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IFF Reports Second Quarter 2012 Adjusted EPS Growth Of 11% To $1.08 Per Share

International Flavors & Fragrances Inc.

Consolidated Income Statement

(Amounts in thousands except per share data)

(Unaudited)
 
  Three Months Ended   Six Months Ended
June 30,   June 30,  
       
  2012     2011

%Change
  2012     2011

%Change
 
Net sales $ 721,317 $ 715,589 1 $ 1,431,933 $ 1,429,860 0
Cost of goods sold   419,774     431,166 (3 )   844,991     847,977 (0 )
Gross margin 301,543 284,423 6 586,942 581,883 1
Research and development 56,400 56,229 0 113,809 113,685 0
Selling and administrative 112,835 106,224 6 218,249 212,843 3
Restructuring and other charges - 3,985 1,668 4,013
Interest expense 10,613 12,009 21,423 23,689
Other (income) expense, net   (845 )   1,055   (1,088 )   7,111
Pretax income 122,540 104,921 17 232,881 220,542 6
Income taxes   33,944     28,733 18   63,230     60,311 5
Net income $ 88,596   $ 76,188 16 $ 169,651   $ 160,231 6
 
 
 
Earnings per share - basic $ 1.09 $ 0.94 $ 2.08 $ 1.98
Earnings per share - diluted $ 1.08 $ 0.93 $ 2.06 $ 1.96
 
Average shares outstanding
Basic 81,095 80,451 80,938 80,250
Diluted 81,782 81,489 81,727 81,320

International Flavors & Fragrances Inc.

Condensed Consolidated Balance Sheet

(Amounts in thousands)

(Unaudited)
 
  June 30,   December 31,
2012 2011
Cash & cash equivalents $ 104,637 $ 88,279
Receivables 516,598 472,346
Inventories 539,267 544,439
Other current assets   203,751   212,156
Total current assets 1,364,253 1,317,220
 
Property, plant and equipment, net 604,022 608,065
Goodwill and other intangibles, net 705,307 708,345
Other assets   351,725   331,951
Total assets $ 3,025,307 $ 2,965,581
 
Bank borrowings and overdrafts, and
current portion of long-term debt $ 87,478 $ 116,688
Other current liabilities   419,945   447,878
Total current liabilities 507,423 564,566
 
Long-term debt 777,404 778,248
Non-current liabilities 513,969 515,360
 
Shareholders' equity   1,226,511   1,107,407
Total liabilities and shareholders' equity $ 3,025,307 $ 2,965,581

International Flavors & Fragrances Inc.

Consolidated Statement of Cash Flows

(Amounts in thousands)

(Unaudited)
 
  Six Months Ended
June 30,
2012   2011
Cash flows from operating activities:
 
Net income $ 169,651 $ 160,231
Adjustments to reconcile to net cash provided by operations:
Depreciation and amortization 37,094 37,356
Deferred income taxes (13,786 ) 27,215
Gain on disposal of assets (1,525 ) (1,580 )
Stock-based compensation 11,272 13,089
Pension settlement/curtailment 874 3,583
Changes in assets and liabilities
Current receivables (58,035 ) (73,172 )
Inventories (5,643 ) (14,098 )
Accounts payable (36,253 ) (39,728 )
Accruals for incentive compensation 2,019 (51,057 )
Other current payables and accrued expenses 41,562 (46,760 )
Changes in other assets/liabilities   (11,864 )   (12,934 )
Net cash provided by operating activities   135,366     2,145  
 
Cash flows from investing activities:
 
Additions to property, plant and equipment (53,833 ) (45,699 )
Purchase of insurance contracts (1,035 ) (1,371 )
Maturities of net investment hedge 1,960 976
Proceeds from disposal of assets   124     399  
Net cash used in investing activities   (52,784 )   (45,695 )
 
Cash flows from financing activities:
Cash dividends paid to shareholders (50,206 ) (43,349 )
Net change in revolving credit facility borrowings and overdrafts (26,034 ) 59,083
Proceeds from issuance of stock under stock plans 5,400 13,155
Excess tax benefits on stock-based payments   6,513     5,075  
Net cash (used in) provided by financing activities   (64,327 )   33,964  
Effect of exchange rates changes on cash and cash equivalents (1,897 ) 1,685
Net change in cash and cash equivalents 16,358 (7,901 )
Cash and cash equivalents at beginning of year   88,279     131,332  
Cash and cash equivalents at end of period $ 104,637   $ 123,431  

International Flavors & Fragrances Inc.

Business Unit Performance

(Amounts in thousands)

(Unaudited)
 
  Three Months Ended   Six Months Ended
June 30, June 30,
2012   2011 2012   2011
Net Sales
Flavors $ 361,371 $ 345,407 $ 711,258 $ 683,994
Fragrances   359,946     370,182     720,675     745,866  
Consolidated 721,317 715,589 1,431,933 1,429,860
 
Segment Profit
Flavors 80,633 71,003 160,313 149,957
Fragrances 63,635 62,260 119,716 130,964
Global Expenses (11,960 ) (11,293 ) (25,145 ) (25,566 )
Restructuring and other charges, net   -     (3,985 )   (1,668 )   (4,013 )
Operating profit 132,308 117,985 253,216 251,342
 
Interest Expense (10,613 ) (12,009 ) (21,423 ) (23,689 )
Other income (expense), net   845     (1,055 )   1,088     (7,111 )
Income before taxes $ 122,540   $ 104,921   $ 232,881   $ 220,542  
 
 
Operating Margin
Flavors 22.3 % 20.6 % 22.5 % 21.9 %
Fragrances 17.7 % 16.8 % 16.6 % 17.6 %
Consolidated 18.3 % 16.5 % 17.7 % 17.6 %

International Flavors & Fragrances Inc.

Sales Performance by Region and Category

(Unaudited)
 
      % Change in Sales- Second Quarter 2012 vs. Second Quarter 2011

Fine & Beauty Care
  Functional   Ingredients   Total Frag.   Flavors   Total
         
North America Reported -6% 1% -13% -5% 8% 2%
 
EAME Reported -12% 1% -29% -11% -1% -7%
Local Currency -4% 8% -24% -5% 7% 0%
 
Latin America Reported 27% 11% -14% 15% 3% 10%
Local Currency 29% 11% -13% 16% 6% 12%
 
Greater Asia Reported 9% 5% -20% 2% 7% 5%
Local Currency 11% 6% -19% 3% 9% 7%
 
Total Reported 0% 4% -21% -3% 5% 1%
Local Currency 4%   7%   -19%   0%   8%   4%

      % Change in Sales- Six Months 2012 vs. Six Months 2011

Fine & Beauty Care
  Functional   Ingredients   Total Frag.   Flavors   Total
         
North America Reported -2% 1% -6% -2% 5% 2%
 
EAME Reported -11% 2% -23% -9% -1% -6%
Local Currency -6% 7% -20% -5% 5% -1%
 
Latin America Reported 15% 8% -12% 9% 3% 7%
Local Currency 16% 8% -12% 9% 5% 8%
 
Greater Asia Reported 2% -2% -22% -4% 7% 3%
Local Currency 3% -2% -23% -4% 9% 4%
 
Total Reported -2% 2% -17% -3% 4% 0%
Local Currency 1%   4%   -15%   -1%   6%   2%

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