1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OF
THE SECURITIES EXCHANGE ACT OF 1934
For Quarterly Period Ended June 30, 2004
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. 10019-2960
---------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 765-5500
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding twelve months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes [X] No [ ]
Number of shares outstanding as of July 31, 2004: 94,223,911
2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
INTERNATIONAL FLAVORS & FRAGRANCES INC.
CONSOLIDATED BALANCE SHEET
(DOLLARS IN THOUSANDS)
(Unaudited)
6/30/04 12/31/03
Assets ---------- -----------
- ------
Current Assets:
Cash & cash equivalents $ 11,245 $ 12,081
Short-term investments 466 474
Trade receivables 388,127 336,980
Allowance for doubtful accounts (16,491) (16,212)
Inventories: Raw materials 228,237 233,313
Work in process 17,334 15,815
Finished goods 214,391 205,503
------------ ------------
Total Inventories 459,962 454,631
Deferred income taxes 60,629 66,070
Other current assets 65,777 48,648
------------ ------------
Total Current Assets 969,715 902,672
------------ ------------
Property, plant & equipment, at cost 1,014,060 1,010,397
Accumulated depreciation (528,093) (499,785)
------------ ------------
485,967 510,612
------------ ------------
Goodwill, net 647,566 647,226
Intangible assets, net 145,062 152,187
Other assets 94,692 94,195
------------ ------------
Total Assets $ 2,343,002 $ 2,306,892
============ ============
Liabilities and Shareholders' Equity
- ------------------------------------
Current Liabilities:
Bank loans and current portion of long-term debt $ 33,863 $ 31,371
Commercial paper 136,950 162,933
Accounts payable-trade 116,314 104,028
Dividends payable 16,520 14,996
Income taxes 32,601 27,826
Other current liabilities 178,436 184,891
------------ -----------
Total Current Liabilities 514,684 526,045
------------ -----------
Other Liabilities:
Long-term debt 666,570 690,231
Deferred gains 71,934 73,439
Retirement liabilities 210,586 210,031
Other liabilities 69,201 64,515
------------ -----------
Total Other Liabilities 1,018,291 1,038,216
------------ -----------
Shareholders' Equity:
Common stock 12 1/2 cent par value; authorized
500,000,000 shares; issued 115,761,840 shares 14,470 14,470
Capital in excess of par value 85,212 95,138
Restricted stock (2,457) (3,952)
Retained earnings 1,577,283 1,496,104
Accumulated other comprehensive income:
Cumulative translation adjustment (68,105) (45,188)
Accumulated gains on derivatives
qualifying as hedges (net of tax) (9,503) (3,678)
Minimum pension liability adjustment (net of tax) (82,815) (82,815)
------------ -----------
1,514,085 1,470,079
Treasury stock, at cost - 21,522,552 shares in '04
and 22,032,132 in '03 (704,058) (727,448)
------------ -----------
Total Shareholders' Equity 810,027 742,631
------------ -----------
Total Liabilities and Shareholders' Equity $ 2,343,002 $ 2,306,892
============ ===========
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3
INTERNATIONAL FLAVORS & FRAGRANCES INC.
CONSOLIDATED STATEMENT OF INCOME
(AMOUNTS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
(Unaudited)
3 Months Ended 6/30
----------------------------
2004 2003
---- ----
Net sales $ 524,177 $ 482,611
---------- ---------
Cost of goods sold 295,716 275,235
Research and development expenses 44,342 38,897
Selling and administrative expenses 83,184 72,888
Amortization 3,709 3,158
Restructuring and other charges 7,716 6,715
Interest expense 6,114 7,957
Other (income) expense, net 1,305 2,371
--------- ---------
442,086 407,221
--------- ---------
Income before taxes on income 82,091 75,390
Taxes on income 25,589 23,992
--------- ---------
Net income 56,502 51,398
Other comprehensive income:
Foreign currency translation adjustments (11,493) 40,883
Accumulated gains on derivatives
qualifying as hedges (net of tax) 591 1,480
--------- ---------
Comprehensive income $ 45,600 $ 93,761
========== =========
Net income per share - basic $0.60 $0.55
Net income per share - diluted $0.59 $0.54
Average number of shares outstanding - basic 94,136 93,782
Average number of shares outstanding - diluted 95,330 94,874
Dividends declared per share $0.175 $0.16
6 Months Ended 6/30
----------------------------
2004 2003
---- ----
Net sales $1,059,192 $ 948,835
---------- ----------
Cost of goods sold 602,502 545,682
Research and development expenses 88,990 77,859
Selling and administrative expenses 172,910 149,003
Amortization 7,408 6,316
Restructuring and other charges 7,716 27,104
Interest expense 12,571 16,070
Other (income) expense, net 2,730 4,897
---------- ----------
894,827 826,931
---------- ----------
Income before taxes on income 164,365 121,904
Taxes on income 51,505 38,489
---------- ----------
Net income 112,860 83,415
Other comprehensive income:
Foreign currency translation adjustments (22,917) 48,913
Accumulated (losses) gains on derivatives
qualifying as hedges (net of tax) (5,825) 659
---------- -----------
Comprehensive income $ 84,118 $ 132,987
========== ===========
Net income per share - basic $1.20 $0.89
Net income per share - diluted $1.19 $0.88
Average number of shares outstanding - basic 94,085 93,970
Average number of shares outstanding - diluted 95,228 95,077
Dividends declared per share $0.335 $0.31
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4
INTERNATIONAL FLAVORS & FRAGRANCES INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(DOLLARS IN THOUSANDS)
(Unaudited)
6 Months Ended 6/30
----------------------------------
2004 2003
---------- ----------
Cash flows from operating activities:
- -------------------------------------
Net income $ 112,860 $ 83,415
Adjustments to reconcile to net cash provided by operations:
Depreciation and amortization 46,082 43,018
Deferred income taxes 3,875 (20,260)
Changes in assets and liabilities:
Current receivables (63,246) (35,189)
Inventories (15,530) 2,943
Current payables 8,360 (9,647)
Other, net (14,824) (6,993)
-------- ---------
Net cash provided by operations 77,577 57,287
-------- ---------
Cash flows from investing activities:
- ------------------------------------
Net change in investments - (128)
Additions to property, plant and equipment (26,712) (26,725)
Proceeds from disposal of assets 892 96,895
-------- --------
Net cash (used in) provided by investing activities (25,820) 70,042
-------- --------
Cash flows from financing activities:
- -------------------------------------
Cash dividends paid to shareholders (30,157) (28,240)
Net change in bank loans (7,275) 1,533
Net change in commercial paper outstanding (25,983) 189,922
Proceeds from long-term debt 102 33,686
Repayments of long-term debt (1,040) (299,103)
Proceeds from issuance of stock under stock option
and employee stock purchase plans 39,471 9,941
Purchase of treasury stock (27,116) (35,868)
-------- --------
Net cash used in financing activities (51,998) (128,129)
-------- --------
Effect of exchange rate changes on cash and cash equivalents (595) 1,368
-------- --------
NET CHANGE IN CASH AND CASH EQUIVALENTS (836) 568
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 12,081 14,858
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 11,245 $ 15,426
======== ========
Interest Paid $ 18,640 $ 25,092
Income Taxes Paid $ 37,936 $ 58,014
Non-cash investing activity:
Asset write-down charges associated with
the sale of the company's Fruit business $ 5,368 -
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
These interim statements and management's related discussion and analysis should
be read in conjunction with the consolidated financial statements and their
related notes, and management's discussion and analysis of results of operations
and financial condition included in International Flavors & Fragrances Inc.
("the Company" or "IFF") 2003 Annual Report on Form 10-K. These interim
statements are unaudited. In the opinion of the Company's management, all normal
recurring adjustments necessary for a fair presentation of the results for the
interim periods have been made.
STOCK OPTION PLANS:
The Company applies the recognition and measurement principles of Accounting
Principles Board Opinion No. 25, Accounting for Stock Issued to Employees, and
related interpretations in accounting for its stock plans. No compensation
expense for stock options is reflected in net earnings, as all options granted
under such plans have an exercise price not less than the market value of the
common stock on the date of grant. The following table illustrates the effect on
net income and net income per share if the Company had applied the fair value
recognition provisions of Statement of Financial Accounting Standards No. 123
for the period presented:
Three Months Ended June 30, Six Months Ended June 30,
- -----------------------------------------------------------------------------------------------------------------------------------
(Dollars in thousands except per share amounts) 2004 2003 2004 2003
- -----------------------------------------------------------------------------------------------------------------------------------
Net income, as reported $56,502 $51,398 $112,860 $83,415
- -----------------------------------------------------------------------------------------------------------------------------------
Deduct: Total stock-based employee compensation expense
determined under fair value method for all stock option
awards, net of related tax effects 2,896 3,525 7,473 6,639
- -----------------------------------------------------------------------------------------------------------------------------------
Pro-forma net income $53,606 $47,873 $105,387 $76,776
- -----------------------------------------------------------------------------------------------------------------------------------
Net income per share:
- -----------------------------------------------------------------------------------------------------------------------------------
Basic - as reported $0.60 $0.55 $1.20 $0.89
- -----------------------------------------------------------------------------------------------------------------------------------
Basic - pro-forma $0.57 $0.51 $1.12 $0.82
- -----------------------------------------------------------------------------------------------------------------------------------
Diluted - as reported $0.59 $0.54 $1.19 $0.88
- -----------------------------------------------------------------------------------------------------------------------------------
Diluted - pro-forma $0.56 $0.50 $1.11 $0.81
- -----------------------------------------------------------------------------------------------------------------------------------
These pro-forma amounts may not be representative of future disclosures because
the estimated fair value of stock options is amortized to expense over the
vesting period, and a different number of options may be granted in future
years.
NET INCOME PER SHARE:
Stock options to purchase 872,250 and 887,500 shares were outstanding for the
second quarter and the first six months of 2004, respectively, and 5,041,370 and
4,979,261 shares for the second quarter and first six months of 2003,
respectively, but were not included in the computation of diluted net income per
share for the respective periods because the options' exercise prices were
greater than the average market price of the common shares in the respective
periods.
SEGMENT INFORMATION:
The Company's reportable segment information, based on geographic region,
follows. The Company evaluates the performance of its geographic regions based
on operating profit, excluding interest expense, other income and expense,
certain unallocated expenses, the effects of restructuring and other charges,
accounting changes, and income tax expense.
6
Three Months Ended June 30, 2004
- ------------------------------------------------------------------------------------------------------------------------------------
North India Latin Asia
(Dollars in thousands) America Europe Region America Pacific Eliminations Consolidated
- ------------------------------------------------------------------------------------------------------------------------------------
Sales to unaffiliated customers $162,556 $210,758 $13,814 $55,761 $81,288 $ -- $524,177
Transfers between regions 19,217 49,106 1,366 123 8,034 (77,846) --
- ------------------------------------------------------------------------------------------------------------------------------------
Total sales $181,773 $259,864 $15,180 $55,884 $89,322 $(77,846) $524,177
====================================================================================================================================
Segment profit $ 23,624 $ 60,944 $ 3,901 $ 7,597 $15,230 $ (1,184) $110,112
==================================================================================================================
Corporate and other
unallocated expenses (12,886)
Restructuring and other charges (7,716)
Interest expense (6,114)
Other income (expense), net (1,305)
-------------
Income before taxes on income $82,091
====================================================================================================================================
Three Months Ended June 30, 2003
- ------------------------------------------------------------------------------------------------------------------------------------
North India Latin Asia
(Dollars in thousands) America Europe Region America Pacific Eliminations Consolidated
- ------------------------------------------------------------------------------------------------------------------------------------
Sales to unaffiliated customers $151,918 $197,961 $11,653 $50,896 $70,183 $ -- $482,611
Transfers between regions 18,216 40,431 58 347 5,057 (64,109) --
- ------------------------------------------------------------------------------------------------------------------------------------
Total sales $170,134 $238,392 $11,711 $51,243 $75,240 $(64,109) $482,611
====================================================================================================================================
Segment profit $ 22,353 $ 54,909 $ 3,206 $ 8,124 $12,500 $ 688 $101,780
==================================================================================================================
Corporate and other
unallocated expenses (9,347)
Restructuring and other charges (6,715)
Interest expense (7,957)
Other income (expense), net (2,371)
--------------
Income before taxes on income $ 75,390
====================================================================================================================================
Six Months Ended June 30, 2004
- ------------------------------------------------------------------------------------------------------------------------------------
North India Latin Asia
(Dollars in thousands) America Europe Region America Pacific Eliminations Consolidated
- ------------------------------------------------------------------------------------------------------------------------------------
Sales to unaffiliated customers $325,603 $436,194 $27,605 $109,498 $160,292 $ -- $1,059,192
Transfers between regions 40,104 96,710 1,369 410 13,676 (152,269) --
- ------------------------------------------------------------------------------------------------------------------------------------
Total sales $365,707 $532,904 $28,974 $109,908 $173,968 $(152,269) $1,059,192
====================================================================================================================================
Segment profit $ 43,105 $124,895 $ 7,148 $ 13,353 $ 28,188 $ (124) $ 216,565
==================================================================================================================
Corporate and other
unallocated expenses (29,183)
Restructuring and other charges (7,716)
Interest expense (12,571)
Other income (expense), net (2,730)
--------------
Income before taxes on income $ 164,365
====================================================================================================================================
Six Months Ended June 30, 2003
- ------------------------------------------------------------------------------------------------------------------------------------
North India Latin Asia
(Dollars in thousands) America Europe Region America Pacific Eliminations Consolidated
- ------------------------------------------------------------------------------------------------------------------------------------
Sales to unaffiliated customers $292,612 $394,332 $22,019 $102,202 $137,670 $ -- $948,835
Transfers between regions 39,531 80,508 306 546 10,061 (130,952) --
- ------------------------------------------------------------------------------------------------------------------------------------
Total sales $332,143 $474,840 $22,325 $102,748 $147,731 $(130,952) $948,835
====================================================================================================================================
Segment profit $ 36,459 $108,776 $ 5,645 $ 17,823 $ 24,062 $ (877) $191,888
==================================================================================================================
Corporate and other
unallocated expenses (21,913)
Restructuring and other charges (27,104)
Interest expense (16,070)
Other income (expense), net (4,897)
--------------
Income before taxes on income $ 121,904
====================================================================================================================================
7
RESTRUCTURING AND OTHER CHARGES:
As described in Note 2 of the Notes to the Consolidated Financial Statements
included in the Company's 2003 Annual Report on Form 10-K, in October 2000, the
Company announced a significant reorganization, including management changes,
consolidation of production facilities and related actions.
In May 2004, the Company entered into a letter of intent with Frutarom
Industries Ltd. ("Frutarom") for the intended sale of IFF's fruit preparations
businesses in Switzerland and Germany. IFF had previously announced its
intention to divest itself of this business, which manufactures processed fruit
and other natural product preparations used in a wide variety of food products,
including baked goods and dairy products. Sales of fruit preparations in 2003
approximated $90 million. The sale of the German and Swiss fruit preparations
businesses is expected to close in the third quarter. As a result, approximately
170 employees will be severed from the Company and transferred to Frutarom.
IFF also has fruit operations in France representing 30% of the total fruit
preparations business. The Company is currently in the consultation process with
its French employee works council on the potential sale of the French fruit
preparations business to Frutarom.
In June 2004, the Company announced that it would close its Canadian
manufacturing facility by the end of 2004 and transfer production to its South
Brunswick, New Jersey and Carrollton, Texas facilities. As a result, 24
employees will be severed from the Company.
As a result of these actions, the Company recorded $7.7 million ($5.0 million
after tax or $.06 per share) of restructuring and other charges related to the
impairment of certain European fruit preparations assets, and the closure of the
Canadian manufacturing facility. In 2004, the Company anticipates that it will
incur, after consideration of the net sales proceeds, additional costs of Euro
11.0 - 12.0 million ($13.0 - $14.0 million at current exchange rates) with
respect to the disposition of the fruit preparations business and related
actions.
Movements in the liabilities related to the restructuring charges were (in
millions):
EMPLOYEE- ASSET-RELATED
RELATED AND OTHER TOTAL
--------------------------------------------
Balance December 31, 2003 $19.6 $1.5 $ 21.1
Additional charges 2.3 5.4 7.7
Cash and other costs (11.2) (6.2) (17.4)
----- ---- -----
Balance June 30, 2004 $10.7 $0.7 $11.4
====== ==== =====
The balance of the employee-related liabilities are expected to be utilized by
2006 as obligations are satisfied and as the final decommissioning and disposal
of the affected equipment occurs.
The Company established accruals relating to the integration of BBA operations.
Costs associated with these integration activities, relating mainly to employee
separation and facility closures, were recorded as a component of purchase
accounting; such costs did not directly impact current earnings.
Movements in acquisition accounting accruals were (in millions):
EMPLOYEE-
RELATED
-----------
Balance December 31, 2003 $ 2.4
Cash and other costs (2.4)
-----
Balance June 30, 2004 $ --
=====
The Company has utilized the acquisition accounting accruals.
8
COMPREHENSIVE INCOME:
Changes in the accumulated other comprehensive income component of shareholders'
equity were as follows:
- ------------------------------------------------------------------------------------------------------------------------
Accumulated losses on
derivatives Minimum Pension
Translation qualifying as hedges, Obligation,
2004 (Dollars in thousands) adjustments net of tax net of tax Total
- ------------------------------------------------------------------------------------------------------------------------
Balance December 31, 2003 $(45,188) $(3,678) $(82,815) $(131,681)
Change (22,917) (5,825) - (28,742)
---------------------------------------------------------------------------------------
Balance June 30, 2004 $(68,105) $(9,503) $(82,815) $(160,423)
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
Accumulated gains on
derivatives Minimum Pension
Translation qualifying as hedges, Obligation,
2003 (Dollars in thousands) adjustments net of tax net of tax Total
- ------------------------------------------------------------------------------------------------------------------------
Balance December 31, 2002 $(138,175) $ 733 $(75,038) $(212,480)
Change 48,913 659 - 49,572
---------------------------------------------------------------------------------------
Balance June 30, 2003 $( 89,262) $1,392 $(75,038) $(162,908)
- ------------------------------------------------------------------------------------------------------------------------
BORROWINGS:
Debt consists of the following (Dollars in thousands):
Rate Maturities June 30, 2004 December 31, 2003
---- ---------- ------------- -----------------
Commercial paper (U.S.) $136,950 $162,933
Bank loans 21,826 30,610
Current portion of long-term debt 12,037 761
--------------------------------------
Total current debt 170,813 194,304
--------------------------------------
U.S. dollars 6.45% 2006 498,806 498,675
Japanese Yen notes 2.45% 2008-11 138,254 141,516
Japanese Yen notes 1.74% 2005 - 11,172
Other 2006 97 861
--------------------------------------
637,157 652,224
Deferred realized gain on interest rate swaps 32,155 39,685
FAS 133 Adjustment (2,742) (1,678)
--------------------------------------
Total long-term debt 666,570 690,231
--------------------------------------
Total debt $837,383 $884,535
======================================
At June 30, 2004, commercial paper maturities did not extend beyond July 22,
2004 and the weighted average interest rate on total borrowings was 2.9%
compared to 3.0% at December 31, 2003.
9
INTANGIBLE ASSETS, NET:
The following tables reflect the carrying values for Intangible assets and
Accumulated amortization at June 30, 2004 and December 31, 2003:
(Dollars in thousands) June 30, 2004 June 30, 2004
Gross Carrying Value Accumulated Amortization
-------------------- ------------------------
Goodwill $689,100 $41,534
Other indefinite lived intangibles 19,200 1,184
Trademarks and other 175,210 48,164
-------- -------
Total $883,510 $90,882
======== =======
(Dollars in thousands) December 31, 2003 December 31, 2003
Gross Carrying Value Accumulated Amortization
-------------------- ------------------------
Goodwill $688,760 $41,534
Other indefinite lived intangibles 19,200 1,184
Trademarks and other 174,699 40,528
-------- -------
Total $882,659 $83,246
======== =======
The changes in goodwill and intangible assets result from adjustments to
acquisition accounting for Celessence. Estimated amortization expense will be
$3.7 million per quarter for 2004 to 2006. Estimated amortization expense will
be $3.7 million for the first three quarters of 2007, $2.4 million in the fourth
quarter of 2007, and $1.7 million per quarter in 2008 and 2009.
RETIREMENT BENEFITS:
As described in Note 14 of the Notes to the Consolidated Financial Statements
included in the Company's 2003 Annual Report on Form 10-K, the Company and most
of its subsidiaries have pension and/or other retirement benefit plans covering
substantially all employees.
For the second quarter and six months ended June 30, 2004 and 2003, pension
expense for the U.S. and non U.S. plans included the following components:
U.S. Plans Three Months Ended June 30, Six Months Ended June 30,
(Dollars in thousands) 2004 2003 2004 2003
---- ---- ---- ----
Service cost for benefits earned $2,391 $2,117 $4,782 $4,234
Interest cost on projected benefit obligation 5,070 4,943 10,140 9,886
Expected return on plan assets (5,203) (5,469) (10,406) (10,938)
Net amortization and deferrals 591 177 1,182 354
Special termination benefits - 325 - 650
------ ------ ------ ------
Defined benefit plans 2,849 2,093 5,698 4,186
Defined contribution and other retirement plans 851 633 1,539 1,267
------ ------ ------ ------
Total pension expense $3,700 $2,726 $7,237 $5,453
====== ====== ====== ======
Non U.S. Plans Three Months Ended June 30, Six Months Ended June 30,
(Dollars in thousands) 2004 2003 2004 2003
---- ---- ---- ----
Service cost for benefits earned $2,336 $2,057 $4,672 $4,114
Interest cost on projected benefit obligation 6,683 5,891 13,366 11,782
Expected return on plan assets (7,208) (6,105) (14,416) (12,210)
Net amortization and deferrals 1,726 1,461 3,452 2,922
Special termination benefits - 306 - 612
------ ------ ------ ------
Defined benefit plans 3,537 3,610 7,074 7,220
Defined contribution and other retirement plans 740 804 1,486 1,608
------ ------ ------ ------
Total pension expense $4,277 $4,414 $8,560 $8,828
====== ====== ====== ======
10
The Company expects to contribute $4.8 million to its U.S. pension plans in
2004. In the second quarter and six-month period ended June 30, 2004, $3.2
million and $3.9 million of contributions were made to the U.S. pension plans,
respectively. The Company expects to contribute $18.5 million to its non-U.S.
pension plans in 2004. In the second quarter and six-month period ended June 30,
2004, $4.0 million and $6.5 million of contributions were made to its non-U.S.
pension plans, respectively.
The special termination benefits in 2003 are the result of termination
agreements in the U.S. and Europe providing for enhanced retirement benefits to
eligible employees.
For the second quarter and six months ended June 30, 2004 and 2003, expense
recognized for postretirement benefits other than pensions included the
following components:
Three Months Ended June 30, Six Months Ended June 30,
(Dollars in thousands) 2004 2003 2004 2003
---- ---- ---- ----
Service cost for benefits earned $ 645 $ 688 $1,290 $1,376
Interest on benefit obligation 1,304 1,555 2,608 3,110
Net amortization and deferrals (52) 261 (104) 522
------ ------ ------ ------
Total postretirement benefit expense $1,897 $2,504 $3,794 $5,008
====== ====== ====== ======
On December 8, 2003, President Bush signed into law the Medicare Prescription
Drug, Improvement and Modernization Act of 2003. Following the guidance of the
Financial Accounting Standards Board, the Company has elected to defer
recognition of the effects of this Act. The Financial Accounting Standards Board
Staff Position No. 106-2, "Accounting and Disclosure Requirements Related to the
Medicare Prescription Drug, Improvement and Modernization Act of 2003" is
effective July 1, 2004 and the Company is currently assessing the implications
of this Act on the Consolidated Financial Statements. The net periodic
postretirement benefit costs in the above table do not reflect the effect of the
Act on the plan.
RECLASSIFICATIONS:
Certain reclassifications have been made to the prior year's financial
statements to conform to fiscal 2004 classifications.
11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
OPERATIONS
Worldwide net sales for the second quarter of 2004 totaled $524.2 million,
increasing 9% in comparison to the prior year quarter. Reported sales for the
2004 quarter benefited from the strengthening of various currencies in relation
to the U.S. dollar; had exchange rates remained constant, sales for the second
quarter 2004 would have increased 5% in comparison to the prior year quarter.
Second quarter 2004 sales growth was strong in all geographic regions although
performance in Europe was the result of favorable currency translation. For the
quarter, sales performance by region was as follows:
o North America flavor sales grew 5% while fragrances grew 8%; in total,
sales grew 7%. The flavor sales performance was driven by new wins and
continued strong order activity across the entire customer portfolio.
Functional fragrance and aroma chemical sales increased 6% and 29%,
respectively, while fine fragrance sales declined 1%.
o European sales increased 6% with fragrances increasing 8% and flavors 4%;
reported sales benefited from the strength of the Euro and Pound Sterling.
For the region, local currency sales declined 1%. Flavor compound sales
grew 4% in local currency, although this performance was offset by
persistent weakness in sales of fruit preparations, which declined 20%;
total flavor sales declined 3%. Local currency fragrance sales increased 1%
for the quarter; sales of functional and fine fragrances increased 4% and
11%, respectively, while aroma chemical sales declined 14%. The fine
fragrance performance was driven by a number of new product wins.
o Asia Pacific sales increased 16% with fragrances increasing 11% and flavors
19%; reported sales benefited from the strength of the Yen and the
Australian dollar. Local currency flavor and fragrance sales increased 13%
and 7%, respectively. The strong performance reflects improving economic
conditions in the region and the benefit of significant new wins in both
flavors and fragrances. For the region, local currency sales growth was
strongest in Greater China, Australia, Indonesia and the Philippines, with
respective increases of 29%, 7%, 14% and 24%. Japan sales remained flat in
local currency which, due to the strength of the Yen, resulted in a 9%
increase in reported dollars.
o Latin American sales increased 11% with fragrances increasing 13% and
flavors 5%. Mexico, Argentina, and Central America flavor sales grew 28%,
17% and 40%, respectively. Fragrance sales increased in all product
categories with fine fragrances increasing 12%, functional fragrances 10%
and aroma chemicals 39%.
o India sales increased 13% in local currency and 14% in reported dollars.
Local currency fragrance sales increased 8%, resulting in an 11% increase
in reported dollars; flavor sales increased 17% in local currency,
resulting in an 18% increase in reported dollars. In both flavors and
fragrances, the sales performance reflected the benefit of new product wins
and the continued strength of the Indian economy.
The percentage relationship of cost of goods sold and other operating expenses
to sales for the second quarter 2004 and 2003 are detailed below.
SECOND QUARTER
-----------------
2004 2003
---- ----
Cost of Goods Sold 56.4% 57.0%
Research and Development Expenses 8.5% 8.1%
Selling and Administrative Expenses 15.9% 15.1%
Cost of goods sold, as a percentage of net sales, decreased from the prior year
period primarily due to improved sales and product mix, and realization of
savings from the 2003 restructuring activities, much of which impacted
manufacturing costs.
Research and development ("R&D") expenses totaled 8.5% of sales compared to 8.1%
in the prior year quarter, consistent with the Company's intended level of R&D
spending. These expenses are expected to approximate 8-8.5% of sales on a full
year basis. Selling, General and Administrative ("SG&A") expenses, as a
percentage of sales, increased to 15.9% from 15.1%. The SG&A increase resulted
from recognition in the quarter of approximately $1.1 million related to the
cost of
12
restricted stock units for which there was no comparable amount in the 2003
results, and higher expense accruals under the Company's incentive compensation
plans, based on the improved operating performance relative to 2003.
Interest expense declined 23% from the prior year as a result of the Company's
interest rate management and debt reduction initiatives. The weighted average
interest rate on total borrowings during the second quarter 2004 was 2.9%
compared to 3.2% in the 2003 second quarter.
The effective tax rate for the second quarter of 2004 was 31.2% compared to
31.8% for the comparable 2003 quarter. The lower effective tax rate in 2004
reflects differences with respect to tax expense incurred on the restructuring
charges recorded in both periods. Excluding restructuring charges the Company
expects an effective tax rate of 31.5% for 2004.
For the six-month period ended June 30, 2004 sales performance by region was as
follows:
o North America fragrance sales increased 10% while flavor sales increased
11%. Functional fragrance, fine fragrance and chemical sales increased 10%,
4% and 21%, respectively.
o Europe sales declined 1% in local currency, increasing 10% in dollars.
Local currency flavor sales declined 2% resulting in a 9% increase in
reported dollar sales. Flavor compound sales grew 3% in local currency,
although this performance was offset by persistent weakness in sales of
fruit preparations which declined 14%. Fragrance sales were flat in local
currency, resulting in an 11% increase in reported dollar sales. Fine
fragrance and functional fragrance local currency sales increased 6% and
4%, respectively, while aroma chemical sales declined 12%.
o Local currency sales in Asia Pacific increased 9% resulting in a 16%
increase in reported dollar sales. Local currency fragrance sales increased
7% resulting in a 12% increase in reported dollars; local currency flavor
sales increased 10% and 18% in reported dollars. This strong performance
reflects improving economic conditions in the region and the benefit of
significant new wins in both fragrances and flavors. For the region, sales
growth was strongest in Australia, Greater China, Indonesia, and Thailand,
with respective local currency increases of 6%, 22%, 8% and 11%,
respectively.
o Latin America sales increased 10% in comparison to the prior year. Flavor
sales increased 7%, benefiting from increases of 44% and 19% in Central
America and Mexico, respectively, reflecting new wins and improved economic
conditions. Fragrance sales increased 11% with Central America, Mexico and
Brazil increasing 20%, 7% and 7%, respectively; Argentina fragrance sales
increased 31% for the period.
o India sales increased 21% in local currency and 24% in reported dollars.
This performance was led by a 26% local currency increase in flavor sales
with fragrance sales increasing 16% in comparison to the prior year period.
In both flavors and fragrances, the sales performance reflected the benefit
of both new product wins and the continued strength of the Indian economy.
The percentage relationship of cost of goods sold and other operating expenses
to sales for the first six months 2004 and 2003 are detailed below.
FIRST SIX MONTHS
----------------
2004 2003
---- ----
Cost of Goods Sold 56.9% 57.5%
Research and Development Expenses 8.4% 8.2%
Selling and Administrative Expenses 16.3% 15.7%
Cost of goods sold, as a percentage of net sales, decreased from the prior year
primarily due to improved sales performance and product mix and realization of
savings from the 2003 restructuring activities, much of which impacted
manufacturing costs.
R&D expenses totaled 8.4% of sales compared to 8.2% in the prior year period,
consistent with the Company's intended level of R&D spending. SG&A expenses, as
a percentage of sales, increased to 16.3% from 15.7%. The SG&A increase in the
six month period resulted from recognition of approximately $1.1 million related
to the cost of restricted stock units for which there was no comparable amount
in the 2003 results, and higher expense accruals under the Company's incentive
compensation plans, based on the improved operating performance relative to
2003.
13
Interest expense declined 22% from the prior year as a result of the Company's
interest rate management and debt reduction initiatives. The weighted average
interest rate on total borrowings during the first six months of 2004 was 2.8%
compared to 3.3% for the first six months of 2003.
The effective tax rate for the first six months of 2004 was 31.3% compared to
31.6% for the first six months of 2003. The lower effective tax rate in 2004
reflects differences with respect to tax expense incurred on the restructuring
charges recorded in both periods. Excluding restructuring charges the Company
expects an effective tax rate of 31.5% for 2004.
RESTRUCTURING AND OTHER CHARGES
As described in Note 2 of the Notes to the Consolidated Financial Statements
included in the Company's 2003 Annual Report on Form 10-K, in October 2000, the
Company announced a significant reorganization, including management changes,
consolidation of production facilities and related actions.
In May 2004, the Company entered into a letter of intent with Frutarom
Industries Ltd. ("Frutarom") for the intended sale of IFF's fruit preparations
businesses in Switzerland and Germany. IFF had previously announced its
intention to divest itself of this business, which manufactures processed fruit
and other natural product preparations used in a wide variety of food products,
including baked goods and dairy products. Sales of fruit preparations in 2003
approximated $90 million. The sale of the German and Swiss fruit preparations
businesses is expected to close in the third quarter. As a result, approximately
170 employees will be severed from the Company and transferred to Frutarom.
IFF also has fruit operations in France representing 30% of the total fruit
preparations business. The Company is currently in the consultation process with
its French employee works council on the potential sale of the French fruit
preparations business to Frutarom.
In June 2004, the Company announced that it would close its Canadian
manufacturing facility by the end of 2004 and transfer production to its South
Brunswick, New Jersey and Carrollton, Texas facilities. As a result, 24
employees will be severed from the Company.
As a result of these actions, the Company recorded $7.7 million ($5.0 million
after tax or $.06 per share) of restructuring and other charges related to the
impairment of certain European fruit preparations assets, and the closure of the
Canadian manufacturing facility. In 2004, the Company anticipates that it will
incur, after consideration of the net sales proceeds, additional costs of Euro
11.0 - 12.0 million ($13.0 - $14.0 million at current exchange rates) with
respect to the disposition of the fruit preparations business and related
actions.
Movements in the liabilities related to the restructuring charges were (in
millions):
EMPLOYEE- ASSET-RELATED
RELATED AND OTHER TOTAL
----------------------------------------
Balance December 31, 2003 $19.6 $1.5 $ 21.1
Additional charges 2.3 5.4 7.7
Cash and other costs (11.2) (6.2) (17.4)
----- ---- -----
Balance June 30, 2004 $10.7 $0.7 $11.4
===== ==== =====
The balance of the employee-related liabilities are expected to be utilized by
2006 as obligations are satisfied and as the final decommissioning and disposal
of the affected equipment occurs.
The Company established accruals relating to the integration of BBA operations.
Costs associated with these integration activities, relating mainly to employee
separation and facility closures, were recorded as a component of purchase
accounting; such costs did not directly impact current earnings.
14
Movements in acquisition accounting accruals were (in millions):
EMPLOYEE-
RELATED
-------------
Balance December 31, 2003 $ 2.4
Cash and other costs (2.4)
-----
Balance June 30, 2004 $ --
=====
The Company has utilized the acquisition accounting accruals.
FINANCIAL CONDITION
Cash, cash equivalents and short-term investments totaled $11.7 million at June
30, 2004. Working capital, at June 30, 2004 was $455.0 million compared to
$376.6 million at December 31, 2003. The working capital increase is directly
attributable to an increase in receivables in 2004 resulting from the Company's
strong sales performance. Gross additions to property, plant and equipment
during the second quarter and six-month period ended June 30, 2004 were $14.4
million and $26.7 million, respectively. The Company expects additions to
property, plant and equipment to approximate $80.0 to $85.0 million for the full
year 2004.
At June 30, 2004, the Company's outstanding commercial paper had an average
interest rate of 1.4%. Commercial paper maturities did not extend beyond July
22, 2004. Bank loans and the current portion of long-term debt is $33.9 million
at June 30, 2004. The Company reduced debt $33.2 million in the second quarter
and $38.6 million in the first half of 2004. The Company anticipates that debt
reduction will approximate $100.0 million for the full year 2004.
In January and April 2004, the Company paid a quarterly cash dividend of $.16
per share to shareholders. In May, the Board of Directors increased the dividend
to $.175 per share effective with the July payment. This increase of 9.4%
represents a payout of approximately 30-35% of forecast earnings consistent with
the Company's long-term dividend payout plan.
Under the share repurchase program authorized in October 2002 the Company
repurchased approximately 0.5 million shares and 0.8 million shares in the
three- and six- month periods ended June 30, 2004. At June 30, 2004, the Company
had $15.0 million remaining under the October 2002 repurchase plan. In July
2004, the Company's Board of Directors authorized a new share repurchase program
of $100.0 million (approximately 2.8 million shares at the current market
price); this program is expected to be completed over the next 18 to 24 months.
Repurchases will be made from time to time on the open market or through private
transactions as market and business conditions warrant. The repurchased shares
will be available for use in connection with the Company's employee benefit
plans and for other general corporate purposes.
The Company anticipates that its financing requirements will be funded from
internal sources and credit facilities currently in place. Cash flows from
operations are sufficient to fund the Company's anticipated normal capital
spending, dividends and other requirements including debt reduction for at least
the next twelve to eighteen months.
EQUITY COMPENSATION PLANS
The Company granted restricted stock units ("RSU's") in May 2004 as an element
of its incentive compensation plans for all eligible U.S. - based employees and
a majority of eligible overseas employees. Vesting of the RSU's for the
Company's senior management will be performance and time based, and for the
remainder of eligible employees, vesting will be time based; the vesting period
will be three years from date of grant. As a result of these awards, the Company
expects to record approximately $4.5 million to $6.0 million in pre-tax
compensation expense during 2004; the actual expense will depend upon the value
of the Company's stock.
15
NON-GAAP FINANCIAL MEASURES
The discussion of the Company's 2004 second quarter and six-month results
exclude the impact of certain restructuring and other charges recorded in 2004
and 2003 related to the Company's reorganization plan as well as the effects of
exchange rate fluctuations. Such information is supplemental to information
presented in accordance with generally accepted accounting principles (GAAP) and
is not intended to represent a presentation in accordance with GAAP. In
discussing its historical and expected future results and financial condition,
the Company believes it is meaningful for investors to be made aware of and to
be assisted in a better understanding of, on a period-to-period comparative
basis, the relative impact of the 2004 and 2003 restructuring and other charges
as well as ongoing exchange rate fluctuations on the Company's operating results
and financial condition. In addition, management reviews this non-GAAP financial
performance measure to evaluate performance on a comparative period-to-period
basis in terms of absolute performance and trend performance.
CAUTIONARY STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
Statements in this quarterly report, which are not historical facts or
information, are "forward-looking statements" within the meaning of The Private
Securities Litigation Reform Act of 1995. Such forward-looking statements are
based on management's reasonable current assumptions and expectations. Such
forward-looking statements, which may be identified by such words as "expect",
"anticipate", "outlook", "guidance", "may" and similar forward-looking
terminology, involve significant risks, uncertainties and other factors, which
may cause the actual results of the Company to be materially different from any
future results expressed or implied by such forward-looking statements, and
there can be no assurance that actual results will not differ materially from
management's expectations. Such factors include, among others, the following:
general economic and business conditions in the Company's markets, including
economic, population health and political uncertainties; interest rates; the
price and availability of raw materials; the Company's ability to implement its
business strategy, including the achievement of anticipated cost savings,
profitability and growth targets; the impact of currency fluctuation or
devaluation in the Company's principal foreign markets and the success of the
Company's hedging and risk management strategies; the impact of possible pension
funding obligations and increased pension expense on the Company's cash flow and
results of operations; the effect of legal and regulatory proceedings, as well
as restrictions imposed on the Company, its operations or its representatives by
foreign governments; and the fact that the outcome of litigation is highly
uncertain and unpredictable and there can be no assurance that the triers of
fact or law, at either the trial level or at any appellate level, will accept
the factual assertions, factual defenses or legal positions of the Company or
its factual or expert witnesses in any such litigation. The Company intends its
forward-looking statements to speak only as of the time of such statements and
does not undertake to update or revise them as more information becomes
available or to reflect changes in expectations, assumptions or results.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There are no material changes in market risk from the information provided in
the Company's Form 10-K for the year ended December 31, 2003 filed with the
Securities and Exchange Commission.
ITEM 4. CONTROLS AND PROCEDURES
The Company's Chief Executive Officer and Chief Financial Officer, with the
assistance of other members of the Company's management, have evaluated the
effectiveness of the Company's disclosure controls and procedures as of the end
of the period covered by this Quarterly Report on Form 10-Q. Based on such
evaluation, the Company's Chief Executive Officer and Chief Financial Officer
have concluded that the Company's disclosure controls and procedures are
effective.
The Company's Chief Executive Officer and Chief Financial Officer have also
concluded that there have been no changes in the Company's internal control over
financial reporting during the quarter ended June 30, 2004 that have materially
affected, or are reasonably likely to materially affect, the Company's internal
control over financial reporting.
16
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is subject to various claims and legal actions in the
ordinary course of its business.
On January 15, 2004, the Circuit Court of Jasper County, Missouri
denied class action status to a purported class action brought against the
Company on behalf of certain former and current workers at a plant owned and
operated by Gilster-Mary Lee Corp. in Jasper, Missouri. See the Company's 2003
Annual Report on Form 10-K under "Legal Proceedings." The plaintiffs in that
action are alleging that they sustained respiratory injuries in the workplace
due to the use by Gilster-Mary Lee Corp of an IFF and BBA flavor. As a result of
this decision, each of the 30 plaintiff cases is to be tried separately. The
Company appealed a March 15, 2004 jury verdict in favor of one of the plaintiffs
awarding approximately $20 million in compensatory damages. The Company believes
that the verdict is not supported by the evidence or law. On April 30, 2004 a
second case was settled for an amount agreed by the parties to be held
confidential, on June 28, 2004 the trial court found in favor of the Company in
four additional plaintiff's cases, and on July 21, 2004 another case was
resolved through a confidential settlement.
Six other actions based on similar claims of respiratory illness are
currently pending against the Company and other flavor suppliers. The parties
are in the discovery phase in the action brought against the Company and another
flavor supplier by 20 former and current workers at a popcorn factory in Marion,
Ohio. In May 2004, the Company and another flavor supplier were named defendants
in a lawsuit by 4 former workers at a Ridgeway, Illinois factory in an action
brought in the Circuit Court for the Second Judicial Circuit, Gallatin County,
Illinois and another concerning 11 other workers at this same plant was filed in
July 2004 in Cook County, Illinois against the Company and another flavor
supplier. In June 2004, the Company and 3 other flavor suppliers were named
defendants in a lawsuit by 1 current worker at a Sioux City, Iowa facility in an
action brought in the Iowa District Court for Woodbury County. In July 2004, the
Company and 3 other flavor suppliers were named defendants in a lawsuit by a
former worker at a Northlake, Illinois facility in an action brought in the
Circuit Court of Cook County, Illinois. In July 2004, the Company, 4 other
flavor suppliers and other unnamed parties were named defendants in a lawsuit by
1 former worker at an Iowa City, Iowa facility in an action filed in U.S.
District Court for the Northern District of Iowa. While the Company has not been
served with a complaint, it has received information concerning an additional
action based on similar claims of respiratory illness by 1 plaintiff in Hamilton
County, Ohio against the Company, 5 other flavor suppliers and other unnamed
defendants.
The Company believes that all IFF and BBA flavors at issue in these
matters meet the requirements of the U.S. Food and Drug Administration and are
safe for handling and use by workers in food manufacturing plants when used
according to specified safety procedures. These procedures are detailed in
instructions that IFF and BBA provide to all its customers for the safe handling
and use of its flavors. It is the responsibility of IFF's customers to ensure
that these instructions, which include the use of appropriate engineering
controls, such as adequate ventilation, proper handling procedures and
respiratory protection for workers, are followed in the workplace.
While the outcome of any litigation cannot be predicted with certainty,
in light of the merits of its defenses and the availability of insurance, the
Company does not expect the outcome of the above cases, singly or in the
aggregate, to have a material adverse effect on the Company's financial
condition, results of operation or liquidity.
17
ITEM 2. CHANGES IN SECURITIES, USE OF PROCEEDS AND ISSUER PURCHASES OF
EQUITY SECURITIES
(e) Issuer Purchases of Equity Securities
TOTAL NUMBER OF SHARES MAXIMUM DOLLAR VALUE OF
TOTAL NUMBER OF AVERAGE PRICE PAID PURCHASED AS PART OF PUBLICLY SHARES THAT MAY YET BE
SHARES PURCHASED (1) PER SHARE ANNOUNCED PROGRAMS (2) PURCHASED UNDER THE PROGRAMS (3)
----------------------------------------------------------------------------------------------------------
April 1 - 30, 2004 250,000 $35.58 250,000 $22,335,664
May 1 - 31, 2004 210,000 $35.43 210,000 $14,895,849
June 1 - 30, 2004 - - - $14,895,849
(1) An aggregate of 460,000 shares of common stock were repurchased during the
second quarter period ended June 30, 2004 under a repurchase program announced
in October 2002.
(2) Under the program announced in October 2002, the Board of Directors approved
the repurchase by the Company of up to $100.0 million of its common stock.
(3) On July 27, 2004, the Board of Directors approved the repurchase of an
additional $100.0 million of its common stock.
18
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The following matters were submitted to a vote of security holders
during the Company's annual meeting of shareholders held on May 11, 2004:
VOTES AUTHORITY
CAST FOR WITHHELD
1.) Election of Directors
Margaret Hayes Adame 75,089,808 4,143,828
Gunter Blobel 75,585,158 3,648,478
J. Michael Cook 75,187,839 4,045,797
Peter A. Georgescu 75,582,996 3,650,640
Richard A. Goldstein 75,471,574 3,762,062
Alexandra A. Herzan 75,485,151 3,748,485
Arthur C. Martinez 75,183,774 4,049,862
Burton M. Tansky 75,583,119 3,650,517
FOR AGAINST ABSTENTIONS BROKER
NON-VOTES
2.) Ratification of 74,283,634 3,452,659 1,497,343 ---
PricewaterhouseCoopers LLP as
independent accountants
FOR AGAINST ABSTENTIONS BROKER
NON-VOTES
3.) International Brotherhood of 8,064,304 60,861,567 2,998,780 7,308,985
Electrical Worker's Pension Benefit
Fund proposal relating to auditor
independence.
19
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
31.1 Certification of Richard A. Goldstein, Chairman of the Board and
Chief Executive Officer of the Company, Pursuant to Securities
Exchange Act Rule 13a-14(a).
31.2 Certification of Douglas J. Wetmore, Senior Vice President and
Chief Financial Officer of the Company, Pursuant to Securities
Exchange Act Rule 13a-14(a).
32 Certification Pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of The Sarbanes-Oxley Act Of 2002, signed
by Richard A. Goldstein, Chairman of the Board and Chief
Executive Officer of the Company, and Douglas J. Wetmore, Senior
Vice President and Chief Financial Officer of the Company.
(b) Reports on Form 8-K
The Company furnished the following Reports on Form 8-K since the
beginning of the quarter for which this report on Form 10-Q is
filed:
o Report on Form 8-K dated April 29, 2004 furnishing under
Item 12 a copy of a Company press release dated April 29,
2004, regarding the Company's financial results for the
first quarter of 2004.
o Report on Form 8-K dated May 11, 2004 furnishing under Item
9 regarding to the increase in the regularly quarterly cash
dividend.
o Report on Form 8-K dated May 27, 2004 furnishing under Item
9 announcing that IFF entered into a letter of intent with
Frutarom Industries Ltd. for the intended sale of its fruit
preparations businesses in Switzerland and Germany and the
potential closure of its manufacturing facilities in Dijon,
France.
o Report on Form 8-K dated July 29, 2004 furnishing under Item
12 a copy of a Company press release dated July 29, 2004,
regarding the Company's financial results for the second
quarter and six-month period ended June 30, 2004.
20
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
INTERNATIONAL FLAVORS & FRAGRANCES INC.
Dated: August 6, 2004 By: /S/ DOUGLAS J. WETMORE
--------------------------
Douglas J. Wetmore, Senior Vice President and
Chief Financial Officer
Dated: August 6, 2004 By: /S/ DENNIS M. MEANY
-----------------------
Dennis M. Meany, Senior Vice President,
General Counsel and Secretary
21
EXHIBIT INDEX
Number Description
- ------ -----------
31.1 Certification of Richard A. Goldstein, Chairman of the Board
and Chief Executive Officer of the Company, Pursuant to
Securities Exchange Act Rule 13a-14(a).
31.2 Certification of Douglas J. Wetmore, Senior Vice President and
Chief Financial Officer of the Company, Pursuant to Securities
Exchange Act Rule 13a-14(a).
32 Certification Pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of The Sarbanes-Oxley Act Of 2002,
signed by Richard A. Goldstein, Chairman of the Board and
Chief Executive Officer of the Company, and Douglas J.
Wetmore, Senior Vice President and Chief Financial Officer of
the Company.