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☑
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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☐
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from to
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New York
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13-1432060
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(State or other jurisdiction
of incorporation or organization)
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(I.R.S. Employer Identification No.)
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Title of Each Class
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Trading Symbol
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Name of Each Exchange on Which Registered
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Common Stock, par value 12 1/2¢ per share
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IFF
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New York Stock Exchange
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6.00% Tangible Equity Units
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IFFT
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New York Stock Exchange
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0.500% Senior Notes due 2021
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IFF 21
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New York Stock Exchange
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1.750% Senior Notes due 2024
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IFF 24
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New York Stock Exchange
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1.800% Senior Notes due 2026
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IFF 26
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New York Stock Exchange
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Large accelerated filer
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þ
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Accelerated filer
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o
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Non-accelerated filer
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o
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Smaller reporting company
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☐
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Emerging growth company
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☐
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PAGE
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PART I
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ITEM 1.
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ITEM 1A.
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ITEM 1B.
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ITEM 2.
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ITEM 3.
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ITEM 4.
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PART II
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ITEM 5.
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ITEM 6.
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ITEM 7.
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ITEM 7A.
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ITEM 8.
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ITEM 9.
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ITEM 9A.
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ITEM 9B.
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PART III
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ITEM 10.
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ITEM 11.
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ITEM 12.
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ITEM 13.
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ITEM 14.
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PART IV
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ITEM 15.
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ITEM 16.
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ITEM 1.
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BUSINESS.
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Name
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Age
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Position
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Andreas Fibig
|
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58
|
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Chairman of the Board and Chief Executive Officer
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Rustom Jilla
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58
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Executive Vice President and Chief Financial Officer
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Richard A. O'Leary
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59
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Executive Vice President, Integration Officer
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Nicolas Mirzayantz
|
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57
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Divisional Chief Executive Officer, Scent
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Matthias Haeni
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54
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Divisional Chief Executive Officer, Taste
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Gregory Yep
|
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55
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Executive Vice President, Chief Global Scientific & Sustainability Officer
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Susana Suarez-Gonzalez
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50
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Executive Vice President, Chief Human Resources Officer
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Anne Chwat
|
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60
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Executive Vice President, General Counsel and Corporate Secretary
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Francisco Fortanet
|
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51
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Executive Vice President, Operations
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ITEM 1A.
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RISK FACTORS.
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ITEM 1B.
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UNRESOLVED STAFF COMMENTS.
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ITEM 2.
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PROPERTIES.
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Location
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Operation
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United States
|
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Carrollton, TX(1)
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Production of flavor compounds; flavor laboratories.
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Hazlet, NJ
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Production of fragrance compounds.
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Jacksonville, FL
|
Production of fragrance ingredients.
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New York, NY(1)
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Fragrance laboratories; corporate headquarters.
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South Brunswick, NJ(1)
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Production of flavor compounds and ingredients; flavor laboratories.
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Union Beach, NJ
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Research and development center.
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Holmdel, NJ(1)
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Research and development center.
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Philadelphia, PA
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Production of flavor compounds; flavor laboratories.
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France
|
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Neuilly(1)
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Fragrance laboratories.
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Grasse
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Production of fragrance compounds, and cosmetic ingredients.
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Great Britain
|
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Haverhill
|
Production of flavor compounds and ingredients, and fragrance ingredients; flavor laboratories.
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Netherlands
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Hilversum
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Flavor and fragrance laboratories.
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Tilburg
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Production of flavor compounds and ingredients, and fragrance compounds.
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Spain
|
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Benicarló
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Production of fragrance ingredients.
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Argentina
|
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Garin
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Production of flavor and fragrance compounds; flavor and fragrance laboratories.
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Brazil
|
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Rio de Janeiro
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Production of fragrance compounds.
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Taubate
|
Production of flavor compounds and ingredients.
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Minas Gerias(1)
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Production of taste solutions.
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Mexico
|
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Tlalnepantla
|
Production of flavor and fragrance compounds; flavor and fragrance laboratories.
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India
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Mumbai(2)
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Flavor and fragrance laboratories.
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Chennai(2)
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Production of flavor compounds and ingredients, and fragrance compounds; flavor laboratories.
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Australia
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Dandenong
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Production of flavor compounds and flavor ingredients.
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China
|
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Guangzhou(2)
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Production of fragrance compounds.
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Shanghai(1)(2)
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Flavor and fragrance laboratories.
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Zhangjiagang(2)
|
Production of flavor compounds.
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Jiande(2)
|
Production of fragrance ingredients.
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Yungpu(2)
|
Production of flavor compounds.
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Indonesia
|
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Jakarta
|
Production of flavor compounds and ingredients; flavor and fragrance laboratories.
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Location
|
Operation
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Thailand
|
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Bangkok(1)
|
Production of savory solutions.
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Japan
|
|
Gotemba
|
Production of flavor compounds.
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Singapore
|
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Jurong(1)
|
Production of flavor and fragrance compounds.
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Science Park(1)
|
Flavor and fragrance laboratories.
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Turkey
|
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Gebze(1)
|
Production of flavor compounds.
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Slovenia
|
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Skofja(1)
|
Production of flavor, food systems and savory powders.
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Israel
|
|
Kibbutz Givat-Oz(1)(3)
|
Production of fragrance ingredients.
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Migdal H'aemeq(1)
|
Production of health products.
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Haifa(1)
|
Production of flavor compounds.
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Russia
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Moscow(1)
|
Production of savory solutions.
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Germany
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Hamburg(1)
|
Production of fragrance compounds.
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Stadthagen
|
Production of health products.
|
Emmerich
|
Production of food systems.
|
Sittensen
|
Production of savory solutions.
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Freilassing
|
Production of savory solutions.
|
(1)
|
Leased.
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(2)
|
Land is leased and building, machinery and equipment are owned.
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(3)
|
We have a 93.4% interest in the subsidiary company that owns this facility.
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ITEM 3.
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LEGAL PROCEEDINGS.
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ITEM 4.
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MINE SAFETY DISCLOSURES.
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Title of Class
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Number of shareholders of record as of February 26, 2020
|
Common stock, par value 12 1/2¢ per share
|
1,555
|
Peer Group Companies
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Avon Products, Inc.
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Kellogg Company
|
Campbell Soup Company
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The Estée Lauder Companies Inc.
|
Church & Dwight Co., Inc.
|
McCormick & Company, Incorporated
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The Clorox Company
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McDonald’s Corporation
|
The Coca-Cola Company
|
Nestle SA
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Colgate-Palmolive Company
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PepsiCo, Inc.
|
Conagra Brands, Inc.
|
The Procter & Gamble Company
|
Edgewell Personal Care Company(1)
|
Revlon, Inc.
|
General Mills, Inc.
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Sensient Technologies Corporation
|
The Hershey Company
|
Unilever N.V.
|
Hormel Foods Corporation
|
YUM! Brands, Inc.
|
(1)
|
Edgewell Personal Care has been included starting from July 1, 2015 when it spun off from Energizer Holdings.
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ITEM 6.
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SELECTED FINANCIAL DATA.
|
|
Fiscal Year Ended December 31, 2019
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||||||||||||||||||
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
|
First Quarter
|
|
Second Quarter
|
|
Third Quarter
|
|
Fourth Quarter
|
|
Total Year
|
||||||||||
Net Sales
|
$
|
1,297,402
|
|
|
$
|
1,291,568
|
|
|
$
|
1,267,345
|
|
|
$
|
1,283,769
|
|
|
$
|
5,140,084
|
|
Gross Profit(a)
|
531,259
|
|
|
546,239
|
|
|
533,088
|
|
|
502,162
|
|
|
2,112,748
|
|
|||||
Income before taxes
|
134,576
|
|
|
169,481
|
|
|
156,866
|
|
|
96,529
|
|
|
557,452
|
|
|||||
Net income
|
111,214
|
|
|
138,869
|
|
|
129,807
|
|
|
80,378
|
|
|
460,268
|
|
|||||
Net income attributable to IFF stockholders(b)
|
108,829
|
|
|
136,377
|
|
|
127,124
|
|
|
83,543
|
|
|
455,873
|
|
|||||
Net income per share — basic(d)
|
0.97
|
|
|
1.21
|
|
|
1.15
|
|
|
0.71
|
|
|
4.05
|
|
|||||
Net income per share — diluted(c)
|
0.96
|
|
|
1.20
|
|
|
1.13
|
|
|
0.70
|
|
|
4.00
|
|
|
Fiscal Year Ended December 31, 2018
|
||||||||||||||||||
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
|
First Quarter
|
|
Second Quarter
|
|
Third Quarter
|
|
Fourth Quarter
|
|
Total Year
|
||||||||||
Net Sales
|
$
|
930,928
|
|
|
$
|
920,016
|
|
|
$
|
907,548
|
|
|
$
|
1,219,047
|
|
|
$
|
3,977,539
|
|
Gross Profit(a)
|
405,809
|
|
|
398,717
|
|
|
400,666
|
|
|
477,515
|
|
|
1,682,707
|
|
|||||
Income before taxes
|
158,837
|
|
|
121,918
|
|
|
100,702
|
|
|
66,300
|
|
|
447,757
|
|
|||||
Net income
|
129,416
|
|
|
99,149
|
|
|
95,716
|
|
|
15,500
|
|
|
339,781
|
|
|||||
Net income attributable to IFF stockholders(b)
|
129,416
|
|
|
99,149
|
|
|
95,716
|
|
|
13,021
|
|
|
337,302
|
|
|||||
Net income per share — basic(d)
|
1.63
|
|
|
1.25
|
|
|
1.18
|
|
|
0.09
|
|
|
3.81
|
|
|||||
Net income per share — diluted(c)(e)
|
1.63
|
|
|
1.25
|
|
|
1.17
|
|
|
0.09
|
|
|
3.79
|
|
|
Footnotes
|
|
||||||||
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
|
Gross Profit
(a)
|
Net Expense (Income)
(b)
|
Diluted EPS
(c)
|
Description
|
||||||
Q1 2019
|
|
|
|
|
||||||
Integration Related Costs
|
$
|
156
|
|
$
|
11,548
|
|
$
|
0.10
|
|
Represents costs related to the integration of the Frutarom acquisition.
|
Restructuring and Other Charges, net
|
—
|
|
12,143
|
|
0.11
|
|
Represents severance costs related to restructuring programs.
|
|||
Frutarom Acquisition Related Costs
|
7,850
|
|
7,999
|
|
0.07
|
|
Represents transaction-related costs and expenses related to the acquisition of Frutarom.
|
|||
Q2 2019
|
|
|
|
|
||||||
Integration Related Costs
|
165
|
|
8,843
|
|
0.08
|
|
Represents costs related to the integration of the Frutarom acquisition.
|
|||
Restructuring and Other Charges, net
|
—
|
|
1,973
|
|
0.02
|
|
Represents severance costs related primarily to Frutarom.
|
|||
Frutarom Acquisition Related Costs
|
—
|
|
(1,290
|
)
|
(0.01
|
)
|
Represents reductions in the contingent consideration payable related to certain acquisitions made by Frutarom.
|
|||
Q3 2019
|
|
|
|
|
||||||
Integration Related Costs
|
187
|
|
8,164
|
|
0.07
|
|
Represents costs related to the integration of the Frutarom acquisition.
|
|||
Restructuring and Other Charges, net
|
—
|
|
2,905
|
|
0.03
|
|
Represents costs primarily related to the Frutarom Integration Initiative and the 2019 Severance Program.
|
|||
Frutarom Acquisition Related Costs
|
(3,603
|
)
|
(2,199
|
)
|
(0.02
|
)
|
Represents a measurement period adjustment to the amount of the inventory "step-up" recorded.
|
|||
Q4 2019
|
|
|
|
|
||||||
Integration Related Costs
|
222
|
|
14,144
|
|
0.12
|
|
Represents costs related to the integration of the Frutarom acquisition.
|
|||
Restructuring and Other Charges, net
|
—
|
|
5,947
|
|
0.05
|
|
Represents costs primarily related to the Frutarom Integration Initiative and the 2019 Severance Program.
|
|||
Frutarom Acquisition Related Costs
|
—
|
|
636
|
|
0.01
|
|
Represents costs primarily compensation associated with Frutarom options that had not vested at the time the Frutarom acquisition closed.
|
|||
N&B Transaction Related Costs
|
—
|
|
18,393
|
|
0.16
|
|
Represents costs and expenses related to the pending transaction with Nutrition & Biosciences Inc.
|
|||
Q1 2018
|
|
|
|
|
||||||
Restructuring and Other Charges, net
|
—
|
|
548
|
|
0.01
|
|
Represents severance costs related to the 2017 Productivity Program and Taiwan lab closure.
|
|||
U.S. Tax Reform
|
—
|
|
649
|
|
0.01
|
|
Represents charges incurred related to enactment of certain U.S. tax legislation changes in December 2017.
|
|||
Q2 2018
|
|
|
|
|
||||||
Integration Related Costs
|
—
|
|
993
|
|
0.01
|
|
Represents costs related to the integration of David Michael.
|
|||
Restructuring and Other Charges, net
|
—
|
|
147
|
|
—
|
|
Represents severance costs related to the 2017 Productivity Program.
|
|||
Frutarom Acquisition Related Costs
|
—
|
|
30,446
|
|
0.38
|
|
Represents transaction-related costs and expenses related to the acquisition of Frutarom.
|
|||
Q3 2018
|
|
|
|
|
||||||
Integration Related Costs
|
18
|
|
722
|
|
0.01
|
|
Represents costs related to the integration of Frutarom.
|
|||
Restructuring and Other Charges, net
|
—
|
|
699
|
|
0.01
|
|
Represents severance costs related to the 2017 Productivity Program.
|
|||
U.S. Tax Reform
|
—
|
|
(8,151
|
)
|
(0.10
|
)
|
Represents charges incurred related to enactment of certain U.S. tax legislation changes in December 2017.
|
|||
Frutarom Acquisition Related Costs
|
—
|
|
45,433
|
|
0.56
|
|
Represents transaction-related costs and expenses related to the acquisition of Frutarom.
|
|||
Q4 2018
|
|
|
|
|
||||||
Integration Related Costs
|
84
|
|
4,076
|
|
0.04
|
|
Represents costs related to the integration of the Frutarom acquisition.
|
|||
Restructuring and Other Charges, net
|
—
|
|
1,672
|
|
0.01
|
|
Represents severance costs related to the 2017 Productivity Program and costs associated with the termination of agent relationships in a subsidiary.
|
|||
U.S. Tax Reform
|
—
|
|
32,847
|
|
0.30
|
|
Represents additional expense based on updated repatriation plans requiring accruals for withholding taxes on deemed repatriation.
|
|||
Frutarom Acquisition Related Costs
|
23,550
|
|
51,200
|
|
0.46
|
|
Represents transaction-related costs and expenses related to the acquisition of Frutarom.
|
(d)
|
The sum of Net Income per basic share by quarter does not equal the earnings per share for the full year due to the impact of higher shares in the third and fourth quarters.
|
(e)
|
The sum of Net Income per diluted share by quarter does not equal the earnings per share for the full year due to rounding.
|
|
Year Ended December 31,
|
||||||||||||||||||
|
2019(a)
|
|
2018(b)
|
|
2017(k)
|
|
2016(k)
|
|
2015(k)
|
||||||||||
Consolidated Statement of Income Data
|
|
|
|
|
|
|
|
|
|
||||||||||
Net sales
|
$
|
5,140,084
|
|
|
$
|
3,977,539
|
|
|
$
|
3,398,719
|
|
|
$
|
3,116,350
|
|
|
$
|
3,023,189
|
|
Cost of goods sold(c)
|
3,027,336
|
|
|
2,294,832
|
|
|
1,926,256
|
|
|
1,720,787
|
|
|
1,672,308
|
|
|||||
Gross profit
|
2,112,748
|
|
|
1,682,707
|
|
|
1,472,463
|
|
|
1,395,563
|
|
|
1,350,881
|
|
|||||
Research and development expenses
|
346,128
|
|
|
311,583
|
|
|
295,469
|
|
|
258,863
|
|
|
245,605
|
|
|||||
Selling and administrative expenses(d)
|
876,121
|
|
|
707,461
|
|
|
570,144
|
|
|
572,518
|
|
|
494,097
|
|
|||||
Restructuring and other charges, net(e)
|
29,765
|
|
|
5,079
|
|
|
19,711
|
|
|
(1,700
|
)
|
|
7,594
|
|
|||||
Amortization of acquisition-related intangibles
|
193,097
|
|
|
75,879
|
|
|
34,693
|
|
|
23,763
|
|
|
15,040
|
|
|||||
Losses (gains) on sale of assets
|
2,367
|
|
|
(1,177
|
)
|
|
(184
|
)
|
|
(10,836
|
)
|
|
—
|
|
|||||
Operating profit
|
665,270
|
|
|
583,882
|
|
|
552,630
|
|
|
552,955
|
|
|
588,545
|
|
|||||
Interest expense
|
138,221
|
|
|
132,558
|
|
|
65,363
|
|
|
52,989
|
|
|
46,062
|
|
|||||
Loss on extinguishment of debt(f)
|
—
|
|
|
38,810
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Other (income) expense, net(g)
|
(30,403
|
)
|
|
(35,243
|
)
|
|
(49,778
|
)
|
|
(23,751
|
)
|
|
3,382
|
|
|||||
Income before taxes
|
557,452
|
|
|
447,757
|
|
|
537,045
|
|
|
523,717
|
|
|
539,101
|
|
|||||
Taxes on income(h)
|
97,184
|
|
|
107,976
|
|
|
241,380
|
|
|
118,686
|
|
|
119,854
|
|
|||||
Net income
|
460,268
|
|
|
339,781
|
|
|
295,665
|
|
|
405,031
|
|
|
419,247
|
|
|||||
Net income attributable to noncontrolling interests
|
4,395
|
|
|
2,479
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Net income attributable to IFF stockholders
|
$
|
455,873
|
|
|
$
|
337,302
|
|
|
$
|
295,665
|
|
|
$
|
405,031
|
|
|
$
|
419,247
|
|
Percentage of net sales
|
9.0
|
|
|
8.5
|
|
|
8.7
|
|
|
13.0
|
|
|
13.9
|
|
|||||
Percentage of average shareholders’ equity(i)
|
7.4
|
|
|
8.7
|
|
|
17.8
|
|
|
25.1
|
|
|
26.9
|
|
|||||
Net income per share — basic
|
$
|
4.05
|
|
|
$
|
3.81
|
|
|
$
|
3.73
|
|
|
$
|
5.07
|
|
|
$
|
5.19
|
|
Net income per share — diluted
|
$
|
4.00
|
|
|
$
|
3.79
|
|
|
$
|
3.72
|
|
|
$
|
5.05
|
|
|
$
|
5.16
|
|
Average number of diluted shares (thousands)
|
113,307
|
|
|
88,121
|
|
|
79,370
|
|
|
79,981
|
|
|
80,891
|
|
|||||
Consolidated Balance Sheet Data
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
606,823
|
|
|
$
|
634,897
|
|
|
$
|
368,046
|
|
|
$
|
323,992
|
|
|
$
|
181,988
|
|
Receivables, net
|
876,197
|
|
|
937,765
|
|
|
663,663
|
|
|
550,658
|
|
|
537,896
|
|
|||||
Inventories
|
1,123,068
|
|
|
1,078,537
|
|
|
649,448
|
|
|
592,017
|
|
|
572,047
|
|
|||||
Property, plant and equipment, net
|
1,386,920
|
|
|
1,241,152
|
|
|
880,580
|
|
|
775,716
|
|
|
732,794
|
|
|||||
Goodwill and intangible assets, net(j)
|
8,349,531
|
|
|
8,417,710
|
|
|
1,572,075
|
|
|
1,365,906
|
|
|
1,247,393
|
|
|||||
Total assets
|
13,287,411
|
|
|
12,889,395
|
|
|
4,598,926
|
|
|
4,016,984
|
|
|
3,702,010
|
|
|||||
Bank borrowings, overdrafts and current portion of long-term debt
|
384,958
|
|
|
48,642
|
|
|
6,966
|
|
|
258,516
|
|
|
132,349
|
|
|||||
Long-term debt
|
3,997,438
|
|
|
4,504,417
|
|
|
1,632,186
|
|
|
1,066,855
|
|
|
935,373
|
|
|||||
Redeemable noncontrolling interests
|
99,043
|
|
|
81,806
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total Shareholders’ equity
|
6,229,548
|
|
|
6,043,374
|
|
|
1,689,294
|
|
|
1,631,134
|
|
|
1,594,989
|
|
|||||
Other Data
|
|
|
|
|
|
|
|
|
|
||||||||||
Current ratio
|
1.9
|
|
|
2.6
|
|
|
2.5
|
|
|
1.8
|
|
|
2.0
|
|
|||||
Additions to property, plant and equipment
|
$
|
235,978
|
|
|
$
|
170,094
|
|
|
$
|
128,973
|
|
|
$
|
126,412
|
|
|
$
|
101,030
|
|
Depreciation and amortization expense
|
323,330
|
|
|
173,792
|
|
|
117,967
|
|
|
102,469
|
|
|
89,597
|
|
|||||
Cash dividends declared per share
|
$
|
2.96
|
|
|
$
|
2.84
|
|
|
$
|
2.66
|
|
|
$
|
2.40
|
|
|
$
|
2.06
|
|
Number of shareholders of record at year-end
|
1,555
|
|
|
1,276
|
|
|
1,735
|
|
|
1,892
|
|
|
2,013
|
|
|||||
Number of employees at year-end
|
13,668
|
|
|
13,209
|
|
|
7,299
|
|
|
6,932
|
|
|
6,732
|
|
(a)
|
Results for the year ended 2019 include a full year of Frutarom’s business operations.
|
(b)
|
Results for the year ended 2018 include Frutarom’s business operations since the acquisition date of October 4, 2018.
|
(c)
|
The 2018 amount includes $23.6 million related to amortization for inventory "step-up" costs for the Frutarom acquisition and $7.1 million of net reimbursements from suppliers related to the previously disclosed FDA mandated recall. The 2017 amount includes $15.9 million of costs related to the amortization for inventory "step-up" for the Fragrance Resources and PowderPure acquisitions and FDA mandated product recall costs of $11.0 million. The 2016 amount includes $7.6 million of costs related to the amortization for inventory "step-up" for the David Michael and Lucas Meyer acquisitions. The 2015 amount includes $6.8 million of costs related to the fair value step-up of inventory for the Ottens Flavors and Lucas Meyer acquisitions.
|
(d)
|
The 2019 amount includes $53.5 million of integration related costs, $20.7 million of N&B transaction related costs, $11.3 million compliance review and legal defense costs offset by $8.0 million related to certain Brazil tax credits. The 2018 amount includes $66.1 million of transaction costs related to acquisition of Frutarom, $6.1 million of integration costs related to the David Michael and Frutarom acquisitions, and $1.3 million of transaction costs related to the acquisitions of Fragrance Resources and PowderPure. The 2017 amount includes $4.5 million of costs related to the Fragrance Resources and PowderPure acquisitions, $3.3 million of integration costs related to the 2017 Productivity Program and $5.3 million of reserve for payment of a tax assessment related to commercial rent for prior periods. The 2016 amount includes $48.5 million of legal charges/credits principally related to litigation accrual and $4.5 million of acquisition-related costs related to the acquisitions of Lucas Meyer, David Michael and Fragrance Resources. The 2015 amount includes $10.5 million of reversal of the previously recorded provision for the Spanish capital tax case, $7.2 million of expense for the acceleration of the contingent consideration payments related to the Aromor acquisition and $11.5 million of acquisition-related costs for the Ottens and Lucas Meyer acquisitions.
|
(e)
|
The 2019 amount represents costs primarily related to the Frutarom Integration Initiative and the 2019 Severance Program. The 2018 and 2017 amounts primarily represent severance costs related to the 2017 Productivity Program. The 2016 amount represents accelerated depreciation related to the termination of a former executive officer and partial reversal of restructuring accruals recorded in the prior year.
|
(f)
|
For 2018, represents a $34.9 million make whole payment on the Senior Notes - 2007 and a $3.9 million realized loss on the termination of a fair value hedge in connection with the acquisition financing of Frutarom.
|
(g)
|
The 2017 amount includes $12.2 million from the release of CTA related to the liquidation of a foreign entity.
|
(h)
|
The 2018 amount includes an additional charge based on updated repatriation plans requiring a $32.8 million accrual of a deferred tax liability for foreign withholding and other taxes, including state taxes, on deemed repatriation. For 2017, represents charges incurred related to enactment of certain U.S. tax legislation changes in December 2017, including $38.6 million related to net adjustments on deferred tax assets, and $100.6 million related to taxes on deemed repatriation of earnings. The 2015 amount includes $10.5 million of settlements due to favorable tax rulings in jurisdictions for which reserves were previously recorded for ongoing tax disputes.
|
(i)
|
Percentage of average shareholders’ equity is calculated using the Net income attributable to IFF stockholders as a percent of the average of Total Shareholders’ equity balance at the end of year and the preceding year.
|
(j)
|
Beginning in 2018, the amount includes $6.9 billion in identifiable intangible assets and goodwill related to our acquisition of Frutarom.
|
(k)
|
The amounts have been adjusted to reflect the adoption of ASU 2017-07, which required that employers who present a measure of operating income in their statement of income to include only the service cost component of net periodic pension cost and postretirement costs in operating expenses. The impact of the adoption of this standard was a decrease in operating profit by approximately $28.8 million, $14.4 million and $0.6 million for the fiscal year 2017, 2016 and 2015, respectively, and corresponding increases in Other (income) expense, net.
|
ITEM 7.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
|
|
Year Ended December 31,
|
|
Change
|
||||||||||||||
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
|
2019
|
|
2018
|
|
2017
|
|
2019 vs. 2018
|
|
2018 vs. 2017
|
||||||||
Net sales
|
$
|
5,140,084
|
|
|
$
|
3,977,539
|
|
|
$
|
3,398,719
|
|
|
29.2
|
%
|
|
17.0
|
%
|
Cost of goods sold
|
3,027,336
|
|
|
2,294,832
|
|
|
1,926,256
|
|
|
31.9
|
%
|
|
19.1
|
%
|
|||
Gross profit
|
2,112,748
|
|
|
1,682,707
|
|
|
1,472,463
|
|
|
|
|
|
|||||
Research and development (R&D) expenses
|
346,128
|
|
|
311,583
|
|
|
295,469
|
|
|
11.1
|
%
|
|
5.5
|
%
|
|||
Selling and administrative (S&A) expenses
|
876,121
|
|
|
707,461
|
|
|
570,144
|
|
|
23.8
|
%
|
|
24.1
|
%
|
|||
Restructuring and other charges, net
|
29,765
|
|
|
5,079
|
|
|
19,711
|
|
|
NMF
|
|
|
(74.2
|
)%
|
|||
Amortization of acquisition-related intangibles
|
193,097
|
|
|
75,879
|
|
|
34,693
|
|
|
154.5
|
%
|
|
118.7
|
%
|
|||
Losses (gains) on sale of assets
|
2,367
|
|
|
(1,177
|
)
|
|
(184
|
)
|
|
NMF
|
|
|
NMF
|
|
|||
Operating profit
|
665,270
|
|
|
583,882
|
|
|
552,630
|
|
|
|
|
|
|||||
Interest expense
|
138,221
|
|
|
132,558
|
|
|
65,363
|
|
|
4.3
|
%
|
|
102.8
|
%
|
|||
Loss on extinguishment of debt
|
—
|
|
|
38,810
|
|
|
—
|
|
|
(100.0
|
)%
|
|
NMF
|
|
|||
Other income, net
|
(30,403
|
)
|
|
(35,243
|
)
|
|
(49,778
|
)
|
|
(13.7
|
)%
|
|
(29.2
|
)%
|
|||
Income before taxes
|
557,452
|
|
|
447,757
|
|
|
537,045
|
|
|
|
|
|
|||||
Taxes on income
|
97,184
|
|
|
107,976
|
|
|
241,380
|
|
|
(10.0
|
)%
|
|
(55.3
|
)%
|
|||
Net income
|
$
|
460,268
|
|
|
$
|
339,781
|
|
|
$
|
295,665
|
|
|
|
|
|
||
Net income attributable to noncontrolling interest
|
4,395
|
|
|
2,479
|
|
|
—
|
|
|
NMF
|
|
|
NMF
|
|
|||
Net income attributable to IFF stockholders
|
455,873
|
|
|
337,302
|
|
|
295,665
|
|
|
|
|
|
|||||
Net income per share — diluted
|
$
|
4.00
|
|
|
$
|
3.79
|
|
|
$
|
3.72
|
|
|
5.5
|
%
|
|
1.9
|
%
|
Gross margin
|
41.1
|
%
|
|
42.3
|
%
|
|
43.3
|
%
|
|
(120.2
|
)
|
|
(101.9
|
)
|
|||
R&D as a percentage of sales
|
6.7
|
%
|
|
7.8
|
%
|
|
8.7
|
%
|
|
(110.0
|
)
|
|
(86.0
|
)
|
|||
S&A as a percentage of sales
|
17.0
|
%
|
|
17.8
|
%
|
|
16.8
|
%
|
|
(74.2
|
)
|
|
101.1
|
|
|||
Operating margin
|
12.9
|
%
|
|
14.7
|
%
|
|
16.3
|
%
|
|
(173.7
|
)
|
|
(158.0
|
)
|
|||
Adjusted operating margin (1)
|
15.4
|
%
|
|
17.0
|
%
|
|
18.2
|
%
|
|
(160.0
|
)
|
|
(117.2
|
)
|
|||
Effective tax rate
|
17.4
|
%
|
|
24.1
|
%
|
|
44.9
|
%
|
|
NMF
|
|
|
NMF
|
|
|||
Segment net sales
|
|
|
|
|
|
|
|
|
|
||||||||
Taste
|
$
|
1,731,919
|
|
|
$
|
1,737,349
|
|
|
$
|
1,632,166
|
|
|
(0.3
|
)%
|
|
6.4
|
%
|
Scent
|
1,922,717
|
|
|
1,880,630
|
|
|
1,766,553
|
|
|
2.2
|
%
|
|
6.5
|
%
|
|||
Frutarom
|
1,485,448
|
|
|
359,560
|
|
|
N/A
|
|
|
NMF
|
|
|
NMF
|
|
|||
Consolidated
|
$
|
5,140,084
|
|
|
$
|
3,977,539
|
|
|
$
|
3,398,719
|
|
|
|
|
|
(1)
|
Adjusted operating margin for the year ended December 31, 2019 excludes integration related costs of $55.2 million, restructuring and other charges of $29.8 million, N&B transaction related costs of $20.7 million, compliance review and legal defense costs of $11.3 million, Frutarom acquisition related costs of $5.9 million, and operational improvement initiatives of $2.3 million, losses on sale of assets of $2.4 million, and FDA mandated product recall of $0.3 million.
|
|
% Change in Sales - 2019 vs. 2018
|
||||
|
Reported
|
|
Currency Neutral(1)
|
||
Taste
|
0
|
%
|
|
2
|
%
|
Scent
|
2
|
%
|
|
4
|
%
|
Frutarom
|
—
|
%
|
|
—
|
%
|
Total
|
29
|
%
|
|
32
|
%
|
(1)
|
Currency neutral sales growth is calculated by translating prior year sales at the exchange rates for the corresponding 2019 period.
|
|
For the Year Ended
December 31, |
||||||
(DOLLARS IN THOUSANDS)
|
2019
|
|
2018
|
||||
Segment profit:
|
|
|
|
||||
Taste
|
$
|
382,590
|
|
|
$
|
395,190
|
|
Scent
|
333,522
|
|
|
329,548
|
|
||
Frutarom
|
126,804
|
|
|
27,358
|
|
||
Global Expenses
|
(49,836
|
)
|
|
(74,730
|
)
|
||
Operational Improvement Initiatives
|
(2,267
|
)
|
|
(2,169
|
)
|
||
Acquisition Related Costs
|
—
|
|
|
1,289
|
|
||
Integration Related Costs
|
(55,160
|
)
|
|
(7,188
|
)
|
||
Restructuring and Other Charges, net
|
(29,765
|
)
|
|
(4,086
|
)
|
||
(Losses) gains on Sale of Assets
|
(2,367
|
)
|
|
1,177
|
|
||
FDA Mandated Product Recall
|
(250
|
)
|
|
7,125
|
|
||
Frutarom Acquisition Related Costs
|
(5,940
|
)
|
|
(89,632
|
)
|
||
Compliance Review & Legal Defense Costs
|
(11,314
|
)
|
|
—
|
|
||
N&B Transaction Related Costs
|
(20,747
|
)
|
|
—
|
|
||
Operating Profit
|
$
|
665,270
|
|
|
$
|
583,882
|
|
Profit margin
|
|
|
|
||||
Taste
|
22.1
|
%
|
|
22.7
|
%
|
||
Scent
|
17.3
|
%
|
|
17.5
|
%
|
||
Frutarom
|
8.5
|
%
|
|
7.6
|
%
|
||
Consolidated
|
12.9
|
%
|
|
14.7
|
%
|
(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)
|
Year Ended December 31, 2019
|
||
Net income
|
$
|
455.9
|
|
Interest expense
|
138.2
|
|
|
Income taxes
|
97.2
|
|
|
Depreciation and amortization
|
323.3
|
|
|
Specified items(1)
|
122.1
|
|
|
Non-cash items(2)
|
36.9
|
|
|
Adjusted EBITDA
|
$
|
1,173.6
|
|
(1)
|
Specified items for the 12 months ended December 31, 2019 of $122.1 million consist of acquisition related costs, operational improvement initiatives, integration related costs, restructuring and other charges, net, FDA mandated product recall, Frutarom acquisition related costs, compliance review and legal defense costs and N&B transaction 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 stock-based compensation and gain on sale of assets.
|
(DOLLARS IN MILLIONS)
|
December 31, 2019
|
||
Total debt
|
$
|
4,382.4
|
|
Adjustments:
|
|
||
Cash and cash equivalents
|
(606.8
|
)
|
|
Net debt
|
$
|
3,775.6
|
|
|
Payments Due by Period
|
||||||||||||||||||
|
Total
|
|
Less than 1 Year
|
|
1-3 Years
|
|
3-5 Years
|
|
More than
5 Years
|
||||||||||
(DOLLARS IN MILLIONS)
|
|
|
2020
|
|
2021 - 2022
|
|
2023 - 2024
|
|
2025 and thereafter
|
||||||||||
Borrowings(1)
|
$
|
4,417
|
|
|
$
|
382
|
|
|
$
|
578
|
|
|
$
|
860
|
|
|
$
|
2,597
|
|
Interest on borrowings(1)
|
2,131
|
|
|
131
|
|
|
231
|
|
|
215
|
|
|
1,554
|
|
|||||
Leases(2)
|
374
|
|
|
51
|
|
|
84
|
|
|
61
|
|
|
178
|
|
|||||
Pension funding obligations(3)
|
76
|
|
|
25
|
|
|
51
|
|
|
—
|
|
|
—
|
|
|||||
Postretirement obligations(4)
|
64
|
|
|
4
|
|
|
8
|
|
|
8
|
|
|
44
|
|
|||||
Purchase commitments(5)
|
129
|
|
|
90
|
|
|
39
|
|
|
—
|
|
|
—
|
|
|||||
U.S. tax reform toll-charge(6)
|
48
|
|
|
5
|
|
|
9
|
|
|
20
|
|
|
14
|
|
|||||
Total
|
$
|
7,239
|
|
|
$
|
688
|
|
|
$
|
1,000
|
|
|
$
|
1,164
|
|
|
$
|
4,387
|
|
(1)
|
The rate assumed for the variable interest component of the contractual interest obligation was the rate in effect at December 31, 2019. See Note 9 to the Consolidated Financial Statements for a further discussion of our various borrowing facilities.
|
(2)
|
Leases include facility and other lease commitments executed in the normal course of the business included in Note 7 of the Notes to the Consolidated Financial Statements.
|
(3)
|
See Note 16 of the Notes to the Consolidated Financial Statements for a further discussion of our retirement plans. Anticipated funding obligations are based on current actuarial assumptions. The projected contributions beyond fiscal year 2022 are not currently determinable.
|
(4)
|
Amounts represent expected future benefit payments for our postretirement benefit plans.
|
(5)
|
Purchase commitments include agreements for raw material procurement and contractual capital expenditures. Amounts for purchase commitments represent only those items which are based on agreements that are enforceable and legally binding.
|
(6)
|
This amount represents the cash portion of the “toll charge” that is payable in installments over eight years beginning in 2018. This amount represents the six remaining installments.
|
|
Goodwill
|
|
Key Assumptions
|
|
Existing Headroom
|
|
Resulting Headroom
|
|||||||||||
(DOLLARS IN MILLIONS)
|
|
Discount Rate
|
|
Terminal Growth
|
|
|
50 bps Increase in Discount Rate
|
|
50 bps Decline in Terminal Growth
|
|||||||||
Savory
|
$
|
1,205
|
|
|
7.5
|
%
|
|
3.0
|
%
|
|
8.3
|
%
|
|
(3.4
|
)%
|
|
(0.3
|
)%
|
Taste
|
1,662
|
|
|
7.5
|
%
|
|
3.0
|
%
|
|
7.5
|
%
|
|
(3.6
|
)%
|
|
(0.9
|
)%
|
|
Sensitivity of Disclosures to Changes in Selected Assumptions
|
||||||||||||||
|
25 BP Decrease in
Discount Rate
|
|
25 BP Decrease in
Discount Rate
|
|
25 BP Decrease in
Long-Term Rate
of Return
|
||||||||||
(DOLLARS IN THOUSANDS)
|
Change in
PBO
|
|
Change in
ABO
|
|
Change in
pension expense
|
|
Change in
pension expense
|
||||||||
U.S. Pension Plans
|
$
|
14,613
|
|
|
$
|
14,534
|
|
|
$
|
(102
|
)
|
|
$
|
1,248
|
|
Non-U.S. Pension Plans
|
55,415
|
|
|
55,374
|
|
|
2,687
|
|
|
1,935
|
|
Reconciliation of Net Income and EPS
|
|||||||||||||||||||||||||||||||
|
Year Ended December 31,
|
||||||||||||||||||||||||||||||
|
2019
|
|
2018
|
||||||||||||||||||||||||||||
(DOLLARS IN THOUSANDS)
|
Income before taxes
|
|
Taxes on income (k)
|
|
Net Income Attributable to IFF (l)
|
|
Diluted EPS (m)
|
|
Income before taxes
|
|
Taxes on income (k)
|
|
Net Income Attributable to IFF (l)
|
|
Diluted EPS (m)
|
||||||||||||||||
Reported (GAAP)
|
$
|
557,452
|
|
|
$
|
97,184
|
|
|
$
|
455,873
|
|
|
$
|
4.00
|
|
|
$
|
447,757
|
|
|
$
|
107,976
|
|
|
$
|
337,302
|
|
|
$
|
3.79
|
|
Operational Improvement Initiatives (a)
|
2,267
|
|
|
610
|
|
|
1,657
|
|
|
0.01
|
|
|
2,169
|
|
|
694
|
|
|
1,475
|
|
|
0.02
|
|
||||||||
Acquisition Related Costs (b)
|
(3,371
|
)
|
|
—
|
|
|
(3,371
|
)
|
|
(0.03
|
)
|
|
(1,289
|
)
|
|
(311
|
)
|
|
(978
|
)
|
|
(0.01
|
)
|
||||||||
Integration Related Costs (c)
|
55,160
|
|
|
12,461
|
|
|
42,699
|
|
|
0.38
|
|
|
7,188
|
|
|
1,397
|
|
|
5,791
|
|
|
0.07
|
|
||||||||
Restructuring and Other Charges, net (d)
|
29,765
|
|
|
6,797
|
|
|
22,968
|
|
|
0.20
|
|
|
4,086
|
|
|
1,020
|
|
|
3,066
|
|
|
0.03
|
|
||||||||
Losses (Gains) on Sale of Assets
|
2,367
|
|
|
572
|
|
|
1,795
|
|
|
0.02
|
|
|
(1,177
|
)
|
|
(352
|
)
|
|
(825
|
)
|
|
(0.01
|
)
|
||||||||
FDA Mandated Product Recall (e)
|
250
|
|
|
57
|
|
|
193
|
|
|
—
|
|
|
(7,125
|
)
|
|
(1,601
|
)
|
|
(5,524
|
)
|
|
(0.06
|
)
|
||||||||
U.S. Tax Reform (f)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(25,345
|
)
|
|
25,345
|
|
|
0.29
|
|
||||||||
Frutarom Acquisition Related Costs (g)
|
5,940
|
|
|
794
|
|
|
5,146
|
|
|
0.05
|
|
|
155,569
|
|
|
28,490
|
|
|
127,079
|
|
|
1.44
|
|
||||||||
Compliance Review & Legal Defense Costs (h)
|
11,314
|
|
|
2,522
|
|
|
8,792
|
|
|
0.08
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
N&B Transaction Related Costs (i)
|
20,747
|
|
|
2,354
|
|
|
18,393
|
|
|
0.16
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Redemption value adjustment to EPS (j)
|
—
|
|
|
—
|
|
|
—
|
|
|
0.02
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.03
|
|
||||||||
Adjusted (Non-GAAP)
|
$
|
681,891
|
|
|
$
|
123,351
|
|
|
$
|
554,145
|
|
|
$
|
4.88
|
|
|
$
|
607,178
|
|
|
$
|
111,968
|
|
|
$
|
492,731
|
|
|
$
|
5.58
|
|
(a)
|
For 2019, represents accelerated depreciation related to plant relocations in India and China. For 2018, represents accelerated depreciation in India and Taiwan asset write off.
|
||||||||||||||
(b)
|
For 2019, represents adjustments to the fair value for an equity method investment in Canada which we began consolidating in the second quarter. For 2018, represents adjustments to the contingent consideration payable for PowderPure, and transaction costs related to Fragrance Resources and PowderPure within Selling and administrative expenses.
|
||||||||||||||
(c)
|
Represents costs related to the integration of the Frutarom acquisition, principally advisory services.
|
||||||||||||||
(d)
|
For 2019, represents costs primarily related to the Frutarom Integration Initiative and the 2019 Severance Program, including severance related to outsourcing the IT function. For 2018, represents severance costs related to the 2017 Productivity Program and costs associated with the termination of agent relationships in a subsidiary.
|
||||||||||||||
(e)
|
For 2019, represents additional claims that management will pay to co-packers. For 2018, principally represents recoveries from the supplier for the third and fourth quarter, partially offset by final payments to the customer made for the effected product in the first quarter.
|
||||||||||||||
(f)
|
Represents charges incurred related to enactment of certain U.S tax legislation changes in December 2017.
|
||||||||||||||
(g)
|
Represents transaction-related costs and expenses related to the acquisition of Frutarom. For 2019, amount primarily includes amortization for inventory "step-up" costs and transaction costs. For 2018, amount primarily includes $23.5 million of amortization for inventory "step-up" costs, $39.4 million of bridge loan commitment fees included in Interest expense; $34.9 million make whole payment on the Senior Notes - 2007 and $3.9 million realized loss on a fair value hedge included in Loss on extinguishment of debt; $12.5 million realized gain on a foreign currency derivative included in Other income; and $66.0 million of transaction costs included in Selling and administrative expenses.
|
||||||||||||||
(h)
|
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.
|
||||||||||||||
(i)
|
Represents costs and expenses related to the pending transaction with Nutrition & Biosciences Inc.
|
||||||||||||||
(j)
|
Represents the adjustment to EPS related to the excess of the redemption value of certain redeemable noncontrolling interests over their existing carrying value.
|
(k)
|
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 for which the tax expense (benefit) was calculated at 0%. For fiscal year 2019, these non-GAAP adjustments were not subject to foreign tax credits or valuation allowances, 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).
|
||||||||||||||
(l)
|
For 2019 and 2018, net income is reduced by income attributable to noncontrolling interest of $4.4M and $2.5M, respectively.
|
||||||||||||||
(m)
|
The sum of these items does not foot due to rounding.
|
Operating Profit
|
|||
|
Year Ended December 31,
|
||
|
2019
|
|
2018
|
% Change - Reported (GAAP)
|
14%
|
|
6%
|
Items impacting comparability (1)
|
3%
|
|
4%
|
% Change - Adjusted (Non-GAAP)
|
17%
|
|
10%
|
Currency Impact
|
2%
|
|
(3)%
|
% Change Year-over-Year - Currency Neutral Adjusted (Non-GAAP)(2)**
|
20%
|
|
7%
|
•
|
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;
|
•
|
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 our shareholders;
|
•
|
our ability to successfully establish and manage acquisitions, collaborations, joint ventures or partnership;
|
•
|
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, public health crises (such as the recent Coronavirus outbreak), 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 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.
|
ITEM 8.
|
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
|
ITEM 9.
|
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
|
ITEM 9A.
|
CONTROLS AND PROCEDURES.
|
ITEM 9B.
|
OTHER INFORMATION.
|
ITEM 11.
|
EXECUTIVE COMPENSATION.
|
ITEM 12.
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
|
ITEM 13.
|
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
|
ITEM 14.
|
PRINCIPAL ACCOUNTANT FEES AND SERVICES.
|
(a)(1) FINANCIAL STATEMENTS: The following consolidated financial statements, related notes, and independent registered public accounting firm’s report are included in this Form 10-K:
|
|
|
|
|
|
(a)(2) FINANCIAL STATEMENT SCHEDULES
|
|
/s/ PricewaterhouseCoopers LLP
|
New York, New York
|
March 3, 2020
|
|
Year Ended December 31,
|
||||||||||
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
|
2019
|
|
2018
|
|
2017
|
||||||
Net sales
|
$
|
5,140,084
|
|
|
$
|
3,977,539
|
|
|
$
|
3,398,719
|
|
Cost of goods sold
|
3,027,336
|
|
|
2,294,832
|
|
|
1,926,256
|
|
|||
Gross profit
|
2,112,748
|
|
|
1,682,707
|
|
|
1,472,463
|
|
|||
Research and development expenses
|
346,128
|
|
|
311,583
|
|
|
295,469
|
|
|||
Selling and administrative expenses
|
876,121
|
|
|
707,461
|
|
|
570,144
|
|
|||
Restructuring and other charges, net
|
29,765
|
|
|
5,079
|
|
|
19,711
|
|
|||
Amortization of acquisition-related intangibles
|
193,097
|
|
|
75,879
|
|
|
34,693
|
|
|||
Losses (gains) on sale of assets
|
2,367
|
|
|
(1,177
|
)
|
|
(184
|
)
|
|||
Operating profit
|
665,270
|
|
|
583,882
|
|
|
552,630
|
|
|||
Interest expense
|
138,221
|
|
|
132,558
|
|
|
65,363
|
|
|||
Loss on extinguishment of debt
|
—
|
|
|
38,810
|
|
|
—
|
|
|||
Other income, net
|
(30,403
|
)
|
|
(35,243
|
)
|
|
(49,778
|
)
|
|||
Income before taxes
|
557,452
|
|
|
447,757
|
|
|
537,045
|
|
|||
Taxes on income
|
97,184
|
|
|
107,976
|
|
|
241,380
|
|
|||
Net income
|
460,268
|
|
|
339,781
|
|
|
295,665
|
|
|||
Net income attributable to noncontrolling interests
|
4,395
|
|
|
2,479
|
|
|
—
|
|
|||
Net income attributable to IFF stockholders
|
455,873
|
|
|
337,302
|
|
|
295,665
|
|
|||
Other comprehensive income:
|
|
|
|
|
|
||||||
Foreign currency translation adjustments
|
23,953
|
|
|
(99,580
|
)
|
|
54,609
|
|
|||
Gains (losses) on derivatives qualifying as hedges
|
(2,678
|
)
|
|
15,078
|
|
|
(17,936
|
)
|
|||
Pension and postretirement liability adjustment
|
(35,942
|
)
|
|
19,757
|
|
|
5,940
|
|
|||
Comprehensive income attributable to IFF stockholders
|
$
|
441,206
|
|
|
$
|
272,557
|
|
|
$
|
338,278
|
|
|
|
|
|
|
|
||||||
Net income per share — basic
|
$
|
4.05
|
|
|
$
|
3.81
|
|
|
$
|
3.73
|
|
Net income per share — diluted
|
$
|
4.00
|
|
|
$
|
3.79
|
|
|
$
|
3.72
|
|
Average number of shares outstanding - basic
|
111,966
|
|
|
87,551
|
|
|
79,070
|
|
|||
Average number of shares outstanding - diluted
|
113,307
|
|
|
88,121
|
|
|
79,370
|
|
|
December 31,
|
||||||
(DOLLARS IN THOUSANDS)
|
2019
|
|
2018
|
||||
ASSETS
|
|
|
|
||||
Current Assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
606,823
|
|
|
$
|
634,897
|
|
Restricted cash
|
17,122
|
|
|
13,625
|
|
||
Receivables:
|
|
|
|
||||
Trade
|
884,428
|
|
|
946,938
|
|
||
Allowance for doubtful accounts
|
(8,231
|
)
|
|
(9,173
|
)
|
||
Inventories
|
1,123,068
|
|
|
1,078,537
|
|
||
Prepaid expenses and other current assets
|
319,334
|
|
|
277,036
|
|
||
Total Current Assets
|
2,942,544
|
|
|
2,941,860
|
|
||
Property, plant and equipment, net
|
1,386,920
|
|
|
1,241,152
|
|
||
Goodwill
|
5,497,596
|
|
|
5,378,388
|
|
||
Other intangible assets, net
|
2,851,935
|
|
|
3,039,322
|
|
||
Other assets
|
608,416
|
|
|
288,673
|
|
||
Total Assets
|
$
|
13,287,411
|
|
|
$
|
12,889,395
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
||||
Current Liabilities:
|
|
|
|
||||
Bank borrowings, overdrafts and current portion of long-term debt
|
$
|
384,958
|
|
|
$
|
48,642
|
|
Accounts payable
|
510,372
|
|
|
471,382
|
|
||
Dividends payable
|
80,038
|
|
|
77,779
|
|
||
Other current liabilities
|
576,822
|
|
|
530,508
|
|
||
Total Current Liabilities
|
1,552,190
|
|
|
1,128,311
|
|
||
Other Liabilities:
|
|
|
|
||||
Long-term debt
|
3,997,438
|
|
|
4,504,417
|
|
||
Retirement liabilities
|
265,370
|
|
|
227,172
|
|
||
Deferred income taxes
|
641,456
|
|
|
655,879
|
|
||
Other liabilities
|
502,366
|
|
|
248,436
|
|
||
Total Other Liabilities
|
5,406,630
|
|
|
5,635,904
|
|
||
Commitments and Contingencies (Note 21)
|
|
|
|
||||
Redeemable noncontrolling interests
|
99,043
|
|
|
81,806
|
|
||
Shareholders’ Equity:
|
|
|
|
||||
Common stock 12 1/2¢ par value; 500,000,000 shares authorized; 128,526,137 and 128,526,137 shares issued as of December 31, 2019 and December 31, 2018, respectively; and 106,787,299 and 106,619,202 shares outstanding as of December 31, 2019 and December 31, 2018, respectively
|
16,066
|
|
|
16,066
|
|
||
Capital in excess of par value
|
3,823,152
|
|
|
3,793,609
|
|
||
Retained earnings
|
4,117,804
|
|
|
3,956,221
|
|
||
Accumulated other comprehensive loss:
|
|
|
|
||||
Cumulative translation adjustments
|
(373,043
|
)
|
|
(396,996
|
)
|
||
Accumulated gains on derivatives qualifying as hedges
|
2,068
|
|
|
4,746
|
|
||
Pension and postretirement liability adjustment
|
(345,919
|
)
|
|
(309,977
|
)
|
||
Treasury stock, at cost (21,738,838 and 21,906,935 shares as of December 31, 2019 and December 31, 2018, respectively)
|
(1,022,824
|
)
|
|
(1,030,718
|
)
|
||
Total Shareholders’ Equity
|
6,217,304
|
|
|
6,032,951
|
|
||
Noncontrolling interests
|
12,244
|
|
|
10,423
|
|
||
Total Shareholders’ Equity including noncontrolling interests
|
6,229,548
|
|
|
6,043,374
|
|
||
Total Liabilities and Shareholders’ Equity
|
$
|
13,287,411
|
|
|
$
|
12,889,395
|
|
|
Year Ended December 31,
|
||||||||||
(DOLLARS IN THOUSANDS)
|
2019
|
|
2018
|
|
2017
|
||||||
Cash flows from operating activities:
|
|
|
|
|
|
||||||
Net income
|
$
|
460,268
|
|
|
$
|
339,781
|
|
|
$
|
295,665
|
|
Adjustments to reconcile to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
323,330
|
|
|
173,792
|
|
|
117,967
|
|
|||
Deferred income taxes
|
(59,279
|
)
|
|
19,402
|
|
|
58,889
|
|
|||
Losses (gains) on sale of assets
|
2,367
|
|
|
(1,177
|
)
|
|
(184
|
)
|
|||
Stock-based compensation
|
34,482
|
|
|
29,401
|
|
|
26,567
|
|
|||
Loss on extinguishment of debt
|
—
|
|
|
38,810
|
|
|
—
|
|
|||
Gain on deal contingent derivatives
|
—
|
|
|
(12,505
|
)
|
|
—
|
|
|||
Pension contributions
|
(23,714
|
)
|
|
(22,433
|
)
|
|
(39,298
|
)
|
|||
Litigation settlement
|
—
|
|
|
—
|
|
|
(56,000
|
)
|
|||
Foreign currency gain on liquidation of entity
|
—
|
|
|
—
|
|
|
(12,217
|
)
|
|||
Changes in assets and liabilities, net of acquisitions:
|
|
|
|
|
|
||||||
Trade receivables
|
59,555
|
|
|
(49,958
|
)
|
|
(68,851
|
)
|
|||
Inventories
|
(62,129
|
)
|
|
(117,641
|
)
|
|
(18,911
|
)
|
|||
Accounts payable
|
55,464
|
|
|
55,136
|
|
|
29,114
|
|
|||
Accruals for incentive compensation
|
(22,357
|
)
|
|
(2,289
|
)
|
|
19,144
|
|
|||
Other current payables and accrued expenses
|
5,488
|
|
|
(5,279
|
)
|
|
22,679
|
|
|||
Other assets
|
(66,650
|
)
|
|
(19,219
|
)
|
|
(3,866
|
)
|
|||
Other liabilities
|
(7,860
|
)
|
|
11,754
|
|
|
20,058
|
|
|||
Net cash provided by operating activities
|
698,965
|
|
|
437,575
|
|
|
390,756
|
|
|||
Cash flows from investing activities:
|
|
|
|
|
|
||||||
Cash paid for acquisitions, net of cash received
|
(49,065
|
)
|
|
(4,857,343
|
)
|
|
(192,328
|
)
|
|||
Additions to property, plant and equipment
|
(235,978
|
)
|
|
(170,094
|
)
|
|
(128,973
|
)
|
|||
Additions to intangible assets
|
(6,070
|
)
|
|
(3,326
|
)
|
|
—
|
|
|||
Proceeds from disposal of assets
|
42,112
|
|
|
8,176
|
|
|
16,139
|
|
|||
Proceeds from disposal of subsidiaries, net of cash held
|
—
|
|
|
10,157
|
|
|
—
|
|
|||
Proceeds from unwinding of cross currency swap derivative instruments
|
25,900
|
|
|
—
|
|
|
—
|
|
|||
Contingent consideration paid
|
(4,655
|
)
|
|
—
|
|
|
—
|
|
|||
Maturity of net investment hedges
|
—
|
|
|
(2,642
|
)
|
|
1,434
|
|
|||
Proceeds from life insurance contracts
|
1,890
|
|
|
1,837
|
|
|
3,798
|
|
|||
Net cash used in investing activities
|
(225,866
|
)
|
|
(5,013,235
|
)
|
|
(299,930
|
)
|
|||
Cash flows from financing activities:
|
|
|
|
|
|
||||||
Cash dividends paid to shareholders
|
(313,510
|
)
|
|
(230,218
|
)
|
|
(206,118
|
)
|
|||
Decrease in revolving credit facility and short term borrowing
|
(1,021
|
)
|
|
(927
|
)
|
|
(4,499
|
)
|
|||
Deferred financing costs
|
—
|
|
|
(33,668
|
)
|
|
(5,373
|
)
|
|||
Repayments of debt
|
(155,261
|
)
|
|
(376,625
|
)
|
|
(250,000
|
)
|
|||
Proceeds from issuance of long-term debt
|
—
|
|
|
3,256,742
|
|
|
498,250
|
|
|||
Proceeds from sales of equity securities, net of issuance costs
|
—
|
|
|
2,268,094
|
|
|
—
|
|
|||
Contingent consideration paid
|
(24,478
|
)
|
|
—
|
|
|
—
|
|
|||
Gain (loss) on pre-issuance hedges
|
—
|
|
|
12,505
|
|
|
(5,310
|
)
|
|||
Proceeds from issuance of stock in connection with stock plans
|
—
|
|
|
—
|
|
|
329
|
|
|||
Employee withholding taxes paid
|
(10,787
|
)
|
|
(9,725
|
)
|
|
(11,768
|
)
|
|||
Purchase of treasury stock
|
—
|
|
|
(15,475
|
)
|
|
(58,069
|
)
|
|||
Net cash (used in) provided by financing activities
|
(505,057
|
)
|
|
4,870,703
|
|
|
(42,558
|
)
|
|||
Effect of exchange rate changes on cash and cash equivalents
|
7,381
|
|
|
(14,567
|
)
|
|
(4,214
|
)
|
|||
Net change in cash, cash equivalents and restricted cash
|
(24,577
|
)
|
|
280,476
|
|
|
44,054
|
|
|||
Cash, cash equivalents and restricted cash at beginning of year
|
648,522
|
|
|
368,046
|
|
|
323,992
|
|
|||
Cash, cash equivalents and restricted cash at end of year
|
$
|
623,945
|
|
|
$
|
648,522
|
|
|
$
|
368,046
|
|
Cash paid for:
|
|
|
|
|
|
||||||
Interest, net of amounts capitalized
|
$
|
133,739
|
|
|
$
|
117,581
|
|
|
$
|
55,440
|
|
Income taxes
|
126,172
|
|
|
116,138
|
|
|
107,390
|
|
|||
Noncash investing activities:
|
|
|
|
|
|
||||||
Accrued capital expenditures
|
$
|
39,466
|
|
|
$
|
33,844
|
|
|
$
|
37,556
|
|
(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 December 31, 2016
|
$
|
14,470
|
|
|
$
|
152,481
|
|
|
$
|
3,818,535
|
|
|
$
|
(680,095
|
)
|
|
(36,645,153
|
)
|
|
$
|
(1,679,147
|
)
|
|
$
|
4,890
|
|
|
$
|
1,631,134
|
|
Net income
|
|
|
|
|
295,665
|
|
|
|
|
|
|
|
|
202
|
|
|
295,867
|
|
||||||||||||
Cumulative adjustment relating to the adoption of ASU 2016-16
|
|
|
|
|
(33,719
|
)
|
|
|
|
|
|
|
|
|
|
(33,719
|
)
|
|||||||||||||
Cumulative translation adjustment
|
|
|
|
|
|
|
54,609
|
|
|
|
|
|
|
|
|
54,609
|
|
|||||||||||||
Losses on derivatives qualifying as hedges; net of tax ($2,017)
|
|
|
|
|
|
|
(17,936
|
)
|
|
|
|
|
|
|
|
(17,936
|
)
|
|||||||||||||
Pension liability and postretirement adjustment; net of tax ($1,583)
|
|
|
|
|
|
|
5,940
|
|
|
|
|
|
|
|
|
5,940
|
|
|||||||||||||
Cash dividends declared ($2.66 per share)
|
|
|
|
|
(209,860
|
)
|
|
|
|
|
|
|
|
|
|
(209,860
|
)
|
|||||||||||||
Stock options
|
|
|
4,558
|
|
|
|
|
|
|
24,423
|
|
|
1,208
|
|
|
|
|
5,766
|
|
|||||||||||
Treasury share repurchases
|
|
|
|
|
|
|
|
|
(459,264
|
)
|
|
(58,069
|
)
|
|
|
|
(58,069
|
)
|
||||||||||||
Vested restricted stock units and awards
|
|
|
(20,779
|
)
|
|
|
|
|
|
169,185
|
|
|
9,774
|
|
|
|
|
(11,005
|
)
|
|||||||||||
Stock-based compensation
|
|
|
26,567
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26,567
|
|
|||||||||||
Balance at December 31, 2017
|
$
|
14,470
|
|
|
$
|
162,827
|
|
|
$
|
3,870,621
|
|
|
$
|
(637,482
|
)
|
|
(36,910,809
|
)
|
|
$
|
(1,726,234
|
)
|
|
$
|
5,092
|
|
|
$
|
1,689,294
|
|
Net income
|
|
|
|
|
337,302
|
|
|
|
|
|
|
|
|
2,404
|
|
|
339,706
|
|
||||||||||||
Cumulative adjustment relating to the adoption of ASU 2014-09
|
|
|
|
|
2,068
|
|
|
|
|
|
|
|
|
|
|
|
2,068
|
|
||||||||||||
Cumulative translation adjustment
|
|
|
|
|
|
|
(99,580
|
)
|
|
|
|
|
|
|
|
(99,580
|
)
|
|||||||||||||
Gains on derivatives qualifying as hedges; net of tax $2,011
|
|
|
|
|
|
|
15,078
|
|
|
|
|
|
|
|
|
15,078
|
|
|||||||||||||
Pension liability and postretirement adjustment; net of tax ($5,052)
|
|
|
|
|
|
|
|
19,757
|
|
|
|
|
|
|
|
|
19,757
|
|
||||||||||||
Cash dividends declared ($2.84 per share)
|
|
|
|
|
|
(253,577
|
)
|
|
|
|
|
|
|
|
|
|
|
|
(253,577
|
)
|
||||||||||
Stock options
|
|
|
2,152
|
|
|
|
|
|
|
46,474
|
|
|
2,188
|
|
|
|
|
4,340
|
|
|||||||||||
Impact of Frutarom acquisition
|
|
|
1,346,229
|
|
|
|
|
|
|
14,901,445
|
|
|
701,111
|
|
|
3,700
|
|
|
2,051,040
|
|
||||||||||
Vested restricted stock units and awards
|
|
|
(10,650
|
)
|
|
|
|
|
|
164,064
|
|
|
7,692
|
|
|
|
|
(2,958
|
)
|
|||||||||||
Stock-based compensation
|
|
|
29,401
|
|
|
|
|
|
|
|
|
|
|
|
|
29,401
|
|
|||||||||||||
Treasury share repurchases
|
|
|
|
|
|
|
|
|
(108,109
|
)
|
|
(15,475
|
)
|
|
|
|
(15,475
|
)
|
||||||||||||
Issuance of equity
|
1,596
|
|
|
2,266,498
|
|
|
|
|
|
|
|
|
|
|
|
|
2,268,094
|
|
||||||||||||
Redeemable NCI
|
|
|
(2,848
|
)
|
|
|
|
|
|
|
|
|
|
|
|
(2,848
|
)
|
|||||||||||||
Dividends paid on noncontrolling interest and other
|
|
|
|
|
(193
|
)
|
|
|
|
|
|
|
|
(773
|
)
|
|
(966
|
)
|
||||||||||||
Balance at December 31, 2018
|
$
|
16,066
|
|
|
$
|
3,793,609
|
|
|
$
|
3,956,221
|
|
|
$
|
(702,227
|
)
|
|
(21,906,935
|
)
|
|
$
|
(1,030,718
|
)
|
|
$
|
10,423
|
|
|
$
|
6,043,374
|
|
(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
|
|
|||||||||||||||||||||||||||
Net income
|
|
|
|
|
455,873
|
|
|
|
|
|
|
|
|
3,729
|
|
|
459,602
|
|
||||||||||||
Cumulative adjustment relating to the adoption of ASU 2016-02
|
|
|
|
|
23,094
|
|
|
|
|
|
|
|
|
|
|
23,094
|
|
|||||||||||||
Cumulative adjustment relating to the adoption of ASU 2017-12
|
|
|
|
|
(981
|
)
|
|
981
|
|
|
|
|
|
|
|
|
—
|
|
||||||||||||
Cumulative translation adjustment
|
|
|
|
|
|
|
22,972
|
|
|
|
|
|
|
|
|
22,972
|
|
|||||||||||||
Losses on derivatives qualifying as hedges; net of tax ($505)
|
|
|
|
|
|
|
(2,678
|
)
|
|
|
|
|
|
|
|
(2,678
|
)
|
|||||||||||||
Pension liability and postretirement adjustment; net of tax ($7,559)
|
|
|
|
|
|
|
(35,942
|
)
|
|
|
|
|
|
|
|
(35,942
|
)
|
|||||||||||||
Cash dividends declared ($2.96 per share)
|
|
|
|
|
(315,770
|
)
|
|
|
|
|
|
|
|
|
|
(315,770
|
)
|
|||||||||||||
Stock options
|
|
|
6,966
|
|
|
|
|
|
|
14,346
|
|
|
677
|
|
|
|
|
7,643
|
|
|||||||||||
Vested restricted stock units and awards
|
|
|
(9,808
|
)
|
|
|
|
|
|
153,751
|
|
|
7,217
|
|
|
|
|
(2,591
|
)
|
|||||||||||
Stock-based compensation
|
|
|
34,482
|
|
|
|
|
|
|
|
|
|
|
|
|
34,482
|
|
|||||||||||||
Redeemable NCI
|
|
|
(2,097
|
)
|
|
|
|
|
|
|
|
|
|
|
|
(2,097
|
)
|
|||||||||||||
Dividends paid on noncontrolling interest and other
|
|
|
|
|
(633
|
)
|
|
|
|
|
|
|
|
(1,908
|
)
|
|
(2,541
|
)
|
||||||||||||
Balance at December 31, 2019
|
$
|
16,066
|
|
|
$
|
3,823,152
|
|
|
$
|
4,117,804
|
|
|
$
|
(716,894
|
)
|
|
(21,738,838
|
)
|
|
$
|
(1,022,824
|
)
|
|
$
|
12,244
|
|
|
$
|
6,229,548
|
|
|
December 31,
|
||||||
(DOLLARS IN THOUSANDS)
|
2019
|
|
2018
|
||||
Raw materials
|
$
|
565,071
|
|
|
$
|
568,916
|
|
Work in process
|
44,532
|
|
|
48,819
|
|
||
Finished goods
|
513,465
|
|
|
460,802
|
|
||
Total
|
$
|
1,123,068
|
|
|
$
|
1,078,537
|
|
(DOLLARS IN THOUSANDS)
|
Balance at January 1, 2017
|
|
Additional Charges (Reversals), Net
|
|
Non-Cash Charges
|
|
Cash Payments
|
|
Balance at December 31, 2017
|
||||||||||
2015 Severance Plan
|
|
|
|
|
|
|
|
|
|
||||||||||
Severance
|
$
|
3,277
|
|
|
$
|
(2,311
|
)
|
|
$
|
—
|
|
|
$
|
(966
|
)
|
|
$
|
—
|
|
2017 Productivity Program
|
|
|
|
|
|
|
|
|
|
||||||||||
Severance
|
—
|
|
|
20,620
|
|
|
—
|
|
|
(13,081
|
)
|
|
7,539
|
|
|||||
Other
|
—
|
|
|
1,402
|
|
|
(528
|
)
|
|
(456
|
)
|
|
418
|
|
|||||
Total restructuring
|
$
|
3,277
|
|
|
$
|
19,711
|
|
|
$
|
(528
|
)
|
|
$
|
(14,503
|
)
|
|
$
|
7,957
|
|
(DOLLARS IN THOUSANDS)
|
Balance at January 1, 2018
|
|
Additional Charges, Net
|
|
Non-Cash Charges
|
|
Cash Payments
|
|
Balance at December 31, 2018
|
||||||||||
2017 Productivity Program
|
|
|
|
|
|
|
|
|
|
||||||||||
Severance
|
$
|
7,539
|
|
|
$
|
3,884
|
|
|
$
|
—
|
|
|
$
|
(7,298
|
)
|
|
$
|
4,125
|
|
Other
|
418
|
|
|
1,195
|
|
|
(418
|
)
|
|
(120
|
)
|
|
1,075
|
|
|||||
Total restructuring
|
$
|
7,957
|
|
|
$
|
5,079
|
|
|
$
|
(418
|
)
|
|
$
|
(7,418
|
)
|
|
$
|
5,200
|
|
(DOLLARS IN THOUSANDS)
|
Balance at January 1, 2019
|
|
Additional Charges (Reversals), Net
|
|
Non-Cash Charges
|
|
Cash Payments
|
|
Balance at December 31, 2019
|
||||||||||
2017 Productivity Program
|
|
|
|
|
|
|
|
|
|
||||||||||
Severance
|
$
|
4,125
|
|
|
$
|
(1,947
|
)
|
|
$
|
—
|
|
|
$
|
(1,072
|
)
|
|
$
|
1,106
|
|
Other
|
1,075
|
|
|
—
|
|
|
—
|
|
|
(987
|
)
|
|
88
|
|
|||||
Frutarom Integration Initiative
|
|
|
|
|
|
|
|
|
|
||||||||||
Severance
|
—
|
|
|
6,110
|
|
|
—
|
|
|
(2,072
|
)
|
|
4,038
|
|
|||||
Fixed asset write down
|
—
|
|
|
534
|
|
|
(534
|
)
|
|
—
|
|
|
—
|
|
|||||
Other
|
—
|
|
|
3,726
|
|
|
(145
|
)
|
|
(1,096
|
)
|
|
2,485
|
|
|||||
2019 Severance Program
|
|
|
|
|
|
|
|
|
|
||||||||||
Severance
|
—
|
|
|
20,871
|
|
|
—
|
|
|
(7,974
|
)
|
|
12,897
|
|
|||||
Other
|
—
|
|
|
471
|
|
|
—
|
|
|
—
|
|
|
471
|
|
|||||
Total restructuring
|
$
|
5,200
|
|
|
$
|
29,765
|
|
|
$
|
(679
|
)
|
|
$
|
(13,201
|
)
|
|
$
|
21,085
|
|
|
December 31,
|
||||||||||
(DOLLARS IN THOUSANDS)
|
2019
|
|
2018
|
|
2017
|
||||||
Taste
|
$
|
328
|
|
|
$
|
1,646
|
|
|
$
|
4,505
|
|
Scent
|
11,768
|
|
|
3,433
|
|
|
13,077
|
|
|||
Frutarom
|
10,042
|
|
|
—
|
|
|
N/A
|
|
|||
Shared IT & Corporate Costs
|
7,627
|
|
|
—
|
|
|
2,129
|
|
|||
Total Restructuring and other charges, net
|
$
|
29,765
|
|
|
$
|
5,079
|
|
|
$
|
19,711
|
|
(IN THOUSANDS)
|
As reported in the fourth quarter of 2018
|
|
Measurement period adjustments
|
|
Final Purchase Price Allocation
|
||||||
Cash and cash equivalents
|
$
|
140,747
|
|
|
$
|
—
|
|
|
$
|
140,747
|
|
Other current assets
|
699,627
|
|
|
(25,706
|
)
|
|
673,921
|
|
|||
Identifiable intangible assets
|
2,690,000
|
|
|
(21,700
|
)
|
|
2,668,300
|
|
|||
Other assets
|
353,710
|
|
|
58,401
|
|
|
412,111
|
|
|||
Equity method investments
|
25,791
|
|
|
10,439
|
|
|
36,230
|
|
|||
Current liabilities
|
(311,325
|
)
|
|
(7,190
|
)
|
|
(318,515
|
)
|
|||
Debt assumed
|
(77,037
|
)
|
|
—
|
|
|
(77,037
|
)
|
|||
Other liabilities
|
(632,488
|
)
|
|
(39,730
|
)
|
|
(672,218
|
)
|
|||
Redeemable noncontrolling interest
|
(97,510
|
)
|
|
(5,392
|
)
|
|
(102,902
|
)
|
|||
Noncontrolling interest
|
(3,700
|
)
|
|
—
|
|
|
(3,700
|
)
|
|||
Excess attributable to Goodwill
|
4,243,079
|
|
|
30,878
|
|
|
4,273,957
|
|
|||
Total Purchase Consideration
|
$
|
7,030,894
|
|
|
|
|
$
|
7,030,894
|
|
(IN THOUSANDS)
|
Estimated Amounts
|
|
Weighted-Average Useful Life
|
||
Product formula
|
$
|
290,000
|
|
|
10 years
|
Customer relationships
|
2,230,000
|
|
|
18 to 20 years
|
|
Trade names
|
140,000
|
|
|
23 years
|
|
Favorable/Unfavorable Leases, net
|
8,300
|
|
|
5 to 15 years
|
|
Total
|
$
|
2,668,300
|
|
|
|
|
Year Ended December 31,
|
||||||
(IN THOUSANDS)
|
2018
|
|
2017
|
||||
Unaudited pro forma net sales
|
$
|
5,135,906
|
|
|
$
|
4,761,115
|
|
Unaudited pro forma net income attributable to the Company
|
474,498
|
|
|
240,784
|
|
(DOLLARS IN THOUSANDS)
|
December 31,
|
||||||
2019
|
|
2018
|
|||||
Asset Type
|
|
|
|
||||
Land
|
$
|
73,170
|
|
|
$
|
75,528
|
|
Buildings and improvements
|
831,579
|
|
|
760,783
|
|
||
Machinery and equipment
|
1,366,041
|
|
|
1,342,881
|
|
||
Information technology
|
231,858
|
|
|
179,876
|
|
||
Construction in process
|
188,120
|
|
|
133,870
|
|
||
Total Property, Plant and Equipment
|
2,690,768
|
|
|
2,492,938
|
|
||
Accumulated depreciation
|
(1,303,848
|
)
|
|
(1,251,786
|
)
|
||
Total Property, Plant and Equipment, Net
|
$
|
1,386,920
|
|
|
$
|
1,241,152
|
|
(DOLLARS IN THOUSANDS)
|
Goodwill
|
||
Balance at January 1, 2017
|
$
|
1,000,123
|
|
Acquisitions
|
87,865
|
|
|
Foreign exchange
|
32,920
|
|
|
Other(a)
|
35,380
|
|
|
Balance at December 31, 2017
|
1,156,288
|
|
|
Acquisitions(b)
|
4,253,541
|
|
|
Disposals
|
(19,069
|
)
|
|
Foreign exchange
|
(12,372
|
)
|
|
Balance at December 31, 2018
|
5,378,388
|
|
|
Acquisitions(c)
|
98,411
|
|
|
Frutarom measurement period adjustment
|
30,876
|
|
|
Foreign exchange
|
(10,079
|
)
|
|
Balance at December 31, 2019
|
$
|
5,497,596
|
|
(a)
|
Other above principally represents the increase to Goodwill associated with the update of certain customer relationship assumptions in the final purchase price allocation of David Michael.
|
(b)
|
Primarily relates to the Company's acquisition of Frutarom.
|
(c)
|
Additions primarily relate to the 2019 Acquisition Activity. See Note 3 for details.
|
|
December 31,
|
||||||
(DOLLARS IN THOUSANDS)
|
2019
|
|
2018
|
||||
Taste
|
$
|
527,785
|
|
|
$
|
525,060
|
|
Scent
|
623,373
|
|
|
618,878
|
|
||
Frutarom
|
4,346,438
|
|
|
4,224,010
|
|
||
Unallocated
|
—
|
|
|
10,440
|
|
||
Total
|
$
|
5,497,596
|
|
|
$
|
5,378,388
|
|
|
Goodwill
|
|
Key Assumptions
|
|
Existing Headroom
|
|
Resulting Headroom
|
|||||||||||
(DOLLARS IN MILLIONS)
|
|
Discount Rate
|
|
Terminal Growth
|
|
|
50 bps Increase in Discount Rate
|
|
50 bps Decline in Terminal Growth
|
|||||||||
Savory
|
$
|
1,205
|
|
|
7.5
|
%
|
|
3.0
|
%
|
|
8.3
|
%
|
|
(3.4
|
)%
|
|
(0.3
|
)%
|
Taste
|
1,662
|
|
|
7.5
|
%
|
|
3.0
|
%
|
|
7.5
|
%
|
|
(3.6
|
)%
|
|
(0.9
|
)%
|
|
December 31,
|
||||||
(DOLLARS IN THOUSANDS)
|
2019
|
|
2018
|
||||
Asset Type
|
|
|
|
||||
Customer relationships
|
$
|
2,653,446
|
|
|
$
|
2,658,659
|
|
Technological know-how
|
468,256
|
|
|
451,016
|
|
||
Trade names & patents
|
178,968
|
|
|
177,770
|
|
||
Other
|
40,362
|
|
|
43,766
|
|
||
Total carrying value
|
3,341,032
|
|
|
3,331,211
|
|
||
Accumulated Amortization
|
|
|
|
||||
Customer relationships
|
(302,047
|
)
|
|
(156,906
|
)
|
||
Technological know-how
|
(135,269
|
)
|
|
(93,051
|
)
|
||
Trade names & patents
|
(27,213
|
)
|
|
(19,593
|
)
|
||
Other
|
(24,568
|
)
|
|
(22,339
|
)
|
||
Total accumulated amortization
|
(489,097
|
)
|
|
(291,889
|
)
|
||
Other intangible assets, net
|
$
|
2,851,935
|
|
|
$
|
3,039,322
|
|
|
December 31,
|
||||||||||||||||||
(DOLLARS IN THOUSANDS)
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
2024
|
||||||||||
Estimated future intangible amortization expense
|
$
|
189,896
|
|
|
$
|
185,510
|
|
|
$
|
181,698
|
|
|
$
|
181,586
|
|
|
$
|
181,586
|
|
|
December 31,
|
||||||
(DOLLARS IN THOUSANDS)
|
2019
|
|
2018
|
||||
Value-added tax receivable
|
$
|
78,526
|
|
|
$
|
62,475
|
|
Income tax receivable
|
69,284
|
|
|
60,139
|
|
||
Prepaid expenses
|
110,768
|
|
|
90,962
|
|
||
Other
|
60,756
|
|
|
63,460
|
|
||
Total
|
$
|
319,334
|
|
|
$
|
277,036
|
|
|
December 31,
|
||||||
(DOLLARS IN THOUSANDS)
|
2019
|
|
2018
|
||||
Operating lease right-of-use assets
|
$
|
287,870
|
|
|
$
|
—
|
|
Finance lease right-of-use assets
|
4,792
|
|
|
—
|
|
||
Deferred income taxes
|
125,552
|
|
|
89,000
|
|
||
Overfunded pension plans
|
85,657
|
|
|
75,158
|
|
||
Cash surrender value of life insurance contracts
|
47,578
|
|
|
43,179
|
|
||
Other(a)
|
56,967
|
|
|
81,336
|
|
||
Total
|
$
|
608,416
|
|
|
$
|
288,673
|
|
(a)
|
Includes land usage rights in China and long term deposits.
|
|
December 31,
|
||||||
(DOLLARS IN THOUSANDS)
|
2019
|
|
2018
|
||||
Accrued payrolls and bonuses
|
$
|
102,704
|
|
|
$
|
121,080
|
|
Rebates and incentives payable
|
49,938
|
|
|
44,175
|
|
||
Value-added tax payable
|
20,729
|
|
|
23,253
|
|
||
Interest payable
|
32,417
|
|
|
36,823
|
|
||
Current pension and other postretirement benefit obligation
|
11,972
|
|
|
11,528
|
|
||
Accrued insurance (including workers’ compensation)
|
9,960
|
|
|
9,447
|
|
||
Earn outs payable
|
12,961
|
|
|
29,974
|
|
||
Restructuring and other charges
|
21,085
|
|
|
5,200
|
|
||
Short term operating lease obligation
|
37,744
|
|
|
—
|
|
||
Short term financing lease obligation
|
1,931
|
|
|
—
|
|
||
Accrued income taxes
|
42,141
|
|
|
24,356
|
|
||
Other
|
233,240
|
|
|
224,672
|
|
||
Total
|
$
|
576,822
|
|
|
$
|
530,508
|
|
(DOLLARS IN THOUSANDS)
|
December 31, 2019
|
||
Operating lease cost
|
$
|
52,213
|
|
Financing lease cost
|
2,235
|
|
|
December 31,
|
||||||
(DOLLARS IN THOUSANDS)
|
2018
|
|
2017
|
||||
Rental Expense
|
$
|
42,365
|
|
|
$
|
37,785
|
|
(DOLLARS IN THOUSANDS)
|
December 31, 2019
|
||
Cash paid for amounts included in the measurement of lease liabilities
|
|
||
Operating cash flow from operating activities
|
$
|
51,444
|
|
Operating cash flow from finance leases
|
64
|
|
|
Financing cash flow from finance leases
|
2,204
|
|
|
Right-of-use assets obtained in exchange for lease obligations
|
|
||
Operating leases
|
29,823
|
|
|
Finance leases
|
2,833
|
|
(DOLLARS IN THOUSANDS)
|
December 31, 2019
|
||
Operating Leases
|
|
||
Operating lease right-of-use assets(1)
|
$
|
287,870
|
|
|
|
||
Other current liabilities(2)
|
37,744
|
|
|
Operating lease liabilities(3)
|
253,367
|
|
|
Total operating lease liabilities
|
291,111
|
|
|
Financing Leases
|
|
||
Financing lease right-of-use assets(1)
|
4,792
|
|
|
|
|
||
Other current liabilities(2)
|
1,931
|
|
|
Financing lease liabilities(3)
|
2,525
|
|
|
Total financing lease liabilities
|
4,456
|
|
(1)
|
Presented in Other assets in the Consolidated Balance Sheet.
|
(2)
|
Presented in Other current liabilities in the Consolidated Balance Sheet.
|
(3)
|
Presented in Other liabilities in the Consolidated Balance Sheet.
|
|
December 31, 2019
|
|
Weighted average remaining lease term in years
|
|
|
Operating leases
|
11.3
|
|
Finance leases
|
3.3
|
|
Weighted average discount rate
|
|
|
Operating leases
|
3.89
|
%
|
Finance leases
|
1.69
|
%
|
(DOLLARS IN THOUSANDS)
|
December 31, 2019
|
||
Operating Leases
|
|
||
Less than 1 Year
|
$
|
49,199
|
|
1-3 Years
|
81,829
|
|
|
3-5 Years
|
60,489
|
|
|
After 5 years
|
178,231
|
|
|
Less: Imputed Interest
|
(78,637
|
)
|
|
Total
|
$
|
291,111
|
|
Financing Leases
|
|
||
Less than 1 Year
|
$
|
2,036
|
|
1-3 Years
|
2,073
|
|
|
3-5 Years
|
486
|
|
|
After 5 years
|
26
|
|
|
Less: Imputed Interest
|
(165
|
)
|
|
Total
|
$
|
4,456
|
|
(DOLLARS IN THOUSANDS)
|
December 31, 2018
|
||
2019
|
$
|
49,350
|
|
2020
|
42,156
|
|
|
2021
|
36,445
|
|
|
2022
|
32,174
|
|
|
2023
|
28,499
|
|
|
Thereafter
|
201,078
|
|
|
Total
|
$
|
389,700
|
|
(DOLLARS IN THOUSANDS)
|
December 31, 2019
|
||
Operating Leases
|
|
||
North America
|
$
|
143,556
|
|
Europe, Africa and Middle East
|
110,552
|
|
|
Greater Asia
|
20,492
|
|
|
Latin America
|
13,270
|
|
|
Consolidated
|
$
|
287,870
|
|
Financing Leases
|
|
||
North America
|
$
|
246
|
|
Europe, Africa and Middle East
|
3,221
|
|
|
Greater Asia
|
516
|
|
|
Latin America
|
809
|
|
|
Consolidated
|
$
|
4,792
|
|
(IN MILLIONS, EXCEPT FAIR VALUE PER TEU)
|
|
SPC
|
|
Amortizing Note
|
|
Total
|
||||||
Fair Value per TEU
|
|
$
|
41.5
|
|
|
$
|
8.5
|
|
|
$
|
50.0
|
|
|
|
|
|
|
|
|
||||||
Gross Proceeds
|
|
$
|
685.5
|
|
|
$
|
139.5
|
|
|
$
|
825.0
|
|
Less: Issuance costs
|
|
20.4
|
|
|
4.4
|
|
|
24.8
|
|
|||
Net Proceeds
|
|
$
|
665.1
|
|
|
$
|
135.1
|
|
|
$
|
800.2
|
|
VWAP of IFF Common Stock
|
|
Common Stock Issued
|
Equal to or greater than $159.54
|
|
0.3134 shares (minimum settlement rate)
|
Less than $159.54, but greater than $130.25
|
|
$50 divided by VWAP
|
Less than or equal to $130.25
|
|
0.3839 shares (maximum settlement rate)
|
(DOLLARS IN THOUSANDS)
|
Effective Interest Rate
|
|
2019
|
|
2018
|
|||||
2020 Notes(1)
|
3.69
|
%
|
|
$
|
299,381
|
|
|
$
|
298,499
|
|
2021 Euro Notes(1)
|
0.82
|
%
|
|
334,561
|
|
|
337,704
|
|
||
2023 Notes(1)
|
3.30
|
%
|
|
299,004
|
|
|
298,698
|
|
||
2024 Euro Notes(1)
|
1.88
|
%
|
|
558,124
|
|
|
564,034
|
|
||
2026 Euro Notes(1)
|
1.93
|
%
|
|
890,183
|
|
|
899,886
|
|
||
2028 Notes(1)
|
4.57
|
%
|
|
396,688
|
|
|
396,377
|
|
||
2047 Notes(1)
|
4.44
|
%
|
|
493,571
|
|
|
493,151
|
|
||
2048 Notes(1)
|
5.12
|
%
|
|
785,996
|
|
|
785,788
|
|
||
Term Loan(1)
|
3.65
|
%
|
|
239,621
|
|
|
349,163
|
|
||
Amortizing Notes(1)
|
6.09
|
%
|
|
82,079
|
|
|
125,007
|
|
||
Bank overdrafts and other
|
|
|
3,131
|
|
|
4,695
|
|
|||
Deferred realized gains on interest rate swaps
|
|
|
57
|
|
|
57
|
|
|||
Total debt
|
|
|
$
|
4,382,396
|
|
|
$
|
4,553,059
|
|
|
Less: Short term borrowings(2)
|
|
|
(384,958
|
)
|
|
(48,642
|
)
|
|||
Total Long-term debt
|
|
|
$
|
3,997,438
|
|
|
$
|
4,504,417
|
|
(1)
|
Amount is net of unamortized discount and debt issuance costs.
|
(2)
|
Includes bank borrowings, overdrafts and current portion of long-term debt.
|
Note
|
|
Redemption Date
|
2020 Notes
|
|
September 25, 2020
|
2021 Euro Notes
|
|
August 25, 2021
|
2023 Notes
|
|
February 1, 2023
|
2024 Euro Notes
|
|
December 14, 2023
|
2026 Euro Notes
|
|
June 25, 2026
|
2028 Notes
|
|
June 26, 2028
|
2047 Notes
|
|
December 1, 2046
|
2048 Notes
|
|
March 26, 2048
|
|
Payments Due by Period
|
||||||||||||||||||
(DOLLARS IN THOUSANDS)
|
Total
|
|
Less than 1 Year
|
|
1-3 Years
|
|
3-5 Years
|
|
More than
5 Years
|
||||||||||
2020 Notes
|
$
|
300,000
|
|
|
$
|
300,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
2021 Euro Notes
|
336,360
|
|
|
—
|
|
|
336,360
|
|
|
—
|
|
|
—
|
|
|||||
2023 Notes
|
300,000
|
|
|
—
|
|
|
—
|
|
|
300,000
|
|
|
—
|
|
|||||
2024 Euro Notes
|
560,600
|
|
|
—
|
|
|
—
|
|
|
560,600
|
|
|
—
|
|
|||||
2026 Euro Notes
|
896,960
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
896,960
|
|
|||||
2028 Notes
|
400,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
400,000
|
|
|||||
2047 Notes
|
500,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
500,000
|
|
|||||
2048 Notes
|
800,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
800,000
|
|
|||||
Term Loan
|
240,000
|
|
|
35,000
|
|
|
205,000
|
|
|
—
|
|
|
—
|
|
|||||
Amortizing Notes
|
83,433
|
|
|
47,001
|
|
|
36,432
|
|
|
—
|
|
|
—
|
|
|||||
Total
|
$
|
4,417,353
|
|
|
$
|
382,001
|
|
|
$
|
577,792
|
|
|
$
|
860,600
|
|
|
$
|
2,596,960
|
|
|
December 31,
|
||||||||||
(DOLLARS IN THOUSANDS)
|
2019
|
|
2018
|
|
2017
|
||||||
U.S. loss before taxes
|
$
|
(110,363
|
)
|
|
$
|
(99,125
|
)
|
|
$
|
(24
|
)
|
Foreign income before taxes
|
667,815
|
|
|
546,882
|
|
|
537,069
|
|
|||
Total income before taxes
|
$
|
557,452
|
|
|
$
|
447,757
|
|
|
$
|
537,045
|
|
|
December 31,
|
||||||||||
(DOLLARS IN THOUSANDS)
|
2019
|
|
2018
|
|
2017
|
||||||
Current tax provision
|
|
|
|
|
|
||||||
Federal
|
$
|
9,979
|
|
|
$
|
(11,568
|
)
|
|
$
|
68,886
|
|
State and local
|
429
|
|
|
1,709
|
|
|
137
|
|
|||
Foreign
|
146,055
|
|
|
98,433
|
|
|
113,468
|
|
|||
Total current tax provision
|
156,463
|
|
|
88,574
|
|
|
182,491
|
|
|||
Deferred tax provision
|
|
|
|
|
|
||||||
Federal
|
(41,126
|
)
|
|
(8,287
|
)
|
|
74,446
|
|
|||
State and local
|
7,598
|
|
|
(7,092
|
)
|
|
(11,537
|
)
|
|||
Foreign
|
(25,751
|
)
|
|
34,781
|
|
|
(4,020
|
)
|
|||
Total deferred tax (benefit) provision
|
(59,279
|
)
|
|
19,402
|
|
|
58,889
|
|
|||
Total taxes on income
|
$
|
97,184
|
|
|
$
|
107,976
|
|
|
$
|
241,380
|
|
|
December 31,
|
|||||||
(DOLLARS IN THOUSANDS)
|
2019
|
|
2018
|
|
2017
|
|||
Statutory tax rate
|
21.0
|
%
|
|
21.0
|
%
|
|
35.0
|
%
|
Difference in effective tax rate on foreign earnings and remittances
|
(6.8
|
)
|
|
(6.1
|
)
|
|
(12.6
|
)
|
Tax benefit from supply chain optimization
|
(1.0
|
)
|
|
(3.0
|
)
|
|
(2.3
|
)
|
Unrecognized tax benefit, net of reversals
|
3.4
|
|
|
2.9
|
|
|
2.3
|
|
U.S. tax reform
|
—
|
|
|
(1.8
|
)
|
|
26.5
|
|
Deferred taxes on deemed repatriation
|
0.8
|
|
|
10.1
|
|
|
0.3
|
|
Global intangible low-taxed income
|
—
|
|
|
1.8
|
|
|
—
|
|
Acquisition costs
|
0.5
|
|
|
1.3
|
|
|
—
|
|
Establishment (release) of valuation allowance on state deferred
|
1.7
|
|
|
(1.5
|
)
|
|
(1.7
|
)
|
State and local taxes
|
(0.8
|
)
|
|
0.6
|
|
|
0.1
|
|
Other, net
|
(1.4
|
)
|
|
(1.2
|
)
|
|
(2.7
|
)
|
Effective tax rate
|
17.4
|
%
|
|
24.1
|
%
|
|
44.9
|
%
|
|
December 31,
|
||||||
(DOLLARS IN THOUSANDS)
|
2019
|
|
2018
|
||||
Employee and retiree benefits
|
$
|
87,924
|
|
|
$
|
80,382
|
|
Credit and net operating loss carryforwards
|
220,156
|
|
|
225,152
|
|
||
Intangible assets
|
8,477
|
|
|
12,489
|
|
||
Amortizable R&D expenses
|
15,477
|
|
|
481
|
|
||
Gain on foreign currency translation
|
3,285
|
|
|
—
|
|
||
Interest limitation
|
39,867
|
|
|
19,380
|
|
||
Inventory
|
14,396
|
|
|
13,308
|
|
||
Lease obligations
|
53,751
|
|
|
—
|
|
||
Other, net
|
14,351
|
|
|
17,528
|
|
||
Gross deferred tax assets
|
457,684
|
|
|
368,720
|
|
||
|
|
|
|
||||
Property, plant and equipment, net
|
(49,158
|
)
|
|
(22,511
|
)
|
||
Intangible assets
|
(621,044
|
)
|
|
(616,333
|
)
|
||
Right-of-use assets
|
(53,555
|
)
|
|
—
|
|
||
Loss on foreign currency translation
|
—
|
|
|
(7,717
|
)
|
||
Deferred taxes on deemed repatriation
|
(46,066
|
)
|
|
(88,759
|
)
|
||
Gross deferred tax liabilities
|
(769,823
|
)
|
|
(735,320
|
)
|
||
Valuation allowance
|
(203,765
|
)
|
|
(200,280
|
)
|
||
Total net deferred tax liabilities
|
$
|
(515,904
|
)
|
|
$
|
(566,880
|
)
|
|
December 31,
|
||||||||||
(DOLLARS IN THOUSANDS)
|
2019
|
|
2018
|
|
2017
|
||||||
Balance of unrecognized tax benefits at beginning of year
|
$
|
50,953
|
|
|
$
|
38,162
|
|
|
$
|
26,428
|
|
Gross amount of increases in unrecognized tax benefits as a result of positions taken during a prior year
|
20,361
|
|
|
9,751
|
|
|
1,169
|
|
|||
Gross amount of decreases in unrecognized tax benefits as a result of positions taken during a prior year
|
(2,241
|
)
|
|
(5,362
|
)
|
|
(268
|
)
|
|||
Gross amount of increases in unrecognized tax benefits as a result of positions taken during the current year
|
13,274
|
|
|
14,677
|
|
|
13,191
|
|
|||
The amounts of decreases in unrecognized benefits relating to settlements with taxing authorities
|
(3,575
|
)
|
|
(4,550
|
)
|
|
—
|
|
|||
Reduction in unrecognized tax benefits due to the lapse of applicable statute of limitation
|
(3,973
|
)
|
|
(1,725
|
)
|
|
(2,358
|
)
|
|||
Balance of unrecognized tax benefits at end of year
|
$
|
74,799
|
|
|
$
|
50,953
|
|
|
$
|
38,162
|
|
|
December 31,
|
||||||||||
(DOLLARS IN THOUSANDS)
|
2019
|
|
2018
|
|
2017(a)
|
||||||
Flavor Compounds
|
$
|
2,850,498
|
|
|
$
|
1,990,985
|
|
|
$
|
1,632,166
|
|
Fragrance Compounds
|
1,543,834
|
|
|
1,496,493
|
|
|
1,424,612
|
|
|||
Ingredients
|
745,752
|
|
|
490,061
|
|
|
341,941
|
|
|||
Total revenues
|
$
|
5,140,084
|
|
|
$
|
3,977,539
|
|
|
$
|
3,398,719
|
|
(a)
|
Prior period amounts have not been adjusted based on the modified retrospective method.
|
|
December 31,
|
||||||||||
(DOLLARS IN THOUSANDS)
|
2019
|
|
2018
|
|
2017(a)
|
||||||
Europe, Africa and Middle East
|
$
|
2,081,758
|
|
|
$
|
1,396,316
|
|
|
$
|
1,065,596
|
|
Greater Asia
|
1,162,992
|
|
|
991,015
|
|
|
903,546
|
|
|||
North America
|
1,170,497
|
|
|
1,010,126
|
|
|
901,821
|
|
|||
Latin America
|
724,837
|
|
|
580,082
|
|
|
527,756
|
|
|||
Total revenues
|
$
|
5,140,084
|
|
|
$
|
3,977,539
|
|
|
$
|
3,398,719
|
|
(a)
|
Prior period amounts have not been adjusted based on the modified retrospective method.
|
|
December 31,
|
||||||
(DOLLARS IN THOUSANDS)
|
2019
|
|
2018
|
||||
Receivables (included in Trade receivables)
|
$
|
884,428
|
|
|
$
|
946,938
|
|
Contract asset - Short term
|
2,736
|
|
|
487
|
|
||
Contract liabilities - Short term
|
11,107
|
|
|
1,006
|
|
|
December 31,
|
||||||||||
(DOLLARS IN THOUSANDS)
|
2019
|
|
2018
|
|
2017
|
||||||
Net Income
|
|
|
|
|
|
||||||
Net income attributable to IFF stockholders
|
$
|
455,873
|
|
|
$
|
337,302
|
|
|
$
|
295,665
|
|
Less: Increase in redemption value of redeemable noncontrolling interests in excess of earnings allocated
|
(2,097
|
)
|
|
(2,848
|
)
|
|
—
|
|
|||
Net income available to IFF stockholders
|
$
|
453,776
|
|
|
$
|
334,454
|
|
|
$
|
295,665
|
|
Shares
|
|
|
|
|
|
||||||
Weighted average common shares outstanding (basic)(1)
|
111,966
|
|
|
87,551
|
|
|
79,070
|
|
|||
Adjustment for assumed dilution(2):
|
|
|
|
|
|
||||||
Stock options and restricted stock awards
|
356
|
|
|
303
|
|
|
300
|
|
|||
SPC portion of the TEUs
|
985
|
|
|
267
|
|
|
—
|
|
|||
Weighted average shares assuming dilution (diluted)
|
113,307
|
|
|
88,121
|
|
|
79,370
|
|
|||
Net Income per Share
|
|
|
|
|
|
||||||
Net income per share - basic
|
$
|
4.05
|
|
|
$
|
3.81
|
|
|
$
|
3.73
|
|
Net income per share - dilutive
|
4.00
|
|
|
3.79
|
|
|
3.72
|
|
(1)
|
For the year ended December 31, 2019 and 2018, the TEUs were assumed to be outstanding at the minimum settlement amount for weighted-average shares 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)
|
|
Shares Repurchased
|
|
Weighted-
Average Price
per Share
|
|
Dollar Amount Repurchased
|
|||||
Year Ended December 31, 2018
|
|
108,109
|
|
|
$
|
143.15
|
|
|
$
|
15,475
|
|
Year Ended December 31, 2017
|
|
459,264
|
|
|
126.44
|
|
|
58,069
|
|
|
December 31,
|
||||||||||
(DOLLARS IN THOUSANDS)
|
2019
|
|
2018
|
|
2017
|
||||||
Equity-based awards
|
$
|
34,482
|
|
|
$
|
29,401
|
|
|
$
|
26,567
|
|
Liability-based awards
|
4,128
|
|
|
2,517
|
|
|
6,014
|
|
|||
Total stock-based compensation
|
38,610
|
|
|
31,918
|
|
|
32,581
|
|
|||
Less tax benefit
|
(7,305
|
)
|
|
(6,556
|
)
|
|
(5,659
|
)
|
|||
Total stock-based compensation, net of tax
|
$
|
31,305
|
|
|
$
|
25,362
|
|
|
$
|
26,922
|
|
(SHARE AMOUNTS IN THOUSANDS)
|
Shares Subject to
SSARs/Options
|
|
Weighted
Average Exercise
Price
|
|
SSARs/
Options
Exercisable
|
||||
December 31, 2018
|
12
|
|
|
$
|
117.21
|
|
|
4
|
|
Granted
|
6
|
|
|
137.82
|
|
|
|
||
Exercised
|
(3
|
)
|
|
60.39
|
|
|
|
||
Canceled
|
—
|
|
|
—
|
|
|
|
||
December 31, 2019
|
15
|
|
|
$
|
138.73
|
|
|
1
|
|
Price Range
|
Number
Exercisable
(in thousands)
|
|
Weighted Average
Remaining
Contractual Life
(in years)
|
|
Weighted
Average
Exercise Price
|
|
Aggregate
Intrinsic Value
(in thousands)
|
|||||
Over $115
|
1
|
|
|
2.34
|
|
$
|
118.10
|
|
|
$
|
2
|
|
|
Number of Shares
(in thousands)
|
|
Weighted Average
Grant Date Fair
Value Per Share
|
|||
December 31, 2018
|
448
|
|
|
$
|
125.99
|
|
Granted
|
230
|
|
|
128.98
|
|
|
Vested
|
(164
|
)
|
|
116.80
|
|
|
Forfeited
|
(17
|
)
|
|
130.85
|
|
|
December 31, 2019
|
497
|
|
|
$
|
130.24
|
|
(DOLLARS IN MILLIONS)
|
Issued Shares
|
|
Aggregate Purchase Price
|
|
Covered Shares
|
||||
2019
|
61,991
|
|
|
$
|
8.5
|
|
|
30,996
|
|
2018
|
66,674
|
|
|
9.3
|
|
|
33,337
|
|
|
2017
|
41,801
|
|
|
5.8
|
|
|
20,901
|
|
(SHARE AMOUNTS IN THOUSANDS)
|
Number of
Shares
|
|
Weighted Average
Grant Date Fair
Value Per Share
|
|||
December 31, 2018
|
162
|
|
|
$
|
132.96
|
|
Granted
|
62
|
|
|
137.82
|
|
|
Vested
|
(54
|
)
|
|
119.81
|
|
|
Forfeited
|
(2
|
)
|
|
138.97
|
|
|
December 31, 2019
|
168
|
|
|
$
|
138.96
|
|
(SHARE AMOUNTS IN THOUSANDS)
|
Cash RSUs
|
|
Weighted Average Fair
Value Per Share
|
|||
December 31, 2018
|
92
|
|
|
$
|
132.23
|
|
Granted
|
37
|
|
|
126.35
|
|
|
Vested
|
(32
|
)
|
|
134.68
|
|
|
Forfeited
|
(2
|
)
|
|
132.32
|
|
|
December 31, 2019
|
95
|
|
|
$
|
126.35
|
|
|
December 31,
|
||||||||||
(DOLLARS IN THOUSANDS)
|
2019
|
|
2018
|
|
2017
|
||||||
Net sales
|
|
|
|
|
|
||||||
Taste
|
$
|
1,731,919
|
|
|
$
|
1,737,349
|
|
|
$
|
1,632,166
|
|
Scent
|
1,922,717
|
|
|
1,880,630
|
|
|
1,766,553
|
|
|||
Frutarom
|
1,485,448
|
|
|
359,560
|
|
|
N/A
|
|
|||
Consolidated
|
$
|
5,140,084
|
|
|
$
|
3,977,539
|
|
|
$
|
3,398,719
|
|
|
December 31,
|
||||||
(DOLLARS IN THOUSANDS)
|
2019
|
|
2018
|
||||
Segment assets
|
|
|
|
||||
Taste
|
$
|
2,222,154
|
|
|
$
|
2,024,573
|
|
Scent
|
2,549,113
|
|
|
2,340,131
|
|
||
Frutarom
|
8,306,003
|
|
|
7,961,538
|
|
||
Global assets
|
210,141
|
|
|
563,153
|
|
||
Consolidated
|
$
|
13,287,411
|
|
|
$
|
12,889,395
|
|
|
December 31,
|
||||||||||
(DOLLARS IN THOUSANDS)
|
2019
|
|
2018
|
|
2017
|
||||||
Segment profit:
|
|
|
|
|
|
||||||
Taste
|
$
|
382,590
|
|
|
$
|
395,190
|
|
|
$
|
360,483
|
|
Scent
|
333,522
|
|
|
329,548
|
|
|
318,954
|
|
|||
Frutarom
|
126,804
|
|
|
27,358
|
|
|
N/A
|
|
|||
Global expenses
|
(49,836
|
)
|
|
(74,730
|
)
|
|
(60,810
|
)
|
|||
Operational Improvement Initiatives (a)
|
(2,267
|
)
|
|
(2,169
|
)
|
|
(1,802
|
)
|
|||
Acquisition Related Costs (b)
|
—
|
|
|
1,289
|
|
|
(20,389
|
)
|
|||
Integration Related Costs (c)
|
(55,160
|
)
|
|
(7,188
|
)
|
|
(4,179
|
)
|
|||
Legal Charges/Credits, net (d)
|
—
|
|
|
—
|
|
|
(1,000
|
)
|
|||
Tax Assessment (e)
|
—
|
|
|
—
|
|
|
(5,331
|
)
|
|||
Restructuring and Other Charges, net (f)
|
(29,765
|
)
|
|
(4,086
|
)
|
|
(19,711
|
)
|
|||
(Losses) gains on Sale of Assets
|
(2,367
|
)
|
|
1,177
|
|
|
184
|
|
|||
FDA Mandated Product Recall (g)
|
(250
|
)
|
|
7,125
|
|
|
(11,000
|
)
|
|||
UK Pension Settlement Charges (h)
|
—
|
|
|
—
|
|
|
(2,769
|
)
|
|||
Frutarom Acquisition Related Costs (i)
|
(5,940
|
)
|
|
(89,632
|
)
|
|
—
|
|
|||
Compliance Review & Legal Defense Costs (j)
|
(11,314
|
)
|
|
—
|
|
|
—
|
|
|||
N&B Transaction Related Costs (k)
|
(20,747
|
)
|
|
—
|
|
|
—
|
|
|||
Operating Profit
|
665,270
|
|
|
583,882
|
|
|
552,630
|
|
|||
Interest expense
|
(138,221
|
)
|
|
(132,558
|
)
|
|
(65,363
|
)
|
|||
Loss on extinguishment of debt
|
—
|
|
|
(38,810
|
)
|
|
—
|
|
|||
Other income, net
|
30,403
|
|
|
35,243
|
|
|
49,778
|
|
|||
Income before taxes
|
$
|
557,452
|
|
|
$
|
447,757
|
|
|
$
|
537,045
|
|
Profit margin
|
|
|
|
|
|
||||||
Taste
|
22.1
|
%
|
|
22.7
|
%
|
|
22.1
|
%
|
|||
Scent
|
17.3
|
%
|
|
17.5
|
%
|
|
18.1
|
%
|
|||
Frutarom
|
8.5
|
%
|
|
7.6
|
%
|
|
N/A
|
|
|||
Consolidated
|
12.9
|
%
|
|
14.7
|
%
|
|
16.3
|
%
|
(a)
|
For 2019, represents accelerated depreciation related to plant relocations in India and China. For 2018, represents accelerated depreciation in India and Taiwan asset write off. For 2017, represents accelerated depreciation and idle labor costs in Hangzhou, China.
|
(b)
|
For 2018, represents adjustments to the contingent consideration payable for PowderPure, and transaction costs related to Fragrance Resources and PowderPure within Selling and administrative expenses. For 2017, represents the amortization of inventory "step-up" included in Cost of goods sold and transaction costs related to the acquisition of Fragrance Resources and PowderPure within Selling and administrative expenses.
|
(c)
|
For 2019 and 2018, represents costs related to the integration of the Frutarom acquisition, principally advisory services. For 2017, represents costs related to the integration of the David Michael and Fragrance Resources acquisitions.
|
(d)
|
Represents an additional charge related to litigation settlement.
|
(e)
|
Represents the reserve for payment of a tax assessment related to commercial rent for prior periods.
|
(f)
|
For 2019, represents costs primarily related to the Frutarom Integration Initiative, the 2019 Severance Program, including severance related to outsourcing the IT function. For 2018, represents severance costs related to the 2017 Productivity Program and costs associated with the termination of agent relationships in a subsidiary. For 2017, represents severance costs related to the 2017 Productivity Program.
|
(g)
|
For 2019, represents additional claims that management will pay to co-packers. For 2018, principally represents recoveries from the supplier for the third and fourth quarter, partially offset by final payments to the customer made for the effected product in the first quarter. For 2017, represents management's best estimate of losses related to the previously disclosed FDA mandated recall.
|
(h)
|
Represents pension settlement charges incurred in one of the Company's UK pension plans.
|
(i)
|
Represents transaction-related costs and expenses related to the acquisition of Frutarom. For 2019, amount primarily includes amortization for inventory "step-up" costs and transaction costs. For 2018, amount primarily includes $23.5 million of amortization for inventory "step-up" costs and $66.0 million of transaction costs included in Selling and administrative expenses.
|
(j)
|
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.
|
(k)
|
Represents costs and expenses related to the pending transaction with Nutrition & Biosciences Inc.
|
|
December 31,
|
||||||
(DOLLARS IN THOUSANDS)
|
2019
|
|
2018
|
||||
United States
|
$
|
382,659
|
|
|
$
|
315,320
|
|
Netherlands
|
91,313
|
|
|
103,997
|
|
||
Singapore
|
68,751
|
|
|
73,544
|
|
||
China
|
188,194
|
|
|
178,502
|
|
||
Other
|
656,003
|
|
|
569,789
|
|
||
Consolidated
|
$
|
1,386,920
|
|
|
$
|
1,241,152
|
|
|
Capital Expenditures
|
|
Depreciation and Amortization
|
||||||||||||||||||||
(DOLLARS IN THOUSANDS)
|
2019
|
|
2018
|
|
2017
|
|
2019
|
|
2018
|
|
2017
|
||||||||||||
Taste
|
$
|
80,267
|
|
|
$
|
70,028
|
|
|
$
|
68,937
|
|
|
$
|
56,674
|
|
|
$
|
54,534
|
|
|
$
|
53,534
|
|
Scent
|
92,077
|
|
|
82,206
|
|
|
53,089
|
|
|
65,386
|
|
|
64,018
|
|
|
59,951
|
|
||||||
Frutarom
|
55,356
|
|
|
12,878
|
|
|
N/A
|
|
|
194,956
|
|
|
47,738
|
|
|
N/A
|
|
||||||
Global assets
|
8,278
|
|
|
4,982
|
|
|
6,947
|
|
|
6,314
|
|
|
7,502
|
|
|
4,482
|
|
||||||
Consolidated
|
$
|
235,978
|
|
|
$
|
170,094
|
|
|
$
|
128,973
|
|
|
$
|
323,330
|
|
|
$
|
173,792
|
|
|
$
|
117,967
|
|
|
Net Sales by Geographic Area
|
||||||||||
(DOLLARS IN THOUSANDS)
|
2019
|
|
2018
|
|
2017
|
||||||
Europe, Africa and Middle East
|
$
|
2,081,758
|
|
|
$
|
1,396,316
|
|
|
$
|
1,065,596
|
|
Greater Asia
|
1,162,992
|
|
|
991,015
|
|
|
903,546
|
|
|||
North America
|
1,170,497
|
|
|
1,010,126
|
|
|
901,821
|
|
|||
Latin America
|
724,837
|
|
|
580,082
|
|
|
527,756
|
|
|||
Consolidated
|
$
|
5,140,084
|
|
|
$
|
3,977,539
|
|
|
$
|
3,398,719
|
|
|
Net Sales by Geographic Area
|
||||||||||
(DOLLARS IN THOUSANDS)
|
2019
|
|
2018
|
|
2017
|
||||||
Net sales related to the U.S.
|
$
|
1,052,654
|
|
|
$
|
952,550
|
|
|
$
|
864,050
|
|
Net sales attributed to all foreign countries
|
4,087,430
|
|
|
3,024,989
|
|
|
2,534,669
|
|
|
U.S. Plans
|
|
Non-U.S. Plans
|
||||||||||||||||||||
(DOLLARS IN THOUSANDS)
|
2019
|
|
2018
|
|
2017
|
|
2019
|
|
2018
|
|
2017
|
||||||||||||
Components of net periodic benefit cost
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Service cost for benefits earned(1)
|
$
|
1,378
|
|
|
$
|
1,971
|
|
|
$
|
2,175
|
|
|
$
|
19,319
|
|
|
$
|
18,738
|
|
|
$
|
18,652
|
|
Interest cost on projected benefit obligation(2)
|
21,954
|
|
|
19,393
|
|
|
20,075
|
|
|
17,775
|
|
|
17,704
|
|
|
17,116
|
|
||||||
Expected return on plan assets(2)
|
(27,927
|
)
|
|
(30,994
|
)
|
|
(35,577
|
)
|
|
(43,480
|
)
|
|
(50,546
|
)
|
|
(50,626
|
)
|
||||||
Net amortization of deferrals(2)
|
5,464
|
|
|
6,592
|
|
|
5,424
|
|
|
11,654
|
|
|
11,798
|
|
|
14,403
|
|
||||||
Settlements and curtailments(2)
|
—
|
|
|
—
|
|
|
—
|
|
|
189
|
|
|
—
|
|
|
2,746
|
|
||||||
Net periodic benefit cost
|
869
|
|
|
(3,038
|
)
|
|
(7,903
|
)
|
|
5,457
|
|
|
(2,306
|
)
|
|
2,291
|
|
||||||
Defined contribution and other retirement plans
|
9,363
|
|
|
10,527
|
|
|
8,604
|
|
|
9,001
|
|
|
6,859
|
|
|
5,681
|
|
||||||
Total expense
|
$
|
10,232
|
|
|
$
|
7,489
|
|
|
$
|
701
|
|
|
$
|
14,458
|
|
|
$
|
4,553
|
|
|
$
|
7,972
|
|
Changes in plan assets and benefit obligations recognized in OCI
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net actuarial (gain) loss
|
$
|
(3,140
|
)
|
|
$
|
21,050
|
|
|
|
|
$
|
61,865
|
|
|
$
|
11,937
|
|
|
|
||||
Recognized actuarial loss
|
(5,421
|
)
|
|
(6,549
|
)
|
|
|
|
(12,479
|
)
|
|
(12,590
|
)
|
|
|
||||||||
Prior service cost
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
2,776
|
|
|
|
||||||||
Recognized prior service (cost) credit
|
(43
|
)
|
|
(43
|
)
|
|
|
|
636
|
|
|
792
|
|
|
|
||||||||
Currency translation adjustment
|
—
|
|
|
—
|
|
|
|
|
6,584
|
|
|
(16,978
|
)
|
|
|
||||||||
Total (gain) loss recognized in OCI (before tax effects)
|
$
|
(8,604
|
)
|
|
$
|
14,458
|
|
|
|
|
$
|
56,606
|
|
|
$
|
(14,063
|
)
|
|
|
(1)
|
Included as a component of Operating Profit.
|
(2)
|
Included as a component of Other Income (Expense), net.
|
|
Postretirement Benefits
|
||||||||||
(DOLLARS IN THOUSANDS)
|
2019
|
|
2018
|
|
2017
|
||||||
Components of net periodic benefit cost
|
|
|
|
|
|
||||||
Service cost for benefits earned
|
$
|
568
|
|
|
$
|
755
|
|
|
$
|
718
|
|
Interest cost on projected benefit obligation
|
2,265
|
|
|
2,460
|
|
|
2,710
|
|
|||
Net amortization and deferrals
|
(4,919
|
)
|
|
(5,497
|
)
|
|
(4,913
|
)
|
|||
Total credit
|
$
|
(2,086
|
)
|
|
$
|
(2,282
|
)
|
|
$
|
(1,485
|
)
|
Changes in plan assets and benefit obligations recognized in OCI
|
|
|
|
|
|
||||||
Net actuarial loss
|
$
|
3,941
|
|
|
$
|
(6,677
|
)
|
|
|
||
Recognized actuarial loss
|
(1,132
|
)
|
|
(1,506
|
)
|
|
|
||||
Prior service credit
|
—
|
|
|
(14,862
|
)
|
|
|
||||
Recognized prior service credit
|
6,051
|
|
|
7,003
|
|
|
|
||||
Total recognized in OCI (before tax effects)
|
$
|
8,860
|
|
|
$
|
(16,042
|
)
|
|
|
(DOLLARS IN THOUSANDS)
|
U.S. Plans
|
|
Non-U.S. Plans
|
|
Postretirement
Benefits
|
||||||
Actuarial loss recognition
|
$
|
7,388
|
|
|
$
|
15,851
|
|
|
$
|
1,367
|
|
Prior service cost (credit) recognition
|
43
|
|
|
(345
|
)
|
|
(5,964
|
)
|
|
U.S. Plans
|
|
Non-U.S. Plans
|
||||||||||||||
2019
|
|
2018
|
|
2017
|
|
2019
|
|
2018
|
|
2017
|
|||||||
Discount rate
|
4.31
|
%
|
|
3.69
|
%
|
|
4.19
|
%
|
|
2.22
|
%
|
|
2.15
|
%
|
|
2.14
|
%
|
Expected return on plan assets
|
5.60
|
%
|
|
6.20
|
%
|
|
7.30
|
%
|
|
4.87
|
%
|
|
5.19
|
%
|
|
5.95
|
%
|
Rate of compensation increase
|
3.25
|
%
|
|
3.25
|
%
|
|
3.25
|
%
|
|
1.93
|
%
|
|
1.98
|
%
|
|
1.97
|
%
|
|
U.S. Plans
|
|
Non-U.S. Plans
|
|
Postretirement Benefits
|
||||||||||||||||||
(DOLLARS IN THOUSANDS)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||||||
Benefit obligation at beginning of year
|
$
|
562,043
|
|
|
$
|
602,783
|
|
|
$
|
957,935
|
|
|
$
|
973,061
|
|
|
$
|
59,625
|
|
|
$
|
82,714
|
|
Service cost for benefits earned
|
1,378
|
|
|
1,971
|
|
|
19,319
|
|
|
18,738
|
|
|
568
|
|
|
755
|
|
||||||
Interest cost on projected benefit obligation
|
21,954
|
|
|
19,393
|
|
|
17,775
|
|
|
17,704
|
|
|
2,265
|
|
|
2,460
|
|
||||||
Actuarial (gain) loss
|
68,839
|
|
|
(33,284
|
)
|
|
119,891
|
|
|
(29,433
|
)
|
|
3,941
|
|
|
(6,677
|
)
|
||||||
Plan amendments
|
—
|
|
|
—
|
|
|
—
|
|
|
2,776
|
|
|
—
|
|
|
(14,862
|
)
|
||||||
Adjustments for expense/tax contained in service cost
|
—
|
|
|
—
|
|
|
(1,333
|
)
|
|
(1,290
|
)
|
|
—
|
|
|
—
|
|
||||||
Plan participants’ contributions
|
—
|
|
|
—
|
|
|
2,803
|
|
|
2,047
|
|
|
437
|
|
|
435
|
|
||||||
Benefits paid
|
(33,560
|
)
|
|
(32,093
|
)
|
|
(28,977
|
)
|
|
(33,862
|
)
|
|
(2,662
|
)
|
|
(5,200
|
)
|
||||||
Curtailments / settlements
|
—
|
|
|
—
|
|
|
(3,455
|
)
|
|
(2,751
|
)
|
|
—
|
|
|
—
|
|
||||||
Translation adjustments
|
—
|
|
|
—
|
|
|
13,935
|
|
|
(49,027
|
)
|
|
—
|
|
|
—
|
|
||||||
Acquisitions/Transferred Liabilities
|
—
|
|
|
3,273
|
|
|
—
|
|
|
48,356
|
|
|
—
|
|
|
—
|
|
||||||
Other
|
—
|
|
|
—
|
|
|
1,191
|
|
|
11,616
|
|
|
—
|
|
|
—
|
|
||||||
Benefit obligation at end of year
|
$
|
620,654
|
|
|
$
|
562,043
|
|
|
$
|
1,099,084
|
|
|
$
|
957,935
|
|
|
$
|
64,174
|
|
|
$
|
59,625
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Fair value of plan assets at beginning of year
|
$
|
532,381
|
|
|
$
|
581,917
|
|
|
$
|
896,782
|
|
|
$
|
929,810
|
|
|
|
|
|
||||
Actual return on plan assets
|
99,904
|
|
|
(23,339
|
)
|
|
100,163
|
|
|
6,699
|
|
|
|
|
|
||||||||
Employer contributions
|
3,683
|
|
|
3,524
|
|
|
20,031
|
|
|
18,238
|
|
|
|
|
|
||||||||
Participants’ contributions
|
—
|
|
|
—
|
|
|
2,803
|
|
|
2,047
|
|
|
|
|
|
||||||||
Benefits paid
|
(33,560
|
)
|
|
(32,093
|
)
|
|
(28,977
|
)
|
|
(33,862
|
)
|
|
|
|
|
||||||||
Settlements
|
—
|
|
|
—
|
|
|
(3,455
|
)
|
|
(1,564
|
)
|
|
|
|
|
||||||||
Translation adjustments
|
—
|
|
|
—
|
|
|
16,982
|
|
|
(47,247
|
)
|
|
|
|
|
||||||||
Acquisitions/Transferred Assets
|
—
|
|
|
2,372
|
|
|
—
|
|
|
21,672
|
|
|
|
|
|
||||||||
Other
|
—
|
|
|
—
|
|
|
954
|
|
|
989
|
|
|
|
|
|
||||||||
Fair value of plan assets at end of year
|
$
|
602,408
|
|
|
$
|
532,381
|
|
|
$
|
1,005,283
|
|
|
$
|
896,782
|
|
|
|
|
|
||||
Funded status at end of year
|
$
|
(18,246
|
)
|
|
$
|
(29,662
|
)
|
|
$
|
(93,801
|
)
|
|
$
|
(61,153
|
)
|
|
|
|
|
|
U.S. Plans
|
|
Non-U.S. Plans
|
||||||||||||
(DOLLARS IN THOUSANDS)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Other assets
|
$
|
35,239
|
|
|
$
|
20,949
|
|
|
$
|
50,418
|
|
|
$
|
54,434
|
|
Other current liabilities
|
(4,193
|
)
|
|
(4,092
|
)
|
|
(1,179
|
)
|
|
(882
|
)
|
||||
Retirement liabilities
|
(49,292
|
)
|
|
(46,519
|
)
|
|
(143,040
|
)
|
|
(114,705
|
)
|
||||
Net amount recognized
|
$
|
(18,246
|
)
|
|
$
|
(29,662
|
)
|
|
$
|
(93,801
|
)
|
|
$
|
(61,153
|
)
|
|
U.S. Plans
|
|
Non-U.S. Plans
|
|
Postretirement Benefits
|
||||||||||||||||||
(DOLLARS IN THOUSANDS)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||||||
Net actuarial loss
|
$
|
142,828
|
|
|
$
|
151,389
|
|
|
$
|
376,991
|
|
|
$
|
321,144
|
|
|
$
|
15,436
|
|
|
$
|
12,627
|
|
Prior service cost (credit)
|
108
|
|
|
151
|
|
|
(3,087
|
)
|
|
(3,926
|
)
|
|
(27,138
|
)
|
|
(33,189
|
)
|
||||||
Total AOCI (before tax effects)
|
$
|
142,936
|
|
|
$
|
151,540
|
|
|
$
|
373,904
|
|
|
$
|
317,218
|
|
|
$
|
(11,702
|
)
|
|
$
|
(20,562
|
)
|
|
U.S. Plans
|
|
Non-U.S. Plans
|
||||||||||||
(DOLLARS IN THOUSANDS)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Accumulated Benefit Obligation — end of year
|
$
|
618,486
|
|
|
$
|
559,775
|
|
|
$
|
1,062,515
|
|
|
$
|
923,586
|
|
Information for Pension Plans with an ABO in excess of Plan Assets:
|
|
|
|
|
|
|
|
||||||||
Projected benefit obligation
|
$
|
55,714
|
|
|
$
|
52,714
|
|
|
$
|
656,574
|
|
|
$
|
582,466
|
|
Accumulated benefit obligation
|
55,671
|
|
|
52,690
|
|
|
620,087
|
|
|
548,116
|
|
||||
Fair value of plan assets
|
2,229
|
|
|
2,103
|
|
|
512,356
|
|
|
466,878
|
|
||||
Weighted-average assumptions used to determine obligations at December 31
|
|
|
|
|
|
|
|
||||||||
Discount rate
|
3.26
|
%
|
|
4.31
|
%
|
|
1.50
|
%
|
|
2.22
|
%
|
||||
Rate of compensation increase
|
3.25
|
%
|
|
3.25
|
%
|
|
2.48
|
%
|
|
1.91
|
%
|
(DOLLARS IN THOUSANDS)
|
U.S. Plans
|
|
Non-U.S. Plans
|
|
Postretirement
Benefits
|
||||||
Estimated Future Benefit Payments
|
|
|
|
|
|
||||||
2020
|
$
|
37,152
|
|
|
$
|
27,460
|
|
|
$
|
3,808
|
|
2021
|
37,908
|
|
|
27,607
|
|
|
3,845
|
|
|||
2022
|
38,411
|
|
|
28,169
|
|
|
3,805
|
|
|||
2023
|
38,796
|
|
|
28,993
|
|
|
3,797
|
|
|||
2024
|
38,831
|
|
|
30,142
|
|
|
3,891
|
|
|||
2025 - 2029
|
189,425
|
|
|
169,438
|
|
|
19,442
|
|
|||
Contributions
|
|
|
|
|
|
||||||
Required Company Contributions in Following Year (2020)
|
$
|
4,387
|
|
|
$
|
20,944
|
|
|
$
|
3,808
|
|
|
U.S. Plans
|
|
Non-U.S. Plans
|
||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||
Cash and cash equivalents
|
1
|
%
|
|
1
|
%
|
|
1
|
%
|
|
3
|
%
|
Equities
|
13
|
%
|
|
25
|
%
|
|
14
|
%
|
|
12
|
%
|
Fixed income
|
86
|
%
|
|
74
|
%
|
|
37
|
%
|
|
36
|
%
|
Property
|
—
|
%
|
|
—
|
%
|
|
8
|
%
|
|
8
|
%
|
Alternative and other investments
|
—
|
%
|
|
—
|
%
|
|
40
|
%
|
|
41
|
%
|
|
U.S. Plans for the Year Ended
|
||||||||||||||
|
December 31, 2019
|
||||||||||||||
(DOLLARS IN THOUSANDS)
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Cash Equivalents
|
$
|
—
|
|
|
$
|
4,431
|
|
|
$
|
—
|
|
|
$
|
4,431
|
|
Fixed Income Securities
|
|
|
|
|
|
|
|
||||||||
Government & Government Agency Bonds
|
—
|
|
|
19,427
|
|
|
—
|
|
|
19,427
|
|
||||
Corporate Bonds
|
—
|
|
|
112,137
|
|
|
—
|
|
|
112,137
|
|
||||
Municipal Bonds
|
—
|
|
|
8,460
|
|
|
—
|
|
|
8,460
|
|
||||
Assets measured at net asset value(1)
|
—
|
|
|
—
|
|
|
—
|
|
|
456,606
|
|
||||
Total
|
$
|
—
|
|
|
$
|
144,455
|
|
|
$
|
—
|
|
|
$
|
601,061
|
|
Receivables
|
|
|
|
|
|
|
$
|
1,347
|
|
||||||
Total
|
|
|
|
|
|
|
$
|
602,408
|
|
|
U.S. Plans for the Year Ended
|
||||||||||||||
|
December 31, 2018
|
||||||||||||||
(DOLLARS IN THOUSANDS)
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Cash Equivalents
|
$
|
—
|
|
|
$
|
3,490
|
|
|
$
|
—
|
|
|
$
|
3,490
|
|
Fixed Income Securities
|
|
|
|
|
|
|
|
||||||||
Government & Government Agency Bonds
|
—
|
|
|
17,827
|
|
|
—
|
|
|
17,827
|
|
||||
Corporate Bonds
|
—
|
|
|
96,566
|
|
|
—
|
|
|
96,566
|
|
||||
Municipal Bonds
|
—
|
|
|
8,138
|
|
|
—
|
|
|
8,138
|
|
||||
Assets measured at net asset value(1)
|
—
|
|
|
—
|
|
|
—
|
|
|
404,895
|
|
||||
Total
|
$
|
—
|
|
|
$
|
126,021
|
|
|
$
|
—
|
|
|
$
|
530,916
|
|
Receivables
|
|
|
|
|
|
|
$
|
1,465
|
|
||||||
Total
|
|
|
|
|
|
|
$
|
532,381
|
|
(1)
|
Investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in the table above are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the Consolidated Balance Sheet. The total amount measured at net asset value includes approximately $80.4 million and $133.1 million in pooled equity funds and $376.0 million and $271.8 million in fixed income mutual funds for the years ended December 31, 2019 and 2018, respectively.
|
|
Non-U.S. Plans for the Year Ended
|
||||||||||||||
|
December 31, 2019
|
||||||||||||||
(DOLLARS IN THOUSANDS)
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Cash
|
$
|
5,921
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5,921
|
|
Equity Securities
|
|
|
|
|
|
|
|
||||||||
U.S. Large Cap
|
58,926
|
|
|
25,616
|
|
|
—
|
|
|
84,542
|
|
||||
Non-U.S. Large Cap
|
24,720
|
|
|
—
|
|
|
—
|
|
|
24,720
|
|
||||
Non-U.S. Mid Cap
|
956
|
|
|
—
|
|
|
—
|
|
|
956
|
|
||||
Non-U.S. Small Cap
|
738
|
|
|
—
|
|
|
—
|
|
|
738
|
|
||||
Emerging Markets
|
27,374
|
|
|
—
|
|
|
—
|
|
|
27,374
|
|
||||
Fixed Income Securities
|
|
|
|
|
|
|
|
||||||||
U.S. Treasuries/Government Bonds
|
108
|
|
|
—
|
|
|
—
|
|
|
108
|
|
||||
U.S. Corporate Bonds
|
—
|
|
|
32,013
|
|
|
—
|
|
|
32,013
|
|
||||
Non-U.S. Treasuries/Government Bonds
|
117,890
|
|
|
—
|
|
|
—
|
|
|
117,890
|
|
||||
Non-U.S. Corporate Bonds
|
33,320
|
|
|
150,034
|
|
|
—
|
|
|
183,354
|
|
||||
Non-U.S. Asset-Backed Securities
|
—
|
|
|
33,654
|
|
|
—
|
|
|
33,654
|
|
||||
Non-U.S. Other Fixed Income
|
2,553
|
|
|
—
|
|
|
—
|
|
|
2,553
|
|
||||
Alternative Types of Investments
|
|
|
|
|
|
|
|
||||||||
Insurance Contracts
|
—
|
|
|
152,025
|
|
|
266
|
|
|
152,291
|
|
||||
Derivative Financial Instruments
|
—
|
|
|
65,016
|
|
|
—
|
|
|
65,016
|
|
||||
Absolute Return Funds
|
3,431
|
|
|
154,463
|
|
|
—
|
|
|
157,894
|
|
||||
Other
|
—
|
|
|
2,330
|
|
|
30,183
|
|
|
32,513
|
|
||||
Real Estate
|
|
|
|
|
|
|
|
||||||||
Non-U.S. Real Estate
|
—
|
|
|
—
|
|
|
83,746
|
|
|
83,746
|
|
||||
Total
|
$
|
275,937
|
|
|
$
|
615,151
|
|
|
$
|
114,195
|
|
|
$
|
1,005,283
|
|
|
Non-U.S. Plans for the Year Ended
|
||||||||||||||
|
December 31, 2018
|
||||||||||||||
(DOLLARS IN THOUSANDS)
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Cash
|
$
|
25,386
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
25,386
|
|
Equity Securities
|
|
|
|
|
|
|
|
||||||||
U.S. Large Cap
|
35,929
|
|
|
11,340
|
|
|
—
|
|
|
47,269
|
|
||||
Non-U.S. Large Cap
|
30,841
|
|
|
8,381
|
|
|
—
|
|
|
39,222
|
|
||||
Non-U.S. Mid Cap
|
905
|
|
|
—
|
|
|
—
|
|
|
905
|
|
||||
Non-U.S. Small Cap
|
628
|
|
|
—
|
|
|
—
|
|
|
628
|
|
||||
Emerging Markets
|
22,608
|
|
|
—
|
|
|
—
|
|
|
22,608
|
|
||||
Fixed Income Securities
|
|
|
|
|
|
|
|
||||||||
U.S. Treasuries/Government Bonds
|
131
|
|
|
—
|
|
|
—
|
|
|
131
|
|
||||
U.S. Corporate Bonds
|
—
|
|
|
29,682
|
|
|
—
|
|
|
29,682
|
|
||||
Non-U.S. Treasuries/Government Bonds
|
137,267
|
|
|
5,494
|
|
|
—
|
|
|
142,761
|
|
||||
Non-U.S. Corporate Bonds
|
30,893
|
|
|
85,841
|
|
|
—
|
|
|
116,734
|
|
||||
Non-U.S. Asset-Backed Securities
|
—
|
|
|
32,587
|
|
|
—
|
|
|
32,587
|
|
||||
Non-U.S. Other Fixed Income
|
2,324
|
|
|
—
|
|
|
—
|
|
|
2,324
|
|
||||
Alternative Types of Investments
|
|
|
|
|
|
|
|
||||||||
Insurance Contracts
|
—
|
|
|
152,947
|
|
|
254
|
|
|
153,201
|
|
||||
Derivative Financial Instruments
|
—
|
|
|
54,512
|
|
|
—
|
|
|
54,512
|
|
||||
Absolute Return Funds
|
3,584
|
|
|
128,111
|
|
|
—
|
|
|
131,695
|
|
||||
Other
|
—
|
|
|
2,374
|
|
|
25,913
|
|
|
28,287
|
|
||||
Real Estate
|
|
|
|
|
|
|
|
||||||||
Non-U.S. Real Estate
|
—
|
|
|
—
|
|
|
68,850
|
|
|
68,850
|
|
||||
Total
|
$
|
290,496
|
|
|
$
|
511,269
|
|
|
$
|
95,017
|
|
|
$
|
896,782
|
|
|
Non-U.S. Plans
|
||||||||||
(DOLLARS IN THOUSANDS)
|
Real
Estate
|
|
Hedge
Funds
|
|
Total
|
||||||
Ending balance as of December 31, 2018
|
$
|
69,104
|
|
|
$
|
25,913
|
|
|
$
|
95,017
|
|
Actual return on plan assets
|
15,033
|
|
|
5,811
|
|
|
20,844
|
|
|||
Purchases, sales and settlements
|
(124
|
)
|
|
(1,542
|
)
|
|
(1,666
|
)
|
|||
Ending balance as of December 31, 2019
|
$
|
84,013
|
|
|
$
|
30,182
|
|
|
$
|
114,195
|
|
|
Expense
|
|
Liability
|
||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||
Discount rate
|
4.30
|
%
|
|
3.70
|
%
|
|
3.30
|
%
|
|
4.30
|
%
|
Current medical cost trend rate
|
7.50
|
%
|
|
7.75
|
%
|
|
7.25
|
%
|
|
7.50
|
%
|
Ultimate medical cost trend rate
|
4.75
|
%
|
|
4.75
|
%
|
|
4.75
|
%
|
|
4.75
|
%
|
Medical cost trend rate decreases to ultimate rate in year
|
2030
|
|
|
2030
|
|
|
2030
|
|
|
2030
|
|
(DOLLARS IN THOUSANDS)
|
U.S. Pension Plans
|
|
Non-U.S. Pension Plans
|
|
Postretirement Benefit Plan
|
|||
25 Basis Point Decrease in Discount Rate
|
|
|
|
|
|
|||
Change in PBO
|
14,613
|
|
|
55,415
|
|
|
N/A
|
|
Change in ABO
|
14,534
|
|
|
55,374
|
|
|
1,944
|
|
Change in pension expense
|
(102
|
)
|
|
2,687
|
|
|
40
|
|
25 Basis Point Decrease in Long-Term Rate of Return
|
|
|
|
|
|
|||
Change in pension expense
|
1,248
|
|
|
1,935
|
|
|
N/A
|
|
•
|
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.
|
|
2019
|
|
2018
|
||||||||||||
(DOLLARS IN THOUSANDS)
|
Carrying Value
|
|
Fair
Value
|
|
Carrying Value
|
|
Fair
Value |
||||||||
LEVEL 1
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents(1)
|
$
|
606,823
|
|
|
$
|
606,823
|
|
|
$
|
634,897
|
|
|
$
|
634,897
|
|
LEVEL 2
|
|
|
|
|
|
|
|
||||||||
Credit facilities and bank overdrafts(2)
|
3,131
|
|
|
3,131
|
|
|
4,695
|
|
|
4,695
|
|
||||
Derivatives
|
|
|
|
|
|
|
|
||||||||
Derivative assets(3)
|
3,575
|
|
|
3,575
|
|
|
7,229
|
|
|
7,229
|
|
||||
Derivative liabilities(3)
|
7,415
|
|
|
7,415
|
|
|
6,907
|
|
|
6,907
|
|
||||
Long-term debt:(4)
|
|
|
|
|
|
|
|
||||||||
2020 Notes
|
299,381
|
|
|
302,700
|
|
|
298,499
|
|
|
300,356
|
|
||||
2021 Euro Notes
|
334,561
|
|
|
338,244
|
|
|
337,704
|
|
|
341,094
|
|
||||
2023 Notes
|
299,004
|
|
|
305,580
|
|
|
298,698
|
|
|
293,017
|
|
||||
2024 Euro Notes
|
558,124
|
|
|
586,825
|
|
|
564,034
|
|
|
584,129
|
|
||||
2026 Euro Notes
|
890,183
|
|
|
945,306
|
|
|
899,886
|
|
|
909,439
|
|
||||
2028 Notes
|
396,688
|
|
|
441,500
|
|
|
396,377
|
|
|
401,231
|
|
||||
2047 Notes
|
493,571
|
|
|
526,106
|
|
|
493,151
|
|
|
446,725
|
|
||||
2048 Notes
|
785,996
|
|
|
919,040
|
|
|
785,788
|
|
|
783,925
|
|
||||
Term Loan(2)
|
239,621
|
|
|
240,000
|
|
|
349,163
|
|
|
350,000
|
|
||||
Amortizing Notes(5)
|
82,079
|
|
|
84,430
|
|
|
125,007
|
|
|
127,879
|
|
(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 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. See Note 8 for additional information on the TEUs.
|
|
December 31,
|
||||||
(DOLLARS IN THOUSANDS)
|
2019
|
|
2018
|
||||
Foreign currency contracts
|
$
|
473,600
|
|
|
$
|
585,581
|
|
Cross currency swaps
|
600,000
|
|
|
600,000
|
|
|
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
|
|
|||
Cross currency swaps
|
4,187
|
|
|
—
|
|
|
4,187
|
|
|||
Total derivative liabilities
|
$
|
4,984
|
|
|
$
|
2,431
|
|
|
$
|
7,415
|
|
|
December 31, 2018
|
||||||||||
(DOLLARS IN THOUSANDS)
|
Fair Value of Derivatives Designated as Hedging Instruments
|
|
Fair Value of Derivatives Not Designated as Hedging Instruments
|
|
Total Fair Value
|
||||||
Derivative assets(a)
|
|
|
|
|
|
||||||
Foreign currency contracts
|
$
|
4,122
|
|
|
$
|
2,020
|
|
|
$
|
6,142
|
|
Cross currency swaps
|
1,087
|
|
|
—
|
|
|
1,087
|
|
|||
Total derivative assets
|
5,209
|
|
|
2,020
|
|
|
7,229
|
|
|||
Derivative liabilities(b)
|
|
|
|
|
|
||||||
Foreign currency contracts
|
$
|
205
|
|
|
$
|
6,702
|
|
|
$
|
6,907
|
|
(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.
|
(DOLLARS IN THOUSANDS)
|
Amount of Gain (Loss)
For the year ended
December 31,
|
|
Location of Gain (Loss)
Recognized in
Income on Derivative
|
||||||
2019
|
|
2018
|
|
||||||
Foreign currency contracts
|
$
|
557
|
|
|
$
|
1,999
|
|
|
Other (income) expense, net
|
Deal contingent swaps
|
|
|
|
|
|
||||
Foreign currency contracts
|
—
|
|
|
12,154
|
|
|
Other income, net
|
||
Interest rate swaps
|
—
|
|
|
352
|
|
|
Interest expense
|
||
|
$
|
557
|
|
|
$
|
14,505
|
|
|
|
|
Amount of Gain (Loss)
Recognized in OCI on Derivative
(Effective Portion)
|
|
Location of Gain
(Loss) Reclassified
from AOCI into Income
(Effective Portion)
|
|
Amount of Gain (Loss) Reclassified from AOCI
into Income
(Effective Portion)
|
||||||||||||
|
For the years ended
December 31,
|
|
|
For the years ended
December 31,
|
|||||||||||||
|
2019
|
|
2018
|
|
|
2019
|
|
2018
|
|||||||||
Derivatives in Cash Flow Hedging Relationships:
|
|
|
|
|
|
|
|
|
|
||||||||
Foreign currency contracts
|
$
|
(3,535
|
)
|
|
$
|
14,220
|
|
|
Cost of goods sold
|
|
$
|
8,504
|
|
|
$
|
(6,203
|
)
|
Interest rate swaps (1)
|
857
|
|
|
864
|
|
|
Interest expense
|
|
(857
|
)
|
|
(864
|
)
|
||||
Derivatives or debt instruments in Net Investment Hedging Relationships:
|
|
|
|
|
|
|
|
|
|
||||||||
Foreign currency contracts
|
—
|
|
|
(518
|
)
|
|
N/A
|
|
—
|
|
|
—
|
|
||||
2024 Euro Notes
|
5,440
|
|
|
20,539
|
|
|
N/A
|
|
—
|
|
|
—
|
|
||||
2021 Euro Notes & 2026 Euro Notes
|
11,969
|
|
|
30,390
|
|
|
N/A
|
|
—
|
|
|
—
|
|
||||
Total
|
$
|
14,731
|
|
|
$
|
65,495
|
|
|
|
|
$
|
7,647
|
|
|
$
|
(7,067
|
)
|
(1)
|
Interest rate swaps were entered into as pre-issuance hedges for the Company's bond offerings.
|
(DOLLARS IN THOUSANDS)
|
Foreign
Currency
Translation
Adjustments
|
|
(Losses) Gains on Derivatives
Qualifying as
Hedges
|
|
Pension and
Postretirement
Liability
Adjustment
|
|
Total
|
||||||||
Accumulated other comprehensive loss, net of tax, as of December 31, 2018
|
$
|
(396,996
|
)
|
|
$
|
4,746
|
|
|
$
|
(309,977
|
)
|
|
$
|
(702,227
|
)
|
OCI before reclassifications
|
23,953
|
|
|
4,969
|
|
|
(45,599
|
)
|
|
(16,677
|
)
|
||||
Amounts reclassified from AOCI
|
—
|
|
|
(7,647
|
)
|
|
9,657
|
|
|
2,010
|
|
||||
Net current period other comprehensive income (loss)
|
23,953
|
|
|
(2,678
|
)
|
|
(35,942
|
)
|
|
(14,667
|
)
|
||||
Accumulated other comprehensive loss, net of tax, as of December 31, 2019
|
$
|
(373,043
|
)
|
|
$
|
2,068
|
|
|
$
|
(345,919
|
)
|
|
$
|
(716,894
|
)
|
(DOLLARS IN THOUSANDS)
|
Foreign
Currency
Translation
Adjustments
|
|
(Losses) Gains on Derivatives
Qualifying as
Hedges
|
|
Pension and
Postretirement
Liability
Adjustment
|
|
Total
|
||||||||
Accumulated other comprehensive (loss) income, net of tax, as of December 31, 2017
|
$
|
(297,416
|
)
|
|
$
|
(10,332
|
)
|
|
$
|
(329,734
|
)
|
|
$
|
(637,482
|
)
|
OCI before reclassifications
|
(99,580
|
)
|
|
8,011
|
|
|
9,717
|
|
|
(81,852
|
)
|
||||
Amounts reclassified from AOCI
|
—
|
|
|
7,067
|
|
|
10,040
|
|
|
17,107
|
|
||||
Net current period other comprehensive income (loss)
|
(99,580
|
)
|
|
15,078
|
|
|
19,757
|
|
|
(64,745
|
)
|
||||
Accumulated other comprehensive loss, net of tax, as of December 31, 2018
|
$
|
(396,996
|
)
|
|
$
|
4,746
|
|
|
$
|
(309,977
|
)
|
|
$
|
(702,227
|
)
|
(DOLLARS IN THOUSANDS)
|
Foreign
Currency
Translation
Adjustments
|
|
(Losses) Gains on Derivatives
Qualifying as
Hedges
|
|
Pension and
Postretirement
Liability
Adjustment
|
|
Total
|
||||||||
Accumulated other comprehensive (loss) income, net of tax, as of December 31, 2016
|
$
|
(352,025
|
)
|
|
$
|
7,604
|
|
|
$
|
(335,674
|
)
|
|
$
|
(680,095
|
)
|
OCI before reclassifications
|
66,826
|
|
|
(14,782
|
)
|
|
(7,941
|
)
|
|
44,103
|
|
||||
Amounts reclassified from AOCI
|
(12,217
|
)
|
(a)
|
(3,154
|
)
|
|
13,881
|
|
|
(1,490
|
)
|
||||
Net current period other comprehensive income (loss)
|
54,609
|
|
|
(17,936
|
)
|
|
5,940
|
|
|
42,613
|
|
||||
Accumulated other comprehensive (loss) income, net of tax, as of December 31, 2017
|
$
|
(297,416
|
)
|
|
$
|
(10,332
|
)
|
|
$
|
(329,734
|
)
|
|
$
|
(637,482
|
)
|
|
Year Ended December 31,
|
|
|
||||||||||
(DOLLARS IN THOUSANDS)
|
2019
|
|
2018
|
|
2017
|
|
Affected Line Item in the Consolidated Statement of Comprehensive Income
|
||||||
(Losses) gains on derivatives qualifying as hedges
|
|
|
|
|
|
|
|
||||||
Foreign currency contracts
|
$
|
9,719
|
|
|
$
|
(7,089
|
)
|
|
$
|
4,506
|
|
|
Cost of goods sold
|
Interest rate swaps
|
(857
|
)
|
|
(864
|
)
|
|
(789
|
)
|
|
Interest expense
|
|||
Tax
|
(1,215
|
)
|
|
886
|
|
|
(563
|
)
|
|
Provision for income taxes
|
|||
Total
|
$
|
7,647
|
|
|
$
|
(7,067
|
)
|
|
$
|
3,154
|
|
|
Total, net of income taxes
|
(Losses) gains on pension and postretirement liability adjustments
|
|
|
|
|
|
|
|
||||||
Prior service cost
|
$
|
6,644
|
|
|
$
|
7,752
|
|
|
$
|
7,040
|
|
|
(a)
|
Actuarial losses
|
(19,032
|
)
|
|
(20,645
|
)
|
|
(24,699
|
)
|
|
(a)
|
|||
Tax
|
2,731
|
|
|
2,853
|
|
|
3,778
|
|
|
Provision for income taxes
|
|||
Total
|
$
|
(9,657
|
)
|
|
$
|
(10,040
|
)
|
|
$
|
(13,881
|
)
|
|
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 to the Consolidated Financial Statements for additional information regarding net periodic benefit cost.
|
(DOLLARS IN THOUSANDS)
|
|
Redeemable
Noncontrolling Interests
|
||
Balance at December 31, 2017
|
|
$
|
—
|
|
Acquired through acquisitions during 2018
|
|
97,510
|
|
|
Share of profit or loss attributable to noncontrolling interests
|
|
2,196
|
|
|
Redemption value mark-up for the current period
|
|
2,848
|
|
|
Sale of a subsidiary with redeemable noncontrolling interests
|
|
(14,673
|
)
|
|
Exercises of redeemable noncontrolling interests
|
|
(6,075
|
)
|
|
Balance at December 31, 2018
|
|
$
|
81,806
|
|
Acquired through acquisitions during 2019
|
|
23,594
|
|
|
Impact of foreign exchange translation
|
|
(126
|
)
|
|
Share of profit or loss attributable to redeemable noncontrolling interests
|
|
666
|
|
|
Redemption value adjustment for the current period
|
|
2,097
|
|
|
Measurement period adjustments
|
|
5,391
|
|
|
Dividends paid
|
|
(753
|
)
|
|
Exercises of redeemable noncontrolling interests
|
|
(13,632
|
)
|
|
Balance at December 31, 2019
|
|
$
|
99,043
|
|
Exhibit Number
|
|
Description
|
4.9
|
|
|
4.10
|
|
|
4.11
|
|
|
4.12
|
|
|
4.13
|
|
|
4.14
|
|
|
4.15
|
|
|
4.16
|
|
|
4.17
|
|
|
*10.1
|
|
|
*10.2
|
|
|
*10.3
|
|
|
*10.4
|
|
|
*10.5
|
|
|
*10.6
|
|
|
*10.7
|
|
|
*10.8
|
|
|
*10.9
|
|
|
*10.10
|
|
|
*10.11
|
|
|
*10.12
|
|
|
*10.13
|
|
Exhibit Number
|
|
Description
|
*10.14
|
|
|
*10.15
|
|
|
*10.16
|
|
|
*10.17
|
|
|
*10.18
|
|
|
*10.19
|
|
|
*10.20
|
|
|
*10.21(i)
|
|
|
10.21(ii)
|
|
|
10.21(iii)
|
|
|
10.21(iv)
|
|
|
10.22(i)
|
|
|
10.22(ii)
|
|
Amendment No 1 to Term Loan Credit Agreement, dated as of July 13, 2018, among the Registrant, as borrower, the lenders signatory thereto and Morgan Stanley Senior Funding, Inc. as administrative agent, incorporated by reference to Exhibit 10.6 to the Registrant’s Quarterly Report on Form 10-Q filed on August 7, 2018.
|
10.23
|
|
|
21
|
|
|
23
|
|
|
31.1
|
|
|
31.2
|
|
|
32
|
|
|
101.INS
|
|
XBRL Instance Document
|
101.SCH
|
|
XBRL Taxonomy Extensions Schema
|
Exhibit Number
|
|
Description
|
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
|
*
|
Management contract or compensatory plan or arrangement
|
ITEM 16.
|
FORM 10-K SUMMARY.
|
|
INTERNATIONAL FLAVORS & FRAGRANCES INC.
|
|
|
|
|
|
By:
|
/s/ Rustom Jilla
|
|
Name:
|
Rustom Jilla
|
|
Title:
|
Executive Vice President and Chief Financial Officer
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/ Andreas Fibig
|
|
Chairman of the Board, Chief Executive Officer and Director (Principal Executive Officer)
|
|
March 3, 2020
|
Andreas Fibig
|
|
|
|
|
|
|
|
|
|
/s/ Rustom Jilla
|
|
Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)
|
|
March 3, 2020
|
Rustom Jilla
|
|
|
|
|
|
|
|
|
|
/s/ Marcello V. Bottoli
|
|
Director
|
|
March 3, 2020
|
Marcello V. Bottoli
|
|
|
|
|
|
|
|
|
|
/s/ Linda B. Buck
|
|
Director
|
|
March 3, 2020
|
Linda B. Buck
|
|
|
|
|
|
|
|
|
|
/s/ Michael Ducker
|
|
Director
|
|
March 3, 2020
|
Michael Ducker
|
|
|
|
|
|
|
|
|
|
/s/ David R. Epstein
|
|
Director
|
|
March 3, 2020
|
David R. Epstein
|
|
|
|
|
|
|
|
|
|
/s/ Roger W. Ferguson, Jr.
|
|
Director
|
|
March 3, 2020
|
Roger W. Ferguson, Jr.
|
|
|
|
|
|
|
|
|
|
/s/ John F. Ferraro
|
|
Director
|
|
March 3, 2020
|
John F. Ferraro
|
|
|
|
|
|
|
|
|
|
/s/ Christina Gold
|
|
Director
|
|
March 3, 2020
|
Christina Gold
|
|
|
|
|
|
|
|
|
|
/s/ Katherine M. Hudson
|
|
Director
|
|
March 3, 2020
|
Katherine M. Hudson
|
|
|
|
|
|
|
|
|
|
/s/ Dale F. Morrison
|
|
Director
|
|
March 3, 2020
|
Dale F. Morrison
|
|
|
|
|
|
|
|
|
|
/s/ Li-Huei Tsai
|
|
Director
|
|
March 3, 2020
|
Li-Huei Tsai
|
|
|
|
|
|
|
|
|
|
/s/ Stephen Williamson
|
|
Director
|
|
March 3, 2020
|
Stephen Williamson
|
|
|
|
|
|
For the Year Ended December 31, 2019
|
||||||||||||||||||||||
|
Balance at
beginning
of period
|
|
Additions charged to costs and expenses
|
|
Acquisitions
|
|
Accounts
written off
|
|
Translation
adjustments
|
|
Balance at end of period
|
||||||||||||
Allowance for doubtful accounts
|
$
|
9,173
|
|
|
$
|
1,262
|
|
|
$
|
—
|
|
|
$
|
(2,024
|
)
|
|
$
|
(180
|
)
|
|
$
|
8,231
|
|
Valuation allowance on credit and operating loss carryforwards and other net deferred tax assets
|
200,280
|
|
|
5,659
|
|
|
—
|
|
|
—
|
|
|
(2,174
|
)
|
|
203,765
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
For the Year Ended December 31, 2018
|
||||||||||||||||||||||
|
Balance at
beginning
of period
|
|
Additions (deductions) charged to costs and expenses
|
|
Acquisitions
|
|
Accounts
written off |
|
Translation
adjustments
|
|
Balance at
end of
period
|
||||||||||||
Allowance for doubtful accounts
|
$
|
13,392
|
|
|
$
|
1,286
|
|
|
$
|
—
|
|
|
$
|
(4,642
|
)
|
|
$
|
(863
|
)
|
|
$
|
9,173
|
|
Valuation allowance on credit and operating loss carryforwards and other net deferred tax assets
|
207,483
|
|
|
(1,821
|
)
|
(1)
|
3,887
|
|
|
—
|
|
|
(9,269
|
)
|
|
200,280
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
For the Year Ended December 31, 2017
|
||||||||||||||||||||||
|
Balance at
beginning
of period
|
|
Additions charged to costs and expenses
|
|
Acquisitions
|
|
Accounts
written off |
|
Translation
adjustments
|
|
Balance at
end of
period
|
||||||||||||
Allowance for doubtful accounts
|
$
|
9,995
|
|
|
$
|
3,798
|
|
|
$
|
—
|
|
|
$
|
(1,496
|
)
|
|
$
|
1,095
|
|
|
$
|
13,392
|
|
Valuation allowance on credit and operating loss carryforwards and other net deferred tax assets
|
152,752
|
|
|
35,646
|
|
(2)
|
—
|
|
|
—
|
|
|
19,085
|
|
|
207,483
|
|
(1)
|
The 2018 amount includes an adjustment to the 2017 foreign net operating loss carryforwards in the amount of $5.9 million.
|
(2)
|
The 2017 amount includes an adjustment to the 2016 foreign net operating loss carryforwards in the amount of $58.8 million.
|
•
|
a prepaid stock purchase contract, pursuant to which we will deliver to the holder, not later than September 15, 2021 (subject to postponement in certain limited circumstances, the “mandatory settlement date”), unless earlier redeemed or settled, a number of shares of our common stock, par value $0.125 per share (the “common stock”) per purchase contract equal to the settlement rate described below under “Description of the Purchase Contracts—Delivery of Common Stock;” and
|
•
|
a senior amortizing note with an initial principal amount of $8.45436 that pays equal quarterly installments of $0.75000 per amortizing note (except for the December 15, 2018 installment payment, which was $0.73333 per amortizing note), which cash payment in the aggregate will be equivalent to 6.00% per year with respect to the $50 stated amount per Unit.
|
•
|
irrevocably authorized and directed the purchase contract agent to execute, deliver and perform on its behalf the purchase contract agreement, and appointed the purchase contract agent as its attorney-in-fact for any and all such purposes;
|
•
|
in the case of a purchase contract that is a component of a Unit, or that is evidenced by a separate purchase contract, irrevocably authorized and directed the purchase contract agent to execute, deliver and hold on its behalf the separate purchase contract or the component purchase contract evidencing such purchase contract, and appointed the purchase contract agent as its attorney-in-fact for any and all such purposes;
|
•
|
consented to, and agreed to be bound by, the terms and provisions of the purchase contract agreement; and
|
•
|
in the case of a holder of a Unit, agreed, for all purposes, including U.S. federal income tax purposes, to treat:
|
o
|
a Unit as an investment unit composed of two separate instruments, in accordance with its form;
|
o
|
the amortizing notes as indebtedness of ours; and
|
o
|
the allocation of the $50 stated amount per Unit between the purchase contract and the amortizing note so that such holder’s initial tax basis in each purchase contract will be $41.54564 and such holder’s initial tax basis in each amortizing note will be $8.45436.
|
•
|
if the applicable market value of our common stock is greater than the threshold appreciation price, then a holder will receive 0.3134 shares of common stock for each purchase contract (the “minimum settlement rate”);
|
•
|
if the applicable market value of our common stock is greater than or equal to the reference price but less than or equal to the threshold appreciation price, then a holder will receive a number of shares of common stock for each purchase contract equal to the Unit stated amount of $50, divided by the applicable market value; and
|
•
|
if the applicable market value of our common stock is less than the reference price, then a holder will receive 0.3839 shares of common stock for each purchase contract (the “maximum settlement rate”).
|
•
|
any “person” or “group” within the meaning of Section 13(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), other than us, any of our subsidiaries and any of our and their employee benefit plans, files a Schedule TO or any other schedule, form or report under the Exchange Act disclosing that such person or group has become the direct or indirect “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act) of more than 50% of the outstanding shares of our common stock;
|
•
|
the consummation of (A) any recapitalization, reclassification or change of our common stock (other than changes resulting from a subdivision or combination) as a result of which our common stock would be converted into, or exchanged for, stock, other securities, other property or assets; (B) any share exchange, consolidation or merger of us pursuant to which our common stock will be converted into cash, securities or other property or assets; or (C) any sale, lease or other transfer in one transaction or a series of transactions of all or substantially all of the consolidated assets of us and our subsidiaries, taken as a whole, to any person other than one of our wholly owned subsidiaries; or
|
•
|
our common stock (or other common stock receivable upon settlement of a holder’s purchase contracts, if applicable) ceases to be listed or quoted on any of the NYSE, the NASDAQ Global Select Market or the NASDAQ Global Market (or any of their respective successors).
|
•
|
in the case of a fundamental change described in the second bullet of the definition of “fundamental change” in which all holders of shares of our common stock receive only cash in the fundamental change, the stock price will be the cash amount paid per share of our common stock; and
|
•
|
in all other cases, the stock price will be the arithmetic average of the daily VWAPs of our common stock over the five consecutive trading day period ending on the trading day immediately preceding the effective date.
|
|
|
Stock Price
|
||||||||||||||||||||
Effective Date
|
|
$50.00
|
|
$100.00
|
|
$130.25
|
|
$135.00
|
|
$140.00
|
|
$159.54
|
|
$175.00
|
|
$207.40
|
|
$225.00
|
|
$275.00
|
|
$300.00
|
September 17, 2018
|
|
0.3223
|
|
0.3321
|
|
0.3217
|
|
0.3197
|
|
0.3175
|
|
0.3096
|
|
0.3052
|
|
0.3012
|
|
0.3007
|
|
0.3016
|
|
0.3023
|
September 15, 2019
|
|
0.3421
|
|
0.3482
|
|
0.3337
|
|
0.3306
|
|
0.3273
|
|
0.3153
|
|
0.3088
|
|
0.3045
|
|
0.3044
|
|
0.3054
|
|
0.3059
|
September 15, 2020
|
|
0.3626
|
|
0.3671
|
|
0.3493
|
|
0.3445
|
|
0.3392
|
|
0.3202
|
|
0.3119
|
|
0.3084
|
|
0.3086
|
|
0.3093
|
|
0.3096
|
September 15, 2021
|
|
0.3839
|
|
0.3839
|
|
0.3839
|
|
0.3704
|
|
0.3571
|
|
0.3134
|
|
0.3134
|
|
0.3134
|
|
0.3134
|
|
0.3134
|
|
0.3134
|
•
|
if the applicable stock price is between two stock prices in the table or the applicable effective date is between two effective dates in the table, the fundamental change early settlement rate will be determined by straight line interpolation between the fundamental change early settlement rates set forth for the higher and lower stock prices and the earlier and later effective dates, as applicable, based on a 365- or 366-day year, as applicable;
|
•
|
if the applicable stock price is greater than $300.00 per share (subject to adjustment in the same manner and at the same time as the stock prices set forth in the column headings of the table above), then the fundamental change early settlement rate will be the minimum settlement rate; or
|
•
|
if the applicable stock price is less than $50.00 per share (subject to adjustment in the same manner and at the same time as the stock prices set forth in the column headings of the table above, the “minimum stock price”), the fundamental change early settlement rate will be determined as if the stock price equaled the minimum stock price, and using straight line interpolation, as described in the first bullet of this paragraph, if the effective date is between two effective dates in the table.
|
•
|
the numerator of which is equal to (i) the number of shares of our common stock outstanding immediately prior to 5:00 p.m., New York City time, on such record date; plus (ii) the total number of shares of our common stock constituting such dividend or other distribution; and
|
•
|
the denominator of which is the number of shares of our common stock outstanding immediately prior to 5:00 p.m., New York City time, on such record date.
|
•
|
the numerator of which is equal to (i) the number of shares of common stock outstanding immediately prior to 5:00 p.m., New York City time, on such record date, plus (ii) the total number of shares of our common stock issuable pursuant to such rights, options or warrants, and
|
•
|
the denominator of which is equal to (i) the number of shares of common stock outstanding immediately prior to 5:00 p.m., New York City time, on such record date, plus (ii) the number of shares of common stock equal to the quotient of the aggregate price payable to exercise such rights, options or warrants divided by the current market price per share of our common stock.
|
•
|
the numerator of which is the number of shares of our common stock that would be outstanding immediately after, and solely as a result of, such subdivision or combination, and
|
•
|
the denominator of which is the number of shares of our common stock outstanding immediately prior to 9:00 a.m., New York City time, on such effective date (before giving effect to such subdivision or combination).
|
•
|
any dividend or distribution as to which an adjustment was effected pursuant to clause (a) above;
|
•
|
any rights, options or warrants as to which an adjustment was effected pursuant to clause (b) above;
|
•
|
any dividend or distribution described in clause (e) below; and
|
•
|
any spin-off (as defined below) to which the provisions set forth below in this clause (d) shall apply,
|
•
|
the numerator of which is the current market price per share of our common stock, and
|
•
|
the denominator of which is equal to (i) the current market price per share of our common stock, minus (ii) the fair market value (as determined by our board of directors, or a committee thereof) on such record date of the portion of the evidences of indebtedness, shares of capital stock, securities, cash or other assets so distributed applicable to one share of our common stock.
|
•
|
the numerator of which is equal to (i) the current market price per share of our common stock, plus (ii) the average of the closing prices (as defined below, as if references to “common stock” therein were references to such capital stock or similar equity interest so distributed) of the capital stock or similar equity interests so distributed applicable to one share of our common stock over the 10 consecutive trading day period commencing on, and including, the effective date of the spin-off (the “valuation period”), and
|
•
|
the denominator of which is the current market price per share of our common stock.
|
•
|
the numerator of which is the current market price per share of our common stock, and
|
•
|
the denominator of which is equal to (i) the current market price per share of our common stock, minus (ii) the amount of such distribution per share of our common stock in excess of the dividend threshold amount; provided that if the distribution is not a regular quarterly cash dividend, then the dividend threshold amount will be deemed to be zero.
|
•
|
the numerator of which will be equal to the sum of:
|
o
|
the aggregate value of all cash and the fair market value (as determined by our board of directors, or a committee thereof) on the expiration date of any other consideration paid or payable for shares of common stock validly tendered or exchanged and not withdrawn as of the expiration date; and
|
o
|
the product of:
|
§
|
the current market price per share of our common stock; and
|
§
|
the number of shares of our common stock outstanding immediately after the last time tenders or exchanges may be made pursuant to such tender or exchange offer (the “expiration time”), after giving effect to the purchase of all shares accepted for purchase or exchange in such tender or exchange offer, and
|
•
|
the denominator of which will be equal to the product of:
|
o
|
the current market price per share of our common stock; and
|
o
|
the number of shares of our common stock outstanding immediately prior to the expiration time on the expiration date, prior to giving effect to the purchase of any shares accepted for purchase or exchange in such tender or exchange offer.
|
•
|
with respect to clause (b) above, the average of the closing prices of our common stock over the 10 consecutive trading day period ending on, and including, the trading day immediately preceding the date of announcement of the issuance requiring such computation;
|
•
|
with respect to clauses (d) (in the event of an adjustment not relating to a spin-off) and (e) above, the average of the closing prices of our common stock over the 10 consecutive trading day period ending on, and including, the trading day immediately preceding the earlier of the ex-date and the record date for the issuance or distribution requiring such computation;
|
•
|
with respect to clause (d) above (in the event of an adjustment relating to a spin-off only), the average of the closing prices of our common stock over the 10 consecutive trading day period commencing on, and including, the effective date of such spin-off; and
|
•
|
with respect to clause (f) above, the average of the closing prices of our common stock over the 10 consecutive trading day period commencing on, and including, the trading day immediately following the expiration date for the tender or exchange offer.
|
•
|
any consolidation or merger of us with or into another person (other than a merger or consolidation in which we are the continuing or surviving corporation and in which the shares of our common stock outstanding immediately prior to the merger or consolidation are not exchanged for cash, securities or other property of us or another person);
|
•
|
any sale, transfer, lease or conveyance to another person of all or substantially all of our property and assets;
|
•
|
any reclassification of our common stock into securities, including securities other than our common stock; or
|
•
|
any statutory exchange of our securities with another person (other than in connection with a merger or acquisition);
|
•
|
upon the issuance of any common stock pursuant to any present or future plan providing for the reinvestment of dividends or interest payable on our securities and the investment of additional optional amounts in common stock under any plan;
|
•
|
upon the issuance of any common stock or rights, options or warrants to purchase those shares pursuant to any present or future employee, director or consultant benefit plan or program of or assumed by us or any of our subsidiaries;
|
•
|
upon the repurchase of any shares of our common stock pursuant to an open market share repurchase program or other buy-back transaction that is not a tender offer or exchange offer of the nature described in clause (f) above;
|
•
|
for the sale or issuance of shares of our common stock, or securities convertible into or exercisable for shares of our common stock, for cash, including at a price per share less than the fair market value thereof or otherwise or in an acquisition, except as described in one of clauses (a) through (f) above;
|
•
|
for a third party tender offer;
|
•
|
upon the issuance of any common stock pursuant to any option, warrant, right or exercisable, exchangeable or convertible security outstanding as of the date the Units were first issued; or
|
•
|
solely for a change in, or elimination of, the par value of our common stock.
|
•
|
to evidence the succession of another person to us, and the assumption by any such successor of the covenants and obligations of ours in the purchase contract agreement and the units and separate purchase contracts, if any;
|
•
|
to add to the covenants for the benefit of holders of purchase contracts or to surrender any of our rights or powers under the agreement;
|
•
|
to evidence and provide for the acceptance of appointment of a successor purchase contract agent;
|
•
|
upon the occurrence of a reorganization event, solely (i) to provide that each purchase contract will become a contract to purchase exchange property and (ii) to effect the related changes to the terms of the purchase contracts, in each case, as required by the applicable provisions of the purchase contract agreement;
|
•
|
to conform the provisions of the purchase contract agreement to the “Description of the Purchase Contracts” and “Description of the Units” sections in the preliminary prospectus supplement, as supplemented by the related pricing term sheet;
|
•
|
to cure any ambiguity or manifest error, to correct or supplement any provisions that may be inconsistent; and
|
•
|
to make any other provisions with respect to such matters or questions, so long as such action does not adversely affect the interest of the holders.
|
•
|
reduce the number of shares of common stock deliverable upon settlement of the purchase contract (except to the extent expressly provided in the anti-dilution adjustments);
|
•
|
change the mandatory settlement date, or adversely modify the right to settle purchase contracts early or the fundamental change early settlement right; or
|
•
|
reduce the above-stated percentage of outstanding purchase contracts the consent of the holders of which is required for the modification or amendment of the provisions of the purchase contracts or the purchase contract agreement.
|
•
|
the successor entity to such consolidation or merger, or the entity which acquires all or substantially all of our assets, shall expressly assume all of our obligations under the purchase contracts and the purchase contract agreement via a supplement to the purchase contract agreement;
|
•
|
the successor entity to such consolidation or merger, or the entity which acquires all or substantially all of our assets, shall be a corporation organized and existing under the laws of the United States or any state thereof or the District of Columbia; and
|
•
|
immediately after the merger, consolidation, sale, assignment, transfer, lease or conveyance, no default has occurred and is continuing under the purchase contracts or the purchase contract agreement.
|
Scheduled Installment Payment Date
|
|
Amount of
Principal |
|
Amount of
Interest |
||||
December 15, 2018
|
|
$
|
0.65497
|
|
|
$
|
0.07836
|
|
March 15, 2019
|
|
0.67606
|
|
|
0.07394
|
|
||
June 15, 2019
|
|
0.68247
|
|
|
0.06753
|
|
||
September 15, 2019
|
|
0.68894
|
|
|
0.06106
|
|
||
December 15, 2019
|
|
0.69547
|
|
|
0.05453
|
|
||
March 15, 2020
|
|
0.70206
|
|
|
0.04794
|
|
||
June 15, 2020
|
|
0.70872
|
|
|
0.04128
|
|
||
September 15, 2020
|
|
0.71544
|
|
|
0.03456
|
|
||
December 15, 2020
|
|
0.72222
|
|
|
0.02778
|
|
||
March 15, 2021
|
|
0.72907
|
|
|
0.02093
|
|
||
June 15, 2021
|
|
0.73598
|
|
|
0.01402
|
|
||
September 15, 2021
|
|
0.74296
|
|
|
0.00704
|
|
•
|
such amortizing notes will cease to be outstanding and interest will cease to accrue (whether or not book-entry transfer of the amortizing notes is made or whether or not the amortizing notes are delivered to the trustee); and
|
•
|
all other rights of the holder will terminate (other than the right to receive the repurchase price and, if the repurchase date falls between a regular record date and the corresponding installment payment date, the related installment payment).
|
•
|
default in the payment of the repurchase price of any amortizing notes when the same shall become due and payable;
|
•
|
default in the payment of any installment payment on any amortizing notes as and when the same shall become due and payable and continuance of such failure for a period of 30 days; or
|
•
|
our failure to give notice of a fundamental change as described under “Description of the Purchase Contracts—Early Settlement Upon a Fundamental Change” when due and continuance of such failure for a period of five business days.
|
•
|
We must deposit in trust for the holder’s benefit and the benefit of all other direct holders of the amortizing notes a combination of money and U.S. government or U.S. government agency notes or bonds that will generate enough cash to make interest, principal and any other payments on the amortizing notes on their due date.
|
•
|
We must deliver to the trustee a legal opinion confirming that the holders of outstanding amortizing notes will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such deposit, defeasance and discharge and will be subject to U.S. federal income tax on the same amount and in the same manner and at the same times as would have been the case if such deposit, defeasance and discharge had not occurred, based on the fact that (i) the Company has received from, or there has been published by, the Internal Revenue Service a ruling (which ruling may be, but need not be, issued with respect to the Company) or (ii) since the date of the Indenture, there has been a change in the applicable U.S. federal income tax law.
|
•
|
We must deposit in trust for the holder’s benefit and the benefit of all other direct holders of the amortizing notes a combination of money and U.S. government or U.S. government agency notes or bonds that will generate enough cash to make interest, principal and any other payments on the amortizing notes on their due date.
|
•
|
We must deliver to the trustee a legal opinion confirming that under current federal income tax law we may make the above deposit without causing the holder to be taxed on the amortizing notes any differently than if we did not make the deposit and just repaid the amortizing notes ourselves.
|
•
|
the successor entity to such consolidation or merger, or the entity which acquires substantially all of our assets, shall expressly assume by supplemental indenture (which shall conform to the provisions of the Trust Indenture Act, as then in effect), satisfactory in form to the trustee and executed and delivered to the trustee, the due and punctual payment of the repurchase price, if applicable, of and all installment payments on all amortizing notes in accordance with the terms of the amortizing notes, and the due and punctual performance and observance of all the covenants and conditions of the Indenture with respect to such securities to be kept or performed by us; and
|
•
|
the successor entity to such consolidation or merger, or the entity which acquires substantially all of our assets, shall be a corporation organized and existing under the laws of the United States or any state thereof or the District of Columbia.
|
•
|
to cure any ambiguity, mistake or inconsistency in the Indenture;
|
•
|
to correct or supplement any provision contained in the Indenture or in any supplemental indenture which may be defective or inconsistent with any other provision contained in the Indenture or in any supplemental indenture, or to make such other provisions in regard to matters or questions arising under the Indenture or under any supplemental indenture as the Board of Directors may deem necessary or desirable and which shall not materially and adversely affect the interests of the holders of amortizing notes;
|
•
|
evidence the succession of another corporation to the Company, or successive successions and the assumption by the successor corporation of the covenants, agreements and obligations of the Company;
|
•
|
to provide for uncertificated amortizing notes in addition to or in place of certificated amortizing notes;
|
•
|
to add to the covenants of the Company for the benefit of the holders of amortizing notes or to surrender any right or power herein conferred upon the Company;
|
•
|
to add to, delete from, or revise the conditions, limitations, and restrictions on the authorized amount, terms, or purposes of issue, authentication, and delivery of amortizing notes, as set forth in the Indenture;
|
•
|
to make any change that does not adversely affect the rights of any holder of amortizing notes in any material respect;
|
•
|
to provide for the issuance of and establish the form and terms and conditions of the amortizing notes, to establish the form of any certifications required to be furnished pursuant to the terms of the Indenture or amortizing notes, or to add to the rights of the holders of amortizing notes;
|
•
|
to add or change CUSIP numbers or other identifying numbers of the amortizing notes upon notice to holders of amortizing notes;
|
•
|
to remove any legends placed on an amortizing note in accordance with the Indenture;
|
•
|
to add any additional Events of Default;
|
•
|
to amend or supplement the Indenture or the amortizing notes to conform the provisions of the Indenture or the amortizing notes to any provision of the “Description of the Amortizing Notes” section in the preliminary prospectus supplement related to the offering of the Units, as supplemented by the related pricing term sheet;
|
•
|
to change or eliminate any of the provisions of the Indenture, provided that any such change or elimination shall become effective only when there are no amortizing notes outstanding created prior to the execution of such supplemental indenture which is entitled to the benefit of such provision; and
|
•
|
to evidence and provide for the acceptance of appointment under the Indenture by a successor trustee with respect to amortizing notes and to add to or change any of the provisions of the Indenture as shall be necessary to provide for or facilitate the administration of the trusts under the Indenture by more than the one Trustee.
|
•
|
extend the fixed maturity of the amortizing notes;
|
•
|
reduce the principal amount of the amortizing notes;
|
•
|
reduce the rate or extend the time of payment of interest on the amortizing notes;
|
•
|
reduce any premium payable upon the redemption of the amortizing notes;
|
•
|
reduce the percentage of the holders of the amortizing notes required to consent to any such supplemental indenture;
|
•
|
modify the right of any holder to receive or sue for payment of the repurchase price, if applicable, of or any installment payment that would be due at the stated maturity; or
|
•
|
expressly subordinate the obligations of the amortizing notes to other indebtedness of the Company.
|
•
|
postpone any installment payment date or reduce the amount owed on any installment payment date; or
|
•
|
reduce the repurchase price or amend or modify in any manner adverse to the holders of the amortizing notes our obligation to make such payment.
|
•
|
100% of the principal amount of the notes to be redeemed on that redemption date; and
|
•
|
the sum of the present values of the remaining scheduled payments of principal and interest on the notes to be redeemed on that redemption date, excluding accrued and unpaid interest on the redemption date, discounted to the redemption date on an annual basis (ACTUAL/ACTUAL (ICMA) (as defined in the rulebook of the International Capital Markets Association)) at the applicable Comparable Government Bond Rate (as defined below), plus 15 basis points in the case of the 2021 notes and 25 basis points in the case of the 2026 notes;
|
|
•
|
|
accept for payment all notes or portions of notes properly tendered pursuant to the Change of Control Offer;
|
|
•
|
|
deposit with the paying agent an amount equal to the Change of Control Payment in respect of all notes or portions of notes properly tendered; and
|
|
•
|
|
deliver or cause to be delivered to the trustee for cancellation the notes properly accepted together with an officers’ certificate stating the aggregate principal amount of the notes being purchased by us.
|
|
•
|
|
liens on property, shares of stock or indebtedness of an entity existing at the time it becomes a Restricted Subsidiary, but not created in anticipation of the transaction in which such entity becomes a Restricted Subsidiary;
|
|
•
|
|
liens on property acquired by us or a Restricted Subsidiary existing at the time of acquisition by us or a Restricted Subsidiary;
|
|
•
|
|
liens on property acquired by us or a Restricted Subsidiary and created prior to, at the time of, or within 180 days after the acquisition of such property, or the completion of construction, the completion of improvements or the commencement of substantial commercial operation of such property, for the purpose of financing all or any part of the purchase price of such property, such construction or the making of such improvements;
|
|
•
|
|
liens on property, shares of stock or indebtedness of an entity existing at the time such entity is merged into or consolidated with us or a Restricted Subsidiary or at the time of a sale, lease or other disposition of all or substantially all of the properties of an entity as an entirety or substantially as an entirety to us or a Restricted Subsidiary, provided that the lien was not incurred in contemplation of such merger or consolidation or sale, lease or other disposition;
|
|
•
|
|
liens on our or a Restricted Subsidiary’s property or in favor of governmental bodies to secure payments of amounts owed under contract or statute or to secure any indebtedness incurred for the purpose of financing all or any part of the purchase price or the cost of constructing or improving the property subject to such liens;
|
|
•
|
|
liens to secure indebtedness owing to us or a Restricted Subsidiary;
|
|
•
|
|
liens existing on the date of the initial issuance of the notes; and
|
|
•
|
|
any extension, renewal or replacement of any Lien referred to above or of any Debt secured by that Lien; provided, however, that such extension, renewal or replacement Lien will secure no larger an amount of Debt than that existing at the time of such extension, renewal or replacement.
|
|
•
|
|
we or the Restricted Subsidiary would be entitled, pursuant to the covenant relating to “Limitation on Liens,” without equally and ratably securing the notes, to incur Debt secured by a Lien on the Principal Property involved in such transaction in an amount at least equal to the Attributable Debt (as defined below) with respect to such Sale and Lease-Back Transaction; or
|
|
•
|
|
we or the Restricted Subsidiary applies, within 180 days of the effective date of the Sale and Lease-Back Transaction, an amount equal to the greater of (1) the net proceeds of such sale or (2) the Attributable Debt with respect to such Sale and Lease-Back Transaction, to either, or a combination of, (x) the prepayment or retirement, other than any mandatory retirement, mandatory prepayment or sinking fund payment or payment at maturity, of debt for borrowed money of us or a Restricted Subsidiary, other than debt subordinate to the notes or debt to us or a Restricted Subsidiary, that matures more than 12 months after its creation or (y) the purchase, construction or development of other comparable property.
|
|
•
|
|
all current liabilities, including current maturities of long-term indebtedness and current maturities of obligations under capital leases; and
|
|
•
|
|
the total of the net book values of all assets of us and our Subsidiaries properly classified as intangible assets under U.S. generally accepted accounting principles, including goodwill, trade names, trademarks, patents, unamortized debt discount and expense and other like intangible assets.
|
|
1.
|
to any tax, assessment or other governmental charge that would not have been imposed but for the holder or beneficial owner, a fiduciary, settlor, beneficiary, member or shareholder of the holder or beneficial owner, or a person holding a power over an estate or trust administered by a fiduciary holder or beneficial owner, being treated as:
|
|
a.
|
being or having been present in, or engaged in a trade or business in, the United States, being treated as having been present in, or engaged in a trade or business in, the United States, or having or having had a permanent establishment in the United States;
|
|
b.
|
having a current or former connection with the United States (other than a connection arising solely as a result of the ownership of the notes, the receipt of any payment in respect of the notes or the enforcement of any rights under the Indenture), including being or having been a citizen or resident of the United States or treated as being or having been a resident thereof;
|
|
c.
|
being or having been a personal holding company, a passive foreign investment company or a controlled foreign corporation for U.S. federal income tax purposes, a foreign tax exempt organization, or a corporation that has accumulated earnings to avoid United States federal income tax;
|
|
d.
|
being or having been a “10-percent shareholder,” as defined in section 871(h)(3) of the United States Internal Revenue Code of 1986, as amended (the “Code”), or any successor provision, of us; or
|
|
e.
|
being a bank receiving payments on an extension of credit made pursuant to a loan agreement entered into in the ordinary course of its trade or business, within the meaning of section 881(c)(3) of the Code or any successor provision;
|
|
2.
|
to any beneficial owner that is not the sole beneficial owner of the notes, or a portion of the notes, or that is a fiduciary, partnership or limited liability company, but only to the extent that a beneficiary or settlor with respect to the fiduciary, a beneficial owner or member of the partnership or limited liability company would not have been entitled to the payment of an additional amount had the beneficiary, settlor, beneficial owner or member received directly its beneficial or distributive share of the payment;
|
|
3.
|
to any tax, assessment or other governmental charge that would not have been imposed but for the failure of the holder or beneficial owner (or their agents) to comply with certification, identification or information reporting requirements concerning the nationality, residence, identity or connection with the United States of the holder or beneficial owner of the notes, if compliance is required by statute, by regulation of the United States or any taxing authority therein or by an applicable income tax treaty to which the United States is a party as a precondition to exemption from such tax, assessment or other governmental charge;
|
|
4.
|
to any tax, assessment or other governmental charge that is imposed otherwise than by withholding or deducting by us or a paying agent from the payment;
|
|
5.
|
to any estate, inheritance, gift, sales, excise, transfer, wealth, capital gains or personal property tax or similar tax, assessment or other governmental charge;
|
|
6.
|
to any tax, assessment or other governmental charge that would not have been imposed but for the presentation by the holder of any note, where presentation is required, for payment on a date more than 30 days after the date on which payment became due and payable or the date on which payment thereof is duly provided for, whichever occurs later;
|
|
7.
|
to any tax, assessment or other governmental charge required to be withheld or deducted that is imposed on a payment pursuant to Sections 1471 through 1474 of the Code (or any amended or successor version of such Sections that is substantively comparable and not materially more onerous to comply with), any Treasury regulations promulgated thereunder, or any other official interpretations thereof (collectively, “FATCA”), any agreement (including any intergovernmental agreement) entered into in connection therewith, or any law, regulation or other official guidance enacted in any jurisdiction implementing FATCA or an intergovernmental agreement in respect of FATCA;
|
|
8.
|
any tax, assessment or other governmental charge that is imposed or withheld solely by reason of a change in law, regulation, or administrative or judicial interpretation that becomes effective more than 15 days after the payment becomes due or is duly provided for, whichever occurs later; or
|
|
9.
|
in the case of any combination of items (1) through (8).
|
|
•
|
|
We must deposit in trust for the holder’s benefit and the benefit of all other direct holders of the notes a combination of money and U.S. government or U.S. government agency notes or bonds that will generate enough cash to make interest, principal and any other payments on the notes on their various due dates.
|
|
•
|
|
We must deliver to the trustee a legal opinion confirming that the holders of outstanding notes of such series will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such deposit, defeasance and discharge and will be subject to U.S. federal income tax on the same amount and in the same manner and at the same times as would have been the case if such deposit, defeasance and discharge had not occurred, based on the fact that (i) the Company has received from, or there has been published by, the Internal Revenue Service a ruling (which ruling may be, but need not be, issued with respect to the Company) or (ii) since the date of the Indenture, there has been a change in the applicable U.S. federal income tax law.
|
|
•
|
|
We must deposit in trust for the holder’s benefit and the benefit of all other direct holders of the notes a combination of money and U.S. government or U.S. government agency notes or bonds that will generate enough cash to make interest, principal and any other payments on the notes on their various due dates.
|
|
•
|
|
We must deliver to the trustee a legal opinion confirming that under current federal income tax law we may make the above deposit without causing the holder to be taxed on the notes any differently than if we did not make the deposit and just repaid the notes ourselves.
|
|
•
|
|
100% of the principal amount of the notes to be redeemed on that redemption date; and
|
|
•
|
|
the sum of the present values of the remaining scheduled payments of principal and interest on the notes to be redeemed on that redemption date, not including any portion of any payments of interest accrued to the redemption date, discounted to the redemption date on an annual basis (ACTUAL/ACTUAL (ICMA) (as defined in the rulebook of the International Capital Markets Association)) at the applicable Comparable Government Bond Rate (as defined below), plus 30 basis points;
|
|
•
|
|
accept for payment all notes or portions of notes properly tendered pursuant to the Change of Control Offer;
|
|
•
|
|
deposit with the paying agent an amount equal to the Change of Control Payment in respect of all notes or portions of notes properly tendered; and
|
|
•
|
|
deliver or cause to be delivered to the trustee for cancellation the notes properly accepted together with an officers’ certificate stating the aggregate principal amount of the notes being purchased by us.
|
|
•
|
|
liens on property, shares of stock or indebtedness of an entity existing at the time it becomes a Restricted Subsidiary, but not created in anticipation of the transaction in which such entity becomes a Restricted Subsidiary;
|
|
•
|
|
liens on property acquired by us or a Restricted Subsidiary existing at the time of acquisition by us or a Restricted Subsidiary;
|
|
•
|
|
liens on property acquired by us or a Restricted Subsidiary and created prior to, at the time of, or within 180 days after the acquisition of such property, or the completion of construction, the completion of improvements or the commencement of substantial commercial operation of such property, for the purpose of financing all or any part of the purchase price of such property, such construction or the making of such improvements;
|
|
•
|
|
liens on property, shares of stock or indebtedness of an entity existing at the time such entity is merged into or consolidated with us or a Restricted Subsidiary or at the time of a sale, lease or other disposition of all or substantially all of the properties of an entity as an entirety or substantially as an entirety to us or a Restricted Subsidiary, provided that the lien was not incurred in contemplation of such merger or consolidation or sale, lease or other disposition;
|
|
•
|
|
liens on our or a Restricted Subsidiary’s property or in favor of governmental bodies to secure payments of amounts owed under contract or statute or to secure any indebtedness incurred for the purpose of financing all or any part of the purchase price or the cost of constructing or improving the property subject to such liens;
|
|
•
|
|
liens to secure indebtedness owing to us or a Restricted Subsidiary;
|
|
•
|
|
liens existing on the date of the initial issuance of the notes; and
|
|
•
|
|
any extension, renewal or replacement of any Lien referred to above or of any Debt secured by that Lien; provided, however, that such extension, renewal or replacement Lien will secure no larger an amount of Debt than that existing at the time of such extension, renewal or replacement.
|
|
•
|
|
we or the Restricted Subsidiary would be entitled, pursuant to the covenant relating to “Limitation on Liens,” without equally and ratably securing the notes, to incur Debt secured by a Lien on the Principal Property involved in such transaction in an amount at least equal to the Attributable Debt (as defined below) with respect to such Sale and Lease-Back Transaction; or
|
|
•
|
|
we or the Restricted Subsidiary applies, within 180 days of the effective date of the Sale and Lease-Back Transaction, an amount equal to the greater of (1) the net proceeds of such sale or (2) the Attributable Debt with respect to such Sale and Lease-Back Transaction, to either, or a combination of, (x) the prepayment or retirement, other than any mandatory retirement, mandatory prepayment or sinking fund payment or payment at maturity, of debt for borrowed money of us or a Restricted Subsidiary, other than debt subordinate to the notes or debt to us or a Restricted Subsidiary, that matures more than 12 months after its creation or (y) the purchase, construction or development of other comparable property.
|
|
•
|
|
all current liabilities, including current maturities of long-term indebtedness and current maturities of obligations under capital leases; and
|
|
•
|
|
the total of the net book values of all assets of us and our Subsidiaries properly classified as intangible assets under U.S. generally accepted accounting principles, including goodwill, trade names, trademarks, patents, unamortized debt discount and expense and other like intangible assets.
|
|
1.
|
to any tax, assessment or other governmental charge that would not have been imposed but for the holder or beneficial owner, a fiduciary, settlor, beneficiary, member or shareholder of the holder or beneficial owner, or a person holding a power over an estate or trust administered by a fiduciary holder or beneficial owner, being treated as:
|
|
a.
|
being or having been present in, or engaged in a trade or business in, the United States, being treated as having been present in, or engaged in a trade or business in, the United States, or having or having had a permanent establishment in the United States;
|
|
b.
|
having a current or former connection with the United States (other than a connection arising solely as a result of the ownership of the notes, the receipt of any payment in respect of the notes or the enforcement of any rights under the Indenture), including being or having been a citizen or resident of the United States or treated as being or having been a resident thereof;
|
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c.
|
being or having been a personal holding company, a passive foreign investment company or a controlled foreign corporation for U.S. federal income tax purposes, a foreign tax exempt organization, or a corporation that has accumulated earnings to avoid United States federal income tax;
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|
d.
|
being or having been a “10-percent shareholder,” as defined in section 871(h)(3) of the United States Internal Revenue Code of 1986, as amended (the “Code”), or any successor provision, of us; or
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|
e.
|
being a bank receiving payments on an extension of credit made pursuant to a loan agreement entered into in the ordinary course of its trade or business, within the meaning of section 881(c)(3) of the Code or any successor provision;
|
|
2.
|
to any beneficial owner that is not the sole beneficial owner of the notes, or a portion of the notes, or that is a fiduciary, partnership or limited liability company, but only to the extent that a beneficiary or settlor with respect to the fiduciary, a beneficial owner or member of the partnership or limited liability company would not have been entitled to the payment of an additional amount had the beneficiary, settlor, beneficial owner or member received directly its beneficial or distributive share of the payment;
|
|
3.
|
to any tax, assessment or other governmental charge that would not have been imposed but for the failure of the holder or any other person to comply with certification, identification or information reporting requirements concerning the nationality, residence, identity or connection with the United States of the holder or beneficial owner of the notes, if compliance is required by statute, by regulation of the United States or any taxing authority therein or by an applicable income tax treaty to which the United States is a party as a precondition to exemption from such tax, assessment or other governmental charge;
|
|
4.
|
to any tax, assessment or other governmental charge that is imposed otherwise than by withholding or deducting by us or a paying agent from the payment;
|
|
5.
|
to any estate, inheritance, gift, sales, excise, transfer, wealth, capital gains or personal property tax or similar tax, assessment or other governmental charge;
|
|
6.
|
to any tax, assessment or other governmental charge that would not have been imposed but for the presentation by the holder of any note, where presentation is required, for payment on a date more than 30 days after the date on which payment became due and payable or the date on which payment thereof is duly provided for, whichever occurs later;
|
|
7.
|
to any tax, assessment or other governmental charge required to be withheld or deducted that is imposed on a payment pursuant to Sections 1471 through 1474 of the Code (or any amended or successor version of such Sections that is substantively comparable and not materially more onerous to comply with), any Treasury regulations promulgated thereunder, or any other official interpretations thereof (collectively, “FATCA”), any agreement (including any intergovernmental agreement) entered into in connection therewith, or any law, regulation or other official guidance enacted in any jurisdiction implementing FATCA or an intergovernmental agreement in respect of FATCA;
|
|
8.
|
any tax, assessment or other governmental charge that is imposed or withheld solely by reason of a change in law, regulation, or administrative or judicial interpretation that becomes effective more than 15 days after the payment becomes due or is duly provided for, whichever occurs later; or
|
|
9.
|
in the case of any combination of items (1) through (8).
|
|
•
|
|
We must deposit in trust for the holder’s benefit and the benefit of all other direct holders of the notes a combination of money and U.S. government or U.S. government agency notes or bonds that will generate enough cash to make interest, principal and any other payments on the notes on the due date.
|
|
•
|
|
We must deliver to the trustee a legal opinion confirming that the holders of outstanding notes will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such deposit, defeasance and discharge and will be subject to U.S. federal income tax on the same amount and in the same manner and at the same times as would have been the case if such deposit, defeasance and discharge had not occurred, based on the fact that (i) the Company has received from, or there has been published by, the Internal Revenue Service a ruling (which ruling may be, but need not be, issued with respect to the Company) or (ii) since the date of the Indenture, there has been a change in the applicable U.S. federal income tax law.
|
|
•
|
|
We must deposit in trust for the holder’s benefit and the benefit of all other direct holders of the notes a combination of money and U.S. government or U.S. government agency notes or bonds that will generate enough cash to make interest, principal and any other payments on the notes on their due date.
|
|
•
|
|
We must deliver to the trustee a legal opinion confirming that under current federal income tax law we may make the above deposit without causing the holder to be taxed on the notes any differently than if we did not make the deposit and just repaid the notes ourselves.
|
Name of Entity
|
Jurisdiction
|
International Flavors & Fragrances S.R.L.
|
Argentina
|
Bush Boake Allen Australia Pty Ltd
|
Australia
|
IFF Australia Holdings Pty Ltd
|
Australia
|
International Flavours & Fragrances (Australia) Pty Ltd
|
Australia
|
Lucas Meyer Cosmetics Australia Pty Ltd
|
Australia
|
Southern Cross Botanicals Pty Ltd
|
Australia
|
Enzymotec Australia PTY LTD
|
Australia
|
Taura Natural Ingredients (Australia) Pty Limited
|
Australia
|
Taura Natural Ingredients Holdings Pty Limited
|
Australia
|
Frutarom GmbH
|
Austria
|
Frutarom Savory Solutions Austria GmbH
|
Austria
|
world wide WIBERG GmbH
|
Austria
|
PTI-BEL TUE
|
Belarus
|
Frutarom Belgium N.V.
|
Belgium
|
Taura Natural Ingredients NV
|
Belgium
|
TNI Investments NV
|
Belgium
|
IFF Essências e Fragrâncias Ltda.
|
Brazil
|
Bush Boake Allen do Brasil Indústria e Comércio Ltda.
|
Brazil
|
Bremil Industria e Comercio de Ingredientes Alimenticos Ltda.
|
Brazil
|
Bremil S/A Industria De Produtos Alimenticos(1)
|
Brazil
|
Envoltec Indústria de Embalagens Ltda.
|
Brazil
|
Frutarom do Brasil GRU Indsutria e Conercio Ltad (formely Citromax Essências Ltda)
|
Brazil
|
Frutarom Do Brazil Industria E Comercio Ltda.
|
Brazil
|
Nardi Armoas Ltda.
|
Brazil
|
Sabormax Indústria de Alimentos e Representacão Ltda.
|
Brazil
|
SDFLC Brasil Industria E Comercio Ltda(2)
|
Brazil
|
Fragrance Resources Asia Pacific Ltd.
|
British Virgin Islands
|
IFF (BVI) Limited
|
British Virgin Islands
|
International Flavors & Fragrances (Canada) Ltd.
|
Canada
|
Lucas Meyer Cosmetics Canada Inc.
|
Canada
|
Les Laboratories Bio ForeXtra Inc.
|
Canada
|
David Michael & Company (Canada) 1986 Ltd.
|
Canada
|
Les Ingrédients Alimentaires BSA Inc.
|
Canada
|
1456111 Ontario Limited
|
Canada
|
Distribution Dan-Hel Inc.(3)
|
Canada
|
Via Viateur Inc.(4)
|
Canada
|
Wiberg Canada Inc.
|
Canada
|
Wiberg Corporation Inc.
|
Canada
|
Bush Boake Allen Chile S.A.
|
Chile
|
IFF Sabores y Fragancias de Chile Ltda.
|
Chile
|
International Flavors & Fragrances I.F.F. (Chile) Limitada
|
Chile
|
Frutarom Chile S.A. (former name: Montana Chile S.A.)
|
Chile
|
International Flavors & Fragrances (Hangzhou) Co., Ltd.(5)
|
China
|
IFF Flavors & Fragrances (Hangzhou) Trading Co., Ltd.
|
China
|
International Flavors & Fragrances (Zhejiang) Co., Ltd.
|
China
|
International Flavors & Fragrances (China) Ltd.
|
China
|
International Flavors & Fragrances (ZhangJiagang) Co., Ltd.
|
China
|
Fragrance Resources (Shanghai) Co. Ltd.
|
China
|
IFF Bio-Technology (Nanjing) Co., Ltd.
|
China
|
Fangchen International Trading Ltd.
|
China
|
Frutarom Flavors (Kushan) Co Ltd.
|
China
|
Frutarom F&F Trading (Shanghai) Co.
|
China
|
Frutarom Flavors and ingredients (shanghai) Co., Ltd.
|
China
|
Inventive Food Technology (ZQ) Ltd.
|
China
|
Pucheng Yongfang Fragrance Technology Co., Ltd.(6)
|
China
|
International Flavors and Fragrances Colombia S.A.S.
|
Colombia
|
Frutarom Flavor and Fragrance Costa Rica Sociedad de Responsabilidad Limitada
|
Costa Rica
|
Alpris Ltd.
|
Cyprus
|
Vantodio Holdings Limited
|
Cyprus
|
Frutarom Czech Republic S.r.o
|
Czech Republic
|
Frutarom Nordic A/S Flachsmann Scandinavia A/S Aksel Holm-Essensfabrik A / S
|
Denmark
|
FYMSA del Caribe, S.R.L(7)
|
Dominican Republic
|
MISR Company for Aromatic products (S.A.E.)
|
Egypt
|
A. Boake, Roberts And Company (Holding), Limited
|
England
|
International Flavours & Fragrances (CIL) Limited
|
England
|
Bush Boake Allen Enterprises Limited
|
England
|
Bush Boake Allen Limited
|
England
|
Bush Boake Allen (Pension Trustees) Limited
|
England
|
Bush Boake Allen Pension Investments Limited
|
England
|
Bush Boake Allen Holdings (U.K.) Limited
|
England
|
International Flavours & Fragrances (GB) Holdings Limited
|
England
|
International Flavours & Fragrances I.F.F. (Great Britain) Limited
|
England
|
International Flavours & Fragrances (Pension Trustees) Limited
|
England
|
Dandy Lions Limited
|
England
|
Frutarom (UK) Holdings Limited
|
England
|
Frutarom (UK) Ltd.
|
England
|
Frutarom UK Investments Limited
|
England
|
Hagelin Flv (UK) Ltd.
|
England
|
Redbrook (UK) Limited
|
England
|
Savoury Flavours (Holding) Limited
|
England
|
Savoury Flavours Ltd.
|
England
|
Unique Ingredients Limited
|
England
|
Aromco Ltd.
|
England
|
Flavors and Essences UK Limited
|
England
|
FoodBlenders Limited
|
England
|
Frutarom - Etol (UK) Limited
|
England
|
International Flavors & Fragrances IFF (France) SAS
|
France
|
International Flavors & Fragrances France Holding I SAS
|
France
|
International Flavors & Fragrances France Holding II SAS
|
France
|
International Flavors & Fragrances France Holding III SAS
|
France
|
Lucas Meyer Cosmetics
|
France
|
Institut Européen de Biologie Cellulaire
|
France
|
David Michael Europe S.A.S.
|
France
|
Fragrance Resources SAS
|
France
|
Frutarom France S.A.R.L
|
France
|
Rene Laurent SAS
|
France
|
International Flavors & Fragrances IFF (Deutschland) GmbH
|
Germany
|
Leagel GmbH
|
Germany
|
IFF Fragrance GmbH
|
Germany
|
Dr. Bruno Stellmach Verwaltungs-GmbH
|
Germany
|
extrakt Chemie Dr. Bruno Stellmach GmbH & Co. KG
|
Germany
|
Frutarom Germany GmbH
|
Germany
|
Frutarom Germany GMP GmbH
|
Germany
|
Frutarom Production GmbH
|
Germany
|
Frutarom Savory Solutions Germany GmbH
|
Germany
|
Aroma S.A.
|
Guatemala
|
Hexachem, Sociedad Anónima
|
Guatemala
|
Manseg S.A.
|
Guatemala
|
International Flavors & Fragrances (Hong Kong) Limited
|
Hong Kong
|
Frutarom (Asia Pacific) Limited
|
Hong Kong
|
Inventive Technology Ltd.
|
Hong Kong
|
Prowin International Ltd.
|
Hong Kong
|
VAYA PHARMA HONKG LTD
|
Hong Kong
|
International Flavors & Fragrances I.F.F. (Hungary) Kft
|
Hungary
|
IFF Hungary Global Kft
|
Hungary
|
International Flavours & Fragrances India Private Limited(8)
|
India
|
BSA India Food Ingr. P. Ltd.
|
India
|
Frutarom Flavours (India) Private Limited(9)
|
India
|
Sonarome Private Limited(10)
|
India
|
P.T. Essence Indonesia
|
Indonesia
|
IFF Capital Services
|
Ireland
|
Irish Flavours and Fragrances Limited
|
Ireland
|
Aromatics Holdings Limited
|
Ireland
|
International Flavors & Fragrances Irish Acquisition Company Limited
|
Ireland
|
Redbrook Blentech Limited
|
Ireland
|
Redbrook Ingredient Services Limited
|
Ireland
|
International Flavors and Fragrances Ingredients Ltd
|
Israel
|
BKF Vision Ltd
|
Israel
|
K-Vision Consulting and Investments Ltd
|
Israel
|
M.P. Equity Holdings Ltd
|
Israel
|
International Flavors and Fragrances I.F.F. (Israel) Ltd.
|
Israel
|
Frutarom Global Ltd.
|
Israel
|
Frutarom Industries Ltd.
|
Israel
|
Frutarom Ltd.
|
Israel
|
Nutra-Lease Ltd.(11)
|
Israel
|
Algalo Industries Ltd.(12)
|
Israel
|
Frutarom Trade & Marketing (1990) Ltd.
|
Israel
|
International Flavors e Fragrances IFF (Italia) S.r.l.
|
Italy
|
Frutarom Italy S.r.l
|
Italy
|
WIBERG Italia S.r.l.
|
Italy
|
International Flavors & Fragrances (Japan) Ltd.
|
Japan
|
PTI Astana LLC
|
Kazakhstan
|
Frutarom Kenya Limited
|
Kenya
|
IFF (Korea) Inc.
|
Korea
|
Frutarom Finance EUR AG
|
Lichtenstein
|
International Flavors & Fragrances (Luxembourg) S.à r.l.
|
Luxembourg
|
International Flavors & Fragrances Ardenne S.à r.l.
|
Luxembourg
|
Etol Skopje DRUŠTVO ZA TRGOVIJA ETOL UVOZ-IZVOZ DOOEL
|
Macedonia
|
Ingrediants dooel Skopje
|
Macedonia
|
International Flavors & Fragrances (Malaysia) Sdn. Bhd.
|
Malaysia
|
International Flavours & Fragrances (Mauritius) Ltd
|
Mauritius
|
Bush Boake Allen Controladora, S.A. de C.V.
|
Mexico
|
IFF Mexico Manufactura, S.A. de C.V.
|
Mexico
|
International Flavors & Fragrances (Mexico), S. de R.L. de C.V.
|
Mexico
|
Frutarom Flavors Mexico S.A. de C.V.
|
Mexico
|
Frutarom Mexico S.A.(13)
|
Mexico
|
Proveedores de Ingeniería Alimentaria, S.A. de C.V. ("PIASA")(14)
|
Mexico
|
Representaciones FYMSA, S.A. de C.V (FYMSA)
|
Mexico
|
PTI-MOL LLC
|
Moldova
|
ERELEM
|
Morocco
|
International Flavors & Fragrances (Myanmar) Limited
|
Myanmar
|
Bush Boake Allen Benelux B.V.
|
Netherlands
|
International Flavors & Fragrances (Nederland) Holding B.V.
|
Netherlands
|
International Flavors & Fragrances I.F.F. (Nederland) B.V.
|
Netherlands
|
Daivd Michael Netherlands B.V.
|
Netherlands
|
Frutarom Netherlands B.V.
|
Netherlands
|
Taura Natural Ingredients Ltd.
|
New Zealand
|
International Flavours & Fragrances (NZ) Limited
|
New Zealand
|
Bush Boake Allen (New Zealand) Limited
|
New Zealand
|
IFF West Africa Limited
|
Nigeria
|
Frutarom Nigeria Limited
|
Nigeria
|
Frutarom Norway A.S
|
Norway
|
Frutarom Perú S.A. (Montana Food activity)
|
Peru
|
International Flavors & Fragrances (Philippines), Inc.
|
Philippines
|
International Flavors & Fragrances (Poland) Sp. z o.o.
|
Poland
|
Amco SP Z.O.O
|
Poland
|
Frutarom Polska Sp. Z o.o. (Former name: Etol Polska SP.z.o.o.)
|
Poland
|
Chemical Process Materials and Equipment S.A.
|
Republic of Panama
|
International Aroma Group
|
Republic of Panama
|
Mark Services Holdings Inc.
|
Republic of Panama
|
Frutarom (Marketing) S.R.L.
|
Romania
|
Frutarom Etol RO SRL
|
Romania
|
International Flavors & Fragrances I.F.F. (Rus)
|
Russia
|
PTI Group of Companies LLC (GK PTI)
|
Russia
|
"Frutarom” Ltd. ÎÎÎ «Ôðóòàðîì» (Frutarom Russia Ltd.)
|
Russia
|
ETOL-RUS, Ltd.
|
Russia
|
OOO WIBERG Rus
|
Russia
|
Platinum Absolut LLC
|
Russia
|
PTI Center LLC
|
Russia
|
PTI-NN LLC
|
Russia
|
Tekhnomol Soya Products LLC
|
Russia
|
Etol JVE d.o.o.
|
Serbia
|
Leagel S.r.l.(15)
|
San Marino
|
International Flavors & Fragrances (Greater Asia) Pte. Ltd
|
Singapore
|
Lucas Meyer Cosmetics Asia Pte. Ltd.
|
Singapore
|
Enzymotec Singapore Pte. Ltd.
|
Singapore
|
Vaya Pharma Pte Ltd.(16)
|
Singapore
|
ETOL SK, s.r.o.
|
Slovakia
|
Frutarom EtolTovarna arom in eteriènih olj d.o.o.
|
Slovenia
|
Etol Proizvodnja Arom D.O.O
|
Slovenia
|
VITIVA proizvodnja in storitve d.d. (Short name: VITIVA d.d.)
|
Slovenia
|
International Flavors and Fragrances IFF (South Africa)
|
South Africa
|
Frutarom South Africa (Proprietary) Limited(17)
|
South Africa
|
Unique Flavors Proprietary Limited
|
South Africa
|
Unique Food Solutions Proprietary Limited
|
South Africa
|
International Flavors & Fragrances I.F.F. (España), S.A.
|
Spain
|
IFF Latin American Holdings (España), S.L.
|
Spain
|
IFF Benicarló, S.L.
|
Spain
|
Frutarom Spain, S.L.
|
Spain
|
Ingredientes Naturales Seleccionados, S.L.
|
Spain
|
Nutrafur S.A
|
Spain
|
Speximo AB
|
Sweden
|
International Flavors & Fragrances I.F.F. (Norden) AB
|
Sweden
|
Advanced Lipid AB(18)
|
Sweden
|
Frutarom Savory Solutions Switzerland AG
|
Switzerland
|
Frutarom Switzerland Finance GBP AG
|
Switzerland
|
Frutarom Switzerland Ltd.
|
Switzerland
|
Frutarom Switzerland Finance CHF AG
|
Switzerland
|
Frutarom Switzerland Finance MXN AG
|
Switzerland
|
Frutarom Switzerland Finance USD AG
|
Switzerland
|
International Flavours & Fragrances (Thailand) Limited
|
Thailand
|
The Mighty Company Limited
|
Thailand
|
IFF Aroma Esans Sanayi Ve Ticaret Anonim ªirketi
|
Turkey
|
IFF Turkey Aroma Ve Esans Ürünleri Satiº Ticaret Anonim ªirketi
|
Turkey
|
Etol Aroma Ve Baharat Gida Ürünleri San.Ve Tic.a.º.
|
Turkey
|
Frutarom Gida Ürünleri Sanayi Ve Ticaret Limited Sirketi
|
Turkey
|
Wiberg Baharat San.Tic.A.S
|
Turkey
|
Frutarom Savory Solutions Ukraine
|
Ukraine
|
Frutarom Etol Ukraine LLC.
|
Ukraine
|
PARMA FA
|
Ukraine
|
PTI-Ukraine LLC
|
Ukraine
|
PTI CA LLC
|
Uzbekistan
|
International Flavors & Fragrances (Middle East) FZ-LLC
|
United Arab Emirates
|
International Flavors & Fragrances (Vietnam) Limited Liability Company
|
Vietnam
|
Western Flavors Fragrances Production Joint Stock Company(19)
|
Vietnam
|
Bush Boake Allen Zimbabwe (Private) Limited
|
Zimbabwe
|
International Flavors & Fragrances (Zimbabwe) (Private) Ltd.
|
Zimbabwe
|
Asian Investments, Inc.
|
United States
|
Tastepoint Inc.
|
United States
|
IFF Augusta Holdings LLC
|
United States
|
IFF Chemical Holdings Inc.
|
United States
|
IFF Delaware Holdings, LLC
|
United States
|
IFF Worldwide LLC
|
United States
|
International Flavors & Fragrances (Caribe) Inc.
|
United States
|
International Flavors & Fragrances Holdings, LLC
|
United States
|
The Additive Advantage, LLC
|
United States
|
iDrug Delivery, Inc.(Delaware)(20)
|
United States
|
IFF International Inc.
|
United States
|
van Ameringen-Haebler, Inc.
|
United States
|
Bush Boake Allen Inc.
|
United States
|
Columbia PhytoTechnology LLC
|
United States
|
Flavor Systems International, Inc.
|
United States
|
Frutarom USA Holding, Inc.
|
United States
|
Frutarom USA Inc.
|
United States
|
International Frutarom Corporation
|
United States
|
Taura Natural Ingredients (North America) Inc.
|
United States
|
CitraSource Holdings, L.L.C.
|
United States
|
Crestmont Investment Co.
|
United States
|
Eden Essentials, Inc.
|
United States
|
FYMSA Real Estate LLC
|
United States
|
Grow Company Inc.
|
United States
|
PIASA USA
|
United States
|
The Foote & Jenks Corporation
|
United States
|
UFC America Inc.
|
United States
|
W.W. Holdings Inc.
|
United States
|
Wiberg Corporation of California
|
United States
|
Enzymotec USA Inc.
|
United States
|
Vaya Pharma Inc.
|
United States
|
(1)
|
51% of the voting stock of BREMIL S/A INDÚSTRIA DE PRODUTOS ALIMENTÍCIOS is owned indirectly by the Company.
|
(2)
|
80% of the voting stock of SDFLC Brasil Industria E Comercio Ltda is owned indirectly by the Company.
|
(3)
|
50% of the voting stock of Distribution Dan-Hel Inc. is owned indirectly by the Company.
|
(4)
|
33.3% of the voting stock of Via Viateur Inc is owned indirectly by the Company.
|
(5)
|
95% of the voting stock of International Flavors & Fragrances (Hangzhou) Co., Ltd. is owned indirectly by the Company.
|
(6)
|
62.3% of the voting stock of Pucheng Yongfang Fragrance Technology Co., Ltd. is owned indirectly by the Company.
|
(7)
|
99.8% of the voting stock of FYMSA del Caribe, S.R.L is owned indirectly by the Company.
|
(8)
|
93.36% of the voting stock of International Flavours & Fragrances India Private Limited is owned indirectly by the Company.
|
(9)
|
99.99% of the voting stock of Frutarom Flavours (India) Private Limited is owned indirectly by the Company.
|
(10)
|
70% of the voting stock of Sonarome Private Limited is owned indirectly by the Company.
|
(11)
|
56.89% of the voting stock of Nutra-Lease Ltd. is owned indirectly by the Company.
|
(12)
|
50% of the voting stock of Algalo Industries Ltd. is owned indirectly by the Company.
|
(13)
|
98% of the voting stock of Frutarom Mexico S.A. is owned indirectly by the Company.
|
(14)
|
75% of the voting stock of Proveedores de Ingeniería Alimentaria, S.A. de C.V. ("PIASA") is owned indirectly by the Company.
|
(15)
|
70% of the voting stock of Leagel S.r.l. is owned indirectly by the Company.
|
(16)
|
80% of the voting stock of VAYA PHARMA PTE LTD is owned indirectly by the Company.
|
(17)
|
95% of the voting stock of Frutarom South Africa (Proprietary) Limited is owned indirectly by the Company.
|
(18)
|
50% of the voting stock of Advanced Lipid AB is owned indirectly by the Company.
|
(19)
|
60% of the voting stock of Western Flavors Fragrances Production Joint Stock Company is owned indirectly by the Company.
|
(20)
|
65% of the voting stock of iDrug Delivery, Inc. is owned indirectly by the Company.
|
/s/ PricewaterhouseCoopers LLP
|
New York, New York
|
March 3, 2020
|
1.
|
I have reviewed this Annual Report on Form 10-K of International Flavors & Fragrances Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
By:
|
/s/ Andreas Fibig
|
Name:
|
Andreas Fibig
|
Title:
|
Chairman of the Board and Chief Executive Officer
|
1.
|
I have reviewed this Annual Report on Form 10-K of International Flavors & Fragrances Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
By:
|
/s/ Rustom Jilla
|
Name:
|
Rustom Jilla
|
Title:
|
Executive Vice President and Chief Financial Officer
|
By:
|
/s/ Andreas Fibig
|
Name:
|
Andreas Fibig
|
Title:
|
Chairman of the Board and Chief Executive Officer
|
By:
|
/s/ Rustom Jilla
|
Name:
|
Rustom Jilla
|
Title:
|
Executive Vice President and Chief Financial Officer
|