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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------
FORM 10-K
|X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Year Ended December 31, 2001 Commission File Number 1-7626
Sensient Technologies Corporation
WISCONSIN 39-0561070
(State of Incorporation) (IRS Employer Identification Number
777 EAST WISCONSIN AVENUE
MILWAUKEE, WISCONSIN 53202-5304
(414) 271-6755
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
TITLE OF EACH CLASS NAME OF EXCHANGE
------------------- ON WHICH REGISTERED
Common Stock, $.10 par value -------------------
Associated Preferred Share Purchase Rights New York Stock Exchange, Inc.
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or such shorter period that the Registrant
was required to file such reports), and (2) has been subject to such filing
requirements for at least the past 90 days. Yes |X| No |_|
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. |X|
There were 47,544,720 shares of Common Stock outstanding as of March 8,
2002. The aggregate market value of the voting Common Stock held by
non-affiliates of the Registrant as of March 8, 2002, was $1,015,861,957. For
purposes of this computation only, the Registrant's directors and executive
officers were considered to be affiliates of the Registrant. Such
characterization shall not be construed to be an admission or determination for
any other purpose that such persons are affiliates of the Registrant.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of: (1) the Company's Annual Report to Shareholders for the
fiscal year ended December 31, 2001 (see Parts I, II and IV of this Form 10-K),
and (2) the Company's Notice of Annual Meeting and Proxy Statement of the
Company dated March 22, 2002 (see Part III of this Form 10-K).
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TABLE OF CONTENTS
PART I
Item 1. Business ................................................................................. 3
General .................................................................................... 3
Description of Business .................................................................... 4
Flavors & Fragrances Group ................................................................. 4
Color Group ................................................................................ 5
Asia Pacific Division ...................................................................... 6
Research and Development/Quality Assurance ................................................. 7
Products and Application Activities ........................................................ 7
Raw Materials .............................................................................. 8
Competition ................................................................................ 8
Foreign Operations ......................................................................... 9
Patents, Formulae and Trademarks ........................................................... 9
Employees .................................................................................. 9
Regulation ................................................................................. 9
Item 2. Properties .............................................................................. 10
Flavors & Fragrances Group ................................................................. 11
Color Group ................................................................................ 11
Asia Pacific ............................................................................... 11
Item 3. Legal Proceedings ....................................................................... 12
Item 4. Submission of Matters to a Vote of Security Holders ..................................... 12
Executive Officers of the Registrant .............................................................. 12
PART II .................................................................................................. 13
Item 5. Market For The Registrant's Common Stock
and Related Stockholder Matters ................................................... 13
Item 6. Selected Financial Data ................................................................. 14
Item 7. Management's Discussion and Analysis of Financial ....................................... 14
Condition and Results of Operations
Item 7A. Quantitative and Qualitative Disclosures About Market Risk ............................... 14
Item 8. Financial Statements and Supplementary Data ............................................. 14
Item 9. Disagreements on Accounting and Financial Disclosure .................................... 14
PART III ................................................................................................. 14
Item 10. Directors and Executive Officers of the Registrant ...................................... 14
Item 11. Executive Compensation .................................................................. 15
Item 12. Security Ownership of Certain Beneficial Owners and Management .......................... 15
Item 13. Certain Relationships and Related Transactions .......................................... 15
PART IV .................................................................................................. 16
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K ......................... 16
List of Financial Statements and Financial Statement Schedules
Financial Statements ....................................................................... 16
Financial Statement Schedules Form 10-K .................................................... 17
Independent Auditors' Report ...................................................................... 17
Schedule II ....................................................................................... 18
Signatures ........................................................................................S-1
Exhibits ..........................................................................................E-1
2
PART I
Item 1. Business
General
Sensient Technologies Corporation (NYSE: SXT), formerly known as
Universal Foods Corporation (the "Company"), was incorporated in 1882 in
Wisconsin. Its principal executive offices are located at 777 East Wisconsin
Avenue, Suite 1100, Milwaukee, Wisconsin 53202-5304, telephone (414) 271-6755.
The Company is a leading global supplier of colors, flavors and
fragrances. The Company uses sophisticated technologies at facilities around the
world to develop unique formulations that bring life to its customers' products.
The Company manufactures ink-jet inks, technical colors, chemicals for laser
printing and flat screen displays, cosmetic and pharmaceutical additives, as
well as colors and flavors for many of the world's best-known foods and
beverages.
The Company has recently completed three acquisitions that have
significantly expanded its worldwide technical colors, dyes and ink-jet ink
businesses as well as one acquisition that has expanded the Company's worldwide
flavors business.
On November 19, 2001, the Company announced the acquisition of
Kimberly-Clark Printing Technology, Inc., now known as Formulabs, Inc.
("Formulabs"), a manufacturer of specialty inks for ink-jet and industrial
applications with annual revenues of approximately $20 million. Formulabs
manufactures and markets wide-format graphic inks, textile inks and other
industrial inks, and has production facilities located in Escondido,
California, Piqua, Ohio, and Tijuana, Mexico.
On December 3, 2001, the Company announced the acquisition of the
industrial dye business of Crompton Colors, Incorporated, with annual revenues
of approximately $40 million. This business, which includes facilities located
in Gibraltar, Pennsylvania, provides the Company with significant new
capabilities in the manufacture and sale of technical dyes and colors for
non-food applications.
On January 10, 2002, the Company announced the acquisition of SynTec
GmbH, a manufacturer of specialty dyes and chemicals based in Wolfen, Germany
with annual revenues of less than $10 million.
On March 25, 2002, the Company announced the acquisition of the flavors
and essential oil operations of C. Melchers GmbH & Company, a supplier of
flavors for coffees and teas, as well as essential oils, aroma chemicals and
other formulations for flavor, cosmetic and fragrance applications. The acquired
businesses, headquartered in Bremen, Germany, reported revenues of
approximately $14 million in 2001.
The Company completed the sale of substantially all of the assets of
its former Red Star Yeast & Products Division on February 23, 2001. The Company
received cash proceeds from this sale of approximately $113 million.
3
Description of Business
The Company is a manufacturer and marketer of high-performance
components that add distinct characteristics and functional advantages to a wide
range of products. The Company's principal products include:
. Flavors, flavor enhancers and bionutrients,
. Fragrances and aroma chemicals,
. Dehydrated vegetables and other food ingredients,
. Natural and synthetic colors,
. Cosmetic and pharmaceutical additives, and
. Ink-jet inks and specialty dyes, pigments and chemicals.
The Company's operations, except for the Asia Pacific Division, are
managed on a products and services basis. The Company's two reportable segments
are the Flavors & Fragrances Group and the Color Group. Financial information
regarding the Company's two reportable segments is incorporated by reference to
the information set forth on pages 33 and 34 of the Company's 2001 Annual Report
to Shareholders under the heading "Segment and Geographic Information."
Flavors & Fragrances Group
The Company is a leading manufacturer and supplier of flavors,
ingredient systems and aroma chemicals to the dairy, food processing, beverage,
personal care and household products industries worldwide. The Company has a
broad, distinctive and fully integrated product offering, ranging from savory
flavor components to fully formulated flavor systems for dairy, beverage, and
processed food applications.
The Flavors & Fragrances Group produces flavor and fragrance products
that impart a desired taste, texture, aroma or other functionality to a broad
range of consumer and other products. This Group includes the Company's
dehydrated vegetable products business, which produces ingredients for food
processors.
The Flavors & Fragrances Group operates principally through the
Company's subsidiaries, Sensient Flavors Inc. (formerly, Universal Flavor
Corporation) and Rogers Foods, Inc. The Group's plants are located in
California, Illinois, Indiana, Michigan, Ohio, Wisconsin, Belgium, Canada,
France, Germany, Italy, Mexico, the Netherlands, Spain and the United Kingdom.
During 1998 the Company integrated its bioproducts business (which was
formerly operated as a separate division known as Red Star BioProducts) into its
Flavors & Fragrances Group. The bioproducts business serves the food, animal
feed processing, and bionutrient industries with a broad line of natural
extracts and specialty flavors. The Company produces various specialty extracts
from yeast, vegetable proteins, meat, milk protein and other natural products
which are used primarily as savory flavor, texture modifiers and enhancers in
processed foods. The nutritional and functional properties of these extracts
also make them useful in enzyme and pharmaceutical production.
4
Strategic acquisitions have expanded the Company's flavors and
fragrances product lines and processing capabilities. In January 1998, the
Company acquired Arancia Ingredientes Especiales, S.A. de C.V., a manufacturer
of savory flavors and other food ingredients, improving access to the rapidly
growing Latin American savory flavor market. In April 1998, the Company acquired
a British savory and seasonings flavor manufacturer, DC Flavours Ltd., which
further expanded the Company's technology and worldwide market presence and also
gave the Company access to the snack food market, the fastest growing segment
in Europe's food market. In May 1998, the acquisition of substantially all of
the assets and business of the beverage business of German flavor manufacturer
Sundi GmbH, with its emphasis on all-natural flavor ingredients, provided the
Company with a point of entry into Germany, Europe's largest flavor market.
During the quarter ended June 30, 2000, the Company integrated its
former Dehydrated Products Division into its Flavors & Fragrances Group. The
Company believes it is the second largest producer of dehydrated onion and
garlic products in the United States. The Company is also one of the largest
producers and distributors of chili powder, paprika, chili pepper and dehydrated
vegetables such as parsley, celery and spinach. Domestically, the Company sells
dehydrated products to food manufacturers for use as ingredients and also for
repackaging under private labels for sale to the retail market and to the food
service industry.
The Company believes it is one of the leading dehydrators of specialty
vegetables in Europe, operating through its Sensient Specialty Vegetables
business. Advanced dehydration technologies utilized by Sensient Specialty
Vegetables permit faster and more effective rehydration of ingredients used in
many of today's popular convenience foods.
Color Group
The Company believes that it is one of the world's largest producers of
synthetic and natural colors, and that it is the world's leading manufacturer of
certified food colors. The Company makes synthetic and natural colors for
domestic and international producers of beverages, bakery products, processed
foods, confections, pet foods, cosmetics and pharmaceuticals.
Operating through its Sensient Technical Colors business, the Company
also makes ink-jet inks and other high purity organic dyes used in a wide
variety of non-food applications.
The Company believes that its advanced process technology,
state-of-the-art laboratory facilities and equipment, and a complete range of
synthetic and natural color products constitute the basis for its market
leadership position. Strategic acquisitions continue to enhance product and
process technology synergies, as well as increasing its international presence.
The Color Group operates principally through the Company's subsidiary,
Warner-Jenkinson Company, Inc., which has its principal manufacturing facilities
in Missouri. Other Color Group facilities are located in New Jersey, California,
Pennsylvania, Ohio, Canada, Mexico, France, Germany, Italy and the
United Kingdom.
5
Effective January 1, 2000, the Company expanded its European color
business by acquiring Dr. Marcus GmbH, a leading manufacturer of natural colors
located near Hamburg, Germany. On January 27, 2000, the Company acquired 100% of
the ownership of Monarch Food Colors, a manufacturer of colors for the food,
pharmaceutical and cosmetic industries located in High Ridge, Missouri. The
Company had previously held a 24% ownership interest in Monarch Food Colors as a
result of its April 1999 acquisition of Pointing Holdings Limited.
In February 1999, the Company expanded its cosmetics business through
the purchase of Les Colorants Wackherr, a Paris, France-based producer of colors
for major cosmetics houses throughout Europe, Asia and North America. Also in
February 1999, the Company further developed its natural colors offerings by
acquiring certain assets of Quimica Universal, a Peruvian producer of carminic
acid and annatto, natural colors used in food and other applications. The
Company acquired Pointing Holdings Limited, a manufacturer of food colors
located in the United Kingdom, in April 1999. The Pointing international color
business significantly strengthened the Company's worldwide color capabilities.
In August 1999, the Company acquired certain assets of Nino Fornaciari fu
Riccardo SNC, an Italian producer of natural colors for the food and beverage
industries.
In September 1998, the Company acquired Italian natural color producer
Reggiana Antociani S.R.L., a company which specializes in the production of
anthocyanin, which is extracted from grape skins and black carrots for use in
fruit juices, flavored teas, wine coolers and fruit fillings, strengthening the
Company's offerings in natural colors, the fastest growing segment of the
worldwide food colors market.
The Company became a supplier of ink-jet inks for the ink-jet printer
market with the acquisition of Tricon Colors in 1997. Also in 1997, the Company
strengthened its presence in Latin America by acquiring certain assets of the
food color business of Pyosa, S.A. de C.V., located in Monterrey,
Mexico.
Asia Pacific Division
The Asia Pacific Division focuses on marketing the Company's diverse
product line in the Pacific Rim under one name. Through its Sensient Asia
Pacific Division, the Company offers a full range of products from its Flavors &
Fragrances Group and Color Group, as well as products developed by regional
technical teams to appeal to local preferences. Sales, marketing and technical
functions are managed through the Asia Pacific Division's headquarters in
Singapore. Manufacturing operations are located in Australia, China, New
Zealand and the Philippines.
In 2001, the Asia Pacific Division incorporated Sensient India Private
Limited and opened a new sales office in Mumbai, India. Additional sales offices
are located in Australia, China, Hong Kong, Japan and Thailand.
6
Research and Development/Quality Assurance
The development of specialized products and services is a complex
technical process calling upon the combined knowledge and talents of the
Company's research, development and quality assurance personnel. The Company
believes that its competitive advantage lies in its ability to work with its
customers to develop and deliver high-performance products that address the
distinct needs.
The Company's research, development and quality assurance personnel
make significant contributions toward improving existing products and developing
new products tailored to customer needs, while providing on-going technical
support and know-how to the Company's manufacturing activities. As of December
31, 2001, the Company employed approximately 258 people in research, development
and quality assurance.
Expenditures for research and development related to continuing
operations in calendar year 2001 were $16,705,000, compared with $18,294,000 in
the year ended December 31, 2000, and $18,245,000 in the year ended December 31,
1999.
As part of its commitment to quality as a competitive advantage, the
Company has undertaken efforts to achieve certification to the requirements
established by the International Organization for Standardization in Geneva,
Switzerland, through its ISO 9000 series of quality standards. Sites currently
certified include Sensient Flavors & Fragrances Group plants in the United
States, Spain, Italy, Mexico, Belgium, Germany, the United Kingdom, Canada and
France and Sensient Color Group plants in the United States, Mexico and the
United Kingdom.
Products and Application Activities
The Company's strategic focus is on the manufacture and marketing of
high-performance components that bring life to products. Accordingly, the
Company devotes considerable attention and resources to the development of
product applications and processing improvements to support its customers'
numerous new and reformulated products. Many of the proprietary processes and
formulae developed by the Company are maintained as trade secrets and under
secrecy agreements with customers.
Lower calorie ingredients and sweeteners for dairy, food and beverage
applications are subjects of development activity for the Flavors & Fragrances
Group. Formulations for functional and textured beverages and flavors for snack
and main meal items offer opportunities as well. Development of savory flavors
accelerated with the integration of the Company's BioProducts Division in 1998
and the Dehydrated Products Division in 2000. The development of yeast
derivatives and other specialty ingredients also provides growth opportunities
in bionutrients and biotechnology markets, such as pharmaceuticals, vitamins,
vaccines and bioremediation.
7
The natural food color market is an important target for the Color
Group. The acquisitions of Reggiana, Forniciari and Dr. Marcus (as discussed
above) have provided new technologies in the extraction and purification of
natural colors and have enabled rapid growth in the beverage, dairy and snack
food segments. Recent expansion of the Color Group's purification technology
will also open further opportunities in the ink-jet market.
Raw Materials
The Company uses a wide range of raw materials in producing its
products. Chemicals used to produce certified colors are obtained from several
domestic and foreign suppliers. Raw materials for natural colors, such as
carmine, beta-carotene, annatto and turmeric, are purchased from overseas and
U.S. sources. In the production of flavors and fragrances, the principal raw
materials include essential oils, aroma chemicals, botanicals, fruits and
juices, and are primarily obtained from local vendors. Flavor enhancers and
secondary flavors are produced from yeast and vegetable materials such as corn
and soybean. Chili peppers, onion, garlic and other vegetables are acquired
under annual contracts with numerous growers in the western United States and
Europe.
The Company believes that alternate sources of materials are available
to enable it to maintain its competitive position in the event of an
interruption in the supply of raw materials from a single supplier.
Competition
All Company products are sold in highly competitive markets. While no
single factor is determinative, the Company's competitive position is based
principally on process and applications expertise, quality, technological
advances resulting from its research and development, and customer service and
support. Because of its highly differentiated products, the Company competes
with only a few companies across multiple product lines, and is more likely
to encounter competition specific to an individual product.
.. Flavors and Fragrances. Competition to supply the flavors and fragrances
industries has taken on an increasingly global nature. Most of the
Company's customers do not buy their entire flavor and/or fragrance
products from a single supplier and the Company does not compete
with a single company in all product categories. Competition for the supply
of flavors and fragrances is based on the development of customized
ingredients for new and reformulated customer products, as well as on
quality, customer service and price. Competition to supply dehydrated
vegetable products is present through several large and small domestic
competitors, as well competitors in other countries. Competition for the
supply of dehydrated vegetables is based principally on product quality,
customer service and price.
.. Color. Competition in the color market is diverse, with the majority of the
Company's competitors specializing in either synthetic dyes or natural
colors. The Company believes that it gains a competitive advantage as the
only major basic manufacturer of a full range of color products, including
synthetic dyes and pigments as well as natural colors. Competition in the
supply of ink-jet inks is based principally upon price, quality and
service, as well as product development and technical capabilities. The
Company competes against two main domestic competitors in supplying ink-jet
inks and believes it gains an advantage as a low cost, high quality
supplier.
8
.. Asia Pacific. Because of the broad array of products available to customers
of the Asia Pacific Division, the Company is able to offer a wider product
base than many of its competitors. Competition is based upon reliability in
product quality, service and price as well as technical support available
to customers.
Foreign Operations
The information appearing under the heading "Geographic Information" in
Note 11 to the Consolidated Financial Statements of the Company, which appears
on page 34 of the Company's 2001 Annual Report, is incorporated herein by
reference.
Patents, Formulae and Trademarks
The Company owns or controls many patents, formulae and trademarks
related to its businesses. The businesses are not materially dependent upon
patent or trademark protection; however, trademarks, patents and formulae are
important for the continued consistent growth of the Company.
Employees
As of December 31, 2001, the Company employed 3,454 persons worldwide.
Regulation
Compliance with government provisions regulating discharges into the
environment, or otherwise relating to the protection of the environment, did not
have a material adverse effect on the Company's operations for the year covered
by this report. Compliance is not expected to have a material adverse effect in
the succeeding two years as well. The production, packaging, labeling and
distribution of certain of the products of the Company are subject to the
regulations of various federal, state and local governmental agencies, in
particular the U.S. Food & Drug Administration.
9
Item 2. Properties
The locations and the nature of the primary production operations of
the Company are as follows:
Flavors & Fragrances Group:
United States
Amboy, IL: Ingredients and flavors
Greenfield, CA: Dehydrated products
Fairfield, OH: Flavors
Harbor Beach, MI: Flavors and flavor enhancers
Indianapolis, IN: Flavors
Juneau, WI: Flavor enhancers and extracts
Livingston, CA: Dehydrated products
Turlock, CA: Dehydrated products
Belgium
Brussels: Natural health ingredients
Heverlee: Ingredients and flavors
Canada
Cornwall, Ontario: Flavor enhancers and extracts
Delta, B.C: Ingredients and flavors
Rexdale, Ontario: Ingredients and flavors
Tara, Ontario: Flavors and flavor enhancers
France
Marchais: Dehydrated products
Strasbourg: Flavor enhancers and extracts
Germany
Bremen (two plants): Flavors, flavored products and essential oils
Great Britain
Bletchley: Flavors and extracts
Lampeter (Wales): Flavors and flavor enhancers
Italy
Milan: Flavors
Mexico
Celaya: Flavor enhancers and extracts
Tijuana: Inks
Tlalnepantla: Ingredients and flavors
Netherlands
Elburg: Dehydrated products
Spain
Granada: Fragrances and aromatic chemicals
10
Color Group:
United States
Elmwood Park, NJ (two plants):
Colors/dyes and ink-jet products
Escondido, CA: Ink-jet products and specialty inks
Gibraltar, PA: Technical dyes for non-food applications
High Ridge, MO: Natural and synthetic colors
Piqua, OH: Specialty inks South Plainfield, NJ (two plants):
Cosmetic/pharmaceutical colors
St. Louis, MO: Natural and synthetic colors
Canada
Kingston, Ontario: Synthetic and natural colors
France
Saint Ouen L'Aumone: Cosmetic colors
Germany
Geesthacht: Natural colors
Wolfen: Specialty dyes and chemicals
Great Britain
King's Lynn: Natural and synthetic colors and dyes
Italy
Reggio Emilia (two plants):
Natural colors
Mexico
Lerma: Synthetic and natural colors
Tijuana: Specialty inks
Asia Pacific:
Australia
Keysborough, Victoria:
Colors and flavors
China
Guangzhou: Colors and flavors
New Zealand
Mt. Wellington: Flavors
Philippines
Pasig City/Manila: Flavors and color blending
None of these properties is held subject to any material encumbrance.
11
Item 3. Legal Proceedings
The Company is a party to various legal proceedings related to its
business. The Company believes that adverse decisions in these proceedings would
not, individually or in the aggregate, subject the Company to damages of a
material amount.
Item 4. Submission of Matters to a Vote of Security Holders
There were no matters submitted to a vote of security holders during
the fourth quarter of the year ended December 31, 2001.
Executive Officers of the Registrant
The executive officers of the Company and their ages as of March 1,
2002 are as follows:
Name Age Position
---- --- --------
Kenneth P. Manning 60 Chairman, President and Chief Executive Officer
Richard Carney 52 Vice President - Human Resources
Steven O. Cordier 46 Vice President - Administration
John L. Hammond 55 Vice President, Secretary and General Counsel
Richard F. Hobbs 54 Vice President, Chief Financial Officer & Treasurer
Johannes Kleppers 45 President - Flavors & Fragrances
Jack H. Koberstine 45 President - Dehydrated Products
Richard J. Malin 35 Assistant Treasurer
John R. Mudd 46 President - Color
Ralph G. Pickles 55 President - Asia Pacific
Stephen J. Rolfs 37 Vice President, Controller & Chief Accounting Officer
Jorge E. Slater 54 Vice President, South America and Marketing
Dr. Ho-Seung Yang 54 Vice President, Technologies
The Company has employed all of the individuals named above for at
least the past five years, except Messrs. Hammond, Kleppers, Koberstine, Mudd,
Rolfs and Yang.
Mr. Hammond joined the Company in January 1998, as Vice President,
Secretary and General Counsel. From 1992 to 1997, Mr. Hammond was employed by
The Providence Journal Company, a newspaper, cable and broadcast television
company, initially as Vice President - Legal, and subsequently as Vice
President, General Counsel and Chief Administrative Officer. From 1989 to 1992,
Mr. Hammond was Vice President, General Counsel and Secretary of Landstar
System, Inc., a trucking company. Prior to that, Mr. Hammond was employed by The
Singer Company for ten years and was Deputy General Counsel at the time of his
departure.
Mr. Kleppers joined the Company in June 2000 as General Manager of the
Company's United Kingdom flavors business. In January 2001, Mr. Kleppers became
General Manager of the Company's European flavors and fragrances business, and
in September 2001, Mr. Kleppers was appointed as President of the Company's
12
Flavors & Fragrances Group. Prior to joining the Company, Mr. Kleppers had been
Vice President, Flavors and Fragrances Europe, for Bush Boake Allen Ltd. since
January 1996.
Mr. Koberstine joined the Company in 1998 as Vice President/General
Manager of the Dairy and Food Ingredients business of the Company's Flavor
Division. In April 2000, Mr. Koberstine became President of the Company's Red
Star Yeast & Products Division, and in February 2001, he became Vice President,
Marketing. In April 2001, he became President of the Company's Dehydrated
Products business. Prior to joining the Company, Mr. Koberstine was employed by
Hercules, Inc. for 16 years, with his final assignment as Director of Sales and
Marketing, North America, for that company's food ingredients business.
Mr. Mudd re-joined the Company in January 2000 and became President of
the Company's Color Division in February 2000. Mr. Mudd served as President of
Monarch Food Colors from May 1993 until the Company acquired that business in
January 2000. Prior to his service with Monarch Food Colors, Mr. Mudd was
employed by the Company for approximately 12 years.
Mr. Rolfs joined the Company as Manager-Corporate Development in 1997.
In December 2001 he was appointed Vice President, Chief Accounting Officer and
Controller. He had served as the Company's Vice President-Treasurer since
September 2000 and, prior to that, as its Vice President-Corporate Development
since June 2000. Prior to joining the Company, Mr. Rolfs was employed by
Brown-Forman Corporation, a beverage and consumer products company, from 1993 to
1997, initially as a Financial Analyst and then as Assistant Vice President.
Prior to that, Mr. Rolfs worked for the public accounting firm of Ernst & Young
LLP from 1986 to 1991.
Dr. Yang re-joined the Company and was elected Vice President -
Technologies in January 1998. From 1990 to 1998, Dr. Yang was employed by SK
Chemicals in Seoul, Korea, where he held the positions of managing director of
corporate planning and development, managing director, group chairman's office
and director, life science and development. Prior to his service with SK
Chemicals, Dr. Yang was the Company's Director of Research from 1987 to 1989.
PART II
Item 5. Market For The Registrant's Common Stock and Related Stockholder Matters
The only market in which the common stock of the Company is traded is
the New York Stock Exchange. The range of the high and low sales prices as
quoted in the New York Stock Exchange - Composite Transaction tape for the
common stock of the Company and the amount of dividends declared for the fiscal
years 2000 and 2001 appearing under "Common Stock Prices and Dividends" on page
38 of the 2001 Annual Report to Shareholders are incorporated by reference. In
fiscal 2001, common stock dividends were paid on a quarterly basis, and it is
expected that quarterly dividends will continue to be paid in the future.
On February 10, 2000, the Board of Directors established a share
repurchase program that authorizes the Company to repurchase up to five million
shares of the Company's common stock. As of March 8, 2002, 3,941,400 shares had
been repurchased under this program. On April 27, 2001, the Board
13
of Directors authorized the repurchase of an additional five million
shares. As of March 8, 2002, no shares had been repurchased under this
authorization.
On June 25, 1998, the Board of Directors of the Company adopted a
preferred stock shareholder rights plan which is described in Note 6 to the
Consolidated Financial Statements - "Shareholders' Equity" on page 30 of the
2001 Annual Report to Shareholders, which is incorporated by reference.
The number of shareholders of record on February 28, 2002 was 4,593.
Item 6. Selected Financial Data
The selected financial data required by this item is incorporated by
reference from the "Five Year Review" and the notes thereto on page 37 of the
2001 Annual Report to Shareholders.
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The information required by this item is set forth under "Management's
Analysis of Operations and Financial Condition" on pages 16 through 21 of the
2001 Annual Report to Shareholders and is incorporated by reference.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
The information required by this item is set forth under "Market Risk
Factors" on pages 19 and 20 of the 2001 Annual Report to Shareholders and is
incorporated by reference.
Item 8. Financial Statements and Supplementary Data
The financial statements and supplementary data required by this item
are set forth on pages 22 through 36 of the 2001 Annual Report to Shareholders
and are incorporated by reference.
Item 9. Disagreements on Accounting and Financial Disclosure
None.
PART III
Item 10. Directors and Executive Officers of the Registrant
Information regarding directors and officers appearing under "Election
of Directors" (ending at "Committees of the Board of Directors") and "Section
16(a) Beneficial Ownership Reporting Compliance" on pages three through five and
page 18, respectively, of the Proxy Statement for the Annual Meeting of
Shareholders of the Company dated March 22, 2002 ("Proxy Statement"), is
incorporated by reference. Additional information regarding executive officers
appears at the end of Part I above.
14
Item 11. Executive Compensation
Information relating to compensation of directors and officers is
incorporated by reference from "Director Compensation and Benefits" on page
seven of the Proxy Statement and "Executive Compensation" on pages 14 through 18
of the Proxy Statement. Information relating to the Compensation and Development
Committee of the Company's Board of Directors is incorporated by reference
from the third paragraph on page six of the Proxy Statement under the heading
"Committees of the Board of Directors."
Item 12. Security Ownership of Certain Beneficial Owners and Management
The discussion of securities ownership of certain beneficial owners and
management appearing under "Principal Shareholders" on pages ten and 11 of the
Proxy Statement is incorporated by reference.
Item 13. Certain Relationships and Related Transactions
There are no family relationships between any of the directors,
nominees for director and officers of the Company nor any arrangement or
understanding between any director or officer or any other person pursuant to
which any of the nominees has been nominated. No director, nominee for director
or officer had any material interest, direct or indirect, in any business
transaction of the Company or any subsidiary during the period January 1, 2001
through December 31, 2001, or in any such proposed transaction. In the ordinary
course of business, the Company engages in business transactions with companies
whose officers or directors are also directors of the Company. These
transactions are routine in nature and are conducted on an arm's-length basis.
The terms of any such transactions are comparable at all times to those
obtainable in business transactions with unrelated persons.
16
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) Documents filed:
1. and 2: Financial Statements and Financial Statement
Schedules. See below for "List of Financial
Statements and Financial Statement Schedules."
3. Exhibits: See Exhibit Index following this report.
With the exceptions of Exhibits 4.2 and 4.3, no other
instruments defining the rights of holders of long-
term debt of the Company and its consolidated
subsidiaries are filed herewith because no other debt
instrument authorizes securities exceeding 10% of the
total consolidated assets of the Company. The Company
agrees to furnish a copy of any such instrument to
the Securities and Exchange Commission upon request.
(b) Reports on Form 8-K:
A report on Form 8-K was filed on December 14, 2001
reporting the issuance of approximately $150 million
of new debt through a private placement.
List of Financial Statements and Financial Statement Schedules
Page Reference in
1. Financial Statements 2001 Annual Report
To Shareholders
---------------
The following consolidated financial statements of Sensient Technologies
Corporation and subsidiaries are incorporated by reference from the Annual
Report to Shareholders for the year ended December 31, 2001:
Independent Auditors Report 36
Consolidated Balance Sheets-December 31, 2001 and 2000 23
Consolidated Statements of Earnings - Years ended December 31, 2001, 2000 and 1999 22
Consolidated Statements of Shareholders' Equity - Years ended December 31, 2001, 2000 and 1999 24
Consolidated Statements of Cash Flows-Years ended December 31, 2001, 2000 and 1999 25
Notes to Consolidated Financial Statements 26-35
17
Page Reference in
2. Financial Statement Schedules Form 10-K Form 10-K
---------
Independent Auditors' Report 17
Schedule II - Valuation and Qualifying Accounts and Reserves 18
All other schedules are omitted because they are inapplicable, not required by
the instructions or the information is included in the consolidated financial
statements or notes thereto.
Independent Auditors' Report
To the Shareholders and Board of Directors
of Sensient Technologies Corporation:
We have audited the consolidated financial statements of Sensient Technologies
Corporation and subsidiaries (the "Company") as of December 31, 2001 and 2000,
and for each of the three years in the period ended December 31, 2001, and have
issued our report thereon dated February 14, 2002, which report includes an
explanatory paragraph as to the change in accounting in 2000 of amortizing
unrecognized net gains and losses related to the Company's obligation for
post-retirement benefits. Such consolidated financial statements and report are
included in your 2001 Annual Report to Shareholders and are incorporated herein
by reference. Our audits also included the consolidated financial statement
schedule of Sensient Technologies Corporation, listed in Item 14. This
consolidated financial statement schedule is the responsibility of the Company's
management. Our responsibility is to express an opinion based on our audits. In
our opinion, such consolidated financial statement schedule, when considered in
relation to the basic consolidated financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.
DELOITTE & TOUCHE LLP
Milwaukee, Wisconsin
February 14, 2002
18
SCHEDULE II
SENSIENT TECHNOLOGIES CORPORATION AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
(IN THOUSANDS)
YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
Valuation Accounts Deducted in the Balance Additions
------------------------------------------- Balance at Charged to
Sheet From the Assets To Beginning of Costs and Additions Balance At
------------------------------------------ Recorded During End of
Which They Apply Period Expenses Acquisitions Deductions(A) Period
---------------- ------ -------- ------------ ------------- ------
1999
Allowance for Losses: $ 4,911 $ 283 $ --- $ 1,143 $ 4,051
Trade accounts receivable
2000
Allowance for losses: $ 4,051 $ 826 $ --- $ 2,029 $ 2,848
Trade accounts receivable
2001
Allowance for losses: $ 2,848 $ 782 $ 1,049 $ 619 $ 4,060
Trade accounts receivable
(A) Accounts written off, less recoveries and reclassification of net assets
held for sale in 2000.
19
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
SENSIENT TECHNOLOGIES CORPORATION
By: /s/ John L. Hammond
-------------------
John L. Hammond
Vice President, Secretary & General Counsel
Dated: March 28, 2002
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below as of March 28, 2002, by the following persons
on behalf of the Registrant and in the capacities indicated.
/s/Kenneth P. Manning /s/ James A.D. Croft
--------------------- --------------------
Kenneth P. Manning James A.D. Croft
Chairman of the Board, President and Director
Chief Executive Officer
/s/ Alberto Fernandez
/s/ Richard F. Hobbs ---------------------
-------------------- Alberto Fernandez
Richard F. Hobbs Director
Vice President, Chief Financial Officer and
Treasurer
/s/ James L. Forbes
-------------------
/s/ Richard A. Abdoo James L. Forbes
-------------------- Director
Richard A. Abdoo
Director
/s/ William V. Hickey
---------------------
/s/ Michael E. Batten William V. Hickey
--------------------- Director
Michael E. Batten
Director
/s/ Essie Whitelaw
------------------
/s/ John F. Bergstrom Essie Whitelaw
--------------------- Director
John F. Bergstrom
Director
/s/ Fergus M. Clydesdale
------------------------
Dr. Fergus M. Clydesdale
Director
S-1
SENSIENT TECHNOLOGIES CORPORATION
EXHIBIT INDEX
2001 ANNUAL REPORT ON FORM 10-K
Exhibit Incorporated by Filed
Number Description Reference From Herewith
------ ----------- -------------- --------
3.1 Amended and Restated Articles of Exhibit 3.1 to Quarterly Report on Form 10-Q for the
Incorporation adopted January 21, 1999 as quarter ended March 31, 2001
amended as of April 26, 2001 (Commission File No.1-7626)
3.2 By-Laws of Sensient Technologies Corporation Exhibit 3.1 to Quarterly Report on Form 10-Q for the
quarter ended March 31, 2001
(Commission File No.1-7626)
4.1 Rights Agreement, dated as of August Exhibit 1.1 to Registration Statement on
6, 1998 between Registrant and Firstar Form 8-A dated July 20, 1998
Trust Company (Commission File No. 1-7626)
4.1(1) Amendment dated as of November 6, 2000 Exhibit 4.1 to Quarterly Report on Form 10-Q for the
to the Rights Agreement dated as of quarter ended September 30, 2000
August 6, 1998, between Registrant and (Commission File No. 1-7626)
Wells Fargo Bank Minnesota, N.A. (as
Successor to Firstar Trust Company), as
Rights Agent
4.2 Indenture dated as of November 9, 1998 Exhibit 4.1 to Registration Statement on Form S-3
between Registrant and The First National dated November 9, 1998
Bank of Chicago, as Trustee (Commission File No. 333-67015)
4.3 Note Purchase Agreement dated as of November X
29, 2001, between the Registrant and Various
Lenders
10 Material Contracts
10.1 Management Contracts or Compensatory
Plans
10.1(a) Executive Employment Contract Exhibit 10.2(a) to Annual Report on Form 10-K
between Registrant and Kenneth P. Manning for the fiscal year ended September 30, 1999
dated November 11, 1999 (Commission File No. 1-7626)
E-1
SENSIENT TECHNOLOGIES CORPORATION
EXHIBIT INDEX
2001 ANNUAL REPORT ON FORM 10-K
Exhibit Incorporated by Filed
Number Description Reference From Herewith
------ ----------- -------------- --------
10.1(b) Form of Amended and Restated Change of X
Control Employment and Severance Agreement
for Executive Officers
10.1(c) 1985 Stock Plan for Executive Exhibit 10.2(c) to Annual Report on Form 10-K
Employees for the fiscal year ended September 30, 1998
(Commission File No. 1-7626)
10.1(d) Universal Foods Corporation 1990 Exhibit 10.2(d) to Annual Report on
Employee Stock Plan, as amended Form 10-K for the fiscal year ended
September 10, 1998 September 30, 1998 (Commission File No. 1-7626)
10.1(d)(1) Amendment of 1990 Employee Stock Plan Exhibit 10.1(d)(1) to Annual Report on Form 10-K for
dated as of November 6, 2000 the fiscal year ended December 31, 2000
(Commission File No. 1-7626)
10.1(e) Universal Foods Corporation 1994 Exhibit 10.2(f) Annual Report on Form 10-K for the
Employee Stock Plan, as amended fiscal year ended September 30, 1998
September 10, 1998 (Commission File No. 1-7626)
10.1(e)(1) Amendment of 1994 Employee Stock Plan dated Exhibit 10.1(e)(1) to Annual Report on Form 10-K for
as of November 6, 2000 the fiscal year ended December 31, 2000
(Commission File No. 1-7626)
10.1(f) Universal Foods Corporation 1998 Exhibit 10.2(h) to Annual Report on Form 10-K for the
Stock Option Plan, as amended fiscal year ended September 30, 1998
September 10, 1998 (Commission File No. 1-7626)
10.1(f)(1) Amendment of 1998 Employee Stock Plan Exhibit 10.1(f)(1) to Annual Report on Form 10-K for the
dated as of November 6, 2000 fiscal year ended December 31, 2000
(Commission File No. 1-7626)
10.1(g) 1999 Non-Employee Director Stock Appendix A to Definitive Proxy Statement filed
Option Plan on Schedule 14A on December 17, 1999.
(Commission File No. 1-7626)
E-2
SENSIENT TECHNOLOGIES CORPORATION
EXHIBIT INDEX
2001 ANNUAL REPORT ON FORM 10-K
Exhibit Incorporated by Filed
Number Description Reference From Herewith
------ ----------- -------------- --------
10.1(g)(1) Amendment of 1999 Non-Employee Director Stock Exhibit 10.1(g)(1) to Annual Report on Form 10-K for
Option Plan dated as of November 6, 2000 the fiscal year ended December 31, 2000 (Commission
File No. 1-7626)
10.1(h) Amended and Restated Directors Appendix B to Definitive Proxy Statement filed
Deferred Compensation Plan on Schedule 14A on December 17, 1999
(Commission File No. 1-7626)
10.1(h)(1) Amendment No. 1 to the Directors Deferred Exhibit 10.1(h)(1) to Annual Report on Form 10-K for
Compensation Plan dated December 12, 2000 the fiscal year ended December 31, 2000
(Commission File No. 1-7626)
10. 1(i) Management Income Deferral Plan, Exhibit 10.2(k) to Annual Report on Form 10-K for the
including Amendment No. 1 thereto fiscal year ended September 30, 1998
dated September 10, 1998 (Commission File No. 1-7626)
10.1(i)(1) Amendment No. 2 to Management Income Deferral Exhibit 10.1(i)(1) to Annual Report on Form 10-K for
Plan dated June 15, 2000 the fiscal year ended December 31, 2000 (Commission
File No. 1-7626)
10.1 (i)(2) Amendment No. 3 to Management Income Deferral Exhibit 10.1(i)(2) to Annual Report on Form 10-K for
Plan dated December 12, 2000 the fiscal year ended December 31, 2000
(Commission File No. 1-7626)
10.1(j) Executive Income Deferral Plan, including Exhibit 10.2 (1) to Annual Report on Form 10-K for
Amendment No. 1 thereto dated September 10, the fiscal year ended September 30, 1998
1998 (Commission File No. 1-7626)
10.1(j)(1) Amendment No. 2 to Executive Income Deferral Exhibit 10.1(j)(1) to Annual Report on Form 10-K for
Plan dated June 15, 2000 the fiscal year ended December 31, 2000
(Commission File No. 1-7626)
10.1(j)(2) Amendment No. 3 to the Executive Income Exhibit 10.1(j)(2) to Annual Report on Form 10-K for
Deferral Plan Dated December 12, 2000 the fiscal year ended December 31, 2000
(Commission File No- 1-7626)
10. 1(k) Amended and Restated Sensient Technologies X
Corporation Rabbi Trust "A" Agreement dated
March 1, 2002 between the Registrant and
Marshall & Ilsley Trust Company
E-3
SENSIENT TECHNOLOGIES CORPORATION
EXHIBIT INDEX
2001 ANNUAL REPORT ON FORM 10-K
Exhibit Incorporated by Filed
Number Description Reference From Herewith
------ ----------- -------------- --------
10.1(l) Trust Agreement, including Changes upon Exhibit 10.2(p) to Annual Report on
Appointment of Successor Trustee dated as of Form 10-K for the fiscal year ended
February 1, 1998 between Registrant and September 30, 1998 (Commission File No. 1-7626)
Firstar Bank, Milwaukee, N.A. ("Rabbi Trust
B")
10.1(m)(1) Amendment No. 1 to Rabbi Trust B Exhibit 10.1(m)(1) to Annual Report on Form 10-K for
dated January 1, 2000 between Registrant and the fiscal year ended December 31, 2000
Marshall & Ilsley Trust Company (Commission File No- 1-7626)
10.1(m)(2) Changes upon Appointment of Successor Trustee Exhibit 10.1(m)(2) to Annual Report on Form 10-K for
for Rabbi Trust B dated as of the fiscal year ended December 31, 2000
January 1, 2000 (Commission File No. 1-7626)
10.1(n) Trust Agreement, including Changes upon Exhibit 10.2(q) to Annual Report on Form 10-K for the
Appointment of Successor Trustee, dated as of fiscal year ended September 30, 1998
February 1, 1998 between Registrant and (Commission File No. 1-7626)
Firstar Bank, Milwaukee N.A.
("Rabbi Trust C")
10.1(n)(1) Amendment No. 1 to Rabbi Trust C dated as of Exhibit 10.1(n)(1) to Annual Report on Form 10-K for
January 1, 2001 between Registrant and the fiscal year ended December 31, 2000
Marshall & Ilsley Trust Company (Commission File No. 1-7626)
10.1(n)(2) Changes upon Appointment of Successor Trustee Exhibit 10.1(n)(2) to Annual Report on Form 10-K for
for Rabbi Trust C dated as of the fiscal year ended December 31, 2000
January 1, 2001 (Commission File No. 1-7626)
10.1(o) Incentive Compensation Plan for Elected Appendix C to Definitive Proxy Statement filed
Corporate Officers on Schedule 14A on December 17, 1999
(Commission File No. 1-7626)
10.1(o)(1) Amendment No. 1 to the Incentive Compensation Exhibit 10.1(o)(1) to Annual Report on Form 10-K for
Plan for Elected Corporate Officers dated the fiscal year ended December 31, 2000
December 12, 2000 (Commission File No. 1-7626)
10.1(p) Form of Management Incentive Plan for Exhibit 10.2 (s) to Annual Report on Form 10-K for
Division Presidents the fiscal year ended September 30, 1998
(Commission File No. 1-7626)
E-4
SENSIENT TECHNOLOGIES CORPORATION
EXHIBIT INDEX
2001 ANNUAL REPORT ON FORM 10-K
Exhibit Incorporated by Filed
Number Description Reference From Herewith
------ ----------- -------------- --------
10.1(p)(1) Amendment No. 1 to the Management Incentive Exhibit 10.1(p)(1) to Annual Report on Form 10-K for
Plan for Division Presidents dated December the fiscal year ended December 31, 2000
12, 2000 (Commission File No. 1-7626)
10.1(q) Form of Management Incentive Plan for Exhibit 10.2(t) to Annual Report on
Corporate Management Form 10-K for the fiscal year ended
September 30, 1998 (Commission File No. 1-7626)
10.1(q)1) Amendment No. 1 to Management Incentive Plan Exhibit 10.1(q)(1) to Annual Report on Form 10-K for
for Corporate Management dated December 12, the fiscal year ended December 31, 2000
2000 (Commission File No. 1-7626)
10.1(r) Form of Management Incentive Plan for Exhibit 10.2(u) to Annual Report on
Division Management Form 10-K for the fiscal year ended
September 30, 1998 (Commission File No. 1-7626)
10.1(r)(1) Amendment No. 1 to Management Incentive Plan Exhibit 10.1(r)(1) to Annual Report on Form 10-K for
for Division Management dated the fiscal year ended December 31, 2000
December 12, 2000 (Commission File No. 1-7626)
10.1(s) Form of Agreement for Executive Officers X
(Supplemental Executive Retirement Plan A)
10.1(t) Form of Agreement for Executive Officers X
(Supplemental Executive Retirement Plan B)
10.1(u) Universal Foods Corporation Supplemental Exhibit 10.2(w) to Annual Report on Form 10-K for the
Benefit Plan, including Amendment No. 1 fiscal year ended September 30, 1998
thereto dated September 10, 1998 (Commission File No. 1-7626)
10.1(u)(1) Amendment No. 2 to Supplemental Benefit Plan Exhibit 10.1(u)(1) to Annual Report on Form 10-K for
dated December 12, 2000 the fiscal year ended December 31, 2000
(Commission File No. 1-7626)
10.1(v) Universal Foods Corporation Transition Exhibit 10.2(x) to Annual Report on Form 10-K for the
Retirement Plan, including Amendment No. 1 fiscal year ended September 30, 1998
thereto, dated September 10, 1998 (Commission File No. 1-7626)
E-5
SENSIENT TECHNOLOGIES CORPORATION
EXHIBIT INDEX
2001 ANNUAL REPORT ON FORM 10-K
Exhibit Incorporated by Filed
Number Description Reference From Herewith
------ ----------- -------------- --------
10.1(v)(1) Amendment No. 2 to the Transition Retirement Exhibit 10.1(v)(1) to Annual Report on form 10-K for
Plan dated December 12, 2000 the fiscal year ended December 31, 2000
(Commission File No. 1-7626)
10.1(w) Sensient Technologies Corporation 2002 X
Non-Employee Directors Stock Plan
13.1 Portions of Annual Report to Shareholders X
for the year ending December 31, 2001
that are incorporated by reference
21 Subsidiaries of the Registrant X
23 Consent of Deloitte & Touche LLP X
99 Notice of Annual Meeting and Proxy Filed on Schedule 14A
Statement dated March 22, 2002. Except to the dated March 22, 2002
extent specifically incorporated by reference (Commission File No. 1-7626).
herein, the Proxy Statement shall not be
deemed to be filed with the Securities and
Exchange Commission as part of this Annual
Report on Form 10-K.
E-6