IFF Reports Fourth Quarter and Full Year 2012 Results
IFF Reports Fourth Quarter and Full Year 2012 Results
Fourth Quarter Local Currency Sales Up 8% and Adjusted EPS up 12%
Full Year Local Currency Sales Up 4%; Reported Sales up 1%
Full Year Adjusted Earnings per Share Increased 6% to $3.98
Business Wire
NEW YORK -- February 7, 2013
International Flavors & Fragrances Inc. (NYSE: IFF), a leading global creator
of flavors and fragrances for consumer products, today reported financial
results for the fourth quarter and full year ended December 31, 2012.
Fourth Quarter 2012 Results
* Reported revenue increased $37 million or 6% to $681 million from $644
million in the prior year quarter. Excluding the impact of foreign
currency (by translating current and prior year sales at the same exchange
rates), local currency sales increased 8% reflecting a high level of new
wins and positive volume on existing business. Our expanding footprint in
emerging markets accounted for 49% of fourth quarter sales.
* On a like-for-like (LFL) basis, which excludes the exit of Flavors
low-margin sales activities, local currency sales increased 10%.
* Net income for the quarter totaled $68.1 million, or $0.83 per share,
compared with net income of $24.4 million or $0.30 per share in the prior
year quarter. Net income in the fourth quarter of 2011 included an
aggregate charge of $36.8 million, or $0.44 per share, related to a patent
litigation settlement and restructuring and other charges.
* Excluding the patent litigation settlement and restructuring charges from
the prior year’s results, adjusted net income increased 11% to $68.1
million from $61.1 million in the prior year quarter, and adjusted
earnings per share (EPS) increased 12% to $0.83 per share from $0.74 per
share in the prior year quarter.
Full Year 2012 Results
* Reported revenue for the full year increased 1% to $2.8 billion. Local
currency sales increased 4% for the full year, reflecting accelerated
momentum throughout the year. On a like-for-like basis, sales increased
5%. The emerging markets accounted for 47% of full year sales.
* Net income for the full year totaled $254.1 million, or $3.09 per share,
compared with net income of $266.9 million or $3.26 per share in the prior
year. Net income for the full year includes special charges of $73.4
million, or $0.89 per share, almost all of which is related to the
previously-announced Spanish tax settlement. Net income for the prior year
included an aggregate charge of $39.3 million, or $0.47 per share, related
to a patent litigation settlement and restructuring and other charges.
* Excluding these charges from operating results, adjusted net income
increased 7% to $327.5 million from $306.2 million and full year adjusted
EPS increased 6% to $3.98 from $3.74.
* Cash flows from operations for the full year were $333.1 million, or 11.8%
of sales, compared with $189.2 million, or 6.8% of sales in the prior
year. Cash flow from operations for 2012 includes a $105.5 million cash
outflow arising from the Spanish tax settlement, and for 2011 includes a
$40 million payment for a patent litigation settlement. Excluding these
items, the Company’s cash flow from operations nearly doubled in 2012.
Management Commentary
Doug Tough, Chairman and CEO, said, “We had a strong finish to the year,
driven by our diverse product portfolio, expanding geographic footprint and
commitment to providing customers with innovative and superior products that
are desired and enjoyed by consumers all around the world. This
diversification allowed us to achieve strong broad-based growth in the fourth
quarter, led by double-digit growth in the emerging markets. Both business
units contributed to our gross margin performance, reflecting strong new wins
from our continued focus on innovation, ongoing manufacturing leverage, and
the impact of exiting lower margin sales activities. Our strong top-line
performance enabled us to achieve local currency sales, operating profit and
EPS growth in line with our long-term targets.”
“For the full year we delivered local currency sales growth of 4%, marking the
third consecutive year of top-line growth in line with our long-term growth
targets. We made targeted investments to expand our footprint in the growing
markets of Greater Asia, which included opening a new manufacturing facility
in Singapore and a creative center in India, continuing construction on our
facility in China, and initiating investments behind our recently-announced
capacity expansion project in Turkey. Based on our consumer insights and
market knowledge, our research programs are aligned under our key R&D
platforms, which are designed to meet the consumer needs of today while
anticipating the consumer preferences of tomorrow. We announced earlier this
week that we are have made further progress with our biotechnology partner,
Evolva, on creating an alternative route for vanillin, which we believe will
provide us with a sustainable source for this key flavoring ingredient and
give us a strong competitive advantage.”
“We are very well positioned in the market, and enter 2013 with a strong R&D
pipeline and solid growth momentum. We have confidence in our strengths and
will continue to focus on excellence in execution of our strategies.”
Fourth Quarter 2012 Operating Highlights
* Local currency sales increased 8%, supported by 11% growth in the emerging
markets, and 6% growth in the developed markets. On a like-for-like basis,
local currency sales increased 10%.
* Gross profit margins, as a percentage of sales, improved to 42.2%,
compared with 37.9% in the fourth quarter of 2011. The improved
performance was driven by favorable manufacturing leverage due to the
strong volume growth, cost savings initiatives, an improved sales mix
including benefits associated with exiting low-margin sales activities in
Flavors, and the continued benefits of pricing which helped to offset the
continued high level of input costs.
* Research, selling and administrative (RSA) expenses, as a percentage of
sales, was 27.6% compared with 29.0% in the fourth quarter of 2011.
Excluding the impact of the 2011 patent litigation settlement, adjusted
RSA, as a percentage of sales, increased 380 basis points to 27.6%
compared with 23.8% in the prior year quarter, primarily as a result of
higher incentive compensation accruals owing to the strength of our strong
performance this quarter and its impact on the achievement of our full
year sales growth targets. Before the impact of incentive compensation,
adjusted RSA as a percentage of sales would have shown a decrease versus a
year ago.
* Operating profit totaled $99.2 million, compared with $47.8 million in the
prior year quarter. Operating profit in the prior year quarter included an
aggregate charge of $43 million related to the patent litigation
settlement and restructuring charges. Excluding these items, adjusted
operating profit increased $8 million, or 9%, to $99.2 million from $91.1
million in the prior year, as a result of volume growth, mix improvements
and manufacturing leverage, which more than offset increased incentive
compensation accruals. Adjusted operating profit margin increased 50 basis
points to 14.6% from 14.1% in the prior year.
* Interest expense decreased by $0.2 million in the fourth quarter compared
with the prior year quarter, reflecting lower levels of outstanding debt.
* The effective tax rate for the quarter was 23.2% compared with 39.8% in
the prior year. The prior year tax rate was negatively impacted by the
patent litigation settlement and restructuring charges. The
quarter-over-quarter reduction also reflects favorable adjustments to
provisions for uncertain tax positions and a lower cost of repatriation.
These items were partially offset by the absence of the R&D tax credit in
2012.
Fourth Quarter 2012 Segment Results
Fragrances Business Unit
* Reported revenue increased 10% to $354 million in the fourth quarter,
compared with $322 million in the fourth quarter of 2011. Local currency
sales increased 13% in the fourth quarter. Fragrance Compounds momentum
continued this quarter with local currency growth of 15%, marking the
third consecutive quarter of accelerated growth.
* Fragrance Ingredients delivered local currency sales growth of 6%, which
marked the first quarter of growth since Q1 2011.
* Strong new customer wins and broad-based growth in our Fragrance Compounds
business drove local currency sales growth of 15%, with double-digit
growth in Latin America, Greater Asia and North America and solid growth
in EAME. Fine Fragrance and Beauty Care achieved 19% local currency sales
growth and Functional Fragrance delivered 12% local currency sales growth.
* Fragrances gross margins increased over the prior year quarter primarily
due to strong new wins, favorable category mix, cost savings initiatives
and the continued benefits of pricing which is helping to offset the
continued high level of input costs.
* Segment profit totaled $53 million in the fourth quarter of 2012 compared
with $37 million in the fourth quarter of 2011, or an increase of 44%. The
improved segment profit is due to strong volume growth combined with gross
margin expansion, which offset increased incentive compensation expenses
this quarter. Segment profit margin increased 360 basis points to 15.1%
from 11.5%.
Flavors Business Unit
* Reported revenue increased 1% to $326 million in the fourth quarter from
$323 million in the prior year quarter.
* Local currency sales increased 3% in the fourth quarter fueled by stronger
growth in the emerging markets of Southeast Asia and Latin America
combined with steady growth in the developed markets of North America and
Western Europe. On a like-for-like basis, local currency sales increased
7% over the prior year quarter, led by 15% LFL growth in North America.
* From an end-use category perspective, local currency sales growth was
fueled by double-digit growth in Beverages, particularly in North America,
followed by solid growth in Savory and Dairy, primarily in Greater Asia.
* Flavors gross margins increased over the prior year quarter primarily due
to favorable category mix, the impact of exiting low-margin sales
activities, and the continued benefits of previous pricing to help offset
the continued high level of input costs.
* Segment profit totaled $62 million in the fourth quarter of 2012, compared
with $63 million in the fourth quarter of 2011. Overall sales growth and
expanded gross margins due to favorable category mix and pricing
realization were more than offset by higher RSA expenses, including
increased incentive compensation expense. Segment profit margin decreased
60 basis points to 19.0% from 19.6%.
Full Year 2012 Operating Highlights
* Local currency sales increased 4%, reflecting 8% growth in emerging
markets. On a like-for-like basis, local currency sales increased 5%.
* Gross profit margins, as a percentage of sales, improved to 41.7%,
compared with 39.6% in 2011. The improved performance was due to an
improved mix of business, the benefits associated with exiting low-margin
sales activities, continued pricing, moderating raw material cost
increases and ongoing manufacturing efficiencies.
* Research, selling and administrative (RSA) expenses, as a percentage of
sales, was 24.4% compared with 23.8% in 2011. Excluding the impact of the
2011 patent litigation settlement, the adjusted RSA, as a percentage of
sales, increased 180 points to 24.4% compared with 22.6% in 2011,
primarily as a result of higher incentive compensation accruals and
pension expenses.
* Operating profit totaled $487 million in 2012 compared with $428 million
in 2011. Excluding an aggregate charge of $46.7 million related to the
patent litigation and restructuring charges from the prior year’s results,
and $1.7 million of restructuring charges form the current year’s results,
adjusted operating profit increased $14 million or 3% to $488 million in
2012 from $474 million in 2011. Adjusted operating profit margins
increased 30 basis points to 17.3% from 17.0%.
* Interest expense decreased by $3 million year-over-year, reflecting lower
levels of outstanding debt.
* The effective tax rate was 42.7% in 2012 as compared to a rate of 28.6% in
the prior year. Excluding the impact of the 2011 and 2012 items previously
noted, including the 2011 patent litigation and restructuring charges and
the 2012 Spanish tax settlement and restructuring charges, the adjusted
effective tax rate for 2012 was 26.4%, compared with 27.1% in the prior
year. The year-over-year reduction reflects favorable adjustments to
provisions for uncertain tax positions in 2012, combined with a lower cost
of repatriation. These favorable impacts were partially offset by the
absence of the US R&D tax credit in 2012.
Full Year 2012 Segment Results
Fragrances Business Unit
* Reported revenue for the full year of $1.4 billion was flat compared with
the prior year. Fragrance local currency sales increased 3%. The
Fragrances segment contributed 51% of the total consolidated revenue.
* For the full year, Fragrance Compounds had local currency growth of 7%,
compared with 1% local currency growth in 2011. Fragrance Ingredients,
although improving over the course of the year, declined 10% in local
currency sales in 2012 versus 2011.
* Fragrance Compounds showed positive local currency sales growth across all
regions, with double-digit growth in Latin America and solid growth in
Greater Asia, North America and EAME. Both Fine Fragrance & Beauty Care
and Functional delivered full year local currency sales growth of 7% due
to strong new customer wins.
* Fragrances gross margins increased over the prior year primarily due to
new customer wins, favorable category mix, and productivity gains from
cost savings initiatives and continued pricing to offset higher input
costs.
* Segment profit totaled $238 million in 2012 compared with $227 million in
the prior year, or an increase of 5%. The segment profit improvement is
due to improved category mix and pricing, combined with ongoing cost
discipline including the benefit from the strategic realignment plan
announced in the first quarter of 2012, which more than offset higher raw
material costs. Segment profit margin increased 80 basis points to 16.5%
from 15.7%.
Flavors Business Unit
* Reported revenue for the full year increased 2% to $1.4 billion. The
Flavors segment contributed 49% of the total consolidated revenue.
* Local currency sales increased 5% for the full year and increased 8% on a
LFL basis, supported by 9% growth in emerging markets. Greater Asia,
Flavors largest region, delivered growth of 7% for the full year growth,
or 8% on a LFL basis. The developed market of North America delivered
like-for-like growth of 9%.
* From an end-use category perspective, local currency growth was fueled by
double-digit growth in Beverages, followed by solid growth in Savory and
Dairy.
* Flavors full year gross margins increased over the prior year primarily
due to favorable category mix, the impact of exiting low-margin sales
activities and continued pricing.
* Full year segment profit for Flavors totaled $298 million compared with
$284 million in the prior year. The improved segment profit is due to
strong volume growth, favorable category mix and pricing realization that
more than offset higher raw material costs, ongoing investments in R&D and
increased incentive compensation expenses. Segment profit margin increased
50 basis points to 21.6% from 21.1%.
Audio Webcast
A live webcast to discuss the Company's fourth quarter and full year 2012
financial results, and first quarter and full year 2013 outlook will be held
today, February 7, 2013, at 10:00 a.m. EST. Investors may access the webcast
and accompanying slide presentation on the Company's website at www.iff.com
under the Investor Relations section. For those unable to listen to the live
broadcast, a recorded version of the webcast will be made available on the
Company's website approximately one hour after the event and will remain
available on IFF’s website for one year.
About IFF
International Flavors & Fragrances Inc. (NYSE: IFF) is a leading global
creator of flavors and fragrances used in a wide variety of consumer products.
Consumers experience these unique scents and tastes in fine fragrances and
beauty care, detergents and household goods, as well as beverages, sweet goods
and food products. The Company leverages its competitive advantages of
consumer insight, research and development, creative expertise, and customer
intimacy to provide customers with innovative and differentiated product
offerings. A member of the S&P 500 Index, IFF has more than 5,700 employees
working in 32 countries worldwide. For more information, please visit our
website at www.iff.com.
Cautionary Statement Under The Private Securities Litigation Reform Act of
1995
This press release includes “forward-looking statements” under the Federal
Private Securities Litigation Reform Act of 1995, including statements
regarding (i) the Company’s belief on the impact of its research strategy on
future consumer needs and preferences, (ii) the Company’s expectation
regarding the impact of its partnership with Evolva and (iii) the Company’s
expectations regarding its competitive position in the market and its
financial operational expectations for 2013. These forward-looking statements
are qualified in their entirety by cautionary statements and risk factor
disclosures contained in the Company’s Securities and Exchange Commission
filings, including the Company’s Annual Report on Form 10-K filed with the
Commission on February 28, 2012. The Company wishes to caution readers that
certain important factors may have affected and could in the future affect the
Company’s actual results and could cause the Company’s actual results for
subsequent periods to differ materially from those expressed in any
forward-looking statements made by or on behalf of the Company. With respect
to the Company’s expectations regarding these statements, such factors
include, but are not limited to: (1) the general worldwide economic climate
and the economic climate for the Company’s industry and demand for the
Company’s products; (2) fluctuations in the price, quality and availability of
raw materials; (3) changes in consumer preferences; (4) the Company’s ability
to implement its business strategy, including the achievement of anticipated
cost savings, profitability, realization of price increases and growth
targets; (5) the Company’s ability to successfully develop new and competitive
products and enter and expand its sales in new and other emerging markets; (6)
the impact of currency fluctuations or devaluations in the Company’s principal
foreign markets; (7) unanticipated costs and construction delays in the
expansion of the Company’s facilities; (8) the effect of legal and regulatory
proceedings, as well as restrictions imposed on the Company, its operations or
its representatives by U.S. and foreign governments; (9) adverse changes in
federal, state, local and foreign tax legislation or adverse results of tax
audits, assessments, or disputes; (10) the direct and indirect costs and other
financial impact that may result from any business disruptions due to
political instability, armed hostilities, incidents of terrorism, natural
disasters, or the responses to or repercussion from any of these or similar
events or conditions; (11) the ability of Evolva to develop an alternative
route for vanillin which will meet consumers and the Company’s clients’ needs
and (12) adverse changes due to accounting rules or regulations. New risks
emerge from time to time and it is not possible for management to predict all
such risk factors or to assess the impact of such risks on the Company’s
business. Accordingly, the Company undertakes no obligation to publicly update
or revise any forward-looking statements, whether as a result of new
information, future events, or otherwise.
International Flavors & Fragrances Inc.
Consolidated Income Statement
(Amounts in thousands except per share data)
(Unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
2012 2011 % 2012 2011 %
Change Change
Net sales $ 680,558 $ 644,383 6 $ 2,821,446 $ 2,788,018 1
Cost of goods 393,490 399,985 (2 ) 1,645,912 1,683,362 (2 )
sold
Gross margin 287,068 244,398 17 1,175,534 1,104,656 6
Research and 62,245 52,459 19 233,713 219,781 6
development
Selling and 125,594 134,349 (7 ) 453,535 443,974 2
administrative
Restructuring
and other - 9,805 (100 ) 1,668 13,172 (87 )
charges
Interest 10,423 10,670 (2 ) 41,753 44,639 (6 )
expense
Other expense 116 (3,415 ) (103 ) 1,450 9,544 (85 )
(income), net
Pretax income 88,690 40,530 119 443,415 373,546 19
Income taxes 20,571 16,136 27 189,281 106,680 77
Net income $ 68,119 $ 24,394 179 $ 254,134 $ 266,866 (5 )
Earnings per $ 0.83 $ 0.30 $ 3.11 $ 3.30
share - basic
Earnings per
share - $ 0.83 $ 0.30 $ 3.09 $ 3.26
diluted
Average shares outstanding
Basic 81,318 80,677 81,108 80,456
Diluted 81,998 81,596 81,833 81,467
International Flavors & Fragrances Inc.
Condensed Consolidated Balance Sheet
(Amounts in thousands)
(Unaudited)
December 31, December 31,
2012 2011
Cash & cash equivalents $ 324,422 $ 88,279
Receivables 499,443 472,346
Inventories 540,658 544,439
Other current assets 208,036 212,156
Total current assets 1,572,559 1,317,220
Property, plant and equipment, net 654,641 608,065
Goodwill and other intangibles, net 702,270 708,345
Other assets 320,130 331,951
Total assets $ 3,249,600 $ 2,965,581
Bank borrowings and overdrafts, and
current portion of long-term debt $ 150,071 $ 116,688
Other current liabilities 472,661 447,878
Total current liabilities 622,732 564,566
Long-term debt 881,104 778,248
Non-current liabilities 493,209 515,360
Shareholders' equity 1,252,555 1,107,407
Total liabilities and shareholders' $ 3,249,600 $ 2,965,581
equity
International Flavors & Fragrances Inc.
Consolidated Statement of Cash Flows
(Amounts in thousands)
(Unaudited)
Twelve Months Ended
December 31,
2012 2011
Cash flows from operating activities:
Net income $ 254,134 $ 266,866
Adjustments to reconcile to net cash
provided by operating activities:
Depreciation and amortization 76,667 75,327
Deferred income taxes (15,878 ) 25,357
Gain on disposal of assets (4,461 ) (3,184 )
Stock-based compensation 19,716 20,547
Pension settlement/curtailment 874 3,583
Spanish tax charge 72,362 -
Payments pursuant to Spanish tax settlement (105,503 ) -
Changes in assets and liabilities
Trade receivables (33,056 ) (35,697 )
Inventories 4,571 (25,199 )
Accounts payable (740 ) (5,859 )
Accruals for incentive compensation 34,632 (49,964 )
Other current payables and accrued expenses 29,203 (45,491 )
Changes in other assets/liabilities 558 (37,096 )
Net cash provided by operating activities 333,079 189,190
Cash flows from investing activities:
Additions to property, plant and equipment (126,140 ) (127,457 )
Purchase of insurance contracts (1,127 ) (1,936 )
Maturities of net investment hedge 1,960 (2,475 )
Proceeds from disposal of assets 1,763 705
Net cash used in investing activities (123,544 ) (131,163 )
Cash flows from financing activities:
Cash dividends paid to shareholders (130,943 ) (90,250 )
Net change in revolving credit facility 138,756 92,662
borrowings and overdrafts
Repayments of long-term debt - (123,708 )
Proceeds from issuance of stock under stock 9,211 14,656
plans
Excess tax benefits on stock-based payments 8,380 5,933
Net cash provided by (used in) financing 25,404 (100,707 )
activities
Effect of exchange rates changes on cash and 1,204 (373 )
cash equivalents
Net change in cash and cash equivalents 236,143 (43,053 )
Cash and cash equivalents at beginning of 88,279 131,332
year
Cash and cash equivalents at end of period $ 324,422 $ 88,279
International Flavors & Fragrances Inc.
Business Unit Performance
(Amounts in thousands)
(Unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
2012 2011 2012 2011
Net Sales
Flavors $ 326,445 $ 322,736 $ 1,378,377 $ 1,347,340
Fragrances 354,113 321,647 1,443,069 1,440,678
Consolidated 680,558 644,383 2,821,446 2,788,018
Segment Profit
Flavors 61,867 63,127 298,326 284,246
Fragrances 53,333 36,925 238,379 226,560
Global (15,971 ) (8,967 ) (48,419 ) (36,410 )
Expenses
Restructuring
and other - (9,805 ) (1,668 ) (13,172 )
charges, net
Patent
Settlement - (33,495 ) - (33,495 )
Litigation
Operating 99,229 47,785 486,618 427,729
profit
Interest (10,423 ) (10,670 ) (41,753 ) (44,639 )
Expense
Other
(expense) (116 ) 3,415 (1,450 ) (9,544 )
income, net
Income before $ 88,690 $ 40,530 $ 443,415 $ 373,546
taxes
Profit Margin
Flavors 19.0 % 19.6 % 21.6 % 21.1 %
Fragrances 15.1 % 11.5 % 16.5 % 15.7 %
Consolidated 14.6 % 7.4 % 17.2 % 15.3 %
International Flavors & Fragrances Inc.
Sales Performance by Region and Category
(Unaudited)
% Change in Sales - Fourth Quarter 2012 vs. Fourth Quarter
2011
Fine & Total
Beauty Functional Ingredients Frag. Flavors Total
Care
North Reported 17% 7% 9% 10% 3% 7%
America
EAME Reported -1% 1% 5% 1% -2% 0%
Local 5% 6% 10% 7% 3% 5%
Currency
Latin Reported 53% 14% -10% 26% 0% 16%
America
Local 59% 15% -9% 29% 4% 20%
Currency
Greater Reported 4% 21% -5% 12% 3% 6%
Asia
Local 5% 22% -4% 13% 4% 7%
Currency
Total Reported 15% 9% 3% 10% 1% 6%
Local 19% 12% 6% 13% 3% 8%
Currency
% Change in Sales - Full Year 2012 vs. Full Year 2011
Fine & Total
Beauty Functional Ingredients Frag. Flavors Total
Care
North Reported 6% 3% -5% 2% 3% 2%
America
EAME Reported -7% -1% -17% -7% -1% -5%
Local 0% 6% -13% -1% 6% 2%
Currency
Latin Reported 22% 11% -9% 13% 0% 9%
America
Local 26% 12% -8% 15% 4% 12%
Currency
Greater Reported 1% 5% -16% 1% 5% 4%
Asia
Local 3% 6% -16% 1% 7% 5%
Currency
Total Reported 3% 4% -12% 0% 2% 1%
Local 7% 7% -10% 3% 5% 4%
Currency
Note: Local currency sales growth is calculated by translating prior year
sales at the exchange rates used for the corresponding 2012 period
International Flavors & Fragrances Inc.
Reconciliation of Like-for-Like Sales Growth
(Unaudited)
The following information and schedules provide reconciliation information
between reported GAAP amounts and certain adjusted amounts. This information
and schedules is not intended as, and should not be viewed as, a substitute
for reported GAAP amounts or financial statements of the Company prepared and
presented in accordance with GAAP.
% Change in Sales for the Three Months Ended December 31, 2012
Reported Local Exit of Low- Like-For-Like
Sales Currency Margin Sales Sales Growth
Growth Sales Growth Activities ^(2)
^(1)
Total 6% 8% 2% 10%
Company
Flavors:
North 3% 3% 12% 15%
America
EAME -2% 3% 1% 4%
Latin 0% 4% 2% 6%
America
Greater 3% 4% 1% 5%
Asia
Total 1% 3% 4% 7%
Flavors
% Change in Sales for the Twelve Months Ended December 31, 2012
Reported Local Exit of Low- Like-For-Like
Sales Currency Margin Sales Sales Growth
Growth Sales Growth Activities ^(2)
^(1)
Total 1% 4% 1% 5%
Company
Flavors:
North 3% 3% 6% 9%
America
EAME -1% 6% 1% 7%
Latin 0% 4% 2% 6%
America
Greater 5% 7% 1% 8%
Asia
Total 2% 5% 3% 8%
Flavors
(1) Local currency sales growth is calculated by translating prior year
sales at the exchange rates used for the
corresponding 2012 period
(2) Like-for-like is a non-GAAP metric that excludes the impact of exiting
low-margin sales activities and foreign exchange
International Flavors & Fragrances Inc.
Reconciliation of Income
(Amounts in thousands)
(Unaudited)
The following information and schedules provide reconciliation information
between reported GAAP amounts and certain adjusted amounts. This information
and schedules is not intended as, and should not be viewed as, a substitute
for reported GAAP amounts or financial statements of the Company prepared and
presented in accordance with GAAP.
In the fourth quarter of 2012, there were no items impacting comparability.
Fourth Quarter 2011
Items Impacting Comparability
Reported Patent Restructuring Adjusted
(GAAP) Litigation and Other (Non-GAAP)
Settlement Charges
Net Sales 644,383 - -
Cost of Goods 399,985 - -
Sold
Gross Profit 244,398 - -
Research and 52,459 - -
Development
Selling and 134,349 (33,495) - 100,854
Administrative
RSA Expense 186,808 (33,495) - 153,313
Restructuring
and other 9,805 - (9,805) ^(a) -
charges, net
Operating 47,785 33,495 9,805 91,085
Profit
Interest 10,670 - -
Expense
Other (income) (3,415) - -
expense, net
Income before 40,530 33,495 9,805 83,830
taxes
Income Taxes 16,136 (3,649) (2,901) 22,686
Net Income 24,394 29,846 6,904 61,144
Earnings per
share - $0.30 ^(b) $0.36 $0.08 $0.74
diluted
(a) Primarily related to category realignment and reduction in workforce
($8M Fragrances, $1.5M Flavors and $0.5M Corporate)
The sum of EPS Reported, plus the per share effects of items added back
(b) to reconcile to EPS as Adjusted, may not equal the total EPS as
Adjusted, due to rounding differences
International Flavors & Fragrances Inc.
Reconciliation of Income
(Amounts in thousands)
(Unaudited)
The following information and schedules provide reconciliation information
between reported GAAP amounts and certain adjusted amounts. This information
and schedules is not intended as, and should not be viewed as, a substitute
for reported GAAP amounts or financial statements of the Company prepared and
presented in accordance with GAAP.
Full Year 2012
Items Impacting Comparability
Reported Spanish Restructuring Adjusted
(GAAP) Tax and Other (Non-GAAP)
Settlement Charges
Net Sales 2,821,446 - -
Cost of Goods 1,645,912 - -
Sold
Gross Profit 1,175,534 - -
Research and 233,713 - -
Development
Selling and 453,535 - -
Administrative
RSA Expense 687,248 - -
Restructuring
and other 1,668 - (1,668 ) ^(b) -
charges, net
Operating 486,618 - 1,668 488,286
Profit
Interest 41,753 - -
Expense
Other (Income) 1,450 - -
expense, net
Income before 443,415 - 1,668 445,083
taxes
Taxes on 189,281 72,362 ^(a) (621 ) 117,540
Income
Net Income 254,134 72,362 1,047 327,543
Earnings per
share - $3.09 $ 0.88 $0.01 $3.98
diluted
Pursuant to the Spanish tax settlement announced on August 2; includes a
(a) $0.71 per share charge to net income covering the fiscal years 2004 -
2010, and a $0.17 per share accrual for uncertain tax positions for
years not settled
(b) Related to restructuring program announced in Q1 2012
Full Year 2011
Items Impacting Comparability
Reported Patent Restructuring Adjusted
(GAAP) Litigation and Other (Non-GAAP)
Settlement Charges
Net Sales 2,788,018 - -
Cost of Goods 1,683,362 - -
Sold
Gross Profit 1,104,656 - -
Research and 219,781 - -
Development
Selling and 443,974 (33,495) - 410,479
Administrative
RSA Expense 663,755 (33,495) - 630,260
Restructuring
and other 13,172 - (13,172) ^(a) -
charges, net
Operating 427,729 33,495 13,172 474,396
Profit
Interest 44,639 - -
Expense
Other (income) 9,544 - -
expense, net
Income before 373,546 33,495 13,172 420,213
taxes
Income Taxes 106,680 (3,649) (3,728) 114,057
Net Income 266,866 29,846 9,444 306,156
Earnings per
share - $3.26 ^(b) $0.36 $0.11 $3.74
diluted
Related to category realignment and reduction in workforce ($8M
(a) Fragrances, $1.5M Flavors and $0.5M Corporate) and Fragrance European
facility rationalization ($3.4M)
The sum of EPS Reported, plus the per share effects of items added back
(b) to reconcile to EPS as Adjusted, may not equal the total EPS as
Adjusted, due to rounding differences
Contact:
Investor Relations:
International Flavors & Fragrances Inc.
Shelley Young, 212-708-7271
Director, Investor Relations
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