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Segment Information | 6 Months Ended
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Jun. 30, 2019
Segment Reporting [Abstract] |
Segment Information | SEGMENT INFORMATION The Company is currently organized into three reportable operating segments, Taste, Scent and Frutarom; these segments align with the internal structure used to manage these businesses. Taste is comprised of Flavor Compounds which are sold to the food and beverage industries for use in consumer products such as prepared foods, beverages, dairy, food and sweet products. Scent is comprised of (1) Fragrance Compounds, which are ultimately used by our customers in two broad categories: Fine Fragrances, including perfumes and colognes, and Consumer Fragrances, including fragrance compounds for personal care (e.g., soaps), household products (e.g., detergents and cleaning agents) and beauty care, including toiletries; (2) Fragrance Ingredients, consisting of synthetic and natural ingredients that can be combined with other materials to create unique fine fragrance and consumer compounds; and (3) Cosmetic Active Ingredients, consisting of active and functional ingredients, botanicals and delivery systems to support our customers’ cosmetic and personal care product lines. Major fragrance customers include the cosmetics industry, including perfume and toiletries manufacturers, and the household products industry, including manufacturers of soaps, detergents, fabric care, household cleaners and air fresheners. Frutarom creates and manufactures a naturals-focused suite of flavor compounds, functional foods and specialty fine ingredients, largely targeting small, local and regional customers. Frutarom’s products are focused on three principal areas: (1) Savory Solutions, (2) Natural Product Solutions, which includes natural health ingredients, natural color and natural food protection, and (3) Taste Solutions. The Company's Chief Operating Decision Maker evaluates the performance of these reportable operating segments based on segment profit which is defined as operating profit before restructuring, global expenses (as discussed below) and certain non-recurring items, Interest expense, Other income (expense), net and Taxes on income. The Global expenses caption represents corporate and headquarter-related expenses which include legal, finance, human resources, certain incentive compensation expenses and other R&D and administrative expenses that are not allocated to individual reportable operating segments. Reportable segment information was as follows:
| Three Months Ended |  | Six Months Ended
| June 30, |  | June 30,
(DOLLARS IN THOUSANDS) | 2019 |  | 2018 |  | 2019 |  | 2018
Net sales: |  |  |  |  |  |  |
Taste | $ | 434,179 |  |  | $ | 450,540 |  |  | $ | 878,781 |  |  | $ | 899,559 |
Scent | 475,671 |  |  | 469,476 |  |  | 964,023 |  |  | 951,385 |
Frutarom | 381,718 |  |  | — |  |  | 746,166 |  |  | — |
Consolidated | $ | 1,291,568 |  |  | $ | 920,016 |  |  | $ | 2,588,970 |  |  | $ | 1,850,944 |
Segment profit: |  |  |  |  |  |  |
Taste | $ | 98,081 |  |  | $ | 109,605 |  |  | $ | 206,536 |  |  | $ | 221,169 |
Scent | 91,244 |  |  | 80,780 |  |  | 177,059 |  |  | 174,056 |
Frutarom | 37,493 |  |  | — |  |  | 66,584 |  |  | — |
Global expenses | (12,886 | ) |  | (20,572 | ) |  | (31,559 | ) |  | (44,398 | )
Operational Improvement Initiatives (a) | (534 | ) |  | (403 | ) |  | (940 | ) |  | (1,429 | )
Acquisition Related Costs (b) | — |  |  | 4 |  |  | — |  |  | 518 |
Integration Related Costs (c) | (11,417 | ) |  | (993 | ) |  | (26,314 | ) |  | (993 | )
Restructuring and Other Charges, net (d) | (2,525 | ) |  | (193 | ) |  | (18,699 | ) |  | (910 | )
Losses on Sale of Assets | (952 | ) |  | (1,264 | ) |  | (764 | ) |  | (1,195 | )
FDA Mandated Product Recall (e) | — |  |  | — |  |  | — |  |  | (5,000 | )
Frutarom Acquisition Related Costs (f) | 1,433 |  |  | (12,455 | ) |  | (8,096 | ) |  | (12,455 | )
Operating profit | 199,937 |  |  | 154,509 |  |  | 363,807 |  |  | 329,363 |
Interest expense | (32,593 | ) |  | (53,246 | ) |  | (69,165 | ) |  | (69,841 | )
Other income (expense) | 2,137 |  |  | 20,655 |  |  | 9,415 |  |  | 21,232 |
Income before taxes | $ | 169,481 |  |  | $ | 121,918 |  |  | $ | 304,057 |  |  | $ | 280,754 |
(a) | Represents accelerated depreciation related to a plant relocation in India and China, as well as a lab closure in Taiwan for 2018.
(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.
(c) | For 2019, represents costs related to the integration of the Frutarom acquisition, principally advisory services. For 2018, represents costs related to the integration of David Michael.
(d) | For 2019, represents severance costs related primarily to Scent. For 2018, represents severance costs related to the 2017 Productivity Program.
(e) | Represents losses related to the FDA mandated recall.
(f) | Represents transaction-related costs and expenses related to the acquisition of Frutarom, including adjustments that reduce the contingent consideration payable related to certain acquisitions made by Frutarom. For 2019, amount primarily includes $2.3 million of adjustments to the contingent consideration payable for the three months ended June 30, 2019 and $7.9 million of amortization for inventory "step-up" costs in the six months ended June 30, 2019. For 2018, amount includes $12.5 million of transaction costs included in administrative expenses.
Net sales are attributed to individual regions based upon the destination of product delivery are as follows:
| Three Months Ended June 30, |  | Six Months Ended June 30,
(DOLLARS IN THOUSANDS) | 2019 |  | 2018 |  | 2019 |  | 2018
Europe, Africa and Middle East | $ | 528,094 |  |  | $ | 292,848 |  |  | $ | 1,057,700 |  |  | $ | 602,161 |
Greater Asia | 293,257 |  |  | 242,221 |  |  | 581,219 |  |  | 485,779 |
North America | 293,918 |  |  | 249,054 |  |  | 594,977 |  |  | 490,199 |
Latin America | 176,299 |  |  | 135,893 |  |  | 355,074 |  |  | 272,805 |
Consolidated | $ | 1,291,568 |  |  | $ | 920,016 |  |  | $ | 2,588,970 |  |  | $ | 1,850,944 |
Net sales related to the U.S. for the three months ended June 30, 2019 and 2018 were $268.3 million and $234.1 million, respectively and for the six months ended June 30, 2019 and 2018 were $541.1 million and $464.3 million, respectively. Net sales attributed to all foreign countries in total for the three months ended June 30, 2019 and 2018 were $1.0 billion and $685.9 million, respectively and for the six months ended June 30, 2019 and 2018 were $2.0 billion and $1.4 billion, respectively. No non-U.S. country had net sales in any period presented greater than 6% of total consolidated net sales. Pending change in Reportable Operating Segments and Reporting Units During the second quarter of 2019, the Company announced that it will be reorganizing its business unit structure into three segments: Taste, Scent and Nutrition & Ingredients. Under the new organization, two parts of the existing Frutarom segment will be included within the existing Taste business unit and a third business unit, Nutrition & Ingredients, will be created that will contain substantially all of the remaining parts of the existing Frutarom business unit. The Company expects to implement the new organizational structure over the next six to nine months.

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- Definition The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -URI http://asc.fasb.org/topic&trid=2134510 + Details
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