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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./ /Photo: http://www.newscom.com/cgi-bin/prnh/20070419/NYTH025LOGO AP Archive: http://photoarchive.ap.org PRN Photo Desk, email@example.com / /Web site: http://www.iff.com / (IFF) CO: International Flavors & Fragrances Inc. ST: New York IN: REA HOU SU: ERN CCA SS-AA -- NYTU021 -- 2054 08/07/2007 06:05 EDT http://www.prnewswire.com