e11vk
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
FOR ANNUAL REPORTS OF EMPLOYEE STOCK PURCHASE, SAVINGS AND SIMILAR
PLANS PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
(Mark One)
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ANNUAL REPORT PURSUANT TO 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended December 31, 2005
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TRANSITION REPORT PURSUANT TO 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission file number: 1-7626
| A. |
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Full title of the plan and address of the plan, if different from that of the issuer named
below: |
Sensient Technologies Corporation
Retirement Employee Stock Ownership Plan
| B. |
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Name of issuer of the securities held pursuant to the plan and the address of its principal
executive office: |
Sensient Technologies Corporation
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202-5304
(414) 271-6755
Table of Contents
All schedules required by Section 2520.103.10 of the Department of Labor’s Rules and Regulations
for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974 have been
omitted because they are not applicable.
2
SENSIENT TECHNOLOGIES CORPORATION
RETIREMENT EMPLOYEE STOCK OWNERSHIP PLAN
FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2005 AND 2004 AND
REPORTS OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMS
3
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Benefits Administrative Committee
Sensient Technologies Corporation Retirement Employee Stock Ownership Plan
Milwaukee, WI
We have audited the accompanying statement of net assets available for benefits of Sensient
Technologies Corporation Retirement Employee Stock Ownership Plan (the “Plan”) as of December 31,
2005 and the related statement of changes in net assets available for benefits for the year then
ended. These financial statements are the responsibility of the Plan’s management. Our
responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. The
Plan is not required to have, nor were we engaged to perform, an audit of its internal control over
financial reporting. Our audit includes consideration of internal control over financial reporting
as a basis for designing audit procedures that are appropriate in the circumstances, but not for
the purpose of expressing an opinion on the effectiveness of the Plan’s internal control over
financial reporting. Accordingly, we express no such opinion. An audit also includes examining,
on a test basis, evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material
respects, the net assets available for benefits of the Plan as of December 31, 2005 and the changes
in net assets available for benefits for the year then ended in conformity with accounting
principles generally accepted in the United States of America.
/s/ VIRCHOW, KRAUSE & COMPANY, LLP
Milwaukee, Wisconsin
May 30, 2006
4
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Benefits Administrative Committee
Sensient Technologies Corporation Retirement Employee Stock Ownership Plan
Milwaukee, Wisconsin
We have audited the accompanying statement of net assets available for benefits of the Sensient
Technologies Corporation Retirement Employee Stock Ownership Plan (the “Plan”) as of December 31,
2004 and the related statement of changes in net assets available for benefits for the year then
ended. These financial statements are the responsibility of the Plan’s management. Our
responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. The
Plan is not required to have, nor were we engaged to perform, an audit of its internal control over
financial reporting. Our audit included consideration of internal control over financial reporting
as a basis for designing audit procedures that are appropriate in the circumstances, but not for
the purpose of expressing an opinion on the effectiveness of the Plan’s internal control over
financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on
a test basis, evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material respects, the net assets
available for benefits of the Plan as of December 31, 2004 and the changes in net assets available
for benefits for the year then ended in conformity with accounting principles generally accepted in
the United States of America.
/s/ DELOITTE & TOUCHE LLP
Milwaukee, Wisconsin
May 13, 2005
5
SENSIENT TECHNOLOGIES CORPORATION
RETIREMENT EMPLOYEE STOCK OWNERSHIP PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 2005 AND 2004
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2005 |
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2004 |
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ASSETS: |
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Investments at fair value – Interest in
Sensient Technologies Corporation Master
Defined Contribution Trust |
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$ |
33,899,988 |
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$ |
45,230,072 |
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Contributions receivable from Sensient Technologies Corporation |
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645,144 |
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499,172 |
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NET ASSETS AVAILABLE FOR BENEFITS |
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$ |
34,545,132 |
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$ |
45,729,244 |
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See notes to financial statements.
6
SENSIENT TECHNOLOGIES CORPORATION
RETIREMENT EMPLOYEE STOCK OWNERSHIP PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS FOR
THE YEARS ENDED DECEMBER 31, 2005 AND 2004
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2005 |
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2004 |
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Investment (loss) income – Equity in net (loss) income
of Sensient Technologies Corporation Master Defined
Contribution Trust |
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$ |
(8,344,951 |
) |
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$ |
8,075,842 |
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Contributions: |
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Sensient Technologies Corporation |
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622,582 |
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497,814 |
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Subtotal |
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(7,722,369 |
) |
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8,573,656 |
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Withdrawals and distributions |
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(3,461,743 |
) |
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(4,555,990 |
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Net (decrease) increase |
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(11,184,112 |
) |
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4,017,666 |
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Net assets available for benefits: |
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Beginning of year |
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45,729,244 |
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41,711,578 |
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End of year |
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$ |
34,545,132 |
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$ |
45,729,244 |
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See notes to financial statements.
7
SENSIENT TECHNOLOGIES CORPORATION
RETIREMENT EMPLOYEE STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2005 AND 2004
Note A — Accounting Policies:
The financial statements of the Sensient Technologies Corporation Retirement Employee
Stock Ownership Plan (the “Plan”) are prepared on an accrual basis in accordance with
accounting principles generally accepted in the United States of America. Assets of the
Plan are stated at fair value.
Benefits are recorded when paid.
Administrative expenses incurred by the Plan are paid by Sensient Technologies Corporation
(the “Company”) on behalf of the Plan or from Plan assets as determined by the Benefits
Administrative Committee.
The preparation of financial statements in conformity with accounting principles generally
accepted in the United States of America requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and the reported
amounts of increases and decreases in net assets during the reporting period. Actual
results could differ from those estimates.
Note B — Description of the Plan:
The following description of the Plan provides only general information. Participants
should refer to the Plan agreement for a more comprehensive description of the Plan’s
provisions.
The Plan is a defined contribution plan covering substantially all domestic employees of
the Company eligible to participate in the Plan. The Plan is subject to the provisions of
the Employee Retirement Income Securities Act of 1974, as amended (“ERISA”). The Company
makes discretionary annual contributions to the Plan as determined annually by its Board
of Directors. Participant contributions are not permitted under the Plan. Contributions
become vested after five years of credited service with the Company or upon termination
due to death or disability. Company contributions to the plan were $622,582 for the year
ended December 31, 2005, which included non-cash contributions of Company stock of
approximately $602,000. Company contributions to the plan were $497,814 for the year
ended December 31, 2004, which included non-cash contributions of Company stock of
approximately $455,305.
Amounts that have been forfeited in accordance with provisions of the Plan, serve to
reduce Company contributions. Forfeitures available to reduce the Company
contribution were $167,545 and $235,310 at December 31, 2005 and 2004, respectively.
8
SENSIENT TECHNOLOGIES CORPORATION
RETIREMENT EMPLOYEE STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 2005 AND 2004
Plan assets may be invested in any type of investment that is legally permitted for
employee retirement plans. Plan assets are invested primarily in common stock of the
Company, mutual funds and fixed income funds. Participants have the option to receive
dividends on the Company’s common stock in the form of cash. Company contributions are
invested in the Company common stock unless the participant meets the following age and
service requirements and has elected to have a portion of their account invested in other
funds. At age 35 with 5 years of service,
participants may elect to have a portion of their account invested in the Fixed Income
Fund. Assets of the Fixed Income Fund are invested primarily in Treasury bills and notes;
certificates of deposit; and other fixed income securities. Employees age 55 with 10
years of service also have the option to elect to have a portion of their account invested
in the Balanced Fund and the U.S. Equity Index Fund. Assets of the Balanced Fund are
invested primarily in common stocks, preferred stocks and bonds. Assets of the U.S.
Equity Index Fund are invested primarily in S&P 500 company stocks to attempt to match the
S&P 500 performance. Participants may revise their investment
allocations daily. Effective February 21, 2006, participants
age 35 with 5 years of service have the option to have a
portion of their account invested in the Fixed Income Fund, Balanced
Fund and U.S. Equity Index Fund.
Individual accounts are maintained for each Plan participant. Each participant’s account
is credited with the Company’s contribution and an allocation of Plan income, and charged
with withdrawals and an allocation of Plan losses. Allocations are based on participant
earnings or account balances, as defined. The benefit to which a participant is entitled
is the benefit that can be provided from the participant’s vested account.
The Plan does not allow participants to borrow funds from their account.
Although it has not expressed any intention to do so, the Company has the right under the
Plan to discontinue contributions at any time and to terminate the Plan subject to the
provisions set forth in ERISA.
9
SENSIENT TECHNOLOGIES CORPORATION
RETIREMENT EMPLOYEE STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 2005 AND 2004
Note C – Sensient Technologies Corporation Master Defined Contribution Trust:
The Plan’s investments are held by the Sensient Technologies Corporation Master Defined
Contribution Trust (the “Master Trust”) along with the investments of the Sensient
Technologies Corporation Savings Plan and the Sensient Technologies Corporation Transition
Plan. Use of the Master Trust permits the commingling of assets of various employee
benefit plans for investment and administrative purposes. Although plan assets are
commingled, supporting records are maintained for the purpose of determining changes in
each plan’s undivided and specifically allocated interest in the Master Trust.
Quoted market prices are used to determine the fair value of marketable securities. Shares
of registered investment companies or collective trusts are stated at quoted market prices
or withdrawal value. Investment income, realized gains and losses, and unrealized
appreciation and depreciation of investments in the Master Trust are allocated to each
plan participating in the Master Trust based upon the relationship of the individual
interest of each plan to the total of the individual interests of all plans participating
in the Master Trust.
Purchases and sales of investments are recorded on a trade-date basis. Interest income is
accrued when earned. Dividend income is recorded on the ex-dividend date. Capital gain
distributions are included in dividend income.
The Master Trust invests in various securities. Investment securities, in general, are
exposed to various risks, such as interest rate, credit, and overall market volatility.
Due to the level of risk associated with certain investment securities, it is reasonably
possible that changes in the values of investment securities will occur in the near term
and that such changes could materially affect the amounts reported in the financial
statements.
The fair value of the net assets of the Master Trust as of December 31, 2005 and 2004 is
as follows:
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2005 |
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2004 |
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Sensient Technologies Corporation common stock* |
|
$ |
42,828,560 |
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$ |
58,649,892 |
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Fixed income funds |
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15,457,754 |
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16,433,881 |
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Mutual funds |
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54,591,197 |
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49,032,445 |
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Net assets in Master Trust |
|
$ |
112,877,511 |
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$ |
124,116,218 |
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Plan’s investment in Master Trust |
|
$ |
33,899,988 |
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$ |
45,230,072 |
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Plan’s investment in Master Trust as a percent of total |
|
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30.03 |
% |
|
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36.44 |
% |
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10
SENSIENT TECHNOLOGIES CORPORATION
RETIREMENT EMPLOYEE STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 2005 AND 2004
Note C – (continued):
The net income of the Master Trust for the years ended December 31, 2005 and 2004 is as
follows:
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2005 |
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2004 |
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Dividends on Sensient Technologies Corporation common stock* |
|
$ |
1,373,650 |
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$ |
1,471,910 |
|
Interest and other dividends |
|
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1,669,736 |
|
|
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1,420,463 |
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Net (depreciation) appreciation of investments based on
quoted market prices |
|
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(10,358,401 |
) |
|
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14,536,371 |
|
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Net (loss) income of Master Trust |
|
$ |
(7,315,015 |
) |
|
$ |
17,428,744 |
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Plan’s equity in net (loss) income of the Master Trust |
|
$ |
(8,344,951 |
) |
|
$ |
8,075,842 |
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During the years ended December 31, 2005 and 2004, net (depreciation) appreciation of the
investments held by the Master Trust (including gains and losses on investments bought and
sold, as well as held during the year) is as follows:
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2005 |
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2004 |
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Sensient Technologies Corporation common stock* |
|
$ |
(14,656,161 |
) |
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$ |
10,519,625 |
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Mutual Funds |
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4,297,760 |
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4,016,746 |
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Net (depreciation) appreciation in fair value of
investments – Master Trust |
|
$ |
(10,358,401 |
) |
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$ |
14,536,371 |
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11
SENSIENT TECHNOLOGIES CORPORATION
RETIREMENT EMPLOYEE STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 2005 AND 2004
Note D – Non-participant Directed Investments of the Plan:
The non-participant directed investments of the Plan held by the Master Trust, are invested
in Sensient Technologies Corporation common stock. Participant account balances, which are
eligible to be diversified but remain in Sensient Technologies Corporation common stock,
cannot be separately determined and are reported as non-participant directed investments.
Information about the net assets and the significant components of the changes in net
assets relating to non-participant directed net assets is as follows:
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2005 |
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2004 |
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Non-participant Directed Net Assets: |
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Sensient Technologies Corporation Common
Stock* |
|
$ |
27,553,215 |
|
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$ |
37,991,007 |
|
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|
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|
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Contributions receivable from Sensient
Technologies
Corporation |
|
|
602,211 |
|
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|
434,308 |
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Non-participant directed net assets |
|
$ |
28,155,426 |
|
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$ |
38,425,315 |
|
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2005 |
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2004 |
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Changes in Non-participant Directed Net Assets: |
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Contributions |
|
$ |
600,503 |
|
|
$ |
434,308 |
|
Dividends |
|
|
860,738 |
|
|
|
930,308 |
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Net (depreciation) appreciation |
|
|
(9,522,017 |
) |
|
|
6,797,966 |
|
Withdrawals and distributions |
|
|
(2,273,804 |
) |
|
|
(3,119,396 |
) |
Transfers to (from) participant directed
investments |
|
|
64,691 |
|
|
|
(1,235,171 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
(10,269,889 |
) |
|
$ |
3,808,015 |
|
|
|
|
|
|
|
|
12
SENSIENT TECHNOLOGIES CORPORATION
RETIREMENT EMPLOYEE STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 2005 AND 2004
Note E – Income Tax Status:
The Plan obtained its latest determination letter on June 27, 2002, in which the Internal
Revenue Service stated that the Plan, as then designed, qualifies under Section 401 of the
Internal Revenue Code. The Plan has been amended since receiving the determination letter;
however, the Company and the Plan Administrator believe that the Plan is currently designed
and operated in compliance with the applicable requirements of the Internal Revenue Code
and the Plan and related trust continue to be tax exempt. Therefore, no provision for
income taxes has been included in the Plan’s financial statements.
Note F – Benefits Payable:
As of December 31, 2005 and 2004 the Plan had no benefits payable to persons who elected to
withdraw from participation in the earnings and operations of the Plan but had not yet been
paid.
Note G – Investments
The following presents the Plan’s portion of investments that represent 5 percent or more
of the Plan’s net assets in the Master Trust:
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|
|
|
|
|
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2005 |
|
2004 |
M&I Fixed Income |
|
$ |
5,292,971 |
|
|
$ |
6,125,151 |
|
Sensient Stock Fund |
|
|
27,553,215 |
|
|
|
37,991,007 |
|
Note H – Parties-in-Interest:
Certain Plan investments are managed and issued by Fidelity, the custodian of the Plan’s
investment assets and, therefore, some transactions qualify as party-in-interest
transactions. The Plan pays fees to Fidelity for investment management, recordkeeping, and
other administrative services.
13
SIGNATURES
The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees
(or other persons who administer the employee benefits plan) have duly caused this annual report to
be signed on its behalf by the undersigned hereunto duly authorized.
Sensient Technologies Corporation Retirement Employee Stock Ownership Plan
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Date: June 28, 2006
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By:
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/s/ John L. Hammond |
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Name:
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John L. Hammond |
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Title:
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Vice President, Secretary and General Counsel |
14
EXHIBIT INDEX
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| Exhibit No. |
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Description |
Exhibit 23.1
|
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Consent of Independent Registered Public Accounting Firm |
|
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|
Exhibit 23.2
|
|
Consent of Independent Registered Public Accounting Firm |
15