International Flavors & Fragrances (IFF) 10-K risk factor changes: FY2020 vs FY2019

[removed: We] [added: - We] may not realize all the [added: synergies and other] benefits anticipated from the Frutarom acquisition, which could adversely affect our [removed: business.][added: business.]

[removed: If we fail to] [added: We may not] realize all the [added: synergies and other] benefits [removed: that we expect to achieve] [added: anticipated] from the Frutarom acquisition, [removed: our business] [added: which] could [removed: be] adversely [removed: affected.][added: affect our business.]

[removed: Some] [added: Many] of these factors are outside of our [added: complete] control [added: and/or will be outside the control of the N&B Business,] and any one of them [removed: if not successfully managed] could result in [removed: increased] [added: lower revenues, higher] costs and diversion of [removed: management’s] [added: management] time and energy, [removed: as well as reputational harm and decreases in the amount of expected revenue] which could materially impact [removed: our] [added: the] business, financial condition and results of [removed: operations.][added: operations of our business.]

As of December 31, [removed: 2019,] [added: 2020,] our total debt consisted of $4.4 billion.

Our level of indebtedness as well as our failure to comply with covenants under our debt instruments, could adversely affect our business, results of operation and financial [removed: condition.][added: condition or our ability to return capital to our shareholders and the additional debt instruments may subject us to additional covenants.]

[removed: We may not be able to] successfully negotiate such arrangements or the terms of the arrangements may not be as favorable as anticipated.

We face vigorous competition from companies throughout the world, including multi-national and specialized [added: companies active in] flavors, fragrances, [added: enzymes, pharmaceutical excipients,] nutrition and specialty [removed: ingredients companies,] [added: ingredients,] as well as consumer product companies which may develop their own flavors, fragrances or ingredients.

Consolidation of [added: or partnerships among] our competitors may exacerbate these risks.

In particular, the discovery and development of new [removed: flavors and fragrance compounds and ingredients,] [added: products,] protection of our intellectual property and development and retention of key employees are critical to our ability to effectively compete in our business.

[removed: If] [added: - If] we are unable to successfully market to our expanded and diverse [removed: Taste] customer base, our operating results and future growth may be adversely [removed: affected.][added: affected.]

As a result of our acquisition of [removed: Frutarom,] [added: Frutarom and] the [added: N&B Transaction, the] number of our customers significantly increased and became more diverse.

[removed: As a result of the expansion of our Tastepoint initiative and the Frutarom acquisition, and based] [added: Based] on [removed: 2019] [added: 2020] sales, we [removed: currently have] [added: had] approximately [removed: 38,000] [added: 33,000] customers, approximately 65% of which are small and mid-sized companies.

Competition for employees can be intense and if we are unable to successfully integrate, motivate and reward the acquired Frutarom [added: employees,] employees [added: from the N&B Business] or our current employees in our combined company, we may not be able to retain them.

During [removed: 2019,] [added: 2020,] our 25 largest customers, each of which was a multi-national consumer products company, [added: collectively] accounted for [removed: 38%] [added: 39%] of our [removed: sales.][added: sales in the aggregate.]

Large multi-national customers’ market share, especially in the consumer product industry, continues to be pressured by new smaller companies and specialty players that cater to or are more adept at adjusting to the latest consumer trends, including towards natural products and clean labels, changes in the retail landscape (including e-commerce and consolidation), and increased competition from private labels, which have resulted and may [removed: continue to result in decreased demand for our products by such multi-national customers and volume erosion, especially in our Taste business.]

Our ability to differentiate ourselves and deliver growth [removed: in line with our Vision 2021 strategy] largely depends on our ability to successfully develop and introduce new products and product improvements that meet our customers’ needs, and ultimately appeal to consumers.

We currently spend approximately [removed: 6.7%] [added: 7.0%] of our sales on research and development; [removed: however] [added: however,] this investment level may vary [added: in the future] if available resources to invest in research and development are limited due to our ongoing integration and restructuring efforts.

[removed: Natural] [added: - Natural] disasters, public health crises (such as the [removed: recent Coronavirus] [added: COVID-19] outbreak), international conflicts, terrorist acts, labor strikes, political crisis, accidents and other events could adversely affect our business and financial results by disrupting development, manufacturing, distribution or sale of our [removed: products.][added: products.]

As a [removed: result,] [added: result of restrictions imposed by governments to contain the outbreak,] a portion of our manufacturing plants and offices [removed: in China] were required to [removed: close for a week.][added: close.]

The outbreak may result in additional or more extensive travel restrictions, closures, disruptions of businesses or facilities in [removed: China or other] affected regions around the world or lead to social, economic, political or labor instability in the affected areas may impact our, our suppliers’ or our customers’ operations.

[added: For example, in 2017, a fire at the manufacturing facility of BASF Group (“BASF”), one of] our suppliers, caused them to declare a force majeure and has resulted in industry disruption due to the lack of availability of certain ingredients used in many fragrance compounds.

We use many different raw materials for our business, particularly natural products, including essential oils, extracts and concentrates derived from fruits, vegetables, flowers, woods and other botanicals, animal products, raw fruits, organic chemicals and petroleum-based [removed: chemicals.][added: chemicals, as well as, in connection with the N&B Business, gelatin, glycols, cellulose processed grains (including dextrose and glucose), guar, locust bean gum, organic vegetable oils, peels, saccharides, seaweed, soybeans, and sugars and yeasts.]

For example, there has been industry-wide price volatility of certain ingredients used in fragrance compounds due to the BASF [removed: incident and in 2019 we experienced increases in the prices of certain naturals.][added: incident.]

Natural products represent approximately [removed: half] [added: sixty percent] of our raw material spend, and we expect such volatility to continue in the near future.

[removed: Similarly, commodities] [added: Energy prices are subject to significant volatility caused by, among other things, market fluctuations, supply] and [removed: energy] [added: demand] prices are subject to significant volatility caused by, among other things, market fluctuations, supply and demand, currency fluctuations, production and transportation disruptions, climate change and weather conditions, and other world events.

As we source many of our raw materials globally to help ensure quality control, if the cost of energy, shipping or transportation increases and we are unable [removed: to] [added: to, timely and fully,] pass along these costs to our customers, our profit margins would be adversely affected.

Cyber security incidents, data breaches and operational disruptions [removed: caused by cyberattacks or cyber-intrusions] are constantly [removed: evolving in nature,] [added: evolving,] becoming more sophisticated and are [removed: being made] [added: conducted] by groups and individuals with a wide range of expertise and motives, [added: including foreign governments, cyber terrorists, cyber criminals and malicious employees and other insiders and outsiders.]

We and our third-party providers are subject to risks posed by such incidents, which can take many forms, including code anomalies, “Acts of God,” data leakage, hardware or software failures, human error, cyber extortion, password theft or introduction of viruses, malware, [added: and] ransomware, including through phishing emails.

[removed: Because we do not currently have duplications of our information technology systems and] [added: As] we [removed: continue to] work on upgrading and integrating [added: N&B’s and] Frutarom’s [removed: systems into ours,] [added: systems,] these risks may be exacerbated.

This regulatory environment is increasingly challenging and may present material obligations and risks to our business, including significantly expanded compliance burdens, [added: restrictions on transfer of personal data,] costs and enforcement risks.

For example, the European Union’s [removed: General Data Protection Regulation (“GDPR”),] [added: GDPR,] which became effective in May 2018, greatly increases the jurisdictional reach of EU law and adds a broad array of requirements related to personal data, including individual notice and opt-out [removed: preferences] [added: preferences, restrictions on] and [added: requirements for transfer of personal data and] the public disclosure of significant data breaches.

All of these evolving compliance and operational requirements, [added: restrictions on use of personal data,] as well as the uncertain interpretation and enforcement of laws, impose significant costs and regulatory risks that are likely to increase over time.

Our failure to comply with these evolving regulations could expose us to fines, [added: sanctions,] penalties and other costs that could [added: harm our reputation and] adversely impact our financial results.

In addition, we are subject to product safety and compliance requirements established by governments, [added: non-governmental organizations, including] industry or similar oversight bodies, or contractually by our customers, including requirements concerning product safety, quality and efficacy, environmental impacts (including packaging, energy and water use and waste management) and other sustainability or similar issues.

[removed: We use a variety of strategies, methodologies and tools to minimize the likelihood of product or process non-compliance] [added: compliance] with these regulations and standards by (i) [removed: identifying] [added: monitoring regulatory developments and] current product standards, (ii) assessing relative risks in our supply chain, (iii) monitoring internal and external performance and (iv) testing raw materials and finished goods.

[added: Products that are mislabeled,] contaminated or damaged could result in a regulatory non-compliance event or even a product recall by the FDA or a similar foreign agency.

As our flavors and fragrance compounds and ingredients [added: and our nutrition and health, food and beverage and pharma offerings] are used in many products intended for human use or consumption, these consequences would be exacerbated if we or our customer did not identify the defect before the product reaches the consumer and there was a resulting impact at the consumer level.

Such a result could lead to potentially [removed: large scale] [added: large-scale] adverse publicity, negative effects on consumer’s health, recalls and potential litigation, fines, penalties, sanctions or other regulatory actions.

[removed: We] [added: - We] are subject to increasing customer, consumer and regulatory focus on sustainability issues, which may result in additional costs in order to meet new requirements or [removed: upgrade Frutarom’s] [added: integrate the N&B Business and Frutarom with our] sustainability [removed: practices][added: practices.]

Federal, state, local and foreign governments, our customers and consumers are becoming increasingly sensitive to [added: environmental and other] sustainability issues.

Risk Factor Summary

*The following summary highlights some of the principal risks that could adversely affect our business, financial condition or results of operations.

This summary is not complete and the risks summarized below are not the only risks we face.

These risks are discussed more fully further below in this section entitled “Risk Factors” in Item 1A.

of this report.

These risks include, but are not limited to, the following:*

- The COVID-19 pandemic may materially and adversely impact our operations, financial condition, results of operations and cash flows.

- We have a substantial amount of indebtedness following the N&B Transaction, which could materially adversely affect our financial condition.

- In connection with the N&B Transaction, we are required to abide by potentially significant restrictions which could limit our ability to undertake certain corporate actions (such as the issuance of common stock or the undertaking of a merger or consolidation) that otherwise could be advantageous.

- We may be unable to provide (or obtain from third-parties) the same types and level of services to the N&B Business that historically have been provided by DuPont, or may be unable to provide (or obtain) them at the same cost.

- Our business, financial condition and results of operations may be adversely affected if we cannot negotiate terms that are as favorable as those DuPont has received when we replace contracts after the closing of the N&B Transaction.

- Our success will also depend on relationships with third parties and our pre-existing customers and the pre-existing customers of the N&B Business, which relationships may be affected by customer or third-party preferences or public attitudes about the N&B Transaction.

Any adverse changes in these relationships could adversely affect the our business, financial condition or results of operations.

- Failure to successfully establish and manage acquisitions, collaborations, joint ventures or partnerships could adversely affect our growth.

- Our business is highly competitive, and if we are unable to compete effectively our sales and results of operations will suffer.

- Our success depends on attracting and retaining talented people within our business.

Significant shortfalls in recruitment or retention could adversely affect our ability to compete and achieve our strategic goals.

- A significant portion of our sales is generated from a limited number of large multi-national customers, which are currently under competitive pressures that may affect the demand for our products and profitability.

- We may not successfully develop and introduce new products that meet our customers’ needs, which may adversely affect our results of operations.

- A disruption in our supply chain, including the inability to obtain ingredients and raw materials from third parties, could adversely affect our business and financial results.

- Volatility and increases in the price of raw materials, energy and transportation, including due to climate change, could harm our profits.

- A significant data breach or other disruption to our information technology systems could disrupt our operations, result in the loss of confidential information or personal data, and adversely impact our reputation, business or results of operations.

- We have made investments in and continue to expand our business into emerging markets, which exposes us to certain risks.

- The impact of currency fluctuation or devaluation in the international markets in which we operate may negatively affect our results of operations.

- International economic, political, legal, compliance and business factors could negatively affect our financial statements, operations and growth.

- Economic uncertainty may adversely affect demand for our products which may have a negative impact on our operating results and future growth.

- Increasing awareness of health and wellness are driving changes in the consumer products industry, and if we are unable to react in a timely and cost-effective manner, our results of operations and future growth may be adversely affected.

- Our performance may be adversely impacted if we are not successful in managing our inventory and/or working capital balances.

- Any impairment of our tangible or intangible long-lived assets, including goodwill, may adversely impact our profitability.

- Our funding obligations for our pension and postretirement plans could adversely affect our earnings and cash flows.

- Our business may be negatively impacted as a result of the United Kingdom’s departure from the European Union.

- If we are unable to comply with regulatory requirements and industry standards, including those regarding product safety, quality, efficacy and environmental impact, we could incur significant costs and suffer reputational harm which could adversely affect results of operations.

- Failure to comply with environmental protection laws may cause us to close, relocate or operate one or more of our plants at reduced production levels, and expose us to civil or criminal liability, which could adversely affect our operating results and future growth.

- We could be adversely affected by violations of the U.S. Foreign Corrupt Practices Act or similar U.S. or foreign anti-bribery and anti-corruption laws and regulations in the jurisdictions in which we operate.

- Defects, quality issues, inadequate disclosure or misuse with respect to the products and capabilities could adversely affect our business, reputation and results of operations.

- Our ability to compete effectively depends on our ability to protect our intellectual property rights.

- Our results of operations may be negatively impacted by the outcome of uncertainties related to litigation.

- Changes in our tax rates, the adoption of new U.S. or international tax legislation, or changes in existing tax laws could expose us to additional tax liabilities that may affect our future results.

- The N&B Transaction could result in significant tax liability, and we may be obligated to indemnify DuPont for any such tax liability imposed on DuPont.

- If we fail to comply with data protection laws in the U.S. and abroad, we may be subject to fines, penalties and other costs.

The success of the Frutarom acquisition ultimately depends on our ability to realize anticipated benefits from the transaction.

Since the Frutarom acquisition, we have benefited from, and expect to continue to benefit from cost synergies through global footprint optimization across manufacturing, the realization of significant procurement synergies plus organizational and operational efficiencies in overhead expenses.

We also expect to achieve revenue synergies by leveraging customer relationships across a much broader customer base and cross-selling legacy IFF and Frutarom technology and capabilities.

The integration of our legacy IFF business and Frutarom’s business is a costly and time-consuming process, and we may face significant implementation challenges that will impact our ability to realize the expected benefits from the acquisition, including without limitation:

- potential disruption of, or reduced growth in, our historical core businesses, due to diversion of management attention as well as financial and other resources from our historical core business and uncertainty with our current customer and supplier relationships;

- loss of business as a result of changes in customer and/or competitor behaviors following the Frutarom acquisition, including our inability to keep certain customer accounts of Frutarom who may be direct competitors to IFF, or our need to deprioritize our business activities in certain markets based on market conditions;

- difficulties in achieving anticipated cost savings, synergies, business opportunities and growth prospects;

- challenges arising from the expansion of our product offerings into adjacencies with which we have limited experience, including functional foods and nutrition;

- the possibility of faulty assumptions underlying expectations regarding the integration;

- coordinating and integrating research and development teams across technologies and products to enhance product development while reducing costs;

- coordinating sales and marketing efforts to effectively position our capabilities and the direction of product development;

- ensuring regulatory compliance, quality.

safety and sustainability standards across an organization of increased scale and complexity;

- retaining and efficiently managing our significantly expanded and decentralized customer base;

- the assumption of and exposure to unknown or contingent liabilities of Frutarom;

- unanticipated issues or higher than expected costs in consolidating and integrating corporate, information technology, finance and administrative infrastructures, and integrating and harmonizing business systems;

- combining and optimizing our manufacturing facilities and global supply chain as well as leveraging customer relationships for cross-selling opportunities;

- aligning compliance, quality, as well as safety and sustainability standards across operations;

- aligning processes, policies, procedures, technologies, operations, employee benefits, information technologies and systems across operations;

- difficulties in managing a larger and more complex combined company, addressing differences in business culture and retaining key personnel; and

- managing tax costs or inefficiencies associated with integrating the operations of the combined company.

The Frutarom acquisition resulted, and may continue to result, in significant costs, charges or other liabilities that could adversely affect the financial results of the combined company.

Following the acquisition of Frutarom, our financial results were adversely affected by restructuring charges, cash expenses and non-cash accounting charges incurred in connection with the acquisition.

We expect to record total pretax restructuring charges related to the Frutarom acquisition of approximately $65 million, of which $10.4 million have been recorded since closing of the transaction through December 31, 2019, comprised of approximately $6.1 million of severance and related benefit costs; $0.5 million of asset write-downs and write-offs; and $3.7 million of costs associated with exit and disposal activities.

In addition, there are many processes, policies, procedures, operations, technologies and systems that are being integrated across our organization that will result in costs, including financial advisory, tax, information technology, legal, consulting and other professional advisory fees associated with these integration activities.

Costs and expenses incurred in connection with the integration limit resources that may otherwise be available for investment in research and development and capital expenditures.

As a result of the acquisition, we assumed all of Frutarom’s liabilities, including unknown and contingent liabilities.

Due to the nature of the transaction and the characteristics of Frutarom, our ability to conduct extensive due diligence was limited and we may subsequently identify unknown liabilities, including those that Frutarom assumed in its prior acquisitions that are not currently probable or estimable.

Prior to our acquisition, Frutarom completed 47 acquisitions since 2011, including 22 since the beginning of 2016.

If we do not properly assess the scope of these liabilities or if these liabilities are neither probable nor estimable at this time, our future financial results could be adversely affected by unanticipated reserves or charges, unexpected litigation or regulatory exposure, unfavorable accounting charges, unexpected increases in taxes due, a loss of anticipated tax benefits or other adverse effects on our business, operating results or financial condition.

We may fail to realize the expected cost savings and increased efficiencies from or stay within our estimated costs of the Frutarom integration and our ongoing optimization of our manufacturing facilities may not be as effective as we anticipate.

Our ability to realize anticipated cost savings and synergies from the Frutarom manufacturing rationalization may be affected by a variety of factors which may impose significant risks to us and which may be out of our control, including:

- our ability to accurately estimate costs in multiple jurisdictions related to the consolidation, updating or closing of manufacturing facilities;

- our ability to successfully and efficiently manufacture the relocated product lines at a different manufacturing facility;

- our ability to effectively reduce overhead and integrate and retain employees of the relocated operations;

- difficulties in implementing and maintaining consistent standards, controls, procedures, policies and information systems;

- integrating newly acquired manufacturing, distribution and technology facilities;

- potential strains on our personnel, systems and resources and diversion of attention from other priorities; and

- unforeseen or contingent liabilities of the relocated operations, including tax liabilities.

Actual charges, costs and adjustments arising from these activities may vary materially from our estimates, and may require cash and non-cash integration and implementation costs or charges in excess of forecasted amounts, which could offset any such savings and other synergies and therefore could have an adverse effect on our margins.

Beginning in the first quarter of fiscal year 2020, we [removed: are operating] [added: operated] our business across two [removed: segments,] [added: segments:] Taste and Scent.

While we are a global leader, our Taste business [removed: is more regional] [added: operates regionally] in nature, with different formulas that reflect local taste preferences.

Consequently, we manage our Taste business geographically, creating products in our regional creative centers which [removed: allow] [added: allows] us to satisfy local taste preferences, while also helping to ensure regulatory compliance and production standards.

We believe our [added: unique portfolio of natural and synthetic ingredients, global footprint,] innovative [removed: technologies,] [added: technologies and know-how, deep] consumer insight and customer intimacy make us a market leader in [removed: scent.][added: scent products.]

[removed: Pending Transaction] [added: Transaction] with Nutrition & Biosciences, Inc.

In connection with the [removed: transaction,] [added: N&B Transaction,] DuPont [removed: will receive] [added: received] a one-time $7.3 billion special cash payment (the “Special Cash [removed: Payment”), subject to certain adjustments.][added: Payment”).]

[removed: 2019 Financial] [added: 2020 Financial] Performance Overview

Scent [removed: achieved] sales [removed: growth of] [added: increased] 2% on a reported basis and [removed: 4%] [added: 3%] on a currency neutral [removed: basis in 2019.][added: basis.]

Exchange rate variations had an unfavorable impact on net sales for [removed: 2019] [added: 2020] of [removed: 3%.][added: approximately 1%.]

Our 25 largest customers accounted for [removed: 38%] [added: approximately 39%] of total sales in [removed: 2019.][added: 2020.]

In [removed: 2019,] [added: 2020,] no customer accounted for more than 10% of sales.

A key factor for commercial success is [added: our] inclusion on [removed: our] strategic customers’ core supplier lists, which provides opportunities to [added: expand and] win new business.

[removed: Included in 2019 were $127.8 million of charges related to] [added: Adjusted operating profit and adjusted operating margin excludes] operational improvement initiatives, [added: Frutarom] integration related costs, restructuring and other charges, net, losses [added: (gains)] on sale of assets, [added: employee separation costs,] FDA mandated product recall, [added: Frutarom acquisition related costs,] compliance review [added: & legal defense] costs, [removed: Frutarom acquisition] [added: N&B transaction] related costs and N&B [removed: transaction] [added: integration] related costs.

[removed: *Restructuring] [added: | Restructuring] and Other Charges, [removed: net*][added: net | | | (17,295) | | | | | | (29,765) | | |]

[removed: This increase was] [added: | (d) | | | For 2020, represents costs] primarily [removed: driven by] [added: related to the Frutarom Integration Initiative. For 2019, represents] costs [removed: incurred in 2019] [added: primarily] related to [removed: our] [added: the] Frutarom Integration Initiative and [added: the] 2019 Severance [removed: Program, including severance costs related to outsourcing the IT function.][added: Program. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |]

[removed: Cash] [added: Operating cash] flows [removed: provided by operations] [added: in 2020] were [added: $714.1 million compared to] $699.0 million [removed: or 13.6% of sales] in 2019 [removed: as compared to cash flows provided by operations of] [added: and] $437.6 [removed: million, or 11.0% of sales, during] [added: million in] 2018.

The increase in operating cash flows from 2018 to 2019 was principally driven by higher earnings from inclusion of our Frutarom acquisition and lower net working capital [removed: (principally] [added: primarily] related to accounts [removed: receivable).][added: receivable.]

| | [added: | |] Year Ended December 31, | | | | | | | | | | | | [added: | | | | | |] Change | | | | | [added: | | | |]

| *(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)* | [added: | | 2020 | | | | | |] 2019 | | | | [removed: 2018] | | [added: 2018] | | [removed: 2017] | | | | [removed: 2019] [added: 2020] vs. [removed: 2018] [added: 2019] | | | [removed: 2018] [added: | | | 2019] vs. [removed: 2017] [added: 2018] | | [added: |]

| Net sales | [added: | |] $ | [removed: 5,140,084] [added: 5,084,239] | | | [added: | |] $ | [removed: 3,977,539] [added: 5,140,084] | | | [added: | |] $ | [removed: 3,398,719] [added: 3,977,539] | | | [removed: 29.2] | [added: | (1.1) | |] % | | [removed: 17.0] | [added: | 29.2 | |] % |

| Cost of goods sold | [added: | | 2,998,373 | | | | | |] 3,027,336 | | | | [removed: 2,294,832] | | [added: 2,294,832] | | [removed: 1,926,256] | | | | [removed: 31.9] [added: (1.0)] | [added: |] % | | [removed: 19.1] | [added: | 31.9 | |] % |

| Gross profit | [added: | | 2,085,866 | | | | | |] 2,112,748 | | | | [added: | |] 1,682,707 | | | | [removed: 1,472,463] | | | | | | | | | [added: | |]

| Research and development (R&D) expenses | [added: | | 356,863 | | | | | |] 346,128 | | | | [removed: 311,583] | | [added: 311,583] | | [removed: 295,469] | | | | [removed: 11.1] [added: 3.1] | [added: |] % | | [removed: 5.5] | [added: | 11.1 | |] % |

| Selling and administrative (S&A) expenses | [added: | | 948,833 | | | | | |] 876,121 | | | | [removed: 707,461] | | [added: 707,461] | | [removed: 570,144] | | | | [removed: 23.8] [added: 8.3] | [added: |] % | | [removed: 24.1] | [added: | 23.8 | |] % |

| Restructuring and other charges, net | [added: | | 17,295 | | | | | |] 29,765 | | | | [added: | |] 5,079 | | | | [removed: 19,711] | | [added: (41.9)] | | [removed: NMF] [added: %] | | | [removed: (74.2] | [removed: )%] [added: NMF] | [added: | |]

| Amortization of acquisition-related intangibles | [added: | | 192,607 | | | | | |] 193,097 | | | | [removed: 75,879] | | [added: 75,879] | | [removed: 34,693] | | | | [removed: 154.5] [added: (0.3)] | [added: |] % | | [removed: 118.7] | [added: | 154.5 | |] % |

| Losses (gains) on sale of [added: fixed] assets | [added: | | 3,784 | | | | | |] 2,367 | | | | [removed: (1,177] | | [removed: )] [added: (1,177)] | | [removed: (184] | | [removed: )] | | [removed: NMF] [added: 59.9] | | [added: %] | [added: | | |] NMF | | [added: |]

| Operating profit | [added: | | 566,484 | | | | | |] 665,270 | | | | [added: | |] 583,882 | | | | [removed: 552,630] | | | | | | | | | [added: | |]

| Interest expense | [added: | | 131,802 | | | | | |] 138,221 | | | | [removed: 132,558] | | [added: 132,558] | | [removed: 65,363] | | | | [removed: 4.3] [added: (4.6)] | [added: |] % | | [removed: 102.8] | [added: | 4.3 | |] % |

| Loss on extinguishment of debt | [added: | |] — | | | | [added: | | — | | | | | |] 38,810 | | | | [added: | |] — | | [added: %] | | [removed: (100.0] | [removed: )%] | [added: (100.0)] | [removed: NMF] | [added: %] |

| Other income, net | [removed: (30,403] | | [removed: )] [added: (6,689)] | | [removed: (35,243] | | [removed: )] | | [removed: (49,778] [added: (30,403)] | | [removed: )] | | [removed: (13.7] | [removed: )%] | [added: (35,243)] | [removed: (29.2] | [removed: )%] | [added: | | | (78.0) | | % | | | | (13.7) | | % |]

| Income before taxes | [added: | | 441,371 | | | | | |] 557,452 | | | | [added: | |] 447,757 | | | | [removed: 537,045] | | | | | | | | | [added: | |]

| Taxes on income | [added: | | 73,999 | | | | | |] 97,184 | | | | [added: | |] 107,976 | | | | [removed: 241,380] | | [added: (23.9)] | | [removed: (10.0] [added: %] | [removed: )%] | | [removed: (55.3] | [removed: )%] [added: (10.0)] | [added: | % |]

| Net income | [added: | |] $ | [added: 367,372 | | | | | $ |] 460,268 | | | [added: | |] $ | 339,781 | | | [removed: $] | [removed: 295,665] | | | | | | | | [added: | |]

| Net income attributable to noncontrolling interest | [added: | | 4,144 | | | | | |] 4,395 | | | | [added: | |] 2,479 | | | | [removed: —] | | [added: (5.7)] | | [removed: NMF] [added: %] | | | [removed: NMF] | [added: 77.3] | [added: | % |]

| Net income attributable to IFF stockholders | [added: | | 363,228 | | | | | |] 455,873 | | | | [added: | |] 337,302 | | | | [removed: 295,665] | | | | | | | | | [added: | |]

| Net income per share — diluted | [added: | |] $ | [removed: 4.00] [added: 3.21] | | | [added: | |] $ | [removed: 3.79] [added: 4.00] | | | [added: | |] $ | [removed: 3.72] [added: 3.79] | | | [removed: 5.5] | [added: | (19.8) | |] % | | [removed: 1.9] | [added: | 5.5 | |] % |

| Gross margin | [added: | | 41.0 | | % | | | |] 41.1 | | % | | [added: | |] 42.3 | | % | | [removed: 43.3] | | [removed: %] [added: (10)] | | [removed: (120.2] [added: bps] | [removed: )] | | [removed: (101.9] | [removed: )] [added: (120)] | [added: | bps |]

| R&D as a percentage of sales | [added: | | 7.0 | | % | | | |] 6.7 | | % | | [added: | |] 7.8 | | % | | [removed: 8.7] | | [removed: %] [added: 30] | | [removed: (110.0] [added: bps] | [removed: )] | | [removed: (86.0] | [removed: )] [added: (110)] | [added: | bps |]

| S&A as a percentage of sales | [added: | | 18.7 | | % | | | |] 17.0 | | % | | [added: | |] 17.8 | | % | | [removed: 16.8] | | [removed: %] [added: 170] | | [removed: (74.2] [added: bps] | [removed: )] | | [removed: 101.1] | [added: (80)] | [added: | bps |]

We are a leading innovator of sensory, food & beverage, pharmaceutical, health & wellness, home & personal care integrated solutions and ingredients that move the world.

Following the recent closing of the N&B Transaction, our business is organized in four business segments: Nourish, Scent, Health & Biosciences and Pharma Solutions.

Impact of COVID-19 Pandemic

On March 11, 2020, the World Health Organization designated COVID-19 as a global pandemic.

Various policies and initiatives have been implemented around the world to reduce the global transmission of COVID-19, including the closure of non-essential businesses, reduced travel, the closure of retail establishments, the promotion of social distancing and remote working policies where appropriate.

IFF has been designated an essential business in most locations given that both its Taste and Scent products are used in the manufacture of food products as well as the manufacture of a range of cleaning and hygiene products.

Accordingly, although there continue to be minor disruptions, all of IFF’s manufacturing facilities remain open and continue to manufacture products.

The COVID-19 pandemic remains a serious threat to the health of the world's population and certain countries and regions continue to suffer from outbreaks or have seen a recurrence of infections.

Accordingly, the Company continues to take the threat from COVID-19 seriously even as the adverse financial impact of COVID-19 on the Company has lessened.

For 2020, revenue was largely flat but this overall performance reflected strength in Consumer Fragrances, offset by declines in Fine Fragrances and most Taste categories, especially those in the food service area.

The impact that COVID-19 will have on our consolidated results of operations in 2021 remains uncertain.

Based on the length and severity of COVID-19, we experience continued volatility as a result of retail and travel, consumer shopping and consumption behavior.

We will continue to evaluate the nature and extent of these potential impacts to our business, consolidated results of operations, segment results, liquidity and capital resources.

Although IFF does not currently anticipate any impairment charges related to COVID-19, the continuing effects of a prolonged pandemic could result in increased risk of asset write-downs and impairments, including, but not limited to, equity investments, goodwill and intangibles.

Any of these events could potentially result in a material adverse impact on IFF’s business and results of operations.

On February 1, 2021, pursuant to the Merger Agreement with DuPont, a wholly owned subsidiary of IFF merged with and into the N&B Business.

The shares issued in the Merger represented approximately 55.4% of the common stock of IFF on a fully diluted basis, after giving effect to the Merger, as of February 1, 2021.

The N&B Business is an innovation-driven and customer-focused business that provides solutions for the global food and beverage, dietary supplements, home and personal care, energy, animal nutrition and pharma markets.

The transaction was made in order to strengthen IFF's customer base and market presence, with an enhanced position in the food & beverage, home & personal care and health & wellness markets.

See Note 3 to the Consolidated Financial Statements for additional information relating to the N&B Transaction.

For a reconciliation between reported and adjusted figures, please refer to the "Non-GAAP Financial Measures" section.

Sales in 2020 decreased 1% on a reported basis and were flat on a currency neutral basis (which excludes the effects of changes in currency by restating exchange ratios in effect for the current year based on the currency of the underlying transaction).

The change in consolidated reported and currency neutral sales was driven by strength in Consumer Fragrances and a slight increase in Fragrance Ingredients, offset by volume reductions in most Taste product categories and Fine Fragrances.

The year-on-year declines in sales of many product categories was partially due to travel and shelter-in-place restrictions, in certain regions, as a result of COVID-19.

The additional week of sales, or a 53rd week, in 2019 also contributed to the year-on-year decline in sales.

Gross margin decreased to 41.0% in 2020 from 41.1% in 2019, principally driven by unfavorable price versus input costs and mix and sales volume reductions on existing business due, principally, to COVID-19, largely offset by the impact of productivity, integration and cross selling initiatives.

Operating profit decreased $98.8 million to $566.5 million (11.1% of sales) in 2020 compared to $665.3 million (12.9% of sales) in 2019.

Foreign currency had a 2% unfavorable impact on operating profit in both the 2020 and 2019 periods.

Adjusted operating profit was $729.7 million (14.4% of sales) for 2020, a decrease from $793.1 million (15.4% of sales) for 2019, principally driven by unfavorable price versus input costs and mix and sales volume reductions on existing business due, principally, to COVID-19, partially offset by the impact of productivity, integration and cross selling initiatives.

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Taste | | | $ | 3,109,781 | | | | | $ | 3,200,520 | | | | | $ | 2,091,635 | | | | | (2.8) | | % | | | | 53.0 | | % |

| Scent | | | 1,974,458 | | | | | | 1,939,564 | | | | | | 1,885,904 | | | | | | 1.8 | | % | | | | 2.8 | | % |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

2020 IN COMPARISON TO 2019

Sales performance for the Scent segment reflected growth in Consumer Fragrances and a slight increase in Fragrance Ingredients, offset by declines in Fine Fragrances through the first nine months of 2020.

In the fourth quarter of 2020, Fine Fragrances saw a slight increase in sales when compared to the comparable period of the prior year.

Sales performance for the Taste segment reflected reduced sales in most Taste categories, especially those related to retail food services.

| | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

We are a leading innovator of sensory experiences that move the world.

The 2018 acquisition of Frutarom solidified our position as an industry leader across an expanded portfolio of products, resulting in a broader customer base across small, mid-sized and large companies and an expansion to new adjacencies that provides a platform for significant cross-selling opportunities.

As part of this new operating model, nearly all of the former Frutarom business segment was consolidated with the Taste segment.

The financial results presented in this Form 10-K reflect the Taste, Scent and legacy Frutarom business segments prior to the realignment.

We develop thousands of different flavors and taste offerings for our customers, most of which are tailor-made.

We continually develop new formulas to meet changing consumer preferences and customer needs.

On December 15, 2019, we entered into definitive agreements with DuPont de Nemours, Inc. (“DuPont”), including an Agreement and Plan of Merger, pursuant to which DuPont will transfer its nutrition and biosciences business (the “N&B Business”) to Nutrition & Biosciences, Inc., a Delaware corporation and wholly owned subsidiary of DuPont (“N&B”), and N&B will merge with and into a wholly owned subsidiary of IFF in exchange for a number of shares of IFF common stock, par value $0.125 per share (“IFF Common Stock”) (collectively, the “DuPont N&B Transaction”).

As a result of the DuPont N&B Transaction, holders of DuPont’s common stock will own approximately 55.4% of the outstanding shares of IFF on a fully diluted basis.

We believe that the combination of IFF and the N&B Business will create a global leader in high-value ingredients and solutions in the global Food & Beverage, Home & Personal Care and Health & Wellness markets.

We expect that the companies' complementary product portfolios will give the combined company leadership positions across key Taste, Texture, Scent, Nutrition, Enzymes, Cultures, Soy Proteins and Probiotics categories.

Completion of the DuPont N&B Transaction is subject to various closing conditions, including, among other things, (1) approval by IFF’s shareholders of the issuance of IFF Common Stock in connection with the transaction; (2) the effectiveness of the registration statements to be filed with the Securities and Exchange Commission pursuant to the Merger Agreement; and (3) the expiration of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and obtaining certain other consents, authorizations, orders or approvals from governmental authorities.

We expect that the transaction will close in early 2021.

Sales in 2019 increased 29% on a reported basis and 32% on a currency neutral basis (which excludes the effects of changes in currency), with the effects of the Frutarom acquisition contributing approximately 28% to reported growth rates and 29% to currency neutral growth rates.

Taste reported sales growth was flat but currency neutral sales grew 2%.

The impact of an additional week of sales, or a 53rd week, in 2019 contributed approximately 1% to reported and currency neutral sales growth.

Consolidated reported

and currency neutral sales growth was driven by additional sales from our acquisition of Frutarom, and to a lesser extent, new win performance (net of losses) in Scent.

From a geographic perspective, North America ("NOAM"), Europe, Africa and Middle East ("EAME"), Greater Asia ("GA") and Latin America ("LA") all delivered sales growth on a consolidated basis led by the Frutarom acquisition.


Gross margin decreased 120 basis points ("bps") year-over-year, driven principally by lower margins in our Frutarom business unit and higher raw material costs, which were partially offset by cost savings and productivity initiatives.

Operating profit increased $81.4 million to $665.3 million (12.9% of sales) in 2019 compared to $583.9 million (14.7% of sales) in 2018.

The comparable period in 2018 included $93.5 million of charges related to operational improvement initiatives, integration related costs, restructuring and other charges, net, and Frutarom acquisition related costs, which were partially offset by acquisition related costs, gains on sale of assets and recoveries related to the FDA mandated product recall.

Excluding these charges, adjusted operating profit was $793.1 million for 2019, an increase from $677.4 million for 2018, principally driven by the inclusion of Frutarom's operating profit for a full year in 2019 compared to one quarter in 2018, productivity initiatives, and volume increases on existing business, partially offset by price to input costs (including the net impact of the BASF supply chain disruption in 2018) and unfavorable foreign exchange rates.

Excluding the above charges, adjusted operating profit as a percentage of sales decreased to 15.4% for 2019 compared to 17.0% for 2018, principally driven by lower margins in our Frutarom business and price to input costs (including the net impact of the BASF supply chain disruption in 2018), partially offset by productivity initiatives.

Foreign currency had a 2%

unfavorable impact on operating profit in the 2019 period compared to a 3% favorable impact on operating profit in the 2018 period.

Restructuring and other charges, net increased to $29.8 million in 2019 compared to $5.1 million in 2018.

*Cash Flows provided by Operating Activities*

Our capital spend was $236.0 million (4.6% of sales) during 2019.

In light of our requirement to relocate one of our Fragrance Ingredients facilities in China, the ongoing construction of new facilities in India and Indonesia, and capital requirements to integrate our recently acquired Frutarom business, we expect that capital spending in 2020 will be about 4-5% of sales (net of potential grants and other reimbursements from government authorities).

| | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Taste | $ | 1,731,919 | | | $ | 1,737,349 | | | $ | 1,632,166 | | | (0.3 | )% | | 6.4 | % |

| Scent | 1,922,717 | | | | 1,880,630 | | | | 1,766,553 | | | | 2.2 | % | | 6.5 | % |

| Frutarom | 1,485,448 | | | | 359,560 | | | | N/A | | | | NMF | | | NMF | |

| | |

| --- | --- |

Adjusted operating margin for the year ended December 31, 2018 excludes Frutarom acquisition related costs of $89.6 million, integration related costs of $7.2 million, restructuring and other charges of $4.1 million, and operational improvement initiatives of $2.2 million, partially offset by FDA mandated product recall of $7.1 million, acquisition related costs of $1.3 million, and gain on sale of assets of $1.2 million.

Adjusted operating margin for the year ended December 31, 2017 excludes net legal charges/credits of $1.0 million, acquisition related costs of $20.4 million, gain on sale of assets of $0.2 million, operational improvement initiative costs of $1.8 million, restructuring and other charges, net of $19.7 million, FDA mandated product recall costs of $11.0 million, UK pension settlement charge of $2.8 million, tax assessment of $5.3 million, and integration related costs of $4.2 million.

Sales growth primarily reflected the additional sales from our acquisition of Frutarom, and to a lesser extent, new win performance (net of losses) in Scent.

For the year ended December 31, [removed: 2019,] [added: 2020,] our exposure to market risk was estimated using sensitivity analyses, which illustrate the change in the fair value of a derivative financial instrument assuming hypothetical changes in foreign exchange rates and interest rates.

At December 31, [removed: 2019,] [added: 2020,] our foreign currency exposures pertaining to derivative contracts exist with the Euro, Japanese Yen, British Pound, Australian Dollar and Indonesian Rupiah.

Based on a hypothetical decrease or increase of 10% in the applicable balance sheet exchange rates (primarily against the U.S. dollar), the estimated fair value of our foreign currency forward contracts would increase by approximately [removed: $10] [added: $7.0] million.

As of December 31, [removed: 2018,] [added: 2020,] these swaps were in a net liability position with an aggregate fair value of [removed: $4.2] [added: $23.4] million.

Based on a hypothetical decrease or increase of 10% in the value of the U.S. dollar against the Euro, the estimated fair value of our cross currency swaps would change by approximately [removed: $60] [added: $34.7] million.

At December 31, [removed: 2019,] [added: 2020,] the fair value of our EUR fixed rate debt was [removed: €1.9] [added: €2.1] billion.

Based on a hypothetical decrease or increase of 10% in foreign exchange rates, the estimated fair value of our EUR fixed [added: rate] debt would change by approximately [removed: $200] [added: $216.3] million.

At December 31, [removed: 2019,] [added: 2020,] the fair value of our USD fixed rate debt was $2.5 billion.

Based on a hypothetical decrease or increase of 10% in interest rates, the estimated fair value of our US fixed [added: rate] debt would change by approximately [removed: $250] [added: $245.5] million.

| | | | | | |

| --- | --- | --- | --- | --- | --- |

| | |

| --- | --- |

As of December 31, [removed: 2019,] [added: 2020,] we had [removed: 104] [added: 242] manufacturing [removed: facilities and 82] [added: facilities,] creative centers and application laboratories located in [removed: 44] [added: 47] different countries.

Sales in [removed: 2019] [added: 2020] were approximately $5.1 [removed: billion which,] [added: billion, which] management believes, [removed: makes] [added: made] us the second largest company in the taste, scent, nutrition and specialty ingredient [removed: industry.][added: industry during the period.]

During the past few years, we have diversified our customer base and leveraged our technical expertise to significantly expand our global small and mid-sized customer [removed: base through acquisitions, including, Frutarom, and the development of Tastepoint.][added: base.]

Based on [removed: 2019] [added: 2020] sales, [removed: of our] approximately [removed: 38,000 customers, approximately] 35% [removed: are] [added: were] global consumer products companies and approximately 65% [removed: are] [added: were] small and mid-sized companies.

During [removed: 2019,] [added: 2020,] our 25 largest customers accounted for [removed: 38%] [added: 39%] of our sales.

In [removed: 2019,] [added: 2020,] no customer accounted for more than 10% of sales.

Our business is geographically diverse, with sales in the U.S. representing approximately 20% of sales in [removed: 2019.][added: 2020.]

No other country [removed: represents] [added: represented] more than 6% of sales.

[removed: Beginning in the first quarter of fiscal year] [added: In] 2020, we [removed: are operating] [added: operated] our business across two [removed: segments,] [added: segments:] Taste and Scent.

While we are a global leader, our Taste business [removed: is more regional] [added: operates regionally] in nature, with different formulas that reflect local taste preferences.

Consequently, we manage our Taste business geographically, creating products in our regional creative centers which [removed: allow] [added: allows] us to satisfy local taste preferences, while also helping to ensure regulatory compliance and production standards.

We develop thousands of different flavors and taste offerings for our customers, most of which are [removed: tailor-made.][added: tailor-made, and we continually develop new formulas to meet changing consumer preferences and customer needs.]

Our Taste business comprises a diversified portfolio across flavor compounds, savory solutions, [removed: inclusions and] [added: inclusions,] nutrition and specialty [added: ingredients and flavor] ingredients.

[added: *Flavor Compounds.*] Our flavor compounds provide unique flavors that are ultimately used by our customers in savory products (soups, sauces, meat, fish, poultry, snacks, etc.), beverages (juice drinks, carbonated or flavored beverages, spirits, etc.), sweets (bakery products, candy, cereal, chewing gum, [removed: etc.),] [added: etc.)] and dairy products (yogurt, ice cream, cheese, etc.).

[added: *Savory Solutions.*] 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.

[added: *Inclusions.*] Inclusions provide taste and texture by, among other things, combining flavorings with fruit, [removed: vegetables,] [added: 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.

[added: *Nutrition and Specialty Ingredients.*] Our nutrition and specialty ingredients primarily consist of natural health ingredients, natural food protection, natural colors and flavor ingredients.

[removed: Natural] food protection ingredients consist of natural antioxidants and anti-microbials used for natural food preservation and shelf life extension to beverages, cosmetic and healthcare products, and pet food and feed additives.

Natural colors comprise a wide array of natural colors and fruit and vegetable concentrates for food, [removed: beverage,] [added: beverage] and cosmetics.

[added: *Flavor Ingredients.*] The flavor ingredients market includes natural flavor extracts, specialty botanical extracts, distillates, essential oils, citrus products, aroma [removed: chemicals,] [added: chemicals] and natural gums and resins.

Such ingredients are used for food, [removed: beverage,] [added: beverage] and [removed: flavors] [added: flavors,] and are often sold directly to food and beverage manufacturers who use them in producing consumer products.

We believe our unique portfolio of natural and synthetic ingredients, global footprint, innovative technologies and know-how, deep consumer insight and customer intimacy make us a market leader in [removed: scent.][added: scent products.]

[removed: Finally, we] [added: We] produce these products in our manufacturing facilities in a consistent, high-quality and cost-effective manner.

Our scientists and perfumers collaborate to develop new molecules, new natural [removed: extractions,] [added: extractions] and innovative processes to create [removed: unique,] [added: unique and] inspiring fragrances.

Our consumer fragrances include [removed: five] [added: three] end-use categories of products:

- Home Care, including household cleaners, dishwashing detergents and air fresheners; [added: and]

Fragrance ingredients [removed: consists] [added: consist] of natural and synthetic, [removed: of] [added: and] active and functional ingredients that are used internally and sold to third parties, including competitors, for use in [added: the] preparation of compounds.

We believe that this business allows us to leverage our fixed costs while maintaining the security of [added: our] supply for our perfumers and ultimately our customers.

Fragrance ingredients also [removed: includes] [added: include] our cosmetic active and functional ingredients, which provide biologists and cosmetic chemists with innovative solutions to address cosmetic challenges such as skin aging and hair protection.

With [removed: approximately 1,800] [added: our] separate fragrance and active and functional ingredients, plus additional botanicals and delivery systems, we believe we are a leader in the industry with the breadth of our product portfolio.

The markets in which we compete require constant innovation to [removed: stay ahead of the curve and to be] [added: remain] competitive.

Consumer preferences tend to drive change in our markets, and as science evolves and sustainability continues to be a key factor to customers and consumers, we must continue to strengthen our research and development platforms and adapt our capabilities to provide differentiated [removed: products to our customers.][added: products.]

We believe that the first step to creating an innovative and unique [removed: flavor or fragrance] [added: product] experience begins with gaining insight into the consumer and emerging trends.

Our consumer science, insight and marketing teams interpret trends, monitor product launches, analyze quantitative market [removed: data,] [added: data] and conduct numerous consumer interviews annually.

Our sensory experts direct research programs exploring topics such as fragrance performance, the psychophysics of sensory perception (including chemesthetic properties such as warming, [removed: cooling,] [added: cooling] and tingling), the genetic basis for flavor and fragrance [removed: preference,] [added: preference] and the effects of aromas on mood, performance, [removed: health,] [added: health] and well-being.

We focus and invest substantial resources in the research and development of new and innovative molecules, compounds, [removed: formulas] [added: formulations] and technologies and the application of these to our customers’ products.

Using the knowledge gained from our consumer insights [removed: programs,] [added: programs and business unit needs,] we strategically focus our resources around key research and development platforms that address or anticipate consumer needs or preferences.

By aligning our capabilities and resources to these platforms, we ensure the proper support and focus for each program so that [removed: it] [added: they] can be further developed and eventually accepted for commercial application.

We have [removed: been granted 415 patents in the United States since 2000 and we have] developed many unique molecules and delivery systems for our customers that are used as the foundations of successful flavors and fragrances around the world.

We have [removed: traditionally] [added: historically] conducted our principal basic research and development activities in Union Beach, New Jersey, where we employ scientists and application engineers who collaborate with our other research and development centers around the world, to support the:

On February 1, 2021, pursuant to an Agreement and Plan of Merger (the "Merger Agreement") with DuPont de Nemours, Inc. ("DuPont"), a wholly owned subsidiary of IFF merged with and into Nutrition & Biosciences, Inc. (“N&B”), a subsidiary of DuPont formed to hold the Nutrition and Biosciences business (the “N&B Business”, and such transaction, the "N&B Transaction").

The shares issued in the Merger represented approximately 55.4% of the common stock of IFF on a fully diluted basis, after giving effect to the Merger, as of February 1, 2021.

As a result of the N&B Transaction, and following our 2018 acquisition of Frutarom Industries Ltd., we have expanded our global leadership positions, which now include high-value ingredients and solutions in the Food & Beverage, Home & Personal Care and Health & Wellness markets, and across key Taste, Texture, Scent, Nutrition, Enzymes, Cultures, Soy Proteins, Pharmaceutical Excipients, Biocides and Probiotics categories.

As the information provided throughout this report is historical, it primarily reflects information about the Company as of December 31, 2020, without giving effect to the N&B Transaction or the N&B Business.

As a result of the N&B Transaction, our business is now organized in four business segments: Nourish (a combination of IFF’s Taste business with N&B’s Food & Beverage business), Scent, Health & Biosciences and Pharma Solutions.

As of December 31, 2020, our business consisted of our Taste and Scent segments.

Natural

- Body Care, including personal wash, hair care and toiletries products.

Organization in 2021, following the N&B Transaction

As a result of the N&B Transaction, we will now be organized in four segments: Nourish, Scent, Health & Biosciences, and Pharma Solutions.

The Nourish segment consists of most of our legacy Taste segment, N&B’s Food & Beverage division and the food protection business of N&B’s Health & Biosciences division.

This segment comprises an innovative and broad portfolio of natural-based ingredients to enhance nutritional value, texture and functionality in a wide range of beverage, dairy, bakery, confectionery and culinary applications.

The Scent segment consists of our legacy Scent segment as well as, effective January 2, 2021, our Flavor Ingredients business.

The Health & Biosciences segment contains N&B’s Health & Biosciences division, with the exception of food protection, which is part of our Nourish division, as well as parts of our Nutrition and Specialty Ingredients offerings.

This segment is the biotechnology driven portfolio of the N&B Business, where enzymes, food cultures, probiotics and specialty ingredients for food and non-food applications are developed and produced.

The Health & Biosciences business includes a biotechnology-driven probiotics portfolio, that produces cultures for use in fermented foods such as yogurt, cheese and fermented beverages.

It also uses industrial fermentation to produce enzymes and microorganisms that provide product and process performance benefits to household detergents, animal feed, ethanol production and brewing.

The Pharma Solutions segment consists of N&B’s Pharma Solutions division, which is one of the world’s largest producers of cellulosics and alginates-based pharma excipients, and is used to improve the functionality and delivery of active pharmaceutical ingredients, including controlled or modified drug release formulations, and enable the development of more effective pharma solutions.

As of December 31, 2020, we have been granted 430 patents in the United States, since 2000, and have 564 pending patent applications.

Following the N&B Transaction, we expect that our principal basic research and development activities will continue in Union Beach, New Jersey, as well as in Wilmington, Delaware, Palo Alto, California, Barbrand, Denmark, and Leiden, The Netherlands.

The N&B Business has strong product and application development pipelines built upon a global network that includes research and development, as well as regulatory and product stewardship capabilities.

Natural ingredients are derived from flowers, fruits and other botanical products, as well as from animal and marine products, and commodity crops like wheat, corn and soy.

As a continuation of this initiative, we expect to close approximately nine additional manufacturing sites by the end of 2021.

In line with our purpose of applying science and creativity for a better world, our sustainability goals include:

- *Strengthening Responsible Sourcing* - we seek to ensure ethical practices in our supply chain, reduce impact to the environment and support workers and grower communities.

In 2020, we were named for the first time to the Dow Jones Sustainability Indices, a family of best-in-class benchmarks for investors who recognize that sustainable business practices are critical to generating long-term shareholder value.

Named to both the 2020 World Index and the North America Index, this distinction validates IFF’s leadership position in sustainability performance and underscores our commitment to executing on key environmental, social and governance (ESG) priorities.

We were also awarded the 2020 EcoVadis platinum sustainability rating, a highly selective designation by EcoVadis, a leading platform for monitoring sustainability in global supply chains.

This distinction places IFF in the top 1% of companies assessed in the areas of Environment, Labor & Human Rights, Ethics and Sustainable Procurement.

Our commitment to good governance starts with our Board and Executive Committee and is supported by a strong governance framework.

This framework is implemented through our organization with frequent communications and trainings on best practices in governance, risk management, business conduct, compliance and ethics.

Moreover, we adhere to the highest standards of ethics, integrity, honesty and respect in our dealings with each other and our business partners.

To maintain those relationships and our strong reputation, we have a robust program to ensure compliance with our Codes.

While the cost of compliance with such laws and regulations leads to higher overall capital expenditure, which can be significant in certain periods, we do not know of any material capital expenditures necessary to comply with such laws and regulations.

We continue to monitor existing and pending laws and regulations and while the impact of regulatory changes cannot be predicted with certainty, compliance has not had, and is not expected to have a material adverse effect on capital expenditure, earnings or competitive position.

With the completion of the N&B Transaction, we added more than 10,000 employees around the world, of whom approximately 30% are employed in the United States.

*Culture and Values*

Our culture is based on our five corporate values of empowerment, expertise, innovation, integrity and responsibility, and the expression of these values can be seen and felt throughout our history.

Our employees appreciate that they contribute to products that touch and enhance the lives of millions of people around the world.

In 2020, we implemented a high-performing culture employee engagement initiative designed to further underscore three key attributes of our culture: extreme accountability, bias toward action and effective collaboration.

We are a leading innovator of sensory experiences that move the world.

Our creative capabilities, global footprint, regulatory and technological know-how provide us a competitive advantage in meeting the demands of our global, regional and local customers around the world.

The 2018 acquisition of Frutarom solidified our position as an industry leader across an expanded portfolio of products, resulting in a broader customer base across small, mid-sized and large companies and an expansion to new adjacencies that provides a platform for significant cross-selling opportunities.

Our product portfolio covers taste, scent and complementary adjacent products, and we have over 128,000 individual products that are provided to customers in approximately 200 countries.

Our global manufacturing footprint allows us to optimize our supply chain and support our global and regional customers.

We currently anticipate that we will continue to optimize our global facilities footprint as we seek opportunities to efficiently and cost-effectively deliver value to our global and regional customers.

We believe that more significant future growth potential for taste and scent, and for our business, exists in the emerging markets (which we classify as all markets except North America, Japan, Australia, and Western, Southern and Northern Europe).

As a result, we intend to continue to build on our multi-decade experience in the emerging markets.

As our customers seek to grow their businesses in emerging markets, we provide them the ability to leverage our long-standing international presence and extensive market knowledge to help drive their brands in these markets.

For the periods presented in this Form 10-K, our business was organized in three segments: Taste, Scent and Frutarom.

As part of this new operating model, nearly all of the former Frutarom business segment was combined with the Taste segment.

The financial results presented in this Form 10-K reflect the Taste, Scent and legacy Frutarom business segments prior to the realignment.

Vision 2021 and Frutarom Integration Initiative

Following the acquisition of Frutarom, we developed a new strategy, Vision 2021, targeting accelerated revenue and profitability growth.

Vision 2021 has four "pillars":

- *Unlocking growth opportunities* \- capitalizing on our expanded product portfolio, broader customer base and extensive geographic presence as well as cross-selling and integrated solutions

- *Driving innovation* \- investing in high-growth and high-return platforms to continue to drive our research and development pipeline and accelerate long-term growth

- *Managing the Portfolio* - focusing on optimizing our portfolio to maximize value creation

- *Accelerating Business Transformation* - successfully integrating Frutarom while delivering on synergy targets and achieving productivity gains across the business base.

At the same time, we have been executing on our Frutarom integration plan to build our go-to-market business model by replicating the Tastepoint blueprint across certain markets, clarify roles and responsibilities and, thereby, accelerate decision-making through a series of organizational changes primarily aimed at driving cost synergies in the manufacturing and creative networks, procurement and overhead functions.

Pending Transaction with Nutrition & Biosciences, Inc.

On December 15, 2019, the Company entered into definitive agreements with DuPont de Nemours, Inc. (“DuPont”), including an Agreement and Plan of Merger, pursuant to which DuPont will transfer its nutrition and biosciences business (the “N&B Business”) to Nutrition & Biosciences, Inc., a Delaware corporation and wholly owned subsidiary of DuPont (“N&B”), and N&B will merge with and into a wholly owned subsidiary of IFF in exchange for a number of shares of IFF common stock, par value $0.125 per share (“IFF Common Stock”) (collectively, the “DuPont N&B Transaction”).

In connection with the transaction, DuPont will receive a one-time $7.3 billion special cash payment (the “Special Cash Payment”), subject to certain adjustments.

As a result of the DuPont N&B Transaction, holders of DuPont’s common stock will own approximately 55.4% of the outstanding shares of IFF on a fully diluted basis.

We believe that the combination of IFF and the N&B Business will create a global leader in high-value ingredients and solutions in the global Food & Beverage, Home & Personal Care and Health & Wellness markets.

We expect that the companies' complementary product portfolios will give the combined company leadership positions across key Taste, Texture, Scent, Nutrition, Enzymes, Cultures, Soy Proteins and Probiotics categories.

Completion of the DuPont N&B Transaction is subject to various closing conditions, including, among other things, (1) approval by IFF’s shareholders of the issuance of IFF Common Stock in connection with the transaction; (2) the effectiveness of the registration statements to be filed with the Securities and Exchange Commission pursuant to the Merger Agreement; and (3) the expiration of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and obtaining certain other consents, authorizations, orders or approvals from governmental authorities.

We expect that the transaction will close in early 2021.

We continually develop new formulas to meet changing consumer preferences and customer needs.

The savory solutions compounds, inclusions and nutrition and specialty ingredients products were included in the legacy Frutarom businesses during 2019 and we will begin reporting them under the Taste business segment in 2020.

Flavor Compounds.

Savory Solutions.

Inclusions.

Nutrition and Specialty Ingredients.

Flavor Ingredients.

In September 2019, we opened our new Home & Fabric Care Innovation Center in Holmdel, New Jersey, a 60,000 square-foot research and development hub, to further drive innovation in our home care and fabric care categories, including digital olfaction technology, immersive virtual reality scent experiences, and the latest generation of encapsulation technology.

- Personal Wash, including bar soaps and shower gels;

- Hair Care, including shampoos and conditioners; and

- Toiletries, including deodorants and shaving creams.

Legacy Frutarom

On August 12, 2019, Marc Jansen filed a putative securities class action against IFF, its Chairman and CEO, and its [removed: CFO,] [added: then-CFO,] in the United States District Court for the Southern District of New York.

The [removed: lawsuit, which] [added: lawsuit] was filed after IFF disclosed that preliminary results of investigations indicated that Frutarom businesses operating principally in Russia and Ukraine had made improper payments to representatives of [removed: customers, alleges that defendants made materially false and misleading statements or omissions concerning IFF’s acquisition of Frutarom, the integration of the two companies, and IFF’s financial reporting and results.][added: customers.]

The [removed: lawsuit brings] [added: amended complaint asserts] claims under Section 10(b) of the Securities Exchange Act of 1934 and SEC Rule [removed: 10b-5] [added: 10b-5, and under the Israeli Securities Act-1968,] against all defendants, and under Section 20(a) of the Securities Exchange Act of 1934 against the individual defendants, [removed: and was filed] on behalf of a putative class of persons and entities who purchased or otherwise acquired IFF securities [added: on the New York Stock Exchange] between May 7, 2018 and August [removed: 5,] [added: 12, 2019 and persons and entities who purchased or otherwise acquired IFF securities on the Tel Aviv Stock Exchange between October 9, 2018 and August 12,] 2019.

[removed: The complaint seeks an] award of unspecified compensatory damages, costs, and expenses.

Two motions to approve securities class actions were filed in the Tel Aviv District Court, [removed: Israel] [added: Israel,] in August 2019, similarly alleging, among other things, false and misleading statements largely in connection with IFF’s acquisition of Frutarom and the above-mentioned improper payments.

[removed: Both assert] [added: One motion ("Borg") asserts] claims under the U.S. federal securities laws against IFF, its Chairman and CEO, and its former CFO.

[removed: One also asserts] [added: The other motion ("Oman") (following an initial amendment) asserted] claims under the Israeli Securities Act-1968 against IFF, [removed: as well as] [added: its Chairman and CEO, and its former CFO, and] against Frutarom and certain former Frutarom officers and directors, [removed: and asserts] [added: as well as] claims under the Israeli Companies Act-1999 against certain former Frutarom officers and directors.

On March 16, 2020, lead plaintiff filed an amended complaint, which added Frutarom and certain former officers of Frutarom as defendants.

The amended complaint alleges, among other things, that defendants made materially false and misleading statements or omissions concerning IFF’s acquisition of Frutarom, the integration of the two companies, and the companies’ financial reporting and results.

The amended complaint seeks an

IFF, its officers, and Frutarom filed a motion to dismiss the case on June 26, 2020.

On November 8, 2020, IFF and its officers filed their response to the Borg motion.

On October 4, 2020, the Oman plaintiff filed a motion to remove IFF and its officers from the motion and to add factual allegations from the U.S. amended complaint.

Responses to the motion to amend the Oman motion were filed during November 2020.

The court granted the motion to amend the Oman motion on February 17, 2021.

The parties agreed, pursuant to the court’s recommendation, to attempt to resolve the dispute through mediation, which is still ongoing, during which the proceedings relating to this claim are stayed.

On March 11, 2020, an IFF shareholder filed a motion to approve a class action in Israel against, among others, Frutarom, Yehudai, and Frutarom’s former board of directors, alleging that former minority shareholders of Frutarom were harmed as a result of the US $20 million bonus paid to Yehudai.

The parties to this motion agreed to attempt to resolve the dispute through mediation to take place regarding the aforesaid claim against Yehudai, which as noted is still ongoing, during which the proceedings relating to this motion are stayed.

Investigation

On June 3, 2020, the Israel Police’s National Fraud Investigation Unit and the Israeli Securities Authority commenced an investigation into Frutarom and certain of its former executives, based on suspected bribery of foreign officials, money laundering, and violations of the Israeli Securities Act-1968.

The National Fraud Investigation Unit and the Israeli Securities Authority have provided IFF and Frutarom with various orders.

IFF is working to ensure compliance with such orders, all in accordance with, and subject to, Israeli law.

| | | | | | |

| --- | --- | --- | --- | --- | --- |

Investigations

IFF’s investigation of allegations that improper payments to representatives of customers were made in Russia and Ukraine has been completed.

Such allegations were substantiated, and IFF has confirmed that key members of Frutarom’s senior management at the time were aware of such payments.

IFF has taken appropriate remedial actions, including replacing senior management in relevant locations, and believes that such improper customer payments have stopped.

IFF has confirmed in these investigations that total affected sales represented less than 1% of the Company's consolidated net sales for 2019.

The impact of the reviews, including the costs associated with them, were not material to IFF’s results of operations or financial condition.

In addition, no evidence was uncovered suggesting that any of these compliance matters had any connection to the United States.

In addition to IFF’s standard compliance integration activities, IFF has also conducted a robust secondary review of Frutarom’s operations in certain other jurisdictions, including those that it deems “high risk”.

These reviews supplement IFF’s existing global compliance initiatives that were implemented at Frutarom in connection with the closing of the Frutarom transaction.

These secondary reviews were conducted with the assistance of outside legal and accounting firms.

These reviews are complete.

IFF is committed to the highest standards of ethics and integrity and has strict compliance policies in place that are regularly reviewed and updated.

| | |

| --- | --- |

[removed: FORM 10-K][added: FORM 10-K]

| | [added: | |] ☑ | [added: | |] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | [added: | |]

For the fiscal year [removed: ended December] [added: ended December] 31, [removed: 2019][added: 2020]

| | [added: | |] ☐ | [added: | |] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | [added: | |]

| | | [added: | | | |] For the transition period from to | [added: | |]

Commission File [removed: Number 1-4858][added: Number 1-4858]

INTERNATIONAL FLAVORS & FRAGRANCES [removed: INC.][added: INC.]

| New York | [added: | |] 13-1432060 | [added: | |]

| *(State or other [removed: jurisdiction* *of] [added: jurisdiction of] incorporation or organization)* | [added: | |] *(I.R.S. Employer Identification No.)* | [added: | |]

521 West 57th [removed: Street, New York, NY 10019-2960][added: Street, New York, NY 10019-2960]

Registrant’s telephone number, including area code [removed: (212) 765-5500][added: (212) 765-5500]

| Title of Each Class | | [added: | | | |] Trading Symbol | | [added: | | | |] Name of Each Exchange on Which Registered | [added: | |]

| Common Stock, par value 12 1/2¢ per share | | [added: | | | |] IFF | | [added: | | | |] New York Stock Exchange | [added: | |]

| 6.00% Tangible Equity Units | | [added: | | | |] IFFT | | [added: | | | |] New York Stock Exchange | [added: | |]

| 0.500% Senior Notes due 2021 | | [added: | | | |] IFF 21 | | [added: | | | |] New York Stock Exchange | [added: | |]

| 1.750% Senior Notes due 2024 | | [added: | | | |] IFF 24 | | [added: | | | |] New York Stock Exchange | [added: | |]

| 1.800% Senior Notes due 2026 | | [added: | | | |] IFF 26 | | [added: | | | |] New York Stock Exchange | [added: | |]

Yes [removed: þ] [added: ☑] No o

Yes o No [removed: þ][added: ☑]

| Large accelerated filer | [removed: þ] | [added: | ☑ | | |] Accelerated filer | [added: | |] o | [added: | |]

| Non-accelerated filer | [added: | |] o | [added: | |] Smaller reporting company | [added: | |] ☐ | [added: | |]

| | | [added: | | | |] Emerging growth company | [added: | |] ☐ | [added: | |]

Yes [removed: ☐] [added: ☑] No [removed: þ][added: o]

The aggregate market value of the voting stock held by non-affiliates of the Registrant was [removed: $15,491,883,187] [added: $13,567,537,235] as of June 30, [removed: 2019.][added: 2020.]

As of February [removed: 26, 2020,] [added: 15, 2021,] there were [removed: 106,802,194] [added: 248,726,256] shares of the registrant’s common stock, par value 12 1/2¢ per share, outstanding.

Portions of the registrant’s proxy statement for the [removed: 2020] [added: 2021] Annual Meeting of Shareholders (the “IFF [removed: 2020] [added: 2021] Proxy Statement”) are incorporated by reference in Part III of this Form 10-K.

| | | [added: | | | |] PAGE | [added: | |]

| | [added: | |] PART I | | [added: | | | |]

| ITEM 1. | [removed: [Business](#sF4A8AE524E14520FA649A0EE926E1768)] | [removed: [3](#sF4A8AE524E14520FA649A0EE926E1768)] | [added: [Business](#ic4b44061b16a422c926a191f63aecd6d_13) | | | [3](#ic4b44061b16a422c926a191f63aecd6d_13) | | |]

| ITEM 1A. | [added: | |] [Risk [removed: Factors](#sD93A14A5EDA35FEAB3699AF87EA8726D)] [added: Factors](#ic4b44061b16a422c926a191f63aecd6d_16)] | [removed: [12](#sD93A14A5EDA35FEAB3699AF87EA8726D)] | [added: | [13](#ic4b44061b16a422c926a191f63aecd6d_16) | | |]

| ITEM 1B. | [added: | |] [Unresolved Staff [removed: Comments](#s076477D24F4B5D2796342686271CBCD0)] [added: Comments](#ic4b44061b16a422c926a191f63aecd6d_19)] | [removed: [27](#s076477D24F4B5D2796342686271CBCD0)] | [added: | [30](#ic4b44061b16a422c926a191f63aecd6d_19) | | |]

| ITEM 2. | [removed: [Properties](#s35F77F1215095FC7940F75FC6A25E94D)] | [removed: [28](#s35F77F1215095FC7940F75FC6A25E94D)] | [added: [Properties](#ic4b44061b16a422c926a191f63aecd6d_22) | | | [31](#ic4b44061b16a422c926a191f63aecd6d_22) | | |]

| ITEM 3. | [added: | |] [Legal [removed: Proceedings](#s752EC7D1506C58B191659855CB8986A1)] [added: Proceedings](#ic4b44061b16a422c926a191f63aecd6d_25)] | [removed: [29](#s752EC7D1506C58B191659855CB8986A1)] | [added: | [32](#ic4b44061b16a422c926a191f63aecd6d_25) | | |]

| ITEM 4. | [added: | |] [Mine Safety [removed: Disclosures](#s715A690302655309A6E3D8EF469AB7C1)] [added: Disclosures](#ic4b44061b16a422c926a191f63aecd6d_28)] | [removed: [30](#s715A690302655309A6E3D8EF469AB7C1)] | [added: | [33](#ic4b44061b16a422c926a191f63aecd6d_28) | | |]

| | [added: | |] PART II | | [added: | | | |]

| ITEM 5. | [added: | |] [Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities](#s4B0FCA4BCA5957EE9C3129E39D538124)] [added: Securities](#ic4b44061b16a422c926a191f63aecd6d_34)] | [removed: [30](#s4B0FCA4BCA5957EE9C3129E39D538124)] | [added: | [33](#ic4b44061b16a422c926a191f63aecd6d_34) | | |]

| ITEM 6. | [added: | |] [Selected Financial [removed: Data](#s4075DD7DC41F50B895BD81D85A21ED4B)] [added: Data](#ic4b44061b16a422c926a191f63aecd6d_37)] | [removed: [32](#s4075DD7DC41F50B895BD81D85A21ED4B)] | [added: | [35](#ic4b44061b16a422c926a191f63aecd6d_37) | | |]

| ITEM 7. | [added: | |] [Management’s Discussion and Analysis of Financial Condition and Results of [removed: Operations](#s1A7EECC346735954AB805AD2D6BDD905)] [added: Operations](#ic4b44061b16a422c926a191f63aecd6d_40)] | [removed: [36](#s1A7EECC346735954AB805AD2D6BDD905)] | [added: | [36](#ic4b44061b16a422c926a191f63aecd6d_40) | | |]

| ITEM 7A. | [added: | |] [Quantitative and Qualitative Disclosures About Market [removed: Risk](#sF91BDBDEC1EA5A95A9E604202626FDA9)] [added: Risk](#ic4b44061b16a422c926a191f63aecd6d_58)] | [removed: [58](#sF91BDBDEC1EA5A95A9E604202626FDA9)] | [added: | [51](#ic4b44061b16a422c926a191f63aecd6d_58) | | |]

| ITEM 8. | [added: | |] [Financial Statements and Supplementary [removed: Data](#s4CC669046FEF5486830F7AA98E8F3CF5)] [added: Data](#ic4b44061b16a422c926a191f63aecd6d_61)] | [removed: [58](#s4CC669046FEF5486830F7AA98E8F3CF5)] | [added: | [52](#ic4b44061b16a422c926a191f63aecd6d_61) | | |]

| | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | |

| --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

Yes ☑ No o

| | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.

Yes ☐ No ☑

| | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | |

| | | | | | | | | |

| | | | | | | | | |

| | | | | | | | | |

| | | | | | | | | |

| | | | | | | | | |

| | | | | | | | | |

| | | | | | | | | |

| | | | | | | | | |

| | | | | | | | | |

| | | | | | | | | |

| | | | | | | | | |

| | | | | | | | | |

| | | | | | | | | |

| | | | | | | | | |

| | | | | | | | | |

| | | | | | | | | |

| | | | | | | | | |

| | | | | | | | | |

| | | | | | | | | |

| | | | | | | | | |

| [SIGNATURES](#ic4b44061b16a422c926a191f63aecd6d_229) | | | | | | [113](#ic4b44061b16a422c926a191f63aecd6d_229) | | |

| | | | | | |

| --- | --- | --- | --- | --- | --- |

| | | |

| --- | --- | --- |

| | |

| --- | --- |

| | | | | |

| --- | --- | --- | --- | --- |

| | | | |

| --- | --- | --- | --- |

| [SIGNATURES](#s1B2F58DA6D3656C2A1AD67FCDA25E217) | | [127](#s1B2F58DA6D3656C2A1AD67FCDA25E217) |

| | | | | | |

| --- | --- | --- | --- | --- | --- |

| | |

| --- | --- |

[removed: Our] [added: IFF] principal properties [added: as of December 31, 2020,] are as follows:

| Location | [added: | |] Operation | [added: | |]

| United States | | [added: | | | |]

| Carrollton, TX(1) | [added: | |] Production of flavor compounds; flavor laboratories. | [added: | |]

| Hazlet, NJ | [added: | |] Production of fragrance compounds. | [added: | |]

| Jacksonville, FL | [added: | |] Production of fragrance ingredients. | [added: | |]

| New York, NY(1) | [added: | |] Fragrance laboratories; corporate headquarters. | [added: | |]

| South Brunswick, NJ(1) | [added: | |] Production of flavor compounds and ingredients; flavor laboratories. | [added: | |]

| Union Beach, NJ | [added: | |] Research and development center. | [added: | |]

| Holmdel, NJ(1) | [added: | |] Research and development center. | [added: | |]

| Philadelphia, PA | [added: | |] Production of flavor compounds; flavor laboratories. | [added: | |]

| France | | [added: | | | |]

| Neuilly(1) | [added: | |] Fragrance laboratories. | [added: | |]

| Grasse | [added: | |] Production of fragrance [removed: compounds,] [added: compounds] and cosmetic ingredients. | [added: | |]

| Great Britain | | [added: | | | |]

| Haverhill | [added: | |] Production of flavor compounds and ingredients, and fragrance ingredients; flavor laboratories. | [added: | |]

| Netherlands | | [added: | | | |]

| Hilversum | [added: | |] Flavor and fragrance laboratories. | [added: | |]

| Tilburg | [added: | |] Production of flavor compounds and ingredients, and fragrance compounds. | [added: | |]

| Spain | | [added: | | | |]

| Benicarló | [added: | |] Production of fragrance ingredients. | [added: | |]

| Argentina | | [added: | | | |]

| Garin | [added: | |] Production of flavor and fragrance compounds; flavor and fragrance laboratories. | [added: | |]

| Brazil | | [added: | | | |]

| Rio de Janeiro | [added: | |] Production of fragrance compounds. | [added: | |]

| Taubate | [added: | |] Production of flavor compounds and ingredients. | [added: | |]

| Mexico | | [added: | | | |]

| Tlalnepantla | [added: | |] Production of flavor and fragrance compounds; flavor and fragrance laboratories. | [added: | |]

| India | | [added: | | | |]

| Mumbai(2) | [added: | |] Flavor and fragrance laboratories. | [added: | |]

| [removed: Chennai(2)] [added: Jakarta] | [added: | |] Production of flavor compounds and [removed: ingredients,] [added: ingredients; flavor] and fragrance [removed: compounds; flavor] laboratories. | [added: | |]

| Australia | | [added: | | | |]

| Dandenong | [added: | |] Production of flavor compounds and flavor ingredients. | [added: | |]

| China | | [added: | | | |]

| Guangzhou(2) | [added: | |] Production of fragrance [added: compounds and flavor] compounds. | [added: | |]

| Shanghai(1)(2) | [added: | |] Flavor and fragrance laboratories. | [added: | |]

| Zhangjiagang(2) | [added: | |] Production of flavor compounds. | [added: | |]

| Jiande(2) | [added: | |] Production of fragrance ingredients. | [added: | |]

| Yungpu(2) | [added: | |] Production of flavor compounds. | [added: | |]

| Indonesia | | [added: | | | |]

| | | | | | |

| --- | --- | --- | --- | --- | --- |

| | | | | | |

| --- | --- | --- | --- | --- | --- |

| Location | | | Operation | | |

The N&B Business’s corporate headquarters is currently located in Wilmington, Delaware.

Its manufacturing, processing, marketing and research and development facilities, as well as regional purchasing offices and distribution centers, are located throughout the world.

The N&B Business’s manufacturing sites, innovation centers and principal offices are located worldwide with about 20 sites in Asia Pacific, 47 in Europe, Africa and Middle East, 13 in Latin America and 25 in the United States and Canada.

Our principal sites include facilities which, in the opinion of its management, are suitable and adequate for their use and have sufficient capacity for its current business needs and expected near-term growth.

| | | | | | |

| --- | --- | --- | --- | --- | --- |

| | |

| --- | --- |

| Minas Gerias(1) | Production of taste solutions. |

| Hamburg(1) | Production of fragrance compounds. |

Our common stock is principally traded on the New York Stock Exchange [removed: and available on the Tel Aviv Stock Exchange, both] under the ticker symbol "IFF".

| Title of Class | [added: | |] Number of shareholders of record as of February [removed: 26, 2020] [added: 15, 2021] | [added: | |]

| Common stock, par value 12 1/2¢ per share | [removed: 1,555] | [added: | 3,865 | | |]

The total return assumes that dividends were reinvested daily and is based on a $100 investment on December 31, [removed: 2014.][added: 2015.]

[removed: ][added: ]

| Peer Group Companies | | [added: | | | |]

| [removed: Campbell Soup Company] [added: Church & Dwight Co., Inc.] | [added: | |] The Estée Lauder Companies Inc. | [added: | |]

| The [removed: Clorox] [added: Coca-Cola] Company | [added: | |] McDonald’s Corporation | [added: | |]

| Colgate-Palmolive Company | [removed: PepsiCo, Inc.] | [added: | Nestle SA | | |]

| [removed: Conagra] [added: The Hershey Company | | | YUM!] Brands, Inc. | [removed: The Procter & Gamble Company] | [added: |]

| Edgewell Personal Care Company(1) | [removed: Revlon, Inc.] | [added: | The Procter & Gamble Company | | |]

| Hormel Foods Corporation | [removed: YUM! Brands, Inc.] | [added: | Symrise AG | | |]

[removed: | (1) | Edgewell] [added: (1)Edgewell] Personal Care has been included starting from July 1, 2015 when it spun off from Energizer Holdings. [removed: |]

| | | | | | |

| --- | --- | --- | --- | --- | --- |

| | | | | | |

| --- | --- | --- | --- | --- | --- |

| Campbell Soup Company | | | Kellogg Company | | |

| The Clorox Company | | | McCormick & Company, Incorporated | | |

| Conagra Brands, Inc. | | | PepsiCo, Inc. | | |

| General Mills, Inc. | | | Unilever N.V. | | |

| Givaudan SA | | | | | |

| | | | | | |

| --- | --- | --- | --- | --- | --- |

| | |

| --- | --- |

| Avon Products, Inc. | Kellogg Company |

| Church & Dwight Co., Inc. | McCormick & Company, Incorporated |

| The Coca-Cola Company | Nestle SA |

| General Mills, Inc. | Sensient Technologies Corporation |

| The Hershey Company | Unilever N.V. |

[removed: This] [added: *This] data should be read in conjunction with the Consolidated Financial Statements and Notes thereto, and with Item 7.

| | [added: | |] Fiscal Year Ended December 31, 2019 | | | | | | | | | | | | | | | | | | | [added: | | | | | | | |]

| *(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)* | [added: | |] First Quarter | | | | [added: | |] Second Quarter | | | | [added: | |] Third Quarter | | | | [added: | |] Fourth Quarter | | | | [added: | |] Total Year | | |

| Net Sales | [added: | |] $ | 1,297,402 | | | [added: | |] $ | 1,291,568 | | | [added: | |] $ | 1,267,345 | | | [added: | |] $ | 1,283,769 | | | [added: | |] $ | 5,140,084 | |

| Gross [removed: Profit(a)] [added: Profit*] | [added: | |] 531,259 | | | | [added: | |] 546,239 | | | | [added: | |] 533,088 | | | | [added: | |] 502,162 | | | | [added: | |] 2,112,748 | | |

| Income before taxes | [added: | |] 134,576 | | | | [added: | |] 169,481 | | | | [added: | |] 156,866 | | | | [added: | |] 96,529 | | | | [added: | |] 557,452 | | |

| Net income | [added: | |] 111,214 | | | | [added: | |] 138,869 | | | | [added: | |] 129,807 | | | | [added: | |] 80,378 | | | | [added: | |] 460,268 | | |

| Net income attributable to IFF [removed: stockholders(b)] [added: stockholders*] | [added: | |] 108,829 | | | | [added: | |] 136,377 | | | | [added: | |] 127,124 | | | | [added: | |] 83,543 | | | | [added: | |] 455,873 | | |

| Net income per share — [removed: basic(d)] [added: basic*] | [added: | |] 0.97 | | | | [added: | |] 1.21 | | | | [added: | |] 1.15 | | | | [added: | |] 0.71 | | | | [added: | |] 4.05 | | |

| Net income per share — [removed: diluted(c)] [added: diluted*] | [added: | |] 0.96 | | | | [added: | |] 1.20 | | | | [added: | |] 1.13 | | | | [added: | |] 0.70 | | | | [added: | |] 4.00 | | |

| | [added: | |] Fiscal Year Ended December 31, [removed: 2018] [added: 2020] | | | | | | | | | | | | | | | | | | | [added: | | | | | | | |]

[removed: (DOLLARS IN THOUSANDS EXCEPT PER SHARE AND PERCENTAGE AMOUNTS)][added: | *(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)* | | | First Quarter | | | | | | Second Quarter | | | | | | Third Quarter | | | | | | Fourth Quarter | | | | | | Total Year | | |]

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Net Sales | | | $ | 1,347,317 | | | | | $ | 1,198,773 | | | | | $ | 1,268,076 | | | | | $ | 1,270,073 | | | | | $ | 5,084,239 | |

| Gross Profit* | | | 565,867 | | | | | | 481,842 | | | | | | 524,427 | | | | | | 513,730 | | | | | | 2,085,866 | | |

| Income before taxes | | | 153,508 | | | | | | 103,065 | | | | | | 105,500 | | | | | | 79,298 | | | | | | 441,371 | | |

| Net income | | | 127,211 | | | | | | 87,366 | | | | | | 86,231 | | | | | | 66,564 | | | | | | 367,372 | | |

| Net income attributable to IFF stockholders* | | | 124,607 | | | | | | 86,204 | | | | | | 84,828 | | | | | | 67,589 | | | | | | 363,228 | | |

| Net income per share — basic* | | | 1.16 | | | | | | 0.75 | | | | | | 0.76 | | | | | | 0.57 | | | | | | 3.25 | | |

| Net income per share — diluted* | | | 1.15 | | | | | | 0.74 | | | | | | 0.75 | | | | | | 0.57 | | | | | | 3.21 | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

The key variances quarter-over-quarter relate to the volume of restructuring, acquisition and integration related charges which are included in the total of Non-GAAP adjustments.

Refer to the Non-GAAP reconciliation in Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations for additional information.*

| | | | | | |

| --- | --- | --- | --- | --- | --- |

INTERNATIONAL FLAVORS & FRAGRANCES INC.

*The following selected consolidated financial data is derived from our Consolidated Financial Statements.

| | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Net Sales | $ | 930,928 | | | $ | 920,016 | | | $ | 907,548 | | | $ | 1,219,047 | | | $ | 3,977,539 | |

| Gross Profit(a) | 405,809 | | | | 398,717 | | | | 400,666 | | | | 477,515 | | | | 1,682,707 | | |

| Income before taxes | 158,837 | | | | 121,918 | | | | 100,702 | | | | 66,300 | | | | 447,757 | | |

| Net income | 129,416 | | | | 99,149 | | | | 95,716 | | | | 15,500 | | | | 339,781 | | |

| Net income attributable to IFF stockholders(b) | 129,416 | | | | 99,149 | | | | 95,716 | | | | 13,021 | | | | 337,302 | | |

| Net income per share — basic(d) | 1.63 | | | | 1.25 | | | | 1.18 | | | | 0.09 | | | | 3.81 | | |

| Net income per share — diluted(c)(e) | 1.63 | | | | 1.25 | | | | 1.17 | | | | 0.09 | | | | 3.79 | | |

_______________________

See the following chart for (a)-(e) footnote explanations.*

Included in the above quarterly results are the following:

| | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | Footnotes | | | | | | | | | |

| *(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)* | Gross Profit (a) | | | Net Expense (Income) (b) | | | Diluted EPS (c) | | | Description |

| Q1 2019 | | | | | | | | | | |

| Integration Related Costs | $ | 156 | | $ | 11,548 | | $ | 0.10 | | Represents costs related to the integration of the Frutarom acquisition. |

| Restructuring and Other Charges, net | — | | | 12,143 | | | 0.11 | | | Represents severance costs related to restructuring programs. |

| Frutarom Acquisition Related Costs | 7,850 | | | 7,999 | | | 0.07 | | | Represents transaction-related costs and expenses related to the acquisition of Frutarom. |

| Q2 2019 | | | | | | | | | | |

| Integration Related Costs | 165 | | | 8,843 | | | 0.08 | | | Represents costs related to the integration of the Frutarom acquisition. |

| Restructuring and Other Charges, net | — | | | 1,973 | | | 0.02 | | | Represents severance costs related primarily to Frutarom. |

| Frutarom Acquisition Related Costs | — | | | (1,290 | | ) | (0.01 | | ) | Represents reductions in the contingent consideration payable related to certain acquisitions made by Frutarom. |

| Q3 2019 | | | | | | | | | | |

| Integration Related Costs | 187 | | | 8,164 | | | 0.07 | | | Represents costs related to the integration of the Frutarom acquisition. |

| Restructuring and Other Charges, net | — | | | 2,905 | | | 0.03 | | | Represents costs primarily related to the Frutarom Integration Initiative and the 2019 Severance Program. |

| Frutarom Acquisition Related Costs | (3,603 | | ) | (2,199 | | ) | (0.02 | | ) | Represents a measurement period adjustment to the amount of the inventory "step-up" recorded. |

| Q4 2019 | | | | | | | | | | |

| Integration Related Costs | 222 | | | 14,144 | | | 0.12 | | | Represents costs related to the integration of the Frutarom acquisition. |

| Restructuring and Other Charges, net | — | | | 5,947 | | | 0.05 | | | Represents costs primarily related to the Frutarom Integration Initiative and the 2019 Severance Program. |

| Frutarom Acquisition Related Costs | — | | | 636 | | | 0.01 | | | Represents costs primarily compensation associated with Frutarom options that had not vested at the time the Frutarom acquisition closed. |

| N&B Transaction Related Costs | — | | | 18,393 | | | 0.16 | | | Represents costs and expenses related to the pending transaction with Nutrition & Biosciences Inc. |

| Q1 2018 | | | | | | | | | | |

| Restructuring and Other Charges, net | — | | | 548 | | | 0.01 | | | Represents severance costs related to the 2017 Productivity Program and Taiwan lab closure. |

| U.S. Tax Reform | — | | | 649 | | | 0.01 | | | Represents charges incurred related to enactment of certain U.S. tax legislation changes in December 2017. |

| Q2 2018 | | | | | | | | | | |

| Integration Related Costs | — | | | 993 | | | 0.01 | | | Represents costs related to the integration of David Michael. |

See index to Consolidated Financial Statements on page [removed: 61.][added: 55.]

See Item 6 on page [removed: 32] [added: 35] for supplemental quarterly data.

| | | | | | |

| --- | --- | --- | --- | --- | --- |

| | |

| --- | --- |

| | | | | | |

| --- | --- | --- | --- | --- | --- |

| | |

| --- | --- |

Management assessed the effectiveness of our internal control over financial reporting as of January [removed: 3, 2020.][added: 1, 2021.]

Based on this assessment, management determined that, as of January [removed: 3, 2020,] [added: 1, 2021,] our internal control over financial reporting was effective.

PricewaterhouseCoopers LLP, our independent registered public accounting firm, has audited the effectiveness of our internal control over financial reporting as of January [removed: 3, 2020] [added: 1, 2021] as stated in their report which is included herein.

| | | | | | |

| --- | --- | --- | --- | --- | --- |

| | |

| --- | --- |

The information relating to directors and nominees of the Company is set forth in the IFF [removed: 2020] [added: 2021] Proxy Statement and is incorporated by reference herein.

The information relating to Section 16(a) beneficial ownership reporting compliance that appears in the IFF [removed: 2020] [added: 2021] Proxy Statement is also incorporated by reference herein.

We have adopted a Code of [removed: Business] Conduct [removed: and Ethics] (the “Code of [removed: Ethics”)] [added: Conduct”)] that applies to all of our employees, including our chief executive officer and our chief financial [removed: officer (who is also our principal accounting officer).][added: officer.]

We have also adopted a Code of Conduct for Directors and a Code of Conduct for Executive Officers (together with the Code of [removed: Ethics,] [added: Conduct,] the “Codes”).

The Codes are available through the Investors — [removed: Corporate] Governance link on our website [removed: *www.iff.com*.][added: at *https://ir.iff.com/governance.*]

We will disclose substantive amendments to and any waivers from the Codes provided to our chief executive [removed: officer and] [added: officer,] principal financial officer [removed: (principal] [added: or principal] accounting [removed: officer),] [added: officer,] as well as any other executive officer or director, on the Company’s website: *www.iff.com*.

The information regarding the Company’s Audit Committee and its designated audit committee financial experts is set forth in the IFF [removed: 2020] [added: 2021] Proxy Statement and such information is incorporated by reference herein.

The information concerning procedures by which shareholders may recommend director nominees is set forth in the IFF [removed: 2020] [added: 2021] Proxy Statement and such information is incorporated by reference herein.

| | | | | | |

| --- | --- | --- | --- | --- | --- |

| | |

| --- | --- |

The items required by Part III, Item 11 are incorporated herein by reference from the IFF [removed: 2020] [added: 2021] Proxy Statement to be filed on or before May [removed: 4, 2020.][added: 1, 2021.]

| | | | | | |

| --- | --- | --- | --- | --- | --- |

| | |

| --- | --- |

The items required by Part III, Item 12 are incorporated herein by reference from the IFF [removed: 2020] [added: 2021] Proxy Statement to be filed on or before May [removed: 4, 2020.][added: 1, 2021.]

| | | | | | |

| --- | --- | --- | --- | --- | --- |

| | |

| --- | --- |

The items required by Part III, Item 13 are incorporated herein by reference from the IFF [removed: 2020] [added: 2021] Proxy Statement to be filed on or before May [removed: 4, 2020.][added: 1, 2021.]

| | | | | | |

| --- | --- | --- | --- | --- | --- |

| | |

| --- | --- |

The items required by Part III, Item 14 are incorporated herein by reference from the IFF [removed: 2020] [added: 2021] Proxy Statement to be filed on or before May [removed: 4, 2020.][added: 1, 2021.]

| (a)(1) FINANCIAL STATEMENTS: The following consolidated financial statements, related notes, and independent registered public accounting firm’s report are included in this Form 10-K: | | [added: | | | |]

| [Report of Independent Registered Public Accounting [removed: Firm](#s69DB3F596C315AAFA23FFBF53F880E0D)] [added: Firm](#ic4b44061b16a422c926a191f63aecd6d_97)] | [removed: [62](#s69DB3F596C315AAFA23FFBF53F880E0D)] | [added: | [56](#ic4b44061b16a422c926a191f63aecd6d_97) | | |]

| [Consolidated Statement of Income and Comprehensive Income for the years ended December 31, [removed: 2019, 2018] [added: 2020, 2019] and [removed: 2017](#s6859A61AF995545A975DD719D544C513)] [added: 2018](#ic4b44061b16a422c926a191f63aecd6d_100)] | [removed: [64](#s6859A61AF995545A975DD719D544C513)] | [added: | [58](#ic4b44061b16a422c926a191f63aecd6d_100) | | |]

| [Consolidated Balance Sheet as of December 31, [removed: 2019] [added: 2020] and [removed: 2018](#s21EFDF14030E5C1EBB8482057EF11A88)] [added: 2019](#ic4b44061b16a422c926a191f63aecd6d_103)] | [removed: [65](#s21EFDF14030E5C1EBB8482057EF11A88)] | [added: | [59](#ic4b44061b16a422c926a191f63aecd6d_103) | | |]

| [Consolidated Statement of Cash Flows for the years ended December 31, [removed: 2019, 2018] [added: 2020, 2019] and [removed: 2017](#s3FCEAFAE338E5D1BABE3DD5176F55EF7)] [added: 2018](#ic4b44061b16a422c926a191f63aecd6d_109)] | [removed: [66](#s3FCEAFAE338E5D1BABE3DD5176F55EF7)] | [added: | [60](#ic4b44061b16a422c926a191f63aecd6d_109) | | |]

| [Consolidated Statement of Shareholders’ Equity for the years ended December 31, [removed: 2019, 2018] [added: 2020, 2019] and [removed: 2017](#sCB64FFAE8FED5F28BEC92D173850BE0E)] [added: 2018](#ic4b44061b16a422c926a191f63aecd6d_112)] | [removed: [67](#sCB64FFAE8FED5F28BEC92D173850BE0E)] | [added: | [61](#ic4b44061b16a422c926a191f63aecd6d_112) | | |]

| [Notes to Consolidated Financial [removed: Statements](#sF543FA21FBE65674A99EC15E787111B3)] [added: Statements](#ic4b44061b16a422c926a191f63aecd6d_118)] | [removed: [69](#sF543FA21FBE65674A99EC15E787111B3)] | [added: | [62](#ic4b44061b16a422c926a191f63aecd6d_118) | | |]

| (a)(2) FINANCIAL STATEMENT SCHEDULES | | [added: | | | |]

| [Schedule II — Valuation and Qualifying Accounts and Reserves for the years ended December 31, [removed: 2019, 2018] [added: 2020, 2019] and [removed: 2017](#s8EC40F6E3BC95679AAA18A18B8148815)] [added: 2018](#ic4b44061b16a422c926a191f63aecd6d_232)] | [removed: [S-1](#s8EC40F6E3BC95679AAA18A18B8148815)] | [added: | [S](#ic4b44061b16a422c926a191f63aecd6d_232)[\-1](#ic4b44061b16a422c926a191f63aecd6d_232) | | |]

We have audited the accompanying consolidated balance [removed: sheet] [added: sheets] of International Flavors & Fragrances Inc. and its subsidiaries (the “Company”) as of January [removed: 3, 2020] [added: 1, 2021] and [removed: December 28, 2018,] [added: January 3, 2020,] and the related consolidated statements of income and comprehensive income, of shareholders' equity and of cash flows for each of the three years in the period ended January [removed: 3, 2020,] [added: 1, 2021,] including the related notes and [added: financial statement] schedule [removed: of valuation and qualifying accounts and reserves for each of the three years] [added: listed] in the [removed: period ended January 3, 2020] [added: index] appearing [removed: on S-1] [added: under Item 15(a)(2)] (collectively referred to as the “consolidated financial statements”).

We also have audited the Company's internal control over financial reporting as of January [removed: 3, 2020,] [added: 1, 2021,] based on criteria established in Internal Control [removed: - Integrated] [added: -Integrated] Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of January [removed: 3, 2020] [added: 1, 2021] and [removed: December 28, 2018,] [added: January 3, 2020,] and the results of its operations and its cash flows for each of the three years in the period ended January [removed: 3, 2020] [added: 1, 2021] in conformity with accounting principles generally accepted in the United States of America.

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of January [removed: 3, 2020,] [added: 1, 2021,] based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the [added: company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.]

*Goodwill Impairment Assessment - [removed: Frutarom Taste, Savory,] [added: Savory and] Natural Product [removed: Solutions, Frutarom Fragrance and Fine Ingredients and Inclusions] [added: Solutions] Reporting Units*

As described in Notes 1 and 5 to the consolidated financial statements, the Company’s consolidated goodwill balance was [removed: $5.5] [added: $5.6] billion as of January [removed: 3, 2020,] [added: 1, 2021,] and the goodwill associated with the [removed: Frutarom Segment, consisting of the Taste, Savory, Natural Product Solutions, Frutarom Fragrance and Fine Ingredients] [added: Savory] and [removed: Inclusions reporting units (collectively, the “Frutarom] [added: Natural Products Solutions] Reporting [added: Units (“the Reporting] Units”) was [removed: $4.3 billion.][added: $1.21 billion and $851.4 million, respectively.]

Management determines the fair value of reporting units, including the [removed: Frutarom] Reporting Units, using key assumptions including revenue growth rates, profit margins and the specific weighted-average cost of capital used to discount future cash flows.

The principal considerations for our determination that performing procedures relating to the goodwill impairment assessment of the [removed: Frutarom] Reporting Units is a critical audit matter are [removed: there was] [added: (i) the] significant judgment by management when developing the fair value measurement of the [removed: Frutarom] Reporting [removed: Units.][added: Units; (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and in evaluating audit evidence relating to management’s significant assumptions related to the revenue growth rates, profit margins and the specific weighted-average cost of capital used to discount future cash flows; and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.]

[removed: This in turn led to a high degree] [added: These procedures also included, among others, (i) testing management’s process for developing the fair value estimate; (ii) evaluating the appropriateness] of [removed: auditor judgment, subjectivity,] [added: the discounted cash flow model; (iii) testing the completeness] and [removed: effort] [added: accuracy of underlying data used] in [removed: performing procedures] [added: the model;] and [removed: in] [added: (iv)] evaluating [removed: audit evidence relating to management’s cash flow projections, including] [added: the] significant assumptions [removed: for] [added: used by management related to] the revenue growth rates, profit margins and the specific weighted-average cost of capital used to discount future cash flows.

These procedures included testing the effectiveness of controls relating to management’s goodwill impairment assessment, including controls over the valuation of the [removed: Company’s Frutarom] Reporting Units.

Evaluating management’s assumptions related to the revenue growth rates and profit margins involved evaluating whether the assumptions used by management were reasonable considering (i) the current and past performance of the [removed: Frutarom] Reporting [removed: Units,] [added: Units;] (ii) the consistency with external market and industry [removed: data,] [added: data;] and (iii) whether the assumptions were consistent with evidence obtained in other areas of the audit.

Professionals with specialized skill and knowledge were used to assist in the evaluation of the [removed: appropriateness of the] Company’s discounted cash flow model and the [removed: reasonableness of certain assumptions used by management, including the] specific weighted-average cost of capital [added: assumption] used to discount future cash flows.

| /s/ PricewaterhouseCoopers LLP | [added: | |]

| New York, New York | [added: | |]

| | [added: | |] Year Ended December 31, | | | | | | | | | | | [added: | | | |]

| *(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)* | [removed: 2019] | | [added: 2020] | | [removed: 2018] | | | | [removed: 2017] [added: 2019] | | | [added: | | | 2018 | | |]

| Net sales | [added: | |] $ | [removed: 5,140,084] [added: 5,084,239] | | | [added: | |] $ | [removed: 3,977,539] [added: 5,140,084] | | | [added: | |] $ | [removed: 3,398,719] [added: 3,977,539] | |

| Cost of goods sold | [removed: 3,027,336] | | [added: 2,998,373] | | [removed: 2,294,832] | | | | [removed: 1,926,256] [added: 3,027,336] | | | [added: | | | 2,294,832 | | |]

| Gross profit | [removed: 2,112,748] | | [added: 2,085,866] | | [removed: 1,682,707] | | | | [removed: 1,472,463] [added: 2,112,748] | | | [added: | | | 1,682,707 | | |]

| Research and development expenses | [removed: 346,128] | | [added: 356,863] | | [removed: 311,583] | | | | [removed: 295,469] [added: 346,128] | | | [added: | | | 311,583 | | |]

| Selling and administrative expenses | [removed: 876,121] | | [added: 948,833] | | [removed: 707,461] | | | | [removed: 570,144] [added: 876,121] | | | [added: | | | 707,461 | | |]

| Restructuring and other charges, net | [removed: 29,765] | | [added: 17,295] | | [removed: 5,079] | | | | [removed: 19,711] [added: 29,765] | | | [added: | | | 5,079 | | |]