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Nature of Operations and Summary of Significant Accounting Policies | 3 Months Ended
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Mar. 31, 2024
Accounting Policies [Abstract] |
Nature of Operations and Summary of Significant Accounting Policies | NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Operations International Flavors & Fragrances Inc. and its subsidiaries (the “Registrant,” “IFF,” “the Company,” “we,” “us” and “our”) is a leading creator and manufacturer of food, beverage, health & biosciences, scent and pharma solutions and complementary adjacent products, including cosmetic active and natural health ingredients, which are used in a wide variety of consumer products. Our products are sold principally to manufacturers of perfumes and cosmetics, hair and other personal care products, soaps and detergents, cleaning products, dairy, meat and other processed foods, beverages, snacks and savory foods, sweet and baked goods, sweeteners, dietary supplements, food protection, infant and elderly nutrition, functional food, and pharmaceutical excipients and oral care products. Basis of Presentation The accompanying interim Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and the related notes included in our 2023 Annual Report on Form 10-K (“2023 Form 10-K”), filed on February 28, 2024 with the Securities and Exchange Commission (“SEC”). The interim Consolidated Financial Statements are prepared in accordance with generally accepted accounting principles (“GAAP”) in the United States of America for interim financial information and with the rules and regulations for reporting on Form 10-Q, and are unaudited. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP in the United States of America have been condensed or omitted, if not materially different from the 2023 Form 10-K. The year-end balance sheet data included in this Form 10-Q was derived from the audited financial statements. In the opinion of management, all adjustments, which consist of normal recurring adjustments necessary for a fair statement of the interim Consolidated Financial Statements, have been made. Correction of Prior Year Consolidated Financial Statements In the first quarter of 2024, the Company revised Interest expense from $111 million to $100 million and Other expense, net from $6 million to $17 million on its Consolidated Statements of Income (Loss) and Comprehensive (Loss) Income for the three months ended March 31, 2023. This reflects certain adjustments made to interest expense associated with the Company’s cash pooling arrangements. The Company also adjusted the disclosure of its total receivables factored for the three months ended March 31, 2023 from $445 million to $402 million. The impacts of these corrections are also presented in the related footnotes. Use of Estimates The preparation of financial statements requires management to make estimates and judgments that affect the amounts reported in the Consolidated Financial Statements and accompanying notes. The inputs into the Company’s judgments and estimates take into account the ongoing global current events and adverse macroeconomic impacts on our critical and significant accounting estimates, including estimates associated with future cash flows that are used in assessing the risk of impairment of certain assets. Actual results could differ from those estimates. Cash, Cash Equivalents and Restricted Cash Cash, cash equivalents and restricted cash reported in the Company’s balance sheet as of March 31, 2024, December 31, 2023, March 31, 2023 and December 31, 2022 were as follows:
(DOLLARS IN MILLIONS) | March 31, 2024 |  | December 31, 2023 |  | March 31, 2023 |  | December 31, 2022
Current assets |  |  |  |  |  |  |
Cash and cash equivalents | $ | 732 |  |  | $ | 703 |  |  | $ | 590 |  |  | $ | 483 |
Cash and cash equivalents included in Assets held for sale | 32 |  |  | 26 |  |  | 4 |  |  | 52 |
Restricted cash | 7 |  |  | 6 |  |  | 16 |  |  | 10 |
Non-current assets |  |  |  |  |  |  |
Restricted cash included in Other assets | — |  |  | — |  |  | 7 |  |  | 7 |
Cash, cash equivalents and restricted cash | $ | 771 |  |  | $ | 735 |  |  | $ | 617 |  |  | $ | 552 |
Accounts Receivable The Company has various factoring agreements globally under which it can factor up to approximately $300 million of its trade receivables (“Company’s own factoring agreements”). In addition, the Company utilizes factoring agreements sponsored by certain customers. Under all of the arrangements, the Company sells the trade receivables on a non-recourse basis to unrelated financial institutions and accounts for the transactions as sales of receivables. The applicable receivables are removed from the Company’s Consolidated Balance Sheets when the cash proceeds are received by the Company. The Company sold a total of approximately $406 million and $402 million of receivables under the Company’s own factoring agreements and customer sponsored factoring agreements for the three months ended March 31, 2024 and 2023, respectively. The cost of participating in these programs was approximately $6 million and $5 million for the three months ended March 31, 2024 and 2023, respectively. These costs are included as a component of interest expense. Under the Company’s own factoring agreements for which the Company has continued responsibility to collect receivables and provide to its sponsor, it sold approximately $191 million and $197 million of receivables for the three months ended March 31, 2024 and 2023, respectively. The outstanding principal amounts of receivables under the Company’s own factoring agreements amounted to approximately $178 million and $196 million as of March 31, 2024 and December 31, 2023, respectively. The proceeds from the sales of receivables are included in Net cash provided by operating activities in the Consolidated Statements of Cash Flows. Expected Credit Losses As of March 31, 2024, the Company reported $1.977 billion of trade receivables, net of allowances of $37 million. Based on the aging analysis as of March 31, 2024, approximately 1% of the Company’s accounts receivable were past due by over 365 days based on the payment terms of the invoice. The following is a roll-forward of the Company’s allowances for bad debts for the three months ended March 31, 2024:
(DOLLARS IN MILLIONS) | Allowances for Bad Debts
Balance at January 1, 2024 | $ | 52 |
Bad debt expense (reversals)(1) | (5) |
Write-offs | (9) |
Foreign exchange | (1) |
Balance at March 31, 2024 | $ | 37 |
_______________________ (1)Included approximately $7 million of reversals of allowances on receivables from certain customers in Egypt. The Company will continue to evaluate its credit exposure related to Egypt. Inventories Inventories are stated at the lower of cost (on a weighted-average basis) or net realizable value. The Company’s inventories consisted of the following:
(DOLLARS IN MILLIONS) | March 31, 2024 |  | December 31, 2023
Raw materials | $ | 728 |  |  | $ | 779 |
Work in process | 432 |  |  | 406 |
Finished goods | 1,251 |  |  | 1,292 |
Total | $ | 2,411 |  |  | $ | 2,477 |
Supply Chain Financing Program In the fourth quarter of 2023, the Company entered into a supply chain financing (“SCF”) program. The SCF program is expected to be available to U.S. based suppliers starting in the second half of 2024. The Company makes continuous efforts to improve working capital efficiency and has worked with suppliers to optimize payment terms and conditions. The Company’s current payment terms with a majority of suppliers generally range from 0 to 180 days, which is deemed to be commercially reasonable. The Company’s SCF program is voluntary and will allow its suppliers to elect to sell the receivables owed to them by the Company to a third-party financial institution. The suppliers, at their own discretion, will determine the invoices they want to sell and directly negotiate the arrangements with the participating third-party financial institution. Supplier participation in the program is solely the decision of the supplier and has no bearing on the Company’s payment terms and amounts due with the supplier. The Company’s responsibility will be limited to making payments based upon the agreed contractual terms and arrangements. The Company will not provide any form of guarantees under the SCF program and will have no economic interest in the suppliers’ decision to participate in the SCF program. Amounts due to suppliers that elect to participate in the SCF program will be included in Accounts payable on the Consolidated Balance Sheets. The Company, or the third-party financial institution, may choose to terminate the agreement of the SCF program at any time upon 30 days’ prior written notice. The third-party financial institution may also terminate the agreement of the SCF program at any time upon three business days’ prior written notice in the event there are insufficient funds available for disbursements. As of March 31, 2024 and December 31, 2023, there were no amounts outstanding related to suppliers’ participation in the SCF program. Recent Accounting Pronouncements In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures.” The ASU was issued to further enhance income tax disclosures, primarily through standardization and disaggregation of rate reconciliation categories and income taxes paid by jurisdiction. This guidance is effective for fiscal years beginning after December 15, 2024, with early adoption permitted, and may be applied either prospectively or retrospectively. The Company is currently evaluating the impact that this guidance will have on its income tax disclosures. In November 2023, the FASB issued ASU 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures.” The ASU intends to improve reportable segment disclosure requirements, primarily through enhanced disclosures of significant segment expenses that are regularly provided to the Chief Operating Decision Maker and included within segment profit and loss. This guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted, and applied retrospectively to all prior periods presented in the financial statements. The Company is currently evaluating the impact that this guidance will have on its reportable segment disclosures.

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