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IFF Q3 2016 Infographic (Graphic:
Business Wire)
International Flavors & Fragrances Inc. (NYSE: IFF)
(Euronext Paris: IFF) reported financial results and strategic
achievements for the third quarter ended September 30, 2016.
Third 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 2% (21)% (15)% 2% (8)% (4)% 3% (4)% (1)%
Acquisition Impact 1% 1% 1% 1% 1% 1% 1%
1% 1%
¹ Schedules at the end of this release contain reconciliations
of reported GAAP to non-GAAP metrics.
Third Quarter 2016 Consolidated Financial Highlights
- Reported net sales for the third
quarter totaled $777.0 million, an increase of 2% from $765.1
million in the third quarter of 2015. Excluding the impact of
foreign exchange, currency neutral sales increased 3%, including a
1 percentage point contribution related to the acquisition of IFF |
Lucas Meyer Cosmetics.
- Reported operating profit declined from
$156.7 million in the third quarter of 2015 to $124.3 million in
the third quarter of 2016, including a charge of $25 million
related to a reserve for litigation. Excluding the impact of
foreign exchange and those items that affect comparability,
currency neutral adjusted operating profit decreased 4% as volume
growth and the benefits associated with cost and productivity
initiatives were more than offset by unfavorable mix and
manufacturing performance as well as increases in research, selling
and administrative costs (RSA), including planned strategic
investments.
- Reported earnings per share (EPS)
decreased from $1.31 per diluted share in the prior year period, to
$1.12 per diluted share compared to the third quarter of 2016.
Excluding the impact of foreign exchange and those items that
affect comparability, adjusted currency neutral EPS declined 1%, as
lower year-over-year shares outstanding and a favorable
year-over-year effective tax rate were more than offset by
operating profit performance.
Third Quarter 2016 Strategic Highlights: Currency Neutral
Performance
Innovating Firsts: strengthen position and drive
differentiation in priority R&D platforms
- Encapsulation-related sales grew strong
double-digits in Personal Wash & Home Care
- Sweetness and savory modulation
portfolio continued to grow double-digits
- Launched 4 new flavor molecules to
build consumer-preferred products
- Commercialized a new captive fragrance
ingredient to drive further differentiation
Win Where We Compete: achieve market leadership position
in key markets, categories & customers
- Middle East & Africa up strong
double-digits led by growth in both Flavors & Fragrances
- North America Fragrance sales +6%
driven by strong double-digit growth in Fabric Care
- Home Care grew low-single-digits led by
double-digit growth in Greater Asia
Become Our Customers’ Partner of Choice: attain
commercial excellence
- Growth achieved across both global and
regional accounts, with regionals outpacing
- First flavor and fragrance company to
join the World Economic Forum
- Elected to World Business Council for
Sustainable Development Executive Committee
Strengthen and Expand the Portfolio: pursue value
creation through collaborations & acquisitions
- IFF | Lucas Meyer Cosmetics achieved
double-digit growth on a standalone basis
- Acquired David Michael in Q4 2016 to
improve share of North American Flavors business
- In Q4 2016, announced intention to
purchase Fragrance Resources to strengthenNorth America and
Germany
Management Commentary
“In the third quarter, we continued to drive the execution of
Vision 2020,” said Chairman and CEO Andreas Fibig. “In the key
areas we’ve identified – encapsulation, modulation, North America,
Africa and the Middle East – we continue to make progress against
our strategic goals. We also accelerated our efforts in M&A
recently, with the addition of approximately $160 million in
expected annualized sales from David Michael and Fragrance
Resources – both of which complement our strategic vision well.
“Financially, third quarter currency neutral sales grew 3%, led
by an improved performance in Flavors and the contribution from the
IFF | Lucas Meyer Cosmetics acquisition. Driven by new win
performance, growth was achieved across both business units. From a
currency neutral operating profit perspective, we anticipated
performance to be muted given the timing of planned investments,
yet results came in softer than expected due principally to
unfavorable mix and higher manufacturing costs. As we progress in
the fourth quarter, we are optimistic that sales, operating profit
and EPS growth – on a currency neutral basis – will all improve
sequentially.
“For the full year, despite challenging conditions given a
higher level of economic uncertainty and limited volume growth by
many consumer packaged goods companies, we are pleased to say that
we are in a position to deliver solid top- and bottom-line growth
in 2016. Longer-term, we believe that our investment in innovation
will enable us to accelerate sales performance while simultaneously
driving productivity improvements to ensure sustainable profit
growth. We’re confident that by doing so, the cumulative benefits
will lead to improved value creation for our customers, employees
and shareholders.”
Third Quarter 2016 Segment Summary: Growth vs. Prior
Year
Reported (GAAP) Currency
Neutral (Non-GAAP) Sales Segment Profit
Sales Segment Profit Fragrances: 1%
(6)% 2% (7)% Acquisition Impact 1% 1% 1% 1%
Flavors:
2% (3)% 3% (4)% Acquisition Impact 0% 0% 0% 0%
Fragrances Business Unit
- On a reported basis, sales increased
1%, or $4.2 million, to $410.1 million. Reported Fragrances segment
profit was $85.0 million and reported segment profit margin was
20.7%.
- Currency neutral sales improved 2%,
including approximately 1 percentage point related to the
acquisition of IFF | Lucas Meyer Cosmetics.
- Fine Fragrances declined 3% on a
reported and currency neutral basis as strong double-digit growth
in Greater Asia and low single-digit growth in North America were
more than offset by softness in Latin America and Western
Europe.
- Consumer Fragrances was flat on a
reported basis and grew 1% on a currency neutral basis led by
mid-single-digit growth in Fabric Care and Personal Wash. On a
geographic basis, growth was led by a high-single-digit increase in
Greater Asia and mid-single-digit growth in North America.
- Fragrance Ingredients grew 9% on a
reported basis and 8% on a currency neutral basis, driven by
low-single digit growth on an organic basis and the contribution of
sales related to the IFF | Lucas Meyer Cosmetics acquisition.
- Fragrances segment profit declined
approximately 7% on a currency neutral basis as volume growth and
the benefits from cost and productivity initiatives were more than
offset by weaker mix, unfavorable price to input costs,
manufacturing performance and RSA.
Flavors Business Unit
- On a reported basis, sales increased
2%, or $7.8 million, to $366.9 million. Reported Flavors segment
profit was $77.5 million and reported segment profit margin was
21.1%.
- Currency neutral sales grew 3% led by
mid-single-digit growth in Savory, Dairy and Sweet.
- EAME increased 2% on a reported basis
and 5% on a currency neutral basis led by strong double-digit
growth in the Middle East and Africa.
- North America was challenged as
low-single-digit growth in Savory and Sweet were offset by softness
in Beverage.
- Latin America increased 4% on a
reported basis and 7% on a currency neutral basis as Brazil and
Mexico both grew strong double-digits.
- Greater Asia increased 4% on a reported
basis and 5% on a currency neutral basis led by growth in India,
Asean, Indonesia and China.
- Flavors segment profit fell
approximately 4% on a currency neutral basis as volume growth and
the benefits from productivity initiatives were more than offset by
weaker mix, unfavorable price to input costs and increases in
RSA.
FY 2016 Guidance: Percent Change vs. Prior Year
The Company’s full year 2016 guidance:
Currency Neutral
FX Impact1 Reported2 Organic
M&A Total
Sales 2.0% - 3.0% ~2.0% 4.0% - 5.0%
~(1.5)% 2.5% - 3.5%
Operating Profit 2.0% - 3.0% ~1.5% 3.5%
- 4.5% ~(2.0)% 1.5% - 2.5%
EPS 3.5% - 4.5% ~1.5% 5.0% - 6.0%
~(2.0)% 3.0% - 4.0%
1 See Use of Non-GAAP Financial Measures2 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 November 9, 2016.
Audio Webcast
A live webcast to discuss the Company’s third quarter 2016
financial results and outlook for the balance of the year will be
held on November 8, 2016, at 10:00 a.m. EST. 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 and
the impact of our actions on value creation for our customers and
shareholders. 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 (20)
expectations regarding the timing of closing and the benefits of
the potential acquisition of Fragrance Resources (21) with respect
to statements regarding the closing and potential benefits of
Fragrance Resources these risks include (i) the ability of both
parties to obtain required consents and (ii) other customary
closing conditions. 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 legal charges/credits, 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.521 West 57th
StreetNew York, NY 10019
T +212.765.5500F +212.708.7132iff.com
International Flavors & Fragrances
Inc.
Consolidated Income Statement
(Amounts in thousands except per share
data)
(Unaudited)
Three Months Ended September 30, Nine Months
Ended September 30, 2016 2015 % Change 2016
2015 % Change Net sales $ 777,001 $ 765,092 2 % $ 2,353,790
$ 2,307,540 2 % Cost of goods sold 430,733
417,966 3 % 1,281,673 1,269,097 1 %
Gross profit 346,268 347,126 (0 )% 1,072,117 1,038,443 3 % Research
and development expenses 64,415 62,750 3 % 191,052 188,725 1 %
Selling and administrative expenses 152,046 122,249 24 % 408,372
372,267 10 % Amortization of acquisition-related intangibles 5,468
5,414 1 % 16,659 10,293 62 % Restructuring and other charges, net
— — — % — (170 ) (100 )%
Operating profit 124,339 156,713 (21 )% 456,034 467,328 (2 )%
Interest expense 13,111 11,855 11 % 40,649 34,357 18 % Other
(income) expense, net (2,162 ) 1,959 (210 )%
(4,952 ) (3,315 ) 49 % Income before taxes 113,390 142,899
(21 )% 420,337 436,286 (4 )% Taxes on income 23,613
36,452 (35 )% 95,223 96,206 (1
)% Net income $ 89,777 $ 106,447 (16 )% $ 325,114 $
340,080 (4 )% Earnings per share -
basic $ 1.13 $ 1.32 $ 4.07 $ 4.20 Earnings per share - diluted $
1.12 $ 1.31 $ 4.05 $ 4.18 Average shares outstanding Basic
79,580 80,330 79,727 80,602 Diluted 79,935 80,737 80,067 81,052
International Flavors & Fragrances
Inc.
Condensed Consolidated Balance
Sheet
(Amounts in thousands)
(Unaudited)
September 30, December 31, 2016 2015 Cash and cash
equivalents $ 498,730 $ 181,988 Receivables 587,074 537,896
Inventories 585,185 572,047 Other current assets 186,046
145,178 Total current assets 1,857,035 1,437,109
Property, plant and equipment, net 745,241 732,794 Goodwill and
other intangibles, net 1,226,119 1,247,393 Other assets
268,734 284,714 Total assets $ 4,097,129 $ 3,702,010
Bank borrowings and overdrafts, and current portion of long-term
debt $ 257,675 $ 132,349 Other current liabilities 598,249
592,807 Total current liabilities 855,924 725,156
Long-term debt 1,110,201 935,373 Non-current liabilities 432,806
446,492 Shareholders' equity 1,698,198
1,594,989 Total liabilities and shareholders' equity $ 4,097,129 $
3,702,010
International Flavors & Fragrances
Inc.
Consolidated Statement of Cash
Flows
(Amounts in thousands)
(Unaudited)
Nine Months Ended
2016 2015
Cash flows from operating activities: Net
income $ 325,114 $ 340,080 Adjustments to reconcile to net cash
provided by operating activities: Depreciation and amortization
75,109 65,099 Deferred income taxes 8,323 13,134 Gain on disposal
of assets (2,998 ) (341 ) Stock-based compensation 19,471 18,355
Pension contributions (44,356 ) (61,125 ) Changes in assets and
liabilities, net of acquisitions: Trade receivables (36,070 )
(108,563 ) Inventories (160 ) (31,655 ) Accounts payable (29,523 )
54,482 Accruals for incentive compensation 3,012 (13,781 ) Other
current payables and accrued expenses 30,663 34,585 Other assets
(10,155 ) (30,098 ) Other liabilities (9,077 ) 14,523
Net cash provided by operating activities 329,353
294,695
Cash flows from investing
activities: Cash paid for acquisitions, net of cash received —
(493,469 ) Additions to property, plant and equipment (70,179 )
(66,632 ) Proceeds from life insurance contracts 292 868 Maturity
of net investment hedges (12 ) 9,735 Proceeds from disposal of
assets 3,664 3,431 Net cash used in
investing activities (66,235 ) (546,067 )
Cash flows from financing activities: Cash dividends paid to
shareholders (134,051 ) (113,875 ) Increase (decrease) in revolving
credit facility borrowings and overdrafts (133,687 ) 249,998
Deferred financing costs (4,780 ) — Repayments of debt (125,000 ) —
Proceeds from issuance of long-term debt 555,559 — Loss on
pre-issuance hedges (3,244 ) — Proceeds from issuance of stock
under stock plans 594 288 Excess tax benefits on stock-based
payments 4,532 11,704 Purchase of treasury stock (94,148 )
(81,237 ) Net cash provided by financing activities
65,775 66,878 Effect of exchange rates changes
on cash and cash equivalents (12,151 ) (21,803 )
Net change in
cash and cash equivalents 316,742 (206,297 )
Cash and cash
equivalents at beginning of year 181,988
478,573
Cash and cash equivalents at end of period $
498,730 $ 272,276
International Flavors & Fragrances
Inc.
Business Unit Performance
(Amounts in thousands)
(Unaudited)
Three Months Ended September 30, Nine Months Ended
September 30, 2016 2015 2016 2015
Net Sales
Flavors $ 366,857 $ 359,103 $ 1,118,869 $ 1,108,689 Fragrances
410,144 405,989 1,234,921
1,198,851
Consolidated 777,001 765,092
2,353,790 2,307,540
Segment Profit Flavors 77,512
79,803 259,662 256,546 Fragrances 85,010 90,893 261,843 252,416
Global Expenses (11,405 ) (6,874 ) (37,544 ) (27,067 )
Restructuring and other charges, net (190 ) — (473 ) 170
Acquisition and related costs (786 ) (6,830 ) (2,035 ) (13,896 )
Operational improvement initiative costs (802 ) (279 ) (1,901 )
(841 ) Spanish capital tax settlement — — 1,482 — Legal charge
(25,000 ) — (25,000 ) —
Operating profit 124,339 156,713 456,034 467,328
Interest Expense (13,111 ) (11,855 ) (40,649 ) (34,357 ) Other
income, net 2,162 (1,959 ) 4,952
3,315
Income before taxes $ 113,390 $
142,899 $ 420,337 $ 436,286
Operating Margin Flavors 21.1 % 22.2 % 23.2 % 23.1 %
Fragrances 20.7 % 22.4 % 21.2 % 21.1 % Consolidated 16.0 % 20.5 %
19.4 % 20.3 %
International Flavors & Fragrances
Inc.
Sales Performance by Region and
Category
(Unaudited)
Third Quarter 2016 vs.
2015 Percentage Change in Sales by Region of Destination
Fine
Consumer Fragrances
Ingredients Total Frag.
Flavors Total North
America Reported 1% 5% 10%
6% -1% 2% EAME Reported
-5% 0% 11% 1% 2% 1%
Currency Neutral -5% 0% 11% 1%
5% 3% Latin America Reported
-6% -12% -26% -12% 4% -6%
Currency Neutral -3% -9% -24%
-9% 7% -4% Greater Asia
Reported 15% 8% 22% 10%
4% 7% Currency Neutral 15% 8%
18% 10% 5% 7% Total
Reported -3% 0% 9% 1% 2%
2% Currency Neutral -3% 1%
8% 2% 3% 3%
First Nine Months 2016 vs. First Nine Months 2015
Percentage Change in Sales by Region of Destination
Fine
Consumer Fragrances
Ingredients Total Frag.
Flavors Total North America
Reported 3% 7% 18% 9% 4%
6% EAME Reported -3% -1%
12% 1% -1% 0% Currency Neutral
-2% 1% 14% 3% 2% 3%
Latin America Reported -2% -4%
-16% -5% -2% -4% Currency
Neutral 5% -1% -15% -1% 3%
0% Greater Asia Reported 2%
6% 15% 8% 2% 4% Currency
Neutral 3% 8% 14% 9% 4%
6% Total Reported -1% 2%
12% 3% 1% 2% Currency Neutral
1% 4% 13% 5%
4% 4%
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)
Q3
Consolidated
Sales Operating Profit EPS %
Change - Reported (GAAP) 2% -21%
-15% Items Impacting Comparability 0% 13% 11%
% Change -
Adjusted (Non-GAAP) 2% -8% -4% Currency
Impact 1% 4% 3%
% Change - Currency Neutral (Adjusted)
3% -4% -1%
Q3
Flavors
Sales Segment Profit % Change - Reported
(GAAP) 2% -3% Currency Impact 1% -1%
% Change
- Currency Neutral 3% -4%
Q3
Fragrances
Sales Segment Profit % Change - Reported
(GAAP) 1% -6% Currency Impact 1% -1%
% Change
- Currency Neutral 2% -7%
YTD
Consolidated
Sales Operating Profit EPS %
Change - Reported (GAAP) 2% -2% -3% Items
Impacting Comparability 0% 3% 5%
% Change - Adjusted
(Non-GAAP) 2% 0%* 2% Currency Impact 2% 3%
3%
% Change - Currency Neutral (Adjusted) 4%
3% 5%
*Item does not foot due to rounding
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.
Third Quarter 2016 Items Impacting
Comparability Adjusted
Operating Profit Reported (GAAP) Restructuring and
Other Charges (a) Operational Improvement Initiative Costs
(b) Acquisition Related Costs (c) Legal
Charges/Credits (d) Adjusted (Non-GAAP) Operating profit
124,339 190 802 786 25,000
151,117 Adjusted Net
Income Reported (GAAP) Restructuring and Other
Charges (a) Operational Improvement Initiative Costs (b)
Acquisition Related Costs (c) Legal Charges/Credits
(d) Adjusted (Non-GAAP) Income before taxes 113,390 190
802 786 25,000
140,168 Taxes on income (e) 23,613 36
200 276 8,750
32,875 Net
income 89,777 154 602 510 16,250
107,293 Diluted EPS
1.12 — 0.01 0.01 0.20
1.34
(a) Accelerated depreciation costs related to restructuring
initiatives.(b) Accelerated depreciation costs in Asia.(c)
Transaction costs related to the acquisition of David Michael.(d)
Legal charge related to reserve for the ZoomEssence case.(e) The
tax effects are calculated based upon the specific rate of the
applicable jurisdiction of the items.* 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: $2.0M related to Lucas Meyer and $1.6M related to
Ottens Flavors.
Third Quarter 2015
Items Impacting Comparability
Adjusted Operating Profit Reported
(GAAP) Operational Improvement Initiative Costs (a)
Acquisition Related Costs (b) Adjusted (Non-GAAP)
Operating profit 156,713 279 6,830
163,822
Adjusted Net Income Reported (GAAP) Operational
Improvement Initiative Costs (a) Acquisition Related Costs
(b) Adjusted (Non-GAAP) Income before taxes 142,899 279
6,830
150,008 Taxes on income (c) 36,452 70
829
37,351 Net income 106,447 209 6,001
112,657 Diluted EPS 1.31 — 0.07
1.39
(d)
(a) Related to a partial plant closing in Asia.(b) 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 Lucas Meyer acquisition.(c) The tax effects are
calculated based upon the specific rate of the applicable
jurisdiction of the items.(d) The sum of these items do not foot
due to rounding.* 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: $3.5M.
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.
YTD 2016 Items Impacting Comparability
Adjusted Operating Income
Reported (GAAP) Restructuring and Other Charges (a)
Operational Improvement Initiative Costs (b) Acquisition
Related Costs (c) Legal Charges/Credits (d) Adjusted
(Non-GAAP) Operating profit 456,034 473 1,901 2,035 23,518
483,961 Adjusted Net Income Reported
(GAAP) Restructuring and Other Charges (a)
Operational Improvement Initiative Costs (b) Acquisition
Related Costs (c) Legal Charges/Credits (d) Adjusted
(Non-GAAP) Income before taxes 420,337 473 1,901 2,035 23,518
448,264 Taxes on income (e) 95,223 90 475 542 8,339
104,669 Net income 325,114 383 1,426 1,493 15,179
343,595 4.05 — 0.02 0.02 0.19
4.28
(a) Accelerated depreciation and severance 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 as well as transaction costs related to
the acquisition of David Michael.(d) Includes legal charge related
to reserve for the ZoomEssence case as well as settlements due to
favorable tax rulings in jurisdictions for which reserves were
previously recorded for ongoing tax disputes.(e) The tax effects
are calculated based upon the specific rate of the applicable
jurisdiction of the items.* 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: $6.3M
related to Lucas Meyer Cosmetics and $4.8M related to Ottens
Flavors.
YTD 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
467,328 (170 ) 841 13,896 481,895
Adjusted Net Income
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 436,286 (170 ) 841 13,896 —
450,853 Taxes on income (e) 96,206 (60 ) 210 1,879 10,478
108,713 Net income 340,080 (110 ) 631 12,017
(10,478 )
342,140 Diluted EPS 4.18 — 0.01 0.15 (0.13 ) 4.20
(f)
(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 for both
acquisitions.(d) Settlements due to favorable tax rulings in
jurisdictions for which reserves were previously recorded for
ongoing tax disputes.(e) The tax effects are calculated based upon
the specific rate of the applicable jurisdiction of the items.(f)
The sum of these items do not foot due to rounding.* 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: $4.7M.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20161107006545/en/
International Flavors & Fragrances Inc.Michael DeVeau,
212-708-7164VP, Global Corporate Communications & Investor
RelationsMichael.DeVeau@iff.com
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