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)
|
February
12, 2015
|
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 February 12, 2015 reporting IFF's financial results for
the quarter and fiscal year ended December 31, 2014.
An audio webcast to discuss the Company's fourth quarter 2014 financial
results and full year 2015 outlook will be held today, February 12,
2015, 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 Relations section. For those unable to listen to the
live broadcast, a replay will be available on the Company's website
approximately one hour after the event and will remain available on the
IFF website for one year.
Non-GAAP financial measures: In the attached press release and the
referenced audio webcast, the Company uses the following non-GAAP
financial operating measures: (i) adjusted earnings per share, (ii)
adjusted gross margin, (iii) adjusted operating profit, (iv) adjusted
operating profit margin, (v) adjusted cash flow from operations, and
(vi) local currency sales. Such information is supplemental to
information presented in accordance with GAAP and is not intended to
represent a presentation in accordance with GAAP. In discussing the
Company’s historical and expected future results and financial
condition, the Company believes it is meaningful for investors to be
made aware of and to be assisted in a better understanding of, on a
period-to-period comparable basis, financial amounts both including and
excluding these identified items, as well as the impact of exchange rate
fluctuations. The Company believes such additional non-GAAP information
provides investors with an overall perspective of the period-to-period
performance of our business. In addition, management internally reviews
each of these non-GAAP measures to evaluate performance on a comparative
period-to-period basis in terms of absolute performance, trends and
expected future performance with respect to our business. A material
limitation of these non-GAAP measures is that such measures do not
reflect actual GAAP amounts. The Company compensates for such
limitations by presenting the reconciliations contained in the attached
press release to the most directly comparable GAAP measure. These
non-GAAP measures may not be comparable to similarly titled measures
used by other companies.
Item 9.01. Financial Statements and Exhibits
(d) Exhibits
99.1 Press Release of International Flavors & Fragrances Inc., dated
February 12, 2015.
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:
|
February 12, 2015
|
/s/ Richard A. O’Leary
|
|
|
Name: Richard A. O’Leary
|
|
|
|
|
|
Title: Interim Chief Financial Officer, Vice President and
Controller
|
Exhibit Index
Number
|
Description
|
99.1
|
Press Release of International Flavors & Fragrances Inc. dated
February 12, 2015
|
Exhibit 99.1
IFF
Reports Strong Fourth Quarter and Full Year 2014 Results
Fourth
Quarter Local Currency Sales Grew 7%; Adjusted Diluted EPS Increased 17%
to $1.07
Full
Year Local Currency Sales Grew 5%; Adjusted Diluted EPS Increased 14% to
$5.08
NEW YORK--(BUSINESS WIRE)--February 12, 2015--International Flavors &
Fragrances Inc. (NYSE:IFF), a leading global creator of flavors and
fragrances for consumer products, today reported financial results for
the fourth quarter and full year ended January 2, 2015.
Fourth Quarter 2014 Results
-
Reported sales increased $30.9 million, or 4%, to $756.1 million from
$725.2 million in the prior year quarter. Local currency sales
increased 7% reflecting strong growth across both businesses and an
additional week of sales activity in 2014.
-
Adjusted operating profit increased $20.6 million, or 18%, to $132.6
million from $112.0 million in the prior year quarter, and adjusted
diluted earnings per share (EPS) increased 17% to $1.07 from $0.92.
-
On a reported basis, operating profit rose $35.8 million, or 38%, to
$130.6 million from $94.8 million in the prior year quarter. Reported
diluted EPS rose 48% to $1.10 from $0.75.
Full Year 2014 Results
-
Reported and local currency sales in 2014 both increased 5% to $3.1
billion driven by solid new win performance and the acquisition of
Aromor during the first quarter of 2014. The emerging markets, which
grew three times faster than the developed markets on a local currency
basis, now account for approximately 50% of total sales.
-
Adjusted operating profit grew $60.8 million, or 11%, to $601.3
million from $540.4 million in 2013, and adjusted diluted EPS gained
14% to $5.08 from $4.46.
-
On a U.S. GAAP basis, operating profit rose $76.0 million, or 15%, to
$592.3 million from $516.3 million in 2013. GAAP diluted EPS increased
18% to $5.06 versus $4.29.
Schedules at the end of this release contain reconciliations of reported
GAAP to non-GAAP financial metrics.
Management Commentary
“We are pleased to report that IFF achieved its long-term financial
targets for 2014. We met or exceeded our revenue, operating profit and
EPS goals and, at the same time, continued to invest in R&D,
manufacturing and commercial resources to strengthen our business
longer-term,” said Andreas Fibig, Chairman and Chief Executive Officer.
“In addition to our strong results, 2014 marked great strides in
sustainability, with our inclusion in the CDP Climate Disclosure
Leadership Index. We also successfully integrated Aromor into our
Fragrances business, which contributed to our overall results. And of
course, we celebrated our 125th year anniversary, a tremendous
achievement, which was exemplified by our people and their passion,
creativity, expertise and empowerment.”
Fourth Quarter 2014 Operating Highlights
-
Local currency sales increased 7%, led by high-single digit growth in
Latin America, North America and EAME. Growth this quarter benefitted
by approximately 2 percentage points associated with an additional
week of sales, or 53rd week, which generally occurs every
six years and 1 percentage point from the acquisition of Aromor.
-
Adjusted gross profit margin declined slightly to 43.6% from 43.8% in
the prior year quarter principally driven by unfavorable net impact of
price to input costs.
-
Research, selling and administrative (RSA) expenses, as a percent of
sales, was 26.1% versus 28.3% in the year-ago period, as continued
investments in R&D and commercial opportunities were more than offset
by lower incentive compensation expense.
-
Excluding items impacting comparability, adjusted operating profit
increased 18%, or $20.6 million, to $132.6 million from $112.0 million
in the prior year quarter. Adjusted operating profit margin increased
210 basis points to 17.5% from 15.4% driven by lower RSA costs.
-
Adjusted EPS grew 17%, to $1.07, as year-over-year gains in adjusted
operating profit were partially offset by a slightly higher adjusted
effective tax rate and interest expense.
Fourth Quarter 2014 Segment Results
Fragrances Business Unit
-
Reported sales increased 5% to $399.8 million in the fourth quarter of
2014 compared with $382.2 million in the prior year quarter.
-
Local currency sales growth was 7%, including 2% of growth related to
Aromor, acquired earlier in the year. All regions delivered solid
mid-single growth.
-
Fine Fragrances local currency sales declined by 1%, against a very
strong 13% growth reported in the year-ago period. A double-digit
increase in Greater Asia was more than offset by weakness in EAME,
which compared to a 32% growth rate reported in the fourth quarter of
2013, as well as softness in Latin America.
-
Consumer Fragrances delivered strong local currency sales growth of 8%
led by double-digit growth in Fabric Care, Home Care and Hair Care.
-
Fragrance Ingredients local currency sales increased 13% driven by the
Aromor acquisition announced earlier this year.
-
Fragrances segment profit increased 23%, or $14.1 million, to $76.2
million, up from $62.1 million in the fourth quarter of 2013. Segment
profit margin increased to 19.1%, up 290 basis points from 16.2% in
the prior year quarter. The improvement in segment profit and segment
profit margin reflects topline growth, lower incentive compensation
expenses versus the strong prior year period, and productivity
initiatives, which all combined to offset higher input costs.
Flavors Business Unit
-
Reported sales increased 4%, or $13.3 million, to $356.3 million from
$343.0 million in the prior year quarter.
-
Local currency sales grew 6% in the fourth quarter, against a 7%
year-ago comparison, led by 7% growth in the emerging markets and a
strong performance in North America.
-
On a category basis, Beverages grew high double-digits with
broad-based growth across all regions driven by strong innovative
solutions for better-for-you products. Growth in Savory was also
solid, improving mid-single digits globally, led by new win
performance.
-
Flavors segment profit totaled $72.6 million, compared with $69.5
million in the prior year quarter. Flavors segment profit margin
improved 10 basis points to 20.4% from 20.3% in the prior year quarter
reflecting topline growth, productivity and cost control, and lower
incentive compensation expense.
Full Year 2014 Operating Highlights
-
Reported sales increased 5%, or $136 million, to $3.1 billion in 2014
versus the prior year. Local currency sales also increased 5%
reflecting 6% growth in emerging markets, 2% growth in the developed
markets and the addition of Aromor.
-
Adjusted gross margin increased 60 basis points to 44.4% from 43.8% in
2013 driven by solid sales growth, and benefits from cost and
productivity initiatives.
-
RSA expenses, as a percent of sales, declined 60 bps to 24.9% versus
25.5% in 2013 primarily related to lower incentive compensation
expense.
-
Excluding items impacting comparability, adjusted operating profit
increased 11%, or $60.8 million, to $601.3 million from $540.4 million
in 2013. Adjusted operating profit margin expanded by 120 basis points
to 19.5% from 18.3% in the prior year as a result of gross margin
expansion and lower RSA expense.
-
Adjusted diluted EPS improved 14% to $5.08 per share in 2014
reflecting sales growth, adjusted operating margin expansion, a lower
effective tax rate, and a year-over-year decrease in average shares
outstanding.
-
Cash flows from operations for the full year were $518.4 million, or
16.8% of sales, compared with $407.6 million, or 13.8% of sales, in
the prior year, which included $48.0 million of cash payments related
to the Spanish tax cases and incremental U.S. pension contributions.
Excluding these payments from the Company’s 2013 operating cash flow,
adjusted cash flow from operations would have increased 14% from
$455.6 million in 2013 to $518.4 million in 2014 reflecting strong net
income growth and improvements in working capital as a percentage of
sales.
-
Cash returned to shareholders in the form of dividends and share
repurchases in 2014 totaled $221.4 million, or 53%, of net income.
Full Year 2014 Segment Results
Fragrances Business Unit
-
Reported sales for the full year increased 7%, or $101.3 million, to
$1.6 billion. Local currency sales also increased 7% as all regions
and all categories within Fragrance Compounds posted solid growth.
-
For the full year, Fine Fragrances grew 2%, following an 8% local
currency sales increase in 2013 as overall growth was supported by
solid new wins across all regions.
-
Consumer Fragrances increased 5% in 2014 led by Fabric Care, which
continues to benefit from industry-leading delivery system technology,
as well as solid performances across all sub-categories, including
Hair Care, Toiletries, Home Care and Personal Wash.
-
Fragrance Ingredients local currency sales grew 18%, including 15%
growth associated with our Aromor acquisition.
-
Fragrances segment profit increased 18%, or $51.7 million, to $335.4
million, up from $283.7 million in 2013. The year-over-year
improvement can be attributed to strong sales growth combined with
gross margin expansion, ongoing cost discipline, and lower incentive
compensation expense. The combined impact on segment profit margin was
significant, improving 210 basis points year-over-year to 20.6%.
Flavors Business Unit
-
Reported sales for the full year increased 2%, or $34.3 million, to
$1.5 billion.
-
Local currency sales increased 4% in 2014, as growth in Beverage,
Dairy and Savory were driven by our innovation platform for
better-for-you products.
-
On a regional basis, Latin America performed best, growing local
currency sales double-digits every quarter in 2014 to finish the year
with 16% growth. EAME and Greater Asia both delivered solid local
currency growth, while North America, although improved in the second
half, was challenged.
-
Full year Flavors segment profit totaled $331.3 million versus $323.6
million in the prior year, or an increase of 2%, as a result of lower
incentive compensation and continued cost discipline. Flavors segment
profit margin remained constant at 22.7%.
Management Commentary
Mr. Fibig continued, “As we look ahead to 2015, we believe our business
is positioned for continued performance that generates favorable returns
for our shareholders, despite some macro-economic uncertainty and
increased currency pressure. We have a well-balanced geographic profile,
a diverse product portfolio, and a strong innovation pipeline that we
believe sets us apart from the competition. We believe this breadth and
diversity provides our investors with an attractive combination of
sustainable growth and strong cash flow generation. As such, our local
currency sales and operating profit outlook for 2015 is consistent with
our long-term targets, while we expect EPS growth in the high-single
digits.”
Audio Webcast
A live webcast to discuss the Company's fourth quarter and full year
2014 financial results, and first quarter and full year 2015 outlook
will be held today, February 12, 2015, 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. (NYSE:IFF) is a leading global
creator of flavors and fragrances used in a wide variety of consumer
products. Consumers experience these unique scents and tastes in fine
fragrances and beauty care, detergents and household goods, as well as
beverages, sweet goods and food products. The Company leverages its
competitive advantages of consumer insight, research and development,
creative expertise, and customer intimacy to provide customers with
innovative and differentiated product offerings. A member of the S&P 500
Index, IFF has more than 6,200 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 our outlook for the first quarter and full year
2015, and our ability to generate shareholder returns and sustain our
long-term growth performance. 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 25, 2014. 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) volatility and increases in the price of raw materials, energy
and transportation; (2) the economic and political risks associated with
the Company’s international operations; (3) the Company’s ability to
benefit from its investments and expansion in emerging markets; (4)
fluctuations in the quality and availability of raw materials; (5)
changes in consumer preferences and demand for the Company’s products or
a decline in consumer confidence and spending;; (6) the Company’s
ability to implement its business strategy, including the achievement of
anticipated cost savings, profitability, realization of price increases
and growth targets; (7) the Company’s ability to successfully develop
new and competitive products that appeal to its customers and consumers;
(8) the impact of a disruption in the Company’s supply chain or its
relationship with its suppliers; (9) the impact of currency fluctuations
or devaluations in the Company’s principal foreign markets; (10) the
effects of any unanticipated costs and construction or start-up delays
in the expansion of the Company’s facilities; (11) 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; (12) adverse changes in federal, state, local and foreign
tax legislation or adverse results of tax audits, assessments, or
disputes; and (13) 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.
|
International Flavors & Fragrances Inc.
Consolidated Income Statement
(Amounts in thousands except per share data)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
Three Months Ended December 31,
|
|
Twelve Months Ended December 31,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2014
|
|
2013
|
|
% Change
|
|
|
2014
|
|
|
|
2013
|
|
|
% Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
|
$
|
756,082
|
|
$
|
725,169
|
|
4
|
%
|
|
$
|
3,088,533
|
|
|
$
|
2,952,896
|
|
|
5
|
%
|
Cost of goods sold
|
|
|
|
428,102
|
|
|
411,714
|
|
4
|
%
|
|
|
1,726,383
|
|
|
|
1,668,691
|
|
|
3
|
%
|
Gross profit
|
|
|
|
327,980
|
|
|
313,455
|
|
5
|
%
|
|
|
1,362,150
|
|
|
|
1,284,205
|
|
|
6
|
%
|
Research and development
|
|
|
|
62,005
|
|
|
70,409
|
|
(12
|
)%
|
|
|
253,640
|
|
|
|
259,838
|
|
|
(2
|
)%
|
Selling and administrative
|
|
|
|
135,027
|
|
|
148,190
|
|
(9
|
)%
|
|
|
514,891
|
|
|
|
505,877
|
|
|
2
|
%
|
Restructuring and other charges
|
|
|
|
386
|
|
|
46
|
|
739
|
%
|
|
|
1,298
|
|
|
|
2,151
|
|
|
(40
|
)%
|
Interest expense
|
|
|
|
12,019
|
|
|
11,129
|
|
8
|
%
|
|
|
46,067
|
|
|
|
46,767
|
|
|
(1
|
)%
|
Other (income) expense, net
|
|
|
|
954
|
|
|
723
|
|
32
|
%
|
|
|
(2,807
|
)
|
|
|
(15,638
|
)
|
|
(82
|
)%
|
Pretax income
|
|
|
|
117,589
|
|
|
82,958
|
|
42
|
%
|
|
|
549,061
|
|
|
|
485,210
|
|
|
13
|
%
|
Income taxes
|
|
|
|
27,454
|
|
|
21,479
|
|
28
|
%
|
|
|
134,518
|
|
|
|
131,666
|
|
|
2
|
%
|
Net income
|
|
|
$
|
90,135
|
|
$
|
61,479
|
|
47
|
%
|
|
$
|
414,543
|
|
|
$
|
353,544
|
|
|
17
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share - basic
|
|
|
$
|
1.11
|
|
$
|
0.75
|
|
|
|
$
|
5.09
|
|
|
$
|
4.32
|
|
|
|
Earnings per share - diluted
|
|
|
$
|
1.10
|
|
$
|
0.75
|
|
|
|
$
|
5.06
|
|
|
$
|
4.29
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average shares outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
80,810
|
|
|
81,242
|
|
|
|
|
80,936
|
|
|
|
81,322
|
|
|
|
Diluted
|
|
|
|
81,312
|
|
|
81,843
|
|
|
|
|
81,494
|
|
|
|
81,930
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International Flavors & Fragrances Inc.
Condensed Consolidated Balance Sheet
(Amounts in thousands)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
December 31, 2014
|
|
|
December 31, 2013
|
Cash & cash equivalents
|
|
|
$
|
478,573
|
|
|
$
|
405,505
|
Receivables
|
|
|
|
493,768
|
|
|
|
524,493
|
Inventories
|
|
|
|
568,729
|
|
|
|
533,806
|
Other current assets
|
|
|
|
168,957
|
|
|
|
189,099
|
Total current assets
|
|
|
|
1,710,027
|
|
|
|
1,652,903
|
|
|
|
|
|
|
|
Property, plant and equipment, net
|
|
|
|
720,268
|
|
|
|
687,215
|
Goodwill and other intangibles, net
|
|
|
|
752,041
|
|
|
|
696,197
|
Other assets
|
|
|
|
312,285
|
|
|
|
295,416
|
Total assets
|
|
|
$
|
3,494,621
|
|
|
$
|
3,331,731
|
|
|
|
|
|
|
|
Bank borrowings and overdrafts, and
|
|
|
|
|
|
|
current portion of long-term debt
|
|
|
$
|
8,090
|
|
|
$
|
149
|
Other current liabilities
|
|
|
|
510,718
|
|
|
|
560,217
|
Total current liabilities
|
|
|
|
518,808
|
|
|
|
560,366
|
|
|
|
|
|
|
|
Long-term debt
|
|
|
|
934,232
|
|
|
|
932,665
|
Non-current liabilities
|
|
|
|
518,892
|
|
|
|
371,649
|
|
|
|
|
|
|
|
Shareholders' equity
|
|
|
|
1,522,689
|
|
|
|
1,467,051
|
Total liabilities and shareholders' equity
|
|
|
$
|
3,494,621
|
|
|
$
|
3,331,731
|
|
|
|
|
|
|
|
|
|
|
International Flavors & Fragrances Inc.
Consolidated Statement of Cash Flows
(Amounts in thousands)
(Unaudited)
|
|
|
|
|
|
Twelve Months Ended December 31,
|
|
|
|
2014
|
|
|
|
2013
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
414,543
|
|
|
$
|
353,544
|
|
Adjustments to reconcile to net cash provided by operations:
|
|
|
|
|
Depreciation and amortization
|
|
|
89,354
|
|
|
|
83,227
|
|
Deferred income taxes
|
|
|
23,350
|
|
|
|
(484
|
)
|
Gain on disposal of assets
|
|
|
(3,768
|
)
|
|
|
(17,841
|
)
|
Stock-based compensation
|
|
|
22,648
|
|
|
|
23,736
|
|
Changes in assets and liabilities
|
|
|
|
|
Trade receivables
|
|
|
(2,635
|
)
|
|
|
(53,156
|
)
|
Inventories
|
|
|
(40,042
|
)
|
|
|
4,822
|
|
Accounts payable
|
|
|
7,753
|
|
|
|
10,074
|
|
Accruals for incentive compensation
|
|
|
(30,947
|
)
|
|
|
24,518
|
|
Other current payables and accrued expenses
|
|
|
(19,332
|
)
|
|
|
9,995
|
|
Changes in other assets/liabilities
|
|
|
57,466
|
|
|
|
(30,873
|
)
|
Net cash provided by operating activities
|
|
|
518,390
|
|
|
|
407,562
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
Cash paid for acquisition, net of cash received (including $15
million of contingent consideration)
|
|
|
(102,500
|
)
|
|
|
—
|
|
Additions to property, plant and equipment
|
|
|
(143,182
|
)
|
|
|
(134,157
|
)
|
Proceeds from disposal of assets
|
|
|
3,295
|
|
|
|
27,312
|
|
Maturity of net investment hedges
|
|
|
3,304
|
|
|
|
646
|
|
Proceeds from life insurance contracts
|
|
|
17,750
|
|
|
|
793
|
|
Net cash used in investing activities
|
|
|
(221,333
|
)
|
|
|
(105,406
|
)
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
Cash dividends paid to shareholders
|
|
|
(133,239
|
)
|
|
|
(87,347
|
)
|
|
|
|
|
|
|
|
|
|
Net change in revolving credit facility borrowings and overdrafts
|
|
|
8,332
|
|
|
|
(283,225
|
)
|
Deferred financing costs
|
|
|
(1,023
|
)
|
|
|
(2,800
|
)
|
Repayments of long-term debt
|
|
|
—
|
|
|
|
(100,000
|
)
|
Proceeds from long-term debt
|
|
|
3,609
|
|
|
|
297,786
|
|
Proceeds from issuance of stock under stock plans
|
|
|
1,864
|
|
|
|
3,799
|
|
Excess tax benefits on stock-based payments
|
|
|
6,330
|
|
|
|
6,112
|
|
Purchase of treasury stock
|
|
|
(88,203
|
)
|
|
|
(51,363
|
)
|
Net cash used in financing activities
|
|
|
(202,330
|
)
|
|
|
(217,038
|
)
|
|
|
|
|
|
|
|
|
|
Effect of exchange rates changes on cash and cash equivalents
|
|
|
(21,659
|
)
|
|
|
(4,035
|
)
|
Net change in cash and cash equivalents
|
|
|
73,068
|
|
|
|
81,083
|
|
Cash and cash equivalents at beginning of year
|
|
|
405,505
|
|
|
|
324,422
|
|
Cash and cash equivalents at end of period
|
|
$
|
478,573
|
|
|
$
|
405,505
|
|
|
|
|
|
|
|
|
|
|
|
International Flavors & Fragrances Inc.
Business Unit Performance
(Amounts in thousands)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Twelve Months Ended
|
|
|
|
December 31,
|
|
December 31,
|
|
|
|
|
2014
|
|
|
|
2013
|
|
|
|
2014
|
|
|
|
2013
|
|
Net Sales
|
|
|
|
|
|
|
|
|
|
Flavors
|
|
|
$
|
356,329
|
|
|
$
|
342,953
|
|
|
$
|
1,457,055
|
|
|
$
|
1,422,739
|
|
Fragrances
|
|
|
|
399,753
|
|
|
|
382,216
|
|
|
|
1,631,478
|
|
|
|
1,530,157
|
|
Consolidated
|
|
|
|
756,082
|
|
|
|
725,169
|
|
|
|
3,088,533
|
|
|
|
2,952,896
|
|
|
|
|
|
|
|
|
|
|
|
Segment Profit
|
|
|
|
|
|
|
|
|
|
Flavors
|
|
|
|
72,641
|
|
|
|
69,507
|
|
|
|
331,257
|
|
|
|
323,562
|
|
Fragrances
|
|
|
|
76,194
|
|
|
|
62,072
|
|
|
|
335,447
|
|
|
|
283,651
|
|
Global Expenses
|
|
|
|
(16,259
|
)
|
|
|
(19,704
|
)
|
|
|
(65,443
|
)
|
|
|
(66,942
|
)
|
Restructuring and other charges, net
|
|
|
|
(386
|
)
|
|
|
(46
|
)
|
|
|
(1,298
|
)
|
|
|
(2,151
|
)
|
Operational improvement initiative costs
|
|
|
|
(1,628
|
)
|
|
|
(4,008
|
)
|
|
|
(7,642
|
)
|
|
|
(8,770
|
)
|
Spanish capital tax charge
|
|
|
|
—
|
|
|
|
(13,011
|
)
|
|
|
—
|
|
|
|
(13,011
|
)
|
Operating profit
|
|
|
|
130,562
|
|
|
|
94,810
|
|
|
|
592,321
|
|
|
|
516,339
|
|
|
|
|
|
|
|
|
|
|
|
Interest Expense
|
|
|
|
(12,019
|
)
|
|
|
(11,129
|
)
|
|
|
(46,067
|
)
|
|
|
(46,767
|
)
|
Other (expense) income, net
|
|
|
|
(954
|
)
|
|
|
(723
|
)
|
|
|
2,807
|
|
|
|
15,638
|
|
Income before taxes
|
|
|
$
|
117,589
|
|
|
$
|
82,958
|
|
|
$
|
549,061
|
|
|
$
|
485,210
|
|
|
|
|
|
|
|
|
|
|
|
Operating Margin
|
|
|
|
|
|
|
|
|
|
Flavors
|
|
|
|
20.4
|
%
|
|
|
20.3
|
%
|
|
|
22.7
|
%
|
|
|
22.7
|
%
|
Fragrances
|
|
|
|
19.1
|
%
|
|
|
16.2
|
%
|
|
|
20.6
|
%
|
|
|
18.5
|
%
|
Consolidated
|
|
|
|
17.3
|
%
|
|
|
13.1
|
%
|
|
|
19.2
|
%
|
|
|
17.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International Flavors & Fragrances Inc.
Sales Performance by Region and Category
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fourth Quarter 2014 vs. 2013
|
|
|
|
|
|
|
Percentage Change in Sales by Region of Destination
|
|
|
|
|
|
|
|
|
Consumer
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
Fine
|
|
Fragrances(*)
|
|
Ingredients
|
|
Frag.
|
|
Flavors
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North America
|
Reported
|
|
|
|
2%
|
|
14%
|
|
-4%
|
|
6%
|
|
7%
|
|
7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EAME
|
Reported
|
|
|
|
-8%
|
|
2%
|
|
24%
|
|
3%
|
|
2%
|
|
2%
|
|
Local Currency
|
|
|
|
-4%
|
|
7%
|
|
28%
|
|
8%
|
|
7%
|
|
7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Latin America
|
Reported
|
|
|
|
-2%
|
|
9%
|
|
-9%
|
|
5%
|
|
10%
|
|
6%
|
|
Local Currency
|
|
|
|
-1%
|
|
10%
|
|
-8%
|
|
6%
|
|
13%
|
|
8%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Greater Asia
|
Reported
|
|
|
|
15%
|
|
4%
|
|
16%
|
|
6%
|
|
2%
|
|
3%
|
|
Local Currency
|
|
|
|
16%
|
|
4%
|
|
20%
|
|
7%
|
|
3%
|
|
5%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
Reported
|
|
|
|
-4%
|
|
6%
|
|
10%
|
|
5%
|
|
4%
|
|
4%
|
|
Local Currency
|
|
|
|
-1%
|
|
8%
|
|
13%
|
|
7%
|
|
6%
|
|
7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Full Year 2014 vs. 2013
|
|
|
|
|
|
|
Percentage Change in Sales by Region of Destination
|
|
|
|
|
|
|
|
|
Consumer
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
Fine
|
|
Fragrances(*)
|
|
Ingredients
|
|
Frag.
|
|
Flavors
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North America
|
Reported
|
|
|
|
1%
|
|
8%
|
|
-1%
|
|
4%
|
|
-1%
|
|
1%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EAME
|
Reported
|
|
|
|
4%
|
|
4%
|
|
33%
|
|
9%
|
|
5%
|
|
7%
|
|
Local Currency
|
|
|
|
2%
|
|
3%
|
|
32%
|
|
8%
|
|
4%
|
|
6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Latin America
|
Reported
|
|
|
|
-2%
|
|
3%
|
|
3%
|
|
2%
|
|
12%
|
|
5%
|
|
Local Currency
|
|
|
|
1%
|
|
4%
|
|
3%
|
|
3%
|
|
16%
|
|
7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Greater Asia
|
Reported
|
|
|
|
8%
|
|
7%
|
|
31%
|
|
10%
|
|
0%
|
|
4%
|
|
Local Currency
|
|
|
|
9%
|
|
8%
|
|
33%
|
|
11%
|
|
3%
|
|
6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
Reported
|
|
|
|
2%
|
|
5%
|
|
18%
|
|
7%
|
|
2%
|
|
5%
|
|
Local Currency
|
|
|
|
2%
|
|
5%
|
|
18%
|
|
7%
|
|
4%
|
|
5%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(*) Former Beauty Care and Functional Fragrances
|
Note: Local currency sales growth is calculated by translating
prior year sales at the exchange rates used for the corresponding 2014
period.
|
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 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.
|
|
Fourth quarter 2014
|
|
|
Items Impacting Comparability
|
|
|
Reported (GAAP)
|
|
|
Restructuring and Other Charges
|
|
|
Operational Improvement Initiative Costs
|
|
|
Spanish Tax
|
|
|
Gain on Sale of Asset
|
|
|
Adjusted (Non-GAAP)
|
Net Sales
|
|
|
756,082
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of Goods Sold
|
|
|
428,102
|
|
|
|
|
|
|
(1,628
|
)
|
(b)
|
|
|
|
|
|
|
|
|
Gross Profit
|
|
|
327,980
|
|
|
|
|
|
|
1,628
|
|
|
|
|
|
|
|
|
|
|
329,608
|
Research and Development
|
|
|
62,005
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling and Administrative
|
|
|
135,027
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RSA Expense
|
|
|
197,032
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring and other charges, net
|
|
|
386
|
|
|
|
(386
|
)
|
(a)
|
|
|
|
|
|
|
|
|
|
|
|
Operating Profit
|
|
|
130,562
|
|
|
|
386
|
|
|
|
|
1,628
|
|
|
|
|
|
|
|
|
|
|
132,576
|
Interest Expense
|
|
|
12,019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other (Income) expense, net
|
|
|
954
|
|
|
|
|
|
|
|
|
|
|
|
|
(723
|
)
|
(d)
|
|
|
Income before taxes
|
|
|
117,589
|
|
|
|
386
|
|
|
|
|
1,628
|
|
|
|
|
|
|
|
(723
|
)
|
|
|
|
118,880
|
Taxes on Income
|
|
|
27,454
|
|
|
|
135
|
|
|
|
|
410
|
|
|
|
|
3,825
|
|
(c)
|
|
|
(253
|
)
|
|
|
|
31,571
|
Net Income
|
|
|
90,135
|
|
|
|
251
|
|
|
|
|
1,218
|
|
|
|
|
(3,825
|
)
|
|
|
|
(470
|
)
|
|
|
|
87,309
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share - diluted
|
|
$
|
1.10
|
|
|
$
|
—
|
|
(e)
|
|
$
|
0.01
|
|
(e)
|
|
$
|
(0.05
|
)
|
(e)
|
|
$
|
—
|
|
(e)
|
|
$
|
1.07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Costs related to the Fragrance Ingredients Rationalization
|
(b) Related to a plant closing, partial closings and other
organizational realignments, principally in Europe and Asia
|
(c) Related to favorable ruling on 2001 dividend withholding case
|
(d) Represents gain on the sale of a non-operating asset
|
(e) The sum of these items do not foot due to rounding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fourth quarter 2013
|
|
|
Items Impacting Comparability
|
|
|
Reported (GAAP)
|
|
|
Restructuring and Other Charges
|
|
|
Operational Improvement Initiative Costs
|
|
|
Spanish Tax Charges
|
|
|
Loss on Asset Sale
|
|
|
Adjusted (Non-GAAP)
|
Net Sales
|
|
|
725,169
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of Goods Sold
|
|
|
411,714
|
|
|
|
(2,250
|
)
|
(a)
|
|
|
(1,759
|
)
|
(b)
|
|
|
|
|
|
|
|
|
Gross Profit
|
|
|
313,455
|
|
|
|
2,250
|
|
|
|
|
1,759
|
|
|
|
|
|
|
|
|
|
|
317,464
|
Research and Development
|
|
|
70,409
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling and Administrative
|
|
|
148,190
|
|
|
|
|
|
|
(152
|
)
|
(b)
|
|
|
(13,011
|
)
|
(c)
|
|
|
|
|
|
135,027
|
RSA Expense
|
|
|
218,599
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring and other charges, net
|
|
|
46
|
|
|
|
(46
|
)
|
(a)
|
|
|
|
|
|
|
|
|
|
|
|
Operating Profit
|
|
|
94,810
|
|
|
|
2,296
|
|
|
|
|
1,911
|
|
|
|
|
13,011
|
|
|
|
|
|
|
|
112,028
|
Interest Expense
|
|
|
11,129
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other (Income) expense, net
|
|
|
723
|
|
|
|
|
|
|
|
|
|
|
|
|
1,938
|
|
(d)
|
|
|
Income before taxes
|
|
|
82,958
|
|
|
|
2,296
|
|
|
|
|
1,911
|
|
|
|
|
13,011
|
|
|
|
|
1,938
|
|
|
|
|
102,114
|
Taxes on Income
|
|
|
21,479
|
|
|
|
804
|
|
|
|
|
478
|
|
|
|
|
3,903
|
|
|
|
|
—
|
|
|
|
|
26,664
|
Net Income
|
|
|
61,479
|
|
|
|
1,492
|
|
|
|
|
1,433
|
|
|
|
|
9,108
|
|
|
|
|
1,938
|
|
|
|
|
75,450
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share - diluted
|
|
$
|
0.75
|
|
|
$
|
0.02
|
|
|
|
$
|
0.02
|
|
|
|
$
|
0.11
|
|
|
|
$
|
0.02
|
|
|
|
$
|
0.92
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Costs related to the Fragrance Ingredients Rationalization
|
(b) Related to plant closing in Europe and partial closing in Asia
|
(c) Spanish capital tax charge
|
(d) Represents a loss on sale of a non-operating asset
|
|
|
|
|
|
|
|
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 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.
|
|
Full year 2014
|
|
|
Items Impacting Comparability
|
|
|
Reported (GAAP)
|
|
|
Restructuring and Other Charges
|
|
|
Operational Improvement Initiative Costs
|
|
|
Spanish Tax
|
|
|
Gain on Asset Sale
|
|
|
Adjusted (Non-GAAP)
|
Net Sales
|
|
|
3,088,533
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of Goods Sold
|
|
|
1,726,383
|
|
|
|
|
(5,100
|
)
|
(a)
|
|
|
(2,541
|
)
|
(b)
|
|
|
|
|
|
|
|
|
Gross Profit
|
|
|
1,362,150
|
|
|
|
|
5,100
|
|
|
|
|
2,541
|
|
|
|
|
|
|
|
|
|
|
1,369,791
|
|
Research and Development
|
|
|
253,640
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling and Administrative
|
|
|
514,891
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RSA Expense
|
|
|
768,531
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring and other charges, net
|
|
|
1,298
|
|
|
|
|
(1,298
|
)
|
(a)
|
|
|
|
|
|
|
|
|
|
|
|
Operating Profit
|
|
|
592,321
|
|
|
|
|
6,398
|
|
|
|
|
2,541
|
|
|
|
|
|
|
|
|
|
|
601,260
|
|
Interest Expense
|
|
|
46,067
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other (Income) expense, net
|
|
|
(2,807
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
(723
|
)
|
(d)
|
|
|
(2,084
|
)
|
Income before taxes
|
|
|
549,061
|
|
|
|
|
6,398
|
|
|
|
|
2,541
|
|
|
|
|
|
|
|
(723
|
)
|
|
|
|
557,277
|
|
Taxes on Income
|
|
|
134,518
|
|
|
|
|
2,240
|
|
|
|
|
636
|
|
|
|
|
3,825
|
|
(c)
|
|
|
(253
|
)
|
|
|
|
140,966
|
|
Net Income
|
|
|
414,543
|
|
|
|
|
4,158
|
|
|
|
|
1,905
|
|
|
|
|
(3,825
|
)
|
|
|
|
(470
|
)
|
|
|
|
416,311
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share - diluted
|
|
$
|
5.06
|
|
|
|
$
|
0.05
|
|
|
|
$
|
0.02
|
|
|
|
$
|
(0.05
|
)
|
|
|
$
|
—
|
|
|
|
$
|
5.08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Costs related to the Fragrance Ingredients Rationalization
|
(b) Related to a plant closing, partial closings and other
organizational realignment, principally in Europe and Asia
|
(c) Related to favorable ruling on 2001 dividend withholding case
|
(d) Represents gain on the sale of a non-operating asset
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Full year 2013
|
|
|
Items Impacting Comparability
|
|
|
Reported (GAAP)
|
|
|
Restructuring and Other Charges
|
|
|
Operational Improvement Initiative Costs
|
|
|
Spanish Tax Charges
|
|
|
Gain on Asset Sale
|
|
|
Adjusted (Non-GAAP)
|
Net Sales
|
|
|
2,952,896
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of Goods Sold
|
|
|
1,668,691
|
|
|
|
|
(5,250
|
)
|
(a)
|
|
|
(3,520
|
)
|
(b)
|
|
|
|
|
|
|
|
|
Gross Profit
|
|
|
1,284,205
|
|
|
|
|
5,250
|
|
|
|
|
3,520
|
|
|
|
|
|
|
|
|
|
|
1,292,975
|
|
Research and Development
|
|
|
259,838
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling and Administrative
|
|
|
505,877
|
|
|
|
|
|
|
|
(152
|
)
|
(b)
|
|
|
(13,011
|
)
|
(c)
|
|
|
|
|
|
492,714
|
|
RSA Expense
|
|
|
765,715
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring and other charges, net
|
|
|
2,151
|
|
|
|
|
(2,151
|
)
|
(a)
|
|
|
|
|
|
|
|
|
|
|
|
Operating Profit
|
|
|
516,339
|
|
|
|
|
7,401
|
|
|
|
|
3,672
|
|
|
|
|
13,011
|
|
|
|
|
|
|
|
540,423
|
|
Interest Expense
|
|
|
46,767
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other (Income) expense, net
|
|
|
(15,638
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
14,155
|
|
(d)
|
|
|
Income before taxes
|
|
|
485,210
|
|
|
|
|
7,401
|
|
|
|
|
3,672
|
|
|
|
|
13,011
|
|
|
|
|
(14,155
|
)
|
|
|
|
495,139
|
|
Taxes on Income
|
|
|
131,666
|
|
|
|
|
2,590
|
|
|
|
|
891
|
|
|
|
|
(2,327
|
)
|
(c)
|
|
|
(5,633
|
)
|
|
|
|
127,187
|
|
Net Income
|
|
|
353,544
|
|
|
|
|
4,811
|
|
|
|
|
2,781
|
|
|
|
|
15,338
|
|
|
|
|
(8,522
|
)
|
|
|
|
367,952
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share - diluted
|
|
$
|
4.29
|
|
(e)
|
|
$
|
0.06
|
|
(e)
|
|
$
|
0.03
|
|
(e)
|
|
$
|
0.19
|
|
(e)
|
|
$
|
(0.1
|
)
|
(e)
|
|
$
|
4.46
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Costs related to the Fragrance Ingredients Rationalization
|
(b) Related to plant closings in Europe and several locations in
Asia
|
(c) Spanish capital tax charge and Spanish tax charge related to
the 2002-2003 ruling
|
(d) Represents a net gain on the sale of non-operating assets
|
(e) The sum of these items do not foot due to rounding
|
CONTACT:
International Flavors & Fragrances Inc.
Michael
DeVeau, 212-708-7164
VP, Global Corporate Communications & Investor
Relations
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