Item 1. FINANCIAL STATEMENTS.

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Item 1. FINANCIAL STATEMENTS.

INTERNATIONAL FLAVORS & FRAGRANCES INC.

CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE (LOSS) INCOME

(Unaudited)


	Three Months Ended
	March 31,
(AMOUNTS IN MILLIONS EXCEPT PER SHARE AMOUNTS)	2024		2023
Net sales	$	2,899	$	3,027
Cost of goods sold	1,875		2,063
Gross profit	1,024		964
Research and development expenses	166		161
Selling and administrative expenses	490		454
Amortization of acquisition-related intangibles	168		171


Restructuring and other charges	3		52
Gains on sale of assets	(2)		(5)
Operating profit	199		131
Interest expense	83		100

Other expense, net	1		17
Income before taxes	115		14
Provision for income taxes	54		22
Net income (loss)	61		(8)
Net income attributable to non-controlling interests	1		1
Net income (loss) attributable to IFF shareholders	$	60	$	(9)

Net income (loss) per share - basic	$	0.23	$	(0.04)
Net income (loss) per share - diluted	$	0.23	$	(0.04)
Average number of shares outstanding - basic	255		255
Average number of shares outstanding - diluted	256		255


Statements of Comprehensive (Loss) Income
Net income (loss)	$	61	$	(8)
Other comprehensive (loss) income, after tax:
Foreign currency translation adjustments	(293)		284
Losses on derivatives qualifying as hedges	(7)		—
Pension and postretirement liability adjustment	5		(2)
Other comprehensive (loss) income	(295)		282
Comprehensive (loss) income	(234)		274
Comprehensive income attributable to non-controlling interests	1		1
Comprehensive (loss) income attributable to IFF shareholders	$	(235)	$	273

See Notes to Consolidated Financial Statements

INTERNATIONAL FLAVORS & FRAGRANCES INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)


(DOLLARS IN MILLIONS)	March 31, 2024		December 31, 2023
ASSETS
Current Assets:
Cash and cash equivalents	$	732	$	703
Restricted cash	7		6
Trade receivables (net of allowances of $37 and $52, respectively)	1,977		1,726



Inventories	2,411		2,477
Assets held for sale	509		506
Prepaid expenses and other current assets	771		875
Total Current Assets	6,407		6,293


Property, plant and equipment, net	4,145		4,240
Goodwill	10,538		10,635
Other intangible assets, net	8,116		8,357

Operating lease right-of-use assets	699		689
Other assets	737		764
Total Assets	$	30,642	$	30,978
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Bank borrowings, overdrafts, and current portion of long-term debt	$	312	$	885
Commercial paper	836		—
Accounts payable	1,346		1,378
Accrued payroll and bonus	222		265
Dividends payable	102		207
Liabilities held for sale	46		46
Other current liabilities	956		977
Total Current Liabilities	3,820		3,758
Other Liabilities:
Long-term debt	9,150		9,186

Retirement liabilities	252		253
Deferred income taxes	1,916		1,937
Operating lease liabilities	651		642
Other liabilities	527		560
Total Other Liabilities	12,496		12,578
Commitments and Contingencies (Note 18)

Shareholders’ Equity:
Common stock $0.125 par value; 500,000,000 shares authorized; 275,726,629 shares issued as of March 31, 2024 and December 31, 2023; and 255,319,533 and 255,288,535 shares outstanding as of March 31, 2024 and December 31, 2023, respectively	35		35
Capital in excess of par value	19,889		19,874
Accumulated deficit	(2,481)		(2,439)
Accumulated other comprehensive loss	(2,191)		(1,896)
Treasury stock, at cost (20,407,096 and 20,438,094 shares as of March 31, 2024 and December 31, 2023, respectively)	(961)		(963)
Total Shareholders’ Equity	14,291		14,611
Non-controlling interests	35		31
Total Shareholders’ Equity including Non-controlling interests	14,326		14,642
Total Liabilities and Shareholders’ Equity	$	30,642	$	30,978

See Notes to Consolidated Financial Statements

INTERNATIONAL FLAVORS & FRAGRANCES INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Three Months Ended March 31,
(DOLLARS IN MILLIONS)	2024		2023
Cash flows from operating activities:
Net income (loss)	$	61	$	(8)
Adjustments to reconcile to net cash provided by operating activities
Depreciation and amortization	278		276
Deferred income taxes	(9)		(28)
Gains on sale of assets	(2)		(5)
Losses on business divestitures	—		14
Stock-based compensation	18		12
Pension contributions	(7)		(7)









Changes in assets and liabilities, net of acquisitions:
Trade receivables	(290)		(63)
Inventories	34		219
Accounts payable	83		(144)
Accruals for incentive compensation	(46)		(70)
Other current payables and accrued expenses	(28)		(51)
Other assets/liabilities, net	7		(18)
Net cash provided by operating activities	99		127
Cash flows from investing activities:

Additions to property, plant and equipment	(118)		(175)



Proceeds from disposal of assets	3		7


Net proceeds received from business divestitures	37		1
Net cash used in investing activities	(78)		(167)
Cash flows from financing activities:
Cash dividends paid to shareholders	(207)		(206)
Increase (decrease) in revolving credit facility and short-term borrowings	250		(100)


Net borrowings of commercial paper (maturities less than three months)	833		393
Deferred financing costs	—		(2)
Repayments of long-term debt	(833)		—







Employee withholding taxes paid	(1)		(6)

Other, net	(2)		(1)
Net cash provided by financing activities	40		78
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(25)		27
Net change in cash, cash equivalents and restricted cash	36		65
Cash, cash equivalents and restricted cash at beginning of year	735		552
Cash, cash equivalents and restricted cash at end of period	$	771	$	617
Supplemental Disclosures:
Interest paid, net of amounts capitalized	$	61	$	66
Income taxes paid, net	53		227
Accrued capital expenditures	53		71

See Notes to Consolidated Financial Statements

INTERNATIONAL FLAVORS & FRAGRANCES INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(Unaudited)


(DOLLARS IN MILLIONS)	Common stock				Capital in excess of par value		Retained earnings		Accumulated other comprehensive (loss) income		Treasury stock			Non-controlling interest		Total
Shares		Cost	Shares		Cost
Balance at January 1, 2023	275,726,629		$	35	$	19,841	$	955	$	(2,198)	(20,758,166)	$	(978)	$	30	$	17,685
Net (loss) income							(9)							1		(8)

Cumulative translation adjustment									284							284

Pension liability and postretirement adjustment; net of tax of $0									(2)							(2)
Cash dividends declared ($0.81 per share)							(207)									(207)
Stock options/SSARs					(5)						55,617	3				(2)

Vested restricted stock units and awards					(4)						43,396	2				(2)
Stock-based compensation					12											12


Other														1		1
Balance at March 31, 2023	275,726,629		$	35	$	19,844	$	739	$	(1,916)	(20,659,153)	$	(973)	$	32	$	17,761


(DOLLARS IN MILLIONS)	Common stock				Capital in excess of par value		Accumulated deficit		Accumulated other comprehensive (loss) income		Treasury stock			Non-controlling interest		Total
Shares		Cost	Shares		Cost
Balance at January 1, 2024	275,726,629		$	35	$	19,874	$	(2,439)	$	(1,896)	(20,438,094)	$	(963)	$	31	$	14,642
Net income							60							1		61

Cumulative translation adjustment									(293)							(293)
Losses on derivatives qualifying as hedges; net of tax of $0									(7)							(7)
Pension liability and postretirement adjustment; net of tax of $0									5							5
Cash dividends declared ($0.40 per share)							(102)									(102)
Stock options/SSARs					(2)						24,253	1				(1)

Vested restricted stock units and awards					(1)						6,745	1				—
Stock-based compensation					18											18



Other														3		3
Balance at March 31, 2024	275,726,629		$	35	$	19,889	$	(2,481)	$	(2,191)	(20,407,096)	$	(961)	$	35	$	14,326

See Notes to Consolidated Financial Statements

INTERNATIONAL FLAVORS & FRAGRANCES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations

International Flavors & Fragrances Inc. and its subsidiaries (the “Registrant,” “IFF,” “the Company,” “we,” “us” and “our”) is a leading creator and manufacturer of food, beverage, health & biosciences, scent and pharma solutions and complementary adjacent products, including cosmetic active and natural health ingredients, which are used in a wide variety of consumer products. Our products are sold principally to manufacturers of perfumes and cosmetics, hair and other personal care products, soaps and detergents, cleaning products, dairy, meat and other processed foods, beverages, snacks and savory foods, sweet and baked goods, sweeteners, dietary supplements, food protection, infant and elderly nutrition, functional food, and pharmaceutical excipients and oral care products.

Basis of Presentation

The accompanying interim Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and the related notes included in our 2023 Annual Report on Form 10-K (“2023 Form 10-K”), filed on February 28, 2024 with the Securities and Exchange Commission (“SEC”).

The interim Consolidated Financial Statements are prepared in accordance with generally accepted accounting principles (“GAAP”) in the United States of America for interim financial information and with the rules and regulations for reporting on Form 10-Q, and are unaudited. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP in the United States of America have been condensed or omitted, if not materially different from the 2023 Form 10-K. The year-end balance sheet data included in this Form 10-Q was derived from the audited financial statements. In the opinion of management, all adjustments, which consist of normal recurring adjustments necessary for a fair statement of the interim Consolidated Financial Statements, have been made.

Correction of Prior Year Consolidated Financial Statements

In the first quarter of 2024, the Company revised Interest expense from $111 million to $100 million and Other expense, net from $6 million to $17 million on its Consolidated Statements of Income (Loss) and Comprehensive (Loss) Income for the three months ended March 31, 2023. This reflects certain adjustments made to interest expense associated with the Company’s cash pooling arrangements. The Company also adjusted the disclosure of its total receivables factored for the three months ended March 31, 2023 from $445 million to $402 million. The impacts of these corrections are also presented in the related footnotes.

Use of Estimates

The preparation of financial statements requires management to make estimates and judgments that affect the amounts reported in the Consolidated Financial Statements and accompanying notes. The inputs into the Company’s judgments and estimates take into account the ongoing global current events and adverse macroeconomic impacts on our critical and significant accounting estimates, including estimates associated with future cash flows that are used in assessing the risk of impairment of certain assets. Actual results could differ from those estimates.

Cash, Cash Equivalents and Restricted Cash

Cash, cash equivalents and restricted cash reported in the Company’s balance sheet as of March 31, 2024, December 31, 2023, March 31, 2023 and December 31, 2022 were as follows:


(DOLLARS IN MILLIONS)	March 31, 2024		December 31, 2023		March 31, 2023		December 31, 2022
Current assets
Cash and cash equivalents	$	732	$	703	$	590	$	483
Cash and cash equivalents included in Assets held for sale	32		26		4		52
Restricted cash	7		6		16		10
Non-current assets
Restricted cash included in Other assets	—		—		7		7
Cash, cash equivalents and restricted cash	$	771	$	735	$	617	$	552

Accounts Receivable

The Company has various factoring agreements globally under which it can factor up to approximately $300 million of its trade receivables (“Company’s own factoring agreements”). In addition, the Company utilizes factoring agreements sponsored by certain customers. Under all of the arrangements, the Company sells the trade receivables on a non-recourse basis to unrelated financial institutions and accounts for the transactions as sales of receivables. The applicable receivables are removed from the Company’s Consolidated Balance Sheets when the cash proceeds are received by the Company.

The Company sold a total of approximately $406 million and $402 million of receivables under the Company’s own factoring agreements and customer sponsored factoring agreements for the three months ended March 31, 2024 and 2023, respectively. The cost of participating in these programs was approximately $6 million and $5 million for the three months ended March 31, 2024 and 2023, respectively. These costs are included as a component of interest expense. Under the Company’s own factoring agreements for which the Company has continued responsibility to collect receivables and provide to its sponsor, it sold approximately $191 million and $197 million of receivables for the three months ended March 31, 2024 and 2023, respectively. The outstanding principal amounts of receivables under the Company’s own factoring agreements amounted to approximately $178 million and $196 million as of March 31, 2024 and December 31, 2023, respectively. The proceeds from the sales of receivables are included in Net cash provided by operating activities in the Consolidated Statements of Cash Flows.

Expected Credit Losses

As of March 31, 2024, the Company reported $1.977 billion of trade receivables, net of allowances of $37 million. Based on the aging analysis as of March 31, 2024, approximately 1% of the Company’s accounts receivable were past due by over 365 days based on the payment terms of the invoice.

The following is a roll-forward of the Company’s allowances for bad debts for the three months ended March 31, 2024:


(DOLLARS IN MILLIONS)	Allowances for Bad Debts
Balance at January 1, 2024	$	52
Bad debt expense (reversals)(1)	(5)
Write-offs	(9)

Foreign exchange	(1)
Balance at March 31, 2024	$	37

(1)Included approximately $7 million of reversals of allowances on receivables from certain customers in Egypt. The Company will continue to evaluate its credit exposure related to Egypt.

Inventories

Inventories are stated at the lower of cost (on a weighted-average basis) or net realizable value. The Company’s inventories consisted of the following:


(DOLLARS IN MILLIONS)	March 31, 2024		December 31, 2023
Raw materials	$	728	$	779
Work in process	432		406
Finished goods	1,251		1,292
Total	$	2,411	$	2,477

Supply Chain Financing Program

In the fourth quarter of 2023, the Company entered into a supply chain financing (“SCF”) program. The SCF program is expected to be available to U.S. based suppliers starting in the second half of 2024. The Company makes continuous efforts to improve working capital efficiency and has worked with suppliers to optimize payment terms and conditions. The Company’s current payment terms with a majority of suppliers generally range from 0 to 180 days, which is deemed to be commercially reasonable. The Company’s SCF program is voluntary and will allow its suppliers to elect to sell the receivables owed to them by the Company to a third-party financial institution. The suppliers, at their own discretion, will determine the invoices they want to sell and directly negotiate the arrangements with the participating third-party financial institution. Supplier participation in the program is solely the decision of the supplier and has no bearing on the Company’s payment terms and amounts due with the supplier. The Company’s responsibility will be limited to making payments based upon the agreed contractual terms and arrangements. The Company will not provide any form of guarantees under the SCF program and will have no economic interest in the suppliers’ decision to participate in the SCF program. Amounts due to suppliers that elect to participate in the SCF program will be included in Accounts payable on the Consolidated Balance Sheets. The Company, or the third-party

financial institution, may choose to terminate the agreement of the SCF program at any time upon 30 days’ prior written notice. The third-party financial institution may also terminate the agreement of the SCF program at any time upon three business days’ prior written notice in the event there are insufficient funds available for disbursements. As of March 31, 2024 and December 31, 2023, there were no amounts outstanding related to suppliers’ participation in the SCF program.

Recent Accounting Pronouncements

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures.” The ASU was issued to further enhance income tax disclosures, primarily through standardization and disaggregation of rate reconciliation categories and income taxes paid by jurisdiction. This guidance is effective for fiscal years beginning after December 15, 2024, with early adoption permitted, and may be applied either prospectively or retrospectively. The Company is currently evaluating the impact that this guidance will have on its income tax disclosures.

In November 2023, the FASB issued ASU 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures.” The ASU intends to improve reportable segment disclosure requirements, primarily through enhanced disclosures of significant segment expenses that are regularly provided to the Chief Operating Decision Maker and included within segment profit and loss. This guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted, and applied retrospectively to all prior periods presented in the financial statements. The Company is currently evaluating the impact that this guidance will have on its reportable segment disclosures.

NOTE 2. NET INCOME (LOSS) PER SHARE

A reconciliation of the shares used in the computation of basic and diluted net income (loss) per share is as follows:


	Three Months Ended March 31,
(AMOUNTS IN MILLIONS EXCEPT PER SHARE AMOUNTS)	2024		2023
Net Income (Loss)


Net income (loss) available to IFF shareholders	$	60	$	(9)
Shares
Weighted average common shares outstanding (basic)	255		255
Adjustment for assumed dilution:
Stock options and restricted stock awards	1		—

Weighted average shares assuming dilution (diluted)	256		255

Net Income (Loss) per Share
Net income (loss) per share - basic(1)	$	0.23	$	(0.04)
Net income (loss) per share - diluted	0.23		(0.04)

(1)For the three months ended March 31, 2024, the basic net income per share cannot be recalculated based on the information presented in the table above due to rounding.

The Company declared a quarterly dividend to its shareholders of $0.40 and $0.81 per share for the three months ended March 31, 2024 and 2023, respectively.

There were approximately 0.3 million potentially dilutive securities excluded from the computation of diluted net loss per share for the three months ended March 31, 2023 because there was a net loss attributable to IFF for the period and, as such, the inclusion of these securities would have been anti-dilutive.

For the three months ended March 31, 2024, there were approximately 0.3 million share equivalents that had an anti-dilutive effect and therefore were excluded from the computation of diluted net income per share in the period. For the three months ended March 31, 2023, there were approximately 0.4 million share equivalents that had an anti-dilutive effect and therefore were excluded from the computation of diluted net loss per share in the period.

The Company has issued shares of Purchased Restricted Stock Units (“PRSUs”) which contain rights to non-forfeitable dividends while these shares are outstanding and thus are considered participating securities. Such securities are required to be included in the computation of basic and diluted earnings per share pursuant to the two-class method.

The Company did not present the two-class method since there was no difference between basic net income (loss) per share for both unrestricted common shareholders and PRSU shareholders for the three months ended March 31, 2024 and 2023. The difference between diluted net income per share for both unrestricted common shareholders and PRSU shareholders for the three months ended March 31, 2024 was less than $0.01 per share. There was no difference between diluted net loss per share for both unrestricted common shareholders and PRSU shareholders for the three months ended March 31, 2023. In addition, the number of PRSUs outstanding as of March 31, 2024 and 2023 was not material. Net income (loss) allocated to such PRSUs was not material for the three months ended March 31, 2024 and 2023.

NOTE 3. BUSINESS DIVESTITURES

Liquidation of a Business in Russia

As part of the liquidation of a business in Russia for the sale of the portion of the Savory Solutions business, the Company recognized a pre-tax loss of approximately $10 million presented in the Other expense, net, and tax benefits of approximately $2 million presented in Provision for income taxes on the Consolidated Statements of Income (Loss) and Comprehensive (Loss) Income for the three months ended March 31, 2023.

Divestiture of the Pharma Solutions Business

On March 19, 2024, the Company announced the sale process and entered into an agreement to sell its Pharma Solutions business, for a value of up to $2.85 billion, that is primarily made up of businesses within the Company’s existing Pharma Solutions reportable operating segment, with some adjustments to the perimeter of the transaction designed to align customers, businesses and the manufacturing footprint. The transaction is subject to customary closing conditions and is expected to close in the second quarter of 2025.

Divestiture of the Cosmetic Ingredients Business

The Company completed the divestiture of its Cosmetic Ingredients business on April 2, 2024. Upon closing, the Company received gross cash proceeds of approximately $841 million from the buyer, adjusted for the preliminary estimates of certain closing adjustments. Finalization of such closing adjustments may result in additional cash receipt from or payment to the buyer.

NOTE 4. RESTRUCTURING AND OTHER CHARGES

Restructuring and other charges primarily consist of separation costs for employees including severance, outplacement and other employee benefit costs (“Severance”), charges related to the write-down of fixed assets of plants to be closed (“Fixed asset write-down”) and all other related restructuring (“Other”) costs. All restructuring and other charges are separately stated on the Consolidated Statements of Income (Loss) and Comprehensive (Loss) Income.

N&B Merger Restructuring Liability

For the three months ended March 31, 2024, the Company had approximately $2 million of charges related to a lease impairment. Since the inception of the restructuring activities, there have been a total of approximately 215 headcount reductions and the Company has expensed approximately $49 million. As of December 31, 2023, the restructuring activities were completed related to employee exits. The Company continues to evaluate its owned and leased properties following the combination of IFF and DuPont de Nemours, Inc’s nutrition and biosciences business (“Merger with N&B”) and may incur additional costs to further consolidate its footprint.

2023 Restructuring Program

In December 2022, the Company announced a restructuring program mainly related to headcount reduction to improve its organizational and operating structure, drive efficiencies and achieve cost savings. For the three months ended March 31, 2024, the Company incurred approximately $1 million of charges related to severance. Since the inception of the restructuring program, the Company has expensed approximately $71 million and there have been a total of approximately 670 actual and planned headcount reductions.

Changes in Restructuring Liabilities

Changes in restructuring liabilities during the three months ended March 31, 2024 were as follows:


(DOLLARS IN MILLIONS)	Balance at January 1, 2024		Additional Charges (Reversals), Net		Non-Cash Charges		Cash Payments		Balance at March 31, 2024
















N&B Merger Restructuring Liability


Other	$	—	$	2	$	(2)	$	—	$	—
2023 Restructuring Program
Severance	14		1		—		(12)		3
Total Restructuring and other charges	$	14	$	3	$	(2)	$	(12)	$	3

Restructuring liabilities are presented in “Other current liabilities” on the Consolidated Balance Sheets.

Charges by Segment

The following table summarizes the total amount of costs incurred in connection with the restructuring programs and activities by segment:


	Three Months Ended March 31,
(DOLLARS IN MILLIONS)	2024		2023
Nourish	$	2	$	30
Health & Biosciences	1		10
Scent	—		10
Pharma Solutions	—		2

Total Restructuring and other charges	$	3	$	52

NOTE 5. STOCK COMPENSATION PLANS

The Company has various plans under which its officers, senior management, other key employees and directors may be granted equity-based awards. Equity awards outstanding under the plans include PRSUs, Restricted Stock Units (“RSUs”), Stock-Settled Appreciation Rights (“SSARs”) and Long-Term Incentive Plan awards. Liability-based awards outstanding under the plans are cash-settled RSUs.

Stock-based compensation expense and related tax benefits were as follows:


	Three Months Ended March 31,
(DOLLARS IN MILLIONS)	2024		2023
Equity-based awards	$	18	$	12
Liability-based awards	1		—
Total stock-based compensation expense	19		12
Less: Tax benefit	(4)		(2)
Total stock-based compensation expense, after tax	$	15	$	10

As of March 31, 2024, there was approximately $64 million of total unrecognized compensation cost related to non-vested awards granted under the equity incentive plans.

NOTE 6. SEGMENT INFORMATION

The Company is organized into four reportable operating segments: Nourish, Health & Biosciences, Scent and Pharma Solutions.

Reportable segment information was as follows:


	Three Months Ended
	March 31,
(DOLLARS IN MILLIONS)	2024		2023
Net sales:
Nourish	$	1,496	$	1,653
Health & Biosciences	531		513
Scent	645		608
Pharma Solutions	227		253
Consolidated	$	2,899	$	3,027
Segment Adjusted Operating EBITDA:
Nourish	$	216	$	208
Health & Biosciences	159		131
Scent	157		105
Pharma Solutions	46		59
Total	578		503
Depreciation & Amortization	(278)		(276)
Interest Expense	(83)		(100)
Other Expense, net	(1)		(17)
Restructuring and Other Charges (a)	(3)		(52)
Acquisition, Divestiture and Integration Related Costs (b)	(58)		(31)
Entity Realignment Costs (c)	(1)		—
Strategic Initiatives Costs (d)	(4)		(13)
Regulatory Costs (e)	(35)		(5)
Other (f)	—		5








Income Before Taxes	$	115	$	14


(a)			For 2024, represents costs related to lease impairment and severance as part of the Company's restructuring efforts. For 2023, represents costs primarily related to severance as part of the Company's restructuring efforts.
(b)			For 2024 and 2023, primarily represents costs related to the Company's actual and planned acquisitions and divestitures and integration related activities primarily for N&B. These costs primarily consisted of external consulting fees, professional and legal fees and salaries of individuals who are fully dedicated to such efforts. For 2024 and 2023, tax expenses for business divestiture costs included establishments of deferred tax liabilities related to planned sales of businesses. For the three months ended March 31, 2024, business divestiture and integration related costs were approximately $56 million and $2 million, respectively. For the three months ended March 31, 2023, business divestiture and integration related costs were approximately $21 million and $10 million, respectively.
(c)			Represents costs related to the Company's entity realignment project to optimize the structure of holding companies, primarily consulting fees.
(d)			Represents costs related to the Company's strategic assessment and business portfolio optimization efforts and reorganizing the Global Business Services Centers, primarily consulting fees.
(e)			Represents costs primarily related to legal fees incurred and provisions recognized for the ongoing investigations of the fragrance businesses.
(f)			For 2024, represents the net impact of costs related to severance, including accelerated stock compensation expense, for a certain executive who has separated from the Company and gains from sale of assets. For 2023, represents gains from sale of assets.

Net sales, which are attributed to individual regions based upon the destination of product delivery, were as follows:


	Three Months Ended March 31,
(DOLLARS IN MILLIONS)	2024		2023
Europe, Africa and Middle East	$	977	$	1,070
Greater Asia	682		688
North America	866		905
Latin America	374		364
Consolidated	$	2,899	$	3,027


	Three Months Ended March 31,
(DOLLARS IN MILLIONS)	2024		2023
Net sales related to the U.S.	$	811	$	871
Net sales attributed to all foreign countries	2,088		2,156

No non-U.S. country had net sales greater than 10% of total consolidated net sales for each of the three months ended March 31, 2024 and 2023.

NOTE 7. EMPLOYEE BENEFITS

Pension and other defined contribution retirement plan expenses included the following components:


(DOLLARS IN MILLIONS)	U.S. Plans
Three Months Ended March 31,
2024			2023

Interest cost on projected benefit obligation(2)	$	6		$	7
Expected return on plan assets(2)	(6)			(8)
Net amortization and deferrals(2)	1			—
Net periodic benefit (income) cost	$	1		$	(1)


(DOLLARS IN MILLIONS)	Non-U.S. Plans
Three Months Ended March 31,
2024			2023
Service cost for benefits earned(1)	$	6		$	5
Interest cost on projected benefit obligation(2)	9			9
Expected return on plan assets(2)	(13)			(12)
Net amortization and deferrals(2)	2			—

Net periodic benefit (income) cost	$	4		$	2

(1)Included as a component of Operating profit.

(2)Included as a component of Other expense, net.

The Company expects to contribute a total of $5 million to its U.S. pension plans and a total of $23 million to its non-U.S. pension plans during 2024. During the three months ended March 31, 2024, no contributions were made to the qualified U.S. pension plans, $6 million of contributions were made to the non-U.S. pension plans and $1 million of contributions were made with respect to the Company’s non-qualified U.S. pension plan.

(Income) expense recognized for post-retirement benefits other than pensions included the following components:


	Three Months Ended March 31,
(DOLLARS IN MILLIONS)	2024		2023

Interest cost on projected benefit obligation	$	1	$	1
Net amortization and deferrals	(1)		(1)
Total postretirement benefit (income) expense	$	—	$	—

The Company expects to contribute $4 million to its postretirement benefits other than pension plans during 2024. In the three months ended March 31, 2024, $1 million of benefit payments were made.

NOTE 8. OTHER EXPENSE, NET

Other expense, net consisted of the following:


	Three Months Ended March 31,
(DOLLARS IN MILLIONS)	2024		2023
Foreign exchange losses	$	(8)	$	(15)
Interest income	3		—
Losses on business divestitures	—		(14)

Pension-related benefit	1		5
Other	3		7
Other expense, net	$	(1)	$	(17)

NOTE 9. INCOME TAXES

The effective tax rate for the three months ended March 31, 2024 was 47.0%, which was primarily driven by tax expenses relating to business divestitures and changes in the mix of earnings, some of which do not give rise to tax benefits due to valuation allowances.

As of March 31, 2024, the Company had approximately $128 million of unrecognized tax benefits recorded in Other liabilities. If these unrecognized tax benefits were recognized, the effective tax rate would be affected.

As of March 31, 2024, the Company had accrued interest and penalties of approximately $48 million classified in Other liabilities.

As of March 31, 2024, the Company’s aggregate provisions for uncertain tax positions, including interest and penalties, was approximately $176 million associated with tax positions asserted in various jurisdictions.

The Company regularly repatriates earnings from non-U.S. subsidiaries. As the Company repatriates these funds to the U.S., there will be required income taxes payable in certain U.S. states and applicable foreign withholding taxes during the period when such repatriation occurs. Accordingly, as of March 31, 2024, the Company had a deferred tax liability of approximately $174 million for the effect of repatriating the funds to the U.S., attributable to various non-U.S. subsidiaries. There is no deferred tax liability associated with non-U.S. subsidiaries where the Company intends to indefinitely reinvest the earnings to fund local operations and/or capital projects.

NOTE 10. PROPERTY, PLANT AND EQUIPMENT, NET

Property, plant and equipment consisted of the following amounts:


(DOLLARS IN MILLIONS)	March 31, 2024		December 31, 2023
Asset Type
Land	$	192	$	195
Buildings and improvements	1,805		1,822
Machinery and equipment	3,754		3,752
Information technology	496		473
Construction in process	366		400
Total Property, plant and equipment	6,613		6,642
Accumulated depreciation	(2,468)		(2,402)
Total Property, plant and equipment, net	$	4,145	$	4,240

Depreciation expense was $110 million and $105 million for the three months ended March 31, 2024 and 2023, respectively.

Interest incurred during the construction period of certain property, plant and equipment is capitalized until the underlying assets are placed in service, at which time straight-line amortization of the capitalized interest begins over the estimated useful lives of the related assets. Capitalized interest was approximately $4 million for each of the three months ended March 31, 2024 and 2023.

NOTE 11. GOODWILL AND OTHER INTANGIBLE ASSETS, NET

Goodwill

Movements in goodwill attributable to each reportable segment for the three months ended March 31, 2024 were as follows:


(DOLLARS IN MILLIONS)	Nourish		Health & Biosciences		Scent		Pharma Solutions		Total
Balance at January 1, 2024	$	3,489	$	4,391	$	1,490	$	1,265	$	10,635






Foreign exchange	(35)		(39)		(8)		(15)		(97)


Balance at March 31, 2024	$	3,454	$	4,352	$	1,482	$	1,250	$	10,538

The goodwill balances at January 1, 2024 and March 31, 2024 included $2.623 billion and $2.250 billion of accumulated impairment related to the Nourish and Health & Biosciences reportable segments, respectively. The accumulated impairment relates to impairment charges recorded in 2023 and 2022.

Other Intangible Assets

Other intangible assets, net consisted of the following amounts:


	March 31,		December 31,
(DOLLARS IN MILLIONS)	2024		2023






Asset Type
Customer relationships	$	8,137	$	8,211
Technological know-how	2,336		2,355
Trade names & patents	334		337

Other	44		44
Total carrying value	10,851		10,947
Accumulated Amortization
Customer relationships	(1,708)		(1,619)
Technological know-how	(863)		(813)
Trade names & patents	(123)		(117)

Other	(41)		(41)
Total accumulated amortization	(2,735)		(2,590)

Other intangible assets, net	$	8,116	$	8,357

Amortization

Amortization expense was $168 million and $171 million for the three months ended March 31, 2024 and 2023, respectively.

Amortization expense for the next five years, based on valuations and determinations of useful lives, is expected to be as follows:



(DOLLARS IN MILLIONS)	Remainder of 2024		2025		2026		2027		2028
Estimated future intangible amortization expense	$	502	$	668	$	666	$	573	$	559

NOTE 12. OTHER CURRENT ASSETS AND LIABILITIES, AND OTHER ASSETS

Prepaid expenses and other current assets consisted of the following amounts:


(DOLLARS IN MILLIONS)	March 31, 2024		December 31, 2023
Value-added tax receivable	$	171	$	187
Prepaid income taxes	163		178
Packaging materials and supplies	161		161
Prepaid expenses	202		184

Other	74		165
Total	$	771	$	875

Other assets consisted of the following amounts:


(DOLLARS IN MILLIONS)	March 31, 2024		December 31, 2023
Deferred income taxes	$	253	$	278
Overfunded pension plans	142		139
Cash surrender value of life insurance contracts	50		49
Finance lease right-of-use assets	26		26
Equity method investments	11		11

Other(1)	255		261
Total	$	737	$	764

(1)Includes land usage rights in China, long-term deposits and receivables on certain derivative instruments.

Other current liabilities consisted of the following amounts:


(DOLLARS IN MILLIONS)	March 31, 2024		December 31, 2023
Rebates and incentives payable	$	102	$	105
Value-added tax payable	49		77
Interest payable	80		65
Current pension and other postretirement benefit obligation	14		13
Accrued insurance (including workers’ compensation)	9		9
Earn outs payable	32		32
Accrued restructuring	3		14
Current operating lease obligation	91		85


Accrued freight	13		14
Accrued commissions payable	11		10
Accrued income taxes	126		194

Accrued expenses payable	300		262
Other	126		97
Total	$	956	$	977

NOTE 13. DEBT

Debt consisted of the following:


(DOLLARS IN MILLIONS)	Effective Interest Rate		March 31, 2024		December 31, 2023




2024 Euro Notes(1)	1.88	%	$	—	$	552
2025 Notes(1)	1.22	%	1,000		1,000
2026 Euro Notes(1)	1.93	%	861		879
2027 Notes(1)	1.56	%	1,211		1,212
2028 Notes(1)	4.57	%	398		398
2030 Notes(1)	2.21	%	1,508		1,508
2040 Notes(1)	3.04	%	772		773
2047 Notes(1)	4.44	%	495		495
2048 Notes(1)	5.12	%	787		787
2050 Notes(1)	3.21	%	1,569		1,569


2024 Term Loan Facility(2)	3.75	%	—		270
2026 Term Loan Facility(2)	5.82	%	609		625

Revolving Credit Facility(3)			250		—
Commercial paper(4)			836		—
Bank overdrafts and other			2		3

Total debt			10,298		10,071
Less: Short-term borrowings(5)			(1,148)		(885)
Total Long-term debt			$	9,150	$	9,186

(1)Amount is net of unamortized discount and debt issuance costs.

(2)Amount is recorded at fair value.

(3)The interest rate on the Revolving Credit Facility is, at the applicable borrower’s option, a per annum rate equal to either (x) an eurocurrency rate plus an applicable margin varying from 1.125% to 1.750% or (y) a base rate plus an applicable margin varying from 0.125% to 0.750%, in each case depending on the public debt ratings for non-credit enhanced long-term senior unsecured debt issued by the Company.

(4)The effective interest rate of commercial paper issuances fluctuates as short-term interest rates and demand fluctuate, and deferred debt issuance costs are immaterial. Additionally, the effective interest rate of commercial paper is not meaningful as issuances do not materially differ from short-term interest rates.

(5)Includes bank borrowings, commercial paper, overdrafts and current portion of long-term debt.

Commercial Paper

For the three months ended March 31, 2024, the Company had gross issuances of $2.099 billion and repayments of $1.263 billion under the commercial paper program. The commercial paper issued had original maturities of less than 34 days. For the three months ended March 31, 2023, the Company had gross issuances of $1.320 billion and repayments of $919 million under the commercial paper program. The commercial paper issued had original maturities of less than 86 days.

The commercial paper program is backed by the borrowing capacity available under the Revolving Credit Facility. The effective interest rate of commercial paper issuances does not materially differ from short-term interest rates, which fluctuate due to market conditions and as a result may impact our interest expense.

Revolving Credit Facility

For the three months ended March 31, 2024, the Company had drawdowns of $250 million under the Revolving Credit Facility. For the three months ended March 31, 2023, the Company had drawdowns of $400 million and repayments of $500 million under the Revolving Credit Facility.

Repayments of Debt

On February 1, 2024, the Company made a $270 million debt repayment related to the 2024 Term Loan Facility at maturity, which was primarily funded from commercial paper issuances.

On March 14, 2024, the Company made a €500 million debt repayment related to the 2024 Euro Notes at maturity, which was primarily funded from commercial paper issuances.

During the first quarter of 2024, the Company made a quarterly debt repayment of approximately $16 million related to the 2026 Term Loan Facility in accordance with the terms of the debt agreement.

Subsequent Event

In the first week of April 2024, the Company made net repayments totaling $586 million related to the commercial paper program and a repayment of $250 million related to the Revolving Credit Facility, which was primarily funded from the proceeds received from the divestiture of the Cosmetic Ingredients business.

NOTE 14. LEASES

The Company has leases for corporate offices, manufacturing facilities, research and development facilities and certain transportation and office equipment. The Company’s leases have remaining lease terms of up to 50 years, some of which include options to extend the leases for up to 15 years.

The components of lease expense were as follows:


	Three Months Ended		Three Months Ended
(DOLLARS IN MILLIONS)	March 31, 2024		March 31, 2023
Operating leases
Operating lease cost	$	32	$	33
Variable lease cost	16		16
Total operating lease cost	$	48	$	49
Finance leases
Finance lease cost	$	3	$	2

Supplemental cash flow information related to leases was as follows:


	Three Months Ended		Three Months Ended
(DOLLARS IN MILLIONS)	March 31, 2024		March 31, 2023
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows for operating leases	$	28	$	33

Financing cash flows for finance leases	2		2
Right-of-use assets obtained in exchange for lease obligations
Operating leases	39		137
Finance leases	3		2

Operating lease right-of-use assets are presented in “Operating lease right-of-use assets” and finance lease right-of-use assets are presented in “Other assets” on the Consolidated Balance Sheets. Operating lease liabilities are presented in “Operating lease liabilities” and finance lease liabilities are presented in “Other liabilities” on the Consolidated Balance Sheets. Any other current liabilities related to operating and finance lease liabilities are presented in “Other current liabilities” on the Consolidated Balance Sheets.

NOTE 15. FINANCIAL INSTRUMENTS

Fair Value

Accounting guidance on fair value measurements specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s market assumptions. These two types of inputs create the following fair value hierarchy:

Level 1 — Quoted prices for identical instruments in active markets.
Level 2 — Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets.
Level 3 — Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable*.*

This hierarchy requires the Company to use observable market data, when available, and to minimize the use of unobservable inputs when determining fair value. The Company also considers counterparty credit risk in its assessment of fair value. The Company determines the fair value of structured liabilities (where performance is linked to structured interest rates, inflation or currency risks) using the Secured Overnight Financing Rate (“Term SOFR”) swap curve and forward interest and exchange rates at period end. Such instruments are classified as Level 2 based on the observability of significant inputs to the model. The Company does not have any instruments classified as Level 3, other than those included in pension asset trusts as discussed in Note 15 of the Company’s 2023 Form 10-K.

The carrying values and the estimated fair values of financial instruments at March 31, 2024 and December 31, 2023 consisted of the following:


	March 31, 2024				December 31, 2023
(DOLLARS IN MILLIONS)	Carrying Value		Fair Value		Carrying Value		Fair Value
LEVEL 1
Cash and cash equivalents(1)	$	732	$	732	$	703	$	703
LEVEL 2
Credit facilities and bank overdrafts(2)	252		252		3		3
Derivatives
Derivative assets(3)	1		1		41		41
Derivative liabilities(3)	166		166		165		165
Commercial paper(2)	836		836		—		—
Long-term debt:


2024 Euro Notes(4)	—		—		552		549
2025 Notes(4)	1,000		937		1,000		924
2026 Euro Notes(4)	861		825		879		835
2027 Notes(4)	1,211		1,066		1,212		1,049
2028 Notes(4)	398		388		398		389
2030 Notes(4)	1,508		1,248		1,508		1,240
2040 Notes(4)	772		535		773		536
2047 Notes(4)	495		389		495		382
2048 Notes(4)	787		687		787		678
2050 Notes(4)	1,569		1,002		1,569		1,029
2024 Term Loan Facility(5)	—		—		270		270
2026 Term Loan Facility(5)	609		609		625		625

(1)The carrying amount of cash and cash equivalents approximates fair value due to the short maturity of those instruments.

(2)The carrying amount approximates fair value as the interest rate is reset frequently based on current market rates as well as the short maturity of those instruments.

(3)The carrying amount approximates fair value as the instruments are marked-to-market and held at fair value on the Consolidated Balance Sheets.

(4)The fair value of the Note is obtained from pricing services engaged by the Company, and the Company receives one price for each security. The fair value provided by the pricing services are estimated using pricing models, where the inputs to those models are based on observable market inputs or recent trades of similar securities. The inputs to the valuation techniques applied by the pricing services are typically benchmark yields, benchmark security prices, credit spreads, reported trades and broker-dealer quotes, all with reasonable levels of transparency.

(5)The carrying amount approximates fair value as the Term Loans were assumed at fair value and the interest rate is reset frequently based on current market rates.

Derivatives

Foreign Currency Forward Contracts

The Company periodically enters into foreign currency forward contracts with the objective of managing our exchange rate risk related to foreign currency denominated monetary assets and liabilities of our operations. These contracts generally involve the exchange of one currency for a second currency at a future date, have maturities not exceeding twelve months and are with counterparties which are major international financial institutions.

Commodity Contracts

The Company utilizes options, futures and swaps that are not designated as hedging instruments to reduce exposure to commodity price fluctuations on purchases of inventory such as soybeans, soybean oil and soybean meal.

The Company also utilizes options, futures and swaps that are designated as hedging instruments to reduce exposure to commodity price fluctuations on purchases of natural gas used in our manufacturing process.

Hedges Related to Issuances of Debt

As of March 31, 2024, the Company designated approximately $861 million of Euro Notes as a hedge of a portion of its net European investments. Accordingly, the change in the value of the debt that is attributable to foreign exchange movements is recorded in Other comprehensive income (“OCI”) as a component of foreign currency translation adjustments in the accompanying Consolidated Statements of Income (Loss) and Comprehensive (Loss) Income.

Cross Currency Swaps

The Company has twelve EUR/USD cross currency swaps with a notional value of $1.400 billion that mature through November 2030. The swaps all qualified as net investment hedges in order to mitigate a portion of the Company’s net European investments from foreign currency risk. As of March 31, 2024, the twelve swaps were in a liability position with an aggregate fair value of $132 million, which were classified as Other liabilities on the Consolidated Balance Sheets. Changes in fair value related to cross currency swaps are recorded in OCI.

The following table shows the notional amount of the Company’s derivative instruments outstanding as of March 31, 2024 and December 31, 2023:


(DOLLARS IN MILLIONS)	March 31, 2024		December 31, 2023
Foreign currency contracts(1)	$	(2,697)	$	(1,400)
Commodity contracts(1)	6		7
Cross currency swaps	1,400		1,400

(1)Foreign currency contracts and commodity contracts are presented net of contracts bought and sold.

The following tables show the Company’s derivative instruments measured at fair value (Level 2 of the fair value hierarchy), as reflected on the Consolidated Balance Sheets as of March 31, 2024 and December 31, 2023:


	March 31, 2024
(DOLLARS IN MILLIONS)	Fair Value of Derivatives Designated as Hedging Instruments		Fair Value of Derivatives Not Designated as Hedging Instruments		Total Fair Value
Derivative assets(1)
Foreign currency contracts	$	—	$	1	$	1


Total derivative assets	$	—	$	1	$	1
Derivative liabilities(2)
Foreign currency contracts	$	—	$	33	$	33
Cross currency swaps	132		—		132
Commodity contracts	1		—		1
Total derivative liabilities	$	133	$	33	$	166


	December 31, 2023
(DOLLARS IN MILLIONS)	Fair Value of Derivatives Designated as Hedging Instruments		Fair Value of Derivatives Not Designated as Hedging Instruments		Total Fair Value
Derivative assets(1)
Foreign currency contracts	$	—	$	41	$	41


Total derivative assets	$	—	$	41	$	41
Derivative liabilities(2)
Foreign currency contracts	$	—	$	4	$	4
Cross currency swaps	161		—		161
Total derivative liabilities	$	161	$	4	$	165

(1)Derivative assets are recorded to Prepaid expenses and other current assets on the Consolidated Balance Sheets.

(2)Derivative liabilities are recorded to Other current liabilities and Other liabilities on the Consolidated Balance Sheets.

The following table shows the effect of the Company’s derivative instruments which were not designated as hedging instruments on the Consolidated Statements of Income (Loss) and Comprehensive (Loss) Income for the three months ended March 31, 2024 and 2023:


	Amount of Gain (Loss)					Location of Gain (Loss) Recognized in Income on Derivative
(DOLLARS IN MILLIONS)	Three Months Ended March 31,
2024			2023
Foreign currency contracts(1)	$	(3)		$	—	Other expense, net

(1)The foreign currency contract net gains (losses) offset any recognized gains (losses) arising from the revaluation of the related intercompany loans during the same respective periods.

The following table shows the effect of the Company’s derivative and non-derivative instruments designated as cash flow and net investment hedging instruments, net of tax, on the Consolidated Statements of Income (Loss) and Comprehensive (Loss) Income for the three months ended March 31, 2024 and 2023:


	Amount of Gain (Loss) Recognized in OCI on Derivative and Non-Derivative (Effective Portion)				Location of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income (“AOCI”) into Income (Effective Portion)		Amount of Gain (Loss) Reclassified from AOCI into Income (Effective Portion)
	Three Months Ended March 31,					Three Months Ended March 31,
(DOLLARS IN MILLIONS)	2024		2023			2024			2023
Derivatives in Cash Flow Hedging Relationships:
Foreign currency contracts	$	(7)	$	—	N/A		$	—		$	—


Derivatives in Net Investment Hedging Relationships:

Cross currency swaps	23		(3)		N/A		—			—
Non-Derivatives in Net Investment Hedging Relationships:
2024 Euro Notes	3		(9)		N/A		—			—
2026 Euro Notes	15		(14)		N/A		—			—
Total	$	34	$	(26)			$	—		$	—

The ineffective portion of the above noted net investment hedges was approximately $4 million for each of the three months ended March 31, 2024 and 2023, and was recorded as a reduction to Interest expense on the Consolidated Statements of Income (Loss) and Comprehensive (Loss) Income.

At March 31, 2024, based on current market rates, the Company does not expect any material derivative losses (net of tax), included in AOCI, to be reclassified into earnings within the next 12 months.

NOTE 16. ASSETS AND LIABILITIES HELD FOR SALE

During the third quarter of 2023, the Company announced the sale process of its Cosmetic Ingredients business within the Scent segment, and in the fourth quarter of 2023, the Company entered into an agreement to sell its Cosmetic Ingredients business. The transaction was closed on April 2, 2024. See Note 3 for additional information.

The sale does not constitute a strategic shift of the Company’s operations and does not have major effects on the Company’s operations and financial results. Therefore, the transaction does not meet the discontinued operations criteria.

The Company determined that the assets and liabilities of the business met the criteria to be presented as “held for sale.” As a result, as of March 31, 2024, such assets and liabilities were classified as held for sale and are reported on the Consolidated Balance Sheets. The Company expects that the sale proceeds less costs to sell will exceed the preliminary estimate of the carrying value of the net assets for the business.

Included in the Company’s Consolidated Balance Sheets as of March 31, 2024 and December 31, 2023 are the following carrying amounts of the assets and liabilities held for sale:


(DOLLARS IN MILLIONS)	March 31, 2024		December 31, 2023
Assets
Cash and cash equivalents	$	32	$	26
Trade receivables, net	18		15
Inventories	17		18
Property, plant and equipment, net	7		7
Goodwill	271		276
Other intangible assets, net	144		146
Operating lease right-of-use assets	10		9
Other assets	10		9
Total assets held-for-sale	$	509	$	506
Liabilities
Accounts payable	$	5	$	4
Deferred tax liability	24		24
Other liabilities	17		18
Total liabilities held-for-sale	$	46	$	46

NOTE 17. ACCUMULATED OTHER COMPREHENSIVE LOSS

The following tables present changes in the accumulated balances for each component of other comprehensive (loss) income, including current period other comprehensive (loss) income and reclassifications out of accumulated other comprehensive loss:


(DOLLARS IN MILLIONS)	Foreign Currency Translation Adjustments		Gains (Losses) on Derivatives Qualifying as Hedges		Pension and Postretirement Liability Adjustment		Total
Accumulated other comprehensive (loss) income, net of tax, as of January 1, 2024	$	(1,652)	$	1	$	(245)	$	(1,896)
OCI before reclassifications	(293)		(7)		3		(297)

Amounts reclassified from AOCI	—		—		2		2
Net current period other comprehensive income (loss)	(293)		(7)		5		(295)
Accumulated other comprehensive (loss) income, net of tax, as of March 31, 2024	$	(1,945)	$	(6)	$	(240)	$	(2,191)


(DOLLARS IN MILLIONS)	Foreign Currency Translation Adjustments		Gains (Losses) on Derivatives Qualifying as Hedges		Pension and Postretirement Liability Adjustment		Total
Accumulated other comprehensive (loss) income, net of tax, as of January 1, 2023	$	(2,066)	$	1	$	(133)	$	(2,198)
OCI before reclassifications	284		—		(1)		283

Amounts reclassified from AOCI	—		—		(1)		(1)
Net current period other comprehensive income (loss)	284		—		(2)		282
Accumulated other comprehensive (loss) income, net of tax, as of March 31, 2023	$	(1,782)	$	1	$	(135)	$	(1,916)

The following table provides details about reclassifications out of Accumulated other comprehensive loss to the Consolidated Statements of Income (Loss) and Comprehensive (Loss) Income:


	Three Months Ended March 31,				Affected Line Item in the Consolidated Statements of Income (Loss) and Comprehensive (Loss) Income
(DOLLARS IN MILLIONS)	2024		2023






Gains (losses) on pension and postretirement liability adjustments

Prior service cost	$	1	$	1	(1)
Actuarial losses	(3)		—		(1)

Tax	—		—		Provision for income taxes
Total	$	(2)	$	1	Total, net of income taxes

(1)The amortization of prior service cost and actuarial loss is included in the computation of net periodic benefit cost. Refer to Note 15 of the Company’s 2023 Form 10-K for additional information regarding net periodic benefit cost.

NOTE 18. COMMITMENTS AND CONTINGENCIES

Guarantees and Letters of Credit

The Company has various bank guarantees, letters of credit and surety bonds which are used to support its ongoing business operations, satisfy governmental requirements associated with pending litigation in various jurisdictions and the payment of customs duties.

As of March 31, 2024, the Company had a total of approximately $226 million of bank guarantees, commercial guarantees, standby letters of credit and surety bonds with various financial institutions. Included in the above aggregate amount was a total of approximately $10 million for other assessments in Brazil for various income tax and indirect tax disputes related to fiscal years 1998-2011. There was a total of approximately $60 million outstanding under the bank guarantees, standby letters of credit and commercial guarantees as of March 31, 2024.

In order to challenge the assessments in these cases in Brazil, the Company has been required to, and has separately pledged assets, principally property, plant and equipment, to cover assessments in the amount of approximately $8 million as of March 31, 2024.

Lines of Credit

The Company has various lines of credit which are available to support its ongoing business operations. As of March 31, 2024, the Company had a total capacity of approximately $1.860 billion of lines of credit with various financial institutions, in addition to the $1.791 billion of capacity under the Revolving Credit Facility. Pursuant to these lines of credit as of March 31, 2024, there were total drawdowns of approximately $1.089 billion primarily related to the issuances of commercial paper and borrowings under the Revolving Credit Facility for approximately $836 million and $250 million, respectively. See Note 13 for additional information.

Litigation

The Company assesses contingencies related to litigation and/or other matters to determine the degree of probability and range of possible loss. A loss contingency is accrued in the Company’s Consolidated Financial Statements if it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Because litigation is inherently

unpredictable and unfavorable resolutions could occur, assessing contingencies is highly sensitive and requires judgments about future events. On at least a quarterly basis, the Company reviews contingencies related to litigation to determine the adequacy of accruals. The amount of ultimate loss may differ from these estimates and further events may require the Company to increase or decrease the amounts it has accrued on any matter.

Periodically, the Company assesses its insurance coverage for all known claims, where applicable, taking into account aggregate coverage by occurrence, limits of coverage, self-insured retentions and deductibles, historical claims experience and claims experience with its insurance carriers. The liabilities are recorded at management’s best estimate of the probable outcome of the lawsuits and claims, taking into consideration the facts and circumstances of the individual matters as well as past experience on similar matters. At each balance sheet date, the key issues that management assesses are whether it is probable that a loss as to asserted or unasserted claims has been incurred and if so, whether the amount of loss can be reasonably estimated. The Company records the expected liability with respect to claims in Other liabilities and expected recoveries from its insurance carriers in Other assets. The Company recognizes a receivable when it believes that realization of the insurance receivable is probable under the terms of the insurance policies and its payment experience to date.

Litigation Matters

Two motions to approve securities class actions were filed in the Tel Aviv District Court, Israel, in August 2019, alleging, among other things, false and misleading statements largely in connection with IFF’s acquisition of Frutarom and improper payments made by Frutarom businesses operating principally in Russia and Ukraine to representatives of customers. One motion (“Borg”) asserted claims under the U.S. federal securities laws against IFF, its former Chairman and CEO, and its former CFO. The Borg case is now dismissed. The other motion (“Oman”) (following an initial amendment) asserted claims under the Israeli Securities Act-1968 against IFF, its former Chairman and CEO, and its former CFO, and against Frutarom and certain former Frutarom officers and directors, as well as claims under the Israeli Companies Act-1999 against certain former Frutarom officers and directors. On July 14, 2022, the court approved the parties’ motion to mediate the dispute, which postpones all case deadlines until after the mediation. The parties held mediation meetings on September 13, 2022, November 22, 2022, March 1, 2023, November 2023, March 3, 2024 and April 1, 2024.

On October 29, 2019, IFF and Frutarom filed a claim in the Tel Aviv District Court, Israel, against Ori Yehudai, the former President and CEO of Frutarom, and against certain former directors of Frutarom, challenging the bonus of US $20 million granted to Yehudai in 2018. IFF and Frutarom allege, among other things, that Yehudai was not entitled to receive the bonus because he breached his fiduciary duty by, among other things, knowing of the above-mentioned improper payments and failing to prevent them from being made. The parties agreed, pursuant to the court’s recommendation, to attempt to resolve the dispute through mediation, and a court decision is pending with regard to the order in which this claim and the class action described below will be heard.

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 court held an evidentiary hearing on the motion to approve a class action in March 2024.

Since March 2023, various putative class action lawsuits have been filed against IFF, Firmenich International SA, Givaudan SA, and Symrise AG and/or certain affiliates thereof in the Quebec Superior Court, the Federal Court of Canada, Ontario Superior Court, the Supreme Court of British Columbia and, in several cases, the United States District Court for the District of New Jersey. These actions allege violations of the Canadian Competition Act and the Sherman Act, as applicable, and other related claims, and seek damages and other relief. In December 2023, the Federal Court of Canada proceeding was discontinued in its entirety. IFF may face additional civil suits, in the United States or elsewhere, relating to such alleged conduct. At this time, IFF is unable to predict the potential outcome of these lawsuits or any potential effect they may have on the Company’s results of operations, liquidity or financial condition.

Investigations

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. On February 26, 2024, the Israeli authorities informed Frutarom that the authorities decided to close the criminal investigation.

On March 7, 2023, the European Commission (“EC”) and the United Kingdom Competition and Markets Authority (“CMA”) carried out unannounced inspections of certain of IFF’s facilities. On the same day, IFF was served with a grand jury subpoena by the Antitrust Division of the U.S. Department of Justice (“DOJ”). IFF understands the EC, CMA, DOJ and the Swiss Competition Commission are investigating potential anticompetitive conduct as it relates to IFF’s fragrance businesses. IFF has been and intends to continue cooperating with these investigations. During the first quarter of 2024, IFF has recognized a provision related to a procedural aspect of the investigation, which was not material to the financial statements. IFF is currently unable, however, to predict or determine the duration or outcome of the investigations, or whether the outcome of the investigations will materially impact the Company’s results of operations, liquidity or financial condition. Additionally, the Company from time to time does receive complaints from customers regarding product quality, performance or other aspects of its ongoing relationships. The Company is unable to determine whether the potential settlement of customer claims, if any, will materially impact the Company’s results of operations, liquidity or financial condition.

Environmental Proceedings

The Company is reporting the following environmental matter in compliance with SEC requirements to disclose environmental proceedings where a governmental authority is a party and that involve potential monetary sanctions of $300,000 or greater. Effective March 22, 2024, the Solae, LLC Memphis site (“Solae”) signed an Administrative Order on Consent (the “Consent Order”) resolving violations and penalties pertaining to the Administrative Order and Assessment received from the City of Memphis on May 27, 2022 related to alleged wastewater discharge violations. In view of the Consent Order, Solae withdrew its previously filed appeal. Pursuant to the Consent Order, Solae is completing its capital project efforts in accordance with the agreed schedule for attaining compliance with current wastewater permit requirements. This matter is not expected to have a material adverse effect on the Company’s financial position, cash flows or results of operations.

Other Contingencies

The Company has contingencies involving third parties (such as labor, contract, technology or product-related claims or litigation) as well as government-related items in various jurisdictions in which it operates pertaining to such items as value-added taxes, other indirect taxes, customs and duties and sales and use taxes. It is possible that cash flows or results of operations, in any period, could be materially affected by the unfavorable resolution of one or more of these contingencies.

The most significant government-related contingencies exist in Brazil. With regard to the Brazilian matters, the Company believes it has valid defenses for the underlying positions under dispute; however, in order to pursue these defenses, the Company is required to, and has provided, bank guarantees and pledged assets in the aggregate amount of approximately $18 million. The Brazilian matters take an extended period of time to proceed through the judicial process and there are a limited number of rulings to date.

Other

The Company is subject to various legal proceedings and claims that have arisen in the ordinary course of business and have not been fully resolved. Due to the inherent subjectivity and unpredictability of outcomes of legal proceedings, the Company is unable to determine, with certainty, the probability of the outcome of these matters or the range of reasonably possible losses, if any.

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