Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

(UNLESS INDICATED OTHERWISE, DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS)

Overview

Company Background

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

Beginning in the first quarter of fiscal year 2020, we operated our business across two segments: Taste and Scent. Following the recent closing of the N&B Transaction, our business is organized in four business segments: Nourish, Scent, Health & Biosciences and Pharma Solutions.

As a leading creator of flavor offerings, we help our customers deliver on the promise of delicious and healthy foods and drinks that appeal to consumers. While we are a global leader, our Taste business 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 allows us to satisfy local taste preferences, while also helping to ensure regulatory compliance and production standards.

Our global Scent business creates fragrance compounds and fragrance ingredients that are integral elements in the world’s finest perfumes and best-known household and personal care 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 scent products.

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.

Transaction with Nutrition & Biosciences, Inc.

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.

2020 Financial Performance Overview

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

Sales

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). Scent sales increased 2% on a reported basis and 3% on a currency neutral basis. Taste sales decreased 3% on a reported basis and 2% on a currency neutral basis. 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.

Exchange rate variations had an unfavorable impact on net sales for 2020 of approximately 1%. The effect of exchange rates can vary by business and region, depending upon the mix of sales priced in U.S. dollars as compared to other currencies.

Our 25 largest customers accounted for approximately 39% of total sales in 2020. In 2020, no customer accounted for more than 10% of sales. A key factor for commercial success is our inclusion on strategic customers’ core supplier lists, which provides opportunities to expand and win new business. We are on the core supplier lists of a large majority of our global and strategic customers within Taste and Scent.

Gross Margin

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

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.

Results of Operations

			Year Ended December 31,																		Change
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)			2020						2019						2018						2020 vs. 2019						2019 vs. 2018
Net sales			$	5,084,239					$	5,140,084					$	3,977,539					(1.1)		%				29.2		%
Cost of goods sold			2,998,373						3,027,336						2,294,832						(1.0)		%				31.9		%
Gross profit			2,085,866						2,112,748						1,682,707
Research and development (R&D) expenses			356,863						346,128						311,583						3.1		%				11.1		%
Selling and administrative (S&A) expenses			948,833						876,121						707,461						8.3		%				23.8		%
Restructuring and other charges, net			17,295						29,765						5,079						(41.9)		%				NMF
Amortization of acquisition-related intangibles			192,607						193,097						75,879						(0.3)		%				154.5		%
Losses (gains) on sale of fixed assets			3,784						2,367						(1,177)						59.9		%				NMF
Operating profit			566,484						665,270						583,882
Interest expense			131,802						138,221						132,558						(4.6)		%				4.3		%
Loss on extinguishment of debt			—						—						38,810						—		%				(100.0)		%
Other income, net			(6,689)						(30,403)						(35,243)						(78.0)		%				(13.7)		%
Income before taxes			441,371						557,452						447,757
Taxes on income			73,999						97,184						107,976						(23.9)		%				(10.0)		%
Net income			$	367,372					$	460,268					$	339,781
Net income attributable to noncontrolling interest			4,144						4,395						2,479						(5.7)		%				77.3		%
Net income attributable to IFF stockholders			363,228						455,873						337,302
Net income per share — diluted			$	3.21					$	4.00					$	3.79					(19.8)		%				5.5		%
Gross margin			41.0		%				41.1		%				42.3		%				(10)		bps				(120)		bps
R&D as a percentage of sales			7.0		%				6.7		%				7.8		%				30		bps				(110)		bps
S&A as a percentage of sales			18.7		%				17.0		%				17.8		%				170		bps				(80)		bps
Operating margin			11.1		%				12.9		%				14.7		%				(180)		bps				(180)		bps
Adjusted operating margin			14.4		%				15.4		%				17.0		%				(100)		bps				(160)		bps
Effective tax rate			16.8		%				17.4		%				24.1		%				(60)		bps				NMF
Segment net sales
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		%
Consolidated			$	5,084,239					$	5,140,084					$	3,977,539

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NMF: Not meaningful

Cost of goods sold includes the cost of materials and manufacturing expenses. R&D includes expenses related to the development of new and improved products and technical product support. S&A expenses include expenses necessary to support our commercial activities and administrative expenses supporting our overall operating activities including compliance with governmental regulations.

2020 IN COMPARISON TO 2019

Sales

Sales for 2020 totaled $5.1 billion, which decreased 1% on a reported basis and flat on a currency neutral basis as compared to the prior year. 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.

Sales performance by segment was as follows:

			% Change in Sales - 2020 vs. 2019
			Reported						Currency Neutral**(1)**
Taste			-3		%				-2		%
Scent			2		%				3		%
Total			-1		%				—		%

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(1)Currency neutral sales growth is calculated by translating prior year sales at the exchange rates for the corresponding 2020 period.

Taste Sales

Taste sales in 2020 decreased 3% on a reported basis and 2% on a currency neutral basis versus the prior year period. Performance was primarily driven by sales declines in all regions, except North America, primarily from volume reductions due to reduced consumer demand, principally related to the COVID-19 pandemic, partially offset by new win performances (net of losses).

Scent Sales

Scent sales in 2020 increased 2% on a reported basis and 3% on a currency neutral basis. Sales growth in the Scent business unit was led by Consumer Fragrances, primarily driven by new win performances (net of losses) and volume increases in most product offerings, such as fabric and home care items, to support consumer demand related to the COVID-19 pandemic. Fragrance Ingredients also contributed to a slight increase in the growth of the Scent business unit, primarily driven by volume increases, offset by price reductions. Performance in the Scent business unit was offset by Fine Fragrances through the first nine months of 2020, primarily driven by volume reductions caused by the disruption of consumer access to retail markets due to COVID-19. However, in the fourth quarter of 2020, Fine Fragrances sales grew slightly compared to the fourth quarter of 2019, primarily driven by new win performances (net of losses), offset by volume reductions.

Cost of Goods Sold

Cost of goods sold, as a percentage of sales, increased to 59.0% in 2020 compared to 58.9% in 2019.

Research and Development (R&D)

Overall R&D expenses, as a percentage of sales, increased to 7.0% in 2020 compared to 6.7% in 2019.

Selling and Administrative (S&A)

S&A expenses increased $72.7 million to $948.8 million, or 18.7% as a percentage of sales, in 2020 compared to $876.1 million, or 17.0% as a percentage of sales, in 2019. Adjusted S&A expense increased by $19.8 million to $808.7 million (15.9% as a percentage of sales) in 2020 compared to $788.9 million (15.3% as a percentage of sales) in 2019. The increase in S&A expenses was due to higher employee related expenses (including bonuses to essential workers in 2020) and incentive compensation.

Restructuring and Other Charges

Restructuring and other charges decreased to $17.3 million in 2020 compared to $29.8 million in 2019 primarily driven by the decrease in costs related to the 2019 Severance Plan (see Note 2 for additional information).

Amortization of Acquisition-Related Intangibles

Amortization expenses decreased to $192.6 million in 2020 compared to $193.1 million in 2019.

Operating Results by Business Unit

We evaluate the performance of business units based on segment profit which is defined as operating profit before Restructuring and other charges, net, Global expenses (as discussed in Note 15 to the Consolidated Financial Statements) and certain non-recurring items, net, Interest expense, Other (income) expense, net and Taxes on income. See Note 15 to the Consolidated Financial Statements for the reconciliation to Income before taxes.

			For the Year Ended December 31,
(DOLLARS IN THOUSANDS)			2020						2019
Segment profit:
Taste			$	436,387					$	482,394
Scent			357,281						349,445
Global Expenses			(63,982)						(38,759)
Operational Improvement Initiatives			—						(2,267)
Frutarom Integration Related Costs			(9,849)						(55,160)
Restructuring and Other Charges, net			(17,295)						(29,765)
Losses on Sales of Assets			(3,784)						(2,367)
Employee Separation Costs			(2,813)						—
FDA Mandated Product Recall			—						(250)
Frutarom Acquisition Related Costs			(1,465)						(5,940)
Compliance Review & Legal Defense Costs			(3,278)						(11,314)
N&B Transaction Related Costs			(28,100)						(20,747)
N&B Integration Related Costs			(96,618)						—
Operating Profit			$	566,484					$	665,270
Profit margin
Taste			14.0		%				15.1		%
Scent			18.1		%				18.0		%
Consolidated			11.1		%				12.9		%

Taste Segment Profit

Taste segment profit decreased $46.0 million to $436.4 million (14.0% of segment sales) in 2020 from $482.4 million (15.1% of segment sales) in the comparable 2019 period. The decrease principally reflected volume reductions on existing business and unfavorable price versus input costs and mix, partially offset by new win performances (net of losses), integration, cross selling and productivity initiatives.

Scent Segment Profit

Scent segment profit increased $7.8 million to $357.3 million (18.1% of segment sales) in 2020, compared to $349.4 million (18.0% of segment sales) reported in 2019. The increase in segment profit principally reflected the impact of new win performances (net of losses) and productivity initiatives, partially offset by unfavorable price versus input costs and mix.

Global Expenses

Global expenses represent corporate and headquarters-related expenses which include legal, finance, human resources and R&D and other administrative expenses that are not allocated to an individual business unit. In 2020, global expenses were $64.0 million compared to $38.8 million during 2019. The increase was principally driven by higher incentive compensation expense in 2020 and lower gains from our currency hedging program.

Interest Expense

In 2020, interest expense decreased $6.4 million to $131.8 million, compared to $138.2 million in 2019. This decrease was primarily driven by repayments on the 2018 Term Loan Facility and TEUs. Average cost of debt was 3.0% for the 2020 and 2019 periods.

Other Income, Net

Other income, net, decreased approximately $23.7 million to $6.7 million of income in 2020 versus $30.4 million of income in 2019. The decrease was primarily driven by foreign exchange losses.

Income Taxes

The effective tax rate was 16.8% in 2020 as compared to 17.4% in 2019. The year-over-year decrease was largely due to a more favorable mix of earnings and lower repatriation costs, partially offset by loss provisions and the cost of global intangible low-taxed income ("GILTI").

Excluding the $32.8 million tax benefit associated with the pre-tax Frutarom integration related costs, restructuring and other charges, net, losses on sale of assets, employee separation costs, a pension settlement, Frutarom acquisition related costs, compliance review & legal defense costs, N&B transaction related costs and N&B integration related costs, the adjusted effective tax rate for 2020 was 17.5%. For 2019, the adjusted effective tax rate was 18.1% excluding the $26.2 million tax benefit associated with the pre-tax operational improvement initiatives, Frutarom integration related costs, restructuring and other charges, net, losses on sale of assets, FDA mandated product recall, Frutarom acquisition related costs, compliance review & legal defense costs and N&B transaction related costs. The year-over-year decrease was largely due to a more favorable mix of earnings and lower repatriation costs, partially offset by loss provisions and the cost of GILTI.

2019 IN COMPARISON TO 2018

For a comparison of our results of operations for the fiscal years ended December 31, 2019 and December 31, 2018, see “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of Exhibit 99.1 to our Form 8-K for the fiscal year ended December 31, 2019, filed with the SEC on June 18, 2020.

Liquidity and Capital Resources

Cash and Cash Equivalents

We had cash and cash equivalents of $649.5 million at December 31, 2020 compared to $606.8 million at December 31, 2019 and of this balance, a portion was held outside the United States. Cash balances held in foreign jurisdictions are, in most circumstances, available to be repatriated to the United States.

Effective utilization of the cash generated by our international operations is a critical component of our strategy. We regularly repatriate cash from our non-U.S. subsidiaries to fund financial obligations in the U.S. As we repatriate these funds to the U.S. we will be required to pay income taxes in certain U.S. states and applicable foreign withholding taxes during the period when such repatriation occurs. Accordingly, as of December 31, 2020, we have a deferred tax liability of $47.1 million for the effect of repatriating the funds to the U.S.

Restricted Cash

As discussed in Note 1 to the Consolidated Financial Statements, restricted cash relates to amounts escrowed for various items including for payments to be made to former Frutarom option holders and for acquisition related payments. At December 31, 2020 we had a balance of $10.3 million (of which $7.3 million is included in Current Assets and $3.0 million is included in Other Assets) compared to $17.1 million at December 31, 2019.

Cash Flows from Operating Activities

Operating cash flows in 2020 were $714.1 million compared to $699.0 million in 2019 and $437.6 million in 2018. The increase in operating cash flows from 2019 to 2020 was principally driven by changes primarily related to accounts receivable, inventories, incentive compensation and accrued expenses, largely offset by lower cash earnings in the current year. 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 primarily related to accounts receivable.

Working capital (current assets less current liabilities) totaled $1.2 billion at year-end 2020 compared to $1.4 billion at year-end 2019.

We have various factoring agreements in the U.S. and The Netherlands under which we can factor up to approximately $100 million in receivables with a financial institution. Additionally, we maintain factoring programs that are sponsored by certain customers. Under all of the arrangements, we sell the receivables on a non-recourse basis to unrelated financial institutions and account for the transactions as a sale of receivables. The applicable receivables are removed from our Consolidated Balance Sheet when the cash proceeds are received.

As of December 31, 2020, 2019 and 2018, we had sold receivables pursuant to these factoring programs of approximately $248.8 million, $205.7 million and $168.3 million, respectively. Participation in the various programs increased cash provided by operations by approximately $43.1 million, $37.7 million and $13.6 million in 2020, 2019 and 2018, respectively. The cost of participating in these programs was approximately $4.4 million, $7.1 million, and $3.4 million in 2020, 2019, and 2018, respectively (see Note 1 for additional information).

Cash Flows Used in Investing Activities

Net investing activities in 2020 utilized $187.5 million compared to $225.9 million and $5.0 billion in 2019 and 2018, respectively. The decrease in cash paid for investing activities from 2019 to 2020 was primarily driven by lower payments for acquisitions and lower spending on property, plant and equipment, partially offset by lower proceeds from disposal of assets in 2020 and cash paid on settlement of derivative instruments in 2020 versus proceeds in 2019. The decrease in cash paid for investing activities from 2018 to 2019 was primarily driven by higher payments for acquisitions in 2018. In 2019, we acquired

certain companies as described in Note 3 for approximately $49.1 million, net of cash acquired. In 2018, we acquired Frutarom for approximately $7.0 billion (net of cash acquired) of which $4.9 billion was paid in cash.

Additions to property, plant and equipment were $191.8 million, $236.0 million and $170.1 million in 2020, 2019 and 2018, respectively (net of grants and other reimbursements from government authorities). These investments largely arise from our ongoing focus to align our manufacturing facilities with customer demand, primarily in emerging markets, and new technology consistent with our strategy.

In light of the COVID-19 pandemic, we have evaluated and re-prioritized our capital projects. We expect that capital spending in 2021 will be approximately 4.5% of sales (net of potential grants and other reimbursements from government authorities).

Frutarom Integration Initiative

We expect to achieve $145 million of synergy targets, with total savings in line with our original expectations. See Note 2 for additional information related to the Frutarom Integration Initiative.

Cash Flows Used in Financing Activities

Net cash used in financing activities in 2020 was $511.6 million, compared to $505.1 million in 2019 and cash provided by financing activities of $4.9 billion in 2018, respectively. The slight increase in 2020 versus 2019 was principally driven by higher repayments of debt and higher dividend payments, largely offset by cash proceeds from issuance of new long-term debt in the current year. The decrease in 2019 versus 2018 was principally driven by Frutarom related financing activities in 2018, partially offset by higher dividend payments in 2019.

At December 31, 2020 and 2019, we had approximately $4.4 billion of debt outstanding.

We paid dividends totaling $322.6 million, $313.5 million and $230.2 million in 2020, 2019 and 2018, respectively. The cash dividend declared per share in 2020, 2019 and 2018 was $3.04, $2.96 and $2.84, respectively.

Our capital allocation strategy is primarily focused on debt repayment to maintain our investment grade rating. We will also prioritize capital investment in our businesses to support the strategic long term plans. We are also committed to maintaining our history of paying a dividend to investors determined by our Board of Directors at its discretion based on various factors.

We currently have a board approved stock repurchase program with a total remaining value of $279.7 million. As of May 7, 2018, we have suspended our share repurchases.

Capital Resources

Operating cash flow provides the primary source of funds for capital investment needs, dividends paid to shareholders and debt service repayments. We anticipate that cash flows from operations and availability under our existing credit facilities will be sufficient to meet our investing and financing needs. We regularly assess our capital structure, including both current and long-term debt instruments, as compared to our cash generation and investment needs in order to provide ample flexibility and to optimize our leverage ratios. We believe our existing cash balances are sufficient to meet our debt service requirements.

Transaction with Nutrition & Biosciences, Inc.

On February 1, 2021 (the "Closing Date"), we completed the transaction with DuPont de Nemours, Inc. ("DuPont") to acquire its nutrition and biosciences business (the "N&B Business") which had been transferred to Nutrition & Biosciences, Inc., a Delaware corporation and wholly owned subsidiary of DuPont ("N&B") in a Reverse Morris Trust transaction. 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. We acquired 100% interest of N&B pursuant to definitive agreements, including an Agreement and Plan of Merger (the "Merger Agreement") entered into on December 15, 2019. The transaction was made in order to strengthen our customer base and market presence, with an enhanced position in the food & beverage, home & personal care and health & wellness markets.

A wholly owned subsidiary of IFF merged with and into N&B in exchange for 141,740,461 shares of IFF common stock, par value $0.125 per share (“IFF Common Stock”) (collectively, the “N&B Transaction”), which had been approved in the special shareholder meeting that occurred on August 27, 2020 where IFF shareholders voted to approve the issuance of shares of IFF common stock in connection with the N&B Transaction pursuant to the Merger Agreement. In connection with the N&B Transaction, DuPont received a one-time $7.3 billion special cash payment (the “Special Cash Payment”). 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 (see Note 3 for additional information).

Revolving Credit Facility and Term Loan Facilities

The Credit Agreements contain various covenants, limitations and events of default customary for similar facilities for similarly rated borrowers, including the requirement for us to maintain, at the end of each fiscal quarter, a ratio of net debt for borrowed money to Consolidated EBITDA in respect of the previous 12-month period. Effective in the fourth quarter of 2020, the maximum permitted ratio of net debt to Consolidated EBITDA under the Credit Agreements is 4.0 to 1.0 through the end of 2020, with step-downs over time. On and after the Closing Date of the N&B Transaction, the Company’s maximum permitted ratio of net debt to Consolidated EBITDA under the Credit Agreements is 4.75 to 1.0, stepping down to 3.50 to 1.0 over time (with a step-up if the Company consummates certain qualified acquisitions).

As of December 31, 2020, we had no outstanding borrowings under our Revolving Credit Facility, $240 million outstanding under the 2018 Term Loan Facility and $200 million outstanding in borrowings under the 2022 Term Loan Facility. The amount that we are able to draw down under the Revolving Credit Facility is limited by financial covenants as described below and in Note 9. As of December 31, 2020, our borrowing capacity was approximately $627 million under the Revolving Credit Facility.

See Note 9 to the Consolidated Financial Statements for further information on our Credit Agreements.

Debt Covenants

At December 31, 2020 and 2019 we were in compliance with all financial and other covenants, including the net debt to adjusted EBITDA ratio. At December 31, 2020 our Net Debt/adjusted EBITDA(1) ratio was 3.43 to 1 as defined by our Credit Agreements, well below the maximum levels in the financial covenants in our existing outstanding credit facilities.

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*(1)*Adjusted EBITDA and Net Debt, which are non-GAAP measures used for these covenants, are calculated in accordance with the definition in the debt agreements. In this context, these measures are used solely to provide information on the extent to which we are in compliance with debt covenants and may not be comparable to adjusted EBITDA and Net Debt used by other companies. Reconciliations of adjusted EBITDA to net income and net debt to total debt are as follows:

(DOLLARS IN MILLIONS)			Year Ended December 31, 2020
Net income			$	363.2
Interest expense			131.8
Income taxes			74.0
Depreciation and amortization			325.4
Specified items**(1)**			163.7
Non-cash items**(2)**			39.6
Adjusted EBITDA			$	1,097.7

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*(1)*Specified items for the 12 months ended December 31, 2020 of $163.7 million consist of Frutarom integration related costs, restructuring and other charges, net, losses (gains) on sale of assets, employee separation costs, pension settlement, Frutarom acquisition related costs, compliance review & legal defense costs, N&B transaction related costs and N&B integration related costs.

*(2)*Non-cash items represent all other adjustments to reconcile net income to net cash provided by operations as presented on the Statement of Cash Flows, including stock-based compensation and gain on sale of assets.

(DOLLARS IN MILLIONS)			December 31, 2020
Total debt			$	4,413.5
Adjustments:
Cash and cash equivalents			(649.5)
Net debt			$	3,764.0

Senior Notes

As of December 31, 2020, we had $3.97 billion aggregate principal amount outstanding in senior unsecured notes, with $1.97 billion principal amount denominated in EUR and $2.00 billion principal amount denominated in USD. The notes bear interest ranging from 0.50% per year to 5.00% per year, with maturities from September 2021 to September 2048. Of these notes, $300 million in aggregate principal amount of our 3.40% senior notes matured in September 2020, which the Company repaid during the third quarter of 2020. See Note 9 to the Consolidated Financial Statements for further information on our senior notes.

As described above, in connection with the closing of the N&B Transaction, we guaranteed N&B’s obligations resulting from N&B’s issuance of $6.25 billion of senior unsecured notes. In lieu of IFF continuing to provide this guarantee, IFF intends to assume all of N&B obligations under the N&B Notes.

Tangible Equity Units - Senior Unsecured Amortizing Notes

On September 17, 2018, in connection with the issuance of the TEUs, we issued $139.5 million aggregate principal amount of Amortizing Notes. There are no covenants or provisions in the indenture related to the TEUs that would afford the holders of the amortizing notes protection in the event of a highly leveraged transaction, reorganization, restructuring, merger or similar transaction involving us that may adversely affect such holders. If a fundamental change occurs, or if we elect to settle the SPCs early, then the holders of the Amortizing Notes will have the right to require us to repurchase the Amortizing Notes at a repurchase price equal to the principal amount of the Amortizing Notes as of the repurchase date plus accrued and unpaid interest. The indenture also contains customary events of default which would permit the holders of the Amortizing Notes to declare the notes to be immediately due and payable if not cured within applicable grace periods, including the failure to make timely installment payments on the notes or other material indebtedness, failure to give notice of a fundamental change and specified events of bankruptcy and insolvency. See Note 8 for further information on the TEUs.

Other Contingencies

See Note 20 to the Consolidated Financial Statements for information related to Other Contingencies.

Other Commitments

Compliance with existing governmental requirements regulating the discharge of materials into the environment has not materially affected our operations, earnings or competitive position. In 2020 and 2019, we spent approximately $7.4 million and $4.5 million on capital projects and approximately $29.2 million and $26.0 million, respectively, in operating expenses and governmental charges for the purpose of complying with such regulations. Expenditures for these purposes will continue for the foreseeable future. In addition, we are party to a number of proceedings brought under the Comprehensive Environmental Response, Compensation and Liability Act or similar state statutes. It is expected that the impact of any judgments in or voluntary settlements of such proceedings will not be material to our financial condition, results of operations or liquidity.

Contractual Obligations

At December 31, 2020, we had contractual payment obligations due within the time periods as specified in the following table:

			Payments Due by Period
			Total						Less than 1 Year						1-3 Years						3-5 Years						More than 5 Years
(DOLLARS IN MILLIONS)									2021						2022 - 2023						2024 - 2025						2026 and thereafter
Borrowings(1)			$	4,444					$	645					$	500					$	615					$	2,684
Interest on borrowings(1)			2,001						118						226						197						1,460
Leases(2)			379						52						87						64						176
Pension funding obligations(3)			721						68						138						143						372
Postretirement obligations(4)			38						4						7						8						19
Purchase commitments(5)			103						58						45						—						—
U.S. tax reform toll-charge(6)			44						5						13						26						—
Total			$	7,730					$	950					$	1,016					$	1,053					$	4,711

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(1)The rate assumed for the variable interest component of the contractual interest obligation was the rate in effect at December 31, 2020. See Note 9 to the Consolidated Financial Statements for a further discussion of our various borrowing facilities.

(2)Leases include facility and other lease commitments executed in the normal course of the business included in Note 7 of the Notes to the Consolidated Financial Statements.

(3)See Note 16 of the Notes to the Consolidated Financial Statements for a further discussion of our retirement plans. Anticipated funding obligations are based on current actuarial assumptions. The projected contributions beyond fiscal year 2023 are not currently determinable.

(4)Amounts represent expected future benefit payments for our postretirement benefit plans.

(5)Purchase commitments include agreements for raw material procurement and contractual capital expenditures. Amounts for purchase commitments represent only those items which are based on agreements that are enforceable and legally binding.

(6)This amount represents the cash portion of the “toll charge” that is payable in installments over eight years beginning in 2018. This amount represents the five remaining installments.

The table above does not include $96.6 million of the total unrecognized tax benefits for uncertain tax positions and approximately $17.4 million of associated accrued interest, and $47.1 million associated with the deferred tax liability on deemed repatriation. Due to the high degree of uncertainty regarding the timing of potential cash flows, we are unable to make a reasonable estimate of the amount and period in which the remaining liabilities might be paid.

Critical Accounting Policies and Use of Estimates

Our significant accounting policies are more fully described in Note 1 to the Consolidated Financial Statements. As disclosed in Note 1, the preparation of financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect reported amounts and accompanying disclosures. These estimates are based on management’s best judgment of current events and actions that we may undertake in the future. Actual results may ultimately differ from these estimates.

Those areas requiring the greatest degree of management judgment or deemed most critical to our financial reporting involve:

Business Combinations. From time to time we enter into strategic acquisitions in an effort to better service existing customers and to attain new customers. When we acquire a controlling financial interest in an entity or group of assets that are determined to meet the definition of a business, we apply the acquisition method described in ASC Topic 805, Business Combinations. In accordance with GAAP, the results of the acquisitions we have completed are reflected in our financial statements from the date of acquisition forward.

We allocate the purchase consideration paid to acquire the business to the assets acquired and liabilities assumed based on estimated fair values at the acquisition date, with the excess of purchase price over the estimated fair value of the net assets acquired recorded as goodwill. If during the measurement period (a period not to exceed twelve months from the acquisition date) we receive additional information that existed as of the acquisition date but at the time of the original allocation described above was unknown to us, we make the appropriate adjustments to the purchase price allocation in the reporting period in which the amounts are determined.

Significant judgment is required to estimate the intangibles and fair value of fixed assets and in assigning their respective useful lives. Accordingly, we typically engage third-party valuation specialists, who work under the direction of management, to assist in valuing significant tangible and intangible assets acquired.

The fair value estimates are based on available historical information, future expectations and assumptions deemed reasonable by management, but are inherently uncertain.

We typically use an income method to estimate the fair value of intangible assets, which is based on forecasts of the expected future cash flows attributable to the respective assets. Significant estimates and assumptions inherent in the valuations reflect a consideration of other marketplace participants, and include the amount and timing of future cash flows (including expected growth rates, discount rate and profitability), royalty rates used in the relief of royalty method, customer attrition rates, product obsolescence factors, a brand’s relative market position and the discount rate applied to the cash flows. Unanticipated market or macroeconomic events and circumstances may occur, which could affect the accuracy or validity of the estimates and assumptions.

Determining the useful life of an intangible asset also requires significant judgment. All of our acquired intangible assets (e.g., trademarks, product formulas, non-compete agreements and customer relationships) are expected to have finite useful lives. Our estimates of the useful lives of finite-lived intangible assets are based on a number of factors including competitive environment, market share, brand history, operating plans and the macroeconomic environment of the regions in which the brands are sold.

The costs of finite-lived intangible assets are amortized through expense over their estimated lives. The value of residual goodwill is not amortized, but is tested at least annually for impairment as described in the following note. For acquired intangible assets, the remaining useful life of the trade names and trademarks, product formulas, and customer relationships was estimated at the point at which substantially all of the present value of cumulative cash flows have been earned.

The periodic assessment of potential impairment of goodwill. We currently, as of December 31, 2020, have goodwill of $5.59 billion. We test goodwill for impairment at the reporting unit level as of November 30 every year or more frequently if

events or changes in circumstances indicate the asset might be impaired. A reporting unit is an operating segment or one level below an operating segment (referred to as a component) to which goodwill is assigned when initially recorded.

We identify our reporting units by assessing whether the components of our operating segments constitute businesses for which discrete financial information is available and management of each operating segment regularly reviews the operating results of those components. We have identified eight reporting units under the Taste and Scent Segments: (1) Flavor Compounds (which includes the Taste reporting unit that was previously included in the former Frutarom segment, as well as Legacy IFF Flavor Compounds), (2) Fragrance Compounds, (3) Fragrance Ingredients, (4) Cosmetic Active Ingredients, (5) Savory, (6) Natural Product Solutions, (7) Fine and Specialty Ingredients ("FSI") and (8) Inclusions.

For the annual impairment test as of November 30, 2020, we utilized Step 0 of the guidance in ASC Topic 350, Intangibles – Goodwill and Other, which allows for the assessment of qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. If, based on a review of qualitative factors, it is more likely than not that the fair value of a reporting unit is less than its carrying value, a quantitative impairment test is performed by comparing the fair value of a reporting unit with its carrying amount. Based on a review of qualitative factors, we determined that for four of the reporting units, a quantitative (Step 1) impairment analysis was not necessary to determine if the carrying values of the reporting unit exceeded their fair values. For the other four reporting units (Savory, Natural Product Solutions, FSI, and Inclusions), we determined that a Step 1 test was necessary.

We assessed the fair value of the reporting units primarily using an income approach. Under the income approach, we determined the fair value by using a discounted cash flow method at a rate of return that reflects the relative risk of the projected future cash flows of each reporting unit, as well as a terminal value. We use the most current actual and forecasted operating data available. Key estimates and assumptions used in these valuations include revenue growth rates and profit margins based on our internal forecasts and historical operating trends, and our specific weighted-average cost of capital used to discount future cash flows.

In performing the quantitative test, we determined that the fair value of the four reporting units exceeded their carrying values and, taken together with the results of the qualitative test, we determined that there was no impairment of goodwill at any of our eight reporting units in 2020. Based on the quantitative impairment test performed at November 30, 2020, we determined that the excess of fair values over their respective carrying values ranged from 35% to 105% for two reporting units (FSI and Inclusions). The remaining two reporting units (Savory and Natural Product Solutions) had less than 10% excess fair value over carrying value.

As of November 30, 2020, the Savory reporting unit had excess fair value over carrying value of approximately 5% and goodwill of $1.21 billion, and the Natural Product Solutions reporting unit had excess fair value over carrying value of approximately 1% and goodwill of $851.4 million. While management believes that the assumptions used in the impairment test were reasonable, changes in key assumptions, including, lower revenue growth, lower operating margin, lower terminal growth rates or increasing discount rates could result in a future impairment.

If current long-term projections for these reporting units are not realized or materially decrease, we may be required to write-off all or a portion of the goodwill. Such charge could have a material effect on the Consolidated Statements of Operations and Balance Sheets.

The periodic assessment of potential impairment of long-lived assets. We review long-lived assets for impairment when events or changes in business conditions indicate that their full carrying value may not be recovered. An estimate of undiscounted future cash flows produced by an asset or group of assets is compared to the carrying value to determine whether impairment exists. If assets are determined to be impaired, the loss is measured based on an estimate of fair value using various valuation techniques, including a discounted estimate of future cash flows.

New Accounting Standards

See Note 1 to the Consolidated Financial Statements for a discussion of recent accounting pronouncements.

Non-GAAP Financial Measures

We use non-GAAP financial measures in this Form 10-K, including: (i) currency neutral metrics, (ii) adjusted gross margin, (iii) adjusted operating profit and adjusted operating margin, (iv) adjusted selling and administrative expenses, and (v) adjusted effective tax rate. We also provide the non-GAAP measures adjusted EBITDA and net debt solely for the purpose of providing information on the extent to which we are in compliance with debt covenants contained in its debt agreements. Our non-GAAP financial measures are defined below.

These non-GAAP financial measures are intended to provide additional information regarding our underlying operating results and comparable year-over-year performance. Such information is supplemental to information presented in accordance

with GAAP and is not intended to represent a presentation in accordance with GAAP. In discussing our historical and expected future results and financial condition, we believe it is meaningful for investors to be made aware of and to be assisted in a better understanding of, on a period-to-period comparable basis, financial amounts both including and excluding these identified items, as well as the impact of exchange rate fluctuations. These non-GAAP measures should not be considered in isolation or as substitutes for analysis of our results under GAAP and may not be comparable to other companies’ calculation of such metrics.

Currency neutral metrics eliminate the effects that result from translating international currency to U.S. dollars. We calculate currency neutral numbers by comparing current year results to the prior year results restated at exchange rates in effect for the current year based on the currency of the underlying transaction.

Adjusted gross margin excludes operational improvement initiatives, Frutarom integration related costs, FDA mandated product recall and Frutarom acquisition related costs.

Adjusted operating profit and adjusted operating margin excludes operational improvement initiatives, Frutarom integration related costs, restructuring and other charges, net, losses (gains) on sale of assets, employee separation costs, FDA mandated product recall, Frutarom acquisition related costs, compliance review & legal defense costs, N&B transaction related costs and N&B integration related costs.

Adjusted selling and administrative expenses excludes Frutarom integration related costs, employee separation costs, Frutarom acquisition related costs, compliance review & legal defense costs, N&B transaction related costs and N&B integration related costs.

Adjusted effective tax rate excludes operational improvement initiatives, acquisition related costs, Frutarom integration related costs, restructuring and other charges, net, losses (gains) on sale of assets, employee separation costs, FDA mandated product recall, pension settlement, Frutarom acquisition related costs, compliance review & legal defense costs, N&B transaction related costs, N&B integration related costs and redemption value adjustment to EPS.

Net Debt to Combined Adjusted EBITDA is the leverage ratio used in our credit agreements and defined as Net Debt (which is long-term debt less cash and cash equivalents) divided by Combined Adjusted EBITDA. However, as Adjusted EBITDA for these purposes was calculated in accordance with the provisions of the credit agreements, it may differ from the calculation used for other purposes.

A. Reconciliation of Non-GAAP Metrics

Reconciliation of Gross Profit
			Year Ended December 31,
(DOLLARS IN THOUSANDS)			2020						2019
Reported (GAAP)			$	2,085,866					$	2,112,748
Operational Improvement Initiatives (a)			—						2,267
Frutarom Integration Related Costs (c)			437						730
FDA Mandated Product Recall (f)			—						250
Frutarom Acquisition Related Costs (h)			759						4,247
Adjusted (Non-GAAP)			$	2,087,062					$	2,120,242

Reconciliation of Selling and Administrative Expenses
			Year Ended December 31,
(DOLLARS IN THOUSANDS)			2020						2019
Reported (GAAP)			$	948,833					$	876,121
Frutarom Integration Related Costs (c)			(8,640)						(53,481)
Employee Separation Costs (e)			(2,813)						—
Frutarom Acquisition Related Costs (h)			(706)						(1,693)
Compliance Review & Legal Defense Costs (i)			(3,278)						(11,314)
N&B Transaction Related Costs (j)			(28,100)						(20,747)
N&B Integration Related Costs (k)			(96,618)						—
Adjusted (Non-GAAP)			$	808,678					$	788,886

Reconciliation of Operating Profit
			Year Ended December 31,
(DOLLARS IN THOUSANDS)			2020						2019
Reported (GAAP)			$	566,484					$	665,270
Operational Improvement Initiatives (a)			—						2,267
Frutarom Integration Related Costs (c)			9,849						55,160
Restructuring and Other Charges, net (d)			17,295						29,765
Losses (Gains) on Sale of Assets			3,784						2,367
Employee Separation Costs (e)			2,813						—
FDA Mandated Product Recall (f)			—						250
Frutarom Acquisition Related Costs (h)			1,465						5,940
Compliance Review & Legal Defense Costs (i)			3,278						11,314
N&B Transaction Related Costs (j)			28,100						20,747
N&B Integration Related Costs (k)			96,618						—
Adjusted (Non-GAAP)			$	729,686					$	793,080

Reconciliation of Net Income and EPS
			Year Ended December 31,
			2020																								2019
(DOLLARS IN THOUSANDS)			Income before taxes						Taxes on income (m)						Net Income Attributable to IFF (n)						Diluted EPS (o)						Income before taxes						Taxes on income (m)						Net Income Attributable to IFF (n)						Diluted EPS (o)
Reported (GAAP)			$	441,371					$	73,999					$	363,228					$	3.21					$	557,452					$	97,184					$	455,873					$	4.00
Operational Improvement Initiatives (a)			—						—						—						—						2,267						610						1,657						0.01
Acquisition Related Costs (b)			—						—						—						—						(3,371)						—						(3,371)						(0.03)
Frutarom Integration Related Costs (c)			9,849						1,459						8,390						0.07						55,160						12,461						42,699						0.38
Restructuring and Other Charges, net (d)			17,295						3,991						13,304						0.12						29,765						6,797						22,968						0.20
Losses (Gains) on Sale of Assets			3,784						770						3,014						0.03						2,367						572						1,795						0.02
Employee Separation Costs (e)			2,813						302						2,511						0.02						—						—						—						—
FDA Mandated Product Recall (f)			—						—						—						—						250						57						193						—
Pension Settlement (g)			4,441						844						3,597						0.03						—						—						—						—
Frutarom Acquisition Related Costs (h)			1,465						448						1,017						0.01						5,940						794						5,146						0.05
Compliance Review & Legal Defense Costs (i)			3,278						736						2,542						0.02						11,314						2,522						8,792						0.08
N&B Transaction Related Costs (j)			28,100						1,579						26,521						0.23						20,747						2,354						18,393						0.16
N&B Integration Related Costs (k)			96,618						22,695						73,923						0.65						—						—						—						—
Redemption value adjustment to EPS (l)			—						—						—						(0.02)						—						—						—						0.02
Adjusted (Non-GAAP)			$	609,014					$	106,823					$	498,047					$	4.38					$	681,891					$	123,351					$	554,145					$	4.88

(a)			Represents accelerated depreciation related to plant relocations in India and China.
(b)			Represents adjustments to the fair value for an equity method investment in Canada which we began consolidating in the second quarter of 2019.
(c)			Represents costs related to the integration of the Frutarom acquisition. For 2020, costs primarily related to advisory services, retention bonuses and performance stock awards. For 2019, costs principally related to advisory services.
(d)			For 2020, represents costs primarily related to the Frutarom Integration Initiative. For 2019, represents costs primarily related to the Frutarom Integration Initiative and the 2019 Severance Program.
(e)			Represents costs related to severance liabilities for two executives who have announced their retirement.

(f)			Represents additional claims that management paid to co-packers.
(g)			Represents pension settlement charges incurred in one of the Company's UK pension plans.
(h)			Represents transaction-related costs and expenses related to the acquisition of Frutarom. For 2020, amount primarily includes earn-out payments, net of adjustments, amortization for inventory "step-up" costs and transaction costs principally related to the 2019 Acquisition Activity. For 2019, amount primarily includes amortization for inventory "step-up" costs and transaction costs.
(i)			Costs related to reviewing the nature of inappropriate payments and review of compliance in certain other countries. In addition, includes legal costs for related shareholder lawsuits.
(j)			Represents transaction costs and expenses related to the transaction with N&B, principally related to legal and professional fees for capital raising activities.
(k)			Represents costs primarily related to advisory services for the integration of the transaction with N&B, principally consulting fees.
(l)			Represents the adjustment to EPS related to the excess of the redemption value of certain redeemable noncontrolling interests over their existing carrying value.
(m)			The income tax expense (benefit) on non-GAAP adjustments is computed in accordance with ASC 740 using the same methodology as the GAAP provision of income taxes. Income tax effects of non-GAAP adjustments are calculated based on the applicable statutory tax rate for each jurisdiction in which such charges were incurred, except for those items which are non-taxable for which the tax expense (benefit) was calculated at 0%. Where non-GAAP adjustments are subject to foreign tax credits or valuation allowances, such factors are taken into consideration in calculating the tax expense (benefit). For amortization, the tax benefit has been calculated based on the statutory rate on a country by country basis.
(n)			For 2020 and 2019, net income is reduced by income attributable to noncontrolling interest of $4.1M and $4.4M, respectively.
(o)			The sum of these items does not foot due to rounding.

B. Foreign Currency Reconciliation

Operating Profit
			Year Ended December 31,
			2020						2019
% Change - Reported (GAAP)			(15)%						14%
Items impacting comparability (1)			7%						3%
% Change - Adjusted (Non-GAAP)			(8)%						17%
Currency Impact			2%						2%
% Change Year-over-Year - Currency Neutral Adjusted (Non-GAAP) (2)(3)			(6)%						20%

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(1)Includes items impacting comparability of $163.2 million for the year ended December 31, 2020 and includes $127.8 million of items impacting comparability for the year ended December 31, 2019.

(2)2019 item does not foot due to rounding.

(3)Currency neutral amount is calculated by translating prior year amounts at the exchange rates used for the corresponding 2020 period. Currency neutral operating profit also eliminates the year-over-year impact of cash flow hedging.

Cautionary Statement Under the Private Securities Litigation Reform Act of 1995

Statements in this Form 10-K, which are not historical facts or information, are “forward-looking statements” within the meaning of The Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based on management’s current assumptions, estimates and expectations and include statements concerning (i) the impacts of COVID-19 and our plans to respond to its implications; (ii) our combination with N&B, including the expected benefits and synergies of the N&B Transaction and future opportunities for the combined company; (iii) our ability to achieve the anticipated benefits of the Frutarom acquisition, including $145 million of expected synergies; (iv) our ability to achieve our Vision 2021 strategy of accelerated revenue and profitability growth, (v) the growth potential of the markets in which we operate, including the emerging markets, (vi) expected capital expenditures in 2021, (vii) expectations regarding the Frutarom Integration Initiative, (viii) the expected costs and benefits of our ongoing optimization of our manufacturing operations, including the expected number of closings, (ix) expected cash flow and availability of capital resources to fund our operations and meet our debt service requirements; (x) our ability to innovate and execute on specific consumer trends and demands; and (xi) our ability to continue to generate value for, and return cash to, our shareholders. These forward-looking statements should be evaluated with consideration given to the many risks and uncertainties inherent in our business that could cause actual results and events to

differ materially from those in the forward-looking statements. Certain of such forward-looking information may be identified by such terms as “expect”, “anticipate”, “believe”, “intend”, “outlook”, “may”, “estimate”, “should”, “predict” and similar terms or variations thereof. Such forward-looking statements are based on a series of expectations, assumptions, estimates and projections about the Company, are not guarantees of future results or performance, and involve significant risks, uncertainties and other factors, including assumptions and projections, for all forward periods. Our actual results may differ materially from any future results expressed or implied by such forward-looking statements. Such risks, uncertainties and other factors include, among others, the following:

• disruption in the development, manufacture, distribution or sale of our products from COVID-19 and other public health crises;

• risks related to the integration of N&B and the Frutarom business, including whether we will realize the benefits anticipated from the acquisitions in the expected time frame;

• unanticipated costs, liabilities, charges or expenses resulting from the Frutarom acquisition and the N&B Transaction;

• risks related to the restrictions that we are required to abide by in connection with the N&B Transaction;

• our ability to provide the same types and level of services to the N&B Business that historically have been provided by DuPont, and our ability to maintain relationships with third parties and pre-existing customers of N&B.

• our ability to realize expected cost savings and increased efficiencies of the Frutarom integration and our ongoing optimization of our manufacturing facilities;

• our ability to successfully establish and manage acquisitions, collaborations, joint ventures or partnership;

• the increase in our leverage resulting from the additional debt incurred to pay a portion of the consideration for Frutarom and its impact on our liquidity and ability to return capital to its shareholders;

• our ability to successfully market to our expanded and diverse Taste customer base;

• our ability to effectively compete in our market and develop and introduce new products that meet customers’ needs;

• our ability to retain key employees;

• changes in demand from large multi-national customers due to increased competition and our ability to maintain “core list” status with customers;

• our ability to successfully develop innovative and cost-effective products that allow customers to achieve their own profitability expectations;

• disruption in the development, manufacture, distribution or sale of our products from natural disasters, public health crises, international conflicts, terrorist acts, labor strikes, political crisis, accidents and similar events;

• the impact of a disruption in our supply chain, including the inability to obtain ingredients and raw materials from third parties;

• volatility and increases in the price of raw materials, energy and transportation;

• the impact of a significant data breach or other disruption in our information technology systems, and our ability to comply with data protection laws in the U.S. and abroad;

• our ability to comply with, and the costs associated with compliance with, regulatory requirements and industry standards, including regarding product safety, quality, efficacy and environmental impact;

• our ability to react in a timely and cost-effective manner to changes in consumer preferences and demands, including increased awareness of health and wellness;

• our ability to meet consumer, customer and regulatory sustainability standards;

• our ability to benefit from our investments and expansion in emerging markets;

• the impact of currency fluctuations or devaluations in the principal foreign markets in which we operate;

• economic, regulatory and political risks associated with our international operations;

• the impact of global economic uncertainty on demand for consumer products;

• our ability to comply with, and the costs associated with compliance with, U.S. and foreign environmental protection laws;

• our ability to successfully manage our working capital and inventory balances;

• the impact of the failure to comply with U.S. or foreign anti-corruption and anti-bribery laws and regulations, including the U.S. Foreign Corrupt Practices Act;

• any impairment on our tangible or intangible long-lived assets, including goodwill associated with the acquisition of Frutarom;

• our ability to protect our intellectual property rights;

• the impact of the outcome of legal claims, regulatory investigations and litigation;

• changes in market conditions or governmental regulations relating to our pension and postretirement obligations;

• the impact of changes in federal, state, local and international tax legislation or policies, including the Tax Cuts and Jobs Act, with respect to transfer pricing and state aid, and adverse results of tax audits, assessments, or disputes;

• the impact of the United Kingdom’s departure from the European Union; and

• the impact of the phase out of the London Interbank Offered Rate (LIBOR) on interest expense.

The foregoing list of important factors does not include all such factors, nor necessarily present them in order of importance. In addition, you should consult other disclosures made by the Company (such as in our other filings with the SEC or in company press releases) for other factors that may cause actual results to differ materially from those projected by the Company. Please refer to Part I. Item 1A., Risk Factors, of this Form 10-K for additional information regarding factors that could affect our results of operations, financial condition and liquidity.

We intend our forward-looking statements to speak only as of the time of such statements and do not undertake or plan to update or revise them as more information becomes available or to reflect changes in expectations, assumptions or results. We can give no assurance that such expectations or forward-looking statements will prove to be correct. An occurrence of, or any material adverse change in, one or more of the risk factors or risks and uncertainties referred to in this report or included in our other periodic reports filed with the SEC could materially and adversely impact our operations and our future financial results.

Any public statements or disclosures made by us following this report that modify or impact any of the forward-looking statements contained in or accompanying this report will be deemed to modify or supersede such outlook or other forward-looking statements in or accompanying this report.