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IFF Sales and Earnings for First Quarter 2002 Meet Expectations
[NOTE: The following press release is being reissued today with the corrected Consolidated Income Statement, originally transmitted incorrectly by PR Newswire. The figures directly below Amortization now read "66,916" for As reported 2001, "75,246" for Pro-Forma (A) 2001, and "72,266" for 2002. Also, the figure for Including nonrecurring charges, Net income, now reads "$20,272" for As reported 2001, rather than "1,386."]International Flavors & Fragrances Inc. (NYSE: IFF) ("IFF" or "the Company") reported earnings per share for the first quarter 2002 at the high end of the Company's forecast range as consolidated sales met previously announced expectations.
Earnings per share for the first quarter 2002 were $.44 per share in comparison to $.21 per share reported for the prior year first quarter. The 2001 results include certain nonrecurring charges and amortization expense associated with goodwill and indefinite life intangibles; excluding these items, comparable pro-forma first quarter 2001 earnings per share were $.36, resulting in an earnings per share increase of 22% in 2002 compared to 2001.
Sales totaled $445.8 million for the 2002 first quarter. Excluding sales from non-core businesses disposed of during 2001, local currency sales for the first quarter 2002 decreased 1.6% in comparison to the 2001 quarter, in line with the Company's expectations. On a similar basis, reported sales declined 3.9%. Translation was unfavorable due to the relative strength of the U.S. dollar versus the Euro, the Japanese Yen and the Australian dollar; these currencies declined versus the U.S. dollar by approximately 4%, 12% and 6%, respectively, in comparison to the prior year.
Excluding sales associated with those businesses disposed of during 2001: * First quarter sales performance was strongest in North America where flavors sales increased by 2% and fragrances were flat; * Local currency fragrance sales in Europe increased 3% although this increase was offset by a 7% local currency decline in flavors with the overall region declining by 1%; * Asia-Pacific was flat and the Indian sub-continent declined 3% in local currency reflecting continued weak economic conditions throughout each of these regions; * Latin America declined by 9% mainly due to Argentina but also slowing economies in both Brazil and Mexico.Richard A. Goldstein, Chairman and Chief Executive Officer of IFF, said, "We continue to be pleased with the progress we have made in our reorganization and in the integration of BBA into "One IFF." The strength of the global economy remains uncertain, but I am confident that the actions we have 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. This will enable us to achieve superior long-term operating results, thus continuing to enhance shareholder value.
Second Quarter 2002
For the second quarter 2002, IFF expects sales to be flat in both local currency and dollar terms compared to last year, excluding approximately $ 15 million of sales attributable to those non-core businesses disposed of in 2001.
IFF expects second quarter 2002 earnings, excluding nonrecurring charges, in the range of $.51 - $.54 per share. For comparative purposes, 2001 second quarter earnings would have approximated $.48 excluding nonrecurring charges ($.06 per share) and reflecting the elimination of goodwill amortization ($.08 per share).
Outlook for 2002 Confirmed
Consistent with guidance previously provided, IFF expects 2002 local currency sales growth in the low single digits, excluding for comparative purposes approximately $60 million of 2001 sales related to non-core businesses disposed of during 2001. Earnings per share are expected to increase between 8% and 12%, excluding nonrecurring charges.
Expected 2002 earnings reflect the elimination of approximately $.35 per share of amortization of goodwill in accordance with Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets, which the Company adopted effective January 1, 2002. This Standard eliminates the amortization of goodwill and other indefinite life intangibles, and requires an evaluation of goodwill impairment on adoption, and annually thereafter. The Company is assessing the impact of adopting the impairment provisions of this Standard, but does not believe it has a material impairment of goodwill on adoption. Under this Standard, for comparative purposes, 2001 full year earnings excluding nonrecurring charges would have approximated $1.75 per share.
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. To date, the Company has recorded approximately $62 million of the expected pretax charges; there were no restructuring charges recorded in the first quarter of 2002. 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.
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 37 countries worldwide and annual sales exceeding $1.8 billion. For more information, please visit our Web site at http://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.
There will be a conference call today at 10:00 AM Eastern Time; the dial in number for U.S.-based participants is 800-811-0667; for international participants, the number is 913-981-4901.
A replay of the conference call will be available from 1:00 PM on April 25, 2002 through 12:00 AM on May 17, 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 475209.
The call can also be monitored via the World Wide Web at http://www.iff.com . Real Network's Real Player or Microsoft Media Player is required to access the webcast. They can be downloaded from http://www.real.com or http://www.microsoft.com/windows/mediaplayer .
International Flavors & Fragrances Inc. Consolidated Income Statement (Amounts in thousands except per share data) Quarter Ended March 31, As reported Pro-Forma (A) 2001 2001 2002 Net Sales $483,661 $463,973 $445,844 Cost of goods sold 284,139 265,535 259,864 Gross margin on sales 199,522 198,438 185,980 Research & development 35,406 35,049 35,170 Selling and administrative 85,845 84,985 75,386 Amortization 11,355 3,158 3,158 66,916 75,246 72,266 Nonrecurring charges (12,420) (12,420) -- Interest expense (22,300) (22,300) (10,427) Other income (expense), net 240 240 1,965 Pretax income 32,436 40,766 63,804 Income taxes 12,164 13,248 21,857 Net income $20,272 $27,518 $41,947 Including nonrecurring charges Net income $20,272 $27,518 $41,947 Earnings per share - basic $.21 $.28 $.44 Earnings per share - diluted $.21 $.28 $.44 Excluding nonrecurring charges Net income $28,035 $35,281 $41,947 Result per share - basic $.29 $.36 $.44 Result per share - diluted $.29 $.36 $.44 (A) Pro-Forma 2001 reflects: * Elimination of sales and operating results of non-core businesses sold during the course of the fourth quarter 2001, namely the North American and Brazilian fruit preparations business and the United Kingdom based portion of the aroma chemicals business acquired in the BBA transaction; * The effect of adoption of FAS 142 resulting in the discontinuance of amortization of goodwill and indefinite life intangibles, effective January 1, 2002. Goodwill amortization of $8.2 million recognized in the 2001 reported results has been eliminated in the 2001 pro- forma results; and * The use of the full year 2001 effective tax rate applied to the quarter. International Flavors & Fragrances Inc. Consolidated Condensed Balance Sheet (Amounts in thousands) December 31, March 31, 2001 2002 Cash & short-term investments $48,905 $34,868 Receivables 318,023 339,628 Inventories 415,984 408,248 Other current assets 113,449 115,941 Total current assets 896,361 898,685 Property, plant and equipment, net 532,473 526,884 Goodwill and other intangibles, net 795,920 786,445 Other assets 43,297 41,463 Total assets $2,268,051 $2,253,477 Commercial paper/notes payable - bank $227,945 $222,581 Other current liabilities 332,269 345,751 Total current liabilities 560,214 568,332 Long-term debt 939,404 930,728 Non-current liabilities 244,263 216,768 Shareholders' equity 524,170 537,649 Total liabilities and shareholders' equity $2,268,051 $2,253,477 Capital spending in quarter: $19,600 Depreciation in quarter: $17,300 ******************** Average Shares Outstanding (000's) 2001 2002 Basic 96,984 94,534 Diluted 97,586 96,182 As Reported % Change in Sales by Fragrances Flavors Total Area of Destination North America -- (6) (3) Europe - Reported (10) (11) (10) Europe - Local Currency (6) (7) (7) Latin America (10) (20) (13) Asia-Pacific - Reported (6) (4) (4) Asia-Pacific - Local Currency (3) -- (1) Indian Sub-continent (16) (4) (10) Indian Sub-Continent - Local Currency (15) (3) (9) Total - Reported (7) (8) (8) Total - Local Currency (5) (6) (6) Pro-Forma to Reflect Businesses Disposed of During 2001 % Change in Sales by Fragrances Flavors Total Area of Destination North America -- 2 1 Europe - Reported (1) (11) (5) Europe - Local Currency 3 (7) (1) Latin America (8) (10) (9) Asia-Pacific - Reported (4) (4) (4) Asia-Pacific - Local Currency (1) -- -- Indian Sub-continent (4) (4) (4) Indian Sub-Continent - Local Currency (3) (3) (3) Total - Reported (3) (5) (4) Total - Local Currency (1) (3) (2)SOURCE International Flavors & Fragrances Inc.
CONTACT: Douglas J. Wetmore of International Flavors & Fragrances Inc., +1-212-708-7145 URL: http://www.iff.com http://www.prnewswire.com
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