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International Flavors & Fragrances Annual Report, Year Ended Dec 31, 1996

Filing Date
Filed March 31, 1997
Period End
December 31, 1996
Security
IFF
In the record · 2016–202610-K1110-Q338-K151

IFF filed 11 annual reports (10-K), 33 quarterly reports (10-Q) and 151 current reports (8-K) between 2016 and 2026.

  1. Material agreement8-K · May ’17May ’17
  2. Material agreement8-K · Jan ’20Jan ’20
  3. Leadership change8-K · Feb ’22Feb ’22
  4. Leadership change8-K · Oct ’25Oct ’25

01—Abstract

Summary

Summary of the 10-K filed March 31, 1997. Cited figures are marked; the original filing is the authoritative source.

International Flavors & Fragrances Inc. reported net sales of $1,436,053 thousanda for 1996, roughly flat compared with $1,439,487 thousand in 1995 (0% change per the filing's table).

Net income fell to $189,894 thousandb, or $1.71 per share, from $248,817 thousand, or $2.24 per share, in 1995. The 1996 results include a nonrecurring pretax charge of $49,707 thousand ($31,315 thousand after tax, or $.29 per share) tied to a program to expand and streamline worldwide aroma chemical production. Excluding that charge, the filing states net income was $221,209 thousand, a decrease of $27,608 thousand or 11% from the prior year.

Management attributed the weaker 1996 performance to slow customer reordering of fragrances in Europe and the United States, a temporary slowdown in new product introductions, restructuring at some major U.S. food customers, and a cool, wet summer that hurt flavor sales to beverage, ice cream and yogurt makers. Currency translation also reduced reported sales, which the company said would have risen about 1% worldwide at constant exchange rates. Fragrance products accounted for $813,918 thousandc of sales and flavor products for $622,135 thousand.

Operating profit was $296,456 thousandd, down from $390,702 thousand. The balance sheet remained conservative, with cash, cash equivalents and short-term investments of $317,983 thousand, working capital of $725,892 thousand, and long-term debt of only $8,289 thousand.

Shareholders' equity was $1,076,537 thousand. The company paid $150,864 thousand in dividends during 1996, raised its annual dividend rate to $1.44 per share in January 1997, and repurchased shares under authorizations totaling 15 million shares.

02—Key points

Key Highlights

  1. Net sales of $1.44 billion in 1996, essentially flat versus $1.44 billion in 1995.
  2. Net income of $189,894 thousand ($1.71 per share), down from $248,817 thousand ($2.24 per share) in 1995, reflecting a $49,707 thousand nonrecurring charge.
  3. Excluding the nonrecurring charge, net income was $221,209 thousand, a decrease of 11% from the prior year.
  4. Operating profit declined to $296,456 thousand from $390,702 thousand; cost of goods sold rose to 54.2% of sales from 51.9%.
  5. Aroma chemical restructuring includes phasing out the Union Beach, New Jersey plant by December 31, 1997 and shifting volume to Augusta, Georgia, with expected annual pretax savings of $20,000,000.
  6. Balance sheet remains strong, with $317,983 thousand in cash and short-term investments and only $8,289 thousand of long-term debt.
  7. Dividend rate increased 5.9% to an annual rate of $1.44 per share in January 1997, and the Board authorized repurchase of an additional 7.5 million shares in September 1996.

03—Questions

Frequently Asked Questions

  1. Why did earnings decline in 1996?

    Net income fell to $189,894 thousand from $248,817 thousand. The decline reflects a $49,707 thousand nonrecurring charge for aroma chemical streamlining, lower margins from moderated sales of higher-margin fine fragrances, reduced selling prices for certain aroma chemicals, and duplicate manufacturing costs during the Union Beach phase-out. Management described the sales weakness as temporary.

  2. What is the company's exposure to environmental and legal claims?

    The company is named a potentially responsible party at 11 waste sites, mainly in New Jersey and Pennsylvania. Management believes the amounts it will probably pay will not be material to its financial condition, results of operations or liquidity, given other large responsible parties, extended payment periods and insurer cost-sharing under a July 1994 agreement.

  3. How is the company funding its operations and shareholder returns?

    The company states it has almost no long-term debt and expects to fund growth, capital expenditures and share repurchases from internal sources. In 1996 it paid $150,864 thousand in dividends and spent $59,763 thousand on treasury stock purchases, while operating cash flow was $307,999 thousand.

  4. How concentrated is the customer base?

    The company estimates its 30 largest customers accounted for about 54% of 1996 sales. Its four largest customers and their affiliates accounted for about 12%, 6%, 5% and 3% of sales, respectively, and no other single customer exceeded 3%.

04—Continue

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