0001140361-18-021868.txt : 20180507 0001140361-18-021868.hdr.sgml : 20180507 20180507103006 ACCESSION NUMBER: 0001140361-18-021868 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 52 CONFORMED PERIOD OF REPORT: 20180331 FILED AS OF DATE: 20180507 DATE AS OF CHANGE: 20180507 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SENSIENT TECHNOLOGIES CORP CENTRAL INDEX KEY: 0000310142 STANDARD INDUSTRIAL CLASSIFICATION: INDUSTRIAL ORGANIC CHEMICALS [2860] IRS NUMBER: 390561070 STATE OF INCORPORATION: WI FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-07626 FILM NUMBER: 18810010 BUSINESS ADDRESS: STREET 1: 777 EAST WISCONSIN AVENUE CITY: MILWAUKEE STATE: WI ZIP: 53202 BUSINESS PHONE: 4142716755 MAIL ADDRESS: STREET 1: PO BOX 737 CITY: MILWAUKEE STATE: WI ZIP: 53201 FORMER COMPANY: FORMER CONFORMED NAME: UNIVERSAL FOODS CORP DATE OF NAME CHANGE: 19920703 10-Q 1 form10q.htm 10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC  20549

FORM 10‑Q

(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended:  March 31, 2018
 

OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from
to

Commission file number: 1‑7626

SENSIENT TECHNOLOGIES CORPORATION
(Exact name of registrant as specified in its charter)

Wisconsin
 
39‑0561070
(State or other jurisdiction of  incorporation or organization)
 
(I.R.S. Employer Identification Number)

777 East Wisconsin Avenue, Milwaukee, Wisconsin  53202-5304
(Address of principal executive offices)

Registrant's telephone number, including area code:
(414) 271‑6755
 
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 (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for at least the past 90 days.Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company.  See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 
Large accelerated filer  ☒
Accelerated filer  ☐
Non-accelerated filer  ☐
(Do not check if a smaller reporting  company)
 
Smaller reporting company  ☐
Emerging growth company  ☐
   

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No  ☒
 
Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

Class
 
Outstanding at April 30, 2018
Common Stock, par value $0.10 per share
 
42,336,473
 


SENSIENT TECHNOLOGIES CORPORATION
INDEX

     
Page No.
       
PART I. FINANCIAL INFORMATION:
 
       
 
Item 1.
Financial Statements:
 
   
1
       
   
2
       
   
3
       
   
4
       
   
5
       
 
Item 2.
12
       
 
Item 3.
17
       
 
Item 4.
17
       
PART II. OTHER INFORMATION:
 
       
 
Item 1.
18
       
 
Item 1A.
18
     
 
Item 2.
18
       
 
Item 6.
18
       
   
19
       
   
20
 
PART I.
FINANCIAL INFORMATION
ITEM 1.
FINANCIAL STATEMENTS

SENSIENT TECHNOLOGIES CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
(In thousands except per share amounts)
(Unaudited)

   
Three Months
Ended March 31,
 
             
   
2018
   
2017
 
                 
Revenue
 
$
356,477
   
$
341,397
 
                 
Cost of products sold
   
233,406
     
220,452
 
                 
Selling and administrative expenses
   
67,390
     
96,908
 
                 
Operating income
   
55,681
     
24,037
 
               
Interest expense
   
5,555
     
4,811
 
                 
Earnings before income taxes
   
50,126
     
19,226
 
                 
Income taxes
   
11,932
     
6,034
 
                 
Net earnings
 
$
38,194
   
$
13,192
 
                 
Weighted average number of shares outstanding:
               
Basic
   
42,879
     
44,202
 
Diluted
   
43,034
     
44,479
 
                 
Earnings per common share:
               
Basic
 
$
0.89
   
$
0.30
 
Diluted
 
$
0.89
   
$
0.30
 
                 
Dividends declared per common share
 
$
0.33
   
$
0.30
 

See accompanying notes to consolidated condensed financial statements.
 
1

SENSIENT TECHNOLOGIES CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
(Unaudited)
 
   
Three Months
Ended March 31,
 
             
   
2018
   
2017
 
             
Comprehensive Income
 
$
62,058
   
$
37,271
 
 
See accompanying notes to consolidated condensed financial statements.
 
2

SENSIENT TECHNOLOGIES CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
(In thousands)

ASSETS
 
March, 31
2018
(Unaudited)
   
December 31,
2017
 
             
CURRENT ASSETS:
           
Cash and cash equivalents
 
$
30,420
   
$
29,344
 
Trade accounts receivable, net
   
216,480
     
195,439
 
Inventories
   
467,996
     
463,517
 
Prepaid expenses and other current assets
   
45,023
     
43,206
 
Assets held for sale
   
2,022
     
1,969
 
                 
TOTAL CURRENT ASSETS
   
761,941
     
733,475
 
                 
OTHER ASSETS
   
67,432
     
68,251
 
DEFERRED TAX ASSETS
   
10,980
     
7,885
 
INTANGIBLE ASSETS, NET
   
7,680
     
7,211
 
GOODWILL
   
425,321
     
408,995
 
                 
PROPERTY, PLANT AND EQUIPMENT:
               
Land
   
35,925
     
35,198
 
Buildings
   
323,001
     
317,464
 
Machinery and equipment
   
709,085
     
687,896
 
Construction in progress
   
35,966
     
40,833
 
     
1,103,977
     
1,081,391
 
Less accumulated depreciation
   
(601,943
)
   
(582,868
)
     
502,034
     
498,523
 
                 
TOTAL ASSETS
 
$
1,775,388
   
$
1,724,340
 
                 
LIABILITIES AND SHAREHOLDERS' EQUITY
               
                 
CURRENT LIABILITIES:
               
Trade accounts payable
 
$
96,136
   
$
109,780
 
Accrued salaries, wages and withholdings from employees
   
21,586
     
23,613
 
Other accrued expenses
   
50,230
     
51,764
 
Income taxes
   
15,049
     
11,036
 
Short-term borrowings
   
20,237
     
20,130
 
                 
TOTAL CURRENT LIABILITIES
   
203,238
     
216,323
 
                 
DEFERRED TAX LIABILITIES
   
17,722
     
18,724
 
OTHER LIABILITIES
   
13,686
     
13,539
 
ACCRUED EMPLOYEE AND RETIREE BENEFITS
   
22,021
     
19,294
 
LONG‑TERM DEBT
   
691,265
     
604,159
 
                 
SHAREHOLDERS' EQUITY:
               
Common stock
   
5,396
     
5,396
 
Additional paid‑in capital
   
103,099
     
107,176
 
Earnings reinvested in the business
   
1,438,823
     
1,414,485
 
Treasury stock, at cost
   
(594,392
)
   
(525,422
)
Accumulated other comprehensive loss
   
(125,470
)
   
(149,334
)
                 
TOTAL SHAREHOLDERS’ EQUITY
   
827,456
     
852,301
 
                 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
 
$
1,775,388
   
$
1,724,340
 

See accompanying notes to consolidated condensed financial statements.
 
3

SENSIENT TECHNOLOGIES CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)

   
Three Months
Ended March 31,
 
             
   
2018
   
2017
 
             
Cash flows from operating activities:
           
Net earnings
 
$
38,194
   
$
13,192
 
Adjustments to arrive at net cash provided by operating activities:
               
Depreciation and amortization
   
12,578
     
12,141
 
Share-based compensation
   
1,254
     
1,930
 
Net loss on assets
   
70
     
386
 
Loss on divestiture of businesses
   
-
     
31,882
 
Deferred income taxes
   
(4,346
)
   
2,202
 
Changes in operating assets and liabilities
   
(29,499
)
   
(30,574
)
                 
Net cash provided by operating activities
   
18,251
     
31,159
 
                 
Cash flows from investing activities:
               
Acquisition of property, plant and equipment
   
(11,058
)
   
(10,069
)
Cash receipts on sold receivables
   
9,051
     
6,407
 
Proceeds from sale of assets
   
45
     
105
 
Proceeds from divestiture of businesses
   
-
     
12,457
 
Acquisition of new businesses
   
(11,000
)
   
-
 
Other investing activity
   
(798
)
   
(63
)
                 
Net cash (used in) provided by investing activities
   
(13,760
)
   
8,837
 
                 
Cash flows from financing activities:
               
Proceeds from additional borrowings
   
92,348
     
5,657
 
Debt payments
   
(12,280
)
   
(19,350
)
Purchase of treasury stock
   
(72,704
)
   
(12,365
)
Dividends paid
   
(14,274
)
   
(13,306
)
Other financing activity
   
(2,715
)
   
(477
)
                 
Net cash used in financing activities
   
(9,625
)
   
(39,841
)
                 
Effect of exchange rate changes on cash and cash equivalents
   
6,210
     
3,089
 
                 
Net increase in cash and cash equivalents
   
1,076
     
3,244
 
Cash and cash equivalents at beginning of period
   
29,344
     
25,865
 
                 
Cash and cash equivalents at end of period
 
$
30,420
   
$
29,109
 

See accompanying notes to consolidated condensed financial statements.
 
4

SENSIENT TECHNOLOGIES CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)

1.
Accounting Policies

In the opinion of Sensient Technologies Corporation (the “Company”), the accompanying unaudited consolidated condensed financial statements contain all adjustments (consisting of only normal recurring adjustments) that are necessary to present fairly the financial position of the Company as of March 31, 2018, and the results of operations, comprehensive income, and cash flows for the three months ended March 31, 2018 and 2017. The results of operations for any interim period are not necessarily indicative of the results to be expected for the full year.

The preparation of financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Expenses are charged to operations in the period incurred.

Please refer to the notes in the Company’s annual consolidated financial statements for the year ended December 31, 2017, for additional details of the Company’s financial condition and a description of the Company’s accounting policies, which have been continued without change except for the Company’s Revenue Recognition accounting policy, which has been updated as a result of the Company’s adoption in the current quarter of Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers, as noted below.

Revenue Recognition
The Company recognizes revenue as the transfer of control of its products to the Company’s customers in an amount reflecting the consideration the Company expects to be entitled. In order to achieve this core principle, the Company applies the following five-step approach:

·
Identification of the contract, or contracts, with a customer
·
Identification of the performance obligations in the contract
·
Determination of the transaction price
·
Allocation of the transaction price to the performance obligations in the contract
·
Recognition of revenue when, or as, we satisfy the performance obligations

The Company considers customer purchase orders, which in some cases are governed by master sales agreements, to be the contracts with the customer. For each contract, the Company considers the promise to transfer products, each of which are distinct, to be the identified performance obligations. In determining the transaction price, the Company evaluates whether the price is subject to refund or adjustment to determine the net consideration to which the Company expects to be entitled. In addition, the Company evaluates the customer’s ability to pay as part of its consideration of the contract. As the Company’s standard payment terms are less than one year, the Company elected the practical expedient under Accounting Standards Codification (ASC) 606-10-32-18, and determined that its contracts do not have a significant financing component. The Company allocates the transaction price to each distinct product based on the relative standalone selling price. Revenue is recognized when control of the product is transferred to the customer, the customer is obligated to pay the Company, and the Company has no remaining obligations, which is typically at shipment. In certain locations, primarily outside the United States, product shipping terms may vary. Thus, in such locations, the point at which control of the product transfers to the customer and revenue recognition occurs will vary accordingly.

Customer returns of non-conforming products are estimated at the time revenue is recognized. In certain customer relationships, volume rebates exist, which are recognized according to the terms and conditions of the contractual relationship. Customer returns, rebates, and discounts are not material to the Company’s consolidated financial statements. The Company has elected to recognize the revenue and cost for freight and shipping when control over the products has transferred to the customer. The Company has elected to immediately expense contract costs from obtaining a contract as the amortization period of the asset the Company otherwise would have recognized would have been less than a year.
 
5

The Company disaggregates its revenue with customers by certain product lines and geographic locations for the Flavors & Fragrances and Color segments. Revenue for the Asia Pacific segment is managed on a geographic basis. For more information on the Company’s disaggregated revenue, see Note 4, Segment Information.

New Pronouncements
In May 2014, the Financial Accounting Standards Board (FASB) issued, ASU No. 2014-09, Revenue from Contracts with Customers. Under this new standard, revenue is recognized when a customer obtains control of promised goods or services in an amount that reflects the consideration the entity expects to receive in exchange for those goods or services. The requirements of the new standard are effective for interim and annual periods beginning after December 15, 2017. The Company adopted this new standard in the current quarter using the modified retrospective method. The adoption of this new standard did not have an impact on the revenue recognized by the Company. The Company has updated its revenue recognition accounting policy, as outlined above, and has included a disclosure on its disaggregated revenue in Note 4, Segment Information, and has included discussion of its disaggregated revenue under Segment Information, in its Management’s Discussion and Analysis of Financial Condition and Results of Operations.

In February 2016, the FASB issued ASU No. 2016-02, Leases, which requires lessees to recognize the lease assets and lease liabilities that arise from leases on the balance sheet and to disclose qualitative and quantitative information about lease transactions. This guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company created a project team within its Corporate Finance Department to review the impact that this ASU will have on the Company. The project team has begun gathering data and reviewing existing leases and other relevant documents across all of the Company’s segments. The Company has also purchased and begun the installation of a software solution to facilitate the implementation of this new standard. The Company will continue to evaluate the expected impact of this standard.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payment. This ASU clarifies how certain cash receipts and cash payments are presented and classified in the statement of cash flows. Among these changes, is a requirement that a transferor’s receipt of a beneficial interest in securitized trade receivables be disclosed as an investing transaction. There is also a requirement to classify cash receipts received that are related to beneficial interests in previously transferred receivables (i.e., deferred purchase price) as inflows from investing activities. The guidance is effective for fiscal years beginning after December 15, 2017, including interim periods within those years. The Company adopted this standard in the current quarter and included $9.1 million as an adjustment to net cash provided by investing activities. The Company has also reclassified the first quarter of 2017 to include $6.4 million collected on sold receivables in cash provided by investing activities rather than cash provided by operating activities as previously reported.

In December 2016, the FASB issued ASU 2016-16, Accounting for Income Taxes: Intra-Entity Asset Transfers of Assets Other than Inventory. Prior to the adoption of ASU 2016-16, the tax effects of intra-entity asset transfers are deferred until the transferred asset is sold to a third party or otherwise recovered through use. ASU 2016-16 eliminates the exception for all intra-entity sales of assets other than inventory. The guidance is effective for fiscal years beginning after December 15, 2017, including interim periods within those years. The Company adopted this standard in the current quarter resulting in a cumulative effect of $0.4 million increase to Earnings reinvested in the business; an increase of $3.0 million to Deferred Tax Assets; a decrease of $3.7 million to Prepaid Expense and Other Current Assets; and a decrease of $1.1 million to Deferred Tax Liabilities on the Company’s Consolidated Balance Sheet.

In March 2017, the FASB issued ASU No. 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. This ASU requires employers to present the service cost component of the net periodic benefit cost in the same income statement line item as the other employee compensation costs arising from services rendered during the period. The other components of net benefit cost are to be presented outside of any subtotal of operating income. This ASU is effective for fiscal years and interim periods beginning after December 15, 2017, and early adoption is permitted. The Company adopted this standard in the current quarter, and as a result, the Company’s non-service cost portion of its pension expense is now recorded in Interest Expense on the Company’s Condensed Statement of Earnings. The Company’s service cost portion of pension expense is recorded in Selling and Administrative Expenses on the Company’s Consolidated Statement of Earnings. This change did not have a material impact on the Company’s consolidated financial statements.
 
6

In August 2017, the FASB issued ASU No. 2017-12, Targeted Improvements to Accounting for Hedging Activities, which expands an entity’s ability to hedge non-financial and financial risk components and reduce complexity in fair value hedges of interest rate risk. This guidance eliminates the requirement to separately measure and report hedge ineffectiveness and generally requires the entire change in the fair value of a hedging instrument to be presented in the same income statement line item as the hedged item. This ASU is effective for fiscal years and interim periods beginning after December 15, 2018. The Company is currently evaluating the expected impact of this standard.

2.
Acquisition

On March 9, 2018, the Company completed the acquisition of certain net assets and the natural color business of GlobeNatural, a natural food and ingredient company based in Lima, Peru. The Company paid $10.5 million of cash for this acquisition. GlobeNatural operations are included in the Color segment. The assets acquired and liabilities assumed were recorded at their estimated fair values as of the acquisition date. The purchase price exceeded the carrying value of the net assets by approximately $8.4 million. The excess was allocated to intangible assets, principally goodwill. The Company is in the process of quantifying the identifiable intangible assets and anticipates completing this analysis in the third quarter of 2018.  During the current quarter, the Company also purchased the assets of a business for an immaterial amount, which is included in the Flavors & Fragrances segment.

3.
Fair Value

Accounting Standards Codification (ASC) 820, Fair Value Measurements and Disclosures, defines fair value for financial assets and liabilities, establishes a framework for measuring fair value in GAAP, and expands disclosures about fair value measurements. As of March 31, 2018, and December 31, 2017, the Company’s assets and liabilities subject to this standard are forward exchange contracts and investments in a money market fund and municipal investments. The fair value of the forward exchange contracts based on current pricing obtained for comparable derivative products (Level 2 inputs) was an asset of $0.1 million as of March 31, 2018, and a liability of $0.6 million as of December 31, 2017. The fair value of the investments based on March 31, 2018, and December 31, 2017, market quotes (Level 1 inputs) was an asset of $0.1 million in both periods and is reported in Other Assets in the Consolidated Condensed Balance Sheets.

The carrying values of the Company’s cash and cash equivalents, trade accounts receivable, accounts payable, accrued expenses, and short-term borrowings approximated fair values as of March 31, 2018. The fair value of the Company’s long-term debt, including current maturities, is estimated using discounted cash flows based on the Company’s current incremental borrowing rates for similar types of borrowing arrangements (Level 2 inputs). The carrying value of the long-term debt at March 31, 2018, was $691.3 million. The fair value of the long-term debt at March 31, 2018, was $701.9 million.
 
7

4.
Segment Information

Operating results by segment for the periods presented are as follows:

(In thousands)
 
Flavors &
Fragrances
   
Color
   
Asia
Pacific
   
Corporate
& Other
   
Consolidated
 
Three months ended March 31, 2018:
                             
Revenue from external customers
 
$
182,482
   
$
143,728
   
$
30,267
   
$
-
   
$
356,477
 
Intersegment revenue
   
5,864
     
3,432
     
-
     
-
     
9,296
 
Total revenue
 
$
188,346
   
$
147,160
   
$
30,267
   
$
-
   
$
365,773
 
                                         
Operating income (loss)
 
$
25,327
   
$
33,672
   
$
4,872
   
$
(8,190
)
 
$
55,681
 
Interest expense
   
-
     
-
     
-
     
5,555
     
5,555
 
Earnings (loss) before income taxes
 
$
25,327
   
$
33,672
   
$
4,872
   
$
(13,745
)
 
$
50,126
 
                                         
Three months ended March 31, 2017:
                                       
Revenue from external customers
 
$
181,075
   
$
130,840
   
$
29,482
   
$
-
   
$
341,397
 
Intersegment revenue
   
5,800
     
3,226
     
154
     
-
     
9,180
 
Total revenue
 
$
186,875
   
$
134,066
   
$
29,636
   
$
-
   
$
350,577
 
                                         
Operating income (loss)
 
$
28,770
   
$
30,217
   
$
5,150
   
$
(40,100
)
 
$
24,037
 
Interest expense
   
-
     
-
     
-
     
4,811
     
4,811
 
Earnings (loss) before income taxes
 
$
28,770
   
$
30,217
   
$
5,150
   
$
(44,911
)
 
$
19,226
 

The Company evaluates performance based on operating income of the respective segments before restructuring and other costs, interest expense, and income taxes. The 2017 restructuring and other costs are reported in Corporate & Other. The 2017 other costs pertain to the costs associated with the Company’s divestiture of a facility and certain related business lines within the Flavors & Fragrances business in Strasbourg, France. There were no restructuring and other costs in the current quarter.

In addition to evaluating the Company’s performance based on the segments above, revenue is also disaggregated and analyzed by product line and geographic market.  The following table displays our revenue by these major sources.

Product Lines

(In thousands)
 
Flavors &
Fragrances
   
Color
   
Asia
Pacific
   
Consolidated
 
Three months ended March 31, 2018:
                       
Flavors
 
$
109,051
   
$
-
   
$
-
   
$
109,051
 
Natural Ingredients
   
53,201
     
-
     
-
     
53,201
 
Fragrances
   
26,094
     
-
     
-
     
26,094
 
Food & Beverage Colors
   
-
     
76,816
     
-
     
76,816
 
Cosmetics
   
-
     
45,504
     
-
     
45,504
 
Other Colors
   
-
     
24,840
     
-
     
24,840
 
Asia Pacific
   
-
     
-
     
30,267
     
30,267
 
Intersegment Revenue
   
(5,864
)
   
(3,432
)
   
-
     
(9,296
)
Total revenue from external customers
 
$
182,482
   
$
143,728
   
$
30,267
   
$
356,477
 
                                 
Three months ended March 31, 2017:
                               
Flavors
 
$
113,617
   
$
-
   
$
-
   
$
113,617
 
Natural Ingredients
   
53,522
     
-
     
-
     
53,522
 
Fragrances
   
19,736
     
-
     
-
     
19,736
 
Food & Beverage Colors
   
-
     
71,388
     
-
     
71,388
 
Cosmetics
   
-
     
37,459
     
-
     
37,459
 
Other Colors
   
-
     
25,219
     
-
     
25,219
 
Asia Pacific
   
-
     
-
     
29,636
     
29,636
 
Intersegment Revenue
   
(5,800
)
   
(3,226
)
   
(154
)
   
(9,180
)
Total revenue from external customers
 
$
181,075
   
$
130,840
   
$
29,482
   
$
341,397
 
 
8

Geographic Markets

(In thousands)
 
Flavors &
Fragrances
   
Color
   
Asia
Pacific
   
Consolidated
 
Three months ended March 31, 2018:
                       
North America
 
$
119,055
   
$
63,582
   
$
-
   
$
182,637
 
Europe
   
45,427
     
43,631
     
6
     
89,064
 
Asia Pacific
   
7,022
     
16,910
     
30,011
     
53,943
 
Other
   
10,978
     
19,605
     
250
     
30,833
 
Total revenue from external customers
 
$
182,482
   
$
143,728
   
$
30,267
   
$
356,477
 

Three months ended March 31, 2017:
                       
North America
 
$
122,122
   
$
61,734
   
$
-
   
$
183,856
 
Europe
   
42,507
     
36,323
     
61
     
78,891
 
Asia Pacific
   
6,324
     
14,778
     
29,316
     
50,418
 
Other
   
10,122
     
18,005
     
105
     
28,232
 
Total revenue from external customers
 
$
181,075
   
$
130,840
   
$
29,482
   
$
341,397
 

5.
Inventories

At March 31, 2018, and December 31, 2017, inventories included finished and in-process products totaling $322.6 million and $310.4 million, respectively, and raw materials and supplies of $145.4 million and $153.1 million, respectively.

6.
Retirement Plans

The Company’s components of annual benefit cost for the defined benefit plans for the periods presented are as follows:

   
Three Months Ended
March 31,
 
             
(In thousands)
 
2018
   
2017
 
             
Service cost
 
$
368
   
$
461
 
Interest cost
   
289
     
355
 
Expected return on plan assets
   
(245
)
   
(255
)
Amortization of actuarial gain
   
(27
)
   
(21
)
                 
Total defined benefit expense
 
$
385
   
$
540
 

As noted in Note 1, Accounting Policies, the Company adopted ASU No. 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost, in the first quarter of 2018. As a result of the adoption of this ASU, the non-service cost portion of the Company’s annual benefit costs summarized above is recorded in Interest Expense in the Company’s Condensed Statement of Earnings. The service cost portion of the Company’s annual benefit costs is recorded in Selling and Administrative Expenses on the Company’s Condensed Statement of Earnings.

7.
Shareholders’ Equity

The Company repurchased 1 million shares of its common stock for an aggregate cost of $72.7 million during the three months ended March 31, 2018, and 155,849 shares of its common stock for an aggregate cost of $12.4 million during the three months ended March 31, 2017. The amount of treasury stock purchases reported in the Company’s Consolidated Condensed Statements of Cash Flow represent purchases that have settled within each respective three-month period.
 
9

8.
Derivative Instruments and Hedging Activity

The Company may use forward exchange contracts and foreign currency denominated debt to manage its exposure to foreign exchange risk by reducing the effect of fluctuating foreign currencies on short-term foreign currency denominated intercompany transactions, non-functional currency raw material purchases, non-functional currency sales, and other known foreign currency exposures. These forward exchange contracts generally have maturities of less than 18 months. The Company’s primary hedging activities and their accounting treatment are summarized below:

Forward exchange contracts – Certain forward exchange contracts have been designated as cash flow hedges. The Company had $31.2 million and $44.9 million of forward exchange contracts, designated as hedges, outstanding as of March 31, 2018, and December 31, 2017, respectively. For the three months ended March 31, 2018 and 2017, the losses reclassified into net earnings in the Company’s Consolidated Statement of Earnings that offset the earnings impact of the related non-functional asset or liability hedged in the same period were not material. In addition, the Company utilizes forward exchange contracts that are not designated as cash flow hedges, the results of these transactions are not material to the financial statements.

Net investment hedges – The Company has certain debt denominated in Euros and Swiss Francs. These debt instruments have been designated as partial hedges of the Company’s Euro and Swiss Franc net asset positions. Changes in the fair value of this debt attributable to changes in the spot foreign exchange rate are recorded in foreign currency translation in other comprehensive income (“OCI”). As of March 31, 2018, and December 31, 2017, the total value of the Company’s Euro and Swiss Franc debt was $268.8 million and $261.9 million, respectively.  For the three months ended March 31, 2018, the impact of foreign exchange rates on these debt instruments increased debt by $6.9 million, which has been recorded as foreign currency translation in OCI.

9.
Income Taxes

The effective income tax rates for continuing operations for the quarters ended March 31, 2018 and 2017, were 23.8% and 31.4%, respectively. The effective tax rates in both 2018 and 2017 were impacted by changes in estimates associated with the finalization of prior year foreign and domestic tax items, audit settlements, adjustments to valuation allowances, and mix of foreign earnings. The 2018 tax rate was also impacted by the 2017 Tax Cuts and Jobs Act which is commonly referred to as “2017 Tax Legislation” and the tax rate in 2017 was also impacted by the restructuring activities, the limited tax deductibility of losses related to the Company’s restructuring activities, and the now completed sale of a facility and certain related business lines within the Flavors & Fragrances segment in Strasbourg, France.

Staff Accounting Bulletin No. 118 (“SAB 118”) was issued to address the application of U.S. GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the 2017 Tax Legislation. The Company is applying SAB 118, and believes the impact of the 2017 Tax Legislation on the 2018 and 2017 income tax expenses should be considered provisional estimates. The ultimate impact could differ from these provisional amounts, possibly materially, due to, additional guidance, changes in interpretation, and additional analysis and assumptions the Company has made.  Any adjustments to the 2018 and 2017 provisional estimates will be reported in income tax expense in the reporting period in which any such adjustments are determined, which will be no later than the fourth quarter of 2018.
 
10

10.
Accumulated Other Comprehensive Income

The following table summarizes the changes in OCI during the three-month period ended March 31, 2018:

(In thousands)
 
Cash Flow
Hedges (a)
   
Pension
Items (a)
   
Foreign
Currency
Items
   
Total
 
Balance as of December 31, 2017
 
$
(669
)
 
$
(309
)
 
$
(148,356
)
 
$
(149,334
)
Other comprehensive income before reclassifications
   
670
     
-
     
23,186
     
23,856
 
Amounts reclassified from OCI
   
38
     
(30
)
   
-
     
8
 
Balance as of March 31, 2018
 
$
39
   
$
(339
)
 
$
(125,170
)
 
$
(125,470
)

(a)
Cash Flow Hedges and Pension Items are net of tax.

11.
Accounts Receivable Securitization

The Company is engaged in an accounts receivable securitization program with a commitment size of $60 million, whereby transactions under the program are accounted for as sales of trade receivables in accordance with ASC Topic 860, Transfers and Servicing. Sales of trade receivables under the program are recorded as a reduction of accounts receivable in the Consolidated Balance Sheet. The fair value of the receivables sold equals the carrying cost at the time of sale and no gain or loss has been recorded as a result of the sales. The sales also resulted in the recording of a deferred purchase price amount, which represents the retained interest in the sold receivables. This amount is adjusted each month based on collections and other activity. The Company estimates the fair value of the deferred purchase price receivable based on historical performance of similar receivables, including an allowance for doubtful accounts, as well as estimated cash discounts to be taken by customers and potential credits issued to customers. The Company deems the interest rate risk related to the deferred purchase price receivable to be de minimis primarily due to the short average collection cycle of the related receivables.

As of March 31, 2018 and 2017, the net trade receivables sold totaled $99.2 million and $56.6 million, respectively, and the fair value of the deferred purchase price receivable was $39.2 million and $16.6 million as of March 31, 2018 and 2017, respectively, which are recorded in Trade Accounts Receivable in the Company’s Consolidated Balance Sheets.

12.
Restructuring

Between March 2014 and 2017, the Company executed a restructuring plan to eliminate underperforming operations, consolidate manufacturing facilities, and improve efficiencies within the Company. The Company recorded $20.2 million of restructuring costs in Corporate & Other for the three months ended March 31, 2017. There were no restructuring and other costs incurred in the three months ended March 31, 2018.

13.
Divestiture

In the first quarter of 2017, the Company completed the sale of a facility and certain business lines in Strasbourg, France, for $12.5 million. The Company recognized a non-cash loss of approximately $11.0 million in Corporate & Other during the three months ended March 31, 2017.

14.
Commitments and Contingencies

The Company is subject to various claims and litigation arising in the normal course of business. The Company establishes reserves for claims and proceedings when it is probable that liabilities exist and reasonable estimates of loss can be made. While it is not possible to predict the outcome of these matters, based on our assessment of the facts and circumstances now known, we do not believe that these matters, individually or in the aggregate, will have a material adverse effect on our financial position. However, actual outcomes may be different from those expected and could have a material effect on our results of operations or cash flows in a particular period.
 
11

ITEM 2.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

Revenue
Revenue was $356.5 million and $341.4 million for the three months ended March 31, 2018 and 2017, respectively, an increase of 4.4%. The impact of foreign exchange rates increased consolidated revenue by approximately 5% for the three months ended March 31, 2018.

Gross Profit
The Company’s gross margin was 34.5% and 35.4% for the three months ended March 31, 2018 and 2017, respectively. Included in cost of sales is $0.3 million of restructuring costs for the three months ended March 31, 2017. The decrease in gross margin for the three months ended March 31, 2018, is primarily a result of higher raw material, manufacturing, and other costs. Restructuring costs reduced gross margin by 10 basis points during the three months ended March 31, 2017.

Selling and Administrative Expense
Selling and administrative expenses as a percent of revenue were 18.9% and 28.4% for the three months ended March 31, 2018 and 2017, respectively. Restructuring and other costs of $30.9 million were included in selling and administrative expenses for the three months ended March 31, 2017. The decrease in selling and administrative expenses as a percent of revenue is primarily due to the restructuring and other costs incurred in 2017. In 2018, there were no restructuring and other costs. Restructuring and other costs increased selling and administrative expense as a percent of revenue by 910 basis points for the three months ended March 31, 2017.

Operating Income
Operating income was $55.7 million and $24.0 million for the three months ended March 31, 2018 and 2017, respectively. Operating margins were 15.6% and 7.0% for the three months ended March 31, 2018 and 2017, respectively. Restructuring and other costs reduced operating margins by 920 basis points during the three months ended March 31, 2017.

Interest Expense
Interest expense was $5.6 million and $4.8 million for the three months ended March 31, 2018 and 2017, respectively. The increase in interest expense is a result of the Company’s higher average debt balance and higher interest rates.

Income Taxes
The effective income tax rates for the quarters ended March 31, 2018 and 2017, were 23.8% and 31.4%, respectively. The effective tax rates in both 2018 and 2017 were impacted by changes in estimates associated with the finalization of prior year foreign and domestic tax items, audit settlements, adjustments to valuation allowances, and mix of foreign earnings. The 2018 tax rate was also impacted by the 2017 Tax Legislation.  The tax rate in 2017 was also impacted by restructuring activities, the limited tax deductibility of losses related to the Company’s restructuring activities, and the now completed sale of a facility and certain related business lines within the Flavors & Fragrances segment in Strasbourg, France. The Company expects its 2018 effective income tax rate to be between 22% and 25%.

Staff Accounting Bulletin No. 118 (“SAB 118”) was issued to address the application of U.S. GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the 2017 Tax Legislation. The Company is applying SAB 118, and believes the impact of the 2017 Tax Legislation on the 2018 and 2017 income tax expenses should be considered provisional estimates. The ultimate impact could differ from these provisional amounts, possibly materially, due to, additional guidance, changes in interpretation, and additional analysis and assumptions the Company has made.  Any adjustments to the 2018 and 2017 provisional estimates will be reported in income tax expense in the reporting period in which any such adjustments are determined, which will be no later than the fourth quarter of 2018.
 
12

Acquisition
On March 9, 2018, the Company completed the acquisition of certain net assets and the natural color business of GlobeNatural, a natural food and ingredient company based in Lima, Peru. The Company paid $10.5 million of cash for this acquisition. GlobeNatural operations are included in the Color segment. The assets acquired and liabilities assumed were recorded at their estimated fair values as of the acquisition date. The purchase price exceeded the carrying value of the net assets by approximately $8.4 million. The excess was allocated to intangible assets, principally goodwill. The Company is in the process of quantifying the identifiable intangible assets and anticipates completing this analysis in the third quarter of 2018.  During the current quarter, the Company also purchased the assets of a business for an immaterial amount, which is included in the Flavors & Fragrances segment.

Restructuring
Between March 2014 and 2017, the Company executed a restructuring plan to eliminate underperforming operations, consolidate manufacturing facilities, and improve efficiencies within the Company. The Company recorded $20.2 million of restructuring costs in Corporate & Other for the three months ended March 31, 2017. There were no restructuring and other costs incurred in the three months ended March 31, 2018.

Divestiture
In the first quarter of 2017, the Company completed the sale of a facility and certain business lines in Strasbourg, France, for $12.5 million. The Company recognized a non-cash loss of approximately $11.0 million in Corporate & Other during the three months ended March 31, 2017.

NON-GAAP FINANCIAL MEASURES

Within the following tables, the Company reports certain non-GAAP financial measures, including: (1) adjusted operating income, adjusted net earnings, and adjusted diluted EPS from continuing operations (which exclude restructuring and other costs) and (2) percentage changes in revenue, operating income, diluted EPS, adjusted operating income, and adjusted diluted EPS on a local currency basis (which eliminate the effects that result from translating its international operations into U.S. dollars). The other costs in 2017 are for the divestiture related costs discussed under Divestiture above. There were no restructuring and other costs incurred in the three months ended March 31, 2018.

The Company has included each of these non-GAAP measures in order to provide additional information regarding our underlying operating results and comparable year-over-year performance. Such information is supplemental to information presented in accordance with GAAP and is not intended to represent a presentation in accordance with GAAP. These non-GAAP measures should not be considered in isolation. Rather, they should be considered together with GAAP measures and the rest of the information included in this report. Management internally reviews each of these non-GAAP measures to evaluate performance on a comparative period-to-period basis and to gain additional insight into underlying operating and performance trends, and the Company believes the information can be beneficial to investors for the same purposes. These non-GAAP measures may not be comparable to similarly titled measures used by other companies.

   
Three Months Ended March 31,
 
   
2018
   
2017
   
% Change
 
                   
Operating income (GAAP)
 
$
55,681
   
$
24,037
     
131.6
%
Restructuring - Cost of products sold
   
-
     
342
         
Restructuring - Selling and administrative
   
-
     
19,870
         
Other -  Selling and administrative (1)
   
-
     
11,047
         
Adjusted operating income
 
$
55,681
   
$
55,296
     
0.7
%
                         
Net earnings (GAAP)
 
$
38,194
   
$
13,192
     
189.5
%
Restructuring and other, before tax
   
-
     
31,259
         
Tax impact of restructuring and other
   
-
     
(7,827
)
       
Adjusted net earnings
 
$
38,194
   
$
36,624
     
4.3
%
                         
Diluted EPS from continuing operations (GAAP)
 
$
0.89
   
$
0.30
     
196.7
%
Restructuring and other, net of tax
   
-
     
0.53
         
Adjusted diluted EPS
 
$
0.89
   
$
0.82
     
8.5
%

(1)
The other costs in 2017 are for the divestiture related costs discussed under Divestiture above.
 
13

The following table summarizes the percentage change for the results for the three months ended March 31, 2018, compared to the results for the three months ended March 31, 2017, in the respective financial measures.

   
Three Months Ended March 31, 2018
 
Revenue
 
Total
   
Foreign
Exchange
Rates
   
Local
Currency
 
Flavors & Fragrances
   
0.8
%
   
4.4
%
   
(3.6
%)
Color
   
9.8
%
   
5.8
%
   
3.9
%
Asia Pacific
   
2.1
%
   
4.3
%
   
(2.2
%)
Total Revenue
   
4.4
%
   
4.9
%
   
(0.5
%)
                         
Operating Income
                       
Flavors & Fragrances
   
(12.0
%)
   
1.3
%
   
(13.3
%)
Color
   
11.4
%
   
6.5
%
   
4.9
%
Asia Pacific
   
(5.4
%)
   
6.4
%
   
(11.8
%)
Corporate & Other
   
(79.6
%)
   
2.8
%
   
(82.3
%)
Operating Income
   
131.6
%
   
6.6
%
   
125.1
%
                         
Diluted EPS
   
196.7
%
   
6.7
%
   
190.0
%
                         
Adjusted Operating Income (1)
   
0.7
%
   
4.9
%
   
(4.2
%)
Adjusted Diluted EPS (1)
   
8.5
%
   
6.1
%
   
2.4
%

(1)
Refer to table above for a reconciliation of these non-GAAP measures.
 
14

SEGMENT INFORMATION

The Company determines its operating segments based on information utilized by the chief operating decision maker to allocate resources and assess performance. Segment performance is evaluated on operating income of the respective business units before restructuring and other costs, which are reported in Corporate & Other, interest expense, and income taxes.

The Company’s discussion below regarding its operating segments has been updated to reflect the Company’s disaggregation of revenue as summarized in Part I, Item I, Note 4, Segment Information, of this report.

Flavors & Fragrances
Flavors & Fragrances segment revenue was $188.4 million and $186.9 million for the three months ended March 31, 2018 and 2017, respectively, an increase of approximately 1%. Foreign exchange rates increased segment revenue by approximately 4%. The increase was primarily a result of higher revenue in Fragrances partially offset by lower revenue in Flavors. The higher revenue in Fragrances is primarily a result of favorable volumes, favorable exchanges rates, and higher selling prices. The lower revenue in Flavors is primarily a result of lower volumes partially offset by the favorable impact of exchange rates and higher selling prices.

Flavors & Fragrances segment operating income was $25.3 million and $28.8 million for the three months ended March 31, 2018 and 2017, respectively, a decrease of approximately 12%. Foreign exchange rates increased segment operating income by approximately 1%. The lower segment operating income was primarily a result of lower operating income in Natural Ingredients and Flavors. The lower operating income in Natural Ingredients was primarily due to higher raw material costs and lower selling prices, partially offset by higher volumes. The lower operating income in Flavors is primarily a result of unfavorable volume and product mix, partially offset by lower manufacturing and other costs, lower raw material costs, and higher selling prices. Segment operating income as a percent of revenue was 13.4% in the current quarter and 15.4% in the prior year’s comparable quarter.

Color
Segment revenue for the Color segment was $147.2 million and $134.1 million for the three months ended March 31, 2018 and 2017, respectively, an increase of approximately 10%. Foreign exchange rates increased segment revenue by approximately 6%. The increase was primarily a result of higher revenue in Cosmetics and Food & Beverage Colors. The higher revenue in both Cosmetics and Food & Beverage Colors is primarily a result of higher volumes and favorable exchange rates.

Segment operating income for the Color segment was $33.7 million and $30.2 million for the three months ended March 31, 2018 and 2017, respectively, an increase of approximately 11%. Foreign exchange rates increased segment operating income by approximately 7%.  The higher segment operating income was primarily a result of higher operating income in Cosmetics as a result of favorable volume and product mix and exchange rates partially offset by higher manufacturing & other costs. Segment operating income as a percent of revenue was 22.9% in the current quarter and 22.5% in the prior year’s comparable quarter.

Asia Pacific
Segment revenue for the Asia Pacific segment was $30.3 million and $29.6 million for the three months ended March 31, 2018 and 2017, respectively, an increase of approximately 2%. Foreign exchange rates increased segment revenue by approximately 4%. The higher segment revenue was primarily due to favorable exchange rates partially offset by lower volumes.

Segment operating income for the Asia Pacific segment was $4.9 million and $5.2 million for the three months ended March 31, 2018 and 2017, respectively, a decrease of approximately 5%, primarily due to higher manufacturing and other costs.  Foreign exchange rates increased segment operating income by approximately 6%. Segment operating income as a percent of revenue was 16.1% in the current quarter and 17.4% in the prior year’s comparable quarter.

Corporate & Other
The Corporate & Other operating loss was $8.2 million and $40.1 million for the three months ended March 31, 2018 and 2017, respectively. The lower operating loss was primarily a result of the absence in 2018 of the restructuring and other costs that were incurred in 2017 and lower performance based executive compensation incurred in 2018.  Restructuring and other costs were $31.3 million for the three months ended March 31, 2017. There were no restructuring and other costs incurred in the three months ended March 31, 2018.
 
15

LIQUIDITY AND FINANCIAL CONDITION

Financial Condition
The Company’s financial position remains strong. The Company is in compliance with its loan covenants calculated in accordance with applicable agreements as of March 31, 2018. The Company expects its cash flow from operations and its available debt capacity can be used to meet future cash requirements for operations, capital expenditures, dividend payments, acquisitions, and stock repurchases.

Cash Flows from Operating Activities
Net cash provided by operating activities was $18.3 million and $31.2 million for the three months ended March 31, 2018 and 2017, respectively. The lower cash provided by operating activities is primarily due to higher working capital balances in the current period. The Company adopted ASU 2016-15, Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments, during the current quarter (refer to Note 1, Accounting Policies, included in Part I, Item I of this report), and as a result, the Company has reclassified $9.1 million and $6.4 million from Net cash provided by operating activities to Net cash (used in) provided by investing activities for the three months ended March 31, 2018 and 2017, respectively.

Cash Flows from Investing Activities
Net cash used in investing activities was $13.8 million for the three months ended March 31, 2018, compared to net cash provided by investing activities of $8.8 million for the three months ended March 31, 2017. Capital expenditures were $11.1 million and $10.1 million for the three months ended March 31, 2018 and 2017, respectively. During the three months ended March 31, 2018, the Company acquired one business and the assets of another business for a total of $11.0 million. During the three months ended March 31, 2017, the Company sold two businesses and a facility and certain business lines for $12.5 million in proceeds.

Cash Flows from Financing Activities
Net cash used in financing activities was $9.6 million and $39.8 million for the three months ended March 31, 2018 and 2017, respectively. The Company repurchased $72.7 million and $12.4 million of Company stock for the three months ended March 31, 2018 and 2017, respectively. Net debt increased in the first three months of 2018 by $80.1 million and decreased by $13.7 million in the first three months of 2017. For purposes of the cash flow statement, net changes in debt exclude the impact of foreign exchange rates. Dividends of $14.3 million and $13.3 million were paid during the three months ended March 31, 2018 and 2017, respectively. Dividends paid were 33 cents per share and 30 cents per share in the first three months of 2018 and 2017, respectively.

CONTRACTUAL OBLIGATIONS

There have been no material changes in the Company’s contractual obligations during the quarter ended March 31, 2018.  For additional information about contractual obligations, refer to “Contractual Obligations” under Item 7 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2017.

OFF-BALANCE SHEET ARRANGEMENTS

The Company is engaged in an accounts receivable securitization program with a commitment size of $60 million, whereby transactions under the program are accounted for as sales of trade receivables in accordance with ASC Topic 860, Transfers and Servicing, and removed from the Company’s consolidated balance sheet (refer to Note 11, Accounts Receivable Securitization, included in Part I, Item I of this report).
 
CRITICAL ACCOUNTING POLICIES

During the quarter ended March 31, 2018, the Company adopted ASU 2014-09, Revenue from Contracts with Customers (refer to Note 1, Accounting Policies, included in Part I, Item I of this report) and updated its accounting policy for revenue recognition. Besides the adoption of this ASU, there have been no material changes in the Company’s critical accounting policies during the quarter ended March 31, 2018.  For additional information about critical accounting policies, refer to “Critical Accounting Policies” under Item 7 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2017.
 
16

ITEM 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes in the Company’s exposure to market risk during the quarter ended March 31, 2018.  For additional information about market risk refer to Item 7A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2017.

ITEM 4.
CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures:  The Company carried out an evaluation, under the supervision and with the participation of management, including the Company’s Chairman, President and Chief Executive Officer and its Senior Vice President and Chief Financial Officer, of the effectiveness, as of the end of the period covered by this report, of the design and operation of the disclosure controls and procedures, as defined in Rule 13a-15(e) of the Exchange Act.  Based upon that evaluation, the Company’s Chairman, President and Chief Executive Officer and its Senior Vice President and Chief Financial Officer have concluded that the disclosure controls and procedures were effective as of the end of the period covered by this report.

Change in Internal Control Over Financial Reporting: There has been no change in the Company’s internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) during the Company’s most recent quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

FORWARD-LOOKING STATEMENTS

This document contains forward-looking statements that reflect management’s current assumptions and estimates of future economic circumstances, industry conditions, Company performance, and financial results.  Forward-looking statements include statements in the future tense, statements referring to any period after March 31, 2018, and statements including the terms “expect,” “believe,” “anticipate”, and other similar terms that express expectations as to future events or conditions.  The Private Securities Litigation Reform Act of 1995 provides a safe harbor for such forward-looking statements.  Such forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties, and other factors that could cause actual events to differ materially from those expressed in those statements.  A variety of factors could cause the Company’s actual results and experience to differ materially from the anticipated results.  These factors and assumptions include the pace and nature of new product introductions by the Company and the Company’s customers; the Company’s ability to successfully implement its growth strategies and restructuring plan; the outcome of the Company’s various productivity-improvement and cost-reduction efforts; the effectiveness of the Company’s past restructuring activities; changes in costs and availability of raw materials and energy; industry and economic factors related to the Company’s domestic and international business; competition from other suppliers of colors, flavors, and fragrances; growth or contraction in markets for products in which the Company competes; terminations and other changes in customer relationships; the costs of compliance, or failure to comply, with laws and regulations applicable to our industries and markets; changing consumer preferences and changing technologies; industry and customer acceptance of price increases; currency exchange rate fluctuations; cost and availability of credit; results of litigation, environmental investigations or other proceedings; complications as a result of existing or future information technology system applications and hardware; the matters discussed under Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2017; and the matters discussed above under Item 2 including the critical accounting policies referenced therein.  Except to the extent required by applicable law, the Company does not undertake to publicly update or revise its forward-looking statements even if experience or future changes make it clear that any projected results expressed or implied therein will not be realized.
 
17

PART II.
OTHER INFORMATION

ITEM 1.
LEGAL PROCEEDINGS
 
The Company is subject to various claims and litigation arising in the normal course of business. The Company establishes reserves for claims and proceedings when it is probable that liabilities exist and reasonable estimates of loss can be made. While it is not possible to predict the outcome of these matters, based on our assessment of the facts and circumstances now known, we do not believe that these matters, individually or in the aggregate, will have a material adverse effect on our financial position. However, actual outcomes may be different from those expected and could have a material effect on our results of operations or cash flows in a particular period.

SEC Inquiry
The Company previously disclosed that it received an informal inquiry from the staff of the Commission’s Division of Enforcement on October 22, 2015. On April 16, 2018, the Company received confirmation that the staff of the Commission’s Division of Enforcement had closed the informal inquiry.

ITEM 1A.
RISK FACTORS

Except as otherwise described below, there were no material changes to the risk factors previously disclosed in Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2017.

ITEM 2.
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The following table provides the specified information about the repurchases of its common shares by the Company during the first quarter of 2018:

Period
 
Total number
of shares
purchased
   
Average
price paid
per share
   
Total number of
shares purchased as
part of a publicly
announced plan(1)
   
Maximum number of
shares that may be
purchased under
publicly announced plans
 
                         
January 1 to January 31, 2018
   
-
   
$
-
     
-
     
3,285,026
 
February 1 to February 28, 2018
   
550,000
     
72.32
     
550,000
     
2,735,026
 
March 1 to March 31, 2018
   
450,000
     
73.17
     
450,000
     
2,285,026
 
                                 
Total
   
1,000,000
   
$
72.70
     
1,000,000
         
 
(1)
Shares were repurchased pursuant to the Board of Directors' August 21, 2014, authorization to repurchase up to five million shares, and October 19, 2017, authorization to repurchase up to three million shares. The Company has repurchased all shares authorized to be repurchased under the 2014 authorization. Repurchases under these authorizations do not have an expiration date. These authorizations may be modified, suspended, or discontinued by the Board of Directors at any time.
 
ITEM 6.
EXHIBITS

See Exhibit Index following this report.
 
18

SENSIENT TECHNOLOGIES CORPORATION
EXHIBIT INDEX
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 2018

Exhibit
Description
Incorporated by Reference From
Filed Herewith
       
Certifications of the Company’s Chairman, President & Chief Executive Officer and Senior Vice President & Chief Financial Officer pursuant to Rule 13a-14(a) of the Exchange Act
 
 X
       
Certifications of the Company’s Chairman, President & Chief Executive Officer and Senior Vice President & Chief Financial Officer pursuant to 18 United States Code § 1350
 
 X
       
101
Interactive data files pursuant to Rule 405 of Regulation S-T
 
 X
 
19

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

   
SENSIENT TECHNOLOGIES CORPORATION
   
Date:
May 7, 2018
By:
/s/  John J. Manning
 
     
John J. Manning, Vice President,
 
     
General Counsel & Secretary
 

Date:
May 7, 2018
By:
/s/  Stephen J. Rolfs
 
     
Stephen J. Rolfs, Senior Vice President & Chief Financial Officer
 
 
 
20

EX-31 2 ex31.htm EXHIBIT 31

EXHIBIT 31

CERTIFICATION
Pursuant to Rule 13a-14(a) of the Exchange Act

I, Paul Manning, certify that:

1.
I have reviewed this quarterly report on Form 10-Q of Sensient Technologies Corporation;

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 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 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 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 controls 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.

Date:     May 7, 2018

/s/ Paul Manning
 
Paul Manning, Chairman, President &
 
Chief Executive Officer
 
 

EXHIBIT 31

CERTIFICATION
Pursuant to Rule 13a-14(a) of the Exchange Act
 
I, Stephen J. Rolfs, certify that:

1.
I have reviewed this quarterly report on Form 10-Q of Sensient Technologies Corporation;

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 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 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 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 controls 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.

Date:     May 7, 2018

 /s/ Stephen J. Rolfs
 
Stephen J. Rolfs, Senior Vice President &
Chief Financial Officer
 
 

EX-32 3 ex32.htm EXHIBIT 32

EXHIBIT 32

CERTIFICATION
Pursuant to 18 United States Code § 1350

The undersigned hereby certifies that the Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2018, of Sensient Technologies Corporation (the “Company”) filed with the Securities and Exchange Commission on or about the date hereof fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in such report fairly presents, in all material respects, the financial condition and results of operations of the Company.

   
/s/ Paul Manning
 
 
Name:
Paul Manning
 
 
Title:
Chairman, President & Chief Executive Officer
 
 
Date:
May 7, 2018
 

A signed original of this written statement required by Section 906 has been provided to Sensient Technologies Corporation and will be retained by Sensient Technologies Corporation and furnished to the Securities and Exchange Commission or its staff upon request.
 

EXHIBIT 32

CERTIFICATION
Pursuant to 18 United States Code § 1350

The undersigned hereby certifies that the Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2018, of Sensient Technologies Corporation (the “Company”) filed with the Securities and Exchange Commission on or about the date hereof fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in such report fairly presents, in all material respects, the financial condition and results of operations of the Company.

   
/s/ Stephen J. Rolfs
 
 
Name:
Stephen J. Rolfs
 
 
Title:
Senior Vice President & Chief Financial Officer
 
 
Date:
May 7, 2018
 

A signed original of this written statement required by Section 906 has been provided to Sensient Technologies Corporation and will be retained by Sensient Technologies Corporation and furnished to the Securities and Exchange Commission or its staff upon request.
 
 

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Accelerated Filer SENSIENT TECHNOLOGIES CORP 0000310142 42336473 2018 Q1 10-Q 109780000 96136000 216480000 195439000 15049000 11036000 -125470000 -149334000 601943000 582868000 103099000 107176000 1724340000 1775388000 2022000 1969000 733475000 761941000 317464000 323001000 <div style="font-family: 'Times New Roman'; font-size: 10pt;"><div style="text-align: left;"><table cellpadding="0" cellspacing="0" class="DSPFListTable" style="font-size: 10pt; font-family: 'Times New Roman'; width: 100%;"><tr><td style="font-size: 10pt; font-family: 'Times New Roman'; width: 18pt; vertical-align: top; align: right;">2.</td><td style="width: auto; vertical-align: top; text-align: left;"><div style="font-size: 10pt; font-family: 'Times New Roman';">Acquisition</div></td></tr></table></div><div><br /></div><div style="font-size: 10pt; font-family: 'Times New Roman'; text-align: left; margin-left: 18pt;">On March 9, 2018, the Company completed the acquisition of certain net assets and the natural color business of <font style="font-size: 10pt; font-family: 'Times New Roman'; font-style: italic;">GlobeNatural,</font> a natural food and ingredient company based in Lima, Peru. The Company paid $10.5 million of cash for this acquisition. <font style="font-size: 10pt; font-family: 'Times New Roman'; font-style: italic;">GlobeNatural</font> operations are included in the Color segment. The assets acquired and liabilities assumed were recorded at their estimated fair values as of the acquisition date. The purchase price exceeded the carrying value of the net assets by approximately $8.4 million. The excess was allocated to intangible assets, principally goodwill. The Company is in the process of quantifying the identifiable intangible assets and anticipates completing this analysis in the third quarter of 2018.&#160; During the current quarter, the Company also purchased the assets of a business for an immaterial amount, which is included in the Flavors &amp; Fragrances segment.</div></div> 29344000 30420000 25865000 29109000 3244000 1076000 44900000 31200000 <div style="font-family: 'Times New Roman'; font-size: 10pt;"><div style="text-align: justify;"><table cellpadding="0" cellspacing="0" class="DSPFListTable" style="font-size: 10pt; font-family: 'Times New Roman'; width: 100%;"><tr><td style="font-size: 10pt; font-family: 'Times New Roman'; width: 18pt; vertical-align: top; align: right;">14.</td><td style="width: auto; vertical-align: top; text-align: justify;"><div style="font-size: 10pt; font-family: 'Times New Roman';">Commitments and Contingencies</div></td></tr></table></div><div style="background-color: #ffffff;"><br /></div><div style="font-size: 10pt; font-family: 'Times New Roman'; text-align: left; margin-left: 18pt;">The Company is subject to various claims and litigation arising in the normal course of business. 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font-family: 'Times New Roman'; text-align: left; margin-left: 18pt;">The Company may use forward exchange contracts and foreign currency denominated debt to manage its exposure to foreign exchange risk by reducing the effect of fluctuating foreign currencies on short-term foreign currency denominated intercompany transactions, non-functional currency raw material purchases, non-functional currency sales, and other known foreign currency exposures. These forward exchange contracts generally have maturities of less than 18 months. The Company&#8217;s primary hedging activities and their accounting treatment are summarized below:</div><div><br /></div><div style="font-size: 10pt; font-family: 'Times New Roman'; text-align: left; margin-left: 18pt;"><font style="font-size: 10pt; font-family: 'Times New Roman'; font-style: italic;">Forward exchange contracts </font>&#8211; Certain forward exchange contracts have been designated as cash flow hedges. The Company had $31.2 million and $44.9 million of forward exchange contracts, designated as hedges, outstanding as of March 31, 2018, and December 31, 2017, respectively. For the three months ended March 31, 2018 and 2017, the losses reclassified into net earnings in the Company&#8217;s Consolidated Statement of Earnings that offset the earnings impact of the related non-functional asset or liability hedged in the same period were not material. In addition, the Company utilizes forward exchange contracts that are not designated as cash flow hedges, the results of these transactions are not material to the financial statements.</div><div><br /></div><div style="font-size: 10pt; font-family: 'Times New Roman'; text-align: left; margin-left: 18pt;"><font style="font-size: 10pt; font-family: 'Times New Roman'; font-style: italic;">Net investment hedges</font> &#8211; The Company has certain debt denominated in Euros and Swiss Francs. These debt instruments have been designated as partial hedges of the Company&#8217;s Euro and Swiss Franc net asset positions. Changes in the fair value of this debt attributable to changes in the spot foreign exchange rate are recorded in foreign currency translation in other comprehensive income (&#8220;OCI&#8221;). As of March 31, 2018, and December 31, 2017, the total value of the Company&#8217;s Euro and Swiss Franc debt was $268.8 million and $261.9 million, respectively.&#160; For the three months ended March 31, 2018, the impact of foreign exchange rates on these debt instruments increased debt by $6.9 million, which has been recorded as foreign currency translation in OCI.</div></div> -31882000 0 0.30 0.89 0.89 0.30 6210000 3089000 0.314 0.238 23613000 21586000 <div style="font-family: 'Times New Roman'; font-size: 10pt;"><div style="text-align: left;"><table cellpadding="0" cellspacing="0" class="DSPFListTable" style="font-size: 10pt; font-family: 'Times New Roman'; width: 100%;"><tr><td style="font-size: 10pt; font-family: 'Times New Roman'; width: 18pt; vertical-align: top; align: right;">3.</td><td style="width: auto; vertical-align: top; text-align: left;"><div style="font-size: 10pt; font-family: 'Times New Roman';">Fair Value</div></td></tr></table></div><div><br /></div><div style="font-size: 10pt; font-family: 'Times New Roman'; text-align: left; margin-left: 18pt;">Accounting Standards Codification (ASC) 820,<font style="font-size: 10pt; font-family: 'Times New Roman'; font-style: italic;"> Fair Value Measurements and Disclosures</font>, defines fair value for financial assets and liabilities, establishes a framework for measuring fair value in GAAP, and expands disclosures about fair value measurements. As of March 31, 2018, and December 31, 2017, the Company&#8217;s assets and liabilities subject to this standard are forward exchange contracts and investments in a money market fund and municipal investments. The fair value of the forward exchange contracts based on current pricing obtained for comparable derivative products (Level 2 inputs) was an asset of $0.1 million as of March 31, 2018, and a liability of $0.6 million as of December 31, 2017. The fair value of the investments based on March 31, 2018, and December 31, 2017, market quotes (Level 1 inputs) was an asset of $0.1 million in both periods and is reported in <font style="font-size: 10pt; font-family: 'Times New Roman'; font-style: italic;">Other Assets</font> in the Consolidated Condensed Balance Sheets.</div><div><br /></div><div style="font-size: 10pt; font-family: 'Times New Roman'; text-align: left; margin-left: 18pt;">The carrying values of the Company&#8217;s cash and cash equivalents, trade accounts receivable, accounts payable, accrued expenses, and short-term borrowings approximated fair values as of March 31, 2018. The fair value of the Company&#8217;s long-term debt, including current maturities, is estimated using discounted cash flows based on the Company&#8217;s current incremental borrowing rates for similar types of borrowing arrangements (Level 2 inputs). The carrying value of the long-term debt at March 31, 2018, was $691.3 million. 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The effective tax rates in both 2018 and 2017 were impacted by changes in estimates associated with the finalization of prior year foreign and domestic tax items, audit settlements, adjustments to valuation allowances, and mix of foreign earnings. The 2018 tax rate was also impacted by the 2017 Tax Cuts and Jobs Act which is commonly referred to as &#8220;2017 Tax Legislation&#8221; and the tax rate in 2017 was also impacted by the restructuring activities, the limited tax deductibility of losses related to the Company&#8217;s restructuring activities, and the now completed sale of a facility and certain related business lines within the Flavors &amp; Fragrances segment in Strasbourg, France.</div><div><br /></div><div style="font-size: 10pt; font-family: 'Times New Roman'; text-align: left; margin-left: 18pt;">Staff Accounting Bulletin No. 118 (&#8220;SAB 118&#8221;) was issued to address the application of U.S. GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the 2017 Tax Legislation. The Company is applying SAB 118, and believes the impact of the 2017 Tax Legislation on the 2018 and 2017 income tax expenses should be considered provisional estimates. 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font-family: 'Times New Roman';">$</div></td><td valign="bottom" style="width: 9%; vertical-align: bottom; text-align: right; background-color: #cceeff;"><div style="font-size: 10pt; font-family: 'Times New Roman';">(148,356</div></td><td nowrap="nowrap" valign="bottom" style="width: 1%; vertical-align: bottom; text-align: left; background-color: #cceeff;"><div style="font-size: 10pt; font-family: 'Times New Roman';">)</div></td><td valign="bottom" style="width: 1%; vertical-align: bottom; background-color: #cceeff;">&#160;</td><td valign="bottom" style="width: 1%; vertical-align: bottom; text-align: left; background-color: #cceeff;"><div style="font-size: 10pt; font-family: 'Times New Roman';">$</div></td><td valign="bottom" style="width: 9%; vertical-align: bottom; text-align: right; background-color: #cceeff;"><div style="font-size: 10pt; font-family: 'Times New Roman';">(149,334</div></td><td nowrap="nowrap" valign="bottom" style="width: 1%; vertical-align: bottom; text-align: left; 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vertical-align: bottom; text-align: left;">&#160;</td><td valign="bottom" style="width: 1%; vertical-align: bottom;">&#160;</td><td valign="bottom" style="width: 1%; vertical-align: bottom; text-align: left;">&#160;</td><td valign="bottom" style="width: 9%; vertical-align: bottom; text-align: right;">&#160;</td><td nowrap="nowrap" valign="bottom" style="width: 1%; vertical-align: bottom; text-align: left;">&#160;</td><td valign="bottom" style="width: 1%; vertical-align: bottom;">&#160;</td><td valign="bottom" style="width: 1%; vertical-align: bottom; text-align: left;">&#160;</td><td valign="bottom" style="width: 9%; vertical-align: bottom; text-align: right;">&#160;</td><td nowrap="nowrap" valign="bottom" style="width: 1%; vertical-align: bottom; text-align: left;">&#160;</td></tr><tr><td valign="bottom" style="width: 30%; vertical-align: top; background-color: #cceeff;"><div style="font-size: 10pt; font-family: 'Times New Roman'; text-align: left; margin-left: 9pt; text-indent: -9pt;">Revenue from external customers</div></td><td valign="bottom" style="width: 1%; 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font-family: 'Times New Roman'; width: 18pt; vertical-align: top; align: right;">1.</td><td style="width: auto; vertical-align: top; text-align: justify;"><div style="font-size: 10pt; font-family: 'Times New Roman';">Accounting Policies</div></td></tr></table></div><div><br /></div><div style="font-size: 10pt; font-family: 'Times New Roman'; text-align: left; margin-left: 18pt;">In the opinion of Sensient Technologies Corporation (the &#8220;Company&#8221;), the accompanying unaudited consolidated condensed financial statements contain all adjustments (consisting of only normal recurring adjustments) that are necessary to present fairly the financial position of the Company as of March 31, 2018, and the results of operations, comprehensive income, and cash flows for the three months ended March 31, 2018 and 2017. The results of operations for any interim period are not necessarily indicative of the results to be expected for the full year.</div><div><br /></div><div style="font-size: 10pt; font-family: 'Times New Roman'; text-align: left; margin-left: 18pt;">The preparation of financial statements in conformity with U.S. generally accepted accounting principles (&#8220;GAAP&#8221;) requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Expenses are charged to operations in the period incurred.</div><div><br /></div><div style="font-size: 10pt; font-family: 'Times New Roman'; text-align: left; margin-left: 18pt;">Please refer to the notes in the Company&#8217;s annual consolidated financial statements for the year ended December 31, 2017, for additional details of the Company&#8217;s financial condition and a description of the Company&#8217;s accounting policies, which have been continued without change except for the Company&#8217;s Revenue Recognition accounting policy, which has been updated as a result of the Company&#8217;s adoption in the current quarter of Accounting Standards Update (ASU) 2014-09, <font style="font-size: 10pt; font-family: 'Times New Roman'; font-style: italic;">Revenue from Contracts with Customers</font>, as noted below.</div><div><br /></div><div style="font-size: 10pt; font-family: 'Times New Roman'; font-style: italic; text-align: left; margin-left: 18pt;">Revenue Recognition</div><div style="font-size: 10pt; font-family: 'Times New Roman'; text-align: left; margin-left: 18pt;">The Company recognizes revenue as the transfer of control of its products to the Company&#8217;s customers in an amount reflecting the consideration the Company expects to be entitled. 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For each contract, the Company considers the promise to transfer products, each of which are distinct, to be the identified performance obligations. In determining the transaction price, the Company evaluates whether the price is subject to refund or adjustment to determine the net consideration to which the Company expects to be entitled. In addition, the Company evaluates the customer&#8217;s ability to pay as part of its consideration of the contract. As the Company&#8217;s standard payment terms are less than one year, the Company elected the practical expedient under Accounting Standards Codification (ASC) 606-10-32-18, and determined that its contracts do not have a significant financing component. The Company allocates the transaction price to each distinct product based on the relative standalone selling price. Revenue is recognized when control of the product is transferred to the customer, the customer is obligated to pay the Company, and the Company has no remaining obligations, which is typically at shipment. In certain locations, primarily outside the United States, product shipping terms may vary. Thus, in such locations, the point at which control of the product transfers to the customer and revenue recognition occurs will vary accordingly.</div><div><br /></div><div style="font-size: 10pt; font-family: 'Times New Roman'; text-align: left; margin-left: 18pt;">Customer returns of non-conforming products are estimated at the time revenue is recognized. In certain customer relationships, volume rebates exist, which are recognized according to the terms and conditions of the contractual relationship. Customer returns, rebates, and discounts are not material to the Company&#8217;s consolidated financial statements. The Company has elected to recognize the revenue and cost for freight and shipping when control over the products has transferred to the customer. The Company has elected to immediately expense contract costs from obtaining a contract as the amortization period of the asset the Company otherwise would have recognized would have been less than a year.</div><div>&#160;</div><div style="font-size: 10pt; font-family: 'Times New Roman'; text-align: left; margin-left: 18pt;">The Company disaggregates its revenue with customers by certain product lines and geographic locations for the Flavors &amp; Fragrances and Color segments. Revenue for the Asia Pacific segment is managed on a geographic basis. For more information on the Company&#8217;s disaggregated revenue, see Note 4, <font style="font-size: 10pt; font-family: 'Times New Roman'; font-style: italic;">Segment Information</font>.</div><div><br /></div><div style="font-size: 10pt; font-family: 'Times New Roman'; font-style: italic; text-align: left; text-indent: 18pt;">New Pronouncements</div><div style="font-size: 10pt; font-family: 'Times New Roman'; text-align: left; margin-left: 18pt;">In May 2014, the Financial Accounting Standards Board (FASB) issued, ASU No. 2014-09, <font style="font-size: 10pt; font-family: 'Times New Roman'; font-style: italic;">Revenue from Contracts with Customers</font>. Under this new standard, revenue is recognized when a customer obtains control of promised goods or services in an amount that reflects the consideration the entity expects to receive in exchange for those goods or services. The requirements of the new standard are effective for interim and annual periods beginning after December 15, 2017. The Company adopted this new standard in the current quarter using the modified retrospective method. The adoption of this new standard did not have an impact on the revenue recognized by the Company. The Company has updated its revenue recognition accounting policy, as outlined above, and has included a disclosure on its disaggregated revenue in Note 4, <font style="font-size: 10pt; font-family: 'Times New Roman'; font-style: italic;">Segment Information</font>, and has included discussion of its disaggregated revenue under <font style="font-size: 10pt; font-family: 'Times New Roman'; font-style: italic;">Segment Information</font>, in its <font style="font-size: 10pt; font-family: 'Times New Roman'; font-style: italic;">Management&#8217;s Discussion and Analysis of Financial Condition and Results of Operations.</font></div><div><br /></div><div style="font-size: 10pt; font-family: 'Times New Roman'; text-align: left; margin-left: 18pt;">In February 2016, the FASB issued ASU No. 2016-02, <font style="font-size: 10pt; font-family: 'Times New Roman'; font-style: italic;">Leases</font>, which requires lessees to recognize the lease assets and lease liabilities that arise from leases on the balance sheet and to disclose qualitative and quantitative information about lease transactions. This guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company created a project team within its Corporate Finance Department to review the impact that this ASU will have on the Company. The project team has begun gathering data and reviewing existing leases and other relevant documents across all of the Company&#8217;s segments. The Company has also purchased and begun the installation of a software solution to facilitate the implementation of this new standard. 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The Company has also reclassified the first quarter of 2017 to include $6.4 million collected on sold receivables in cash provided by investing activities rather than cash provided by operating activities as previously reported.</font></div><div><br /></div><div style="font-size: 10pt; font-family: 'Times New Roman'; text-align: left; margin-left: 18pt;">In December 2016, the FASB issued ASU 2016-16, <font style="font-size: 10pt; font-family: 'Times New Roman'; font-style: italic;">Accounting for Income Taxes: Intra-Entity Asset Transfers of Assets Other than Inventory</font>. Prior to the adoption of ASU 2016-16, the tax effects of intra-entity asset transfers are deferred until the transferred asset is sold to a third party or otherwise recovered through use. ASU 2016-16 eliminates the exception for all intra-entity sales of assets other than inventory. The guidance is effective for fiscal years beginning after December 15, 2017, including interim periods within those years. The Company adopted this standard&#160;in the current quarter resulting in a cumulative effect of $0.4 million increase to <font style="font-size: 10pt; font-family: 'Times New Roman'; font-style: italic;">Earnings reinvested in the business</font>; an increase of $3.0 million to <font style="font-style: italic;">Deferred Tax Assets</font>; a decrease of $3.7 million to <font style="font-size: 10pt; font-family: 'Times New Roman'; font-style: italic;">Prepaid Expense </font><font style="font-style: italic;">and </font><font style="font-size: 10pt; font-family: 'Times New Roman'; font-style: italic;">Other Current Assets</font>; and a decrease of $1.1 million to <font style="font-size: 10pt; font-family: 'Times New Roman'; font-style: italic;">Deferred Tax Liabilities</font> on the Company&#8217;s Consolidated Balance Sheet.</div><div><br /></div><div style="font-size: 10pt; font-family: 'Times New Roman'; text-align: left; margin-left: 18pt;">In March 2017, the FASB issued ASU No. 2017-07, <font style="font-size: 10pt; font-family: 'Times New Roman'; font-style: italic;">Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost</font>. This ASU requires employers to present the service cost component of the net periodic benefit cost in the same income statement line item as the other employee compensation costs arising from services rendered during the period. The other components of net benefit cost are to be presented outside of any subtotal of operating income. This ASU is effective for fiscal years and interim periods beginning after December 15, 2017, and early adoption is permitted. The Company adopted this standard in the current quarter, and as a result, the Company&#8217;s non-service cost portion of its pension expense is now recorded in <font style="font-size: 10pt; font-family: 'Times New Roman'; font-style: italic;">Interest Expense</font> on the Company&#8217;s Condensed Statement of Earnings. The Company&#8217;s service cost portion of pension expense is recorded in <font style="font-size: 10pt; font-family: 'Times New Roman'; font-style: italic;">Selling and Administrative Expenses </font>on the Company&#8217;s Consolidated Statement of Earnings. This change did not have a material impact on the Company&#8217;s consolidated financial statements.</div><div>&#160;</div><div style="font-size: 10pt; font-family: 'Times New Roman'; text-align: left; margin-left: 18pt;">In August 2017, the FASB issued ASU No. 2017-12, <font style="font-size: 10pt; font-family: 'Times New Roman'; font-style: italic;">Targeted Improvements to Accounting for Hedging Activities</font>, which expands an entity&#8217;s ability to hedge non<font style="font-size: 10pt; font-family: 'Times New Roman';">-</font>financial and financial risk components and reduce complexity in fair value hedges of interest rate risk. This guidance eliminates the requirement to separately measure and report hedge ineffectiveness and generally requires the entire change in the fair value of a hedging instrument to be presented in the same income statement line item as the hedged item. This ASU is effective for fiscal years and interim periods beginning after December 15, 2018. The Company is currently evaluating the expected impact of this standard.</div></div> 827456000 852301000 -148356000 -309000 -149334000 -669000 39000 -125170000 -125470000 -339000 <div style="font-family: 'Times New Roman'; font-size: 10pt;"><div><table cellpadding="0" cellspacing="0" class="DSPFListTable" style="font-size: 10pt; font-family: 'Times New Roman'; width: 100%;"><tr style="vertical-align: top;"><td style="width: 18pt; vertical-align: top; align: right;"><div style="font-size: 10pt; font-family: 'Times New Roman';">11.</div></td><td style="width: auto; vertical-align: top; align: left;"><div style="font-size: 10pt; font-family: 'Times New Roman';">Accounts Receivable Securitization</div></td></tr></table></div><div><br /></div><div style="font-size: 10pt; font-family: 'Times New Roman'; text-align: left; margin-left: 18pt;">The Company is engaged in an accounts receivable securitization program with a commitment size of $60 million, whereby transactions under the program are accounted for as sales of trade receivables in accordance with ASC Topic 860, <font style="font-size: 10pt; font-family: 'Times New Roman'; font-style: italic;">Transfers and Servicing</font>. Sales of trade receivables under the program are recorded as a reduction of accounts receivable in the Consolidated Balance Sheet. The fair value of the receivables sold equals the carrying cost at the time of sale and no gain or loss has been recorded as a result of the sales. The sales also resulted in the recording of a deferred purchase price amount, which represents the retained interest in the sold receivables. This amount is adjusted each month based on collections and other activity. The Company estimates the fair value of the deferred purchase price receivable based on historical performance of similar receivables, including an allowance for doubtful accounts, as well as estimated cash discounts to be taken by customers and potential credits issued to customers. The Company deems the interest rate risk related to the deferred purchase price receivable to be de minimis primarily due to the short average collection cycle of the related receivables.</div><div><br /></div><div style="font-size: 10pt; font-family: 'Times New Roman'; text-align: left; margin-left: 18pt;">As of March 31, 2018 and 2017, the net trade receivables sold totaled $99.2 million and $56.6 million, respectively, and the fair value of the deferred purchase price receivable was $39.2 million and $16.6 million as of March 31, 2018 and 2017, respectively, which are recorded in <font style="font-size: 10pt; font-family: 'Times New Roman'; font-style: italic;">Trade Accounts Receivable</font> in the Company&#8217;s Consolidated Balance Sheets.</div></div> 6900000 594392000 525422000 <div style="font-family: 'Times New Roman'; font-size: 10pt;"><div style="text-align: justify;"><table cellpadding="0" cellspacing="0" class="DSPFListTable" style="font-size: 10pt; font-family: 'Times New Roman'; width: 100%;"><tr><td style="font-size: 10pt; font-family: 'Times New Roman'; width: 18pt; vertical-align: top; align: right;">7.</td><td style="width: auto; vertical-align: top; text-align: justify;"><div style="font-size: 10pt; font-family: 'Times New Roman';">Shareholders&#8217; Equity</div></td></tr></table></div><div><br /></div><div style="font-size: 10pt; font-family: 'Times New Roman'; text-align: left; margin-left: 18pt;">The Company repurchased 1 million shares of its common stock for an aggregate cost of $72.7 million during the three months ended March 31, 2018, and 155,849 shares of its common stock for an aggregate cost of $12.4 million during the three months ended March 31, 2017. 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The Company recognized a non-cash loss of approximately $11.0 million in Corporate &amp; Other during the three months ended March 31, 2017.</div></div> 19294000 22021000 P18M 12400000 72700000 39200000 16600000 99200000 56600000 60000000 11000000 8400000 Cash Flow Hedges and Pension Items are net of tax. 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3 Months Ended
Mar. 31, 2018
Apr. 30, 2018
Document and Entity Information [Abstract]    
Entity Registrant Name SENSIENT TECHNOLOGIES CORP  
Entity Central Index Key 0000310142  
Current Fiscal Year End Date --12-31  
Entity Well-known Seasoned Issuer Yes  
Entity Voluntary Filers No  
Entity Current Reporting Status Yes  
Entity Filer Category Large Accelerated Filer  
Entity Common Stock, Shares Outstanding   42,336,473
Document Fiscal Year Focus 2018  
Document Fiscal Period Focus Q1  
Document Type 10-Q  
Amendment Flag false  
Document Period End Date Mar. 31, 2018  
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CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS (Unaudited) - USD ($)
shares in Thousands, $ in Thousands
3 Months Ended
Mar. 31, 2018
Mar. 31, 2017
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS (Unaudited) [Abstract]    
Revenue $ 356,477 $ 341,397
Cost of products sold 233,406 220,452
Selling and administrative expenses 67,390 96,908
Operating income 55,681 24,037
Interest expense 5,555 4,811
Earnings before income taxes 50,126 19,226
Income taxes 11,932 6,034
Net earnings $ 38,194 $ 13,192
Weighted average number of shares outstanding:    
Basic (in shares) 42,879 44,202
Diluted (in shares) 43,034 44,479
Earnings per common share:    
Basic (in dollars per share) $ 0.89 $ 0.30
Diluted (in dollars per share) 0.89 0.30
Dividends declared per common share (in dollars per share) $ 0.33 $ 0.30
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CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2018
Mar. 31, 2017
CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) [Abstract]    
Comprehensive Income $ 62,058 $ 37,271
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CONSOLIDATED CONDENSED BALANCE SHEETS (Unaudited) - USD ($)
$ in Thousands
Mar. 31, 2018
Dec. 31, 2017
CURRENT ASSETS:    
Cash and cash equivalents $ 30,420 $ 29,344
Trade accounts receivable, net 216,480 195,439
Inventories 467,996 463,517
Prepaid expenses and other current assets 45,023 43,206
Assets held for sale 2,022 1,969
TOTAL CURRENT ASSETS 761,941 733,475
OTHER ASSETS 67,432 68,251
DEFERRED TAX ASSETS 10,980 7,885
INTANGIBLE ASSETS, NET 7,680 7,211
GOODWILL 425,321 408,995
PROPERTY, PLANT AND EQUIPMENT:    
Land 35,925 35,198
Buildings 323,001 317,464
Machinery and equipment 709,085 687,896
Construction in progress 35,966 40,833
Property, plant and equipment, gross 1,103,977 1,081,391
Less accumulated depreciation (601,943) (582,868)
Property, plant and equipment, net 502,034 498,523
TOTAL ASSETS 1,775,388 1,724,340
CURRENT LIABILITIES:    
Trade accounts payable 96,136 109,780
Accrued salaries, wages and withholdings from employees 21,586 23,613
Other accrued expenses 50,230 51,764
Income taxes 15,049 11,036
Short-term borrowings 20,237 20,130
TOTAL CURRENT LIABILITIES 203,238 216,323
DEFERRED TAX LIABILITIES 17,722 18,724
OTHER LIABILITIES 13,686 13,539
ACCRUED EMPLOYEE AND RETIREE BENEFITS 22,021 19,294
LONG-TERM DEBT 691,265 604,159
SHAREHOLDERS' EQUITY:    
Common stock 5,396 5,396
Additional paid-in capital 103,099 107,176
Earnings reinvested in the business 1,438,823 1,414,485
Treasury stock, at cost (594,392) (525,422)
Accumulated other comprehensive loss (125,470) (149,334)
TOTAL SHAREHOLDERS' EQUITY 827,456 852,301
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 1,775,388 $ 1,724,340
XML 14 R5.htm IDEA: XBRL DOCUMENT v3.8.0.1
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2018
Mar. 31, 2017
Cash flows from operating activities:    
Net earnings $ 38,194 $ 13,192
Adjustments to arrive at net cash provided by operating activities:    
Depreciation and amortization 12,578 12,141
Share-based compensation 1,254 1,930
Net loss on assets 70 386
Loss on divestiture of business 0 31,882
Deferred income taxes (4,346) 2,202
Changes in operating assets and liabilities (29,499) (30,574)
Net cash provided by operating activities 18,251 31,159
Cash flows from investing activities:    
Acquisition of property, plant and equipment (11,058) (10,069)
Cash receipts on sold receivables 9,051 6,407
Proceeds from sale of assets 45 105
Proceeds from divesture of business 0 12,457
Acquisition of new businesses (11,000) 0
Other investing activity (798) (63)
Net cash (used in) provided by investing activities (13,760) 8,837
Cash flows from financing activities:    
Proceeds from additional borrowings 92,348 5,657
Debt payments (12,280) (19,350)
Purchase of treasury stock (72,704) (12,365)
Dividends paid (14,274) (13,306)
Other financing activity (2,715) (477)
Net cash used in financing activities (9,625) (39,841)
Effect of exchange rate changes on cash and cash equivalents 6,210 3,089
Net increase in cash and cash equivalents 1,076 3,244
Cash and cash equivalents at beginning of year 29,344 25,865
Cash and cash equivalents at end of year $ 30,420 $ 29,109
XML 15 R6.htm IDEA: XBRL DOCUMENT v3.8.0.1
Accounting Policies
3 Months Ended
Mar. 31, 2018
Accounting Policies [Abstract]  
Accounting Policies
1.
Accounting Policies

In the opinion of Sensient Technologies Corporation (the “Company”), the accompanying unaudited consolidated condensed financial statements contain all adjustments (consisting of only normal recurring adjustments) that are necessary to present fairly the financial position of the Company as of March 31, 2018, and the results of operations, comprehensive income, and cash flows for the three months ended March 31, 2018 and 2017. The results of operations for any interim period are not necessarily indicative of the results to be expected for the full year.

The preparation of financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Expenses are charged to operations in the period incurred.

Please refer to the notes in the Company’s annual consolidated financial statements for the year ended December 31, 2017, for additional details of the Company’s financial condition and a description of the Company’s accounting policies, which have been continued without change except for the Company’s Revenue Recognition accounting policy, which has been updated as a result of the Company’s adoption in the current quarter of Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers, as noted below.

Revenue Recognition
The Company recognizes revenue as the transfer of control of its products to the Company’s customers in an amount reflecting the consideration the Company expects to be entitled. In order to achieve this core principle, the Company applies the following five-step approach:

·
Identification of the contract, or contracts, with a customer
·
Identification of the performance obligations in the contract
·
Determination of the transaction price
·
Allocation of the transaction price to the performance obligations in the contract
·
Recognition of revenue when, or as, we satisfy the performance obligations

The Company considers customer purchase orders, which in some cases are governed by master sales agreements, to be the contracts with the customer. For each contract, the Company considers the promise to transfer products, each of which are distinct, to be the identified performance obligations. In determining the transaction price, the Company evaluates whether the price is subject to refund or adjustment to determine the net consideration to which the Company expects to be entitled. In addition, the Company evaluates the customer’s ability to pay as part of its consideration of the contract. As the Company’s standard payment terms are less than one year, the Company elected the practical expedient under Accounting Standards Codification (ASC) 606-10-32-18, and determined that its contracts do not have a significant financing component. The Company allocates the transaction price to each distinct product based on the relative standalone selling price. Revenue is recognized when control of the product is transferred to the customer, the customer is obligated to pay the Company, and the Company has no remaining obligations, which is typically at shipment. In certain locations, primarily outside the United States, product shipping terms may vary. Thus, in such locations, the point at which control of the product transfers to the customer and revenue recognition occurs will vary accordingly.

Customer returns of non-conforming products are estimated at the time revenue is recognized. In certain customer relationships, volume rebates exist, which are recognized according to the terms and conditions of the contractual relationship. Customer returns, rebates, and discounts are not material to the Company’s consolidated financial statements. The Company has elected to recognize the revenue and cost for freight and shipping when control over the products has transferred to the customer. The Company has elected to immediately expense contract costs from obtaining a contract as the amortization period of the asset the Company otherwise would have recognized would have been less than a year.
 
The Company disaggregates its revenue with customers by certain product lines and geographic locations for the Flavors & Fragrances and Color segments. Revenue for the Asia Pacific segment is managed on a geographic basis. For more information on the Company’s disaggregated revenue, see Note 4, Segment Information.

New Pronouncements
In May 2014, the Financial Accounting Standards Board (FASB) issued, ASU No. 2014-09, Revenue from Contracts with Customers. Under this new standard, revenue is recognized when a customer obtains control of promised goods or services in an amount that reflects the consideration the entity expects to receive in exchange for those goods or services. The requirements of the new standard are effective for interim and annual periods beginning after December 15, 2017. The Company adopted this new standard in the current quarter using the modified retrospective method. The adoption of this new standard did not have an impact on the revenue recognized by the Company. The Company has updated its revenue recognition accounting policy, as outlined above, and has included a disclosure on its disaggregated revenue in Note 4, Segment Information, and has included discussion of its disaggregated revenue under Segment Information, in its Management’s Discussion and Analysis of Financial Condition and Results of Operations.

In February 2016, the FASB issued ASU No. 2016-02, Leases, which requires lessees to recognize the lease assets and lease liabilities that arise from leases on the balance sheet and to disclose qualitative and quantitative information about lease transactions. This guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company created a project team within its Corporate Finance Department to review the impact that this ASU will have on the Company. The project team has begun gathering data and reviewing existing leases and other relevant documents across all of the Company’s segments. The Company has also purchased and begun the installation of a software solution to facilitate the implementation of this new standard. The Company will continue to evaluate the expected impact of this standard.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payment. This ASU clarifies how certain cash receipts and cash payments are presented and classified in the statement of cash flows. Among these changes, is a requirement that a transferor’s receipt of a beneficial interest in securitized trade receivables be disclosed as an investing transaction. There is also a requirement to classify cash receipts received that are related to beneficial interests in previously transferred receivables (i.e., deferred purchase price) as inflows from investing activities. The guidance is effective for fiscal years beginning after December 15, 2017, including interim periods within those years. The Company adopted this standard in the current quarter and included $9.1 million as an adjustment to net cash provided by investing activities. The Company has also reclassified the first quarter of 2017 to include $6.4 million collected on sold receivables in cash provided by investing activities rather than cash provided by operating activities as previously reported.

In December 2016, the FASB issued ASU 2016-16, Accounting for Income Taxes: Intra-Entity Asset Transfers of Assets Other than Inventory. Prior to the adoption of ASU 2016-16, the tax effects of intra-entity asset transfers are deferred until the transferred asset is sold to a third party or otherwise recovered through use. ASU 2016-16 eliminates the exception for all intra-entity sales of assets other than inventory. The guidance is effective for fiscal years beginning after December 15, 2017, including interim periods within those years. The Company adopted this standard in the current quarter resulting in a cumulative effect of $0.4 million increase to Earnings reinvested in the business; an increase of $3.0 million to Deferred Tax Assets; a decrease of $3.7 million to Prepaid Expense and Other Current Assets; and a decrease of $1.1 million to Deferred Tax Liabilities on the Company’s Consolidated Balance Sheet.

In March 2017, the FASB issued ASU No. 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. This ASU requires employers to present the service cost component of the net periodic benefit cost in the same income statement line item as the other employee compensation costs arising from services rendered during the period. The other components of net benefit cost are to be presented outside of any subtotal of operating income. This ASU is effective for fiscal years and interim periods beginning after December 15, 2017, and early adoption is permitted. The Company adopted this standard in the current quarter, and as a result, the Company’s non-service cost portion of its pension expense is now recorded in Interest Expense on the Company’s Condensed Statement of Earnings. The Company’s service cost portion of pension expense is recorded in Selling and Administrative Expenses on the Company’s Consolidated Statement of Earnings. This change did not have a material impact on the Company’s consolidated financial statements.
 
In August 2017, the FASB issued ASU No. 2017-12, Targeted Improvements to Accounting for Hedging Activities, which expands an entity’s ability to hedge non-financial and financial risk components and reduce complexity in fair value hedges of interest rate risk. This guidance eliminates the requirement to separately measure and report hedge ineffectiveness and generally requires the entire change in the fair value of a hedging instrument to be presented in the same income statement line item as the hedged item. This ASU is effective for fiscal years and interim periods beginning after December 15, 2018. The Company is currently evaluating the expected impact of this standard.
XML 16 R7.htm IDEA: XBRL DOCUMENT v3.8.0.1
Acquisition
3 Months Ended
Mar. 31, 2018
Acquisition [Abstract]  
Acquisition
2.
Acquisition

On March 9, 2018, the Company completed the acquisition of certain net assets and the natural color business of GlobeNatural, a natural food and ingredient company based in Lima, Peru. The Company paid $10.5 million of cash for this acquisition. GlobeNatural operations are included in the Color segment. The assets acquired and liabilities assumed were recorded at their estimated fair values as of the acquisition date. The purchase price exceeded the carrying value of the net assets by approximately $8.4 million. The excess was allocated to intangible assets, principally goodwill. The Company is in the process of quantifying the identifiable intangible assets and anticipates completing this analysis in the third quarter of 2018.  During the current quarter, the Company also purchased the assets of a business for an immaterial amount, which is included in the Flavors & Fragrances segment.
XML 17 R8.htm IDEA: XBRL DOCUMENT v3.8.0.1
Fair Value
3 Months Ended
Mar. 31, 2018
Fair Value [Abstract]  
Fair Value
3.
Fair Value

Accounting Standards Codification (ASC) 820, Fair Value Measurements and Disclosures, defines fair value for financial assets and liabilities, establishes a framework for measuring fair value in GAAP, and expands disclosures about fair value measurements. As of March 31, 2018, and December 31, 2017, the Company’s assets and liabilities subject to this standard are forward exchange contracts and investments in a money market fund and municipal investments. The fair value of the forward exchange contracts based on current pricing obtained for comparable derivative products (Level 2 inputs) was an asset of $0.1 million as of March 31, 2018, and a liability of $0.6 million as of December 31, 2017. The fair value of the investments based on March 31, 2018, and December 31, 2017, market quotes (Level 1 inputs) was an asset of $0.1 million in both periods and is reported in Other Assets in the Consolidated Condensed Balance Sheets.

The carrying values of the Company’s cash and cash equivalents, trade accounts receivable, accounts payable, accrued expenses, and short-term borrowings approximated fair values as of March 31, 2018. The fair value of the Company’s long-term debt, including current maturities, is estimated using discounted cash flows based on the Company’s current incremental borrowing rates for similar types of borrowing arrangements (Level 2 inputs). The carrying value of the long-term debt at March 31, 2018, was $691.3 million. The fair value of the long-term debt at March 31, 2018, was $701.9 million.
XML 18 R9.htm IDEA: XBRL DOCUMENT v3.8.0.1
Segment Information
3 Months Ended
Mar. 31, 2018
Segment Information [Abstract]  
Segment Information
4.
Segment Information

Operating results by segment for the periods presented are as follows:

(In thousands)
 
Flavors &
Fragrances
  
Color
  
Asia
Pacific
  
Corporate
& Other
  
Consolidated
 
Three months ended March 31, 2018:
               
Revenue from external customers
 
$
182,482
  
$
143,728
  
$
30,267
  
$
-
  
$
356,477
 
Intersegment revenue
  
5,864
   
3,432
   
-
   
-
   
9,296
 
Total revenue
 
$
188,346
  
$
147,160
  
$
30,267
  
$
-
  
$
365,773
 
                     
Operating income (loss)
 
$
25,327
  
$
33,672
  
$
4,872
  
$
(8,190
)
 
$
55,681
 
Interest expense
  
-
   
-
   
-
   
5,555
   
5,555
 
Earnings (loss) before income taxes
 
$
25,327
  
$
33,672
  
$
4,872
  
$
(13,745
)
 
$
50,126
 
                     
Three months ended March 31, 2017:
                    
Revenue from external customers
 
$
181,075
  
$
130,840
  
$
29,482
  
$
-
  
$
341,397
 
Intersegment revenue
  
5,800
   
3,226
   
154
   
-
   
9,180
 
Total revenue
 
$
186,875
  
$
134,066
  
$
29,636
  
$
-
  
$
350,577
 
                     
Operating income (loss)
 
$
28,770
  
$
30,217
  
$
5,150
  
$
(40,100
)
 
$
24,037
 
Interest expense
  
-
   
-
   
-
   
4,811
   
4,811
 
Earnings (loss) before income taxes
 
$
28,770
  
$
30,217
  
$
5,150
  
$
(44,911
)
 
$
19,226
 

The Company evaluates performance based on operating income of the respective segments before restructuring and other costs, interest expense, and income taxes. The 2017 restructuring and other costs are reported in Corporate & Other. The 2017 other costs pertain to the costs associated with the Company’s divestiture of a facility and certain related business lines within the Flavors & Fragrances business in Strasbourg, France. There were no restructuring and other costs in the current quarter.

In addition to evaluating the Company’s performance based on the segments above, revenue is also disaggregated and analyzed by product line and geographic market.  The following table displays our revenue by these major sources.

Product Lines

(In thousands)
 
Flavors &
Fragrances
  
Color
  
Asia
Pacific
  
Consolidated
 
Three months ended March 31, 2018:
            
Flavors
 
$
109,051
  
$
-
  
$
-
  
$
109,051
 
Natural Ingredients
  
53,201
   
-
   
-
   
53,201
 
Fragrances
  
26,094
   
-
   
-
   
26,094
 
Food & Beverage Colors
  
-
   
76,816
   
-
   
76,816
 
Cosmetics
  
-
   
45,504
   
-
   
45,504
 
Other Colors
  
-
   
24,840
   
-
   
24,840
 
Asia Pacific
  
-
   
-
   
30,267
   
30,267
 
Intersegment Revenue
  
(5,864
)
  
(3,432
)
  
-
   
(9,296
)
Total revenue from external customers
 
$
182,482
  
$
143,728
  
$
30,267
  
$
356,477
 
                 
Three months ended March 31, 2017:
                
Flavors
 
$
113,617
  
$
-
  
$
-
  
$
113,617
 
Natural Ingredients
  
53,522
   
-
   
-
   
53,522
 
Fragrances
  
19,736
   
-
   
-
   
19,736
 
Food & Beverage Colors
  
-
   
71,388
   
-
   
71,388
 
Cosmetics
  
-
   
37,459
   
-
   
37,459
 
Other Colors
  
-
   
25,219
   
-
   
25,219
 
Asia Pacific
  
-
   
-
   
29,636
   
29,636
 
Intersegment Revenue
  
(5,800
)
  
(3,226
)
  
(154
)
  
(9,180
)
Total revenue from external customers
 
$
181,075
  
$
130,840
  
$
29,482
  
$
341,397
 
 
Geographic Markets

(In thousands)
 
Flavors &
Fragrances
  
Color
  
Asia
Pacific
  
Consolidated
 
Three months ended March 31, 2018:
            
North America
 
$
119,055
  
$
63,582
  
$
-
  
$
182,637
 
Europe
  
45,427
   
43,631
   
6
   
89,064
 
Asia Pacific
  
7,022
   
16,910
   
30,011
   
53,943
 
Other
  
10,978
   
19,605
   
250
   
30,833
 
Total revenue from external customers
 
$
182,482
  
$
143,728
  
$
30,267
  
$
356,477
 

Three months ended March 31, 2017:
            
North America
 
$
122,122
  
$
61,734
  
$
-
  
$
183,856
 
Europe
  
42,507
   
36,323
   
61
   
78,891
 
Asia Pacific
  
6,324
   
14,778
   
29,316
   
50,418
 
Other
  
10,122
   
18,005
   
105
   
28,232
 
Total revenue from external customers
 
$
181,075
  
$
130,840
  
$
29,482
  
$
341,397
 
XML 19 R10.htm IDEA: XBRL DOCUMENT v3.8.0.1
Inventories
3 Months Ended
Mar. 31, 2018
Inventories [Abstract]  
Inventories
5.
Inventories

At March 31, 2018, and December 31, 2017, inventories included finished and in-process products totaling $322.6 million and $310.4 million, respectively, and raw materials and supplies of $145.4 million and $153.1 million, respectively.
XML 20 R11.htm IDEA: XBRL DOCUMENT v3.8.0.1
Retirement Plans
3 Months Ended
Mar. 31, 2018
Retirement Plans [Abstract]  
Retirement Plans
6.
Retirement Plans

The Company’s components of annual benefit cost for the defined benefit plans for the periods presented are as follows:

  
Three Months Ended
March 31,
 
       
(In thousands)
 
2018
  
2017
 
       
Service cost
 
$
368
  
$
461
 
Interest cost
  
289
   
355
 
Expected return on plan assets
  
(245
)
  
(255
)
Amortization of actuarial gain
  
(27
)
  
(21
)
         
Total defined benefit expense
 
$
385
  
$
540
 

As noted in Note 1, Accounting Policies, the Company adopted ASU No. 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost, in the first quarter of 2018. As a result of the adoption of this ASU, the non-service cost portion of the Company’s annual benefit costs summarized above is recorded in Interest Expense in the Company’s Condensed Statement of Earnings. The service cost portion of the Company’s annual benefit costs is recorded in Selling and Administrative Expenses on the Company’s Condensed Statement of Earnings.
XML 21 R12.htm IDEA: XBRL DOCUMENT v3.8.0.1
Shareholders' Equity
3 Months Ended
Mar. 31, 2018
Shareholders' Equity [Abstract]  
Shareholders' Equity
7.
Shareholders’ Equity

The Company repurchased 1 million shares of its common stock for an aggregate cost of $72.7 million during the three months ended March 31, 2018, and 155,849 shares of its common stock for an aggregate cost of $12.4 million during the three months ended March 31, 2017. The amount of treasury stock purchases reported in the Company’s Consolidated Condensed Statements of Cash Flow represent purchases that have settled within each respective three-month period.
XML 22 R13.htm IDEA: XBRL DOCUMENT v3.8.0.1
Derivative Instruments and Hedging Activity
3 Months Ended
Mar. 31, 2018
Derivative Instruments and Hedging Activity [Abstract]  
Derivative Instruments and Hedging Activity
8.
Derivative Instruments and Hedging Activity

The Company may use forward exchange contracts and foreign currency denominated debt to manage its exposure to foreign exchange risk by reducing the effect of fluctuating foreign currencies on short-term foreign currency denominated intercompany transactions, non-functional currency raw material purchases, non-functional currency sales, and other known foreign currency exposures. These forward exchange contracts generally have maturities of less than 18 months. The Company’s primary hedging activities and their accounting treatment are summarized below:

Forward exchange contracts – Certain forward exchange contracts have been designated as cash flow hedges. The Company had $31.2 million and $44.9 million of forward exchange contracts, designated as hedges, outstanding as of March 31, 2018, and December 31, 2017, respectively. For the three months ended March 31, 2018 and 2017, the losses reclassified into net earnings in the Company’s Consolidated Statement of Earnings that offset the earnings impact of the related non-functional asset or liability hedged in the same period were not material. In addition, the Company utilizes forward exchange contracts that are not designated as cash flow hedges, the results of these transactions are not material to the financial statements.

Net investment hedges – The Company has certain debt denominated in Euros and Swiss Francs. These debt instruments have been designated as partial hedges of the Company’s Euro and Swiss Franc net asset positions. Changes in the fair value of this debt attributable to changes in the spot foreign exchange rate are recorded in foreign currency translation in other comprehensive income (“OCI”). As of March 31, 2018, and December 31, 2017, the total value of the Company’s Euro and Swiss Franc debt was $268.8 million and $261.9 million, respectively.  For the three months ended March 31, 2018, the impact of foreign exchange rates on these debt instruments increased debt by $6.9 million, which has been recorded as foreign currency translation in OCI.
XML 23 R14.htm IDEA: XBRL DOCUMENT v3.8.0.1
Income Taxes
3 Months Ended
Mar. 31, 2018
Income Taxes [Abstract]  
Income Taxes
9.
Income Taxes

The effective income tax rates for continuing operations for the quarters ended March 31, 2018 and 2017, were 23.8% and 31.4%, respectively. The effective tax rates in both 2018 and 2017 were impacted by changes in estimates associated with the finalization of prior year foreign and domestic tax items, audit settlements, adjustments to valuation allowances, and mix of foreign earnings. The 2018 tax rate was also impacted by the 2017 Tax Cuts and Jobs Act which is commonly referred to as “2017 Tax Legislation” and the tax rate in 2017 was also impacted by the restructuring activities, the limited tax deductibility of losses related to the Company’s restructuring activities, and the now completed sale of a facility and certain related business lines within the Flavors & Fragrances segment in Strasbourg, France.

Staff Accounting Bulletin No. 118 (“SAB 118”) was issued to address the application of U.S. GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the 2017 Tax Legislation. The Company is applying SAB 118, and believes the impact of the 2017 Tax Legislation on the 2018 and 2017 income tax expenses should be considered provisional estimates. The ultimate impact could differ from these provisional amounts, possibly materially, due to, additional guidance, changes in interpretation, and additional analysis and assumptions the Company has made.  Any adjustments to the 2018 and 2017 provisional estimates will be reported in income tax expense in the reporting period in which any such adjustments are determined, which will be no later than the fourth quarter of 2018.
XML 24 R15.htm IDEA: XBRL DOCUMENT v3.8.0.1
Accumulated Other Comprehensive Income
3 Months Ended
Mar. 31, 2018
Accumulated Other Comprehensive Income [Abstract]  
Accumulated Other Comprehensive Income
10.
Accumulated Other Comprehensive Income

The following table summarizes the changes in OCI during the three-month period ended March 31, 2018:

(In thousands)
 
Cash Flow
Hedges (a)
  
Pension
Items (a)
  
Foreign
Currency
Items
  
Total
 
Balance as of December 31, 2017
 
$
(669
)
 
$
(309
)
 
$
(148,356
)
 
$
(149,334
)
Other comprehensive income before reclassifications
  
670
   
-
   
23,186
   
23,856
 
Amounts reclassified from OCI
  
38
   
(30
)
  
-
   
8
 
Balance as of March 31, 2018
 
$
39
  
$
(339
)
 
$
(125,170
)
 
$
(125,470
)

(a)
Cash Flow Hedges and Pension Items are net of tax.
XML 25 R16.htm IDEA: XBRL DOCUMENT v3.8.0.1
Accounts Receivable Securitization
3 Months Ended
Mar. 31, 2018
Accounts Receivable Securitization [Abstract]  
Accounts Receivable Securitization
11.
Accounts Receivable Securitization

The Company is engaged in an accounts receivable securitization program with a commitment size of $60 million, whereby transactions under the program are accounted for as sales of trade receivables in accordance with ASC Topic 860, Transfers and Servicing. Sales of trade receivables under the program are recorded as a reduction of accounts receivable in the Consolidated Balance Sheet. The fair value of the receivables sold equals the carrying cost at the time of sale and no gain or loss has been recorded as a result of the sales. The sales also resulted in the recording of a deferred purchase price amount, which represents the retained interest in the sold receivables. This amount is adjusted each month based on collections and other activity. The Company estimates the fair value of the deferred purchase price receivable based on historical performance of similar receivables, including an allowance for doubtful accounts, as well as estimated cash discounts to be taken by customers and potential credits issued to customers. The Company deems the interest rate risk related to the deferred purchase price receivable to be de minimis primarily due to the short average collection cycle of the related receivables.

As of March 31, 2018 and 2017, the net trade receivables sold totaled $99.2 million and $56.6 million, respectively, and the fair value of the deferred purchase price receivable was $39.2 million and $16.6 million as of March 31, 2018 and 2017, respectively, which are recorded in Trade Accounts Receivable in the Company’s Consolidated Balance Sheets.
XML 26 R17.htm IDEA: XBRL DOCUMENT v3.8.0.1
Restructuring
3 Months Ended
Mar. 31, 2018
Restructuring [Abstract]  
Restructuring
12.
Restructuring

Between March 2014 and 2017, the Company executed a restructuring plan to eliminate underperforming operations, consolidate manufacturing facilities, and improve efficiencies within the Company. The Company recorded $20.2 million of restructuring costs in Corporate & Other for the three months ended March 31, 2017. There were no restructuring and other costs incurred in the three months ended March 31, 2018.
XML 27 R18.htm IDEA: XBRL DOCUMENT v3.8.0.1
Divestiture
3 Months Ended
Mar. 31, 2018
Divestiture [Abstract]  
Divestiture
13.
Divestiture

In the first quarter of 2017, the Company completed the sale of a facility and certain business lines in Strasbourg, France, for $12.5 million. The Company recognized a non-cash loss of approximately $11.0 million in Corporate & Other during the three months ended March 31, 2017.
XML 28 R19.htm IDEA: XBRL DOCUMENT v3.8.0.1
Commitments and Contingencies
3 Months Ended
Mar. 31, 2018
Commitments and Contingencies [Abstract]  
Commitments and Contingencies
14.
Commitments and Contingencies

The Company is subject to various claims and litigation arising in the normal course of business. The Company establishes reserves for claims and proceedings when it is probable that liabilities exist and reasonable estimates of loss can be made. While it is not possible to predict the outcome of these matters, based on our assessment of the facts and circumstances now known, we do not believe that these matters, individually or in the aggregate, will have a material adverse effect on our financial position. However, actual outcomes may be different from those expected and could have a material effect on our results of operations or cash flows in a particular period.
XML 29 R20.htm IDEA: XBRL DOCUMENT v3.8.0.1
Accounting Policies (Policies)
3 Months Ended
Mar. 31, 2018
Accounting Policies [Abstract]  
Revenue Recognition
Revenue Recognition
The Company recognizes revenue as the transfer of control of its products to the Company’s customers in an amount reflecting the consideration the Company expects to be entitled. In order to achieve this core principle, the Company applies the following five-step approach:

·
Identification of the contract, or contracts, with a customer
·
Identification of the performance obligations in the contract
·
Determination of the transaction price
·
Allocation of the transaction price to the performance obligations in the contract
·
Recognition of revenue when, or as, we satisfy the performance obligations

The Company considers customer purchase orders, which in some cases are governed by master sales agreements, to be the contracts with the customer. For each contract, the Company considers the promise to transfer products, each of which are distinct, to be the identified performance obligations. In determining the transaction price, the Company evaluates whether the price is subject to refund or adjustment to determine the net consideration to which the Company expects to be entitled. In addition, the Company evaluates the customer’s ability to pay as part of its consideration of the contract. As the Company’s standard payment terms are less than one year, the Company elected the practical expedient under Accounting Standards Codification (ASC) 606-10-32-18, and determined that its contracts do not have a significant financing component. The Company allocates the transaction price to each distinct product based on the relative standalone selling price. Revenue is recognized when control of the product is transferred to the customer, the customer is obligated to pay the Company, and the Company has no remaining obligations, which is typically at shipment. In certain locations, primarily outside the United States, product shipping terms may vary. Thus, in such locations, the point at which control of the product transfers to the customer and revenue recognition occurs will vary accordingly.

Customer returns of non-conforming products are estimated at the time revenue is recognized. In certain customer relationships, volume rebates exist, which are recognized according to the terms and conditions of the contractual relationship. Customer returns, rebates, and discounts are not material to the Company’s consolidated financial statements. The Company has elected to recognize the revenue and cost for freight and shipping when control over the products has transferred to the customer. The Company has elected to immediately expense contract costs from obtaining a contract as the amortization period of the asset the Company otherwise would have recognized would have been less than a year.
 
The Company disaggregates its revenue with customers by certain product lines and geographic locations for the Flavors & Fragrances and Color segments. Revenue for the Asia Pacific segment is managed on a geographic basis. For more information on the Company’s disaggregated revenue, see Note 4, Segment Information.
New Pronouncements
New Pronouncements
In May 2014, the Financial Accounting Standards Board (FASB) issued, ASU No. 2014-09, Revenue from Contracts with Customers. Under this new standard, revenue is recognized when a customer obtains control of promised goods or services in an amount that reflects the consideration the entity expects to receive in exchange for those goods or services. The requirements of the new standard are effective for interim and annual periods beginning after December 15, 2017. The Company adopted this new standard in the current quarter using the modified retrospective method. The adoption of this new standard did not have an impact on the revenue recognized by the Company. The Company has updated its revenue recognition accounting policy, as outlined above, and has included a disclosure on its disaggregated revenue in Note 4, Segment Information, and has included discussion of its disaggregated revenue under Segment Information, in its Management’s Discussion and Analysis of Financial Condition and Results of Operations.

In February 2016, the FASB issued ASU No. 2016-02, Leases, which requires lessees to recognize the lease assets and lease liabilities that arise from leases on the balance sheet and to disclose qualitative and quantitative information about lease transactions. This guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company created a project team within its Corporate Finance Department to review the impact that this ASU will have on the Company. The project team has begun gathering data and reviewing existing leases and other relevant documents across all of the Company’s segments. The Company has also purchased and begun the installation of a software solution to facilitate the implementation of this new standard. The Company will continue to evaluate the expected impact of this standard.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payment. This ASU clarifies how certain cash receipts and cash payments are presented and classified in the statement of cash flows. Among these changes, is a requirement that a transferor’s receipt of a beneficial interest in securitized trade receivables be disclosed as an investing transaction. There is also a requirement to classify cash receipts received that are related to beneficial interests in previously transferred receivables (i.e., deferred purchase price) as inflows from investing activities. The guidance is effective for fiscal years beginning after December 15, 2017, including interim periods within those years. The Company adopted this standard in the current quarter and included $9.1 million as an adjustment to net cash provided by investing activities. The Company has also reclassified the first quarter of 2017 to include $6.4 million collected on sold receivables in cash provided by investing activities rather than cash provided by operating activities as previously reported.

In December 2016, the FASB issued ASU 2016-16, Accounting for Income Taxes: Intra-Entity Asset Transfers of Assets Other than Inventory. Prior to the adoption of ASU 2016-16, the tax effects of intra-entity asset transfers are deferred until the transferred asset is sold to a third party or otherwise recovered through use. ASU 2016-16 eliminates the exception for all intra-entity sales of assets other than inventory. The guidance is effective for fiscal years beginning after December 15, 2017, including interim periods within those years. The Company adopted this standard in the current quarter resulting in a cumulative effect of $0.4 million increase to Earnings reinvested in the business; an increase of $3.0 million to Deferred Tax Assets; a decrease of $3.7 million to Prepaid Expense and Other Current Assets; and a decrease of $1.1 million to Deferred Tax Liabilities on the Company’s Consolidated Balance Sheet.

In March 2017, the FASB issued ASU No. 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. This ASU requires employers to present the service cost component of the net periodic benefit cost in the same income statement line item as the other employee compensation costs arising from services rendered during the period. The other components of net benefit cost are to be presented outside of any subtotal of operating income. This ASU is effective for fiscal years and interim periods beginning after December 15, 2017, and early adoption is permitted. The Company adopted this standard in the current quarter, and as a result, the Company’s non-service cost portion of its pension expense is now recorded in Interest Expense on the Company’s Condensed Statement of Earnings. The Company’s service cost portion of pension expense is recorded in Selling and Administrative Expenses on the Company’s Consolidated Statement of Earnings. This change did not have a material impact on the Company’s consolidated financial statements.
 
In August 2017, the FASB issued ASU No. 2017-12, Targeted Improvements to Accounting for Hedging Activities, which expands an entity’s ability to hedge non-financial and financial risk components and reduce complexity in fair value hedges of interest rate risk. This guidance eliminates the requirement to separately measure and report hedge ineffectiveness and generally requires the entire change in the fair value of a hedging instrument to be presented in the same income statement line item as the hedged item. This ASU is effective for fiscal years and interim periods beginning after December 15, 2018. The Company is currently evaluating the expected impact of this standard.
XML 30 R21.htm IDEA: XBRL DOCUMENT v3.8.0.1
Segment Information (Tables)
3 Months Ended
Mar. 31, 2018
Segment Information [Abstract]  
Segment Information
Operating results by segment for the periods presented are as follows:

(In thousands)
 
Flavors &
Fragrances
  
Color
  
Asia
Pacific
  
Corporate
& Other
  
Consolidated
 
Three months ended March 31, 2018:
               
Revenue from external customers
 
$
182,482
  
$
143,728
  
$
30,267
  
$
-
  
$
356,477
 
Intersegment revenue
  
5,864
   
3,432
   
-
   
-
   
9,296
 
Total revenue
 
$
188,346
  
$
147,160
  
$
30,267
  
$
-
  
$
365,773
 
                     
Operating income (loss)
 
$
25,327
  
$
33,672
  
$
4,872
  
$
(8,190
)
 
$
55,681
 
Interest expense
  
-
   
-
   
-
   
5,555
   
5,555
 
Earnings (loss) before income taxes
 
$
25,327
  
$
33,672
  
$
4,872
  
$
(13,745
)
 
$
50,126
 
                     
Three months ended March 31, 2017:
                    
Revenue from external customers
 
$
181,075
  
$
130,840
  
$
29,482
  
$
-
  
$
341,397
 
Intersegment revenue
  
5,800
   
3,226
   
154
   
-
   
9,180
 
Total revenue
 
$
186,875
  
$
134,066
  
$
29,636
  
$
-
  
$
350,577
 
                     
Operating income (loss)
 
$
28,770
  
$
30,217
  
$
5,150
  
$
(40,100
)
 
$
24,037
 
Interest expense
  
-
   
-
   
-
   
4,811
   
4,811
 
Earnings (loss) before income taxes
 
$
28,770
  
$
30,217
  
$
5,150
  
$
(44,911
)
 
$
19,226
 
Product Information
Product Lines

(In thousands)
 
Flavors &
Fragrances
  
Color
  
Asia
Pacific
  
Consolidated
 
Three months ended March 31, 2018:
            
Flavors
 
$
109,051
  
$
-
  
$
-
  
$
109,051
 
Natural Ingredients
  
53,201
   
-
   
-
   
53,201
 
Fragrances
  
26,094
   
-
   
-
   
26,094
 
Food & Beverage Colors
  
-
   
76,816
   
-
   
76,816
 
Cosmetics
  
-
   
45,504
   
-
   
45,504
 
Other Colors
  
-
   
24,840
   
-
   
24,840
 
Asia Pacific
  
-
   
-
   
30,267
   
30,267
 
Intersegment Revenue
  
(5,864
)
  
(3,432
)
  
-
   
(9,296
)
Total revenue from external customers
 
$
182,482
  
$
143,728
  
$
30,267
  
$
356,477
 
                 
Three months ended March 31, 2017:
                
Flavors
 
$
113,617
  
$
-
  
$
-
  
$
113,617
 
Natural Ingredients
  
53,522
   
-
   
-
   
53,522
 
Fragrances
  
19,736
   
-
   
-
   
19,736
 
Food & Beverage Colors
  
-
   
71,388
   
-
   
71,388
 
Cosmetics
  
-
   
37,459
   
-
   
37,459
 
Other Colors
  
-
   
25,219
   
-
   
25,219
 
Asia Pacific
  
-
   
-
   
29,636
   
29,636
 
Intersegment Revenue
  
(5,800
)
  
(3,226
)
  
(154
)
  
(9,180
)
Total revenue from external customers
 
$
181,075
  
$
130,840
  
$
29,482
  
$
341,397
 
Geographical Information
Geographic Markets

(In thousands)
 
Flavors &
Fragrances
  
Color
  
Asia
Pacific
  
Consolidated
 
Three months ended March 31, 2018:
            
North America
 
$
119,055
  
$
63,582
  
$
-
  
$
182,637
 
Europe
  
45,427
   
43,631
   
6
   
89,064
 
Asia Pacific
  
7,022
   
16,910
   
30,011
   
53,943
 
Other
  
10,978
   
19,605
   
250
   
30,833
 
Total revenue from external customers
 
$
182,482
  
$
143,728
  
$
30,267
  
$
356,477
 

Three months ended March 31, 2017:
            
North America
 
$
122,122
  
$
61,734
  
$
-
  
$
183,856
 
Europe
  
42,507
   
36,323
   
61
   
78,891
 
Asia Pacific
  
6,324
   
14,778
   
29,316
   
50,418
 
Other
  
10,122
   
18,005
   
105
   
28,232
 
Total revenue from external customers
 
$
181,075
  
$
130,840
  
$
29,482
  
$
341,397
 
XML 31 R22.htm IDEA: XBRL DOCUMENT v3.8.0.1
Retirement Plans (Tables)
3 Months Ended
Mar. 31, 2018
Retirement Plans [Abstract]  
Components of Annual Benefit Cost
The Company’s components of annual benefit cost for the defined benefit plans for the periods presented are as follows:

  
Three Months Ended
March 31,
 
       
(In thousands)
 
2018
  
2017
 
       
Service cost
 
$
368
  
$
461
 
Interest cost
  
289
   
355
 
Expected return on plan assets
  
(245
)
  
(255
)
Amortization of actuarial gain
  
(27
)
  
(21
)
         
Total defined benefit expense
 
$
385
  
$
540
 
XML 32 R23.htm IDEA: XBRL DOCUMENT v3.8.0.1
Accumulated Other Comprehensive Income (Tables)
3 Months Ended
Mar. 31, 2018
Accumulated Other Comprehensive Income [Abstract]  
Summary of Changes in OCI
The following table summarizes the changes in OCI during the three-month period ended March 31, 2018:

(In thousands)
 
Cash Flow
Hedges (a)
  
Pension
Items (a)
  
Foreign
Currency
Items
  
Total
 
Balance as of December 31, 2017
 
$
(669
)
 
$
(309
)
 
$
(148,356
)
 
$
(149,334
)
Other comprehensive income before reclassifications
  
670
   
-
   
23,186
   
23,856
 
Amounts reclassified from OCI
  
38
   
(30
)
  
-
   
8
 
Balance as of March 31, 2018
 
$
39
  
$
(339
)
 
$
(125,170
)
 
$
(125,470
)

(a)
Cash Flow Hedges and Pension Items are net of tax.
XML 33 R24.htm IDEA: XBRL DOCUMENT v3.8.0.1
Accounting Policies (Details) - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2018
Mar. 31, 2017
Dec. 31, 2017
New Accounting Pronouncements or Change in Accounting Principle [Line Items]      
Collected on sold receivables $ 9,051 $ 6,407  
Increase to earnings reinvested in the business 1,438,823   $ 1,414,485
Increase to deferred tax assets 10,980   7,885
(Decrease) to prepaid expense and other current assets (45,023)   (43,206)
(Decrease) to deferred tax liabilities (17,722)   $ (18,724)
ASU 2016-15 [Member]      
New Accounting Pronouncements or Change in Accounting Principle [Line Items]      
Collected on sold receivables 9,051 $ 6,407  
ASU 2016-16 [Member]      
New Accounting Pronouncements or Change in Accounting Principle [Line Items]      
Increase to earnings reinvested in the business 400    
Increase to deferred tax assets 3,000    
(Decrease) to prepaid expense and other current assets (3,700)    
(Decrease) to deferred tax liabilities $ (1,100)    
XML 34 R25.htm IDEA: XBRL DOCUMENT v3.8.0.1
Acquisition (Details) - USD ($)
$ in Thousands
3 Months Ended
Mar. 09, 2018
Mar. 31, 2018
Mar. 31, 2017
Business Acquisition [Line Items]      
Payments to acquire business   $ 11,000 $ 0
Globe Natural [Member]      
Business Acquisition [Line Items]      
Payments to acquire business $ 10,500    
Purchase price excess on carrying value of the net assets allocated to intangible assets and goodwill $ 8,400    
XML 35 R26.htm IDEA: XBRL DOCUMENT v3.8.0.1
Fair Value (Details) - USD ($)
$ in Thousands
Mar. 31, 2018
Dec. 31, 2017
Level 1 [Member]    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Investments $ 100 $ 100
Level 2 [Member]    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Forward exchange contracts, asset 100  
Forward exchange contracts, liability   $ 600
Level 2 [Member] | Carrying Value [Member]    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Long term debt 691,300  
Level 2 [Member] | Fair Value [Member]    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Long term debt $ 701,900  
XML 36 R27.htm IDEA: XBRL DOCUMENT v3.8.0.1
Segment Information, Operating Results by Segment (Details) - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2018
Mar. 31, 2017
Revenue [Abstract]    
Revenue $ 356,477 $ 341,397
Operating income (loss) 55,681 24,037
Interest expense 5,555 4,811
Earnings before income taxes 50,126 19,226
Flavors & Fragrances [Member]    
Revenue [Abstract]    
Revenue 182,482 181,075
Operating income (loss) 25,327 28,770
Interest expense 0 0
Earnings before income taxes 25,327 28,770
Color [Member]    
Revenue [Abstract]    
Revenue 143,728 130,840
Operating income (loss) 33,672 30,217
Interest expense 0 0
Earnings before income taxes 33,672 30,217
Asia Pacific [Member]    
Revenue [Abstract]    
Revenue 30,267 29,482
Operating income (loss) 4,872 5,150
Interest expense 0 0
Earnings before income taxes 4,872 5,150
Reportable Segments [Member]    
Revenue [Abstract]    
Revenue 365,773 350,577
Reportable Segments [Member] | Flavors & Fragrances [Member]    
Revenue [Abstract]    
Revenue 188,346 186,875
Reportable Segments [Member] | Color [Member]    
Revenue [Abstract]    
Revenue 147,160 134,066
Reportable Segments [Member] | Asia Pacific [Member]    
Revenue [Abstract]    
Revenue 30,267 29,636
Intersegment Revenue [Member]    
Revenue [Abstract]    
Revenue (9,296) (9,180)
Intersegment Revenue [Member] | Flavors & Fragrances [Member]    
Revenue [Abstract]    
Revenue (5,864) (5,800)
Intersegment Revenue [Member] | Color [Member]    
Revenue [Abstract]    
Revenue (3,432) (3,226)
Intersegment Revenue [Member] | Asia Pacific [Member]    
Revenue [Abstract]    
Revenue 0 (154)
Corporate & Other [Member]    
Revenue [Abstract]    
Revenue 0 0
Operating income (loss) (8,190) (40,100)
Interest expense 5,555 4,811
Earnings before income taxes $ (13,745) $ (44,911)
XML 37 R28.htm IDEA: XBRL DOCUMENT v3.8.0.1
Segment Information, Revenue from External Customers by Product Line (Details) - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2018
Mar. 31, 2017
Revenue [Abstract]    
Revenue $ 356,477 $ 341,397
Flavors & Fragrances [Member]    
Revenue [Abstract]    
Revenue 182,482 181,075
Flavors [Member]    
Revenue [Abstract]    
Revenue 109,051 113,617
Natural Ingredients [Member]    
Revenue [Abstract]    
Revenue 53,201 53,522
Fragrances [Member]    
Revenue [Abstract]    
Revenue 26,094 19,736
Color [Member]    
Revenue [Abstract]    
Revenue 143,728 130,840
Food & Beverage Colors [Member]    
Revenue [Abstract]    
Revenue 76,816 71,388
Cosmetics [Member]    
Revenue [Abstract]    
Revenue 45,504 37,459
Other Colors [Member]    
Revenue [Abstract]    
Revenue 24,840 25,219
Asia Pacific [Member]    
Revenue [Abstract]    
Revenue 30,267 29,482
Intersegment Revenue [Member]    
Revenue [Abstract]    
Revenue (9,296) (9,180)
Intersegment Revenue [Member] | Flavors & Fragrances [Member]    
Revenue [Abstract]    
Revenue (5,864) (5,800)
Intersegment Revenue [Member] | Color [Member]    
Revenue [Abstract]    
Revenue (3,432) (3,226)
Intersegment Revenue [Member] | Asia Pacific [Member]    
Revenue [Abstract]    
Revenue $ 0 $ (154)
XML 38 R29.htm IDEA: XBRL DOCUMENT v3.8.0.1
Segment Information, Revenue from External Customers by Geographic Markets (Details) - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2018
Mar. 31, 2017
Revenue [Abstract]    
Revenue $ 356,477 $ 341,397
North America [Member]    
Revenue [Abstract]    
Revenue 182,637 183,856
Europe [Member]    
Revenue [Abstract]    
Revenue 89,064 78,891
Asia Pacific [Member]    
Revenue [Abstract]    
Revenue 53,943 50,418
Other [Member]    
Revenue [Abstract]    
Revenue 30,833 28,232
Flavors & Fragrances [Member]    
Revenue [Abstract]    
Revenue 182,482 181,075
Color [Member]    
Revenue [Abstract]    
Revenue 143,728 130,840
Asia Pacific [Member]    
Revenue [Abstract]    
Revenue 30,267 29,482
Asia Pacific [Member] | Asia Pacific [Member]    
Revenue [Abstract]    
Revenue 30,267 29,482
Reportable Geographical Components [Member] | Flavors & Fragrances [Member] | North America [Member]    
Revenue [Abstract]    
Revenue 119,055 122,122
Reportable Geographical Components [Member] | Flavors & Fragrances [Member] | Europe [Member]    
Revenue [Abstract]    
Revenue 45,427 42,507
Reportable Geographical Components [Member] | Flavors & Fragrances [Member] | Asia Pacific [Member]    
Revenue [Abstract]    
Revenue 7,022 6,324
Reportable Geographical Components [Member] | Flavors & Fragrances [Member] | Other [Member]    
Revenue [Abstract]    
Revenue 10,978 10,122
Reportable Geographical Components [Member] | Color [Member] | North America [Member]    
Revenue [Abstract]    
Revenue 63,582 61,734
Reportable Geographical Components [Member] | Color [Member] | Europe [Member]    
Revenue [Abstract]    
Revenue 43,631 36,323
Reportable Geographical Components [Member] | Color [Member] | Asia Pacific [Member]    
Revenue [Abstract]    
Revenue 16,910 14,778
Reportable Geographical Components [Member] | Color [Member] | Other [Member]    
Revenue [Abstract]    
Revenue 19,605 18,005
Reportable Geographical Components [Member] | Asia Pacific [Member] | North America [Member]    
Revenue [Abstract]    
Revenue 0 0
Reportable Geographical Components [Member] | Asia Pacific [Member] | Europe [Member]    
Revenue [Abstract]    
Revenue 6 61
Reportable Geographical Components [Member] | Asia Pacific [Member] | Asia Pacific [Member]    
Revenue [Abstract]    
Revenue 30,011 29,316
Reportable Geographical Components [Member] | Asia Pacific [Member] | Other [Member]    
Revenue [Abstract]    
Revenue $ 250 $ 105
XML 39 R30.htm IDEA: XBRL DOCUMENT v3.8.0.1
Inventories (Details) - USD ($)
$ in Thousands
Mar. 31, 2018
Dec. 31, 2017
Inventories [Abstract]    
Inventories, including finished and in-process products $ 322,600 $ 310,400
Raw materials and supplies $ 145,400 $ 153,100
XML 40 R31.htm IDEA: XBRL DOCUMENT v3.8.0.1
Retirement Plans (Details) - Defined Benefit Plan [Member] - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2018
Mar. 31, 2017
Defined Benefit Plan Disclosure [Line Items]    
Service cost $ 368 $ 461
Interest cost 289 355
Expected return on plan assets (245) (255)
Amortization of actuarial gain (27) (21)
Total defined benefit expense $ 385 $ 540
XML 41 R32.htm IDEA: XBRL DOCUMENT v3.8.0.1
Shareholders' Equity (Details) - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2018
Mar. 31, 2017
Shareholders' Equity [Abstract]    
Common stock repurchased during the period (in shares) 1,000,000 155,849
Common stock repurchased during the period, value $ 72,700 $ 12,400
XML 42 R33.htm IDEA: XBRL DOCUMENT v3.8.0.1
Derivative Instruments and Hedging Activity (Details) - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2018
Dec. 31, 2017
Maximum [Member]    
Derivative instruments and hedging activity for the period [Abstract]    
Number of months for contracts to mature 18 months  
Forward Exchange Contracts [Member] | Cash Flow Hedges [Member]    
Derivative instruments and hedging activity for the period [Abstract]    
Derivative, fair value $ 31,200 $ 44,900
Foreign Currency Denominated Debt, Net Investment Hedging [Member]    
Derivative instruments and hedging activity for the period [Abstract]    
Carrying value of foreign denominated debt 268,800 $ 261,900
Impact of foreign exchange rates on debt instruments recorded in Other Comprehensive Income $ 6,900  
XML 43 R34.htm IDEA: XBRL DOCUMENT v3.8.0.1
Income Taxes (Details)
3 Months Ended
Mar. 31, 2018
Mar. 31, 2017
Income Taxes [Abstract]    
Effective income tax rates for continuing operations 23.80% 31.40%
XML 44 R35.htm IDEA: XBRL DOCUMENT v3.8.0.1
Accumulated Other Comprehensive Income (Details)
$ in Thousands
3 Months Ended
Mar. 31, 2018
USD ($)
Accumulated Other Comprehensive Loss [Roll Forward]  
Beginning balance $ 852,301
Other comprehensive income before reclassifications 23,856
Amounts reclassified from OCI 8
Ending balance 827,456
Accumulated Other Comprehensive (Loss) Income [Member]  
Accumulated Other Comprehensive Loss [Roll Forward]  
Beginning balance (149,334)
Ending balance (125,470)
Cash Flow Hedges [Member]  
Accumulated Other Comprehensive Loss [Roll Forward]  
Beginning balance (669) [1]
Other comprehensive income before reclassifications 670 [1]
Amounts reclassified from OCI 38 [1]
Ending balance 39 [1]
Pension Items [Member]  
Accumulated Other Comprehensive Loss [Roll Forward]  
Beginning balance (309) [1]
Other comprehensive income before reclassifications 0 [1]
Amounts reclassified from OCI (30) [1]
Ending balance (339) [1]
Foreign Currency Items [Member]  
Accumulated Other Comprehensive Loss [Roll Forward]  
Beginning balance (148,356)
Other comprehensive income before reclassifications 23,186
Amounts reclassified from OCI 0
Ending balance $ (125,170)
[1] Cash Flow Hedges and Pension Items are net of tax.
XML 45 R36.htm IDEA: XBRL DOCUMENT v3.8.0.1
Accounts Receivable Securitization (Details) - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2018
Mar. 31, 2017
Accounts Receivable Securitization [Abstract]    
Proceeds from accounts receivable securitization program $ 60,000  
Accounts receivable securitization program 99,200 $ 56,600
Fair value of the deferred purchase price receivable $ 39,200 $ 16,600
XML 46 R37.htm IDEA: XBRL DOCUMENT v3.8.0.1
Restructuring (Details) - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2018
Mar. 31, 2017
Restructuring Cost and Reserve [Line Items]    
Total restructuring $ 0  
Other costs $ 0  
Corporate & Other [Member]    
Restructuring Cost and Reserve [Line Items]    
Total restructuring   $ 20,200
XML 47 R38.htm IDEA: XBRL DOCUMENT v3.8.0.1
Divestiture (Details) - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2018
Mar. 31, 2017
Long Lived Assets Held-for-sale [Line Items]    
Proceeds from the sale of facility and related business lines $ 0 $ 12,457
Corporate & Other [Member]    
Long Lived Assets Held-for-sale [Line Items]    
Non-cash loss on assets held for sale   $ 11,000
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