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IFF Reported Sales and Earnings for Second Quarter Meet Forecast; Company Confirms Guidance for 2001

07/26/01

NEW YORK--(BUSINESS WIRE)--July 26, 2001--International Flavors & Fragrances Inc. ("IFF" or "the Company") reported sales for the second quarter 2001 totaling $478,216,000 in comparison to reported sales in the second quarter of 2000 of $368,759,000. 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, second quarter 2000 sales of the combined Company totaled $490,889,000.

Earnings per share were $.34 for the second quarter 2001, including the effect of certain nonrecurring charges recorded in connection with a previously announced reorganization. Excluding the effects of these nonrecurring charges, per share results for the second quarter were $.40, consistent with management's previously announced expectations for the quarter.

Richard A. Goldstein, Chairman and Chief Executive Officer of IFF, said, "We continue to be very pleased with the progress to date in reorganizing and integrating BBA into the new `One IFF.' We achieved integration savings of nearly $10 million in the second quarter, and as of July 1, 2001, our run rate for such savings exceeded $50 million on an annualized basis. Although difficult economic circumstances exist in many parts of the world, we are continuing to maintain our full year expectations of total revenue growth in the low single digits and earnings per share, excluding nonrecurring charges, of $1.40 - $1.44 per share. We are confident that the actions we are taking this year to streamline our business and realize operational efficiencies lay a solid foundation on which to chart our path to growth."

On a local currency basis, consolidated second quarter 2001 sales increased approximately 1% in comparison to the comparable second 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 flat sales in reported dollars. The translation effect was most pronounced against the Euro and the major European currencies, and in Asia-Pacific due to the weak Japanese Yen and Australian dollar.

Local currency sales increases for the second quarter were strongest in North America and Europe, with each region growing 2%. Asia-Pacific was flat in local currency reflecting weak economic conditions in Japan as well as political uncertainties in the Philippines and Indonesia. Latin America declined 4% for the quarter reflecting continued weakness in Argentina and Brazil.

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 second quarter 2001, the Company recorded approximately $8.8 million of pretax charges relating to the reorganization ($5.7 million after tax or $.06 per share). The charges recognized in the second quarter relate primarily to employee separation costs and other reorganization activities. The Company has recorded approximately $53 million of the pretax charges expected to be incurred in connection with the reorganization including approximately $21 million in the first six 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.

The Company initially financed the BBA acquisition primarily with commercial paper. On May 7, 2001, the Company issued $700 million in U.S. dollar denominated bonds with a five-year term; the proceeds of the debt issuance were used to pay down commercial paper outstanding.

IFF is the world's leading creator and manufacturer of flavor and fragrance products used by others to impart or improve flavor or fragrance in a wide variety of consumer products. IFF has sales, manufacturing and creative facilities around the world.

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 1:00 PM EDT; the dial in number for U.S.-based participants is 800-289-0530; for international participants, the number is 913-981-5524.

A replay of the conference call will be available from 4:00 PM on July 26, 2001 through 12:00 AM on August 3, 2001. The dial in number for the replay for U.S.-based listeners is 888-289-1112; for international listeners, the number is 719-457-0820. The replay pass code is 600881.

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 June 30,
                                        ------------------------------
                                        IFF Alone Pro-Forma (B)
                                           2000      2000       2001
                                           ----      ----       ----

Net sales                                $368,759  $490,889  $478,216

Cost of goods sold (A)                    203,562   281,649   269,506
                                        ------------------------------
Gross margin on sales                     165,197   209,240   208,710
Research & development                     26,945    33,831    35,502
Selling and administrative (A)             61,754    86,189    81,001

Amortization                                         10,548    11,400
                                        ------------------------------
                                           76,498    78,672    80,807
Nonrecurring charges                                           (8,780)
Interest expense                           (3,074)  (19,789)  (17,634)
Other income (expense), net                  (203)     (817)   (1,006)
                                        ------------------------------
Pretax income                              73,221    58,066    55,387
Income taxes                               24,305    22,042    20,382
                                        ------------------------------
Net  income                              $ 48,916  $ 36,024  $ 33,005
                                        ------------------------------

Including nonrecurring charges
Net income                               $ 48,916  $ 36,024  $ 33,005
Earnings per share - basic                  $.48      $.35    $.34
Earnings per share - diluted                $.48      $.35    $.34
                                        ------------------------------

Excluding nonrecurring charges
Net income                               $ 48,916  $ 36,024  $ 38,668
Result per share - basic                    $.48       $.35    $.40
Result per share - diluted                  $.48       $.35    $.40
                                        ------------------------------
Notes: 

(A) For the quarter ended June 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)

                                       Six Month Period Ended June 30,
                                       -------------------------------
                                       IFF Alone Pro-Forma (B)
                                           2000      2000      2001
                                           ----      ----      ----

Net sales                                $738,671  $976,707  $961,877

Cost of goods sold (A)                    408,239   559,735   553,645
                                        ------------------------------
Gross margin on sales                     330,432   416,972   408,232
Research & development                     53,757    67,748    70,908
Selling and administrative (A)            123,503   172,368   166,846
Amortization                                         21,096    22,755
                                        ------------------------------
                                          153,172   155,760   147,723
Nonrecurring charges                       (9,354)   (9,354)  (21,200)
Interest expense                           (5,211)  (38,712)  (39,934)
Other income (expense), net                   126    (1,141)     (766)
                                        ------------------------------
Pretax income                             138,733   106,553    85,823
Income taxes                               46,041    40,805    32,546
                                        ------------------------------
Net  income                              $ 92,692  $ 65,748   $53,277
                                        ------------------------------

Including nonrecurring charges
Net income                                $92,692  $ 65,748  $ 53,277
Earnings per share - basic                  $.90      $.64      $.55
Earnings per share - diluted                $.90      $.64      $.55
                                        ------------------------------
Excluding nonrecurring charges
Net income                               $ 98,940  $ 71,996  $ 66,702
Result per share - basic                    $.96      $.70      $.69
Result per share - diluted                  $.96      $.70      $.69
                                        ------------------------------
Notes: 

(A) For the six month period ended June 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,   June 30, 
                                                  2000        2001
                                             ------------  ----------
Cash & short-term investments                   $ 129,238  $   61,097
Receivables                                       364,314     398,720
Inventories                                       435,312     418,618
Other current assets                               90,076      98,147
                                              -----------  ----------
    Total current assets                        1,018,940     976,582

Property, plant and equipment, net                679,874     584,629
Goodwill and other intangibles, net               755,923     780,544
Other assets                                       34,296      43,551
                                              -----------  ----------
                            Total assets      $ 2,489,033  $2,385,306
                                              -----------  ----------

Commercial paper/notes payable - bank         $   852,985   $ 445,252
Other current liabilities                         326,032     329,662
                                              -----------  ----------
   Total current liabilities                    1,179,017     774,914

Long-term debt                                    417,402     816,278
Non-current liabilities                           261,355     253,729

Shareholders' equity                              631,259     540,385
                                              -----------  ----------
             Total liabilities and 
              shareholders' equity            $ 2,489,033  $2,385,306
                                              -----------  ----------

Note:
Reflects a preliminary allocation of purchase price for Bush Boake
Allen.



----------------------------------------------------------------------
Average Shares Outstanding (in thousands)           2001       2000
----------------------------------------------------------------------
Second quarter:
         Basic                                     95,756     102,359
         Diluted                                   96,735     102,387
----------------------------------------------------------------------
Year-to-date
         Basic                                     96,370     103,311
         Diluted                                   97,161     103,336
----------------------------------------------------------------------


----------------------------------------------------------------------
Percent Change in Sales by 
 Area of Destination                      Fragrances  Flavors  Total
----------------------------------------------------------------------

         SECOND QUARTER

         North America                         (1)       6       2

       Europe - Reported                       (3)      (5)     (3)
       -----------------                                           
    Europe - Local Currency                     3        1       2

         Latin America                         (3)      (5)     (4)

    Asia-Pacific - Reported                    (7)      (6)     (7)
    -----------------------                                        
  Asia-Pacific - Local Currency                (1)       1       0

    Central Asia Middle East                  (10)      (1)     (5)
    ------------------------                                       
     CAME - Local Currency                     (9)      (2)     (5)

        Total - Reported                       (3)      (2)     (3)
        ----------------                                           
     Total - Local Currency                    (0)       2       1
----------------------------------------------------------------------
----------------------------------------------------------------------

          YEAR-TO-DATE

         North America                         -0-       3       1

       Europe - Reported                       (3)      (2)     (3)
       -----------------                                           
    Europe - Local Currency                     4        5       4

         Latin America                         -0-      (2)     (1)

    Asia-Pacific - Reported                    (4)      (3)     (3)
    -----------------------                                        
 Asia-Pacific - Local Currency                  2        4       3

    Central Asia Middle East                   (7)      (5)     (6)
    ------------------------                                       
     CAME - Local Currency                     (4)      (4)     (4)

        Total - Reported                       (2)      (1)     (2)
        ----------------                                           
     Total - Local Currency                     1        3       2
----------------------------------------------------------------------

--30--db/ny*

CONTACT: International Flavors & Fragrances Inc.
Douglas J. Wetmore, 212/708-7145


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