IFF Earnings for Fourth Quarter Meet Forecast -- Company Provides Guidance for 2002
NEW YORK--(BUSINESS WIRE)--Jan. 28, 2002-- International Flavors & Fragrances Inc. (NYSE: IFF) ("IFF" or "the Company") announced fourth quarter 2001 earnings per share of $.30, increasing 100% and 67% compared to pro-forma and reported earnings per share excluding nonrecurring charges, respectively, for the fourth quarter 2000.
The Company acquired Bush Boake Allen ("BBA") effective November 3, 2000 and BBA's sales and operating results are included in the Company's consolidated results from that date; pro-forma results are prepared as though the acquisition of BBA occurred January 1, 2000.
Consistent with expectations, earnings per share for the full year 2001 were $1.40, excluding the effect of certain nonrecurring charges associated with the Company's previously announced reorganization. Including these nonrecurring charges, earnings per share were $1.20.
Net income for the fourth quarter and full year 2001, excluding the effect of certain nonrecurring charges, totaled $29.2 million and $135.1 million, respectively. Including these nonrecurring charges, net income for the full year 2001 was $116.0; there were no such charges in the fourth quarter 2001.
Sales for the fourth quarter 2001 totaled $419.2 million in comparison to pro-forma and reported sales of $444.1 million and $384.5 million in the fourth quarter 2000, respectively. Full year 2001 sales totaled $1,843.8 million in comparison to pro-forma and reported sales of $1,880.6 million and $1,462.8 million for the full year 2000, respectively.
Fourth quarter 2001 sales were favorably impacted by approximately 1% due to currency translation. On a full year basis, local currency sales increased 1% although these gains were unfavorably impacted on translation into the stronger U.S. dollar, resulting in a 2% decrease in reported sales in comparison to 2000 pro-forma results.
Fourth quarter and full year 2001 sales were also impacted by the disposition of certain non-core operations, specifically the Company's North American and Brazilian fruit preparations businesses, and a portion of the aroma chemicals business acquired in the BBA transaction. These dispositions, part of IFF's previously announced reorganization plan, occurred during the fourth quarter 2001. In 2000, these businesses had net sales of $81 million; in 2001, for the period owned by the Company, they had sales of $61 million. Excluding revenue from these businesses in both 2000 and 2001, local currency sales growth for the fourth quarter and full year 2001 would have been approximately 1% higher. Disposal of these businesses did not materially impact the Company's earnings.
Richard A. Goldstein, Chairman and Chief Executive Officer of IFF, said, "IFF began 2001 with two main priorities - continuing to focus on the integration of BBA and further implementing our reorganization. We continue to be very pleased with our progress on both these fronts. Under our programs, we achieved savings of $16 million in the fourth quarter and in excess of $40 million for the full year 2001. As of January 1, 2002, our run rate for savings exceeded $70 million on an annualized basis. These savings enabled us to grow earnings despite the difficult sales and economic environment over the past year.
"Additionally, during the year, we improved our customer service and strengthened our relationships with key customers, invested in business development and implemented programs to retain and incentivize key employees. The actions we've taken to streamline our business and realize operating efficiencies, coupled with our back-to-basics approach, are the cornerstones on which we will build future growth - achieving superior long-term operating results and enhancing shareholder value."
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. During 2001, the Company recorded approximately $30 million of pretax charges relating to the reorganization ($19.1 million after tax or approximately $.20 per share). The charges recognized during 2001 relate primarily to employee separation costs and other reorganization activities. To date, the Company has recorded approximately $62 million of the pretax charges expected to be incurred in connection with the reorganization. Certain costs associated with the merger and integration of BBA operations were accounted for as part of the acquisition and did not affect current earnings.
First Quarter 2002
For the first quarter 2002, IFF expects local currency sales declines in the low single digits in comparison to the prior year, excluding for comparative purposes approximately $20 million of first quarter 2001 sales related to non-core businesses disposed of during 2001. Exchange is expected to be unfavorable by approximately 2-3% for the quarter.
IFF expects first quarter 2002 earnings per share, excluding nonrecurring charges, to increase between 10% and 15% over the prior year quarter. Expected earnings reflect the elimination of approximately $.09 per share of amortization of goodwill in accordance with a new accounting standard the Company is required to adopt effective January 1, 2002; under this standard, for comparative purposes, 2001 first quarter earnings excluding nonrecurring charges would have approximated $.38 per share.
Outlook for 2002
For 2002, IFF expects local currency sales growth in the low single digits excluding for comparative purposes approximately $61 million of 2001 sales related to non-core businesses disposed of during 2001. On a percentage basis, growth is forecast to be in the high single digits in Central Asia and the Middle East ("CAME") led by continued strong performance in India. North America, Europe, Asia-Pacific and Latin America are all expected to grow in low single digits.
IFF expects earnings per share for 2002, excluding nonrecurring charges, to increase between 8% and 12%. Expected earnings consider the elimination of approximately $.35 per share of amortization of goodwill in accordance with a new accounting standard the Company is required to adopt effective January 1, 2002; under this standard, for comparative purposes, 2001 full year earnings excluding nonrecurring charges would have approximated $1.75 per share.
Expected earnings reflect continued cost savings from reorganization and integration efforts, partially offset by planned increases in spending on the Company's research and development initiatives. IFF's R&D initiatives are focused on technologies critical to the long-term growth objectives for the Company.
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. 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 1-800-967-7185; for international participants, the number is 719-457-2634.
A replay of the conference call will be available from 1:00 PM on January 28, 2002 through 12:00 AM on February 15, 2002. 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 664028.
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 December 31,
As reported Pro-Forma (A)
2000 2000 2001
---- ---- ----
Net sales $384,533 $444,101 $419,170
Cost of goods sold 231,915 270,244 241,157
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Gross margin on sales 152,618 173,857 178,013
Research & development 30,248 33,321 32,744
Selling and administrative 72,969 82,574 73,944
Amortization 7,032 10,551 11,843
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42,369 47,411 59,482
Nonrecurring charges (24,234) (24,234) -
Interest expense (15,666) (21,568) (13,945)
Other income (expense), net 174 292 1,511
------------------------------------------
Pretax income 2,643 1,901 47,048
Income taxes 1,257 3,306 17,878
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Net income $1,386 $(1,405) $29,170
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Including nonrecurring charges
Net income $1,386 $(1,405) $29,170
Earnings per share - basic $.01 $(.01) $.31
Earnings per share - diluted $.01 $(.01) $.30
-----------------------------------------
Excluding nonrecurring charges
Net income $17,138 $14,347 $29,170
Result per share - basic $.18 $.15 $.31
Result per share - diluted $.18 $.15 $.30
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Notes:
(A) Pro-forma as though the acquisition of BBA had taken place as
of January 1, 2000. Reference should be made to the Form 8-K filed by
the Company on April 27, 2001 for details and assumptions regarding
preparation of the pro-forma information.
International Flavors & Fragrances Inc.
Consolidated Income Statement
(Amounts in thousands except per share data)
Year Ended December 31,
As reported Pro-Forma (A)
2000 2000 2001
---- ---- ----
Net sales $1,462,795 $1,880,612 $1,843,766
Cost of goods sold 831,653 1,098,000 1,063,433
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Gross margin on sales 631,142 782,612 780,333
Research & development 112,671 136,504 135,248
Selling and administrative 258,653 339,642 313,335
Amortization 7,032 42,195 46,089
------------------------------------------
252,786 264,271 285,661
Nonrecurring charges (41,273) (41,273) (30,069)
Interest expense (25,072) (81,158) (70,424)
Other income (expense), net (2,314) (2,083) 2,609
------------------------------------------
Pretax income 184,127 139,757 187,777
Income taxes 61,122 56,359 71,775
------------------------------------------
Net income $123,005 $83,398 $116,002
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Including nonrecurring charges
Net income $123,005 $83,398 $116,002
Earnings per share - basic $1.22 $.83 $1.21
Earnings per share - diluted $1.22 $.82 $1.20
-----------------------------------------
Excluding nonrecurring charges
Net income $149,770 $110,163 $135,103
Result per share - basic $1.48 $1.09 $1.41
Result per share - diluted $1.48 $1.09 $1.40
-----------------------------------------
Notes:
(A) Pro-forma as though the acquisition of BBA had taken place as
of January 1, 2000. Reference should be made to the Form 8-K filed by
the Company on April 27, 2001 for details and assumptions regarding
preparation of the pro-forma information.
International Flavors & Fragrances Inc.
Consolidated Condensed Balance Sheet
(Amounts in thousands)
December 31,
------------------------------
2000 2001
------------------------------
Cash & short-term investments $129,238 $48,905
Trade receivables, net 332,220 318,023
Other receivables 32,094 23,322
Inventories 435,312 415,984
Other current assets 90,076 91,114
------------------------------
Total current assets 1,018,940 897,348
Property, plant and equipment, net 679,874 532,473
Goodwill and other intangibles, net 755,923 795,920
Other assets 34,296 43,297
------------------------------
Total assets $2,489,033 $2,269,038
------------------------------
Commercial paper/bank loans $852,985 $227,945
Other current liabilities 326,032 332,269
------------------------------
Total current liabilities 1,179,017 560,214
Long-term debt 417,402 939,404
Retirement and other liabilities 158,204 199,710
Deferred taxes 103,151 44,553
Shareholders' equity 631,259 525,157
------------------------------
Total liabilities and shareholders'
equity $2,489,033 $2,269,038
------------------------------
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Average Shares Outstanding (in thousands) 2000 2001
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Fourth quarter:
Basic 97,834 94,874
Diluted 97,865 96,209
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Full year
Basic 101,073 95,770
Diluted 101,093 96,819
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Percent Change in Sales
by Area of Destination Fragrances Flavors Total
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FOURTH QUARTER
North America (7) (5) (6)
Europe - Reported (9) 1 (5)
-----------------
Europe - Local Currency (13) (2) (9)
Latin America (6) (23) (11)
Asia-Pacific - Reported (4) (4) (4)
-----------------------
Asia-Pacific - Local Currency (2) 0 (1)
Central Asia Middle East (19) (8) (13)
------------------------
CAME - Local Currency (22) (9) (15)
Total - Reported (8) (5) (6)
----------------
Total - Local Currency (9) (5) (7)
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FULL YEAR
North America (3) 3 0
Europe - Reported (5) (2) (4)
-----------------
Europe - Local Currency (2) 2 (1)
Latin America 2 (9) (2)
Asia-Pacific - Reported (5) (4) (4)
-----------------------
Asia-Pacific - Local Currency 0 3 1
Central Asia Middle East (9) (5) (6)
------------------------
CAME - Local Currency (8) (4) (6)
Total - Reported (3) (2) (2)
----------------
Total - Local Currency 0 1 1
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--30--eb/ny*
| CONTACT: | International Flavors & Fragrances Inc., New York |
|---|---|
| Douglas J. Wetmore | |
| 212-708-7145 | |