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IFF Sales and Earnings for First Quarter 2001 Exceed Forecast
NEW YORK--(BUSINESS WIRE)--April 27, 2001--
Company Confirms Guidance for 2001 and is Pleased With Progress to Date
International Flavors & Fragrances Inc. ("IFF" or "the Company") reported sales for the first quarter 2001 totaling $483,661,000 in comparison to reported sales in the first quarter of 2000 of $369,912,000. 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, first quarter 2000 sales of the combined Company totaled $485,818,000.
Earnings per share were $.21 for the first quarter 2001. These results include 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 first quarter were $.29, $.01 better than previously forecast.
Richard A. Goldstein, Chairman and Chief Executive Officer of IFF, said, "We have accomplished a great deal so far in 2001. We are extremely pleased with the progress to date on the Company's reorganization and the integration of BBA into the new "One IFF." We are maintaining our full year expectations of total revenue growth in the low single digits and earnings per share, excluding nonrecurring charges, of approximately $1.42 per share."
On a local currency basis, consolidated first quarter 2001 sales increased approximately 3% in comparison to the first 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.
Local currency sales increases were led by Europe, which achieved an increase of 7%, and by Asia-Pacific which increased 4%; local currency sales in Central Asia Middle East ("CAME") increased 1%. Latin America sales increased 2% while North America sales increased 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. A portion of these savings will be reinvested in the business; however, the Company expects a large portion to contribute to improving net earnings.
In the first quarter 2001, the Company recorded approximately $12.4 million ($.08 per share) of charges relating to the reorganization. The charges recognized in the first quarter relate primarily to employee separation costs and other reorganization activities. The Company has recorded approximately $44 million of the charges expected to be incurred in connection with the reorganization. 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. During the first quarter of 2001, the Company entered into a long-term arrangement with a major European financial institution providing approximately $125 million of financing, the proceeds of which were used to reduce commercial paper outstanding. On April 26, 2001, the Company announced its intention to issue $500 million in U.S. dollar denominated bonds with an expected five-year term. The Company expects this financing transaction to be completed in early May 2001, and the resultant proceeds to be used to further reduce commercial paper outstanding.
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.
There will be a conference call today at 9:00 AM EDT; the dial in number for U.S.-based participants is 800-289-0518; for international participants, the number is 913-981-5532.
A replay of the conference call will be available from 12:00 PM on April 27, 2001 through 12:00 AM on May 4, 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 407733.
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 March 31, IFF Alone Pro-Forma (B) IFF 2000 2000 2001 Net sales $369,912 $485,818 $483,661 Cost of goods sold (A) 204,677 278,086 284,139 Gross margin on sales 165,235 207,732 199,522 Research & development 26,812 33,917 35,406 Selling and administrative (A) 61,749 86,179 85,845 Amortization -------- 10,548 11,355 76,674 77,088 66,916 Nonrecurring charges (9,354) (9,354) (12,420) Interest expense (2,137) (18,923) (22,300) Other income (expense), net 329 (324) 240 Pretax income 65,512 48,487 32,436 Income taxes 21,736 18,763 12,164 Net income $ 43,776 $ 29,724 $20,272 Including nonrecurring charges Net income $ 43,776 $ 29,724 $20,272 Earnings per share - basic $.42 $.29 $.21 Earnings per share - diluted $.42 $.29 $.21 Excluding nonrecurring charges Net income $ 50,024 $ 35,972 $ 28,035 Result per share - basic $.48 $.35 $.29 Result per share - diluted $.48 $.34 $.29 Notes: (A) For the quarter ended March 31, 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) March 31, December 31, 2001 2000 Cash & short-term investments $ 71,403 $ 129,238 Receivables 377,141 364,314 Inventories 417,683 435,312 Other current assets 97,180 90,076 Total current assets 963,407 1,018,940 Property, plant and equipment, net 617,035 679,874 Goodwill and other intangibles, net 790,025 755,923 Other assets 55,900 34,296 Total assets $2,426,367 $2,489,033 Commercial paper/notes payable - bank $843,902 $852,985 Other current liabilities 344,902 326,032 Total current liabilities 1,188,804 1,179,017 Long-term debt 438,532 417,402 Non-current liabilities 251,482 261,355 Shareholders' equity 547,549 631,259 Total liabilities and shareholders' equity $2,426,367 $2,489,033 Note: Reflects a preliminary allocation of purchase price for Bush Boake Allen at date of acquisition. Average Shares Outstanding (000's) 2000 2001 Basic 104,264 96,984 Diluted 104,285 97,586 Percent Change in Sales Fragrances Flavors Total by Area of Destination North America 3 (1) 1 Europe - Reported (3) 1 (2) Europe - Local Currency 5 9 7 Latin America 4 (3) 2 Asia-Pacific - Reported 1 0 0 Asia-Pacific - Local Currency 4 4 4 Central Asia Middle East (1) (10) (7) CAME - Local Currency 5 (2) 1 Total - Reported 0 (1) 0 Total - Local Currency 4 2 3
|CONTACT:||International Flavors & Fragrances Inc., New York|
|Douglas J. Wetmore, 212/708-7145|