000 after tax) in that year. The provision included the
writedown of affected property, plant and equipment to their estimated net
realizable values and the accrual of estimated severance and other costs
associated with the plan. The consolidation of such production facilities was
completed in 1994.
NOTE 3. MARKETABLE SECURITIES
Marketable securities are included in cash equivalents and short-term
investments, as appropriate. Effective January 1, 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 this standard was not material.
At December 31, 1994, marketable securities totaling $124,654,000 were
available for sale and recorded at fair value which approximated cost. At
December 31, 1993, marketable securities totaling $147,023,000 were recorded at
cost which approximated fair value. Realized gains and losses on the sale of
marketable securities were not material.
NOTE 4. INVENTORIES
December 31,
------------------------
1994 1993
---- ----
(Dollars in thousands)
Raw materials .......................... $211,071 $175,269
Work in process ........................ 25,600 26,902
Finished goods ......................... 125,434 100,755
-------- --------
$362,105 $302,926
======== ========
NOTE 5. PROPERTY, PLANT AND EQUIPMENT
December 31,
---------------------
1994 1993
---- ----
(Dollars in thousands)
Land ......................................... $ 35,678 $ 27,570
Buildings and improvements ................... 231,016 207,338
Machinery and equipment ...................... 397,845 339,390
Construction in progress ..................... 72,373 36,331
-------- --------
736,912 610,629
Accumulated depreciation ..................... 331,182 287,212
-------- --------
$405,730 $323,417
======== ========
NOTE 6. BORROWINGS
Bank loans (all foreign) averaged $15,937,000 in 1994, $15,294,000 in 1993
and $16,430,000 in 1992. The highest levels were $28,677,000 in 1994,
$30,937,000 in 1993 and $20,367,000 in 1992. The 1994 weighted average annual
interest rate on these loans (based on balances outstanding at the end of each
month) was approximately 92% and the average rate on loans outstanding at
December 31, 1994 was 16%. These rates compare to 129% and 94%, respectively, in
1993, and 78% and 107%, respectively, in 1992. In 1994, as in prior years, the
interest rates were substantially affected by very high rates in
hyperinflationary countries, principally Brazil, where local borrowing is used
as a hedge against devaluations. Excluding these countries, the 1994 weighted
average annual interest rate would have been 6% and the average rate on loans
outstanding at December 31 would have been 7%.
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
15
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
long-term debt outstanding at December 31, 1994 are $2,391,000 annually in 1995
through 1998, and $1,494,000 in 1999. At December 31, 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 $13,743,000 in 1994, $17,661,000 in 1993
and $12,719,000 in 1992.
At December 31, 1994, the Company and its subsidiaries had available unused
lines of bank credit aggregating approximately $57,000,000.
NOTE 7. INCOME TAXES
1994 1993 1992
---- ---- ----
(Dollars in thousands)
U.S. income before taxes ............. $ 98,122 $ 86,428 $ 77,934
Foreign income before taxes .......... 262,234 237,340 203,567
-------- -------- --------
Total income before taxes ............ $360,356 $323,768 $281,501
======== ======== ========
The following table shows the components of current and deferred income tax
expense by taxing jurisdiction, both domestic and foreign:
1994 1993 1992
---- ---- ----
(Dollars in thousands)
Current
Federal ....................... $ 40,737 $ 34,386 $ 32,919
State and local ............... 7,155 7,504 5,541
Foreign ....................... 90,251 78,792 61,425
--------- --------- ---------
138,143 120,682 99,885
--------- --------- ---------
Deferred
Federal ....................... (4,063) (926) (3,696)
State and local ............... (304) (733) (391)
Foreign ....................... 558 2,274 9,020
--------- --------- ---------
(3,809) 615 4,933
--------- --------- ---------
Total income taxes ........... $ 134,334 $ 121,297 $ 104,818
========= ========= =========
Effective January 1, 1992, the Company adopted, on a prospective basis,
Statement of Financial Accounting Standards No. 109, Accounting for Income Taxes
(FAS 109). This statement required the Company to change its method of
accounting for income taxes from the deferred method to the liability method.
The liability method requires the recognition of deferred tax assets and
liabilities for the expected future tax consequences of temporary differences
between the tax bases of assets and liabilities and their financial statement
bases. The effect of adopting FAS 109 was a tax benefit of $12,060,000.
At December 31, 1994 and 1993, gross deferred tax assets were $52,600,000
and $44,800,000, respectively; gross deferred tax liabilities were $36,600,000
and $34,700,000, respectively. No valuation allowance was required for deferred
tax assets. The principal components of deferred tax assets (liabilities) were:
1994 1993
---- ----
(Dollars in thousands)
Employee and retiree benefits .............. $ 27,000 $ 26,300
Inventory .................................. 10,300 5,300
Property, plant and equipment .............. (20,400) (20,200)
Other, net ................................. (900) (1,300)
-------- --------
$ 16,000 $ 10,100
======== ========
16
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
A reconciliation between the U.S. federal income tax rate and the effective
tax rate is:
1994 1993 1992
---- ---- ----
Statutory tax rate ...................... 35.0% 35.0% 34.0%
Difference in effective tax rate on
foreign earnings and remittances ....... 1.4 1.7 2.6
State and local taxes ................... 1.2 1.4 1.2
Other, net .............................. (0.3) (0.6) (0.6)
---- ---- ----
Effective tax rate ...................... 37.3% 37.5% 37.2%
==== ==== ====
Income taxes paid were $107,347,000 in 1994, $110,789,000 in 1993 and
$102,917,000 in 1992.
Undistributed earnings of foreign subsidiaries for which no deferred taxes
have been provided approximated $528,000,000 at December 31, 1994. Any
additional U.S. taxes payable on these foreign earnings, if remitted, would be
substantially offset by credits for foreign taxes already paid.
NOTE 8. 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.
In 1992, 132,973 shares and 183,830 shares of common stock were newly
issued under the Company's stock plans and in connection with a business
acquisition, respectively. In 1994, 600 shares of common stock were newly issued
under the Company's stock plans.
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, 1992 ................ 104,804 $ 9,443
Acquisitions ........................... 174,664 18,932
Used for stock plans ................... (113,784) (10,416)
--------- ----------
Balance December 31, 1992 .............. 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
========= ==========
17
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Transactions in newly issued shares and treasury shares resulted in a net
credit to Capital in excess of par value of $6,062,000 in 1992, and net charges
of $5,822,000 and $4,092,000 in 1993 and 1994, respectively.
Changes in the cumulative translation adjustment were (in thousands):
Balance January 1, 1992 ........................ $ 94,269
Translation adjustments ........................ (43,793)
--------
Balance December 31, 1992 ...................... 50,476
Translation adjustments ........................ (50,028)
--------
Balance December 31, 1993 ...................... 448
Translation adjustments ........................ 41,350
--------
Balance December 31, 1994 ...................... $ 41,798
========
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 $1.08, $1.00 and $.91 in 1994, 1993 and 1992,
respectively.
18
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
NOTE 9. 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, 1992 ................ 1,451,721 1,805,583
Granted ................................ (615,300) 615,300
Exercised .............................. -- (440,271)
Terminated ............................. 20,814 (20,814)
Lapsed ................................. -- (15,000)
Increase under 1992 Plan ............... 2,250,000 --
--------- ---------
Balance December 31, 1992 .............. 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
========= =========
During 1994, options to purchase common stock were granted at prices
ranging from $36.00 to $47.00 per share. At December 31, 1994, the price range
for shares under option was $9.00 to $47.00; options for 964,410 shares were
exercisable at that date. During 1994, shares of common stock under option were
exercised at prices ranging from $8.50 to $35.50.
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.
19
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
NOTE 10. INTERNATIONAL OPERATIONS
<TABLE>
<CAPTION>
1994 (Dollars in thousands)
-----------------------------------------------------------------
United Western Other
States Europe Foreign Eliminations Consolidated
------ ------- ------- ------------ ------------
<S> <C> <C> <C> <C> <C>
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
==========
</TABLE>
<TABLE>
<CAPTION>
1993 (Dollars in thousands)
-----------------------------------------------------------------
United Western Other
States Europe Foreign Eliminations Consolidated
------ ------- ------- ------------ ------------
<S> <C> <C> <C> <C> <C>
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
==========
</TABLE>
<TABLE>
<CAPTION>
1992 (Dollars in thousands)
-----------------------------------------------------------------
United Western Other
States Europe Foreign Eliminations Consolidated
------ ------- ------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Sales to unaffiliated customers..... $ 349,994 $ 506,118 $ 270,334 $ -- $1,126,446
Transfers between areas ............ 54,641 61,281 4,069 (119,991) --
----------- ---------- ---------- ---------- ----------
Total sales ................... $ 404,635 $ 567,399 $ 274,403 $ (119,991) $1,126,446
=========== ========== ========== ========== ==========
Operating profit ................... $ 84,549 $ 129,946 $ 56,608 $ (2,957) $ 268,146
=========== ========== ========== ==========
Unallocated expenses ............... (4,497)
Interest expense ................... (12,436)
Other income (expense), net ........ 30,288
----------
Income before taxes on income . $ 281,501
==========
Identifiable assets ................ $ 322,487 $ 357,851 $ 191,399 $ (27,833) $ 843,904
=========== ========== ========== ==========
Unallocated assets ................. 423,690
----------
Total assets .................. $1,267,594
==========
</TABLE>
20
<PAGE>
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 gains of $13,543,000 in 1994,
$15,197,000 in 1993 and $6,822,000 in 1992 are included in Other income
(expense), net. Worldwide sales to the Company's largest customer amounted to
$172,824,000 in 1994, $147,983,000 in 1993 and $150,400,000 in 1992.
In 1992, operating profit (Western Europe and Consolidated) reflects the
nonrecurring charge of $20,033,000 for consolidation of European aroma chemical
production.
NOTE 11. 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:
<TABLE>
<CAPTION>
U.S. Plans Non-U.S. Plans
---------------------- ----------------------
1994 1993 1992 1994 1993 1992
---- ---- ---- ---- ---- ----
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Service cost for benefits earned ............ $4,784 $3,915 $3,569 $4,078 $3,654 $3,363
Interest cost on projected benefit
obligation ................................. 8,210 7,654 6,909 8,658 7,681 7,743
Actual return on plan assets ................ 676 (7,888) (5,034) (8,576) (7,616) (8,064)
Net amortization and deferrals .............. (9,982) (409) (2,489) 261 266 292
------ ---- ------ ------ ------ ------
Defined benefit plans ....................... 3,688 3,272 2,955 4,421 3,985 3,334
Defined contribution and other
retirement plans ........................... 2,165 2,049 1,950 2,761 2,831 3,530
------ ------ ------ ------ ------ ------
Total pension expense ..................... $5,853 $5,321 $4,905 $7,182 $6,816 $6,864
====== ====== ====== ====== ====== ======
</TABLE>
The funded status of pension plans at December 31 was:
<TABLE>
<CAPTION>
U.S. Plans Non-U.S. Plans
---------------- ---------------
1994 1993 1994 1993
---- ---- ---- ----
(Dollars in thousands)
<S> <C> <C> <C> <C>
Actuarial present value of benefit obligation:
Vested benefit obligation .................... $ 88,900 $ 84,785 $ 83,206 $ 70,190
Non-vested benefit obligation ................ 4,685 4,727 6,243 4,998
-------- -------- -------- --------
Accumulated benefit obligation ............... $ 93,585 $ 89,512 $ 89,449 $ 75,188
======== ======== ======== ========
Projected benefit obligation ................... $115,091 $112,521 $124,235 $105,338
Plan assets at fair value ...................... 119,806 118,212 116,450 102,882
-------- -------- -------- --------
Plan assets in excess of (less than) projected
benefit obligation ............................ 4,715 5,691 (7,785) (2,456)
Unrecognized net loss .......................... 7,439 4,695 2,263 211
Remaining balance of unrecognized net (asset)
liability established at adoption of FAS 87 ... (4,900) (5,338) 2,602 2,503
-------- -------- -------- --------
Net pension asset (liability) ................ $ 7,254 $ 5,048 $ (2,920) $ 258
======== ======== ======== ========
</TABLE>
21
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Principal actuarial assumptions used to determine the above data were:
<TABLE>
<CAPTION>
U.S. Plans Non-U.S. Plans
------------- ----------------
1994 1993 1994 1993
---- ---- ---- ----
<S> <C> <C> <C> <C>
Discount rate .................................... 7.5% 7.0% 5.0%-8.0% 5.0%-9.0%
Weighted average rate of compensation increase ... 4.5% 4.5% 3.0%-6.0% 3.0%-7.0%
Long-term rate of return on plan assets .......... 8.0% 8.0% 5.0%-8.0% 6.0%-9.0%
</TABLE>
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.
Effective January 1, 1992, the Company adopted, on the immediate
recognition basis, Statement of Financial Accounting Standards No. 106,
Employers' Accounting for Postretirement Benefits Other Than Pensions (FAS 106).
This statement requires that the cost of such benefits, which are primarily
health care, be recognized in the financial statements on the accrual basis,
over an employee's required service period. Previously, the Company recognized
the cost of such benefits when paid. The adoption of FAS 106 resulted in a
pretax charge of $29,632,000 ($18,149,000 after tax) representing the cumulative
transition effect of adopting this standard.
Expense recognized under FAS 106 included the following components:
1994 1993 1992
---- ---- ----
(Dollars in thousands)
Service cost for benefits earned ...... $1,189 $ 914 $ 898
Interest on benefit obligation ........ 3,110 2,636 2,370
------ ------ ------
Total benefit expense ............... $4,299 $3,550 $3,268
====== ====== ======
The components of the benefit obligation of the U.S. plan, included in
Retirement and other liabilities, at December 31 were:
1994 1993
---- ----
(Dollars in thousands)
Retirees .................................. $18,128 $17,831
Active employees eligible to retire ....... 7,869 8,259
Other active employees .................... 14,277 14,545
------- -------
Accumulated benefit obligation ............ 40,274 40,635
Unrecognized net loss ..................... (4,276) (6,257)
------- -------
Net benefit liability ................... $35,998 $34,378
======= =======
Principal actuarial assumptions used to determine the FAS 106 data were:
1994 1993
---- ----
Discount rate ............................................... 8.0% 7.5%
Initial medical cost trend rate ............................. 10.5% 11.3%
Ultimate medical cost trend rate ............................ 5.0% 5.0%
Medical cost trend rate decreases to ultimate rate in year .. 2002 2002
22
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
The effect of a one percent increase in the assumed medical rate of
inflation would increase the accumulated postretirement benefit obligation by
approximately $5,200,000; the annual service and interest cost would not be
materially affected.
NOTE 12. 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, 1994 and 1993, the value of outstanding forward 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 13. 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 consolidated financial statements listed in the index
appearing under Item 8 on page 10 present fairly, in all material respects, the
financial position of International Flavors & Fragrances Inc. and its
subsidiaries at December 31, 1994 and 1993, and the results of their operations
and their cash flows for each of the three years in the period ended December
31, 1994, 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.
As discussed in Notes 7 and 11 to the financial statements, the Company
changed its method of accounting for income taxes and postretirement benefits
other than pensions in 1992.
Price Waterhouse LLP
1177 Avenue of the Americas
New York, New York 10036
February 1, 1995
Item 9. Disagreements on Accounting and Financial Disclosure.
None.
23
<PAGE>
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, 1994.
(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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
10(f) Management Incentive Compensation Plan of Registrant, incorporated by
reference to Exhibit A to the Registrant's Proxy Statement dated April
13, 1971.
10(g) Amendments to the Registrant's Management Incentive Compensation Plan,
adopted February 6, 1973, incorporated by reference to Exhibit 11(v)
to the Registrant Statement of the Registrant (Reg. No. 2-47516).
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.
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.
24
<PAGE>
Number
-------
10(j) Director Charitable Contribution Program adopted by the Board of
Directors on February 14, 1995.
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 27 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.
25
<PAGE>
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. HOPPELL
-------------------------------
Thomas H. Hoppel
Vice-President and Treasurer
Dated: March 30, 1995
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 March 30, 1995
Hugh R. Kirkpatrick
Herbert G. Reid
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.
26
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of the Registration Statement on Form S-3 (No. 33-23513) of
our report dated February 1, 1995 appearing on page 23 of International Flavors
& Fragrances Inc.'s Annual Report on Form 10-K for the year ended December 31,
1994. 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 30, 1995
27
<PAGE>
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, 1994
<TABLE>
<CAPTION>
Additions Trans-
Balance at charged to lation Balance
beginning costs and Accounts adjust- at end
of period expenses written off ments of period
----------- ----------- ----------- ------- ---------
<S> <C> <C> <C> <C> <C>
Allowance for doubtful accounts ........ $6,314 $1,599 $724 $259 $7,448
====== ====== ==== ==== ======
</TABLE>
For the Year Ended December 31, 1993
<TABLE>
<CAPTION>
Additions Trans-
Balance at charged to lation Balance
beginning costs and Accounts adjust- at end
of period expenses written off ments of period
----------- ----------- ----------- ------- ---------
<S> <C> <C> <C> <C> <C>
Allowance for doubtful accounts ........ $6,105 $768 $280 $(279) $6,314
====== ==== ==== ===== ======
</TABLE>
For the Year Ended December 31, 1992
<TABLE>
<CAPTION>
Additions Trans-
Balance at charged to lation Balance
beginning costs and Accounts adjust- at end
of period expenses written off ments of period
----------- ----------- ----------- ------- ---------
<S> <C> <C> <C> <C> <C>
Allowance for doubtful accounts ........ $6,322 $257 $173 $(301) $6,105
====== ==== ==== ===== ======
</TABLE>
S-1
<PAGE>
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.l. 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.
<TABLE>
<CAPTION>
Organized under
NAME OF COMPANY laws of
--------------- ----------------
<S> <C>
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 Flavors & Fragrances (Canada) Ltd. ..................................... Canada
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 (Philippines) Inc. ................................ Philippines
International Flavors & Fragrances I.F.F. (Espana) S.A. .............................. Spain
ALVA Insurance Limited ............................................................... Bermuda
IFF Concentrates Inc. ................................................................ Oregon
Auro Tech, Inc. ...................................................................... Wisconsin
</TABLE>
E-1
<PAGE>
EXHIBIT INDEX
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
10(f) Management Incentive Compensation Plan of Registrant, incorporated by
reference to Exhibit A to the Registrant's Proxy Statement dated April
13, 1971.
10(g) Amendments to the Registrant's Management Incentive Compensation Plan,
adopted February 6, 1973, incorporated by reference to Exhibit 11(v)
to the Registrant Statement of the Registrant (Reg. No. 2-47516).
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.
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.
<PAGE>
Number
-------
10(j) Director Charitable Contribution Program adopted by the Board of
Directors on February 14, 1995.
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 27 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.
EXHIBIT 10(j)
As Revised to February 17, 1995
-------------------------------
INTERNATIONAL FLAVORS & FRAGRANCES INC.
DIRECTOR CHARITABLE CONTRIBUTION PROGRAM
I. PROGRAM OVERVIEW
----------------
A. After the death of each participating Director*, it is the intention of
International Flavors & Fragrances Inc. (the "Corporation") to contribute
$500,000 to an eligible charitable or educational institution recommended by the
Director and an additional $500,000 to the IFF Foundation (the "Foundation"), to
be used for charitable contributions selected by the Foundation. The
contribution recommended by the Director will be made by the Corporation in his
or her name.
B. To finance the anticipated contributions in the Director's name and by
the Foundation, the Corporation will apply for life insurance covering each
Director. With respect to each Director serving on the effective date of the
Program, the Corporation will apply for the insurance promptly. The Corporation
will apply for the insurance with respect to each person becoming a Director
after the effective date of the Program promptly after his or her election. The
policy covering any Director will be a specifically designed joint life policy
under which two Directors will be insured. The Corporation will be the owner of
and the beneficiary under the policy.
C. The Program will benefit the Director, the charitable organization and
the Corporation.
--------
* All future references to Director will mean participating Director, except
where the context otherwise requires.
<PAGE>
1. By enabling the Director to recommend that a significant contribution
be made in his or her name to an eligible charity or educational
institution, the Program will assist the Director in accomplishing
his or her charitable or educational contribution goals, with no
commitment of personal resources.
2. The charitable organization will receive from an extremely reliable
source a substantial endowment that otherwise might not have been
available to it.
3. The Program will provide additional funds to enable the Corporation
and the Foundation to make meaningful contributions to charitable and
educational organizations, thereby enhancing the Corporation's public
image, while at the same time creating an additional innovative
method for attracting and retaining quality Directors.
II. PARTICIPATION IN THE PROGRAM
----------------------------
A. With respect to Directors serving on the effective date of the Program:
1. Each non-employee Director will be fully vested in the Program on
such date.
2. Each employee director will be deemed fully vested in the Program at
age 62, provided that he is serving as a Director at such date.
2
<PAGE>
B. With respect to persons becoming Directors after the effective date of
the Program:
1. A non-employee Director will vest in the Program over a sixty-month
period of service according to the following schedule:
MONTHS OF SERVICE DONATION TO DIRECTOR'S
AS A DIRECTOR RECOMMENDED CHARITY
------------- -------------------
Less than 24 $0
24-35 $200,000
36-47 $300,000
48-59 $400,000
60 or more $500,000
2. Provided that an employee Director is serving as a Director at age
62, he or she will vest in the Program on that date in accordance
with the schedule in B.1 above, which will include service as a
Director both before and after that date.
C. Notwithstanding A. and B. above, in the event a Director is determined,
in the sole discretion of the Corporation, not to be insurable, he or she will
be ineligible to, and will not, participate in the Program.
III. OPERATION OF THE PROGRAM
------------------------
A. Prior to the effective date of the Program (or, for a new Director, at
the time he or she is first elected as a Director), the Director and the
Corporation will enter into a Memorandum of Understanding which, among other
things, (1) will state the Corporation's intention to make a corporate
contribution in the Director's name following the Director's death, and (2) will
acknowledge the Director's participation in the Program.
3
<PAGE>
B. Directors will be paired as the Corporation may elect and each pair of
Directors will apply for a joint life insurance policy with the Corporation as
owner and beneficiary. Directors will be asked to complete necessary enrollment
forms and policy applications. The Secretary of the Corporation will be
available to assist any Director in completing the paperwork.
C. At the time a Director first becomes vested in the Program, the
Corporation will request the Director to complete a contribution form to
recommend one or more eligible charitable or educational institutions of his or
her choice to receive the amount of the eventual donation as to which the
Director is then vested and, if a Director selects more than one donee, the
amount to be given to each. No contribution may be for less than $100,000. Each
person becoming a Director after the effective date of the Program will be
requested to complete additional contribution forms as the amount of the
eventual donation in which he or she is vested increases.
D. Although the Corporation will give deference to Director
recommendations, the Corporation, in its sole discretion, reserves the right to
accept or reject any recommendation. An accepted recommendation will be
effective upon return to the Director of a copy of the contribution form.
E. A Director may revoke or revise a contribution recommendation at any
time by completing a new contribution form. The revocation or revision will
be effective when accepted by the Corporation by returning a copy of the
contribution form to the Director.
F. Any proceeds of insurance as to which a Director has not made a
recommendation which has been accepted by the Corporation will be paid to the
Foundation.
4
<PAGE>
G. The Corporation will pay all premiums on the life insurance policy and
all expenses of the Program.
H. After the death of a Director, the Corporation will make the
contribution to the recommended institution(s) in the Director's name.
I. After the death of the second Director insured under a policy, the
Corporation will receive the proceeds as beneficiary of the full policy covering
both Directors.
IV. IMPLEMENTATION OF THE PROGRAM
-----------------------------
A. The Program will become effective March 1, 1995.
B. A Director's rights and interests under the Program may not be assigned
or transferred.
C. The Program may be amended, suspended or terminated at any time by the
Board of Directors. Nothing contained in the Program will create a trust, actual
or constructive, for the benefit of a Director or any organization recommended
by a Director to receive a donation, or will give any Director or recommended
organization any interest in any assets of the Program or the Corporation.
D. The Office of the Secretary of the Corporation will administer the
Program. A Director may seek assistance from or direct any questions about the
Program to the Secretary of the Corporation.
5
<PAGE>
INTERNATIONAL FLAVORS & FRAGRANCES INC.
DIRECTOR CHARITABLE CONTRIBUTION PROGRAM
QUESTIONS AND ANSWERS
1. Will participating Directors need to qualify for life insurance?
Yes. The requirements are minimal, however. Each Director will be asked to sign
a life insurance application, answer six health-related questions and a smoking
question, and provide details for certain avocations (e.g., scuba diving and
aviation). In addition, each Director will be asked to authorize Metropolitan
Life Insurance Company to obtain a report from his or her attending
physician(s).
2. Will a medical examination be required?
Generally, only the information and authorization outlined in the response to
question 1 will be required. In certain instances, however--for example, where
the Director has not had a medical examination within 6-12 months prior to
completing the application--an examination may be required.
3. What will happen if a Director is determined to be a higher than standard
life insurance risk, is a smoker, or is even uninsurable?
Joint life policies insuring two Directors permit more flexibility than
traditional single life policies. As a result, although the Corporation's
premium outlays may be higher for "rated" Directors and for smokers, it is
expected that a wide range of risks can be accommodated. Nevertheless,
6
<PAGE>
in the unlikely event that a Director were determined to be uninsurable, he or
she would be ineligible to participate in the Program.
4. Why does the Program utilize joint life insurance policies?
Joint life policies have lower premiums than single life policies. Directors
will be paired under these policies on the most cost efficient basis for the
Corporation.
5. Will a Director incur any direct or indirect costs or suffer any tax
consequences as a result of the Program?
Under the Program, the Corporation will make a charitable contribution with its
own funds in the Director's name after the Director's death. All costs of the
Program--insurance policy premiums--will be paid by the Corporation and the
Corporation will be both the owner and the beneficiary of the policies. As a
result, there is no cost to a Director and, under current tax laws and
regulations, the Program should have no income or estate tax consequences to the
Director at any time.
6. The Program description states that the Corporation intends to make a
charitable contribution after the death of each Director, yet the life insurance
proceeds will not be payable until the death of the second insured under each
policy. What is the relationship between the life insurance and the actual
contributions?
As described in response to question 7, below, the insurance policies serve as
mechanisms to help finance the Program. In all cases, however, the charitable
contributions are made directly from the Corporation's general assets. The
contribution payments are not directly tied to the Corporation's receipt, as
beneficiary, of the death benefits under the insurance policies.
7
<PAGE>
7. What is the role of the life insurance in the Program?
The life insurance enables the Corporation to finance efficiently its
anticipated future charitable contributions in the Director's name and by the
Foundation. The Director has neither an interest in nor any right to the
benefits from the life insurance on his or her life. Assuming that current
Federal tax laws relating to charitable contributions do not change, and if
certain other assumptions (e.g., mortality projections) are met, the Corporation
can reasonably expect to be reimbursed for all of its outlays for life insurance
premiums and the after-tax cost of its anticipated charitable contributions
pursuant to the Program.
8. What charities and educational institutions are eligible for a Director's
recommendation to receive a charitable contribution under the Program?
The recommended recipient of a contribution under the Program must be an
established United States charitable or educational institution that meets the
definition of an Exempt Organization in Section 501(c)(3) of the Internal
Revenue Code and the regulations under it. Although the Corporation will give
deference to Director recommendations, the Corporation, in its sole discretion,
reserves the right at any time to accept or reject any recommendation.
9. May a Director recommend more than one recipient for portions of the intended
charitable contribution?
Yes, but the minimum amount that a Director may recommend be contributed to any
one charitable institution is $100,000. As a result, the number of recommended
recipients for the total contribution cannot exceed five.
10. Will the Corporation notify intended recipients recommended by a Director
for charitable contributions?
8
<PAGE>
No, unless the Director specifically requests otherwise in writing to the
Corporation. Any intended recipient notified by the Corporation at the request
of a Director will also be informed of any revocation or revision of the
Director's recommendation and of any other event that will change the expected
donation, such as the death or disability of a Director prior to full vesting.
11. Whom can a Director call for assistance or with questions about the Program?
The Program will be administered by the Office of the Secretary of the
Corporation. A Director may call the Vice President and Secretary of the
Corporation for assistance or with questions about any aspect of the Program,
including the eligibility of a recommended recipient of a contribution.
9
POWER OF ATTORNEY
The undersigned director and/or officer of International Flavors &
Fragrances Inc., a New York corporation, which is about to file with the
Securities and Exchange Commission, under the provisions of Section 13 or 15(d)
of the Securities Exchange Act of 1934, as amended, an Annual Report on Form
10-K, hereby constitutes and appoints George Rowe, Jr. and Stephen A. Block his
(her) attorneys, and each of them his (her) attorney with power to act without
the other, with full power of substitution and resubstitution, for him (her) and
in his (her) name, place and stead to sign in any and all capacities such Annual
Report, and any and all amendments thereto, and to file the same with all
exhibits thereto and other documents in connection therewith, granting unto said
attorneys, and each of them, full power and authority to do so and to perform
all and every act necessary to be done in connection therewith, as fully to all
intents and purposes as he (she) might or could do if personally present, hereby
ratifying the acts of his (her) said attorneys and each of them.
IN WITNESS WHEREOF, the undersigned has hereunto set his (her) hand and
seal this 14th day of February 1995.
MARGARET HAYES ADAME (L.S.)
------------------------------------
Margaret Hayes Adame
<PAGE>
POWER OF ATTORNEY
The undersigned director and/or officer of International Flavors &
Fragrances Inc., a New York corporation, which is about to file with the
Securities and Exchange Commission, under the provisions of Section 13 or 15(d)
of the Securities Exchange Act of 1934, as amended, an Annual Report on Form
10-K, hereby constitutes and appoints George Rowe, Jr. and Stephen A. Block his
(her) attorneys, and each of them his (her) attorney with power to act without
the other, with full power of substitution and resubstitution, for him (her) and
in his (her) name, place and stead to sign in any and all capacities such Annual
Report, and any and all amendments thereto, and to file the same with all
exhibits thereto and other documents in connection therewith, granting unto said
attorneys, and each of them, full power and authority to do so and to perform
all and every act necessary to be done in connection therewith, as fully to all
intents and purposes as he (she) might or could do if personally present, hereby
ratifying the acts of his (her) said attorneys and each of them.
IN WITNESS WHEREOF, the undersigned has hereunto set his (her) hand and
seal this 14th day of February 1995.
ROBIN CHANDLER DUKE (L.S.)
------------------------------------
Robin Chandler Duke
<PAGE>
POWER OF ATTORNEY
The undersigned director and/or officer of International Flavors &
Fragrances Inc., a New York corporation, which is about to file with the
Securities and Exchange Commission, under the provisions of Section 13 or 15(d)
of the Securities Exchange Act of 1934, as amended, an Annual Report on Form
10-K, hereby constitutes and appoints George Rowe, Jr. and Stephen A. Block his
(her) attorneys, and each of them his (her) attorney with power to act without
the other, with full power of substitution and resubstitution, for him (her) and
in his (her) name, place and stead to sign in any and all capacities such Annual
Report, and any and all amendments thereto, and to file the same with all
exhibits thereto and other documents in connection therewith, granting unto said
attorneys, and each of them, full power and authority to do so and to perform
all and every act necessary to be done in connection therewith, as fully to all
intents and purposes as he (she) might or could do if personally present, hereby
ratifying the acts of his (her) said attorneys and each of them.
IN WITNESS WHEREOF, the undersigned has hereunto set his (her) hand and
seal this 14th day of February 1995.
RICHARD M. FURLAUD (L.S.)
------------------------------------
Richard M. Furlaud
<PAGE>
POWER OF ATTORNEY
The undersigned director and/or officer of International Flavors &
Fragrances Inc., a New York corporation, which is about to file with the
Securities and Exchange Commission, under the provisions of Section 13 or 15(d)
of the Securities Exchange Act of 1934, as amended, an Annual Report on Form
10-K, hereby constitutes and appoints George Rowe, Jr. and Stephen A. Block his
(her) attorneys, and each of them his (her) attorney with power to act without
the other, with full power of substitution and resubstitution, for him (her) and
in his (her) name, place and stead to sign in any and all capacities such Annual
Report, and any and all amendments thereto, and to file the same with all
exhibits thereto and other documents in connection therewith, granting unto said
attorneys, and each of them, full power and authority to do so and to perform
all and every act necessary to be done in connection therewith, as fully to all
intents and purposes as he (she) might or could do if personally present, hereby
ratifying the acts of his (her) said attorneys and each of them.
IN WITNESS WHEREOF, the undersigned has hereunto set his (her) hand and
seal this 14th day of February 1995.
HUGH R. KIRKPATRICK (L.S.)
------------------------------------
Hugh R. Kirkpatrick
<PAGE>
POWER OF ATTORNEY
The undersigned director and/or officer of International Flavors &
Fragrances Inc., a New York corporation, which is about to file with the
Securities and Exchange Commission, under the provisions of Section 13 or 15(d)
of the Securities Exchange Act of 1934, as amended, an Annual Report on Form
10-K, hereby constitutes and appoints George Rowe, Jr. and Stephen A. Block his
(her) attorneys, and each of them his (her) attorney with power to act without
the other, with full power of substitution and resubstitution, for him (her) and
in his (her) name, place and stead to sign in any and all capacities such Annual
Report, and any and all amendments thereto, and to file the same with all
exhibits thereto and other documents in connection therewith, granting unto said
attorneys, and each of them, full power and authority to do so and to perform
all and every act necessary to be done in connection therewith, as fully to all
intents and purposes as he (she) might or could do if personally present, hereby
ratifying the acts of his (her) said attorneys and each of them.
IN WITNESS WHEREOF, the undersigned has hereunto set his (her) hand and
seal this 14th day of February 1995.
HERBERT G. REID (L.S.)
------------------------------------
Herbert G. Reid
<PAGE>
POWER OF ATTORNEY
The undersigned director and/or officer of International Flavors &
Fragrances Inc., a New York corporation, which is about to file with the
Securities and Exchange Commission, under the provisions of Section 13 or 15(d)
of the Securities Exchange Act of 1934, as amended, an Annual Report on Form
10-K, hereby constitutes and appoints George Rowe, Jr. and Stephen A. Block his
(her) attorneys, and each of them his (her) attorney with power to act without
the other, with full power of substitution and resubstitution, for him (her) and
in his (her) name, place and stead to sign in any and all capacities such Annual
Report, and any and all amendments thereto, and to file the same with all
exhibits thereto and other documents in connection therewith, granting unto said
attorneys, and each of them, full power and authority to do so and to perform
all and every act necessary to be done in connection therewith, as fully to all
intents and purposes as he (she) might or could do if personally present, hereby
ratifying the acts of his (her) said attorneys and each of them.
IN WITNESS WHEREOF, the undersigned has hereunto set his (her) hand and
seal this 14th day of February 1995.
STANLEY M. RUMBOUGH, JR. (L.S.)
------------------------------------
Stanley M. Rumbough, Jr.
<PAGE>
POWER OF ATTORNEY
The undersigned director and/or officer of International Flavors &
Fragrances Inc., a New York corporation, which is about to file with the
Securities and Exchange Commission, under the provisions of Section 13 or 15(d)
of the Securities Exchange Act of 1934, as amended, an Annual Report on Form
10-K, hereby constitutes and appoints George Rowe, Jr. and Stephen A. Block his
(her) attorneys, and each of them his (her) attorney with power to act without
the other, with full power of substitution and resubstitution, for him (her) and
in his (her) name, place and stead to sign in any and all capacities such Annual
Report, and any and all amendments thereto, and to file the same with all
exhibits thereto and other documents in connection therewith, granting unto said
attorneys, and each of them, full power and authority to do so and to perform
all and every act necessary to be done in connection therewith, as fully to all
intents and purposes as he (she) might or could do if personally present, hereby
ratifying the acts of his (her) said attorneys and each of them.
IN WITNESS WHEREOF, the undersigned has hereunto set his (her) hand and
seal this 14th day of February 1995.
GEORGE ROWE, JR. (L.S.)
------------------------------------
George Rowe, Jr.
<PAGE>
POWER OF ATTORNEY
The undersigned director and/or officer of International Flavors &
Fragrances Inc., a New York corporation, which is about to file with the
Securities and Exchange Commission, under the provisions of Section 13 or 15(d)
of the Securities Exchange Act of 1934, as amended, an Annual Report on Form
10-K, hereby constitutes and appoints George Rowe, Jr. and Stephen A. Block his
(her) attorneys, and each of them his (her) attorney with power to act without
the other, with full power of substitution and resubstitution, for him (her) and
in his (her) name, place and stead to sign in any and all capacities such Annual
Report, and any and all amendments thereto, and to file the same with all
exhibits thereto and other documents in connection therewith, granting unto said
attorneys, and each of them, full power and authority to do so and to perform
all and every act necessary to be done in connection therewith, as fully to all
intents and purposes as he (she) might or could do if personally present, hereby
ratifying the acts of his (her) said attorneys and each of them.
IN WITNESS WHEREOF, the undersigned has hereunto set his (her) hand and
seal this 14th day of February 1995.
HENRY P. VAN AMERINGEN (L.S.)
------------------------------------
Henry P. van Ameringen
<PAGE>
POWER OF ATTORNEY
The undersigned director and/or officer of International Flavors &
Fragrances Inc., a New York corporation, which is about to file with the
Securities and Exchange Commission, under the provisions of Section 13 or 15(d)
of the Securities Exchange Act of 1934, as amended, an Annual Report on Form
10-K, hereby constitutes and appoints George Rowe, Jr. and Stephen A. Block his
(her) attorneys, and each of them his (her) attorney with power to act without
the other, with full power of substitution and resubstitution, for him (her) and
in his (her) name, place and stead to sign in any and all capacities such Annual
Report, and any and all amendments thereto, and to file the same with all
exhibits thereto and other documents in connection therewith, granting unto said
attorneys, and each of them, full power and authority to do so and to perform
all and every act necessary to be done in connection therewith, as fully to all
intents and purposes as he (she) might or could do if personally present, hereby
ratifying the acts of his (her) said attorneys and each of them.
IN WITNESS WHEREOF, the undersigned has hereunto set his (her) hand and
seal this 14th day of February 1995.
HENDRIK C. VAN BAAREN (L.S.)
------------------------------------
Hendrik C. van Baaren
<PAGE>
POWER OF ATTORNEY
The undersigned director and/or officer of International Flavors &
Fragrances Inc., a New York corporation, which is about to file with the
Securities and Exchange Commission, under the provisions of Section 13 or 15(d)
of the Securities Exchange Act of 1934, as amended, an Annual Report on Form
10-K, hereby constitutes and appoints George Rowe, Jr. and Stephen A. Block his
(her) attorneys, and each of them his (her) attorney with power to act without
the other, with full power of substitution and resubstitution, for him (her) and
in his (her) name, place and stead to sign in any and all capacities such Annual
Report, and any and all amendments thereto, and to file the same with all
exhibits thereto and other documents in connection therewith, granting unto said
attorneys, and each of them, full power and authority to do so and to perform
all and every act necessary to be done in connection therewith, as fully to all
intents and purposes as he (she) might or could do if personally present, hereby
ratifying the acts of his (her) said attorneys and each of them.
IN WITNESS WHEREOF, the undersigned has hereunto set his (her) hand and
seal this 14th day of February 1995.
WILLIAM D. VAN DYKE, III (L.S.)
------------------------------------
William D. Van Dyke, III
<PAGE>
POWER OF ATTORNEY
The undersigned director and/or officer of International Flavors &
Fragrances Inc., a New York corporation, which is about to file with the
Securities and Exchange Commission, under the provisions of Section 13 or 15(d)
of the Securities Exchange Act of 1934, as amended, an Annual Report on Form
10-K, hereby constitutes and appoints George Rowe, Jr. and Stephen A. Block his
(her) attorneys, and each of them his (her) attorney with power to act without
the other, with full power of substitution and resubstitution, for him (her) and
in his (her) name, place and stead to sign in any and all capacities such Annual
Report, and any and all amendments thereto, and to file the same with all
exhibits thereto and other documents in connection therewith, granting unto said
attorneys, and each of them, full power and authority to do so and to perform
all and every act necessary to be done in connection therewith, as fully to all
intents and purposes as he (she) might or could do if personally present, hereby
ratifying the acts of his (her) said attorneys and each of them.
IN WITNESS WHEREOF, the undersigned has hereunto set his (her) hand and
seal this 14th day of February 1995.
EUGENE P. GRISANTI (L.S.)
------------------------------------
Eugene P. Grisanti
<PAGE>
POWER OF ATTORNEY
The undersigned director and/or officer of International Flavors &
Fragrances Inc., a New York corporation, which is about to file with the
Securities and Exchange Commission, under the provisions of Section 13 or 15(d)
of the Securities Exchange Act of 1934, as amended, an Annual Report on Form
10-K, hereby constitutes and appoints George Rowe, Jr. and Stephen A. Block his
(her) attorneys, and each of them his (her) attorney with power to act without
the other, with full power of substitution and resubstitution, for him (her) and
in his (her) name, place and stead to sign in any and all capacities such Annual
Report, and any and all amendments thereto, and to file the same with all
exhibits thereto and other documents in connection therewith, granting unto said
attorneys, and each of them, full power and authority to do so and to perform
all and every act necessary to be done in connection therewith, as fully to all
intents and purposes as he (she) might or could do if personally present, hereby
ratifying the acts of his (her) said attorneys and each of them.
IN WITNESS WHEREOF, the undersigned has hereunto set his (her) hand and
seal this 14th day of February 1995.
THOMAS H. HOPPEL (L.S.)
------------------------------------
Thomas H. Hoppel
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
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.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<CASH> 230,581
<SECURITIES> 71,227
<RECEIVABLES> 228,434
<ALLOWANCES> (7,448)
<INVENTORY> 362,105
<CURRENT-ASSETS> 964,486
<PP&E> 736,912
<DEPRECIATION> (331,182)
<TOTAL-ASSETS> 1,399,725
<CURRENT-LIABILITIES> 259,723
<BONDS> 14,342
<COMMON> 14,470
0
0
<OTHER-SE> 993,609
<TOTAL-LIABILITY-AND-EQUITY> 1,399,725
<SALES> 1,315,237
<TOTAL-REVENUES> 1,315,237
<CGS> 677,826
<TOTAL-COSTS> 966,624
<OTHER-EXPENSES> (25,213)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 13,470
<INCOME-PRETAX> 360,356
<INCOME-TAX> 134,334
<INCOME-CONTINUING> 226,022
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 226,022
<EPS-PRIMARY> 2.03
<EPS-DILUTED> 2.03
</TABLE>
