Exhibit 99.1
International Flavors & Fragrances Inc.
NEWS RELEASE
IFF
IFF REPORTS SOLID FOURTH QUARTER and FULL-YEAR RESULTS for 2007
Reported EPS up 9% in Fourth Quarter, up 14% for the Year
Adjusted EPS up 18% in Fourth Quarter, up 15% for the Year
Sales up 8% in Fourth Quarter, up 9% for the Year
New York, N.Y., January 30, 2008 ... International Flavors & Fragrances Inc.
(NYSE: IFF), a leading global creator of flavors and fragrances for consumer
products, today announced results for the fourth quarter and full year 2007.
Earnings per share (EPS) as reported were $.58 in the 2007 fourth quarter,
versus $.53 in the prior year quarter. For the full year, earnings per share as
reported were $2.82, compared to $2.48 in 2006, an increase of 14 percent.
"I am pleased with our 2007 financial performance, which reflects strong top
line and EPS growth," said Robert M. Amen, Chairman and Chief Executive Officer.
"We met or exceeded each of our financial goals and delivered our second
consecutive year of increased earnings.
"Our full-year financial results demonstrate that our strategies are working.
Specifically, we increased sales, grew market share and built a stronger
organization. While we still have opportunities for improvement, our 2007
accomplishments provide a sound foundation for continued growth in sales and EPS
in 2008 and beyond."
Excluding non-recurring items, fourth quarter EPS ("Adjusted EPS") was $.53, up
18 percent over the comparable fourth quarter 2006 adjusted earnings per share.
The 2007 fourth quarter results included a gain on the disposition of land of
$.05; the 2006 results included restructuring charges of $.02, a gain on
disposition of assets of $.06, and a one-time tax benefit of $.04 relating to
years 2006 and earlier.
On a comparable basis, excluding non-recurring items from both years, the 2007
Adjusted EPS of $2.66 represents a 15 percent improvement over the full year
2006 adjusted earnings per share of $2.32. The full year 2007 results included a
pension curtailment loss of $.04 per share resulting from the freezing of the
Company's defined benefit pension plan for the majority of U.S. employees, gains
on disposition of assets of $.09, and the $.11 benefit of a tax ruling related
to earlier years; the 2006 results included restructuring charges of $.02, other
income primarily relating to gains on disposition of assets of $.11, an
insurance recovery of $.03 related to a 2005 product contamination issue, and a
one-time tax benefit of $.04 relating to prior years.
FOURTH QUARTER 2007
- -------------------
Sales were $553 million, up 8 percent from the prior year quarter; Flavor and
Fragrance sales increased 16 percent and 2 percent, respectively. Sales for the
2007 quarter benefited from the generally weaker U.S. dollar; at comparable
exchange rates, sales would have increased 2 percent in comparison to the 2006
quarter.
Flavors Business Unit
- ---------------------
The significant increase in Flavor sales of 16 percent was driven primarily by
new wins and increased volume in Europe the emerging markets of Asia and Latin
America. Flavor compound sales increased in each region in both local currency
and dollars.
Fragrance Business Unit
- -----------------------
Total Fragrance sales were driven by a 4 percent increase in Ingredient sales
and a 3 percent increase in functional, offset by a decline in fine fragrance of
2 percent. Ingredient sales were strongest in Asia as a result of a strong
demand for compounds and production shifting to this region. Sales in Fine and
Beauty Care weakened in the fourth quarter; most notably in North America and
Europe.
Sales performance by region and product category follows:
Fourth Quarter 2007 vs. 2006
Percent Change in Sales by Region of Destination
----------------------------------------------------------------------
Fine &
Beauty Care Functional Ingredients Total Frag. Flavors Total
----------------------------------------------------------------------
North America Reported -12% -12% -2% -10% 1% -5%
Europe Reported -1% 16% 5% 6% 20% 11%
Local Currency -12% 4% -5% -5% 8% -
Latin America Reported 4% -1% -3% - 42% 12%
Greater Asia Reported 22% 4% 24% 12% 19% 16%
Local Currency 19% 3% 22% 10% 12% 11%
Total Reported -2% 3% 4% 2% 16% 8%
Local Currency -7% -1% -1% -3% 10% 2%
----------------------------------------------------------------------
2
Fourth Quarter 2007 Highlights
- ------------------------------
o Net income was $47 million compared to $48 million in 2006.
o Gross profit, as a percentage of sales, was 40.7 percent compared with
41.0 percent in the prior year quarter. The decline was mainly due to
lower selling prices for Ingredients and some impact of higher material
costs as well as lower fragrance volumes.
o Research and Development expense, as a percentage of sales, was 9.7
percent, representing a 12 percent increase compared to 2006; the 2006
quarter was low by historical comparisons, at 9.3 percent of sales.
o Selling and Administrative expense, as a percentage of sales, was 17.8
percent, in line with the 17.6 percent in the 2006 quarter.
o Other income (expense), net in the 2007 fourth quarter increased $8
million over the prior year quarter, mainly due to the gain on sale of
land as well as lower exchange losses.
o Interest expense totaled $16 million, increasing 119 percent compared to
the 2006 quarter, primarily due to higher borrowings incurred in
connection with the Company's accelerated share repurchase activities.
o The effective tax rate of 26.2 percent compared to 23.1 percent in 2006;
excluding the one-time tax benefit, the effective tax rate in the 2006
quarter would have been 28.8 percent. The lower effective tax rate for the
current quarter resulted from a greater percentage of consolidated pre-tax
earnings in lower tax jurisdictions.
o Average number of diluted shares (in thousands) of 81,694 compared to
90,602 in the prior year quarter.
FULL YEAR 2007
- --------------
Sales totaled $2,277 million, up 9 percent from 2006; flavor and fragrance sales
increased 12 percent and 6 percent, respectively. 2007 sales benefited from the
generally weaker U.S. dollar and at comparable exchange rates would have
increased 5 percent over the prior year.
Flavors Business Unit
- ---------------------
Flavors delivered strong sales performance across all regions--most notably in
Latin America, Greater Asia and Europe--and in virtually all categories,
particularly beverages and savory.
Fragrance Business Unit
- -----------------------
Total Fragrance sales for the year were driven by continued growth in Fine and
Beauty Care of 8 percent and Ingredients of 9 percent. Foreign exchange
accounted for 4 percent of the sales increase.
3
Sales performance by region and product category follows:
2007 vs. 2006
Percent Change in Sales by Region of Destination
----------------------------------------------------------------------
Fine &
Beauty Care Functional Ingredients Total Frag. Flavors Total
----------------------------------------------------------------------
North America Reported 4% -1% 1% 2% 4% 3%
Europe Reported 8% 12% 17% 12% 13% 12%
Local Currency - 4% 8% 3% 5% 4%
Latin America Reported 11% -7% 3% -1% 27% 7%
Greater Asia Reported 16% 2% 4% 6% 16% 12%
Local Currency 13% 1% 4% 4% 12% 9%
Total Reported 8% 3% 9% 6% 12% 9%
Local Currency 4% - 5% 2% 9% 5%
-------------------------------------------------------------------
Full Year 2007 Highlights
- -------------------------
o Net income of $247 million, up 9 percent compared to 2006.
o Gross profit, as a percentage of sales, was 41.8 percent compared with
42.2 percent in 2006. The decline was mainly due to lower selling prices
for Ingredients and some impact of higher material costs.
o Research and Development expense, as a percentage of sales, was 8.7
percent, comparable to the prior year.
o Selling and Administrative expense, as a percentage of sales, declined to
16.5 percent compared to 16.8 percent in 2006.
o Other income (expense), net in 2007 increased $4 million over the prior
year, mainly due to the gain on sale of land as well as favorable exchange
results.
o Interest expense totaled $42 million, increasing 63 percent compared to
2006, due to higher borrowings incurred in connection with the Company's
accelerated share repurchase activities. Average cost of debt was 4.5
percent for 2007 compared to 3.3 percent in 2006.
o The effective tax rate of 24.8 percent compared to a rate of 27.7 percent
in the prior year. Both the 2007 and 2006 rates benefited from favorable
tax rulings with respect to prior years; excluding the benefit of these
rulings from both years, the 2007 effective tax rate would have been 27.9
percent compared to a rate of 28.8 percent for 2006. The lower effective
tax rate for the current year was the result of a greater percentage of
consolidated pre-tax earnings in lower tax jurisdictions.
o Average number of diluted shares (in thousands) of 87,633 compared to
91,369 in 2006.
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About IFF
- ---------
International Flavors & Fragrances Inc. (NYSE: IFF), is a leading 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, confectionary and food
products. The Company leverages its competitive advantages of brand
understanding and consumer insight combined with its focus on R&D and
innovation, to provide customers with differentiated product offerings. A member
of the S&P 500 Index, IFF has sales, manufacturing and creative facilities in 30
countries worldwide. For more information, please visit our Web site at
www.iff.com.
Individuals interested in receiving future updates on IFF via e-mail can
register at http://ir.iff.biz
Audio Web Cast
- --------------
An audio Web cast, to discuss the Company's fourth quarter and full year 2007
financial results and outlook, will be held today at 10:00 a.m. ET. Interested
parties can access the Web cast and accompanying slide presentation on the
Company's Web site 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 Web site approximately one hour after the event and will remain
available on the IFF Web site until 12:00 p.m. on February 13, 2008.
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Cautionary Statement Under The Private Securities Litigation Reform Act of 1995
Statements in this report, which are not historical facts or information, are
"forward-looking statements" within the meaning of The Private Securities
Litigation Reform Act of 1995. Such forward-looking statements are based on
management's current assumptions, estimates and expectations. Certain of such
forward-looking information may be identified by such terms as "expect,"
"believe," "outlook," "guidance," "may," and similar terms or variations
thereof. All information concerning future revenues, tax rates or benefits,
savings, earnings and other future financial results or financial position,
constitutes forward-looking information. Such forward-looking statements involve
significant risks, uncertainties and other factors. Actual results of the
Company may differ materially from any forward-looking information or results
expressed or implied by such forward-looking statements. Such factors include,
among others, the following: general economic and business conditions in the
Company's markets, including economic, population health and political
uncertainties; interest rates; the price, quality and availability of raw
materials; the Company's ability to implement its business strategy, including
the achievement of anticipated cost savings, profitability and growth targets;
the impact on cash and the impact of increased borrowings related to the July
2007 share repurchase program; the impact of currency fluctuation or devaluation
in the Company's principal foreign markets and the success of the Company's
hedging and risk management strategies; the outcome of uncertainties related to
litigation; the impact of possible pension funding obligations and increased
pension expense on the Company's cash flow and results of operations; and 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. The Company intends its forward-looking statements to speak only as
of the time of such statements and does not undertake or plan to update or
revise them as more information becomes available or to reflect changes in
expectations, assumptions or results.
Any public statements or disclosures by IFF following this report that modify or
impact any of the forward-looking statements contained in or accompanying this
report will be deemed to modify or supersede such outlook or other
forward-looking statements in or accompanying this report.
Investor Contact: Yvette Rudich
Director of Corporate Communications
212-708-7164
Media Contact: Melissa Sachs
Manager, Corporate Communications
212-708-7278
6
International Flavors & Fragrances Inc.
Consolidated Income Statement
(Amounts in thousands except per share data)
(Unaudited)
Quarter Ended Twelve Months Ended
December 31, December 31,
--------------------------------------------------------------------------------
2006 2007 % Change 2006 2007 % Change
--------------------------------------------------------------------------------
Net sales $ 514,318 $ 553,498 8% $ 2,095,390 $2,276,638 9%
Cost of goods sold 303,403 328,199 8% 1,211,259 1,324,424 9%
--------------------------------------------------------------------------------
Gross margin 210,915 225,299 7% 884,131 952,214 8%
Research & development 48,031 53,898 12% 185,692 199,023 7%
Selling and administrative 90,559 98,354 9% 351,923 375,287 7%
Amortization 3,709 2,212 -40% 14,843 12,878 -13%
Curtailment Loss - - - 5,943
Restructuring and other
charges 2,007 - 2,680 -
Interest expense 7,401 16,229 119% 25,549 41,535 63%
Other expense (income), net (3,208) (9,389) (9,838) (11,136)
--------------------------------------------------------------------------------
Pretax income 62,416 63,995 3% 313,282 328,684 5%
Income taxes 14,434 16,772 16% 86,782 81,556 -6%
--------------------------------------------------------------------------------
Net income 47,982 47,223 -2% 226,500 247,128 9%
--------------------------------------------------------------------------------
Earnings per share - basic $ 0.54 $ 0.59 9% $ 2.50 $ 2.86 14%
Earnings per share -
diluted $ 0.53 $ 0.58 9% $ 2.48 $ 2.82 14%
--------------------------------------------------------------------------------
Average shares outstanding
(in thousands):
Basic 89,416 80,550 -10% 90,443 86,541 -4%
Diluted 90,602 81,694 -10% 91,369 87,633 -4%
--------------------------------------------------------------------------------
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International Flavors & Fragrances Inc.
Consolidated Condensed Balance Sheet
(Amounts in thousands)
(Unaudited)
----------------------------
December 31, December 31,
2006 2007
----------------------------
Cash & cash equivalents $ 114,508 $ 151,471
Short-term - investments 604 604
Receivables 405,302 450,579
Inventories 446,606 484,222
Other current assets 112,783 109,489
----------------------------
Total current assets 1,079,803 1,196,365
Property, plant and equipment, net 495,124 508,820
Goodwill and other intangibles, net 745,716 732,836
Other assets 158,261 261,656
----------------------------
Total assets $ 2,478,904 $ 2,699,677
============================
Bank borrowings, overdrafts $ 15,897 $ 35,671
Other current liabilities 430,874 359,312
----------------------------
Total current liabilities 446,771 394,983
Long-term debt 791,443 1,176,970
Non-current liabilities 335,522 510,527
Shareholders' equity 905,168 617,197
----------------------------
Total liabilities and shareholders' equity $ 2,478,904 $ 2,699,677
============================
8
International Flavors & Fragrances Inc.
Consolidated Statement of Cash Flows
(Amounts in thousands)
(Unaudited)
---------------------------------
December 31, December 31,
2006 2007
---------------------------------
Cash flows from operating activities:
Net income $ 226,500 $ 247,128
Adjustments to reconcile to net cash provided by operations:
Depreciation and amortization 89,733 82,788
Deferred income taxes (12,423) (6,343)
Gain on disposal of assets (22,836) (13,791)
Equity based compensation 18,185 18,168
Curtailment loss - 5,943
Changes in assets and liabilities
Current receivables (27,153) (32,974)
Inventories 9,492 (12,406)
Current payables 38,087 22,298
Changes in other assets/liabilities (37,966) 3,251
---------------------------------
Net cash provided by operations (1) 281,619 314,062
---------------------------------
Cash flows from investing activities:
Net change in short-term investments (240) (311)
Additions to property, plant and equipment (58,282) (65,614)
Net, purchase of investments (17,355) (2,699)
Proceeds from disposal of assets 27,235 16,959
---------------------------------
Net cash used in investing activities (48,642) (51,665)
---------------------------------
Cash flows from financing activities:
Cash dividends paid to shareholders (67,381) (76,600)
Net change in bank borrowings and overdrafts (48,714) (129,648)
Proceeds from long-term debt 373,637 498,569
Repayments of long-term debt (499,300) -
Proceeds from issuance of stock under stock plans 110,867 50,116
Excess tax benefits on stock options exercised 4,653 6,568
Purchase of treasury stock (270,998) (577,001)
---------------------------------
Net cash used in financing activities (397,236) (227,996)
---------------------------------
Effect of exchange rates changes on cash and cash equivalents 6,222 2,562
Net change in cash and cash equivalents (158,037) 36,963
Cash and cash equivalents at beginning of year 272,545 114,508
---------------------------------
Cash and cash equivalents at end of period $ 114,508 $ 151,471
=================================
(1) Operating cash flows for 2006 increased by $18.7 million from the amount
reported in 2006 as a result of including the purchase of investments of $17.3
million in investing activities and $1.4 million of deferred financing costs in
financing activities.
9
International Flavors & Fragrances Inc.
Business Unit Performance
(Amounts in thousands)
(Unaudited)
Three Months Ended December 31, 2007
----------------------------------------------------
Global
(Dollars in thousands) Flavor Fragrance Expenses Consolidated
----------------------------------------------------
Net sales $ 253,138 $ 300,360 $ - $ 553,498
====================================================
Operating profit $ 41,770 $ 36,892 $ (2,065) 76,597
====================================
Interest expense (16,229)
Other income (expense), net 3,627
------------
Income before taxes on income $ 63,995
============
Three Months Ended December 31, 2006
----------------------------------------------------
Global
(Dollars in thousands) Flavor Fragrance Expenses Consolidated
----------------------------------------------------
Net sales $ 218,611 $ 295,707 $ - $ 514,318
====================================================
Operating profit $ 30,952 $ 47,054 $ (3,747) $ 74,259
====================================
Interest expense (7,401)
Other income (expense), net (4,442)
------------
Income before taxes on income $ 62,416
============
10
International Flavors & Fragrances Inc.
Business Unit Performance
(Amounts in thousands)
(Unaudited)
Twelve Months Ended December 31, 2007
----------------------------------------------------
Global
(Dollars in thousands) Flavor Fragrance Expenses Consolidated
----------------------------------------------------
Net sales $1,005,544 $ 1,271,094 $ - $ 2,276,638
====================================================
Operating profit $ 187,275 $ 209,812 $(26,976) 370,111
====================================
Interest expense (41,535)
Other income (expense), net 108
------------
Income before taxes on income $ 328,684
============
Twelve Months Ended December 31, 2006
----------------------------------------------------
Global
(Dollars in thousands) Flavor Fragrance Expenses Consolidated
----------------------------------------------------
Net sales $ 894,775 $ 1,200,615 - $ 2,095,390
====================================================
Operating profit $ 153,099 $ 212,240 (18,485) 346,854
====================================
Interest expense (25,549)
Other income (expense), net (8,023)
------------
Income before taxes on income $ 313,282
============
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International Flavors & Fragrances Inc.
Regulation G Reconciliation Schedule
Fourth Quarter and Full Year 2007
January 30, 2008
2006
--------------------------
Fourth Quarter Full Year
EPS Reported $ 0.53 $ 2.48
Restructuring Charges 0.02 0.02
Insurance Recovery -0.03
Other Income -0.06 -0.11
Tax Adjustment (1) -0.04 -0.04
--------------------------
EPS as Adjusted $ 0.45 $ 2.32
==========================
2007
--------------------------
Q4 Full Year
EPS Reported $ 0.58 $ 2.82
Loss on Curtailment 0.04
Gain on Asset Sales -0.05 -0.09
Tax Adjustment (1) -0.11
--------------------------
EPS as Adjusted $ 0.53 $ 2.66
==========================
(1) Favorable tax ruling benefit
This supplemental schedule provides adjusted non-GAAP financial information and
a quantitative reconciliation of the difference between the non-GAAP financial
measure and the financial measure calculated and reported in accordance with
GAAP
These non-GAAP financial measures should not be considered in isolation, or as a
substitute for, or superior to, financial measures calculated in accordance with
GAAP. The Company believes that it is meaningful for investors to be made aware
of and to be assisted in a better understanding of, on a period to period
comparative basis, the relative impact of restructuring charges and the other
income that primarily consists of gains on asset disposals, the benefit of tax
rulings relating to 2006 and prior years, and the pension curtailment charge.
The adjusted information is intended to be more indicative of the Company's core
operating results.
12