Bush Boake Allen Reports Second Quarter Earnings of $.37 a Share.Business Editors MONTVALE, N.J.--(BUSINESS WIRE)--July 20, 2000 Bush Boake Allen Inc. (NYSE NYSE See: New York Stock Exchange : BOA boa (bō`ə), name for live-bearing constrictor snakes of the family Boidae, found mostly in the Americas. This family, which also comprises the egg-laying pythons of the Old World, includes the largest of all snakes, as well as many smaller ) reported today that second quarter earnings increased 32% to $.37 a share (diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. ) compared to $.28 a share (diluted) earned in the second quarter of 1999. Net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight in the second quarter were $123.6 million compared to $127.2 million in the prior year. Net income was $7.2 million compared to $5.5 million in the second quarter of 1999. For the first six months of 2000, the Company earned $.68 a share (diluted) versus $.50 a share (diluted) in the same period of 1999. Net sales were $240.9 million compared to $248.6 million in the prior year. Net income was $13.2 million compared to $9.8 million last year. "For the most part, the second quarter reflected a continuation of the market conditions that were evident during the first three months of this year, particularly in our aroma chemical aroma chemical, n an odorous chemical with useful properties that is also legal and safe to use as a flavor or fragrance. and European flavor and fragrance businesses," stated Julian W. Boyden, BBA's chairman, president and chief executive officer. For the Company, as a whole, flavor and fragrance sales declined less than 2% as market weakness in Europe and Asia Pacific could not be overcome by growth in the Americas and International regions. Aroma chemical sales decreased 9%, however, lower material costs and operating efficiencies more than offset the decreased volume and prices resulting in the improved income from operations for the Company. In our aroma chemical business, prices are down from the prior year due to continued market pressure on terpene-based products, the strength of the Pound Sterling versus the Euro, and increased volumes of Chinese materials becoming available both for domestic use and for exports. Sales volumes declined approximately 7% from the second quarter of 1999. Operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. , however, benefited from lower raw material costs and manufacturing cost efficiency gains generated from improved yields and process improvements in both chemical plants, together with some rebuilding of inventories of key products that were sold out at the end of 1999 due to Y2K See Y2K problem and Y2K compliant. Y2K - Year 2000 demands. In our flavor and fragrance business, Europe Region sales declined 9% with only Spain and Denmark reporting growth. Pricing in continental Europe Continental Europe, also referred to as mainland Europe or simply the Continent, is the continent of Europe, explicitly excluding European islands and, at times, peninsulas. has been severely affected by the strong Pound Sterling. In the UK, new management leadership is in place to address a series of operational and structural issues mainly related to the flavor business. A strengthening of the Company's focus on its customers, leveraging of core competencies A core competency is something that a firm can do well and that meets the following three conditions specified by Hamel and Prahalad (1990):
tr.v. re·de·ployed, re·de·ploy·ing, re·de·ploys 1. To move (military forces) from one combat zone to another. 2. of assets and the incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. investment in sales, service and technical resources. In the Company's International Region, sales increased 3% with strong growth reported in Eastern Europe Eastern Europe The countries of eastern Europe, especially those that were allied with the USSR in the Warsaw Pact, which was established in 1955 and dissolved in 1991. and Turkey. Operations in the Asia Pacific Region had a 4% decline in sales mainly due to currency and market weakness in Australia and lower fragrance sales in the Philippines and China resulting from a discontinued dis·con·tin·ue v. dis·con·tin·ued, dis·con·tin·u·ing, dis·con·tin·ues v.tr. 1. To stop doing or providing (something); end or abandon: customer product. However, good growth was reported in Singapore, Malaysia, Thailand and Japan enabling the Region to report a double-digit increase in operating income. In the Americas Region, sales rose 3% as strong growth in U.S. flavors was offset by lower fragrance and seasoning sales. Canadian operations reported strong growth in sales and operating income while sales in Latin America Latin America, the Spanish-speaking, Portuguese-speaking, and French-speaking countries (except Canada) of North America, South America, Central America, and the West Indies. advanced 7% and operating income was up slightly from last year. Summing up the second quarter, Mr. Boyden stated, "although sales levels remain disappointing, it is encouraging to see the continued improvement in operating income as the Company benefits from the major capital investments made over the last several years. Moreover, our global presence and strong financial position provides a strategic plus as developing markets continue to grow." Bush Boake Allen Inc., which conducts operations on six continents Six Continents is a large retail PLC in UK which split into Six Continents Retail known as Mitchells and Butlers plc. The hotels and soft drinks business of Six Continents PLC is now known as InterContinental Hotels Group PLC. , has 60 locations in 38 countries worldwide. The Company supplies flavors and fragrances to the world's leading consumer products companies for use in foods, beverages, soaps and detergents, cosmetics, toiletries toi·let·ry n. pl. toi·let·ries An article, such as toothpaste or a hairbrush, used in personal grooming or dressing. toiletries npl → artículos mpl de aseo (= , personal care items and related products. Its aroma chemicals, natural extracts and essential oils serve as raw materials for a wide range of compounded flavors and fragrances. As announced in a press release dated June 20, 2000, the Company has engaged Credit Suisse First Boston Credit Suisse First Boston was originally the trading name of the Financière Crédit Suisse-First Boston, a London-based 50-50 investment banking joint venture formed in 1978 between the First Boston Corporation and Credit Suisse. Corporation to help explore various strategic alternatives, including a possible sale of the Company. This process is progressing. Statements in this press release, which are not historical, are forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. that are subject to risks and uncertainties which could cause actual results to differ materially. Such risks and uncertainties with respect to Bush Boake Allen's business include general economic conditions, customers changing flavor and/or fragrance formulations, pricing, availability and capacity of both materials which are purchased and products which are sold, the effect of the transition to the Euro and political and economic uncertainties, currency fluctuations, devaluations and/or revaluations in the many countries in which the Company operates. The company assumes no duty to update any such forward-looking information.
BUSH BOAKE ALLEN INC.
Comparative Summary of Income (Unaudited)
Second Quarter Ended June 25, Percent
2000 1999 Change
(Note 1)
Net Sales $123,565,000 $127,223,000 (2.9) %
Income from operations 12,661,000 10,219,000 23.9
Income before taxes 11,582,000 8,857,000 30.8
Net income $7,181,000 $5,452,000 31.7
Earnings per share:
- Basic $0.37 $0.28 32.7
- Diluted $0.37 $0.28 31.6
Weighted average shares
outstanding:
- Basic 19,319,536 19,293,712
- Diluted 19,494,449 19,394,324
Six Months Ended June 25, Percent
2000 1999 Change
(Note 1)
Net Sales $240,906,000 $248,593,000 (3.1) %
Income from operations 23,562,000 19,150,000 23.0
Income before taxes 21,294,000 15,611,000 36.4
Net income $13,202,000 $9,787,000 34.9
Earnings per share:
- Basic $0.68 $0.51 34.0
- Diluted $0.68 $0.50 36.0
Weighted average shares
outstanding:
- Basic 19,313,301 19,292,059
- Diluted 19,419,596 19,411,163
Note 1. During the first quarter of 2000, the Company changed its
method of accounting for its domestic aroma chemicals
inventories from the last-in, first-out (LIFO) method to the
first-in, first-out (FIFO) method. As required by generally
accepted accounting principles, the Company has retroactively
adjusted prior year financial statements for the change. The
change in accounting had no material effect on net income for
the second quarter and six months ended June 25, 2000 and
decreased net income by approximately $300,000 ($.02 per
share) in the second quarter of 1999 and $500,000 ($.03 per
share) in the six months ended June 25, 1999.
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