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þ
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the fiscal year ended December 31, 2013
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from to
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NEW YORK
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13-1432060
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(State or other jurisdiction
of incorporation or organization)
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(I.R.S. Employer Identification No.)
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521 WEST 57TH STREET, NEW YORK, N.Y.
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10019
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(Address of principal executive offices)
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(Zip Code)
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Title of Each Class
|
Name of Each Exchange on Which Registered
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Common Stock, par value
|
New York Stock Exchange
|
12
1
/
2
¢ per share
|
|
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Large accelerated filer
þ
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Accelerated filer
¨
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Non-accelerated filer
¨
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Smaller reporting company
¨
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PAGE
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PART I
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ITEM 1.
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ITEM 1A.
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ITEM 1B.
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ITEM 2.
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ITEM 3.
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ITEM 4.
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PART II
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ITEM 5.
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ITEM 6.
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ITEM 7.
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ITEM 7A.
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ITEM 8.
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ITEM 9.
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ITEM 9A.
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ITEM 9B.
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PART III
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ITEM 10.
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ITEM 11.
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ITEM 12.
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ITEM 13.
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ITEM 14.
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PART IV
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ITEM 15.
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ITEM 1.
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BUSINESS.
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Region
|
% of 2013 Sales
|
|
Europe, Africa, Middle East
|
33
|
%
|
Greater Asia
|
28
|
%
|
North America
|
23
|
%
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Latin America
|
16
|
%
|
•
|
Leverage geographic reach:
Our strong geographic reach allows us to capture the benefits of attractive population growth and wealth creation in emerging markets, representing a key component of our growth plan. In emerging markets, strong GDP growth and a significant expansion of the middle-class consumer are increasing the demand for better-flavored and fragranced consumer products. To support this trend, we have made significant investments in emerging markets. Since 2008, we have opened eight state-of-the-art creative centers in Shanghai, Sao Paulo, Moscow, Singapore, Mumbai, Delhi, Chengdu, and Beijing. We continue to invest in the fast growing region of Greater Asia. In 2013, we opened a new flavors manufacturing facility in Guangzhou, China, which followed the 2012 opening of our new facility in Singapore, both of which are part of a more than $100 million investment in Greater Asia. We also announced a $50 million investment to fund our expansion in Indonesia, bringing our total investment in Greater Asia to more than $150 million. We also continued toward the completion of our more than $50 million expansion in Turkey, expected to be completed in 2015. Additionally, our satellite labs in Beijing, Chengdu and Guangzhou provide service to local customers in these emerging markets. We expect that the emerging markets will represent more than half of our annual sales by 2015, as we estimate that growth potential in these markets is more than twice the expected growth in the developed markets.
|
•
|
Strengthen innovation platform:
We continue to focus on creating innovative and distinctive products that drive consumer preference for our customers’ brands. We have been strengthening our platforms by leveraging our knowledge of consumer trends to direct ten key research platforms that address current and expected future needs of consumers. We in turn use our customer-centric knowledge and research platforms to drive technological development and create a cost-effective product portfolio. We anticipate that this focus on innovation will be instrumental in driving our customers' growth, thereby allowing our customers to win in the marketplace and drive their market share gains. To capture these opportunities in Flavors, we are focusing on key flavor modulation technologies to provide consumers with our healthier solutions without a change in taste quality. In Fragrances, we are focusing on ingredients, including our naturals portfolio, as well as our delivery systems. We are also collaborating with biotechnology firms in both the United States and Europe to advance our agenda to develop low cost, sustainable and natural ingredients. In January 2014, we acquired Aromor Flavors and Fragrances Ltd. ("Aromor"), a manufacturer and marketer of complex specialty ingredients that are used in fragrances and flavors, to provide us with cost-effective, quality ingredients to use in our formula creations.
|
•
|
Maximize portfolio:
We believe in a disciplined, analytical approach toward value creation to maximize our portfolio and drive profitability. We have identified opportunities where we can accelerate our performance by further leveraging our advantaged portfolio and implementing solutions to fix less attractive areas. These solutions include appropriate pricing actions, greater efficiency in our supply chain, aligning resources behind our advantaged portfolio, and, in some cases, phasing out some low margin sales activities, such as in our Flavors business unit, which was completed in 2013.
|
•
|
Savory
— We produce flavors which are used in soups, sauces, condiments, prepared meals, meat and poultry, and potato chips and other savory snacks.
|
•
|
Beverages
— We create flavors for juice drinks, carbonated beverages, flavored waters and spirits and have creative expertise dedicated to beverage flavor systems.
|
•
|
Sweet
— We create innovative flavor concepts and heat-stable flavors for bakery products, as well as candy, chewing gum and cereal, which each have distinctive sweet tastes. For pharmaceutical and oral care products, we produce flavors for products such as toothpaste and mouthwash.
|
•
|
Dairy
— We offer a complete range of value-added compounded flavors for all dairy applications, including yogurt, ice cream, cheese, cream and butter flavor. We also offer a wide range of quality vanilla extracts and a variety of flavor solutions that build on our understanding of vanilla.
|
•
|
Fragrance Compounds
— Fragrance Compounds refers to our fragrance compounds that are ultimately used by our customers in two broad end-use categories, Fine Fragrance and Beauty Care and Functional Fragrances.
|
◦
|
Fine Fragrance and Beauty Care
— We have created some of the industry-leading fine fragrance classics as well as cutting-edge niche fragrances, as evidenced by our number of top sellers and the success of our new launches. Within our Beauty Care product line, we provide our customers innovation in the hair care, toiletries and skincare categories to create new fragrance experiences for the consumer and increased brand loyalty for our customers.
|
◦
|
Functional Fragrances
— We have three subcategories of products in which our fragrances are included: (1) Fabric Care, including laundry detergents, fabric softeners and specialty laundry products; (2) Personal Wash, including bar soap and shower gel; and (3) Home Care, including household cleaners, dishwashing detergents and air fresheners.
|
•
|
Fragrance Ingredients
— We manufacture innovative, high-quality and cost-effective fragrance, and to a much smaller extent flavor, ingredients, for internal use in our compound businesses and for external use in preparation of compounds by our customers and other third parties, including our competitors. With over 1,200 separate fragrance ingredients, we believe that we lead the industry with the breadth of our product portfolio. We manufacture our ingredients through our global network of production facilities and continue to work to optimize our manufacturing processes. We believe that this network gives us the flexibility to make products in different locations while maintaining the same high and consistent standards of product quality. We will continue to invest in this business, particularly in the specialty chemicals component, as evidenced by our recently completed acquisition of Aromor, while at the same time ensuring we maintain a cost-effective portfolio, particularly in the price sensitive commodities component.
|
•
|
Develop a deep understanding of consumers’ preferences, values and branding
. Through our Consumer Insights program, we have dedicated professionals working to understand consumer trends all around the globe. Our consumer and marketing teams interpret consumer trends, monitor product launches, analyze quantitative market data and conduct several hundred thousand consumer interviews annually. Our sensory experts explore flavor and fragrance performance, the psychophysics of sensory perception (including chemesthetic properties such as warming, cooling and tingling), the genetic basis for flavor and fragrance preference, and the effects of tastes and aromas on mood, performance, health and well-being. Utilizing our proprietary statistical programs, we use this information to enable us to understand the emotional connections between a prospective product and the consumer. The ability to pinpoint the likelihood of a product’s success translates into stronger brand equity for our customers’ products, helping to produce increased returns and greater market share gains for our customers and us.
|
•
|
Develop and utilize technology to create innovative solutions that drive brand success
. We spend approximately 9% of our sales on the research, development and implementation of new molecules, compounds and technologies that help our customers respond to changing consumer preference. As a result of this investment, we have been granted over 253 patents in the United States since 2000, including 17 in 2013, and we have developed many unique molecules and delivery systems for our customers that are used as the foundations of successful flavors and fragrances around the world.
|
•
|
Cultivate our creative expertise in collaboration with our customers
. We have a network of creative centers around the world where we create or adapt the basic flavors or fragrances that we have developed in the R&D process to commercialize for use in our customers’ consumer products. Our global creative teams consist of perfumers, fragrance evaluators and flavorists, as well as marketing, consumer insight and technical application experts, from a wide range of cultures and nationalities. In close partnership with our customers’ product development groups, our creative teams create the scents and tastes that our customers are seeking in order to satisfy consumer demands in each of their markets.
|
•
|
Develop strong customer intimacy
. We believe that understanding our customers’ brands and goals by supplying them with superior products accurately and on time, and our ability to be named a “core list supplier,” are key drivers of our future growth.
|
•
|
Drive efficiency in all that we do.
We focus on integrating our consumer insight, technology and creative expertise in a manner that we believe drives the necessary productivity and efficiency to improve profitability on a long-term basis. We believe that discipline in driving efficiencies is a significant factor in our ability to simultaneously enhance margins and cash flows, while continuing to invest in our key growth initiatives.
|
Douglas D. Tough
|
64
|
Chairman of the Board and Chief Executive Officer
|
Kevin C. Berryman
|
55
|
Executive Vice President and Chief Financial Officer
|
Nicolas Mirzayantz
|
51
|
Group President, Fragrances
|
Hernan Vaisman
|
55
|
Group President, Flavors
|
Ahmet Baydar
|
61
|
Senior Vice President, Research and Development
|
Angelica T. Cantlon
|
62
|
Senior Vice President, Human Resources
|
Anne Chwat
|
54
|
Senior Vice President, General Counsel and Corporate Secretary
|
Francisco Fortanet
|
45
|
Senior Vice President, Operations
|
Richard A. O’Leary
|
53
|
Vice President and Controller
|
ITEM 1A.
|
RISK FACTORS.
|
•
|
governmental laws, regulations and policies adopted to manage national economic conditions, such as increases in taxes, austerity measures that may impact consumer spending, monetary policies that may impact inflation rates and currency fluctuations;
|
•
|
changes in environmental, health and safety regulations, such as the continued implementation of the European Union’s REACH regulations, and the burdens and costs of our compliance with such regulations;
|
•
|
the imposition of tariffs, quotas, trade barriers, other trade protection measures and import or export licensing requirements, which could adversely affect our cost or ability to import raw materials or export our flavors or fragrances to surrounding markets;
|
•
|
our ability to anticipate and adapt our flavors and fragrances to local preferences;
|
•
|
risks and costs arising from language and cultural differences;
|
•
|
changes in the laws and policies that govern foreign investment in the countries in which we operate, including the risk of expropriation or nationalization, and the costs and ability to repatriate the revenue that we generate in these countries;
|
•
|
risks and costs associated with political and economic instability, corruption, and social and ethnic unrest in the countries in which we operate;
|
•
|
difficulty in recruiting and retaining trained personnel;
|
•
|
risks and costs associated with health or similar issues, such as a pandemic or epidemic; or
|
•
|
the risks of operating in developing or emerging markets in which there are significant uncertainties regarding the interpretation, application and enforceability of laws and regulations and the enforceability of contract rights and intellectual property rights.
|
•
|
the risk that we may be unable to integrate successfully the relocated manufacturing operations;
|
•
|
the risk that we may be unable to coordinate management and integrate and retain employees of the relocated manufacturing operations;
|
•
|
the risk that we may face difficulties in implementing and maintaining consistent standards, controls, procedures, policies and information systems;
|
•
|
potential strains on our personnel, systems and resources and diversion of attention from other priorities; and
|
•
|
unforeseen or contingent liabilities of the relocated manufacturing operations.
|
ITEM 1B.
|
UNRESOLVED STAFF COMMENTS.
|
ITEM 2.
|
PROPERTIES.
|
Location
|
Operation
|
United States
|
|
Augusta, GA
|
Production of fragrance ingredients.
|
Carrollton, TX
(1)
|
Production of flavor compounds; flavor laboratories.
|
Hazlet, NJ
(1)
|
Production of fragrance compounds; fragrance laboratories.
|
Jacksonville, FL
|
Production of fragrance ingredients.
|
New York, NY
(1)
|
Fragrance laboratories; corporate headquarters.
|
South Brunswick, NJ
(1)
|
Production of flavor compounds and ingredients; flavor laboratories.
|
Union Beach, NJ
|
Research and development center.
|
|
|
France
|
|
Neuilly
(1)
|
Fragrance laboratories.
|
Grasse
|
Production of flavor and fragrance ingredients; fragrance laboratories.
|
|
|
Great Britain
|
|
Haverhill
|
Production of flavor compounds and ingredients, and fragrance ingredients; flavor laboratories.
|
|
|
Netherlands
|
|
Hilversum
|
Flavor and fragrance laboratories.
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Tilburg
|
Production of flavor compounds and ingredients, and fragrance compounds.
|
|
|
Spain
|
|
Benicarló
|
Production of fragrance ingredients.
|
|
|
Argentina
|
|
Garin
|
Production of flavor compounds and ingredients, and fragrance compounds; flavor laboratories.
|
|
|
Brazil
|
|
Rio de Janeiro
|
Production of fragrance compounds.
|
São Paulo
|
Flavor and fragrance laboratories.
|
Taubate
|
Production of flavor compounds and ingredients.
|
|
|
Mexico
|
|
Tlalnepantla
|
Production of flavor and fragrance compounds; flavor and fragrance laboratories.
|
Location
|
Operation
|
India
|
|
Mumbai
(2)
|
Flavor and fragrance laboratories.
|
Chennai
(2)
|
Production of flavor compounds and ingredients, and fragrance compounds; flavor laboratories.
|
|
|
Australia
|
|
Dandenong
|
Production of flavor compounds and flavor ingredients.
|
|
|
China
|
|
Guangzhou
(3)
|
Production of flavor compounds.
|
Guangzhou
(3)
|
Production of fragrance compounds.
|
Shanghai
(4)
|
Flavor and fragrance laboratories.
|
Xin’anjiang
(5)
|
Production of fragrance ingredients.
|
Zhejiang
(3)
|
Production of fragrance ingredients.
|
|
|
Indonesia
|
|
Jakarta
|
Production of flavor compounds and ingredients; flavor and fragrance laboratories.
|
|
|
Japan
|
|
Gotemba
|
Production of flavor compounds.
|
Tokyo
|
Flavor and fragrance laboratories.
|
|
|
Singapore
|
|
Jurong
(4)
|
Production of flavor and fragrance compounds.
|
Science Park
(1)
|
Flavor and fragrance laboratories.
|
|
|
Turkey
|
|
Gebze
|
Production of flavor compounds.
|
|
|
Israel
|
|
Kibbutz Givat-Oz
(3)
|
Flavor and fragrance ingredients manufacturing and laboratories.
|
(1)
|
Leased.
|
(2)
|
We have a 93.4% interest in the subsidiary company that owns this facility.
|
(3)
|
Land is leased and building and machinery and equipment are owned.
|
(4)
|
Building is leased and machinery and equipment are owned.
|
(5)
|
We have a 90% interest in the subsidiary company that leases the land and owns the buildings and machinery.
|
ITEM 3.
|
LEGAL PROCEEDINGS.
|
ITEM 4.
|
MINE SAFETY DISCLOSURES.
|
ITEM 5.
|
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
|
|
2013
|
|
2012
|
||||||||||||
Quarter
|
High
|
|
Low
|
|
High
|
|
Low
|
||||||||
First
|
$
|
77.40
|
|
|
$
|
65.74
|
|
|
$
|
58.89
|
|
|
$
|
52.05
|
|
Second
|
82.80
|
|
|
73.02
|
|
|
60.91
|
|
|
53.73
|
|
||||
Third
|
84.99
|
|
|
75.86
|
|
|
63.23
|
|
|
53.03
|
|
||||
Fourth
|
90.30
|
|
|
79.59
|
|
|
67.79
|
|
|
59.78
|
|
Title of Class
|
Number of shareholders of record as of February 11, 2014
|
Common stock, par value 12
1
/
2
¢ per share
|
2,256
|
Quarter
|
2013
|
|
2012
|
||||
First
|
$
|
0.34
|
|
|
$
|
0.31
|
|
Second
|
0.34
|
|
|
0.31
|
|
||
Third
|
0.39
|
|
|
0.34
|
|
||
Fourth
|
0.39
|
|
|
0.34
|
|
|
ANNUAL RETURN PERCENTAGE
Years Ending
|
|||||||||||||
Company Name / Index
|
2009
|
|
2010
|
|
2011
|
|
2012
|
|
2013
|
|||||
International Flavors & Fragrances
|
42.43
|
|
|
38.06
|
|
|
(3.81
|
)
|
|
29.72
|
|
|
31.59
|
|
S&P 500 Index
|
26.46
|
|
|
15.06
|
|
|
2.11
|
|
|
16.00
|
|
|
32.39
|
|
Peer Group
|
18.05
|
|
|
15.44
|
|
|
9.69
|
|
|
8.26
|
|
|
19.83
|
|
|
INDEXED RETURNS
Years Ending
|
||||||||||||||||||||||
Company Name / Index
|
Base Period 2008
|
|
2009
|
|
2010
|
|
2011
|
|
2012
|
|
2013
|
||||||||||||
International Flavors &
Fragrances
|
$
|
100
|
|
|
$
|
142.41
|
|
|
$
|
196.62
|
|
|
$
|
189.14
|
|
|
$
|
245.35
|
|
|
$
|
322.85
|
|
S&P 500 Index
|
100
|
|
|
126.46
|
|
|
145.51
|
|
|
148.59
|
|
|
172.37
|
|
|
228.19
|
|
||||||
Peer Group
|
100
|
|
|
118.21
|
|
|
136.61
|
|
|
149.85
|
|
|
162.14
|
|
|
194.30
|
|
Peer Group Companies
(2)
|
|
|
Alberto Culver Company
|
Hillshire Brands Co.
|
Unilever NV
|
Avon Products
|
Hormel Foods Corp.
|
YUM Brands, Inc.
|
Campbell Soup Co.
|
Kellogg Co.
|
|
Church & Dwight Co. Inc.
|
Estee Lauder Companies, Inc.
|
|
Clorox Company
|
McCormick & Company, Inc.
|
|
Coca-Cola Company
|
McDonald’s Corp.
|
|
Colgate-Palmolive Co.
|
Nestle SA
|
|
ConAgra Foods, Inc.
|
Pepsico Inc.
|
|
General Mills Inc.
|
Procter & Gamble Co.
|
|
H.J. Heinz Co.
|
Revlon Inc.
|
|
Hershey Company
|
Sensient Technologies Corp.
|
|
(1)
|
The Cumulative Shareholder Return assumes that the value of an investment in our Common Stock and each index was $100 on December 31, 2008, and that all dividends were reinvested.
|
(2)
|
Due to the international scope and breadth of our business, we believe that a Peer Group comprising international public companies, which are representative of the customer group to which we sell our products, is the most appropriate group against which to compare shareholder returns. Alberto Culver Company ceased trading on May 9, 2011 and has only been included through that date. In July 2012, Sara Lee Corp. spun off certain of its businesses and changed its name to Hillshire Brands Co. H.J. Heinz Co was acquired by Hawk Acquisition Holding Corp on June 7, 2013 and has only been included through that date.
|
Period
|
Total Number of
Shares
Repurchased
(1)
|
|
Average
Price Paid
per Share
|
|
Total Number of
Shares Purchased as
Part of Publicly
Announced Program
|
|
Approximate Dollar Value
of Shares That May Yet
be Purchased Under the
Program
|
||||||
October 1 - 31, 2013
|
105,167
|
|
|
$
|
82.01
|
|
|
105,167
|
|
|
$
|
209,077,445
|
|
November 1 - 30, 2013
|
62,312
|
|
|
86.25
|
|
|
62,312
|
|
|
203,703,107
|
|
||
December 1 - 31, 2013
|
64,620
|
|
|
86.14
|
|
|
64,620
|
|
|
198,136,699
|
|
||
Total
|
232,099
|
|
|
$
|
84.80
|
|
|
232,099
|
|
|
$
|
198,136,699
|
|
(1)
|
Shares were repurchased pursuant to the repurchase program announced in December 2012, with repurchases beginning in the first quarter of 2013. Repurchases under the program are limited to $250 million in total repurchase price, and the expiration date is December 31, 2014. Authorization of the repurchase program may be modified, suspended, or discontinued at any time.
|
ITEM 6.
|
SELECTED FINANCIAL DATA.
|
(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
|
|
Net Income Per Share
(c)(d)
|
|||||||||||||||||||||||||||||||||||||
|
Net Sales
|
|
Gross Profit
(a)
|
|
Net Income
(b)
|
|
Basic
|
|
Diluted
|
||||||||||||||||||||||||||||||
Quarter
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||||||||||||||
First
|
$
|
727,836
|
|
|
$
|
710,616
|
|
|
$
|
311,360
|
|
|
$
|
285,399
|
|
|
$
|
90,697
|
|
|
$
|
81,056
|
|
|
$
|
1.11
|
|
|
$
|
1.00
|
|
|
$
|
1.10
|
|
|
$
|
0.99
|
|
Second
|
757,635
|
|
|
721,317
|
|
|
333,986
|
|
|
301,543
|
|
|
102,322
|
|
|
88,596
|
|
|
1.25
|
|
|
1.09
|
|
|
1.24
|
|
|
1.08
|
|
||||||||||
Third
|
742,256
|
|
|
708,955
|
|
|
325,404
|
|
|
301,524
|
|
|
99,046
|
|
|
16,363
|
|
|
1.21
|
|
|
0.20
|
|
|
1.20
|
|
|
0.20
|
|
||||||||||
Fourth
|
725,169
|
|
|
680,558
|
|
|
313,455
|
|
|
287,068
|
|
|
61,479
|
|
|
68,119
|
|
|
0.75
|
|
|
0.83
|
|
|
0.75
|
|
|
0.83
|
|
||||||||||
|
$
|
2,952,896
|
|
|
$
|
2,821,446
|
|
|
$
|
1,284,205
|
|
|
$
|
1,175,534
|
|
|
$
|
353,544
|
|
|
$
|
254,134
|
|
|
$
|
4.32
|
|
|
$
|
3.11
|
|
|
$
|
4.29
|
|
|
$
|
3.09
|
|
(a)
|
Q1-2013 includes $1.2 million of operational improvement initiative costs associated with the plant closings in Europe and partial closing in Asia. Q2-2013 includes $0.8 million of restructuring-related costs associated with the Fragrance Ingredients Rationalization and $0.2 million of operational improvement initiative costs associated with the plant closings in Europe and Asia, as discussed above. Q3-2013 includes $2.2 million of restructuring-related costs associated with the Fragrance Ingredients Rationalization and $0.4 million of operational improvement initiative costs associated with the plant closings in Europe and Asia. Q4-2013 includes $2.3 million of restructuring-related costs associated with the Fragrance Ingredients Rationalization and $1.8 million of operational improvement initiative costs associated with the plant closings in Europe and several locations in Asia.
|
(b)
|
Q1-2013 includes a $6.2 million Spanish tax charge related to the 2002-2003 ruling and $0.9 million of operational improvement initiative costs, net of tax, associated with the plant closings in Europe and Asia. Q2-2013 includes $1.9 million of restructuring-related costs, net of tax, associated with the Fragrance Ingredients Rationalization, $0.1 million of operational improvement initiative costs, net of tax, associated with the plant closings in Europe and Asia, and a $10.5 million net gain related to the sale of a non-operating asset. Q3-2013 includes $1.4 million of restructuring-related costs, net of tax, associated with the Fragrance Ingredients Rationalization and $0.3 million of operational improvement initiative costs, net of tax, associated with the plant closings in Europe and Asia as discussed above. Q4-2013 includes $1.5 million, net of tax, associated with the Fragrance Ingredients Rationalization, $1.4 million of operational improvement initiative costs, net of tax, associated with the plant closings in Europe and several locations in Asia, a $9.1
|
(b)
|
Q1-2013 includes tax charges of $0.08 per diluted share related to the 2002-2003 ruling and $0.01 per diluted share related to operational improvement initiative costs. Q2-2013 includes a gain of $0.13 per diluted share related to the sale of a non-operating asset and restructuring charges of $0.02 per diluted share. Q3-2013 includes restructuring charges of $0.02 per diluted share. Q4-2013 includes charges of $0.11 per diluted share related to the Spanish capital tax case, restructuring charges of $0.02 per diluted share, operational improvement initiative costs of $0.02 per diluted share and a loss of $0.02 per diluted share related to the sale of a non-operating asset.
|
(c)
|
The sum of the 2012 Net Income per basic and diluted share by quarter does not equal the earnings per respective share for the full year due to rounding.
|
|
2013
|
|
2012
|
|
2011
|
|
2010
|
|
2009
|
||||||||||
Consolidated Statement of Income Data
|
|
|
|
|
|
|
|
|
|
||||||||||
Net sales
|
$
|
2,952,896
|
|
|
$
|
2,821,446
|
|
|
$
|
2,788,018
|
|
|
$
|
2,622,862
|
|
|
$
|
2,326,158
|
|
Cost of goods sold
(a)
|
1,668,691
|
|
|
1,645,912
|
|
|
1,683,362
|
|
|
1,530,260
|
|
|
1,391,913
|
|
|||||
Research and development expenses
|
259,838
|
|
|
233,713
|
|
|
219,781
|
|
|
218,772
|
|
|
184,771
|
|
|||||
Selling and administrative expenses
(b)
|
505,877
|
|
|
453,535
|
|
|
443,974
|
|
|
447,392
|
|
|
390,885
|
|
|||||
Restructuring and other charges, net
(c)
|
2,151
|
|
|
1,668
|
|
|
13,172
|
|
|
10,077
|
|
|
18,301
|
|
|||||
Interest expense
|
46,767
|
|
|
41,753
|
|
|
44,639
|
|
|
48,709
|
|
|
61,818
|
|
|||||
Other (income) expense, net
(d)
|
(15,638
|
)
|
|
1,450
|
|
|
9,544
|
|
|
8,059
|
|
|
1,921
|
|
|||||
|
2,467,686
|
|
|
2,378,031
|
|
|
2,414,472
|
|
|
2,263,269
|
|
|
2,049,609
|
|
|||||
Income before taxes
|
485,210
|
|
|
443,415
|
|
|
373,546
|
|
|
359,593
|
|
|
276,549
|
|
|||||
Taxes on income
(e)
|
131,666
|
|
|
189,281
|
|
|
106,680
|
|
|
96,036
|
|
|
81,023
|
|
|||||
Net income
|
$
|
353,544
|
|
|
$
|
254,134
|
|
|
$
|
266,866
|
|
|
$
|
263,557
|
|
|
$
|
195,526
|
|
Percentage of net sales
|
12.0
|
|
|
9.0
|
|
|
9.6
|
|
|
10.0
|
|
|
8.4
|
|
|||||
Percentage of average shareholders’ equity
|
26.0
|
|
|
21.5
|
|
|
25.3
|
|
|
29.7
|
|
|
28.9
|
|
|||||
Net income per share — basic
|
$
|
4.32
|
|
|
$
|
3.11
|
|
|
$
|
3.30
|
|
|
$
|
3.29
|
|
|
$
|
2.48
|
|
Net income per share — diluted
|
$
|
4.29
|
|
|
$
|
3.09
|
|
|
$
|
3.26
|
|
|
$
|
3.26
|
|
|
$
|
2.46
|
|
Average number of diluted shares (thousands)
|
81,930
|
|
|
81,833
|
|
|
81,467
|
|
|
80,440
|
|
|
79,094
|
|
|||||
Consolidated Balance Sheet Data
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
405,505
|
|
|
$
|
324,422
|
|
|
$
|
88,279
|
|
|
$
|
131,332
|
|
|
$
|
80,135
|
|
Receivables, net
|
524,493
|
|
|
499,443
|
|
|
472,346
|
|
|
451,804
|
|
|
444,265
|
|
|||||
Inventories
|
533,806
|
|
|
540,658
|
|
|
544,439
|
|
|
531,675
|
|
|
444,977
|
|
|||||
Property, plant and equipment, net
|
687,215
|
|
|
654,641
|
|
|
608,065
|
|
|
538,118
|
|
|
501,293
|
|
|||||
Goodwill and intangible assets, net
|
696,197
|
|
|
702,270
|
|
|
708,345
|
|
|
714,416
|
|
|
720,530
|
|
|||||
Total assets
|
3,331,731
|
|
|
3,246,192
|
|
|
2,965,581
|
|
|
2,872,455
|
|
|
2,644,774
|
|
|||||
Bank borrowings, overdrafts and current portion of long-term debt
|
149
|
|
|
150,071
|
|
|
116,688
|
|
|
133,899
|
|
|
76,780
|
|
|||||
Long-term debt
|
932,665
|
|
|
881,104
|
|
|
778,248
|
|
|
787,668
|
|
|
934,749
|
|
|||||
Total Shareholders’ equity
(f)
|
1,467,051
|
|
|
1,252,555
|
|
|
1,107,407
|
|
|
1,003,155
|
|
|
771,910
|
|
|||||
Other Data
|
|
|
|
|
|
|
|
|
|
||||||||||
Current ratio
(g)
|
2.9
|
|
|
2.5
|
|
|
2.3
|
|
|
2.0
|
|
|
2.3
|
|
|||||
Additions to property, plant and equipment
|
$
|
134,157
|
|
|
$
|
126,140
|
|
|
$
|
127,457
|
|
|
$
|
106,301
|
|
|
$
|
66,819
|
|
Depreciation and amortization expense
|
83,227
|
|
|
76,667
|
|
|
75,327
|
|
|
79,242
|
|
|
78,525
|
|
|||||
Cash dividends declared per share
|
$
|
1.46
|
|
|
$
|
1.30
|
|
|
$
|
1.16
|
|
|
$
|
1.04
|
|
|
$
|
1.00
|
|
Number of shareholders of record at year-end
|
2,255
|
|
|
2,430
|
|
|
2,587
|
|
|
2,758
|
|
|
3,004
|
|
|||||
Number of employees at year-end
|
6,000
|
|
|
5,715
|
|
|
5,644
|
|
|
5,514
|
|
|
5,377
|
|
(a)
|
The 2013 amount includes $6,691 ($4,493 after tax) of accelerated depreciation associated with the Fragrance Ingredients rationalization and several locations in Asia.
|
(b)
|
Includes $13,011 ($9,108 after tax) in 2013 of expense associated with the Spanish capital tax case and $33,495 ($29,846 after tax) in 2011 of costs associated with the Mane patent litigation settlement.
|
(c)
|
Restructuring and other charges ($1,398 after tax) in 2013, ($1,047 after tax) in 2012, ($9,444 after tax) in 2011, ($8,928 after tax) in 2010 and ($14,763 after tax) in 2009 were the result of various restructuring and reorganization programs of the Company.
|
(d)
|
The 2013 amount includes $14,155 ($8,522 after tax) of net gains related to the sale of non-operating assets.
|
(e)
|
The 2012 amount includes after tax charges of $72,362 related to the overall Spanish tax settlement.
|
(f)
|
Includes noncontrolling interest for all periods presented.
|
(g)
|
Current ratio is equal to current assets divided by current liabilities.
|
ITEM 7.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
|
Sales by Destination
(DOLLARS IN MILLIONS)
|
2013
|
|
Percent
of sales
|
|
2012
|
|
Percent
of sales
|
|
2011
|
|
Percent
of sales
|
|||||||||
Europe, Africa and Middle East (EAME)
|
$
|
972
|
|
|
33
|
%
|
|
$
|
913
|
|
|
32
|
%
|
|
$
|
957
|
|
|
34
|
%
|
Greater Asia (GA)
|
823
|
|
|
28
|
%
|
|
772
|
|
|
27
|
%
|
|
745
|
|
|
27
|
%
|
|||
North America (NOAM)
|
681
|
|
|
23
|
%
|
|
694
|
|
|
25
|
%
|
|
678
|
|
|
24
|
%
|
|||
Latin America (LA)
|
477
|
|
|
16
|
%
|
|
442
|
|
|
16
|
%
|
|
408
|
|
|
15
|
%
|
|||
Total net sales, as reported
|
$
|
2,953
|
|
|
|
|
$
|
2,821
|
|
|
|
|
$
|
2,788
|
|
|
|
|
Year Ended December 31,
|
|||||||
Sales by End-Use Product Category
|
2013
|
|
2012
|
|
2011
|
|||
Flavor Compounds
|
48
|
%
|
|
49
|
%
|
|
48
|
%
|
Functional Fragrances
|
24
|
%
|
|
23
|
%
|
|
23
|
%
|
Fine Fragrance and Beauty Care
|
19
|
%
|
|
19
|
%
|
|
18
|
%
|
Fragrance Ingredients
|
9
|
%
|
|
9
|
%
|
|
11
|
%
|
Total Net Sales
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
Year Ended December 31,
|
|
Change
|
||||||||||||||
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
|
2013
|
|
2012
|
|
2011
|
|
2013 vs. 2012
|
|
2012 vs. 2011
|
||||||||
Net sales
|
$
|
2,952,896
|
|
|
$
|
2,821,446
|
|
|
$
|
2,788,018
|
|
|
4.7
|
%
|
|
1.2
|
%
|
Cost of goods sold
|
1,668,691
|
|
|
1,645,912
|
|
|
1,683,362
|
|
|
1.4
|
%
|
|
(2.2
|
)%
|
|||
Gross profit
|
1,284,205
|
|
|
1,175,534
|
|
|
1,104,656
|
|
|
|
|
|
|||||
Research and development (R&D) expenses
|
259,838
|
|
|
233,713
|
|
|
219,781
|
|
|
11.2
|
%
|
|
6.3
|
%
|
|||
Selling and administrative (S&A) expenses
|
505,877
|
|
|
453,535
|
|
|
443,974
|
|
|
11.5
|
%
|
|
2.2
|
%
|
|||
Restructuring and other charges, net
|
2,151
|
|
|
1,668
|
|
|
13,172
|
|
|
29.0
|
%
|
|
(87.3
|
)%
|
|||
Operating profit
|
516,339
|
|
|
486,618
|
|
|
427,729
|
|
|
|
|
|
|||||
Interest expense
|
46,767
|
|
|
41,753
|
|
|
44,639
|
|
|
12.0
|
%
|
|
-6.5
|
%
|
|||
Other (income) expense, net
|
(15,638
|
)
|
|
1,450
|
|
|
9,544
|
|
|
-1,178.5
|
%
|
|
(84.8
|
)%
|
|||
Income before taxes
|
485,210
|
|
|
443,415
|
|
|
373,546
|
|
|
|
|
|
|||||
Taxes on income
|
131,666
|
|
|
189,281
|
|
|
106,680
|
|
|
(30.4
|
)%
|
|
77.4
|
%
|
|||
Net income
|
$
|
353,544
|
|
|
$
|
254,134
|
|
|
$
|
266,866
|
|
|
|
|
|
||
Net income per share — diluted
|
$
|
4.29
|
|
|
$
|
3.09
|
|
|
$
|
3.26
|
|
|
38.8
|
%
|
|
-5.2
|
%
|
Gross margin
|
43.5
|
%
|
|
41.7
|
%
|
|
39.6
|
%
|
|
180.0
|
|
|
210.0
|
|
|||
R&D as a percentage of sales
|
8.8
|
%
|
|
8.3
|
%
|
|
7.9
|
%
|
|
50.0
|
|
|
40.0
|
|
|||
S&A as a percentage of sales
|
17.1
|
%
|
|
16.1
|
%
|
|
15.9
|
%
|
|
100.0
|
|
|
20.0
|
|
|||
Operating margin
|
17.5
|
%
|
|
17.2
|
%
|
|
15.3
|
%
|
|
30.0
|
|
|
190.0
|
|
|||
Adjusted operating margin
(1)
|
18.3
|
%
|
|
17.3
|
%
|
|
15.3
|
%
|
|
100.0
|
|
|
200.0
|
|
|||
Effective tax rate
|
27.1
|
%
|
|
42.7
|
%
|
|
28.6
|
%
|
|
(1,560.0
|
)
|
|
1,410.0
|
|
|||
Segment net sales
|
|
|
|
|
|
|
|
|
|
||||||||
Flavors
|
$
|
1,422,739
|
|
|
$
|
1,378,377
|
|
|
$
|
1,347,340
|
|
|
3.2
|
%
|
|
2.3
|
%
|
Fragrances
|
1,530,157
|
|
|
1,443,069
|
|
|
1,440,678
|
|
|
6.0
|
%
|
|
0.2
|
%
|
|||
Consolidated
|
$
|
2,952,896
|
|
|
$
|
2,821,446
|
|
|
$
|
2,788,018
|
|
|
|
|
|
(1)
|
Adjusted operating margin for the twelve months ended December 31, 2013 excludes the operational improvement initiative costs of $2.3 million, Restructuring and other charges, net of $2.2 million, $6.7 million of accelerated depreciation included in Cost of goods sold related to the Fragrance Ingredients Rationalization and several locations in Asia, and the Spanish capital tax charge of $13.0 million. Adjusted operating margin for the twelve months ended December 31, 2012 excludes Restructuring and other charges, net of $1.7 million.
|
|
|
% Change in Sales — 2013 vs 2012
|
||||||||||||||||
|
|
Fine &
Beauty Care
|
|
Functional
|
|
Ingredients
|
|
Total
Frag.
|
|
Flavors
|
|
Total
|
||||||
NOAM
|
Reported
|
-3
|
%
|
|
3
|
%
|
|
-6
|
%
|
|
-2
|
%
|
|
-2
|
%
|
|
-2
|
%
|
EAME
|
Reported
|
12
|
%
|
|
6
|
%
|
|
-4
|
%
|
|
6
|
%
|
|
7
|
%
|
|
6
|
%
|
|
Local Currency
(1)
|
10
|
%
|
|
3
|
%
|
|
-6
|
%
|
|
4
|
%
|
|
6
|
%
|
|
5
|
%
|
LA
|
Reported
|
9
|
%
|
|
12
|
%
|
|
-5
|
%
|
|
9
|
%
|
|
5
|
%
|
|
8
|
%
|
|
Local Currency
(1)
|
11
|
%
|
|
14
|
%
|
|
-5
|
%
|
|
11
|
%
|
|
8
|
%
|
|
10
|
%
|
GA
|
Reported
|
9
|
%
|
|
14
|
%
|
|
3
|
%
|
|
11
|
%
|
|
4
|
%
|
|
7
|
%
|
|
Local Currency
(1)
|
10
|
%
|
|
15
|
%
|
|
8
|
%
|
|
13
|
%
|
|
7
|
%
|
|
9
|
%
|
Total
|
Reported
|
8
|
%
|
|
9
|
%
|
|
-4
|
%
|
|
6
|
%
|
|
3
|
%
|
|
5
|
%
|
|
Local Currency
(1)
|
8
|
%
|
|
8
|
%
|
|
-4
|
%
|
|
6
|
%
|
|
4
|
%
|
|
5
|
%
|
(1)
|
Local currency sales growth is calculated by translating prior year sales at the exchange rates for the corresponding
2013
period.
|
•
|
NOAM reported sales decline reflects
2%
Flavors declines as double-digit growth in Beverages was more than offset by volume declines in Sweet and Dairy, driven primarily by the exit of low margin sales activities. In Fragrances, Functional Fragrances sales were up
3%
versus last year as new wins and volume gains in Home Care were offset by lower volumes on existing business in Fabric Care. Fine and Beauty Care sales declined
3%
as a result of mid single-digit declines in Fine Fragrance. On a like-for-like basis, excluding the effects of the exit of low margin sales activities, NOAM Flavors experienced mid single-digit growth.
|
•
|
EAME LC growth was led by
6%
growth in Flavors resulting from double-digit gains in Beverages along with mid single-digit growth in Savory. This growth was mainly due to new wins within our emerging markets in the region, as well as volume increases. On a like-for-like basis, excluding the effects of the exit of low margin sales activities, EAME Flavors experienced high single-digit growth. Fine and Beauty Care had LC sales growth of
10%
driven by double-digit growth in Fine Fragrance and mid single-digit growth in Hair Care and Toiletries and Functional Fragrances experienced
3%
LC growth driven by high single-digit gains in Fabric Care, which more than offset volume declines in Fragrance Ingredients of
6%
year-over-year.
|
•
|
LA LC sales growth of
10%
was driven by double-digit gains in Fragrance Compounds, reflecting double-digit LC sales growth in Fabric Care, Personal Wash and Fine Fragrance, and mid single-digit growth in Hair Care and
|
•
|
GA delivered LC sales growth of
9%
, led by high single-digit gains in Savory and Dairy, along with mid single-digit growth in Beverages and Sweet categories. On a like-for-like basis, excluding the effects of the exit of low margin sales activities, GA Flavors experienced high single-digit growth. Both Functional Fragrances and Fine and Beauty Care experienced double-digit growth led by high double-digit growth in Fabric Care within Functional Fragrances and double-digit growth in Hair Care and Toiletries within Fine and Beauty Care categories. In addition, GA experienced Fragrance Ingredients LC sales growth of 8%.
|
|
Restructuring Charges
(In Thousands)
|
||||||
|
2013
|
|
2012
|
||||
Flavors
|
$
|
—
|
|
|
$
|
(36
|
)
|
Fragrances
|
2,151
|
|
|
1,636
|
|
||
Global
|
—
|
|
|
68
|
|
||
Total
|
$
|
2,151
|
|
|
$
|
1,668
|
|
|
For the Year Ended
December 31,
|
||||||
(DOLLARS IN THOUSANDS)
|
2013
|
|
2012
|
||||
Segment profit:
|
|
|
|
||||
Flavors
|
$
|
323,562
|
|
|
$
|
298,326
|
|
Fragrances
|
283,651
|
|
|
238,379
|
|
||
Global Expenses
|
(66,942
|
)
|
|
(48,419
|
)
|
||
Restructuring and other charges, net
|
(2,151
|
)
|
|
(1,668
|
)
|
||
Spanish capital tax charge
|
(13,011
|
)
|
|
—
|
|
||
Operational improvement initiative costs
|
(8,770
|
)
|
|
—
|
|
||
Operating Profit
|
$
|
516,339
|
|
|
$
|
486,618
|
|
Profit margin
|
|
|
|
||||
Flavors
|
22.7
|
%
|
|
21.6
|
%
|
||
Fragrances
|
18.5
|
%
|
|
16.5
|
%
|
||
Consolidated
|
17.5
|
%
|
|
17.2
|
%
|
|
|
% Change in Sales — 2012 vs 2011
|
||||||||||||||||
|
|
Fine &
Beauty Care
|
|
Functional
|
|
Ingredients
|
|
Total
Frag.
|
|
Flavors
|
|
Total
|
||||||
NOAM
|
Reported
|
6
|
%
|
|
3
|
%
|
|
-5
|
%
|
|
2
|
%
|
|
3
|
%
|
|
2
|
%
|
EAME
|
Reported
|
-7
|
%
|
|
-1
|
%
|
|
-17
|
%
|
|
-7
|
%
|
|
-1
|
%
|
|
-5
|
%
|
|
Local Currency
(1)
|
0
|
%
|
|
6
|
%
|
|
-13
|
%
|
|
-1
|
%
|
|
6
|
%
|
|
2
|
%
|
LA
|
Reported
|
22
|
%
|
|
11
|
%
|
|
-9
|
%
|
|
13
|
%
|
|
0
|
%
|
|
9
|
%
|
|
Local Currency
(1)
|
26
|
%
|
|
12
|
%
|
|
-8
|
%
|
|
15
|
%
|
|
4
|
%
|
|
12
|
%
|
GA
|
Reported
|
1
|
%
|
|
5
|
%
|
|
-16
|
%
|
|
1
|
%
|
|
5
|
%
|
|
4
|
%
|
|
Local Currency
(1)
|
3
|
%
|
|
6
|
%
|
|
-16
|
%
|
|
1
|
%
|
|
7
|
%
|
|
5
|
%
|
Total
|
Reported
|
3
|
%
|
|
4
|
%
|
|
-12
|
%
|
|
0
|
%
|
|
2
|
%
|
|
1
|
%
|
|
Local Currency
(1)
|
7
|
%
|
|
7
|
%
|
|
-10
|
%
|
|
3
|
%
|
|
5
|
%
|
|
4
|
%
|
(1)
|
Local currency sales growth is calculated by translating prior year sales at the exchange rates for the corresponding 2012 period.
|
•
|
NOAM reported growth reflects 3% Flavors growth as strong new wins and realization of price increases in Beverages and Dairy more than offset volume declines in Sweet and Savory. In Fragrances, Fine and Beauty Care sales increased 6% as compared to a decline of 3% in the comparable 2011 period. Functional Fragrances sales were up 3% versus last year as new wins and volume gains in Fabric Care and Personal Wash offset lower volumes on existing business in Home Care. On a like-for-like basis, excluding the effects of the exit of low margin sales activities, NOAM Flavors sales experienced high single-digit growth.
|
•
|
EAME LC growth was led by 6% growth in Flavors resulting from high single-digit growth in Savory along with mid single-digit growth in Beverages and low single-digit growth in Sweet. This growth was mainly due to new wins within our emerging markets in the region, as well as the realization of price increases. Functional Fragrances experienced 6% growth driven by double-digit gains in Fabric Care, which was more than offset volume declines in Fragrance Ingredients of 13% year-over-year.
|
•
|
LA LC sales growth of 12% was driven by double-digit gains in Fragrance Compounds, reflecting double-digit LC sales growth in Fine and Beauty Care and double-digit and high single-digit growth in Functional Fragrance categories, which were only partially offset by high single-digit volume declines in Fragrance Ingredients. Flavors LC sales growth was 4%, driven by mid single-digit gains in Beverages and Savory and double-digit gains in Dairy, which were only partially offset by low single-digit declines in Sweet.
|
•
|
GA delivered solid LC sales growth of 5%, led by high single-digit gains in Savory, Sweet and Dairy, along with mid single-digit growth in Beverages. Functional Fragrances experienced mid single-digit growth led by mid single-digit growth in Fabric Care and high single-digit growth in Personal Wash. Within Fine and Beauty Care, Fine Fragrance
|
|
Restructuring Charges
(In Thousands)
|
||||||
|
2012
|
|
2011
|
||||
Flavors
|
$
|
(36
|
)
|
|
$
|
1,475
|
|
Fragrances
|
1,636
|
|
|
11,224
|
|
||
Global
|
68
|
|
|
473
|
|
||
Total
|
$
|
1,668
|
|
|
$
|
13,172
|
|
|
For the Year Ended
December 31,
|
||||||
(DOLLARS IN THOUSANDS)
|
2012
|
|
2011
|
||||
Segment profit:
|
|
|
|
||||
Flavors
|
$
|
298,326
|
|
|
$
|
284,246
|
|
Fragrances
|
238,379
|
|
|
226,560
|
|
||
Global Expenses
|
(48,419
|
)
|
|
(36,410
|
)
|
||
Restructuring and other charges, net
|
(1,668
|
)
|
|
(13,172
|
)
|
||
Mane patent litigation settlement
|
—
|
|
|
(33,495
|
)
|
||
Operating Profit
|
$
|
486,618
|
|
|
$
|
427,729
|
|
Profit margin
|
|
|
|
||||
Flavors
|
21.6
|
%
|
|
21.1
|
%
|
||
Fragrances
|
16.5
|
%
|
|
15.7
|
%
|
||
Consolidated
|
17.2
|
%
|
|
15.3
|
%
|
(1)
|
Adjusted EBITDA and Net Debt, which are non-GAAP measures used for these covenants, are calculated in accordance with the definition in the debt agreements. In this context, these measures are used solely to provide information on the extent to which we are in compliance with debt covenants and may not be comparable to adjusted EBITDA and Net Debt used by other companies. Reconciliations of adjusted EBITDA to net income and net debt to total debt are as follows:
|
|
12 Months Ended
December 31,
|
||||||
(DOLLARS IN MILLIONS)
|
2013
|
|
2012
|
||||
Net income
|
$
|
353.5
|
|
|
$
|
254.1
|
|
Interest expense
|
46.8
|
|
|
41.8
|
|
||
Income taxes
|
131.7
|
|
|
189.3
|
|
||
Depreciation and amortization
|
83.2
|
|
|
76.7
|
|
||
Specified items
(1)
|
2.2
|
|
|
1.7
|
|
||
Non-cash items
(2)
|
6.1
|
|
|
16.1
|
|
||
Adjusted EBITDA
|
$
|
623.5
|
|
|
$
|
579.7
|
|
(1)
|
Specified items for the 12 months ended
December 31, 2013
of
$2.2 million
consist of restructuring charges related to the Fragrance Ingredients Rationalization. Specified items for the 12 months ended
December 31, 2012
of
$1.7 million
consist of restructuring charges related to the 2011 Strategic Initiative.
|
(2)
|
Non-cash items, defined as part of Adjusted EBITDA in the terms of the Company’s New Facility agreement, represent all other adjustments to reconcile net income to net cash provided by operations as presented on the Statement of Cash Flows, including gain on disposal of assets, stock-based compensation and pension settlement/curtailment.
|
|
December 31,
|
||||||
(DOLLARS IN MILLIONS)
|
2013
|
|
2012
|
||||
Total debt
|
$
|
932.8
|
|
|
$
|
1,031.2
|
|
Adjustments:
|
|
|
|
||||
Deferred gain on interest rate swaps
|
(7.1
|
)
|
|
(9.0
|
)
|
||
Cash and cash equivalents
|
(405.5
|
)
|
|
(324.4
|
)
|
||
Net debt
|
$
|
520.2
|
|
|
$
|
697.8
|
|
|
Payments Due
|
||||||||||||||||||
Contractual Obligations
(Dollars In Millions)
|
Total
|
|
2014
|
|
2015 - 2016
|
|
2017 - 2018
|
|
2019 and thereafter
|
||||||||||
Borrowings
(1)
|
$
|
926
|
|
|
$
|
1
|
|
|
$
|
125
|
|
|
$
|
250
|
|
|
$
|
550
|
|
Interest on borrowings
(1)
|
326
|
|
|
49
|
|
|
95
|
|
|
64
|
|
|
118
|
|
|||||
Operating leases
(2)
|
268
|
|
|
30
|
|
|
50
|
|
|
39
|
|
|
149
|
|
|||||
Pension funding obligations
(3)
|
75
|
|
|
25
|
|
|
50
|
|
|
—
|
|
|
—
|
|
|||||
Postretirement obligations
(4)
|
105
|
|
|
5
|
|
|
10
|
|
|
12
|
|
|
78
|
|
|||||
Purchase commitments
(5)
|
126
|
|
|
60
|
|
|
66
|
|
|
—
|
|
|
—
|
|
|||||
Total
|
$
|
1,826
|
|
|
$
|
170
|
|
|
$
|
396
|
|
|
$
|
365
|
|
|
$
|
895
|
|
(1)
|
See Note 8 to the Consolidated Financial Statements for a further discussion of our various borrowing facilities.
|
(2)
|
Operating leases include facility and other lease commitments executed in the normal course of the business, including sale leaseback obligations included in Note 7 of the Notes to the Consolidated Financial Statements. Further details concerning worldwide aggregate operating leases are contained in Note 17 of the Notes to the Consolidated Financial Statements.
|
(3)
|
See Note 13 to the Consolidated Financial Statements for a further discussion of our retirement plans. Anticipated funding obligations are based on current actuarial assumptions. The projected contributions beyond fiscal year
2016
are not currently determinable.
|
(4)
|
Amounts represent expected future benefit payments for our postretirement benefit plans.
|
(5)
|
Purchase commitments include agreements for raw material procurement and contractual capital expenditures. Amounts for purchase commitments represent only those items which are based on agreements that are enforceable and legally binding.
|
|
Sensitivity of Disclosures to Changes in Selected Assumptions
|
||||||||||||||
|
25 BP Decrease in
Discount Rate
|
|
25 BP Decrease in
Discount Rate
|
|
25 BP Decrease in
Long-Term Rate
of Return
|
||||||||||
(DOLLARS IN THOUSANDS)
|
Change in
PBO
|
|
Change in
ABO
|
|
Change in
pension expense
|
|
Change in
pension expense
|
||||||||
U.S. Pension Plans
|
$
|
15,781
|
|
|
$
|
15,460
|
|
|
$
|
1,085
|
|
|
$
|
947
|
|
Non-U.S. Pension Plans
|
$
|
36,246
|
|
|
$
|
32,866
|
|
|
$
|
2,932
|
|
|
$
|
1,989
|
|
Postretirement Benefit Plan
|
N/A
|
|
|
$
|
3,225
|
|
|
$
|
190
|
|
|
N/A
|
|
|
Reported
Sales
Growth
|
|
Local
Currency
Sales Growth
(1)
|
|
Exit of Low
Margin Sales
Activities
|
|
Like-for-
Like Sales
Growth
(2)
|
||||
Total Company
|
5
|
%
|
|
5
|
%
|
|
1
|
%
|
|
6
|
%
|
Flavors
|
|
|
|
|
|
|
|
||||
North America
|
-2
|
%
|
|
-2
|
%
|
|
5
|
%
|
|
3
|
%
|
EAME
|
7
|
%
|
|
6
|
%
|
|
1
|
%
|
|
7
|
%
|
Latin America
|
5
|
%
|
|
8
|
%
|
|
3
|
%
|
|
11
|
%
|
Greater Asia
|
4
|
%
|
|
7
|
%
|
|
0
|
%
|
|
7
|
%
|
Total
|
3
|
%
|
|
4
|
%
|
|
2
|
%
|
|
6
|
%
|
(1)
|
Local currency sales growth is calculated by translating prior year sales at the exchange rates used for the corresponding
2013
period.
|
(2)
|
Like-for-like is a non-GAAP metric that excludes the impact of exiting low margin sales activities and foreign exchange.
|
•
|
volatility and increases in the price of raw materials, energy and transportation;
|
•
|
the economic climate for the Company’s industry and demand for the Company’s products;
|
•
|
the ability of the Company to successfully implement its strategic plan and meet its long-term financial goals;
|
•
|
fluctuations in the quality and availability of raw materials;
|
•
|
decline in consumer confidence and spending;
|
•
|
changes in consumer preferences;
|
•
|
the Company’s ability to predict the short and long-term effects of global economic conditions;
|
•
|
movements in interest rates;
|
•
|
the Company’s ability to implement its business strategy, including the achievement of anticipated cost savings, profitability, realization of price increases and growth targets;
|
•
|
the Company's ability to benefit from its investments in emerging markets;
|
•
|
the Company’s ability to successfully develop new and competitive products that appeal to its customers and consumers;
|
•
|
the effects of any unanticipated costs and construction or start-up delays in the expansion of any of the Company’s facilities;
|
•
|
the impact of currency fluctuations or devaluations in the Company’s principal foreign markets;
|
•
|
any adverse impact on the availability, effectiveness and cost of the Company’s hedging and risk management strategies;
|
•
|
uncertainties regarding the outcome of, or funding requirements, related to litigation or settlement of pending litigation, uncertain tax positions or other contingencies;
|
•
|
the impact of possible pension funding obligations and increased pension expense, particularly as a result of changes in asset returns or discount rates, on the Company’s cash flow and results of operations;
|
•
|
the Company's ability to implement its Fragrance Ingredients Rationalization plan, including the achievement of anticipated cost savings;
|
•
|
the effect of legal and regulatory proceedings, as well as restrictions imposed on the Company, its operations or its representatives by U.S. and foreign governments;
|
•
|
adverse changes in federal, state, local and foreign tax legislation or adverse results of tax audits, assessments, or disputes;
|
•
|
the ability of the Company to attract and retain talented employees;
|
•
|
the direct and indirect costs and other financial impact that may result from any business disruptions due to political instability, armed hostilities, incidents of terrorism, natural disasters, or the responses to or repercussion from any of these or similar events or conditions;
|
•
|
the Company’s ability to quickly and effectively implement its disaster recovery and crisis management plans; and
|
•
|
adverse changes due to accounting rules or regulations.
|
ITEM 8.
|
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
|
ITEM 9.
|
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
|
ITEM 9A.
|
CONTROLS AND PROCEDURES.
|
ITEM 11.
|
EXECUTIVE COMPENSATION.
|
ITEM 12.
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
|
ITEM 13.
|
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
|
ITEM 14.
|
PRINCIPAL ACCOUNTANT FEES AND SERVICES.
|
ITEM 15.
|
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
|
|
|
(a)(2) FINANCIAL STATEMENT SCHEDULES
|
|
|
|
S-1
|
/s/ PricewaterhouseCoopers LLP
|
New York, New York
|
February 25, 2014
|
|
Year Ended December 31,
|
||||||||||
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
|
2013
|
|
2012
|
|
2011
|
||||||
Net sales
|
$
|
2,952,896
|
|
|
$
|
2,821,446
|
|
|
$
|
2,788,018
|
|
Cost of goods sold
|
1,668,691
|
|
|
1,645,912
|
|
|
1,683,362
|
|
|||
Research and development expenses
|
259,838
|
|
|
233,713
|
|
|
219,781
|
|
|||
Selling and administrative expenses
|
505,877
|
|
|
453,535
|
|
|
443,974
|
|
|||
Restructuring and other charges, net
|
2,151
|
|
|
1,668
|
|
|
13,172
|
|
|||
Interest expense
|
46,767
|
|
|
41,753
|
|
|
44,639
|
|
|||
Other (income) expense, net
|
(15,638
|
)
|
|
1,450
|
|
|
9,544
|
|
|||
|
2,467,686
|
|
|
2,378,031
|
|
|
2,414,472
|
|
|||
Income before taxes
|
485,210
|
|
|
443,415
|
|
|
373,546
|
|
|||
Taxes on income
|
131,666
|
|
|
189,281
|
|
|
106,680
|
|
|||
Net income
|
353,544
|
|
|
254,134
|
|
|
266,866
|
|
|||
Other comprehensive income (loss):
|
|
|
|
|
|
||||||
Foreign currency translation adjustments
|
(10,556
|
)
|
|
17,687
|
|
|
(36,581
|
)
|
|||
(Losses) gains on derivatives qualifying as hedges
|
(3,794
|
)
|
|
(4,455
|
)
|
|
8,420
|
|
|||
Pension and postretirement liability adjustment
|
25,264
|
|
|
(41,548
|
)
|
|
(71,797
|
)
|
|||
Comprehensive income
|
$
|
364,458
|
|
|
$
|
225,818
|
|
|
$
|
166,908
|
|
|
|
|
|
|
|
||||||
|
2013
|
|
2012
|
|
2011
|
||||||
Net income per share — basic
|
$
|
4.32
|
|
|
$
|
3.11
|
|
|
$
|
3.30
|
|
Net income per share — diluted
|
$
|
4.29
|
|
|
$
|
3.09
|
|
|
$
|
3.26
|
|
|
December 31,
|
||||||
(DOLLARS IN THOUSANDS)
|
2013
|
|
2012
|
||||
ASSETS
|
|
|
|
||||
Current Assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
405,505
|
|
|
$
|
324,422
|
|
Receivables:
|
|
|
|
||||
Trade
|
534,986
|
|
|
508,736
|
|
||
Allowance for doubtful accounts
|
(10,493
|
)
|
|
(9,293
|
)
|
||
Inventories
|
533,806
|
|
|
540,658
|
|
||
Deferred income taxes
|
40,189
|
|
|
65,763
|
|
||
Prepaid expenses and other current assets
|
148,910
|
|
|
142,401
|
|
||
Total Current Assets
|
1,652,903
|
|
|
1,572,687
|
|
||
Property, plant and equipment, net
|
687,215
|
|
|
654,641
|
|
||
Goodwill
|
665,582
|
|
|
665,582
|
|
||
Other intangible assets, net
|
30,615
|
|
|
36,688
|
|
||
Deferred income taxes
|
154,437
|
|
|
157,074
|
|
||
Other assets
|
140,979
|
|
|
159,520
|
|
||
Total Assets
|
$
|
3,331,731
|
|
|
$
|
3,246,192
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
||||
Current Liabilities:
|
|
|
|
||||
Bank borrowings, overdrafts and current portion of long-term debt
|
$
|
149
|
|
|
$
|
150,071
|
|
Accounts payable
|
226,733
|
|
|
199,272
|
|
||
Dividends payable
|
31,740
|
|
|
—
|
|
||
Restructuring and other charges
|
2,116
|
|
|
3,149
|
|
||
Other current liabilities
|
299,628
|
|
|
277,386
|
|
||
Total Current Liabilities
|
560,366
|
|
|
629,878
|
|
||
Other Liabilities:
|
|
|
|
||||
Long-term debt
|
932,665
|
|
|
881,104
|
|
||
Deferred gains
|
41,339
|
|
|
44,674
|
|
||
Retirement liabilities
|
238,225
|
|
|
327,373
|
|
||
Other liabilities
|
92,085
|
|
|
110,608
|
|
||
Total Other Liabilities
|
1,304,314
|
|
|
1,363,759
|
|
||
Commitments and Contingencies (Note 17)
|
|
|
|
||||
Shareholders’ Equity:
|
|
|
|
||||
Common stock 12
1
/2¢ par value; authorized 500,000,000 shares; issued 115,761,840 shares as of December 31, 2013 and 2012; and outstanding 81,384,246 and 81,626,874 shares as of December 31, 2013 and 2012
|
14,470
|
|
|
14,470
|
|
||
Capital in excess of par value
|
131,461
|
|
|
127,504
|
|
||
Retained earnings
|
3,075,657
|
|
|
2,841,166
|
|
||
Accumulated other comprehensive loss:
|
|
|
|
||||
Cumulative translation adjustments
|
(104,278
|
)
|
|
(93,722
|
)
|
||
Accumulated losses on derivatives qualifying as hedges
|
(4,012
|
)
|
|
(218
|
)
|
||
Pension and postretirement liability adjustment
|
(284,421
|
)
|
|
(309,685
|
)
|
||
Treasury stock, at cost — 34,377,594 and 34,134,966 shares as of December 31, 2013 and 2012
|
(1,365,805
|
)
|
|
(1,330,707
|
)
|
||
Total Shareholders’ Equity
|
1,463,072
|
|
|
1,248,808
|
|
||
Noncontrolling interest
|
3,979
|
|
|
3,747
|
|
||
Total Shareholders’ Equity including noncontrolling interest
|
1,467,051
|
|
|
1,252,555
|
|
||
Total Liabilities and Shareholders’ Equity
|
$
|
3,331,731
|
|
|
$
|
3,246,192
|
|
|
Year Ended December 31,
|
||||||||||
(DOLLARS IN THOUSANDS)
|
2013
|
|
2012
|
|
2011
|
||||||
Cash flows from operating activities:
|
|
|
|
|
|
||||||
Net income
|
$
|
353,544
|
|
|
$
|
254,134
|
|
|
$
|
266,866
|
|
Adjustments to reconcile to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
83,227
|
|
|
76,667
|
|
|
75,327
|
|
|||
Deferred income taxes
|
(484
|
)
|
|
(15,878
|
)
|
|
25,357
|
|
|||
Gain on disposal of assets
|
(17,841
|
)
|
|
(4,461
|
)
|
|
(3,184
|
)
|
|||
Stock-based compensation
|
23,736
|
|
|
19,716
|
|
|
20,547
|
|
|||
Pension settlement/curtailment
|
215
|
|
|
874
|
|
|
3,583
|
|
|||
Spanish tax charges
|
—
|
|
|
72,362
|
|
|
—
|
|
|||
Payments pursuant to Spanish tax settlement
|
—
|
|
|
(105,503
|
)
|
|
—
|
|
|||
Changes in assets and liabilities:
|
|
|
|
|
|
||||||
Trade receivables
|
(53,156
|
)
|
|
(33,056
|
)
|
|
(35,697
|
)
|
|||
Inventories
|
4,822
|
|
|
4,571
|
|
|
(25,199
|
)
|
|||
Accounts payable
|
10,074
|
|
|
(740
|
)
|
|
(5,859
|
)
|
|||
Accruals for incentive compensation
|
24,518
|
|
|
34,632
|
|
|
(49,964
|
)
|
|||
Other current payables and accrued expenses
|
9,995
|
|
|
29,203
|
|
|
(45,491
|
)
|
|||
Changes in other assets
|
11,973
|
|
|
(9,969
|
)
|
|
(22,428
|
)
|
|||
Changes in other liabilities
|
(43,061
|
)
|
|
1,244
|
|
|
(14,668
|
)
|
|||
Net cash provided by operating activities
|
407,562
|
|
|
323,796
|
|
|
189,190
|
|
|||
Cash flows from investing activities:
|
|
|
|
|
|
||||||
Additions to property, plant and equipment
|
(134,157
|
)
|
|
(126,140
|
)
|
|
(127,457
|
)
|
|||
Proceeds from disposal of assets
|
27,312
|
|
|
1,763
|
|
|
705
|
|
|||
Maturity of net investment hedges
|
646
|
|
|
1,960
|
|
|
(2,475
|
)
|
|||
Purchase of life insurance contracts
|
—
|
|
|
(1,127
|
)
|
|
(1,936
|
)
|
|||
Proceeds from termination of life insurance contracts
|
793
|
|
|
9,283
|
|
|
—
|
|
|||
Net cash used in investing activities
|
(105,406
|
)
|
|
(114,261
|
)
|
|
(131,163
|
)
|
|||
Cash flows from financing activities:
|
|
|
|
|
|
||||||
Cash dividends paid to shareholders
|
(87,347
|
)
|
|
(130,943
|
)
|
|
(90,250
|
)
|
|||
Net change in revolving credit facility borrowings and overdrafts
|
(283,225
|
)
|
|
138,756
|
|
|
92,662
|
|
|||
Deferred financing costs
|
(2,800
|
)
|
|
—
|
|
|
—
|
|
|||
Repayments of long-term debt
|
(100,000
|
)
|
|
—
|
|
|
(123,708
|
)
|
|||
Proceeds from long-term debt
|
297,786
|
|
|
—
|
|
|
—
|
|
|||
Proceeds from issuance of stock under stock plans
|
3,799
|
|
|
9,211
|
|
|
14,656
|
|
|||
Excess tax benefits on stock-based payments
|
6,112
|
|
|
8,380
|
|
|
5,933
|
|
|||
Purchase of treasury stock
|
(51,363
|
)
|
|
—
|
|
|
—
|
|
|||
Net cash (used in) provided by financing activities
|
(217,038
|
)
|
|
25,404
|
|
|
(100,707
|
)
|
|||
Effect of exchange rate changes on cash and cash equivalents
|
(4,035
|
)
|
|
1,204
|
|
|
(373
|
)
|
|||
Net change in cash and cash equivalents
|
81,083
|
|
|
236,143
|
|
|
(43,053
|
)
|
|||
Cash and cash equivalents at beginning of year
|
324,422
|
|
|
88,279
|
|
|
131,332
|
|
|||
Cash and cash equivalents at end of year
|
$
|
405,505
|
|
|
$
|
324,422
|
|
|
$
|
88,279
|
|
Cash paid for:
|
|
|
|
|
|
||||||
Interest, net of amounts capitalized
|
$
|
48,165
|
|
|
$
|
41,315
|
|
|
$
|
49,365
|
|
Income Taxes
(1)
|
$
|
138,940
|
|
|
$
|
184,592
|
|
|
$
|
87,785
|
|
Noncash investing activities:
|
|
|
|
|
|
||||||
Accrued capital expenditures
|
$
|
21,744
|
|
|
$
|
26,565
|
|
|
$
|
24,050
|
|
(1)
|
The 2012 amount includes
$105.5 million
pursuant to the Spanish tax settlement (see Note 9).
|
(DOLLARS IN THOUSANDS)
|
Common
stock
|
|
Capital in
excess of
par value
|
|
Retained
earnings
|
|
Accumu-
lated other
comprehensive
(loss) income
|
|
Treasury stock
|
|
Noncontrolling
interest
|
|||||||||||||||
Shares
|
|
Cost
|
|
|||||||||||||||||||||||
Balance at December 31, 2010
|
$
|
14,470
|
|
|
$
|
123,809
|
|
|
$
|
2,519,706
|
|
|
$
|
(275,351
|
)
|
|
(35,551,475
|
)
|
|
$
|
(1,383,212
|
)
|
|
$
|
3,733
|
|
Net income
|
|
|
|
|
266,866
|
|
|
|
|
|
|
|
|
(738
|
)
|
|||||||||||
Cumulative translation adjustment
|
|
|
|
|
|
|
(36,581
|
)
|
|
|
|
|
|
|
||||||||||||
Gains on derivatives qualifying as hedges; net of tax $(3,504)
|
|
|
|
|
|
|
8,420
|
|
|
|
|
|
|
|
||||||||||||
Pension liability and postretirement adjustment; net of tax $33,171
|
|
|
|
|
|
|
(71,797
|
)
|
|
|
|
|
|
|
||||||||||||
Cash dividends declared ($1.16 per share)
|
|
|
|
|
(93,679
|
)
|
|
|
|
|
|
|
|
|
||||||||||||
Stock options
|
|
|
517
|
|
|
|
|
|
|
385,405
|
|
|
15,018
|
|
|
|
||||||||||
Vested restricted stock units and awards
|
|
|
(16,284
|
)
|
|
|
|
|
|
190,813
|
|
|
7,449
|
|
|
|
||||||||||
Stock-based compensation
|
|
|
20,589
|
|
|
|
|
|
|
134,625
|
|
|
4,472
|
|
|
|
||||||||||
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Balance at December 31, 2011
|
$
|
14,470
|
|
|
$
|
128,631
|
|
|
$
|
2,692,893
|
|
|
$
|
(375,309
|
)
|
|
(34,840,632
|
)
|
|
$
|
(1,356,273
|
)
|
|
$
|
2,995
|
|
Net income
|
|
|
|
|
254,134
|
|
|
|
|
|
|
|
|
752
|
|
|||||||||||
Cumulative translation adjustment
|
|
|
|
|
|
|
17,687
|
|
|
|
|
|
|
|
||||||||||||
Losses on derivatives qualifying as hedges; net of tax $1,327
|
|
|
|
|
|
|
(4,455
|
)
|
|
|
|
|
|
|
||||||||||||
Pension liability and postretirement adjustment; net of tax $11,696
|
|
|
|
|
|
|
(41,548
|
)
|
|
|
|
|
|
|
||||||||||||
Cash dividends declared ($1.30 per share)
|
|
|
|
|
(105,861
|
)
|
|
|
|
|
|
|
|
|
||||||||||||
Stock options/SSARs
|
|
|
4,248
|
|
|
|
|
|
|
336,296
|
|
|
13,144
|
|
|
|
||||||||||
Vested restricted stock units and awards
|
|
|
(23,113
|
)
|
|
|
|
|
|
263,645
|
|
|
10,298
|
|
|
|
||||||||||
Stock-based compensation
|
|
|
17,738
|
|
|
|
|
|
|
105,725
|
|
|
2,124
|
|
|
|
||||||||||
Balance at December 31, 2012
|
$
|
14,470
|
|
|
$
|
127,504
|
|
|
$
|
2,841,166
|
|
|
$
|
(403,625
|
)
|
|
(34,134,966
|
)
|
|
$
|
(1,330,707
|
)
|
|
$
|
3,747
|
|
Net income
|
|
|
|
|
353,544
|
|
|
|
|
|
|
|
|
232
|
|
|||||||||||
Cumulative translation adjustment
|
|
|
|
|
|
|
(10,556
|
)
|
|
|
|
|
|
|
||||||||||||
Losses on derivatives qualifying as hedges; net of tax $429
|
|
|
|
|
|
|
(3,794
|
)
|
|
|
|
|
|
|
||||||||||||
Pension liability and postretirement adjustment; net of tax $22,778
|
|
|
|
|
|
|
25,264
|
|
|
|
|
|
|
|
||||||||||||
Cash dividends declared ($1.46 per share)
|
|
|
|
|
(119,053
|
)
|
|
|
|
|
|
|
|
|
||||||||||||
Stock options
|
|
|
10,395
|
|
|
|
|
|
|
157,403
|
|
|
6,196
|
|
|
|
||||||||||
Treasury share repurchases
|
|
|
|
|
|
|
|
|
(655,907
|
)
|
|
(51,363
|
)
|
|
|
|||||||||||
Vested restricted stock units and awards
|
|
|
(26,735
|
)
|
|
|
|
|
|
159,559
|
|
|
6,277
|
|
|
|
||||||||||
Stock-based compensation
|
|
|
20,297
|
|
|
|
|
|
|
96,317
|
|
|
3,792
|
|
|
|
||||||||||
Balance at December 31, 2013
|
$
|
14,470
|
|
|
$
|
131,461
|
|
|
$
|
3,075,657
|
|
|
$
|
(392,711
|
)
|
|
(34,377,594
|
)
|
|
$
|
(1,365,805
|
)
|
|
$
|
3,979
|
|
|
December 31,
|
||||||
(DOLLARS IN THOUSANDS)
|
2013
|
|
2012
|
||||
Raw materials
|
$
|
252,457
|
|
|
$
|
256,728
|
|
Work in process
|
6,658
|
|
|
7,804
|
|
||
Finished goods
|
274,691
|
|
|
276,126
|
|
||
Total
|
$
|
533,806
|
|
|
$
|
540,658
|
|
|
Number of Shares
|
|||||||
(SHARES IN THOUSANDS)
|
2013
|
|
2012
|
|
2011
|
|||
Basic
|
81,322
|
|
|
81,108
|
|
|
80,456
|
|
Assumed dilution under stock plans
|
608
|
|
|
725
|
|
|
1,011
|
|
Diluted
|
81,930
|
|
|
81,833
|
|
|
81,467
|
|
(DOLLARS IN THOUSANDS)
|
Employee-
Related
|
|
Pension
|
|
Asset -
Related/and
Other
|
|
Total
|
||||||||
Balance at January 1, 2011
|
$
|
3,977
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,977
|
|
Additional charges (reversals), net
|
8,677
|
|
|
3,877
|
|
|
618
|
|
|
13,172
|
|
||||
Non-cash charges
|
—
|
|
|
(3,139
|
)
|
|
—
|
|
|
(3,139
|
)
|
||||
Payments and other costs
|
(1,880
|
)
|
|
(738
|
)
|
|
(618
|
)
|
|
(3,236
|
)
|
||||
Balance at December 31, 2011
|
10,774
|
|
|
—
|
|
|
—
|
|
|
10,774
|
|
||||
Additional charges (reversals), net
|
1,376
|
|
|
292
|
|
|
—
|
|
|
1,668
|
|
||||
Non-cash charges
|
—
|
|
|
(292
|
)
|
|
—
|
|
|
(292
|
)
|
||||
Payments and other costs
|
(9,001
|
)
|
|
—
|
|
|
—
|
|
|
(9,001
|
)
|
||||
Balance at December 31, 2012(1)
|
3,149
|
|
|
—
|
|
|
—
|
|
|
3,149
|
|
||||
Additional charges (reversals), net
|
2,151
|
|
|
—
|
|
|
5,250
|
|
|
7,401
|
|
||||
Non-cash charges
|
—
|
|
|
—
|
|
|
(5,250
|
)
|
|
(5,250
|
)
|
||||
Payments and other costs
|
(3,184
|
)
|
|
—
|
|
|
—
|
|
|
(3,184
|
)
|
||||
Balance at December 31, 2013
|
$
|
2,116
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,116
|
|
(1)
|
$0.6 million
of the remaining employee-related liability is classified in Other liabilities as of
December 31, 2012
in the Consolidated Balance Sheet.
|
(DOLLARS IN THOUSANDS)
|
December 31,
|
||||||
2013
|
|
2012
|
|||||
Asset Type
|
|
|
|
||||
Land
|
$
|
20,723
|
|
|
$
|
24,183
|
|
Buildings and improvements
|
432,978
|
|
|
376,656
|
|
||
Machinery and equipment
|
952,103
|
|
|
877,213
|
|
||
Information technology
|
254,961
|
|
|
247,298
|
|
||
Construction in process
|
97,218
|
|
|
141,667
|
|
||
|
1,757,983
|
|
|
1,667,017
|
|
||
Accumulated depreciation
|
(1,070,768
|
)
|
|
(1,012,376
|
)
|
||
|
$
|
687,215
|
|
|
$
|
654,641
|
|
(DOLLARS IN THOUSANDS)
|
|
December 31, 2013 and 2012
|
||
Flavors
|
|
$
|
319,479
|
|
Fragrances
|
|
346,103
|
|
|
Total
|
|
$
|
665,582
|
|
|
December 31,
|
||||||
(DOLLARS IN THOUSANDS)
|
2013
|
|
2012
|
||||
Gross carrying value
(1)
|
$
|
165,406
|
|
|
$
|
165,406
|
|
Accumulated amortization
|
(134,791
|
)
|
|
(128,718
|
)
|
||
Total
|
$
|
30,615
|
|
|
$
|
36,688
|
|
(1)
|
Includes patents, trademarks and other intellectual property, valued at acquisition.
|
|
December 31,
|
||||||
(DOLLARS IN THOUSANDS)
|
2013
|
|
2012
|
||||
Overfunded pension plans
|
$
|
14,058
|
|
|
$
|
33,345
|
|
Cash surrender value of life insurance contracts
|
56,292
|
|
|
51,391
|
|
||
Other
|
70,629
|
|
|
74,784
|
|
||
Total
|
$
|
140,979
|
|
|
$
|
159,520
|
|
|
December 31,
|
||||||
(DOLLARS IN THOUSANDS)
|
2013
|
|
2012
|
||||
Accrued payrolls and bonuses
|
$
|
105,816
|
|
|
$
|
80,027
|
|
VAT payable
|
23,448
|
|
|
30,129
|
|
||
Interest payable
|
12,709
|
|
|
14,788
|
|
||
Current pension and other postretirement benefit obligation
|
11,891
|
|
|
13,503
|
|
||
Accrued insurance (including workers’ compensation)
|
9,777
|
|
|
11,016
|
|
||
Other
|
135,987
|
|
|
127,923
|
|
||
Total
|
$
|
299,628
|
|
|
$
|
277,386
|
|
(DOLLARS IN THOUSANDS)
|
Rate
|
|
Maturities
|
|
2013
|
|
2012
|
|||||
Senior notes — 2007
|
6.40
|
%
|
|
2017-27
|
|
$
|
500,000
|
|
|
$
|
500,000
|
|
Senior notes — 2006
|
6.14
|
%
|
|
2016
|
|
125,000
|
|
|
225,000
|
|
||
Senior notes — 2013
|
3.20
|
%
|
|
2023
|
|
299,736
|
|
|
—
|
|
||
Credit facilities
|
1.41
|
%
|
|
2016
|
|
—
|
|
|
296,748
|
|
||
Bank overdrafts and other
|
|
|
|
|
|
984
|
|
|
399
|
|
||
Deferred realized gains on interest rate swaps
|
|
|
|
|
7,094
|
|
|
9,028
|
|
|||
|
|
|
|
|
932,814
|
|
|
1,031,175
|
|
|||
Less: Current portion of long-term debt
|
|
|
|
|
(149
|
)
|
|
(150,071
|
)
|
|||
|
|
|
|
|
$
|
932,665
|
|
|
$
|
881,104
|
|
|
December 31,
|
||||||||||
(DOLLARS IN THOUSANDS)
|
2013
|
|
2012
|
|
2011
|
||||||
U.S. loss before taxes
|
$
|
(20,727
|
)
|
|
$
|
(21,308
|
)
|
|
$
|
(5,854
|
)
|
Foreign income before taxes
|
505,937
|
|
|
464,723
|
|
|
379,400
|
|
|||
Total income before taxes
|
$
|
485,210
|
|
|
$
|
443,415
|
|
|
$
|
373,546
|
|
|
December 31,
|
||||||||||
(DOLLARS IN THOUSANDS)
|
2013
|
|
2012
|
|
2011
|
||||||
Current
|
|
|
|
|
|
||||||
Federal
|
$
|
8,658
|
|
|
$
|
8,280
|
|
|
$
|
2,386
|
|
State and local
|
1,246
|
|
|
(456
|
)
|
|
15
|
|
|||
Foreign
(1)
|
122,246
|
|
|
197,335
|
|
|
78,922
|
|
|||
|
132,150
|
|
|
205,159
|
|
|
81,323
|
|
|||
Deferred
|
|
|
|
|
|
||||||
Federal
|
(4,686
|
)
|
|
(4,650
|
)
|
|
11,088
|
|
|||
State and local
|
262
|
|
|
(74
|
)
|
|
5,996
|
|
|||
Foreign
(1)
|
3,940
|
|
|
(11,154
|
)
|
|
8,273
|
|
|||
|
(484
|
)
|
|
(15,878
|
)
|
|
25,357
|
|
|||
Total income taxes
|
$
|
131,666
|
|
|
$
|
189,281
|
|
|
$
|
106,680
|
|
|
December 31,
|
|||||||
|
2013
|
|
2012
|
|
2011
|
|||
Statutory tax rate
|
35.0
|
%
|
|
35.0
|
%
|
|
35.0
|
%
|
Difference in effective tax rate on foreign earnings and remittances
|
(10.2
|
)
|
|
(10.6
|
)
|
|
(10.0
|
)
|
Unrecognized tax benefit, net of reversals
|
1.0
|
|
|
0.9
|
|
|
1.8
|
|
Corporate restructuring of certain foreign subsidiaries
|
—
|
|
|
(2.4
|
)
|
|
—
|
|
Spanish tax charges
|
1.3
|
|
|
16.3
|
|
|
—
|
|
Spanish dividend withholdings
|
—
|
|
|
2.6
|
|
|
—
|
|
State and local taxes
|
0.2
|
|
|
(0.1
|
)
|
|
1.5
|
|
Other, net
|
(0.2
|
)
|
|
1.0
|
|
|
0.3
|
|
Effective tax rate
|
27.1
|
%
|
|
42.7
|
%
|
|
28.6
|
%
|
|
December 31,
|
||||||
(DOLLARS IN THOUSANDS)
|
2013
|
|
2012
|
||||
ASSETS
|
|
|
|
||||
Employee and retiree benefits
|
$
|
136,370
|
|
|
$
|
156,399
|
|
Credit and net operating loss carryforwards
(1)
|
311,562
|
|
|
308,900
|
|
||
Property, plant and equipment, net
|
(699
|
)
|
|
2,643
|
|
||
Trademarks and other
(1)
|
189,536
|
|
|
141,248
|
|
||
Amortizable R&D expenses
|
42,303
|
|
|
30,590
|
|
||
Other, net
|
16,957
|
|
|
25,148
|
|
||
Gross deferred tax assets
|
696,029
|
|
|
664,928
|
|
||
Valuation allowance
(1)
|
(503,990
|
)
|
|
(450,733
|
)
|
||
Total net deferred tax assets
|
$
|
192,039
|
|
|
$
|
214,195
|
|
(1)
|
During 2013, the Company decreased its deferred tax assets by
$30 million
relating to a revision to the 2012 foreign net operating loss carryforwards. The entire decrease of
$30 million
was offset by a corresponding decrease in valuation allowances. During 2012, the Company increased its deferred tax assets by
$129 million
. The 2012 amount includes a revision to the 2011 foreign net operating loss carryforwards in the amount of
$74 million
and a
$55 million
increase related to current year internally generated intangible assets. This entire increase of
$129 million
was offset by a corresponding increase in valuation allowances. These revisions are not considered material to the previously issued financial statements.
|
|
December 31,
|
||||||||||
(DOLLARS IN THOUSANDS)
|
2013
|
|
2012
|
|
2011
|
||||||
Balance of unrecognized tax benefits at beginning of year
|
$
|
41,153
|
|
|
$
|
67,615
|
|
|
$
|
63,928
|
|
Gross amount of increases in unrecognized tax benefits as a result of positions taken during a prior year
|
7,364
|
|
|
22,031
|
|
|
118
|
|
|||
Gross amount of decreases in unrecognized tax benefits as a result of positions taken during a prior year
|
(993
|
)
|
|
(1,853
|
)
|
|
(50
|
)
|
|||
Gross amount of increases in unrecognized tax benefits as a result of positions taken during the current year
|
4,951
|
|
|
3,854
|
|
|
8,300
|
|
|||
The amounts of decreases in unrecognized benefits relating to settlements with taxing authorities
|
(26,712
|
)
|
|
(48,355
|
)
|
|
(2,960
|
)
|
|||
Reduction in unrecognized tax benefits due to the lapse of applicable statute of limitation
|
(4,210
|
)
|
|
(2,139
|
)
|
|
(1,721
|
)
|
|||
Balance of unrecognized tax benefits at end of year
|
$
|
21,553
|
|
|
$
|
41,153
|
|
|
$
|
67,615
|
|
|
December 31,
|
||||||||||
(DOLLARS IN THOUSANDS)
|
2013
|
|
2012
|
|
2011
|
||||||
Equity-based awards
|
$
|
23,736
|
|
|
$
|
19,716
|
|
|
$
|
20,547
|
|
Liability-based awards
|
4,042
|
|
|
3,294
|
|
|
3,044
|
|
|||
Total stock-based compensation
|
27,778
|
|
|
23,010
|
|
|
23,591
|
|
|||
Less tax benefit
|
(8,456
|
)
|
|
(7,228
|
)
|
|
(7,730
|
)
|
|||
Total stock-based compensation, net of tax
|
$
|
19,322
|
|
|
$
|
15,782
|
|
|
$
|
15,861
|
|
|
2012
|
|
2011
|
||||
Weighted average fair value of SSARs granted during the period
|
$
|
10.39
|
|
|
$
|
11.47
|
|
Assumptions:
|
|
|
|
||||
Risk-free interest rate
|
0.9
|
%
|
|
1.7
|
%
|
||
Expected volatility
|
22.5
|
%
|
|
23.2
|
%
|
||
Expected dividend yield
|
2.1
|
%
|
|
2.1
|
%
|
||
Expected life, in years
|
5
|
|
|
5
|
|
||
Termination rate
|
1.05
|
%
|
|
0.99
|
%
|
||
Exercise multiple
|
1.44
|
|
|
1.43
|
|
(SHARE AMOUNTS IN THOUSANDS)
|
Shares Subject to
SSARs/Options
|
|
Weighted
Average Exercise
Price
|
|
SSARs/
Options
Exercisable
|
||||
Balance at December 31, 2012
|
606
|
|
|
$
|
44.68
|
|
|
320
|
|
Exercised
|
(268
|
)
|
|
$
|
39.26
|
|
|
|
|
Cancelled
|
(23
|
)
|
|
$
|
35.25
|
|
|
|
|
Balance at December 31, 2013
|
315
|
|
|
$
|
49.96
|
|
|
183
|
|
Price Range
|
Number
Outstanding
(in thousands)
|
|
Weighted Average
Remaining
Contractual Life
(in years)
|
|
Weighted
Average
Exercise Price
|
|
Aggregate
Intrinsic Value
(in thousands)
|
|||||
$26 – $30
|
15
|
|
|
4.8
|
|
$
|
30.48
|
|
|
|
||
$31 – $35
|
34
|
|
|
1.3
|
|
$
|
35.01
|
|
|
|
||
$36 – $40
|
23
|
|
|
1.3
|
|
$
|
37.91
|
|
|
|
||
$41 – $50
|
81
|
|
|
2.8
|
|
$
|
44.05
|
|
|
|
||
$51 – $60
|
84
|
|
|
4.6
|
|
$
|
57.17
|
|
|
|
||
$61 – $65
|
78
|
|
|
4.4
|
|
$
|
62.13
|
|
|
|
||
|
315
|
|
|
|
|
$
|
49.96
|
|
|
$
|
11,350
|
|
Price Range
|
Number
Exercisable
(in thousands)
|
|
Weighted Average
Remaining
Contractual Life
(in years)
|
|
Weighted
Average
Exercise Price
|
|
Aggregate
Intrinsic Value
(in thousands)
|
|||||
$26 – $30
|
15
|
|
|
4.8
|
|
$
|
30.48
|
|
|
|
||
$31 – $35
|
34
|
|
|
1.3
|
|
$
|
35.01
|
|
|
|
||
$36 – $40
|
23
|
|
|
1.3
|
|
$
|
37.91
|
|
|
|
||
$41 – $50
|
81
|
|
|
2.8
|
|
$
|
44.05
|
|
|
|
||
$51 – $55
|
30
|
|
|
3.1
|
|
$
|
51.34
|
|
|
|
||
|
183
|
|
|
|
|
$
|
41.70
|
|
|
$
|
8,108
|
|
(SHARE AMOUNTS IN THOUSANDS)
|
Number of
Shares
|
|
Weighted Average
Grant Date Fair
Value Per Share
|
|||
Balance at December 31, 2012
|
619
|
|
|
$
|
54.09
|
|
Granted
|
188
|
|
|
$
|
73.32
|
|
Vested
|
(248
|
)
|
|
$
|
44.94
|
|
Forfeited
|
(1
|
)
|
|
$
|
52.27
|
|
Balance at December 31, 2013
|
558
|
|
|
$
|
64.86
|
|
(SHARE AMOUNTS IN THOUSANDS)
|
Number of
Shares
|
|
Weighted Average
Grant Date Fair
Value Per Share
|
|||
Balance at December 31, 2012
|
537
|
|
|
$
|
28.30
|
|
Granted
|
101
|
|
|
$
|
77.19
|
|
Vested
|
(149
|
)
|
|
$
|
22.46
|
|
Forfeited
|
(13
|
)
|
|
$
|
61.14
|
|
Balance at December 31, 2013
|
476
|
|
|
$
|
60.58
|
|
(SHARE AMOUNTS IN THOUSANDS)
|
Cash RSUs
|
|
Weighted Average Fair
Value Per Share
|
|||
Balance at December 31, 2012
|
120
|
|
|
$
|
65.96
|
|
Granted
|
37
|
|
|
$
|
85.94
|
|
Vested
|
(44
|
)
|
|
$
|
76.49
|
|
Cancelled
|
(1
|
)
|
|
$
|
79.04
|
|
Balance at December 31, 2013
|
112
|
|
|
$
|
85.94
|
|
|
December 31,
|
||||||||||
(DOLLARS IN THOUSANDS)
|
2013
|
|
2012
|
|
2011
|
||||||
Net sales
|
|
|
|
|
|
||||||
Flavors
|
$
|
1,422,739
|
|
|
$
|
1,378,377
|
|
|
$
|
1,347,340
|
|
Fragrances
|
1,530,157
|
|
|
1,443,069
|
|
|
1,440,678
|
|
|||
Consolidated
|
$
|
2,952,896
|
|
|
$
|
2,821,446
|
|
|
$
|
2,788,018
|
|
|
|
|
|
|
|
||||||
|
December 31,
|
|
|
||||||||
(DOLLARS IN THOUSANDS)
|
2013
|
|
2012
|
|
|
||||||
Segment assets
|
|
|
|
|
|
||||||
Flavors
|
$
|
1,573,737
|
|
|
$
|
1,421,126
|
|
|
|
||
Fragrances
|
1,623,033
|
|
|
1,517,447
|
|
|
|
||||
Global assets
|
134,961
|
|
|
307,619
|
|
|
|
||||
Consolidated
|
$
|
3,331,731
|
|
|
$
|
3,246,192
|
|
|
|
||
|
|
|
|
|
|
||||||
|
December 31,
|
||||||||||
(DOLLARS IN THOUSANDS)
|
2013
|
|
2012
|
|
2011
|
||||||
Segment profit:
|
|
|
|
|
|
||||||
Flavors
|
$
|
323,562
|
|
|
$
|
298,326
|
|
|
$
|
284,246
|
|
Fragrances
|
283,651
|
|
|
238,379
|
|
|
226,560
|
|
|||
Global expenses
|
(66,942
|
)
|
|
(48,419
|
)
|
|
(36,410
|
)
|
|||
Restructuring and other charges, net
|
(2,151
|
)
|
|
(1,668
|
)
|
|
(13,172
|
)
|
|||
Mane patent litigation settlement
|
—
|
|
|
—
|
|
|
(33,495
|
)
|
|||
Spanish capital tax charge
(1)
|
(13,011
|
)
|
|
—
|
|
|
—
|
|
|||
Operational improvement initiative costs
(2)
|
(8,770
|
)
|
|
—
|
|
|
—
|
|
|||
Operating Profit
|
516,339
|
|
|
486,618
|
|
|
427,729
|
|
|||
Interest expense
|
(46,767
|
)
|
|
(41,753
|
)
|
|
(44,639
|
)
|
|||
Other income (expense), net
(3)
|
15,638
|
|
|
(1,450
|
)
|
|
(9,544
|
)
|
|||
Income before taxes
|
$
|
485,210
|
|
|
$
|
443,415
|
|
|
$
|
373,546
|
|
Profit margin
|
|
|
|
|
|
||||||
Flavors
|
22.7
|
%
|
|
21.6
|
%
|
|
21.1
|
%
|
|||
Fragrances
|
18.5
|
%
|
|
16.5
|
%
|
|
15.7
|
%
|
|||
Consolidated
|
17.5
|
%
|
|
17.2
|
%
|
|
15.3
|
%
|
|
Capital Expenditures
|
|
Depreciation and Amortization
|
||||||||||||||||||||
(DOLLARS IN THOUSANDS)
|
2013
|
|
2012
|
|
2011
|
|
2013
|
|
2012
|
|
2011
|
||||||||||||
Flavors
|
$
|
108,215
|
|
|
$
|
90,309
|
|
|
$
|
69,675
|
|
|
$
|
33,662
|
|
|
$
|
30,816
|
|
|
$
|
31,140
|
|
Fragrances
|
17,616
|
|
|
26,069
|
|
|
50,454
|
|
|
39,716
|
|
|
42,987
|
|
|
41,941
|
|
||||||
Unallocated assets
|
8,326
|
|
|
9,762
|
|
|
7,328
|
|
|
9,849
|
|
|
2,864
|
|
|
2,246
|
|
||||||
Consolidated
|
$
|
134,157
|
|
|
$
|
126,140
|
|
|
$
|
127,457
|
|
|
$
|
83,227
|
|
|
$
|
76,667
|
|
|
$
|
75,327
|
|
|
Net Sales by Geographic Area
|
||||||||||
(DOLLARS IN THOUSANDS)
|
2013
|
|
2012
|
|
2011
|
||||||
Europe, Africa and Middle East
|
$
|
971,921
|
|
|
$
|
912,768
|
|
|
$
|
956,977
|
|
Greater Asia
|
823,504
|
|
|
771,877
|
|
|
744,810
|
|
|||
North America
|
680,840
|
|
|
694,430
|
|
|
678,763
|
|
|||
Latin America
|
476,631
|
|
|
442,371
|
|
|
407,468
|
|
|||
Consolidated
|
$
|
2,952,896
|
|
|
$
|
2,821,446
|
|
|
$
|
2,788,018
|
|
|
U.S. Plans
|
|
Non-U.S. Plans
|
||||||||||||||||||||
(DOLLARS IN THOUSANDS)
|
2013
|
|
2012
|
|
2011
|
|
2013
|
|
2012
|
|
2011
|
||||||||||||
Components of net periodic benefit cost
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Service cost for benefits earned
|
$
|
3,644
|
|
|
$
|
3,121
|
|
|
$
|
3,602
|
|
|
$
|
16,423
|
|
|
$
|
12,585
|
|
|
$
|
10,560
|
|
Interest cost on projected benefit obligation
|
23,284
|
|
|
24,314
|
|
|
24,373
|
|
|
31,103
|
|
|
30,944
|
|
|
34,033
|
|
||||||
Expected return on plan assets
|
(26,320
|
)
|
|
(24,329
|
)
|
|
(25,070
|
)
|
|
(47,793
|
)
|
|
(43,728
|
)
|
|
(45,386
|
)
|
||||||
Net amortization of deferrals
|
24,600
|
|
|
20,180
|
|
|
11,888
|
|
|
9,337
|
|
|
6,443
|
|
|
5,360
|
|
||||||
Settlements and curtailments
|
—
|
|
|
—
|
|
|
444
|
|
|
215
|
|
|
873
|
|
|
3,139
|
|
||||||
Special termination benefits
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
738
|
|
||||||
Net periodic benefit cost
|
25,208
|
|
|
23,286
|
|
|
15,237
|
|
|
9,285
|
|
|
7,117
|
|
|
8,444
|
|
||||||
Defined contribution and other retirement plans
|
7,326
|
|
|
7,039
|
|
|
6,550
|
|
|
4,094
|
|
|
4,837
|
|
|
4,113
|
|
||||||
Total expense
|
$
|
32,534
|
|
|
$
|
30,325
|
|
|
$
|
21,787
|
|
|
$
|
13,379
|
|
|
$
|
11,954
|
|
|
$
|
12,557
|
|
Changes in plan assets and benefit obligations recognized in OCI
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net actuarial (gain) loss
|
$
|
(39,754
|
)
|
|
$
|
32,569
|
|
|
|
|
$
|
36,134
|
|
|
$
|
53,469
|
|
|
|
||||
Recognized actuarial loss
|
(24,296
|
)
|
|
(19,810
|
)
|
|
|
|
(9,536
|
)
|
|
(7,181
|
)
|
|
|
||||||||
Prior service cost
|
—
|
|
|
—
|
|
|
|
|
(873
|
)
|
|
—
|
|
|
|
||||||||
Recognized prior service cost
|
(304
|
)
|
|
(370
|
)
|
|
|
|
(15
|
)
|
|
(135
|
)
|
|
|
||||||||
Currency translation adjustment
|
—
|
|
|
—
|
|
|
|
|
5,464
|
|
|
6,068
|
|
|
|
||||||||
Total recognized in OCI (before tax effects)
|
$
|
(64,354
|
)
|
|
$
|
12,389
|
|
|
|
|
$
|
31,174
|
|
|
$
|
52,221
|
|
|
|
|
Postretirement Benefits
|
||||||||||
(DOLLARS IN THOUSANDS)
|
2013
|
|
2012
|
|
2011
|
||||||
Components of net periodic benefit cost
|
|
|
|
|
|
||||||
Service cost for benefits earned
|
$
|
1,526
|
|
|
$
|
1,357
|
|
|
$
|
1,178
|
|
Interest cost on projected benefit obligation
|
4,503
|
|
|
5,656
|
|
|
5,861
|
|
|||
Net amortization and deferrals
|
(3,040
|
)
|
|
(1,770
|
)
|
|
(2,552
|
)
|
|||
Expense
|
$
|
2,989
|
|
|
$
|
5,243
|
|
|
$
|
4,487
|
|
Changes in plan assets and benefit obligations recognized in OCI
|
|
|
|
|
|
||||||
Net actuarial (gain)
|
$
|
(15,524
|
)
|
|
$
|
(10,921
|
)
|
|
|
||
Recognized actuarial loss
|
(1,672
|
)
|
|
(2,951
|
)
|
|
|
||||
Recognized prior service credit
|
4,712
|
|
|
4,721
|
|
|
|
||||
Total recognized in OCI (before tax effects)
|
$
|
(12,484
|
)
|
|
$
|
(9,151
|
)
|
|
|
(DOLLARS IN THOUSANDS)
|
U.S. Plans
|
|
Non-U.S. Plans
|
|
Postretirement
Benefits
|
||||||
Actuarial loss recognition
|
$
|
16,726
|
|
|
$
|
11,867
|
|
|
$
|
734
|
|
Prior service cost (credit) recognition
|
292
|
|
|
(90
|
)
|
|
4,649
|
|
Weighted-average actuarial
assumption used to determine expense
|
U.S. Plans
|
|
Non-U.S. Plans
|
||||||||||||||
2013
|
|
2012
|
|
2011
|
|
2013
|
|
2012
|
|
2011
|
|||||||
Discount rate
|
4.10
|
%
|
|
4.70
|
%
|
|
5.60
|
%
|
|
4.14
|
%
|
|
4.71
|
%
|
|
5.37
|
%
|
Expected return on plan assets
|
7.30
|
%
|
|
7.30
|
%
|
|
7.75
|
%
|
|
6.26
|
%
|
|
6.27
|
%
|
|
6.55
|
%
|
Rate of compensation increase
|
3.25
|
%
|
|
3.25
|
%
|
|
3.25
|
%
|
|
2.73
|
%
|
|
2.88
|
%
|
|
2.66
|
%
|
|
U.S. Plans
|
|
Non-U.S. Plans
|
|
Postretirement Benefits
|
||||||||||||||||||
(DOLLARS IN THOUSANDS)
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||||||
Benefit obligation at beginning of year
|
$
|
573,706
|
|
|
$
|
523,298
|
|
|
$
|
780,164
|
|
|
$
|
670,231
|
|
|
$
|
119,308
|
|
|
$
|
128,719
|
|
Service cost for benefits earned
|
3,644
|
|
|
3,121
|
|
|
16,423
|
|
|
12,585
|
|
|
1,526
|
|
|
1,357
|
|
||||||
Interest cost on projected benefit obligation
|
23,284
|
|
|
24,314
|
|
|
31,103
|
|
|
30,944
|
|
|
4,503
|
|
|
5,656
|
|
||||||
Actuarial (gain) loss
|
(29,875
|
)
|
|
47,547
|
|
|
2,655
|
|
|
76,786
|
|
|
(15,524
|
)
|
|
(10,921
|
)
|
||||||
Plan amendments
|
—
|
|
|
—
|
|
|
(873
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Adjustments for expense/tax contained in service cost
|
—
|
|
|
—
|
|
|
(2,343
|
)
|
|
(2,282
|
)
|
|
—
|
|
|
—
|
|
||||||
Plan participants’ contributions
|
—
|
|
|
—
|
|
|
2,793
|
|
|
2,492
|
|
|
1,022
|
|
|
979
|
|
||||||
Benefits paid
|
(26,157
|
)
|
|
(24,574
|
)
|
|
(27,571
|
)
|
|
(27,234
|
)
|
|
(5,314
|
)
|
|
(6,482
|
)
|
||||||
Curtailments / settlements
|
—
|
|
|
—
|
|
|
(768
|
)
|
|
(2,641
|
)
|
|
—
|
|
|
—
|
|
||||||
Special termination benefits
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Translation adjustments
|
—
|
|
|
—
|
|
|
16,995
|
|
|
19,283
|
|
|
—
|
|
|
—
|
|
||||||
Benefit obligation at end of year
|
$
|
544,602
|
|
|
$
|
573,706
|
|
|
$
|
818,578
|
|
|
$
|
780,164
|
|
|
$
|
105,521
|
|
|
$
|
119,308
|
|
Fair value of plan assets at beginning of year
|
$
|
405,289
|
|
|
$
|
372,142
|
|
|
$
|
776,188
|
|
|
$
|
702,366
|
|
|
|
|
|
||||
Actual return on plan assets
|
36,199
|
|
|
39,306
|
|
|
11,970
|
|
|
64,765
|
|
|
|
|
|
||||||||
Employer contributions
|
33,520
|
|
|
18,415
|
|
|
19,377
|
|
|
16,767
|
|
|
|
|
|
||||||||
Participants’ contributions
|
—
|
|
|
—
|
|
|
2,793
|
|
|
2,492
|
|
|
|
|
|
||||||||
Benefits paid
|
(26,157
|
)
|
|
(24,574
|
)
|
|
(27,571
|
)
|
|
(27,234
|
)
|
|
|
|
|
||||||||
Settlements
|
—
|
|
|
—
|
|
|
(768
|
)
|
|
(2,641
|
)
|
|
|
|
|
||||||||
Translation adjustments
|
—
|
|
|
—
|
|
|
17,681
|
|
|
19,673
|
|
|
|
|
|
||||||||
Fair value of plan assets at end of year
|
$
|
448,851
|
|
|
$
|
405,289
|
|
|
$
|
799,670
|
|
|
$
|
776,188
|
|
|
|
|
|
||||
Funded status at end of year
|
$
|
(95,751
|
)
|
|
$
|
(168,417
|
)
|
|
$
|
(18,908
|
)
|
|
$
|
(3,976
|
)
|
|
|
|
|
|
U.S. Plans
|
|
Non-U.S. Plans
|
||||||||||||
(DOLLARS IN THOUSANDS)
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
Amounts recognized in the balance sheet:
|
|
|
|
|
|
|
|
||||||||
Other assets
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
14,058
|
|
|
$
|
33,345
|
|
Other current liabilities
|
(3,819
|
)
|
|
(3,855
|
)
|
|
(651
|
)
|
|
(621
|
)
|
||||
Retirement liabilities
|
(91,930
|
)
|
|
(164,562
|
)
|
|
(32,315
|
)
|
|
(36,700
|
)
|
||||
Net amount recognized
|
$
|
(95,749
|
)
|
|
$
|
(168,417
|
)
|
|
$
|
(18,908
|
)
|
|
$
|
(3,976
|
)
|
|
U.S. Plans
|
|
Non-U.S. Plans
|
|
Postretirement Benefits
|
||||||||||||||||||
(DOLLARS IN THOUSANDS)
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||||||
Amounts recognized in AOCI consist of:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net actuarial loss
|
$
|
145,105
|
|
|
$
|
209,156
|
|
|
$
|
263,930
|
|
|
$
|
231,857
|
|
|
$
|
13,891
|
|
|
$
|
31,087
|
|
Prior service cost (credit)
|
482
|
|
|
786
|
|
|
(1,330
|
)
|
|
(431
|
)
|
|
(15,007
|
)
|
|
(19,719
|
)
|
||||||
Total AOCI (before tax effects)
|
$
|
145,587
|
|
|
$
|
209,942
|
|
|
$
|
262,600
|
|
|
$
|
231,426
|
|
|
$
|
(1,116
|
)
|
|
$
|
11,368
|
|
|
U.S. Plans
|
|
Non-U.S. Plans
|
||||||||||||
(DOLLARS IN THOUSANDS)
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
Accumulated Benefit Obligation — end of year
|
$
|
536,176
|
|
|
$
|
570,655
|
|
|
$
|
777,188
|
|
|
$
|
745,828
|
|
Information for Pension Plans with an ABO in excess of Plan Assets:
|
|
|
|
|
|
|
|
||||||||
Projected benefit obligation
|
$
|
544,602
|
|
|
$
|
573,706
|
|
|
$
|
43,778
|
|
|
$
|
43,403
|
|
Accumulated benefit obligation
|
536,176
|
|
|
570,655
|
|
|
41,991
|
|
|
41,720
|
|
||||
Fair value of plan assets
|
448,851
|
|
|
405,289
|
|
|
18,669
|
|
|
16,776
|
|
||||
Weighted-average assumptions used to determine obligations at December 31
|
|
|
|
|
|
|
|
||||||||
Discount rate
|
4.70
|
%
|
|
4.10
|
%
|
|
4.18
|
%
|
|
4.14
|
%
|
||||
Rate of compensation increase
|
3.25
|
%
|
|
3.25
|
%
|
|
2.66
|
%
|
|
2.73
|
%
|
(DOLLARS IN THOUSANDS)
|
U.S. Plans
|
|
Non-U.S. Plans
|
|
Postretirement
Benefits
|
||||||
Estimated Future Benefit Payments
|
|
|
|
|
|
||||||
2014
|
28,830
|
|
|
28,783
|
|
|
4,903
|
|
|||
2015
|
30,264
|
|
|
29,184
|
|
|
5,162
|
|
|||
2016
|
31,512
|
|
|
30,043
|
|
|
5,448
|
|
|||
2017
|
32,993
|
|
|
31,559
|
|
|
5,786
|
|
|||
2018
|
34,422
|
|
|
34,010
|
|
|
6,163
|
|
|||
2019 - 2023
|
186,021
|
|
|
181,978
|
|
|
35,326
|
|
|||
Contributions
|
|
|
|
|
|
||||||
Required Company Contributions in the Following Year (2014)
|
$
|
4,136
|
|
|
$
|
20,451
|
|
|
$
|
4,903
|
|
|
U.S. Plans
|
|
Non-U.S. Plans
|
||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||
Percentage of assets invested in:
|
|
|
|
|
|
|
|
||||
Cash and cash equivalents
|
1
|
%
|
|
1
|
%
|
|
2
|
%
|
|
2
|
%
|
Equities
|
48
|
%
|
|
50
|
%
|
|
25
|
%
|
|
22
|
%
|
Fixed income
|
51
|
%
|
|
49
|
%
|
|
59
|
%
|
|
59
|
%
|
Property
|
0
|
%
|
|
0
|
%
|
|
8
|
%
|
|
9
|
%
|
Alternative and other investments
|
0
|
%
|
|
0
|
%
|
|
6
|
%
|
|
8
|
%
|
|
U.S. Plans for the year ended
|
||||||||||||||
|
December 31, 2013
|
||||||||||||||
(DOLLARS IN THOUSANDS)
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Cash Equivalents
|
$
|
—
|
|
|
$
|
5,694
|
|
|
$
|
—
|
|
|
$
|
5,694
|
|
Equity Securities
|
|
|
|
|
|
|
|
||||||||
U.S. Common Stock
|
38,993
|
|
|
—
|
|
|
—
|
|
|
38,993
|
|
||||
Non-U.S. Common Stock
|
343
|
|
|
—
|
|
|
—
|
|
|
343
|
|
||||
Balanced Funds
|
—
|
|
|
8,389
|
|
|
—
|
|
|
8,389
|
|
||||
Pooled Funds
|
—
|
|
|
165,670
|
|
|
—
|
|
|
165,670
|
|
||||
Fixed Income Securities
|
|
|
|
|
|
|
|
||||||||
Government & Government Agency Bonds
|
—
|
|
|
8,262
|
|
|
—
|
|
|
8,262
|
|
||||
Mutual Funds
|
—
|
|
|
158,646
|
|
|
—
|
|
|
158,646
|
|
||||
Corporate Bonds
|
—
|
|
|
54,699
|
|
|
—
|
|
|
54,699
|
|
||||
Municipal Bonds
|
—
|
|
|
7,440
|
|
|
—
|
|
|
7,440
|
|
||||
Total
|
$
|
39,336
|
|
|
$
|
408,800
|
|
|
$
|
—
|
|
|
$
|
448,136
|
|
Receivables
|
|
|
|
|
|
|
$
|
715
|
|
||||||
Total
|
|
|
|
|
|
|
$
|
448,851
|
|
|
U.S. Plans for the year ended
|
||||||||||||||
|
December 31, 2012
|
||||||||||||||
(DOLLARS IN THOUSANDS)
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Cash Equivalents
|
$
|
—
|
|
|
$
|
1,976
|
|
|
$
|
—
|
|
|
$
|
1,976
|
|
Equity Securities
|
|
|
|
|
|
|
|
||||||||
U.S. Common Stock
|
43,338
|
|
|
—
|
|
|
—
|
|
|
43,338
|
|
||||
Non-U.S. Common Stock
|
700
|
|
|
—
|
|
|
—
|
|
|
700
|
|
||||
Balanced Funds
|
—
|
|
|
8,077
|
|
|
—
|
|
|
8,077
|
|
||||
Pooled Funds
|
—
|
|
|
150,372
|
|
|
—
|
|
|
150,372
|
|
||||
Fixed Income Securities
|
|
|
|
|
|
|
|
||||||||
Government & Government Agency Bonds
|
—
|
|
|
6,662
|
|
|
—
|
|
|
6,662
|
|
||||
Mutual Funds
|
—
|
|
|
123,447
|
|
|
—
|
|
|
123,447
|
|
||||
Corporate Bonds
|
—
|
|
|
61,382
|
|
|
—
|
|
|
61,382
|
|
||||
Municipal Bonds
|
—
|
|
|
8,696
|
|
|
—
|
|
|
8,696
|
|
||||
Asset Backed Securities
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Total
|
$
|
44,038
|
|
|
$
|
360,612
|
|
|
$
|
—
|
|
|
$
|
404,650
|
|
Receivables
|
|
|
|
|
|
|
$
|
639
|
|
||||||
Total
|
|
|
|
|
|
|
$
|
405,289
|
|
|
Non-U.S. Plans for the year ended
|
||||||||||||||
|
December 31, 2013
|
||||||||||||||
(DOLLARS IN THOUSANDS)
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Cash
|
$
|
11,956
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
11,956
|
|
Equity Securities
|
|
|
|
|
|
|
|
||||||||
U.S. Large Cap
|
40,274
|
|
|
—
|
|
|
—
|
|
|
40,274
|
|
||||
Non-U.S. Large Cap
|
92,551
|
|
|
12,783
|
|
|
—
|
|
|
105,334
|
|
||||
Non-U.S. Mid Cap
|
107
|
|
|
—
|
|
|
—
|
|
|
107
|
|
||||
Non-U.S. Small Cap
|
29
|
|
|
—
|
|
|
—
|
|
|
29
|
|
||||
Emerging Markets
|
57,689
|
|
|
—
|
|
|
—
|
|
|
57,689
|
|
||||
Fixed Income Securities
|
|
|
|
|
|
|
|
||||||||
U.S. Treasuries/Government Bonds
|
328
|
|
|
—
|
|
|
—
|
|
|
328
|
|
||||
U.S. Corporate Bonds
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Non-U.S. Treasuries/Government Bonds
|
120,651
|
|
|
75,131
|
|
|
—
|
|
|
195,782
|
|
||||
Non-U.S. Corporate Bonds
|
65,443
|
|
|
189,707
|
|
|
—
|
|
|
255,150
|
|
||||
Non-U.S. Mortgage-Backed Securities
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Non-U.S. Asset-Backed Securities
|
—
|
|
|
17,895
|
|
|
—
|
|
|
17,895
|
|
||||
Non-U.S. Other Fixed Income
|
1,205
|
|
|
—
|
|
|
—
|
|
|
1,205
|
|
||||
Alternative Types of Investments
|
|
|
|
|
|
|
|
||||||||
Insurance Contracts
|
334
|
|
|
—
|
|
|
—
|
|
|
334
|
|
||||
Hedge Funds
|
—
|
|
|
—
|
|
|
15,280
|
|
|
15,280
|
|
||||
Other
|
928
|
|
|
—
|
|
|
—
|
|
|
928
|
|
||||
Absolute Return Funds
|
—
|
|
|
31,253
|
|
|
—
|
|
|
31,253
|
|
||||
Private Equity Funds
|
—
|
|
|
—
|
|
|
7
|
|
|
7
|
|
||||
Real Estate
|
|
|
|
|
|
|
|
||||||||
Non-U.S. Real Estate
|
—
|
|
|
64,898
|
|
|
1,221
|
|
|
66,119
|
|
||||
Total
|
$
|
391,495
|
|
|
$
|
391,667
|
|
|
$
|
16,508
|
|
|
$
|
799,670
|
|
|
Non-U.S. Plans for the year ended
|
||||||||||||||
|
December 31, 2012
|
||||||||||||||
(DOLLARS IN THOUSANDS)
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Cash
|
$
|
14,075
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
14,075
|
|
Equity Securities
|
|
|
|
|
|
|
|
||||||||
U.S. Large Cap
|
28,009
|
|
|
—
|
|
|
—
|
|
|
28,009
|
|
||||
Non-U.S. Large Cap
|
116,473
|
|
|
—
|
|
|
—
|
|
|
116,473
|
|
||||
Non-U.S. Mid Cap
|
132
|
|
|
—
|
|
|
—
|
|
|
132
|
|
||||
Non-U.S. Small Cap
|
35
|
|
|
—
|
|
|
—
|
|
|
35
|
|
||||
Emerging Markets
|
25,876
|
|
|
—
|
|
|
—
|
|
|
25,876
|
|
||||
Fixed Income Securities
|
|
|
|
|
|
|
|
||||||||
U.S. Treasuries/Government Bonds
|
52
|
|
|
—
|
|
|
—
|
|
|
52
|
|
||||
U.S. Corporate Bonds
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Non-U.S. Treasuries/Government Bonds
|
131,764
|
|
|
68,453
|
|
|
—
|
|
|
200,217
|
|
||||
Non-U.S. Corporate Bonds
|
64,583
|
|
|
182,068
|
|
|
—
|
|
|
246,651
|
|
||||
Non-U.S. Mortgage-Backed Securities
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Non-U.S. Asset-Backed Securities
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Non-U.S. Other Fixed Income
|
1,460
|
|
|
9,944
|
|
|
—
|
|
|
11,404
|
|
||||
Alternative Types of Investments
|
|
|
|
|
|
|
|
||||||||
Insurance Contracts
|
945
|
|
|
—
|
|
|
—
|
|
|
945
|
|
||||
Hedge Funds
|
—
|
|
|
—
|
|
|
14,436
|
|
|
14,436
|
|
||||
Private Equity
|
—
|
|
|
—
|
|
|
7
|
|
|
7
|
|
||||
Absolute Return Funds
|
—
|
|
|
51,156
|
|
|
—
|
|
|
51,156
|
|
||||
Real Estate
|
|
|
|
|
|
|
|
||||||||
Non-U.S. Real Estate
|
—
|
|
|
65,468
|
|
|
1,252
|
|
|
66,720
|
|
||||
Total
|
$
|
383,404
|
|
|
$
|
377,089
|
|
|
$
|
15,695
|
|
|
$
|
776,188
|
|
|
Non-U.S. Plans
|
||||||||||||||
(DOLLARS IN THOUSANDS)
|
Real
Estate
|
|
Private
Equity
|
|
Hedge
Funds
|
|
Total
|
||||||||
Ending balance as of December 31, 2012
|
$
|
1,252
|
|
|
$
|
7
|
|
|
$
|
14,436
|
|
|
$
|
15,695
|
|
Actual return on plan assets
|
(31
|
)
|
|
—
|
|
|
844
|
|
|
813
|
|
||||
Purchases, sales and settlements
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Ending balance as of December 31, 2013
|
$
|
1,221
|
|
|
$
|
7
|
|
|
$
|
15,280
|
|
|
$
|
16,508
|
|
|
Expense
|
|
Liability
|
||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||
Discount rate
|
4.00
|
%
|
|
4.60
|
%
|
|
4.80
|
%
|
|
4.00
|
%
|
Current medical cost trend rate
|
6.75
|
%
|
|
7.00
|
%
|
|
6.50
|
%
|
|
6.75
|
%
|
Ultimate medical cost trend rate
|
4.75
|
%
|
|
4.75
|
%
|
|
4.75
|
%
|
|
4.75
|
%
|
Medical cost trend rate decreases to ultimate rate in year
|
2021
|
|
|
2021
|
|
|
2021
|
|
|
2021
|
|
|
Sensitivity of Disclosures to Changes in Selected Assumptions
|
||||||||||||||
|
25 BP Decrease in Discount
Rate
|
|
25 BP Decrease in
Discount Rate
|
|
25 BP Decrease in
Long-Term Rate of
Return
|
||||||||||
(DOLLARS IN THOUSANDS)
|
Change in
PBO
|
|
Change in
ABO
|
|
Change in
pension expense
|
|
Change in pension
expense
|
||||||||
U.S. Pension Plans
|
$
|
15,781
|
|
|
$
|
15,460
|
|
|
$
|
1,085
|
|
|
$
|
947
|
|
Non-U.S. Pension Plans
|
$
|
36,246
|
|
|
$
|
32,866
|
|
|
$
|
2,932
|
|
|
$
|
1,989
|
|
Postretirement Benefit Plan
|
N/A
|
|
|
$
|
3,225
|
|
|
$
|
190
|
|
|
N/A
|
|
•
|
Level 1 — Quoted prices for
identical
instruments in active markets.
|
•
|
Level 2 — Quoted prices for
similar
instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets.
|
•
|
Level 3 — Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable
.
|
|
2013
|
|
2012
|
||||||||||||
(DOLLARS IN THOUSANDS)
|
Carrying
Amount
|
|
Fair
Value
|
|
Carrying
Amount
|
|
Fair
Value
|
||||||||
Cash and cash equivalents
(1)
|
$
|
405,505
|
|
|
$
|
405,505
|
|
|
$
|
324,422
|
|
|
$
|
324,422
|
|
Credit facilities and bank overdrafts
(2)
|
984
|
|
|
984
|
|
|
297,147
|
|
|
297,147
|
|
||||
Long-term debt:
(3)
|
|
|
|
|
|
|
|
||||||||
Senior notes — 2007
|
500,000
|
|
|
590,024
|
|
|
500,000
|
|
|
634,000
|
|
||||
Senior notes — 2006
|
125,000
|
|
|
139,146
|
|
|
225,000
|
|
|
248,000
|
|
||||
Senior notes — 2013
|
299,736
|
|
|
278,770
|
|
|
—
|
|
|
—
|
|
(1)
|
The carrying amount of cash and cash equivalents approximates fair value due to the short maturity of those instruments.
|
(2)
|
The carrying amount of our credit facilities and bank overdrafts approximates fair value as the interest rate is reset frequently based on current market rates as well as the short maturity of those instruments.
|
(3)
|
The fair value of our long-term debt was calculated using discounted cash flows applying current interest rates and current credit spreads based on our own credit risk.
|
(DOLLARS IN THOUSANDS)
|
December 31, 2013
|
|
December 31, 2012
|
||||
Forward currency contracts
|
$
|
255,500
|
|
|
$
|
143,483
|
|
Interest rate swaps
|
$
|
375,000
|
|
|
$
|
100,000
|
|
|
December 31, 2013
|
||||||||||
|
Fair Value of
Derivatives
Designated as
Hedging
Instruments
|
|
Fair Value of
Derivatives Not
Designated as
Hedging
Instruments
|
|
Total Fair
Value
|
||||||
Derivative assets
(a)
|
|
|
|
|
|
||||||
Foreign currency contracts
|
$
|
580
|
|
|
$
|
8,896
|
|
|
$
|
9,476
|
|
Interest rate swaps
|
670
|
|
|
—
|
|
|
670
|
|
|||
|
$
|
1,250
|
|
|
$
|
8,896
|
|
|
$
|
10,146
|
|
Derivative liabilities
(b)
|
|
|
|
|
|
||||||
Foreign currency contracts
|
$
|
6,024
|
|
|
$
|
2,909
|
|
|
$
|
8,933
|
|
|
|
|
|
|
|
||||||
|
December 31, 2012
|
||||||||||
|
Fair Value of
Derivatives
Designated as
Hedging
Instruments
|
|
Fair Value of
Derivatives Not
Designated as
Hedging
Instruments
|
|
Total Fair
Value
|
||||||
Derivative assets
(a)
|
|
|
|
|
|
||||||
Foreign currency contracts
|
$
|
676
|
|
|
$
|
2,535
|
|
|
$
|
3,211
|
|
Interest rate swaps
|
328
|
|
|
—
|
|
|
328
|
|
|||
|
$
|
1,004
|
|
|
$
|
2,535
|
|
|
$
|
3,539
|
|
Derivative liabilities
(b)
|
|
|
|
|
|
||||||
Foreign currency contracts
|
$
|
5,251
|
|
|
$
|
278
|
|
|
$
|
5,529
|
|
(a)
|
Derivative assets are recorded to Prepaid expenses and other current assets in the Consolidated Balance Sheet.
|
(b)
|
Derivative liabilities are recorded as Other current liabilities in the Consolidated Balance Sheet.
|
Derivatives Not Designated as Hedging Instruments
|
Amount of Gain
For the years ended
December 31,
|
|
Location of Gain
Recognized in
Income on Derivative
|
||||||
2013
|
|
2012
|
|
||||||
Foreign currency contract
|
$
|
16,479
|
|
|
$
|
17,847
|
|
|
Other (income) expense, net
|
|
Amount of Gain or
(Loss) Recognized in
OCI on Derivative
(Effective Portion)
|
|
Location of Gain or
(Loss) Reclassified
from Accumulated
OCI into Income
(Effective Portion)
|
|
Amount of Gain or
(Loss) Reclassified
from Accumulated
OCI into Income
(Effective Portion)
|
||||||||||||
|
For the years ended
December 31,
|
|
|
For the years ended
December 31,
|
|||||||||||||
|
2013
|
|
2012
|
|
|
2013
|
|
2012
|
|||||||||
Derivatives in Cash Flow Hedging Relationships:
|
|
|
|
|
|
|
|
|
|
||||||||
Cross currency swap
(1)
|
$
|
—
|
|
|
$
|
1,975
|
|
|
Other (income) expense, net
|
|
$
|
(333
|
)
|
|
$
|
(2,787
|
)
|
Forward currency contract
|
(1,308
|
)
|
|
(6,523
|
)
|
|
Cost of goods sold
|
|
(624
|
)
|
|
4,206
|
|
||||
Interest rate swaps
(2)
|
(2,530
|
)
|
|
—
|
|
|
Interest expense
|
|
(205
|
)
|
|
—
|
|
||||
Derivatives in Net Investment Hedging Relationships:
|
|
|
|
|
|
|
|
|
|
||||||||
Forward currency contract
|
(1,330
|
)
|
|
(395
|
)
|
|
N/A
|
|
—
|
|
|
—
|
|
||||
Total
|
$
|
(5,168
|
)
|
|
$
|
(4,943
|
)
|
|
|
|
$
|
(1,162
|
)
|
|
$
|
1,419
|
|
(1)
|
Ten year swap executed in 2003.
|
(2)
|
Interest rate swaps were entered into as pre-issuance hedges for the
$300 million
bond offering.
|
|
Foreign
Currency
Translation
Adjustments
|
|
(Losses) Gains on
Derivatives
Qualifying as
Hedges
|
|
Pension and
Postretirement
Liability
Adjustment
|
|
Total
|
||||||||
(DOLLARS IN THOUSANDS)
|
|
|
|
|
|
|
|
||||||||
Accumulated other comprehensive loss, net of tax, as of December 31, 2012
|
$
|
(93,722
|
)
|
|
$
|
(218
|
)
|
|
$
|
(309,685
|
)
|
|
$
|
(403,625
|
)
|
OCI before reclassifications
|
(10,556
|
)
|
|
(4,956
|
)
|
|
4,339
|
|
|
(11,173
|
)
|
||||
Amounts reclassified from AOCI
|
—
|
|
|
1,162
|
|
|
20,925
|
|
|
22,087
|
|
||||
Net current period other comprehensive income (loss)
|
(10,556
|
)
|
|
(3,794
|
)
|
|
25,264
|
|
|
10,914
|
|
||||
Accumulated other comprehensive loss, net of tax, as of December 31, 2013
|
$
|
(104,278
|
)
|
|
$
|
(4,012
|
)
|
|
$
|
(284,421
|
)
|
|
$
|
(392,711
|
)
|
|
Foreign
Currency
Translation
Adjustments
|
|
(Losses) Gains on
Derivatives
Qualifying as
Hedges
|
|
Pension and
Postretirement
Liability
Adjustment
|
|
Total
|
||||||||
(DOLLARS IN THOUSANDS)
|
|
|
|
|
|
|
|
||||||||
Accumulated other comprehensive (loss) income, net of tax, as of December 31, 2011
|
$
|
(111,409
|
)
|
|
$
|
4,237
|
|
|
$
|
(268,137
|
)
|
|
$
|
(375,309
|
)
|
OCI before reclassifications
|
17,687
|
|
|
(3,036
|
)
|
|
(58,833
|
)
|
|
(44,182
|
)
|
||||
Amounts reclassified from AOCI
|
—
|
|
|
(1,419
|
)
|
|
17,285
|
|
|
15,866
|
|
||||
Net current period other comprehensive income (loss)
|
17,687
|
|
|
(4,455
|
)
|
|
(41,548
|
)
|
|
(28,316
|
)
|
||||
Accumulated other comprehensive loss, net of tax, as of December 31, 2012
|
$
|
(93,722
|
)
|
|
$
|
(218
|
)
|
|
$
|
(309,685
|
)
|
|
$
|
(403,625
|
)
|
|
December 31, 2013
|
|
December 31, 2012
|
|
Affected Line Item in the
Consolidated Statement of Comprehensive Income |
||||
(DOLLARS IN THOUSANDS)
|
|
|
|
|
|
||||
(Losses) gains on derivatives qualifying as hedges
|
|
|
|
|
|
||||
Cross currency swap
|
$
|
(333
|
)
|
|
$
|
(2,787
|
)
|
|
Other (income) expense, net
|
Foreign currency contracts
|
(861
|
)
|
|
5,802
|
|
|
Cost of goods sold
|
||
Interest rate swaps
|
(205
|
)
|
|
—
|
|
|
Interest expense
|
||
|
237
|
|
|
(1,596
|
)
|
|
Provision for income taxes
|
||
|
$
|
(1,162
|
)
|
|
$
|
1,419
|
|
|
Total, net of income taxes
|
(Losses) gains on pension and postretirement liability adjustments
|
|
|
|
|
|
||||
Settlements / Curtailments
|
$
|
(215
|
)
|
|
$
|
(873
|
)
|
|
(a)
|
Prior service cost
|
(319
|
)
|
|
(505
|
)
|
|
(a)
|
||
Actuarial losses
|
(33,618
|
)
|
|
(26,118
|
)
|
|
(a)
|
||
|
13,227
|
|
|
10,211
|
|
|
Provision for income taxes
|
||
|
$
|
(20,925
|
)
|
|
$
|
(17,285
|
)
|
|
Total, net of income taxes
|
(a)
|
The amortization of prior service cost and actuarial loss is included in the computation of net periodic benefit cost. Refer to Note 13 to the Consolidated Financial Statements - Employee Benefits for additional information regarding net periodic benefit cost.
|
Exhibit
Number
|
|
Description
|
|
|
|
|
|
3(i)
|
|
|
Restated Certificate of Incorporation of the Company, incorporated by reference to Exhibit 10(g) to Registrant’s Report on Form 10-Q filed on August 12, 2002 (SEC File No. 001-04858).
|
|
|
|
|
3(ii)
|
|
|
By-laws of the Registrant, effective as of February 6, 2014, incorporated by reference to Exhibit 3(ii) to Registrant’s Report on Form 8-K filed on February 7, 2014.
|
|
|
|
|
4.1
|
|
|
Note Purchase Agreement, dated as of July 12, 2006, by and among International Flavors & Fragrances Inc. and the various purchasers named therein, incorporated by reference to Exhibit 4.7 to Registrant’s Report on Form 8-K filed on July 13, 2006 (SEC File No. 001-04858).
|
|
|
|
|
4.2
|
|
|
Form of Series A, Series B, Series C and Series D Senior Notes incorporated by reference to Exhibit 4.8 to Registrant’s Report on Form 8-K filed on July 13, 2006 (SEC File No. 001-04858).
|
|
|
|
|
4.3
|
|
|
Note Purchase Agreement, dated as of September 27, 2007, by and among International Flavors & Fragrances Inc. and the various purchasers named therein, incorporated by reference to Exhibit 4.7 to Registrant’s Report on Form 8-K filed on October 1, 2007 (SEC File No. 001-04858).
|
|
|
|
|
4.4
|
|
|
Form of Series A, Series B, Series C and Series D Senior Notes incorporated by reference to Exhibit 4.8 of Registrant’s Report on Form 8-K filed on October 1, 2007 (SEC File No. 001-04858).
|
|
|
|
|
*10.1
|
|
|
Letter Agreement between International Flavors & Fragrances Inc. and Douglas D. Tough, dated September 8, 2009, incorporated by reference to Exhibit 10.1 to the Registrant’s Report on Form 8-K filed on September 14, 2009.
|
|
|
|
|
*10.2
|
|
|
Supplemental Retirement Plan, adopted by the Registrant’s Board of Directors on October 29, 1986 as amended and restated through October 9, 2007, incorporated by reference to Exhibit 10.5 to Registrant’s Report on Form 10-K filed on February 27, 2008 (SEC File No. 001-04858).
|
|
|
|
|
*10.3
|
|
|
2000 Stock Award and Incentive Plan, adopted by the Registrant’s Board of Directors on March 9, 2000 as amended and restated through October 9, 2007, incorporated by reference to Exhibit 10.6 to Registrant’s Report on Form 10-K filed on February 27, 2008 (SEC File No. 001-04858).
|
|
|
|
|
*10.4
|
|
|
2010 Stock Award and Incentive Plan, as Amended and Restated as of February 6, 2014.
|
|
|
|
|
*10.5
|
|
|
2000 Supplemental Stock Award Plan, adopted by the Registrant’s Board of Directors on November 14, 2000 as amended and restated through October 9, 2007, incorporated by reference to Exhibit 10.7 to Registrant’s Report on Form 10-K filed on February 27, 2008 (SEC File No. 001-04858).
|
|
|
|
|
*10.6
|
|
|
Performance Criteria for the Registrant’s Equity Choice Program relating to Senior Executives incorporated by reference to Exhibit 10.1 to Registrant’s Report on Form 10-Q filed on May 6, 2010.
|
|
|
|
|
*10.7
|
|
|
Form of Non-Employee Director’s Restricted Stock Units Agreement under International Flavors & Fragrances Inc. 2000 Stock Award and Incentive Plan, incorporated by reference to Exhibit 10.7 to Registrant’s Report on Form 10-Q filed on October 31, 2007 (SEC File No. 001-04858).
|
|
|
|
|
*10.8
|
|
|
Form of U.S. Restricted Stock Units Agreement under International Flavors & Fragrances Inc. 2000 Stock Award and Incentive Plan incorporated by reference to Exhibit 10.5 to Registrant’s Report on Form 10-Q filed on October 31, 2007 (SEC File No. 001-04858).
|
Exhibit
Number
|
|
Description
|
|
|
|
|
|
*10.9
|
|
|
Form of U.S. Stock Settled Appreciation Rights Agreement under International Flavors & Fragrances Inc. 2000 Stock Award and Incentive Plan, incorporated by reference to Exhibit 10.6 to Registrant’s Report on Form 10-Q filed on October 31, 2007 (SEC File No. 001-04858).
|
|
|
|
|
*10.10
|
|
|
Form of Restricted Stock Units Agreement under International Flavors & Fragrances Inc. 2000 Stock Award and Incentive Plan incorporated by reference to Exhibit 10.2 to Registrant’s Report on Form 10-Q filed on August 5, 2009.
|
|
|
|
|
*10.11
|
|
|
Form of Purchased Restricted Stock Agreement under International Flavors & Fragrances Inc. 2000 Stock Award and Incentive Plan incorporated by reference to Exhibit 10.1 to Registrant’s Report on Form 10-Q filed on August 5, 2009.
|
|
|
|
|
*10.12
|
|
|
Form of Employee Stock Option Agreement under International Flavors & Fragrances Inc. 2000 Stock Award and Incentive Plan, incorporated by reference to Exhibit 10.1 to Registrant’s Report on Form 10-Q filed on November 9, 2004 (SEC File No. 001-04858).
|
|
|
|
|
*10.13
|
|
|
Form of International Flavors & Fragrances Inc. Stock Option Agreement under 2000 Stock Option Plan for Non-Employee Directors, incorporated by reference to Exhibit 10.2 to Registrant’s Report on Form 10-Q filed on November 9, 2004 (SEC File No. 001-04858).
|
|
|
|
|
*10.14
|
|
|
Restated and Amended Executive Separation Policy Document, as Amended through and including February 6, 2014.
|
|
|
|
|
*10.15
|
|
|
Trust Agreement dated October 4, 2000 among Registrant, First Union National Bank and Buck Consultants Inc. approved by Registrant’s Board of Directors on September 12, 2000, incorporated by reference to Exhibit 10.21 to Registrant’s Report on Form 10-K filed on March 13, 2006 (SEC File No. 001-04858).
|
|
|
|
|
*10.16
|
|
|
Amendment dated August 2, 2005 to the Trust Agreement dated October 4, 2000 among Registrant, Wachovia Bank, N.A. (formerly First Union National Bank) and Buck Consultants LLC (formerly Buck Consultants Inc.), incorporated by reference to Exhibit 10.1 to Registrant’s Report on Form 10-Q filed on August 5, 2005 (SEC File No. 001-04858).
|
|
|
|
|
*10.17
|
|
|
2000 Stock Option Plan for Non-Employee Directors as amended and restated as of December 15, 2004, incorporated by reference to Exhibit 10.2 to Registrant’s Report on Form 8-K filed on December 20, 2004 (SEC File No. 001-04858).
|
|
|
|
|
*10.18
|
|
|
Amendment No. 1, dated as of March 6, 2012, to the 2000 Stock Option Plan for Non-Employee Directors as amended and restated as of December 15, 2004, incorporated by reference to Exhibit 10.20(a) to Registrants Report on Form 10-Q filed on May 8, 2012.
|
|
|
|
|
*10.19
|
|
|
Director Charitable Contribution Program, adopted by the Board of Directors on December 8, 2009, incorporated by reference to Exhibit 10.38 to Registrant’s Report on Form 10-K filed on February 25, 2010.
|
|
|
|
|
10.20
|
|
|
Form of Director/Officer Indemnification Agreement incorporated by reference to Exhibit 10.1 to Registrant’s Report on Form 8-K filed on July 28, 2008 (SEC File No. 001-04858).
|
|
|
|
|
10.21
|
|
|
Credit Agreement, dated as of November 9, 2011, among International Flavors & Fragrances Inc., International Flavors & Fragrances (Luxembourg) S.à r.l., International Flavors & Fragrances (Nederland) Holding B.V., International Flavors & Fragrances I.F.F. (Nederland) B.V. and IFF Latin American Holdings (España) S.L., as borrowers, the banks, financial institutions and other institutional lenders and issuers of letters of credit party thereto, and Citibank, N.A. as administrative agent, incorporated by reference to Exhibit 10.1 to Registrant’s Report on Form 8-K filed on November 16, 2011.
|
Exhibit
Number
|
|
Description
|
|
|
|
|
|
10.22
|
|
|
Amendment No. 1, dated as of March 9, 2012, to the Credit Agreement, dated as of November 9, 2011, among International Flavors & Fragrances Inc., International Flavors & Fragrances (Luxembourg) S.à r.l., International Flavors & Fragrances (Nederland) Holding B.V., International Flavors & Fragrances I.F.F. (Nederland) B.V. and IFF Latin American Holdings (España) S.L., as borrowers, the banks, financial institutions and other institutional lenders and issuers of letters of credit party thereto, and Citibank, N.A. as administrative agent, incorporated by reference to Exhibit 10.26(a) to Registrants Report on Form 10-Q filed on May 8, 2012.
|
|
|
|
|
*10.23
|
|
|
Form of Executive Death Benefit Plan Agreement incorporated by reference to Exhibit 10.27 to Registrant’s Report on Form 10-K filed on February 28, 2012.
|
|
|
|
|
*10.24
|
|
|
Deferred Compensation Plan, as amended and restated December 12, 2011 incorporated by reference to Exhibit 10.28 to Registrant’s Report on Form 10-K filed on February 28, 2012.
|
|
|
|
|
*10.25
|
|
|
Form of U.S. Stock Settled Appreciation Rights Agreement under International Flavors & Fragrances Inc. 2010 Stock Award and Incentive Plan incorporated by reference to Exhibit 10.29 to Registrant’s Report on Form 10-K filed on February 28, 2012.
|
|
|
|
|
*10.26
|
|
|
Form of Restricted Stock Units Agreement under International Flavors & Fragrances Inc. 2010 Stock Award and Incentive Plan incorporated by reference to Exhibit 10.30 to Registrant’s Report on Form 10-K filed on February 28, 2012.
|
|
|
|
|
*10.27
|
|
|
Form of Purchased Restricted Stock Agreement under International Flavors & Fragrances Inc. 2010 Stock Award and Incentive Plan incorporated by reference to Exhibit 10.31 to Registrant’s Report on Form 10-K filed on February 28, 2012.
|
|
|
|
|
*10.28
|
|
|
Form of Non-Employee Director’s Restricted Stock Units Agreement under International Flavors & Fragrances Inc. 2010 Stock Award and Incentive Plan incorporated by reference to Exhibit 10.32 to Registrant’s Report on Form 10-K filed on February 28, 2012.
|
|
|
|
|
*10.29
|
|
|
Form of Annual Bonus Award Agreement under International Flavors & Fragrances Inc. 2010 Stock Award and Incentive Plan
|
|
|
|
|
*10.30
|
|
|
Form of Long-Term Incentive Plan Award Agreement under International Flavors & Fragrances Inc. 2010 Stock Award and Incentive Plan
|
|
|
|
|
21
|
|
|
List of Principal Subsidiaries.
|
|
|
|
|
23
|
|
|
Consent of PricewaterhouseCoopers LLP.
|
|
|
|
|
31.1
|
|
|
Certification of Douglas D. Tough pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
31.2
|
|
|
Certification of Kevin C. Berryman pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
32
|
|
|
Certification of Douglas D. Tough and Kevin C. Berryman pursuant to 18 U.S.C. Section 1350 as adopted pursuant to the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
101.INS
|
|
|
XBRL Instance Document
|
|
|
|
|
101.SCH
|
|
|
XBRL Taxonomy Extensions Schema
|
|
|
|
|
101.CAL
|
|
|
XBRL Taxonomy Extension Calculation Linkbase
|
|
|
|
|
101.DEF
|
|
|
XBRL Taxonomy Extension Definition Linkbase
|
|
|
|
|
101.LAB
|
|
|
XBRL Taxonomy Extension Label Linkbase
|
|
|
|
|
101.PRE
|
|
|
XBRL Taxonomy Extension Presentation Linkbase
|
*
|
Management contract or compensatory plan or arrangement
|
|
INTERNATIONAL FLAVORS & FRAGRANCES INC.
|
|
|
|
|
|
By:
|
/s/ Kevin C. Berryman
|
|
Name:
|
Kevin C. Berryman
|
|
Title:
|
Executive Vice President and
Chief Financial Officer
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/
S
/ Douglas D. Tough
|
|
Chairman of the Board, Chief Executive Officer and Director (Principal Executive Officer)
|
|
February 25, 2014
|
Douglas D. Tough
|
|
|
|
|
|
|
|
|
|
/
S
/ Kevin C. Berryman
|
|
Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)
|
|
February 25, 2014
|
Kevin C. Berryman
|
|
|
|
|
|
|
|
|
|
/
S
/ Marcello V. Bottoli
|
|
Director
|
|
February 25, 2014
|
Marcello V. Bottoli
|
|
|
|
|
|
|
|
|
|
/
S
/ Linda B. Buck
|
|
Director
|
|
February 25, 2014
|
Linda B. Buck
|
|
|
|
|
|
|
|
|
|
/
S
/ J. Michael Cook
|
|
Director
|
|
February 25, 2014
|
J. Michael Cook
|
|
|
|
|
|
|
|
|
|
/
S
/ Roger W. Ferguson, Jr.
|
|
Director
|
|
February 25, 2014
|
Roger W. Ferguson, Jr.
|
|
|
|
|
|
|
|
|
|
/
S
/ Andreas Fibig
|
|
Director
|
|
February 25, 2014
|
Andreas Fibig
|
|
|
|
|
|
|
|
|
|
/
S
/ Christina Gold
|
|
Director
|
|
February 25, 2014
|
Christina Gold
|
|
|
|
|
|
|
|
|
|
/
S
/ Alexandra A. Herzan
|
|
Director
|
|
February 25, 2014
|
Alexandra A. Herzan
|
|
|
|
|
|
|
|
|
|
/
S
/ Henry W. Howell, Jr.
|
|
Director
|
|
February 25, 2014
|
Henry W. Howell, Jr.
|
|
|
|
|
|
|
|
|
|
/
S
/ Katherine M. Hudson
|
|
Director
|
|
February 25, 2014
|
Katherine M. Hudson
|
|
|
|
|
|
|
|
|
|
/
S
/ Arthur C. Martinez
|
|
Director
|
|
February 25, 2014
|
Arthur C. Martinez
|
|
|
|
|
|
|
|
|
|
/
S
/ Dale F. Morrison
|
|
Director
|
|
February 25, 2014
|
Dale F. Morrison
|
|
|
|
|
|
For the Year Ended December 31, 2013
|
||||||||||||||||||
|
Balance at
beginning
of period
|
|
Additions
(deductions)
charged to
costs and
expenses
|
|
Accounts
written
off
|
|
Translation
adjustments
|
|
Balance at
end of
period
|
||||||||||
Allowance for doubtful accounts
(1)
|
$
|
9,293
|
|
|
$
|
1,984
|
|
|
$
|
(1,059
|
)
|
|
$
|
275
|
|
|
$
|
10,493
|
|
Valuation allowance on credit and operating loss carryforwards and other net deferred tax assets
|
450,733
|
|
|
38,360
|
|
(2)
|
—
|
|
|
14,897
|
|
|
503,990
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
|
For the Year Ended December 31, 2012
|
||||||||||||||||||
|
Balance at
beginning
of period
|
|
Additions
(deductions)
charged to
costs and
expenses
|
|
Accounts
written
off
|
|
Translation
adjustments
|
|
Balance at
end of
period
|
||||||||||
Allowance for doubtful accounts
(1)
|
$
|
5,831
|
|
|
$
|
3,639
|
|
|
$
|
(824
|
)
|
|
$
|
647
|
|
|
$
|
9,293
|
|
Valuation allowance on credit and operating loss carryforwards and other net deferred tax assets
|
290,879
|
|
|
153,718
|
|
(3)
|
—
|
|
|
6,136
|
|
|
450,733
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
|
For the Year Ended December 31, 2011
|
||||||||||||||||||
|
Balance at
beginning
of period
|
|
Additions
(deductions)
charged to
costs and
expenses
|
|
Accounts
written
off
|
|
Translation
adjustments
|
|
Balance at
end of
period
|
||||||||||
Allowance for doubtful accounts
(1)
|
$
|
8,470
|
|
|
$
|
(518
|
)
|
|
$
|
(1,219
|
)
|
|
$
|
(902
|
)
|
|
$
|
5,831
|
|
Valuation allowance on credit and operating loss carryforwards and other net deferred tax assets
|
288,182
|
|
|
8,743
|
|
|
—
|
|
|
(6,046
|
)
|
|
290,879
|
|
(1)
|
net sales or revenues;
|
(2)
|
earnings measures, including earnings from operations, earnings before or after taxes, earnings before or after interest, depreciation, amortization, or extraordinary or special items;
|
(3)
|
net income or net income per common share (basic or diluted);
|
(4)
|
return measures, including return on assets (gross or net), return on investment, return on capital, or return on equity;
|
(5)
|
cash flow, free cash flow, cash flow return on investment (discounted or otherwise), net cash provided by operations, or cash flow in excess of cost of capital;
|
(6)
|
net economic profit (operating earnings minus a charge for capital) or economic value created;
|
(7)
|
operating margin or profit margin;
|
(8)
|
shareholder value creation measures, including stock price or total shareholder return;
|
(9)
|
dividend payout levels, including as a percentage of net income; and
|
(10)
|
strategic business criteria, consisting of one or more objectives based on meeting specified market penetration, geographic business expansion goals, cost targets, total market capitalization, agency ratings of financial strength, completion of capital and borrowing transactions, business retention, new
|
(A)
|
All deferral of settlement, forfeiture conditions and other restrictions applicable to Awards shall lapse (other than as set forth in Section 10 hereof) and such Awards shall be fully payable as of the time of the Change in Control without regard to deferral and vesting conditions, except to the extent of any waiver by the Participant or other valid express election to defer beyond a Change in Control and subject to applicable restrictions set forth in Section 11(a); provided, however, that, in the case of an Award subject to Code Section 409A, the end of any deferral period and settlement of the Award shall occur only if the Change in Control is a Change in Control as defined in Section 9(c) and Code Section 409A (but forfeiture conditions relating to such Award will lapse), and any waiver
|
(B)
|
Any Award carrying a right to exercise that was not previously exercisable and vested shall become fully exercisable and vested as of the time of the Change in Control and shall remain exercisable and vested for the applicable period provided under any Award Agreement (i.e., provisions terminating the Award at specified times following termination of employment will continue to apply) and subject to applicable restrictions set forth in Section 11(a) and, in the case of an Award subject to Code Section 490A, applicable restrictions in the Award Agreement which shall meet the requirements of Section 11(i) and other requirements of Code Section 409A.
|
•
|
Lowering the exercise price of an Option or SAR after it is granted;
|
•
|
Any other action that is treated as a repricing under generally accepted accounting principles;
|
•
|
Canceling an Option or SAR at a time when its exercise price exceeds the fair market value of the underlying Stock, in exchange for another Option or SAR, restricted stock, other equity, cash or other property;
|
(C)
|
the death of the Participant; provided, however, that unless a specific time otherwise is stated for payment of a 409A Award upon death, such payment shall occur in the calendar year in which falls the 30
th
day after death; or
|
(D)
|
the date the Participant has experienced a 409A Disability (as defined below); or
|
(E)
|
409A Change in Control. The occurrence of a 409A Change in Control (as defined below);
|
INTERNATIONAL FLAVORS & FRAGRANCES INC
|
Restated and Amended
|
Executive Separation Policy Document
|
(As Amended through and including February 6, 2014)
|
|
INTERNATIONAL FLAVORS & FRAGRANCES INC.
|
|
|
Executive Separation Policy
|
|
|
|
Page
|
1.
|
Purpose
|
1
|
2.
|
Definitions
|
1
|
3.
|
Eligibility
|
7
|
4.
|
Severance Payments and Benefits
|
7
|
5.
|
Acceleration of Equity Awards Upon a Change in Control; Certain Provisions Applicable to Equity Awards
|
7
|
6.
|
Effect of Federal Excise Tax
|
8
|
7.
|
Employee Obligations and Conditions to Receipt of Payments and Benefits
|
11
|
8.
|
Other Provisions Applicable to Severance Payments and Benefits
|
14
|
9.
|
Other Plans and Policies; Non-Duplication of Payments or Benefits
|
15
|
10.
|
Special Rules for Compliance with Code Section 409A
|
16
|
11.
|
Miscellaneous
|
21
|
(i)
|
Accrued Payments at Termination
. Certain provisions of this Policy require payment of
|
(ii)
|
Performance-Based Payments.
Any amount payable at the time a performance-based incentive Award otherwise would be payable if employment had not terminated must be paid within 60 days after the date such Award becomes payable.
|
(iii)
|
Gross-Up
. Gross-up Payments will be made at the time specified in Section 6, and in any event the gross-up must be paid no later than the end of Employee's taxable year next following Employee's taxable year in which Employee remits the related taxes to the taxing authorities.
|
(iv)
|
Legal Fees and Expenses
. Any legal fees and expenses of Employee payable by the Company under Section 11(c) shall be paid within 30 days of the date the Company receives the bill therefor, and in any event the fees and expenses must be paid or reimbursed no later than the end of Employee's taxable year next following Employee's taxable year in which the legal fee or expense was incurred.
|
(v)
|
Other Prompt Payments
. Any payment or benefit required under Section 8(a) of the Policy to be paid promptly following a date or event shall be paid within 30 days after such date or event.
|
(vi)
|
No Employee Influence on Year of Payment
. In the case of any payment under the Policy payable during a specified period of time following a termination or other event, if such permitted payment period begins in one calendar year and ends in a subsequent calendar year, the Employee shall have no right to elect in which year the payment will be made, and the Company's determination of when to make the payment shall not be influenced in any way the Employee.
|
(i)
|
Separate Payments
. Any lump-sum payment and each installment payment of Severance Payments and Benefits shall be deemed a separate payment for all purposes, including for purposes of Section 409A. The portion of a lump-sum payment of Severance Payments and Benefits payable for specified terminations in the period of two years following a Change in Control that exceeds the present value of the installment payments of Severance Payments and Benefits that would be payable for a specified termination not within two years following a Change in Control will be deemed to be a separate payment for all purposes, including for purposes of Section 409A (the "Separate Lump Sum").
|
(ii)
|
Installment Payment Rules
. Installment payments shall be made at the dates specified in
|
(iii)
|
Lump-Sum Severance Payment Rules
. If Severance Payments and Benefits are payable as a lump-sum payment, the amount of Severance Payments and Benefits payable at the date specified in Section 8(a) of the Policy (i.e., without the six-month delay) shall equal (A) the present value of the amount of Severance Payments and Benefits that would have been payable assuming Severance Payments and Benefits were instead payable due to a termination not for Cause prior to a Change in Control to the extent such amount qualifies as a short-term deferral under Code Section 409A, plus (B) the maximum amount of Severance Payments and Benefits payable under the "two-year/two-times" exclusion from being a deferral of compensation under Treasury Regulation § 1.409A-1(b)(9)(iii), plus (C) the Separate Lump Sum identified in Section 10(b)(i) above (if this amount qualifies as a short-term deferral under Code Section 409A), plus (D), if the six-month delay rule in Section 10(c) does not apply, all remaining amounts of the Severance Payments and Benefits (subject to Section 10(b)(iv)). Any other amounts of such Severance Payments and Benefits (i.e., amounts subject to the six-month delay rule) shall be paid at the date six months after the date of Employee's termination, together with applicable interest, subject to Section 10(b)(iv).
|
(i)
|
General Rule
. The six-month delay rule will apply to certain payments and benefits under the Policy if all of the following conditions are met:
|
(A)
|
The Employee is a “key employee” (as defined in Code Section 416(i) without regard to paragraph (5) thereof) for the year in which the separation from service occurs. The Company will determine status of “key employees” annually, under administrative
|
(B)
|
The Company’s stock is publicly traded on an established securities market or otherwise.
|
(C)
|
The payment or benefit in question is a deferral of compensation and not excepted or excluded from being such by the short-term deferral rule, or the "two-years/two-times" rule in Treasury Regulation § 1.409A-1(b)(9)(iii), or any other exception or exclusion; provided, however, that the exclusion under Treasury Regulation § 1.409A-1(b)(9)(v)(D) shall apply in the case of Severance Payments and Benefits only if and to the extent that it is not necessary to apply to any other payment or benefit payable within six months after the Employee's separation from service.
|
(ii)
|
Effect of Rule
. If it applies, the six-month delay rule will delay a payment or benefit which otherwise would be payable under this Policy within six months after the Employee's separation from service.
|
(A)
|
Any delayed payment or benefit shall be paid on the date six months after the Employee's separation from service.
|
(B)
|
During the six-month delay period, accelerated payment will occur in the event of the Employee's death but not for any other reason (including no acceleration upon a Change in Control), except as otherwise permitted under Section 409A.
|
(C)
|
Any payment that is not triggered by a separation from service, or is triggered by a separation from service but would be made more than six months after separation (without applying this six-month delay rule), shall be unaffected by the six-month delay rule.
|
(iii)
|
Limit to Application of Six-Month Delay Rule
. If the terms of any agreement or other document relating to this Policy impose this six-month delay rule in circumstances in which it is not required for compliance with Section 409A, those terms shall not be given effect.
|
(i)
|
The minimum performance that is a condition for payment of the incentive award at the level that would authorize any positive payment under the incentive award is achieved over the entire performance period; or
|
(ii)
|
For financial reporting purposes, the Company has determined for any quarterly reporting period ending at or after the date of termination through the end of the performance period that achievement of the minimum level of performance specified in (i) is probable (so that accounting expense is accrued relating to the award); or
|
(iii)
|
The Company's earnings before taxes reportable in its financial statements for any quarterly reporting period ending at or after the date of termination through the end of the year of termination or the later end of the performance period, or for the full year of termination, are positive.
|
(i)
|
Good Reason. The definition of "Good Reason" in Section 2(n) of the Policy is intended to constitute an "involuntary separation" within the meaning of Treasury Regulation § 1.409A-1(n), and shall be so construed and interpreted.
|
(ii)
|
Deferrals and Waivers of Settlement. Certain provisions of the Policy and Designations, specifically Policy Section 5(a)(ii) and Designations Section II(d)(vi) and Section II(f)(iv), refer to deferrals and waivers of settlement of awards. Any such deferral or waiver relating to an award that is a deferral of compensation subject to Section 409A (i.e., is not a "grandfathered" award or excluded from Section 409A) will be permitted only in accordance with the provisions specified in Section 5(b) of the Company's Deferred Compensation Plan, as amended and restated October 8, 2007, subject to any additional limitations as may be necessary for compliance with Code Section 409A.
|
(iii)
|
Continued Benefits. Medical, dental and group life and disability benefits shall be continued as specified in Designation Sections II(a)(vi) and II(d)(ix), subject to any applicable requirements under Treasury Regulation § 1.409A-1. If any of these benefits are not excluded from being deferrals of compensation under Code Section 409A, in addition to any other requirement regarding the timing of payment, the benefits or any payments in lieu of the benefits shall be made no later than the end of Employee's taxable year next following Employee's taxable year in which the benefit or expense was due to be paid.
|
(iv)
|
Excess Benefit Plan. The Company shall have no authority to elect to pay the present value of accrued obligations to the Employee under the Excess Benefit Plan as a lump sum except for "grandfathered" accrued obligations and except as permitted in compliance with Code Section 409A (including transition rules and as permitted under Treasury Regulation § 1.409A-3(j)(4)). In addition, the terms of any "rabbi trust" required or permitted to be established under the Policy in connection with the Excess Benefit Plan or otherwise shall be limited as required by Code Section 409A.
|
(v)
|
Other Separate Payments. In addition to the provisions of Section 10(b)(i), each other
|
(vi)
|
Non-transferability. No right of an Employee to any payment or benefit under this Policy shall be subject to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment, or garnishment by creditors of the Employee or of any beneficiary of the Employee.
|
(vii)
|
No Acceleration. The timing of payments and benefits under the Policy may not be accelerated to occur before the time specified for payment hereunder, except to the extent permitted under Treasury Regulation § 1.409A-3(j)(4) or as otherwise permitted under Code Section 409A without the Employee incurring a tax penalty.
|
(viii)
|
Limitation on Offsets. If the Company has a right of offset that could apply to a payment that constitutes a deferral of compensation under Section 409A, such right may only be exercised at the time the payment would have been made to the Employee and may be exercised only as an offset against an obligation that arose within 30 days before and within the same year as the payment date if application of such offset right against an earlier obligation would not be permitted under Section 409A.
|
(ix)
|
Release and Termination Agreement. The Company will supply to an Employee a form of the release and termination agreement specified in Section 7(c) not later than the date of Employee's termination, which must be returned within the time period required by law and must not be revoked by Employee within the applicable time period (if any) in order for Employee to satisfy Section 7(c), such that it becomes legally effective. If any amount payable during a fixed period following Employee's termination is subject to the requirement or condition that Employee has executed and not revoked such agreement (including any case in which such fixed period would begin in one year and end in the next), the Company, in determining the time of payment of any such amount, will not be influenced by Employee or the timing of any action by Employee, including Employee's execution of such a release agreement and expiration of any revocation period. In particular, the Company retains discretion to deposit any payment hereunder in escrow at any time during such fixed period, so that such deposited amount is constructively received and taxable income to Employee upon deposit (it may be constructively received even in the absence of such deposit) but with distribution from such escrow remaining subject to Employee's execution and non-revocation of such release and termination agreement.
|
Participant:
[NAME]
|
Job Level:
[#]
|
|
Organization Unit/Location:
[ORG. UNIT/LOCATION]
|
Position/Participant Group:
[POSITION/GROUP]
|
|
Participant Information
|
AIP Award Information
|
|||
Base Salary
|
AIP Target
|
Performance Metrics
|
Plan Year
|
Payment of Award
|
[Insert Base Salary]
|
[Target Amount], representing [x%] of Base Salary
|
Actual AIP Award payouts are based on achievement of the results against the Performance Metrics and Weightings below, as well as the Participant’s individual performance.
|
[201X]
|
The Company will pay AIP Awards in the year following the Plan Year at the discretion of the Committee.
Payment may range from 0% to 200% of the AIP Target as described in Section 5 of the AIP Terms and Conditions. The payment will be made in the applicable local currency.
|
Performance Metrics and Weightings
|
|
|
|
Min.
|
Target
|
Max.
|
|
Metric*
|
Weight
|
[%]
|
[%]
|
[%]
|
|
Corporate
|
Local Currency Sales Growth*
|
[X]
|
|
|
|
|
|
Operating Profit*
|
[X]
|
|
|
|
|
|
Gross Margin*
|
[X]
|
|
|
|
|
|
Working Capital*
|
[X]
|
|
|
|
|
[Business Unit]
|
Local Currency Sales Growth*
|
[X]
|
|
|
|
|
|
Operating Profit*
|
[X]
|
|
|
|
|
|
Gross Margin*
|
[X]
|
|
|
|
|
|
Working Capital*
|
[X]
|
|
|
|
|
Total
|
|
100.00
|
|
|
|
1.
|
Amount of Award
. As of the Date of Grant, the Participant shall be eligible to receive an AIP Award in the amount of the AIP Target set forth on the first page of the AIP Award Agreement, as such amount may be adjusted as described in Section 5 below.
|
2.
|
Eligibility for Award
. A Participant’s eligibility for an AIP Award in one Plan Year does not guarantee eligibility of the Participant for another AIP Award in a subsequent Plan Year.
|
3.
|
Payment of the Award
. The AIP Award provides the Participant with an opportunity to receive a single AIP Award cash payout (the “
AIP Award Payment
”) if the Company and, to the extent determined by the Committee, business units and other units or subunits of the Company designated by the Committee, achieve one or more satisfactory levels of performance (each a “
Metric Result
”) in respect of one or more metrics (each a “
Performance Metric
”) as specified by the Committee, over a single fiscal year (each a “
Plan Year
”), as specified in the AIP Award Agreement. Any AIP Award Payment will be made in accordance with the attached AIP Award Agreement. All AIP Awards shall be paid in the applicable local currency. Except as provided in Section 9 below, a Participant must remain employed by the Company continuously from the Date of Grant of the AIP Award through the date the AIP Award Payment is made. Accordingly, there is no partial payout for AIP Awards, except as provided in Section 9 below.
|
4.
|
Target Award Value
. The attached AIP Award Agreement specifies the Participant’s AIP Award at a target level (the “
AIP Target
”). The AIP Target provides the Participant with an opportunity to receive an AIP Award Payment in an amount equal to the AIP Target. However, the actual AIP Award Payment may be more or less than the AIP Target, depending on the Metric Results as described in Section 5 below.
|
i.
|
For purposes of calculating the AIP Award, a Participant’s annual base salary effective as of April 1 of a Plan Year shall be considered as if effective on January 1 of the Plan Year. In the event the Participant has one or more salary changes after April 1, the AIP Targetshall be adjusted pro-rata based on the number of days in the Plan Year that the Participant remains at each base salary level.
|
ii.
|
For purposes of calculating the AIP Award, a Participant’s Target Award Percentage, effective as of April 1 of the Plan Year, shall be considered as if effective on January 1 of the Plan Year. In the event of a promotion, transfer or adjustment that results in a change to a Participant’s Target Award Percentage after April 1 of a Plan Year, the AIP Target will be pro-rated based on the number of days in the Plan Year that the Participant remains at each Target Award Percentage.
|
5.
|
Weight and Achievement of Metric Results.
The Committee shall determine the Performance Metrics and weight to be applied to each Performance Metric in determining the AIP Target. Specific values for Threshold, Target and Maximum (each, as described below) levels of performance of the Metric Results shall be set at the beginning of each Plan Year by the Company when its budgets and other incentive targets are approved the Company’s Board of Directors. If 100% of the Metric Results are achieved (the “
Target
”), the AIP Award shall be equal to the AIP Target; if the “
Threshold
” amount of the Metric Results are achieved, the AIP Award shall be equal to 25% of the AIP Target; and if the “
Maximum
” amount of the Metric Results are achieved, the AIP Award shall be equal to 200% of the AIP Target. If less than the Threshold is met, the AIP Award shall be $0. If in a Plan Year the actual performance is above the Threshold, but below the Target, or above the Target but below the Maximum, the AIP Award Payment shall be adjusted on a pro rata basis by the level of actual achievement of the Metric Results. In no event shall the AIP Award Payment be more than 200% of the AIP Target.
|
6.
|
Performance Metrics
.
|
a.
|
Performance Metrics. The Committee has established the following Performance Metrics categories for AIP Awards. Notwithstanding the attached AIP Award Agreement, for each Plan Year, the Committee may change the Performance Metrics for the Plan Year on or before March 31 of such Plan Year.
|
i.
|
The percent increase in sales, measured in U.S. dollars, from the current Plan Year against the prior Plan Year, excluding the effects of currency movements (“
Local
Currency Sales Growth
”), prepared on a basis consistent with the approved operating plan but normalized, as determined by the Committee in its sole discretion;
|
ii.
|
Operating profit (“
Operating Profit
”), prepared on a basis consistent with the approved operating plan but normalized, as determined by the Committee in its sole discretion;
|
iii.
|
Gross profit of the unit being measured, expressed as a percent of net sales (“
Gross Margin Percentage
”), prepared on a basis consistent with the approved operating plan but normalized, as determined by the Committee in its sole discretion; and
|
iv.
|
Average amount of inventory and accounts receivable minus trade accounts payable, expressed as a percent of net sales on a 5-quarter average basis (“
Working Capital Percentage
”), prepared on a basis consistent with the approved
|
7.
|
Discretionary Nature of AIP Award Payments.
After the end of each Plan Year, the Committee shall approve the Metric Results as prepared and presented by management. Subject to Section 7 of the Plan, the AIP Award Payment to a Participant may be calculated based on the Metric Results or may be adjusted to take into account any factor, including the Participant’s individual performance in that Plan Year. Except with respect to a Participant who is a “Covered Employee" (as defined under Treas. Reg. 1.162-27(c)(2)), adjustments may be made to increase the AIP Award if the Participant’s job performance rating is at the highest rating available. A Participant that receives a job performance rating at the lowest rating available shall not be eligible to receive an AIP Award for that Plan Year.
|
8.
|
Mid-Year Entrants
. New Company employees must be hired before October 1 of a Plan Year to be eligible to receive an AIP Award for that Plan Year. AIP Awards for Participants hired after January 1, but prior to October 1, of a Plan Year will be pro-rated from the date of hire based on the number of days in the Plan Year that the Participant is employed by the Company as compared to the number of days in the Plan Year.
|
9.
|
Termination of Employment or Leave of Absence
. The following shall apply following a Participant’s termination of employment or leave of absence.
|
a.
|
Involuntary Termination: (i) if the Participant is involuntarily terminated without Cause (as defined in the Plan) by the Company, or if applicable, the Participant resigns for Good Reason (as defined in the Plan), on or before March 31 of the Plan Year, the Participant will forfeit, and shall not be entitled to, any portion of an AIP Award for that Plan Year; (ii) if the Participant is involuntarily terminated without Cause, or if applicable, the Participant resigns for Good Reason (as defined in the Plan) after March 31 of the Plan Year, the Participant’s AIP Award, if any, shall be pro-rated based on the number of the Participant’s active days employed by the Company in such Plan Year preceding the date of termination; and (iii) if the Participant is terminated for Cause (as defined in the Plan) at any time during the Plan Year, the Participant shall forfeit, and shall not be entitled to, any portion of an AIP Award for such Plan Year.
|
b.
|
Voluntary Termination: If the Participant voluntarily terminates employment at any time during a Plan Year, or prior to payment of an AIP Award for a Plan Year, the Participant shall forfeit, and shall not be entitled to, receive any portion of an AIP Award for such Plan Year.
|
c.
|
Retirement, Death and Permanent Disability: AIP Awards, if any, are pro-rated based on the Participant’s number of active days employed by the Company in the Plan Year preceding the date of retirement, death or permanent disability.
|
d.
|
Leave of Absence: If the Participant is not in active employment for any portion of the Plan Year as a result of a paid or unpaid leave of absence, the amount of any AIP Award may be further adjusted, subject to local legal requirements and applicable Company policies that govern leaves of absence.
|
10.
|
Change in Control
. In the event the Company undergoes a “Change in Control” (as defined in Section 9 of the Plan), AIP Awards shall be treated as provided for in Section 9 of the Plan.
|
11.
|
Clawback and Recoupment of Awards
. Notwithstanding anything herein to the contrary, if the Participant is designated by the Company as grade level 7 or above for any portion of the Plan Year, any AIP Award paid in connection with the AIP shall be subject to the clawback, recoupment or forfeiture provisions under Section 10 of the Plan and Section 7 of the ESP, if applicable. By acknowledging the AIP Award Agreement, the Participant acknowledges that any and all Awards previously granted to the Participant under the Plan prior to the Grant Date, and any other cash or Common Stock provided to the Participant prior to or following the Grant Date under the AIP or otherwise under the Plan, are subject to the provisions of Section 10 of the Plan and, if applicable, Section 7 of the ESP.
|
12.
|
Limits on Transfers of Awards
. Except as provided by the Committee, no AIP Award and no right under any AIP Award, shall be assignable, alienable, saleable, or transferable by a Participant other than by will or by the laws of descent and distribution, in accordance with Section 11(b) of the Plan.
|
13.
|
Administration
.
|
a.
|
Administration
. The Board has delegated administrative authority to the Committee and the AIP shall be administered by the Committee or a subset of the Committee that satisfies the requirements of Section 162(m) of the Internal Revenue Code of 1986, as amended, and regulations promulgated thereunder (the “Code”) with respect to any incentive compensation subject to Code §162(m).
|
b.
|
Powers and Duties
. The Committee shall have sole discretion and authority to make any and all determinations necessary or advisable for administration of the AIP and may adopt, amend or revoke any rule or regulation established for the proper administration of the AIP. The Committee shall have the ability to modify the AIP provisions, to the extent necessary, or delegate such authority, to accommodate any changes in law or regulations in jurisdictions in which Participants will receive AIP Awards. The Committee will review and approve the Performance Metrics established at the beginning of each Plan Year and review and approve AIP Award Payments. All interpretations, decisions, or determinations made by the Committee pursuant to the AIP shall be final and conclusive.
|
14.
|
Amendment; Termination of the AIP.
The Committee has the right to revise, modify, or terminate the AIP in whole or in part at any time or for any reason, and the right to modify any AIP Award in accordance with Section 11(e) of the Plan.
|
15.
|
Tax Liability and Withholding
. The Participant shall be responsible for any tax liability that may arise as a result of the payments contemplated by an AIP Award or these AIP Terms and Conditions in accordance with Section 11(d) of the Plan. The Participant acknowledges the Company is authorized to withhold
taxes due or potentially payable in connection with any AIP Award in accordance with Section 11(d) of the Plan. Further, the Participant agrees to any deduction or setoff by the Company as provided under Section 11(f) of the Plan.
|
16.
|
Compliance with Code Section 409A
. Section 11(j) of the Plan is hereby incorporated by reference.
|
17.
|
Severability; Survival of Terms
. Should any provision of an AIP Award or these AIP Terms and Conditions be held by a court of competent jurisdiction to be unenforceable, such holding shall not affect the validity of the remainder of the AIP Award or these AIP Terms and Conditions. These AIP Terms and Conditions shall apply to and bind the Participant and the Company and their respective permitted assignees and transferees, heirs, legatees, executors, administrators and legal successors.
|
18.
|
Entire Agreement
. These AIP Terms and Conditions, the AIP Award Agreement and the Plan constitute the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and the Participant with respect to the subject matter hereof.
|
19.
|
Non U.S. Residents
. Rights and restrictions for Participants residing in foreign countries may differ and shall be based on applicable foreign law and will be governed by Section 11(k) of the Plan.
|
20.
|
Electronic Delivery.
The Company may, in its sole discretion, deliver any documents related to an AIP Award by electronic means. The Participant hereby consents to receive such documents by electronic delivery and, if requested, to agree to participate in the Plan through an on-line or electronic system established and maintained by the Company or another third party designated by the Company.
|
21.
|
Governing Law
. These AIP Terms and Conditions and the AIP Award Agreement shall be governed by and construed according to the laws of the State of New York and of the United States without regard to principles of conflict of law.
|
22.
|
Consent for Data Transfer
. By accepting this AIP Agreement, the Participant voluntarily acknowledges and consents to the collection, use processing and transfer of personal data as described herein, including for the purpose of managing and administering the Plan, certain personal information, including name, home address and telephone number, date of birth, social security number or other employee identification number, salary, nationality, job title, or directorships held in the Company ("
Data
"). The Company and/or its affiliates will transfer Data among themselves as necessary for the purpose of implementation, administration and management of the Plan and may further transfer Data to any third parties assisting the Company in the implementation, administration and management of the Plan. These recipients may be located in the European Economic Area, or elsewhere throughout the world, such as the United States. The Participant authorizes them to receive, possess, use, retain and transfer the Data, in electronic or other form, for the purposes of implementing, administering and managing Participant's participation in the Plan, including any requisite transfer of such Data as may be required for the administration of the Plan. A Participant may, at any time, review Data, require any necessary amendments to it or withdraw the consents herein in writing by contacting the Company; however, withdrawing consent may affect Participant's ability to participate in the Plan.
|
23.
|
Notices
. Any notice required or permitted to be given under these AIP Terms and Conditions or
|
Participant:
[NAME]
|
Job Level:
[#]
|
|
Organization Unit/Location:
[ORG. UNIT/LOCATION]
|
Position:
[POSITION]
|
|
Participant Information
|
LTIP Award Information
|
||||
Base Salary
|
LTIP Target
|
Performance Metrics
|
Share Price for Determining Number of Shares at Target*
|
Performance Cycle
|
Payment of Award
|
[Insert Base Salary]
|
[Target Amount], representing [x%] of Base Salary
|
Actual LTIP Award payouts are based on achievement of the results against the Performance Metrics and Weightings below.
|
[INSERT SHARE PRICE]
*20-day trailing average stock price as of the first trading day of the Performance Cycle
|
[January 1, 201X]-[December 31, 201X]
|
Payments are made in the year following the last day of the Performance Cycle [XXX] at the discretion of the Committee.
The cash portion will be paid in the applicable local currency.
|
Performance Segments; Performance Metrics; Award Amounts at Target
|
Performance
Segment
|
Proration**
|
Award Amounts at Target
|
Performance Metrics
|
||
|
|
Cash Target
|
Shares Target
|
EP***
Metric
|
TSR***
Metric
|
|
Year 1: 201X
|
100%
|
$[X]
|
[# of Shares]
|
50%
|
50%
|
|
Year 2: 201X
|
100%
|
$[X]
|
[# of Shares]
|
50%
|
50%
|
|
Year 3: 201X
|
100%
|
$[X]
|
[# of Shares]
|
50%
|
50%
|
|
Cumulative
201X-201X
|
100%
|
$[X]
|
[# of Shares]
|
0%
|
100%
|
|
Total LTIP Cycle
|
|
$[X]
|
[# of Shares]
|
|
|
1.
|
Amount of Award
. As of the Date of Grant, the Participant shall be eligible to receive an LTIP Award in the amount of the LTIP Target set forth on the first page of the LTIP Award Agreement, as such amount may be adjusted as described in Section 5 below.
|
2.
|
Eligibility for Award
. A Participant’s eligibility for an LTIP Award in one Performance Cycle does not guarantee eligibility of the Participant for another LTIP Award in a subsequent Performance Cycle.
|
3.
|
Payment of the Award
. The LTIP Award provides the Participant with an opportunity to receive a single LTIP Award payout, comprising two separate payments, one in cash and one in stock (collectively, the “
LTIP Award Payment
”) if the Company achieves one or more satisfactory levels of performance (each a “
Performance Achievement Level
”) in respect of one or more metrics (each a “
Performance Metric
”) specified by the Committee, as provided hereunder. Performance Metrics must be met over discrete periods of time (each a “
Performance Segment
”) within or over a multi-year performance period (a “
Performance Cycle
”), as specified in the LTIP Award Agreement. Any LTIP Award Payment will be made in accordance with the attached LTIP Award Agreement. All LTIP Awards payable in cash will be paid in the applicable local currency. Except as provided in Section 9 below, a Participant must remain employed by the Company continuously from the Date of Grant of the LTIP Award through the date the LTIP Award Payment is made. Accordingly, there is no partial payout for LTIP Awards, except as provided in Section 9 below.
|
4.
|
LTIP Target
. The attached LTIP Award Agreement specifies the Participant’s Long-Term Incentive Plan Target Award (the “
LTIP Target
”). The LTIP Target provides the Participant with an opportunity to receive an LTIP Award Payment in an amount equal to the LTIP Target. However, the actual LTIP Award Payment may be more or less than the LTIP Target, depending on the performance of the Company during the Performance Segments, as described further below and in Section 5:
|
I.
|
The LTIP Target is first divided equally among the four Performance Segments: (i) Year 1, (ii) Year 2, (iii) Year 3 and (iv) Cumulative Performance Segment, each of which is weighted 25% when determining the LTIP Award Payment; and
|
II.
|
The LTIP Target for a Performance Segment is then divided equally among the Performance Metrics for each Performance Segment, where each Performance Segment is weighted 50% between EP (as defined below) and
|
III.
|
The LTIP Target for each Performance Metric in a Performance Segment is then divided equally between an opportunity to receive an LTIP Award Payment in the form of cash and an opportunity to receive an LTIP Award Payment in the form of common stock (“
Common Stock
”) of the Company.
|
5.
|
Achievement of Performance Achievement Levels.
The Committee shall specify the Performance Achievement Levels for each Performance Segment that will provide an LTIP Award Payment at LTIP Target. Specific values for Threshold, Target and Maximum (each, as described below) Performance Achievement Levels shall be set for each Performance Segment at the beginning of each Performance Segment by the Company when its budgets and other incentive targets are approved the Company’s Board of Directors. If 100% of the Performance Achievement Levels are achieved for a Performance Segment (the “
Target
”), the LTIP Award shall be equal to the LTIP Target for such Performance Segment; if the “
Threshold
” amount of the Performance Achievement Levels are achieved for the Performance Segment, the LTIP Award for such Performance Segment shall be equal to 25% of the LTIP Target for such Performance Segment; and if the “
Maximum
” amount of the Performance Achievement Levels are achieved for a Performance Segment, the LTIP Award for such Performance Segment shall be equal to 200% of the LTIP Target for such Performance Segment. If less than the Threshold is met, the LTIP Award shall be $0. If in a Performance Segment the actual performance is above the Threshold, but below the Target, or above the Target but below the Maximum, the LTIP Award Payment for such Performance Segment shall be adjusted on a pro rata basis by the actual Performance Achievement Levels. In no event shall the LTIP Award Payment for any Performance Segment be more than 200% of the LTIP Target for such Performance Segment.
|
6.
|
Performance Metrics
.
|
a.
|
The Committee has established Internal Economic Profit (“
EP
”) and External Total Shareholder Return (“
TSR
”) against the S&P 500 as the financial metrics for measuring Company performance for the Performance Segments. EP measures operating profitability after considering (i) the Company’s operating profit, (ii) the Company’s income taxes and (iii) a charge for the capital employed in the business. TSR is calculated by measuring the change in the market price of stock plus dividends paid (assuming the dividends are reinvested) for the Company and the S&P 500 companies over each Performance Segment. The market price for purposes of calculating the TSR of the Company and the S&P 500 for each Performance Segment is determined based on the average closing price per share of the Company’s Common Stock over the period of 20 consecutive trading days preceding that date.
|
b.
|
The Performance Achievement Level for a Performance Segment that is a calendar year shall be set by the Committee on or before March 31 of each such year. The Performance
|
c.
|
Notwithstanding the attached LTIP Award Agreement, (i) for a Performance Segment that is a calendar year, the Committee may change the Performance Metrics for the Performance Segment on or before March 31 of such year; and (ii) for a Performance Segment that is greater than a calendar year, the Committee may change the Performance Metrics for the Performance Segment on or before March 31 of the first calendar year of the Performance Segment.
|
7.
|
Notional Account Credits
. The portion of the LTIP Award attributable to the achievement of a Performance Metric at or above the Threshold, during a Performance Segment prior to the LTIP Award Payment date will be credited to a notional bookkeeping account maintained by the Company until payout of the LTIP Award as provided herein. Shares of Common Stock do not have voting rights until payout. Shares of Common Stock do not pay dividends until vested.
|
8.
|
Mid-Year Entrants
. For Participants entering the LTIP after January 1 of a Performance Segment, LTIP Awards shall be pro-rated based on the number of days in the Performance Segment that the Participant is employed by the Company as compared to the number of days in the Performance Segment.
|
9.
|
Termination of Employment or Leave of Absence
. A Participant’s rights under the LTIP Award following termination of employment or leave of absence shall be determined in accordance with the following provisions.
|
a.
|
Involuntary Termination: (i) if the Participant is involuntarily terminated without Cause (as defined in the Plan) by the Company, or, if applicable, the Participant terminates for Good Reason (as defined in the Plan), the Participant’s LTIP Award will be calculated as provided above and pro-rated based on the number of days in the Performance Segment through the separation from service, as compared to the total number of days in the Performance Segment,
and payment will be made on the normally scheduled payout date for the respective Performance Cycle; and (ii) if the Participant is terminated for Cause (as defined in Plan) at any time during the Plan Year, the Participant will not be entitled to any portion of an LTIP Award.
|
b.
|
Voluntary Termination: If the Participant voluntarily terminates employment at any time during a Plan Year, or prior to payment of an LTIP Award for a Plan Year, the Participate will not be entitled to receive any portion of an LTIP Award.
|
c.
|
Retirement, Death and Disability: LTIP Awards, if any, are pro-rated based on the number of days in the Performance Segment through the separation from service due to retirement, death or disability as compared to the total number of days in the Performance Segment and payment is made on the normally scheduled payout date for the respective Performance Cycle.
|
d.
|
Leave of Absence: If a Participant is not in active employment for any portion of the Plan Year as a result of a paid or unpaid leave of absence, the amount of any LTIP Award may
|
10.
|
Change in Control
. In the event the Company undergoes a “Change in Control” (as defined in Section 9 of the Plan), LTIP Awards shall be treated as provided in Section 9 of the Plan.
|
11.
|
Clawback and Recoupment Provisions
. Notwithstanding anything herein to the contrary, both cash payments and Common Stock awards paid or payable in connection with an LTIP Award shall be subject to the clawback, recoupment and forfeiture provisions of Section 10 of the Plan and Section 7 of the ESP. By acknowledging the LTIP Award Agreement, the Participant acknowledges that any and all Awards previously granted to the Participant under the Plan prior to the Grant Date, and any other cash or Common Stock provided to the Participant prior to or following the Grant Date under the LTIP or otherwise under the Plan, are subject to the provisions of Section 10 of the Plan and Section 7 of the ESP.
|
12.
|
Limits on Transfers of Awards
. Except as provided by the Committee, no LTIP Award and no right under any LTIP Award, shall be assignable, alienable, saleable, or transferable by a Participant other than by will or by the laws of descent and distribution in accordance with Section 11(b) of the Plan.
|
13.
|
Administration
.
|
a.
|
Administration
. The Board has delegated administrative authority to the Committee and the LTIP shall be administered by the Committee or a subset of the Committee that satisfies the requirements of Section 162(m) of the Internal Revenue Code of 1986, as amended, and regulations promulgated thereunder (the “Code”) with respect to any incentive compensation subject to Code §162(m).
|
b.
|
Powers and Duties
. The Committee shall have sole discretion and authority to make any and all determinations necessary or advisable for administration of the LTIP and may adopt, amend or revoke any rule or regulation established for the proper administration of the LTIP. The Committee shall have the ability to modify the LTIP provisions, to the extent necessary, or delegate such authority, to accommodate any changes in law or regulations in jurisdictions in which Participants will receive LTIP Awards. The Committee will review and approve the Performance Metrics established at the beginning of each Plan Year and review and approve LTIP Award Payments. All interpretations, decisions, or determinations made by the Committee pursuant to the LTIP shall be final and conclusive.
|
14.
|
Amendment; Termination of the LTIP.
The Committee has the right to revise, modify, or terminate the LTIP in whole or in part at any time or for any reason, and the right to modify any LTIP Award amount in accordance with Section 11(e) of the Plan.
|
15.
|
Tax Liability and Withholding
. The Participant shall be responsible for any tax liability that may arise as a result of the payments contemplated by an LTIP Award or these LTIP Terms and Conditions in accordance with Section 11(d) of the Plan. The Participant acknowledges the Company is authorized to withhold
taxes due, or potentially payable in connection with any LTIP Award Payment in accordance with Section 11(d) of the Plan. Further, the Participant agrees to any deduction or setoff by the Company as provided under Section 11(f) of the Plan.
|
16.
|
Compliance with Code Section 409A
. Section 11(j) of the Plan is hereby incorporated by reference.
|
17.
|
Severability; Survival of Terms
. Should any provision of an LTIP Award or these LTIP Terms and Conditions be held by a court of competent jurisdiction to be unenforceable, such holding shall not affect the validity of the remainder of the LTIP Award or these LTIP Terms and Conditions. These LTIP Terms and Conditions shall apply to and bind the Participant and the Company and their respective permitted assignees and transferees, heirs, legatees, executors, administrators and legal successors.
|
18.
|
Entire Agreement
. These LTIP Terms and Conditions, the LTIP Award Agreement and the Plan constitute the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and the Participant with respect to the subject matter hereof.
|
19.
|
Non U.S. Residents
. Rights and restrictions for Participants residing in foreign countries may differ and shall be based on applicable foreign law and will be governed by Section 11(k) of the Plan.
|
20.
|
Electronic Delivery
. The Company may, in its sole discretion, deliver any documents related to an LTIP Award by electronic means. The Participant hereby consents to receive such documents by electronic delivery and, if requested, to agree to participate in the Plan through an on-line or electronic system established and maintained by the Company or another third party designated by the Company.
|
21.
|
Governing Law
. These LTIP Terms and Conditions and the attached LTIP Award Agreement shall be governed by and construed according to the laws of the State of New York and of the United States without regard to principles of conflict of law.
|
22.
|
Consent for Data Transfer
. By accepting this LTIP Agreement, the Participant voluntarily acknowledges and consents to the collection, use processing and transfer of personal data as described herein, including for the purpose of managing and administering the Plan, certain personal information, including name, home address and telephone number, date of birth, social security number or other employee identification number, salary, nationality, job title, any shares of Common Stock or directorships held in the Company, and details of all options or any other entitlement to shares of Common Stock awarded, canceled, purchased, vested, unvested or outstanding in Participant’s favor ("
Data
"). The Company and/or its affiliates will transfer Data among themselves as necessary for the purpose of implementation, administration and management of the Plan and may further transfer Data to any third parties assisting the Company in the implementation, administration and management of the Plan. These recipients may be located in the European Economic Area, or elsewhere throughout the world, such as the United States. The Participant authorizes them to receive, possess, use, retain and transfer the Data, in electronic or other form, for the purposes of implementing, administering and managing
|
23.
|
Notices
. Any notice required or permitted to be given under these LTIP Terms and Conditions or the LTIP Award Agreement shall be in writing and shall be deemed to have been given when delivered personally or by courier, or sent by certified or registered mail, postage prepaid, return receipt requested, duly addressed to the party concerned at the address indicated below or to such changed address as such party may subsequently by similar process give notice of:
|
Name of Entity
|
Country
|
International Flavors & Fragrances SRL
|
Argentina
|
Bush Boake Allen Australia Pty Ltd
|
Australia
|
IFF Australia Holdings Pty Ltd
|
Australia
|
International Flavours & Fragrances (Australia) Pty Ltd
|
Australia
|
Alva Insurance Ltd
|
Bermuda
|
I.F.F. Essencias e Fragrancias Ltda.
|
Brazil
|
Bush Boake Allen Industria E Commercial do Brasil Limitada
|
Brazil
|
International Flavors & Fragrances I.F.F. (Canada) Ltd.
|
Canada
|
Bush Boake Allen (Chile) S.A.
|
Chile
|
IFF Sabores y Fragancias de Chile Ltda.
|
Chile
|
International Flavors & Fragrances I.F.F. (Chile) Limitada
|
Chile
|
International Flavors & Fragrances (Hangzhou) Co. Ltd1
|
China
|
IFF Flavors & Fragrances (Hangzhou) Trading Co.
|
China
|
International Flavors & Fragrances (Zhejiang) Co., Ltd.
|
China
|
International Flavors & Fragrances (China) Ltd.
|
China
|
Sabores y Fragancias S.A.
|
Colombia
|
International Flavors & Fragrances (Middle East) FZ-LLC
|
Dubai
|
Misr Co. for Aromatic Products (MARP) S.A.E.
|
Egypt
|
International Flavors & Fragrances I.F.F. (France) SAS
|
France
|
International Flavors & Fragrances I.F.F. (Deutschland) G.m.b.H.
|
Germany
|
IFF Worldwide (Gibraltar) Limited
|
Gibraltar
|
IFF (Gibraltar) Holdings Limited
|
Gibraltar
|
International Flavors & Fragrances (Hong Kong) Limited
|
Hong Kong
|
Essence Scientific Research Private Limited
|
India
|
Fragrance Holdings Private Limited
|
India
|
International Flavours & Fragrances India Private Limited2
|
India
|
P.T. Essence Indonesia
|
Indonesia
|
IFF Capital Services Ltd.
|
Ireland
|
IFF Financial Services Ltd.
|
Ireland
|
Irish Flavours and Fragrances Limited
|
Ireland
|
Aromatics Holdings Limited
|
Ireland
|
International Flavors & Fragrances Irish Acquisition Company Limited
|
Ireland
|
Aromor Flavor & Fragrances Ltd.
|
Israel
|
BKF Vision Ltd.
|
Israel
|
K-Vision Consulting and Investments Ltd.
|
Israel
|
M.P. Equity Holdings Ltd.
|
Israel
|
International Flavors & Fragrances I.F.F. (Israel) Ltd.
|
Israel
|
International Flavors & Fragrances I.F.F. (Italia) S.r.l.
|
Italy
|
Bush Boake Allen (Jamaica) Limited3
|
Jamaica
|
International Flavors & Fragrances (Japan) Ltd.
|
Japan
|
IFF (Korea) Inc.
|
Korea
|
IFF (Gibraltar) Holdings (Luxembourg) SCS
|
Luxembourg
|
International Flavors & Fragrances (Luxembourg) S.a.r.l.
|
Luxembourg
|
International Flavors & Fragrances Ardenne S.a.r.l.
|
Luxembourg
|
International Flavours & Fragrances (Mauritius) Ltd.
|
Mauritius
|
1
|
90% of the voting stock of International Flavors & Fragrances (Hangzhou) Co. Ltd., is owned, directly or indirectly, by the Company.
|
2
|
93.36% of the voting stock of International Flavours & Fragrances (India) Limited is owned, directly or indirectly, by the Company.
|
3
|
70% of the voting stock of Bush Boake Allen (Jamaica) Limited is owned, directly or indirectly, by the Company.
|
Bush Boake Allen Controladora S.A. de C.V.
|
Mexico
|
IFF Mexico Manufactura S.A. de C.V.
|
Mexico
|
International Flavors & Fragrances (Mexico) S. de R.L. de C.V.
|
Mexico
|
Bush Boake Allen Benelux B.V.
|
Netherland
|
International Flavors & Fragrances (Nederland) Holding B.V.
|
Netherland
|
International Flavors & Fragrances I.F.F. (Nederland) B.V.
|
Netherland
|
IFF Luxar C.V.
|
Netherland
|
International Flavours & Fragrances (NZ) Ltd
|
New Zealand
|
Bush Boake Allen (NZ) Ltd
|
New Zealand
|
International Flavors & Fragrances (Philippines), Inc.
|
Philippines
|
International Flavors & Fragrances (Poland) Sp.z.o.o.
|
Poland
|
International Flavors & Fragrances (Greater Asia) Pte Ltd
|
Singapore
|
International Flavors & Fragrances (Asia Pacific) Pte Ltd
|
Singapore
|
International Flavors & Fragrances I.F.F. (S.A.) (Pty) Ltd.
|
South Africa
|
International Flavors & Fragrances I.F. F. (Espana) S.A.
|
Spain
|
IFF Latin American Holdings (Espana) S.L.
|
Spain
|
IFF - Benicarlo S.L.
|
Spain
|
International Flavors & Fragrances I.F.F. (Norden) AB
|
Sweden
|
International Flavors & Fragrances I.F.F. (Switzerland) A.G.
|
Switzerland
|
International Flavours & Fragrances (Thailand) Ltd.
|
Thailand
|
IFF Aroma Esans Sanayi Ve Ticaret A.S.
|
Turkey
|
A. Boake, Roberts And Company (Holding), Limited
|
England
|
International Flavours & Fragrances (CIL) Limited
|
England
|
Bush Boake Allen Enterprises Ltd.
|
England
|
Bush Boake Allen Limited
|
England
|
Bush Boake Allen (Pension Trustees) Limited
|
England
|
Bush Boake Allen Pension Investments Limited
|
England
|
Bush Boake Allen Holdings (U.K.) Limited
|
England
|
IFF Augusta Limited
|
England
|
IFF Augusta II Limited
|
England
|
International Flavours & Fragrances (GB) Holdings Limited
|
England
|
International Flavours & Fragrances I.F.F. (Great Britain) Ltd.
|
England
|
Asian Investments, Inc.
|
Delaware
|
Bush Boake Allen Inc.
|
Virginia
|
IFF Chemical Holdings Inc.
|
Delaware
|
IFF International Inc.
|
New York
|
IFF Augusta Holdings LLC
|
Delaware
|
Aromor Flavors & Fragrances Inc.
|
Delaware
|
International Flavors & Fragrances (Caribe) Inc.
|
Delaware
|
van Ameringen-Haebler, Inc.
|
New York
|
Fragrances Ingredients Holdings Inc.
|
Delaware
|
Bush Boake Allen Zimbabwe (Private) Limited
|
Zimbabwe
|
International Flavors & Fragrances (Zimbabwe) (Private) Ltd.
|
Zimbabwe
|
/s/ PricewaterhouseCoopers LLP
|
New York, New York
|
February 25, 2014
|
1.
|
I have reviewed this Annual Report on Form 10-K of International Flavors & Fragrances Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
By:
|
/s/ Douglas D. Tough
|
Name:
|
Douglas D. Tough
|
Title:
|
Chairman of the Board and Chief Executive Officer
|
1.
|
I have reviewed this Annual Report on Form 10-K of International Flavors & Fragrances Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
By:
|
/s/ Kevin C. Berryman
|
Name:
|
Kevin C. Berryman
|
Title:
|
Executive Vice President and Chief Finanical Officer
|
By:
|
/s/ Douglas D. Tough
|
Name:
|
Douglas D. Tough
|
Title:
|
Chairman of the Board and Chief Executive Officer
|
By:
|
/s/ Kevin C. Berryman
|
Name:
|
Kevin C. Berryman
|
Title:
|
Executive Vice President and Chief Financial Officer
|