UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
______________
FORM 8-K
CURRENT
REPORT
PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES
EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) |
November 5, 2013 |
INTERNATIONAL FLAVORS & FRAGRANCES INC. |
(Exact Name of Registrant as Specified in Charter) |
New York |
1-4858 |
13-1432060 |
(State or Other Jurisdiction of Incorporation) |
(Commission File Number) |
(I.R.S. Employer Identification No.) |
521 West 57th Street, New York, New York |
10019 |
(Address of Principal Executive Offices) |
(Zip Code) |
Registrant’s telephone number, including area code | (212) 765-5500 |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
⃞ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
⃞ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
⃞ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
⃞ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02. Results of Operations and Financial Condition
Attached and being furnished hereby as Exhibit 99.1 is a copy of a press release of International Flavors & Fragrances Inc. ("IFF" or the "Company") dated November 5, 2013 reporting IFF's financial results for the quarter ended September 30, 2013.
An audio webcast to discuss the Company's third quarter 2013 financial results and full year 2013 outlook will be held today, November 5, 2013, at 10:00 a.m. EDT. Interested parties can 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 replay will be available on the Company's website approximately one hour after the event and will remain available on the IFF website for one year.
Non-GAAP financial measures: In the attached press release and the referenced audio webcast, the Company uses the following non-GAAP financial operating measures: (i) adjusted EPS, (ii) adjusted operating profit, (iii) adjusted operating profit margin, (iv) adjusted gross profit, (v) adjusted gross margin, (vi) adjusted net income, (vii) local currency sales, (viii) LFL, or like-for-like, sales and (ix) adjusted effective tax rate. Such information is supplemental to information presented in accordance with GAAP and is not intended to represent a presentation in accordance with GAAP. In discussing the Company’s historical and expected future results and financial condition, the Company believes it is meaningful for investors to be made aware of and to be assisted in a better understanding of, on a period-to-period comparable basis, financial amounts both including and excluding these identified items, as well as the impact of exchange rate fluctuations and the exit of certain low margin sales activities on operating results and financial condition. The Company believes such additional non-GAAP information provides investors with an overall perspective of the period-to-period performance of our business. In addition, management internally reviews each of these non-GAAP measures to evaluate performance on a comparative period-to-period basis in terms of absolute performance, trends and expected future performance with respect to our business. A material limitation of these non-GAAP measures is that such measures do not reflect actual GAAP amounts; for example, charges relating to Spanish tax assessments and costs associated with operational improvements include actual cash outlays that impact cash flows. The Company compensates for such limitations by presenting the reconciliations contained in the attached press release to the most directly comparable GAAP measure. These non-GAAP measures may not be comparable to similarly titled measures used by other companies.
Item 9.01. Financial Statements and Exhibits
(d) Exhibits
99.1 Press Release of International Flavors & Fragrances Inc., dated November 5, 2013.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
INTERNATIONAL FLAVORS & FRAGRANCES INC. |
||
Dated: |
November 5, 2013 |
/s/ Kevin C. Berryman |
Name: Kevin C. Berryman |
||
|
||
Title: Executive Vice President and Chief |
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Financial Officer |
Exhibit Index
Number |
Description |
99.1 |
Press Release of International Flavors & Fragrances Inc. dated November 5, 2013 |
Exhibit 99.1
IFF Reports Third Quarter 2013 Local Currency Sales Growth of 4% and Adjusted EPS Growth of 13% to $1.22 per Diluted Share
Local Currency Sales Increase by 4%; Reported Sales Increase by 5%
Adjusted Operating Profit Margins Expand 50 basis points to 19.4%
NEW YORK--(BUSINESS WIRE)--November 5, 2013--International Flavors & Fragrances Inc. (NYSE:IFF), a leading global creator of flavors and fragrances for consumer products, today reported financial results for the third quarter ended September 30, 2013.
Third Quarter 2013 Results
1 Please see the information and schedules at the end of this release for reconciliations of GAAP to non-GAAP financial metrics.
Management Commentary
“In the third quarter, IFF benefited from our balanced business mix and continued focus on executing our three-pillar growth strategy,” said Doug Tough, Chairman and CEO of IFF. “We are pleased with our growth momentum on both the top and bottom lines, especially in light of a more challenging comparison to the third quarter of last year. This is the sixth consecutive quarter that our gross profit margin, adjusted operating profit margin and adjusted net income as a percent of sales have all increased versus the year-ago period.”
Mr. Tough continued, “Our consolidated local currency sales growth of 4% was led by 8% growth in the emerging markets, which continue to grow at two to three times the rate of the developed markets with strong performance across both of our business units. We are also beginning to see greater stability in our Fragrance Ingredients business. Our broad and diverse portfolio of end-use product categories combined with our diverse regional footprint continues to be a source of strength for us.
“IFF’s gross margin progression this quarter reflects a continued focus on strategic initiatives, as well as a more benign raw material cost environment. As previously communicated, we continue to reinvest in our Research & Development platforms to support future growth, and to ensure a strong innovation pipeline for the near, mid and longer-term. We believe these investments will enable us to better serve our customers and provide them with new and innovative ways to drive consumer engagement.”
Mr. Tough concluded, “Looking forward, we expect to see moderate growth in the fourth quarter, given the strong growth achieved in the prior year period. We continue to expect that the Company will deliver on its long-term growth targets for the full year 2013.”
Third Quarter 2013 Operating Highlights
Fragrances Business Unit
Flavors Business Unit
Audio Webcast
A live webcast to discuss the Company's third quarter financial results and full year outlook will be held today, November 5, 2013, at 10:00 a.m. ET. 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 5,800 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 the Company’s expectations concerning (i) growth in the fourth quarter of 2013; (ii) the impact of R&D investments on future growth and innovation; and (iii) its ability to execute on its long-term strategic plan and reach its long-term growth targets in 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 26, 2013. The Company wishes to caution readers that certain important factors may affect 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 economic climate for the Company’s industry and demand for the Company’s products; (2) the ability of the Company to successfully implement its restructuring initiative and achieve the estimated savings; (3) fluctuations in the price, quality and availability of raw materials; (4) decline in consumer confidence and spending; (5) changes in consumer preferences; (6) the Company’s ability to predict the short and long-term effects of global economic conditions; (7) movements in interest rates; (8) the effects of any unanticipated costs and construction or start-up delays in the expansion of any of the Company’s facilities; (9) the Company’s ability to implement its business strategy and ongoing profit and operational improvement initiatives, including the achievement of anticipated cost savings, profitability, realization of price increases and growth targets; (10) the Company’s ability to successfully develop new and competitive products and enter and expand its sales in new and other emerging markets; (11) the impact of currency fluctuations or devaluations in the Company’s principal foreign markets; (12) any adverse impact on the availability, effectiveness and cost of the Company’s hedging and risk management strategies; (13) uncertainties regarding the outcome of, or funding requirements, related to litigation or settlement of pending litigation, uncertain tax positions or other contingencies; (14) the impact of possible pension funding obligations and increased pension expense, particularly as a result of changes in asset returns or discount rates, on the Company’s cash flow and results of operations; (15) 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; (16) adverse changes in federal, state, local and foreign tax legislation or adverse results of tax audits, assessments, or disputes; (17) 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; (18) the Company’s ability to quickly and effectively implement its disaster recovery and crisis management plans; and (19) 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) |
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Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||
2013 | 2012 | % Change | 2013 | 2012 | % Change | |||||||||||||||
Net sales | $ | 742,256 | $ | 708,955 | 5 | % | $ | 2,227,727 | $ | 2,140,888 | 4 | % | ||||||||
Cost of goods sold | 416,852 | 407,431 | 2 | % | 1,256,977 | 1,252,422 | 0 | % | ||||||||||||
Gross margin | 325,404 | 301,524 | 8 | % | 970,750 | 888,466 | 9 | % | ||||||||||||
Research and development | 65,654 | 57,658 | 14 | % | 189,428 | 171,467 | 10 | % | ||||||||||||
Selling and administrative | 118,221 | 109,691 | 8 | % | 357,687 | 327,942 | 9 | % | ||||||||||||
Restructuring and other charges | — | — | 2,105 | 1,668 | ||||||||||||||||
Interest expense | 11,625 | 9,907 | 35,637 | 31,330 | ||||||||||||||||
Other (income) expense, net | (4,080 | ) | 2,424 | (16,359 | ) | 1,333 | ||||||||||||||
Pretax income | 133,984 | 121,844 | 10 | % | 402,252 | 354,726 | 13 | % | ||||||||||||
Income taxes | 34,938 | 105,481 | (67 | )% | 110,187 | 168,710 | (35 | )% | ||||||||||||
Net income | $ | 99,046 | $ | 16,363 | 505 | % | $ | 292,065 | $ | 186,016 | 57 | % | ||||||||
Earnings per share - basic | $ | 1.21 | $ | 0.20 | $ | 3.57 | $ | 2.28 | ||||||||||||
Earnings per share - diluted | $ | 1.20 | $ | 0.20 | $ | 3.54 | $ | 2.26 | ||||||||||||
Average shares outstanding | ||||||||||||||||||||
Basic | 81,437 | 81,246 | 81,349 | 81,241 | ||||||||||||||||
Diluted | 82,043 | 81,898 | 81,959 | 81,984 |
International Flavors & Fragrances Inc. Condensed Consolidated Balance Sheet (Amounts in thousands) (Unaudited) |
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September 30, | December 31, | |||||
2013 | 2012 | |||||
Cash & cash equivalents | $ | 343,149 | $ | 324,422 | ||
Receivables | 553,884 | 499,443 | ||||
Inventories | 520,707 | 540,658 | ||||
Other current assets | 216,127 | 208,164 | ||||
Total current assets | 1,633,867 | 1,572,687 | ||||
Property, plant and equipment, net | 656,662 | 654,641 | ||||
Goodwill and other intangibles, net | 697,716 | 702,270 | ||||
Other assets | 336,266 | 316,594 | ||||
Total assets | $ | 3,324,511 | $ | 3,246,192 | ||
Bank borrowings and overdrafts, and | ||||||
current portion of long-term debt | $ | 144 | $ | 150,071 | ||
Other current liabilities | 509,432 | 479,807 | ||||
Total current liabilities | 509,576 | 629,878 | ||||
Long-term debt | 933,464 | 881,104 | ||||
Non-current liabilities | 441,941 | 482,655 | ||||
Shareholders' equity | 1,439,530 | 1,252,555 | ||||
Total liabilities and shareholders' equity | $ | 3,324,511 | $ | 3,246,192 |
International Flavors & Fragrances Inc. Consolidated Statement of Cash Flows (Amounts in thousands) (Unaudited) |
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Nine Months Ended September 30, | ||||||||||
2013 | 2012 | |||||||||
Cash flows from operating activities: | ||||||||||
Net income | $ | 292,065 | $ | 186,016 | ||||||
Adjustments to reconcile to net cash provided by operations: | ||||||||||
Depreciation and amortization | 61,084 | 56,332 | ||||||||
Deferred income taxes | (5,167 | ) | (13,830 | ) | ||||||
Gain on disposal of assets | (18,859 | ) | (2,243 | ) | ||||||
Stock-based compensation | 18,919 | 15,363 | ||||||||
Pension settlement/curtailment | — | 874 | ||||||||
Spanish tax charge | — | 72,362 | ||||||||
Payments pursuant to Spanish tax settlement | — | (105,503 | ) | |||||||
Changes in assets and liabilities | ||||||||||
Current receivables | (72,051 | ) | (66,364 | ) | ||||||
Inventories | 10,679 | (3,751 | ) | |||||||
Accounts payable | (11,581 | ) | (33,652 | ) | ||||||
Accruals for incentive compensation | (1,298 | ) | 14,927 | |||||||
Other current payables and accrued expenses | 27,416 | 29,095 | ||||||||
Changes in other assets/liabilities | (43,891 | ) | (12,048 | ) | ||||||
Net cash provided by operating activities | 257,316 | 137,578 | ||||||||
Cash flows from investing activities: | ||||||||||
Additions to property, plant and equipment | (86,448 | ) | (84,176 | ) | ||||||
Purchase of life insurance contracts | — | (1,127 | ) | |||||||
Proceeds from termination of life insurance contracts | 793 | 5,327 | ||||||||
Maturity of net investment hedges | 626 | 1,960 | ||||||||
Proceeds from disposal of assets | 16,782 | 223 | ||||||||
Net cash used in investing activities | (68,247 | ) | (77,793 | ) | ||||||
Cash flows from financing activities: | ||||||||||
Cash dividends paid to shareholders | (55,525 | ) | (75,458 | ) | ||||||
Net change in revolving credit facility borrowings and overdrafts | (282,915 | ) | 8,376 | |||||||
Deferred financing costs | (2,800 | ) | — | |||||||
Repayments of long-term debt | (100,000 | ) | — | |||||||
Proceeds from long-term debt | 297,786 | — | ||||||||
Proceeds from issuance of stock under stock plans | 3,613 | 7,664 | ||||||||
Excess tax benefits on stock-based payments | 5,583 | 6,920 | ||||||||
Purchase of treasury stock | (31,923 | ) | — | |||||||
Net cash used in financing activities | (166,181 | ) | (52,498 | ) | ||||||
Effect of exchange rates changes on cash and cash equivalents | (4,161 | ) | 1,615 | |||||||
Net change in cash and cash equivalents | 18,727 | 8,902 | ||||||||
Cash and cash equivalents at beginning of year | 324,422 | 88,279 | ||||||||
Cash and cash equivalents at end of period | $ | 343,149 | $ | 97,181 |
International Flavors & Fragrances Inc. Business Unit Performance (Amounts in thousands) (Unaudited) |
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Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Net Sales | ||||||||||||||||
Flavors | $ | 349,385 | $ | 340,674 | $ | 1,079,786 | $ | 1,051,932 | ||||||||
Fragrances | 392,871 | 368,281 | 1,147,941 | 1,088,956 | ||||||||||||
Consolidated | 742,256 | 708,955 | 2,227,727 | 2,140,888 | ||||||||||||
Segment Profit | ||||||||||||||||
Flavors | 81,101 | 76,145 | 254,055 | 236,458 | ||||||||||||
Fragrances | 81,309 | 65,331 | 221,577 | 185,049 | ||||||||||||
Global Expenses | (18,313 | ) | (7,301 | ) | (47,236 | ) | (32,450 | ) | ||||||||
Restructuring and other charges, net | — | — | (2,105 | ) | (1,668 | ) | ||||||||||
Operational improvement initiative costs | (2,568 | ) | — | (4,761 | ) | — | ||||||||||
Operating profit | 141,529 | 134,175 | 421,530 | 387,389 | ||||||||||||
Interest Expense | (11,625 | ) | (9,907 | ) | (35,637 | ) | (31,330 | ) | ||||||||
Other income (expense), net | 4,080 | (2,424 | ) | 16,359 | (1,333 | ) | ||||||||||
Income before taxes | $ | 133,984 | $ | 121,844 | $ | 402,252 | $ | 354,726 | ||||||||
Operating Margin | ||||||||||||||||
Flavors | 23.2 | % | 22.4 | % | 23.5 | % | 22.5 | % | ||||||||
Fragrances | 20.7 | % | 17.7 | % | 19.3 | % | 17.0 | % | ||||||||
Consolidated | 19.1 | % | 18.9 | % | 18.9 | % | 18.1 | % |
International Flavors & Fragrances Inc. Sales Performance by Region and Category (Unaudited) |
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Third Quarter 2013 vs. 2012 | ||||||||||||||
Percentage Change in Sales by Region of Destination | ||||||||||||||
Fine & Beauty Care | Functional | Ingredients | Total Frag. | Flavors | Total | |||||||||
North America | Reported | -10% | 7% | -2% | -2% | 1% | 0% | |||||||
EAME | Reported | 16% | 4% | -1% | 8% | 5% | 7% | |||||||
Local Currency | 10% | 0% | -5% | 3% | 3% | 3% | ||||||||
Latin America | Reported | 7% | 10% | -8% | 7% | 4% | 6% | |||||||
Local Currency | 10% | 12% | -9% | 9% | 7% | 8% | ||||||||
Greater Asia | Reported | 9% | 16% | 25% | 15% | 1% | 6% | |||||||
Local Currency | 10% | 16% | 31% | 16% | 4% | 8% | ||||||||
Total | Reported | 6% | 9% | 1% | 7% | 2% | 5% | |||||||
Local Currency | 5% | 8% | 0% | 5% | 3% | 4% | ||||||||
2013 vs. 2012 | ||||||||||||||
Percentage Change in Sales by Region of Destination | ||||||||||||||
Fine & Beauty Care | Functional | Ingredients | Total Frag. | Flavors | Total | |||||||||
North America | Reported | -2% | 1% | -4% | -1% | -1% | -1% | |||||||
EAME | Reported | 8% | 6% | -5% | 4% | 5% | 4% | |||||||
Local Currency | 6% | 4% | -6% | 3% | 5% | 3% | ||||||||
Latin America | Reported | 12% | 12% | -7% | 10% | 2% | 7% | |||||||
Local Currency | 16% | 13% | -7% | 13% | 4% | 10% | ||||||||
Greater Asia | Reported | 9% | 14% | 0% | 10% | 4% | 6% | |||||||
Local Currency | 9% | 14% | 5% | 12% | 6% | 8% | ||||||||
Total | Reported | 7% | 8% | -4% | 5% | 3% | 4% | |||||||
Local Currency | 7% | 8% | -4% | 5% | 4% | 5% |
Note: Local currency sales growth is calculated by translating prior year sales at the exchange rates used for the corresponding 2013 period.
International Flavors & Fragrances Inc. Reconciliation of Like-for-Like Sales Growth (Unaudited) |
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% Change in Sales for the Nine Months Ended September 30, 2013 | |||||||||
Reported Sales Growth | Local Currency Sales Growth (1) | Exit of Low-Margin Sales Activities | Like-for-Like Sales Growth (2) | ||||||
Total Company | 4% | 5% | 1% | 6% | |||||
Flavors: | |||||||||
North America | -1% | -1% | 7% | 6% | |||||
EAME | 5% | 5% | 0% | 5% | |||||
Latin America | 2% | 4% | 4% | 8% | |||||
Greater Asia | 4% | 6% | 0% | 6% | |||||
Total Flavors | 3% | 4% | 2% | 6% | |||||
(1) Local currency sales growth is calculated by translating prior year sales at the exchange rates used for the corresponding 2013 period.
(2) Like-for-like is a non-GAAP metric that excludes the impact of exiting low-margin sales activities and foreign exchange.
*Note: The exit of low-margin sales activities was substantially completed as of the second quarter.
International Flavors & Fragrances Inc. Reconciliation of Income (Amounts in thousands) (Unaudited) |
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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. |
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Third Quarter 2013 | |||||||||||||||||
Items Impacting Comparability | |||||||||||||||||
Reported (GAAP) | Restructuring and Other Charges | Operational Improvement Initiative Costs | Adjusted (Non-GAAP) | ||||||||||||||
Net Sales | 742,256 | ||||||||||||||||
Cost of Goods Sold | 416,852 | (2,167 | ) | (a) | (401 | ) | (b) | ||||||||||
Gross Profit | 325,404 | 2,167 | 401 | 327,972 | |||||||||||||
Research and Development | 65,654 | ||||||||||||||||
Selling and Administrative | 118,221 | ||||||||||||||||
RSA Expense | 183,875 | ||||||||||||||||
Restructuring and other charges, net | — | ||||||||||||||||
Operating Profit | 141,529 | 2,167 | 401 | 144,097 | |||||||||||||
Interest Expense | 11,625 | ||||||||||||||||
Other (Income) expense, net | (4,080 | ) | |||||||||||||||
Income before taxes | 133,984 | 2,167 | 401 | 136,552 | |||||||||||||
Taxes on Income | 34,938 | 758 | 97 | 35,793 | |||||||||||||
Net Income | 99,046 | 1,409 | 304 | 100,759 | |||||||||||||
Earnings per share - diluted | $ | 1.20 | $ | 0.02 | $ | 0.00 | $ | 1.22 | |||||||||
(a) | Costs related to the Fragrance Ingredients Rationalization | ||||||||||||||||
(b) | Related to plant closing in Europe and partial closing in Asia |
Third Quarter 2012 | ||||||||
Items Impacting Comparability | ||||||||
Reported (GAAP) | Spanish Tax Charge | Adjusted (Non-GAAP) | ||||||
Net Sales | 708,955 | |||||||
Cost of Goods Sold | 407,431 | |||||||
Gross Profit | 301,524 | |||||||
Research and Development | 57,658 | |||||||
Selling and Administrative | 109,691 | |||||||
RSA Expense | 167,349 | |||||||
Restructuring and other charges, net | — | |||||||
Operating Profit | 134,175 | |||||||
Interest Expense | 9,907 | |||||||
Other (Income) expense, net | 2,424 | |||||||
Income before taxes | 121,844 | |||||||
Taxes on Income | 105,481 | (72,362) |
(a) |
33,119 | ||||
Net Income | 16,363 | 72,362 | 88,725 | |||||
Earnings per share - diluted | $ 0.20 | $ 0.88 | $ 1.08 | |||||
(a) | Pursuant to the Spanish tax settlement; includes 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. |
International Flavors & Fragrances Inc. Reconciliation of Income (Amounts in thousands) (Unaudited) |
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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 |
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Third Quarter Year-to-Date 2013 | ||||||||||||||||||||||||
Items Impacting Comparability | ||||||||||||||||||||||||
Reported (GAAP) | Restructuring and Other Charges | Operational Improvement Initiative Costs | Spanish Tax Charge | Gain on Asset Sale | Adjusted (Non-GAAP) | |||||||||||||||||||
Net Sales | 2,227,727 | |||||||||||||||||||||||
Cost of Goods Sold | 1,256,977 | (3,000 | ) | (a) | (1,761 | ) | (b) | |||||||||||||||||
Gross Profit | 970,750 | 3,000 | 1,761 | |||||||||||||||||||||
Research and Development | 189,428 | |||||||||||||||||||||||
Selling and Administrative | 357,687 | |||||||||||||||||||||||
RSA Expense | 547,115 | |||||||||||||||||||||||
Restructuring and other charges, net | 2,105 | (2,105 | ) | (a) | ||||||||||||||||||||
Operating Profit | 421,530 | 5,105 | 1,761 | 428,396 | ||||||||||||||||||||
Interest Expense | 35,637 | |||||||||||||||||||||||
Other (Income) expense, net | (16,359 | ) | 16,093 | (d) | (266 | ) | ||||||||||||||||||
Income before taxes | 402,252 | 5,105 | 1,761 | (16,093 | ) | 393,025 | ||||||||||||||||||
Taxes on Income | 110,187 | 1,787 | 412 | (6,230 | ) | (c) | (5,633 | ) | 100,523 | |||||||||||||||
Net Income | 292,065 | 3,318 | 1,349 | 6,230 | (10,460 | ) | 292,502 | |||||||||||||||||
Earnings per share - diluted | $ | 3.54 | $ | 0.04 | $ | 0.02 | $ | 0.08 | $ | (0.13 | ) | $ | 3.55 | |||||||||||
(a) | Costs related to the Fragrance Ingredients Rationalization | |||||||||||||||||||||||
(b) | Related to plant closings in Europe and partial closing in Asia | |||||||||||||||||||||||
(c) | Spanish tax charge related to the 2002-2003 ruling | |||||||||||||||||||||||
(d) | Represents a gain on sale of a non-operating asset |
Third Quarter Year-to-Date 2012 | ||||||||||
Items Impacting Comparability | ||||||||||
Reported (GAAP) | Restructuring and Other Charges | Spanish Tax Charge | Adjusted (Non-GAAP) | |||||||
Net Sales | 2,140,888 | |||||||||
Cost of Goods Sold | 1,252,422 | |||||||||
Gross Profit | 888,466 | |||||||||
Research and Development | 171,467 | |||||||||
Selling and Administrative | 327,942 | |||||||||
RSA Expense | 499,409 | |||||||||
Restructuring and other charges, net |
1,668 | (1,668 | ) | (a) | ||||||
Operating Profit | 387,389 | 1,668 | 389,057 | |||||||
Interest Expense | 31,330 | |||||||||
Other (Income) expense, net | 1,333 | 1,333 | ||||||||
Income before taxes | 354,726 | 1,668 | 356,394 | |||||||
Taxes on Income | 168,710 | 621 | (72,362 | ) | (b) | 96,969 | ||||
Net Income | 186,016 | 1,047 | 72,362 | 259,425 | ||||||
Earnings per share - diluted | $ 2.26 | $ 0.01 | $ 0.88 | $ 3.15 | ||||||
(a) | Related to restructuring program announced in Q1 2012 | |||||||||
(b) | Pursuant to the Spanish tax settlement; includes 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. |
CONTACT:
Investor Relations:
International Flavors & Fragrances
Inc.
Shelley Young, 212-708-7271
Director, Investor Relations