F I R S T Q U A R T E R 2 0 2 2 EARNINGS CONFERENCE CALL May 10, 2022 IFF CAUTIONARY STATEMENT 2 Statements in this presentation, which are not historical facts or information, are "forward-looking statements" within the meaning of The Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based on management's current assumptions, estimates and expectations including those concerning the impacts of COVID-19 and our plans to respond to its implications; the expected impact of ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 1-4858 INTERNATIONAL FLAVORS & FRAGRANCES INC. (Exact name of registrant as specified in its charter) New York 13-1432060 (State or other juris ...

CAGNY 2022 Glenn Richter – EVP & CFO February 24, 2022 iff CAUTIONARY STATEMENT 2 Statements in this presentation, which are not historical facts or information, are "forward-looking statements" within the meaning of The Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based on management's current assumptions, estimates and expectations including those concerning the impacts of COVID-19 and our plans to respond to its implications; the expected impact of global supply c ...

☑ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (I.R.S. Employer Identification No.) 521 West 57th Street, New York, NY 10019-2960 For the fiscal year ended December 31, 2021 OR (Exact name of registrant as specified in its charter) ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (State or other jurisdiction of incorporation or organization) For ...

F O U R T H Q U A R T E R & F U L L Y E A R 2 0 2 1 EARNINGS CONFERENCE CALL February 10, 2022 IFF CAUTIONARY STATEMENT 2 Statements in this presentation, which are not historical facts or information, are "forward-looking statements" within the meaning of The Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based on management's current assumptions, estimates and expectations including those concerning the impacts of COVID-19 and our plans to respond to its implications ...

International Flavors & Fragrances Inc. (NYSE:IFF) Q4 2021 Earnings Conference Call February 10, 2021 9:00 AM ET Company Participants Michael DeVeau - Head of IR Andreas Fibig - Chairman and CEO Glenn Richter - EVP and CFO Conference Call Participants Gunther Zechmann - Bernstein Mark Astrachan - Stifel Mike DeStefano - Wells Fargo John Roberts - UBS Adam Samuelson - Goldman Sachs Jeff Zekauskas - JPMorgan Lauren Lieberman - Barclays David Butler - Deutsche bank Ghansham Panjabi - Baird Chris Parkinson - Mi ...

Financial Data and Key Metrics Changes - For the first nine months of 2021, the company achieved $8.6 billion in sales, representing a 10% growth with a 7% increase on a currency-neutral basis [9][10] - The adjusted operating EBITDA margin was 22%, with combined EBITDA growth of 5% [10] - Free cash flow reached $884 million, approximately 10% of trailing nine months sales, driven by strong cash generation [10][43] Business Line Data and Key Metrics Changes - The Nourish division achieved 9% currency-neutral sales growth, with broad-based strength across flavors, ingredients, and food design businesses [17] - The Scent division delivered 8% currency-neutral growth, led by double-digit growth in fine fragrance and strong performance in consumer fragrance [17] - Health & Biosciences saw strong demand in key areas but faced margin challenges due to higher logistics costs, resulting in a 12% decrease in operating EBITDA [37][40] - Pharma Solutions remained flat for the year, impacted by supply chain challenges [18][40] Market Data and Key Metrics Changes - North America achieved 7% growth across all business divisions, with Nourish and Scent leading the performance [13] - Asia experienced a 7% increase in sales, driven by double-digit growth in India and low single-digit growth in China [14] - Latin America was the strongest performing region with 12% growth, primarily from Nourish and Scent divisions [14] - EMEA region saw 7% sales growth, with double-digit increases in the third quarter [15] Company Strategy and Development Direction - The company is focused on portfolio optimization and has completed the divestiture of its food preparation business, with plans to divest the Microbial Control business by Q2 2022 [11][12] - The management emphasized the importance of executing pricing actions to combat inflationary pressures and improve gross margins [34][47] - The company aims to achieve a deleveraging target of less than 3 times net debt to EBITDA within 20 to 36 months post-transaction close [44] Management's Comments on Operating Environment and Future Outlook - Management acknowledged significant inflationary pressures affecting raw material, logistics, and energy costs, which have impacted margins [10][46] - The company expects continued strong sales momentum and is optimistic about returning the Pharma Solutions division to profitability [22][40] - The outlook for 2021 has been revised to target $11.55 billion in total revenue, reflecting strong demand despite ongoing macro supply chain challenges [47][49] Other Important Information - The company has achieved approximately $40 million in cost synergies, nearing its 2021 target of $45 million [25] - Management is confident in the long-term potential of the combined company following the merger with DuPont's N&B business [30] Q&A Session Summary Question: What do you think of IFF's long-term targets? - Management is pleased with the tracking of topline growth against long-term targets and feels comfortable with the deleveraging target [55] Question: Can you discuss margin contraction and guidance cuts? - The primary hit to margins has been from material costs, with inflation rates higher than initially anticipated [64] Question: How do you see inflation for '22 and pricing implementation? - The company is in early phases of planning for '22, expecting to implement pricing actions early in the year, but timing of recovery is uncertain [73] Question: Can you provide insights on synergy realization in '22? - Cost synergies are on track to exceed targets, while sales synergies are also progressing well [77] Question: Is there potential for portfolio optimization? - The company is working on optimizing its portfolio and expects to provide more transparency early next year [86]

PART I. FINANCIAL INFORMATION [Item 1. Financial Statements](index=2&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS.) The N&B merger significantly transformed the company's financials, tripling assets and doubling Q3 net sales, though nine-month net income declined due to merger-related expenses [Consolidated Balance Sheets](index=2&type=section&id=CONSOLIDATED%20BALANCE%20SHEETS) Consolidated Balance Sheet Highlights (in millions) | Account | September 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | **Total Current Assets** | $7,132 | $3,060 | | **Goodwill** | $16,590 | $5,593 | | **Other intangible assets, net** | $10,959 | $2,727 | | **Total Assets** | **$40,252** | **$13,555** | | **Total Current Liabilities** | $3,579 | $1,904 | | **Long-term debt** | $10,818 | $3,779 | | **Total Liabilities** | $18,674 | $7,135 | | **Total Shareholders' Equity** | $21,473 | $6,322 | - The significant increase in **assets**, **liabilities**, and **equity** is primarily due to the merger with DuPont's N&B business, which was completed on February 1, 2021[19](index=19&type=chunk) [Consolidated Statements of Income and Comprehensive (Loss) Income](index=3&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20INCOME%20AND%20COMPREHENSIVE%20(LOSS)%20INCOME) Statement of Income Highlights (in millions, except per share data) | Metric | Q3 2021 | Q3 2020 | 9 Months 2021 | 9 Months 2020 | | :--- | :--- | :--- | :--- | :--- | | **Net sales** | $3,071 | $1,268 | $8,625 | $3,814 | | **Gross profit** | $1,090 | $524 | $2,754 | $1,572 | | **Operating profit** | $298 | $150 | $412 | $466 | | **Net income attributable to IFF** | $194 | $85 | $180 | $296 | | **Net income per share - diluted** | $0.76 | $0.75 | $0.75 | $2.64 | - While **Q3 net income increased significantly** year-over-year, the **nine-month net income decreased from $296 million in 2020 to $180 million in 2021**, reflecting higher operating costs and merger-related expenses post-acquisition of N&B[8](index=8&type=chunk) [Consolidated Statements of Cash Flows](index=4&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) Cash Flow Summary for Nine Months Ended September 30 (in millions) | Cash Flow Activity | 2021 | 2020 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $1,126 | $415 | | **Net cash provided by (used in) investing activities** | $75 | $(119) | | **Net cash used in financing activities** | $(1,022) | $(418) | | **Net change in cash, cash equivalents and restricted cash** | $135 | $(140) | - **Operating cash flow more than doubled**, driven by higher earnings and adjustments for non-cash items like depreciation, amortization, and inventory step-up amortization related to the N&B merger. Investing activities provided cash due to **$193 million** received from the N&B merger[11](index=11&type=chunk) [Notes to Consolidated Financial Statements](index=7&type=section&id=NOTES%20TO%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) The notes detail the N&B merger's **$16 billion** purchase, increased debt, new segment reporting, and ongoing litigation and divestiture plans [Note 3. Acquisitions](index=11&type=section&id=NOTE%203.%20ACQUISITIONS) - On **February 1, 2021**, IFF completed its merger with DuPont's Nutrition & Biosciences (N&B) business in a Reverse Morris Trust transaction. The N&B business contributed approximately **$1.64 billion** in net sales for Q3 2021 and **$4.41 billion** for the first nine months of 2021[48](index=48&type=chunk)[50](index=50&type=chunk) N&B Merger Purchase Price (in millions) | Component | Value | | :--- | :--- | | Fair value of common stock issued | $15,929 | | Fair value for replacement equity awards | $25 | | **Total purchase consideration** | **$15,954** | - The preliminary purchase price allocation resulted in the recognition of **$11.8 billion in goodwill** and **$9.3 billion in identifiable intangible assets**, primarily customer relationships and technological know-how[55](index=55&type=chunk)[59](index=59&type=chunk)[60](index=60&type=chunk) [Note 5. Goodwill and Other Intangible Assets, Net](index=15&type=section&id=NOTE%205.%20GOODWILL%20AND%20OTHER%20INTANGIBLE%20ASSETS%2C%20NET) Goodwill Movement by Segment - Nine Months Ended Sep 30, 2021 (in millions) | Segment | Balance at Dec 31, 2020 | Acquisitions (N&B) | Other | Balance at Sep 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | Nourish | $4,859 | $2,702 | $(1,146) | $6,415 | | Health & Biosciences | $0 | $6,651 | $139 | $6,790 | | Scent | $734 | $910 | $227 | $1,871 | | Pharma Solutions | $0 | $1,539 | $(25) | $1,514 | | **Total** | **$5,593** | **$11,802** | **$(805)** | **$16,590** | - Total goodwill **increased from $5.6 billion to $16.6 billion**, with the N&B merger accounting for an **$11.8 billion increase**[74](index=74&type=chunk) [Note 7. Debt](index=18&type=section&id=NOTE%207.%20DEBT) - Total debt **increased from $4.4 billion at year-end 2020 to $11.5 billion** as of September 30, 2021, primarily due to the assumption of debt from the N&B merger[81](index=81&type=chunk) - As part of the N&B merger, IFF assumed **$1.25 billion** from a Term Loan Facility and **$6.25 billion** in a series of Senior Notes incurred by N&B prior to the transaction[83](index=83&type=chunk) [Note 11. Segment Information](index=22&type=section&id=NOTE%2011.%20SEGMENT%20INFORMATION) - Following the N&B merger, the company reorganized into **four reportable segments: Nourish, Health & Biosciences (H&B), Scent, and Pharma Solutions**[113](index=113&type=chunk) Net Sales by Segment (in millions) | Segment | Q3 2021 | Q3 2020 | 9 Months 2021 | 9 Months 2020 | | :--- | :--- | :--- | :--- | :--- | | Nourish | $1,662 | $712 | $4,638 | $2,174 | | Health & Biosciences | $618 | $31 | $1,683 | $99 | | Scent | $580 | $525 | $1,699 | $1,541 | | Pharma Solutions | $211 | $0 | $605 | $0 | Segment Adjusted Operating EBITDA (in millions) | Segment | Q3 2021 | Q3 2020 | 9 Months 2021 | 9 Months 2020 | | :--- | :--- | :--- | :--- | :--- | | Nourish | $327 | $148 | $921 | $466 | | Health & Biosciences | $151 | $10 | $469 | $29 | | Scent | $130 | $118 | $375 | $323 | | Pharma Solutions | $40 | $0 | $131 | $0 | [Note 15. Commitments and Contingencies](index=32&type=section&id=NOTE%2015.%20COMMITMENTS%20AND%20CONTINGENCIES) - The company is facing a putative **securities class action** in the U.S. and two similar motions in Israel related to alleged false and misleading statements concerning the **Frutarom acquisition** and improper payments made by Frutarom businesses[160](index=160&type=chunk)[162](index=162&type=chunk) - The Israeli Securities Authority and Israel Police have commenced an **investigation into Frutarom** and certain former executives regarding **suspected bribery** and other violations[165](index=165&type=chunk) - The company has accrued approximately **$35 million** related to a **voluntary recall** of certain grades of its Avicel® PH NF microcrystalline cellulose product due to elevated conductivity levels[177](index=177&type=chunk) [Note 17. Assets Held for Sale](index=36&type=section&id=NOTE%2017.%20ASSETS%20HELD%20FOR%20SALE) - In Q3 2021, the company entered an agreement to sell its Microbial Control business unit for approximately **$1.274 billion**, with the transaction expected to close in **Q2 2022**. Assets and liabilities of this business are now classified as held for sale[182](index=182&type=chunk)[184](index=184&type=chunk) - The company also entered an agreement to **divest its fruit preparation business**, which is part of the Nourish segment. The transaction closed on **October 1, 2021**[186](index=186&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=37&type=section&id=ITEM%202.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS.) Management attributes **142%** Q3 sales growth to the N&B merger, despite gross margin decline, while operating cash flow significantly increased and debt covenants were met [Results of Operations (Third Quarter 2021 vs. 2020)](index=39&type=section&id=Results%20of%20Operations%20(Third%20Quarter%202021%20vs.%202020)) - Q3 2021 sales increased **142% to $3.071 billion**, driven by **$1.640 billion** in incremental sales from the N&B merger and volume increases across Nourish, Health & Biosciences, and Scent segments[200](index=200&type=chunk)[205](index=205&type=chunk) - Gross profit margin **decreased from 41.3% to 35.5%** due to higher raw material costs and the product portfolio mix of the newly acquired N&B business[201](index=201&type=chunk)[211](index=211&type=chunk) - Adjusted Operating EBITDA **increased 135% to $648 million**, though the margin slightly **decreased from 22% to 21%** of sales due to higher cost of goods sold[202](index=202&type=chunk) [Results of Operations (First Nine Months 2021 vs. 2020)](index=43&type=section&id=Results%20of%20Operations%20(First%20Nine%20Months%202021%20vs.%202020)) - For the first nine months, sales **increased 126% to $8.625 billion**, with **$4.409 billion** attributable to the N&B merger[227](index=227&type=chunk) - Operating profit for the nine-month period **decreased 12% to $412 million from $466 million** in the prior year, primarily due to merger-related costs such as N&B inventory step-up (**$363 million**) and increased amortization (**$547 million vs $145 million**)[204](index=204&type=chunk)[233](index=233&type=chunk)[238](index=238&type=chunk) - The effective tax rate **increased to 22.1% from 16.9%** year-over-year, mainly due to an unfavorable mix of earnings and higher repatriation costs[241](index=241&type=chunk) [Liquidity and Capital Resources](index=46&type=section&id=Liquidity%20and%20Capital%20Resources) - Cash flow from operations for the first nine months of 2021 was **$1.126 billion**, a significant **increase from $415 million** in the same period of 2020, driven by higher cash earnings and changes in working capital[253](index=253&type=chunk) - The company was **in compliance with all debt covenants** as of September 30, 2021, with a Net Debt/Credit Adjusted EBITDA ratio of **4.10 to 1.0**[268](index=268&type=chunk) - Capital allocation strategy prioritizes maintaining an **investment-grade rating**, investing in the business, paying dividends, and **repaying debt**. The **share repurchase program remains suspended**[261](index=261&type=chunk)[262](index=262&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=55&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK.) No material changes in market risk from the 2020 Form 10-K, except for increased USD fixed-rate debt exposure, where a **10%** interest rate change would impact fair value by **$874 million** - The fair value of the company's USD fixed-rate debt was **$8.742 billion** at September 30, 2021. A hypothetical **10%** change in interest rates would alter this fair value by approximately **$874 million**[300](index=300&type=chunk) [Item 4. Controls and Procedures](index=55&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES.) Management concluded that disclosure controls and procedures were effective, with no material changes to internal control over financial reporting during the quarter - Management concluded that disclosure controls and procedures are **effective** as of the end of the reporting period[301](index=301&type=chunk) - There were **no changes** in internal control over financial reporting during the quarter that have materially affected, or are reasonably likely to materially affect, internal controls[303](index=303&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=56&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS.) This section refers to Note 15 for details on legal proceedings, including matters related to the Frutarom acquisition and other contingencies - For information regarding legal proceedings, the report refers to **Note 15** of the Consolidated Financial Statements[306](index=306&type=chunk) [Item 1a. Risk Factors](index=56&type=section&id=ITEM%201a.%20RISK%20FACTORS.) No material changes to the risk factors previously disclosed in the company's 2020 Annual Report on Form 10-K - There have been **no material changes** with respect to the risk factors disclosed in the company's 2020 Form 10-K[307](index=307&type=chunk)

International Flavors & Fragrances Inc. (NYSE:IFF) Q2 2021 Earnings Conference Call August 6, 2021 10:00 AM ET Company Participants Michael DeVeau - Head of Investor Relations Andreas Fibig - Chairman and CEO Rustom Jilla - Executive Vice President and CFO Conference Call Participants Mark Astrachan - Stifel Mike Sison - Wells Fargo Faiza Alwy - Deutsche Bank John Roberts - UBS Gunther Zechmann - Bernstein Adam Samuelson - Goldman Sachs Jeff Zekauskas - JPMorgan Lauren Lieberman - Barclays Ghansham Panjabi ...

[Cover Page and Company Information](index=1&type=section&id=Cover%20Page%20and%20Company%20Information) [Filing Information](index=1&type=section&id=Filing%20Information) This report is a quarterly filing by International Flavors & Fragrances Inc. for the period ended June 30, 2021, with 249,064,711 common shares outstanding as of July 29, 2021 - The company is a **large accelerated filer**, having submitted all required reports and interactive data files[4](index=4&type=chunk) Filing Information | Indicator | Value | | :--- | :--- | | Common Stock Outstanding as of July 29, 2021 | 249,064,711 | | Registered Exchange | New York Stock Exchange | [PART I. FINANCIAL INFORMATION](index=2&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [ITEM 1. FINANCIAL STATEMENTS](index=2&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) This section presents the unaudited consolidated financial statements for the period ended June 30, 2021, reflecting the company's financial position and operating results post-N&B merger [Consolidated Balance Sheets](index=2&type=section&id=Consolidated%20Balance%20Sheets) Total assets significantly increased to **$40.86 billion** as of June 30, 2021, from $13.55 billion, primarily due to the N&B merger, with substantial increases in goodwill and intangible assets Consolidated Balance Sheets | (Millions of USD) | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | **Assets** | | | | Cash and Cash Equivalents | 935 | 650 | | Trade Receivables, Net | 2,059 | 929 | | Inventories, Gross | 2,464 | 1,132 | | Total Current Assets | 6,297 | 3,060 | | Property, Plant and Equipment, Net | 4,566 | 1,458 | | Goodwill | 17,250 | 5,593 | | Other Intangible Assets, Net | 11,448 | 2,727 | | **Total Assets** | **40,864** | **13,555** | | **Liabilities and Shareholders' Equity** | | | | Total Current Liabilities | 3,227 | 1,904 | | Long-Term Debt | 11,354 | 3,779 | | Deferred Income Taxes | 2,674 | 593 | | Total Other Liabilities | 15,737 | 5,231 | | Total Shareholders' Equity | 21,761 | 6,310 | | **Total Liabilities and Shareholders' Equity** | **40,864** | **13,555** | [Consolidated Statements of Income (Loss) and Comprehensive Income (Loss)](index=3&type=section&id=Consolidated%20Statements%20of%20Income%20(Loss)%20and%20Comprehensive%20Income%20(Loss)) Net sales surged **158% to $3.089 billion** in Q2 2021, but net income decreased 66% to $30 million, mainly due to increased costs from the N&B merger Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) | (Millions of USD, except per share amounts) | Q2 2021 | Q2 2020 | First Six Months 2021 | First Six Months 2020 | | :--- | :--- | :--- | :--- | :--- | | Net Sales | 3,089 | 1,199 | 5,554 | 2,546 | | Cost of Sales | 2,179 | 717 | 3,890 | 1,498 | | Gross Profit | 910 | 482 | 1,664 | 1,048 | | Research and Development Expenses | 164 | 81 | 307 | 167 | | Selling and Administrative Expenses | 412 | 230 | 863 | 460 | | Operating Income | 110 | 120 | 114 | 316 | | Interest Expense | 77 | 32 | 142 | 64 | | Income (Loss) Before Income Taxes | 44 | 104 | (10) | 257 | | Provision for Income Taxes | 14 | 16 | — | 42 | | Net Income (Loss) | 30 | 88 | (10) | 215 | | Net Income (Loss) Attributable to IFF Shareholders | 28 | 87 | (14) | 211 | | Net Income (Loss) Per Share - Diluted | 0.11 | 0.74 | (0.06) | 1.89 | [Consolidated Statements of Cash Flows](index=4&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Operating cash flow significantly increased to **$698 million** for the first six months of 2021, with investing activities turning to a net inflow, largely due to the N&B merger Consolidated Statements of Cash Flows | (Millions of USD) | First Six Months 2021 | First Six Months 2020 | | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | 698 | 208 | | Net Cash Provided by (Used in) Investing Activities | 30 | (77) | | Net Cash Used in Financing Activities | (427) | (215) | | Effect of Exchange Rate Changes | (18) | (28) | | Net Change in Cash, Cash Equivalents, and Restricted Cash | 283 | (112) | | Cash, Cash Equivalents, and Restricted Cash at End of Period | 943 | 512 | | Interest Paid, Net | 160 | 57 | | Income Taxes Paid | 134 | 58 | [Consolidated Statements of Shareholders' Equity](index=5&type=section&id=Consolidated%20Statements%20of%20Shareholders'%20Equity) Total shareholders' equity increased to **$21.8 billion** as of June 30, 2021, driven by the N&B merger, which significantly boosted common stock and capital in excess of par value Consolidated Statements of Shareholders' Equity | (Millions of USD) | June 30, 2021 | June 30, 2020 | | :--- | :--- | :--- | | Common Stock | 34 | 16 | | Capital in Excess of Par Value | 19,800 | 3,838 | | Retained Earnings | 3,759 | 4,168 | | Accumulated Other Comprehensive Loss | (834) | (1,017) | | Treasury Stock | (998) | (1,017) | | Noncontrolling Interests | 39 | 13 | | **Total Shareholders' Equity (including Noncontrolling Interests)** | **21,800** | **6,001** | - The N&B merger resulted in an **$18 million increase in common stock** and a **$15.936 billion increase in capital in excess of par value**[14](index=14&type=chunk) [NOTES TO CONSOLIDATED FINANCIAL STATEMENTS](index=7&type=section&id=NOTES%20TO%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) This section provides detailed notes to the consolidated financial statements, covering business nature, accounting policies, N&B merger impact, and other key financial disclosures [NOTE 1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=7&type=section&id=NOTE%201.%20NATURE%20OF%20OPERATIONS%20AND%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) The company, a leading manufacturer in various sectors, completed its merger with DuPont N&B on February 1, 2021, significantly altering its financial reporting and fiscal year-end - The company completed its merger with DuPont N&B business on **February 1, 2021**, with financial statements reflecting N&B's results from that date[20](index=20&type=chunk) - The company changed its fiscal year-end from a 52/53-week period to a calendar year (January 1 to December 31) to align with N&B's fiscal year[22](index=22&type=chunk) Cash, Cash Equivalents, and Restricted Cash | (Millions of USD) | June 30, 2021 | December 31, 2020 | June 30, 2020 | December 31, 2019 | | :--- | :--- | :--- | :--- | :--- | | Cash and Cash Equivalents | 935 | 650 | 498 | 60 | | Restricted Cash | 7 | 7 | 10 | 1 | | Restricted Cash in Other Assets | 1 | 3 | 4 | — | | **Total Cash, Cash Equivalents, and Restricted Cash** | **943** | **660** | **512** | **62** | - The company increased cash from operating activities by **$72 million** for the first six months of 2021 through factoring agreements, incurring a cost of **$3 million**[27](index=27&type=chunk)[28](index=28&type=chunk) - As of June 30, 2021, the company's net trade receivables were **$2.059 billion**, with an allowance for doubtful accounts of **$42 million**, and approximately **90%** of receivables were within payment terms[33](index=33&type=chunk) Allowance for Doubtful Accounts | (Millions of USD) | Allowance for Doubtful Accounts | | :--- | :--- | | Balance as of December 31, 2020 | 21 | | Bad Debt Expense | 2 | | Other Adjustments (N&B Merger Related) | 20 | | Foreign Exchange Impact | (1) | | **Balance as of June 30, 2021** | **42** | - The company entered into an agreement in Q2 2021 to divest its Fruit Preparations business, with related assets and liabilities totaling approximately **$113 million** classified as held for sale[42](index=42&type=chunk) [NOTE 2. NET INCOME (LOSS) PER SHARE](index=10&type=section&id=NOTE%202.%20NET%20INCOME%20(LOSS)%20PER%20SHARE) Diluted net income per share attributable to IFF shareholders decreased to **$0.11** in Q2 2021 from $0.74, primarily due to a significant increase in outstanding shares post-N&B merger Net Income (Loss) Per Share | (Millions of USD, except per share amounts) | Q2 2021 | Q2 2020 | First Six Months 2021 | First Six Months 2020 | | :--- | :--- | :--- | :--- | :--- | | Net Income (Loss) Attributable to IFF Shareholders | 28 | 87 | (14) | 211 | | Net Income (Loss) Attributable to IFF Shareholders | 29 | 85 | (14) | 215 | | Weighted Average Common Shares Outstanding (Basic) | 254 | 112 | 230 | 112 | | Weighted Average Shares (Diluted) | 255 | 114 | 230 | 114 | | Net Income (Loss) Per Share - Basic | 0.11 | 0.75 | (0.06) | 1.91 | | Net Income (Loss) Per Share - Diluted | 0.11 | 0.74 | (0.06) | 1.89 | - The N&B merger resulted in the issuance of **141,740,461 shares of IFF common stock**, representing approximately **55.4%** of the combined IFF common stock outstanding[47](index=47&type=chunk) - The company declared a quarterly dividend of **$0.77 per share** to shareholders in Q2 2021, compared to $0.75 in the prior year period[48](index=48&type=chunk) [NOTE 3. ACQUISITIONS](index=11&type=section&id=NOTE%203.%20ACQUISITIONS) The company completed the N&B merger on February 1, 2021, acquiring the business for **$15.954 billion**, accounted for using the purchase method, resulting in a substantial increase in goodwill - IFF completed its merger with N&B on **February 1, 2021**, with DuPont shareholders holding approximately **55.4%** of the combined IFF shares[53](index=53&type=chunk)[54](index=54&type=chunk) - N&B contributed **$1.693 billion in net sales** and a **net loss of $85 million** in Q2 2021, and **$2.769 billion in net sales** and a **net loss of $144 million** for the first six months, including purchase accounting adjustments[55](index=55&type=chunk) Total Purchase Consideration | (Millions of USD) | | | :--- | :--- | | Fair Value of Common Stock Issued to DuPont Shareholders | 15,929 | | Fair Value of Replacement Equity Awards Attributable to Pre-Merger Service | 25 | | **Total Purchase Consideration** | **15,954** | Preliminary Purchase Price Allocation | (Millions of USD) | Q1 2021 Reported | Measurement Period Adjustments | Q2 2021 Reported | | :--- | :--- | :--- | :--- | | Cash and Cash Equivalents | 207 | (14) | 193 | | Receivables | 962 | (8) | 954 | | Inventories | 1,615 | (15) | 1,600 | | Property, Plant and Equipment | 3,242 | 1 | 3,243 | | Intangible Assets | 9,176 | (5) | 9,171 | | Long-Term Debt | (7,636) | — | (7,636) | | **Total Identifiable Net Assets** | **4,218** | **(26)** | **4,192** | | Goodwill | 11,762 | 26 | 11,788 | | **Preliminary Purchase Price** | **15,954** | **—** | **15,954** | - The company recognized **$11.788 billion in goodwill**, with **$2.393 billion** allocated to Nourish, **$7.694 billion** to Health & Biosciences, and **$1.701 billion** to Pharma Solutions[63](index=63&type=chunk) Finite-Lived Intangible Assets | (Millions of USD) | Estimated Amount | Estimated Useful Life | | :--- | :--- | :--- | | Finite-Lived Intangible Assets | | | | Trademarks | 281 | 4 to 22 years | | Customer Relationships | 6,785 | 13 to 25 years | | Technology Know-How | 2,105 | 5 to 14 years | | **Total** | **9,171** | | Unaudited Pro Forma Net Sales and Net Income (Loss) | (Millions of USD) | First Six Months 2021 | First Six Months 2020 | | :--- | :--- | :--- | | Unaudited Pro Forma Net Sales | 6,061 | 5,636 | | Unaudited Pro Forma Net Income (Loss) Attributable to the Company | 406 | (91) | - For the first six months of 2021, the company incurred approximately **$91 million in transaction-related costs** due to the N&B merger, primarily for M&A advisory and professional services[69](index=69&type=chunk) [NOTE 4. RESTRUCTURING AND OTHER CHARGES](index=14&type=section&id=NOTE%204.%20RESTRUCTURING%20AND%20OTHER%20CHARGES) The company incurred **$28 million** in restructuring and other charges for the first six months of 2021, mainly related to N&B merger layoffs and the Frutarom integration plan - The Frutarom integration plan aims to optimize the manufacturing network, with approximately **30 sites expected to close by the end of 2022**, and **22 sites closed as of June 30, 2021**, with total costs estimated at **$60 million**[71](index=71&type=chunk) - For the first six months of 2021, the company incurred approximately **$25 million in severance costs** related to the N&B merger, affecting about **200 employees**[73](index=73&type=chunk) Restructuring Liability | (Millions of USD) | Balance as of December 31, 2020 | Net New (Reversal) Charges | Cash Payments | N&B Merger Impact | Balance as of June 30, 2021 | | :--- | :--- | :--- | :--- | :--- | :--- | | Frutarom Integration Plan - Severance | 3 | 2 | (2) | — | 3 | | 2019 Severance Plan - Severance | 6 | — | — | — | 6 | | N&B Merger Restructuring Liability - Severance | — | 25 | (1) | 4 | 28 | | **Total Restructuring** | **14** | **28** | **(4)** | **4** | **42** | Restructuring and Other Charges by Segment | (Millions of USD) | Q2 2021 | Q2 2020 | First Six Months 2021 | First Six Months 2020 | | :--- | :--- | :--- | :--- | :--- | | Nourish | 17 | 2 | 20 | 7 | | Health & Biosciences | 4 | — | 4 | — | | Scent | 2 | — | 3 | — | | Pharma Solutions | 1 | — | 1 | — | | **Total Restructuring and Other Charges** | **24** | **2** | **28** | **7** | [NOTE 5. GOODWILL AND OTHER INTANGIBLE ASSETS, NET](index=15&type=section&id=NOTE%205.%20GOODWILL%20AND%20OTHER%20INTANGIBLE%20ASSETS,%20NET) Total goodwill increased to **$17.25 billion** as of June 30, 2021, primarily from the N&B merger, with other net intangible assets also significantly rising to **$11.448 billion** - In Q1 2021, the company reorganized its reporting structure, reallocating **$985 million of goodwill** from the Taste (now Nourish) segment to the Scent (**$257 million**) and Health & Biosciences (**$728 million**) segments[77](index=77&type=chunk) Goodwill by Segment | (Millions of USD) | Nourish | Health & Biosciences | Scent | Pharma Solutions | Total | | :--- | :--- | :--- | :--- | :--- | :--- | | Balance as of December 31, 2020 | 4,859 | — | 734 | — | 5,593 | | Acquisitions (N&B Merger) | 2,393 | 7,694 | — | 1,701 | 11,788 | | Reallocation | (985) | 728 | 257 | — | — | | **Balance as of June 30, 2021** | **6,208** | **8,369** | **983** | **1,690** | **17,250** | Other Intangible Assets, Net | (Millions of USD) | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Customer Relationships | 9,421 | 2,728 | | Trademarks and Patents | 446 | 187 | | Technology Know-How | 2,574 | 479 | | **Other Intangible Assets, Net** | **11,448** | **2,727** | - Amortization expense for Q2 2021 was **$200 million**, up from $49 million in the prior year period, primarily due to the N&B merger[81](index=81&type=chunk) Estimated Future Intangible Asset Amortization Expense | (Millions of USD) | 2021 | 2022 | 2023 | 2024 | 2025 | | :--- | :--- | :--- | :--- | :--- | :--- | | Estimated Future Intangible Asset Amortization Expense | 391 | 779 | 779 | 779 | 777 | [NOTE 6. OTHER ASSETS AND LIABILITIES, CURRENT AND NONCURRENT](index=17&type=section&id=NOTE%206.%20OTHER%20ASSETS%20AND%20LIABILITIES,%20CURRENT%20AND%20NONCURRENT) Other current assets increased to **$832 million** and other current liabilities to **$790 million** as of June 30, 2021, reflecting changes in VAT receivables, prepaid expenses, and rebates payable Other Current Assets | (Millions of USD) | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | VAT Receivables | 182 | 93 | | Income Tax Receivables | 70 | 100 | | Prepaid Expenses | 298 | 100 | | Assets Held for Sale | 124 | — | | **Total Other Current Assets** | **832** | **342** | Other Noncurrent Assets | (Millions of USD) | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Finance Lease Right-of-Use Assets | 21 | 8 | | Deferred Income Taxes | 113 | 197 | | Pension Plan Overfunding | 106 | 101 | | **Total Other Assets** | **518** | **418** | Other Current Liabilities | (Millions of USD) | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Rebates and Incentives Payable | 92 | 64 | | VAT Payable | 64 | 20 | | Interest Payable | 55 | 29 | | Short-Term Operating Lease Obligations | 112 | 41 | | Liabilities Held for Sale | 11 | — | | **Total Other Current Liabilities** | **790** | **499** | [NOTE 7. DEBT](index=18&type=section&id=NOTE%207.%20DEBT) Total debt increased to **$11.97 billion**, with long-term debt at **$11.354 billion**, primarily due to the N&B merger, which involved assuming $1.25 billion in term loans and $6.25 billion in senior notes Debt | (Millions of USD) | Effective Interest Rate | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | :--- | | 2021 Euro Notes | 0.82% | 358 | 368 | | 2022 Notes | 0.69% | 300 | — | | 2025 Notes | 1.22% | 1,001 | — | | 2027 Notes | 1.56% | 1,220 | — | | 2030 Notes | 2.21% | 1,511 | — | | 2040 Notes | 3.04% | 775 | — | | 2050 Notes | 3.21% | 1,574 | — | | 2024 Term Loan | 1.45% | 625 | — | | 2026 Term Loan | 1.84% | 625 | — | | **Total Debt** | | **11,970** | **4,413** | | Less: Short-Term Borrowings | | (616) | (634) | | **Total Long-Term Debt** | | **11,354** | **3,779** | - Following the N&B merger, the company assumed **$1.25 billion in N&B term loans** and **$6.25 billion in senior notes** to fund a special cash payment to DuPont[89](index=89&type=chunk) - The N&B term loans include a **$625 million three-year loan** and a **$625 million five-year loan**, with interest rates based on adjusted LIBOR or base rate plus applicable margins[90](index=90&type=chunk) - As of June 30, 2021, the company was in compliance with all debt covenants, including a maximum consolidated leverage ratio of **4.75x**[92](index=92&type=chunk) - The N&B senior notes total **$6.25 billion**, comprising six series maturing from 2022 to 2050, with interest rates ranging from **0.697% to 3.468%**[93](index=93&type=chunk) Senior Notes Redemption Dates | Notes | Redemption Date | | :--- | :--- | | 2022 Notes | September 15, 2022 | | 2025 Notes | September 1, 2025 | | 2027 Notes | August 15, 2027 | | 2030 Notes | August 1, 2030 | | 2040 Notes | May 15, 2040 | | 2050 Notes | June 1, 2050 | - The company has **$200 million in outstanding borrowings** under its 2022 Term Loan Agreement, which includes a covenant for a net debt to EBITDA ratio not exceeding **4.75x**[98](index=98&type=chunk) [NOTE 8. LEASES](index=20&type=section&id=NOTE%208.%20LEASES) The company's leases for facilities, with terms up to 40 years, saw an increase of approximately **$530 million** in right-of-use assets and operating lease liabilities due to the N&B merger Lease Costs | (Millions of USD) | Q2 2021 | Q2 2020 | First Six Months 2021 | First Six Months 2020 | | :--- | :--- | :--- | :--- | :--- | | Operating Lease Cost | 46 | 12 | 78 | 2 | | Finance Lease Cost | 1 | 1 | 2 | — | Cash Flow and Right-of-Use Assets from Leases | (Millions of USD) | First Six Months 2021 | First Six Months 2020 | | :--- | :--- | :--- | | Operating Cash Flow from Operating Leases | 60 | 24 | | Financing Cash Flow from Finance Leases | 2 | 1 | | Operating Lease Right-of-Use Assets | 31 | 22 | | Finance Lease Right-of-Use Assets | 15 | 2 | - The N&B merger resulted in an increase of approximately **$530 million** in right-of-use assets and operating lease liabilities[100](index=100&type=chunk) [NOTE 9. INCOME TAXES](index=20&type=section&id=NOTE%209.%20INCOME%20TAXES) As of June 30, 2021, the company had **$133 million** in unrecognized tax benefits and **$35 million** in accrued interest and penalties, mostly related to the N&B merger, with the effective tax rate rising to 31.8% in Q2 - As of June 30, 2021, the company had **$133 million in unrecognized tax benefits**, of which **$38 million** related to the N&B merger[101](index=101&type=chunk) - As of June 30, 2021, the company had **$35 million in accrued interest and penalties**, of which **$19 million** related to the N&B merger[102](index=102&type=chunk) - As of June 30, 2021, the company's total unrecognized tax positions (including interest and penalties) amounted to **$169 million**, with **$57 million** related to the N&B merger[103](index=103&type=chunk) - As of June 30, 2021, the company had a **$65 million deferred tax liability** for the repatriation of funds from non-U.S. subsidiaries to the U.S[104](index=104&type=chunk) - The effective tax rate for Q2 2021 was **31.8%**, up from 15.4% in the prior year period, primarily due to an unfavorable earnings mix, increased repatriation costs, and UK tax rate changes[107](index=107&type=chunk) - The effective tax rate for the first six months of 2021 was **0%**, down from 16.3% in the prior year period, mainly due to a favorable earnings mix, partially offset by increased repatriation costs and UK tax rate changes[108](index=108&type=chunk) [NOTE 10. STOCK COMPENSATION PLANS](index=21&type=section&id=NOTE%2010.%20STOCK%20COMPENSATION%20PLANS) Stock compensation expense for Q2 2021 was **$19 million**, with the N&B merger resulting in the conversion of N&B employee equity awards into IFF common stock awards Stock Compensation Expense | (Millions of USD) | Q2 2021 | Q2 2020 | First Six Months 2021 | First Six Months 2020 | | :--- | :--- | :--- | :--- | :--- | | Equity Awards | 16 | 10 | 27 | 19 | | Liability Awards | 3 | 3 | 6 | 2 | | **Total Stock Compensation Expense** | **19** | **13** | **33** | **21** | | Less: Tax Benefit | (4) | (2) | (7) | (3) | | **Total Stock Compensation Expense, Net of Tax** | **15** | **11** | **26** | **18** | - The N&B merger resulted in the conversion of N&B employee equity awards into **335,347 IFF stock options**, **258,572 IFF RSU awards**, and **5,816 IFF SAR awards**[110](index=110&type=chunk) - At the merger date, the fair value of replacement awards attributable to N&B employee pre-merger service was approximately **$25 million**, included in the purchase price[112](index=112&type=chunk) [NOTE 11. SEGMENT INFORMATION](index=22&type=section&id=NOTE%2011.%20SEGMENT%20INFORMATION) Following the N&B merger in Q1 2021, the company reorganized into four reportable segments: Nourish, Health & Biosciences, Scent, and Pharma Solutions, with performance measured by Adjusted Operating EBITDA - The company reorganized into **four segments**: Nourish, Health & Biosciences (H&B), Scent, and Pharma Solutions[113](index=113&type=chunk) - The Nourish segment combines most of IFF's traditional Taste segment and N&B's Food & Beverage segment[114](index=114&type=chunk) - The Health & Biosciences segment is N&B's biotechnology-driven portfolio, covering enzymes, food cultures, probiotics, and specialty ingredients for non-food applications[115](index=115&type=chunk) - The Scent segment includes fragrance compounds, fragrance ingredients, and cosmetic active ingredients[116](index=116&type=chunk) - The Pharma Solutions segment is N&B's historical pharmaceutical solutions business, primarily producing cellulose and alginate-based pharmaceutical excipients[117](index=117&type=chunk) - Management changed the segment performance metric from segment operating profit to **segment Adjusted Operating EBITDA**[118](index=118&type=chunk) Net Sales and Segment Adjusted Operating EBITDA | (Millions of USD) | Q2 2021 | Q2 2020 | First Six Months 2021 | First Six Months 2020 | | :--- | :--- | :--- | :--- | :--- | | **Net Sales:** | | | | | | Nourish | 1,668 | 690 | 2,976 | 1,462 | | Health & Biosciences | 639 | 34 | 1,065 | 68 | | Scent | 550 | 475 | 1,119 | 1,016 | | Pharma Solutions | 232 | — | 394 | — | | **Consolidated Total** | **3,089** | **1,199** | **5,554** | **2,546** | | **Segment Adjusted Operating EBITDA:** | | | | | | Nourish | 324 | 142 | 594 | 318 | | Health & Biosciences | 190 | 10 | 318 | 19 | | Scent | 117 | 87 | 245 | 205 | | Pharma Solutions | 48 | — | 91 | — | | **Total** | **679** | **239** | **1,248** | **542** | Net Sales by Geographic Region | (Millions of USD) | Q2 2021 | Q2 2020 | First Six Months 2021 | First Six Months 2020 | | :--- | :--- | :--- | :--- | :--- | | Europe, Africa and Middle East | 1,084 | 463 | 1,957 | 1,006 | | Greater Asia | 707 | 275 | 1,294 | 585 | | North America | 961 | 301 | 1,683 | 604 | | Latin America | 337 | 160 | 620 | 351 | | **Consolidated Total** | **3,089** | **1,199** | **5,554** | **2,546** | [NOTE 12. EMPLOYEE BENEFITS](index=24&type=section&id=NOTE%2012.%20EMPLOYEE%20BENEFITS) For the first six months of 2021, the company's net periodic benefit cost for U.S. pension plans was **$1 million** and **$12 million** for non-U.S. plans, with expected contributions for 2021 Net Periodic Benefit (Income) Cost | (Millions of USD) | Q2 2021 | Q2 2020 | First Six Months 2021 | First Six Months 2020 | | :--- | :--- | :--- | :--- | :--- | | **U.S. Plans** | | | | | | Net Periodic Benefit (Income) Cost | — | 1 | 1 | (1) | | **Non-U.S. Plans** | | | | | | Net Periodic Benefit (Income) Cost | 7 | 2 | 12 | 3 | - The company expects to contribute **$4 million** to U.S. pension plans and **$25 million** to non-U.S. plans in 2021[125](index=125&type=chunk) - For the first six months of 2021, the company contributed **$10 million** to non-U.S. pension plans[125](index=125&type=chunk) Postretirement Benefits Other Than Pension | (Millions of USD) | Q2 2021 | Q2 2020 | First Six Months 2021 | First Six Months 2020 | | :--- | :--- | :--- | :--- | :--- | | **Postretirement Benefits Other Than Pension** | | | | | | Total Postretirement Benefit Income | — | — | (1) | (1) | - The company expects to contribute **$4 million** to postretirement benefits other than pension plans in 2021, having contributed **$2 million** in the first six months of 2021[126](index=126&type=chunk) [NOTE 13. FINANCIAL INSTRUMENTS](index=25&type=section&id=NOTE%2013.%20FINANCIAL%20INSTRUMENTS) The company uses derivatives to manage foreign exchange and commodity price risks, including forward foreign exchange contracts, commodity contracts, and cross-currency swaps, with derivative assets of **$2 million** and liabilities of **$18 million** as of June 30, 2021 - The company measures the fair value of financial instruments using a **three-level hierarchy**, primarily utilizing observable market data (Level 2)[127](index=127&type=chunk)[130](index=130&type=chunk) Fair Value of Financial Instruments | (Millions of USD) | June 30, 2021 Carrying Value | June 30, 2021 Fair Value | December 31, 2020 Carrying Value | December 31, 2020 Fair Value | | :--- | :--- | :--- | :--- | :--- | | **Level 1** | | | | | | Cash and Cash Equivalents | 935 | 935 | 650 | 650 | | 2025 Notes | 1,001 | 995 | — | — | | 2027 Notes | 1,220 | 1,200 | — | — | | 2030 Notes | 1,511 | 1,490 | — | — | | 2040 Notes | 775 | 767 | — | — | | 2050 Notes | 1,574 | 1,560 | — | — | | **Level 2** | | | | | | Credit Lines and Bank Overdrafts | 9 | 9 | 2 | 2 | | Derivative Assets | 2 | 2 | 1 | 1 | | Derivative Liabilities | 18 | 18 | 29 | 29 | | Long-Term Debt | 11,354 | 11,354 | 3,779 | 3,779 | - The company uses **forward foreign exchange contracts** to reduce cash flow volatility risk from intercompany loans, foreign currency denominated receivables/payables, and raw material purchases[136](index=136&type=chunk) - The company uses **options, futures, and swap contracts** to mitigate commodity price volatility risk, such as for soybeans, soybean oil, and soybean meal[137](index=137&type=chunk) - The company holds forward currency contracts designated as cash flow hedges to offset currency risk for U.S. dollar-denominated raw material purchases by Euro functional currency entities[138](index=138&type=chunk) - The company designated its **2021 and 2026 Euro Notes** and **2024 Euro Notes** as hedging instruments for portions of its net investments in Europe[139](index=139&type=chunk)[140](index=140&type=chunk) - In Q3 2019, the company entered into **four Euro/U.S. Dollar cross-currency swap contracts** to hedge foreign currency exposure on portions of its net investments in Europe[141](index=141&type=chunk) Notional Amounts of Derivative Instruments | (Millions of USD) | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Foreign Exchange Contracts | 133 | 221 | | Commodity Contracts | 7 | — | | Cross-Currency Swaps | 300 | 300 | Fair Value of Derivative Instruments | (Millions of USD) | June 30, 2021 Total Fair Value of Derivative Assets | June 30, 2021 Total Fair Value of Derivative Liabilities | | :--- | :--- | :--- | | Foreign Exchange Contracts | 2 | 3 | | Cross-Currency Swaps | — | 15 | | **Total** | **2** | **18** | - The company expects **$2 million (net of tax)** of derivative losses included in accumulated other comprehensive loss as of June 30, 2021, to be reclassified into earnings within the next 12 months[148](index=148&type=chunk) [NOTE 14. ACCUMULATED OTHER COMPREHENSIVE LOSS](index=30&type=section&id=NOTE%2014.%20ACCUMULATED%20OTHER%20COMPREHENSIVE%20LOSS) Accumulated other comprehensive loss increased to **$834 million net** as of June 30, 2021, from $698 million, primarily due to foreign currency translation adjustments and pension/postretirement liability adjustments Accumulated Other Comprehensive (Loss) Income, Net | (Millions of USD) | Foreign Currency Translation Adjustments | Derivative Hedges Gains (Losses) | Pension and Postretirement Liability Adjustments | Total | | :--- | :--- | :--- | :--- | :--- | | Accumulated Other Comprehensive (Loss) Income, Net as of December 31, 2020 | (285) | (7) | (406) | (698) | | OCI Before Reclassifications | (154) | 2 | 1 | (151) | | Amounts Reclassified from AOCI | — | 4 | 11 | 15 | | **Accumulated Other Comprehensive (Loss) Income, Net as of June 30, 2021** | **(439)** | **(1)** | **(394)** | **(834)** | Reclassification Adjustments from Accumulated Other Comprehensive Loss | (Millions of USD) | First Six Months 2021 | First Six Months 2020 | Affected Line Item in Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) | | :--- | :--- | :--- | :--- | | Derivative Hedges Gains (Losses) | | | | | Foreign Exchange Contracts | (5) | 4 | Cost of Sales | | Tax | 1 | (1) | Provision for Income Taxes | | **Total** | **(4)** | **3** | **Total, Net of Tax** | | Pension and Postretirement Liability Adjustments Losses | | | | | Prior Service Cost | 3 | (9) | (1) | | Actuarial Loss | (15) | — | (1) | | Tax | 1 | 2 | Provision for Income Taxes | | **Total** | **(11)** | **(7)** | **Total, Net of Tax** | [NOTE 15. COMMITMENTS AND CONTINGENCIES](index=30&type=section&id=NOTE%2015.%20COMMITMENTS%20AND%20CONTINGENCIES) The company faces various commitments and contingencies, including **$382 million** in bank guarantees, ongoing securities class action lawsuits related to Frutarom, and operational risks for Chinese factories - As of June 30, 2021, the company had **$382 million** in bank guarantees, commercial guarantees, standby letters of credit, and performance bonds[152](index=152&type=chunk) - As of June 30, 2021, the company had **$1.53 billion** in available credit facilities and **$1.345 billion** in revolving credit facilities[154](index=154&type=chunk) - The company faces a securities class action lawsuit related to the Frutarom acquisition, alleging false and misleading statements, with one U.S. lawsuit dismissed but under appeal[157](index=157&type=chunk) - Israeli police and securities regulators are investigating Frutarom and its former executives for alleged bribery of foreign officials and money laundering[162](index=162&type=chunk) - The company's Guangzhou Taste factory (net book value approx. **$61 million**) and Guangzhou Scent factory (net book value approx. **$9 million**) in China face operational risks due to regional planning changes[163](index=163&type=chunk)[165](index=165&type=chunk)[166](index=166&type=chunk) - The company expects to receive approximately **$50 million in compensation** from the Zhejiang flavor and fragrance factory relocation, with **$43 million received as of 2020**[167](index=167&type=chunk) - As of June 30, 2021, the total net book value of the company's ten factories in China was **$288 million**[169](index=169&type=chunk) - The company faces multiple government-related contingencies in Brazil, for which it has provided **$23 million** in bank guarantees and pledged assets for defense[171](index=171&type=chunk) - The company recognized **$7 million in income** from the recovery of overpaid Brazilian indirect taxes (PIS/COFINS) in 2020[173](index=173&type=chunk) - The company identified certain batches of Avicel® PH NF (Pharma Solutions) microcrystalline cellulose with elevated conductivity and initiated a voluntary recall in the U.S. on August 5, 2021, with no expected material impact[174](index=174&type=chunk) - The company currently estimates the range of reasonably possible losses exceeding accrued liabilities to be **$0 to approximately $23 million**[175](index=175&type=chunk) [NOTE 16. REDEEMABLE NONCONTROLLING INTERESTS](index=34&type=section&id=NOTE%2016.%20REDEEMABLE%20NONCONTROLLING%20INTERESTS) Redeemable noncontrolling interests totaled **$100 million** as of June 30, 2021, primarily influenced by profit allocations, granting noncontrolling shareholders the right to sell their interests in Frutarom subsidiaries - Certain subsidiaries acquired in the Frutarom acquisition have redeemable noncontrolling interests, granting noncontrolling shareholders the right to sell their interests within specified periods[176](index=176&type=chunk) Redeemable Noncontrolling Interests | (Millions of USD) | Redeemable Noncontrolling Interests | | :--- | :--- | | Balance as of December 31, 2019 | 99 | | Foreign Currency Translation Impact | 12 | | Share of Net Income (Loss) Attributable to Redeemable Noncontrolling Interests | 3 | | Adjustment to Redemption Value | (4) | | Measurement Period Adjustment | (1) | | Exercise of Redeemable Noncontrolling Interests | (11) | | **Balance as of June 30, 2020** | **98** | | Balance as of December 31, 2020 | 98 | | Foreign Currency Translation Impact | (1) | | Share of Net Income (Loss) Attributable to Redeemable Noncontrolling Interests | 3 | | **Balance as of June 30, 2021** | **100** | - The increase in redeemable noncontrolling interests in 2021 is primarily attributable to the **share of profit** attributable to redeemable noncontrolling interests[178](index=178&type=chunk) [NOTE 17. SUBSEQUENT EVENT](index=34&type=section&id=NOTE%2017.%20SUBSEQUENT%20EVENT) On July 28, 2021, the company entered into an amended and restated revolving credit agreement for a **$2 billion** senior unsecured revolving loan facility, maturing by July 28, 2026 - The company entered into an amended and restated revolving credit agreement on **July 28, 2021**, providing a **$2 billion senior unsecured revolving loan facility** maturing by **July 28, 2026**[179](index=179&type=chunk)[180](index=180&type=chunk) - The credit facility has an option to increase to **$2.5 billion**, with the maximum allowed net debt to consolidated EBITDA ratio gradually decreasing from **4.75:1.0 to 3.50:1.0**[180](index=180&type=chunk) [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=35&type=section&id=ITEM%202.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) [OVERVIEW](index=35&type=section&id=OVERVIEW) The company completed its N&B merger on February 1, 2021, expanding its global leadership and reorganizing into four segments, while adapting to a new currency neutral calculation method and mitigating COVID-19 impacts - The company completed its merger with N&B on **February 1, 2021**, expanding its global leadership in high-value ingredients and solutions[182](index=182&type=chunk)[183](index=183&type=chunk) - The company reorganized into **four segments**: Nourish, Health & Biosciences, Scent, and Pharma Solutions[184](index=184&type=chunk) - The company changed its currency neutral calculation method to translate current year invoiced sales at prior year comparable exchange rates[188](index=188&type=chunk) - The financial impact of the COVID-19 pandemic has lessened, but future effects remain uncertain, potentially increasing asset impairment risks[191](index=191&type=chunk)[192](index=192&type=chunk) - Q2 2021 sales increased by **158% to $3.089 billion**, primarily due to **$1.693 billion in incremental sales** from the N&B merger[194](index=194&type=chunk) - Q2 2021 gross profit increased by **89% to $910 million**, but gross margin decreased from 40% to **30%**, mainly due to N&B inventory step-up, higher raw material costs, and product mix changes[195](index=195&type=chunk) - Q2 2021 Adjusted Operating EBITDA increased by **184% to $679 million**, with EBITDA margin rising from 20% to **22%**, driven by the N&B merger and sales volume growth[196](index=196&type=chunk) [RESULTS OF OPERATIONS](index=37&type=section&id=RESULTS%20OF%20OPERATIONS) This section analyzes the company's operating results for Q2 and the first six months of 2021 compared to 2020, focusing on the N&B merger's impact across key financial metrics and segment performance Consolidated Results of Operations | (Millions of USD, except per share amounts) | Q2 2021 | Q2 2020 | Change % | First Six Months 2021 | First Six Months 2020 | Change % | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Net Sales | 3,089 | 1,199 | 158% | 5,554 | 2,546 | 118% | | Cost of Sales | 2,179 | 717 | 204% | 3,890 | 1,498 | 160% | | Gross Profit | 910 | 482 | 89% | 1,664 | 1,048 | 59% | | Research and Development Expenses | 164 | 81 | 102% | 307 | 167 | 84% | | Selling and Administrative Expenses | 412 | 230 | 79% | 863 | 460 | 88% | | Operating Income | 110 | 120 | (8%) | 114 | 316 | (64%) | | Interest Expense | 77 | 32 | 141% | 142 | 64 | 122% | | Income (Loss) Before Income Taxes | 44 | 104 | (58%) | (10) | 257 | (104%) | | Net Income (Loss) | 30 | 88 | (66%) | (10) | 215 | (105%) | | Diluted Earnings Per Share | 0.11 | 0.74 | (85%) | (0.06) | 1.89 | (103%) | [SECOND QUARTER 2021 IN COMPARISON TO SECOND QUARTER 2020](index=37&type=section&id=SECOND%20QUARTER%202021%20IN%20COMPARISON%20TO%20SECOND%20QUARTER%202020) Q2 2021 sales surged **158% to $3.089 billion**, driven by the N&B merger, but gross margin declined to 29.5% due to inventory step-up and raw material costs, leading to lower operating and net income - Q2 2021 sales increased by **158% to $3.089 billion**, with **$1.693 billion** from the N&B merger[198](index=198&type=chunk) Sales Growth by Segment (Q2 2021 vs. Q2 2020) | Segment | Sales Change % | | :--- | :--- | | Nourish | 142% | | Health & Biosciences | Not Applicable | | Scent | 16% | | Pharma Solutions | Not Applicable | | **Total** | **158%** | - Nourish sales increased by **142% to $1.668 billion**, with **$857 million** from the N&B merger[200](index=200&type=chunk) - Health & Biosciences sales were **$639 million**, with **$604 million** from the N&B merger[201](index=201&type=chunk) - Scent sales increased by **16% (12% currency neutral)** to **$550 million**, driven by higher volumes in fragrance compounds and ingredients[202](index=202&type=chunk) - Pharma Solutions sales were **$232 million**, representing a new segment post-N&B merger[203](index=203&type=chunk) - Cost of sales as a percentage of sales increased from 59.8% to **70.5%**, primarily due to N&B inventory step-up, higher raw material costs, and product mix changes[204](index=204&type=chunk) - R&D expenses as a percentage of sales decreased from 6.8% to **5.3%**, despite an absolute increase, due to faster sales growth[205](index=205&type=chunk) - Selling and administrative expenses increased by **$182 million to $412 million**, mainly due to the N&B merger and related integration costs[206](index=206&type=chunk) - Restructuring and other charges increased to **$24 million**, primarily for severance costs[207](index=207&type=chunk) - Amortization expense increased to **$200 million**, mainly due to the N&B merger[208](index=208&type=chunk) - Interest expense increased to **$77 million**, primarily due to debt assumed in the N&B merger[209](index=209&type=chunk) - Other net income decreased from $16 million to **$11 million**, mainly due to lower pension plan income and reduced foreign exchange gains[210](index=210&type=chunk) - The effective tax rate increased from 15.4% to **31.8%**, primarily due to an unfavorable earnings mix, increased repatriation costs, and UK tax rate changes[211](index=211&type=chunk) Segment Adjusted Operating EBITDA and Margin (Q2 2021 vs. Q2 2020) | (Millions of USD) | Q2 2021 | Q2 2020 | | :--- | :--- | :--- | | **Segment Adjusted Operating EBITDA** | | | | Nourish | 324 | 142 | | Health & Biosciences | 190 | 10 | | Scent | 117 | 87 | | Pharma Solutions | 48 | — | | **Total** | **679** | **239** | | **Segment Adjusted Operating EBITDA Margin:** | | | | Nourish | 19.4% | 20.6% | | Health & Biosciences | 29.7% | 29.4% | | Scent | 21.3% | 18.3% | | Pharma Solutions | 20.7% | —% | | **Consolidated Total** | **22.0%** | **19.9%** | - Nourish segment Adjusted Operating EBITDA increased by **$182 million to $324 million**, driven by the N&B merger and volume growth, but with a lower margin[215](index=215&type=chunk) - Health & Biosciences segment Adjusted Operating EBITDA increased by **$180 million to $190 million**, primarily due to the N&B merger[216](index=216&type=chunk) - Scent segment Adjusted Operating EBITDA increased by **$30 million to $117 million**, mainly due to volume growth[217](index=217&type=chunk) - Pharma Solutions segment Adjusted Operating EBITDA was **$48 million**, representing a new segment post-N&B merger[218](index=218&type=chunk) [FIRST SIX MONTHS 2021 IN COMPARISON TO FIRST SIX MONTHS 2020](index=41&type=section&id=FIRST%20SIX%20MONTHS%202021%20IN%20COMPARISON%20TO%20FIRST%20SIX%20MONTHS%202020) For the first six months of 2021, sales grew **118% to $5.554 billion**, primarily from the N&B merger, but increased cost of sales and higher expenses resulted in a net pre-tax loss of $10 million - For the first six months of 2021, sales increased by **118% to $5.554 billion**, with **$2.769 billion** from the N&B merger[219](index=219&type=chunk) Sales Growth by Segment (First Six Months 2021 vs. First Six Months 2020) | Segment | Sales Change % | | :--- | :--- | | Nourish | 104% | | Health & Biosciences | Not Applicable | | Scent | 10% | | Pharma Solutions | Not Applicable | | **Total** | **118%** | - Nourish sales increased by **104% to $2.976 billion**, with **$1.382 billion** from the N&B merger[221](index=221&type=chunk) - Health & Biosciences sales were **$1.065 billion**, with **$993 million** from the N&B merger[222](index=222&type=chunk) - Scent sales increased by **10% (8% currency neutral)** to **$1.119 billion**, driven by volume growth[223](index=223&type=chunk) - Pharma Solutions sales were **$394 million**, representing a new segment post-N&B merger[224](index=224&type=chunk) - Cost of sales as a percentage of sales increased from 58.8% to **70.0%**, primarily due to N&B inventory step-up, higher raw material costs, and product mix changes[225](index=225&type=chunk) - R&D expenses as a percentage of sales decreased from 6.6% to **5.5%**, despite an absolute increase, due to faster sales growth[226](index=226&type=chunk) - Selling and administrative expenses increased by **$403 million to $863 million**, mainly due to the N&B merger and related transaction and integration costs[227](index=227&type=chunk) - Restructuring and other charges increased to **$28 million**, primarily for severance costs[229](index=229&type=chunk) - Amortization expense increased to **$352 million**, mainly due to the N&B merger[230](index=230&type=chunk) - Interest expense increased to **$142 million**, primarily due to debt assumed in the N&B merger[231](index=231&type=chunk) - Other net income increased from $5 million to **$18 million**, mainly due to higher foreign exchange gains and interest income[232](index=232&type=chunk) - The effective tax rate decreased from 16.3% to **0%**, primarily due to a favorable earnings mix, partially offset by increased repatriation costs and UK tax rate changes[233](index=233&type=chunk) Segment Adjusted Operating EBITDA and Margin (First Six Months 2021 vs. First Six Months 2020) | (Millions of USD) | First Six Months 2021 | First Six Months 2020 | | :--- | :--- | :--- | | **Segment Adjusted Operating EBITDA** | | | | Nourish | 594 | 318 | | Health & Biosciences | 318 | 19 | | Scent | 245 | 205 | | Pharma Solutions | 91 | — | | **Total** | **1,248** | **542** | | **Segment Adjusted Operating EBITDA Margin:** | | | | Nourish | 20.0% | 21.8% | | Health & Biosciences | 29.9% | 27.9% | | Scent | 21.9% | 20.2% | | Pharma Solutions | 23.1% | —% | | **Consolidated Total** | **22.5%** | **21.3%** | - Nourish segment Adjusted Operating EBITDA increased by **$276 million to $594 million**, driven by the N&B merger and volume growth, but with a lower margin[239](index=239&type=chunk) - Health & Biosciences segment Adjusted Operating EBITDA increased by **$299 million to $318 million**, primarily due to the N&B merger[240](index=240&type=chunk) - Scent segment Adjusted Operating EBITDA increased by **$40 million to $245 million**, mainly due to volume growth[241](index=241&type=chunk) - Pharma Solutions segment Adjusted Operating EBITDA was **$91 million**, representing a new segment post-N&B merger[242](index=242&type=chunk) [Liquidity](index=44&type=section&id=Liquidity) Cash and cash equivalents increased to **$935 million**, with operating cash flow significantly rising to **$698 million**, driven by the N&B merger, as the company balances investments, dividends, and debt repayment while maintaining investment-grade ratings - As of June 30, 2021, cash and cash equivalents were **$935 million**, an increase from $650 million as of December 31, 2020, with the N&B merger contributing approximately **$193 million**[243](index=243&type=chunk) - As of June 30, 2021, the company had a **$65 million deferred tax liability** for the repatriation of funds from non-U.S. subsidiaries to the U.S[244](index=244&type=chunk) - Operating cash flow for the first six months of 2021 was **$698 million**, a significant increase from $208 million in the prior year period, primarily due to higher cash earnings and working capital changes[246](index=246&type=chunk) - As of June 30, 2021, working capital was **$3.07 billion**, a significant increase from $1.156 billion as of December 31, 2020[247](index=247&type=chunk) - For the first six months of 2021, the company removed approximately **$384 million in receivables** through factoring agreements, increasing operating cash flow by approximately **$72 million**[249](index=249&type=chunk) - Investing activities for the first six months of 2021 resulted in a net cash inflow of **$30 million**, an improvement from a net outflow of $77 million in the prior year period, primarily due to cash inflows from the N&B merger[250](index=250&type=chunk) - The company expects capital expenditures to be **4.5% of sales** in 2021, slightly higher than 4% in 2020[251](index=251&type=chunk) - Financing activities for the first six months of 2021 resulted in a cash outflow of **$427 million**, an increase from $215 million in the prior year period, mainly due to higher dividend payments and debt repayments[252](index=252&type=chunk) - The company paid **$274 million in dividends** in 2021 and announced on August 5, 2021, a 3% increase in its quarterly dividend to **$0.79 per share**[253](index=253&type=chunk) - The company's capital allocation strategy aims to maintain an investment-grade rating while investing in the business, paying dividends, and repaying debt[254](index=254&type=chunk) - As of June 30, 2021, the company was in compliance with all financial and debt covenants, with a net debt to credit-adjusted EBITDA ratio of **4.23:1.0**[261](index=261&type=chunk) Credit-Adjusted EBITDA | (Millions of USD) | Twelve Months Ended June 30, 2021 | | :--- | :--- | | Net Loss | (220) | | Interest Expense | 294 | | Income Taxes | (69) | | Depreciation and Amortization | 1,655 | | Specific Items | 904 | | Non-Cash Items | 46 | | **Credit-Adjusted EBITDA** | **2,610** | Net Debt | (Millions of USD) | June 30, 2021 | | :--- | :--- | | Total Debt | 11,988 | | Less: Cash and Cash Equivalents | 935 | | **Net Debt** | **11,053** | - As of June 30, 2021, the company had **$10.158 billion in senior unsecured notes outstanding**, including those assumed in the N&B merger, with interest rates ranging from **0.69% to 5.12%**[265](index=265&type=chunk) - The company expects to contribute **$4 million** to U.S. pension plans, **$25 million** to non-U.S. plans, and **$4 million** to postretirement benefit plans in 2021[266](index=266&type=chunk) [Non-GAAP Financial Measures](index=47&type=section&id=Non-GAAP%20Financial%20Measures) The company uses various non-GAAP financial measures, including currency neutral metrics, adjusted gross profit, adjusted selling and administrative expenses, adjusted operating EBITDA, and adjusted effective tax rate, to provide clearer insights into operating performance and comparability - The company uses non-GAAP financial measures such as **currency neutral metrics, adjusted gross profit, adjusted selling and administrative expenses, adjusted operating EBITDA and its margin, and adjusted effective tax rate**[269](index=269&type=chunk) - These non-GAAP measures provide additional information on underlying operating performance and comparable year-over-year performance, but should not replace GAAP results[270](index=270&type=chunk) - Adjusted gross profit excludes Frutarom acquisition-related costs and N&B inventory step-up[271](index=271&type=chunk) - Adjusted selling and administrative expenses exclude Frutarom integration-related costs, restructuring and other charges, shareholder activism-related costs, business divestiture costs, employee separation costs, compliance review and legal defense costs, N&B transaction-related costs, and N&B integration-related costs[271](index=271&type=chunk) - Adjusted operating EBITDA and its margin exclude depreciation and amortization expense, interest expense, other income (expense), net, restructuring and other charges, and certain non-recurring items[272](index=272&type=chunk) - Adjusted effective tax rate excludes Frutarom integration-related costs, restructuring and other charges, loss on asset sale, shareholder activism-related costs, business divestiture costs, employee separation costs, Frutarom acquisition-related costs, compliance review and legal defense costs, N&B inventory step-up, N&B transaction-related costs, and N&B integration-related costs[273](index=273&type=chunk) Gross Profit Reconciliation (Q2) | (Millions of USD) | Q2 2021 | Q2 2020 | | :--- | :--- | :--- | | Reported (GAAP) | 910 | 482 | | N&B Inventory Step-Up | 195 | — | | **Adjusted (Non-GAAP)** | **1,105** | **482** | Selling and Administrative Expenses Reconciliation (Q2) | (Millions of USD) | Q2 2021 | Q2 2020 | | :--- | :--- | :--- | | Reported (GAAP) | 412 | 230 | | Frutarom Integration-Related Costs | — | (2) | | Restructuring and Other Charges | (1) | — | | Business Divestiture Costs | (5) | — | | Employee Separation Costs | (3) | — | | N&B Transaction-Related Costs | (2) | (11) | | N&B Integration-Related Costs | (17) | (23) | | **Adjusted (Non-GAAP)** | **384** | **194** | Net Income Reconciliation (Q2) | (Millions of USD, except per share amounts) | Q2 2021 Pre-Tax Income | Q2 2021 Provision for Income Taxes | Q2 2021 Net Income Attributable to IFF | Q2 2021 Diluted EPS | | :--- | :--- | :--- | :--- | :--- | | Reported (GAAP) | 44 | 14 | 28 | 0.11 | | N&B Inventory Step-Up | 195 | 45 | 150 | 0.59 | | N&B Transaction-Related Costs | 2 | 1 | 1 | — | | N&B Integration-Related Costs | 17 | 4 | 13 | 0.05 | | **Adjusted (Non-GAAP)** | **291** | **71** | **218** | **0.86** | Gross Profit Reconciliation (First Six Months) | (Millions of USD) | First Six Months 2021 | First Six Months 2020 | | :--- | :--- | :--- | | Reported (GAAP) | 1,664 | 1,048 | | N&B Inventory Step-Up | 377 | — | | **Adjusted (Non-GAAP)** | **2,041** | **1,049** | Selling and Administrative Expenses Reconciliation (First Six Months) | (Millions of USD) | First Six Months 2021 | First Six Months 2020 | | :--- | :--- | :--- | | Reported (GAAP) | 863 | 460 | | N&B Transaction-Related Costs | (91) | (16) | | N&B Integration-Related Costs | (54) | (33) | | **Adjusted (Non-GAAP)** | **698** | **404** | Net (Loss) Income Reconciliation (First Six Months) | (Millions of USD, except per share amounts) | First Six Months 2021 Pre-Tax Income (Loss) | First Six Months 2021 Provision for Income Taxes | First Six Months 2021 Net (Loss) Income Attributable to IFF | First Six Months 2021 Diluted EPS | | :--- | :--- | :--- | :--- | :--- | | Reported (GAAP) | (10) | — | (14) | (0.06) | | N&B Inventory Step-Up | 377 | 82 | 295 | 1.28 | | N&B Transaction-Related Costs | 91 | 19 | 72 | 0.30 | | N&B Integration-Related Costs | 54 | 13 | 41 | 0.18 | | **Adjusted (Non-GAAP)** | **560** | **124** | **432** | **1.87** | [Cautionary Statement Under the Private Securities Litigation Reform Act of 1995](index=50&type=section&id=Cautionary%20Statement%20Under%20the%20Private%20Securities%20Litigation%20Reform%20Act%20of%201995) This section contains forward-looking statements regarding future performance, N&B merger benefits, and various operational and financial expectations, which are subject to significant risks and uncertainties - Forward-looking statements cover COVID-19 impacts, FY2021 sales and profit expectations, Fruit Preparations divestiture, N&B merger benefits, Frutarom acquisition synergies, Vision 2021 strategy, market growth potential, capital expenditures, manufacturing optimization, cash flow, expense reductions, inventory increases, inflation, innovation capabilities, and return of shareholder value[289](index=289&type=chunk) - Forward-looking statements are subject to multiple risks and uncertainties, including COVID-19 disruptions, N&B and Frutarom integration risks, unexpected costs, increased leverage, market competition, key employee retention, customer demand changes, supply chain disruptions, raw material price volatility, IT system disruptions, regulatory compliance, currency fluctuations, legal proceedings, pension obligations, tax policy changes, and LIBOR phase-out[291](index=291&type=chunk)[292](index=292&type=chunk) - The company undertakes no obligation to update or revise forward-looking statements, and actual results may differ materially from expectations[293](index=293&type=chunk) [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=52&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) As of June 30, 2021, the fair value of the company's USD fixed-rate debt was **$8.703 billion**, with a hypothetical 10% change in interest rates resulting in an approximate **$870 million** change in its estimated fair value - As of June 30, 2021, the fair value of the company's USD fixed-rate debt was **$8.703 billion**[295](index=295&type=chunk) - A hypothetical **10% increase or decrease in interest rates** would result in an approximate **$870 million increase or decrease** in the estimated fair value of USD fixed-rate debt[295](index=295&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES](index=52&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) The CEO and CFO have assessed and determined the company's disclosure controls and procedures were effective as of the end of the reporting period, with no significant changes in internal control over financial reporting - The CEO and CFO have assessed and determined that the company's disclosure controls and procedures were **effective** as of the end of the reporting period[296](index=296&type=chunk) - As of June 30, 2021, there were no significant changes in the company's internal control over financial reporting[298](index=298&type=chunk) [PART II. OTHER INFORMATION](index=53&type=section&id=PART%20II.%20OTHER%20INFORMATION) [ITEM 1. LEGAL PROCEEDINGS](index=53&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) Updated information regarding legal proceedings is referenced in Note 15 of the consolidated financial statements within this Form 10-Q - Updated information regarding legal proceedings is disclosed in **Note 15**[301](index=301&type=chunk) [ITEM 1a. RISK FACTORS](index=53&type=section&id=ITEM%201a.%20RISK%20FACTORS) No material changes to the risk factors disclosed in this quarterly report compared to the company's 2020 Form 10-K - There are no material changes to the risk factors disclosed in this quarterly report compared to the company's 2020 Form 10-K[302](index=302&type=chunk) [ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS](index=53&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) There were no unregistered sales of equity securities or use of proceeds during this quarter - There were no unregistered sales of equity securities or use of proceeds during this quarter[303](index=303&type=chunk) [ITEM 6. EXHIBITS](index=53&type=section&id=ITEM%206.%20EXHIBITS) This section lists the exhibits filed with Form 10-Q, including management certifications and XBRL interactive data files - Exhibits include certifications filed under **Sections 302 and 1350 of the Sarbanes-Oxley Act** and XBRL interactive data files[305](index=305&type=chunk) [SIGNATURES](index=54&type=section&id=SIGNATURES) [Signatures](index=54&type=section&id=Signatures) This report was signed on August 5, 2021, by Andreas Fibig (Chairman & CEO), Rustom Jilla (EVP & CFO), and Robert Anderson (SVP, Corporate Controller & Chief Accounting Officer) - The report was signed by **Andreas Fibig** (Chairman & CEO), **Rustom Jilla** (Executive Vice President & CFO), and **Robert Anderson** (Senior Vice President, Corporate Controller & Chief Accounting Officer) on **August 5, 2021**[307](index=307&type=chunk)