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) |
August 8, 2016 |
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 August 8, 2016 reporting IFF's financial results for the quarter ended June 30, 2016.
An audio webcast to discuss the Company's second quarter 2016 financial results and full year 2016 outlook will be held tomorrow, August 9, 2016, at 10:00 a.m. EST. Interested parties can access the webcast and accompanying slide presentation on the Company's website at www.iff.com under the Investor 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.
Item 9.01. Financial Statements and Exhibits
(d) Exhibits
99.1 Press Release of International Flavors & Fragrances Inc., dated August 8, 2016.
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: |
August 8, 2016 |
/s/ Alison A. Cornell |
Name: Alison A. Cornell |
||
|
||
Title: Executive Vice President and Chief Financial Officer |
Exhibit Index
Number |
Description |
99.1 |
Press Release of International Flavors & Fragrances Inc. |
Dated August 8, 2016 |
Exhibit 99.1
IFF Reports Second Quarter 2016 Results
NEW YORK--(BUSINESS WIRE)--August 8, 2016--International Flavors & Fragrances Inc. (NYSE: IFF) (Euronext Paris: IFF) reported financial results and strategic achievements for the second quarter ended July 1, 2016.
Second Quarter 2016 Consolidated Summary: Change vs. Prior Year
Reported (GAAP) | Adjusted (Non-GAAP)¹ | Currency Neutral (Non-GAAP)¹ | ||||||||||||||||
Sales | Operating Profit | EPS | Sales | Operating Profit | EPS | Sales | Operating Profit | EPS | ||||||||||
Consolidated | 3% | 11% | 13% | 3% | 7% | 8% | 4% | 7% | 5% | |||||||||
Acquisition Impact | 2% | 3% | 3% | 2% | 3% | 3% | 2% | 3% | 3% |
¹ Schedules at the end of this release contain reconciliations of reported GAAP to non-GAAP metrics.
Second Quarter 2016 Consolidated Financial Highlights
Second Quarter 2016 Strategic Highlights: Currency Neutral Performance
Innovating Firsts: strengthen position and drive differentiation in priority R&D platforms
Win Where We Compete: achieve market leadership position in key markets, categories & customers
Become Our Customers’ Partner of Choice: attain commercial excellence
Strengthen and Expand the Portfolio: pursue value creation through collaborations & acquisitions
Management Commentary
“As we celebrate the first anniversary of the launch of Vision 2020, we are proud of the performance we made relative to our strategic priorities,” said Chairman and CEO Andreas Fibig. “Since inception, we’ve seen strong currency neutral sales growth across all of our key platforms – modulation, encapsulation, delivery systems and naturals – proof that we are executing our plan and delivering industry-leading innovation to our customers. We also made strong in-roads in improving our market position in key countries, strengthening our relationships with many of our customers and actively pursuing value creation opportunities through collaborations and acquisitions.
“With respect to the second quarter of 2016, we are pleased to report our performance was consistent with our expectations for all of our key financial metrics. Currency neutral sales growth of 4% was driven by new wins across both businesses and the benefits associated with our strategic acquisitions. Adjusted operating profit and adjusted EPS, on a currency neutral basis, both grew faster than sales led by volume growth, cost and productivity initiatives and acquisitions. We achieved these financial results as we continued to strategically reinvest in the business to drive long-term growth.
“As we have started the year well – first half currency neutral sales grew 5% and currency neutral adjusted operating profit and adjusted EPS were up 7% and 8% respectively – we remain cautiously optimistic in achieving our previously stated currency neutral guidance given the continued macroeconomic uncertainty.”
Second Quarter 2016 Segment Summary: Growth vs. Prior Year
Reported (GAAP) | Currency Neutral (Non-GAAP) | |||||||
Sales | Segment Profit | Sales | Segment Profit | |||||
Fragrances: | 5% | 10% | 5% | 7% | ||||
Acquisition Impact | 3% | 5% | 3% | 5% | ||||
Flavors: | 2% | 8% | 3% | 9% | ||||
Acquisition Impact | 1% | 1% | 1% | 1% |
Fragrances Business Unit
Flavors Business Unit
FY 2016 Guidance: Percent Change vs. Prior Year
The Company’s full year 2016 guidance:
Currency Neutral | FX Impact1 | GAAP2 | ||||||||
Organic | M&A | Total | ||||||||
Sales | 2.0 - 3.0% | ~1.5% | 3.5 - 4.5% | ~(2)% | 1.5 - 2.5% | |||||
Operating Profit | 3.5 - 5.5% | ~1.5% | 5.0 - 7.0% | ~(3)% | 2.0 - 4.0% | |||||
EPS | 5.0 - 7.0% | ~1.5% | 6.5 - 8.5% | ~(2)% | 4.5 - 6.5% |
1 See Use of Non-GAAP Financial Measures
2
Excludes items impacting comparability
A copy of the Company’s Quarterly Report on Form 10-Q will be available on its website at www.iff.com or at sec.gov by August 10, 2016.
Audio Webcast
A live webcast to discuss the Company’s second quarter 2016 financial results will be held on August 9, 2016, at 10:00 a.m. EDT. Investors may access the webcast and accompanying slide presentation on the Company's IR website at ir.iff.com. For those unable to listen to the live webcast, a recorded version 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.
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 our outlook for fiscal year 2016. 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 March 1, 2016. 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 Company’s ability to implement its Vision 2020 strategy; (2) the Company’s ability to successfully identify and complete acquisitions in line with its Vision 2020 strategy, and to realize the anticipated benefits of those acquisitions; (3) the Company’s ability to effectively compete in its market, and to successfully develop new and competitive products that appeal to its customers and consumers; (4) changes in consumer preferences and demand for the Company’s products or a decline in consumer confidence and spending; (5) the Company’s ability to benefit from its investments and expansion in emerging markets; (6) the impact of currency fluctuations or devaluations in the principal foreign markets in which it operates, including the devaluation of the Euro; (7) the economic and political risks associated with the Company’s international operations, including challenging economic conditions in China and Latin America; (8) the impact of any failure of the Company’s key information technology systems or a breach of information security; (9) the Company’s ability to attract and retain talented employees; (10) the Company’s ability to comply with, and the costs associated with compliance with U.S. and foreign environmental protection laws; (11) the Company’s ability to realize expected cost savings and efficiencies from its profitability improvement initiative and other optimization activities; (12) volatility and increases in the price of raw materials, energy and transportation; (13) fluctuations in the quality and availability of raw materials; (14) the impact of a disruption in the Company’s supply chain or its relationship with its suppliers; (15) any adverse impact on the availability, effectiveness and cost of the Company’s hedging and risk management strategies; (16) the Company’s ability to successfully manage its working capital and inventory balances; (17) uncertainties regarding the outcome of, or funding requirements related to litigation or settlement of pending litigation uncertain tax positions or other contingencies; (18) the effect of legal and regulatory developments, as well as restrictions or costs that may be imposed on the Company or its operations by U.S. and foreign governments; (19) adverse changes in federal, state, local and international tax legislation or policies, including with respect to transfer pricing and state aid, and adverse results of tax audits, assessments, or disputes; and (19) changes in market conditions or governmental regulations relating to our pension and postretirement obligations. 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 revise any forward-looking statements, whether as a result of new information, future events, or otherwise.
Use of Non-GAAP Financial Measures
We provide in this press release (1) Currency Neutral Sales, (2) Adjusted Operating Profit and Currency Neutral Adjusted Operating Profit and (3) Adjusted EPS and Currency Neutral Adjusted EPS, which exclude restructuring costs and other significant items of a non-recurring and/or nonoperational nature such as operational improvement initiatives and acquisition related costs (often referred to as “Items Impacting Comparability”) and, with respect to the currency neutral items, the impact of foreign currency movements. We provide these metrics as we believe that they are useful in providing period to period comparisons of the results of our operational performance. When we provide our expectations for our currency neutral metrics in our full year 2016 guidance, we estimate the anticipated FX impact by comparing prior year results to the prior year results restated at exchange rates in effect for the current year based on the currency of the underlying transaction. When we provide our expectations for our Adjusted Operating Profit and our Adjusted EPS in our full year 2016 guidance, the closest corresponding GAAP measures (expected reported Operating Profit and EPS) and a reconciliation of the differences between the non-GAAP expectation and the corresponding GAAP measure generally are not available without unreasonable effort due to inherent difficulty of forecasting the timing and amount of reconciling items that would be excluded from the GAAP measure in the relevant future period and the relevant tax impact of such reconciling items on EPS. The variability of the excluded items may have a significant, and potentially unpredictable, impact on our future GAAP results. Currency Neutral Sales, Adjusted Operating Profit, Currency Neutral Adjusted Operating Profit, Adjusted EPS and Currency Neutral Adjusted EPS should not be considered in isolation or as substitutes for analysis of the Company’s results under GAAP and may not be comparable to other companies’ calculation of such metrics.
Meet IFF
International Flavors & Fragrances Inc. (NYSE:IFF) (Euronext Paris: IFF) is a leading innovator of sensorial experiences that move the world. At the heart of our company, we are fueled by a sense of discovery, constantly asking “what if?”. That passion for exploration drives us to co-create unique products that consumers taste, smell, or feel in fine fragrances and beauty, detergents and household goods, as well as beloved foods and beverages. Our 6,700 team members globally take advantage of leading consumer insights, research and development, creative expertise, and customer intimacy to develop differentiated offerings for consumer products. Learn more at www.iff.com, Twitter , Facebook, Instagram, and LinkedIn.
International Flavors & Fragrances Inc. Consolidated Income Statement (Amounts in thousands except per diluted share data) (Unaudited) |
||||||||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||
2016 | 2015 | % Change | 2016 | 2015 | % Change | |||||||||||||||||
Net sales | $ | 793,478 | $ | 767,541 | 3 | % | $ | 1,576,789 | $ | 1,542,448 | 2 | % | ||||||||||
Cost of goods sold | 427,837 | 422,501 | 1 | % | 850,940 | 851,131 | (0 | )% | ||||||||||||||
Gross profit | 365,641 | 345,040 | 6 | % | 725,849 | 691,317 | 5 | % | ||||||||||||||
Research and development expenses | 63,252 | 62,514 | 1 | % | 126,637 | 125,976 | 1 | % | ||||||||||||||
Selling and administrative expenses | 132,784 | 131,023 | 1 | % | 256,327 | 250,018 | 3 | % | ||||||||||||||
Amortization of acquisition-related intangibles | 5,130 | 3,040 | 69 | % | 11,191 | 4,880 | 129 | % | ||||||||||||||
Restructuring and other charges, net | — | (358 | ) | (100 | )% | — | (170 | ) | (100 | )% | ||||||||||||
Operating profit | 164,475 | 148,821 | 11 | % | 331,694 | 310,613 | 7 | % | ||||||||||||||
Interest expense | 15,060 | 11,407 | 32 | % | 27,539 | 22,502 | 22 | % | ||||||||||||||
Other (income) expense, net | (2,635 | ) | 436 | (704 | )% | (2,792 | ) | (5,275 | ) | (47 | )% | |||||||||||
Income before taxes | 152,050 | 136,978 | 11 | % | 306,947 | 293,386 | 5 | % | ||||||||||||||
Taxes on income | 35,317 | 31,604 | 12 | % | 71,610 | 59,754 | 20 | % | ||||||||||||||
Net income | $ | 116,733 | $ | 105,374 | 11 | % | $ | 235,337 | $ | 233,632 | 1 | % | ||||||||||
Earnings per share - basic | $ | 1.46 | $ | 1.30 | $ | 2.94 | $ | 2.88 | ||||||||||||||
Earnings per share - diluted | $ | 1.46 | $ | 1.29 | $ | 2.93 | $ | 2.86 | ||||||||||||||
Average shares outstanding | ||||||||||||||||||||||
Basic | 79,764 | 80,790 | 79,809 | 80,729 | ||||||||||||||||||
Diluted | 80,040 | 81,192 | 80,141 | 81,201 |
International Flavors & Fragrances Inc. Condensed Consolidated Balance Sheet (Amounts in thousands) (Unaudited) |
||||||
June 30, | December 31, | |||||
2016 | 2015 | |||||
Cash & cash equivalents | $ | 539,992 | $ | 181,988 | ||
Receivables | 621,164 | 537,896 | ||||
Inventories | 584,489 | 572,047 | ||||
Other current assets | 183,789 | 145,178 | ||||
Total current assets | 1,929,434 | 1,437,109 | ||||
Property, plant and equipment, net | 737,353 | 732,794 | ||||
Goodwill and other intangibles, net | 1,229,381 | 1,247,393 | ||||
Other assets | 258,460 | 284,714 | ||||
Total assets | $ | 4,154,628 | $ | 3,702,010 | ||
Bank borrowings and overdrafts, and | ||||||
current portion of long-term debt | $ | 133,473 | $ | 132,349 | ||
Other current liabilities | 554,778 | 592,807 | ||||
Total current liabilities | 688,251 | 725,156 | ||||
Long-term debt | 1,357,684 | 935,373 | ||||
Non-current liabilities | 430,761 | 446,492 | ||||
Shareholders' equity | 1,677,932 | 1,594,989 | ||||
Total liabilities and shareholders' equity | $ | 4,154,628 | $ | 3,702,010 |
International Flavors & Fragrances Inc. Consolidated Statement of Cash Flows (Amounts in thousands) (Unaudited) |
||||||||
Six Months Ended June 30, | ||||||||
2016 | 2015 | |||||||
Cash flows from operating activities: | ||||||||
Net income | $ | 235,337 | $ | 233,632 | ||||
Adjustments to reconcile to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 49,743 | 41,041 | ||||||
Deferred income taxes | 16,543 | 17,891 | ||||||
(Gain) loss on disposal of assets | (2,910 | ) | 14 | |||||
Stock-based compensation | 13,774 | 12,860 | ||||||
Pension contributions | (39,510 | ) | (57,493 | ) | ||||
Changes in assets and liabilities, net of acquisitions: | ||||||||
Trade receivables | (70,361 | ) | (92,329 | ) | ||||
Inventories | (7,271 | ) | (9,834 | ) | ||||
Accounts payable | (29,167 | ) | 27,334 | |||||
Accruals for incentive compensation | (2,001 | ) | (21,191 | ) | ||||
Other current payables and accrued expenses | 18,800 | 21,305 | ||||||
Other assets | (1,346 | ) | (12,417 | ) | ||||
Other liabilities | (27,081 | ) | 5,505 | |||||
Net cash provided by operating activities | 154,550 | 166,318 | ||||||
Cash flows from investing activities: | ||||||||
Cash paid for acquisitions, net of cash received | — | (188,835 | ) | |||||
Additions to property, plant and equipment | (43,236 | ) | (37,937 | ) | ||||
Proceeds from life insurance contracts | — | 548 | ||||||
Maturity of net investment hedges | (641 | ) | 9,735 | |||||
Proceeds from disposal of assets | 3,630 | 1,515 | ||||||
Net cash used in investing activities | (40,247 | ) | (214,974 | ) | ||||
Cash flows from financing activities: | ||||||||
Cash dividends paid to shareholders | (89,463 | ) | (75,927 | ) | ||||
Net change in revolving credit facility borrowings and overdrafts | (138,142 | ) | (30,283 | ) | ||||
Deferred financing costs | (4,796 | ) | — | |||||
Proceeds from issuance of long-term debt | 555,559 | 86,162 | ||||||
Loss on pre-issuance hedges | (3,244 | ) | — | |||||
Proceeds from issuance of stock under stock plans | 494 | 286 | ||||||
Excess tax benefits on stock-based payments | 4,431 | 11,608 | ||||||
Purchase of treasury stock | (71,714 | ) | (38,813 | ) | ||||
Net cash provided by (used in) financing activities | 253,125 | (46,967 | ) | |||||
Effect of exchange rates changes on cash and cash equivalents | (9,424 | ) | (5,696 | ) | ||||
Net change in cash and cash equivalents | 358,004 | (101,319 | ) | |||||
Cash and cash equivalents at beginning of year | 181,988 | 478,573 | ||||||
Cash and cash equivalents at end of period | $ | 539,992 | $ | 377,254 |
International Flavors & Fragrances Inc. Business Unit Performance (Amounts in thousands) (Unaudited) |
||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Net Sales | ||||||||||||||||
Flavors | $ | 379,504 | $ | 372,478 | $ | 752,012 | $ | 749,586 | ||||||||
Fragrances | 413,974 | 395,063 | 824,777 | 792,862 | ||||||||||||
Consolidated | 793,478 | 767,541 | 1,576,789 | 1,542,448 | ||||||||||||
Segment Profit | ||||||||||||||||
Flavors | 90,337 | 84,015 | 182,151 | 176,743 | ||||||||||||
Fragrances | 87,596 | 79,924 | 176,833 | 161,522 | ||||||||||||
Global Expenses | (12,232 | ) | (8,629 | ) | (26,141 | ) | (20,194 | ) | ||||||||
Restructuring and other charges, net | (182 | ) | 358 | (283 | ) | 170 | ||||||||||
Acquisition and related costs | (213 | ) | (6,566 | ) | (1,249 | ) | (7,066 | ) | ||||||||
Operational improvement initiative costs | (831 | ) | (281 | ) | (1,099 | ) | (562 | ) | ||||||||
Spanish capital tax settlement | — | — | 1,482 | — | ||||||||||||
Operating profit | 164,475 | 148,821 | 331,694 | 310,613 | ||||||||||||
Interest Expense | (15,060 | ) | (11,407 | ) | (27,539 | ) | (22,502 | ) | ||||||||
Other income, net | 2,635 | (436 | ) | 2,792 | 5,275 | |||||||||||
Income before taxes | $ | 152,050 | $ | 136,978 | $ | 306,947 | $ | 293,386 | ||||||||
Operating Margin | ||||||||||||||||
Flavors | 23.8 | % | 22.6 | % | 24.2 | % | 23.6 | % | ||||||||
Fragrances | 21.2 | % | 20.2 | % | 21.4 | % | 20.4 | % | ||||||||
Consolidated | 20.7 | % | 19.4 | % | 21.0 | % | 20.1 | % |
International Flavors & Fragrances Inc. Sales Performance by Region and Category (Unaudited) |
||||||||||||||||
Second Quarter 2016 vs. 2015 | ||||||||||||||||
Percentage Change in Sales by Region of Destination | ||||||||||||||||
Fine | Consumer Fragrances | Ingredients | Total Frag. | Flavors | Total | |||||||||||
North America | Reported | -5% | 8% | 17% | 7% | 4% | 5% | |||||||||
EAME | Reported | -3% | 3% | 23% | 5% | 3% | 5% | |||||||||
Currency Neutral | -5% | 1% | 21% | 3% | 4% | 4% | ||||||||||
Latin America | Reported | 9% | -5% | -14% | -3% | -10% | -5% | |||||||||
Currency Neutral | 15% | -4% | -14% | -1% | -7% | -3% | ||||||||||
Greater Asia | Reported | 0% | 10% | 9% | 9% | 4% | 6% | |||||||||
Currency Neutral | 1% | 11% | 8% | 11% | 6% | 8% | ||||||||||
Total | Reported | -1% | 4% | 15% | 5% | 2% | 3% | |||||||||
Currency Neutral | -1% | 4% | 14% | 5% | 3% | 4% | ||||||||||
First Six Months 2016 vs. First Six Months 2015 | ||||||||||||||||
Percentage Change in Sales by Region of Destination | ||||||||||||||||
Fine | Consumer Fragrances | Ingredients | Total Frag. | Flavors | Total | |||||||||||
North America | Reported | 5% | 7% | 23% | 10% | 6% | 8% | |||||||||
EAME | Reported | -2% | -1% | 13% | 2% | -3% | 0% | |||||||||
Currency Neutral | 0% | 1% | 15% | 4% | 1% | 3% | ||||||||||
Latin America | Reported | -1% | 0% | -10% | -1% | -6% | -2% | |||||||||
Currency Neutral | 9% | 3% | -9% | 3% | 1% | 2% | ||||||||||
Greater Asia | Reported | -3% | 6% | 12% | 7% | 1% | 3% | |||||||||
Currency Neutral | -1% | 8% | 12% | 8% | 4% | 6% | ||||||||||
Total | Reported | 0% | 3% | 13% | 4% | 0% | 2% | |||||||||
Currency Neutral | 3% | 5% | 15% | 6% | 4% | 5% |
Currency neutral growth is calculated by translating prior year sales at the exchange rates used for the corresponding 2016 period.
International Flavors & Fragrances Inc. GAAP to Non-GAAP Reconciliation Foreign Exchange Impact (Unaudited) |
||||||
Q2 Consolidated |
Sales | Operating Profit | EPS | |||
% Change - Reported (GAAP) | 3% | 11% | 13% | |||
Items Impacting Comparability | 0% | -4% | -5% | |||
% Change - Adjusted (Non-GAAP) | 3% | 7% | 8% | |||
Currency Impact | 1% | 0% | -3% | |||
% Change - Currency Neutral (Adjusted) | 4% | 7% | 5% | |||
Q2 Flavors |
Sales | Segment Profit | ||||
% Change - Reported (GAAP) | 2% | 8% | ||||
Currency Impact | 1% | 1% | ||||
% Change - Currency Neutral | 3% | 9% | ||||
Q2 Fragrances |
Sales | Segment Profit | ||||
% Change - Reported (GAAP) | 5% | 10% | ||||
Currency Impact | 0% | -3% | ||||
% Change - Currency Neutral | 5% | 7% | ||||
1H Consolidated |
Sales | Operating Profit | EPS | |||
% Change - Reported (GAAP) | 2% | 7% | 2% | |||
Items Impacting Comparability | 0% | -2% | 3% | |||
% Change - Adjusted (Non-GAAP) | 2% | 5% | 5% | |||
Currency Impact | 3% | 2% | 3% | |||
% Change - Currency Neutral (Adjusted) | 5% | 7% | 8% |
International Flavors & Fragrances Inc.
GAAP to
Non-GAAP Reconciliation
(Amounts in thousands)
(Unaudited)
The following information and schedules provide reconciliation information between reported GAAP amounts and non-GAAP certain adjusted amounts. This information and schedules are 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.
Second Quarter 2016 | ||||||||||
Items Impacting Comparability | ||||||||||
Adjusted Operating Income | ||||||||||
Reported (GAAP) |
Restructuring and Other Charges (a) |
Operational Improvement Initiative Costs (b) |
Acquisition Related Costs (c) |
Adjusted (Non-GAAP) |
||||||
Operating profit |
164,475 |
182 |
831 |
213 | 165,701 | |||||
(a) |
Accelerated depreciation costs related to restructuring initiatives. |
|||||||||
(b) |
Accelerated depreciation and severance costs in Asia. |
|||||||||
(c) | Additional transaction costs related to acquisition of Lucas Meyer. | |||||||||
* | The Company tracks the amount of amortization recorded on recent acquisitions in order to monitor its progress with respect to its Vision 2020 goals. The following amounts were recorded with respect to recent acquisitions: $1.7M related to Lucas Meyer and $1.6M related to Ottens Flavors. | |||||||||
Second Quarter 2015 | ||||||||||
Items Impacting Comparability | ||||||||||
Adjusted Operating Income | ||||||||||
Reported (GAAP) |
Restructuring and Other Charges (a) |
Operational Improvement Initiative Costs (b) |
Acquisition related costs (c) |
Adjusted (Non-GAAP) |
||||||
Operating profit | 148,821 | (358) | 281 | 6,566 | 155,310 | |||||
(a) | Costs related to the Fragrance Ingredients Rationalization. | |||||||||
(b) | Related to a partial plant closing in Asia. | |||||||||
(c) | Transaction costs related to acquisitions (Ottens Flavors and Lucas Meyer Cosmetics) as well as expense related to the fair value step up of inventory on the Ottens Flavors acquisition. | |||||||||
* | The Company tracks the amount of amortization recorded on recent acquisitions in order to monitor its progress with respect to its Vision 2020 goals. The following amounts were recorded with respect to recent acquisitions: $1.2M. |
International Flavors & Fragrances Inc.
GAAP to
Non-GAAP Reconciliation
(Amounts in thousands)
(Unaudited)
The following information and schedules provide reconciliation information between reported GAAP amounts and non-GAAP certain adjusted amounts. This information and schedules are 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.
Second Quarter 2016 | ||||||||||||||||
Items Impacting Comparability | ||||||||||||||||
Adjusted Net Income and EPS | ||||||||||||||||
Reported (GAAP) | Restructuring and Other Charges (a) | Operational Improvement Initiative Costs (b) | Acquisition Related Costs (c) | Adjusted (Non-GAAP) | ||||||||||||
Income before taxes | 152,050 | 182 | 831 | 213 | 153,276 | |||||||||||
Taxes on income (d) | 35,317 | 35 | 208 | (102 | ) | 35,458 | ||||||||||
Net income | 116,733 | 147 | 623 | 315 | 117,818 | |||||||||||
Earnings per share - diluted | $ | 1.46 | $ | — | $ | 0.01 | $ | — | $ | 1.47 | ||||||
Refer to Adjusted Operating Income table for footnotes (a), (b) and (c). | ||||||||||||||||
(d) | The tax effects are calculated based upon the specific rate of the applicable jurisdiction of the items. |
Second Quarter 2015 | |||||||||||||||
Items Impacting Comparability | |||||||||||||||
Adjusted Net Income and Adjusted EPS | |||||||||||||||
Reported (GAAP) | Restructuring and Other Charges (a) | Operational Improvement Initiative Costs (b) | Acquisition Related Costs (c) | Adjusted (Non-GAAP) | |||||||||||
Income before taxes | 136,978 | (358) | 281 | 6,566 | 143,467 | ||||||||||
Taxes on income | 31,604 | (125) | 70 | 875 | 32,424 | ||||||||||
Net income | 105,374 | (233) | 211 | 5,691 | 111,043 | ||||||||||
Earnings per share - diluted | $ | 1.29 | $ | — | $ | — | $ | 0.07 | $ | 1.36 | |||||
Refer to Adjusted Operating Income table for footnotes (a), (b) and (c). |
International Flavors & Fragrances Inc.
GAAP to
Non-GAAP Reconciliation
(Amounts in thousands)
(Unaudited)
The following information and schedules provide reconciliation information between reported GAAP amounts and non-GAAP certain adjusted amounts. This information and schedules are 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.
Second Quarter Year-to-Date 2016 | ||||||||||||
Items Impacting Comparability | ||||||||||||
Adjusted Operating Income | ||||||||||||
Reported (GAAP) |
Restructuring and Other Charges (a) |
Operational Improvement Initiative Costs (b) |
Acquisition Related Costs (c) |
Tax Settlements (d) |
Adjusted (Non-GAAP) |
|||||||
Operating profit | 331,694 | 283 | 1,099 | 1,249 | (1,482) | 332,843 | ||||||
(a) | Accelerated depreciation costs related to restructuring initiatives. | |||||||||||
(b) | Accelerated depreciation and severance costs in Asia. | |||||||||||
(c) | Expense related to the fair value step up of inventory and additional transaction costs related to acquisition of Lucas Meyer. | |||||||||||
(d) | Settlements due to favorable tax rulings in jurisdictions for which reserves were previously recorded for ongoing tax disputes. | |||||||||||
* |
The Company tracks the amount of amortization recorded on recent acquisitions in order to monitor its progress with respect to its Vision 2020 goals. The following amounts were recorded with respect to recent acquisitions: $4.3M related to Lucas Meyer and $3.2M related to Ottens Flavors. |
Second Quarter Year-to-Date 2015 | ||||||||||
Items Impacting Comparability | ||||||||||
Adjusted Operating Income | ||||||||||
Reported (GAAP) |
Restructuring and Other Charges (a) |
Operational Improvement Initiative Costs (b) |
Acquisition Related Costs (c) |
Adjusted (Non-GAAP) |
||||||
Operating profit | 310,613 | (170) | 562 | 7,065 | 318,070 | |||||
(a) | Costs related to the Fragrance Ingredients Rationalization. | |||||||||
(b) | Related to plant closings in Europe and partial closing in Asia. | |||||||||
(c) | Transaction costs related to acquisitions (Ottens Flavors and Lucas Meyer Cosmetics) as well as expense related to the fair value step up of inventory on the Ottens Flavors acquisitions. | |||||||||
* | The Company tracks the amount of amortization recorded on recent acquisitions in order to monitor its progress with respect to its Vision 2020 goals. The following amounts were recorded with respect to recent acquisitions: $1.2M. |
International Flavors & Fragrances Inc.
GAAP to
Non-GAAP Reconciliation
(Amounts in thousands)
(Unaudited)
The following information and schedules provide reconciliation information between reported GAAP amounts and non-GAAP certain adjusted amounts. This information and schedules are 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.
Second Quarter Year-to-Date 2016 | |||||||||||||||||||
Items Impacting Comparability | |||||||||||||||||||
Adjusted Net Income and EPS | |||||||||||||||||||
Reported (GAAP) |
Restructuring and Other Charges (a) |
Operational Improvement Initiative Costs (b) |
Acquisition Related Costs (c) |
Tax Settlements (d) | Adjusted (Non-GAAP) | ||||||||||||||
Income before taxes | 306,947 | 283 | 1,099 | 1,249 | (1,482 | ) | 308,096 | ||||||||||||
Taxes on income (e) | 71,610 | 54 | 275 | 266 | (411 | ) | 71,794 | ||||||||||||
Net income | 235,337 | 229 | 824 | 983 | (1,071 | ) | 236,302 | ||||||||||||
Earnings per share - diluted | $ | 2.93 | $ | — | $ | 0.01 | $ | 0.01 | $ | (0.01 | ) | $ | 2.94 | ||||||
Refer to Adjusted Operating Income table for footnotes (a), (b), (c) and (d). | |||||||||||||||||||
(e) | The tax effects are calculated based upon the specific rate of the applicable jurisdiction of the items. |
Second Quarter Year-to-Date 2015 | ||||||||||||||||||||
Items Impacting Comparability | ||||||||||||||||||||
Adjusted Net Income and Adjusted EPS | ||||||||||||||||||||
Reported (GAAP) |
Restructuring and Other Charges (a) |
Operational Improvement Initiative Costs (b) |
Acquisition Related Costs (c) |
Tax Settlements (d) |
Adjusted (Non-GAAP) |
|||||||||||||||
Income before taxes | 293,386 | (170 | ) | 562 | 7,065 | - | 300,843 | |||||||||||||
Taxes on income | 59,754 | (60 | ) | 140 | 1,050 | 10,478 | 71,362 | |||||||||||||
Net income | 233,632 | (110 | ) | 422 | 6,015 | (10,478 | ) | 229,481 | ||||||||||||
Earnings per share - diluted | $ | 2.86 | $ | — | $ | 0.01 | $ | 0.07 | $ | (0.13 | ) | $ | 2.81 | |||||||
Refer to Adjusted Operating Income table for footnotes (a), (b) and (c). | ||||||||||||||||||||
(d) | Settlements due to favorable tax rulings in jurisdictions for which reserves were previously recorded for ongoing tax disputes. |
CONTACT:
International Flavors & Fragrances Inc.
Michael
DeVeau, 212-708-7164
VP, Global Corporate Communications & Investor
Relations
Michael.DeVeau@iff.com