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Name | Symbol | Market | Type |
---|---|---|---|
International Flavors and Fragrances Inc | NYSE:IFFT | NYSE | Trust |
Price Change | % Change | Price | High Price | Low Price | Open Price | Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 47.56 | 0 | 01:00:00 |
☒
|
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.)
|
Title of each class
|
|
Trading Symbol(s)
|
|
Name of each exchange
on which registered
|
Common Stock, par value 12 1/2¢ per share
|
|
IFF
|
|
New York Stock Exchange
|
6.00% Tangible Equity Units
|
|
IFFT
|
|
New York Stock Exchange
|
0.500% Senior Notes due 2021
|
|
IFF 21
|
|
New York Stock Exchange
|
1.750% Senior Notes due 2024
|
|
IFF 24
|
|
New York Stock Exchange
|
1.800% Senior Notes due 2026
|
|
IFF 26
|
|
New York Stock Exchange
|
Large accelerated filer
|
☒
|
Accelerated filer
|
☐
|
Non-accelerated filer
|
☐
|
Smaller reporting company
|
☐
|
|
|
Emerging growth company
|
☐
|
(DOLLARS IN THOUSANDS)
|
March 31, 2020
|
|
December 31, 2019
|
||||
ASSETS
|
|
|
|
||||
Current Assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
433,246
|
|
|
$
|
606,823
|
|
Restricted cash
|
9,699
|
|
|
17,122
|
|
||
Trade receivables (net of allowances of $18,728 and $16,428, respectively)
|
943,114
|
|
|
876,197
|
|
||
Inventories: Raw materials
|
553,433
|
|
|
565,071
|
|
||
Work in process
|
48,297
|
|
|
44,532
|
|
||
Finished goods
|
474,183
|
|
|
513,465
|
|
||
Total Inventories
|
1,075,913
|
|
|
1,123,068
|
|
||
Prepaid expenses and other current assets
|
356,322
|
|
|
319,334
|
|
||
Total Current Assets
|
2,818,294
|
|
|
2,942,544
|
|
||
Property, plant and equipment, at cost
|
2,632,441
|
|
|
2,690,768
|
|
||
Accumulated depreciation
|
(1,293,317
|
)
|
|
(1,303,848
|
)
|
||
|
1,339,124
|
|
|
1,386,920
|
|
||
Goodwill
|
5,267,559
|
|
|
5,497,596
|
|
||
Other intangible assets, net
|
2,677,446
|
|
|
2,851,935
|
|
||
Other assets
|
586,653
|
|
|
608,416
|
|
||
Total Assets
|
$
|
12,689,076
|
|
|
$
|
13,287,411
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
||||
Current Liabilities:
|
|
|
|
||||
Bank borrowings, overdrafts, and current portion of long-term debt
|
$
|
385,569
|
|
|
$
|
384,958
|
|
Accounts payable
|
456,156
|
|
|
510,372
|
|
||
Accrued payroll and bonus
|
87,083
|
|
|
102,704
|
|
||
Dividends payable
|
80,062
|
|
|
80,038
|
|
||
Other current liabilities
|
418,125
|
|
|
474,118
|
|
||
Total Current Liabilities
|
1,426,995
|
|
|
1,552,190
|
|
||
Long-term debt
|
3,946,905
|
|
|
3,997,438
|
|
||
Retirement liabilities
|
261,512
|
|
|
265,370
|
|
||
Deferred income taxes
|
616,084
|
|
|
641,456
|
|
||
Other liabilities
|
494,193
|
|
|
502,366
|
|
||
Total Other Liabilities
|
5,318,694
|
|
|
5,406,630
|
|
||
Commitments and Contingencies (Note 15)
|
|
|
|
||||
Redeemable noncontrolling interests
|
102,713
|
|
|
99,043
|
|
||
Shareholders’ Equity:
|
|
|
|
||||
Common stock 12 1/2¢ par value; 500,000,000 shares authorized; 128,526,137 shares issued as of March 31, 2020 and December 31, 2019; and 106,812,257 and 106,787,299 shares outstanding as of March 31, 2020 and December 31, 2019, respectively
|
16,066
|
|
|
16,066
|
|
||
Capital in excess of par value
|
3,835,265
|
|
|
3,823,152
|
|
||
Retained earnings
|
4,162,347
|
|
|
4,117,804
|
|
||
Accumulated other comprehensive loss
|
(1,164,208
|
)
|
|
(716,894
|
)
|
||
Treasury stock, at cost (21,713,880 and 21,738,838 shares as of March 31, 2020 and December 31, 2019, respectively)
|
(1,021,620
|
)
|
|
(1,022,824
|
)
|
||
Total Shareholders’ Equity
|
5,827,850
|
|
|
6,217,304
|
|
||
Noncontrolling interest
|
12,824
|
|
|
12,244
|
|
||
Total Shareholders’ Equity including Noncontrolling interest
|
5,840,674
|
|
|
6,229,548
|
|
||
Total Liabilities and Shareholders’ Equity
|
$
|
12,689,076
|
|
|
$
|
13,287,411
|
|
|
Three Months Ended
|
||||||
|
March 31,
|
||||||
(AMOUNTS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
|
2020
|
|
2019
|
||||
Net sales
|
$
|
1,347,317
|
|
|
$
|
1,297,402
|
|
Cost of goods sold
|
781,450
|
|
|
766,143
|
|
||
Gross profit
|
565,867
|
|
|
531,259
|
|
||
Research and development expenses
|
85,909
|
|
|
90,596
|
|
||
Selling and administrative expenses
|
229,714
|
|
|
213,182
|
|
||
Amortization of acquisition-related intangibles
|
48,350
|
|
|
47,625
|
|
||
Restructuring and other charges, net
|
4,918
|
|
|
16,174
|
|
||
Losses (gains) on sales of fixed assets
|
754
|
|
|
(188
|
)
|
||
Operating profit
|
196,222
|
|
|
163,870
|
|
||
Interest expense
|
32,140
|
|
|
36,572
|
|
||
Other loss (income), net
|
10,574
|
|
|
(7,278
|
)
|
||
Income before taxes
|
153,508
|
|
|
134,576
|
|
||
Taxes on income
|
26,297
|
|
|
23,362
|
|
||
Net income
|
127,211
|
|
|
111,214
|
|
||
Net income attributable to noncontrolling interests
|
2,604
|
|
|
2,385
|
|
||
Net income attributable to IFF stockholders
|
124,607
|
|
|
108,829
|
|
||
Other comprehensive (loss) income, after tax:
|
|
|
|
||||
Foreign currency translation adjustments
|
(452,278
|
)
|
|
42,377
|
|
||
Gains (losses) on derivatives qualifying as hedges
|
1,447
|
|
|
(97
|
)
|
||
Pension and postretirement net liability
|
3,517
|
|
|
2,593
|
|
||
Other comprehensive (loss) income
|
(447,314
|
)
|
|
44,873
|
|
||
Comprehensive (loss) income attributable to IFF stockholders
|
$
|
(322,707
|
)
|
|
$
|
153,702
|
|
|
|
|
|
||||
Net income per share - basic
|
$
|
1.16
|
|
|
$
|
0.97
|
|
Net income per share - diluted
|
$
|
1.15
|
|
|
$
|
0.96
|
|
Average number of shares outstanding - basic
|
112,082
|
|
|
111,864
|
|
||
Average number of shares outstanding - diluted
|
113,594
|
|
|
113,389
|
|
|
Three Months Ended March 31,
|
||||||
(DOLLARS IN THOUSANDS)
|
2020
|
|
2019
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net income
|
$
|
127,211
|
|
|
$
|
111,214
|
|
Adjustments to reconcile to net cash provided by operating activities
|
|
|
|
||||
Depreciation and amortization
|
80,595
|
|
|
81,775
|
|
||
Deferred income taxes
|
2,221
|
|
|
(12,389
|
)
|
||
Losses (gains) on sale of assets
|
754
|
|
|
(188
|
)
|
||
Stock-based compensation
|
8,624
|
|
|
7,604
|
|
||
Pension contributions
|
(5,397
|
)
|
|
(3,956
|
)
|
||
Changes in assets and liabilities, net of acquisitions:
|
|
|
|
||||
Trade receivables
|
(133,291
|
)
|
|
(55,935
|
)
|
||
Inventories
|
(568
|
)
|
|
(24,719
|
)
|
||
Accounts payable
|
(31,635
|
)
|
|
8,988
|
|
||
Accruals for incentive compensation
|
(19,340
|
)
|
|
(36,969
|
)
|
||
Other current payables and accrued expenses
|
(65,158
|
)
|
|
(11,321
|
)
|
||
Other assets
|
42,462
|
|
|
(9,978
|
)
|
||
Other liabilities
|
10,467
|
|
|
(6,894
|
)
|
||
Net cash provided by operating activities
|
16,945
|
|
|
47,232
|
|
||
Cash flows from investing activities:
|
|
|
|
||||
Cash paid for acquisitions, net of cash received
|
—
|
|
|
(33,895
|
)
|
||
Additions to property, plant and equipment
|
(48,294
|
)
|
|
(57,609
|
)
|
||
Proceeds from life insurance contracts
|
1,739
|
|
|
1,890
|
|
||
Proceeds from disposal of assets
|
3,806
|
|
|
3,970
|
|
||
Contingent consideration paid
|
—
|
|
|
(4,655
|
)
|
||
Net cash used in investing activities
|
(42,749
|
)
|
|
(90,299
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Cash dividends paid to shareholders
|
(80,038
|
)
|
|
(77,779
|
)
|
||
Increase in revolving credit facility and short term borrowings
|
169
|
|
|
2,895
|
|
||
Repayments on debt
|
(11,584
|
)
|
|
(36,156
|
)
|
||
Contingent consideration paid
|
(327
|
)
|
|
—
|
|
||
Purchases of redeemable noncontrolling interest
|
(14,173
|
)
|
|
—
|
|
||
Proceeds from issuance of stock in connection with stock options
|
—
|
|
|
200
|
|
||
Employee withholding taxes paid
|
(1,275
|
)
|
|
(1,339
|
)
|
||
Net cash used in financing activities
|
(107,228
|
)
|
|
(112,179
|
)
|
||
Effect of exchange rate changes on cash, cash equivalents and restricted cash
|
(42,529
|
)
|
|
3,853
|
|
||
Net change in cash, cash equivalents and restricted cash
|
(175,561
|
)
|
|
(151,393
|
)
|
||
Cash, cash equivalents and restricted cash at beginning of year
|
623,945
|
|
|
648,522
|
|
||
Cash, cash equivalents and restricted cash at end of period
|
$
|
448,384
|
|
|
$
|
497,129
|
|
Supplemental Disclosures:
|
|
|
|
||||
Interest paid, net of amounts capitalized
|
$
|
41,755
|
|
|
$
|
48,506
|
|
Income taxes paid
|
32,636
|
|
|
33,326
|
|
||
Accrued capital expenditures
|
19,013
|
|
|
14,241
|
|
(DOLLARS IN THOUSANDS)
|
Common
stock
|
|
Capital in
excess of
par value
|
|
Retained
earnings
|
|
Accumulated other
comprehensive (loss) income |
|
Treasury stock
|
|
Non-controlling
interest
|
|
Total
|
|||||||||||||||||
Shares
|
|
Cost
|
|
|||||||||||||||||||||||||||
Balance at January 1, 2019
|
$
|
16,066
|
|
|
$
|
3,793,609
|
|
|
$
|
3,956,221
|
|
|
$
|
(702,227
|
)
|
|
(21,906,935
|
)
|
|
$
|
(1,030,718
|
)
|
|
$
|
10,423
|
|
|
$
|
6,043,374
|
|
Net income
|
|
|
|
|
108,829
|
|
|
|
|
|
|
|
|
844
|
|
|
109,673
|
|
||||||||||||
Adoption of ASU 2016-02
|
|
|
|
|
23,094
|
|
|
|
|
|
|
|
|
|
|
23,094
|
|
|||||||||||||
Adoption of ASU 2017-12
|
|
|
|
|
981
|
|
|
|
|
|
|
|
|
|
|
981
|
|
|||||||||||||
Cumulative translation adjustment
|
|
|
|
|
|
|
42,377
|
|
|
|
|
|
|
|
|
42,377
|
|
|||||||||||||
Losses on derivatives qualifying as hedges; net of tax $44
|
|
|
|
|
|
|
(97
|
)
|
|
|
|
|
|
|
|
(97
|
)
|
|||||||||||||
Pension liability and postretirement adjustment; net of tax $836
|
|
|
|
|
|
|
2,593
|
|
|
|
|
|
|
|
|
2,593
|
|
|||||||||||||
Cash dividends declared ($0.73 per share)
|
|
|
|
|
(77,799
|
)
|
|
|
|
|
|
|
|
|
|
(77,799
|
)
|
|||||||||||||
Stock options/SSARs
|
|
|
3,424
|
|
|
|
|
|
|
13,978
|
|
|
660
|
|
|
|
|
4,084
|
|
|||||||||||
Vested restricted stock units and awards
|
|
|
(2,405
|
)
|
|
|
|
|
|
13,401
|
|
|
629
|
|
|
|
|
(1,776
|
)
|
|||||||||||
Stock-based compensation
|
|
|
7,604
|
|
|
|
|
|
|
|
|
|
|
|
|
7,604
|
|
|||||||||||||
Redeemable NCI
|
|
|
370
|
|
|
|
|
|
|
|
|
|
|
|
|
370
|
|
|||||||||||||
Balance at March 31, 2019
|
$
|
16,066
|
|
|
$
|
3,802,602
|
|
|
$
|
4,011,326
|
|
|
$
|
(657,354
|
)
|
|
(21,879,556
|
)
|
|
$
|
(1,029,429
|
)
|
|
$
|
11,267
|
|
|
$
|
6,154,478
|
|
(DOLLARS IN THOUSANDS)
|
Common
stock
|
|
Capital in
excess of
par value
|
|
Retained
earnings
|
|
Accumulated other
comprehensive (loss) income |
|
Treasury stock
|
|
Non-controlling
interest
|
|
Total
|
|||||||||||||||||
Shares
|
|
Cost
|
|
|||||||||||||||||||||||||||
Balance at January 1, 2020
|
$
|
16,066
|
|
|
$
|
3,823,152
|
|
|
$
|
4,117,804
|
|
|
$
|
(716,894
|
)
|
|
(21,738,838
|
)
|
|
$
|
(1,022,824
|
)
|
|
$
|
12,244
|
|
|
$
|
6,229,548
|
|
Net income
|
|
|
|
|
124,607
|
|
|
|
|
|
|
|
|
617
|
|
|
125,224
|
|
||||||||||||
Cumulative translation adjustment
|
|
|
|
|
|
|
(452,278
|
)
|
|
|
|
|
|
|
|
(452,278
|
)
|
|||||||||||||
Gains on derivatives qualifying as hedges; net of tax $(176)
|
|
|
|
|
|
|
1,447
|
|
|
|
|
|
|
|
|
1,447
|
|
|||||||||||||
Pension liability and postretirement adjustment; net of tax $(1,022)
|
|
|
|
|
|
|
3,517
|
|
|
|
|
|
|
|
|
3,517
|
|
|||||||||||||
Cash dividends declared ($0.75 per share)
|
|
|
|
|
(80,062
|
)
|
|
|
|
|
|
|
|
|
|
(80,062
|
)
|
|||||||||||||
Stock options/SSARs
|
|
|
(490
|
)
|
|
|
|
|
|
13,763
|
|
|
672
|
|
|
|
|
182
|
|
|||||||||||
Vested restricted stock units and awards
|
|
|
(1,827
|
)
|
|
|
|
|
|
11,195
|
|
|
532
|
|
|
|
|
(1,295
|
)
|
|||||||||||
Stock-based compensation
|
|
|
8,624
|
|
|
|
|
|
|
|
|
|
|
|
|
8,624
|
|
|||||||||||||
Redeemable NCI
|
|
|
5,806
|
|
|
|
|
|
|
|
|
|
|
|
|
5,806
|
|
|||||||||||||
Dividends paid on noncontrolling interest
and Other |
|
|
|
|
(2
|
)
|
|
|
|
|
|
|
|
(37
|
)
|
|
(39
|
)
|
||||||||||||
Balance at March 31, 2020
|
$
|
16,066
|
|
|
$
|
3,835,265
|
|
|
$
|
4,162,347
|
|
|
$
|
(1,164,208
|
)
|
|
(21,713,880
|
)
|
|
$
|
(1,021,620
|
)
|
|
$
|
12,824
|
|
|
$
|
5,840,674
|
|
(DOLLARS IN THOUSANDS)
|
March 31, 2020
|
|
December 31, 2019
|
|
March 31, 2019
|
|
December 31, 2018
|
||||||||
Current assets
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents
|
$
|
433,246
|
|
|
$
|
606,823
|
|
|
$
|
483,504
|
|
|
$
|
634,897
|
|
Restricted cash
|
9,699
|
|
|
17,122
|
|
|
13,625
|
|
|
13,625
|
|
||||
Noncurrent assets
|
|
|
|
|
|
|
|
||||||||
Restricted cash included in Other assets
|
5,439
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Cash, cash equivalents and restricted cash
|
$
|
448,384
|
|
|
$
|
623,945
|
|
|
$
|
497,129
|
|
|
$
|
648,522
|
|
|
Three Months Ended March 31,
|
||||||
(DOLLARS IN THOUSANDS)
|
2020
|
|
2019
|
||||
Taste
|
|
|
|
||||
Flavor compounds
|
$
|
576,368
|
|
|
$
|
567,314
|
|
Savory solutions
|
155,764
|
|
|
136,337
|
|
||
Inclusions
|
30,146
|
|
|
28,633
|
|
||
Nutrition and specialty ingredients
|
43,955
|
|
|
44,208
|
|
||
Flavor ingredients
|
24,089
|
|
|
28,310
|
|
||
Total Taste
|
830,322
|
|
|
804,802
|
|
||
Scent
|
|
|
|
||||
Fine fragrances
|
94,150
|
|
|
106,074
|
|
||
Consumer fragrance
|
314,028
|
|
|
283,221
|
|
||
Fragrance ingredients
|
108,817
|
|
|
103,305
|
|
||
Total Scent
|
516,995
|
|
|
492,600
|
|
||
Total revenues
|
$
|
1,347,317
|
|
|
$
|
1,297,402
|
|
(DOLLARS IN THOUSANDS)
|
March 31, 2020
|
|
December 31, 2019
|
||||
Receivables (included in Trade receivables)
|
$
|
961,842
|
|
|
$
|
892,625
|
|
Contract asset - Short term
|
1,951
|
|
|
2,736
|
|
||
Contract liabilities - Short term
|
11,379
|
|
|
11,107
|
|
(DOLLARS IN THOUSANDS)
|
Allowances for
Bad Debts
|
||
Balance at December 31, 2019
|
$
|
16,428
|
|
Bad debt expense
|
4,751
|
|
|
Write-offs
|
(1,301
|
)
|
|
Foreign exchange
|
(1,150
|
)
|
|
Balance at March 31, 2020
|
$
|
18,728
|
|
|
Three Months Ended March 31,
|
||||||
(AMOUNTS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
|
2020
|
|
2019
|
||||
Net Income
|
|
|
|
||||
Net income attributable to IFF stockholders
|
$
|
124,607
|
|
|
$
|
108,829
|
|
Add: Reduction in redemption value of redeemable noncontrolling interests in excess of earnings allocated
|
5,806
|
|
|
370
|
|
||
Net income available to IFF stockholders
|
$
|
130,413
|
|
|
$
|
109,199
|
|
Shares
|
|
|
|
||||
Weighted average common shares outstanding (basic)(1)
|
112,082
|
|
|
111,864
|
|
||
Adjustment for assumed dilution(2):
|
|
|
|
||||
Stock options and restricted stock awards
|
349
|
|
|
362
|
|
||
SPC portion of TEUs
|
1,163
|
|
|
1,163
|
|
||
Weighted average shares assuming dilution (diluted)
|
113,594
|
|
|
113,389
|
|
||
|
|
|
|
||||
Net Income per Share
|
|
|
|
||||
Net income per share - basic
|
$
|
1.16
|
|
|
$
|
0.97
|
|
Net income per share - diluted
|
1.15
|
|
|
0.96
|
|
(1)
|
For the three months ended March 31, 2020 and 2019, the tangible equity units (“TEUs”) were assumed to be outstanding at the minimum settlement amount for basic earnings per share. See below for details.
|
(2)
|
Effect of dilutive securities includes dilution under stock plans and incremental impact of TEUs. See below for details.
|
(DOLLARS IN THOUSANDS)
|
Balance at
December 31, 2019
|
|
Additional Charges (Reversals), Net
|
|
Non-Cash Charges
|
|
Cash Payments
|
|
Balance at March 31, 2020
|
||||||||||
2017 Productivity Program
|
|
|
|
|
|
|
|
|
|
||||||||||
Severance
|
$
|
1,106
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(146
|
)
|
|
$
|
960
|
|
Other(1)
|
88
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
88
|
|
|||||
Frutarom Integration Initiative
|
|
|
|
|
|
|
|
|
|
||||||||||
Severance
|
4,038
|
|
|
1,869
|
|
|
—
|
|
|
(928
|
)
|
|
4,979
|
|
|||||
Fixed asset write down
|
—
|
|
|
3,366
|
|
|
(3,366
|
)
|
|
—
|
|
|
—
|
|
|||||
Other(1)
|
2,485
|
|
|
(317
|
)
|
|
—
|
|
|
1
|
|
|
2,169
|
|
|||||
2019 Severance Plan
|
|
|
|
|
|
|
|
|
|
||||||||||
Severance
|
12,897
|
|
|
—
|
|
|
—
|
|
|
(1,048
|
)
|
|
11,849
|
|
|||||
Other(1)
|
471
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
471
|
|
|||||
Total restructuring
|
$
|
21,085
|
|
|
$
|
4,918
|
|
|
$
|
(3,366
|
)
|
|
$
|
(2,121
|
)
|
|
$
|
20,516
|
|
(1)
|
Other includes supplier contract termination costs, consulting and advisory fees.
|
|
Three Months Ended March 31,
|
||||||
(DOLLARS IN THOUSANDS)
|
2020
|
|
2019
|
||||
Taste
|
$
|
4,918
|
|
|
$
|
2,553
|
|
Scent
|
—
|
|
|
10,900
|
|
||
Shared IT & Corporate Costs
|
—
|
|
|
2,721
|
|
||
Total Restructuring and other charges, net
|
$
|
4,918
|
|
|
$
|
16,174
|
|
(DOLLARS IN THOUSANDS)
|
Goodwill
|
||
Balance at December 31, 2019
|
$
|
5,497,596
|
|
Measurement period adjustments(1)
|
(15,283
|
)
|
|
Foreign exchange
|
(214,754
|
)
|
|
Balance at March 31, 2020
|
$
|
5,267,559
|
|
(1)
|
Measurement period adjustments relate to adjustments recorded in connection with completing the purchase price allocation related to the 2019 Acquisition Activity. See Note 3 for details.
|
(DOLLARS IN THOUSANDS)
|
Increase (decrease) to Goodwill
|
||
Cosmetic active ingredients
|
$
|
110,788
|
|
Natural Product Solutions
|
(78,945
|
)
|
|
Fine Ingredients
|
(29,221
|
)
|
|
Taste
|
(2,622
|
)
|
|
Total
|
$
|
—
|
|
|
March 31,
|
|
December 31,
|
||||
(DOLLARS IN THOUSANDS)
|
2020
|
|
2019
|
||||
Asset Type
|
|
|
|
||||
Customer relationships
|
$
|
2,561,536
|
|
|
$
|
2,653,446
|
|
Trade names & patents
|
174,134
|
|
|
178,968
|
|
||
Technological know-how
|
455,226
|
|
|
468,256
|
|
||
Other
|
22,410
|
|
|
40,362
|
|
||
Total carrying value
|
3,213,306
|
|
|
3,341,032
|
|
||
Accumulated Amortization
|
|
|
|
||||
Customer relationships
|
(348,509
|
)
|
|
(302,047
|
)
|
||
Trade names & patents
|
(30,595
|
)
|
|
(27,213
|
)
|
||
Technological know-how
|
(137,162
|
)
|
|
(135,269
|
)
|
||
Other
|
(19,594
|
)
|
|
(24,568
|
)
|
||
Total accumulated amortization
|
(535,860
|
)
|
|
(489,097
|
)
|
||
Other intangible assets, net
|
$
|
2,677,446
|
|
|
$
|
2,851,935
|
|
(DOLLARS IN THOUSANDS)
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
2024
|
||||||||||
Estimated future intangible amortization expense
|
$
|
135,577
|
|
|
$
|
178,000
|
|
|
$
|
174,245
|
|
|
$
|
174,135
|
|
|
$
|
174,135
|
|
(DOLLARS IN THOUSANDS)
|
March 31, 2020
|
|
December 31, 2019
|
||||
Operating lease right-of-use assets
|
$
|
287,301
|
|
|
$
|
287,870
|
|
Deferred income taxes
|
96,109
|
|
|
125,552
|
|
||
Overfunded pension plans
|
89,819
|
|
|
85,657
|
|
||
Cash surrender value of life insurance contracts
|
43,694
|
|
|
47,578
|
|
||
Other(a)
|
69,730
|
|
|
61,759
|
|
||
Total
|
$
|
586,653
|
|
|
$
|
608,416
|
|
(a)
|
Includes finance lease right-of-use assets, restricted cash, land usage rights in China and long term deposits.
|
(DOLLARS IN THOUSANDS)
|
Effective Interest Rate
|
|
March 31, 2020
|
|
December 31, 2019
|
|||||
2020 Notes(1)
|
3.69
|
%
|
|
$
|
299,598
|
|
|
$
|
299,381
|
|
2021 Euro Notes(1)
|
0.82
|
%
|
|
327,408
|
|
|
334,561
|
|
||
2023 Notes(1)
|
3.30
|
%
|
|
299,080
|
|
|
299,004
|
|
||
2024 Euro Notes(1)
|
1.88
|
%
|
|
546,009
|
|
|
558,124
|
|
||
2026 Euro Notes(1)
|
1.93
|
%
|
|
870,689
|
|
|
890,183
|
|
||
2028 Notes(1)
|
4.57
|
%
|
|
396,766
|
|
|
396,688
|
|
||
2047 Notes(1)
|
4.44
|
%
|
|
493,676
|
|
|
493,571
|
|
||
2048 Notes(1)
|
5.12
|
%
|
|
786,050
|
|
|
785,996
|
|
||
Term Loan(1)
|
3.65
|
%
|
|
239,665
|
|
|
239,621
|
|
||
Amortizing Notes(1)
|
6.09
|
%
|
|
70,882
|
|
|
82,079
|
|
||
Bank overdrafts and other
|
|
|
2,594
|
|
|
3,131
|
|
|||
Deferred realized gains on interest rate swaps
|
|
|
57
|
|
|
57
|
|
|||
Total debt
|
|
|
4,332,474
|
|
|
4,382,396
|
|
|||
Less: Short-term borrowings(2)
|
|
|
(385,569
|
)
|
|
(384,958
|
)
|
|||
Total Long-term debt
|
|
|
$
|
3,946,905
|
|
|
$
|
3,997,438
|
|
(1)
|
Amount is net of unamortized discount and debt issuance costs.
|
(2)
|
Includes bank borrowings, overdrafts and current portion of long-term debt.
|
|
Three Months Ended
|
|
Three Months Ended
|
||||
(DOLLARS IN THOUSANDS)
|
March 31, 2020
|
|
March 31, 2019
|
||||
Operating lease cost
|
$
|
12,443
|
|
|
$
|
12,469
|
|
Finance lease cost
|
753
|
|
|
—
|
|
|
Three Months Ended
|
Three Months Ended
|
|||||
(DOLLARS IN THOUSANDS)
|
March 31, 2020
|
|
March 31, 2019
|
||||
Cash paid for amounts included in the measurement of lease liabilities
|
|
|
|
||||
Operating cash flows from operating leases
|
$
|
12,331
|
|
|
$
|
11,076
|
|
Operating cash flows for finance leases
|
33
|
|
|
—
|
|
||
Financing cash flows for finance leases
|
721
|
|
|
—
|
|
||
Right-of-use assets obtained in exchange for lease obligations
|
|
|
|
||||
Operating leases
|
10,968
|
|
|
9,249
|
|
||
Finance leases
|
1,930
|
|
|
452
|
|
|
Three Months Ended March 31,
|
||||||
(DOLLARS IN THOUSANDS)
|
2020
|
|
2019
|
||||
Equity-based awards
|
$
|
8,624
|
|
|
$
|
7,604
|
|
Liability-based awards
|
(639
|
)
|
|
730
|
|
||
Total stock-based compensation expense
|
7,985
|
|
|
8,334
|
|
||
Less: Tax benefit
|
(1,394
|
)
|
|
(1,382
|
)
|
||
Total stock-based compensation expense, after tax
|
$
|
6,591
|
|
|
$
|
6,952
|
|
|
Three Months Ended
|
||||||
|
March 31,
|
||||||
(DOLLARS IN THOUSANDS)
|
2020
|
|
2019
|
||||
Net sales:
|
|
|
|
||||
Taste
|
$
|
830,322
|
|
|
$
|
804,802
|
|
Scent
|
516,995
|
|
|
492,600
|
|
||
Consolidated
|
$
|
1,347,317
|
|
|
$
|
1,297,402
|
|
Segment profit:
|
|
|
|
||||
Taste
|
$
|
137,347
|
|
|
$
|
131,402
|
|
Scent
|
105,395
|
|
|
89,953
|
|
||
Global expenses
|
(20,393
|
)
|
|
(16,667
|
)
|
||
Operational Improvement Initiatives (a)
|
—
|
|
|
(406
|
)
|
||
Frutarom Integration Related Costs (b)
|
(3,650
|
)
|
|
(14,897
|
)
|
||
Restructuring and Other Charges, net (c)
|
(4,918
|
)
|
|
(16,174
|
)
|
||
(Losses) gains on sale of assets
|
(754
|
)
|
|
188
|
|
||
Frutarom Acquisition Related Costs (d)
|
(813
|
)
|
|
(9,529
|
)
|
||
Compliance Review & Legal Defense Costs (e)
|
(649
|
)
|
|
—
|
|
||
N&B Transaction Related Costs (f)
|
(5,199
|
)
|
|
—
|
|
||
N&B Integration Related Costs (g)
|
(10,144
|
)
|
|
—
|
|
||
Operating profit
|
196,222
|
|
|
163,870
|
|
||
Interest expense
|
(32,140
|
)
|
|
(36,572
|
)
|
||
Other (loss) income, net
|
(10,574
|
)
|
|
7,278
|
|
||
Income before taxes
|
$
|
153,508
|
|
|
$
|
134,576
|
|
(a)
|
Represents accelerated depreciation related to a plant relocation in India.
|
(b)
|
Represents costs related to the integration of the Frutarom acquisition. For 2020, costs primarily related to advisory services, retention bonuses and performance stock awards. For 2019, costs principally related to advisory services.
|
(c)
|
For 2020, represents costs primarily related to the Frutarom Integration Initiative. For 2019, represents costs primarily related to the Frutarom Integration Initiative and the 2019 Severance Charges program.
|
(d)
|
Represents transaction-related costs and expenses related to the acquisition of Frutarom. For 2020, amount primarily includes earn-out payments, net of adjustments, amortization for inventory "step-up" costs and transaction costs principally related to the 2019 Acquisition Activity. For 2019, amount primarily includes amortization for inventory "step-up" costs and transaction costs.
|
(e)
|
Costs related to reviewing the nature of inappropriate payments and review of compliance in certain other countries. In addition, includes legal costs for related shareholder lawsuits.
|
(f)
|
Represents transaction costs and expenses related to the pending transaction with Nutrition & Biosciences Inc.
|
(g)
|
Represents costs related to the integration of the pending transaction with Nutrition & Biosciences Inc.
|
|
Three Months Ended March 31,
|
||||||
(DOLLARS IN THOUSANDS)
|
2020
|
|
2019
|
||||
Europe, Africa and Middle East
|
$
|
543,130
|
|
|
$
|
529,606
|
|
Greater Asia
|
309,508
|
|
|
287,962
|
|
||
North America
|
303,387
|
|
|
301,059
|
|
||
Latin America
|
191,292
|
|
|
178,775
|
|
||
Consolidated
|
$
|
1,347,317
|
|
|
$
|
1,297,402
|
|
|
Three Months Ended March 31,
|
||||||
(DOLLARS IN THOUSANDS)
|
2020
|
|
2019
|
||||
Net sales related to the U.S.
|
$
|
270,686
|
|
|
$
|
272,803
|
|
Net sales attributed to all foreign countries
|
1,076,631
|
|
|
1,024,599
|
|
(DOLLARS IN THOUSANDS)
|
U.S. Plans
|
||||||
Three Months Ended March 31,
|
|||||||
2020
|
|
2019
|
|||||
Service cost for benefits earned(1)
|
$
|
400
|
|
|
$
|
474
|
|
Interest cost on projected benefit obligation(2)
|
4,263
|
|
|
5,453
|
|
||
Expected return on plan assets(2)
|
(7,083
|
)
|
|
(6,983
|
)
|
||
Net amortization and deferrals(2)
|
1,858
|
|
|
1,275
|
|
||
Net periodic benefit (income) cost
|
$
|
(562
|
)
|
|
$
|
219
|
|
(DOLLARS IN THOUSANDS)
|
Non-U.S. Plans
|
||||||
Three Months Ended March 31,
|
|||||||
2020
|
|
2019
|
|||||
Service cost for benefits earned(1)
|
$
|
5,940
|
|
|
$
|
4,873
|
|
Interest cost on projected benefit obligation(2)
|
3,245
|
|
|
4,435
|
|
||
Expected return on plan assets(2)
|
(11,614
|
)
|
|
(10,904
|
)
|
||
Net amortization and deferrals(2)
|
3,834
|
|
|
2,922
|
|
||
Net periodic benefit (income) cost
|
$
|
1,405
|
|
|
$
|
1,326
|
|
(1)
|
Included as a component of Operating profit.
|
(2)
|
Included as a component of Other loss (income), net.
|
|
Three Months Ended March 31,
|
||||||
(DOLLARS IN THOUSANDS)
|
2020
|
|
2019
|
||||
Service cost for benefits earned
|
$
|
143
|
|
|
$
|
148
|
|
Interest cost on projected benefit obligation
|
474
|
|
|
578
|
|
||
Net amortization and deferrals
|
(1,153
|
)
|
|
(1,194
|
)
|
||
Total postretirement benefit income
|
$
|
(536
|
)
|
|
$
|
(468
|
)
|
•
|
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.
|
|
March 31, 2020
|
|
December 31, 2019
|
||||||||||||
(DOLLARS IN THOUSANDS)
|
Carrying Value
|
|
Fair Value
|
|
Carrying Value
|
|
Fair Value
|
||||||||
LEVEL 1
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents(1)
|
$
|
433,246
|
|
|
$
|
433,246
|
|
|
$
|
606,823
|
|
|
$
|
606,823
|
|
LEVEL 2
|
|
|
|
|
|
|
|
||||||||
Credit facilities and bank overdrafts(2)
|
2,594
|
|
|
2,594
|
|
|
3,131
|
|
|
3,131
|
|
||||
Derivatives
|
|
|
|
|
|
|
|
||||||||
Derivative assets(3)
|
32,892
|
|
|
32,892
|
|
|
3,575
|
|
|
3,575
|
|
||||
Derivative liabilities(3)
|
5,631
|
|
|
5,631
|
|
|
7,415
|
|
|
7,415
|
|
||||
Long-term debt:(4)
|
|
|
|
|
|
|
|
||||||||
2020 Notes
|
299,598
|
|
|
301,191
|
|
|
299,381
|
|
|
302,700
|
|
||||
2021 Euro Notes
|
327,408
|
|
|
327,667
|
|
|
334,561
|
|
|
338,244
|
|
||||
2023 Notes
|
299,080
|
|
|
303,381
|
|
|
299,004
|
|
|
305,580
|
|
||||
2024 Euro Notes
|
546,009
|
|
|
549,159
|
|
|
558,124
|
|
|
586,825
|
|
||||
2026 Euro Notes
|
870,689
|
|
|
822,800
|
|
|
890,183
|
|
|
945,306
|
|
||||
2028 Notes
|
396,766
|
|
|
418,176
|
|
|
396,688
|
|
|
441,500
|
|
||||
2047 Notes
|
493,676
|
|
|
446,510
|
|
|
493,571
|
|
|
526,106
|
|
||||
2048 Notes
|
786,050
|
|
|
823,569
|
|
|
785,996
|
|
|
919,040
|
|
||||
Term Loan(2)
|
239,665
|
|
|
240,000
|
|
|
239,621
|
|
|
240,000
|
|
||||
Amortizing Notes(5)
|
70,882
|
|
|
71,810
|
|
|
82,079
|
|
|
84,430
|
|
(1)
|
The carrying amount of cash and cash equivalents approximates fair value due to the short maturity of those instruments.
|
(2)
|
The carrying amount 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 carrying amount approximates fair value as the instruments are marked-to-market and held at fair value on the Consolidated Balance Sheet.
|
(4)
|
The fair value of the Company's long-term debt was calculated using discounted cash flows applying current interest rates and current credit spreads based on its own credit risk.
|
(5)
|
The fair value of the Amortizing Notes of the TEUs is based on the most recently quoted price for the outstanding securities, adjusted for any known significant deviation in value. The estimated fair value of these long-term obligations is not necessarily indicative of the amount that would be realized in a current market exchange.
|
(DOLLARS IN THOUSANDS)
|
March 31, 2020
|
|
December 31, 2019
|
||||
Foreign currency contracts
|
$
|
242,904
|
|
|
$
|
473,600
|
|
Cross currency swaps
|
600,000
|
|
|
600,000
|
|
|
March 31, 2020
|
||||||||||
(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
|
$
|
2,803
|
|
|
$
|
2,421
|
|
|
$
|
5,224
|
|
Cross currency swaps
|
27,668
|
|
|
—
|
|
|
27,668
|
|
|||
|
$
|
30,471
|
|
|
$
|
2,421
|
|
|
$
|
32,892
|
|
Derivative liabilities(b)
|
|
|
|
|
|
||||||
Foreign currency contract
|
$
|
—
|
|
|
$
|
5,631
|
|
|
$
|
5,631
|
|
|
December 31, 2019
|
||||||||||
(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
|
$
|
1,310
|
|
|
$
|
2,265
|
|
|
$
|
3,575
|
|
Derivative liabilities(b)
|
|
|
|
|
|
||||||
Foreign currency contracts
|
$
|
797
|
|
|
$
|
2,431
|
|
|
$
|
3,228
|
|
Interest rate swaps
|
4,187
|
|
|
—
|
|
|
4,187
|
|
|||
Total derivative liabilities
|
$
|
4,984
|
|
|
$
|
2,431
|
|
|
$
|
7,415
|
|
(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.
|
|
Amount of Gain (Loss)
|
|
Location of Gain (Loss) Recognized in Income on Derivative
|
||||||
(DOLLARS IN THOUSANDS)
|
Three Months Ended March 31,
|
|
|||||||
2020
|
|
2019
|
|
||||||
Foreign currency contracts(1)
|
$
|
(7,663
|
)
|
|
$
|
926
|
|
|
Other (income) expense, net
|
(1)
|
The foreign currency contract net gains (losses) offset any recognized gains (losses) arising from the revaluation of the related intercompany loans during the same respective periods.
|
|
Amount of Gain (Loss)
Recognized in OCI on
Derivative
|
|
Location of Gain (Loss) Reclassified from
AOCI into Income
|
|
Amount of Gain (Loss)
Reclassified from
Accumulated OCI into
Income
|
||||||||||||
|
Three Months Ended March 31,
|
|
|
Three Months Ended March 31,
|
|||||||||||||
(DOLLARS IN THOUSANDS)
|
2020
|
|
2019
|
|
|
2020
|
|
2019
|
|||||||||
Derivatives in Cash Flow Hedging Relationships:
|
|
|
|
|
|
|
|
|
|
||||||||
Foreign currency contracts
|
$
|
1,231
|
|
|
$
|
(312
|
)
|
|
Cost of goods sold
|
|
$
|
2,069
|
|
|
$
|
2,372
|
|
Interest rate swaps (1)
|
216
|
|
|
216
|
|
|
Interest expense
|
|
(216
|
)
|
|
(216
|
)
|
||||
Derivatives in Net Investment Hedging Relationships:
|
|
|
|
|
|
|
|
|
|
||||||||
Cross currency swaps
|
21,351
|
|
|
10,667
|
|
|
N/A
|
|
—
|
|
|
—
|
|
||||
Non-Derivatives in Net Investment Hedging Relationships:
|
|
|
|
|
|
|
|
|
|
||||||||
2024 Euro Notes
|
9,569
|
|
|
4,206
|
|
|
N/A
|
|
—
|
|
|
—
|
|
||||
2021 Euro Notes & 2026 Euro Notes
|
21,052
|
|
|
9,253
|
|
|
N/A
|
|
—
|
|
|
—
|
|
||||
Total
|
$
|
53,419
|
|
|
$
|
24,030
|
|
|
|
|
$
|
1,853
|
|
|
$
|
2,156
|
|
(1)
|
Interest rate swaps were entered into as pre-issuance hedges for bond offerings.
|
(DOLLARS IN THOUSANDS)
|
Foreign
Currency
Translation
Adjustments
|
|
Gains on Derivatives
Qualifying as
Hedges
|
|
Pension and
Postretirement
Liability
Adjustment
|
|
Total
|
||||||||
Accumulated other comprehensive (loss) income, net of tax, as of December 31, 2019
|
$
|
(373,043
|
)
|
|
$
|
2,068
|
|
|
$
|
(345,919
|
)
|
|
$
|
(716,894
|
)
|
OCI before reclassifications
|
(452,278
|
)
|
|
3,300
|
|
|
—
|
|
|
(448,978
|
)
|
||||
Amounts reclassified from AOCI
|
—
|
|
|
(1,853
|
)
|
|
3,517
|
|
|
1,664
|
|
||||
Net current period other comprehensive income (loss)
|
(452,278
|
)
|
|
1,447
|
|
|
3,517
|
|
|
(447,314
|
)
|
||||
Accumulated other comprehensive (loss) income, net of tax, as of March 31, 2020
|
$
|
(825,321
|
)
|
|
$
|
3,515
|
|
|
$
|
(342,402
|
)
|
|
$
|
(1,164,208
|
)
|
(DOLLARS IN THOUSANDS)
|
Foreign
Currency
Translation
Adjustments
|
|
Losses
on Derivatives
Qualifying as
Hedges
|
|
Pension and
Postretirement
Liability
Adjustment
|
|
Total
|
||||||||
Accumulated other comprehensive (loss) income, net of tax, as of December 31, 2018
|
$
|
(396,996
|
)
|
|
$
|
4,746
|
|
|
$
|
(309,977
|
)
|
|
$
|
(702,227
|
)
|
OCI before reclassifications
|
42,377
|
|
|
2,059
|
|
|
—
|
|
|
44,436
|
|
||||
Amounts reclassified from AOCI
|
—
|
|
|
(2,156
|
)
|
|
2,593
|
|
|
437
|
|
||||
Net current period other comprehensive income (loss)
|
42,377
|
|
|
(97
|
)
|
|
2,593
|
|
|
44,873
|
|
||||
Accumulated other comprehensive (loss) income, net of tax, as of March 31, 2019
|
$
|
(354,619
|
)
|
|
$
|
4,649
|
|
|
$
|
(307,384
|
)
|
|
$
|
(657,354
|
)
|
|
Three Months Ended March 31,
|
|
Affected Line Item in the
Consolidated Statement of Income and Comprehensive Income |
||||||
(DOLLARS IN THOUSANDS)
|
2020
|
|
2019
|
|
|||||
Gains (losses) on derivatives qualifying as hedges
|
|
|
|
|
|
||||
Foreign currency contracts
|
$
|
2,364
|
|
|
$
|
2,711
|
|
|
Cost of goods sold
|
Interest rate swaps
|
(216
|
)
|
|
(216
|
)
|
|
Interest expense
|
||
Tax
|
(295
|
)
|
|
(339
|
)
|
|
Provision for income taxes
|
||
Total
|
$
|
1,853
|
|
|
$
|
2,156
|
|
|
Total, net of income taxes
|
Losses on pension and postretirement liability adjustments
|
|
|
|
|
|
||||
Prior service cost
|
$
|
(4,348
|
)
|
|
$
|
2,836
|
|
|
(a)
|
Actuarial losses
|
(191
|
)
|
|
168
|
|
|
(a)
|
||
Tax
|
1,022
|
|
|
(5,597
|
)
|
|
Provision for income taxes
|
||
Total
|
$
|
(3,517
|
)
|
|
$
|
(2,593
|
)
|
|
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 16 of our 2019 Form 10-K for additional information regarding net periodic benefit cost.
|
(DOLLARS IN THOUSANDS)
|
Redeemable
Noncontrolling Interests
|
||
Balance at December 31, 2018
|
$
|
81,806
|
|
Acquired through acquisitions during 2019
|
26,224
|
|
|
Impact of foreign exchange translation
|
(190
|
)
|
|
Share of profit or loss attributable to redeemable noncontrolling interests
|
1,541
|
|
|
Redemption value adjustment for the current period
|
(370
|
)
|
|
Dividends paid
|
5,700
|
|
|
Balance at March 31, 2019
|
$
|
114,711
|
|
|
|
||
Balance at December 31, 2019
|
$
|
99,043
|
|
Impact of foreign exchange translation
|
19,255
|
|
|
Share of profit or loss attributable to redeemable noncontrolling interests
|
1,987
|
|
|
Redemption value adjustment for the current period
|
(5,806
|
)
|
|
Measurement period adjustments
|
(1,426
|
)
|
|
Exercises of redeemable noncontrolling interests
|
(10,340
|
)
|
|
Balance at March 31, 2020
|
$
|
102,713
|
|
|
Three Months Ended
|
|
|
|||||||
|
March 31,
|
|
|
|||||||
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
|
2020
|
|
2019
|
|
Change
|
|||||
Net sales
|
$
|
1,347,317
|
|
|
$
|
1,297,402
|
|
|
4
|
%
|
Cost of goods sold
|
781,450
|
|
|
766,143
|
|
|
2
|
%
|
||
Gross profit
|
565,867
|
|
|
531,259
|
|
|
|
|||
Research and development (R&D) expenses
|
85,909
|
|
|
90,596
|
|
|
(5
|
)%
|
||
Selling and administrative (S&A) expenses
|
229,714
|
|
|
213,182
|
|
|
8
|
%
|
||
Amortization of acquisition-related intangibles
|
48,350
|
|
|
47,625
|
|
|
2
|
%
|
||
Restructuring and other charges, net
|
4,918
|
|
|
16,174
|
|
|
(70
|
)%
|
||
Losses (gains) on sales of fixed assets
|
754
|
|
|
(188
|
)
|
|
NMF
|
|
||
Operating profit
|
196,222
|
|
|
163,870
|
|
|
|
|||
Interest expense
|
32,140
|
|
|
36,572
|
|
|
(12
|
)%
|
||
Other loss (income), net
|
10,574
|
|
|
(7,278
|
)
|
|
NMF
|
|
||
Income before taxes
|
153,508
|
|
|
134,576
|
|
|
|
|||
Taxes on income
|
26,297
|
|
|
23,362
|
|
|
13
|
%
|
||
Net income
|
$
|
127,211
|
|
|
$
|
111,214
|
|
|
|
|
Net income attributable to noncontrolling interests
|
2,604
|
|
|
2,385
|
|
|
9
|
%
|
||
Net income attributable to IFF stockholders
|
$
|
124,607
|
|
|
$
|
108,829
|
|
|
14
|
%
|
Diluted EPS
|
$
|
1.15
|
|
|
$
|
0.96
|
|
|
19
|
%
|
Gross margin
|
42.0
|
%
|
|
40.9
|
%
|
|
|
|||
R&D as a percentage of sales
|
6.4
|
%
|
|
7.0
|
%
|
|
|
|||
S&A as a percentage of sales
|
17.0
|
%
|
|
16.4
|
%
|
|
|
|||
Operating margin
|
14.6
|
%
|
|
12.6
|
%
|
|
|
|||
Adjusted operating margin
|
16.5
|
%
|
|
15.8
|
%
|
|
|
|||
Effective tax rate
|
17.1
|
%
|
|
17.4
|
%
|
|
|
|||
Segment net sales
|
|
|
|
|
|
|||||
Taste
|
$
|
830,322
|
|
|
$
|
804,802
|
|
|
3
|
%
|
Scent
|
516,995
|
|
|
492,600
|
|
|
5
|
%
|
||
Consolidated
|
$
|
1,347,317
|
|
|
$
|
1,297,402
|
|
|
|
(1)
|
Currency neutral sales growth is calculated by translating prior year sales at the exchange rates for the corresponding 2020 period.
|
|
Three Months Ended March 31,
|
||||||
(DOLLARS IN THOUSANDS)
|
2020
|
|
2019
|
||||
Segment profit:
|
|
|
|
||||
Taste
|
$
|
137,347
|
|
|
$
|
131,402
|
|
Scent
|
105,395
|
|
|
89,953
|
|
||
Global expenses
|
(20,393
|
)
|
|
(16,667
|
)
|
||
Operational Improvement Initiatives
|
—
|
|
|
(406
|
)
|
||
Frutarom Integration Related Costs
|
(3,650
|
)
|
|
(14,897
|
)
|
||
Restructuring and Other Charges, net
|
(4,918
|
)
|
|
(16,174
|
)
|
||
(Losses) gains on sale of assets
|
(754
|
)
|
|
188
|
|
||
Frutarom Acquisition Related Costs
|
(813
|
)
|
|
(9,529
|
)
|
||
Compliance Review & Legal Defense Costs
|
(649
|
)
|
|
—
|
|
||
N&B Transaction Related Costs
|
(5,199
|
)
|
|
—
|
|
||
N&B Integration Related Costs
|
(10,144
|
)
|
|
—
|
|
||
Operating profit
|
$
|
196,222
|
|
|
$
|
163,870
|
|
Profit margin:
|
|
|
|
||||
Taste
|
16.5
|
%
|
|
16.3
|
%
|
||
Scent
|
20.4
|
%
|
|
18.3
|
%
|
||
Consolidated
|
14.6
|
%
|
|
12.6
|
%
|
(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:
|
(DOLLARS IN MILLIONS)
|
Twelve Months Ended March 31, 2020
|
||
Net income
|
$
|
471.7
|
|
Interest expense
|
133.7
|
|
|
Income taxes
|
100.1
|
|
|
Depreciation and amortization
|
322.1
|
|
|
Specified items (1)
|
105.8
|
|
|
Non-cash items (2)
|
38.9
|
|
|
Adjusted EBITDA
|
$
|
1,172.3
|
|
(1)
|
Specified items for the 12 months ended March 31, 2020 of $105.8 million, consisted of operational improvement initiatives, acquisition related costs, Frutarom integration related costs, restructuring and other charges, net, FDA mandated product recall, Frutarom acquisition related costs, compliance review & legal defense costs, N&B transaction related costs and N&B integration related costs.
|
(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 and stock-based compensation.
|
(DOLLARS IN MILLIONS)
|
March 31, 2020
|
||
Total debt
|
$
|
4,332.5
|
|
Adjustments:
|
|
||
Cash and cash equivalents
|
433.2
|
|
|
Net debt
|
$
|
3,899.3
|
|
Reconciliation of Gross Profit
|
|||||||
|
Three Months Ended March 31,
|
||||||
(DOLLARS IN THOUSANDS)
|
2020
|
|
2019
|
||||
Reported (GAAP)
|
$
|
565,867
|
|
|
$
|
531,259
|
|
Operational Improvement Initiatives (a)
|
—
|
|
|
406
|
|
||
Frutarom Integration Related Costs (b)
|
149
|
|
|
156
|
|
||
Frutarom Acquisition Related Costs (d)
|
513
|
|
|
7,850
|
|
||
Adjusted (Non-GAAP)
|
$
|
566,529
|
|
|
$
|
539,671
|
|
Reconciliation of Net Income
|
|||||||||||||||||||||||||||||||
|
Three Months Ended March 31,
|
||||||||||||||||||||||||||||||
|
2020
|
|
2019
|
||||||||||||||||||||||||||||
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
|
Income before taxes
|
|
Taxes on income (i)
|
|
Net Income Attributable to IFF (j)
|
|
Diluted EPS (k)
|
|
Income before taxes
|
|
Taxes on income (i)
|
|
Net Income Attributable to IFF (j)
|
|
Diluted EPS
|
||||||||||||||||
Reported (GAAP)
|
$
|
153,508
|
|
|
$
|
26,297
|
|
|
$
|
124,607
|
|
|
$
|
1.15
|
|
|
$
|
134,576
|
|
|
$
|
23,362
|
|
|
$
|
108,829
|
|
|
$
|
0.96
|
|
Operational Improvement Initiatives (a)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
406
|
|
|
142
|
|
|
264
|
|
|
—
|
|
||||||||
Frutarom Integration Related Costs (b)
|
3,650
|
|
|
815
|
|
|
2,835
|
|
|
0.02
|
|
|
14,897
|
|
|
3,349
|
|
|
11,548
|
|
|
0.10
|
|
||||||||
Restructuring and Other Charges, net (c)
|
4,918
|
|
|
1,034
|
|
|
3,884
|
|
|
0.03
|
|
|
16,174
|
|
|
4,031
|
|
|
12,143
|
|
|
0.11
|
|
||||||||
Losses (Gains) on Sale of Assets
|
754
|
|
|
189
|
|
|
565
|
|
|
—
|
|
|
(188
|
)
|
|
(43
|
)
|
|
(145
|
)
|
|
—
|
|
||||||||
Frutarom Acquisition Related Costs (d)
|
213
|
|
|
(1,634
|
)
|
|
1,847
|
|
|
0.02
|
|
|
9,529
|
|
|
1,530
|
|
|
7,999
|
|
|
0.07
|
|
||||||||
Compliance Review & Legal Defense Costs (e)
|
649
|
|
|
135
|
|
|
514
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
N&B Transaction Related Costs (f)
|
5,199
|
|
|
—
|
|
|
5,199
|
|
|
0.05
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
N&B Integration Related Costs (g)
|
10,144
|
|
|
2,168
|
|
|
7,976
|
|
|
0.07
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Redemption value adjustment to EPS (h)
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.05
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Adjusted (Non-GAAP)
|
$
|
179,035
|
|
|
$
|
29,004
|
|
|
$
|
147,427
|
|
|
$
|
1.30
|
|
|
$
|
175,394
|
|
|
$
|
32,371
|
|
|
$
|
140,638
|
|
|
$
|
1.24
|
|
(a)
|
Represents accelerated depreciation related to a plant relocation in India.
|
(b)
|
Represents costs related to the integration of the Frutarom acquisition. For 2020, costs primarily related to advisory services, retention bonuses and performance stock awards. For 2019, costs principally related to advisory services.
|
(c)
|
For 2020, represents costs primarily related to the Frutarom Integration Initiative. For 2019, represents costs primarily related to the Frutarom Integration Initiative and the 2019 Severance Charges program.
|
(d)
|
Represents transaction-related costs and expenses related to the acquisition of Frutarom. For 2020, amount primarily includes earn-out payments, net of adjustments, amortization for inventory "step-up" costs and transaction costs principally related to the 2019 Acquisition Activity. For 2019, amount primarily includes amortization for inventory "step-up" costs and transaction costs.
|
(e)
|
Costs related to reviewing the nature of inappropriate payments and review of compliance in certain other countries. In addition, includes legal costs for related shareholder lawsuits.
|
(f)
|
Represents transaction costs and expenses related to the pending transaction with Nutrition & Biosciences Inc.
|
(g)
|
Represents costs related to the integration of the pending transaction with Nutrition & Biosciences Inc.
|
(h)
|
Represents the adjustment to EPS related to the excess of the redemption value of certain redeemable noncontrolling interests over their existing carrying value.
|
(i)
|
The income tax expense (benefit) on non-GAAP adjustments is computed in accordance with ASC 740 using the same methodology as the GAAP provision of income taxes. Income tax effects of non-GAAP adjustments are calculated based on the applicable statutory tax rate for each jurisdiction in which such charges were incurred, except for those items which are non-taxable or are subject to a valuation allowance for which the tax expense (benefit) was calculated at 0%. For fiscal years 2020 and 2019, these non-GAAP adjustments were not subject to foreign tax credits, but to the extent that such factors are applicable to any future non-GAAP adjustments we will take such factors into consideration in calculating the tax expense (benefit).
|
(j)
|
For 2020 and 2019, net income is reduced by income attributable to noncontrolling interest of $2.6M and $2.4M, respectively.
|
(k)
|
The sum of these items does not foot due to rounding.
|
|
Three Months Ended
|
||
|
March 31,
|
||
|
2020
|
|
2019
|
Operating Profit:
|
|
|
|
% Change - Reported (GAAP)
|
19.7%
|
|
(6.3)%
|
Items impacting comparability
|
(11.1)%
|
|
19.4%
|
% Change - Adjusted (Non-GAAP)
|
8.6%
|
|
13.1%
|
Currency Impact
|
2.0%
|
|
1.3%
|
% Change Year-over-Year - Currency Neutral Adjusted (Non-GAAP)*
|
10.6%
|
|
14.4%
|
•
|
disruption in the development, manufacture, distribution or sale of our products from Covid-19 and other public health crises;
|
•
|
risks related to the integration of the Frutarom business, including whether we will realize the benefits anticipated from the acquisition in the expected time frame;
|
•
|
unanticipated costs, liabilities, charges or expenses resulting from the Frutarom acquisition;
|
•
|
our ability to realize expected cost savings and increased efficiencies of the Frutarom integration and our ongoing optimization of our manufacturing facilities;
|
•
|
our ability to successfully establish and manage acquisitions, collaborations, joint ventures or partnership;
|
•
|
the increase in our leverage resulting from the additional debt incurred to pay a portion of the consideration for Frutarom and its impact on our liquidity and ability to return capital to its shareholders;
|
•
|
our ability to successfully market to our expanded and diverse Taste customer base;
|
•
|
our ability to effectively compete in our market and develop and introduce new products that meet customers’ needs;
|
•
|
our ability to retain key employees;
|
•
|
changes in demand from large multi-national customers due to increased competition and our ability to maintain “core list” status with customers;
|
•
|
our ability to successfully develop innovative and cost-effective products that allow customers to achieve their own profitability expectations;
|
•
|
disruption in the development, manufacture, distribution or sale of our products from natural disasters, international conflicts, terrorist acts, labor strikes, political crisis, accidents and similar events;
|
•
|
the impact of a disruption in our supply chain, including the inability to obtain ingredients and raw materials from third parties;
|
•
|
volatility and increases in the price of raw materials, energy and transportation;
|
•
|
the impact of a significant data breach or other disruption in our information technology systems, and our ability to comply with data protection laws in the U.S. and abroad;
|
•
|
our ability to comply with, and the costs associated with compliance with, regulatory requirements and industry standards, including regarding product safety, quality, efficacy and environmental impact;
|
•
|
our ability to react in a timely and cost-effective manner to changes in consumer preferences and demands, including increased awareness of health and wellness;
|
•
|
our ability to meet consumer, customer and regulatory sustainability standards;
|
•
|
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;
|
•
|
economic, regulatory and political risks associated with our international operations;
|
•
|
the impact of global economic uncertainty on demand for consumer products;
|
•
|
our ability to comply with, and the costs associated with compliance with, U.S. and foreign environmental protection laws;
|
•
|
our ability to successfully manage our working capital and inventory balances;
|
•
|
the impact of the failure to comply with U.S. or foreign anti-corruption and anti-bribery laws and regulations, including the U.S. Foreign Corrupt Practices Act;
|
•
|
any impairment on our tangible or intangible long-lived assets, including goodwill associated with the acquisition of Frutarom;
|
•
|
our ability to protect our intellectual property rights;
|
•
|
the impact of the outcome of legal claims, regulatory investigations and litigation;
|
•
|
changes in market conditions or governmental regulations relating to our pension and postretirement obligations;
|
•
|
the impact of changes in federal, state, local and international tax legislation or policies, including the Tax Cuts and Jobs Act, with respect to transfer pricing and state aid, and adverse results of tax audits, assessments, or disputes;
|
•
|
the impact of the United Kingdom’s expected departure from the European Union;
|
•
|
the impact of the phase out of the London Interbank Office Rate (LIBOR) on interest expense;
|
•
|
risks associated with our pending combination with N&B, including business uncertainties and contractual restrictions while the transaction is pending, costs incurred in connection with the transaction, our ability to pursue alternative transactions, and the impact if we fail to complete the transaction; and
|
•
|
risks associated with the integration of N&B if we are successful in completing the transaction, including whether we will realize the anticipated synergies and other benefits of the transaction.
|
10.1
|
|
|
10.2
|
|
|
31.1
|
|
|
31.2
|
|
|
32
|
|
|
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
|
104
|
|
Cover Page Interactive File (formatted as Inline XBRL and contained in Exhibit 101)
|
Dated:
|
|
May 11, 2020
|
By:
|
|
/s/ Andreas Fibig
|
|
|
|
|
|
Andreas Fibig
|
|
|
|
|
|
Chairman of the Board and Chief Executive Officer
|
|
|
|
|
|
|
Dated:
|
|
May 11, 2020
|
By:
|
|
/s/ Rustom Jilla
|
|
|
|
|
|
Rustom Jilla
|
|
|
|
|
|
Executive Vice President and Chief Financial Officer
|
1 Year International Flavors an... Chart |
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