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International Flavors & Fragrances Annual Report, Year Ended Dec 31, 1999

Filing Date
Filed March 30, 2000
Period End
December 31, 1999
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 30, 2000. Cited figures are marked; the original filing is the authoritative source.

International Flavors & Fragrances Inc. reported net sales of $1,439,499 thousanda (about $1.44 billion) for 1999, up from $1,407,349 thousand in 1998, with net income of $162,000 thousand ($1.53 per diluted share) compared with $203,785 thousand ($1.90 per diluted share) in 1998.

The filing attributes the earnings decline to nonrecurring charges of $32,948 thousandb under a worldwide streamlining program announced in June 1999, a decline in gross margin, higher research and development spending, and Brazil's currency devaluation and economic disruption. Cost of goods sold rose to 55.0% of sales from 54.2%, and selling and administrative expenses rose to 18.2% from 17.0%, partly due to Year 2000 program costs of $14.2 million. The company's financial position remained strong, according to management.

Cash, cash equivalents and short-term investments totaled $62,971 thousandc at year-end 1999, working capital was $465,712 thousand, and long-term debt was only $3,832 thousand. The company established a $300 million commercial paper program in October 1999, under which $63.2 million was outstanding at year-end, and total shareholders' equity declined to $858,497 thousand from $945,051 thousand. The company also expects a charge of approximately $10 million in 2000 from a Voluntary Retirement Incentive Program initiated in January 2000.

Sales outside the United States represented approximately 70%d of total sales in 1999, 1998 and 1997. Management reported that the Year 2000 program was completed before January 1, 2000, with no significant problems identified through February 2000. The filing also describes the company's roughly 4,680 employees and its status as one of the four largest international producers of fragrance and flavor products, based on management's belief.

02—Key points

Key Highlights

  1. Net sales rose 2% to $1,439,499 thousand in 1999, with fragrance sales up 4% and flavor sales up 1%.
  2. Net income fell to $162,000 thousand ($1.53 per diluted share) from $203,785 thousand ($1.90 per diluted share) in 1998, reflecting nonrecurring charges of $32,948 thousand.
  3. Streamlining program announced in June 1999 is expected to total about $50,000 thousand in pretax charges, with annual savings of approximately $15,000 thousand once completed.
  4. Cost of goods sold increased to 55.0% of sales from 54.2%, largely due to Brazil's currency devaluation and economic disruption.
  5. Year-end cash, cash equivalents and short-term investments totaled $62,971 thousand, and long-term debt was $3,832 thousand.
  6. A $300,000 thousand commercial paper program was established in October 1999, with $63,200 thousand outstanding at December 31, 1999.
  7. Share repurchases totaled $46,298 thousand in 1999, and dividends declared per share were $1.52 for the year.

03—Questions

Frequently Asked Questions

  1. Why did net income decline in 1999?

    Net income fell to $162,000 thousand from $203,785 thousand. The filing cites nonrecurring charges of $32,948 thousand tied to the streamlining program, a decline in gross margin, higher research and development expenses, and increased selling and administrative costs, which included Year 2000 program costs of $14,200 thousand.

  2. What is the company's exposure to Brazil and Latin America?

    Latin America flavor sales declined 11% in 1999 because of currency and economic conditions in the region, most notably in Brazil, the company's largest flavor market in the area. Latin America net sales were $232,913 thousand, down from $239,472 thousand in 1998. Brazil's devaluation also contributed to the increase in cost of goods sold.

  3. How strong is the company's balance sheet and liquidity?

    Management described the financial condition as strong. Working capital was $465,712 thousand at year-end 1999, down from $575,120 thousand. Long-term debt was $3,832 thousand, while bank loans were $29,274 thousand and commercial paper was $63,200 thousand. The company also had a $300,000 thousand revolving credit facility backing its commercial paper, with no amounts drawn at year-end.

  4. What are the expected costs and savings from the streamlining program?

    The program is expected to result in total pretax charges of approximately $50,000 thousand ($33,000 thousand after tax), with about $40,900 thousand recorded in 1999. The company anticipates annual savings of approximately $15,000 thousand once completed, and about $5,000 thousand of savings were realized in the second half of 1999. The filing notes that more than 200 employees will be affected.

04—Continue

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