EX-99.1 2 file2.htm PRESS RELEASE





FOR IMMEDIATE RELEASE


IFF REPORTS FOURTH QUARTER AND FULL YEAR 2006 RESULTS


Strong Sales Performance Drives Reported 4th Quarter EPS of $.49


2006 EPS Increase 20% as Sales Grow 5%



New York, N.Y., January 30, 2007 … International Flavors & Fragrances Inc. (NYSE: IFF) today reports results for the fourth quarter and full year 2006; results are summarized in the table below (dollars in millions except per share data):


 


Q4 2006

Growth Q4
2006 vs. 2005


2006

Growth

2006 vs. 2005

Sales

$514

+   11%

$2,095

+   5%

Net Income

$  44

+ 192%

$   223

+ 15%

Earnings per share

$ .49

+ 206%

$  2.44

+ 20%


“The strong fourth quarter performance tops off a very good 2006 for IFF,” said Robert M. Amen, IFF Chairman and Chief Executive Officer. “It is very encouraging to see the fourth quarter growth in both flavors and fragrances, all driven by the excellent contribution of the people of IFF.   Our strategy is working and we have good momentum going into 2007.”


Earnings per share were $.49 in the 2006 fourth quarter, versus $.16 in the prior year quarter, an increase of 206%. The 2006 results include restructuring charges of $.02 and a non-recurring gain on disposition of land, included in Other income, of $.06.  The 2005 fourth quarter results included a restructuring charge of $.17 per share.  On a comparable basis, excluding the restructuring charges from both periods and the 2006 land sale gain, fourth quarter 2006 earnings per share of $.45 represent a 36% gain over the 2005 quarter.


For the full year 2006, earnings per share were $2.44, compared to $2.04 in 2005, an increase of 20%.  The 2006 results include restructuring charges of $.02 and non-recurring gains on disposition of assets, included in Other income, of $.14; the 2005 results included restructuring charges of $.16 per share, offset by a $.26 benefit relating to the Company's repatriation of funds from overseas affiliates.  On a comparable basis, excluding these non-recurring items from both years, the 2006 per share results of $2.32 represent a 20% improvement over the full year 2005 of $1.94.


Fourth quarter 2006 sales totaled $514 million, up 11% from the prior year quarter; fragrance and flavor sales increased 13% and 7%, respectively.  Sales for the 2006 quarter benefited from the generally weaker U.S. dollar; at comparable exchange rates, sales would have increased 7% in comparison to the 2005 quarter.




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Fragrance sales were led by an 18% increase in fine fragrance sales driven by both new product introductions and continued success of existing creations.  Sales of functional fragrances and fragrance ingredients increased 9% and 11%, respectively, with the increases coming from both increased volume and new product introductions.  


Flavor sales increased 7%, based on a combination of new wins and volume growth. Flavor compound sales increased in each region in both local currency and dollars.


Fourth Quarter 2006

Sales performance by region and product category compared to the prior year quarter follows:

 

 

Fourth Quarter 2006 vs. 2005

 

 

% Change in Sales by Region of Destination

 

 

Fine

Func'l.

Ingr.

Total Frag.

Flavors

Total

North America

Reported

23%

12%

5%

14%

2%

8%

Europe

Reported

20%

16%

17%

18%

10%

15%

 

Local Currency

13%

9%

10%

11%

4%

8%

Latin America

Reported

25%

1%

7%

8%

6%

7%

Asia Pacific

Reported

-11%

11%

6%

4%

9%

7%

 

Local Currency

-15%

8%

6%

1%

8%

5%

India

Reported

-5%

-11%

38%

-4%

10%

4%

 

Local Currency

-5%

-13%

35%

-5%

10%

3%

Total

Reported

18%

9%

11%

13%

7%

11%

 

Local Currency

14%

7%

8%

9%

5%

7%


Net income for the 2006 fourth quarter, including $1 million in after tax restructuring charges, totaled $44 million, a 192% increase compared with the prior year quarter.  The 2005 fourth quarter result of $15 million included restructuring charges of $16 million after tax.


•

Gross profit, as a percentage of sales, improved one half percentage point compared to the prior year quarter, mainly due to higher sales.  

•

Research and Development expenses totaled 9% of sales compared to 10% in the prior year quarter.

•

Selling, General and Administrative expenses, as a percentage of sales, were 17.6% in the current quarter compared to 18.6% in 2005.  The 2005 quarter included approximately $3 million of expense relating to a product contamination issue.

•

Other income (expense), net in the 2006 fourth quarter increased $4 million over the prior year quarter, mainly due to the gain on sale of land, partially offset by higher exchange losses.

•

The effective tax rate was 28.8% compared to 29.4% in the prior year quarter.  



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Full Year 2006

Sales performance by region and product category compared to the prior year follows:


 

 

Full Year 2006 vs. 2005

 

 

% Change in Sales by Region of Destination

 

 

Fine

Func'l.

Ingr.

Total Frag.

Flavors

Total

North America

Reported

20%

2%

10%

10%

3%

7%

Europe

Reported

7%

5%

-4%

4%

1%

3%

 

Local Currency

8%

5%

-3%

4%

1%

3%

Latin America

Reported

25%

2%

6%

8%

11%

9%

Asia Pacific

Reported

9%

3%

2%

4%

4%

4%

 

Local Currency

8%

2%

4%

4%

5%

4%

India

Reported

2%

-4%

29%

3%

10%

7%

 

Local Currency

2%

-4%

31%

3%

10%

7%

Total

Reported

13%

3%

3%

6%

4%

5%

 

Local Currency

13%

3%

3%

6%

4%

5%


Net income for 2006, including $2 million in after tax restructuring charges, totaled $223 million, a 15% increase compared with the prior year.  Full year 2005 results of $193 million included restructuring charges totaling $16 million after tax, as well as a tax benefit of $25 million relating to repatriation of funds from overseas affiliates.  


▪

Gross profit, as a percentage of sales, improved one percentage point compared to the prior year, mainly from higher sales, improved manufacturing expense absorption and favorable product mix.  

▪

Research and Development expenses totaled 8.9% of sales compared to 9.0% in the prior year.

▪

Selling, General and Administrative expenses, as a percentage of sales, were 16.8% compared to 17.0% in 2005. The 2005 figures included approximately $8 million of expense relating to a product contamination issue; 2006 results include the benefit of a $3 million insurance recovery related to this matter.

▪

Other income (expense), net in 2006 increased $7 million over the prior year, mainly due to gains on sale of assets, partially offset by higher exchange losses.

▪

The effective tax rate was 28.8% compared to a rate of 21.6% in the prior year.  The 2005 rate reflected the one-time $25 million tax benefit; excluding this benefit, the 2005 effective rate would have been 31.6%.


About IFF

IFF is a leading creator and manufacturer of flavors and fragrances used in a wide variety of consumer products—from fine fragrances and toiletries, to soaps, detergents and other household products, to beverages and food products.  IFF is dedicated to The Pursuit of Excellence in every area of its business, using knowledge, creativity, innovation and technology to continually provide customers with the highest quality products and service and



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superior consumer understanding.  IFF has sales, manufacturing and creative facilities in 30 countries worldwide. For more information, please visit our Web site at www.iff.com.

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 reasonable current assumptions and expectations. Certain of such forward-looking information may be identified by such terms as “expect”, “believe”, “may”, "outlook", "guidance" and similar terms or variations thereof.  All information concerning future revenues, tax rates or benefits, interest 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 future 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 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; uncertainties related to any potential claims and rights of indemnification or other recovery for customer and consumer reaction to its earlier contamination issue; 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 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.


Webcast and Conference call

In conjunction with the release, the Company will host a real-time webcast and teleconference to discuss its 2006 fourth quarter results. The teleconference and the webcast are scheduled for 9:00 a.m. Eastern Time on Tuesday, January 30, 2007.


You may use the following dial-in numbers to access the teleconference (please dial in 5 to 10 minutes prior to the scheduled start time):


United States:    

1-800-361-0912

International:    

1-913-981-5559

Reservation Number:

3837469


You may access the webcast, together with the supplemental financial information presented as slides at the webcast and discussed in the teleconference, via the Company’s internet website located at http://www.iff.com by clicking on “Investor Relations” and selecting the current link under “Webcasts”.




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Playback Information

An archive of the webcast and a replay of the teleconference will be available following completion of the webcast and teleconference.  The replay will be available beginning at 1:00 p.m. Eastern Time on Tuesday, January 30th and ending at Midnight on Monday, February 12, 2007.  The archive of the webcast can be accessed through the Company’s website as described above.  The dial-in numbers and reservation number for the replay are:


United States:

888-203-1112

International:  

719-457-0820

Reservation Number:

3837469


Contact

Douglas J. Wetmore

Senior Vice President and

Chief Financial Officer

Phone: 212-708-7145


********************



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International Flavors & Fragrances Inc.

Consolidated Income Statement

(Amounts in thousands except per share data)

(Unaudited)


 

Quarter Ended

Year Ended

 

December 31,

December 31,

 

2005

2006

% Change

2005

2006

% Change

Net Sales

 

$461,645

$514,318

11%

$1,993,393

$2,095,390

5%

Cost of goods sold

      274,818

303,403

10%

1,168,992

1,211,259

4%

Gross margin on sales

186,827

210,915

13%

824,401

884,131

7%

Research & development

46,028

48,031

4%

179,812

185,692

3%

Selling and administrative

85,691

90,559

6%

339,323

351,923

4%

Amortization

3,768

3,709

 

15,071

14,843

 

Restructuring and other charges

23,319

2,007

 

23,319

2,680

 

Interest expense

5,752

7,401

29%

23,956

25,549

7%

Other (income) expense, net

700

(3,208)

 

(3,268)

(9,838)

 

Pretax income

21,569

62,416

189%

246,188

313,282

27%

Income taxes

6,331

17,945

 

53,122

90,293

 

Net income

$15,238

$44,471

192%

$193,066

$222,989

15%

Earnings per share - basic

$0.16

$0.50

213%

$2.06

$2.47

20%

Earnings per share - diluted

$0.16

$0.49

206%

$2.04

$2.44

20%

Average shares outstanding

(in thousands):

 

 

 

 

 

 

 

 

 

 

Basic

92,757

89,416

4%

93,584

90,443

3%

Diluted

93,404

90,602

3%

94,826

91,369

4%






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International Flavors & Fragrances Inc.

Consolidated Condensed Balance Sheet

(Amounts in thousands)

                       (Unaudited)


 

December 31,

2005

December 31,

2006

Cash & cash equivalents

$

272,545

$

114,508

Short term investments

                  352

                  604

Receivables

368,519

           405,302

Inventories

430,794

446,606

Other current assets

119,064

112,783

   Total current assets

 1,191,274

 1,079,803

Property, plant and equipment, net

499,145

495,124

Goodwill and other intangibles, net

772,651

745,716

Other assets

175,126

158,261

   Total assets

 $

2,638,196

$

2,478,904

Bank borrowings, overdrafts and current portion of long-term debt

$

819,392

$

15,897

Other current liabilities

383,304

434,752

   Total current liabilities

 1,202,696

450,649

Long-term debt

131,281

791,443

Non-current liabilities

388,872

335,522

Shareholders' equity

915,347

901,290

   Total liabilities and shareholders' equity

$

2,638,196

$

2,478,904












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International Flavors & Fragrances Inc.

Consolidated Statement of Cash Flows

(Amounts in thousands)

(Unaudited)


 

Year Ended

December 31,

 

2005

2006

Cash flows from operating activities:

 

 

Net income

$193,066

$222,989

Adjustments to reconcile to net cash provided by operations:

 

 

   Depreciation and amortization

             91,928

             89,733

   Deferred income taxes

            (32,882)

            (12,423)

   Gain on disposal of assets

             (2,108)

            (22,836)

   Changes in assets and liabilities

 

   

      Current receivables

             (1,897)

            (27,153)

      Inventories

                (117)

               9,492

      Current payables

             (6,369)

             40,279

      Other, net

            (64,461)

            (38,298)

Net cash provided by operations

           177,160

           261,783

Cash flows from investing activities:

 

 

   Net change in short-term investments

                   35

                (240)

   Additions to property, plant and equipment

            (93,433)

            (58,282)

   Proceeds from disposal of assets

               2,787

             27,235

Net cash used in investing activities

            (90,611)

            (31,287)

Cash flows from financing activities:

 

 

   Cash dividends paid to shareholders

            (67,779)

            (67,381)

   Net change in bank loans

           312,094

            (47,596)

   Proceeds from long-term debt

                   -   

           375,000

   Repayments of long-term debt

            (11,653)

          (499,300)

Proceeds from issuance of stock under stock option and employee stock purchase plans

             23,015

           110,867

   Excess tax benefits on stock options exercised

                   -   

               4,653

   Purchase of treasury stock

            (98,319)

          (270,998)

Net cash provided by (used in) financing activities

           157,358

          (394,755)

Effect of exchange rates changes on cash and cash equivalents

             (3,958)

               6,222

Net change in cash and cash equivalents

           239,949

          (158,037)

Cash and cash equivalents at beginning of year

             32,596

           272,545

Cash and cash equivalents at end of year

$272,545

$114,508











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