Back to GetFilings.com
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the fiscal year ended December 31, 2002 Commission File Number 1-4858
INTERNATIONAL FLAVORS & FRAGRANCES INC.
(Exact name of Registrant as specified in its charter)
NEW YORK 13-1432060
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
521 WEST 57TH STREET, NEW YORK, N.Y. 10019
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number, including area code (212) 765-5500
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
NAME OF EACH EXCHANGE ON
TITLE OF EACH CLASS WHICH REGISTERED
------------------- ------------------------
Common Stock, par value New York Stock Exchange
12 1/2(cent) per share
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
None
(Title of Class)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendments to this Form 10-K. [ ]
Indicate by check mark whether the Registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act) Yes [X] No [ ].
For the purpose of reporting the following market value of Registrant's
outstanding common stock, the term "affiliate" refers to persons, entities or
groups which directly or indirectly control, are controlled by, or are under
common control with the Registrant and does not include individual executive
officers or directors or under 10% shareholders. The aggregate market value of
Registrant's common stock not held by affiliates as of June 28, 2002 was
$3,080,187,516.
Indicate the number of shares outstanding of each of the Registrant's
classes of common stock, as of March 1, 2003:
93,869,384 shares of Common Stock, par value 12 1/2 (cent) per share
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Annual Report to Shareholders for the fiscal
year ended December 31, 2002 (the "IFF 2002 Annual Report") are incorporated by
reference in Parts I, II and IV of this Form 10-K.
Portions of the Registrant's Proxy Statement to be sent to shareholders in
connection with the 2003 Annual Meeting (the "IFF 2003 Proxy Statement") are
incorporated by reference in Part III of this Form 10-K.
================================================================================
PART I
ITEM 1. BUSINESS.
International Flavors & Fragrances Inc., incorporated in New York in 1909
(the "Company"), is a leading creator and manufacturer of flavor and fragrance
products used by other manufacturers to impart or improve flavor or fragrance
in a wide variety of consumer products. Fragrance products are sold principally
to manufacturers of perfumes, cosmetics, toiletries, hair care products,
deodorants, soaps, detergents and air care products; flavor products are sold
principally to manufacturers of prepared foods, beverages, dairy foods,
pharmaceuticals and confectionery products.
The present world-wide scope of the Company's business is in part the
result of the 1958 combination of (i) the business conducted prior to the
combination primarily in the United States by the Company under the name van
Ameringen-Haebler, Inc. ("VAH") with (ii) the business conducted prior to the
combination primarily in Europe by N. V. Polak & Schwarz's Essencefabrieken, a
Dutch corporation ("P & S"). The P & S enterprise, founded in Holland in 1889,
was also engaged in the manufacture and sale of flavor and fragrance products,
with operations in a number of countries where VAH was not an important factor.
In October 2000, the Company implemented a global reorganization under the
broad umbrellas of Business Development and Operations, rather than separate
divisions for flavors and fragrances. The responsibilities of Business
Development, whose purpose is to drive top line growth of the Company, include
category strategy, consumer research, product development, global sales and
marketing, research and development coordination and technical application. The
responsibilities of Operations, whose focus is on product delivery, product
planning and increasing productivity, include global supply chain,
manufacturing, customer service, quality control, logistics and distribution.
The Company has a Regional Manager covering each major geographical region of
the world. The Regional Managers work with and are supported by both Business
Development and Operations.
In November 2000, the Company acquired Bush Boake Allen Inc. ("BBA"), an
international flavor, fragrance and aroma chemical company with worldwide
annual sales of $499 million. This acquisition enhanced the Company's position
as a global leader in flavor markets, strengthened the Company's already
leading global fragrance position, expanded the Company's product line and
customer base, particularly in certain emerging markets, and broadened and
enhanced the Company's management pool.
The Company currently has 35 manufacturing facilities with the major
manufacturing facilities being located in the United States, The Netherlands,
France, Great Britain, Ireland, Spain, Switzerland, Argentina, Brazil, Mexico,
China, Singapore, Philippines, Indonesia, Japan, India and Australia. The
remaining manufacturing facilities are located in 8 other countries. The
Company maintains its own sales and distribution facilities in 34 countries and
is represented by sales agents in other countries. The Company's principal
executive offices are located at 521 West 57th Street, New York, New York 10019
(212-765-5500). Except as the context otherwise indicates, the term "the
Company" as used in this report refers to the Registrant and its subsidiaries.
MARKETS
Fragrance products are used by customers in the manufacture of consumer
products such as soaps, detergents, cosmetic creams, lotions and powders,
lipsticks, after-shave lotions, deodorants, hair preparations, candles, air
fresheners and all-purpose cleaners, as well as in other consumer products
designed solely to appeal to the sense of smell, such as perfumes and colognes.
The cosmetics industry, including perfume and toiletries manufacturers, is one
of the Company's two largest fragrance customer groups. Most of the major
United States companies in this industry are customers of the Company, and five
of the largest United States cosmetics companies are among its principal
customers. The household products industry, including soaps and detergents, is
the other important fragrance customer group. Four of the largest United States
household product manufacturers are major customers of the Company. In the
three years ended December 31, 2002, sales of fragrance products accounted for
approximately 55%, 55% and 59%, respectively, of the Company's total sales on a
reported basis.
2
Flavor products are sold principally to the food and beverage industries
for use in consumer products such as soft drinks, candies, baked goods,
desserts, prepared foods, dietary foods, dairy products, drink powders,
pharmaceuticals, snack foods and alcoholic beverages. Two of the Company's
largest customers for flavor products are major producers of prepared foods and
beverages in the United States. In the three years ended December 31, 2002
sales of flavor products accounted for approximately 45%, 45% and 41%,
respectively, of the Company's total sales on a reported basis.
PRODUCTS
The Company's principal fragrance and flavor products consist of compounds
of large numbers of ingredients blended under formulas created by its perfumers
and flavorists. Most of these compounds contribute the total fragrance or
flavor to the consumer products in which they are used. This fragrance or
flavor characteristic is often a major factor in the public selection and
acceptance of the consumer end product. A smaller number of compounds is sold
to manufacturers who further blend them to achieve the finished fragrance or
flavor in their products. The Company produces thousands of compounds, and new
compounds are constantly being created in order to meet the many and changing
characteristics of its customers' end products. Most of the fragrance and
flavor compounds are created and produced for the exclusive use of particular
customers. The Company's products are sold in solid and liquid forms and in
amounts ranging from a few pounds to many tons, depending upon the nature of
the product.
The ingredients used by the Company in its compounds are both synthetic
and natural. The Company manufactures most of the synthetic ingredients and key
strategic natural ingredients. While the major part of the Company's production
of synthetic ingredients is used by it in its compounds, a substantial portion
is sold to others. The natural ingredients are derived from flowers, fruits and
other botanical products as well as from animal products. They contain varying
numbers of organic chemicals, which are responsible for the fragrance or flavor
of the natural product. The natural products are purchased for the larger part
in processed or semi-processed form. Some are used in compounds in the state in
which they are purchased and others after further processing. Natural products,
together with various chemicals, are also used as raw materials for the
manufacture of synthetic ingredients by chemical processes. The Company's
flavor products also include extracts and seasonings derived from various
fruits, vegetables, nuts, herbs and spices as well as microbiologically-derived
ingredients.
MARKET DEVELOPMENTS
The demand for consumer products utilizing flavors and fragrances has been
stimulated and broadened by changing social habits resulting from various
factors such as increases in personal income, employment of women, teen-age
population, leisure time, health concerns and urbanization and by the continued
growth in world population. In the fragrance field, these developments have
expanded the market for hair care, candles and air care products and deodorant
and personal wash products with finer fragrance quality, as well as the market
for colognes, toilet waters, men's toiletries and other products beyond
traditional luxury items such as perfumes. In the flavor field, similar market
characteristics have stimulated the demand for products such as convenience
foods, soft drinks and low-cholesterol and low-fat food products that must
conform to expected tastes. New and improved methods of packaging, application
and dispensing have been developed for many consumer products that utilize some
of the Company's flavor or fragrance products. These developments have called
for the creation by the Company of many new compounds and ingredients
compatible with the newly introduced materials and methods of application used
in consumer end products.
PRODUCT DEVELOPMENT AND RESEARCH
The development of new fragrance and flavor compounds is a complex
artistic and technical process calling upon the combined knowledge and talents
of the Company's creative perfumers and flavorists and its application chemists
and research chemists. Through long experience, the perfumers and flavorists
develop and refine their skills for creating fragrances or flavors best suited
to the market requirements of the customers' products.
3
An important contribution to the creation of new fragrance and flavor
products is the development of new ingredients having fragrance or flavor
value. The principal functions of the fragrance research program are to isolate
and synthesize fragrance components found in natural substances and through
chemical synthesis in order to develop new materials and better techniques for
utilization of such materials. The principal functions of the flavor research
program are to isolate and synthesize flavor components found in natural
substances and to isolate and produce natural flavor ingredients utilizing
improved processes.
The work of the perfumers and flavorists is conducted in 37 fragrance and
flavor laboratories in 27 countries. The Company maintains a research center at
Union Beach, New Jersey. The Company spent $144,027,000 in 2002, $135,248,000
in 2001 and $112,671,000 in 2000 on its research and development activities.
These expenditures are expected to increase in 2003 to approximately
$160,000,000. Of the amount expended in 2002 on such activities, 64% was for
fragrances and the balance was for flavors. The Company employed 1097 persons
in 2002 and 1060 persons in 2001 in such activities.
The business of the Company is not materially dependent upon any patents,
trademarks or licenses.
DISTRIBUTION
Most of the Company's sales are through its own sales force, operating
from 7 sales offices in the United States and 52 sales offices in 33 foreign
countries. Sales in other countries are made through sales agents and
distributors. For the year ended December 31, 2002, 32% of the Company's sales
were to customers in North America, 37% in Europe, 16% in Asia-Pacific, 12% in
Latin America and 3% in the India Region. For additional information with
respect to the management of the Company's operations by major geographical
region, see Note 13 of the Notes to the Company's Consolidated Financial
Statements on pages 46-47 of the IFF 2002 Annual Report.
During 2002 the Company's 30 largest customers accounted for approximately
52% of its sales, its four largest customers and their affiliates accounted for
about 9%, 8%, 6% and 4%, respectively, of its sales, and no other single
customer accounted for more than 3% of sales.
GOVERNMENTAL REGULATION
Manufacture and sale of the Company's products are subject to regulation
in the United States by the Food and Drug Administration, the Agriculture
Department, the Bureau of Alcohol, Tobacco and Firearms, the Environmental
Protection Agency, the Occupational Safety and Health Administration, the Drug
Enforcement Administration and state authorities. Foreign subsidiaries are
subject to similar regulation in a number of countries. Compliance with
existing governmental requirements regulating the discharge of materials into
the environment has not materially affected the Company's operations, earnings
or competitive position. The Company expects to spend in 2003 approximately
$3,800,000 in capital projects and $13,500,000 in operating expenses and
governmental charges for the purpose of complying with such requirements. The
Company expects that in 2004 capital expenditures, operating expenses and
governmental charges for such purpose will not be materially different.
RAW MATERIAL PURCHASES
More than 5,000 different raw materials are purchased from many sources
all over the world. The principal natural raw material purchases consist of
essential oils, extracts and concentrates derived from fruits, vegetables,
flowers, woods and other botanicals, animal products and raw fruits. The
principal synthetic raw material purchases consist of organic chemicals. The
Company believes that alternate sources of materials are available to enable it
to maintain its competitive position in the event of any interruption in the
supply of raw materials from present sources.
COMPETITION
The Company has more than 50 competitors in the United States and world
markets. While no single factor is responsible, the Company's competitive
position is based principally on the creative
4
skills of its perfumers and flavorists, the technological advances resulting
from its research and development, the quality of its customer service and the
support provided by its marketing and application groups, and its understanding
of consumers. The Company believes that it is the largest company producing and
marketing on an international basis a wide range of fragrance and flavor
products of the types manufactured for sale to manufacturers of consumer
products. In particular countries and localities, the Company faces competition
from numerous companies specializing in certain product lines, among which are
some companies larger than the Company and some more important in a particular
product line or lines. Most of the Company's customers do not buy all their
fragrance or flavor products from the same supplier, and some customers make
their own fragrance or flavor compounds with ingredients supplied by the
Company or others.
EMPLOYEE RELATIONS
The Company at December 31, 2002 employed 5,728 persons, of whom 1,656
were employed in the United States. The Company has never experienced a work
stoppage or strike and considers that its employee relations are satisfactory.
AVAILABLE INFORMATION
The Company makes available free of charge through its website,
www.iff.com, all materials that it files electronically with the SEC, including
its annual report on Form 10-K, quarterly reports on Form 10-Q, current reports
on Form 8-K, and amendments to those reports filed or furnished pursuant to
Section 13(a) or 15(d) of the Securities Exchange Act of 1934 as soon as
reasonably practicable after electronically filing such materials with, or
furnishing them to, the SEC. During the period covered by this Form 10-K, the
Company made all such materials available through its website as soon as
reasonably practicable after filing such materials with the SEC.
You may also read and copy any materials filed by the Company with the SEC
at the SEC's Public Reference Room at 450 Fifth Street, N.W., Washington, DC
20549, and you may obtain information on the operation of the Public Reference
Room by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains an
Internet website, www.sec.gov, that contains reports, proxy and information
statements and other information that the Company files electronically with the
SEC.
CAUTIONARY STATEMENT
Statements in this Annual Report on Form 10-K (including information
incorporated by reference from the IFF 2002 Annual Report) which are not
historical facts or information, are "forward-looking statements" within the
meaning of The Private Securities Litigation Reform Act of 1995. Such
forward-looking statements are based on management's reasonable current
assumptions and expectations. Such forward-looking statements involve risks,
uncertainties and other factors, which may cause the actual results of the
Company to be materially different from any future results expressed or implied
by such forward-looking statements, and there can be no assurance that actual
results will not differ materially from management's expectations. Such factors
include, among others, the following: general economic and business conditions
in the Company's markets, including economic and political uncertainties;
interest rates; the price and availability of raw materials; the Company's
ability to implement its business strategy, including the achievement of
anticipated cost savings, profitability and growth targets; the impact of
currency fluctuation or devaluation in the Company's principle foreign markets
and the success of the Company's hedging and risk management strategies; the
impact of possible pension funding obligations and increased pension expense on
the Company's cash flow and results of operations; and the effect of legal and
regulatory proceedings, as well as restrictions imposed on the Company, its
operations or its representatives by foreign governments.
The Company intends its forward-looking statements to speak only as of the
time of such statements and does not undertake to update or revise them as more
information becomes available or to reflect changes in expectations,
assumptions or results.
5
ITEM 2. PROPERTIES.
The principal manufacturing and research properties of the Company are as
follows:
LOCATION OPERATION
- -------- ---------
UNITED STATES
New York, NY ................... Fragrance laboratories.
Augusta, GA .................... Production of fragrance chemical ingredients.
Hazlet, NJ (1) ................. Production of fragrance compounds; fragrance laboratories.
South Brunswick, NJ(1) ......... Production of flavor ingredients and compounds;
flavor laboratories.
Union Beach, NJ ................ Research and development center.
Carrollton, TX(1) .............. Production of seasonings.
Jacksonville, FL ............... Production of fragrance chemical ingredients.
NETHERLANDS
Hilversum ...................... Flavor and fragrance laboratories.
Tilburg ........................ Production of flavor and fragrance compounds and flavor ingredients.
FRANCE
Bois-Colombes .................. Fragrance laboratories.
Dijon .......................... Production of fragrance ingredients and compounds, flavor ingredients and
compounds and fruit preparations; flavor laboratories.
Grasse ......................... Production of fragrance and flavor ingredients; fragrance laboratories.
GREAT BRITAIN
Haverhill ...................... Production of flavor compounds and ingredients, and fragrance chemical
ingredients; flavor laboratories.
IRELAND
Drogheda ....................... Production of fragrance compounds.
SPAIN
Benicarlo ...................... Production of fragrance chemical ingredients.
SWITZERLAND
Reinach-Aargau ................. Production of fruit preparations.
ARGENTINA
Garin .......................... Production of flavor ingredients and compounds; production of fragrance
compounds; flavor laboratories.
BRAZIL
Rio de Janeiro ................. Production of fragrance compounds.
Taubate ........................ Production of flavor ingredients and compounds; flavor laboratories.
Sao Paulo ...................... Fragrance laboratories.
MEXICO
Tlalnepantla ................... Production of flavor and fragrance compounds; flavor and fragrance
laboratories.
CHINA
Guangzhou(1) ................... Production of flavor and fragrance compounds; flavor laboratories.
Shanghai(1) .................... Flavor and fragrance laboratories.
Xin'anjiang .................... Production of fragrance chemical ingredients.
6
LOCATION OPERATION
- -------- ---------
INDIA
Chennai(2) ............... Production of flavor and fragrance compounds and flavor ingredients.
SINGAPORE
Jurong(3) ................ Production of flavor and fragrance compounds.
Science Park (1) ......... Flavor and fragrance laboratories.
PHILIPPINES
Manila(1) ................ Production of flavor compounds and flavor ingredients.
INDONESIA
Jakarta(3) ............... Production of flavor and fragrance compounds and ingredients; flavor and
fragrance laboratories.
JAPAN
Gotemba .................. Production of flavor compounds.
Tokyo .................... Flavor and fragrance laboratories.
AUSTRALIA
Melbourne ................ Production of flavor compounds and flavor ingredients.
Sydney ................... Production of seasonings.
- ----------
(1) Leased.
(2) The Company has approximately a 93.1% interest in the subsidiary company
that owns this facility.
(3) Land is leased and building is partially leased and partially owned.
The principal executive offices of the Company and its New York laboratory
facilities are located at 521 West 57th Street, New York City.
ITEM 3. LEGAL PROCEEDINGS.
On September 7, 2001, the Company was named as a defendant in a purported
class action brought against it in the Circuit Court of Jasper County,
Missouri, on behalf of employees of a plant owned and operated by Gilster-Mary
Lee Corp. in Jasper, Missouri. The plaintiffs are alleging that they sustained
respiratory injuries in the workplace due to the use by Gilster-Mary Lee of a
BBA flavor. All BBA and IFF flavors meet the requirements of the U. S. Food and
Drug Administration and are safe for handling and use by workers in food
manufacturing plants when used according to specified safety procedures. Based
on the preliminary report issued by the National Institute for Occupational
Safety and Health (NIOSH), it appears any injuries the plaintiffs may have
suffered are related to inadequate workplace conditions.
This case is currently in discovery. The Company does not expect this
litigation to have a material adverse effect on the Company's financial
condition, results of operations or liquidity.
Over the past 20 years, various Federal and State authorities and private
parties have claimed that the Company is a potentially responsible party as a
generator of waste materials for alleged pollution at a number of waste sites
operated by third parties located principally in New Jersey and seek to recover
costs incurred and to be incurred to clean up the sites.
The waste site claims and suits usually involve million dollar amounts,
and most of them are asserted against many potentially responsible parties.
Remedial activities typically consist of several phases carried out over a
period of years. Most site remedies begin with investigation and feasibility
studies, followed by physical removal, destruction, treatment or containment of
contaminated soil and debris, and sometimes by groundwater monitoring and
treatment. To date, the Company's financial
7
responsibility for some sites has been settled through agreements granting the
Company, in exchange for one or more cash payments made or to be made, either
complete release of liability or, for certain sites, release from further
liability for early and/or later remediation phases, subject to certain
"re-opener" clauses for later-discovered conditions. Settlements in respect of
some sites involve, in part, payment by the Company, and other parties, of a
percentage of the site's future remediation costs over a period of years. At
present, only three sites remain the subject of significant unsettled claims.
The Company believes that the amounts it has paid and anticipates paying
in the future for clean-up costs and damages at all sites are not and will not
be material to the Company's financial condition, results of operations or
liquidity, because of the involvement of other large potentially responsible
parties at most sites, because payment will be made over an extended time
period and because, pursuant to an agreement reached in July 1994 with three of
the Company's liability insurers, defense costs and indemnity amounts payable
by the Company in respect of the sites will be shared by the insurers up to an
agreed amount.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
EXECUTIVE OFFICERS OF REGISTRANT:
YEAR
FIRST
BECAME
NAME OFFICE AND OTHER BUSINESS EXPERIENCE(2) AGE OFFICER
----- ----------------------------------------------- ----- --------
Richard A. Goldstein(1) ......... Chairman of the Board and Chief Executive 61 2000
Officer since June 2000; President and Chief
Executive Officer of Unilever United States,
Inc. and Business Group President of Unilever
North American Foods, a home, personal care
and food products company, prior thereto;
Director, Legacy Hotels; Director, Fiduciary
Trust Company International; Director, The
Interpublic Group of Companies, Inc.;
Director, Continuum Health Partners, Inc.
Julian W. Boyden ................ Executive Vice President, New Business 58 2000
Development since November 2000; Chairman
of the Board, President and Chief Executive
Officer of Bush Boake Allen Inc., a flavor and
fragrance company, prior thereto.
D. Wayne Howard ................. Executive Vice President, Global Operations 47 2000
since September 2000; Vice President, Supply
Chain Strategy of Nordstrom, Inc., a retailer,
from January 2000 to August 2000; Vice
President, Strategic Sourcing, North America
of Unilever North American Foods, prior
thereto.
Stephen A. Block ................ Senior Vice President, General Counsel and 58 1993
Secretary since February 2000; Senior Vice
President, Law & Regulatory Affairs, and
Secretary from May 1999 to February 2000;
Vice President, Law & Regulatory Affairs,
and Secretary prior thereto.
8
YEAR
FIRST
BECAME
NAME OFFICE AND OTHER BUSINESS EXPERIENCE(2) AGE OFFICER
----- -------------------------------------------------- ----- --------
Clint D. Brooks ............ Senior Vice President, Research and 51 2000
Development since December 2002; Vice
President, Research and Development from
October 2000 to December 2002; Director of
Chemical Sciences, Abbott Laboratories, a
pharmaceutical company, prior thereto.
Steven J. Heaslip .......... Senior Vice President, Human Resources since 45 2001
December 2002; Vice President, Human
Resources from September 2001 to December
2002; Senior Vice President, Human
Resources, Elizabeth Arden, a manufacturer
of prestige beauty products, prior thereto.
Douglas J. Wetmore ......... Senior Vice President and Chief Financial 45 1992
Officer since September 2000; Vice President
and Chief Financial Officer from April 1998 to
September 2000; Controller prior thereto.
Gail S. Belmuth ............ Vice President, Corporate Communications since 39 2001
June 2001; President and COO of Banner
McBride North America, a change management
consulting firm, from May 2000 to May 2001;
Managing Director, Burson-Marsteller, a public
relations firm, prior thereto.
Arun Bewoor ................ Vice President, India Region since January 2003; 58 2003
Managing Director of IFF India Ltd and
Regional Vice President, India Region from
June 2002 to January 2003; Managing
Director, Bush Boake Allen India Ltd., prior
thereto.
Robert Burns ............... Vice President, Asia Pacific Region since 45 2003
January 2003; Regional Vice President, Asia
Pacific from January 2001 to January 2003;
Managing Director, IFF Australia from
January 1999 to December 2000; Managing
Director/Vice President Flavors, IFF
Indonesia, prior thereto.
James H. Dunsdon ........... Vice President, North America Region since 56 2003
January 2003; Regional Vice President, North
America from January 2001 to January 2003;
Executive Vice President BBA, prior thereto.
Rob J. M. Edelman .......... Vice President, Europe Region since January 41 2003
2003; Regional Vice President, Europe from
January 2001 to January 2003; Vice President
and Director of Marketing and Sales, Aroma
Chemicals from July 1999 to December 2000;
Managing Director, PFW Aroma Chemicals
B.V., an aroma chemicals manufacturing
company, prior thereto.
9
YEAR
FIRST
BECAME
NAME OFFICE AND OTHER BUSINESS EXPERIENCE(2) AGE OFFICER
---- ----------------------------------------------- ----- --------
Graciela M. Ferro .......... Vice President, Latin America Region since 48 2003
January 2003; Regional Vice President, Latin
America from October 2000 to January 2003;
Vice President, Latin America, LATAM Area
Manager, Fragrance Division and IFF
Argentina affiliate Manager from October
1999 to October 2000; Vice President, Latin
America, IFF Argentina Affiliate Manager
from August 1998 to October 1999; Regional
Account Manager for the Unilever, Latin
America Account, prior thereto.
Robert J. Gordon ........... Vice President, Sales, Global Accounts since 50 2002
December 2002; Vice President, Global
Business Development, Functional Products,
Fragrances from January 2001 to December
2002; Regional Vice President, EAME from
January 2000 to January 2001; Regional Vice
President, Latin America, prior thereto.
Neil Humphreys ............. Vice President, Global Business Development, 56 2002
Flavors and Functional Fragrances since
December 2002; Vice President, Global
Business Development, Flavors from January,
2001 until December 2002; Vice President,
Regional Manager, Asia-Pacific, Flavors from
July 1998 to January 2001; Senior Vice
President, Asia-Pacific, Givaudan-Roure, a
flavor, fragrance and aroma chemical
manufacturing company, prior thereto.
Nicolas Mirzayantz ......... Vice President, Global Business Development, 40 2002
Fine Fragrance and Toiletries since December
2002; Vice President, Global Business
Development, Fine Fragrances and Toiletries
since January 2001; Fragrances General
Manager, IFF France from January 1999 to
January 2001; Vice President, Commercial and
Creative Director, IFF France, prior thereto.
- ----------
(1) Member of Executive Committee of the Board of Directors.
(2) Employed by the Company or an affiliated company for the last five years,
except as otherwise indicated.
10
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
SECURITY HOLDER MATTERS.
(a) Market Information.
Information concerning where the Company's common stock is traded and the
high and low stock prices for each quarter during the last two years appears
under the caption "Stock Prices" on page 51 of the IFF Annual Report and such
information is incorporated by reference herein.
(b) Approximate Number of Equity Security Holders.
(B)
(A) NUMBER OF RECORD HOLDERS AS
TITLE OF CLASS OF DECEMBER 31, 2002
-------------- -----------------------------
Common stock, par value 12 1/2 (cent) per share 3,875
(c) Dividends.
Cash dividends declared per share for each quarter since January 2001 were
as follows:
2003 2002 2001
--------- --------- ---------
First ............................ $.15 $.15 $.15
Second ........................... .15 .15
Third ............................ .15 .15
Fourth ........................... .15 .15
ITEM 6. SELECTED FINANCIAL DATA.
Information setting forth the selected financial data required by this
Item 6 appears on page 52 of the IFF 2002 Annual Report. Such information is
incorporated by reference in this Item 6. The BBA operating results are
included in the Company's consolidated results from November 3, 2000, the date
of the acquisition of BBA.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION.
The Company's Management's Discussion and Analysis of Results of
Operations and Financial Condition required by this Item 7 appears under the
caption "Management's Discussion and Analysis of Results of Operations and
Financial Condition" on pages 25 to 32 of the IFF 2002 Annual Report. Such
information is incorporated by reference in this Item 7.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Information on quantitative and qualitative disclosures about market risk
required by this Item 7A appears in Note 15 on page 50 of the IFF 2002 Annual
Report. Such information is incorporated by reference in this Item 7A.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The consolidated financial statements of the Company and its subsidiaries
and the notes thereto, listed in Item 15(a)(1) and included in the IFF 2002
Annual Report on pages 34 through 50, together with the report thereon of
PricewaterhouseCoopers LLP dated January 27, 2003 on page 33 of the IFF 2002
Annual Report, and quarterly financial information on page 51 of the IFF 2002
Annual Report, are incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
11
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The information relating to directors and nominees of the Company is set
forth under the caption "Election of Directors" in the IFF 2003 Proxy Statement
and is incorporated by reference herein. The information under the heading
"Section 16(a) Beneficial Ownership Reporting Compliance" that appears in the
IFF 2003 Proxy Statement is also incorporated by reference herein. See Part I,
Item 4 for the Company's Executive Officers.
ITEM 11. EXECUTIVE COMPENSATION.
The information relating to executive compensation is set forth under the
captions "Summary Compensation," "Option Grants in 2002," "Aggregated Option
Exercises in 2002 and Option Values at December 31, 2002," "Directors'
Compensation," "Employment Contracts and Termination of Employment and
Change-in-Control Arrangements," "Executive Separation Policy" and "Pension
Plans" in the IFF 2003 Proxy Statement and such information is incorporated by
reference herein.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
The information relating to security ownership of management and certain
beneficial owners is set forth under the captions "Election of Directors" and
"Security Ownership" in the IFF 2003 Proxy Statement and such information is
incorporated by reference herein. The information relating to the Company's
equity plans is set forth under the caption "Equity Compensation Plan
Information" in the IFF 2003 Proxy Statement and such information is
incorporated by reference herein.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The information regarding certain relationships and related transactions
is set forth under the captions "Compensation Committee Interlocks and Insider
Participation" and "Additional Information" in the IFF 2003 Proxy Statement and
such information is incorporated by reference herein.
ITEM 14. CONTROLS AND PROCEDURES.
(a) Evaluation of Disclosure Controls and Procedures. The Company's Chief
Executive Officer and Chief Financial Officer, with the assistance of other
members of the Company's management, have evaluated the effectiveness of the
Company's disclosure controls and procedures (as such term is defined in Rules
13a-14(c) and 15d-14(c) under the Securities Exchange Act of 1934, as amended
(the "Exchange Act")) as of a date within 90 days prior to the filing date of
this annual report (the "Evaluation Date"). Based on such evaluation, the
Company's Chief Executive Officer and Chief Financial Officer have concluded
that, as of the Evaluation Date, the Company's disclosure controls and
procedures are effective in alerting them on a timely basis to material
information relating to the Company (including its consolidated subsidiaries)
required to be included in the Company's filings under the Exchange Act.
(b) Changes in the Internal Controls. Since the Evaluation Date, there
have not been any significant changes in the Company's internal controls or in
other factors that could significantly affect such controls.
12
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(a)(1) FINANCIAL STATEMENTS. The following consolidated financial
statements, related notes and independent accountants' report from the IFF 2002
Annual Report are incorporated by reference into Item 8 of Part II of this
Annual Report on Form 10-K:
PAGE
NO.
-----
Report of Independent Accountants ....................................................... 33
Consolidated Statement of Income for the three years ended December 31, 2002 ............ 34
Consolidated Balance Sheet--December 31, 2002 and 2001 .................................. 35
Consolidated Statement of Cash Flows for the three years ended December 31, 2002 ........ 36
Consolidated Statement of Shareholders' Equity for the three years ended December 31,
2002 .................................................................................. 37
Notes to Consolidated Financial Statements .............................................. 38
(a)(2) FINANCIAL STATEMENT SCHEDULES. The following schedule is included in Part IV of
this Annual Report on Form 10-K:
Schedule II--Valuation and Qualifying Accounts and Reserves for the three years ended
December 31, 2002 ....................................................................... S-1
Report of Independent Accountants on Financial Statement Schedule ....................... 17
All other schedules are omitted because they are not applicable or the
required information is shown in the financial statements or notes thereto.
(a)(3) EXHIBITS.
NUMBER
------
2 Agreement and Plan of Merger dated as of September 25, 2000 among Registrant, Bush
Boake Allen Inc. and B Acquisition Corp. incorporated by reference to Exhibit 2.1 to
Registrant's Report on Form 8-K dated September 25, 2000.
3(i) Restated Certificate of Incorporation of Registrant, incorporated by reference to
Exhibit 10(g) to Registrant's Report on Form 10-Q dated August 12, 2002.
3(ii) By-laws of Registrant, as amended through March 11, 2003.
4.1 Shareholders Protection Rights Agreement dated as of March 21, 2000 between
Registrant and The Bank of New York, as Rights Agent, incorporated by reference to
Exhibit 4 to Registrant's Report on Form 8-K dated March 22, 2000.
4.1a First Amendment dated as of September 26, 2000, to Shareholder Protection Rights
Agreement, incorporated by reference to Exhibit 4 to Registrant's Report on Form 8-K
dated September 26, 2000.
4.1b Letter Agreement between the Registrant and Wachovia Bank, National Association
("Wachovia") dated as of October 31, 2002 appointing Wachovia as Successor Rights
Agent pursuant to the Shareholder Protection Rights Agreement dated as of March 21,
2000 and amended as of September 26, 2000, incorporated by reference to Exhibit 4(a) to
Registrant's Report on Form 10-Q dated November 12, 2002.
4.2 Specimen Certificates of Registrant's Common Stock bearing legend notifying of
Shareholder Protection Rights Agreement, incorporated by reference to Exhibit 4(b) to
Registrant's Registration Statement on Form S-3 filed on September 29, 2000
(Reg. No. 333-46932).
13
NUMBER
-------
4.3 Indenture, dated as of May 1, 2001, between International Flavors & Fragrances Inc. and
Bank One Trust Company, N. A., as Trustee, incorporated by reference to Exhibit 4.1 to
Registrant's Registration Statement on Form S-4 dated June 26, 2001
(Reg. No. 333-63910).
4.4 First Supplemental Indenture, dated as of May 7, 2001, between International Flavors
& Fragrances Inc. and Bank One Trust & Company, N. A., as Trustee, incorporated by
reference to Exhibit 4.2 to Registrant's Registration Statement on Form S-4 dated
June 26, 2001 (Reg. No. 333-63910).
4.5 Form of 6.45% Note due 2006 (included in 4.4), incorporated by reference to Exhibit 4.2.1
to Registrant's Registration Statement on Form S-4 dated June 26, 2001
(Reg. No. 333-63910).
4.6 Registration Rights Agreement, dated May 7, 2001, among International Flavors
& Fragrances Inc. and Salomon Smith Barney Inc., Banc One Capitals Markets, Inc., First
Union Securities, Inc. and Tokyo-Mitsubishi International plc, as representatives of the
Initial Purchasers, incorporated by reference to Exhibit 4.3 to Registrant's Registration
Statement on Form S-4 dated June 26, 2001 (Reg. No. 333-63910).
*10.1 Memorandum of Understanding between Registrant and Richard A. Goldstein, Chairman
of the Board and Chief Executive Officer of Registrant, approved by Registrant's Board
of Directors on April 13, 2000, incorporated by reference to Exhibit 10(a) to Registrant's
Report on Form 10-Q dated August 14, 2000.
*10.2 Agreement dated June 23, 1998 between Registrant and Carlos A. Lobbosco, Executive
Vice President of Registrant, incorporated by reference to Exhibit 10(a) to Registrant's
Report on Form 10-Q dated November 13, 1998.
*10.2a Agreement dated as of October 1, 1999 between Registrant and Carlos A. Lobbosco,
Executive Vice President of Registrant, incorporated by reference to Exhibit 10(o) to
Registrant's Report on Form 10-K for fiscal year ended December 31, 1999.
*10.2b Agreement dated July 25, 2001 between Registrant and Carlos A. Lobbosco, Executive
Vice President, Business Development, incorporated by reference to Exhibit 10(b) to
Registrant's Report on Form 10-Q dated August 14, 2001.
*10.3 Promissory Note dated June 29, 1999 between Registrant and Nicolas Mirzayantz, Vice
President, Global Business Development, Fine Fragrance and Toiletries.
*10.4 Performance Incentive Award Agreement in respect of a performance incentive award of
200,000 restricted shares of Company Common Stock approved by the Company's Board
of Directors on August 1, 2002, granted to Richard A. Goldstein, Chairman of the Board
and Chief Executive Officer of the Company, incorporated by reference to Exhibit 10(a)
to Registrant's Report on Form 10-Q dated November 12, 2002.
*10.5 Supplemental Retirement Plan adopted by Board of Directors on October 29, 1986,
incorporated by reference to Exhibit 10(e) to Registrant's Report on Form 10-Q dated
May 14, 1997.
*10.6 2000 Stock Award and Incentive Plan adopted by the Registrant's Board of Directors on
March 9, 2000, as amended and restated through May 7, 2002, incorporated by reference
to Exhibit 10(d) to Registrant's Report on Form 10-Q dated August 12, 2002.
*10.7 2000 Supplemental Stock Award Plan adopted by the Registrant's Board of Directors on
November 14, 2000, as amended and restated through March 12, 2002, incorporated by
reference to Registrant's Report on Form 10-Q dated August 12, 2002.
14
NUMBER
-----
*10.8 Registrant's Executive Death Benefit Plan effective July 1, 1990, incorporated by
reference to Exhibit 10(c)to Registrant's Report on Form 10-Q dated May 14, 1997.
*10.9 Registrant's "Vision 2001 Compensation Program" adopted by Registrant's Board of
Directors on December 12, 2000, incorporated by reference to Exhibit 10(k) to
Registrant's Report on Form 10-K for the fiscal year ended December 31, 2000.
*10.10 Registrant's Executive Separation Policy, as amended through February 13, 2001,
incorporated by reference to Registrant's Report on Form 10-Q dated August 12, 2002.
*10.11 Registrant's Employee Stock Option Plan adopted in 1992.
*10.12 1997 Employee Stock Option Plan as amended by Registrant's Board of Directors on
February 8, 2000, incorporated by reference to Exhibit 10(11) to Registrant's Report on
Form 10-K for the fiscal year ended December 31, 1999.
*10.13 Registrant's Global Employee Stock Purchase Plan adopted by Registrant's Board of
Directors on November 14, 2000, incorporated by reference to Exhibit B to Registrant's
Proxy Statement dated March 30, 2001.
*10.14 Registrant's Senior Officer Stock Exercise Loan Program adopted by Registrant's Board
of Directors on November 13, 2001, incorporated by reference to Exhibit 10.19 to
Registrant's Report on Form 10-K for fiscal year ended December 31, 2001.
*10.15 Deferred Compensation Plan adopted by the Company's Board of Directors on
December 12, 2000, incorporated by reference to Exhibit 99 to the Company's
Registration Statement on Form S-8 dated May 16, 2001 (Reg. No. 333-61072).
10.16 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(b) to Registrant's Report on Form 10-Q
dated November 14, 2000.
*10.17 Stock Option Plan for Non-Employee Directors, incorporated by reference to
Exhibit 10(h) to Registrant's Report on Form 10-Q dated May 14, 1997.
*10.18 2000 Stock Option Plan for Non-Employee Directors adopted by Registrant's Board of
Directors on February 8, 2000, incorporated by reference to the Registrant's Proxy
Statement dated March 29, 2000.
*10.19 Director Charitable Contribution Program adopted by the Board of Directors on
February 14, 1995, incorporated by reference to Exhibit 10(j) to Registrant's Report on
Form 10-K for the fiscal year ended December 31, 1994.
*10.20 Resolutions approving Non-Employee Directors' Annual Stock Grant Program adopted
by Registrant's Board of Directors on September 12, 2000, incorporated by reference to
Exhibit 99(c) to Registrant's Registration Statement on Form S-3 filed on September 29,
2000 (Reg. No. 333-46932).
10.21 Five Year Credit Agreement dated as of September 26, 2001 among the Company, as
Borrower, certain Initial Lenders, Citibank N.A., as Administrative Agent, and Salomon
Smith Barney Inc., as Arranger, incorporated by reference to Exhibit 10(b) to Registrant's
Report on Form 10-Q dated November 14, 2001.
10.21a Amendment No. 1 dated as of June 10, 2002 to the Five Year Credit Agreement dated as
of September 26, 2001 among the Company, as Borrower, certain Initial Lenders and
Citibank N.A., as Administration Agent, incorporated by reference to Exhibit 10 (c) to
Registrant's Report on Form 10-Q dated August 12, 2002.
15
NUMBER
------
10.22 Multi-currency Revolving Credit Facility Agreement dated July 19, 2002, among
International Flavor & Fragrances (Luxembourg) S.A.R.L., as Borrower, the Company, as
Guarantor, certain Original Lenders, Barclays Bank PLC, as Agent, ABN AMRO Bank
NV and Barclays Capital, as Arrangers, incorporated by references to Exhibit 10(b) to
Registrant's Report on Form 10-Q dated August 12, 2002.
13 Registrant's 2002 Annual Report; except for those portions thereof that are expressly
incorporated by reference in this Form 10-K, this exhibit is furnished only for the
information of the Commission and is not deemed to be filed as part of this Form 10-K.
21 List of Principal Subsidiaries.
23 Consent of PricewaterhouseCoopers LLP.
24 Powers of Attorney authorizing Richard A. Goldstein, Douglas J. Wetmore and Stephen
A. Block to sign this report and amendments thereto on behalf of certain directors and
officers of the Registrant.
99.1 Registrant's Board of Directors' Corporate Governance Guidelines adopted by the Board
of Directors on May 7, 2002, incorporated by reference to Exhibit 99(a) to Registrant's
Report on Form 10-Q dated May 10, 2002.
99.2 Registrant's Charter of the Nominating and Governance Committee of the Company's
Board of Directors adopted by the Board of Directors on May 7, 2002, incorporated by
reference to Exhibit 99 (b) to Registrant's Report on Form 10-Q dated May 10, 2002.
99.3 Registrant's Charter of the Compensation Committee of the Company's Board of
Directors adopted by the Board of Directors on May 7, 2002, incorporated by reference
to Exhibit 99 (c) to Registrant's report on Form 10-Q dated May 10, 2002.
99.4 Registrant's Charter of the Executive Committee of the Company's Board of Directors
adapted by the Board of Directors on May 7, 2002, incorporated by reference to
Exhibit 99 (d) to Registrant's Report of Form 10-Q dated May 10, 2002.
99.5 Certification pursuant to 18 US. C. Section 1350, as adopted pursuant to Section 906 of
The Sarbanes-Oxley Act of 2002, signed by Richard A. Goldstein, Chairman of the Board
and Chief Executive Officer of the Registrant and Douglas J. Wetmore, Senior Vice
President and Chief Financial Officer of the Registrant.
- ----------
* Management contract or compensatory plan or arrangement.
(b) REPORTS ON FORM 8-K
The Company did not file any reports on Form 8-K during the last quarter
of the fiscal year ended December 31, 2002.
16
REPORT OF INDEPENDENT ACCOUNTANTS ON FINANCIAL STATEMENT SCHEDULE
To the Board of Directors of International Flavors & Fragrances Inc.
Our audits of the consolidated financial statements referred to in our report
dated January 27, 2003 appearing in the 2002 Annual Report to Shareholders of
International Flavors & Fragrances Inc. (which report and consolidated
financial statements are incorporated by reference in this Annual Report on
Form 10-K) also included an audit of the financial statement schedule listed in
Item 15(a)(2) of this Form 10-K. In our opinion, this financial statement
schedule presents fairly, in all material respects, the information set forth
therein when read in conjunction with the related consolidated financial
statements.
PRICEWATERHOUSECOOPERS LLP
New York, New York
January 27, 2003
17
Pursuant to the requirements of Section 13 of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
INTERNATIONAL FLAVORS & FRAGRANCES INC.
(Registrant)
By /s/ Douglas J. Wetmore
----------------------
Douglas J. Wetmore
Senior Vice President and
Chief Financial Officer
Dated: March 25, 2003
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the date indicated:
Principal Executive Officer:
/s/ Richard A. Goldstein
-------------------------
Richare A. Goldstein
Chairman of the Board
and
Chief Executive Officer
Principal Financial and Accounting Officer:
/s/ Douglas J. Wetmore
-------------------------
Douglas J. Wetmore
Senior Vice President
and
Chief Financial Officer
Directors:
/s/ Richard A. Goldstein
------------------------
RICHARD A. GOLDSTEIN
MARGARET HAYES ADAME* ]
GUNTER BLOBEL* ]
J. MICHAEL COOK* ] *By /s/ STEPHEN A. BLOCK
PETER A. GEORGESCU* } ------------------------
ARTHUR C. MARTINEZ* ] Stephen A. Block
HENRY P. VAN AMERINGEN* ] Attorney in fact
WILLIAM D. VAN DYKE, III* ] March 25, 2003
Original powers of attorney authorizing Richard A. Goldstein, Douglas J. Wetmore
and Stephen A. Block, and each of them, to sign this report on behalf of certain
directors and officers of the Registrant have been filed with the Securities and
Exchange Commission.
18
CERTIFICATION
I, Richard A. Goldstein, certify that:
1. I have reviewed this annual report on Form 10-K of International Flavors &
Fragrances Inc.;
2. Based on my knowledge, this annual 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 annual report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual 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 annual report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) Designed such disclosure controls and procedures 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 annual report
is being prepared;
b) Evaluated the effectiveness of the registrant's disclosure control and
procedures as of a date within 90 days prior to the filing date of
this annual report (the "Evaluation Date"); and
c) Presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a) All significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in this
annual report whether there were significant changes in internal controls
or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies and material
weakness.
Dated: March 25, 2003 By: /s/ Richard A. Goldstein
------------------------
Name: Richard A. Goldstein
Title: Chairman of the Board and
Chief Executive Officer
CERTIFICATION
I, Douglas J. Wetmore, certify that:
1. I have reviewed this annual report on Form 10-K of International Flavors &
Fragrances Inc.;
2. Based on my knowledge, this annual 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 annual report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual 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 annual report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) Designed such disclosure controls and procedures 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 annual report
is being prepared;
b) Evaluated the effectiveness of the registrant's disclosure control and
procedures as of a date within 90 days prior to the filing date of
this annual report (the "Evaluation Date"); and
c) Presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a) All significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in this
annual report whether there were significant changes in internal controls
or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies and material
weakness.
Dated: March 25, 2003 By: /s/ Douglas J. Wetmore
----------------------
Name: Douglas J. Wetmore
Title: Senior Vice President and
Chief Financial Officer
INTERNATIONAL FLAVORS & FRAGRANCES INC. AND SUBSIDIARIES
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
(In thousands)
FOR THE YEAR ENDED
DECEMBER 31, 2002
----------------------------------------------
BALANCE AT ADDITIONS CHARGED
BEGINNING TO COSTS AND ACCOUNTS TRANSLATION BALANCE AT THE
OF PERIOD EXPENSES WRITTEN OFF ADJUSTMENTS END OF PERIOD
----------- ------------------ ------------- ------------- ---------------
Allowance for doubtful accounts ....... $10,835 $4,067 $2,707 $738 $12,933
======= ====== ====== ==== =======
FOR THE YEAR ENDED
DECEMBER 31, 2001
----------------------------------------------
BALANCE AT ADDITIONS CHARGED
BEGINNING TO COSTS AND ACCOUNTS TRANSLATION BALANCE AT THE
OF PERIOD EXPENSES WRITTEN OFF ADJUSTMENTS END OF PERIOD
----------- ------------------ ------------- ------------- ---------------
Allowance for doubtful accounts ....... $11,074 $2,947 $2,306 $ (880) $10,835
======= ====== ====== ====== =======
FOR THE YEAR ENDED
DECEMBER 31, 2000
----------------------------------------------
BALANCE AT ADDITIONS CHARGED
BEGINNING TO COSTS AND ACCOUNTS TRANSLATION BALANCE AT THE
OF PERIOD EXPENSES WRITTEN OFF ADJUSTMENTS END OF PERIOD
----------- ------------------ ------------- ------------- ---------------
Allowance for doubtful accounts ....... $10,013 $2,359 $963 $ (335) $11,074
======= ====== ==== ====== =======
S-1
EXHIBIT INDEX
NUMBER
------
2 Agreement and Plan of Merger dated as of September 25, 2000 among Registrant, Bush
Boake Allen Inc. and B Acquisition Corp. incorporated by reference to Exhibit 2.1 to
Registrant's Report on Form 8-K dated September 25, 2000.
3(i) Restated Certificate of Incorporation of Registrant, incorporated by reference to
Exhibit 10(g) to Registrant's Report on Form 10-Q dated August 12, 2002.
3(ii) By-laws of Registrant, as amended on March 11, 2003.
4.1 Shareholders Protection Rights Agreement dated as of March 21, 2000 between
Registrant and The Bank of New York, as Rights Agent, incorporated by reference to
Exhibit 4 to Registrant's Report on Form 8-K dated March 22, 2000.
4.1a First Amendment dated as of September 26, 2000, to Shareholder Protection Rights
Agreement, incorporated by reference to Exhibit 4 to Registrant's Report on Form 8-K
dated September 26, 2000.
4.1b Letter Agreement between the Registrant and Wachovia Bank, National Association
("Wachovia") dated as of October 31, 2002 appointing Wachovia as Successor Rights
Agent pursuant to the Shareholder Protection Rights Agreement dated as of March 21,
2000 and amended as of September 26, 2000, incorporated by reference to Exhibit 4(a)
to Registrant's Report on Form 10-Q dated November 12, 2002.
4.2 Specimen Certificates of Registrant's Common Stock bearing legend notifying of
Shareholder Protection Rights Agreement, incorporated by reference to Exhibit 4(b)
to Registrant's Registration Statement on Form S-3 filed on September 29, 2000
(Reg. No. 333-46932).
4.3 Indenture, dated as of May 1, 2001, between International Flavors & Fragrances Inc. and
Bank One Trust Company, N. A., as Trustee, incorporated by reference to Exhibit 4.1 to
Registrant's Registration Statement on Form S-4 dated June 26, 2001 (Reg. No.
333-63910).
4.4 First Supplemental Indenture, dated as of May 7, 2001, between International Flavors &
Fragrances Inc. and Bank One Trust & Company, N. A., as Trustee, incorporated by
reference to Exhibit 4.2 to Registrant's Registration Statement on Form S-4 dated June
26, 2001 (Reg. No. 333-63910).
4.5 Form of 6.45% Note due 2006 (included in 4.4), incorporated by reference to Exhibit
4.2.1 to Registrant's Registration Statement on Form S-4 dated June 26, 2001
(Reg. No. 333-63910).
4.6 Registration Rights Agreement, dated May 7, 2001, among International Flavors &
Fragrances Inc. and Salomon Smith Barney Inc., Banc One Capitals Markets, Inc., First
Union Securities, Inc. and Tokyo-Mitsubishi International plc, as representatives of the
Initial Purchasers, incorporated by reference to Exhibit 4.3 to Registrant's Registration
Statement on Form S-4 dated June 26, 2001 (Reg. No. 333-63910).
10.1 Memorandum of Understanding between Registrant and Richard A. Goldstein,
Chairman of the Board and Chief Executive Officer of Registrant, approved by
Registrant's Board of Directors on April 13, 2000, incorporated by reference to
Exhibit 10(a) to Registrant's Report on Form 10-Q dated August 14, 2000.
10.2 Agreement dated June 23, 1998 between Registrant and Carlos A. Lobbosco, Executive
Vice President of Registrant, incorporated by reference to Exhibit 10(a) to Registrant's
Report on Form 10-Q dated November 13, 1998.
NUMBER
------
10.2a Agreement dated as of October 1, 1999 between Registrant and Carlos A. Lobbosco,
Executive Vice President of Registrant, incorporated by reference to Exhibit 10(o) to
Registrant's Report on Form 10-K for fiscal year ended December 31, 1999.
10.2b Agreement dated July 25, 2001 between Registrant and Carlos A. Lobbosco, Executive
Vice President, Business Development, incorporated by reference to Exhibit 10(b) to
Registrant's Report on Form 10-Q dated August 14, 2001.
10.3 Promissory Note dated June 29, 1999 between Registrant and Nicolas Mirzayantz, Vice
President, Global Business Development, Fine Fragrance and Toiletries.
10.4 Performance Incentive Award Agreement in request of a performance incentive award
of 200,000 restricted shares of Company Common stock approved by the Company's
Board of Directors on August 1, 2002, granted to Richard A. Goldstein, Chairman of
the Board and Chief Executive Officer of the Company, incorporated by reference to
Exhibit 10(a) to Registrant's Report on Form 10-Q dated November 12, 2002.
10.5 Supplemental Retirement Plan adopted by Board of Directors on October 29, 1986,
incorporated by reference to Exhibit 10(e) to Registrant's Report on Form 10-Q dated
May 14, 1997.
10.6 2000 Stock Award and Incentive Plan adopted by the Registrant's Board of Directors on
March 9, 2000, as amended and restated through May 7, 2002, incorporated by reference
to Exhibit 10(d) to Registrant's Report on Form 10-Q dated August 12, 2002.
10.7 2000 Supplemental Stock Award Plan adopted by the Registrant's Board of Directors on
November 14, 2000, as amended and restated through March 12, 2002, incorporated by
reference to Registrant's Report on Form 10-Q dated August 12, 2002.
10.8 Registrant's Executive Death Benefit Plan effective July 1, 1990, incorporated by
reference to Exhibit 10(c) to Registrant's Report on Form 10-Q dated May 14, 1997.
10.9 Registrant's "Vision 2001 Compensation Program" adopted by Registrant's Board of
Directors on December 12, 2000, incorporated by reference to Exhibit 10(k) to
Registrant's Report on Form 10-K for the fiscal year ended December 31, 2000.
10.10 Registrant's Executive Separation Policy, as amended through February 13, 2001,
incorporated by reference to Registrant's Report on Form 10-Q dated August 12, 2002.
10.11 Registrant's Employee Stock Option Plan adopted in 1992.
10.12 1997 Employee Stock Option Plan as amended by Registrant's Board of Directors on
February 8, 2000, incorporated by reference to Exhibit 10(ll) to Registrant's Report on
Form 10-K for the fiscal year ended December 31, 1999.
10.13 Registrant's Global Employee Stock Purchase Plan adopted by Registrant's Board of
Directors on November 14, 2000, incorporated by reference to Exhibit B to Registrant's
Proxy Statement dated March 30, 2001.
10.14 Registrant's Senior Officer Stock Exercise Loan Program adopted by Registrant's Board
of Directors on November 13, 2001, incorporated by reference to Exhibit 10.19 to
Registrant's Report on Form 10-K for fiscal year ended December 31, 2001.
10.15 Deferred Compensation Plan adopted by the Company's Board of Directors on
December 12, 2000, incorporated by reference to Exhibit 99 to the Company's
Registration Statement on Form S-8 dated May 16, 2001 (Reg. No. 333-61072).
NUMBER
------
10.16 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(b) to Registrant's Report on Form
10-Q dated November 14, 2000.
10.17 Stock Option Plan for Non-Employee Directors, incorporated by reference to
Exhibit 10(h) to Registrant's Report on Form 10-Q dated May 14, 1997.
10.18 2000 Stock Option Plan for Non-Employee Directors adopted by Registrant's Board of
Directors on February 8, 2000, incorporated by reference to the Registrant's Proxy
Statement dated March 29, 2000.
10.19 Director Charitable Contribution Program adopted by the Board of Directors on
February 14, 1995, incorporated by reference to Exhibit 10(j) to Registrant's Report on
Form 10-K for the fiscal year ended December 31, 1994.
10.20 Resolutions approving Non-Employee Directors' Annual Stock Grant Program adopted
by Registrant's Board of Directors on September 12, 2000, incorporated by reference to
Exhibit 99(c) to Registrant's Registration Statement on Form S-3 filed on September 29,
2000 (Reg. No. 333-46932).
10.21 Five Year Credit Agreement dated as of September 26, 2001 among the Company, as
Borrower, certain Initial Lenders, Citibank N.A., as Administrative Agent, and Salomon
Smith Barney Inc., as Arranger, incorporated by reference to Exhibit 10(b) to
Registrant's Report on Form 10-Q dated November 14, 2001.
10.21a Amendment No. 1 dated as of June 10, 2002 to the Five Year Credit Agreement dated
as of September 26, 2001 among the Company, as Borrower, certain Initial Lenders and
Citibank N.A., as Administrative Agent, incorporated by reference to Exhibit 10(c) to
Registrant's Report on Form 10-Q dated August 12, 2002.
10.22 Multi-currency Revolving Credit Facility Agreement dated July 19, 2002 among
International Flavor & Fragrances (Luxembourg) S.A.R.L., as Borrower, the Company,
as Guarantor, certain Original Lenders, Barclays Bank PLC, as Agent, ABN AMRO
Bank NV and Barclays Capital, as Arrangers, incorporated by reference to Exhibit 10(b)
to Registrant's Report on Form 10-Q dated August 12, 2002.
13 Registrant's 2002 Annual Report; except for those portions thereof that are expressly
incorporated by reference in this Form 10-K, this exhibit is furnished only for the
information of the Commission and is not deemed to be filed as part of this Form 10-K.
21 List of Principal Subsidiaries.
23 Consent of PricewaterhouseCoopers LLP.
24 Powers of Attorney authorizing Richard A. Goldstein, Douglas J. Wetmore and Stephen
A. Block to sign this report and amendments thereto on behalf of certain directors and
officers of the Registrant.
99.1 Registrant's Board of Directors' Corporate Governance Guidelines adopted by the
Board of Directors on May 7, 2002, incorporated by reference to Exhibit 99(a) to
Registrant's Report on Form 10-Q dated May 10, 2002.
99.2 Registrant's Charter of the Nominating and Governance Committee of the Company's
Board of Directors adopted by the Board of Directors on May 7, 2002, incorporated by
reference to Exhibit 99 (b) to Registrant's Report on Form 10-Q dated May 10, 2002.
NUMBER
-----
99.3 Registrant's Charter of the Compensation Committee of the Company's Board of
Directors adopted by the Board of Directors on May 7, 2002, incorporated by reference
to Exhibit 99 (c) to Registrant's report on Form 10-Q dated May 10, 2002.
99.4 Registrant's Charter of the Executive Committee of the Company's Board of Directors
adapted by the Board of Directors on May 7, 2002, incorporated by reference to
Exhibit 99 (d) to Registrant's Report of Form 10-Q dated May 10, 2002.
99.5 Certification pursuant to 18 US. C. Section 1350, as adopted pursuant to Section 906 of
The Sarbanes-Oxley Act of 2002, signed by Richard A. Goldstein, Chairman of the
Board and Chief Executive Officer of the Registrant and Douglas J. Wetmore, Senior
Vice President and Chief Financial Officer of the Registrant.