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Share Name | Share Symbol | Market | Type |
---|---|---|---|
International Flavors and Fragrances Inc | NYSE:IFF | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 85.76 | 0 | 12:48:01 |
þ
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
|
¨
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
|
|
New York
|
|
13-1432060
|
(State or other jurisdiction of
incorporation or organization)
|
|
(I.R.S. Employer
Identification No.)
|
Large accelerated filer
|
|
þ
|
Accelerated filer
|
¬
|
|
|
|
|
|
Non-accelerated filer
|
|
¬
|
Smaller reporting company
|
¬
|
|
1
|
|
|
|
June 30, 2016
|
|
December 31, 2015
|
||||
ASSETS
|
|
|
|
|
||||
Current Assets:
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
539,992
|
|
|
$
|
181,988
|
|
Trade receivables (net of allowances of $9,425 and $8,229, respectively)
|
|
621,164
|
|
|
537,896
|
|
||
Inventories: Raw materials
|
|
273,424
|
|
|
265,209
|
|
||
Work in process
|
|
19,320
|
|
|
17,450
|
|
||
Finished goods
|
|
291,745
|
|
|
289,388
|
|
||
Total Inventories
|
|
584,489
|
|
|
572,047
|
|
||
Prepaid expenses and other current assets
|
|
183,789
|
|
|
145,178
|
|
||
Total Current Assets
|
|
1,929,434
|
|
|
1,437,109
|
|
||
Property, plant and equipment, at cost
|
|
1,850,356
|
|
|
1,812,283
|
|
||
Accumulated depreciation
|
|
(1,113,003
|
)
|
|
(1,079,489
|
)
|
||
|
|
737,353
|
|
|
732,794
|
|
||
Goodwill
|
|
940,544
|
|
|
941,389
|
|
||
Other intangible assets, net
|
|
288,837
|
|
|
306,004
|
|
||
Deferred income taxes
|
|
139,023
|
|
|
166,323
|
|
||
Other assets
|
|
119,437
|
|
|
118,391
|
|
||
Total Assets
|
|
$
|
4,154,628
|
|
|
$
|
3,702,010
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
|
||||
Current Liabilities:
|
|
|
|
|
||||
Bank borrowings and overdrafts and current portion of long-term debt
|
|
$
|
133,473
|
|
|
$
|
132,349
|
|
Accounts payable
|
|
255,143
|
|
|
285,501
|
|
||
Accrued payroll and bonus
|
|
49,053
|
|
|
48,843
|
|
||
Dividends payable
|
|
44,588
|
|
|
44,824
|
|
||
Other current liabilities
|
|
205,994
|
|
|
213,639
|
|
||
Total Current Liabilities
|
|
688,251
|
|
|
725,156
|
|
||
Long-term debt
|
|
1,357,684
|
|
|
935,373
|
|
||
Deferred gains
|
|
41,630
|
|
|
43,260
|
|
||
Retirement liabilities
|
|
244,223
|
|
|
242,383
|
|
||
Other liabilities
|
|
144,908
|
|
|
160,849
|
|
||
Total Other Liabilities
|
|
1,788,445
|
|
|
1,381,865
|
|
||
Commitments and Contingencies (Note 13)
|
|
|
|
|
||||
Shareholders’ Equity:
|
|
|
|
|
||||
Common stock 12 1/2¢ par value; authorized 500,000,000 shares; issued 115,858,190 shares as of June 30, 2016 and December 31, 2015 and outstanding 79,640,930 and 80,022,291 shares as of June 30, 2016 and December 31, 2015
|
|
14,470
|
|
|
14,470
|
|
||
Capital in excess of par value
|
|
140,355
|
|
|
140,802
|
|
||
Retained earnings
|
|
3,750,364
|
|
|
3,604,254
|
|
||
Accumulated other comprehensive loss
|
|
(608,310
|
)
|
|
(613,440
|
)
|
||
Treasury stock, at cost - 36,217,260 shares as of June 30, 2016 and 35,835,899 shares as of December 31, 2015
|
|
(1,623,007
|
)
|
|
(1,555,769
|
)
|
||
Total Shareholders’ Equity
|
|
1,673,872
|
|
|
1,590,317
|
|
||
Noncontrolling interest
|
|
4,060
|
|
|
4,672
|
|
||
Total Shareholders’ Equity including noncontrolling interest
|
|
1,677,932
|
|
|
1,594,989
|
|
||
Total Liabilities and Shareholders’ Equity
|
|
$
|
4,154,628
|
|
|
$
|
3,702,010
|
|
|
2
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Net sales
|
$
|
793,478
|
|
|
$
|
767,541
|
|
|
$
|
1,576,789
|
|
|
$
|
1,542,448
|
|
Cost of goods sold
|
427,837
|
|
|
422,501
|
|
|
850,940
|
|
|
851,131
|
|
||||
Gross profit
|
365,641
|
|
|
345,040
|
|
|
725,849
|
|
|
691,317
|
|
||||
Research and development expenses
|
63,252
|
|
|
62,514
|
|
|
126,637
|
|
|
125,976
|
|
||||
Selling and administrative expenses
|
132,784
|
|
|
131,023
|
|
|
256,327
|
|
|
250,018
|
|
||||
Amortization of acquisition-related intangibles
|
5,130
|
|
|
3,040
|
|
|
11,191
|
|
|
4,880
|
|
||||
Restructuring and other charges, net
|
—
|
|
|
(358
|
)
|
|
—
|
|
|
(170
|
)
|
||||
Operating profit
|
164,475
|
|
|
148,821
|
|
|
331,694
|
|
|
310,613
|
|
||||
Interest expense
|
15,060
|
|
|
11,407
|
|
|
27,539
|
|
|
22,502
|
|
||||
Other (income) expense, net
|
(2,635
|
)
|
|
436
|
|
|
(2,792
|
)
|
|
(5,275
|
)
|
||||
Income before taxes
|
152,050
|
|
|
136,978
|
|
|
306,947
|
|
|
293,386
|
|
||||
Taxes on income
|
35,317
|
|
|
31,604
|
|
|
71,610
|
|
|
59,754
|
|
||||
Net income
|
116,733
|
|
|
105,374
|
|
|
235,337
|
|
|
233,632
|
|
||||
Other comprehensive income (loss), after tax:
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation adjustments
|
(4,689
|
)
|
|
17,557
|
|
|
9,389
|
|
|
(32,958
|
)
|
||||
(Losses) gains on derivatives qualifying as hedges
|
800
|
|
|
(5,966
|
)
|
|
(9,392
|
)
|
|
6,117
|
|
||||
Pension and postretirement net liability
|
2,578
|
|
|
5,476
|
|
|
5,133
|
|
|
11,023
|
|
||||
Other comprehensive income (loss)
|
(1,311
|
)
|
|
17,067
|
|
|
5,130
|
|
|
(15,818
|
)
|
||||
Total comprehensive income
|
$
|
115,422
|
|
|
$
|
122,441
|
|
|
$
|
240,467
|
|
|
$
|
217,814
|
|
|
|
|
|
|
|
|
|
||||||||
Net income per share - basic
|
$
|
1.46
|
|
|
$
|
1.30
|
|
|
$
|
2.94
|
|
|
$
|
2.88
|
|
Net income per share - diluted
|
$
|
1.46
|
|
|
$
|
1.29
|
|
|
$
|
2.93
|
|
|
$
|
2.86
|
|
Average number of shares outstanding - basic
|
79,764
|
|
|
80,790
|
|
|
79,809
|
|
|
80,729
|
|
||||
Average number of shares outstanding - diluted
|
80,040
|
|
|
81,192
|
|
|
80,141
|
|
|
81,201
|
|
||||
Dividends declared per share
|
$
|
0.56
|
|
|
$
|
0.47
|
|
|
$
|
1.12
|
|
|
$
|
0.94
|
|
|
3
|
|
|
|
Six Months Ended June 30,
|
||||||
|
|
2016
|
|
2015
|
||||
Cash flows from operating activities:
|
|
|
|
|
||||
Net income
|
|
$
|
235,337
|
|
|
$
|
233,632
|
|
Adjustments to reconcile to net cash provided by operating activities:
|
|
|
|
|
||||
Depreciation and amortization
|
|
49,743
|
|
|
41,041
|
|
||
Deferred income taxes
|
|
16,543
|
|
|
17,891
|
|
||
(Gain) loss on disposal of assets
|
|
(2,910
|
)
|
|
14
|
|
||
Stock-based compensation
|
|
13,774
|
|
|
12,860
|
|
||
Pension contributions
|
|
(39,510
|
)
|
|
(57,493
|
)
|
||
Changes in assets and liabilities, net of acquisitions:
|
|
|
|
|
||||
Trade receivables
|
|
(70,361
|
)
|
|
(92,329
|
)
|
||
Inventories
|
|
(7,271
|
)
|
|
(9,834
|
)
|
||
Accounts payable
|
|
(29,167
|
)
|
|
27,334
|
|
||
Accruals for incentive compensation
|
|
(2,001
|
)
|
|
(21,191
|
)
|
||
Other current payables and accrued expenses
|
|
18,800
|
|
|
21,305
|
|
||
Other assets
|
|
(1,346
|
)
|
|
(12,417
|
)
|
||
Other liabilities
|
|
(27,081
|
)
|
|
5,505
|
|
||
Net cash provided by operating activities
|
|
154,550
|
|
|
166,318
|
|
||
Cash flows from investing activities:
|
|
|
|
|
||||
Cash paid for acquisitions, net of cash received
|
|
—
|
|
|
(188,835
|
)
|
||
Additions to property, plant and equipment
|
|
(43,236
|
)
|
|
(37,937
|
)
|
||
Proceeds from life insurance contracts
|
|
—
|
|
|
548
|
|
||
Maturity of net investment hedges
|
|
(641
|
)
|
|
9,735
|
|
||
Proceeds from disposal of assets
|
|
3,630
|
|
|
1,515
|
|
||
Net cash used in investing activities
|
|
(40,247
|
)
|
|
(214,974
|
)
|
||
Cash flows from financing activities:
|
|
|
|
|
||||
Cash dividends paid to shareholders
|
|
(89,463
|
)
|
|
(75,927
|
)
|
||
Net change in revolving credit facility borrowings and overdrafts
|
|
(138,142
|
)
|
|
(30,283
|
)
|
||
Deferred financing costs
|
|
(4,796
|
)
|
|
—
|
|
||
Proceeds from issuance of long-term debt
|
|
555,559
|
|
|
86,162
|
|
||
Loss on pre-issuance hedges
|
|
(3,244
|
)
|
|
—
|
|
||
Proceeds from issuance of stock under stock plans
|
|
494
|
|
|
286
|
|
||
Excess tax benefits on stock-based payments
|
|
4,431
|
|
|
11,608
|
|
||
Purchase of treasury stock
|
|
(71,714
|
)
|
|
(38,813
|
)
|
||
Net cash provided by (used in) financing activities
|
|
253,125
|
|
|
(46,967
|
)
|
||
Effect of exchange rate changes on cash and cash equivalents
|
|
(9,424
|
)
|
|
(5,696
|
)
|
||
Net change in cash and cash equivalents
|
|
358,004
|
|
|
(101,319
|
)
|
||
Cash and cash equivalents at beginning of year
|
|
181,988
|
|
|
478,573
|
|
||
Cash and cash equivalents at end of period
|
|
$
|
539,992
|
|
|
$
|
377,254
|
|
Interest paid, net of amounts capitalized
|
|
$
|
24,971
|
|
|
$
|
23,827
|
|
Income taxes paid
|
|
$
|
52,719
|
|
|
$
|
46,071
|
|
|
4
|
|
|
5
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||
(SHARES IN THOUSANDS)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||
Basic
|
79,764
|
|
|
80,790
|
|
|
79,809
|
|
|
80,729
|
|
Assumed dilution under stock plans
|
276
|
|
|
402
|
|
|
332
|
|
|
472
|
|
Diluted
|
80,040
|
|
|
81,192
|
|
|
80,141
|
|
|
81,201
|
|
|
6
|
|
(DOLLARS IN THOUSANDS)
|
Employee-Related Costs
|
|
Accelerated Depreciation
|
|
Total
|
||||||
Balance at December 31, 2015
|
$
|
7,882
|
|
|
$
|
—
|
|
|
$
|
7,882
|
|
Additional charges (reversals), net
|
—
|
|
|
283
|
|
|
283
|
|
|||
Non-cash charges
|
—
|
|
|
(283
|
)
|
|
(283
|
)
|
|||
Payments and other costs
|
(1,446
|
)
|
|
—
|
|
|
(1,446
|
)
|
|||
Balance at June 30, 2016
|
$
|
6,436
|
|
|
$
|
—
|
|
|
$
|
6,436
|
|
(DOLLARS IN THOUSANDS)
|
Goodwill
|
||
Balance at December 31, 2015
|
$
|
941,389
|
|
Foreign exchange
|
3,229
|
|
|
Other
|
(4,074
|
)
|
|
Balance at June 30, 2016
|
$
|
940,544
|
|
|
7
|
|
|
June 30,
|
|
December 31,
|
||||
(DOLLARS IN THOUSANDS)
|
2016
|
|
2015
|
||||
Cost
|
|
|
|
||||
Customer relationships
|
$
|
289,743
|
|
|
$
|
293,799
|
|
Trade names & patents
|
31,554
|
|
|
34,182
|
|
||
Technological know-how
|
111,808
|
|
|
112,393
|
|
||
Other
|
24,072
|
|
|
22,711
|
|
||
Total carrying value
|
457,177
|
|
|
463,085
|
|
||
Accumulated Amortization
|
|
|
|
||||
Customer relationships
|
(74,061
|
)
|
|
(66,324
|
)
|
||
Trade names & patents
|
(11,272
|
)
|
|
(10,282
|
)
|
||
Technological know-how
|
(66,618
|
)
|
|
(65,258
|
)
|
||
Other
|
(16,389
|
)
|
|
(15,217
|
)
|
||
Total accumulated amortization
|
(168,340
|
)
|
|
(157,081
|
)
|
||
|
|
|
|
||||
Other intangible assets, net
|
$
|
288,837
|
|
|
$
|
306,004
|
|
(DOLLARS IN THOUSANDS)
|
Rate
|
|
Maturities
|
|
June 30, 2016
|
|
December 31, 2015
|
|||||
Senior notes - 2006
(1)
|
6.14
|
%
|
|
2016
|
|
$
|
124,991
|
|
|
$
|
124,964
|
|
Senior notes - 2007
(1)
|
6.40
|
%
|
|
2017-27
|
|
499,618
|
|
|
499,618
|
|
||
Senior notes - 2013
(1)
|
3.20
|
%
|
|
2023
|
|
297,846
|
|
|
297,683
|
|
||
Euro Senior notes - 2016
(1)
|
1.75
|
%
|
|
2024
|
|
550,598
|
|
|
—
|
|
||
Credit facility
|
2.67
|
%
|
|
2019
|
|
—
|
|
|
131,196
|
|
||
Bank overdrafts and other
|
|
|
|
|
15,791
|
|
|
10,982
|
|
|||
Deferred realized gains on interest rate swaps
|
|
|
|
|
2,313
|
|
|
3,279
|
|
|||
|
|
|
|
|
1,491,157
|
|
|
1,067,722
|
|
|||
Less: Current portion of long-term debt
|
|
|
|
|
(133,473
|
)
|
|
(132,349
|
)
|
|||
|
|
|
|
|
$
|
1,357,684
|
|
|
$
|
935,373
|
|
|
8
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
(DOLLARS IN THOUSANDS)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Equity-based awards
|
$
|
7,844
|
|
|
$
|
7,473
|
|
|
$
|
13,774
|
|
|
$
|
12,860
|
|
Liability-based awards
|
1,739
|
|
|
666
|
|
|
2,332
|
|
|
2,573
|
|
||||
Total stock-based compensation expense
|
9,583
|
|
|
8,139
|
|
|
16,106
|
|
|
15,433
|
|
||||
Less: tax benefit
|
(2,816
|
)
|
|
(2,225
|
)
|
|
(4,789
|
)
|
|
(4,412
|
)
|
||||
Total stock-based compensation expense, after tax
|
$
|
6,767
|
|
|
$
|
5,914
|
|
|
$
|
11,317
|
|
|
$
|
11,021
|
|
|
9
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
(DOLLARS IN THOUSANDS)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Net sales:
|
|
|
|
|
|
|
|
||||||||
Flavors
|
$
|
379,504
|
|
|
$
|
372,478
|
|
|
$
|
752,012
|
|
|
$
|
749,586
|
|
Fragrances
|
413,974
|
|
|
395,063
|
|
|
824,777
|
|
|
792,862
|
|
||||
Consolidated
|
$
|
793,478
|
|
|
$
|
767,541
|
|
|
$
|
1,576,789
|
|
|
$
|
1,542,448
|
|
Segment profit:
|
|
|
|
|
|
|
|
||||||||
Flavors
|
$
|
90,337
|
|
|
$
|
84,015
|
|
|
$
|
182,151
|
|
|
$
|
176,743
|
|
Fragrances
|
87,596
|
|
|
79,924
|
|
|
176,833
|
|
|
161,522
|
|
||||
Global expenses
|
(12,232
|
)
|
|
(8,629
|
)
|
|
(26,141
|
)
|
|
(20,194
|
)
|
||||
Restructuring and other charges, net
(1)
|
(182
|
)
|
|
358
|
|
|
(283
|
)
|
|
170
|
|
||||
Acquisition and related costs
(2)
|
(213
|
)
|
|
(6,566
|
)
|
|
(1,249
|
)
|
|
(7,066
|
)
|
||||
Operational improvement initiative costs
(3)
|
(831
|
)
|
|
(281
|
)
|
|
(1,099
|
)
|
|
(562
|
)
|
||||
Spanish capital tax settlement
(4)
|
—
|
|
|
—
|
|
|
1,482
|
|
|
—
|
|
||||
Operating profit
|
164,475
|
|
|
148,821
|
|
|
331,694
|
|
|
310,613
|
|
||||
Interest expense
|
(15,060
|
)
|
|
(11,407
|
)
|
|
(27,539
|
)
|
|
(22,502
|
)
|
||||
Other income (expense)
|
2,635
|
|
|
(436
|
)
|
|
2,792
|
|
|
5,275
|
|
||||
Income before taxes
|
$
|
152,050
|
|
|
$
|
136,978
|
|
|
$
|
306,947
|
|
|
$
|
293,386
|
|
(1)
|
Restructuring and other charges, net relate to accelerated depreciation costs in Europe recorded in Cost of goods sold.
|
(2)
|
Acquisition and related costs are associated with the 2015 acquisition of Lucas Meyer as discussed in Note 3, including inventory step-up charges related to the inventory acquired.
|
(3)
|
Operational improvement initiative costs relate to accelerated depreciation and severance costs in Asia in the 2016 period and accelerated depreciation in the 2015 period.
|
(4)
|
The Spanish capital tax settlement represents interest received from the Spanish government related to the reversal of the unfavorable ruling the Spanish capital tax case from 2002, which was reversed during the year ended December 31, 2015.
|
|
10
|
|
U.S. Plans
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
(DOLLARS IN THOUSANDS)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Service cost for benefits earned
|
$
|
772
|
|
|
$
|
984
|
|
|
$
|
1,543
|
|
|
$
|
1,968
|
|
Interest cost on projected benefit obligation
|
6,006
|
|
|
5,954
|
|
|
12,013
|
|
|
11,907
|
|
||||
Expected return on plan assets
|
(8,070
|
)
|
|
(8,083
|
)
|
|
(16,139
|
)
|
|
(16,165
|
)
|
||||
Net amortization and deferrals
|
1,385
|
|
|
5,203
|
|
|
2,772
|
|
|
10,406
|
|
||||
Net periodic benefit cost
|
93
|
|
|
4,058
|
|
|
189
|
|
|
8,116
|
|
||||
Defined contribution and other retirement plans
|
2,211
|
|
|
2,093
|
|
|
4,612
|
|
|
4,228
|
|
||||
Total expense
|
$
|
2,304
|
|
|
$
|
6,151
|
|
|
$
|
4,801
|
|
|
$
|
12,344
|
|
|
|
|
|
|
|
|
|
||||||||
Non-U.S. Plans
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
(DOLLARS IN THOUSANDS)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Service cost for benefits earned
|
$
|
3,863
|
|
|
$
|
4,102
|
|
|
$
|
7,638
|
|
|
$
|
8,485
|
|
Interest cost on projected benefit obligation
|
6,372
|
|
|
6,151
|
|
|
12,737
|
|
|
12,543
|
|
||||
Expected return on plan assets
|
(11,985
|
)
|
|
(12,440
|
)
|
|
(23,934
|
)
|
|
(25,390
|
)
|
||||
Net amortization and deferrals
|
3,286
|
|
|
3,314
|
|
|
6,550
|
|
|
6,801
|
|
||||
Net periodic benefit cost
|
1,536
|
|
|
1,127
|
|
|
2,991
|
|
|
2,439
|
|
||||
Defined contribution and other retirement plans
|
1,763
|
|
|
1,693
|
|
|
3,470
|
|
|
3,288
|
|
||||
Total expense
|
$
|
3,299
|
|
|
$
|
2,820
|
|
|
$
|
6,461
|
|
|
$
|
5,727
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
(DOLLARS IN THOUSANDS)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Service cost for benefits earned
|
$
|
214
|
|
|
$
|
301
|
|
|
$
|
429
|
|
|
$
|
601
|
|
Interest cost on projected benefit obligation
|
787
|
|
|
1,082
|
|
|
1,574
|
|
|
2,164
|
|
||||
Net amortization and deferrals
|
(1,355
|
)
|
|
(712
|
)
|
|
(2,710
|
)
|
|
(1,423
|
)
|
||||
Total postretirement benefit (income) expense
|
$
|
(354
|
)
|
|
$
|
671
|
|
|
$
|
(707
|
)
|
|
$
|
1,342
|
|
•
|
Level 1–Quoted prices for
identical
instruments in active markets.
|
•
|
Level 2–Quoted prices for
similar
instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets.
|
•
|
Level 3–Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable
.
|
|
11
|
|
|
June 30, 2016
|
|
December 31, 2015
|
||||||||||||
(DOLLARS IN THOUSANDS)
|
Carrying
Amount |
|
Fair
Value |
|
Carrying
Amount |
|
Fair
Value |
||||||||
Cash and cash equivalents
(1)
|
$
|
539,992
|
|
|
$
|
539,992
|
|
|
$
|
181,988
|
|
|
$
|
181,988
|
|
Credit facilities and bank overdrafts
(2)
|
15,791
|
|
|
15,791
|
|
|
142,178
|
|
|
142,178
|
|
||||
Long-term debt:
(3)
|
|
|
|
|
|
|
|
||||||||
Senior notes - 2006
|
124,991
|
|
|
125,225
|
|
|
124,964
|
|
|
127,717
|
|
||||
Senior notes - 2007
|
499,618
|
|
|
578,590
|
|
|
499,618
|
|
|
563,855
|
|
||||
Senior notes - 2013
|
297,846
|
|
|
312,847
|
|
|
297,683
|
|
|
290,830
|
|
||||
Euro Senior notes - 2016
|
550,598
|
|
|
584,953
|
|
|
—
|
|
|
—
|
|
(1)
|
The carrying amount of cash and cash equivalents approximates fair value due to the short maturity of those instruments.
|
(2)
|
The carrying amount of our credit facilities and bank overdrafts approximates fair value as the interest rate is reset frequently based on current market rates as well as the short maturity of those instruments.
|
(3)
|
The fair value of our long-term debt was calculated using discounted cash flows applying current interest rates and current credit spreads based on our own credit risk.
|
|
12
|
|
(DOLLARS IN THOUSANDS)
|
June 30, 2016
|
|
December 31, 2015
|
||||
Foreign currency contracts
|
$
|
805,900
|
|
|
$
|
573,200
|
|
Interest rate swaps
|
$
|
475,000
|
|
|
$
|
475,000
|
|
|
June 30, 2016
|
||||||||||
(DOLLARS IN THOUSANDS)
|
Fair Value of
Derivatives Designated as Hedging Instruments |
|
Fair Value of
Derivatives Not Designated as Hedging Instruments |
|
Total Fair
Value |
||||||
Derivative assets
(a)
|
|
|
|
|
|
||||||
Foreign currency contracts
|
$
|
4,038
|
|
|
$
|
12,159
|
|
|
$
|
16,197
|
|
Interest rate swaps
|
4,341
|
|
|
—
|
|
|
4,341
|
|
|||
|
$
|
8,379
|
|
|
$
|
12,159
|
|
|
$
|
20,538
|
|
Derivative liabilities
(b)
|
|
|
|
|
|
||||||
Foreign currency contracts
|
$
|
1,353
|
|
|
$
|
9,274
|
|
|
$
|
10,627
|
|
|
$
|
1,353
|
|
|
$
|
9,274
|
|
|
$
|
10,627
|
|
|
December 31, 2015
|
||||||||||
(DOLLARS IN THOUSANDS)
|
Fair Value of
Derivatives Designated as Hedging Instruments |
|
Fair Value of
Derivatives Not Designated as Hedging Instruments |
|
Total Fair
Value |
||||||
Derivative assets
(a)
|
|
|
|
|
|
||||||
Foreign currency contracts
|
$
|
6,560
|
|
|
$
|
3,700
|
|
|
$
|
10,260
|
|
Interest rate swaps
|
1,210
|
|
|
—
|
|
|
1,210
|
|
|||
|
$
|
7,770
|
|
|
$
|
3,700
|
|
|
$
|
11,470
|
|
Derivative liabilities
(b)
|
|
|
|
|
|
||||||
Foreign currency contracts
|
$
|
2,106
|
|
|
$
|
3,022
|
|
|
$
|
5,128
|
|
(a)
|
Derivative assets are recorded to Prepaid expenses and other current assets in the Consolidated Balance Sheet.
|
(b)
|
Derivative liabilities are recorded as Other current liabilities in the Consolidated Balance Sheet.
|
|
13
|
|
|
Amount of (Loss) Gain
Recognized in OCI on
Derivative (Effective
Portion)
|
|
Location of (Loss) Gain
Reclassified from AOCI into
Income (Effective Portion)
|
|
Amount of (Loss) Gain
Reclassified from
Accumulated OCI into
Income (Effective
Portion)
|
||||||||||||
|
Three Months Ended June 30,
|
|
|
|
Three Months Ended June 30,
|
||||||||||||
|
2016
|
|
2015
|
|
|
|
2016
|
|
2015
|
||||||||
Derivatives in Cash Flow Hedging Relationships:
|
|
|
|
|
|
|
|
|
|
||||||||
Foreign currency contracts
|
$
|
612
|
|
|
$
|
(6,035
|
)
|
|
Cost of goods sold
|
|
$
|
2,736
|
|
|
$
|
3,561
|
|
Interest rate swaps
(1)
|
171
|
|
|
69
|
|
|
Interest expense
|
|
(171
|
)
|
|
(69
|
)
|
||||
Derivatives in Net Investment Hedging Relationships:
|
|
|
|
|
|
|
|
|
|
||||||||
Foreign currency contracts
|
1,934
|
|
|
(1,030
|
)
|
|
N/A
|
|
—
|
|
|
—
|
|
||||
Euro Senior notes - 2016
|
9,649
|
|
|
—
|
|
|
N/A
|
|
—
|
|
|
—
|
|
||||
Total
|
$
|
12,366
|
|
|
$
|
(6,996
|
)
|
|
|
|
$
|
2,565
|
|
|
$
|
3,492
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Amount of (Loss) Gain
Recognized in OCI on
Derivative (Effective
Portion)
|
|
Location of (Loss) Gain
Reclassified from AOCI into
Income (Effective Portion)
|
|
Amount of (Loss) Gain
Reclassified from
Accumulated OCI into
Income (Effective
Portion)
|
||||||||||||
|
Six Months Ended June 30,
|
|
|
|
Six Months Ended June 30,
|
||||||||||||
|
2016
|
|
2015
|
|
|
|
2016
|
|
2015
|
||||||||
Derivatives in Cash Flow Hedging Relationships:
|
|
|
|
|
|
|
|
|
|
||||||||
Foreign currency contracts
|
$
|
(6,391
|
)
|
|
$
|
5,979
|
|
|
Cost of goods sold
|
|
$
|
5,352
|
|
|
$
|
4,584
|
|
Interest rate swaps
(1)
|
(3,001
|
)
|
|
138
|
|
|
Interest expense
|
|
(257
|
)
|
|
(138
|
)
|
||||
Derivatives in Net Investment Hedging Relationships:
|
|
|
|
|
|
|
|
|
|
||||||||
Foreign currency contracts
|
(470
|
)
|
|
3,531
|
|
|
N/A
|
|
—
|
|
|
—
|
|
||||
Euro Senior notes - 2016
|
9,649
|
|
|
—
|
|
|
N/A
|
|
—
|
|
|
—
|
|
||||
Total
|
$
|
(213
|
)
|
|
$
|
9,648
|
|
|
|
|
$
|
5,095
|
|
|
$
|
4,446
|
|
|
14
|
|
|
Foreign
Currency
Translation
Adjustments
|
|
(Losses) Gains on
Derivatives
Qualifying as
Hedges
|
|
Pension and
Postretirement
Liability
Adjustment
|
|
Total
|
||||||||
(DOLLARS IN THOUSANDS)
|
|
|
|
|
|
|
|
||||||||
Accumulated other comprehensive (loss) income, net of tax, as of December 31, 2015
|
$
|
(297,499
|
)
|
|
$
|
9,401
|
|
|
$
|
(325,342
|
)
|
|
$
|
(613,440
|
)
|
OCI before reclassifications
|
9,389
|
|
|
(4,297
|
)
|
|
—
|
|
|
5,092
|
|
||||
Amounts reclassified from AOCI
|
—
|
|
|
(5,095
|
)
|
|
5,133
|
|
|
38
|
|
||||
Net current period other comprehensive income (loss)
|
9,389
|
|
|
(9,392
|
)
|
|
5,133
|
|
|
5,130
|
|
||||
Accumulated other comprehensive (loss) income, net of tax, as of June 30, 2016
|
$
|
(288,110
|
)
|
|
$
|
9
|
|
|
$
|
(320,209
|
)
|
|
$
|
(608,310
|
)
|
|
Foreign
Currency
Translation
Adjustments
|
|
(Losses) Gains on
Derivatives
Qualifying as
Hedges
|
|
Pension and
Postretirement
Liability
Adjustment
|
|
Total
|
||||||||
(DOLLARS IN THOUSANDS)
|
|
|
|
|
|
|
|
||||||||
Accumulated other comprehensive (loss) income, net of tax, as of December 31, 2014
|
$
|
(173,342
|
)
|
|
$
|
12,371
|
|
|
$
|
(379,459
|
)
|
|
$
|
(540,430
|
)
|
OCI before reclassifications
|
(32,958
|
)
|
|
10,563
|
|
|
—
|
|
|
(22,395
|
)
|
||||
Amounts reclassified from AOCI
|
—
|
|
|
(4,446
|
)
|
|
11,023
|
|
|
6,577
|
|
||||
Net current period other comprehensive income (loss)
|
(32,958
|
)
|
|
6,117
|
|
|
11,023
|
|
|
(15,818
|
)
|
||||
Accumulated other comprehensive (loss) income, net of tax, as of June 30, 2015
|
$
|
(206,300
|
)
|
|
$
|
18,488
|
|
|
$
|
(368,436
|
)
|
|
$
|
(556,248
|
)
|
|
15
|
|
|
Six Months Ended June 30, 2016
|
|
Six Months Ended June 30, 2015
|
|
Affected Line Item in the
Consolidated Statement of Comprehensive Income |
||||
(DOLLARS IN THOUSANDS)
|
|
|
|
|
|
||||
(Losses) gains on derivatives qualifying as hedges
|
|
|
|
|
|
||||
Foreign currency contracts
|
$
|
6,117
|
|
|
$
|
5,239
|
|
|
Cost of goods sold
|
Interest rate swaps
|
(257
|
)
|
|
(138
|
)
|
|
Interest expense
|
||
|
(765
|
)
|
|
(655
|
)
|
|
Provision for income taxes
|
||
|
$
|
5,095
|
|
|
$
|
4,446
|
|
|
Total, net of income taxes
|
(Losses) gains on pension and postretirement liability adjustments
|
|
|
|
|
|
||||
Prior service cost
|
$
|
3,735
|
|
|
$
|
2,318
|
|
|
(a)
|
Actuarial losses
|
(10,347
|
)
|
|
(18,102
|
)
|
|
(a)
|
||
|
1,479
|
|
|
4,761
|
|
|
Provision for income taxes
|
||
|
$
|
(5,133
|
)
|
|
$
|
(11,023
|
)
|
|
Total, net of income taxes
|
(a)
|
The amortization of prior service cost and actuarial loss is included in the computation of net periodic benefit cost. Refer to Note 14 of our
2015
Form 10-K for additional information regarding net periodic benefit cost.
|
|
16
|
|
|
17
|
|
|
18
|
|
|
19
|
|
|
20
|
|
|
Three Months Ended June 30,
|
|
|
|
Six Months Ended June 30,
|
|
|
||||||||||||||
(DOLLARS IN THOUSANDS
EXCEPT PER SHARE AMOUNTS)
|
2016
|
|
2015
|
|
Change
|
|
2016
|
|
2015
|
|
Change
|
||||||||||
Net sales
|
$
|
793,478
|
|
|
$
|
767,541
|
|
|
3
|
%
|
|
$
|
1,576,789
|
|
|
$
|
1,542,448
|
|
|
2
|
%
|
Cost of goods sold
|
427,837
|
|
|
422,501
|
|
|
1
|
%
|
|
850,940
|
|
|
851,131
|
|
|
—
|
%
|
||||
Gross profit
|
365,641
|
|
|
345,040
|
|
|
|
|
725,849
|
|
|
691,317
|
|
|
|
||||||
Research and development (R&D) expenses
|
63,252
|
|
|
62,514
|
|
|
1
|
%
|
|
126,637
|
|
|
125,976
|
|
|
1
|
%
|
||||
Selling and administrative (S&A) expenses
|
132,784
|
|
|
131,023
|
|
|
1
|
%
|
|
256,327
|
|
|
250,018
|
|
|
3
|
%
|
||||
Amortization of acquisition-related intangibles
|
5,130
|
|
|
3,040
|
|
|
69
|
%
|
|
11,191
|
|
|
4,880
|
|
|
129
|
%
|
||||
Restructuring and other charges, net
|
—
|
|
|
(358
|
)
|
|
(100
|
)%
|
|
—
|
|
|
(170
|
)
|
|
(100
|
)%
|
||||
Operating profit
|
164,475
|
|
|
148,821
|
|
|
|
|
331,694
|
|
|
310,613
|
|
|
|
||||||
Interest expense
|
15,060
|
|
|
11,407
|
|
|
32
|
%
|
|
27,539
|
|
|
22,502
|
|
|
22
|
%
|
||||
Other (income) expense
|
(2,635
|
)
|
|
436
|
|
|
(704
|
)%
|
|
(2,792
|
)
|
|
(5,275
|
)
|
|
(47
|
)%
|
||||
Income before taxes
|
152,050
|
|
|
136,978
|
|
|
|
|
306,947
|
|
|
293,386
|
|
|
|
||||||
Taxes on income
|
35,317
|
|
|
31,604
|
|
|
12
|
%
|
|
71,610
|
|
|
59,754
|
|
|
20
|
%
|
||||
Net income
|
$
|
116,733
|
|
|
$
|
105,374
|
|
|
11
|
%
|
|
$
|
235,337
|
|
|
$
|
233,632
|
|
|
1
|
%
|
Diluted EPS
|
$
|
1.46
|
|
|
$
|
1.29
|
|
|
13
|
%
|
|
$
|
2.93
|
|
|
$
|
2.86
|
|
|
2
|
%
|
Gross margin
|
46.1
|
%
|
|
45.0
|
%
|
|
110
|
|
|
46.0
|
%
|
|
44.8
|
%
|
|
120
|
|
||||
R&D as a percentage of sales
|
8.0
|
%
|
|
8.1
|
%
|
|
(10
|
)
|
|
8.0
|
%
|
|
8.2
|
%
|
|
(20
|
)
|
||||
S&A as a percentage of sales
|
16.7
|
%
|
|
17.1
|
%
|
|
(40
|
)
|
|
16.3
|
%
|
|
16.2
|
%
|
|
10
|
|
||||
Operating margin
|
20.7
|
%
|
|
19.4
|
%
|
|
130
|
|
|
21.0
|
%
|
|
20.1
|
%
|
|
90
|
|
||||
Adjusted operating margin
(1)
|
20.9
|
%
|
|
20.2
|
%
|
|
70
|
|
|
21.1
|
%
|
|
20.6
|
%
|
|
50
|
|
||||
Effective tax rate
|
23.2
|
%
|
|
23.1
|
%
|
|
10
|
|
|
23.3
|
%
|
|
20.4
|
%
|
|
290
|
|
||||
Segment net sales
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Flavors
|
$
|
379,504
|
|
|
$
|
372,478
|
|
|
2
|
%
|
|
$
|
752,012
|
|
|
$
|
749,586
|
|
|
—
|
%
|
Fragrances
|
413,974
|
|
|
395,063
|
|
|
5
|
%
|
|
824,777
|
|
|
792,862
|
|
|
4
|
%
|
||||
Consolidated
|
$
|
793,478
|
|
|
$
|
767,541
|
|
|
|
|
$
|
1,576,789
|
|
|
$
|
1,542,448
|
|
|
|
(1)
|
Adjusted operating margin excludes
$1.2 million
consisting of restructuring, acquisition-related and operational improvement costs for the
three months ended June 30, 2016
and excludes
$6.5 million
acquisition-related, restructuring and operational improvement initiative costs for the
three months ended June 30, 2015
. For the
six
months ended
June 30, 2016
, adjusted operating margin excludes
$1.1 million
of restructuring, acquisition-related and operational improvement initiative costs which were partially offset by the benefit of the Spanish capital tax settlement compared to the exclusion of
$7.5 million
of Restructuring and other charges, net and operational improvement initiative costs during the comparable
2015
period.
|
|
21
|
|
|
|
% Change in Sales - Second Quarter 2016 vs. Second Quarter 2015
|
||||||||||||||||
|
|
Fine Fragrances
|
|
Consumer Fragrances
|
|
Ingredients
|
|
Total Frag.
|
|
Flavors
|
|
Total
|
||||||
NOAM
|
Reported
|
-5
|
%
|
|
8
|
%
|
|
17
|
%
|
|
7
|
%
|
|
4
|
%
|
|
5
|
%
|
EAME
|
Reported
|
-3
|
%
|
|
3
|
%
|
|
23
|
%
|
|
5
|
%
|
|
3
|
%
|
|
5
|
%
|
|
Currency Neutral
(1)
|
-5
|
%
|
|
1
|
%
|
|
21
|
%
|
|
3
|
%
|
|
4
|
%
|
|
4
|
%
|
LA
|
Reported
|
9
|
%
|
|
-5
|
%
|
|
-14
|
%
|
|
-3
|
%
|
|
-10
|
%
|
|
-5
|
%
|
|
Currency Neutral
(1)
|
15
|
%
|
|
-4
|
%
|
|
-14
|
%
|
|
-1
|
%
|
|
-7
|
%
|
|
-3
|
%
|
GA
|
Reported
|
0
|
%
|
|
10
|
%
|
|
9
|
%
|
|
9
|
%
|
|
4
|
%
|
|
6
|
%
|
|
Currency Neutral
(1)
|
1
|
%
|
|
11
|
%
|
|
8
|
%
|
|
11
|
%
|
|
6
|
%
|
|
8
|
%
|
Total
|
Reported
|
-1
|
%
|
|
4
|
%
|
|
15
|
%
|
|
5
|
%
|
|
2
|
%
|
|
3
|
%
|
|
Currency Neutral
(1)
|
-1
|
%
|
|
4
|
%
|
|
14
|
%
|
|
5
|
%
|
|
3
|
%
|
|
4
|
%
|
(1)
|
Currency neutral sales growth is calculated by translating prior year sales at the exchange rates for the corresponding
2016
period.
|
•
|
NOAM Flavors sales increased
4%
, which included the impact of acquisitions contributing to high single-digit growth in Beverage and low single-digit growth in Sweet. NOAM Fragrance sales increased
7%
in the
second
quarter of
2016
, principally due to double-digit gains Fragrance Ingredients, which included the impact of acquisitions, Home Care, Fabric Care and Hair Care, which was partially offset by mid single-digit declines in Fine Fragrance.
|
•
|
EAME Flavors currency neutral sales increased
4%
primarily due to double-digit growth in Dairy, high single-digit growth in Beverage and mid to low single-digit growth in Sweet and Savory. EAME Fragrance currency neutral sales increased
3%
overall, driven mainly by double-digit growth in Fragrance Ingredients, which included the impact of acquisitions, Hair Care and Home Care, which more than offset low single-digit declines in Fine Fragrance.
|
•
|
LA Flavors currency neutral sales declined
7%
driven by double-digit declines in Sweet and high single-digit declines in Beverage, which were only partially offset by mid single-digit growth in Savory and Dairy categories. LA Fragrances currency neutral sales decreased
1%
overall, principally driven by double-digit declines in Fragrance Ingredients and Home Care as well as high single-digit declines in Fabric Care, which were only partially offset by double-digit growth in Fine Fragrance and Personal Wash.
|
•
|
GA Flavors currency neutral sales increased
6%
from the prior year period driven by double-digit growth in Sweet, mid single-digit growth in Savory and low single-digit gains in Beverage and Dairy. GA Fragrances currency neutral sales growth of
11%
was principally driven by double-digit gains in Fabric Care and Personal Wash as well as high single-digit growth in Fragrance Ingredients, which included the impact of acquisitions.
|
|
22
|
|
|
Three Months Ended June 30,
|
||||||
(DOLLARS IN THOUSANDS)
|
2016
|
|
2015
|
||||
Segment profit:
|
|
|
|
||||
Flavors
|
$
|
90,337
|
|
|
$
|
84,015
|
|
Fragrances
|
87,596
|
|
|
79,924
|
|
||
Global expenses
|
(12,232
|
)
|
|
(8,629
|
)
|
||
Restructuring and other charges, net
|
(182
|
)
|
|
358
|
|
||
Acquisition and related costs
|
(213
|
)
|
|
(6,566
|
)
|
||
Operational improvement initiative costs
|
(831
|
)
|
|
(281
|
)
|
||
Operating profit
|
$
|
164,475
|
|
|
$
|
148,821
|
|
Profit margin:
|
|
|
|
||||
Flavors
|
23.8
|
%
|
|
22.6
|
%
|
||
Fragrances
|
21.2
|
%
|
|
20.2
|
%
|
||
Consolidated
|
20.7
|
%
|
|
19.4
|
%
|
|
23
|
|
|
24
|
|
|
|
% Change in Sales - First Six Months 2016 vs. First Six Months 2015
|
||||||||||||||||
|
|
Fine Fragrances
|
|
Consumer Fragrances
|
|
Ingredients
|
|
Total Frag.
|
|
Flavors
|
|
Total
|
||||||
NOAM
|
Reported
|
5
|
%
|
|
7
|
%
|
|
23
|
%
|
|
10
|
%
|
|
6
|
%
|
|
8
|
%
|
EAME
|
Reported
|
-2
|
%
|
|
-1
|
%
|
|
13
|
%
|
|
2
|
%
|
|
-3
|
%
|
|
0
|
%
|
|
Currency Neutral
(1)
|
0
|
%
|
|
1
|
%
|
|
15
|
%
|
|
4
|
%
|
|
1
|
%
|
|
3
|
%
|
LA
|
Reported
|
-1
|
%
|
|
0
|
%
|
|
-10
|
%
|
|
-1
|
%
|
|
-6
|
%
|
|
-2
|
%
|
|
Currency Neutral
(1)
|
9
|
%
|
|
3
|
%
|
|
-9
|
%
|
|
3
|
%
|
|
1
|
%
|
|
2
|
%
|
GA
|
Reported
|
-3
|
%
|
|
6
|
%
|
|
12
|
%
|
|
7
|
%
|
|
1
|
%
|
|
3
|
%
|
|
Currency Neutral
(1)
|
-1
|
%
|
|
8
|
%
|
|
12
|
%
|
|
8
|
%
|
|
4
|
%
|
|
6
|
%
|
Total
|
Reported
|
0
|
%
|
|
3
|
%
|
|
13
|
%
|
|
4
|
%
|
|
0
|
%
|
|
2
|
%
|
|
Currency Neutral
(1)
|
3
|
%
|
|
5
|
%
|
|
15
|
%
|
|
6
|
%
|
|
4
|
%
|
|
5
|
%
|
(1)
|
Currency neutral sales growth is calculated by translating prior year sales at the exchange rates for the corresponding
2016
period.
|
•
|
NOAM Flavors sales increased
6%
, which included the impact of acquisitions contributing to high single-digit growth in Beverage and Sweet which more than offset high single-digit declines in Dairy. NOAM Fragrance sales increased
10%
in the
second
quarter of
2016
, principally due to double-digit gains Fragrance Ingredients, which included the impact of acquisitions, Fabric Care and Home Care as well as mid single-digit gains in Fine Fragrance.
|
•
|
EAME Flavors currency neutral sales increased
1%
primarily due to high single-digit growth in Dairy and low single-digit growth in Beverage and Sweet. EAME Fragrance currency neutral sales increased
4%
overall, driven mainly by double-digit growth in Fragrance Ingredients, which included the impact of acquisitions, and Hair Care as well as low single-digit growth in Fabric Care and Fine Fragrance.
|
•
|
LA Flavors currency neutral sales were up
1%
driven by double-digit gains in the Savory and Dairy. LA Fragrances currency neutral sales increased
3%
overall, principally led by double-digit gains in Personal Wash, Fine Fragrance and Hair Care, which more than offset high single-digit declines in Fragrance Ingredients and mid single-digit declines in Fabric Care.
|
•
|
GA Flavors currency neutral sales increased
4%
from the prior year period driven by high single-digit gains in Sweet and low to mid single-digit gains in Savory, Beverage and Dairy. GA Fragrances currency neutral sales growth of
8%
was principally driven by double-digit gains in Fragrance Ingredients, which included the impact of acquisitions, Fabric Care and Personal Wash which more than offset mid single-digit declines in Hair Care.
|
|
25
|
|
|
Six Months Ended June 30,
|
||||||
(DOLLARS IN THOUSANDS)
|
2016
|
|
2015
|
||||
Segment profit:
|
|
|
|
||||
Flavors
|
$
|
182,151
|
|
|
$
|
176,743
|
|
Fragrances
|
176,833
|
|
|
161,522
|
|
||
Global expenses
|
(26,141
|
)
|
|
(20,194
|
)
|
||
Restructuring and other charges, net
|
(283
|
)
|
|
170
|
|
||
Acquisition and related costs
|
(1,249
|
)
|
|
(7,066
|
)
|
||
Operational improvement initiative costs
|
(1,099
|
)
|
|
(562
|
)
|
||
Spanish capital tax settlement
|
1,482
|
|
|
—
|
|
||
Operating profit
|
$
|
331,694
|
|
|
$
|
310,613
|
|
Profit margin:
|
|
|
|
||||
Flavors
|
24.2
|
%
|
|
23.6
|
%
|
||
Fragrances
|
21.4
|
%
|
|
20.4
|
%
|
||
Consolidated
|
21.0
|
%
|
|
20.1
|
%
|
|
26
|
|
|
27
|
|
(1)
|
Adjusted EBITDA and Net Debt, which are non-GAAP measures used for these covenants, are calculated in accordance with the definition in the debt agreements. In this context, these measures are used solely to provide information on the extent to which we are in compliance with debt covenants and may not be comparable to adjusted EBITDA and Net Debt used by other companies. Reconciliations of adjusted EBITDA to net income and net debt to total debt are as follows:
|
|
28
|
|
|
Twelve Months Ended June 30,
|
||||||
(DOLLARS IN MILLIONS)
|
2016
|
|
2015
|
||||
Net income
|
$
|
420.8
|
|
|
$
|
431.2
|
|
Interest expense
|
51.2
|
|
|
45.5
|
|
||
Income taxes
|
131.8
|
|
|
121.9
|
|
||
Depreciation and amortization
|
98.2
|
|
|
81.4
|
|
||
Specified items
(1)
|
15.0
|
|
|
0.8
|
|
||
Non-cash items
(2)
|
20.4
|
|
|
19.3
|
|
||
Adjusted EBITDA
|
$
|
737.4
|
|
|
$
|
700.1
|
|
(1)
|
Specified items for the 12 months ended
June 30, 2016
of
$15.0 million
consist of costs associated with restructuring and the acceleration of the contingent consideration related to the Aromor acquisition as discussed in our 2015 Form 10-K.
|
(2)
|
Non-cash items represent all other adjustments to reconcile net income to net cash provided by operations as presented on the Statement of Cash Flows, including gain on disposal of assets, stock-based compensation and pension settlement/curtailment.
|
|
June 30,
|
||||||
(DOLLARS IN MILLIONS)
|
2016
|
|
2015
|
||||
Total debt
|
$
|
1,491.2
|
|
|
$
|
998.0
|
|
Adjustments:
|
|
|
|
||||
Deferred gain on interest rate swaps
|
(2.3
|
)
|
|
(4.2
|
)
|
||
Cash and cash equivalents
|
(540.0
|
)
|
|
(377.3
|
)
|
||
Net debt
|
$
|
948.9
|
|
|
$
|
616.5
|
|
•
|
our ability to implement our Vision 2020 strategy;
|
•
|
our ability to successfully identify and complete acquisitions in line with our Vision 2020 strategy, and to realize the anticipated benefits of those acquisitions;
|
•
|
our ability to effectively compete in our market, and to successfully develop new and competitive products that appeal to our customers and consumers;
|
•
|
changes in consumer preferences and demand for our products or a decline in consumer confidence and spending;
|
•
|
our ability to benefit from our investments and expansion in emerging markets;
|
•
|
the impact of currency fluctuations or devaluations in the principal foreign markets in which we operate, including the devaluation of the Euro;
|
•
|
the economic and political risks associated with our international operations, including challenging economic conditions in China and Latin America;
|
|
29
|
|
•
|
the effect of legal and regulatory developments, as well as restrictions or costs that may be imposed on us or our operations by U.S. and foreign governments;
|
•
|
the impact of any failure of our key information technology systems or a breach of information security;
|
•
|
our ability to attract and retain talented employees;
|
•
|
our ability to comply with, and the costs associated with compliance, with U.S. and foreign environmental protection laws;
|
•
|
our ability to realize expected cost savings and efficiencies from our profitability improvement initiatives and other optimization activities;
|
•
|
volatility and increases in the price of raw materials, energy and transportation;
|
•
|
fluctuations in the quality and availability of raw materials;
|
•
|
the impact of a disruption in our supply chain or our relationship with our suppliers;
|
•
|
any adverse impact on the availability, effectiveness and cost of our hedging and risk management strategies;
|
•
|
our ability to successfully manage our working capital and inventory balances;
|
•
|
uncertainties regarding the outcome of, or funding requirements, related to litigation or settlement of pending litigation, uncertain tax positions or other contingencies;
|
•
|
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
|
•
|
changes in market conditions or governmental regulations relating to our pension and postretirement obligations.
|
|
30
|
|
|
Second Quarter 2016
|
||||||||||
|
Items Impacting Comparability
|
||||||||||
|
Adjusted Gross Profit
|
||||||||||
|
Reported (GAAP)
|
|
Restructuring and Other Charges (a)
|
|
Operational Improvement Initiative Costs (b)
|
|
Adjusted (Non-GAAP)
|
||||
Gross profit
|
365,641
|
|
|
182
|
|
|
831
|
|
|
366,654
|
|
|
Second Quarter 2016
|
|||||||
|
Items Impacting Comparability
|
|||||||
|
Adjusted Selling and administrative expenses
|
|||||||
|
Reported (GAAP)
|
|
Acquisition and Related Costs (c)
|
|
Adjusted (Non-GAAP)
|
|||
Selling and administrative expenses
|
132,784
|
|
|
(213
|
)
|
|
132,571
|
|
|
Second Quarter 2016
|
|||||||||||||
|
Items Impacting Comparability
|
|||||||||||||
|
Adjusted Operating Profit
|
|||||||||||||
|
Reported (GAAP)
|
|
Restructuring and Other Charges (a)
|
|
Operational Improvement Initiative Costs (b)
|
|
Acquisition Related Costs (c)
|
|
Adjusted (Non-GAAP)
|
|||||
Operating profit
|
164,475
|
|
|
182
|
|
|
831
|
|
|
213
|
|
|
165,701
|
|
|
Second Quarter 2016
|
|||||||||||||
|
Items Impacting Comparability
|
|||||||||||||
|
Adjusted Net Income
|
|||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||
|
Reported (GAAP)
|
|
Restructuring and Other Charges (a)
|
|
Operational Improvement Initiative Costs (b)
|
|
Acquisition Related Costs (c)
|
|
Adjusted (Non-GAAP)
|
|||||
Income before taxes
|
152,050
|
|
|
182
|
|
|
831
|
|
|
213
|
|
|
153,276
|
|
Taxes on income (d)
|
35,317
|
|
|
35
|
|
|
208
|
|
|
(102
|
)
|
|
35,458
|
|
Net income
|
116,733
|
|
|
147
|
|
|
623
|
|
|
315
|
|
|
117,818
|
|
|
31
|
|
|
Second Quarter 2015
|
||||||||||
|
Items Impacting Comparability
|
||||||||||
|
Adjusted Gross Profit
|
||||||||||
|
Reported (GAAP)
|
|
Operational Improvement Initiative Costs (b)
|
|
Acquisition and Related Costs (c)
|
|
Adjusted (Non-GAAP)
|
||||
Gross profit
|
345,040
|
|
|
281
|
|
|
844
|
|
|
346,165
|
|
|
Second Quarter 2015
|
|||||||
|
Items Impacting Comparability
|
|||||||
|
Adjusted Selling and Administrative Expenses
|
|||||||
|
Reported (GAAP)
|
|
Acquisition and Related Costs (c)
|
|
Adjusted (Non-GAAP)
|
|||
Selling and administrative expenses
|
131,023
|
|
|
(5,722
|
)
|
|
125,301
|
|
|
Second Quarter 2015
|
|||||||||||||
|
Items Impacting Comparability
|
|||||||||||||
|
Adjusted Operating Profit
|
|||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||
|
Reported (GAAP)
|
|
Restructuring and Other Charges (a)
|
|
Operational Improvement Initiative Costs (b)
|
|
Acquisition related costs (c)
|
|
Adjusted (Non-GAAP)
|
|||||
Operating profit
|
148,821
|
|
|
(358
|
)
|
|
281
|
|
|
6,566
|
|
|
155,310
|
|
|
Second Quarter 2015
|
|||||||||||||
|
Items Impacting Comparability
|
|||||||||||||
|
Adjusted Net Income
|
|||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||
|
Reported (GAAP)
|
|
Restructuring and Other Charges (a)
|
|
Operational Improvement Initiative Costs (b)
|
|
Acquisition Related Costs (c)
|
|
Adjusted (Non-GAAP)
|
|||||
Income before taxes
|
136,978
|
|
|
(358
|
)
|
|
281
|
|
|
6,566
|
|
|
143,467
|
|
Taxes on income (d)
|
31,604
|
|
|
(125
|
)
|
|
70
|
|
|
875
|
|
|
32,424
|
|
Net income
|
105,374
|
|
|
(233
|
)
|
|
211
|
|
|
5,691
|
|
|
111,043
|
|
|
32
|
|
|
Second Quarter Year-to-Date 2016
|
|||||||||||||
|
Items Impacting Comparability
|
|||||||||||||
|
Adjusted Gross Profit
|
|||||||||||||
|
Reported (GAAP)
|
|
Restructuring and Other Charges (a)
|
|
Operational Improvement Initiative Costs (b)
|
|
Acquisition Related Costs (c)
|
|
Adjusted (Non-GAAP)
|
|||||
Gross profit
|
725,849
|
|
|
283
|
|
|
1,099
|
|
|
889
|
|
|
728,120
|
|
|
Second Quarter Year-to-Date 2016
|
||||||||||
|
Items Impacting Comparability
|
||||||||||
|
Adjusted Selling and Administrative Expense
|
||||||||||
|
Reported (GAAP)
|
|
Acquisition Related Costs (c)
|
|
Tax Settlements (d)
|
|
Adjusted (Non-GAAP)
|
||||
Selling and administrative expense
|
256,327
|
|
|
(360
|
)
|
|
1,482
|
|
|
257,449
|
|
|
Second Quarter Year-to-Date 2016
|
||||||||||||||||
|
Items Impacting Comparability
|
||||||||||||||||
|
Adjusted Operating Income
|
||||||||||||||||
|
Reported (GAAP)
|
|
Restructuring and Other Charges (a)
|
|
Operational Improvement Initiative Costs (b)
|
|
Acquisition Related Costs (c)
|
|
Tax Settlements (d)
|
|
Adjusted (Non-GAAP)
|
||||||
Operating profit
|
331,694
|
|
|
283
|
|
|
1,099
|
|
|
1,249
|
|
|
(1,482
|
)
|
|
332,843
|
|
|
Second Quarter Year-to-Date 2016
|
||||||||||||||||
|
Items Impacting Comparability
|
||||||||||||||||
|
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
|
306,947
|
|
|
283
|
|
|
1,099
|
|
|
1,249
|
|
|
(1,482
|
)
|
|
308,096
|
|
Taxes on income (e)
|
71,610
|
|
|
54
|
|
|
275
|
|
|
266
|
|
|
(411
|
)
|
|
71,794
|
|
Net income
|
235,337
|
|
|
229
|
|
|
824
|
|
|
983
|
|
|
(1,071
|
)
|
|
236,302
|
|
|
33
|
|
|
Second Quarter Year-to-Date 2015
|
||||||||||
|
Items Impacting Comparability
|
||||||||||
|
Adjusted Gross Profit
|
||||||||||
|
Reported (GAAP)
|
|
Operational Improvement Initiative Costs (b)
|
|
Acquisition Related Costs (c)
|
|
Adjusted (Non-GAAP)
|
||||
Gross profit
|
691,317
|
|
|
562
|
|
|
843
|
|
|
692,722
|
|
|
Second Quarter Year-to-Date 2015
|
|||||||
|
Items Impacting Comparability
|
|||||||
|
Adjusted Selling and Administrative Expense
|
|||||||
|
Reported (GAAP)
|
|
Acquisition Related Costs (c)
|
|
Adjusted (Non-GAAP)
|
|||
Selling and administrative expense
|
250,018
|
|
|
(6,222
|
)
|
|
243,796
|
|
|
Second Quarter Year-to-Date 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
|
310,613
|
|
|
(170
|
)
|
|
562
|
|
|
7,065
|
|
|
318,070
|
|
|
Second Quarter Year-to-Date 2015
|
||||||||||||||||
|
Items Impacting Comparability
|
||||||||||||||||
|
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
|
293,386
|
|
|
(170
|
)
|
|
562
|
|
|
7,065
|
|
|
—
|
|
|
300,843
|
|
Taxes on income (e)
|
59,754
|
|
|
(60
|
)
|
|
140
|
|
|
1,050
|
|
|
10,478
|
|
|
71,362
|
|
Net income
|
233,632
|
|
|
(110
|
)
|
|
422
|
|
|
6,015
|
|
|
(10,478
|
)
|
|
229,481
|
|
|
34
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Operating Profit:
|
|
|
|
|
|
|
|
% Change - Reported (GAAP)
|
11%
|
|
(3)%
|
|
7%
|
|
—%
|
Items impacting comparability
(1)
|
(4)%
|
|
2%
|
|
(2)%
|
|
1%
|
% Change - Adjusted (Non-GAAP)
|
7%
|
|
(1)%
|
|
5%
|
|
1%
|
Currency Impact
|
—%
|
|
8%
|
|
2%
|
|
8%
|
% Change Year-over-Year - Currency Neutral Adjusted (Non-GAAP)**
|
7%
|
|
7%
|
|
7%
|
|
9%
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||
(DOLLARS IN THOUSANDS)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Amortization Expense:
|
|
|
|
|
|
|
|
Ottens Flavors
|
$1,586
|
|
$1,200
|
|
$3,202
|
|
$1,200
|
Lucas Meyer
|
1,686
|
|
—
|
|
4,272
|
|
—
|
|
35
|
|
Item 1.
|
Legal Proceedings
|
|
36
|
|
|
37
|
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
Period
|
Total Number of
Shares
Repurchased
(1)
|
|
Average
Price Paid
per Share
|
|
Total Number of
Shares Purchased as
Part of Publicly
Announced Program
|
|
Approximate Dollar Value
of Shares That May Yet
be Purchased Under the
Program
|
||||||
April 1 - 30, 2016
|
85,645
|
|
|
$
|
118.75
|
|
|
85,645
|
|
|
$
|
186,563,378
|
|
May 1 - 31, 2016
|
85,743
|
|
|
121.97
|
|
|
85,743
|
|
|
176,105,137
|
|
||
June 1 - 30, 2016
|
87,502
|
|
|
126.61
|
|
|
87,502
|
|
|
165,026,549
|
|
||
Total
|
258,890
|
|
|
$
|
122.47
|
|
|
258,890
|
|
|
$
|
165,026,549
|
|
(1)
|
Shares were repurchased pursuant to the repurchase program originally announced in December 2012 and amended in August 2015 (i) to increase from $250 million to $500 million the total purchase price of shares that may be repurchased under the program and (ii) to extend the program through December 31, 2017. Authorization of the repurchase program may be modified, suspended, or discontinued at any time.
|
Item 6.
|
Exhibits
|
31.1
|
|
Certification of Andreas Fibig pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
31.2
|
|
Certification of Alison A. Cornell pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
32
|
|
Certification of Andreas Fibig and Alison A. Cornell pursuant to 18 U.S.C. Section 1350 as adopted pursuant to the Sarbanes-Oxley Act of 2002.
|
101.INS
|
|
XBRL Instance Document
|
101.SCH
|
|
XBRL Taxonomy Extensions Schema
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase
|
|
38
|
|
Dated:
|
|
August 8, 2016
|
By:
|
|
/s/ Andreas Fibig
|
|
|
|
|
|
Andreas Fibig
|
|
|
|
|
|
Chairman of the Board and Chief Executive Officer
|
|
|
|
|
|
|
Dated:
|
|
August 8, 2016
|
By:
|
|
/s/ Alison A. Cornell
|
|
|
|
|
|
Alison A. Cornell
|
|
|
|
|
|
Executive Vice President and Chief Financial Officer
|
|
39
|
|
Number
|
|
Description
|
31.1
|
|
Certification of Andreas Fibig pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
31.2
|
|
Certification of Alison A. Cornell pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
32
|
|
Certification of Andreas Fibig and Alison A. Cornell pursuant to 18 U.S.C. Section 1350 as adopted pursuant to the Sarbanes-Oxley Act of 2002.
|
101.INS
|
|
XBRL Instance Document
|
101.SCH
|
|
XBRL Taxonomy Extensions Schema
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase
|
|
40
|
|
1 Year International Flavors an... Chart |
1 Month International Flavors an... Chart |
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