XML 37 R22.htm IDEA: XBRL DOCUMENT v3.20.4
Segment Information
 12 Months Ended
Dec. 31, 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 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 is as follows:
 December 31,
(DOLLARS IN THOUSANDS)202020192018
Net sales
Taste$3,109,781 $3,200,520 $2,091,635 
Scent1,974,458 1,939,564 1,885,904 
Consolidated$5,084,239 $5,140,084 $3,977,539 
December 31,
(DOLLARS IN THOUSANDS)20202019
Segment assets
Taste$10,356,936 $10,319,779 
Scent3,056,211 2,757,491 
Global assets142,524 210,141 
Consolidated$13,555,671 $13,287,411 
 December 31,
(DOLLARS IN THOUSANDS)202020192018
Segment profit:
Taste$436,387 $482,394 $419,264 
Scent357,281 349,445 325,901 
Global expenses(63,982)(38,759)(67,799)
Operational Improvement Initiatives (a)— (2,267)(2,169)
Acquisition Related Costs (b)— — 1,289 
Frutarom Integration Related Costs (c)(9,849)(55,160)(7,188)
Restructuring and Other Charges, net (d)(17,295)(29,765)(4,086)
(Losses) gains on Sale of Assets (3,784)(2,367)1,177 
Employee Separation Costs (e)(2,813)— — 
FDA Mandated Product Recall (f)— (250)7,125 
Frutarom Acquisition Related Costs (g)(1,465)(5,940)(89,632)
Compliance Review & Legal Defense Costs (h)(3,278)(11,314)— 
N&B Transaction Related Costs (i)(28,100)(20,747)— 
N&B Integration Related Costs (j)(96,618)— — 
Operating Profit566,484 665,270 583,882 
Interest expense(131,802)(138,221)(132,558)
Loss on extinguishment of debt— — (38,810)
Other income, net6,689 30,403 35,243 
Income before taxes$441,371 $557,452 $447,757 
Profit margin:
Taste14.0 %15.1 %20.0 %
Scent18.1 %18.0 %17.3 %
Consolidated11.1 %12.9 %14.7 %
(a)Represents accelerated depreciation related to plant relocations in India and China.
(b)Represents adjustments to the fair value for an equity method investment in Canada which we began consolidating in the second quarter of 2019.
(c)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.
(d)For 2020, represents costs primarily related to the Frutarom Integration Initiative. For 2019, represents costs primarily related to the Frutarom Integration Initiative and the 2019 Severance Program.
(e)Represents costs related to severance liabilities for two executives who have announced their retirement.
(f)Represents additional claims that management paid to co-packers.
(g)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. For 2019, amount primarily includes amortization for inventory "step-up" costs and transaction costs.
(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 transaction costs and expenses related to the transaction with N&B, principally related to legal and professional fees for capital raising activities.
(j)Represents costs primarily related to advisory services for the integration of the transaction with N&B, principally consulting fees.
The Company has not disclosed revenues at a lower level than provided herein, such as revenues from external customers by product, as it is impracticable for it to do so.
The Company had no customers that accounted for greater than 10% of consolidated net sales in 2020, 2019 and 2018. The Company's largest customer had net sales of $342.2 million, $336.1 million and $356.8 million in 2020, 2019 and 2018, respectively. The majority of these sales were in the Scent reportable operating segment.
Long-lived assets, net, by country, consisted as follows:
 December 31,
(DOLLARS IN THOUSANDS)20202019
United States$389,335 $382,659 
Netherlands88,090 91,313 
Singapore63,446 68,751 
China172,442 188,194 
Other744,872 656,003 
Consolidated$1,458,185 $1,386,920 
Segment capital expenditures and depreciation and amortization consisted as follows:
 Capital ExpendituresDepreciation and Amortization
(DOLLARS IN THOUSANDS)202020192018202020192018
Taste$107,322 $135,421 $82,712 $244,704 $247,791 $101,224 
Scent77,192 92,279 82,400 73,801 69,225 65,066 
Global assets7,280 8,278 4,982 6,855 6,314 7,502 
Consolidated$191,794 $235,978 $170,094 $325,360 $323,330 $173,792 
Net sales are attributed to individual regions based upon the destination of product delivery and are as follows:
 Net Sales by Geographic Area
(DOLLARS IN THOUSANDS)202020192018
Europe, Africa and Middle East$1,987,398 $2,081,758 $1,396,316 
Greater Asia1,161,660 1,162,992 991,015 
North America1,228,243 1,170,497 1,010,126 
Latin America706,938 724,837 580,082 
Consolidated$5,084,239 $5,140,084 $3,977,539 
 Net Sales by Geographic Area
(DOLLARS IN THOUSANDS)202020192018
Net sales related to the U.S.$1,093,031 $1,052,654 $952,550 
Net sales attributed to all foreign countries3,991,208 4,087,430 3,024,989 
No non-U.S. country had net sales in any period presented greater than 6% of total consolidated net sales.