At this time, I’d like to welcome everyone to the International Flavors & Fragrances Fourth-Quarter and Full-Year 2010 Earnings Conference Call. All participants will be on a listen-only mode until the formal question-and-answer portion of the call. Participants will be announced by their name and company name and in order to get all participants an opportunity to ask their question, we request a limit of one question per person. I’d now like to introduce Michael DeVeau, Investor Relations Manager. You may begin.

Thank you, Operator, and good morning everyone. Speaking on the call today is our Chairman and CEO, Doug Tough; our President of Flavors, Hernan Vaisman; our President of Fragrances, Nicolas Mirzayantz and our CFO, Kevin Berryman. Also in the room with us today is Beth Ford, our Executive Vice President, Supply Chain. This call is being recorded and will be available for playback on our Web site. Please keep in mind that during this call we’ll be making forward-looking statements about the company’s performance, particularly with respect to the first-quarter and full-year of 2011. These statements are based on how we see things today and contain some elements of uncertainty. For additional information concerning factors that could cause actual results to differ materially from forward-looking statements, I ask that you to refer to the cautionary statements and risk factors contained in IFF’s filing with the SEC. Some of today’s prepared remarks we’ll discuss the non-GAAP financial information which excludes those items that affect comparability. These items are laid out in our reconciliation to comparable net GAAP measures, which is also available on our Web site. With that, I’d like to turn the call over to Doug.

Thank you, Michael, and good morning, good afternoon to everyone. IFF had an excellent year in calendar year 2010 led by strong performances across both Flavors and Fragrances. Our 13% local currency sales growth can be credited to strong growth in the emerging markets, increased relative innovation and an underlying strength across our product portfolio. While we did experience some benefits from restocking and favorable comparisons early in the year, I am pleased to say that a large part of our success was driven by new business wins. This record top-line performance provided strong operational leverage that when combined with our margin improvement initiatives drove a substantial increase in operating profit. For the full-year, adjusted operating profit increased 17% and operating profit margin expanded 60 basis points to 16.3%. The benefits of lower interest expense and a more favorable tax rate provided additional leverage to our bottom-line results. For the full-year, adjusted earnings per share grew 25% to $3.37, a company record for the highest annual EPS we’ve achieved. I’d like to now highlight some key accomplishments that we achieved throughout the last 12 months. First, from a customer perspective, we’re recognized as a leading supplier by both Procter & Gamble and Natura. In addition, we’re selected as a global core supplier for a multinational flavor customer, making us one of only three suppliers on that coveted list. In 2010, we solidified our commitment to research and development by appointing Dr. Ahmet Baydar to a newly creative position of Senior Vice President, Research and Development. Under Dr. Baydar’s direction, we are strengthening our efforts in innovation, technological development and external collaborations. All of which are viable to accelerating our performance. In addition, we signed a licensing agreement with a developer of our all natural sweetness enhancer Redpoint Bio that will…

Thank you, Doug, and hi, everyone. I’m very happy to report that local currency sales in the fourth-quarter increased 11%. Most regions reported double-digit growth. A very strong performance was once again driven by increased volumes on new business means across all categories. The strong trends in Greater Asia continued into the fourth-quarter as every category reported double-digit growth. From a regional perspective, our three largest Greater Asia markets, China, Indonesia, and India combined grew an impressive 18%. In the developed markets of North America and EAME, double-digit growth in Savory and Confectionary growth [ph] results. Our strong performance in Europe can be credited to our new EU regulatory approved to our natural flavors profile. Real introduction of these profiles enabled our customer to accelerate the development of their products to comply with a new legislation, while meeting the consumer demand for more natural products. Our performance in Latin America was strong as Confectionary, Savory and Dairy all grew double-digits. On a full-year basis, local currency sales increased 10%. In Greater Asia and EAME, nearly, all categories experienced double-digit growth. In North America, increased volumes, and new business wins in Savory and Confectionary, drove results. In Latin America, new business wins and volume recovery in Savory, Confectionary and Dairy more than offset the loss of non-strategic business. Our strong positions in the emerging markets continue to pay dividends, as these regions grew 14% in the fourth-quarter and the full-year. In the key emerging markets, such as the BRIC countries, we grew nearly 20%. In Eastern Europe, the growth was impressive as Poland, Russia, Hungary combined doing excess 35%. As a result, our emerging market percent in Flavor has grown to approximately to 48% of sales in the fourth-quarter, a position that I expect will provide greater opportunities for growth in the future. From an R&D perspective, our innovative technologies such as sweetness enhancement and salt reduction were the components behind our new win performance. External collaborations such as our agreement with Redpoint Bio and our recently announced partnership with Evolva Holdings are long-term initiatives that are on the way to capture incremental sales and wellness opportunities. Adjusted operating profit increased $7 million to $54 million as strong sales growth and margin improvement initiative drove results. As a result, adjusted operating profit margin improved 50 basis points to 17.9%. Looking ahead, I expect that local currency sales growth will begin to normalize in the first-quarter as our year-over-year comparatives become more challenging. In addition, our efforts of focus on profitable categories could have a modest impact on our sales figures. Nevertheless, on a full-year basis, it is my expectation that our new win performance will continue to drive solid local currency sales and profit growth. With that, I’d like to turn the call over to Nicolas Mirzayantz our Group President of Fragrances.

Thank you, Hernan, and good morning and good afternoon, everyone. It is my pleasure to report in the context of 5% growth in Q4 2009, local currency sales in the fourth-quarter of 2010 increased 8% over the prior year period. Overall growth can once again be attributed to Fine Fragrance and Beauty Care and strong emerging market performance, as new business wins in Latin America and Greater Asia continue to drive results. For the fourth consecutive quarter, we achieved double-digit growth in Fine Fragrance and Beauty Care as new business wins and increased volume growth results in Europe, Latin America and Greater Asia. As noted on our last conference call, (inaudible) Armani Acqua di Gioia, Calvin Klein Beauty continued to play an integral part of overall growth in this category. Functional fragrance results were solid, as new wins across all categories more than offset volume declines. The strong trends in fabric care in Greater Asia continued, as the team was successful in both winning new business and growing production volume. North America and Europe did experience slowing, as volume weakness impacted results. In Home care, our collage composition and unique portfolio of ingredients grew high single-digit growth. Fragrance Ingredient sales performed well growing 9% as new wins, our strong portfolio and underlying improvement in demand continued to drive results. For the full-year, local currency sales increase 16% as new win performance improving economic conditions and benefits of restocking dropped double digit growth across all regions and nearly all categories. Our very strong performance can be credited to the team’s ability to execute key strategic initiatives that were developed few years ago. Our previous investments in consumer insight, innovation and creative expertise have enabled us to grow faster than the overall fragrance market in 2010, which in turn drove market share…

Thank you, Nicolas, and good morning and good afternoon, everyone. Looking at our quarterly results, as Hernan and Nicolas have noted, our strong top-line growth continues to be driven by new business wins. Similar to what we experienced in the third-quarter, growth from new business wins outpaced volume growth. Volume trends from existing business as expected slowed, but remained positive. Emerging markets once again represented our strongest growth area increasing to 45% of our total business in the fourth-quarter and for the first time in company history, Greater Asia on a full-year basis has surpassed North America to become our second largest region behind our Europe, Africa and Middle East business. Gross margin was pressured slightly as input costs, particularly in the Fragrance business unit, increased years-over-year in the quarter. Adjusted operating declined $6 million to $84 million versus the fourth-quarter 2009 and adjusted operating profit margin decreased 210 basis points year-over-year to 13.4%. It should be noted that operating cost this quarter includes approximately $11 million of higher growth-driven incentive compensation costs versus what we’d consider more normalized levels and more R&D credits versus year ago. The additional incentive compensation expense above normalized levels continue to be driven by our strong performance year-to-date. We discussed the R&D credits impact on our conference call last year when we noted the accelerated levels of credits we realized in the fourth-quarter of 2009. Clearly, below the line items such as lower interest expense and a more favorable tax rate provided a boost to our EPS. For the quarter, adjusted earnings per share grew 10% to $0.69. Analyzing the P&L in more detail I’d like to further discuss input cost, research, selling and administrative cost or what we call RSA and currency. Regarding input costs, we did experience a 2% increase in the…

Thank you, Kevin and Nicolas and Hernan for the comprehensive review of Q4 and our full-year 2010 results. Looking ahead we expect local currency sales to be in line with our long-term targets in 2011 albeit that the quality of our growth will be better as we’ve begun exiting some lower margin businesses. We believe that our team’s ability to continue to win new business will be an important driver of results going forward while we are facing our most challenging year-over-year comparables in the first half we are off to a good start. We do expect input cost will rise in 2011. It is our expectation related to proactive pricing manufacturing efficiency and other internal cost of disciplines as well as the $17 million to $20 million savings from our European manufacturing restructuring should offset the pressures. From an RSA standpoint we’ll continue to be disciplined in the management of fixed cost. Some of the impacts we faced in 2010 in particular incentive compensation expense should transition to reflect more normalized business trends. We also plan to make investments to support future growth particularly in the areas identified in our strategic review. We’re incorporating our strategic findings to accelerate our growth in the right categories, regions and customers and improve our overall profitability by implementing margin enhancing solutions such as cost reduction or changes to pricing on parts of the portfolio that are under performing. Overall top-line growth maybe slightly impacted but some of these initiatives however the reduction will be in underperforming categories and customers. As a result of the above mentioned commentary, we are optimistic in our ability to deliver results that will approach our long-term financial targets. In summary, 2010 was a strong year at IFF, both from a financial perspective and a learning perspective. Our double-digit top-line and bottom-line performance is a testament to the company’s potential. Thanks in large part to the hard work and dedication across the entire organization, we’re able to deliver record results across almost all of our financial metrics. The IFF people worked very hard in establishing customer intimacy so that we understand our customers’ needs today and in the future. Those excellent relationships enabled us to achieve a heightened level of satisfaction and R&D success with our customers. We’ll look to sustain and improve that customer intimacy to continue to win in the marketplace. We also work diligently to fully understand where we are creating value and where we are destroying it. We’ve begun to incorporate those findings into our 2011 plan, as we expect to maximize those areas that provide the greatest opportunities, improve those areas that are more challenged. We believe the insights gained from our strategy review will provide additional opportunities as to how we drive incremental value longer-term for our shareholders. Looking at 2011, we’re optimistic about our growth prospects and the potential financial results that we can deliver. With that, we’d be happy to take any questions you may have. Thank you.

(Operator instructions) Your first question comes from the line of Mark Astrachan from Stifel Nicolaus.

Thanks, and good morning, everyone. I guess trying to get a sense of how quickly can pricing offset the input cost pressure. It sounds fine for the year, but I guess I’m trying to get a sense is the go-forward pricing intended to offset input cost pressure that you saw in the fourth-quarter, are you anticipating it will be for additional cost inflation in the first half of the year?

I think we had noted, Mark, in past conference calls, we saw some of the cost pressures coming, so some of the pricing discussions have already started with our customers. Having said that, the acceleration in cost pressures came more swiftly than first anticipated and will necessitate pricing discussions at an even escalated level from where we’re. Those discussions are ongoing and they will vary customer to customer and region to region as well as almost product to product. Over the course of the first half, we’ll be having all these discussions and the implementation of the timing is going to vary. And I’ll invite Hernan or Nicolas to talk further if they want.

Yes, as Doug explained, we’re already discussing with customers and as he mentioned, this is one-by-one, you have different impact in the costs. We will see some recovery in price by this quarter, but we can’t precise exactly what will be the amount that we’ll be recovering.

Mark, with same trend in Fragrances, as we had some visibility on some additional pressure on input cost, we have engaged with our customers providing great transparency as far as what were the key drivers of input costs and as Doug was mentioning, product by product, line by line, so, we’re working with our customers to secure this price increase.

Great. And then just sort of related to that, how accepting are the customers of pricing given what’s going on with commodity costs? And then just sort of related to that, is there an opportunity to take proactive pricing as well where applicable and not just reactive pricing?

Well, I think from a pricing point of view with customers, no customer is necessarily looking for a price increase, but the good news is there is such visibility in the category as well as across a lot of categories and a lot of companies whether it’s oil as well as apparel companies, there’s pressure all around the globe right now, so the customers are aware of it. Nicolas, moment ago mentioned the word ‘transparency’ with our customers. We execute that transparency with sharing with them the cost information, which is in the public domain, so they have a good grasp of the factors at work. So, the receptivity to it is well understood.

Your next question comes from the line of Emily Klingbeil with Credit Suisse.

Hi, good morning, and congratulations first of all on such a strong financial 2010. I have a similar question, but I guess slightly different take on it. First part of it is, with commodity cost increasing, particularly, at some of your largest customers and taking away some of their operating profit, I’d like to know how this is impacting innovation and demand for replacers and how you see it really impacting your top-line in terms of what they’re demanding from you? And then the second part of the question is on the commodity cost increases. How comfortable are you that you have levers to be able to offset those costs, whether it be through sourcing and/or through SG&A? Thank you.

Emily, could you just restate the first question for me, please?

Emily, could you please press ‘*1’ again?

Operator, can we go to the next question and then we’ll have Emily jump back into the Q&A session.

Your next question comes from the line of John Roberts with Buckingham Research.

Good morning, guys.

Good morning.

Good morning.

As a result of the review, how much of your sales are in the questionable categories that you’ve some plan of action for dealing with?

John, the element of sales that you call questionable is unfortunately for us in the modest sector. Most of the business came through very positively though in both Flavors and Fragrances there are opportunities. The good news though there are different ways to attack the problem. Some of it maybe through pricing, some of it through the concept of what does it cost to serve the customer. So where we’ve mentioned there will be a higher quality of sales, we’ve nevertheless still indicated that we’d expect to be in the 4% range plus in terms of top-line where we’ve been so, it’s a better quality, there will be some reduction but it’s at a modest level.

You do want to give us a sense at what the total part is that needs to be addressed in pricing or some other way?

Correct.

Okay. I’ll get back in queue.

Your next question comes from the line of Emily Klingbeil with Credit Suisse.

Hi. I still try that again. My question was really on just the commodity cost pressure that some of your largest customers are facing. My question is are you seeing this environment as one where they are looking to you and towards innovation to try to help them drive their top-line? And is that having a little bit of a reverse effect in terms of your win rate? How is it impacting your win rate?

Well, I think Hernan will be able to talk to this well, but I’ll start. So far, as they are very much expecting us to come forward with innovation, ideas and ways to mitigate against this commodity cost pressure, and that’s where our consumer insights comes in, identifying things like health and wellness and nutrition, which has been particularly picked up by our Flavors Group. And I’d really like Hernan to talk about in more depth.

Yes. Definitely, we expect a switch between the high value products in term of innovation to more affordable products. So far we haven’t seen the market this kind of approach, but definitely, following experience that we had in the past, whenever you have this kind of price increases on specific raw materials, we’ll have these kind of request. In terms of how it’s going to really affect the effective trade, I strongly believe I mean following what went through many years, we’ve a very solid tool box to help our customers to go through this kind of price increase on their costs side.

Thank you.

Welcome.

Your next question comes from the line of Jeff Zekauskas with JPMorgan.

Hi, good morning. I have a two part question. Can you compare the rate of cost inflation in your Flavors business versus the rate of cost inflation in your Fragrance business? And the second part is an unrelated question, which is that your deferred tax line on your funds flow statement was I think negative $13 million this year. And in the previous year it was negative 17. Are your cash taxes higher than your book taxes? And if they are, why is that?

Let me take a crack, Jeff, on the inflation question, Flavors versus Fragrance. I’d certainly say that we’re seeing higher levels of input cost trend for the fragrance business at this particular point in time. I mentioned in my commentary citrus oils, which effects both businesses, turpentine, which is a fragrance-oriented input cost. So, generally speaking, even though we’re seeing increases in input cost in our Flavor, our natural flavors are natural, which to a large extent it’s our flavor business as well. The index on inflation in Fragrance is certainly higher than Flavors at this particular point in time. In terms of the deferred tax question, we’ve evaluated, I’d have to get back and we can follow-up on a follow-up call on that. But fundamentally, the cash tax is paid and the book tax, there’s not a significant difference now. Year-over-year there can be differences obviously, but I can follow-up and give you more details as it relates to that.

Thank you very much.

Sure.

Your next question comes from the line of Ed Aaron with RBC Capital Markets.

Hey, guys, this is Asher Kanka [ph] sitting in for Ed. Thanks for taking my question. My question centers around your pipeline and expectations for growth and new business wins moving in 2011, so it seems like the mix of new versus existing business will obviously play a role in gross margin just given the new business is priced for the current commodity environment, so just how should we think about that?

Hi. Nicolas. Just wanted to say that we continue to see a very strong pipeline of new business, as we’ve accelerated our innovation rate, increased collage participation and also the result of the focus on key categories and leveraging category expertise. So we see the strong pipeline right now and we’ve access to more business and therefore, we remain confident as the inflow of new wins and moving forward.

In a similar direction, I think in Flavors we see also a very strong pipeline. As I mentioned before, and also mentioned by Doug, these trends of health and awareness and naturals really help us to have a material increase in the pipeline and also help us to increase our success rate. Having said that, and as I mentioned before, when you have these kind of increases in commodities, the companies might start looking for different kind of approach in the product portfolio, but for the time being and following what we’ve today is very solid.

Great. And then if I could just sneak in a follow-up, what was the normalized tax rate on the quarter and what would you guys expect for that line item moving into 2011?

I’d say that we are kind of in the mid-27s range is how you should probably be thinking about it for 2011.

Great. Thanks for taking my question.

Your next question comes from the line of Lauren Lieberman with Barclays Capital.

Thanks. Good morning. I just was curious a little bit about the trends in Functional Fragrance, because I think it was interesting to me most that I guess in North America things had already started to slow in the third-quarter, but in Europe it was a pretty dramatic slowdown. I understand it’s by definition has to be tied towards category trends, which are definitely not encouraging in those two regions. Where do you think inventory level stand for your customers so that should we expect to still see negative growth in those two regions for Functional for another period of time? Thanks.

Hi, Lauren, it’s Nicolas. Despite challenging year-over-year comparable, Functional Fragrance was plus 1% in Q4, but for the full-year was actually plus 7%. So, we had already sealed the pipeline of introduction and new wins. We also had benefited to some extent to some additional promotional program that may be were not there again this year, so we had to deal with very strong comparables. We’re seeing some return to normalized level of evolution in the developed market, which is affecting the top-line, but as I say, when I looked at new wins ratio, it continue to be very strong.

I guess really I just wanted to get to, I know that it’s very normal in a normalized environment where you don’t have tons of restocking to see choppiness across the quarters. So I understand the full-year trend matters an awful lot. But just very specific to Functional Fragrance in the developed markets, I know from my other coverage, the category growth is very week. So what I want to understand is do you think inventory levels for your customers are and at retail even are high enough that we should still expect to see negative trends in functional for another quarter or so until kind of demand catches up with that inventory because the category slowed in the second half of the year?

I think it’s fair to say that the level of growth in these categories in developed countries is slower than in the rest of the portfolio in the other region. Right now, we don’t have enough visibility yet on the inventories that are still out there to understand what will be the impact for us in Q1.

Okay. Thank you very much.

Your next question comes from the line of Andrew Sawyer with Goldman Sachs.

Thanks, guys. Sorry to kind of beep this into the ground. On the commodity side, since it’s tough to track a lot of your inputs, could you give us some help around what’s the basket inflation is and what’s the year-on-year indexes are both for ag and petrochemicals, are we talking like tens or that magnitude?

You’re right that we’ve a broad basket of goods and some are more critical than others. We probably see the pressures unfolding is in the mid-to-high single-digits overall for the basket of goods, but I wouldn’t want to say we saw some of this coming before and some of the pricing actions that we’ve already taken are going to mitigate some of that.

Okay. Thank you for that context. Really appreciate it. And then just a quick one, as I look kind of across your businesses, the one that really stood out that’s still showing acceleration even against the tougher comps is the North American Flavors business. Could you just give a little more color on that?

Yes, of course. As I mentioned before, we’ve a very good year in North America. We have very good and solid wins in the health and wellness arena. So on top of it better economic situation really help us to really deliver a good solid growth in North America. So basically, the new wins and higher volumes.

Your next question comes from the line of Mike Sison with KeyBanc.

Hey, guys, congrats on a great 2010. In terms of 2011, in terms of the outlook for volume, you’ve noted that you’d be in line with your long-term goals, which is I recall, on a volume front is or local currency front is plus 2% above the market growth. So to help us frame up '11, what do you think the markets will grow in 2011, and how much of the growth are you looking for supported by new products? And then when you take a look at the EPS progression, you sort of highlighted again, I guess it was 10% plus, right, in terms of EPS growth for a long-term growth goal. Given the headwinds in raws, is it sort of lower growth in that in the first half and then much stronger growth in the second half? Can you help us sort of understand the progression as the year unfolds?

Sure. Mike, let me some of it and then I’ll ask Kevin to address some subsections of it. Really, from an overall market growth point of view, the world is really made up of many different parts. And the emerging markets obviously growing more rigorously than the developed market, so, these are generalizations that we are foreseeing maybe a point or so of growth, two points max in developed, we’d be seeing at least triple that in the emerging markets, and we are well-positioned in the emerging markets and investing there, so that will be a big chunk of our growth going forward, which is why we’ve held on to the 4% plus local currency growth this year. So, it’s made up of different parts and to come to that overall standpoint. We think we’ve higher comparables. The way Nicolas already mentioned in half one, but in looking at the business we think there is going to be a robust performance really throughout the year. Some of that’s been addressed by my comrades here in the context of wins, and the pipeline of innovation we’ve already got, so the confidence level in the top line is quite robust. You raised an EPS question, I’ll ask Kevin to talk about that, Mike.

Mike, I think there’s a couple of dynamics that you need to think through. The first one is on the input cost. Certainly, although we’ve seen acceleration in certain areas, there is likelihood that some of that will come into the second half for the year versus the first half. And in addition, remember that we’ve the $17 million to $20 million of manufacturing efficiencies due to the rationalization that we’re expecting from day one. If you take into account our pricing initiatives and certainly, the fact that in our RSA investment we’re going to probably have more normalized levels of incentive compensation. We’ll still be able to realize some improvements in the first half of 2011 even though we are comparing to a very, very strong year of those numbers.

Great, thank you.

Your next question comes from the line of Edward Yang with Oppenheimer.

Hi, thanks for taking my question. First of all, what do you expect global expense spending to total in 2011? It’s been volatile with some of the RSA and incentive compensation spending that you mentioned. And secondly, just on pricing, I’d like to understand that better for both Flavors and Fragrances. Previously, it was my understanding that rising raw material environment, you don’t necessarily adjust pricing on your existing products that basically you only get pricing when you introduce new products. Has that changed at all or are you now adjusting prices on existing products as raw materials rise? Thank you.

I think, Ed, we don’t really talk specifically about the expected cost structures going forward. We do know that we’ll be considering investments to support our growth initiatives per our strategy, and we do know there will be some dampening on our cost structure in RSA, because of the very high levels of growth-driven incentive compensation that we incurred in 2010. We have a variable base compensation scheme that translates into pay for performance ultimately and that certainly was realized in 2010. Perhaps on the other comment, I’ll just have a preliminary introductory comment, and then turn it over to Hernan and Nicolas. We’ve always proactively priced to the extent that there are input cost specifically that are affecting our margin structure. And I think we are getting better and more proactive in getting sooner and ahead of the curve. But I’ll turn it over to Nicolas and Hernan to see if there is any additional comments they would like to make.

No, I think this is what you mentioned, Kevin, I mean we always have increases on to our customers when you have this kind of price increases. You cannot really absorb such increase. I mean definitely will have a very negative impact. So I don’t know where the comment comes from, but definitely, we always have price existing and new businesses accordingly.

And to echo Kevin’s comments, I think that we’ve now the tools, we’ve invested in IT to provide real time visibility on the key drivers of input costs and therefore, we can go back formula by formula and really share with our key partners what will be the impact on their portfolio. So we are very, very early on able to share this visibility and also to give greater level of granularity than we ever did in the past.

Kevin, just to clarify on the global expenses, so does that mean that you expect that to be up year-over-year, flat or down from the $61 million you spent in 2010?

We don’t provide guidance as it relates to that, but I think you have a perspective on some of the plusses or minuses that will be going on.

Okay, thank you.

Your next question comes from the line of John Roberts with Buckingham Research.

Thanks. Since the tax rate declined as 2010 progressed, should we assume a lower full rate in 2011? Maybe your geographic mix is sort of shifted as the year went on and as you enter 2011?

We had talked about that a little bit in our call, in our preliminary comments. We expect that our rate for 2011 will be in the neighborhood of, let’s call it, mid-27s is the right rate to be thinking about on an ongoing basis.

Your European Fine Fragrance business accelerated a little bit in the December quarter versus the September quarter. Is a significant amount of that reexported as perfume to the emerging markets from Europe? Is the acceleration in Europe not really Europe consumption of end finished products?

It’s a very good question. If you look at the dynamic in Europe for Fine Fragrances, most of the European players manufacture in Europe for the rest of the world. We don’t have visibility on what portion of the growth is coming from emerging market or more developed markets. But it is fair to say that some of the introduction last year were successful. So we know that it was positively impacting our results in Europe, but also for export to North America. And it is fair to say that also good portion of revenue in Europe for Fine Fragrance were exported to emerging markets.

All right. Thank you.

Your next question comes from the line of Sam Yake with BGB Securities.

Yes, thanks for taking my question. I just have one question. I was wondering in the past you have mentioned that your margins in the emerging markets are comparable to the developed markets. And I’m wondering if you could address in general, do you believe that that the trend will continue in the future.

Hi, Sam. Yes, I’d say that that’s our expectation. As we’ve discussed in the past, there are variabilities across countries or customers or what not, but in general, you should not be thinking about the emerging markets as being a fundamentally different margin profile than the developed markets.

Okay, thanks so much.

Your next question comes from the line of Jeff Zekauskas wit JPMorgan.

Thanks. In your opening remarks, you said that the combination of price increases and cutting your expense or your manufacturing expenses by $17 million to $20 million would roughly offset raw material inflation. So is another way of looking at that claim that if you didn’t have the expense cuts, your raw material inflation would be $17 million to $20 million above your pricing? And what you would attempt to do is to recoup that piece in 2012? Is that reading it right?

Look, I think the answer to your question, Jeff, is that when we are looking for pricing action, our expectation is that we’re going to price to recover our input costs increases (inaudible). Now, we continue to drive efficiencies throughout our organization in everything that we do, whether it’s manufacturing or overhead cost or whatever else. Those will ultimately provide for hopefully additional margin opportunities longer-term. We’re in the midst of certainly some volatility on the input cost, so it’s a little difficult to say what’s going to happen specifically in one quarter or what not, but the expectation is that we are pricing to recover our input cost and that’s what we are trying to accomplish.

And what’s your CapEx for 2011?

We’ve continued to give a direction on 4%. We are finalizing our implementation relative to our strategy. We’ll provide some additional insights relative to our Investor Day coming up here in March.

Okay, great, thank you.

There are no further questions at this time.

Thank you very much for your participation today.

This concludes today’s conference call. You may now disconnect.