IFF Reports Record Second Quarter 2007 Results
NEW YORK, Aug. 7 /PRNewswire-FirstCall/ -- International Flavors & Fragrances Inc. (NYSE: IFF), a leading global creator of flavors and fragrances, today reported growth in sales and net income for the second quarter of 2007. Earnings per share were $.87 in the quarter, representing a 30 percent increase from the second quarter of 2006. The second quarter included the benefit of a tax ruling relating to prior years; as a result, accrued tax liabilities were reduced, increasing net income and earnings per share in the quarter by $10 million and $.11, respectively. On a comparable basis, excluding this tax adjustment, the 2007 second quarter earnings per share would have been $.76, representing a 13 percent gain over the 2006 quarter.
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"We are pleased with the continued growth in sales, operating profit and earnings. During the second quarter, we made progress against our business priorities, which include focusing on our customers and building a stronger organization," said Robert M. Amen, Chairman and Chief Executive Officer of IFF.
"Looking ahead, we believe we are well-positioned to continue to grow in line with our goals. Our recent share repurchase and dividend announcement underscores our confidence in our ability to build shareholder value and invest for our growth."
Sales rose 8 percent in the second quarter to $574 million compared to $531 million in the prior year period. Sales benefited from the generally weaker U.S. dollar, mainly against the Euro and Pound Sterling; at comparable exchange rates, sales would have increased 5 percent over the 2006 quarter.
Flavor sales grew 11 percent, due to new wins and volume growth. Flavor sales increased in each region, both in local currency and dollars.
Fragrance sales increased 6 percent, led by 11 percent growth in fine fragrance and beauty care sales, a result of new product introductions and the continued success of existing creations. Functional fragrance and ingredient sales increased 4 percent and 1 percent, respectively.
Second Quarter 2007 Highlights
-- Gross profit, as a percentage of sales, totaled 42.9%, the same as
the prior year quarter. The sales growth drove improved expense
absorption, most notably in flavors; lower selling prices for
fragrance ingredients and the impact of scaling up production in the
new fragrance ingredient facility in China offset this improvement.
-- Selling and Administrative expenses, as a percentage of sales,
were 15.9% in the current quarter compared to 16.5% in the prior year
quarter, reflecting good cost control.
-- Interest expense increased by $2 million from the prior year,
primarily due to higher average interest rates on borrowings; the
average interest rate for the second quarter was 4.2% compared to 3.3%
for the 2006 quarter.
-- The effective tax rate for the quarter was 19% compared to 28% in the
prior year quarter, reflecting the above tax ruling benefit. The tax
rate benefited by 11 percentage points resulting from the reversal of
$10 million of previously established tax accruals no longer required
based on rulings obtained from applicable tax jurisdictions.
About International Flavors & Fragrances Inc.
IFF is a leading creator of flavors and fragrances used in a wide variety of consumer products and packaged goods. Consumers experience these unique scents and tastes in fine fragrances and beauty care, detergents and household goods, as well as beverages, confectionary and food products. The Company leverages its competitive advantages of brand understanding and consumer insight combined with its focus on R&D and innovation, to provide customers with differentiated product offerings. A member of the S&P 500 Index, IFF has sales, manufacturing and creative facilities in 30 countries worldwide. For more information, please visit our Web site at www.iff.com.
Audio Web Cast
An audio Web cast, to discuss the Company's second quarter 2007 financial results and outlook, will be held today at 10:00 a.m. ET. Interested parties can access the Web cast and accompanying slide presentation on the Company's Web site at www.iff.com, under the Investor Relations section. For those unable to listen to the live broadcast, a replay will be available on the Company's Web site approximately one hour after the event and will remain available on the IFF Web site until 11:59 p.m. on August 21, 2007.
Cautionary Statement Under The Private Securities Litigation Reform Act of 1995
Statements in this report, which are not historical facts or information, are "forward-looking statements" within the meaning of The Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based on management's current assumptions, estimates and expectations. Certain of such forward-looking information may be identified by such terms as "expect", "believe", "may", "outlook", "guidance" and similar terms or variations thereof. All information concerning future revenues, tax rates or benefits, interest savings, earnings and other future financial results or financial position, constitutes forward-looking information. Such forward-looking statements involve significant risks, uncertainties and other factors. Actual results of the Company may differ materially from any future results expressed or implied by such forward-looking statements. Such factors include, among others, the following: general economic and business conditions in the Company's markets, including economic, population health and political uncertainties; interest rates; the price, quality and availability of raw materials; the Company's ability to implement its business strategy, including the achievement of anticipated cost savings, profitability and growth targets; the impact on cash and the impact of increased borrowings related to the July 2007 announced share repurchase program; the impact of currency fluctuation or devaluation in the Company's principal foreign markets and the success of the Company's hedging and risk management strategies; the outcome of uncertainties related to litigation; uncertainties related to any potential claims and rights of indemnification or other recovery for customer and consumer reaction to its earlier contamination issue; the impact of possible pension funding obligations and increased pension expense on the Company's cash flow and results of operations; and the effect of legal and regulatory proceedings, as well as restrictions imposed on the Company, its operations or its representatives by foreign governments. The Company intends its forward- looking statements to speak only as of the time of such statements and does not undertake or plan to update or revise them as more information becomes available or to reflect changes in expectations, assumptions or results.
Any public statements or disclosures by IFF following this release that modify or impact any of the outlook or other forward-looking statements contained in or accompanying this release or as part of the webcast will be deemed to modify or supersede such outlook or other forward-looking statements in or accompanying this release or the webcast.
International Flavors & Fragrances Inc.
Consolidated Income Statement
(Amounts in thousands except per share data)
(Unaudited)
Quarter Ended Six Months Ended
June 30, June 30,
% %
2006 2007 Change 2006 2007 Change
Net sales $530,505 $573,726 8% $1,041,937 $1,139,827 9%
Cost of goods
sold 302,889 327,668 8% 597,707 657,050 10%
Gross margin
on sales 227,616 246,058 8% 444,230 482,777 9%
Research &
development 45,588 48,760 7% 91,190 95,392 5%
Selling and
administrative 87,684 91,198 4% 173,272 182,469 5%
Amortization 3,711 3,555 -4% 7,421 7,111 -4%
Restructuring
and other
charges (304) -- 357 --
Interest expense 6,300 8,396 33% 11,673 16,710 43%
Other expense
(income), net (286) (2,819) 153 (2,986)
Pretax income 84,923 96,968 14% 160,164 184,081 15%
Income taxes 23,741 18,596 -22% 45,292 43,020 -5%
Net income $61,182 $78,372 28% $114,872 $141,061 23%
Earnings per
share - basic $0.67 $0.88 31% $1.26 $1.58 25%
Earnings per
share - diluted $0.67 $0.87 30% $1.25 $1.56 25%
Average shares
outstanding
(in thousands):
Basic 90,869 89,174 -2% 91,202 89,276 -2%
Diluted 91,787 90,124 -2% 91,997 90,391 -2%
International Flavors & Fragrances Inc.
Consolidated Condensed Balance Sheet
(Amounts in thousands)
(Unaudited)
December 31, June 30,
2006 2007
Cash & cash equivalents $114,508 $124,171
Short term investments 604 583
Receivables 405,302 479,360
Inventories 446,606 454,737
Other current assets 112,783 95,465
Total current assets 1,079,803 1,154,316
Property, plant and equipment, net 495,124 482,861
Goodwill and other intangibles, net 745,716 738,605
Other assets 158,261 171,206
Total assets $2,478,904 $2,546,988
Bank borrowings, overdrafts
and current portion of long-term debt $15,897 $18,982
Other current liabilities 430,874 332,965
Total current liabilities 446,771 351,947
Long-term debt 791,443 785,774
Non-current liabilities 335,522 414,611
Shareholders' equity 905,168 994,656
Total liabilities and shareholders' equity $2,478,904 $2,546,988
International Flavors & Fragrances Inc.
Consolidated Statement of Cash Flows
(Amounts in thousands)
(Unaudited)
June 30, June 30,
2006 2007
Cash flows from operating activities:
Net income $114,872 $141,061
Adjustments to reconcile to net cash
provided by operations:
Depreciation and amortization 44,602 42,287
Deferred income taxes 329 4,629
Gain on disposal of assets (3,881) (6,737)
Equity based compensation 8,094 8,248
Changes in assets and liabilities
Current receivables (60,327) (54,058)
Inventories 1,163 (1,258)
Current payables (2,336) (38,535)
Changes in other assets 16,358 2,361
Changes in other liabilities 1,886 1,836
Net cash provided by operations 120,760 99,834
Cash flows from investing activities:
Net change in short-term investments 25 (311)
Additions to property, plant and
equipment (19,806) (21,331)
Proceeds from disposal of assets 6,504 8,751
Net cash used in investing activities (13,277) (12,891)
Cash flows from financing activities:
Cash dividends paid to shareholders (33,990) (37,230)
Net change in bank borrowings and
overdrafts (32,508) (496)
Net change in commercial paper
outstanding 281,521 --
Repayments of long-term debt (499,306) --
Proceeds from issuance of stock under
stock plans 23,146 36,461
Excess tax benefits on stock options
exercised 205 3,914
Purchase of treasury stock (91,315) (80,711)
Net cash used in financing activities (352,247) (78,062)
Effect of exchange rates on cash and
cash equivalents 2,052 782
Net change in cash and cash equivalents (242,712) 9,663
Cash and cash equivalents at beginning
of year 272,545 114,508
Cash and cash equivalents at end of period $29,833 $124,171
SOURCE International Flavors & Fragrances Inc.
-0- 08/07/2007
/CONTACT: Investors, Yvette Rudich, Director of Corporate Communications,
+1-212-708-7164, or Media, Melissa Sachs, Manager, Corporate Communications,
+1-212-708-7278, both of International Flavors & Fragrances Inc./
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/Web site: http://www.iff.com /
(IFF)
CO: International Flavors & Fragrances Inc.
ST: New York
IN: REA HOU
SU: ERN CCA
SS-AA
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2054 08/07/2007 06:05 EDT http://www.prnewswire.com