þ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the fiscal year ended December 31, 2016 |
¬ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the transition period from to |
NEW YORK | 13-1432060 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
521 WEST 57TH STREET, NEW YORK, N.Y. | 10019 |
(Address of principal executive offices) | (Zip Code) |
Title of Each Class | Name of Each Exchange on Which Registered |
Common Stock, par value | New York Stock Exchange |
12 1/2¢ per share |
Large accelerated filer þ | Accelerated filer ¬ | Non-accelerated filer ¬ | Smaller reporting company ¬ |
PAGE | ||
PART I | ||
ITEM 1. | ||
ITEM 1A. | ||
ITEM 1B. | ||
ITEM 2. | ||
ITEM 3. | ||
ITEM 4. | ||
PART II | ||
ITEM 5. | ||
ITEM 6. | ||
ITEM 7. | ||
ITEM 7A. | ||
ITEM 8. | ||
ITEM 9. | ||
ITEM 9A. | ||
ITEM 9B. | ||
PART III | ||
ITEM 10. | ||
ITEM 11. | ||
ITEM 12. | ||
ITEM 13. | ||
ITEM 14. | ||
PART IV | ||
ITEM 15. | ||
ITEM 16. | ||
ITEM 1. | BUSINESS. |
Region | % of 2016 Sales | |
Europe, Africa, Middle East | 31 | % |
Greater Asia | 28 | % |
North America | 25 | % |
Latin America | 16 | % |
(1) | Innovating Firsts - We seek to strengthen our position and drive differentiation in priority R&D platforms. In 2016, we launched four captive fragrance molecules and four new flavor modulators. We also continued to see sales growth with respect to products using our encapsulation technology. |
(2) | Winning Where We Compete - Our ambition is to achieve a #1 or #2 market leadership position in key markets and categories and with specific customers. In 2016, we grew our sales in both our Flavors and Fragrances businesses in North America and the Middle East and Africa. |
(3) | Becoming Our Customers' Partner of Choice - Our goal is to attain commercial excellence by providing our customers with in-depth local consumer understanding, industry-leading innovation, outstanding service and the highest quality products. In 2016, we achieved “core list” status with two key customers and received awards for business excellence from several customers. In addition, we received several business excellence awards from top customers and were rated gold by EcoVadis for sustainability, ranked top supplier. |
(4) | Strengthening and Expanding the Portfolio - We actively pursue value-creation through partnerships, collaborations, and acquisitions within flavors, fragrances and adjacencies. We prioritize opportunities that provide (i) access to new technologies, (ii) the ability to increase our market share in key markets and with key customers or (iii) access to adjacent products or services that will position us to leverage our expertise in science and technology and our customer base. During 2016, we acquired David Michael to strengthen our share of the North American flavors business and announced our acquisition of Fragrance Resources, which was completed in January 2017. We expect these acquisitions to strengthen our market share position within the key markets of North America and Germany. |
• | Continued Consumer Demand for Fresh, Clean and Authentic Products. Consumers in developed markets increasingly want to make food choices that promote a healthy lifestyle and are moving towards products with “all natural” or healthier ingredients. In addition, consumers, non-governmental organizations and governmental agencies are seeking more transparency in product labeling. In response, many of our customers are announcing initiatives to provide |
• | Expansion of Consumer Food Companies. The number of participants in the food industry continues to expand, with mid-sized regional companies and companies focused on niche-product categories joining the traditional global companies to drive and accelerate product innovation. As a result, larger food and beverage companies are seeing slower growth than in previous years. We continue to look for innovative and value-creating methods for serving this growing customer base as evidenced by our recent acquisitions of Ottens Flavors and David Michael. We believe these acquisitions will permit us to further penetrate small and mid-sized customers, primarily in North America. |
◦ | Fine Fragrances - Fine Fragrances focuses on perfumes and colognes. IFF’s scientists and perfumers collaborate to develop new molecules, new natural extractions, and innovative processes that enliven perfumers' palettes and help them create unique, inspiring fragrances. We have created some of the industry-leading fine fragrance classics as well as cutting-edge niche fragrances, as evidenced by the number of top sellers. |
◦ | Consumer Fragrances - Our Consumer Fragrances include five end-use categories of products: |
▪ | Fabric Care - laundry detergents, fabric softeners and specialty laundry products; |
▪ | Home Care - household cleaners, dishwashing detergents and air fresheners; |
▪ | Personal Wash, including bar soap and shower gel; |
▪ | Hair Care; and |
▪ | Toiletries. |
◦ | discovery of new materials; |
◦ | development of new technologies, such as delivery systems; |
◦ | creation of new compounds; and |
◦ | enhancement of existing ingredients and compounds. |
• | Positive Principles - We seek to embed the principles of eliminating the concept of waste, using clean renewable energy, and celebrating diversity into our company and culture. |
• | Regenerative Products - We strive to intentionally design our products to continuously support well-being and have a positive contribution to society and the environment in a circular economy. |
• | Sensational People - We seek to engage our employees and stakeholders to make a positive difference in the world. |
Andreas Fibig | 55 | Chairman of the Board and Chief Executive Officer |
Richard A. O'Leary | 56 | Executive Vice President and Chief Financial Officer |
Nicolas Mirzayantz | 54 | Group President, Fragrances |
Matthias Haeni | 51 | Group President, Flavors |
Gregory Yep | 52 | Executive Vice President, Chief Global Scientific & Sustainability Officer |
Susana Suarez-Gonzalez | 47 | Executive Vice President, Chief Human Resources Officer |
Anne Chwat | 57 | Executive Vice President, General Counsel and Corporate Secretary |
Francisco Fortanet | 48 | Executive Vice President, Operations |
ITEM 1A. | RISK FACTORS. |
• | diversion of management attention from managing our historical core business; |
• | potential disruption of our historical core business or of the acquired business; |
• | the strain on, and need to continue to expand, our existing operational, technical, financial and administrative infrastructure; |
• | challenges related to the lack of experience in operating in the geographical or product markets of the acquired business; |
• | challenges in controlling additional costs and expenses in connection with and as a result of the acquisition; |
• | difficulties in assimilating employees and corporate cultures or in integrating systems and controls; |
• | difficulties in anticipating and responding to actions that may be taken by competitors; |
• | difficulties in realizing the anticipated benefits of the transaction; |
• | potential loss of key employees, key customers, suppliers or other partners of the acquired business; and |
• | the assumption of and exposure to unknown or contingent liabilities of acquired businesses. |
• | governmental laws, regulations and policies adopted to manage national economic and macroeconomic conditions, such as increases in taxes, austerity measures that may impact consumer spending, monetary policies that may impact inflation rates, currency fluctuations and sustainability of resources; |
• | changes in environmental, health and safety regulations, such as the continued implementation of the European Union’s REACH regulations, and the burdens and costs of our compliance with such regulations; |
• | the imposition of or changes in tariffs, quotas, trade barriers, other trade protection measures and import or export licensing requirements, by the United States or other Countries, which could adversely affect our cost or ability to import raw materials or export our flavors or fragrances to surrounding markets; |
• | risks and costs arising from language and cultural differences; |
• | changes in the laws and policies that govern foreign investment in the countries in which we operate, including the risk of expropriation or nationalization, and the costs and ability to repatriate the profit that we generate in these countries; |
• | risks and costs associated with political and economic instability, bribery and corruption, and social and ethnic unrest in the countries in which we operate; |
• | difficulty in recruiting and retaining trained local personnel; |
• | natural disasters, pandemics or international conflicts, including terrorist acts, or national and regional labor strikes in the countries in which we operate, which could interrupt our operations or endanger our personnel; or |
• | the risks of operating in developing or emerging markets in which there are significant uncertainties regarding the interpretation, application and enforceability of laws and regulations and the enforceability of contract rights and intellectual property rights. |
• | the risk that we may be unable to integrate successfully the relocated manufacturing operations; |
• | the risk that we may be unable to effectively reduce overhead, coordinate management and integrate and retain employees of the relocated manufacturing operations; |
• | the risk that we may face difficulties in implementing and maintaining consistent standards, controls, procedures, policies and information systems; |
• | potential strains on our personnel, systems and resources and diversion of attention from other priorities; and |
• | unforeseen or contingent liabilities of the relocated manufacturing operations. |
ITEM 1B. | UNRESOLVED STAFF COMMENTS. |
ITEM 2. | PROPERTIES. |
Location | Operation |
United States | |
Carrollton, TX(1) | Production of flavor compounds; flavor laboratories. |
Hazlet, NJ(1) | Production of fragrance compounds; fragrance laboratories. |
Jacksonville, FL | Production of fragrance ingredients. |
New York, NY(1) | Fragrance laboratories; corporate headquarters. |
South Brunswick, NJ(1) | Production of flavor compounds and ingredients; flavor laboratories. |
Union Beach, NJ | Research and development center. |
France | |
Neuilly(1) | Fragrance laboratories. |
Grasse | Production of fragrance ingredients. |
Great Britain | |
Haverhill | Production of flavor compounds and ingredients, and fragrance ingredients; flavor laboratories. |
Netherlands | |
Hilversum | Flavor and fragrance laboratories. |
Tilburg | Production of flavor compounds and ingredients, and fragrance compounds. |
Spain | |
Benicarló | Production of fragrance ingredients. |
Argentina | |
Garin | Production of flavor and fragrance compounds; flavor and fragrance laboratories. |
Brazil | |
Rio de Janeiro | Production of fragrance compounds. |
São Paulo | Flavor and fragrance laboratories. |
Taubate | Production of flavor compounds and ingredients. |
Mexico | |
Tlalnepantla | Production of flavor and fragrance compounds; flavor and fragrance laboratories. |
India | |
Mumbai(2) | Flavor and fragrance laboratories. |
Chennai(2) | Production of flavor compounds and ingredients, and fragrance compounds; flavor laboratories. |
Australia | |
Dandenong | Production of flavor compounds and flavor ingredients. |
China | |
Guangzhou(3) | Production of flavor compounds. |
Guangzhou(3) | Production of fragrance compounds. |
Shanghai(4) | Flavor and fragrance laboratories. |
Xin’anjiang(5) | Production of fragrance ingredients. |
Zhejiang(3) | Production of fragrance ingredients. |
Location | Operation |
Indonesia | |
Jakarta | Production of flavor compounds and ingredients; flavor and fragrance laboratories. |
Japan | |
Gotemba | Production of flavor compounds. |
Tokyo | Flavor and fragrance laboratories. |
Singapore | |
Jurong(4) | Production of flavor and fragrance compounds. |
Science Park(1) | Flavor and fragrance laboratories. |
Turkey | |
Gebze | Production of flavor compounds. |
Israel | |
Kibbutz Givat-Oz(3) | Production of fragrance ingredients. |
Germany | |
Hamburg | Production of fragrance compounds. |
(1) | Leased. |
(2) | We have a 93.4% interest in the subsidiary company that owns this facility. |
(3) | Land is leased and building and machinery and equipment are owned. |
(4) | Building is leased and machinery and equipment are owned. |
(5) | We have a 90% interest in the subsidiary company that leases the land and owns the buildings and machinery. |
ITEM 3. | LEGAL PROCEEDINGS. |
ITEM 4. | MINE SAFETY DISCLOSURES. |
ITEM 5. | MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. |
2016 | 2015 | ||||||||||||||
Quarter | High | Low | High | Low | |||||||||||
First | $ | 122.38 | $ | 97.24 | $ | 123.08 | $ | 97.59 | |||||||
Second | 131.30 | 114.65 | 120.61 | 108.82 | |||||||||||
Third | 143.43 | 124.77 | 118.87 | 100.02 | |||||||||||
Fourth | 143.64 | 116.64 | 122.64 | 106.91 |
Title of Class | Number of shareholders of record as of February 15, 2017 |
Common stock, par value 12 1/2¢ per share | 1,878 |
Quarter | 2016 | 2015 | |||||
First | $ | 0.56 | $ | 0.47 | |||
Second | 0.56 | 0.47 | |||||
Third | 0.64 | 0.56 | |||||
Fourth | 0.64 | 0.56 |
ANNUAL RETURN PERCENTAGE Years Ending | ||||||||||||||
Company Name / Index | 2012 | 2013 | 2014 | 2015 | 2016 | |||||||||
International Flavors & Fragrances | 29.72 | 31.59 | 19.95 | 20.22 | 0.40 | |||||||||
S&P 500 Index | 16.00 | 32.39 | 13.69 | 1.38 | 11.96 | |||||||||
Peer Group | 8.21 | 19.83 | 7.98 | 5.54 | 4.34 |
INDEXED RETURNS Years Ending | |||||||||||||||||||||||
Company Name / Index | Base Period 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | |||||||||||||||||
International Flavors & Fragrances | $ | 100 | $ | 129.72 | $ | 170.70 | $ | 204.75 | $ | 246.15 | $ | 247.13 | |||||||||||
S&P 500 Index | 100 | 116.00 | 153.57 | 174.60 | 177.01 | 198.18 | |||||||||||||||||
Peer Group | 100 | 108.21 | 129.66 | 140.01 | 147.78 | 154.19 |
Peer Group Companies(2) | |
Avon Products Inc. | Hormel Foods Corp. |
Campbell Soup Co. | Kellogg Co. |
Church & Dwight Co. Inc. | Estee Lauder Companies, Inc. |
Clorox Company | McCormick & Company, Inc. |
Coca-Cola Company | McDonald’s Corp. |
Colgate-Palmolive Co. | Nestle SA |
ConAgra Foods, Inc. | Pepsico Inc. |
Edgewell Personal Care (included since 7/1/15) | Procter & Gamble Co. |
General Mills Inc. | Revlon Inc. |
Heinz (HJ) Co. (included through 6/7/13) | Sensient Technologies Corp. |
Hershey Company | Unilever NV |
Hillshire Brands Co. (included through 8/28/14) | YUM! Brands Inc. |
(1) | The Cumulative Shareholder Return assumes that the value of an investment in our Common Stock and each index was $100 on December 31, 2011, and that all dividends were reinvested. |
(2) | Due to the international scope and breadth of our business, we believe that a Peer Group comprising international public companies, which are representative of the customer group to which we sell our products, is the most appropriate group against which to compare shareholder returns. In July 2012, Sara Lee Corp. spun off certain of its businesses and changed its name to Hillshire Brands Co. Heinz (HJ) Co. was acquired by Hawk Acquisition Holding Corp on June 7, 2013 and has only been included through that date. Hillshire Brands Co. was acquired by Tyson Foods on August 28, 2014 and has |
Period | Total Number of Shares Repurchased (1) | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Program | Approximate Dollar Value of Shares That May Yet be Purchased Under the Program | |||||||||
October 1 - 31, 2016 | 56,167 | $ | 133.62 | 56,167 | $ | 135,088,381 | |||||||
November 1 - 30, 2016 | 79,335 | 123.41 | 79,335 | 125,297,344 | |||||||||
December 1 - 31, 2016 | 132,985 | 120.31 | 132,985 | 109,297,809 | |||||||||
Total | 268,487 | $ | 124.01 | 268,487 | $ | 109,297,809 |
(1) | Shares were repurchased pursuant to the repurchase program originally announced in December 2012 and amended in August 2015 (i) to increase from $250 million to $500 million the total purchase price of shares that may be repurchased under the program and (ii) to extend the program through December 31, 2017. Authorization of the repurchase program may be modified, suspended, or discontinued at any time. |
ITEM 6. | SELECTED FINANCIAL DATA. |
(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA) | Net Income Per Share | ||||||||||||||||||||||||||||||||||||||
Net Sales | Gross Profit(a) | Net Income(b) | Basic | Diluted(c)(d) | |||||||||||||||||||||||||||||||||||
Quarter | 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | |||||||||||||||||||||||||||||
First | $ | 783,312 | $ | 774,907 | $ | 360,209 | $ | 346,277 | $ | 118,603 | $ | 128,258 | $ | 1.48 | $ | 1.58 | $ | 1.47 | $ | 1.57 | |||||||||||||||||||
Second | 793,478 | 767,541 | 365,641 | 345,040 | 116,733 | 105,374 | 1.46 | 1.30 | 1.46 | 1.29 | |||||||||||||||||||||||||||||
Third | 777,001 | 765,092 | 346,268 | 347,126 | 89,777 | 106,447 | 1.13 | 1.32 | 1.12 | 1.31 | |||||||||||||||||||||||||||||
Fourth(d) | 762,559 | 715,649 | 326,952 | 313,156 | 79,918 | 79,168 | 1.00 | 0.99 | 1.00 | 0.98 | |||||||||||||||||||||||||||||
$ | 3,116,350 | $ | 3,023,189 | $ | 1,399,070 | $ | 1,351,599 | $ | 405,031 | $ | 419,247 | $ | 5.07 | $ | 5.19 | $ | 5.05 | $ | 5.16 |
Footnotes | ||||||||||||||
(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA) | Gross Profit(a) | Net Income(b) | Diluted EPS (c) | Description | ||||||||||
Q1 2016 | ||||||||||||||
Operational improvement initiatives | $ | 268 | $ | 201 | $ | — | Accelerated depreciation in Hangzhou, China. | |||||||
Restructuring and other charges | 101 | 82 | — | Accelerated depreciation related to restructuring initiatives. | ||||||||||
Acquisition related costs and adjustments | 889 | 669 | 0.01 | Expense related to the fair value step up of inventory and additional transaction costs related to the acquisition of Lucas Meyer. | ||||||||||
Legal charges/credits | — | (1,044 | ) | (0.01 | ) | Amounts expected to be received related to the Spanish capital tax settlement. | ||||||||
Q2 2016 | ||||||||||||||
Operational improvement initiatives | 831 | 623 | 0.01 | Accelerated depreciation in Hangzhou, China and severance costs in Guangzhou, China. | ||||||||||
Restructuring and other charges | 182 | 147 | — | Accelerated depreciation and severance costs related to restructuring initiatives. | ||||||||||
Acquisition related costs and adjustments | — | 315 | — | Additional transaction costs related to the acquisition of Lucas Meyer. | ||||||||||
Q3 2016 | ||||||||||||||
Operational improvement initiatives | 791 | 602 | 0.01 | Accelerated depreciation and dismantling costs in Hangzhou, China and severance costs in Guangzhou, China. | ||||||||||
Restructuring and other charges | 190 | 154 | — | Accelerated depreciation costs related to restructuring initiatives. | ||||||||||
Acquisition related costs and adjustments | — | 510 | 0.01 | Transaction costs related to the acquisition of David Michael. | ||||||||||
Legal charges/credits | — | 16,250 | 0.20 | Legal charge related to litigation accrual. | ||||||||||
Q4 2016 | ||||||||||||||
Operational improvement initiatives | 502 | 379 | — | Accelerated depreciation, dismantling and idle labor costs in Hangzhou, China and the partial reversal of severance accruals related to prior year operational initiatives in Europe. | ||||||||||
Restructuring and other charges | 185 | (158 | ) | — | Accelerated depreciation related to restructuring initiatives, severance costs related to the termination of a former executive officer and the partial reversal of restructuring accruals recorded in the prior year. | |||||||||
Acquisition related costs and adjustments | 6,759 | 6,586 | 0.08 | Transaction costs related to the acquisition of David Michael and Fragrance Resources as well as expense related to the fair value step up of inventory on the David Michael acquisition. | ||||||||||
Gain on Asset Sale | — | (5,160 | ) | (0.06 | ) | Gain from sale of property in Brazil. | ||||||||
Legal charges/credits | — | 16,250 | 0.20 | Legal charge related to litigation accrual. | ||||||||||
Q1 2015 | ||||||||||||||
Operational improvement initiatives | 281 | 211 | — | Accelerated depreciation in Hangzhou, China. | ||||||||||
Restructuring and other charges | — | 121 | — | Restructuring costs associated with the Fragrance Ingredients Rationalization. | ||||||||||
Acquisition related costs and adjustments | — | 325 | — | Transaction costs related to the acquisition of Ottens Flavors. | ||||||||||
Tax settlements | — | (10,478 | ) | (0.13 | ) | Settlements due to favorable tax rulings in jurisdictions for which reserves were previously recorded for ongoing tax disputes. | ||||||||
Q2 2015 | ||||||||||||||
Operational improvement initiatives | 281 | 211 | — | Accelerated depreciation in Hangzhou, China. | ||||||||||
Restructuring and other charges | — | (233 | ) | — | Restructuring costs associated with the Fragrance Ingredients Rationalization. | |||||||||
Acquisition related costs and adjustments | 844 | 5,691 | 0.07 | Transaction costs related to the acquisition of Ottens Flavors and Lucas Meyer as well as expense related to the fair value step up of inventory on the Ottens Flavors acquisition. | ||||||||||
Q3 2015 | ||||||||||||||
Operational improvement initiatives | 279 | 209 | — | Accelerated depreciation in Hangzhou, China. | ||||||||||
Acquisition related costs and adjustments | 2,465 | 6,001 | 0.07 | Transaction costs related to the acquisition of Ottens Flavors and Lucas Meyer as well as expense related to the fair value step up of inventory on the Lucas Meyer acquisition. | ||||||||||
Q4 2015 | ||||||||||||||
Operational improvement initiatives | 274 | 205 | — | Accelerated depreciation in Hangzhou, China. | ||||||||||
Restructuring and other charges | — | 5,402 | 0.07 | Severance costs associated with various restructuring activities. | ||||||||||
Acquisition related costs and adjustments | 3,515 | 99 | — | Transaction costs related to the acquisition of Ottens Flavors and Lucas Meyer as well as expense related to the fair value step up of inventory on the Lucas Meyer acquisition. | ||||||||||
Accelerated contingent consideration | — | 7,192 | 0.09 | Represents the acceleration of the contingent consideration payment related to the Aromor acquisition. | ||||||||||
Legal charges/credits | — | (7,582 | ) | (0.09 | ) | To reverse the previously recorded provision related to the Spanish capital tax case as a result of the favorable ruling received on February 24, 2016. |
(d) | The sum of the 2015 Net Income per diluted share by quarter does not equal the earnings per share for the full year due to rounding. |
2016 | 2015 | 2014 | 2013 | 2012 | |||||||||||||||
Consolidated Statement of Income Data | |||||||||||||||||||
Net sales | $ | 3,116,350 | $ | 3,023,189 | $ | 3,088,533 | $ | 2,952,896 | $ | 2,821,446 | |||||||||
Cost of goods sold(a) | 1,717,280 | 1,671,590 | 1,726,383 | 1,668,691 | 1,645,912 | ||||||||||||||
Gross profit | 1,399,070 | 1,351,599 | 1,362,150 | 1,284,205 | 1,175,534 | ||||||||||||||
Research and development expenses | 254,263 | 246,101 | 253,640 | 259,838 | 233,713 | ||||||||||||||
Selling and administrative expenses(b) | 566,224 | 494,517 | 507,563 | 499,805 | 447,463 | ||||||||||||||
Restructuring and other charges, net(c) | (1,700 | ) | 7,594 | 1,298 | 2,151 | 1,668 | |||||||||||||
Amortization of acquisition-related intangibles | 23,763 | 15,040 | 7,328 | 6,072 | 6,072 | ||||||||||||||
Gain on sales of fixed assets(d) | (10,836 | ) | — | — | — | — | |||||||||||||
Operating profit | 567,356 | 588,347 | 592,321 | 516,339 | 486,618 | ||||||||||||||
Interest expense | 52,989 | 46,062 | 46,067 | 46,767 | 41,753 | ||||||||||||||
Other (income) expense, net(e) | (9,350 | ) | 3,184 | (2,807 | ) | (15,638 | ) | 1,450 | |||||||||||
Income before taxes | 523,717 | 539,101 | 549,061 | 485,210 | 443,415 | ||||||||||||||
Taxes on income(f) | 118,686 | 119,854 | 134,518 | 131,666 | 189,281 | ||||||||||||||
Net income | $ | 405,031 | $ | 419,247 | $ | 414,543 | $ | 353,544 | $ | 254,134 | |||||||||
Percentage of net sales | 13.0 | 13.9 | 13.4 | 12.0 | 9.0 | ||||||||||||||
Percentage of average shareholders’ equity | 25.1 | 26.9 | 27.7 | 26.0 | 21.5 | ||||||||||||||
Net income per share — basic | $ | 5.07 | $ | 5.19 | $ | 5.09 | $ | 4.32 | $ | 3.11 | |||||||||
Net income per share — diluted | $ | 5.05 | $ | 5.16 | $ | 5.06 | $ | 4.29 | $ | 3.09 | |||||||||
Average number of diluted shares (thousands) | 79,981 | 80,891 | 81,494 | 81,930 | 81,833 | ||||||||||||||
Consolidated Balance Sheet Data | |||||||||||||||||||
Cash and cash equivalents | $ | 323,992 | $ | 181,988 | $ | 478,573 | $ | 405,505 | $ | 324,422 | |||||||||
Receivables, net | 550,658 | 537,896 | 493,768 | 524,493 | 499,443 | ||||||||||||||
Inventories | 592,017 | 572,047 | 568,729 | 533,806 | 540,658 | ||||||||||||||
Property, plant and equipment, net | 775,716 | 732,794 | 720,268 | 687,215 | 654,641 | ||||||||||||||
Goodwill and intangible assets, net | 1,365,906 | 1,247,393 | 752,041 | 696,197 | 702,270 | ||||||||||||||
Total assets | 4,016,984 | 3,702,010 | 3,494,621 | 3,331,731 | 3,246,192 | ||||||||||||||
Bank borrowings, overdrafts and current portion of long-term debt | 258,516 | 132,349 | 8,090 | 149 | 150,071 | ||||||||||||||
Long-term debt | 1,066,855 | 935,373 | 934,232 | 932,665 | 881,104 | ||||||||||||||
Total Shareholders’ equity(g) | 1,631,134 | 1,594,989 | 1,522,689 | 1,467,051 | 1,252,555 | ||||||||||||||
Other Data | |||||||||||||||||||
Current ratio(h) | 1.8 | 2.0 | 3.3 | 2.9 | 2.5 | ||||||||||||||
Additions to property, plant and equipment | $ | 126,412 | $ | 101,030 | $ | 143,182 | $ | 134,157 | $ | 126,140 | |||||||||
Depreciation and amortization expense | 102,469 | 89,597 | 89,354 | 83,227 | 76,667 | ||||||||||||||
Cash dividends declared per share | $ | 2.40 | $ | 2.06 | $ | 1.72 | $ | 1.46 | $ | 1.30 | |||||||||
Number of shareholders of record at year-end | 1,892 | 2,013 | 2,105 | 2,255 | 2,430 | ||||||||||||||
Number of employees at year-end | 6,932 | 6,732 | 6,211 | 6,000 | 5,715 |
(a) | The 2016 amount includes $7,648 ($5,139 after tax) of costs related to the fair value step-up for the David Michael and Lucas Meyer acquisitions, $2,391 ($1,803 after tax) of operational improvement initiative costs consisting of accelerated depreciation and $658 ($533 after tax) of accelerated depreciation related to restructuring activities. The 2015 amount includes $6,825 ($4,516 after tax) of costs related to the fair value step-up of inventory for the Ottens Flavors and Lucas Meyer acquisitions and $1,115 ($836 after tax) of operational improvement initiative costs in Europe and Asia. The 2014 amount includes $7,641 ($5,221 after tax) of accelerated depreciation associated with the Fragrance Ingredients |
(b) | The 2016 amount includes $48,518 ($31,429 after tax) of legal charges/credits principally related to litigation accrual, $4,547 ($2,940 after tax) of acquisition-related costs related to the acquisitions of Lucas Meyer, David Michael and Fragrance Resources and $1,364 ($822 after tax) of severance costs related to the termination of a former executive officer. The 2015 amount includes $10,530 ($7,582 after tax) of reversal of the previously recorded provision for the Spanish capital tax case, $7,192 of expense for the acceleration of the contingent consideration payments related to the Aromor acquisition and $11,517 ($7,601 after tax) of acquisition-related costs for the Ottens and Lucas Meyer acquisitions. The 2013 amount includes $13,011 ($9,108 after tax) of expense associated with the Spanish capital tax case. |
(c) | Restructuring and other charges after tax of $5,292 in 2015, $844 in 2014, $1,398 in 2013 and $1,047 in 2012, were the result of various restructuring and reorganization programs of the Company. |
(d) | The 2016 amount includes $7,818 ($5,160 after tax) of gains related to the sale of property in Brazil. |
(e) | The 2014 amount includes $723 ($470 after tax) and the 2013 amount includes $14,155 ($8,522 after tax) of net gains related to the sale of non-operating assets. |
(f) | The 2015 amount includes $10,478 of settlements due to favorable tax rulings in jurisdictions for which reserves were previously recorded for ongoing tax disputes. The 2012 amount includes after tax charges of $72,362 related to the overall Spanish tax settlement. |
(g) | Includes noncontrolling interest for all periods presented. |
(h) | Current ratio is equal to current assets divided by current liabilities. |
ITEM 7. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. |
Sales by Destination (DOLLARS IN MILLIONS) | 2016 | Percent of sales | 2015 | Percent of sales | 2014 | Percent of sales | ||||||||||||||
Europe, Africa and Middle East (EAME) | $ | 965 | 31 | % | $ | 946 | 31 | % | $ | 1,042 | 34 | % | ||||||||
Greater Asia (GA) | 880 | 28 | % | 839 | 28 | % | 856 | 28 | % | |||||||||||
North America (NOAM) | 769 | 25 | % | 718 | 24 | % | 690 | 22 | % | |||||||||||
Latin America (LA) | 502 | 16 | % | 520 | 17 | % | 501 | 16 | % | |||||||||||
Total net sales, as reported | $ | 3,116 | $ | 3,023 | $ | 3,089 |
Year Ended December 31, | ||||||||
Sales by Category | 2016 | 2015 | 2014 | |||||
Flavor Compounds | 48 | % | 48 | % | 47 | % | ||
Consumer Fragrances | 32 | % | 32 | % | 32 | % | ||
Fine Fragrances | 10 | % | 10 | % | 11 | % | ||
Fragrance Ingredients | 10 | % | 10 | % | 10 | % | ||
Total Net Sales | 100 | % | 100 | % | 100 | % |
Year Ended December 31, | Change | ||||||||||||||||
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS) | 2016 | 2015 | 2014 | 2016 vs. 2015 | 2015 vs. 2014 | ||||||||||||
Net sales | $ | 3,116,350 | $ | 3,023,189 | $ | 3,088,533 | 3.1 | % | (2.1 | )% | |||||||
Cost of goods sold | 1,717,280 | 1,671,590 | 1,726,383 | 2.7 | % | (3.2 | )% | ||||||||||
Gross profit | 1,399,070 | 1,351,599 | 1,362,150 | ||||||||||||||
Research and development (R&D) expenses | 254,263 | 246,101 | 253,640 | 3.3 | % | (3.0 | )% | ||||||||||
Selling and administrative (S&A) expenses | 566,224 | 494,517 | 507,563 | 14.5 | % | (2.6 | )% | ||||||||||
Restructuring and other charges, net | (1,700 | ) | 7,594 | 1,298 | (122.4 | )% | 485.1 | % | |||||||||
Amortization of acquisition-related intangibles | 23,763 | 15,040 | 7,328 | 58.0 | % | 105.2 | % | ||||||||||
Gain on sales of fixed assets | (10,836 | ) | — | — | 100 | % | — | % | |||||||||
Operating profit | 567,356 | 588,347 | 592,321 | ||||||||||||||
Interest expense | 52,989 | 46,062 | 46,067 | 15.0 | % | — | % | ||||||||||
Other (income) expense, net | (9,350 | ) | 3,184 | (2,807 | ) | (393.7 | )% | (213.4 | )% | ||||||||
Income before taxes | 523,717 | 539,101 | 549,061 | ||||||||||||||
Taxes on income | 118,686 | 119,854 | 134,518 | (1.0 | )% | (10.9 | )% | ||||||||||
Net income | $ | 405,031 | $ | 419,247 | $ | 414,543 | |||||||||||
Net income per share — diluted | $ | 5.05 | $ | 5.16 | $ | 5.06 | (2.1 | )% | 2.0 | % | |||||||
Gross margin | 44.9 | % | 44.7 | % | 44.1 | % | 20.0 | 60.0 | |||||||||
R&D as a percentage of sales | 8.2 | % | 8.1 | % | 8.2 | % | 10.0 | (10.0 | ) | ||||||||
S&A as a percentage of sales | 18.2 | % | 16.4 | % | 16.4 | % | 180.0 | — | |||||||||
Operating margin | 18.2 | % | 19.5 | % | 19.2 | % | (130.0 | ) | 30.0 | ||||||||
Adjusted operating margin (1) | 20.0 | % | 20.2 | % | 19.5 | % | (20.0 | ) | 70.0 | ||||||||
Effective tax rate | 22.7 | % | 22.2 | % | 24.5 | % | 50.0 | (230.0 | ) | ||||||||
Segment net sales | |||||||||||||||||
Flavors | $ | 1,496,525 | $ | 1,442,951 | $ | 1,457,055 | 3.7 | % | (1.0 | )% | |||||||
Fragrances | 1,619,825 | 1,580,238 | 1,631,478 | 2.5 | % | (3.1 | )% | ||||||||||
Consolidated | $ | 3,116,350 | $ | 3,023,189 | $ | 3,088,533 |
(1) | Adjusted operating margin for the twelve months ended December 31, 2016 excludes net legal charges/credits of $48.5 million, acquisition related costs of $12.2 million, gain on sale of assets of $7.8 million, operational improvement initiative costs of $2.4 million and restructuring and other charges, net of $0.3 million. |
% Change in Sales — 2016 vs 2015 | ||||||||||||||||||
Fine Fragrances | Consumer Fragrances | Ingredients | Total Frag. | Flavors | Total | |||||||||||||
NOAM | Reported | -2 | % | 8 | % | 10 | % | 6 | % | 8 | % | 7 | % | |||||
EAME | Reported | -1 | % | 1 | % | 13 | % | 3 | % | 1 | % | 2 | % | |||||
Currency Neutral(1) | 0 | % | 2 | % | 14 | % | 4 | % | 5 | % | 4 | % | ||||||
LA | Reported | -6 | % | -5 | % | -15 | % | -6 | % | 1 | % | -3 | % | |||||
Currency Neutral(1) | -3 | % | -3 | % | -13 | % | -4 | % | 5 | % | -1 | % | ||||||
GA | Reported | 0 | % | 6 | % | 13 | % | 7 | % | 4 | % | 5 | % | |||||
Currency Neutral(1) | 2 | % | 7 | % | 11 | % | 8 | % | 6 | % | 6 | % | ||||||
Total | Reported | -2 | % | 2 | % | 9 | % | 3 | % | 4 | % | 3 | % | |||||
Currency Neutral(1) | -1 | % | 3 | % | 10 | % | 4 | % | 6 | % | 5 | % |
(1) | Currency neutral sales growth is calculated by translating prior year sales at the exchange rates for the corresponding 2016 period. |
• | NOAM Flavors sales growth, which included the impact of acquisitions, primarily reflected high single-digit gains in Sweet and low single-digit gains in Beverage and Dairy. Total Fragrances sales growth reflected double-digit gains in Fragrance Ingredients (driven entirely by the impact of acquisitions), Fabric Care and Home Care categories, which more than offset low single-digit declines in Fine Fragrance. |
• | EAME Flavors sales growth primarily reflected mid single-digit gains in Savory and Sweet and high single-digit gains in Dairy. EAME total Fragrances sales growth was driven by double-digit gains in Fragrance Ingredients (driven entirely by the impact of acquisitions) and Hair Care and low single-digit gains in Fabric Care. |
• | LA Flavors sales growth was driven by double-digit growth in Savory and Dairy and high single-digit growth in Sweet. LA total Fragrances sales declined reflecting double-digit declines in Fragrance Ingredients as well as high |
• | GA Flavors sales growth was led by mid single-digit gains in Savory, Beverage and Sweet and high single-digit gains in Dairy. GA total Fragrances sales growth primarily reflected double-digit gains in Fragrance Ingredients (driven entirely by the impact of acquisitions) and Fabric Care and high single-digit growth in Personal Wash. |
Restructuring Charges (In Thousands) | |||||||
2016 | 2015 | ||||||
Flavors | $ | (1,119 | ) | $ | 4,198 | ||
Fragrances | (581 | ) | 1,347 | ||||
Global | — | 2,049 | |||||
Total | $ | (1,700 | ) | $ | 7,594 |
For the Year Ended December 31, | |||||||
(DOLLARS IN THOUSANDS) | 2016 | 2015 | |||||
Segment profit: | |||||||
Flavors | $ | 337,242 | $ | 318,476 | |||
Fragrances | 334,220 | 321,764 | |||||
Global Expenses | (48,487 | ) | (28,180 | ) | |||
Restructuring and other charges, net | (322 | ) | (7,594 | ) | |||
Gain on sales of fixed assets | 7,818 | — | |||||
Spanish capital tax charge reversal | — | 10,530 | |||||
Operational improvement initiative costs | (2,402 | ) | (1,115 | ) | |||
Acquisition related costs | (12,195 | ) | (18,342 | ) | |||
Accelerated contingent consideration | — | (7,192 | ) | ||||
Legal charges/credits, net | (48,518 | ) | — | ||||
Operating Profit | $ | 567,356 | $ | 588,347 | |||
Profit margin | |||||||
Flavors | 22.5 | % | 22.1 | % | |||
Fragrances | 20.6 | % | 20.4 | % | |||
Consolidated | 18.2 | % | 19.5 | % |
% Change in Sales — 2015 vs 2014 | ||||||||||||||||||
Fine Fragrances | Consumer Fragrances | Ingredients | Total Frag. | Flavors | Total | |||||||||||||
NOAM | Reported | -5 | % | 1 | % | -7 | % | -2 | % | 11 | % | 4 | % | |||||
EAME | Reported | -9 | % | -8 | % | -7 | % | -8 | % | -11 | % | -9 | % | |||||
Currency Neutral(1) | 6 | % | 8 | % | 4 | % | 7 | % | 4 | % | 5 | % | ||||||
LA | Reported | -10 | % | 7 | % | 1 | % | 2 | % | 7 | % | 4 | % | |||||
Currency Neutral(1) | -5 | % | 10 | % | 3 | % | 6 | % | 16 | % | 9 | % | ||||||
GA | Reported | -2 | % | — | % | 3 | % | — | % | -3 | % | -2 | % | |||||
Currency Neutral(1) | -1 | % | 2 | % | 8 | % | 3 | % | 2 | % | 2 | % | ||||||
Total | Reported | -8 | % | -1 | % | -5 | % | -3 | % | -1 | % | -2 | % | |||||
Currency Neutral(1) | 1 | % | 5 | % | 2 | % | 4 | % | 6 | % | 5 | % |
(1) | Currency neutral sales growth is calculated by translating prior year sales at the exchange rates for the corresponding 2015 period. |
• | NOAM Flavors sales growth, which included the impact of acquisitions, primarily reflected high double-digit growth in Sweet and Dairy and double-digit growth in Beverage. NOAM total Fragrances sales declined driven by double-digit declines in Toiletries, high single-digit declines in Fragrance Ingredients and mid single-digit declines in Fine Fragrance, which more than offset mid single-digit gains in Home Care and Fabric Care. |
• | EAME Flavors sales growth primarily reflected mid single-digit gains in Savory and Beverage. EAME total Fragrances sales growth was driven by double-digit gains in the Fabric Care and mid single-digit growth in Fine Fragrance and Fragrance Ingredients, offset by the effects of currency, which included the impact of acquisitions. |
• | LA Flavors sales growth was driven by double-digit gains in Beverage, Savory and Dairy. LA total Fragrances sales growth reflected double-digit gains in Fabric Care, Home Care and Hair Care categories as well as low single-digit gains in Fragrance Ingredients, which offset mid single-digit declines in Fine Fragrance. |
• | GA Flavors sales growth was led by low single-digit gains in Savory and Dairy, which more than offset low single-digit declines in Sweet. GA total Fragrances sales growth primarily reflected high single-digit gains in Fragrance Ingredients and mid single-digit gains in Fabric Care, offset by the effects of currency. |
Restructuring Charges (In Thousands) | |||||||
2015 | 2014 | ||||||
Flavors | $ | 4,198 | $ | — | |||
Fragrances | 1,347 | 1,298 | |||||
Global | 2,049 | — | |||||
Total | $ | 7,594 | $ | 1,298 |
For the Year Ended December 31, | |||||||
(DOLLARS IN THOUSANDS) | 2015 | 2014 | |||||
Segment profit: | |||||||
Flavors | $ | 318,476 | $ | 331,257 | |||
Fragrances | 321,764 | 335,447 | |||||
Global Expenses | (28,180 | ) | (65,443 | ) | |||
Restructuring and other charges, net | (7,594 | ) | (1,298 | ) | |||
Spanish capital tax charge reversal | 10,530 | — | |||||
Operational improvement initiative costs | (1,115 | ) | (7,642 | ) | |||
Acquisition related costs | (18,342 | ) | — | ||||
Accelerated contingent consideration | (7,192 | ) | — | ||||
Operating Profit | $ | 588,347 | $ | 592,321 | |||
Profit margin | |||||||
Flavors | 22.1 | % | 22.7 | % | |||
Fragrances | 20.4 | % | 20.6 | % | |||
Consolidated | 19.5 | % | 19.2 | % |
(1) | Adjusted EBITDA and Net Debt, which are non-GAAP measures used for these covenants, are calculated in accordance with the definition in the debt agreements. In this context, these measures are used solely to provide information on the extent to which we are in compliance with debt covenants and may not be comparable to adjusted EBITDA and Net Debt used by other companies. Reconciliations of adjusted EBITDA to net income and net debt to total debt are as follows: |
(DOLLARS IN MILLIONS) | Twelve Months Ended December 31, 2016 | ||
Net income | $ | 405.0 | |
Interest expense | 53.0 | ||
Income taxes | 118.7 | ||
Depreciation and amortization | 102.5 | ||
Specified items(1) | 63.4 | ||
Non-cash items(2) | 13.8 | ||
Adjusted EBITDA | $ | 756.4 |
(1) | Specified items for the 12 months ended December 31, 2016 of $63.4 million consist of legal charges/credits principally related to litigation accrual, acquisition-related costs, restructuring charges and operational improvement initiative costs. |
(2) | Non-cash items represent all other adjustments to reconcile net income to net cash provided by operations as presented on the Statement of Cash Flows, including gain on disposal of assets and stock-based compensation. |
(DOLLARS IN MILLIONS) | December 31, 2016 | ||
Total debt | $ | 1,325.4 | |
Adjustments: | |||
Deferred gain on interest rate swaps | (1.3 | ) | |
Cash and cash equivalents | (324.0 | ) | |
Net debt | $ | 1,000.1 |
Payments Due | |||||||||||||||||||
Contractual Obligations (Dollars In Millions) | Total | 2017 | 2018 - 2019 | 2020 - 2021 | 2022 and thereafter | ||||||||||||||
Borrowings(1) | $ | 1,321 | $ | 250 | $ | 100 | $ | — | $ | 971 | |||||||||
Interest on borrowings(1) | 247 | 47 | 69 | 57 | 74 | ||||||||||||||
Operating leases(2) | 256 | 33 | 53 | 48 | 122 | ||||||||||||||
Pension funding obligations(3) | 180 | 60 | 120 | — | — | ||||||||||||||
Postretirement obligations(4) | 80 | 5 | 10 | 11 | 54 | ||||||||||||||
Purchase commitments(5) | 64 | 54 | 9 | 1 | — | ||||||||||||||
Total | $ | 2,148 | $ | 449 | $ | 361 | $ | 117 | $ | 1,221 |
(1) | See Note 9 to the Consolidated Financial Statements for a further discussion of our various borrowing facilities. |
(2) | Operating leases include facility and other lease commitments executed in the normal course of the business, including sale leaseback obligations included in Note 8 of the Notes to the Consolidated Financial Statements. Further details concerning worldwide aggregate operating leases are contained in Note 18 of the Notes to the Consolidated Financial Statements. |
(3) | See Note 14 of the Notes to the Consolidated Financial Statements for a further discussion of our retirement plans. Anticipated funding obligations are based on current actuarial assumptions. The projected contributions beyond fiscal year 2019 are not currently determinable. |
(4) | Amounts represent expected future benefit payments for our postretirement benefit plans. |
(5) | Purchase commitments include agreements for raw material procurement and contractual capital expenditures. Amounts for purchase commitments represent only those items which are based on agreements that are enforceable and legally binding. |
Sensitivity of Disclosures to Changes in Selected Assumptions | |||||||||||||||
25 BP Decrease in Discount Rate | 25 BP Decrease in Discount Rate | 25 BP Decrease in Long-Term Rate of Return | |||||||||||||
(DOLLARS IN THOUSANDS) | Change in PBO | Change in ABO | Change in pension expense | Change in pension expense | |||||||||||
U.S. Pension Plans | $ | 15,719 | $ | 15,620 | $ | (109 | ) | $ | 1,250 | ||||||
Non-U.S. Pension Plans | 46,658 | 44,861 | 2,876 | 1,895 | |||||||||||
Postretirement Benefit Plan | N/A | 2,302 | 100 | N/A |
Reconciliation of Gross Profit | ||||||||||||||
Reported (GAAP) | Restructuring and Other Charges (a) | Operational Improvement Initiative Costs (b) | Acquisition and Related Costs (c) | Adjusted (Non-GAAP) | ||||||||||
Gross profit | 1,399,070 | 658 | 2,391 | 7,648 | 1,409,767 |
Reconciliation of Selling and Administrative Expenses | |||||||||||||||||
Reported (GAAP) | Restructuring and Other Charges (a) | Operational Improvement Initiative Costs (b) | Acquisition and Related Costs (c) | Legal Charges/Credits (d) | Adjusted (Non-GAAP) | ||||||||||||
Selling and Administrative Expenses | 566,224 | (1,364 | ) | (11 | ) | (4,547 | ) | (48,518 | ) | 511,784 |
Reconciliation of Operating Profit | ||||||||||||||||||||
Reported (GAAP) | Restructuring and Other Charges (a) | Operational Improvement Initiative Costs (b) | Acquisition Related Costs (c) | Legal Charges/Credits (d) | Gain on Sale of Asset (e) | Adjusted (Non-GAAP) | ||||||||||||||
Operating profit | 567,356 | 322 | 2,402 | 12,195 | 48,518 | (7,818 | ) | 622,975 |
Reconciliation of Net Income | ||||||||||||||||||||
Reported (GAAP) | Restructuring and Other Charges (a) | Operational Improvement Initiative Costs (b) | Acquisition Related Costs (c) | Legal Charges/Credits (d) | Gain on Sale of Asset (e) | Adjusted (Non-GAAP) | ||||||||||||||
Income before taxes | 523,717 | 322 | 2,402 | 12,195 | 48,518 | (7,818 | ) | 579,336 | ||||||||||||
Taxes on income (f) | 118,686 | 97 | 599 | 4,117 | 17,089 | (2,658 | ) | 137,930 | ||||||||||||
Net income | 405,031 | 225 | 1,803 | 8,078 | 31,429 | (5,160 | ) | 441,406 |
Reconciliation of Gross Profit | |||||||||||
Reported (GAAP) | Operational Improvement Initiative Costs (a) | Acquisition and Related Costs (b) | Adjusted (Non-GAAP) | ||||||||
Gross profit | 1,351,599 | 1,115 | 6,825 | 1,359,539 |
Reconciliation of Selling and Administrative Expenses | ||||||||||||||
Reported (GAAP) | Acquisition and Related Costs (b) | Accelerated Contingent Consideration (c) | Legal Charges/Credits (d) | Adjusted (Non-GAAP) | ||||||||||
Selling and Administrative Expenses | 494,517 | (11,517 | ) | (7,192 | ) | 10,530 | 486,338 |
Reconciliation of Operating Profit | ||||||||||||||||||||
Reported (GAAP) | Operational Improvement Initiative Costs (a) | Acquisition Related Costs (b) | Accelerated Contingent Consideration (c) | Legal Charges/Credits (d) | Restructuring and Other Charges (e) | Adjusted (Non-GAAP) | ||||||||||||||
Operating profit | 588,347 | 1,115 | 18,342 | 7,192 | (10,530 | ) | 7,594 | 612,060 |
Reconciliation of Net Income | |||||||||||||||||||||||
Reported (GAAP) | Operational Improvement Initiative Costs (a) | Acquisition Related Costs (b) | Accelerated Contingent Consideration (c) | Legal Charges/Credits (d) | Restructuring and Other Charges (e) | Tax Settle-ments (f) | Adjusted (Non-GAAP) | ||||||||||||||||
Income before taxes | 539,101 | 1,115 | 18,342 | 7,192 | (10,530 | ) | 7,594 | — | 562,814 | ||||||||||||||
Taxes on income (g) | 119,854 | 279 | 6,225 | — | (2,948 | ) | 2,302 | 10,478 | 136,190 | ||||||||||||||
Net income | 419,247 | 836 | 12,117 | 7,192 | (7,582 | ) | 5,292 | (10,478 | ) | 426,624 |
Operating Profit | |||
December 31, 2016 | December 31, 2015 | ||
% Change - Reported (GAAP) | (4)% | (1)% | |
Items impacting comparability (1) (2) | 5% | 3% | |
% Change - Adjusted (Non-GAAP)(2) | 2% | 2% | |
Currency Impact | 2% | 6% | |
% Change Year-over-Year - Currency Neutral Adjusted (Non-GAAP)(2)** | 4% | 8% |
(DOLLARS IN THOUSANDS) | December 31, 2016 | December 31, 2015 | |
David Michael | $1,662 | $— | |
Ottens Flavors | 6,345 | 4,310 | |
Lucas Meyer Cosmetics | 8,322 | 3,249 |
• | our ability to successfully identify and complete acquisitions in line with our Vision 2020 strategy, and to realize the anticipated benefits of those acquisitions; |
• | our ability to effectively compete in our market, and to successfully develop new and competitive products that appeal to our customers and consumers; |
• | changes in consumer preferences and demand for our products or a decline in consumer confidence and spending; |
• | our ability to benefit from our investments and expansion in emerging markets; |
• | the impact of currency fluctuations or devaluations in the principal foreign markets in which we operate, including the devaluation of the Euro; |
• | the potential adverse impact of Brexit on currency exchange rates, global economic conditions and cross-border agreements that affect our business; |
• | the economic and political risks associated with our international operations, including current challenging economic conditions in China and Latin America; |
• | the impact of any failure of our key information technology systems or a breach of information security; |
• | our ability to attract and retain talented employees; |
• | our ability to comply with, and the costs associated with compliance with, U.S. and foreign environmental protection laws; |
• | our ability to realize expected cost savings and efficiencies from our profitability improvement initiatives and other optimization activities; |
• | volatility and increases in the price of raw materials, energy and transportation; |
• | fluctuations in the quality and availability of raw materials; |
• | the impact of a disruption in our supply chain or our relationship with our suppliers; |
• | any adverse impact on the availability, effectiveness and cost of our hedging and risk management strategies; |
• | our ability to successfully manage our working capital and inventory balances; |
• | uncertainties regarding the outcome of, or funding requirements, related to litigation or settlement of pending litigation, uncertain tax positions or other contingencies; |
• | the effect of legal and regulatory proceedings, as well as restrictions imposed on the Company, its operations or its representatives by U.S. and foreign governments; |
• | adverse changes in federal, state, local and international tax legislation or policies, including with respect to transfer pricing and state aid, and adverse results of tax audits, assessments, or disputes; and |
• | changes in market conditions or governmental regulations relating to our pension and postretirement obligations. |
ITEM 8. | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. |
ITEM 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. |
ITEM 9A. | CONTROLS AND PROCEDURES. |
ITEM 11. | EXECUTIVE COMPENSATION. |
ITEM 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS. |
ITEM 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE. |
ITEM 14. | PRINCIPAL ACCOUNTANT FEES AND SERVICES. |
ITEM 15. | EXHIBITS AND FINANCIAL STATEMENT SCHEDULES. |
(a)(2) FINANCIAL STATEMENT SCHEDULES | |
/s/ PricewaterhouseCoopers LLP |
New York, New York |
February 28, 2017 |
Year Ended December 31, | |||||||||||
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS) | 2016 | 2015 | 2014 | ||||||||
Net sales | $ | 3,116,350 | $ | 3,023,189 | $ | 3,088,533 | |||||
Cost of goods sold | 1,717,280 | 1,671,590 | 1,726,383 | ||||||||
Gross profit | 1,399,070 | 1,351,599 | 1,362,150 | ||||||||
Research and development expenses | 254,263 | 246,101 | 253,640 | ||||||||
Selling and administrative expenses | 566,224 | 494,517 | 507,563 | ||||||||
Restructuring and other charges, net | (1,700 | ) | 7,594 | 1,298 | |||||||
Amortization of acquisition-related intangibles | 23,763 | 15,040 | 7,328 | ||||||||
Gain on sales of fixed assets | (10,836 | ) | — | — | |||||||
Operating profit | 567,356 | 588,347 | 592,321 | ||||||||
Interest expense | 52,989 | 46,062 | 46,067 | ||||||||
Other (income) expense, net | (9,350 | ) | 3,184 | (2,807 | ) | ||||||
Income before taxes | 523,717 | 539,101 | 549,061 | ||||||||
Taxes on income | 118,686 | 119,854 | 134,518 | ||||||||
Net income | 405,031 | 419,247 | 414,543 | ||||||||
Other comprehensive income (loss): | |||||||||||
Foreign currency translation adjustments | (54,526 | ) | (124,157 | ) | (69,064 | ) | |||||
(Losses) gains on derivatives qualifying as hedges | (1,797 | ) | (2,970 | ) | 16,383 | ||||||
Pension and postretirement liability adjustment | (10,332 | ) | 54,117 | (95,038 | ) | ||||||
Comprehensive income | $ | 338,376 | $ | 346,237 | $ | 266,824 | |||||
2016 | 2015 | 2014 | |||||||||
Net income per share — basic | $ | 5.07 | $ | 5.19 | $ | 5.09 | |||||
Net income per share — diluted | $ | 5.05 | $ | 5.16 | $ | 5.06 |
December 31, | |||||||
(DOLLARS IN THOUSANDS) | 2016 | 2015 | |||||
ASSETS | |||||||
Current Assets: | |||||||
Cash and cash equivalents | $ | 323,992 | $ | 181,988 | |||
Receivables: | |||||||
Trade | 560,653 | 546,125 | |||||
Allowance for doubtful accounts | (9,995 | ) | (8,229 | ) | |||
Inventories | 592,017 | 572,047 | |||||
Prepaid expenses and other current assets | 142,347 | 145,178 | |||||
Total Current Assets | 1,609,014 | 1,437,109 | |||||
Property, plant and equipment, net | 775,716 | 732,794 | |||||
Goodwill | 1,000,123 | 941,389 | |||||
Other intangible assets, net | 365,783 | 306,004 | |||||
Deferred income taxes | 138,636 | 166,323 | |||||
Other assets | 127,712 | 118,391 | |||||
Total Assets | $ | 4,016,984 | $ | 3,702,010 | |||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||
Current Liabilities: | |||||||
Bank borrowings, overdrafts and current portion of long-term debt | $ | 258,516 | $ | 132,349 | |||
Accounts payable | 274,815 | 285,501 | |||||
Dividends payable | 50,678 | 44,824 | |||||
Other current liabilities | 314,288 | 262,482 | |||||
Total Current Liabilities | 898,297 | 725,156 | |||||
Other Liabilities: | |||||||
Long-term debt | 1,066,855 | 935,373 | |||||
Deferred gains | 39,816 | 43,260 | |||||
Retirement liabilities | 243,407 | 242,383 | |||||
Other liabilities | 137,475 | 160,849 | |||||
Total Other Liabilities | 1,487,553 | 1,381,865 | |||||
Commitments and Contingencies (Note 18) | |||||||
Shareholders’ Equity: | |||||||
Common stock 12 1/2¢ par value; authorized 500,000,000 shares; issued 115,858,190 shares as of December 31, 2016 and 2015; and outstanding 79,213,037 and 80,022,291 shares as of December 31, 2016 and 2015 | 14,470 | 14,470 | |||||
Capital in excess of par value | 152,481 | 140,802 | |||||
Retained earnings | 3,818,535 | 3,604,254 | |||||
Accumulated other comprehensive loss: | |||||||
Cumulative translation adjustments | (352,025 | ) | (297,499 | ) | |||
Accumulated gains on derivatives qualifying as hedges | 7,604 | 9,401 | |||||
Pension and postretirement liability adjustment | (335,674 | ) | (325,342 | ) | |||
Treasury stock, at cost - 36,645,153 and 35,835,899 shares as of December 31, 2016 and 2015 | (1,679,147 | ) | (1,555,769 | ) | |||
Total Shareholders’ Equity | 1,626,244 | 1,590,317 | |||||
Noncontrolling interest | 4,890 | 4,672 | |||||
Total Shareholders’ Equity including noncontrolling interest | 1,631,134 | 1,594,989 | |||||
Total Liabilities and Shareholders’ Equity | $ | 4,016,984 | $ | 3,702,010 |
Year Ended December 31, | |||||||||||
(DOLLARS IN THOUSANDS) | 2016 | 2015 | 2014 | ||||||||
Cash flows from operating activities: | |||||||||||
Net income | $ | 405,031 | $ | 419,247 | $ | 414,543 | |||||
Adjustments to reconcile to net cash provided by operating activities: | |||||||||||
Depreciation and amortization | 102,469 | 89,597 | 89,354 | ||||||||
Deferred income taxes | 14,350 | 13,043 | 23,350 | ||||||||
Gain on disposal of assets | (10,836 | ) | (622 | ) | (3,768 | ) | |||||
Stock-based compensation | 24,587 | 23,160 | 22,648 | ||||||||
Pension contributions | (46,347 | ) | (67,897 | ) | (43,982 | ) | |||||
Changes in assets and liabilities, net of acquisitions: | |||||||||||
Trade receivables | (21,544 | ) | (91,712 | ) | (2,635 | ) | |||||
Inventories | 15,452 | (37,628 | ) | (40,042 | ) | ||||||
Accounts payable | (7,642 | ) | 89,273 | 19,403 | |||||||
Accruals for incentive compensation | 12,133 | (17,399 | ) | (30,947 | ) | ||||||
Other current payables and accrued expenses | 49,103 | 29,124 | (30,982 | ) | |||||||
Other assets | (2,442 | ) | 46,862 | 64,605 | |||||||
Other liabilities | 1,092 | (61,470 | ) | 36,843 | |||||||
Net cash provided by operating activities | 535,406 | 433,578 | 518,390 | ||||||||
Cash flows from investing activities: | |||||||||||
Cash paid for acquisitions, net of cash received (including $15 million of contingent consideration related to the Aromor acquisition in 2014) | (236,836 | ) | (493,424 | ) | (102,500 | ) | |||||
Additions to property, plant and equipment | (126,412 | ) | (101,030 | ) | (143,182 | ) | |||||
Proceeds from disposal of assets | 6,856 | 4,302 | 3,295 | ||||||||
Maturity of net investment hedges | 637 | 12,128 | 3,304 | ||||||||
Proceeds from life insurance contracts | 292 | 868 | 17,750 | ||||||||
Net cash used in investing activities | (355,463 | ) | (577,156 | ) | (221,333 | ) | |||||
Cash flows from financing activities: | |||||||||||
Cash dividends paid to shareholders | (184,897 | ) | (158,870 | ) | (133,239 | ) | |||||
Increase (decrease) in revolving credit facility borrowings and overdrafts | (134,344 | ) | 136,826 | 8,332 | |||||||
Proceeds from issuance of long-term debt | 555,559 | — | 3,609 | ||||||||
Deferred financing costs | (5,788 | ) | — | (1,023 | ) | ||||||
Repayments of debt | (125,000 | ) | — | — | |||||||
Loss on pre-issuance hedges | (3,244 | ) | — | — | |||||||
Proceeds from issuance of stock under stock plans | 813 | 886 | 1,864 | ||||||||
Excess tax benefits on stock-based payments | 4,650 | 12,055 | 6,330 | ||||||||
Purchase of treasury stock | (127,443 | ) | (122,193 | ) | (88,203 | ) | |||||
Net cash used in financing activities | (19,694 | ) | (131,296 | ) | (202,330 | ) | |||||
Effect of exchange rate changes on cash and cash equivalents | (18,245 | ) | (21,711 | ) | (21,659 | ) | |||||
Net change in cash and cash equivalents | 142,004 | (296,585 | ) | 73,068 | |||||||
Cash and cash equivalents at beginning of year | 181,988 | 478,573 | 405,505 | ||||||||
Cash and cash equivalents at end of year | $ | 323,992 | $ | 181,988 | $ | 478,573 | |||||
Cash paid for: | |||||||||||
Interest, net of amounts capitalized | $ | 50,576 | $ | 46,760 | $ | 46,106 | |||||
Income taxes | $ | 107,898 | $ | 102,734 | $ | 92,087 | |||||
Noncash investing activities: | |||||||||||
Accrued capital expenditures | $ | 26,049 | $ | 26,030 | $ | 14,376 |
(DOLLARS IN THOUSANDS) | Common stock | Capital in excess of par value | Retained earnings | Accumulated other comprehensive (loss) income | Treasury stock | Non-controlling interest | Total | |||||||||||||||||||||||
Shares | Cost | |||||||||||||||||||||||||||||
Balance at December 31, 2013 | $ | 14,470 | $ | 131,461 | $ | 3,075,657 | $ | (392,711 | ) | (34,377,594 | ) | $ | (1,365,805 | ) | $ | 3,979 | $ | 1,467,051 | ||||||||||||
Net income | 414,543 | 149 | 414,692 | |||||||||||||||||||||||||||
Cumulative translation adjustment | (69,064 | ) | (69,064 | ) | ||||||||||||||||||||||||||
Gains on derivatives qualifying as hedges; net of tax $(2,526) | 16,383 | 16,383 | ||||||||||||||||||||||||||||
Pension liability and postretirement adjustment; net of tax $36,554 | (95,038 | ) | (95,038 | ) | ||||||||||||||||||||||||||
Cash dividends declared ($1.72 per share) | (139,466 | ) | (139,466 | ) | ||||||||||||||||||||||||||
Stock options | 9,770 | 87,706 | 3,590 | 13,360 | ||||||||||||||||||||||||||
Treasury share repurchases | (927,339 | ) | (88,959 | ) | (88,959 | ) | ||||||||||||||||||||||||
Vested restricted stock units and awards | (23,871 | ) | 136,627 | 4,953 | (18,918 | ) | ||||||||||||||||||||||||
Stock-based compensation | 22,648 | 22,648 | ||||||||||||||||||||||||||||
Balance at December 31, 2014 | $ | 14,470 | $ | 140,008 | $ | 3,350,734 | $ | (540,430 | ) | (35,080,600 | ) | $ | (1,446,221 | ) | $ | 4,128 | $ | 1,522,689 | ||||||||||||
Net income | 419,247 | 544 | 419,791 | |||||||||||||||||||||||||||
Cumulative translation adjustment | (124,157 | ) | (124,157 | ) | ||||||||||||||||||||||||||
Losses on derivatives qualifying as hedges; net of tax $463 | (2,970 | ) | (2,970 | ) | ||||||||||||||||||||||||||
Pension liability and postretirement adjustment; net of tax $(29,452) | 54,117 | 54,117 | ||||||||||||||||||||||||||||
Cash dividends declared ($2.06 per share) | (165,727 | ) | (165,727 | ) | ||||||||||||||||||||||||||
Stock options | 6,099 | 194,016 | 7,085 | 13,184 | ||||||||||||||||||||||||||
Treasury share repurchases | (1,074,210 | ) | (121,193 | ) | (121,193 | ) | ||||||||||||||||||||||||
Vested restricted stock units and awards | (28,465 | ) | 124,895 | 4,560 | (23,905 | ) | ||||||||||||||||||||||||
Stock-based compensation | 23,160 | — | — | 23,160 | ||||||||||||||||||||||||||
Balance at December 31, 2015 | $ | 14,470 | $ | 140,802 | $ | 3,604,254 | $ | (613,440 | ) | (35,835,899 | ) | $ | (1,555,769 | ) | $ | 4,672 | $ | 1,594,989 | ||||||||||||
Net income | 405,031 | 218 | 405,249 | |||||||||||||||||||||||||||
Cumulative translation adjustment | (54,526 | ) | (54,526 | ) | ||||||||||||||||||||||||||
Losses on derivatives qualifying as hedges; net of tax $(227) | (1,797 | ) | (1,797 | ) | ||||||||||||||||||||||||||
Pension liability and postretirement adjustment; net of tax $3,049 | (10,332 | ) | (10,332 | ) | ||||||||||||||||||||||||||
Cash dividends declared ($2.40 per share) | (190,750 | ) | (190,750 | ) | ||||||||||||||||||||||||||
Stock options | 8,952 | 30,015 | 1,335 | 10,287 | ||||||||||||||||||||||||||
Treasury share repurchases | (1,058,018 | ) | (127,443 | ) | (127,443 | ) | ||||||||||||||||||||||||
Vested restricted stock units and awards | (21,860 | ) | 218,749 | 2,730 | (19,130 | ) | ||||||||||||||||||||||||
Stock-based compensation | 24,587 | — | — | 24,587 | ||||||||||||||||||||||||||
Balance at December 31, 2016 | $ | 14,470 | $ | 152,481 | $ | 3,818,535 | $ | (680,095 | ) | (36,645,153 | ) | $ | (1,679,147 | ) | $ | 4,890 | $ | 1,631,134 |
December 31, | |||||||
(DOLLARS IN THOUSANDS) | 2016 | 2015 | |||||
Raw materials | $ | 288,629 | $ | 282,181 | |||
Work in process | 13,792 | 17,450 | |||||
Finished goods | 289,596 | 272,416 | |||||
Total | $ | 592,017 | $ | 572,047 |
Number of Shares | ||||||||
(SHARES IN THOUSANDS) | 2016 | 2015 | 2014 | |||||
Basic | 79,648 | 80,449 | 80,936 | |||||
Assumed dilution under stock plans | 333 | 442 | 558 | |||||
Diluted | 79,981 | 80,891 | 81,494 |
(DOLLARS IN THOUSANDS) | Employee- Related | Asset - Related/and Other | Total | ||||||||
Balance at January 1, 2014 | $ | 2,116 | $ | — | $ | 2,116 | |||||
Additional charges (reversals), net | (46 | ) | 6,444 | 6,398 | |||||||
Non-cash charges | — | (5,100 | ) | (5,100 | ) | ||||||
Payments and other costs | (1,311 | ) | (1,344 | ) | (2,655 | ) | |||||
Balance at December 31, 2014 | 759 | — | 759 | ||||||||
Additional charges (reversals), net | 7,594 | — | 7,594 | ||||||||
Payments and other costs | (471 | ) | — | (471 | ) | ||||||
Balance at December 31, 2015 | 7,882 | — | 7,882 | ||||||||
Additional charges (reversals), net | (1,700 | ) | 658 | (1,042 | ) | ||||||
Non-cash charges | — | (658 | ) | (658 | ) | ||||||
Payments and other costs | (2,905 | ) | — | (2,905 | ) | ||||||
Balance at December 31, 2016 | $ | 3,277 | $ | — | $ | 3,277 |
(DOLLARS IN THOUSANDS) | December 31, | ||||||
2016 | 2015 | ||||||
Asset Type | |||||||
Land | $ | 36,366 | $ | 22,896 | |||
Buildings and improvements | 519,947 | 538,096 | |||||
Machinery and equipment | 1,052,114 | 991,746 | |||||
Information technology | 182,153 | 183,759 | |||||
Construction in process | 122,753 | 75,786 | |||||
1,913,333 | 1,812,283 | ||||||
Accumulated depreciation | (1,137,617 | ) | (1,079,489 | ) | |||
$ | 775,716 | $ | 732,794 |
(DOLLARS IN THOUSANDS) | Goodwill | ||
Balance at January 1, 2014 | $ | 665,582 | |
Acquisitions | 9,902 | ||
Balance at December 31, 2014 | 675,484 | ||
Acquisitions | 265,905 | ||
Balance at December 31, 2015 | 941,389 | ||
Acquisitions | 67,480 | ||
Foreign exchange | (8,746 | ) | |
Balance at December 31, 2016 | $ | 1,000,123 |
December 31, | |||||||
(DOLLARS IN THOUSANDS) | 2016 | 2015 | |||||
Flavors | $ | 473,820 | $ | 401,494 | |||
Fragrances | 526,303 | 539,895 | |||||
Total | $ | 1,000,123 | $ | 941,389 |
December 31, | |||||||
(DOLLARS IN THOUSANDS) | 2016 | 2015 | |||||
Asset Type | |||||||
Customer relationships | $ | 371,270 | $ | 293,799 | |||
Trade names & patents | 30,679 | 34,182 | |||||
Technological know-how | 119,544 | 112,393 | |||||
Other | 24,470 | 22,711 | |||||
Total carrying value | 545,963 | 463,085 | |||||
Accumulated Amortization | |||||||
Customer relationships | (82,555 | ) | (66,324 | ) | |||
Trade names & patents | (12,198 | ) | (10,282 | ) | |||
Technological know-how | (68,292 | ) | (65,258 | ) | |||
Other | (17,135 | ) | (15,217 | ) | |||
Total accumulated amortization | (180,180 | ) | (157,081 | ) | |||
Other intangible assets, net | $ | 365,783 | $ | 306,004 |
December 31, | |||||||
(DOLLARS IN THOUSANDS) | 2016 | 2015 | |||||
Overfunded pension plans | $ | 4,343 | $ | 4,906 | |||
Cash surrender value of life insurance contracts | 43,425 | 41,957 | |||||
Other | 79,944 | 71,528 | |||||
Total | $ | 127,712 | $ | 118,391 |
December 31, | |||||||
(DOLLARS IN THOUSANDS) | 2016 | 2015 | |||||
Accrued payrolls and bonuses | $ | 64,357 | $ | 48,843 | |||
VAT payable | 15,567 | 10,241 | |||||
Interest payable | 17,173 | 12,515 | |||||
Current pension and other postretirement benefit obligation | 10,630 | 10,620 | |||||
Accrued insurance (including workers’ compensation) | 10,798 | 10,857 | |||||
Restructuring and other charges | 3,277 | 7,882 | |||||
Litigation accrual | 55,000 | 5,000 | |||||
Other | 137,486 | 156,524 | |||||
Total | $ | 314,288 | $ | 262,482 |
(DOLLARS IN THOUSANDS) | Rate | Maturities | 2016 | 2015 | ||||||||
Senior notes — 2006 (1) | 6.14 | % | 2016 | $ | — | $ | 124,964 | |||||
Senior notes — 2007 (1) | 6.40 | % | 2017-27 | 499,676 | 499,618 | |||||||
Senior notes — 2013 (1) | 3.20 | % | 2023 | 297,986 | 297,683 | |||||||
Euro Senior notes - 2016 (1) | 1.75 | % | 2024 | 512,764 | — | |||||||
Credit facilities | 1.13 | % | 2019 | — | 131,196 | |||||||
Bank overdrafts and other | 13,599 | 10,982 | ||||||||||
Deferred realized gains on interest rate swaps | 1,346 | 3,279 | ||||||||||
1,325,371 | 1,067,722 | |||||||||||
Less: Bank borrowings, overdrafts and current portion of long-term debt | (258,516 | ) | (132,349 | ) | ||||||||
$ | 1,066,855 | $ | 935,373 |
December 31, | |||||||||||
(DOLLARS IN THOUSANDS) | 2016 | 2015 | 2014 | ||||||||
U.S. income before taxes | $ | 9,078 | $ | 29,792 | $ | 17,650 | |||||
Foreign income before taxes | 514,639 | 509,309 | 531,411 | ||||||||
Total income before taxes | $ | 523,717 | $ | 539,101 | $ | 549,061 |
December 31, | |||||||||||
(DOLLARS IN THOUSANDS) | 2016 | 2015 | 2014 | ||||||||
Current | |||||||||||
Federal | $ | (2,920 | ) | $ | 7,648 | $ | 1,175 | ||||
State and local | 1,383 | 199 | 264 | ||||||||
Foreign | 105,873 | 98,964 | 109,729 | ||||||||
104,336 | 106,811 | 111,168 | |||||||||
Deferred | |||||||||||
Federal | 8,838 | 14,379 | 20,795 | ||||||||
State and local | (631 | ) | 399 | 113 | |||||||
Foreign | 6,143 | (1,735 | ) | 2,442 | |||||||
14,350 | 13,043 | 23,350 | |||||||||
Total income taxes | $ | 118,686 | $ | 119,854 | $ | 134,518 |
December 31, | ||||||||
2016 | 2015 | 2014 | ||||||
Statutory tax rate | 35.0 | % | 35.0 | % | 35.0 | % | ||
Difference in effective tax rate on foreign earnings and remittances | (12.2 | ) | (10.7 | ) | (9.9 | ) | ||
Unrecognized tax benefit, net of reversals | 0.6 | (0.8 | ) | 0.8 | ||||
Spanish tax charges | — | (0.4 | ) | — | ||||
Spanish dividend withholdings | — | — | (0.7 | ) | ||||
State and local taxes | 0.1 | 0.1 | 0.1 | |||||
Other, net | (0.8 | ) | (1.0 | ) | (0.8 | ) | ||
Effective tax rate | 22.7 | % | 22.2 | % | 24.5 | % |
December 31, | |||||||
(DOLLARS IN THOUSANDS) | 2016 | 2015 | |||||
Employee and retiree benefits | $ | 132,638 | $ | 132,379 | |||
Credit and net operating loss carryforwards(1) | 186,062 | 183,594 | |||||
Trademarks and other(2) | 1,406 | 143,727 | |||||
Amortizable R&D expenses(2) | 4,040 | 56,091 | |||||
Other, net | (2,783 | ) | 10,076 | ||||
Gross deferred tax assets | 321,363 | 525,867 | |||||
Property, plant and equipment, net | (17,000 | ) | (11,337 | ) | |||
Trademarks and other | (55,899 | ) | (72,710 | ) | |||
Gross deferred tax liabilities | (72,899 | ) | (84,047 | ) | |||
Valuation allowance(1)(2) | (152,752 | ) | (339,395 | ) | |||
Total net deferred tax assets | $ | 95,712 | $ | 102,425 |
(1) | During 2016 and 2015, the Company increased its deferred tax assets by $7.6 million and by $10.0 million, respectively, relating to an adjustment to the 2015 and 2014 foreign net operating loss carryforwards, respectively. The entire adjustments of $7.6 million and $10.0 million were offset by corresponding adjustments in valuation allowances. These adjustments are not considered material to the previously issued financial statements. |
(2) | The Company executed a legal entity restructuring that resulted in a significant reduction of fully valued deferred tax assets. |
December 31, | |||||||||||
(DOLLARS IN THOUSANDS) | 2016 | 2015 | 2014 | ||||||||
Balance of unrecognized tax benefits at beginning of year | $ | 24,198 | $ | 23,055 | $ | 21,553 | |||||
Gross amount of increases in unrecognized tax benefits as a result of positions taken during a prior year | 1,254 | 18 | 1,795 | ||||||||
Gross amount of decreases in unrecognized tax benefits as a result of positions taken during a prior year | (3 | ) | (43 | ) | (823 | ) | |||||
Gross amount of increases in unrecognized tax benefits as a result of positions taken during the current year | 8,131 | 12,011 | 5,378 | ||||||||
The amounts of decreases in unrecognized benefits relating to settlements with taxing authorities | (6,075 | ) | (10,221 | ) | — | ||||||
Reduction in unrecognized tax benefits due to the lapse of applicable statute of limitation | (1,077 | ) | (622 | ) | (4,848 | ) | |||||
Balance of unrecognized tax benefits at end of year | $ | 26,428 | $ | 24,198 | $ | 23,055 |
December 31, | |||||||||||
(DOLLARS IN THOUSANDS) | 2016 | 2015 | 2014 | ||||||||
Equity-based awards | $ | 24,587 | $ | 23,160 | $ | 22,648 | |||||
Liability-based awards | 3,884 | 4,784 | 4,354 | ||||||||
Total stock-based compensation | 28,471 | 27,944 | 27,002 | ||||||||
Less tax benefit | (7,375 | ) | (8,348 | ) | (8,018 | ) | |||||
Total stock-based compensation, net of tax | $ | 21,096 | $ | 19,596 | $ | 18,984 |
(SHARE AMOUNTS IN THOUSANDS) | Shares Subject to SSARs/Options | Weighted Average Exercise Price | SSARs/ Options Exercisable | ||||||
Balance at December 31, 2015 | 38 | $ | 52.10 | 38 | |||||
Exercised | (17 | ) | 46.72 | ||||||
Cancelled | (2 | ) | 41.16 | ||||||
Balance at December 31, 2016 | 19 | $ | 59.14 | 18 |
Price Range | Number Outstanding (in thousands) | Weighted Average Remaining Contractual Life (in years) | Weighted Average Exercise Price | Aggregate Intrinsic Value (in thousands) | ||||||||
$51 – $60 | 10 | 1.12 | $ | 55.09 | ||||||||
$61 – $65 | 8 | 1.42 | 62.13 | |||||||||
Over $65 | 1 | 5.35 | 118.10 | |||||||||
19 | $ | 59.14 | $ | 1,112 |
Price Range | Number Exercisable (in thousands) | Weighted Average Remaining Contractual Life (in years) | Weighted Average Exercise Price | Aggregate Intrinsic Value (in thousands) | ||||||||
$51 – $60 | 10 | 1.12 | $ | 55.09 | ||||||||
$61 - $65 | 8 | 1.42 | 62.13 | |||||||||
18 | $ | 58.24 | $ | 1,112 |
(SHARE AMOUNTS IN THOUSANDS) | Number of Shares | Weighted Average Grant Date Fair Value Per Share | ||||
Balance at December 31, 2015 | 480 | $ | 93.33 | |||
Granted | 183 | 113.76 | ||||
Vested | (192 | ) | 78.44 | |||
Forfeited | (27 | ) | 106.62 | |||
Balance at December 31, 2016 | 444 | $ | 107.43 |
(SHARE AMOUNTS IN THOUSANDS) | Number of Shares | Weighted Average Grant Date Fair Value Per Share | ||||
Balance at December 31, 2015 | 234 | $ | 95.48 | |||
Granted | 59 | 119.81 | ||||
Vested | (91 | ) | 75.87 | |||
Forfeited | (4 | ) | 114.91 | |||
Balance at December 31, 2016 | 198 | $ | 110.62 |
(SHARE AMOUNTS IN THOUSANDS) | Cash RSUs | Weighted Average Fair Value Per Share | ||||
Balance at December 31, 2015 | 99 | $ | 119.64 | |||
Granted | 33 | 117.83 | ||||
Vested | (33 | ) | 129.53 | |||
Forfeited | (3 | ) | 130.89 | |||
Balance at December 31, 2016 | 96 | $ | 117.83 |
December 31, | |||||||||||
(DOLLARS IN THOUSANDS) | 2016 | 2015 | 2014 | ||||||||
Net sales | |||||||||||
Flavors | $ | 1,496,525 | $ | 1,442,951 | $ | 1,457,055 | |||||
Fragrances | 1,619,825 | 1,580,238 | 1,631,478 | ||||||||
Consolidated | $ | 3,116,350 | $ | 3,023,189 | $ | 3,088,533 | |||||
December 31, | |||||||||||
(DOLLARS IN THOUSANDS) | 2016 | 2015 | |||||||||
Segment assets | |||||||||||
Flavors | $ | 1,780,695 | $ | 1,604,623 | |||||||
Fragrances | 1,925,642 | 1,975,002 | |||||||||
Global assets | 310,647 | 122,385 | |||||||||
Consolidated | $ | 4,016,984 | $ | 3,702,010 | |||||||
December 31, | |||||||||||
(DOLLARS IN THOUSANDS) | 2016 | 2015 | 2014 | ||||||||
Segment profit: | |||||||||||
Flavors | $ | 337,242 | $ | 318,476 | $ | 331,257 | |||||
Fragrances | 334,220 | 321,764 | 335,447 | ||||||||
Global expenses | (48,487 | ) | (28,180 | ) | (65,443 | ) | |||||
Restructuring and other charges, net (1) | (322 | ) | (7,594 | ) | (1,298 | ) | |||||
Gain on sales of fixed assets (2) | 7,818 | — | — | ||||||||
Spanish capital tax charge reversal (3) | — | 10,530 | — | ||||||||
Acquisition related costs (4) | (12,195 | ) | (18,342 | ) | — | ||||||
Operational improvement initiative costs (5) | (2,402 | ) | (1,115 | ) | (7,642 | ) | |||||
Accelerated contingent consideration (6) | — | (7,192 | ) | — | |||||||
Legal charges/credits, net (7) | (48,518 | ) | — | — | |||||||
Operating Profit | 567,356 | 588,347 | 592,321 | ||||||||
Interest expense | (52,989 | ) | (46,062 | ) | (46,067 | ) | |||||
Other income (expense), net | 9,350 | (3,184 | ) | 2,807 | |||||||
Income before taxes | $ | 523,717 | $ | 539,101 | $ | 549,061 | |||||
Profit margin | |||||||||||
Flavors | 22.5 | % | 22.1 | % | 22.7 | % | |||||
Fragrances | 20.6 | % | 20.4 | % | 20.6 | % | |||||
Consolidated | 18.2 | % | 19.5 | % | 19.2 | % |
Capital Expenditures | Depreciation and Amortization | ||||||||||||||||||||||
(DOLLARS IN THOUSANDS) | 2016 | 2015 | 2014 | 2016 | 2015 | 2014 | |||||||||||||||||
Flavors | $ | 47,064 | $ | 39,416 | $ | 91,104 | $ | 47,705 | $ | 45,228 | $ | 36,008 | |||||||||||
Fragrances | 73,345 | 50,597 | 43,948 | 50,724 | 39,614 | 43,790 | |||||||||||||||||
Unallocated assets | 6,003 | 11,017 | 8,130 | 4,040 | 4,755 | 9,556 | |||||||||||||||||
Consolidated | $ | 126,412 | $ | 101,030 | $ | 143,182 | $ | 102,469 | $ | 89,597 | $ | 89,354 |
Net Sales by Geographic Area | |||||||||||
(DOLLARS IN THOUSANDS) | 2016 | 2015 | 2014 | ||||||||
Europe, Africa and Middle East | $ | 964,931 | $ | 945,675 | $ | 1,041,585 | |||||
Greater Asia | 880,040 | 839,120 | 856,217 | ||||||||
North America | 769,081 | 718,614 | 690,214 | ||||||||
Latin America | 502,298 | 519,780 | 500,517 | ||||||||
Consolidated | $ | 3,116,350 | $ | 3,023,189 | $ | 3,088,533 |
U.S. Plans | Non-U.S. Plans | ||||||||||||||||||||||
(DOLLARS IN THOUSANDS) | 2016 | 2015 | 2014 | 2016 | 2015 | 2014 | |||||||||||||||||
Components of net periodic benefit cost | |||||||||||||||||||||||
Service cost for benefits earned | $ | 2,497 | $ | 3,144 | $ | 3,057 | $ | 15,210 | $ | 15,866 | $ | 14,142 | |||||||||||
Interest cost on projected benefit obligation | 24,096 | 23,705 | 25,090 | 24,413 | 25,389 | 33,360 | |||||||||||||||||
Expected return on plan assets | (33,988 | ) | (32,405 | ) | (27,647 | ) | (45,865 | ) | (50,437 | ) | (49,861 | ) | |||||||||||
Net amortization of deferrals | 5,821 | 21,390 | 17,656 | 12,802 | 12,864 | 10,584 | |||||||||||||||||
Settlements and curtailments | — | — | — | — | — | 43 | |||||||||||||||||
Net periodic benefit cost | (1,574 | ) | 15,834 | 18,156 | 6,560 | 3,682 | 8,268 | ||||||||||||||||
Defined contribution and other retirement plans | 8,404 | 7,104 | 7,854 | 6,304 | 7,028 | 6,323 | |||||||||||||||||
Total expense | $ | 6,830 | $ | 22,938 | $ | 26,010 | $ | 12,864 | $ | 10,710 | $ | 14,591 | |||||||||||
Changes in plan assets and benefit obligations recognized in OCI | |||||||||||||||||||||||
Net actuarial (gain) loss | $ | (4,917 | ) | $ | 7,623 | $ | 72,848 | $ | 3,848 | ||||||||||||||
Recognized actuarial loss | (5,759 | ) | (21,207 | ) | (13,643 | ) | (13,629 | ) | |||||||||||||||
Prior service cost | — | — | — | 459 | |||||||||||||||||||
Recognized prior service cost | (62 | ) | (183 | ) | 742 | 765 | |||||||||||||||||
Currency translation adjustment | — | — | (43,270 | ) | (25,230 | ) | |||||||||||||||||
Total recognized in OCI (before tax effects) | $ | (10,738 | ) | $ | (13,767 | ) | $ | 16,677 | $ | (33,787 | ) |
Postretirement Benefits | |||||||||||
(DOLLARS IN THOUSANDS) | 2016 | 2015 | 2014 | ||||||||
Components of net periodic benefit cost | |||||||||||
Service cost for benefits earned | $ | 852 | $ | 966 | $ | 1,295 | |||||
Interest cost on projected benefit obligation | 3,326 | 3,904 | 4,896 | ||||||||
Net amortization and deferrals | (5,088 | ) | (4,476 | ) | (4,109 | ) | |||||
(Credit) Expense | $ | (910 | ) | $ | 394 | $ | 2,082 | ||||
Changes in plan assets and benefit obligations recognized in OCI | |||||||||||
Net actuarial loss (gain) | $ | 2,868 | $ | (1,557 | ) | ||||||
Recognized actuarial loss | (1,701 | ) | (1,331 | ) | |||||||
Prior service credit | — | (33,902 | ) | ||||||||
Recognized prior service credit | 6,789 | 5,807 | |||||||||
Total recognized in OCI (before tax effects) | $ | 7,956 | $ | (30,983 | ) |
(DOLLARS IN THOUSANDS) | U.S. Plans | Non-U.S. Plans | Postretirement Benefits | ||||||||
Actuarial loss recognition | $ | 5,181 | $ | 14,344 | $ | 1,513 | |||||
Prior service cost (credit) recognition | 31 | (696 | ) | (6,334 | ) |
Weighted-average actuarial assumption used to determine expense | U.S. Plans | Non-U.S. Plans | |||||||||||||||
2016 | 2015 | 2014 | 2016 | 2015 | 2014 | ||||||||||||
Discount rate | 4.20 | % | 3.90 | % | 4.70 | % | 3.03 | % | 2.74 | % | 4.18 | % | |||||
Expected return on plan assets | 7.30 | % | 7.30 | % | 7.30 | % | 6.40 | % | 6.24 | % | 6.27 | % | |||||
Rate of compensation increase | 3.25 | % | 3.25 | % | 3.25 | % | 1.98 | % | 2.00 | % | 2.66 | % |
U.S. Plans | Non-U.S. Plans | Postretirement Benefits | |||||||||||||||||||||
(DOLLARS IN THOUSANDS) | 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | |||||||||||||||||
Benefit obligation at beginning of year | $ | 587,511 | $ | 625,479 | $ | 860,240 | $ | 965,266 | $ | 77,148 | $ | 113,497 | |||||||||||
Service cost for benefits earned | 2,497 | 3,144 | 15,210 | 15,866 | 852 | 966 | |||||||||||||||||
Interest cost on projected benefit obligation | 24,096 | 23,705 | 24,413 | 25,389 | 3,326 | 3,904 | |||||||||||||||||
Actuarial (gain) loss | (7,078 | ) | (36,338 | ) | 134,377 | (47,883 | ) | 2,868 | (1,557 | ) | |||||||||||||
Plan amendments | — | — | — | 459 | — | (33,902 | ) | ||||||||||||||||
Adjustments for expense/tax contained in service cost | — | — | (1,515 | ) | (1,976 | ) | — | — | |||||||||||||||
Plan participants’ contributions | — | — | 1,538 | 1,790 | 411 | 809 | |||||||||||||||||
Benefits paid | (29,694 | ) | (28,479 | ) | (30,648 | ) | (29,121 | ) | (4,760 | ) | (6,569 | ) | |||||||||||
Curtailments / settlements | — | — | (487 | ) | — | — | — | ||||||||||||||||
Translation adjustments | — | — | (107,562 | ) | (69,550 | ) | — | — | |||||||||||||||
Benefit obligation at end of year | $ | 577,332 | $ | 587,511 | $ | 895,566 | $ | 860,240 | $ | 79,845 | $ | 77,148 | |||||||||||
Fair value of plan assets at beginning of year | $ | 500,311 | $ | 501,801 | $ | 790,614 | $ | 852,893 | |||||||||||||||
Actual return on plan assets | 31,828 | (11,556 | ) | 105,879 | (3,271 | ) | |||||||||||||||||
Employer contributions | 23,519 | 38,545 | 23,239 | 29,352 | |||||||||||||||||||
Participants’ contributions | — | — | 1,538 | 1,790 | |||||||||||||||||||
Benefits paid | (29,694 | ) | (28,479 | ) | (30,648 | ) | (29,121 | ) | |||||||||||||||
Settlements | — | — | (487 | ) | — | ||||||||||||||||||
Translation adjustments | — | — | (97,997 | ) | (61,029 | ) | |||||||||||||||||
Fair value of plan assets at end of year | $ | 525,964 | $ | 500,311 | $ | 792,138 | $ | 790,614 | |||||||||||||||
Funded status at end of year | $ | (51,368 | ) | $ | (87,200 | ) | $ | (103,428 | ) | $ | (69,626 | ) |
U.S. Plans | Non-U.S. Plans | ||||||||||||||
(DOLLARS IN THOUSANDS) | 2016 | 2015 | 2016 | 2015 | |||||||||||
Amounts recognized in the balance sheet: | |||||||||||||||
Other assets | $ | 4,343 | $ | — | $ | — | $ | 4,096 | |||||||
Other current liabilities | (4,027 | ) | (3,866 | ) | (557 | ) | (613 | ) | |||||||
Retirement liabilities | (51,684 | ) | (83,334 | ) | (102,871 | ) | (73,109 | ) | |||||||
Net amount recognized | $ | (51,368 | ) | $ | (87,200 | ) | $ | (103,428 | ) | $ | (69,626 | ) |
U.S. Plans | Non-U.S. Plans | Postretirement Benefits | |||||||||||||||||||||
(DOLLARS IN THOUSANDS) | 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | |||||||||||||||||
Amounts recognized in AOCI consist of: | |||||||||||||||||||||||
Net actuarial loss | $ | 154,417 | $ | 165,093 | $ | 339,654 | $ | 324,068 | $ | 19,336 | $ | 18,169 | |||||||||||
Prior service cost (credit) | 141 | 203 | (7,390 | ) | (8,482 | ) | (31,664 | ) | (38,453 | ) | |||||||||||||
Total AOCI (before tax effects) | $ | 154,558 | $ | 165,296 | $ | 332,264 | $ | 315,586 | $ | (12,328 | ) | $ | (20,284 | ) |
U.S. Plans | Non-U.S. Plans | ||||||||||||||
(DOLLARS IN THOUSANDS) | 2016 | 2015 | 2016 | 2015 | |||||||||||
Accumulated Benefit Obligation — end of year | $ | 574,612 | $ | 583,346 | $ | 865,585 | $ | 837,272 | |||||||
Information for Pension Plans with an ABO in excess of Plan Assets: | |||||||||||||||
Projected benefit obligation | $ | 65,101 | $ | 587,511 | $ | 895,566 | $ | 609,922 | |||||||
Accumulated benefit obligation | 65,101 | 583,346 | 865,585 | 586,954 | |||||||||||
Fair value of plan assets | 9,389 | 500,311 | 790,218 | 536,200 | |||||||||||
Weighted-average assumptions used to determine obligations at December 31 | |||||||||||||||
Discount rate | 4.20 | % | 3.90 | % | 2.14 | % | 3.03 | % | |||||||
Rate of compensation increase | 3.25 | % | 3.25 | % | 1.97 | % | 1.98 | % |
(DOLLARS IN THOUSANDS) | U.S. Plans | Non-U.S. Plans | Postretirement Benefits | ||||||||
Estimated Future Benefit Payments | |||||||||||
2017 | $ | 32,871 | $ | 22,781 | $ | 5,005 | |||||
2018 | 33,912 | 23,109 | 5,132 | ||||||||
2019 | 35,331 | 23,731 | 5,227 | ||||||||
2020 | 39,392 | 23,855 | 5,431 | ||||||||
2021 | 37,014 | 24,488 | 5,417 | ||||||||
2022 - 2026 | 187,696 | 134,742 | 25,968 | ||||||||
Contributions | |||||||||||
Required Company Contributions in the Following Year (2017) | $ | 16,107 | $ | 13,762 | $ | 5,005 |
U.S. Plans | Non-U.S. Plans | ||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||
Percentage of assets invested in: | |||||||||||
Cash and cash equivalents | — | % | 1 | % | 2 | % | 2 | % | |||
Equities | 36 | % | 41 | % | 27 | % | 27 | % | |||
Fixed income | 64 | % | 58 | % | 56 | % | 55 | % | |||
Property | — | % | — | % | 5 | % | 7 | % | |||
Alternative and other investments | — | % | — | % | 10 | % | 9 | % |
U.S. Plans for the year ended | |||||||||||||||
December 31, 2016 | |||||||||||||||
(DOLLARS IN THOUSANDS) | Level 1 | Level 2 | Level 3 | Total | |||||||||||
Cash Equivalents | $ | — | $ | 1,673 | $ | — | $ | 1,673 | |||||||
Fixed Income Securities | |||||||||||||||
Government & Government Agency Bonds | — | 11,845 | — | 11,845 | |||||||||||
Corporate Bonds | — | 90,843 | — | 90,843 | |||||||||||
Municipal Bonds | — | 9,682 | — | 9,682 | |||||||||||
Asset Backed Securities | — | 64 | — | 64 | |||||||||||
Assets measured at net asset value(1) | — | — | — | 410,533 | |||||||||||
Total | $ | — | $ | 114,107 | $ | — | $ | 524,640 | |||||||
Receivables | $ | 1,324 | |||||||||||||
Total | $ | 525,964 |
U.S. Plans for the year ended | |||||||||||||||
December 31, 2015 | |||||||||||||||
(DOLLARS IN THOUSANDS) | Level 1 | Level 2 | Level 3 | Total | |||||||||||
Cash Equivalents | $ | — | $ | 4,767 | $ | — | $ | 4,767 | |||||||
Equity Securities | |||||||||||||||
U.S. Common Stock | 37,024 | — | — | 37,024 | |||||||||||
Balanced Funds | — | 8,845 | — | 8,845 | |||||||||||
Fixed Income Securities | |||||||||||||||
Government & Government Agency Bonds | — | 11,070 | — | 11,070 | |||||||||||
Corporate Bonds | — | 77,754 | — | 77,754 | |||||||||||
Municipal Bonds | — | 10,006 | — | 10,006 | |||||||||||
Assets measured at net asset value(1) | — | — | — | 350,074 | |||||||||||
Total | $ | 37,024 | $ | 112,442 | $ | — | $ | 499,540 | |||||||
Receivables | $ | 771 | |||||||||||||
Total | $ | 500,311 |
Non-U.S. Plans for the year ended | |||||||||||||||
December 31, 2016 | |||||||||||||||
(DOLLARS IN THOUSANDS) | Level 1 | Level 2 | Level 3 | Total | |||||||||||
Cash | $ | 12,726 | $ | — | $ | — | $ | 12,726 | |||||||
Equity Securities | |||||||||||||||
U.S. Large Cap | 72,438 | 17,102 | — | 89,540 | |||||||||||
U.S. Mid Cap | 504 | — | — | 504 | |||||||||||
U.S. Small Cap | 382 | — | — | 382 | |||||||||||
Non-U.S. Large Cap | 69,442 | 10,606 | — | 80,048 | |||||||||||
Non-U.S. Mid Cap | 514 | — | — | 514 | |||||||||||
Non-U.S. Small Cap | 284 | — | — | 284 | |||||||||||
Emerging Markets | 37,354 | 1,035 | — | 38,389 | |||||||||||
Fixed Income Securities | |||||||||||||||
U.S. Treasuries/Government Bonds | 75 | — | — | 75 | |||||||||||
U.S. Corporate Bonds | — | 28,843 | — | 28,843 | |||||||||||
Non-U.S. Treasuries/Government Bonds | 121,987 | 57,116 | — | 179,103 | |||||||||||
Non-U.S. Corporate Bonds | 26,412 | 183,020 | — | 209,432 | |||||||||||
Non-U.S. Asset-Backed Securities | — | 27,114 | — | 27,114 | |||||||||||
Non-U.S. Other Fixed Income | 1,969 | — | — | 1,969 | |||||||||||
Alternative Types of Investments | |||||||||||||||
Insurance Contracts | — | 31,087 | 246 | 31,333 | |||||||||||
Hedge Funds | — | — | 30,739 | 30,739 | |||||||||||
Other | — | 16,904 | — | 16,904 | |||||||||||
Absolute Return Funds | 2,443 | — | — | 2,443 | |||||||||||
Non-U.S. Real Estate | — | — | 41,796 | 41,796 | |||||||||||
Total | $ | 346,530 | $ | 372,827 | $ | 72,781 | $ | 792,138 |
Non-U.S. Plans for the year ended | |||||||||||||||
December 31, 2015 | |||||||||||||||
(DOLLARS IN THOUSANDS) | Level 1 | Level 2 | Level 3 | Total | |||||||||||
Cash | $ | 13,239 | $ | — | $ | — | $ | 13,239 | |||||||
Equity Securities | |||||||||||||||
U.S. Large Cap | 74,306 | 17,118 | — | 91,424 | |||||||||||
U.S. Mid Cap | 262 | — | — | 262 | |||||||||||
U.S. Small Cap | 230 | — | — | 230 | |||||||||||
Non-U.S. Large Cap | 73,578 | 12,372 | — | 85,950 | |||||||||||
Non-U.S. Mid Cap | 2,175 | — | — | 2,175 | |||||||||||
Non-U.S. Small Cap | 226 | — | — | 226 | |||||||||||
Emerging Markets | 33,291 | 2,152 | — | 35,443 | |||||||||||
Fixed Income Securities | |||||||||||||||
U.S. Treasuries/Government Bonds | 67 | — | — | 67 | |||||||||||
Non-U.S. Treasuries/Government Bonds | 121,552 | 55,184 | — | 176,736 | |||||||||||
Non-U.S. Corporate Bonds | 56,238 | 174,626 | — | 230,864 | |||||||||||
Non-U.S. Asset-Backed Securities | — | 26,132 | — | 26,132 | |||||||||||
Non-U.S. Other Fixed Income | 1,625 | — | — | 1,625 | |||||||||||
Alternative Types of Investments | |||||||||||||||
Insurance Contracts | 299 | 36,447 | — | 36,746 | |||||||||||
Hedge Funds | — | — | 17,034 | 17,034 | |||||||||||
Absolute Return Funds | 2,566 | 16,603 | — | 19,169 | |||||||||||
Non-U.S. Real Estate | — | 13,985 | 39,307 | 53,292 | |||||||||||
Total | $ | 379,654 | $ | 354,619 | $ | 56,341 | $ | 790,614 |
Non-U.S. Plans | |||||||||||
(DOLLARS IN THOUSANDS) | Real Estate | Hedge Funds | Total | ||||||||
Ending balance as of December 31, 2015 | $ | 39,307 | $ | 17,034 | $ | 56,341 | |||||
Actual return on plan assets | (8,525 | ) | (1,333 | ) | (9,858 | ) | |||||
Purchases, sales and settlements | (528 | ) | 15,038 | 14,510 | |||||||
Transfers in/out | 11,788 | — | 11,788 | ||||||||
Ending balance as of December 31, 2016 | $ | 42,042 | $ | 30,739 | $ | 72,781 |
Expense | Liability | ||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||
Discount rate | 4.20 | % | 3.90 | % | 4.20 | % | 4.20 | % | |||
Current medical cost trend rate | 7.15 | % | 5.80 | % | 8.00 | % | 7.15 | % | |||
Ultimate medical cost trend rate | 4.75 | % | 4.75 | % | 4.75 | % | 4.75 | % | |||
Medical cost trend rate decreases to ultimate rate in year | 2023 | 2023 | 2030 | 2023 |
Sensitivity of Disclosures to Changes in Selected Assumptions | |||||||||||||||
25 BP Decrease in Discount Rate | 25 BP Decrease in Discount Rate | 25 BP Decrease in Long-Term Rate of Return | |||||||||||||
(DOLLARS IN THOUSANDS) | Change in PBO | Change in ABO | Change in pension expense | Change in pension expense | |||||||||||
U.S. Pension Plans | $ | 15,719 | $ | 15,620 | $ | (109 | ) | $ | 1,250 | ||||||
Non-U.S. Pension Plans | 46,658 | 44,861 | 2,876 | 1,895 | |||||||||||
Postretirement Benefit Plan | N/A | 2,302 | 100 | N/A |
• | Level 1 — Quoted prices for identical instruments in active markets. |
• | Level 2 — Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets. |
• | Level 3 — Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. |
2016 | 2015 | ||||||||||||||
(DOLLARS IN THOUSANDS) | Carrying Amount | Fair Value | Carrying Amount | Fair Value | |||||||||||
Cash and cash equivalents(1) | $ | 323,992 | $ | 323,992 | $ | 181,988 | $ | 181,988 | |||||||
Credit facilities and bank overdrafts(2) | 13,599 | 13,599 | 142,178 | 142,178 | |||||||||||
Long-term debt:(3) | |||||||||||||||
Senior notes — 2006(4) | — | — | 124,964 | 127,717 | |||||||||||
Senior notes — 2007(4) | 499,676 | 556,222 | 499,618 | 563,855 | |||||||||||
Senior notes — 2013(4) | 297,986 | 302,376 | 297,683 | 290,830 | |||||||||||
Euro Senior notes - 2016(4) | 512,764 | 546,006 | — | — |
(1) | The carrying amount of cash and cash equivalents approximates fair value due to the short maturity of those instruments. |
(2) | The carrying amount of the Company's credit facilities and bank overdrafts approximates fair value as the interest rate is reset frequently based on current market rates as well as the short maturity of those instruments. |
(3) | The fair value of the Company's long-term debt was calculated using discounted cash flows applying current interest rates and current credit spreads based on its own credit risk. |
(4) | Amount is net of unamortized discount and debt issuance costs. |
(DOLLARS IN THOUSANDS) | December 31, 2016 | December 31, 2015 | |||||
Forward currency contracts | $ | 527,500 | $ | 573,200 | |||
Interest rate swaps | $ | 412,500 | $ | 475,000 |
December 31, 2016 | |||||||||||
Fair Value of Derivatives Designated as Hedging Instruments | Fair Value of Derivatives Not Designated as Hedging Instruments | Total Fair Value | |||||||||
Derivative assets(a) | |||||||||||
Foreign currency contracts | $ | 13,765 | $ | 7,737 | $ | 21,502 | |||||
Interest rate swaps | 335 | — | 335 | ||||||||
$ | 14,100 | $ | 7,737 | $ | 21,837 | ||||||
Derivative liabilities(b) | |||||||||||
Foreign currency contracts | $ | 46 | $ | 2,209 | $ | 2,255 | |||||
Interest rate swaps | 725 | — | 725 | ||||||||
$ | 771 | $ | 2,209 | $ | 2,980 | ||||||
December 31, 2015 | |||||||||||
Fair Value of Derivatives Designated as Hedging Instruments | Fair Value of Derivatives Not Designated as Hedging Instruments | Total Fair Value | |||||||||
Derivative assets(a) | |||||||||||
Foreign currency contracts | $ | 6,560 | $ | 3,700 | $ | 10,260 | |||||
Interest rate swaps | 1,210 | — | 1,210 | ||||||||
$ | 7,770 | $ | 3,700 | $ | 11,470 | ||||||
Derivative liabilities(b) | |||||||||||
Foreign currency contracts | $ | 2,106 | $ | 3,022 | $ | 5,128 |
(a) | Derivative assets are recorded to Prepaid expenses and other current assets in the Consolidated Balance Sheet. |
(b) | Derivative liabilities are recorded as Other current liabilities in the Consolidated Balance Sheet. |
Derivatives Not Designated as Hedging Instruments | Amount of Gain For the years ended December 31, | Location of Gain Recognized in Income on Derivative | |||||||
2016 | 2015 | ||||||||
Foreign currency contract | $ | 26,821 | $ | 8,644 | Other (income) expense, net |
Amount of Gain or (Loss) Recognized in OCI on Derivative (Effective Portion) | Location of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) | Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) | |||||||||||||||
For the years ended December 31, | For the years ended December 31, | ||||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||||
Derivatives in Cash Flow Hedging Relationships: | |||||||||||||||||
Foreign currency contract | $ | 1,591 | $ | (3,244 | ) | Cost of goods sold | $ | 4,726 | $ | 16,250 | |||||||
Interest rate swaps (1) | (3,388 | ) | 274 | Interest expense | (595 | ) | (274 | ) | |||||||||
Derivatives in Net Investment Hedging Relationships: | |||||||||||||||||
Foreign currency contract | 3,230 | 5,231 | N/A | — | — | ||||||||||||
Euro Senior notes - 2016 | 32,897 | — | N/A | — | — | ||||||||||||
Total | $ | 34,330 | $ | 2,261 | $ | 4,131 | $ | 15,976 |
(1) | Interest rate swaps were entered into as pre-issuance hedges. |
Foreign Currency Translation Adjustments | (Losses) Gains on Derivatives Qualifying as Hedges | Pension and Postretirement Liability Adjustment | Total | ||||||||||||
(DOLLARS IN THOUSANDS) | |||||||||||||||
Accumulated other comprehensive loss, net of tax, as of December 31, 2015 | $ | (297,499 | ) | $ | 9,401 | $ | (325,342 | ) | $ | (613,440 | ) | ||||
OCI before reclassifications | (54,526 | ) | 2,334 | (21,111 | ) | (73,303 | ) | ||||||||
Amounts reclassified from AOCI | — | (4,131 | ) | 10,779 | 6,648 | ||||||||||
Net current period other comprehensive income (loss) | (54,526 | ) | (1,797 | ) | (10,332 | ) | (66,655 | ) | |||||||
Accumulated other comprehensive loss, net of tax, as of December 31, 2016 | $ | (352,025 | ) | $ | 7,604 | $ | (335,674 | ) | $ | (680,095 | ) |
Foreign Currency Translation Adjustments | (Losses) Gains on Derivatives Qualifying as Hedges | Pension and Postretirement Liability Adjustment | Total | ||||||||||||
(DOLLARS IN THOUSANDS) | |||||||||||||||
Accumulated other comprehensive (loss) income, net of tax, as of December 31, 2014 | $ | (173,342 | ) | $ | 12,371 | $ | (379,459 | ) | $ | (540,430 | ) | ||||
OCI before reclassifications | (124,157 | ) | 13,006 | 33,410 | (77,741 | ) | |||||||||
Amounts reclassified from AOCI | — | (15,976 | ) | 20,707 | 4,731 | ||||||||||
Net current period other comprehensive income (loss) | (124,157 | ) | (2,970 | ) | 54,117 | (73,010 | ) | ||||||||
Accumulated other comprehensive loss, net of tax, as of December 31, 2015 | $ | (297,499 | ) | $ | 9,401 | $ | (325,342 | ) | $ | (613,440 | ) |
Foreign Currency Translation Adjustments | (Losses) Gains on Derivatives Qualifying as Hedges | Pension and Postretirement Liability Adjustment | Total | ||||||||||||
(DOLLARS IN THOUSANDS) | |||||||||||||||
Accumulated other comprehensive (loss) income, net of tax, as of December 31, 2013 | $ | (104,278 | ) | $ | (4,012 | ) | $ | (284,421 | ) | $ | (392,711 | ) | |||
OCI before reclassifications | (69,064 | ) | 12,434 | (111,915 | ) | (168,545 | ) | ||||||||
Amounts reclassified from AOCI | — | 3,949 | 16,877 | 20,826 | |||||||||||
Net current period other comprehensive income (loss) | (69,064 | ) | 16,383 | (95,038 | ) | (147,719 | ) | ||||||||
Accumulated other comprehensive loss, net of tax, as of December 31, 2014 | $ | (173,342 | ) | $ | 12,371 | $ | (379,459 | ) | $ | (540,430 | ) |
December 31, 2016 | December 31, 2015 | December 31, 2014 | Affected Line Item in the Consolidated Statement of Comprehensive Income | |||||||||
(DOLLARS IN THOUSANDS) | ||||||||||||
(Losses) gains on derivatives qualifying as hedges | ||||||||||||
Foreign currency contracts | $ | 5,401 | $ | 18,571 | $ | (4,426 | ) | Cost of goods sold | ||||
Interest rate swaps | (595 | ) | (274 | ) | (274 | ) | Interest expense | |||||
(675 | ) | (2,321 | ) | 751 | Provision for income taxes | |||||||
$ | 4,131 | $ | 15,976 | $ | (3,949 | ) | Total, net of income taxes | |||||
(Losses) gains on pension and postretirement liability adjustments | ||||||||||||
Settlements / Curtailments | $ | — | $ | — | $ | (43 | ) | (a) | ||||
Prior service cost | 7,469 | 6,389 | (63 | ) | (a) | |||||||
Actuarial losses | (21,103 | ) | (36,167 | ) | (28,219 | ) | (a) | |||||
2,855 | 9,071 | 11,448 | Provision for income taxes | |||||||||
$ | (10,779 | ) | $ | (20,707 | ) | $ | (16,877 | ) | Total, net of income taxes |
Exhibit Number | Description | ||
3(i) | Restated Certificate of Incorporation of the Registrant, incorporated by reference to Exhibit 10(g) to Registrant’s Quarterly Report on Form 10-Q (File No. 001-04858) filed on August 12, 2002. | ||
3(ii) | By-laws of the Registrant, including all amendments adopted as of December 15, 2015, incorporated by reference to Exhibit 3(ii) to Registrant’s Current Report on Form 8-K filed on December 17, 2015. | ||
4.1 | Note Purchase Agreement, dated as of September 27, 2007, by and among the Registrant and the various purchasers named therein, incorporated by reference to Exhibit 4.7 to Registrant’s Current Report on Form 8-K (File No. 001-04858) filed on October 1, 2007. | ||
4.2 | Form of Series A, Series B, Series C and Series D Senior Notes incorporated by reference to Exhibit 4.8 to Registrant’s Current Report on Form 8-K (File No. 001-04858) filed on October 1, 2007. | ||
4.3 | Indenture, dated as of April 4, 2013, between the Registrant and U.S. Bank National Association, as Trustee (including the form of Notes), incorporated by reference to Exhibit 4.1 to Registrant’s Current Report on Form 8-K filed on April 4, 2013. | ||
4.4 | Indenture, dated as of March 2, 2016, between the Registrant and U.S. Bank National Association, as Trustee, incorporated by reference to Exhibit 4.1 to Registrant’s Registration Statement on Form S-3 (Registration No. 333-209889) filed on March 2, 2016. | ||
4.5 | Form of Debt Security, incorporated by reference to Exhibit 4.2 to Registrant’s Registration Statement on Form S-3 (Registration No. 333-209889) filed on March 2, 2016. | ||
4.6 | First Supplemental Indenture, dated as of March 14, 2016, between the Registrant and U.S. Bank National Association, as Trustee (including the form of Notes), incorporated by reference to Exhibit 4.7 to Registrant’s Current Report on Form 8-K filed on March 14, 2016. | ||
*10.1 | Letter Agreement, dated as of May 26, 2014, between the Registrant and Andreas Fibig, incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on May 28, 2014. | ||
*10.2 | Supplemental Retirement Plan, incorporated by reference to Exhibit 10.5 to Registrant’s Annual Report on Form 10-K (File No. 001-04858) filed on February 27, 2008. | ||
*10.3 | 2000 Stock Award and Incentive Plan, as amended and restated December 31, 2007, incorporated by reference to Exhibit 10.6 to Registrant’s Annual Report on Form 10-K (File No. 001-04858) filed on February 27, 2008. | ||
*10.4 | Form of Employee Stock Option Agreement under the 2000 Stock Award and Incentive Plan, incorporated by reference to Exhibit 10.1 to Registrant’s Quarterly Report on Form 10-Q (File No. 001-04858) filed on November 9, 2004. | ||
*10.5 | Form of Stock-Settled Appreciation Rights Agreement under the 2000 Stock Award and Incentive Plan, incorporated by reference to Exhibit 10.6 to Registrant’s Quarterly Report on Form 10-Q (File No. 001-04858) filed on October 31, 2007. | ||
*10.6 | Form of Non-Employee Director’s Restricted Stock Units Agreement under International Flavors & Fragrances Inc. 2000 Stock Award and Incentive Plan, incorporated by reference to Exhibit 10.7 to Registrant’s Report on Form 10-Q filed on October 31, 2007. | ||
*10.7 | 2010 Stock Award and Incentive Plan, as amended and restated as of May 6, 2015, incorporated by reference to Exhibit 10.8 to Registrant’s Quarterly Report on Form 10-Q filed on May 12, 2015. |
Exhibit Number | Description | |
*10.8 | Form of U.S. Stock Settled Appreciation Rights Agreement under the 2010 Stock Award and Incentive Plan, incorporated by reference to Exhibit 10.29 to Registrant’s Annual Report on Form 10-K (File No. 001-04858) filed on February 28, 2012. | |
*10.9 | Form of Restricted Stock Units Agreement - Non-Employee Director under the 2010 Stock Award and Incentive Plan, incorporated by reference to Exhibit 10.32 to Registrant’s Annual Report on Form 10-K (File No. 001-04858) filed on February 28, 2012. | |
*10.10 | Form of Long-Term Incentive Plan Award Agreement under the 2010 Stock Award and Incentive Plan, incorporated by reference to Exhibit 10.30 to Registrant’s Annual Report on Form 10-K filed on February 25, 2014. | |
*10.11 | Form of Restricted Stock Units Award Agreement under the 2010 Stock Award and Incentive Plan, incorporated by reference to Exhibit 10.1 to Registrant’s Quarterly Report on Form 10-Q filed on May 6, 2014. | |
*10.12 | Form of Equity Choice Program Award Agreement under the 2010 Stock Award and Incentive Plan, incorporated by reference to Exhibit 10.2 to Registrant’s Quarterly Report on Form 10-Q filed on May 6, 2014. | |
*10.13 | 2015 Stock Award and Incentive Plan, as amended and restated February 7, 2017. | |
*10.14 | Form of Annual Incentive Plan Award Agreement under the 2015 Stock Award and Incentive Plan, incorporated by reference to Exhibit 10.3 to Registrant’s Quarterly Report on Form 10-Q filed on May 12, 2015. | |
*10.15 | Form of Long-Term Incentive Plan Award Agreement under the 2015 Stock Award and Incentive Plan, incorporated by reference to Exhibit 10.4 to Registrant’s Quarterly Report on Form 10-Q filed on May 12, 2015. | |
*10.16 | Form of Equity Choice Program Award Agreement under the 2015 Stock Award and Incentive Plan, incorporated by reference to Exhibit 10.5 to Registrant’s Quarterly Report on Form 10-Q filed on May 12, 2015. | |
*10.17 | Form of Restricted Stock Units Award Agreement under the 2015 Stock Award and Incentive Plan, incorporated by reference to Exhibit 10.6 to Registrant’s Quarterly Report on Form 10-Q filed on May 12, 2015. | |
*10.18 | Form of Non-Employee Director Restricted Stock Units Award Agreement under the 2015 Stock Award and Incentive Plan, incorporated by reference to Exhibit 10.7 to Registrant’s Quarterly Report on Form 10-Q filed on May 12, 2015. | |
*10.19 | Form of Equity Choice Program Award Agreement under the 2015 Stock Award and Incentive Plan, incorporated by reference to Exhibit 10.1 to Registrant’s Quarterly Report on Form 10-Q filed on November 9, 2015. | |
*10.20 | Form of Long-Term Incentive Plan Award Agreement under the 2015 Stock Award and Incentive Plan, incorporated by reference to Exhibit 10.25 to Registrant’s Annual Report on Form 10-K filed on March 1, 2016. |
Exhibit Number | Description | ||
*10.21 | Amended and Restated Executive Severance Policy, as amended through and including February 7, 2017. | ||
*10.22 | Form of Director/Officer Indemnification Agreement, incorporated by reference to Exhibit 10.1 to Registrant’s Current Report on Form 8-K (File No. 001-04858) filed on July 28, 2008. | ||
*10.23 | Credit Agreement, dated as of November 9, 2011, amended and restated as of December 2, 2016, among the Registrant, International Flavors & Fragrances (Luxembourg) S.à.r.l., International Flavors & Fragrances (Nederland) Holding B.V., International Flavors & Fragrances I.F.F. (Nederland) B.V. and International Flavors & Fragrances (Greater Asia) PTE. Ltd., as borrowers, the banks, financial institutions and other institutional lenders party thereto, and Citibank, N.A. as administrative agent, incorporated by reference to Exhibit 10.28 to Registrant’s Current Report on Form 8-K filed on December 5, 2016. | ||
*10.24 | Form of Executive Death Benefit Program - Plan Agreement, incorporated by reference to Exhibit 10.27 to Registrant’s Annual Report on Form 10-K filed on February 28, 2012. | ||
*10.25 | Deferred Compensation Plan, as amended and restated December 12, 2011, incorporated by reference to Exhibit 10.28 to Registrant’s Annual Report on Form 10-K (File No. 001-04858) filed on February 28, 2012. | ||
*10.26 | Separation Agreement and General Release, dated as of October 11, 2016, between the Registrant and Alison Cornell. | ||
12 | Statement re: Computation of Ratios | ||
21 | List of Principal Subsidiaries. | ||
23 | Consent of PricewaterhouseCoopers LLP. | ||
31.1 | Certification of Andreas Fibig pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | ||
31.2 | Certification of Richard A. O'Leary pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | ||
32 | Certification of Andreas Fibig and Richard A. O'Leary pursuant to 18 U.S.C. Section 1350 as adopted pursuant to the Sarbanes-Oxley Act of 2002. | ||
101.INS | XBRL Instance Document | ||
101.SCH | XBRL Taxonomy Extensions Schema | ||
101.CAL | XBRL Taxonomy Extension Calculation Linkbase | ||
101.DEF | XBRL Taxonomy Extension Definition Linkbase | ||
101.LAB | XBRL Taxonomy Extension Label Linkbase | ||
101.PRE | XBRL Taxonomy Extension Presentation Linkbase |
* | Management contract or compensatory plan or arrangement |
ITEM 16. | FORM 10-K SUMMARY. |
INTERNATIONAL FLAVORS & FRAGRANCES INC. | ||
By: | /s/ Richard A. O'Leary | |
Name: | Richard A. O'Leary | |
Title: | Executive Vice President and Chief Financial Officer |
Signature | Title | Date | ||
/s/ Andreas Fibig | Chairman of the Board, Chief Executive Officer and Director (Principal Executive Officer) | February 28, 2017 | ||
Andreas Fibig | ||||
/s/ Richard A. O'Leary | Executive Vice President, Chief Financial Officer and Chief Accounting Officer | February 28, 2017 | ||
Richard A. O'Leary | ||||
/s/ Marcello V. Bottoli | Director | February 28, 2017 | ||
Marcello V. Bottoli | ||||
/s/ Linda B. Buck | Director | February 28, 2017 | ||
Linda B. Buck | ||||
/s/ Michael Ducker | Director | February 28, 2017 | ||
Michael Ducker | ||||
/s/ David R. Epstein | Director | February 28, 2017 | ||
David R. Epstein | ||||
/s/ Roger W. Ferguson, Jr. | Director | February 28, 2017 | ||
Roger W. Ferguson, Jr. | ||||
/s/ John F. Ferraro | Director | February 28, 2017 | ||
John F. Ferraro | ||||
/s/ Christina Gold | Director | February 28, 2017 | ||
Christina Gold | ||||
/s/ Henry W. Howell, Jr. | Director | February 28, 2017 | ||
Henry W. Howell, Jr. | ||||
/s/ Katherine M. Hudson | Director | February 28, 2017 | ||
Katherine M. Hudson | ||||
/s/ Dale F. Morrison | Director | February 28, 2017 | ||
Dale F. Morrison |
For the Year Ended December 31, 2016 | |||||||||||||||||||
Balance at beginning of period | Additions (deductions) charged to costs and expenses | Accounts written off | Translation adjustments | Balance at end of period | |||||||||||||||
Allowance for doubtful accounts | $ | 8,229 | $ | 2,452 | $ | (225 | ) | $ | (461 | ) | $ | 9,995 | |||||||
Valuation allowance on credit and operating loss carryforwards and other net deferred tax assets | 339,395 | (171,408 | ) | (1)(4) | — | (15,235 | ) | 152,752 | |||||||||||
For the Year Ended December 31, 2015 | |||||||||||||||||||
Balance at beginning of period | Additions (deductions) charged to costs and expenses | Accounts written off | Translation adjustments | Balance at end of period | |||||||||||||||
Allowance for doubtful accounts | $ | 9,147 | $ | 590 | $ | 60 | $ | (1,568 | ) | $ | 8,229 | ||||||||
Valuation allowance on credit and operating loss carryforwards and other net deferred tax assets | 355,568 | 16,445 | (2) | — | (32,618 | ) | 339,395 | ||||||||||||
For the Year Ended December 31, 2014 | |||||||||||||||||||
Balance at beginning of period | Additions (deductions) charged to costs and expenses | Accounts written off | Translation adjustments | Balance at end of period | |||||||||||||||
Allowance for doubtful accounts | $ | 10,493 | $ | 222 | $ | (554 | ) | $ | (1,014 | ) | $ | 9,147 | |||||||
Valuation allowance on credit and operating loss carryforwards and other net deferred tax assets | 503,990 | (92,204 | ) | (3) | — | (56,218 | ) | 355,568 |
1. | Purpose of the Plan |
2. | Definitions |
(a) | “Accounting Forfeiture Event” has the meaning set forth in Section 32. |
(c) | “Annual Limit” has the meaning set forth in Section 3. |
(a) | Stock Subject to the Plan |
(b) | Individual Award Limits |
(a) | Exercise Price |
(b) | Term and Exercise of Options |
(c) | Incentive Stock Options |
(a) | Calculation |
(b) | Discretionary Reduction |
(c) | Performance Measures |
(d) | Performance Schedules |
(e) | Committee Determinations |
(b) | Increase or Decrease in Issued Shares Without Consideration |
(c) | Certain Mergers and Other Transactions |
(d) | Other Changes |
(f) | No Other Rights |
(a) | Change in Control |
(b) | Effect of Change in Control on Performance Incentive Awards |
(c) | Termination of Employment |
(a) | Withholding |
Page | ||
1 | Purpose | 1 |
2 | Definitions | 1 |
3 | Eligibility | 7 |
4 | Administration | 7 |
5 | Termination of Employment | 8 |
6 | Termination of Employment by the Company Not for Cause or by a Tier I Employee for Good Reason Prior to or More than Two Years After a Change in Control | 8 |
7 | Termination by the Company Not for Cause or by Employee for Good Reason Within Two Years After a Change in Control | 9 |
8 | Effect of Federal Excise Tax | 11 |
9 | Conditions to Receipt of Severance Payments and Benefits | 12 |
10 | Other Provisions Applicable to Severance Payments and Benefits | 17 |
11 | Other Plans and Policies; Non‑Duplication of Payments or Benefits | 18 |
12 | Special Rules for Compliance with Code Section 409A | 18 |
13 | Miscellaneous | 20 |
(A) | For purposes of this Section 9(b)(ii), the term “Excess Compensation” means, the difference between (x) the fair market value of the cash or stock paid to or received by the Employee as part of its Severance Payments and Benefits less (y) the fair market value of the cash or stock that would have been paid to or received by the Employee had the financial statements requiring the misstatement or restatement been properly stated, in all cases as determined by the Committee in its sole discretion. |
Title | Severance Factor | Severance Continuation Period | CIC Severance Factor |
Tier I Employees | |||
Chief Executive Officer | 2 | 24 months | 3 |
All Other Tier I Employees | 1.5 | 18 months | 2 |
Tier II Employees | 1 | 12 months | 1.5 |
(a) | Separation Payment. In accordance with the ESP, the Company will pay you a cash severance amount equal to $1,364,160, less applicable withholdings, which represents 1.5X the sum of your gross annual base salary of $560,000, and a pro-rated target bonus of $349,440 (the “Separation Payment”), payable to you in 18 equal, monthly installment payments in accordance with the Company’s normal payroll practices (the “Severance Pay Period”), beginning the first pay period which is at least five (5) days after the Effective Date (as defined in Section 15(e) below) of this Agreement. |
(b) | Annual Incentive Plan Payment. You will be eligible to receive a prorated payment under, and in accordance with, the terms of the Annual Incentive Plan (“AIP”) award agreement for the 2016 fiscal year (the “AIP Agreement”). The amount payable to you, if any, shall be calculated and paid in accordance with the terms of the AIP Agreement based on the achievement of the pre-established performance goals applicable to the 2016 AIP. |
(c) | Medical, Dental & Life Insurance Coverage. You will be eligible to participate in continued group medical, dental and life insurance coverage at the active employee rate, during the Severance Pay Period, provided that the Company’s obligation to provide this continued coverage (i) is subject to you continuing to make your portion of the monthly premium payments to the appropriate health care insurer (such amounts shall be withheld from the monthly installments of the Severance Payment); and (ii) shall immediately cease in the event you become eligible for different employer provided coverage, and you must notify the Company within one (1) week of becoming eligible for such different coverage. After the Severance Pay Period ends, you will be entitled to apply for continuation coverage of medical and dental benefits, at no cost to the Company, pursuant to the Consolidated Omnibus Budget Reconciliation Act (“COBRA”) and New York State’s Insurance Law (mini-COBRA), if applicable, if you return an election form that will be provided to you under separate cover at your address on file with the Company. Please note that the Company’s offer to subsidize the COBRA or mini-COBRA premiums otherwise chargeable to you may adversely impact your eligibility to apply for individual insurance pursuant to the Affordable Care Act. You may wish to consult with a tax advisor or financial planner prior to electing COBRA or mini-COBRA continuation coverage or accepting the Company’s offer to subsidize such coverage during the Severance Pay Period. |
(d) | Outplacement Services. The Company will provide you with twelve months of outplacement services through Mullin International, 212-768-3900. The contact person is Keith Mullin. |
(e) | Equity Plan Benefits. The terms and conditions relating to the treatment of your Equity Choice Plan (“ECP”) awards, long-term incentive plan (“LTIP”) awards, or other equity awards in respect of the common stock of the Company (collectively, “Awards”), if any, shall be governed by the provisions of the applicable equity award plans and award agreements under the Company’s 2015 Stock Award and Incentive Plan (“SAIP”), as such equity plan, award agreements and SAIP may have been amended from time to time (collectively, “Award Documents”). In accordance with the respective Award Agreements, based on your termination as of the Separation Date: |
(f) | 401(k). If you are a participant in the Company’s 401(k) plan, you will receive written correspondence from Vanguard at the beginning of the month following the Separation Date, describing the vested balance in your 401(k) account and disposition options. In the meantime, if you need to contact Vanguard they can be reached at 800-320-6058 or vanguard.com. Your contributions, and the Company’s matching contributions on your behalf, to the 401(k) account will cease as of the Separation Date. |
(g) | Deferred Compensation Plan. If you are a participant in the Company’s Deferred Compensation Plan, you will receive written correspondence from IFF at the beginning of the month following the Separation Date, describing the vested balance in your deferred compensation account and distribution details. In the meantime, if you need to contact Vanguard they can be reached at 800-320-6058 or vanguard.com. Your contributions, and the Company’s matching contributions, if any, will cease as of the Separation Date. |
(h) | Termination of All Other Benefits. Except as specifically set out in this Section 2, all other benefits shall cease as of the Separation Date, including Accidental Death and Dismemberment Insurance, Vision Coverage and Short and Long-Term Disability Insurance. |
(a) | You acknowledge and agree that, other than as specifically set forth in this Agreement, you are not due any compensation or benefits under any benefit plan, program or policy of the Company or its affiliates, including without limitation compensation for unpaid salary, unpaid bonus, commissions, disability benefits, severance, or accrued or unused vacation time or vacation pay; that you have received all leave (paid or unpaid), commissions and notice periods to which you are entitled; you have not worked any uncompensated time (regular or overtime), have no known workplace injuries or occupational diseases, and no other remuneration or benefits are due to you arising from or relating to your employment with the Company or the termination of your employment. |
(b) | Payments under this Agreement will be made by the Company using such method of payment as it may determine in its discretion, including without limitation, by direct deposit to your bank account. Unless you advise the Company’s Payroll Department in writing of any changes to your banking information, any payments by direct deposit shall be into such bank account as is currently on file with the Payroll Department. |
(a) | You understand and agree that nothing in this Agreement limits your right to bring an action to enforce the terms of this Agreement or to bring a proceeding pursuant to the OWBPA to challenge the validity of the release of claims pursuant to the ADEA consistent with the Equal Employment Opportunity Commission (“EEOC”) Enforcement Guidance On Non-Waivable Employee Rights Under EEOC-Enforced Statutes dated April 11, 1997. |
(b) | You understand that the Release and Waiver contained in Section 4 above does not include a waiver of any claims or rights, which cannot be waived by law. |
(c) | You warrant that you have not filed any suit, charge, complaint, grievance or proceeding against any Releasee in any court of the United States or any state or local governmental subdivision thereof, or with any administrative agency or arbitration panel, concerning any claim, demand, issue or cause of action covered by this Agreement. |
(d) | You understand and agree that nothing in this Agreement, or any prior agreement you may have with any Releasee, does not prohibit or restrict you from lawfully communicating truthful information, or cooperating with, or otherwise assisting in an investigation by any governmental agency or self-regulatory organization regarding a possible violation of any federal law or responding to any inquiry from any such or organization, including an inquiry about the existence of this Agreement or its underlying facts, without first notifying Releasees. |
(a) | Security Agreement. You acknowledge that, at the time you became employed or during the course of your employment with the Company, you signed a Security Agreement, which is attached hereto as Exhibit B. You represent that you have fully abided by by the terms and conditions of the Security Agreement during the course of your employment. |
(b) | Non-Disparagement; Public Statements. Subject to your rights contained in Section 5(d), you agree not to directly or indirectly take any actions or make any statements that criticize, ridicule, disparage or are otherwise derogatory to the Company or any of the Releasees (as defined in Section 4) or any of their respective products or services, financial status or businesses, or that damage or is intended to damage the Company or any of the Releasees in any of their respective business relationships, or encourage the making of such statements or the taking of such actions by someone else. In addition, subject to your rights contained in Section 5(d), you agree not discuss, provide interviews or otherwise publicly make any statements about the Company or your experiences at the Company without the prior written consent of the Company. |
(c) | Confidential and Proprietary Information. |
(e) | Non-Solicitation. You agree that for a period of twenty-four (24) months following the Separation Date, you shall not, directly or indirectly, (i) solicit, induce, divert, employ or retain, or interfere with or attempt to influence the relationship of the Company or any of its affiliates, with any person or entity that is or was, during the last twelve (12) months of your employment with the Company, (A) an employee of the Company or any of its affiliates or (B) a person engaged to provide services to the Company or any of its affiliates, or (ii) interfere with or attempt to influence the relationship the Company or any of its affiliates has with any customer, supplier or other person with whom the Company or any of its affiliates does business. |
(f) | Non-Compete. You agree that for a period of twelve (12) months following the Separation Date, without the prior written consent of the Executive Vice President of Human Resources, you shall not, directly or indirectly, become employed by, render services for, serve as an agent or consultant to, or become a partner, member, principal, stockholder or other owner of, any of the following entities: Firmenich, S.A., Givaudan, S.A., V. Mane Fils, S.A., Robertet, S.A., Sensient Technologies Corporation, Symrise A.G., Takasago International Corporation, Wild Flavors GmbH, Kerry, or any of their respective affiliates. |
(g) | Return of Company Property. |
(h) | Intellectual Property / Work Product. |
(i) | Cooperation. You agree to make yourself available to testify on behalf of the Company in any action, suit, or proceeding, whether civil, criminal, administrative, or investigative, and to provide necessary information and meet and consult with members of management or other representatives of, or counsel to, the Company as reasonably requested. The Company's request for reasonable cooperation shall take into consideration your personal and business commitments and the amount of notice provided to you The Company will fully reimburse you for reasonable out-of-pocket expenses incurred in connection with such cooperation provided they are properly documented. |
(j) | Compliance with Company Policy. You represent that, during your employment with the Company, you have not engaged in willful misconduct or violation of a Company policy that is materially detrimental to the Company or in any action or inaction that would constitute grounds for being terminated for Cause, as such term is defined in the ESP. |
(k) | Resignation upon Termination. This Agreement represents your resignation from all board and board committee memberships, and all other offices and positions that you hold with or on behalf of the Company and all of its subsidiaries, affiliates, partnerships and joint ventures, effective as of the Separation Date. You agree to execute and return to the Company, simultaneously with the execution of this Agreement a letter in the form attached as Exhibit C, which separately confirms your resignation from such positions. |
(l) | Execution of Documentation. You agree to execute any other documentation reasonably requested by the Company from time to time, and to deliver the same to the Company within such time as may be reasonably specified by the Company. |
(a) | You and the Company hereby agree that the period and geographical areas of restriction imposed upon you by the provisions of Section 8 of this Agreement are fair and reasonable and are reasonably required for the protection of the Company. You acknowledge and agree that a breach by you of Section 8 of this Agreement, shall be deemed a material breach of this Agreement and that remedies at law will be inadequate to protect the Company and its affiliates in the event of such breach, and, without prejudice to any other rights and remedies otherwise available to the Company, you agree to the granting of injunctive relief in the Company’s favor in connection with any such breach or violation without proof of irreparable harm plus, if the Company prevails, its legal fees and costs to enforce these provisions. You expressly waive any security or bond that might otherwise be required in connection with such relief. |
(b) | You further acknowledge and agree that the Company’s obligation to make any payments to you or provide you with any benefit or right pursuant to this Agreement is subject to your compliance with your obligations under Section 8, and that in the event of a breach by you of any provision of Section 8, (i) you shall be obligated to immediately repay to the Company all amounts and benefits theretofore paid to or received by you pursuant to this Agreement; and/or (ii) you shall forfeit any further payments or benefits under this Agreement. |
(c) | You further acknowledge that under the terms of the SAIP and your other Award Documents, if you fail to comply with your obligations under Section 32(b) of the SAIP, including the non-competition, non-solicitation, confidentiality and cooperation obligations thereunder, or if a restatement or misstatement of the Company’s financial statements is required, some or all of your AIP, LTIP awards, ECP awards and other stock-based or cash awards may be subject to forfeiture or repayment in accordance with the terms of the respective Award Documents. However, nothing in the SAIP shall be deemed or construed to conflict with your rights under Section 5(d) of this Agreement. |
(a) | You expressly agree that this Agreement shall be assignable by the Company to a successor to any of the businesses of the Company and you hereby expressly consent to such assignment. |
(b) | In the event that any one or more of the provisions of this Agreement shall be or become invalid, illegal or unenforceable in any respect, including the restrictions in Section 8 but excluding the general release language, the validity, legality and enforceability of the remaining provisions contained herein shall not be affected thereby. If the general release language is found to be illegal or unenforceable, you agree to execute a binding replacement release. In the event that one or more terms or provisions of this Agreement are deemed invalid or unenforceable by the laws of New York or any other state or jurisdiction in which it is to be enforced, by reason of being vague or unreasonable as to duration or geographic scope of activities restricted, or for any other reason, the provision in question shall be immediately amended or reformed to the extent necessary to make it valid and enforceable by the court of such jurisdiction charged with interpreting and/or enforcing such provision. You agree and acknowledge that the provision in question, as so amended or reformed, shall be valid and enforceable as though the invalid or unenforceable portion had never been included herein. |
(a) | You have carefully read and understand this Agreement; |
(b) | The Company has advised you in writing to consult with an attorney of your choosing before signing this Agreement and you have, in fact, retained and been represented by legal counsel of your own choosing in connection with, and before signing, this Agreement, and that the time afforded to you to consider the terms of this Agreement has provided you with a full and fair opportunity to thoroughly discuss all aspects of your rights and this Agreement with your attorney; |
(c) | You acknowledge that you have had a reasonable period of twenty-one calendar days (the “Review Period”) to review and consider this Agreement before signing it. You understand that you may use as much of the Review Period as you wish before signing this Agreement. If you sign this Agreement prior to the expiration of the Review Period, you are acknowledging that you have voluntarily and knowingly waived the remainder of the Review Period with respect to such claims, and that the decision to accept a shortened period of time was not induced by the Company or any Released Party; |
(d) | You understand the consequences of entering into this Agreement, including with respect to the restraints in Section 8 and the release and waiver in Section 4, that this Agreement is LEGALLY BINDING and by signing it you give up certain rights; |
(e) | You understand that, following your execution of the Agreement, you will have a period of seven (7) calendar days to revoke this Agreement by delivering written notification addressed to the Company’s Executive Vice President, Chief Human Resources Officer, 521 West 57th Street, New York, NY 10019-2960, no later than the close of business on the seventh (7th) calendar day after you sign it (except that if the seventh (7th) calendar day after you sign the Agreement falls on a Saturday, Sunday or holiday observed by the Company, you shall have until the conclusion of the immediately next business day) (the “Revocation Period”). For purposes of this Agreement, the “Effective Date” as used herein shall mean the first (1st) calendar day after the Revocation Period expires without you revoking the Agreement. |
(f) | As set forth in Section 4 herein, you KNOWINGLY AND VOLUNTARILY RELEASE the Releasees from any and all claims you may have, known or unknown, as of the date you sign this Agreement, in exchange for the benefits you have obtained in the Agreement, and that these benefits are in addition to any benefit you would have otherwise received if you did not sign this Agreement; |
(g) | If you refuse to sign this Agreement within the Review Period or revoke this Agreement during the Revocation Period, this Agreement will not be effective and enforceable and you will not receive any of the payments or benefits set forth in Section 2, other than those you have a right to receive by law, if any; and |
(h) | You have voluntarily chosen to enter into this Agreement and have not been forced or pressured in any way to sign it by any person or party. |
Alison Cornell | International Flavors & Fragrances Inc. |
(Amounts in thousands except Ratio of Earnings to Fixed Charges) | Fiscal Year | ||||||||||||||||||
Earnings: | 2016 | 2015 | 2014 | 2013 | 2012 | ||||||||||||||
Add: | |||||||||||||||||||
Income before taxes | $ | 523,717 | $ | 539,101 | $ | 549,061 | $ | 485,210 | $ | 443,415 | |||||||||
Fixed charges | 68,838 | 63,158 | 63,098 | 64,194 | 59,009 | ||||||||||||||
Amortization of capitalized interest | 4,723 | 4,198 | 3,734 | 3,087 | 2,864 | ||||||||||||||
Less: | |||||||||||||||||||
Capitalized interest | (4,035 | ) | (5,893 | ) | (5,572 | ) | (6,629 | ) | (6,762 | ) | |||||||||
Total Earnings available for fixed charges | $ | 593,243 | $ | 600,564 | $ | 610,321 | $ | 545,862 | $ | 498,526 | |||||||||
Fixed Charges: | |||||||||||||||||||
Interest expense | $ | 52,989 | $ | 46,062 | $ | 46,067 | $ | 46,767 | $ | 41,753 | |||||||||
Capitalized interest | 4,035 | 5,893 | 5,572 | 6,629 | 6,762 | ||||||||||||||
Portion of rental expense which represents interest factor(1) | 11,814 | 11,203 | 11,459 | 10,798 | 10,494 | ||||||||||||||
Total Fixed charges | $ | 68,838 | $ | 63,158 | $ | 63,098 | $ | 64,194 | $ | 59,009 | |||||||||
Ratio of Earnings to Fixed Charges | 8.62 | % | 9.51 | % | 9.67 | % | 8.5 | % | 8.45 | % |
Name of Entity | Jurisdiction |
International Flavors & Fragrances S.R.L. | Argentina |
Bush Boake Allen Australia Pty Ltd | Australia |
IFF Australia Holdings Pty Ltd | Australia |
International Flavours & Fragrances (Australia) Pty Ltd | Australia |
Lucas Meyer Cosmetics Australia Pty Ltd | Australia |
Southern Cross Botanicals Pty Ltd | Australia |
IFF Essências e Fragrâncias Ltda. | Brazil |
Bush Boake Allen do Brasil Indústria e Comércio Ltda. | Brazil |
International Flavors & Fragrances (Canada) Ltd. | Canada |
Lucas Meyer Cosmetics Canada Inc. | Canada |
Les Laboratories Bio ForeXtra Inc.2 | Canada |
David Michael & Company (Canada) 1986 Ltd. | Canada |
Bush Boake Allen Chile S.A. | Chile |
IFF Sabores y Fragancias de Chile Ltda. | Chile |
International Flavors & Fragrances I.F.F. (Chile) Limitada | Chile |
International Flavors & Fragrances (Hangzhou) Co., Ltd.1 | China |
IFF Flavors & Fragrances (Hangzhou) Trading Co., Ltd. | China |
International Flavors & Fragrances (Zhejiang) Co., Ltd. | China |
International Flavors & Fragrances (China) Ltd. | China |
David Michael Hong Kong Limited | China |
David Michael (Beijing Flavor Co. Ltd. | China |
International Flavors and Fragrances Colombia S.A.S. | Colombia |
MISR Company for Aromatic products (S.A.E.) | Egypt |
A. Boake, Roberts And Company (Holding), Limited | England |
International Flavours & Fragrances (CIL) Limited | England |
Bush Boake Allen Enterprises Limited | England |
Bush Boake Allen Limited | England |
Bush Boake Allen (Pension Trustees) Limited | England |
Bush Boake Allen Pension Investments Limited | England |
Bush Boake Allen Holdings (U.K.) Limited | England |
IFF Augusta Limited | England |
IFF Augusta II Limited | England |
International Flavours & Fragrances (GB) Holdings Limited | England |
International Flavours & Fragrances I.F.F. (Great Britain) Limited | England |
Southern Cross Botanicals UK Limited | England |
International Flavors & Fragrances I.F.F. (France) SAS | France |
International Flavors & Fragrances France Holding I SAS | France |
International Flavors & Fragrances France Holding II SAS | France |
International Flavors & Fragrances France Holding III SAS | France |
Lucas Meyer Cosmetics | France |
Institut Européen de Biologie Cellulaire | France |
David Michael Europe S.A.S. | France |
International Flavors & Fragrances IFF (Deutschland) GmbH | Germany |
IFF Worldwide (Gibraltar) Limited | Gibraltar |
IFF (Gibraltar) Holdings | Gibraltar |
International Flavors & Fragrances (Hong Kong) Limited | Hong Kong |
Essence Scientific Research Private Limited | India |
Fragrance Holdings Private Limited | India |
International Flavours & Fragrances India Private Limited3 | India |
P.T. Essence Indonesia | Indonesia |
IFF Capital Services | Ireland |
IFF Financial Services | Ireland |
Irish Flavours and Fragrances Limited | Ireland |
Aromatics Holdings Limited | Ireland |
International Flavors & Fragrances Irish Acquisition Company Limited | Ireland |
Aromor Flavors and Fragrances Ltd. | Israel |
BKF Vision Ltd | Israel |
K-Vision Consulting and Investments Ltd | Israel |
M.P. Equity Holdings Ltd | Israel |
International Flavors and Fragrances I.F.F. (Israel) Ltd. | Israel |
International Flavors e Fragrances IFF (Italia) S.r.l. | Italy |
International Flavors & Fragrances (Japan) Ltd. | Japan |
IFF (Korea) Inc. | Korea |
IFF (Gibraltar) Holdings (Luxembourg) S.C.S. | Luxembourg |
International Flavors & Fragrances (Luxembourg) S.à r.l. | Luxembourg |
International Flavors & Fragrances Ardenne S.à r.l. | Luxembourg |
International Flavors & Fragrances (Malaysia) Sdn. Bhd. | Malaysia |
International Flavours & Fragrances (Mauritius) Ltd | Mauritius |
Bush Boake Allen Controladora, S.A. de C.V. | Mexico |
IFF Mexico Manufactura, S.A. de C.V. | Mexico |
International Flavors & Fragrances (Mexico), S. de R.L. de C.V. | Mexico |
Bush Boake Allen Benelux B.V. | Netherlands |
International Flavors & Fragrances (Nederland) Holding B.V. | Netherlands |
International Flavors & Fragrances I.F.F. (Nederland) B.V. | Netherlands |
IFF Luxar C.V. | Netherlands |
IFF Worldwide C.V. | Netherlands |
David Michael Netherlands B.V. | Netherlands |
International Flavours & Fragrances (NZ) Limited | New Zealand |
Bush Boake Allen (New Zealand) Limited | New Zealand |
International Flavors & Fragrances (Philippines), Inc. | Philippines |
International Flavors & Fragrances (Poland) Sp. z o.o. | Poland |
International Flavors & Fragrances I.F.F. (Rus) | Russia |
International Flavors & Fragrances (Greater Asia) Pte. Ltd | Singapore |
International Flavors & Fragrances (Asia Pacific) Pte Ltd | Singapore |
Lucas Meyer Cosmetics Asia Pte. Ltd. | Singapore |
International Flavors and Fragrances IFF (South Africa) | South Africa |
International Flavors & Fragrances I.F.F. (España), S.A. | Spain |
IFF Latin American Holdings (España), S.L. | Spain |
IFF Benicarló, S.L. | Spain |
International Flavors & Fragrances I.F.F. (Norden) AB | Sweden |
International Flavors & Fragrances I.F.F. (Schweiz) AG | Switzerland |
International Flavours & Fragrances (Thailand) Limited | Thailand |
IFF Aroma Esans Sanayi Ve Ticaret Anonim Şirketi | Turkey |
IFF Turkey Aroma Ve Esans Ürünleri Satiş Ticaret Anonim Şirketi | Turkey |
International Flavors & Fragrances (Middle East) FZ-LLC | United Arab Emirates |
International Flavors & Fragrances (Vietnam) Limited Liability Company | Vietnam |
Bush Boake Allen Zimbabwe (Private) Limited | Zimbabwe |
International Flavors & Fragrances (Zimbabwe) (Private) Ltd. | Zimbabwe |
Aromor Flavors and Fragrances Inc. | Delaware |
Asian Investments, Inc. | Delaware |
Fragrance Ingredients Holdings Inc. | Delaware |
IFF Augusta Holdings LLC | Delaware |
IFF Chemical Holdings Inc. | Delaware |
IFF Delaware Holdings, LLC | Delaware |
International Flavors & Fragrances (Caribe) Inc. | Delaware |
Lucas Meyer Cosmetics USA, Inc. | Delaware |
International Flavors & Fragrances Holdings, LLC | Delaware |
IFF International Inc. | New York |
van Ameringen-Haebler, Inc. | New York |
Henry H. Ottens Manufacturing Co., Inc. | Pennsylvania |
David Michael & Co., Inc. | Pennsylvania |
LHFS, LLC | Pennsylvania |
Bush Boake Allen Inc. | Virginia |
/s/ PricewaterhouseCoopers LLP |
New York, New York |
February 28, 2017 |
1. | I have reviewed this Annual Report on Form 10-K of International Flavors & Fragrances Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
By: | /s/ Andreas Fibig |
Name: | Andreas Fibig |
Title: | Chairman of the Board and Chief Executive Officer |
1. | I have reviewed this Annual Report on Form 10-K of International Flavors & Fragrances Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
By: | /s/ Richard A. O'Leary |
Name: | Richard A. O'Leary |
Title: | Executive Vice President and Chief Financial Officer |
By: | /s/ Andreas Fibig |
Name: | Andreas Fibig |
Title: | Chairman of the Board and Chief Executive Officer |
By: | /s/ Richard A. O'Leary |
Name: | Richard A. O'Leary |
Title: | Executive Vice President and Chief Financial Officer |
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Document and Entity Information - USD ($) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2016 |
Feb. 15, 2017 |
Jun. 30, 2016 |
|
Entity Information [Line Items] | |||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Period End Date | Dec. 31, 2016 | ||
Document Fiscal Year Focus | 2016 | ||
Document Fiscal Period Focus | FY | ||
Trading Symbol | IFF | ||
Entity Registrant Name | INTERNATIONAL FLAVORS & FRAGRANCES INC | ||
Entity Central Index Key | 0000051253 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Current Reporting Status | Yes | ||
Entity Voluntary Filers | No | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Common Stock, Shares Outstanding | 79,037,680 | ||
Entity Public Float | $ 10,040,332,045 |
CONSOLIDATED STATEMENT OF INCOME AND COMPREHENSIVE INCOME - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Income Statement [Abstract] | |||
Net sales | $ 3,116,350 | $ 3,023,189 | $ 3,088,533 |
Cost of goods sold | 1,717,280 | 1,671,590 | 1,726,383 |
Gross profit | 1,399,070 | 1,351,599 | 1,362,150 |
Research and development expenses | 254,263 | 246,101 | 253,640 |
Selling and administrative expenses | 566,224 | 494,517 | 507,563 |
Restructuring and other charges, net | (1,700) | 7,594 | 1,298 |
Amortization of acquisition-related intangibles | 23,763 | 15,040 | 7,328 |
Gain on sales of fixed assets | (10,836) | 0 | 0 |
Operating profit | 567,356 | 588,347 | 592,321 |
Interest expense | 52,989 | 46,062 | 46,067 |
Other (income) expense, net | (9,350) | 3,184 | (2,807) |
Income before taxes | 523,717 | 539,101 | 549,061 |
Taxes on income | 118,686 | 119,854 | 134,518 |
Net income | 405,031 | 419,247 | 414,543 |
Other comprehensive income (loss): | |||
Foreign currency translation adjustments | (54,526) | (124,157) | (69,064) |
(Losses) gains on derivatives qualifying as hedges | (1,797) | (2,970) | 16,383 |
Pension and postretirement liability adjustment | (10,332) | 54,117 | (95,038) |
Comprehensive income | $ 338,376 | $ 346,237 | $ 266,824 |
Net income per share - basic (in dollars per share) | $ 5.07 | $ 5.19 | $ 5.09 |
Net income per share - diluted (in dollars per share) | $ 5.05 | $ 5.16 | $ 5.06 |
CONSOLIDATED BALANCE SHEET (Parenthetical) - $ / shares |
Dec. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Common stock, par value | $ 0.125 | $ 0.125 |
Common stock, shares authorized | 500,000,000 | 500,000,000 |
Common stock, shares issued | 115,858,190 | 115,858,190 |
Common stock, shares outstanding | 79,213,037 | 80,022,291 |
Treasury stock, shares at cost | 36,645,153 | 35,835,899 |
CONSOLIDATED STATEMENT OF CASH FLOWS (Parenthetical) $ in Millions |
12 Months Ended |
---|---|
Dec. 31, 2015
USD ($)
| |
Statement of Cash Flows [Abstract] | |
Business acquisition contingent consideration | $ 15 |
CONSOLIDATED STATEMENT OF SHAREHOLDERS EQUITY (Parenthetical) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
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Statement of Stockholders' Equity [Abstract] | |||
Tax effect of gain (losses) on derivatives qualifying as hedges | $ (227) | $ 463 | $ (2,526) |
Tax effect of pension liability and postretirement adjustment | $ 3,049 | $ (29,452) | $ 36,554 |
Cash dividends declared, per share | $ 2.40 | $ 2.06 | $ 1.72 |
Nature of Operations and Summary of Significant Accounting Policies |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Nature of Operations and Summary of Significant Accounting Policies | NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Operations International Flavors & Fragrances Inc. and its subsidiaries (the “Registrant,” “IFF,” “the Company,” “we,” “us” and “our”) is a leading creator and manufacturer of flavors and fragrances (including cosmetic active ingredients) used to impart or improve flavor or fragrance in a wide variety of consumer products. Our products are sold principally to manufacturers of perfumes and cosmetics, hair and other personal care products, soaps and detergents, cleaning products, dairy, meat and other processed foods, beverages, snacks and savory foods, sweet and baked goods, and pharmaceutical and oral care products. Fiscal Year End The Company has historically operated on a 52/53 week fiscal year generally ending on the Friday closest to the last day of the year. For ease of presentation, December 31 is used consistently throughout the financial statements and notes to represent the period-end date. The 2016 and 2015 fiscal years were 52 week periods and the 2014 fiscal year was a 53 week period. For the 2016, 2015 and 2014 fiscal years, the actual closing dates were December 30, January 1 and January 2, respectively. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts and accompanying disclosures. These estimates are based on management’s best knowledge of current events and actions the Company may undertake in the future. Actual results may ultimately differ from estimates. Principles of Consolidation The consolidated financial statements include the accounts of International Flavors & Fragrances Inc. and those of its subsidiaries. Significant intercompany balances and transactions have been eliminated. To the extent a subsidiary is not wholly owned, any related noncontrolling interest is included as a separate component of Shareholders’ Equity. Any applicable expense (income) attributable to the noncontrolling interest is included in Other expense, net in the accompanying Consolidated Statement of Income and Comprehensive Income due to its immateriality and, as such, is not presented separately. Revenue Recognition The Company recognizes revenue when the earnings process is complete. This generally occurs when (i) title and risk of loss have been transferred to the customer in accordance with the terms of sale and (ii) collection is reasonably assured. Sales are reduced, at the time revenue is recognized, for applicable discounts, rebates and sales allowances based on historical experience. Related accruals are included in Other current liabilities in the accompanying Consolidated Balance Sheet. Foreign Currency Translation The Company translates the assets and liabilities of non-U.S. subsidiaries into U.S. dollars at year-end exchange rates. Income and expense items are translated at average exchange rates during the year. Cumulative translation adjustments are shown as a separate component of Shareholders’ Equity. Research and Development Research and development (“R&D”) expenses relate to the development of new and improved flavors or fragrances, technical product support and compliance with governmental regulation. All research and development costs are expensed as incurred. Cash Equivalents Cash equivalents include highly liquid investments with maturities of three months or less at date of purchase. Accounts Receivable The Company sells certain accounts receivable on a non-recourse basis to unrelated financial institutions under “factoring” agreements that are sponsored, solely and individually, by certain customers. The Company accounts for these transactions as sale of receivables, removes the receivables sold from its financial statements, and records cash proceeds when received by the Company. The beneficial impact on cash provided by operations from participating in these programs increased approximately $34.0 million, $3.4 million and $33.1 million in 2016, 2015 and 2014, respectively. The cost of participating in these programs was immaterial to our results in all periods. Inventories Inventories are stated at the lower of cost (on a weighted-average basis) or market. Our inventories consisted of the following:
Long-Lived Assets Property, Plant and Equipment Property, plant and equipment are recorded at cost. Depreciation is calculated on a straight-line basis, principally over the following estimated useful lives: buildings and improvements, 10 to 40 years; machinery and equipment, 3 to 20 years; information technology hardware and software, 3 to 7 years; and leasehold improvements which are included in buildings and improvements, the estimated life of the improvements or the remaining term of the lease, whichever is shorter. Finite-Lived Intangible Assets Finite-lived intangible assets include customer relationships, patents, trade names, technological know-how and other intellectual property valued at acquisition and amortized on a straight-line basis over the following estimated useful lives: customer relationships, 11 - 24 years; patents, 10 - 15 years; trade names, approximately 30 years and technological know-how, 19 - 28 years. The Company reviews long-lived assets for impairment when events or changes in business conditions indicate that their full carrying value may not be recovered. An estimate of undiscounted future cash flows produced by an asset or group of assets is compared to the carrying value to determine whether impairment exists. If assets are determined to be impaired, the loss is measured based on an estimate of fair value using various valuation techniques, including a discounted estimate of future cash flows. Goodwill Goodwill represents the difference between the total purchase price and the fair value of identifiable assets and liabilities acquired in business acquisitions. In assessing the potential for impairment of goodwill, management uses the most current actual and forecasted operating data available and current market-based assumptions in accordance with the criteria in FASB Accounting Standards Codification ("ASC") 350. The Company has identified four reporting units: (1) Flavors, (2) Fragrance Compounds, (3) Fragrance Ingredients and (4) Cosmetic Actives Ingredients. These reporting units were determined based on the level at which the performance is measured and reviewed by segment management. The Company performs an annual goodwill impairment test utilizing the two-step approach for the Flavors, Fragrance Compounds, Fragrance Ingredients and Cosmetic Actives Ingredients reporting units, by assessing the fair value of the reporting units based on discounted cash flows. The Company completed its annual goodwill impairment test as of November 30, 2016, which indicated no impairment of goodwill, as the estimated fair values substantially exceeded the carrying values of each of these reporting units. Income Taxes The Company accounts for taxes under the asset and liability method. Under this method, deferred income taxes are recognized for temporary differences between the financial statement and tax return bases of assets and liabilities, based on enacted tax rates and other provisions of the tax law. The effect of a change in tax laws or rates on deferred tax assets and liabilities is recognized as income in the period in which such change is enacted. Future tax benefits are recognized to the extent that the realization of such benefits is more likely than not, and a valuation allowance is established for any portion of a deferred tax asset that management believes may not be realized. The Company recognizes uncertain tax positions that it has taken or expects to take on a tax return. Pursuant to accounting requirements, the Company first determines whether it is “more likely than not” its tax position will be sustained if the relevant tax authority were to audit the position with full knowledge of all the relevant facts and other information. For those tax positions that meet this threshold, the Company measures the amount of tax benefit based on the largest amount of tax benefit that it has a greater than 50% chance of realizing in a final settlement with the relevant authority. Those tax positions failing to qualify for initial recognition are recognized in the first interim period in which they meet the more likely than not standard. The Company maintains a cumulative risk portfolio relating to all of its uncertainties in income taxes in order to perform this analysis, but the evaluation of its tax positions requires significant judgment and estimation in part because, in certain cases, tax law is subject to varied interpretation, and whether a tax position will ultimately be sustained may be uncertain. The Company regularly repatriates a portion of current year earnings from select non–U.S. subsidiaries. No provision has been made for additional taxes on undistributed earnings of subsidiary companies that are intended and planned to be indefinitely invested in such subsidiaries. The Company intends to, and has plans to, reinvest these earnings indefinitely in its foreign subsidiaries to fund local operations, capital projects and/or aquisitions. Interest and penalties related to unrecognized tax benefits are recognized as a component of income tax expense. Retirement Benefits Current service costs of retirement plans and postretirement health care and life insurance benefits are accrued. Prior service costs resulting from plan improvements are amortized over periods ranging from 10 to 20 years. Financial Instruments Derivative financial instruments are used to manage interest and foreign currency exposures. The gain or loss on the hedging instrument is recorded in earnings at the same time as the transaction being hedged is recorded in earnings. The associated asset or liability related to the open hedge instrument is recorded in Prepaid expenses and Other current assets or Other current liabilities, as applicable. The Company records all derivative financial instruments on the balance sheet at fair value. Changes in a derivative’s fair value are recognized in earnings unless specific hedge criteria are met. If the derivative is designated as a fair value hedge, the changes in the fair value of the derivative and of the hedged item attributable to the hedged risk are recognized in Net income. If the derivative is designated as a cash flow hedge, the effective portions of changes in the fair value of the derivative are recorded in Accumulated other comprehensive income ("AOCI") in the accompanying Consolidated Balance Sheet and are subsequently recognized in Net income when the hedged item affects earnings. Ineffective portions of changes in the fair value of cash flow hedges, if any, are recognized as a charge or credit to earnings. Software Costs The Company capitalizes direct internal and external development costs for certain significant projects associated with internal-use software and amortizes these costs over 7 years. Neither preliminary evaluation costs nor costs associated with the software after implementation are capitalized. Costs related to projects that are not significant are expensed as incurred. Shipping and Handling Costs Net sales include shipping and handling charges billed to customers. Cost of goods sold includes all costs incurred in connection with shipping and handling. Net Income Per Share Net income per share is based on the weighted average number of shares outstanding. A reconciliation of shares used in the computations of basic and diluted net income per share is as follows:
An immaterial amount of Stock-Settled Appreciation Rights (“SSARs”) were excluded from the computation of diluted net income per share at December 31, 2016 and 2015. There were no stock options or SSARs excluded from the computation in 2014. The Company has issued shares of Purchased Restricted Stock ("PRS") and Purchased Restricted Stock Units (“PRSUs”) which contain nonforfeitable rights to dividends and thus are considered participating securities which are required to be included in the computation of basic and diluted earnings per share pursuant to the two-class method. The two-class method was not presented since the difference between basic and diluted net income per share for both common shareholders, PRS and PRSU holders was less than $0.01 per share for each year and the number of PRS and PRSUs outstanding as of December 31, 2016, 2015 and 2014 was immaterial. Net income allocated to such PRS and PRSUs during 2016, 2015 and 2014 was approximately $1.0 million, $2.0 million and $2.4 million, respectively. Stock-Based Compensation Compensation cost of all stock-based awards is measured at fair value on the date of grant and recognized over the service period for which awards are expected to vest. The cost of such stock-based awards is principally recognized on a straight-line attribution basis over their respective vesting periods, net of estimated forfeitures. New Accounting Standards In January 2017, the Financial Accounting Standards Board (“FASB”) issued amendments to the Business Combination guidance which clarifies the definition of a business in order to assist companies when evaluating whether transactions should be accounted for as acquisitions or disposals of assets or businesses. This guidance will be effective prospectively for annual and interim periods beginning after December 15, 2017. This guidance may have an impact on accounting for future acquisitions. In January 2017, the FASB issued an amendment to the Goodwill Impairment guidance which eliminates Step 2 from the goodwill impairment test. This guidance will be effective for fiscal years beginning after December 15, 2019. Early adoption is permitted. The Company plans to adopt this guidance in accordance with its existing annual impairment review policy in fiscal year 2017. The Company does not expect this adoption to have an impact on its consolidated financial statements. In October 2016, the FASB issued authoritative guidance which allows for the immediate recognition of current and deferred income tax impact on intra-entity asset transfers, excluding inventory. This guidance will be effective for fiscal years beginning after December 15, 2017. Early adoption is only permitted as of the beginning of an annual reporting period. This guidance must be adopted using a modified retrospective transition. The Company plans to adopt this guidance in the first quarter of fiscal year 2017 and accordingly, will record a cumulative-effect adjustment directly to Retained earnings of approximately $47 million. In August 2016, the FASB issued authoritative guidance which requires changes to the classification of certain activities within the statement of cash flows. This guidance will be effective for annual and interim periods beginning after December 15, 2017. Early adoption will be permitted for all entities. The Company does not expect this adoption to have a significant impact on its statement of cash flows. In March 2016, the FASB issued authoritative guidance which requires changes to several aspects of the accounting for share-based payment transactions, including the treatment of income tax consequences, classification of awards as either equity or liabilities, and classification of certain items on the statement of cash flows. This guidance will be effective for annual and interim periods beginning after December 15, 2016. The standard requires that employee taxes paid when an employer withholds shares be presented in the Consolidated Statement of Cash Flows as a financing activity instead of an operating activity. The Company expects to adopt this change retroactively and that the impact of this aspect of the standard on the Consolidated Statement of Cash Flows will be approximately $13-$25 million on an annual basis. In addition, the standard requires that excess tax benefits presented in the Consolidated Statement of Cash Flows be classified as an operating activity instead of a financing activity. The Company expects to adopt this change retroactively and that the impact of this aspect of the standard on the Consolidated Statement of Cash Flows will be approximately $5-$12 million on an annual basis. The standard also requires all excess tax benefits/deficiencies be recognized as income tax expense/benefit in the income statement to be applied on a prospective basis. Depending on the future volatility of the stock price, the impact of this aspect of the standard could have a material impact on tax expense on its Consolidated Statement of Income and Comprehensive Income. Additionally, the standard allows the Company to make an entity-wide accounting policy election to either estimate the number of awards that are expected to vest or account for forfeitures as they occur. The Company plans to continue to account for forfeitures using an estimate of awards expected to be forfeited. Lastly, the standard requires that the threshold for equity classification of awards permits withholding up to the maximum statutory tax rates in the applicable jurisdictions. The adoption of this aspect of the standard will impact future vestings. In February 2016, the FASB issued authoritative guidance which requires changes to the accounting for leases. The new guidance establishes a new lease accounting model, that requires entities to record assets and liabilities related to leases on the balance sheet for certain types of leases. The guidance will be effective for annual and interim periods beginning after December 31, 2018. Early adoption will be permitted for all entities. The Company expects the adoption of this guidance will result in significant increases to assets and liabilities on its Consolidated Balance Sheet and is still evaluating the impact on its Consolidated Statement of Income and Comprehensive Income. In September 2015, the FASB issued authoritative guidance related to the adjustments made during the measurement period for items in a business combination. Specifically, the new guidance requires adjustments related to the finalization of estimates to be recorded in the period when they are determined and to provide certain additional disclosures. This guidance is effective for fiscal years beginning after December 15, 2015. The Company adopted this guidance during 2016 and the adoption did not have a significant impact on its consolidated financial statements. In May 2015, the FASB issued authoritative guidance which removed the requirement to categorize within the fair value hierarchy investments for which fair values are estimated using the net asset value practical expedient. The Company has adopted this guidance for the year ended December 31, 2016 and has reclassified prior year amounts for the year ended December 31, 2015 as disclosed in Note 14 to the Consolidated Financial Statements. In April 2015, the FASB issued authoritative guidance which requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability. This guidance is effective for annual and interim periods beginning after December 15, 2015. The Company adopted this guidance retrospectively in 2016 and accordingly has reclassified all debt issuance costs on long-term debt as a direct deduction from the carrying amount of the debt liability in the Consolidated Balance Sheet as of December 31, 2015. The adoption of this guidance did not have a significant impact on its consolidated financial statements. In May 2014, the FASB issued authoritative guidance that provides for a comprehensive model to be used in accounting for revenue arising from contracts with customers. Under this standard, revenue will be recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. This guidance is applicable to all entities and is effective for annual and interim periods beginning after December 15, 2017. Adoption as of the original effective date is permitted. Accordingly, the Company is required to adopt this standard in the first quarter of fiscal year 2018. Companies have the option to apply the new guidance under a retrospective approach to each prior reporting period presented or a modified retrospective approach with the cumulative effect of initially applying the new guidance recognized at the date of initial application within the Consolidated Balance Sheet. The Company is evaluating the impact of the new standard, including updates to the standard that have been proposed by the FASB. In particular, the Company has reviewed the nature of its larger customer relationships and is in the process of reviewing the nature of potential regional variations in all aspects of its customer base regardless of size. Based on the work performed to date, the Company expects to conduct further review and analysis of certain areas that may lead to changes in the manner in which the Company recognizes revenue, including the customized nature of the product, consignment arrangements, rebates, upfront costs, shipping terms and documentation other than formal contracts. As a result, the financial statement impact has not yet been determined. The Company is also currently evaluating the method of adoption and the potential impacts to the consolidated financial statements and related disclosures. Reclassifications and Revisions Certain prior year amounts have been reclassified and revised to conform with current year presentation. The Consolidated Balance Sheet as of December 31, 2015, has been revised to properly reflect in-bound goods in transit. Accordingly, Inventory and Accounts payable decreased by $17.0 million. This adjustment was not material to the previously-issued financial statements. |
Restructuring and Other Charges |
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Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Other Charges | RESTRUCTURING AND OTHER CHARGES Restructuring and other charges primarily consist of separation costs for employees including severance, outplacement and other benefit costs. 2015 Severance and Contingent Consideration Charges During the fourth quarter of 2015, the Company established a series of initiatives intended to streamline its management structure, simplify decision-making and accountability, better leverage and align its capabilities across the organization and improve efficiency of its global manufacturing and operations network. As a result, in 2015, the Company recorded a pre-tax charge of $7.6 million, included in Restructuring and other charges, net, related to severance and related costs pertaining to approximately 150 positions that will be affected. During 2016, the Company made payments of $2.9 million and recorded accelerated depreciation expense of $0.7 million. In addition, during 2016, the Company recorded a credit of $1.7 million related to the reversal of severance accruals that were determined to be no longer required. The total cost of the plan is now expected to be approximately $8.8 million with the remaining charges related principally to accelerated depreciation. The Company expects the plan to be fully completed the second half of 2017. Separately, in 2015, the Company recorded a charge of $7.2 million, included in Selling and administrative expenses, associated with the acceleration from 2016 to 2015 of contingent consideration payments from the Aromor acquisition that were triggered by certain of the management structure changes noted above. Fragrance Ingredients Rationalization - 2014 In 2014, the Company closed its fragrance ingredients manufacturing facility in Augusta, Georgia and consolidated production into other Company facilities. In connection with this closure, the Company incurred charges of $13.8 million, consisting primarily of $10.3 million in accelerated depreciation of fixed assets, $2.2 million in personnel-related costs and $1.3 million in plant shutdown and other related costs. The Company recorded total charges of $7.4 million during 2013, consisting of $2.2 million of pre-tax charges related to severance included in Restructuring and other charges, net and $5.2 million of non-cash charges related to accelerated depreciation included in Cost of goods sold. During 2014, the Company recorded $1.3 million of plant shutdown and other related costs included in Restructuring and other charges, net as well as an additional $5.1 million of non-cash charges related to accelerated depreciation included in Cost of goods sold. As a result of this closure, 43 positions have been eliminated. During 2015, the Company recorded a net credit of $0.5 million principally related to the reversal of severance accruals. Rollforward of Liability Movements in related accruals during 2014, 2015 and 2016 are as follows:
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Acquisitions (Notes) |
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Dec. 31, 2016 | |
Business Combinations [Abstract] | |
Acquisitions | ACQUISITIONS Fragrance Resources On January 17, 2017, the Company completed the acquisition of Fragrance Resources, a privately-held fragrance company with facilities in Germany, North America, France, and China. The acquisition will be accounted for under the purchase method. Fragrance Resources was acquired to strengthen the North American and German fragrances business. The Company paid approximately Euro 142 million (approximately $150.5 million) including approximately Euro 6.8 million (approximately $7.2 million) of cash acquired for this acquisition, which was funded from existing resources. Due to the limited time since closing and the fact that the purchase price allocation has not been completed, the Company has not yet calculated the actual amounts related to the assets and liabilities acquired in the Fragrance Resources transaction. As a result, certain required disclosures have not been made. The purchase price allocation is expected to be completed by the third quarter of 2017. No pro forma financial information for 2016 is presented as the acquisition was not material to the consolidated financial statements. 2016 Activity David Michael On October 7, 2016, the Company completed the acquisition of 100% of the outstanding shares of David Michael & Company, Inc. ("David Michael"). The acquisition was accounted for under the purchase method. David Michael was acquired to strengthen the North American flavors business. The Company paid approximately $242.0 million (including $5.1 million of cash acquired) for this acquisition, which was funded from existing resources. The purchase price exceeded the preliminary fair value of existing net assets by approximately $169.0 million. The excess was allocated principally to identifiable intangible assets including approximately $90.0 million related to customer relationships, approximately $8.4 million related to proprietary technology and trade name and approximately $70.7 million of goodwill (which is deductible for tax purposes). Goodwill is the excess of the purchase price over the fair value of net assets acquired. Goodwill represents synergies from the addition of David Michael to the Company's existing Flavors business. The intangible assets are being amortized over the following estimated useful lives: trade name and proprietary technology, up to 5 years and customer relationships, 18 - 20 years. The purchase price allocation is preliminary pending the finalization of certain procedures associated with purchase price, contractually required to be completed subsequent to December 31, 2016 as well as the finalization of the analysis associated with customer relationships and certain other assets. The purchase price allocation is expected to be completed by the first half of 2017. No pro forma financial information for 2016 is presented as the impact of the acquisition was immaterial to the Consolidated Statement of Comprehensive Income. 2015 Activity Lucas Meyer During the third quarter of 2015, the Company completed the acquisition of 100% of the outstanding shares of Lucas Meyer Cosmetics, a business of Unipex Group ("Lucas Meyer"). The total shares acquired include shares effectively acquired pursuant to put and call option agreements. The acquisition was accounted for under the purchase method. Total consideration was approximately Euro 284.0 million ($312.1 million), including approximately $4.8 million of cash acquired. The Company paid Euro 282.1 million (approximately $309.9 million) for this acquisition, which was funded from existing resources, and recorded a liability of approximately Euro 2.0 million (approximately $2.2 million). The purchase price exceeded the fair value of existing net assets by approximately $290.1 million. The excess was allocated principally to identifiable intangible assets (approximately $156.4 million), goodwill (approximately $179.5 million) and approximately $40.1 million to deferred taxes. Goodwill is the excess of the purchase price over the fair value of net assets acquired. Goodwill represents the value the Company expects to achieve from its expansion into new segments of the industry. Separately identifiable intangible assets are principally related to customer relationships, proprietary technology and patents. The intangible assets are being amortized over the following estimated useful lives: trade names and proprietary technology, 28 years; customer relationships, 23 years; patents, 11 years; and non-solicitation agreements, 3 years. The purchase price allocation was completed during the second quarter of 2016. No pro forma financial information for 2015 is presented as the impact of the acquisition was immaterial to the Consolidated Statement of Comprehensive Income. Ottens Flavors During the second quarter of 2015, the Company completed the acquisition of 100% of the outstanding shares of Henry H. Ottens Manufacturing Co., Inc. ("Ottens Flavors"). The acquisition was accounted for under the purchase method. The Company paid $198.9 million (including $10.4 million of cash acquired) for this acquisition, which was funded from existing resources. The purchase price exceeded the fair value of existing net assets by $162.1 million. The excess was allocated principally to identifiable intangible assets ($80.0 million) and goodwill ($82.1 million, which is deductible for tax purposes). Goodwill represents synergies from the addition of Ottens Flavors to the Company's existing Flavors business. Separately identifiable intangible assets are principally related to customer relationships and proprietary flavors technology. The intangible assets are being amortized using lives ranging from 5-17 years. The purchase price allocation was completed during the fourth quarter of 2015. No pro forma financial information for 2015 is presented as the impact of the acquisition was immaterial to the Consolidated Statement of Comprehensive Income. |
Property, Plant and Equipment, Net |
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Property, Plant and Equipment, Net [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment, Net | PROPERTY, PLANT AND EQUIPMENT, NET Property, plant and equipment consisted of the following amounts:
Depreciation expense was $78.6 million for the year ended December 31, 2016, and $74.8 million and $82.0 million for the years ended December 31, 2015 and 2014, respectively. |
Goodwill and Other Intangible Assets, Net |
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Goodwill and Other Intangible Assets, Net | GOODWILL AND OTHER INTANGIBLE ASSETS, NET Goodwill Movements in goodwill during 2014, 2015 and 2016 were as follows:
Goodwill by segment was as follows:
The increase reflected in Flavors above represents the preliminary purchase price allocation of David Michael as disclosed in Note 3. The decrease reflected in Fragrances above represents the impact of finalizing the purchase price allocation of Lucas Meyer as disclosed in Note 3. Other Intangible Assets Other intangible assets, net consisted of the following amounts:
Amortization expense was $23.8 million for the year ended December 31, 2016, and $15.0 million and $7.3 million for the years ended December 31, 2015 and 2014, respectively. Estimated annual amortization (excluding the recent acquisition of Fragrance Resources) is $27.7 million for the year 2017, $27.2 million for the year 2018, $26.0 million for the year 2019, $25.3 million for the year 2020 and $20.8 million for 2021. |
Other Assets |
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Other Assets [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Assets | OTHER ASSETS Other assets consisted of the following amounts:
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Other Current Liabilities |
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Other Liabilities, Current [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Current Liabilities | OTHER CURRENT LIABILITIES Other current liabilities consisted of the following amounts:
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Sale and Leaseback Transactions |
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Dec. 31, 2016 | |
Sale and Leaseback Transactions [Abstract] | |
Sale and Leaseback Transactions | SALE AND LEASEBACK TRANSACTIONS In connection with the disposition of certain real estate in prior years, the Company entered into long-term operating leases. The leases are classified as operating leases and the gains realized on these leases have been deferred and are being credited to income over the initial lease term. Such deferred gains totaled $35.6 million and $38.4 million at December 31, 2016 and 2015, respectively, of which $32.4 million and $35.2 million, respectively, are reflected in the accompanying Consolidated Balance Sheet under Deferred gains, with the remainder included as a component of Other current liabilities. |
Borrowings |
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Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Borrowings | BORROWINGS Debt consisted of the following at December 31:
(1) Amount is net of unamortized discount and debt issuance costs. Euro Senior Notes - 2016 On March 14, 2016, the Company issued Euro 500.0 million face amount of 1.75% Senior Notes ("Euro Senior Notes - 2016") due 2024 at a discount of Euro 0.9 million. The Company received proceeds related to the issuance of these Euro Senior Notes - 2016 of Euro 496.0 million which was net of the Euro 0.9 million discount and Euro 3.1 million underwriting discount (recorded as deferred financing costs). In addition, the Company incurred $1.3 million of other deferred financing costs in connection with the debt issuance. In connection with the debt issuance, the Company entered into pre-issuance hedging transactions that were settled upon issuance of the debt and resulted in a loss of approximately $3.2 million. The discount, deferred financing costs and pre-issuance hedge loss are being amortized as interest expense over the eight year term of the debt. The Euro Senior Notes - 2016 bear interest at a rate of 1.75% per annum, with interest payable on March 14 of each year, commencing on March 14, 2017. The Euro Senior Notes - 2016 will mature on March 14, 2024. Upon 30 days’ notice to holders of the Euro Senior Notes - 2016 , the Company may redeem the Euro Senior Notes - 2016 for cash in whole, at any time, or in part, from time to time, prior to maturity, at redemption prices that include accrued and unpaid interest and a make-whole premium, as specified in the indenture governing the Euro Senior Notes - 2016. However, no make-whole premium will be paid for redemptions of the Euro Senior Notes - 2016 on or after December 14, 2023. The indenture provides for customary events of default and contains certain negative covenants that limit the ability of the Company and its subsidiaries to grant liens on assets, or to enter into sale-leaseback transactions. In addition, subject to certain limitations, in the event of the occurrence of both (1) a change of control of the Company and (2) a downgrade of the Euro Senior Notes - 2016 below investment grade rating by both Moody’s Investors Services, Inc. and Standard & Poor’s Ratings Services within a specified time period, the Company will be required to make an offer to repurchase the Notes at a price equal to 101% of the principal amount of the Euro Senior Notes - 2016, plus accrued and unpaid interest to the date of repurchase. As discussed in Note 15, the Euro Senior Notes - 2016 have been designated as a hedge of the Company's net investment in certain subsidiaries. Senior Notes - 2013 On April 4, 2013, the Company issued $300.0 million face amount of 3.20% Senior Notes (“Senior Notes - 2013”) due 2023 at a discount of $0.3 million. The Company received proceeds related to the issuance of these Senior Notes - 2013 of $297.8 million which was net of the $0.3 million discount and a $1.9 million underwriting discount (recorded as deferred financing costs). In addition, the Company incurred $0.9 million of other deferred financing costs in connection with the debt issuance. The discount and deferred financing costs are being amortized as interest expense over the term of the Senior Notes - 2013. The Senior Notes - 2013 bear interest at a rate of 3.20% per year, with interest payable on May 1 and November 1 of each year, commencing on November 1, 2013. The Senior Notes - 2013 mature on May 1, 2023. Upon 30 days’ notice to holders of the Senior Notes - 2013, the Company may redeem the Senior Notes - 2013 for cash in whole, at any time, or in part, from time to time, prior to maturity, at redemption prices that include accrued and unpaid interest and a make-whole premium. However, no make-whole premium will be paid for redemptions of the Senior Notes - 2013 on or after February 1, 2023. The Indenture provides for customary events of default and contains certain negative covenants that limit the ability of the Company and its subsidiaries to grant liens on assets, to enter into sale-leaseback transactions or to consolidate with or merge into any other entity or convey, transfer or lease all or substantially all of the Company’s properties and assets. In addition, subject to certain limitations, in the event of the occurrence of both (1) a change of control of the Company and (2) a downgrade of the Senior Notes - 2013 below investment grade rating by both Moody’s Investors Services, Inc. and Standard & Poor’s Ratings Services within a specified time period, the Company will be required to make an offer to repurchase the Senior Notes - 2013 at a price equal to 101% of the principal amount of the Senior Notes - 2013, plus accrued and unpaid interest to the date of repurchase. Senior Notes - 2007 On September 27, 2007, the Company issued $500 million of Senior Unsecured Notes (“Senior Notes - 2007”) in four series under the Note Purchase Agreement (“NPA”): (i) $250 million in aggregate principal amount of 6.25% Series A Senior Notes due September 27, 2017, (ii) $100 million in aggregate principal amount of 6.35% Series B Notes due September 27, 2019, (iii) $50 million in aggregate principal amount of 6.50% Series C Notes due September 27, 2022, and (iv) $100 million in aggregate principal amount of 6.79% Series D Notes due September 27, 2027. Senior Notes - 2006 In 2006, the Company issued $375 million of Senior Unsecured Notes (“Senior Notes - 2006”) in four series under another NPA: (i) $50 million in aggregate principal amount of 5.89% Series A Senior Notes due July 12, 2009, (ii) $100 million in aggregate principal amount of 5.96% Series B Notes due July 12, 2011, (iii) $100 million in aggregate principal amount of 6.05% Series C Notes due July 12, 2013, and (iv) $125 million in aggregate principal amount of 6.14% Series D Notes due July 12, 2016. In 2009, 2011 and 2013, the Company repaid $50 million, $100 million and $100 million, respectively, upon maturity of the first three series. In 2016, the Company made a final payment of $125.0 million on the last series of the Senior Notes - 2006. Total Senior Notes Outstanding Maturities on the outstanding Euro Senior Notes - 2016, Senior Notes - 2013 and Senior Notes - 2007 at December 31, 2016 were: 2017, $250 million; 2019, $100 million; 2022 and thereafter, $970.5 million. There is no debt maturing in 2018, 2020 or 2021. The estimated fair value at December 31, 2016 of the Euro Senior Notes - 2016, Senior Notes - 2013 and Senior Notes - 2007 was approximately $546.0 million, $302.4 million and $556.2 million, respectively, and is discussed in further detail in Note 15. Credit Facility On December 2, 2016, the Company and certain of its subsidiaries amended and restated the Company’s existing amended and restated credit agreement with Citibank, N.A., as administrative agent, last amended and restated on April 4, 2014 (the “Credit Facility”), to, among other things (i) modify the available tranches of the revolving loan facility provided under the Credit Facility, (ii) extend the maturity date of the Credit Facility until December 2, 2021 and (iii) increase the Company’s required ratio of Net Debt to Consolidated EBITDA under the Facility from 3.25 to 1.0 to 3.50 to 1.0. Tranche A of the Credit Facility is now available to borrowers in U.S. dollars, euros, Swiss francs, Japanese yen and British sterling in an aggregate amount up to an equivalent of approximately $564.1 million, with a sublimit of $25 million for swing line borrowings. Tranche B of the Credit Facility is now available to borrowers in U.S. dollars, euros, Swiss francs, Japanese yen and British sterling in an aggregate amount up to an equivalent of approximately $385.9 million, with sublimits of €50 million and $25 million for swing line borrowings. The Credit Facility is available for general corporate purposes of each borrower and its subsidiaries. The obligations under the Credit Facility are unsecured and the Company has guaranteed the obligations of each other borrower under the Credit Facility. Borrowings under the Credit Facility bear interest at an annual rate of LIBOR plus a margin, currently 112.5 bps, linked to the Company's credit rating. The Company pays a commitment fee on the aggregate unused commitments; such fee is not material. The Credit Facility contains various affirmative and negative covenants, including the requirement for the Company to maintain, at the end of each fiscal quarter, a ratio of net debt for borrowed money to adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) in respect of the previous 12-month period of not more than 3.50 to 1. As of December 31, 2016, the Company was in compliance with all covenants under this Credit Facility. The Company had no borrowings outstanding under the Credit Facility as of December 31, 2016, with $950 million still available for additional borrowings. As the Credit Facility is a multi-year revolving credit agreement, the Company classifies as long-term debt the portion that it has the intent and ability to maintain outstanding longer than 12 months. During the first quarter of 2016, the Company repaid the full amount outstanding under the credit facility ($131.2 million). Short term borrowings, including the current portion of the Senior Notes - 2007, commercial paper, the Credit Facility borrowings and bank overdrafts, were outstanding in several countries and averaged $162.4 million in 2016 and $203.0 million in 2015. The highest levels were $289.3 million in 2016, $415.4 million in 2015, and $8.8 million in 2014. The 2016 weighted average interest rate of these borrowings, based on balances outstanding at the end of each month, was 5.17% compared to 2.67% and 4.13%, respectively, in 2015 and 2014. Commercial Paper Commercial paper issued by the Company generally has terms of 30 days or less. During 2016, the Company issued approximately $65 million of commercial paper, which was fully repaid by December 31, 2016. As of December 31, 2016, there was no commercial paper outstanding. The Company did not issue commercial paper during 2015. Subsequent to December 31, 2016, the Company issued approximately $87.5 million of commercial paper. Other During 2013, the Company entered into multiple interest rate swap agreements effectively converting the fixed rate on a portion of certain of the long-term senior notes to a variable short-term rate based on the LIBOR plus an interest markup. In March 2008, the Company realized an $18 million gain on the termination of an interest rate swap, which has been deferred and is being amortized as a reduction to interest expense over the remaining term of the related debt. The balance of this deferred gain was $1.3 million at December 31, 2016. |
Income Taxes |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | INCOME TAXES Earnings before income taxes consisted of the following:
The income tax provision consisted of the following:
Effective Tax Rate Reconciliation A reconciliation between the U.S. federal statutory income tax rate to the actual effective tax rate was as follows:
The effective tax rate reflects the benefit from having significant operations outside the U.S. that are taxed at rates that are lower than the U.S. federal rate of 35%. Included in the 2015 effective tax rate was a $10.5 million benefit related to favorable tax rulings in Spain and another jurisdiction for which reserves were previously recorded. Included in the 2014 effective tax rate was a $3.8 million tax benefit related to the reserve reversal for the 2001 Spanish dividend withholding tax case. The 2016, 2015 and 2014 effective tax rates were also favorably impacted by the reversals of liabilities for uncertain tax positions of $7.5 million, $2.8 million and $2.3 million, respectively, principally due to statutory expiry and effective settlement. Deferred Taxes The deferred tax assets consisted of the following amounts:
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Net operating loss carryforwards were $149.1 million and $144.1 million at December 31, 2016 and 2015, respectively. If unused, $4.9 million will expire between 2017 and 2036. The remainder, totaling $144.2 million, may be carried forward indefinitely. Tax credit carryforwards were $42.8 million and $42.0 million at December 31, 2016 and 2015, respectively. If unused, the credit carryforwards will expire between 2017 and 2036. The U.S. consolidated group has historically generated taxable income after the inclusion of foreign dividends. As such, the Company is not in a federal net operating loss position. This allows IFF and its U.S. subsidiaries to realize tax benefits from the reversal of temporary differences and the utilization of its federal tax credits before the expiration of the applicable carryforward periods. The Company has not factored any future trends, other than inflation, in its U.S. taxable income projections. The corresponding U.S. federal taxable income is sufficient to realize $102 million in deferred tax assets as of December 31, 2016. The majority of states in the U.S. where IFF and its subsidiaries file income tax returns allow a 100% foreign dividend exclusion, effectively converting the domestic companies’ reversing temporary differences into net operating losses. As there is significant doubt with respect to realizability of these net operating losses, the Company has established a full valuation allowance against these deferred tax assets. Of the $191.9 million deferred tax asset for net operating loss carryforwards and credits at December 31, 2016, the Company considers it unlikely that a portion of the tax benefit will be realized. Accordingly, a valuation allowance of $142.6 million of net operating loss carryforwards and $9.4 million of tax credits has been established against these deferred tax assets, respectively. In addition, due to realizability concerns, the Company established a valuation allowance against certain other net deferred tax assets of $3.2 million. Uncertain Tax Positions A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
At December 31, 2016, 2015 and 2014, there were $19.1 million, $24.2 million, and $22.3 million, respectively, of unrecognized tax benefits recorded to Other liabilities and $7.3 million and $0.7 million recorded to Other current liabilities for 2016 and 2014, respectively. If these unrecognized tax benefits were recognized, all the benefits and related interest would be recorded as a benefit to income tax expense. For the year ended December 31, 2016, the Company increased its liabilities for interest and penalties by $0.3 million, net, and reduced its liabilities by $1.4 million, net, and $0.1 million, net for the years ended 2015 and 2014, respectively, principally due to payments made pursuant to the Spanish tax settlement, as discussed below. At December 31, 2016, 2015 and 2014, the Company had accrued $0.8 million, $0.8 million and $1.7 million, respectively, of interest and penalties classified as Other liabilities and $0.3 million and $0.5 million in 2016 and 2014, respectively, recorded to Other current liabilities. As of December 31, 2016, the Company’s aggregate provision for uncertain tax positions, including interest and penalties, was $27.5 million, associated with various tax positions asserted in foreign jurisdictions, none of which is individually material. Other Tax benefits credited to Shareholders’ equity totaled $0.2 million in each of the years ended December 31, 2016, 2015 and 2014 associated with stock option exercises and PRSU dividends. U.S. income taxes and foreign withholding taxes associated with the repatriation of earnings of its foreign subsidiaries were not provided on a cumulative total of $1.9 billion of undistributed earnings of foreign subsidiaries. The Company intends to, and has plans to, reinvest these earnings indefinitely in the Company's foreign subsidiaries to fund local operations and/or capital projects. The unrecognized deferred tax liability on these undistributed earnings approximates $344 million. The Company has ongoing income tax audits and legal proceedings which are at various stages of administrative or judicial review, of which the material items are discussed below. In addition, the Company has other ongoing tax audits and legal proceedings that relate to indirect taxes, such as value-added taxes, capital tax, sales and use and property taxes, which are discussed in Note 18. The Company also has several other tax audits in process and has open tax years with various taxing jurisdictions that range primarily from 2006 to 2015. Based on currently available information, the Company does not believe the ultimate outcome of any of these tax audits and other tax positions related to open tax years, when finalized, will have a material impact on its financial position. |
Shareholders' Equity |
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Dec. 31, 2016 | |
Equity [Abstract] | |
Shareholders' Equity | SHAREHOLDERS’ EQUITY Dividends Cash dividends declared per share were $2.40, $2.06 and $1.72 in 2016, 2015 and 2014, respectively. The Consolidated Balance Sheet reflects $50.7 million of dividends payable at December 31, 2016. This amount relates to a cash dividend of $0.64 per share declared in December 2016 and paid in January 2017. Dividends declared, but not paid as of December 31, 2015 and December 31, 2014 were $44.8 million ($0.56 per share) and $38.0 million ($0.47 per share), respectively. Share Repurchases In December 2012, the Board of Directors authorized a $250 million share repurchase program, which commenced in the first quarter of 2013. In August 2015, the Board of Directors approved an additional $250 million share repurchase authorization and extension through December 31, 2017. Based on the total remaining amount of $109.3 million available under the repurchase program, approximately 0.9 million shares, or 1.2% of shares outstanding (based on the market price and shares outstanding as of December 31, 2016) could be repurchased under the program as of December 31, 2016. During the year ended December 31, 2016, the Company repurchased 1.1 million shares on the open market at an aggregate cost of $127.4 million or an average of $120.45 per share. The purchases will be made from time to time on the open market or through private transactions as market and business conditions warrant. Repurchased shares will be placed into treasury stock. The ultimate level of purchases will be a function of the daily purchase limits established in the pre-approved program according to the share price at that time. This plan expires on December 31, 2017. |
Stock Compensation Plans |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Compensation Plans | STOCK COMPENSATION PLANS The Company has various equity plans under which its officers, senior management, other key employees and Board of Directors may be granted options to purchase IFF common stock or other forms of stock-based awards. Beginning in 2004, the Company granted Restricted Stock Units (“RSUs”) as the principal element of its equity compensation for all eligible U.S.-based employees and a majority of eligible overseas employees. Vesting of the RSUs is solely time based; the vesting period is primarily 3 years from date of grant. For a small group of employees, primarily overseas, the Company granted stock options prior to 2008. The cost of all employee stock-based awards are principally recognized on a straight-line attribution basis over their respective vesting periods, net of estimated forfeitures. Total stock-based compensation expense included in the Consolidated Statement of Income and Comprehensive Income was as follows:
The shareholders of the Company approved the Company’s 2015 Stock Award and Incentive Plan (the “2015 Plan”) on May 6, 2015. The 2015 Plan replaced the Company’s 2010 Stock Award and Incentive Plan (the “2010 Plan”) and provides the source for future deferrals of cash into deferred stock under the Company’s Deferred Compensation Plan (with the Deferred Compensation Plan being deemed a subplan under the 2015 Plan for the sole purpose of funding deferrals under the IFF Share Fund). Under the 2015 Plan, a total of 1,500,000 shares are authorized for issuance in addition to 1,552,694 shares remaining available under the 2010 plan that were rolled into the 2015 Plan. At December 31, 2016, 853,746 shares were subject to outstanding awards and 2,715,923 shares remained available for future awards under all of the Company’s equity award plans, including the 2015 Plan (excluding shares not yet issued under open cycles of the Company’s Long-Term Incentive Plan). The Company offers a Long-Term Incentive Plan (“LTIP”) for senior management. The targeted payout is 50% cash and 50% IFF common stock at the end of the three-year cycle and provides for segmentation in which one-fourth of the award vests during each twelve-month period, with the final one-fourth segment vesting over the full three-year period. Grants under the LTIP are currently earned upon achievement of defined Economic Profit ("EP") targets and the Company's performance ranking of Total Shareholder Return as a percentile of the S&P 500 ("Relative TSR"). EP measures operating profitability after considering (i) all operating costs, (ii) income taxes and (iii) a charge for the capital employed in the business. When the award is granted, 50% of the target dollar value of the award is converted to a number of “notional” shares based on the closing price at the beginning of the cycle. For those shares whose payout is based on Relative TSR, compensation expense is recognized using a graded-vesting attribution method, while compensation expense for the remainder of the performance shares (EP targets) is recognized on a straight-line basis over the vesting period based on the probable outcome of the performance condition. The 2012-2014 cycle concluded at the end of 2014 and an aggregate 90,062 shares of common stock were issued in March 2015. The 2013-2015 cycle concluded at the end of 2015 and an aggregate 73,134 shares of common stock were issued in March 2016. The 2014-2016 cycle concluded at the end of 2016 and an aggregate 47,267 shares of common stock will be issued in March 2017. In 2006, the Board of Directors approved the Equity Choice Program (the “Program”) for senior management. This program continues under the 2015 Plan. Eligible employees can choose from among three equity alternatives and will be granted such equity awards up to certain dollar awards depending on the participant’s employment grade level. A participant may choose among (1) SSARs, (2) RSUs or (3) PRSUs. SSARs and Options SSARs granted become exercisable on the third anniversary of the grant date and have a maximum term of 7 years. An immaterial amount of SSARS was granted in 2015. No SSARs were granted in 2016 or 2014. No stock options were granted in 2016, 2015 or 2014. SSARs and options activity was as follows:
The weighted average exercise price of SSARs and options exercisable at December 31, 2016, 2015 and 2014 were $58.24, $52.10 and $47.92, respectively. SSARs and options outstanding at December 31, 2016 was as follows:
SSARs and options exercisable as of December 31, 2016 was as follows:
The total intrinsic value of options/SSARs exercised during 2016, 2015 and 2014 totaled $1.3 million, $7.3 million and $7.5 million, respectively. As of December 31, 2016, there was less than $0.1 million of total unrecognized compensation cost related to non-vested SSARs granted; such cost is expected to be recognized over a period of 1.27 years. Restricted Stock Units The Company has granted RSUs to eligible employees and Board of Directors. Such RSUs are subject to forfeiture if certain conditions are not met. RSUs principally vest 100% at the end of 3 years and contain no performance criteria provisions. An RSU’s fair value is calculated based on the market price of the Company's stock at date of grant, with an adjustment to reflect the fact that such awards do not participate in dividend rights. The aggregate fair value is amortized to expense ratably over the vesting period. RSU activity was as follows:
The total fair value of RSUs that vested during the year ended December 31, 2016 was $22.8 million. As of December 31, 2016, there was $21.3 million of total unrecognized compensation cost related to non-vested RSUs granted under the equity incentive plans; such cost is expected to be recognized over a weighted average period of 1.9 years. Purchased Restricted Stock and Purchased Restricted Stock Units In 2014, the grant of awards under the Equity Choice program provided for eligible employees to purchase restricted shares of IFF common stock and deposit them into an escrow account. For each share deposited in escrow by the eligible employee, the Company matched with a grant of a share of restricted stock or, for non-U.S. participants, a restricted stock unit. The shares of restricted stock and restricted stock units generally vest on the third anniversary of the grant date, are subject to continued employment and other specified conditions and pay dividends if and when paid by the Company. Holders of restricted stock have, in most instances, all of the rights of stockholders, except that they may not sell, assign, pledge or otherwise encumber such shares. The PRSUs provide no such rights. During 2015, the Company modified the program so that all participants, including U.S. participants, began to receive a restricted stock unit instead of a share of restricted stock. Restricted stock units pay dividend equivalents and do not have voting rights. The Company issued 58,629 shares of PRSUs in 2016 for an aggregate purchase price of $7.0 million covering 29,315 purchased shares, 52,577 and 14,622 shares of PRS and PRSUs, respectively, in 2015 for $6.2 million and $1.7 million, respectively, covering 33,600 purchased shares and 99,091 shares of PRS in 2014 for $9.7 million covering 49,545 purchased shares. PRS and PRSU activity was as follows:
The total fair value of PRS and PRSUs that vested during the year ended December 31, 2016 was $10.2 million. As of December 31, 2016, there was $8.3 million of total unrecognized compensation cost related to non-vested PRS and PRSUs granted under the equity incentive plans; such cost is expected to be recognized over a weighted average period of 1.8 years. Liability Awards The Company has granted cash-settled RSUs ("Cash RSUs") to eligible employees that are paid out 100% in cash upon vesting. Such RSUs are subject to forfeiture if certain conditions are not met. Cash RSUs principally vest 100% at the end of three years and contain no performance criteria provisions. A Cash RSU's fair value is calculated based on the market price of the Company's stock at the date of the closing period and is accounted for as a liability award. The aggregate fair value is amortized to expense ratably over the vesting period. Cash RSU activity was as follows:
The total fair value of Cash RSUs that vested during the year ended December 31, 2016 was $3.9 million. As of December 31, 2016, there was $4.9 million of total unrecognized compensation cost related to non-vested Cash RSUs granted under the equity incentive plans; such cost is expected to be recognized over a weighted average period of 1.8 years. The aggregate compensation cost will be adjusted based on changes in the Company’s stock price. |
Segment Information |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information | SEGMENT INFORMATION The Company is organized into two operating segments, Flavors and Fragrances; these segments align with the internal structure used to manage these businesses. Flavor compounds are sold to the food and beverage industries for use in consumer products such as prepared foods, beverages, dairy, food and sweet products. Fragrances is comprised of (1) Fragrance Compounds, which are ultimately used by our customers in two broad categories: Fine Fragrances, including perfumes and colognes, and Consumer Fragrances, including fragrance compounds for personal care (e.g., soaps), household products (e.g., detergents and cleaning agents) and beauty care, including toiletries; (2) Fragrance Ingredients, consisting of synthetic and natural ingredients that can be combined with other materials to create unique fine fragrance and consumer compounds; and (3) Cosmetic Active Ingredients, consisting of active and functional ingredients, botanicals and delivery systems to support our customers’ cosmetic and personal care product lines. Major fragrance customers include the cosmetics industry, including perfume and toiletries manufacturers, and the household products industry, including manufacturers of soaps, detergents, fabric care, household cleaners and air fresheners. The Company's Chief Operating Decision Maker evaluates the performance of these operating segments based on segment profit which is defined as operating profit before Restructuring, global expenses (as discussed below) and certain non-recurring items, Interest expense, Other income (expense), net and Taxes on income. The Global expenses caption represents corporate and headquarter-related expenses which include legal, finance, human resources, certain incentive compensation expenses and other R&D and administrative expenses that are not allocated to individual operating segments. Unallocated assets are principally cash and cash equivalents and other corporate and headquarter-related assets. Reportable segment information is as follows:
(1) Restructuring and other charges, net include accelerated depreciation related to restructuring initiatives, severance costs related to the termination of a former executive officer and the partial reversal of restructuring accruals recorded in the prior year for the year ended December 31, 2016, severance and related costs related to restructuring initiatives for the year ended December 31, 2015 and plant shutdown costs related to the Fragrance Ingredients Rationalization for the year ended December 31, 2014. (2) Represents a gain related to the sale of property in Brazil for the year ended December 31, 2016. (3) The Spanish capital tax charge reversal represents the reversal of the charge recorded during the year ended December 31, 2013 (as a result of the unfavorable ruling of the Spanish capital tax case from 2002) in the year ended December 31, 2015 due to a favorable ruling on the Company's appeal. (4) Acquisition related costs include costs related to the fair value step-up of inventory of the David Michael and Lucas Meyer acquisitions as well as transaction costs related to the Lucas Meyer, David Michael and Fragrance Resources acquisitions for the year ended December 31, 2016 and transaction costs and costs related to the fair value step-up of inventory of the Ottens Flavors and Lucas Meyer acquisitions for the year ended December 31, 2015. (5) Operational improvement initiative costs include accelerated depreciation and dismantling and idle labor costs in Hangzhou, China, severance costs in Guangzhou, China and the partial reversal of severance accruals related to prior year operational initiatives in Europe for the year ended December 31, 2016 and costs related to the closing of a smaller facility in Europe and certain manufacturing activities in Asia, while transferring production to larger facilities in each respective region for the year ended December 31, 2015 and December 31, 2014. (6) Acceleration of contingent consideration payments related to the Aromor acquisition. (7) Legal charges/credits principally relate to litigation accrual as discussed in Note 18 which was partially offset by settlements due to favorable tax rulings in jurisdictions for which reserves were previously recorded for ongoing tax disputes. The Company has not disclosed revenues at a lower level than provided herein, such as revenues from external customers by product, as it is impracticable for it to do so. The Company had one customer that accounted for more than 10% of consolidated net sales in each year for all periods presented and had net sales of $364.8 million, $358.9 million and $368.2 million in 2016, 2015 and 2014, respectively. The majority of these sales were in the Fragrances operating segment. Total long-lived assets consist of net property, plant and equipment and amounted to $775.7 million and $732.8 million at December 31, 2016 and 2015, respectively. Of this total, $191.3 million and $170.2 million were located in the United States at December 31, 2016 and 2015, respectively, $95.1 million and $98.9 million were located in the Netherlands at December 31, 2016 and 2015, respectively, $78.4 million and $63.4 million were located in Singapore at December 31, 2016 and 2015, respectively, and $78.4 million and $82.7 million were located in China at December 31, 2016 and 2015, respectively.
Net sales are attributed to individual regions based upon the destination of product delivery. Net sales related to the U.S. for the years ended December 31, 2016, 2015 and 2014 were $735.3 million, $682.2 million and $652.6 million, respectively. Net sales attributed to all foreign countries in total for the years ended December 31, 2016, 2015 and 2014 were $2.4 billion, $2.3 billion and $2.4 billion, respectively. No non-U.S. country had net sales in any period presented greater than 10.0% of total consolidated net sales. |
Employee Benefits |
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Compensation and Retirement Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Employee Benefits | EMPLOYEE BENEFITS The Company has pension and/or other retirement benefit plans covering approximately one-fourth of active employees. In 2007 the Company amended its U.S. qualified and non-qualified pension plans under which accrual of future benefits was suspended for all participants that did not meet the rule of 70 (age plus years of service equal to at least 70 at December 31, 2007). Pension benefits are generally based on years of service and on compensation during the final years of employment. Plan assets consist primarily of equity securities and corporate and government fixed income securities. Substantially all pension benefit costs are funded as accrued; such funding is limited, where applicable, to amounts deductible for income tax purposes. Certain other retirement benefits are provided by general corporate assets. The Company sponsors a qualified defined contribution plan covering substantially all U.S. employees. Under this plan, the Company matches 100% of participants’ contributions up to 4% of compensation and 75% of participants’ contributions from over 4% to 8%. Employees that are still eligible to accrue benefits under the pension plans are limited to a 50% match up to 6% of the participants’ compensation. In addition to pension benefits, certain health care and life insurance benefits are provided to qualifying U.S. employees upon retirement from IFF. Such coverage is provided through insurance plans with premiums based on benefits paid. The Company does not generally provide health care or life insurance coverage for retired employees of foreign subsidiaries; such benefits are provided in most foreign countries by government-sponsored plans, and the cost of these programs is not material. The Company offers a non-qualified Deferred Compensation Plan ("DCP") for certain key employees and non-employee directors. Eligible employees and non-employee directors may elect to defer receipt of salary, incentive payments and Board of Directors’ fees into participant-directed investments, which are generally invested by the Company in individual variable life insurance contracts it owns that are designed to informally fund savings plans of this nature. The cash surrender value of life insurance is based on the net asset values of the underlying funds available to plan participants. At December 31, 2016 and December 31, 2015, the Consolidated Balance Sheet reflects liabilities of $37.6 million and $34.6 million, respectively, related to the DCP in Other liabilities and $18.8 million and $13.9 million, respectively, included in Capital in excess of par value related to the portion of the DCP that will be paid out in IFF shares. The total cash surrender value of life insurance contracts the Company owns in relation to the DCP and post-retirement life insurance benefits amounted to $43.4 million and $42.0 million at December 31, 2016 and 2015, respectively, and are recorded in Other assets in the Consolidated Balance Sheet. The plan assets and benefit obligations of the defined benefit pension plans are measured at December 31 of each year.
The amounts expected to be recognized in net periodic cost in 2017 are:
Changes in the postretirement benefit obligation and plan assets, as applicable, are detailed in the following table:
The Company considers a number of factors in determining and selecting assumptions for the overall expected long-term rate of return on plan assets. The Company considers the historical long-term return experience of its assets, the current and expected allocation of its plan assets and expected long-term rates of return. The Company derives these expected long-term rates of return with the assistance of its investment advisors. The Company bases its expected allocation of plan assets on a diversified portfolio consisting of domestic and international equity securities, fixed income, real estate and alternative asset classes. The asset allocation is monitored on an ongoing basis. The Company considers a variety of factors in determining and selecting its assumptions for the discount rate at December 31. For the U.S. plans, the discount rate was based on the internal rate of return for a portfolio of high quality bonds rated Aa or higher by either Moody’s or Standard & Poor's with maturities that are consistent with the projected future benefit payment obligations of the plan. For the Non-U.S. Plans, the discount rates were determined by region and are based on high quality long-term corporate bonds. Consideration has been given to the duration of the liabilities in each plan when selecting the bonds to be used in determining the discount rate. The rate of compensation increase for all plans and the medical cost trend rate for the applicable U.S. plans are based on plan experience. The percentage of assets in the Company's pension plans, by type, is as follows:
With respect to the U.S. plans, the expected return on plan assets was determined based on an asset allocation model using the current target allocation, real rates of return by asset class and an anticipated inflation rate. The target investment allocation is 40% equity securities and 60% fixed income securities. The expected annual rate of return for the non-U.S. plans employs a similar set of criteria adapted for local investments, inflation rates and in certain cases specific government requirements. The target asset allocation, for the non-U.S. plans, consists of approximately: 40% – 70% in fixed income securities; 15% – 40% in equity securities; 5% – 20% in real estate; and 5% – 10% in alternative investments. The following tables present the Company's plan assets for the U.S. and non-U.S. plans using the fair value hierarchy as of December 31, 2016 and 2015. The plans’ assets were accounted for at fair value and are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company's assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the valuation of fair value assets and their placement within the fair value hierarchy levels. For more information on a description of the fair value hierarchy, see Note 15.
(1) Investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in the table above are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the Consolidated Balance Sheet. The total amount measured at net asset value includes approximately $187.3 million and $159.7 million in pooled equity funds and $223.2 million and $190.3 million in fixed income mutual funds for the years ended December 31, 2016 and 2015, respectively.
Cash and cash equivalents are primarily held in registered money market funds which are valued using a market approach based on the quoted market prices of identical instruments. Other cash and cash equivalents are valued daily by the fund using a market approach with inputs that include quoted market prices for similar instruments. Equity securities are primarily valued using a market approach based on the quoted market prices of identical instruments. Pooled funds are typically common or collective trusts valued at their net asset values (NAVs). Fixed income securities are primarily valued using a market approach with inputs that include broker quotes and benchmark yields. Derivative instruments are valued by the custodian using closing market swap curves and market derived inputs. Real estate values are primarily based on valuation of the underlying investments, which include inputs such as cost, discounted future cash flows, independent appraisals and market comparable data. Hedge funds are valued based on valuation of the underlying securities and instruments within the funds. Quoted market prices are used when available and NAVs are used for unquoted securities within the funds. Absolute return funds are actively managed funds mainly invested in debt and equity securities and are valued at their NAVs. The following table presents a reconciliation of Level 3 non-U.S. plan assets held during the year ended December 31, 2016:
The following weighted average assumptions were used to determine the postretirement benefit expense and obligation for the years ended December 31:
The effect of a 1% increase in the medical cost trend rate would increase the accumulated postretirement benefit obligation and the annual postretirement expense by approximately $0.3 million and less than $0.1 million, respectively; a 1% decrease in the rate would decrease the obligation and expense by approximately $0.4 million and less than $0.1 million, respectively. The Company contributed $20.0 million and $23.2 million to its qualified U.S. pension plans and non-U.S. pension plans in 2016, respectively. The Company made $3.6 million in benefit payments with respect to its non-qualified U.S. pension plan. In addition, $4.8 million of payments were made with respect to the Company's other postretirement plans. |
Financial Instruments |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial Instruments | FINANCIAL INSTRUMENTS Fair Value Accounting guidance on fair value measurements specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company's market assumptions. These two types of inputs create the following fair value hierarchy:
This hierarchy requires the Company to use observable market data, when available, and to minimize the use of unobservable inputs when determining fair value. The Company determines the fair value of structured liabilities (where performance is linked to structured interest rates, inflation or currency risks) using the London InterBank Offer Rate (“LIBOR”) swap curve and forward interest and exchange rates at period end. Such instruments are classified as Level 2 based on the observability of significant inputs to the model. The Company does not have any instruments classified as Level 1 or Level 3, other than those included in pension asset trusts included in Note 14. These valuations take into consideration the Company's credit risk and its counterparties’ credit risk. The estimated change in the fair value of these instruments due to such changes in its own credit risk (or instrument-specific credit risk) was immaterial as of December 31, 2016. The amounts recorded in the balance sheet (carrying amount) and the estimated fair values of financial instruments at December 31 consisted of the following:
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Derivatives The Company periodically enters into foreign currency forward contracts with the objective of reducing exposure to cash flow volatility associated with its intercompany loans, foreign currency receivables and payables and anticipated purchases of certain raw materials used in operations. These contracts generally involve the exchange of one currency for a second currency at a future date, have maturities not exceeding twelve months and are with counterparties which are major international financial institutions. During the years ended December 31, 2016 and 2015, the Company entered into several forward currency contracts which qualified as net investment hedges, in order to mitigate a portion of its net European investments from foreign currency risk. The effective portions of net investment hedges are recorded in other comprehensive income ("OCI") as a component of Foreign currency translation adjustments in the accompanying Consolidated Statement of Income and Comprehensive Income. Realized gains/(losses) are deferred in AOCI where they will remain until the net investments in the Company's European subsidiaries are divested. Sixteen of these forward currency contracts matured during the year ended December 31, 2016. The outstanding forward currency contacts have remaining maturities of less than one year. Subsequent to the issuance of the Euro Senior Notes - 2016 during the first quarter of 2016, the Company designated the debt as a hedge of a portion of its net European investments. Accordingly, the change in the value of the debt that is attributable to foreign exchange movements is recorded in OCI as a component of Foreign currency translation adjustments in the accompanying Consolidated Statement of Income and Comprehensive Income. During the year ended December 31, 2016 and 2015, the Company entered into several forward currency contracts which qualified as cash flow hedges. The objective of these hedges is to protect against the currency risk associated with forecasted U.S. dollar (USD) denominated raw material purchases made by Euro (EUR) functional currency entities which result from changes in the EUR/USD exchange rate. The effective portions of cash flow hedges are recorded in OCI as a component of Gains/(Losses) on derivatives qualifying as hedges in the accompanying Consolidated Statement of Income and Comprehensive Income. Realized gains/(losses) in AOCI related to cash flow hedges of raw material purchases are recognized as a component of Cost of goods sold in the accompanying Consolidated Statement of Income and Comprehensive Income in the same period as the related costs are recognized. During 2015 and 2014, the Company entered into interest rate swap agreements that effectively converted the fixed rate on a portion of its long-term borrowings to a variable short-term rate based on the LIBOR plus an interest markup. These swaps are designated as fair value hedges. Amounts recognized in Interest expense were immaterial for the year ended December 31, 2016. During the first quarter of 2016, the Company entered into and terminated two Euro interest rate swap agreements to hedge the anticipated issuance of fixed-rate debt. These swaps were designated as cash flow hedges. The effective portions of cash flow hedges are recorded in OCI as a component of Losses on derivatives qualifying as hedges in the accompanying Consolidated Statement of Comprehensive Income. The Company incurred a loss of Euro 2.9 million ($3.2 million) due to the termination of these swaps. The loss is being amortized as interest expense over the life of the Euro Senior Notes - 2016 as discussed in Note 9. During the fourth quarter of 2016, the Company entered into one interest rate swap to hedge the anticipated issuance of fixed-rate debt, which is designated as a cash flow hedge. The effective portions of cash flow hedges are recorded in OCI as a component of Losses/gains on derivatives qualifying as hedges in the accompanying Consolidated Statement of Income and Comprehensive Income. During the first quarter of 2013, the Company entered into three interest rate swap to hedge the anticipated issuance of fixed-rate debt, which are designated as cash flow hedges. The effective portions of cash flow hedges are recorded in OCI as a component of Losses/gains on derivatives qualifying as hedges in the accompanying Consolidated Statement of Income and Comprehensive Income. During the second quarter of 2013, the Company terminated these swaps and incurred a loss of $2.7 million, which it will amortize as Interest expense over the life of the Senior Notes - 2013 (discussed in Note 9). The following table shows the notional amount of the Company’s derivative instruments outstanding as of December 31, 2016 and December 31, 2015:
The following tables show the Company’s derivative instruments measured at fair value (Level 2 of the fair value hierarchy) as reflected in the Consolidated Balance Sheets as of December 31, 2016 and December 31, 2015 (in thousands):
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The following table shows the effect of the Company’s derivative instruments which were not designated as hedging instruments in the Consolidated Statement of Income and Comprehensive Income for the years ended December 31, 2016 and December 31, 2015 (in thousands):
Most of these net gains (losses) offset any recognized gains (losses) arising from the revaluation of the related intercompany loans during the same respective periods. The following table shows the effect of the Company’s derivative instruments designated as cash flow and net investment hedging instruments in the Consolidated Statement of Income and Comprehensive Income for the years ended December 31, 2016 and December 31, 2015 (in thousands):
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The ineffective portion of the above noted cash flow hedges and net investment hedges was not material for the years ended December 31, 2016 and 2015. The Company expects approximately $4.1 million (net of tax), of derivative gains included in AOCI at December 31, 2016, based on current market rates, will be reclassified into earnings within the next twelve months. The majority of this amount will vary due to fluctuations in foreign currency exchange rates. |
Accumulated Other Comprehensive Income (Loss) |
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Accumulated Other Comprehensive Income (Loss) [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated Other Comprehensive Income (Loss) | ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) The following tables present changes in the accumulated balances for each component of other comprehensive income, including current period other comprehensive income and reclassifications out of accumulated other comprehensive income:
The following table provides details about reclassifications out of accumulated other comprehensive income to the Consolidated Statement of Comprehensive Income:
(a) The amortization of prior service cost and actuarial loss is included in the computation of net periodic benefit cost. Refer to Note 14 to the Consolidated Financial Statements - Employee Benefits for additional information regarding net periodic benefit cost. |
Concentrations of Credit Risk |
12 Months Ended |
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Dec. 31, 2016 | |
Risks and Uncertainties [Abstract] | |
Concentrations of Credit Risk | CONCENTRATIONS OF CREDIT RISK The Company does not have significant concentrations of risk in financial instruments. Temporary investments are made in a well-diversified portfolio of high-quality, liquid obligations of government, corporate and financial institutions. There are also limited concentrations of credit risk with respect to trade receivables because the Company has a large number of customers who are spread across many industries and geographic regions. The Company’s larger customers are each spread across many sub-categories of its segments and geographical regions. The Company had one customer that accounted for more than 10% of its consolidated net sales in each year for all periods presented. |
Commitments and Contingencies |
12 Months Ended |
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Dec. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | COMMITMENTS AND CONTINGENCIES Lease Commitments Minimum rental payments under non-cancelable operating leases are $32.6 million in 2017, $27.2 million in 2018, $25.4 million in 2019, $24.2 million in 2020 and $145.4 million in 2021 and thereafter through 2063. The corresponding rental expense was $35.4 million, $33.6 million and $34.4 million for the years ended December 31, 2016, 2015 and 2014, respectively. None of our leases contain escalation clauses and they do not require capital improvement funding. Guarantees and Letters of Credit The Company has various bank guarantees and letters of credit which are available for use to support its ongoing business operations and to satisfy governmental requirements associated with pending litigation in various jurisdictions. At December 31, 2016, the Company had total bank guarantees and standby letters of credit of approximately $38.6 million with various financial institutions. Included in the above aggregate amount is a total of $15.9 million for other assessments in Brazil for various income tax and indirect tax disputes related to fiscal years 1998-2011. There were no material amounts utilized under the standby letters of credit as of December 31, 2016. In order to challenge the assessments in these cases in Brazil, the Company has been required to and has separately pledged assets, principally property, plant and equipment to cover assessments in the amount of approximately $13.1 million as of December 31, 2016. Lines of Credit The Company has various lines of credit which are available to support its ongoing business operations. As of December 31, 2016, the Company had available lines of credit (in addition to the $950.0 million of capacity under the Credit Facility as discussed in Note 9) of approximately $74.1 million with various financial institutions. There were no material amounts drawn down pursuant to these lines of credit as of December 31, 2016. Litigation The Company assesses contingencies related to litigation and/or other matters to determine the degree of probability and range of possible loss. A loss contingency is accrued in the Company’s consolidated financial statements if it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Because litigation is inherently unpredictable and unfavorable resolutions could occur, assessing contingencies is highly sensitive and requires judgments about future events. On at least a quarterly basis, the Company reviews contingencies related to litigation to determine the adequacy of accruals. The amount of ultimate loss may differ from these estimates and further events may require the Company to increase or decrease the amounts it has accrued on any matter. Periodically, the Company assesses its insurance coverage for all known claims, where applicable, taking into account aggregate coverage by occurrence, limits of coverage, self-insured retentions and deductibles, historical claims experience and claims experience with its insurance carriers. The liabilities are recorded at management’s best estimate of the probable outcome of the lawsuits and claims, taking into consideration the facts and circumstances of the individual matters as well as past experience on similar matters. At each balance sheet date, the key issues that management assesses are whether it is probable that a loss as to asserted or unasserted claims has been incurred and if so, whether the amount of loss can be reasonably estimated. The Company records the expected liability with respect to claims in Other liabilities and expected recoveries from its insurance carriers in Other assets. The Company recognizes a receivable when it believes that realization of the insurance receivable is probable under the terms of the insurance policies and its payment experience to date. Environmental Over the past 20 years, various federal and state authorities and private parties have claimed that we are a Potentially Responsible Party (“PRP”) as a generator of waste materials for alleged pollution at a number of waste sites operated by third parties located principally in New Jersey and have sought to recover costs incurred and to be incurred to clean up the sites. The Company has been identified as a PRP at eight facilities operated by third parties at which investigation and/or remediation activities may be ongoing. The Company analyzes its potential liability on at least a quarterly basis and accrues for environmental liabilities when they are probable and estimable. The Company estimates its share of the total future cost for these sites to be less than $5 million. While joint and several liability is authorized under federal and state environmental laws, the Company believes the amounts it has paid and anticipates paying in the future for clean-up costs and damages at all sites are not and will not have a material adverse effect on its financial condition, results of operations or liquidity. This assessment is based upon, among other things, the involvement of other PRPs at most of the sites, the status of the proceedings, including various settlement agreements and consent decrees and the extended time period over which payments will likely be made. There can be no assurance, however, that future events will not require the Company to materially increase the amounts it anticipates paying for clean-up costs and damages at these sites, and that such increased amounts will not have a material adverse effect on its financial condition, results of operations or cash flows. China Facilities Guangzhou Flavors plant During 2015, the Company was notified by Chinese authorities of compliance issues pertaining to the emission of odors from several of its plants in China. As a result, the Company's Flavors plant in China was temporarily idled. The Company has made additional capital improvements in odor-abatement equipment at these plants to address these issues and is in the process of building a second Flavors plant in China, which is expected to be operating in the first quarter of 2019. During the fourth quarter of 2016, the Company was notified that certain governmental authorities have begun to evaluate a change in the zoning of the Guangzhou Flavors plant. The zoning, if changed, would prevent the Company from continuing to manufacture product at the existing plant. The ultimate outcome of any change that the governmental authorities may propose, the timing of such a change and the nature of any compensation arrangements that might be provided to the Company are uncertain. The net book value of the existing plant was approximately $69 million as of December 31, 2016. Zhejiang Ingredients plant The Company has received a request from the Chinese government to relocate its Fragrance Ingredients plant in Zhejiang, China. The Company is in discussions with the government regarding the timing of the requested relocation and the amount and nature of government compensation to be provided to the Company. The Company expects to conclude discussions with the Government in the first half of 2017. The net book value of the current plant was approximately $26 million as of December 31, 2016. Depending upon the ultimate outcome of the discussions with the Chinese government, between $0-$26 million of the remaining net book value may be subject to accelerated depreciation. Total China Operations The total carrying value of all five plants in China (one of which is currently under construction) was approximately $135 million as of December 31, 2016. If the Company is required to close a plant, or operate one at significantly reduced production levels on a permanent basis, the Company may be required to record charges that could have a material impact on its consolidated financial results of operations, financial position and cash flows in future periods. Other Contingencies The Company has contingencies involving third parties (such as labor, contract, technology or product-related claims or litigation) as well as government-related items in various jurisdictions in which it operates pertaining to such items as value-added taxes, other indirect taxes, customs and duties and sales and use taxes. It is possible that cash flows or results of operations, in any period, could be materially affected by the unfavorable resolution of one or more of these contingencies. The most significant government-related contingencies exist in Brazil. With regard to the Brazilian matters, the Company believes it has valid defenses for the underlying positions under dispute; however, in order to pursue these defenses, the Company is required to, and has provided, bank guarantees and pledged assets in the aggregate amount of $29 million. The Brazilian matters take an extended period of time to proceed through the judicial process and there are a limited number of rulings to date. ZoomEssence In March 2012, ZoomEssence, Inc. filed a complaint against the Company in the U.S. District Court for the District of New Jersey alleging trade secret misappropriation, breach of contract and unjust enrichment in connection with certain spray dry technology disclosed to the Company. ZoomEssence sought an injunction and monetary damages. ZoomEssence initially sought a temporary restraining order and preliminary injunction, but the Court denied these applications in an order entered on September 27, 2013, finding that ZoomEssence had not demonstrated a likelihood of success on the merits of its claims. On November 3, 2014, ZoomEssence amended its complaint against the Company to include allegations of breach of the duty of good faith and fair dealing, fraud in the inducement, and misappropriation of confidential and proprietary information. On November 13, 2014, the Company filed a counterclaim against ZoomEssence alleging trade secret misappropriation, breach of contract, breach of the implied covenant of good faith and fair dealing, unjust enrichment, misappropriation of confidential and proprietary information, common law unfair competition, tortious interference with contractual relations, and conversion. During the third quarter of 2016, the Court stayed the case and directed the parties to mediate. During the fourth quarter of 2016, the parties engaged in mediation and various settlement discussions which have not resulted in a resolution of the litigation to date. If the case is not settled, we expect that a trial on the merits of the case will occur during 2017. Based on expert assessment of potential exposure and the status of the settlement discussions, the Company recorded an additional reserve of $50 million during 2016. Other The Company determines estimates of reasonably possible losses or ranges of reasonably possible losses in excess of related accrued liabilities, if any, when it has determined that either a loss is reasonably possible or a loss in excess of accrued amounts is reasonably possible and the amount of losses or range of losses is determinable. For all third party contingencies (including labor, contract, technology, tax, product-related claims and business litigation), the Company currently estimates that the aggregate range of reasonably possible losses in excess of any accrued liabilities is $0 to approximately $28 million. The estimates included in this amount are based on the Company’s analysis of currently available information and, as new information is obtained, these estimates may change. Due to the inherent subjectivity of the assessments and the unpredictability of outcomes of legal proceedings, any amounts accrued or included in this aggregate amount may not represent the ultimate loss to the Company from the matters in question. Thus, the Company’s exposure and ultimate losses may be higher or lower, and possibly significantly so, than the amounts accrued or the range disclosed above. Spanish Capital Tax The Spanish tax authorities alleged claims for a capital tax and the Appellate Court rejected one of the two bases upon which the Company based its capital tax position. On January 22, 2014, the Company filed an appeal and in order to avoid future interest costs in the event its appeal was unsuccessful, the Company paid Euro 9.8 million ($11.2 million, representing the principal amount) during the first quarter of 2014. On February 24, 2016, the Company received a favorable ruling on its appeal from the Spanish Supreme Court which overruled a lower court ruling. As a result of this decision, the Company reversed the previously recorded provision of Euro 9.8 million ($10.5 million) for the year ended December 31, 2015. During 2016, the Company recorded additional income of $2.3 million related to the finalization of amounts received from the authorities. This amount has principally been reflected as a reduction of administrative expense. |
Subsequent Events |
12 Months Ended |
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Dec. 31, 2016 | |
Subsequent Events [Abstract] | |
Subsequent Events | SUBSEQUENT EVENTS 2017 Productivity Program On February 15, 2017, the Company announced that it was adopting a multi-year productivity program designed to improve overall financial performance, provide flexibility to invest in growth opportunities and drive long-term value creation. In connection with this program, the Company expects to optimize its global footprint and simplify its organizational structures globally. In connection with this initiative, the Company expects to incur cumulative, pre-tax cash charges of between $30-$35 million, consisting primarily of $21-$22 million in personnel-related costs and an estimated $9-$13 million in facility-related costs, such as lease termination, and integration-related costs. In addition, the Company may incur up to $5 million of accelerated depreciation. Approximately $10 million of these charges are expected to be recorded in the first quarter of 2017, with the remainder of the personnel-related costs expected to be recognized by the end of 2017 and the other costs expected to be recognized over the following seven quarters. The overall charges are split approximately evenly between Flavors and Fragrances. This initiative is expected to result in the reduction of approximately 370 members of the Company’s global workforce in various parts of the organization. |
Schedule II - Valuation and Qualifying Accounts and Reserves |
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Valuation and Qualifying Accounts [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule II - Valuation and Qualifying Accounts and Reserves | SCHEDULE II — VALUATION AND QUALIFYING ACCOUNTS AND RESERVES (IN THOUSANDS)
_______________________ (1) The 2016 amount includes an adjustment to the 2015 foreign net operating loss carryforwards in the amount of $7.6 million, as discussed in Note 10 of the Consolidated Financial Statements. (2) The 2015 amount includes an adjustment to the 2014 foreign net operating loss carryforwards in the amount of $10.0 million, as discussed in Note 10 of the Consolidated Financial Statements. (3) The 2014 amount includes an adjustment to the 2013 foreign net operating loss carryforwards in the amount of $81.0 million, as discussed in Note 10 of the Consolidated Financial Statements. (4) The Company executed a legal entity restructuring that resulted in a significant reduction of fully valued deferred tax assets. |
Nature of Operations and Summary of Significant Accounting Policies (Policies) |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fiscal Year End | The Company has historically operated on a 52/53 week fiscal year generally ending on the Friday closest to the last day of the year. For ease of presentation, December 31 is used consistently throughout the financial statements and notes to represent the period-end date. The 2016 and 2015 fiscal years were 52 week periods and the 2014 fiscal year was a 53 week period. For the 2016, 2015 and 2014 fiscal years, the actual closing dates were December 30, January 1 and January 2, respectively. |
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Use of Estimates | The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts and accompanying disclosures. These estimates are based on management’s best knowledge of current events and actions the Company may undertake in the future. Actual results may ultimately differ from estimates. |
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Principles of Consolidation | The consolidated financial statements include the accounts of International Flavors & Fragrances Inc. and those of its subsidiaries. Significant intercompany balances and transactions have been eliminated. To the extent a subsidiary is not wholly owned, any related noncontrolling interest is included as a separate component of Shareholders’ Equity. Any applicable expense (income) attributable to the noncontrolling interest is included in Other expense, net in the accompanying Consolidated Statement of Income and Comprehensive Income due to its immateriality and, as such, is not presented separately. |
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Revenue Recognition | The Company recognizes revenue when the earnings process is complete. This generally occurs when (i) title and risk of loss have been transferred to the customer in accordance with the terms of sale and (ii) collection is reasonably assured. Sales are reduced, at the time revenue is recognized, for applicable discounts, rebates and sales allowances based on historical experience. Related accruals are included in Other current liabilities in the accompanying Consolidated Balance Sheet. |
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Foreign Currency Translation | The Company translates the assets and liabilities of non-U.S. subsidiaries into U.S. dollars at year-end exchange rates. Income and expense items are translated at average exchange rates during the year. Cumulative translation adjustments are shown as a separate component of Shareholders’ Equity. |
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Research and Development | Research and development (“R&D”) expenses relate to the development of new and improved flavors or fragrances, technical product support and compliance with governmental regulation. All research and development costs are expensed as incurred. |
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Cash Equivalents | Cash equivalents include highly liquid investments with maturities of three months or less at date of purchase. |
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Accounts Receivable | The Company sells certain accounts receivable on a non-recourse basis to unrelated financial institutions under “factoring” agreements that are sponsored, solely and individually, by certain customers. The Company accounts for these transactions as sale of receivables, removes the receivables sold from its financial statements, and records cash proceeds when received by the Company. |
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Inventories | Inventories are stated at the lower of cost (on a weighted-average basis) or market. |
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Property, Plant and Equipment | Property, plant and equipment are recorded at cost. Depreciation is calculated on a straight-line basis, principally over the following estimated useful lives: buildings and improvements, 10 to 40 years; machinery and equipment, 3 to 20 years; information technology hardware and software, 3 to 7 years; and leasehold improvements which are included in buildings and improvements, the estimated life of the improvements or the remaining term of the lease, whichever is shorter. |
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Finite-Lived Intangible Assets | Finite-lived intangible assets include customer relationships, patents, trade names, technological know-how and other intellectual property valued at acquisition and amortized on a straight-line basis over the following estimated useful lives: customer relationships, 11 - 24 years; patents, 10 - 15 years; trade names, approximately 30 years and technological know-how, 19 - 28 years. The Company reviews long-lived assets for impairment when events or changes in business conditions indicate that their full carrying value may not be recovered. An estimate of undiscounted future cash flows produced by an asset or group of assets is compared to the carrying value to determine whether impairment exists. If assets are determined to be impaired, the loss is measured based on an estimate of fair value using various valuation techniques, including a discounted estimate of future cash flows. |
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Goodwill | Goodwill represents the difference between the total purchase price and the fair value of identifiable assets and liabilities acquired in business acquisitions. In assessing the potential for impairment of goodwill, management uses the most current actual and forecasted operating data available and current market-based assumptions in accordance with the criteria in FASB Accounting Standards Codification ("ASC") 350. The Company has identified four reporting units: (1) Flavors, (2) Fragrance Compounds, (3) Fragrance Ingredients and (4) Cosmetic Actives Ingredients. These reporting units were determined based on the level at which the performance is measured and reviewed by segment management. The Company performs an annual goodwill impairment test utilizing the two-step approach for the Flavors, Fragrance Compounds, Fragrance Ingredients and Cosmetic Actives Ingredients reporting units, by assessing the fair value of the reporting units based on discounted cash flows. The Company completed its annual goodwill impairment test as of November 30, 2016, which indicated no impairment of goodwill, as the estimated fair values substantially exceeded the carrying values of each of these reporting units. |
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Income Taxes | The Company accounts for taxes under the asset and liability method. Under this method, deferred income taxes are recognized for temporary differences between the financial statement and tax return bases of assets and liabilities, based on enacted tax rates and other provisions of the tax law. The effect of a change in tax laws or rates on deferred tax assets and liabilities is recognized as income in the period in which such change is enacted. Future tax benefits are recognized to the extent that the realization of such benefits is more likely than not, and a valuation allowance is established for any portion of a deferred tax asset that management believes may not be realized. The Company recognizes uncertain tax positions that it has taken or expects to take on a tax return. Pursuant to accounting requirements, the Company first determines whether it is “more likely than not” its tax position will be sustained if the relevant tax authority were to audit the position with full knowledge of all the relevant facts and other information. For those tax positions that meet this threshold, the Company measures the amount of tax benefit based on the largest amount of tax benefit that it has a greater than 50% chance of realizing in a final settlement with the relevant authority. Those tax positions failing to qualify for initial recognition are recognized in the first interim period in which they meet the more likely than not standard. The Company maintains a cumulative risk portfolio relating to all of its uncertainties in income taxes in order to perform this analysis, but the evaluation of its tax positions requires significant judgment and estimation in part because, in certain cases, tax law is subject to varied interpretation, and whether a tax position will ultimately be sustained may be uncertain. The Company regularly repatriates a portion of current year earnings from select non–U.S. subsidiaries. No provision has been made for additional taxes on undistributed earnings of subsidiary companies that are intended and planned to be indefinitely invested in such subsidiaries. The Company intends to, and has plans to, reinvest these earnings indefinitely in its foreign subsidiaries to fund local operations, capital projects and/or aquisitions. Interest and penalties related to unrecognized tax benefits are recognized as a component of income tax expense. |
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Retirement Benefits | Current service costs of retirement plans and postretirement health care and life insurance benefits are accrued. Prior service costs resulting from plan improvements are amortized over periods ranging from 10 to 20 years. |
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Financial Instruments | Derivative financial instruments are used to manage interest and foreign currency exposures. The gain or loss on the hedging instrument is recorded in earnings at the same time as the transaction being hedged is recorded in earnings. The associated asset or liability related to the open hedge instrument is recorded in Prepaid expenses and Other current assets or Other current liabilities, as applicable. The Company records all derivative financial instruments on the balance sheet at fair value. Changes in a derivative’s fair value are recognized in earnings unless specific hedge criteria are met. If the derivative is designated as a fair value hedge, the changes in the fair value of the derivative and of the hedged item attributable to the hedged risk are recognized in Net income. If the derivative is designated as a cash flow hedge, the effective portions of changes in the fair value of the derivative are recorded in Accumulated other comprehensive income ("AOCI") in the accompanying Consolidated Balance Sheet and are subsequently recognized in Net income when the hedged item affects earnings. Ineffective portions of changes in the fair value of cash flow hedges, if any, are recognized as a charge or credit to earnings. |
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Software Costs | The Company capitalizes direct internal and external development costs for certain significant projects associated with internal-use software and amortizes these costs over 7 years. Neither preliminary evaluation costs nor costs associated with the software after implementation are capitalized. Costs related to projects that are not significant are expensed as incurred. |
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Shipping and Handling Costs | Net sales include shipping and handling charges billed to customers. Cost of goods sold includes all costs incurred in connection with shipping and handling. |
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Net Income Per Share | Net income per share is based on the weighted average number of shares outstanding. A reconciliation of shares used in the computations of basic and diluted net income per share is as follows:
An immaterial amount of Stock-Settled Appreciation Rights (“SSARs”) were excluded from the computation of diluted net income per share at December 31, 2016 and 2015. There were no stock options or SSARs excluded from the computation in 2014. The Company has issued shares of Purchased Restricted Stock ("PRS") and Purchased Restricted Stock Units (“PRSUs”) which contain nonforfeitable rights to dividends and thus are considered participating securities which are required to be included in the computation of basic and diluted earnings per share pursuant to the two-class method. The two-class method was not presented since the difference between basic and diluted net income per share for both common shareholders, PRS and PRSU holders was less than $0.01 per share for each year and the number of PRS and PRSUs outstanding as of December 31, 2016, 2015 and 2014 was immaterial. Net income allocated to such PRS and PRSUs during 2016, 2015 and 2014 was approximately $1.0 million, $2.0 million and $2.4 million, respectively. |
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Stock-Based Compensation | Compensation cost of all stock-based awards is measured at fair value on the date of grant and recognized over the service period for which awards are expected to vest. The cost of such stock-based awards is principally recognized on a straight-line attribution basis over their respective vesting periods, net of estimated forfeitures. |
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New Accounting Standards | New Accounting Standards In January 2017, the Financial Accounting Standards Board (“FASB”) issued amendments to the Business Combination guidance which clarifies the definition of a business in order to assist companies when evaluating whether transactions should be accounted for as acquisitions or disposals of assets or businesses. This guidance will be effective prospectively for annual and interim periods beginning after December 15, 2017. This guidance may have an impact on accounting for future acquisitions. In January 2017, the FASB issued an amendment to the Goodwill Impairment guidance which eliminates Step 2 from the goodwill impairment test. This guidance will be effective for fiscal years beginning after December 15, 2019. Early adoption is permitted. The Company plans to adopt this guidance in accordance with its existing annual impairment review policy in fiscal year 2017. The Company does not expect this adoption to have an impact on its consolidated financial statements. In October 2016, the FASB issued authoritative guidance which allows for the immediate recognition of current and deferred income tax impact on intra-entity asset transfers, excluding inventory. This guidance will be effective for fiscal years beginning after December 15, 2017. Early adoption is only permitted as of the beginning of an annual reporting period. This guidance must be adopted using a modified retrospective transition. The Company plans to adopt this guidance in the first quarter of fiscal year 2017 and accordingly, will record a cumulative-effect adjustment directly to Retained earnings of approximately $47 million. In August 2016, the FASB issued authoritative guidance which requires changes to the classification of certain activities within the statement of cash flows. This guidance will be effective for annual and interim periods beginning after December 15, 2017. Early adoption will be permitted for all entities. The Company does not expect this adoption to have a significant impact on its statement of cash flows. In March 2016, the FASB issued authoritative guidance which requires changes to several aspects of the accounting for share-based payment transactions, including the treatment of income tax consequences, classification of awards as either equity or liabilities, and classification of certain items on the statement of cash flows. This guidance will be effective for annual and interim periods beginning after December 15, 2016. The standard requires that employee taxes paid when an employer withholds shares be presented in the Consolidated Statement of Cash Flows as a financing activity instead of an operating activity. The Company expects to adopt this change retroactively and that the impact of this aspect of the standard on the Consolidated Statement of Cash Flows will be approximately $13-$25 million on an annual basis. In addition, the standard requires that excess tax benefits presented in the Consolidated Statement of Cash Flows be classified as an operating activity instead of a financing activity. The Company expects to adopt this change retroactively and that the impact of this aspect of the standard on the Consolidated Statement of Cash Flows will be approximately $5-$12 million on an annual basis. The standard also requires all excess tax benefits/deficiencies be recognized as income tax expense/benefit in the income statement to be applied on a prospective basis. Depending on the future volatility of the stock price, the impact of this aspect of the standard could have a material impact on tax expense on its Consolidated Statement of Income and Comprehensive Income. Additionally, the standard allows the Company to make an entity-wide accounting policy election to either estimate the number of awards that are expected to vest or account for forfeitures as they occur. The Company plans to continue to account for forfeitures using an estimate of awards expected to be forfeited. Lastly, the standard requires that the threshold for equity classification of awards permits withholding up to the maximum statutory tax rates in the applicable jurisdictions. The adoption of this aspect of the standard will impact future vestings. In February 2016, the FASB issued authoritative guidance which requires changes to the accounting for leases. The new guidance establishes a new lease accounting model, that requires entities to record assets and liabilities related to leases on the balance sheet for certain types of leases. The guidance will be effective for annual and interim periods beginning after December 31, 2018. Early adoption will be permitted for all entities. The Company expects the adoption of this guidance will result in significant increases to assets and liabilities on its Consolidated Balance Sheet and is still evaluating the impact on its Consolidated Statement of Income and Comprehensive Income. In September 2015, the FASB issued authoritative guidance related to the adjustments made during the measurement period for items in a business combination. Specifically, the new guidance requires adjustments related to the finalization of estimates to be recorded in the period when they are determined and to provide certain additional disclosures. This guidance is effective for fiscal years beginning after December 15, 2015. The Company adopted this guidance during 2016 and the adoption did not have a significant impact on its consolidated financial statements. In May 2015, the FASB issued authoritative guidance which removed the requirement to categorize within the fair value hierarchy investments for which fair values are estimated using the net asset value practical expedient. The Company has adopted this guidance for the year ended December 31, 2016 and has reclassified prior year amounts for the year ended December 31, 2015 as disclosed in Note 14 to the Consolidated Financial Statements. In April 2015, the FASB issued authoritative guidance which requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability. This guidance is effective for annual and interim periods beginning after December 15, 2015. The Company adopted this guidance retrospectively in 2016 and accordingly has reclassified all debt issuance costs on long-term debt as a direct deduction from the carrying amount of the debt liability in the Consolidated Balance Sheet as of December 31, 2015. The adoption of this guidance did not have a significant impact on its consolidated financial statements. In May 2014, the FASB issued authoritative guidance that provides for a comprehensive model to be used in accounting for revenue arising from contracts with customers. Under this standard, revenue will be recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. This guidance is applicable to all entities and is effective for annual and interim periods beginning after December 15, 2017. Adoption as of the original effective date is permitted. Accordingly, the Company is required to adopt this standard in the first quarter of fiscal year 2018. Companies have the option to apply the new guidance under a retrospective approach to each prior reporting period presented or a modified retrospective approach with the cumulative effect of initially applying the new guidance recognized at the date of initial application within the Consolidated Balance Sheet. The Company is evaluating the impact of the new standard, including updates to the standard that have been proposed by the FASB. In particular, the Company has reviewed the nature of its larger customer relationships and is in the process of reviewing the nature of potential regional variations in all aspects of its customer base regardless of size. Based on the work performed to date, the Company expects to conduct further review and analysis of certain areas that may lead to changes in the manner in which the Company recognizes revenue, including the customized nature of the product, consignment arrangements, rebates, upfront costs, shipping terms and documentation other than formal contracts. As a result, the financial statement impact has not yet been determined. The Company is also currently evaluating the method of adoption and the potential impacts to the consolidated financial statements and related disclosures. |
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Reclassifications and Revisions | Reclassifications and Revisions Certain prior year amounts have been reclassified and revised to conform with current year presentation. |
Nature of Operations and Summary of Significant Accounting Policies (Tables) |
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Dec. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Inventory | Our inventories consisted of the following:
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Reconciliation of Shares Used in Computations of Basic and Diluted Net Income Per Share | A reconciliation of shares used in the computations of basic and diluted net income per share is as follows:
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Restructuring and Other Charges (Tables) |
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Dec. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Movements in Restructuring and Related Accruals | Movements in related accruals during 2014, 2015 and 2016 are as follows:
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Property, Plant and Equipment, Net (Tables) |
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Dec. 31, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment, Net [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Property, Plant and Equipment | Property, plant and equipment consisted of the following amounts:
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Goodwill and Other Intangible Assets, Net (Tables) |
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Dec. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Goodwill by Operating Segment | Movements in goodwill during 2014, 2015 and 2016 were as follows:
Goodwill by segment was as follows:
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Trademark and Other Intangible Assets | Other intangible assets, net consisted of the following amounts:
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Other Assets (Tables) |
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Other Assets [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Other Assets | Other assets consisted of the following amounts:
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Other Current Liabilities (Tables) |
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Dec. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Liabilities, Current [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Other Current Liabilities | Other current liabilities consisted of the following amounts:
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Borrowings (Tables) |
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Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Debt | Debt consisted of the following at December 31:
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Income Taxes (Tables) |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Earnings before Income Taxes | Earnings before income taxes consisted of the following:
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Schedule of Income Tax Provision | The income tax provision consisted of the following:
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Schedule of Reconciliation between U.S. Federal Statutory Income Tax Rate to Actual Effective Tax Rate | A reconciliation between the U.S. federal statutory income tax rate to the actual effective tax rate was as follows:
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Schedule of Deferred Tax Assets and Liabilities | The deferred tax assets consisted of the following amounts:
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Reconciliation of Beginning and Ending Amount of Unrecognized Tax Benefits | A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
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Stock Compensation Plans (Tables) |
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Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-Based Compensation Expense Included in Consolidated Statement of Income and Comprehensive Income | Total stock-based compensation expense included in the Consolidated Statement of Income and Comprehensive Income was as follows:
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SSAR's and Stock Option Activity | SSARs and options activity was as follows:
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SSAR's and Stock Option Outstanding | SSARs and options outstanding at December 31, 2016 was as follows:
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SSAR's and Stock Option Exercisable | SSARs and options exercisable as of December 31, 2016 was as follows:
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RSU's [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
RSU, PRS and Cash RSU Activity | RSU activity was as follows:
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Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
RSU, PRS and Cash RSU Activity | PRSU activity was as follows:
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Cash RSU's [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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RSU, PRS and Cash RSU Activity | Cash RSU activity was as follows:
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Segment Information (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reportable Segment Information | eportable segment information is as follows:
(1) Restructuring and other charges, net include accelerated depreciation related to restructuring initiatives, severance costs related to the termination of a former executive officer and the partial reversal of restructuring accruals recorded in the prior year for the year ended December 31, 2016, severance and related costs related to restructuring initiatives for the year ended December 31, 2015 and plant shutdown costs related to the Fragrance Ingredients Rationalization for the year ended December 31, 2014. (2) Represents a gain related to the sale of property in Brazil for the year ended December 31, 2016. (3) The Spanish capital tax charge reversal represents the reversal of the charge recorded during the year ended December 31, 2013 (as a result of the unfavorable ruling of the Spanish capital tax case from 2002) in the year ended December 31, 2015 due to a favorable ruling on the Company's appeal. (4) Acquisition related costs include costs related to the fair value step-up of inventory of the David Michael and Lucas Meyer acquisitions as well as transaction costs related to the Lucas Meyer, David Michael and Fragrance Resources acquisitions for the year ended December 31, 2016 and transaction costs and costs related to the fair value step-up of inventory of the Ottens Flavors and Lucas Meyer acquisitions for the year ended December 31, 2015. (5) Operational improvement initiative costs include accelerated depreciation and dismantling and idle labor costs in Hangzhou, China, severance costs in Guangzhou, China and the partial reversal of severance accruals related to prior year operational initiatives in Europe for the year ended December 31, 2016 and costs related to the closing of a smaller facility in Europe and certain manufacturing activities in Asia, while transferring production to larger facilities in each respective region for the year ended December 31, 2015 and December 31, 2014. (6) Acceleration of contingent consideration payments related to the Aromor acquisition. (7) |
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Capital Expenditure and Depreciation and Amortization by Segment |
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Net Sales by Geographic Area |
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Employee Benefits (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Compensation and Retirement Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Plan Assets and Benefit Obligations of Defined Benefit Pension Plans | The plan assets and benefit obligations of the defined benefit pension plans are measured at December 31 of each year.
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Components of Net Periodic Benefit Cost and Changes in Plan Assets and Benefit Obligations Recognized in OCI |
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Amounts Expected to be Recognized in Net Periodic Cost | The amounts expected to be recognized in net periodic cost in 2017 are:
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Weighted-Average Actuarial Assumption Used to Determine Expense |
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Changes in Postretirement Benefit Obligation and Plan Assets | Changes in the postretirement benefit obligation and plan assets, as applicable, are detailed in the following table:
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Amounts Recognized in Balance Sheet |
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Amounts Recognized in Accumulated Other Comprehensive Income |
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Accumulated Benefit Obligation |
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Estimated Future Benefit Payments |
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Percentage of Assets Invested |
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Fair Value Hierarchy of Plan Assets | The following tables present the Company's plan assets for the U.S. and non-U.S. plans using the fair value hierarchy as of December 31, 2016 and 2015. The plans’ assets were accounted for at fair value and are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company's assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the valuation of fair value assets and their placement within the fair value hierarchy levels. For more information on a description of the fair value hierarchy, see Note 15.
(1) Investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in the table above are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the Consolidated Balance Sheet. The total amount measured at net asset value includes approximately $187.3 million and $159.7 million in pooled equity funds and $223.2 million and $190.3 million in fixed income mutual funds for the years ended December 31, 2016 and 2015, respectively.
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Reconciliation of Level 3 Non-U.S. Plan Assets Held | The following table presents a reconciliation of Level 3 non-U.S. plan assets held during the year ended December 31, 2016:
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Weighted Average Assumptions Used to Determine Postretirement Benefit Expense and Obligation | The following weighted average assumptions were used to determine the postretirement benefit expense and obligation for the years ended December 31:
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Sensitivity of Disclosures to Changes in Selected Assumptions |
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Financial Instruments (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Carrying Amount and Estimated Fair Value of Financial Instruments | The amounts recorded in the balance sheet (carrying amount) and the estimated fair values of financial instruments at December 31 consisted of the following:
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Derivative Instruments Notional Amount Outstanding | The following table shows the notional amount of the Company’s derivative instruments outstanding as of December 31, 2016 and December 31, 2015:
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Derivative Instruments Measured at Fair Value | The following tables show the Company’s derivative instruments measured at fair value (Level 2 of the fair value hierarchy) as reflected in the Consolidated Balance Sheets as of December 31, 2016 and December 31, 2015 (in thousands):
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Derivative Instruments Which Were Not Designated as Hedging Instruments | The following table shows the effect of the Company’s derivative instruments which were not designated as hedging instruments in the Consolidated Statement of Income and Comprehensive Income for the years ended December 31, 2016 and December 31, 2015 (in thousands):
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Derivative Instruments Designated as Cash Flow and Net Investment Hedging Instruments | The following table shows the effect of the Company’s derivative instruments designated as cash flow and net investment hedging instruments in the Consolidated Statement of Income and Comprehensive Income for the years ended December 31, 2016 and December 31, 2015 (in thousands):
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Accumulated Other Comprehensive Income (Loss) (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Accumulated Other Comprehensive Income (Loss) [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Changes in Accumulated Other Comprehensive Income (Loss) | The following tables present changes in the accumulated balances for each component of other comprehensive income, including current period other comprehensive income and reclassifications out of accumulated other comprehensive income:
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Reclassifications of Accumulated Other Comprehensive Income to Consolidated Statement of Comprehensive Income | The following table provides details about reclassifications out of accumulated other comprehensive income to the Consolidated Statement of Comprehensive Income:
(a) The amortization of prior service cost and actuarial loss is included in the computation of net periodic benefit cost. Refer to Note 14 to the Consolidated Financial Statements - Employee Benefits for additional information regarding net periodic benefit cost. |
Nature of Operations and Summary of Significant Accounting Policies - Schedule of Inventory (Detail) - USD ($) $ in Thousands |
Dec. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Raw materials | $ 288,629 | $ 282,181 |
Work in process | 13,792 | 17,450 |
Finished goods | 289,596 | 272,416 |
Total | $ 592,017 | $ 572,047 |
Nature of Operations and Summary of Significant Accounting Policies - Reconciliation of Shares Used in Computation of Basic and Diluted Net Income Per Share (Detail) - shares shares in Thousands |
12 Months Ended | ||
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Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||
Basic | 79,648 | 80,449 | 80,936 |
Assumed dilution under stock plans | 333 | 442 | 558 |
Diluted | 79,981 | 80,891 | 81,494 |
Restructuring and Other Charges - Movements in Restructuring and Related Accruals (Detail) - USD ($) $ in Thousands |
12 Months Ended | ||
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Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
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Restructuring Reserve [Roll Forward] | |||
Balance | $ 7,882 | $ 759 | $ 2,116 |
Additional charges (reversals), net | (1,042) | 7,594 | 6,398 |
Non-cash charges | (658) | (5,100) | |
Payments and other costs | (2,905) | (471) | (2,655) |
Balance | 3,277 | 7,882 | 759 |
Employee-Related [Member] | |||
Restructuring Reserve [Roll Forward] | |||
Balance | 7,882 | 759 | 2,116 |
Additional charges (reversals), net | (1,700) | 7,594 | (46) |
Non-cash charges | 0 | 0 | |
Payments and other costs | (2,905) | (471) | (1,311) |
Balance | 3,277 | 7,882 | 759 |
Asset - Related/and Other [Member] | |||
Restructuring Reserve [Roll Forward] | |||
Balance | 0 | 0 | 0 |
Additional charges (reversals), net | 658 | 0 | 6,444 |
Non-cash charges | (658) | (5,100) | |
Payments and other costs | 0 | 0 | (1,344) |
Balance | $ 0 | $ 0 | $ 0 |
Goodwill and Other Intangible Assets, Net Goodwill and Other Intangible Assets, Net - Goodwill Rollforward (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
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Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
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Goodwill [Roll Forward] | |||
Goodwill | $ 941,389 | $ 675,484 | $ 665,582 |
Goodwill, Acquired During Period | 67,480 | 265,905 | 9,902 |
Goodwill | 1,000,123 | $ 941,389 | $ 675,484 |
Goodwill, Translation Adjustments | $ (8,746) |
Goodwill and Other Intangible Assets, Net - Schedule of Goodwill by Operating Segment (Detail) - USD ($) $ in Thousands |
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
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Goodwill [Line Items] | ||||
Goodwill | $ 1,000,123 | $ 941,389 | $ 675,484 | $ 665,582 |
Flavors [Member] | ||||
Goodwill [Line Items] | ||||
Goodwill | 473,820 | 401,494 | ||
Fragrances [Member] | ||||
Goodwill [Line Items] | ||||
Goodwill | $ 526,303 | $ 539,895 |
Goodwill and Other Intangible Assets, Net - Additional Information (Detail) - USD ($) $ in Thousands |
12 Months Ended | ||
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Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||
Amortization of acquisition-related intangibles | $ 23,763 | $ 15,040 | $ 7,328 |
Estimated annual amortization, 2016 | 27,700 | ||
Estimated annual amortization, 2017 | 27,200 | ||
Estimated annual amortization, 2018 | 26,000 | ||
Estimated annual amortization, 2019 | 25,300 | ||
Estimated annual amortization, 2020 | $ 20,800 |
Other Assets - Schedule of Other Assets (Detail) - USD ($) $ in Thousands |
Dec. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Other Assets [Abstract] | ||
Overfunded pension plans | $ 4,343 | $ 4,906 |
Cash surrender value of life insurance contracts | 43,425 | 41,957 |
Other | 79,944 | 71,528 |
Total | $ 127,712 | $ 118,391 |
Other Current Liabilities - Schedule of Other Current Liabilities (Detail) - USD ($) $ in Thousands |
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
---|---|---|---|---|
Other Liabilities, Current [Abstract] | ||||
Accrued payrolls and bonuses | $ 64,357 | $ 48,843 | ||
VAT payable | 15,567 | 10,241 | ||
Interest payable | 17,173 | 12,515 | ||
Current pension and other postretirement benefit obligation | 10,630 | 10,620 | ||
Accrued insurance (including workers’ compensation) | 10,798 | 10,857 | ||
Restructuring and other charges | 3,277 | 7,882 | $ 759 | $ 2,116 |
Litigation accrual | 55,000 | 5,000 | ||
Other | 137,486 | 156,524 | ||
Total | $ 314,288 | $ 262,482 |
Sale and Leaseback Transactions - Additional Information (Detail) - USD ($) $ in Millions |
Dec. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Sale Leaseback Transaction [Line Items] | ||
Deferred gain on sale of property | $ 35.6 | $ 38.4 |
Deferred Gains and Other Current Liabilities [Member] | ||
Sale Leaseback Transaction [Line Items] | ||
Deferred gain on sale of property | $ 32.4 | $ 35.2 |
Income Taxes - Schedule of Earnings before Income Taxes (Detail) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Income Tax Disclosure [Abstract] | |||
U.S. income before taxes | $ 9,078 | $ 29,792 | $ 17,650 |
Foreign income before taxes | 514,639 | 509,309 | 531,411 |
Income before taxes | $ 523,717 | $ 539,101 | $ 549,061 |
Income Taxes - Schedule of Income Tax Provision (Detail) - USD ($) $ in Thousands |
12 Months Ended | |||||
---|---|---|---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
||||
Current | ||||||
Federal | $ (2,920) | $ 7,648 | $ 1,175 | |||
State and local | 1,383 | 199 | 264 | |||
Foreign | 105,873 | 98,964 | [1] | 109,729 | ||
Total current income tax provision | 104,336 | 106,811 | 111,168 | |||
Deferred | ||||||
Federal | 8,838 | 14,379 | 20,795 | |||
State and local | (631) | 399 | 113 | |||
Foreign | 6,143 | (1,735) | [1] | 2,442 | ||
Total deferred income tax provision | 14,350 | 13,043 | 23,350 | |||
Total income taxes | $ 118,686 | $ 119,854 | $ 134,518 | |||
|
Income Taxes - Schedule of Reconciliation between U.S. Federal Statutory Income Tax Rate to Actual Effective Tax Rate (Detail) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Income Tax Disclosure [Abstract] | |||
Statutory tax rate | 35.00% | 35.00% | 35.00% |
Difference in effective tax rate on foreign earnings and remittances | (12.20%) | (10.70%) | (9.90%) |
Unrecognized tax benefit, net of reversals | 0.60% | (0.80%) | 0.80% |
Spanish tax charges | 0.00% | (0.40%) | 0.00% |
Spanish dividend withholdings | 0.00% | 0.00% | (0.70%) |
State and local taxes | 0.10% | 0.10% | 0.10% |
Other, net | (0.80%) | (1.00%) | (0.80%) |
Effective tax rate | 22.70% | 22.20% | 24.50% |
Income Taxes - Schedule of Income Tax Provision (Narrative) (Detail) - USD ($) $ in Thousands |
12 Months Ended | |||||
---|---|---|---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
||||
Income Tax [Line Items] | ||||||
Foreign, Current | $ 105,873 | $ 98,964 | [1] | $ 109,729 | ||
Total deferred income tax provision | $ 14,350 | $ 13,043 | $ 23,350 | |||
|
Income Taxes - Schedule of Deferred Tax Assets and Liabilities (Detail) - USD ($) $ in Thousands |
Dec. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Income Tax Disclosure [Abstract] | ||
Employee and retiree benefits | $ 132,638 | $ 132,379 |
Credit and net operating loss carryforwards | 186,062 | 183,594 |
Trademarks and other(2) | 1,406 | 143,727 |
Amortizable R&D expenses(2) | 4,040 | 56,091 |
Other, net | (2,783) | 10,076 |
Gross deferred tax assets | 321,363 | 525,867 |
Property, plant and equipment, net | (17,000) | (11,337) |
Trademarks and other | (55,899) | (72,710) |
Gross deferred tax liabilities | (72,899) | (84,047) |
Valuation allowance | (152,752) | (339,395) |
Total net deferred tax assets | $ 95,712 | $ 102,425 |
Income Taxes - Schedule of Deferred Tax Assets and Liabilities (Narrative) (Detail) - USD ($) $ in Millions |
12 Months Ended | |
---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Income Tax Disclosure [Abstract] | ||
Increase (Decrease) in deferred tax assets | $ (7.6) | $ (10.0) |
Shareholders' Equity - Additional Information (Detail) - USD ($) $ / shares in Units, shares in Millions |
12 Months Ended | ||||
---|---|---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
Aug. 31, 2015 |
Dec. 31, 2013 |
|
Equity [Abstract] | |||||
Cash dividends declared per share | $ 2.40 | $ 2.06 | $ 1.72 | ||
Dividends payable | $ 50,678,000 | $ 44,824,000 | $ 38,000,000 | ||
Dividend per share declared | $ 0.64 | $ 0.56 | $ 0.47 | ||
Shares authorized under repurchase program | $ 250,000,000 | ||||
Stock Repurchase Program, Additional Authorized Amount | $ 250,000,000 | ||||
Remaining authorized repurchase amount | $ 109,300,000 | ||||
Remaining number of shares authorized to be repurchase | 0.9 | ||||
Stock repurchased during period as percentage of shares outstanding | 1.20% | ||||
Shares repurchased (in shares) | 1.1 | ||||
Shares repurchased, amount | $ 127,400,000 | ||||
Shares repurchased, average price per share (in dollars per share) | $ 120.45 |
Stock Compensation Plans - Stock-Based Compensation Expense Included in Consolidated Statement of Income and Comprehensive Income (Detail) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Total stock-based compensation | $ 28,471 | $ 27,944 | $ 27,002 |
Less tax benefit | (7,375) | (8,348) | (8,018) |
Total stock-based compensation, net of tax | 21,096 | 19,596 | 18,984 |
Equity-based awards [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Total stock-based compensation | 24,587 | 23,160 | 22,648 |
Liability-based awards [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Total stock-based compensation | $ 3,884 | $ 4,784 | $ 4,354 |
Stock Compensation Plans - SSAR's and Stock Option Activity (Detail) - SSAR's and Stock Options [Member] - $ / shares shares in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | ||
Balance at December 31, 2013, Shares Subject to SSAR's/Options | 38 | |
Exercised, Shares Subject to SSAR's/Options | (17) | |
Cancelled, Shares Subject to SSAR's/Options | (2) | |
Balance at December 31, 2014, Shares Subject to SSAR's/Options | 19 | 38 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Abstract] | ||
Balance at December 31, 2013, Weighted Average Exercise Price | $ 52.10 | |
Exercised, Weighted Average Exercise Price | 46.72 | |
Cancelled, Weighted Average Exercise Price | 41.16 | |
Balance at December 31, 2014, Weighted Average Exercise Price | $ 59.14 | $ 52.10 |
SSARs/ Options Exercisable | 18 | 38 |
Stock Compensation Plans - Restricted Stock Units Plan - Additional Information (Detail) - RSU's [Member] $ in Millions |
12 Months Ended |
---|---|
Dec. 31, 2016
USD ($)
| |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Vesting percentage | 100.00% |
Vesting period, in years | 3 years |
Total fair value of vested | $ 22.8 |
Unrecognized compensation cost related to non-vested stock options and SSAR, RSU, PRS and Cash RSU awards granted | $ 21.3 |
Unrecognized compensation cost related to non-vested stock options and SSAR, RSU, PRS and Cash RSU awards granted, weighted average period, in years | 1 year 10 months 24 days |
Stock Compensation Plans - Purchased Restricted Stock Plan - Additional Information (Detail) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
PRS [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of shares issued | 58,629 | 52,577 | 99,091 |
Value of shares purchased by employees | $ 7.0 | $ 6.2 | $ 9.7 |
Shares purchased by employees | 29,315 | 33,600 | 49,545 |
Total fair value of vested | $ 10.2 | ||
Unrecognized compensation cost related to non-vested stock options and SSAR, RSU, PRS and Cash RSU awards granted | $ 8.3 | ||
Unrecognized compensation cost related to non-vested stock options and SSAR, RSU, PRS and Cash RSU awards granted, weighted average period, in years | 1 year 9 months 24 days | ||
PRSUs [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of shares issued | 183,000 | 14,622 | |
Value of shares purchased by employees | $ 1.7 | ||
Total fair value of vested | $ 22.8 |
Stock Compensation Plans - Liability Awards - Additional Information (Detail) - Cash RSU's [Member] $ in Millions |
12 Months Ended |
---|---|
Dec. 31, 2016
USD ($)
| |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Vesting percentage granted in cash to eligible employees | 100.00% |
Vesting percentage | 100.00% |
Vesting period, in years | 3 years |
Total fair value of vested | $ 3.9 |
Unrecognized compensation cost related to non-vested stock options and SSAR, RSU, PRS and Cash RSU awards granted | $ 4.9 |
Unrecognized compensation cost related to non-vested stock options and SSAR, RSU, PRS and Cash RSU awards granted, weighted average period, in years | 1 year 9 months 18 days |
Segment Information - Capital Expenditure and Depreciation and Amortization by Segment (Detail) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Segment Reporting Information [Line Items] | |||
Capital Expenditures | $ 126,412 | $ 101,030 | $ 143,182 |
Depreciation and amortization | 102,469 | 89,597 | 89,354 |
Operating Segments [Member] | Flavors [Member] | |||
Segment Reporting Information [Line Items] | |||
Capital Expenditures | 47,064 | 39,416 | 91,104 |
Depreciation and amortization | 47,705 | 45,228 | 36,008 |
Operating Segments [Member] | Fragrances [Member] | |||
Segment Reporting Information [Line Items] | |||
Capital Expenditures | 73,345 | 50,597 | 43,948 |
Depreciation and amortization | 50,724 | 39,614 | 43,790 |
Unallocated assets [Member] | |||
Segment Reporting Information [Line Items] | |||
Capital Expenditures | 6,003 | 11,017 | 8,130 |
Depreciation and amortization | $ 4,040 | $ 4,755 | $ 9,556 |
Segment Information - Net Sales by Geographic Area (Detail) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Segment Reporting Information [Line Items] | |||
Net sales | $ 3,116,350 | $ 3,023,189 | $ 3,088,533 |
Europe, Africa and Middle East [Member] | |||
Segment Reporting Information [Line Items] | |||
Net sales | 964,931 | 945,675 | 1,041,585 |
Greater Asia [Member] | |||
Segment Reporting Information [Line Items] | |||
Net sales | 880,040 | 839,120 | 856,217 |
North America [Member] | |||
Segment Reporting Information [Line Items] | |||
Net sales | 769,081 | 718,614 | 690,214 |
Latin America [Member] | |||
Segment Reporting Information [Line Items] | |||
Net sales | $ 502,298 | $ 519,780 | $ 500,517 |
Employee Benefits - Components of Net Periodic Benefit Cost and Changes in Plan Assets and Benefit Obligations Recognized in OCI (Detail) - Postretirement Benefit Plan [Member] - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Defined Benefit Plan Disclosure [Line Items] | |||
Service cost for benefits earned | $ 852 | $ 966 | $ 1,295 |
Interest cost on projected benefit obligation | 3,326 | 3,904 | 4,896 |
Net amortization of deferrals | (5,088) | (4,476) | (4,109) |
Net periodic benefit cost | (910) | 394 | $ 2,082 |
Net actuarial loss (gain) | 2,868 | (1,557) | |
Recognized actuarial loss | (1,701) | (1,331) | |
Prior service credit | 0 | (33,902) | |
Recognized prior service credit | 6,789 | 5,807 | |
Total recognized in OCI (before tax effects) | $ 7,956 | $ (30,983) |
Employee Benefits - Amounts Expected to be Recognized in Net Periodic Cost (Detail) $ in Thousands |
12 Months Ended |
---|---|
Dec. 31, 2016
USD ($)
| |
U.S. Pension Plans [Member] | |
Defined Benefit Plan Disclosure [Line Items] | |
Actuarial loss recognition | $ 5,181 |
Prior service cost (credit) recognition | 31 |
Non-U.S. Pension Plans [Member] | |
Defined Benefit Plan Disclosure [Line Items] | |
Actuarial loss recognition | 14,344 |
Prior service cost (credit) recognition | (696) |
Postretirement Benefit Plan [Member] | |
Defined Benefit Plan Disclosure [Line Items] | |
Actuarial loss recognition | 1,513 |
Prior service cost (credit) recognition | $ (6,334) |
Employee Benefits - Weighted-Average Actuarial Assumption Used to Determine Expense (Detail) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
U.S. Pension Plans [Member] | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Discount rate | 4.20% | 3.90% | 4.70% |
Expected return on plan assets | 7.30% | 7.30% | 7.30% |
Rate of compensation increase | 3.25% | 3.25% | 3.25% |
Non-U.S. Pension Plans [Member] | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Discount rate | 3.03% | 2.74% | 4.18% |
Expected return on plan assets | 6.40% | 6.24% | 6.27% |
Rate of compensation increase | 1.98% | 2.00% | 2.66% |
Employee Benefits - Amounts Recognized in Balance Sheet (Detail) - USD ($) $ in Thousands |
Dec. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Defined Benefit Plan Disclosure [Line Items] | ||
Other assets | $ 4,343 | $ 4,906 |
Retirement liabilities | (243,407) | (242,383) |
U.S. Pension Plans [Member] | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Other assets | 4,343 | 0 |
Other current liabilities | (4,027) | (3,866) |
Retirement liabilities | (51,684) | (83,334) |
Net amount recognized | (51,368) | (87,200) |
Non-U.S. Pension Plans [Member] | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Other assets | 0 | 4,096 |
Other current liabilities | (557) | (613) |
Retirement liabilities | (102,871) | (73,109) |
Net amount recognized | $ (103,428) | $ (69,626) |
Employee Benefits - Amounts Recognized in Accumulated Other Comprehensive Income (Detail) - USD ($) $ in Thousands |
Dec. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
U.S. Pension Plans [Member] | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Net actuarial loss | $ 154,417 | $ 165,093 |
Prior service cost (credit) | 141 | 203 |
Total AOCI (before tax effects) | 154,558 | 165,296 |
Non-U.S. Pension Plans [Member] | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Net actuarial loss | 339,654 | 324,068 |
Prior service cost (credit) | (7,390) | (8,482) |
Total AOCI (before tax effects) | 332,264 | 315,586 |
Postretirement Benefit Plan [Member] | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Net actuarial loss | 19,336 | 18,169 |
Prior service cost (credit) | (31,664) | (38,453) |
Total AOCI (before tax effects) | $ (12,328) | $ (20,284) |
Employee Benefits - Accumulated Benefit Obligation (Detail) - USD ($) $ in Thousands |
Dec. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
U.S. Pension Plans [Member] | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Accumulated Benefit Obligation — end of year | $ 574,612 | $ 583,346 |
Projected benefit obligation | 65,101 | 587,511 |
Accumulated benefit obligation | 65,101 | 583,346 |
Fair value of plan assets | $ 9,389 | $ 500,311 |
Discount rate | 4.20% | 3.90% |
Rate of compensation increase | 3.25% | 3.25% |
Non-U.S. Pension Plans [Member] | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Accumulated Benefit Obligation — end of year | $ 865,585 | $ 837,272 |
Projected benefit obligation | 895,566 | 609,922 |
Accumulated benefit obligation | 865,585 | 586,954 |
Fair value of plan assets | $ 790,218 | $ 536,200 |
Discount rate | 2.14% | 3.03% |
Rate of compensation increase | 1.97% | 1.98% |
Employee Benefits - Estimated Future Benefit Payments (Detail) $ in Thousands |
12 Months Ended |
---|---|
Dec. 31, 2016
USD ($)
| |
U.S. Pension Plans [Member] | |
Defined Benefit Plan Disclosure [Line Items] | |
2014 | $ 32,871 |
2015 | 33,912 |
2016 | 35,331 |
2017 | 39,392 |
2018 | 37,014 |
2019-2023 | 187,696 |
Required Company Contributions in the Following Year (2017) | 16,107 |
Non-U.S. Pension Plans [Member] | |
Defined Benefit Plan Disclosure [Line Items] | |
2014 | 22,781 |
2015 | 23,109 |
2016 | 23,731 |
2017 | 23,855 |
2018 | 24,488 |
2019-2023 | 134,742 |
Required Company Contributions in the Following Year (2017) | 13,762 |
Postretirement Benefit Plan [Member] | |
Defined Benefit Plan Disclosure [Line Items] | |
2014 | 5,005 |
2015 | 5,132 |
2016 | 5,227 |
2017 | 5,431 |
2018 | 5,417 |
2019-2023 | 25,968 |
Required Company Contributions in the Following Year (2017) | $ 5,005 |
Employee Benefits - Weighted Average Assumptions Used to Determine Postretirement Benefit Expense and Obligation (Detail) |
12 Months Ended | |
---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Expense [Member] | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Discount rate | 4.20% | 3.90% |
Current medical cost trend rate | 7.15% | 5.80% |
Ultimate medical cost trend rate | 4.75% | 4.75% |
Medical cost trend rate decreases to ultimate rate in year | 2023 | 2023 |
Liability [Member] | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Discount rate | 4.20% | 4.20% |
Current medical cost trend rate | 8.00% | 7.15% |
Ultimate medical cost trend rate | 4.75% | 4.75% |
Medical cost trend rate decreases to ultimate rate in year | 2030 | 2023 |
Employee Benefits - Sensitivity of Disclosures to Changes in Selected Assumptions (Detail) $ in Thousands |
12 Months Ended |
---|---|
Dec. 31, 2016
USD ($)
| |
U.S. Pension Plans [Member] | |
Defined Benefit Plan Disclosure [Line Items] | |
25 BP Decrease in Discount Rate, Change in PBO | $ 15,719 |
25 BP Decrease in Discount Rate, Change in ABO | 15,620 |
25 BP Decrease in Discount Rate, Change in pension expense | (109) |
25 BP Decrease in Long-Term Rate of Return, Change in pension expense | 1,250 |
Non-U.S. Pension Plans [Member] | |
Defined Benefit Plan Disclosure [Line Items] | |
25 BP Decrease in Discount Rate, Change in PBO | 46,658 |
25 BP Decrease in Discount Rate, Change in ABO | 44,861 |
25 BP Decrease in Discount Rate, Change in pension expense | 2,876 |
25 BP Decrease in Long-Term Rate of Return, Change in pension expense | 1,895 |
Postretirement Benefit Plan [Member] | |
Defined Benefit Plan Disclosure [Line Items] | |
25 BP Decrease in Discount Rate, Change in ABO | 2,302 |
25 BP Decrease in Discount Rate, Change in pension expense | $ 100 |
Financial Instruments - Derivative Instruments Notional Amount Outstanding (Detail) - USD ($) $ in Thousands |
Dec. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Forward Currency Contracts [Member] | ||
Schedule Of Information By Major Category Of Credit Derivatives Contracts [Line Items] | ||
Derivative instruments outstanding | $ 527,500 | $ 573,200 |
Interest Rate Swaps [Member] | ||
Schedule Of Information By Major Category Of Credit Derivatives Contracts [Line Items] | ||
Derivative instruments outstanding | $ 412,500 | $ 475,000 |
Financial Instruments - Derivative Instruments Which Were Not Designated as Hedging Instruments (Detail) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Foreign currency contracts [Member] | Other (income) expense, net [Member] | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Amount of Gain or (Loss) Recognized in Income on Derivative | $ 26,821 | $ 8,644 |
Financial Instruments - Additional Information (Detail) € in Millions |
3 Months Ended | 12 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2016
USD ($)
|
Mar. 31, 2016
EUR (€)
Agreement
|
Mar. 31, 2016
USD ($)
Agreement
|
Dec. 31, 2016
USD ($)
contract
|
Apr. 04, 2013
USD ($)
|
|
Derivatives, Fair Value [Line Items] | |||||
Number of interest rate swap agreements | Agreement | 3 | 3 | |||
Loss incurred on termination of interest rate swaps | $ 2,700,000 | ||||
Derivative gains included in AOCI | $ 4,100,000 | ||||
Forward Currency Contracts [Member] | |||||
Derivatives, Fair Value [Line Items] | |||||
Number of multiple forward currency contracts matured | contract | 16 | ||||
Interest Rate Swaps [Member] | |||||
Derivatives, Fair Value [Line Items] | |||||
Loss incurred on termination of interest rate swaps | € 2.9 | $ 3,200,000 | |||
Number of Interest Rate Derivatives Held | Agreement | 2 | 2 | |||
Senior Notes - 2013 [Member] | |||||
Derivatives, Fair Value [Line Items] | |||||
Senior notes | $ 300,000,000.0 |
Concentrations Of Credit Risk - Additional Information (Detail) |
12 Months Ended |
---|---|
Dec. 31, 2016
Customer
| |
Risks and Uncertainties [Abstract] | |
Number of customers that accounted for more than 10% of consolidated net sales | 1 |
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