IFF Earnings for Third Quarter Exceed Forecast; Company Provides Guidance for 2001
NEW YORK--(BUSINESS WIRE)--Oct. 25, 2001--International Flavors & Fragrances Inc. (NYSE:IFF) ("IFF" or "the Company") reported sales for the third quarter 2001 totaling $462,719,000 in comparison to reported sales in the third quarter of 2000 of $339,591,000.
The Company acquired Bush Boake Allen ("BBA") effective November 3, 2000; BBA's sales and operating results are included in the Company's 2001 consolidated results. On a pro-forma basis, third quarter 2000 sales of the combined Company totaled $459,804,000.
Earnings per share were $.35 for the third quarter 2001, including the effects of certain nonrecurring charges recorded in connection with a previously announced reorganization. Excluding the effects of these nonrecurring charges, per share results for the third quarter were $.41, surpassing management's previously announced expectations for the quarter by $.01 per share.
Richard A. Goldstein, Chairman and Chief Executive Officer of IFF, said, "We continue to be very pleased with our progress to date in reorganizing and integrating BBA into the new 'One IFF.' Third quarter results, excluding nonrecurring charges, increased 65% in comparison to the 2000 pro-forma results. We achieved integration savings of nearly $14 million in the third quarter, and as of October 1, 2001, our run rate for such savings exceeded $60 million on an annualized basis.
"Notwithstanding our solid performance in the third quarter, like many other companies, we are witnessing difficult economic circumstances in many parts of the world, aggravated further by the events of September 11. During this time, we consider it prudent to be conservative in our outlook for the remainder of this year. We expect our full year revenue growth to be flat to up slightly in local currency, and our earnings per share, excluding nonrecurring charges, to be in the range of $1.38 - $1.41 per share. We are confident that the actions we are taking this year to streamline our business and realize operational efficiencies will enable us to deliver these expected results and will provide a solid foundation on which to chart our future path to growth."
On a local currency basis, consolidated third quarter 2001 sales increased approximately 3% in comparison to the comparable third quarter 2000 pro-forma sales. However, the local currency sales gains were unfavorably impacted on translation into the continuing strong U.S. dollar, resulting in the sales increase in reported dollars of 1%.
Local currency sales increases for the third quarter were strongest in Latin America and North America with respective increases of approximately 9% and 4%. Asia-Pacific was flat in local currency reflecting weak economic conditions in Japan as well as political uncertainties in the Philippines and Indonesia. Local currency sales in Europe declined approximately 1%.
On October 5, 2000, the Company announced a significant reorganization, including management changes, consolidation of production facilities and related actions. The total cost of these actions is expected to be approximately $90 million - $100 million through mid-2002, and the reorganization is expected to yield annual savings by the year 2003 in the range of $25 million - $30 million. The Company expects a large portion of these savings to contribute to improving net earnings.
In the third quarter 2001, the Company recorded approximately $8.9 million of pretax charges relating to the reorganization ($5.7 million after tax or approximately $.06 per share). The charges recognized in the third quarter relate primarily to employee separation costs and other reorganization activities. The Company has recorded approximately $62 million of the expected pretax charges to be incurred in connection with the reorganization including approximately $30 million in the first nine months of the current year. Certain costs associated with the merger and integration of BBA operations have been accounted for as part of the acquisition and did not affect current earnings.
IFF is the world's leading creator and manufacturer of flavors and fragrances used in a wide variety of consumer products -- from fine fragrances and toiletries, to soaps, detergents and other household products, to beverages and food products. IFF is dedicated to The Pursuit of Excellence in every area of its business, using knowledge, creativity, innovation and technology to continually provide customers with the highest quality products and service and superior consumer understanding.
IFF has sales, manufacturing and creative facilities in 42 countries worldwide and approximate annual revenues of $1.9 billion. For more information, please visit our Web site at www.iff.com.
Cautionary Statement Under the Private Securities Litigation Reform Act of 1995 Statements in this release which are not historical facts or information are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, and are subject to risks and uncertainties that could cause IFF's actual results to differ materially from those expressed or implied by such forward-looking statements. Risks and uncertainties with respect to IFF's business include general economic and business conditions, interest rates, the price and availability of raw materials, and political and economic uncertainties, including the fluctuation or devaluation of currencies in countries in which IFF does business. The Company intends its forward-looking statements to speak only as of the time of such statements, and does not undertake to update or revise them as more information becomes available.
Conference call
There will be a conference call today at 10:00 AM EDT; the dial in number for U.S.-based participants is 800-967-7141; for international participants, the number is 719-457-2630.
A replay of the conference call will be available from 1:00 PM on October 25, 2001 through 12:00 AM on November 1, 2001. The dial in number for the replay for U.S.-based listeners is 888-203-1112; for international listeners, the number is 719-457-0820. The replay pass code is 610814.
The call can also be monitored via the World Wide Web at www.iff.com. Real Network's Real Player or Microsoft Media Player is required to access the webcast. They can be downloaded from www.real.com or www.microsoft.com/windows/mediaplayer.
International Flavors & Fragrances Inc.
Consolidated Income Statement
(Amounts in thousands except per share data)
Quarter Ended September 30,
IFF Alone Pro-Forma (B)
2000 2000 2001
---- ---- ----
Net sales $339,591 $459,804 $462,719
Cost of goods sold (A) 191,499 268,021 268,631
Gross margin on sales 148,092 191,783 194,088
Research & development 28,666 35,435 31,596
Selling and administrative (A) 62,181 84,700 72,545
Amortization 10,548 11,491
57,245 61,100 78,456
Nonrecurring charges (7,685) (7,685) (8,869)
Interest expense (4,195) (20,878) (16,545)
Other income (expense), net (2,614) (1,234) 1,864
Pretax income 42,751 31,303 54,906
Income taxes 13,824 12,248 21,351
Net income $ 28,927 $ 19,055 $ 33,555
Including nonrecurring charges
Net income $ 28,927 $ 19,055 $ 33,555
Earnings per share - basic $ .29 $ .19 $ .35
Earnings per share - diluted $ .29 $ .19 $ .35
Excluding nonrecurring charges
Net income $ 33,692 $ 23,820 $ 39,231
Result per share - basic $ .34 $ .24 $ .41
Result per share - diluted $ .34 $ .24 $ .41
Notes:
(A) For the quarter ended September 30, 2000, captions reflect the
reclassification of shipping and handling costs from Selling
expense to Cost of goods sold in accordance with guidance
established by Emerging Issues Task Force 00-10, "Accounting for
Shipping and Handling Fees and Costs."
(B) Pro-forma as though the acquisition of BBA had taken place as of
January 1, 2000.
International Flavors & Fragrances Inc.
Consolidated Income Statement
(Amounts in thousands except per share data)
Nine Month Period Ended September 30,
IFF Alone Pro-Forma (B)
2000 2000 2001
---- ---- ----
Net sales $1,078,262 $1,436,511 $1,424,596
Cost of goods sold (A) 599,738 827,756 822,276
Gross margin on sales 478,524 608,755 602,320
Research & development 82,423 103,183 102,504
Selling and administrative (A) 185,684 257,068 239,391
Amortization 31,644 34,246
210,417 216,860 226,179
Nonrecurring charges (17,039) (17,039) (30,069)
Interest expense (9,406) (59,590) (56,479)
Other income (expense), net (2,488) (2,375) 1,098
Pretax income 181,484 137,856 140,729
Income taxes 59,865 53,053 53,897
Net income $ 121,619 $ 84,803 $ 86,832
Including nonrecurring charges
Net income $ 121,619 $ 84,803 $ 86,832
Earnings per share - basic $ 1.19 $ .83 $ .90
Earnings per share - diluted $ 1.19 $ .83 $ .89
Excluding nonrecurring charges
Net income $ 132,632 $ 95,816 $ 105,933
Result per share - basic $ 1.30 $ .94 $ 1.10
Result per share - diluted $ 1.30 $ .94 $ 1.09
Notes:
(A) For the nine month period ended September 30, 2000, captions
reflect the reclassification of shipping and handling costs from
Selling expense to Cost of goods sold in accordance with guidance
established by Emerging Issues Task Force 00-10, "Accounting for
Shipping and Handling Fees and Costs."
(B) Pro-forma as though the acquisition of BBA had taken place as of
January 1, 2000.
International Flavors & Fragrances Inc.
Consolidated Condensed Balance Sheet
(Amounts in thousands)
December 31, September 30,
2000 2001
------------ ------------
Cash & short-term investments $ 129,238 $ 66,790
Receivables 364,314 388,992
Inventories 435,312 419,963
Other current assets 90,076 85,605
Total current assets 1,018,940 961,350
Property, plant and equipment, net 679,874 576,951
Goodwill and other intangibles, net 755,923 773,779
Other assets 34,296 62,554
Total assets $ 2,489,033 $ 2,374,634
Commercial paper/notes payable - bank $ 852,985 $ 405,263
Other current liabilities 326,032 332,356
Total current liabilities 1,179,017 737,619
Long-term debt 417,402 845,503
Non-current liabilities 261,355 250,839
Shareholders' equity 631,259 540,673
Total liabilities and
shareholders' equity $ 2,489,033 $ 2,374,634
Note:
Reflects a preliminary allocation of purchase price for Bush Boake
Allen.
Average Shares Outstanding (in thousands) 2001 2000
------- --------
Third quarter:
Basic 95,467 99,833
Diluted 96,746 99,833
Year-to-date
Basic 96,069 102,152
Diluted 97,022 102,169
Percent Change in Sales by
Area of Destination Fragrances Flavors Total
---------- ------- -----
THIRD QUARTER
-------------
North America (1) 11 4
Europe - Reported (5) (6) (6)
Europe - Local Currency 0 0 (1)
Latin America 18 (9) 9
Asia-Pacific - Reported (7) (4) (6)
Asia-Pacific - Local Currency (2) 2 0
Central Asia Middle East (2) (1) (1)
CAME - Local Currency 1 1 1
Total - Reported 0 1 1
Total - Local Currency 2 3 3
YEAR-TO-DATE
------------
North America 0 5 2
Europe - Reported (4) (3) (4)
Europe - Local Currency 1 3 2
Latin America 5 (5) 3
Asia-Pacific - Reported (5) (3) (4)
Asia-Pacific - Local Currency 0 4 2
Central Asia Middle East (6) (3) (4)
CAME - Local Currency (3) (3) (3)
Total - Reported (1) (1) (1)
Total - Local Currency 1 3 2
--30--sds/ny*
| CONTACT: | International Flavors & Fragrances Inc. |
|---|---|
| Douglas J. Wetmore, 212/708-7145 | |