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Segment Information | 9 Months Ended
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Sep. 30, 2020
Segment Reporting [Abstract] |
Segment Information | SEGMENT INFORMATION During the first quarter of 2020, the Company reorganized its reporting structure and combined substantially all of the components of the former Frutarom reportable operating segment into the former Taste reportable operating segment. Prior year amounts have been recast to conform to the current year reporting structure. As a result of the reorganization, the Company is now organized into two reportable operating segments, Taste and Scent; these segments align with the internal structure used to manage these businesses. Taste is comprised of a diversified portfolio across flavor compounds, savory solutions, inclusions and nutrition and specialty ingredients. Flavor compounds provide unique flavors that are ultimately used by IFF's customers in savory products, beverages, sweets, and dairy products. Savory solutions include marinades or powder blends of flavors, natural colors, seasonings, functional ingredients and natural anti-oxidants that are primarily designed for the meat and fish industry. Inclusions provide taste and texture by, among other things, combining flavorings with fruit, vegetables, and other natural ingredients for a wide range of food products, such as health snacks, baked goods, cereals, pastries, ice cream and other dairy products. Nutrition and specialty ingredients primarily consist of natural health ingredients, natural food protection, natural colors and flavor ingredients. The flavor ingredients market includes natural flavor extracts, specialty botanical extracts, distillates, essential oils, citrus products, aroma chemicals, and natural gums and resins. Such ingredients are used for food, beverage, and flavors and are often sold directly to food and beverage manufacturers who use them in producing consumer 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. 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 |  | Nine Months Ended
| September 30, |  | September 30,
(DOLLARS IN THOUSANDS) | 2020 |  | 2019 |  | 2020 |  | 2019
Net sales: |  |  |  |  |  |  |
Taste | $ | 765,238 |  |  | $ | 782,428 |  |  | $ | 2,343,884 |  |  | $ | 2,398,549 |
Scent | 502,838 |  |  | 484,917 |  |  | 1,470,282 |  |  | 1,457,766 |
Consolidated | $ | 1,268,076 |  |  | $ | 1,267,345 |  |  | $ | 3,814,166 |  |  | $ | 3,856,315 |
Segment profit: |  |  |  |  |  |  |
Taste | $ | 101,600 |  |  | $ | 121,425 |  |  | $ | 346,223 |  |  | $ | 383,450 |
Scent | 101,388 |  |  | 87,894 |  |  | 277,156 |  |  | 272,061 |
Global expenses | (9,608) |  |  | (8,385) |  |  | (49,550) |  |  | (35,957) |
Operational Improvement Initiatives (a) | — |  |  | (712) |  |  | — |  |  | (1,652) |
Frutarom Integration Related Costs (b) | (1,883) |  |  | (10,511) |  |  | (8,816) |  |  | (36,825) |
Restructuring and Other Charges, net (c) | (1,497) |  |  | (3,716) |  |  | (8,299) |  |  | (22,415) |
Losses on sale of assets | (415) |  |  | (372) |  |  | (1,568) |  |  | (1,136) |
FDA Mandated Product Recall (d) | — |  |  | (250) |  |  | — |  |  | (250) |
Frutarom Acquisition Related Costs (e) | (808) |  |  | 2,914 |  |  | (1,382) |  |  | (5,182) |
Compliance Review & Legal Defense Costs (f) | (1,000) |  |  | (3,623) |  |  | (1,624) |  |  | (3,623) |
N&B Transaction Related Costs (g) | (8,247) |  |  | — |  |  | (24,372) |  |  | — |
N&B Integration Related Costs (h) | (29,241) |  |  | — |  |  | (61,887) |  |  | — |
Operating profit | 150,289 |  |  | 184,664 |  |  | 465,881 |  |  | 548,471 |
Interest expense | (34,844) |  |  | (33,497) |  |  | (99,046) |  |  | (102,662) |
Other (expense) income, net | (9,945) |  |  | 5,699 |  |  | (4,762) |  |  | 15,114 |
Income before taxes | $ | 105,500 |  |  | $ | 156,866 |  |  | $ | 362,073 |  |  | $ | 460,923 |
_______________________
(a) | Represents accelerated depreciation related to a plant relocation in India and China.
(b) | Represents costs related to the integration of the Frutarom acquisition. For 2020, costs primarily related to advisory services, retention bonuses and performance stock awards. For 2019, costs principally related to advisory services.
(c) | For 2020, represents costs primarily related to the Frutarom Integration Initiative. For 2019, represents costs primarily related to the Frutarom Integration Initiative and 2019 Severance Program.
(d) | Represents additional claims that management paid to co-packers.
(e) | Represents transaction-related costs and expenses related to the acquisition of Frutarom. For 2020, amount primarily includes earn-out payments, net of adjustments, amortization for inventory "step-up" costs and transaction costs principally related to the 2019 Acquisition Activity, including an adjustment to reverse an earnout liability and another adjustment to record an earnout liability in the third quarter of 2020. For 2019, amount primarily includes amortization for inventory "step-up" costs and transaction costs, along with a measurement period adjustment to the amount of the inventory "step-up" recorded.
(f) | 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.
(g) | Represents transaction costs and expenses related to the pending transaction with N&B, principally related to legal and professional fees for capital raising activities.
(h) | Represents costs primarily related to advisory services for the integration of the pending transaction with N&B, principally consulting fees.
Net sales, which are attributed to individual regions based upon the destination of product delivery, were as follows:
| Three Months Ended September 30, |  | Nine Months Ended September 30,
(DOLLARS IN THOUSANDS) | 2020 |  | 2019 |  | 2020 |  | 2019
Europe, Africa and Middle East | $ | 481,088 |  |  | $ | 512,715 |  |  | $ | 1,487,538 |  |  | $ | 1,570,415 |
Greater Asia | 283,204 |  |  | 281,461 |  |  | 868,025 |  |  | 862,680 |
North America | 320,753 |  |  | 286,741 |  |  | 924,661 |  |  | 881,718 |
Latin America | 183,031 |  |  | 186,428 |  |  | 533,942 |  |  | 541,502 |
Consolidated | $ | 1,268,076 |  |  | $ | 1,267,345 |  |  | $ | 3,814,166 |  |  | $ | 3,856,315 |
| Three Months Ended September 30, |  | Nine Months Ended September 30,
(DOLLARS IN THOUSANDS) | 2020 |  | 2019 |  | 2020 |  | 2019
Net sales related to the U.S. | $ | 286,394 |  |  | $ | 254,438 |  |  | $ | 824,836 |  |  | $ | 796,488 |
Net sales attributed to all foreign countries | 981,682 |  |  | 1,012,907 |  |  | 2,989,330 |  |  | 3,059,827 |
No non-U.S. country had net sales greater than 6% of total consolidated net sales for the three months ended September 30, 2020 and nine months ended September 30, 2020.

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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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