filings.toolsItem 1. FINANCIAL STATEMENTS.
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Item 1. FINANCIAL STATEMENTS.
INTERNATIONAL FLAVORS & FRAGRANCES INC.
CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS)
(Unaudited)
| Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||||||||||||||||||
| June 30, | June 30, | |||||||||||||||||||||||||||||||||||||||||||
| (DOLLARS AND SHARES IN MILLIONS EXCEPT PER SHARE AMOUNTS) | 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||||||||||||||||||||||
| Net sales | $ | 2,764 | $ | 2,889 | $ | 5,607 | $ | 5,788 | ||||||||||||||||||||||||||||||||||||
| Cost of sales | 1,734 | 1,821 | 3,542 | 3,696 | ||||||||||||||||||||||||||||||||||||||||
| Gross profit | 1,030 | 1,068 | 2,065 | 2,092 | ||||||||||||||||||||||||||||||||||||||||
| Research and development expenses | 182 | 173 | 346 | 339 | ||||||||||||||||||||||||||||||||||||||||
| Selling and administrative expenses | 483 | 493 | 944 | 983 | ||||||||||||||||||||||||||||||||||||||||
| Amortization of acquisition-related intangibles | 145 | 153 | 288 | 321 | ||||||||||||||||||||||||||||||||||||||||
| Impairment of goodwill | — | 64 | 1,153 | 64 | ||||||||||||||||||||||||||||||||||||||||
| Restructuring and other charges | 21 | 2 | 38 | 5 | ||||||||||||||||||||||||||||||||||||||||
| Losses (gains) on sale of assets | 1 | (8) | 1 | (10) | ||||||||||||||||||||||||||||||||||||||||
| Operating profit (loss) | 198 | 191 | (705) | 390 | ||||||||||||||||||||||||||||||||||||||||
| Interest expense | 61 | 79 | 132 | 162 | ||||||||||||||||||||||||||||||||||||||||
| Gain on extinguishment of debt | (488) | — | (488) | — | ||||||||||||||||||||||||||||||||||||||||
| Losses (gains) on business disposals | 81 | (368) | 81 | (368) | ||||||||||||||||||||||||||||||||||||||||
| Loss on assets classified as held for sale | — | 282 | — | 282 | ||||||||||||||||||||||||||||||||||||||||
| Other expense, net | 10 | 15 | 30 | 16 | ||||||||||||||||||||||||||||||||||||||||
| Income (loss) before income taxes | 534 | 183 | (460) | 298 | ||||||||||||||||||||||||||||||||||||||||
| (Benefit) provision for income taxes | (78) | 11 | (55) | 65 | ||||||||||||||||||||||||||||||||||||||||
| Net income (loss) | 612 | 172 | (405) | 233 | ||||||||||||||||||||||||||||||||||||||||
| Net income attributable to non-controlling interests | — | 2 | 1 | 3 | ||||||||||||||||||||||||||||||||||||||||
| Net income (loss) attributable to IFF shareholders | $ | 612 | $ | 170 | $ | (406) | $ | 230 | ||||||||||||||||||||||||||||||||||||
| Net income (loss) per share - basic | $ | 2.39 | $ | 0.67 | $ | (1.59) | $ | 0.90 | ||||||||||||||||||||||||||||||||||||
| Net income (loss) per share - diluted | $ | 2.38 | $ | 0.66 | $ | (1.59) | $ | 0.90 | ||||||||||||||||||||||||||||||||||||
| Average number of shares outstanding - basic | 256 | 255 | 256 | 255 | ||||||||||||||||||||||||||||||||||||||||
| Average number of shares outstanding - diluted | 257 | 256 | 256 | 256 | ||||||||||||||||||||||||||||||||||||||||
| Statement of Comprehensive Income (Loss) | ||||||||||||||||||||||||||||||||||||||||||||
| Net income (loss) | $ | 612 | $ | 172 | $ | (405) | $ | 233 | ||||||||||||||||||||||||||||||||||||
| Other comprehensive income (loss), after tax: | ||||||||||||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustments | 758 | (128) | 1,162 | (421) | ||||||||||||||||||||||||||||||||||||||||
| Gains (losses) on derivatives qualifying as hedges | — | 1 | (1) | (6) | ||||||||||||||||||||||||||||||||||||||||
| Pension and postretirement liability adjustment | (50) | 3 | (49) | 8 | ||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income (loss) | 708 | (124) | 1,112 | (419) | ||||||||||||||||||||||||||||||||||||||||
| Comprehensive income (loss) | 1,320 | 48 | 707 | (186) | ||||||||||||||||||||||||||||||||||||||||
| Comprehensive income attributable to non-controlling interests | — | 2 | 1 | 3 | ||||||||||||||||||||||||||||||||||||||||
| Comprehensive income (loss) attributable to IFF shareholders | $ | 1,320 | $ | 46 | $ | 706 | $ | (189) |
The accompanying notes are an integral part of these Consolidated Financial Statements.
INTERNATIONAL FLAVORS & FRAGRANCES INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
| (DOLLARS AND SHARES IN MILLIONS EXCEPT PER SHARE AMOUNTS) | June 30, 2025 | December 31, 2024 | |||||||||
| ASSETS | |||||||||||
| Current Assets: | |||||||||||
| Cash and cash equivalents | $ | 816 | $ | 469 | |||||||
| Trade receivables (net of allowances of $26 and $26, respectively) | 1,801 | 1,624 | |||||||||
| Inventories | 2,371 | 2,133 | |||||||||
| Assets held for sale | — | 3,030 | |||||||||
| Prepaid expenses and other current assets | 940 | 737 | |||||||||
| Total Current Assets | 5,928 | 7,993 | |||||||||
| Property, plant and equipment, net | 3,905 | 3,739 | |||||||||
| Goodwill | 8,283 | 9,080 | |||||||||
| Other intangible assets, net | 6,430 | 6,445 | |||||||||
| Operating lease right-of-use assets | 620 | 573 | |||||||||
| Other assets | 955 | 837 | |||||||||
| Total Assets | $ | 26,121 | $ | 28,667 | |||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||||||
| Current Liabilities: | |||||||||||
| Short-term debt and current portion of long-term debt | $ | 500 | $ | 1,413 | |||||||
| Accounts payable | 1,348 | 1,283 | |||||||||
| Accrued payroll and bonus | 258 | 420 | |||||||||
| Dividends payable | 102 | 102 | |||||||||
| Liabilities held for sale | — | 332 | |||||||||
| Other current liabilities | 975 | 783 | |||||||||
| Total Current Liabilities | 3,183 | 4,333 | |||||||||
| Other Liabilities: | |||||||||||
| Long-term debt | 5,684 | 7,564 | |||||||||
| Retirement liabilities | 180 | 167 | |||||||||
| Deferred income taxes | 1,387 | 1,592 | |||||||||
| Operating lease liabilities | 571 | 534 | |||||||||
| Other liabilities | 680 | 566 | |||||||||
| Total Other Liabilities | 8,502 | 10,423 | |||||||||
| Commitments and Contingencies (Note 17) | |||||||||||
| Shareholders’ Equity: | |||||||||||
| Common stock $0.125 par value; 500.0 shares authorized; 275.7 shares issued as of June 30, 2025 and December 31, 2024; and 256.3 and 255.7 shares outstanding as of June 30, 2025 and December 31, 2024, respectively | 35 | 35 | |||||||||
| Capital in excess of par value | 19,916 | 19,917 | |||||||||
| Accumulated deficit | (3,215) | (2,605) | |||||||||
| Accumulated other comprehensive loss | (1,415) | (2,527) | |||||||||
| Treasury stock, at cost (19.4 and 20.0 shares as of June 30, 2025 and December 31, 2024, respectively) | (917) | (944) | |||||||||
| Total Shareholders’ Equity | 14,404 | 13,876 | |||||||||
| Non-controlling interests | 32 | 35 | |||||||||
| Total Shareholders’ Equity including Non-controlling interests | 14,436 | 13,911 | |||||||||
| Total Liabilities and Shareholders’ Equity | $ | 26,121 | $ | 28,667 |
The accompanying notes are an integral part of these Consolidated Financial Statements.
INTERNATIONAL FLAVORS & FRAGRANCES INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(Unaudited)
| (DOLLARS AND SHARES IN MILLIONS EXCEPT PER SHARE AMOUNTS) | 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 April 1, 2024 | 275.7 | $ | 35 | $ | 19,889 | $ | (2,481) | $ | (2,191) | (20.4) | $ | (961) | $ | 35 | $ | 14,326 | |||||||||||||||||||||||||||||||||||||
| Net income (loss) | 170 | 2 | 172 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Other Comprehensive income (loss) | (124) | (124) | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Cash dividends declared(1) | (102) | (102) | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Vested restricted stock units and awards | (20) | 0.3 | 15 | (5) | |||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | 25 | 25 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Other | (1) | (1) | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2024 | 275.7 | $ | 35 | $ | 19,894 | $ | (2,414) | $ | (2,315) | (20.1) | $ | (946) | $ | 37 | $ | 14,291 |
| (DOLLARS AND SHARES IN MILLIONS EXCEPT PER SHARE AMOUNTS) | 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 April 1, 2025 | 275.7 | $ | 35 | $ | 19,932 | $ | (3,725) | $ | (2,123) | (20.0) | $ | (942) | $ | 36 | $ | 13,213 | |||||||||||||||||||||||||||||||||||||
| Net income (loss) | 612 | — | 612 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Other Comprehensive income (loss) | 708 | 708 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Cash dividends declared(1) | (102) | (102) | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock options/SSARs | (1) | — | (1) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Vested restricted stock units and awards | (47) | 0.6 | 25 | (22) | |||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | 32 | 32 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Impact from business divestitures | (4) | (4) | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2025 | 275.7 | $ | 35 | $ | 19,916 | $ | (3,215) | $ | (1,415) | (19.4) | $ | (917) | $ | 32 | $ | 14,436 |
| (DOLLARS AND SHARES IN MILLIONS EXCEPT PER SHARE AMOUNTS) | 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, 2024 | 275.7 | $ | 35 | $ | 19,874 | $ | (2,439) | $ | (1,896) | (20.4) | $ | (963) | $ | 31 | $ | 14,642 | |||||||||||||||||||||||||||||||||||||
| Net income (loss) | 230 | 3 | 233 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Other Comprehensive income (loss) | (419) | (419) | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Cash dividends declared(1) | (204) | (204) | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock options/SSARs | (2) | — | 1 | (1) | |||||||||||||||||||||||||||||||||||||||||||||||||
| Vested restricted stock units and awards | (21) | 0.3 | 16 | (5) | |||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | 43 | 43 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Other | (1) | 3 | 2 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2024 | 275.7 | $ | 35 | $ | 19,894 | $ | (2,414) | $ | (2,315) | (20.1) | $ | (946) | $ | 37 | $ | 14,291 |
The accompanying notes are an integral part of these Consolidated Financial Statements.
| (DOLLARS AND SHARES IN MILLIONS EXCEPT PER SHARE AMOUNTS) | 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, 2025 | 275.7 | $ | 35 | $ | 19,917 | $ | (2,605) | $ | (2,527) | (20.0) | $ | (944) | $ | 35 | $ | 13,911 | |||||||||||||||||||||||||||||||||||||
| Net income (loss) | (406) | 1 | (405) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Other Comprehensive income (loss) | 1,112 | 1,112 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Cash dividends declared(1) | (204) | (204) | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock options/SSARs | (1) | — | 1 | — | |||||||||||||||||||||||||||||||||||||||||||||||||
| Vested restricted stock units and awards | (51) | 0.6 | 26 | (25) | |||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | 51 | 51 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Impact from business divestitures | (4) | (4) | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2025 | 275.7 | $ | 35 | $ | 19,916 | $ | (3,215) | $ | (1,415) | (19.4) | $ | (917) | $ | 32 | $ | 14,436 |
(1)Cash dividends declared per common share were $0.40 for each of the three months ended June 30, 2025 and June 30, 2024, and $0.80 per share for each of the six months ended June 30, 2025 and June 30, 2024.
The accompanying notes are an integral part of these Consolidated Financial Statements.
INTERNATIONAL FLAVORS & FRAGRANCES INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| Six Months Ended June 30, | |||||||||||
| (DOLLARS IN MILLIONS) | 2025 | 2024 | |||||||||
| Cash flows from operating activities: | |||||||||||
| Net income (loss) | $ | (405) | $ | 233 | |||||||
| Adjustments to reconcile to net cash provided by operating activities | |||||||||||
| Depreciation and amortization | 478 | 524 | |||||||||
| Deferred income taxes | (163) | (77) | |||||||||
| Loss on assets classified as held for sale | — | 282 | |||||||||
| Losses (gains) on sale of assets | 1 | (10) | |||||||||
| Losses (gains) on business disposals | 81 | (368) | |||||||||
| Stock-based compensation | 51 | 43 | |||||||||
| Pension contributions | (9) | (11) | |||||||||
| Gain on extinguishment of debt | (488) | — | |||||||||
| Impairment of goodwill | 1,153 | 64 | |||||||||
| Changes in assets and liabilities, net of acquisitions: | |||||||||||
| Trade receivables | (106) | (293) | |||||||||
| Inventories | (124) | 4 | |||||||||
| Accounts payable | 77 | 54 | |||||||||
| Accruals for incentive compensation | (204) | 18 | |||||||||
| Other assets/liabilities, net | 26 | (127) | |||||||||
| Net cash provided by operating activities | 368 | 336 | |||||||||
| Cash flows from investing activities: | |||||||||||
| Additions to property, plant and equipment | (274) | (200) | |||||||||
| Proceeds from disposal of assets | — | 16 | |||||||||
| Net proceeds received from business disposals | 2,707 | 848 | |||||||||
| Cash received on foreign currency forward contracts | 112 | — | |||||||||
| Joint venture capital contributions | (4) | — | |||||||||
| Net cash provided by investing activities | 2,541 | 664 | |||||||||
| Cash flows from financing activities: | |||||||||||
| Cash dividends paid to shareholders | (204) | (309) | |||||||||
| Net borrowings of commercial paper (maturities less than three months) | — | 189 | |||||||||
| Principal payments of debt | (2,413) | (849) | |||||||||
| Deferred and contingent consideration paid | — | (36) | |||||||||
| Withholding tax paid on stock-based compensation | (22) | (14) | |||||||||
| Other, net | (15) | (4) | |||||||||
| Net cash used in financing activities | (2,654) | (1,023) | |||||||||
| Effect of exchange rate changes on cash and cash equivalents | 90 | (38) | |||||||||
| Net change in cash and cash equivalents | 345 | (61) | |||||||||
| Cash and cash equivalents at beginning of year | 471 | 735 | |||||||||
| Cash and cash equivalents at end of period | $ | 816 | $ | 674 | |||||||
| Supplemental Disclosures: | |||||||||||
| Interest paid, net of amounts capitalized | $ | 130 | $ | 158 | |||||||
| Income taxes paid, net | 139 | 185 | |||||||||
| Accrued capital expenditures | 69 | 64 | |||||||||
The accompanying notes are an integral part of these 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 products for application in food, beverage, health & biosciences, scent (and pharmaceuticals, until the recent sale of our Pharma Solutions disposal group), as well as complementary adjacent products, including natural health ingredients, all of which are used in a wide variety of consumer and end-use products. Our products are sold principally to manufacturers of dairy, meat, beverages, snacks, savory, sweet, baked goods, grain processors and other foods, personal care products, soaps and detergents, cleaning products, perfumes, dietary supplements, food protection, infant, elderly and animal nutrition, functional food, bio-fuel, pharmaceutical and oral care products. As a result, we hold global leadership positions in the Food & Beverage, Home & Personal Care and Health & Wellness markets, and across key Tastes, Textures, Scents, Nutrition, Enzymes, Cultures, Soy Proteins, and Probiotics categories, among others.
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 2024 Annual Report on Form 10-K (“2024 Form 10-K”), filed on February 28, 2025 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 2024 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.
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 which are based on such estimates and judgments.
Reclassifications
Certain amounts in the prior period financial statements have been reclassified to conform to the current period presentation. These reclassifications had no effect on reported consolidated Net income (loss) in those prior periods.
Effective January 1, 2025, the Company implemented a reorganization of its internal structure, which impacted the way the Chief Operating Decision Maker (“CODM”), the Chief Executive Officer, allocates resources and assesses financial performance. As a result, the Company has updated its reportable segments beginning with the first quarter of 2025. The Company also adjusted its corporate cost allocations to align with the new organizational structure and updated operating model, consistent with how management assesses performance effective January 1, 2025. As a result, certain segment information for the three months and six months ended June 30, 2024 has been recast to reflect these changes in corporate allocations among the Company’s reportable segments on a comparable basis. Please see Note 6 for more information.
Cash, Cash Equivalents and Restricted Cash
Cash, cash equivalents and restricted cash reported in the Company’s balance sheet as of June 30, 2025, December 31, 2024, June 30, 2024 and December 31, 2023 were as follows:
| (DOLLARS IN MILLIONS) | June 30, 2025 | December 31, 2024 | June 30, 2024 | December 31, 2023 | |||||||||||||||||||
| Current assets | |||||||||||||||||||||||
| Cash and cash equivalents | $ | 816 | $ | 469 | $ | 671 | $ | 703 | |||||||||||||||
| Cash and cash equivalents included in Assets held for sale | — | 2 | 3 | 26 | |||||||||||||||||||
| Restricted cash | — | — | — | 6 | |||||||||||||||||||
| Cash, cash equivalents and restricted cash | $ | 816 | $ | 471 | $ | 674 | $ | 735 |
Accounts Receivable
The Company has various factoring agreements globally under which it can factor up to approximately $366 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 from sponsoring banks by the Company.
The Company sold a total of approximately $910 million and $882 million of receivables under the Company’s own factoring agreements and customer sponsored factoring agreements for the six months ended June 30, 2025 and 2024, respectively. The cost of participating in these programs was approximately $6 million and $8 million for the three months ended June 30, 2025 and 2024, respectively, and was approximately $12 million and $14 million for the six months ended June 30, 2025 and 2024, respectively. These costs are included as a component of interest expense. Although the Company’s own factoring agreements are non-recourse to the Company, the Company has continued responsibility to collect receivables on behalf of sponsoring banks. Under these agreements, the Company sold approximately $503 million and $436 million of receivables for the six months ended June 30, 2025 and 2024, respectively. The outstanding principal amounts of receivables under the Company’s own factoring agreements amounted to approximately $285 million and $189 million as of June 30, 2025 and December 31, 2024, 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 June 30, 2025, the Company reported $1.801 billion of trade receivables, net of allowances of $26 million. Based on the aging analysis as of June 30, 2025, less than 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 six months ended June 30, 2025 and 2024.
| Six Months Ended June 30, | |||||||||||
| (DOLLARS IN MILLIONS) | 2025 | 2024 | |||||||||
| Balance at January 1 | $ | 26 | $ | 52 | |||||||
| Bad debt expense (reversals) | 3 | (9) | |||||||||
| Write-offs | (5) | (15) | |||||||||
| Foreign exchange (gains) losses | 2 | (1) | |||||||||
| Balance at June 30 | $ | 26 | $ | 27 |
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) | June 30, 2025 | December 31, 2024 | |||||||||
| Raw materials | $ | 804 | $ | 657 | |||||||
| Work in process | 396 | 368 | |||||||||
| Finished goods | 1,171 | 1,108 | |||||||||
| Total | $ | 2,371 | $ | 2,133 |
Recent Accounting Pronouncements
In July 2025, The Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2025-05, “Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets”, which provides a practical expedient to measure credit losses on accounts receivable and contract assets. This guidance is effective for periods beginning after December 15, 2025 and will be adopted prospectively. Early adoption is permitted. The Company is currently evaluating the impact of this guidance on our consolidated financial statements and related disclosures.
In November 2024, the FASB issued ASU 2024-03, “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses”, and in January 2025, issued ASU 2025-01, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date (“ASU 2025-01”). The ASU was issued to improve the disclosures about a public business entity’s expenses, primarily through disaggregation of certain expense captions into specified categories in disclosures within the footnotes to the financial statements. This guidance is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. Public business entities are permitted to adopt the ASU prospectively or retrospectively. The Company is currently evaluating the impact that this guidance will have on its Consolidated Financial Statements and footnote disclosures.
In December 2023, the FASB issued 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 expects the standard will impact certain income tax disclosures in the Notes to the Consolidated Financial Statements, but will otherwise not have an impact on the Company’s results of operations.
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 June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| (AMOUNTS IN MILLIONS EXCEPT PER SHARE AMOUNTS) | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||
| Net Income | |||||||||||||||||||||||
| Net income (loss) available to IFF shareholders | $ | 612 | $ | 170 | $ | (406) | $ | 230 | |||||||||||||||
| Shares | |||||||||||||||||||||||
| Weighted average common shares outstanding (basic) | 256 | 255 | 256 | 255 | |||||||||||||||||||
| Adjustment for assumed dilution: | |||||||||||||||||||||||
| Stock options and restricted stock awards | 1 | 1 | — | 1 | |||||||||||||||||||
| Weighted average shares assuming dilution (diluted) | 257 | 256 | 256 | 256 | |||||||||||||||||||
| Net Income (loss) per Share | |||||||||||||||||||||||
| Net income (loss) per share - basic | $ | 2.39 | $ | 0.67 | $ | (1.59) | $ | 0.90 | |||||||||||||||
| Net income (loss) per share - diluted | 2.38 | 0.66 | (1.59) | 0.90 |
The Company declared a quarterly dividend to its shareholders of $0.40 per share for each of the three months ended June 30, 2025 and 2024. For each of the six months ended June 30, 2025 and 2024, the Company declared quarterly dividends to its shareholders totaling $0.80.
There were approximately 1 million potentially dilutive securities excluded from the computation of diluted net loss per share for the six months ended June 30, 2025 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 each of the three and six months ended June 30, 2025 and June 30, 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 loss per share.
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 the difference between diluted net income per share for both unrestricted common shareholders and PRSU shareholders for the three and six months ended June 30, 2025 and 2024 was less than $0.01 per share.
NOTE 3. BUSINESS DIVESTITURES AND ASSETS AND LIABILITIES HELD FOR SALE
Divestiture of the Pharma Solutions Disposal Group
During March 2024, the Company announced it had entered into an agreement to sell its Pharma Solutions business that is primarily made up of most businesses within the Company’s existing Pharma Solutions reportable operating segment (the “Pharma Solutions disposal group”). The Company completed the divestiture on May 1, 2025, and received gross cash proceeds of approximately $2.564 billion. The sale consideration is subject to certain post-closing adjustments, which are primarily related to cash, working capital balances, and other adjustments per the transaction agreement.
The following table summarizes the fair value of sale consideration received in connection with the business divestiture:
| (DOLLARS IN MILLIONS) | |||||
| Cash proceeds from the buyer | $ | 2,564 | |||
| Amount held in escrow | 17 | ||||
| Earnout consideration | 100 | ||||
| Direct costs to sell | (30) | ||||
| Fair value of sale consideration | $ | 2,651 |
The fair value of sale consideration includes the fair value of the earnout expected to be received from the Buyer of $100 million. The Company has potential to earn a total of $250 million additional proceeds based on 2024 and 2025 results of the Pharma Solutions disposal group. The 2024 results and related earnout amount are in process of being finalized with the buyer in a third party arbitration process. The Company engaged an independent third party to determine the fair value of the expected earnout consideration as of June 30, 2025, which was based on a Monte Carlo simulation. The fair value estimation uses Level 3 unobservable inputs as categorized within the ASC Topic 820 fair value hierarchy. This method considers the terms and conditions of the earnout as described in the relevant transaction agreements, our best estimates of forecasted EBITDA for the earnout periods as applicable, and assumptions such as risk-adjusted discount rate, EBITDA volatility, counterparty discount rate and risk-free rate. The simulation consists first in risk-adjusting the EBITDA projections using a risk-adjusted discount rate and then simulating a range of EBITDA over the applicable period using the estimate of EBITDA volatility. The fair value of the earnout is estimated as the present value of the potential range of payouts averaged across the range of simulated EBITDA using the counterparty discount rate. As the determination of performance of the subject business in 2024 has not been resolved and the actual performance for all of 2025 is not yet known, these estimations are subject to significant uncertainty. Based on the final calculation of 2024 and 2025 results, there could be a significant increase or decrease in the total earnout received by the Company.
The net proceeds received from the business divestiture presented under Cash flows from investing activities represent the cash portion of the sale consideration, reduced by the cash transferred to the buyer as part of the transaction. Amounts paid for direct costs to sell are presented under Cash flows from operating activities.
The following table summarizes the different components of net proceeds received from business divestiture presented under Cash flows from investing activities:
| (DOLLARS IN MILLIONS) | |||||
| Cash proceeds from the buyer | $ | 2,564 | |||
| Cash transferred to the buyer | (29) | ||||
| Net Cash flows from investing activities | $ | 2,535 |
The carrying value of net assets associated with the Pharma Solutions disposal group, adjusted for currency translation adjustment, NCI, and pension adjustments amounted to approximately $2.742 billion. The major classes of assets and liabilities sold consisted of the following:
| (DOLLARS IN MILLIONS) | May 1, 2025 | ||||
| Assets | |||||
| Cash and cash equivalents | $ | 29 | |||
| Trade receivables, net | 218 | ||||
| Inventories | 289 | ||||
| Property, plant and equipment, net | 439 | ||||
| Goodwill(1) | 1,190 | ||||
| Other intangible assets, net | 1,093 | ||||
| Operating lease right-of-use assets | 68 | ||||
| Deferred tax assets | 17 | ||||
| Other assets | 116 | ||||
| Less: Loss recognized on assets held-for-sale(2) | (337) | ||||
| Total assets | 3,122 | ||||
| Liabilities | |||||
| Accounts payable | $ | (131) | |||
| Deferred tax liability | (75) | ||||
| Other liabilities | (193) | ||||
| Total liabilities | (399) | ||||
| Equity | |||||
| Accumulated other comprehensive income - currency translation adjustment | $ | 49 | |||
| Accumulated other comprehensive income - pension adjustment | (26) | ||||
| Non-controlling Interests (NCI) | (4) | ||||
| Total equity | 19 | ||||
| Carrying value of net assets (adjusted for currency translation, pension, and NCI adjustments) | $ | 2,742 |
(1) The goodwill balance is presented net of $64 million of goodwill impairment recorded in 2024.
(2) A loss was recorded on assets held-for-sale in the amount of $337 million through March 31, 2025.
As a result of the business divestiture, the Company recognized a pre-tax loss of approximately $91 million, subject to certain post-closing adjustments, presented in Losses (gains) on business disposals on the Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) for the three and six months ended June 30, 2025. This is in addition to the life-to-date loss on assets classified as held for sale of $337 million recognized through March 31, 2025. $282 million of the loss on assets classified as held for sale was recognized during the three and six months ended June 30, 2024. The total income tax expense recognized was approximately $81 million, including approximately $70 million of income tax benefit that was recognized during the year ended December 31, 2024.
Divestiture of the Nitrocellulose business
During October 2024, the Company entered into an agreement to sell its Nitrocellulose business (including the related industrial park in Germany), which was included within the Company’s existing Pharma Solutions reportable operating segment. The Company completed the divestiture on May 9, 2025, and received cash proceeds of approximately $161 million. The sale consideration is subject to certain post-closing adjustments, which are primarily related to cash, working capital balances, and other adjustments per the transaction agreement.
The following table summarizes the fair value of sale consideration received in connection with the business divestiture:
| (DOLLARS IN MILLIONS) | |||||
| Cash proceeds from the buyer | $ | 161 | |||
| Direct costs to sell | (3) | ||||
| Fair value of sale consideration | $ | 158 |
The net proceeds received from the business divestiture presented under Cash flows from investing activities represent the cash portion of the sale consideration, which was determined as the fair value of sale consideration adjusted by the cash transferred to the buyer as part of the transaction. Amounts paid for direct costs to sell are presented under Cash flows from operating activities.
The following table summarizes the different components of net proceeds received from business divestiture presented under Cash flows from investing activities:
| (DOLLARS IN MILLIONS) | |||||
| Cash proceeds from the buyer | $ | 161 | |||
| Cash transferred to the buyer | (9) | ||||
| Net Cash flows from investing activities | $ | 152 |
The carrying amount of net assets associated with the Nitrocellulose business, adjusted for currency translation adjustment and pension adjustments, was approximately $148 million. The major classes of assets and liabilities sold consisted of the following:
| (DOLLARS IN MILLIONS) | May 9, 2025 | ||||
| Assets | |||||
| Cash and cash equivalents | $ | 9 | |||
| Trade receivables, net | 33 | ||||
| Inventories | 15 | ||||
| Property, plant and equipment, net | 60 | ||||
| Goodwill | 77 | ||||
| Other intangible assets, net | 19 | ||||
| Other assets | 40 | ||||
| Total assets | 253 | ||||
| Liabilities | |||||
| Accounts payable | $ | (30) | |||
| Other liabilities | (50) | ||||
| Total liabilities | (80) | ||||
| Equity | |||||
| Accumulated other comprehensive income - currency translation adjustment | (1) | ||||
| Accumulated other comprehensive income - pension adjustment | (24) | ||||
| Total equity | (25) | ||||
| Carrying value of net assets (adjusted for currency translation and pension adjustments) | $ | 148 |
As a result of the business divestiture, the Company recognized a pre-tax gain of approximately $10 million, subject to certain post-closing adjustments, presented in Losses (gains) on business disposals on the Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) for the three and six months ended June 30, 2025. The total income tax benefit recognized was approximately $1 million for the three and six months ended June 30, 2025.
Divestiture of a Tobacco Flavoring Business in North America
The Company completed the divestiture of the Tobacco Flavoring Business in North America on April 1, 2025, and received gross cash proceeds of approximately $20 million.
As a result of the divestiture, the Company recognized a pre-tax gain of less than $1 million presented in Losses (gains) on business disposals on the Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) for the three and six months ended June 30, 2025. The total income tax expense recognized was approximately $5 million for the three and six months ended June 30, 2025.
Assets and Liabilities Held for Sale
There were no assets and liabilities that met the criteria to be presented as “held for sale” as of June 30, 2025.
The Company’s Consolidated Balance Sheet as of December 31, 2024 included the carrying amounts of the assets and liabilities of the Pharma Solutions disposal group, Nitrocellulose disposal group, and a portion of the Savory Solutions business in Turkey as held for sale. The Company completed the sale of a portion of the Savory Solutions business in Turkey during the three months ended March 31, 2025, and the sale of the Pharma Solutions disposal group and Nitrocellulose disposal group during the three months ended June 30, 2025.
| (DOLLARS IN MILLIONS) | December 31, 2024 | |||||||
| Assets | ||||||||
| Cash and cash equivalents | $ | 2 | ||||||
| Trade receivables, net | 187 | |||||||
| Inventories | 274 | |||||||
| Property, plant and equipment, net | 451 | |||||||
| Goodwill | 1,216 | |||||||
| Other intangible assets, net | 1,078 | |||||||
| Operating lease right-of-use assets | 57 | |||||||
| Other assets | 112 | |||||||
| Less: Loss recognized on assets held-for-sale | (347) | |||||||
| Total assets held-for-sale | $ | 3,030 | ||||||
| Liabilities | ||||||||
| Accounts payable | $ | 90 | ||||||
| Deferred tax liability | 51 | |||||||
| Other liabilities | 191 | |||||||
| Total liabilities held-for-sale | $ | 332 | ||||||
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 Income (Loss).
IFF Productivity Program
Beginning in 2024, the Company began undertaking a productivity enhancement program aimed at improving productivity and optimizing its organizational footprint to align with business needs. This program will involve a series of actions, including ceasing operations in select manufacturing plants, consolidating leased and owned real estate space, and reducing employee headcount. The Company aims to substantially complete this productivity program by December 31, 2026.
The estimated total cost of the program initiatives ranges from $100 million to $120 million. The anticipated cash charges include employee-related costs such as severance, contract terminations, and dismantling costs. Additionally, non-cash charges related to assets, such as fixed asset write downs, are expected.
For the three and six months ended June 30, 2025, the Company incurred approximately $21 million and $38 million, respectively, in severance costs in connection with the IFF Productivity Program. As of June 30, 2025, the Company incurred approximately $41 million related to severance costs and approximately $20 million in fixed asset write downs in connection with this program since inception.
Changes in Restructuring Liabilities
Changes in restructuring liabilities during the six months ended June 30, 2025 were as follows:
| (DOLLARS IN MILLIONS) | Balance at January 1, 2025 | Additional Charges (Reversals), Net | Non-Cash Charges | Cash Payments | Balance at June 30, 2025 | ||||||||||||||||||||||||||||||
| IFF Productivity Program | |||||||||||||||||||||||||||||||||||
| Severance | $ | 3 | $ | 38 | $ | — | $ | (13) | $ | 28 | |||||||||||||||||||||||||
| Total Restructuring and other charges | $ | 3 | $ | 38 | $ | — | $ | (13) | $ | 28 |
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 June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| (DOLLARS IN MILLIONS) | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||
| Taste | $ | 6 | $ | — | $ | 8 | $ | 1 | |||||||||||||||
| Food Ingredients | 7 | 1 | 10 | 2 | |||||||||||||||||||
| Health & Biosciences | 5 | — | 8 | 1 | |||||||||||||||||||
| Scent | 3 | 1 | 12 | 1 | |||||||||||||||||||
| Total Restructuring and other charges | $ | 21 | $ | 2 | $ | 38 | $ | 5 |
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 June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| (DOLLARS IN MILLIONS) | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||
| Equity-based awards | $ | 32 | $ | 25 | $ | 51 | $ | 43 | |||||||||||||||
| Liability-based awards | 1 | 1 | 1 | 2 | |||||||||||||||||||
| Total stock-based compensation expense | 33 | 26 | 52 | 45 | |||||||||||||||||||
| Less: Tax benefit | (9) | (5) | (13) | (9) | |||||||||||||||||||
| Total stock-based compensation expense, after tax | $ | 24 | $ | 21 | $ | 39 | $ | 36 |
As of June 30, 2025, there was approximately $105 million of total unrecognized compensation cost related to non-vested awards granted under the equity incentive plans.
NOTE 6. SEGMENT INFORMATION
Effective January 1, 2025, the Company implemented a reorganization of its internal structure, which impacted the way the CODM, the Chief Executive Officer, allocates resources and assesses financial performance. As a result, the Company has updated its reportable segments beginning with the first quarter of 2025.
Specifically, the former Nourish segment has been separated into two new reportable segments: Taste and Food Ingredients. The Taste segment (formerly the Flavors business within Nourish) includes flavor compounds and natural taste solutions used in food and beverage applications. The Food Ingredients segment (formerly the Ingredients business within Nourish) includes a broad portfolio of natural and plant-based specialty ingredients that provide texturizing and food protection capabilities, as well as soy and pea protein solutions, emulsifiers, and sweeteners.
In addition, immaterial business transfers occurred between Food Ingredients and Pharma Solutions, and between Health & Biosciences and Taste. Accordingly, the Company’s reportable segments as of January 1, 2025 are: Taste, Food Ingredients, Health & Biosciences, Scent, and Pharma Solutions.
The Company also adjusted its corporate cost allocations to align with the new organizational structure and updated operating model, consistent with how management assesses performance effective January 1, 2025.
Segment information for the three months and six months ended June 30, 2024 has been recast to reflect the updated segment structure and changes in corporate allocations among the Company’s reportable segments on a comparable basis.
The Company’s CODM does not use assets by segment to evaluate segment performance or allocate resources and thus, total assets by segment are not disclosed.
Reportable segment information was as follows:
As a result of the divestitures of the Pharma Solutions disposal group and Nitrocellulose business that were completed during the three months ended June 30, 2025, the Pharma Solutions reportable segment information for the three months and six months ended June 30, 2025 includes one month and four months of results, respectively.
| Three Months Ended June 30, 2025 | |||||||||||||||||||||||||||||||||||
| Taste | Food Ingredients | Health & Biosciences | Scent | Pharma Solutions | Total | ||||||||||||||||||||||||||||||
| Net sales | $ | 631 | $ | 850 | $ | 577 | $ | 603 | $ | 103 | $ | 2,764 | |||||||||||||||||||||||
| Cost of sales | (377) | (642) | (311) | (336) | (68) | ||||||||||||||||||||||||||||||
| Research & development expenses | (47) | (14) | (55) | (62) | (3) | ||||||||||||||||||||||||||||||
| Selling & administrative expenses | (98) | (104) | (91) | (92) | (10) | ||||||||||||||||||||||||||||||
| Depreciation expense add-back (a) | 16 | 34 | 31 | 17 | — | ||||||||||||||||||||||||||||||
| Adjusted Operating EBITDA | $ | 125 | $ | 124 | $ | 151 | $ | 130 | $ | 22 | $ | 552 |
| Reconciliation of Adjusted Operating EBITDA: | ||||||||||||||
| Total Adjusted Operating EBITDA | $ | 552 | ||||||||||||
| Depreciation & Amortization | (242) | |||||||||||||
| Interest Expense | (61) | |||||||||||||
| Other Expense, net (b) | (10) | |||||||||||||
| Restructuring and Other Charges (c) | (21) | |||||||||||||
| (Losses) Gains on Business Disposals (e) | (81) | |||||||||||||
| Divestiture and Integration Costs (g) | (26) | |||||||||||||
| Strategic Initiative Costs (h) | (6) | |||||||||||||
| Regulatory Costs (i) | (53) | |||||||||||||
| Gain on Debt Extinguishment (j) | 488 | |||||||||||||
| Entity Realignment Costs (k) | (4) | |||||||||||||
| Other (l) | (2) | |||||||||||||
| Income (Loss) Before Taxes | $ | 534 |
| Six Months Ended June 30, 2025 | |||||||||||||||||||||||||||||||||||
| Taste | Food Ingredients | Health & Biosciences | Scent | Pharma Solutions | Total | ||||||||||||||||||||||||||||||
| Net sales | $ | 1,258 | $ | 1,646 | $ | 1,117 | $ | 1,217 | $ | 369 | $ | 5,607 | |||||||||||||||||||||||
| Cost of sales | (754) | (1,251) | (609) | (680) | (248) | ||||||||||||||||||||||||||||||
| Research & development expenses | (87) | (26) | (107) | (117) | (8) | ||||||||||||||||||||||||||||||
| Selling & administrative expenses | (192) | (196) | (172) | (178) | (42) | ||||||||||||||||||||||||||||||
| Depreciation expense add-back (a) | 31 | 62 | 60 | 32 | 5 | ||||||||||||||||||||||||||||||
| Adjusted Operating EBITDA | $ | 256 | $ | 235 | $ | 289 | $ | 274 | $ | 76 | $ | 1,130 |
| Reconciliation of Adjusted Operating EBITDA: | ||||||||||||||
| Total Adjusted Operating EBITDA | $ | 1,130 | ||||||||||||
| Depreciation & Amortization | (478) | |||||||||||||
| Interest Expense | (132) | |||||||||||||
| Other Expense, net (b) | (30) | |||||||||||||
| Restructuring and Other Charges (c) | (38) | |||||||||||||
| Impairment of Goodwill (d) | (1,153) | |||||||||||||
| (Losses) Gains on Business Disposals (e) | (81) | |||||||||||||
| Divestiture and Integration Costs (g) | (77) | |||||||||||||
| Strategic Initiative Costs (h) | (14) | |||||||||||||
| Regulatory Costs (i) | (64) | |||||||||||||
| Gain on Debt Extinguishment (j) | 488 | |||||||||||||
| Entity Realignment Costs (k) | (5) | |||||||||||||
| Other (l) | (6) | |||||||||||||
| Income (Loss) Before Taxes | $ | (460) |
| Three Months Ended June 30, 2024 | |||||||||||||||||||||||||||||||||||
| Taste | Food Ingredients | Health & Biosciences | Scent | Pharma Solutions | Total | ||||||||||||||||||||||||||||||
| Net sales | $ | 610 | $ | 847 | $ | 556 | $ | 603 | $ | 273 | $ | 2,889 | |||||||||||||||||||||||
| Cost of sales | (357) | (655) | (294) | (328) | (187) | ||||||||||||||||||||||||||||||
| Research & development expenses | (40) | (21) | (50) | (55) | (7) | ||||||||||||||||||||||||||||||
| Selling & administrative expenses | (100) | (94) | (89) | (93) | (26) | ||||||||||||||||||||||||||||||
| Depreciation expense add-back (a) | 14 | 32 | 28 | 16 | 5 | ||||||||||||||||||||||||||||||
| Adjusted Operating EBITDA | $ | 127 | $ | 109 | $ | 151 | $ | 143 | $ | 58 | $ | 588 |
| Reconciliation of Adjusted Operating EBITDA: | ||||||||||||||
| Total Adjusted Operating EBITDA | $ | 588 | ||||||||||||
| Depreciation & Amortization | (246) | |||||||||||||
| Interest Expense | (79) | |||||||||||||
| Other Expense, net (b) | (15) | |||||||||||||
| Restructuring and Other Charges (c) | (2) | |||||||||||||
| Impairment of Goodwill (d) | (64) | |||||||||||||
| (Losses) Gains on Business Disposals (e) | 368 | |||||||||||||
| Loss on Assets Classified as Held for Sale (f) | (282) | |||||||||||||
| Divestiture and Integration Costs (g) | (59) | |||||||||||||
| Strategic Initiative Costs (h) | (12) | |||||||||||||
| Regulatory Costs (i) | (19) | |||||||||||||
| Entity Realignment Costs (k) | (2) | |||||||||||||
| Other (l) | 7 | |||||||||||||
| Income (Loss) Before Taxes | $ | 183 |
| Six Months Ended June 30, 2024 | |||||||||||||||||||||||||||||||||||
| Taste | Food Ingredients | Health & Biosciences | Scent | Pharma Solutions | Total | ||||||||||||||||||||||||||||||
| Net sales | $ | 1,229 | $ | 1,703 | $ | 1,085 | $ | 1,248 | $ | 523 | $ | 5,788 | |||||||||||||||||||||||
| Cost of sales | (741) | (1,328) | (580) | (678) | (368) | ||||||||||||||||||||||||||||||
| Research & development expenses | (79) | (41) | (96) | (110) | (13) | ||||||||||||||||||||||||||||||
| Selling & administrative expenses | (196) | (184) | (177) | (181) | (54) | ||||||||||||||||||||||||||||||
| Depreciation expense add-back (a) | 31 | 67 | 57 | 32 | 17 | ||||||||||||||||||||||||||||||
| Adjusted Operating EBITDA | $ | 244 | $ | 217 | $ | 289 | $ | 311 | $ | 105 | $ | 1,166 |
| Reconciliation of Adjusted Operating EBITDA: | ||||||||||||||
| Total Adjusted Operating EBITDA | $ | 1,166 | ||||||||||||
| Depreciation & Amortization | (524) | |||||||||||||
| Interest Expense | (162) | |||||||||||||
| Other Expense, net (b) | (16) | |||||||||||||
| Restructuring and Other Charges (c) | (5) | |||||||||||||
| Impairment of Goodwill (d) | (64) | |||||||||||||
| (Losses) Gains on Business Disposals (e) | 368 | |||||||||||||
| Loss on Assets Classified as Held for Sale (f) | (282) | |||||||||||||
| Divestiture and Integration Costs (g) | (117) | |||||||||||||
| Strategic Initiative Costs (h) | (16) | |||||||||||||
| Regulatory Costs (i) | (54) | |||||||||||||
| Entity Realignment Costs (k) | (3) | |||||||||||||
| Other (l) | 7 | |||||||||||||
| Income (Loss) Before Taxes | $ | 298 |
| a) | There is depreciation recorded within cost of sales, research & development expenses, and selling & administrative expenses, which is then added back to calculate segment Adjusted Operating EBITDA. This reflects how the CODM reviews Segment results. | |||||||
| b) | Please refer to Note 8 for additional information. | |||||||
| c) | For 2025, represents costs related to severance as part of the IFF Productivity Program. For 2024, represents costs related to lease impairment and severance as part of the Company’s restructuring efforts. Please refer to Note 4 for additional information. | |||||||
| d) | For 2025, represents the impairment of goodwill related to the Food Ingredients reporting unit. For 2024, represents the impairment of goodwill related to the Pharma Solutions disposal group. | |||||||
| e) | For 2025, primarily represents losses recognized as part of the sale of the Pharma Solutions disposal group, offset in part by gains recognized as part of the sale of the Nitrocellulose business. For 2024, primarily represents gains recognized as part of the sale of the Cosmetic Ingredients business. Please refer to Note 3 for additional information. | |||||||
| f) | For 2024, represents the loss recognized on assets classified as held for sale of the Pharma Solutions disposal group. | |||||||
| g) | For 2025 and 2024, primarily represents costs related to the Company’s completed divestitures. These costs primarily consisted of external consulting fees, professional and legal fees and salaries of individuals who are fully dedicated to such efforts. For the three months ended June 30, 2025, there were approximately $26 million of divestiture costs. For the three months ended June 30, 2024, business divestiture and integration costs were approximately $56 million and $3 million, respectively. For the six months ended June 30, 2025, there were approximately $77 million of divestiture costs. For the six months ended June 30, 2024, business divestiture and integration costs were approximately $112 million and $5 million, respectively. | |||||||
| h) | For 2025 and 2024, represents costs related to the Company’s strategic assessment and business portfolio optimization efforts and reorganizing the Global Business Services Centers, primarily consulting fees. | |||||||
| i) | Represents costs primarily related to legal fees and provisions incurred related to the ongoing investigations of the fragrance businesses including a provision for the anticipated settlement of the related US class action lawsuits. | |||||||
| j) | For 2025, represents the gain recognized on the extinguishment of debt in connection with the completion of tender offers. Please refer to Note 13 for additional information. |
| k) | Represents primarily consulting costs related to the Company’s implementation of a phased restructuring initiative aimed at optimizing its legal entity framework. See Note 9 for additional information. | |||||||
| l) | For 2025, primarily represents the net impact of costs related to severance, including accelerated stock compensation expense, for certain executives who have separated from the Company. For 2024, represents gains (losses) from sale of assets and executive employee separation costs. | |||||||
Segment capital expenditures consisted as follows:
| Three Months Ended June 30, | |||||||||||
| (DOLLARS IN MILLIONS) | 2025 | 2024 | |||||||||
| Taste | $ | 15 | $ | 11 | |||||||
| Food Ingredients | 40 | 23 | |||||||||
| Health and Biosciences | 22 | 19 | |||||||||
| Scent | 8 | 10 | |||||||||
| Pharma Solutions | 10 | 19 | |||||||||
| Consolidated | $ | 95 | $ | 82 |
| Six Months Ended June 30, | |||||||||||
| (DOLLARS IN MILLIONS) | 2025 | 2024 | |||||||||
| Taste | $ | 42 | $ | 23 | |||||||
| Food Ingredients | 100 | 70 | |||||||||
| Health and Biosciences | 62 | 35 | |||||||||
| Scent | 32 | 25 | |||||||||
| Pharma Solutions | 38 | 47 | |||||||||
| Consolidated | $ | 274 | $ | 200 |
Net sales, which are attributed to individual regions based upon the destination of product delivery, were as follows:
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| (DOLLARS IN MILLIONS) | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||
| Europe, Africa and Middle East | $ | 953 | $ | 972 | $ | 1,905 | $ | 1,949 | |||||||||||||||
| Greater Asia | 647 | 681 | 1,317 | 1,363 | |||||||||||||||||||
| North America | 803 | 876 | 1,671 | 1,742 | |||||||||||||||||||
| Latin America | 361 | 360 | 714 | 734 | |||||||||||||||||||
| Consolidated | $ | 2,764 | $ | 2,889 | $ | 5,607 | $ | 5,788 |
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| (DOLLARS IN MILLIONS) | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||
| Net sales related to the U.S. | $ | 764 | $ | 822 | $ | 1,565 | $ | 1,633 | |||||||||||||||
| Net sales attributed to all foreign countries | 2,000 | 2,067 | 4,042 | 4,155 |
No country other than the U.S. had net sales greater than 10% of total consolidated net sales for each of the three and six months ended June 30, 2025 and 2024.
NOTE 7. EMPLOYEE BENEFITS
Pension and other defined contribution retirement plan expenses included the following components:
| (DOLLARS IN MILLIONS) | U.S. Plans**(1)** | ||||||||||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Interest cost on projected benefit obligation(3) | $ | — | $ | 5 | $ | 1 | $ | 11 | |||||||||||||||
| Expected return on plan assets(3) | — | (6) | — | (12) | |||||||||||||||||||
| Net amortization and deferrals(3) | 1 | 1 | 1 | 2 | |||||||||||||||||||
| Net periodic benefit (income) cost | $ | 1 | $ | — | $ | 2 | $ | 1 |
| (DOLLARS IN MILLIONS) | Non-U.S. Plans | ||||||||||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Service cost for benefits earned(2) | $ | 5 | $ | 6 | $ | 10 | $ | 12 | |||||||||||||||
| Interest cost on projected benefit obligation(3) | 9 | 9 | 18 | 18 | |||||||||||||||||||
| Expected return on plan assets(3) | (12) | (12) | (23) | (25) | |||||||||||||||||||
| Net amortization and deferrals(3) | 1 | 1 | 2 | 3 | |||||||||||||||||||
| Net periodic benefit (income) cost | $ | 3 | $ | 4 | $ | 7 | $ | 8 |
(1)The International Flavors & Fragrances Inc. Pension Plan (the “Plan”) was formally terminated on April 1, 2024, and settlements of the terminated Plan occurred during November 2024. The Company continues to administer several smaller non-qualified U.S. pension plans.
(2)Included as a component of Operating profit (loss).
(3)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 $15 million to its non-U.S. pension plans during 2025. During the six months ended June 30, 2025, $2 million of contributions were made with respect to the Company’s non-qualified U.S. pension plans and $7 million of contributions were made to the non-U.S. pension plans.
Expense recognized for post-retirement benefits other than pensions included the following components:
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| (DOLLARS IN MILLIONS) | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||
| Interest cost on projected benefit obligation | $ | — | $ | — | $ | 1 | $ | 1 | |||||||||||||||
| Net amortization and deferrals | — | — | (1) | (1) | |||||||||||||||||||
| Total postretirement benefit expense | $ | — | $ | — | $ | — | $ | — |
The Company expects to make $4 million of payments related to its postretirement benefits other than pension plans during 2025. In the six months ended June 30, 2025, $1 million of benefit payments were made.
NOTE 8. OTHER EXPENSE, NET
Other expense, net consisted of the following:
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| (DOLLARS IN MILLIONS) | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||
| Foreign exchange losses | $ | (17) | $ | (33) | $ | (41) | $ | (41) | |||||||||||||||
| Interest income | 7 | 3 | 11 | 6 | |||||||||||||||||||
| Pension-related benefit | — | 1 | 1 | 3 | |||||||||||||||||||
| Other | — | 14 | (1) | 16 | |||||||||||||||||||
| Other expense, net | $ | (10) | $ | (15) | $ | (30) | $ | (16) |
NOTE 9. INCOME TAXES
The effective tax rate for the three months ended June 30, 2025 was (14.6)%, which was primarily driven by the tax benefit resulting from the entity realignment project, offset in part by the impact of business divestitures and changes in the mix of earnings following the divestitures. The entity realignment project is a phased restructuring initiative aimed at optimizing the Company’s legal entity framework, improving effectiveness and alignment with strategic goals. The Company recorded a one-time tax benefit of $359 million during the three months ended June 30, 2025 as a result of this restructuring.
The effective tax rate for the six months ended June 30, 2025 was 12.0%, which was primarily driven by the tax benefit resulting from the entity realignment project, offset in part by the impact of business divestitures, a goodwill impairment charge that is mostly non-taxable and changes in the mix of earnings following the divestitures.
As of June 30, 2025, the Company had approximately $154 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 June 30, 2025, the Company had accrued interest and penalties of approximately $58 million classified in Other liabilities.
As of June 30, 2025, the Company’s aggregate provisions for uncertain tax positions, including interest and penalties, was approximately $212 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 June 30, 2025, the Company had a deferred tax liability of approximately $151 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) | June 30, 2025 | December 31, 2024 | |||||||||
| Asset Type | |||||||||||
| Land | $ | 139 | $ | 136 | |||||||
| Buildings and improvements | 1,798 | 1,688 | |||||||||
| Machinery and equipment | 3,713 | 3,447 | |||||||||
| Information technology | 561 | 507 | |||||||||
| Construction in process | 405 | 389 | |||||||||
| Total Property, plant and equipment | 6,616 | 6,167 | |||||||||
| Accumulated depreciation | (2,711) | (2,428) | |||||||||
| Total Property, plant and equipment, net | $ | 3,905 | $ | 3,739 |
Depreciation expense was $97 million and $93 million for the three months ended June 30, 2025 and 2024, respectively, and $190 million and $203 million for the six months ended June 30, 2025 and 2024, 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 $3 million and $3 million for the three months ended June 30, 2025 and 2024, and approximately $6 million and $7 million for the six months ended June 30, 2025 and 2024.
NOTE 11. GOODWILL AND OTHER INTANGIBLE ASSETS, NET
Goodwill
Movements in goodwill attributable to each reportable segment for the six months ended June 30, 2025 were as follows:
| (DOLLARS IN MILLIONS) | Nourish | Taste | Food Ingredients | Scent | Health & Biosciences | Pharma Solutions | Total | ||||||||||||||||||||||||||||||||||||||||
| Balance at January 1, 2025 | $ | 3,320 | $ | — | $ | — | $ | 1,465 | $ | 4,295 | $ | — | $ | 9,080 | |||||||||||||||||||||||||||||||||
| Reallocation of goodwill in segment reorganization | (3,317) | 2,178 | 1,153 | — | (14) | — | — | ||||||||||||||||||||||||||||||||||||||||
| Transferred to assets held for sale | — | (6) | — | — | — | — | (6) | ||||||||||||||||||||||||||||||||||||||||
| Impairment | — | — | (1,153) | — | — | — | (1,153) | ||||||||||||||||||||||||||||||||||||||||
| Foreign exchange | — | 133 | — | 46 | 186 | — | 365 | ||||||||||||||||||||||||||||||||||||||||
| Other | (3) | — | — | — | — | — | (3) | ||||||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2025 | $ | — | $ | 2,305 | $ | — | $ | 1,511 | $ | 4,467 | $ | — | $ | 8,283 |
Goodwill Impairment Test
Effective January 1, 2025, the Company reorganized its Nourish segment into two new reportable segments: Taste and Food Ingredients, to align with changes in the Company’s internal management reporting structure. As a result of this change, goodwill previously allocated to the Nourish reporting unit was reallocated between the new Taste and Food Ingredients reporting units. In accordance with ASC 350, the Company performed a quantitative goodwill impairment test on the former Nourish reporting unit immediately prior to the change, and separately tested goodwill for the new Taste and Food Ingredients reporting units following the reorganization. Based on the results of the impairment testing, the Company determined that the carrying amount of the Food Ingredients reporting unit exceeded its estimated fair value, and accordingly recognized a goodwill impairment charge of $1.153 billion. This charge is reflected in the Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) for the six months ended June 30, 2025. As of June 30, 2025, there is no remaining goodwill attributable to the Food Ingredients reporting unit.
The Company assessed the fair value of the reporting units using an income approach. Under the income approach, the Company 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. The Company used the most current actual and forecasted operating data available. Key estimates and assumptions used in these valuations include revenue growth rates, gross margins, adjusted operating EBITDA margins, terminal growth rates and discount rates.
Other Intangible Assets
Other intangible assets, net consisted of the following amounts:
| June 30, | December 31, | ||||||||||
| (DOLLARS IN MILLIONS) | 2025 | 2024 | |||||||||
| Asset Type | |||||||||||
| Customer relationships | $ | 7,314 | $ | 7,004 | |||||||
| Technological know-how | 2,026 | 1,937 | |||||||||
| Trade names & patents | 289 | 268 | |||||||||
| Other | 24 | 25 | |||||||||
| Total carrying value | 9,653 | 9,234 | |||||||||
| Accumulated Amortization | |||||||||||
| Customer relationships | (2,042) | (1,765) | |||||||||
| Technological know-how | (1,012) | (875) | |||||||||
| Trade names & patents | (148) | (128) | |||||||||
| Other | (21) | (21) | |||||||||
| Total accumulated amortization | (3,223) | (2,789) | |||||||||
| Other intangible assets, net | $ | 6,430 | $ | 6,445 |
Amortization
Amortization expense was $145 million and $153 million for the three months ended June 30, 2025 and 2024, respectively, and $288 million and $321 million for the six months ended June 30, 2025 and 2024, 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 2025 | 2026 | 2027 | 2028 | 2029 | ||||||||||||||||||||||||
| Estimated future intangible amortization expense | $ | 297 | $ | 589 | $ | 501 | $ | 487 | $ | 451 |
NOTE 12. OTHER CURRENT ASSETS AND LIABILITIES, AND OTHER ASSETS
Prepaid expenses and other current assets consisted of the following amounts:
| (DOLLARS IN MILLIONS) | June 30, 2025 | December 31, 2024 | |||||||||
| Value-added tax receivable | $ | 154 | $ | 152 | |||||||
| Prepaid income taxes | 212 | 193 | |||||||||
| Deferred charges | 40 | 44 | |||||||||
| Packaging materials and supplies | 133 | 123 | |||||||||
| Prepaid expenses | 180 | 159 | |||||||||
| Earnout receivable | 100 | — | |||||||||
| Other | 121 | 66 | |||||||||
| Total | $ | 940 | $ | 737 |
Other assets consisted of the following amounts:
| (DOLLARS IN MILLIONS) | June 30, 2025 | December 31, 2024 | |||||||||
| Deferred income taxes | $ | 244 | $ | 240 | |||||||
| Overfunded pension plans | 168 | 144 | |||||||||
| Cash surrender value of life insurance contracts | 53 | 52 | |||||||||
| Finance lease right-of-use assets | 29 | 27 | |||||||||
| Equity method investments | 16 | 10 | |||||||||
| Long-term receivables(1) | 240 | 171 | |||||||||
| Other(2) | 205 | 193 | |||||||||
| Total | $ | 955 | $ | 837 |
(1)Primarily relates to long-term tax receivables due to an operating loss carryback and receivables from certain government authorities, which the Company has corresponding payables to DuPont in relation to the N&B Transaction in 2021.
(2)Includes land usage rights in China.
Other current liabilities consisted of the following amounts:
| (DOLLARS IN MILLIONS) | June 30, 2025 | December 31, 2024 | |||||||||
| Rebates and incentives payable | $ | 98 | $ | 111 | |||||||
| Value-added tax payable | 46 | 58 | |||||||||
| Interest payable | 47 | 42 | |||||||||
| Current pension and other postretirement benefit obligation | 13 | 12 | |||||||||
| Accrued restructuring | 28 | 3 | |||||||||
| Current operating lease obligation | 95 | 82 | |||||||||
| Accrued income taxes | 218 | 131 | |||||||||
| Accrued expenses payable | 318 | 203 | |||||||||
| Other | 112 | 141 | |||||||||
| Total | $ | 975 | $ | 783 |
NOTE 13. DEBT
Debt consisted of the following:
| (DOLLARS IN MILLIONS) | Effective Interest Rate | June 30, 2025 | December 31, 2024 | ||||||||||||||
| 2025 Notes(1)(2) | 1.22 | % | $ | 500 | $ | 1,000 | |||||||||||
| 2026 Euro Notes(1) | 1.93 | % | 942 | 827 | |||||||||||||
| 2027 Notes(1)(2) | 1.56 | % | 805 | 1,209 | |||||||||||||
| 2028 Notes(1) | 4.57 | % | 399 | 398 | |||||||||||||
| 2030 Notes(1)(2) | 2.21 | % | 1,239 | 1,507 | |||||||||||||
| 2040 Notes(1)(2) | 3.04 | % | 342 | 771 | |||||||||||||
| 2047 Notes(1)(2) | 4.44 | % | 392 | 495 | |||||||||||||
| 2048 Notes(1)(2) | 5.12 | % | 674 | 787 | |||||||||||||
| 2050 Notes(1)(2) | 3.21 | % | 889 | 1,568 | |||||||||||||
| 2026 Term Loan Facility(1) | 4.88 | % | — | 413 | |||||||||||||
| Revolving Credit Facility(3) | — | — | |||||||||||||||
| Bank overdrafts and other | 2 | 2 | |||||||||||||||
| Total debt | 6,184 | 8,977 | |||||||||||||||
| Less: Short-term borrowings | (500) | (1,413) | |||||||||||||||
| Total Long-term debt | $ | 5,684 | $ | 7,564 |
(1)Amount is net of unamortized discount and debt issuance costs.
(2)Included in the tender offers described below.
(3)Borrowings under the Revolving Credit Facility are subject to interest at varying spreads above quoted market rates and a commitment fee is paid on the total unused borrowings.
Repayments of Debt
Tender Offers
On May 20, 2025, the Company commenced tender offers to purchase for cash certain of its outstanding series of Senior Notes for an aggregate purchase price, excluding accrued and unpaid interest, of $2.0 billion. The carrying value of this series of Senior Notes purchased as a result of these tender offers was $2.5 billion. The Company also incurred approximately $6 million of banking and legal costs. In connection with the completion of these tender offers, the Company recognized a gain on debt extinguishment of $488 million within the Consolidated Statements of Income (Loss) and Comprehensive Income (Loss). The tender offers were primarily funded through the proceeds received from the divestiture of the Pharma Solutions disposal group.
Other
For the six months ended June 30, 2025, the Company made debt repayments totaling approximately $413 million on the remaining balance of the 2026 Term Loan Facility. This was done using a portion of the cash proceeds from the divestiture of the Pharma Solutions disposal group in accordance with the terms of the Term Loan Facility agreement.
For the six months ended June 30, 2024, the Company made a $270 million and €500 million (approximately $547 million) debt repayment at maturity related to the 2024 Term Loan Facility and 2024 Euro Notes, respectively, which were primarily funded from commercial paper issuances, which were subsequently repaid using proceeds received from the divestiture of the Cosmetic Ingredients business. The Company also made quarterly debt repayments totaling approximately $31 million related to the 2026 Term Loan Facility in accordance with the terms of the debt agreement.
Commercial Paper
For the six months ended June 30, 2025, the Company had gross issuances of $3.284 billion and repayments of $3.284 billion under the commercial paper program. For the six months ended June 30, 2024, the Company had gross issuances of $3.298 billion and repayments of $3.109 billion under the commercial paper program. The commercial paper issued during both the six months ended June 30, 2025 and 2024 had original maturities of less than 90 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 six months ended June 30, 2025, the Company had no drawdowns or repayments under the Revolving Credit Facility. For the six months ended June 30, 2024, the Company had drawdowns of $250 million and repayments of $250 million under the Revolving Credit Facility.
On June 25, 2025, the Company, with its lenders, entered into the Fourth Amended and Restated Credit Agreement (Revolving Credit Agreement), which amended and restated the most recent Amendment No. 4 to the Third Amended and Restated Credit Agreement dated September 19, 2023. This amendment and restatement, among other things, extended the termination date to June 25, 2030, as well as removed the financial covenant relief period and associated restrictions. The Fourth Amended and Restated Credit Agreement states that from the effective date through September 30, 2025, our net debt to credit adjusted EBITDA ratio shall not exceed 4.00x, and shall not exceed 3.75x thereafter, with a temporary step-up to 4.25x permitted for three fiscal quarters following an acquisition exceeding $500 million in paid consideration. As of June 30, 2025, we were in compliance with all financial and other covenants.
Lines of Credit
The Company has various lines of credit which are available to support its ongoing business operations. As of June 30, 2025 the Company has a total capacity of approximately $1.747 billion of lines of credit with various financial institutions.
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 | Six Months Ended | Six Months Ended | ||||||||||||||||||||
| (DOLLARS IN MILLIONS) | June 30, 2025 | June 30, 2024 | June 30, 2025 | June 30, 2024 | |||||||||||||||||||
| Operating leases | |||||||||||||||||||||||
| Operating lease cost | $ | 32 | $ | 32 | $ | 58 | $ | 64 | |||||||||||||||
| Variable lease cost | 10 | 12 | 32 | 28 | |||||||||||||||||||
| Total operating lease cost | $ | 42 | $ | 44 | $ | 90 | $ | 92 | |||||||||||||||
| Finance leases | |||||||||||||||||||||||
| Finance lease cost | $ | 3 | $ | 3 | $ | 6 | $ | 6 |
Supplemental cash flow information related to leases was as follows:
| Six Months Ended | Six Months Ended | ||||||||||
| (DOLLARS IN MILLIONS) | June 30, 2025 | June 30, 2024 | |||||||||
| Cash paid for amounts included in the measurement of lease liabilities | |||||||||||
| Operating cash flows for operating leases | $ | 67 | $ | 60 | |||||||
| Operating cash flows for finance leases | 1 | 1 | |||||||||
| Financing cash flows for finance leases | 6 | 5 | |||||||||
| Right-of-use assets obtained in exchange for lease obligations | |||||||||||
| Operating leases | 79 | 44 | |||||||||
| Finance leases | 6 | 8 |
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. Instruments classified as Level 3 include the earnout receivable as discussed in Note 3, as well as instruments held in pension asset trusts as discussed in Note 8 of the Company’s 2024 Form 10-K.
The carrying values and the estimated fair values of financial instruments at June 30, 2025 and December 31, 2024 consisted of the following:
| June 30, 2025 | December 31, 2024 | ||||||||||||||||||||||
| (DOLLARS IN MILLIONS) | Carrying Value | Fair Value | Carrying Value | Fair Value | |||||||||||||||||||
| LEVEL 1 | |||||||||||||||||||||||
| Cash and cash equivalents(1) | $ | 816 | $ | 816 | $ | 469 | $ | 469 | |||||||||||||||
| LEVEL 2 | |||||||||||||||||||||||
| Credit facilities and bank overdrafts(2) | 2 | 2 | 2 | 2 | |||||||||||||||||||
| Derivatives | |||||||||||||||||||||||
| Derivative assets(3) | 36 | 36 | 9 | 9 | |||||||||||||||||||
| Derivative liabilities(3) | 255 | 255 | 129 | 129 | |||||||||||||||||||
| Long-term debt: | |||||||||||||||||||||||
| 2025 Notes(4) | 500 | 496 | 1,000 | 972 | |||||||||||||||||||
| 2026 Euro Notes(4) | 942 | 934 | 827 | 813 | |||||||||||||||||||
| 2027 Notes(4) | 805 | 754 | 1,209 | 1,102 | |||||||||||||||||||
| 2028 Notes(4) | 399 | 399 | 398 | 391 | |||||||||||||||||||
| 2030 Notes(4) | 1,239 | 1,090 | 1,507 | 1,274 | |||||||||||||||||||
| 2040 Notes(4) | 342 | 245 | 771 | 536 | |||||||||||||||||||
| 2047 Notes(4) | 392 | 307 | 495 | 392 | |||||||||||||||||||
| 2048 Notes(4) | 674 | 592 | 787 | 686 | |||||||||||||||||||
| 2050 Notes(4) | 889 | 568 | 1,568 | 985 | |||||||||||||||||||
| 2026 Term Loan Facility(5) | — | — | 413 | 413 | |||||||||||||||||||
| LEVEL 3 | |||||||||||||||||||||||
| Earnout Receivable(6) | 100 | 100 | — | — | |||||||||||||||||||
(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.
(6)The earnout receivable is recognized at fair value. Refer to Note 3 for further discussion of the valuation method and inputs used.
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 that are not designated as hedging instruments to reduce exposure to commodity price fluctuations on purchases of inventory such as soybeans.
The Company also utilizes 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 June 30, 2025, the Company had designated approximately $942 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 Income (Loss).
Cross Currency Swaps
The Company has twelve EUR/USD cross currency swaps with a notional value of $1.4 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 June 30, 2025, the twelve swaps were in a liability position with an aggregate fair value of $254 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 June 30, 2025 and December 31, 2024:
| (DOLLARS IN MILLIONS) | June 30, 2025 | December 31, 2024 | |||||||||
| Foreign currency contracts(1) | $ | (1,630) | $ | (1,512) | |||||||
| Commodity contracts(1) | 24 | 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 June 30, 2025 and December 31, 2024:
| June 30, 2025 | |||||||||||||||||
| (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 forward contracts | $ | — | $ | 36 | $ | 36 | |||||||||||
| Total derivative assets | $ | — | $ | 36 | $ | 36 | |||||||||||
| Derivative liabilities(2) | |||||||||||||||||
| Foreign currency contracts | $ | — | $ | 1 | $ | 1 | |||||||||||
| Cross currency swaps | 254 | — | 254 | ||||||||||||||
| Total derivative liabilities | $ | 254 | $ | 1 | $ | 255 |
| December 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 | $ | — | $ | 8 | $ | 8 | |||||||||||
| Commodity contracts | 1 | — | 1 | ||||||||||||||
| Total derivative assets | $ | 1 | $ | 8 | $ | 9 | |||||||||||
| Derivative liabilities(2) | |||||||||||||||||
| Foreign currency contracts | $ | — | $ | 39 | $ | 39 | |||||||||||
| Cross currency swaps | 90 | — | 90 | ||||||||||||||
| Total derivative liabilities | $ | 90 | $ | 39 | $ | 129 |
(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 Income (Loss) for the three and six months ended June 30, 2025 and 2024:
| Amount of Gain (Loss) Recognized in Income on Derivative Settlements | Amount of Gain (Loss) Recognized in Income on Changes in Fair Value | Location of Gain (Loss) Recognized in Income on Derivative | ||||||||||||||||||||||||
| (DOLLARS IN MILLIONS) | Three Months Ended June 30, | Three Months Ended June 30, | ||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||||||
| Foreign currency contracts(1) | $ | 93 | $ | (43) | $ | 36 | $ | 4 | Other expense, net | |||||||||||||||||
| Amount of Gain (Loss) Recognized in Income on Derivative Settlements | Amount of Gain (Loss) Recognized in Income on Changes in Fair Value | Location of Gain (Loss) Recognized in Income on Derivative | ||||||||||||||||||||||||
| (DOLLARS IN MILLIONS) | Six Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||||||
| Foreign currency contracts(1) | $ | 115 | $ | (41) | $ | 66 | $ | (64) | Other expense, net | |||||||||||||||||
| Commodity contracts | — | (1) | — | — | Cost of sales | |||||||||||||||||||||
| Total | $ | 115 | $ | (42) | $ | 66 | $ | (64) |
(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 Income (Loss) for the three and six months ended June 30, 2025 and 2024:
| 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 June 30, | Three Months Ended June 30, | ||||||||||||||||||||||||||||
| (DOLLARS IN MILLIONS) | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||||||||
| Derivatives in Cash Flow Hedging Relationships: | |||||||||||||||||||||||||||||
| Commodity contracts | $ | — | $ | 1 | Cost of sales | $ | 1 | $ | — | ||||||||||||||||||||
| Interest rate swaps(1) | — | — | Interest expense | (1) | — | ||||||||||||||||||||||||
| Derivatives in Net Investment Hedging Relationships: | |||||||||||||||||||||||||||||
| Cross currency swaps | (102) | 13 | N/A | — | — | ||||||||||||||||||||||||
| Non-Derivatives in Net Investment Hedging Relationships: | |||||||||||||||||||||||||||||
| 2026 Euro Notes | (59) | 5 | N/A | — | — | ||||||||||||||||||||||||
| Total | $ | (161) | $ | 19 | $ | — | $ | — | |||||||||||||||||||||
| Amount of Gain (Loss) Recognized in OCI on Derivative and Non-Derivative (Effective Portion) | Location of Gain (Loss) Reclassified from AOCI into Income (Effective Portion) | Amount of Gain (Loss) Reclassified from AOCI into Income (Effective Portion) | |||||||||||||||||||||||||||
| Six Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||
| (DOLLARS IN MILLIONS) | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||||||||
| Derivatives in Cash Flow Hedging Relationships: | |||||||||||||||||||||||||||||
| Foreign currency contracts | $ | — | $ | (7) | Cost of sales | $ | — | $ | — | ||||||||||||||||||||
| Commodity contracts | (1) | 1 | Cost of sales | 1 | — | ||||||||||||||||||||||||
| Interest rate swaps(1) | — | — | Interest expense | (1) | — | ||||||||||||||||||||||||
| Derivatives in Net Investment Hedging Relationships: | |||||||||||||||||||||||||||||
| Cross currency swaps | (126) | 36 | N/A | — | — | ||||||||||||||||||||||||
| Non-Derivatives in Net Investment Hedging Relationships: | |||||||||||||||||||||||||||||
| 2024 Euro Notes | — | 3 | N/A | — | — | ||||||||||||||||||||||||
| 2026 Euro Notes | (87) | 20 | N/A | — | — | ||||||||||||||||||||||||
| Total | $ | (214) | $ | 53 | $ | — | $ | — |
(1) Interest rate swaps were entered into as pre-issuance hedges for the Company’s bond offerings.
The ineffective portion of the above noted net investment hedges was approximately $3 million and $7 million for each of the three and six months ended June 30, 2025 and 2024, respectively, and was recorded as a reduction to Interest expense on the Consolidated Statements of Income (Loss) and Comprehensive Income (Loss).
At June 30, 2025, 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. ACCUMULATED OTHER COMPREHENSIVE LOSS
The following tables present changes in the accumulated balances for each component of other comprehensive loss, including current period other comprehensive income (loss) and reclassifications out of accumulated other comprehensive loss, for the three and six months ended June 30, 2025 and 2024:
| (DOLLARS IN MILLIONS) | Foreign Currency Translation Adjustments | Gains (Losses) on Derivatives Qualifying as Hedges | Pension and Postretirement Liability Adjustment | Total | |||||||||||||||||||
| Accumulated other comprehensive loss, net of tax, as of April 1, 2025 | $ | (2,022) | $ | (3) | $ | (98) | $ | (2,123) | |||||||||||||||
| OCI before reclassifications | 710 | — | (1) | 709 | |||||||||||||||||||
| Reclassifications due to business divestitures | 48 | — | (50) | (2) | |||||||||||||||||||
| Other amounts reclassified from AOCI | — | — | 1 | 1 | |||||||||||||||||||
| Net current period other comprehensive income (loss) | 758 | — | (50) | 708 | |||||||||||||||||||
| Accumulated other comprehensive loss, net of tax, as of June 30, 2025 | $ | (1,264) | $ | (3) | $ | (148) | $ | (1,415) |
| (DOLLARS IN MILLIONS) | Foreign Currency Translation Adjustments | Gains (Losses) on Derivatives Qualifying as Hedges | Pension and Postretirement Liability Adjustment | Total | |||||||||||||||||||
| Accumulated other comprehensive loss, net of tax, as of January 1, 2025 | $ | (2,426) | $ | (2) | $ | (99) | $ | (2,527) | |||||||||||||||
| OCI before reclassifications | 1,114 | (1) | (1) | 1,112 | |||||||||||||||||||
| Reclassifications due to business divestitures | 48 | — | (50) | (2) | |||||||||||||||||||
| Amounts reclassified from AOCI | — | — | 2 | 2 | |||||||||||||||||||
| Net current period other comprehensive income (loss) | 1,162 | (1) | (49) | 1,112 | |||||||||||||||||||
| Accumulated other comprehensive loss, net of tax, as of June 30, 2025 | $ | (1,264) | $ | (3) | $ | (148) | $ | (1,415) |
| (DOLLARS IN MILLIONS) | Foreign Currency Translation Adjustments | Gains (Losses) on Derivatives Qualifying as Hedges | Pension and Postretirement Liability Adjustment | Total | |||||||||||||||||||
| Accumulated other comprehensive loss, net of tax, as of April 1, 2024 | $ | (1,945) | $ | (6) | $ | (240) | $ | (2,191) | |||||||||||||||
| OCI before reclassifications | (132) | 1 | 1 | (130) | |||||||||||||||||||
| Reclassifications due to business divestitures | 4 | — | — | 4 | |||||||||||||||||||
| Other amounts reclassified from AOCI | — | — | 2 | 2 | |||||||||||||||||||
| Net current period other comprehensive income (loss) | (128) | 1 | 3 | (124) | |||||||||||||||||||
| Accumulated other comprehensive loss, net of tax, as of June 30, 2024 | $ | (2,073) | $ | (5) | $ | (237) | $ | (2,315) | |||||||||||||||
| (DOLLARS IN MILLIONS) | Foreign Currency Translation Adjustments | Gains (Losses) on Derivatives Qualifying as Hedges | Pension and Postretirement Liability Adjustment | Total | |||||||||||||||||||
| Accumulated other comprehensive loss, net of tax, as of January 1, 2024 | $ | (1,652) | $ | 1 | $ | (245) | $ | (1,896) | |||||||||||||||
| OCI before reclassifications | (425) | (6) | 4 | (427) | |||||||||||||||||||
| Reclassifications due to business divestitures | 4 | — | — | 4 | |||||||||||||||||||
| Amounts reclassified from AOCI | — | — | 4 | 4 | |||||||||||||||||||
| Net current period other comprehensive income (loss) | (421) | (6) | 8 | (419) | |||||||||||||||||||
| Accumulated other comprehensive loss, net of tax, as of June 30, 2024 | $ | (2,073) | $ | (5) | $ | (237) | $ | (2,315) |
The following table provides details about reclassifications out of Accumulated other comprehensive loss to the Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) other than due to business divestitures:
| Three Months Ended June 30, | Affected Line Item in the Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) | ||||||||||||||||
| (DOLLARS IN MILLIONS) | 2025 | 2024 | |||||||||||||||
| (Losses) gains on pension and postretirement liability adjustments | |||||||||||||||||
| Prior service cost | $ | 1 | $ | — | (1) | ||||||||||||
| Actuarial losses | (2) | (2) | (1) | ||||||||||||||
| Total | $ | (1) | $ | (2) | Total, net of income taxes |
| Six Months Ended June 30, | Affected Line Item in the Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) | ||||||||||||||||
| (DOLLARS IN MILLIONS) | 2025 | 2024 | |||||||||||||||
| (Losses) gains on pension and postretirement liability adjustments | |||||||||||||||||
| Prior service cost | $ | 1 | $ | 1 | (1) | ||||||||||||
| Actuarial losses | (3) | (5) | (1) | ||||||||||||||
| Total | $ | (2) | $ | (4) | 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 7 for additional information regarding net periodic benefit cost.
NOTE 17. 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 June 30, 2025, the Company had a total of approximately $198 million of available bank guarantees, commercial guarantees, standby letters of credit and surety bonds with various financial institutions. There was a total of approximately $54 million outstanding under the bank guarantees, standby letters of credit and commercial guarantees as of June 30, 2025.
The Company has been required to, and has separately pledged assets, principally property, plant and equipment, to cover assessments in Brazil for various income tax and indirect tax disputes related to fiscal years 1998-2011 in the amount of approximately $7 million as of June 30, 2025.
Litigation
The Company assesses contingencies related to litigation and/or other matters to determine the degree of probability and range of possible loss if reasonably estimable. 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 and any assessments or the related decisions on accruals could be inaccurate. 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 substantially differ from these estimates and the amounts accrued, 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 probable liabilities are recorded at management’s best estimate of the probable outcome of the lawsuits and claims where reasonably estimable, 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
A motion to approve a securities class actions was 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. The 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 postponed 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. In November 2024, the court granted extensions to the parties’ joint filings of the responses to the Oman motion and for the evidential hearings, for the parties to exhaust the mediation proceeding. In the second quarter of 2025, the parties finalized a settlement agreement and submitted it to the court for approval. The settlement, if approved, resolves all claims against Frutarom and its former officers and directors, and was made to avoid the cost, distraction and uncertainty of prolonged litigation. The settlement agreement states the settlement payment, fees and expenses totaling 24.0 million New Israel Shekel (approximately $6.8 million) will be paid by the respondents’ insurers.
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. During the three months and six months ended June 30, 2025, the Company recognized a provision of $42 million within “Selling and Administrative Expenses” in connection with the U.S. class action lawsuits, based on estimated potential settlement amounts. This provision does not include any potential liabilities that may arise from other civil proceedings not encompassed by the U.S. class action lawsuits. IFF may face additional civil suits, in the United States, Canada or in other countries, 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. The resolution of any of these items could have a material adverse effect on IFF’s results of operation, financial condition, and overall business.
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. The Mexican Competition Commission has also announced that it is investigating potential anticompetitive conduct in the fragrance and fragrance ingredients industries. The Company has applied for leniency in a number of jurisdictions. Leniency, if obtained in a jurisdiction, would generally carry significant benefits by, for example, reducing or eliminating monetary liability in that jurisdiction. Since March 7, 2023, regulatory authorities in other countries have initiated investigations involving the same conduct. While these investigations are confidential, the Company is cooperating and/or seeking leniency in those jurisdictions, as well. IFF has been and intends to continue actively cooperating with these investigations, as well as any other present or future inquiries from governmental authorities. During the first three months of 2024, IFF recognized a provision of €15.9 million (approximately $17.5 million) in connection with a settlement with the EC, which was paid during the third quarter of 2024. This settlement pertains to a charge related to the deletion of messages relevant to the investigation by a former Scent employee. This settlement does not conclude the ongoing antitrust investigation. 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. However, an adverse judgment or other outcome or settlement with respect to any proceedings discussed above could result in significant fines or payments by IFF. The resolution of any of these items could have a material adverse effect on IFF’s results of operations, financial condition, and overall business.
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 $7 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.
NOTE 18. SUBSEQUENT EVENTS
One Big Beautiful Bill Act
On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the U.S. The OBBBA permanently extends key provisions of the Tax Cuts and Jobs Act of 2017, including 100% bonus depreciation, domestic research cost expensing, and the business interest expense deduction. Further, the OBBBA makes significant changes to the U.S. international tax framework, most notably the Global Intangible Low-Taxed Income (“GILTI”) regime. The legislation has multiple effective dates, with certain provisions effective in 2025 and others effective in 2026. ASC 740, “Income Taxes”, requires the effects of changes in tax rates and laws on deferred tax balances to be recognized in the period in which the legislation is enacted. The Company is still evaluating the impact of the OBBBA and will evaluate all deferred tax balances impacted, as well as any other changes required to its financial statements as a result.
Share Repurchase Authorization
On August 5, 2025, the Company announced that its Board of Directors has authorized a new share repurchase program with a total value of $500 million. The program does not have a specified term or termination date. Under the program, the Company is authorized to repurchase shares of common stock in privately negotiated transactions, and/or open market transactions, including under plans complying with Rule 10b5-1 under the Exchange Act, and in block trades, or a combination of the foregoing. The Board will review the share repurchase program periodically and may authorize adjustment of its term and size. The Company plans to fund repurchases from available cash and cash provided by operating activities.
Sale of Soy Crush, Concentrates & Lecithin Business
On August 5, 2025, the Company announced that it has entered into a definitive agreement to divest its soy crush, concentrates, and lecithin business. The sale aligns with IFF’s strategy to strengthen its portfolio and supports the ongoing evaluation of strategic alternatives for its Food Ingredients segment, with a focus on maximizing shareholder value. The transaction is expected to close in the fourth quarter of 2025.
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