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International Flavors & Fragrances Annual Report, Year Ended Dec 31, 2006

Filing Date
Filed February 23, 2007
Period End
December 31, 2006
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 February 23, 2007. Cited figures are marked; the original filing is the authoritative source.

International Flavors & Fragrances Inc. (IFF), a New York corporation headquartered at 521 West 57th Street, New York, reported net sales of $2.095 billiona for 2006, up from $1.993 billion in 2005, and net income of $226.5 million, or $2.48 per diluted share, compared with $193.1 million, or $2.04 per diluted share, in 2005.

Fragrance products accounted for 57% of 2006 sales and flavor products for 43%. Net sales rose 5% in both dollars and local currency, led by fine fragrances, and gross margin improved as cost of goods sold fell to 57.8% of sales from 58.6%. Restructuring charges were minimal at $2.7 millionb in 2006 versus $23.3 million in 2005.

Balance sheet and cash flow changes were significant. Total debt was $807 millionc at year-end 2006, down from $951 million, after the company issued $375 million of Senior Notes in July 2006 and repaid maturing notes. Operating cash flow rose to $263 million from $177 million, and cash and cash equivalents fell to $115 million.

The company repurchased 6.9 million shares for $271 milliond in 2006, and in October 2006 the Board approved a new $300 million repurchase program, of which $206 million remained at year-end. The quarterly dividend was raised to $0.21 per share, effective with the January 2007 payment. The filing also describes ongoing exposure to workplace respiratory-illness lawsuits tied to flavor ingredients, including butter-flavor popcorn claims, and to environmental claims as a potentially responsible party.

Management states it does not expect these matters to have a material adverse effect, and it believes adequate provision has been made for known claims. Robert M. Amen became Chairman and CEO in July 2006.

02—Key points

Key Highlights

  1. Net sales rose to $2.095 billion in 2006 from $1.993 billion in 2005, a 5% increase in both dollars and local currency, led by fine fragrances.
  2. Net income increased to $226.5 million ($2.48 diluted EPS) from $193.1 million ($2.04 diluted EPS) in 2005.
  3. Cost of goods sold fell to 57.8% of net sales from 58.6%, and restructuring and other charges dropped to $2.7 million from $23.3 million.
  4. Operating cash flow was $263 million in 2006, up from $177 million in 2005.
  5. Total debt declined to $807 million from $951 million after issuing $375 million of Senior Notes in July 2006.
  6. Share repurchases totaled $271 million in 2006, and a new $300 million program was authorized in October 2006 with $206 million remaining at year-end.
  7. The quarterly dividend rate was raised 14% to $0.21 per share, effective with the January 2007 payment.

03—Questions

Frequently Asked Questions

  1. How did IFF perform financially in 2006?

    Net sales were $2.095 billion, up 5% from $1.993 billion in 2005, and net income rose to $226.5 million from $193.1 million. Diluted earnings per share were $2.48 versus $2.04. Growth was led by fine fragrances, with flavor sales also increasing.

  2. What is the company's product mix?

    Fragrance products accounted for 57% of 2006 sales and flavor products for 43%. Fragrances are sold mainly to cosmetics, personal care and household products makers, while flavors are sold mainly to food and beverage manufacturers.

  3. How is IFF's debt position and capital return to shareholders?

    Total debt was $807 million at December 31, 2006, down from $951 million. The company repurchased $271 million of stock in 2006 and paid dividends of $0.74 per share, with the quarterly rate increased to $0.21 for 2007.

  4. What legal risks does the filing disclose?

    IFF faces numerous lawsuits from workers alleging respiratory illness from exposure to flavor ingredients, including butter-flavor popcorn claims, and is a potentially responsible party at waste sites, mainly in New Jersey. Management does not expect these matters to have a material adverse effect and believes adequate provision has been made for known claims.

  5. Who leads the company?

    Robert M. Amen has served as Chairman of the Board and Chief Executive Officer since July 2006. Douglas J. Wetmore is Senior Vice President and Chief Financial Officer.

04—Continue

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