-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LRUjJZIekobFH+X5sOfBimSO+ISY7MiA08fHEhtKPCE3od+hcQDUEnJimJYD6alx Qs2O1S/4A4ktyJDeUYOI5g== 0000950172-01-500089.txt : 20010430 0000950172-01-500089.hdr.sgml : 20010430 ACCESSION NUMBER: 0000950172-01-500089 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20010427 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 20010427 FILER: COMPANY DATA: COMPANY CONFORMED NAME: INTERNATIONAL FLAVORS & FRAGRANCES INC CENTRAL INDEX KEY: 0000051253 STANDARD INDUSTRIAL CLASSIFICATION: INDUSTRIAL ORGANIC CHEMICALS [2860] IRS NUMBER: 131432060 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-04858 FILM NUMBER: 1612396 BUSINESS ADDRESS: STREET 1: 521 W 57TH ST CITY: NEW YORK STATE: NY ZIP: 10019 BUSINESS PHONE: 2127655500 MAIL ADDRESS: STREET 2: 521 W 57TH ST CITY: NEW YORK STATE: NY ZIP: 10019 FORMER COMPANY: FORMER CONFORMED NAME: VANAMERIGEN HAEBLER INC DATE OF NAME CHANGE: 19680426 8-K 1 s498049.txt 8-K SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 April 27, 2001 Date of Report (Date of earliest event reported) INTERNATIONAL FLAVORS & FRAGRANCES INC. (Exact name of registrant as specified in its charter) New York (State or other jurisdiction of incorporation) 1-4858 13-1432060 (Commission File Number) (IRS Employer Identification No.) 521 West 57th Street, New York, New York 10019 ---------------------------------------- ------- (Address of principal executive offices) (Zip Code) (212) 765-5500 ----------------------------------------------------- (Registrant's telephone number, including area code) ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS. (c) Exhibits:
Exhibit No. Description ----------- ----------- 99.1 Unaudited historical geographic information with respect to the years 2000 and 1999, reclassified to reflect the separation of EAME into the regions of Europe and CAME (as defined below). 99.2 Unaudited quarterly historical geographic information with respect to the year 2000, reclassified to reflect the separation of EAME into the regions of Europe and CAME. 99.3 Unaudited proforma quarterly geographic information with respect to the year 2000, reclassified to reflect the separation of EAME into the regions of Europe and CAME giving effect to the BBA acquisition as if it had occurred at January 1, 2000. 99.4 Unaudited quarterly proforma consolidated statements of income for the year 2000. 99.5 Unaudited proforma consolidated statement of income for the year 2000.
ITEM 9. REGULATION FD DISCLOSURE As previosly announced, effective January 1, 2001 Internationl Flavors & Fragrances Inc. (the "Company") was reorganized into five geographic regions with an individual manager responsible for each region. The five regions include North America, Europe, the newly-constituted Central Asia, Middle East ("CAME"), Latin America and Asia-Pacific; previously Europe and CAME had been combined as one geographic region - Europe Africa and the Middle East ("EAME"). North and Latin America and Asia Pacific were unaffected by the geographic reorganization. Also, as previously announced, the Company acquired Bush Boake Allen ("BBA"), effective November 3, 2000, and BBA operating results are included in the Company's consolidated results from that date. In anticipation of earnings announcements for 2001, the following information is being furnished as a result of or otherwise in connection with the acquisition of BBA and the reorganization of the geographic regions under which the Company operates: 1. Unaudited historical geographic information with respect to the years 2000 and 1999, reclassified to reflect the separation of EAME into the regions of Europe and CAME. 2. Unaudited quarterly historical geographic information with respect to the year 2000, reclassified to reflect the separation of EAME into the regions of Europe and CAME. 3. Unaudited proforma quarterly geographic information with respect to the year 2000, reclassified to reflect the separation of EAME into the regions of Europe and CAME giving effect to the BBA acquisition as if it had occurred at January 1, 2000. 4. Unaudited proforma consolidated statement of income for the year 2000. 5. Unaudited quarterly proforma consolidated statements of income for the year 2000. 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. By: /s/ Stephen A. Block _________________________________ Name: Stephen A. Block Title: Senior Vice President, General Counsel and Secretary Dated: April 27, 2001
EXHIBIT INDEX Exhibit No. Description - ----------- ----------- 99.1 Unaudited historical geographic information with respect to the years 2000 and 1999, reclassified to reflect the separation of EAME into the regions of Europe and CAME. 99.2 Unaudited quarterly historical geographic information with respect to the year 2000, reclassified to reflect the separation of EAME into the regions of Europe and CAME. 99.3 Unaudited proforma quarterly geographic information with respect to the year 2000, reclassified to reflect the separation of EAME into the regions of Europe and CAME giving effect to the BBA acquisition as if it had occurred at January 1, 2000. 99.4 Unaudited proforma consolidated statement of income for the year 2000. 99.5 Unaudited quarterly proforma consolidated statements of income for the year 2000.
EX-99 2 segment.txt EXHIBIT 99.1, 99.2 AND 99.3 Exhibit 99.1 International Flavors & Fragrances Inc. Geographical Information Effective January 1, 2001 the Company was reorganized into five major geographical regions with a regional manager responsible for each of the following areas: North America, Europe, Asia-Pacific, Latin America and the newly constituted Central Asia and the Middle East (CAME) region. Previously Europe and CAME were managed as one area; North America, Latin America and Asia-Pacific regions were unaffected by the geographical reorganization. The tables below report IFF's historical geographical information for the years 2000 and 1999 based on the new regional organization:
North Latin Asia- 2000 (Dollars in thousands) America Europe CAME America Pacific Eliminations Consolidated - ---------------------------------------------------------------------------------------------------------------------------- Sales to unaffiliated customers $470,953 $542,729 $22,143 $220,287 $206,683 $ -- $1,462,795 Transfers between areas 55,610 122,948 4 1,936 13,779 (194,277) - -------- -------- ------- -------- -------- ---------- ---------- Total sales $526,563 $665,677 $22,147 $222,223 $220,462 $(194,277) $1,462,795 ======== ======== ======= ======== ======== ========== ========== Operating profit $ 48,503 $158,080 $ 4,330 $ 39,063 $ 39,999 $ 1,762 $ 291,737 ======== ======== ======= ======== ======== ========= Corporate and other unallocated expenses (31,919) Nonrecurring charges (41,273) Interest expense (25,072) Amortization of goodwill and other intangibles ( 7,032) Other income (expense), net ( 2,314) ------- Income before taxes on income $ 184,127 ========== Segment assets $600,007 $570,435 $51,564 $175,161 $ 228,901 $ (31,737) $1,594,331 ======== ======== ======= ======== ========= ========== Unallocated assets 894,702 ----------- Total assets $2,489,033 - ---------------------------------------------------------------------------------------------------------------------------- Unallocated ----------- Capital expenditures $30,586 $14,030 $ 794 $ 4,806 $7,500 $ 2,980 $60,696 Depreciation and amortization 26,691 20,626 763 5,154 5,975 10,135 69,344 - -----------------------------------------------------------------------------------------------------------------------------
North Latin Asia- 1999 (Dollars in thousands) America Europe CAME America Pacific Eliminations Consolidated - ------------------------------------------------------------------------------------------------------------------------ Sales to unaffiliated customers $476,496 $550,342 $24,493 $212,770 $175,398 $ - $1,439,499 Transfers between areas 62,432 124,924 3 756 13,540 (201,655) -- -------- -------- ------- -------- -------- ---------- ---------- Total sales $538,928 $675,266 $24,496 $213,526 $188,938 $(201,655) $1,439,499 ======== ======== ======= ======== ======== ========== ========== Operating profit $ 69,555 $171,831 $ 5,812 $ 41,288 $31,503 $ 1,439 $ 321,428 ======== ======== ======= ======== ======== ========= ========== Corporate and other unallocated expenses (40,152) Nonrecurring charges (32,948) Interest expense (5,154) Other income (expense), net 291 ---------- Income before taxes on income $ 243,465 =========== Segment assets $519,054 $463,675 $23,586 $194,140 $176,222 $ (61,314) $1,315,363 ======== ======== ======= ======== ======== ========== Unallocated assets 86,132 ---------- Total assets $1,401,495 =========== - -------------------------------------------------------------------------------------------------------------------------- Unallocated ----------- Capital expenditures $57,306 $19,607 $1,620 $14,585 $7,595 $ 3,122 $103,835 Depreciation and amortization 16,811 24,890 384 6,322 5,353 2,609 56,369 - ---------------------------------------------------------------------------------------------------------------------------
Exhibit 99.2 International Flavors & Fragrances Inc. 2000 Quarterly Information (Dollars in thousands) The following tables report IFF's quarterly geographical information based on the new regional organizational structure:
North Latin Asia- 1st Quarter 2000 America Europe CAME America Pacific Elimination Consolidated - --------------------------------------------------------------------------------------------------------------------- Sales to unaffiliated customers $114,747 $144,157 $5,910 $55,244 $49,854 $ - $369,912 Transfers between areas 12,377 34,418 2 312 2,981 (50,090) - -------- -------- ------ ------- ------- --------- --------- Total sales $127,124 $178,575 $5,912 $55,556 $52,835 $(50,090) $369,912 ======== ======== ====== ======= ======= ========= ======== Operating profit $16,627 $47,565 $1,335 $10,595 $10,432 $ (1,264) $ 85,290 ======= ======= ====== ======= ======= ======== Corporate and other unallocated expenses (8,616) Nonrecurring charges (9,354) Interest Expense (2,137) Other income (expense), net 329 -------- Income before taxes on income $65,512 ========
North Latin Asia- 2nd Quarter 2000 America Europe CAME America Pacific Elimination Consolidated - ------------------------------------------------------------------------------------------------------------------ Sales to Unaffiliated customers $121,199 $131,968 $5,181 $57,770 $52,641 $ - $368,759 Transfers between areas 15,239 28,182 2 456 3,212 (47,091) - -------- -------- ------ ---- --- -- ----- --------- -------- Total sales $136,438 $160,150 $5,183 $58,226 $55,853 $(47,091) $368,759 ======== ======== ====== ======= ======= ========= ======== Operating profit $ 17,755 $ 42,745 $957 $12,471 $11,890 $1,587 $ 87,405 ======== ======== ==== ======= ======= ====== Corporate and other unallocated expenses (10,907) Nonrecurring charges - Interest Expense (3,074) Other income (expense), net (203) --------- Income before taxes on income $ 73,221 ========
North Latin Asia- 3rd Quarter 2000 America Europe CAME America Pacific Elimination Consolidated - -------------------------------------------------------------------------------------------------------------------- Sales to Unaffiliated customers $112,994 $125,051 $5,762 $47,533 $48,251 $ - $339,591 Transfers between areas 12,904 29,047 - 555 4,153 (46,659) - -------- -------- ------ -------- ------- --------- -------- Total sales $125,898 $154,098 $5,762 $48,088 $52,404 $(46,659) $339,591 ======== ======== ====== ======= ======= ========= ======== Operating profit $11,890 $38,389 $1,033 $ 7,351 $9,039 $ 214 $ 67,916 ======= ======= ====== ======= ====== ===== Corporate and other unallocated expenses (10,671) Nonrecurring charges ( 7,685) Interest Expense (4,195) Other income (expense), net (2,614) -------- Income before taxes on income $42,751 ========
North Latin Asia- 4th Quarter 2000 America Europe CAME America Pacific Elimination Consolidated - ------------------------------------------------------------------------------------------------------------------- Sales to unaffiliated customers $122,013 $141,553 $5,290 $59,740 $55,937 $ - $384,533 Transfers between areas 15,090 31,301 - 613 3,433 (50,437) - -------- -------- ------ ------- -------- --------- --------- Total sales $137,103 $172,854 $5,290 $60,353 $59,370 $(50,437) $384,533 ======== ======== ====== ======= ======= ========= ========= Operating profit $ 2,231 $ 29,381 $1,005 $ 8,646 $ 8,638 $ 1,225 $ 51,126 Corporate and other unallocated expenses (1,725) Nonrecurring charges (24,234) Interest Expense (15,666) Amortization of goodwill and other intangibles (7,032) Other income (expense), net 174 -------- Income before taxes on income $2,643 ========
Exhibit 99.3 International Flavors & Fragrances Inc. 2000 Pro Forma Information (Dollars in thousands) The following pro forma geographical information gives effect to the BBA acquisition as if it had occurred as of the beginning of each of the periods presented:
North Latin Asia- 1st Quarter 2000 (Pro forma) America Europe CAME America Pacific Eliminations Consolidated - --------------------------------------------------------------------------------------------------------------------- Sales to Unaffiliated customers $154,858 $179,637 $21,445 $60,346 $69,532 $ - $485,818 Transfers between areas 18,884 41,552 296 312 2,992 (64,036) - -------- -------- ------- ------- -------- -------- -------- Total sales $173,742 $221,189 $21,741 $60,658 $72,524 $(64,036) $485,818 ======== ======== ======= ======= ======= ========= ======== Operating profit $ 22,983 $ 50,737 $ 4,112 $10.719 $ 13,159 $ (1,203) $100,507 ======== ======== ======= ======= ======== ======== ======== Corporate and other unallocated expenses (12,871) Nonrecurring charges (9,354) Interest Expense (18,923) Amortization of goodwill and other intangibles (10,548) Other income (expense), net (324) -------- Income before taxes on income $48,487 =======
North Latin Asia- 2nd Quarter 2000 (Pro forma) America Europe CAME America Pacific Eliminations Consolidated - -------------------------------------------------------------------------------------------------------------------- Sales to Unaffiliated customers $164,123 $166,981 $21,279 $63,343 $75,163 $ - $490,889 Transfers between areas 21,850 35,222 237 456 3,225 (60,990) - -------- -------- ------- ------- ------- -------- -------- Total sales $185,973 $202,203 $21,516 $63,799 $78,388 $(60,990) $490,889 ======== ======== ======= ======= ======= ========= ======== Operating profit $ 25,688 $44,443 $ 4,368 $12,755 $15,751 $1,648 $104,653 ======== ======= ======= ======= ======= ====== ======== Corporate and other unallocated expenses (15,433) Nonrecurring charges - Interest Expense (19,789) Amortization of goodwill and other intangibles (10,548) Other income (expense), net (817) --------- Income before taxes on income $ 58,066 =========
North Latin Asia- 3rd Quarter 2000 (Pro forma) America Europe CAME America Pacific Eliminations Consolidated - -------------------------------------------------------------------------------------------------------------------- Sales to Unaffiliated customers $156,048 $159,898 $21,248 $53,392 $69,218 $ - $459,804 Transfers between areas 19,085 36,049 233 555 4,164 (60,086) - -------- -------- ------- ------- ------- ---------- -------- Total sales $175,133 $195,947 $21,481 $53,947 $73,382 $(60,086) $459,804 ======== ======== ======= ======= ======= ========= ======== Operating profit $ 19,327 $41,041 $ 4,274 $7,809 $ 12,470 $ 275 $ 85,196 ======== ======= ======= ====== ======== ===== Corporate and other unallocated expenses (13,548) Nonrecurring charges (7,685) Interest Expense (20,878) Amortization of goodwill and other intangibles (10,548) Other income (expense), net (1,234) -------- Income before taxes on income $31,303 =======
North Latin Asia- 4th Quarter 2000 (Pro forma) America Europe CAME America Pacific Eliminations Consolidated - ----------------------------------------------------------------------------------------------------------------------- Sales to Unaffiliated customers $144,541 $150,774 $20,334 $62,483 $65,969 $ - $444,101 Transfers between areas 18,722 34,818 200 613 3,445 (57,798) - -------- -------- ---- --- ------- -------- -------- -------- Total sales $163,263 $185,592 $20,534 $63,096 $69,414 (57,798) $444,101 ======== ======== ======= ======= ======= ======== ======== Operating profit $ 6,425 $ 29,514 $4,019 $8,783 $ 10,620 $ 1,286 $ 60,647 ======= ======== ====== ====== ======== ======= Corporate and other unallocated expenses (2,685) Nonrecurring charges (24,234) Interest Expense (21,568) Amortization of goodwill and other intangibles (10,551) Other income (expense), net 292 --------- Income before taxes on income $1,901 ======
North Latin Asia- Year 2000 (Pro forma) America Europe CAME America Pacific Elimination Consolidated - -------------------------------------------------------------------------------------------------------------------- Sales to Unaffiliated customers $619,570 $657,290 $84,306 $239,564 $279,882 $ - $1,880,612 Transfers between areas 78,541 147,641 966 1,936 13,826 (242,910) - -------- -------- -------- -------- -------- --------- ---------- Total sales $698,111 $804,931 $85,272 $241,500 $293,708 (242,910) $1,880,612 ======== ======== ======= ======== ======== ========= ========== Operating profit $ 74,423 $165,735 $ 16,773 $ 40,066 $ 52,000 $2,006 $ 351,003 ======== ======== ======== ======== ======== ====== ========== Corporate and other unallocated expenses (44,537) Nonrecurring charges (41,273) Interest Expense (81,158) Amortization of goodwill and other intangibles (42,195) Other income (expense), net (2,083) ---------- Income before taxes on income $ 139,757 =========
EX-99 3 sconso.txt EXHIBIT 99.4, 99.5 Exhibit 99.4 Unaudited Pro Forma Consolidated Statements of Income 2000 (Dollars in thousands)
Pro Pro Historical Forma Forma 1st Quarter Ended 3/31/00 IFF (1) BBA (2) Adjustments Combined - ------------------------- -------------- ------------- ------------- ----------- Net sales $ 369,912 $117,341 $ (1,435)(3) $ 485,818 -------------- ------------- -------------- ------------- Cost of goods sold (8) 204,677 74,905 (1,496)(4) 278,086 Research and development expenses 26,812 7,105 33,917 Selling and administrative expenses (8) 61,749 24,430 86,179 Nonrecurring charges 9,354 - 9,354 Interest expense 2,137 536 16,250 (5) 18,923 Amortization - - 10,548 (6) 10,548 Other (income) expense, net (329) 653 324 -------------- ------------- -------------- ------------- 304,400 107,629 25,302 437,331 -------------- ------------- -------------- ------------- Income before taxes on income 65,512 9,712 (26,737) 48,487 Taxes on income 21,736 3,691 (6,664)(7) 18,763 -------------- ------------- -------------- ------------- Net income $ 43,776 $ 6,021 $ (20,073) $ 29,724 ============== ============= ============== =============
Pro Pro Historical Forma Forma 2nd Quarter Ended 6/30/00 IFF (1) BBA (2) Adjustments Combined - ------------------------- -------------- ------------- --------------- --------------- Net sales $ 368,759 $123,565 $ (1,435)(3) $ 490,889 -------------- ------------- -------------- ------------- Cost of goods sold (8) 203,562 79,583 (1,496)(4) 281,649 Research and development expenses 26,945 6,886 33,831 Selling and administrative expenses (8) 61,754 24,435 86,189 Nonrecurring charges - - - Interest expense 3,074 465 16,250 (5) 19,789 Amortization - - 10,548 (6) 10,548 Other (income) expense, net 203 614 817 -------------- ------------- -------------- ------------- 295,538 111,983 25,302 432,823 -------------- ------------- -------------- ------------- Income before taxes on income 73,221 11,582 (26,737) 58,066 Taxes on income 24,305 4,401 (6,664)(7) 22,042 -------------- ------------- -------------- ------------- Net income $ 48,916 $ 7,181 $ (20,073) $ 36,024 ============== ============= ============== =============
Unaudited Pro Forma Consolidated Statements of Income 2000 (Dollars in thousands) Pro Pro Historical Forma Forma 3rd Quarter Ended 9/30/00 IFF (1) BBA (2) Adjustments Combined - ------------------------- -------------- ------------- ----------------- -------------- Net sales $ 339,591 $121,648 $ (1,435)(3) $ 459,804 -------------- ------------- -------------- ------------- Cost of goods sold (8) 191,499 78,018 (1,496)(4) 268,021 Research and development expenses 28,666 6,769 35,435 Selling and administrative expenses (8) 62,181 22,519 84,700 Nonrecurring charges 7,685 - 7,685 Interest expense 4,195 433 16,250 (5) 20,878 Amortization - - 10,548 (6) 10,548 Other (income) expense, net 2,614 (1,380) 1,234 -------------- ------------- -------------- ------------- 296,840 106,359 25,302 428,501 -------------- ------------- -------------- ------------- Income before taxes on income 42,751 15,289 (26,737) 31,303 Taxes on income 13,824 5,088 (6,664)(7) 12,248 -------------- ------------- -------------- ------------- Net income $ 28,927 $ 10,201 $ (20,073) $ 19,055 ============== ============= ============== =============
Pro Pro Historical Forma Forma 4th Quarter Ended 12/31/00 IFF (1) BBA (2) Adjustments Combined - -------------------------- -------------- ------------- ---------------- --------------- Net sales $ 384,533 $ 60,212 $ (644)(3) $ 444,101 -------------- ------------- -------------- ------------- Cost of goods sold 231,915 39,178 (849)(4) 270,244 Research and development expenses 30,248 3,073 - 33,321 Selling and administrative expenses 72,969 9,605 - 82,574 Nonrecurring charges 24,234 - - 24,234 Interest expense 15,666 252 5,650 (5) 21,568 Amortization 7,032 - 3,519 (6) 10,551 Other (income) expense, net (174) (118) - (292) -------------- ------------- -------------- ------------- 381,890 51,990 8,320 442,200 -------------- ------------- -------------- ------------- Income before taxes on income 2,643 8,222 (8,964) 1,901 Taxes on income 1,257 3,255 (1,206)(7) 3,306 -------------- ------------- -------------- ------------- Net income $ 1,386 $ 4,967 $ (7,758) $ (1,405) ============== ============= ============== =============
Exhibit 99.5
Unaudited Pro Forma Consolidated Statements of Income 2000 (Dollars in thousands) Pro Pro Historical Forma Forma Year Ended 12/31/00 IFF (1) BBA (2) Adjustments Combined - ------------------- -------------- ------------- ---------------- --------------- Net sales $1,462,795 $422,766 $ (4,949)(3) $1,880,612 -------------- ------------- -------------- ------------- Cost of goods sold 831,653 271,684 (5,337)(4) 1,098,000 Research and development expenses 112,671 23,833 136,504 Selling and administrative expenses 258,653 80,989 339,642 Nonrecurring charges 41,273 - 41,273 Interest expense 25,072 1,686 54,400 (5) 81,158 Amortization 7,032 - 35,163 (6) 42,195 Other (income) expense, net 2,314 (231) 2,083 -------------- ------------- -------------- ------------- 1,278,668 377,961 84,226 1,740,855 -------------- ------------- -------------- ------------- Income before taxes on income 184,127 44,805 (89,175) 139,757 Taxes on income 61,122 16,435 (21,198)(7) 56,359 -------------- ------------- -------------- ------------- Net income $ 123,005 $ 28,370 $ (67,977) $ 83,398 ============== ============= ============== =============
Notes to Unaudited Pro Forma Consolidated Statements of Income: (1) IFF acquired Bush Boake Allen ("BBA"), effective November 3, 2000, and the BBA operating results are included in IFF's consolidated results from that date. (2) BBA results from the beginning of the year to November 3, 2000, the date of acquisition, are included in the respective periods. (3) To eliminate intercompany sales between IFF and BBA for the period from the beginning of the year to November 3, 2000, the date of acquisition. For purposes of computing the individual quarter eliminations, the full year amount was allocated on a pro rata basis. Post-acquisition, intercompany sales are eliminated in arriving at the IFF historical results. (4) To eliminate cost of goods sold relating to intercompany sales and account for related estimated profit that remains in inventory. For purposes of computing the individual quarter eliminations, the full year amount was allocated on a pro rata basis. (5) To reflect the recognition of incremental interest expense on additional borrowings of approximately $970.0 million, equal to the cash consideration exchanged in the acquisition. Interest expense was calculated using an average interest rate of 6.7%. The interest rate reflects IFF's average borrowing rate during the year. (6) To reflect the amortization of goodwill and other intangibles resulting from the preliminary allocation of the excess of consideration over the net assets of BBA. Other intangible assets include patents, trademarks and other intellectual property owned or developed by BBA, the value of which is being amortized over periods ranging from 10 to 20 years. Under current accounting rules, IFF would expect the amount of excess consideration allocated to goodwill to be amortized over 20 years. In December 2000, the Financial Accounting Standards Board (FASB) reached a tentative decision to use the nonamortization approach to account for purchased goodwill. Under the revised proposal, goodwill would not be amortized annually, but instead would be reviewed for impairment and written down (expensed against earnings) when the carrying value of the goodwill exceeds its fair value. The final standard has not been issued and the proposed approach may change. (7) To reflect the tax effect, as appropriate, of the pro forma adjustments. (8) Reflects the reclassification of shipping and handling costs from Selling expense to Cost of goods sold in accordance with guidance established by Emerging Issues Task Force No. 00-10, "Accounting for Shipping and Handling Fees and Costs." This change in classification was made by IFF in the 4th quarter 2000 and does not affect the reported BBA historical amounts. -----END PRIVACY-ENHANCED MESSAGE-----