NEW YORK, Feb 07, 2013 (BUSINESS WIRE) —
–Full Year Local Currency Sales Up 4%; Reported Sales up 1%
–Full Year Adjusted Earnings per Share Increased 6% to $3.98
International Flavors & Fragrances Inc.
/quotes/zigman/230113/quotes/nls/iff IFF
+0.03%
, 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.
/quotes/zigman/230113/quotes/nls/iff IFF
+0.03%
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 % Change 2012 2011 % Change
------- ------- --------- ---------
Net sales $ 680,558 $ 644,383 6 $ 2,821,446 $ 2,788,018 1
Cost of goods sold 393,490 399,985 (2) 1,645,912 1,683,362 (2)
------- ------- --------- ---------
Gross margin 287,068 244,398 17 1,175,534 1,104,656 6
Research and development 62,245 52,459 19 233,713 219,781 6
Selling and administrative 125,594 134,349 (7) 453,535 443,974 2
Restructuring and other charges - 9,805 (100) 1,668 13,172 (87)
Interest expense 10,423 10,670 (2) 41,753 44,639 (6)
Other expense (income), net 116 (3,415) (103) 1,450 9,544 (85)
------- ------- -- --------- ---------
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 share - basic $ 0.83 $ 0.30 $ 3.11 $ 3.30
Earnings per share - diluted $ 0.83 $ 0.30 $ 3.09 $ 3.26
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' equity $ 3,249,600 $ 2,965,581
==== ============ ==== ============
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 borrowings and overdrafts 138,756 92,662
Repayments of long-term debt - (123,708)
Proceeds from issuance of stock under stock plans 9,211 14,656
Excess tax benefits on stock-based payments 8,380 5,933
-------- --------
Net cash provided by (used in) financing activities 25,404 (100,707)
-------- -------- ---
Effect of exchange rates changes on cash and cash equivalents 1,204 (373)
Net change in cash and cash equivalents 236,143 (43,053)
Cash and cash equivalents at beginning of year 88,279 131,332
-------- --------
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 Expenses (15,971) (8,967) (48,419) (36,410)
Restructuring and other charges, net - (9,805) (1,668) (13,172)
Patent Settlement Litigation - (33,495) - (33,495)
------- ------- -- --------- --------- --
Operating profit 99,229 47,785 486,618 427,729
Interest Expense (10,423) (10,670) (41,753) (44,639)
Other (expense) income, net (116) 3,415 (1,450) (9,544)
------- -- ------- --------- -- --------- --
Income before taxes $ 88,690 $ 40,530 $ 443,415 $ 373,546
== ======= == ======= == ========= == =========
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 & Functional Ingredients Total Frag. Flavors Total
Beauty Care
----------- ---------- ----------- ----------- ------- -----
North America Reported 17% 7% 9% 10% 3% 7%
EAME Reported -1% 1% 5% 1% -2% 0%
Local Currency 5% 6% 10% 7% 3% 5%
Latin America Reported 53% 14% -10% 26% 0% 16%
Local Currency 59% 15% -9% 29% 4% 20%
Greater Asia Reported 4% 21% -5% 12% 3% 6%
Local Currency 5% 22% -4% 13% 4% 7%
Total Reported 15% 9% 3% 10% 1% 6%
Local Currency 19% 12% 6% 13% 3% 8%
----------- ---------- ----------- ----------- ------- -----
% Change in Sales - Full Year 2012 vs. Full Year 2011
------------------------------------------------------------------
Fine & Functional Ingredients Total Frag. Flavors Total
Beauty Care
----------- ---------- ----------- ----------- ------- -----
North America Reported 6% 3% -5% 2% 3% 2%
EAME Reported -7% -1% -17% -7% -1% -5%
Local Currency 0% 6% -13% -1% 6% 2%
Latin America Reported 22% 11% -9% 13% 0% 9%
Local Currency 26% 12% -8% 15% 4% 12%
Greater Asia Reported 1% 5% -16% 1% 5% 4%
Local Currency 3% 6% -16% 1% 7% 5%
Total Reported 3% 4% -12% 0% 2% 1%
Local Currency 7% 7% -10% 3% 5% 4%
----------- ---------- ----------- ----------- ------- -----
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 Sales Local Currency Exit of Low- Like-For-Like
Growth Sales Growth (1) Margin Sales Sales Growth (2)
Activities
-------------- ---------------- ------------ ----------------
Total Company 6% 8% 2% 10%
--------------- -------------- ---------------- ------------ ----------------
Flavors:
North America 3% 3% 12% 15%
EAME -2% 3% 1% 4%
Latin America 0% 4% 2% 6%
Greater Asia 3% 4% 1% 5%
Total Flavors 1% 3% 4% 7%
% Change in Sales for the Twelve Months Ended December 31, 2012
Reported Sales Local Currency Exit of Low- Like-For-Like
Growth Sales Growth (1) Margin Sales Sales Growth (2)
Activities
-------------- ---------------- ------------ ----------------
Total Company 1% 4% 1% 5%
--------------- -------------- ---------------- ------------ ----------------
Flavors:
North America 3% 3% 6% 9%
EAME -1% 6% 1% 7%
Latin America 0% 4% 2% 6%
5% 7% 1% 8%
Greater Asia
Total Flavors 2% 5% 3% 8%
(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 Sold 399,985 - -
Gross Profit 244,398 - -
Research and Development 52,459 - -
Selling and Administrative 134,349 (33,495) - 100,854
RSA Expense 186,808 (33,495) - 153,313
Restructuring and other charges, net 9,805 - (9,805) (a) -
Operating Profit 47,785 33,495 9,805 91,085
Interest Expense 10,670 - -
Other (income) expense, net (3,415) - -
Income before taxes 40,530 33,495 9,805 83,830
Income Taxes 16,136 (3,649) (2,901) 22,686
Net Income 24,394 29,846 6,904 61,144
======== ========== ============= ==========
Earnings per share - diluted $0.30 (b) $0.36 $0.08 $0.74
(a) Primarily related to category realignment and reduction in
workforce ($8M Fragrances, $1.5M Flavors and $0.5M Corporate)
(b) The sum of EPS Reported, plus the per share effects of items
added back 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 Tax Restructuring Adjusted
(GAAP) Settlement and Other (Non-GAAP)
Charges
Net Sales 2,821,446 - -
Cost of Goods Sold 1,645,912 - -
Gross Profit 1,175,534 - -
Research and Development 233,713 - -
Selling and Administrative 453,535 - -
RSA Expense 687,248 - -
Restructuring and other charges, net 1,668 - (1,668) (b) -
Operating Profit 486,618 - 1,668 488,286
Interest Expense 41,753 - -
Other (Income) expense, net 1,450 - -
Income before taxes 443,415 - 1,668 445,083
Taxes on Income 189,281 72,362 (a) (621) 117,540
Net Income 254,134 72,362 1,047 327,543
========= === ====== === ====== ====== === ==========
Earnings per share - diluted $3.09 $ 0.88 $0.01 $3.98
(a) Pursuant to the Spanish tax settlement announced on August 2;
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
(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 Sold 1,683,362 - -
Gross Profit 1,104,656 - -
Research and Development 219,781 - -
Selling and Administrative 443,974 (33,495) - 410,479
RSA Expense 663,755 (33,495) - 630,260
Restructuring and other charges, net 13,172 - (13,172) (a) -
Operating Profit 427,729 33,495 13,172 474,396
Interest Expense 44,639 - -
Other (income) expense, net 9,544 - -
Income before taxes 373,546 33,495 13,172 420,213
Income Taxes 106,680 (3,649) (3,728) 114,057
Net Income 266,866 29,846 9,444 306,156
========= ========== ============= ==========
Earnings per share - diluted $3.26 (b) $0.36 $0.11 $3.74
(a) Related to category realignment and reduction in workforce ($8M
Fragrances, $1.5M Flavors and $0.5M Corporate) and Fragrance
European facility rationalization ($3.4M)
(b) The sum of EPS Reported, plus the per share effects of items
added back to reconcile to EPS as Adjusted, may not equal the total
EPS as Adjusted, due to rounding differences
http://cts.businesswire.com/ct/CT?id=bwnews&sty=20130207005716r1&sid=cmtx4&distro=nx
SOURCE: International Flavors & Fragrances Inc.
Investor Relations:
International Flavors & Fragrances Inc.
Shelley Young, 212-708-7271
Director, Investor Relations
Copyright Business Wire 2013
Source Article from http://www.marketwatch.com/story/iff-reports-fourth-quarter-and-full-year-2012-results-2013-02-07
